MediaNama » Pyramid Saimira

Pyramid Saimira Posts Net Loss Of Rs. 36.4M

Preethi J — Tue, 02 Feb 2010 06:27:20 +0000

It appeared to be recovering but the quarter has been a setback for theatre chain owner Pyramid Saimira, which reported a standalone net loss of Rs. 36.4 million, down 95.1% year on year in the quarter ended December 2009. It had registered a net profit of Rs. 57.79 million in the September 2009 quarter. The group runs film, hospitality, realty, food and beverage and cine advertising businesses.

Details: Financials

Net income has tumbled 94.3 percent sequentially and 97.6 percent year on year to Rs. 32.8 million in the quarter. Expenditure has also reduced 91.4 percent from the previous quarter to Rs. 48.75 million.

In October, PSTL sold 39.87% stake of its film production subsidiary Pyramid Saimira Productions International to RDB Group and announced it would produce 28 films and 1,785 hours of TV content for 2010-2011.

N. Seetharaman was appointed as an additional director of the company with effect from October 28, 2009.

In November, the company called SEBI’s order banning 250 individuals and companies from trading on the stock market after a scam involving the company as “biased, arbitrary and a deliberate cover up done by SEBI without heeding to principles of natural justice.” Nine people filed their objection but SEBI stuck to its guns, reports Business Standard.

The past year was a rough one for PSTL with box office failures, operational losses, the share market scam which led to a decline of its stock’s valuation and the income tax department paralysing its accounts.

-Q4 09: Pyramid Saimira Posts YoY Losses Of Rs. 1.37B; Animation & Gaming Writeoff; Four Screens Shut

- Pyramid Saimira To Raise $100M; Detaches Production, Distribution Wings

SEBI

Sep09 Results Digest: Reliance Mediaworks (Adlabs), CDIL, Tata Comm & Pyramid Saimira

Diwaskar Chettri — Mon, 26 Oct 2009 12:36:32 +0000

Reliance Mediaworks

Financials

Reliance ADAG group’s Reliance Mediaworks, previously Adlabs, has reported a consolidated net loss of US$ 2.3 million for the quarter ending September 2009 better than the previous quarter loss of US$ 13.6 million.

Film and Media Service’s revenue increased by 64 percent to US$ 10 million compared to the last quarter and revenues from BIG Synergy, television production venture, and BIG Cinemas were US$ 6.25 million and US$ 24 million respectively. As a standalone, total income was reported to be US$ 23 million almost US$ 10 million more compared to income ending June 2009 . EBITDA as reported was US$7.2 million as against the loss of US$ 1.8 million in the last quarter.

Business Operations

BIG Cinemas at present has a network of 480 screens across India, Malaysia and Netherlands and also reopened Odeon Theatre in Connaught Place, New Delhi as Odeon BIG Cinemas.

Reliance Mediawork’s Film and Media Services, launched film cameras and equipment rental services in India.

BIG Synergy, TV venture, produced five non-fiction shows for various TV channels in India.

Details: Release | Financials

Compact Disc India

CDI announced a Net Profit of Rs. 128.4 million for the second quarter 2009 and also has announced that it will invest US$ 3 million in CDI Media LLC, a wholly owned subsidiary in USA to set up pre-production animation studio at Los Angeles. Revenue generated for this quarter amounted to Rs. 616.7 milllion about 150 million more than the corresponding quarter of last fiscal. Total expenditure for the period was Rs. 488.3 million including development costs of Rs. 486 million.

Details: Financials

Tata Communications Limited

The Company has posted a net profit of Rs 104.50 million for the quarter ended September 30, 2009 almost three times lower than the profit declared for quarter ended June, 2009 which was Rs. 319.40 million and for the quarter ended September 2008 which was Rs.329.20 million. Total Income has decreased as compared to Rs 10357.70 million for the quarter ended September 2008 and Rs 8502.40 million for the quarter ended June 2009 to Rs 7929.90 million for the quarter ended September 2009 .

Details: Financials

Pyramid Saimira

(by Preethi J)

Despite a year of massive downsizing, theatre chain owner Pyramid Saimira has posted a net profit of Rs. 57.79 million over income of Rs. 573.28 million which sequentially fell by 28.95% in the quarter ended June 2009. From the 802 screens Pyramid owned in June 2008, there were 190 screens left as of June 2009.

The company has only now announced its results as it extended its financial year to 15 months. In the previous quarter, the company witnessed losses of Rs. 853.72 million. Its EBITDA has increased from Rs. 75.78 million to Rs. 96.67 million in the quarter.

Pyramid has also managed to control expenses in the quarter, which are down 17.33% from the previous quarter and 74.65% lower year on year at Rs. 567 million.

Previously, the company had written off investments in its DTH business in Europe and UK-based animation and console game developer Aurona Technologies. We now see that the write-offs resulted in a reduction in value of content invested in subsidiaries to the tune of Rs. 76.94 crores. The write-off on Aurona came to Rs. 13.65 crores while that of its DTH business Spize TV Pte was for Rs. 8.5 crores.

Details: Financials

Pyramid has managed to divest a 39.87% stake in one of its subsidiaries which was previously a division – Pyramid Saimira Production International (PSPIL) – to a strategic investor, and it now owns 39.86% as a co-promoter. It planned to list this as well as the other subsidiary Pyramid Saimira Content Distribution. Its board also approved qualified institutional placement measures to issue 1 crore equity shares and planned to offer 1 crore warrants to its promoters to raise money to help the company back on its feet.

Pyramid has also been attemptingto sell its overseas subsidiaries and exit non-core sectors, but there have been no announcements regarding them so far. The company has had a very rough quarter and year with box office failures, operational losses, share market scam leading to a decline of its valuation and the income tax department paralysing its accounts.

Pyramid Saimira To Raise $100M; Detaches Production, Distribution Wings

Preethi J — Thu, 27 Aug 2009 08:20:47 +0000

BSE-listed Indian theatre chain owner Pyramid Saimira (PSTL) informed the BSE that it will raise funds to the tune of $100 million via an international issue of securities including Foreign Currency Convertible Bonds (FCCBs), Global Depositary Receipts (GDRs), American Depositary Receipts (ADRs), subject to approval. PSTL recently approved qualified institutional placement measures to issue 1 crore equity shares and planned to offer 1 crore warrants to its promoters.

The financially distressed company is in dire need for funds after a share market scam led to a decline of its valuation, operational losses followed and box office failures delivered another hit to the company, it had to shut down 497 of its 745 screens. Its accounts were also paralysed by the Income Tax department, to which it owed Rs. 26.57 crores, due on March 31, 2009. PSTL posted losses of Rs. 1.37 billion in FY 2009.

The funds could be used to get its production and distribution of movies back on track. It needs to pay 300 employees’ salaries. Besides these, the group runs animation/gaming, hospitality, food and beverage and cine advertising companies. The company has not yet sold its gaming subsidiary Aurona Technologies, nor its US and Malaysia businesses – the non-core sectors the company planned to exit. The US subsidiary owns 21 screens, two radio stations, a banquet hall and a magazine, DesiPages and was suffering losses. The Malaysian one was profitable, and operates in the movie distribution sector.

De-merging Production & Distribution

The board of directors at the company have also approved the demerger of two divisions into subsidiaries – Pyramid Saimira Content Distribution and Pyramid Saimira Production International. This was the first step in the company’s plan to list the two subsidiaries. CNBC-TV18 reported the company plans to divest 40% stake to a strategic partner it has roped in as co-promoter.

Will this move help the company regain its financial balance or will it boomerang? The board hopes the subsidiaries will be freed of the negative publicity that was choking the company, and listing them will help the company open up avenues to raise more funds.

- Pyramid Saimira Promoter PS Saminathan, 230 Barred From Trading

- Pyramid Saimira Quits Gaming; To Sell Subsidiary Aurona; Focus On Core Biz

- Pyramid Saimira Bites Back At I-T Dept; 300 Employees Not Paid Salaries; Threat of Solvency?

- Pyramid Saimira Selling Stake In Subsidiaries; Cutting Op Losses Further

Q4 09: Pyramid Saimira Posts YoY Losses Of Rs. 1.37B; Animation & Gaming Writeoff; Four Screens Shut

Preethi J — Mon, 29 Jun 2009 13:42:53 +0000

During the quarter, theatre chain owner Pyramid Saimira did not distribute any movies and though marketing was slightly profitable, operations were beset with collection delays. Its US subsidiary made losses while its Malaysian subsidiary Pyramid Saimira Theatre Chain Sdn Bhd (the official blog is here) was profitable.

Following its reorganisation and de-risking steps, PSTL now has shut down four more screens in the quarter, bringing its total to 248 screens. In Q2 09, the theatre chain owned 745 screens. Occupancy rates have dropped to 32.35% from 38% last quarter. Average revenue per footfall (or user) is higher at Rs. 47.86 from Rs. 41.93 in Q3 09. In the quarter, 169 lakh tickets were sold.

The company struggled with financial paralysis as the Income Tax department had attached its bank accounts, but these were lifted earlier this month. It has announced it is extending its financial year to 15 months, up to June 30, 2009 and there will be a Q5.

Subsidiaries Suffer; No Sale?

Pyramid has written off investments in its DTH business in Europe and UK-based animation and console game developer Aurona Technologies due to their poor performances. The DTH subsidiary had not sustained its business operations and suffered serious losses due to the recession’s effect on purchasing power in Europe. Aurona being an outsourcing provider of game development was affected by pound depreciation.

PSTL has been ready to sell its overseas subsidiaries, especially those it perceives to be non-core to its flagship theatre business. The group runs film, hospitality, IPTV, DTH, realty, food and beverage and cine advertising businesses .

However, there has been no announcement yet on Aurona’s buyer. The studio has delivered games for Sony, Nintendo, Microsoft XBOX, most recently it launched a game for Sony PS2 in Indian called Hanuman: Boy Warrior. Our review of it is here.

Details: Financials

Quarterly Results

Pyramid registered a net loss of Rs. 853.72 million in Q4 09, with income from exhibition logging Rs. 590.93 million and revenues from food and beverages at Rs. 215.97 million. Expenses totalled Rs. 685.9 million with depreciations including amortisations of Rs. 45.32 million.

Basic EPS after extraordinary items registered at a negative Rs. 30.19.

A PSTL theatre in South India. Photo Courtesy: PSTL

For the quarter, exhibition segment posted net profits of Rs. 14.65 million over revenues of Rs. 590.9 million. Food and beverages made a profit of Rs. 61 million on income of Rs. 215.9 million.

Year on Year Results

Pyramid Saimira’s other income tanked by 94.5% to Rs. 583.26 during the fiscal year ending March, 2009 compared to FY08. It raked up net losses of Rs. 1.37 billion, while it had made Rs. 578.73 million in profits last year. The company has placed losses of Rs. 1,757.82 million as extraordinary items.

Income from exhibitions dropped by 4% compared to FY 08 to Rs. 5242.56 million. A similar, minor, difference in beverages and food revenues at Rs. 1967.88 million. Costs were also similar to the previous year, with a 2.4% rise to Rs. 6,622.17 million. Basic EPS stood at negative Rs. 48.77 while it was Rs. 20.47 last fiscal.

RoundUp: DoT; MeritNation; IndyaRocks’ SMS Gold Service; Games2Win

MediaNama — Thu, 25 Jun 2009 12:47:02 +0000

DoT To Telcos: First Pay, Then Argue

Seeking to curb the number of disputes logged with the Telecom Disputes Settlement & Appellate Tribunal (TDSAT), the Department of Telecom (DoT) is planning to bring about a change in regulations so telcos will have to cough up 50% of the amount before they can challenge financial penalties imposed on them. An estimated Rs 500 crore is currently held up due to the disputes. (More on ET)

IndyaRocks’ SMS Gold

Indyarocks has launched a new service SMS Gold which offers various tariff plans for SMS packs. The pre-paid plans are targeted at users, schools and small business owners. They can also be used for events like weddings to send reminders. The basic plan costs Rs 2,500 where an SMS costs just 25 paise, but the larger packs include one of Rs 5,000 and Rs. 8,000 which allow the registered user to send . Indyarocks promises unlimited validity on all the offers with SMS Gold and allows users to schedule their delivery – quite a useful option.

New E-Learning Portal Launched: MeritNation.com
Info Edge (owner of job portal Naukri.com) has launched an e-learning portal Meritnation.com. The site offers coaching in Maths, Science and English for students in classes 6 to 12. MeritNation offers detailed multimedia learning modules, practice tests, videos and animations to help the students understand text-book solutions. It also features blogs and an ‘Ask and Answer’ section where students can share their knowledge. It has also been heard that the Malayala Manorama group is launching an education website.

Games2Win In Top 20
Games2Win.com claims it is now one of the top 20 online gaming portals, quoting Comscore numbers. There are 13 million unique users in the extended web category and 5 million in the portal category, the May 2009 statistics say. Please note that we are not aware of Comscore’s methodology and so can not certify its numbers.

Pyramid Saimira Promoter PS Saminathan, 230 Barred From Trading

Preethi J — Fri, 24 Apr 2009 11:41:43 +0000

Market regulatory body SEBI has clamped down on primary promoter of struggling theatre retail firm Pyramid Saimira, PS Saminathan, for his alleged involvement in the forged open offer letter scam.

Saminathan, the SEBI Order (Release | 54 Page Report) says, helped ex-promoter Nirmal Kotecha off-load shares of PSTL at an artificially inflated price in the market. He has also been deemed guilty of misleading the public and trying to boost the scrip of PSTL with his statements.

The Open Offer Letter

In December, a forged letter of SEBI ordering Saminathan to make an open offer at a price that was at a substantial premium to its market price pushed the company into the limelight. Already suffering from bad fortunes, PSTL’s stock has taken a nose dive, losing 94% of its market value in the past 6 months. The sudden dumping of shares by a Pyramid ex-director, Nirmal Kotecha, who held close to 25% of shares and had resigned from the company in November, sparked talk of price manipulation amongst shareholders.

In the report of its investigations into the forged letter and Kotecha’s tradings, SEBI has brought to light various aspects of allegedly fraudulent activity. Over 230 entities involved in it have been barred from trading on stock exchanges.

Saminathan: A Victim Of Circumstances?

In June 08, Saminathan had informed the exchange that he was purchasing 13,70,000 shares worth 4.845% of equity from Kotecha. His holding was already 17.29% so the buy was subject to SEBI regulations which required both the parties to have held shares in the company for three years. But Kotecha had not been with the company for that period so the purchase was illegal.

In October 2008, Saminathan announced he would purchase 70,45,619 equity shares aggregating to 25% from N.C. Ravichandran and Kotecha, by way of inter-se transfer on November 28, 2008. The price was fixed at Rs 200 per share but the company sent another announcement to the BSE that the transfer was postponed to December 22, 2008 and that the price would be Rs 200 or market price, whichever was lower.

Notwithstanding this announcement, Saminathan went ahead and bought Kotecha’s shares on November 19 at an average price of Rs 50 per share on BSE. He purchased a total of 8,43,942 shares of PSTL in market transactions at an average price of Rs 45.67 per share between October 24 and December 5, even as he claimed that “competitors and big business interests are behind the constant hammering of its share price and are creating a panic among investors”. SEBI has noted that its interim investigation reveals that Saminathan was facilitating Kotecha in offloading the shares of PSTL in the market at artificially raised price.

The company’s director N Narayanan has told CNBC-TV18 that Saminathan was “a victim of circumstances” and will prove his innocence.

Kotecha Charged With Stock Manipulation, Money Laundering

Nirmal Kotecha, the largest shareholder of PSTL till November when he exited, has been charged with manipulating the securities market and money laundering. Nineteen associates/ entities related to Kotecha have been identified as having participated in it with banking transactions, forgery and abetting the alleged scam.

Kotecha’s manipulation can be observed in the prices of PSTL’s scrip -from Rs 80.92 in December, when he was actively selling his shares to Rs 26.25 in January when he stopped. Just the day before he stopped trading, the price was Rs 41.40 on the BSE. Now, the company’s stocks have hit an all time low at Rs 13.15 as on March 5, 2009 on BSE.

Following his bank account trails, SEBI also found that Kotecha had been carefully withdrawing large amounts of cash in small individual portions of below Rs 10 lakhs each to evade suspicion from banking regulators. He transferred funds to his wife, relatives and an engineering college student to hide his trails.

His wife Viral Doshi has been barred from trading as she has been charged with aiding Kotecha.

His activities during December:

-Kotecha sold 15,05,862 shares on December 22, 2008 at an average price of Rs. 75.85 per share. Out of them, 6,69,611 shares were sold at an average rate of Rs. 80.92 per share.

- A total of 40,29,254 shares were traded on the NSE on December 22nd – three times that of the previous day. PSTL’s scrip had opened at Rs. 83, a rise of 10% from the previous day’s closing price of Rs. 75.45. It closed that evening at Rs. 67.90. Kotecha sold 4.45 lakh shares when the price was Rs. 83 to Rs. 77.50, accounting for 39.87% to market (net). He sold 3.45 lakh shares when it was between Rs. 77.50 to Rs. 67.90 and another 0.51 lakh shares later.

- On BSE on the same day, Kotecha, dealing via Kotak Securities and IL&FS Investsmart, sold a whopping 2,25,444 shares at an average price of Rs. 81.02, just before PSTL issued a denial of the news that was already in the dailies that it had received a letter from SEBI ordering it to go in for an open offer.

- The denial sent the price spiralling down from Rs 79.60 to Rs 74.10 at 12.16.33 p.m. Kotecha continued to sell, this time via IL&FS Investsmart and India Capital Markets – he sold 67,983 shares at an average rate of Rs 76 and 3,71,768 shares at Rs 68.36.

- Kotecha also shared his fast money making tip with his maternal uncle Deepak Thakkar who made a profit of Rs. 20,76,064. Thakkar hurriedly bought 19,758 shares, 80,000 shares and 85 PSTL shares on December 16, 17 and 22 respectively. The majority were bought for Rs 53.96 and Rs 62.04.

-On December 19th, news of the open offer letter was published.

- On December 22nd, just before Saminathan denied the news, he sold 99,843 shares for Rs 80.10 to Rs 82.30. These timely orders, according to SEBI, were given by Kotecha.

Others Allegedly Involved

An engineering college student from Mumbai was allegedly used as a front for Kotecha’s share market game. The youngster, a relative of Kotecha’s accountant, was made to open an account with India Capital Markets which was then apparently solely operated by Kotecha, who already had an account in his name. This account was used by Kotecha to influence volumes and price of PSTL’s scrip. It contributed to over 20% of the market volume during 2 days in November, which affected the share price considerably.

A PR Executive & Journalist Implicated; Located Using Cellular Operators

Rajesh Unnikrishnan, an assistant editor at Economic Times and Rakesh Sharma, previously an executive with Adfactors PR agency have been charged with giving publicity to the forged letter. Unnikrishnan and Sharma were previously colleagues in Business Standard. SEBI has tracked down the cellphone locations of the two and confirmed that Kotecha met with the two prior to Sharma’s circulating the email about the forged letter. Mails were sent to Times of India, DNA, Economic Times, Business Standard, Telegraph and Hindu Business Line.

With its promoter now tagged with blame, the Pyramid Saimira’s reputation is sputtering. The company has a myriad of problems and is circling the drain. It reportedly has not paid its employees salaries, has income tax related issues and has had to sell off its gaming subsidiary Aurona. Pyramid’s sigh of relief “We are clear…SEBI’s Letter Forged” may be too early. Is this its death knell?

Pyramid Saimira Quits Gaming; To Sell Subsidiary Aurona; Focus On Core Biz

Preethi J — Thu, 26 Mar 2009 12:17:09 +0000

Faced with the threat of bankruptcy, Pyramid Saimira is selling its subsidiary Aurona Technologies. Bollywood Hungama reports that the announcement will be in the next 10-15 days. No other information about the deal size or new owner are known. Medianama tried to contact PSTL but a company representative said its Managing Director PS Saminathan is unavailable until Monday. The company representative declined to comment.

Aurona is a game development studio that has delivered games for Sony, Nintendo, Microsoft XBOX, as well as desktops, websites, arcades and mobiles. It was acquired by Pyramid Saimira a little over a year ago, in January 2008. It is headquartered at London, and has a representative office at Los Angeles and a development centre at Hyderabad. It was originally acquired by Pyramid to gain a foothold in European markets. The company recently launched a PS2 game for Sony Computer Entertainment India called Hanuman: Boy Warrior. Read our report on it here.

Aurona Charges On: Development vs Cafes

Meanwhile, Aurona’s CEO Dr Santosh Pillai has announced that his studio will expand its expertise in India, setting up two separate teams – one for services and another for game development and publishing. Just what its competitorDhruva Interactive recently did with Gametantra.

Interestingly, Saminathan told BollywoodHungama that Pyramid still has plans to roll out a chain of gaming cafés over the next 7-8 months in 60 cities in South India. He has also reportedly said that gaming business is unviable unless it is on a large scale. If he has exited, why invest in gaming cyber cafes? Wonder what this is about?

Focus On Core

Saminathan told Bollywood Hungama the reason to exit Aurona was PSTL’s need to consolidate its core business of film production and distribution. Its shaky financial position, tax problems and Rs 60 crore capital gap that it desperately needs to run its operations are some of the prime issues with which the company is grappling.

This is in line with what PSTL had already announced: that it would close its unviable subsidiaries and was looking to sell them to obtain fresh working capital. The group operates in hospitality, IPTV, DTH, realty, food and beverage and cine advertising sectors besides film. Subsidiaries Saimira Realty, Saimira Access (IPTV), Spize TV (DTH) and Dimple Cine Advertising, may be the next to follow. In 2007, Pyramid had projected its F & B business to be worth $1 billion by 2010.

Note: Thanks to Money Sharma of Bollywood Hungama for informing us about this.

Pyramid Saimira Bites Back At I-T Dept; 300 Employees Not Paid Salaries; Threat of Solvency?

Preethi J — Tue, 24 Mar 2009 11:04:30 +0000

Production house Pyramid Saimira’s petition to the Madras High Court has been denied. The company wanted the court to direct the Income Tax department to release attachments to the tune of Rs 245 crores to its bank accounts. The court refused to lift the attachments, adjudging that it was up to the I-T Department, and has directed the two parties to find a solution, Economic Times reports.

Op Losses, Box Office Failures & Now Tax Cuts

Pyramid faced a tax bill of Rs 26.57 crores that was due on March 31st. The I-T department had attached Rs 165 crores of investment, Rs 50 crores of normal trade receivables and Rs 30 crores of theatre receivables to this, wounding the company on the back of operational losses and a slew of box office failures. The Rajnikant starring Kuselan caused losses of Rs 40.32 crore. The group operates in theatre, film and television content production, distribution hospitality, food and beverage, animation and gaming and cine advertising sectors.

Staying Afloat: Salaries Withheld; Divesting Subsidiaries; Diluting Stakes

The company is down on its knees – it reported a net loss of Rs 74.74 crore in the quarter ended December 2008. Pyramid is circling the drain, with 300 employees on its rolls who have not received their salaries for the past three months. According to MoneyControl, the company owes close to Rs 1.5 crore in salaries and additionally requires a working capital of Rs 60 crore to continue its operations. Pyramid recently authorized the strategic sales of its subsidiaries to help raise money and its core promoters have diluted their stakes from 25% to 17.9% to raise liquidity. Other promoters include corporate bodies with 25 percent; FIIs/FIs hold around 12 percent; CitiGroup Global Markets, Bennett Coleman & CO, Mavi Investments with 3.41 percent, 1.77 percent and 1.81 percent respectively; Punjab National Bank with 3.54 percent. We’d written earlier about Read our post on Pyramid closing 33 screens and dropping plans for acquisitions. Rising inflation, poor spending and content failure have reduced the number of screens Pyramid operates down from 802 in June 2008 to 252. The company has unleased 194 screens during the third quarter, shifted 151 screens from a fixed hire model to an on demand content supply and another 148 screens to a profit sharing model.

Solvency Threat

Now, Pyramid has informed the BSE that the court had authorised the attachments to be restricted to Rs 26 crores and the two would mutually agree as to the exact items to be attached for this Rs 26 crores out of the Rs 246 crores already attached. It has filed its revised tax returns and expects a refund of Rs 2 crores, which the court has directed the I-T Dept to consider on merit. With this amount, the company may be able to pay its employees, but will it be able to continue operations with such a large liquidity shortfall? With the entire economy facing a cash crunch, Pyramid faces solvency unless it acts fast.

Pyramid Saimira Selling Stake In Subsidiaries; Cutting Op Losses Further

Preethi J — Tue, 10 Mar 2009 10:04:51 +0000

(with inputs from Nikhil Pahwa)

Pyramid Saimira is on a downward spiral, now informing the BSE that the board has decided to sell off stake in the subsidiaries. The group operates in theatre, film and television content production, distribution, hospitality, food and beverage, animation and gaming and cine advertising sectors.

The promoters have already diluted their stake to raise liquidity and announced they might shut down unviable subsidiaries. Last week, the companys board authorized any strategic sale that may be required to effectively re-organise and revitalize the subsidiaries, and also allowed the Managing Director to sell equity shares of the subsidiaries so that fresh working capital may be infused into the companys core activities.

“We have lost close to 100 crore of cash in some divisions and also because of the general recession in the occupancy rates. Therefore, we have lost some 100 crores of cash flow which we thought we should replenish,” P. S. Saminathan, chairman, PSTL, has told Reuters. PSTL is in talks with strategic players for stake sale in two of its foreign subsidiaries and an Indian subsidiary.

Cutting Operational Losses

It plans to bridge its working capital gap of Rs 60 crore by reorganising its production and distribution verticals by this fiscal end. The board also okayed a write down of Rs 76.94 crore in the books of PSTL so that the current books reflect the realisable value of investment.

Outcome of Board Meeting

Apart from authorizing the strategic sale, Pyramid Saimira’s board also approved their management’s plan to file revised Return with the Income Tax Department, and write down the value of investment in the books of PSTL to the extent of US$19.25 million (equivalent to INR 76.94 Crores). More here.

Tough Times

Pyramid Saimira had reported a net loss of Rs 74.74 crore in the quarter ended December 2008. It recorded net sales of Rs 137.94 crore. The company also faces a tax bill of Rs 26.57 crores that has been deferred to March 31st, we had reported in an earlier post.

The company has unleased 194 screens during the third quarter, shifted 151 screens from a fixed hire model to an on demand content supply and another 148 screens to a profit sharing model. After the resignation of non-executive, independent director Nirmal Kotecha in November, another – N Venkataraman – is leaving, the company said in an announcement.

Pyramid Saimira To Close Unviable Subsidiaries; Stake Dilution Plans

Preethi J — Wed, 11 Feb 2009 14:45:12 +0000

Pyramid Saimira will undergo massive restructuring soon – it is closing shutters of ‘unviable’ subsidiaries overseas and bringing the others under a single umbrella. The Indian entertainment multinational lost Rs 40.32 crores when its Rajnikant starrer Kuselan bombed at the box office, and is now reeling under a massive liquidity crunch. (Related: the issue of stars in films). Pyramid Saimira was in the digital distribution business, owns a European DTH company Spize TV and gaming developer Aurona Technologies, among others.

Promoters To Dilute Further

The core promoters, V Natrajan, N Narayanan and PS Saminathan, have already diluted their stake from 25 percent to 17.9 percent to raise liquidity to help it overcome the financial crisis. Other promoters include corporate bodies with 25 percent; FIIs/FIs hold around 12 percent; CitiGroup Global Markets, Bennett Coleman & CO, Mavi Investments with 3.41 percent, 1.77 percent and 1.81 percent respectively; Punjab National Bank with 3.54 percent. The promoters are now considering further diluting their shares and are talking to private equity players and financial institutions to raise liquidity.

The Rise: A Pleasant Autumn…

In June 2008, the company had leased over 45 lakh seats through 802 screens worldwide. In early September, Saimira acquired distribution rights for four more films in India. It set up a joint venture in China and planned to invest $30 million to establish 25 theatres. It inaugurated the 290 seat Huainan Pyramid Lonozhe Theatre Entertainment Tower in China. It announced plans to invest Rs 200 crores towards renovation of 250 screens in South India. In October 2008, the company’s London based subsidiary Aurona Technologies bagged a gaming contract from the publisher Deep Silver.

The Fall: …Followed by a Chilly Winter

In September, Pyramid Saimira reviewed its expansion plans quoting ‘high inflation, slackening of demand for entertainment and food products and constraints of margins in leisure industry’ as reasons. Medianama reported Pyramid was closing down 33 screens and had dropped plans for acquisitions in UK and Europe. The number of screens fell to 745 by September and to 252 by December due to poor spending and content failure .

Kotecha Dumps Stock: Price Manipulation?

In November, Pyramid’s director, Nirmal Kotecha, resigned from the company. Nirmal Kotecha had invested in Pyramid shares and even bought shares from other investors. After the IPO, he held 70,36,619 shares, close to 25 percent shares in September. He started selling them quickly in November and by December owned only 12.92 percent shares in the company. Earlier this month, he dumped his entire holding of 0.24 per cent in the company, sparking curiosity and talk of price manipulation in the shareholding community.

Foul Play: Stock Loses 94% of its Market Value

False media reports claiming that SEBI had ordered P S Saminathan, a promoter, to make open offer at a price that was at a substantial premium to its market price put the company in the limelight in December. As the company’s stock rose, it fell again when SEBI clarified that it had not issued such a letter. A whopping 72 lakh shares were traded during this period, raising eyebrows.

Subsequently SEBI began an investigation to track the apparently forged letter. In a press release to BSE, the company alleged that competitors were hammering its share price and creating panic amongst investors. But harm had been done and Pyramid’s stock took a sharp dive to Rs 29.05. The stock has lost 94 per cent of its market value in the course of a year.

Future is In Consolidation

Reeling from its bad fortunes, the company announced in January that it was undertaking measures to increase profitability of its screens by reducing their numbers and moving some to a revenue sharing model to cut operational losses. It announced that the group had the following companies under it:

– Saimira Access Technologies – a services and IPTV provider
– Spize TV Pte – a DTH provider in UK
– Its USA subsidiary;
– Joint ventures in China and Malaysia
– Its subsidiaries Dimple Cine Advertising
– Game developer Aurona Technologies
– Post production subsidiary
– Content distribution subsidiary for Singapore and India and
– Its umbrella company for exhibition and investment holding Pyramid Saimira Theatre

Now, the company may have to surrender some of these too. PSTL president N Narayanan has told Financial Express, “We came to an understanding that some of these subsidiaries are not doing well and found to be unviable. We want to close those unviable ones while bringing all the other subsidiaries under single holding company.”

This month, the company is fighting off rumours of SUN TV acquiring the group and betting on the Tamil movie Naan Kadavul that will release in five cities in US.

Timeline:

Sep 1: Pyramid Saimira acquires distribution rights for four films

Sep 17: Inaugurates its first ever Cineplex in China

Sep 23: Reviews Expansion Plans, closes 33 screens; drops plans for acquisitions in UK and Europe

Sep 30: Announces plans to modernize 250 screens in South India

Oct 6: Subsidiary Aurona Technologies announces game art contract with US-based Deep Silver

Nov 17: Director Kotecha Resigns

Dec 5: Amends its Initial Conversion Price of FCCBs from Rs 454.00 per Bond to Rs 246.50.

Dec 22: Issues clarification on media reports on Open Offer

Dec 24: Issues a press release calling for an investigation by SEBI

Jan 13: Issues clarification on news of P S Saminathan selling shares at a low price

Jan 30: Announces Q3 Results

Feb 2: Denies reports of Sun TV group acquiring the Pyramid Saimira