Bharat Nidhi buyback: Why The Times of India stakeholder is facing minority shareholders’ ire

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Updated: July 4, 2019 6:17:13 PM

Bharat Nidhi Ltd, a significant stakeholder in The Times of India’s publisher Bennett, Coleman & Co, is facing the wrath of a group of minority shareholders, who allege gross undervaluation of company’s shares in the proposed buyback offer.

Sebi noted that the proposed measures like restructuring of RFL's debt, assignment of its gross non-performing assets to ARCs and raising of capital to meet capital adequacy norms seem essential for revival of the company. (File photo)Bharat Nidhi shareholders have sent complaints to capital markets regulator SEBI, asking it to keep the buyback on hold until all the guidelines of providing mandatory exit to public shareholders are met.

Bharat Nidhi Ltd, a significant stakeholder in The Times of India’s publisher Bennett, Coleman & Co, is facing the wrath of a group of minority shareholders, who allege gross undervaluation of company’s shares in the proposed buyback offer. The shareholders have sent complaints to capital markets regulator SEBI, asking it to keep the buyback on hold until all the guidelines of providing mandatory exit to public shareholders are met. “… any attempt made by you to provide a limited exit to shareholders of the Company via the proposed buyback at artificially depressed prices, being against the intention of the guidelines prescribed by SEBI as mentioned hereinabove, is wholly illegal and fraudulent,” a complaint sent to SEBI dated 27 June 2019, seen by Financial Express Online, said.

“We are shareholders who have invested in the company a long time ago and instead of protecting our interests the company is now seeking to push us out of the company at an artificially depressed price,” it added. The aggrieved shareholders have also asked Bharat Nidhi Ltd to appoint an independent valuer to arrive at the ‘fair value’ of shares as against the ‘book value’ of now.

Responding to the allegations, Bharat Nidhi Ltd said that it is working in accordance to the guidelines laid down by the concerned regulators. “The Company is following the due legal procedures set out by the Regulators under the applicable laws. We believe the concerns raised are unfounded,” Bharat Nidhi Ltd’s Company Secretary told Financial Express Online in an email response.

Valuation under cloud

The shareholders allege that the valuation of exit share price has been calculated on the basis of the book value as against the SEBI prescribed fair value method, and is far lower than what it actually should be. The valuer Corporate Professionals said that it has no access to the complete information about the investments. “As BNL doesn’t have access to the detailed information about BCCL and BPHL downstream investments, in accordance with our scope of work, the Valuation of major operative investments of BNL in Bennett, Coleman & Co. Ltd. (BPHCL) has been undertaken as per their respective Audited Consolidated balance sheets as on 31st March 2018 (which is the latest Audited Balance Sheet of the company as on this date of the report) as provided to us by the management of BNL (in the capacity of investors),” Corporate Professionals said.

“No discussions has taken place with the management of BCCL or BPHCL and the valuation has been done basis these financials only. However, it is clarified that the BCCL value is derived by segregating its value of operations (based on its consolidated financials comprising of its own financials as well as financials of Subsidiaries, Associates and Joint Ventures) and the value of Non operating/ surplus assets have been considered and added separately, after appropriate adjustments,” it added.

Bharat Nidhi buyback

A share buyback was announced by the company last month as it moves forward to delist its shares on the Calcutta Stock Exchange (CSE) and transfers to the dissemination board (DB) of the National Stock Exchange (NSE). The company is one of the 63 companies that  were listed on the CSE and shifted to the DB in accordance to the SEBI’s order, dated 2012, which provides for an exit route to the shareholders of the company moving from regional to national stock exchange.

The buyback offers 21,791 shares at an exit price of Rs 11,229 for an aggregate amount of up to Rs 24,46,91,139. Bharat Nidhi counts BCCL and Bennett Property Holdings among its associates, in which it holds 24.41 per cent stake each.  BCCL is the publisher of major national dailies The Times of India and The Economic Times. Other than this, Bharat Nidhi also holds shares in Times Publishing House and Times Internet.

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