Piramal Set To Pull Out Of Plus Channel

Luggage king Dilip Piramal is planning to pull out of Plus Channel. The move comes just a few months after he hiked his stake in the loss making media company.

Confirming the move, Piramal said some foreign media companies have approached him. He said he would sell his 60 per cent stake at a good price. Things are at a very nebulous stage, he said. He, however, declined to give further details.

Market sources maintain that Piramal would only be too glad to get out of Plus Channel, which posted a loss of Rs 12 crore on a turnover of about Rs 60 crore in 1996-97. Piramal had picked up 45 per cent stake in Plus in October 1995.

According to Amit Khanna, promoter of Plus Channel, the original equity base was Rs 10 crore, with Piramal contributing Rs 4.5 crore. The balance was held by industrialist Ajit Gulabchand, film-maker Mahesh Bhatt, Jayesh Choksi of Gufic Pharma and Khanna. Piramal was always the single-largest shareholder.

A few months ago, the equity base of the company was increased to Rs 20 crore and Piramal hiked his stake to 60 per cent by converting Rs 7.5 crore worth of debt into equity. Piramals total exposure in the company, including debt, then rose to Rs 30 crore.

Plus Channel started off as a software production company and held the marketing rights for various programmes, specially in state-owned Doordarshan. Things turned bad when it branched out into film production. The channel produced about 10 to 12 films, made at a cost of 1 to 1.5 crore, each.

None of them except Papa Kehte Hain could break even. Even this film, which was supposed to have garnered revenue to the tune of Rs 12 crore, barely managed Rs 1.5 crore, said some industry analysts.

The company also started music and events divisions. The events division was a washout while the music division enjoyed some success, specially with Papa Kehte Hein. Plus Channels proposed private placement too did not work out.

The company also owed Doordarshan Rs 3 crore at one point. All this caused Piramal to continuously pump in money to keep the channel going.

In a bid to salvage his investment, Piramal converted debt into equity a few months ago.

The well known industrialist is reportedly unhappy with Khanna who is the driving force behind the channel, but can do little as a shareholders agreement ensures that Khanna cannot be removed except through his consent.