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Hathway consolidates stake in subsidiary through preferential route

MUMBAI: Multi-system operator (MSO) Hathway Cable & Datacom will raise its stake in its subsidiary Hathway Bhawani Cabletel & Datacom through the preferential route.

In the process, Hathway will be investing Rs 9.9 million in the subsidiary. It may be recalled that Hathway had appointed Samson Jesudas as managing director of the subsidiary a few months back.

The subsidiary will allot to Hathway 900,000 fully paid equity shares, of face value of Rs 10 each, at a price of Rs 11 per share.

Following the preferential allotment, Hathway’s holding in the company will increase to 31.69 per cent. Taking into account the persons acting in concert (i.e. Hathway Media Vision Pvt Ltd), the total stake would stand increased to 55.96 per cent.

Hathway, along with another group company Hathway Media Vision Pvt Ltd, currently has a controlling stake in Hathway Bhawani. While Hathway controls 24 per cent stake (1,920,000 equity share) of Hathway Bhawani, the group company Hathway Media Vision holds 27 per cent (2,160,000 equity shares) of the subsidiary company.

For the first quarter of fiscal 2015, Hathway Bhawani’s revenue eased 4 per cent quarter-on-quarter to Rs 3.89 crore (Rs 38.9 million). The company still managed to cut losses to Rs 6.55 million compared to a loss of Rs 9.96 million recorded in the trailing quarter.

Higher pay channel cost at Rs 1.62 crore (Rs 16.2 million), almost double of what it had spent on the fourth quarter (Rs 8.66 million), impacted Hathway Bhawani’s performance substantially.

Some solace came in lower other expenses at Rs 2.19 crore (Rs 21.9 million), down 37.8 per cent over the trailing quarter ended March 2014 and lower provisioning of depreciation at Rs 1.94 million. As a result of its cost-cutting efforts, the company managed to reduce operating loss to Rs 6.21 million compared to an operating loss of Rs 1.00 crore (Rs 10.0 million) incurred in the fourth quarter.

The benefit generated through lower provisioning of depreciation was mitigated due to provisioning for doubtful advances/investments, Bhawani Hathway said.

The company is in process of finalising fresh terms with local cable operators (LCOs). But as the terms are yet to be finalised, the management decided to take a conservative approach to estimating recognition of activation fees and subscription income.

Hathway Bhawani’s share settled Monday’s session 4 per cent higher at Rs 10.39, which is 5.5 per cent lower than the price at which the parent company would be subscribing for preferential allotment.