Strictly Private & Confidential
Restructuring for Value Enhancement
November 2008
Presented By:
S. Subramanian Ph.D.
Head of Investment Banking,
ENAM Securities Pvt. Ltd.
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
1
Multiple Champion Teams = India’s Leading Investment Bank
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rank for several years
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market over 2,50,000 retail investors through
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towns/cities in India
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Award Winning Investment
Bank (AsiaMoney,
FinaceAsia, OutlookMoney)
Trusted advisors to some
of India’s most admired
business
Ranked No 1 on the Equity
Offering League Table for
FY08
(Source: Primedatabase)
M&A and Advisory Team
gaining momentum
Investment
Bank
Institutional
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AMC
Proprietary
Investments
Corporate
Finance
Broking
Enam Direct
Wealth
Management
Treasury
Advisory
Private Equity
M&A
Private
Equity
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year in the last 7 years
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Strictly Private & Confidential
2
Source : Prime database, Index of Performance Rankings
Enam : At the Vanguard of India’s Evolution
1980s
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Enam is early to spot fundamental trends, anticipate and service client needs and benefit from it
Strictly Private & Confidential
3
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
4
Introduction
Corporate restructuring encompasses two distinct groups of activities;
Business Restructuring:
 Expansions – including mergers and consolidations, tender offers, joint ventures, and
acquisitions;
 Contraction – including sell offs, spin offs, equity carve outs, abandonment of assets, and
liquidation.
Financial Restructuring:
 Value Re-engineering - Subsidiarisation, De-subsidiarisation.
 Ownership and control – including the market for corporate control, stock repurchases
program, exchange offers and going private;

Strictly Private & Confidential
5
Does Restructuring create value?
The key principle behind corporate restructuring is to create shareholder
value over and above that of the sum of the parts.
Corporate Restructuring creates value only if:
Value of the combined entity as a result of the corporate restructuring is greater
than the sum of value of individual companies.
C > A + B Value creation
C<= A + B
Strictly Private & Confidential
Value destruction
6
Value Creation through listing of distinct businesses
Objective
 To list the shares of subsidiary company through allotment of shares of subsidiary company to the shareholders of parent
company pursuant to a scheme of arrangement.
Single Business
Entity
Multiple Business
Entity
Shareholders
Shareholders
X Co.
(Parent)
X Co.
(Parent)
Listed
X Co.
(Parent)
100%
Y Co.
(Subsidiary)
Unlisted
Listed
100%
X Co.
(Parent)
Listed
100%
A Co.
(Subsidiary)
Tea business
B Co.
(Subsidiary)
Steel
Business
C Co.
(Subsidiary)
Telecom
Business
A Co.
(Subsidiary)
Tea business
B Co.
(Subsidiary)
Steel
Business
C Co.
(Subsidiary)
Telecom
Business
Unlisted
Unlisted
Unlisted
Listed
Listed
Listed
Stake held
Issue of consideration
Strictly Private & Confidential
Shareholders
Distribution of
shares of A, B,
& C Co. to the
shareholders of
X Co. pursuant
to a scheme of
arrangement
Listed
Listed
100%
Y Co.
(Subsidiary)
Shareholders
Distribution of
shares of Y Co.
to the
shareholders of
X Co. pursuant
to a scheme of
arrangement
7
Alternative Routes



Formation of a special purpose company (SPV) – A 100% subsidiary of parent company
Transfer investments (shares of Y Co.) from parent company to SPV pursuant to a scheme of arrangement and get shares of SPV
listed
Alternative 1A - Merge SPV into Y Co. at a later point in time and get Y Co. shares listed or Alternative 1B – Merge Y Co. into the
SPV at a later point in time, to be decided depending on tax and cost efficiency. Alternative 2 –Let only SPV remain listed without
any merger. Alternative1 is preferred purely from an administrative convenience rather than from a shareholder value
perspective.
Alternative 1
Transfer of
Investments to SPV*
Formation of SPV
Alternative 1A
Alternative 1B
Shareholders
Shareholders
Shareholders
Shareholders
Parent Co
Parent Co
Parent Co
Parent Co
Listed
100%
Issue of Shares in
Consideration
100%
Listed
SPV
Unlisted
Y Co
SPV
Listed
Listed
SPV
Y Co
Listed
Unlisted
- Merge SPV into Y Co, and get Y Co.
shares listed
Y Co
- As consideration Y Co issues shares
to shareholders of SPV i.e. Parent
Co and its shareholders
Unlisted
*Structure under Alternative 2 shall be similar
Strictly Private & Confidential
Y Co. to merge into
SPV
SPV to merge into Y
Co.
Transfer of
investment
8
Listed
Issue of Shares in
Consideration
SPV
Y Co
Listed
- Merge Y Co, into SPV
- Investment of SPV in Y Co
will get cancelled. No
further shares will be
issued
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
9
Case Study - Nicholas Piramal India Ltd

Scheme of Arrangement between Nicholas Piramal India Ltd. (NPIL) and Kojam Fininvest Ltd. (KFL) for transfer of 53.76%
stake of Gujarat Glass Private Ltd. (GGPL) held by NPIL to KFL

Appointed Date – 01st July 2003, Effective Date – 22nd December 2003
Prior to Scheme of
Arrangement
Prior to the
Appointed Date
Pursuant to a Scheme of
Arrangement
KFL Merged into GGL
in 2007
Shareholders
Shareholders
Shareholders
Shareholders
NPIL
NPIL
NPIL
NPIL
Listed
Listed
53.76%
53.76%
Listed
Listed
100%
0.5%
0.28%
Unlisted
GGPL
GGPL
Unlisted
Unlisted
GGPL
KFL
53.76%
Unlisted
GGL*
KFL
Listed
Issue of Shares in Consideration

KFL was incorporated on 30th June 2003
with a paid up capital of Rs. 5 Lakhs as
a wholly owned subsidiary of NPIL
Strictly Private & Confidential

NPIL transferred its stake in GGPL to
KFL pursuant to a scheme of
arrangement at book value

KFL issued its shares to the
shareholders of NPIL in the ratio of 1: 4
as consideration of such transfer and
got listed
10
Listed

KFL was merged into GGL in 2007
pursuant to a scheme of Amalgamation

The shares of GGL held by KFL were
cancelled
pursuant
to
such
amalgamation

GGL issued its shares to the
shareholders of KFL in the ratio of 1:1

GGL shares were listed in February
2008
*The company was converted into a public ltd. company in March 2007
Case Study - Nicholas Piramal India Ltd
Pre-Demerger
Post-Demerger
Present Market Cap.
EQ ( In Crs. )
38
NICHOLAS PIRAMAL
Nicholas Piramal @ 235
Price-June03
62
EQ ( In Crs. )
38
GGL @ 68
Market Cap.
1,177
Listing Price
130
Total
4,978
Sensex
3,793
Nicholas Piramal - Market Cap.
2,470
Sensex (Nov4, 2008)
10,631
Sensex
4,709
Market Cap ( x )
KFL
EQ ( In Crs. )
10
Listing Price
40
Market Cap.
40
Sensex
4,709
Total Market Cap. On
Demerger
2510
Incremental Market Cap
% Wealth Creation
Strictly Private & Confidential
11
1,333
113.3%
4,910
68
4.2
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
12
Case Study - Reliance Industries Ltd

As per the Scheme of De-merger, business of RIL was segregated into five undertakings as illustrated below. These
undertakings were hived off into four subsidiaries. Each of these subsidiaries issued its shares to the shareholders of RIL in
the ratio of 1:1

Appointed date – 01st September 2005, Effective date – 21st December 2005, Record date – 25th January 2005
Reliance Industries Ltd Shareholders
Reliance Industries Ltd
Coal based energy
Undertaking
ASSETS
Building at Goa
Shares in
Reliance Energy
Reliance Power
Hirma Power Pvt Ltd
Jayamkondam Power Pvt Ltd
Rleiance Thermal Energy Pvt
Ltd
Gas based energy
Undertaking
ASSETS
Building at Bandra (E),
Mumbai
Shares in
Reliance Patalganga
Power Ltd
Liabilities
Related Loans
Liabilities
Related Loans
Reliance Energy Ventures
Ltd
Strictly Private & Confidential
Financial Services
Undertaking
ASSETS
Building in New Delhi
Shares in
Reliance Capital
Reliance General Insurance
Reliance Life Insurance
Liabilities
Related Loans
Telecom
Undertaking
ASSETS
Building, Plant & Machinery, Vehicles
and Equipment located at various
locations
Receivables for capital leases
Shares in
Reliance Communication Infrastructure
Reliance Telecom
Reliance Infocomm
World Tel holding Ltd
Preference shares of Reliance
Telecomm
Liabilities
Related Loans
Reliance Natural Resources
Ltd (formerly Global Fuel
Management Services Ltd.)
Reliance Capital Ventures
Ltd
13
Remaining
Undertaking
Reliance Communications
Ventures Ltd
Petrochemicals, Oil & Gas,
Textiles and other business
Case Study - Reliance Industries Ltd (Contd)

Scheme of Arrangement between Reliance Industries (RIL) and Reliance Capital Ventures Ltd. (RCVL) for demerger of
financial services undertaking to RCVL

Scheme of Arrangement between RCVL and Reliance Capital Ltd (RCL) for amalgamation of RCVL with RCL

Demerger Scheme - Appointed Date – 01st September 2005, Effective Date – 21nd December 2005
Prior to Schemes of
Arrangement
Pursuant to Scheme
of De-merger
Pursuant to Scheme
of Amalgamation
Shareholders
Shareholders
Shareholders
RIL
RIL
RIL
Listed
Listed
De-merger of
Financial Services
Undertaking
42.70%
RCL
RCL
Listed
42.70%
Listed
RCVL
Issue of Shares
in Consideration
Listed
RCVL merged into
RCL
RCL
RCVL
Listed
Listed
Issue of Shares in Consideration
- RCVL was incorporated on 3rd September 2004 and the
financial services undertaking of RIL was transferred
through the scheme of demerger to RCVL
- RCVL issued its shares to the shareholders of RIL in the
ratio of 1:1 as consideration of such transfer
- RCVL got listed through the scheme of demerger
Strictly Private & Confidential
14
- RCVL was merged into RCL in 2006 pursuant to a
scheme of Amalgamation
- RCVL shareholding in RCL was cancelled pursuant
to such amalgamation
- RCVL shareholders received shares of RCL in the
ratio of 5:100
Case Study - Reliance Industries Ltd (Contd)
• Scheme of Arrangement between Reliance Industries (RIL) and Reliance Natural Resources Ltd. (RNRL) for de-merger of gas
based energy undertaking to RNRL
• De-merger Scheme - Appointed Date – 01st September 2005, Effective Date – 21nd December 2005
Prior to Scheme of
Arrangement
Pursuant to a Scheme of De-merger
Shareholders
Shareholders
Shareholders
RIL
RIL
RIL
Listed
Post Scheme of De-merger
Listed
Listed
100%
100%
RNRL
Unlisted
Reliance
Patalganga
Power Ltd
Unlisted
Reliance
Patalganga
Power Ltd
Issue of Shares in
Consideration
100%
- RNRL issued its shares to the shareholders of RIL in the
ratio of 1:1 as consideration of such transfer
- RNRL shares were be listed pursuant to such scheme
- RIL Shareholding in RNRL was cancelled pursuant to the
scheme
Strictly Private & Confidential
Listed
RNRL
Listed
- RNRL was incorporated on 24th April
2000 with a paid up capital of Rs. 5
Lakhs as a wholly owned subsidiary
of RIL
RNRL
15
Reliance
Patalganga
Power Ltd
Case Study - Reliance Industries Ltd (Contd)
Pre-Demerger
Post-Demerger
RIL
Present Market Cap.
RELIANCE Inds.
RIL @1455.20
229,018
RCOM @250
51,704
EQ ( In Crs. )
1,394.15
EQ ( In Crs. )
1394.2
Price-Jan '06
850
Listing Price
730
RNRL @56
9,088
Market Cap.
118,490
Market Cap.
101,762
RCAP @740
18,154
Sensex
10,370
Sensex
10,735
Total
RELIANCE CAPITAL
RELIANCE COMMUNICATION
Sensex (Nov4, 2008)
EQ ( In Crs. )
245.63
EQ ( In Crs. )
611.5
Price-Jan '06
450
Listing Price
300
Market Cap.
9,950
Market Cap.
36,660
Sensex
10,370
Sensex
10,735
RNRL
EQ ( In Crs. )
611.57
Listing Price
17.5
Market Cap.
2,269
Sensex
10,565
RELIANCE CAPITAL
Strictly Private & Confidential
Listing Price
500
Market Cap.
10,436
Sensex
10,735
Total Market Cap. - Demerger
151,127
Incremental Market Cap.
22,687
% Wealth Creation
19.1%
16
Market Cap ( x ) - Since Jan'06
307,964
10,631
2.6
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
17
Case Study - Bharat Forge

Bharat Forge – Significant Group Company holdings and non core assets

BF Utilities – All businesses apart from forging business demerged into BF Utilities
Post-Demerger
Pre-Demerger
BHARAT FORGE
EQ ( In Crs. )
18.83
Price – Aug 01
12
Listing Price
Market Cap.
250
Market Cap.
Sensex
2,812
Present Market Cap.
Sensex
BHARAT FORGE @ 110
2,417
10
BF UTILITIES @ 735
2,770
200
Total
5,187
Sensex (Nov4, 2008)
10,631
3,279
BF UTILITIES LTD
Listing Price
18
Market Cap.
54
Sensex
3,279
Total Market Cap.- Demerger
Incremental Market Cap.
% Wealth Creation
Strictly Private & Confidential
Market Cap ( x ) - Since Aug 01
18
254
4
2%
20.7
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
19
Some more cases….
ZEE Telefilms
Pre-Demerger
EQ ( In Crs. )
Price - Dec ' 06
Market Cap.
Sensex
43.35
300
12,990
14,090
Post-Demerger
ZEE Entertainment
EQ ( In Crs. )
Listing Price
Market Cap.
Sensex
WWIL
EQ ( In Crs. )
Listing Price
Market Cap.
Sensex
ZEE News
EQ ( In Crs. )
Listing Price
Market Cap.
Sensex
DISH TV
EQ ( In Crs. )
Listing Price
Market Cap.
Sensex
Total Market Cap. - on Demerger
% Wealth Creation
Present Market Cap.
ZEE Entertainment @ 154
WWIL @13
Zee News @ 40
Dish TV @ 18
Total
Sensex (Nov4, 2008)
Market Cap ( x ) - Since Dec.06
Strictly Private & Confidential
43.36
275
11,924
13,362
21.72
130
2,824
13,362
23.98
40
959.2
13,362
42.82
110
4710.2
13,362
20,417
57.2%
6,684
273
944
1,682
9,583
10,631
0.7
GE Shipping
GTL
Pre-Demerger
Pre-Demerger
EQ ( In Crs. )
190.34
EQ ( In Crs. )
85.69
Price June 06
240
Price -July06
140
Market Cap.
4,567
Market Cap.
1,198
Sensex
11,699
Sensex
10,744
Post-Demerger
Post-Demerger
GE SHIPPING
GTL
EQ ( In Crs. )
152.27
EQ ( In Crs. )
85.3
Listing Price
225
Listing Price
150
GE Shipping - Market Cap.
3424.5
Market Cap.
1,280
Sensex
13,385
Sensex
13,137
GREAT OFFSHORE
GTL Infra.
EQ ( In Crs. )
38.12
EQ ( In Crs. )
320
Listing Price
730
Listing Price
25
Market Cap.
2781.3
Market Cap.
800
Sensex
13,385
Sensex
13,137
Total Market Cap. On Demerger
6205.8
Total Market Cap. On Demerger
2079.5
Incremental Market Cap Attained
1638.6
Incremental Market Cap Attained
881.1
% Wealth Creation
35.9%
% Wealth Creation
73.5%
Present Market Cap.
Present Market Cap.
GE Shipping @ 210
3,212
GTL @ 196
1,855
Great Offshore @ 337
1,253
GTL Infra. @ 38
2,964
Total
4,464
Total
4,819
Sensex (Nov4, 2008)
10,631
Sensex (Nov4, 2008)
Market Cap ( x ) - Since June ' 06
20
10,631
1.0
Market Cap ( x ) - Since July 06
4.0
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
21
Case Study - Sterlite
Listing
1993
1997
2000
2002
Aug 2007
Rights cum
Public Issue
Merger of
Sterlite
communications
with Sterlite
Demerger of
Sterlite optic
from Sterlite
Acquisition of
HZL from GoI
ADR $2 bn
1993
1996
1997
1998
2000
2001
2002
2003
1996
Sterlite
Communications
IPO Setup as a
subsidiary
Strictly Private & Confidential
1998
2001
2003
Indal Hostile
takeover bid
Acquisition of
Balco from GoI
$1 bn Vedanta
Listing
22
2007
Three Tier Structure
Vedanta
Sterlite
Balco
Hind Zinc
Sterlite Energy
Copper Mines
Strictly Private & Confidential
23
Vedanta Alumina
Creating Value for Promoter
Promoter Holding
Mar-01
Mar-02
Mar-03
Mar-04
Indian Promoters
1.5%
1.5%
0.0%
0.0%
Malco
0.0%
4.6%
7.1%
35.4%
35.4%
PAC
1.6%
Employee Trust
Twinstar Holding
Total
Market Cap (Rs. Crs)
Events
Strictly Private & Confidential
Mar-05
Mar-06
Mar-07
Mar-08
7.1%
4.7%
4.6%
4.6%
3.61%
55.1%
60.2%
73.6%
72.3%
72.3%
56.98%
1.6%
4.3%
4.0%
0.0%
7.4%
11.5%
7.0%
3.2%
3.2%
3.2%
2.51%
38.5%
50.4%
78.1%
78.3%
81.5%
80.0%
80.1%
63.1%
167
228
210
576
1606
4569
26158
50579
EWT+ Malco
EWT+
Malco+
Buyback
Creeping
Rights
24
ADR
Agenda
ENAM
About Restructuring
Case Study - Value Creation through listing
Nicholas Piramal India Ltd
Reliance Industries Ltd
Bharat Forge
Other Cases
Case Study – Control & Ownership
Sterlite
TV 18 India Limited
Strictly Private & Confidential
25
Case Study - TV 18 India Limited

Objective


Consolidate their media business which creates a Group structure (and reorganize capital its own capital) that is
expected to unlock significant shareholder value.
Pre Scheme Scenario

“CNBC Awaaz” and the general news English Channel – “CNN IBN” were held in promoter entities & legally not part
of the listed entity, due to government restrictions
TV 18 India Limited
Promoter owned Holding company
CNBC TV 18 – English business news channel
Awaaz – Hindi Business and Consumer Channel
Moneycontrol.com – Financial portal
IBN – General News Channel(s)+ Portals
Commoditiescontrol.com –Commodity info portal

August 22, 2003 News Uplinking Guidelines-

Eligibility criteria for an applicant company desirous of uplinking news and current affairs TV channel(s) from India

It is registered / incorporated in India under the Companies Act, 1956;

Foreign direct investment in the applicant company does not exceed 26% of the total paid up capital *



Indian shareholder to hold at least 51% of the total equity (excluding the equity held by Public Sector Banks and
Public Financial Institutions as defined in section 4A of the Companies Act, 1956) in the new entity
TV18 was non compliant and hence would not have got necessary licenses to operate the business; its current
license on CNBC-TV18 was under threat
Reason for proposed restructuring

Compliance with uplinking norms

Forced restructuring allows opportunity to consolidate businesses for TV18 Shareholders
Strictly Private & Confidential
26
Case Study - TV 18 India Limited (cont’d)

Scheme

Demerger of Media Investment Undertaking

Merger of Indian News Business Undertaking of SGA News Limited


Consolidation of both AWAAZ and CNN IBN Channels
Existing shareholder of TV18 holding 10 shares of face value Rs 10 each would end up with

12 shares of face value Rs 5 each in Network Ltd
14 shares of face value Rs 5 each in TV18.
Shareholders of SGA News for every 1 equity share of face value of Rs 10 each would get 3.67 shares of face value of
Rs 5 each to




Mr. Raghav Bahl transferred 2,868,225 Equity shares of face value Rs.10/- per share (Prior to the Record date) to
Network 18 Media and Investments Limited pursuant to the Scheme
Implications

Creation of 2 listed entities

Network 18 would be the holding company for strategic and financial group investments and TV 18 would act as
the operating company

No effective dilution for TV18 Shareholders

30% Reduction in capital

Funding Options for Growth improve manifold
Strictly Private & Confidential
27
Case Study - TV 18 India Limited (cont’d)
Post-Demerger
Pre-Demerger
Present Market Cap.
EQ ( In Crs. )
26.20
TV 18
TV18 @ 85
Price - Sep'06
600
EQ ( In Crs. )
28.28
Market Cap.
1,572
Listing Price
630
Sensex
12,962
Market Cap.
Sensex
1,610
3,553
Sensex (Nov4, 2008)
10,631
14,403
Market Cap ( x ) - Since Sep.06
EQ ( In Crs. )
25.43
Listing Price
300
Market Cap.
1,524
Sensex
14,403
Total Market Cap.- Demerger
5,077
Incremental Market Cap.
3,505
% Wealth Creation
223%
28
610
Total
NETWORK 18
Strictly Private & Confidential
NW18 @ 100
1,000
1.0
Strictly Private & Confidential
Thank You
ENAM Securities Pvt. Ltd.
801, Dalamal Tower, Nariman Point,
Mumbai- 400021
Tel – 91-22-6638 1800, Fax – 91-22-2284 6824