Asian hedge fund Altima India Master Fund is asking for removal of Raghav Bahl and Alok Verma as directors of the AIM listed The Indian Film Company (IFC). The company has been promoted by Television 18 chairman and managing director Raghav Bahl who holds 21.64% and is the single largest shareholder of the company. Altima, who holds 14.39% in IFC, has demanded appointment of Aashish Vyas and Atul Setia in their place, IFC said in a filing.
IFC has called for a extra-ordinary general meeting (EGM) on February 5, 2009, where the shareholders will vote on the issue. Altima, which has formed a group of shareholders called IFC Requisition Group (IFCRG), has said in a statement that it has about 32% of shareholders to vote in favour of its resolution. VCCircle tried to reach Bahl but he was not available.
Altima had demanded removal of Bahl and Verma in a letter on December 24, 2008. To this IFC’s board had replied on January 12, 2009 saying that “removal of Mr Raghav Bahl and Mr Alok Verma is contrary to the best interests of shareholders.” The board in its letter had asked all shareholders to vote against the proposed resolutions of Altima, to which IFCRG has now responded.
Aashish Vyas has previously worked with Motilal Oswal, and is currently running his own investment firm while Atul Setia is a partner at Altima. Vyas has no personal investment in IFC, the IFCRG has said in its statement.
The directors of IFC are Shyam Benegal (chairman), Raghav Bahl, Lord Meghnad Desai, Peter Ratford and Alok Verma.
Some of the large investors in IFC include Deutsche Bank (10.55%), Dundee Leeds Management (9.09%), Kelusa Master Fund (6.36%), BlackRock Merrill Lynch Investment Mgrs (6.18%), Elara Capital (3.22%) and Viacom Brand Solutions (4.55%). Altima initially held a 1.32% stake in the firm, and has gradually increased it to 14.39%.
IFC had raised £55 million through issue of 55 million shares at £1 in June 2007 to invest in Indian films. Altima, along with other shareholders, has complained that the returns received by IFC have not materialised into returns for shareholders. Some of the films released by IFC are Jab We Met, Welcome, Singh is Kinng and the latest is Aamir Khan starrer Ghajini. All of these films have performed well at the Indian box office.
The net asset value of IFC as of 30 September, 2008 was 99.42 pence per ordinary share, which has now fallen to around 30 pence. IFC has in the first 18 months of operation produced a total net profit of £3.4 million (of which £2.0 million was earned in interest) on initial equity capital of £52.8 million.
IFCRG plans a “review of the business, including an assessment of past performance and future strategy” if its resolutions are passed. It also plans a review of accounting policies and methodology, among other things.