NEPC pulls off a coup

The Khemkas – Mr. Ravi Prakash Khemka, Mr. Raj Kumar Khemka and Mr. T. K. Khemka – of the Chennai-based NEPC group are sure learning fast. Famous for tapping the market for its various ventures, the NEPC group recently concluded a steal deal for its associate, Sai Televisions Ltd., by swapping 5 per cent of the company's equity for 50 per cent stake in a US-based Voice over Internet Protocol (VoIP) start up, PointCLIK Communications. Relatively unheard of, the Sai Televisions’ scrip was valued at a whopping Rs. 500 for the purpose!

Consequently, the company’s name is to be changed to Sai Television and Communication Ltd, and the objects clause of the company’s incorporation documents will also be amended suitably.

But what is really interesting about the deal is the high valuation of the share of Sai Televisions, a media company not many have heard of despite high quotes at the National Stock Exchange (NSE).

Sai Televisions is the company that owned the now-defunct NEPC TV. The Khemkas’ penchant for tapping the public for funds resulted in the company raising Rs. 5 crore from the market. While the promoter family holds 24 per cent, the public holds the rest.

Despite its insignificant revenues and profits, Sai Televisions' scrip has been changing hands at unbelievable prices since last March. The scrip went up to Rs. 546 and is now trading in the Rs. 250 band. Though the scrip closed at Rs. 238.30 at NSE on 1 February 2001, it should be noted that there were just four trades and 1,000 shares changing hands, if at all they actually changed hands.

"The company posted a turnover of Rs. 5 crore and a profit of Rs.10 lakh by hiring out TV programs produced for NEPC TV. This year, we will do better," assures Mr. Raj Kumar Khemka, vice-chairman of the NEPC group. According to him, Sai Televisions has more than 3,000 hours of programs already hired out.

The memorandum of understanding (MoU) with PointCLIK is to set up VoIP gateways in at least eight Indian cities and sell pre-paid/post-paid phone cards as soon as the government permits Internet telephony in the country.

While PointCLIK will bring in the required money for setting up the infrastructure, Sai Televisions will do the local spadework. The US company has an equity base of $10 million funded by private investors.

Announcing the tie-up, Mr. Eddie Yates, president and chief executive of PointCLIK, said, "Eight gateways, each at an outlay of $1 million, will be put up in India. As the demand in Asia is big, we are looking at the Asia-Pacific Rim." Customers of PointCLIK will be given
access to private network of 250 gateways to be set up by 2003. Calls will be carried by these private gateways.

According to Mr. Yates, PointCLIK currently offers its services in Honolulu, Tokyo and various other areas in Japan. By buying the phone cards – similar to virtual calling cards offered by basic service providers – one can dial an overseas number using the regular landline. The VoIP takes the voice from the local phone system in an analog form and converts it into digital signals, transmitting it in a private network, he said.

When questioned about competition from other free phone services like dialpad.com, Mr. Yates did not sound perturbed and said that the quality of voice in PointCLIKs' network would be superior to that of others.