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Malaysia’s Astro to increase stake in Sun Direct
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New Delhi: Malaysia’s Astro Group is planning to increase its stake in Sun Direct, India’s No.2 direct-to-home (DTH) player. The Group already holds 20% stake in Kalanithi Maran’s DTH venture through its subsidiary South Asia Entertainment Holdings. The move takes advantage of recent changes in the way FDI in Indian companies is calculated.

According to the proposal submitted to the foreign investment promotion board (FIPB), Astro will pick up 37.50% stake in Kal Media Services, a company owned by the Maran family. Kal Media Services will then pick up 40% stake in Sun Direct TV, giving Astro an effective indirect stake of 15% over and above its existing 20% stake. This will take Astro’s effective total control over Sun Direct to 35%.

However, the new FDI calculation formula does not recognise foreign stakes in investing companies like Kal Media as FDI, so long as they are owned and operated by resident Indians. So, Astro’s FDI in Sun Direct will remain at 20%, even though its effective control will touch 35% (20%+15%). As per earlier rules, FDI would have touched 57.5% (20% direct stake + 37.5% in Kal Media) well above the permitted 49% ceiling. As per the earlier formula, even the indirect foreign investments in locally-owned firms was counted as foreign investments.

Full Story: Sun Direct Blog

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