The Hindu Business Line : IndusInd Media & Comm clarifies

We refer to your story titled "IndusInd Media deal with Swiss co comes under scanner" (Business Line, March 10). The impressions created by it could mislead readers into believing that our company (IMCL) has violated rules. The facts are as follows:

To comply with the provisions of the Cable Television Networks (Amendment) Act 2002, IMCL, after evaluation of various vendors, opted for Nagravision S.A. of Switzerland to be its technology partner.

Nagravision, subsidiary of the Kudelski Group, is a global leader in the field of Conditional Access System (CAS). Its technology has ensured secure access to their services to more than 35 million decoders/Set Top Boxes worldwide.

Keeping in view the long-term strategic implications of the CAS project on IMCL, a need was felt for a long-term partner instead of a mere technology vendor.

In April 2003, IMCL entered into an Agreement with Kudelski and its subsidiary Nagravision in terms of which Kudelski would subscribe to $11,914,000 worth of equity shares to IMCL for cash. IMCL would source Conditional Access Systems, Smart Cards and Set Top Boxes (STBs) from Nagravision.

In June 2003, IMCL had filed an application with FIPB, seeking approval for issue of equity shares to Kudelski. In January 2004, FIPB approved issue of 15,34,400 equity to IMCL for consideration of approximately $12 million.

Pending receipt of FIPB approval and keeping in view the need to import CAS, Smart Cards and STBs, and install them by July 14, 2003, Kudelski S.A. had deposited $11,914,000 into an Escrow Account. The funds have been utilised for purchase of CAS, Smart Cards and STBs, which have duly been imported and are being put to use in India.

IMCL, on its own, had approached the RBI for ratification of the Escrow Account and RBI was of the view that IMCL should approach FIPB in the matter, which has been done by IMCL. The issue of shares to Kudelski has been approved by FIPB in January 2004 and IMCL will issue shares to Kudelski on receipt of necessary approvals.

Viresh Dhaibar

General Manager (Legal) & Company Secretary

IndusInd Media & Communications Ltd.

Mumbai

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IndusInd Media & Comm clarifies