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ESOP stands for - Employee Stock Option Scheme where in u offer the stocks (Shares) of the company to the employees at a subsidized rate

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CASE STUDY- ZEE TELEFILMS LTD

Zee Telefilms Ltd., a blue chip Indian company has had an allocation plan like this:

• Zee Telefilms issued 4,60,000 ESOPs convertible into equity shares of Rs. 10 each, to about 70 employees in 1999.

• Each of the 70 employees was eligible to apply for between 3,000 to 7,000 shares at Rs. 212 (USD 4.80) at which time, the shares were being traded at Rs. 4,225 (USD 94.55) on the Bombay Stock Exchange (BSE)

• Shares were issued in three equal parts

 One-third of the shares, allotted is freely transferable

 Another one-third is locked in for one year from the date of allotment of shares

 The balance is locked in for a period of two years from the date of allotment.

History Of Company – ZEE TELEFILMS

1982

- The Company was incorporated on 25th November, and it obtained the Certificate of Commencement of Business on 5th January 1983 as Empire Holdings Ltd. in the state of Maharashtra. It was promoted by the Essel group of companies, comprising Sanjay Badgamia, Vasant Parekh and Ashok Kothari. The main object of the company the business of entertainment software.

1992

- It entered into the business of entertainment software and subsequently the name was changed to ZEE Telefilms Ltd. The Company co-promoted Essel Packaging Ltd. the partnership company of the Essel group in 1982.

- The Company produces/develops Hindi films, serials, game shows, children programmes etc. The Company would also commission serials, game shows etc., through directors/producers on contract basis, purchase rights of Hindi films, serials and other programmes from the producers for a predetermined period.

- 70 No. of Equity shares subscribed for by signatories to the Memorandum of Association. 2,47,930 No. of equity shares of Rs 10 each were then issued at par of which 97,930 shares reserved for allotment to directors, their relatives etc. Balance 1,50,000 shares issued to public on 25th February 1986. 4,96,000 shares offered in rights basis in proportion 2:1.

1993

- ASSPL became a wholly owned subsidiary of the Company. During the year, the Company entered into an agreement with the Mauritus Broadcasting Corporation for supply of programme software to ZEE TV.

- During August, the Company issued 89,28,000 rights equity shares of Rs 10 each at a premium of Rs 20 per share in proportion 12:1. Another 90,00,000 shares were offered at a premium of Rs 20 per share through a prospectus as follows: 9,00,000 shares and 27,00,000 shares reserved for allotment to FIIs and NRIs (repatriation basis) respectively. Only 21,90,300 shares taken up by NRIs. Of the balance 10,000 shares reserved for allotment on preferential basis to employees (only 4,100 shares taken up). Remaining 45,90,000 shares along with 5,15,600 shares not taken up were issued to the public (of these 4,98,000 shares taken up by FIIs and 17,600 shares by public).

1994

- The Company promoted Siti Cable Venture for provision of integrated cable network facility to individual cable operators on a city by city basis and function as a city TV station.

- The Company also proposed to develop Pay TV industry and with this in view is jointly promoting Zee Cinema, the first Hindi movie Pay TV Channel along with the News Corp Group.

1995

- The Company alongwith Newscorp promoted another company viz. Programme Asia Trading Company Private Ltd. (PATCO) for programme supplies to EL TV and Zee Cinema Channel.

- Asia Today Ltd. and Zee Telefilms Ltd. entered into a sale and purchase agreement for production, procurement and provision of Hindustani entertainment software from India and export the same to Hongkong for transmitting such software on ZEE TV Channel.

- As per the agreement entered into between ASSPL & ATL the former has been approached as a sole canvassing agent for booking and selling advertisement slots or time slots throughtout India directly or through advertising agencies for relaying on the Zee TV.

- 4,00,000 Redeemable Cumulative Non-Convertible Pref. share issued during the year.

1996

- Pref. shares redeemed during the year.

1997

- 3,00,000 pref. shares issued.

- Walt Disney animation films will be telecast every day for two hours on Zee TV from February 1 following an agreement reached between Buena Vista Television India and Zee.

- In order to bring the first of its kind `Zee Cine Awards' to millions of TV viewers across the globe, the Zee Network has tied up with the 150-year old world audit major, Price Waterhouse (which incidentally is the auditing firm for the Oscar awards also) and the market research firm Gallup MBA.

1998

- A Letter of intent was signed on 14.04.98 between Zee Network and EchoStar Communications Corp, to launch Zee's Hindi family entertainment channel on EchoStar's direct-to-home (DTH) satellite services for television audiences in the US.

- The Zee Network, which runs the Zee family of channels, is foraying into the print media with the launch of a film magazine christened Cine Zee. The magazine will be launched in August.

- Zee has also signed an agreement with Deutsche Telecom for beaming in Germany. It is also negotiating with leading cable companies in Sweden.

- Subhash Chandra-promoted Zee Telefilms (ZTL) and the holding company for the Zee Network, Asia Today Ltd (ATL) may be merged.

- Equity shares and convertible debentures of Zee Telefilms Limited can now be purchased up to 30 per cent of its total paid-up equity capital subject to certain conditions. - Apart from the three Star India channels - Star News, Star Plus and Star Movies - Asia Today Ltd (ATL), the 50:50 joint venture between Chandra and Murdoch; Siticable, the 50:50 joint venture between Zee Telefilms and murdoch; and Chandra's Zee Multimedia, which owns the UK, US, African and European Zee channels, will be merged with Zee Telefilms.

- Zee TV and Tata Tea Ltd have won the 1997-98 Ficci awards for creativity in visual media and training and placement disabled persons respectively.

- Siti Cable and Zee Telefilms Ltd (ZTL) have merged their operations. Siti Cable is a 50:50 joint venture between Subhash `Zee TV' Chandra's Essel group and Rupert Murdoch who controls Star TV.

- Zee Telefilms will launch its cable Internet services in 4-6 months through its sister concern SitiCable. The company will provide unlimited Internet access (24 hours) over cable and will not charge its customers for Net-surfing.

1999

- As part of its expansion plans, ZTL will increase its authorised capital from Rs 50 to Rs 75 crore.

- Zee Telefilms Ltd (ZTL) shareholders approved an increase in the company's authorized share capital from Rs 50 crore to Rs 75 crore to safeguard itself from any fund shortfall required for the ambitious projects envisaged in the face of technological convergence.

- Subhash Chandra-promoted Zee Telefilms Ltd (ZTL) has tied up with French major Canal Plus for its proposed digital TV service, a precursor to a KU-band direct-to-home (DTH) service.

- ZEE TV will launch three new channels in Europe and start broadcasts in eight regional languages in India during an action-packed six months expansion programme.

- Zee Telefilms Limited (ZTL) will soon launch three English language channels, including a news channel called the Asian News Network, thus taking head-on its partner-turned-competitor Star TV.

- Zee TV upto 1999 has been operating four channels, three of which were being played out of STAR TV facility in Hong Kong on lease basis. With the growth of the network into eleven channels, the launch of the DTO bouquet and the Alpha channels including the English channels, a decision was taken to install a fully owned facility in Singapore which can play-out ten channels. This facility was set up in a record time of three months and has been fully operational since middle of March 2000.

- In September 1999, ZTL acquired Zee Multimedia Worldwide Limited (ZMWL). Following this acquisition, all the international operations including the broadcasting business of ZMWL came under ZTL's control. ZTL acquired NewsCorp's 50% stake in Asia Today Limited (ATL), Siticable, and Programme Asia Trading Company Ltd. and now owns 100% of these businesses. The consideration paid for the acquisition was USD 296.51 million

2000

- Zeenext.com, the Internet portal site of the company subsidiary EConnect India Ltd, and mobile Internet firm Unimobile.com that they had tied up to offer zeenext portal contents to wireless communication devices.

- Zee Telefilms has emerged as the new market mover on Dalal Street.

- Zee Telefilms signed an MoU with Asianet Communication Ltd. for consolidating Zee's entry into the South Indian regional channels.

- Zee Telefilms will set up 500 Internet kiosks, named eZee centres, across the country as part of its e-commerce initiatives, senior company.

- Zee Telefilms has been awarded the prestigious "Ground Breaker" award as the top national programmer by the US-based trade publication, Multichannel News International.

- Media and entertainment major Zee Telefilms has acquired 26 per cent stake in Aplab Ltd, an electronic equipment market.

- Zee Telefilms will launch "Basic Education Support Television" in April 2001 - a project aimed at educating the rural India through the television medium.

- Zee Telefilms Ltd's American Depository Receipts/American Depository Shares issue worth $1.5 billion.

- Zee Telefilms Ltd aims at a 1:1 debt-equity ratio for its Rs. 2,400 crore outlay to set up a fibre-optic and coaxial network across 26 cities in the country.

- The Company and TransWorld International have joined their bids for the telecast rights for the cricket World Cup tournaments for 2003 and 2007.

- Zee Telefilms subsidiary Zee Publishing has been hived off as a separate company.

- Zee Telefilms Ltd will be launching its sports channel, tentatively christened, zee Sports, on 1st October.

- Zee Telefilms Ltd. will float a new joint venture company with the Hollywood studio, Metro Gold-wyn Mayer Inc (MGM) to operate a co-branded movie channel exclusively for the South Asian market.

- The promoter of the company Mr. Subhash Chandra will launch Zed TV, a education channel on October 12.

- Indian media firm Zee Telefilms it has signed a joint venture agreement with an infotech firm to provide direct-to-home broadcast services.

- Zee Interactive Learning Systems, a 100 per cent subsidiary of Zee Telefilms, has tied up with three public sectors undertakings and four state governments in the country to provide Web-based training initiatives.

- The Company has apppointed three whole-time directors viz. Mr. R.K. Singh, Mr. Deepak Shourie and Mr. Dev Naganad.

- The Company has entered into a joint venture tie-up with Sterling Infotech to establish a direct-to-home television services.

- Zee Telefilms, proposes to set up a niche alternative lifestyle channel targeted at the non-resident Indian Population, has decided to brand the channel as Chakra.

- The Indian Music Industry has joined hands with Zee Telefilms to present year 2000's IMI-Zee Sangeet Awards.

- Zee Interactive Multimedia Ltd., a subsidiary of Zee Telefilms, is expanding its operations to 26 cities in the next 12 to 18 months.

- Buddha Films, the company that has been working as the Zee group's platform for acquiring sports properties has been de-merged from Zee Telefilms (ZTL) and spun off as a separate, stand-along company.

- Former director operations of Videsh Sanchar Nigam Amitabh Kumar has joined Zee Telefilms as vice-president distribution and access infrastructure.

- Media baron Subhash Chandra has sold 50 lakh shares in Zee Telefilms (ZTL) to a US-based institutional investor.

- The four regional channels that form the Alpha bouquet were launched on the following dates :Alpha Marathi : 15th August, 1999Alpha Bangla : 15th September, 1999Alpha Punjabi : 18th October 1999Alpha Gujarati : 21st March, 2000

2001

- In May, 2001, Zee Telefilms has decided to induct a strategic partner, preferably an international media major to strengthen its financial and technical strengths to achieve high growth in the field of convergence. ZTL has converted its flagship Zee TV into a pay channel with effect from 10 June 2001.

2002

- Zee Telefilms has come out with Open offer to acquire 23,39,900 fully paid-up equity shares of Rs 10/- each of ETC Networks. It represens 20% of the voting equity share capital at a price of Rs 31.52/- per fully paid up equity share. The issue opens on 3rd Apr. 2002 and closes on 3rd May 2002.

-Zee Telefilms Ltd has informed that Zee TV Partners Cartoon Network, Snap Ties with Nickelodeon.

-Zee Telefilms took a controlling stake in ETC Networks in June 2002, following a memorandum of understanding (MoU) signed between the two companies in February this year. As per the MoU, Zee was to acquire 57 per cent in ETC in two stages for Rs 25 crore

INFOSYS LTD (Not part of presentation)

1994 - EMPLOYEE STOCK OFFER PLAN

The company instituted an employee stock option plan (ESOPs) in 1994 for all eligible employees. Under the plan, warrants were transferred to employees deemed eligible by the advisory board constituted for the purpose. Accordingly 600000 warrants, were issued by the company to the Infosys Techonologies Ltd employees trust, to be held in trust and transferred t selected employees form time to time. Warrants were issued at Rs.0.50 each and entitled the holder thereof to apply for and be issued one equity share of par value of Rs. 5 each at a price of Rs.50, after a period of five years form the date of issue. The warrants and the shares to be issued were subject to a lock-in-period of five years from the date of issue. The warrants expire on Sept.30,1999 and are convertible before their expiration. All warrants were converted into shares.

Average allotment price under this plan Rs.50 per share

1998 - EMPLOYEE STOCK OPTION PLAN

This employee option plan was specially designed for American depository receipts, to be issued outside India. In the words company the purpose of this stock option plan has been explained as below

One of the objectives of American depository share (ads) issue and consequent listing on nasdaq stock exchange was to institute an ads – linked stock option plan to attract the best and the brightest across the world. The compensation committee of the board administered the 1998 plan. The govt., of India has approved the 1998 plan. The plan is effective for a period of 10 years from the date of adoption by the board. The compensation committee of the board shall determine the exercise price for the ads-linked stock plan,

Which will not be less than 90% of the fair market value on the date of grant.

Weighted average price per option granted during 2000-01 Rs.5375

1999 - EMPLOYEE STOCK OPTION PLAN

During the year 2000, company came out with another stock option plan for its eligible employees. This plan options are to be issued to the employees at an exercise price not less than the fair price market value. Fair market value means the closing price of the company’s shares on the stock exchange where there is highest trading volume on the date of grant and if the shares are not traded on that day, the closing price on the next trading day.

Weighted average price per option granted during 2000-01 Rs.6249

I have made some recent attempts to learn about ESOP. Sir, this presentation really clarified many of my doubts. Very useful.. Thanks a lot sir! Regards, Gowri
As always, your topics and presentations are very useful.Looking forward for such regular postings
Hi

I found that a Jenny asked same question in this forum 1 month ago.

Please use search box at the top of site to find this question.
Apart from that, you also ref more information at: ESOP Books

Rgs
Dear Mr. Peer Md. Sardhar.,
I am grateful to you for sharing information which keeps novices like me enlightened. This is real hard work from your side to enable us. thank you
I have been given a task to work out ESOPs for some of our Very Senior Managers. The Company is a Pvt Ltd Coy in Software Development and wants to implement ESOPs
Could you pls advice me as to how arrive at a figure for allotment
regards
hari
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