| Chandra: Consolidation mode
Mumbai, Dec. 15: Zee Telefilms took a step forward in its consolidation process by approving a proposal to merge ETC Networks with Econnect India — both subsidiaries of the company. The merger will be completed in five to six months.
The board also decided to merge five Mauritius-based operating entities, including Software Suppliers International, Zee Telefilms International, Zee MGM, Expand Fast Holding, BVI and Asia TV (Africa), with Asia Today, Mauritius.
Zee Telefilms said these steps form part of the corporate restructuring of its Indian and foreign subsidiaries.
The Zee network airs channels ranging from entertainment to fashion. To woo the religiously inclined, the Zee board also plans to launch a new channel called Jagaran which will have religious content.
The exchange ratio of shares for the merger of its subsidiaries, ETC Networks and Econnect India, would be determined by Deloitte Haskins and Sells, an independent valuer.
Zee Telefilms had reduced its IT-related operations, which were spearheaded by Econnect. However, Econnect is maintains web portals of the Zee group and independent companies.
Econnect has state-of-the-art computer hardware and software and process-skilled manpower. It plans to launch a music channel in the south. However, Zee does not have any organisational capabilities in the south. “Setting up of independent offices will require time and an additional capital outlay which will adversely affect existing operations,” Zee said.
“The merger of ETC and Econnect would help ETC to kick off plans for the southern markets without much delay or additional outlay,” Zee said.
Moreover, ETC’s plans to launch an interactive entertainment portal would get an immediate boost by combining these two entities. Zee expected the financial condition of the merged entity to show an improvement as compared with the stand-alone financials of each of the companies because the bulk of accumulated losses of Econnect was written off against reduction of its capital.
“The merger would create a win win situation for all stakeholders of Zee Telefilms and ETC Networks and the available manpower, technical and financial resources of Econnect would create value for all,” said Vikas Gupta, company secretary & Sr. VP finance of ZTL.