The Board of Directors of the Company in their meeting held today has approved measures to strengthen the Company’s Corporate Structure in line with its planning for corporate restructuring aimed at additional simplification and operational efficiency.
The Board of Directors of the Company has approved merger of two of the Company’s subsidiaries viz. ETC Networks Limited and Econnect India Limited. The proposal of merger have also been approved by the respective Boards of ETC and Econnect. The exchange ratio of shares would be determined by an independent valuer, Deloitte Haskins and Sells have been appointed for this purpose.
As reported earlier, ZTL had substantially reduced its IT related operations, which were spearheaded by Econnect. However, Econnect remains engaged in the business of maintaining web portals of Zee group and independent companies.
Econnect has state of the art computer hardware and software and process skilled manpower and technical resources in a geographically distributed operations. Econnect has technical and field strength and fully equipped offices in Bangalore and Hyderabad and a network of associate spread across southern states.
ETC has business expansion plans of launching a music channel in Southern languages. So far it does not have any organisational capabilities in Southern states. Setting up of independent offices would have required time and additional capital outlay which would have adversely affected its existing operations and acquisition of local knowledge would have been time consuming. The proposed merger of ETC and Econnect would enable ETC to embark upon plans for the southern markets without much delay or additional outlay. Further, ETC’s plans to launch an interactive entertainment portal would get an immediate kick start on combining these two entities. The financial condition of merged entity will show improvement as compared to stand-alone financials of each of the companies in view of the fact that the bulk of accumulated losses of Econnect were recently written off against reduction of its capital.
The merger of two entities would create a win win situation for all stakeholders of Zee Telefilms and ETC Networks Limited and available manpower, technical and financial resources of Econnect would create value for both the entities as well as its shareholders, said Mr. Vikas Gupta, Company Secretary & Sr. V.P. Finance of the Company and Director – Finance of ETC Networks Limited.
In a second decision, the Board has approved merger of all its Mauritius based subsidiaries into single operating company. As of now there are 6 Companies located in Mauritius.
Software Suppliers International Ltd (SSIL), engaged in the business of marketing company’s products in middle east and broadcasting of TRENDZ channel,
Zee Telefilms International Ltd (ZTIL), engaged in international syndication of ZTL content,
Zee MGM, engaged in managing and broadcasting, Zee MGM Channel,
Expand Fast Holding Ltd, BVI (EFHL), engaged in the business of providing satellite services to group broadcasting companies,
Asia TV (Africa) Ltd. earlier engaged in the business of marketing and distribution of Television channels in Africa including South Africa.
All these companies shall now merge with Asia Today Ltd. (ATL), Mauritius which was so far engaged in the business of broadcasting Zee TV and Zee Cinema channels.
The Company has earlier re-organised its international business operations whereby most of the television channels incl. Zee Cinema, Zee News and Alpha Channels have been shifted to India. The broadcasting operations of Zee TV will also be shifted to India, soon.
Mr. Rajiv Garg, CEO, Corporate Finance and Strategy, Essel Group and MD, ETC Networks Ltd. said that “today’s Board decision is the outcome of the ZTL’s commitment to a simplified and operationally efficient corporate structure besides bringing in greater transparency. The restructuring of Indian and foreign subsidiaries of ZTL would make its corporate structure more tuned to its current business requirements while keeping it well equipped to all its needs in the current domestic and international business environment”.
It is pertinent to recall that in the 1st phase of restructuring, the Company has already consolidated its structure by merging with itself four of its wholly owned subsidiaries viz. Dakshin Media Ltd, Kaveri Entertainment Ltd, Programme Asia Trading Company Ltd and El Zee Television Ltd and hiving off three overseas subsidiaries from the network viz. LLTV UK, Hokushan Trading Company and Asia TV USA. The capital structure of E-connect India Ltd. (‘EIL’) and Zee Interactive Learning Systems Ltd. (‘ZILS’) were restructured so as to reflect true and fair view of their state of affair. Accordingly, the accumulated losses of Rs.200 million of EIL and Rs. 400 million of ZILS were adjusted out of their respective share capital.
The above exercise has resulted in tax saving, diminishing goodwill from accounts besides resulting in benefits of eliminating redundant entities and thereby bringing additional transparency and operational efficiency.