Tag: EIL

ETC board okays share-swap ratio for merger

MUMBAI: The boards of ETC Networks Ltd and Econnect India Ltd (EIL) have approved the share swap ratio for the merger of the two companies in their board meetings held on 2 January 2004, ETC informed the Bombay Stock Exchange.

Earlier, in a meeting held on 15 December 2003, the Zee Telefilms Ltd (ZTL) board had approved the merger of ETC Networks with another ZTL subsidiary Econnect India Ltd (EIL).

Under the approved share swap arrangement, the ETC shareholders will be entitled to three Econnect equity shares of Rs 10 each fully paid up against every ETC equity share of Rs 10 each fully paid up held by them.

However, to rationalise the resultant share capital of the merged entity EIL, the share capital of EIL will be re-organised by consolidating three shares of Rs 10 each fully paid up into one equity share of Rs 10 each fully paid up.

This means that once the amalgamation and capital restructuring of ETC and EIL are completed, the shareholders of ETC would be issued and allotted one Econnect equity share of Rs 10 each fully paid up for every equity share of Rs 10 each fully paid up held by them, that is, in the ratio of 1:1.

The name of the merged entity would then be changed to ETC Networks Ltd. The merger process is expected to be completed within a period of four-five months.

The proposed merger is subject to the approval of shareholders of the company and the Hon’ble High Courts of Judicature at Bombay and Delhi.

January 3, 2004
Zee Tele gets restructure approval, to launch religious channel

MUMBAI: The restructuring of the Zee Network continues. At a meeting held this afternoon, the Zee Telefilms Ltd (ZTL) board gave the management the go ahead to merge ETC Networks with Econnect India Ltd (EIL) another ZTL subsidiary.

The merger process is expected to be completed within five-six months. Both ZTL and ETC informed the Bombay Stock Exchange of the developments today. The boards of ETC and EIL have also approved of the proposal.

A press release issued by ZTL pointed out that the merger will be synergistic for the two companies as EIL has full fledged offices in Bangalore and Hyderabad, and a network of associates across south India.

ETC, which has plans to launch a southern language music channel, would get access to ready infrastructure courtesy the merger.

This apart ETC also intends to launch an interactive entertainment portal which it could do so immediately using the technical resources available with EIL. The merger will also help shore up ETC’s financials as the combined entity will have a better balance sheet as compared to those of the individual companies, the release states.

Earlier this year, ZTL had got board and shareholder approval to whittle down EIL’s equity capital from Rs 210 million to Rs 2.6 million. ZTL had also written off the value of its investment of Rs 614.5 million in EIL and another subsidiary Zee Interactive Learning Systems Ltd (ZILS). Consequent to this, ZTL had effected a corresponding reduction in its reserves and surplus by Rs 612.2 million to Rs 34483.6 million.

The ZTL meeting today also approved the merger of five Mauritius based operating entities viz. Software Suppliers International Ltd (SSIL), Zee Telefilms International Ltd (ZTIL – syndication of ZTL content), Zee MGM (managing movie channel MGM), Expand Fast Holding Ltd, BVI (EFHL – providing satellite services to group broadcasting companies) and Asia TV (Africa) Ltd (marketing and distributing the Zee Network in Africa) with Asia Today Ltd (ATL), Mauritius (broadcasting of Zee TV and Zee Cinema).

Addittionally, the board also put the stamp of approval on the launch of a new television channel Jagaran which would have religious content. This would be Zee’s second attempt at launching a channel on alternative lifestyles and religion after its earlier aborted attempt through Chakra in 2001.

December 15, 2003
Zee seeks to clean convergence adventure from balance sheet

MUMBAI: It is finally taking a hit in its balance sheet for its adventurous forays during the peak of the dot com and convergence craze.
Subhash Chandra’s Zee Telefilms Ltd (ZTL) is planning to write off the value of ZTL’s investment of Rs 614.5 million in its wholly owned subsidiaries, Econnect India Ltd (EIL) and Zee Interactive Learning Systems Ltd (ZILS).
Consequent to this, ZTL has proposed to effect a corresponding reduction in its reserves and surplus by Rs 612.2 million to Rs 34483.6 million.
Breakup of ZTL’s investments in EIL and ZILS:
EIL   Rs 210 million (2,10,00,000 equity shares of Rs. 10/- each)
ZILS   Rs 404.5 million (19,26,413 equity shares of Rs. 10/- each at a premium of Rs. 200/- per share)
Investments written off by Rs 614.5 million.
Reserves and surplus reduced by Rs 612.2 million.
Zee has already got board approval for the same. Now it is seeking its shareholders nod too, through an extraordinary general meeting scheduled to be held on 8 August 2003.
The move comes in the wake of a major capital reduction in EIL and ZILS, both of which have incurred heavy losses. The company has admitted that the two companies’ net worth has been totally eroded in its notice to shareholders.
While EIL has a paid up share capital of Rs 210 million, the net worth of ZILS is pegged at Rs 405.3 million comprising of paid up capital of Rs 20 million and Reserves and Surplus of Rs 385.3 million (on account of its shares being issued at a premium of Rs 200 each to ZTL).
The accumulated losses and outstanding miscellaneous expenses of the two subsidiaries as on 31 December 2002 are as given below:
Subsidiary   Accumulated losses   Miscellaneous expense not written off
EIL   163,957,067   43,397,962
ZILS   413,909,000   13,810,000
Under the proposal, the ZTL board says it wants to extinguish the losses of EIL by reducing its paid up equity share capital from Rs 210 million to Rs 2.6 million.
Similarly, ZILS will also undertake a capital reduction from Rs 20 million consisting of 2 million equity shares to Rs 500,000. The Rs 385.2 million which it got from its issue of shares to ZTL at a premium of Rs 200 per share will be shown as a credit in the balance sheet.
ZTL has said that the losses in Zils are on account of a general slowdown in the information technology business globally and those in EIL to a general slowdown in the dotcom business. This news comes in the aftermath of the dotcom slaughter, which left many Internet ventures in ruins. However, it should be noted here that regionally and globally, IT education, which was the mainstay of ZILS, was not greatly affected by the dotcom bust. Did the ZILS management follow an incorrect business model?
Despite the fact that Econnect has closed down a number of unremunerative channels on the portal and has been focusing on entertainment portals to supplement the business of its parent company ZTL, the company has not started making profits yet.
ZILS also has not been financially strong enough to generate profits even as recent efforts at non-performing operations and assets were discontinued. This despite the fact that ZILS has also closed down a number of loss making centers and has restructured the business to focus on the export of software and content development.
It is pertinent to note though, that the Zee Group has been plugging its KidZee foray into pre-primary education on its television channels with a plan to roll out 100 centres through the franchising route. The kids education initiative is being charted through ZILS.
The Zee management says the current accounting exercise will not impact its ability to service its liability in respect of the paid up or unpaid share capital.
Market analysts say the markets have already factored in losses incurred by subsidiaries of Zee Telefilms and don’t expect any reactions to the resultant capital reduction in ZTL. Following the write-off, the current assets position is expected to be more in line with Zee’s present financial position.
(Figures have been approximated to one decimal place)

January 23, 2003