Zee Telefilms (ZTL) has decided to prune the number of its subsidiaries from 23 to 12 to simplify its organisational structure.
The ZTL board at its meeting held today decided that 11 subsidiaries will cease to exist, subject to regulatory approvals, in six to eight months.
A senior ZTL official said, "The Indian entities will be merged with Zee Telefilms, while the foreign arms will be wound up."
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The companies that will go off the list are: E-Connect India, Programme Asia Trading Company, Elzee Television, Kaveri Entertainment, Dakshin Media, Winterheath Company (Mauritius), Hokushan Trading (Hong Kong), Expand Fast Holding (Netherlands), Zee Multimedia Worldwide (Netherlands), Asia TV (USA) and Zee TV SA (South Africa).
Subhash Chandra, chairman, ZTL said, "This restructuring highlights Zee's continued commitment to create value for shareholders and ensure better business practices".
Sandeep Goyal, chief executive officer, group broadcasting, said, "In the past few years, because of both organic and inorganic growth, the corporate structure of Zee had become multi-layered and complex. Also, due to subsequent changes in the regulatory and tax framework, inefficiencies had crept in. We aim to achieve better tax-efficiency and leaner corporate structure by reducing the number of subsidiaries from 23 to 12."
ZTL expects to achieve considerable savings with the closure of the subsidiaries. This would also facilitate the process of consolidation of financials of the remaining subsidiaries with that of the holding company.
The revised structure is expected to result in better utilisation of resources besides being simple and efficient from the point of view of tax, accounting practices and legal compliances.
There would have been substantial continued cost on account of keeping these companies in good standing and management, ZTL said in a media statement.
Shareholders and analysts had often publicly queried the need for so many subsidiaries saying that this led to a complex structure which was difficult to understand. Chandra had replied that this problem would be addressed in due course.
S Majumdar a media analyst at Motilal Oswal Securities said, "This will go a long way in alleviating investors concerns and bring in a lot more transparency. Most of these entities have been insignificant and their existence didn't make much sense with the government allowing uplinking from India. It is a great effort on the part of ZTL to have taken this decision".
Zee is one of India's largest media companies with a presence spanning broadcasting, programming, cable distribution, movie production, music publishing and education business. It recorded a turnover of about Rs 816.6 crore for the nine months ended December 31, 2001.