MUMBAI: Hinduja TMT board has approved demerging its media business into a separate listed entity.
The proposal put forward by the management is to have two debt-free listed companies with mirror shareholding. While information technology and telecom businesses will form part of the technology company, media including film content and cable TV distribution and broadband will be part of the new entity. In Fascel which is a cellular service operator, HTMT has made a financial investment and is planning to sell its stake at the appropriate time.
The board, which met today, has authorised a committee of directors to work out a detailed scheme to carry forward this demerger process.
"We plan to have two listed entities and are working out the details. But in the media company, this will not stop each of the individual segments to pursue their own interests," says HTMT CEO and MD K Thiagarajan.
Apart from its core business which is IT, HTMT has presence in media (film content, cable TV distribution network) and broadband businesses through its subsidiaries. It also has substantial investments and other liquid assets.
Explaining the rational for the demerger, the company says the good show of both the IT business and the Media & Broadband businesses has given it the confidence to explore newer avenues and for that it felt the necessity to have two separate listed companies concentrating on the two branches.
The recent acquisition of Source One Communications Inc, USA and Customer Contact Centre Inc, Philippines has provided the company with global delivery capabilities. On the other hand, the media & broadband businesses , powered by high investments, looks at expansions through alliances, partnerships, strategic investments and joint ventures including mergers & acquisitions, informs a company release.
"The restructuring exercise will not only unlock value for the shareholders in the short term, the new entities will achieve their individual business objectives faster & better than before, thereby creating further value for the shareholders in the long term," says Thiagarajan.
The board also declared HTMT's results. For the quarter ended December 2004, Hinduja TMT Ltd has posted a net profit of Rs 226.806 million, as compared to Rs 225.461 million a year ago. Total income has increased from Rs 456.871 million in Q3-03 to Rs 468.620 million for the quarter ended 31 December 2004.
