etc and Econnect, subsidiaries of ZEE, to merge

etc Networks Ltd and Econnect India Ltd, subsidiaries of ZEE Telefilms Ltd (ZTL), will merge. At a board meeting held recently, it was decided "in principle" that the two companies would come together via a suitable exchange ratio. M/S Deloitte Haskins have been appointed to carry out a detailed valuation and propose an exchange ratio for the same.

With the merger, the accumulated losses of Econnect are set to be absorbed, which began as a provider of IT solutions but had to progressively downsize owing to the global downturn in the IT industry.

Engaged formerly in maintaining a B2B and C2C web portal apart from offering Internet services, Econnect in recent times was involved primarily in maintaining web portals of the ZEE group and independent companies of small scale.

For etc, the merger heralds good tidings since the company can embark on its plans to expand into the southern markets with a separate music channel using the infrastructure of Econnect. On the cards is also an interactive entertainment portal, which will be kick-started post the merger.

Commenting about the development, Jagjit Singh Kohli, CEO, etc Networks says, "The merger will enable etc to expand its business operations in an economical way, and Econnect's existing resources, manpower and state of the art machines would be exploited to the benefit of the merged entity".

The merger process will be completed in a period of five to six months and the equity shares of the merged entity would continue to be listed on the BSE and NSE.