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A merger of ETC Networks with ZTL is also likely but the officials did not confirm this possibility.

Mumbai , Dec. 8

ZEE Telefilms Ltd (ZTL) is considering merging some of its wholly-owned subsidiaries with itself as part of its restructuring process.

The possibility of the merger of ETC Networks with ZTL is also on the cards as the boards of both companies are meeting on December 15 to "consider corporate restructuring plans."

Currently, ZTL has 18-20 subsidiaries formed during the process of organic and inorganic growth over the years.

In February 2002, ZTL's board had approved the company's restructuring proposal, which entailed merging some of its subsidiaries with the company.

The primary intention of the merger is to simplify ZTL's corporate structure, an official said. The company had assumed a multi-layered and complex structure in the process of organic and inorganic growth. "Changes in the regulatory and tax framework over time have prompted us to look at merging these subsidiaries with ZTL," said the official.

The merger would bring in some operational efficiencies and cost savings, officials added.

Four subsidiaries have already been merged with ZTL since the February 2002 announcement.

A merger of ETC Networks with ZTL is also likely but the officials did not confirm this possibility.

As of December 2002, ZTL had a 51.01 per cent stake in ETC Networks, mutual funds and UTI 16.27 per cent, foreign institutional investors 4.60 per cent, private corporate bodies 16.47 per cent and public 10.40 per cent. ETC Networks runs two channels — ETC Music and ETC Punjabi.

Equity analysts tracking this sector said this merger, if true, could augur well for the shareholders of ETC. "No doubt, ETC is doing well but its shareholders would be better off holding shares of ZTL as it is a more integrated company. Also, there is a greater risk for ETC as it operates in a niche area," an analyst said.

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