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Prime Focus is about to acquire a UK-based animation company, Clear. The company says that it will be paying £1.5 million for this acquisition.

The company's MD, Mr Namit Malhotra, says that this consolidation will come through by March'07.

Excerpts from CNBC-TV18's exclusive interview with Mr Namit Malhotra:

You are looking at acquiring company named Clear Ltd, what is the value that you are paying for the company?

The value is at about £1.5 million. Out of this, 80 per cent would be through stock, offloaded from our UK Company, VTR, which we recently acquired. About 20 per cent of it would be in cash.

What sort of synergies do you see in line of business between you and Clear?

Clear is a well-positioned company within the London post-production market. VTR is well known for its infrastructure. So there is some amount of consolidation we see within the London market by putting these two companies together. Over and above that, it is these creative people that we have acquired as part of this acquisition, would work well within India and UK. In terms of outsourcing, we can bring work from there to India and take some of our top creative work to London.

Does the company have any debt?

It is an almost nil debt company. It is a profit-making company, and last year they did revenues about £3 million.

So as a combined entity how much revenue do you see coming into your books?

As of now, we are still working out a specific structure.

Between VTR and Clear, the revenues of Clear will be merged with VTR and the VTR piece will be integrated with our Prime Focus India books. So the deal would actually enlarge the UK piece.

When is this consolidation expected to come through?

We should be able to consolidate by March'07.

There was a strategic investment of about £4.7 million from Prime Focus into VTR, could you give us details of that and would any of that be used to fund this acquisition?

That is exactly the part we are weighing in terms of how the specific structuring should be done. VTR is fundamentally a large organisation with revenues of £20 million.

They have been cash positive and the PAT is negative at this point. The £4.7 million, which we have invested, would hopefully bring about upgradation of technological infrastructure and reposition the company through its financials in the immediate term.

Is this a joint acquisition by VTR and Prime Focus? Is this going to be 100 per cent held by Prime Focus?

Finer points are being structured. It would be a 100 per cent acquisition. But whether this will be 100 per cent through VTR or Prime Focus is what we are weighing at this point.

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