ZNL and R-GECs demerger: Beneficial

The Subhash Chandra-promoted Zee Entertainment Enterprises Ltd (ZEEL) is expecting a major boost in its operating profits.

The demerger is beneficial for ZEEL in various ways ' At present it is just handling the non news and non regional channels from the Zee bouquet, but after the demerger it can use the content library more effectively as dubbing it in other languages will enable it to air it on its other language channels.

The cross selling of channels will also be possible with the increase in the cluster size.

It will also help generate cost savings in the selling and distribution expenses of ZEEL.

The redundancies would be eliminated and this will further boost the company's operating profit.

However, as per the scheme ZEEL will add - Zee Marathi, Zee Bangla, Zee Talkies, Zee Telugu, Zee Kannada and Zee Cinemalu (yet to launch) along with the assets and liabilities pertaining to these businesses.

It will also add the assets of Zee Gujarati, a discontinued channel, including programme rights and IPRs.

After the scheme, the promoters holding in ZEEL will go up to 42.82 per cent from present level of 41.50 per cent. ZNL's promoters holding will remain the same at 54.14 per cent.

Post the acquisition and the issuance of new shares of ZEEL to ZNL, the effective paid up capital of ZEEL would be Rs 484.48 million as compared to Rs 434.01 million earlier.

Therefore, ZEEL and ZNL have called for a meeting for the same to take the approval from their respective shareholders on the proposed scheme of arrangement, on December 29.