Padmalaya Telefilms shares dip to 52-week low

MUMBAI: Touching a year after Zee Telefilms acquired a strategic stake in Padmalaya Telefilms Limited (PTL) through the acquisition of a substantial stake in PTL's holding company, Padmalaya Enterprises private Limited (PETL), the shares of PTL slumped to their 52-week low on both the premier stock exchanges of the country.

On the Bombay Stock Exchange (BSE), the scrip ended the day at Rs 45.45, down 18.40 per cent, on brisk volumes of almost 354,508 shares. The earlier 52-week low was Rs 56.6. On the National Stock Exchange (NSE), the scrip closed the day at Rs 45.75, down 18.81 per cent with volumes of 139,424.

However, what is noteworthy is the fact that Zee Telefilms was one of the few media scrips which actually rose to Rs 73.25 (up 0.27 per cent) on the BSE; Rs 73 (up 0.07 per cent) on the NSE.

Padmalaya Telefilms posted a net profit of Rs 40.2 million for the quarter ended 31 December 2002 (down 39 per cent) compared to a net profit of Rs 66.1 million in the quarter ended 31 December 2001. Total income also decreased from Rs 274.0 million in the December 2001 quarter to Rs 202.3 million in the quarter ended 31 December 2002.

In a strategic move, Zee Telefilms announced in March 2002 that it planned to acquire a significant stake in Padmalaya Telefilms, one of India's leading entertainment houses with significant presence in film production and distribution, television software production and animation software.

As per the MOU executed between Zee and the promoters of PTL, Zee would acquire majority stake in Padmalaya Enterprises Private Ltd. (PEPL) which is a holding company of PTL. Since this move triggered a change in management control of PTL, PEPL with Zee acting in concert, made an open offer in accordance with SEBI guidelines. Both companies sought the requisite regulatory approvals.

At that time, Zee Telefilms CMD Subhash Chandra said "With this acquisition, Zee continues to consolidate its position as India's largest vertically integrated media and entertainment company. Zee's acquisition of PTL creates an entertainment powerhouse with unmatchable strengths in animation software, Film production-distribution and television content."

At that time, Zee was already a large, established player in the movie, music and animation business. Zee owns ZICA, one of India's best animation production units with over 100 animators with top end skills for cell animation. ZICA is currently focused on the production of Bhagmati, India's first full-length animation movie.

The key benefits of this strategic move for Zee Telefilms at that point of time were:

* Creation of a unified animation studio with capability to deliver high-end animation products for international markets.

* To capitalise on PTL's extensive experience of over 30 years in movie production and distribution.

* PTL's huge library of hit-films with over 300 films complimented Zee's strong library of more than 3,000 movie titles.

* To utilise the well-established production facilities for in-house movie projects. 

* To leverage PTL's direct control over 60 theatres in South India and its wide distribution network in South India.

* To add over 1,500 hours of television software in Telugu, Tamil and Kannada to the existing Zee library (Zee has two satellite channels Bharathi (Tamil) and Kaveri (Kannada) and one cable channel in Telugu serving the Southern market). 

Benefits to PTL

* Zee's existing international operations, with offices in the US, Canada, UK, Dubai, Singapore, Hong Kong and South Africa would help PTL gain direct access to buyers overseas for its animation products.

* Leveraging joint marketing, promotion and product development opportunities in the movie business with Zee.

* Common apparatus for negotiations with the music and movie industry.

* Zee would provide its global platform to PTL for its television software library and animation property by airing on its international channels.

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