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HTMT considers demerging Media business into a separate listed entity

Mumbai, January 31, 2005:

HTMT’s Board, at its meeting held today, gave an in-principle approval to the management’s proposal for demerging the Company’s media business into a separate listed entity. It has authorized a Committee of Directors to work out a detailed scheme in this regard.

The proposal presented by the management envisages two debt free listed companies with mirror image shareholding as under:

- Information Technology businesses, IT subsidiaries and the main financial investments such as in Fascel Ltd, the investments as the part of the technology company.
- Media (Film Content, Cable TV distribution network) and Broadband (High speed internet & related value added services) as the part of the new entity.

The Board also authorized the management to appoint necessary consultants for formulating the scheme and fulfilling statutory compliance etc. and directed it to submit its final recommendation along with the structure of the scheme at the earliest.

Rationale for demerger

Today, besides having Information Technology as its core business, HTMT also has presence in Media (Film Content, Cable TV distribution network) and Broadband (High speed internet & related value added services) businesses through its subsidiaries. It also has substantial investments such as Fascel Ltd (cellular services operations) and other liquid assets.

During the last four years, the Information Technology business of the Company has grown at an Industry leading rate to become one of the significant players in India. The recent acquisition of Source One Communications Inc, USA and Customer Contact Centre Inc, Philippines has provided the company with global delivery capabilities. Going forward, in order to build a sharper focus on Information technology business for much better performance it is necessary for the company to attract Global 1000 customers & top class talent worldwide. Further inorganic growth initiatives will require having a focused entity with single business interest.

The Media & Broadband businesses of HTMT, on the back of high investments, have also become well established and are well prepared to participate in an era of explosive growth aided by regulatory moves in motion. Going forward, expansions through alliances, partnerships, strategic investments and joint ventures including mergers & acquisitions will be a key growth strategy for these businesses. In order to deal with the changing business environment, whereby convergence within the sector is a challenge and an opportunity, it is considered necessary to have a separate listed entity focused on the media – broadband businesses.

According to Mr. K. Thiagarajan, Managing Director & CEO “The restructuring exercise will not only unlock value for the shareholders in the short term, the new entities will achieve their individual business objectives faster & better than before, thereby creating further value for the shareholders in the long term”.