INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

AIR SAHARA OFFERS SPECIAL FARES

THE Max India group has merged its telecom holding company Max Telecom Ventures Ltd (MTVL) with group flagship Max India. With this merger, the Rs 400 crore, netted by the group by selling its 1.95 % equity stake in Hutchison Essar last year, and which was so far residing in MTVL, has been transferred into the reserves of the listed Max India.

While the approvals have been obtained recently, the merger comes into effect retrospectively from December 1, 2005 , Max India joint MD, B Anantharaman. For a long time, MTVL had two share holders — Max India and ILFS, both of whom held 60.8% and 39.2%, respectively, in the company. MTVL owned a 3.2% stake in the consolidated Hutchison Essar. Prior to the Hutchison Essar divestment, however, ILFS' 39.2% shareholding in MTVL was transferred to Max India, making MTVL a 100% subsidiary of Max India. In a simultaneous transaction, shares amounting to a 1.25% stake in Hutchison Essar, held by MTVL, were transferred to ILFS.

While Max India has totally exited Hutchison Essar, the group's chairman, Analjit Singh, reemerged as an investor in the telecom company earlier this year in his individual capacity. He is learnt to be holding a 7.6% stake in Hutchison Essar. Meanwhile, the Rs 400 crore earned through the Hutchison Essar divestment has enabled Max India to move back into black. After making a consolidated loss of Rs 160 crore in FY05, the company registered a net profit of Rs 296 crore in FY06. Its net sales grew by 15% to Rs 146.33 crore from Rs 127.19 crore and its service income grew by 67% to Rs 862 crore.

Mr Anantharaman said Max India's cash from operations had grown by 395% and its group investments were up 122% during the year. The income of its life insurance joint venture company —Max New York Life — has gone up by 96% to Rs 851 crore in FY06 and during the same year, the revenue of its health care subsidiary Max Healthcare has increased by 195% to Rs 137 crore.