MUMBAI: Reliance ADAG's move to demerge its radio business from Adlabs Films Ltd. seems to have hit the wall with the information and broadcasting ministry yet to approve the proposal.
Adlbas, sources say, is discussing internally whether it should set itself a deadline or make a revised application. Adlabs, however, still hopes that the proposal to demerge the radio business will get the I&B nod.Though Reliance had housed its FM radio business under Adlabs, it had subsequently applied to the ministry for transferring it to Reliance Unicom Ltd (RUL).
Adlabs recently admitted that it is "not possible for the company to give effect to the demerger of the radio business as provided in the Original Scheme of Amalgamation and Arrangement" as it has received no definite answer yet. The amalgamation of Entertainment One (India) Ltd (EOIL) and the transfer and vesting of digital cinema business of Mukta Adlabs Digital Exhibition Pvt Ltd (MADEL) into the company, however, has received all the "necessary" approvals.
Adlabs said: "It is desired to give effect only to the amalgamation of EOIL with the applicant company and demerger of digital cinema business of MADEL into the applicant company and not give effect to the demerger of radio business of the applicant company into RUL from the Scheme."
Accordingly, Adlabs is seeking the sanction of the Bombay High Court to modify the Scheme.
Adlabs had declared its financial results over an extended 15-month period ended 30 June 2007 with the hope that it would get the I&B approval by then. Indian companies announce their financial year over 12 months. Big FM, the radio venture of Reliance ADAG's Adlabs, posted a loss of Rs 945.02 million (before current and deferred tax) for the 15-month period. The radio business was in investment mode during this period and the start up losses were expected.