Troubled times for Pentamedia

By Shanthi Kannan

CHENNAI, SEPT. 30. From relative obscurity, Mr. V. Chandrasekaran of Pentamedia Graphics has grown in the past decade to high levels. A merger here, a de-merger there and an acquisition somewhere else have always kept him and his Pentamedia group in the limelight all the time. And, the Pentamedia group companies' stocks, not surprisingly, have been the most watched ones on the bourses. Of late, however, the group has come under cloud. The reasons are not far to seek.

Like many in the information technology industry, this group too has begun dishing out pink slips, quite aggressively at that, on a massive scale to the employees of Pentamedia and Pentasoft. Now comes the news that the Bombay Stock Exchange has suspended trading in Pentamedia Graphics' scrips from October 4 following discovery of irregularities in preferential allotment of 10 lakh equity shares.

A combination of factors, both from within and outside, appear to have pushed the group into a difficult phase. Much of Pentamedia Graphics' business around 90 per cent is America-centric. Similarly, Pentasoft is U.S.-focused. The slowdown has indeed altered the business environment in the U. S. `Onsite consulting in the U.S. has drained,'' admits Mr. Chandrasekaran. Offsite jobs too have come down and are not fetching that much revenue. Obviously, the cash flow has been hit.

The reduction in manpower, Mr. Chandrasekaran says, is an inevitable step to cut costs and consolidate business. Indications are that the group will eventually slash its staff size to around 600 plus.

What is in store for the group? A drastic overhaul of the strategy is what the management appears to be thinking. Pentamedia Graphics will henceforth focus only on 3D animations. ``We will either produce or co-produce 3D films,'' he says. Further, it has decided not to invest in its domestic subsidiaries, Num TV, Media Dreams, Mayajaal Entertainment, Krish Srikkanth Sports Entertainment, Intelivision and overseas arms like Pentamedia Corporation, U.S., Animasia International Pte., Singapore, and Improvision Corporation, U.S.

Sometime ago, it was proposed that Mayajaal and Krish Srikkanth Sports would be merged with Media Dreams. The company even wanted to christen the merged entity as Penta Entertainment Ltd. Now, in the changed scenario, Mr. Chandrasekaran is talking of independent partners for all these entities.

Mr. Chandrasekaran is confident that he would get over the current bad phase. At the moment, however, the company, nay Mr. Chandrasekaran, is under siege from all fronts - employees, regulator and funding institutions - at a time when business is evaporating.

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