Media mogul Kerry Packer cuts India operations

Paritosh Parasher

Australian media mogul Kerry Packer has finally initiated action to cut a string of losses that his company, Consolidated Press Holding (CPH), has suffered in India.

As part of this damage control operation, about 75 percent of staff at Consolidated Futuristic Solutions, a CPH subsidiary producing software in India, has been sacked. The Australian and North American offices of the beleaguered company have been shut down.

The software unit of Consolidated Solutions, also known as coFuture, would be doing the massive downsizing in a week. It has already reportedly sacked 25 of its 150 employees.

Packer's partner company in India, Himachal Futuristic Communications Ltd. (HFCL), holds 51 percent stake in Consolidated Software Solutions.

Australian newspapers have quoted HFCL chairman Mahendra Nahata as saying that in the future the focus would be kept on the core business, that is telecommunication equipment.

He has blamed the slowdown in the market and the failure of Consolidated Solutions to make any "significant sales."

The mass sackings in a CPH-HFCL subsidiary have come close on the heels of the report that Packer, the owner of Channel Nine television network, had suffered huge losses from his recent investments in India.

Early last year, Packer had ventured with great fanfare into the Indian IT and entertainment sector. The unprecedented and massive investments in the Indian companies had coincided with a spate of equally impressive investments by Packer's Australian media rival Rupert Murdoch.

Industry experts had termed these investments by Packer and Murdoch, an American, as exercises to get a foothold in the Indian IT industry that was bursting at the seams at that time.

In March 2000, the Packer managers had announced the buying of 10 percent stake in HFCL. They had paid almost 400 million Australian dollars for their stake in the Indian company. A part of this capital was used to run Consolidated Solutions.

Much has changed since those frenzied forays. There has been a significant decline in the value of hi-tech shares all over the world. HFCL shares have lost 90 percent of their value since the Internet bubble burst soon after Packer's highly publicized India visit.

The CPH-HFCL combination also got a drubbing in the Indian cable television project with the decision not to bid for Doordarshan's programming slots.

Packer's woes have been made worse by the collapse of Australian telecommunications company Onetel. The heir apparent to the Packer throne, James Packer, was deeply involved in this project along with the other rising star on the Australian corporate scene, and son of Rupert Murdoch, Lachlan Murdoch.

The two have lost hundreds of million Australian dollars in the collapse that shocked Australia.

Financial analysts here believe it would not be easy for Packer and his son James, said to be responsible for deciding to enter the Indian market, to go out of the Indian market. Their other investments are also said to be at risk.

The future of the venture capital fund which Packer, Australia's richest man, launched with Indian stock broker Ketan Parekh and HFCL chairman Vinay Maloo is also stated to be unknown. The $250 million project has not even taken off while Parekh has been jailed for a bank scam.

His financial fortunes at home also nose-dived in the last Australian financial year that finished June 30. He is reported to have lost billions of dollars in the last 12 months.

But the massive losses have failed to dislodge him from the top spot as Australia's richest man. The 63-year-old patriarch still has assets worth a cool Australian $6.2 billion.

Indo-Asian News Service