BSE listed Educomp Solutions Ltd, an education service provider, has received the approval of its shareholders to transfer the domain and the business associated with the StudyPlaces.com business to its wholly owned subsidiary Educomp Software Limited. The business being transferred would cover the domain name studyplaces.com, its “business contracts along with all the employees, assets liabilities including all licenses, permits, consents and approvals whatsoever as a going concern” based on the book value as on 31st March 2011.
Educomp had acquired Studyplaces last year, with a maximum consideration of $1.5 million dollars, as a preferential share allotment. Info Edge, which had invested $1 million in the company alongwith $1 million each from Kleiner Perkins, Caulfield & Byers (KPCB), Sherpalo Ventures had reported that they had lost money on the deal.
There’s been a tendency of late, for companies to amalgamate loss making Internet businesses in order to save on taxes. For example, Firefly e-ventures’ job portal business Shine.com was merged with parent company HT Media, with HT Media able to take on board the accumulated losses incurred by the Job portal business, hence have a tax benefit from the transaction, because HT Media is a profitable entity. Details here. Note that Web18 has also been merged into Network18. Details of that transaction here.