Prannoy Roy-promoted television news broadcasting company, New Delhi Television (NDTV) is likely to fix the float price band between Rs 63-70 for their maiden Initial Public Offer (IPO) which is expected to hit the market on April 21 and close after seven days on April 28, inform market sources. Presently, the group runs an English news channel, NDTV 24×7 and its Hindi wing NDTV India.
ICICI Securities, Kotak Mahindra Capital and JM Morgan Stanley have turned up to play the role of lead managers to the issue. On contacting one of the lead managers to confirm the price band, he refused to comment. All attempts to get in touch with company officials also proved futile.
As per the Red Herring prospects filed with the Securities and Exchange Board of India (SEBI) in March 2004, the company plans to garner Rs109 crore through fresh issue of equity shares with face value of Rs 4 per share and offer for sale of 5,910,937 existing equity shares for face value of Rs 4 each. The price and the number of equity shares to be issued will be decided by book building process. The telly news major has plans to list the equity shares on both the National and Bombay Stock Exchanges.
NDTV, however, is the next media group to follow suit after TV Today Networks to join the growing list of companies and promoters wishing to sell shares to the public.
As per the draft prospectus, NDTV's objective of the issue is to deploy the net proceeds from the fresh issue of shares to meet its working capital requirements, repayment of loans and general corporate purposes. Net proceeds from the sale of existing shares will be paid to selling shareholders. As a result of this issue, the company also expects to provide greater liquidity to its existing shareholders.
The current shareholding pattern of the company consists of 51.1million equity shares of Rs 4 each aggregating to Rs 20.4 crore. The post-issue shareholding pattern of the company can be determined only after the book-building pattern.
Current shareholders of the company who are offering shares are GS Television Holdings (1,362,925 shares), GS Media Holdings (407,400), GS Communication Holdings, (266,700), Saffron Fund Inc (810,837), JF India Fund (1,621,663), JP Morgan Fleming India Investment Company, Mauritius (608,125), SBI Capital Markets A/c India Magnum Fund and NV Mutual Fund (833,287) - adding up to a total of 5,910,937 equity shares.
NDTV has total outstanding term loans to the extent of Rs 30 crore from the Syndicate Bank. The company intends to pre-pay the loans to the extent of Rs 20 crore within the running fiscal year. The working capital requirements of the company are mainly on account of debtors arising from credit to advertisers, security deposits and advanced income tax. NDTV forecasts the working capital requirement to shoot up to Rs 42.8 crore on account of high debtor collection period of 120 days and low creditor payment period of 30days. The company also plans to use approximately up to Rs 15 crore of the net proceeds of this issue for general corporate purposes.
Media analysts, however, are keeping a close watch on the issue. Says Richard D'souza, Senior analyst with Four Dimension Securities: "The Media sector is in the limelight right now. This is one sector that performs irrespective of what happens on the international front. Secondly, the booming Indian economy will see advertising revenues for media companies going up and lastly, with the elections round the corner, news media companies are expected to perform well."
The news section contributes five per cent to the complete television viewership but shares only nine per cent of the total television advertising revenue. The total advertising revenues for the Indian television news segment were estimated at approximately Rs 350 crore in FY03 as compared to Rs 100 crore in FY99. Increasing number of advertisers want to advertise on news channels due to the favourable demographics of the news viewers. It is seen that 54.7 per cent of news viewership comes from SEC A and SEC B class population which is the prime target audience for many advertisers. Going ahead, this equation is expected to get even more favourable as news channels become an important part of the media planners' budget.
It was only a few months back when the TV Today shares got listed on the bourses. TV Today's offer of 14.5 lakh shares at Rs 95 each, yielded about Rs 137 crore. It was oversubscribed about 36 times and the share price doubled on the first day of listing itself.