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Sun TV files draft red herring prospectus for proposed IPO

15-February-2006
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Sun TV files draft red herring prospectus for proposed IPO

Kalanidhi Maran’s Sun TV Ltd has filed a draft red herring prospectus for its proposed IPO. The company plans to utilise the proceeds from the proposed issue of 6.889 million shares to finance its expansion plans, including launch of new television channels, FM radio stations, and an owned corporate office, according to the prospectus.

Launched in 1993, the group currently operates satellite television channels in Tamil, Telugu, Malayalam and Kannada, besides FM stations in Chennai, Coimbatore, Tirunelveli (Tamil) and Vishakapatnam (Telugu). The print brands include Dinakaran, Tamil Murasu and Kungumam. As reported by exchange4media, Kal Radio and South Asia FM have successfully bid for 67 licenses under the Phase II expansion of FM radio, and Sun expects that its subsidiaries will be allowed to retain 46 of them.

Sun TV Ltd had reported a net profit of Rs 614 million, and total income of Rs 1.58 billion for the half year ended September 30, 2005. Kotak Investment bank and DSP Merrill Lynch are the lead managers to the issue. The company’s net profit for 2004-05 (April-March) was Rs 767.5 million, while total income was Rs 3.01 billion.

The funds generated are intended for the launch of new TV channels, among other things, at an estimated amount of Rs 1,136.87 million. The estimated utilisation of this amount is put down as Rs 703.38 million by March 31, 2006, and Rs 433.49 million by March 31, 2007.

Sun TV currently operates out of the ‘Anna Arivalayam’, the DMK headquarters on Mount Road, Chennai. Construction of an owned corporate office, studio facilities and additional uplinking infrastructure are estimated to cost Rs 623.40 million, of which Rs 173.40 million is estimated to be utilised by March 31, 2007, and Rs 450 million by March 31, 2008.

The biggest listed media company in India as of now is Zee Telefilms Ltd, which is valued at around $1.6 billion.

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