111Publishing house DB Corp, which runs the regional daily Dainik Bhaskar, plans to sell up to 24.78 million equity shares on going public, according to its new Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI). The issue is expected to constitute up to 13.65% of the group’s paid-up capital post-issue. (via ContentSutra)

I Media Corp FY09 Losses At Rs. 53.05 Million

DB Corp’s Internet and digital marketing division I Media Corp Limited (IMCL) runs portals Bhaskar.comDivyabhaskar.co.in and Indiainfo.com and the SMS shortcode 54567.

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It also offers e-governance and online education services. There seems to be another website 3DSyndication.com, but not much is known about it. IMCL was set up in 2006 has incurred losses every year till date.

In March 2009, net losses for IMCL were up at Rs. 53.05 million and it has a negative net worth of Rs. 112.73 million. Despite sales soaring up in FY08 to Rs. 22.13 million from Rs. 1.71 million in FY07, fiscal 2009 saw it fall again to Rs. 13.08 million. Earnings per share has dipped to -Rs. 50.53.

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DB Corp owns 55% of IMCL with 577,500 equity shares while Writers & Publishers owns 40.23% (422,500 equity shares). The group has invested Rs. 5.78 million in IMCL so far and has advanced a loan of Rs. 154.37 million.

Interestingly, DB Corp plans to spend Rs. 501 million in offering integrated media solutions for advertisers through digital media through IMCL, on ground promotion and 94.3 My FM by its subsidiary Synergy Media Entertainment Limited. I Media Corp also plans to set up digital kiosks. The proceeds be used to DB Corp’s publishing units and set up two more for Rs. 600 million.

Surprisingly, DB Corp does appear to have planned not mention any mobile specific initiatives, or mention its application JV with Sam Pitroda’s CSAM for MeraMobi.

IMCL will commence its digital out-of-home business soon by establishing interactive kiosks and display screens at airports, railway  stations, large commercial complexes, shopping malls, large educational institutes, gyms, beauty salons and fast food restaurants. The division is currently in the process of identifying suitable locations. Will these kiosks serve regional ads?

IndiaInfo.com Acquisition

DB Corp allotted shares to Indiainfo executives on June 22, 2007, as consideration for the transfer of Indiainfo’s Internet division to DB Corp. Readers might remember that IndiaInfo was among the most prominent Indian portals prior to the dot com bust. Indiainfo.com offers news in Hindi, English and Gujarati as well as travel, online shopping, jobs information services etc. The scheme for the demerger is as follows:

(a) 25 Equity Shares in proportion to members existing shareholding in Indiainfo Limited.
(b) 10 preference shares of Rs. 10,000 each of our Company in proportion members existing shareholding in Indiainfo

The group issued 201 fully paid-up Equity Shares to the two non-resident shareholders of Indiainfo, who were also eligible for a bonus issue of 1,638 Equity Shares in March 2008. Since the company was unable to issue preference shares, it issued 180 equity shares at a total value of Rs 0.09 million.

In the DRHP, DB Corp has published the financial details of IndiaInfo prior to its demerger.

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DB Corp adds that losses brought forward from the internet division of Indiainfo.com in FY 07 resulted in tax expenses which rose 909.68% to Rs. 630.27 million in FY08.

Download Red Herring Prospectus (PDF, 7.1Mb)

My FM

myfmDB Group has invested Rs. 700 million so far in My FM. It holds 56.82% in Synergy Media, the subsidiary that runs My Fm, while promoters and promoter groups hold the rest. It has also lent Rs. 489.73 million to SMEL. This subsidiary too has been making losses -in FY08, losses spiralled to Rs. 281.78 million but has reduced to Rs. 273.25  million in FY09.

Warburg Pincus arm Cliffrose, which owns a 7.14% stake in DB Corp, has a pre-emptive right in relation to the fresh issuance of shares by SMEL. My FM has 17 stations, of which three were launched in 2008 in Kota, Jabalpur and Raipur.

DNA

DB Corp has an agreement with Diligent Media Corp Ltd (DMCL), the owner of English news daily DNA to print, edit, publish, circulate, and market the paper in Gujarat and Rajasthan. As of March 31, 2009, three editions of DNA are being published by DB Group – in Ahmedabad, Surat and Jaipur. It has made royalty payments of Rs. 3.2 million in aggregate in 2008 and 2009 on publication license agreements signed with DMC. The licence fees amount to Rs. 1,200,000 per annum.

dmcl-medianamaIn FY08, DMCL reported a loss of Rs. 150.47 crores. As we had reported earlier, the company expects to break even next year, and Essel Group Chairman has said that DNA has reduced its losses to Rs. 4.5 crores per month this year.

Essel Group company Mediavest India Pvt Ltd owns 47 percent in DMCL, Bhaskar Group companies hold 47 percent and DB Corp Chairman Ramesh Chandra Agarwal holds 6 percent.

Private Treaties

DB Group has a provision of Rs. 7.50 million in private treaties agreements, allowing clients to place their advertisements in its print and non print media periodically, for a specified term.

The Group

DB Corp owns 7 newspapers and 5 periodicals in three languages – Hindi, Gujarati and English; its flagship newspapers are Dainik Bhaskar, Divya Bhaskar and Saurashtra Samachar.

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Dainik Bhaskar is ranked second amongst top 10 daily newspapers in India by readership (according to IRS 2009 survey).

Financials

DB Group’s net profit fell 37.14% to Rs. 477.01 million in FY09. In the last quarter, 75.67% of its consolidated income was from advertisements and 21.96% from circulation. In FY09, an increase in the cover price of its publications and addition of subscriptions in new markets led to 10.19% increase in net sales to Rs. 2.15 billion. DB Group’s net worth has risen from Rs. 2,858.48 million in June 30, 2008 to Rs. 3,576.39 million in  June 30, 2009.

Note that the company had filed a DRHP in December 2008, looking to raise Rs. 660 crore by issuing 18.8 million shares.

Related

– DNA Expects To Break Even Next Year; Current Burn Rs. 4.5 Cr/Month
– N97 Apps By Indian Media Co’s: India Today, NDTV, Rediff, CNBC-TV18; Eterno & Galatta