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DB Corp To Demerge Internet & Mobile Biz From IMCL

dbcorplogoDB Corp, publishers of the newspaper dailies Dainik Bhaskar, Divya Bhaskar, Saurashtra Samachar and Dainik Divya Marathi,  plan to demerge the Internet and mobile interactive business of its digital arm I Media Corp Ltd (IMCL) into the holding company DB Corp Ltd, according to the company’s annual report FY 12-13 (zip file).

The process of demerger is expected to be completed in 2013-2014 and following the demerger, IMCL will continue its events business. IMCL is presently the digital arm of DB Corp and manages the group’s website and mobile properties which includes group portals like Indiainfo.com, dainikbhaskar.com, divyabhaskar.com, dailybhaskar.com, divyamarathi.com, myfmindia.com and mobile properties like 54567 which allows users to send messages consisting of images, audio, text and video. IMCL has recorded a total revenue of Rs 12.2 crores during 2012-2013.

IMCL & SMEL Merger: Synergy Media Entertainment Ltd (SMEL) that runs conducts outdoor events and offers outdoor advertising solutions to brands, has also been merged with IMCL with effect from April 1, 2012, based on a judgement passed by High Court of Jabalpur on April 30, 2013, as indicated by the annual report. So the demerger of IMCL would also include SMEL’s demerger from DB Corp.

It is worth noting that this demerger has been made public less than six months after DB Corp had acquired the remaining stake in IMCL and SMEL from existing shareholders for Rs 37.97 crore, making them wholly owned subsidiaries of the group in December 2012. Prior to December 2012, DB Corp held 55% stake in IMCL, while Writers & Publishers Pvt Ltd held 40.2% stake in IMCL as of March 2012. DB Corp also held 56.82% stake (zip file) in SMEL as of March 2012.

DB Corp’s Digital Approach: The company claims that 65% of its advertising revenue comes from local advertiser base in tier II and tier III cities who apparently find print medium to be the most meaningful and cost-effective for advertising. The company believes that the digital penetration is too low to pose significant threat to the print revenue, especially in tier II and tier III cities.

However, the company claims to also be taking steps to align its offerings across multiple platforms in line with the digital growth in tier II & tier II cities.  We believe that this could be the reason for the demerger of IMCL & SMEL from DB Corp.

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Divya Prabhat stake sale by DB Corp: The company has informed the BSE that it will be selling 51% of its stake in Divya Prabhat Publications Pvt. Ltd. Although DPPPL will cease to be a subsidiary of DB Corp on completion of documentation, there is no information on who has acquired DPPPL.

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