India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Issue Highlights
Price Band
Minimum Bid Lot Size : 95 Equity Shares
Maximum Bid Lot Size : 2850 Equity Shares
IPO open during
Book Running Lead Managers : Aryaman Financial Services Ltd.
To list on
IPO Grading
Market Cap post-listing
Market Cap of Free-Float : `150Cr (based on the cap price)
Executive Summery
Ø Midvalley Entertainment Ltd. (MVEL) is engaged in the media and entertainment business like film production, distribution and exhibition in South India. MVEL present across the value chain of media and entertainment which includes concept to completion i.e. from script to screen. It produces, distributes and exhibits movies both in Indian and foreign languages.
Ø According to a joint report of KPMG and an industry chamber, the Indian Media and Entertainment (M&E) industry pegged at $12.9bbn in 2009 registering a 14% growth over last year and is projected to grow at a CAGR of 13% to reach the size of $24.04bn by 2014.
Ø MVEL forayed into the exhibition business by entering into screening agreements with theaters. All its screens are located in B & C category towns, where quality theatres are absent. Hence the company is in a position to take the advantage by providing better movie viewing experience through improved and hygienic conditions.
Ø The promoters and core-management team of MVEL has global business experience and reputed qualifications in various fields and the same would enable it to develop strong business models and execute plans effectively.
Ø Due to experience in content selection and programming for many theatres and a deep understanding of different film genres, MVEL is well-placed to exploit each film available in the market.
Company Background
Midvalley Entertainment Ltd. (MVEL) was incorporated as ‘CTV Entertainment Private Limited’ in July 1989.MVEL was converted into a public limited company in February 2000 and changed its name to MidvalleyEntertainment Ltd. in December 2005. MVEL is mainly engaged in the media and entertainment business likefilm production, distribution and exhibition in South India
Promotors
Mr. Datuk K. Ketheeswaran is the Non- Executive Chairman of MVEL. He promotedvarious companies which have varied businesses viz; plantations, investments,entertainment related businesses etc. In the year 2006, Mr. Datuk K. Ketheeswaran,through his companies acquired the shares of MVEL from the then existing promotersto focus on production, distribution and exhibition of movie business in India.Mr. K. Murugavel is the Chief Operating Officer of the Company (COO) of MVEL and isin charge of overall management of day-to-day activities, including managing financeand business development
Industry Overview
According to a joint report of KPMG and an industry chamber, the Indian Media andEntertainment (M&E) industry pegged at $12.9bbn in 2009 registering a 14% growthover last year and is projected to grow at a CAGR of 13% to reach the size of $24.04bnby 2014.
Film Entertainment
According to the Annual Report of Central Board of Film Certification (CBFC) in 2009,India is the world’s largest producer of films. In 2009, India produced a total of 2961films on celluloid including a staggering figure of 1288 feature films. The provision of100% foreign direct investment has made the Indian film market attractive for foreignenterprises such as 20 th Century Fox, Sony Pictures, and Warner Bros. The growingsize of Indian film market has also propped up prominent Indian enterprises such asZee, UTV, Adlabs and Sun Network’s Sun Pictures who have started participating inproducing and distributing films directly.Out of the total 1288 films permitted by CBFC India, Hindi films form a major part of themarket with 235 films, closely followed by Telugu, Tamil, Kannada, Marathi andMalayalam Film markets, which contribute 218, 190, 177, 99 and 94 films respectively.Hence, it is evident that regional (especially southern) films command more than 50%of the total Indian feature film market with the rest being commanded by Hindi films.According to a joint report by KPMG and an industry chamber, the film industrycontracted 14% in 2009 wherein the film industry is projected to grow at a CAGR of9% to touch an estimated amount of $3.02bn over the next five years. Growth driversfor the sector would include expansion of factors like an increase in the number ofmultiplex screens, digital screens facilitating wider releases, higher cable and satelliterevenues, improving collections from the overseas markets and supplementary revenuestreams like DTH, digital downloads, etc, which are expected to emerge in future.
Television Industry
There has been a phenomenal increase in the number of channels beamed on the TVscreen viewers in India. The number of channels has increased from 45 channels in2001 to 439 in 2009. There has also been a rapid growth in the number of channels innews and other niche segments such as lifestyle, kids and infotainment apart fromgeneral entertainment.
The number of Non-News & Current Affairs TV channels has grown to 203 and that offNews & Current affairs TV channels has grown to 236 during the same period. News &Current Affairs TV channels constitute 54% and Non-News & Current Affairs TV channelsconstitute 46 % of total permitted 439 TV channels under up linking guidelines.
The average number of permissions granted per year for new Channels is about 40, itcan be seen that there were as many as 111 Channels permitted in 2008 due toheightened economic activity leading to a huge growth in the electronic media in Indiawhile 2009 saw a bit of decline in the number of permissions as only 67 Channelspermitted in 2009 because not many bidders came forward to apply for new channelsdue to global recession.
The new bid for channels has surged in 2010 as a large number of bidders have beenseeking permissions for new Channels. The Ministry decided to make a reference toTelecom Regulatory Authority of India (TRAI) about the total number of Channels thatcan be permitted in the country keeping in view the available spectrum and transpondercapacities. In addition to this, Ministry has also sought recommendations of TRAI onseveral other relevant issues like eligibility criteria for the applicant companies etc
Radio Industry
The Indian Radio Industry is mainly dominated by the State-owned All India Radio(AIR) which covers 91% of India’s area and reaches 99% of the population. However,the turning point for the radio industry came with the Phase-II privatization reformswhen the Government rationalized the licensing fee by fixing it at 4% of the grossrevenue (or 10% of the reserve OTEF, whichever is higher). This, for the first time,made the business model viable for the companies. Consequently many large corporatehouses entered the private FM business.Out of 337 channels put up for auction, 245 channels in 87 cities were successfullyallocated. As on date 251 private FM channels (including 21 from Phase-I) are functioning.Growth of radio stations in the future is likely to continue due to Phase-III licensing,further liberalization of regulation as well as better ability of the radio stations to selladvertisement space. Government has been examining the recommendations of TRAIfor Phase-III licensing of FM Radio. Some of the most important recommendations ofTRAI are as follows:
•increasing FDI Limits,
•allowing networking within the radio stations under same company
•permitting tradability of licenses, and
•ownership of multiple frequencies.
Government Initiatives and Support for Media and Entertainment Industry
The Government has initiated the following measures:
•The government has allotted $50.13mn in the current Five-Year Plan (2007-2012)for various development projects for the film industry. The funds will be utilized toset up a centre for excellence in animation, gaming and visual effects
•To offer better audio quality and sharper picture to millions of its viewers, publicbroadcaster Doordarshan plans to go completely digital by 2017
Business Operations
Midvalley Entertainment Ltd. (MVEL) is engaged in the media and entertainmentbusiness like film production, distribution and exhibition in South India. MVEL is havingits presence in the media and entertainment activity from concept to completion i.e.from script to screen. It produce, distribute and exhibit movies both in Indian andforeign languages. MVEL also hold the music, video and television rights of movies,television serials for sales to TV channels and other emerging media sources. It intendto emerge as one of the leading theatre chain in Southern India and has currentlyentered into screening agreements with 46 theatres in distribution territories of AndhraPradesh, Karnataka and Tamil Nadu. Services MVEL currently focuses on the following business areas
Exhibition of movies
MVEL forayed into the exhibition business by way of entering into screening agreementswith theatres in B & C category towns. It has already entered into screening agreementswith 46 screens and is in the process of entering into similar agreements with moresuch screens
MVEL is in the process of creating a chain of theatres under its management andoperational control. It has embarked on a project to acquire right to screen movies byentering into screening agreement with theaters in B & C category towns of southIndian states and convert the same into a pleasant viewing experience for moviewatchers. MVEL intend to upgrade the infrastructure in select theatres and installdigital projection equipments on selective basis with an objective to take movies to theIndian masses in these centers.
Distribution of movies
To have the presence across all segments, MVEL distribute movies from all bannersand production houses based on its relationships with producers and also based ontrial screenings. MVEL, in the past have acquired territorial distribution rights for variousmovies. MVEL currently acquire and distribute movies in territories where it has anexhibition presence. MVEL’s aim is to distribute movies throughout Southern Peninsulain the same territories where its theaters are located and South East Asian Countries.Further, the company has a library of 651 movies in various languages. This consistsof 417 Tamil movies, 107 Telugu movies, 52 Kannada movies and 75 Malayalam movies.
Production of movies
MVEL, in the recent past has produced several movies. In the year 2006 it produced‘Thambi’, a Tamil movie while in 2007 its home production hit the screen. Anothermovie Alanganallur Kalai is in production and is expected to hit the screens in 2010.Further, MVEL has executed various theatrical distribution agreements with differentdistributors
Strengths
Strategic location of theatres
MVEL forayed into the exhibition business by entering into screening agreements withtheaters. All its screens are located in B & C category towns, where quality theatresare absent. Hence the company is in a position to take the advantage by providingbetter movie viewing experience through improved and hygienic conditions.
Global business experience and qualifications of promoters and core-management team
The promoters and core-management team of MVEL has global business experienceand reputed qualifications in various fields and the same would enable it to developstrong business models and execute plans effectively.
Capital-efficient project design and execution
The projects are planned and conceived by MVEL in a manner that each property isprofitable on a standalone basis. The company assesses the location and demographicsand decides on capital expenditure accordingly. The properties on which the companyoperates are not owned by it. MVEL manage these properties pursuant to agreementsentered into with the respective owners of the properties.
Selection of content
Due to experience in content selection and programming for many theatres and adeep understanding of different film genres, MVEL is well-placed to exploit each film available in the market. A standard acquisition procedure is in place and films arestringently reviewed before a decision to invest is taken by its management.
Presence from Script to Screen
MVEL has presence in the entire value chain of the film industry, i.e. production,distribution and exhibition.
Objects of the Issue
The objects of the Issue are:
•Entering into screening agreements with 300 cinema theatres
•Renovation and Up-gradation of cinema infrastructure with Digital Equipment andother related assets for a select 100 screens
•Acquisition of company or acquisition of screening rights of company having similarline and objects of business
•To meet general corporate expenses
•Meeting the IPO expenses
Investment Risks
(Please refer to the RHP for a complete listing of risk factors)
•The business of MVEL is dependent on the popularity of the films.
•Any mid-term or ad-hoc cancellation of lease agreements entered into with thetheater owners will affect MVEL business and financial results.
•Digital projection technologies may render its traditional film projection equipmentobsolete, requiring the company to incur significant capital expenditure.
•Piracy and home-viewing may reduce the number of foot-fall in theaters, henceaffecting the business and profitability of the companies engaged in the filmbusiness.
•MVEL has not paid Income Tax dues aggregating to `9.14Cr which is undisputedas on date
No comments:
Post a Comment