DB Corp ventures into the capital market with its initial public offering

By afaqs! news bureau , afaqs!, Mumbai | In Media | December 10, 2009
The media house will open its IPO of 1.81 crore equity shares on December 11, at a price band of Rs 185 to Rs 212

DB Corp Ltd, known for its Hindi newspaper, Dainik Bhaskar in the northern states, is all set to embark on its journey to the capital market. Its IPO of 1.81 crore equity shares opens on December 11 at a price band of Rs 185 - Rs 212, and closes on December 15.

About 10 per cent of the fully diluted post-issue capital of the company will comprise the issuance; of this, 7 per cent will be new, while the persisting 3 per cent will be on sale by Cliffrose Investment Ltd.

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The capital raised through the public issue will help the company to set up new publishing units, upgrade the existing plant and machinery, enhance brand image through sales and marketing, reduce working capital loans and prepay existing term loans.

As per IRS 2009, DB Corp Ltd has shown multiple growth, with an approximate readership of 1.55 crore average issue readers. The journey which started with one newspaper, one state and five editions in 1995 has come to 7 newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and English) across 11 states.

Popular in the Hindi belt - including Madhya Pradesh, Chhattisgarh, Rajasthan, Haryana, Punjab, Himachal Pradesh, Uttarakhand and Delhi - Dainik Bhaskar, the flagship brand of the group, now has 27 editions in nine states.

Girish Agarwal, non executive director, DB Corp, says, "Our main focus is to tap the regional market, especially Tier II and III cities, where exponential opportunity lies ahead. The Bhaskar group covers almost 24 per cent of urban population in its readership. We are still to emerge in some markets, such as Punjab, as a popular newspaper; we have to make a mark as a business newspaper and establish amply in the radio sector."

Due to an exclusive agreement with the Late Bishambhar Dayal Agarwal and his heirs (BDA) and Bhaskar Prakashan Private Limited (BPPL), DB Corp Ltd cannot publish the newspaper titled Dainik Bhaskar from the states of Maharashtra, Western Uttar Pradesh and certain districts of Madhya Pradesh. BDA retains the title, Dainik Bhaskar, in these regions.

The districts of Madhya Pradesh where DB Corp is not permitted to publish Dainik Bhaskar are: Sidhi, Narsinghpur, Seoni, Satna, Mandla, Chhindwara, Rewa, Shahdol, Jabalpur, Balaghat, Damoh, Chhatarpur, Panna, Tikamgarh, Anuppur, Umaria, Katni, Dindori, Gwalior and Jhansi.

DB Corp has announced its financial income in the red herring prospectus. The company's turnover has reached Rs 960 crore in fiscal 2009 from Rs 674 crore in fiscal 2007.

Out of the Rs 960 crore, Rs 725 crore comes from advertising while Rs 215 crore is contributed by subscription. Another Rs 10 crore comes though event management and others. In the last two years its dependence on advertising revnues has increased marginally from 72 per cent in fiscal 2007 to 75 per cent in the last fiscal (09).

The board of directors of DB Corp is confident that investors will be rewarded, regardless of whatever gets invested in the company's IPO.