Mukta Arts manages to sail through, IPO oversubscribed 1.2 times

By Jai Kumar NR
Notwithstanding the bad market conditions, Mukta Arts has managed to sail through with its IPO. The IPO (fixed price portion) has been marginally oversubscribed by around 1.2 times, according to a market source. However, the data is still being collated and a rough estimate shows that the issue has been oversubscribed by around 1.2 times, the source said.

Mukta Arts has received around 4000 applications, according to the source. The company has offered around 16.66 lakh shares at a price of Rs 165. On an average, the company has received each application for around 416 shares against the minimum application of 100 shares. This, more or less, reflects the fact that the company received so many bulk applications. In other words, this has also helped the company sail through with its IPO. The company has offered equity shares (price Rs 165) at a price-earning multiple of 31 (based on the annualised EPS of Rs 5.31 for fiscal 1999), which was on the higher side. The projected EPS (face value Rs 5) of Rs 8.69 discounted the offer price of Rs 165 by a multiple of almost 19.

Yaadein shoots in Mumbai Director Subhash Ghai completed the first spell of shooting for Yaadein from July 20-25 on a set at Filmistan Studios. He had earlier performed the muhurat of the film in London. A song on Hrithik Roshan and Kareena Kapoor, the romantic lead, was picturised during the schedule in Mumbai. The song was written by Anand Bakshi and tuned by Anu Malik. It was a record for the showman to record an entire song with newcomers in just five days. Jackie Shroff will join the lead pair during the next schedule to be held in Mumbai and Rajasthan from August 6 to 21. Ashok Ghai is the film’s producer.

The company’s bookbuilding portion at a floor price of Rs 150 was oversubscribed by 4 times. Buoyed by the response, Mukta Arts had increased the offer price to Rs 165, which was Rs 15 higher than that of the floor price for the bookbuilding portion.

Commenting on the response to the IPO a merchant banking source said, the fact that the company is promoted by high-profile director of Hindi films Subhash Ghai seems to have worked in favour of the IPO. Also, the IPO management team included leading merchant bankers like HSBC Securities, Enam Financial Consultants, SMIFS Capital Markets, Triumph International Finance and Enam Securities.
Mukta Arts has collected around Rs 32.98 crore against the issue size of Rs 27.48 crore. The public issue proceeds are being used for financing a Rs 100-crore project which has not been apprised by any bank or financial institution.

The project involves setting up an integrated studio cum research and training institute at a cost of Rs 23 crore, upgradation of Audeus and equipment procurement at a cost of Rs 17 crore, acquisition of rights for movies, music albums, etc at an outlay of Rs 25 crore and establishment of overseas and domestic offices for distribution at a cost of Rs 13 crore and setting up Web casting services and portal development at a cost of Rs 5 crore. Besides, Rs 10 crore has been earmarked for working capital requirements.

For the year ended December 31, 2000, the company is projecting a several fold jump in net profit to Rs 20 crore on turnover of Rs 32 crore. Of the targeted turnover, the company is expecting to generate a revenue of Rs 15 crore from sale of existing rights. Revenue from equipment division is projected at Rs 7 crore.

Mukta Arts generates a major portion of its income from feature film production. Besides, the company is also into equipment hiring.

For the nine-month period ended December 31, 1999, the company had recorded a turnover of Rs 22.73 crore and a net profit of Rs 6.57 crore. For the first quarter of fiscal 2000, the company earned a net profit of Rs 31.77 lakh on total income of Rs 92.46 crore.

The IPO opened for subscription on July 28 and closed on August 1. The shares will be listed at the stock exchanges of Mumbai, Calcutta and NSE.

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