Creative Eye to peg fresh initial float price at Rs 150

Creative Eye Ltd is relaunching its IPO, withdrawn earlier in the first week of July before the fixed price could be completed, at an indicative floor price of Rs 150. It has split its share value from Rs 10 to Rs 5. The new offer document was filed with SEBI. Creative Eye had earlier proposed to issue shares through a mix of book-building and fixed price IPO at a price of Rs 225. The book-building component had already been oversubscribed 1.25 times. But the company, in consultation with its book running lead manager decided to relaunch the issue at a more investor-friendly price.

According to HSBC sources, the company has also scaled down its fund requirements from Rs 75.5 crore earlier to Rs 40 crore by deferring implementation of certain projects related to Teleshopping and e-commerce networks.

Part of the reduction in fund requirement is due to Rs 10 crore lower working capital needs. Managing director Dheeraj Kumar said that the company had to scale down its fund requirements in line with the proposed reduction in issue price. “The idea is to concentrate immediately on the more profitable ventures and defer the teleshopping network and related projects to a later stage.”

During the last one month, the company signed some more contracts with Doordarshan which includes procurement of north India network rights for Chitrahaar every Friday. This programme is produced by it already for DD national network and telecast every Wednesday, he pointed out.

Creative Eye generated Rs 44 crore in revenues for DD in 1999-2000 which translates to a 11 per cent share in DD’s total revenues for the year excluding sports programmes. DD’s gross revenues for 1999-2000 was Rs 500 crore.
For the year ended March 31, 2000, the company reported total income and net profit of Rs 49.77 crore and Rs 2.85 crore, respectively. Its weighted average earning per share on a paid-up capital of Rs 7.51 crore works out to Rs 10.91. He said the company’s strength was in the quality of programmes produced by it and its strong links with leading FMCG companies like Hindustan Lever, Proctor & Gamble, Godrej, Reckitt & Colman among others which ensured a steady stream of revenues for the company.

HSBC sources clarified that the EPS of the company was strictly not comparable with other companies in the entertainment sector because Creative Eye followed the conservative policy of booking 100 per cent of its production costs in the first year itself unlike most of its competitors who defer production-related expenses over a number of years.

Dheeraj Kumar said programmes based on Hindu mythology, in which the company specialises, commanded the maximum TV viewership and Om Namah Shivaya a serial developed for DD, was consistently rated among the top five programmes on DD. He added that the company was now airing programmes not only on the national network but also regional channels of Doordarshan.

Dheer Kothari

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