V R Films & Studios coming with an IPO to raise up to Rs 2.27 crore

V R Films & Studios 

• V R Films & Studios is coming out with an initial public offering (IPO) of 3,72,000 equity shares of face value of Rs 10 each  at a fixed price of Rs 61 per equity share.
• The issue will open on April 12, 2019 and will close on April 18, 2019
• The shares will be listed on BSE SME.
• The share is priced 6.10 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Hem Securities.
• Compliance Officer for the issue is Nidhi Natani.
  

Profile of the company

V R Films & Studios (VRFSL), was initially incorporated as 'V R Films & Studios Private Limited' under the provisions of The Companies Act, 1956 vide Certificate of Incorporation dated December 31, 2007 issued by the Registrar of Companies, Mumbai. The company has taken over the running business of M/s Visual Reality, a proprietorship concern of one of its Promoter vide Business Takeover Agreement dated December 31, 2007. The name of the company was subsequently changed to ‘V R Films & Studios Limited’ pursuant to special resolution passed by the Shareholders at its Extra Ordinary General Meeting held on February 22, 2019 and a fresh certificate of incorporation consequent upon conversion from Private Company to Public Company was issued by the Registrar of Companies, Mumbai dated March 11, 2019.

VRFSL is engaged in the business of providing complete localization services for television, film and digital industry, which consists of dubbing, mixing, subtitling, content editing and content localization services for movies, documentaries, audio books, games and TV programmes in regional and international languages. It also acquire foreign language films mainly from Hollywood and Chinese film industry and dub them in Indian Local language (Hindi, Tamil, Telugu etc.) and then distribute them theatrically or sub license to sub distributors across all licensed territories in all licensed languages including English.

Proceed is being used for :

• Meeting working capital requirements;
  
• Meeting Issue Expenses;
  
• General Corporate Purposes.

Industry Overview

Indian television market has opportunity of catering to 100 million homes as 197 million homes out of the total 298 million have TV sets as of 2017. In 2017, television viewership in India grew at the rate of 12 % y-o-y. Total of 243 FM channels (21 from the Phase - I and 222 from Phase – II) are operational. Under the phase III, the Cabinet has already given permission to 162 FM channels in 69 cities to operate and 17 cities were provided with licenses to operate in 2017.Telecom Regulatory Authority of India (TRAI) plans to introduce a policy for broadcasting sector with a vision of 2020. The policy aims to usher a new era in the broadcasting sector where MRP of the TV channel will be declared by broadcasters directly to the consumers, and will bring more transparency and choices to the consumers. Digitalisation has played the major role in the growth of Indian film industry. The Indian film industry is expected to grow at a rate of 11.9 % by 2020. By 2019, cinema exhibition industry in India is expected to have over 3,000 multiplex screens. Media and entertainment Industry is set to expand at a CAGR of 13.10 per cent over 2018-23, one of the highest rates globally. Television and AGV segments are expected to lead industry growth and offer immense growth opportunities in digital technologies as well.

The Government of India has increased the FDI limit from 74% to 100%. Measures are taken such as digitisation of cable distribution to improve profitability and ease of institutional finance. In 2011, Indian Government passed the 'The Cable Television Networks (Regulation) Amendment Act, 2011' for digitisation of cable television networks.

Pros and strengths

Well equipped with advance technology: The company is well equipped with all the advance equipment‘s as needed in the Industry. This provides company with the edge over its competitors.

Marque Clientele: The company has worked with large number of marque clients which includes Viacom 18 Media Private Limited, Bangla Entertainment Pvt. Ltd, Discovery Communications India, Paramount Pictures Corporation, Paramount Pictures International Limited, SDI Media Hong Kong Limited, Sony Pictures Networks India Private Limited, Zee Entertainment Enterprises Limited, ATL Media Limited (Mauritius), Genx Entertainment Limited.

Wide number of languages dubbed: The company has experience of dubbing various languages including various International languages such as English, Hindi, Tamil, Telugu, Malayalam, Punjabi, Bengali, Oriya, Urdu, Gujarati, Marathi, Malaysia, Mandarin, Thai, Russian, etc.

Risks and concerns:

Intensive amount of working capital needs: Its business requires significant amount of working capital and major portion of its working capital is utilized towards advances for movie rights, inventories and trade receivables. A failure in obtaining such additional financing at all or on terms favorable to the company could have an adverse effect on the results of operations and financial condition.

Intense competition: The company face intense competition from both Indian and foreign competitors, many of which are substantially larger and have greater financial resources than the company. Growth in entertainment industry in recent years has attracted new industry participants and competitors. The entry of such competitors may change the media and entertainment industry in ways that may not favor the company.

Heavily dependent on key Managerial Personnel: The company is heavily dependent on its Promoters and Key Managerial Personnel for the continued success of its business through their continuing services and strategic guidance and support.

Outlook:

V R Films & Studios (VRFSL) is engaged in providing localizing services for entertainment/ digital industry. It consists of dubbing, mixing, subtitling, content editing and content localization services for movies, documentaries, audio books, games and TV programs in regional and international languages. The company has experience of dubbing various languages including various International languages such as English, Hindi, Tamil, Telugu, Malayalam, Punjabi, Bengali, Oriya, Urdu, Gujarati, Marathi, Malaysia, Mandarin, Thai, Russian, etc. On the concern side, the sudden spurt in the top and bottom for FY 18 raises concern and the company is spending nearly 18% to raise such a small amount.

The company is coming out with a maiden IPO of 3,72,000 equity shares of Rs 10 each  at a fixed price of Rs 61.00 per equity share to mobilize Rs 2.27 crore. On the performance front, VRFSL has reported that as per Restated Financial Statements for the seven (7) months period ended October 31, 2018 and fiscal 2018, 2017 and 2016, its total revenues were Rs. 367.04 Lakhs, Rs. 1283.03 Lakhs, Rs. 611.00 lakhs, and Rs. 627.99 Lakhs, respectively. While, Profit after Tax for the similar period mentioned above was Rs. 34.09 Lakhs, Rs. 97.57 Lakhs, Rs. 27.43 Lakhs, and Rs. 3.26 Lakhs, respectively.

The company maintains long term relationship with its customers. It aims to achieve this by adding value to its customers through the use of latest and updated technology, quality assurances and timely delivery of results. Its strategy is to acquire films for the Indian Sub-Continent comprising of India, Bangladesh, Pakistan, Sri Lanka, Maldives, Nepal and Bhutan and plan releases for each film on platforms like Theatrical, Satellite TV, VOD and Digital space including web series in this whole region.