Bodhi Tree Multimedia coming with an IPO to raise up to Rs 4 crore

Bodhi Tree Multimedia

• Bodhi Tree Multimedia is coming out with an initial public offering (IPO) of 3,90,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 95 per equity share.
• The issue will open on October 09, 2020 and will close on October 13, 2020.
• The shares will be listed on Emerge Platform of NSE.
• The share is priced 9.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Shreni Shares.
• Compliance Officer for the issue is Saloni Jain.

Profile of the company

The company was incorporated as ‘Bodhi Tree Multimedia Private Limited’ under the provisions of the Companies Act, 1956, vide Certificate of Incorporation dated July 4, 2013 issued by the Registrar of Companies, Mumbai, Maharashtra. The name of the company was subsequently changed to ‘Bodhi Tree Multimedia Limited’ pursuant to special resolution passed by the Shareholders at its Extra Ordinary General Meeting held on August 18, 2020 and a fresh certificate of incorporation consequent upon conversion from Private Company to Public Company was issued by the Registrar of Companies, Mumbai, Maharashtra dated September 1, 2020.

The company was created with the main objects to Carry on in India and abroad the business of making of Small or Big Films either for General Public Viewing or Television, TV Serials for any TV Channels in India or abroad either alone or in collaboration with others, Creation, Manufacturing, Consultants etc. of different type of Contents like Text, Audio, Video Content used in all types of communication carriers, develop, create, conceptualize, advise any commercial dissemination of Content/ information (Content Films and/or Serials etc.) by various types of modes available now and in future based on Telephone, T.V., Cable, Mobile network and any other types of media available in India or abroad either for itself or for any other client.

The company’s business model is B2B, wherein the primary business activity includes content production for television, films and digital platforms. It has been in the forefront of creating differentiated and edgy content through its distinct line-up of shows. Its business activities operate in 3 verticals at present: TV - Hindi GEC (General Entertainment Channels), Digital Content (OTT), and Regional content in multiple languages.

• TV - Hindi GEC: The company produces contents for linear broadcast networks like Zee, Sony, Star, Disney, Viacom, Sun and others. These contents include daily soaps, reality shows etc.
• Digital Platforms (OTT): It produces content for non-linear platforms such as Netflix, Voot, etc
• Regional Shows: It also produce content in regional languages including Tamil, Marathi, Bengali, and Gujarati on both TV and OTT platforms.

Proceed is being used for:

• Meeting working capital requirements.
• General corporate purpose.
• Meeting the issue expenses.

Industry overview

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making high growth strides. Proving its resilience to the world, the Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenues. The industry has been largely driven by increasing digitization and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people. The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38 percent of India’s gross domestic product. By 2021, Indian media and entertainment industry to reach Rs 2.35 trillion. The rapid proliferation of mobile access is enabling on-demand, anytime-anywhere content consumption nationwide. With a population of 1.3 billion, a tele-density approaching 89% of households, 688 million internet subscribers and nearly 400 million smartphone users, India’s telecom industry is poised to become the primary platform for content distribution and consumption. India ranks as one of the fastest-growing app markets globally, where entertainment apps are driving significant consumer engagement. Online gaming retained its position as the fastest growing segment on the back of transaction-based games mainly fantasy sports, increased in-app purchases and a 31% growth in the number of online gamers to reach around 365 million.

The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to Fastrack the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector. The Government of India has agreed to set up the National Centre of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Indian and Canadian Government have signed an audio-visual co-production deal to enable producers from both the countries exchange and explore their culture and creativity, respectively. The Government of India has supported Media and Entertainment industry’s growth by taking various initiatives such as digitizing the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.

Pros and strengths

Strong brand value: The name Bodhi is well established, it enjoys a strong reputation in the Indian media industry. The company uses the Bodhi Tree name for its Hindi and other regional language film production and distribution businesses. Through its continued efforts, both with participants and audiences, it seeks to continue to benefit from the positive values associated with the brand Bodhi as a business to business (B2B) and business to consumer (B2C) name. It has worked with large number of marque clients which includes some of the renowned names in Films, Television and OTT Industry. It stands ahead of its competitors mainly due to its long term relationship with its clients and it has a proven track records of deliverables in timely and cost effective manner which has created a brand loyalty amongst its clients. Its specialization in genres like Youth, Horror, Thriller and Edgy contents has strengthened the brand Bodhi in the media industry.

Highly effective and efficient Sales and Marketing team: The market is highly competitive and fragmented. It competes with a variety of Entertainment and Production houses, as well as service providers. Its management team possesses a deep experience of Indian television market and their excellent marketing skill helped company to cater more customers and media rights. Some of its competitors have the great financial, workforce, marketing, sales and other resources. However, very few of these houses are involved exclusively in a business like the business of the company and comparable to the scale of operations. The principal competitive factors include product quality, reliability, and price that can comprehensively address varying requirements of different TV channels and OTT platforms. Its ability to compete effectively is primarily dependent on ensuring consistent product quality and timely delivery at competitive prices, thereby strengthening its brand over the years. The company’s cost-effective and integrated offerings, its focus on customer satisfaction and its reliability combined with its quality consciousness, provides it with a competitive advantage in its business.

Organized and focused business operations: A strong Managerial team is involved in sales and marketing pitching for prime projects at the appropriate time. The team ensures compatibility and reliability with the clients servicing their needs and requirements efficiently. This is the reason major clients continue to associate with company year on year. The company also focuses on transitioning from delivering playout content using existing models to distributing that content via emerging options may have high-level work streams such as second-screen application development, modification of digital rights contracts and management systems, establishment of new relationships with content delivery networks, and integration with social media sites through APIs. While identifying projects it’s needed to fulfil the organization’s future-state vision, the company may also review and continue, halt or repurpose any in-flight projects related to the transformation effort.

Risks and concerns

Success of providing services depends on scriptwriters, artists and technicians: The activity and its success is largely depending upon creativity and individual skills of few people like the scriptwriter, artists and other technicians, which are not readily replaceable. Thus, the entire success of company’s activities depends upon the creativity of these few peoples. Unavailability of dates of scriptwriters, artists and other technicians could also delay its projects. Further, in case of any dispute with, or loss of any of these people for any reason in the course of rendering services, may adversely affect the project, which in turn could materially adversely affect results of company’s operations.

Requires significant amount of working capital: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards advances inventories and trade receivables. As on August 31, 2020, it has been sanctioned working capital of Rs 750 lakh. Its growing scale and expansion, if any, may result in increase in the quantum of current assets. Its inability to maintain sufficient cash flow, credit facility and other sourcing of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of operations. Further, it has high inventories and outstanding amount due from its debtors which may adversely affect its cash flows and business operations.

Intensified competition: The company faces intense competition from both Indian and foreign competitors, many of which are substantially larger and have greater financial resources than it. 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 it. Domestic competitors of a scale similar to or greater than its own may impact its ability to attract creative and technical talent and other scarce resources including content, which could have a material adverse effect on its business, prospects, financial condition and results of operations.

Outlook

Incorporated in 2013, Bodhi Tree Multimedia is primarily engaged in content production for television, films and other digital platforms. The business operates in 3 key segments that are TV - Hindi General Entertainment Channels (GEC), Digital Platforms (OTT), and Regional shows in multiple languages. The company has experience of Scripting, Producing TV daily soaps and OTT based web series into various languages including various local languages such as Hindi, Marathi, Gujarati, Tamil, Kannada, Telugu, Bengali and Bhojpuri. It is also looking forward to adding more shows and web series into new local Indian languages as the opportunity into the market is widely spread over. It always carry a trending outlook, optimistic nature and a confident attitude towards every assignment may it be Producing; Directing of Film or OTT based Web series. On the concern side, the company’s success heavily depends upon the continued services of its Key Managerial Personnel, along with support of its Promoters. It also depends significantly on its Key Managerial Personnel for executing its day to day activities. Besides, it has experienced negative cash flows and any negative cash flows in the future could adversely affect its financial conditions and results of operations.

The company is coming out with a maiden IPO of 3,90,000 equity shares of Rs 10 each at a fixed price of Rs 95 per equity share to mobilize Rs 3.71 crore. On the performance front, the company’s total Income for the financial year 2019-20 stood at Rs 2,746.52 lakh whereas in Financial Year 2018-19 the same stood at Rs 3, 863.34 lakh representing a decrease of 28.91%. Net Profit after tax for the Financial Year 2019-20 increased to Rs 365.57 lakh as compared to Rs 36.13 lakh financial year 2018-19. The company aims to monetize the content explosion by exploring new media platforms and it also focusing on expanding its client base. It aims to achieve this by providing value added services to its clients through the strong story writing, best direction, and use of latest and updated technology, quality assurance, and timely delivery of results. The company will also focus on creating its own intellectual property (IP) which can give it an opportunity to scale up the business significantly by selling format rights globally.