Veritaas Advertising

• Veritaas Advertising is coming out with initial public offering (IPO) of 7,44,000 shares of Rs 10 each in a price band Rs 109-114 per equity share. 
• The issue will open for subscription on May 13, 2024 and will close on May 15, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 10.90 times of its face value on the lower side and 11.40 times on the higher side.
• Book running lead manager to the issue is Horizon Management.
• Compliance Officer for the issue is Mahima Khandelwal. 

Profile of the company

The company is an integrated advertising agency offering 360-degree services across multiple platforms. It owns advertisement spaces in West Bengal, Guwahati and Shillong, thereby making it one of the few media owning marketing and advertisement agencies. It also operates in Delhi, Mumbai and Pune. It operate/advertise in police booths and outdoor hoardings, which reduces its dependence on third parties and enables it in offering integrated services.

The company’s advertising services enables its clients to monetize their marketing collaterals and generate revenues and acts as a differentiator compared to other players in respective markets. With content at its heart, the company builds creative stories around brands to enhance their ROI. Working across various offline platforms, the company’s expertise includes strategizing, building compelling conversations to increase a brand’s influence and reach the desired target audience. It has created and managed successful marketing campaigns for various brands and worked with large budgets to drive the best reach and engagement for its clients. It provide high-end ecosystem and end-to-end advertising solutions platform for advertising media services consisting of Brand Strategy, Events, Outdoor (OOH) Media services which covers advertisement modes such as police booth hoardings, Newspapers insertions, Brochures, and display of Outdoor Hoardings, etc. In all such mediums of advertising “Creative” exists i.e. all the services are given keeping in mind the necessity of being creative, so it can deliver most compelling ideations, creations and communications to grab attentions of the public at large. It is dependent on third parties for space, such as pole kiosks, newspapers insertion, third party outdoor hoardings, etc. for catering the needs of its clients. While it has long term relationships with the such parties, it typically do not enter into long term agreements with such intermediaries. 

The company’s innovative and diverse service portfolio and result oriented strategies have aided in curating an industry-wide client selection across various geographies it operates. It has executed project in West Bengal, Meghalaya, Assam, Delhi, Jharkhand, Mumbai and Pune, and therefore have a market presence in these states. Its end-to-end solutions and integrated service offerings has enabled it in successfully inculcating a horizontal marketing approach in its business operations. Its consistent efforts and specialised services have helped it in achieving a mix of clientele spread across industries inter alia, electronic, automobile, fast moving consumer goods, lifestyle, education, real estate, insurance, pharmaceuticals and information technology. In additional to multiple industries, it offers its services across multiple geographies, as well. The company has a sales network in West Bengal, Assam and Delhi. It has its offices in Kolkata, Guwahati and Delhi. It is in the process of setting up an office in Mumbai to expand its reach in all metro cities of India. Through its strategically located offices and teams in three major cities in India. 

Proceed is being used for:

• Funding the capital expenditure towards setting up of new Police Booths in West Bengal, Assam, Maharashtra and Delhi.
• Funding the capital expenditure in Pole Kiosks for setting up of traffic signal point display in Kolkata, Mumbai and Pune.
• General Corporate Purposes.

Industry overview

The Indian advertising market size reached Rs 743.0 Billion in 2022. The growing adoption of advertising to enhance brand awareness, increasing number of media and entertainment models, and rising demand for digital advertising solutions represent some of the key factors driving the market. Advertising refers to a marketing strategy that is designed to promote a product, service, or cause. It comprises various forms of advertising, such as television, print, radio, internet or online, mobile, and outdoor. It acts as an introduction to a product and can be considered an effective way to increase brand awareness among individuals. It is inexpensive, convenient, eliminates middlemen, and assists in easy tracking of consumer behavior. It benefits in attracting a wide consumer base, increasing sales volume and rate of investment (ROI) of a business, and expanding business reach. It assists in educating businesses to consumers, supporting salesmanship, and creating employment opportunities. It aids in increasing the engagement of customers towards the business by offering information about the product and improving their decision-making. Besides this, it encourages various businesses to stay in competition with other companies. As a result, advertising can be employed in Television advertising, Print advertising, Radio advertising, Internet/Online advertising, Mobile Advertising, Outdoor advertising, etc.

India’s Advertising industry is expected to grow at a rate of 16.8 per cent year-on-year to Rs 51,365 crore ($ 7.61 billion) in 2016, buoyed by positive industry sentiment and a strong GDP growth of 7 per cent and above. India’s digital advertising market has grown at a fast pace of 33 per cent annually between 2010 and 2015, while spending as a percentage of total advertising increased to 13 per cent or nearly $ 1 billion in 2015. Print contributes a significant portion to the total advertising revenue, accounting for almost 41.2 per cent, whereas TV contributes 38.2 per cent, and digital contributes 11 per cent of the total revenue. Outdoor, Radio and Cinema make up the balance 10%. Of the current Rs 2,750 crore ($ 407.66 million) digital advertisement market, search and display contribute the most – search advertisements constitute 38 per cent of total advertisement spends followed by display advertisement at 29 per cent, as per the study. The Internet’s share in total advertising revenue is anticipated to grow twofold from eight per cent in 2013 to 16 per cent in 2018. Online advertising, which was estimated at Rs 2,900 crore ($ 429.9 million) in 2013, could jump threefold to Rs 10,000 crore ($1.48 billion) in five years, increasing at a compound annual rate of 28 per cent.

Pros and strengths

Geographical presence: With the help of the company’s long-standing market presence and integrated business model, it has been able to create a domestic market presence of the company in the geographies it operates, thereby catering to various customers functioning in various industries. In addition to multiple industries, it offers its services across multiple geographies, as well. The company has offices in Delhi, Kolkata and Guwahati from where it operates. While, it has already taken up projects which are currently being executed in Maharashtra, however, it is in the process of setting up an office in Mumbai as well.

Diverse customer base spread across various industries: Owing to the company’s diverse service portfolio, its customer base is also diversified and spread across various geographies and platforms. Its innovative and diverse service portfolio and result oriented strategies have aided in curating an industrywide client portfolio across various geographies. Its end-to-end solutions and integrated service portfolio has enabled it in successfully inculcating a horizontal marketing approach in its business operations. Its consistent efforts and specialised services have helped it in achieving a mix of private clientele spread across industries, inter alia, electronic, automobile, fast moving consumer goods, lifestyle, construction, education, real estate, insurance and information technology. It offers its services to renowned private companies.

Infrastructure to support innovative and quality solutions: The company’s Promoters who form part of its executive management has inculcated a culture of innovation and instilled a firm belief that innovation and service development is a key element of its growth and, will continue to be so. In line with this thinking, the company has over the years made regular investments in infrastructure and build an inhouse workshop to meet the printing and fabrication requirements of its clients in timebound manner with quality and help to expand its bouquet of service offerings. The service innovations will be key factor going forward and its continued investment in infrastructure will better prepare it to take advantage of any future opportunities.

Risks and concerns

Dependent on availability of space or sites for publishing of ads: The company provides high-end ecosystem and end-to-end advertising solutions platform for advertising media services consisting of Brand Strategy, Events, Outdoor (OOH) Media services which covers advertisement modes such as police booth hoardings, pole kiosks, Newspapers insertions, Brochures, and display of Outdoor Hoardings, etc. Its main requirement for advertisement in outdoor spaces, which covers advertisement modes such as police booth hoardings, pole kiosks, newspapers insertions, brochures, events and display of outdoor hoardings, etc., is dependent on the availability of ad space in that particular media on which client wants to publish/display the advertisements. While, it owns the majority of the spaces on which it displays advertisements, as part of its outdoor hoardings, however it is significantly dependent on third parties for space, such as pole kiosks, newspapers insertion, third party outdoor hoardings, etc. While it typically has long term relationships with the aforementioned parties, it typically does not enter into long term agreements with such intermediaries and the success of its business is accordingly significantly dependent on it maintaining good relationships with such intermediaries. In the absence of formal agreements, if its intermediaries arbitrarily terminate services orders placed by it or fail to offer the advertisement space required by its customers, its ability to execute the orders of its customers may adversely be affected. 

Significantly rely on police booth display for advertisement: Police booth advertising at cities /towns of West Bengal, Guwahati and Shillong is one of its main business vertical. Police booth advertisements draw significant attention of the target audience, on account of wide spread presence in diverse areas of a city. Owing to the efficacy of this advertisement segment, it has in the past significantly invested in advertisements through police booths at cities /towns of West Bengal, Guwahati and Shillong, thereby making it one of its main business verticals. In order to supplement this segment of the company, it is proposing to utilise a portion of the Net Proceeds towards fabrication of police booths which are proposed to be installed in West Bengal, Assam, Maharashtra and Delhi. The company fabricate the police booths at its cost and install the same at the traffic signals and it has exclusive right to use the booths for its advertisement business for a period of three 03 years initially which is renewed at the interval of every three years. It also ensures maintenance of the booths at its expense. While it typically has long term relationships with the aforementioned party and has long term agreements with Police Department, the success of its business is accordingly significantly dependent on it maintaining good relationships with such department. The right over the booths is available to it for a period of three 03 years initially which is renewed at the interval of every three years.

Requires significant amount of working capital: The company’s business requires a significant amount of working capital. In the event, it is unable to source the required amount of working capital for addressing an increased demand of its services, it might not be able to efficiently satisfy the demand of its customers. Even if it is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its services. Further, one of the objects of this Issue include funding of working capital requirements of the company, which is based on management estimates and certain assumptions. Its working capital requirements may be subject to change due to factors beyond its control including force majeure conditions, an increase in defaults by its customers, non-availability of funding from banks or financial institutions. Accordingly, such working capital requirements may not be indicative of the actual requirements of the company in the future and investors are advised to not place undue reliance on such estimates of future working capital requirements.

Outlook

Veritas Advertising is a fully integrated marketing and advertising agency offering diverse solutions across various platforms. It offers a bouquet of specialized services, including but not limited to, brand building, content creation, print and advertising solutions across various offline platforms. The company owns advertising spaces in West Bengal, Guwahati, and Shillong, making it one of the few media-owning marketing and advertising agencies. The company also operate in Delhi, Mumbai, and Pune. The company offers a premium ecosystem and comprehensive advertising solutions platform for advertising media services. This includes Brand Strategy, Events, and Outdoor (OOH) Media services, which cover various advertisement modes like police booth hoardings, newspaper insertions, brochures, and display of outdoor hoardings, among others. Owing to its diverse service portfolio, its customer base is also diversified and spread across various geographies and platforms. Its innovative and diverse service portfolio and result oriented strategies have aided in curating an industrywide client portfolio across various geographies. On the concern side, the industries in which the company operate are competitive with both organized and unorganized markets. It may be unable to compete with the prices and services offered by its competitors. It may have to compete with new players who enter the market and are able to offer competing services. 

The company is coming out with an IPO of 7,44,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 109-114 per equity share. The aggregate size of the offer is around Rs 8.11 crore to Rs 8.48 crore based on lower and upper price band respectively. On performance front, total revenue has increased by Rs 447.54 lakh and 131.94%, from Rs 339.21 lakh in the fiscal year ended March 31, 2022 to Rs 786.76 lakh in the fiscal year ended March 31, 2023. The increase in revenue was on account of increase in its sale of advertisement services to its customer. Net Profit has increased by Rs 31.31 lakh and 248.89% from profit of Rs 12.58 lakh in the fiscal year ended March 31, 2022 to profit of Rs 43.89 lakh in the fiscal year ended March 31, 2023. Meanwhile, having worked with several corporates in West Bengal, Assam, Delhi, Pune and Mumbai, the company want to substantially expand on a PAN India basis and reach out to growing industries domestically. It is in the process of setting up of an office at Mumbai to cater western part of the country from where most of the corporate houses operates. It aims to add new customers with the help of its expertise and experience backed by quality assurances and timely delivery of results.