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Wednesday, February 15, 2006

Sun TV files for IPO

Sun TV Ltd, a leading television broadcaster in Tamil Nadu and Kerala and among the major players in that business segment in the country, has filed the red herring prospectus for its proposed IPO.

It intends to come out with a fresh equity issue of 68,89,000 equity shares of Rs 10 each for cash, to be made entirely through the book building route. The issue will constitute 10 per cent of the fully diluted post issue paid-up capital of the company.

Following the issue, the shareholding of its promoter, Mr Kalanithi Maran, will reduce to 89.99 per cent from 99.99 per cent.

Kotak Mahindra Capital Company is the book running lead manager and DSP Merrill Lynch is the senior co-book running lead manager.

The issue proceeds will be used to beef up Sun's subsidiaries, launch more TV channels, construct its own corporate office, set up studio facilities and up-linking infrastructure, purchase new equipment and upgrade the existing ones.

Sun TV estimates that its plan to launch three regional channels would entail an investment of Rs 113.68 crore; the new office and studio facilities would need Rs 62.3 crore and the new equipment/up-gradation would cost Rs 31.26 crore.

With reference to the subsidiaries set up for radio broadcast, Sun's prospectus says that it estimates a total expenditure of around Rs 183.35 crore towards acquisition of broadcast equipment and setting up of 46 local offices and radio studios. There is also an anticipated pre-operating expenditure of Rs 50 crore towards obtaining frequency allocation, SACFA clearance, overheads prior to start of commercial operations and launch expenses.

According to a wire agency report on Tuesday, Sun hopes to raise Rs 700-800 crore through the issue.

For FY05, Sun TV had a net profit of Rs 77.92 crore (Rs 77.29 crore in FY04) on a total income of Rs 301.05 crore (Rs 268.32 crore). For the first half of FY06, its net profit was Rs 62.55 crore on a total income of Rs 158.27 crore. The company's net worth as of September 30, 2005 was Rs 467.73 crore; its outstanding loans were Rs 10.5 crore.

"In November and December 2005, we paid dividends of Rs 1,850 million in the aggregate and in December 2005 we made a bonus issue of Rs 600 million, and our reserves and surplus were accordingly reduced. We believe we are in a stable financial position to take advantage of future opportunities, including acquisitions, to expand our business," the prospectus said.

Our Chennai Bureau reports: Sun TV is part of the Sun Network, which runs 14 TV Channels, four FM Radio stations, two daily newspapers and four magazines.

Mr Kalanithi Maran, brother of Mr Dayanidhi Maran, Union Minister of Communication and Information Technology, launched Sun TV in Tamil in 1993. The channel started with three hours of programming and then grew to 24 hours of programming by 1995.

Today, under the Sun brand there are four Tamil channels, including Sun TV, and two Malayalam channels, including Surya TV. Sun TV is a free to air channel. Sun TV's red herring prospectus says that in Tamil Nadu, the combined audience share of all Sun channels is 60 per cent compared to the 5 per cent of its closest competitor for the year ended March 31.

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