The Hindu Business Line : NDTV readies IPO; sees competition from DD

THE private news broadcaster, New Delhi Television Ltd (NDTV), readies itself for an initial public offering to raise Rs 109 crore with a concern alongside that viewers and advertisers could shift to Doordarshan News, the 24-hour news channel of Doordarshan.

"Doordarshan News, controlled by the Government, which is the incumbent news broadcaster, recently launched its 24-hour news channel similar to our existing news channels, post which, the market share of news broadcasters, has significantly declined. As Doordarshan News is terrestrial, it has access to greater resources and needs to be mandatorily carried by all cable operators on the prime band under a direction from the Government, any shift in viewer and advertiser preferences towards Doordarshan News may adversely affect our business," NDTV said in its draft red herring prospectus filed with the Securities and Exchange Board of India.

NDTV is planning to deploy the proceeds of the issue towards meeting its working capital requirements, repayment of loans and for general corporate purposes. The company has indicated that during fiscal 2005 it will require a total of Rs 40 crore towards repayment of its loans and working capital requirements and Rs 15 crore towards general corporate purposes.

Currently, NDTV has a total outstanding loan of Rs 30 crore and has utilised working capital to the extent of Rs 8 crore from Syndicate Bank. "We intend to pre-pay our outstanding loans to the extent of Rs 20 crore during financial year 2005," NDTV has said.

The entire issue is through the book-building route.

The issue is a combination of fresh infusion to the capital base as well as dilution of stake of some of the existing shareholders. NDTV said that 60 per cent of the issue will be allocated on a discretionary basis to institutional buyers, 15 per cent to non-institutional bidders and the remaining 25 per cent to retail bidders.

NDTV commenced broadcasting news through its own television news channels - NDTV 24x7 and NDTV India - since April 2003. For the nine- month period ending December 31, 2003 NDTV's net loss was Rs 47.38 crore.

NDTV is the second news broadcasting company to go in for a public issue. In December 2003, TV Today Network Ltd had gone in for an initial public offering.