Tabassum International: Below Average

Score: Below Average

BL Research Bureau

GIVEN the nascent stage of operations, the highly competitive nature of the industry, the small scale of operations and the high risks involved, an investment in this initial public offering can be avoided.

What the company says

According to the offer document, the following are the significant aspects relating to its operations:

The company is professionally managed and is not dependent on the personality of Ms. Tabassum (which is cited as a risk factor).

The company is engaged in the business of television serial production, stage shows and event management.

The company has organised over 200 stage shows under the ``Tabassum Hit Parade'' banner in India and abroad.

The object of the initial public offering is expansion of television serial production and setting up a website.

The project cost is Rs. 6.50 crores and is financed entirely by shareholder funds.

The company had revenues of Rs. 1.18 crores for the 14-month period ending February 02, 2000 and earnings of Rs.0.38 crores.

The company plans to sell the serial to the producer and it would take the route of selling airtime directly on its own.

It plans to upgrade its production base to the digital betacam format from the present betacam format.

The proposed website will cover Bollywood, television and ad world and would be a free to all website with revenues from advertising and marketing of cinema tickets.

Serials produced by the company are yet to go on air, although they have been submitted to some channels for approval.

The Internet business is expected to lose Rs. 10 lakhs till it breaks even.

The company has projected revenues of Rs. 24.54 crores and earnings of Rs. 3.36 crores for the first year of operations.

Outlook: The company has outlined a set of plans which involve a scale that has not been hitherto managed by the company. It would require considerable upgradation of human skills at the company's disposal. This would be difficult, given the presence of numerous other media content providers with better pedigree and resources. The proposed plans for the Internet business may well mean a drain of cash flows without commensurate returns.

The fact that the few serials named in the offer document have not gone on air is a cause for concern. Though with the proliferation of satellite channels, business opportunities have opened up for programming content, Tabassum International may find it tough to compete. Its revenue model of selling serials outright could also carry the prospect of lower profitability as TV channels may have better negotiating power. Overall, the risks associated with this IPO seem to be on the high side. Returns are unlikely to be in line with the risk profile. Against this backdrop, the IPO can be given a wide berth.

Industry class :Media

Issue Type :Equity

Offer Price :Rs. 10 per share

Offer Size :Rs.4 crores

Offer Opens :September 6

Offer Closes :September 12

Project Cost :Rs. 6.50 crores

Equity :Rs. 10 crores

Listing :Mumbai, Ahmedabad, Hyderabad

Promoters :Ms. Tabassum

Lead Managers :Aryaman Financial