Galaxy Multimedia: Below average

Score: Below average

S. Vaidya Nathan

THE proposed initial public offering of Galaxy Multimedia may carry a degree of risk that may not be compensated by commensurate returns with the intense competition in the industry.

The company does not have a track record in this area and the project is yet to be completed. The proposed business is one where the company would encounter intense competition from well-established companies and it may not be easy to attain the scale of operations that could support the resources being deployed in the project. The risks associated with the project -- as it is in a fledgling state -- would be high and more appropriate for venture capital type investing. In this backdrop, investors can give this initial public offering priced at Rs 10 per share a wide berth.

What the company says: The company plans to set up a state-of-the-art multimedia and post production facilities and production of television software. The project cost has been pegged at Rs 12.56 crore, of which 20 per cent is being financed by Bank of India through a term loan. The company was associated with Prime Focus as a co-producer of 52 episodes of the serial, Hotel Hindustani, which is being aired on a satellite channel from March 2000.

The company has also produced the first music video titled Three brothers and the violin for Magnasound (India) Ltd. The promoter, Mr Vipin Rai Bhayana has been associated with the film and entertainment industry for the last three years. The project will cater to the development of multimedia content to be delivered in digital format on compact discs, digital video disks and Internet. There has been a five month delay in the project. The lead manager is UTI Securities Exchange, the equity base would be Rs 10.05 crore and the offer closes for subscription on September 27.

Industry class :Media

Issue Type :Equity

Offer Price :Rs 10 per share

Offer Size :25.50 lakh shares

Project Cost :Rs 12.57 crore

Equity :Rs 10.05 crore

Listing :Bombay and Hyderabad

Promoter :Mr Vipin Rai Bhayana