Issue Summary

Type Equity Size Rs *** m Floor Price Rs 130 Face value Rs 10 per share Issue Opens 6th October 2000 Issue Closes 12th October 2000 Shares on offer 2.8 m Book Built and Fixed     Price Portion Opens on 27th October 2000 Book Built and Fixed     Price Portion Closes on 3rd November 2000

Min. subscription Book Building Listing Bombay and National Stock Exchanges Lead Managers JM Morgan Stanley Co-Managers IL&FS Merchant Banking Services and Triumph International Promoters Mr. Jeetendra, Mrs. Shobha Kapoor, Ms. Ekta Kapoor Promoters post     issue holding 68%

Background

	Book Building
	Issue Structure Book Building Portion Fixed Price Portion   Institutional Investor Non-Institutional Investor Retail Portion Retail Investor No. of shares 1,680,000 420,000 420,000 280,000 % of total size 60% 15% 15% 10% Minimum Bid/ Application size 1,050 1,050 50 50 Maximum Bid/ Application size Not exceeding book built portion Not exceeding book built portion 1,000 1,000
	Business
	Balaji Telefilms, incorporated in 1994, is a television content provider. Mr. Jeetendra, Mrs. Shobha Kapoor and Ms. Ekta Kapoor promoted the company with the object of making television software including serials and other entertainment content. Balaji began its operations with 'Mano Ya Na Mano' which was aired on Zee TV in FY95. The second serial that the company produced was 'Hum Paanch' that was aired on Zee TV. The serial, has been one of the popular sitcoms running for more than five years. Currently Balaji is providing 30 hours of television software per week on various channels. Some of the popular serials being aired include, 'Hum Paanch', 'Ghar Ek Mandir', 'Bandhan', catering to the Hindi speaking audience and 'Pavitra Bandham', 'Kulaa Villaakku', in regional languages. Balaji is presently producing television software for major channels being aired in the country which include Doordarshan, Zee TV, Sony TV, Star TV, Sun TV, Gemini TV and Udaya TV. The main objectives of the issue are To expand infrastructure facilities of the company To meet the long term working capital requirement To meet the expenses of the issue
	Promoters
	Mr. Jeetendra is a commerce graduate from University of Bombay. He has extensive experience in the film industry having acted in over 200 films. He is the Chairman of Balaji Telefilms Limited. Mrs. Shobha Kapoor, the Managing Director of Balaji, is in charge of the overall administrative and production activities of the company. Ms. Ekta Kapoor, the creative director in the company, oversees the creative side of the company's business. She has been the instrumental factor behind BTL's foray into regional channels. Academically she has a graduation degree in Commerce from the University of Mumbai.
	Sector
	In the past five decades there has been a tremendous growth in terms of reach and impact of television broadcasting. India today has both terrestrial (i.e. broadcasting of audio/video signals from on-ground facilities and equipment) and satellite broadcasting services. The possibility of providing the latest technology broadcasting services through the Direct-to-Home (DTH) mode is expected in future. Currently, terrestrial broadcasting is the exclusive domain of the Government and is undertaken only by Doordarshan (DD). DD has the largest viewership with 68 million households reaching 88% of the population. Satellite broadcasting was first initiated by DD in India in the early 90's but it came into its own with the arrival of the Cable & satellite channels. Today about 70 channels can be viewed in India through satellite transmission with the most popular channel, Zee TV reaching 20.42 million households.

Reasons to apply

	Balaji has 1390 hours of library content (as on 31st August 2000). Its library comprises of daily soaps (1235 hours), Sitcom (54 hours), children programme (49 hours) and others (62 hours). This would the company to do re-runs, which generate profits directly.
	With television offering higher reach, advertising spends on television are set to increase further, giving greater momentum to the entertainment sector and consequently the content providers. This is apparent from the fact that television advertising spends grew by 24.9 % between 1997 and 1998 as compared to 17.2 % for press and 19.9 % for all media segments.
	The export markets offer a good potential to market Indian software to the non-resident Indian community. BTL has exported some of its programmes to Mauritius, South Africa and Singapore. Moreover, with a slew of new channels expected to be aired in coming months, demand for television software is expected to skyrocket. This would benefit content providers like BTL.
	The management of Balaji Telefilms has adequate experience in the entertainment industry.

Reasons not to apply

	The company treats 40% of the cost of production of programmes, where the ownership or copyrights are retained, as deferred revenue expenditure. It is written off in the subsequent three years equally.
	The skilled writers in the content provider business are scarce.
	The company has not identified the premises for its studios in Mumbai, Bangalore, Chennai and Calcutta, the cost of which has been estimated at Rs 87 m.

Financial Performance

(Rs bn)	FY98	FY99	FY00
Sales	106.4	132.3	201.0
Other Income	0.1	0.1	0.5
Total Income	106.4	132.4	201.5
Expenditure	103.4	99.2	134.1
EBIDTA	3.0	33.2	67.4
GPM (%)	2.9%	25.1%	33.6%
Depreciation	0.4	0.6	1.0
Interest	1.1	1.5	4.9
Profit before tax	1.5	31.1	61.5
Extraordinary item	-	0.0	- 7.2
Less: Tax	0.7	3.2	11.5
Net Profit	0.8	28.0	42.9
NPM (%)	0.7%	21.1%	21.3%
Issued shares (m)	7.5	7.5	7.5
EPS (Rs)	0.1	3.7	5.7
P/E (x)	1,282.9	34.8	22.8

Funding

Where the money comes from... (Rs m) (%) Share capital *** *** Term Loan 70 *** Total *** ***

Where the money will go... (Rs m) (%) Land and Building - owned 87 15% Building - leased 60 10% Shooting and Post-production equipment 227 39% Long term working capital 161 28% Other expenses 40 7% Total 574 100%

Shareholding

Particulars	Pre-Offer (%)	Post-Offer (%)
Promoter group	93.3	67.9
Employees	0.5	0.4
Others	6.2	4.5
Public	-	27.2
Total	100.0	100.0