Gramophone Company has done a private placement of shares at a price of Rs.1,785 per share. The company has also decided to merge most of its subsidiaries excluding Saregama Plc. UK.
Gramophone Company sells its music under the HMV brand name. It has a tie-up with the international major EMI, which holds a 9.9% of the company’s Rs 73 million equity. After the current placement the equity will go up to Rs 80 million.
With the Rs 150 bn media industry getting stupendous valuations the going has been good for the listed companies to make a private placement and the non-listed ones to make an IPO. Gramophone has merely cashed in on the trend.
Off course the company has a library of music rights of almost 10,000 movies. With the music rights of the current blockbusters such as Taal selling for Rs 50 bn, it is the value of Gramophone’s library has led to the re-rating of the stock in the recent times from a level of Rs 330 to over Rs 1800 at present.
The funds raised at present would help the company to retire a part of its debt as well as fund its future acquisition of catalogues and labels. The RPG group (which holds 48% of the company’s equity) has announced that the company plans to double its turnover and triple its net profits over the next three years.
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