Crest Communication Ltd. (Crest) is a media company providing services like animation (2D/3D), software development for television/advertising films and post-production activities (such as electronic video editing, audio mixing and dubbing). The company has catered to many advertising agencies including HTA, Lintas and Ogilvy & Mather in the past apart from many Indian and overseas motion picture houses.
The stock seems to have fallen on bad times, having crashed from a level of over Rs 1,200 and is currently quoting at Rs 189 (52–week low: Rs 183). We take a look at the recent developments.
Crest took over animation business of Rich Animation Studios during the last year at a price of US $ 2 m. This involved the takeover of the studio’s hardware along with 28 animators of the studio. This is in addition to the 45 trained animators the company already has. The takeover of Rich Animation was done by Mauritius based Crest Holding Mauritius Ltd. Besides, the company also made two private placements of 1.65 m shares last year in October 1999 and March 2000 respectively. (The second placement was made at a premium of Rs 740 per share.)
These were used to repay the debts of the company, which amounted to Rs 195 m in March 1999. The repayment would help the company reduce its interest charge of Rs 25 m. Crest has also set up a Singapore subsidiary to take advantage of television and advertising opportunities in the Pacific-rim countries.
However, the main problem for the company has been lack of a suitable organisation, which would enable it to monetise the opportunities in the animation business. For instance, the company’s trade receivables increased by Rs 23 m last year (FY2000) compared to the Rs 13 m increase in the turnover. This actually casts a doubt on the genuineness of the sales itself. Whether the company is now able to grasp the opportunities that exist in its business remains to be seen.
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