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Creative Eye Limited

Issue Summary

Type Book Building Shares on offer 0.5 m
Size Rs 25 m Face Value Rs 5 per share
Floor Price Rs 50 Promoters post issue holding 56%
Minimum subscription Book Building Promoters Mr. Dheeraj Kumar Kochhar and Mrs. Zuby Kochhar
Listing Mumbai and National Stock Exchanges Lead Managers HSBC Securities and SSKI Corporate Finance Limited
Issue opens 23rd Nov 2000 Issue closes 28th Nov 2000
Bid/Issue opens 3rd November 2000 Bid/Issue closes 9th November 2000

Book Building

Issue Structure Book Building Portion Fixed Price Portion
  Institutional Investor Non-Institutional Investor Retail Investor
No. of shares available 3,002,800 750,800 1,251,200
% of total issue 60% 15% 25%
Minimum Bid/Application 1,100 1,100 100
Maximum Bid/Application Not exceeding the book built portion Not exceeding the book built portion 1,000



    Creative Eye Limited (CEL), incorporated in 1986, was promoted by Mr. Dheeraj Kumar Kochhar, a promoter with substantial expertise in the field of film and television production. The company's first serial was a 26 episode serial called "Kahan Gaye Woh Log" telecast on Doordarshan (DD). A 19 episode detective serial "Adalat", which despite its non prime-time slot, notched up total rating points as high as 55 per cent.

    More recently, Creative Eye has made a highly successful foray into a new genre - mythology. In 1997 it began producing "On Namah Shivay", a serial based on a popular deity in the Indian pantheon - Lord Shiva. Om Namah Shivay has been consistently rated among the top five programs on Doordarshan. Other diversification includes sports programming in which CEL is a part of a consortium that markets and sells commercial time for sports events and programs.

    Creative Eye is engaged in the production of TV software for Doordarshan and other satellite channels. The company is present in all activities of the production process, right from conception to getting the program telecast on TV and marketing airtime on Doordarshan.

    Business Model of Creative Eye

    • TV Serials
    • Social Genre Programmes
    • Comedy
    • Musical
    • Feature Films

    The model also includes a foray into the Internet. The company intends to set up two web based portals namely, by FY01 and by FY02.


    Mr. Dheeraj Kumar Kochhar is actively involved in the production, quality control, and marketing aspects of CEL. He is also the founder of the All India Video Film Producers Association. He has three decades of experience in the fields of acting, directing, and producing.

    Ms. Zuby Kochhar, who is an Executive Director of the company, looks after pre-production planning, and related activities like story line conceptualisation and music.


    The Indian entertainment sector has undergone a sea change over a decade. The media was mainly dominated by cinema till 1990's. After liberalisation, nearly 20-25 private television channels have entered the fray.

    Media pie
    Adspend (%) FY95 FY97
    Television 62.50 68.80
    Radio 20.90 15.00
    Press 16.60 16.20

    Television has been the key driver behind the growth of entertainment industry. It is expected that the television software industry will generate revenues to the tune of Rs 90 bn by FY05. This growth would be primarily driven by low penetration of television, increasing global acceptance of Indian content and the developments on the Indian convergence front. The world animation segment is also expected to grow from US$ 20 bn in FY98 to US$ 45 bn in FY02. This could also give the entertainment industry a big push.

    The three layers of entertainment industry are production, content and delivery. Production includes film making, recording and animation studios. Content includes teleserials, telefilms, cartoons and music. Cinevista is present in all the three categories.


  • The strength of any software producing company is its library. Creative Eye has over 1,000 hours of programming in its in-house library. Good libraries generate incremental revenues where the cost of re-relay of these serials is close to nil (except for marketing expenses). The company is currently selling programmes not only to Doordarshan but also diversifying into the southern languages. This would generate additional revenue streams.
  • Higher advertising spends on television fuelled by the growing reach of television, will lead to growth in demand for quality content. With more than 30-40 channels lined up for launch, the content providers like Creative Eye are set to benefit.
  • The company has a good presence in mythological segment that has excellent mass market potential. It is also the largest private sector marketer of Hindi feature films on DD metro and National.
  • The company's plan to extend its supply to the radio channels is a positive move considering the fact that FM channel privatization allows for additional sales particularly in film based programming for radio.
  • Web TV is a potentially large and yet untapped market. It gives the subscriber the option to customize his or her requirements (i.e. movies, songs, soaps). As the television audience in India gets more sophisticated and demanding, this concept is likely to pick up.


  • The company is heavily dependent on Doordarshan, which is continuously losing its market share to private channels like Zee, Star and Sony.
  • The company is wholly dependent upon the personalities of Mr. & Mrs. Dheeraj Kumar and therefore subject to risks with individual performance and existence.
  • Internet in India is still at its nascent stage and is plagued by infrastructure bottlenecks in terms of bandwidth and penetration of computers. Moreover, there are already a number of web sites based on the same concept of content via Internet. It has to be seen how successful the company positions itself while marketing its products.
  • Web TV is a long gestation period concept, i.e., the business involves investing huge chunks of money and it takes years before the business breaks even.
  • The cost of the project and the means of finance have not been appraised by any financial institution.


(Rs m) FY98 FY99 FY00
Sales 436 389 452
Other Income 5 12 46
Total Income 442 402 498
Expenditure 416 373 459
EBIDTA 26 29 39
GPM(%) 5.9% 7.4% 8.6%
Depreciation 1 1 2
Interest - 1 0
Profit before tax 25 27 37
Less: Tax 9 9 8
Net Profit 16 18 29
NPM (%) 3.8% 4.7% 6.3%
Issued shares (m) 15.0 15.0 15.0
EPS (Rs) 1.1 1.2 1.9


Where the money comes from...
  (Rs m) (%)
Public Issue *** ***
Internal accruals *** ***
Total 400 100%
Where the money will go...
  (Rs m) (%)
Development of portals 20 5%
Procurement of film rights 65 16%
Expansion of marketing network 20 5%
Acquisition of rights /commercial time on TV Channel 40 10%
Expansion of post production studio 30 8%
Acquisition of TV software including hindi film songs 20 5%
Working capital 170 43%
Issue expenses 35 9%
Total 400 100%


Particulars Pre-Offer Post-Offer
  % stake in Total % stake in Total
Promoter Group 74.5 55.9
TCW/ICICI 19.6 14.7
Employees 1.7 1.3
Employees trust 1.5 1.1
Public 2.7 27.1
Total 100.0 100.0

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We would like to inform our readers that this IPO note is just a one-time view on the company and in no way implies that there will be regular coverage on the company's performance or any other development. Should we decide to bring the company under research coverage in the future, it will be available exclusively to subscribers of the respective subscription.