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Mukta Arts IPO on July 10 at Rs 150 per share

Our Correspondent in Bombay

Mukta Arts Limited, promoted by Hindi film-maker Subhash Ghai, is to become India's first ever motion picture company to go public. Mukta Arts is seeking to raise Rs 1 billion through an initial public offering via the stock exchanges in Bombay and Calcutta, and the National Stock Exchange from July 10.

The public issue consists of a book building portion of Rs 750 million and a fixed price portion of Rs 250 million. Mukta Arts has plans to utilise the funds for setting up an integrated studio and theatre complex complete with a research and training centre in Bombay. New equipment would complement the existing studio which will be upgraded by setting up animation and graphics facilities.

Mukta Arts will acquire rights of movies, songs and entertainment software for enhancing the entertainment software library. The company plans to diversify into television software, music albums and software, theme restaurants and franchising of the same. It also has plans to set up domestic and overseas distribution networks, and Web-casting facilities and portals.

For a man used to make others dance to his tune and command, Ghai found today's media briefing in Bombay a different mind-game.

Journalists quizzed him why his company chose to raise funds through the IPO route rather than preferential allotment to financial institutions and others, or from the venture capitalists. There were queries about "unreasonable" financial projections, risk factors (no mention of the Censors who can script the fate of a movie in India), the use of funds being raised, film personalities who "ran away" after collecting funds from the public at large in the past. Evidently, Ghai the businessman was at the receiving end of the screams that had the curtness of familiar expressions like "lights, camera, action, cut, pack-up".

Ghai, who turned up in a formal grey-green suit over a white shirt, seemed suave, calm and composed, and fielded questions in a manner befitting a top executive of a blue-chip company. And when it came to technicals, he let professionals in his company and from outside (lead managers, book-runners, issue registrars, bankers) do the talking. But not before he made himself very clear: "I'm not here to run away with people's money. My aim is to institutionalise the film business in India, not to make money for me or my company."

However, not many among the invitees were willing to buy that line.

For Mukta Arts is not the first firm to attempt corporatisation in India's unorganised entertainment industry. Examples galore of spectacular failures of companies promoted by superstars. Mukta Arts' executives were quick to request the scribes not to draw comparisons between their companies and other outfits. "Mukta Arts' business model is different. We have structured it in such a way that there is only one way out for us -- up," said Ghai.

Initially, Mukta Arts' software library comprising Ghai's 12 blockbusters such as Karz, Karma and Hero, will concentrate on sale of rights. Mukta Arts will also focus on movie production and distribution. In the field of hardware, Mukta Arts will offer production and post-production facilities.

Ghai said Mukta Arts will generate revenues from sale of rights for exhibition of films at cinemas, audio rights in India and abroad, satellite and television rights, overseas distribution rights, and cable, video and digital video disc rights.

India's movie software exports have grown from $10 million in 1989 to $100 million in 1999. The figure is expected to swell to $250 million in 2000. The total revenue generation of the film industry is expected to grow from Rs 62.15 billion in 1999 to Rs 339.84 billion by 2005. Export earnings from film software are expected to rise from Rs 6.65 billion to Rs 147 billion by 2005.

Ghai took great pride in the fact that United India Insurance has decided to institutionalise the film insurance scheme. The first ever movie insurance cover in India was offered to his latest movie Taal.

Additional inputs: UNI

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