Nimbus plans IPO to avoid recurrent losses
Mumbai: Recurrent losses for five years continuously have led Nimbus Communications to take another chance and try its luck with an IPO yet again, although the market conditions are unpredictable nowadays, following a swing of scams associated with the corporate governance. The company operates sports channels like Neo Sports and Neo Cricket and in order to clear the debt of 
225 crore to Punjab National Bank, it has been making an attempt to hit the primary markets for fund raising and expansion.
In order to achieve the ambitious target of Rs900 crore, the company has issued 220.5 lakh shares and has also filed a draft red herring prospectus on September 30, 2010 with the Securities and Exchange Board of India (Sebi). The media reports stated that IPO had been planned by the company in 2008 and 2009 but there is no validated proof of this. In order to gain the valid reasons Harish Kanayalal Thawani, the promoter of Nimbus, although tried to, but could not be reached.
The issue would see 80.10 lakh shares being sold by some of the corporate investors such as Americorp Ventures, CSI BD (Mauritius) and Funderburk Enterprises. The promoters and 3i Sports would not sell any of their holdings. On a serious note, the company faces extreme barriers in business because of the consistent losses and a negative operation of cash flow.
Losses worth 35.3 crore, 79.71 crore, 108.2 crore, 131.71 crore and 142.39 crore in the fiscal years 2006 to 2010, respectively, were incurred according to the prospectus. With this state, as the entire capital has been utilized for the growth of the business, the expansion cannot be picturized to be profitable very soon.
Although the regulatory approval has not been received as of now, so as to launch the two new entertainment channels, Nimbus intends to utilize a total of Rs350 crore raised towards expansion with Rs129.1 crore earmarked which would impact its growth in broadcasting business.
The company has a high debt burden of around Rs579 crore as of March 31, 2010, a chunk of which is secured loans of Rs331.65 crore. High interest rates of approximately 11 percent-12 percent may lead to a massive outgo as interest expenses in future.
The promoters of the company ' Harish Kanayalal Thawani, Shobha Harish Thawani and Paramount ' have had to promise a part of their equity to these banks. Nimbus has defaulted on repayment of a short-term loan of Rs225 crore provided by Punjab National Bank, which was due for repayment in full on June 30, 2010. An extension had been provided to the company according to which an outstanding of Rs140 crore had to be paid till December 23, 2010.
The failure of the bank regarding the payment of the margin money of 60 crore to PNB and Union Bank of India, which was due by April 2010, has raised apprehensions regarding the financial stature of the company which can harm its position to a large extent.
225 crore to Punjab National Bank, it has been making an attempt to hit the primary markets for fund raising and expansion.
In order to achieve the ambitious target of Rs900 crore, the company has issued 220.5 lakh shares and has also filed a draft red herring prospectus on September 30, 2010 with the Securities and Exchange Board of India (Sebi). The media reports stated that IPO had been planned by the company in 2008 and 2009 but there is no validated proof of this. In order to gain the valid reasons Harish Kanayalal Thawani, the promoter of Nimbus, although tried to, but could not be reached.
The issue would see 80.10 lakh shares being sold by some of the corporate investors such as Americorp Ventures, CSI BD (Mauritius) and Funderburk Enterprises. The promoters and 3i Sports would not sell any of their holdings. On a serious note, the company faces extreme barriers in business because of the consistent losses and a negative operation of cash flow.
Losses worth 35.3 crore, 79.71 crore, 108.2 crore, 131.71 crore and 142.39 crore in the fiscal years 2006 to 2010, respectively, were incurred according to the prospectus. With this state, as the entire capital has been utilized for the growth of the business, the expansion cannot be picturized to be profitable very soon.
Although the regulatory approval has not been received as of now, so as to launch the two new entertainment channels, Nimbus intends to utilize a total of Rs350 crore raised towards expansion with Rs129.1 crore earmarked which would impact its growth in broadcasting business.
The company has a high debt burden of around Rs579 crore as of March 31, 2010, a chunk of which is secured loans of Rs331.65 crore. High interest rates of approximately 11 percent-12 percent may lead to a massive outgo as interest expenses in future.
The promoters of the company ' Harish Kanayalal Thawani, Shobha Harish Thawani and Paramount ' have had to promise a part of their equity to these banks. Nimbus has defaulted on repayment of a short-term loan of Rs225 crore provided by Punjab National Bank, which was due for repayment in full on June 30, 2010. An extension had been provided to the company according to which an outstanding of Rs140 crore had to be paid till December 23, 2010.
The failure of the bank regarding the payment of the margin money of 60 crore to PNB and Union Bank of India, which was due by April 2010, has raised apprehensions regarding the financial stature of the company which can harm its position to a large extent.