Bhartiya Global Infomedia Limited IPO Analysis

BGIL is a technology based company focusing on the sectors such as Information Technology security and compliance automation software solutions and technology related to media & entertainment industry with focus on Research & Development. Current business operations consist of RFID & Smart Card and Digital Post Production Studio. Its promoters are Mr. Rakesh Bhhatia and Mrs. Arti Bhatia
BGIL is entering the market with 67,20,000 equity shares of Rs. 10/ - Face value. The issue would constitute 42.42% of the fully diluted post issue paid-up capital of the company. Price band: Rs. 75 to Rs. 82 per equity share . The floor price is 7.5 times the Face value and the Cap price is 8.2 times of the Face Value. Bids can be made for a minimum of 75 shares equity shares and in multiple of 75 equity shares thereafter. The issue opens on 11th July 2011 and closes on 14th July 2011.After completion of the Issue, the Promoters and Promoter Group will continue to hold approximately 51.06% of post-issue paid up share capital.
The book running lead manager to the issue is Almondz Global Securities Limited and Karvy Computershare Private Limited is the registrar.

IPO Objective: 1. Setting up of our Corporate office at Noida & Branch Office at Mumbai; a. Purchase of owned Corporate office at Noida & relocation of Branch Office at Mumbai b. Up gradation of Digital Post Production Studio and Investment in IT division 2. Expansion of R&D technology centre; 3. Repayment of bank borrowings; 4. Meeting long term working capital requirements; 5. Meeting general corporate purposes; and 6. Meeting Issue Expenses
Risk factors:
IPO Grade 2 by CARE, indicating below average fundamentals.

Promoters and our Promoter Group Companies are involved in legal proceedings BGIL has delayed payment of statutory dues of service tax and dues to lenders in respect of unsecured loans, which could adversely affect the financial conditions and business operations Unsecured loans amounting to RS 193.82 lakhs taken by our Company may be recalled by our lenders at any time affecting cash flows. BGIL has negative cash flows in few years. Any negative cash flow from operations in future could affect their operations and financial conditions. Analysis:

Promoters, group background and company performance do not inspire me to take an investment call on the IPO. A substantial amount of the issue proceeds will be used for building corporate offices, repayment of loan, which will not result in revenue accretion. The unsecured loans and the negative cash flows can have an unfavourable effect on the financial performance.The below average rating by of 2 by Care further de-motivate me from investing in the company. Its competitors who are mentioned in the prospectus ie Prime Focus and Bartronics are running at 67.7 and 63 and are in the market for the past 5 years. Another point to be highlighted is The

previous issues of the BRLM ie Omkar Speciality and Texmo Pipes, both are quoting much below their IPO price. MY VERDICT: AVOID SUBSCRIPTION