DQ Entertainment Ltd. is one of the leading producers of animation, visual effects, game art and entertainment content for the Indian as well as global media and entertainment industry. The company has also forayed into production and distribution of live action television and feature films.
Issue Details Listing NSE & BSE Offer Open date 8th March 10 Offer Close date 10th March 10 Promoter Mr. Tapaas Chakravarti Price Band 75-80 Industry Film Production, Distribution & Entertainment
Shareholding Pre Issue Post Issue Promoters 94.03 75.00 Others 5.97 25.00 Total 100.0 100.0
Financial Snapshot Rs in crore FY09 FY08
Revenues 149.8 128.4 EBIDTA 53.7 25.2 PBT 19.9 8.1 PAT 16.1 7.0
Key Investment Highlights Low-risk business model with diversified revenue streams DQ Entertainment has diversified its business portfolio over the years. It has strategically moved along the animation value chain, gaining greater exposure to intellectual property ownership and distribution. Service revenues comprise revenues from traditional 2D animation, digital 2D animation, 3D animation and 3D game art. IP exploitation revenues comprise revenues from licensing for free and pay televisions, cable television, home videos, DTO, publishing, merchandising and distribution
Robust Order Book DQ Entertainment has a strong order book worth ~USD 95.07 million (Rs. 456.7 crore approx.), providing strong earning visibility. Projects worth USD 28 million (Rs. 1,34.5 crores) are to be executed in FY10 which comprises of 80 % of estimated revenue for FY10.The momentum of revenue growth is expected to be maintained for FY10 and FY11.
Highly developed platforms, infrastructure and systems The company has invested significantly for creating robust IT, technology and management infrastructure, including proprietary ERP solution, which it has developed over the past years. It has developed the flexibility to produce different styles of animation including traditional 2D animation; technology based 2D digital and 3D animation.
Key Concerns Limited experience in IP content creation DQ Entertainment Ltd. has limited experience in this field. Any inability to effectively manage its foray into this field could adversely affect business, prospects, financial condition and results of operations.
Products can have short lifecycles The market for animation entertainment is characterized by short product lifecycles and frequent introduction of new products. Company run the risk of committing resources for the creation of such products and eventually failing to realize anticipated revenues.
Company Background
DQ Entertainment is one of the leading producers of animation, visual effects, game art and entertainment content for the Indian as well as global media and entertainment industry. It The company has also ventured into production and distribution of live action television and feature films. It has an asset base of over 350 hours of animation content from which it can earn revenues through licensing and distribution activities. Promoted by Tapaas Chakravarti and incorporated in the year 2007, DQ Entertainment has gradually moved upwards in the animation value chain, gaining greater exposure to IP ownership and distribution by following a low risk co-production model for content development enabling it to receive license revenue share besides its regular production revenues. DQ Entertainment has also released its first homegrown 3D CGI television series “The Jungle Book” based on the Rudyard’s Kipling epic novel as well as three special TV features “Balkand”, “Omkar” and “Ravan” based on Indian mythology for India and the Indian Diaspora across the globe. Its production capabilities include 10 production facilities in India (8 in Hyderabad and 1each in Mumbai and Kolkata), talent pool of over 2,851 employees, and worldwide thirdparty sales representatives in Paris, Tokyo and Los Angeles. To augment its talent pool, the DQ School of Visual Arts was set up in fiscal 2008 to address the demand for high quality animation and gaming professionals. The School has, centers at Hyderabad, Mumbai and Kolkata and has trained 715 people since its inception DQ Entertainment has won recognition in the form of several awards such as the “Movers and Shakers of 2009”,”The Day Time EMMY 2007 Award”, “ Pulicenella Award” at ‘Cartoons on the Bay’, “Red Herring Top 100 Private Companies Asia 2005” and several other nominations at prestigious events
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