To use IPO proceeds for expansion: DQ Entertainment

Excerpts from India Business Hour on CNBC-TV18 Watch the full show » RELATED NEWS DQ Entertainment IPO subscribed 86 times DQ Entertainment fair value to be Rs 95-100: Udayan DQ Entertain BSE | NSE 10/02/12 Are Mutual Funds betting on DQ Entertain?

DQ Entertainment , which closed yesterday, received tremendous response from investors and got subscribed 86.33 times, as per data available on the NSE website.

It's a blockbuster initial public offering (IPO). The animation and gaming company is hoping to raise Rs 153 crore from the issue which has a price band of Rs 75-80 per share. The issue has seen tremendous response from across categories.

In an interview with CNBC-TV18, Tapaas Chakravarti, Chairman and Chief Executive Officer of DQ Entertainment, discusses it.

Below is a verbatim transcript of an exclusive interview with Tapaas Chakravarti on CNBC-TV18. Also watch the accompanying video.

Q: You must be a happy man today given the fact that the subscription has been at a whopping 85-86 times. What are investors betting on? Is this the entire space that your company operates in?

A: Yes we are absolutely jubilant and it is resounding response by the investors. I have the latest figures which have now come out from the stock exchange. Qualified institutional buying (QIB) is 93.8 times, HNI is 272.9 times, retail is 19.45, employee is 0.32 times and total is 86.33 times of this total book.

It is a business model which we have been meticulously building for last nine years. We are a global company and have given consistent growth topline and bottomline for seven-eight years. Now expansion needed this fund. I think our story definitely has touched the heart and soul of the people, otherwise this is unprecedented.

Q: As our research analyst was pointing out that investors seem to be betting on the long-term story, you have got an order book position of about USD 93 million. Can you take us through the expansion plans that you have lined up and that you are funding through this IPO?

A: We are expanding through the internal accruals for last four months. We are adding over 600 people now and more are to be added. This is just to support our massive expansions into intellectual properties (IP) like Iron Man 1, Iron Man 2, Casper 1, Casper 2 and the Jungle Book which we have sold in 90 countries.

We are not a mere service provider, but besides having 90 clients worldwide, we are working with them as a partner like Iron Man. We own literally half the world for distribution licensing and similarly many other products. So one-third of the money will go into infrastructure to house these people and move into special economic zone (SEZ) because we are section 10A compliant company. Another one-third will go into long-term working capital markets to the banks. One-third will go into IP development and IP investment, which again comes back within two years time. So that also you can say sort of a long-term working capital.