Videocon Industries is looking to raise money via its D2H business. The company is planning to launch an initial public offering (IPO) worth Rs 700 crore by January-February 2015, said CMD Venugopal Dhoot, in an interview to CNBC-TV18. The IPO will value company at Rs 5,400 crore.
The Mumbai-headquartered company currently has a D2H base of around 90 lakh users which is likely to double over the next five years.
The company had earlier in the year sold 10 percent stake in its Mozambique plant to Oil India and ONGC Videsh for nearly Rs 15,000 crore. The board is yet to decide about how to use that money. The company may also look to cut down debt which currently stands at around Rs 22,000 crore.
Meanwhile, Dhoot says Videocon is likely to focus more on its Brazilian operations as the field there has 10 million barrel of oil and equivalents. He expects oil and gas discovery in Brazil. The Brazilian fields are expected to start production from FY16.
Below is verbatim transcript of the interview:
Q: The latest news on Videocon is that your D2H business is planning to file for an IPO again or possibly list. Can you give us more details in terms of where the plans have progressed to and by when would you envisage a listing and how much would you require?
A: Videocon D2H business has been doing well and we have filed an IPO of around Rs 700 crore. We hope to launch it in January or February maximum, market is good and Videocon D2H has been number one since beginning in customer acquisition from where it started and now it has become number one in customer acquisition.
We thought that our shareholders also should take the advantage of that and we are going to public to raise Rs 700 crore.
This will be used for further expansion of the project in times to come and there is also a great opportunity that India market is very good.
Apart from that D2H is a very good business and in smaller cities people are opting for D2H and the quality, service of Videocon has been very good and that is why Videocon D2H is liked by the people and we are giving the best services.
Within five years we will double our base so that it becomes a super profitable company in times to come.
Q: What is your current subscriber base and current market share?
A: Current number is around 90 lakh and that will double in time to come. Our average revenue per unit (ARPU) is also very good compared to market and that is the reason we can have very good EBITDA and we will be very successful.
Wherever Videocon goes and starts, it always becomes number one in the market because of service quality and our brand image. For D2H also we believe that is going to happen.
Q: Can you compare your ARPU to the two leading players, Tata Sky and Dish TV?
A: It is nearly the same, Tata is little higher because Tata was the first one to come in and if you compare with Dish TV we are the same.
Q: Does Videocon Industries have any fund raising plans?
A: Videocon Industries have had a fund raising plan but now it is not there because we have already sold Mozambique for around Rs 16,000 crore and most of the money is lying in the bank and we want to utilise it.
As of today, we do not have any money shortage, infact we want our shareholders to make money out of us and not dilute any further at the moment.
Q: You still have interest in Brazilian fields, what is your call on the way crude prices have fallen in general, that would have impacted the valuation of your rest of upstream business? Going forward, do you plan more investments in this business or would you stay put with whatever you have right now?
A: We have been in petroleum business since last 25 years and wherever we have gone in petroleum business we have made success be it Brazil, Indonesia, Malaysia and then in Mozambique.
We know the business and that is why many proposals come to us and if a good proposal comes we might get into some addition but as of today we are concentrating only on Brazil.
Brazil has seen extraordinary success, its valuations should be far bigger than Mozambique and it is having a potential strength. We are here to bring this oil and gas to India also from Brazil. So this is a great opportunity for us and there also very light crude will be found and gas is also extraordinarily good.
Apart from that Indonesia is a very successful oil field that we have. Initially we thought that it will be difficult but we are getting very good oil and Indonesia also is a very successful business. So this is the way Videocon is going ahead in oil business and in future also Videocon will be going in petroleum business for a long time.
Q: Any decision in terms of the utilisation of funds which are in your bank post the Mozambique deal?
A: We have kept this money in the bank as fixed deposit and have been utilising it for our needs with the instruction of the bank.
We have full faith in State Bank of India and have also given them our money management and whatever they say accordingly this money will be appropriated. We just think that this is a great success we could get in Mozambique.
Q: Your group debt stood at Rs 25,000 crore, could you update us with your latest numbers on that level and any plans in terms of reducing the debt on the balance sheet?
A: Group has got substantial debt which should be around Rs 22,000 crore, it should not be any problem for us because we are having lot of business, we are having telecom, we are having D2H, we are having consumer durable and apart from that we have large estates of oil.
To sustain that our assets are very big and that much of room we have and we have a fix deposit also in the bank.
One year back we were thinking that we have a very large loan portfolio but today we don’t think that it is a large debt. We can service it properly and banks are happy with that.
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