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Publisher of Dainik Jagran plans IPO by Jan

Our Bureau

Mumbai , Dec. 29

JAGRAN Prakashan Ltd (JPL), publishers of the country's highest circulated newspaper Dainik Jagran, would be coming out with their IPO, likely January.

A portion of the proceeds would be earmarked for acquisitions and joint ventures in the media business, for which JPL already has a board-appointed committee examining the subject.

The 26 per cent equity stake in JPL, which Independent News & Media PLC acquired in June for Rs 150 crore, would drop to 20 per cent after the IPO. But the Irish company has agreed to stay locked in at a minimum 75 per cent of that 20 per cent for the next three years, senior JPL officials said.

JPL's requirement of funds for newly stated plans exceeds Rs 300 crore. The eventual IPO size won't be limited to this figure; that depends on inflows through the book building process. According to Mr Mahendra Mohan Gupta, CMD & Managing Editor and Mr R.K. Agarwal, Chief Financial Officer, the company envisages capital expenditure of Rs 137 crore for the next two years, including outlay for a second brand of newspaper from strong edition centres of Dainik Jagran. The second paper would tap the advertising potential of those who cannot afford the rates quoted by Dainik Jagran.

Against the average 20-page size of the main paper, the second brand could be a cheaper 12-page strong product. "We have not yet decided the number of locations from where the second brand would be printed," Mr Gupta said. Part of cited business viability for the second brand stems from ongoing expansion and upgrading of JPL's printing infrastructure. It wants more colour pages in Dainik Jagran and with such facilities in place, the second brand gets an easier, cost effective ride to the market.

Dainik Jagran has 28 editions and a circulation of 2.4 million copies. Currently, JPL, which also does job printing, has stretched its capacity. It out-sources the printing of its own magazine Sakhi. Rs 110 crore from the equity sale to Independent News & Media PLC is being used to upgrade printing facilities (the promoters got Rs 40 crore from that transaction).

Mr Agarwal said, a part of the Rs 137-crore capex would also go towards reducing operating costs (like less newsprint wastage), higher automation and improved efficiency. Besides this capex, Rs 40 crore would go for working capital needs and another similar amount for JPL's outdoor activity / event management business. The kitty for acquisitions and joint ventures was Rs 80 crore.

The idea, Mr Gupta said, was to explore synergies with the many newspapers and magazines around that have a good product but not the marketing infrastructure to sell. "We are talking with them," he said. Options would be to buy brands, float joint ventures or have deals wherein a portion of revenue generated accrues to JPL for providing its infrastructure. Herein, the company was also open to media other than print; it was willing to look at non-Hindi entities and foray outside its traditional north Indian geography.

Notwithstanding willingness to explore domestically, JPL had no plans for overseas editions, something it could study given the equity held by Independent News & Media. "We have no such plans," Mr Gupta said. But both he and Mr Agarwal were open to more job printing assignments should capacity permit. Asked if the foreign equity stake, job printing business and upgrading of infrastructure, hinted at foreign brands also being printed by JPL, Mr Agarwal said, "that is quite far fetched."

JPL with revenues of Rs 228 crore at end September 2005 hopes to have a turnover of Rs 475 crore by financial year-close. In FY05, it had revenues of Rs 377 crore.

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