A digital entertainment company Silly Monks Entertainment is set to open its initial public offering (IPO) for subscription and plans to raise Rs 15.12 crore through the public offer of 12.60 lakh equity shares of face value of Rs 10 each. The Hyderabad-based company will open its subscription on the SME listing platform of the National Stock Exchange- NSE Emerge- from January 5 till 10 January.

Incorporated in 2013, Silly Monks is an entertainment & media startup which focuses on areas such as digital media publishing, movie/content production, celebrities social media management, app development,  audio content Distribution, Google Ad word and digital Advertising, event management, and live band performances.

The publishes digital content on various platforms, such as Saavn, YouTube, Facebook, Vuclip, Amazon etc. The contents that are published on these platforms are either created by the company by its in-house production or acquired through outright purchase or through syndicated method.

Here is a quick lowdown on what we could find about the company from its prospectus.

Business streams

The company has three subsidiaries- Monkstar Music LLP- for audio content,  Event Monks Entertainment LLP- for live events, and Dream Boat Entertainment Pte Limited (DBEPL) – main content publishing business. When the company purchases content, it owns the copyrights of the content through an agreement with assignor and hence the publishing revenue is fully accrued to the company. However, when the content is through syndication, it shares the revenue with the content partner.

It said in its document that it is substantially dependent on digital media publishing business for its revenue, and for fiscal 2017, digital media publishing constitutes approximately 87% of its total revenue.

Financials

Silly Monks’a clocked revenue of Rs 6.54 crore for the financial year (half year) ending September 30, 2017. The net profit for the same period stood at Rs 0.96 crore. For FY17 ending March 2017, it reported revenues of Rs 12.01 crore with net profit of Rs 1.45 crore and in FY16, the revenues stood at Rs 4.92 crore, along with the net profit of Rs 0.28 crore.

Shareholding pattern

Company’s co-founder and MD Tekulapalli Sanjay Reddy will hold maximum shares by 45.76%, while the other co-founder  Anil Kumar Pallala (CEO) will hold 9.53% share. Its existing investors Ektha.Com Private Limited will hold 31% shares, and Ranganathasai Korrapati will hold 19.06%. Besides, the company mentions more names like Swathi Reddy  (Wife of Sanjay Reddy) with 2.10%  shares, T Mahikaansh Reddy (1.24%) , Gaurika Reddy (1.24%), and  Sridevi Koti Karyampudi 0.76%.

Objectives of IPO

Expanding content portfolio: Besides expanding its network of distribution platform and content procurement. The company also said that it will move from content procurer to content creator.  It will also add more local content and will deliver categorized content, for instance for children, teenagers etc.

Setting up six offices in Mumbai, Chennai, Bangalore, Delhi, Cochin & Hyderabad for PAN India presence: The company currently has its registered office in Hyderabad, and operates  SPV office at Hong Kong & a sale point in Cochin.  With four new offices in India, the company will be able to do engage with local talents, which will result in vast & diversified content library of its own.

–General Corporate Purpose, and

–Issue Related Expenses

It also gave a breakup of how much it will use for each objective. The company said that it will use close to Rs 8.3 crore from the issue for content expansion, followed by 2.45 crore for pan-India or office expansion, and 0.42 crore for general corporate use. Silly Monks expects to use 3.78% of the issue size with Rs 0.57 crore for IPO related expenses.