R-ADAG may pick up stake in Ultra

Home video major Ultra is in talks with the Reliance Anil Dhirubhai Ambani Group (R-ADAG) for a strategic equity partnership in the company.

Susheelkumar Agarwal, managing director of Ultra Group, confirmed the development. He said: "We have been approached by the Ambani group and others such as Nimbus Communications and the TV 18 group."

However, he added that the talks were at a nascent stage. Agarwal said that the negotiations with the strategic players were aimed at raising around Rs 100 crore through sale of around 25 per cent equity. If the deal happens, it will value the company at around Rs 500 crore.

He said the company would not sell a majority stake at this point in time. "We are looking at a equity partner in the company. We do not want to sell our library, which has over 2,000 titles," he added.

However, industry sources said the Ambani group might not be interested in picking up a minority stake.

There has been a sudden rush of corporate biggies wanting to enter the home video industry after Delhi-based optical storage media maker Moser Baer entered the business last December with DVD and VCD prices at Rs 34 and Rs 28 respectively. Harish Thawani-promoted Nimbus Communications too has announced its plan to join the fray.

According to PricewaterhouseCoopers (PwC), the home video market is expected to grow at a compound annual growth rate (CAGR) of 31 per cent to Rs 2,500 crore by 2011. An additional boost will come from a growing domestic retail sector.