Now Saregama offers rights at a discount

After the bonanza from ING Vysya and Karnataka Bank, it is the turn of entertainment major Saregama India to reward the shareholders with a rights issue at a huge discount to the market price.

While the two banks announced their issues at almost one tenth of their market prices "" ING Vysya is offering three shares for every share held at Rs 45 while market price was at Rs 500 and Karnataka Bank at Rs 20 when market price was over Rs 150 "" Saregama said it would offer four shares for every seven shares held, at Rs 45. The Saregama stock closed up at 145.20 on Thursday.

Sanjeev Goenka, vice chairman of the company, said the issue was a way of rewarding shareholders who had shown continuous faith in the company, which turned around after three years of loss.

The company, part of RPG Group, will raise Rs 24 crore though the issue to be launched within 60 days. It will be managed by I-Sec.

Goenka said the proceeds from the issue would be utilised to retire its existing debt and fund its future expansion plans.

"Saregama has around Rs 13 crore debt. We plan to retire the entire amount and make it a debt free company," he added.

The rest Rs 11 crore and some more funds mobilised through internal accruals would be utilised for digitisation of existing catalogue, strengthening home video business and film production into which the company has re-entered recently.

The digitisation process is part of Saregama's plan to become an important player in the emerging broadband segment which is going to be a big entertainment medium in the country in another 12 to 15 months.

Saregama is also going into the film production in a big way by launching four films, two Hindi and two Bengali in next one year.