Saregama plans rights issue in January

After coming out of the red, the RPG group entertainment outfit Saregama India is planning a rights issue in January 2005. The final decision regarding the rights issue will be taken at a board meeting to be held on December 23.

The Saregama counter saw witnessed hectic buying activity in both BSE and NSE on Friday. The scrip closed at Rs 126.80, which is almost 20 per cent higher than the previous close of Rs 105.

Sources close to the company informed that Saregama's performance has improved further in the current quarter (ending December 31) due to higher income from the selling of home video of Warner Brothers and royalty from the FM channels.

Incidentally, FM channel use to give royalty to the music company that owns the right of the song. The company posted a net profit of Rs 2.15 crore in the first half of this fiscal over a net sales of Rs 48.52 crore. On contrary it had a loss of Rs 21 crore in 2003-04.

Company officials said the change in strategy of Saregama has paid rich dividends.

"Acquisition costs have come down drastically. It is now working on royalty basis and not on one time payment for acquisition. Here the risk element is much less," company sources said.

According to the sources, Saregama's bottomline is likely to be improved further in the current quarter following a reduction in overheads during last few months.

Incidentally, the promoters have around 50.33 per cent stake in Saregama. The public holding in the company is around 18.20 per cent.