>DQ ENTERTAINMENT (INERNATIONAL) LTD: IPO NOTE (SMC)

Company Profile
Incorporated in 2007, DQ Entertainment (International) Limited is one of the leading producers of animation, visual effects, game art and entertainment content for the Indian as well as global media and entertainment industry. The company is a producer, co-producer and global distributor of TV series, direct-to-home videos and feature films. DQ Entertainment also creates art games for online, mobile and next-generation consoles. The company has also forayed into production and distribution of live action television and feature films & recently moved from a pure outsourcing service model to one where it does most of its projects on a co-production model along with large animation studios, as well as developing their own Intellectual Property (IP) content.

DQ Entertainment with its Production, Sales, Licensing and Distribution centers in India & abroad has a work force of 3500+(2788 permanent employees and 712 freelancers and trainees).

Strengths
■ Low-risk business model
The strength of DQE lies in its low risk business model i.e entering into intellectual property ownership & distribution. The model not only helps the company in generating production margins but also helps in acquiring rights to earn licenses revenues.

■ Robust Order Book
DQE has a strong order book worth USD 95.07 million (Rs. 4,567.16 million approx.), providing high levels of earning visibility. More than 80% of FY10 revenues are identified with over 40% of the order book already in various stages of production & balance to commence during the year.

■ Diversified client base
The company has a client base of over 90 companies which includes internationally recognized brands such as, the Disney Group, Nickelodeon, American Greetings, BBC, Moonscoop Group, ZDF-Germany, Australian Broadcasting Corporation and NBC Universal to name a few.

■ Innovative in-house animation techniques
DQE has developed several in-house animation techniques and technologies, which the company believes have given it an advantage over its competitors.

Strategies
■ Capitalize on the growth of the animation industry
At an estimated size of USD 494 million in 2008, the Indian animation industry is miniscule as compared to the global animation industry with estimated revenues of USD 68 billion in 2008.This leaves huge growth potential for the Indian animation industry which is likely to reach a size of about USD 1095 million by 2012. The company intends to capitalize on such growth factors by leveraging its international experience and expertise in this sector to the domestic animation industry.

■ Continued focus on co-production business model
The company intends to continue entering into co-production agreements to obtain larger percentages of the global, cross platform intellectual property and distribution rights in its productions

■ Acquisitions, strategic investments and joint ventures
DQE plans to grow through acquisitions of, strategic investments in and joint ventures with creative companies to ensure co-development of global intellectual property on a partnership basis.

To read the full report: DQ ENTERTAINMENT