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Basilic Fly Studio

• Basilic Fly Studio is coming out with a 100% book building; initial public offering (IPO) of 68,40,000 shares of Rs 10 each in a price band Rs 92-97 per equity share.
• The issue will open for subscription on September 01, 2023 and will close on September 05, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 9.20 times of its face value on the lower side and 9.70 times on the higher side.
• Book running lead manager to the issue is GYR Capital Advisors.
• Compliance Officer for the issue is Nikhil Midha.

Profile of the company

Basilic Fly Studio, Stands proudly as one of India’s Foremost Visual Effects (VFX) Powerhouses. It is a visual effects (VFX) studio headquartered in Chennai, India with subsidiaries operating at Canada and UK which specialize in creating visual experiences that captivate audiences around the world. It holds proficiency in the VFX industry and have delivered high-quality VFX solutions for movies, TV, net series and commercials.

With a decade of expertise under its belt since its inception in 2012, it has become synonymous with captivating visual experiences that leave audiences spellbound. Its passion for pushing the boundaries of creativity and technology knows no bounds, as it tirelessly deliver exceptional VFX solutions for a diverse range of projects including movies, TV & net series and commercials. It talented team of artists, armed with the latest cutting-edge technology, has garnered acclaim from clients spanning various sectors and countries, solidifying its reputation as a trusted name in the Indian VFX industry. From its humble beginnings as a compact unit, it has blossomed into a thriving organization with over 500 skilled individuals. In order to better cater to its global clientele, it has expanded its reach with offices in Pune, London and Vancouver, providing local points of contact for efficient query resolution. 

At the company, it has established a strong presence in the industry by forging direct partnerships with diverse production houses, as well as collaborating with prominent VFX companies and studios through sub-contracting arrangements. Many VFX companies and studios choose to outsource certain aspects to specialized teams who are equipped with expertise, infrastructure and technology to manage large-scale VFX projects. It has generated major revenue from VFX companies and Studios.

Proceed is being used for:

• Expenditure for setup of Studio/Facility at Hyderabad and Salem.
• Expenditure for adding infrastructure to further strengthen the existing facilities/offices of the company located at Chennai and Pune.
• Making investment through equity in the subsidiaries for expansion of workspace by acquiring new office space located at London and strengthen the existing facilities/offices located at Vancouver.
• General corporate purposes.
• Issue expenses.

Industry overview

The Indian VFX industry has been gradually climbing up the ladder with adaptation of world-class techniques and innovative technology. The content creators are upping their storytelling with marvelous VFX advancements. With the rising trend in the industry, the VFX is growing at an impeccable growth rate. It is experimenting a huge standards gap from other Western countries, but however the times are changing a lot. In a recent years, the VFX industry in India has taken a storm with some of the great work that has been displayed recently. Apart from the big budget & successful films like Bahubali & Krish, there are some of the corporations have become tech savvy. 

The Animation, Visual effects, Gaming and Comic (AVGC) sector in India has witnessed unprecedented growth rates in recent times, with many global players entering the Indian talent pool to avail offshore delivery of services. Further, the Media and Entertainment (M&E) Industry is expected to grow at an 8.8% CAGR by 2026. As per the experts, within the M&E Industry, the AVGC sector can witness a growth of 14-16% in the next decade. India is emerging as a primary destination for high-end, skill-based activities in the AVGC sector. The Government of India has designated audio-visual services as one of the 12 Champion Service Sectors and announced key policy measures aimed at nurturing sustained growth

To realize the potential of the Indian AVGC industry, in the Budget speech for the fiscal year 2022- 2023, Hon’ble Finance Minister of India, Smt. Nirmala Sitharaman announced the formation of an Animation, Visual effects, Gaming and Comic (AVGC) promotion Task Force. The AVGC sector has the potential to present positive prospects for investors while also generating employment opportunities for the youth. Newer industry developments, such as discussions around metaverse and education digitization, could aid the AVGC sector's growth in India and prepare it to become a global leader. Moreover, the larger thought supporting the formation was to unleash the scope and reach of AVGC sector in India to become a torch bearer of Create in India and Brand India.

Pros and strengths

Well equipped with advance technology: The Company is well equipped with all the advance equipment’s as needed in the Industry. This provides the company with the edge over its competitors.

Experienced Promoters and Technically Sound Operation Team: Its Promoters have significant industry experience and have been instrumental in the consistent growth of the company. Its management and technical professional teams combine expertise and experience outlines plans for future development of the company and ensures successful execution of the plans.

Strong client base: The company is successful in building a strong client base for the business. This relationship has helped it in getting repeated business from its clients. Thus, it focus on maintaining strong relationship with existing clients which will help it to gain competitive advantage in gaining new clients and increasing the business.

Risks and concerns

Operates in constantly evolving VFX market: The Company operates in the entertainment industry which involves a substantial degree of risk, including as a result of rapidly evolving changes in technology, digital content platforms and consumer tastes. The Company’s business requires it to quickly react to changing technologies, market dynamics and clients’ behaviour and preference. In particular, the convergence of high-definition portable devices, high-speed wireless internet and complementary digital content services, all of which are becoming widely available and more affordable, has created a market in which consumers can watch their favourite shows when, how and where they want.  As a result, the industry has seen high demand for OTT content, which has resulted in increased opportunities for VFX services providers. The Company’s success at winning opportunities to provide VFX services for content producers depends on its ability to effectively adapt its services to the changes content producers develop in response to evolving consumer preferences. If it fails to keep pace with its customers’ needs or fails to respond to changes in technology, it may be unable to compete effectively which could have a material adverse effect on its business, financial condition, cash flow and results of operations. 

Face intense competition: It faces intense competition from both Indian and foreign competitors, many of which are substantially larger and have greater financial resources than it. Growth in entertainment industry in recent years has attracted new industry participants and competitors. The entry of such competitors may change the media and entertainment industry in ways that may not favor it. Domestic competitors of a scale similar to or greater than its own may impact its ability to attract creative and technical talent and other scarce resources including content, which could have a material adverse effect on its business, prospects, financial condition and results of operations.

Dependent on key Personnel: Its success heavily depends upon the continued services of its Key Managerial Personnel, along with support of its Promoters. It also depends significantly on its Key Managerial Personnel for executing its day to day activities. The loss of any of its Promoters and Key Management Personnel, or failure to recruit suitable or comparable replacements, could have an adverse effect on it. The loss of service of the Promoters and other senior management could seriously impair the ability to continue to manage and expand the business efficiently. If it is unable to retain qualified employees at a reasonable cost, it may be unable to execute its growth strategy.

Outlook

Incorporated in 2016, Basilic Fly Studio, Stands proudly as one of India’s Foremost Visual Effects (VFX) Powerhouses. It is a visual effects (VFX) studio headquartered in Chennai, India with subsidiaries operating at Canada and UK which specialize in creating visual experiences that captivate audiences around the world. On the concern side, its success heavily depends upon the continued services of its Key Managerial Personnel, along with support of its Promoters. It also depends significantly on its Key Managerial Personnel for executing its day to day activities. The loss of any of its Promoters and Key Management Personnel, or failure to recruit suitable or comparable replacements, could have an adverse effect on it

The issue has been offered in a price band of Rs 92-97 per equity share. The aggregate size of the offer is Rs 62.93 crore to Rs 66.35 crore based on lower and upper price band respectively. On performance front, total income of the company for fiscal year 2023 was Rs 7895.15 lakh against Rs 2528.78 lakh total income for Fiscal year 2022. An increase of 212.21% in total income. Profit after tax for the Fiscal 2023 was at Rs 2774.02 lakh against profit after tax of Rs 90.1 lakh in fiscal 2022. Going forward, the company’s intend to cater to the increasing demand of its existing customers and also to increase its existing customer base by enhancing its geographical reach. Enhancing its presence in additional regions will enable it to reach out to a larger market and have direct access to the producers, production houses and directors which will allow it to have better understanding of their concept and ideas.