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Network18 to infuse $5 mn in HomeShop18

moneycontrol.com
Nov 14, 2009 at 02:41am IST

Korea’s GS Home Shopping will invest in Network18’s arm HomeShop18. GS Home Shopping will acquire 15 per cent stake in the company for $18.5 million while Network18 will infuse $5 million in HomeShop18 to hold on to controlling stake of 51 per cent stake in the company.

In an interview with CNBC-TV18, Group Chief Executive Officer of Network18 Haresh Chawla spoke about the HomeShop18 operations and how he sees the deal impacting HomeShop18.

Excerpts from the interview:

BIGGER HORIZONS: Network18 Group CEO Haresh Chawla speaks about the HomeShop18 operations.

Question: What can you tell us about GS Home Shopping? What will they bring to the table with this $18.5 million and 15 per cent stake buy?

Haresh Chawla: GS is the largest home shopping company in Korea, which is a mature and a large market for home shopping. It is also the third largest home shopping company in the world. Besides the television part of the business, they are also largest players in the online retailing business in Korea. So from our perspective, they bring in a lot of earning and value. They also have a good relationship with suppliers in China and in other parts of the world. So bringing in a strategic partner with so much experience and so much depth of knowledge will really help us scale up that business in India.

Question: They are coming in as strategic investors and not as financial investors. Is that an option for GS Home to increase their stake from the current 15% which they have bought?

Haresh Chawla: This is something we will discuss with them at a later date because currently we do have a financial investor in the venture. SAIF Partners seed-funded the venture with us about two years ago. However, there is nothing on the cards at the moment.

Question: This deal values HomeShop18 at USD 100 million. How much will Network18 continue to hold going forward in HomeShop18?

Haresh Chawla: We will continue to hold a controlling stake at about 51per cent. The company has raised $23.5 million in which GS Home Shopping has put about $18.5 million and Network18 will put in $5 million to make sure that we retain controlling stake.

Question: Does this move make GS the second largest stakeholder or does SAIF hold higher than that?

Haresh Chawla: SAIF holds higher than that. Our stakes are roughly in the range of 51 per cent in Network18, 15 per cent will be with GS, about 27 per cent with SAIF and the rest with the team.

Question: What is the growth potential for the business itself? How have things shaped up until now?

Haresh Chawla: We have been seeing pretty good traction, for the business we are hitting a run rate of just about Rs 25 crore a month on our gross sales. Hence, it is a pretty good scale up happened so far. We believe that with this round of funding, we should be able to start scaling up in several other aspects of the business.

It was a concept risk which we took. However, the consumers have responded very well. We do close to about two lakh plus orders in a month. So we are the largest e-commerce player in India as well. Therefore, with this funding, we should be able to scale up on several part of the operation. We are also seeing some competition entering which should make it all a pretty good market to operate in. All over the globe, home shopping is really one of the most profitable TV ventures. Home shopping would become one of the very attractive segments of the television market.

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