LAHORE: Hum Network Limited (HNL) on Tuesday announced it was contemplating the issue of right shares worth Rs140 million to meet its expansion and working capital requirements of Hum Mart (Private) Limited (HM).
In a notification sent to the Pakistan Stock Exchange (PSX), HNL announced that during its board meeting held on October 2nd, 2018, it was considering an issue of further shares as right to meet its expansion and working capital requirements.
The suggested amount of the proposed right shares issue is Rs140 million, which would ultimately raise the paid-up capital of HM to Rs200 million, read the notification.
Moreover, the board gave the go-ahead to further investment in HM of Rs80 million, which translates to HNL’s shareholding in its wholly-owned subsidiary to 70 percent.
Consequently, the company will proportionately renounce the shares so offered by HM, hence post right issue as mentioned above, HNL will not have a 100 percent stake in HM, read the notification.
In late February, HNL had announced the incorporation of HM as a wholly-owned subsidiary of HNL with an authorized share capital of Rs300 million and an initial subscribed and paid-u capital of Rs60 million.
During an investor briefing session in February, the HNL CEO Duraid Qureshi, who was the keynote speaker at the event, while briefing the gathering said, “Hum Mart feels that the online marketplace will explode in the next two to three years and this is the right time to enter the market. If done properly we will be in a position to ride the wave.”
Hum Mart will be initiated with seed money of Rs 150 million, with HNL having 60 to 70 per cent share in it. Cash flow positive is to be planned within 2.5 years.
The company will operate in Karachi at first but will expand into Lahore at the end of the first year and Islamabad would be targeted by the end of the third year.
According to the plan laid down in that session, the company said it needed an additional capital of Rs 60 million at the end of year one and Rs 40 million at the end of year two.
“The e-commerce market space is competitive, with a number of players already present. It generally takes close to 10 years to be profitable in this business, but we are aiming to be profitable in no more than three years,” said a senior manager of HNL while addressing the gathering.
Hum Network Limited is engaged in the business of electronic media. Its broadcasting portfolio consists of satellite channels, such as Hum Tv, Hum Sitaray, Hum Masala and Hum World (including separate beams for North America, the United Kingdom and the Middle East).
Also, it has strategic business units (SBUs) in films, digital media, as well as print media
HNL shares were trading at Rs5.63, down Rs0.61 (-9.78 percent. And KSE-100 index was trading at 40,806.50 points, down 122.94 points (-0.30 percent) at the time of filing this report.