New Storyline - Value Research

CMYK
COVER STORY
New Storyline
Call it the art of impossible
The Bollywood has arrived! From
the first talkie Alam Ara to the sci-fi
thrillers like Krissh and
Tarzan -The wonder car to
emotional flicks like Black to
hi-end animation feature
Hanuman to what not,
the movie experience
of the Indians is not
same any more as it
!
n
o
i
t
used to be decades
Ac
ago.
Lights,
e
c
No long queues,
orman
erf
Stock P to 100)
ed
(rebas
160
Adlabs Films
UTV Software
Mukta Arts
120
Inox Leisure
PVR
80
Shringar
Cinemas
22 Sep ‘05
22 Jan ‘06
22 May ‘06
25 Sep ‘06
no black marketing of tickets, no
uncertainty whether you would get
inside the hall, no stereotyped movies
with heroes running around the trees.
Films are having out-of-the-box
themes and are being concluded
without cost overruns.
From new concept movies being
made to delivering tickets at the
doorstep of the consumer,
the largest film industry in the world
has gone in for a complete makeover.
How has the industry been able to
refine its act after takes and retakes
over the decades?
Bollywood has been able to widen
its canvass with the arclights of
leading corporate houses falling on it.
Not only the corporate houses are
developing a liking for the cinema,
the producers and directors are also
putting their act together and getting
organised by the day.
Call it a GMP (good manufacturing
practice) or attribute any management
term but the fact remains that a new
genre has emerged that is
professional and demanding, and use
concepts like the CPM (critical path
method) and PERT (project
evaluation review technique).
Cut to the recent box office hits like
Krissh, Rang De Basanti, Fanaah,
Phir Hera Pheri, Lagay Raho Munna
Bhai, Omkara, Kabhi Alvida Naa
Kehna etc. Quality content, apart
from slick marketing is also one
reason for the runaway successes of
these films. For example, the year's
biggest grosser Krissh, which has
already made Rs 100 crore and still
counting, had set aside Rs 10 crore
on publicity. Producer Rakesh
Roshan had tie-ups with Singapore
Tourism Board and Pantaloon for
promoting the film. Some other big
brands are also associating
themselves with the movies. For
Kabhi Alvida Naa Kehna, LVMH and
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COVER STORY
Nike gave free products and Airtel paid
for some TV spots. Another example is
Rang De Basanti for which UTV had
inked pact with Provogue, Berger
Paints, LG and Club HP. The partners
spent around Rs 4.5 crore on
marketing the film. So it will benefit
multiplexes significantly.
Over half a dozen successes in the
first half of the financial year and
increasing mall culture in tier-II cities
are expected to give the multiplex
chains like Adlabs, PVR, Inox etc
handsome returns. Most of the chains
have drawn up
expansion plans
and will increase their
capacity by almost 200 per cent by
2008. As some companies are also into
businesses other than film exhibition,
the integrated players will see a surge in
their top line and bottom line. The
growth has also been fuelled by easier
access to capital.
We have got you the sneak preview of
some premier Bollywood companies.
Read on the behind-the-scene activities
to find out
If the cineplexes and multiplexes have acquired the cult status in India, then the credit goes to the PVR. The company, which gave the country its first multiplex in 1997, is
the largest cinema exhibition player in the country. The company opened India's
biggest multiplex in Bangalore, built over 1,20,000 sq ft with 11 screens
and a seating capacity for 2019 people. The company also pioneered the concept of luxury viewing with facilities like plush
and fully reclining seats etc. It was the first company to
receive institutional funding in the cinema industry from
ICICI Venture (India Advantage Fund invested Rs 38 crore).
It was PVR again which introduced
the concept of computerised and
online ticketing. The company also
brings out a monthly magazine Movies First on the latest
happenings and developments in Hollywood as well as
Bollywood.
PVR has forayed into film distribution business through its
arm PVR Pictures. The latter has tied up with Ram Gopal Vermaowned Factory for the distribution business. The new venture, PVR Factory, operates
under the PVR Pictures entity and has exclusive distribution rights for Delhi, Uttar
Pradesh and Uttaranchal. PVR recently entered into an agreement with Amir Khan
Productions for producing movies. .
The company has drawn up ambitious plans to come up with 250 screens in a couple
of years. As many as 8.8 million moviegoers visited various PVR cinemas in 2005-06.
PVR
Net Sales (Rs cr)
PAT (Rs cr)*
RONW (%)**
103
69
5.7
4.0
4.7
9.6
FY 06
FY 05
*Net of non-recurring transactions
** Return on Net Worth
FRONT ROW PLAYER
PVR is the largest exhibition player in India
As many as 8.8 million people saw movies
at PVR multiplexes in 2005-06
First company to receive institutional
funding in cinema industry
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COVER STORY
BOX OFFICE BOMB
Piracy remains the biggest
bane of the Indian film
industry. According to one
estimate, 85 per cent of all
successful Bollywood flicks
are pirated in Pakistan. Amir
Khan-Kajol starer Fanaa is
believed to be the most
pirated movie ever. Over
20 crore pirated DVDs and
VCDs are sold in India every
year.
The Ronnie Screwvala-led UTV is one of the most dynamic integrated media players in the
industry. It operates in the entire value chain from producing and distributing movies, creating content for television channels to dubbing and broadcasting. Its television content
division is one of the largest in India. The division, apart from providing fictional content to various entertainment channels, provides solutions to leading international players with non-fiction shows. The company entered into
animation business in 1997 and since then there is no looking back for it. UTV Toons is
India's largest animation studio and with over 600 titles under its belt. UTV is also into airtime sales i.e sells advertising commercials on various channels. UTV has also distributed
the biggest of the Bollywood flicks including Lagan, Sarfarosh, Asoka, Swades, Mughal-EAzam, Parineeta, Viruddh, Bluffmaster etc. The strength of its distribution business can
be gauged from the fact that its movies reach 13,500 screens in India and 47,300 screens
overseas. The group also owns popular kids channel Hungama TV.
UTV
Net Sales (Rs cr)
PAT (Rs cr)*
RONW (%)**
173
154
0.9
13.4
0.7
14.5
FY 06
FY 05
*Net of non-recurring transactions
** Return on Net Worth
SCREEN PRESENCE
UTV's television content division is one
of the largest in India
UTV Toons is India’s largest animation
studio possessing over 600 titles
Company is very strong in distribution
business. Its movies reach 13,500 screens
in India and 47,300 screens overseas
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COVER STORY
SHRINGAR GROUP
Shringar is an integrated film exhibition and distribution company.
The company, which started operations in the 50s for financing
Bolloywood flicks, has gone from strength to strength. By 1990s the
group had established itself as leading distributor. The group has
three companies under its fold: Shringar Cinemas, Shringar Films
and Swanston Multiplex Cinemas.
Shringar Cinema provides theatre management services and programming model for content selection to the theatre owners.
Shringar Films handles the film distribution business and has
movies like Qayamat Se Qayamat Tak, Raja Hindustani, Jo Jeeta
Wohi Sikander, Baazigar, Rangeela, Lagaan, Chalte Chalte,
Munnabhai MBBS etc under its belt. Shringar Films plans to adopt
'own the content' strategy for its distribution business. Swanston
Multiplex manages the programming and operations of Fame
Adlabs at Versova in Mumbai. The group is also planning to diversify into food business under the Via 1 Food Street brand name. In 2001
India Value Fund invested in Shringar to fund the latter's expansion.
The fund later on sold 31.56 lakh shares to Temasek Holdings at Rs
62.50 in 2005.
Net Sales (Rs cr)
PAT (Rs cr)*
RONW (%)**
29
8
-4.9
-5.3
-13.5
-24.4
FY 06
FY 05
(Figures for Shringar Cinemas)
*Net of non-recurring transactions
** Return on Net Worth
CINEMA SCOPE
Apart from distribution and production,
Shringar also provides theatre
management services
Shringar Group also planning to
diversify into food business
Investment player Temasek holds
some stake in the company
BIG- TICKET
FLICKS
Kabhi Alvida Naa Kehna
Rs 50 crore
Krrish
Rs 40 crore
Don
Rs 40 crore
Jaaneman
Rs 40 crore
Omkara
Rs 25 crore
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COVER STORY
Subash Ghai-promoted Mukta Arts is one of the oldest organised players
in the industry. The company, which started 28 years ago, is into generation and distribution of contents for the entertainment industry.
Perhaps it is the Mukta Arts, which has produced the most number of commercial hit films like Karz, Hero, Karma, Ram Lakhan,
Saaudagar, Khalnayak, Pardes, Taal etc. The company's experiment with new genre films
like Jogger's Park and Iqbal also proved to be very successful. The company's films have good
archival value, ensuring steady flow of revenues.
Exhibition and distribution business contributed 50% of revenues during 2005-06.
The company also sees opportunity in animation, special effects, gaming, mobile content
and media education. Though the company had
offers for television programming, it did not
take a call since it believes that it does not have
the wherewithal in this area.
The latest and the most prestigious project for
the company was the opening up of Whistling
Woods Institute for Film, Television and Media
Arts (WWI) to train people on all aspects of film
making. The institute is also the officially certified training partner in India for Apple and
Digidesign, offering certification courses in
Final Cut Pro, Shake, Logic and Pro Tools.
MUKTA ARTS
Net Sales (Rs cr)
PAT (Rs cr)*
RONW (%)**
40
48
-5.6
-17.0
-5.2
-14.2
FY 06
FY 05
*Net of non-recurring transactions
** Return on Net Worth
NEW ACT
Mukta Arts has produced the
maximum commercial hit films
Mukta Arts-promoted Whistling
Woods Institute trains people
on all aspects of film making
Inox is one of the most profitable chains of multiplexes in the country. The company has
embarked on an aggressive rollout of multiplexes
across the country. With 11 multiplexes in
10 cities including Mumbai, Pune,
Vadodara, Goa and Kolkata, the company
now has Hyderabad, Chennai, Jodhpur, Lucknow,
Raipur, Kolkata and Bangalore on its radar. In
Kolkata, though the company has two multiplexes, it has tied up with local player to widen its canvas. The company opened its screen in Darjeeling
INOX
HOUSEFUL
Inox one of the most profitable chains of multiplexes in the country
Inox plans to double screen count to 98 in 16 cities in two years
Ties up with Pantaloon for pan-India presence
Net Sales (Rs cr)
PAT (Rs cr)
RONW (%)**
102
59
17.5
7.2
13.9
FY 06
FY 05
** Return on Net Worth
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COVER STORY
in April and in Kota in June, taking
its total count to 41 screens. The
company plans to almost double its
screen count to 98, across 23 multiplexes in 16 cities in two years.
The company has also tied up with
Kishore Biyani's Pantaloon group to
make a pan India presence.
Adlabs, set up in 1978, started out as film processing company catering to the ad film market. The company today is a formidable integrated player in the media industry. The company covers entire value chain from film production & processing to distribution, exhibition & FM radio.
The company entered the
film exhibition business in
2000 when it set up a 518-seat IMAX Dome theatre and Mumbai's first multiplex. It entered
into film production business in 2002 through
its subsidiary Entertainment One India. It
also
signed
a
deal
with
Synergy
Communications to acquire controlling stake
ADLABS
in the latter.
Additionally it entered into financing and co-production pact with Hyde Park
Entertainment Group, to mark entry into Hollywood.
The film processing division has met with the standards of the prestigious Kodak
Imagecare Programme for negative processing. With this feat, the company ahs entered
into the elite club of top-end processing labs in the world. Margins from the theatre
business continue to rank among the best in the country.
Recently the company has shown its intent to cater to the budget audiences by developing low-cost cinemas. In 2005-06, of the five films it produced, four were declared hits.
The company is also credited with introducing the concept of digital distribution.
For this purpose the company has signed a pact with Mukta Arts. Adlabs Films Limited
sold 50.15% stake to Reliance Anil Dhirubhai Ambani Group (R-ADAG) for Rs 360 crore.
This is in line with ADAG's plan to diversify into entertainment value chain from television to radio and DTH.
Net Sales (Rs cr)
PAT (Rs cr)*
RONW (%)**
106
86
21.6
20.6
9.5
18.7
FY 06
FY 05
*Net of non-recurring transactions
** Return on Net Worth
ACTION PACKED
Adlabs operates in entire value chain from film production &
processing to distribution, exhibition & FM radio
Margins from theatre business among the best in the country
Co ties up with Park Entertainment to mark entry into Hollywood
Co planning to enter into DTH business in a big way
October 2006 Wealth Insight 25
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