DPR for Filmmaking

This document is confidential and no reproduction or use thereof is permitted

Without the consent of Punditz Consultants Private Limited, Hyderabad.

www.punditzconsultants.com

Submitted to

UTV

Submitted by

Punditz Consultants Pvt. Ltd., Hyderabad

17th Of March 2011

http://www.punditzconsultants.com/

Punditz Consultants Pvt. Ltd., Hyderabad. 2

I. Executive Summary … 3

II. Introduction … 5

III. Why Film Financing… Why now… … 6

IV. Indian Film Industry … 8

V. Telugu film Industry … 14

VI. Studio Support … 19

VII. Slate / Portfolio film production … 21

VIII. Proposal … 23

IX. Players … 24

X. Plan … 33

XI. Financials … 39

XII. Enclosures … 41

XIII. References … 43


Indian entertainment industry has outperformed Indian economy almost every year through

the past decade, registering a CAGR of around 14 percent. Indian film industry has done well

increasing in size from Rs. 32 Billion in 2000-01 to Rs. 120 Billion in 2010-11 growing @ 14%

per annum. The business is increasing everyday as a number of avenues are adding to the

market potential. Apart from creating new age customer touch points like the internet and

mobile (poised to grow aggressively thanks to 3G technology), even the traditional income

streams like theatrical revenues, DVD sales, TV and Audio rights are increasing in size with

market expanding into new territories, advent of multiplexes and rise in ticket prices etc. The

new Indian film industry is vibrant, organized and futuristic.

South cinema, including Telugu and Tamil, accounting to about 40% of the total Indian film

industry is also increasing in size and quality. Not only do they have a strong presence in

national and international markets directly from the diaspora but also crossover potential in

countries like Japan, China, South Korea, Singapore etc. Regional cinema is strengthened by a

well integrated value chain including production, distribution, exhibition, C & S networks.

There are, however some concerns like the inexperienced lot of producers with money in their

hands coming in search of quick fame and failing to deliver; lot of productions going haywire

and out of control. Now is the time for improving the quality of money and make movies in an

organized environment. This can be done by bringing in

a. Studio support system and

b. Slate film financing i.e., funding a slate or portfolio of films than a single production.


Studio support system in essence is about major studios joining hands with experienced and

independent line producers with their expertise, reach and infrastructure to make movies on a

regular basis. While their presence lends great value to the move in terms of market, it helps to

administer proper control through the production process.

Slate film financing has been successful in Hollywood in the past 6 – 7 years with more than

half of the movies being made today produced on Slate financing arrangements (SFAs). Each of

the SFAs is made between bankers and studios for a number of 20-30 movies for a duration of

3-5 years in the range of $ 300 MM and $ 1 Bn.

Punditz Consultants Pvt. Ltd. is an entertainment company experienced in cross-lingual,

cross-cultural and cross-generic film content production. With 4 complete production teams

and about 20 strong creative team working on the subject lines, Punditz is all set to produce

films of good and sensible content with control on costs of production.

Prasad Film Labs, a Prasad Group company is one of the biggest film lab and post production

studios in the country with presence across India, in Singapore and USA. EFX, their latest

digital edition, adds to their state of the art facilities in the areas of SFX, DI, digital mastering

etc. Prasad group owns the Prasad’s IMAX, that kick started multiplex culture in Hyderabad.

Prasad group has plans to expand their presence into digital projection and 3D cameras.

Punditz, with their experience in film production, proposes to produce a slate of 21 films in a

span of 3 years with the support of Prasad Labs as equity partners. The total cost of production

for the whole slate is estimated around Rs. 100 Crores and generating revenues estimated

around Rs. 150 Crores on a conservative estimate. Punditz requires an investment of Rs. 50

Crores to meet this costs of production of which about 25 percent or Rs. 12.5 Crores will come

in from the studios and the balance Rs. 37.5 Cr is sought from media focused investor group. It

should be clearly understood that Punditz is confident of generating Rs. 50 Cr of value over the

3 year period as internal accruals and cost savings. Exit to investors could be through listing or

buyback @ agreed yield.


This project is intended to raise investments for the proposed production of a slate of films in

Indian languages with multilingual and crossover/export potential. This document explains:

a. The project, the necessity for such a project from both investment and industry points of

view;

b. Business plan, the environment in which this project is executed, the processes that are

used for corporate and production management;

c. Key stakeholders including the investors, production teams and the infrastructure

holders, their respective roles and responsibilities

d. Scope of the project, though on broad terms is limited to filmmaking, will time to time

extend to TV, Music and Stage related content as well. This can be a part of promotion,

talent search or general branding, can be on regional or national stage.

e. Key objectives of this project are

To provide the investors with decent return on their investments;

To provide clean, sensible and laudable entertainment to people which will in turn

help our brand image;

To add value to the film industry in terms of organizing the structure and changing

the quality of the money that flows in;

To SITE (Search, Identify, Train and Employ) talent, both creative and acting and

thus add to the knowledge pool of the industry

f. Estimates the revenues and expenditures of the project, the assumptions and facts that

drive these figures, threats and disaster management plans


a. Content is the King: Media for content viewing

is expanding and becoming more and more

interactive. These interactive technologies,

digital downloading, new formats for PDA’s

and handheld devices, videogames, and social

networking applications… they all require

content. This is clearly evident from the fact

that top name like Google announcing their

foray into media and content aggregation. So, the demand and the revenue base for

content and hence the demand for content creation / production is growing

exponentially.

b. Increasing number of revenue streams, volumes and territories:

Indian cinema is expanding into new territories especially overseas. Films casting

some stars like command equal overseas revenues to domestic box office sales.

While the number of customer touch points like digital media, home video etc is

increasing on one hand, on the other, the existing streams are increasing in size. The

per capita cinema spending has increased from a meager Rs. 30 in 1997 to Rs. 120 in

2008. this is mainly due to a surge in ticket price 3 - 5 times thanks to the advent of

multiplexes.

Study1 reveals that there is no decline of number of viewers in India due to the rise in

ticket prices (Number of tickets sold increased from 3 billion in 2002 to 3.5 billion in

2009).

Satellite and DVD rights have increased more than 5 times in the past 6 years.

1 ‘Indian media’ at www.nationmaster.com

http://www.nationmaster.com/


c. Increasing Corporate Culture in film industry: Corporate culture has taken strong roots in

the earlier unorganized industry thus bringing in transparency, discipline and cost

control. This has also to do with the recent emergence and success of other ‘knowledge-

intensive’ industries like IT, especially in exports or knowledge-transfer. Advantages are

clearly seen.

Market segmentation and Intelligent selection of scripts with a thorough

understanding of TG preferences (For example, stories like ‘A Wednesday” for

multiplex audiences exclusively)

Forecast and feasibility studies leading to a near perfect analysis of how the movie

could fare commercially, especially at the box office

Development of ancillary units to take up non critical functions of film production

Contract system with stars and other major cost centers thus reducing the amount of

cash flow in the whole production

Establishing MIS to integrate all the functions and manage

Reducing the dependence on the distribution by a direct contact with the exhibitor to

the producer.

d. For the Society:

Employment: This project, if successfully executed, will provide employment of at

least 100,000 man-days for skilled and unskilled manpower in a span of three years.

Movies as a CSR Tool: Movies as a media can help not only build the investing

company’s brand image but also help reach the public at large very effectively. So,

movie financing can be used as a tool to meet the CSR missions of the business houses.

Likeminded brands can even be roped in for in-film or promotion partnerships.


A snapshot of Facts and Figures

Existing Scenario:

a. Business: Films make a very important part of entertainment industry

Indian film industry earns about 25 percent of total entertainment industry

directly and another 7-8 percent indirectly (Films on TV, Music, Advertising)

Film revenues come mainly from domestic theatrical sales – Then the Overseas

Box office, Satellite and Home video, DVD, VCD and then Music, In-film branding.

As large as 14% of the revenues are lost due to piracy.2

Domestic box-office dominates the revenues at more than 70%, as compared to

11% in Hollywood.

Global Stage – Comparison:

- India ranks No. 1 in world for the number of films (1325 in 2008) and in the

number of cinema admissions (3.48 Billion in 2009).

- However, it stands No. 13 in the total investments made in production of feature

films (Rs. 9.3 Bn in 2008, less than one percent of the total global investments)

- No. 3 in the no. of screens (11,000 way below USA’s 39,000 and China’s 35,000)

- No. 3 in the revenues earned ($1.8 Bn, below US @ 9 Bn and Japan at 1.9 Bn. The

average revenues per movie is $ 1.4 Mn compared to a $ 14.8 Mn for a US film).

2 Source: KPMG-CII Repot


- Another interesting fact suggests that India stands 1st in ‘time taken to earn a

movie ticket’ at 16 minutes versus 24 Minutes in US and 48 Minutes in Australia

against a world average of 56 minutes.3 Taking Indian per capita income into

consideration, this shows how low the ATP (Average ticket price) in India is.

b. Production – Last decade has seen a paradigm shift in the production of movies in

India. Brand Bollywood has grown in leaps and bounds not just in home ground but

foreign soil as well. Some notable developments are

Small and niche films to target audience on new and unexplored genres like

docudramas (Leaving Home), satires (Well done abba), reality flicks (LSD) etc.

Digital production – With Projection turning digital very fast and new generation

High end digital cameras (Redone, Arri Alexa) introduced into Indian markets,

small and independent filmmakers have started grabbing the opportunity to make

films in digital format and screen it for niche audiences. Productions with these

high definition cameras work out very cheap (Less than Rs. 10 Million) because

they are

- Highly flexible in shooting requirements (Can shoot in natural lighting

conditions) which reduces the time to setup

- Record on chip thus reducing the film cost besides a facility to check for the

output on location everyday

Old classics colored and re-released (Moghal e Azam, Maya Bazaar)

3 Source: Screen Australia


Overseas recognition

– Scripts not only for the Indian diaspora but for a mainstream global audience

(Kites)

– Increasing use of foreign locations

– Foreign productions developing scripts with Indian backdrop (Slumdog

Millionaire)

– Co-Production tie-ups between Indian and Hollywood giants (Reliance-

DreamWorks)

– Marketing Indian films on a global stage (‘Raavan’ at Cannes)

c. Exhibition – a very important factor in the value chain –

Though India produces the highest number of films per annum globally, has the

largest audience annually and more than 60 percent of film revenues come from

Domestic Box office, it has the lowest Screen Density (12 screens per million as

against 27 in China and Japan, 59 in UK and 117 in USA)4.

Multiplex screens poised to grow at a fast pace with the strategy of producers

shifting from ‘Long run – Less screens’ to ‘More screens – Steal the Cream’, thus

reducing the shelf life of movies from a few months earlier to 1-2 weeks now.

Multiplex screens provide flexibility in timing of shows. While the movie RACE

has been played for 31 shows on a single day in a multiplex, many niche movies

run on single screens with hundred odd capacities for a show a day before

picking up good word of mouth.

4 www.screendaily.com

http://www.screendaily.com/


Demand for screens increasing because of Digitization of projection reducing the

additional cost of prints to the distributor, thus helping him take a chance on the

number of screens.

The other major drive of technology in exhibition has been 3D. With many

filmmakers announcing the conversion of earlier 2D blockbusters into 3D, the

opportunity for this projection has increased.

Potential: An analysis of Indian film revenues from different streams is given below5

5 FICCI-KPMG Report

0

20

40

60

80

100

120

140

160

180

2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p

Rs.

Bill

ion

Years 2005 - 10

Size of Indian Film Industry

Domestic Thatrical Overseas Theatricals Home Video

Cable & Sat Rights Ancillary Revenues


a. Indian films have set the box office registers ringing. Ghajini’s net collections record of Rs

2956 million in its opening weekend in 2008 was broken by 3 Idiots at the fag end of

2009. However, 2010 has been a different story altogether as four movies – My Name Is

Khan, Housefull, Kites and Raajneeti - have broken Ghajini’s opening weekend record. 3

Idiots did a net business of Rs. 405 million (Rs 40.50 crore). Raajneeti did Rs 340 million

(Rs 34 crore) in its opening weekend followed by Housefull at Rs. 310 Mil, Kites at Rs 305

million and My Name Is Khan at Rs. 300 Mil. Domestic theatrical revenues have grown @

15.5 % over the past 4 years and future potential is a CAGR of 8.4 %7.

b. Even the Overseas Box office performance has been very good. MNIK stands first at Rs.

73.5 Cr, followed by ‘3 Idiots’ at Rs. 72 Cr. Raajneeti has done 16 Cr in 10 days; Kites

opened with 5th in UK top 10 and 10th in US top 10 charts. Overseas theatrical revenues

have grown @ 22.7 % and future projections are a growth rate of around 14 %.

c. Other revenues including Home TV, C&S rights, Music rights etc also have registered a

growth between 20 and 30 %. The future for all these looks good at growth rates of

between 5 and 16 % CAGR.

d. Piracy is estimated to cutoff about 14% of the total revenues. The combined forces of

technology and stringent regulations should be able to reduce the menace of piracy.

Genres: There are new genres like Horrors, New age cinema like Dev D and LSD, current

flicks like ‘A Wednesday’ and ‘Mumbai Meri Jaan’ which are attracting multiplex audience

and making their mark instantaneously. These movies are made with low budgets and

have emerged as ‘Minimum guarantee’ genres at the box office. Analysis of movies over

the past 5 years reveals that overseas audience has a maximum preference for ‘Drama’

and ‘Crossover’ genres.

6 www.businessofcinema.com

7 FICCI-KPMG Report

http://www.businessofcinema.com/


SWOT analysis of Indian Film Industry:

Strengths:

Large reach of the industry

Low costs of production and increasing

revenues ensure high ROI’s

High internet and mobile penetration

helps promotion of films to certain TGs

like Youth and Yuppies.

Globalization helping the processes to

increase to Hollywood standards and

thus the quality of content

Scope for development in the lines of

other knowledge industries as

technology and manpower are available

at a cheaper rate.

Weaknesses:

Highly fragmented industry

Still early years of industry status and

systematization happening

Opportunities:

Digital production expanding

scope for experimentation at the

same time reducing the costs of

production

Growth assured for the coming

years and good time to invest

Opportunities in the areas of

exhibition and infrastructure

Alternate content like short

films and animation has

increasing demand

Threats:

Inexperienced producers with

easy money coming to produce

films

Piracy a major threat to films

worldwide and it dents about 14

percent in Indian Film revenues


Snapshot (Including last year’s performance)

a. About 200 films produced every year

b. Revenues of about Rs. 3000 Cr most of it through theatrical sale with an estimated

number of admissions of around 125 Crore tickets per annum

c. Costs of production of a movie ranging between Rs. 2 Cr and Rs. 25 Cr

d. Pre release revenues per movie ranging from Rs. 3 Cr and Rs. 30 Cr including sale

of territories (3 major areas viz., Nizam, Andhra and Ceded, satellite, audio and

overseas rights)

e. Satellite rights starting from 25 – 100 Lacs for a small film to 5 – 7 Cr for a mega

film

f. Around 4000 screens across the state with more than 250 in twin cities alone

g. Around 60 multiplex screens in twin cities with more than 75 pc capacity

occupancy

h. Highly enthusiastic audience – Reflection of 1980’s scenario - golden age for

movies


Business Pitch

a. Size of Telugu Film Industry

b. Categories of films: Telugu films can be divided into 5 categories as per the costs of

production for each film.

Category A: Digital Film – Filmed in digital format, at present this is used

for only shoe-stringed budget, indie films.

Category B: Low-Budget film: Done with unknown or less known actors.

Category C: Medium budget film: Medium stars, about 60 days of

production

Category D: Big budget film, with stars, generally reachable and bankable.

Category E: Mega budget flick, with young and most wanted stars, can be

easily sold pre-release

0

5000

10000

15000

20000

25000

30000

35000

819 1,5263,333

7,985

14,011

21,044

30,234

Rs.

Mill

ion

Size of Telugu Film Industry

1980 1985 1990 1995 2000 2005 2010E

198

1


c. Costs of Production – Typical Costs of Production for different categories of films are

shown below

0

50

100

150

200

250

Cat A Cat B Cat C Cat D Cat E

725

80

160

220

Rs.

Mill

ion

Categories of Films - Small to Big

Telugu Films - Costs of Production

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

5% 10% 5% 7% 5%5%

20%

10% 8% 7%

30%

30%

20% 15% 15%

5%

5%

5%5%

3%

20%

10%

40% 50% 60%

10%

10%10%

7%5%

25%15% 10% 8% 5%

Telugu Films – Cost of Prodn Breakup

Music Unit & Equipment Production Costs Post Production

Remunerations Digitization (Incl SFX) Promotion



d. Revenue Matrix – Telugu film revenues including all the streams and for different levels

of success (MG denotes Minimum guarantee) are given below. The extreme cases of a

blockbuster or super flop are not considered.

e. Project Durations – Project durations with a breakup of time taken for each stage viz.,

Pre Production, Production, Post Production and Release of the movie are given below.

These are only typical and can change with the subject and style of making.

0

50

100

150

200

250

300

350


Rs.

Mill

ion

Success Range for each Category

Telugu Film Revenues

MG

FAIL

AVG

AB AVG

HIT

0 2 4 6 8 10 12 14

Cat A

Cat B

Cat C

Cat D

Cat E

Duration in Months

Cat

ego

ry o

f fi

lm

Project Duration (In Months)

PreProduction Production PostProduction Release


Issues: There are certain issues to be addressed to convert the positive points like good

infrastructures and audience turnouts into long term business prospects:

a. Subjective Reasons for Low performance levels8:

True potential going unidentified – No attempt to nurture talent

Driven by pre conceived assumptions – Not facts

Lack of judgment of Script – many still go by narration..!

Lack of research to know what a viewer wants, his / her get-go, emotions

No product segmentation - Scripts made to woo all the viewers as a bunch

Inexperienced producers taking up production as a hobby, not able to

release on their own and losing huge monies

- Tollywood, in spite of being the second biggest in the country, can not

boast of many nationally acclaimed names because of their Indifference

to experimentation and lack encouragement to out-of-the-box talent

b. Objective Reasons:

Not the right cost allocation – Going more frenzy in freezing stars than by

market potential

No proper planning – huge amounts of cash going into the projects than

required – escalating budgets

Result… Projects finally ending up as cost failures even more than creative failures

Solution… Studio Support System in a Corporate Environment making a slate of films

8 Punditz Analysis


Big studios joining hands with experienced producers to produce movies.

The Model

FUND

STUDIO

LINE

PRODUCER

PROJECTS

A media focused corporate

fund investing in the right

teams and projects

Studio supporting the

projects with their reach

and Infrastructure, ensuring

smooth execution

Experienced line

production teams designing

and executing the projects

to the design

Right mix of projects that

are commercially viable

and aesthetically appealing


Features

a. Bring in financial discipline – introduce contract system with key players like cast

and crew

b. Ensure smooth flow of production process – release the movie by negotiating with

buyers and exhibitors

c. Promote indie culture – Independent movie makers with trained talent on one

hand and raw talent on the other

d. Develop script banks and creative talent banks to bring in new ideas

e. Employ new age marketing tools like online, to stay connected with audience

f. Developing Production hubs in tier 2 & 3 cities

g. Developing exhibition circuits - Reducing dependence on distribution

h. Development of virtual studios - 3D setups, Modeling, Miniature - SFX, 2D & 3D

teams


Financing for a slate or portfolio of films was termed as ‘Slate Film Financing’. Making

different genres of films for different audiences, timings and budgets would help producers

benefit on the economies of scale. Producers can reduce their costs by

a. Signing long term contracts with stars

b. Signing multi-film deals with distributors and exhibitors

A KPMG study established that producing a portfolio of films can reduce the costs of production by

about 10% and increase the revenues by 12%, thus expanding the profit window by over 20 %.

Chart – Costs Reduction in Slate / Portfolio Film Production

Cost Reductions Existing Costs (%) Possible Cost Revised Costs

( % ) Increase( % ) ( % )

Pre production 2 2 4

Remunerations 30 -3 27

Post production 7 -2 5

Equipment 4 -1 3

Production Expenditure 35 -4 31

Distribution Costs 22 -3 19

Total 100 -11 89

Chart – Revenue Increase in Slate / Portfolio Film Production

Revenue Enhancement Existing Rev Change Revised Rev

( % ) Increase( % ) ( % )

Domestic Theatrical 65 9 74

Overseas Theatrical 11 0 11

Satellite 14 0 14

Music 6 0 6

Others 4 0 4

Leakages 0 5 5

Total 100 14 114

Total Costs Of

Production are

reduced by

10 – 12 %

Total

Revenues are

increased

by 10 – 12 %


Hollywood Model of Slate Financing Arrangements (SFA): Hollywood popularized this kind

of financing a slate of films in the earlier 2003. Since then all the leading studios have entered

into such deals with banks and other financial institutions. Today, more than half of the films

produced in Hollywood are done in these arrangements. Some of the prominent SFA deals

that happened in Hollywood are given below:

Some SFA deals that happened in Hollywood Between 2004 & 2010

Sl. No.

Date SPV Title Studio Investment Banker Deal Amount Movies/Years

1 2004 Jul Melrose Partners 1 Paramount Meryll Lynch $ 231 MM 26 / 3

2 2005 Apr MVL Film finance Marvel / Paramount ML / Pierce, Fenner & Smith

$ 525 MM 10 characters

3 2005 Jun Legendary Pictures Warner Bros Thomas Tull $ 500 MM 25 / 5

4 2005 Sep Kingdom Films Walt Disney Co CSFB $ 135 MM + $ 370 MM Credit line

5 2005 Jan Dune Entertainment Fox filmed entertainment Drusdner Bank $ 325 MM 28

6 2005 Nov Dune Entertainment Fox filmed entertainment Drusdner Bank $ 325 MM 16

7 2006 Jan Relativity Media Universal Deutsche Bank $ 200 MM

Gunhill road 1 Sony entertainment $ 400 MM

8 2006 May Relativity Media Universal / Sony entertainment

Deutsche Bank $ 740 MM 19

9 2006 Oct Melrose partners 2 Paramount Dresdner Kleinwort $ 300 MM 25

10 2007 Jan Newline Cinema Newline Cinema Royal Bank of Scotland $ 350 MM 20 / 2

11 2007 Aug Dune Entertainment Fox filmed entertainment Drusdner Bank $ 500 MM

12 2007 Aug United artists (MGM) United artists (MGM) Meryll Lynch $ 500 MM 15-18

13 2008 Feb Relativity Media Universal $ 1 Bn 40

14 2009 Sep Relativity Media Universal Comerica Bank / $ 300 MM

15 2009 July

Reliance Big Entertainment

Dreamworks Reliance $ 825 MM 30


• Propose to initiate the first channel of Fund – Studio – Line Producer with a closed

ended fund to make films

• About 25% of the fund will be invested by the studio in the form of infrastructure

• An SPV formed with all the three viz., Prasad Labs, Investors and Punditz

– Punditz consultants – Execution of productions & corporate management

– Prasad Labs - Infrastructure Support

– Corporate Fund

• Studio support in terms of infrastructure and production equipment viz., Lab, Raw

Film, Unit and equipment, Post Production studio, recording theatre besides

others


Mainly there will be three players viz., investing group, Line Producers and Studio. However,

partnerships will be built with TV networks, Distributors, stars and other major cost centers to

reduce the amounts of cash flow and spread the risks across the portfolio.

Investors are either a group of HNIs or an institutional fund with plans to invest in film

industry. This fund will be invested in a Special Purpose Vehicle which will produce the

movies. The amount of investments needed is Rs. 50 Cr in which 25% will be invested by

the studio (Prasad Film Labs) and the remaining 75% (Rs. 37.5 Cr) will be brought in by

the investors. The duration of the SPV is proposed to be 3 years and the number of films

is 21. The exit route for the investors will be either through IPO or Management Buy-Out

(MBO) which can be decided at the start of the venture.

Studio – Prasad Labs

a. Founded in 1956 by ace filmmaker Dr. LV Prasad, PFL is the largest provider of

integrated film Lab, Post production services and Outdoor equipment including

the first Panavision camera in South India

b. 18 times winner of the prestigious national award for the best film laboratory

c. Established labs across the country in six locations fully digitized with a capacity

of over 50000 prints per annum

d. Production facilities and offices in India (Chennai, Mumbai, Hyderabad, Bangalore,

Trivandrum, Bhuvaneswar, New Delhi, Kolkata), Singapore and Hollywood.

e. Established South India’s first IMAX theatre in Hyderabad over six years ago with

the world’s largest 3D-IMAX screen


f. Established EFX, the film restoration and visual effects studio with world class

artists and projects on their portfolio

g. Entered into digital cinema services like mastering, distribution and exhibition

h. Established LV Prasad’s Film & TV academy in collaboration with Arcadia

university, USA to nurture and promote talent

i. Plans to enter into digital cinema projection (Prasad Xtreme Digital Cinema

Network – PXD has tied up with BARCO digital projection systems)

Line Producers – Punditz

a. Profile

- Punditz is a group of producers, directors, management & finance professionals,

experienced in handling major projects & filmmaking

- A team with an understanding of filmmaking as a business and movie as a product

with an end use of creating pleasure

- Equipped with enough production teams to organize 3 – 4 productions paralelly

- Network of over a hundred industry trained technical and creative people with a

good 50 ready-to-shoot scripts on hand

- Overall team’s experience – Over 100 projects [Scale from Rs. 50 Lacs to Rs. 20 Cr]

- Cross cultural, cross lingual, cross generic and cross platform experience

- Exposed to the digital age tools and markets

- Worked on in-film branding events from designing to execution

- Connectivity with Yuppies and Collegiates – that is, age groups of 15 – 40 years - A

major chunk of film going public


b. Our process

- More time for pre production than production / Post production

- Market research and group discussions among targeted groups

- Using PR, Media at proper junctures of production and innovative product launch

and promotion events

- In-Film product placement and brand partnerships

- Multilingual productions to blanket risks even before the release

- Usage of Project Management methodologies & state of art technology

- Rehearsals, auditions and mock sessions with all the cast and crew for every

project resulting in wastage reduction

- Marketing scripts – Reduce risk – Increase probability of success

- Employing new tools like viral marketing, social networking to reach the target

groups

- Alternative content production - Short films as the second stream of content -

Target Media: DTH/IPTV, Web & 3G and Festival participation

- Developing subjects in unexplored genres like fusion music, sports, thrillers, Sci-Fi,

Period

c. Our strengths – Multiple production teams, “Ready to produce” scripts and well

trained crew members, support from distribution and satellite channels,

networking capabilities (Connectivity with various TG’s). Our financial processes

are supported by auditors with specific domain expertise (Pavan More &

Associates)


d. Core Team

- Raj Madiraju – Founder and Creative Head

Founder of Punditz Consultants – A four year old entertainment company

Creative head with corporate brain – Over 15 years of entertainment

industry experience in different verticals like Films, TV and LIVE Event

management

Working experience of eight films as 1st and 2nd Assistant director –

Including one Hollywood project – Worked with ace directors like Dasari

Narayana Rao and Suresh Krishna

Directed one film in Telugu the year 2000 – A small budget flick ‘Uncle’

Worked in top management positions for entertainment companies like

Digiquest Corp., Innosoft, Larsco entertainment etc

Designing and making experience of Ad films – Over 10 TV Commercials for

political parties and educational institutions

Over 20 corporate films and short films –

More than 20 class one events including corporate launches, conferences,

entertainment events – From designing to production

About 50 weekly episodes of Business shows on TV

Worked on 5 films for their In-film product placement successfully


- GVG Raju – Producer

A second generation film industry professional

Experienced for over two decades and 15 projects on various stages of

production

Good hands on various nuances of film production including creative,

management and marketing areas

Expertise in identifying and nurturing raw talent

Member of jury for National award selection

Filmography:

- 8 films as producer with top stars in Telugu like Pawan Kalyan, Prabhas,

Gopichand, Sumanth, Tarun etc., and eminent directors like Suresh Krishna,

Muthyala Subbaiah, Sekhar Kammula etc.

- Films won both critical accalaims and box office successes.

- Projects worth Special mention include ‘Toli Prema’ (5 Nandi awards

including Golden Nandi for best film), ‘Godavari’ (5 Nandis including Silver

Nandi for second best film) and ‘Gokulamlo Sita’, a box office success

- B. K. Sarma, Designer, Company affairs

B. K. Sarma is a Certified Associate of the Indian Institute of Bankers and

has a Masters degree in Business Administration. He has had over three

decades of experience in the banking and financial services industries,

working in various positions at Canara Bankand its subsidiaries such as

Can Fina. As head of systems group at Can Fina, he has been involved in

various financial activities such as merchant banking, factoring, portfolio

management, equity analysis and research. From 1992, Mr.Sarma has been


Punditz Core Team Continued…

working as an independent consultant, heading Foray Universal

Consultancy Services formerly known as Foray Financial Services.

In this role he has been involved in raising capital for several successful

ventures in Hyderabad, Bangalore and Chennai. He has also provided

consulting services in all aspects of issue management to at least 70

companies for their public/rights/preferential offers.

- Venugopal Nair – Executive Producer (Hindi & Hollywood)

Over 4 decades of rich experience in film production

Worked for various Hindi movies in the initial stages and have worked with

the stalwarts of the Indian Film Makers likWednesday, July 14, 2010e

Satyajit Ray, Mrinal Sen, Bimal Roy, Ritwik Ghatak and Basu Bhattacharya.

Worked with almost all the international films that are shot in India, like

Far Pavilion, Octopussy, Jungle Book, A Passage to India, Gandhi, Jewel in

the Crown, Peacock Spring, Warrior and many others.

Worked with some of the Documentary films like Ganga the Goddess of

India, Jainism in India, Ayurveda.

Specialties - For International Producers, organizing their shoot, location

selection, talent search, organizing equipment and technicians in India,

Local and Central Permissions from the respective Government, Customs,

and Logistics, Location Management, hotels, transport etc.

- MV Raghu – Director of Photography

Ace cinematographer with over 65 films as DP in Telugu, Hindi and Tamil

Worked with top Telugu directors including K. Vishwanath, Vamsi,

Jandhyala etc. apart from directing two films himself


Punditz Core Team Continued…

‘Kallu’, his directorial debut won top laurels in Telugu films in 1986

including three Nandi awards, Kalasagar and APCTA awards

His work behind the lens is regarded as top class with some of the great

works as Sirivennela (A Nandi award winner for cinematography),

Swathimuthyam, Sitara, Anweshana, Kallu apart from many others

Good hands on digital productions including ‘Red’ camera.

Worked on several documentaries including Hollywood works

Been active in film festival organizations - HIFF and Hyderabad Film club

Been a faculty to film studies in Hyderabad Central University

- B Satyanarayana – Producer

A passionate film producer with extensive experience in production

Over 30 years and 25 films as production executive

Produced 4 films independently

Ability to produce films to the planned budgets

Filmography as producer

- ‘Bollywood Calling’ with Nagesh Kukunoor, a nationally acclaimed director

- ‘Missamma’ with Neelakantha, a national award winning director

- ‘Mayabazar’ with Mohankrishna another national award winning director

e. Second Line – Very strong line of trained creative people with extensive hands on

expertise on production equipment and experience in filmmaking in several

languages.


Deliverables

a. Provide infrastructure required for

production

b. Evaluating the project designs

c. Assessment of team combinations

d. Nurturing relations with stars

e. Support in the areas of marketing

f. Evaluating and finalizing scripts

a. Arrange for the funds

required

b. Helping production teams

in corporate management

c. Financial Management

a. Design and execution of production

b. Negotiating with stars for contracts

c. Organizing talent pools

d. Appraising the studio with the designs

e. Appraising the investors with plans

f. Corporate management

Studio

Corporate

Fund

Line

Producer


Win – Win Situation:

INVESTORS:

• Mitigation of risk by slate

production – expanding the profit

window and making a bouquet of

films, not one.

• Experience an industry with

stalwarts in the field ensuring no

shocks and surprises

• Participation in a sunrise concept

and thus reaping the early mover

advantage

• Owning a healthy content bank of

20 plus films at the end of 3 year

period

• Supporting efforts to redesign a

high risk – high return model into

a low risk – good return model

LINE PRODUCER:

• Opportunity to work with the

leaders of Industry

• Infrastructure support – an

enabler to produce more movies,

annually

• Support for innovative and

creative entertainment ventures

• Opportunity to enter Bollywood

and Hollywood productions

earlier, than planned

• Creating an employment

opportunity of over one lac man

days

STUDIO:

• Utilisation of under -utilised

capacity

• Improved visibility as a

production house with

around 10 movies produced

each year, through the JV

• Be a part of productions in a

number of languages,

including Bollywood and

Hollywood productions

• Value Creation for small and

insignificant films by lending

name and support


Process: Organizational Structure and the processes are shown in the charts below


a. Search for Creative Talent – Short Film Festival

- A contest inviting trained and untrained talent to present their short films

- Trained talent from industry and raw talent from corporates and college

students

- Expect to aggregate about 30 good short films per event

- Potential to be sent to film festivals across the world

- A set of about 10 – 15 talented creative people writers and directors

- A TV show to screen the films as episodes inviting viewers to vote their choice

– Second and third editions of TV show expected to rake in revenues as well

b. Movie Making - Overall Plan is for 21 movies in 3 years. However, this can change with

market dynamics

o First Year:

- 2 Digital films (Short digital but converted to 35 mm - 10 prints)

- 2 Small films (Approximately 36 prints)

- 1 Medium film (Approximately 200 prints)

o Second Year:

- 2 Digital films (Short digital but converted to 35 mm - 10 prints)

- 2 Small films (Approximately 36 prints)

- 1 Medium film (Approximately 200 prints)

- 1 Big Budget film (Approximately 350 prints)

o Third Year: 3 Digital films, 3 small films, two medium films, one big

budgeted film and one mega film


Project Phasing – The chart describes different stages of each production and all the

productions in the plan, year-wise.

Year I (2 Digital Films, 2 Small Films and One Medium Film)

Year 1 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12

Short films - event + Production

A1

A2

A3 Development

B1

B2

B3 Development

C1

C2 Development

D1 Development

Chart - Project Phasing (Legend)

Pre Production

Production

Post Production

Release


Year II (2 Digital Films, 2 Small Films and One Medium Film, One Big film)

Year III (3 Digital Films, 3 Small Films, One Medium One Big and One Mega films)


Short films - event + Productn

A5

A6

A7 Development

B5

B7

B8 Development

C3

C4

D2

E1


Short films - event + Production

A3

A4

A5 Development

B3

B4

B5 Development

C2

C3 Development

D1

D2 Development


a. Summary of Projections – Three Years

Particulars

I Year

II Year

III Year

Income

Category - A

130.00

450.00

220.00

Category - B

1,000.00

700.00

1,300.00

Category - C

600.00

1,000.00

2,300.00

Category - D

-

2,400.00

2,100.00

Category - E

3,000.00

Total Income

1,730.00

4,550.00

8,920.00

Expenses

Category - A

140.00

140.00

210.00

Category - B

500.00

500.00

750.00

Category - C

800.00

800.00

1,600.00

Category - D

-

1,600.00

1,600.00

Category - E

110.00

2,090.00

Office maintenance

66.40

125.72

144.58

Total Exp

1,506.40

3,275.72

6,394.58

Profit before tax

223.60

1,274.28

2,525.42

Provision for tax

55.90

318.57

631.36

Profit After tax

167.70

955.71

1,894.07

PAT/ Sales ratio

9.69%

21.00%

21.23%

ROI

9.32%

57.92%

122.20%

EPS

1.68

9.56

18.94

(Assumed that 10000000 shares of 10/- each)


Notes

The 50 Cr raised from investors will be treated as under by the company:

a 10 Cr as normal equity and balance 40 Cr as preferential equity

b The face value of the equity share will be Rs. 10 divided into 1 Cr shares.

c The preferential shares will have a face value of 100 that is 40 lac shares

d The preferential shares will have a coupon rate @ 5% dividend on a cumulative basis.

e The Pref equity shall be converted into normal equity at the end of three years at an appropriate premium

based on the earnings achieved (EPS) and 50% of the industry average P/E multiple for similar size companies

f At the end of 3 years - Plan an IPO with an offer for sale at market related prices

g Punditz - 10% of equity and profits earned will accrue to Punditz as working partners for their efforts

The Remaining financial projections viz., Cashflow for three years, Office expenditure, Assumptions for

revenues, Cost structure for each individual project etc are given as annexures in separate individual files.


The Letter of Intent from Prasad Labs for their participation in the proposed project is pasted below:


b. CII – FICCI report on Indian entertainment industry – 2009

c. CII – KPMG report on Indian Entertainment Industry – Focus 2010

d. www.businessofcinema.com

e. www.screenglobal.com, www.screenaustralia.com

f. http://en.wikipedia.org/wiki/Bollywood

g. http://en.wikipedia.org/wiki/Cinema_of_Andhra_Pradesh

h. www.nationmaster.com

i. www.screendaily.com

j. www.imdb.com, www.boxofficemojo.com

Raja Sekhar Madiraju, Director

Punditz Consultants Pvt. Ltd.,

Phone: 91 98488 03132

Email: [email protected]

http://www.businessofcinema.com/

http://www.screenglobal.com/

http://www.screenaustralia.com/

http://en.wikipedia.org/wiki/Bollywood

http://en.wikipedia.org/wiki/Cinema_of_Andhra_Pradesh

http://www.nationmaster.com/

http://www.screendaily.com/

http://www.imdb.com/

http://www.boxofficemojo.com/

mailto:[email protected]

DPR for Filmmaking

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