Management Presentation SHREE ASHTAVINAYAK CINE VISION LTD.

Management Presentation

SHREE ASHTAVINAYAKCINE VISION LTD.

Table of Contents

Investment Highlights - 2

Company Overview - 4

Industry Overview - 15

1


Investment Highlights

2

Investment Highlights

Indian Film Industry expected to grow at CAGR of 20% for the next 3 years to US$3.8 billion in 2010*

Change in demographic profile of India

Increased spending on entertainment

Multiplexes expected to grow from 328 screens in 2005 to 1,000+ by 2008*

Company is one of the prominent film distributors in Mumbai

Integrated presence across the value chain gives the Company a de-risked operating model

Strong track record in the production and distribution business – proven execution skills and understanding of the market

Strong pipeline of releases in FY’08 and FY’09

*Source: PWC “The Indian entertainment and media industry, the growth story unfolds”, 2007

3


Company Overview

4

SACVL Corporate Overview

Incorporated in Mumbai on 23rd October 2001

Film Production

Film production is considered as the key source of revenues

Built capabilities for cost effective film production

Produced hit movies such as, Jab We Met, Bhagam Bhag, “Golmaal-Fun Unlimited” , “Maine Pyaar Kyun Kiya”

10 movies intended to be produced in FY’08 and FY’09

Film Distribution

Distributed 31 movies over past three years

Distribution extends chain of integration & strengthens margins

Creates presence and increases visibility in the market

Prominent distributor in the Mumbai territory, recently entered the Delhi territory

Successfully distributed blockbusters such as OM Shanti OM, Phir Hera Pheri, Partner, Heyy Babyy, Dus

Film Exhibition

Completed the integration of the business model by entering into exhibition of films thus covering the entire value chain

Leased approximately 35 theaters in Mumbai and currently enjoys monopoly in Goa

De-risked business model – SACVL pre-sells distribution rights for all territories except Mumbai prior to release

Recovers costs through pre-sale of rights such as, distribution, music, video, overseas etc

Revenues generated from the Mumbai territory go directly to the bottom-line

5

Positions the Company higher on the learning curve

Increased knowledge of the market

Presence gives it a competitive advantage over other production houses

Stronger bargaining power with the producers and exhibitors

Strong and continuous presence in the market

Production

Average operating margin of 25%

Segment is the key source of revenues

Corporate structure helps in procuring institutional funding and insurance facility

Distribution

Good relation with production houses ensures continuous availability of quality films

Distributing films from other banners, provides critical market knowledge besides revenues

Exhibition

Forayed into exhibition to gain control of the retail end

Provides deeper understanding of the audience preferences, aiding future productions

Helps diversify revenue streams

Combined Leverage

Value Chain

6

Management Team

Mr. Dhilin Mehta

Chairman & Managing Director

Mr. H. K. Mehta

Joint Managing Director

Mr. Dhaval Jatania

Director – Business Development

Mr. Hiren Gandhi

Director – Production

Mr. Rupen Amlani

Director – Distribution and Marketing

An M.B.A with a finance specialization, he is the promoter of Shree Ashtavinayak

Dhilin began his career with small budget films like Fun2ssh and Agnipankh

Presently he is working with renowned actors and technicians on the forthcoming ventures of the Company

A Commerce Graduate, he is in-charge of the Finance & Administration activities of the Company

He co-ordinates with the department of Shree Ashtavinayak for its funding requirements

Responsible for putting the Company’s financial resources into the best investment avenues to generate better returns

A Management Graduate (MBA), specialized in Marketing

Looks after Business Development and is involved with production and distribution divisions of the Company

Responsible for drawing up the strategic roadmap of the production department, being the interface between the Company and the directors, actors, script-writers and others

A Computer Engineer, specialized in Networking

Looks after the Production Division and particularly focuses on the budgeting aspect

Responsible for the finalization of the scripts, directors, cast and locations

Has been involved in all three in-house productions of the Company

A Management Graduate specialized in Marketing

Involved in the acquisition of distribution rights for films produced by other production houses

Decides the media strategy using the various channels for publicity for successful commercial exploitation of the movies

7

Popular Stars Signed By The Company

Salman Khan

Akshay Kumar

Ajay Devgan Sanjay Dutt

Govinda

Sushmita Sen

Bipasha Basu

Lara Dutta Kareena Kapoor

Some directors working with the company

Priyadarshan

Rohit Shetty

Aneez Bazmee

Sanjay Gadhvi

David Dhawan

Abbas - Mastan

Hera Pheri Garam Masala Hungama

Golmaal Zameen

No entry Pyar To Hona Hi Tha Deewangee

Dhoom 2 Dhoom

Maine Pyar Kyun Kiya? Mujhse Shaadi Karogi Coolie No. 1 Haseena Maan Jaayegi Biwi No. 1 Hero No. 1

Aitraaz Baazigar Humraaz Khiladi Soldier

8

Focus: High entertainment value and mainstream Hindi films

Target audience:- All segments Repertoire: - Family entertainers, thrillers, comedy and romantic films

Movies With Mass Appeal

De-risked model

5 Parameter TestMovies With Mass

AppealActive Risk

Diversification

Production DistributionProduction DistributionProduction Distribution

Business Model

9

De-Risked Model

5 Parameter Test Movies With Mass Appeal Active Risk Diversification

Production DistributionProduction Distribution Production Distribution

De-Risked Model

Star cast:- Bankability and market value of the star

Banner/Producer:- Adequate financial resources to complete the movie on time

Script/Director:- Strength of the script and track record of the director

Music director: - Track record of the music director

Marketing capability of the producer

10

The recipe of entertainment: Script Screenplay Stars Salability

De-Risked Model


Production DistributionProduction Distribution Production Distribution

De-Risked Model

11

De-Risked Model

De-Risked Model


Distribution

Multiple stream of revenues

+ Focus on cost + Bankable

stars/directors +Cluster bombing

Production

12

De-Risked Model


Production Distribution

Pre-sells all the territories (except Mumbai) and other rights of the movie before the release

Recovers all costs related to movie

Revenues generated from Mumbai territory go directly to the bottom-line

Company recovers all the money invested in the project even before the movie is released

De-Risked Model

Mumbai Territory

Box Office 25-35%

In-CinemaAds 2.5%

Satellite/Cable Rights

18%OverseasTheatricalRights 5%

MusicRights 7%

VideoRights 8%

Box Officefrom otherterritories25-35%

Profits

Co

st o

f P

rod

uct

ion

Rec

ove

red

th

rou

gh

pre

-sal

e

Revenue Pie (Production segment)*

*Source: Company business model

13

De-risked model


Production Distribution

Focus on cost + cluster

bombing

Reverse calculation of revenues No of screens that movie can be screened on X Percentage occupancy X Per ticket cost X First 3 days revenues = Total revenues

Total revenues /1.2 = price of movie rights

Discounted higher if bought at an earlier stage

The exposure of movie would be maximum in the first week for revenue maximization

De-Risked Model

14


Industry Overview

15

India Entertainment Industry

Media and entertainment industry is valued at USD 7.8 billion and is expected to grow at 19%

By 2010, the entertainment industry is expected to reach USD 18.6 billion

Indian Film industry is valued at USD 1.8 billion which is expected to double by 2010

Contributes ~20% share of the entertainment industry

Largest film industry in the world in terms of number of movies produced

Country has about has 12,000, single screen theaters

Multiplexes are expected to grow from 328 screens in 2005 to over 1,000 screens by 2008

Digitization of movies and increase in the number of screens has enhanced the movie going experience

Indian Entertainment Industry 2007

Indian Film Industry

42.0%

2.0%19.4%

0.8%

31.0%

2.5%0.3%2.0%

Telev ision

Music

Films

Radio

Print Media

Live Entertainment

Outdoor Advertising

Internet Advertising

1,4131,700

1,9752,425

2,8253,300

3,825

0

1000

2000

3000

4000

5000

2004 2005E 2006F 2007F 2008F 2009F 2010F

US

D m

illio

nSource: PWC “The Indian entertainment and media industry, the growth story unfolds”, 2007

16

India Entertainment Industry

Government initiatives have given a boost to the Film industry

Industry status granted in 2001

100% FDI allowed via automatic route

Industry Financing

Prior to receiving industry status

– Difficult to acquire finance

– Finances generally came from unorganized sector, which involved high costs

– Directors pre-sold the movie rights at ‘mahurat’ stage, at a huge discounts

Post receiving industry status

– Companies can go to public to raise money

– Eros International admitted to AIM in November 2006

– Banks have started financing movies

17

Some Projects in Pipeline

Movie Title - Director US $ Million

1 Untitled – Shivam Nair 3.0

2 Untitled – Rohit Shetty 5.8

3 Untitled – Anees Bazmi 6.8

5 Untitled – Anthony D'souza 10.0

4 Untitled – Priyadarshan 7.0

6 Untitled – David Dhawan 6.0

Total $38.6

Detailed Capex Spend – Production Pipeline

18

Track Record of Strong & Consistent Growth

Total Income (USD million) FY2007 Revenue Composition

Production 68%

Distribution

32%

Exhibition

0%

24

15

7

5

10

15

20

25

30

FY2005 FY2006 FY2007

US$

2005–07 CAGR: 91%2005–07 CAGR: 91%

15.0%12.0%

1.0%

0%

10%

20%

FY2005 FY2006 FY2007

Net Income Margin FY2006 Revenue Composition

Production

53%

Distribution

46%

Exhibition

1%

Source: Company’s Business Model, Annual Report & January 2007 IPO Prospectus

19

Selected Financial Data

2005(audited)

2006(audited)

2007(audited)

Total Income

EBITDA

Fiscal Year ending31 March

EBITDA Margin

6.6 15.3

EBIT

EBIT Margin

2006(unaudited)

2007(unaudited)

(US$. mm)(2)

For 6 months ending 30 September

(US$ mm) (1)

0.2

2.1%

0.1

2.0%

11.3

74.1%

3.1

20.2%

(US$ mm)

(1) Rs.40 = US $1.00(2) Rs 44 = US $1.00

24.4

20.2

82.6%

5.5

22.7%

10.7

8.8

82.2%

2.1

19.7%

7.9

5.9

83.1%

2.7

37.7%

Net Income

Net Margin

0.1

1.0%

1.9

12.0%

3.5

15.0%

1.3

12.6%

1.7

23.9%

Source: Company’s Annual Report & January 2007 IPO Prospectus

20

Actual (as at 30 September 2007)

(Rs. m) (US$ m) (1)

Total Cash 201.8 5.0

Total Shareholders' Funds 989.3 24.7

Total Capitalization 1,061.5 26.5

Total Debt 72.2 1.8

Unsecured Loans -

Secured Loans 72.2 1.8

(1) Rs.40 = US$1.00(2) Proforma for $30mm FCCB minus 4% offering costs

Capitalisation

-

Proforma(as at 30 September 2007)

(Rs. m) (US$ m) (1)

1,352.0 33.8

989.3 24.7

2,261.5 56.5

1,272.2 31.8

1,200.0

72.2 1.8

30.0

21


Thank You

Management Presentation SHREE ASHTAVINAYAK CINE VISION LTD.

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Transcript of Management Presentation SHREE ASHTAVINAYAK CINE VISION LTD.