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Reliance MediaWorks has a robust business model
From a post-production house to one of the leading entertainment companies, Reliance MediaWorks (formerly Adlabs) has come a long way. Mr Anil Arjun, Chief Executive Officer, expects a turnaround this year as a host of releases are lined up after a lull in April-June. He spoke to Business Line about the industry’s outlook, plans and the idea for brand change.
While you posted a loss in Q2, do you believe that it was still better with the new revenue sharing agreement in place?
We have seen a major gain in performance between Q1 and Q2. Our EBITDA from operations grew to Rs 35 crore and losses were down from Rs 65 crore (in the preceding quarter) to Rs 11 crore. Depreciation and interest were high because we went through a large capital expansion in the past year. I see a lot of benefits flowing from Q3 onwards and reflecting positively on our growth and profits.
From the industry’s point of view, there has been a 20 per cent growth (in the box office) from the same period last year, and this is good news. For the rest of this year, there is a strong line-up of releases that would reflect in the industry’s numbers.
Are you more buoyant about the remaining quarters?
Reliance MediaWorks has shown strong performance in all its business segments this quarter. Its strategic investments and business operations have helped create a robust business model. This makes us a significant player across the entire film and media services value chain, which is now benefiting from the upswing seen since July. We work with a large number of films and with production values going up in India, the film and media services business (including camera rentals, film processing, DI Labs, image processing) is doing very well. These days new releases are planned well in advance and give producers and cinemas enough time to promote them and ensure a good box office (collection).
Are there any expansion plans this fiscal?
We will commission the first phase of our state-of-the-art 200,000-sq.ft film studio comprising seven sound stages at Film City in Mumbai which will support films, TV and advertising productions as well as our 1,200-people media BPO. This will provide a comprehensive one-point solution for the transition from analog to digital and physical media to digital data by the end of fiscal.
Going forward, we plan to scale-up BIG Cinemasnetwork and add 100 screens by next year leading to a presence across 85 cities and catering to over 35 million customers. There is a lot of absorption capacity in the market for cinemas and that is a thrust area for us.
In what proportion do the three verticals – exhibitions, film and media services and television software – contribute to your business?
These verticals are strictly not comparable. One is consumer business, where there is high turnover and relatively less margin while the other is a B2B business where turnover is moderate but margins higher. Of the three, the exhibition business contributes around 50 per cent with 30 per cent from film and media services and the balance from television software. I do not expect this proportion to change dramatically. What will happen, though, is that the scale would improve as we are investing across all three.
What was the rationale in going for a brand change?
The brand change from Adlabs to Reliance MediaWorks was done to reflect the profile of the company. Adlabs is derived from processing ad films. But over the years it has gone beyond this basic objective. In 2006, film processing was 80-85 per cent of our turnover but that is down to 10-15 per cent today.
We have been growing in the film processing space at double digits over the years. However, the overall space has changed now with the growth in the entertainment industry in the past few years. A lot of our initiatives are focused on moving towards consumer orientation space like cinemas, television software production and digital post production. The name change reflects the stronger Reliance parentage and the overall portfolio of the company.
Will Reliance MediaWorks benefit from the DreamWorks deal?
There will be options in the post-production space. We will pitch for visual effects, image correction and so on and see an opportunity to play it in the cinema screens. We run the largest network, not just in India but also in Malaysia and the US for some screens. We hope to play these movies.
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