Eros has Rs 10 bn capex plan

MUMBAI: Eros International Media has an investment plan of Rs 10 billion over two years as it has firmed up a pipeline of 50 movies.

The slate, wide enough to make it India’s top movie studio, will include a mix of own productions, co-productions and acquisitions.

“We have a capex plan of Rs 9-10 billion spread over 18-24 months. The investment will be made through internal accruals. We have a pipeline of 50 movies, out of which 30 are already listed out and announced,” says Eros Group India chief financial officer Kamal Jain.

Eros’ top priority will be Bollywood, making up 80 per cent of the roster. The studio will also make regional language movies, including Tamil, Telugu, Marathi and Bengali.

The list includes Shah Rukh Khan‘s Ra.One, Hrithik Roshan‘s Zindagi Na Milegi Dobara, Ranbir Kapoor‘s Rockstar, Akshay Kumar, John Abraham, Deepika Padukone starrer Desi Boyz, Shahid Kapoor‘s Mausam, Roshan Abbas‘ directorial debut Always Kabhie Kabhie, Prasanth Shah‘s Chalo Dilli, Saif Ali Khan - Kareena Kapoor starrer Agent Vinod and Irffan Khan‘s Bangkok Blues.

As part of the de-risked strategy, Eros will co-produce 60 per cent of the movie slate. “We will entirely produce just 10 per cent of the slate. The remaining 30 per cent will be through acquisitions. This strategy also allows us to scale up,” says Jain.

Eros was involved in 290 film projects over the last three years. “We have a portfolio approach. The wide range of movies allows us to be de-risked. About 40 per cent of the revenues come from the India box office collections and 25 per cent through satellite TV telecast rights sales. While 30 per cent is from overseas (via deal with Eros International Plc), five per cent is through ancillary streams,” says Jain.

Eros has locked in Rs 2.4 billion from television and music syndication deals. This includes Rs 1 billion sold as TV telecast rights to Star India and Rs 640 million to Zee.

“We have a strong slate for two years, 80 per cent of which we have pre-sold as TV and music syndication rights. This is part of the Rs 2.4 billion value,” says Jain.

Eros has a catalogue of 1000 movies, 50 per cent of which is Hindi content. “We are in a relatively secure position because of our catalogue strength. We get 15-20 per cent of our revenues from catalogue exploitation. This delivers us attractive margins,” says Jain.

The pure play movie company believes in entirely pre-selling the telecast and music rights. “We resist all temptations and as a strategy do not hold on to these rights. We de-risk ourselves as much as we can,” says Jain.

Eros posted a consolidated revenue of Rs 6.5 billion in FY’10, the highest reported by an Indian movie company. Is there scope for a top line scale-up? “We are not driven by top line. We are profit-focussed. The catalogue revenue, for instance, contributes straight to the bottom line,” says Jain.

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