| MUMBAI:
Hyderabad-based DQ Entertainment (DQE) is eyeing joint venture deals with international
animation companies that would assure it of a product pipeline. As a step in this
direction, the company has entered into a 51:49 per cent joint venture with France's
animation powerhouse Onyx Films to produce high-end CGI feature films. "We are looking at more
such deals with other companies which would boost our product pipeline. That will
form a part of our expansion strategy," says DQ Entertainment MD and CEO
Tapaas Chakravarti.The JV with Onyx Films, in which DQE will make an initial
investment of Euro 1.5 million (around Rs 90 million), has identified three feature
films valued at $89.5 million including Skyland (budget of $31.5 million), Night
of the Child King ($30 million) and The Enchanted Boy ($28 million). While Skyland
is funded fully, the process of arranging money is on for Night of the Child King.
"Besides these three movies, the aim of the JV is to launch one feature film
every year from 2008 onwards," says Chakravarti. DQE is also buying a 20 per
cent strategic stake in TV production company Method Films, a sister concern of
Onyx, for Euro 2.5 million (around Rs 150 million). Already lined up is a slate
of nine TV series for major broadcasters in the US, Canada and Europe, six of
which are currently under production. "The strategic stake in Method Films
will help us access global revenue and overseas funds for the entire production.
It will also provide DQE a huge order pipeline in the area of animation, VFX and
post production work in the years to come," says Chakravarti. DQE is planning
to invest Rs 2.5 billion over three years while ramping up its 3,000-seater capacity
to a strength of 5,000. The company is currently capitalised to the extent of
$12 million and has private equity investors including International Finance Corporation
(IFC), India Value Fund, IL&FS Investment Managers Ltd and TDA Capital Partners.
The company clocked $12 million in FY06 and is projecting a turnover of
$25 million this fiscal. The target will be much higher once DQE has established
itself in the value chain game. The JV will help it leap into the status of feature
film producers while guaranteeing utilisation of production facilities and additional
streams of revenue. "Strategic alliances are extremely important and
will bring about strong presence of creativity, powered by massive production
capabilities," says Onyx Films chairman and Method Films CEO Aton Soumache. The
private equity investors in DQE are bullish about the growth prospects of the
company. "DQE is beginning to work on the content side of the animation business
rather than being a pure outsourcing player. By entering into this joint venture,
the company has shown that it is keen to participate in the financial risk of
the animation business. This way there can be substantial upsides," says
Rajeev Agrawal, fund manager at India Value Fund. | 
