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Balaji Telefilms aims to break even consolidated business by end of FY20

The company expects significantly higher revenue from ALTBalaji.

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MUMBAI: Balaji Telefilms Ltd (Balaji Telefilms) is hoping to break even its consolidated business by the end of the ongoing financial year. While the recent partnership of its digital arm ALTBalaji with ZEE5 will work as a key contributing factor, good movies and better cost control environment for television segment will also help the content powerhouse to achieve its aim by 31 March 2020. Moreover, the company expects significantly higher revenue from ALTBalaji at the end of this financial year compared to FY 2019.

“Our aim is to break even on both the cash as well as on a P&L level, the consolidated business by March 31 2020 given that at this scale of operations we will be cash sufficient for a long time,” the management said in an earnings call with analysts after publishing its Q1 results.

“The cash receipts from the sale of rights for the movies has to yet come in, it has come in Q2, so Q2, Q3 we will see that, that is the portion. H2 is when the cash situation on ALT we will see a significant increase. So the movies cash inflow starts from this quarter because the Zee deal kicks in. You will see a significant improvement in cash flow on ALT also. A combination of this will mean that we will be in a much better position breaking even like I said at the end of the year,” the management added further.

Like the financial year 2019, ALTBalaji will be investing around  Rs150 crore this year out of which Rs 75 crore has already been invested in the first quarter itself. So, while the proposed investment in ALTBalaji will be around Rs 75 crore. the company will contemplate later if there is a need to increase funds. While Rs 100 crore is allocated for investment in content, rest of the Rs 50 crore will be used for other segments like technology, people.

Moreover, there will be no ALTBalaji content available on big telecom platforms from 1 October 2019 due to the new ZEE5 deal. “It is a co-sharing model, share the content on ALT as well as on ZEE. Before the ZEE deal we used to share the content on about 6 to 7 partners. Now all that will be taken away and everything will be behind the paywall for all production that will go in H2,” the management commented on the newly announced deal.

The company is also confident about a certain amount of revenue for ALTBalaji from the ZEE5 deal. It also hopes to continue on the growth trajectory of its revenue which was at Rs 7 crore in the first year and Rs 42 crore in the second year. Moreover, it also expects 1.5 to 2X growth compared to last year.

For now, the deal has been struck for two years where the IP will be co-shared by both the platforms, unlike a TV production deal. Moreover, the library of 38-40 shows that have been produced will continue to be exclusively with the OTT platform.

“What the Zee deal does is that there will be no telcos now where freely content will be available, so there is no free-pricing model, everything goes behind the pay and therefore we are more confident that we will be able to get direct subscriptions. Our library of 38 shows will be exclusive to us. Only the fresh shows in H2 will go to ZEE5. So these factors lead us to believe that we will have direct subscription growth year-on-year,” the management commented.

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