NEW DELHI: Padmalaya Telefilms Limited (PTL) is on the verge of signing a major co-production deal with an European studio, for production of four episodes and two movies to be made over the next five to seven years.
The deal is expected to finalise by this month-end, however, PTL has not yet announced the name of the studio.
On the development, PTL vice-president and head of Zee Institute of Creative Animation (ZICA) Rajiv Sangari says, “We are on the final stages of signing the memorandum of understanding with the associates. The deal is for 2-D animation projects and the overall revenue/ project projection is about US$15 million. By far, it may be the biggest deal in animation industry in India.”
Sangari adds that the project would entail production and marketing through co-production format. The production will be done in PTL studios in Mumbai and Hyderabad.
“We also intend to open up an office in Germany to support the European company,” Sangari explains.
In the past year, Indian animation studios have showed signs of moving from service-oriented projects to co-productions. Sangari expects this trend to continue.
“I predict a lot of co-production deals between US and India as well as Europe and India. People abroad have started seeing India as a favoured destination for doing not only service jobs but also developing properties with them by being their partners. Of course, 3-D animation is gaining grounds and will continue to do so in 2004, but the traditional style is also getting inroads in India,” Sangari explains.
PTL had recently announced that they plan to produce 52-episode, 22-minute flash animation series for Zee TV, scheduled for early 2004. The serial, titled Bheema Keema, is being targeted at the urban and semi-urban Hinglish language speaking kids of the country. The series is being planned for Sundays during the primetime slot.
For its new projects, PTL is also upgrading its facilities. It has acquired a new 3-D animation studio which will soon launch in Mumbai. “We have also taken up a place in Andheri, Mumbai, for a special effects division which should be up and running by about January 2004,” said Sangari.
Tag: PTL
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Padmalaya to sign co-production deal with European studio
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Padmalaya works on indigenous animation series for Zee
NEW DELHI: Padmalaya Telefilms Limited (PTL) is gearing up to air a 52-episode 22-minute flash animation series on Zee TV, scheduled for early 2004. The serial, titled Bheema Keema, is being targeted at the urban and semi-urban ‘Hinglish’ language speaking kids of the country. The series is being planned for Sundays during the primetime slot.
Bheema Keema is a concept targeted at eight to 15 years olds. The main highlight of this serial is that it will be the first Indian animated television serial of 52 episodes showcasing on Zee TV, says Rajiv Sangari, vice-president, PTL and head of Zee Institute of Creative Animation (ZICA).
Bheema Keema is about two main characters, positioned as smart kids facing challenges and adventures in day-to-day life. The other secondary characters are Happy Singh and Chichi, the side-kicks, Pummy the pet dog and Dr. Kamal, a cranky genius scientist. The scripts and treatment has been conceptualised as per the lifestyle of the target audience.
Since these semi-metro kids have access to all the latest gizmos and gadgets, and they often fantasize to do something adventurous, mischievous and sporty in real life, they are attached to such concepts on television through which they can relate themselves directly, says Sangari.
PTL through its own animation division ZICA is gearing up for the bigger projects. As there is also a huge demand for skilled animation in the country, and very few trained animator available in the industry, to bridge this gap PTL has its own Animation training division, ZICA Training Academy, the only training institute that develops all the areas of an artist right from drawing skills to 2D and 3D Animation. Thus preparing the new breed animators for full-fledged production, says Sangari.
PTL has worked in the local market mainly for Zee Telefilms, including television commercials for Zee News and Esselworld, and television channel packaging for premier channels in DTH for Zee.
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Zee Q1 net up 31 % even as scrip slides
MUMBAI: The numbers for Zee are in. Net profit and net revenue for the quarter have travelled north by about 31 per cent and 16 per cent respectively.
ZTL’s net revenue for the quarter ended 30 June 2003 has gone up by 16.27 per cent to Rs 2.893 billion while the net profit is up by 30.69 per cent to Rs 623 million vis-?-vis the corresponding quarter of the previous fiscal. During the corresponding quarter last year, net profit stood at Rs 476.7 million, while net sales stood at Rs 2.488 billion.
Sequentially, the net sales of the company decreased by 21.5 per cent and the net profit by about 24 per cent as compared to Q4 of last fiscal. During the last quarter of 2003, net profit stood at Rs 820 million, while net sales stood at Rs 3.685 billion.
Revenue breakup
Zee’s subscription revenues are up 40.53 per cent at Rs 1,427.7 million, while advertisement revenues are down 13.35 per cent at Rs 1,2112.1 million, compared to Rs 1,399 million during the corresponding quarter last year.
A company statement clarifies that the dip in advertising revenues is because of “softness in local advertising markets in the early part of the quarter due to the Cricket World Cup hangover” as also because of “initial problems in establishing a new rate card, which has now been well accepted in the market.” It further says that higher pay revenues from domestic and international markets drove the growth of 18.8 per cent in operating profits to Rs 901 million over the same period last year.
Meanwhile on a standalone basis, ZTL’s total revenue has decreased from Rs 1,086.3 million in the June quarter of 2002 to Rs 1,085.9 million in the quarter ended 30 June 2003. Net profit figures for the quarter ended 30 June 2003 stand at Rs 170.7 million, vis-?-vis Rs 166 million for the quarter ended 30 June 2002, a marginal 2.83 per cent increase.
Zee slides on BSE
However, on the Bombay Stock Exchange (BSE) today, Zee slipped 2.75 per cent to Rs 115.10 on profit booking by investors as the company’s Q1 results fell below analysts’ expectations. The Zee counter recorded a substantial volume of over 1.35 million shares today. Analysts believe the slide was because of net sales slipping below expectations and also because of the counter unwinding in the derivatives segment.
For the current quarter, it would be pertinent to note that the Q1 numbers include financials of Padmalaya Enterprises Private Limited (PEPL), the holding company of Padmalaya Telefilms Limited (PTL), and financials of ETC Networks Limited (ETC) which have been consolidated with Zee. Since neither of these companies was consolidated during the corresponding quarter last year, previous period figures cannot be compared directly.
Also, other sales and services include revenues from PTL. Further, the effect of restructuring Econnect and Zee Interactive Learning Systems does not appear in the current financials as it is pending before the high court.
The Company will be amalgamating three of its wholly owned subsidiaries Patco, Kaveri Entertainment Limited and Elzee Television Limited with retrospective effect from 1 April 2001. Hence the effect of amalgamation has been now given in the financials of the quarter ending 31 March 2003.
Content and Broadcast
Out of the total revenue of Rs 3,044.1 million for the June quarter, the content and broadcast segment accounts for Rs 2.56 billion, which is a rise from Rs 2,186.4 million in the previous year’s corresponding quarter.
ZTL’s pay bouquet comprises 15 channels including 11 channels of Zee, two channels of Turner (CNN, Cartoon Network), CNBC and Reality TV Channel. Later this year, uplinking of Zee TV and Zee Cinema is scheduled to move from Singapore to India. The company also plans to launch the Direct to Home (DTH) services in the coming months.
During the quarter, Zee TV showcased some blockbuster titles in its Thursday Premiere initiative. The list of movies included Chura Liya Hai Tumne, Chhal, Escape from Taliban, Ek Choti Si Love Story, Wah Tera Kya Kehna and Jaani Dushman.
Trendz, the new fashion channel from the Zee stable was also launched during the June quarter while Nickelodeon moved out from 1 May 2003.
Zee claims to have snared the number two slot among the female target audience. It is giving the credit for this to its strategy of offering differentiated fare to its viewers as also to a series of synchronized marketing and programming campaigns, which it says helped it to attract new audience.
After taking CNBC into its distribution fold w.e.f. 1 April 2003, Zee has plans for repositioning Zee Music as a young and vibrant interactive music channel by August 2003. State-of-the-art packaging, quality VJs, slick promotions and high quality programming are being peddled as the USP of this launch. -
Zee’s FY04 ad, subscription revenues to grow by 8%, 24%: Motilal Oswal
MUMBAI: A Motilal Oswal Inquire India Research (MOSt) report dated 28 April 2003 states that Zee Telefilms’ FY03 advertising revenues have been stronger than expected and subscription revenues have posted a robust growth. Commenting on the future outlook, the MOSt report states that the stage is set for a brisk performance in FY04 with the strong results reported in FY03.
The MOSt report expects revenues to grow 13.7 per cent in FY04, powered by an eight per cent growth in ad revenues, 24 per cent growth in subscription revenues and 69 per cent growth in other sales and services. MOSt analysts project domestic pay revenue growth of 37 per cent to Rs 2.1 billion from Rs 1.6 billion in FY03.
MOSt analysts estimate Profit After Tax (PAT) after minority interest to grow 24.9 per cent to Rs 3.2 billion in FY04, translating into an EPS of Rs 7.6. At the current price, the analysts felt that the stock is attractively valued with a P/E of 11.5x FY03 and 9.2x FY04E earnings. On the EV/EBITDA measure, the stock quotes at 9.1x FY03 and 6.4x FY04E earnings.
Motilal Oswal media analyst Subhabrata Majumder says: “Zee Telefilms’ 4QFY03 results are significantly ahead of the street’s and our expectations. While PAT growth before extraordinary items and after minority interest was 55.4 per cent, total revenues grew 16.7 per cent YoY. The balance sheet has been cleaned up through a one-time write-off.”
On the stock market performance of the Zee scrip, Majumder adds:”We believe that the stage is set for a rally of 15-20 per cent in the stock price in the short term. The stock has been battered on concerns regarding implementation hiccups of conditional access system (CAS) and the impact on ad revenues due to the World Cup. Both concerns have clearly been overplayed. Following an EPS of Rs 6.1 in FY03, we believe that there would be a spate of earnings upgrades. We recommend Buy with a 12-month price target of Rs110.”
The MOSt report also says that other sales and services have got a boost from PTL (Padmalaya Telefilms) consolidation; and that the margin improvement has led to a 64 per cent growth in EBITDA. The report says that the growth in PAT was 30.2 per cent for 4QFY03 and 22.6 per cent for FY03 even after completely excluding Padmalaya Telefilms’ (PTL) financials to make the numbers comparable.
The following are some excerpts from the MOSt report:
Advertising revenues: Advertising revenues for the quarter were stronger than expected at Rs1.69 billion, aided by above-par performance in Zee Cinema, Zee News, Alpha channels and Zee English. This is a degrowth of 15.7 per cent YoY and a marginal degrowth of 1 per cent QoQ. There were widespread fears that ad revenues for the quarter would come under severe strain due to shifting of ad revenues to competing channels for the cricket World Cup.
Subscription revenues: Subscription revenues continued their growth journey, both on the domestic as well as international fronts. Domestic pay revenues registered a robust growth of 32.5 per cent QoQ to touch Rs 501 million compared to Rs 378 million in 3QFY03. After a quarter of flattish growth, domestic pay revenues got a leg up due to the rate hikes undertaken in January 2003 (price increased from Rs 37 to Rs 50 for the Zee Turner bouquet) and a marginal increase of 5 per cent QoQ in paid connectivity to 4.6 million homes in 4QFY03.
MOSt analysts expect domestic pay revenue momentum to be sustained in FY04 with a 40 per cent growth led by a bouquet rate hike to Rs 55 per sub per month (already effective starting April 2003) and increase in paid connectivity to 5.5 million homes by March 2004.
International subscription revenues continued their strong growth to touch Rs 550 million in 4QFY03 compared to Rs 470 million in 3QFY03.
On a YoY basis, international pay revenues posted a growth of 43 per cent. The number of international subscribers posted a growth of 4.9 per cent QoQ to reach a total of 771,000 as at March 2003 vis-?-vis 735,000 subscribers as at December 2002. MOSt analysts expect international subscription revenues to grow by at least 30 per cent in FY04.
Other sales and services get a boost from PTL (Pentamedia Telefilms) consolidation:
Zee recorded income of Rs 672 million from other sales and services, out of which Rs 516.5 million was contributed by PTL. The PTL acquisition has been made effective from 1 September 2002 and Zee results have been consolidated for seven months’ operations of PTL.
After stripping the PTL numbers, there is a sequential growth of 26.7 per cent in other sales and services revenues. This is largely due to an improved performance at the education unit, ZILS that registered a YoY growth of 50 per cent in revenues. At the current level of operations, ZILS has achieved near cash break even from a position of substantial losses two quarters ago.
Operating expenses grow by a marginal 2.6 per cent:
Programming, transmission, education and other direct operating expenses fell 7.5 per cent YoY. Transmission costs have remained stable while programming costs have registered a decline of 9 per cent YoY. Staff costs showed a sharp decline of 5.9 per cent YoY on the back of major cuts in employee base.
Zee’s total workforce (excluding ETC and PTL) has been curtailed at 1,450 as at March 2003 down from 1,800 as at September 2002. This would lead to continued savings in staff costs over the next two quarters. Administrative & selling costs rose 24.3 per cent YoY although this was primarily on account of the ETC and PTL acquisitions.
Margin improvement leads to EBITDA growth:
EBITDA margin improved to 32.5 per cent in 4QFY03 compared to 31.4 per cent in 4QFY02. EBITDA grew 63.5 per cent YoY to Rs 1.2 billion compared to Rs 732 million.
Other income has risen marginally YoY but sharply on a QoQ basis to Rs 238 million from Rs 175 million in 3QFY03. Net interest cost has fallen significantly on a QoQ basis to Rs 155 million in 4QFY03 from Rs 227 million in 3QFY03. This is ostensibly on account of a repayment of debt, forex fluctuation registered in 3QFY03 and other gains.
Profit before tax registered a sharp increase of 63.4 per cent YoY and 24.1 per cent QoQ. PAT registered a sharp growth of 75.2 per cent YoY and 19.2 per cent QoQ to Rs 925 million. Excluding PTL numbers completely, the growth works out to 30.2 per cent YoY and flat QoQ.
Lower receivables; reduced debt:
Total receivables have been curtailed at Rs 5.6 billion as at March 2003 as against Rs 6.3 billion as at March 2002. This translates into receivable days of 171 as at March 2003 compared to 213 days as at March 2002. Receivable days have now been brought down further to 155 days of sales.
Due to the strong growth of 52.5 per cent in subscription revenues compared to ad revenue degrowth of 5.3 per cent in FY03, the debtors share of the advertising business has fallen, which MOSt analysts believe is a welcome change. Further, the company disclosed that the aging profile of the debtors outstanding has improved with a fall in the share of older receivables.
MOSt analysts expect receivable days to fall to 140 days by June 2003 and to 130 days by March 2004. Zee has repaid long-term debt of Rs 1.1 billion in FY03 most of which was taken in 4QFY03. With this, total debt outstanding is Rs 7.4 billion as of March 2003 compared to Rs 8.5 billion as of March 2002. MOSt analysts expect total debt to fall substantially to Rs 4.8 billion by March 2004 with improved cash flows from operations and lowering of receivable days.
Cash on the balance sheet stood at Rs 1.5 billion as at March 2003, down from Rs 2.7 billion as at March 2002.
Write-offs clean up the balance sheet:
Zee has taken a one-time write-off of Rs 386 million on account of subsidiaries writing-off inventory, advances, deferred revenue expenditure, etc. These write-offs relate to the operations for years prior to FY02. Following the writeoffs, the management claims that the current assets position of the company becomes fully representative of its current financial condition. -
Padmalaya Telefilms shares dip to 52-week low
MUMBAI: Touching a year after Zee Telefilms acquired a strategic stake in Padmalaya Telefilms Limited (PTL) through the acquisition of a substantial stake in PTL’s holding company, Padmalaya Enterprises private Limited (PETL), the shares of PTL slumped to their 52-week low on both the premier stock exchanges of the country.
On the Bombay Stock Exchange (BSE), the scrip ended the day at Rs 45.45, down 18.40 per cent, on brisk volumes of almost 354,508 shares. The earlier 52-week low was Rs 56.6. On the National Stock Exchange (NSE), the scrip closed the day at Rs 45.75, down 18.81 per cent with volumes of 139,424.
However, what is noteworthy is the fact that Zee Telefilms was one of the few media scrips which actually rose to Rs 73.25 (up 0.27 per cent) on the BSE; Rs 73 (up 0.07 per cent) on the NSE.
Padmalaya Telefilms posted a net profit of Rs 40.2 million for the quarter ended 31 December 2002 (down 39 per cent) compared to a net profit of Rs 66.1 million in the quarter ended 31 December 2001. Total income also decreased from Rs 274.0 million in the December 2001 quarter to Rs 202.3 million in the quarter ended 31 December 2002.
In a strategic move, Zee Telefilms announced in March 2002 that it planned to acquire a significant stake in Padmalaya Telefilms, one of India’s leading entertainment houses with significant presence in film production and distribution, television software production and animation software.
As per the MOU executed between Zee and the promoters of PTL, Zee would acquire majority stake in Padmalaya Enterprises Private Ltd. (PEPL) which is a holding company of PTL. Since this move triggered a change in management control of PTL, PEPL with Zee acting in concert, made an open offer in accordance with SEBI guidelines. Both companies sought the requisite regulatory approvals.
At that time, Zee Telefilms CMD Subhash Chandra said “With this acquisition, Zee continues to consolidate its position as India’s largest vertically integrated media and entertainment company. Zee’s acquisition of PTL creates an entertainment powerhouse with unmatchable strengths in animation software, Film production-distribution and television content.”
At that time, Zee was already a large, established player in the movie, music and animation business. Zee owns ZICA, one of India’s best animation production units with over 100 animators with top end skills for cell animation. ZICA is currently focused on the production of Bhagmati, India’s first full-length animation movie.
The key benefits of this strategic move for Zee Telefilms at that point of time were:
* Creation of a unified animation studio with capability to deliver high-end animation products for international markets.
* To capitalise on PTL’s extensive experience of over 30 years in movie production and distribution.
* PTL’s huge library of hit-films with over 300 films complimented Zee’s strong library of more than 3,000 movie titles.
* To utilise the well-established production facilities for in-house movie projects.
* To leverage PTL’s direct control over 60 theatres in South India and its wide distribution network in South India.
* To add over 1,500 hours of television software in Telugu, Tamil and Kannada to the existing Zee library (Zee has two satellite channels Bharathi (Tamil) and Kaveri (Kannada) and one cable channel in Telugu serving the Southern market).
Benefits to PTL
* Zee’s existing international operations, with offices in the US, Canada, UK, Dubai, Singapore, Hong Kong and South Africa would help PTL gain direct access to buyers overseas for its animation products.
* Leveraging joint marketing, promotion and product development opportunities in the movie business with Zee.
* Common apparatus for negotiations with the music and movie industry.
* Zee would provide its global platform to PTL for its television software library and animation property by airing on its international channels. -
Zee open offer for ETC opens
Zee Telefilms’ open offer for 20 per cent additional stake in ETC Networks at Rs. 31.52 per share opens today.
This follows the Zee’s acquisition in February of a 48.38 per cent of ETC promoters’ stake. In its offer letter Zee had said: “The acquisition of majority stake in ETC Networks will enable Zee Telefilms to have undisputed market leadership in the music and Punjabi segments besides providing access to the ETC library.”
Meanwhile, the Subhash Chandra broadcaster clarified yesterday that its recent offer to acquire a major stake in Telugu animation major Padmalaya Telefilms would remain at Rs. 148.50 per share. Zee said that it would not increase the offer price for acquiring 20 per cent in Padamalaya Telefilms. Zee’s clarification came in response to queries raised after PTL’s ruling price reportedly touched Rs. 153.25 on Monday. The scrip is currently trading at Rs 149.
Zee’s open offer for 20 per cent more of PTL is expected to open on 5 May. The offers comes on the heels of newly acquired Zee subsidiary Padmalaya Enterprises acquiring a 34 per cent stake in PTL.