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Management Presentation

SHREE ASHTAVINAYAK. CINE VISION LTD. Management Presentation. Table of Contents. Investment Highlights - 2 Company Overview - 4

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Management Presentation

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  1. SHREE ASHTAVINAYAK CINE VISION LTD. Management Presentation

  2. Table of Contents Investment Highlights - 2 Company Overview - 4 Industry Overview - 15 1

  3. Investment Highlights 2

  4. Investment Highlights • Indian Film Industry expected to grow at CAGR of 20% for the next 3 years to US$3.8 billion in 2010* • Change in demographic profile of India • Increased spending on entertainment • Multiplexes expected to grow from 328 screens in 2005 to 1,000+ by 2008* • Company is one of the prominent film distributors in Mumbai • Integrated presence across the value chain gives the Company a de-risked operating model • Strong track record in the production and distribution business – proven execution skills and understanding of the market • Strong pipeline of releases in FY’08 and FY’09 *Source: PWC “The Indian entertainment and media industry, the growth story unfolds”, 2007 3

  5. Company Overview 4

  6. SACVL Corporate Overview Incorporated in Mumbai on 23rd October 2001 Film Production • Film production is considered as the key source of revenues • Built capabilities for cost effective film production • Produced hit movies such as, Jab We Met, Bhagam Bhag, “Golmaal-Fun Unlimited” , “Maine Pyaar Kyun Kiya” • 10 movies intended to be produced in FY’08 and FY’09 Film Distribution • Distributed 31 movies over past three years • Distribution extends chain of integration & strengthens margins • Creates presence and increases visibility in the market • Prominent distributor in the Mumbai territory, recently entered the Delhi territory • Successfully distributed blockbusters such as OM Shanti OM, Phir Hera Pheri, Partner, Heyy Babyy, Dus • Film Exhibition • Completed the integration of the business model by entering into exhibition of films thus covering the entire value chain • Leased approximately 35 theaters in Mumbai and currently enjoys monopoly in Goa • De-risked business model – SACVL pre-sells distribution rights for all territories except Mumbai prior to release • Recovers costs through pre-sale of rights such as, distribution, music, video, overseas etc • Revenues generated from the Mumbai territory go directly to the bottom-line 5

  7. Value Chain • Positions the Company higher on the learning curve • Increased knowledge of the market • Presence gives it a competitive advantage over other production houses • Stronger bargaining power with the producers and exhibitors • Strong and continuous presence in the market Production Distribution Exhibition • Average operating margin of 25% • Segment is the key source of revenues • Corporate structure helps in procuring institutional funding and insurance facility • Good relation with production houses ensures continuous availability of quality films • Distributing films from other banners, provides critical market knowledge besides revenues • Forayed into exhibition to gain control of the retail end • Provides deeper understanding of the audience preferences, aiding future productions • Helps diversify revenue streams Combined Leverage 6

  8. Management Team 7

  9. Popular Stars Signed By The Company Some directors working with the company • Hera Pheri • Garam Masala • Hungama Priyadarshan • Dhoom 2 • Dhoom Sanjay Gadhvi Salman Khan Ajay Devgan Sanjay Dutt • Maine Pyar Kyun Kiya? • Mujhse Shaadi Karogi • Coolie No. 1 • Haseena Maan Jaayegi • Biwi No. 1 • Hero No. 1 David Dhawan • No entry • Pyar To Hona Hi Tha • Deewangee Aneez Bazmee Akshay Kumar Bipasha Basu Govinda • Golmaal • Zameen Rohit Shetty • Aitraaz • Baazigar • Humraaz • Khiladi • Soldier Abbas - Mastan Sushmita Sen Lara Dutta Kareena Kapoor 8

  10. Business Model Focus: High entertainment value and mainstream Hindi films Target audience:- All segments Repertoire: - Family entertainers, thrillers, comedy and romantic films Movies With Mass Appeal De-risked model 5 Parameter Test Movies With Mass Appeal Active Risk Diversification Production Distribution Production Distribution Production Distribution 9

  11. De-Risked Model De-Risked Model 5 Parameter Test Movies With Mass Appeal Active Risk Diversification Production Distribution Production Distribution Production Distribution • Star cast:- Bankability and market value of the star • Banner/Producer:- Adequate financial resources to complete the movie on time • Script/Director:- Strength of the script and track record of the director • Music director: - Track record of the music director • Marketing capability of the producer 10

  12. Production Distribution De-Risked Model De-Risked Model 5 Parameter Test Movies With Mass Appeal Active Risk Diversification Production Distribution Production Distribution • The recipe of entertainment: • Script • Screenplay • Stars • Salability 11

  13. De-Risked Model De-Risked Model 5 Parameter Test Movies With Mass Appeal Active Risk Diversification Production Distribution + + Bankable stars/directors Cluster bombing Multiple stream of revenues Focus on cost + 12

  14. De-Risked Model De-Risked Model 5 Parameter Test Movies With Mass Appeal Active Risk Diversification Revenue Pie (Production segment)* Production Distribution Mumbai Territory Box Office 25-35% • Pre-sells all the territories (except Mumbai) and other rights of the movie before the release • Recovers all costs related to movie • Revenues generated from Mumbai territory go directly to the bottom-line • Company recovers all the money invested in the project even before the movie is released Box Officefrom otherterritories25-35% Profits Cost of ProductionRecovered through pre-sale In-CinemaAds 2.5% VideoRights 8% MusicRights 7% Satellite/Cable Rights18% OverseasTheatricalRights 5% *Source: Company business model 13

  15. De-Risked Model De-risked model 5 Parameter Test Movies With Mass Appeal Active Risk Diversification Production Distribution • Reverse calculation of revenues No of screens that movie can be screened on X Percentage occupancy X Per ticket cost X First 3 days revenues = Total revenues • Total revenues /1.2 = price of movie rights • Discounted higher if bought at an earlier stage • The exposure of movie would be maximum in the first week for revenue maximization + Focus on cost cluster bombing 14

  16. Industry Overview 15

  17. India Entertainment Industry Indian Entertainment Industry 2007 • Media and entertainment industry is valued at USD 7.8 billion and is expected to grow at 19% • By 2010, the entertainment industry is expected to reach USD 18.6 billion • Indian Film industry is valued at USD 1.8 billion which is expected to double by 2010 • Contributes ~20% share of the entertainment industry • Largest film industry in the world in terms of number of movies produced • Country has about has 12,000, single screen theaters • Multiplexes are expected to grow from 328 screens in 2005 to over 1,000 screens by 2008 • Digitization of movies and increase in the number of screens has enhanced the movie going experience Indian Film Industry Source: PWC “The Indian entertainment and media industry, the growth story unfolds”, 2007 16

  18. India Entertainment Industry • Government initiatives have given a boost to the Film industry • Industry status granted in 2001 • 100% FDI allowed via automatic route • Industry Financing • Prior to receiving industry status • Difficult to acquire finance • Finances generally came from unorganized sector, which involved high costs • Directors pre-sold the movie rights at ‘mahurat’ stage, at a huge discounts • Post receiving industry status • Companies can go to public to raise money • Eros International admitted to AIM in November 2006 • Banks have started financing movies 17

  19. Some Projects in Pipeline Detailed Capex Spend – Production Pipeline 18

  20. Track Record of Strong & Consistent Growth Total Income (USD million) FY2007 Revenue Composition 2005–07 CAGR: 91% Net Income Margin FY2006 Revenue Composition Source: Company’s Business Model, Annual Report & January 2007 IPO Prospectus 19

  21. 2005 2006 2007 2007 2006 (audited) (audited) (audited) (unaudited) (unaudited) Selected Financial Data For 6 months ending 30 September Fiscal Year ending 31 March (US$ mm) (US$. mm)(2) (US$ mm) (1) Total Income 6.6 15.3 24.4 10.7 7.9 EBITDA 0.2 11.3 20.2 8.8 5.9 EBITDA Margin 2.1% 74.1% 82.6% 82.2% 83.1% EBIT 0.1 3.1 5.5 2.1 2.7 37.7% EBIT Margin 2.0% 20.2% 22.7% 19.7% Net Income 0.1 1.9 3.5 1.3 1.7 Net Margin 1.0% 12.0% 15.0% 12.6% 23.9% • Rs.40 = US $1.00 • Rs 44 = US $1.00 Source: Company’s Annual Report & January 2007 IPO Prospectus 20

  22. Capitalisation Actual (as at 30 September 2007) Proforma (as at 30 September 2007) (Rs. m) (US$ m) (1) (Rs. m) (US$ m) (1) Total Cash 201.8 5.0 1,352.0 33.8 Secured Loans 72.2 1.8 72.2 1.8 Unsecured Loans - 1,200.0 - 30.0 Total Debt 72.2 1.8 1,272.2 31.8 Total Shareholders' Funds 989.3 24.7 989.3 24.7 Total Capitalization 1,061.5 26.5 2,261.5 56.5 • Rs.40 = US$1.00 • Proforma for $30mm FCCB minus 4% offering costs 21

  23. Thank You

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