Film and entertainment firm Reliance MediaWorks expects to add 5 to 8 percentage points to its margins by calendar year 2012, driven by its newly unveiled film studio, a top official told Reuters on Friday.
The company, which operates in three business segments--cinemas, film and media services, and television production--has EBITDA margins of about 20%, Chief Executive Anil Arjun said.
"Impact on margins will be positive because we have added a business that has a significant turnover and high margins," he added.
Reliance MediaWorks, which provides production, post-production and imaging services for films, has added a studio with 8 sound stages spread over seven acres in Film City to its offerings, to create a one-stop shop.
The first phase of the studio, which is being built with an investment of more than 1 billion rupees, will be operational by January 15. The second phase will be operational by mid-2011.
The studio is expected to contribute 10% to the company's revenue and yield EBITDA margins of 50%, Arjun said. "We see a lot of opportunity in broadcast and in the ad commercials space," Arjun said.
Expansion plans for cinemas
Reliance MediaWorks, which has about 550 screens spread across India, US, Malaysia and the Netherlands, plans to add 60 to 70 screens in India this year.
"We are adding a lot of premium properties in Hyderabad, Chennai, Mumbai, Ludhiana, so that will take the count to about 340 or so," Arjun said.
The company, which the market values at Rs 9720 crore, has been investing in these screens over the past one year and will need an incremental investment of Rs 30 crore to Rs 40 crore this year, he added.
Reliance MediaWorks' theatre exhibition business has just come out of the seasonally strongest quarter of the year. However, Arjun expressed slight disappointment with the quarter.
"Third quarter is generally a good season, but by itself certain films did not work out at the anticipated level."
Multiplex chains were expected to see their strongest period of box-office collection in the December quarter this year with about 35 Hindi movies from varied genres and another 70 Hollywood films releasing during the quarter.
"The quarter could have been better," Arjun said.