Digitisation to throw up opportunities in 3-5 yrs: Eros

Eros International Media's FY13 performance has been in-line with expectations, says its Group CFO (India) Kamal Jain. Going forward, Eros is very positive with respect to the strategies that were delivered during FY13. The company has been leading the change with respect to the digitisation which will throw many opportunities in next three- five years.

The HBO deal by the company has also been a landmark in FY13 and Eros is hopeful of achieving good subscription numbers in the next three-five years.  "The initial subscription of the deal is positive and has surpassed all our expectations in the last one and a half month. This year, we are expecting good numbers as we are launching it on different platforms like the DTH and cable platform," Jain says in an interview to CNBC-TV18. Also Read: See stable subscription income by Q3 of FY14: Siti Cable The company grew 11.5 percent in topline and 4.5 percent in bottomline in FY13 and is optimistic going forward. It posted a consolidated net profit rise of 7 percent at Rs 32 crore against Rs 30 crore year-on-year for the quarter ended March. Below is the verbatim transcript of Kamal Jain’s interview on CNBC-TV18 Q: This is not the kind of performance investors are used to from Eros International. Consolidated revenues Q-o-Q are fairly muted for the full year and even if you look at Q4 alone, it is up a mere 2.5 percent, as well margins beginning to show a bit of pressure. What would you attribute this to? Are we going to see this continue into the current year as well? A: It has been a pretty satisfying year for us. On consolidated basis, the top-line has been a landmark this year. We have touched Rs 1,000 crore for the first time and on annual basis we have grown by 11.5 percent on top-line and 4.5 percent on bottom-line and so, it is a growth year for us. We did not deliver a huge growth, but it is pretty satisfying in a way, because we delivered the strategy that we thought at the beginning of the year in terms of diversifying our business model to gain more strength in the business model. We did quite a few mainstream Tamil language films this year which include Thuppaki, one of the biggest blockbusters this year, apart from being high profile releases in Hindi such as Son of Sardar, Cocktail, Housefull 2 and many other films that show that we are diversifying our business model. The dependence on one particular region is something that we are overcoming easily and is a part of our strategy. Another strategy at the beginning of the year was to do quite a few small budget films and market those films in a way like a large scale film by putting more Printing and Advertising (P&A) to the film. We gained success there as well. We did quite a few small films like Vicky Donor, English Vinglish and Ferrari Ki Sawaari during the year and all these films have delivered good results for us, very high return on investment. Vicky Donor has got national award as well. So, it is a mixed portfolio approach this year we deliver apart from the high profile films. The landmark achievement is that we have done an HBO deal during the year which is pretty successful already. We have launched it into two platforms, Dish TV and Airtel during the year and in just about one-one and half months we have surpassed our expectations with respect to subscribers concerned. So, overall if we are very positive with respect to the strategies that we thought has been delivered during the year, going forward also it will be very positive for us. This is because we are leading the change with respect to the digitisation which is going to throw many opportunities in next 3 to 5 years. We being the leader in the content space we will be best to capitalise those opportunities. This year if you look at overall basis, there is a growth on top-line and bottom-line basis, it is not as much as what was there last year. But we will continue to grow even next year as well as next few financial years. Q: Focusing on the HBO deal, what exactly will it throw up in terms of a P&L potential for Eros International? A: We have launched two premium television channels HBO Defined and HBO Hits and will be showcasing about 70 percent of the Hollywood films from Time Warner and Paramount and 30 percent of Hindi films exclusively from Eros. So, it is first of its own kind that we are launching premium television at the cusp of digitisation. These services will offer many premiers of English films as well as Hindi films apart from the whole host of catalogue films from Hollywood studios as well as from us. It is absolutely non-advertisement channel which is advertisement free channel. It is dependent on subscription. HBO is hugely successful worldwide having more than 25 percent market share where they are operating. So we are very positive with HBO. We have already launched the paid mode on Airtel as well as Dish TV. As of now, it is turning at 50 percent subscription price, Rs 59 for Standard-Definition (SD) and Rs 69 for High-Definition (HD) and we have gained very good subscription already. Q: If we can tie you down to some numbers both on the HBO deal as well as your overall revenue growth, what do you expect the current year to deliver in terms of an overall revenue growth as well in terms of a bottom-line growth? From HBO deal itself, how much may you make in FY14? A: The initial subscription is very positive and has surpassed all our expectations in last one and a half month. It is too early to disclose numbers as of now. This year, we are expecting good numbers because we are going to launch it on many other platforms, DTH platform as well as cable platform, there is a huge demand already coming from across. We are hopeful of tapping a good number in next three-five years. The pay TV homes alone would be in excess of 160 million pay TV homes. Even if we target around 10 percent in next three-five years, there is a huge number which we are looking at. The pricing that we are targeting is in excess of Rs 100 right now which is currently running at a 50 percent discount in price, so Rs 100 for SD and Rs 140 for HD. So if you see, the kind of subscription, you get the full value across platforms and the kind of numbers you have on overall basis with respect to the paid television homes, it’s a huge opportunity to grab. Since we have already seen initial few success, going forward we will be definitely seeing lot of success. Q: Can you give us a number in terms of one of the latest movies Yeh Jawaani Hai Deewani? You have the overseas distributor rights and the Indian release has been quite successful. Do you have any potential targets which could show up in the quarter going underway in terms of what we could get from this movie in particular? A: Yeh Jawaani Hai Deewani is one of the most successful films of recent times. We have overseas and few India rights as well. Overseas it is doing exceedingly well. We are releasing the film in Israel as well which is after a long time. After one Shahrukh Khan film 10 years ago, this film is releasing in Israel. We are testing this film across various new territories outside India and in last three days the film has done good numbers. I do not have the numbers right now, but it has done quite well exceeding expectations even there as well. In India also, in the first three days it has done phenomenal business. So, it is a good film and we have many such films in our portfolio during the year to come in FY14.