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Anil Arjun, CEO of Adlabs Films Ltd

India Infoline News Service | Mumbai |

"Adlabs is looking at raising an Rs6bn by way of rights issue and that there are numerous reasons to be optimistic about India’s media and entertainme

Adlabs Films Ltd is India?s largest film and entertainment services company owned by the Reliance Anil Dhirubhai Ambani Group. Adlabs was established in 1975 as a processing laboratory primarily catering to the advertising industry. Adlabs soon became India?s premier film processing laboratory and also entered film financing and production. In 2001, the company entered the burgeoning multiplex business with the world?s largest IMAX dome in Mumbai and began to build, what is now, India?s largest cinema chain. In 2005, Reliance Anil Dhirubhai Ambani Group became a majority promoter in Adlabs. The financial resources and management expertise acted as a catalyst in synergizing various interrelated businesses, catapulting Adlabs into becoming India?s biggest success story in the film and entertainment industry. In the recent past Adlabs has not just established a strong presence for its multiplex business in India and internationally but has also entered new segments of the film production value chain including digital post-production services, digital cinema mastering, film restoration, film camera equipment and production support services. Adlabs' television venture, BIG Synergy is among the top players in the television programming industry.

Anil Arjun, CEO of Adlabs Films Ltd, has been closely associated with the company since Reliance ADA Group acquired majority and controlling interest. As a member of the Management Council, he was involved in driving corporatization process, business growth strategy and organizational development, and was appointed CEO of the company in August 2008. Anil has been part of Reliance Group for over 8 years. Prior to Adlabs, Anil was a part of Reliance Communications where he worked closely and extensively with different functional groups to successfully integrate the implementation and network build-out of a 9000 kms fiber-optic project rollout in Tamil Nadu and Kerala. Anil has also previously worked with ICICI Group for 8 years, where he was involved in project financing. During his tenure there he completed key project appraisals in telecom, transportation, manufacturing and services sectors. Anil is qualified as a Chartered Accountant and holds a Bachelors Honours Degree in Commerce from Delhi University.

Replying to Anil Mascarenhas of India Infoline, Anil Arjun says, "Adlabs is looking at raising an Rs6bn by way of rights issue and that there are numerous reasons to be optimistic about India?s media and entertainment industry."

What was the thought process behind the name change to Reliance MediaWorks Ltd?
The original name, Adlabs Films, was reflective of the company?s initial business as a film processing laboratory. Pursuant to the Reliance ADA Group acquiring the controlling stake in Adlabs in the year 2005, the company has witnessed transformational growth in the canvas and scale of its operations. The name Reliance MediaWorks Limited more accurately reflects the company?s identity as a diversified film and media services company with a global presence.

What kind of transformation has the company seen post the acquisition by the ADAG group?
Reliance ADA Group?s financial strength and management expertise have acted as a catalyst in expanding Adlabs? leadership across various inter-related businesses of exhibition, film and media services, and television software.

When Reliance ADA Group invested in Adlabs, the company has 20 screens centered in Western India. Today, Adlabs has created a dominant presence in the film exhibition business with 459 screens in India and internationally. The company has also entered new segments of the film production value chain including inter alia: digital post-production, digital cinema mastering, studios/shooting floors, film and TV equipment rentals, visual effects and image enhancement, film restoration BPO and other value added services. Adlabs' television venture, BIG Synergy is among the top players in India in the television programming industry.

The company?s operations include a 100% owned facility in Los Angeles, California - Lowry Digital - which is universally regarded one of the premier digital restoration facilities in the world.

For the year ended March 31, 2009, the Company delivered total revenues of Rs7.33bn (US$152 mn), reflecting a Compounded Annual Growth Rate (CAGR) of 80% in the last three years.

Which are the new segments you plan to enter?
Adlabs is constructing a state of art 200,000 sq ft. film studio comprising 7 sound stages at Film City in Mumbai which will support film, TV and advertising productions. The Studio will be at par with Hollywood studios and would prove to be a one-stop solution for all production needs for domestic and international clients. The studio will provide all support facilities like make rooms, costume rooms, carpentry/molding rooms etc within its premises.

To what extent has the global economic environment affected the industry? What growth do you expect?
In the year 2008-09, the Indian media and entertainment (M&E) industry continued to rise as one of the fastest growing industries in the country. The current challenging global economic environment has led to moderate but steady growth and the projections for the coming years are still strong. According to the KPMG and FICCI report, while the industry grew 15 per cent annually in the last five years to $11.68 billion (Rs 584 billion) in 2008, the growth projection for 2009-13 is expected to continue at 12.5 per cent CAGR and over the next five years, the industry is projected to cross the mark of $21 billion (Rs.1052 billion) from $11.68 billion in 2008.

With penetration levels still remaining low, what are some of the opportunities for companies such as yours?
There are a number of reasons to be optimistic about India?s media and entertainment industry, including the factors that contribute to the high growth of the Indian economy. Despite the high growth achieved during the recent years, almost all the segments of the media and entertainment industry have a low penetration compared to the international average. On the other hand, the growing middle class, young population and increasing discretionary spending are the factors that not only help the overall economy to grow at a healthy pace but also create a conducive environment for the media and entertainment industry.

Brief us on your various verticals and which are the ones you plan to scale up considerably?

Adlabs is planning to:

  • Expand the worldwide exhibition screen count from 428 screens in April 09 to over 570 screens in next one year.
  • Establish a 1200 member media BPO, specializing in content processing, image enhancement and restoration services.
  • Set up a 200,000 sq ft. state of the art studios, sound stages at Film City, Mumbai.
  • Enhance inventory of film and broadcast cameras, lights and post production infrastructure.

Adlabs is looking at scaling up the Lowry technology and expertise by setting up a media BPO in India, which will be one of the world?s largest comprehensive digital restoration and content processing services facilities.

Tell us more about Lowry Digital.
The company?s operations include a 100% owned facility in Los Angeles, California - Lowry Digital - which is universally regarded one of the premier digital restoration facilities in the world. The company utilizes proprietary image processing science to deliver superior picture elements and has developed an unique technology - The Lowry Process? which is used to create unsurpassed image quality at every stage of the workflow for all outputs, including film, broadcast television, commercials, digital cinema, Blu-ray, or web-based video. Lowry Digital?s services include film restoration, emergency image repair, digital blow-ups and digital intermediate enhancements. Lowry Digital?s clients are predominantly industry giants like Walt Disney, Paramount Pictures, MGM and 20th Century Fox and entertainment leaders like George Lucas, Steven Spielberg and James Cameron.

Tell us more about BIG Cinemas operations. How many screens do you have in India and abroad?
Big Cinemas, a division of Adlabs Films Ltd and a member of Reliance ADA Group is India?s largest cinema chain with over 459 screens spread across India, US, Malaysia and Netherlands.

BIG Cinemas, today has a dominant network of over 213 screens spread across 66 cities. The company is proposing to scale up the BIG Cinemas network considerably and is proposing to add 100 more screens by next year leading to a presence across 85 cities and would cater to more than 35 million customers.

Give us an idea about your presence in Film Services.
Adlabs has a comprehensive presence in Film Services: Motion Picture Processing and DI; Visual Effects; Film Restoration and image enhancement; Digital Mastering: Studios and Equipment rentals with facilities located at US and India.

Adlabs is further enhancing its position as a leading provider of film and media services across the entire production value chain by setting up state of art 200,000 sq ft. Studios comprising 7 sound stages at Film City in Mumbai which will support film, TV and advertising productions. The company has also introduced Film Camera Rentals Service, which will make available an extensive inventory of state of art equipments to fulfill the complete technical requirements of Indian as well as International movie makers.

What are your plans in BIG Synergy? How much does it contribute to your revenues?
Adlabs acquired majority interest in Synergy Communications in 2006. Today, BIG Synergy is widely regarded as a leader in non-fiction programming, and has enjoyed singular success in adapting international formats for Indian viewers. In the recent past, BIG Synergy has produced some spectacular shows like Dus Ka Dum, Jhalak Dikhhla Jaa, Kya Aap Paanchi Paas Se Tez Hain, Sach Ka Saamna, India?s Got Talent and Aap Ki Kacheri that have attained both critical and commercial success. BIG Synergy will continue to develop such content that has strong and widespread audience appeal in India. In FY 2008-09 BIG Synergy recorded growth of 38% at Rs400mn.

What are your suggestions for B-school students to be job ready?
I feel that the on job training that MBA students are today exposed to definitely adds a practical aspect to their theoretical knowledge and results into their being better prepared to face the corporate challenge. One facet that the MBA students should definitely focus on is keeping themselves updated on the industry and corporate developments in the sectors that they are interested in as it would enhance their understanding of companies that they would join.

What is the culture of your organization and what kind of talent are you looking for?
At Adlabs we invest in our people and we give them freedom and space to enhance their creativity and nurture their entrepreneurial capabilities. To further strengthen our teams we are always on a lookout for talented individuals who are creative, loyal and hardworking and can be our next generation of leaders.

What would be your advice to a youngster wanting to join your company?
Be sincere, passionate and confident about everything you do to achieve success in work and life.

Brief us on your financials. What is the outlook?
We have scaled our business operations significantly to provide a comprehensive range of quality services to the film and media industry. All the business segments including the recent additions today hold dominant industry positions. The Indian media and entertainment industry is witnessing an unprecedented growth due to the strong evolution in the consumption patterns and the changing dynamics of production values. We are convinced of the strong values of our businesses and have made strategic investments in FY08-09 to become the leading service provider across the complete value chain. These investments would contribute substantially to our bottom line in the next financial year

In FY09 our Revenues from Operations grew by 57% to Rs6.62bn and EBITDA from Operations were higher by 18% at Rs680mn.

Comment on your expansion plans. How would it be funded?
Adlabs is looking at raising an amount up to Rs6bn (US$124mn) by way of rights offer of equity shares to the Company?s shareholders, subject to necessary sanctions and applicable provisions of law. The funds raised through Rights Issue would be utilized for expansion and growth opportunities including investment in various projects in India as well as overseas.

What is the latest shareholding pattern. Any plans to dilute stake?
Currently, the promoter group holds 61.47% stake in the company and the public holdings are 38.53%

What is your message to shareholders?
We would like to thank our shareholders who have shown constant faith in the company and we aim to continue growing from strength to strength with their support.

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