mukta arts Management discussions

Industry performance

The year 2020-21 has been a test of grit, determination and staying power for many industries across the country. The year started with most businesses that were not in the essential products and services category closed due to the Covid-19 related lockdown. This situation continued for months, and generally longer for the Media and Entertainment sector in particular.

After the lockdown was lifted starting in early October 2020 and businesses were just finding their footing in the new normal, when the second Covid-19 wave forced another lockdown. As a result, the year 2020-21 has been a year with limited positives. While the national GDP fell 8% from 2019 to 2020 calendar year, the Media and Entertainment sector fell by 24%. This is in stark contrast to the trends noted in the past few years when the Media and Entertainment sector would outperform the overall industry growth rates. As a result, the revenues of the Media and Entertainment sector went back to the 2017 levels.

Of the segments within Media and Entertainment, Digital subscription and Online gaming were two sectors that grew, bolstered by the situation. Digital subscription grew by 49% while Online gaming grew by 18%. The Music Industry remained at more or less the same levels. All the remaining segments fell, from Television at 13% to Live events at 68%. Filmed entertainment also saw a drop, falling 62% from the previous years level.

A closer look at the Filmed entertainment segment shows varying fortunes of different segments. Theatrical revenue for 2020 fell to less than a quarter of the 2019 volume, while digital actually doubled over its 2019 levels. Production of films was stopped for over six months. Wherever it was possible, animation replaced live shooting and as a result, animation showed some improvement.

Of the films that had been produced and were ready for theatrical release, some releases were postponed and some were released on OTT platforms. With the resumption of production of movies it is expected to take a short while before theatrical revenues start growing again. It is expected that the Filmed Entertainment sector shall take 1 to 2 years to get back on its earlier growth path. Television and Music too are expected to recover similarly. Such has been the effect of this pandemic, that some segments, like Print, Radio and OOH are expected to take over three years for recovery.

Company Performance

Against this backdrop, Mukta Arts as a group has had mixed fortunes. The film library of Mukta Arts continued to yield revenues from the deal with Zee Entertainment. The theatrical release of the Marathi film Vijeta had been hit by the pandemic and its full-fledged release is still on hold. There was some indirect cost saving on account of the moratorium on repayment offered by the lenders, as this supported the cash flows materially. The standalone financial performance has shown higher profits in 2020-21 compared to 2019-20, with Profit after Tax up 35% from Rs 5 crores to Rs 7 crores notwithstanding a 9% fall in gross revenues from Rs 33 crores to Rs 30 crores, mainly on account of costs being reined in for tackling the difficult times.

The two subsidiaries in the film exhibition space, in India and in Bahrain, were however, strongly affected by the pandemic. In India, out of a total of 365 days, the longest duration any of the cinemas were operational, was 137 days for two cinemas. Because of the lockdowns and closure of businesses, the work on the upcoming cinemas too has been going slow. There are a number of locations that have been ready at fit out stage since the start of this pandemic.

In Bahrain, the cinema remained closed for the entire year. The Company did experiment with an open air drive-in cinema but closed it due to lack of suitable content. The cinema reopened in May this year for about two weeks after which it was closed down again. The Management role with the 10 screen Dana Mall Theatre is awaiting completion of renovation and opening of the Theatre. In spite of the present situation, the film exhibition business continues to be promising in the long term. The Bahrain entity has found an investor who has taken a substantial stake in the business. Both in Bahrain and in India, the Management and team are fully geared up for reopening soon, and to turn the business around on a war footing.

Whistling Woods International (WWI), the Mukta subsidiary in the film education field, was only marginally affected by the pandemic, and was able to realign activities in keeping with the changed requirements. It continued its robust growth despite a small yet significant reduction in the student body caused by pandemic- induced lockdowns. Although its gross revenue fell by 9% to Rs 51 crores in 2020-21, its Profit after Tax grew 26% to almost Rs 5 crores.

WWI has continued to solidify its reputation as Indias premier Film & Creative Arts institute. WWI has also entered into a key partnership with Rajiv Gandhi National Institute of Youth Development (RGNIYD) - an institute of National Importance, which brings with itself great expertise and an elevated academic platform to enable a wider reach of WWIs education.

WWI has also continued in 2020-21, the pioneering efforts it has been undertaking in Emerging Technology innovation over the past decade. On lines similar to its earlier Development Labs and Technology Centres, WWI set up its Emerging Media Lab in 2020 with a focus on Virtual Production. It is this focus on Emerging Media technologies that has enabled WWI to be elevated to a global thought leadership role through its association with the Society of Motion Pictures & Television Engineers and the global VR/AR Association.

While WWI will continue its strong progress in academic and technology innovation, it will also continue exploring newer avenues of specialised education in areas like Blockchain, UI/UX Design, FinTech and Sports & E-Sports Operations & Management and build out a robust academic presence in the same, just as it has in Film & Creative Arts.

Another subsidiary of the Company, Connect.1 Limited is monetising all of Whistling Woods content catalog on all digital platforms since 2012. Over the past year, Connect.1 has been the pioneer in expansion of short format content publishing on the many OTT platforms that have been established in India, including Indias largest OTT platform - Disney+ Hotstar. Today, in addition to Hotstar and YouTube, WWI content is streamed on several OTT platforms like EpicOn, Hungama Play, Shorts TV, Sony Liv, to name a few, and will soon be seen globally on Amazon Video Direct as well, discussions for which are underway presently.