Reliance MediaWorks February 2011 Disclaimer This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Reliance MediaWorks Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment therefore. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company believes to be reasonable in light of its operating experience in recent years. The Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. 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The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to or for the benefit of US persons absent registration or an applicable exemption from registration 2 Reliance ADA Group stepped into the company in FY 2006 FY 2006 Film prod 14% Film processing 53% Cinemas 33% Operations in Mumbai only 8 theatres (32 screens) 14 professionals with > 10 years’ experience Revenues: Rs 1,250 million (USD 26.6 million) FY 2010 FY 2006 Film processing DI 13% 2% Eqp rent 2% Restoration 6% TV prod 5% Cinemas 72% New business areas to incrementally add to revenues in the coming years New businesses added, to Yield further results FY 2011 onwards Market leader in every business Operations in 118 cities, 5 countries 156 professionals with > 10 years’ experience Revenues: Rs 6,720 million (USD 143 million) 82% from businesses created in last 4 years FY 2010 (60% CAGR over 4 years) Projects under implementation in 2011: Studios, TV Post 56% from businesses in last 2 years 3 Performance in FY11 YTD Dec’10 FY 10 YTD Studio operational with 70,000 sq ft BPO operational with 90,000 sq ft Revenues: Rs 7095 million (USD 157 million) Revenue and EBIDTA have increased as compared to last year. With the recent commissioning of the Studios and the BPO facility, we expect film and media services division to be a substantial contributor to our business portfolio 4 The growth opportunity is very large…. Films Net Box Office Collection (“NBOC”) of top 50 films has gone up by 32%, to Rs. 15,050 million (USD 334 Million) in CY 2010 from Rs. 11,440 million (USD 254 million) in CY 2008 Big Budget films (>500 prints) – 48 in CY 2010 versus 30 in CY 2008 Average cost of production of big budget films has increased by more than 50% over the last 5 years Television Penetration in TV households 60% in FY 2010 versus 50% in FY 2006 460 channels in FY 2010 versus 120 channels in FY 2004 The number of big format shows has increased substantially over the last 5 years 5 Comprehensive presence across production value chain – Film, TV and Ad Commercials 6 Film & Media Services (Domestic) Services Suite Production services Film Post Studios Lab: Mumbai, Chennai, Kolkata TV Broadcast Digital Intermediate Film cameras Promos Lights, Grips India VFX Set Design & Construction Sub-titling Digital Cinema Mastering 8 200,000 sq ft state of the art Studio facility being built at Film City Picture: Jan 5, 2011 Phase I (70,000 sq ft with 3 sound stages) completed recently Phase II and III expected to be ready by May and August 2011 70,000 sq. ft. – Jan 2011 launch Phase I India's first and only full service Studio Complex designed by LA architects and built to Hollywood standards Design includes stringent fire protection, detection and fire fighting facilities adhering to LA County Fire Safety Norms SOPs being developed by LA consultants based on Hollywood Best Practices for studio operations Experienced expat from LA assisting an Indian team of professionals in implementing SOPs and setting up operations USPs Facility for films, TV shows and TV commercials Largest, fully air-conditioned facility in Mumbai Built-up area of 2 lakh sq ft over a 7 acre property in Film City Clear internal height of 58 ft 8 silent sound stages of different sizes Studio facility is a natural extension to Production Services portfolio 9 Film Post Typical film goes through the film post value chain as – Cans Digital) Incremental services FY 2010 onwards lead to increased wallet share DI VFX Promos Prints (Analogue and 2008 2009 2010 2011 (Half Year) 140 161 163 89 19,777 26,280 23,957* 14,502 141 163 147 163 No. of digital prints - - 1,069 1,286 No. of films done for DI - 34 45 34 No. of promos - - - 6 No. of films No. of analogue prints No. of analogue prints / film Focus is to increase share of wallet New businesses – DI and VFX – leverage existing clients and add significantly to profitability Cross Selling opportunities tapped * 2010 impacted due to strike 10 Production Services – Equipment Rental Solutions RMWL is associated with most of the popular reality shows, televised events and films - 33 programmes on general entertainment channels in India, 49 televised events since April 2009. As of December 31, 2010; RMWL rented out film equipment for 83 films. Shows Events Films Kaun Banega Crorepati Filmfare Awards Dabangg (Arbaaz Khan Productions) Bigg Boss Femina Miss India Rajneeti (Prakash Jha Productions) Jhalak Dikhla Ja Mirchi Awards Ravana (Madras Talkies) Nach Baliye Star Parivaar Awards What’s Your Rashee (Ashutosh Gowarikar Prod) India’s Got Talent Star Screen Awards Aisha (Anil Kapoor Films) Pati Patni Aur Who Standard Chartered Mumbai Marathon Break Ke Baad (Kunal Kohli Productions) Rakhi Ka Swayamvar Airtel Delhi Marathon Ra – One (Red Chilies Entertainment) Rahul Dulhaniya Le Jayega Sunfeast Bangalore Marathon Khelein Hum Jee Jaan Se (Ashutosh Gowarikar Prod) Dus Ka Dum Economic Times Awards Tees Maar Khan (Three’s Company Prod) Sacch Ka Samna Brand Equity Awards Khatta Meetha (Seven Arts International) 11 Film & Media Services (International) International Business Distinct business lines Creative Services – VFX, 2D to 3D conversion, Animation, CGI Media Services BPO – Restoration, Archival, Migration, Encoding, Transcoding, Compression & Authoring, Standards & Format Conversion All businesses exhibit strong entry barriers in terms of Technology Brand & Credibility Manpower training Infrastructure quality Top Trends in the Industry: Trends Key Drivers Alternate platforms: TV, Internet and mobile Technology Demand for high-definition images Skill sets 3D Front-end/ Development centers VFX / Animation / CGI Scale Digital platform – one world 13 We have built global capabilities Presence London New York Los Angeles Tokyo Mumbai Pune Kolkata Chennai Technology Imaging QC & Operations Centers LA RMW Burbank (Lowry) 3D London Tokyo RMW Imaging ops RMW VFX ops RMW lab ops (i-lab) RMW VFX ops Large Delivery Centers Image processing 450 people, fully operational 2D to 3D 450 people fully trained VFX + Animation 300 people, fully operational Front-end with Imagica 1,200 December 2010 established relationship with Russian World Studios and OGK in Russia 14 Competitive advantage through proprietary tools RMW has developed and now owns proprietary imaging tools which facilitate : Image Processing Standard Definition to High Definition 16 mm to High Definition 3D Alignment These tools are currently deployed in London, Burbank and Mumbai, and are internationally benchmarked Leverage the front-end relationship with clients at Burbank : David Fincher : Zodiac, Benjamin Button, Social Network Disney : 7-year old relationship, handling Animation Classics such as Fantasia, Alice in Wonderland, Winnie the Pooh trilogy, Cinderella, Jungle Book, Peter Pan, 101 Dalmatians, Sleeping Beauty, Snow White, Pinocchio James Cameron : Avatar, 4K restoration of Titanic 4 projects under active discussions (under NDA) November 2010: RMW among 4 companies to receive the Creativity and Innovation Hollywood Post Alliance Award 15 Exhibition India – a consumption driven economy • Population: 1.2 billion → increasing urbanization → relatively large youth population → 43% of population < 25 years of age; 36% between 25-50 years • GDP Growth (Real): ~6.5% → second highest growing economy Key driver of growth is to be consumption • Consumption Centres → spread over 50 cities • GDP Size (PPP adjusted): US$ 3 trillion → fourth largest economy in the world • Rising Propensity to Spend → Recreation and education spend doubled from Rs 1,800/- to Rs 4,120/- ; expected to further double to Rs 8,400/- in 4 years Deep Domestic Demand.. Huge growth potential 17 Growing opportunity for multiplex business Box-office collection of Rs 68,500 million in CY 2009, growing @ 8% Growing size of big budget movies, a key revenue driver for multiplexes Top 10 films NBOC (Rs million) No. of big budget releases 2008 Increase 8,080 6,140 32% 48 35 37% Print size of big budget movies has grown significantly Multiplex contribution has gone up from 10% in CY 2006 to around 25 percent of the total domestic theatrical revenues for the overall Indian film industry and as much as 60% for Hindi films Hollywood : a new source of revenue stream, has grown to 5.5% of Indian box-office from 2% in 2006 Low screen density in top cities (screens per million population) Mumbai: 23 Chennai: 5 Surat: 12 Lucknow: 17 2010 Delhi: 13 Bangalore: 21 Kanpur: 15 Nagpur: 18 Thane: 14 Ahmedabad: 19 Pune: 16 Indore: 13 Kolkata: 8 Hyderabad: 6 Jaipur: 8 Ludhiana: 11 Denmark: 61 Belgium: 43 Italy: 52 UK: 30 International benchmarks (screens per million population) US: 117 Spain: 46 France: 77 Germany: 45 18 Multiplex business : benchmarked globally India (multiplex) India USA Canada Australia Singapore France Admits (million) 81 3,100 1,420 128 91 19 201 Population (million) 120 1,140 307 33 21 5 62 Movie Freq (yearly) 0.68 2.7 4.6 3.8 4.2 3.9 3.2 ATP (USD) $2.6 $0.5 $7.5 $6.9 $9.4 $6.2 $8.5 BO (million USD) $208 $1,522 $10,650 $882 $849 $118 $1,704 No. of cities 106 CY 2009 Multiplex penetration (admits as a % of population) and spend per head expected to grow : in sync with international benchmarks – as propensity to spend increases in these cities 19 BIG Cinemas’ network in India Schematic representation 268 screens 81 cities % contribution to all-India Hindi box-office BIG cities BIG screens Bombay 40% 21 107 Delhi UP 20-22% 12 43 East Punjab 7.5 -9% 6 22 Rajasthan 5-5.5% 5 9 CP 5-5.5% 10 18 Nizam & Andhra* 5-5.5% 11 26 Bengal 4.5-5% 1 3 Mysore 3.5-4.5% 4 9 3.5% 3 10 TN & Kerala** 1-1.5% 8 21 Assam, Orissa 1.5% - - 100% 81 268 Circuit CI * - Additionally serves the Telugu market ** - Additionally serves the Tamil market 21 Operating performance Growth in key parameters over last 2 years - India Class Admits (million) ATP (Rs.) SPH (Rs.) Financial Year Metro/Tier 1 Tier 2 Tier 3/4 2009 8.0 6.7 8.4 2011 (9 months) 6.9 6.7 10.6 % increase 16% 34% 70% 2009 144 90 49 2011 (9 months) 163 95 56 % increase 13% 5% 13% 2009 34 20 12 2011 (9 months) 44 26 19 % increase 30% 26% 60% Apart from current growth, Tier 2/3 cities represent significant opportunity for growth in the next 3-4 years 23 Growth in key parameters over last 2 years - India (cont.) Parameter Current Period YTD Dec 10 Previous Period Apr Dec 09 Growth Admits (million) 24.32 19.79 23% Same Store Basis* Admits (million) 18.16 17.27 5% ATP Comparable properties (Rs.) 98.82 90.33 9% SPH Comparable properties (Rs.) 27.63 22.32 24% We have registered significant growth – in ticket prices and spend on F&B * Same Store refers to cinema theatres which have been operational for entire 9 months in the period mentioned 24 Content flow and programming Big releases 5 big banners in Hindi (Yashraj, BIG, Dharma, UTV, Eros) slated to release 20 films in next 18 months Around 13 high-value Hollywood / 3D movies expected in next 12-15 months A-list stars have 14 films on floor Neighborhood centric content selection, mapping and scheduling Regional language films (Gujarati, Marathi, Bhojpuri etc.) Introduced ‘uninterrupted’ English film shows ; subtitled English films 25 Customer experience : mapping key touch points screens F&B box office online 2 exit foyer feedback concession screen entrance 1 5 key touch points washrooms seating lounge 3 welcome foyer baggage drop- off security frisking box office typical customer walk-through 26 Customer experience : innovative formats 27 Awards won over the years Cine Diner won the award for Most Admired Innovative Concept of the Year at India Retail Forum 2010 Cine Diner also won 2nd place at the IAD – Interior & Architecture Awards 2009 in the Best Interior Design Hospitality category ‘Most Admired Retailer in Entertainment’ at the India Retail Awards 2009 ‘International Exhibitor of the Year’ at the prestigious ‘CineAsia 2008’ at Macau in December 2008 ‘Retailer of the Year’ in Entertainment for the second consecutive year at the India Retail Summit in 2007 ‘Most Admired Retailer in Entertainment’ at the India Retail Awards 2007 28 Mystery audits Key audit impact areas: Exterior, Box Office, Lobby, Auditoriums, Concession and Restrooms Carried out by external agencies ( which specialize in hospitality industry ) Audit score mapped against other cinema chains Periodicity – once in 2 months Action taken – theatre managers to provide action taken report (ATR) to COOs 29 Brand Connect WOMEN’S DAY (8th March’10 ) MOTHER’S DAY (9th May’10 ) INDIAN INDEPENDENCE DAY ( 7-15th Aug’10 ) – global initiative WORLD ENVIRONMENT DAY (5th June’10 ) – global initiative 30 Marketing : Grassroots , promotions, contests… 3 + 1 Ticket combo offer (Oct 10 to Mar 11) Customer Loyalty program (launch Dec’10) Launched across 30 cinemas Hot Ticket festival offer (May’10) • 75,000 Unique registrations • Sponsored 1st prizes – i10 car Prepaid movie ticket vouchers (Dec’10) SURE SHOT Winner (Launch Sept’10) • Guaranteed prize won for every transaction at BIG Cinemas • Prizes are coupons/vouchers from local retailers (neighborhood centric) 31 Retail micro-orientation Daily sales plan Cinema-wise weekly admits plotted from release schedule: Categorization of movies Historical performance of category Translated to daily target footfalls Modified every week for next fortnight, based on: Actual release schedule Verdict of film Customer-oriented pricing Movie specific pricing Eg, Tees Maar Khan, Gol3 Idiots, Kites, etc Day-part pricing E.g. R-Mulund: Morning: Rs 70/- 1:00 p.m.: Rs 110-130/- Evening: Rs 175-200/- Special pricing of Rs 50/- and Cost efficiency Electricity management (lights, A/C) Seasonal staffing (130 increased from Diwali to New Year) Micro-monitoring of yield efficiency (Popcorn, Pepsi) – to reduce spoilage and wastage Rs 150/ Food price increase by Rs 10-15/- on big week-ends 32 Path to revenue growth and profitability drivers : F&B F&B Increasing SPH - Pepsi deal - Movie Munchies product mix : kathi rolls / salads/ fresh sandwiches / candy floss , etc - Combo deals : Value meals / 3 product combos, etc - Seat serve: Mobile Vendors - Kids special Combos / merchandise 33 Off Screen Advertising Auditorium doors Washrooms Lobby Lounge Signage Exit Passage Stair Case 34 Exhibition overseas International Collections for Indian films Language US UK/ Europe Far East Others Hindi 30% 30% 3% 37% Telugu 85% 2% 5% 8% Tamil 7% 20% 55% 18% Exhibition – overseas 205 screens in US 72 screens in Malaysia Tamil 25% Indian 35% Others 4% Chinese 11% Europe Programming model with Pathe in Netherlands since June ‘09 Screen branding 40% increase in footfalls Hollyw ood 65% Malay 14% English 46% Now expanding to France (Paris BIG chain: Play mix of content 35% of Hindi Opened market beyond KL 70% of Tamil / Telugu SPH highest among chains Account for 30-33% of Tamil GBOC and Lyon) with Pathe and Belgium (Brussels and Antwerp) with Kinepolis Need for theatrical presence in US Total 200 screens: 55 India focused screens, balanced with 145 Hollywood screens (managed locations) Strong Indian community – 2.6 million population + H1, L1, students Including other Asians (Pakistani, Bangladeshi) aggregates approximately 3.6 million US accounts for 30 to 33 % of overseas theatrical revenue for Hindi movies (Rs 2,000 million) US cinema chains reluctant to carry Indian content : Hollywood movies are first priority Cultural mismatch – unable to handle Indian crowds Indian movies get second-rung theatres : Poor customer experience Deals with distributors on MG basis – substantial under-reporting Highly unorganized distribution pattern for Tamil and Telugu movies 36 BIG Cinemas in US Canonsburg Madisonville Pigeon Forge Greenville New York New Jersey Laughlin Chicago Freemont Cleveland San Jose Herndon Norfolk Falls Church Decatur Los Angeles Corona Kansas Norcross Cherokee Greenacres Palm Bay BIG Cinemas in US Growth in Box Office YTD Dec’10 : 10% increase since last year BO contribution No 1 3 2 Movie Dabangg Ravanan - Tamil Market share 27% 56% Total Prints 61 34 BIG Prints 9 10 Enthiran - Tamil 54% 54 9 Promotions : Movie specific (star premiers, sweepstakes, social media) and Brand specific (Everyone is a Winner !) Events and Festivals : Green your lifestyle, Independence Day, Diwali Talent Hunt Innovative marketing tools : Print@home, Online Polls, Tag it ! Unlocking the advertisement potential Indian Diaspora median income higher than average American or any other ethnic community Focused access, understanding and reach to community provides greater value to advertisers Example Spanish, African-American etc. which are now mainstream focus Our focused consumer targeting from this year has begun yielding revenues 38 Exhibition – Malaysia 72 screens in Malaysia Tamil 25% Others 4% Chinese 11% Play mix of content Opened market beyond KL Account for significant % of Tamil GBOC Malay 14% English 46% 39 BIG Synergy Snapshot of shows Leader in original format, studio based, interactive shows Cutting edge shows : Kaun Banega Crorepati, Dus Ka Dum, Jhalak Dikhhla Jaa – Dancing with the Stars, Kya Aap Paanchi Paas Se Tez Hain, Aap Ki Kacheri and India’s Got Talent Winner of 2009 Indian Telly Awards for “Best Production house of the year “ 41 Exhibition overseas International Collections for Indian films Language US UK/ Europe Far East Others Hindi 30% 30% 3% 37% Telugu 85% 2% 5% 8% Tamil 7% 20% 55% 18% Thank you 205 screens in US 72 screens in Malaysia Tamil 25% Indian 35% Others 4% Chinese 11% Europe Programming model with Pathe in Netherlands since June ‘09 Screen branding 40% increase in footfalls Hollyw ood 65% Malay 14% English 46% Now expanding to France (Paris BIG chain: Play mix of content 35% of Hindi Opened market beyond KL 70% of Tamil / Telugu SPH highest among chains Account for 30-33% of Tamil GBOC and Lyon) with Pathe and Belgium (Brussels and Antwerp) with Kinepolis