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					Industry Overview

Entertainment is always seen as a major source for leisure, relaxation and information. Sociologist
throughout the world are discovering that improved living standard translate into higher needs for
leisure and entertainment. It is also an established fact that entertainment is generally recession
proof. Entertainment is a knowledge-based creative industry that has always been successful in
drawing masses.


The Indian Entertainment industry which primarily consists of television software and
broadcasting, film software, distribution and exhibition, music, radio is one of India‟s oldest and
prominent industries. Film production houses across the world are not only into forward and
backward integration but also sideways. Internationally the exhibition industry is based on big
theatrical chains.


Indian Film Industry is stated to be one of the biggest in the world and produce over 800 films in a
year. It is reported to be directly and indirectly employing more than 2.5 million persons. Though
the industry is very big, the Mumbai based Hindi and South based Tamil & Telugu film industry are
said to dominate the scene.

Currently there are more than 12000 Cinema screens in India. This means 13 screens per million
head of population, the lowest screen average in the world. Most of the Cinema halls are owned
by individual business man and more than 95% of theatres are single screen and stand alone, which
makes it difficult for technical up-gradation and maintaining quality of services to customers
which increasingly Indian consumers are demanding. Therefore a fresh wind of change in
exhibition industry is needed to consolidate and upgrade the exhibition sector and also release the
new film over a wider geography to combat piracy.


Herein comes the basis for consolidation of screens under corporate management to provide
consistent quality viewing besides other leisure facilities, including Kids Corner, food & beverages
for the viewers under one roof.




1/43
ABOUT GEMINI INDUSTRIES AND IMAGING PRIVATE LTD

GEMINI is a household name in the whole of India and in good many parts of the World, identified
by the logo of twin boys with bugles; GEMINI is a landmark in the heart of Tamil Nadu & Andhra
Pradesh. GEMINI was founded by Late Mr S S Vasan in April 1964.


The group presently under the ownership and control of Mr A. Ravishankar Prasad, Managing
Director and Mr A Manohar Prasad, Joint Managing Director, grand children of late Shri L.V.
Prasad, the doyen of the Indian Film Industry and recipient of the prestigious Dadha Saheb Phalke
award.


GEMINI INDUSTRIES AND IMAGING PRIVATE LTD is the holding company under which subsidiary
partnership firms operate independently.



MAJOR BUSINESS CARRIED OUT BY THE COMPANY:

The company is in the business of Trading in film, Film processing and Printing, Film Production,
Graphics and special effects in film making, Cine equipment hire and Distribution of film.


SUBSIDIARY PARTNERSHIP FIRMS & THEIR KEY BUSINESS ACTIVITIES


Anand Cine Service – Chennai          Cine Equipment Hire

                                      Only Company in Asia having 52 Units to cater to the
                                      various production requirements with latest equipments
                                      and experienced and skilled crew.

Gemini Labs – Hyderabad               Processing & Printing of Films

                                      Catering to the requirements of Producers in Andhra
                                      Pradesh.

Anand Cine Service – Hyderabad        Cine Equipment Hire

Gemini Film Circuit                   Film Production

                                      The Firm has track record of producing Tamil, Telugu and
                                      Hindi super hit films.
                                                                                                 -




2/43
       GROUP BUSINESS VERTICALS - PRESENT



                                                       Graphics
                GIIL                                      &
                                                       Special
                                                        Effects


                                               Sale of
                                               Negatives
                                               &
                                               Positives


                                  Processing
                                  &Printing




                        SUBSIDIARY PARTNERSHIP FIRMS




       ANAND CINE                   ANAND CINE                    GEMINI
       SERVICE                      SERVICE                       LABS
       CHENNAI                      HYDERABAD                     HYDERABAD



                                                                   Processing
         Film                          AP-Region
         Equipment
                                                                   &Printing
                                       Equipment
         Hire                          Hire

        GEMINI
        FILM
        CIRCUIT


           Film
           Production




3/43
CURRENT TRENDS IN MEDIA & ENTERTAINMENT (M&E) INDUSTRY

          The Indian M&E industry, which was valued at nearly US$ 11 Billion (Rs. 450 Bn3) in 2006, is projected
           to be growing at a CAGR of ~18% over the next five years, reaching a value of over US$ 25 billion (Rs.
           1 trillion) by 2011. India‟s growth is also expected to be the key driver in pushing the global M&E
           industry to US$ 2 trillion by 2011.


          The M&E industry growth comes on the back of rising income levels in India over the past few years,
           as well as the young Indian population and its dynamic spending patterns.


          There are key trends viz. emergence of large scale exhibition networks and new customer segment
           that are fundamentally changing the landscape of the Indian Film industry and associated industries
           that “retail” film content, such as TV, Music, organized retailing, etc.


          Large scale exhibition networks that control significant market share – especially by focusing on tier
           II/III cities where increasing purchasing power will create a viable market. Today, large exhibition
           networks spanning metro and non-metro cities have not been created, mainly on account of poor
           viability of multiplex type of screening experience in non-metros. The standalone exhibition business
           model in these towns is structured around low ticket prices and poor movie-watching experience,
           coupled with minor income from parking, F&B, etc.


          The Indian film industry has witnessed its share of wide-ranging changes in the recent past.
           Bollywood, the colloquial name for the Mumbai-based Hindi film industry, which commands a
           significant share of the Indian film market, is now gaining a global audience. A rapidly emerging mall
           culture has given home to scores of new multiplex theatres. New technologies have led to digital
           streaming of movies, as well as innovative modes of distributing trailers, pictures, music, and other
           film content In addition, regulatory changes and the official recognition of film as an industry have
           introduced fresh lines of financing from organizations like banks and corporate.


          There is a clear demand for good quality movie going experiences in these non-metro towns, from a
           customer perspective. M&E accounts for 8% of the average consumption basket across the country
           currently. Given the increasing exposure to new media and entertainment options coupled with
           increasing income levels and a younger earning class,       estimate for the total potential multiplex
           screens in India in the range of 2000-3000 based on a bottom-up assessment for multiplex quality
           screens.



          With the all India utilization at movie theatres at abysmally low levels of 15-25%, significant new
           capacity need not be added. There might be pockets where there is supply demand mismatch but on
           an overall basis, enough capacity is already present.
4/43
          A predominant share of the exhibitor‟s cost is the share of the box office collections (net of
           entertainment tax) that is paid off to the producer/distributor as cost of procuring the movie. This
           share varies between 30-50% depending on the movie‟s budget and its running week.


          The entry of these large corporates is bringing in discipline to the industry, previously known for its
           lack of planning and adhoc nature. This welcome change is leading to the corporatization of the
           Indian film industry.


          Some of the key indicators of this trend are:
               o     Financing of films by institutional financing companies, large corporate houses - reducing the
                     cost of borrowing significantly. Signing of exclusive contracts by production houses with
                     directors, actors, actresses.
               o     Efficient project management with significant resources invested in pre-production planning
                     and scripting activities before the actual start of production Transparent accounting processes
                     improving investors' confidence - payments by cheque and audit of accounts after project
                     completion Significant focus on marketing activities and maximizing returns by taping
                     innovative revenue streams like in-film placements, Forward and backward integration by
                     exhibitors, distributors and production houses to retain value across the value-chain within
                     their enterprise Tie-ups with large international production and distribution companies in the
                     areas of co-production, international distribution, animation.
               o     Increasing convergence of Indian and global tastes will provide opportunities to develop global
                     Indian productions, for the leading production houses. It is estimated that around 50 million13
                     people spread around the world follow the Indian movies closely: 25 million Indians (persons
                     of Indian origin, students and working professionals living outside India) and equally large
                     non-Indian community in countries like Malaysia, South Africa, Japan, Germany etc. are big
                     fans of Indian entertainment. There is a large acceptability of Indian movies in the
                     international market, not only in the international film festivals but also in the mainstream.


          From a large production house perspective, non domestic BO revenues are increasing Exponentially
           and are providing a robust basis for hedging their risks.




          The recent blockbuster of Rajinikant (Sivaji) which was made with a budget of nearly Rs. 80 crore,
           recovered a quarter or more from overseas rights (nearly Rs. 18 crore) and satellite rights (Rs. 4
           crore).




5/43
          Key findings of a recent IMRB survey reveals that Theatres are not dead: There is a significantly
           increased preference to watch movies in theatres and multiplexes from the 15-34 age segment. This
           is largely due to the college going population, young couples and small families. As the family size
           grows, there is an increased tendency to watch movie content at home. One of the key reasons for
           this transition is the high cost of watching movies in theatres.


          The multiplex format has been well accepted by the urban population with more than 80% of the
           population willing to pay more than Rs. 100 for a good movie watching experience. A similar trend is
           seen even in the tier-II and tier-III cities with more than 60% of the population willing to pay
           significantly more than the average ticket price they are currently playing for a better movie
           watching experience.


          There is a huge potential for multiplexes in South India. Traditionally watching films in theatres,
           especially with family, is a popular means of entertainment. Further, people are multi-lingual and
           are open to watching good films even in languages other than their native language. These factors
           drive up foot–falls in theatres; according to reports, gross Tamil Nadu, Andhra Pradesh, Karnataka,
           Kerala attendance in the South is over 1.5 billion tickets per annum. Further, multiplexes in South
           India enjoy higher occupancy rates than those in other parts of the country. Thus, multiplex players
           based in the South as well as from other parts of the country have plans to add around 600 screens in
           this region through multiplexes. At an estimated investment of Rs 2.5 crore per screen, the total
           investment would work out to Rs 1,500 crore. Besides box office collections, multiplexes have other
           sources of revenue: food & beverages, advertisements, parking fees, etc. (10). Box office collections
           account for 60% of the total revenues5,Chart followed by food and beverages (25%), advertisements
           (10%) and miscellaneous revenues (5%). Another factor that impacts the box-office performance of a
           film, besides its quality, is the regulation pertaining to entertainment tax and ticket prices in that
           state.



          Major segments of the M & E Industry are Television, Film, Music, Print media. Films have the highest
           inter-linkages with other mainstream M&E segments, such as TV and Music, and they are in fact
           several TV channels whose main content is based on films and film music. Film content constitutes
           nearly 10% of TV content and nearly 13% of advertisement revenues in India, not including the
           numerous talk shows and interviews that the film world provides fuel for. Similarly, in the print
           media sector, there are several magazines and newspaper sections dedicated to news and gossip
           from the film industry.

          Favourable Indian demographics, growing population, urbanization, rising income levels, education
           levels etc. have led to an increased demand for entertainment and infotainment and the willingness
           to spend for entertainment has also increased exponentially. This will make the Film industry and
           grow in tune with the changed dynamics of the viewers preferences.
6/43
          FUTURE BUSINESS PLAN

          The Future Business plan of the Gemini group has been planned around the changing
           dynamics of the Film industry.


          The expansion will focus on the following areas:


            Anand Cine Service                   Expansion of Equipment Hire Services
            Chennai & Hyderabad

            Gemini Film Circuit                  Production of Tamil, Telugu & Hindi movies all
                                                  put together 103 movies annually, including First
                                                  Copy Buy out movies.
                                                 Five Studios in Chennai , Hyderabad & Mumbai

            Gemini Industries and                taking over 100 Multiplex & 300 single screens
            Imaging Private Limited               in Tier II & III Cities of AP

            Gemini Labs , Chennai                Graphics & Special Effects




       Gemini group plans to integrate all its production capabilities to become India's largest content
       creator .Further the group has ambitious plans to expand the existing business relating to film
       equipment hiring, film processing and proposes to enter into exhibition by controlling at least
       100 Multiplex and 300 single screens in the Southern States.


       Gemini also plans to setup full fledged Graphics, Animation and Special Effects infrastructure
       to provide one roof solution to its clients besides content development under GEMINI Brand.


       In addition this will create Brand and value for the Group„s business.




7/43
Benefits of expansion & consolidation

Gemini has inherent advantage - of being a corporate house providing many services to film
industry in Tamil Nadu and Andhra Pradesh. With such well established base, it is in a good
position amongst Industry and also Film viewers.


Equipment Hire
Anand Cine Service (ACS) is the leading equipment provider for film producers. With increasing
number of films being produced in South India, the demand for equipment is increasing
exponentially. To cater to this expanding market, ACS plans to expand the volume and also the
crew for handling various equipments provided on hire.


Digital Studio


Gemini Labs plans to setup special effects, Graphics and animation studios. This facility will cater
to the needs of producers to complete the post production work under one roof. Completion of
film – including CG & Special Effects, print making will be available under Gemini banner, which
will be time & cost effective for film producers.


This facility will be used by Gemini‟s film production arm for production of low cost animation
films for children.


Film Production


Gemini Film Circuit has over the years produced 58 films in Tamil, Telugu and Hindi. Many of
these films have been great hits.


With such background, Gemini plans to produce / own 103 movies in a year to build content base.
Gemini plans to use „First Copy buy‟ model to acquire films produced by others.


Multiplex & Single screen theatre take over


Gemini Industries and Imaging Private Limited plans to acquire / take on long lease about 100
multiplexes and about 300 single screen theatres in Tier II & III cities of Andhra Pradesh. These
centres will be developed into full fledged entertainment centres for guests. The plan includes
8/43
facilities like Kids Corner, Food & Beverages, Parking, ATMs, Gaming Centres & other services. This
would result in generating revenue besides Box office collections.


With such a network, Gemini plans to have online ticketing, pre-paid ticketing cards for SMS /
Telephone / Internet bookings etc managed from a central location. Cross city utilization of pre-
paid ticketing cards would help regular travelers. Such pre-paid cards may also be used for
payment in other facilities like Kids Corner, Gaming Centre, Foods & Beverages etc.


Screen ownership brings more distribution / screening opportunities and command better share in
collections.




9/43
               GROUP BUSINESS VERTICALS – FUTURE BUSINESS PLAN



                                                                Graphics
                          GIIL                                     &
                                                                Special
                                                                 Effects


                                                         Sale of
                                                         Negatives,
                                                         Positives


        Exhibition
        Multiplex
        & Single                            Processing
                                            &Printing
        Screens




                                  SUBSIDIARY PARTNERSHIP FIRMS




               ANAND CINE                     ANAND CINE                   GEMINI
               SERVICE                        SERVICE                      LABS
               CHENNAI                        HYDERABAD                    HYDERABAD



                                                                            Processin
                 Film                           AP-Region
                                                                                g
                 Equipment                      Equipment
                                                                            &Printing
                 Hire                           Hire


                 GEMINI
                 FILM
                 CIRCUIT


                     Film
                     Production

                                                                                        -




10/43
STRENGTHS:

       The Corporate structure created in 1946 has stood against the different difficult situations
        in these 60 Years. The structure has well set for taking up the integration of all activities of
        the industry both in terms of software and hardware.


       The business activity of raw film, Cine equipment hire, Film processing, Studio graphics,
        Production, Distribution and Exhibition will come under one roof after integration, there by
        saving in cost and time which will result in higher returns.


       Anand Cine Service having 52 units of latest equipments available in the Globe with skilled
        and experienced crew gives a edge over others. This infrastructure is one of its kind in
        entire Asia.


       First colour laboratory in the whole of South India - Gemini Colour Laboratory. The film
        processing division has latest equipment and employees of three generations with utmost
        sincerity and loyalty.

       The Government of India has awarded National Award to our Laboratory for three
        consecutive years for the best Film Processing Unit. Likewise, Kerala State Government
        has awarded best Film Processing Unit for four times, including three consecutive years.


       Gemini group plans to integrate all its production capabilities to become India's largest
        content creator .Further the group has ambitious plans to expand the existing business
        relating to film equipment hiring, film processing and proposes to enter into exhibition by
        controlling at least 100 Multiplex and 300 single screens in the Southern States. In addition
        this will create Brand and value for the Group„s business.


       Favourable Indian Demographics – growing population, urbanization, rising income and
        education levels.


       Good entertainment software is a regenerative asset and appreciates in value over passage
        of time.



11/43
       Global entertainment conglomerates have discovered the virtues of India as an ideal
        production base for content and have started sourcing.


       The South Indian diaspora is another significant factor contributing to the potential of
        India‟s media and entertainment sector. The large number of cash rich NRIs are considered
        to be sixth territory. (The Indian terrrtitories are divided into five distinct markets: West
        (Mumbai), South (Madras), East (Kolkatta), North (Delhi) and North East (Meghalaya,
        Manipur, Tirupara, Sikkim, Nagaland and Assam.


       Favourable environment in for entertainment industry in both Tamil Nadu & Andhra
        Pradesh.


TREND IN INDIAN MEDIA & ENTERTAINMENT(M&E) INDUSTRY


Indian Media & Entertainment

       The Indian Media & Entertainment (M&E) industry is, at present, one of the most-tracked sectors in
        the country not because it is the largest, but because of the tectonic changes that are occurring.


       From a global perspective, India has been ranked as the fastest growing market in the world for
        spends in M&E over the next five years.




       The Indian M&E industry, which was valued at nearly US$ 11 Billion (Rs. 450 Bn3) in 2006, is
        projected to be growing at a CAGR of ~18% over the next five years, reaching a value of over US$ 25


12/43
        billion (Rs. 1 trillion) by 2011. India‟s growth is also expected to be the key driver in pushing the
        global M&E industry to US$ 2 trillion by 2011.
                                                                                                            -




Overview of the size and Growth of the Key M & E Sub -segments




                                                                                                            -


Television Industry


       Television currently accounts for 25% of the global M&E industry and is the highest contributor to
        revenues for most of the top 10 media conglomerates world wide.In India too, television is at its
        prime, accounting for over Rs.190 billion , or 45% of the M & E Industry , making it the largest
        segment.




13/43
       Today, there are over 350 channels available in the country, making it the third largest television
        market in the world. The TV segment is largely broken down into subscription, advertisement and
        content revenue models, with subscription contributing the largest share.


       Out of nearly 200 million households, TV has penetrated to nearly 60% - that is, over 120 million
        television households. Of these, more than 60 million households receive cable. Even the average
        revenue per user (ARPU) is one of the lowest in the world, hovering at an average of Rs. 85 in rural
        areas and Rs. 180 in metro cities (Refer Figure 5).


                                                                                                           -




14/43
Film Entertainment


       Of all the M&E segments, it is filmed entertainment that is, by itself, the genesis of an entire
        economic chain dedicated to bringing entertainment to an audience.


       Films have the highest inter-linkages with other mainstream M&E segments, such as TV and Music,
        and they are in fact several TV channels whose main content is based on films and film music. Film
        content constitutes nearly 10% of TV content and nearly 13% of advertisement revenues in India, not
        including the numerous talk shows and interviews that the film world provides fuel for. Similarly, in
        the print media sector, there are several magazines and newspaper sections dedicated to news and
        gossip from the film industry.


       In the Music channel, films provide 65-70% of the content for the Indian music industry. Even in
        Radio, film music is the key content of most radio channels. In the new and rapidly growing segment
        of FM channels, the percentage of film music content is even higher.

                                     Film Related Content Downloaded in Mobiles


                                                                             22%
                                                                                          Ring Tones
                                                  11%
                                                                                          Caller Tunes
                                             9%                                           Wall Papers
                                                                                          Ringback
                                    4%                                                    Tunes
                                                                                          Video
                                    4%



                    0%              5%      10%          15%        20%            25%



                                                                                                            -


                               Film Content Downloaded From Internet

                Songs                                                          11%


            RingTones                                               9%


               Movies                       4%


             Wallpaper                      4%


               Trailers        1%

                          0%        2%     4%       6%         8%      10%          12%




15/43
       This public fascination with cinema explains why the Indian film industry produces the most number
        of movies in the world – over 1000 films annually.


       This translates into the highest ticket sales in the world as well, with 3.7 billion tickets sold in India,
        as against 1.4 billion in the United States in 2006. But out of the 1000 plus films produced in India, it
        is not the Hindi movies (often referred to as „Bollywood‟) that dominates the number of films made.
        While Hindi movies might have the widest reach within India and outside, it is the Telugu
        („Tollywood‟) and the Tamil („Kollywood‟) which dominate the number of movies produced.
        Collectively they account for more than 40% of the total movies produced when compared to 20% for
        Hindi movies. This not only reinforces the wide-spread interest for various genres of movies but also
        the depth of talent that exists in the Indian film industry.


       Overall, the Indian film industry was estimated to be worth US$ 1.8 billion11 in 2006. Based on
        detailed, top-down analysis, taking into account the share of private consumption as a proportion of
        GDP, share of wallet for M&E spend, and spend on films within the M&E space, it has been estimated
        that the Indian film industry will be worth US$ 4.4 – 5.1 billion (Rs. 176 – 204 billion) by 2011.


       The Indian film industry has witnessed its share of wide-ranging changes in the recent past.
        Bollywood, the colloquial name for the Mumbai-based Hindi film industry, which commands a
        significant share of the Indian film market, is now gaining a global audience. A rapidly emerging mall
        culture has given home to scores of new multiplex theatres. New technologies have led to digital
        streaming of movies, as well as innovative modes of distributing trailers, pictures, music, and other
        film content In addition, regulatory changes and the official recognition of film as an industry have
        introduced fresh lines of financing from organizations like banks and corporate.
                                                                                                                  -

                                    Feature Films Produced ( 1985 - 2005)
                    1400

                    1200

                    1000                                                                     937
                                                                 865           892
                                                   817
                     800                                                                     699
              Nos




                                     631                                       611
                                                                 593
                     600546          549           543

                     400356

                     200

                       0
                      1985         1995           2002
                                                     Year        2003        2004           2005


       The corporatization of the film industry has opened new revenue streams, while at the same time
        ensuring a greater degree of transparency and public knowledge about film companies.
16/43
       There are key trends viz. emergence of large scale exhibition networks and new customer segment
        that are fundamentally changing the landscape of the Indian Film industry and associated industries
        that “retail” film content, such as TV,Music, organized retailing, etc.
                                                                                                                -
Consolidation and changing customer preferences
       The M&E industry growth comes on the back of rising income levels in India over the past few years,
        as well as the young Indian population and its dynamic spending patterns.


       A quick review of key investments in this sector coupled with corporate activity validates the
        optimism that is shared by global and Indian M&E majors. Sample this this sector has witnessed FDI
        inflows of Rs. 400 crore in 3 yrs, a flurry of PE funds entering M&E space in India including 3i,
        Warburg Pincus, D.E. Shaw. Global M&E players are also entering with commitment of around US$ 1-
        2 billion investment. The Indian corporates are not left far behind with entry of ADAG through
        Adlabs Films and Tatas through their DTH venture with Star.
                                                                                                                -

Consolidation and emergence of large scale exhibition networks
       Large scale exhibition networks that control significant market share – especially by focusing on tier
        II/III cities where increasing purchasing power will create a viable market. Today, large exhibition
        networks spanning metro and non-metro cities have not been created, mainly on account of poor
        viability of multiplex type of screening experience in non-metros as well as limitations in
        distribution of physical film rolls to so many cities. In comparison, the top 3 exhibitors in developed
        market such as the US control 35% of the theatres and about 40% of the market share.


       Non-metro markets currently have very few good quality cinema screens. Even large cities with
        populations in excess of 2 million (e.g. Nagpur, Lucknow, Kanpur) can only boast of 2-3 good quality
        cinema theaters on account of low utilization faced by these movie halls. Even „hit‟ movies garner
        utilizations of 25-30% for 2 weeks or so. Therefore, the standalone exhibition business model in
        these towns is structured around low ticket prices and poor movie-watching experience, coupled
        with minor income from parking, F&B, etc. These cinema hall owners completely de-risk their
        business model by going in for rental arrangements for every aspect of the business with distributors
        for screening, caterers for F&B and outsourced security. Most of these standalone ventures are
        unprofitable, but exist primarily because of the real estate value of the location to the proprietor.
                                                                                                                -




17/43
Density of Film Theatres




                                      -
Preference Statistics& Expectations




                                      -




18/43
                                             Metro Population 15-34
                                             Years. Ticket rate in Rupees




                                                     Tier II / III City.
                                                     Ticket rate in
                                                     Rupee



                                                                                                           -


       There is a clear demand for good quality movie going experiences in these non-metro towns, from a
        customer perspective. M&E accounts for 8% of the average consumption basket across the country
        currently. Given the increasing exposure to new media and entertainment options coupled with
        increasing income levels and a younger earning class, estimate for the total potential multiplex
        screens in India in the range of 2000-3000 based on a bottom-up assessment for multiplex quality
        screens. Assuming the global average of 250 seats per screen we estimate the number of admissions
        required to profitably sustain a screen to be between 100,000 – 140,000 at an utilizations of 30-40%
        (from the current all-India average of 20%). With 4 such screens per city on an average (from a
        competition dynamics perspective), we require 400,000 – 500,000 admissions to sustain multiplex
        economics in a city. At an average annual admissions per capita of 3-3.5 (based on India and global
        benchmarks) and that multiplexes only target the high income populace, we require 100,000 –
        180,000 high income population to sustain these multiplex screens. Based on city-level demographic
        data, ability to pay, income levels, it is estimated a potential of 2,000 – 3,000 multiplex quality
        screens in India of which we expect 60%-65% to be present in the non-metro cities .



19/43
Why takeover of existing capacity?


       With the all India utilization at movie theatres at abysmally low levels of 15-25%, significant new
        capacity need not be added. There might be pockets where there is supply demand mismatch but on
        an overall basis, we have enough capacity already present. There is an increasing trend of large
        exhibition chains acquiring existing standalone screens and refurbishing them to provide multiplex-
        quality viewing experience to the customer.
                                                                                                              -
Benefits of having theatre Network
       There are multiple benefits that large chains get by using this model:
           Access to prime real estate – most of these standalone screens have been present for a long
            time, and cities have developed around them, thereby making these screens central to key
            localities.
           Basic infrastructure – multiplex chains get access to basic infrastructure which they leverage to
            refurbish the overall theater.
           Having a larger number of screens under control will improve the bargaining power with the
            producers/ distributors.
           From the point of view of standalone screen owners, who operate on a de-risked model, they
            are presented with an option for a long term fixed lease of the entire asset, which is a very
            profitable and stable business arrangement for them.
           Players like Ad Labs and Fun Republic have taken the lead in this business model of converting
            existing standalone theaters to multiplex quality screens, and have seen a lot of success, given
            their first mover advantage in a majority of the non- metros .
           A different business model has also emerged through take over operational control of standalone
            screens and provide l content and screening through a rental arrangement.). They acquire
            theatres on long lease/ownership and improve the infrastructure to offer high quality viewing
            experience and have technology tie-ups. This model has gained a lot of acceptance in South
            India, with Pyramid Saimira having nearly 350 theatres under control and looking at expanding to
            2000 screens by 2010.
           In spite of the advent of multiplexes and large scale exhibitors, it has been felt that stand-alone
            theatres would not be wiped out completely. They would continue to have loyal patrons and
            because of their unique location they would continue to attract crowds similar to what we are
            seeing in the retail industry with the kirana shops.
           However, these single theatres will need to carve out a unique positioning and improve the
            entertainment offering by bundling gaming parlors, better quality ambiance, eat-out joints, etc.
            to their product portfolio just like these stand-alone retail outlets are upgrading to give a super
            market kind of an experience.
                                                                                                              -




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Balance of power with emergence of large production houses (studios)


       A predominant share of the exhibitor‟s cost is the share of the box office collections (net of
        entertainment tax) that is paid off to the producer/distributor as cost of procuring the movie. This
        share varies between 30-50% depending on the movie‟s budget and its running week.


       Recently, the large production houses have started to stretch the limits, commanding shares of as
        high as 55%- 60%. Given that the best performing movies, or at least the ones with the biggest hype,
        come from such production houses, it is difficult for the exhibitor to let go off them. In fact a „hit‟
        movie can account for around 3-5% of an exhibitor‟s annual income. Therefore, it is difficult for
        exhibitors to completely pass up films from well known production houses. However, doing so
        completely destroys the economics of the exhibitors, who is already running on a fine margin - an
        example of this is the US market, wherein the powerful studios have squeezed the exhibitors out of
        their profits. Equipped with the best talent in the industry and a strong pipeline of movies, the
        studios command rates that make the exhibition model un-viable.


       However, in an emerging country such as India, the advent of large networks is expected to balance
        the power equation between the exhibitor and the producer/distributor. The emergence of large
        scale exhibitors will at some level ensure a minimum domestic box office collection for a movie,
        given its simultaneous release across a large network and reduction of piracy. On the other side, the
        emergence of large scale exhibitors will also provide opportunities to fuel the growth of the
        independent movie, who is currently finding it difficult to convince distributors to invest in their
        movies.
                                                                                                              -


Corporatization of Indian film industry


       After gaining industry status in 2000, the century old film industry has seen a flurry of new entrants
        like R-ADAG, UTV, Sahara group, EROS International across the value chain. The entry of these
        groups are not only from a perspective of securing organized financing for films but also creating
        scale for 5-10 films per year (almost like a 'production line'), borrowing concepts from traditional
        manufacturing with emphasis on processes that bring the creativity to completion in a structured,
        time-bound manner and within budgets.


       The entry of these large corporates is bringing in discipline to the industry, previously known for its
        lack of planning and ad hoc nature. This welcome change is leading to the corporatization of the
        Indian film industry.


                                                                                                              -


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       Some of the key indicators of this trend are:
           Financing of films by institutional financing companies, large corporates - reducing the cost of
            borrowing significantly. Signing of exclusive contracts by production houses with directors,
            actors, actresses.
           Efficient project management with significant resources invested in pre-production planning and
            scripting activities before the actual start of production Transparent accounting processes
            improving investors' confidence - payments by cheque and audit of accounts after project
            completion Significant focus on marketing activities and maximizing returns by taping innovative
            revenue    streams    like   in-film   placements,Forward    and    backward    integration   by
            exhibitors,distributors and production houses to retain value across the value-chain within their
            enterprise Tie-ups with large international production and distribution companies in the areas of
            co-production,international distribution, animation.
                                                                                                            -
Global acceptance of Indian themes


       Increasing convergence of Indian and global tastes will provide opportunities to develop global
        Indian productions, for the leading production houses. It is estimated that around 50 million13
        people spread around the world follow the Indian movies closely: 25 million Indians (persons of
        Indian origin, students and working professionals living outside India) and equally large non-Indian
        community in countries like Malaysia, South Africa, Japan, Germany etc. are big fans of Indian
        entertainment. There is a large acceptability of Indian movies in the international market, not only
        in the international film festivals but also in the mainstream


       In addition, the economic boom in India and China is attracting great curiosity in the West about
        India, China and their cultures. This can be seen from the fact that „non-Hollywood‟ productions
        have been celebrating global financial success recently with „cross over‟ films like Crouching Tiger
        Hidden Dragon, Amelie, Life is Beautiful, Bend it like Beckham, Monsoon Wedding, Namesake and
        Pride & Prejudice .


       Even Indian movies nowadays appeal to international audience as much as to the Indian audience -
        creative talent from India is being recognized and their demand is on a rise. This can be seen from
        the collections some of the recent movies have been earning in US and UK box-office in comparison
        to the domestic collections.


       Therefore large Bollywood producers can garner higher international revenues and target a wider
        global audience.
                                                                                                            -




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       Growing share of non-domestic Box Office revenues production expenses, satellite rights have been
        growing at 25-30% year on year.


       The growing acceptance of Indian movies in international markets is seeing a surge in the
        international distribution rights. At present, most of the overseas rights are being sold on an outright
        sale basis. With the surge in demand for quality Bollywood movies from nearly 25 million NRI
        population and even from niche pockets of other nationalities like Africa, Japan, etc, the overseas
        market has become lucrative with big banner films realizing approx 25-30% of the total proceeds
        from international markets. International distribution has proved to be an attractive revenue stream
        for producers. As a result, we will see an imminent revenue expansion for producers due to sale of
        overseas rights from current share of less than 12% to 25% over the next 3 years12.
                                                                                                               -


Emergence of tie-ups of Indian production houses with international distributors


       From a large production house perspective, non domestic BO revenues are increasing Exponentially
        and are providing a robust basis for hedging their risks ..


       The recent blockbuster of Rajinikant (Sivaji) which was made with a budget of nearly Rs. 80 crore,
        recovered a quarter or more from overseas rights (nearly Rs. 18 crore) and satellite rights (Rs. 4
        crore).


       Satellite rights for any blockbuster which used to cost around Rs. 3-5 crore, is now costing anywhere
        between 8- 10 crore. Even a commercially flop Umrao-Jaan fetched more than the 2005‟s biggest
        block buster. Based on the theatrical collection and increased production expenses, satellite rights
        have been growing at 25- 30% year on year. This was due to the flurry of new channels fighting to
        garner content.
       Year 2006 was a record-breaking year for Hindi films at the US box office, with 7 of the 14 foreign
        language films that grossed over 2 million, being Hindi movies. As a result, global distribution majors
        are increasingly eyeing the lucrative Indian film industry and its output. Los Angeles-based Time
        Warner Cable has tied up with BOD WOD, a company that holds exclusive rights to popular Indian
        movies from studios like Adlabs and UTV, to bring the latest Bollywood hits in US shores through
        International Movies on Demand. International distributors are also getting into film distribution for
        the Indian market in a big way – Sony Pictures is already present in Bollywood and others are
        expected to follow suit.
                                                                                                               -


       Larger budget movies coupled with the need to sustain a robust pipeline of movies (which
        determines negotiating power with exhibitors) will drive corporatization on the Indian Film industry.
        This trend is already partially observed in Bollywood today, with leading production houses like UTV,
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        Adlabs and Yashraj Films going the corporate way. Indian producers will need to learn and adopt the
        studio model, by leveraging the experiences of globally successful studios like Universal Studios.


       Going the corporatized way facilitates greater access to financing and lower cost of capital, enables
        intelligent selection of scripts factoring in customer preferences and market trends and allows for
        higher transparency and discipline in the film making process, resulting in increased focus on cost-
        controls, higher emphasis on scripting, planning and documentation.


       Some of these large players are now involved in producing 8-10 films annually with each film being
        handled like a standalone project having pre-determined budgets and deadlines. These production
        houses are also signing large multi-year multi-film deals with leading directors, actors, and other
        creative talent to get exclusive access to them.


       Once the large prestigious Indian production houses start corporatizing their set up, they will be
        able to attract companies like Time Warner, Walt Disney and Viacom who are aggressively looking to
        enter film production in India, as partners. For example, Warner Bros. has joined the Bollywood race
        with its first India production „Made in China‟. Walt Disney, which already has a presence in the
        kid‟s television segment through Disney Channel and Toon Disney in India, is now setting sights on
        Bollywood. Walt Disney is looking at making 10 to 15 movies in the next 10 years. While some of
        them will be made in-house, other movies will be acquired from local producers and directors.


       Of the total number of movies Walt Disney will make/acquire it expects at least a couple of them to
        be released globally. While the acquisition will be done under the banner of Walt Disney Pictures,
        distribution and marketing will be handled by group firm Buena Vista International.


       Another US giant, the cable network and movie studio owner Viacom has already said it is keen to
        tap India‟s digital media business and explore co-producing films to address India‟s large customer
        base.
                                                                                                             -




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Changing customer preferences-growing global acceptance for Indian films and emergence of new
media
       Traditionally, the theatre was the only way for a film maker to screen movies. With the advent of TV
        (in 60s and 70s in India), movies began to be screened on TV as well, but did not provide for an
        immediate source of revenue as it does today, in terms of being sold for „viewing rights‟. With the
        emergence of home-theatre systems across the globe and now in India, first in the forms of
       Video Cassette Players or Recorders (VCP/VCR), movie revenues started to transition to homes. It
        took many years before the theatre owners took note and started to innovate their offerings to
        „bring the customers back‟, which essentially gave rise to and resulted in the multiplex culture.
        While this went a long way in solidifying the place of theatres in the overall scheme of movie culture
        and revenues, the emergence of new media such as the internet, IPTV and mobile are now
        threatening to create a parallel viewing culture that can fundamentally change the way we see
        movies. So over the past few years Indians have been increasingly exposed to a host of hi-tech tools
        that have transformed the way people access/share content. Whether it is reading the newspaper or
        communicating with friends or sharing photographs, there are always newer electronic modes in
        addition to the traditional medium. Online newspapers, Blackberry devices or photo sharing portals
        all have given the customers the flexibility of medium. Similarly even to access film content, people
        are exploring multiple media like internet, mobile, DVD, apart from the traditional theatres.


       The Indian entertainment industry, is one of the fastest growing sectors of the Indian economy riding
        on the economic growth and rising income levels that India has been experiencing in the past few
        years. Sociologists throughout the world are discovering that improved living standards translate into
        higher need for leisure and entertainment. There are a number of key factors, which make the
        Indian media and entertainment industry today an attractive proposition.


       Favourable Indian demographics, growing population, urbanization, rising income levels, education
        levels etc. have led to an increased demand for entertainment and infotainment and the willingness
        to spend for entertainment has also increased exponentially. We see a change in customer‟s viewing
        habits not only in the choice of media but also on the wider acceptance of genres when compared to
        a decade earlier. The advent of more and more crossover films, growing number of unconventional
        films which are not formula-based validates this view.


       To get a first hand feel of the changing customer preferences, a primary research using market
        research services from IMRB has been conducted.
                                                                                                                 -


       The research covered over 750 respondents spread across 5 locations (Lucknow, Surat, Jalandhar,
        Dhanbad and Tirunelvelli) spanning tier-I, tier-II and tier –III cities. The cities were selected so as to
        cover the different regions of the country to take into account regional differences. The sample has

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        a fair representation from both the genders with males to female ratio of nearly 60:40 and an
        almost equitable distribution across age groups. The relatively higher representation from the age
        group between 15-44 years is driven by our hypothesis that they are the key influencers in the
        viewing modes of film content.


       On the socio-economic classification, representation across the spectrum is ensured to see who
        leads the trend and who trails in adopting the various media formats.
       Key findings - key insights that are perhaps counter-intuitive are: Theatres are not dead: There is a
        significantly increased preference to watch movies in theatres and multiplexes from the 15-34 age
        segment. This we believe is largely the college going population, young couples and small families.
        As the family size grows, there is an increased tendency to watch movie content at home. One of
        the key reason for this transition is the high cost of watching movies in theatres.
                                                                                                             -


Potential for multiplexes in Tier II and III towns


       Key findings of a recent IMRB survey reveals that Theatres are not dead: There is a significantly
        increased preference to watch movies in theatres and multiplexes from the 15-34 age segment. This
        is largely due to the college going population, young couples and small families. As the family size
        grows, there is an increased tendency to watch movie content at home. One of the key reason for
        this transition is the high cost of watching movies in theatres.


       The multiplex format has been well accepted by the urban population with more than 80% of the
        population willing to pay more than Rs. 100 for a good movie watching experience. A similar trend is
        seen even in the tier-II and tier-III cities with more than 60% of the population willing to pay
        significantly more than the average ticket price they are currently playing for a better movie
        watching experience.


       Mobile will lead the way in which different film related content is distributed through new media:
           With mobile penetration in Indian growing to more than 20%, the percentage of subscribers who
            access film content through mobiles is also increasing. More than 70% of the urban population
            and more than 30% of the population from tier-II/tier-III cities access film content on mobile.
            The most frequently downloaded film content is ring-tones across the spectrum. One of the
            reason for the high penetration of this medium is the ease of access to content.
           The internet media will be a strong contender for viewing films in 3-5 years time: There is a
            significant difference in the use of internet to access film content between the urban centers
            and the tier-II/III towns. While more than 60% of the urban population access some sort of film
            content using the internet, the acceptance of internet is quite low at 10 to 25% in tier-II and
            tier-III cities respectively.

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           This is primarily due to the poor penetration of internet subscription in India. While more than
            40% of customers access internet through cyber cafes, the primarily use it for mailing and
            chatting. Also the age group which leads the internet usage is the college going population (15-
            24 years of age).
           Going forward, with crashing PC prices and cheaper broadband connections, Indians will be able
            to view movies on demand directly from the internet.
                                                                                                            -
Emergence of new media savvy customer segment


       With increasing technological innovations, there are clear segment emerging who embrace these
        technology. Our study reveals that the age group between 15-34 years uses mobile phones/internet
        to access movie content more than that of other age groups.


       Just at theatres, an Indian watches 3-4 films per year, this is quite comparable with other nations.
        There are reports which talk of the low density of screens in India i.e. 12 screens per million .
        However if we look at the population who can afford movies on theatre,(i.e. 65% of the population
        above the poverty line, on a highly optimistic note), the screen density is comparable to some of the
        developed markets. In addition, the average size of a screen in advanced markets is 250 seats while
        in India it is around 750. So we feel that on an overall level, the need may not exist so much in
        increasing the number of screens but improving the quality of the said that, there will be some
        pockets where there might be a supply-demand mismatch necessitating more screens.


       While the Indian film theatrical revenues has been growing at a sluggish pace, India movies have
        found significant following in international countries. This has led to the phenomena of movies
        supposedly targeted at NRI audiences – while this may not be completely true, there is no doubt that
        today, the international market forms a key part of a film producers strategy in terms of selecting
        the movie theme and also distribution of the movie.


       In this section, we provide our views on the key drivers that may change the way we watch movies
        and also how the film maker (producer) makes money.


       This therefore has fundamental implications for the movie making process, including themes,
        marketing and segmenting customers and distribution strategies to tap relevant film audiences.
                                                                                                            -


Overall movie revenue share


       The Indian film industry realizes about 84% of its revenues from box office collections as compared
        to the US film industry where the box office sales account for only 25 per cent of the revenues.
        Going ahead, with other channels emerging, and increase in various touch points
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       It is expected that relative contribution of box-office to the overall film revenues would decrease,
        but still theatres would remain the highest contributor to the film‟s revenues
.
       Traditionally theatres were the only means of viewing movies in India, and therefore the box-office
        contribution to the overall film revenues was significant. It was only after the introduction of cable
        TV, followed by DVD players, DTH, internet, mobile that the touch points have increased
        considerably, but still the DVD player and broadband penetration in India is much lower than the
        developed countries leading to continued dominance of box-office in the overall film revenue
        collections.


       Film producers in India have traditionally been relying on the domestic box office collection for a
        movie to do well, anticipating 75-80% of their revenues coming from domestic BO collection.
        Compare this with a developed market like US where box office accounts for less than 25% of a
        movie‟s revenues. This was traditionally due to the lack of alternative modes of accessing film
        content in India. With home entertainment devices unaffordable for a large segment of the
        population, Indians preferred to watch movies in the large screens by paying on an average US$ 0.5
        (Rs. 20) for a movie.


       This has resulted in India leading in the number of theatre admissions with more than 3.7 billion
        tickets sold in 2006 when compared to 1.7 billion in the US. However this does not translate into
        higher revenues in India due to one of the lowest average ticket prices in the world.


       US generated an estimated US$ 10 billion at the box office alone in 2005 at an average ticket price
        of US$ 6 when compared to an average ticket price of less than US$ 0.5 in India, translating to a box
        office collection of just over US$ 1.5 billion. However, with the advent of multiplexes and digital
        screens in India the average ticket prices would increase significantly and expected to be thekey
        driver in the growth of domestic theatrical revenues.
                                                                                                             -


       Multiplexes currently account for fewer than 10% of the screens but nearly 37% of the domestic
        theatrical collections of the film industry. With nearly 97% of the urban population in the prime
        movie going age of 15-35 years choosing multiplex as the preferred media to watch movies, it shows
        the overwhelming acceptance for this medium.


       In fact they are also willing to pay a premium over the traditional single theatres to have the best
        movie experience in the multiplexes. Multiplexes charge more than double of single theatres ticket
        prices in metrocities ranging anywhere between Rs. 75-200. Based on our research we observe that
        the prime movie going population are more than willing to pay that amount.

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       for the ticket for a better movie going experience with more than 80% of the people from metro
        cities willing to pay Rs. 100 or more for the best theatre experience.


       In Tier-II/III cities, we see a latent demand for good quality movie halls. Contrasted to the movie-
        going „culture‟ in metros, about 75% of the population in these towns prefers to watch movies at
        home (TV/DVD/Computer) and a quarter of them do so because of poor movie watching experience
        at theatres. In fact more than 60% of the population is willing to pay nearly double of what they are
        paying currently for a better movie watching experience, which is currently not available in their
        city.


       With large scale exhibitors starting to focus on Tier-II/III cities for their expansion, we expect a
        ready acceptance from this crowd. In fact, we believe that the key attractions/positives of the
        movie-going experience are applicable across city types and that is a) friends and social power -
        going out together b) romance & the privacy factor - the only area which affords privacy c)
        collective catharsis - the pleasure of crying and laughing.


       The largest theatre chain company – Pyramid Saimira (PSTL) has already been reviving the theatre
        culture in smaller towns in the south by improving the quality of theatres and in addition, bringing
        the latest movies along with the all-India release.


       Digital theatres in these towns by virtue of showing the latest releases have already increased their
        utilization by 15-20%, more than compensating for the migration to digital technology. PVR has
        already launched PVR talkies with ticket prices ranging between Rs. 40-60 (double of the current
        ticket prices in smaller cities) to address the tier-II/III towns. Adlabs has also planned to enter the
        Tier – II cities with their Ebony lounge concept – idea of personalized cinema halls.

                                                                                                              -


       The advent of multiplexes and digital screens, would provide an opportunity for viewers in Tier-II/III
        cities to experience good quality movies and would significantly contribute to the growth of
        domestic box office.


       Currently 65% of the total box office collections in the country comes from non-metros which we
        expect to further rise to 70% in three-to-five years.


       In addition to multiplex type viewing facilities, the box-office in Tier II and III towns will be well
        served by multiplex operators taking a more holistic approach to entertainment i.e., providing
        entertainment options beyond just movies. For example, including food courts/restaurants and
        retail options will help create entertainment destinations in these towns, which are not available
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        today. While these non-film revenues won‟t accrue to film producers, it will create a sustainable
        culture for movie going as an enjoyable experience.


       In summary, the domestic box office collections will show robust growth on the back of viable
        multiplex projects in Tier II and III towns (beyond metros).
                                                                                                              -


International box-office and growing acceptance of Indian films


       A recent trend that has caught on to the Indian film industry is to tap the large international
        audience around the world. We believe, going forward, there will be two key drivers of international
        box office revenues for Indian films:


           Greater acceptability of Indian movies and themes to global audiences Improved distribution of
            Indian films because of tieups with globally leading distributors such as Warner,Fox, Sony
            Entertainment etc.


           It is estimated that around 50 million13 people spread around the world follow the Indian movies
            closely: 25 million Indians (persons of Indian origin, students and working professionals living
            outside India) and equally large non-Indian community in countries like Malaysia, South Africa,
            Japan, Germany etc. are big fans of Indian entertainment. There is a large acceptability of
            Indian movies in the international market, not only in the international film festivals but also in
            the mainstream.


                                                                                                              -




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SOUTH INDIAN FILM INDUSTRY


       Production of South Indian films has shown an increasing trend. Among the four languages,
        production of Telugu and Tamil films has shown an increasing trend in the past few years, while
        production of Kannada and Malayalam films has not changed significantly. Telugu has the largest
        share in the total number of films produced, followed by Tamil, Kannada and Malayalam. The film
        industry has no entry barriers, and of late, many people with diverse and non-film backgrounds are
        getting into film production. This trend is especially noticeable in Telugu films. Besides fresh
        entrants, a few Hindi film producers too are also planning to enter the South Indian films segment
        through co-productions.


       Films can be categorized as big budget, medium budget and small budget films on the basis of their
        cost budget. For the same category of films, the size of the budget varies considerably across
        languages. The budgets of Tamil and Telugu films are of a similar range, while those of Kannada and
        Malayalam films are comparatively lower film budgets, particularly those of big and medium budget
        films, have seen a significant scale-up over the past few years. This has been on account of various
        factors, such as increase in actors‟ and directors‟ remuneration, more number of overseas shoots,
        more elaborate sets and glitzy costumes and usage of technologically advanced equipment. On the
        other hand, small budget films account for a significant proportion of the total number of films
        produced.


       Among the four languages, Kannada had the highest release percentage in 2006 (92%), followed by
        Malayalam (81%), Telugu (76%) and Tamil (72%)..


       The cost budget of a film can be broken up into production and post-production costs, and print and
        advertising costs. Production and post-production costs account for the major share of the cost
        budget5 (Chart 5). Print and advertising costs vary from 5%-10%.for a small budget film to 25%-30%
        for a big budget film. This is because a big budget film typically comes out with a larger number of
        prints than a small budget film. Post-production is highly technology-intensive, and it determines
        the final quality of the film in terms of look and feel.




                                                                                                           -




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                                                                                                            -




       Multiplexes are the next big thing expected in South Indian films. With a multiple choice of films
        under one roof, plush interiors of international standards, state-of-the- art sound and projection
        systems and associated facilities, multiplexes represent a paradigm shift in film-viewing experience.
        As a result, they are attracting more viewers who are also willing to pay a premium. Besides, they
        are also contributing to the success of niche films targeted at urban audiences. In short, they are
        showing the way forward in enhancing theatrical revenues.


       Presently, in South India, there are         multiplexes across Bangalore, Chennai, Hyderabad and
        Vijayawada6. In addition, there are many cineplexes with multiple screens but which are not
        equipped with computerized ticketing systems and other plush facilities offered by multiplexes. The
        rest are all single screen theatres, a significant portion of which is in a dilapidated state.
                                                                                                            -




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                                                                                                                  -


       There is a huge potential for multiplexes in South India. Traditionally, watching films in theatres,
        especially with family, is a popular means of entertainment. Further, people are multi-lingual and
        are open to watching good films even in languages other than their native language. These factors
        drive up foot–falls in theatres; according to reports, gross Tamil Nadu, Andhra Pradesh, Karnataka &
        Kerala attendance in the South is over 1.5 billion tickets per annum4. Further, multiplexes in South
        India enjoy higher occupancy rates than those in other parts of the country. Thus, multiplex players
        based in the South as well as from other parts of the country have plans to add around 600 screens
        in this region through multiplexes. At an estimated investment of Rs 2.5 crore per screen, the total
        investment would work out to Rs 1,500 crore.Besides box office collections, multiplexes have other
        sources of revenue: food & beverages, advertisements, parking fees, etc. (10). Box office collections
        account for 60% of the total revenues, followed by food and beverages (25%), advertisements (10%)
        and miscellaneous revenues (5%). Another factor that impacts the box-office performance of a film,
        besides its quality, is the regulation pertaining to entertainment tax and ticket prices in that state.


                                                                                                                  -




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                                     GEMINI - A PROFILE
GEMINI IN FILM INDUSTRY

       GEMINI is a household name in the whole of India and in good many parts of the World, identified by
        the logo of twin boys with bugles, GEMINI is a landmark in the heart of Tamil Nadu. GEMINI was
        founded by Late Mr S S Vasan in early forties.
       A Crogress M.P. in Rajya Sabha and a pioneer in the field of film production, direction and
        distribution.
       Mr S S Vasan established very strong traditions in the field of film industry.    Mr S S Vasan has
        produced many top class films, not only in Tamil and Hindi but in other languages too.
       Many top class artistes who are holding eminent position in politics and film today were introduced
        and patronized by Mr S S Vasan.
       The group presently under the ownership and control of Mr A. Ravishankar Prasad and Mr A Manohar
        Prasad, grand children of late Shri L.V. Prasad, the doyen of the Indian Film Industry and recipient
        of the prestigious Dadha Saheb Phalke award.
                                                                                                           -


MANAGEMENT


MANAGEMENT TRANSITION
       The first motion picture colour film laboratory was established by Mr S S Vasan and the first colour
        film in the South Indian languages was processed in GEMINI Colour Laboratory.
       Incorporated in April 1946, the Company was owned and managed by Late Mr S S Vasan and his
        family members.
       During the years 1980-01, GEMINI took steps to modernize its processing methods from subtractive to
        additive. This was successfully done by importing the following equipments:
                1. Two Carter Wet Printing Machines
                2. Three Bell & Howell Modular Printing Machines
                3. Two Hazeltine Colour Film Analyzers
                4. GMF Optical Printing Machine
                5. Avid Editing
                6. Telecine machine
                                                                                                           -



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           The Management was forced to import the new computerized electronic equipments, because a
            new laboratory came into existence equipped with the latest technology and additive methods.


           GEMINI Colour Laboratory was the first established laboratory for the whole of the south and
            therefore, naturally the lab enjoyed the advantage of monopoly.        The method of Colour
            Processing was called subtractive method. Though the unit enjoyed monopoly, workload was
            not very high, because, the industry had not switched over from black & while to colour in a
            large measure in 1980.    The Black & White films were very popular and Colour films were
            restricted due to stringent import control policy.    Later on, the technology of Colour film
            underwent a drastic change in the international market, as a result of which, the subtractive
            method became obsolete and the new additive method became popular.



PAST MANAGEMENT


       On the sad and sudden demise of Mr S S Vasan in 1968, GEMINI was managed by his Son Mr S
        Balasubramaniam until March 1980. In March 1980, the ownership and the management were taken
        over by Mr Palaniappan Ramaswamy. GEMINI was doing well during the period 1980 to 1984. After
        1984, the slide took place and GEMINI incurred heavy losses, losing business besides valuable
        customers, mainly due to mismanagement and since then incurring Cash losses continuously since
        1984.
                                                                                                           -


PRESENT MANAGEMENT


           In April 1992, the ownership and the management of the Company were taken over by Mr A
            Ravishankar Prasad and Mr A Manohar Prasad. They joined GEMINI in April 1992 as its Managing
            Director and Joint Managing Director respectively and were responsible for adopting modern
            management techniques coupled with prudent financial management for running the affairs of
            the Company with the sole aim of bringing back the Company out of red and to its original top
            position held during the days of Late Mr S S Vasan.

                                                                                                           -




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PROFESSIONAL MANAGEMENT


       GEMINI is perhaps the only Colour Laboratory in India with professional Board of Directors and drawn
        into its services with rich and varied experienced in their respective professional fields.


       Mr A RAVISHANKAR PRASAD, Managing Director is a Graduate in Civil Engineering. He is 51years old
        and in the past 30 years, he has gained a lot of experience in business, on his own. On Graduation,
        he was associated for 3 years with several Construction Projects, which he has supervised
        personally. In the meanwhile coming from a family which has produced films for the past five
        decades, he has also produced few films after forming a new Company – M/s Ravishankar Films. The
        above films were very successful films at the Box Office.


       Not content with producing films, he then went abroad and has to his credit a pioneering
        achievement, i.e., the manufacture of 35mm sprocketed magnetic tapes. These magnetic tapes,
        are now manufactured in India for the first time and they have replaced the use of sound negatives
        to a very large extent. The entire process of the above manufacturing process was studied by Mr
        Ravishankar Prasad for nearly two full years and on completion of a six month educational cum
        training trip to the U.S.A. he commenced the production of Magnetic Tapes. The tapes have been
        received by the film industry very well and it has created a virtual monopoly in the Indian Market, as
        the quality of the magnetic tape matches with international quality.


       Mr Ravishankar Prasad is managing M/s Ravishankar Films independently and has earned the
        reputation of a successful businessman, in a very short span of time purely through sincere and hard
        work.


       Mr A MANOHAR PRASAD, Joint Managing Director, is a Commerce Graduate from Bombay. He is
        47years old and has an experience of nearly 25 years in his family business. He is very actively
        involved in the Equipment Hiring Division of M/s Prasad Productions Pvt Ltd, wherein all film
        shooting equipments, i.e., Cameras, Lights, Sound Recorders, Mobile Power Generators are available
        on Hire to Film Producers in India.
                                                                                                             -


       It may be mentioned that it is in our country, that the maximum number of films are produced in
        the World per annum. The Company Mr A Manohar Prasad manages now is M/s Anand Cine Services,
        a subsidiary of M/s Prasad Productions Pvt Ltd. Next to the Government of India, M/s Anand Cine
        Service is the Company that has in its inventory the maximum number of Cameras, Lights, Sound
        Recorders and Mobile Power Generators. Since he took over the management of M/s Anand Cine
        Service, the Company has grown rapidly and latest equipments have also been imported.            Very
        recently, the firm has added to its inventory many new Cameras, capable of running upto 130

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        frames per second from M/s ARRIFLEX, West Germany and 32 flicker free Daylight lamps from M/s
        LEE, UK. The Import of the above equipments was done for the first time into our country, keeping
        pace with the changing technology and far ahead of local competition. He is also a diploma holder
        in photography and has developed excellent contacts with Cinematographers in India.


       Mr A Manohar Prasad is also well-versed in handling matters pertaining to Banks and other
        Government financial institutions with which he has an excellent track record.


       Mr A Manohar Prasad has to his credit the introduction of the latest in lighting systems, i.e., Flicker
        Free Daylight lighting systems used for Motion Picture Production. These were imported into our
        country for the first time recently and they are in heavy demand.


GIIL Group Entities and their business activities


GEMINI INDUSTRIES & IMAGING PRIVATE LIMITED [GIIPL]

       Lab Processing: The company is having a well-organized laboratory in Chennai which processes the
        films of most of the languages in India. It caters to the needs of the entire South India and it
        dominates nearly 75% of the market share as far as processing is concerned. The activities are under
        the direct control of the two Directors.
       The lab processes around 9000 rolls a month and this itself is a captive market for our rolls. Apart
        from Gemini Labs, the rolls are supplied to producers/cine distributors who process their films in
        other labs also. It is pertinent to note that none of the other labs have their own positive film raw
        stock to promote.
       The Group has Processing Laboratories at Bangalore in the name of “Anand Cine Processing
        Laboratory” and at Hyderabad in the name of “Gemini Labs”. The lab has already captured a good
        market in the State of Andhra Pradesh and is turning out be a very successful unit in spite of tough
        competition faced in the State. As such, the Group caters to the Laboratory needs of all the major
        South Indian language film producers.
       Credentials Of The Processing Lab

            o   Winner of National Award from Government of India for three consecutive years for the best
                Film Processing Unit.
            o   Winner of best film processing unit award from Kerala State Government four times out of
                which three awards were for consecutive years
            o   First colour laboratory in the whole of South India - Gemini Colour Laboratory
            o   The film processing division has found employees of three generations with utmost sincerity
                and loyalty
       GEMINI Lab Chennai is a division of Gemini Industries And Imaging Ltd and the other Division in this
        company are Trading division which trade in films both positive and negative Rolls and this helps in
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        winning processing jobs for the labs and the other unit is connected with Graphics and Special
        Effects in Film.
       Graphics And Special Effects In Film - This unit has got latest equipment for producing high quality
        output. It employs well qualified professionals in the field. It has got latest application programme
        for producing quality animation and graphics. It has also got a sound studio with latest sophisticated
        equipment.
                                                                                                             -




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ANAND CINE SERVICE(ACS)- Chennai

         Anand Cine Service is the largest equipment hirer in the country catering to about 52 shootings
          simultaneously on a single day. Each unit comprises of a Camera, Lights, Power Generator, Sound
          Recorder and a 15-member crew. The entire unit travels in a large bus from location to location
          even as far as Kashmir to Kanyakumari. The most sophisticated equipments are available today with
          ACS. ACS has tied up with other facility provider such as Laboratories/ post productions houses,
          every producer prefers utilising the facilities under the same umbrella as he need not look anywhere
          else for any other support.


         The existing other equipment providers are a fragmented lot and they do not support the producers
          in any other way outside of just film equipments. Therefore, if a producer has a choice between
          equipment providers, his first choice would be ACS, due to the various other benefits accruing to the
          producer. Also all the other equipment providers put together would not exceed the fleet strength
          of ACS, which are currently 52 units.


         As upgradation is also a continuous process at ACS, it is difficult for competitors to keep up their
          standards with ACS and have an edge over ACS in offering something new. All leading cameramen
          engage the services of ACS for any prestigious film‟s shooting.


         The firm was originally promoted by S.Sh A. RAVISHANKAR PRASAD and A. MANOHAR PRASAD, grand
          children of late Shri L.V. Prasad, the doyen of the Indian Film Industry and recipient of the
          prestigious Dadha Saheb Phalke award. Anand Cine Service has some of the advanced and unique
          equipments such as the Akela Crane, Pentagon Crane and Cameras.


         As the market grows so has the expectations of the audience to watch more quality films. In turn
          technicians are demanding more quality equipments.


         The business of equipment hire is highly profitable since there are no major expenditures involved.
          Since, the equipments are fully owned by ACS, there are no major cash outflows in the business.
          Further, the daily labours who work for ACS are paid by the production unit which takes the cine
          equipments on hire.
                                                                                                              -


        Equipment Hire -Unique manpower

             The equipment in the division are sophisticated and expensive, which require careful handling
             The group‟s labour force comprises of about 600 labourers who are trained to handle such
              equipment right from the time the equipment are taken out for shooting to the stage the
              equipment are brought back to the warehouse
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           The uniqueness of this labour force is that the labourers are not employees of the company.
            They work on a daily wages basis and would be paid by the hirer of equipment except for a few
            who would be paid by the group.
           There is a cost saving with respect to social security obligations which are not mandatory


ANAND CINE SERVICE (HYDERABAD)

       The entity is a partnership firm operating in the state of Andhra Pradesh. The firm is
        primarily involved in montoring and collection for the equipments which are given on hire
        in that state. The firm owns a land in Jubilee hills, measuring 5 Acres which is to be
        developed and used for the film related businesses of the group.


Gemini Labs Hyderabad

        The Group has a processing laboratory at Hyderabad in the name of “Gemini Labs” which had
        commenced operations in February 2004. The lab has already captured a good market in the State
        of Andhra Pradesh and is turning out be a very successful unit in spite of tough competition faced in
        the State. As such, the Group caters to the Laboratory needs of all the major South Indian language
        film producers.




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FILM PRODUCTION

       Gemini Group has a deep root in film production too. The group which produced many successful
        films in the past under the banner „Gemini Pictures Circuit Pvt Ltd‟ is now producing films in
        various languages like Tamil, Telugu, Hindi, Kannada etc., under the banners “Gemini Film Circuit”
        and “Anandi Art Creations”.


       At present the production of feature films is done by Gemini Film Circuit („GFC‟) which is a
        partnership firm owned by the family members of Mr Ravishankar Prasad and Mr Manohar Prasad.


       Almost all the films produced by the group have been super-hits and have done wonderfully well in
        the box office. There are also revenues in relation to satellite rights, music rights, dvd/vcd rights,
        internet rights, and radio rights etc which act as mitigating factors for risks that are involved in
        production of films.
                                                                                                             -


       The list of films in various languages, produced by GEMINI under various banners, is furnished
        hereunder :

        TELUGU FILMS :                                  TAMIL FILMS :
            1.    AADA PRATHAKKU                            1.    IRUMBUTHIRAI
            2.    ANDHRA MACHNUVARI                         2.    AVVAIYAR
            3.    MANUSHALU MARALE                          3.    VANJIKOTTAI VALIBHAN
            4.    KANNAVARI KALLALU                         4.    CHANDRALEKHA
            5.    AVVAI                                     5.    VAZHKAIPADAGU
            6.    BALE KODALU                               6.    MOTOR SUNDARAM PILLAI
            7.    COLLECTOR JANAKI                          7.    VILAIYATTUPILLAI
            8.    LAKSHMI                                   8.    ELLORUM NALLAVARE
            9.    MANGALA                                   9.    JAANI
            10.   NAGA PANJAMI                              10.   MADANA KAMARAJAN
            11.   PATCHINI SAMSARAM                         11.   CHAKKRADARI
            12.   RAJEE NEE PREMEKU                         12.   MANGAMMA SABATHAM
            13.   STRANGE BROTHERS                          13.   APOORVA SAHODARARGAL
            14.   SANKAR DADA MBBS                          14.   NANDANAR
                                                            15.   RAJEE EN KANMANI
                                                            16.   HARICHANDRA
                                                            17.   VALLIYIN SELVAN
                                                            18.   SAMSARAM
                                                            19.   TERRORIST
                                                            20.   BLIND FOLDED
                                                            21.   PERIYA KUDUMBAM
                                                            22.   THODARUM
                                                            23.   KURUMBU
                                                            24.   VASOOL RAJA MBBS




                                                                                                      -




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         HINDI FILMS
             1.    PARDA HAI PARD
             2.    SANJOG
             3.    SAMAJ KO BADAL DALI
             4.    TEEN BAHURANIYAN
             5.    EK GAON KI KAHANI
             6.    ZINDAGI
             7.    GRAHASTI
             8.    GHARANA
             9.    GHUNGHAT
             10.   PAIGHAM
             11.   RAJ TILAK
             12.   DO DULHE
             13.   INSANIYAT
             14.   BAHUT DIN HUWE
             15.   MANGALA
             16.   NISHAN
             17.   CHANDRALEKHA
             18.   AURAT
             19.   SAMPAT
             20.   SANSAR


Almost all the films in the above list were super-hit films and have done wonderfully well in the Box office.

GEMINI, during its steady march of progress for decades, has passed hardest times and achieved what it
aimed for by virtue of excellent team work of its employees.


                                                                                                                -


Employee Management


GEMINI Group has an employment base of more than 1000 personnel at various locations. The Gemini Colour
Laboratory, Chennai in particular, has a employment strength of 175 persons, with technical experience.
The Laboratory has found employees of three generation with utmost sincerity and loyalty to the
organization.   The co-operation extended by the employees all through the six decades, is wonderful.
GEMINI never witnessed any act of non-co-operation from the employees. The Management never hesitated
/ failed to appreciate the achievements emerging out of the team work.


GEMINI has provided their employees with the opportunity to use and expand their skills, knowledge and
creative potential both for their benefits and for that of the Company by providing them challenging and
rewarding work environment.


The Management of GEMINI always considers the employees as its paramount asset.                Hence, GEMINI
employees are galvanized with Human Resource training programmes to facilitate them to face any
challenge in the work spot.



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The GEMINI Management is immensely pleased to take care of their welfare, not only by way of high
remuneration, but also with variety of welfare schemes, such as, Mediclaim, Group Accident Insurance,
Emergency hospitalization with company physician, Incentive, as much as 35% of the Gross Salary apart from
bonus of 20% as per Law, Uniform, conveyance, other incidental allowances connected to employment.
Above all, the Management never failed to show humanity whenever an employee underwent a critical /
expensive medical treatment.


Inspite of business crises at times, GEMINI is very particular in bringing into force the revised Wage
settlement on time and thereby the interests of employees be secured and cordial relationship with
employees maintained. Really, GEMINI is proud of their employees, who have toiled hard and shaped the
destiny of their Laboratory for the past 60 years.



Group Offices


GEMINI has Branch Offices and representative offices in important Capital cities of the Country


(i)     NEW DELHI            P.B. No. 327, 3rd Floor, “F” Block, United India Life Building,
                             Cannaught Place, New Delhi 110 001
(ii)    BOMBAY               B/104, “Guru Darshan”, Plot No 7, Lokhandwala Complex, Andheri
                             (West), Bombay 400 058
(iii)   HYDERABAD            C-19, Film Nagar, Jubiliee Hills, Hyderabad 500 034
(iv)    BANGALORE            Flat No. 120, 1st Floor, Kailash Apartments, No 98, VIII Main Road,
                             Malleswaram, Bangalore 560 003
(v)     BHUSAWAL             P B No 61, 3837, Bustum Building, Municipal Park, Bhusaval
(vi)    PONDICHERRY          No 208, Thiruvalluvar Salai, Kosapalayam, Pondicherry – 13


                                                                                                         I


NATIONAL AWARD


The Government of India has awarded National Award to our Laboratory for three consecutive years for the
best Film Processing Unit. Likewise, even Kerala State Government has awarded best Film Processing Unit
for four times, including three consecutive years.




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