A small presentation to guide all about execution of Reliance Media Works...

1. The Capital expenditure evaluation of
Reliance Media works
Submitted to: Prof. Dr. Paresh Shah
Financial Management
Submitted by:
Prashant Maharshi
ISBE/PGP/SS/2011-13
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2. Contents
• Industry Profile
• Overview of Reliance Media Works
• Capital Expenditure and need for it
• SWOT Analysis
• Growth Analysis
• Financial Profile of RMWL
• Ratio Analysis of RMWL
• Balance Sheet of RMWL for 5 Years
• Conclusions
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3. Industry Profile
• Film Exhibition
2006 Market Size was estimated at Rs.
1. Single and double screen cinemas 61,000-crore
2. Multiplex cinemas Expected to reach Rs. 1,05,200-crore by
• Content production- Film 2013, at a CAGR of 19%
Maximum growth expected in Television
and Film segments
More than 300 national and regional TV
channels
Close to 1000 films made every year
Liberal FDI policies across all the
segments of the industry
Government is focusing on regulations to
give further impetus to the industry.
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4. Overview of RMWL
• Part of Reliance ADA Group
• Established in 1975, as Adlabs Films Limited in Mumbai
• Formed primarily for processing laboratory and catering to the advertising industry
• In 2001, it entered into multiplex business
• Operates Big cinemas with over 543 screens overseas
• RMW’s television venture is among top players in television programming industry
• RMW has presence across three segments film production, exhibition, distribution
• It also works with BPO and is leading global players
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5. The Network
Presence
London
New York
Los Angeles Tokyo
Mumbai
Pune
Kolkata
Chennai
The company operates the Big Cinemas multiplex chain having over 543 screens
across India, the US, Malaysia, Nepal, Japan. .
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6. Off Screen Advertising
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7. Capital Expenditure
• Is an investment to acquire or upgrade fixed or long lived assets
• Decisions are taken to make profits in future
• It is made up of two processes :
a. Making the decision
b. Implementing it
• It is derived and associated with Strategic Planning
• Is made to maximize shareholder’s wealth
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8. Evaluation Techniques for CE
• The Net Present Value (NPV)
• The Internal Rate of Return Method (IRR)
• The Equivalent Annual Cost Method
• The Pay Back Method
• The Discounted Pay Back Method
• The Accounting Rate of Return Method (ARR)
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9. Need for Capital Expenditure
• Expansion
• Maintenance of current level of activity
• Cost reduction or quality achievement
• Replacement
• Modernization
• Research and Development
• Protection of Property
• To meet legal requirements
• Safety and health
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10. SWOT Analysis of RMWL
Strengths Weakness Opportunities Threats
Vast customer
Highly fragmented Emerging concept of movies Piracy
reach
Growing Lack of cohesive production and Lack of quality
Poor sections of the society
middle class distribution infrastructure content
Change in Lack of efforts for media
New distribution channels
lifestyles penetration
Technological Rise in viewership
innovations
Customer
Technological innovations like
profile and
animations
movie schedule
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11. Growth Analysis
• Box-office collection of Rs 68,500 million in CY 2009, growing @ 8%
• Growing size of big budget movies, a key revenue driver for multiplexes
Particulars 2010 2008 Increase
Top 10 films NBOC (Rs million) 8,080 6,140 32%
No. of big budgets releases 48 35 37%
• Print size of big budget movies has grown significantly
• Multiplex contribution has gone up from 10% in CY 2006 to around 25 percent of
the total domestic theatrical revenues for the overall Indian film industry and as
much as 60% for Hindi films
• Hollywood : a new source of revenue stream, has grown to 5.5% of Indian box-
office from 2% in 2006
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12. Growth Analysis cont…..
Film prod
14%
FY 2006
• Operations in Mumbai only
Cinemas
Film • 8 theatres (32 screens)
processing
33%
53%
Revenues: Rs 1,250 million
• 14 professionals with > 10 years’ experience
(USD 26.6 million)
FY 2010 FY 2006 FY 2010 (60% CAGR over 4
Film processing
13% DI years)
2% Eqp rent
2%
Restoration
6% • New businesses added, to Yield further
results FY 2011 onwards
TV prod • Market leader in every business
5%
• Operations in 118 cities, 5 countries
Cinemas Revenues: Rs 6,720 million
72%
(USD 143 million) • 156 professionals with > 10 years’
experience
82% from businesses created in last 4 years Projects under implementation in 2011:
56% from businesses in last 2 years • Studios, TV Post
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13. Production Value Chain
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14. Financial Profile of RMWL
Key Financial Indicators
Particulars Units 2010 2008 Increase
Revenue Rs million 3,157.7 6,918.9 7,310.4
EBITDA Percent 37.6 22.4 9.5
PAT Rs million -428.8 -570.5 -1,447.9
PAT margins Percent -13.6 -8.2 -19.8
Revenue growth Percent 47.1 64.3 5.7
EBITDA growth Percent 39.7 -2.0 -55.2
PAT growth Percent n.m. n.m. n.m.
Gearing Times 1.9 2.7 7.8
RoCE Percent n.m. 3.6 n.m.
RoE Percent n.m. n.m. n.m.
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15. Shareholding Pattern (%)
Share holding
June Sep Dec Mar (As on Mar 31, 2011)
Particulars
2010 2010 2010 2011
FII DII
3.97% 0.30%
Promoters 62.2 62.2 62.2 62.2
Others
33.50% Promoters
62.23%
FII 2.9 4.2 5.7 4.0
DII 1.6 1.2 0.4 0.3
Others 33.33 32.4 31.7 33.5
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16. Ratio Analysis
March 31, March 31, March 31, March 31, March 31,
Particulars
2007 2008 2009 2010 2011
A. Profitability Ratios:
Operating Profit Margin(%) 40.03 38.89 17.61 19.43 -10.73
Gross Profit Margin(%) 48.44 0.64 -6 6.2 -24.56
Net Profit Margin(%) 22.42 15.42 -5.71 -20.77 -50.09
Return on Total Assets 78.19 147.01 117.59 93.14 36.91
Earnings Per Share 21.46 9.95 -6.44 -22.63 -55.55
B. Liquidity Ratios:
Current Ratio 0.86 1 1.19 0.86 0.74
Quick Ratio 3.03 2.79 6.41 5.88 5.58
C. Leverage Ratios:
Debt Equity Ratio 1.87 1.36 2.24 4.18 11.24
Long Term Debt Equity Ratio -- 0.59 0.92 1.25 3.17
Interest Cover 21.72 2.17 0.09 0.47 -0.55
D. Turnover Ratios:
Inventory Turnover Ratio 235.84 183.91 206.5 151.88 132.54
Debtors Turnover Ratio 6.09 2.6 2.48 1.97 2.36
Fixed Assets Turnover Ratio 1.25 0.65 0.63 0.46 0.46
Total Assets Turnover Ratio 0.42 0.22 0.33 0.24 0.27
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17. Balance Sheet of RMWL for 5 years
(Currency: Indian Rs. In March 31, March 31, March 31, March 31, March 31,
millions) 2007 2008 2009 2010 2011
Sources of Funds
Shareholder’s Funds 3,111.86 6,780.84 5,548.28 5,464.05 5,432.43
Loan Funds 5,834.17 9,226.85 12,147.30 17,951.27 19,128.80
Deferred tax Liabilities (net) 128.62 - - - -
9,074.64 16,007.69 17,695.58 23,415.32 24,561.23
Application of Funds
Fixed Assets 3,399.45 8,333.48 8,543.72 10,353.74 10,156.43
Investments 816.52 2,441.99 233.46 1,325.18 726.84
Current assets, loans & advances 6,661.49 7,369.59 10,196.17 12,369.49 12,043.92
Less: Current liabilities & provisions - 1,802.82 - 2,137.37 - 1,401.91 - 1,800.93 - 2,095.90
Net Current Assets 4,858.67 5,232.22 8,794.26 10,568.56 9,948.02
Profit & Loss Account - - 124.14 1,167.84 3,729.94
9,074.64 16,007.69 17,695.58 23,415.32 24,561.23
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18. Conclusions
• Fastest growing film and entertainment exhibition & Services Company
• BIG Cinemas has 10 to 15% of Indian box office contributions of big ticket films.
• Big Synergy is the leader in the field of non-fiction programming
• There has been a huge loss to the group of Rs. 2562.10 million this year
• Investment and funds from different sources has decreased to a great extinct
• Need for Capital Expenditure to overcome losses
• Has diversified business into different segments
• RMW is planning rights issue of Rs 500 crore in March 2012
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19. Thank You
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