Dear fellow owners
The confl uence of the millennial audience and rapidly advancing technology juggernautis creating a tectonic shift in the world of entertainment. The screens are gettingsmaller viewing individualized critique democratized and content diversifi ed. Theviewing hours and viewer base continue to rise. Entertainment is increasingly becomingomnipresent and all encompassing.
While theatre and television screens still rule the roost in delivering fi lmedentertainment millennial consumers are geared up to swamp the scene now. Typicalmillennials those born between 1981 and 1996 (aged 22 to 37 years in 2018) andpost-millenials are overly digital prefer to buy almost everything fromclothes to food online are pretty cool using shared cars and don't fret aboutowning a television.
Content as the best bet for healthy RoI digital viewing as the new normal andinternationalization of audience beyond diaspora for Indian entertainment are the threeundercurrents that we at Eros sensed and seized well in time. All our energies andresources are being devoted in accelerating the pace and scale of our operations in linewith these three factors.
The fi scal year 2017-18 (FY2018) was a year of rebooting Eros on its path ofenhanced profi tability and sustained growth. It proved to be a landmark year thatwitnessed our EBIT and PAT margin expanding by 10.3% and 4.9% respectively while wecontained our new releases to a modest 24 from 44 in the previous year. Restraint onhigher budget fi lms was a strategic decision taken due to our stringent green lightingand budgeting processes and with an objective to have low dependence on box offi cecollections. We diverted all our focus to high RoI projects with potentially low-riskprofi le. With the focus on compelling stories produced within prudent budgets acrosslanguages de-risking investments with sizeable pre-sales and optimizing catalogue andancillary revenues the enhanced profi tability of FY2018 bore testament to the effi cacyof our business strategy and model.
Honing a pool of in-house creative talent and strategically partnering with fi lmproduction entities with a proven content stickiness in India and elsewhere are twoessential elements of our content-driven approach. An Indo-Turkish co-production deal withPana Films of Turkey and another co-production deal with Drishyam Films during the yearand the most recent partnership with Baahubali famed iconic writer V Vijayendra Prasadshall prove to be decisive enablers of our content prowess in the coming years. Theselection of Newton our political comedy-drama fi lm as India's offi cial entry toOscars 2018 and screening of our Tamil drama Oru Kidayin Karunai Manu at the 17thedition of The New York Indian Film Festival' as the offi cial choice areprestigious validations that inspire us on the path of content centricity.
We released 24 fi lms in FY2018 mostly medium and low-budget ones across genres andlanguages. Revenues during the year were driven by the release of sports-based dramas likeMukkabaaz Raid (Overseas) Ribbon Rukh Kadvi Hawa; super hit comedy Shubh MangalSavdhan Newton Munna Michael Sniff Sarkar 3 Aamhi Doghi (Marathi) Rong Beronger Kori(Bengali) Oru Kidayin Karunai Manu (Tamil) Tujha Tu Majha Mi (Marathi) Aake (Kannada)Posto (Bengali) Projapati Biskut (Bengali) Baap Janma (Marathi) and Boss 2 (Bengali).Our mix of movies from different genres has further strengthened our position as a Companythat offers versatility and uniqueness in content.
Serving engaging and engrossing content is our hallmark. Consolidating the fragmentedIndian fi lmed entertainment market is the fuel that drives this passion. With thechanging market dynamics of the entertainment industry with OTT markets driving theentertainment consumption we are at vantage to leverage our capabilities of qualitycontent and world-class technology-driven distribution. We have also broken an industrystereotype by successfully premiering India's fi rst digital release Meri Nimmo on ErosNow our parent company's OTT platform. As we make new strides we are confi dent that ourfi lm and digital content slate will contribute further to accelerate Eros Now's paidsubscription growth which in this year itself grew by 276%.
The most signifi cant development of FY2018 came in the form of an industry defi ningpartnership that we inked with Reliance Industries Limited in the fourth quarter ofFY2018. In this strategic content creation and acquisition partnership Eros and Reliancewould invest a whopping Rs 10 billion to produce and consolidate fi lm and digital acrossIndia. The partnership adds signifi cant strength to our existing content slate whilemitigating investment risks - as we benefi t by leveraging both our distribution networks.Expressing confi dence in our capabilities and business prospects Reliance Industriesacquired a 5% equity stake in our parent company Eros International Plc.
A shining star of our Board and our then Chairman Mr. Naresh Chandra left for hisheavenly abode on July 9 2017. Another esteemed colleague and insightful board memberMs. Jyoti
Deshpande resigned from the role of being an executive director to undertake a new rolewith Reliance Industries at the beginning of FY2019. She however continues to besteering Eros Group in two capacities; fi rst as a non-executive Director and second as akey decision maker in our content JV with Reliance Industries. The zeal creativityardour and conviction of our employees form the bedrock of our current and future success.A big thanks to you our valued shareholders for your unequivocal support and trustin Eros. I also express my deep gratitude to our Board members for their relentlessguidance and torch-bearing efforts.
We look forward to your support in weaving magic on the screen and good wishes tocontinue our entertainment journey
|Warm Regards |
|Sunil Arjan Lulla |
|Executive Vice Chairman & Managing Director |