It's still not a patch on Bollywood, but more and more Hollywood films are beginning to find more and more takers in the country. According to industry players such as Sony Pictures Releasing India, in the last four years, the Hollywood films genre has seen a cumulative average growth of 33 per cent annually. In 2006, 74 films were released as against 55 in 2005. The revenues garnered are also up smartly, by 39 per cent over 2005, to Rs 250 crore. These figures may not compare well with those for Hindi films-1,090 of which were released in 2006, raking in revenues of Rs 6,400 crore (domestic box office collections) as per PWC-FICCI report.

Yet, distributors of Hollywood films have reason to be pleased as punch. Says Uday Singh, Managing Director, Sony Pictures Releasing India (SPRI): "The ongoing multiplex boom, coupled with the increased acceptability of dubbed films, has widened the mass appeal of Hollywood films in India. And don't forget the marketing efforts that studios are putting in to promote the films." Singh should know. The biggest contributor to the 2006 boom for foreign films in India was SPRI's Casino Royale, the Bond thriller which grossed Rs 41 crore at the box office. According to industry sources, this was followed by Warner Brother's Superman Returns, which grossed around Rs 24 crore. Of the top 10 Hollywood films in India last year, five were released by SPRI. These include Casino Royale, Pirates of the Carribean-II, Chronicles of Narnia, Da Vinci Code and Underworld Evolutions. The others in the top 10 are Superman Returns, MI-3, Poseidon, X-Man III and The Departed. Of the total Rs 250 crore collected at the box office by foreign films in India, SPRI clocked Rs 117 crore at the box office.

The increasing interest in Hollywood films has also prompted studios to release more prints. In 2006, the top 10 films accounted for over 1,700 prints as against an average of 150-250 prints in previous years. Casino Royale itself premiered with 427 prints.

Yet, the reality is that Hollywood films in India still account for only 4 per cent of the overall box office collections. That number may nudge upwards in the coming year with two big-bang sequels lined up-Spiderman III and Pirates of the Caribbean III. June will also see the release of Ocean's Thirteen followed by Harry Potter and the Order of the Phoenix. The ongoing year might just prove to be a more rewarding sequel to 2006.

-Anusha Subramanian

Big-Ticket Plans
Media & entertainment is attracting mega bucks.

Ambit’s Wadhwa: Big bucks are chasing the M&E sector

If there's a liquidity crunch, it isn't quite evident in the media and entertainment (M&E) sector, where financiers are falling over each other to invest in such ventures. Recently, for instance, India TV, a Hindi language news channel, received funding from Fuse+Media, the India-dedicated fund of the US-based venture capital fund ComVentures. The VC fund is acquiring a 19.17 per cent stake in India TV's holding company, Independent News Services, for $11.5 million (Rs 51 crore). Prior to that Sameer Gehlaut, promoter of broking firm Indiabulls, picked up a 25 per cent stake in B.A.G. Films for Rs 26.2 crore. The acquisition was through a preferential allotment of up to 2,02,50,000 equity shares of Rs 2 each at a price of Rs 13 per share. Then there's Peter Mukerjea's new venture, INX Media, which has raised about $300 million (Rs 1,290 crore) from investors like Temasek Holdings, New Vernon Private Equity and New Silk Route Partners. And there may be more action on the cards. "At least $100-200 million (Rs 430-860 crore) will be raised by M&E companies before the second quarter ends (before September 30)," says Ashok Wadhwa, CEO, Ambit Corporate Finance.

As per the latest FICCI-PWC report, 2006 saw the maximum flow of foreign direct investment (FDI) in the M&E sector. As many as 13 proposals for FDI in media were cleared by the Ministry of Information & Broadcasting; and the ministry is further examining 22 proposals for clearance, eight of which are for the news and current affairs segment. Over the last three years, the M&E industry has secured foreign investments to the tune of Rs 400 crore.

If M&E firms are gobbling up big-ticket investments, it's because they have huge opportunities to grow. According to Mukesh Jain, Associate Director of Ernst & Young's transaction advisory services, the big media groups are expanding beyond their core areas both in terms of segments and geographies. "Investors are keenly eyeing, or are already invested, in digital media. TV broadcasters are getting into new ventures and finer segments. On the content front, we are seeing international formats and special niche genre programming," Jain explains. Adds Wadhwa: "There is a renewed interest in the M&E sector as we are going to witness a second large influx of broadcasters into the general entertainment space, NDTV being just one of them. Film financing and trading will also attract investment. A lot of money is likely to get into the content space."

However, if there's one sector where investors need to be cautious, it is M&E. Akhil Gupta, Chairman & Managing Director, Blackstone Advisors India, says issues of corporate governance are an area of concern. "We decided against a few deals because we felt the promoters couldn't take their companies to the next level of growth," he shrugs. "But the trickiest issue, of course, is valuation," he adds.

-Anusha Subramanian

Fodder on the Line
A contact centre for farmers-but not all can call.

Not all call centre folk need to be trained to talk and behave like first-world city slickers. A few of them spend most of their day chewing the fat with Indian farmers, advising them on how to burnish pale brinjals or to coerce cows into yielding more milk or to protect their plants from pest attacks. All the farmer has to do is dial 1551 from anywhere in the country (between 6 am and 10 pm except on Sundays and holidays), and he's connected to the agricultural department's Kisan Call Centre, a one-stop shop for farmers across the country. Other than providing solutions related to harvesting and animal husbandry, these centres also provide loans to farmers via schemes like Kisan Credit. Currently there are 14 such centres across the country, which have been established at a cost of Rs 100 crore. "These call centres provide level one support to farmers. When the agents are not able to handle the query, the calls are diverted to level two, comprising experts identified by the department," says an official of the department.

As of now about 120 agriculture graduates attend to the farmers' queries in their respective local languages. They are experts located in different parts of the country at state agriculture universities, ICAR (Indian Council of Agricultural Research) institutes, and state departments of agriculture. A major issue, however, with this project-which was initiated three years ago-is connectivity. With the toll-free number accessible only through BSNL phone lines, farmers subscribing to GSM and other basic service providers or using CDMA phones cannot avail of the facility. "The matter is being taken up and a solution is expected soon," says the department official.

-Amit Mukherjee

Raising a Stink
BG flexes its muscle, GAIL objects.

Gas row: The ball is now in government’s court

Netting short-term business deals is as important as blueprinting long-term business strategies-even if that means you need to float a new venture against the wishes of your existing joint venture partner. And who would know this better than global energy major BG, which recently applied to the government for permission to set up a company (BG Energy Holding) to sell natural gas to bulk consumers in the country. The supplies will be procured from the global LNG spot market and sold to existing consumers, who face a shortage of as much as 50 per cent of their requirements.

The tenure of this business is, however, a short-term one since domestic gas supplies are likely to swell in a year when Reliance Industries' (RIL's) gas finds in the deep waters of the Krishna Godavari basin will be available in the market. The supplies are significant, estimated at close to half the prevailing deficit of around 80 million standard cubic metres per day. BG's impetus to deliver gas to consumers during the year's window period is catalysed by the recent commissioning of gas pipelines by GAIL (India) linking Maharashtra and Gujarat.

Meanwhile, the red flag has been raised by GAIL (India), its joint venture partner, in a city gas distribution business, Mahanagar Gas (MGL). GAIL (India) claims BG's proposal contravenes Press Note 1, a regulation that protects domestic industry from predatory practices of foreign companies that use the joint venture to learn the ropes of the domestic market and then form another wholly owned entity that directly competes with the joint venture.

BG, meanwhile, claims that since the new company will supply gas to only bulk consumers, there will be no conflict of interest since the existing joint venture retails gas to individual consumers that too in Mumbai alone. Interestingly, this is not the first time that GAIL(India) has objected to BG's new ventures in the country-BG plans to retail gas in the southern states of Andhra Pradesh and Karnataka. The government, however, overruled GAIL's objections and went ahead and gave approval to BG's plans.

Evidently, the lure of the fledgling domestic market is too strong a pull to put off foreign investors from expanding their business interests in the country, never mind regulations like Press Note 1 that seek to protect domestic industry.

The protection has, however, softened over the last couple of years-the earlier version of Press Note 1, termed Press Note 18, was more of a 'rent seeking' regulation that required companies to obtain a No Objection Certificate from the domestic partner. At least now, the judgement call rests with the government and a decision on BG's proposal should be forthcoming in the next couple of months.

-Balaji Chandramouli