Sahara India Company Analysis

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This is a documentation is about company analysis of sahara india.

COMPANY ANALYSIS COMPANY: SAHARA INDIA PARIWAR Sahara India Pariwar is an Indian conglomerate, founded by Mr. Subrata Roy Sahara in the year 1978 in Gorakhpur, India. Sahara India Pariwar headed by Mr. Subrata Roy Sahara (Chairman) and headquartered at Lucknow, UP, India, has diversified businesses ranging from hospitality (Sahara Star), Real estate (Sahara city, Aamby valley), Sports (Force India F1, Pune warriors & Indian cricket team), Media (Sahara One), IT, Manufacturing, Infrastructure & Housing, Power, Life Insurance (Sahara India Life Insurance Company) etc. INDUSTRY: MEDIA AND ENTERTAINMENT The Indian Media and Entertainment industry has always been one of the most popular and profitable industries. It consists of various sub sectors such as television, movies, music, newspapers, magazines, radio, gaming, animation, etc. The scope of this industry is unlimited. It was one of the few industries to maintain a growth rate even during recession, and has bounced back very well since 2010. 2010 and 2011 have been monumental years for the media and entertainment industry, with the switch to DTH services, introduction of HD channels, digital music, animation and vfx companies coming into focus with old film restoration, conversion of 2D to 3D, 3D movies, social media marketing, India becoming the 7th largest social media consumer thereby creating global interest, investment and ventures for example there are many Indian TV channels which have made their mark on a global front and address the millions of Indians living abroad for ex. Star Plus, Sony Sab TV, Star Gold, etc and many global TV shows and movies which are now 1st premiering in India and then around the world for example, TV show Missing on star world, Movie The Adventures of Tin Tin, which released 6 weeks before its US release, Mission Impossible Ghost Protocol which release 6 days before its US release, The Avengers which released a day before its world wide release etc. The coming years are going to be very important for the media and entertainment industry, with experts expecting it to break through all barriers, and reach a growth rate of 13% from the current 11% , with its estimated worth to be Rs. 738 billion Sector wise revenue earnings, the media and entertainment industry are heavily dependent on TV and Movies, which together contribute to about 75% of its revenue. Other sectors such as print media, animation, radio, games, etc are on continuous rise with the fast pace technological advancements taking place in the industry. Indian TV and Movies have also been popular on the global front for ex. Movies earning 100-200 crore through box office collections. In the coming years the TV industry is expected to contribute to about half of the media and entertainment industry’s revenues. The popularity of Indian TV has also boosted the revenue generated from advertisements. The rise in the level of urban lifestyle has also contributed greatly to the M&E industry’s revenue. In short the Indian M&E industry is on a growing spree and is nowhere near its peak; in fact we can say that it has just begun.

SWOT ANALYSIS STRENGTHS: Strong and Sound Industry Media and Entertainment is one of the most if not the most booming industry in India Large Customer Base Growth of the lower middle class and lower class, with improvement in lifestyle and increase in disposable income Technological advancements with new techniques, 3D, HD channels, etc Indian film industry is the 2nd largest film industry all over the globe Good returns due to lower cost of production and high sales value Healthy Competition allows vertical and lateral growth WEAKNESS: Lack of ethics with lawsuits being filed for IPR (intellectual property rights) Poor reach/penetration to the SBC and EBC (socially and economically backward class) Fragmented system with many disputes between musicians and directors, producers and theatre owners, channel owners and service providers etc OPPORTUNITIES: Economically weaker section of the society is untapped Crossover movies and TV shows to provide global reach New distribution channels like internet (youtube movies), mobile, etc Technology advancement with animation, 2D-3D, 3D movies, HD channels etc Rise of global interest and investments Rise in advertisement prices Threats: Music and Movie Piracy Stealing of ideas, thus violating IPR Lack of content quality Revenue sharing with majority going to theatre owners, cable operators

PEST ANALYSIS POLITICAL FACTORS: Venture Capitalists are allowed to invest Service tax on cinematographic films exemption Entertainment Tax may be included in Goods and Service Tax Complicated Tax rules and high Service Tax, Entertainment Tax and VAT TDS, Tax for foreign telecasting companies & Taxation for DTH industry Service Tax exemption for advertising in media fronts (except radio and TV) 26% FDI in print media with 100% FDI in non news print media ECONOMICAL FACTORS: High growth rate of 13% Worth almost Rs. 750 billion High Inflation Rate Lifestyle improvement of lower middle class and lower class Increase in Disposable Income SOCIAL FACTORS: Lifestyle improvement of lower middle class and lower class Increase in Population Increase in literacy rate Globalization Audience Intellectual Maturity Increase in Social Awareness TECHNOLOGICAL FACTORS: Technological Advancement with e-newspapers/magazines, 2D-3D, animation, HD TV etc New technological means of delivery such as internet, mobile etc Automation Lower costs of production, higher returns

SAHARA ONE MEDIA & ENTERTAINMENT LTD Sahara India Pariwar entered the media and entertainment with the flagship of Sahara India Mass and Communication ltd. (SIMCL) by Mr. Subrata Roy, in the year 1981. The company was initially involved with the production of television software’s but now has expanded its reach, covering all most all the areas in media and entertainment, ranging from newspapers, magazines, news channels, entertainment channels, and producing movies. On 16th December 2005, SIMCL changed its name to SAHARA ONE MEDIA & ENTERTAINMENT LTD. NEWSPAPERS & MAGAZINES: In the year 1991, realising the potential of Urdu newspapers, weekly, and monthly’s with about 13% of Indian population reading and speaking Urdu, SIMCL launched Rashtriya Sahara magazine on October 2nd 1991, which was then converted into a weekly on 15th August 1993 and then into a daily on 2nd June 1999. It finally expanded into Roznama Rashtriya Sahara in the year 2003. SIMCL also launched Aalmi Sahara (Urdu weekly newspaper) in 2003, and Bazm-e-sahara (urdu monthly magazine) in 2008, also with launch of Aalmi Sahara news channel, it became the 1st newspaper and news channel. Today Roznama Rashtriya Sahara, Aalmi Sahara, and Bazm-esahara are the nation’s most widely read Urdu daily’s, weekly’s and monthly’s respectively. SIMCL also catered to the English reading audience with the launch of Sahara Time a weekly newspaper in 2003, which was then transformed into a magazine in 2008. TELEVISION: In the year 2000, SIMCL entered the ever growing and expanding television industry with its channel Sahara TV, a general Hindi entertainment channel. In order to expand its viewership, Sahara TV was renamed to Sahara Manoranjan in 2003 and finally to Sahara One in 2004. SIMCL also launched FILMY a Hindi movie channel in 2006 and FIRANGI an English entertainment channel dubbed in Hindi in 2008, to cater to a wider audience. SIMCL also has a news channel called Sahara Samay with regional languages. MOVIE PRODUCTION: SIMCL entered into the world of ever so popular Indian Film Industry with the inception of Sahara One Motion Pictures in 2003. Today it is India’s biggest motion pictures production company with more than 50 movies under its belt. They have not only been producing commercial movies but also notable art movies. Their most successful movies include Maalamal Weekly, Corporate, Page 3, Yahaan, Bewafa, Darna Mana Hai, Sarkar, Ab tak chappan , Bose- the forgotten hero, Hanuman, No Entry and Wanted. They have also started GEON special effects studio. SIMCL is headed by Mr. Subrata Roy (chairman) and it is headquartered at Sahara India Point, CTS 40-44, S. V. Road, Goregaon (West), Mumbai 400 104. The top management/board of directors and shareholding pattern of the company are as follows:

BOARD OF DIRECTORS ? ? ? ? ? ? ? Shri Subrata Roy Sahara (CHAIRMAN, Promoter Non-Executive Director) Smt. Swapna Roy (Promoter Non-Executive Director), Shri O. P. Srivastava (Promoter Non-Executive Director) Shri Brijendra Sahay (Independent Non-Executive Director) Shri R. S. Rathore (Independent Non-Executive Director) Shri J. N. Roy (Independent Non Executive Director) Shri Boney Kapoor (Executive Director (WTD))

SHARE HOLDING PATTERN A. Shareholding of Promoter and Promoter Group 1. Indian Individual/Hindu undivided family Corporate Bodies 2. Foreign Total Shareholding of Promoter and Promoter group= A1+A2 B. Public Shareholding 1. Institutions 2. Non-Institutions Corporate Bodies Individual shareholders with nominal share capital upto Rs. 1 lakh Individual shareholders with nominal share capital excess of Rs. 1 lakh Clearing Members NRI (REPAT) Total Public Shareholding= B1+B2 C. Share held by Custodians Grand Total= A+B+C 23.86 0.79 0.34 0.01 0.01 25.01 -100 -38.91 36.08 -74.99 Percentage Share

PROFITAND LOSS STATEMENT March 31, 2011 Rs. INCOME Turnover Other income TOTAL EXPENDITURE Content costs Personnel expenses Operating and other expenses Decrease in inventories Depreciation Investment written off Financial expenses TOTAL Profit before tax 852,253,600 136,912,375 62,886,918 232,900,199 2,875,148 245,000 121,916,734 1,409,989,974 5,834,034 1,461,857,978 114,196,296 150,742,647 24,542,144 2,548,204 – 132,674,552 1,886,561,821 136,497,802 1,240,089,404 175,734,604 1,415,824,008 1,816,049,771 207,009,852 2,023,059,623 March 31, 2010 Rs.

Provision for tax: Current tax Deferred tax charge/ (release) Fringe benefit tax Net profit for the year 1,630,000 3,667,165 – 536,869 53,600,000 (6,487,859) 65,519 89,320,142

The financial performance of Sahara One Media and Entertainment Ltd. over the past 2 years, shows that though the expenses have reduced slightly over the last year, the revenue generated from their operations have dipped considerably with a 30% change over the previous year, which in turn has affected their profit, which has decreased from almost 9 crore to 5 lakh i.e. a 99.4% change, this outlines that their service are underperforming and have not been able to attract the customers.

Segment Wise Performance/Contribution Television REVENUE External sales Inter-segment sales Total Motion Pictures REVENUE External sales Inter-segment sales Total Total Revenue 2011 (Rs.) 175,187,347 -175,187,347 1,240,089,404 2010(Rs.) 299,736,068 -299,736,068 1,816,049,771 2011 (Rs.) 1,064,902,057 -1,064,902,057 2010(Rs.) 1,516,313,703 -1,516,313,703

The Segment wise performance and contribution of the Television and Motion pictures to the overall revenue has decreased considerably this year over the previous year, highlighting the underperformance of these sectors. On a comparative analysis between the 2 sectors, the Motion Pictures sector has always underperformed over the Television sector, indicating the success of Motion Picture sector hasn’t lived up to its mark. In order to remain profitable and boost their revenue Sahara One Media and Entertainment Ltd have to identify and address the issues as soon as possible, and find newer, fresher content that will boost their sales. SWOT ANALYSIS STRENGTHS: General: Strong Financial Muscle Covering Different Fields of Media and Entertainment Newspaper: 3 Top Urdu Newspapers Wide regional audience reach TV: 3 Different Entertainment and 2 Different News channels Wide Audience base catering to different customers Movie Production: Long list of HIT Movies Movie deals with top directors

WEAKNESS: General: Weak Packaging of their services Excessively dependent on Television Channels for revenue TV: Older content on TV Weak in Prime time slot on TV Brand Image on TV No worldwide reach Newspaper: Content Similarity in newspaper and news channel Movies: Too many projects in pipeline Not produced a well known/hit movie for last 2 years Majority of the movies shown on FILMY are Sahara One Motion Pictures OPPORTUNITIES: General: Growing interest of corporate, joint Ventures with big corporate for Movies and TV Growth of New distribution channels like mobile, internet etc Growing number of TV, Movie viewers, and newspaper readers Rise in advertisement prices TV: Growing Popularity of Reality TV Acquiring TV rights for the top movies of the year Sponsoring of Awards Expansion of channels on a global level HD Channels Newspapers: E-Newspapers with regional language support GEON: Rise of animation films and 3D graphics

THREATS: TV: Strong existing competitors with a foothold in the TV industry Rise of New channels, which are getting popular Lack of original and quality content Rise of DTH services, which require extra placement charges Decline in viewership Rise of IPL Movies: Piracy Revenue distribution between producers, and theatres Well known Global producers entering the market Rise of IPL with not many movies releasing during that time Newspapers: Rise of the English and Hindi newspapers Technological advancements, decreasing the sales of newspapers COMPETITOR ANALYSIS Sahara One Media and Entertainment ltd as such don’t have a competitor with such diverse reaches in the media and entertainment industry but on each front has competitors with much stronger foothold. Newspapers: In terms of Urdu newspapers, Sahara is the biggest competitors of others. It has been the no. 1 Urdu newspaper and magazine brand for almost 20 years, with it selling close to 4 lakh copies a day and readership base of almost 32 lakh, however their users have been decreasing slightly with the rise of English and Hindi newspapers such as TOI, Dainik Bhaskar etc, hence they will have to keep a closer watch on their English and Hindi counterparts. Television: In terms of Television, Sahara has been lagging behind its competitors. The major competitors of Sahara would be Sony and Star. Sony and Star in terms of entertainment channels are leading the race. They have a strong foothold in the industry, with always fresh content coming up, new strategies coming up; in fact star and Sony are each other’s biggest competitors. Sony’s entertainment channel, Sony set max, Sony Pix, Sony Sab TV and Star’s entertainment channels like Star movies, Star Plus, Star world and Star/ABP news eat into the FILMY’s FIRANGI, Sahara Samay and Sahara One’s viewership, with them showing Hindi and English TV shows, reality TV, cricket, Hindi dubbed English movies, HD channels etc. Sahara will have to take up some drastic measures and initiatives, to give them a run for their money and compete with them.

Movies: In terms of Movies, and the different fields Sahara are targeting, there is only 1 major competitor and that is YRF (yash raj films), YRF have been in this business since almost 35 years. They are the number 1 production house in India, with countless number of hits under their belly, they are also 1 of the first production houses to develop their own music company, studios, etc and are also said to be entering the multiplexes industry. Sahara has the financial power to match them, but need a redirected approach. STRATEGIES EMPLOYED FOR GROWTH Newspapers: Sahara One Media and Entertainment Ltd are carrying out new strategies, and measures to maintain their no. 1 position among the Urdu newspapers and magazines. They launched ENewspapers and E-Magazines, which will help them, reach a wider audience. They are also trying to incorporate regional languages for the newspapers and the magazines, to provide convenience to the customers. This is definitely a forward step, with the rise in technology and to keep up to date with the customers, this move should definitely help them, if not to boost their sales but definitely waive of their competitors to maintain their no.1 position in Urdu newspapers and magazine. Television: Sahara One Media and Entertainment Ltd relies heavily on its television channels for profits, but the revenue generated by them has been continuously decreasing, thus in an attempt to boost its sales, they have come out with some interesting strategies. Sahara One entered into a joint venture on a global front (in UK) with ARY Digital to broadcast Indian cricket matches such as Indian tour of Australia, changed their logo, acquired the celebrity cricket league, which is on the line of IPL, and has been attracting audiences in big numbers; fresh new shows such as haunted nights, jai jai bajrangbali, etc, shift from run of daypart (RODP) ads to fixed ad rates, which is supposed to increase its ad revenue by 30% and finally entering into a joint venture with colors to air the much publicised and highly awaited reality show Sur Kshetra. These strategies have contributed and will contribute to its revenue, but they have to maintain such an approach and also apply such an approach to their other channels like FILMY and FIRANGI and introduce a fresh look and content.

Movie Production: Sahara One Motion Pictures is one of India’s largest movie producers, they have given a series of hits, but over the last 2 years, none notable movie. The revenue generated has also dropped drastically, but to boost the revenue they have come up with new strategies like the launch of GEON a graphic studio, to rope in the demand for animation and 3D effects, they were on the verge of acquiring MGM studios in 2010, but the deal did not fall through, but their approach hasn’t stopped and talks are ongoing. Sahara One Motion Pictures have also signed top directors to direct movies for them on 2, 3, or 5 movie contracts and have many awaited movies to go under production like No Entry 2, Mr. India 2 etc. Sahara are also in the process of creating a new FILM CITY, for movies, televisions, commercials, etc along with a movie making, acting, dancing etc academies and preview theatres. They are also creating multiplexes all over India with 230x3 screens with independent/self movie distribution network. The new strategies and steps taken are all positive and have the capability to overtake its television sister company in terms of revenue and also catapult Sahara One Motion Pictures to the no. 1 movie producers status.



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