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Punditz Consultants Pvt. Ltd., Hyderabad 17th Of March 2011

This document is confidential and no reproduction or use thereof is permitted Without the consent of Punditz Consultants Private Limited, Hyderabad. www.punditzconsultants.com

I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. XIII.

Executive Summary Introduction Why Film Financing Why now Indian Film Industry Telugu film Industry Studio Support Slate / Portfolio film production Proposal Players Plan Financials Enclosures References

3 5 6 8 14 19 21 23 24 33 39 41 43

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Indian entertainment industry has outperformed Indian economy almost every year through the past decade, registering a CAGR of around 14 percent. Indian film industry has done well increasing in size from Rs. 32 Billion in 2000-01 to Rs. 120 Billion in 2010-11 growing @ 14% per annum. The business is increasing everyday as a number of avenues are adding to the market potential. Apart from creating new age customer touch points like the internet and mobile (poised to grow aggressively thanks to 3G technology), even the traditional income streams like theatrical revenues, DVD sales, TV and Audio rights are increasing in size with market expanding into new territories, advent of multiplexes and rise in ticket prices etc. The new Indian film industry is vibrant, organized and futuristic.

South cinema, including Telugu and Tamil, accounting to about 40% of the total Indian film industry is also increasing in size and quality. Not only do they have a strong presence in national and international markets directly from the diaspora but also crossover potential in countries like Japan, China, South Korea, Singapore etc. Regional cinema is strengthened by a well integrated value chain including production, distribution, exhibition, C & S networks.

There are, however some concerns like the inexperienced lot of producers with money in their hands coming in search of quick fame and failing to deliver; lot of productions going haywire and out of control. Now is the time for improving the quality of money and make movies in an organized environment. This can be done by bringing in a. b. Studio support system and Slate film financing i.e., funding a slate or portfolio of films than a single production.

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Studio support system in essence is about major studios joining hands with experienced and independent line producers with their expertise, reach and infrastructure to make movies on a regular basis. While their presence lends great value to the move in terms of market, it helps to administer proper control through the production process. Slate film financing has been successful in Hollywood in the past 6 7 years with more than half of the movies being made today produced on Slate financing arrangements (SFAs). Each of the SFAs is made between bankers and studios for a number of 20-30 movies for a duration of 3-5 years in the range of $ 300 MM and $ 1 Bn. Punditz Consultants Pvt. Ltd. is an entertainment company experienced in cross-lingual, cross-cultural and cross-generic film content production. With 4 complete production teams and about 20 strong creative team working on the subject lines, Punditz is all set to produce films of good and sensible content with control on costs of production. Prasad Film Labs, a Prasad Group company is one of the biggest film lab and post production studios in the country with presence across India, in Singapore and USA. EFX, their latest digital edition, adds to their state of the art facilities in the areas of SFX, DI, digital mastering etc. Prasad group owns the Prasads IMAX, that kick started multiplex culture in Hyderabad. Prasad group has plans to expand their presence into digital projection and 3D cameras. Punditz, with their experience in film production, proposes to produce a slate of 21 films in a span of 3 years with the support of Prasad Labs as equity partners. The total cost of production for the whole slate is estimated around Rs. 100 Crores and generating revenues estimated around Rs. 150 Crores on a conservative estimate. Punditz requires an investment of Rs. 50 Crores to meet this costs of production of which about 25 percent or Rs. 12.5 Crores will come in from the studios and the balance Rs. 37.5 Cr is sought from media focused investor group. It should be clearly understood that Punditz is confident of generating Rs. 50 Cr of value over the 3 year period as internal accruals and cost savings. Exit to investors could be through listing or buyback @ agreed yield.

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This project is intended to raise investments for the proposed production of a slate of films in Indian languages with multilingual and crossover/export potential. This document explains: a. The project, the necessity for such a project from both investment and industry points of view; b. Business plan, the environment in which this project is executed, the processes that are used for corporate and production management; c. Key stakeholders including the investors, production teams and the infrastructure holders, their respective roles and responsibilities d. Scope of the project, though on broad terms is limited to filmmaking, will time to time extend to TV, Music and Stage related content as well. This can be a part of promotion, talent search or general branding, can be on regional or national stage. e. Key objectives of this project are To provide the investors with decent return on their investments; To provide clean, sensible and laudable entertainment to people which will in turn help our brand image; To add value to the film industry in terms of organizing the structure and changing the quality of the money that flows in; To SITE (Search, Identify, Train and Employ) talent, both creative and acting and thus add to the knowledge pool of the industry f. Estimates the revenues and expenditures of the project, the assumptions and facts that drive these figures, threats and disaster management plans

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a. Content is the King: Media for content viewing is expanding and becoming more and more interactive. These interactive technologies, digital downloading, new formats for PDAs and handheld devices, videogames, and social networking applications they all require content. This is clearly evident from the fact that top name like Google announcing their foray into media and content aggregation. So, the demand and the revenue base for content and hence the demand for content creation / production is growing exponentially. b. Increasing number of revenue streams, volumes and territories: Indian cinema is expanding into new territories especially overseas. Films casting some stars like command equal overseas revenues to domestic box office sales. While the number of customer touch points like digital media, home video etc is increasing on one hand, on the other, the existing streams are increasing in size. The per capita cinema spending has increased from a meager Rs. 30 in 1997 to Rs. 120 in 2008. this is mainly due to a surge in ticket price 3 - 5 times thanks to the advent of multiplexes. Study1 reveals that there is no decline of number of viewers in India due to the rise in ticket prices (Number of tickets sold increased from 3 billion in 2002 to 3.5 billion in 2009). Satellite and DVD rights have increased more than 5 times in the past 6 years.

Indian media at www.nationmaster.com

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c. Increasing Corporate Culture in film industry: Corporate culture has taken strong roots in the earlier unorganized industry thus bringing in transparency, discipline and cost control. This has also to do with the recent emergence and success of other knowledgeintensive industries like IT, especially in exports or knowledge-transfer. Advantages are clearly seen. Market segmentation and Intelligent selection of scripts with a thorough understanding of TG preferences (For example, stories like A Wednesday for multiplex audiences exclusively) Forecast and feasibility studies leading to a near perfect analysis of how the movie could fare commercially, especially at the box office Development of ancillary units to take up non critical functions of film production Contract system with stars and other major cost centers thus reducing the amount of cash flow in the whole production Establishing MIS to integrate all the functions and manage Reducing the dependence on the distribution by a direct contact with the exhibitor to the producer. d. For the Society: Employment: This project, if successfully executed, will provide employment of at least 100,000 man-days for skilled and unskilled manpower in a span of three years. Movies as a CSR Tool: Movies as a media can help not only build the investing companys brand image but also help reach the public at large very effectively. So, movie financing can be used as a tool to meet the CSR missions of the business houses. Likeminded brands can even be roped in for in-film or promotion partnerships.

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A snapshot of Facts and Figures Existing Scenario: a. Business: Films make a very important part of entertainment industry Indian film industry earns about 25 percent of total entertainment industry directly and another 7-8 percent indirectly (Films on TV, Music, Advertising) Film revenues come mainly from domestic theatrical sales Then the Overseas Box office, Satellite and Home video, DVD, VCD and then Music, In-film branding. As large as 14% of the revenues are lost due to piracy.2 Domestic box-office dominates the revenues at more than 70%, as compared to 11% in Hollywood. Global Stage Comparison: India ranks No. 1 in world for the number of films (1325 in 2008) and in the number of cinema admissions (3.48 Billion in 2009). However, it stands No. 13 in the total investments made in production of feature films (Rs. 9.3 Bn in 2008, less than one percent of the total global investments) No. 3 in the no. of screens (11,000 way below USAs 39,000 and Chinas 35,000) No. 3 in the revenues earned ($1.8 Bn, below US @ 9 Bn and Japan at 1.9 Bn. The average revenues per movie is $ 1.4 Mn compared to a $ 14.8 Mn for a US film).

Source: KPMG-CII Repot

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Another interesting fact suggests that India stands 1st in time taken to earn a movie ticket at 16 minutes versus 24 Minutes in US and 48 Minutes in Australia against a world average of 56 minutes.3 Taking Indian per capita income into consideration, this shows how low the ATP (Average ticket price) in India is.

b. Production Last decade has seen a paradigm shift in the production of movies in India. Brand Bollywood has grown in leaps and bounds not just in home ground but foreign soil as well. Some notable developments are Small and niche films to target audience on new and unexplored genres like docudramas (Leaving Home), satires (Well done abba), reality flicks (LSD) etc. Digital production With Projection turning digital very fast and new generation High end digital cameras (Redone, Arri Alexa) introduced into Indian markets, small and independent filmmakers have started grabbing the opportunity to make films in digital format and screen it for niche audiences. Productions with these high definition cameras work out very cheap (Less than Rs. 10 Million) because they are Highly flexible in shooting requirements (Can shoot in natural lighting conditions) which reduces the time to setup Record on chip thus reducing the film cost besides a facility to check for the output on location everyday Old classics colored and re-released (Moghal e Azam, Maya Bazaar)

Source: Screen Australia

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Overseas recognition Scripts not only for the Indian diaspora but for a mainstream global audience (Kites) Increasing use of foreign locations Foreign productions developing scripts with Indian backdrop (Slumdog Millionaire) Co-Production tie-ups between Indian and Hollywood giants (RelianceDreamWorks) Marketing Indian films on a global stage (Raavan at Cannes)

c. Exhibition a very important factor in the value chain Though India produces the highest number of films per annum globally, has the largest audience annually and more than 60 percent of film revenues come from Domestic Box office, it has the lowest Screen Density (12 screens per million as against 27 in China and Japan, 59 in UK and 117 in USA)4. Multiplex screens poised to grow at a fast pace with the strategy of producers shifting from Long run Less screens to More screens Steal the Cream, thus reducing the shelf life of movies from a few months earlier to 1-2 weeks now. Multiplex screens provide flexibility in timing of shows. While the movie RACE has been played for 31 shows on a single day in a multiplex, many niche movies run on single screens with hundred odd capacities for a show a day before picking up good word of mouth.

www.screendaily.com

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Demand for screens increasing because of Digitization of projection reducing the additional cost of prints to the distributor, thus helping him take a chance on the number of screens. The other major drive of technology in exhibition has been 3D. With many filmmakers announcing the conversion of earlier 2D blockbusters into 3D, the opportunity for this projection has increased.

Potential: An analysis of Indian film revenues from different streams is given below 5
Size of Indian Film Industry
180 160 140 Rs. Billion 120 100 80 60 40 20 0 2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p

Years 2005 - 10 Domestic Thatrical Cable & Sat Rights Overseas Theatricals Ancillary Revenues Home Video

FICCI-KPMG Report

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a.

Indian films have set the box office registers ringing. Ghajinis net collections record of Rs 2956 million in its opening weekend in 2008 was broken by 3 Idiots at the fag end of 2009. However, 2010 has been a different story altogether as four movies My Name Is Khan, Housefull, Kites and Raajneeti - have broken Ghajinis opening weekend record. 3 Idiots did a net business of Rs. 405 million (Rs 40.50 crore). Raajneeti did Rs 340 million (Rs 34 crore) in its opening weekend followed by Housefull at Rs. 310 Mil, Kites at Rs 305 million and My Name Is Khan at Rs. 300 Mil. Domestic theatrical revenues have grown @ 15.5 % over the past 4 years and future potential is a CAGR of 8.4 %7.

b.

Even the Overseas Box office performance has been very good. MNIK stands first at Rs. 73.5 Cr, followed by 3 Idiots at Rs. 72 Cr. Raajneeti has done 16 Cr in 10 days; Kites opened with 5th in UK top 10 and 10th in US top 10 charts. Overseas theatrical revenues have grown @ 22.7 % and future projections are a growth rate of around 14 %.

c.

Other revenues including Home TV, C&S rights, Music rights etc also have registered a growth between 20 and 30 %. The future for all these looks good at growth rates of between 5 and 16 % CAGR.

d.

Piracy is estimated to cutoff about 14% of the total revenues. The combined forces of technology and stringent regulations should be able to reduce the menace of piracy. Genres: There are new genres like Horrors, New age cinema like Dev D and LSD, current flicks like A Wednesday and Mumbai Meri Jaan which are attracting multiplex audience and making their mark instantaneously. These movies are made with low budgets and have emerged as Minimum guarantee genres at the box office. Analysis of movies over the past 5 years reveals that overseas audience has a maximum preference for Drama and Crossover genres.

6 7

www.businessofcinema.com FICCI-KPMG Report

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SWOT analysis of Indian Film Industry:

Strengths: Large reach of the industry Low costs of production and increasing revenues ensure high ROIs High internet and mobile penetration helps promotion of films to certain TGs like Youth and Yuppies. Globalization helping the processes to increase to Hollywood standards and thus the quality of content Scope for development in the lines of other knowledge industries as technology and manpower are available at a cheaper rate.

Opportunities: Digital production expanding

scope for experimentation at the same time reducing the costs of production Growth assured for the coming years and good time to invest Opportunities in the areas of exhibition and infrastructure Alternate content films and increasing demand like short has

animation

Weaknesses: Highly fragmented industry Still early years of industry status and systematization happening

Threats: Inexperienced films Piracy a major threat to films worldwide and it dents about 14 percent in Indian Film revenues producers with

easy money coming to produce

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Snapshot (Including last years performance) a. b. About 200 films produced every year Revenues of about Rs. 3000 Cr most of it through theatrical sale with an estimated number of admissions of around 125 Crore tickets per annum c. d. Costs of production of a movie ranging between Rs. 2 Cr and Rs. 25 Cr Pre release revenues per movie ranging from Rs. 3 Cr and Rs. 30 Cr including sale of territories (3 major areas viz., Nizam, Andhra and Ceded, satellite, audio and overseas rights) e. Satellite rights starting from 25 100 Lacs for a small film to 5 7 Cr for a mega film f. g. Around 4000 screens across the state with more than 250 in twin cities alone Around 60 multiplex screens in twin cities with more than 75 pc capacity occupancy h. Highly enthusiastic audience Reflection of 1980s scenario - golden age for movies

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Business Pitch a. Size of Telugu Film Industry

Size of Telugu Film Industry

35000 30000 Rs. Million 25000 20000 15000 10000 819 5000 0 1980 1
198

30,234

21,044 14,011 7,985

1,526

3,333

1985

1990

1995

2000

2005

2010E

b.

Categories of films: Telugu films can be divided into 5 categories as per the costs of production for each film. Category A: Digital Film Filmed in digital format, at present this is used for only shoe-stringed budget, indie films. Category B: Low-Budget film: Done with unknown or less known actors. Category C: Medium budget film: Medium stars, about 60 days of production Category D: Big budget film, with stars, generally reachable and bankable. Category E: Mega budget flick, with young and most wanted stars, can be easily sold pre-release

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c.

Costs of Production Typical Costs of Production for different categories of films are shown below
Telugu Films - Costs of Production
250
200 150 80 100 50 0 25 7 220

160

Rs. Million

Cat A

Cat B

Cat C

Cat D

Cat E

Categories of Films - Small to Big

Telugu Films Cost of Prodn Breakup

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Music Remunerations 5% 5% 10% 20% 5% 30% 30% 5% 5% 15% 8% 7% 20% 10% 5% 3% 15% 7% 5% 25% 15% 10% 10% 5% 10% 8% 7% 5% 5%

10%

40%

50%

60%

20%
10%

Cat A

Cat B
Unit & Equipment Digitization (Incl SFX)

Cat C

Cat D

Cat E
Post Production

Production Costs Promotion

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d.

Revenue Matrix Telugu film revenues including all the streams and for different levels of success (MG denotes Minimum guarantee) are given below. The extreme cases of a blockbuster or super flop are not considered.

Telugu Film Revenues

350 300
MG FAIL AVG AB AVG HIT

Rs. Million

250 200 150 100 50 0 Cat A Cat B Cat C Cat D Cat E Success Range for each Category

e.

Project Durations Project durations with a breakup of time taken for each stage viz., Pre Production, Production, Post Production and Release of the movie are given below. These are only typical and can change with the subject and style of making.

Project Duration (In Months)

Cat E

Category of film

Cat D Cat C Cat B Cat A 0 2 PreProduction 4 6 Production 8 10 12 Release 14

Duration in Months PostProduction

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Issues: There are certain issues to be addressed to convert the positive points like good infrastructures and audience turnouts into long term business prospects: a. Subjective Reasons for Low performance levels8: True potential going unidentified No attempt to nurture talent Driven by pre conceived assumptions Not facts Lack of judgment of Script many still go by narration..! Lack of research to know what a viewer wants, his / her get-go, emotions No product segmentation - Scripts made to woo all the viewers as a bunch Inexperienced producers taking up production as a hobby, not able to release on their own and losing huge monies Tollywood, in spite of being the second biggest in the country, can not boast of many nationally acclaimed names because of their Indifference to experimentation and lack encouragement to out-of-the-box talent b. Objective Reasons: Not the right cost allocation Going more frenzy in freezing stars than by market potential No proper planning huge amounts of cash going into the projects than required escalating budgets Result Projects finally ending up as cost failures even more than creative failures Solution Studio Support System in a Corporate Environment making a slate of films

Punditz Analysis

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Big studios joining hands with experienced producers to produce movies. The Model

A media focused corporate

FUND

fund investing in the right teams and projects

Studio supporting the projects with their reach STUDIO and Infrastructure, ensuring smooth execution

Experienced line LINE PRODUCER production teams designing and executing the projects to the design

Right mix of projects that PROJECTS are commercially viable and aesthetically appealing

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Features a. Bring in financial discipline introduce contract system with key players like cast and crew b. Ensure smooth flow of production process release the movie by negotiating with buyers and exhibitors c. Promote indie culture Independent movie makers with trained talent on one hand and raw talent on the other d. e. f. g. h. Develop script banks and creative talent banks to bring in new ideas Employ new age marketing tools like online, to stay connected with audience Developing Production hubs in tier 2 & 3 cities Developing exhibition circuits - Reducing dependence on distribution Development of virtual studios - 3D setups, Modeling, Miniature - SFX, 2D & 3D teams

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Financing for a slate or portfolio of films was termed as Slate Film Financing. Making different genres of films for different audiences, timings and budgets would help producers benefit on the economies of scale. Producers can reduce their costs by a. b. Signing long term contracts with stars Signing multi-film deals with distributors and exhibitors

A KPMG study established that producing a portfolio of films can reduce the costs of production by about 10% and increase the revenues by 12%, thus expanding the profit window by over 20 %.
Chart Costs Reduction in Slate / Portfolio Film Production Cost Reductions Existing Costs (%) (%) Pre production Remunerations Post production Equipment Production Expenditure Distribution Costs Total 2 30 7 4 35 22 100 Possible Cost Revised Costs Increase( % ) 2 -3 -2 -1 -4 -3 -11 (%) 4 27 5 3 31 19 89

Total Costs Of Production are reduced by 10 12 %

Chart Revenue Increase in Slate / Portfolio Film Production

Revenue Enhancement Existing Rev (%) Domestic Theatrical 65 11 14 6 4 0 100 Change Increase( % ) 9 0 0 0 0 5 14 Revised Rev (%) 74 11 14 6 4 5 114

Total Revenues are increased by 10 12 %

Overseas Theatrical Satellite Music Others Leakages Total

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Hollywood Model of Slate Financing Arrangements (SFA): Hollywood popularized this kind of financing a slate of films in the earlier 2003. Since then all the leading studios have entered into such deals with banks and other financial institutions. Today, more than half of the films produced in Hollywood are done in these arrangements. Some of the prominent SFA deals that happened in Hollywood are given below: Some SFA deals that happened in Hollywood Between 2004 & 2010
Sl. No. 1 2 3 4 5 6 7 Date 2004 Jul 2005 Apr 2005 Jun 2005 Sep 2005 Jan 2005 Nov 2006 Jan SPV Title Melrose Partners 1 MVL Film finance Legendary Pictures Kingdom Films Dune Entertainment Dune Entertainment Relativity Media Gunhill road 1 8 9 10 11 12 13 14 2006 May 2006 Oct 2007 Jan 2007 Aug 2007 Aug 2008 Feb 2009 Sep Relativity Media Melrose partners 2 Newline Cinema Dune Entertainment United artists (MGM) Relativity Media Relativity Media Studio Paramount Marvel / Paramount Warner Bros Walt Disney Co Fox filmed entertainment Fox filmed entertainment Universal Sony entertainment Universal / Sony entertainment Paramount Newline Cinema Fox filmed entertainment United artists (MGM) Universal Universal Comerica Bank / Deutsche Bank Dresdner Kleinwort Royal Bank of Scotland Drusdner Bank Meryll Lynch Investment Banker Meryll Lynch ML / Pierce, Fenner & Smith Thomas Tull CSFB Drusdner Bank Drusdner Bank Deutsche Bank Deal Amount $ 231 MM $ 525 MM $ 500 MM Movies/Years 26 / 3 10 characters 25 / 5

$ 135 MM + $ 370 MM Credit line $ 325 MM $ 325 MM $ 200 MM $ 400 MM $ 740 MM $ 300 MM $ 350 MM $ 500 MM $ 500 MM $ 1 Bn $ 300 MM 15-18 40 19 25 20 / 2 28 16

15

2009 July

Reliance Big Entertainment

Dreamworks

Reliance

$ 825 MM

30

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Propose to initiate the first channel of Fund Studio Line Producer with a closed ended fund to make films

About 25% of the fund will be invested by the studio in the form of infrastructure An SPV formed with all the three viz., Prasad Labs, Investors and Punditz Punditz consultants Execution of productions & corporate management Prasad Labs - Infrastructure Support Corporate Fund

Studio support in terms of infrastructure and production equipment viz., Lab, Raw Film, Unit and equipment, Post Production studio, recording theatre besides others

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Mainly there will be three players viz., investing group, Line Producers and Studio. However, partnerships will be built with TV networks, Distributors, stars and other major cost centers to reduce the amounts of cash flow and spread the risks across the portfolio. Investors are either a group of HNIs or an institutional fund with plans to invest in film industry. This fund will be invested in a Special Purpose Vehicle which will produce the movies. The amount of investments needed is Rs. 50 Cr in which 25% will be invested by the studio (Prasad Film Labs) and the remaining 75% (Rs. 37.5 Cr) will be brought in by the investors. The duration of the SPV is proposed to be 3 years and the number of films is 21. The exit route for the investors will be either through IPO or Management Buy-Out (MBO) which can be decided at the start of the venture.

Studio Prasad Labs a. Founded in 1956 by ace filmmaker Dr. LV Prasad, PFL is the largest provider of integrated film Lab, Post production services and Outdoor equipment including the first Panavision camera in South India b. c. 18 times winner of the prestigious national award for the best film laboratory Established labs across the country in six locations fully digitized with a capacity of over 50000 prints per annum d. Production facilities and offices in India (Chennai, Mumbai, Hyderabad, Bangalore, Trivandrum, Bhuvaneswar, New Delhi, Kolkata), Singapore and Hollywood. e. Established South Indias first IMAX theatre in Hyderabad over six years ago with the worlds largest 3D-IMAX screen

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f.

Established EFX, the film restoration and visual effects studio with world class artists and projects on their portfolio

g. h.

Entered into digital cinema services like mastering, distribution and exhibition Established LV Prasads Film & TV academy in collaboration with Arcadia university, USA to nurture and promote talent

i.

Plans to enter into digital cinema projection (Prasad Xtreme Digital Cinema Network PXD has tied up with BARCO digital projection systems)

Line Producers Punditz a. Profile Punditz is a group of producers, directors, management & finance professionals, experienced in handling major projects & filmmaking A team with an understanding of filmmaking as a business and movie as a product with an end use of creating pleasure Equipped with enough production teams to organize 3 4 productions paralelly Network of over a hundred industry trained technical and creative people with a good 50 ready-to-shoot scripts on hand Overall teams experience Over 100 projects [Scale from Rs. 50 Lacs to Rs. 20 Cr] Cross cultural, cross lingual, cross generic and cross platform experience Exposed to the digital age tools and markets Worked on in-film branding events from designing to execution Connectivity with Yuppies and Collegiates that is, age groups of 15 40 years - A major chunk of film going public

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b. -

Our process More time for pre production than production / Post production Market research and group discussions among targeted groups Using PR, Media at proper junctures of production and innovative product launch and promotion events

In-Film product placement and brand partnerships Multilingual productions to blanket risks even before the release Usage of Project Management methodologies & state of art technology Rehearsals, auditions and mock sessions with all the cast and crew for every project resulting in wastage reduction

Marketing scripts Reduce risk Increase probability of success Employing new tools like viral marketing, social networking to reach the target groups

Alternative content production - Short films as the second stream of content Target Media: DTH/IPTV, Web & 3G and Festival participation

Developing subjects in unexplored genres like fusion music, sports, thrillers, Sci-Fi, Period

c.

Our strengths Multiple production teams, Ready to produce scripts and well trained crew members, support from distribution and satellite channels, networking capabilities (Connectivity with various TGs). Our financial processes are supported by auditors with specific domain expertise (Pavan More & Associates)

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d. -

Core Team Raj Madiraju Founder and Creative Head Founder of Punditz Consultants A four year old entertainment company Creative head with corporate brain Over 15 years of entertainment industry experience in different verticals like Films, TV and LIVE Event management Working experience of eight films as 1st and 2nd Assistant director Including one Hollywood project Worked with ace directors like Dasari Narayana Rao and Suresh Krishna Directed one film in Telugu the year 2000 A small budget flick Uncle Worked in top management positions for entertainment companies like Digiquest Corp., Innosoft, Larsco entertainment etc Designing and making experience of Ad films Over 10 TV Commercials for political parties and educational institutions Over 20 corporate films and short films More than 20 class one events including corporate launches, conferences, entertainment events From designing to production About 50 weekly episodes of Business shows on TV Worked on 5 films for their In-film product placement successfully

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GVG Raju Producer A second generation film industry professional Experienced for over two decades and 15 projects on various stages of production Good hands on various nuances of film production including creative, management and marketing areas Expertise in identifying and nurturing raw talent Member of jury for National award selection Filmography: 8 films as producer with top stars in Telugu like Pawan Kalyan, Prabhas, Gopichand, Sumanth, Tarun etc., and eminent directors like Suresh Krishna, Muthyala Subbaiah, Sekhar Kammula etc. Films won both critical accalaims and box office successes. Projects worth Special mention include Toli Prema (5 Nandi awards including Golden Nandi for best film), Godavari (5 Nandis including Silver Nandi for second best film) and Gokulamlo Sita, a box office success

B. K. Sarma, Designer, Company affairs B. K. Sarma is a Certified Associate of the Indian Institute of Bankers and has a Masters degree in Business Administration. He has had over three decades of experience in the banking and financial services industries, working in various positions at Canara Bankand its subsidiaries such as Can Fina. As head of systems group at Can Fina, he has been involved in various financial activities such as merchant banking, factoring, portfolio management, equity analysis and research. From 1992, Mr.Sarma has been

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Punditz Core Team Continued working as an independent consultant, heading Foray Universal

Consultancy Services formerly known as Foray Financial Services. In this role he has been involved in raising capital for several successful ventures in Hyderabad, Bangalore and Chennai. He has also provided consulting services in all aspects of issue management to at least 70 companies for their public/rights/preferential offers. Venugopal Nair Executive Producer (Hindi & Hollywood) Over 4 decades of rich experience in film production Worked for various Hindi movies in the initial stages and have worked with the stalwarts of the Indian Film Makers likWednesday, July 14, 2010e Satyajit Ray, Mrinal Sen, Bimal Roy, Ritwik Ghatak and Basu Bhattacharya. Worked with almost all the international films that are shot in India, like Far Pavilion, Octopussy, Jungle Book, A Passage to India, Gandhi, Jewel in the Crown, Peacock Spring, Warrior and many others. Worked with some of the Documentary films like Ganga the Goddess of India, Jainism in India, Ayurveda. Specialties - For International Producers, organizing their shoot, location selection, talent search, organizing equipment and technicians in India, Local and Central Permissions from the respective Government, Customs, and Logistics, Location Management, hotels, transport etc. MV Raghu Director of Photography Ace cinematographer with over 65 films as DP in Telugu, Hindi and Tamil Worked with top Telugu directors including K. Vishwanath, Vamsi, Jandhyala etc. apart from directing two films himself
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Punditz Core Team Continued Kallu, his directorial debut won top laurels in Telugu films in 1986 including three Nandi awards, Kalasagar and APCTA awards His work behind the lens is regarded as top class with some of the great works as Sirivennela (A Nandi award winner for cinematography), Swathimuthyam, Sitara, Anweshana, Kallu apart from many others Good hands on digital productions including Red camera. Worked on several documentaries including Hollywood works Been active in film festival organizations - HIFF and Hyderabad Film club Been a faculty to film studies in Hyderabad Central University B Satyanarayana Producer A passionate film producer with extensive experience in production Over 30 years and 25 films as production executive Produced 4 films independently Ability to produce films to the planned budgets Filmography as producer e. Bollywood Calling with Nagesh Kukunoor, a nationally acclaimed director Missamma with Neelakantha, a national award winning director Mayabazar with Mohankrishna another national award winning director

Second Line Very strong line of trained creative people with extensive hands on expertise on production equipment and experience in filmmaking in several languages.

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Deliverables

a.

Provide infrastructure required for production Evaluating the project designs Assessment of team combinations Nurturing relations with stars Support in the areas of marketing Evaluating and finalizing scripts

b. c. d. e. f.

a. Arrange for the funds required b. Helping production teams in corporate management Studio Corporate Fund c. Financial Management

Line Producer
a. b. c. d. e. f. Design and execution of production Negotiating with stars for contracts Organizing talent pools Appraising the studio with the designs Appraising the investors with plans Corporate management

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Win Win Situation:

INVESTORS:
Mitigation of risk by slate production expanding the profit window and making a bouquet of films, not one. Experience an industry with stalwarts in the field ensuring no shocks and surprises Participation in a sunrise concept and thus reaping the early mover advantage

LINE PRODUCER:
Opportunity to work with the leaders of Industry Infrastructure support an enabler to produce more movies, annually Support for innovative and creative entertainment ventures Opportunity to enter Bollywood and Hollywood productions earlier, than planned Creating an employment opportunity of over one lac man days

STUDIO: Utilisation of under -utilised capacity Improved visibility as a production house with around 10 movies produced each year, through the JV Be a part of productions in a number of languages, including Bollywood and Hollywood productions Value Creation for small and insignificant films by lending name and support

Owning a healthy content bank of 20 plus films at the end of 3 year period

Supporting efforts to redesign a high risk high return model into a low risk good return model

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Process: Organizational Structure and the processes are shown in the charts below

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a. Search for Creative Talent Short Film Festival A contest inviting trained and untrained talent to present their short films Trained talent from industry and raw talent from corporates and college students Expect to aggregate about 30 good short films per event Potential to be sent to film festivals across the world A set of about 10 15 talented creative people writers and directors A TV show to screen the films as episodes inviting viewers to vote their choice Second and third editions of TV show expected to rake in revenues as well b. Movie Making - Overall Plan is for 21 movies in 3 years. However, this can change with market dynamics o First Year: o 2 Digital films (Short digital but converted to 35 mm - 10 prints) 2 Small films (Approximately 36 prints) 1 Medium film (Approximately 200 prints)

Second Year: 2 Digital films (Short digital but converted to 35 mm - 10 prints) 2 Small films (Approximately 36 prints) 1 Medium film (Approximately 200 prints) 1 Big Budget film (Approximately 350 prints)

Third Year: 3 Digital films, 3 small films, two medium films, one big budgeted film and one mega film

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Project Phasing The chart describes different stages of each production and all the productions in the plan, year-wise.

Chart - Project Phasing (Legend) Pre Production Production Post Production Release

Year I (2 Digital Films, 2 Small Films and One Medium Film)

Year 1

M1

M2

M3

M4

M5

M6

M7

M8

M9

M10

M11

M12

Short films - event + Production A1 A2 A3 B1 B2 B3 C1 C2 D1

Development

Development

Development Development

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Year II (2 Digital Films, 2 Small Films and One Medium Film, One Big film)

Year 2
A3 A4 A5 B3 B4 B5 C2 C3 D1 D2

M13

M14

M15

M16

M17

M18

M19

M20

M21

M22

M23

M24

Short films - event + Production

Development

Development Development Development

Year III (3 Digital Films, 3 Small Films, One Medium One Big and One Mega films)

Year 3

M25

M26

M27

M28

M29

M30

M31

M32

M33

M34

M35

M36

Short films - event + Productn A5 A6 A7 B5 B7 B8 C3 C4 D2 Punditz Consultants Pvt. Ltd., Hyderabad. E1

Development

Development

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a.

Summary of Projections Three Years

Particulars I Year II Year III Year

Income Category - A Category - B Category - C Category - D Category - E Total Income 1,730.00 4,550.00 130.00 1,000.00 600.00 450.00 700.00 1,000.00 2,400.00 220.00 1,300.00 2,300.00 2,100.00 3,000.00 8,920.00

Expenses Category - A Category - B Category - C Category - D Category - E 140.00 500.00 800.00 140.00 500.00 800.00 1,600.00 110.00 210.00 750.00 1,600.00 1,600.00 2,090.00

Office maintenance Total Exp

66.40 1,506.40

125.72 3,275.72

144.58 6,394.58

Profit before tax Provision for tax

223.60 55.90

1,274.28 318.57

2,525.42 631.36

Profit After tax

167.70

955.71

1,894.07

PAT/ Sales ratio ROI EPS (Assumed that 10000000 shares of 10/- each)

9.69% 9.32% 1.68

21.00% 57.92% 9.56

21.23% 122.20% 18.94

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Notes

The 50 Cr raised from investors will be treated as under by the company:

a b c d e

10 Cr as normal equity and balance 40 Cr as preferential equity The face value of the equity share will be Rs. 10 divided into 1 Cr shares. The preferential shares will have a face value of 100 that is 40 lac shares The preferential shares will have a coupon rate @ 5% dividend on a cumulative basis. The Pref equity shall be converted into normal equity at the end of three years at an appropriate premium based on the earnings achieved (EPS) and 50% of the industry average P/E multiple for similar size companies

f g

At the end of 3 years - Plan an IPO with an offer for sale at market related prices Punditz - 10% of equity and profits earned will accrue to Punditz as working partners for their efforts

The Remaining financial projections viz., Cashflow for three years, Office expenditure, Assumptions for revenues, Cost structure for each individual project etc are given as annexures in separate individual files.

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The Letter of Intent from Prasad Labs for their participation in the proposed project is pasted below:

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b. c. d. e. f. g. h. i. j.

CII FICCI report on Indian entertainment industry 2009 CII KPMG report on Indian Entertainment Industry Focus 2010 www.businessofcinema.com www.screenglobal.com, www.screenaustralia.com http://en.wikipedia.org/wiki/Bollywood http://en.wikipedia.org/wiki/Cinema_of_Andhra_Pradesh www.nationmaster.com www.screendaily.com www.imdb.com, www.boxofficemojo.com

Raja Sekhar Madiraju, Director Punditz Consultants Pvt. Ltd., Phone: 91 98488 03132 Email: raj@punditzconsultants.com

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