Balaji Telefilms India's leading prod..

Balaji Telefilms India's leading production house Speaks

Televisionpoint.com Team
Balaji Telefilms Limited has disclosed a forward-looking information to enable investors to comprehend better. Balaji Telefilms, India's leading production house and the largest fiction content provider enjoys a leading market share in small screen content-providing business, its shares are listed on the Mumbai and the National stock exchanges and enjoyed a market capitalisation of RS 580 CR. The Company is promoted by veteran actor Jeetendra Kapoor and his wife Shobha Kapoor, their daughter Ekta Kapoor and son Tusshar Kapoor, headquartered in Mumbai, the promoter family owns 42 per cent of the Company's equity.

Key Highlights of the Report
• 15.75 per cent increase in programming hours from 1485.5 in 2003-04 to 1719.5.
• Attractive realisation of RS 17.7 lakhs per hour from commissioned programmes.
• Presence of 30 of its programmes in the top 50 in Hindi cable and satellite channels.
• Launch of 14 new programmes across a number of channels.
• Commissioning of five state-of-the-art studios.

Ekta Kapoor, Creative Director, Speaks
How does Balaji retain its audience and TRP?
Let me put it in an interestingly different way: in most businesses, the quickest way to eliminate the difference between yourself and your competitor is through faithful imitation. Simply check what the most successful company is doing, find an institutionalized way of imitating it and eliminate the competitive difference. Balaji has been around for nearly a decade and, therefore, it should be relatively simple for all our competitors to create me-too content and eat into our market presence. However, if this has not transpired, then there must be a specific reason.

In my opinion, it is because we possess an insight into exactly what our viewers will like and not like. This might sound like a simple capability but believe me, this represents our most valuable intellectual capital and the biggest differentiator between Balaji and its competitors. This is best demonstrated in our treatment of Kyunki Saas Bhi Kabhi Bahu Thi. This is the sixth year of the programme and we have successfully been able to evolve the plot in response to changing audience moods without losing eye share.

Okay, this brings me to the second most important factor of success at Balaji - the script! So what I am saying is that a combination of an insight into what a customer wants and our ability to innovate are the principal drivers of our success.

Shareholders are worried that the business of soap making is getting increasingly difficult.
Not difficult, but competitive. Okay, make that 'very competitive'! My big lesson at Balaji has been that it is one thing to get to the number one slot but I can tell you that it is quite another to stay there.

Have you ever worried about the fact that everything is a potential competitor to your business - even multiplexes and shopping malls?
We are becoming increasingly aware. So we must respond by making our programmes better and better: In business what they term Kaizen or continuous improvement. We do so with a difference. We try to make our programmes and their characters a part of people's lives. Besides, we are also diversifying our genre and foraying into Filmmaking; we are exploring new horizons with an eye to reach out to more viewers nationally and internationally.

You mentioned films. Is Balaji getting into films because the media boom is over?
The media boom has just begun! I can tell shareholders that there is a tremendous demand for quality content on the small screen. While we continue to leverage value from the small screen, Filmmaking will be a synergic extension to enhance revenues and profits. We have some upcoming productions in the pipeline that are going to be soon released. Filmmaking will enhance Balaji's impact in the industry simply because we don't see the two media infringing on each other - one is an indoor activity, the other outdoor; television programmes are a daily affair, films are not; television you can watch at your convenience; with films, you need to go out. As a result, we see both surviving and both doing so in a mutually exclusive manner.

What is the biggest challenge for a creative head like you?
Brain drain. As soon as someone leaves, he or she carries away intellectual capital, which can potentially impact quality. To top this, there is a significant shortage of trained professionals, making it imperative for us to train fresher's into becoming trained professionals on-the-job. Plagiarism is another challenge, from two perspectives - that someone should not be able to take away what is your idea and create successful content and that you do not fall prey to copying someone else's idea and using the short cut to success. As a result, at Balaji, we pride ourselves on being original.

Your creative team and other members of the organisation insist that it is you who drives them. Shareholders would want to know what drives Ekta Kapoor?
The opposite is true - my team drives me! When you see a bunch of young enthusiasts, you are driven to push further, to try that much harder and to deliver better. Recently, we conducted a talent show across the North of the country and recruited 50 odd creative team members. When I saw them, I was truly inspired!

Shobha Kapoor, Managing Director and CEO, Speaks
Profits are declining and shareholders want to know whether the best days of Balaji are over.
Not at all! The reasons why profits declined in 2004-05 are because we explored new channels, geographies, time-slots and formats. Each of these initiatives takes time to generate profits, which shareholders will see from 2005-06.

What were the Company's highlights in 2004-05?
Over the last few years, we had progressively de-risked our business from a financial perspective. I am pleased that during the year under review, we extended our focus to content as well. We did so through a number of initiatives - we extended our soap to channels like MTV that were traditionally not connected with soap, which we feel is a victory of sorts for our content. Besides, we extended ourselves from soap to the non-fictional genre (Kosmiic Chat and Kyaa Kahein), opening up an entire new business area for the Company. In view of the fact that most of our people possessed a long-standing insight into soap, we considered it prudent to create a new team to address the challenge of the non-soap genre. I am optimistic that the induction of fresh talent will lead to new perspectives in the creation of nonsoap content and the increase in non-soap content will diversify our income mix. As a result, during a challenging year, we strengthened our ability to generate sustainable growth over the foreseeable future.

How does the Company expect to move from here?
By extending from a leadership position in Hindi soap to a leadership position as the number one content provider in India across all languages. As a part of this aspiration, we hope to explore animation; ad films and a reality TV show. Besides, we also expect to produce three more commercial films in 2005-06, especially in the area of niche films where we see a big dearth in India.

What is the biggest challenge facing the Company?
The ability to extend our recruitment policy into selective recruitment and the extension of this into value-added sustainable growth. Why this is a challenge is that as the business gets bigger, there is a greater need to recruit in larger numbers. Along with the increased numbers comes the risk of error - the fact that we can always make an error in selection, the fact that we may not train right and the fact that our people may leave, carrying away valuable experience and expertise. The one reason why we have continued to remain successful is because we have gradually institutionalised our people-centric practices. For instance, we have bought a greater science into recruitment. We are recruiting from the other cities, and are not just providing jobs but careers and we are not just providing a place to work in but a hands-on university experience where empowerment, learning and knowledge sharing are continuous. As a result, I am proud to say that Balaji continued to be a preferred place to work in, attracting the best talent from across the country.

Tusshar Kapoor, Executive Director, Speaks
Why did Balaji move into films in 2004-05?
A number of people have asked me this. It is important to state that given our infrastructure and insight into content and storytelling, we felt that an extension into film production represented the most attractive option to de-risk revenues and enhance profits. Now this might sound contradictory to a number of people who associate films with risk. The truth is that with our institutionalised cost management approach in television content creation, we stood the best chance to extend it to films, protecting our downside on one end and liberating our upside on the other.

How did the Company do so?
For one, we extended ourselves only to low budget films where even if the film did not click, we would either cover our costs or make a small loss and if the film clicked we would end up making a tidy profit. So given the cost-benefit analysis, an entry into films represented the most attractive extension of the Company's interests. Besides, we selected to employ the services of a relatively low cost star cast. We invested our films with superior production values. And lastly, we prudently covered a significant portion of our film expenditure through prerelease sales to distributors.

What were the learning's from Kya Kool Hain Hum?
From a corporate perspective, we realised the need to utilise our assets and resources to the fullest leading to effective cost management. We learned the importance of a finely tuned script and schedule before embarking on the next shot. Besides, we gained a precious experience into film promotion. We created a dedicated team for film production comprising scriptwriters, creative heads, associate creative heads, production heads and post-production associates. This translated into minimal re-shooting, saving costs for the Company, which is critical in a medium where the returns cannot be accurately predicted.

Balaji Telefilms is usually associated with family drama, values, traditions and alike. Why did your film take a thematic turn?
Kya Kool Hain Hum was aimed primarily at college-goers - 'generation next' - that would allow us to create a recall in the minds of viewers. We felt that the subject of a sex comedy would attract a fair audience. I think the timing was also perfect for the film in terms of audience acceptance. Besides, we tied up with high-street stores across the country to promote the movie. We succeeded in doing so as the movie did well even in the interiors of the country.

Television Media is the Driver for the growth of Balaji
In a country where 72 per cent of the population is rural, a television represents the principal link with the outside world. In a country where 48 per cent of the population is illiterate, television serves the role of a friend people can spend time with. This explains why television reaches over 40 per cent of the billion people in India, commanding the highest mind share among consumers and cutting across rural-urban and class divides. At RS 139 Billion, India's television industry is universally acknowledged as its most dynamic media, accounting for no less than 55 per cent of India's entertainment industry in 2004. It is expected to play a driving role in the entertainment industry's growth from RS 222 Billion in 2004 to RS 588 billion by 2010, emerging as a RS 371 Billion (revenues) segment by then.

As a result, as the medium's rural penetration increases, the growing preference for television entertainment is expected to grow the market for broadcasters and television content producers like Balaji more aggressively than before.