This has been a very good year for UTV Motion Pictures where Movies big and small have done well and yet we have not seen that translated to the bottom line?

Some of our Movies are cash profitable in the same year and many of the others are profitable over a longer period because the ancillary rights specially Satellite TV rights has had a deferred revenue model. Simply put, as an illustration, if earlier we used to sell Satellte TV Rights, like all have been doing for many years, outright for 5-7 years for around Rs10 crores then now in the changed model in the first year it would be only around Rs. 5crore but the Total Revenue over a 5 year period would be higher at around Rs. 12-14 crores. The revenue in the first year to be recognized would be Rs5 crore Vs Rs10 crore for outright sale as per past model and therefore the gap in Year One.

You have invested into Gaming across 3 subsidiaries but the model is not so well understood in India since a majority of the activity is overseas. Also how big can this business truly be for UTV and what does UTV bring to the table in Gaming to take on global companies?

Firstly, UTV’s core strength and business focus is to create Content for worldwide dissemination. UTV has spotted global and local talent with like-minded vision and partnered and invested into these start ups to create Games on multiple platforms for a Global audience. The Pharma, IT, Telecom and other sectors out of India have been doing this for the last decade, and quite successfully and Media has similar opportunities and we have identified them well.

In Mobile, we believe India is the fastest growing market and Games on Mobile has hardly made its presence felt. India Games (our subsidiary) which has close to 60% of the market share in India and has grown 120% in 08-09, since we invested into it is best poised for growing this market as also to create a strong Online gaming platform in India as broadband expands into homes. UTV’s strengths in building scale into its business as well as promoting it and growing the market and industry will be a strong value add to ensure that India Games enjoys at least 50% growth YOY for quite some years
to come.

In Online Gaming, our investment into True Games, less than a year old, has progressed well and by Q2 of 09-10 we will be launching our own MMORPG Platform in the USA and Turkey with our own owned titles & IPs. Online Gaming has experienced high growth worldwide specially in China and Taiwan and just by studying the phenomenal success in these countries one can see its true potential.

For the quantum of investments we have put in, in the last 18 months we believe that post its gestation period which for any business like this is 24-30 months UTV will enjoy a more than a healthy ROCE (return on capital employed).

Disney invested approx. Rs.8 billion into UTV. Founder Promoter Group also put in Rs.400 million as 10% of warrants. How have the Funds been deployed? What and how are the future capital needs of the company and how will they be met?

The approx. Rs.8.4 billion was invested as follows, with over 75% of it in building IP & inventory and therefore working capital and 10% to create brands in Broadcasting and 15% to reduce
debt.
So,
a) Rs. 240crore into 4 Broadcasting Channels, of which Rs. 120crore is for Titles and licensing of content and IPs
b) Rs. 375 crore into Movies, of which Rs. 140 crore was for The Happening and rest to get into production of over 20-24 movies in India
c) Rs. 60 crore towards Games IP in Ignition for 2010-11 Release
d) Rs. 40 crore towards New Media for licensing of Digital Content & creation of Web Portals
e) Rs. 125 crore towards reducing debt

Subsequent to this there have been further Investments into Broadcasting and News & Movies and Gaming IP and working capital from debt.

What specifically is the Disney synergy? The value add? Where do they contribute?

Firstly it’s important to highlight that Disney owns more than 59% of UTV. While its voting is capped at 32% and the Founder Promoters have the option to buy back the 22% odd tendered in the open offer Disney’s present shareholding in the Company is over 59%.

In the past 3 months itself (a) all of Disney’s theatrical releases in India are being done by UTV (b) Disney has taken over the worldwide Home Video Distribution of UTV’s Global Release “Taare Zameen
Par” (c) Disney’s senior most gaming team has been active in monitoring and adding value to our Gaming IPs being created in London & Florida & Tokyo. Disney and UTV will on a case to case basis look actively at many more synergies.

Founder Promoters had pledges 98% of their shares. Where does that stand?

Founder Promoter group has been cognizant of the concern specifically over the “Pledge”. Till date a total number of 4.4 million shares have been freed from “pledge” and only 3.4 million shares representing 42.2% of the Founder Promoter Shareholding and 9.8% of the total share capital remain pledged.