Financial Daily from THE HINDU group of publications
Friday, Sep 27, 2002
Saregama changing track for comeback
KOLKATA, Sept. 26
SAREGAMA India Ltd (SIL), the erstwhile Gramophone Company of India (GCI), has decided to go for a rejig of its operations in order to get back into pink of health.
Mr Abhik Mitra, Managing Director of the company, told Business Line, that as part of its revival strategy, SIL was trying to emerge as "more of a non-music company''. The focus now was on the entertainment sector as whole, he said.
As part of this exercise, SIL, which in its Gramophone Company avatar had recorded its first song 100 years ago, is planning to spread itself equally over its three business areas - two of which are new - films and TV software.
"From the present scene, where majority of our turnover is from the music business, we propose a scenario where equal emphasis is placed on films and TV software,'' Mr Mitra said.
The company, which is making a cautious re-entry into film business, is planning its first launch within the next two to three months.
"We are not planning a mega movie, we have pegged the budget at around Rs 5-10 crore - but the star cast will be good,'' he said even as he held his cards close to the chest. SIL plans at least five movies every year.Alongside, the company, which the Goenkas revived after buying it in the mid-eighties, has also made some internal changes to maintain its presence in the music industry.
Mr Mitra said that the stress now was on ``artiste and repertoire management - A&R'', which essentially involved developing new products and seizing opportunities.
SIL missed out on devotional songs and Bangla rock band scene - an opening which has been fully utilised by one of its rivals.
The company has now created a new post of Vice-President to take care of this and has redesignated people while recruiting some to give a sharper focus to marketing and sales.
"The working capital position was also being improved through better inventory management and "unlocking of capital blocked with film producers'' to whom the money was given as advance for music rights for films which are yet to see the light of the day,'' Mr Mitra said.
Referring to the renegotiations now on, he said that besides holding talks to reopen deals, SIL was also remodelling its purchase pattern for music rights of films so as to lower its risk.
"In some cases, we are not going for the minimum guarantee payment, assuring them only royalty payments on the cassettes sold.''
All these measures taken together were expected to bolster the revenues of the company by the next fiscal, according to Mr Mitra.
He said that TV software, an area which SIL had ventured into following the recommendations of McKinsey & Co, is yielding good revenue and the company proposed to strengthen its present content in Tamil serials while making a foray into Hindi serials too.
Joint fight against piracy
THE music industry and the film industry are planning to tie up to fight piracy together, Mr Abhik Mitra, Managing Director of Saregama India Ltd and member of the FICCI anti-piracy committee, has said.
Mr Mitra said that although the music industry, where over 50 per cent of the existing business was illegitimate
(due to piracy) had umbrella organisations such as IMI and Phonographic Performance India Ltd (PPIL), the film industry had so far been fragmented in its efforts to combat this menace which was knocking the bottom out of the legitimate entertainment companies.
He said that FICCI committee would now move to States to try create an awareness on piracy and what could be done to arrest it.
It would also put in place a fund to be raised by the two industries in a transparent manner to fight piracy.
Mr Mitra estimated that around Rs 50 crore would be needed in the first year to carry out campaigns and set up a special police force to curb piracy.
Currently, only around Rs 5 crore is spent annually on this score.
At present, the big names in the music industry contribute one per cent of their annual turnover to maintain PPIL, which conducts raids to stop unauthorised use of recorded music and also sale of pirated cassettes and CDs.
The Saregama MD said that it was difficult to curb music piracy through measures like slashing prices of cassettes and CDs. "Beyond a point, it squeezes margins and impacts the bottomline," he said.
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