Financial Daily from THE HINDU group of publications
Saturday, May 08, 2004
Financial Daily from THE HINDU group of publications Saturday, May 08, 2004 |
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Corporate
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Sick Units Saregama plans to sell land in revival bid Indrani Dutta
Kolkata , May 7 SAREGAMA India Ltd, the ailing entertainment company in the RPG group fold, is planning to sell of the majority of its land housing its factory premises here, as part of its turnaround bid, sources said. Confirming this development, top RPG sources told Business Line that of the total 14 acres of factory land at Jessore in north 24 Parganas in West Bengal, 11 could be sold subject to the necessary clearances. "The current factory and studio operations could be accommodated within about three acres," sources said. Besides the factory, which is located close to the airport, SIL owns small residential properties in Mumbai and Kolkata. However, no firm decision has yet been taken on these real estate according to sources. SIL hopes to raise about Rs 16 crore from the Jessore Road property which is being sold to one of the real estate majors in the city. The land sale proceeds would be pooled with other "accruals for funding a revival plan" sources said. The proposed revival plan envisages streamlining of the traditional music business in its physical form while simultaneously streamlining the relatively new initiatives like maximisation of publishing revenue, earnings from home videos, besides producing films and putting in place agreements for digital downloads. Elaborating, sources said that revenues from public performances and those from the radio FM channels and cellular service providers (for ringtones) were proposed to be shored up. Talks were also being held with the TV channels which were using the SIL catalogue, billed as one of the largest in the world. It is categorised into various segments such as new Hindi films, old Hindi films, regional music (including Bhojpuri and all the main Indian languages), classical, devotional, ghazals, indipop and international music. Besides the RPG group, EMI Records of UK also holds a small stake in Saregama, which was earlier known as HMV and is still one of the country's best known brands. However, although the country is one of the world's largest music markets the music cassette market - the former bread-earner for music companies - is shrinking irreversibly. This, along with problems such as piracy and high music acquisition costs has pushed the industry to the brink with market leaders like SIL being in the red for a few years in a row now. SIL's losses for the 15-month period ending June 2003 stood at Rs 48.1 crore on a turnover of Rs 123.5 crore. Referring to the new initiatives being launched by the company, sources said that as part of its strategy to tap alternative revenue streams, SIL was planning tie ups with network portals for offering digital downloads. "We are talking to several aggregators and service providers for distribution of music through digital downloads and the first to be finalised is one with a company called Divine Arts and Real Networks. While Real Networks will be the software company, which will provide the service, Divine Arts will be the intermediary (called the aggregator in the music industry parlance) acting as a go-between the music company and the service provider. It will act as the content-owing Internet portal according to sources. The enabling process for a digital download, which needs high speed bandwidth, is expected to be ready shortly and there could be more than one tie-up, sources said adding that SIL was talking to several aggregators and service providers now. On the emerging business segment of home videos, which now contributes over 12 per cent of SIL turnover, sources said that tie-ups with Warner, Universal, Miramax and BBC were already in place and this was being looked upon as one of the company's thrust areas. Talks were being held with Indian home video companies too.
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