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Saregama: Hitting a new note
Nandini Lakshman |
July 12, 2003
It is 9.30 am and Abhik Mitra is juggling back-to-back appointments at his suburban Mumbai office.
As managing director of Saregama India Ltd, the RPG group's entertainment company, Mitra is hoping to hit the right notes.
In keeping with consulting firm McKinsey 's roadmap for diversification, after a gap of four years, SIL is re-entering films with three productions.
There are joint ventures for home video for both film and television shows. After selling one million copies of Shaad Ali's Sathiya film music, it is banking on the new Rakesh Roshan sci-fi thriller Koil Mil Gaya to once again make sweet music.
Also, having acquired a television software house in the south, it will embark on a shopping expedition in Mumbai. It is revamping its music business and drawing synergies from its other operations.
What's more, the remix genre which was sacrilege earlier, is being gladly lapped up, and the entire operations revamped, all in the hope of touching Rs 250 crore (Rs 2.5 billion) in the next two years.
"My focus is to make music work. It all depends on how well we amortise our royalty charges," says the straight-talking Mitra.
Will all this keep the coffers ringing? "At least not for some time. I am a bit sceptical as SIL is spreading itself too thin," says Gautam Mambro, who tracks the company for broking firm Valuequest.
Saregama has already extended its accounting year for three months but its revenue is down to Rs 95.26 crore (Rs 952.6 million), from Rs 123.38 crore (Rs 1.233 billion) the previous year.
During the same period, net sales slid from Rs 104.49 crore (Rs 1.044 billion) to Rs 79.39 crore (Rs 793.9 million), with net losses ballooning to Rs 38.9 crore (Rs 389 million) from Rs 25.76 crore (Rs 257.6 billion) in the previous year.
Such dismal sounds are the outcome of the churn in the music industry. The last few years have seen music companies pay astronomical sums to acquire music rights of new films.
That the notes jarred is a different story altogether. SIL was no different. It did sell 6.5 million copies of Yash Chopra's Mohabbatein, but it lost heavily on Chopra's other duds Mere Yaar Ki Shaadi Hai and Mujhse Dosti Karoge.
Then it signed up film-maker Vashu Bhagnani to make five films. In all, SIL invested around Rs 40 crore (Rs 400 million) for the acquisitions in the last two years.
Then rampant music piracy and the subsequent slashing of prices also took its toll on SIL.
With the music industry still in the dumps, SIL plans to become a full fledged entertainment company and is trying to drive synergies across its various properties.
A month ago, it spun off Saregama Films as a separate company to handle television and film content. It will now leverage its strengths in music to promote both its new film and TV content.
Three months ago it acquired Chennai-based Min Bimbangal Productions, a television software company owned by film director K Balachander for Rs 10 crore (Rs 100 million).
Its new Telugu mythological soap Namo Venkatesha which will have a 52-week run went on air on June 8. So SIL has launched a music album based on the serial.
Mitra says that the TV division which has a current turnover of Rs 3.5 crore (Rs 35 million) could touch Rs 9 crore (Rs 90 million) in the next 18 months.
The next stop is Mumbai. Mitra wants to buy Hindi software houses, and may even look at Bengali ones. Until then, there are films. It has tied up with Mukesh Bhatt for three Hindi films.
The focus here is to keep costs low and make films within a Rs 5 crore (Rs 50 million) to Rs 10 crore (Rs 100 million) budget. Its earlier efforts on celluloid were unmemorable and included the Shabana Azmi starrer Godmother almost four years ago. Its other lacklustre productions include Rajiv Menon's Sapnay and Bada Din with Azmi and model Marc Robinson.
Today, music still accounts for most of its business with the regional and national catalogue and new films each accounting for 33 per cent of turnover.
And it give it a further fillip, it recently decentralised its music business.
"There is a more regional focus to what we are doing today. I will not touch anything unless it is a good, low-cost regional play," says Mitra.
While Mitra remains overall in charge, each of the other functions -- operations and international business, new Hindi film acquisitions and regional marketing and scouting for new artists will be looked after by a strategic business head reporting to Mitra.
Six months ago, SIL created a new post -- vice president Artistes & Repertoire Management and hired Atul Churamani from Virgin Records to scout for new artistes.
It has already identified four new artistes to promote. Two months ago, as part of a teaser campaign, Rajiv Sachar, 21, made his presence felt at Mumbai's Jazz By the Bay restaurant.
"We look at artiste management as a long term growth," says Mitra revealing that it signed up a band -- Bhoomi -- in Kolkata four months ago.
In a way, Saregama, the erstwhile HMV is now talking a different language. Says Mitra, "Music is a lot about fashion, and good successful music is about good successful experimentation." So unlike earlier, now it has no qualms of launching remixes backed by glitzy videos.
In its haste to don a modern garb, is SIL abandoning its priceless repertoire? "No. Because we are acquiring new artistes does not mean that old music is not good," says Mitra.
So the accent is on publishing and royalty on record labels. "It is a hard battle as everybody believes that music is free," he adds.
Besides all this, it has tied up with Warner Home Video and BBC to market their home film and television show videos.
SIL will distribute about 5,000 films from the Warner catalogue including the latest box-office wizard Harry Potter.
It claims to have already sold 35,000 copies of the first Harry Potter film. The BBC tie-up will offer a range of content in different genres like children's entertainment, natural history, documentaries, serials, drama and current affairs. VCDs and DVDs of the Teletubbies, Yes Minister and Pride and Prejudice are now available.
Does this mean SIL will sing a different tune soon? Says an analyst, "The new ventures, especially films, could change the company's risk profile. We would rather wait and watch."
But Mitra is optimistic. "We will revitalise profitability in our core business. At the same time, we need to be across the entertainment spectrum."