Started in a Mumbai garage nearly 16 years ago after founder Namit Malhotra mortgaged family silver, Prime Focus is now a multinational company. With a turnover of Rs 773 crore (in 2011-12), the entertainment services company employs more than 4,500 people.
Through its two subsidiaries – Prime Focus Technologies and Prime Focus World – the post-production company offers visual effects, animation services, television post-production and 2D and 3D content conversion, among other entertainment services. The company had converted Hollywood movies such as Avataar , Clash of the Titans and Star Wars into 3D, and has five Oscar nominations to its credit. Currently among the top five players in the world, Prime Focus is scouting for acquisitions in the US, according to its Managing Director and Chief Executive Officer Ramki Sankaranarayanan.
China is a regulated media market. According to a Chinese-North American treaty, only 21 movies can be exported to China. A year ago, this was increased to 37, but the difference (16 movies) has to be 3D movies.
Interestingly, outside the US, China is also the second largest market for Hollywood. So, it’s strategically important for us to have a China leg and that’s why the joint venture in China to start foraying into China.
When will this JV be set up, what are the locations and isn’t language a problem in China?
We will set up this joint venture in the next six months. On the locations, it would be mainland China, and we are in the process of making many of these decisions.
Brad Pitt is as popular in China as Jackie Chan is in the US. People look at the Hollywood content, people love the kind of visual spectacle that Avataar and Spider-Man offered. So, language is not an issue.
When did Standard Chartered come on board?
When we did the US acquisitions (acquired Post Logic Studios and Frantic Films in 2007), we paid $43 million for both the companies. At that time, we raised FCCBs (Foreign Currency Convertible Bonds) and that’s when the Standard Chartered transaction happened. The FCCB was for $55 million dollars and with interest we had to repay $79 million.
Standard Chartered had invested $70 million, $35 million in equity for a 19 per cent stake, and $35 million in non-convertible debentures.
What percentage of revenue comes in from Prime Focus World?
Last year, about 70 per cent of the revenues came in from Prime Focus World. Prime Focus Technologies, last year, contributed less than 5-6 per cent. This year, we would end up with more, like 14-15 per cent.
Are you looking at a further dilution of equity or raising funds?
Our stated intent is not to dilute the parent anymore (like stake sale to Standard Chartered). We might look at diluting a little bit in our subsidiaries, but as of now, we don’t need funds. It’s not like we are going to shop tomorrow morning.
At Prime Focus, has acquisition been a strategy for growth?
After 2007, we haven’t done much. We are looking at growth, but we wouldn’t rule out inorganic growth, but only if a good opportunity comes by. The services Prime Focus World provides (are part) of a $3-billion market annually, of which we have less than $100 million. We might look at acquisitions in the US. We continue to evaluate opportunities.
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