B E A C O N A Newsletter by SIMCON– SIMSREE Consulting Club
Volume : 2
Issue : 11 September 2014
Inside this issue:
Industry Analysis: Media and Entertainment
Company Analysis: Zee Entertainment
Enterprises Ltd
CONvergence’14
Concept of the Month
Quiz
Did You Know?
Volume: 2 BEACON : Page 1
Issue : 11 Sep. 2014
Introduction:
According to a FICCI-KPMG report published on January 3,
2014, India’s Media and Entertainment (M&E) industry reached
Rs 92,000 crore in 2013, a 12% increase as compared to 2012.
As of January 2014, around 161 million households in India
watch television. More than 330 million newspapers are circu-
lated daily in India. A staggering 214 million are connected to
the Internet; of which 130 million are mobile internet users.
Such statistics show how much penetration the media has at-
tained in a country of around 1.21 billion, and also how there is
still loads of ground to cover – offering opportunities.
2013 saw an increase in the digitization of media products and
services, like the effect on cable Television. With the boom of
Internet, digital marketing has grown by leaps and bounds as
numbers suggest.
The industry continues to grow and also plays an important role
in bringing about awareness on many issues impacting the entire
population. Digital technologies, ever increasing demand of
smartphones, penetration of broadband internet & digital cinema
have brought about the increase in this sector. Backing from the
Indian government is also an added advantage. Advertising con-
tinues to evolve over a period of time and going Digital is the
way ahead.
Market size of the Media & Entertainment sector:
According to the above mentioned KPMG report, Media & En-
tertainment industry has the potential to ramp up by 14.2% to
more than Rs 1.78 lakh crore in the coming four years.
The television industry in India is anticipated to increase at a
CAGR of 16.2% over 2013-18. That makes it around Rs 88,500
crore.
Without much surprise, digital advertising is projected to have
the highest CAGR of 27.7% with other sub-sectors projected to
grow at a CAGR in the range of 9-18 %, till 2018.
The foreign direct investment (FDI) inflows in the information
and broadcasting (I&B) sector (including print media) in the
period April 2000 - July 2014 stood at around Rs 23,060 crore,
as per data released by Department of Industrial Policy and Pro-
motion (DIPP).
So how are companies investing in this sector?
Recently, a MoU was signed between Prasar Bharati and
Deutsche Welle, a German public service broadcaster to expand
the reach of Doordarshan India into other markets like Asia,
Europe, and Middle East. This enables the availability of
Doordarshan India’s programmes at no cost, on Hotbird 13B, a
leading
DTH platform in Europe.
Discovery Communications India recently launched its Investi-
gation Discovery (ID) channel and thus ventured into the Hindi
entertainment space. After the launch of HD variants, Discovery
channel’s portfolio in India has now grown to eleven.
Multiplex chain INOX bought 100% shares of Satyam Cine-
plexes Ltd (Satyam), valued at Rs 182 crore. This deal raises
INOX’s screen count in India to 358, across 91 multiplexes and
50 cities. The intent of this deal was to increase INOX’s pres-
ence in North India; especially Delhi.
In association with Orange, Infosys launched its IP TV
(Television on the Internet) services to its customers. Infosys
plans to create interactive television apps on Orange’s store -
Livebox Play. It also intends to integrate this system with its
cloud-based services.
Vodafone India is currently working with Disney India’s Inter-
active business to develop games and applications for smart
phones.
Media and Entertainment Industry:
Media industry is composed of various segments like television,
print, films, music, digital etc. The share of each of the compo-
nents in the total industry can be shown in a chart below. Tele-
vision contributes to the largest share as of now and continues
to grow at an ever increasing rate. It is expected to grow at 51%
till 2017 estimates the KPMG report mentioned earlier.
Figure 1- Industry Segments
Source: http://www.ibef.org/industry/media-entertainment-
india.aspx
Figure 2- Advertising revenue
Source: http://www.ibef.org/industry/media-entertainment-
india.aspx
For detailed report and all company analysis from previous Beacons together, please visit
our blog:
http://simconblog.wordpress.com
INDUSTRY ANALYSIS:
Media and Entertainment
Volume: 2 BEACON : Page 2
Issue : 11 Sep. 2014
For detailed report and all company analysis from previous Beacons together, please visit
our blog:
http://simconblog.wordpress.com
INDUSTRY ANALYSIS:
Media and Entertainment Top Industry Players:
Top companies according to Market Capitalization:
Porter’s five force analysis of industry
Impact of current issues in M&E Industry:
High and multiple taxes in film industry:
A high amount of indirect tax - 15-50% - is levied on film indus-
try. Along with this, multiple taxes like VAT + service tax are
imposed on the industry. This has been a long stretched issue in
film industry. Of the earnings after tax, 40% of the money goes
to exhibitors and the balance is left with the producers. So for
financing a project of Rs 10 crore with 50% tax, the box office
collection of Rs 50 crore is required to break even. The film pro-
ducers argue that only 5-6% of the movies in the film industry
are a box-office hit. For others recovering such high amount
money is very tough. It discourages investment.
Piracy:
Piracy is one of the biggest and ever increasing problems of the
film, television and music industry. With the rise in digital me-
dia it has become easier to pirate and share the movies. An E&Y
report estimates the losses due to piracy to be around Rs 2,469
crore per year in India.
Intellectual Property Rights:
According to a survey conducted by E&Y, 56% of the frauds
happening in the industry are due to Intellectual Property Rights
(IPR) issues. With the increase in digitization in M&E sector,
more and more such cases of breach of faith and frauds happen.
This is resulting in monetary as well as reputational loss. With
more companied growing from unorganized firms to organized
company, it is has become very essential for them to increase
vigilance.
What role is the Indian Government playing in this?
To promote exchange of culture and art between the two coun-
tries, the Indian and Canadian governments signed a co-
production deal in 2014. This deal would help producers from
both countries to enhance and utilize their creative, technical,
artistic and marketing resources in the process of making films/
serials.
The Central Government has given the green signal forlicenses
to around 50 new news and entertainment channels in India.
Star, Sony, Viacom and Zee have already acquired licenses to
such energies. Presently, around 350 broadcasters cater to close
to 780 channels ranging from news to entertainment to sport
and many other domains.
How to build on this momentum?
Digitization and the Internet will drive India’s Media & Enter-
tainment industry forward. Internet Service Providers are al-
ready earning increased revenue due to broadband penetration.
Additionally, advertising agencies began competition with each
other to acquire in the digital and social media domains. These
developments suggest growth for the M&E industry in India.
Opportunities outside the country also beckon. The African
continent and the Middle East are two relatively unexplored
markets, and Indian M&E companies could plan their expansion
realizing the regions’ potential.
Conclusion:
Growth of middle class, rise in disposable incomes, high
amount of content consumption and a favourable regulatory
environment in India are bound to encourage foreign invest-
ments and growth in the M&E industry. With increase in broad-
band penetration and services like 2G, 3G and even 4G being
provided by the telecom companies, we are bound to get more
people into the digital world. With increased foreign invest-
ments, there is a rising sense of urgency to take up opportunities
offered by the Indian M&E industry. It is of utmost importance
to comprehend and adjust to the economic and cultural nuances
in a diverse country like India, and come up with content tai-
lored for the local market. While M&E companies continue to
be exposed to risks ranging from competition, piracy, corrup-
tion & fraud, our on-going structural and regulatory reforms by
the new Government and focussed development of corporate
governance norms are bound to reduce these threats.
References: Deloitte
Best Media Info
IBEF
MoneyControl
FICCI
E&Y
Company Name Market Cap (Rs. Cr)
Zee Entertainment 32,444.05
Sun TV Network 12,833.37
DB Corp 6,405.75
Dish TV 5,844.12
TV18 Broadcast 4,886.79
Volume: 2 BEACON : Page 3
Issue : 11 Sep. 2014
Company Overview
Launched in 1992, ZEE is a globally recognised company in the
M&E industry. With over 730+ million viewers across the
globe, ZEEL has a presence in 169 countries.
Zee Entertainment Enterprises Limited is one of India's leading
television, media and entertainment companies. It is amongst
the largest producers and aggregators of Hindi programming in
the world (having produced 32 serials & daily soaps till date),
with an extensive library housing over 1.2 lac+ hours of televi-
sion content. Zee TV has a leading share in the Hindi General
Entertainment genre (GEC) with an average weekly channel
share of 17% amongst all GECs. With rights to more than 3,500
movie titles from foremost studios and of stellar film stars,
ZEEL houses the world's largest Hindi film library.
ZEEL's well-known brands include Zee TV, Zee Cinema, Zee
Premier, Zee Action, Zee Classic, Ten Sports, Ten Cricket, Ten
Action+, Zee Cafe, Zee Studio, Zee Trendz, Zee Khana
Khazana, Zee Salaam, Zee Jagran, Zing, ETC Music and ETC
Punjabi. The company also has a strong offering in the regional
language domain with channels such as Zee Marathi, Zee
Bangla, Zee Telugu, Zee Kannada and Zee Talkies.
The ZEEL stable owns an integrated range of businesses. All of
these in singularity adhere to the content–to–consumer value
chain model of media and entertainment business. ZEEL is a
pioneer in every aspect of content aggregation and distribution
through traditional media like satellite and cable and new media
like the internet, in India.
It has also entered the educational arena with brands like ZICA,
Kidzee, ZIMA & ZED. Zee also has its in–house production
company under the name Zee Motion Pictures.
Shareholding Pattern
Management
SWOT Analysis
For detailed report and all company analysis from previous Beacons together, please visit
our blog:
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COMPANY ANALYSIS:
Zee Entertainment Enterprises Ltd
Strengths
- Global presence and complete
array of channels - Zee has
total 34 channels that cater to
various customer segments
across 169 countries
- Have good viewership base
(730+ viewership in FY14).
The channels provide good
content and enjoy high TRP
ratings
- Trailblazing growth in ad
revenue (around 17% YoY
growth in Q1 FY15)
- Good subscription revenue –
Revenue through subscription
contributed to almost 41% of
the revenue in FY14.
Weakness
- Zee does not have rights to
major sporting events and as a
result, it lags in the sports seg-
ment
- Lack of high cost content -
Zee, the flagship channel of
ZEEL, has shied away from
making major investments in
acquiring high cost content like
new movies and reality shows
Opportunity
- The TV industry is expected
to double its size by 2018
Increasing digitisation will help
in increasing subscription reve-
nue – Penetration level of digi-
tal TV is still low at around
36% and is expected to rise
steadily
- The new channel launches by
Zee like Zee Zindagi offer
great potential due to its fresh
concept
Threats
- The discontinuation of Media
Pro with Star might put pressure
on subscription revenue growth.
- Star Sports has rights to tele-
cast cricket matches in India till
2018 as well as events like ISL
whereas Zee do have right to
broadcast any major sporting
event in FY2015 as well as in
FY16
Name Designation
Dr. Subhash Chandra
Non-Executive Chairman &
Promoter of Essel Group of
Companies
Mr. Suboodh Kumar Executive Vice Chairman
Mr. Punit Goenka Managing Director & CEO
Mr. Ashok Kurien Non-Executive Director
Lord Gulam K. Noon Independent Director
Prof. R. Vaidyanathan Independent Director
Prof. Sunil Sharma Independent Director
Prof. (Mrs.) Neharika
Vohra Independent Director
Volume: 2 BEACON : Page 4
Issue : 11 Sep. 2014
For detailed report and all company analysis from previous Beacons together, please visit
our blog:
http://simconblog.wordpress.com
Financials
The financial highlights from Balance sheet for FY 13-14 are as
given below:
The Return on Net Worth (RONW) and Return on Capi-
tal Employed (ROCE) stood at 18.8% and 28.1%, respec-
tively as compared to 18.4 and 27.1 the previous year.
The Price-Earnings (PE) Ratio and Earning per Share
(EPS) was 29.2 and Rs. 9.30 respectively in FY 2013-14.
The Liquidity ratio increased from 3.3 in FY 2013 to
3.5 in FY 2014.
Competitor Analysis
The breakup of Entertainment industry is shown below:
The table below shows the media companies finance for the
year that ended March 2013.
New Developments
1. Ad cap case – The final decision regarding 12 minute ad
cap case will be taken by the Delhi High Court on 20th
November, 2014. But impact on Zee is unlikely as it
already adheres to the 12 minute per hour ad cap.
2. New channels – Zee launched 5 new channels in the FY
13-14. These channels were – &Pictures (Hindi movie
channel), Zee Anmol, Zindagi (syndicated content from
Pakistan), Zee Bioskop (Indonesia’s first Bollywood
channel) & Zee Nung (Bollywood Channel in Thai)
3. Disbanding of Media Pro – Media Pro, a JV between Zee
Turner Ltd and Star Media, came to an end in April 2014
after TRAI disallowed aggregators to bundle channels of
more than one broadcaster. The disbanding of Media Pro
is likely to put pressure on subscription revenue growth
in the short term.
4. Plan of global expansion – ZEEL is planning to increase
its overseas presence by expanding its operations to
countries in Middle East, South East Asia and Africa.
5. Collaboration with entertainment industry to re-build
Kashmir – Zee Entertainment, Event and Entertainment
Management Association (EEMA) and the Film & Tele-
vision Producers Guild have joined hands to raise a fund
raiser campaign to raise funds and awareness for the
flood stricken Kashmir.
References:
NDTV Profit
Money Control
Zee Television Financials
Zee Entertainment Company Overview
COMPANY ANALYSIS:
Zee Entertainment Enterprises Ltd
Company Revenue
(Rs Cr)
Net
Profit
(Rs Cr)
Net Worth
(Rs Cr)
Star India 4,075.6 349.3 2,929.1
Zee Entertain-
ment
2,684.9 640.5 3,352.8
Viacom 18 1,579.0 -40.6 790.4
Multi Screen
Media
966.1 102.9 1,447.1
Discovery
Comm India
159.6 24.3 130.8
Volume: 2 BEACON : Page 5
Issue : 11 Sep. 2014
Sydenham Institute of Management Studies, Research and Entrepreneurship Education organized SIMERATIONS’14 – its flagship
inter college annual festival. The 20th edition of SIMERATIONS, a management-cultural-sport-literary festival, was the zenith for
India’s youth from prominent colleges to showcase their acumen in a variety of fields and enhance their versatility. During this festi-
val on 21st September 2014, SIMCON - SIMSREE Consulting Club - in association with ‘Benchmark Six Sigma’ organized ‘CON-
VERGENCE’- an Inter B school case study competition.
Promotion of the event:
Convergence was promoted on several social sites like Facebook, Blogs, Linkedin. Also the updates of competition were posted on
dare2compete.com; a very popular online portal for B-School students to be updated about competitions and other events.
The search for the best minds, who could think like a consultant, spanned across three challenging rounds. We received around 300
entries from across B-schools like IIMs, XLRI, SPJIMR, NMIMS, NITIE, JBIMS, TISS and many more. The first round was an
online quiz of 20 questions for 30 minutes and 30 teams were shortlisted for the next round. In round 2, a case study from the ship-
ping industry was given to the teams. Based on the presentations we received from these teams, we got them evaluated and came up
with the top six teams for the final round.
Our judging panel:
Mr. Shripad Ranade is a Senior Principal at TATA Strategic Management Group; where he looks after
the strategy and operation consulting in automotive, engineering and metal sectors. He has been helping
TSMG’s clients through high quality strategy formulations as well as performance improvement pro-
grams. He had been a part of the Aditya Birla Group of Companies and Alcan India before joining the
TATA Strategic Management Group.
Mr. Saurabh Kumar Sahu is working as a Senior Principal in Accenture management consulting. He has
ten years of Management Consulting Experience and is engaged in strategy assignments in growth strat-
egy, supply chain management, procurement transformation and sales & marketing effectiveness. He has
handled projects across the retail, consumer goods, pharmaceutical and automotive industries in India, UK
and US.
Mr. Dhananjay Bapat is Director of Marketing at Videojet technologies. He has over 16 years of experience
in sales & marketing. He has played a key role in driving profitable revenue growth through sales, market-
ing and product management. He is also responsible for developing strategies for high growth based on
market intelligence. Previously, he has worked with companies like Atlas Copco, Saint Gobain Abrasives
and Godrej.
Ms. Sangeeta Pandit is a Chartered Accountant and has been a member of Bombay Stock Exchange. She
is currently on the board of directors of ZEE Learn Ltd. She is a HOD of Finance at SIMSREE.
On-Campus Event:
For the final round, finalist teams were called for on-campus presentations of the case study. Finalist teams were from TISS, NITIE,
IMT Ghaziabad, SIMS and SIMSREE. A brief description of case study was shared before starting with the presentations for the
benefit of audience. The teams were asked not to mention their college names in their presentation, for anonymity. After individual
CONVERGENCE’14
IMT Ghaziabad, SIMS and SIMSREE. A brief description of case study was shared before starting with the presentations for the
benefit of audience. The teams were asked not to mention their college names in their presentation, for anonymity. After individual
presentations, the Q&A sessions were very interesting as some of the questions asked by the judges flummoxed the teams; apart
from the other ones which were handled by them very well. Judges then shared their insights on the case and the consulting world
while we consolidated the results.
Team ‘Invictus’, comprising of Ramya Lakshminarayanan and Vikram Singh Thakur from SIMSREE, emerged as winners and were
awarded prizes worth INR 15000.
Team ‘TopGun’ comprising of Mihir Haryaal and Satyanarayan Sanwal from SIMS emerged runners-up and were awarded prizes
worth INR 10000.
Team ‘Invictus’ Team ‘TopGun’
We would like to thank our sponsor Benchmark Six Sigma, our judges for taking time out from their schedule on a Sunday, the par-
ticipants, audience and the Simerations’14 team for helping us make Con-vergence’14 a grand success.
Core Competency A Core competency is a deep proficiency that permits a corporation to deliver distinctive price to consumers. It displays an organiza-
tion’s cumulative learning, notably of how to coordinate numerous production skills and integrate multiple technologies. Such a
Core ability creates sustainable competitive advantage for a corporation and helps it branch into a large form of connected markets.
Core Competencies additionally contribute considerably to the advantages a company’s product offer consumers. Some critical indi-
cator for a Core Competency? It’s rigid for competitors to copy or procure. Understanding Core Competencies permits corporations
to take a position within the strengths that differentiate them and set ways that unify their entire organization.
How does it work?
An organization should take the below mentioned steps to establish its Core Competencies:
Segregate its key skills and sharpen them into organization wide strengths
Analyse itself with different firms with an equivalent skills to confirm that it's developing distinctive capabilities
Develop an understanding of what capabilities its consumers really value, and invest consequently to develop and sustain valued
strengths
Build an organizational game plan that sets target for competence building
Pursue alliances, acquisitions and licensing arrangements which will additional build the organization’s strengths in its crux
areas
Encourage involvement and communication in core capability development across the organization
Preserve core strengths at the same time as management expands and redefines the business
Reconstruct or deprive non-core capabilities to release resources that may be used to deepen core capabilities
Why do companies use it?
Organisation use core competencies for the following reasons:
Design competitive positions and techniques that take advantage of company strengths
Consolidate the corporate across business units and functional units, and improve the transfer of information and skills among
them
Help workers perceive management's priorities
Incorporate the use of technology in carrying out business processes
Decide where to assign resources
Make outsourcing, divestment and partnering selections
Widen the domain within which the corporate innovates, and spawn new products and services
Initiate new markets and expeditiously enter emerging markets
Enhance image and build client loyalty
Volume: 2 BEACON : Page 6
Issue : 11 Sep. 2014
CONCEPT OF THE MONTH
QUIZ
1. In which country has DHL launched its first commercial delivery service
“parcelcopter”?
2. Which company has recently started India’s first bit coin exchange
“BTCXIndia”?
3. Which Nobel laureate founded RugMark, an international scheme that tags all carpets made in factories certified as child
labour-free?
4. Pharmaceutical company X on 6th April 2014 announced to buy Pharmaceutical company Y with the deal pegged at $4 bil-
lion which would make company X India’s largest drug maker by sales. Identify company X and Y.
5. Which semiconductor chip maker was formerly known as “NM Electronics”?
The FedEx express once had just $5000 to its name. The founder decided to gam-
ble in Vegas with that money and made $32000 which was enough to continue its
operations for a little longer. Now, in 2014, the company is worth more than $2 bil-
lion.
The first Apple computers logo featured Sir Isaac
Newton reading a book under an apple tree with a single
glowing apple suspended in the tree above his head.
In 1972, Bill Gates started his first company by
name “Traf-O-Data”. The company was formed with
the objective of processing raw data from roadway traf-
fic counters to creating reports for engineers.
Volume: 2 BEACON : Page 7
Issue : 11 Sep. 2014
Contributions invited:
To make this feature a successful effort, we seek continued involvement and contribution from our readers,
that is YOU. We invite articles and trivia on themes related to consulting. Be it industry news, consulting
trends, a joke, a cartoon or feedback, we are eager to hear from you. So go ahead, do your research, pen down
your thoughts and mail your entries to [email protected].
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SIMCON –SIMSREE CONSULTING CLUB Mail To : [email protected]
Winner:-
Sharved Mahajan
SIMSREE
ANSWERS : AUGUST ISSUE
Answer To: [email protected] with Subject= SIMCON_Quiz_September_2014
Winner will be recognized.
All Correct Answers will be published in next month’s Edition.
1. Lakme
2. Brylcreem & Godrej Consumer Products Ltd
3. Vistara Airlines (A JV between TATA and SIA)
4. X: General Electric, Y: Honeywell
5. Erstwhile Satyam Computers (now part of Tech Mahindra)