FICCI-FRAMES 2007

Bollywood needs to tap market resources

Vinay Ranjan / March 20

All the major industries especially information technology, auto, pharma, oil and gas, metal and banking sector have expanded their operations by tapping the resources from the equity market. They have come out with Initial Public Offerings (IPOs) to raise money from the market to enhance their financial base. And, the investors, in turn, too got benefited by investing in these equities.

However, the entertainment industry is one among others which is yet to take the advantage of the securities market fully. According to the FICCI-PricewaterhouseCooper's (PWC) annual report for 2007, the Indian entertainment and media industry is expected to grow from its present size of Rs 43,700 crore to Rs 1,00,000 crore in 2011, at 18% compound annual growth rate (CAGR).

The media industry has been able to tap the market resources to a great ext ent. Several of hm elisted at the bourses. But, on the contrary, there are only handful of entertainment companies that are listed on the stocks exchanges.

It is interesting to note than the two leading indices of the country consists only one entertainment company as their constituent of the Index. The Bombay Stock Exchange (BSE)'s 30-stock Sensex does not have a single entertainment company in the constituents of its Index.

The National Stock Exchange (NSE) S&P CNX Nifty includes only a single entertainment company. Out of the 50-stock of the Nifty, Zee Entertainment is the only company that is one among the constituents of the Nifty Index.

Apart from Zee entertainment, there are few entertainment companies, mostly mega players, which are listed at BSE and NSE. Subhash Ghai's Mukta Arts, Anuradha Prasad's Bagfilms, Ekta Kapoor's venture Balajitelefilms and South based Maran family's Sun TV among other few entertainment companies are listed on the stock exchanges.

In this disheartening backdrop of the entertainment industry's lacunae of not being able to tap resources from the equity market, the seventh three-day `FICCI-FRAMES 2007: Global convention on the business of entertainment' would be held between March 26-28 in Mumbai.

The organisers of the convention have kept a session to discuss the performance of the entertainment industry in tapping the resources from the market. And, how the investors and the financial community view this sector?

They have invited Akhil Gupta, managing director and chairman, Blackstone Group, the stock market analyst Rakesh Jhunjhunwala, Sandeep Pahwa, Global sector head for media and entertainment, HSBC Securities, UK and Mukesh Jain, associate director, transaction, advisory services, Ernst & Young to enlighten the entertainment industry about the market dynamics and opportunities to tap new resources and break the traditional funding channels.

The need of the hour for both the Bollywood and the market players, participating in the FICCI-FRAMES convention, is to identify the challenges before the entertainment industry of not being able to mobilize the resources from the market, the way other sectors of the industry do.

One of the major challenges is how the entertainment industry can work on the lines of the corporate world. They need to discuss how to introduce corporate governance in the entertainment industry to bring transparency in the functioning of these entities so that they can gain the investors confidence to attract his or her money.

There is a opinion among the investors of the equities that the entertainment companies need to streamline the profit and loss account on their books. And, the investors should be duly rewarded when a film or Tele-serial makes good profits.

The need of hour for the market players is to educate the small and medium enterprises of the Bollywood also about the potential of the equity market. These companies can garner financial muscles from the market so that they can provide opportunities to a large number of aspiring talented actors, writers, directors and others who are struggling to establish themselves.

This will not only help the Bollywood to integrate themselves from the corporate world, but it will also enhance the stakeholders and shareholders value.

Related Link: FICCI-FRAMES 2007