Mr. Sunil Lulla
Message from Executive Vice Chairman & Managing Director
“At Eros, we are driven by passion. Not just for entertaining people, but to make wonderful films and bring the best content to viewers in every corner of the world.”
Dear Fellow Owners,
The confluence of the millennial audience and rapidly advancing technology juggernaut is creating a tectonic shift in the world of entertainment. The screens are getting smaller, viewing individualized, critique democratized and content diversified. The viewing hours and viewer base continue to rise. Entertainment is increasingly becoming omnipresent and all encompassing.
While theatre and television screens still rule the roost in delivering filmed entertainment, millennial consumers are geared up to swamp the scene now. Typical millennials – those born between 1981 and 1996 (aged 22 to 37 years in 2018) and post-millenials – are overly digital, prefer to buy almost everything – from clothes to food – online, are pretty cool using shared cars and don’t fret about owning a television.
Content as the best bet for healthy RoI, digital viewing as the new normal and internationalization of audience beyond diaspora for Indian entertainment are the three undercurrents that we, at Eros, sensed and seized well in time. All our energies and resources are being devoted in accelerating the pace and scale of our operations in line with these three factors.
“The most significant development of FY2018 came in the form of an industry- defining partnership that we inked with Reliance Industries Limited in the fourth quarter of FY2018. In this strategic content creation and acquisition partnership, Eros and Reliance would invest a whopping Rs.10 billion to produce and consolidate film and digital across India.”
The fiscal year, 2017-18 (FY2018), was a year of rebooting Eros on its path of enhanced profitability and sustained growth. It proved to be a landmark year that witnessed our EBIT and PAT margin expanding by 10.3% and 4.9%, respectively, while we contained our new releases to a modest 24 from 44 in the previous year. Restraint on higher budget films was a strategic decision taken due to our stringent green lighting and budgeting processes and with an objective to have low dependence on box office collections.We diverted all our focus to high RoI projects, with potentially low-risk profile. With the focus on compelling stories produced within prudent budgets across languages, de-risking investments with sizeable pre-sales and optimizing catalogue and ancillary revenues, the enhanced profitability of FY2018 bore testament to the efficacy of our business strategy and model.
Honing a pool of in-house creative talent and strategically partnering with film production entities with a proven content stickiness in India and elsewhere are two essential elements of our content-driven approach. An Indo-Turkish co-production deal with Pana Films of Turkey and another co-production deal with Drishyam Films during the year and the most recent partnership with Baahubali famed iconic writer, V Vijayendra Prasad, shall prove to be decisive enablers of our content prowess in the coming years. The selection of Newton, our political comedy-drama film, as India’s official entry to Oscars 2018 and screening of our Tamil drama, Oru Kidayin Karunai Manu, at the 17th edition of ‘The New York Indian Film Festival’ as the official choice are prestigious validations that inspire us on the path of content centricity.
We released 24 films in FY2018, mostly medium and low- budget ones across genres and languages. Revenues during the year were driven by the release of sports-based dramas like Mukkabaaz, Raid (Overseas), Ribbon, Rukh, Kadvi Hawa; super hit comedy Shubh Mangal Savdhan, Newton, Munna Michael, Sniff, Sarkar 3, Aamhi Doghi (Marathi), Rong Beronger Kori (Bengali), Oru Kidayin Karunai Manu (Tamil), Tujha Tu Majha Mi (Marathi), Aake (Kannada), Posto (Bengali), Projapati Biskut (Bengali), Baap Janma (Marathi) and Boss 2 (Bengali). Our mix of movies from different genres has further strengthened our position as a Company that offers versatility and uniqueness in content.
Serving engaging and engrossing content is our hallmark. Consolidating the fragmented Indian filmed entertainment market is the fuel that drives this passion. With the changing market dynamics of the entertainment industry – with OTT markets driving the entertainment consumption – we are at vantage to leverage our capabilities of quality content and world-class technology-driven distribution. We have also broken an industry stereotype by successfully premiering India’s first digital release, Meri Nimmo on Eros Now, our parent company’s OTT platform. As we make new strides, we are confident that our film and digital content slate will contribute further to accelerate Eros Now’s paid subscription growth, which in this year itself grew by 276%.
The most significant development of FY2018 came in the form of an industry defining partnership that we inked with Reliance Industries Limited in the fourth quarter of FY2018. In this strategic content creation and acquisition partnership, Eros and Reliance would invest a whopping ` 10 billion to produce and consolidate film and digital across India. The partnership adds significant strength to our existing content slate while mitigating investment risks – as we benefit by leveraging both our distribution networks. Expressing confidence in our capabilities and business prospects, Reliance Industries acquired a 5% equity stake in our parent company, Eros International Plc.
A shining star of our Board and our then Chairman, Mr. Naresh Chandra, left for his heavenly abode on July 9, 2017. Another esteemed colleague and insightful board member, Ms. Jyoti Deshpande resigned from the role of being an executive director to undertake a new role with Reliance Industries at the beginning of FY2019. She, however, continues to be steering Eros Group in two capacities; first as a non-executive Director and second as a key decision maker in our content JV with Reliance Industries. The zeal, creativity, ardour and conviction of our employees form the bedrock of our current and future success. A big thanks to you – our valued shareholders, for your unequivocal support and trust in Eros. I also express my deep gratitude to our Board members for their relentless guidance and torch-bearing efforts.
We look forward to your support in weaving magic on the screen and good wishes to continue our entertainment journey…
Sunil Arjan Lulla
Executive Vice Chairman & Managing Director
(from Annual Report 2017-18)