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Balaji Telefilms Limited Annual Report 2004-05 Balaji Telefilms Limited. A Decade of Balaji www.balajitelefilms.com Forward-looking statement In this Annual Report we have disclosed forward- looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the management's plans and assumptions. We have tried wherever possible to identify such statements by using words such as 'anticipate,' 'estimate,' 'expects,' 'projects' 'intends,' 'plans,' 'believes,' and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. A PRODUCT [email protected] Brand identity 2 What Balaji achieved in 2004-05 3 Corporate information 4 Chairman’s overview 6 Creative Director speaks 14 MD & CEO looks back and ahead 24 Tusshar Kapoor on Balaji’s extension 32 Drivers of Balaji’s growth 34 Balaji’s programmes 2004-05 52 Management’s discussion and analysis 54 Ratios 60 Risk management 62 Directors’report 66 Corporate Governance 70 Certificate on Corporate Governance 79 Auditors’report 81 Annexure to Auditors' report in 2004-05 82 contents. Balance sheet 84 Profit & loss account 85 Cash flow statement 86 Schedules 87 1 3 Corporate Information Directors Jeetendra Kapoor Dhruv Kaji Jeetendra Kapoor Balaji Telefilms' Chairman since 1st February, 2000. Balaji Telefilms' Director since 2nd September 2003. Shobha Kapoor Commenced his film career as a junior artiste with the legendary A chartered accountant with an experience of more than 25 years Ekta Kapoor filmmaker V Shantaram Financial advisor and management consultant, with major expertise Tusshar Kapoor Has acted in more than 200 films and received several prestigious in strategic planning Akshay Chudasama awards Was associated with Raymond Ltd as Finance Director and Dhruv Kaji The Company leverages his respected industry standing and rich Pinesworth Holding Ltd (Singapore) as the Executive Director Pradeep Kumar Sarda network of relationships with various television channels, artistes, Possesses an experience in evaluating and guiding business projects Jeetendra Kapoor Shobha Kapoor Ekta Kapoor John Yu Leung Lau Michelle Lee Guthrie directors and writers *(P, N) in India and abroad *(I, N) Chairman of the Board's Shareholders' Committee and member of Chairman of the Audit Committee and member of the Board's the Board's Audit and Remuneration Committee(s) Remuneration Committee Shobha Kapoor Pradeep Kumar Sarda Balaji Telefilms' Director since 10th November, 1994. Balaji Telefilms' Director since 17th May, 2004. Company Secretary Reappointed as the Managing Director and CEO effective 10th Chairman of the Sarda Group of Industries with a vast experience in Alpa Shah November 2004 the paper, engineering files, construction and real estate industries Chairman of the Governing Board of Ecole Mondiale World Akshay Chudasama Dhruv Kaji Pradeep Kumar Sarda Responsible for the Company's administration and production Statutory Auditors Among the few Indian television producers with a successful track School, Mumbai *(I, N) Deloitte, Haskins & Sells record in a young industry Instrumental in shaping the Company's Member of the Board's Audit Committee Snehal & Associates diversification strategy *(P, E) Tusshar Kapoor Member of the Board's Shareholders' Committee Balaji Telefilms' Director since 23rd January 2004 Term ends on: 9th November 2009 Internal Auditors A management graduate from the University of Michigan PSK & Associates An established actor, he brings relevant experience from the film Ekta Kapoor industry *(P, E) Balaji Telefilms' Director since 10th November, 1994. Term ends on: 31st July 2007 Reappointed the Company's Creative Director effective 10th Tusshar Kapoor John Yu Leung Lau Michelle Lee Guthrie November 2004 Michelle Lee Guthrie Heads the Company's creative division Balaji Telefilms' Director since 24th January 2005 Commenced her career as a Producer and Creative Director at 19 Registered Office Chief Executive Officer of Star since November 2003 Her contribution comprises entertainment landmarks in India Balaji Telefilms Limited Previously, a lawyer at Allen, Allen and Hemsley in Sydney and C-13, Balaji House, Dalia Industrial Estate, Actively involved in concept building, script design and creative Singapore, where she focused on the media and technology sector, Opposite Laxmi Industries, conversion at Balaji before she joined News Corporation in 1994 New Link Road, Andheri (West), Selected one of Asia's most powerful communicators by the Asia She has ten years of experience in the pay television industry Mumbai - 400 053 Week magazine *(P, E) Besides the Indian companies, she is also on the Board of 25 Tel: +91 22 2673 2275 Member of the Board's Shareholders' Committee companies incorporated outside India, like Phoenix Satellite Fax: +91 22 2673 2308 Term ends on: 9th November 2009 Television and China Network Systems *(I, N) Website: www.balajitelefilms.com Akshay Chudasama John Yu Leung Lau Balaji Telefilms' Director since 17th July, 2000. Balaji Telefilms' Director since 24th January, 2005 Possesses rich expertise in the creation of joint ventures, commercial Oversees all financial matters at Star, including corporate strategy, / contractual transaction structuring and documentation management and financial reporting, internal audit, treasury and tax Highly qualified in corporate laws, mergers and acquisitions, Also heads the business development division, identifying and Regional Offices consumer protections, insurance sector privatisation, dispute developing growth opportunities He is a member of the Board of Chennai: Plot no. 38, K K Salai resolution as well as internet and cyber laws *(I, N) Directors of 137 companies incorporated outside India, like ESPN, Kavery Rangam Nagar, Saligramam, Chennai - 600 093 Chairman of the Remuneration Committee and member of the Star Sports, Phoenix Satellite Television and China Network Bangalore: Plot no. 2058 Board's Audit Committee Systems *(I, N) 19th Main Road, 2nd Block, Rajaji Nagar, Bangalore - 560 010 *P= Promoter; E= Executive; N= Non-Executive; I= Independent Trivandrum: Ishara, T.C. 36/589 Perumthanni, Vallakkadavu, P.O. 5 Trivandrum - 695 008 Chairman's overview In life as in show business, the big question is: what next? geographic locations. This was reflected in the Company's new-age programmes like Kosmiic Chat on Zoom TV From the Chairman's position, the biggest challenge facing Balaji Telefilms today is a sustainable growth in income and profits. Over the coming years, content creators will need to enter into alliances with broadcasting companies, assuring one of At the Company, we are convinced that this can indeed be a content and the other of income. As a forward-looking reality for the following reasons: organisation, Balaji entered into a strategic alliance with At Balaji, we see entertainment as a critical release for lives Asian Broadcasting FZ LLC (ABF) in 2004-05 that are becoming increasingly stressful Over the coming years, content creators will need to tighten We see television as a media gaining in importance due to a their costs and become competitive. As a resource-focused growing preference for at-home entertainment organisation, Balaji invested in five new studios and cutting- We see a gradual decline in channel loyalties resulting in edge infrastructure, not just with a view to service its captive consumers willing to shift channels to arrive at their favourite growing needs but also explore probable BPO opportunities programmes in the sector We see a sustained growth in channel choice, as the economy grows, concurrent with the growing number of Outlook products that need wider and reasonably priced advertising What is heartening for Balaji is that India's entertainment exposure industry continues to be bullish and growing. Dedication, We see a sharp growth in television audiences as the cable On an average, a channel requires eight hours of original revolution accelerates and moves into stronger hands and as programming a day. The existence of around 100 channels determination television ownership becomes progressively cheaper translates into 800 hours of programming every single day, almost half of Balaji's entire production during the year under and discipline Strengthening long-term growth review. As a result, at Balaji, we continue to remain optimistic in a It would be relevant to indicate why, despite this evident Jeetendra Kapoor, Chairman, growing business and expect that a combination of our de-risked bullishness, we reported a decline in our profits in 2004-05: Balaji Telefilms, reviews 2004-05 and aggressive approach will translate into enhanced value for all Balaji's mature programmes of 2003-04 were replaced by low those who own shares in our Company. margin alternatives. As in the previous years,
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