Shemaroo Entertainment Limited Investor Presentation – May 2015 Index Executive Summary Company Overview Business Overview Financial & Strategic Overview Executive Summary Overview • Shemaroo Entertainment Ltd is a well established and reputed media content house in India, with activities in Content Acquisition, Value Addition to Content and Content Distribution. • The company was co-founded by Mr. Budhichand Maroo as a book circulating library in 1962, and moved on to setting up one of India’s first movie video cassette rental business in 1979. • Over the years Shemaroo has become one of the largest independent content aggregators in India, distributing its content through different existing and emerging media platforms like Broadcasting channels, new media platforms like mobiles, internet etc, Home Video, In flight entertainment etc. • The company is listed on both NSE and BSE and has a current market cap of around INR 6.5 Bn. Business • Shemaroo acquires content with either Perpetual rights (complete ownership) or Aggregated rights (limited ownership) • The company distributes and monetizes this content across different media platforms. • The current content library stands at around 3,000 titles. Notable Content Library • Perpetual Titles (Hindi) – Amar Akbar Anthony, Anari, Dil, Disco Dancer, Ishiqiya, Khuda Gawah, Namak Halal • Aggregated Titles (Hindi) - Mughal-E-Azam, Jab We Met, Don, Anand, Sarfarosh, Shahenshah, The Dirty Picture Financial Performance • Total Income in FY15 reported at INR 3,247 Mn; 3 year CAGR of 20% • EBITDA in FY15 reported at INR 881 Mn; 3 year CAGR of 20% • Net Profit in FY15 reported at INR 409 Mn; 3 year CAGR of 26% 3 Company Overview About Shemaroo • Founded in 1962 as a book circulating library, today Total Revenue (INR Mn) Shemaroo is an established integrated media content house 27.6% 27.2% 27.1% 30% in India with activities across content acquisition, value 24.8% 3,000 3,247 addition to content and content distribution. 21.8% 2,654 2,161 20% 2,250 1,871 • The company is headquartered out of Mumbai and 1,602 employees over 300 people. 1,500 10% • The Company is one of the largest independent content 750 aggregators with a library of around 3,000 titles, which it distributes across various existing and emerging media - 0% FY11 FY12 FY13 FY14 FY15 platforms. Total Revenue EBITDA Margin • Identifying that movies have the longest shelf life for television and other media content, Shemaroo pioneered FY15 Revenue Distribution (INR Mn) the movie library syndication business by acquiring movie New media, titles from producers and distributing it to broadcasters and 373 other media platforms. • Shemaroo has grown multifold over the years by developing Traditional excellent relationships with producers and also the Media, broadcasting networks, thereby becoming the largest 2,861 organized player in a historically fragmented industry. 5 Milestones 2011 onwards 2006 - 2009 2011- Achieved a total of 600 perpetual right titles and converted to 2000 - 2005 2008 - Commenced Public Limited content aggregation and 2012 – Completed 50 distribution for MVAS years platforms 1962-2000 2001- Digital Post 2014 – Got listed on production started 2009 - Commenced BSE and NSE distributing content ove 1962 - Started book 2003 – Entered Overseas New Media platforms like circulating library in markets for distribution YouTube.com Mumbai 2005 – Commenced 1987 - Home Video acquiring of perpetual Distribution started rights 1993 - Broadcast Syndication started 6 Experienced Leadership Buddhichand Maroo, Chairman Co-founder of the group and associated with the Group since 1962, over 50 years of business experience, over 30 years in media & entertainment industry Raman Maroo, Promoter, MD Co-founder of the Group and associated with the Group since 1974 . Over 40 years of business experience, Over 30 years in media & entertainment industry and Instrumental in expansion into television rights syndication and transformation of Shemaroo into a content house Atul Maru Promoter, Joint MD Over 30 years of experience in the media and entertainment industry, Actively involved in the operations of the Company and has spearheaded various initiatives including the home video division of the Company Hiren Gada, Whole Time Director & Chief Financial Officer Over 18 years of work experience, Over 10 years in media & entertainment Industry, Handles the Strategy and Finance functions in the Company Regular speaker at industry forums; quoted in media on issues pertaining to the industry Jai Maroo , Non Executive Director Experience - 4 years as a software engineer and Over 10 years in media & entertainment . Holds a masters degree in computer science and engineering from Pennsylvania State University, U.S.A, worked with Citrix Systems Inc., USA investor in several technology ventures. Guiding the Company on digital distribution activities mainly on mobile and internet 7 Independent Directors Gnanesh Gala, Independent Director Graduated with a B.Com degree from the University of Bombay in 1982. He is the Managing Director of Navneet Education Limited CA Reeta Bharat Shah, Independent Director She has over 27 years of experience in the field of education & administration in various capacities and is currently the HOD (accountancy) at SIES College of Commerce & Economics. She has written articles in various magazines/books & is a regular speaker, panel member & trainer at various conferences/seminars Vasanji Mamania , Independent Director Holds a diploma in mechanical engineering from M.S. University, Baroda. Over 52 years of experience in various industrial sectors including film processing, civil constructions, heavy engineering and non -ferrous metals and also Co-founder of Adlabs Shashidhar Sinha, Independent Director B.Tech from IIT Kanpur and post graduate from IIM Bangalore, India Drives Advertising Standards Council of India, AAAI’s Indian Broadcasting Federation joint body on industry practices, Audit Bureau of Circulation and the Joint Industry Body set up to monitor TV measurement CEO of Lodestar Um India Kirit Gala , Independent Director Mechanical Engineering from Mumbai in 1984, MBA from Mumbai in 1986 and doctoral research in marketing at Tennessee, U.S.A. in 1987 . Managing Director of Gala Precision Engineering Private Limited 8 Shemaroo's role in a movie lifecycle • Shemaroo typically participates in the second and subsequent cycles of film monetization • These subsequent cycles of film monetization have been typically growing due to various factors like increasing advertisement spends, digitization etc. • There is a lower risk in these cycles due to visibility of performance of movie during first cycle of launch Theatrical, • Shemaroo decides on the cost of the content after it is confident of Television and achieving the desired return on Investment at a portfolio level overseas release • Shemaroo then distributes this content over different platforms like generate ~90-95% Broadcasting channels, New Media platforms like YouTube.com, and of the revenues in others. the first cycle of launch, where Shemaroo is not typically present Revenue UTV Star Sony Shemaroo is present Movies Gold Max in the ancillary UTV Star Sony revenue streams like Movies Gold Max New Media and UTV Star Sony Home Video movie Movies Gold Max distribution, which contribute towards the remaining 5% to 10% of the revenues First Cycle Subsequent Cycles 9 Business Model Complete Ownership Limited Ownership In-House Creation Rights Rights Perpetual Rights – Aggregate Rights - Rights Complete ownership rights for limited by either period of distribution across all usage, platforms, geography geographies, platforms, and or a combination thereof perpetual periods • Hindi Films Content Library • Regional Content • Music • Special Interest Category • New Media Focused Content • Other Content Monetization Platforms New Media Traditional Media Broadcast Syndication Home Video Others • Mobile • Satellite • VCD • In - Flight • Internet • Terrestrial • DVD • Overseas • Other Platforms • Cable • Blue Ray • Etc. 10 Types of Rights & Library Content Library as of July 31, 2014: Type of Content Total Number of Total Number of Total Number of Perpetual Titles Aggregated Titles Titles Hindi films 355 1289 1644 Regional Titles 364 728 1092 Special Interest content 40 142 182 TOTAL 759 2159 2918 Perpetual Rights Aggregated Rights 11 Content Selection Criteria Shemaroo uses proprietary tools and considers various other factors for content valuation as shown below. The company purchases forward rights to movies and decides on the cost of the content after it is sure to achieve a desired return on investment at a portfolio level. Viewership rating Box Office Records Cast Awards Production House Track Genres Reviews Comparable Movie Record Valuation 12 Business Partners Shemaroo is one of the largest organized player in a historically fragmented Media Industry. The company has successfully created a niche business by creating long term trustworthy relationships with not only key movie producers, but also broadcasting channels and other media platforms. Shemaroo is the preferred partner of choice for both parties due to its industry expertise, knowledge and relationships. The company prides that most Bollywood services that require content would have at least some content provided from Shemaroo. Traditional Media New Media Producers Reliance UTV Movies Star Gold SONY Max Youtube Mukta Comm RK Films Arts Daily Airtel 9X Jalwa Mastiii TV Today Nadiadwala Motion Digital TV Grandson