Reliance MediaWorks announces strategic restructuring

Reports net loss in Q2 despite 21% increase in topline; exhibitions and film & media services divisions to be housed in separate subsidiaries

BestMediaInfo Bureau | Delhi | November 11, 2011

Reliance MediaWorks Ltd., India's fastest growing film and entertainment services company, has reported a 21 per cent increase in total income at Rs 236 crore ($47.5 million) for the second quarter of FY 2011-12 compared to trailing quarter. There was a sharp recovery at the operating profit level with cash breakeven in Q2 against a cash operating loss of Rs 19 crore ($3.8 million) in the trailing quarter. As a result of higher interest and depreciation charges, the company has recorded a net loss of Rs 123.7 ($25 million) crore for the quarter.

The company has received board approval to raise up to Rs 500 crore through a rights offer to shareholders and the process is underway. The funds raised through the rights issue would be utilised, inter alia, for substantially reducing the debt incurred for creating the asset base

The board has also decided to explore various options for restructuring the business, including creation of subsidiaries for exhibitions and film and media services divisions. The film and media services division is expected to be a dominant contributor to revenues with over 60 per cent in FY13.

The company has witnessed transformational growth and made strategic investments since 2005. The worldwide BIG Cinemas screen count has gone up to more than 530 with presence in India, the USA, Malaysia, Nepal and the Netherlands.

It has set up India's largest Hollywood benchmarked studios which will comprise eight sound stages spread across 200,000 sq. ft within Film City in Mumbai. The company's television production division, BIG Synergy, is regarded as one of the top players in the television programming industry. It also has a 1,200-member media BPO which offers content processing, image enhancement and restoration services, visual effects and 2D to 3D conversion services with operations in the US, the UK and Mumbai.

Commenting on the development, Anil Arjun, CEO of Reliance MediaWorks, said, “The company has witnessed phenomenal growth in the scale of its operations in last five years. This strategic structuring initiative will enable us to effectively pursue the best business opportunities available to each operating unit independently, and also enable us to remain well-positioned and appropriately structured for sustainable, long-term growth.”

Reliance MediaWorks has partnered with Los Angeles-based digital production studio Digital Domain Productions to set up visual effects and 3D stereo production services studios in Mumbai and London that will cater to motion pictures, television, commercial, and stereo 3D conversion.

It has extended its 3D conversion services to Indian filmmakers and advertisers. Shah Rukh Khan starrer 'Don 2' is the first Indian film to be converted into 3D by Reliance MediaWorks and the first 3D advertisement project was the 'It's Fast. Are You?' campaign of Reliance Netconnect.

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