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Prime Focus inks multiple contracts in India and abroad; bets big on OTT, animation

MUMBAI: Prime Focus Ltd (PFL), the integrated media service provider, has inked multiple contracts with leading media and entertainment companies in India and abroad during the July-September quarter.

PFL Group CFO Vikas Rathee informed that the company has signed new contracts with BCCI, IMG Reliance, Red Chillies, and Broadcaster Audience Research Council (BARC) in India. In Asia Pacific, the company has also got contracts from Multivision Media, Sony, and Lionsgate.

PFL’s technology arm Prime Focus Technologies has signed contracts with new and existing clients. On the international market side, the company has added clients like Take 5 Productions and a distribution house Nordisk, TERN International and AETN in US and European companies. It has also forged a channel partner relationship with Colortime in Los Angeles.

PFL’s brand services business has added customers like Big Bazaar, Xiaomi, TVS, Red Label, and Maybelline New York. It also produced three short films for the MAMI Festival for Tata Sky.

PFL executive chairman and Group CEO Namit Malhotra said that the Q2 FY18 result was the best performance delivered by the company for the second quarter.

The company had posted a net profit of Rs 21.9 crore during the fiscal second quarter compared to a net loss of Rs 39.5 crore in the corresponding quarter of the previous fiscal. EBITDA jumped 54% to Rs 142.1 crore as against Rs 92.4 crore. Consolidated revenue was up 18% to Rs 568.6 crore from Rs 483.7 crore.

“Globalisation of our execution base along with our cost optimization strategy to deliver higher quality work out of our most cost advantageous locations have helped to expand our EBITDA margin to approximately 25%,” Malhotra told analysts recently.

He also informed that the company has expanded and opened two brand new facilities, one in Chennai and the other in Montreal, Canada. He also stated that the company’s Mumbai facility has reached its peak.

Malhotra said that the additional capacity in Chennai will mean that the operating cost in India will also go down and the company will also get access to a wider talent pool.

The company’s order book stands at approximately $250 million with additions like Fantastic Beasts and Where to Find Them Part 2, Ant-Man and the Wasp, The New Mutants, and Black Panther.

Malhotra also said that the company’s TV division in UK gained strong traction as well on the back of exclusive content offered by OTT platforms like Netflix, Sky, and Amazon Prime Video. “We expect this to be a significant contributor to revenues and profitability growth in the future,” he noted.

“The outlook for all our businesses that is on the creative services side, the technology and the Indian market continues to look strong and as the holiday season kicks in we look forward to promising second half of this year being better than before,” Malhotra stated.

PFL founder and CEO Ramki Sankaranarayanan said that the company has not seen any impact on its business following the ‘Game of Thrones’ leak episode which saw three of its current employees getting arrested. PFL is the technology vendor of Star India’s video streaming service Hotstar, which has the rights to stream the show in the Indian market.

“At this time we do not see any effect, it is business as usual. In fact, we have added to some of the volumes that we traditionally do. So we have not seen an effect of that so far,” Sankaranarayanan said when queried about the impact of the leak on the company’s business.

He further noted that the requirement for media processing, media localisation, and media ERP technology side is witnessing a growth as over the top (OTT) players like Netflix and Amazon Prime Video are producing a large volume of content and releasing it globally in one go.

“What is different in this particular trend of increasing the number of hours of original programming by Netflix is that they instantly have to ensure for the content to be available in over 100 markets simultaneously. This means there is a concurrent demand that needs to play out for content to be instantly available for that many number of countries and this is actually a new trend because previously it was far more linear, staggered,” he noted.

On the listing plans for its global VFX and animation firm Prime Focus World, Rathee said that the company continues to evaluate options to unlock value.

Talking about the Capex requirement, Rathee said that the company has spent around Rs 80 crore in the first half of FY18 across the businesses which include hard Capex as well as IP creations. The company has given a guidance of Rs 160-175 crore Capex for the current fiscal.