Sri Adhikari Brothers, one of the major content providers for the cable television industry in India, has a history of successful programmes on Doordarshan. Now, the media company is planning to launch a Hindi language channel in the first quarter of this financial year. The company has increased its programming capacity to cater to the needs of the new channel.

The new channel will reduce the dependence of the company on one channel, ie., DD. The entertainment industry is already crowded in India and a shakeout is expected. In such a scenario, companies with a proven record of good content creation like Sri Adhikari Brothers will have an edge over others, the SBI Caps research report said.

The company also plans to improve its product mix by venturing into telefilms and music videos.

The plan is to produce five to six telefilms per year, under strict cost control. The company realising the value of its content has started recycling it. Because of the low cost of recycling, the company's operating margins are expected to improve.

The company has also been selling Hindi entertainment programmes to foreign airlines and is planning to tap the demand for ethnic entertainment from NRIs in UK and US.

The uplinking of the Hindi channel will be done from Mauritius through a fully owned subsidiary. In order to raise resources for the new channel, the company has made a preferential allotment to financial institutions and mutual funds. The project cost of the new channel is estimated to be around Rs 90 crore and the channel is expected to be break-even by fiscal 2004.

However, the company will be facing competition from established players like Zee, Sony, DD and Starplus who account for 85 per cent of the TV ad spend, the report said.

In order to provide programming for the new channel, the company plans to increase its programming capacity of around 21 hrs/week to 28 hrs/week by the end of this year. Besides, it has commissioned private producers to produce software for the new channel under the guidance of Sri Adhikari Brothers. The company plans to capitalise on its brand image in non-CS homes. This segment would be the possible audience for the Hindi channel. The channel would initially be free to air and will move later on to a pay mode.

The company is also venturing into animation software. For this purpose, the company has entered into a joint venture with Silicon Valley based IT solution company, ETIAM Emedia Inc for developing animation software. Sri Adhikari Brothers will hold 26 per cent in the joint venture company, ETIAM Emedia Ltd.

The joint venture company will set up a state-of-the art studio in India to undertake development of animation graphics, animated cartoons and animated feature films. The studio will also provide 2D and 3D technology and digital imaging for content and film production. This tieup provides Sri Adhikari Brothers with a foothold in one more area of media entertainment and would have some synergies with the channel business.

SBI Caps has estimated a topline growth of 25 per cent, which will give a revenue of Rs 3.8 crore for fiscal 2000 against Rs 3 crore for fiscal 1999. The profitability estimate is based on two factors. First, average programming capacity is expected to rise from 16 hrs/week in fiscal 1999 to 20 hrs/week in fiscal 2000 and 27 hrs/week in fiscal 2001.

Second, the company's revenue stream from recycling of its existing library content is expected to go up. This would also improve its operating margins.

(Based on SBI Caps research report)