5 Paisa - Features of indian stock market

Saregama India has announced its foray into the fast growing home video segment. The company has signed up with Warner Home Video to market and distribute its formidable and finest collection of classic films, as well as its latest super hits and cartoons on VCDs and the fast emerging DVD format. The first set of ten Warner products will be available within this month. Saregama will distribute the products through large retail outlets along with tying up with non-traditional outlets such as hardware stores, bookstores and children stores.

Saregama India, India’s leading music company, has an enviable record of big blockbusters. The new venture is a natural augmentation of its audio business and one in which it can leverage on its existing wide distribution and sales network. The RPG group has increased its focus on retail business in the last few years. It has entered into music retailing through its chain of stores Music World. Saregama has a 43% stake in Music World Entertainment Ltd. Saregama’s expertise in exploiting catalogue developed over the years will pave the way for innovative ways of marketing home videos.

This is also likely to be a precursor to Saregama entering, at a later stage, the Indian home video market in Hindi and regional languages. This market has initially been dominated by new names in the industry who exploited the potential of satellite & cable rights, home video viewing rights etc much before the film industry realized the true potential and value of their intellectual property. Over the last few years, the industry has recognized the revenue potential of these alternate streams and may look to tie up with reputed players like Saregama. Moreover Saregama’s existing relationships with reputed names in the industry would make it easier for them to acquire various rights as a package deal alongwith music rights.

All in all the company’s new move would have positive fallout. At Rs126, the stock is trading at 23.3xFY01 and 0.55xBV. With no major music releases in the first nine months of the current fiscal, the company has reported losses of Rs104m in the first nine months of the current fiscal. With prices of CDs coming down dramatically during the current fiscal (Hindi film music CDs are now available for Rs99 as against the earlier price range of Rs190-250 per CD), the near term outlook is not inspiring.

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