MUMBAI: Eros International has forayed into the Tamil film industry, which is the second largest film segment in India after Hindi films. The AIM listed company has picked up a 51 per cent majority shareholding in Ayngaran, which has a dominant market share in the Tamil content and distribution industry.
Eros will provide an initial funding of $33 million to the new venture through internal and external sources in order to take over and grow the existing business as well as to produce, acquire and distribute forthcoming Tamil films based on agreed forecasts and targets.
Apart from the majority shareholding, this transaction will also give Eros access to Ayngaran’s library of over 600 films, and approximately 25 new films already in development.
Eros International chairman and CEO Kishore Lulla says, “We are really excited about this deal. Ayngaran is the Eros of Tamil films. The business is in the same stage as the Hindi film segment was 10 years ago, poised to expand rapidly.”
This deal, following Eros’s recent announcement of a 76 per cent rise in full-year profits, forms part of a strategy to pursue partnership and acquisitions in the fragmented Indian film industry.
Ayngaran chairman K KarunaMoorthy says, “Aligning with Eros will allow us to accelerate our growth and become a global player in Tamil films by maintaining and building on our competitive advantage.”
Eros and Ayngaran previously co-operated on the international distribution of the film Sivaji-the Boss starring Tamil star Rajnikant, which was released on 15 June this year. The film created history by grossing over $ 25 million worldwide; the highest ever for any Tamil film and featured in the UK charts in spite of showing across just 13 Cineworld screens.
Lulla added, “As part of our consolidation strategy this will allow us to tap into new market segments, audiences and revenues within our core business.”
KarunaMoorthy says, “Eros is a very large and respected player within the Indian entertainment sector. We believe that we will greatly benefit from Eros’s experience in bringing scale to the distribution through their worldwide infrastructure and marketing muscle.”
Out of the total 1,090 films produced in India in 2006, 223 films were Hindi language feature films and 162 films were Tamil films. Internationally, Tamil films have a huge market in UK, USA , Canada, France, Germany, Norway, Switzerland, Malaysia, Singapore, Sri Lanka, South Africa, Australia and the United Arab Emirates.
Buyoed by the announcement, Eros International’s stock on AIM went up by 2.36 per cent today was was trading at Ã‚Â£520 (up Ã‚Â£12 from its previous day close of Ã‚Â£508) at the time of filing this report.