A Taste of Success – Manmohan Shetty

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Manmohan Shetty, the Chairman of Adlabs Films Limited is only too well known in the industry for his astute business sense. His company, Adlabs (now Adlabs Films Limited) set up in 1978 catering only to the ad film market, has grown exponentially under his leadership to a market leader in the entertainment space.
Manmohan Shetty, Chairman Adlabs Films Limited

Adlabs today, has an integrated business model that covers the entire value chain from film production and post production to digital distribution and film exhibition, to FM Radio. “Our vision is to have, under one company, all divisions of media, minus television and paper…for now”, says Manmohan Shetty with a twinkle in his eyes.

And he has every reason to smile. The turning point for Adlabs came in 2005 when Reliance Anil Dhirubhai Ambani Group (Reliance – ADA Group) acquired a 50.16 per cent stake in Adlabs Films Limited for a cool Rs 3.6 billion. “It was a blessing for us that Reliance decided to enter into the media business and chose Adlabs as its partner. Just in reaction to the news, the share price of Adlabs had shot up by 20 per cent to Rs 240.60 on the BSE. In 2004-05, Adlabs posted a turnover of Rs 82.4 crore and a profit of Rs 21 crore. This year our turnover will exceed everyone’s expectations.”

There has been no stopping Shetty after that. The combined synergy has propelled Adlabs to make new deals and increase its investments in all of its divisions significantly, other than entering new avenues like overseas distribution and FM Radio. “We have recently signed multi-film deals worth Rs 3900 million with four film makers. Adlabs will do 10 films with Vipul Shah within three years, 10 films with Ram Gopal Varma in two years, and three films with Prakash Jha over a span of two years.”

Adlabs also recently entered into production of Hollywood movies through AshoK Amritraj’s Hyde Park Entertainment Group. “As part of our expansion plans, we will co-finance and co-produce movies with Ashok’s Hyde Park. The deal came through after we opened offices in UK and US. Though distribution of Bollywood movies will form the primary business activity, our overseas operation will also explore opportunities in film production and post-production activities”, said Shetty.

Adlabs has plans to distribute 18 to 24 films overseas this year and has some of the biggest films lined up for release in the coming months. After the raging box-office success of Rakesh Roshan’s Krrish, other projects like Sajid Nadiadwala’s Jaanemann, Ravi Chopra’s Babul and Mani Ratnam’s Guru are in the pipeline.

An arts graduate by qualification, Shetty gained valuable experience in film processing and printing business for over 27 years. Over the years, he developed strong business relationships with many large film production houses. He is currently the Chairman of the National Film Development Corporation (NFDC). He is also a member of the N K Singh commitee for facilitating venture funding for the entertainment industry, a member of the screening committee of IDBI Institutional film financing, and member of the FICCI committee on the entertainment industry.

Not one to be proud of his accomplishments, he commented, “Having spent over 25 years in an industry, people like to make use of your experience. It’s because you are exposed to the business for so long, and are aware of risks, people like to take your advice.”

The different divisions of Adlabs:

Adlabs’s main business is processing of pictures and it has processed films for all major production companies in Mumbai. It has facilities for processing raw exposed films, colour correction, editing and making multiple copies of final print for the distributor. Adlabs has processed more than 1,000 movies since inception and has a 70 per cent market share of films in western India.

In 2000, Adlabs entered the Film Exhibition Business with the setting up of one of the largest Dome Theatre in the world with a 518 seat IMAX Dome theatre. Adlabs also started Mumbai’s first multiplex with 4 screens and 1314 seats. Commenting on the multiplex business, Shetty said, “The multiplexes have gained momentum and the average occupancy has increased. Especially on weekends, we experience almost 100 per cent capacity utilisation.

However the IMAX Dome theatre concept has not performed well. The risk to return ratio, considering the high capital expenditure, is not favorable. We are operating at occupancy rates of 28 to 32 per cent, which is far below the required 40 per cent. We are planning of setting up one multiplex in Pune, two in Delhi and a few more in Chandigarh, Jalandhar, etc.”
In 2002 Adlabs made its debut into film production and financing through its 100 per cent subsidiary Entertainment One India Ltd. “The company would be investing around Rs180-200mn per annum across four to five films. Some of the films under its banner are Gangajaal, Main Madhuri Dixit Banna Chahati Hu, Intehaa and Munnabhai MBBS.

In 2003, Adlabs in a 50 – 50 deal with Mukta Arts made its foray into digital distribution of films. “So far 42 theatres have already been digitalised and we plan to add 100 theatres more to the list. The initial investment for setting the server and projector is around Rs 1 million which is borne either by us, or the theatre owner or by a bank, or on a partial basis by the parties involved.”

The future of entertainment may be hard to predict for some, but Shetty is confident, “The future is the consumer who has the money to pay and even high tickets prices are not a deterrent factor for the consumers now. For example for Superman Returns in the Inox theatre we charged Rs 300 for a ticket and still did very well. The spending attitude of the consumer has changed, the consumer does not mind spending money as long as they get a good thing. The consumer is the future. Providing good entertainment to the consumer is the future.”