In the Hot Seat by Marc Barber

‘Showmanship in business comes from your numbers and demonstrating profitability. That’s what investors like, not a flashy office.’ So says Kishore Lulla, chief executive of Bollywood media and distribution Eros International.

Certainly, the London base of Eros, set amid the oil-smeared garages and uniform moulded offices of an industrial estate in north-west London, is devoid of any pretensions. Much like Lulla himself, who may mix with the stars and film-makers but comes across as the antithesis of the cigar chomping movie oligarch.

This does not limit his ambition, however, as he explains: ‘The plan is to become the biggest media company in India, then capitalise on that growth and see what can be done with Hollywood either by acquisition, joint ventures or strategic alliance.

‘The Indian film and entertainment industry is at an inflection point,’ he enthuses. ‘It will consolidate in the next three years. There are so many opportunities in this fragmented industry, which is growing at more than 18 to 20 per cent a year.’

A growth business
Eros’ annual results to March were indicative of Bollywood’s – and India’s – formidable rise. Revenue was up 70.2 per cent to $113 million (£70 million), driving profits 47 per cent north to $45.5 million.

Eros, one of the few AIM-listed concerns with a share price in the ascendant, plans to move to the Full List next year. ‘It will give us more visibility and a higher valuation,’ he observes. ‘We are totally a growth company and huge growth is going to come once we go to the Full List as we’ll have US investors – they value media in a big way. Being on AIM, you are not able to tap US investors.’

While Eros’ internal cash flow is strong at approximately $90 million, a $150 million five-year syndicated facility was signed with Citigroup and RBS earlier this year. Such levels of debt don’t faze Lulla.

‘Our earnings before interest, tax, depreciation and amortisation (EBITDA) is total cash so whatever we have in cash, we have in debt also. We are in a very good position today as we have trust [in the industry]. This is not based on an overnight success.’

From Mumbai to M&A
Eros was founded by Lulla’s father, Arjan, back in Mumbai in 1977. Kishore, who started working for Eros when he was 16, partly attributes his sangfroid temperament to familiarity. ‘It’s so easy because I have been doing it all my life,’ he says.

When Lulla teamed up with his father he soon made the decision to come to the UK and work on making the company international. Now there is unprecedented interest in Bollywood and India’s flourishing economy, with its cash-rich, English-speaking middle classes numbering 400 million. Lulla says that 21st-century India brings into focus the vision he had for the company when he joined in the late 1980s.

With a library of 1,900 films, further acquisitions will be made to swell that number. ‘I always told my father, don’t sell your rights away internationally. We will have our own offices and own everything, although I didn’t know how to do it.’

To this end, Eros has already branched out into music, pay per view, mobile phones and other new media. A deal was signed with Google’s YouTube and a partnerships with Sony Pictures and film studio Lionsgate.

Eros remains very much a family concern, since Lulla’s brother steers the Indian operation, while a cousin manages international affairs from an office in Singapore. That continuity and insider knowledge is vital for the company and its success. ‘It is run by people who have been with the business for years,’ says Lulla.