UMP Plc: Investing in Bollywood II

August 21, 2008 at 12:01 am

UMP Plc is is an Indian media and entertainment company with global operations. It is involved in producing films in Hindi and other Indian regional languages, in co-producing with Hollywood, in animation and gaming, as well as in global distribution through various networks and across platforms. It is the company behind recent box office epic hit Jodha Akbar (2008), the acclaimed Rang De Basanti (2006), Mira Nair’s America-set The Namesake (2006) and M. Night Shyamalan’s most recent offering The Happening (2008). The driving force behind most projects of is producer and company director Ronnie Screwalla, one of India’s film entrepreneurs that has been enjoying high profile internationally, even if with occasional controversies involved.

Registered on the Isle of Man, the UMP Plc is the holding company of UTV Motion Pictures (Mauritius) Limited and related to the Mumbai-based UTV.* It floated about 23% of its value on London’s AIM in July 2007 with the ticker UTVM, trading in US dollars. With shares priced at US $2.90 each, the IPO raised capital of US $70 million gross (US$65.7 million net); it allowed the company to reach market capitalization of $302M. The company then changed its name to UMP Plc. in February 2008.

Prior to the AIM admission, UMP was the wholly owned subsidiary of UTV Software Communications Limited (UTV India), a media and entertainment company with interests and subsidiaries in the US, UK and South-East Asia engaged in TV content production, motion pictures, interactive (animation & gaming), broadcasting, advertising production, multi-language dubbing and post-production.

According to Investors Chronicle (January 2008), house broker Jermyn has forecast cash profits before tax of £21m for full-year 2008, and predicts compound annual growth of 40 per cent up to 2010, with a target price of $4.50. A more recent IC article (14 August 2008) is also optimistic, listing several bull points for UMP: high-growth Indian film industry; strong industry relationships, and successful overseas expansion. The bear points, however, include the lack of financial history and tightly held shares.

Having traded now slightly over a year, UMP Plc.’s shares have moved between $3.50 and $1.85 at their lowest point, and at the moment of this writing are at $2.25. The market capitalization in August 2008 is at $263.34M, with 117.04M shares outstanding. The Highlights of the company’s first and only so far Annual report (2007-2008) set the revenue at $40 million, the net profit after tax at $16 million, and the EPS at 0.158.** The statement on shareholding indicates that 77% of the 104,137,931 shares are owned by Promoter and Promoter Group while public shareholding stands only at 23% (24,137,931). Of these, the largest public shareholders include Amoeba Capital Asia Fund 3,448,276 (3.3%) and Deutsche Bank AG, London (3.3%). In addition, during the company’s annual meeting in August 2008, a Special Resolution was passed, which authorizes the directors (without the need for further sanction) to allot and issue up to 21,000,000 ordinary shares of US$0.05 each to such persons and on such terms as they think fit and to grant options to various persons performing services for the benefit of the Company; an arrangement that is to be revisited at the next annual meeting.

Like other Indian players, UMP is working on expanding its interactions with Hollywood, and it has done quite well so far. They have clearly shown that they do not intent to stick to the Bollywood recipe; the general pattern in their work so far has been to make Western style pictures while capitalizing on connections with the large Indian diaspora (writer Jhumpa Lahiri, directors Miar Nair and M. Night Shyamalan, etc.) It has acquired rights to distribute Miramax’s library in South East Asia. Building on the recent success of films such as Jodha Akbar, UMP claims to be among the top 20 distributors operating within the US. They also claim to be the only Indian studio to have projects with major Hollywood studios. Indeed, they co-produced Mira Nair’s The Namesake (which was distributed internationally within the art house circuit) with Fox Searchlight and, with 20th Century Fox, M Night Shyamalan’s The Happening (2008) starring Mark Wahlberg in which UTV reportedly invested over $27 million (about half of the film’s $57M budget). The Happening was hyped up as the most high profile Hollywood co-production by an Asian studio but on release it was considered to have underperformed in comparison with other Shyamalan films (it still made its budget two and a half times over). Most recently, UMP was engaged with the production of a low-budget Hollywood film ($2 million), Ex-Terminators, a Texas-based dark comedy starring actress Heather Graham. There has also been talk of an agreement with Hollywood actor Will Smith’s Overbrook Entertainment to produce two more Hollywood films. Having also co-produced Chris Rock’s I Think I Love My Wife (2007), the UMP are clearly prepared to move on to become a Hollywood player.

Besides Ronnie Screwvala (50) who is also the founder of the UTV Company, UMP’s other directors include Andrew James Carnegie (44) a specialist in corporate finance and CEO of the media advisory firm India Media Partners Ltd, Charles Vanderpump (58) a financial specialist who acts as a director of various Isle of Man-based companies, and the CEO Siddharth Roy Kapur (33) who has prior experience in advertising, marketing, PR and corporate communications from Newscorp’s Star Network television operations in India, Middle East and Hong Kong. Carnegie and Vanderpump are also on the board of directors of UTV Mauritius, and hold respectively 90,000 and 10,000 shares in UMP.

So what is my two minutes narrative on what I think of UMP as a possible investment? Hmmm… On the one hand it looks promising. It is a company that clearly aims to expand by going beyond the narrow Bollywood niche and seeks to enter more dynamic relations with Hollywood and diversify. Energetic Ronnie Screwalla is most likely a plus. Unlike the IFC, the UMP is clearly looking beyond the typical Bollywood formula for entertainment, and thus it has better chances for growth.

On the other hand, however, the lack of transparency is staggering. The volume at which this stock is traded is small, with little liquidity. The target price of $4.50 sounds over optimistic to me. The authorization to issue a 21 million extra shares at a fraction of the share market price is worrying, it would likely impact the capitalization and the cashflow. A search for Indian Media Partners on the Internet produces only a log-in portal with no public information or an accessible site whatsoever. Less than 25% of the shares are publicly traded, which means that shareholders have next to no say in the affairs of the company and cannot possibly influence the way it is run.

Unlike the Indian Film Company the shares of which have never risen beyond the price of their IPO, the UMP has seen a rise of $0.60 or nearly 22% at their highest point. On the other hand, UMP’s EPS after a year of trading stand at $0.158 which compares negatively with the EPS reported by the IFC at 3.56p. But at the end of the day, it comes down to accountancy standards, and it is difficult to judge where only one annual report is available for each company so far. Neither company pays dividend.

According to information from Investors Chronicle’s, UMP comes out ahead of other Indian film related companies due to its advancement in diversifying its operation, and this indeed may be the case. Over a year the shares have made a loss of -23.5% ($2.95; -$0.68) but there have been shorter term gains of +8.10% over 3 months ($2.10 ; +$0.17) and of +4.37% over 6 months ($2.17; +$0.10). This suggests that if timed correctly, an investment in UMP could be profitable. Only it is difficult to say what impacts the timing for purchase into this company, as there seems to be no clear link between their films and the share price: the shares have tumbled by more than 35% precisely during the period when their most profitable film up to date (Jodha Akbar) was enjoying the biggest ever release given to an Indian film in February 2008.

Thus UMP may be a good purchase for insiders who would get the tip when to buy but not for retail investors.

© Dina Iordanova
21 August 2008

* Related companies: UTV Motion Pictures (Mauritius) Limited is an India-based global movie operation which was incorporated in the Republic of Mauritius on 12 October 2004 and houses the movie production business of the entire UTV group. UTV-Mauritius initially carried on the business of movie distribution in regions outside North America, UK and India; however, it has recently acquired the rights to exploit Bollywood, Hollywood, Indian regional language and animation movies throughout the world. The Mumbai-based operation, UTV India, began as a television content company in 1990 and has developed into an integrated entertainment content production and distribution company with three business streams: content (movies and television), new media (animation and gaming) and broadcasting. It is an established corporate entity in Indian movie making and it is listed on the NSE and the BSE. In the financial year ended 31 March 2006 it had gross revenues of Rs 2,130 million (approximately $48 million).

** According to the IC’s January 2008 article, the meantime, UMP expects to generate $250m in gross box office revenues in the 2008-2009 financial year.

Transnational Class of Film Professionals II

July 28, 2008 at 12:57 pm

Valley of the Wolves: Iraq (Kurtlar vadisi – Irak) is a Turkish action film made in 2006, set in the conflict zone in Iraq near the Turkish border. The film opens with a reenactment a real incident from the summer of 2003 (pictured), where a group of Turkish border guards are arrested in their own headquarters and publicly humiliated by American troops, who are officially their ‘allies’. The incident leads to the suicide of one of the border officers who feels he has been dishonored by such treatment on the very territory he is supposed to guard and protect. Opening with a set up that clearly questions the nature of the American ‘allied’ involvement with Turkey, the rest of the film pictures in truly dark shades the travails of various shady American figures and mercenaries operating in Iraq, and the resistance they encounter from brave undercover Turkish patriots. There are many action scenes, weddings that end up in bloodshed, blown-up minarets, spectacular fights, suicide explosions, as well as reconstructions of scenes that remind of the notorious Abu Ghraib pictures, smartly interwoven into the plot.

The film made quite a splash internationally, and even though it has not been shown in America, it has been extensively discussed as a work of anti-Americanism. A discussion on NBC even mentioned that American troops stationed in countries where the film was screening have been explicitly prohibited from seeing it, out of fear that they may become subject of attack by enraged audiences. And even if the film was not distributed in the US, the two American actors who were cast in it, Billy Zane and Gary Busey, were publicly denounced for taking part, and declared anti-patriotic racist mercenaries, like in this image seen at a blog-site called ‘Villagers with Torches‘.

It is not my intention to go into this controversy here, as I have discussed it elsewhere (BBC World Service, December 2006). My interest in Valley of the Wolves is in relation to the emerging transnational class of film professionals, and it is this film that gives me the chance to most powerfully illustrate my point. The stunts, for example, were handled by a group of Czech-born professionals, who mostly work in Hollywood but also have regular international outings. Dusan Hyska, the stunt coordinator for the production, comes with credits from films such as Stephen Spielberg’s Saving Private Ryan, and has worked on productions by directors like James Cameron (Titanic) and Scorsese (Gangs of New York). His fellow-stuntsman Jiri Horky was in Van Helsing, The League of Extraordinary Gentlemen, and, more recently, in the second installment of the Chronicles of Narnia (2008) while Jan Petrina, Billy Zane’s stunt double, has also been in Ridley Scott’s Black Hawk Down (2001). If we move on to the special effects department led by industry veteran Mark Meddings, one discovers a wealth of overlaps with key American films by directors Ridley Scott, Stephen Spielberg and Oliver Stone. Employed on Valley of the Wolves as coordinator of special effects, Meddings comes with credits as senior special effects technician on Saving Private Ryan (1998), and has to his credits films such as Ridley Scott’s Gladiator (2000) and Black Hawk Down (2001), Anthony Minghella’s Cold Mountain (2003), and Oliver Stone’s Alexander (2004). The project that immediately preceded his involvement with Valley of the Wolves was Ridley Scott’s Kingdom of Heaven (2005), a film showing the clash of Christian and Islamic civilizations.

Here is a clip of the film. The Hollywood touch shows; the style seen in this sequence is reminiscent of the bazaar scene in Indiana Jones (I believe it was in Raiders of the Lost Ark), mixed with sequences from Black Hawk Down.

In the ‘bonus’ section of Valley of the Wolves DVD, Meddings and his colleagues are seen setting up scenes of destruction with dummies, bloody body parts, artificial severed limbs and a variety of other props and prosthetics. Watching the ‘Making of’ documentary I could not help a feeling of a ‘deja vu’, thinking of many other similar ‘Making of’ documentaries found on the DVDs of Hollywood action epics, showing teams of equally committed special effects professionals engaged with setting up the pyrotechnics, the stunts, and the prosthetics for each new film. The plastic severed limbs and the little pumps that splat blood used in the Valley of the Wolves clearly have their prototype in the well-familiar bloody body parts and guts scattered all over Omaha beach in the famous scene that created the memorable heart-wrenching reaction on seeing Saving Private Ryan‘s opening scenes.

The bottom line is that the creative specialist force behind this epic entertainment is the same, and it operates transnationally. The same people whose skills and ingenuity helped create the unforgettable visceral images that enhanced American patriotism in Saving Private Ryan can happen, on occasion, to apply those same skills and wit in the context of productions that may encourage a very different view of the world. It is not realistic that the special effects profession or the stunts people, many of whom may be working in Hollywood but are often not even Americans, could be bound by patriotic loyalties or political allegiances that would bar them from taking on assignments across the world. It is an aspect of globalization that needs to be acknowledged and reckoned with.

For Part I of his post, click here.

© Dina Iordanova
29 July 2008

This entry is part of my investigation into international epic cinema, which also includes entries on other films from China (Hero, House of Flying Daggers, Curse of the Golden Flower), Thailand (Suryiothai), Kazakhstan (Nomad), India (Asoka, Jodha Akbar), and elsewhere (Mongol).

Transnational Class of Film Professionals I

July 27, 2008 at 12:17 am

Russian director Sergei Bodrov, Chinese cameraman Fei Zhao, Czech cameraman Igor Luther

The emerging class of transnational film professionals consists of American and other international specialists who have gravitated around Hollywood but who regularly contract on productions from various countries, and of specialists who are based in a range of other countries, but whose dispersal does not prevent them from grouping and regrouping in various team configurations, again to work on a wide range of productions made internationally. It is in the context of epic cinema that this highly skilled labour is most easily seen and discovered, maybe because it is these large-scale productions with their sizable crews of below the line personnel that create the need of outsourcing arrangements that would bring in professionals that offer their services in the sphere of transnational filmmaking.

It is about stunts specialists, special effects people, the folks engaged in CGI, the musical effects department, and so on. As this is a highly-skilled and well-paid workforce that needs to be kept employed on an ongoing basis, the companies that employ these specialists often take on assignments coming from international sources. The result is that, no matter if the film is billed as Chinese or American production, its underlying stunts, special effects, sound effects, and CGI are often generated from within the same group of transnational professionals. Even though most of the crew who worked on House of Flying Daggers are Chinese, the sound and visual effects were outsourced to American companies, and ended up being handled by people who were also involved in productions such as Moulin Rouge, Lord of the Rings, 300 and The World Trade Center. It is only Indian superproductions for now who manage to source all departments entirely from within their own workforce.

Of course, the talent working above the line are more often than not transnational professionals themselves – like Russian director Sergei Bodrov, who worked for the Kazakh government on Nomad and who then made Mongol as a Kazakh/German/Russian/Mongolian production. Mongol used a Japanese star, a Russian and a Dutch cinematographer, an Icelandic editor, and a Finnish composer, as well as scores of Chinese, Koreans, Germans and Russians employed in ‘below the line’ roles. The Chinese cinematographer of The Emperor and the Assassin, Fei Zhao, also shot films for Woody Allen. Czech cameramen worked on Suryiothai one of whom, Igor Luther, has worked across Europe with directors like Andrzej Wajda and Volker Schlöndorff. It is more of less the same like in Hollywood, which is used to cherry-picking international talent in putting together multinational crews, where Oliver Stone’s Alexander had a team comprising of a Mexican cinematographer, a Greek composer, an editor who mostly works in the Arab world and an editor who mostly works with Luc Besson.

It is still too early to say to what extend this pragmatic transnationalism, often driven by pure practicalities and matters of convenience and often remaining behind the scenes and below the line, impacts on the look and feel of epic films, if at all. In the second part of this post, I will discuss an example where I saw it clearly pronounced and deployed in an interesting context.

© Dina Iordanova
27 July 2008

This entry is part of my investigation into international epic cinema, which also includes entries on other films from China (Hero, House of Flying Daggers, Curse of the Golden Flower), Thailand (Suryiothai), Kazakhstan (Nomad), India (Asoka, Jodha Akbar), and elsewhere (Mongol).

Film Festivals: Cannes Director’s Calendar

May 14, 2008 at 11:25 pm

Thierry Frémaux and Gilles Jacob at Cannes press conference, 2008

Festival artistic directors see films mostly on the DVD screeners that are submitted as part of the entry procedure, and usually after the submissions have been filtered by a group of scouts who eliminate many and then prepare the ‘short list’ for the attention of the selectioner. Attending other festivals in person is not of decisive importance for festival programmers, as it is not here that they make their choices. Yet, they still go to festivals, mostly to show they are part of the community, to keep up with industry developments, and to exchange views on who is ‘in’ in the world of current cinema. Trade magazines, such as Screen International regularly publish information on which festival directors go to which festivals, so that one can figure out which are the festivals that provide an influential forum for international film.

In a recent interview with Screen International, Cannes Film Festival’s Thierry Frémaux listed the festivals he attends. In the past, before taking over the helm at Cannes, he preferred some of the reputed American cinephile festivals, like Telluride and San Francisco. But these days he goes to

Berlinale (February)
Venice (end August) and
Pusan, Korea (October)

Even if he wanted, however, it would no longer be possible for Frémaux to go to the earlier festivals. As Cannes director, he is now in the straitjacket of the festival’s yearly cycle. Telluride’s dates overlap with those of Venice (and Venice is largely regarded as the site for screening all those important films that have been completed over the summer and did not make it to the Cannes early spring deadline), whereas the event in San Francisco just precedes Cannes and coincides with the hectic period of Cannes press conferences and preparations.

There is a clear division between the different types of festivals, and they follow parallel and overlapping festival cycles over the globe and around the year. The festivals that belong to the trend-setters have their own cycle with several high points during the year. Those festivals that exist mostly for the sake of proliferating the pure enjoyment of cinema follow a cycle that is scheduled differently and rely on a different demographics of loyal fans.

© Dina Iordanova
15 May 2008

Humbert Balsan retrospective at the French Cinematheque, Paris

May 9, 2008 at 1:08 am

This retrospective, which opened two days ago at the Cinematheque Francaise at Bercy, features the work of the producer. Balsan committed suicide in 2005, on the very day of the opening of Berlin Film Festival, reportedly over serious financial difficulties, leaving the European film community distraught and bewildered. Some of the films that he had committed to at that point, like Bela Tarr’s The Man from London, have since been completed (See Dave Kehr’s revealing hommage to Balsan at the Rouge web-site).

One of the most versatile French producers with more than sixty titles to his name, Balsan worked with key international figures like Ismail Merchant and James Ivory (The Proprietor; Mr. & Mrs. Bridge; Jefferson in Paris; Quartet), with French directors, such as Sandrine Veysset (Y aura-t-il de la neige à Noël?/ Will It Snow for Christmas ) and Claire Denis (The Intruder), and produced films directed by actors like Brigitte Rouan (Post coitum animal triste) and Jean-Louis Trintignant (Le Maitre-nageur ).

More uniquly, however, Balsan was committed to working with directors from the Arab world and the Middle East. Besides a host of documentaries, he produced most of the important work of celebrated Egyptian Youssef Chahine, as well as films by Youssry Nasrallah, and Lebanese Maroun Bagdadi . He was the man behind some of the most important films of the decade, such as Ismael Ferroukhi’s pensive Mecca-pilgrimage Le Grande Voyage and Palestinian Elia Suleiman’s Divine Intervention.

Balsan would have been 54 today. He entered cinema as an actor and appeared in a host of smaller roles later on.


Balsan as Gauvain in Robert Bresson’s 1974 Lancelot of the Lake

© Dina Iordanova
9 May 2008