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Economy - overview:
India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration. According to the World Bank, as of 2011, the Indian economy is nominally worth US$1.848 trillion it is the tenth-largest economy by market exchange rates, and is, at US$4.457 trillion, the third-largest by purchasing power parity, or PPP. With its average annual GDP growth rate of 5.8% over the past two decades, and reaching 6.1% during 2011–12, India is one of the world's fastest-growing economies. However, the country ranks 140th in the world in nominal GDP per capita and 129th in GDP per capita at PPP. Until 1991, all Indian governments followed protectionist policies that were influenced by socialist economics. Widespread state intervention and regulation largely walled the economy off from the outside world. An acute balance of payments crisis in 1991 forced the nation to liberalise its economy; since then it has slowly moved towards a free-market system by emphasizing both foreign trade and direct investment
inflows. India's recent economic model is largely capitalist. India has been a member of WTO since 1 January 1995. The 487.6-million worker Indian labor force is the world's second-largest, as of 2011. The service sector makes up 55.6% of GDP, the industrial sector 26.3% and the agricultural sector 18.1%. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, and potatoes. Major industries include textiles, telecommunications, chemicals, pharmaceuticals, biotechnology, food processing, steel, transport equipment, cement, mining, petroleum, machinery, and software. In 2006, the share of external trade in India's GDP stood at 24%, up from 6% in 1985. In 2008, India's share of world trade was 1.68%;In 2011, India was the world's tenth-largest importer and the nineteenth-largest exporter. Major exports include petroleum products, textile goods, jewelry, software, engineering goods, chemicals, and leather manufactures. Major imports include crude oil, machinery, gems, fertilizer, and chemicals. Between 2001 and 2011, the contribution of petrochemical and engineering goods to total exports grew from 14% to 42%. The Bombay Stock Exchange is Asia's oldest and India's largest bourse by market capitalization. Averaging an economic growth rate of 7.5% for several years prior to 2007, India has more than doubled its hourly wage rates during the first decade of the 21st century. Some 431 million Indians have left poverty since 1985; India's middle classes are projected to number around 580 million by 2030. Though ranking 51st in global competitiveness, India ranks 17th in financial market sophistication, 24th in the banking sector, 44th in business sophistication, and 39th in innovation, ahead of several advanced economies, as of 2010. With 7 of the world's top 15 information technology outsourcing companies based in India, the country is viewed as the second-most favorable outsourcing destination after the United States, as of 2009. India's consumer market, currently the world's eleventh-largest, is expected to become fifth-largest by 2030. India's telecommunication industry, the world's fastest-growing, added 227 million subscribers during the period 2010–11. Its automotive industry, the world's second fastest growing, increased domestic sales by 26% during 2009–10, and exports by 36% during 2008–09. Power capacity is 250 gig watts, of which 8% is renewable. The Pharmaceutical industry in India is among the significant emerging markets for global pharmacy industry. The Indian pharmaceutical market is expected to reach $ 48.5 billion by 2020. India's R & D spending constitutes 60% of Biopharmaceutical industry. India is among the top 12 Biotech destinations of the world. At the end of 2011, Indian IT Industry employed 2.8 million professionals, generated revenues close to US$100 billion equaling 7.5% of Indian GDP and contributed 26% of India's merchandize exports. Despite impressive economic growth during recent decades, India continues to face socioeconomic challenges. India contains the largest concentration of people living below the World Bank's international poverty line of US$1.25 per day, the proportion having decreased from 60% in 1981 to 42% in 2005. Half of the children in India are underweight, and 46% of children under the age of three suffer from malnutrition. The Mid-Day Meal Scheme attempts to lower these
rates. Since 1991, economic inequality between India's states has consistently grown: the percapita net state domestic product of the richest states in 2007 was 3.2 times that of the poorest. Corruption in India is perceived to have increased significantly, with one report estimating the illegal capital flows since independence to be US$462 billion. Driven by growth, India's nominal GDP per capita has steadily increased from US$329 in 1991, when economic liberalization began, to US$1,265 in 2010, and is estimated to increase to US$2,110 by 2016; however, it has always remained lower than those of other Asian developing countries such as Indonesia, Iran, Malaysia, Philippines, Sri Lanka, and Thailand, and is expected to remain so in the near future. According to a 2011 PricewaterhouseCoopers report, India's GDP at purchasing power parity could overtake that of the United States by 2045. During the next four decades, Indian GDP is expected to grow at an annualized average of 8%, making it potentially the world's fastestgrowing major economy until 2050. The report highlights key growth factors: a young and rapidly growing working-age population; growth in the manufacturing sector due to rising education and engineering skill levels; and sustained growth of the consumer market driven by a rapidly growing middle class. The World Bank cautions that, for India to achieve its economic potential, it must continue to focus on public sector reform, transport infrastructure, agricultural and rural development, removal of labor regulations, education, energy security, and public health and nutrition. Citing persistent inflation pressures, weak public finances, limited progress on fiscal consolidation and ineffectiveness of the government, rating agency Fitch revised India's Outlook to Negative from Stable on 18 June 2012. Another credit rating agency S&P had warned previously that a slowing GDP growth and political roadblocks to economic policy-making could put India at the risk of losing its investment grade rating. However, Moody didn't revise its outlook on India keeping it stable, but termed the national government as the "single biggest drag" on the business activity. http://en.wikipedia.org/wiki/India#Economy
1.1 Gross domestic product (GDP)
GDP is the market value of all officially recognized final goods and services produced within a country in a given period of time. GDP per capita is often considered an indicator of a country's standard of living.
GDP (purchasing power parity) 2009 2010 2011 $3.806 trillion $4.21 trillion $4.515 trillion
2% industry 26. and inventories of raw materials.3 Inflation Rate: Inflation rate is a measure of inflation.) This record shows total business spending on fixed assets. 1. depository banks for loans to meet temporary shortages of funds. This indicates india is a growing country GDP . This decrease in rate shows the increase in purchasing power. machinery.8% of GDP (2011 est. or the rate of increase of a price index such as the consumer price index.4 Interest Rates Interest rate the annualized interest rate a country's central bank charges commercial.5 % and in 2011 it was 6% 4 . it includes investment that merely replaces worn-out or scrapped capital.in 2010 it was 5.. 1. 1. It is the percentage rate of change in price level over time.2 Saving and Investment (gross fixed): 32. It is measured gross of the depreciation of the assets. dwellings. GDP . such as factories.per capita (PPP) 2009 2010 2011 $3200 $3500 $3700 From the above table it can be analyzed that per capital income is increasing but it increasing at a lower rate. i. Inflation rate in 2010 it was 12% and in 2011 it was 11%. equipment.composition by sector (2011) agriculture 17. usually one year.4% services 56.4% From above table it can be analyzed that service sector contributes maximum to GDP.From the above shown data it can be analyzed that in India purchasing power parity is in increasing trend.e. Industry sector is in increasing trend. which provide the basis for future production.
while the non-tax revenues of the States are grants from the central government.8 billion (2011 est. inheritance tax). of which 3/4 come from direct taxes. It is also known as consumption. sales tax. public sector dividends.5 Budget: A budget is a financial plan and a list of all planned expenses and revenues. The non-tax revenues of the central government come from fiscal services. The spending includes durables. wherein the constitution empowers the union government to levy income tax. interest receipts. tax on entertainment and professions. initiated in 1991. It is a plan for saving. customs and making it more progressive Reducing exemptions and concessions Simplification of laws and procedures Introduction of permanent account number (PAN) to track monetary transactions21 of the 28 states introduced value added tax (VAT) on 1 April 2005 to replace the complex and multiple sales tax system. Total tax receipts of Centre and State amount to approximately 18% of national GDP. economic and social services. John Maynard Keynes considered consumer spending to be the most important determinant of short-term demand in an economy. borrowing and spending. excises. customs and excise duties and the state governments to levy sales tax on intrastate sale of goods. service tax. The local governments are empowered by the state government to levy property tax and charge users for public utilities like water supply. such as food. More than half of the revenues of the union and state governments come from taxes. and is measured monthly.org/wiki/Government_of_India#Taxation 1. dividends and income from general.1. etc. http://en.6 Tax Structure: India has a THREE-TIER TAX STRUCTURE. More than a quarter of the union government's tax revenues is shared with the state governments. sewage etc.. such as washing machines. stamp duties on transfer of property and collect land revenue (levy on land owned).) 1. and nondurables.7 Consumer Spending The amount of money spent by households in an economy. excise duties on manufacture of alcohol. interest receipts.4billion expenditures: $308. The tax reforms. have sought to rationalize the tax structure and increase compliance by taking steps in the following directions: Reducing the rates of individual and corporate income taxes. Inter-state share in the federal tax pool is decided by the recommendations of the Finance Commission to the President. Budget: revenues: $196.wikipedia. 5 . tax on capital transactions (wealth tax.
 For example. and derivatives. Investment spending should not be confused with investment. which refers to the purchase of financial instruments such as stocks. or infrastructure. bonds. Also called capital formation. production inputs.9 Foreign Exchange Exchange rate (also known as the foreign-exchange rate. People are earning more and spending more. Investment spending may include purchases such as machinery. land. It is also regarded as the value of one country’s currency in terms of another currency. ¥) to the United States dollar (US$) means that ¥91 will be exchanged for each US$1 or that US$1 will be exchanged for each ¥91 6 . or goods used in the production of capital.8 Investment spending: Money spent on capital goods. 1. 1. an interbank exchange rate of 91 Japanese yen (JPY. or services. goods.From the above given chart it can be analyzed that the consumer spending is increasing day by day. forex rate or FX rate) between two currencies is the rate at which one currency will be exchanged for another.
A negative balance of payments means that more money is flowing out of the country than coming in. Historically.2 billion USD in October of 2012.726 44. accounting for 16 percent of exports.319 48.indexmundi. including all financial exports and imports.2 USD Million reaching an all time high of 30418. Exports amount to 22% of India’s GDP. India Exports averaged 8603.com/india/exchange_rates. India is also leading exporter of textile goods.0 USD Million in March of 2011 and a record low of 1805.html 1. 7 .405 45.0 USD Million in May of 1994. Balance Of Payments – BOP A record of all transactions made between one particular country and all other countries during a specified period of time. United States. United Arab Emirates and China. BOP compares the dollar difference of the amount of exports and imports. leather manufactures and services.487 43.10 India Exports India exports were worth 23. This page includes a chart with historical data for India Exports. Gems and jewelry constitute the single largest export item.S $ 1 1 1 1 1 http://www. chemicals. 41. and vice versa.Foreign Exchange Rate Year 2007 2008 2009 2010 2011 Indian rupee.64 U. India’s main export partners are European Union. engineering goods. from 1994 until 2012.
about 50% of the total workforce. But if monsoon rains get delayed even by 15 days. it becomes a cause of worry for the government to maintain GDP growth. India ranks second worldwide in farm output. it could encourage government to ease curbs on export of wheat and rice.40 Percent in December of 2009 and a record low of 3. including the states of Punjab and Haryana. and help calm inflation.1.8 percent in 2010/11 fiscal year. But as per the estimates given by India Meteorological Department.6% of the GDP in 2009. rains this year in 2012 have not been so good till now. 1. agriculture provides around 70% of employment either directly or indirectly. This is the major reason for the economic growth of India to depend on Monsoon season. India Unemployment Rate averaged 7. Rainfall in North India has been delayed by over 20 days and India's largest dam. the Bhakra Nangal. it boosts up the economy of the country and helps in maintaining GDP growth. Agriculture and allied sectors like forestry and fisheries accounted for 16. Industrial sector especially in a country like India. In India.11 Monsoon and Agriculture: Monsoon and Agriculture in India has a significant history. Historically. have received deficient or scanty rainfall. which has worsened the power situation further with major outages across Punjab. There is a similar situation at other reservoirs in the North.80 Percent in December of 2011. Still.12 Unemployment rate: In India was last reported at 3. Rainfall in June already saw a 31 percent deficit and 82 per cent of the area of the country. If the monsoon is good. The economic contribution of agriculture to India's GDP is steadily declining with the country's broad-based economic growth. and good rainfall will boost output of grain and oil seeds. which does not seem to be the case this year. If the rainfall would have been normal as were in 2010 and 2011. and Delhi. agriculture is demographically the broadest economic sector and plays a significant role in the overall socio-economic fabric of India. Many parts of Maharashtra and Punjab are declared as drought-hit as they received less than 50% rainfall this year by mid-August.57 Percent reaching an all-time high of 9. Today. from 1983 until 2011. Haryana. This page includes a chart with historical data for India Unemployment Rate. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labor force. Monsoon does play an important role on the economy of a country. Monsoon season in India starts from June and continue till September. has reached a critical level. 8 . Economy of a country depends on Agricultural.
in broad term fiscal policy refers to "that segment of national economic policy which is primarily concerned with the receipts and expenditure of central government. fiscal policy refers to the policy of the government with regard to taxation. the government has to depend on indirect methods of regulations. 2. The financial resources can be mobilized by Taxation: Through effective fiscal policies. Efficient allocation of Financial Resources 9 . Public Savings: The resources can be mobilized through public savings by reducing government expenditure and increasing surpluses of public sector enterprises. issue of government bonds." In other words. Development by effective Mobilization of Resources The principal objective of fiscal policy is to ensure rapid economic growth and development. Private Savings: Through effective fiscal measures such as tax benefits. In this way. the government can raise resources from private sector and households. the fiscal policy is concerned with government expenditure and government revenue.1. The central and the state governments in India have used fiscal policy to mobilize resources. To generate revenue and to incur expenditure. Resources can be mobilized through government borrowings by ways of treasury bills. So. the government aims to mobilize resources by way of direct taxes as well as indirect taxes because most important source of resource mobilization in India is taxation. This objective of economic growth and development can be achieved by Mobilization of Financial Resources. loans from domestic and foreign parties and by deficit financing. Main Objectives of Fiscal Policy In India The fiscal policy is designed to achive certain objectives as follows :1. public expenditure and public borrowings. The state has to play active and important role. So. The importance of fiscal policy is high in underdeveloped countries.. the government frames a policy called budgetary policy or fiscal policy. So. In a democratic society direct methods are not approved. fiscal policy is a powerful weapon in the hands of government by means of which it can achieve the objectives of development.13 Fiscal Policy The fiscal policy is concerned with the raising of government revenue and incurring of government expenditure. etc. Fiscal policy has to decide on the size and pattern of flow of expenditure from the government to the economy and from the economy back to the government.
Therefore. introducing tax savings schemes. Reduction in inequalities of Income and Wealth Fiscal policy aims at achieving equity or social justice by reducing income inequalities among different sections of the society. The government invests a significant proportion of its tax revenue in the implementation of Poverty Alleviation Programmes to improve the conditions of poor people in society. Employment Generation The government is making every possible effort to increase employment in the country through effective fiscal measure. These resources are allocated for Development Activities which includes expenditure on railways. 5. Concession in taxes and duties in the form of tax holidays. subsidies. 6. The direct taxes such as income tax are charged more on the rich people as compared to lower income groups. There are various incentives from the government for setting up projects in backward areas such as Cash subsidy. Similarly. Productive use of financial resources. Indirect taxes are also more in the case of semiluxury and luxury items. While Non-development Activities includes expenditure on defence.The central and state governments have tried to make efficient allocation of financial resources. Price Stability and Control of Inflation One of the main objective of fiscal policy is to control inflation and stabilize price. which are mostly consumed by the upper middle class and the upper class. 3. But generally the fiscal policy should ensure that the resources are allocated for generation of goods and services which are socially desirable. etc. Investment in infrastructure has resulted in direct and indirect employment. etc 7. etc. India's fiscal policy is designed in such a manner so as to encourage production of desirable goods and discourage those goods which are socially undesirable. Lower taxes and duties on small-scale industrial (SSI) units encourage more investment and consequently generates more employment. Finance at concessional interest rates. infrastructure. Balanced Regional Development Another main objective of the fiscal policy is to bring about a balanced regional development. Various rural employment programmes have been undertaken by the Government of India to solve problems in rural areas. interest payments. etc. Therefore. self employment scheme is taken to provide employment to technically qualified persons in the urban areas. the government always aims to control the inflation by Reducing fiscal deficits. Reducing the Deficit in the Balance of Payment 10 . 4.
Imposing customs duties on imports. The foreign exchange is also conserved by Providing fiscal benefits to import substitute industries. exemption of sales tax and octroi. In this way adverse balance of payment can be corrected either by imposing duties on imports or by giving subsidies to export. Conclusion On Fiscal Policy The objectives of fiscal policy such as economic development. Foreign Exchange Earnings Fiscal policy attempts to encourage more exports by way of Fiscal Measures like. etc. A part of the government's revenue is invested in the infrastructure development. price stability. This results in economic growth. This is because fiscal policy facilitates the capital formation. Exemption of central excise duties and customs. etc. exemption of income tax on export earnings. Exemption of sales tax and octroi. 9. etc. Capital Formation The objective of fiscal policy in India is also to increase the rate of capital formation so as to accelerate the rate of economic growth. the fiscal policy must be efficiently designed to encourage savings and discourage and reduce spending.Fiscal policy attempts to encourage more exports by way of fiscal measures like Exemption of income tax on export earnings. Taxation. all sectors of the economy get a boost. The foreign exchange earned by way of exports and saved by way of import substitutes helps to solve balance of payments problem. 11. there is also an urgent need for making India's fiscal policy a rationalized and growth oriented one. can be achieved only if the tools of policy like Public Expenditure. The foreign exchange earned by way of exports and saved by way of import substitutes helps to solve balance of payments problem. Foreign exchange provides fiscal benefits to import substitute industries. social justice. Development of Infrastructure Government has placed emphasis on the infrastructure development for the purpose of achieving economic growth. An underdeveloped country is trapped in vicious (danger) circle of poverty mainly on account of capital deficiency. 8. Though there are gaps in India's fiscal policy. Borrowing and deficit financing are effectively used. etc. The 11 . In order to increase the rate of capital formation. The fiscal policy measure such as taxation generates revenue to the government. Due to this. Increasing National Income The fiscal policy aims to increase the national income of a country. which in turn increases the GDP. per capita income and national income of the country. 10.
is so designed as to maintain the price stability in the economy. To avoid this problem the central monetary authority carries out this essential function of restricting the inventories.html 1. Promotion of Fixed Investment The aim here is to increase the productivity of investment by restraining non essential fixed investment.success of fiscal policy depends upon taking timely measures and their effective administration during implementation. The centre of focus is to facilitate the environment which is favourable to the architecture that enables the developmental projects to run swiftly while also maintaining reasonable price stability. The main objective of this policy is to avoid over-stocking and idle money in the organization Promotion of Exports and Food Procurement Operations Monetary policy pays special attention in order to boost exports and facilitate the trade. Desired Distribution of Credit 12 . Controlled Expansion Of Bank Credit One of the important functions of RBI is the controlled expansion of bank credit and money supply with special attention to seasonal requirement for credit without affecting the output. Other objectives of the monetary policy of India.14 Monetary policy: Monetary policy is the process by which monetary authority of a country. In India. Restriction of Inventories Overfilling of stocks and products becoming outdated due to excess of stock often results is sickness of the unit. http://kalyan-city. are: Price Stability Price Stability implies promoting economic development with considerable emphasis on price stability. as stated by RBI. the central monetary authority is the Reserve Bank of India (RBI). generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth. It is an independent objective of monetary policy.blogspot.in/2011/03/fiscal-policy-meaning-its-main.
It encourages more competitive environment and diversification. Equitable Distribution of Credit The policy of Reserve Bank aims equitable distribution to all sectors of the economy and all social and economic class of people To Promote Efficiency It is another essential aspect where the central banks pay a lot of attention. http://en. ease operational constraints in the credit delivery system.Monetary authority has control over the decisions regarding the allocation of credit to priority sector and small borrowers.15 Gross domestic savings: 13 .wikipedia. Reducing the Rigidity RBI tries to bring about the flexibilities in the operations which provide a considerable autonomy. It maintains its control over financial system whenever and wherever necessary to maintain the discipline and prudence in operations of the financial system. This policy decides over the specified percentage of credit that is to be allocated to priority sector and small borrowers.org/wiki/Monetary_policy_of_India 1. It tries to increase the efficiency in the financial system and tries to incorporate structural changes such as deregulating interest rates. to introduce new money market instruments etc.
news and forecasts for Gross domestic savings (% of GDP) in India. reducing poverty by about 10 percentage points.tradingeconomics.31 in 2011. modern agriculture.http://www. The economy has posted an average growth rate of more than 7% in the decade since 1997. and a multitude of services. 14 .This page includes a historical data chart. India's diverse economy encompasses traditional village farming. Gross domestic savings are calculated as GDP less final consumption expenditure (total consumption). accounting for more than half of India's output with less than one third of its labor force.com/india/gross-domestic-savings-percent-of-gdp-wb-data. handicrafts.html The Gross domestic savings (% of GDP) in India was last reported at 30. according to a World Bank report published in 2012. a wide range of modern industries. Services are the major source of economic growth.
cable and satellite television. India has the third largest television market in the world behind only china and the USA. Across the Middle East.Chapter 2 Media and entertainment industry Analysis: 2. parts of South East Asia and 15 . the use of digital technology in all spheres of entertainment and the growth of multiplexes have contributed to the growth of this sector. music and television are fast disappearing. the technology of film-making in India is perhaps the best among all developing countries. In television alone.1 Industry life cycle: Entertainment Industry in India comprises of Film Industry and Television Industry. regional and local channels being beamed across the country. television is the major segment of entertainment industry. In India. Indian film industry is now increasingly getting professional and a lot of production houses such as Yash Raj Productions. In the past two decades entertainment industry in India has witnessed explosive growth. Presently.000 million in 2008. Dharma Productions. Doordarshan in 1991. The Indian entertainment industry is among the fastest growing sectors in the country. an estimated 6 million people earn their livelihood from the entertainment industry and this number is all set to grow. from a single state owned television network. Several positive developments like the accordance of the 'industry' status to the film industry. are now working on corporate lines. India has the world's biggest movie industry in terms of the number of movies produced. close to a thousand films a year in all languages. satellite channel penetration. Mukta Arts etc. the retail boom in the channels for music sales (Music World & Planet M). The popularity of Indian entertainment industry goes well beyond the geographical frontiers of the country. producing on an average. Presently. In terms of employment. Skills and resources are being pooled extensively. Indian television channels and films are viewed and enjoyed across the entire South Asia. Indian film industry is the largest film industry in the world. Entertainment industry in India is projected to be one of the major economic driving forces of the country. Besides adaptation to high-end digital technology. television reaches about hundred million Indian households. the entertainment industry is also witnessing rapid development of state-of-the-art studios and post production facilities. animation and FM. 400. Today. In terms of film production India exceeds Hollywood's production volume by over three times. Entertainment industry in India is presently in a consolidation phase as boundary lines between films. today there are over 300 national.According to an estimate by FICCI and Ernst and Young Indian entertainment industry would worth more than Rs. Some of the fastest growing segments in the Indian entertainment industry include music.
The adoption of digital distribution platforms —direct-to-home (DTH) and digital cable 16 .2 Structure of industry: MEDIA AND ENTERTAINMENT Print Electronic News paper Magazine Tv Radio Internet Media can be divided into – • Television . The future prospects of Indian entertainment industry look to be extremely good. Indian TV channels and films are increasingly finding a foothold beyond the expatriate pockets as the audience there has started to enjoy and identify with the contemporary Indian culture.Africa. As India's profile rises on the global stage outside interest in India's culture and entertainment industry is also bound to grow. of which 90 million are served by cable and satellite TV. the industry generated estimated revenues of US$ 5. large expatriate populations ensure that Indian TV channels and films are a regular part of their entertainment bouquet. As many as 500 TV channels were operational in 2009. So it is in Growing stage.68 billion (INR 272.7 billion).com/blog/2012/03/16/indian-film-industry-bollywood-perspectivesand-outlook/ 2.In 2009. India is home to 134 million TV households. http://www. In UK and North America (USA and Canada). Quite a few of Indian filmstars are also getting good offers from Hollywood.mbacrystalball.
which generate 70 to 80 per cent of a film’s revenue. People finds a lot many source for entertainment now a days.000 films are produced annually in more than 20 languages. Consumers can now access entertainment content online or on their mobile devices in the form of audio and video files and text-based content. From about two million digital TV households in 2006. GoI-controlled All India Radio (AIR) and 37 private FM radio companies that operate close to 280 FM radio stations in India cater to this segment. the trend to access videos through the Internet and mobile phones is fast gathering momentum.73 billion (INR 131. the platform currently caters to about 15 to 17 million digital subscribers.7 billion). The industry remains dependent on domestic theatrical collections.The FM radio segment is one of the fastest-growing entertainment segments in India.3 billion (INR 494. Films . New Media (Including Internet) .500 screens in the next two to three years. Revenues in this segment have almost doubled since 2006.In 2009.Increasing broadband penetration is expected to attract more content online. • Radio . the industry was estimated at US$ 201 million (INR 9. It is a highly fragmented industry.6 per cent to reach revenues of US$ 10.Film-based music dominates music sales in India. In 2008.7 billion) in 2009.1 billion (INR 439. As the second-largest mobile telephony market in the world. Distribution via digital formats on the Internet and through mobile phones is the emerging business model for music companies. 3. In fact Airtel has become the largest music company in the country. which is expected to grow at a rate of 12. People have print media electronic media 17 .3 billion) in 2010 2. More than 1. The music industry generated revenues of US$ 369 million (INR 17. As in most global markets. • • • The entertainment industry in India generated about US$ 9. and this is estimated to grow to 1. digital sales of music are becoming the norm in India. There are presently more than 800 multiplex screens in India. The Riverly within industry is very high. Almost every major M&E player now has a strategy to host its content on new media platforms.1 billion). the industry generated estimated revenues of US$ 2. In 2009. India has provided a new platform for content delivery.1 billion) in revenues in CY2009. Music .3 Nature of competition: In media and entertainment industry pure competition can be seen.—is helping TV distribution become more organised.3 billion tickets were sold for films screened across 10. In India.000 theatre screens. It is a highly competitive industry.
As per the industry experts. Liberalization and live transmission of First Gulf war by CNN in the country saw immergence of LCOs distributing satellite channels through analogue cable to the subscribers.for their entertainment. local sourcing in short to medium term is not possible as there are no sufficient manufacturing capabilities. TV Households (HH) were dominated by handful of channels transmitted by Government owned Doordarshan (DD) through free-to-air (FTA) terrestrial signals. The government is focusing on regulations to give further impetus to industry. And it is expected to reach 105200 crores in 2013. The FDI policies across all the industry is very liberal and close to 1000 films are made every year. riding on digital platform. 2. The cable & satellite (C&S) HH made further inroads on the back of private channels launched by ZEE and subsequently by STAR. The switching cost is less people can easily swich over from one source to another it is also one of the reason of high competition. Due to technological advantage over incumbent analogue cable. There are national and regional 300 channels are on air currently and maximum growth is to be expected from television and film segment. 18 . Fox. the last mile operator can carry 60-70 channels on his analog network due to technological constraints versus approximately 600 channels available in the country. Set Top Box (STB). UTV. This industry is growing at a CAGR rate of 19%. viewed on a digital screen.lative experience will call for digital content. to achieve better quality viewing and transparency in revenue earning and sharing. A true digital environ to give super.5 Technology & research in industry: Digitalization is the inevitable path forward. 2. ZEE and STAR amongst others. DTH has been able to connect semiurban and rural areas to the world of Indian Television channels. one of the most important components for digitalization. On an average. The competition amongst broadcasters is expected to increase further with Government approving 75 licenses for launch of new channels or re launch of existing channels in HD after a 2 year freeze. The major players who are launching new channels and HD channels are Discovery. Currently digital DTH addressable system is the torchbearer of growth in C&S HH. Till 1990. The rivals competition in the industry is high and the rivals have diversified business.4 Cost. is currently being largely imported. efficiency & profitability of industry: The current market size of media and entertainment industry can be estimated at 61000 crores.
statutory or embodied in a voluntary code occupied by a particular industry or it may result more indirectly from the influence of consumers organizations. TV Advertising which has a high contribution towards broadcaster’s revenue grow at 13% in 2010. Consumerism is a movement or policies aimed at regulating the products or services.1 billion.while advertising constituted 33% at us$ 2. DTH has been able to connect semi-urban and rural areas to the world of Indian Television channels. In TV industry the content is most important what type of content channel is providing affects its business. Due to technological advantage over incumbent analogue cable. The other factor is Advertisement.6 Industry sales growth rate: Size of TV industry in india In 2010.2. Despite one of the lowest average revenue per user .7 Key success factors for the industry: The main key success factors for this industry are as follows. The another key success factor is Consumerism. subscription revenues contributed around 63% to the total television and stood at us$3. Largely due to rapid DTH expansion.TV distribution dominated the total television revenue pie and saw a strong growth of 15% in 2010. 2. Advertisement is the big source of revenue for this industry. methods or standards of manufacturers. Currently digital DTH addressable system is the torchbearer of growth in C&S HH. while advertising constituted approximately 4% to the total television market at us$ 260 milliom. such regulation may be institutional.9 billion. 19 . One of the important factor is Technology. The other factor is the Content. sellers and advertisers in the interest of buyers.
Riverly within industry (High): Highly Fragmented industry. Increase globalization. 20 .8 Porter’s five force model: Bargaining power of consumer (High): Consumer can switch channel. Highly diversified rivals. High fixed cost. Highly perishable products. Increasing number content providers. Availability of various alternative source of entertainment Threat of new entrants (Low) High sunk cost High capital requirement Difficult access to distribution Steeper learning curve because of mature market. Bargaining power of supplier (Low): Decreasing bargaining power of supplier.2.
The growth trajectory is backed by strong consumption in Tier 2 and 3 cities. 21 . Overall. The industry is estimated to be INR 93 billion in 2011 indicating a growth of 11. The Indian film industry is projected to grow at a CAGR of 10. The print industry grew by 8. the industry is expected to register a CAGR of 15 percent to touch INR 1. and is expected to grow at a CAGR of 17 percent over 2011-16.3 percent from INR 193 billion in 2010 to INR 209 billion in 2011. The over-all television industry is estimated to be INR 329 billion in 2011.457 billion by 2016.Threat of substitutes: Film industry Sports event like world cup Significant cultural event Print media Internet http://www. registering a growth of 5percent over 2010. .authorstream.5 percent vis-à-vis 2010. The Indian music industry achieved revenues of INR 9 billion in 2011. to reach INR 728 billon. says the FICCI-KPMG report. to reach INR 735 billion in 2016.1 percent to touch INR 150 Billion in 2016.9 Industry growth rate: The Indian Media & Entertainment (M&E) Industry registered a growth of 12 percent over 2010. and fast increasing new media business.com/Presentation/yugeshdubey-289444-media-entertainment-industryanalysis-education-ppt-powerpoint/ 2. continued growth of regional media.
with an extensive library housing over 80. Pioneer of television entertainment industry in India. Zee Trendz. Zee entertains over 500 million viewers across 167 countries.1 Company Strategy: Zee TV. Zee Classic. Zee Action. Zee TV has driven the growth of the satellite and cable industry. All of these in singularity adhere to the content-to-consumer value chain model of media and entertainment business. the company launched Zee TV in the UK / Europe (1995). The company also has a strong offering in the regional language domain with channels such as Zee Marathi. Zee is a pioneer in every aspect of content aggregation and distribution through traditional media like satellite and cable and new media like the internet. the USA (1998). Zee TV has created strong brand equity and is the largest media franchise serving the South Asian Diaspora. Ten Sports.000 movie titles from foremost studios and of iconic film stars. Zee Cinema. The Zee stable owns an integrated range of businesses. They have some Strategic Alliances like: 22 . With rights to more than 3. in India. Zing. Zee Telugu. Use strategies in different combinations and their main motive is growth. Realizing its strength in programming and the need for Indian entertainment in the overseas market. Through its strong presence worldwide. ETC Music and ETC Punjabi . Zee Premier. The popularity of Zee arises from its understanding of Indian culture and beliefs which are depicted in its programming. 3. Zee Jagran. Zee Entertainment Enterprise Ltd. With a reach of more than 120 countries and access to more than 500 million viewers globally.Chapter 3 Company Analysis Zee Entertainment Enterprises Limited Zee Entertainment Enterprises Limited is one of India’s leading television. the flagship channel of Zee Network was launched in October 1992. Zee Sports. media and entertainment companies. Zee Talkies and Zee Cinema. Zee Kannada. With over sixteen years of its launch. Zee Studio. Africa (1998) and today is available across five continents. Zee Cafe. Zee’s well-known brands include Zee TV. Zee houses the world’s largest Hindi film library. Zee Bangla. It is amongst the largest producers and aggregators of Hindi programming in the world.000 hours of television content.
V. Invest in the business in a focused. 76:24 joint venture between ZEEL and Turner named Zee-Turner. Continuous innovation to stay ahead of the curve and seize growth opportunities. II. 50:50 joint venture between Zee-Turner and Star-Den named Media Pro. 4. III. 23 . IV. 2. Joint venture with Ten Sports gives three sports channels. To use the strong cash f lows of their business to improve returns to shareholders. Inspire creativity and Continue to run their business as best in class. disciplined way and achieve superior financial performance. with viewer satisfaction as the ultimate goal. 3. Few other criteria they follow under strategies alternative: I. Zee have acquired 51% stake in ETC Music and ETC Punjabi.1. Reaffirm their commitment to highest level of integrity and professionalism throughout their business.
24 0 1.11 0 930.42 581.568.74 93.210.86 0 1.3 1.12 1.242.07 2.278.014.92 81.204.12 Mar '08 4.8 0 2.81 12.80 Mar '12 1.378.4 190.67 1.3.93 Mar '09 2.62 313.204.041.63 18.46 555 218.91 233.47 62.166.1 406.310.75 879.18 2.00 0 2.94 156.210.36 1.24 0 2.66 130.12 1.54 Mar '11 3.94 72.61 0 870.278.169.94 0 2.86 92.24 56.169.20 366.57 Mar '10 4.99 75.69 81.96 1.99 0 1.503.65 18.74 0 1.2 Profit & Loss account Mar '08 12 mths Mar '09 12 mths Mar '10 12 mths Mar '11 12 mths Mar '12 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Profit & Loss account 3.80 24 .041.37 23.5 157.349.6 0 1.2 27.77 48.00 106.5 0 681.
81 200 49.22 295.24 25 .74 9.35 159.33 4.8 14.23 267.14 200 53.37 860.30 143.97 791.8 23.6 727.65 86.27 418.63 80.76 11.70 5.44 309.84 867.340.64 3.3 9.99 538.19 27.587.6 454.76 63.5 21.335.5 12.95 10.89 200 29.74 926.780.51 390.5 741.340.7 1.565.42 1.41 442.81 576.67 6.6 237.54 4.09 361.05 464.07 12.76 5.12 677.33 31.8 558.4 863.67 843.43 608.35 0 454.07 86.3 639.2 742 0.63 31.17 132.61 195.11 150 31.69 635.92 378.Operating Profit PBDIT Interest PBDT Depreciation Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Equity Dividend Corporate Dividend Tax Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 409.68 32.74 619.8 14.5 720 7.373.87 194.27 16.54 4.23 485 20.88 400 64.68 11.63 844.84 632.9 489.07 7.6 0.
4 5.33 58.81 97.2 40.00 121.79 39.29 158.3.89 139.23 97.805.89 2.08 2.38 111.5 60.82 49.82 2.67 58.3 Comparison of Balance Sheet Balance Sheet Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum.128.36 0 2.9 0 2.904.2 57.43 2.39 204.1 221.26 2.996.825.08 122.9 2.12 6.51 43.71 95.17 154.95 43.903.33 216.95 258.4 0 2.93 18.10 162.9 95.4 43.4 118.776.4 43.60 2.299. Depreciation Net Block Capital Work in Progress Mar '08 Mar '09 Mar '10 Mar '11 Mar '12 43.95 2.995.10 1 0 1 2.1 177.35 189.5 2.36 43.5 26 .08 0 1.899.81 0 2.4 49.25 70.332.343.084.20 2.63 1.944.3 81.55 170.87 133.96 67.513.
060.63 0.16 1.80 357.242.1 1.332.944.21 564.54 0 2.01 2.6 1.62 319.99 1.55 0.996.93 453.513.09 1.22 439.83 0 2.23 298.51 672.98 171.09 616.74 556.71 1.103.59 1.411.01 2.21 666.52 417.7 954.497.50 511.881.97 64.20 0 2.38 37.96 649.057.Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA.50 703.01 1.68 110.69 1.10 1.94 140.13 463.98 1.96 638.24 1.48 351.208.824.006.01 2.75 237.70 1.07 0.59 663.4 76.701.16 53.42 1.813.20 993 662.36 0.731.27 384.349.92 1. Loans & Advances Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 1.74 362.85 29.904.28 22.47 236.7 183.242.9 744.445.01 1.41 408.431.80 31.48 49.349.61 160.47 255.43 781.90 523.72 854.227.24 27 .9 541.3 0 2.54 400.89 93.97 885.
9529 0 198.058 #DIV/0! 148.544 97.1755 136.1614 #DIV/0! 100.8919 136.3631 #DIV/0! 252.5183 211.479 115.7209 123.8646 #DIV/0! 253.824 143.6717 208.3876 211.16216 127.277 #DIV/0! 142.895 #DIV/0! 77.6109 270.0797 149.2496 95.973 202.187 122.2804 122.147 75.2183 Mar '09 Mar '10 Mar '11 Mar '12 Other Manufacturing Expenses 100 Selling and Admin Expenses Miscellaneous Expenses Total Expenses Operating Profit 100 100 100 100 28 .5183 140.2026 128.693 #DIV/0! 140.5571 192.3011 249.7209 122.7705 68.3.676 88.3265 155.4419 164.34116 0 192.1892 230.4155 216.565 114.4 Trend analysis Profit and loss statement Profit & Loss account Mar '08 Income Sales Turnover Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost 100 100 100 100 100 #DIV/0! 100 #DIV/0! 100 116.147 116.52161 #DIV/0! 131.3693 128.1221 169.2496 208.8145 131.3931 193.
PBDIT Interest PBDT Depreciation Profit Before Tax PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Equity Dividend Corporate Dividend Tax Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 86.2012 195.101 104.2961 107.4795 202.982 130.4124 63.54115 133.0705 224.1015 189.9325 230.2857 222.63822 29 .6718 185.49046 100 60.846 100 109.4681 160.03671 75 63.363 97.9894 165.3802 218.8105 168.493766 159.2476 221.1336 200 132.1805 104.702 225.0262 112.954 136.8302 133.7791 50.3603 128.48075 152.3521 100.207 84.8302 158.659 100 100 100.1409 149.2642 185.9897 2.1354 75.5882 86.3192 83.3172 202.2944 225.80798 185.453 83.0242 157.8902 140.3487 178.2247 137.0701 16.6682 160.74739 189.4159 165.
582 145.1105 136.3453 145.584 288.4327 1.7537 82.2258 225.69235 107.7524 629.1339 65.528738 124.411034 0 0.1716 139.56418 100 100 100 100 100 100 100 100 100.7787 100.2478 202.0923 100.606 106. Depreciation Net Block Capital Work in Progress Investments 100 100 100 100 100 117.489572 128.2984 110.5766 134.5315 221.28076 58.61243 159.0284 124.5788 136.523917 0 0.1032 905.54551 45.5 Trend Analysis Balance Sheet Balance Sheet Mar '08 Mar '09 Mar '10 Mar '11 Mar '12 Sources Of Funds Total Share Capital Equity Share Capital Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum.7306 1.6921 1749.5118 78.6614 100.5898 126.0923 110.476 114.1691 132.5766 225.21012 126.4496 30 .4341 129.0111 133.0577 140.2996 37.8434 167.0923 100.1716 221.0904 171.0923 133.14671 83.3.
7434 143.7273 145.4063 77.731 100 107.1381 86.3487 466.6341 68.5089 0 124.033 162.8726 271.2085 117.27839 109.9898 70.2268 150.9817 191.4368 0 126.4394 148.5583 114.91392 107.65079 81.8692 3625900 133.9697 108.2416 342.15444 100 102.7796 92.28409 199. Loans & Advances 100 Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 100 100 100 100 100 100 100 100 31 .883 213.64668 78.6385 259.0948 422.0805 97.6004 151.48075 420.34365 1600100 176.68988 0 158.Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits 100 100 100 100 100 100 135.8315 63.1975 89.0814 75.6712 113.4956 169.5394 60.0755 0 128.5316 174.3225 104.4502 171.0963 138.13696 497.3909 132.7772 120.9207 92.63822 Total CA.88346 117.
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