Women-led Family-owned Businesses...

Ref. No.: FM0020

op
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Women-led Family-owned Businesses:

Capital Structure of Balaji Telefilms Ltd.

“Women business owners are significant players in the nation’s economy and their
momentum shows
no signs of slowing down.”1
– Marjorie Alfus, Chairperson, Women’s Business Research
“We expect to emerge stronger with a wider genre exposure. We don’t just expect
this wider spread to
progressively de risk our business but also expect the programs to generate
attractive toplines and
bottomlines. This will enable us to enhance value for our share holders.”2

No
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– Shobha Kapoor, Managing Director, Balaji Telefilms Ltd.

“A combination of an insight into what the customer wants and our ability to
innovate represents our
success drivers.”3
– Ekta Kapoor, Creative Director, Balaji Telefilms Ltd.

Family-owned businesses4 are the oldest and still continuing format of businesses
across the
globe. In India, majority of the businesses are family-owned with management
control in the hands
of the promoters or family members. Since ages, only male members of the family
have been the
successors of the family-owned businesses. But this trend has changed with few
empowered women
leading their family business or creating their own companies. Balaji Telefilms
Ltd. (Balaji), promoted
by Shobha Kapoor is the prominent player in the Indian Media and Entertainment
(M&E) industry,
holding strong position in the Indian television arena. Balaji raised its capital
through Initial Public

Toh Alvin, “Women Business Owners Making Their Mark in the 21 st Century”,
http://www.a1articles.com/
article_124217_15.html, January 29 th 2007

“Annual Report 2007–2008”, http://www.balajitelefilms.com/Investors/images/annual-

report/Balaji-Annual-Report%200708.pdf, 2008, page 12

Ibid., page 9

A family business is a business in which one or more members of a family have

significant ownership interest commitment
towards the business. A firm is said to be family-owned if a person is the
controlling shareholder, i.e., the person has highest
percentage of voting rights in comparison to other shareholders.

Do

This case study was written by Fareeda under the direction of Fathima Reshma Taj
H., IBSCDC. It is intended to be used as the basis
for class discussion rather than to illustrate either effective or ineffective
handling of a management situation. The case was
compiled from published sources.
© 2009, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or
distributed in any form or medium whatsoever
without the permission of the copyright owner.

1
Women-led Family-owned Businesses...

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Offering (IPO) and remained cash rich with its consistent investments in the high
quality debt funds.
As a matter of policy, the company remained completely debt-free. However, the
question is to what
extent are the capital structure decisions of the company influenced by its woman
leader?

Family-owned and Women-led Companies: Capital Structure and Company

Performance
Family-owned businesses constitute 80% of the world businesses.5 Some of the
world’s oldest
companies are family-owned, for instance, Kongo Gumi of Japan, a family
construction firm founded
in 578 AD, survived 40 generations till its end in 2006.6 The family businesses
employ around 50%
of the world’s workforce and contribute 40%–50% to the world’s Gross National
Product (GNP). 7
Some of the largest wealth creators and businesses are family-owned such as Wal-
Mart. In India,
the highest generator and creator of wealth are family-owned businesses.

No
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In India more than 95% of companies are family-owned businesses, contributing 60%–
70% of the
GDP.8 The family businesses are the backbone of Indian economy with their history
dating back to preindependence period. In the late 19th century, traders and money
lenders became industrialists and groups
such as Agarwals and Guptas in the North, the Chettiars in the South, the Gujarati
Jains and Banias,
Muslim Khojas and Memons in the West and Marwaris all over India flourished. During
1950s, 18 Indian
families and two British houses hold major part of Indian businesses.9 The
businesses during this period
were mainly in trade and small in size requiring less investment and controlled by
a family.
During 1970s, the family businesses had undergone many changes along with the
developments
in the Indian economy. Family businesses have shifted their focus to manufacturing
and required
more investment. The infrastructure developments during this period supported the
growth of the
businesses. The inception of financial institutions shifted the financial control
of the businesses from
owners to institutions. Besides, the family businesses started splitting, Dalmia
being the first business
house to break up followed by prominent groups such as Birla, Kirloskar,
Shriram,Walchand, Thapar,
Mafatlal, Mahindra, Lalbhai, etc. Though the businesses had lost financial control
and undergone
breakups, the control of family business over the management remained unimpaired.

5
Do

During 1990s, the economic reforms and open markets made the family businesses
struggle with
the emergence of new businesses in the service sector. The family businesses which
were enjoying
monopoly till then had to face stiff competition from new domestic players and
international companies.
Though many family businesses faced crisis due to these economic reforms, few
adapted the changes
well and remained major employers, largest creators and users of economic
resources. According

Anuranjan, “Indian Family Managed Business”,

http://www.scribd.com/doc/17787209/Indian-Family-Managed-Business ,
page 3

Kristie Leah “The World’s Oldest Family Companies”,

http://www.familybusinessmagazine.com/worldsoldest.html, September
2008

“Indian Family Managed Business”, op.cit.

Pawar Satyajeet, “Family Business in India ”,

http://www.docstoc.com/docs/12265673/Family-Business-in-India

“Indian Family Managed Business”, op.cit.

2
Women-led Family-owned Businesses...

to recent statistics, the management of as many as 461 of the 500 most valuable
companies are
under family control.10 The biggest family-owned businesses in India are – Tata,
Ambani, Birla,
Mittal, Godrej, Wipro, etc.

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Family businesses are traditionally dominated by men, but the scenario changed with
the rising
status of women in family businesses through globalisation, liberalisation and a
growing emphasis on
education. Indian women are breaking traditional barriers and working their way to
the top of
companies or creating their own businesses. Until 1970s, women in India were
confined to traditional
roles (as a daughter, mother, sister and wife) within the family. However, in the
last three decades,
few businesswomen in India have broken through the barriers of social conformity –
both at home
and in the workplace – to become successful entrepreneurs and professionals. The
list includes
Lalita Gupte of ICICI Bank (joint managing director), Kalpana Morparia of ICICI
Bank (joined JP
Morgan as CEO), Anu Aga of Thermax India, Kiran Mazumdar-Shaw of Biocon Ltd. and
Simone
Tata of Tata Group, to name a few. Despite their great strides in the corporate
world, women are
often discouraged by family members from having careers that infringe too much on
family life.
Though women in India do not have proportionate representation in the companies,
they are
better off than other countries across globe. As per a study by EMA Partners, an
executive search
firm, 11% of 240 large companies in India have women CEOs, whereas only 3% of
Fortune 500
companies have women CEOs.11 Besides, 35% of the women CEOs are also promoters of
their
companies. Women promoters have been outperforming in terms of both financials and
management
performance. According to a Sunday Economic Times (SundayET) study in 2009, “Nine
listed
companies managed by prominent women promoters (excluding unlisted firms and non-
promoter
women CEOs) fared better than the top 30 firms listed in the Bombay Stock Exchange
in year-onyear growth rates for the last five years”.12 The women promoters have
made their marks through
their efficient performance in their respective industries (Exhibit I). During the
last 5 years, the
companies’ income before tax grew by a Compounded Annual Growth Rate (CAGR) of
around
35% as against a 21% CAGR for the BSE-30 firms; their profits had grown by around
56% whereas
BSE-30 companies posted a growth rate of 27%.13

Do

To achieve desirable results, the women owners had to work hard to succeed with
their true
business sense. As stated by Kiran Mazumdar-Shaw, chairman and managing director,
Biocon Ltd.,
“Women have special attributes like compassion, sensitivity, multi-tasking and
above all, the inner
strength to excel. Women can use these attributes as well as their instincts,
intellects, thoughts and
ideas to their advantage.”14 Again if a woman fails, it’s not seen as an individual
failure but seen as
the collective failure of women, which puts extra pressure on women leaders to
deliver.

10

“Indian Family Managed Business”, op.cit.

11

“India conservative? More women CEOs in India than U.S.”,

http://www.siliconindia.com/shownews/
India_conservative_More_women_CEOs_in_India_than_US-nid-63352.html, November 30 th
2009

12

Rawani Anand, “Women promoters beat big daddies”,

http://economictimes.indiatimes.com/News/News-By-Company/
Corporate-Trends/Women-promoters-beat-big-daddies/articleshow/4240125.cms?curpg=1,
March 8 th 2009

13

Ibid.

14

Tikoo Rajiv, “The Gender eDGE”,

http://www.financialexpress.com/printer/news/433979/, March 12 th 2009

3
Women-led Family-owned Businesses...

Exhibit I
Leading Women Promoters in India in 2009 (in INR crore)
Promoter

Industry

Biocon Ltd.

Kiran
Mazumdar
Shaw

Pharmaceuticals

Apollo
Hospitals
Enterprise
Ltd.
Balaji
Telefilms Ltd.

Sangeeta
Reddy

Hospitals
Medical
Services

Shobha
Kapoor

Entertainment/
Media Industry

Thermax Ltd.

Meher
Pudumjee

Piramal
Healthcare
Ltd.
HT Media Ltd.

Swati Piramal

Pollution
Control
Equipment
Pharmaceuticals

Kinetic
Engineering
Ltd.
Jindal
Saw
Ltd.
Sulajja
Firodia
Motwani
Sminu Jindal

Auto - 2 & 3
Wheelers
Steel
Tubes/Pipes

Rajshree
Sugars
Chemicals
Ltd.

Rajshree
Pathy

Sugar
Integrated

* NA – Not Available

&

EBIT as
%
of
Sales

904.2

Total
Income
in FY
2009
987.8

CAGR for
Last 5 Years
(in %)

4.9

Net
Profits
in
FY
2009
203.2

14.93

1,457.9

1,479.3

12.20
19.6

124.8

25

294.9

304.2

10.5

20.6

13

3,095.6

3,159.3

14.89

10.1

382.8

50

2,321.9

2,482.9

18.25

180.7

365.6

21

No
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&

Shobhana
Bhartia

Sales in
FY 2009

Entertainment/
Media Industry

Interest
op
y

Company

28.41

1,323.0

1,352.3

10.62

31.7

108.9

NA

82.6

84.4

(57.20)

21.4

(66.9)

NA

5,003.3

5,029.9

12.64

197.6

339.1

58

354.4

358.1

16.62

26.0

24.7

19
Compiled by the author from hindi.economictimes.inditimes.com

Do

The efficiency of these women-led companies also attributes to their efficient

capital structures.
Basically, family-owned businesses, led by women are risk averse. The Arthur
Anderson/MassMutual
American Family Business Survey, 1997 notes that “Family businesses tend to avoid
debt. It notes
that 34.3% report no debt other than trade payables and another 34.2% have debt to
equity levels of
1% to 25%.”15 The family businesses avoid debt due to the risk of losing control
over the firm as
higher degree of leverage increases the probability of bankruptcy. It has been
noticed that, the
capital structures of the women-owned family businesses have low debt and efficient
returns on
capital employed (Exhibit II).
One such prominent woman-led company is Balaji, leading the television fiction
arena of the
Indian M&E industry.

15

McConaughy, Daniel L., “Founding Family Control and Capital Structure: The Risk of
Loss of Control and the Aversion
to...”, http://www.allbusiness.com/specialty-businesses/family-owned-
businesses/331244-1.html, June 22 nd 1999

4
Women-led Family-owned Businesses...

Exhibit II
Financials of Leading Women-led Family Business in India (in INR crore)
Biocon
Ltd.

Apollo
Hospitals
Enterprise
Ltd.

Balaji
Telefilms
Ltd.

Thermax
Ltd.

Piramal
Healthcare
Ltd.

Net Worth

HT
Media Ltd.

Kinetic
Engineering
Ltd.

Jindal
Saw Ltd.

Rajshree
Sugars &
Chemicals Ltd.

op
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Particulars

1,374.8

1,370.8

388.8

961.8

1,189

91.6

36.8

2,350.7
116.0

Debt

163.9

449.5

976.9

369.8

221.7

1,636.6

399.1

Fixed Assets

713.2

662.7

40.67

439.9

1,018.7

559.4

51.8

1,076.6

410.5

Current Assets

777.0

786.8

85.61

1,630.4

1,533.3

711.8

175.8
3,395.4

207.4

Investments

346.7

538

245.67

196.8

129.9

405.6

110.9

215.3

47.6

EPS

10.93

22.91

4.04

22.31

16.43

5.21

(32.21)

69.49

8.46

2.31

1.91

2.25

1.23

2.73

1.22

2.10

2.25
1.38

Current Ratio

Compiled by the author fom hindi.economictimes.inditimes.com

Indian Entertainment Industry: Balaji Telefilms Ltd.

No
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The Indian M&E industry is one of the fastest growing sectors of the country. The
sector grew
at a CAGR 15% in the last 5 years reaching INR 584 billion ($11.68 billion) in 2008
and expected to
reach INR 1,052 billion ($21.04) billion in 2013 with a CAGR of 12.5%.16 As per the
Federation of
Indian Chambers of Commerce and Industry (FICCI)-KPMG17report the challenging
global economic
environment has led for the moderate projections for the M&E industry as against
the earlier projection
of 18% for 2008–2012. Amit Mitra, secretary general, FICCI, justifies “India is one
of the few
countries where economic growth will be led by domestic consumption. With a low
advertising
spend to GDP ratio of 0.47 percent, a growing consumer class and middle class,
young population,
low media penetration and increasing discretionary spending; India continues to be
an attractive
market for Media & Entertainment.”18

Do

Indian M&E industry spread across various segments – television, print media,
films, animation,
internet, music, radio. Television is the largest segment of the M&E industry
occupying $4.81 billion,
of the M&E industry followed by print media, films and other segments (Exhibit
III). The television
segment continues to dominate the Indian M&E by its revenue projections reaching
$9.45 billion in
2013 at CAGR 14.5%. The Indian viewers are exposed to about 450 channels (in 2008)
as compared
to 120 channels in 2003, classifying the television as one of the leading sectors
of the economy. 19
The growth in the television industry stems from an upbeat television distribution
with the emergence
of digital mediums in the form of Direct to Home television (DTH), Internet
Protocol Television
(IPTV) and Digital Cable. This has led to the increase of service providers and
subscribers and the
DTH subscribers are expected to increase to 28 million by 2013.20
16

“Media & Entertainment: The Next Five Years Are Promising”,

http://www.theindusview.com/vol4Issue4/specialreport.html

17
KPMG is a global network of professional services firms providing Audit, Tax and
Advisory services. It has about 137,000
professionals working together delivering value in about 144 countries worldwide.

18

“Media & Entertainment Industry projected to grow at 12.5% over next five years to
INR 1052 bn: FICCI-KPMG report”,
http://www.in.kpmg.com/pressreleases/pdf/Press%20Release-%20FICCI%20Frames.pdf,
February 17 th 2009, page 1

19

“Annual Report 2008–2009”, http://www.balajitelefilms.com/Investors/images/annual-

report/Balaji-Annual-Report%200809.pdf, page 21

20

“Annual Report 2008–2009”, op.cit.

5
Women-led Family-owned Businesses...

Exhibit III
Sector-wise Growth of the Media & Entertainment Industry (in $ billion)
2008

2013

% CAGR

Television
Print
Film
Animation
OOH
Gaming
Internet
Radio
Music

4.81
3.45
2.18
0.35
0.32
0.13
0.12
0.16
0.14

9.45
5.32
3.37
0.79
0.59
0.55
0.43
0.33
0.21

14.5
9.0
9.1
17.8
12.8
33.3
27.9
11.2
8

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Segment

No
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Source: “Media & Entertainment: The Next Five Years Are Promising”,
http://www.theindusview.com/vol4Issue4/pdf/
20090312_IndusView_Publication_Vol4_Issue4_Special_Report_Media_Sector.pdf, 2009,
page 2

Another prominent sector of Indian M&E industry after print media sector is the
film industry.
India is the world’s largest film producer by volume, producing approximately 1,000
films a year and
accounts for over 3 billion theatrical admissions per annum.21 This growth is
driven by the audiences,
who have been open to accepting national and international movies. The multiplex
culture has resulted
in the audience accepting movies from all cultures and genres. The film industry is
expected to grow
at CAGR 9% reaching $3.37 billion in 2013. The films have become the major source
of content for
television, music and radio segments. For instance, the film songs become the
content of the
programmes on television and radio. The increase in demand for the quality content
for both television
and film segments have led to the development of numerous content providers and
production houses.
The content providers are one of the primary entities of the M&E industry value
chain, followed
by distributors and end users (Exhibit IV). The content generated by new agencies,
individual movie/
tele-serial producers or companies takes the form of movies, general entertainment,
sports, news,
current affairs, realty shows and game shows. Few companies also felt the need to
be present
across the value chain. For instance, the conglomerates such as Walt Disney, Times
Warner, etc.,
are well-integrated on the global stage. In India too, companies such as Zee
Entertainment and Sun
TV are positioned across the value chain and are ready to exploit the benefits that
arise in future.

Do

The Indian M&E industry is highly fragmented with numerous content providers
providing
content to its different segments. The prominent content providers providing
content for both
television and film segment were UTV Software Communications Ltd., B.A.G films,
Creative
Eye, Balaji, etc. The companies in the entertainment content business are mostly
equity financed
and less dependent on debt. The direct dependence of the companies on debt could
discourage the
risk taking and growth prospects of the companies and hence the companies are
largely equity
financed (Exhibit V). One such company with zero debt capital structure,
reinforcing its net worth
with internal accruals and equity is Balaji.
21

“Annual Report 2008–2009”, op.cit.

Women-led Family-owned Businesses...

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Exhibit IV
M&E Industry Value Chain

Source: “Balaji Telefilms”,

http://www.spjimr.org/event_khoj2008/2008finalists_report/FF-15-
01_Balaji_Telefilms.pdf,
2008, page 2

Exhibit V
Debt Equity Mix of Content Provider of Television and Film Industry as on
March 31st 2009 (in INR crore)
Company
Cinevistaas Ltd.

Do

Media Matrix Worldwide Ltd.

Creative Eye Ltd.
Balaji Telefilms Ltd.
Pritish
Nandy
Communications Ltd.
Mukta Arts Ltd.
Crest Animation Studios Ltd.
Radaan Mediaworks (I) Ltd.
B.A.G Films & Media Ltd.
K Sera Sera Productions Ltd.
UTV
Software
Communications Ltd.
Moving Picture Company
(India) Ltd.

Total
Income
57.7

Net Profit

Equity

Debt

0.93

166.3

17.7

Market
Capitalisation*
32.7

21.9
54.3
304.2
15.3

0.11
(3.8)
20.6
(1.7)

9.65
41.1
388.9
93.7

0
11.2
0
1.3

45.2
12.0
381.5
49.0

167.7
38.3
32.9
60.6
66.7
312.3

4.13
(6.9)
0.14
1.7
(4.3)
16.6

126.6
115.9
26.8
177.2
170.9
,
1056.5

28.2
16.7
6.95
0.99
35.6
346.7

109.1
140.7
18.95
215.5
107.4
,
1524.9

10.8

0.28

17.1

7.9

5.8

* The market capitalisation of the companies is as on November 19th 2009.

Compiled by the author from:
http://hindi.economictimes.indiatimes.com/quotecompare.cms?companyID=4155

7
Women-led Family-owned Businesses...

Balaji Telefilms Ltd.: Capital Structure Policy

op
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Balaji is the leading television content provider, dominating the prime-time22 and
non-prime-time
fictional content of Indian M&E industry. It was promoted in 1994 by veteran actor
Jeetendra
Kapoor, his wife Shobha Kapoor and daughter Ekta Kapoor. Though the first few pilot
projects of
company were not successful, it achieved its first breakthrough from its programmes
Hum Paanch
(Indian sitcom) and Mano Ya Na Mano (fictional thriller) for Zee TV. The programmes
such as
Kyunki Saas Bhi Kabhi Bahu Thi, Kahani Ghar Ghar Ki, Kaun Banega Crorepati, etc.,
were
the turning points in the company’s journey to success.

No
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Besides television serials Balaji ventured into feature film production and new
media (Internet)
(Exhibit VI). Balaji, under the banner name Balaji Motion Picture Ltd., has
produced films such as
Kya Kool Hai Hum, Shootout at Lokhandwala, Sarkar Raj, etc. The company also has
plans to
emerge as a content aggregator or a producer for new media sphere such as Internet,
mobile phones
and gaming to develop efficient revenue generating models. Puneet Kinra, CEO,
Balaji justified that
“Balaji’s creative talent, superior execution capabilities and its ability to
deliver scale are its forte.
Leveraging our inherent skills, we are gearing ourselves to cross new horizons of
content creation.”23

Exhibit VI
Balaji Telefilms Business Segment

Source: “Annual Report 2008–2009”,

http://www.balajitelefilms.com/Investors/images/annual-report/Balaji-AnnualReport
%2008-09.pdf, 2009, page 9

Do

Balaji’s success over the years can be attributed to its creative abilities and its
unique business
model (Exhibit VII). Balaji generates revenue by providing content to both
sponsored24, commissioned25
programmes and events. It provides content in both national (Hindi) and regional
languages such as
22

The hours between 7 p.m. and 11 p.m., when the largest TV audience is available.

23
“Annual Report 2008–2009”, op.cit., page 9

24

Sponsored programmes: Content developers purchase time slots from the channel and
get ‘free commercial time’ in return.
The company retains the advertisement revenues and the Intellectual Property Rights
(IPR). The sponsored programmes
generate variable income for the company.

25

Commissioned Programmes: The customer of the company channel, commissions it to

produce episodes as per its requirement
against a fixed remuneration or cost-plus basis. The channel retains the IPR. It
generates study income for the company.

8
Women-led Family-owned Businesses...

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Telugu, Tamil, Kannada in various genres – sitcoms, thrillers, game shows,

fictional shows, etc.,
catering to all kinds of the customers. Ekta Kapoor, creative director, Balaji,
stated “we are now
present across all genres – romance, horror as well as the conventional fiction
programmes, with
success across them all.”26 By the end of 2000 fiscal, the company enjoyed over
616.5 hours of
programming time across 10 channels – DD National, DD Metro, Sun TV, Gemini TV,
Udaya TV,
Star India, Sony TV, Zee TV, Metro Gold and SAB TV. As a matter of policy to
increase flexibility
and save time, the company invests in its own equipment and studios.

No
tC

Exhibit VII
Pillars of Balaji’s Business Model

Source: “Management Discussion and Analysis”,

http://www.balajitelefilms.com/Investors/images/annual-report/
mda_2001.pdf, 2000–2001, page 1

In October 2000, Balaji raised money from the market through IPO for its further
expansion. The
company successfully raised INR 36.45 crore, by issuing and allotting 2,803,250
equity shares of INR
10 each for cash at a premium of INR 120 per share.27 The IPO proceeds were
utilised to finance the
expansion of infrastructure facilities (equipments and building studios) and also
to meet its long-term
working capital requirements. Balaji had set up offices and integrated studios in
Mumbai, Bangalore,
Chennai and Kolkata. Post-issue, the company’s paid-up capital was INR 10.30 crore
(including equity
capital of INR 1 crore, INR 6.5 crore of bonus issue in June 2000 and IPO of INR
2.80 crore), with the
promoters’ stake being 69%.28 During 2000–2001 fiscal, the company repaid all its
long-term debt
from its strong cash flows and IPO proceeds and emerged as a completely debt-free
company. It had
reduced its debt-equity ratio to zero in 2001 from 1.09 in 2000 and 1.67 in 1999.29

Do

During 2002–2003 fiscal, the company increased its number of shares by splitting
each share in
1:5 ratio. Balaji subdivided its equity share of INR 10 each into equity share of
INR 2 each, increasing
its number of shares to 51,516,250 and its paid-up capital being same.30 The share
capital of Balaji
had increased to INR 13.04 crore in 2005 fiscal from 10.30 crore in 2004 fiscal
with the preferential
26

“Annual Report 2008–2009”,op.cit., page 15

27

“Balaji Telefilms Ltd”, http://www.balajitelefilms.com/Investors/images/quarterly-

result/pdf/FY01_Q3.pdf, 2000, page 1

28

“Management discussion and analysis_

2001”,http://www.balajitelefilms.com/Investors/images/annual-report/mda_2001.pdf,
2001, page 5

29

Ibid.

30

“Annual Report 2002–2003”, http://www.balajitelefilms.com/Investors/images/annual-

report/annualreport_2003.pdf, 2003,
page 80

9
Women-led Family-owned Businesses...

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allotment31 of 13,694,193 shares of INR 2 each at a premium of INR 88 to Asian

Broadcasting FZLLC, an affiliate of Star Group Ltd.32 This preferential allotment
provided 21% stake to Asian
Broadcasting and Balaji received INR 123.25 crore in return.33 The promoters of the
company hold
40% of the total shares accounting 26,085,250 shares (Annexure I).
Since 2005 fiscal, the company has grown tremendously, occupying nearly every
commercial
channel with its serials, events, etc., at prime time. The company’s programming
hours increased
from 1,720 hours in 2004–2005 to 1,820 hours in fiscal 2007 and declined to 1,571
hours in fiscal 2008
(Exhibit VIII). In course of time the company reduced it’s sponsored programming
hours as the
commissioned programmes de-risk it from the market risk, providing steady income
over the life of
the programmes. By 2009 fiscal, Balaji telecasted nearly 25 serials holding the
total programming
hours of 1,497 hours on all general entertainment channels Star Plus, Colors
(Annexure II).

Year

2004–2005
2005–2006
2006–2007
2007–2008
2008–2009

No
tC

Exhibit VIII
Balaji Telefilms Ltd.: Programming Hours Distribution
Sponsored Programming
Hours

Commissioned
Programming Hours

Total Programming
Hours

789

931

1,720

1,045

1,068

2,113
759

1,061

1,820

652

919

1,571

570

927

1,497

Compiled by the author from Annual Reports of the company

Do

Balaji evolved as the leading content provider with increasing revenues and net
profits every
year. The company’s revenue increased from INR 201.69 crore in 2005 fiscal to INR
328.97 crore
in 2008 and declined to INR 294.91 crore in 2009 (Annexure III). The decline in the
revenue is
attributed to the decline in programming hours due to the adverse effects of
economic slowdown on
advertisement industry. Even the company’s profit before tax and profit after tax
declined by 71%
and 70% respectively from its previous year. The Earnings Per Share (EPS) of the
Balaji stood at
INR 4.04 in 2009, a decline of 69.85% from its previous year. Despite the decline
in its profits, the
company paid dividend of INR 0.30, a 15% on the face value of equity share.34 As of
March 31st
2009, the market price of the equity of the company was INR 29.55 (closing price on
the BSE). 35
31

Preferential allotment is a way of infusing fresh equity in the business by issuing

shares or warrants to the specified entities
at specific prices to a promoter or promoter group or a person acting in concert
(PAC) or institutional players.

32

“Annual Report 2004–2005”, http://www.balajitelefilms.com/Investors/images/annual-

report/annualreport_2005.pdf, 2005,
page 68

33

“Balaji Tele to make pref allotment to Star group affiliate — To offer 25.1% stake
at Rs 90”, http://
www.thehindubusinessline.com/bline/2004/08/19/stories/2004081902830100.htm, August
19 th 2004

34

“Annual Report 2008–2009”, op.cit., page 42

35

Ibid.

10
Women-led Family-owned Businesses...

op
y

Balaji remained completely debt free since 2001 fiscal and met its long-term
capital requirements
through its retained earnings and short-term investments. Balaji’s net worth has
consistently grown
from INR 218.9 crore in 2005 to INR 388.88 crore in 2009 (Annexure IV). The surplus
funds of the
company are employed for setting up studios, purchasing land for studios etc., with
the objective of
strengthening company’s competitive edge. The company invests its surplus funds
mainly in debt
funds to preserve capital, liquidate at will and generate a fair return on
investment. As a matter of
policy the company invests its major part of surplus funds in high credit quality
funds and small
amount in equity funds.

Do

No
tC

As per company annual report, “the investment of surplus funds continue to be

focused on relatively
safe financial instruments with the overall philosophy of safety and liquidity.”36
The total investment
made by Balaji in 2009 fiscal stood at INR 245.67 crore and 249.89 crore in 2008.
Jeetendra Kapoor,
chairman, Balaji states, “our initiatives will be directly proportionate to our top
line over the coming
years. Correspondingly, we expect that our combination of de-risked and aggressive
approach will
translate into enhanced value for all stakeholders.”37

36

“Annual Report 2008–2009”, op.cit., page 27

37

“Annual Report 2007–2008”, op.cit., page 9

11
Women-led Family-owned Businesses...

op
y

Annexure I
Shareholding Pattern of Balaji Telefilms Ltd. (as on March 31st 2009)

No
tC

Source: “Annual Report 2008–2009”,

http://www.balajitelefilms.com/Investors/images/annual-report/Balaji-Annual-

Do

Report%2008-09.pdf, 2009, page 41

12
Women-led Family-owned Businesses...

No
tC

op
y

Annexure II
Balaji’s TV Programmes on Different TV Channels (as on March 31st 2009)

Source: “Annual Report 2008–2009”,

http://www.balajitelefilms.com/Investors/images/annual-report/Balaji-Annual-

Do

Report%2008-09.pdf, 2009, page 26

13
Women-led Family-owned Businesses...

Particulars (as of 31st March)

2008-2009

2007-2008

Income
Turnover

op
y

Annexure III
The Income and Expenses Statement of Balaji Telefilms Ltd. FY 2005–2009
(in INR crore)
2006-2007

2005-2006

2004-2005

294.91

328.97

317.46

280.37

196.75

21.27

17.28

9.41

8.69

4.94

Total

316.18

346.25

326.87

289.06

201.69

Expenditure
Cost of Production of TV serials/
feature films
180.66

161.20

159.49

156.41

106.38

13.20

13.62

11.57

7.17

5.40

61.28

30.24

26.82

23.13

17.61

0.05

0.19

Employee Costs
Administrative and Other
Expenses
Interest
Depreciation
Total
Profit Before Tax
Provision for tax
Current Tax
Deffered Tax
Fringe Benefit Tax
Profit After Tax

No
tC

Other Income

23.52

12.70

11.25

14.32
9.74

278.66

217.76

209.13

201.08

139.32

37.52

128.49

117.74

87.98

62.37

(18.60)

(40.30)

(37.40)

(29.48)

(20.86)
(0.21)

8.60

0.46

(0.20)

1.19

(0.85)

(0.72)

(0.71)

(0.27)

26.67

87.93

79.43

59.42

41.30
Excess/ (Short) Provision for tax
in respect of earlier years
Balance brought forward from
Previous year

(0.35)

(0.55)

0.29

0.22

0.21

161.54

109.65

63.90

32.50

88.32

Amount Available for

Appropriations

187.86

197.03

143.62

92.14

129.83

Appropriations
Interim Dividend

22.82

2.67

8.79

Proposed Dividend

1.96

22.82

Corporate Dividend Tax

0.33

3.88
3.20

2.74

10.77

182.90

161.54

109.66

63.90

32.50

4.04

13.40

12.23

9.15

7.61

Do

Transfer to General Reserve

Balance Carried to Balance

sheet
Basic and Diluted Earnings per
Share

Compiled by the author from Annual Reports of the company

14

7.94

82.43
5.94

4.13

19.56
Women-led Family-owned Businesses...

Annexure IV
Balance Sheet of Balaji Telefilms Ltd. FY 2005–2009 (in INR crore)
2008–2009

2007–2008

Sources of Funds
Shareholders’ Funds
Share Capital

13.04

Reserves and Surplus

2006–2007

2005–2006

2004–2005

op
y

Particulars (as of 31st March)

13.04

13.04

13.04

13.04

375.84

351.8

291.12

237.43

200.09

388.88

364.84

304.16

250.47

213.13

4.31

4.77
4.57

5.77

Deferred Tax Liability

Total

388.88

369.15

308.93

255.04

218.9

98.14

94.77

77.68

66.95

55.93

57.68

50.49

38.1

30.69

21.29

40.46

44.28

39.58

36.26

34.64

51.39

17.62

3.82

5.07

1.2
91.85

61.9

43.4

41.33

35.84

Application of Funds
Gross Block
Less: Depreciation
Net Block
Capital Work in Progress
Investments

No
tC

Fixed Assets

Deferred Tax Asset

Current Assets, Loans and
Advances
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances

245.67

4.29

249.89

178.76

162.38

113.75

0.9

9.57

6.87

11.62
23.87

50.57

68.55

66.84

73.7

53.5

11.13

7.62

6.38

6.23

23.01

40.47

42.99

17.05

17.45

85.61

126.21

123.08

108.6

97.82

35.49

41.43

34.56

34.34

28.32

3.05

27.42

1.75

22.93
0.19

38.54

68.85

36.31

57.27

28.51

Less: Current Liabilities and

Provisions
Current Liabilities
Provisions

Do

Net Current Assets

Total

47.07

57.36

86.77

51.33

69.31

388.88

369.15

308.93

255.04

218.9

Compiled by the author from the Annual Reports of the company

15