Finance - Cine is a platform that allows movie producers to raise capital for films by issuing bonds to viewers. Producers issue bonds through the Finance - Cine portal and mobile app to fund specific movies. Users can purchase these bonds and trade them on the exchange until maturity. Bond holders receive interest payments regularly until the movie's completion and release, at which point their capital is repaid. This model provides benefits over traditional funding by giving producers capital upfront without ownership dilution and users an investment opportunity with higher returns than risk-free rates.

1. Directi Case study Contest
Finance – Cine : A Movie
Financing Venture
Presented by:
Fabulous four
Mahesh Panigrahy
Namita Joshi
Namratha Vaidya
Sanyukta Sen
11 December 2012

2. Introduction
Finance – Cine
We are :
• The first platform for the movie makers to connect with the viewers for funding purpose
• A service provider that facilitates raising capital for movies through its own viewers
• A medium by which users can reap more ROI as compared to traditional investments
Exchange will
enable trading of
purchased bonds
by traders
Producers can
Users can
raise money by
purchase movie
issuing movie
bonds
bonds
Finance
- Cine
11 December 2012

3. Product
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4. Product – Conception and Timeline
Movie Financing Timeline
Trading of
Movie
Start of
Capital is Movie Bonds Completi Bond
movie
Production raised on the on & Maturity
Exchange Release
• Bonds are
• Finance – Cine • Bonds will be
purchased by
issues bonds traded on the • Coupons will
the users
to the public on exchange after be paid
• No bonds can
behalf of the the NFO close regularly to • Production
be issued
Production date till the bond House will
purchased
House for maturity holders till have pay back
after the NFO
funding the • Maturity Date movie the capital to
close date
specific movie will be some completion the bond
• Production
• The New Fund house start the
weeks after the and few holders
Offer expires release of the weeks after
movie with the
after a certain movie release
raised capital
duration
11 December 2012

5. Movie Financing – Current Scenario
Major Funding Sources: Problems with the Current Funding
Sources:
• Till 1990’s movies were funded by •This creates hegemony of underworld in the movie
Black underworld, diamond merchants Black industry
Money Money
• This can be obtained at high interest
•Problem with this fund source is that it has to be repaid
rates(10 -15% in 2011) based on your Bank before movie release
Bank
Loans financial muscle Loans
•IPOs generally are prefered only upto 20% of the total
• Raising capital from people in the equity capital requirement
IPO IPO
• Fund is obtained from distirbutors by selling •This reduces the bargaining of the producer over
Distribution distribution rights Distribution distributor
Financing Financing
• HNIs pump in money, who put money as •Raising money through equity will lead to dilution
HNIs
equity HNIs
• Issued by US based Film finance Inc •Issuers asks for guarantees(upto 3 -5 % of film budget)
Completion Completion
•They scrutinize budgets, schedules and control the
Bonds Bonds same
11 December 2012

6. Product - Benefits
Benefits of our service to the producer:
• Finance – Cine will directly transfer funds to Production Houses after charging a minimal
fee
• No ownership, control, scrutiny or interference by Finance – Cine or by bond
holders(viewers), as there is no dilution of equity
• Trading of the bonds in volatile Indian markets will lead to price fluctuations thus
popularizing the movie
• High Trade Volumes just before./after release of the movie will increase viewership of
movies, thus increasing profitability
• Interest paid on bonds would be tax deductible business expense
Benefits to the user:
• Higher interest more than the risk free rate without incurring much risk
• The benefits similar to US prediction markets can be reaped without actually betting
• For traders it is a good route for diversification in short term investments
• Minimum or No credit risk, as defaulting on part of the production house would lead to
the loss of viewership of subsequent movies by the production house
• User friendly interface of the portal and timely updates
11 December 2012

7. Technology
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8. Technological Aspect of the Product /
Service
• Producers issue
Online bonds
Portal
• Users buy bonds
• Producers issue
Mobile bonds
Application
• Users buy bonds
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9. Business Model
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10. Why is the business model sustainable ?
• The Product offering / service is unique, so this gives Finance – Cine, the first
mover advantage
• With 1000+ Bollywood movies and 3000+ Indian movies, the movie
financing market, is yet to flourish leaving large untapped market segment
• Financing of movies through issuance of bonds will appeal even to the
common masses as they can connect well with the movie
• Movie bonds will give traders a diversification strategy, thereby enabling us
to make sustainable profits
• Issuance of bonds through electronic media will help cater the needs of 150
Million Indian Internet users and 27 Million smartphone users
11 December 2012

11. Assessing Porter’s Five Forces
Bargaining Powers • High number of suppliers
• Unique Service
of Supplier +1 • Low probability of forward integration
• Large customer base to raise fund
Bargaining powers • No competitor
• High cost of changing
of Customer+1
Balance of
Competitive
• No Competitor
• First mover advantage
Power
Rivalry+1 (Out of 5 our
• No substitution as it’s a unique product firm is
Threat of scoring 3)
Substitution+0.5
• High time and energy cost
Threat of new • Low technology protection
• Low entry barriers
entry-0.5

12. Profit Model
11 December 2012

13. Profit Projection
Profit Model:
• The margins obtained from the issuance of bonds by the seller and buyer will contribute to
profits
Assumptions:
Film Business Assumptions:
• No. of movies financed in the first year is 40 and will grow at the rate of 20%
• Average budget of Indian movies is 87 Million and will grow at the rate of inflation
• Permissible Financing Ratio will be 25% of the budget
• Average duration for the movie production is 24 months
Product/Service Assumptions:
• Face Value of the bonds issued will be Rs. 1000
• Margins from the seller and buyer will be .25% each
• Bond trading Margins would be .02%
11 December 2012

14. Income Statement Projection – 5 years
Income Statement Projection
(Rs.) Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Initial Margin 4,375,000 5,722,500 7,485,030 9,790,419 12,805,868
Trading Volume 1,750 1,750 1,750 1,750 1,750
Sales from Application 866,250 944,213 1,029,192 1,121,819 1,222,783
Total Revenue 5,243,000 6,668,463 8,515,972 10,913,988 14,030,401
Expense
Fees for NSE Listing 250,000 250,000 250,000 250,000 250,000
Other Expense 2,097,200 2,667,385 3,406,389 4,365,595 5,612,160
Total Expense 2,347,200 2,917,385 3,656,389 4,615,595 5,862,160
Profit Before Tax 2,895,800 3,751,078 4,859,583 6,298,393 8,168,241
Tax 955,614 1,237,856 1,603,662 2,078,470 2,695,519
Profit After Tax 1,940,186 2,513,222 3,255,921 4,219,923 5,472,721
11 December 2012

15. Profit Projection for 5 years
Assumptions:
Film Business Assumptions:
• No. of movies financed in the first year is 40 and will grow at the rate of 20%
• Average budget of Indian movies is 87 Million and will grow at the rate of inflation
• Permissible Financing Ratio will be 25% of the budget
• Average duration for the movie production is 24 months
Product/Service Assumptions:
• Face Value of the bonds issued will be Rs. 1000
• Margins from the seller and buyer will be .25% each
• Bond trading Margins would be .02%
11 December 2012

16. Marketing
Strategies
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17. Segmentation, Targeting, and Positioning for
Production Houses
•Fund house
•Ease of raising capital
•High consumer Base Market
•Low interest payments Positioning
•Establishment of new relationship
• with customer with increased credibility
•Large & Medium Production House
•15 & 30 nos. Market
•Big & Medium Budget movies
•40 movies Targeting
Budget of movie making
(demographic)
Big, Medium & Low Budget, Market Segmentation
Art & Parallel Movie
11 December 2012

18. Segmentation, Targeting, and Positioning for
Consumers (Bond Traders)
•Security Market
•Easy Accessibility
Positioning
Online traders Market
Targeting
Movie Viewers in India
50% of 14.5 million daily Viewers Market Segmentation
11 December 2012

19. Risk
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20. Risk
Although our business model is robust it is prone to certain risk
such as:
• The production houses that run out of money before producing a movie and
those who abscond will result in credit default risk
• If funds are not collected before the close of the NFO, the production house runs
the risk of raising insufficient funds
11 December 2012

21. References
http://www.mpaa-india.org/hollywoodinvestment.html
http://www.rediff.com/money/2006/may/27spec1.htm
http://www.investopedia.com/ask/answers/09/bond-over-the-
counter.asp#ixzz2B8OaR4JN
http://businessofcinema.com/bollywood-news/indian-film-industry-
to-grow-at-9-to-touch-rs-137-billion-by-2014/30681
http://www.marketing91.com/swot-analysis-bollywood/
http://www.nishithdesai.com/hollywood-bollywood/media-chap-3-
C.htm
11 December 2012

22. Thank You
11 December 2012