AIM listed specialist film investment company, The Indian Film Company Limited, has agreed with its investment manager for a reduction in the management fee by 100 basis points for the just ended financial year, FY10. In a filing to the London’s junior market, the company said it has agreed with its Investment Manager, Film Investment Managers (Mauritius) Limited, for slashing the management fee from 2% to 1% of the opening Net Asset Value (NAV).
The reduction in the management fee is in line with the general economic conditions, while stating that FY11 will see higher level of activity "as the general economic conditions show signs of returning consumer confidence".
The company is essentially looking to make the management fee commensurate with the returns. It also said that “In recognition of the lower fee during FY10, the Investment Manager may have the opportunity to earn a Fee in excess of 2% for the financial years ending 31 March 2011 and 31 March 2012. Any increase in the fee will be subject to the agreement of the independent directors and may require consultation with the company's nominated ddviser. It is expected that the fee will return to the level of 2% of the opening NAV for the financial year ending 31 March 2013.”
The current talks about reduction in the management fee comes after the firm's shareholders asked for a review of the business, including an assessment of past performance and future strategy. The issue was finally settled when a representative of the shareholder group was appointed to the TIFC board and a review was ordered.
In the latest filing to the stock exchanges also, the company has specifically mentioned that, “as the Investment Manager is deemed to be a related party under the AIM Rules, the independent directors (which excludes Raghav Bahl), having consulted with the company's nominated adviser, consider the fee to be fair and reasonable insofar as shareholders are concerned.”
The Indian Film Company Limited was admitted to trading on the AIM market in June 2007 having raised £55 million at 100p per share in order to invest in a diverse portfolio of Indian films targeted at the Indian audiences across varying genre, language and budgets. Film Investment Managers (Mauritius) Ltd, which is the fund manager, is jointly and equally owned by Viacom Inc and BK Media Mauritius. BK Media Mauritius is owned by Raghav Bahl, the founder and controlling shareholder of Network 18.
The revenue figure being reported for TIFC for the period from 1 October 2009 to 31 December 2009 in Network 18's quarterly results is INR 316.38 million ( Rs 31.6 crores) . The films slated for release, in the fourth quarter of the current financial year ( FY -11) are "Striker", "Road Movie", "Kaun Bola" and "Banda yeh Bindaas hai". The company signed up deals worth Rs 240 million for satellite syndication of films in its library. The company's productions and co-production projects are at various stages of completion and are progressing as scheduled.
There are quite a few film funds have in the market now. Cinema Capital Venture Fund, (CCVF) was launched this year with a corpus of Rs 500 crore. Vistaar Religare, a film fund sponsored by Religare has also invested in films such as ‘ Victory’.