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Mckinsey to do growth study for Saregama

Our Bureau

KOLKATA, April 30

MANAGEMENT consultants Mckinsey & Co has been appointed to carry out a growth study for Saregama India Ltd, the flagship entertainment company of the RPG group.

Mr Abhik Mitra, Managing Director of Saregama (erstwhile Gramophone Company of India Ltd), told newspersons here today that the study would begin in end-June and was expected to be completed in eight to 10 weeks.

``We expect to crystallise opinion on the report by September,'' Mr Mitra said.

Mckinsey's mandate is to formulate a strategy for Saregama to help it reconfigure its business model to attain a higher level of growth while retaining its leadership. New business partnerships on the basis of this study would be a distinct possibility, he indicated.

The study would also take a look at three or four new entertainment software areas which include supply of software for TV, film, animation and FM. Saregama was also planning to take up entertainment event management. However, a final move would be made only on the basis of the consultant's report.

He said that the RPG group might enter these areas either on its own or through partnerships. ``Mckinsey will determine the why, how, when and how much of these matters,'' he observed.

To a question on Saregama's earlier exit from film making, Mr Mitra said that things had changed for the industry since then and some different strategies were being planned in case the group made a re-entry into film business.

While reviewing the 2000-01 performance, he disclosed that the plans of floating separate subsidiaries for Hamara CD. com had been shelved and it had been decided to retain this and FM software as divisions.

But for the Rs 5-crore odd start-up expenses made on these ventures during 2000-01, the company's profits (before taxes and extraordinary expenses) would be higher than Rs 16.7 crore registered. The corresponding figure for 1999-2000 was Rs 7.3 crore.

As part of a consolidation exercise, the management has decided to merge the two sites of Hamara CD.com and Saregama. com within the next three months.

During 2000-01, the turnover increased to Rs 154.6 crore (Rs 127.3 crore) even as expenditure on raw materials and interest outgo were hemmed in.

While implementation of a reputed consultant's report helped trimming of raw material costs despite a rise in plastics prices, the interest burden was substantially lower as the company became debt-free in 2000-01.

Net profit was lower at Rs 5.4 crore (Rs 6 crore) on account of a higher tax provision of Rs 1.8 crore (Rs 0.6 crore) and VRS which cost Rs 9.8 crore.