Kishore Lulla: Media mogul

Media company Eros International released five of Bollywood’s top ten releases in 2007. Chief executive Kishore Lulla tells how he’s planning to build a global giant that can take on anything Hollywood has to offer.

Media company Eros International released five of Bollywood’s top ten releases in 2007. Chief executive Kishore Lulla tells how he’s planning to build a global giant that can take on anything Hollywood has to offer.

Media company Eros International released five of Bollywood’s top ten releases in 2007. Chief executive Kishore Lulla tells how he’s planning to build a global giant that can take on anything Hollywood has to offer

The moulded, low-slung buildings of an industrial estate next to the A40 in north-west London are a far cry from the glitzy costumes and choreographed effervescence of Bollywood, and yet it’s here that you’ll find the UK division of Eros International, a central player in that $15.2 billion (£8.4 billion) industry.

Kishore Lulla, CEO of the media company which both commissions and distributes Indian movies, is equally self-effacing and unpretentious. ‘I believe in a laid-back style,’ he comments. ‘You should never be stressed as stress won’t solve your problem.’

The company was founded by Lulla’s father, Arjan, back in Mumbai in 1977. Kishore, who started working for Eros when he was 16, partly attributes his sangfroid temperament to familiarity. ‘It’s so easy because I have been doing it all my life,’ he says.

Formidable rise
Recent year-end results for Eros are indicative of Bollywood’s – and India’s – formidable rise. Revenue was up 70.2 per cent to $113 million, with profits of $45.5 million, a rise of 47.2 per cent. Eros is one of the few concerns listed on the Alternative Investment Market (AIM) with a share price in the ascendant.

The plan is to take the company to the Full List next year. ‘It will give us more visibility and a higher valuation,’ he observes. ‘We are totally a growth company and huge growth is going to come once we go to the Full List as we’ll have US investors – they value media in a big way. Being on AIM, you are not able to tap US investors.’

While the internal cash flow is strong at approximately $90 million, a $150 million
five-year syndicated facility was signed with Citigroup and RBS earlier this year. Such levels of debt don’t faze Lulla. ‘Our earnings before interest, tax, depreciation and amortisation (EBITDA) is total cash so whatever we have in cash, we have in debt also.
We are in a very good position today as we have trust [in the industry]. This is not based on an overnight success.’

For Lulla, now is the time to go on the offensive. ‘The plan is to become the biggest media company in India. Then we can capitalise on that growth and see what can be done with Hollywood either by acquisition, joint ventures or strategic alliance.

‘The Indian film and entertainment industry is at an inflection point,’ he enthuses. ‘It’s fragmented and is going to get consolidated in the next three years. There are so many opportunities in this fragmented industry, which is growing at more than 18 to 20 per cent a year.’

Unprecedented interest

When Lulla teamed up with his father he soon made the decision to come to the UK and work on making the company international. He notes that the place of his birth was an entirely different proposition back then. ‘India is now a powerful country,’ he says. ‘Ten years ago it was not the case.’

Now there is unprecedented interest in Bollywood and India’s flourishing economy, with its cash rich, English-speaking middle classes numbering 400 million. Lulla says that 21st-century India brings into focus the vision he had for the company when he joined in the late 1980s.

He compares India’s film industry to Hollywood’s golden age of the 1940s and 1950s. ‘It’s at exactly the same point, structurally. But what Hollywood did in 50 years, India will do in ten.

‘This will be made possible by today’s new-age technology, such as the internet, and because India is booming.’

Eros is a light operation with 193 employees. It is also still very much a family concern as his brother steers the Indian operation, while a cousin manages international affairs from an office in Singapore. ‘It is run by people who have been with the business for years,’ says Lulla.

Although the company is listed, he insists that little has changed apart from the addition of senior executives. ‘We’ve hired different people who can strengthen the company, but the working of the organisation, in regards to distribution and sales, is the same.

‘We are a family of entrepreneurs, but our execution is corporate. We want to keep that. It’s how major corporations function as it’s the people who make the company. Corporate only means the rules of governance and the rules you need to follow which is,
of course, important.’

Lulla’s insistence that Bollywood could become a global phenomenon is an example of bucking conventional thinking. ‘Ten years ago, when I said I’d dub Bollywood films into different languages, people used to laugh at me. Nobody wanted Bollywood movies.’

He recalls renting a cinema after it had finished playing its standard programme to try and prove there was interest in Bollywood outside of India. ‘The cinema was packed
out. We made money and it was clear what could happen.’

Eros presently has a library of 1,900 films and acquisitions will be made to swell that number. ‘I always told my father, don’t sell your rights away internationally. We will have our own offices and own everything, although I didn’t know how to do it.’

It’s this approach that has kept Eros going for 30 years. ‘For other operators, their thinking was never global,’ he claims. Be that as it may, Lulla and his management
have their work cut out if they are to evolve into a powerhouse of Indian media, not just cinema.

To this end, Eros has already branched out into music, pay per view, mobile phones, ring tones and other new media. A deal was signed with Google’s YouTube and a couple of partnerships formed, one with Sony Pictures, the other with film studio Lionsgate.

In October last year Eros set up EyeQube Studios, a visual effects facility in Mumbai. Lulla believes there is an opportunity here as Indian movies are largely star dominated and rarely use visual effects and animation. This can drive other revenue, such as toys and gaming, which Bollywood has yet to exploit.

If there are dangers, Lulla says they relate to India as a whole. ‘Between 50 and 70 per cent of our margins are coming from India today. If the country as a whole goes down, then of course our revenue model will follow. It is a risk,’ he says, pausing. ‘In India, if the country as a whole goes down, people will cut down on their holidays, their travel – but they will still watch a movie.’

Risks and gains

Embarking on a series of acquisitions could undermine a relatively small, tight-knit organisation. Again, Lulla has a positive slant.
He refers to the recent acquisition of the distribution company Ayngaran for $1 million, saying it’ll generate $3.5 million this year.

As for an acquisition strategy, he says the management teams are important but the company has to also have long-term value.

‘If the management team [of an acquired organisation] does go away, [it will be] okay because we have the core distribution network. We know how to do that. It is very easy for us to acquire a content company or a distribution company.’

The desire to succeed simmers under the surface of Lulla’s cool exterior. He rattles off the names of entrepreneurs and business leaders who have reached the heights, like Bill Gates, Warren Buffett and Lakshmi Mittal, marvelling at how they went against the grain, defying the logic of protocol.

‘It is their thinking – their strategy that sets them apart. They think differently – it is a question of your strategic thinking and how you are going to be different from others. That’s what the world recognises.’

These figures are clearly an inspiration to Lulla. If you mix with the leading figures
in business and cinema like he does on a regular basis, then it makes perfect sense to aim for the stars.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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