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Nextgen Animation Mediaa Ltd.

BSE: 532999 Sector: Media
NSE: N.A. ISIN Code: INE875I01010
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Nextgen Animation Mediaa Ltd. (NEXTGENANIMAT) - Chairman Speech

Company chairman speech

NEXTGEN ANIMATION MEDIAA LIMITED ANNUAL REPORT 2010-2011 CHAIRMAN'S REPORT Dear Friends, Greeting to all of you. It gives me an immense pleasure to share this moment with each of you and extend a warm welcome to the fifth Annual General Body Meeting of your Company. During the fiscal year 2010-11, in addition to the overseas activities, your Company has commenced domestic work including making of a movie. This would typically mean from the stage of creating a story to production of the actual animated movie. During the current year, the Company has delivered the Story line, creation of some characters and CGI and special effects for South Indian Movies. Accordingly the revenue from the domestic business is determined. I would like to draw your attention that this has been a good beginning into the domestic industry and a step towards our vision. While it is normally understood that the movie would mean a large project and lot of tasks are associated with it, this would largely help establishing the Company as a larger Animation player with a lower margin. Overall, while the revenue has increased when compared to the previous year, your Company had added a foray into the International Market namely Germany, Canada and USA through WOS Advaitaa Technologies Inc. Accordingly the team working on the new projects has come up with a healthy pipeline of opportunities, which is to be explored. Here again we are hopeful of being successful with some additional business in the current year. We are also hopeful that efforts put by the team would become successful as the Client would benefit from the cost arbitrage without compromising on the quality of the work. I am glad to inform you regarding the performance of the new state-of-the- art infrastructure for animation and gaming development at Chennai facility. The state-of-the-art technology and world-class facilities, together with its depth and breadth of experience, has earned it an unparalleled reputation in global animation circles. As a part of the cost cutting program, Nextgen studio has downsized its activities at Chennai facility. The team at Chennai is experienced for over several years which would be more than 200 man years and recent being delivery of International Music videos, Kollywood films & Special Effects in Documentry films for European clients. Here exceptional team of creative artists has been consistently delivering 2D, 3D and VFX content to the international and Indian Media & Entertainment markets for more than 15 years including international well-known publishing house, Indian Bollywood, Tollywood and Kollywood industry and popular TV channels. The recent downturn has also helped the Company to introspect, consolidate and move forward on the activities and also look at the domestic market to meet the vision of the Company. During the year, again the Company is also looking at expansion in these areas and has lot of activity. The growth drivers for the animation sector include entry of global entertainment majors leading to co-production of movies, endto- end production out of India, original IP creation and growth in the domestic market. However, the gaming industry witnessed growth in mobile and console segment, contributing to domestic consumption and the services business was propelled by enhanced partnerships with international game publishers. According to PWC Global entertainment and media outlook: 2011-2015 The Indian Animation industry was worth US$ 631 million in 2011 and is expected to grow at CAGR of 23% to reach US$ 961 million by 2013. Thus, Indian studios are now looking to create their own intellectual property, by collaborating with foreign studios. Also, with the popularity of 3D, indigenous studios are doing a large amount of 2D-to-3D conversion. Following are excerpts from the report, via PWC. Indian animation, gaming & VFX industry is a highly fragmented industry. It showed a healthy growth in 2011 on the back of the growth in the global animation industry and the subsequent work outsourced to Indian firms. The Indian Animation industry was worth US$ 631 million in 2011 and is expected to grow at CAGR of 23% to reach US$ 961 million by 2013. Indian production houses are slowly moving up the value chain. While initially, only post- production work outsourced from Hollywood studios used to be sent to India. Indian players are primarily involved in the labour- intensive production and post-production activities, as a `Service Provider' working on the revenue model of `Work-For-Hire'. This means that most skill sets are at the lower end of the value chain. Though there are a few firms offering world-class capabilities for India to merge as a global animation hub, there is a need to upscale these capabilities across a wider section of the industry by focusing on owning the IP. This Indian gaming industry continues to grow at a fast pace driven by mobile and online gaming. Social networking has been a boon for the gaming industry with online users becoming gaming addicts through this route. While console gaming gets users acquainted with new formats (like motion- sensitive and 3D games), PC gaming is not quite living up to the promise it has. Piracy remains a major issue for PC gaming, with game manufacturers looking to generate revenues from online subscription. * Needless to add, the areas of focus in the year gone by and in the coming years would be creation of the Intellectual Property Rights (IPR), Theatrical content, Home Video segment and game development & services. * In the area of education your Company has short listed in North America and also looking for setting up Residential Animation program in India and also in Middle East. While it can be said that your Company has achieved limited success during the year under review, but your Company is pursuing the same as the entire business is manpower centric and it is important to keep attracting good talents and retain them. Your Company is in the growth path after a year of consolidation and the hybrid strategy of organic growth, strategic alliances and acquisitions in India and North America. It is in advanced levels of discussion with potential suitors in each of the areas. I will keep you posted in our success. Finally, I must express my profound gratitude for your continued support. I also thank all the Directors of the Board, employees, and all persons associated with the Company for creating a solid infrastructure and base to start a good beginning for your Company. Krishnakumar Subramanian Chairman and Managing Director 29th February 2012 Mumbai