Tata Elxsi, an engineering design services company, has written off $4 million (about Rs 22 crore) it had invested in the joint venture company A Squared Entertainment LLC in the US.
Earlier this month, Tata Elxsi had decided to exit the JV, A Squared Elxsi Entertainment LLC (A2E2), after the company found that the JV was not progressing as per its business expectations.
Madhukar Dev, the CEO and MD of the Bangalore-based company said the company had so far invested about $1 million towards Tata Elxsi’s share of equity in the JV and another $3 million towards operational expenses.
In December last year, Tata Elxsi had formed a JV with A Squared Entertainment (A2), an animation company owned by Andrew Heyward, a Hollywood veteran who has created over 500 animation characters in his career. The initial focus of the JV was to create animated characters of renowned personalities targeting the children in the age group of 10-14.
Heyward had obtained the rights to produces shows featuring animated characters of personalities like Warren Buffet, Martha Stewart, Gisele Bündchen and Arnold Schwarzenegger.
As the JV partner, Tata Elxsi’s role was to fund these projects apart from providing animation services.
“However during the life of the JV, we did not see any significant uptake in this content. We saw some interest among the broadcasters for these animation shows, but those did not translate into enough business,” Dev told Business Standard.
“We were also hamstrung by the fact that we had to abandon the show featuring the animation character of Arnold Schwarzenegger because of the scandal that came out about him. Broadcasters did not want to touch anything about him since it was meant for the children,” he added.
As per the JV contract, Tata Elxsi was also expected to invest $3 million every year from second year onwards. However, the company came to know that “the actual investment would be much more that what the company was told.
“We did not want to take any further risk,” said Dev.
After calling off the JV, Tata Elxsi would continue its client relationship with Heyward. “We are out of the JV, but we are still working with Heyward as an animation services provider,” he added.
