In my opinion, the right question to ask is why was this necessary and is this likely to be a one-off? In all the euphoria around the stock and storification of the business and its prospects; we as investors ignored the clear risks to the business model. If you strip out everything, this business effectively provides unsecured financing to one of the riskiest segments in the country (albeit at a high margin): film production; which are known to have delays, production risks, marketing risks, etc! In my opinion, receivables issues are likely to be a feature of the business model as long as the clientele includes mainly Indian and regional film producers. Just for reference; the amount “invested” in the production of this film is 33% of the company’s total networth! Doing VFX work for internationally reputable clients like Disney, Netflix, Amazon Prime, etc is very important, and one of the main differentiation factors will be share of business that comes via them rather than from local move producers.
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