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Reliance MediaWorks February 2011

Investor Presentation, July 2009

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Page 1: Investor Presentation, July 2009

Reliance MediaWorks

February 2011

Page 2: Investor Presentation, July 2009

2

This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Reliance MediaWorks Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment therefore.This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company believes to be reasonable in light of its operating experience in recent years. The Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company.No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Any opinions expressed in this presentation are subject to change without notice. None of the Company, the placement agents, promoters or any other persons that may participate in the offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith.This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or part, or disclosed by recipients directly or indirectly to any other person. In particular, this presentation is not for publication or distribution or release in the United States, Australia, Canada or Japan or in any other country where such distribution may lead to a breach of any law or regulatory requirement. The information contained herein does not constitute or form part of an offer or solicitation of an offer to purchase or subscribe for securities for sale in the United States, Australia, Canada or Japan or any other jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to or for the benefit of US persons absent registration or an applicable exemption from registration

Disclaimer

Page 3: Investor Presentation, July 2009

Film processing13% DI

2% Eqp rent2%

Restoration6%

TV prod5%

Cinemas72%

Reliance ADA Group stepped into the company in FY 2006

Revenues: Rs 1,250 million(USD 26.6 million)

Film processing

53%

Cinemas33%

Film prod14%

Operations in Mumbai only

8 theatres (32 screens)

14 professionals with > 10 years’ experience

3

Revenues: Rs 6,720 million(USD 143 million)

FY 2006 FY 2010 (60% CAGR over 4 years)

New businesses added, to Yield further results FY 2011 onwards

Market leader in every business

Operations in 118 cities, 5 countries

156 professionals with > 10 years’ experience

Projects under implementation in 2011: Studios, TV Post

82% from businesses created in last 4 years

56% from businesses in last 2 years

FY 2010

New business areas to

incrementally add to revenues

in the coming years

FY 2006

Page 4: Investor Presentation, July 2009

Performance in FY11

FY 10 YTD

Studio operational with 70,000 sq ft

BPO operational with 90,000 sq ft

4

Revenue and EBIDTA have increased as compared to last year.

With the recent commissioning of the Studios and the BPO facility, we expect film and media services division to be a substantial contributor to our business portfolio

YTD Dec’10

Revenues: Rs 7095 million(USD 157 million)

Page 5: Investor Presentation, July 2009

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The growth opportunity is very large….

Films

Net Box Office Collection (“NBOC”) of top 50 films has gone up by 32%, to Rs. 15,050 million (USD 334 Million) in CY 2010 from Rs. 11,440 million (USD 254 million) in CY 2008

Big Budget films (>500 prints) – 48 in CY 2010 versus 30 in CY 2008

Average cost of production of big budget films has increased by more than 50% over the last 5 years

Television

Penetration in TV households 60% in FY 2010 versus 50% in FY 2006

460 channels in FY 2010 versus 120 channels in FY 2004

The number of big format shows has increased substantially over the last 5 years

Page 6: Investor Presentation, July 2009

Comprehensive presence across production value chain – Film, TV and Ad Commercials

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Page 7: Investor Presentation, July 2009

Film & Media Services (Domestic)

Page 8: Investor Presentation, July 2009

Services Suite

Studios

TV Broadcast

Film cameras

Lights, Grips

Set Design & Construction

Lab: Mumbai, Chennai, Kolkata

Digital Intermediate

Promos

India VFX

Sub-titling

Digital Cinema Mastering

Film PostProduction services

8

Page 9: Investor Presentation, July 2009

200,000 sq ft state of the art Studio facility being built at Film City

Phase I (70,000 sq ft with 3 sound stages) - completed recently

Phase II and III expected to be ready by May and August 2011

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70,000 sq. ft. – Jan 2011 launchPhase I

Picture: Jan 5, 2011

India's first and only full service Studio Complex designed by LA architects and built to Hollywood standards Design includes stringent fire protection, detection and fire fighting facilities adhering to LA County Fire Safety Norms SOPs being developed by LA consultants based on Hollywood Best Practices for studio operations Experienced expat from LA assisting an Indian team of professionals in implementing SOPs and setting up operations USPs

Facility for films, TV shows and TV commercials Largest, fully air-conditioned facility in Mumbai Built-up area of 2 lakh sq ft over a 7 acre property in Film City Clear internal height of 58 ft 8 silent sound stages of different sizes

Studio facility is a natural extension to Production Services portfolio

Page 10: Investor Presentation, July 2009

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Film Post

2008 2009 2010 2011 (Half Year)

No. of films 140 161 163 89

No. of analogue prints 19,777 26,280 23,957* 14,502

No. of analogue prints / film 141 163 147 163

No. of digital prints - - 1,069 1,286

No. of films done for DI - 34 45 34

No. of promos - - - 6

Typical film goes through the film post value chain as – Cans DI VFX Promos Prints (Analogue and Digital)

Incremental services FY 2010 onwards lead to increased wallet share

* 2010 impacted due to strike

Focus is to increase share of wallet New businesses – DI and VFX – leverage existing clients and add significantly to profitability Cross Selling opportunities tapped

Page 11: Investor Presentation, July 2009

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Production Services – Equipment Rental Solutions

RMWL is associated with most of the popular reality shows, televised events and films - 33 programmes on general entertainment channels in India, 49 televised events since April 2009. As of December 31, 2010; RMWL rented out film equipment for 83 films.

Shows Events Films

Kaun Banega Crorepati Filmfare Awards Dabangg (Arbaaz Khan Productions)

Bigg Boss Femina Miss India Rajneeti (Prakash Jha Productions)

Jhalak Dikhla Ja Mirchi Awards Ravana (Madras Talkies)

Nach Baliye Star Parivaar Awards What’s Your Rashee (Ashutosh Gowarikar Prod)

India’s Got Talent Star Screen Awards Aisha (Anil Kapoor Films)

Pati Patni Aur Who Standard Chartered Mumbai Marathon Break Ke Baad (Kunal Kohli Productions)

Rakhi Ka Swayamvar Airtel Delhi Marathon Ra – One (Red Chilies Entertainment)

Rahul Dulhaniya Le Jayega Sunfeast Bangalore Marathon Khelein Hum Jee Jaan Se (Ashutosh Gowarikar Prod)

Dus Ka Dum Economic Times Awards Tees Maar Khan (Three’s Company Prod)

Sacch Ka Samna Brand Equity Awards Khatta Meetha (Seven Arts International)

Page 12: Investor Presentation, July 2009

Film & Media Services (International)

Page 13: Investor Presentation, July 2009

International Business

Distinct business lines Creative Services – VFX, 2D to 3D conversion, Animation, CGI Media Services BPO – Restoration, Archival, Migration, Encoding, Transcoding, Compression &

Authoring, Standards & Format Conversion All businesses exhibit strong entry barriers in terms of

Technology Brand & Credibility Manpower training Infrastructure quality

Top Trends in the Industry:

13

Trends

Alternate platforms: TV, Internet and mobile Demand for high-definition images 3D VFX / Animation / CGI

Technology Skill sets Front-end/ Development centers Scale Digital platform – one world

Key Drivers

Page 14: Investor Presentation, July 2009

London

New York

Mumbai

ChennaiKolkata

TokyoLos Angeles

Pune

Presence

We have built global capabilities

Technology

ImagingRMW

Burbank (Lowry)3D

QC & Operations Centers

LA RMW Imaging opsRMW VFX

ops

London RMW lab ops (i-lab)RMW VFX

ops

Tokyo Front-end with Imagica

Large Delivery Centers

Image processing 450 people, fully

operational

2D to 3D 450 people fully trained

VFX + Animation 300 people, fully

operational

1,200

14

December 2010 established relationship with Russian World Studios and OGK in Russia

Page 15: Investor Presentation, July 2009

Competitive advantage through proprietary tools

RMW has developed and now owns proprietary imaging tools which facilitate :

Image Processing

Standard Definition to High Definition

16 mm to High Definition

3D Alignment

These tools are currently deployed in London, Burbank and Mumbai, and are internationally benchmarked

Leverage the front-end relationship with clients at Burbank :

David Fincher : Zodiac, Benjamin Button, Social Network

Disney : 7-year old relationship, handling Animation Classics such as Fantasia, Alice in Wonderland, Winnie the

Pooh trilogy, Cinderella, Jungle Book, Peter Pan, 101 Dalmatians, Sleeping Beauty, Snow White, Pinocchio

James Cameron : Avatar, 4K restoration of Titanic

4 projects under active discussions (under NDA)

15

November 2010: RMW among 4 companies to receive the Creativity and Innovation Hollywood Post Alliance Award

Page 16: Investor Presentation, July 2009

Exhibition

Page 17: Investor Presentation, July 2009

India – a consumption driven economy

Deep Domestic Demand.. Huge growth potential

• Population: 1.2 billion

→ increasing urbanization

→ relatively large youth population

→ 43% of population < 25 years of age; 36%

between 25-50 years

• GDP Growth (Real): ~6.5%

→ second highest growing economy

Key driver of growth is to be consumption

• Consumption Centres

→ spread over 50 cities

• GDP Size (PPP adjusted): US$ 3 trillion

→ fourth largest economy in the world

• Rising Propensity to Spend→ Recreation and education spend doubled

from Rs 1,800/- to Rs 4,120/- ; expected to further double to Rs 8,400/- in 4 years

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Page 18: Investor Presentation, July 2009

Growing opportunity for multiplex business

Box-office collection of Rs 68,500 million in CY 2009, growing @ 8% Growing size of big budget movies, a key revenue driver for multiplexes

Print size of big budget movies has grown significantly Multiplex contribution has gone up from 10% in CY 2006 to around 25 percent of the total domestic theatrical

revenues for the overall Indian film industry and as much as 60% for Hindi films Hollywood : a new source of revenue stream, has grown to 5.5% of Indian box-office from 2% in 2006

  2010 2008 Increase Top 10 films NBOC (Rs million) 8,080 6,140 32%

No. of big budget releases  48 35 37%

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Low screen density in top cities (screens per million population)

Mumbai: 23 Delhi: 13 Thane: 14 Kolkata: 8Chennai: 5 Bangalore: 21 Ahmedabad: 19 Hyderabad: 6Surat: 12 Kanpur: 15 Pune: 16 Jaipur: 8Lucknow: 17 Nagpur: 18 Indore: 13 Ludhiana: 11

International benchmarks (screens per million population)

US: 117 France: 77 Denmark: 61 Italy: 52Spain: 46 Germany: 45 Belgium: 43 UK: 30

Page 19: Investor Presentation, July 2009

CY 2009 India (multiplex) India USA Canada Australia Singapore France

Admits (million) 81 3,100 1,420 128 91 19 201

Population (million) 120 1,140 307 33 21 5 62

Movie Freq (yearly) 0.68 2.7 4.6 3.8 4.2 3.9 3.2

ATP (USD) $2.6 $0.5 $7.5 $6.9 $9.4 $6.2 $8.5

BO (million USD) $208 $1,522 $10,650 $882 $849 $118 $1,704

No. of cities 106

Multiplex business : benchmarked globally

Multiplex penetration (admits as a % of population) and spend per head expected to grow : in sync with international benchmarks – as propensity to spend increases in these cities

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Page 20: Investor Presentation, July 2009

BIG Cinemas’ network in India

Page 21: Investor Presentation, July 2009

Schematic representation

268 screens

81 cities

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Circuit% contribution

to all-India Hindi box-office

BIG cities BIG screens

Bombay 40% 21 107

Delhi UP 20-22% 12 43

East Punjab 7.5 -9% 6 22

Rajasthan 5-5.5% 5 9

CP 5-5.5% 10 18

Nizam & Andhra* 5-5.5% 11 26

Bengal 4.5-5% 1 3

Mysore 3.5-4.5% 4 9

CI 3.5% 3 10

TN & Kerala** 1-1.5% 8 21

Assam, Orissa 1.5% - -

100% 81 268

* - Additionally serves the Telugu market** - Additionally serves the Tamil market

Page 22: Investor Presentation, July 2009

Operating performance

Page 23: Investor Presentation, July 2009

Growth in key parameters over last 2 years - India

Apart from current growth, Tier 2/3 cities represent significant opportunity for growth in the next 3-4 years

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Class Financial Year Metro/Tier 1 Tier 2 Tier 3/4

Admits (million)

2009 8.0 6.7 8.4

2011 (9 months) 6.9 6.7 10.6

% increase 16% 34% 70%

ATP (Rs.)

2009 144 90 49

2011 (9 months) 163 95 56

% increase 13% 5% 13%

SPH (Rs.)

2009 34 20 12

2011 (9 months) 44 26 19

% increase 30% 26% 60%

Page 24: Investor Presentation, July 2009

Growth in key parameters over last 2 years - India (cont.)

We have registered significant growth – in ticket prices and spend on F&B

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Parameter Current Period YTD Dec 10

Previous Period Apr Dec 09 Growth

Admits (million) 24.32 19.79 23%

Same Store Basis*

Admits (million) 18.16 17.27 5%

ATP Comparable properties (Rs.) 98.82 90.33 9%

SPH Comparable properties (Rs.) 27.63 22.32 24%

* Same Store refers to cinema theatres which have been operational for entire 9 months in the period mentioned

Page 25: Investor Presentation, July 2009

Content flow and programming

Big releases

5 big banners in Hindi (Yashraj, BIG, Dharma, UTV, Eros) slated to release 20 films in next 18 months

Around 13 high-value Hollywood / 3D movies expected in next 12-15 months

A-list stars have 14 films on floor

Neighborhood centric content selection, mapping and scheduling

Regional language films (Gujarati, Marathi, Bhojpuri etc.)

Introduced ‘uninterrupted’ English film shows ; subtitled English films

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Page 26: Investor Presentation, July 2009

1

2

3

typical customer walk-through

baggage drop- off

box office

concessionscreen

entrance

seatinglounge

washrooms

welcomefoyer

exitfoyer

securityfrisking

Customer experience : mapping key touch points

box office

online

screens

F&B

feedback

5 key touch points

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Page 27: Investor Presentation, July 2009

Customer experience : innovative formats

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Page 28: Investor Presentation, July 2009

Awards won over the years

Cine Diner won the award for Most Admired Innovative Concept of the Year at India Retail Forum 2010

Cine Diner also won 2nd place at the IAD – Interior & Architecture Awards 2009 in the Best Interior Design - Hospitality category

‘Most Admired Retailer in Entertainment’ at the India Retail Awards 2009

‘International Exhibitor of the Year’ at the prestigious ‘CineAsia 2008’ at Macau in December 2008

‘Retailer of the Year’ in Entertainment for the second consecutive year at the India Retail Summit in 2007

‘Most Admired Retailer in Entertainment’ at the India Retail Awards 2007

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Page 29: Investor Presentation, July 2009

Mystery audits

Key audit impact areas: Exterior, Box Office, Lobby, Auditoriums, Concession and Restrooms

Carried out by external agencies ( which specialize in hospitality industry )

Audit score mapped against other cinema chains

Periodicity – once in 2 months

Action taken – theatre managers to provide action taken report (ATR) to COOs

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Page 30: Investor Presentation, July 2009

Brand Connect

WOMEN’S DAY (8th March’10 ) MOTHER’S DAY (9th May’10 )

WORLD ENVIRONMENT DAY (5th June’10 ) – global initiative

INDIAN INDEPENDENCE DAY ( 7-15th Aug’10 ) – global initiative

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Page 31: Investor Presentation, July 2009

Marketing : Grassroots , promotions, contests…

3 + 1 Ticket combo offer (Oct 10 to Mar 11)

Launched across 30 cinemas

Hot Ticket festival offer

(May’10)

• 75,000 Unique registrations• Sponsored 1st prizes – i10 car

Customer Loyalty program

(launch Dec’10)

SURE SHOT Winner (Launch Sept’10) • Guaranteed prize won for every transaction at BIG Cinemas• Prizes are coupons/vouchers from local retailers (neighborhood

centric)

Prepaid movie ticket vouchers

(Dec’10)

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Page 32: Investor Presentation, July 2009

Retail micro-orientation

Cinema-wise weekly admits plotted from release schedule: Categorization of movies Historical performance of category

Translated to daily target footfalls

Modified every week for next fortnight, based on: Actual release schedule Verdict of film

Daily sales plan

Movie specific pricing Eg, Tees Maar Khan, Gol3

Idiots, Kites, etc

Day-part pricing

E.g. R-Mulund: Morning: Rs 70/- 1:00 p.m.: Rs 110-130/- Evening: Rs 175-200/- Special pricing of Rs 50/- and

Rs 150/- Food price increase by Rs

10-15/- on big week-ends

Customer-oriented pricing

Electricity management (lights, A/C)

Seasonal staffing (130 increased from Diwali to New Year)

Micro-monitoring of yield efficiency (Popcorn, Pepsi) – to reduce spoilage and wastage

Cost efficiency

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Page 33: Investor Presentation, July 2009

F & B Increasing SPH

- Pepsi deal

- Movie Munchies product mix : kathi rolls / salads/ fresh sandwiches / candy floss , etc

- Combo deals :Value meals / 3 product combos, etc

- Seat serve: Mobile Vendors

- Kids specialCombos / merchandise

Path to revenue growth and profitability drivers : F&B

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Page 34: Investor Presentation, July 2009

Off Screen Advertising

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Washrooms Signage

Auditorium doors

Stair Case

Lobby Lounge

Exit Passage

Page 35: Investor Presentation, July 2009

Exhibition overseas

Language US UK/ Europe Far East Others

Hindi 30% 30% 3% 37%

Telugu 85% 2% 5% 8%

Tamil 7% 20% 55% 18%

Indian35%

Hollywood65%

205 screens in US

BIG chain: 35% of Hindi 70% of Tamil / Telugu

English46%

Malay14%

Chinese11%

Tamil25% Others

4%

72 screens in Malaysia

Play mix of content Opened market beyond KL SPH highest among chains Account for 30-33% of Tamil GBOC

Europe

Programming model with Pathe in

Netherlands since June ‘09

Screen branding

40% increase in footfalls

Now expanding to France (Paris

and Lyon) with Pathe and Belgium

(Brussels and Antwerp) with

Kinepolis

International Collections for Indian films

Exhibition – overseas

Page 36: Investor Presentation, July 2009

Total 200 screens: 55 India focused screens, balanced with 145 Hollywood screens (managed locations)

Strong Indian community – 2.6 million population + H1, L1, students

Including other Asians (Pakistani, Bangladeshi) aggregates approximately 3.6 million

US accounts for 30 to 33 % of overseas theatrical revenue for Hindi movies (Rs 2,000 million)

US cinema chains reluctant to carry Indian content :

Hollywood movies are first priority

Cultural mismatch – unable to handle Indian crowds

Indian movies get second-rung theatres :

Poor customer experience

Deals with distributors on MG basis – substantial under-reporting

Highly unorganized distribution pattern for Tamil and Telugu movies

Need for theatrical presence in US

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Page 37: Investor Presentation, July 2009

Chicago

New Jersey

New York

San Jose

Freemont

Los Angeles

Falls Church

Pigeon Forge

Kansas

Herndon

Palm BayGreenacresNorcross

Laughlin

Madisonville

Greenville

Canonsburg

Norfolk

Cleveland

Decatur

CherokeeCorona

BIG Cinemas in US

Page 38: Investor Presentation, July 2009

Growth in Box Office YTD Dec’10 : 10% increase since last year BO contribution

Promotions : Movie specific (star premiers, sweepstakes, social media) and Brand specific (Everyone is a Winner !) Events and Festivals : Green your lifestyle, Independence Day, Diwali Talent Hunt Innovative marketing tools : Print@home, Online Polls, Tag it !

No Movie Market share Total Prints BIG Prints1 Dabangg 27% 61 93 Ravanan - Tamil 56% 34 102 Enthiran - Tamil 54% 54 9

BIG Cinemas in US

38

Unlocking the advertisement potential Indian Diaspora median income higher than average American or any other ethnic community Focused access, understanding and reach to community provides greater value to advertisers

Example Spanish, African-American etc. which are now mainstream focus Our focused consumer targeting from this year has begun yielding revenues

Page 39: Investor Presentation, July 2009

Exhibition – Malaysia

English46%

Malay14%

Chinese11%

Tamil25% Others

4%

72 screens in Malaysia

Play mix of content

Opened market beyond KL

Account for significant % of Tamil GBOC

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Page 40: Investor Presentation, July 2009

BIG Synergy

Page 41: Investor Presentation, July 2009

Leader in original format, studio based, interactive shows

Cutting edge shows : Kaun Banega Crorepati, Dus Ka Dum, Jhalak Dikhhla Jaa – Dancing with the Stars, Kya Aap Paanchi Paas Se Tez Hain, Aap Ki Kacheri and India’s Got Talent

Winner of 2009 Indian Telly Awards for “Best Production house of the year “

Snapshot of shows

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Page 42: Investor Presentation, July 2009

Exhibition overseas

Language US UK/ Europe Far East Others

Hindi 30% 30% 3% 37%

Telugu 85% 2% 5% 8%

Tamil 7% 20% 55% 18%

Indian35%

Hollywood65%

205 screens in US

BIG chain: 35% of Hindi 70% of Tamil / Telugu

English46%

Malay14%

Chinese11%

Tamil25% Others

4%

72 screens in Malaysia

Play mix of content Opened market beyond KL SPH highest among chains Account for 30-33% of Tamil GBOC

Europe

Programming model with Pathe in

Netherlands since June ‘09

Screen branding

40% increase in footfalls

Now expanding to France (Paris

and Lyon) with Pathe and Belgium

(Brussels and Antwerp) with

Kinepolis

International Collections for Indian films

Thank you