Srini Raju about funding in Media and Entertainment business

Srini Raju said, “Media and entertainment is a glamorous field and the returns in these fields are not encouraging. For example, the market cap of Infosys is twice that of entire media and entertainment business in India. IT and BPO has less talent, but has more money. Media and Entertainment has more talent, but its not converting into revenue. During the period between 2007 and 2009, lots of private equity firms chased media companies. Now all those PE investors are making losses. The top lines are growing and the bottom line is shriking for media companies. If you look at the history, there are two industries that are making huge losses consistently. These are airlines and media. I had around 1000 crores of equity in my real estate firm and it didn’t have any debts. No bank came forward to loan us money because real estate is a risky sector. The same thing goes with media sector as well. Movies are made with passion and there is no guarantee of returns in this business. The interest rate charged by bank is to be blamed in India. In Japan and China, the interest rate is less than 6%. In India, it is as high as 15%. Hence there is no scope for making profits if we have to pay such a huge money as interest. That is the reason why I aim for a minimum of 25% annual return when I invest in any fund. The returns on my investments through my PE firm has been a lucrative 40% over a period of time.”