June 2011
Volume 31 No. 4

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India’s Tata Elxsi Trades Bollywood For Hollywood

By Dom Serafini

Within the emerging economically powerful BRIC nations (Brazil, Russia, India and China) there is a company that is as solid and versatile as a brick: Tata, a Mumbai (Bombay), India-based conglomerate with 2010 revenue of $67.4 billion that operates companies in 80 countries. The Group, also called Tata Sons Ltd, came to the attention of Hollywood last May when one of its divisions, Tata Elxsi, opened offices in Santa Monica, California to enter the lucrative animation and visual effects markets.

Maurizio Zuccarini
A 2 Entertainment’s Andrew Berman, Tata Elxsi’s
chairman Subramaniam Ramadorai; regional manager
North America, Bhaskar Dutt

Recently, Tata Elxsi acquired a 51 percent stake in Andy Heyward’s A Squared Entertainment, the planned producer of the recently cancelled Arnold Schwarzenegger’s The Governator. Previously, Indian companies such as Prime Focus and Reliance had expanded into Hollywood with the acquisition of several postproduction services by the former, and investment in Steven Spielberg’s Dream Works by the latter. Recently, Germany’s RTL Group partnered with Reliance to launch two thematic TV channels in India.

These and other companies are now creating a new outsourcing industry in India to increase the country’s entertainment sector, now generating estimated annual revenues of $13 billion. Of these domestic revenues, $1 billion comes from the animation and visual effects business, which, according to some estimates, is growing at a rate of 18 percent per year.
Not that Indian companies are new to the business. In the past, western companies that won visual effect contracts subsequently subcontracted the job to Indian labs, where costs are 40 percent lower. Now the strategy is to go direct and take full contracts, but to do so Indian companies need a strong presence in Hollywood.

The Tata Group is said to be the largest private conglomerate in India with interests in communications, information technology (IT) and entertainment, among other areas. Of Tata’s 90 operating companies, 27 are publicly listed.

The group was founded 143 years ago by Jamsedji Tata and with its current chairman, Ratan Tata, it is in its fifth generation of family stewardship. The Group became a household name with the 2008 acquisition of Jaguar and Land Rover, from Ford Motors.

In 2009 the New York-based Reputation Institute ranked the Tata Group as the 11th most reputable company in the world. Recently, however the group became involved in the 2008 Indian government’s allocation of the mobile-phone spectrum, which tarnished Tata’s admired reputation, even though nothing in India’s auditor general’s report suggests that Tata received any special treatment.

In the communications, IT and entertainment businesses, the Tata Group operates with four divisions

Tata Consultancy Services (TCS), a global U.S.$8.2 billion a year IT services company headquartered in Mumbai, with offices in 42 countries worldwide and multiple cities in the U.S. It serves more than 11 sectors, including banking. While it does IT work for entertainment companies, TCS does not dabble in entertainment per se. It is run by N. Chandrasekeran and it has been publicly traded in India since 2004.

Tata Interactive Services, a producer of educational content and e-learning products for schools, corporations and government. Home office is in Mumbai, with offices in eight additional countries. Sanjay Shama runs the company.

Tata Communications (TC), a U.S.$2.45 billion a year telco that also operates Tata Sky, a joint venture between Tata Sons, which owns 80 percent and Rupert Murdoch’s Star Group, that owns 20 percent. Reportedly, Singapore-based Temasek Holdings picked up 10 percent stake in Tata Sky from Tata Sons, diluting Tata's stake in the venture to 70 percent. However, the Group would not confirm it. Tata Sky, a direct-to-home satellite platform, covers more than 4,500 towns in India. Tata did not divulge the number of subscribers. Vikram Kaushik runs it, while Ratan Tata himself runs TC from Mumbai.

Tata Elxsi Ltd (TEL), a U.S.$84 million a year engineering company publicly traded on the Indian stock exchanges. The “Elxsi” part of the company’s name came from an acquired company. Under the label “Visual Computing Labs,” it operates a division called Mediaworks, which is involved in animation, visual effects and commercials production. TEL maintains its headquarters in Bangalore, India and in seven other countries, with multiple offices in the U.S. including studios in Los Angeles, which were opened last year. Subramaniam Ramadorai runs the company.

With Hayward’s A Squared Entertainment, Tata Elxsi Ltd will produce and distribute children's series for television, the Web, mobile devices and video games. Under the deal, TEL has agreed to finance the productions and supply the animation workforce from its studio in Bangalore, India, while A Squared will provide the creative direction for the projects, using its contacts in Hollywood. Financial terms for this and other deals were not disclosed
Tata Elxsi's credits include its 3D animation services for Walt Disney's first Indian animation feature, 2008's Roadside Romeo, co-produced with veteran Bollywood banner Yash Raj Films. In addition, the company has worked on such Sony Pictures’ films as Spider-Man 3 and Ghost Rider with Nicolas Cage.

Tata Elxsi’s CEO, Subramaniam Ramadorai was recently in Cannes to participate in MIP and to attend Arnold Schwarzenegger’s inaugural dinner for The Governator, the action-movie star and former California Governor’s vehicle that was supposed to be his re-enter into show biz with an animation series produced by A Squared, but which was later cancelled due to Schwarzenegger’s confessing to having fathered an illegitimate son.

A product of New York City, where he lived in the ’70s, and Los Angeles, where he earned a Masters in Computer Science at UCLA, up until recently the 67-year-old Indian-born Ramadorai was the chairman of Tata Consultancy Services (TCS). Today, Ramadorai is TEL chairman and also TCS vice chairman in addition to other chairmanships such as that of the Bombay Stock Exchange and Tata Technologies.

Last February Ramadorai was appointed advisor to India’s Prime Minister with the rank of cabinet minister for the National Skill Development Council.

VideoAge first met with Ramadorai at MIP and he subsequently agreed to answer the following questions:

VideoAge: Are there sufficient animators in India? Reportedly there was a need for 10,000 animators.
Subramaniam Ramadorai: The Indian animation industry is still at a nascent stage. The animation industry in India was formally recognized just over a decade ago. Lack of exposure, inadequate resources, investments and government support are some of the key challenges faced by the sector. Though it is witnessing a constant growth, it still requires nurturing and focused development.

As per the NASSCOM [animation association] report, the manpower requirement for animation and VFX industries in India is expected to grow from 17,500 in 2009 to 29,500 by 2012.

VideoAge: Costs of animation in India is estimated to be 40 percent lower than in Western countries, but is the quality comparable? In the past there were complaints about the low quality.
S. Ramadorai: The animation industry in India has gained significance as an outsourcing destination for animation work due to low cost skilled labor. Some of the leading Indian animation studios have worked on international projects and feature films and delivered international quality. For instance Roadside Romeo, a full-length feature film that was co-produced by Disney Pictures and YRF, was fully animated in 3D by Tata Elxsi where we were responsible for both the creative and technical aspects of production. Roadside Romeo was nominated among the final set of five finalists for the “Best Animated Movie” by the VES awards alongside internationally acclaimed movies like Wall- E and Kung Fu Panda.

While the cost factor is a significant attraction for considering outsourcing of animation work, we need to ensure some key aspects to scale the quality to a level of consistency expected by the international market. The Indian industry has to assimilate high quality technology and tools, enable more international exposure for creative personnel and inculcate a knowledge sharing platform for international experts to come and share their learnings. The IT sector also faced similar challenges 20 years back. Today India is considered a preferred IT destination. The Indian animation sector needs to borrow some for the successful IT practices and also inculcate better project management skills to become more competent internationally.

Tata Elxsi for example, has deputed about 20 of its creative staff from the VCL studios in Mumbai, to UCLA to get trained by international experts. VCL has an established studio in Los Angeles with highly acclaimed creative staff from Hollywood, and regularly arranges for key international talent to support projects. We also leverage our software teams to help develop and innovate more efficient workflows, specific tools and plug-ins for our work. At a national level, we have taken a key role in representing the industry with the government and the Ministry of Information and Broadcasting, and helped develop a national agenda that aims to foster and grow this industry in a sustained manner. This includes creating accredited animation courses, developing a comprehensive curriculum and enabling greater recognition for this industry through national awards.

VideoAge: Is Tata’s long-term strategy to focus on outsourcing or on being a producer?
S. Ramadorai: We believe that it is important for us to focus on a portfolio right from simple outsourcing to co-production and production. This is beneficial from a business and creative perspective as it provides a synergy and opportunity for concept incubation, design, styles, business trends, risk amortization and mitigation.

VideoAge: Is television Tata’s main business or it is movies?
S. Ramadorai: Though we provide graphics/VFX for television commercials and VFX/CG for TV shows, our larger involvement has been in features (movies). Recently, Tata Elxsi signed a Memorandum of Understanding to form a joint venture with A Squared Entertainment, which envisions exciting properties. This tie-up intends to create, develop and distribute original brands, including animated entertainment and digital gaming. With this tie-up we expect significant participation in the television segment too.

VideoAge: Since Tata operates in different sectors, will Elxsi be taking advantage of their services and financial support? Can you give us some examples?
S. Ramadorai: Tata Elxsi is a profitable, zero-debt company with access to funds both internally and externally if required. We do leverage other Tata companies where relevant. For example, we have utilized the computer infrastructure of CRL that hosts one of India’s fastest supercomputers for rendering and animation projects. 

We have executed some exciting projects for other Tata companies, including advertisements, new product launches and custom content, which are redefining how automotive and other B2C companies can use technology and animation more effectively to position and sell their products.

For example, we have developed stereoscopic 3D content to showcase the global truck being launched by Tata Motors. Just a week ago, we enabled an innovative concept around an e-puppet, where a virtual car interacted with the audience and responded to questions, all with realistic lip synch and movements. This concept and the launch were a great hit, and also helped reflect the technological innovations that are built into these vehicles.

VideoAge: Has animation in India created its own style (for example Japan’s big eyes) or will it do whatever clients want?
S. Ramadorai: Well, this continues to be a topic of discussion in several animation forums across India. At this point in time there is no specific Indian style of animation. India continues to develop content as per client’s needs and requirements.

Animation styles are usually said to be derived from the culture, target audience and content/story. Since India brings a culture of over 5,000 years of history, Indians can lean on great tales of the stories of Ramayana and Mahabharata, to animal stories and parables around Buddha to develop its own discrete content and style. We believe that possibly the new ways of showcasing these stories to audiences not just in India but worldwide will help us connect to all genres of people and enable us to define a distinct Indian style.

Currently Tata Elxsi is working on a feature film called Arjuna – a CG film for a Disney owned company, UTV. Based on the warrior prince from the Indian epic Mahabharata, Tata Elxsi has created a distinctive look with toon shaded (CG with a 2D look) characters contrasted against richly textured backgrounds – often matte painted. This kind of work might help India develop an ‘Indian style’ in the animation sphere!

VideoAge: Executives in the international animation business complain that the TV animation business is shrinking, that competition is tough and that there is more supply than demand. What does this leave Tata?
S. Ramadorai: This is an opportunity where Tata Elxsi can leverage its creative talent both in its Hollywood and India studios, and provide customers a unique benefit of lowered cost and international quality.

VideoAge: Show business is different than engineering and it will bring Tata under more scrutiny simply because of more media coverage. Is Tata’s corporate culture ready for some show?
S. Ramadorai: Yes, we are!