The Hindu Business Line : Better growth hopes lift Crest Animation

THE stock markets appear to be confident of Crest Animation Studios' performance in the coming quarters as seen in the renewed interest in its shares.

In the last five sessions, shares of Crest Animation have risen by 20 per cent. Today, however, its price dipped by Rs 2.2 to end at Rs 84.45 on the BSE with 2.24 lakh shares being traded.

The fact that Crest Animation had turned in a net loss of Rs 0.5 crore in the third quarter of the current fiscal (against a loss of Rs 0.6 crore during the same period last year) does not appear to have dampened the enthusiasm of investors in the company.

The third quarter loss is also explained to the fact that of this, Rs 0.35 crore is on account of exchange fluctuations.

"Foreign exchange fluctuations have impacted many companies which are in export related businesses," said Mr Vinayak Purohit, Chief Financial Officer, Crest Animation Studios.

Today, Crest informed the BSE that it has been ordered by the Settlement Commission and Central Excise to pay differential customs duty of Rs 2.09 crore on capital goods imported earlier.

However, the company has already made provision for this to the extent of Rs 4.5 crore in the accounts of 2003/04 fiscal. Therefore, it has no implication on its balance sheet of this year.

Going beyond the quarter financial numbers, Crest appears to have bright prospects, company officials and analysts said.

Crest is slowly expanding its portfolio in the area of television, film and DVDs and is also making a foray into original, full-fledged animation films. Moving down the value chain augurs well for Crest as margins are expected to improve.

The company's subsidiary in the US, RichCrest Animation, is likely to end up with more deals in computer generated imaging (CGI) in the next few months, analysts said. CGI films are becoming hugely popular raking in large amounts of money at the box office.

Crest has also associated with Mike Young Productions on several projects, significant among them being the collaborative work on Pet Aliens, a 3D animated television show, which was launched on Cartoon Network this year.

Crest Animation is able to offer CGI production at almost one-third the cost in the US. The company, therefore, has taken a focussed approach to CGI during the current fiscal adding animators to its talent pool.

However, there is a cost involved in training animators, Mr Purohit said.

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