In the business of glory
A soaring Sensex
and the boom in Bollywood saw corporate houses and banks lining
up to finance films. Though the
economic downturn has caused a dip in the fortunes of tinsel
town, all is not lost yet, reports Shiv Kumar from Mumbai
Aamir Khan-starrer Ghajini has garnered nearly Rs 50 crore in the international market
NEARLY two decades
ago Amitabh Bachchan was perhaps the first person who began the
‘corporatisation’ of Bollywood when he launched Amitabh
Bachchan Corporation Limited with himself as the brand mascot.
It turned out to be one of the most spectacular failures in
India’s film history that nearly bankrupted the superstar.
This setback was a major deterrent for others, who may have
wanted to follow suit.
But in the recent
years, a boom in the film business saw banks, major corporate
houses, and international production studios eager to fund
films. If one takes a casual look at the some of the latest
releases featuring big stars like the Bachchans, the Khans,
Akshay Kumar et al, nearly every movie has a corporate venture
business houses, including the venerable Tatas, the Mahindras,
the Ambanis (Anil’s companies) and a whole new breed of
businessmen have turned film producers due to the easy funding
from banks and the market.
UTV finds small-budget productions like Khosla ka Ghosla can recover money
prospects of an economic recession have sharply dulled appetite
of the corporate sector. Only a handful of cash-rich players are
still in the field after the sensex plummeted last year.
The Tata Group,
which was among the first to test the waters when its group
company Tata Infomedia produced Aetbaar more than five
years ago, left the business after the movie sank without a
trace. After making a few grand announcements the group divested
the subsidiary entirely to pursue other opportunities.
failure at the box office did not really dull the appetite of
other A-listers in the stock exchanges. Mahindra and Mahindra
recently announced that a film produced by one of its group
companies is ready for release. Titled Mumbai Chaka Chak
(Sparkling Mumbai), the comedy flick focuses on the lighter side
of a road sweeper’s life in the country’s financial capital.
Chakraborty, who heads the Mahindra’s ventures in films, says
films would be where television was 15 years ago. "This is
a business we want to be in and we want to make good
company, however, has been quite cautious in its Bollywood
foray. Despite the changed market scenario, it has not announced
any changes in its plans — at least not yet.
The other big
player to enter filmdom happens to be Anil Ambani. The flashy
tycoon, who hails from a conservative Gujarati family, is said
to have broken ties with his elder brother over, among other
things, his desire to venture into the tinseltown. Married to
former actress Tina Munim, Anil’s ventures in the
entertainment industry include movie theatres, processing
laboratories (Adlabs), film rental and production and
direct-to-home (DTH) satellite transmission via Reliance Big
processes nearly two-thirds of all Hindi films made in India.
The company has now announced that it would invest as much as a
billion dollars in the production and distribution of films in
Anil Ambani had
set his sights even higher with his companies buying chains of
movie theatres across the US. The Reliance Big Entertainment had
struck a deal with Hollywood star filmmaker Steven Spielberg.
Under the deal, the Anil Ambani’s company is funding Spielberg
to the tune of $550 million under which DreamWorks promoted by
the Hollywood director would be disinvested from Paramount and
taken private. The Reliance Big Entertainment was to hold a 50
per cent stake in DreamWorks. However, due to global recession,
the venture has been buried deep in the cold storage.
The Reliance Big
Entertainment-DreamWorks alliance is expected to roll out its
first Hollywood venture some time in 2011. This is several
months behind the initial schedule. Under the original plan, the
venture was to produce six films annually from 2009 onwards.
However, now the
plan is in cold storage as the younger Ambani is working at
consolidating his media empire. The plan includes more action in
the distribution sector with the company taking a call on
potential winners. Reliance Big Entertainment has already scored
a winner with Aamir Khan-starrer Ghajini, which has been
released successfully abroad. The buzz has it that Ghajini has
garnered nearly Rs 50 crore internationally for the producers.
Despite the film’s success, many corporate players in
Bollywood, who had pumped in huge amounts of money signing up
stars for mega-budget productions, are undergoing a rethink.
"Only productions that are on the floor for which signing
amounts have been already paid to the stars are going
ahead," confirmed an industry analyst.
According to the
grapevine, companies like UTV, which had entered the sector with
a bang, are now looking for ways to conserve cash. The company
recently exited the home video business, hiving off its entire
library to Moser Baer in return for royalties. The company may
also look at small-budget productions, which can recover its
money, say sources.
The company is
also said to be scaling down its plans in the television space.
UTV has already renegotiated prices for two films on the floor
starring Irrfan Khan and more such corrections are likely across
Earlier, UTV, the
company promoted by stage director Ronnie Screwvala and Rupert
Murdoch’s Star Television, had signed up Akshay Kumar for a
one-film deal worth more than Rs 71 crore. According to the
trade buzz, the project is said to have been shelved.
producers had said at the height of the bullish market that
stars needed to be paid such high amounts because new producers
were finding it difficult to rope in the A-list stars like Shah
Rukh Khan and Aamir Khan and Akshay Kumar. But now even the
stars are openly talking of taking a pay cut. Some like Sanjay
Dutt, who admit to making good money during the boom times, are
now prepared to work for less in troubled times.
However, many of
them are said to be demanding a share of the profits like
co-production rights, which ensure that they get to share
revenues from television, cable and home viewing rights. Shah
Rukh and Aamir Khan have gone on record saying they will only
act in films made by their own production houses. That leaves
several top-notch filmmakers without a star name to sell the
To add to the
woes, films starring B-grade film stars have almost lost the
market after distributors began backing out of deals. Several
films have been completed and are awaiting release. The list
includes several big names like Suneil Shetty’s Red Alert,
Right Ya Wrong featuring Sunny Deol and Irrfan Khan and Aashayein
starring John Abraham.
This is in sharp
contrast to last year and the year before that. According to the
Federation of Indian Chambers of Commerce and Industry (FICCI),
which produces an annual report on the country’s entertainment
sector, as many as 1,146 films were made in India in 2007. The
body also organises the prestigious FICCI-Frames, which is an
annual interface between the industry and the filmmaking
The body estimates
that the introduction of newer technology, production techniques
and marketing would help the industry grow to $ 3.9 billion by
According to Amita
Sarkar, who heads the entertainment division at FICCI, the
granting of industry status to film production in 2002 has
helped to bring in the corporates. Creative persons, who had to
face severe financial shortages in the past, can now avail of
financing from various financial institutions, says Sarkar.
Directors say the
entry of companies had allowed them access to easier finance
while earlier they had to take the help of alternative sources,
including the underworld. "They pay on time and always by
cheque," says producer Vikram Bhatt, who has been backed by
several corporate houses in the past.
The entry of the
corporate sector also helped Bollywood to look towards foreign
shores for growth. Indian films are now finding their ways to
countries like Pakistan, Indonesia and the Middle East via the
legal channels as corporate producers tie up with distributors
However, in cases
where the corporate players were smart enough to produce films
within a budget, they have scored. Small-budget films that
easily turned a profit include some like Khosla ka Ghosla
and Life in a Metro backed by UTV.
This fact has not
been lost on international studios. Hollywood has begun to take
notice with major players like Sony Pictures Entertainment and
Warner Brothers tying up with Indian film producers to make
Hindi films. Sony Pictures’s first Indian venture Saawariya
was released in 2007. Walt Disney and Yash Raj Films will
release three animation movies soon.
But it is the
Indian companies who seem to have lost their appetite for
filmmaking. Some of them are said to be in talks to sell out to
big international studios. The grapevine has it that at least
one of the companies may be taken over by a foreign studio.
Hollywood studios are said to have pumped in as much as Rs 1,200
crore to pick up stakes in various Indian film companies over
the past few months.
EXIM Bank has financed Dhoom-2
AMONG the major
players who are entering the business include banks. Shedding
their conservatism, banks have taken to bankrolling films in a
big way. Since banks may take up to 5 per cent of their total
exposure to one sector, several banks have lined up with funds.
RBI norms state that film producers with a track record of five
years may one be eligible for receiving funds. Producers are
also required to ensure that there are additional revenue
streams in addition to bank funds.
The biggest banks,
who lend to filmmakers include IDBI and EXIM Bank. At the FICCI
Frames-2008 media convention, John Matthew, Chief General
Manager, EXIM Bank had said the bank lends money to film makers
on the condition that the money is returned before the release
of the film. "Our exposure is only towards the completion
of the film since the film maker is required to tie up other
sources of funds prior to release," Matthew said. The bank
is further safeguarded since companies like Infinity Film
Completion Services, sponsored by GIC (General Insurance
Corporation of India) guarantee completion of films. So far EXIM
Bank has lent more than Rs 300 crore to filmmakers and has
financed films like Dhoom-2, Salaam Namaste, Veer Zaara
etc. YES Bank, too, has begun lending to film and television
producers and distributors.