Can Shah Rukh Khan outperform the ailing Sensex? Bollywood’s more organised, better financed executives seem to think so.
While a meltdown heats up economies all over, the nation’s film industry has begun to look investor-friendly. Venture capitalists have now joined banks to finance films and these funds are targeting individuals to invest in film funds.
In the new regime, box office duds can be made financially sound even before release, because money is made from home video sales, television rights and music –part of about 30 different saleable rights.
What’s more, globally, entertainment is considered recession-proof.
“A film’s dependence on box office is less than 22 per cent of the film’s net revenues today,” says Sheetal Talwar, chairman of Vistaar Religare Capital Advisors, which manages a film fund with a Rs 200-crore corpus. Twenty years ago, as much as 90 per cent of a movie’s revenues came from the box-office. Mushrooming multiplex screens and higher ticket prices are making film-wallahs project the industry size to double by 2012.
The Securities and Exchange Board of India (SEBI)-approved Cinema Capital Venture Fund (CCVF), with a total outlay of Rs 700 crore, will finance film production ventures (70 per cent) and film entertainment related technology and television content.
“As this industry gets more organised, a lot more of private equity players will want to come in but the ones that will do well will have industry know-how,” says Sameer Gupta, managing partner of the fund.
Since 2001, IDBI Bank has funded over 50 films and has not reported any bad investments. Exim Bank and Bank of Baroda have also been financing films. Established international filmmaking entities – Viacom, Dream Works, Warner Brothers – are coming in to make movies, completing the corporate trend.