With 12 releases in just eight months, Sahara India Mass Communications (SIMC) has become one the country's biggest Hindi film producers. Two of its films "" Page Three and Bose: The Forgotten Hero "" have won National Awards. Not content with producing films locally, the company, which markets its films under the Sahara One banner, has now tied up with Percept Films to produce Tree of Life, starring Mel Gibson.
Buoyed by its success, SIMC (FY05 turnover: Rs 210 crore, including television operations), also plans to start making big budget films.
Shantonu Aditya, who joined Sahara One as CEO in June, on where the company is headed.
What is your business model?
We have several models. We have long-term agreements with other production houses like (Boney Kapoor's) BSK productions, with whom we made Sarkar, and with K Sera Sera, with whom we made No Entry. These films are partly funded by us. We have a say in the concepts and the budgets.
We also buy out films made by other production houses. For instance, Page Three was a film for which we bought all the rights.
Finally, we also make films in-house. These films are fully funded by us. Yahaan and Pyar Mein Twist fall in that category. We are open to all kinds of models.
What has been your strike rate so far?
Our strike rate has been decent. Out of 12 films, we have had four hits: Phir Milenge, Bewafaa, Page Three and Bose. Mumbai Express was a flop. We have made movies across genres "" comedy, romance, history. Our first animation film, Hanuman, is scheduled for an October release.
Is film making a profitable business? If you keep a tight control on the budget and are able to get the marketing right, film making can be a very profitable business. As a rule of thumb, two out of ten films are usually hits, four are average successes and four are flops. If you follow a low cost model, it's difficult to lose money because there are so many avenues today from which you can recover costs. The return on investment can be 2.5-3 times on a hit.
The trickiest part is the distribution because the business is so opaque. It's difficult to keep track of ticket sales. With multiplexes, though, the system is far more transparent since ticket sales are all computerised and we can check daily sales.
Also, one needs to ensure that there's enough money for marketing. If there are production cost overruns and there's not enough money left for marketing, that could be a problem. Usually, spend on production is 60-70 per cent with the rest earmarked for marketing.
How many films are you making?
We make films in all genres and that's perhaps why we get around 70 scripts a week. Currently, we have around 40 films on hand.
Shooting has started for about 22 of them and the others are in the process of being scripted. We are making an international film, Tree of Life, with Mel Gibson. Shooting will begin some time in December this year and will be ready for release in December, 2008.
How do you fund your productions?
Except for Bose, our budgets have been below Rs 10 crore. But now that we have some experience, we hope to make bigger budget films. There is a big opportunity there: if you have a hit you can make big money.
We fund our ventures from our capital (Rs 17.2 crore) and internal accruals. We are also planning to tap banks like IDBI, which is open to film financing. We are not planning an equity issue at this stage.
Which are the new big markets?
The international market is growing "" the CIS countries, such as Kazakhstan, are big markets. Apart from theatrical and music rights, today there are ringtones, home video, DTH and broadband content providers. Normally, 60 per cent of revenues come from theatrical rights while the remaining 40 per cent comes from the remaining sources.
What is your turnover and profit from films and what kind of growth are you looking at?
I will not be able to tell you what our revenues and profits are from films. It's hard to say how much we'll grow but we're looking at about 50 per cent in a year or so.
