India's first film fund will offer support and transparency for "independent, content-driven" films.
When Bhavna Talwar directed her first film Dharm last year, little did she realise that it would end up as not just critically acclaimed but also one of the most profitable films of 2007. The “niche” film was made with a modest budget of $1.1 million (Rs 4.9 crore), which includes the marketing costs. Released in Europe (through licenced distributors), Dharm first made returns of over 40 per cent in Europe before getting a theatrical release in India to boost home-video sales.
“The multiplex boom,” says Sheetal Talwar, chairman and MD, Vistaar Religare Capital Advisors, “is in our heads. The reality is,” he adds, “less than 25 per cent of the net revenue of sales of films happens through theatrical.”
The financial process of recovering money, according to Talwar, happens largely through avenues like DTH, home videos and satellite television. “Given an 18-month cycle,” he says confidently, “any film can recover its making costs. After all, there are 30 rights where producers can sell their films even after they have been released in theatres.”
Talwar obviously knows that the business of Indian cinema is changing. Which is why he strongly believes that a new film fund, created as a 50:50 joint venture between Vistaar Entertainment (the holding company of The Friday Fund and WSG Pictures) and Religare, will bring “high-quality, money-making, independent, content-driven films” to the table. Having received clearance from SEBI recently, Vistaar Religare Film Fund is essentially a corpus of Rs 200 crore of which deals worth Rs 80 crore have already been struck.
So essentially, if Talwar is to be believed, within the next two years, 16-18 films from Vistaar-Religare Film Fund stable will be in various stages of production. The scripts for all films will be cleared by a special “investment management committee” that already boasts names like R Balki (ad-man and director of Cheeni Kum), Bhavna, ad filmmaker Johnny Pinto and film critic Subhash K Jha. “Of the eight confirmed films by the film fund, which is India’s first, four are immediate films,” says Talwar.
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In what is also a sweet coincidence, one of the first few films from the fund, for which work has already started and which will release early next year, is Awasthi, a movie by Bhavna (also Talwar’s wife). “I didn’t even know that my script was being considered seriously by the investment management committee,” clarifies Bhavna, adding, “I was never even present for any of the meetings while the members discussed my story.”
Besides Awasthi, which will have veteran actor Pankaj Kapoor doing a comedy, the fund is supporting a film that will be directed by Kapoor himself, besides another one which the fund will produce with Bobby Bedi. “There’s The Jonzes that we are doing with Demi Moore, we have acquired Stone Man, and we have already confirmed two more international projects, including a film called Finding Lenny with Movie World, one of the most reputed production houses in Hollywood,” confirms Talwar.
But how is this fund different from other corporate giants entering the film market? In Talwar’s view, it’s crucial to understand the difference. “Everyone is investing in large, star-led projects with investors entering production companies which are listed at 50x or 100x evaluation. In our fund,” he claims, “investors are entering at ground zero.” The fund, he confidently claims, is a growth opportunity for investors, in an industry with immense growth potential in India.
Komal Nahta, film trade analyst, would agree: “A film fund for India is the need of the hour. After all,” he says, “there needs to be greater transparency and accountability as to where all the money is going, how the money on films is being made.” Nahta’s understanding is that the fund will back film projects and be an equity partner in films.
In other words, the fund will finance films, even acquire distribution rights and then sell them to other distributors in different territories. It will obviously take interest from the film and, hopefully, distribute it equally, unlike many production companies in which one rarely knows how much investors at ground level have made. Talwar says that the fund’s biggest strength is that the investors are not stuck with the vagaries of the stock market.
The idea of the film fund came when Talwar and Sunil Godhwani, CEO and MD, Religare Enterprises, met socially and casually remarked on the circuitous way by which production companies made products (read films) privately, paid crazy amounts of money to cast and crew, distributing them at huge margins with zero transparency and no accounting.
“Everyone claims that so much money is being made on so many films that have been released recently. If that’s the case all production companies should be worth Rs 2,000 crore or more,” says Talwar. Taran Adarsh, another film trade analyst, agrees, “There are huge numbers which float in the market and yes, despite corporatisation of the film industry, there’s zilch accountability or price-sharing mechanism.” Religare stepped in and with its expertise in financial services, promised transparency and accountability in the entire financial process of filmmaking.
“What we also need is strong content which isn’t always star-led,” says Bhavna. “The investment management committee will scout for fresh content, new talent and merge it to see [whether] a relevant film project becomes financially viable too.”
The promoters of the film fund do believe that, besides the content (on which Talwar promises never to compromise), the next parameter for them to judge by will be how they can recover costs and make strong billing on films, for their investors. With projects ranging in size from Rs 2 crore to Rs 25 crore, reports suggest that 11-15 high net worth individuals have already invested some of their hard-earned money in the fund. They are hoping that the Bollywood tide will favour them.
For now, we will have to wait and watch.
