 "Sajid Nadiadwala")
The pecking order in Bollywood is all set to change. Sajid Nadiadwala of Nadiadwala Grandson Entertainment - not Yash Raj Films, Eros International or Dharma Productions - has three entries - 2 States, Heropanti and Kick - amongst the top five films of 2014. (The other two are Viacom18-produced Queen and Ek Villain by Balaji Motion Pictures). His fourth film this year, Highway, was critically acclaimed. It did not make as much money as the other three but the return on investment was a whopping 154 per cent, though it was made for just Rs 9 crore.
Salman Khan-starrer Kick, which Nadiadwala co-produced along with UTV and directed, has collected over Rs 300 crore in worldwide box office collections - its production cost was around Rs 100 crore - and is well on its way to becoming one of the biggest hits of all times. The return on investment for the producers is close to 50 per cent, and it is rising. 2 States (made for Rs 40 crore) fetched a return of 92 per cent, while the return on Heropanti (budget: Rs 27 crore) was over 40 per cent. The four movies in which Nadiadwala and UTV have invested around Rs 180 crore have given a staggering average return of 65 per cent - something that would make even the big boys of Bollywood envious.
Offshore link
What adds more heft to Nadiawala's slow rise in Bollywood is the impressive show overseas. Kick, despite the fact that it has not been released in all key countries, has already rustled up over Rs 70 crore in overseas collections. If these are included, the returns begin to look even better. Clearly, Nadiadwala's confidence on his ability to deliver a hit is running high. So much so that he has postponed his fifth release planned for 2014, Phantom, which stars Saif Ali Khan and Katrina Kaif, to next year so that "everyone in his team enjoys a well-deserved break".
Nadiadwala, 48, has in the last two decades made several big-budget films with big stars and shot at exotic locales. But it is only in recent years that he has tasted such success. He admits that he was concentrating on big-budget films earlier, but the success of Highway has made him look at small-budget movies as well - it has to some extent changed his image from a maker of loud films to a maker of sensitive cinema. Curiously, he says that he does not have a budget in mind when he starts a movie - it could go up or down as the idea evolves. While he may start a project with an open budget, Nadiadwala believes in sharing the risks with others so that he can focus on the creative part of the movie. "A big-budget film means (expenditure of) Rs 100 to 150 crore. In such a scenario, it becomes very important to hedge your risks. Earlier, one person - the producer usually - took all the risks. Now, we look at hedging the risk at every stage possible," says he.
That is why he has tied up with UTV for at least five movies and wants to continue the relationship. He also has a 10-year partnership going with T-Series for music. Nadiadwala is clear about one more thing: he does not give away the intellectual property rights of his film to anyone and prefers to leverage it over the years. This means if the movie is remade later into any other language, the royalty payment would go to him. Nadiadwala is also very particular about when to rope in a partner for his movies. He says the returns are better if a partner is brought in at the later stages of the movie-making process. For instance, a partner may be willing to put in more money in the movie if the star cast and the script are both ready than when the movie is only in the script-writing stage. In his deal with UTV, Nadiadwala has outsourced the distribution and marketing rights of the movie as he does not have the bandwidth to handle them on his own.
Hedging risks
Nadiadwala says that even distributors these days like to de-risk themselves. So exhibitors pay upfront money to the distributor and once that money is recovered, the revenue sharing starts. He says the good news is that newer finance options are emerging, which gives production houses like his a big advantage which they did not have earlier. "Institutional funding has become easier. Banks are ready to loan money and new funds are coming up. It is a shift in the business model. The funds are ready to convert debt into equity in the project, which is always good," he says.
Nadiadwala also prefers to de-risk his ventures by staying out of the volatile areas of the business like selling satellite rights. Instead, he depends mostly on box-office collections, which are directly tied to his creative abilities. For instance, Salman Khan had already got into an alliance with Star India to sell the rights of the movies in which he acts till 2017. This includes Kick. "The money goes to the actor directly, so the producer does not have to give anything to him over and above the regular fees. The volatility of the satellite fees is also taken care of and is not the producer's headache," Nadiadwala says. This way he runs the risk of losing out on big money from satellite rights, but it helps him keep his principal cost - star fees - under control.
Instead of such ancillary revenue, Nadiadwala says he depends on box-office collections which are increasing due to more movie halls being built and ticket prices going northwards. "The box office business looks promising. For movies like Kick and Dhoom 3, the footfalls have been around 20 million each. That's really great," he says.
If collections are robust and risks are shared, will he make a lot of movies each year? Nadiadwala says there are no fixed numbers or genres in his mind. He does not want to grow the company quickly and surely doesn't want to take it public. He is also sure that after Kick he might direct another film but after two years; for now, he will stick to production. But he does have a slew of big blockbusters in the pipeline which includes Housefull 3 starring Akshay Kumar, Judwaa 2 (Salman Khan) and Tamasha (Ranbir Kapoor and Deepika Padukone). Each of these movies is expected to cost around Rs 100 crore and feature big actors. After he made a successful movie based on 2 States, Nadiadwala had the first right of refusal for another book by Chetan Bhagat, Revolution 2020, but did not see it as a potential script for a movie.
In the last 22 years in the film production business, Nadiadwala, a lawyer by education has had to traverse many tough challenges. He has had some major flops like Jaan-E-Mann and Kambahqt Ishq despite roping in big stars. Says Suniel Wadhwa, an independent distributor and box-office analyst: "In a career of more than two decades, Nadiadwala's films have covered many themes and genres. His early movies like Jeet and Judwaa were seen as archetypes of modern Bollywood blockbuster film-making. Nadiadwala achieved box office records for films like Mujshe shaadi karogi and Housefull 1 and 2."
Analysts also say he has woven close relationships with Bollywood's top actors who feature regularly in his movies and it has given him an edge in the market. "Many of his movies feature Salman Khan and Akshay Kumar; you won't see him experimenting with rank outsiders or taking a major risk in the cast. That has worked for him. Slowly, he is getting new faces too," says an analyst. Ask him what is his formula for success and he quips: "My company, you can say, follows the whims and instincts of one man - me". That confidence has paid him rich dividends this year.
