This story first appeared in DNA Money edition on Friday March 25, 2011.
Despite entertainment sector receiving industry status, organised funding still eludes film making. However, the situation is changing with innovative funding options, transparency in dealings and extensive use of technology to monitor costs luring back corporates/ investors, film makers said at FICCI Frames 2011.
Bobby Bedi, managing director, Kaleidoscope Entertainment, said, “There are times when the box-office numbers show that a particular movie has made so many crores in the opening week. And despite that the film financier continues to lose money. Actual reporting of business numbers is very crucial to attract investments without which funding will always remain a challenge.”
Industry experts said that film makers have to get realistic while budgeting their movies and going out to raise funds. There have been times when film makers adopt the bubble-up strategy, making financial institutions to pay up the entire cost of production, they said, adding that many with access to public money got greedy and misused the funds for their personal gains.
“A few lucky ones who got funding from corporates and investment funds have even gone to the extent of splurging it like water, thereby making their projects non-viable leading to losses for their investors,” said a top official from a leading production house.
However, a few significant industry developments in the recent past are changing the way finances are being handled by investors and production houses to make it a win-win situation for those involved.
“Technology and software are being extensively used by film makers these days to structure, streamline and monitor their production schedules and costs on a real-time basis. This approach is certainly helping to bring in transparency in the business thereby instilling confidence in the corporates, banks and investment firms/funds to look at this business afresh,” said Bedi.
Ashok Wadhwa, group CEO, Ambit Capital, said aspects like collaboration with international studios for a global appeal, increased transparency, focus on delivering results, return on investment, monetising the product across streams, etc by some of the leading producers and production houses are making a great difference.
“These are primarily the reasons why organised funding institutions are keen to explore relationships with players who not only focus on offer a great product, but also back it up with a bouquet of other resources that give assured returns as against looking at theatrical release as the key source of revenue. In fact, my personal view is that there are quite a few foreign investment firms currently looking to invest in international markets especially countries like China & India,” said Nirvaer Sidhu, VP-media and entertainment, Goldman Sachs India.
Karan Ahluwalia, executive vice-president, media and entertainment, Yes Bank, said a very lucrative yet untapped financing option is securitisation of intellectual property rights.
“Intangible assets like movie libraries and even music libraries can become a means to raise capital. This is a well established option in the West and it is only a matter of time before Indian companies realise the value of this resource,” he said.
Ranu Vohra, managing director and CEO, Avendus Capital, suggested tapping the high networth individuals and family business houses which have built their wealth from scratch. He said between Rs 500 crore and Rs 700 crore would available for investment from the family houses.
“These are people with growing family businesses, have already invested across various asset classes and are now looking at other alternative options to build their wealth. Any family house with over $100 million for investments in this high-risk high-return industry would make for a potential investor. Catalysing this set of investors is, however, still a key challenge,” said Vohra.
No comments:
Post a Comment