I have been securing bank funding for my films for a very long time. The point is that, to secure a bank loan, a producer has to fulfill certain conditions. Earlier, banks used to offer loans against the negative of the film. So if you could not repay the loan, your film would not release.
Today, too, they have conditions, where they ask for assets as collateral against the loan. So, if a producer is ready to mortgage his or her house or anything else, they will be able to get a loan. Earlier, producers were passionate about making films whereas, today, it is about making a ‘project’.
Take, for instance, the trend of making a film and then selling it to a corporate house. So, for example, if a producer is making a film on a budget of `45 crore, he sells it to a corporate house for Rs.55 crore, and he makes a profit. Now corporate houses are in trouble because they didn’t have enough understanding of the film business.
What happens with the film business is that there is no guarantee to recover your investment. The success ratio of our industry is seven per cent, which is why banks are not willing to part with money easily.
Let me draw form my own experience. I had taken a bank loan for my film Tezz but I repaid the entire sum just before the film released. So, even if the film didn’t do well at the box office, it became easier for me to seek bank finance for my next film as I had repaid the earlier one on time. So it is incorrect to say that banks don’t want to finance films.
As for the government, it cannot help you. The have given Hindi cinema industry status. What more can they do?
Amar Butala, COO, Salman Khan Films
The green-lighting and revenue model of our films is still a work in progress when compared to the West. Our green-lighting process is driven by sentiment rather than data. While green-lighting a film, studios in the West clearly benchmark it to previous films by genre, cast, release date and several other parameters to arrive at a probable revenue number.
In India, we have limited box-office data and even less data on revenue from non-theatrical platforms. So producers in India don’t have the ‘science’ that studios in the West have. In fact, we have started getting dependable data only in the last few years.
Similarly, the syndication process is far more evolved in Hollywood, where rights are not bundled for no value, rights have fair windowing. So a given right can be monetised several times over. There is, of course, no concept of perpetual deals and annuity income is one which is accounted and calibrated while green-lighting a film. Theatrically, too, they have abundant clarity on their box-office number and reporting is clear.
In India, transparency in the theatrical business with the advent of multiplexes has improved. With newer platforms on television, mobile phones and the Internet to consume films, producers are now recognising the value of ancillary rights, which earlier we weren’t able to monetise.
Lastly, several producers have output deals with broadcasters and music companies. This means a considerable cost of a film is now underwritten. With this transparency, newer sources of revenue and output deals, the next step might be institutional funding.
Already, we do have a some banks that will undertake slate funding or bridge funding for certain producers. We are still many years away from banks underwriting our films completely because the business still is largely speculative for them.