figures because the producers and distributors believe that we shouldn’t mention gross figures, as a portion of it goes to the government as entertainment tax.” Rathi simplifies it even further, “A movie ticket which costs Rs. 250, includes service charge and entertainment tax which is the gross price. Net collections are derived after deducting service charge and entertainment tax from the overall collections, which is later divided among the distributor and exhibitor, depending on the ratio that has been decided during the deal.” He also adds that the entertainment tax differs from state to state. For instance, states like Rajasthan and Himachal Pradesh do not charge entertainment tax, whereas Maharashtra has levied 45 per cent entertainment tax. In areas like Chattisgarh, the tickets that cost up to Rs 50 are tax free, and the ones that cost over and above that, charge 20 per cent tax.
Dividing the moolah
When the producer sells a film to the distributor, he already earns a particular amount, hence the net collections are shared by the exhibitor and distributor. After the multiplex vs producers stand off in 2009, a mutual understanding was reached with each party getting 50 per cent in the first week and the percentage going down every week. Shroff says, “First week, the ratio of the distributor-exhibitor share is 50:50, 42.5:57.5 in the second week, 37.5: 62.5 in the third week and so on.The reason for this is that the business keeps decreasing week by week, but the cost of the multiplex or the theatre is the same.” So, if a film has made Rs.200 crore net, then on an average, 45 per cent will go to the distributor, and 55 per cent will be the exhibitor’s share of the total net collections.
But there’s a term called ‘overflow’. “Over and above the distributor’s share will go to the producer. For instance, if a producer sold a particular film in one territory, say for Rs. 1 crore, he may give the distributor a minimum guarantee of that amount. After a week, if the sum total of the net box-office collection of the film in that distributor’s territory equals Rs. 1 crore, then he breaks even. If he made Rs.1.20 crore, then he’ll keep Rs. 20 lakhs as his profit. But, if he earns Rs. 1.5 crore, then that’s called commission mode, since he earned Rs. 30 lakhs more after his share of