A cinema fund is a very new concept in India. So far, how have investors reacted to this What is your minimum investment and overall corpus that you are planning on collecting
So far, investors have reacted very positively to this fund and we have had a better response than what we hoped for. When you sell movies in a country where people have grown up watching cinema, your job does get a little easier. We have a minimum investment level of Rs 2 crore and hope to raise a corpus of Rs 200 crore. Bhavna Talwar, director of Dharm, Pankaj Kapur and other industry experts select the projects, which we would like to finance and also lend their support to ensure selected projects are seen through. While cinema funds are a fairly new concept in town, the changing face of Indian cinema is ready for a certain level of professionalism to enter this industry. Funds like ours are hoping to pioneer that and over the next 5 years we hope that investors no longer view cinema as a risky and opaque investment, but a smart and transparent one.
How do you plan to utilise the funds
We are going to disperse the funds project-wise and have different stake holdings in different movies. We are trying to promote good cinema and hence, be it new film makers or old, star-studded movies or new comers, Bollywood or Hollywood, we are considering all as investment avenues. Currently, we have already committed to 8 projects worth almost Rs 80 crore. We have a minimum lock-in period of 5 years, during which, the earnings of each investor should be compounded. We hope to make almost 40-50 movies during that timeframe and are hopeful that each of them will do decently well. Amongst them, if we have a super-hit its only a bonus to us, as we are not depending on such things as far as investor returns and fund performance goes.
What are the types of returns you hope to generate How much money has Vistaar-Religare invested in the fund What is your target investor
While it is too early to comment on how much of a return we will generate, considering industry norms, since most average movies make easily 40% or so returns on investment, we would hope to be somewhere between the 30-40% ROI mark. Currently, ticket revenues only generate 25% of the overall money made in a film. The rest of it is made through music rights, film distribution rights, overseas rights, television rights, etc. This has made the industry a lot less risky than one originally anticipates it to be. Hence, as long as a movie is well-made and well-marketed, has a good story and most importantly is made within a reasonable budget, one will always make money in cinema.
Our funds are currently targeting HNIs and sophisticated investors, with Religare being the main marketing force. We are also hoping to rope in another marketing partner so as to further widen our investor base. Religare and Vistaar together have together invested 10% of the overall corpus, which amounts to Rs 20 crore.
What do you feel about the current situation of the Indian film industry and how do you see the entertainment industry growing in the future
The Indian film industry is in a state of metamorphosis. We are no longer a star-led era, but recent years have shown that the evolved markets are more movie- and story-based. Content-based films are the way of the future. While newer film makers still have to look around for financing options, avenues like us will provide a welcome relief to them. Established directors on the other hand still have plenty of financing options. Though as quality comes more and more to the forefront, the industry will change too. Sunil Godvani and I, together, always hoped to start a fund, which promotes depth of talent as well as investor returns. Religare is looking after the investor returns aspect. As far as the industry as a whole goes, I see it doubling from $2 to 4 billion over the next five years. I believe we can sustain 13% growth year-on-year.
What are the risks involved in investing within the cinema world
These days, thanks to home video distribution rights, DVD and VCD sales, and global appeal, the risks involved for financers are relatively lesser, since most of the times they have covered their investment before the movie even hits the screen.
Typically, like in all project-related investments, the biggest risks faced are that of completion, proper budgeting and being able to stick to that, government and censor approvals and lastly audience response. However, with the urban film culture developing, a good story, as long as one has the ability to stay with it, should be able to overcome these risks and make money. Also, with corporate interest within this industry, transparency levels are also increasing and this should go a long way in helping the growth of this industry in the future.