Entertainment and media industry

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An Industry Analysis - Desk Research report on
Submitted in partial fulfillment of the requirements
For the degree of Master of Business Administration
To
By
Name of Students PRN NO.
1- Gaziyani Md. Hasnain Md. Khalid ----------------------------
2- Ansari Abu Swaleh Rafeeque Ah. ----------------------------
3- Rahul O. Bhandari ----------------------------
4- Khushboo Mutha ----------------------------
5- Bhagyashree Mankar ----------------------------
Under the guidance of
HON. HOD. PROF. MR. U.S. KASAR
In the Year-2013-14
Through
S.N.J.B’s Late Sau. K.B.Jain College of Engineering, Neminagar, Tal- Chandwad, Dist-Nasik, (M.S)

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DECLARATION BY THE STUDENT
I hereby declare that this Project Report titled ENTERTAINMENT AND MEDIA
INDUSTRY Submitted by me is based on actual work carried out by me under the guidance and
Supervision of PROF. MR. U.S. KASAR any reference to work done by any other person
Or institution or any material obtained from other sources have been duly cited and
Referenced. It is further to state that this work is not submitted anywhere else for any
Examination.
Date:
Name of Students: Signature of the Students
1- Gaziyani Md. Hasnain Md. Khalid
2- Ansari Abu Swaleh Rafeeque Ah.
3- Rahul O. Bhandari
4- Khushboo Mutha
5- Bhagyashree Mankar

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ACKNOWLEDGEMENT
We would like to thank the almighty for his constant grace showered on us
and his increasing gift of knowledge and strength that has relentlessly prevailed
our life through the entire project work.
It was such an honor and privilege for us to collect information for the
companies and share with the class. We would have not completed our project
without their immense help and co-operation.
Our sincere gratitude goes to Mr. and for guiding us
and helping to collect data and constantly counseling us through their undertaking.
We acknowledge our sincere thanks to Prof. Kasar Umesh S for his guidance
that made us this project materialized. Finally, we are also thankful to our parents
and friends for their encouragement and support.
We would like to thank SNJB’s KBJ COE dept of MBA and our principal
Dr.V.J.Gond for the exposure and support provided during the project.
Names of students
1- Gaziyani Md. Hasnain
Md. Khalid
2- Abu Swaleh Rafeeque
Ah.
3- Rahul O. Bhandari
4- Khushboo Mutha
5- Bhagyashree Mankar

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Entertainment and media Industry
The words that come to our mind when we think of entertainment are
Pleasure, Fun and Relaxation. Entertainment exists from the time man exists. He
always found some way or the other to entertain himself. Though the methods and
sources of entertainment differed the essence remained the same that was to get
pleasure. We would say a lot has changed over the years in other words everything
is getting more and more modernized. But, yet the truth is that the basic mode of
entertainment yet remains the same. Earlier the scope of entertainment was
narrower unlike today. Now services are available to entertain us in other words it
is commercialized.
All, young & old, rich & poor, man & woman, require entertainment. Every
individual needs some sort of entertainment in his life. Entertainment provides
some sort of a change from the normal course of life.
Modern age, man has been found facing a number of problems. They are
supposed to follow the busy schedule to earn more and at the same time also
required to be a high performer. Management of a family is also important. This
necessitates entertainment. The changes in the taste and temperament in the
masses, increasing disposable income, the changing lifestyle due to corporate
changes has paved the way for the development of healthy entertainment
facilities. Opening of new air-conditioned cinema halls, open-air theatres, drama
centers, music centers, pub, club, art and handicraft and painting centers have
been found gaining popularity. Many entrepreneurs have been seen promoting
entertainment services. By doing this, they not only entertain the masses but also
inculcate awareness, promote education, and develop knowledge. The focus today is
on development of entertainment services in a right fashion. In the Indian
perspective, where majority of the population is illiterate, it is the responsibility
of the entertainment services to inculcate awareness even in the rural areas of the
country.
The entertainment industry in India has outperformed the economy and is
one of the fastest growing sectors in India. However, it registered a moderate

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growth of over 15 per cent in 2003. The FICCI-Ernst and Young Study titled "The
Indian Entertainment Industry: Emerging Trends and Opportunities", scheduled to
be unveiled during FICCI-FRAMES 2004 - the Global Convention on the Business of
Entertainment on 15th of this month at Mumbai, has projected that the industry
will grow from Rs.19,200 crores in 2003 to Rs. 42,300 crores in 2008, at a
compounded annual growth rate of 17 per cent.
(SOURCE: ERNST AND YOUNG STUDY)
ZEE TELEFILMS HAS SECURED TOP POSITION IN INDIAN ENTERTAINMENT
INDUSTRY WITH A MARKET CAP OF RS 4,739 CRORE AND NO ONE COMES ANYWHERE
NEAR. MEDIA MATRIX WORLDWIDE, AT NO 2, IS WAY BEHIND WITH RS 406
CRORE.
Top 5 Companies By Market Cap
Sector
Rank Company
MARKET CAP
(RS CRORE)
1 Zee Telefilms 4,739
2 MediaMatrix Worldwide 406
3 Sahara India Mass Communications 387
4 Balaji Telefilms 357
5 Pentamedia Graphics 161
19.200
22.608
26.945
31.634
36.690
42.300
0
5
10
15
20
25
30
35
40
45
2003 2004 2005 2006 2007 2008
(in crores)
Years
Estimated Turnover of Entertainment Industry
Estimated Turnover

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Top 5 Media Companies By Net Profit
Sector
Rank
Company Net Profit (Rs Crore)
1 Zee Telefilms 87
2 Balaji Telefilms 57
3 Padmalaya Telefilms 17
4 Adlabs Films 17
5 ETC Networks 14
(SOURCE: ECONOMICTIMES.COM)
ENTERTAINMENT SECTOR IS DIVIDED INTO MANY SEGMENTS. SOME OF THE
SEGMENTS ARE AS FOLLOWS:
 Amusement parks
The roots of the amusement park industry go back to medieval Europe when
pleasure gardens began to spring up on the outskirts of major European cities. These
gardens were a forerunner of today's amusement parks, featuring live entertainment,
fireworks, dancing, games, and even primitive amusement rides. Today the amusement park
remains an international favorite. Many developing nations are experiencing the joys of the
amusement park for the first time, while the older, more established amusement parks
continue to search for new and different ways to keep their customers happy. Rides are
taking advantage of technology to reach heights and speeds that thrill seekers only
dreamt about not too long ago.
ESSEL WORLD: ESSEL WORLD OFFERS OVER THIRTY-FOUR THRILLING AND
SCINTILLATING RIDES, GAMES AND AMUSEMENTS, GUARANTEED TO PEP YOU UP.
WATER KINGDOM: THE WATER KINGDOM IS ASIA'S LARGEST THEME WATER
PARK. SET AMIDST AN EXOTIC JUNGLE, COMPLETE WITH QUAINT SCULPTURES, RUINS
AND TROPICAL VEGETATION, THE WATER KINGDOM HAS SEVERAL INNOVATIVE
ATTRACTIONS - THE WORLDS BIGGEST WAVE POOL, ACTIVITY POOLS, RIVER ADVENTURE
CRUISES AND LOTS MORE.

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 Radio
Radio is a theater to the mind. Radio is also a mass medium. It is only an audio
medium. It is best suitable for local advertising followed by spot and then by network.
Unlike print media, a radio set can accommodate a group of individuals all at the same time.
Listening does, however, usually compel all or almost all the individual's attention. No doubt
housewives turn to radio and listen. Some household jobs or activities can be combined
satisfactorily with radio listening.
Radio had great response in the beginning but with the higher penetration of
television, the radios was out shadowed in other words people preferred tantalizing both
their senses.
Just a few 3 - 4 years back listening to the radio was not looked upon. Thanks to
the revolution brought about in 2001 with the entry of lots of private radio stations and
cheap handsets in the metros number of people harping on radio as a source of
entertainment has zoomed up again.
Radio covers 90% of India and entertains about 98.81% of population
through programmes broadcasted by AIR. Many private players are now plunging
into this industry giving the listeners a world of choices namely Radio City, Radio
Mirchi, Go, Win and RED. These five players in Mumbai spent an estimated Rs 500
million last year; the aggregate revenues did not amount to more than Rs 260
million. The high licenses, that came into effect after a blistering bidding process
three years ago, are killing the fledgling private FM players.
www.indiantelevision.com/headlines/y2k3/may/may211.htm
The temporary closure of Win 94.6 due to alleged non-payment of license fees
for the current year is bad news for the entire radio industry. The growth rate of
private FM is directly proportional to the number of stations in a city. Disruptions
and closures will only add to the woes of the industry and not help matters. www.studio-

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 Televisions
Unlike radio TV was a great source of entertainment right from the
beginning. This aspect is now changing. Apart from being entertaining it is also a
great source of information now as well as a source of education. Earlier it was only
for those lucky few, as everyone could not afford it. Now it’s become like a
necessity (common commodity), which has grabbed the attention of all age groups.
Television is broadcast and electronic medium. Television combines three attributes
like sound, picture and motion. Television broadcasts audio-visual programmes. Television is
a theatre of the home. Receiving a television set is a glamorous family medium. No other
medium can compare with television for its great penetration of the market. Print media
like newspapers and magazines are hard on the eyes to read and understand. The problem
of illiteracy is also there. The readers have to put in a lot of effort on reading and
understanding the message. In case of television broadcasting it is just enough if the
viewer keeps his or her eyes open. Commercials are broadcast only during breaks, and cuts
are usually only for a few seconds and require no efforts to view. It is an entertainment
and information mass medium possessing all the qualities essential for a mass medium.
Television was introduced in India, as an experimental service in September 1959,
with a limited transmission three days a week. There have been two ignition points: the
first in the eighties when colour TV was introduced by state-owned broadcaster
Doordarshan (DD) during the 1982 Asian Games. It then proceeded to install transmitters
nationwide rapidly for terrestrial broadcasting. In this period no private enterprise was
allowed to set up TV stations or to transmit TV signals.
The second spark came in the early nineties with the broadcast of satellite TV by
foreign programmers like CNN followed by Star TV and a little later by domestic channels
such as Zee TV and Sun TV into Indian homes. Prior to this, Indian viewers had to make do
with DD's chosen fare which was dull, non-commercial in nature, directed towards only
education and socio-economic development. www.indiantelevision.com/indianbrodcast/history/historyoftele.htm
The initial success of the channels had a snowball effect: more foreign
programmers and Indian entrepreneurs flagged off their own versions. From two
channels prior to 1991, Indian viewers were exposed to more than 90 channels by
2002.

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Today cable TV has become so addictive that previously where women’s were more
toward their household work now its different, they now make sure they complete their
chores before their favorite serial starts and they can relax. Two main revenue streams
of TV are Advertisement (A) and Subscription (S) revenues.
Cable penetration has increased in leaps and bounds. Cable connectivity is
provided by small and unorganized as well as large, corporate players. Cable
operations are regulated by Cable Televisions Networks (Regulation) Act, 1995.
 Sports
What entertains one the most playing a particular sport or watching a particular
sport? Well the answer is obvious, watching. Earlier in India we had sports like gulli danda
and kabadi but now there is cricket, hockey, football, etc.
Adventure sports:
Sports generates a win and loose relationship where as adventure sports generates a win
and win relationship. India Offers a wide range of adventure sports for tourists.
Trekking and Skiing in the Himalayas, White Water Rafting on the Ganges and Beas,
Camel and Jeep safaris in the deserts of Rajasthan, Paragliding in Himachal, are just some
of the options available to the adventure seeking tourists.
The perennial challenge of the Himalayas for mountaineers. Coniferous forests and
flower meadows welcome the trekker. And the rapids of snow-fed rivers are ideal for
white water rafting.
Lakshadweep offers excellent wind surfing, snorkelling and scuba diving in the
crystal clear waters of the lagoons which surround each island.
This particular source of entertainment is gaining momentum because of the
changing outlook of the people and even because of the safety facilities provided with
each adventure sport.

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 Music
Until the 1990s, the Indian music industry was synonymous with Indian film
music. Music cassettes and radio (run by All India Radio) were the only delivery
media to the music listener. However, over the years, the industry has undergone a
transformation. Non-film genres, such as international music, Indi-pop and regional
music have become significant despite the continuing dominance of film music.
International music has gained popularity owing to the promotional effects of
satellite music television and the entry of global music majors like Sony Music and
Universal. Besides, old genres of Indian music such as classical and devotional music
have received renewed focus and commercial attention.
This metamorphosis of the industry has been in tandem with changes such as
the retail revolution in music distribution (with the emergence of music retailing
outlets), increasing penetration of Compact Discs (CDs), and emerging distribution
channels such as the Internet. These factors, coupled with the increased
affordability of quality music hardware.www.screenindia.com/20010413/mcover.html

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BRIEF HISTORY OF INDIAN FILM INDUSTRY
 The Beginnings
In 1886 the Lumiere Brothers Cinematographe unveiled six soundless short films at
Bombay's Watson's Hotel. Soon after, Hiralal Sen
and H.S. Bhatavdekar started making films in
Calcutta and Bombay, respectively. Like Lumiere
Brothers Bhatavdekar made India's first actuality
films in 1899. Tough there were efforts at filming
stage plays earlier India's first feature film Raja
Harishchandra was made in 1913 by Dadasaheb Phalke
who is known as the Father of Indian Cinema. This
was a silent movie.By 1920 there was a regular
industry bringing out films starting with 27 per year and reaching 207 films in 1931.
 Advent of Sound
By the time of the First World War, and the phenomenal expansion of Hollywood, 85% of
feature films shown in India were American. But
the introduction of sound made an immediate
difference. In 1931, India's first talkie, Alam Ara,

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was released, dubbed into Hindi and Urdu. As the talkies emerged over the next decade,
so too did a new series of issues. The most prominent of these, of course, was language,
and language markets; alongside, there are considerations of regional identity, of the
different places that separately and together make up India. Many films of the time were
produced both in the regional language (Bengali, Marathi), and in Hindi, so that they could
be oriented to the larger Hindi-speaking market. The Indian public quite naturally
preferred to see films made in their own language and the more songs they had the better.
In those days, the films made had upto 40 songs.
 The 1950s
By the start of the 1950s, Calcutta became the
vanguard of the art cinema, with the
emergence of the film society movement at the
end of the 1940s and Satyajit Ray's Pather
Panchali/Song of the Road, produced with
West Bengal state government support in 1955. International recognition came
with Satyajit Ray's Pather Panchali in 1955. Satyajit Ray is considered as one of
the greatest directors of all times. Post-independence, despite a relatively
sympathetic government enquiry in 1951, the industry became the object of
considerable moral scrutiny and criticism, and was subject to severe taxation. A
covert consensus emerged between proponents of art cinema and the state, all
focussing on the imperative to create a "better" cinema. The Film and Television
Institute of India was established at Pune in 1959 to develop technical skills for an
industry seen to be lacking in this field. However, active support for parallel
cinema, as it came to be called, only really took off at the end of the 1960s, under
the aegis of the government's Film Finance Corporation, set up in 1961 to support
new film-makers.
Ironically, this pressure and vocal criticism occurred at a time when arguably some
of the most interesting work in popular cinema was being produced. Radical cultural
organizations, loosely associated with the Indian Communist Party, had organized

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themselves as the All India Progressive Writers Association and the Indian
People's Theatre Association (IPTA). The latter had produced Dharti ke Lal/Sons
of the Soil (KA Abbas; 1943), and its impact on the industry can be seen in the
work of radical writers such as Abbas, lyricists such as Sahir Ludhianvi, and
directors such as Bimal Roy and Zia Sarhady.
In addition, directors such as Raj Kapoor, Guru Dutt and Mehboob Khan, while not
directly involved with IPTA, created films that reflected a passionate concern for
questions of social justice. Largely studio-based, the films of this era nevertheless
incorporated vivid stylistic experimentation, influenced by international currents in
film-making. Such effects are evident in Awara/The Vagabond (Raj Kapoor, 1951,
script by KA Abbas), Awaaz/The Call (Zia Sarhady; 1956) and Pyaasa/Craving (Guru
Dutt; 1957).
The First International Film Festival, held in Bombay in 1951, showed Italian works
for the first time in India. The influence of Neorealism can be seen in films such
as Do Bigha Zamin/Two Measures of Land (Bimal Roy, 1953), a portrait of father
and son eking out a living in Calcutta that strongly echoes the narrative of Vittorio
de Sica's Bicycle Thief (1948). Mehboob Khan's Andaz/Style (1949), an upperclass
love triangle founded on a tragic misunderstanding, draws on codes of psychological
representation - hallucinations and dreams that feature strongly in 1940s
Hollywood melodrama. Mehboob's tendency to make a visual spectacle of his
material, and his involvement with populist themes and issues make him a good
example of popular cinema of the time.
 The Indian Popular Cinema and the Superstars
During the 1960s, popular cinema had shifted its social concerns towards more
romantic genres, showcasing such new stars as Shammi Kapoor - a kind of Indian
Elvis - and later, Rajesh Khanna, a soft, romantic hero. The period is also notable
for a more assertive Indian nationalism. Following the Indo-Pakistan wars of 1962
and 1965, the Indian officer came to be a rallying point for the national imagination

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in films such as Sangam/Meeting of Hearts (Raj Kapoor, 1964) and
Aradhana/Adoration (Shakti Samanta; 1969).
However, the political and economic upheaval of the
following decade saw a return to social questions across the
board, in both the art and popular cinemas. The accepted
turning point in the popular film was the angry, violent
Zanjeer/The Chain (Prakash Mehra; 1973), which fed into
the anxieties and frustrations generated by the
quickening but lopsided pace of industrialization and
urbanization. Establishing Amitabh Bachchan as the
biggest star of the next decade, its policeman hero is
ousted from service through a conspiracy, and takes the law into his own hands to
render justice and to avenge his deceased parents.
The considerable political turmoil of the next few years, including the railway
strike of 1974 and the Nav Nirman movement led by JP Narayan in Bihar and
Gujarat, ultimately led to the declaration of Indira Gandhi's Emergency in 1975. It
was as if the state and the people had split apart. As the cities grew, so did the
audiences. The popular cinema generated an ambiguous figure to express this
alienation. At the level of images, there was a greater investment in the stresses
of everyday life and, unlike the 1950s, in location shooting. In Zanjeer, the casual
killing of a witness on Bombay's commuter trains conjures up the perils of life in
the metropolis. This is echoed in images of the dockyard, taxi-rank, railtrack and
construction site in Deewar/The Wall (Yash Chopra; 1975), also starring Amitabh
Bachchan.
The recurrent narrative of these films, of protagonists uprooted from small town
and rural families to the perils of the city, is shared by the street children
researched by professional sociologists in Mira Nair's Salaam Bombay (1988). The
Bombay films' very excesses, their grand gestures, and the priority given to
emotion and excitement may more truly reflect the dominant rhythms of urban life
in India. At the level of plot and character, however, the Bombay films

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simultaneously simplify and collapse our sense of India, reducing the enormous
variety of identity - social, regional, ethnic and religious - that makes up Indian
society. Where these identities appear, they do so as caricatures and objects of
fun.
The Art Cinema of the 80s
To counter this, the art cinema of the 1980s diversified from its Bengali moorings
of the earlier period under the aegis of the Film Finance Corporation. Works by
Shyam Benegal, Gautam Ghose, Saeed Mirza, BV Karanth, Girish Kasaravaili, Mrinal
Sen, MS Sathyu, Ray, and Kundan Shah, among others,
actively addressed questions of social injustice: problems of
landlord exploitation, bonded labour, untouchability, urban
power, corruption and criminal extortion, the oppression of
women, and political manipulation. Ghatak in particular had
addressed many of these issues earlier, but never had there
been such an outpouring of the social conscience, nor such a
flowing of new images - of regional landscapes, cultures, and
social structures. Many of the films may seem didactic and uncomplex,
undercutting the attention to form that had marked the earlier period - but not
all. Benegal's first two films indicate an unusual concern with the psychology of
domination and subordination. Ankur/The Seedling (1974), starring Shabana Azmi,
is particularly striking not only for this but also for the open, fluid way it captures
the countryside. Among Kannada directors, working in south India, Kasaravalli in
Ghattashradha (1981) effected an intimate vision of the oppression of widows
through the view of a child. And special mention must be made of Kundan Shah's
Jaane Bhi Do Yaaron/Let Sleeping Dogs Lie (1984), a wonderful exercise in farce
and slapstick that is also a brilliant portrait of Bombay.

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 The South
The most notable of the directors who speak specifically about their own cultures,
and about the possibilities of change, are Adoor Gopalakrishnan and Aravindan
from Kerala. A key to their productivity was the overall development of film
culture in Kerala, India's most literate state. In his films Gopalakrishnan
transformed the lush countryside, busy towns and animated culture of Kerala into a
strange, dissociated place, fraught with communicative gaps, menacing, inexplicable
characters, and an overall sense of the impenetrable. Subjects range from the
mounting tragedies that beset a young couple in the city (Swayamvaram/One's Own
Choice; 1972), and the effete authoritarianism of a declining feudal landlord
(Elippathayam/The Rat-Trap; 1984), to the mysterious spiritual decline of a popular
communist activist (Mukha Mukham/Face to Face; 1987).
The late Aravindan, sometime cartoonist and employee of the Kerala Rubber Board,
had something of the mystic in him, but went through a range of styles, including a
cinemaverite approach, as in Thampu/The Circus Tent (1978), in which circus
performers speak direct to the camera. His episode from the Ramayana, Kanchana
Sita/Golden Sita, places the action against the grain of the high Hindu tradition by
situating it among tribes in the verdant landscape of the Kerala forests. At his
best, his narrative style refuses a didactic approach, generating a whimsical sense
of how destinies are shaped.
 Full circle The
90's saw the Indian Cinema come to a full
circle with Hum Aapke Hain Kaun
turning out to be the biggest grosser
ever.
Indian cinema has come a long way from the
shaky flickering images and grating noises and
sounds to a very sophisticated state-of-the-art technology for creation and
projection of image and sound track. The film industry has grown multi-

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dimensionally with unique blend of commerce, art, craft, star glamour, social
communication, literary adjuncts, artistic expression, performing arts, folk forms
and above all a wide-ranging and abiding appeal to the heart, the mind and the
conscience. www.meadev.nic.in/earthquake/culture/films/intro.htm
Current Scenario
Film entertainment is the most popular form of entertainment and it is this
undiminished passion through the decades that has driven India to become the
largest producer of films in the world. Since 1931, when talkies were introduced in
the country, the film industry has produced more than 67,000 films in more than
30 different languages and dialects.
The film industry grossed a turnover of Rs 3,900 crore (Rs 39 billion) in 2002. The
current worth of the industry is pegged at Rs 4,500 crore. A market survey conducted in
march by accounting firm Ernst and Young has predicted that the film industry is
expected to grow at the rate of 18 per cent annually to gross Rs 10,000 crore in the next
four years. The Indian film industry is the largest in the world in terms of number of films
produced and also in the number of tickets sold.The industry produced 1200 films in 2002,
and 1,013 films in 2001, up from 855 films in 2000. Bollywood’s annual ticket sales world
wide are 3.8 billion as compared to Hollywood 2.8 billion. But Hollywood's revenue is much
higher because ticket rates in india are among the lowest in the world. While Hindi films
continued to be the largest segment in 2001 (23 per cent share), south Indian language
films (Telegu, Tamil and Malyalam) have seen growth in their shares. Times of India
India’s movie industry is a great sector for foreign investment by
corporatised entertainment companies. Though risks are high on a per-movie basis,
the risk spreads out across a number of films. However, the domestic film-making
industry, despite its profligacy, is yet to acquire the character of professionalism
on a large scale.
According to the FICCI report on the Indian Entertainment Industry for 2002, the
Indian film industry employs more than 6 million people, most of whom are contract
workers as opposed to regular employees. This statistics cannot however be used to
calculate the movie industry’s share in the GDP or employment generation. This is because
a vast proportion of the turnover takes place outside the legal economy.

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SIZE OF THE INDUSTRY
A FICCI report 2002 on the Indian Entertainment Industry prepared by
Arthur Andersen India Ltd. states that it is difficult to accurately determine the
size of the Indian film industry because unlike in the developed economies such as
the U.S. and U.K., costs and revenues for films in India are not monitored by any
nodal agency. Therefore, the size of the industry has been estimated using two
different approaches – estimation of total costs and estimation of total revenues.
Costand Revenuefiguresforthe film industryfor 2002
Average
Number of
Movies
Total
Gross
Value
INR
Billion
Less: Theatre
Share –
distribution
Commission
INR billion
Net
Revenues
INR
Total
Costs
INR
Hindi
mainstream
75 16.5 6.4 10.1 12.8
Cross-over
Hindi
15 0.9 0.4 0.5 0.4
Foreign
movies
15 0.8 0.4 0.4 NA
Malayalam 93 3.7 1.8 1.9 2.3
Tamil
mainstream
84 5.9 2.8 3.1 3.3
Telegu
mainstream
74 5.9 2.8 3.1 3.3
Bengali 50 0.5 0.2 0.3 0.3

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Other Films 150 0.9 0.4 0.5 0.5
Others 640 3.2 1.5 1.7 1.6
*US $ 1 = INR (Indian Rupees 48)
(Source: KPMG and FICCI Report – Indian Entertainment Sector in the Spotlight.)
COST-BASED APPROACH
This comprises artists’ remuneration, production expenses, technicians expenses,
marketing expenses, studio charges, and other fixed costs.
REVENUESBASED APPROACH
The revenue models of Indian film makers have undergone a fundamental
shift in the future with a higher probability of exploiting alternate revenue
streams as opposed to relying on domestic theatre viewership revenue stream.
Some of the new revenue possibilitie are overseas theatre viewership, home video
segment, satellite rights, music rights and in-cinema advertising amongst others.
The Indian films can be sold for fewer territories than a typical US film.
While the domestic theatrical rights can be sold for five to ten different sub-
territories, for a fixed time period, the overseas, music, and C&S TV rights are
usually sold to a single distributor respectively. Unlike the U.S. where home video
distribution contributes 32 per cent of the total revenue, an Indian
film generates negligible revenue from this source because of the unorganised rental/
state market and piracy.
Overseas Rights
Overseas rights include overseas theatrical rights as well as overseas video and
television rights, which are presently sold by film producers as a package to overseas
distributors. The last few years have seen Indian movies gain immense popularity overseas.
The major export destinations continue to be the U.S.A., Canada, and the U.K., countries
such as Japan, South Africa, Mauritius, Australia, New Zealand and the Middle East are
fast becoming important export markets for Indian films.

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Music Rights
The music industry whose fortunes are closely interlinked with the film
industry is likely to grow at approximately Rs 16.4 billion by 2007. As per industry
sources, sale of music rights contributed Rs 1.5 billion to film industry revenues.
Music rights include the domestic and international music rights of a film, which
are sold by the film producer exclusively to music companies. As new film music
contributes more than 4 per cent of the music industry revenues, music companies
compete to procure the music rights of new films from reputed production houses.
Cost of Music rights of some films
Music Company Producer
Cost
(Rs mn)
Films
Sa Re Ga Ma Yash Chopra 15
For 3 films - Saathiyan,
Mere Yaar Ki Shaadi hai,
Mujhse Dosti Karoge
Tips Mukta Arts 85 Yaadein
Sony
Karan Johar
Aamir Khan
Dreamz
Unlimited
120
60
60
Kabhie Khushi Kabhie Gham
Lagaan
Asoka
Universal
Sanjay Leela
Bhansali
120 Devdas
(Source: FICCI Report 2002 - Indian Entertainment Industry)

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Telecasting and video rights
In the near future, the home entertainment segment, broadcast TV, DVD and VCD
is expected to increase its share, even as multiplexes emerge as a strong distribution
platform. The share of satellite rights in the consolidated revenue pie has grown from 4
per cent to 14 per cent between 1999-2002. Even channels have started a new trend by
acquiring and broadcasting new titles at exorbitant prices, within 3 to 4 months of their
release. As telecasting blockbuster films is an effective way of driving up viewership,
there is a demand for these channels to acquire television rights of hit films.
Corporate Sponsorships and Merchandising:
Corporates have also started marketing their products through films. And in
exchange film makers get additional revenue in the form of Corporate Sponsorships. For
example, Mukta Arts had earned Rs 35 million from Coke, Pass Pass and Hero Cycles for
product endorsements in Yaadein. Today revenues are also generated from the sale of
Internet rights and merchandising. FICCI Report 2002- Indian Entertainment Industry
Revenue Break up segment wise
(Rs. bn)
Domestic theatrical sales 36.00
Overseas theatrical rights 5.25
Music rights 1.50
Telecasting and video rights 2.00
Corporate Sponsorship/ Merchandising 0.10
Total 44.85
Source: FICCI Report 2002 - Indian Entertainment Industry
Domestic theatrical
sales
Overseas theatrical
rights
Music rights
Telecasting and video
rights

22
EXTERNAL ENVIRONMENT OF FILM INDUSTRY
(I) POLITICAL ENVIRONMENT
SUPPORT AND PROMOTION BY DIFFERENT GOVERNMENT BODIES
 Films Division
The Ministry of Information and Broadcasting over the last 47 years
through an exclusive Films Division, set up in 1948, has been securing the active
participation of the public in nation building activities, through the medium of film.
The largest agency dedicated to the production, and distribution of documentaries
and news agencies, the Films Division produces news magazines from its
headquarters at Mumbai, films on agriculture, defence and family welfare from
Delhi and featurettes from its regional centres at Calcutta and Bangalore. The
Division caters to more than 12,911 cinema theatres allover India and to non -
theatrical circuits like units of the Directorate of Field Publicity, mobile units of
the State Governments, Doordarshan, field units of the Department of Family
Welfare, educational institutions and voluntary organisations. The Division's films
are also screened abroad through the Indian embassies, television networks,
Government departments, educational, cultural, and social organisations as well.
The Division aims to foster the growth of the documentary film movement - which
is essential to the realms of information, communication and integration.

23
The Division has been given the responsibility of organising the Mumbai
International Film Festival for Documentary, Short and Animation films, which is a
biennial event.
 National Film Development Corporation Limited
The National Film Development Corporation Limited set up on 11 April, 1980
aims at bringing an overall improvement in the quality of Indian cinema and also
increasing its access. As films constitute a vital segment of audio - visual culture,
NFDC covers a large gamut of activities - production of films, export of Indian
films, import of foreign films, import and distribution of raw stock, construction of
cinema theatres and development of technology. The Corporation promotes the
concept of low - budget yet high quality films, which is a possible solution to the
financial problems faced by the film - makers of the country. The Corporation
imports about 20 to 30 films annually for theatrical release. India exports films to
over 100 countries. It participates in various international film markets to promote
Indian cinema and also plays host to a number of buyers from various countries.
NFDC's main objective is to expose the Indian audience to a plethora of fine films
from various countries, however due to limited resources the emphasis is on good
quality family entertainers.
To fight video piracy, NFDC, in collaboration with the Indian film industry
has set up an anti - piracy body, Indian Federation Against Copyright Theft
(INFACT), which is registered as a company under the Companies Act. The Theatre
Financing Scheme was launched by NFDC to ensure the creation of additional
seating capacity in India and to provide outlets for fine cinema.
 Directorate of Film Festivals
The Directorate of Film Festivals was set up in 1973, under the Ministry of
Information and Broadcasting, to help promote Indian films of aesthetic and
technical excellence, both within India and abroad. Since then, the Directorate has
supplied a platform for the best in Indian cinema by holding the National Film

24
Festival every year. The Directorate has been successfully promoting Indian
cinema abroad and also given a chance for Indians to appreciate some of the finest
works of international cinema. Within the country, it has made the newest trends
in international cinema accessible to the general public.
The Directorate was brought under the NFDC in July 1981, and in July 1988,
it was again transferred to the Ministry of Information and Broadcasting.
 National Film Awards
The National Awards for films, known as state awards till 1966, were set up
in 1953, for promoting the country's film art by acknowledging the outstanding
achievements in various fields of film - making.
The Dadasaheb Phalke Award is decided by the Government of India, and
the entries for the National Awards are judged by two national juries, one for the
feature films and the other for short films.
 National Film Archive of India
The National Film Archive of India ( NFAI ) was established in February
1964, as a media unit of the Ministry of Information and Broadcasting. Its
objective is to acquire, preserve and restore the rich heritage of national cinema,
and the cream of international cinema. The archive has made significant progress in
the preservation of films, audio and video material, documentation, research and
dissemination of film culture in India.
The archive functions as the main repository for Indian and foreign
research workers for viewing film classics, relating to their research projects.
 National Centre of Films for Children and Young People

25
The National Centre of Films for Children and Young People ( N'CYP ), earlier
known as Children's Film Society, was established in 1955, as an autonomous unit
with an aim to provide children value - based entertainment through the medium of
films, and is engaged in production, acquisition, distribution and exhibition of
children's films. N'CYP conducts ' International Film Festivals for Children and
Young People' every two years. The Centre produces feature films, television
serials, short featurettes and short animation films for children and young people.
It also purchases the rights of foreign films and presents them in the country
after dubbing in Indian languages. The films produced by N'CYP are entered in
several National and International Film Festivals and have won many awards.
 Film and Television Institute of India
The Film and Television Institute of India ( FTII ) located at Pune, imparts
technical training in the art of film - making and also gives in - service training to
the personnel of Doordarshan. The FTII conducts 3 - year specialisation courses in
motion picture photography, cinematography, film direction, sound recording and
sound engineering with one - year integrated training.
The TV wing of the Institute primarily caters to the training requirements
of various production and technical staff of Doordarshan. Television training is
given in TV programme production, studio technical operations, TV films and TV
graphics and design. The Institute regularly sends its students' films in national
and international film festivals, in order to give exposure to students' work, not
only on the national, but the international level.
 Federation of Film Societies of India
The Federation of Film Societies, an apex body of the film societies in India,
is provided grants - in - aid by the Ministry of Information and Broadcasting to
spread film awareness and development of audience taste in the realm of cinema.
These Film Societies aim at nurturing and developing film culture in the country.
www.meadev.nic.in/media/films.htm

26
FDI POLICY
100% foreign direct investment (“FDI”) is permitted in the film sector.
(II) ECONOMIC ENVIRONMENT
 Purchasing Power Parity (PPP) in India has increased from $300 in 1992 to $ 1600
in 1997 and from $ 1600 to $ 2660 in 2002-03. So today people have more money
to spend on entertainment which leads to increase in turnover of the industy.
http://www.theodora.com/wfb/
 Interest rate: As there is a fall in interest rate in last several years, film
producers get funds at low rate. This encourages people to venture into the
business of film production.
(III) SOCIO-CULTURE ENVIRONMENT
Bollywood is perceived to be ‘The Place where Dreams come true’. Every
Indian would wish to be like, look like, see like or talk like a particular actor/
actress from this magic world. Imagine the level of etching this industry has on
the hearts and minds of people.
The Indian film industry has moulded itself very perfectly with the ongoing
traditions, values, beliefs and lifestyle. A flashback into the history of the country
and its people would reveal the impact it had on the industry.
Just after India broke from the shackles of dependency, patriotism was
deep down there in the hearts of the people. To serve the country better, there

27
were thinkers and actors like Manoj Kumar who had come with films like Kranti,
Roti Kapda Makan, Purab Paschim, etc.
Next came in the phase of action and drama where our very own Mr.
Amitabh Bachan was aptly called the Angry Young Man. He worked in the movies
like Zanjeer, Sholay, Deewar , etc.
The present era inspired by westernisation with more broader mindsets and
a complete shift in paradigm has resulted in movies like Dil Chahta Hai, Murder,
Julie, etc.
From hairstyles to costumes, from beliefs to lifestyle, from house concepts
to the toy in the hands of a kid, every thing which is seen in the daily cores is
reflected on the Silver Screen.
(IV) LEGAL ENVIRONMENT
THE FILM INDUSTRY AND COPYRIGHT LAWS
The Threat
The film industry in India today is facing its biggest threat, that of piracy.
This includes, cable piracy, VCR piracy and its new avatars, VCD piracy. The
development of these new forms (VCDs and now DVDs) are a double edged sword.
Whereas, on the one hand they provide for additional sources for commercial
exploitation of the film, on the other hand, the ease with which they can be copied,
reproduced and disseminated to the public, is giving the film industry nightmares.
Films appear on cable without any authority whatsoever, almost as soon as they are
released in the theatres, sometimes even prior to their theatrical release.
Overseas rights of Indian films are sold almost simultaneously along with the
release in India.
Copyright Laws in India

28
With the advancement of technology, Copyright laws in India have also been
changing to keep pace with the times. The Copyright Act, 1957 was enacted and
came into force on the 21st
of January 1958. In its Objects and Reasons the
legislature recognized that "new and advanced means of communications like
broadcasting, litho-photography, etc." call for certain amendments in the existing
laws (Copyright Act, 1911). The legislature also commented that "adequate
provisions have to be made for fulfillment of international obligations in the field
of copyright which India must accept". It is in this year (1957) that cinematograph
films derived separate copyrights apart from its various components, namely,
story, music etc.
The laws have thereafter been subjected to certain changes. It was
Amending Act 65 of 1984 which specifically addressed the issue of piracy. The
Statement of Objects and Reasons to the amendment acknowledged piracy as a
"global problem due to the rapid advances in technology". Besides addressing the
loss in the form of royalties to the legitimate copyright owners, the legislature
also realized the losses to the exchequer by way of tax evasion. Certain relevant
portions from the Object and Reasons for the amendment are reproduced below :
"….recorded music and video cassettes of films and TV programmes are
reproduced, distributed and sold on a massive scale in many parts of the world
without any remuneration to the authors, artistes, publishers and producers
concerned. The emergence of new techniques of recordings, fixation and
reproduction of audio programmes, combined with the advent of video
technology have greatly helped the pirates. It is estimated that the losses to
the film producers and other owners of copyright amount to several crores of
rupees. The loss to Government in terms of tax evasion also amounts to crores
of rupees. In addition, because of the recent video boom in the country, there
are reports that uncertified video films are being exhibited on a large scale. A
large number of video parlours have also sprung up all over the country and they
exhibit such films recorded on video tapes by charging admission fees from
their clients. In view of these circumstances, it is proposed to amend the

29
Copyright Act, 1957, suitably to combat effectively the piracy that is prevalent
in the country"
In its effort to address the above issues, by way of the amendments, the following
changes were incorporated in the Act, namely: -
i. The punishment provided for the infringement of the copyright was enhanced to
a maximum of three years, with a minimum punishment of imprisonment of six
months, and a fine upto to Rs. 2 lakhs, with a minimum of Rs. 50,000/-.; An
enhanced punishment in the case of second and subsequent convictions was also
provided for;
ii. The provisions of the Act were now specifically made applicable to video films
and compute programes;
iii. The producers of records and video films were now under a statutory obligation
to display certain information in the records, video films and containers thereof,
which included the name of the copyright owner, year of first publication etc.
India's new copyright law, passed in June 1994, became effective on May 10,
1995 and establishes an entirely new potential for reducing piracy in India.
According to the Statement of Object and Reasons, the legislature recognized
that "effective copyright protection promotes and rewards human creativity and
is, in modern society, an indispensable support for intellectual, cultural and
economic activity. The legislature further recognized that copyright law promotes
the creation of literary, artistic, dramatic and musical works, cinematograph films
and sound recordings by providing certain exclusive rights to their authors and
creators. It was felt that the present Act needs revamping on the following
grounds:
 to extend more effective protection to owners of copyright and related rights
in the context of technological developments affecting the reproduction of
words by, inter alia, bringing within the scope of copyright the subsequent hire

30
or sale of copies of cinematograph films, computer programmes and sound
recordings.
 to further clarify the law in respect of cable, satellite and other means of
simultaneous communication of works to more than one household or private
place of residence, including the residential rooms of a hotel or a hostel.
 to make provisions for licenses whereby the reproduction of works by
reprographic equipment or by means of devices such as tape recorders and
video cassette recorders, where such reproduction would not under the existing
law be infringement of copyright, shall be subject to payment or remuneration
to copyright owners by means of a levy on such equipment.
The law protects cinematograph films as a distinct work, giving the producer of the
film the exclusive rights
i. to make a copy of the film, including a photograph of any image forming part
thereof;
ii. to sell or give on hire, or offer for sale or hire, any copy of the film
regardless of whether such copy has been sold or given on hire on earlier
occasions;
iii. to communicate the film to the public
India, being a member of two of the major copyright conventions of the
world (The Berne Convention and The Universal Copyright Convention), Indian
works and works of Indian authors are accorded copyright protection in all major
countries of the world. Likewise, foreign works and works of foreign authors are
accorded the same protection as Indian works.
In addition to the law bringing India newly into compliance with its
substantive TRIPS obligations in the copyright area, the law provides for new
minimum criminal penalties including a mandatory minimum jail term which, if
implemented, will go far to controlling piracy.

31
The government has initiated some measures for better enforcement of copyright
laws. A summary of some of these measures is given below :
 The Department of Education, Ministry of Human resource Development,
Government of India has constituted a Copyright Enforcement Advisory Council
(CEAC). The CEAC is reconstituted from time to time to review periodically the
progress of enforcement of the Copyright Act and to advise the government on
measures for improving the enforcement.
 Creation of separate cells in state police headquarters. Special cells for
copyright enforcement have so far been set up in the following 23 States and
Union Territories: These are the States / Union Territories of Andhra Pradesh,
Assam, A &N Islands, Chandigarh, Dadra & Nagar Haveli, Daman & Due, Delhi,
Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala,
Madhya Pradesh, Meghalaya, Orissa, Pondicherry, Punjab, Sikkim, Tamil Nadu,
Tripura and West Bengal. States have also been advised to designate a nodal
officer for copyright enforcement to facilitate easy interaction by copyright
industry organizations and copyright owners.
 Encouraging setting up of collective administration societies and organization of
seminars and workshops to create greater awareness about copyright law among
the enforcement personnel and the general public. For collective administration
of copyright, copyright societies are set up for different classes of works. At
present there are three registered copyright societies. These are the Society
for Copyright Regulations of Indian Producers of Films & Television (SCRIPT)
for cinematographic films, Indian Performing Rights Society Limited (IPRS) for
musical works and Phonographic Performance Limited (PPL) for sound
recordings.
There is now an urgent need for all the constituent parts, i.e. the rights owners,
the government, the enforcement agencies and the judiciary, to work jointly in
eradicating the menace of piracy. www.filmpiracy.com/artic.html#a
FILM CERTIFICATION

32
All films meant for public exhibition, irrespective of their length, whether in
celluloid or video or CD or DVD version are subjected to censorship. Programmes
produced exclusively for broadcasting through the Television are excluded.
"Film censorship becomes necessary because a film motivates thought and action and
assures a high degree of attention and retention as compared to the printed word. The
combination of act and speech, sight and sound in semi darkness of the theatre with
elimination of all distracting ideas will have a strong impact on the minds of the viewers
and can affect emotions. Therefore, it has as much potential for evil as it has for good
and has an equal potential to instill or cultivate violent or good behaviour. It cannot be
equated with other modes of communication. Censorship by prior restraint is, therefore,
not only desirable but also necessary"
SUPREME COURT OF INDIA
 Film Censorship In India
The Cinematograph Act 1952, apart from including provisions relating to
constitution and functioning of the Central Board of Film Certification (then called
the Central Board of Film Censors), also lays down the guidelines to be followed for
certifying films. Initially, there were only two categories of certificates "U"
(Universal exhibition) and "A" (restricted to adult audiences), but two other
categories were added in June 1983 "UA" for unrestricted public exhibition
subject to parental guidance for children below the age of twelve and "S" films for
public exhibition restricted to specialized audiences such as doctors. The 1952 Act
has been amended to bring it up-to-date, and the last amendments were in 1981
and 1984. The present censorship of films is governed by the 1952 Act, the
Cinematograph (Certification) Rules promulgates in 1983 and the guidelines issued
from time to time, The guidelines are issued under section 5(B) of the Act.
 Legislation
The censorship of films is governed by the The Cinematograph Act,1952, the
Cinematograph (Certification) Rules promulgated in 1983 and the guidelines issued on
December 6, 1991. The guidelines are issued under Section 5B of the Act. This section

33
says that ' a film shall not be certified for public exhibition, if, in the opinion of the
authority competent to grant the certificate, the film or any part of it is against the
interests of the sovereignty and integrity of India, the security of the States, friendly
relations with foreign States, public order, decency or morality or involves defamation or
contempt of court or is likely to incite the commission of any offence.
 Enforcement
a. Introduction
1. The Central Board of Film Certification is responsible mainly for certifying
films. The enforcement of the penal provisions of the Cinematograph Act, 1952
is with the State Governments /Union Territory Administrations, since
exhibition of films is a State subject...
2. The CBFC does not have any enforcement agency or manpower directly under
its control. It has to depend on the local police force for enforcement of laws.
3. There are various forms of violations which often go unchecked because there
are no checks and no complaints from either the law enforcement agencies or
members of the public.
b. Violations of Cinematograph act
The following are the major violations that agitate the minds of the public:
(a) exhibition of an 'A' certified film to a non-adult
(b) exhibition of an 'S' certified film to persons other than those for whom it is
meant;
(c) exhibition of a film in a form other than the one in which it was certified. Such
violations are known as interpolations. Interpolations can be described as follows:
(i) re-insertion in prints of a film for exhibition those portions which were
deleted by the Board before certification of the film
(ii) insertion in prints of a film, portions which were never shown to the Board
for certification;

34
(iii) exhibition of 'bits' unconnected with the certified film.
(d) exhibition of a film which was refused a certificate (or 'banned' in common
parlance)
(e) exhibition of uncensored films with forged certificates of other films.
(f) exhibition of films without censor certificates.
C. Penalties
1. Offences with regard to violations of censorship provisions are Cognizable.
Furthermore, they are non-bailable.
2. Section 7 of the Cinematograph Act provides penalties for violation of
censorship provisions. Penalty can also be imposed for failure to comply with
section 6A which requires that any person delivering a film to an exhibitor or a
distributor will also give to him details of all cuts, certification, title, length and
conditions of certification.
3. A person guilty of violation while exhibiting celluloid films is punishable with
imprisonment for a term which may extend to Three years, or with fine which
may extend to Rs.1/-lakh, or with both, and with a further fine up to Rs.20,000
for each day for a continuing offence. Similarly, Showing of video films which
violate the rules in the manner prescribed in this section will attract
imprisonment of not less than three months but which may extend to three
years and a fine of not less than Rs.20,000 but which may extend to Rs.1/-lakh
and a further fine up to Rs.20,000 for each day for a continuing offence.
4. Furthermore, the trial court can direct that the offending film be forfeited to
the Government. Under Section 7A, any police officer can enter a hall where an
offending film is being screened, search the premises and seize the print. Films
can also be seized when they are likely to be exhibited in violation of
Cinematograph Act.
 Who Does Film Censorship?
In keeping with this responsibility, the Central Board of Film Certification
known till June 1, 1983 as the Central Board of Film Censors) was set up in Mumbai,

35
with regional offices in some other cities (at present there are nine such offices in
Mumbai, Calcutta, Chennai, Bangalore, Hyderabad, Thiruvananthapuram, New Delhi,
Cuttack, and Guwahati). A Film Certification Appellate Tribunal (FCAT) has also
been constituted under section 5D of the 1952 Act for hearing appeals against any
order of the CBFC. While the work of certification of films is a central subject,
the states have to enforce these censorship provisions and bring any violations to
the notice of the CBFC. The organizational structure of the CBFC is based on the
provisions of the 1952 Act and the Cinematograph (Certification) Rules 1983. The
Chairman and members are appointed for a term of three years or till such time as
the Government may direct. They comprise eminent persons from different walks
of life such as social sciences, law, education, art, film and so on, thus representing
a cross-section of society.The CBFC is assisted by the Advisory Panel in various
regional offices which are headed by Regional Officers. The members of these
panels are also representative of cross-section of society and interests. These
members hold office till such time as the Government may direct but not
exceeding two years. However, the members can be re-appointed. The CBFC has
divided itself into Examining and Revising Committees to provide a two-tier system
for certification of films in the event of the applicant or the Chairman himself not
being satisfied with the decision of the Examining Committee. The certification
rules also apply to foreign films imported into India, dubbed films, and video films.
In the case of dubbed films, the Board does not have any fresh censorship for the
visuals in general cases. The Certification does not apply to films made specifically
for Doordarshan, since Doordarshan has its own system of examining such films.
 The Process of Certification
- Examination
1. The Cinematograph (Certification) Rules, 1983 have laid down the procedure
that a producer must go through to get his celluloid, video, CD or DVD film
certified.
2. The film, document specified in rule21, censor fee and cess fee have to be
submitted to the regional officer of the concerned regional centre. The

36
regional officer will form an Examining Committee to view the film. This
Examining Committee, in the case of a short film, will consist of an officer of
the CBFC and one member of advisory panel either of whom shall be a woman,
and in the case of a long film/feature film, one officer of the CBFC and four
members of the advisory panel of whom two persons shall be women. After the
film has been previewed, a report indicating the recommendations of EC along
with the category of certificate recommended and deletions / modifications as
deemed necessary is prepared and given to the Chairman of CBFC who may
approve the decision of the examination committee and ask the regional officer
to initiate further actions necessary to issue the certificate.
-Appeal
3. However, if the Chairman, on his own motion or on the request of the applicant,
so feels, he may refer the film to a Revising Committee. The Revising
Committee will consist of the Chairman, in his absence, a Board member, and not
more than nine members, drawn either from the Board or the advisory panel,
provided none of them was on the Examining Committee. The Revising
Committee will view the same film print shown to the Examining Committee
without any changes, and each member will be required to record his verdict
before leaving the theatre. If the Chairman is not in agreement with the
majority view, he may direct another Revising Committee to see the film.
4. After the applicant is apprised of the decision of the Board, he will delete or
modify any portions (if so directed) and submit them to the regional officer
along with one copy of the film (in video cassette format) as certified.
5. Before any order prejudicially affecting the applicant of a film is passed by the
Board, he is given an opportunity to represent his views in the matter.
-Appeal in Tribunal
6. An applicant aggrieved by the order of the Board can go on appeal to Film
Certification Appellate Tribunal.

37
7. If the matter goes in appeal to the Film Certification Appellate Tribunal which
is headed by a retired judge as Chairperson and not more than four other
members, the FCAT may view the film and hear both the applicant and the CBFC
before coming to its judgement.
8. Certificate is finally issued by the concerned Regional Officer on behalf of the
Board. www.cbfcindia.tn.nic.in
AN OVERVIEW OF FILMS CERTIFIED
(From 1.1.2003 to 31.12.2003)
U UA A S TOTAL
INDIAN FEATURE FILMS 479 198 200 - 877
FOREIGN FEATURE FILMS 34 67 181 - 282
INDIAN SHORT FILMS 1056 64 57 - 1177
FOREIGN SHORT FILMS 47 109 72 - 228
INDIAN LONG FILMS OTHER
THAN FEATURE
- - - - -
FOREIGN LONG FILMS OTHER
THAN FEATURE
- - - - -
TOTAL 1616 438 510 - 2564
(Source: Central Board of Film Certification)
ENTERTAINMENT TAX
 Films are a huge source of government receipts on account of the high rate of
entertainment tax which stands at an average of 25 per cent for the country as a
whole. In fact, in Maharashtra, it is as high as 60 per cent. Gujarat has an incidence of
100 per cent, while Madhya Pradesh has a tax rate of 75 percent. Andhra Pradesh has
low tax rate of only12 percent.
 Texemption for export earnings raised abroad according to Section 80HHF is 20%.
 Tax benefits to multiplex construction companies :
50% of the profits and gains derived from the business of building, owning and
operating multiplex theatres are allowed as a tax deduction. In order to avail of this
deduction, the theatre must have been constructed during the period between April 1,
2002 and March 31, 2005 and must not be situated in Mumbai, Kolkatta, Chennai and

38
Delhi. The deduction is available for five (5) consecutive assessment years beginning
from the first assessment year.
(Section 80IB(7A) of the Income-tax Act, 1961). www.incometaxindia.gov.in
(V) TECHNOLOGY ENVIRONMENT
The Indian film industry is increasingly adopting digital technology in its processes.
The cameras that are being used in India are the same as those used in Hollywood today.
Digital breakthroughs and digital creation of scenes is increasingly becoming part of
Indian cinema. There is marked improvement on the technical side such as dolby sound,
computerized editing, special effects etc. It is expected that digital technology will bring
a sea change in the film production.
Areas which need to be addressed are in the Digital Space are:
- Animation: Currently the global outsourcing in the animation space is being done in the
Philippines, Taiwan and Korea. There are more than 50,000 animation specialists working in
this space. In India, there are just four major studios and about 2,000 to 3,000
professionals are available. The scope for providing training in Animation and creating
opportunities for outsourcing from India is untapped and huge. Individuals with basic
drawing and visualization skills can be easily trained in animation.
- Special Effects: It requires very high capital investments. Large IT players have the
opportunity to enter this space and can also provide high-end consultancy.
- Digital Cinema: Infrastructure
FICCI has tied with NASSCOM which can be called as “ e-Entertainment Alliance”.
This Alliance will establish:
1. A forum to create ‘Human Capital’ from India in the creative and performing arts and
related technologies, provide young and budding entrepreneurs opportunities to compete
globally in the technology space in animation, special effects, digitization etc. and produce

39
winners in the International arena. Training Programs and workshops are to be organized
for both IT as well as entertainment techies.
2. Every possible form of media will be covered in the e-entertainment space be it print,
radio, TV, electronic/internet based, films, sports, … … the opportunity lies in developing
the abilities to digitize the contents.
3. There is a need to Create an ‘Advanced Institute for Digital Arts ‘ (AIDA) in Mumbai.
4. The source of funding in the Hollywood film industry generally comes from Germany
through the “Completion guarantors” and not through the Venture Capital Funds at this
point of time. Hence eE@ needs to research and develop alternate sources of funding.
5. Better interaction with International Bodies like Motion Pictures Association, USA etc.
6. Leveraging the TiE network in bridging the gap between Hollywood & Bollywood and
getting marketing support from the Indian Community abroad.
7. Working closely with the Investor community in India and abroad.
8. Lobbying with the Govt. in technology related issues benefiting the entertainment
industry. FICCI Report 2002- Indian Entertainment Industry

40
Michael Porter’s 5 Forces
1. Threat of Subsititute:
There is no threat of substitute for film industry as no other sector can give
entermainment to people in a way film industry provides. But inside the film industry there
can be threat of new advanced technology, in near future, which will eliminate the work of
film processing units. In USA and UK, experiments on new technology have been started.
2. Threat of New Entrant:
For an industry threat can be sport like cricket world cup which comes once in 4 years.
During world cup theatres incurs the loss of many unsold seats. But this threat is
temporary one. Inside the industry one threat can be an entry of prevailing international
players into the Indian market with the concepts like Spider man, Anaconda etc. which are
totally different from Indian movies.
3. Bargaining Power of Buyers:
a. Producers: For film producers, buyers are distributors. In case of reputed film
producers like Yashraj Films, Dharma Production, Sanjay Leela Bhanshali etc. who
have a track record of delivering successful films, bargaining power of distributors
is very less. So there is less bargaining power of distributors. Distributors have to
buy the rights of film at high price as said by the company. Where in case of other
films distributors have high bargaining power and films are sold at low price or
below the expectation level of the producers.
b. Distributors: For distributors theatres are buyers. There is less amount of
bargaining as prices are generally fixed and more or less same depending upon the
contract and the mutual understanding.
c. Theatres: For theatres, buyers are public who can not bargain for the prices of
tickets. But in many states, government has put some restriction on the prices of
tickets.

41
4. Bargaining Power of Supplier:
Big suppliers like film-processing units, camera and equipments suppliers, actors etc.
generally have the fixed rate in the market. So less bargaining prevails.
5. Intensity of Competition:
Film industry faces competition from other entertainment segments like amusement
parks sports, television etc. In order to compete with them industry has come up with
Video Games Section, Art Gallery, Music Station and Trendy Cafeterias inside the
theatres which provides a complete family entertainment. And inside the industry the
intensity of competition among producers is less but high in case of directors, actors, film
processing units etc.

42
REVENUE CONTENT AUDIENCE CERTIFICATION
PRODUCT
CLASSIFICATION
PRODUCTS
Domestic Sales
Overseas Sales
Music Rights
Telecasting and
Video Rights
Corporate
Sponsorships and
Merchandising
Romantic
Comedy
Social
Thriller
Horror
Patriotic
Science Fiction
Animation
Kids
Youth
Family
Niche Market
Universal
Adult
Universal Adult
Specified
Audience

43
Process Flowchart
Output
Output
Story Writer /Script
Director
Producer
Hiring of Technicians, actors, actress etc.
Shooting ExposedNegative
Film Laboratory Positive / Rush Print
Final PositiveEditing

44
Output
Output
PROCESS EXPLANATION
The story writer provides story to director. Initially only the concept of the
story is explained. Then director approaches the producer to
finance the film. The making of film starts as soon as
producer gets ready to finance. Story writer and director sit
Dubbing
Backgroung Music
Sound Effects etc.
Final Negative Cutting
Re-cording Mixed Sound
Negative
ReleasePrints
Film Certification Marketing
Distributors
Cinema Halls

45
together to prepare the script which is made up of number of scenes. Sometimes it
also happens that the same person acts as a story writer and a director. At the
same time the director and the producer hire the actors, actress, technicians etc.
And Shooting starts.
After the completion of shooting, film roll is sent to film laboratory. The film roll
undergoes a series of processes in the lab. The lab develops exposed negative along with
rush print which is also called as positive. This positive is then delivered to editor but the
negative is kept in the lab only. Editor also receives sound negative from sound recordist
and assembles it with positive. And then he starts his work of sorting, cutting and editing
the positive. He makes the film of two and half hours from 4 to 5 hours. And now final
positive is ready. This final positive is sent to the lab for final negative cutting. Then the
works of dubbing, background music and sound effects start. Re-corder mixes all sound
effects and develops mixed sound negative which is also sent to the lab. The lab liaises
with sound correction and editing positive resulting in the final or release print for the
film. This film is then pre-viewed in a pre-view theatre as a form of quality check. One
release print is then sent to the Central Board of Film Certification (also called the
Central Board of Film Censors) in order to get film certificate. Then duplicate prints are
made in lab. Side by side promotion activities are carried on by producer. The duplicate
release prints are then passed on to distributors and from distributors to cinema halls at
the time of launch of the film.
COMPONENTS
Producer Animal Suppliers Art Directors
Art Printers Artificial Plants Artists

46
Dubbing Artists Costume Suppliers Singers
Actors Auditorium Cameramen
Cine Equipment Editing Rooms/Editors Colour Film Processing
Costume Designers Satellite Televisions Dance Directors
Directors Distributors Preview Theatres
Story Writers Gun & Bomb Suppliers Hair Dressers
Home & Mini Theatres Light & Light Fittings Lyricists
Graphics & Special
Effects
Stunt Artists
Make-up
Artists/Materials
Video Cassette
Conversion
Music
Composers/Directors
Stunt Directors
Orchestras Outdoor units Public Relation Officer
Raw Film Suppliers Film Training Institutions Rain & Fog Machines
Shooting Houses &
Locations
Recording Studio
Equipment
Sound & Light Equipment
- Rentals
Film Trade Bodies &
Associations
Projection & Sound
Equipment
Production Managers etc.
(Source: www.filmplusindia.com/categ.html)

47
5 MAJOR COMPONENTS
1. Direction
The Director is responsible for executing the shooting process on the floor.
His responsibility does not begin or end with shooting. He is
responsible for converting the ideas which are in the form of
words into visuals. The storywriter and the screenplay writer
may be different persons but the Director must be good in
this department as well. The director is chiefly responsible for shot-taking which
he executes through his cameraman, thus making it imperative for the director to
have basic knowledge of camera, lighting and the visuals in general.
The actors are made to perform in front of the camera and with the help of
body language and dialogues, reveal the story to the audience. The director learns
the art of handling the actors. The whole story shot in bits and pieces are
assembled together in accordance with the syntax of the film grammar with the
help of the editor.
In the selection of sound and music, the director has to make some
conscious decisions and hence his knowledge of these are essential too. The
director brings out everyone’s talent and puts them together to make a worthwhile
programme.
The field of Direction is vast. It ranges from Directing Documentary films,
News & Current Affair programmes, educational and instructional films,
advertisement and corporate films, entertainment, fictions, soap operas and of
course, feature films too.

48
2. Camera & Lighting Technique
The painter paints his canvas and his
tools are pigments and brushes. The
cinematographer paints his canvas with
lights and records on film or video.
Though the tools are different yet the end
results have striking similarities.
Photography has it roots in science,
technology, art and aesthetics. Physics,
chemistry, engineering technology are the means to achieve the end, that is, the
aesthetics. Such a subject needs serious studies to achieve high-end results.
The Film and Television technology is growing rapidly and every other day a
new equipment is released in the field. Therefore, people with camera should be
prepared for latest developments in the field. The purpose of artistic lighting
expands beyond merely illuminating the subject for exposure level. A good lighting
can make the subject appear better than what it meets the eye and good subject
may look ordinary if the lighting lacks aesthetics.
3. Video Editing & Sound Recording
The word Editor must not
necessarily to taken as reference to
the technician working in a cutting
room. It simply refers to the person
who is responsible for the particular
editing decision being discussed. The
process of editing is usually a far
wide responsibility involving the
syntax of the film and television grammar. Editing is not merely cutting and joining.

49
In fact, the shoot material which are shot in pieces needs to be put in order and
joined together abiding by the rules of the film and television grammar to convey
the visual and aural message to the viewer authentically.
4. Acting & Presentation
In almost all Film and Television programmes there is
hardly any programme where no actor is involved. It is
through the actors the director conveys his message or
idea to the audience. The role of an actor cannot be
underestimated at any cost. Observation, imagination, body language, emoting
capabilities, verbal and non-verbal communications are the tools of an actor, which
is more important than the superficial beauty and glamour.
Acting for Film and Television is highly technical. The actor doesn’t perform
in isolation and is directly bonded to the camera, lights and microphone. Besides,
his time and pace criteria are totally related to the editing parameters. This makes
it compulsory for a Film & Television performer to have the basic knowledge of
cinematography, editing and the Film grammar. It is this technology that makes
Film and Television acting so different from theatre. http://www.filminstituteindia.com/

50
CORPORATIZATION AND FINANCING
The film industry is one sector in India, operations of which have always remained
under cloud, mystery and suspicion. While producers dependence on underworld and hawala
money (money transferred unofficially) for financing has always been a known fact, it’s a
different story that all Hindi films ultimately end with the victory of “Good” and enemies
of the nation, “Evil”, destroyed! The Film Industry on the whole has always worked like
small scale industries in the unorganized sector. For over five decades of its existence,
the industry did not produce any “Corporate Entity” worth its name.
While the bosses at the film industry have kept demanding more support from the
government, policy & regulatory framework and clean money from institutions for
financing, they did little work in cleaning up their balance sheets, income tax returns,
disclosures and above all, incorporating their businesses. But the last few years have seen
some change.
The famed actor, Amitabh Bachchan called the Big B who promoted Amitabh
Bachchan Corporation Limited (ABCL) took the lead towards Corporatization of film
industry in India. Though still an unlisted company with shareholders and whatever its fate
may be, ABCL set the example for others in film industry, that things can be done in a
little more organized way. Globalization, Software technology, TV programming and the
Music boom in India have since prompted several traditional players and industry majors to
make their operations more transparent and hence CORPORATIZE.

51
Scores of film producers, financers, distributors and associates, have now
converted their businesses into “Companies” under law. Some have already raised capital
from the public and are now listed at major stock exchanges, while several others propose
to do the same.
Besides Zee Telefilms, some others who have successfully corporatized includes
music leader Tips Industries, Jitendra promoted Balaji Telefilms, Dheeraj Kumar’s
Creative Eye, Sri Adhikari Brothers, RPG’s Saregama, Pritish Nandi Communications and of
course Subhash Ghai’s Mukta Arts.
Films Produced By Corporate Production Houses
Production House
Film
Aamir Khan Productions Private Limited Lagaan
Zee Telefilms Limited The Hero
Balaji Telefilms Limited Krishna Cottage
Mukta Arts Limited Yaadein
Yashraj Films Private Limited Dhoom
Padmalaya Telefilms Limited Suryavansh
Tips Industries Limited Fida
Venus Tapes & Cassettes Private Limited Josh
Devgan Entertainment Private Limited Raju Chacha
(Source: FICCI Report 2002 - Indian Entertainment Industry)
Still not many Film companies have availed finance from these sources. This
is because corporate structure in place is a pre requisite for such a venture. This
means that the company has to clearly define the following:
 Documented scripts in place

52
 Legally enforceable contracts with the artists and technicians
 The entire time schedule documented
 The producer has to make sure the filming activity is completed in time and there
are no time and cost overruns.
Apart from these corporatised players and a few reputed film producers who have
a track record of delivering successful films, other film-makers have to rely heavily on
arranging financing for their films from the unorganised market comprising “friends”,
“relatives” and “private financiers” which is also difficult and involves high cost of
interest.
BANK FINANCING FOR INDIAN FILMS
Earlier, banks were wary of funding films, and producers borrowed money
from private investors at interest rates as high as 25 to 35 %. The scenario has
now changed, and financial institutions are more than willing to lend to film
projects at the much lower rate of 16 to 17 percent.
Industrial Development Bank of India was the first institution to make an allocation
of Rs 1 billion for the film industry for 2001-2002 and it sanctioned film financing to the
tune of Rs 635 million in 2001 spread over seven projects floated by the likes of Crest
Communication, Padimini Telemedia, VR Projects and D. Raama Naidu, which rose to Rs. 995
million in 2002.
FILM PRODUCERS SANCTIONED BY IDBI
Producer Amount sanctioned (Rs mn)
Suresh Production 40
Crest Communications 200
Rajshree Productions 200
V.R. Pictures 70
F.K. Films 50
Alu Entertainment 25

53
Padmini Telemedia 50
(Source: IDBI)
For instance, Canara Bank, which had earlier funded Gayab, is also bankrolling K Sera
Sera Production’ forthcoming venture James. The movie has a budget of about Rs. 7 crore,
80% of which was funded by the bank.
LONG TERM PROSPECTS
The long term prospects for the industry look bright. Though nascent at this stage,
companies promoted by serious promoters will also command a good valuation at the
market. While domestic and international investors have got an opportunity to invest in the
sector, strong and positive signals have been sent to banks and financial institutions that
the industry is changing. CII & CRISIL are also working at developing a financing model
that would enable the banks to weigh the risks in this industry.
It is now hoped that the ensuing restructuring and corporatization will usher in a
new era in corporate India and industry will flourish by producing quality products for its
audience. The Indo-Italian Chamber of Commerce and Industry

54
INFRASTRUCTURE
The infrastructure for films comprises of production, post-production and
exhibition infrastructure. Production & Post-Production Infrastructure here includes
studio floors, film cities, laboratories and post-production facilities. In 2002, India has 25
studios and three film cities. Studios are enclosed structures where sets can be built for
shooting. A studio floor should have the necessary dimensions to allow building of these
sets and provide the necessary acoustics for shooting. Mumbai being the hub of film
production in the country has the maximum number of studios.
However, most of the studios are not maintained due to lack of funds. Many like
Famous Studios at Andheri and Ranjeet Studio at Dadar in Mumbai have closed down.
Besides, the studio floors are very small and do not allow building of huge sets. For
example, an average studio floor size in India is 100 feet by 150 feet versus the
international standard of 220 feet by 350 feet. An Indian studio is spread over 5 acres
and has one or two studio floors whereas an
international studio is spread over a minimum of 500 acres and has more than 6-10 studio
floors and hundreds of locations. In fact, an international studio is akin to a film city in
India.
Indian films cities do not come even close to international ones. For example, the
Mumbai and Noida film cities are spread over barely 40-50 acres of land and have only 20
locations each.
Perhaps the only international grade studio in the country is the Ramoji Rao Studio
in Hyderabad, with six studio floors. The film city is spread over 2,800 acres, of which
1,500 acres is developed and has over 100 shooting locations.
Post-production infrastructure like editing and dubbing suites are given as part of
the overall package to the production houses. Till recently, most of the equipment used in
India was largely outdated. Now, several specialised post-production studios like Empire
Studio, Crest Communications, CMM and Pentamedia Graphics have been set up which
offer modern technology to producers. Players like Ramoji Rao and Rama Naidu have
already set up or are in the process of setting or investing in post-production facilities.
They are positioning themselves as end-to-end providers, wherein a producer can just

55
come with a script and can take away a readymade film from the studio, which is how it is
done internationally.
Post-production facilities have to keep pace with fast changing technology. Avid
Editing Suites are rapidly replacing the old Steinbeck editing systems. In fact, even Avid
Suites are becoming obsolete and are being replaced by computer-based editing suites like
Adobe Premier.
Exhibition Infrastructure:
The number of theatres has not increased with a speed it should be
increased in the last three years. This is due to the high degree of piracy, low
ticket rates, high incidence of taxes and levies, low collections of theatre owners
which prevent them from spending on renovation. Alternative profitable options for
real estate like retailing has led many theatres in Mumbai to be converted into
shopping complexes and departmental stores.
Another reason for the poor infrastructure is the high incidence of
entertainment tax, which stands at an average of 25 per cent for the country as a
whole. In fact, in Maharashtra, it is as high as 60 per cent. Gujarat has an
incidence of 100 per cent, while Madhya Pradesh has a tax rate of 75 percent. If
one were to reduce the entertainment tax, one would easily see the improvement in
exhibition infrastructure. Andhra Pradesh is such an example. With 12 percent
average entertainment tax rate, the state has the highest number of theatres and
a very flourishing film industry notes Uday Singh, Managing Director, Colombia
Tristar Films of India. Even a country like China, which has a highly regulated
market and produces far less films than India, has 65,000 theatres.
Entertainment Tax Rates In Asian Countries
Country Percentage
Honk Kong 0.00
Indonesia 25 – 30

56
Japan 3.00
Korea 16.60
Malasia 30.90
Phillipines 33.00
Singapore 3.00
Taiwan 7.62
Thailand 7.00
SCREENS
As compared to approximately 36,000 screens in the U.S., there are around 13,000
cinema screens in India. Most of the cinema halls in India operate in an unorganised
environment and are owned by individual businessmen. More than 95 per cent theatres are
single screen and stand-alone. However, the industry has recently seen the entry of
organised corporate players.
Priya Village Roadshow Ltd., a joint venture between the New Delhi based Bijli
Group and Australian media and entertainment conglomerate, Village Roadshow Ltd., was
the first organised corporate player in this space. E-City Entertainment India Limted,
Inox Leisure Ltd. and Adlabs Ltd. are other corporates who have ventured into this space
in 2001.
Till 1997, the concept of housing more than two screens in one theatre was non
existent in India. Priya Village Roadshow Ltd. pioneered the concept of world class multiple
screen cinema halls in India by opening their flagship property, Anupam-PVR, in New Delhi
in 1997.
In the last two years, the state governments of Gujarat, Rajasthan, West Bengal
and Maharashtra have announced entertainment tax exemptions on new multiplexes which
has resulted in an increase in the development of multiplexes in these states.

57
With a population totalling more than 1 billion, 13,000 screens translates into a
measly 13 screens per million of the population. This is far below global averages.
India has witnessed a sharp decline in cinema attendance in the last 10-15 years due
to three reasons, namely poor cinema content, poor film exhibition infrastructure and
rampant piracy.
However, the film exhibition industry in India is expected to grow rapidly
over the coming years due to continuous positive developments in the area of film
content (which is improving), film exhibition space (which is witnessing development
of multiplexes with as many as 200 multiplex screens planned in the near future)
and a sustained clampdown on piracy (which is likely to result in a decline in the
frequency of watching films in homes through alternative media platforms). These
three factors are likely to lead to higher cinema
attendance in India.
CONTENT OF FILMS
Indian producers and directors are increasingly spending more time on the
development phase of the film and have started toying with experimental ideas. The film
makers have also started paying attention to the packaging of the film, which goes a long
way in improving the final product.
Some of the changes that the Indian film industry has witnessed recently include
shooting in long schedules for a sense of uniformity and timely and efficient completion (
Lagaan, Dil Chahta Hai), use of technology through better cameras and synchronous sound
( Lagaan, Dil Chahta Hai), focus on packaging and marketing ( Kabhi Khushi Kabi Gham,
Mujhe Kuch Kehna Hai, Gadar, Ek Prem Katha, Kasoor, Style, Ajnabee, Pyaar Tune Kya
Kiya), production
of small budget niche films ( Bollywood Calling, Monsoon Wedding, Tum Bin) and
experimentation of characters and novel story lines ( Zubeidaa, Dil Chahta Hai, Asoka,
Lagaan, Aks, Chandni Bar and Astitva).

58
Indian cinema has also arrived on the global stage with “Lagaan” securing an Oscar
nomination, “Monsoon Wedding” winning the Golden Lion at Venice and Ismail Merchant
honoured by the Bafta Academy.
FILM INSURANCE
Most of the developmental work that has happened in the introduction of insurance cover
for Indian films is attributable to Mr. Ajit Gupta, Development Officer of United India
Insurance (UII), who is credited with pioneering this concept in the India film industry.
The credit is also due to film makers like Subhash Ghai and Bobby Bedi, who have been the
forerunners and proponents of taking insurance cover for film production. The importance
of insurance cover assumes significant importance in view of the concerns of institutional
lenders, who want to mitigate risks associated with the film production process from
multiple entities.
Taal (1998) was the first Indian film to be insured for covering risks associated
with the film during the production period. Since then, United India Insurance has insured
more than 20 films with total production outlay in excess of Rs 1 billion.
Till date, UII has settled four claims out of the films insured by it. The first claim
was from Yash Raj Films India Ltd. for a month’s delay in the completion of its film,
Mohabattein, due to postponement of shooting caused by an injury to the heroine,
Aishwarya Rai. Other films that have received compensation for production delays include
Dil Chahta Hai (unseasonal rains in Australia), Saathiyaan (camera malfunctioning) and
Badhai Ho Badhai (Anil Kapoor had to hospitalised due to a leg injury). The Economic Times
Entertainment Report

59
OVERSEAS MARKET
Mr. Supran Sen, Secretary, Film Federation of India speaking about the export
market for Indian films says that the U.S. and Canada are major markets for Indian films
accounting for 30 per cent of exports, followed by the U.K. accounting for 25 per cent,
Mauritius for 10 per cent, Dubai for 10 per cent and other countries accounting for the
remaining 25 per cent. The U.S. market is specially good for sentimental films, as well as
China and the East European countries like Hungary and Czechoslovakia. Russia is another
major market for Indian films.
Co-production is also an important new feature of the industry with a few U.S.
companies showing interest in co-production as well as the U.K., Canada and Singapore.
Speaking about the export market, an important aspect of the internationalisation
of the Indian film industry, Mr. Nandkumar Bele, Secretary of the Indian Film Exporters
Association, says that exports started way back in the early sixties and the Association
was set up in 1963 to facilitate exports. The major exporters he named, are Eros
Multimedia which is the biggest exporter of Hindi films followed by CA Corporation, Fair
Deal International Pvt Ltd. and other exporters like Venus Records and Tapes PL, Tips
Exporters and Yash Raj Films. The bulk market is in the U.S. the U.K. and Canada and films
are also regularly exported to Mauritius, Fiji, New Zealand, Australia, Malaysia, Indonesia,
Singapore, Hongkong, Dubai, Tanzania and Kenya. Some exporters such as Eros, Yash Raj
Films and Fair Deal have offices abroad.
Rajnikant is a super hero in Japan and his film, Muthu was a super hit in Japan and
was subtitled in Japanese. The Chinese market is also an interested market and the
Chinese who have a strict censorship board are mainly interested in family films and
romantic films.
The South African film makers are interested in co-producing with Indian film
producers and the South African Government is offering various facilities for shooting of
Indian films in that country.
There are two problems faced by exporters which come in the way of
Internationalization. A major problem is piracy with the emergence of the latest
technology tools like Digital Versatile Discs (DVD). For instance 30,000 copies of DVDs
appeared in the American market barely a week after the theatrical release of the film
Devdas there. Similarly, pirated cassettes of Indian films appear in the Pakistani market

60
barely 2 or 3 days after they are released internationally. Malaysia is another big centre
for piracy of Indian films. This phenomenon is a major dent in export revenues for film
exporters.
Another problem is that of income tax. Earlier, the film makers used to get
exemption for export earnings raised abroad under Section 80 HHC of the Income
Tax Act of 1960. An interpretation put forward by an Income Tax Officer that
this exemption does not apply to exports of films because the rights of the films
are given on lease and thus they are not outright sales (this section applies to
sales) and since the rights in the film assigned are intangible and not on a par with
other foods or merchandise, was made the basis of the removal of this exemption
since 1995. Assessed and completed cases were thus opened up and many
exporters had to pay income tax for 5 to 7 years along with penalties. This was a
major setback for several exporters whose liability was high as well as for small
exporters who were badly hit by this interpretation.
After representation by the industry to the Government, while this provision was
no longer made applicable, the new provision under Section 80HHF introduced and allowed
tax exemption of 100 per cent in 1999-2000, 80 per cent in 2000-2001, 60 per cent in
2001-2002, 40 per cent in 2002-2003 and 20 per cent in 2003-2004.
While the Government on the one hand wants to encourage exports of Indian films,
on the other hand it wants to tax it heavily. The concessions for instance given to the IT
industry are not given to the film industry, even though the Government has recently given
it industry status.
Mr. Mohan Chhabria, Director, Fair Deal Exports Pvt. Ltd., a leading exporter of
Hindi films says in the last three to four years there have been two developments that
have helped with the internationalisation and exports of films. One is that the Indian
industry has technically reached the standards of America and secondly content wise, the
films are now getting into subjects which are universally liked.
Mr. Chhabria states that if you have a good product, the middlemen and importers
in the business, mostly people of Indian origin settled abroad approach the exporters
themselves. Recently, Australian TV approached Fair Deal for buying the films Dil Chatha
Hai and Hum Dil Chuke Sanam.

61
Sometimes the suppliers meet the buyers at festivals. New markets are also often
opened up by participating in festivals. However, the cast of the films is important and
certain stars like Shah Rukh Khan, Salman Khan, Amir Khan, Hrithik Roshan, Amitabh
Bachchan and Sanjay Dutt are more in demand abroad. The Indo-Italian Chamber of Commerce and Industry
According to Pravinder Bhatia, assistant vice - president, corporate finance,
Ernst & Young, the overseas market is more lucrative than the Indian one. For
instant, Kal Ho Na Ho grossed nearly Rs 20,000 crores and Lakshya about Rs 8
crores in ticket sales alone in the UK & US. And then there is the additional
revenue generated by the sale of audio & video CDs. Times of India

62
REGIONAL FILMS
According to the Economic Times Entertainment Report 2001-2002 after Hindi
films, the Telegu film industry is perhaps the biggest, followed by the Tamil film industry
in terms of revenue generation, though in number of films released, Tamil outranks Telegu.
Together, they are called the “Tollywood” film industry. What sets this segment apart
from the rest of the industry is its high degree of discipline. The average time for making
these films is 4-9 months.
The producers and directors, along with the artistes do a lot of homework before
making a film. The entire script of the film is usually ready before shooting begins and the
artistes know their roles clearly. Since the artistes are usually involved in filmmaking, they
give continuous dates to the producers. As a result, none of the South-based artistes take
up more than 2 films a year, as opposed to many Hindi artistes who make 4-6 films in a
year.
One more peculiarity of the Tamil and Telegu films is the increasing proportion of
integration in the industry. Ramoji Rao owns a studio and a post-production facilities in
Hyderabad. Many top production houses in the South are owned by artistes. Thus, unlike
the Hindi film industry, in A category films, the artistes have more clout and are involved
in the entire process of film making. These artistes also have a substantial control on the
script. Artistes like Rajnikant also control the theatres, albeit indirectly. The Tamil and
Telegu industry is more integrated than the Hindi industry in many ways, with fewer
players and the top players controlling the industry both in terms of value and volumes. In
this respect the Tamil and Telegu film industry is similar to international film production
houses.
One major difference between the Hindi and South based films is the extent of
star worship. Films are classified under the various categories mainly based on the star
cast. For example, in Telegu films in which famous actors like a Chiranjeevi or Nagarjuna
or Venkatesh or Balakrishna or Alu Arvind star would be rated as A category, irrespective
of the director and the film producer. The other top stars are Mohan Babu, Pavan Kalyal
and Mahesh Babu. Then there are a lot of other actors like Jagapati Babu, Srikanth,

63
Prakash Raj and Naveen, who are not as big and do one to two good films in a year. These
may be rated as B films.
Amongst the banners, Suresh Productions, run by D. Rama Naidu and his son Suresh
is one of the most respected. This production house has done more than 100 films for
which it has entered the Guiness Book of World Records. The other main production
houses are Usha Kiran Movies of Ramoji Rao, Anjana Productions of Chiranjeevi, Geeta Art
Films of Alu Arvind, Annapurna Studio Private Ltd of Nagarjuna and his father – the
legend and Nageshwar Rao, Padmalaya Production of Mahesh Babu and his father Krishna
and Laxmi Prasanna Productions of Mohan Babu.
In the South based film industry in general and the Telegu film based industry in
particular, the production houses are mainly owned by the top stars, who do at least one to
two films for their own production houses in a year. This trend is slowly entering the Hindi
film industry too. There are star directors like Raghavendra Rao, S.V. Krishan Reddy and B.
Gopal, whose films are A class. Finally, there are a number of independent films producers
like C. Ashwin Dutt and Subhiram Reddy who make big budget A grade movies.
In Tamil films, Rajnikant has a special category of his own. He falls perhaps in the
super A category. Rajnikant produces his own films. He works on the principle of selling a
film at areasonable profit so that everybody involved in the movie makes a winning. His
films usually carry the names of 4-5 producers, who are mainly needy people. His film
“Padiaappa” did a business of Rs 320-350 million. The entire film was made for Rs 60
million and was sold for close to RS 250 million. Of the film profits, he usually reserves
35-40 per cent for charity. The rest goes towards his fee for the film. With close to Rs
100 million per film, he is one of the highest paid actors in the country.
The other major banners in Tamil films are Supergood Films, which makes movies
under Oscar Movies Banner, Mani Ratnam who makes movies under Madras Talkies Banner
and Kamala Haasan’s home production. Shankar, who was a director till recently is the most
sought after and number one director in Tamil films.
Another aspect of the Telegu and Tamil films is the large inter-lingual market.
Films in either of the languages usually get dubbed in the other language.

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