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Bollywood Economy

Content
• Bollywood
• Indian economy
• Economic aspects of Bollywood
• Leading players in the industry
• Economic growth of the industry in the last 5 years
• Movies that contributed to the growth
• Comparison with other regional movie industries
• Impact of Bollywood on other industries
• Reason for the high rate of investment into the industry
• Impact of recession on the industry
• Benefits to government
• Conclusion
Bollywood
• Popularly known as Hindi film industry.
• Based in Mumbai, Maharashtra.
• Originated in 1913.
• Term coined in 1970’s, inspired by Tollywood, the
Bengali film industry.
• Often used to refer to the whole Indian film
industry.
• Unlike Hollywood it does not have a physical
existence.
Indian film industry facts and figures

• Over 250 films are censored or released each year in


Bollywood.
• Hindi film industry is the largest film industry in India, in
terms of the ticket sales and the number of film produced
annually.
• 20 million people go to movies on daily basis and pay the
equivalent to average Indians days wages.
• The Central Board of Film Certification cites on its web site
that every 3 months as audience as large as billions
population visits cinema halls.
Indian Economy

Characteristics:
 Mixed economy.
 Both Govt. and private sector have influence
over the economy.
 Liberalized economy.
 Labour intensive.
 Low level of income and capital formation.
 Low order of resource utilization.
• Considered as a low income country by World
Bank,
with the Gross National Income of US$549.

• Great inequality in the distribution of wealth:


the richest tenth of households hold 33% of
wealth, while the poorest tenth only hold 3%.

• 86% of the population lives under $2 per day;


44% lives under $1 per day.
India’s economic projections

2008 2009 2010

GDP growth 7.30% 5.40% 7.60%

CPI growth 9.30% 5.50% 4.90%

• Source: report from Federation of Indian Chamber of Commerce and Industry, New
Delhi dated September, 2010
Economic aspects of Bollywood
• The Rs.130-billion ($2.85 billion) industry is one of the fast
growing sectors in the country with expanding global
reach.

• Approximately 250 movies are produced each year,


ranging from budget of $200,000 to $50,00,000.

• During the last decade, exports have grown from Rs.100


million ($2.18 million) to Rs.1.5 billion ($32.85 million).

• The industry is expected to grow at the rate of 19 percent


and reach a turnover of over Rs.260 billion ($5.7 billion) by
2011.

• Provides employment to more than 1,75,000 people. Has


employment generating capacity of nearly 35,000 per
year.
• In the year 2009 , 27% of the money invested in the
industry was from NRIs and it rose to 31% this year.

• Recently, the Govt has diluted the restrictions


regarding FDI into the media and entertainment,
which allows the NRIs to pool in funds into
Bollywood.

• The industry makes an annual income of more than


US$500 billion a year approximately.

• The industry is growing at the rate of 11.2% per year.


Leading Players in the industry
• Yashraj films
• Red chillies production
• Eros international
• UTV Movies
• Shree Ashtavinayak Cinevision Pvt. Ltd
• Sheemaroo
• Dharma productions
• Kaleidoscope
• Percept pictures
• Bhandarkar productions
Yashraj Films
• Yash Chopra- MD
• Aditya Chopra- CEO
• Highest grosser in the entertainment business.
• Collectively, 8 of the recent YRF productions have
grossed in excess of 200 Million US Dollars worldwide.
• Produces almost 5 movies a year, budget ranging from
40 crores – 90 crores.
• Employs more than 35000 people ranging from
technicians to junior artist and flimstars.
Red Chillies Production
• Owners – Shah Rukh Khan and Gauri Khan.
• Recent collaboration with Dharma productions.
• Also into advertisement and television industries.
• Produces 3 movies on an average per year,
ranging from
30 crores– 75 crores.
• Have earned a revenue of US$ 160 million from
USA, UK and UAE, in 2009-2010.
• Employs nearly 19,000 people.
Eros International

• Owner - Komal Nahta


• Have a strong hold on the overseas markets of
USA and UAE.
• Produces 5 movies on an average each year,
10 crore – 50 crore .
• Have earned a revenue of US$ 135 million from
USA and UAE, in 2009-2010.
• Employs nearly 14,000 people on temporary
basis.
Eros International
Class of Authorize- Issued Paid up Paid up Paid up
shares d capital capital shares face value capital
Year (no.)

2009-2010 Equity 125.00 71.41 7,14,07,00 10.00 71.41


shares 0
UTV Movies
• Chairman –Naresh Chandra
• Concentrates on only small and medium
budget films, ranging from 2.5 crores – 10
crores .
• Popular mostly in south- east Asia and UAE.
• Have earned a revenue of US$ 105 million
from overseas trade, in 2009-2010.
• Employs nearly 9,000 people .
Shree Ashtavinayak
Cinevision Pvt. Ltd
• Chairman & MD- Dhilin H. Mehta
• Board of directors –Ms.Seema D. Kar, Mr. Amit A.
Behl, Mr. Kiran B. Mistry.
• Don’t have a strong hold on the overseas markets .
Popular mostly in south- east Asia.
• Produces 5 movies on an average each year,
10 crores– 45 crores.
• Have earned a revenue of US$ 95 million from overseas
trade, in 2009-2010.
• Employs nearly 11,000 people on temporary basis.
Growth of the industry in the last
5 years, 2005-2010
Year No. of films FDI Annual Revenue
produced investment earned
2006 284 11% m960 crore US$235
billion
2007 249 17% m840 crore US$340 billion
2008 273 20% m875 crore US$317 billion
2009 241 27% m985 crore US$475 billion
2010 235 31% m1060 crore ---------

Source- report from Research institute of media planning and management,


August’2010
• Fastest growing industry in India.

• Contributes 29% to the growth of Indian economy.

• Expected to be the largest contributors of growth in


India.

• Industry is attracting more and more FDI.

• Annual investment is increasing at a rapid rate.


Recent movies that added to the
revenue of the industry
Top five highest-grossing Bollywood
films in India
Net Gross Net Gross
Rank Movie Year Studio(s) (according (according
to BOI) to IBOS)
Vinod Rs. Rs.
1 3 Idiots 2009 Chopra 202,57,00,0 189,38,74,7
Productions 00 29
Rs. Rs.
Arbaaz Khan
2 Dabangg 2010 140,00,00,0 142,48,31,0
Productions
00 00
Rs. Rs.
3 Ghajini 2008 Geetha Arts 114,67,00,0 117,48,22,7
00 56
Prakash Jha
Rs. Rs.
Productions/
4 Raajneeti 2010 92,93,00,00 94,89,66,31
UTV Motion
0 6
Pictures
Rs. Rs.
Rab Ne Bana Yash Raj
5 2008 86,78,00,00 73,52,37,84
Di Jodi Films
0 8
Comparison with other regional
movie industries
Other film industries in India
• Tollywood (Bengali)
• Tollywood (telugu)
• Lolywood (lucknow)
• Ollywood (orissa)
• Kollywood (tamil nadu)
• Sandalwood (kannada)
• Bhojpuri film industry
Tollywood
• The Bengali film industry.

• Approximately 160 movies are produced each year,


ranging from budget of $20,000 to $3,00,000.

• Provides employment to more than 65,000 people. Has


employment generating capacity of nearly 1500 per
year.

• There has not been any contribution to the industry


through FDI.
• The industry makes an annual income of more
than
US$60 million a year approximately.

• The industry is growing at the rate of 7.2% per


year.

• Annual income of the industry adds to only 4%


of the growth of Indian economy.
Mollywood
• The Malayalam film industry film industry.

• Approximately 90 movies are produced each year,


ranging from budget of $200,000 to $50,00,000.

• Provides employment to more than 35,000 people. Has


employment generating capacity of nearly 1100 per
year.

• There has been contribution to the industry through


FDI.
• The industry makes an annual income of more
than
US$110 million a year approximately.

• The industry is growing at the rate of 6.4% per


year.

• Annual income of the industry adds to only 7%


of the growth of Indian economy.
Telugu film industry

• Approximately 100 movies are produced each


year, ranging from budget of $70,000 to $9,00,000.

• Provides employment to more than 30,000 people. Has


employment generating capacity of nearly 1000 per
year approximately.

• There has been 11% contribution to the industry


through FDI.
• The industry makes an annual income of more
than
US$90 million a year approximately.

• The industry is growing at the rate of 7.8% per


year.

• Annual income of the industry adds to only 3% of


the growth of Indian economy.
Bhojpuri film industry
• Approximately 75 movies are produced each year,
ranging from budget of $30,000 to $2,00,000.

• Provides employment to more than 32,000


people. Has employment generating capacity of
nearly 1700 per year approximately.

• There has been no contribution to the industry


through FDI.
• The industry makes an annual income of
more than
US$15 million a year approximately.

• The industry is growing at the rate of 4.7%


per year.

• Annual income of the industry adds to only


2% of the growth of Indian economy.
Ollywood
• Approximately 60 movies are produced each year,
ranging from budget of $60,000 to $2,00,000.

• Provides employment to more than 15,000


people. Has employment generating capacity of
nearly 2000 per year approximately.

• There has been no contribution to the industry


through FDI.
• The industry makes an annual income of more
than
US$9 million a year approximately.

• The industry is growing at the rate of 5.2% per


year.

• Annual income of the industry adds to only 1.7%


of the growth of Indian economy
Comparison with Bollywood
No. of films Growth rate Annual FDI in % of income
produced of the % added to
industry in % Indian
economy
(approx.)
Bollywood 250 11.2 31 9.2
Tollywood 160 7.2 No 4
Ollywood 60 4.7 No 2
Telugu film 100 7.8 11 3
industry
Bhojpuri 75 5.2 No 1.7
Mollywood 90 6.4 Yes 7
Comparison with Bollywood
300
250
200
% of income
150 added to
indian
100 economy
50 %growth rate
of the
0 industry
Impact of Bollywood on other
industries
Music industry
• Almost 70% of the Indian music industry depends on
Bollywood.

• Bollywood is responsible for pooling in almost 75% of


revenue earned annually.

• The potential of the Indian music industry can be better


understood from its size estimated at around US$ 182.9
million in 2010, up from US$ 160.9 million in
2008, portraying a growth of 14 per cent during the
reporting period. It is expected to grow at a CAGR of 16 %
over 2010-14 to reach US$ 379.1 million.
Media and advertisement
• The Indian Media and advertisement (M&A) industry stood at US$
12.9 billion in 2009 registering a 1.4 per cent growth over last year.
• According to a joint report by KPMG and an industry chamber. Over
the next five years, the industry is projected to grow at a compound
annual growth rate (CAGR) of 13 per cent to reach the size of US$
24.04 billion by 2014.
• The report stated. Additionally, the gaming segment is expected to
be the fastest growing sector in the M&A industry. The sector
showed a 22 per cent growth in 2009 and is expected to grow at a
CAGR of 32 per cent to reach US$ 705.2 million by 2014
Other Industries

• Apparels industry
• Disc producing
• Prop industry
• Tourism industry
• Recreational industry
• Television industry
Reason for the high rate of
investment into the industry
• Less regulations in Foreign Direct Investment.

• Increased demand for the Bollywood movies in


India as well as in abroad.

• Awesome turnovers from the recent movies.

• Withdrawal of recession.
Effect of recession on the industry
• The total revenue that Bollywood earned in 2008
was R10,900 crore with an overseas collection of
r977 crore.
• The overseas box office also saw a major drop of 30
per cent with a cut down in the film going audience.
• KPMG has estimated that the domestic box office
revenue in 2009 will be around R7,880 crore as
compared to m 8.020 crore in 2008, thus bearing a
loss of about a 100 crore
Consumer preferences
• Multiplex

• Theater

• Home viewing- DTH services & DVD, CDs


copyright

• Internet , Pirated CDs


Government’s benefits from
Bollywood
Entertainment tax
• One of the highest revenue earning sectors from
tax in entertainment industry is cinema.
• The entertainment tax department collects the
tax from the sponsors and deposit it to the
Government of India.
• Entertainment tax in all states of India is 15%-
20%, except Maharashtra and UP, where it is
25%-30%.
• The government receives 37% of the total
entertainment tax from Bollywood.
Corporate tax from the production
houses

• Indian government receives a corporate tax of


30% from the industry.

• If the taxable income is more than 1 million, a


surcharge of 10% of income tax is levied on
the company.
Contribution to GDP

• The present GDP rate is 7.60% and wants to


attain 9% by 2010.

• The Bollywood industry added to 19% of the


total GDP of the country in 2009 and is
expected to contribute 22% of the GDP in
2010.
Conclusion
• Bollywood affects the Indian economy beyond
limits. It’s proving itself to be ahead of the
curve both politically and socially . It has
pushed viewers to address issues of
communal relations and religious intolerance
within India. Bollywood has asserted itself as a
popular vehicle for discussion , reflection and
social change.
Reference
• http://www.sebi.gov.in/dp/ashtadraft.pdf
• http://www.moneycontrol.com/financials/shreeashtavi
nayakcinevision/balance-sheet/SAC03
• http://www.bollywoodhungama.com/features/2008/1
1/14/4503/index.html
• http://filmistan.mywebdunia.com/2009/02/07/no_rec
ession_in_bollywood.html
• http://business.mapsofindia.com/india-tax/corporate-
rate.html
• http://www.economywatch.com/foreign-direct-
investment/