Bollywood Economy

ECONOMY
1
 Group –G5
Anwar Sadath
Joshin Shaji C
Poulomi Das
Sachin C D
Sudeep Babu

SOP owner- Mr. Cris Abraham

2
 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
3 
 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.


4
 Entertainment industry in
India


The ministry of information , broadcasting and

media is managed by Ms Ambika Soni, MP.

Entertainment industry in India comprises
television industry, different film industries,
theatre, music industry, etc.

An amount of n103 crores has been allotted
 towards the development of the film industries
 by the government in Budget 2010-2011.

5
 Indian Economy

Ø

6

 

Characteristics:


Ø Mixed economy.
Ø Both Govt. and private sector have
influence over the economy.
Ø Liberalized economy.
Ø Labour intensive.
Ø Low level of income and capital formation.
Ø Low order of resource utilization.
Ø

7 
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.


8
 India’s economic projections




2008 2009 2010

GDP 7.30% 5.40% 7.60%


growth
CPI growth 9.30% 5.50% 4.90%





 Source: report from Federation of Indian Chamber of Commerce and
Industry, New Delhi dated September, 2010

9
 Economic aspects of
Bollywood

10
 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 $2
million to $50 million.

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.

11
Provides employment to more than 1,75,000
 

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.

12 The industry is growing at the rate of
11.2% per year.
 Leading Players in the
industry

13
 Yashraj films
Red chillies production
Eros international
UTV Movies
Shree Ashtavinayak Cinevision Pvt. Ltd
Sheemaroo
Dharma productions
Kaleidoscope
Percept pictures
Bhandarkar productions



14
 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
15 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.
16
 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.
17


 Eros International
Class of Authorize Issued Paid up Paid up Paid up
shares -d capital capital shares face valuecapital
Year (no.)
2009- Equity 125.00 71.41 7,14,07,0 10.00 71.41
2010 shares 00

18
 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 .



19
 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
20
basis.
 Growth of the industry in the
last 5 years, 2005-2010

21
 Year No. of films FDI in Annual Revenue
2006 produced
284 % 11 investment
960 1305 in m
earned
2007 249 17 in 840 n cro
1700re
2008 273 20 cro875 re 1585
2009 241 27 985 2355
2010 235 31 1060 ---------

Source- report from Research institute of media planning and

management, August’2010
22
23
N o . o f film s
p ro d u ce d

Ye a r
 FD I in %

24 Ye a rs
25
A n n u a lin ve stm e n t in
n cro re

Ye a rs
26
R e ve n u e e a rn e d in a
cro re

Ye a rs
 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
27 rate.
 Recent movies that added to
the revenue of the industry

28
 Top five highest-grossing
Bollywood films in India
Rank Movie Year Studio(s) Net Gross Net Gross
(according (according
to BOI) to IBOS)
1 3 Idiots 2009 Vinod Chopra
Rs. Productions
Rs.
2,02,57,00, 1,89,38,74,7
2 Dabangg 2010 Arbaaz 000Rs. 29
Rs.
Khan 1,40,00,00, 1,42,48,31,0
3 Ghajini 2008 Productio 000
Geetha Arts
Rs. 00
Rs.
ns 1,14,67,00, 1,17,48,22,7
4 Raajneeti 2010 Prakash 000
Rs. 56
Rs.
Jha 92,93,00,00 94,89,66,31
Productio 0 6
5 Rab Ne Bana Di Jodi ns/
2008 Yash Raj Films
Rs. Rs.
UTV Motion Pictures 73,52,37,84
86,78,00,00
0 8
29
 Comparison with other
regional
movie industries

30
 Other film industries in India
 Tollywood (Bengali)
 Tollywood (Telugu)
 Mollywood (Kerala)
 Lolywood (Lucknow)
 Ollywood (Orissa)
 Kollywood (Tamil Nadu)
 Sandalwood (Karnataka)
 Bhojpuri film industry
 Marathi film industry
 Punjabi film industry
 Gujrathi film industry
 Assamese film industry


31
 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
32 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.



33
 Mollywood

The Malayalam film industry.


Approximately 90 movies are produced each
year, ranging from budget of $200,000 to
$5,000,000.


Provides employment to more than 35,000

people. Has employment generating
capacity of nearly 1100 per year.

34
There has been contribution to the industry
 

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.


35 
 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
36
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.


37
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.
38
 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.


39
 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
40
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.

41
 Comparison with Bollywood
No. of films Growth rate Annual FDI % of
Bollywood produced
250 of the
11.2 in
31 % income
9.2
Tollywood 160 industry
7.2 in No added
4 to
Ollywood 60 %
4.7 No Indian
2
Telugu film 100 7.8 11 economy
3
industry (approx.)
Bhojpuri 75 5.2 No 1.7
Mollywood 90 6.4 Yes 7

42
 Comparison with Bollywood


43
44
% of income added to
In d ia n e co n o m y



Comparison with Bollywood
 Impact of Bollywood on other
industries

45
 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.

 Some of the leading music companies are T-
46 Series, HMV,
 Sa Re Ga Ma.
 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
% to reach the size of US$ 24.04 billion by
2014.
The report stated. Additionally, the M&A
segment is expected to be the fastest
growing sector. The sector showed a 22
%growth in 2009 and is expected to grow at
47
a CAGR of 32 % to reach US$ 705.2 million
by 2014.
 Other Industries

Apparels industry
Disc producing
Prop industry
Tourism industry
Recreational industry
Television industry


48
 R e a so n fo r th e h ig h ra te o f
in ve stm e n t in to th e in d u stry
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.

49 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 % 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
50 
 Consumer preferences
 Multiplex – 36% of public like to see movies in
multiplexes, considering it to be a treat of
sophistication, as the services availed here
are higher and price is almost 5 times to that
of in theaters.

 Theater – 64% of public who prefer to see
copyrighted movies in theaters since the price
of tickets are comparatively less compared to
multiplexes.

 Home viewing- DTH services & DVD, CDs
copyright

 Internet , Pirated CDs- 23% of the revenue of
51 Bollywood was being consumed by piracy in
2008 and 26% in 2009.
 

 Government’s benefits from

Bollywood

52
 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.
53

 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.

54
 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.

55
 Other benefits

Public awareness

Development of tourism industry

Improvement of infrastructure

56
 Expectations this Diwali

More than n230 crore of the annual
investment of 2010 is at stake this Diwali
season with upcoming movies like
Golmaal-3, Guzarish, Action Replay.



57
 CONCLUSION

58
 Reference
 http://www.sebi.gov.in/dp/ashtadraft.pdf
 http://www.moneycontrol.com/financials/shreeashtav
 http://www.bollywoodhungama.com/features/2008/1
 http://filmistan.mywebdunia.com/2009/02/07/no_rec
 http://business.mapsofindia.com/india-tax/corporate
 http://www.economywatch.com/foreign-direct-invest
 http://www.zorsebol.com/movies/bollywood-movies/b
 http://www.whereincity.com/movies/
 http://indiabudget.nic.in/ub2010-11/eb/sbe59.pdf



59
 QUERIES

60
61