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IDBI plans consortium for film financing

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Ms Sushma Swaraj, Union Minister for Information & Broadcasting, with Mr James Murdoch, Chairman & CEO, Star group, at the Frames 2002 `Global convention on the Business of Entertainment' held in Mumbai on Friday. Mr R.S. Lodha, FICCI President, and Mr P.P. Vora, IDBI Chairman & Managing Director, are also seen.

MUMBAI, March 15

INDUSTRIAL Development Bank of India (IDBI) plans to set up a consortium involving commercial banks for taking up film financing projects,'' Mr. P.P. Vora, Chairman and Managing Director of the financial institution has said. IDBI has initiated talks with Bank of India (BoI) towards this end.

IDBI had set up an initial corpus of Rs 100 crore last year for financing films. ''In the last one year, we have financed nine feature films of which two have been released and one is due to be released next month,'' Mr. Vora told delegates to the Frames 2002, Global Convention on the Business of Entertainment here.

He acknowledged that evaluation of projects in this arena was not easy. Enumerating some of the benchmarks for film financing, Mr. Vora said the industry needed to corporatise itself. "First, convert yourself into a limited liability company. Second, we need a complete script which will be evaluated by an advisory committee set up for this purpose,'' he said.

Apart from expediting the corporatisation process in the film industry, it needs to nurture a habit of ploughing back earnings. "The industry needs to standardise functions, become transparent in accounting practices,'' he said.

There should be a financial institution for undertaking completion bond, in the event there is a delay in completion of films. According to him, on an average film budgets are in the range of Rs 10-25 crore. "Sometimes we do take up a line of credit to a big production house,'' Mr. Vora said.

Recognising the issue of entertainment tax irregularities, Ms Sushma Swaraj, Union Minister for Information and Broadcasting, said a committee set up to develop the entertainment sector had arrived at a consensus that the tax should be around 60 per cent.

According to her, State governments have been in the process of reducing entertainment tariff.

While acknowledging that the entertainment industry had done well by doubling its film exports during the last three years, Ms Swaraj said that the industry must ensure that overseas sales and territory agreements are worded without ambiguity. ''There have been some adverse feedback on this,'' she said.

"This is also the right time to dwell on the trade and services aspects of the industry under the General Agreement on Tariff and Trade (GATT). Discussions are to be held on GATT sometime this year,'' she said.

She identified three areas of concern - piracy, rates for cable television and content creation and development of human capital. '' We are toying with the idea of a conditional access system which is mandatory for pay television. A committee set up for this is due to give its report shortly,'' she said.

According to Mr. James Murdoch, Chairman & CEO, Star Group, conditional access should mean pathway to further investments. '' It means the ability to introduce subscription management,'' he said.

He dwelled on the issue of under-declaration by cable operators and said that in some cases it was as high as 85 per cent. "We estimate subscription earnings to be Rs 4,500 crore. About Rs 2000 crore is stuck at the sub-operator level. This has to be unlocked,'' Mr. Murdoch said.

"Clearly, the current base and declaration levels need to be scrapped. True ratings must be established through a transparent market oriented process,'' he said. He also sought a more relaxed policy on DTH.

Mr. Kamal Hassan, actor, stressed the need for the industry to fix its own theatre tariff based on the expectation of the film's performance, as is done overseas.

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