The film industry's new .. Dalal Street

The film industry's new .. Dalal Street

MARCH 30: Haunted by black money and the underworld, the Indian entertainment industry is getting a new sense of respectability from an unlikely quarter. Stock market bulls are giving an enhanced valuation to the hitherto neglected industry and asking the film making companies to list their shares on the bourses.

Says Ambit Corporate Finance Managing Director Ashok Wadhwa: ``The film industry should look forward to equity funding rather than seeking bank finance, which is difficult to obtain unless the producers corporatise their companies.''

Wadhwa was speaking at an international conference on "The Business of Entertainment: India-Opportunities in the 21st Century", organised by FICCI here today. ``And one of the main way to corporatise is to list shares on the bourses,'' he added.

The potential of the entertainment industry could be gauged by the fact that the industry would be raising Rs 3,000 crore through 40 issues in the next few months, Communications Equity Associates chairman Deepak Nanda said. ``The industry would grow from Rs 15,000 crore to Rs 70,000 crore in seven years,'' he added.

Echoing a similar view, CEO of Prasar Bharati R R Shah predicted that the entertainment industry would become a similar power in the world as the IT industry. With 50 channels already available besides six news channels and three sports channels Shah felt that the convergence of PC and TV is not far off which would trigger a demand for software.

Encouraging the industry to start corporatising, Information and Broadcasting minister, Arun Jaitley said his ministry is following up the issue of film financing with the Finance Minister. ``But, first the industry will have to prove their credit worthiness to the financial institutions,'' he added.

``India was on the threshold of becoming a superpower in information technology. We are creating a proper legislative framework in which this industry can grow. We should have an effective communication in which entertainment becomes a lucrative option,'' he said.

Jaitley said the government is also contemplating serious changes in copyright laws, violation of which have harmed the legitimate industry. The proposed legislation would also impose deterrents to stop violation of the copyright act and piracy.

Later, Wadhwa said that as the entertainment industry depended on intellectual property, debt was a "wrong" and "costly" way of funding, Though most of the domestic media companies are taking the public issue route, private equity would be the best form of raising funds.

"By placing funds privately, companies would actually be one step away from going public. Besides, they will be saving themselves from other hassles like organising investors meet and explaining on their return on investments," he said.

In fact, a report by management consultancy firm, Arthur Anderson on ``Potential of the Indian entertainment industry'' called for corporatisation of the industry by public participation and consolidation of players to improve economies of scale. Projecting a five-fold growth in the film industry revenues, it asked the industry to pursue joint ventures with IT companies for convergence.

``The industry is poised to take advantage of the international demand for Indian entertainment, cable penetration will enhance the quality content in an area of convergence,'' the report said.