At the young age of 26, Dhilin Mehta is spearheading Shree Ashtavinayak Cine Vision – a Rs 1 billion (Rs 100 crores) net worth company – as it chairman and managing director.
Having built a strong in-house team to look into activities, the company is now taking the next big step towards investment of a whopping Rs 9 billion (Rs 900 crores) for production of 20 films over a period of three years.
In an exclusive interview with Businessofcinema.com, Mehta talks about the company’s plans forward, the overdrive into film production and more.
What kind of responses have poured in for the announcement of investing Rs 9 billion in production of 20 films?
It has been good. The distributors and exhibitors are pleased because audiences will be given continuous entertainment for a span of two – three years. We are happy that we are one of the fastest growing companies in the entertainment space that is making commercial projects.
What is the source of funding for this investment?
All the 15 -20 movies that have been lined up are in different stages of production and investment. There is no need to invest the entire money in all the movies right away. Besides, we are a very cash rich company; we listed on the stock exchange in December 2006 and raised FCCBs in January. We also have good tie ups with banks like EXIM and IDBI. Now the net worth of the company is also Rs 1 billion, so we do not see any problems as far as funding is concerned.
Maximum investment of capital will be made in this year for four – five movies, which are releasing. We do not invest 100 per cent in the movies because we pre-sell it and recover the cost of production and make table profit. We invest 10 – 15 per cent of the total money in the initial stages to sign the talent, the balance is invested when the film goes on floors and we invest 70 – 75 per cent until the shooting is complete.
In fact, we get a credit line from various distributors and suppliers and we save the money on that front due to our incredible line up.
Ashtavinayak started of as film production company in 2002 with Fun2shh and Agni Pankh and gradually ventured to distribution. Now the focus is back towards film production. Why, this back and forth action?
We started with production of two films in 2002 and then distributed around 40 movies in three years. Production has been the key focus for Shree Astavinayak Cine Vision since inception and distribution goes on at a secondary level. Maximum revenues come from the production division, so we would rather concentrate more on that. Moreover, production did not witness any sluggishness. After Fun2shh and Agni Pankh we worked towards the scripts of other movies, produced Maine Pyar Kyun Kiya and distributed 20 movies in two years.
Haala Bol was the last movie distributed by Ashtavinayak in Gujarat in January. No further acquisitions have been made since then. So has distribution taken a back seat?
We can only distribute movies if some good ones are available with a good star cast, director and have the potential to get in revenues. We try to distribute six – eight films every year. Earlier we were producing one or two films annually, but right now, all the resources are put into the production division for four – five. Therefore, production will be the key area, in future as well.
How much do production, distribution and exhibition contribute respectively towards revenues?
Production is the key revenue driver and 50 – 60 per cent revenues come from it; 25 – 30 per cent comes from distribution and the balance from other areas. The share of production will go on increasing in the coming years.
Since you already have an expertise in production, and are further building it, have you considered aligning with any other distribution company for an output deal?
We are in talks with various companies, but we have not arrived at any decision. We are open to it. We do not have a binding principal.
Ashtavinayak had a deal with The Indian Film Company. What is the status on that?
The agreement was cancelled with mutual consideration. Ashtavinayak decided to produce all the movies in-house. The Indian Film Company is just the worldwide distributors of our movies. They distributed Jab We Met worldwide. Their distribution of Kidnap and Golmaal Returns is independent of that contract.
Is it more worthwhile for your company to retain rights of movies or to sell them?
We follow the de-risk model, which is conservative. This is why we are successful and do not lose money in any film. We are happy with 25-30 per cent gross margins on a movie and do not want any supernatural returns for every movie. We are happy to sell a movie if after its completion we get gross margin of 25-30 per cent.
Is it true that most distribution companies are bleeding due to the high price of content acquisition and hence focus is shifting towards content production?
This depends totally on a case-to-case basis on the company, distributor and producer. These things depend on the acquisition cost of content and capability of distributor to exploit it. Earlier the focus for distribution companies was on Bombay territory rights, but now focus is on worldwide rights, so there has been a shift but distributors will be in existence.
The record of accomplishment of Shree Ashtavinayak clearly shows that we bought different kind of movies at different rates and recovered costs in each movie, because we distributed them well in as many screens as possible with our wide logistics network.
There is an industry perception that Ashtavinayak is responsible for over paying actors to a certain extent. What is your stance on that?
We would like to keep our trade secrets under wraps. The fee charged by Akshay Kumar depends upon the company, number of days he is required to shoot and his role in the movie. If people think that Ashtavinayak is a part of this game then I would not like to comment on this, we are just here to perform.
Blue is touted as India’s most expensive film to the tune of Rs 120 crores. Do you think our market supports recovery of such expensive films?
Firstly, we have not spoken about the budget of the film. These are all rumours. The film is still in shooting stages and hence the budget is still under finalization. We will declare the budget at the right time because the movie is releasing in mid 2009. All I can say is that it will be a grand movie and will create history in Indian cinema.
Most film companies are making movies in co-production, but in your slate of films there are only two co-productions and all balance movies are in-house productions. Why is it so?
We are masters as far as production is concerned. We are generally not associated with co-productions. The reason behind these associations is that we are getting a benefit of working with a star like Sanjay Dutt in one film and with Himesh in the other.
We would avoid co-production in future in maximum number of films, unless if there is a good opportunity and mutual understanding.
What is the current status on Shree Ashtavinayak’s exhibition business?
Exhibition business started in 2004-2005, it is still a tiny segment for us. We manage these theatres on a case-to-case basis with no fixed contract. We started that business to be an integrated company with a value chain consisting of production, distribution and exhibition.
Presence in the exhibition section indirectly passes value to the distribution section, which is turn passes value to production. Like for instance; we get first hand reaction of the audiences, which in turn helps us in our home production and distribution.
With so many director and actors turning producers, do you see it threatening or complementing a company like yours?
No industry is void of competition. At the end of the day, quality of product matters. Even if five movies release on a Friday, all of them can fair well, provided they are good movies.