A question of collections


Within Mumbai circuit, Thane has grown into a full-fledged territory. But
distributors accuse the local exhibitors of being caught up in tax evasion and depriving them of their rightful dues. The case may well be representative of most other territories, too, they argue. Screen takes up the issue with prominent exhibitors...

ARE distributors getting the proper price for their films from Thane district, which has now emerged as a major sub territory of Mumbai? Most top distributors insist they aren’t, but they appear reluctant to talk about it, saying it’s a sensitive issue.

The reason is very simple. Most cinemas in Thane are known in trade circles as "cutting centers." Distributors of big star cast films manage to get a better bargain than those of other films from the exhibitors in Thane, though even they do not seem to be getting what they demand.

Within Mumbai circuit, Thane has emerged as a sizeable territory, fetching as much as Rs 15 lakh to 35 lakh, depending on the star cast and the banner. In the entire Thane district there are about 90 cinemas. Ticket prices here vary from time to time, depending on the films to be shown, hence it is very difficult to estimate a film’s weekly collections from a particular theatre even if the seating capacity remains a constant. A rough calculation of the gross income from 29 cinemas in the district (barring Ambernath, Ulhasnagar, Virar and Vasai ) comes to Rs 164,25,727 from 28 shows if the cinemas remain houseful. But the figure is based on the published statistics in the trade magazines. Unfortunately they are not accurate figures because they have not been updated.

For instance, as per the figures given by CN Mirani of the 994-seater Anand Cinema, the collections per show come up to Rs 33, 540. Which means that for 28 shows, the collections will come up to Rs 314, 98,084. The trade papers, on the other hand, still peg the collections per show at Rs 6994, per show and for 28 shows at Rs 195,832.

As per the trade papers’ statistics, if the 29 cinemas were to run to full houses for 28 shows, their collections would add up to Rs. 164,25,727. After you’ve subtracted the entertainment tax from it, the industry’s share would be approximately Rs 66 lakh. Out of this, if 50 per cent is considered as the theatre rental, the distributors should get a share of Rs.33 lakh per film. Mind you this is only from 29 cinemas and not the entire Thane district.

Let’s assume that the revenue from the remaining cinemas come up to Rs 60 lakh, what should be the total amount a distributor may expect from Thane cinemas? Therefore, if a distributor gets only Rs 20 lakh or even Rs 35 lakh for a hit film, it would still be way below the deserved figure. Based on the calculations above, a distributor should get at least Rs 40 lakh for an above average film and Rs 25 lakh from an average performer at the turnstiles.
Why then are the distributors, who’re obviously well-versed in the trade, and know what collections their film must have netted in each theatre, settling for less? And to top it all why aren’t they willing to even make an issue of it? Is it true that no distributor can afford to cross swords with the local cinemas in Thane? CN Mirani, president of the Theatre Owners Association, and Pradeep Bhaiyya who controls about 15 cinemas in Thane and is a prominent sub-distributor, say the distributors are expecting more than they deserve. With the collections of films falling by the day, the sub-distributors like Bhaiyya are acquiring films mostly on a commission basis, though they do take films on a minimum guarantee (MG) basis if they feature the big stars.

Thane is a satellite town of Mumbai. Because of its close proximity to the metro, Thane and its surrounding areas have been developed as an industrial belt supported by CIDCO. However, some of the adjoining towns such as Bhiwandi had become famous for its handlooms much before the industrialisation of Thane had begun. Similarly, Ulhasnagar too had developed into a prominent trade center for its notorious, cheap quality commodities. With the earning power growing among the local population, cinemas began to thrive. Today, collections in cinema houses all over the country have come down to from 50 per cent to 30 per cent owing to piracy and the competition from the satellite channels. Piracy has grown into a full-fledged industry of its own in the territory, with even the latest movie releases being aired on the cable networks, sometimes on the very week of their premiere at cinemas.

According to Pradeep Bhaiyya, there are nearly 90 cinemas in the territory, including the touring cinemas, though from the trade point of view there are only 35 centres. Mirani adds that there are no cutting centers any more, owing to the strict vigilance enforced by the Thane Collector, Mukesh Khullar. Mirani declines to discuss the issue further, but whether he cares to admit it or not, Thane cinemas are still notorious as "cutting centres," meaning they do not show the exact collections, so that they can avoid paying entertainment tax.
Obviously, the distributors give films on a fixed hire knowing fully well that they cannot get the exact figures of weekly collections. This evasion of entertainment tax, in collusion with the district authorities, has put the distributors in a quandary. And they refuse to make an issue of it for fear they may not get even the pittance they’re currently offered if they do so.

So there we have it, a curious Catch 22 situation. Thanks to the stringent measures adopted by the Thane district collector, Mukesh Khullar, against entertainment tax evasions, at least some cinemas in Thane city have begun to show the exact collections, as per rules laid down by the tax authorities.
Whether the arguments of CN Mirani and Pradeep Bhaiyya hold good in terms of falling attendance is disputable because the majority of films sold for the territory are acquired only for a week, barring few exceptions. A new trend in distribution has started of late, whereby distributors distribute films in parts like Thane, Gujarat, Saurashtra and Karnataka to sub-distributors from whom they collect a lump sum amount for each film. Thus the main distributors pass on their ‘burden’ to the sub-distributors. The arrangement may work well for them, but in the long run, the business of films becomes restricted.

Screen spoke to several distributors and exhibitors to find out what amount ought to be realised from the Thane segment and what is actually being given to the distributors currently. According to the government of Maharashtra, which publishes the entertainment tax collections in the state every year from all the districts, Thane district has given Rs 785.16 lakh in 1994, Rs 814.17 lakh in 1995-96, Rs 926.68 lakh in 1996-97, Rs 1151.37 lakh in 1997-98, Rs 1401.87 lakh in 1998-99 and Rs 1609.50 lakh in 1999-2000. This shows a rampant tax evasion as well as withheld shares from the area to the distributors.

According to CN Mirani, there are about 45 cinemas in the district which come under the Thane sub-distributors’ area. It covers the four cinemas of Ambernath, six cinemas of Ulhasnagar, six of Dombivli, seven of Kalyan, eight each of Thane city and Bhivandi and two cinemas of Panvel. "The prices of films for the territory have shot up. Previously each cinema exhibitor used to pay a fixed hire and book films on his own. Now there are sub-distributors for Thane territory who buy films for the entire area and then distribute them among the cinemas. The hike in prices has been 100 per cent from what they were five years ago. Films like Raju Chacha fetch around Rs 20 lakh to Rs 25 lakh, while films like Khiladi 420 fetches Rs 10 lakh to Rs 12 lakh. Now, one person controls all the Thane cinemas. There isn’t much that separates the Thane moviebuff from his counterpart in Mumbai, as far as tastes go, except that action films do run in small towns like Shahapur and Shahad. However, there is no market whatsoever for English films. Even the dubbed English films have not done well in Thane," he points out.

However, all is not well with Thane cinemas. "Sub-exhibitors who pay minimum guarantee or fixed hire stand to lose heavily when films flop. There is a shortage of films for the cinemas. When Raju Chacha and Khiladi 420 were released, only two cinemas in Thane city could show them, with all the remaining six cinemas having to be content with repeat runs, for which attendance was as low as 20 per cent. If piracy and competition from the satellite channels continue to further eat into movie collections, most of the cinemas in Thane district may have to close down. This is because the cinemas can’t pass on the high incidence of expenditure they incur, following the hike in wages, electricity tariff, carbons, water taxes, repairs and maintenance, all of which have shot up by 100 per cent. The exhibitors say that even the measly Re One they get by way of service charges is not enough to meet the taxes, which also include property taxes," Mirani added.

Pradeep Bhaiyya adds he takes films on a commission basis because collections in cinemas have gone down considerably, and as such, he’d rather not take risks. Though Thane has about 90 cinemas, only 38 centres offer good collections, and all the rest are weak centres. He said he had acquired Mann for Rs 35 lakh and suffered heavy losses on it. He also revealed that big budget films fetch about Rs 25 lakh while the other films fetch about Rs 15 lakh from Thane district.


MSM Desai