View from Delhi: Bollywood catches the fancy of NRI investors

It's a big jump from steel, trucks and cement to Amitabh Bachchan and Madhuri Dixit, but some business groups in India have decided to take the plunge. There is apparently much more money in making films than in making steel, and Indian corporates, led by Tatas, will be investing Rs3-4 billion in Bollywood this year.

According to latest reports, the Tatas themselves, who have scrupulously avoided contact with Bollywood, will be spending up to Rs250 million in the next couple of years. This will be done done through a company called Tata Infomedia, whose main business is printing business directories.

Corporate funds will be involved in as many as 50 films this year, including four films each from old stables like Mukta Arts, Rajashree Productions, Tips and Yash Chopra, and six to eight films from newcomers like Tata and an NRI group called Metalight Productions.

Lured by glamour and high returns, NRIs have apparently decided to invest in Bollywood in a big way, with Metalight, a Singapore-based company, leading the way.

Metalight has brought in about Rs600 million, all of it in "white" money, which is unusual in film industry. It plans to make six films by March next year.

The industry is getting a big boost with the entry of Tatas. For if Tatas are here, can Birla and Reliance be far behind? Reliance already has an entertainment division headed by an old pro, Amit Khanna, who is also an adviser to FICCI, an industrial association, on entertainment industry.

The film business is now a proper industry with lending banks setting guidelines for investment and borrowings.

It is now much easier for even a newcomer to approach a bank for funds, provided he sticks to the guideline. Companies making TV films, as well as ad films are also entitled to borrow from banks and do not have to chase private financiers of dubious reputation, which used to be the case until now.

Foreign companies are also making a beeline to Bollywood. The TV segment is already crowded with foreign electronic media giants like Sony, Fox and Turner Broadcasting, who have been buying up Indian films by the dozen.

Sony shows more Indian films on TV than even the Indian channels. It has not yet gone into film-making but might decide to get into the act soon.

Now that the print media has been thrown open to foreign investors, there are reports that Indian media groups are looking for foreign partners and vice-versa. Newspapers like the Financial Times of London, the Wall Street Journal and even the New York Times may soon have tie-ups for publication of their newspapers in India.

There are also plans for bringing out Hindi editions of some of these newspapers in the country, since Hindi newspapers are doing much better than their English counterpart, though advertisers still prefer the latter.

All this is taking place at a time when things are less than rosy on the economic front. GDP growth this year will be around three per cent, the lowest in ten years. There will be no growth at all on the farm front and foodgrain production may be down by 10 per cent.

However, grain godowns are full and foreign reserves have just crossed $60 billion. The Reserve Bank has just asked business professionals like consultants, engineers, accountants, etc to keep their money in foreign banks if they wish to and they don't have to bring it home.

It's quite a change from the times when you had to account for every penny earned and spent abroad, even though it was your own money!