Kangana Ranaut raised questions on the credibility of Gangubai Kathiyawadi’s box office collections. Financial transparency in Bollywood has always been clouded with doubts about the sources and utilisation of funds. Involvement of illegally earned money of underworld and politicians, and undisclosed income of businessmen in Bollywood supports Kangana’s aspersions about Gangubai’s collections.
How does this business work?
Say ABC (politician, mafia don, local drug lord, businessman, etc) wants to convert his black money into white, he will use a producer as a vehicle for conversion. Firstly, he (in case of businessman) or his front (in case of politician, mafia don, local drug lord) becomes an investor / financier / coproducer in the film. So a small amount is given in cheque and balance is given in cash. This cash is used to pay everyone from crew to vendors to film stars and directors. Now the story begins. This is followed by a sales of tickets. It is easy to make a show housefull by exhibitor (cinema hall / multiplex owner) just “cutting” tickets. So, a “person” would give money to the exhibitor/(s) and the exhibitor would “cut” tickets and account for that money as revenues from sales of tickets. The exhibitor keeps his share (in which again he would have a “deal” with the “person” whereby he would either return that money after deducting his “fees” and tax payable on the income or the exhibitor would become a conduit for that “person” to circulate that money in the market. Exhibitor retains his share of box office revenues and the balance money goes to the distributor. Distributor deducts his commission and balance amount goes to the producer. This is how producer gets money in white, which is either deployed in his next film or is returned to the “person” investing in the film.
This kind of box office success also helps to bolster the brand and reputation of the film stars, who can then command a better price in the brand endorsement and advertisement market. The producer and directors are benefited as their credibility improves and they can get more real investors in his films.
This also shows how the distribution and production businesses are tightly intertwined and under the singular control of politicians and underworld.
This brings us to the other issue of Kashmir Files not getting enough number of screens while other movies get 2,000 – 3,000 screens. The phenomenon that controls this issue is the ownership and control over multiplexes. Most crucial link in the chain is the control over distribution and exhibition. In 2010, India had around 10,000 single screen cinema halls and around 800 multiplex screens. Around 60% of the total single screens were in 4 South Indian states, and around 10% in Uttar Pradesh. In 2019, India has around 9,600 screens with nearly 3,000 multiplex screens. This shows that in last decade more than 3,600 single screen cinema halls have either shut down or got converted into multiplexes. According to global consulting firm E&Y, multiplexes now account for 50% of the box office collections in
the country. This shows a slow and steady transition from unorganized widely dispersed single screen industry to organized cartelized multiplex industry.
Bollywood Mafia controls the same with extreme impunity. Can any pro-India movie get released and get adequate number of screens across the country? The answer is a very big NO. Between three large production houses, they control a significant majority of screens across the country. Multiplexes are a natural choice of producers, due to their trust on and control over the exhibitor due to their interlinkages and transparency in reporting box office collections. Dwindling single screens and rise of multiplex chains, has increased the stranglehold of Bollywood Mafia and ensures that outsiders’ films are not released or they don’t get adequate screens.
Now you know why Kashmir Files didn’t get enough number of screens. Now you also know why Kangana has raised aspersions on box office collections of Gangubai Kathiyawadi. The Bollywood Mafia connections are overtly obvious.
(Author is a Chartered Accountant by qualification and a Corporate Finance and Investment Professional. He is also the author of “Diagnosing GST for Doctors” published by CNBC Books 18. He tweets from @sumeetnmehta)