Flop show for Bollywood stocks as box-office collections dry up

A 'TEAR JERKER' is on show for shareholders of Bollywood production and exhibition houses, which are still down 70-80% since the market peaked in January 2008.      According to media analysts, lesser number of big-banner films, an influx of niche crossover films, low success rate and declining audience turnout have wrecked havoc on the bottomlines of production houses and distributors. "Year 2009 has been very bad for Bollywood companies," said Anand Shah, media analyst, Angel Broking.      "Business was dull during the first three months of 2009 as a result of early school and college examinations; IPL and Champions League stole the limelight between April and June. The producers-multiplex strike and the resultant two-month no-release phase hit the industry very badly. The Swine flu also delayed a few good releases and reduced occupancy alarmingly," Mr Shah added. According to analysts, average occupancies in multiplexes have declined to as low as 25-30% levels in FY2009. Film content is said to be the major culprit for low audience turnout. Movies like New York, Raaz (The Mystery...), Love Aaj Kal and Kambakth Ishq managed to sail through, thanks to a strong star-cast and superior promotion.      In comparison, 2008 was a better year with a blockbuster release (Rab Ne Bana Di), 3 super hits (Singh Is King, Jaane Tu and Jannat) and 3 hits (Race, Golmaal Returns and Jodhaa Akbar) out of 30 films released. (Source:Boxoffice India.com). According to analysts, multiplexes in north Indian cities and southern cities have better occupancy figures than other parts of the country. Even in a metro like Mumbai, there is no weekday movie-going culture; average occupancy is less than 30% at most multiplexes on weekdays.      "There is no way you can increase occupancy rate; you can't go on increasing ticket prices as well. The only way to increase revenues is by adding more exhibition centres," said Aashish Upganlawar, media analyst, Sharekhan.      According to analysts, the business model (of distribution and production companies) makes them high risk investments. While occupancy risk is the dominating factor for exhibitors, selling the film is a major task for producers. Distributors are sceptical about buying movies; the content has to be really good for films to sell. Moreover, pre-sale values (of spots, add-ons and merchandise) have come down drastically over the past few months, experts say.      "There has to be some real good reason for investors to invest in Bollywood stocks. There is too much risk in the business. There are better alternatives in the market than film stocks," Mr Upganlawar added. Echoing Mr Upganlawar, Preeti Saxena, media analyst, SMC Global Securities, said: "Investors with a one-year horizon can invest in film stocks. Film stocks are likely to do well during Diwali and New Year with several blockbuster releases," Ms Saxena added. According to Mr Shah of Angel Broking, the conscious decision of industry peers to reduce starcast remuneration and tighten filming budget will improve profit margins of film companies.      shailesh.menon@timesgroup.com