Corona crisis has literally paralyzed Tollywood. No film shoots are happening, no movie is releasing in theaters. No work is going in filmmakers' offices. There is no income for the people working in the film industry.
The movies that are supposed to be released remained as dead capital. When it comes to salaries, some of them are giving away with 50% pay cuts and others have stopped giving salaries. The lives of staff in the movie theaters and movie representatives are horrible now.
This is one side of the coin. The other side of the coin is even more pathetic. The burden of interest that is increasing with each passing day on the producer is the main thing. The production of a medium or big film is not possible without finance.
The interest for the credit amount that is raised by any top production house would be around Rs. 1.5 to Rs.3. It is very fortunate if the producer is able to raise the amount for one and a half rupee interest.
It is based on the circle the producer has outside the circle of regular financiers who has 'additional' income.
Roughly, it will be more than Rs. 15 cr finance for a Rs.30 cr movie. So, the interest would be around Rs. 30 lakhs per month. If the movie is stalled for a period of three months, the burden of additional interest would be around Rs.1 cr. There are several films that are stopped midway, that are stopped in the finishing stages.
There is an estimation that a minimum of 10 banners are paying Rs.50 lakhs to Rs.1 crore and more interest to their financiers. This is about big banners and medium banners. There are several small banners that are going through the same situation.
There is an estimation that Tollywood is taking an additional burden of 10 cr of interest on Tollywood. Not just the movies under production but some producers have given advance to the heroes by taking loans from the financiers.
The great thing we have to observe in the industry is that if a producer takes a loan for a project, it will keep on increasing till the completion of the project but there will not be a scenario where it will be returned before the completion. The amount will be increasing and it is an additional burden on the project.
From March 15 to July 15, i.e, for the period of the last four months, there is a burden of Rs.40 crores on Tollywood as per the estimation.
Producer's Guild said to have conducted meetings regarding the issue but they couldn't find a solution to the problem as per the talk. Financiers said to have clarified that they are not ready to decrease the interest and they are not ready for losses. They have reportedly questioned the producers whether they have shared the revenue when the achieved huge profits in the films.
Some production companies reportedly came up with a new proposal related to the stalled projects. The are proposing that one third of the interest loss should be borne by the financiar, the second one third should be borne by the hero (It should be deducted from his remuneration), the producer has to bear the remaining part. The proposal sounds logical but we do not know whether it will work practically or not.
If the corona crisis continues for two more months, the interest burden of Tollywood will exceed Rs.60 cr as per the industry people. If we include office rents, maitenance, half the salaries the estimations will be much higher.
