Demonetisation has hit Kollywood hard: Why the Tamil film industry is struggling to cope

Even as the merits and pitfalls of Prime Minister Narendra Modi's demonetisation drive are being discussed (and playing out in real life), what cannot be denied, is the impact it has had on the Tamil film industry.

Shoots of several Kollywood films have been stalled, theatres — especially those in rural areas of Tamil Nadu — are cutting down on shows, and release dates are being reshuffled. The footfalls in cinema theatres across Tamil Nadu are reportedly at an all time low. And financiers big and small, the backbone of the Tamil film industry, have stopped funding projects and are asking for immediate repayment of loans taken at high interest rates.

(L-R) Posters of Saithan, Kaththi Sandai and Kavalai Vendam

Kollywood doesn't work like Bollywood.

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For one, unlike the Hindi film industry, Kollywood does not have any corporates making films. It is small-time or cash rich individuals who produce films. This has resulted in a lot of black money flowing into the industry.

Traditionally, it has been a cash-and-carry economy that runs the industry, with the black to white ratio as high as 60:40. It is an open secret that a certain part of the stars' remuneration are paid in 'black' as producers find it difficult to pay white money. This has resulted in stars' fees going up due to easy availability of cash.

Payments to crewmembers are also made in cash.

Film producer PL Thenappan points out, "The industry is in bad shape as there is an acute shortage of small notes, mainly Rs 100 and Rs 50. We need hard cash on a daily basis to shoot; light boys and junior artistes have to be paid in cash.”

Almost all deals in the industry were in Rs 500 and Rs 1,000 notes.

There is also a cap on cinema ticket prices in Tamil Nadu, leading to a situation where theatres (mostly in small towns and rural areas) used to charge two to three times more than the government approved rates. Sales of food and beverages in canteens are in cash, as are ticket sales. Only in cities — that too, at the multiplexes — do people go in for online bookings and payments through credit and debit cards.

Gautham Menon’s Achcham Yenbadhu Madamaiyada took a fantastic opening in the urban areas of Chennai city, Chengalpet (suburbs) and Coimbatore. But other films, released after the demonetisation drive was announced, have failed to attract the audiences. Rakesh Gowthaman, managing director of Vettri Theatres in Chrompet, a suburb of Chennai, said: “For the common man, cinema has suddenly become the least of his priorities. The walk-ins for films in my screens have come down drastically. Most of the audiences who are coming in have booked tickets online and my canteen sales are at an all-time low.”

The industry is now looking for solutions to cope with the cash crunch.

The release date of several films have been reshuffled: Vijay Antony’s Saithan, which was to release on 17 November, has now been pushed to 1 December. Vishal’s Kaththi Sandai, which was to release on 25 November, has been postponed indefinitely. Its producers (Cameo Films) issued a formal statement that read: "We made Kaththi Sandai with the aim of entertaining the Tamil audience world over. But given the current situation, we find it unjust to release the film while thousands of people suffer in the money crisis.”

The basic problem is that financiers are not willing to settle their accounts by taking the “scrapped” notes. They want the money they lent — a large part of it in cash (black) to be returned in cash with valid notes. Most producers are finding it difficult to source new Rs 2,000 and Rs 500 notes and it would be impossible to pay back (such huge sums) in Rs 100 or Rs 50 notes!

Meanwhile, the mad rush to release new films continues. Five films are scheduled to release this weekend (26-27 November), out of which only the romcom Kavalai Vendam — with Jiiva and Kajal Aggarwal as the leads — has the star value that may help garner a good opening. The rest of the slate comprises little-known, small films looking for a theatrical release. Some of these films were lying in the cans for months and now have a chance to get a theatrical screening. Another dozen films are trying for a December release, as the industry is running helter skelter following demonetisation. Industry analysts are of the opinion that the situation will take at least six to eight months to return to some kind of normalcy.

Until then, Kollywood will be holding its breath.