Box-Office Collections

Introduction

I like watching good movies in the theatres, after going by the reviews and word of mouth publicity, so far so good but since the year 2010 till date, I have started listening to the news of Select Blockbuster movies earning anywhere from 350 crores to 1000 crores on a Budget ranging from 200 cores to 500 crores. But as a Chartered Accountant and having my feet firmly on the ground about the costs I used to always feel that the producer of the movie tends to increase the Production cost and Revenue generated by the movie for an entirely different cause and could be a clear case of money laundering either single-handedly or with a group of Investors.

What is Money laundering?

Placement

The first step is called Placement, which involves the physical movement of currency or monetary funds derived from Legal / Illegal activities into a less suspicious form. This step is often as simple as taking paper currency and depositing it in an ordinary Bank account or getting a loan at least on paper from a foreign source who has no interest whatsoever in the filmmaking except for some commission on the deal and parting his name for the venture alternatively he could be paid through Hawala had he given the loan genuinely or request to act him as the Distributor/Exhibitor and announce in media promptly that this movie was sold at an exorbitant rate of 5 Million USD and minted Double the amount in the Box Office asking him to remit the money through Legal Channels or have some other Out of account Quid pro quo basis of dealings which is very common and not known to the authorities,there is no authority in India to verify the accuracy of claims of the producer in a foreign country because I have practically experienced it when I was abroad, the entire cinema hall used to have 10 or 12 patrons but was declared a super-duper hit by the planted stories in media that's where my Training in CA raised red flags.

Layering

The second step is Layering. The goal of layering is to separate the illegal proceeds from any connection to their illegal source by taking the funds and making a series of financial transactions that are designed to obscure any audit trail or attempt to follow the funds. Money launderers can layer by inflating the total ticket sales even when the movie is in fact a flop, Cinemas can be classified according to

• Tier 1: Cities consisting of Multiplexes and single-screen cinemas
• Tier 2: Cities same as above
• Tier 3: Cities are mostly single-screen cinemas.

I cannot rule out the possibility of tearing up the tickets upwards at the Box -office in both multiplexes and single-screen cinemas inflating the total collections so as to easily convert the Black money into White money and show it as a legitimate source of income. Once the money has been layered and moved to separate it from its original source, the money launderer will want to bring the money back to him by making it appear as if it is legitimate business earnings. Even the software can be suitably modified as per their Targeted / Budgeted figures of collections.

Integration

And the third step is commonly called Integration. If the money launderer operates a business, one means of bringing the "Cleaned" money back into his control is by overvaluing his assets or overstating his profits. For the types of businesses that deal with large amounts of cash sales and keep only minimal sales records such as having businesses in Restaurants, Shopping Complexes, Retail Stores & Business Etc, Money laundering is easily accomplished because money from illegitimate sources can be combined with legitimate income to hide its original source with relative ease and little risk of detection. There is no clear indication of exactly when money is laundered. Two People Known to me who were total strangers to the business of movie-making suddenly became producers overnight in Tulu& Kannada Films, now I am getting a clearer picture because our Relatively small Tulu film industry with a new release every 2 weeks had a Golden run until the Covid 19 hit them very badly and now it's showing signs of recovery. During 80'S Kannada film industry was producing anywhere between 80-90 films per year but now it has crossed 200 plus and some movies are just produced to get the censor certificate to claim the subsidy amount ranging from Rs 10.00 Lakhs To 18.75 Lakhs Per Film, from the Government of Karnataka which is more than the production cost of the movies thereby making a profit, there is an organized syndicate which was caught and investigations carried out by the committee some time back.

Conclusion

Take the Box Office Collections with a pinch of salt and enjoy the movie. Let's get entertained at least and conclude with the words of Actress Vidya Balan" Entertainment, entertainment, entertainment " from her National Awardaward-winning movie The Dirty Picture.