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The multinational effect news
Alok Agarwal
24 February 2001

The multinational effect

"It was liberalisation of the economy and its opening up way back in 1992, which gave the much desired impetus to the event management industry", pointed out Mr. Brian Tellis, director and founder member of Fountainhead Promotions & Events.

Fountainhead is a leading name in the industry and is known for organising events for the Times of India group, including the Smirnoff war of DJs and the Brand Equity Quiz. The company also provides "event support" to two of the most well recognised events in the country - the Femina Miss India contest and the Filmfare Awards function. Events like Femina Miss India and its male equivalent Graviera Mr. India contests have started pulling in larger than ever crowds and corporate sponsorships.

Reminiscing, he pointed out that, as the economy began opening up, a lot of multinationals came into the country and brought with them the culture of promoting their products and brands through events and programs. "Product managers for Indian brands looked around and followed suit. The trend truly caught on. A positive fallout of this has been the fact that the approach to events and programs became more structured, something which was missing earlier", explained Mr. Tellis.

As it usually happens with most sunrise industries, the influx of new people in the sector has simmered down substantially with time and the present players can be truly addressed as survivors. Points out Mr. Mirwani, "In 1995-96, almost 15 new companies were being formed everyday. However, most of them have downed their shutters. Today the numbers are low. The industry is looked upon as a serious business venture, where gross returns are in the order of anything between 15 per cent to 20 per cent Projects are not of long term nature and returns as well as results are almost instantaneous."

The fastest growing segment

The live concert circuit is probably the fastest growing segment of the business. As per industry estimates, it has grown more than 200 per cent between 1995 and 1999. The last three years have witnessed a spate of international artists coming to India to perform in live events.

With Indian films and film celebrities always being close to the heart of Indians, wherever they may be located, there is a huge potential for the event management industry to organize live shows abroad. The last few years have seen a plethora of such shows held in countries like the US, UAE, UK and South Africa, where there is a large non-resident Indian presence.

These shows have evoked tremendous response not only from the Indians settled there but also from Pakistanis, Sri Lankans and UAE residents. Shows already organised in the US featuring leading film artists have been a complete sell-out, with people craving for more. The UAE with a large concentration of South Indian population has been a favourite stop over for South Indian film artists who have always performed to a full house. Moreover, with the growing expatriate population in countries like Australia, Canada and New Zealand, there is a huge untapped potential for shows/events to be organized abroad with Indian "stars".

Organising international artists to perform in India is very expensive. Accordingly, many companies now prefer organising promotional events featuring domestic artists thereby adding a new dimension to the event management industry. However there are companies which still prefer to have international artists perform in India. For example, Pepsi aims to bring at least two internationally renowned performers to India each year.

The future

If the projections made by FICCI is true, the biggest gainer in all this would be the government, which collects taxes on such events. According to FICCI, from Rs 100 crore collected in 1999, the tax revenue can rise to about Rs 1,007 crore in the year 2005.

Industry experts, however, feel that if this growth is to happen, certain anomalies are to be cleared:

  • Entertainment tax rates, which forms a big chunk, needs to be rationalised across the country. Presently different states levy different tax rates, with southern states levying lower taxes. Funds thus saved can then be reinvested in more "Events", which will help generate more revenues for the government.

  • Apart from the tax rates, the payment of entertainment tax also poses a major problem to the organisers. Currently the tax has to be paid before the tickets for the event are sold and the relevant department stamps the tickets for the tax paid. This means that if the amount of tax paid is lost if the tickets remain unsold. The government should only levy tax on the exact number of tickets sold.

  • In addition to the entertainment tax, an event management company is also required to pay service tax. A clear case of double taxation, the service tax element should be withdrawn.

  • For holding such events a large number of permissions need to be sought. These include permissions from the police departments (for use of loudspeakers, traffic etc.), customs (in the event of foreign artists being used), local municipal corporation and central government among others. This imposes unusual hardship on event management companies as well as the artists. The industry feels that instead the government should introduce the facility of single window clearance, which will expedite matters and reduce the time taken for such permissions from the current one month to a few days.

  • Professional charges by organisations like Indian Performers Right Society or IPRS and Indian Music Industry or IMI are unjustified and arbitrary, almost amounting to dual form of taxation, allege industry sources.

But, despite these hurdles the industry is poised for significant growth. Says Mr. Tellis, "I see phenomenal growth ahead. More and more brands are coming into the country and more and more are realising the potential of exposing and promoting their products through events on a 1:1 basis with target audiences. Brand custodians are realising that if they have Rs 100 in their kitty to promote their products, then some part of it must be earmarked for events in addition to the print and the television media."

According to Mr. Tellis as compared to advertising in the print or television media, events tend to hit the target audience spot on. "Here the conversion rate is much higher and, therefore, to that extent, return on rupee is also much higher."

However, industry players are unanimous that promoting brands through events is definitely not a replacement for the print and the electronic medium. They can at best supplement the two streams. That in any case is good enough!

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The multinational effect