Hyderabad: Austerity and discipline are not terms one would ordinarily associate with the Telugu movie industry, India’s most prolific, famed for opulent production values and highly paid actors worshipped as demigods by their fanatical fan clubs.

Yet, they have become part of the dialogue between producers and movie stars in the Andhra Pradesh capital of Hyderabad, as the industry known as Tollywood reels under increasing costs—mainly because of budget overruns— and poor box-office collections.

Changing trend: On the sets of Magadheera, one of the two Telugu blockbusters in 2009. Tollywood reels under increasing costs, mainly because of budget overruns, and poor box-office collections.

The Telugu Movie Artists Association, an actors’ lobby, in a recent letter to the Telugu Film Producers’ Council, proposed multiple belt-tightening measures to save Tollywood.

The measures apply to everyone. Directors will have bound scripts ready before filming begins and refrain from improvising on the sets; actors will take a cut in remuneration and do more films; fight and dance sequences will be rehearsed beforehand so no raw stock is wasted.

The shooting of big-budget projects will be wrapped up in no longer than 80 days and smaller productions in 50 days. The quantity of film they will be allowed to use up will be limited, too.

In Tollywood, it amounts to an all-out war on profligacy that’s much needed, perhaps belated. Including dubbed films, 277 movies in the Telugu language were released last year, according to a November report by the consultancy Ernst and Young. Only 13 films of the 120 made locally broke even, says T. Prasanna Kumar, secretary of the producers’ council.

The industry has been hit by changing audience preferences, piracy, high ticket prices in multiplexes, inflation and dubbed English films eroding the market share of local productions. It has also felt the impact of unrest over the campaign for a Telangana state to be carved out of Andhra Pradesh.

But the main damage has been done by a trend of overspending.

“Tollywood is currently swamped with inexperienced, first-time producers who do not budget their films before shooting begins," said a film producer who didn’t want to be named.

Out of last year’s releases, only two films, Magadheera and Arundhati, were hits, defined as a movie that makes more that Rs30 crore in domestic theatrical revenue.

While Magadheera was a big-budget project (costing Rs42 crore), Arundhati was a medium-budget production (Rs13 crore). The remaining failed to recover costs.

“There is a lack of training institutes unlike in the Mumbai film industry, because of which many producers jump in without knowing the logistics of film-making," says Suresh Babu, whose production and distribution company Suresh Productions released two of this year’s commercially successful films in Telugu— Leader and Namo Venkatesa.

Producers complain that the industry is losing its reputation for efficiency and technical competence because of trends such as starting filming without a script or a planned budget, and shooting unplanned fight sequences for days together. The biggest component of the growing costs, however, is actors’ payments.

The biggest of stars charge between Rs4 crore and Rs9 crore per film, according to people in the film industry who didn’t want to be named. N.T. Rama Rao Junior, the grandson of the late actor-turned-politician N.T. Rama Rao, who starred in one of this year’s hits Adhurs, charges Rs7 crore per film, said a film producer.

“Over the last seven-eight years, actor cost has gone up from 35% of total cost to about 65%. This means the rest of the budget has shrunk to 35%, leading to poor quality of film making," says Suresh Babu.

The Movie Artists Association has proposed penny-pinching to save on costs: switch to buffets on the sets from ordering food specially for the stars, avoid five-star hotels during outdoor shooting, fly economy class. Actors won’t get any petrol allowance and will be paid in instalments, it said in the letter to the producers’ council.

Industry outsiders

Such austerity drives aren’t without precedent. In the 1970s, N.T. Rama Rao and Akkineni Nageswara Rao, the then superstars of Telugu cinema, accepted pay cuts of 95% on salaries of around Rs3-5 lakh per movie as the industry went through a similar recession.

The producers’ council has its own prescription to cure the industry’s ills including measures such as opening training schools, a talent management bank and cooperative systems for purchasing common requirements for film-makers such as set materials. Financial measures include actors doing more films a year at a lower fee and accepting only cheque payments.

“The trend of overspending exists in Andhra because producers from a non-film background are a bigger part of the Telugu film industry than other south Indian film industries like Tamil and Kannada," says Tammareddy Bharadwaja, a film producer.

Suresh Babu agrees. “There are only 10-15 producers today who are in the industry for good."

The Telugu film industry shifted gradually to Hyderabad from Chennai, then known as Madras, after Andhra Pradesh was formed in 1956.

In 1984, wooed by tax and infrastructure incentives offered by then chief minister and former superstar N.T. Rama Rao’s Telugu Desam Party government, many producers chose Hyderabad as their base.

“Films running to packed houses started making extraordinary profits overnight," says Bharadwaja. “This led to an influx of film-makers from other boom sectors over the 1980-90s—first the excise contractors, followed by the infrastructure developers, followed by software entrepreneurs."

Beginning of ‘the mess’

Suresh Babu explains further that the nature of the industry attracts short stints.

“The market size of the Telugu film industry is less than Rs800 crore, and yet it brings in a lot of passion and emotional stake. This is why software engineers in the 1990s didn’t think much of coming back from the US, making one film, and exiting. This is when the mess began," he says.

To be sure, there are success stories in the model. Ashta Chamma, a film produced on a budget of Rs2 crore by ex-stock broker Ram Mohan and directed by software engineer Shekhar Kammula, became a commercial success, warranting a B-school case study.

But success eluded many others and failures continue to mount. As the Ernst and Young report puts it: “If the present situation were to continue, the industry may witness a spate of bankruptcies and shrinkage in business activity."

Will the austerity measures help?

The producers’ council’s Prasanna Kumar is optimistic. “With cost-cutting measures, and low piracy rates after the anti-piracy drive last year, we might just see a higher number of hits in 2010. We have already seen five films break even," he says.

Suresh Babu is sceptical. “If these measures do work, we may up profitability by 20%. But we have to remember that we are trying to change deeply ingrained habits here. This will take a lot more than a set of recommendations."