Monday, February 1, 2010

The art market in 2004

Now that I'm back in Bombay, I can answer Elizabeth Flock, one of the writers of the Forbes article on Neville Tuli, which I blogged about last week. I stated in my blog that Forbes underestimated the size of the art market in 2004, to which Elizabeth replied, "There are several Indian art experts who have estimated the value of the art market at only Rs 50 crore in 2004."
I have before me a chart displaying the total revenues and break up of auctions of Indian art in 2004. Sales were $13 million, which, at the 2004 average of 45 rupees to a dollar, works out to 58.5 crore rupees. Saffronart was the biggest revenue earner, accounting for 35% of total sales. Christie's had a 32% share, Osian's 17%, Sotheby's 15% and small players the rest.
At that time auctions did not constitute a substantial portion of total sales of Indian art, and it is reasonable to believe the market was four or five times that 58.5 crore figure, which tallies with my guesstimate of a total market size of 200 to 300 crores in 2004. The very next year, auction house sales jumped to $51 million, definitely a higher growth rate than that of the market as a whole.
Forbes won't reveal the names of the experts they consulted, but it's clear those people either didn't know what they were talking about, or chose for some reason to hide the truth.


torntash said...

My data for the period agrees with yours - though is it not inclusive of buyer's premium? Since Art Tactic entered the scene over the last two years, there seems to have been a move to omit this froth from the numbers.

I also agree generally with your guesstimates although it is terribly hard to get any accuracy, especially as the market was then dominated (value-wise) by secondary sales for specific moderns. Back in 2004, on the primary market for contemporaries, you could have picked up a Rashid Rana from me for Rs.15,000.

Not sure what the reason Forbes was pumped with incorrect info. I would have thought it was ignorance on their informants part rather than malice.

Girish Shahane said...

Thanks a lot for that note, Torntash. the underestimation might also be a case of misinterpretation on the part of Forbes. Consider this passage: "When Osian’s Art Fund was launched, an advisor with a foreign institutional investor concluded that it was too risky to bet on. He argued that the total value of transactions in the art market had been Rs. 50 crore in 2004, Rs. 225 crore in 2005 and Rs. 311 crore in 2006 until June."
These figures agree well with the size of the art auction market in those years. Maybe the 'advisor with a foreign institutional investor' was speaking of auction sales and Forbes took it to refer to the entire Indian art market. They then made up the story about other experts, or asked somebody who was clueless.
Still, loads of good info in the story, no?

torntash said...

I agree with you that there is really good info in the story and, as a whole, is one of the best researched investigative pieces dealing with the Indian art market ever to have been published. It has certainly caused a stir among the players in the scene who feel this topic was well overdue analysis in the public domain.

My hope is that other media organisations might take their cue from this piece. Of course objectivity is hard if you are already in bed with those needing to be held accountable. I quote from Forbes talking about the ET Art Index: "The index was also created and managed by Osian's in association with the Economic Times, a financial daily owned by the Bennett, Coleman and Company that is an investor in Osian's." Many of us were just waiting for that to be stated publicly.

adrian mckinty said...

My question is more of a meta one. What has crore become a significant unit of measurement in India but has not caught on elsewhere? We know many Indian words have become popular in English, why not crore or lakh?

Girish Shahane said...

I don't know, Adrian. I think lakh is a particularly useful term, there ought to be some unit between a thousand and a thousand thousand. Some Indian financial organisations and media outlets have shifted to using the million and billion system to express quarterly and annual results, and it causes much confusion, but it helps to be aligned to the global norm.
India evolved a fabulous numerical system, which the world took over, but in doing so somehow missed out on lakhs and crores.

globalbabble said...

Poor Neville Tuli. I quite liked his hair. Perhaps, the article should have been titled "hairy tales".

Girish Shahane said...

He still has his hair. I had hair when I first met him.

manish nai said...

Haha...Like this Girish nice sense of humor!