Multiplexes rake in the rupees in Bollywood-mad India

By Nandita Bose and Abhishek Vishnoi

MUMBAI (Reuters) - For a country that produces twice as many movies a year as Hollywood, India has a problem that's making cinema theatre operators beam: a shortage of modern multi-screen cinemas and plenty of increasingly affluent film fans.

Multiplex operators like PVR Ltd , Inox Leisure , Reliance Mediaworks and Mexican chain Cinepolis are scrambling to set up theatres targeting the rapidly growing number of middle-class Indians willing to pay to watch Bollywood movies in more comfortable surroundings.

These plush theatres, often in big city shopping malls, are a far cry from the single-screen cinemas most Indians still frequent and which range from huge, purpose-built halls to sheds where the deluxe seats are wooden benches.

The potential is huge, provided operators can find the right location in a country where prime urban real estate is costly and in short supply.

Multiplexes account for just 8 percent of India's 12,000 screens but rake in a third of total box office receipts, according to the Single Screen Association of India and a report by consultants KPMG and the Federation of Indian Chambers of Commerce and Industry (FICCI).

Averaging 160 rupees each, tickets at Indian multiplexes cost almost three times more than a ticket at single-screen cinemas, the KPMG-FICCI report said. At the Inox multiplex in a prime Mumbai area, tickets for a recent showing of blockbuster "Krrish 3" sold for as much as 380 rupees each.

"Indians love their movies, their Bollywood stars and the middle class is increasingly ready to spend on a better movie-watching experience," said Pramod Arora, president of India's biggest movie theatre operator PVR, which expects revenue growth of 25 percent a year for the next three years.

By comparison, KPMG forecasts overall film industry revenues to grow 10.8 percent a year through to 2017.

"We want to grow in the bigger metro areas as they have limited real estate available and we want to capture all that first because that represents the prime consumption story in this country," Arora added.

MOVIE MADNESS

Multiplexes made it to India with the advent of modern shopping malls in the past decade or so.

PVR set up India's first multiplex in 1997. Last year, it acquired rival Cinemax and has seen its share price double this year. India has just 8 screens per million people, far less than the 117 per million in the United States and 31 per million in China, according to the KPMG-FICCI report.

PVR runs 398 screens and plans to open another 300-360 in the next three years. Cinepolis, the world's fifth-largest operator, plans to have 500 screens in India by the end of 2017 from 68 now.

Finding the right location, however, is a challenge for multiplex operators as mall development slows along with the economy. Economic growth this fiscal year is expected to be well below the decade-low rate of a year ago.

"We haven't grown at the pace at which we would have liked," said Cinepolis country head Ashish Shukla.

"We entered Brazil later and we are already three times the size of what we are in India because the development of real estate hasn't been as per the commitment made to us," he added. Cinepolis began operating in India in 2009.

Debt is another issue for the industry. PVR is the most leveraged of the listed Indian multiplex operators, according to Thomson Reuters StarMine data, with 6 billion rupees in debt for a debt-equity ratio of one.

"Once the free cashflows are higher than the need for us to grow then obviously we will retire the debt," Arora said. "In the next 4-6 quarters we should be coming to that stage provided we don't get another good acquisition opportunity."

Some investors, however, are cautious.

"The business model of PVR is reasonably good," said R.K. Gupta, chief executive of Taurus Mutual Fund, which owns shares in the company.

"But debt is a big concern for the company and the industry in general. It is fairly high and if say for some reason several movies in a row flop then there might be concerns." (Editing by Miral Fahmy and Tony Munroe)

Yahoo Cricket

Most Viewed

  • Dum Laga Ke Haisha: Bhumi Pednekar’s Journey From An Assistant To A Heroine
    Dum Laga Ke Haisha: Bhumi Pednekar’s Journey From An Assistant To A Heroine

    After Parineeti, it’s Bhumi Pednekar, who is the new heroine.Weighing 85 kgs, she is obviously here to change the way we look at heroines.Rani Mukherji was at YRF recently where she saw portions of the film starring Bhumi.Rani was amazed to see the confidence and screen presence Bhumi had and asked the team to inform her whenever she is around as she personally wanted to meet Bhumi. In fact, Bhumi was also looking into the casting for Maardani and that’s when she had interacted with Rani …

  • Who Is Twinkle Khanna’s Daughter Nitara Buying Flowers For?
    Who Is Twinkle Khanna’s Daughter Nitara Buying Flowers For?

    Proud parents Akshay Kumar and Twinkle Khanna never got their daughter Nitara Khanna Bhatia publicly. In 2012, during the death Anniversary of Rajesh Khanna that was the first time 10 month old Nitara was clicked by the shutterbugs. Nitara looked cute dressed in pink with cute little hair clip accessorized her hair. Later in 2014, during Makar Sankrati, Akshay Kumar celebrated it with his daughter Nitara. …

  • Shah Rukh Khan Comments On Salman Khan’s Bigg Boss And Aamir Khan’s Satyamev Jayate
    Shah Rukh Khan Comments On Salman Khan’s Bigg Boss And Aamir Khan’s Satyamev Jayate

    At a press conference for his new TV game show ‘India Poochega – Sabse Shaana Kaun‘, Shah Rukh Khan was asked why he does question-answer sort of shows, to which SRK said that he likes doing that sort of TV shows. The actor went further on and gave his views on the other different shows like Salman Khan‘s Bigg Boss and Aamir Khan‘s Satyamev Jayate, SRK said, “I think they are all wonderful. “I have never been offered Bigg Boss, I’ve not been offered those shows. …

  • Nawazuddin Siddqui Thinks Being Compared To Irrfan Khan Is Insulting!
    Nawazuddin Siddqui Thinks Being Compared To Irrfan Khan Is Insulting!

    We had recently reported that Irrfan Khan actually walked out of an interview when questioned about colleague Nawazuddin Siddiqui. The two have been constantly compared ever since Nawazuddin started delivering stellar performances and it is important to note that Irrfan is much more senior that Siddiqui. We now hear that Nawazuddin, who garnered a lot of acclaim for his role in Badlapur is not too happy about the comparisons either. …

  • Did You Know Sushant Singh Rajput Used To Spy On Girlfriend Ankita Lokhande!
    Did You Know Sushant Singh Rajput Used To Spy On Girlfriend Ankita Lokhande!

    Bollywood’s young’un Sushant Singh Rajput is running on his toes with the promotion of his upcoming film Detective Byomkesh Bakshy! During a promotional event when asked if he has done anything detective like in real life, Sushant Singh admitted something rather unsual. The 29-year-old actor revealed that he has in fact spied on people who are really close to him that includes fiancé Ankita Lokhande. Sushant Singh admitted that he is very possessive by nature, and that he always keeps an eye …

  • Gautam Gulati’s New Found Love
    Gautam Gulati’s New Found Love

    Bigg Boss 8 contestant Gautam Gulati received a lot of love from his female fan following. After winning the Bigg Boss 8 trophy as a winner, he created more buzz on social media as well as amongst female fan following. Gautam Gulati calls his fan following as Ggians and he usually stays updated and in touch with them on social media websites. Among all the messages, Gautam Gulati received a heart warming letter from one of his fan named Yashvi Jangid. …

  • Kapil Sharma Clarifies On The Rumour Made On Him And Shah Rukh Khan
    Kapil Sharma Clarifies On The Rumour Made On Him And Shah Rukh Khan

    Since yesterday, much loved comedian Kapil Sharma has been in target on the rumours that he has refused to appear on Shah Rukh Khan’s TV show, India Poochega Sabse Shaana Kaun? The ongoing rumours said that Kapil Sharma has apparently turned down the invitation to appear as a guest on SRK’s upcoming TV show. I can’t say no to u ever @iamsrk bhai.. Love u always :) Everyone knows that Bollywood star Shah Rukh Khan and Kapil Sharma share a good friendship since long time. SRK has appeared …

  • Why Was Shraddha Kapoor Trying To Hide Her Tattoo?
    Why Was Shraddha Kapoor Trying To Hide Her Tattoo?

    Bollywood actress Shraddha Kapoor received Best Celebrity Singer Of The Year award at Golden Indian Music Academy Awards (GiMA). While addressing the media at the red carpet music awards, Shraddha Kapoor got caught off with a tattoo on her wrist. On this Shraddha said “I was trying to hide the tattoo but unfortunately it got seen by you people. Shraddha Kapoor played a joke with the media but the next second she revealed that it’s a tattoo for her upcoming movie ABCD 2 with actor Varun …

Loading...