The Hindu Business Line : Multiplexes stumble in Q1 earnings

Mumbai, Aug. 2 The two-month standoff between Bollywood producers and film exhibitors in April and May has taken its toll on the first quarter earnings of multiplex operators this fiscal.

Inox posted a loss of Rs 4.01 crore (Rs 3.68-crore profit) for the period ending June 30. Revenue from theatrical exhibition and entertainment fell 33 per cent to Rs 34.4 crore (Rs 51.7 crore).

Fame also registered a loss of Rs 9.53 crore with revenues down to Rs 15.76 crore (Rs 23.61 crore).

Similarly, Cinemax reported a loss of Rs 4.58 crore (Rs 3-crore profit) for the June quarter. Income was down 21 per cent to Rs 24.09 crore (Rs 30.59 crore).

“The first quarter was the worst in the last 10-15 years and a big blip on our balance sheet. However, it is an extraordinary event and every industry goes through its ups and downs,” said Mr Nitin Sood, Chief Financial Officer, PVR Cinemas.

“During the deadlock, there was a complete blackout with no promotions and marketing activities for films,” added Mr Anil Arjun, CEO, Adlabs. Movie releases were stalled for two months as a result.

Slowdown effect

The biggest overheads for operators are rentals, electricity, staff salaries and marketing.

Around 25 per cent of revenues come from food and beverage sales while the balance is from ticket sales.

“However, due to the slowdown in consumer spends and a weak movie pipeline, average ticket prices (were) also reduced by 12-20 per cent, which hit revenues by 20-40 per cent,” said an analyst with a city-based broking firm.

Expect turnaround

However, Mr Deepak Asher, President, Multiplex Association of India and Director, Inox Leisure, said he had anticipated the slowdown this quarter.

“With the elections and Indian Premier League, I do not know how many films would have actually been released during the faceoff,” he added.

Going ahead, multiplex operators expect a turnaround in earnings this year as movie releases line up after a lull in April-June.

“In July itself, the industry has seen a 100 per cent jump in the average monthly box office earnings during the last six months.

The line-up of movies for the rest of the year is strong and we expect the July momentum to sustain through the year,” said Mr Arjun.

During the last month, with movies such as New York, Kambhakt Ishq, Love Aaj Kal and Luck hitting the screens there has been a turnaround in occupancy levels. This has also been a heady time for Hollywood releases like Terminator Salvation, The Hangover, Bolt and Ice Age 3 - Dawn of Dinosaurs have been getting 60-70 per cent occupancy,

Operators are equally upbeat about the coming days with movies like Kaminey, Whats your Rashee, Kites, Blue, London Dreams, Qurbaan and 3 Idiots among others due to hit the screens.

Related Stories:
Multiplexes plan to hike ticket prices
Multiplexes brace for 35-50% dip in business

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