Glitz Cinemas is on the block. The multiplex chain, owned by Capital 18 which is the private equity arm of Network18 Group, has a strong presence in smaller towns. According to investment banking sources, the promoters of Glitz Cinemas are asking for around R3 crore per screen or around R80-90 crore.
?While there are several interested suitors including big multiplex players, the expectations for Glitz promoters are a bit high. We have asked the Glitz management to come back with a more realistic pricing. We are still interested,? a senior executive of a leading multiplex chain said on conditions of anonymity.
Glitz Cinemas commenced commercial operations in July 2008 and has strong presence in Dehradun, Ranchi, Bilaspur, Raipur, Ajmer, Kurushetra and Delhi offering over 4,000 seats per show and reaching to 2 million-plus captive customers. Industry observers said the company would be a good fit for leading multiplex players interested in expanding their operations in smaller towns.
Glitz Cinemas is promoted by Stargaze Entertainment. It also offers three differentiated products ? Glitz Lounge, Glitz Max and Glitz 3D. Experts say it requires an investment of around R1 crore per screen when setting up a multiplex chain in any tier-II town once rentals, locations and other costs are in place. The valuations go up if the film exhibitor owns the land or has a long-term anchor tenant deal with a leading mall in that city.
Higher valuation by Stargaze Entertainment for Glitz Cinemas is based on both current and future plans of its properties. By 2012, Glitz Cinemas is expected to expand to another four towns to take its tally to 11 and add 500-600 seats. In terms of screens, too, the number will reach 35-40 by 2012, sources said. ?If a leading exhibitor like PVR or Inox plans to enter Ranchi, Dehradun or Ajmer, acquisition will be the preferred route rather than making fresh investments due to high cost structure. Therefore, there is tremendous interest for everyone in Glitz,? an analyst who tracks the sector said.
The analysis of the books of listed film exhibitors like PVR, Inox and Cinemax shows that all these companies together are sitting on combined cash of over R700 crore which will be used to fund their respective expansion plans.
?The organised film exhibition industry adds over 125-130 screens every year. With signs of slowdown creeping in, it will not be unusual for some of the players to use their cash reserves towards acquiring some properties rather than going in for a green field multiplex auditorium,? another analyst said.