The decision to exit distribution and exhibition of Hindi films will affect the earnings before interest, taxes, depreciation and amortization (EBITDA) margins of Pyramid Saimira Theatre Ltd, an end-to-end entertainment company, in a major way. The company expects its EBITDA margins to come down to 10-11% this year as against 16% last year, said P S Saminathan, chairman and managing director, Pyramid group.
The company had decided to exit the distribution and exhibition of (particularly) Hindi films in northern and western parts of India owing to an unviable cost structure.
?We expect a sharp decline in our EBITDA margins during the current fiscal. We may end up notching up 11% as against 16% last year. The topline, though, will remain more or less the same as of last fiscal,?said Saminathan. The company has also decided to shelve its plans for the UK and European markets, he added.
Speaking to FE, Saminathan said, ?Following the winding up of Hindi films? distribution, we expect to lose at least Rs 50 crore or more on the topline. We found that distribution of Hindi films is unviable and decided to wind up the same.?
The company was losing almost Rs 1 crore a month on screens for want of viewers. ?We incurred a loss of around Rs 10 crore; therefore, we returned 32 screens that were taken on lease, in the northern and western belt, to the owners,?he said.
?Due to high inflation, slackening demand for entertainment and food products, and constraints of margins in the leisure industry, the company has had to take this hard decision,?Saminathan said.
He added that Pyramid Saimira will work on consolidating its position in the southern markets ?while cutting down expenditures sharply?.
The company will continue with its operations in the US and Malaysia, since they remain profitable, he said. Operations will also be expanded to China, in view of its joint venture with the Ministry of culture and ceding of entertainment business in mainland China.
On the flip side, however, the company will not proceed with acquisitions in the UK and Europe; in effect, ?we will not focus on the core European market?, said Saminathan.