They say, once bitten twice shy. And the saying sounds just apt for end-to-end entertainment player Pyramid Saimira Theatre Limited (PSTL). Caught in a tight liquidity position after its high-budget Tamil superstar Rajani-starred film Kuselan bombed at the box office late last year, and due to few distribution losses at the box-office, PSTL is seriously mulling to close down its unviable subsidiaries including in the overseas markets.

Having brought down their holding substantially to 17.9% a few days ago from 25% to resolve liquidity problems as well as to pay income tax dues, the core promoter(s) of the firm are now open to dilute their stakes even further, if necessary, to raise enough liquidity to tide over the current crisis, said PSTL president N Narayanan. While PS Saminathan, the main promoter, holds close to 17.9% in the firm, corporate bodies have around 25%. FIIs/FIs holding in PSTL is little over 12%, while PE players such as CitiGroup Global Markets, Bennett Coleman & CO, Mavi Investments hold 3.41%, 1.77% and 1.81%, respectively. Punjab National Bank is another shareholder with 3.54%.

?Though we have undergone some operational restructuring, the company is still under pressure due to lack of liquidity. We require a substantial amount to come to normal conditions and accordingly we are in talks with a select few private equity players as well as banks and FIs for the same,? Narayanan said. ?Despite the downward conditions in the market, some of the banks/FIs have agreed to lend some amount and we require to raise some more money to tide over the crisis and we are confident to do so,? he added.

To a query, he said: ?As part of our restructuring exercises, we have decided to close down our unviable subsidiaries, including in the overseas markets. We are looking at a third-party assistance to identify those subsidiares and give suggestions on how to take up the exercise in a more relevant manner.?

The company has nearly six subsidiaries and a few joint ventures in India and in countries such as the US, Malaysia, Europe, China and these subsidiaries are involved in distribution, exhibition, content production, post-production, advertisement & marketing, DTH operations, technology solutions. ?We come to an understanding that some of these subsidiaries are not doing well and found to be unviable. We want to close those unviable ones while bringing all the other subsidiaries under single holding company,? Narayanan said. This not only helps us tide over the current crisis, but also would help us grow in the quarters to come, he added.

Narayanan, who has been recently entrusted with the operational powers of the group companies, said, ?We have grown faster than expected till June 2008 by acquiring over 45 lakh seats through 800-odd screens across the globe on lease. However, due to poor spending, content failure and various other reasons, the average footfall per screen has come down drastically and the company was forced to bring down the number of screens to 252 as of December 31, 2008 from a high of 802 as of June 30, 2008.

More over, since the company has huge fixed cost for carrying capacity, it started facing supply-side constraints to feed exhibition units in a revenue-sharing mode and end up in taking uncalled for risk on content which was not the original business model, he pointed out. To add to its woes, the company has also caught in income tax problems during the last two quarters, he said further.

Taking into consideration these problems, the company started implementing consolidation measures, including bringing down the number of screens, seat capacity and content distribution. ?We expect the benefits out of these measures to spill over in the quarters to come,? he maintained.

For the quarter ended December 2008, the company had reported a net loss of Rs 74.74 crore on a net sales of Rs 137.94 crore, against a net profit of Rs 29.86 crore on net sales of Rs 231.41 crore during the same quarter of last fiscal.

No-show

• The end-to-end entertainment player is caught in a tight liquidity position

• Its promoter open to dilute stakes even further to raise enough liquidity to tide over the current crisis

• Firm in talks with a select few private equity players as well as banks and FIs for liquidity

• It has nearly six subsidiaries and a few JVs in India and in countries such as the US, Malaysia, Europe and China