Unfazed by H1 losses, multiplexes chart expansion plan

Written by Priyanka Akhouri | Mumbai | Updated: Aug 27 2009, 04:58am hrs
Despite a low phase in the first half of 2009, analysts predict growth and expansion for the multiplex industry.

The number of screens in the country are currently 900. As per industry experts, this number will definitely see a growth in the current financial year, despite the loss by companies in the first quarter of 2009.

Says Devang Sampat, senior VP, Cinemax, This financial year we expect to add around 40 screens against 10 in the last financial year. The investments of the multiplex players might also open up, as last year was not a favourable period due to the slowdown. Now that the real estate properties have started opening up and since market conditions are slowly improving, we at Cinemax expect to see a 300% growth.

A multiplex costs about Rs 2-2.25 crore to be set up and this excludes the operational cost. Sometimes the cost also increases in case of a 3D screen set-up, which is 50% more than the normal screen. Moreover, the cost of setting up multiplexes differs, depending on the location, real estate condition and number of seats.

Big Cinemas has three 3-D screens and plans to increase the count to around 20 by the year-end. Cinemax has seven and plans to increase to 24 in the next one year. Fame already has three screens and plans to add two more in two months. Similarly, Inox is looking at installing 3-D screens in Kolkata, Bangalore and Pune.

Milan Saini, country head, Cinepolis India, says, In the current financial year we have seen multiplexes coming up, but there has been more than 10% dip in investments. In FY08-09, a few multiplex players walked out of projects and were not willing to expand due to slowdown and cash issues. Companies reduced their investment plans and were asking for negotiations regarding rentals. But this certainly differed from company to company. Cinepolis in the calendar year came up with 298 screens and plans to add another 41 screens in FY09-10.

Timmy Kandhari, leader, media and entertainment, PWC, says, There has been a steady growth in the number of multiplex screens from approximately 5% of the total screens in 2007 to 9% so far, adding, Cinepolis plans to operate 500 screens in India with an investment of Rs 1,500 crore and has signed deals with 12 developers in eight cities for setting up 110 screens in the first phase. Our new property will be operational in Amritsar with a minimum of four screens by October this year. The company also plans to enter into deals with realty developers for creating 200 more screens across India by 2010.

However, setting multiplex projects in FY09-10 will not be a cakewalk, since establishing a property will depend on changes in the socio-economic conditions in India or other countries. Inox Leisure invests around Rs 2.25 crore per screen and is planning to open new properties in the coming weeks in Bangalore, Siliguri and Kolkata. Cinemax in India has 75 screens spread over 24 locations and plans to add another 50 screens, for which the investment will be around Rs 100 crore.

Kandhari adds, Margins of most players are expected to improve from Q1 with a spate of big movies and festive season in Q2 and Q3." However, a growth of 10%-15% is expected by the end of 2010 and beginning of 2011.