Multiplex chain operator Inox Leisure has so far signed agreements with various developers to add 926 screens to its network, which are expected to come in the next few years, said a top company official. India is an “under-screen” nation and the company is growing and is “bullish” about this industry, said Inox Leisure Chief Executive Officer Alok Tandon in a conference call with the investors.
Besides, Inox is also planning to spend around Rs 65 crore as capital expenditure (capex) and has plans to take a fit-out of another 25 screens. “Based on the agreement already signed, I feel proud to share that beyond the financial year 2021-22, we have properties signed up to the extent of nearly 133 more properties, 926 more screens with an addition of another 1,71,675 seats.
“And, once this entire pipeline is fully implemented, we will have 296 properties, 1,618 screens and nearly 3,27,000 seats,” said Tandon. However, when asked if the rentals of 926 properties will be the same as what it is paying now or will it have a more mix of revenue sharing, he did not comment.
“No, it is too early to say how we see those 926 screens. But, let me tell you that today, our rentals are in the tune of 18-20 per cent of the total revenues. “It is difficult to say whether, going forward, we have more properties signed on a revenue share or a mix of revenue share and minimum guarantee or a fixed minimum guarantee,” Tandon added.
He also said the entire company today has been battling how to survive this pandemic or how to stay afloat, and how to ensure that costs are reduced. “I think it will be some time before we visit the drawing board again and go through every property that we have signed and then decided the way forward. So, it is too early for me to comment on that.”
During the quarter, Inox had in April 2021 opened SBR Horizon Bengaluru with 5 screens and 694 seats. Currently, Inox is operational in 69 cities of 18 states and one Union territory with 648 screens. “We are a very under-screen nation, and today, what we are doing at INOX is we are trying to expand our footprint because we all know that we have only 8-8.5 screens per million population; and if I talk about multiplexes, it is about 2.45-3 screens per million population.
“So, we at INOX are growing, we are very bullish about this industry, we have got a very robust pipeline,” he said. Inox would spend around Rs 65 crore on expansion but it would depend on the normalisation process. “As far as capex is concerned, we have 19 screens wherein 90 per cent of the work has been completed and, hence, would require an additional capex of anything between Rs 8 crore to Rs 10 crore.
“We may open and invest in another 25 screens, but all that depends on the normalisation process and how the movies do. For those 25 screens, we would require an additional Rs 65 crore,” he said. Like other multiplex chains, Inox started its operation from July 30 in some regions after a forced closure by the second wave of the coronavirus pandemic. Inox has permission to open 459 screens and has opened 201 screens so far as on August 3. Tandon said Inox has a “healthy line-up of movies” to show once normalcy returns.
“If we look at the movie line-up, I think it is mouth-watering; and in Hindi, we have movies like Bell Bottom, Satyameva Jayate, Suryavanshi, Shamshera, Prithviraj, and Lal Singh Chaddha, just to name a few. “If I talk about movies in other Indian languages, we have RRR, KGF-2, Pushpa, Radheshyam and many more to come. And, English is not far behind F9: The Fast Saga, The Conjuring: The Devil Made Me Do It, Jungle Cruise, Suicide Squad, Spiderman and the list gets endless,” he added.
The company has an “impact on revenues during the first quarter of 2021-22 due to the second wave of COVID-19” and tried to keep its fixed costs under control. “However, year-on-year comparison of Q1 FY2022 with Q1 FY2021 would be skewed as Q1 FY2021 was a complete shutdown,” it said. According to Tandon, Inox liquidity position is “very strong”.
“As of July 31, 2021, we have a liquidity of about Rs 400 crore, which includes undrawn limits of Rs 120 crore,” he added. Alternatively, INOX owns six cinema properties and a head office and can raise about Rs 350 crore by doing the sale on a lease back of these properties. As of July 31, 2021, Inox Leisure’s gross debt stood at Rs 117 crore.
It is also in talks with our various partners overpayments on rentals and common area maintenance (CAM) charges during the COVID-19 period.
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