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Multiplexes set to take country by storm

There has been a threefold rise in screen numbers in two years, and over 62 pc growth is predicted, reports Sanjeev Sinha.

business Updated: Apr 03, 2008 21:55 IST
Sanjeev Sinha

Buoyed by positive regulatory changes, booming consumerism and multiple revenue stream, the nation’s multiplex industry is set for an unprecedented boom. So much so that the number of screens alone is expected to record a three-fold jump from 500 now to over 1500 by the fiscal 2010. This will drive the industry growth at 62 per cent CAGR over the same period to Rs 4,000 cr, thus contributing 28 percent of the total theatrical sales for the film industry, according to a report by Systematix Institutional Research.

Industry majors agree. “I feel these are still conservative figures. Simply top six multiplex chains have plans of 300-500 screens each by FY-10. Even if you count 50 per cent, it can be achieved,” said Devang Sampat, Sr V-P, Cinemax India.

Cinemax India, for instance, has lined up a massive expansion plan for the next two years. The multiplex chain currently has 55 screens over 17 properties across the country. By fiscal 2010, Cinemax — owned by real estate player Kanakia Group — is planning to scale up its presence to 299 screens across about 100 properties. The total investment outlay is pegged at around Rs 350 cr, of which Rs 108 cr was raised in February 2007 through an IPO.

Multiplex chain PVR Cinemas, which currently has 92 screens, is also planning to add over 150 screens across India, staggered over a period of three years from 2008-2010, with a total investment outlay of around Rs 300 cr, according to its CFO Nitin Sood.

Adlabs Cinemas, on the other hand, also has plans to expand exponentially over the next two years from its existing 151 screens. “Screen density in India is still very low compared to developed countries. A UNESCO study in 2005 showed that India needs a total of 20,000 screens to cater to the cinema-viewing population, indicating that this is clearly a market with huge potential,” informed Tushar Dhingra, COO, Adlabs Cinemas.

Although the Adlabs official didn’t divulge expansion retails, industry sources claim they are targeting to reach 550 screens by 2010. And not to be left behind in the race, other players like Fame India, Inox Leisure and Fun Cinemas also seem to have major expansion plans up their sleeve.

Among the major factors driving the growth of multiplex industry are also favourable demographic changes, retail boom and the emergence of a mall culture. For instance, a number of mall developers are considering movies/theatres and entertainment outlets as the key elements attracting footfalls to the malls, and thus multiplexes are fast emerging as one of the key anchor tenants for most organized retail outlets in India,” said Sampat.

But all said and done, the industry is not bereft of challenges. Analysts feel the players would have to recraft their business model to weather the challenges ahead of them. Cutting costs at operating level, for instance, is the best way to address this problem. Also, as multiplex companies grow, they will face increasing competitive pressure due to overcrowding in the same region (mainly in tier-I cities), which will ultimately force them to set their sights on tier-II and tier-III cities.