The other hit: multiplexes’ financial performance

Performance of multiplexes this quarter is most likely going to be a flop show. The on-going strike between them and the producers that started on April 4, is going to hit the collections hard. Saurabh Turakhia reports.

Performance of multiplexes this quarter is most likely going to be a flop show. The on-going strike between them and the producers that started on April 4, is going to hit the collections hard.

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Moreover, cricket hot property IPL will keep big releases out of its way, till it goes on. Expansion plans of most of these exhibitors have also deviated from their initial blueprint, thanks to the real estate slowdown and lack of requisite funds. Poor content has also contributed to a lackluster season.

An Angel Broking Sector update on multiplexes has revised its estimates on the sector and while it remains ‘Neutral’ on Fame, Inox and Cinemax, it has downgraded PVR from ‘Buy’ to ‘Neutral’. The update says that occupancies have declined to as low as 25 to 30 per cent levels in financial year 2009.

A comparison of actual rollout to the announced expansion plans for financial year 2009 also indicated that companies added 10 to 15 per cent less capacity than planned. On the content side too, the show has been poor and several films flopped. Top grosser in calendar year 2008 earned Rs 435 crore, a 40 per cent fall from the collections in calendar year 2007.

Pramod Arora, group president, PVR Ltd says this quarter is an unusual one fraught with multiple challenges. However, he remains confident that issues will be resolved soon. “There is a very good line up of content for the year 2009-10. Hence, the industry is sure to bounce back to its growth trajectory soon”, he said.