National multiplex chains like PVR, Inox, Cinemax, Fame, Fun and Adlabs are expected to post a combined net loss of Rs 30-35 crore for the first quarter of 2009-10, due to the two-month long deadlock between Bollywood producers and film exhibitors in April and May.
Market analysts expect around 30-40 per cent erosion in the gross revenue of the national multiplex chains for the April to June quarter as a direct impact of the strike.
The cost of operating the empty multiplexes during the strike period may amount to around Rs 140 crore for the leading ones, say those who track the sector. Because of the strike, no new films were released in the multiplexes, causing losses to exhibitors, distributors and producers.
These multiplex chains had together posted a net profit of Rs 25 crore in the April to June quarter of last year. The exhibitors listed at the stock exchange like PVR Cinemas, Inox Leisure and Adlabs together generated a combined income of over Rs 165 crore in the first quarter of 2008-09.
“The April to June quarter will be slack for the multiplexes, as the big four or five exhibitors are expected to post a combined net loss of around Rs 30 crore,” said Anand Shah, an analyst with Angel Broking. However, the PVR stocks are interesting among the other listed exhibitors, added Shah.
According to Ashish Kapur, the combined fixed cost losses – rent, salary, electricity bills – for all multiplexes for the first quarter (April-June) is expected to be around Rs 140 crore. “The big players will get adversely impacted. PVR may post a net loss of around Rs 9.5 crore for the first quarter, while the net loss for Inox may also be in the same region,” said Kapur.
An e-mail questionnaire to PVR Cinemas and Adlabs remained unanswered. However, Alok Tandon, chief executive officer, Inox Leisures, said: “The first two months of the first quarter were difficult for us. However, we had anticipated the slowdown, as IPL (the televised cricket tourney) was also scheduled during the same time. Now things are looking up and with a slew of big releases, we should be doing well. The fact that Inox is going to add more screens to its existing network is sufficient to say that the business is looking up now.”
Highlighting the specific reasons for a rather ‘dull’ first quarter for the exhibitors and its impact on rest of the year, K Srinivas Reddy, director, Juniper Research, said: “Overall, most multiplex chains are not doing well financially. Their expansion plans are delayed in Tier-II and Tier-III towns and the average ticket prices have also seen a decline across centres. Then, overcrowding of multiplexes in small cities due to competition is also adding to their woes, as the market is not growing.”
