Pyramid Saimira Theatre plans Rs 1,000 cr expansion

To set up 1,550 digital cinema theatres across India over two years.

Pyramid Saimira Theatre will set up 1,550 digital cinema theatres across India over two years at an investment of nearly Rs 1,000 crore. "We will have around 40-45 per cent market share in digital cinema distribution in one year," P S Saminathan, managing director, told CRISIL MarketWire today.

The company is raising around Rs 75 crore via an initial public offer. "We are a debt-free company, so we may consider raising funds through debt (for the remaining amount)," Saminathan said.

The company is looking at a pan-India presence and is starting off with expansion in Punjab and Haryana. Among the locations to be added, at least 50 will be multiplexes in Tier-I cities such as Mumbai and Delhi, he said.

Last year the company added 170 halls to its portfolio, all of which are currently functional, Saminathan added.

Pyramid Saimira has so far focused on the south India market. The company's April-September revenue was Rs 52 crore, and while expectations for 2006-07 are Rs 160-17o crore, the company is likely to beat them by 20-25 per cent, Saminathan said.

Digital cinema involves distribution of films via satellite links rather than making prints and physical distribution. This results in nearly 20 per cent cost saving for producers, because creating prints is expensive. It also saves around 5 per cent of cost for distributors, Saminathan said.

The reach of digital cinema is also substantially higher, because the number of locations is not dependent on the number of copies made. There is also a higher control on piracy. The Indian film industry loses nearly 30 per cent of its revenue to piracy.

However, there is no digital distribution technology standard being followed in India yet. As a result, there could be compatibility issue between distributors.

Girish Swar, media analyst at Ask Raymond James, said, the Reliance group had tried to promote digital cinema a few years ago through Mukta Arts, but failed. That was because, at the time, technology was still under-developed and Reliance tried it through physical delivery of hard disks.

Pyramid, on the other hand, will be using JPEG format for its movies, and will be distributing them through a centralised system.

Analysts are upbeat about the popularisation of digital cinema in India. However, they expect consolidation in the sector by 2009.

Ironically, while no plans are on, Saminathan did not dismiss the possibility of Pyramid Saimira's buyout.