Indian cine goers and filmmakers have never had it so good.
Domestic entertainment industry is poised for a giant leap, more so with an additional 280-300 screens expected to come up in the next 18-24 months, if the plans announced by major players in the business are any indication.
The retail shopping boom has fuelled a spurt in the number of multiplexes, with most of them coming up at shopping malls or alongside them.
It is a major happening sector now. According to industry analysts, entertainment major PVR Cinemas is planning addition of 82 screens in 12 new centres, Inox Leisure is targeting 48 screens under its 11 new projects and Anil Dhirubhai Ambani Enterprises-owned Adlabs Films is looking to add about 100 screens in the next two years, Cinemax is eyeing 150 screens and Shringar Cinemas is aiming at 80 screens.
To finance the expansion plans, film exhibition majors, too, have announced their fund-raising programmes. PVR is tapping the capital markets with an issue of 77 lakh equity shares of Rs 10 each for cash at a premium to be decided through book building.
The price band has been fixed at Rs 200-240 per share. The company expects to raise around Rs 154 crore at the lower end of the price band and Rs 184 crore at the higher.
Following suit is Inox Leisure, which is debuting in the market with its initial public offering (IPO). The company has filed its draft redherring prospectus and is planning to issue 1.65 million equity shares of Rs 10 each at a premium.
The price is to be decided through a 100 per cent book building process. It is slated to open for subscription sometime in January.
Meanwhile, Adlabs Films is planning to raise the amount needed for expansion from international markets. The company, recently acquired by the Anil Ambani group, is planning to raise $50 million (around Rs 250 crore) through a float of foreign currency convertible bonds. On the other hand, Cinemax Cinemas is targeting about 150 screens in the next two years.
Hiral Kanakia, director, Cinemax, said, "Cinemax is aiming at 500 screens in the next five years. We are looking at investing about Rs 400 crore, which will be done partially through private and public offerings."
Shringar Cinemas is looking at raising a total of Rs 120 crores in the next 24 months via debt and equity to fund setting up of another 80 screens.
On the impact of the sudden spurt in screens, Kanakia pointed out that in future, multiplexes will become a weekend sport. That apart, it will also provide an impetus to film production and will push up import of Hollywood films.
Manoj Bhatia, CEO, Inox, said, "The trend will ultimately encourage filmmakers to make varied and experimental cinema." He cited the example of the upcoming Yash Raj film Neal-N-Nikki.
Bhatia also said the increase in screens will in turn also lead to rationalisation of entertainment tax.
Sharvan Shroff, managing director, Shringar Cinemas, said, "The plan to expand screens has been on multiplex operators' agenda for some time now. The rise in the number of malls as well as the pick-up in real estate sector has resulted in the trend."
Shroff says this phenomenon has already impacted the film industry.
"Movies today are targeting the multiplex audiences. This has also lead to segmentation of films which, in turn, helps cater to a larger set of audiences."
Shroff is of the opinion that cinema-goers today receive a superior cinema experience at a marginal premium compared with the older single-screen theatres. Ticket pricing would also be more or less stable.
A boom in retail shopping has also aided the multiplex boom, as most of them are being set up at or alongside such malls. This will help increase footfall for both multiplexes and shopping malls simultaneously.
An Edelweiss Securities research report, released earlier this year, said the country expects over 220 malls by 2006 and over 600 malls by 2010. The rise in the number of malls means a growth in the number of multiplexes also, the report stated.
PVR, in its prospectus, has stated, "The expected organised retail boom should result in a significant increase in the number of multiplex cinemas as one of the key elements for the success of a mall is its ability to drive footfalls consistently. Multiplexes are one of the anchor tenants in large format malls which increases footfalls by 40 per cent to 50 per cent."
For instance, Inox Leisure announced that it has entered into a tie-up with Pantaloon, a major retail chain and brand in the country, to be its multiplex cinema partner in all its new properties.
Inox's Bhatia said, "The alliance is a win-win for both of us. For Pantaloon it makes available a high quality multiplex operator for all the properties it is associated with and for us it provides preferential access to all real estate developments that Pantaloon is associated with."
All said and done, one of the key factors that multiplex owners need to take heed of is bunching up in one area. "There is a lot of capacity for multiplexes currently, if they are all not bunched up in one location. If players enter markets and location after careful analysis, there is space for everyone to be profitable," Shroff says.
