Multiplex screens to cross 3,000-mark by 2019: ICRA

The number of multiplex screens in India is likely cross the 3,000-mark by 2019, and most of them will be in tier II and III cities, according to ICRA.
While the multiplex screens in India have grown at a CAGR of 13.5 per cent from 2009 to 2016, the film exhibition industry continues to be dominated by single screen theatres, which are almost three times the number of multiplex screens, the rating agency said.
At present, there are around 2,200 multiplex screens in India and the number is likely to cross the 3,000-mark in three years with most of them in tier II and III cities, it said.

Despite a healthy growth, the screen penetration in India remains significantly low, at six screens per million of population, as compared to developed countries. For example, the USA has an estimated over 125 screens for a million. The home to Hollywood had over 40,000 screens at the end of 2015, it noted.
"The multiplex industry has seen significant consolidation in recent years which has led to considerable change in market dynamics with four major multiplex chains - PVR, Inox, Carnival Cinemas and Cinepolis - emerging as the prominent players, accounting for more than 70 per cent of the total screen count of the Indian multiplex industry," ICRA Senior Vice President Rohit Inamdar said.

"These players are now likely to focus on organic growth, barring small acquisitions of regional players. Consequently, one can expect significant capex in the near to medium-term, largely to increase screen base," he added.

The implementation of Goods and Services Tax (GST) is also expected to boost the profitability of the multiplex owners, it added.
The film exhibitors, which include multiplexes as well as single screens, pay entertainment taxes in the range of 0-66 per cent to respective state governments on their gross collections from the sale of tickets.
"Since entertainment tax is proposed to be subsumed in GST, implementation of GST at a favourable rate can bring down the levied entertainment tax and the same would improve the profitability of multiplex players as the entire benefit of lower entertainment tax is unlikely to be passed on to the customers," the agency said.

"The profitability would also get a boost by the availment of input credit against taxes paid on rentals which was not the case earlier," it added.