 "PVR")
The race for the top slot in the mutiplex space has just become fiercer. PVR, which was the runaway market leader so far with 444 screens all over India, is suddenly finding Inox closing in - fast.
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Till the end of July, the gap between PVR and Inox in terms of number of screens was 117. That has narrowed to 86 after Inox acquired New Delhi-headquartered Satyam Cineplexes for Rs 182 crore.It might narrow further as Inox also has access to 36 screens that are part of Satyam's expansion plan. Of the 36 screens in the Satyam pipeline, four are already funded while the rest will be developed by Inox. In addition to this, Inox has got 16 properties (which translates to 96 screens) under development which should be ready for rollout over the next 12 to 18 months. Adding all this, Inox's screen count will be in the range of 485-490 screens in the next one and a half years.
Satyam's was the third acquisition of Inox in the last seven years. In May 2013, Inox had merged Fame India, a multiplex cinema theatre firm, with the company after acquiring controlling stake in 2011.
In 2007, Calcutta Cinema Private Ltd (CCPL) a West Bengal-based multiplex firm was merged with Inox.
But PVR is obviously not sitting tight. In the past, it acquired Cinemax but gave thrust to organic growth. Though PVR had backed out from the Satyam deal, it has not ruled out the possibility of buying a regional player or multiplex chain in order to strengthen its presence in a particular region. PVR, which plans to add 66 screens (that makes it a total of 510 screens - ahead of Inox) across 13 properties this financial year through the organic route, is all set to go in for a qualified institutional placement worth Rs 500 crore for funding inorganic growth expansion. PVR has already added 23 screens in the first quarter.
In addition to the exhibition business, PVR also acquires Hollywood movies to be showcased in India. It uses the films to run its properties like PVR Director's Cut and PVR Director's Rare which allow the audiences to access niche Hollywood content on the big screen. This year, the company has bought exhibition rights to movies like Fox Catcher, Alone in Berlin, Our Kind of Traitor, Equals, the untitled Lance Armstrong biopic, Legend, Civilian, Inversion, American Express, Hologram for the King, London Fields and Visions. Inox on the other hand has made a conscious decision to focus only on the exhibition space.
PVR Managing Director Ajay Bijli says his firm also looked at Satyam but didn't go for the acquisition as the per screen cost was too high.
"We acquired the Cinemax chain at approximately Rs 4.13 crore a screen and in case of organic expansion, the cost per screen is Rs 2.5 crore. So the cost per screen that Satyam quoted, was over-priced," he says.
Vivek Gupta, Partner, BMR Advisors, says the local players - largely promoter-run - may find it tough to compete in the current scenario. On the other hand, concerns over real estate sector, causing lesser construction of new malls, also are forcing large multiplex groups to acquire existing operational assets.
Deepak Asher, director at Inox, says consolidation has been happening in this space since 2010. According to him, there were about six national players, 15-20 regional players and many local players about five years ago, but now all national players are expanding into tier II and III cities by acquiring regional players.
This is obviously pushing up valuations. For example, the Inox deal valued Satyam at Rs 5 crore per screen as against the average rate of Rs 4 crore paid for deals in the past. "Valuation is dependent on the areas and quality of the screens. Those in metros that earn more revenues will obviously get a higher valuation than screens in tier II. Satyam, for example, has marquee sites, which is a factor in the rich per screen valuation," Gupta of BMR Advisors says.
After the Satyam acquisition, Inox will be present in 50 cities with 91 multiplexes, PVR is located in 43 cities with 101 multiplexes. The national third player in the business is Cinepolis, a Mexican multiplex chain brand that entered India in 2009 and has just around 100 screens.
The fourth player in the market - Big Cinemas, a part of Anil Ambani's Reliance Media Works is also being wooed by many. According to the grapevine, Inox is one among the interested parties along with Naavis Capital and Carnival Cinemas. The deal will give Inox a huge leverage in the form of 250 more screens.
As the famous Bollywood dialogue goes: "Picture abhi baki hai".
