Expect 45-50% topline growth this year: Cinemax India

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Expect 45-50% topline growth this year: Cinemax India

Cinemax India has added 40 screens to their kitty this year itself, due to which chief executive Sunil Punjabi believes that they could post close to 45-50% growth in this fiscal.

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Cinemax India has added 40 screens to their kitty this year itself, due to which chief executive Sunil Punjabi believes that they could post close to 45-50% growth in this fiscal. "We are extremely bullish about the exhibition business," he added.

The company is now expanding into non-exhibition business also, namely gaming. Punjabi told CNBC-TV18 that they plan to open their gaming business 'Giggles' in those malls in which they have a multiplex. They have also opened up another gaming business, 'Versus.'

"The idea was to look at a larger mix of people in terms of getting not only kids but also getting the entire family in," explained Punjabi.

Below is an edited transcript of his interview with Ekta Batra and Latha Venkatesh. Also watch the accompanying videos.

Q: Give us a sense of what sort of expansion you are looking at in the non-exhibition business. We understand that you are coming up with a gaming zone business under the brand name of 'Giggles.' Can you just take us through what sort of investment you have and what sort of potential you actually see from it?

A: Giggles has been a brand that we nurtured for the last couple of years. Wherever we have a multiplex in a mall, we have looked at setting up 'Giggles'. 'Giggles' was more like a family entertainment brand but focused towards kids.

What we have recently done in the last six months is that we've launched a second gaming brand called 'Versus'. We started the 'Versus' in Delhi. The idea there was to look at larger mix of people, in terms of getting not only the kids but also getting the entire family in. So apart from the regulars, we also have bowling lane etc.

But we have kept this concept from a more family gaming, not from youth gaming perspective. So you have a mix of everything reaching across larger demographics. That is the brand that we want to take forward and that is where we are looking at growth in the gaming space.

Q: How much are you investing in the non-exhibition business? Also, give us the internal projections of the company with regards to how much it is going to contribute as a whole by the end of FY13 on the topline, EBITDA, as well as the bottomline?

A: Right now we are looking at almost three-four gaming centers coming up this year. What has really happened is the exhibition space is growing at 50% year on year. Last year vis-à-vis this year we should probably close the year at about almost 50% jump. Even going forward we are looking at a similar kind of jump. So the base of the exhibition business per se has significantly grown.

The gaming business is fairly nascent, so it won't be a large percentage of the topline considering the topline itself has grown fairly significantly. We will probably look at atleast a 2-3% at best, that's the kind of number we are right now targeting.

Q: What was the purpose behind reducing the face value of the share?

A: The idea behind reducing the face value was because we were looking to split the business into an operating business and in asset business, the reason being the inherent value of the asset business was not getting captured in the share price. Also, going forward, the operating business is the one which is growing and growing at a significantly large pace.

So when we really looked at it, there was some amount of unlocking that one needed to do from a value perspective and that was the thinking behind splitting it into an operating company and into an asset company. The asset block largely will have couple of multiplexes that we own plus a mall as well.

Q: What debt do you have and does it get split equally?

A: It is half, so it will be equally spilt.

Q: What kind of pace of growth do you expect for both the businesses from a 12 month or a 24 month perspective?

A: The exhibition space is growing fairly aggressively. We recently finished our first phase of expansion, so we now have 132 screens plus another three screens under management contract. Hopefully, we will have another six screens in Hyderabad up and running in this quarter itself.

So all of these properties have grown last financial year. We had closed at 104 and we have ramped up significant, almost 40 screens in this year itself. All of these into multiple phases will have full year impact next year. Last year vis-à-vis this year, we will probably be looking at a good jump of almost around 45 to 50% growth in terms of top-line and the following year a similar kind of a number.