Cineline India, which exited the exhibition business by selling its screens to multiplex player PVR in 2012, is making a comeback under a new brand, MovieMax, and aims to be a long-term player in the cinema space. It has become the third listed player in the Indian multiplex industry after PVR and INOX.
The company has started its first year of operations after re-entering the multiplex industry with 23 screens it had leased out to PVR. In addition, Cineline, which is part of real-estate firm Kanakia Group, will add 52 more screens in its portfolio in FY23.
“We have started operations of 23 screens and fitouts are going on for the rest of the screens and will open all 75 screens in this financial year (FY23). Fitouts will cost Rs 2.5 crore per screen. There are also investments in projectors, speakers and seats. Further cost will be false ceiling, air conditioning, etc. These investments keep going on. We will incur major investments in the second half of FY23,” Rasesh Kanakia, chairman, Cineline India Ltd, told Moneycontrol.
He said that while the company had to exit the exhibition industry due to pressures in the real estate business in 2012, it had held on to the assets with an eye on making a comeback. “We are going to be a prominent player in this (multiplex) industry and will keep adding 75-100 screens per year for three years,” he said.
Ironically, the COVID-19 pandemic and resulting shutdowns and restrictions, which dealt a severe blow to theatres, has given an opening to the chain. Kanakia said that there is now strong potential for acquiring screens in India.
“The pandemic has created opportunity in this space. In one or two years there will be a situation where we will have a good run in acquiring cinemas. Developers are offering to do fitouts including adding and maintaining air conditioners, finishing lobby work, which earlier operators had to do. Plus, 20-25 percent of screens post-pandemic have not been able to restart. So, there is lot of scope,” Kanakia said.
He is not alone in his optimism. Anuj Kejriwal, CEO and MD, ANAROCK Retail, says that there is pent-up supply which will hit the market in the next 12-18 months.
“The expectations of landlords in terms of rent from cinemas have been re-established. At present, the (multiplex) cinema industry should be around 2,800-3,000 screens (all India) and by the end of FY23, the number is likely to go up to 3,800-4,000 screens,” he had said in an earlier interview to Moneycontrol.
Multiplex players like PVR, Cinepolis India and Miraj Cinemas plan to take their screen count above that in pre-COVID times. PVR, which added 85-100 screens pre-pandemic, will add 120-125 screens in FY23. Cinepolis India, which added 21 screens pre-pandemic, will add 60 screens this financial year. And Miraj Cinemas will take the new screen count up from 35 in pre-COVID times to 75 screens in FY23.
Kanakia also noted that there will be more consolidation in the industry and said that PVR and INOX combining will be helpful to the sector. “More mergers are expected to happen. Mergers are great news for the industry. We are open for acquisitions. We will be looking at some other chains for merger,” he said.
Cineline India, which has a strong presence in the northern market, will be focusing on the south for expansion. “We will be focusing on Tier III cities more because there are no multiplexes there. But in the south we want to do more penetration and will be acquiring more and more screens. We will look at converting single screens into multiple screens,” said Kanakia.
The multiplex player is seeing strong traction in terms of footfall after re-entering the exhibition business in April.
“While going live on BookMyShow and educating people about the new brand took time, in 15 days we did the same business that PVR did in one month because of KGF Chapter 2.”
With an average ticket price (ATP) of Rs 200-235 and spend per head (SPH) of Rs 60, Cineline India believes there is scope for 10-20 percent increase in both ATP and SPH.
“Along with ATP and SPH, we are focusing more on ad sales. Local advertisers and pan-India consumer brands are coming to us like airlines, and travel and tourism firms, while consumer brand campaigns keep going on,” said Kanakia.
He expects Q1 of FY23 to deliver good results for Cineline India.