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INOX Leisure CEO says Q1 FY22 is a write-off as second COVID-19 wave puts a pause on recovery

With theatres once again facing challenging times, exhibitors like last year will have to think of measures to mitigate cost. One such measure is negotiations with landlords regarding rent waiver.

May 18, 2021 / 10:09 AM IST
Inox Leisure | The Company has commenced the commercial operations of a Multiplex Cinema Theatre at Kolkata with effect from February 20, 2021

Inox Leisure | The Company has commenced the commercial operations of a Multiplex Cinema Theatre at Kolkata with effect from February 20, 2021

 
 
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One of the top multiplexes in India, INOX Leisure's CEO, Alok Tandon during Q4 FY2021 earnings call said that the quarter delivered a lot of hope.

But the second wave of COVID-19 in India is making many exhibitors lose hope because for cinemas situation is back to square one.

Once again theatres are shut due to coronavirus-led lockdown in different states. In a few places, where theatres are allowed to operate with limited capacity, there is no audience due to COVID-19 scare.

This is why Tandon said that the first two quarters of FY22 will be a challenge.

Challenge continues

Close

"April-May-June is a write-off. July-August-September we will have to see. But starting October there will be string of movies which will be ready to release because by that time vaccination would be over. We have pinned our hopes on the vaccination of the entire country. I have got my second jab and have to be careful for 15-20 days. While I have to be responsible and wear mask, I may not be fearful of going out," Tandon told Moneycontrol.

While Tandon hopes that after the vaccination drive the fear psychosis will come down and audience will be ready to go to theatres, things will restart for cinemas not before second half of FY22, according to experts.

This means that like last year, two quarters for theatres will be a washout, putting more pressure on multiplexes like INOX.

"INOX is shut everywhere as 95 to 98 percent states have asked us to shut. It is only Uttar Pradesh and Andhra Pradesh with capacity restrictions. But there also we have shut down because there is nothing to show. There is fear psychosis. So, all our 648 screens are shut."

With theatres once again facing challenging times, exhibitors like last year will have to think of measures to mitigate cost. One such measure is negotiations with landlords regarding rent waiver.

Rent negotiations

On this the INOX CEO said, "(We are) still speaking with them. Some are ready for rent waiver. Others said that let this thing pass and we will discuss it. Developers are saying that we are standing with you."

During the earnings call, Tandon had noted that expense towards rent and CAM during Q4 FY2020 was Rs 82.7 crore and this dropped to Rs 67.2 crore in Q4 FY21.

For the current closures, Tandon said that in lot of places they have got a positive answer even for shutdowns which is voluntary. So, INOX's effort is to replicate the negotiations that happened in the last financial year.

The multiplex operator is also deferring screen expansion plans and waiting for the situation to normalise.

Expansion plans deferred

For FY22, while INOX has plans to add 19-20 screens, to add more 25 screens it will be wait and watch. So, this financial year INOX will move up from 648 screens to 670-odd screens.

The multiplex major is focusing on adding around 20 screens because 90 percent of the work is completed and for that it would need CAPEX of around Rs eight to Rs 10 crore.

Ask Tandon whether there has been a drop in adding new screens due to COVID-19 impact, he said that there is no construction and we cant carry out our fit-outs because of lockdown. So, it is not the same at all.

"One of our best years was two years back when we had opened 85 screens in one year. Up till March 2021, we opened about 17 screens in five properties. And in this financial year we have opened five screens. So, it is not like we are not expanding only that it has deferred. It stopped because there were national lockdowns and there was no revenue coming in," said Tandon.

Betting on content and food

While challenges are plenty, Tandon is optimistic about theatre business. He said that there were about 20-25 movies in Hindi, English and other Indian languages ready to be released including big ventures like Akshay Kumar's Sooryavanshi, Shahid Kapoor-starrer Jersey, Ajay Devgn's Maidaan. Hence, content is there, he said.

Along with content, INOX is betting big on its food and beverage (F&B) business.

Tandon said that they want to increase the food segment's contribution  which is at 22-25 percent to a higher contribution in the entire revenue pie of INOX.

"Apart from staple cinema food, we are increasing our reach and expanding it to meal options including pulao, dal makhni, rajma chawal. We also have special menu to satiate sweet tooth of our customers with jar based desserts like Tiramisu."

Tandon said that today in megaplex in Malad, Mumbai, INOX is offering 250 items with 12 different cuisines.

In addition, INOX has tied up with online food aggregators Swiggy and Zomato for better reach and especially to cater to non-cinema audience.

For INOX, revenue coming from food business in 2020 was Rs 500 crore and Tandon said that they are putting a lot of efforts to increase this.
Maryam Farooqui
first published: May 17, 2021 08:49 pm

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