Cinema business to be over Rs 50 crore this year: Mukta Arts

Mukta Arts posted a 65 percent fall in revenues and its profits declined to Rs 2 crore versus Rs 21 crore. Speaking to CNBC-TV18, Rahul Puri, MD, Mukta Arts, says the company has spun-off exhibition business in its partnership with VN. “So, the quarterly results do not reflect the income or the profits from that business,” he adds. He expects the company to post a fairly healthy profit on the back of subsidiaries, exhibition business and education business.“The cinema business would touch well over Rs 50 crore in terms of its revenues this year and we have opened eight screens (1,500 seats) this year itself,” he adds.Below is the transcript of Rahul Puri’s interview with Reema Tendulkar and Mangalam Maloo on CNBC-TV18.Reema: Very disappointing quarter, revenues down 65 percent, earnings before interest, taxes, depreciation and amortisation (EBITDA) down nearly 87 percent, profits came down to Rs 2 crore versus Rs 21 crore. What was the reason and can we expect an improvement in the coming quarter?A: Yes, comparing apples and oranges, we were a very different company back when you are looking at a year back in terms of quarters. So, comparing quarter-on-quarter, from that point of view is not strictly comparable because we basically spun-off our exhibition business in our partnership with VN. So, the quarterly results that you see do not reflect the income or the profits from that business. At the moment that is only going to come in the consolidated numbers at the end of the year. So, when you say that revenues are down 65 percent and EBITDA is down 87 percent, it is a lot to do with the loss of that.Reema: Give us a like to like comparison of revenues and profits and what should we expect in FY17?A: it is not a like to like.Reema: No, we get the point that it is not a like to like comparison because you spun off your exhibition business, but going ahead, could you give us some numbers, your guidance on revenues and profitability for FY17?A: The company’s main aim this year, was to get back in the profitability after a couple of years of showing losses. I think you can see that this year, we have in three quarters, we have managed to do that. We have managed to get back into profit and I would suggest that by the end of the year also, we would show on a consolidated basis, a fairly healthy profit when we take into account all the subsidiaries including the exhibition business as well as the education business which is Whistling Woods. So, we would be able to show some profit. And from an overall standpoint, in terms of revenue growth, it is difficult to look at what we were last year, but all of our businesses are steadily growing and if you can see that on quarter-on-quarter as well. So, I would expect us to be able to [post additional profitability by FY 2017.Mangalam: Alright then, the business that you have the maximum thrust on which is your theatrical revenues business, where the revenues increase 25 percent. But we saw a significant reduction in the earnings before interest and taxes. So could you give us a sense of what the new normal for earnings before interest and taxes comes in for your theatrical business going forward?A: I think that is not something that is specific to Mukta A2, it is something due to the quarter. Theatrical business is season wise, and I do not think the third quarter was as good as everybody hoped for in terms of numbers. Yes, we had a couple of big films, but most of the films did not deliver as we had hoped that they would. Generally, Q4 is also fairly soft in terms of numbers for that business as well. But given the fact that we know that, we will be tweaking our output so that margins are improved over the next quarter as well. I think the cinema business which should touch well over Rs 50 crore in terms of its revenues this year. And we have opened now, eight screens, 1,500 seats this year itself, and we have got plans to do many more over the next six months.