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Maharashtra govt's decision on outside food: Multiplex operators up in arms

If and when the rule of carrying one's own food to the theatres is implemented, the worst hit would be PVR, which has 157 screens in Maharashtra.

July 30, 2018 / 07:02 PM IST
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With Food and Beverages (F&B) forming a major chunk of the revenue of multiplex chains, it is unlikely that they will let go of this income stream easily. In the context of the Maharashtra government's decision to allow movie goers to carry their own food to multiplexes, entities like PVR and Inox are set to take a hit as the state is home to majority of their screens.

For PVR, the largest player in the industry, revenue from food counters make up for 26.71 percent of the total revenue. Likewise, for Inox, the share was 26.8 percent in the first quarter of the financial year.

PVR Limited’s results for the first quarter showed that while its box office revenue grew by 12 percent, the growth in F&B revenues was much faster at 23 percent, from Rs 165 crore to Rs 203 crore.

Inox Leisure Ltd also had similar trends in their results for the quarter. Inox’ revenues from F&B rose from Rs 88.2 crore to Rs 111.4 crore reflecting a 26 percent growth.

If and when the rule of carrying one’s own food to the theatres is implemented, the worst hit would be PVR, which has 157 screens in Maharashtra out of its total 625 screens. Inox has a total of 492 screens, of which 118 screens are in Maharashtra.

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According to sources in the industry, if patrons are allowed to bring in outside food and beverages, the entire viability of the business model on which multiplexes work will be in jeopardy, leading to shut down of cinema theatres across the country.

“The cinema exhibition industry pays around Rs 3,000 crore in GST and in addition, several other taxes. There would be significant loss of revenue for the government if cinemas were to shut down. Film income alone cannot make business model sustainable. Film exhibition is exposed to highest GST slab of 28 percent that gets deducted for every ticket sold. Furthermore, the remaining amount gets split between producers and exhibitors. Even without letting outside food in cinemas the margins are very low, allowing the food into cinemas, will make business model completely unviable,” said an industry insider from the multiplex business.

The major multiplexes have decided to not allow any guest with own food into their theaters even if the proposal is implemented. A senior official from the multiplex business said: “The Constitution guarantees the fundamental right to freely carry on any legal business or trade. Any restrictions of the type sought by the petitioner would unlawfully impinge on the fundamental rights of the cinemas to carry on their business.”

According to him, many other businesses like amusement parks, sports stadiums, restaurants, hotels, bars and  airlines have similar restrictions and the plea of the petitioner is similar to asking a patron be allowed to carry his own food to a restaurant, or his own bed to a hotel.
Tasmayee Laha Roy
first published: Jul 30, 2018 06:52 pm

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