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Ajay Devgn's NY Cinemas cuts down target to 100 screens on COVID slowdown, weak Bollywood show

The theatre chain will consider adding 30-40 screens every year if pre-COVID business returns, eyes tier II and III towns.

September 19, 2022 / 06:45 PM IST
Representative image.

Representative image.

Actor Ajay Devgn's multiplex chain NY Cinemas has curtailed its expansion plans as the COVID pandemic and lacklustre performance of Bollywood films have taken the sheen off the business.

The company, which in the first year of its launch in 2017 planned to reach the 250-screen mark in 4-5 years, is now focusing on touching the 100-screen target.

COVID slows expansion

"We targeted 30-40 screens every year to be opened pre-Covid but post-COVID we have slowed down expansion because we think a lot of things have to go back in place and have deferred our expansion accordingly. Though the initial plan was to put together 250 screens, for now, we want to achieve the 100 mark," said Rajeev Sharma, CEO, NY Cinemas, told Moneycontrol.

The impact of the pandemic coupled with the below-par performance of Bollywood is the reason for the company not going aggressive on expansion. "There are two years of COVID disaster and then the business has not picked up as expected. When we see things start picking up we will start expanding. But if everything goes well and as expected like pre-COVID times then we would look at adding 30-40 screens every year," he said.

Recent big Bollywood releases like Aamir Khan-starrer Laal Singh Chaddha made at a budget of Rs 180 crore and Akshay Kumar's Raksha Bandhan with cost of production of around rs 70 crore saw below par performance at the box office with collections at Rs 59.58 crore and Rs 45 crore respectively.

Currently, the multiplex operator has 14 screens under fit-out which are targeted to open by end of December or early January, which will take the total screen count to 40-42 by March end (2023).

The company, named after the initials of Ajay Devgn's children Nysa and Yug, recently announced the launch of a new property in Ahmedabad.

"The new property which is done with fit-out is a four-screen property. We are set to go live by end of this month or next. Roughly around Rs 12 crore was invested in the new property. And with this multiplex, we will be live with 26 screens," the CEO said.

NY Cinemas will deliver 35 more screens next calendar year. "For this, we will start accepting sites for fit-out by October-November this year and these are targeted for opening in June-July till December next year. So in total, there will be 22 screen additions this year and 35 screens next year. By FY23-24, we will have 75 screens operational," said Sharma.

He added that with 20 screens that the company is going live with, the investment is approximately Rs 50 crore.

Eyeing new markets

With tier II and III cities in focus, the company is looking at markets including Uttar Pradesh, Punjab, Gujarat, Maharashtra and Madhya Pradesh.

"Focus is tier II, III and maintaining a presence in tier I. So, we do not do multiple cinemas in tier I in cities like Delhi, Mumbai, and Bengaluru but we keep our existence with 3-4 locations within each city. Ajay's (Devgn) vision is to bring the audience closer to films and film stars of their choice. We intend to increase viewership of movies by spreading in tier III, IV cities," he said.

The theatre chain will be opening in Haryana soon and expanding into Punjab and Gujarat, and by end of this year it will start exploring some of the southern cities.

"Southern market has always had better viewership pattern than North. Business in South India is a benefit for any multiplex player. We had reservations in the beginning as a startup because South needs a dedicated focus. It cannot be one or two sign-ups. We had plans to open in South India in 2020 but it got deferred because of Covid but now we will start focusing on South India expansion by end of this calendar year," Sharma added.

Pandemic pangs

The COVID-19 impact not only slowed down screen additions but the company's revenues also took a hit. "There was hardly any revenue during Covid and it is yet to come back to normal. But post-COVID, what we have seen is people have started spending quite a bit on F&B (food and beverage). So, theatres are enjoying the benefit of F&B revenue being better than what it was in pre-COVID times. Revenue will get better than 2019 levels with spend on F&B continuing as new content comes in and footfalls go back to pre-COVID levels. BY FY23-24, it (revenue) will be better than pre-COVID levels," Sharma said.

He said currently while footfalls are down by 25 percent, revenues are down by 20 percent because people are spending on F&B. This segment contributes 28-30 percent to overall revenue and we have seen 20 percent growth in spend per head post-Covid."

Sharma also said that footfalls are not back to 2019 levels because of a lack of good content.

"If there is good content, people have come in odd hours like early morning shows. We have seen that for KGF Chapter 2, RRR and Pushpa. The consumption pattern is changing and people have access to global content. Also, what we see as releases till now is content made in the past. So, the new content will start releasing in Q2 next year. By the beginning of next financial year, things should go back to pre-COVID levels in terms of viewership pattern and footfalls."
Maryam Farooqui
first published: Sep 19, 2022 05:03 pm