Tuesday, March 6, 2007

State of Multiplex Industry in India

In India, there has been a change in the spending pattern of consumers. Consumers today have started spending more on lifestyle categories like restaurants, movies and entertainment. A strong appetite for movies and an increase in the average household incomes in India augurs well for the multiplex business. Since standalone theaters lack the financial strength to upgrade and install the latest technologies, multiplexes are emerging as an alternative form of entertainment.

Currently, there are 130 multiplexes (with two or more screens). By the end of 2006, approximately 145 multiplexes will house more than 550 screens. Majority of the multiplexes in India are coming up within malls. Malls in India are on the rise with the number expected to rise from around 50 in 04 to around 350 by the end of 06. Multiplexes are preferred anchor tenants in the malls as they increase footfalls. Mall development in small towns is also picking up at a rapid pace which would in turn result in a significant jump in the number of multiplexes. Moreover several states like Maharashtra, Punjab, and Kolkata have announced entertainment tax exemptions for multiplexes in the initial years in order to drive growth.

PVR, Inox, Shringar and Adlabs are the biggest listed players in the film exhibition space. The other big name which has also recently filed its draft red herring prospect-us for its proposed IPO is the CineMax chain. Shringar Cinemas, an integrated film exhibition and distribution company, since its IPO in April 05, has signed 34 incremental properties. Including the existing 31 screens, the company’s strength would increase to 192 screens and approximately 51,000 seats by 08. Inox a pan India multiplex operator currently has operations in 11 cities and has entered into an alliance with well-known retail brand - Pantaloon Group of Companies.

This alliance provides Inox preferential access to all real estate developments that the Pantaloon Group is involved with. Inox plans an addition of atleast 60 new screens by 2008. CineMax is also expanding its network nationwide rapidly. CineMax presently has 33 screens up and running across various locations in India and another 97 plus screens are in the making. PVR is on a major expansion drive and is aiming for another 82 screens by March 2008 in addition to its present screens. Adlabs acquired in 2005 by the Anil Ambani plans to expand its presence from the current 41 and is expected to add another 115 screens by 2009. The other big chain to look out for is Atul Goel’s Fun Republic. Presently the chain has 29 screens operational in 8 multiplexes.

However it’s not just these top six who are eyeing the multiplex pie. Newer companies increasingly entering the multiplex fray include Mukesh Ambani’s Reliance Industries group, which plans to create its own brand of multiplexes. Bright and attractive retail market Gujarat is luring more companies build shopping malls. The Kalani Group is scheduled to penetrate Gujarat by creating a shopping mall-cum-multiplex at Vadodara, Ahmedabad and Surat. The company also plans to open ten similar malls around the country including Indore, Raipur, Udaipur, Chandigarh, Jabalpur and Ujjain.

Even regional players like Sathyam Cinemas in Chennai are ramping up. They have two multiplexes in Chennai and will add 18 more screens in three multiplexes across Chennai by 2008. The company is also scouting for four-five more sites in Chennai besides venturing into cities like Madurai, Coimbatore, Trichy and Calicut.These multiplexes and malls can be prospective clientele for A Ltd.

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