Despite the seemingly royal linkages of my first name, I like to see life from the back bench. While studying it helped when lectures were unending but later I realized it also worked as a corporate reporter. It gives a clear view of both the performer and the viewer; of the 360 degree perspective and the minute detail. Now while tracking the world of business for the pages of Forbes India as Senior Assistant Editor, I will use this space to share what I observe from that rear seat.
For someone who has been fascinated by the silver screen since childhood, Ajay Bijli would surely describe his Rs 400 crore move to acquire Cinemax, as a blockbuster. The entrepreneur from Delhi has been the poster boy of India’s multiplex industry, having pretty much started the trend in India in 1997.
Reality is that for much of the past five to seven years, he was relegated to side-roles even as peers like Big Cinemas and later Inox grew to become bigger players than him. But all of that has changed this week. By adding Cinemax’s 138 screens to PVR’s 213, he has become the biggest Dabangg of them all, that too by a long margin.
The Cinemax acquisition adds muscle to his PVR’s reach, especially in Mumbai where the Kanakia family had set up 45 screens at 14 locations. Bijli now has 351 screens spread all over India. Biggest competitors Big Cinemas and Inox – along with its acquired but yet not merged Fame – have a little over 250 screens each. Of course, the Anil Ambani-company is still the biggest if screens overseas are counted. But Bijli knows that the screen numbers don’t matter, if they do not add to his company’s profitability. Cinemax, a profitable company, gets a thumbs up on that count too.
There is a fascinating sub-plot to this deal. Breathing down Bijli’s neck in the race for Cinemax, were Milan Saini and Deepak Marda, Managing Director and Joint Managing Director of Cinepolis India, the local arm of the Mexican multinational. Marda, who was earlier in talks with Big Cinemas for taking a strategic stake in the Ambani-company, also badly wanted to acquire Cinemax. “We chose PVR after negotiations with other players. Cinepolis was very close and their offer was almost the same as PVRs, but we chose PVR as we had more trust and faith in the management team,” says Rasesh Kanakia, Cinemax chairman in The Economic Times today.
When I was writing this feature in April 2012, Bijli and Marda were sizing each other up in more than one instance. Both were chasing similar targets – to get to 500 screens as fast as possible. They were in a race- from signing deals with mall developers in the best locations across the country to making sure that each had an upper hand in every acquisition opportunity. There is a bit of history too. Bijli was in talks with Cinepolis owners in Mexico for a possible partnership with the South American company. But that didn’t work out.
The exit of Kanakias from the industry is also a reflection of the exhibition business."We have re-structured our businesses, which till now had four verticals - real estate, education, hospitality and movie exhibition," Kanakia told me over the phone from Mumbai. Though the business was doing well, Kanakia realised that he needed bigger scale.
"In exhibition business you need scale to bargain, not just with distributors, but also with advertisers, food and beverage supplies and for ticketing," he said. And with mall development slagging in most parts of the country, organic expansion is a tough proposition. "We don't have an appetite for acquisition and I have known Ajay for years and admire him," added Kanakia.
With Bijli bagging Cinemax and faced with the harsh realities of the industry that Kanakia talked about, Marda and Saini do not have too many options left. Their talks with Big Cinemas didn't yield much and the two former mates at Stanford Business School don’t have much choice to expand their business through the inorganic route. Some of the smaller players who might be up for sale include Wave and Fun Republic. But this is a space that is too dynamic for the final word to be written yet. For now, Ajay Bijli is the undisputed superstar.