Copyright 2016, Forbesindia.com

Expansion Takes a While in India: Cinepolis CEO

Global CEO of Cinepolis Alejandro Ramirez tells Forbes India that he's going to stay invested in India long-term despite the slow pace of business


Alejandro Ramirez
Profile:
CEO, Cinepolis
Education: BA, Harvard; MSc, Oxford; MBA, HBS
Career: World Bank; UNDP; Deputy Permanent Representative of Mexico to the OECD
Interests: Movies, travelling, theatre and art

Q. You run a family business in Mexico. There are many family businesses in India too. What is the main challenge for a family business?
The challenge for these businesses is to evolve as soon as they make the transition to the second and third generations.  The world over, 80 percent of family businesses don’t survive beyond the second generation. Part of the reason I came back was that my family wanted to have more robust corporate governance and a culture of professionalism. I think we have the best practices, including having independent members on the board.  

Q. How has the slowdown affected the exhibition business?
There is a theory in the US that cinema-going is countercyclical. In times of slowdown, people go to movies more as they substitute more-expensive forms of entertainment with the less-expensive ones. So they travel less, go to concerts and theatre less, but go to the movies more.

Our biggest market is Mexico and other Latin American markets. We didn’t have a high year of growth in Mexico, where the GDP grew by 1.3 percent. But we grew 21 percent in Mexico and globally, we were up 29 percent. We are the fourth-largest in the world after Regal Entertainment Group, AMC Entertainment and Cinemark, all of which are US-based. This year, we will open 320 more screens.

Q. India was your first market outside Latin America and now you are present in the US too. What are your biggest priorities?
As of now, the most important [markets] in terms of expansion are Brazil, India and the US. We have a bigger pipeline in India than in Brazil. But things take longer to happen in India. We started in India two years ahead of Brazil. But, in Brazil we are already operating 230 screens; in India we have 84 screens.

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Q. Are you happy with your performance in India?
We are happy with what we have accomplished. This year, we will add 60 screens and plan to finish 2017 with 400 operational screens. We are still optimistic about the prospects in India and are here for the long run.  

Q. You had some issues with the earlier heads of the Indian units [the two sides have since settled a dispute over shareholding]. Do you think that might have cost you some of the growth?

Yes. In every operation around the world, if there is any problem with the local management, you tend to slow down. You tend to lose some months. But we have a very good team now.

Q. How different is the Indian market?
India may not be the most expensive in terms of investment required to open a cinema. But the cost of land is very high. Rentals are very high compared to Latin America or the US. In terms of acquisition targets too, Indian companies trade at higher multiples than their peers in the US or Brazil. So that is part of the challenge. Valuations are high here.