While theatre owners look forward to re-opening after months of zero revenue, reduced capacity and high fixed costs might bring the curtains down for some small and mid-sized players
According to a KPMG report, India has 9,440 screens of which 3,150 are in a multiplex, and the rest are standalone. Post the lockdown in March, no new screens are expected to be added during FY21, and many single screens may be permanently closed
Courtesy: Priya Entertainment
After being shut for close to eight months, cinemas are set to open across the country from October 15 (barring a few states). While the government mandate has made many theatre owners upbeat after months of zero revenue, it may merely be a baby step in the long road to normality. According to audit firm KPMG, the film industry’s revenues are expected to decline significantly by 67 percent to Rs 61.1 billion in FY21 as compared to Rs 183.3 billion in FY20; revenues earned from the box office during the same period will plummet to Rs 30 billion from Rs 139 billion.
Even cash-rich multiplex owners aren’t expecting a windfall as soon as the curtains go up. “Our first set of consumers would really play the role of an evangelist. They will go out and talk about their experiences at the cinema. We will use this more as a marketing phase,” says Gautam Dutta, CEO, PVR Cinemas, adding it will only be in Diwali that the theatres will get into real action. “Starting mid-November is really when we will begin the road to recovery and, by December, I am confident we will hover around the pre-Covid numbers.”
In a graded reopening that is being planned, PVR has approvals to re-open 100 properties comprising 487 screens out of their total of 845. By the end of the month or November, they are looking at getting approvals for the remaining screens.
Given their relatively deep pockets, players like PVR have not been forced to shut down any theatres just yet. According to a recent Crisil note, the company had liquidity (cash and bank balance, undrawn committed bank lines and other liquid investments) of over Rs 4.5 billion as on September 2020. This, reckons Crisil, “should remain adequate to meet operating and debt servicing for the next few months”.
But the agony might run deeper for many smaller and mid-size players as analysts feel people might still be diffident to venture out to theatres. “It will take multiplexes at least another 8-10 months, if not more, to come back to pre-Covid levels; a complete recovery can only happen once an effective vaccine is in place,” says Naveen Kulkarni, CIO, Axis Securities.