Companies, Entertainment, PVR , INOX

Cinema goers watch Bollywood movie “Dilwale Dulhania Le Jayenge” (The Big Hearted Will Take the Bride), starring actor Shah Rukh Khan, inside Maratha Mandir theatre in Mumbai December 11, 2014. The movie, released in October 1995, has set a record of completing 1000 weeks of continuous screening at a cinema, a feat unmatched by any other Bollywood movies. According to Manoj Desai, owner of the theatre, the movie, which is still being screened, enjoys at least 50 to 60 percent occupancy on weekdays and full house on weekends at his theatre. The movie is screened only in the morning and the ticket price ranges from 15 to 20 Indian rupees ($0.24-$0.32). Picture taken December 11, 2014. REUTERS/Danish Siddiqui (INDIA – Tags: ENTERTAINMENT SOCIETY) – RTR4HQDE

Cinema halls crippled by the pandemic-induced lockdowns will get some respite from relief measures such as waiver of property tax and part of the electricity bill, which some states have announced, but owners said they need much more to weather the storm.

Gujarat took the lead by exempting property tax and fixed charges for electricity for the year to March 2022, while Bihar, Assam, Andhra Pradesh and Uttar Pradesh waived off minimum electricity charges for three months.

Kailash Gupta, Chief Financial Officer of INOX Leisure Ltd said state support was necessary as COVID-10 had inflicted severe financial hardship and loss of jobs.

“Support from governments at all levels in the form of waivers and subsidies will prove to be extremely critical and massively helpful in overcoming the financial stress. We believe that the decision by government of Gujarat is a bright beginning and we will surely see more states coming forward to support the industry,” Gupta told Moneycontrol.

Devang Sampat, CEO, Cinepolis India, said relief measures were necessary to ensure that the sector continues to be able to provide employment to lakhs of people directly or indirectly associated with the movie industry.

“We hope that all state governments implement a complete waiver in electricity charges immediately to provide the oxygen which this industry needs in the short term,” said Sampat. 

Akshaye Rathi, film exhibitor/ director, Saroj Screens Pvt Ltd said the industry was expecting relief from the Maharashtra government. 

Exemption from property tax means relief of tens of lakhs of rupees a year in big cities while in smaller towns it would be between Rs 2 lakh and Rs 5 lakh, he said.

“This kind of relief can help to some extent,” said Rathi.  

But there are other measures that can be of bigger help for exhibitors. 

Theatres urge for more financial help

Rathi said states should help ease the heavy burden of licence fee for cinemas. “The state governments can extend the period of the tenure of the licence as cinemas have been shut for a long time.”

Vishek Chauhan, who runs the single-screen Roopbani Cinema in Bihar, said exemption from property tax and fixed electricity charges was not of much consequence in the long term.

“A theatre in a tier I-II market records an average revenue of around Rs 5-10 crore. Now you are reimbursing them Rs 5 lakh. It is not going to make real difference. What will make a difference is if you give us a five-year tax break.”

“We are facing cash burn. We are short of liquidity. We need to get some money into our coffers to tide over this situation,” he said.

Top multiplex players like PVR and INOX  have raised funds to tide over the crisis.

PVR had completed a Rs 300 crore rights issue last year in July and this year in February it completed its equity fund raising of Rs 800 crore through the Qualified Institutional Placement (QIP). 

The company had said that the funds will be utilised for reduction of debt and meeting ongoing capital expenditure, among others. 

INOX recently  launched a QIP to raise up to Rs 300 crore. The funds are being raised for capex, working capital and debt repayment. It had also raised Rs 250 crore through QIP last year in November.

While many multiplex players are looking at different ways to manage business, smaller theatre-owners are struggling.

Smaller players need more attention

“You (state governments) are not giving us structured loans. Telangana had done that by giving cinemas Rs 5-10 lakh soft loans. And this is required especially for cinemas because we don’t fall under any category. We don’t fall under MSMEs. Even bankers don’t take us seriously,” Chauhan said.

Sharing his experience of approaching a bank for a loan, Chauhan said, “I had approached a banker for a working capital loan and he asked why do you need working capital. I said we have to give advance to distributors which goes up to Rs 4 lakh – 5 lakh and he couldn’t believe it that cinemas needed working capital.”

He said theatre owners get equipment loan and loans for renovation.

“But to do business we don’t get loans. We need structured loans for specific cinema needs. We are a very high cash generating business. Based on the cinema’s turnover they should get loans at reduced interest rates so that we can operate our business.”

While cinemas last year got the go ahead to reopen from October 15, owners chose not to open as there was dearth of new content. This means that many theatres have stayed shut for over a year now. 

This is why Chauhan said that the biggest concern will be for cinema owners who have kept their properties shut till now.

“Last year in November-December, I spoke to an exhibitor friend and asked him to reopen his theatre. He said no because he needs Rs 10 lakh to reopen. And he didn’t have that kind of money. Hence, we need liquidity injection otherwise around 2,000 screens would be shut. Give theatres liquidity pan-India so that they can open when the time has come for them to restart,” said Chauhan. 

Chauhan has urged various state governments to listen to the small exhibitors who have a bigger share in terms of overall screen count in India. 

“Before the pandemic we had around 6,000 single screens, I think we would be left with 4,000 single screens. State governments can impact a large population if they go out and help them (small exhibitors).” 


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