Consulting Industry Overview • • The Indian film industry is the largest film industry in the world in terms of the number of films produced and admissions each year. Revenue for 2004 was estimated at Rs. 59 billion (US$1. 3 billion), which was less than 1% of global film industry revenue and a fraction of the U. S. Film industry revenue, which was US$9. 49 billion in 2003. (Source CII ) Film Industry Revenues 12% 4% 57% 9% 2% 2% 14% Domestic Theatrical Leakages piracy In Cinema Ads Music Satellite / DTH / IPTV DVD / VCD / Overseas Cable Overseas Theatrical
Nearly 80% of Indian Industry revenues come from Domestic and Overseas Theatrical. On the contrary US Film Industry earns only 35% from box office sales and remaining 65% is derived from other revenue sources This clearly signifies the onset and potential of Multiplexes in the Indian Film Exhibition Sector. Consulting Consulting The Film Exhibition Industry • • The Indian film exhibition sector had revenues of Rs. 34 billion in 2004. (Source:CII) The Film Exhibition Industry can be divided into two segments: – – single and double-screen cinemas and multiplex cinemas, i. e. hree screens or more. • As of March 2005, there were approximately 12,000 cinemas in India of which 73 were multiplexes with a total of 276 screens. Multiplexes constitute only 0. 6 % of about 12,000 cinema halls in India, but account for 28% to 34 % of the box office take for the Top 50 films in 2004. (Source Yes Bank) • Consulting The Film Exhibition Industry: Multiplex More than 60 additional multiplexes with more than 220 additional screens are slated to commence operations by the end of 2006, a growth rate of 80-100% Average price of a ticket for a multiplex cinema is Rs. 5 - 85 but the number of screens in multiplexes represented only 2. 3% of total screens in India as of March 2005. (Source:Industry Estimates) An increase in the number of Multiplex screens should result in an increase in film exhibition revenues, so the opening of new Multiplexes represents a significant growth opportunity for the industry. S c re e ns P e r M illio n P o pula tio n 140 120 100 80 60 40 20 0 India UK Belgium Ger many Spain Italy Ir eland Denmar k Fr ance USA 117 77 52 30 12 43 45 46 53 61
In India, the number of screens per million of population is just 12 whereas the average in western countries is 40. India needs 20,000 screens to cater the entire cinema viewing population Consulting The Film Exhibition Industry: Multiplex No of Multiplex in Cities 16 12 8 4 0 12 6 5 4 4 3 3 Nasik Multiplexs Across Regions as on March 2005 (source Yes Bank) 3 Pune 23 North South East Delhi Kolkata Mumbai & Suburbs Ahmedabad Ghaziabad Gurgaon 42 3 5 West Geographic Distribution of Theatres Across India Ficci - E&Y Report 2004
Andhra Pradesh 24% 21% Kerala Karnataka Maharashtra Uttar Pradesh Tamil Nadu Others 10% 19% 8% 9% 9% Number of Screens 3 Screens 4 Screens 5 Screens 6 Screens More than 6 Screens Number of Number of Number of Seats / Multiplexes Screens Seats Screens 40 120 43143 360 21 84 25862 308 6 30 10148 338 4 24 6991 291 2 18 3326 185 73 276 89470 1482 Majority of multiplexes have 3 screens. The table enlists the number of multiplexes sub-divided by the number of screens and seats. Consulting Consulting Key players
Company PVR Cinemas * Inox Leisure Limited Adlabs Films * Shringar Cinemas Wave Cinemas E-City Cinemas Total % of India # of Properties # of Screens 7 34 5 25 4 14 3 14 3 13 3 14 25 114 34% 41% # of Seats 7333 7344 5666 4588 4380 3952 33263 37% * Only film exhibitio n pro perties with 3 o r mo re s creens have been co ns idered fo r this analys is So urce: Bo llywo o d Emerging Trends & Gro wth Drivers - Yes Bank Repo rt 2005 Kindly note that the No of Properties , Screens and Seats have been updated in the subsequent slides * from respective Company Web Sites as new properties have come up after report was published.
Six largest multiplex operators of India tabulated above operate 114 screens spread across 25 properties with a cumulative seating capacity of 33,263. This constitutes 34%, 41% and 37% of India’s total multiplex properties, screens and seats respectively. (Source: Market Estimates) Consulting Key player : Adlabs Films Adlabs Upcom ing Multiplexes Nam e City Screens Cineplex Adlabs Ansal Vaishali Plaza Metro Adlabs Mangal Adlabs Goldspot Adlabs Adlabs Palm Beach Himalaya Adlabs RDB Boulevard IMAX, Mani Square Ansal Mall Gopalan Legacy Adlabs Dattani Mall Nam e
Seats 1,076 1,003 1,491 1,102 1,362 1,008 1,200 1,050 1,350 1,200 1,100 1,100 Adlabs Upcoming Multiplexes Name City Screens Seats Sangam Adlabs Mumbai 4 1250 R Town Fortune City Mall Ansal Plaza Maheshwari Parmeshwari Adlabs RAP, Borivali Rap Mirage RAP Media Ltd RAP Media Ltd RAP Media Ltd RAP Media Ltd Mumbai Bangalore Gurgaon Hyderabad 8 to 10 8 to 10 3 5 to 6 2200 2,200 1,000 1600 Mangalore Ghaziabad Mumbai Indore Hyderabad New Mumbai Ahmedabad Kolkata Kolkatta Greater Noida Bangalore Thane 3 6 4 4 4 5 3 4 4 4 4 RAP Metropolitan RAP Media Ltd Patiala Little world Mall Kharghar Paras Zirakhpur Downtown Total upcoming Mumbai Agra Amritsar Jalandhar Ludhiana Mohali (Chandigarh) Moradabad 4 3 6 5 7 5 3 5 4 to 5 4 122 - 128 1250 1004 1,700 1,500 2,000 1,500 1016 1,450 1,200 1300 36,212 Adlabs Film s Ltd Exis ting M ultiple xe s Location City Scre e n Kalyani Nagar CIDCO Wadala Mulund Kanjurmarg Andheri Sahibabad Industrial Estate Pune Nashik Mumbai Mumbai Mumbai Mumbai Ghaziabad 3 3 5 4 4 5 4 28
Se ats 1,109 1,200 1,832 1,353 1,263 1,282 1,313 9,352 Gold Adlabs Divya Adlabs Imax Adlabs R-Adlabs Huma Adlabs Fame Adlabs Aerens R Imax at Rap Adlabs Adlabs Films Ltd was founded by Mr. Manmohan Shetty and Mr. Vasanji Mamania In 2005, (Reliance - ADA Group) acquired a 50. 16% stake in Adlabs Films Limited Consulting Key player : E-City Entertainment E - City Entertainment (Essel Group)
Nam e Sigma Mall Fun Republic Fun Republic City Centre Cross River Mall Ansals Plaza II Pacif ic Mall Nand Plaza Fun Republic Fun Republic TDIChandigarh Fun Republic Malnz Times Square (Jagat Cinema) Axis Mall Lake Mall Times Square Dindayal City Mall Fun Republic Dreams Mall Kukreja Mall AEZ Carnival Country North Square TDI Mall V3S Mall Mittal's Mega Mall Ansals Plaza Mittal's Mega Mall Sun City Mall Ansals Royale Plaza Grand Total Location Bangalore Hyderabad Lucknow Mumbai New Delhi Punjab Agra, Uttar Pradesh Agra, Uttar Pradesh Ahmedabad Chandigarh Chandigarh Coimbatore G. T. Road Jaipur Kolkatta Kolkotta Kota M.
P Mumbai Mumbai Mumbai NCR (Uttar Pradesh) New Delhi New Delhi New Delhi Panipat, Haryana Punjab Punjab Rajasthan Rajasthan Since /Targe t Date March, 2006 Planned 2007 April, 2006 Planned 2007 March, 2006 Planned 2008 May, 2006 Planned 2006 June, 2001 November, 2003 Planned 2007 Planned 2006 Planned 2008 December,2005 Planned 2008 Planned 2007 Planned 2006 Planned 2006 August, 2003 Planned 2006 June, 2006 March, 2006 February, 2006 December, 2005 February, 2006 Planned 2006 Planned 2007 Planned 2009 Planned 2007 Planned 2007 No of Scre e ns 3 6 4 4 4 4 4 3 6 4 3 6 6 2 4 4 4 4 6 5 4 3 3 3 3 3 4 4 4 3 120
E-City Entertainment is a business segment of the Essel Group. In Film Exhibition they have 2 Brands 1. Fun Republic Entertainment 2. Fun Multiplex. • E City Entertainment has made a prominent appearance Metros across Regions like Mumbai and Delhi. • And is seen to be targeting Tier 2 Tier 3 Cities like Coimbatore, Rajasthan, Punjab, Kolkata Consulting Key player : Shringar Cinemas
Shringar Cinemas Ltd Existing Multiplexes Fame Adlabs 5 screens , 1342 seats Fame Malad 6 screens, 1571 seats Fame Nasik 3 Screens, 1407 Seats Fame Kandivali 4 Screens, 1275 Seats Fame Kolkata 4 Screens, 900 Seats Fame Pune 3 Screens - 1009 Seats Grand Total 25 Screens 7504 Seats • Shringar Cinemas, managed by promoters who have been one of the largest film distributors in Western India for Hindi films. Company is focusing on Western India i. e. Mumbai, Pune, Nashik, Aurangabad as well as Eastern Indian i. e. Kolkata Shringar Cinemas Ltd Upcoming Projects FAME FAME FAME FAME FAME FAME Allahabad Ghatkopar Aurangabad Hyderabad Surat - Raj Empire Thane 4 screens and 1250 seats 3 screens and approximately 1000 seats. 3 screens and approximately 900 seats 6 Screen 5 screens Consulting Key player :Inox Leisure Ltd
Inox Leisure Ltd Existing Multiplexes No of screens City Location Mumbai Nariman Point 5 Bangalore Magrath Road 5 Vadodara Race Course Circle 4 Pune Bund Garden 4 Goa Panaji 4 Kolkatta Salt Lake 4 Kolkatta Elgin Road 4 Indore Sapna Sangeeta 3 Darjeeling Laden La road 3 Jaipur Vaibhav Nagar 2 Grand Total 38 No of seats 1335 1103 1318 1316 1271 1144 1016 1080 811 787 11181 Inox Leisure Ltd
Upcoming Projects Location Screens Seats Vishakhapatnam Raipur Lucknow Kolkatta Kharagpur Jaipur Jaipur Hyderabad Chennai Bangalore Bangalore Bangalore Grand Total 4 4 4 5 4 3 3 6 5 4 7 7 56 1300 1250 1000 1042 1200 750 750 1470 1156 1100 1860 1720 14598 Inox Leisure plans to target very specifically cities in South India Like Bangalore, Chennai, Hyderabad, Vishakhapatnam. Consulting Key player : PVR
PVR Cinemas Existing Locations Name PVR Bangalore PVR Priya PVR Saket PVR Vikaspuri PVR Narania PVR Gurgaon PVR EDM PVR Faridabad PVR SRS Faridabad PVR Plaza Spice PVR PVR Hyderabad PVR Rivoli PVR Lucknow PVR Indore PVR Mumbai Grand Total Location Screens Seats Bangalore 11 NA Delhi NA 944 Delhi 4 1000 Delhi 3 921 Delhi 4 830 Gurgaon 7 1300 Ghaziabad 3 720 2 480 Faridabad (Ha NCR Delhi 3 776 Delhi NA 300 Noida NA 1821 Hyderabad 5 812* Delhi 3 329* Lucknow 4 928 Indore 5 1199 Mumbai 2+3 NA 57 approx 12360 Approx PVR Cinemas Upcoming
Cinemas PVR C INEMAS Mumbai PVR C INEMAS New Delhi PVR C INEMAS Mumbai PVR C INEMAS Mumbai PVR C INEMAS New Delhi PVR C INEMAS C hennai PVR C INEMAS Mumbai PVR C INEMAS Ludhiana PVR C INEMAS Gurgaon Prashant Vihar, Delhi Latur Aurangabad Silver Arc, Ludhiana TOTAL Screens 6 Screens 6 Screens 7 Screens 8 Screens 6 Screens 7 Screens 4 Screens 4 Screens 2 Screens 3 Screens 3 Screens 3 Screens 3 Screens 71 Screens Seats 1750 1269 2050 2200 1500 1600 1250 1000 450 800 1050 1100 1000 Expected In Fiscal 2006 Fiscal 2007 Fiscal 2007 Fiscal 2007 Fiscal 2008 Fiscal 2007 Fiscal 2007 Fiscal 2007 Fiscal 2006 Fiscal 2006 Fiscal 2006 Fiscal 2006 Fiscal 2008 9310 Seats • PVR Cinemas setup India’s first multiplex in 1997 at Delhi. • The Company has been funded by ICICI Venture and is in final stages of closing second round of equity funding for future expansion • PVR Cinemas is focusing on developing multiplex properties in Northern, Western and Southern India (Bangalore & Hyderabad) Consulting Key player : Wave Cinemas Wave Cinemas is a part of The Chadha Group. Currently operates 13 screens spread across 3 properties. With existing operations in Noida, Kaushambhi and Lucknow. Wave Cinemas is a regional player focusing on Northern India. enetrating in untapped raw territory in UP and Ghaziabad. Wave Cinemas Existing Cinemas Location Screens Noida 5 Kaushambi ( Ghaziabad) 4 Lucknow 4 Grand Total 13 Seats 1804 1192 1394 4390 Wave Cinemas Upcoming Projects Mohali ALL LOCATIONS ARE Ludhiana IN NORTHERN INDIA Raja Garden Delhi Consulting Consulting Summary: Growth Drivers Growth drivers responsible for the expected increase in the number of multiplex cinemas are as follows: • An increase in disposable income in the hands of an ever expanding Indian middle class demographic changes tax benefits for multiplex cinemas retail boom Favourable • Organised • Entertainment • Increase in the number of high grade Hindi films. Consulting Favourable Demographics Demographics • • (source CIA fact sheet July 2005 Est) Current Population: 1 billion+ (1,080,264,388) growing between 1. 4% to 1. 8% annually Age structure: 0-14 years: 31. 2% 15-64 years: 63. 9% 65 years and over: 4. 9% Median age: 24. 66 years A younger population tends to have higher aspirations, and will spend more as it enters the earning phase. • • Consulting Increase in Disposal Income
Classes Rich Consuming Climbers Aspirants Destitutes Between Above USD 4,600 USD 970 - 4,600 USD 470 - 970 USD 340 - 470 Less USD 340 Households in Households in Households in 1995 2000 2006E 1 million 3 million 6 million 29 million 66 million 75 million 48 milliom 66 million 78 million 48 million 32 million 33 million 32 million 24 million 17 million URBAN CONSUMER SPEND % (Source KSA Technopak) Categories 1999 2002 Savings & Investments 14 5. 2 Consumption Shopping 22 24. 3 Leisure & Entertainment 21 29. 1 Grocery 43 41. 4 Sub total of Consumption 86 94. Total 100 100 Source: CII – KPMG Report 2005 accredited NCAER Multiplexes generally cater to High and Middle income Groups, with an increase in the number of households within this earning group, will result to higher consumption and spending patterns. Similarly migration of households from lower income to middle income levels will further drive the consumption patterns. Urban consumers have increased their expenditure on leisure & entertainment. Simultaneously spends on eating out, movies and theater, and books and music will increase. Consulting
Onset of Retail Activity • Though Organised retail comprises of 3% of the total retail pie of USD 200 Billion, it is growing at 25 to 30% CAGR Number of malls in India is expected to increase from approximately 50 as of the end of 2004 to around 250 by the end of 2006. (Source: BW Marketing Whitebook, 2005, attributed to KSA Technopak. ) • • • There will be approximately 600 malls by 2010 Securities study) (Source Edelweiss Multiplexes are one of the anchor tenants in large format malls, as their presence increases footfalls by approximately 40-50%. Source: CII) Consulting Entertainment tax benefits Entertainment Tax Exemption / Benefit Minimum Minimum Seating No of Screens 1250 4 1000 1000 1000 NA NA 3 3 3 NA 3 STATE Delhi Gujrat Maharashtra Mumbai Kalyan, Thane, Dombivali, Navi Mumbai, Nasik, Aurangabad, Nagpur Vasai, Virar, Nallasopara Karnataka UP Tamil Nadu West Bengal ENTERTAINMENT TAX 30% 100% 45% 45% 40% City Mumbai Rest of Maharashtra Punjab Kolkatta Rajasthan UP Bhopal/Indore/ Jabalpur/Gwali or Yr 1 100% 100% 100% 100% 100% 100% Yr 2 100% 100% 100% 100% 100% 100% Yr 3 100% 100% 100% 100% 90% 100%
Yr 4 75% 75% 100% 100% 80% 100% Yr 5 75% 75% 100% NA 70% 100% 34% 40% 60% 15% 30% 100% 100% 100% 75% 50% 1000 3 Source PVR Cinema Research • In order to encourage investment many state governments have announced policies offering entertainment tax benefits. • This has encouraged the growth of Multiplex Cinemas and also encouraged singlescreen theaters to convert into Multiplexes. • Quantum of entertainment tax benefit would be dependant on compliance with certain conditions specified by the relevant state. Consulting Increase in Hindi Movies 001 Average number of high grade Hindi films released per week 1. 15 2002 1. 46 2003 1. 58 2004 1. 71 Source: Bollywood Emerging Trends & Growth Drivers - Yes Bank Report 2005 The number of Hindi movies has increased from year 2001 to 2004. This signifies immense potential and is definitely a sign of being a crowd puller and generating more revenue. Consulting Regulatory • • • The Indian film exhibition sector is highly regulated and changes in regulations may have an adverse effect on business. Regulations by both the central and the state governments.
Policies extend to aspects of building and safety requirements, licensing requirements, tax and entertainment tax registrations and grant of exemptions from the payment of entertainment tax. Provisions of laws include: – Requiring a minimum distance between the screen and the front row seats, which distances were set based on large screens used in singlescreen cinemas and not the smaller screens used at most Multiplex Cinemas. – The permissible pressure at which the electrical current may be supplied to a projector, which provision does not reflect the technological advances in respect of Multiplex Cinemas. The reservation of playing times for a scientific film, educational film, news reel or documentary. , – Restrictions on ticket prices in certain states. • Consulting Break-Up of Revenues REVENUE Patron’s Spend Ticket Revenue Advertising F&B Revenues Conducting Fee Parking Charges Management Fee Consulting Break-Up of Cost Cost Direct Cost Distributors Share Entertainment Tax F&B Cost A 1250 seater Multiplex in a metropolitan city would cost anywhere between Rs80-90mn. This does not include the cost of land because the land may be leased Personnel Cost
Depreciation Interest Consulting Way Forward • Over the next 18-24 months, 6 of the largest multiplex operators in India mentioned earlier are likely to commercialize approximately 200-240 screens spread across 50- 60 new multiplexes. • These multiplexes will have a cumulative seating capacity in excess of 55000-60000. • There will also be an increase in number of multiplexes operated by smaller players, who constituted 66% of total multiplexes as of march 2005. • It is estimated that number of operating multiplexes in India will increase by 80-100% by end of 2006. By the end of 2006, 135+ multiplexes will house more than 160,000 seats spread across 500+ screens. • These multiplexes will have significant direct positive impact on the business economics of film production, financing, distribution and exhibition and indirectly on other ancillary markets. (Source: Yes bank) Consulting D’Essence Consulting, New MHADA Complex, Bldg no. 1 , Office no. 2, Near PMGP Colony, Andheri East Mumbai 400093 Fax- 28228142 / Tel-28347425 www. dessenceconsulting. com EmaiL: info@dessenceconsulting. com elsa@dessenceconsulting. com
