Pyramid Saimira puts India movie exhibition expansion plan on hold
Wednesday, Sep 17
MUMBAI - Pyramid Saimira Theatre Ltd has put its domestic
expansion plan on
hold and even shut a few cinema screens in North India because high
inflation
has impacted consumers' spending pattern, Managing Director P.
Saminathan
told NewsWire18 today.
As a result, the company's revenue projection has been cut to
around 10 bln
rupees in 2008-09 (Apr-Mar), against the earlier guidance of 12.7 bln
rupees,
he said.
The company earlier expected to add around 350 screens in the
country, most
of them in North India, but "we have decided not to go aggressively on
screen
expansion because of the downturn," Saminathan said.
"In fact, I would say the industry is not growing at all this
year. The
growth you see in organised exhibition companies is because they are
eating
away business from small local players," he said.
Pyramid Saimira had plans to expand its food and beverage
business, which
have been put on hold as well. "These are discretionary spends for
people, so
in bad times people prefer to save on them," Saminathan said.
The trend is prevalent in some geographies outside of India too,
as Pyramid
has reduced its number of screen in Malaysia too.
The group's consolidated revenue for 2008-09 is seen at 14-15 bln
rupees,
he said.
In 2007-08, the company recorded consolidated revenue of 10.3 bln
rupees,
and standalone revenue at 7.4 bln rupees.
The company hopes to hold earnings before interest, tax,
depreciation, and
amortisation margin between 16-17%, but given the market conditions,
it may
prove a challenge, Saminathan said.
.
OVERSEAS EXPANSION
Despite turmoil in domestic plans, Pyramid Saimira continues to
explore
growth opportunities outside of India.
The company today announced a 50:50 joint venture in China through
which
it has started its first cinema complex in the country.
The JV will invest 1.5 bln rupees on further expansion.
Saminathan said the JV would have four more complexes before
November, and
30 complexes--with 75-80 screens--by March.
The capital expenditure for expansion in China would be limited
because
under terms of the agreement the local government would own the land
and
premises of Pyramid's theatres, Saminathan said.
Pyramid is also close to completing the acquisition of UK's oldest
exhibition company, for an approximate $100 mln (4.6 bln rupees), he
said.
Saminathan said the company have enough funding options, but at
present did
not require any funds, Saminathan said.
Yet, the company has debt of 6.7 bln rupees and debt to equity
ratio of 3.
Around 4 bln rupees of its debt is from overseas, partly from a
convertible
bond which has a conversion price of 380 rupees per share, compared
with its
current share price of 120.55 rupees on National Stock Exchange.
.
CONTENT PRODUCTION
Slow growth in its exhibition business has not affected the
group's content
production plans, he said.
The company will still be producing and releasing around 30 films
in
2008-09, of which 17 are under production currently, Saminathan said.
Increase in television content production is slightly behind
schedule. The
company currently only has three and a half hours of original content
to air
per day.
The company is filming four to five hours of original content per
day at
present, Saminathan said. By the end of the year, the company will be
making
around 12-14 hours of original content per day.
There is expectation of high demand for content due to proposed
launch of
several new regional channels. But it is yet to be seen if this
lacklustre
year for entertainment will also drag these launch plans. End
.
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