Inox defers FY21 capex plans, PVR to raise ~300 crore

Multiplex operator Inox Leisure has deferred its FY21 capital expenditure (capex) plans by a year as the exhibition business suffers due to the coronavirus (Covid-19) pandemic. Inox, the country’s second-largest multiplex chain, reported a loss of ~21 crore (before tax) in the March quarter of FY20 against a profit before tax of ~68 crore a year ago.

Analysts have already said the April-june peroid of FY21 will be a washout since multiplexes have been shut for the duration. Cinema halls are likely to open in July as part of the government’s Unlock 1.0 programme. “I rather focus on FY22 than FY21,” said Inox group Director Siddharth Jain.

“This financial year is going to be tough, given the disruption that the business has seen due to the pandemic. While the festive quarter (October-december) will see blockbusters being lined up by filmmakers, it is better to look at new screen additions in FY22,” Jain, who belongs to the promoter family, said.

The shift to FY22 will also mean that Inox’s capex outlay will increase to ~250 crore (in FY22) from an average annual outlay of ~150-200 crore, Jain said. This is because the company will look to add nearly 100 screens in FY22, a significant jump over previous years.

In FY21, for instance, Inox will launch only those screens that were commissioned in FY20 and whose work is nearly 86 per cent complete.

This number is 41 in terms of screens for which the company will require an additional amount of nearly ~30 crore to complete the work, Jain said. Inox has no plans to raise capital in the near future and said in a separate disclosure to the stock exchanges on Tuesday that it was adequately funded for the next six months.

In contrast, rival PVR, the largest multiplex operator in the country, had said on Monday that its board had approved a fundraise of ~300 crore via a rights issue.

Some part of the money, said media analysts, could be utilised to fund new screen additions this year (FY21) as it strives to maintain the lead. In FY20, Inox added 52 screens, taking its total tally to 626 screens. On the other hand, PVR added 87 screens, taking its tally to 845 screens.

India’s exhibition sector is skewed in favour of multiplexes despite the latter having only a 30 per cent share

of the total 9,600 screens in the country. Multiplexes, say experts, take over half of the theatrical revenues in India, owing to their ability to attract both footfalls and content.

Analysts expect occupancy levels to be low in the first few months following reopening. This is owing to the fear of catching the virus among people, said Karan Taurani, vice-president, research, Elara Capital. He added that the occupancy will improve subsequently.

Taurani expects occupancy levels to settle around 25-30 per cent for most multiplexes in about six to eight months after reopening. This is against the 35-36 per cent occupancy levels that existed before the Covid-19 outbreak.

Jain said the Independence Day weekend this year could see footfalls improve in multiplexes as consumers attempt to shrug off the fatigue from the extended lockdown. “Apart from blockbusters, smaller films in recent years have also done well. So, we are hoping to see viewers lap up both once we reopen. Some of the blockbusters could also be advanced to take advantage of the Independence Day weekend,” said Jain.

While Akshay Kumar’s Sooryavanshi is eyeing an October release, Salman Khan’s Radhe will be launched in November and Ajay Devgn’s Bhuj - The Pride of India, sports drama ’83, and Aamir Khan’s Laal Singh Chadha will be released in December.