Multiplexes could take ₹100-crore hit from Maharashtra move to allow food in theatres

Our Bureau MUMBAI | Updated on July 31, 2018 Published on July 31, 2018

Operating profit of industry could drop by Rs 100 cr if just half of movie-goers carry their own food & beverage, says report

The operating profit of the Indian multiplex industry could fall by Rs 100 crore even if half of the movie-goers to multiplexes in Maharashtra carry their own food & beverages (F&B), a report by CRISIL Ratings said today.

To offset this loss, ticket prices need to rise by Rs 70 per ticket. Maharashtra accounts for about a quarter of the revenues of multiplex operators. Non-ticket segments comprising F&B and advertising are highly profitable and subsidise losses on ticket sales.

The gross profit margin of multiplexes in the F&B segment is about 75 per cent and in the advertising segment over 80 per cent. In fiscal 2018, leading multiplexes reported an operating profit (EBITDA) of Rs 58 lakh per screen. “Of this, the gross profit generated by the F&B segment was Rs 61 lakh per screen, while advertisements reeled in Rs 33 lakh per screen. Put another way, these multiplexes would have bled if their only source of revenue was ticket sales,” Sachin Gupta, Senior Director, CRISIL Ratings said.

Apart from being highly profitable, non-ticket revenues are growing twice as fast as ticket sales. The compound annual growth rate of non-ticket revenues was 29 per cent in the last five fiscals, compared with 15 per cent for ticket revenues. As a result, the share of non-ticket revenues has increased to about 43 per cent in FY18, compared to 30 per cent in FY13.

The Maharashtra government in July said movie-goers could carry their own food inside multiplexes with effect from August 1, 2018. A public interest litigation (PIL) on this is pending before the Bombay High Court.

However, an increase of Rs 70 in ticket prices to offset F&B losses may not go well with movie-goers. “Today, multiplexes account for half of the box-office collections despite having only a fourth of the total movie screens in India. They are also the main attraction at shopping malls. Therefore, any disruption in multiplex operations will, apart from having a cascading impact on the film industry, affect footfalls at malls too,” Nitesh Jain, Director, CRISIL Ratings, added.

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Published on July 31, 2018
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