Chennai entertainment group defies downturn, plans investmentDecember 8th, 2008 - 11:44 am ICT by IANS
Chennai, Dec 8 (IANS) Despite mounting losses in the aftermath of the global meltdown, city-based entertainment group Pyramid Saimira feels it is the right time to invest. It is planning to establish at least 800 theatres all over the country.It is to invest between Rs.6 billion and Rs.8 billion on film production and distribution and another Rs.2 billion for theatre acquisitions over the next two years.
“The plan is to have around 800 theatres under our fold, many in category B and C towns, by the end of this fiscal,” group chairman P.S. Saminathan told IANS in an intervieww.
Saminathan conceded his group has been hit by the meltdown, and debunked the theory that entertainment is recession-proof. “Theatre industry is witnessing a fall in ticket sales. Parents are cutting their children’s pocket money while corporates have stopped bulk booking for movies,” he said.
Nevertheless, Saminathan said, the time was right to invest so as to be ready when the uptrend starts in April 2010.
“It is time for consolidation and redrawing of overseas and domestic business strategies to cut costs in view of the global economic slowdown,” he said.
The investments will be funded by institutional debt and internal accruals to the tune of Rs.1.25 billion, he said.
Involved in every sphere of film activity - production (movie and television serials), distribution, exhibition (theatre management), hospitality, food and beverage, gaming animation and cine advertising - Pyramid Saimira operates in domestic and a few overseas markets.
“The economic slowdown has affected our theatre business in America. The business sectors that are hit are the ones where a large number of Indians or people of Indian origin are employed - our main target segment.”
Last October, the group’s flagship company, the Rs.7.49-billion Pyramid Saimira Theatre Ltd (PSTL), through its US subsidiary Pyramid Saimira Entertainment Inc, had acquired the Texas-based FunAsia that operated an entertainment complex with a movie theatre, banquet halls and radio station, apart from owning a magazine.
“People there have cut down their spending. Our theatre ticket price has halved to $6 and advertisement revenues have gone down,” Saminathan said.
In order to cut the cash burn after investing $11 million there, the group is reducing the number of theatre screens it operates to 18 from 25 and mulls screening movies that would interest other sections of the population.
In Malaysia, the group has rationalised the number of screens to 15 from 51 and converted many lease deals into revenue-sharing ones.
On the home turf, PSTL exited the theatre business in western and northern India, closing around 33 screens to focus on the four southern markets. However, the exercise cost it Rs.200 million.
The company exited distribution of Hindi movies in September and after the Rs.400-million loss incurred in the Tamil movie “Kuselan” starring Rajnikanth, PSTL is going slow on movie purchases for distribution.
“With 745 theatres and 460,000 seats under our management bringing in approximately Rs.30 million per day, we can afford cyclical losses,” Saminathan said.