Inox emerges as top bidder for SRS Cinemas acquisition

Multiplex firm INOX Leisure has offered close to Rs225 crore for the SRS Cinemas acquisition, rival Cinepolis also in fray


INOX is currently inspecting the assets of SRS Cinemas, which operates 62 multiplex screens across 22 cities in India. Photo:
INOX is currently inspecting the assets of SRS Cinemas, which operates 62 multiplex screens across 22 cities in India. Photo:

Mumbai: Inox Leisure Ltd has emerged as the highest bidder for SRS Cinemas, the multiplex business of SRS Ltd, two people aware of the development said on condition of anonymity.

Inox has offered close to Rs225 crore for the theatre chain, one of the two people cited above said.

The company is currently inspecting the assets of SRS Cinemas, which operates 62 multiplex screens across 22 cities in India, and talks are at a fairly advanced stage, said the second person.

The acquisition of SRS Cinemas will potentially accelerate a consolidation rush in the film exhibition industry which has seen larger multiplex chains—PVR Ltd, Inox and Cinepolis—acquire smaller rivals, often at a premium.

For Inox, the deal with SRS Cinemas will mark its fourth such acquisition.

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“SRS is the last relatively large asset which is left in the multiplex space,” said Suniil Punjabi, an independent strategic adviser (entertainment and media) and former chief executive of Cinemax India. “Though the locations are not much to talk about, the potential acquisition does give Inox strategic advantage in consolidating the north India belt, which has been a weak spot for them.”

Inox made its first acquisition in 2007 when it acquired Calcutta Cine Pvt. Ltd. This was followed by Fame India Ltd in 2010.

In August 2014, Inox acquired a third multiplex chain, Satyam Cineplexes Ltd. Inox currently operates 113 multiplexes and 446 screens in 57 cities.

Mexican multiplex chain Cinepolis is also in separate talks with the promoters of SRS Cinemas for a competing bid, the people cited above said.

A spokesperson for Cinepolis India declined to comment.

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SRS Ltd is selling its multiplex chain to reduce debt and has hired SBI Capital Markets to manage the sale.

Emails sent to Inox, SRS and SBI Capital Markets remained unanswered till the time of going to press.

The SRS group was founded in 1985 by Anil Jindal.

It was incorporated as SRS Commercial Co. Ltd in August 2000 and later renamed SRS Entertainment Ltd in January 2005. The group entered the multiplex business in 2004. It listed as SRS Ltd in 2011.

Over the years SRS Ltd has diversified into other businesses, including consumer packaged goods, jewellery and retailing, all of which operate under the SRS brand.

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Currently, more than 90% of the company’s revenue and profits are accounted for by the jewellery business.

A report by rating agency ICRA said that SRS Ltd has defaulted on its loan repayment obligations because of weak cash flows.

“While the management has attributed the continued deterioration in realization of domestic debtors to recent strikes by jewellers, the significant delay in realization of export receivables remains unexplained,” ICRA said in its ratings rationale of the company in May last year.

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