Carnival Films to acquire 3,000 screens over next three years
Carnival is in talks to buy 175 screens from three separate multiplex operators in Andhra Pradesh, Punjab and Uttar Pradesh
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Mumbai: Carnival Films Pvt. Ltd, a Kochi-based company that currently operates around 75 screens, has declared plans to acquire nearly 3,000 more over the next three years in India and abroad.
Backed by international agri-commodity trading company Advantage Overseas Pvt. Ltd (AOPL), Carnival Films most recently bought out the multiplex business of Housing Development and Infrastructure Ltd (HDIL) for a little over Rs.100 crore. The acquisition boosted Carnival’s modest screen count of 45 overnight to more than 75.
Shrikant Bhasi, chairman of the Carnival Group, said that his company is in talks to acquire 175 screens from three separate multiplex operators in Andhra Pradesh, Punjab and Uttar Pradesh. Bhasi did not share details of the plans, but confirmed that consulting firm KPMG is advising the company on the transactions, which he said will be concluded in the next two to three months. “The immediate goal is to have 300 screens,” said Bhasi, who is also a movie producer and has played minor roles in Malayalam films. “My team is already working for a 3,000-screen project.”
There is a great deal of interest from domestic and international private equity firms in the film exhibition space, said Bhasi. A single screen costs around Rs.2.2 crore to develop and acquisition is the easiest route to add more screens in India. Internal accruals and debt will be the two main sources of acquisition to hit the 3,000 mark, Bhasi said.
He said his plan has the backing of AOPL, which reported a revenue of Rs.52,000 crore for the last financial year.
However, Mint could not independently verify this.
Multiplexes account for approximately 25% of the total number of screens in India, according to a March 2014 report by KPMG.
“It is a distributor-driven market,” said P.V. Sunil, director and chief executive of Carnival Films. “The more screens, the more bargaining power with distributors. You can also have better deals with retailers selling food in cinemas based on the volumes.” There are fewer than 1,000 multiplex screens in India, he said.
Akshay Rathi, director of Saroj Screens Pvt. Ltd and Vidarbha Exhibitiors Pvt. Ltd, which owns 23 screens across Maharashtra and Chhattisgarh, said there are some people in this business who have entered the market just to build and then sell out their business at a higher valuation and some of them are selling off because they have acquired a huge debt on their books to build the business.
“Carnival’s 3,000 screen dream seems to be tough. But there is solid interest from private equity firms in the exhibition space in India,” a consultant, requesting anonymity, said.
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