We expect to cross 500 screen milestone in 1-2 years: Deepak Asher

How does the deal help in your strategy of expanding the INOX footprint?
INOX strongly believes in the growth potential of the exhibition sector, and is constantly looking out for opportunities for growth, both organic and inorganic. It has been our stated goal, when we launched our first multiplex around 12 years ago, to be a significant player in the Indian multiplex space and redefine the movie going experience in India. Acquiring Satyam accelerates INOX's strategy of exponential growth on a pan-India basis, particularly in the North Indian region. The business will also see significant benefits due to consolidation and economies of scale – both on the revenue side and the cost side.

With the acquisition, where does INOX stand vis-à-vis competition in terms of number of screen count?
Post the acquisition of Satyam Cineplexes, the screen count of INOX is 358. It continues to be one of the largest players in the sector nationally.

The deal with Satyam gives you a direct entry into the Delhi market. How are you going to leverage this?
The acquisition will lead to cost optimisation and revenue enhancement in the following ways -- sharing of best practices across both chains, savings in duplication of infrastructure costs, huge potential for reducing supply chain costs due to economies of scale, one-stop shop for pan-India advertising campaigns, larger footfall and eyeball numbers to improve advertising and marketing revenues and better pricing power.

This is the third acquisition by INOX, the others being Kolkata's Calcutta Cine Pvt Ltd and Fame India Ltd. Are you looking at inorganic growth as a strategy?
We, at INOX, continually explore opportunities that support our long-term strategy. We kicked off the consolidation phase in the multiplex industry by acquiring Calcutta Cine Pvt Ltd. Thereafter, we acquired Fame (India) Ltd. We intend to continue evaluating opportunities for organic and inorganic growth in the exhibition sector.

How will you offer a one-stop platform to the complete value chain of film producers and distributors, right to the end-consumer?
With our presence now in 50 cities along with Satyam Cineplexes, we look forward to take advantage of our vast reach across the length and breadth of the country and offer a one-stop pan-India platform to the complete value chain of film makers, producers, distributors, right to the end-consumer.

How are you going to integrate Satyam with INOX?
Over the next few months, we will evaluate the full benefits of integration and consolidation, to drive competitive advantage across the value chain, and consider our strategic options, including a merger of Satyam with INOX, in accordance with regulatory guidelines.

How do you propose to fund the deal? Is the deal being funded with pure debt?
The acquisition has been funded by debt raised by INOX.

Industry officials reckon that the consolidation would continue in the cinema exhibition space and two or three players would end up dominating the business. What is your take?
As you are aware, we are a grossly under-screened nation with the maximum number of movies being produced every year with approximately eight screens per million population. If you compare this with 30 screens per million in China, 60 screens per million in the UK and 120 screens per million in the US, you can see the potential for growth. We believe that there's a huge scope for expansion with a lot many players to join in the multiplex bandwagon. Also, as seen in other sectors, after the initial burst of growth which witnesses several players entering the sector, there comes a phase when consolidation commences, and 3-4 large players end up dominating the business. We believe this will occur in this sector as well, though it may be too early to say when.

During the last fiscal, your revenue grew 14.2% to Rs 877.8 crore. Post the deal with Satyam, what is the kind of growth in revenues you foresee in the current fiscal?
It is premature to put in any numbers at this very early stage. However, we believe that with this acquisition, we will be able to perform better and continue with the INOX growth trend in the future.

In terms of number of screens, what is your growth target?
INOX as well as Satyam have a robust property pipeline to be opened in the next 12-24 months, by which time we expect to cross the 500 screen milestone.