Subhash Ghai to enter multiplex business

He is known for making multi-star and mega-budget films. Now, Subhash Ghai's production and distribution company, Mukta Arts Ltd, is set to foray into the exhibition business.

The chain of multiplexes will be operational under the Mukta Cinemas brand.

Industry sources say the company is looking to invest Rs. 50 crore in the next three years.

It has planned to tie up with mall owners in Baroda, Ahmedabad and Bhopal, on a revenue-sharing model. It also plans to rent space, instead of buying properties outright.

The company plans to roll out 14 screens this financial year, with an investment of Rs. 20 crore (Rs. 200 million).

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Ravi Gupta, CEO of Mukta Arts, confirmed the development, saying: "After production and distribution, exhibition was the next logical step for us."

The distribution arm of Mukta already controls the programming of 160 single-screen cinema halls and multiplexes, including Big Cinemas, Inox, Fame and several other chains and standalone properties.

"He has strong presence in distribution across the country, along with being a content provider. By entering the exhibition arena, Mukta would be extending and completing their presence in all the major streams of the film business," said Jagat Dave, director, Ambit Corporate Finance.

Mukta also has interests in television and equipment hiring. It also operates the Whistling Woods Institute, which imparts training in various skills related to films, television, and the media industry.

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In the next two years, Mukta has lined up five films, including one directed by Abbas-Mastan and Ghai himself.

In its last quarter, which ended June 30, the company posted a profit of Rs. 6.4 crore (Rs. 64 million) from a loss of Rs. 11.9 crore (Rs. 119 million) for the corresponding period last year.

Total income, though, was down to Rs. 43.9 crore (Rs. 439 million) from Rs. 46 crore (Rs. 460 million).

There are 1,050 screens in India with the Anil Dhirubhai Ambani Group's BIG Cinemas leading the pack with 268 screens (550  worldwide), followed by PVR with 140.

Apart from the big multiplex operators such as Inox, PVR and Cinemax, several other brands like Mexico-based Cinepolis and Inspire Multiplex's My Cinemas have aggressive expansion plans in the Indian market.

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Typically, the investment per seat at a multiplex is Rs. 70,000-100,000, depending on the location. Break-even usually happens in five to seven years.

"With urbanisation and a growing middle class, a whole lot of new players are expected to enter the market in the next two years. With Subhash Ghai in this space, it will only increase the pace of growth," said Jehil Thakkar, executive director, KPMG.

According to the Ficci-KPMG 2010 report on the media and entertainment industry, the number of multiplex screens in India is likely to cross 1,600 by 2013.

Around 3.5 billion tickets are sold annually with 1,000-plus movies produced, making India one of the largest film markets in the world.