Many blockbuster films are ready for being released; 2021 is likely to be good for the industry: Alok Tandon, CEO, Inox Leisure

Alok Tandon, CEO, Inox Leisure Ltd, talks about people response, footfalls, movie pipeline, arrangements the company has made for the safety of its customers, expansion plans, M&A opportunities, budget expectations and challenges from OTT players among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Things are opening up now and even states are allowing people to come and watch movies. What kind of response you are getting at the beginning of the year?

A: At the beginning of the year, I think it will start very well from the Pongal because we are waiting for the blockbuster 'Master' to come and it is being released in many Indian languages. After this film, I know, a good flow will start. If we will talk from the time, when we opened up in October then from mid-October only a few states allowed us to open, not everybody.

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So, at the start, the footfalls that we had was just a trickle. So very few people were coming, there was a fear Psychosis if I can use that word, but slowly we have overcome that. Today as the CEO of the company, I have ensured that our guests are comfortable, they are safe and our hygiene and the safety protocols we are following so that they can comfortably come to our cinemas. Tenet came in cinemas in November and Wonder Woman came in December and the footfalls are increasing gradually and I am quite confident that things will be back to normal after one or two blockbusters.

Q: Thus, you want to say that worst is behind you?

A: I would say, yes, absolutely the worst is behind us. The cinema industry, which was hit the most, which was closed first and opened at the last, I think that we will have a remarkable comeback. We will turnaround things and things will get back to normal soon and reach to the pre-COVID levels.

Q: What is the capacity at present in terms of footfalls that is happening?

A: If I take all the 100% seats, the occupancy level comes in single digit and if seen from the 50% occupancy level that the government has allowed then naturally it will double. But if I look at the entire occupancy with 100% seats than I would say a high single-digit occupancy. 

Q: if we will talk about Maharashtra, the state from which has the maximum contribution to your revenue in sense 25%, then what kind of growth is expected here? Also, tell us about the movie pipeline that is visible to you and which kind of response is expected with it?

A: Maharashtra-circuit and Delhi-circuit contribute a lot in the Hindi film industry. In the calendar year 2021, I think, it will be called the 'Year of Content'. If we will talk about Hindi then Sooryavanshi, 83, Jayeshbhai Jordaar, Brahmastra, you can rattle one name after another, it is a complete line-up. Pictures have been made and post-production work is going. The second thing is if I will talk about the sequels, whether it is Golmaal 5 or No Entry 2, or anything else. Many of the sequels that are coming are ready to be released. If we will talk about other Indian languages apart from Hindi like I mentioned earlier about Master and then RRR is also coming. Many pictures are ready for being released. So, even I will say Tamil, Telugu, Bengali, Marathi or Gujarati, about 50-60 pictures are ready for being released or can come soon. Besides, English which works a lot even in Tier-II and Tier-III, now, because they are dubbed in various Indian languages also. Again, a movie of Tom Cruise is coming, we have Black Widow, Tom & Jerry, so there are many movies one after another. So, the content line is very good and 2021, we all are keeping the fingers crossed, should be a great year for the industry. 

Q: I think, even people are frustrated with being at home and are now willing to come out, see movies and lead a normal life. We have walked a step ahead and waiting for a few more states to open and fear should move out of the people. So, do you think that the concern will be there for another quarter?

A: Yes, you can say one more quarter of the financial year 2020-21, till March 31, 2021, is like as good as write off. But starting April, things will get better. And, the fear that you are talking about but people are willing to get out, so, we are doing many things and implementing several safety protocols to ensure that the guest visiting us feel safe and comfortable. We are following our hygiene protocols, safety protocols and the guidelines that we have received from the I&B Ministry. 

Q: So, why don't you tell it to our viewers who want to know what Inox has done on basis of which they can feel safe when they come to the place with their family and friends?

A: The internet tickets come to you in an electronic form. So, when you come to our box-office then your telephone number will be taken and a ticket will be sent via SMS to your phone, which will contain your ticket number, bar code and you can scan it and enter the premises, the entire food menu will be populated and you will be able to see where is your seat in the auditorium. So, you do not need to give a physical ticket. You have the ticket on your phone. In terms of social distancing, circles have been marked and we ensure that people stand over there. In the case of the auditorium, we ensure staggered timing of the entry, interval and exit and try to make sure that the sows are not clashing.

In the case of food, we have ensured lines are maintained on the entire FnB (Food and Beverages) counters and they are not crowded, therefore, on the App, we have provided the facility to order your food. Then after every show, we do the cleaning of the auditorium and at night we do deep cleaning, sanitizing of every solid surface after two-three hours and more than that we pump-in about 20-30% extra fresh air into the auditorium to ensure if you have a fear that I am sitting at an enclosed place than it should not be there. After the show ends, we put more fresh air to ensure that the atmosphere becomes fresh once more.

Q: Now tell us about the difficult phase through which the company has passed, where revenue was almost zero. How did you spend this time and going forward if you want to expand and invest in your business then are you comfortable to put in that kind of money or you will raise some fresh capital?

A: Inox's balance sheet was always strong weather it was pre-COVID or after-COVID. We have a strong and robust balance sheet. Yes, we had a lot of trouble and mid-March onwards revenues were zero, I can't even say that there was a trickle of revenue but it was like a tap being dry, there was no income at all and still we had expenditures. So, what we all did was that we made a core committee, which sat through every line item of the profit and loss statement, went through the fine line and guided everyone that how they can control their cost. Recently, we went for a QIP, where fresh capital was raised but having said that even after that our balance sheet is quite strong. As far as expansion and CapEx are concerned then we are putting money/ investing in the screens which were almost 85% complete before the shutdown and ensuring that they are opened at the earliest. I think, 15 of our screens will be opened in the next 10-12 days, old CapEx was used in it. As far as new screens are concerned, I will say expansion has been differed not stopped. So, as the cash keeps on coming in, we will start deploying.

Q: It means you will invest in the screens that are 85% complete?

A: Less investment will be made there.

Q: What is the ballpark number we are talking?

A: 41 of our screens are nearly 85% 

complete, which means around investments of around Rs 20-25 crore will be made and this is the maximum/ outer limit to which it can go. But it will be almost zero in the CapEx that has been put in place and also in our fixed items. So that is the only expenditure, we are looking at otherwise there is nothing elsewhere fresh capital is concerned.

Q: Are you looking forward to any M&A opportunity?

A: These are the tough times for everyone and Inox has always been ahead in M&A.

Q: That's why I have asked about it, as it is the right time where you may get some good assets at right valuations?

A: There are a lot of cinema screens, which will not open. Unfortunately, they will not open, which is bad for the industry, we wish that all the screens and chains should continue to operate. But, now, it is too early even to talk about it. As I have informed you that we were the first people to acquire another chain Calcutta Cine Pvt Ltd (CCPL) way back in 2006-07. Apart from this, we have also completed three different acquisitions. Going forward things are on our radar but no talks are happening on it. Radar means, we have never side away.

Q: As you are expecting that this year will be better than the last year what are the targets in FY22 for the company and do you think that you will reach to the pre-COVID levels or it can be better than it?

A: The line-up of the movies, which I mentioned earlier gives confidence that it will happen. My short-term target is to win your confidence, let the people come back and spend time with us as family, friend and all that. So, that is the first target. But having said this, I am quite bold about the entire industry, cinema is not going anywhere, large screens are not going anywhere and content creators are making movies for the large screens, which gives the maximum satisfaction. So, this will happen. I am very bullish about the industry, so, FY22 would be a great year for us.

Q: Can you provide any idea about the margins?

A: The track record of the margins will be the same as it has been in the past. We will try to better it because every quarter, every year, we try to better our margins. But I will not be able to tell you pin-point that it will be this or what can be.

Q: Budget is round the corner and this industry has faced the maximum heat across the COVID-period. Are you expecting that the government will pay some attention to this sector and the industry to relieve you all a bit?

A:  The government has many problems and challenges, so, I am the last person to say that they haven't helped us because they also have other sectors to deal with. But, as a company head, I would like to say that it would be great if they look at the GST on tickets because as we have been badly hit and if we can get some relief there in which we can be shifted to a lower slab. It will be a boost for the entire industry and if electricity rates are rationalized and industrial tariff is provided to us, it will be great. So, I will say that these are our two pleas to the government of India and that is something that we would like a highlight.

Q: COVID period gave time to many a to reflect at a personal, professional and professional levels and improve ourselves and many people used it wisely? So, how you can summarize the period and tell two-three things that emerged and you would like to contribute to the company's strategy? How is Inox in the next five years?

A: The first thing we did was cost, where we did not pay attention earlier if there is a line item, we were a very-very cost-conscious company. But there were times when we were not looking at one particular line and that is something, which we are not targeting. We have ensured that today with whatever manpower we have, we give more liberty and power to people so that they can do work that is beyond the scope of their job profile. So that is something which we are telling people to do. Today, the advent of video conferencing has helped us, I am talking about our units where we are already operational. Earlier people have to fly down to see what is happening and whatnot. Today you can tell two-three people to stand with mobile phones and you get everything on your computers. So, the activity has increased cost has gone down and you can take a walkthrough through the entire property and even come to know that where they are slipping and how they can buck up and ensure that things are back to normal.

Q: Some analysts say that these OTTs, like NetFlix and availability of online content, is a threat for multiplexes. What is your view on it and do you think that it is worrisome or you believe that people will get back to you and this is a strong model and is here to stay?

A: Cinemas are not going anywhere they are here to stay. What you consume on OTT platforms? You are consuming web series, documentaries. I would say that there are people who consume movies but if they have missed it out in the hall then they decide to see them there. The content that is being made for the OTT is different from being made for a large screen. What are our outings today? We as Indians love to go to movies, we as an Indians love to spend time with our family and ensure that we have a great three hours in the cinema hall and that is not going anywhere. So movies will continue to be made for the large screens, cinema halls will continue to be made. The way we are talking from the megaplex, we will continue to de-couch people and ensure that they come to us and watch cinemas. I am very bullish about the entire Indian film industry whether its creativity, whether it is new stars, directors, storyline. Things are improving and improving for the good.