• CRISIL Ratings
  • Press Release
July 31, 2018 location Mumbai

Maharashtra food rule can chew Rs 100 crore off multiplex profits

For offset, ticket prices need to rise by Rs 70

The operating profit of the Indian multiplex industry could moderate 200 basis points (bps), or by ~Rs 100 crore, if half of the movie-goers to multiplexes in Maharashtra carry their own food & beverages (F&B) inside, an analysis by CRISIL Ratings shows.


Maharashtra accounts for roughly a quarter of the revenues of multiplex operators.


Non-ticket segments comprising F&B and advertising are highly profitable and subsidise losses on ticket sales.


Says Sachin Gupta, Senior Director, CRISIL Ratings, “The gross profit margin of multiplexes in the F&B segment is about 75%, and in the advertising segment over 80%. In fiscal 2018, leading multiplexes reported an operating profit (EBITDA) of Rs 58 lakh per screen. Of this, the gross profit generated by the F&B segment was Rs 61 lakh per screen, while advertisements reeled in Rs 33 lakh per screen. Put another way, these multiplexes would have bled if their only source of revenue was ticket sales.”


Apart from being highly profitable, non-ticket revenues are growing twice as fast as ticket sales. The compound annual growth rate for non-ticket revenues was 29% in the past five fiscals compared with 15% for ticket revenues. As a result, share of non-ticket revenues has increased to ~43% in fiscal 2018 compared with ~30% in fiscal 2013.


Maharashtra’s food and civil supplies minister recently said movie-goers can carry their own food inside multiplexes with effect from August 1, 2018. A public interest litigation (PIL) on this is pending before the Bombay High Court.


CRISIL estimates that multiplexes will be required to hike ticket prices by Rs 70 in Maharashtra to offset the impact on the F&B division. However, such a sharp increase may not go well with movie-goers.


Says Nitesh Jain, Director, CRISIL Ratings, “Today, multiplexes account for half of the box-office collections despite having only a fourth of the total movie screens in India. They are also the main attraction at shopping malls. Therefore, any disruption in multiplex operations will, apart from having a cascading impact on the film industry, will affect footfalls at malls, too.”


CRISIL-rated companies account for about 60% of the multiplex industry revenue.


CRISIL will monitor the outcome of the PIL and progress on the decision by the government of Maharashtra, as well as its domino effect on other states.


In the event the rule is imposed, the ability of multiplexes to augment their revenue streams by raising tickets prices and advertising tariffs will be the key monitorable.


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    Saman Khan
    Media Relations
    CRISIL Limited
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    Sachin Gupta
    Senior Director - CRISIL Ratings
    CRISIL Limited
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    Nitesh Jain
    Director - CRISIL Ratings
    CRISIL Limited
    D:+91 22 3342 3329