CINELINE LETTER TO OUR VALUED STAKEHOLDERS
With the untiring dedication of our employees and the loyalty of our
patrons, I am confident Cineline will continue on its upward growth trajectory in the
years ahead.
Dear Shareholders,
It is my privilege to present the Annual Report for the FY 2022-23 - a
year characterised by ongoing recovery and a resurgence of optimism for Cineline as we
made a comeback in the movie exhibition business through our brand MovieMAX.
In the face of the enduring impacts of the Covid-19 pandemic, Cineline
has demonstrated remarkable resilience and adaptability in responding to the changing
environment. Driven by our commitment to making cinema entertainment accessible across
India, we continued our measured growth trajectory.
Macro View on the Economy
The film exhibition industry is steadily recovering from the setbacks
of the Covid-19 pandemic, with cautious optimism about growth prospects. India continues
to be severely under-penetrated in terms of screen density compared to global counterparts
like China and the US. This provides significant headroom for growth and expansion even as
the PVR-INOX merger creates a formidable entity.
Cineline is well-positioned to establish itself as the preferred brand
in the film exhibition space. By targeting the budget cinema segment and smaller towns and
cities, we plan to tap into the vast untapped demand from Tier-1, Tier-2 markets and
create a pan- India footprint. This strategy has helped us to emerge as the fourth-largest
cinema chain in India.
Financial Overview During the Year
On the consolidated front, our revenue for FY 2022-23 stood at ?
14,405.07 Lakhs as compared to ? 5,013.69 Lakhs in FY 2021-22, representing a robust
growth of 187%. Profit after tax was recorded at ? 165.59 Lakhs in FY 2022-23 as compared
to a loss of ? 3,546.41 Lakhs in FY 2021-22. This tremendous growth can be attributed to
our focus on expanding in Tier-1, and Tier-2 cities while tapping under-penetrated
markets. This is further supported by the strategy to expand under a low capital
expenditure model and increase average ticket price and spending per head. By expanding in
a cost-effective manner and securing a long-term advertisement commitments, we have been
able to significantly grow the top and bottom lines. Our performance this year
demonstrates the success of our strategic initiatives to boost revenues and profitability.
In continuation of our vision to become an asset-light and debt-light
company, we monetised our asset - Eternity Mall owned by us in Nashik for a whopping value
of Rs. 60 crores as well as certain commercial units held by the company at a premium
valuation. To further strengthen our base, the Board has decided to monetise our
hospitality business in the future at a premium valuation. While we plan to monetise, it
is worth noting that our hospitality business is back on track and has witnessed robust
growth this year. The occupancy rate and average room rate have neared pre-covid levels.
During the year the hospitality business generated a revenue of ? 5,521
Lakhs in FY 2022-23, up from 3,418 Lakhs in the previous year. EBITDA totalled ? 1,909
Lakhs, while EBITDA margin reached 35%. The occupancy rate was 78% for the year and the
average room tariff stood at ? 9,292. The upcoming Mumbai-Goa expressway is further
anticipated to increase passenger traffic in Goa, resulting in improved occupancy and
average room rate.
Mew Developments
I am delighted to announce the launch of a new brand 'MovieMAX' for our
cinema exhibition operations. We have already tied up with 146 screens pan-India with over
30,000+ seats. We see a clear opportunity and space for an organised national player who
can provide a quality experience to consumers while winning developers' confidence. To
further support this optimism, during the year we infused funds of ? 20.25 crores by an
issuance of 27 lakh warrants to the members of promoter group. The funds will be utilised
for expansion and addition of new screens. Over the next few months, we will continue
acquiring additional screens pan-India and build a strong consumer oriented brand in this
segment.
FY 2022-23 saw Cineline actively expand its screen count by 61
additional operational screens across India. We also added 17 new properties to our
portfolio to cater to the vast demand.
This included our new flagship property in Hyderabad. Our expansion
strategy is well-framed and adopts a low capex plan. We aim to acquire developers' fully
fitted, plug-and-play screens which will help us reduce capital expenditure substantially.
In addition to opening up new screens, we are also renovating and
upgrading existing screens to give a better consumer experience which again shall
contribute to better margins.
Since opening its first multiplex in October 2022, MovieMAX has already
expanded across multiple cities. In its first year of operations, MovieMAX has achieved an
impressive feat highlighting the brand's early success in tapping the value-conscious
entertainment segment. MovieMAX aims to expand its footprint pan-India in the coming
years.
The early success of MovieMAX combined with the steady performance of
our existing Cineline multiplexes, places us in a strong position to deliver on our
commitment of providing exceptional cinema experiences to entertainment- seekers across
urban and semi-urban India.
The Bigger Picture
The pandemic has fundamentally altered audience preferences to look out
for more content-rich movies. With this change in preference, customers are also looking
at movie outings as an experience rather than just a 3-hour outing. To focus and tap on
the opportunities we are now entering malls and other lifestyle experience centres where
we are introducing new screen formats to enhance the overall experience. The experience
will be further underpinned by Food and Beverages being an integral part of the new movie
experience. To explore and gain market share, we also aim to exhibit regional films which
are now gaining widespread acceptance and opening up new content opportunities. As the
quantity and variety of movies grow, more screens will be needed to showcase small and
independent films. Cineline aims to be at the forefront of this expansion and plans to
launch several screens pan-India.
Closing Mote
Despite the challenges, Cineline has persevered and pursued prudent
expansion. With the unwavering support of our investors, partners, and moviegoers, I am
confident we will continue on this trajectory of responsible growth in the years ahead. I
am proud of how we have navigated challenges and uncertainties as an organisation. Today,
Cineline stands well- poised to tap into the vast potential of this underserved industry.
With the untiring dedication of our employees and the loyalty of our
patrons,
I am confident Cineline will continue on its upward growth trajectory
in the years ahead.
I thank you for your continued faith and support. I look forward to
updating you on Cinelines progress in my message next year.
Regards,
Mr. Rasesh B. Kanakia
Chairman
Cineline India Limited