Maharashtra: Maharashtra government order permitting outside Food & Beverages at multiplexes and theatres has irked the stakeholders, as they fear that the industry could suffer loss of revenue to the tune of 40%. The move, if implemented, could severely hit cinema theatre operators, as sales of food and beverages contribute a sizable chunk to their revenues and profits.
The industry sentiments also reflected in stock market as the Shares of PVR and Inox Leisure plunged 13.1% and 5.43% respectively, on the BSE.
The share price of Subhash Ghai’s Mukta Arts, which runs the Mukta A2 chain of multiplexes, also fell but recovered later to end the day with a 1.26 per cent gain. The state government will also meet multiplex owners soon on reduction of food prices sold on their premises and bringing them at par with market rates.
Earlier in January, Bombay High Court termed the prices of food items sold at multiplexes in Maharashtra as exorbitant. The high court’s observations came during the hearing of a public interest lawsuit, challenging the prohibition on carrying outside food items inside the movie theatres and multiplexes. The PIL also claimed that there was no legal or statutory provision prohibiting people from carrying personal food items into film theatres. The matter is still pending in the high court and is expected to be heard on 25th July.
Speaking on the announcement, Rahul Puri, MD at Mukta A2 Cinemas said,“Almost 35-40 percent of revenue is generated by Food and beverage segment for multiplexes overall, hence it is a high margin business for the market. For a company like Mukta A2 Cinemas, 25-30% sales is contributed from F&B sector. As the final verdict is yet to be made by the court, government must engage with multiplexes before passing any statement on this issue.”
Reacting to the development, the Multiplex Association of India (MAI) said in a statement, “We wish to clarify that none of the multiplex cinema theatres operated by any of our members has received any order, notification or communication to this effect from the government of Maharashtra or any other regulatory authority. Hence, we are not aware of any decision to this effect, if taken by the government.”
“Since the matter is sub judice, and since we have no other formal communication from any regulatory authority, we would not like to comment any further on the matter,” added Deepak Asher, president, MAI.
Maharashatra state food minister Ravindra Chavan said the government is working on a resolution that is expected to come out in six weeks.
