Pyramid Saimira Q3 2008 revenue falls, losses rise

MUMBAI: The Chennai-based cinema and entertainment group Pyramid Saimira Theatre Ltd (PSTL) has posted a net loss of Rs 747.44 million in Q3 ended 31 December, 2008, as compared to a net profit Rs 298.65 million in the same quarter last year. The company has provisioned Rs 763.2 million for the appreciation of value of foreign currency convertible bonds on account of foreign exchange fluctuations which has led to its net profit of Rs 15.7 million being wiped out.

Of late, PSTL has been in the news for the wrong reasons. It had incurred huge losses on movie production (Rs 403.2 million loss on Kuselan); its stock value got a hit and it came under scrutiny over a fake Sebi (Securities and Exchange Board of India) letter and buyback offer; and Punjab National Bank sold off some of the promoter’s pledged shares. Additionally, the buzz in the market was that Sun TV Network was looking to pick up a stake in the company.

A look at the financial results shows that the total income of the company has declined to Rs 1.38 billion from Rs 2.31 billion. Even for the nine-month period ended 31 December, 2008, the company posted a net loss of Rs 525.4 million as against a net profit of Rs 609.86 million in the same period last fiscal.

The company says its business model was to hire screens on the basis of fixed monthly payments preceded by security deposits, running the theatre (all expenses in the book) and taking benefits to the company. But after seeing a fall in the average capacity utilization of screens, average spend per person, less then 10 per cent of success rate of films, and a huge hit with its flop movie, PSTL has been taking a close look at its properties, and renegotiating terms with exisiting partners and signing new deals with them. It said in a release, “The company had to take uncalled for risk on content which was not the original business model.”

But since June 2008, when it had 802 screens, it has been paring them down. Unviable exhibition points have been chopped, while the business model of exhibiting in other screens has been changed to make the exhibition business profitable. By 30 September 2008 it had brought that figure down to 752.

During Q3, it has further reduced the number of screens to 252 where it only functions as an exhibitor (as on 30 December 2008). It dehired 194 screens, brought 151 screens from fixed hire model to case to case content model and brought 148 screens under the revenue share model. It transferred the accounts of these 299 screens under its distribution subsidiary PSEL.

The income from the exhibition business remained static at Rs 986.73 million in Q3 2008, while income from food and beverages was Rs 392.75 million. The total expenses stood at Rs 1.3 billion. The operating profit of the company is Rs 79.7 million (Rs 342.33 million, Q3 2007).

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