Mention the name INOX and you immediately think entertainment. But you’d be surprised to know the over 90-year-old INOX Group actually gets its name from one of its early businesses that isn’t even remotely connected with entertainment: industrial oxygen. The group only ventured into entertainment in 1999 with INOX Leisure Ltd (INOL) and today the name is almost synonymous with the entertainment business even though it is in a string of other businesses from fluorochemicals to wind energy.
With 557 screens in 67 cities, INOXis second only to the country’s largest cinema exhibitor PVR, which has 748 screens. Mumbai-based INOX isn’t stopping at that: The company with a market capitalisation of more than ₹2,500 crore is expanding aggressively and plans to push at least 50-60 screens every year after establishing its presence in the industry with the acquisition of Calcutta Cine in 2006, Fame India in 2011, and Satyam Cineplexes in 2014.
Fortune India spoke to INOL CEO Alok Tandon, 55, about the making of India’s second-largest multiplex player and its growth strategy.
Edited excerpts from the interview:
INOX has pushed for an aggressive growth last year. What are your expansion plans?
We now have 546 operational screens at 134 multiplexes across 67 Indian cities, and we have a pipeline of another 850 screens to be rolled out over the next four-five years. As regards localisation, we are already creating properties and offerings that are suited to individual markets rather than a ‘one-design-fits-all’ sort of approach. In fact, we are the only major chain that can boast of such design diversity to suit the consumer profile of the specific micro market. And as regards expansion, we believe that socio-economic and infrastructure factors such as urbanisation,nuclearisation of families, and an increase in out-of-home activities, the telecommunication boom, and the like are leading to high urban growth and a definitive change in lifestyle and consumption patterns. Therefore, the strategic expansion focus at INOX is to address this urban growth in metros and tier 1 cities on priority. The other aspect is the growth in English and regional language content that is on the up in India, making south India an important growth zone for us.
INOX is suddenly seen as an aspirational brand.What are the strategies you undertook to build this brand image in such a short span of time?
We identified three key pillars to meet and,dare I say, surpass such consumer expectations. These are ‘Luxury, Technology, and Service’. By striving for excellence in all the three areas, we came up with newer cinema formats,a newer F&B menu, staff uniforms and some great-looking interiors for our new properties, making the brand more talked about.There was a special impetus on the ‘premium’ destinations to catapult the cinema-viewing experience there to a whole new level that was not available in the country till now. This was achieved through the concept of ‘7-star cinema viewing’, a blend of luxury and technology that became a guiding principle for our teams to strive for the best possible experience that acinema can offer anywhere in the world.
You have acquired Calcutta Cine, Fame India, andSatyam. What are some of the other projects in the pipeline?
We kick started the consolidation phase inthe multiplex industry in India by acquiring Calcutta Cine way back in 2006. Today, if you look at our existing and upcoming footprint,you will realise we are a truly national player with a presence from Jamnagar and Goa inthe west to Jorhat and Darjeeling in the east;from Amritsar and Zirakpur in Punjab to Madurai and Thrissur in the south. We take great pride in being catalysts for growth in cinema infrastructure across India. We have over 850 screens in the pipeline through theorganic channel with properties in the metroslike Mumbai, NCR, and Bengaluru as well asin new markets like Agartala and Bijapur.
Do you expect the recent GST cut on movietickets to affect footfall? What are your other expectations from the government as an industry to ease the regulatory framework?
We welcome the GST announcement by the government of India for a 10% reduction which means more value for our guests and increased footfall across theatres in the country and more penetration in smaller towns and cities in India. It’s difficult to open a multiplex in India, especially when the most part is dependent on real estate. The cinema licence process can be made simpler. Currently, each state has variations in the procedure and listof NOCs, permissions, norms to be adhered to.This leads to complexity and slows us down in our expansion work. We would really appreciate a single-window clearance approach by the government that can help us save time once the project work at a new location is over.
OTT players also have grown in a big way to bite into your core service. Is that a threat to you?
OTT is personal whereas cinema is social. OTT cannot fulfil the desire of the consumer to step out and to get enthralled in a big group. OTT film content is not fresh but a re-run of what we have already shown on the big screen when it was fresh and desirable. Original content being produced for this platform depends on stars and filmmakers that are established names on the big screen. This again demonstrates that cinema builds equity and we are happy we are contributing towards other platforms indirectly. We will always look at existing content and how we can create more engagement with customers around it. As regards the threat from new media, let me tell you that cinema has seen many waves of new media like television, VCRs, satellite TV invasion, cable networks, and now the Internet. The charm and grandeur of large-screen cinema have only gone up.
What are some of the factors that contribute to the Indian market being underscreened compared to other big foreign markets? How are you planning to bridge that gap?
While it is correct that there are eight screens in a million population and this needs to improve to enable moviegoers to watch movies near home, this will depend greatly on a sustained rise in disposable income and a whole host of economic factors beyond our control. It will also depend on development of retail centres and malls that has seen a slowdown. However, we are doing our part by extending the best cinema experience to the cities and towns that exceed a population base of 300,000. We are also looking to convert existing single-screen theatres into multi-screen options where viable.
Your Insignia offering is known for luxury, technology, and service. How did it come about and what is next for INOX’s luxury segment?
Insignia is one of the key pillars for us to deliver our 7-star experience. Insignia has redefined luxury in the Indian multiplex business. We have over 12 locations in the country with an Insignia. It has undergone a metamorphosis of sorts over the last few years from simply a premium offering with comfortable seating to being the symbol of uber-luxury in cinemas. Going ahead, we shall have more Insignia screens. It is an experience that is sheer indulgence with opulent recliners, plush adjustable seating with head and neck motor support, a USB port, ample leg space, personalised ticketing, and a live kitchen.
At a time when customers are spoilt for choice,how do you make sure that you get it right?
We are part of the machinery that is ‘spoiling’ the consumer. We are happy about it. It spawns healthy competition and keeps us on our toes to keep reinventing our offering. It’s an automatic check mechanism for us to stay fresh and relevant. Why should we complain? Morechoice, more fun. Let’s bring it on.