In order to overcome the losses the SRS group decided to sell of their multiplex arm, ‘SRS Cinemas’ according to a report in the livemint.com. Inox Leisure Ltd has emerged as the highest bidder for SRS Cinemas, two people aware of the development said on condition of anonymity that Inox has offered close to Rs225 crore for the theatre chain.
SRS Multiplex operating under the SRS Cinemas brand, is a mid size theatre group operating in tier-II and tier III cities in Delhi and northern India. SRS Cinemas operates 62 multiplex screens across 22 cities in India. SRS Group has diversified interests in sectors including jewellery, commodities, retail, hospitality, financial services, real estate, education and healthcare. However, SRS group has seen a major slump in its jewellery business off late, which contributes to almost 90% of the group’s income.
A report by rating agency ICRA said that SRS Ltd has defaulted on its loan repayment obligations because of poor cash flows. “While the management has attributed the continued deterioration in realization of domestic debtors to recent strikes by jewellers, the significant delay in realization of export receivables remains unexplained,” ICRA said in its ratings rationale of the company in May last year.
According to the report in Economics Times, Jitin Sadana, vice president–strategy & planning, SRS Group said, “Jewellery is our core business, which contributes to almost 90% of the group’s income. There have been strikes, which affected the business, followed by the slump. This resulted in delaying our debt repayment,”
As per the report in livemint.com “SRS is the last relatively large asset which is left in the multiplex space,” said Sunil Punjabi, an independent strategic adviser (entertainment and media) and former chief executive of Cinemax India. “Though the locations are not much to talk about, the potential acquisition does give Inox strategic advantage in consolidating the north India belt, which has been a weak spot for them.”
This is not the first time Inox has made a bid for such an acquisition, Inox first accquired Calcutta Cine Pvt. Ltd. in the year 2007, then Fame India Ltd. in 2010, and, the third multiplex chain that Inox acquired was Satyam Cineplexes Ltd. Inox currently operates in 113 multiplexes and 446 screens in 57 cities.