(Top) INOX Forum at Elgin Road in Calcutta; one of Fame’s two multiplexes in the city

Mumbai, Feb. 3: INOX Leisure today became the second largest multiplex chain in the country when it shopped for Fame India cinemas for a massive bargain.

With a network of 55 multiplexes, 204 screens and 57,891 seats, INOX will now be a formidable rival to PVR Films, which is expected to announce a similar merger with DLF-owned DT Films. In case the merger comes through, PVR will own 134 screens.

The lead player continues to be Anil Ambani’s BIG Cinemas with over 240 screens across India.

As of now, INOX, promoted by Gujarat Fluorochemicals Ltd, plans to keep Fame, owned by the Shroff family, as a separate entity and, after acquiring additional shares, will make it a subsidiary.

INOX currently operates 30 multiplexes and 109 screens with 31,401 seats in 21 cities. Fame India has 25 multiplexes, 95 screens with 26,487 seats in 12 cities.

In Calcutta, INOX has four plexes, at Forum, City Centre, Rajarhat and Swabhumi. Fame runs two, at South City and Hiland Park.

For the average plex-trotter, the acquisition raises hopes of cheaper tickets at multiplexes.

“Over the next few months, we will evaluate the full benefits of integration and consolidation, to drive competitive advantage across the value chain and consider our strategic options in accordance with regulatory guidelines,” promised Deepak Asher, director, INOX Leisure.

Industry watchers said “consolidation is the need of the hour” given the intense competition among the theatre chains.

Under the deal, INOX will pocket 43.28 per cent of Fame India for just Rs 66.48 crore. Fame, doddering under a loan burden of Rs 80 crore and valued at Rs 150 crore, was pegged at Rs 153 crore by INOX for the dream deal.

“We plan to make an open offer to buy out another 20 per cent in Fame for Rs 30 crore. This is allowed by regulators. We hope it gets finalised soon,” said Asher.

“At present, we are just concentrating on managing this landmark integration. How the acquisition will pan out will be decided in the next couple of months,” added Alok Tandon, chief executive officer of INOX.

Besides plexes, Fame India also has subsidiaries like Big Picture Hospitality Services, its food business joint venture, Headstrong Films, a production joint venture, and Shringar Films, which is into distribution.

The decision to go for largescale acquisitions was taken by INOX and PVR last year when the multiplex owners had been cornered by a recessive economy and striking producers seeking a larger share in profits.

“There was a definite decision to focus more on B-towns like Ahmedabad, Jodhpur, Bhopal, Mangalore, Coimbatore, Kanpur, Hubli, Vishakhapatnam and Bhubaneswar as well as in the Northeast. It was felt that growth through acquisitions would build stronger muscles for the plex owners who were at the receiving end from producers last year. That, along with IPL, had affected bottomlines in a big way and plex owners do not want a repeat of that,” said a source at Fame India.

Bollywood is expectedly wary about the acquisition spree by INOX and PVR.

“This will lead to monopolies and cartelisation. Big producers will be able to wrangle deals favourable to them, but the small ones will be badly hit as they will be bullied by the large plex operators,” said Anil Nagrath, former president of the Indian Motion Pictures Producers’ Association.

The Fame acquisition is the second big takeover by INOX after its lucrative deal with Calcutta Cinema Private Ltd, promoted by Bengal Ambuja, in 2006 to buy 89 Cinemas, now christened INOX Swabhumi.

CCPL, along with its 89 Cinemas, had also provided INOX access to an additional nine multiplexes in Bengal and Assam.

Anil Ambani’s Reliance Capital had increased its stake in INOX from 7 to 9 per cent in 2007 and despite strong rumours over the past couple of years, Big Cinemas has not yet upped its share in the company. Industry sources do not rule that out in future.

The INOX scrip flared by 11.74 per cent to close at Rs 85.65. The Fame India share price rose by 4.89 per cent to close at Rs 46.10.