The decision to sell SPI Cinemas was motivated by financial requirements and was not taken under political pressure, CEO Kiran Reddy told The Hindu on Wednesday. On Sunday, PVR Cinemas, India’s largest movie exhibitor, announced that it was purchasing a 71.7% stake, or 222,711 equity shares, in the South Indian theatre chain for Rs 633 crores.
Originally known as Sathyam Cinemas, the Chennai-headquartered SPI Cinemas has branches in Tamil Nadu, Telangana, Andhra Pradesh, Karnataka, Kerala and Mumbai.
In 2015, Reddy’s company was believed to have sold its Luxe multiplex to Jazz Cinemas under pressure from people close to the AIADMK. Jazz Cinemas is reportedly owned by a relative of an AIADMK leader who was close to the late Chief Minister J Jayalalithaa. When asked if political compulsions were a reason for the deal with PVR, he said, “Not this time. Not this time. Last time, yes.”
On the decision to sell, Reddy told The Hindu that the chain had seen “explosive growth” in the recent years, causing the company to borrow more money than its cash flow could generate. This raised the prospect of having to raise capital because Reddy said he wasn’t comfortable with the continuing debt. “I did not want to get to a stage where my own personal fears would come in the way of doing what is right for the business,” he added.
Reddy also gave the assurance that his involvement in SPI Cinemas would only increase after the proposed takeover.
The acquisition, which will increase PVR’s screen count to 706 across 60 cities, is scheduled to be completed within a year. News of the deal has generated mixed reactions on Twitter, with audiences expressing their loyalty to SPI Cinemas (and concern over the fate of the theatre chain’s iconic flavour-it-yourself popcorn).
Reddy assured that SPI cinemas would not be re-branded after the takeover and hailed the outpouring of support on social media. “The brand is in the hearts of the people and that’s something no one can take away,” he said.