Showing posts with label gst. Show all posts
Showing posts with label gst. Show all posts

24 December, 2018

GST on Cinema Tickets

The Union Government of India has recently announced a reduction of GST on Movie Tickets from 28% to 18%. The Film Industry took collective credit for hard-bargaining this issue with the Prime Minister and many celebrities thanked him on social media. However, the average movie-goer isn’t too kicked.


2018 has been very average for the Indian Film Industry with many high profile, high budget Hindi films tanking like no other, notably Shah Rukh Khan’s latest outing “Zero” and Amitabh Bachhan / Aamir Khan’s magnum opus “Thugs of Hindostan”. Needless to say, the only saving grace was Superstar Rajinikanth’s 2.0 directed by ace Director Shankar, his third outing with the mega actor after Sivaji - The Boss (2007) and Enthiran (The Robot) which released in 2010. Produced by Lyca at an estimated budget of over Rs. 550 Crores (a little less than USD 80 million) - perhaps the only Indian film to have been invested so much upon. And to everyone’s surprise, the film has raked over Rs. 700 Crores at Box offices worldwide in its first three weeks of release and is still seeing full occupancies during the Christmas / New Year weekend as well. Karan Johar took up the release of the film in the Hindi Belt and has done a fantastic job indeed. 


I was at Delhi two weeks back and finished my meetings ahead of schedule and was sitting over a Cappuccino in one of South Delhi’s tony Malls. Was quite excited to watch 2.0 in Hindi (after watching 4 times in Tamil already at various theatres in Chennai). The ticket cost for 2.0 in 3D was Rs. 450 including GST. Add to that, my proposed indulgence of Popcorn, Nachos and Coffee and I would have ended up spending at least Rs. 1,000 over 4 hours. At a spur of the moment, I decided against it and went ahead with some other plans. Of the Rs. 450, I guess 28% would have been taxes. So, I would have paid about Rs. 120 as GST which would now be reduced by Rs. 40 approximately (depending on Ticket costs). 

Is reduction of GST on cinema tickets a good move? Yes. 

Will it draw more audiences in to the Cinemas / Multiplexes? Perhaps Not.

Here’s why I reckon so;

Most theatres focus on the F&B offering than the core - Movies. Multiplex chains like PVR and SPI Sathyam (now owned by PVR) focus on the “experience” of watching a movie while standalone Cinemas too have focussed on improving facilities. Sadly, reduction of GST is not enough to draw audiences. We need better content from film makers and needless to say, a sharp reduction in F&B prices. By reducing the prices and focussing on volumes, the Theatre Owners would see a significant jump in occupancy which hovers around 40% on weekdays and approx. 70% on weekends. 



GST is now reduced from 28% to 18% on Tvs - Smart Tvs which come with built-in OTT Apps like SunNxt, Hotstar, Zee5 and of course YouTube. Theatre Owners, hello there?!?

19 October, 2017

Deepavali Retail Sales – Less Fire, more Smoke


The week leading up to Deepavali was perhaps the most exciting times for Retailers. From Apparel to Consumer Durables, Motor cycles to Cars, people would flock to Retail Stores with their savings of the year. The period around Deepavali, which normally comes in the latter half of October or early November and the entire 3rd Quarter of a financial Year would contribute over 50% of Retail Sales for certain categories like Television sets, Refrigerators, Washing Machines etc. This was the trend through the 90s and the new Millennium.

Cut to mid-2000s, the evolution of Mall culture in India has been rapid, with over 1,000 functional shopping centers across the country. For every 3 new malls that open, 1 perishes and the trend is worse in certain cities, which were over-hyped by the Real Estate fraternity. The good part of Malls is that they provide customers 365-day access to regional, domestic and international brands. The footfalls used to be far higher in Malls a decade back than today – in act, today it has halved on an average to say the least. Since the prevalence of E-Commerce over the past 5 years, there has been all round the year discount on Electronics and Apparel which means customers are shopping more online than before, while the overall market growth has been tepid with Organized Retail registering a CAGR of 6-7% over the past few years. After MRP adjustment due to Inflation, there is hardly any positivity on the bottom-line numbers and Retailers have been struggling over the past few years. The Balance sheet has been strained a lot and to keep the monthly and quarterly Sales numbers looking up, Retailers have been offering various incentives to Customers all through the year.


The fight-back from Offline Retailers against Online Retailers has been merely on the price front which E-tailers have been managing all the while thanks to Wall Street funding in billions in the sector in India. That no E-Commerce company has been profitable in a decade (almost) nor have they been sold / acquired at a premium says a story that’s still unfolding.

So I set out this Deepavali to various retail stores to see what’s brewing and how the market is operating. The Offline Retailers are a worried lot. Fewer people are coming to their stores and even fewer are actually shopping. The bill values have halved in 5 years with customers picking lesser number of garments per bill. Consumer Durables retail is even worse with round the year launch of new models, availability across modern retail chains and low prices through the year. The best was saved for electronics, perhaps. I walked in to a retailer of mobile phones and enquired for an iPad. To my shock and surprise, he suggested I buy it online since the prices are far lower than his procurement prices.


Deepavali Retail Sales 2017 has been more smoke than fire, I guess. Local Retailers have taken full page Ads making Vinit Jain & Co. richer by a few hundred crores but the desired result is obvious that it has not translated in to incremental Sales. Smaller Retailers, with less than 3 shops are even more worried due to liquidity, cash crunch and rising debts. I never imagined that Retail would see such a gloomy period, but this is only getting more real. 

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