Government may regulate price of food items sold at multiplexes

Most of us might have felt the pinch while buying food and beverage items at premium multiplexes. Café located inside the multiplex charge exorbitant prices for common food items like popcorn or samosa. A Mumbai resident who seems to be annoyed with this practice filed a petition in the court questioning practice of multiplexes that do not allow outside food to be carried inside multiplexes across the state. The Bombay High Court heard the petition and observed that food and beverages are being sold at an exorbitant price inside multiplexes. The court has given the state government six weeks to frame a policy to regulate prices of food sold in multiplexes.

This development is likely to have a negative impact on players like PVR & INOX Leisure. If there is unfavourable judgement on food & beverage pricing it would hit the overall margins of multiplexes, as food & beverage is a high margin segment. The next hearing of this petition is scheduled for June 12.

During 9MFY18, the PVR generated around 22 per cent revenue from food & beverages (F&B) while Inox Leisure generated around 27 per cent revenue from F&B segment. Out of 122 properties of Inox leisure, 27 properties are situated in the state of Maharashtra. Out of 134 properties of PVR, 37 properties are located in the state of Maharashtra.

During Thursday’s trading session, the stocks of these two companies were in focus. The stock of PVR opened at Rs. 1,250 and touched an intra-day high of Rs. 1,274.65 and a low of Rs. 1,231.4. The stock recovered from this low and closed for the day at Rs. 1,259, down by 0.2 per cent from its previous close. On the other hand, the stock of Inox leisure remained flat and closed for the day at Rs. 270.9, up by 0.22 per cent from its previous close.