The Tamil Nadu Government has imposed a cap on movie ticket prices in Chennai.
Current tickets in Chennai are priced at Rs100-Rs150. With the new cap, A/C theatres will have a ceiling of Rs50 whereas Non A/C theatres will have a band of Rs7 to Rs30.
The Tamil Nadu government has imposed a cap in Chennai, Coimbatore and Trichy regions. No entertainment tax exemption will be allowed in Chennai where the tax is 15 per cent. Karnataka and AP are not likely to follow suit.
These moves will be detrimental to development of multiplexes in Chennai. Margins may be hit by more than 50 per cent and the return on investment will also be impacted.
Inox has plans to set up one property in Chennai in a month. PVR also has plans to set up one property in Chennai in four months whereas Adlabs is looking to set up a property in Chennai in 18 months. The cost of setting up a single multiplex is Rs10 crore.