INTERVIEW-Adlabs sees Q1 under pressure, turnaround in FY10

(Recasts, adds details, background)

* To see turnaround in FY10, Q1 seen under pressure

* Posted FY09 consolidated loss due to investments in exhibition and media businesses * Looking to repay debt at lower cost

By Swati Pandey

MUMBAI, July 1 (Reuters) Multiplex operator Adlabs Films Ltd ADLF.BO plans to set up 100 more screens in FY10 and sees a turnaround in earnings in the period as movie releases line up after a lull in April-June, a senior official said on Wednesday.

The firm posted a consolidated net loss of 513.75 million rupees in FY09 against a profit of 474.7 million rupees a year ago due to heavy investments during the year, even as sales more than doubled to 6.6 billion rupees, Chief Financial Officer Venkat Devrajan said in a telephone interview to Reuters.

"Turnaround should happen from this year onwards. April-June could possibly be under pressure because the entire film industry was on strike. Q1 will not be so good but the negative, so to say, would be recouped in the next 9 months as most of the films are getting lined up one after the other."

Movie releases had stalled for two months due to a deadlock between film producers and exhibitors over revenue sharing. The deadlock ended on June 5 after producers and distributors agreed to a 50 percent revenue share for the first week.

Adlabs, which recently demerged its radio business, added over 280-odd screens last year across the world including in Malaysia, U.S. and India, which will help it earn revenues in the coming year, Devrajan said.

Earlier this year, the multiplex operator slashed ticket prices to attract more audience to beat the economic slowdown that led to lower footfalls and poorer releases. However, it doesn't have plans to raise prices for now, Devrajan said.

"Depending upon the movie, depending upon the theatre, depending upon the time, it's a call that we have to take at various points of time. Since releases have just started, we have to take a decision at some point, either way, but so far there is no decision that has been taken."

Devrajan was euphoric about the recent upswing in demand with collections of John Abraham-Katrina Kaif starrer New York "the best in the recent past."

"Demand has been quite good. New York opened up with fantastic numbers. Hopefully, the other releases should help us catch up with all the releases we lost in April-June," he said.

"As long as the movies are flowing in, we are doing good business."

FUNDING

Adlabs, which has debt two times its equity, is looking at various options to pay it off at a lower cost and is still considering various funding options for its capex plans this year.

The firm has a market share of 10-15 percent of the box office, Devrajan said.

The company plans to spend 2 billion rupees in 2009/10 mainly on its media business and for setting up a studio in Film City in suburban Mumbai, while some portion of the money would go into its exhibition business too.

"We'll look at fund raising at some point of time. It could be any - debt or equity," Devrajan said. "If I have the opportunity to repay debt at a lower cost, definitely we'll look at it," he added.

Shares of Adlabs closed up 2.38 percent at 351.30 rupees in a firm Mumbai market.

(Editing by Sunil Nair)