Hopefully we will get the board's approval to hive off the cinema business: Rahul Puri, MD, Mukta Arts

In an interview with ET Now, Rahul Puri, MD, Mukta Arts, sheds some light on the company's plans to hive off the cinema business to a wholly owned subsidiary.

ET Now: I thought that there was a bit of to and fro and when it came to this decision. It seems like now you are finally taking a decision to hive off this multiplex business into a wholly-owned subsidiary?
Rahul Puri: We had brought it up in the last board meeting to discussions but unfortunately we were not be able to finalise those discussions. So we carried that item across now to this board meeting. And hopefully, we will get the approval from the board to move ahead and hive the business off.

ET Now: Just for clarity because everybody may not know all that housed under Mukta Arts. What remains within Mukta Arts and what gets hived off as a wholly-owned subsidiary?
Rahul Puri: The entire cinema operations will be hived off into wholly-owned subsidiary company that the 13 properties that we have plus the Bahrain overseas property. We are looking to put that into separate wholly-owned subsidiary. And Mukta Arts will remain the production company. All of the assets of the libraries that exist and all of the real estate properties will remain with Mukta.

ET Now: I am guessing the companies do this to unlock value. I am guessing this is a precursor to eventual fund raising, or listing, or both of the cinema business, even though it is a fledgling business right now.
Rahul Puri: Well yes. I mean obviously the idea here is that it gives a lot more flexibility in terms of the cinema business. It is a fledgling business, you are right. We are still a very young business in terms of what we want to do. I would not say that this is a precursor to anything that has been pre-decided. But yes, it is definitely an opportunity for us to be able to extend a whole host of possibilities to that business and as I said it gives us a lot more flexibility and more importantly a lot more transparency in terms of what is actually going on in the cinema business. I think that is something that investors and we as a company are very-very keen to deliver. So all in all, I think it is a very positive move and we are hopeful that in this board meeting the approvals will come through for that.

ET Now: Given the way how PVR has performed, I would believe that that bent of mind will have some logic. By when would you decide on the future plans of this wholly-owned subsidiary because you have not really highlighted, you are just evaluating options whether to raise funds, go the IPO route, get it listed?
Rahul Puri: Well I think all of that is in good time. I think that we have already made it very clear that our effort in the company is that in the next year or so to get the number of screens up to about 100 from 51 which it currently stands at today. So we want to quickly, rapidly move that up to 100. Now there are certain demands for that which could require capital to be brought into for us to be able to reach to that but in the short term that is not really one of the concerns for that business. But once we get to that 100 number and achieve sort of critical mass for the business, then absolutely I think there will be a lot of options available to the company in terms of how to unlock value and how to really grow that business.

ET Now: The back of the envelope enterprise value of the business as of now, the subsidiary. I am sure you may have worked out those numbers.
Rahul Puri: It is difficult for me to talk about that until the board meeting is over.