Multiplex companies such as PVR and Inox are pleading with mall owners for a complete rent waiver through the months that they have been shut, and once they are allowed to resume operations, their request is for a 50:50 revenue share with mall owners until their business picks up.

Despite multiplexes contributing close to 25 per cent of a mall's footfalls, not many mall operators are open either for a rent waiver or a revenue share. With business being far from satisfactory, mall operators' argument is that they too have liabilities and can't afford a complete rental waiver.

After all, multiplexes occupy anywhere between one-tenth to one-fourth of a mall's space. "We also have fixed costs, loans on the asset which needs to be paid off. The moratorium is only for a limited period, we need cash to keep the asset alive," argues the CEO of a leading mall.

Multiplex companies are among the worst hit by the COVID-19 pandemic as they have had absolutely no revenue through the lockdown period. Though malls have opened in most parts of the country, the multiplexes are still not allowed to be operational.

To add to this, the multiplexes, even after they are operational, will have to cope with shortage of content, as many producers have released their films on digital platforms since the reopening of multiplexes has been stalled indefinitely.

Even if the multiplexes open up, the content crisis will remain, as most new projects have been delayed due to the pandemic.

While a few Bollywood and Hollywood releases could come to their rescue as soon as they open, their content pipeline will dry up post reopening until the new slate of films are ready for release.

"Unlike a brand that deals in tangible merchandise, multiplexes have to depend on film studios and distributors for content which looks uncertain in the immediate short term, resulting in deep revenue losses," points out Shirish Handa, Chief Business Development Officer, INOX Leisure.

With a substantial reduction in revenues and no change in real costs, Handa says his company's bottomline doesn't look safe. "Until the business recovers, a revenue-sharing approach is most suitable for the multiplex as well as for mall owners to tide over this tough phase," Handa adds.

Nitin Sood, CFO, PVR, also admits that his company is in talks with mall owners for a rent waiver. "We are seeking a complete rent waiver during the period we have been shut and asking either for lower rental or a revenue share for at least a year. We are hoping that we will reach an amicable agreement."

"The mall owners would have to take a pragmatic approach towards the situation and help them survive this period with everyone understanding the inter-dependence of malls and multiplexes to survive and thrive. Both parties will have to find a mutually beneficial and sustainable mechanism to sail through the current situation, since both cannot survive without the other," points out Bimal Sharma, Head (Retail Advisory and Transaction Services), CBRE South Asia.

A multiplex, explains Anuj Kejriwal, CEO and MD, Anarock Retail, needs to operate at a 30-32 per cent occupancy cost at an all-India level to breakeven.

"With restrictions on seating capacity, they will in any case find it difficult to meet the basic seating requirement. Therefore, both mall owners and the multiplexes need to understand each other's needs and work out an amicable arrangement," says Kejriwal.

"The three major sources of footfall for a mall are cinema, F&B, and events. While events are not going to happen for some time and F&B has its own challenges, the malls have to ensure that the cinemas are open," Kejriwal further explains.

Mukesh Kumar, CEO, Infiniti Mall, says they have already offered up to 50-70 per cent rent reductions to their retail tenants as well as a 50 per cent cut in the common area maintenance fee.

"There is still no clarity as to when the multiplexes will be allowed to resume. We will work out an amicable solution once they open up." Manoj Agrawal, CEO, Viviana Mall, says that they are in discussion with all their partners for an amicable solution to the current crisis.

"The requests received from various retailers are being evaluated in light of the agreed terms with individual retail partners as well as their performance over the years. Also, as mentioned, based on government guidelines, we want to reopen Viviana Mall for our valued customers and retailers alike at the earliest. Commercial and business requirements are very important but these would have to be taken up at an appropriate time which could possibly be post reopening of the mall," Agrawal adds.