In terms of growth, they said the focus is on accelerating expansion in underrepresented markets | Photo: Bloomberg
Leading multiplex operator PVR INOX plans to shut down 70 underperforming screens in FY25 and will look at possible monetisation of non-core real estate assets in prime locations such as Mumbai, Pune and Vadodara, according to its latest annual report.
While the company will add 120 new screens in FY25, it will also close nearly 6,070 underperforming screens as it looks for profitable growth.
Around 40 per cent of the new screens to be added will come from South India, where it will have a “strategic focus” on this less-penetrated region as per its medium- and long-term strategy.
In addition, PVR INOX is redefining its growth strategy by transitioning to a capital-efficient growth model to reduce its capital expenditure on new screen additions by 25 to 30 percent in the current fiscal year.
PVR INOX will now partner with developers to jointly invest in new capital expenditures for displays by transitioning to a franchise and company-operated (FOCO) model.
It is also looking at monetizing its real estate assets as the leading film exhibitor aims to become a “net debt-free” company for the foreseeable future.
“This implies potential monetisation of our non-core real estate assets in prime locations like Mumbai, Pune and Vadodara,” said Managing Director Ajay Kumar Bijli and CEO Sanjeev Kumar addressing the company’s shareholders.
In terms of growth, they said the focus is on accelerating expansion in underrepresented markets.
“Our company’s medium to long-term strategy will involve expanding the number of screens in South India due to the high demand for films in the region and comparatively low number of multiplexes compared to other regions. We estimate that approximately 40 per cent of our new screens will come from South India,” they said.
During the year, PVR INOX opened 130 new screens across 25 cinemas and also closed 85 underperforming screens across 24 cinemas in line with its profitable growth strategy.
“This rationalization is part of our ongoing efforts to optimize our portfolio. The number of closures appears high because we are doing this for the first time as a combined entity,” Bijli said.
PVR INOX’s net debt in FY24 stood at Rs 1,294 crore. The company had reduced its net debt by Rs 136.4 crore in the last fiscal, Chief Financial Officer Gaurav Sharma said.
“While we are reducing capital expenditure, we are not compromising on growth and will open nearly 110,120 screens in fiscal 2025. At the same time, without deviating from our target of profitable growth, we will divest nearly 6,070 non-performing screens that are a drag on our profitability,” he said.
In FY24, PVR’s revenue stood at Rs 6,203.7 crore and it posted a loss of Rs 114.3 crore. This was the first full year of operations for the merged entity PVR INOX.
On the progress in the merger integration, Bijli said that “80-90 per cent of the expected synergies have been achieved by 2023-24.”
In FY24, PVR INOX recorded a 10 per cent growth in ticket prices and 11 per cent growth in F&B spend per person, which was “higher than normal.” This was primarily due to merger synergies in integrating PVR and INOX, Sharma said.
“Going forward, increases in ticket prices and per capita food and beverage spending will be more in line with long-term historical growth rates,” he said.
PVR INOX aims to restore pre-pandemic operating margins, improve return on capital and boost free cash flow generation.
“We aim to increase revenue by driving traffic through innovative customer acquisition and retention,” Sharma said, adding, “We are also driving cost efficiencies by renegotiating rental contracts, closing underperforming screens, adopting a more agile organizational structure and controlling overhead costs.
First published: September 1, 2024 | 10:51 am IS
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