The multiplex operator is also looking to shift to an asset-light model to reduce capex in the new screens
Mumbai: City-based multiplex major PVR Inox plans to add 120 screens in the current financial year while closing 70 screens, the company revealed in a Bombay Stock Exchange (BSE) regulatory filing.
About 15% to 20% of the new screens will be premium or special format screens. The company is also planning to add a couple of rows of recliners in the existing or the new mainstream cinemas to capitalise on the premiumisation trend, one of the company representatives revealed in the filing. Tickets for these will be priced at a premium compared to the rest of the seats in the theatre.
Currently, about 15% of the 1754 screens it has across India and Sri Lanka are premium and special format screens.
The company, which has 361 cinemas in 113 cities in India and Sri Lanka also plans to have 3-4 food courts operational by the end of the financial year 2025 (FY2025) under a joint venture (JV) company it has set up with Devyani International Ltd.
In the JV, which was registered on 27 July as Devyani PVR INOX Food Court Ltd., Devyani International, the operator of Yum Brands (KFC & Pizza Hut), and Costa Coffee outlets in India, holds a 51% stake while PVR INOX holds 49%.
The food courts, to be launched in shopping malls, will operate under the brand name Treat Junction, the earnings call revealed.
“In the next 2 to 3 months, we expect at least 2 food courts to be fully operational. The locations have been identified. We will provide an update once we announce the opening of the food courts. And by the end of this fiscal, about 4 to 5 food courts will be operational,” Gaurav Sharma, Head of Investor Relations and Corporate Finance – PVR-Inox Ltd. revealed in the earnings call about the first quarter FY2025 performance.
He explained that the food courts would be outside the cinema premises. “Just like any other food court in a shopping mall, anybody can enter and exit the food court at his or her will. There is no requirement that a customer has to buy a ticket or anything,” Sharma said.
“It’s a pre-ticketed F&B revenue that we, as a strategy, are targeting in this JV. So yes, that’s the sort of business model the food court will be operating in,” he added.
The cinema exhibitor has been facing intense competition from OTT platforms and has decided to shift towards a capital-light growth model by partnering with developers and jointly investing in new screen capex, the filings reveal.
“The capital-light, asset-light model that we are talking about, which is more on variable rentals is going forward basis, where we are negotiating new properties under the new model,” said Sharma.
The company has experienced a subdued quarter-ended 30 June in terms of occupancy and revenue.
It reported a 20% occupancy and a 9% year-on-year decline in revenue due to a 13% drop in movie releases. Ajay Bijli, managing director of the company, attributed the quarter’s weak performance to the general elections and the cricket World Cup, which impacted footfall. Weak ticketing and food and beverage revenue, coupled with operating deleverage, led to a net loss of Rs 137 crore, the filings revealed.
The company opened 50 new screens and exited 14 underperforming screens resulting in a net addition of 36 screens during the quarter.
However, owing to some major releases in the pipeline such as Stree 2, Vedaaa, Bhool Bhulaiyaa 3 and Pushpa 2, the company is hopeful of good footfall and revenues in subsequent quarters.
“The management expects third quarter (Q3) to be the biggest quarter of FY25,” said stock broking firm Motilal Oswal in its recent report on the company. The Q3 will see big titles hitting movie screens including Amir Khan’s Sitare Zameen Par and Allu Arjun starrer- Pushpa 2.
“The management expects the content pipeline to return to the pre-Covid level in the next 6-12 months,” the report said further.
