PVR-INOX’s strategic focus: Multiplex operator to shut 70 non-performing screens in FY25, to monetise real estate assets  

Leading multiplex operator PVR-INOX plans to close 70 non-performing screens in FY25 and will go for potential monetisation of non-core real estate assets in prime locations such as Mumbai, Pune and Vadodara, according to its latest annual report. 

Though the company will add 120 new screens in FY25, it will also close almost 60-70 non-performing screens, as it chases for profitable growth. About 40 percent of new screens addition will come from South India, where it will have a “strategic focus” on this lesser penetrated region as per its medium to long-term strategy. 

Moreover, PVR INOX is redefining its growth strategy by transitioning towards a capital-light growth model to reduce its capex on new screens addition by 25-30 percent in the current fiscal. PVR-INOX will partner with developers to jointly invest in new screen capex by shifting towards a franchise-owned and company-operated (FOCO) model, PTI reported.

It is also evaluating monetisation of owned real estate assets, as the leading film exhibitor aims to become “net-debt free” company in the foreseeable future. 

“This involves a potential monetisation of our non-core real estate assets in prime locations such as Mumbai, Pune, and Vadodara,” MD Ajay Kumar Bijli and Executive Director Sanjeev Kumar said in an address to the company's shareholders. 

“Our company’s medium to long-term strategy will involve expanding the number of screens in South India due to the region’s high demand for films and comparatively low number of multiplexes in comparison to other regions. We estimate that approximately 40 percent of our total screen additions will come from South India,” the company said. 

During the year, PVR-INOX opened 130 new screens across 25 cinemas and also shut down 85 under-performing screens across 24 cinemas in line with its strategy of profitable growth. 

“This rationalisation is part of our ongoing efforts to optimise our portfolio. The number of closures seems high because we are doing it for the first time as a combined entity,” said Bijli. 

PVR-INOX’s net debt in FY24 was at Rs 1,294 crore. The company had reduced its net debt by Rs 136.4 crore last financial year, said CFO Gaurav Sharma. 

“Even though we are cutting down on capital expenditure, we are not compromising on growth and will open almost 110-120 screens in FY25. At the same time, not wavering from our goal of profitable growth, we will exit almost 60-70 screens that are non-performing and a drag on our profitability,” he said. 

In FY24, PVR’s revenue was at Rs 6,203.7 crore and it reported a loss of Rs 114.3 crore. This was the first full year of operations of the merged entity PVR INOX. 

Over the progress on merger integration, Bijli said “80-90 per cent of the targeted synergies was achieved in 2023-24". 

In FY24, PVR INOX had a 10 percent growth in ticket prices and 11 percent in F&B spend per head, which was “higher-than-normal". This was primarily on account of merger synergies on the integration of PVR and INOX, said Sharma. 

PVR INOX aims to restore pre-pandemic operating margins, enhancing return on capital, and driving free cash flow generation. 

The multiplex operator saw its consolidated net loss widen to Rs 179 crore in the June quarter of FY25 impacted by postponement of film releases due to general elections. The company had posted a consolidated net loss of Rs 82 crore in the first quarter last fiscal.

Consolidated revenue from operations were at Rs 1,190.7 crore in the first quarter, down from Rs 1,304.9 crore in the year-ago period. Total expenses were higher at Rs 1,457.5 crore as compared to Rs 1,437.7 crore in the corresponding period in the last fiscal.