The PVR-INOX merger reshapes India’s multiplex biz fundamentally; here's how

The behemoth to be created by the surprise merger of the country’s top two multiplex chains -- PVR Limited and INOX Leisure -- will leave just Carnival Cinemas, Cinepolis India and a few regional players in the country’s film exhibition business as the space is seeing consolidation in the wake of the pandemic’s brutal assault on their finances.  

The merged entity will become the largest film exhibition company in India, operating 1,546 screens across 341 properties in 109 cities. INOX currently operates 675 screens across 160 properties in 72 cities, while PVR operates 871 screens across 181 properties in 73 cities. 

“Given that together they would contribute 40-45 per cent of overall multiplex revenues and with their monopolistic power, they would be in strong position to dictate the market across various streams of Average Ticket Price, Spend Per Head and ad revenues,” said NV Capital Founding Partner Vivek Menon. 

In terms of screen count, debt-ridden Carnival Cinemas will be the distant second in the space with its 450-plus screens across 100 cities, most of which care categorised as Tier 2 and 3.  

Cinepolis India, the only exhibitor in the country with an international backing, follows closely with its 400 screens across 22 Indian cities – a fraction of its Mexican parent’s 6,700 screens worldwide. Incidentally, Sunday’s merger announcement came weeks after PVR and Cinepolis India were in advanced talks to stitch up a merger deal themselves.

Then come Miraj Cinemas, smaller multiplex chains like Mukta A2 Cinemas and a long tail of single screens, Menon added.  

Meanwhile, Rasesh Kanakia, the former owner of Cinemax Cinemas which he sold to PVR in 2013, plans to take another shot at the film exhibition business as the non-compete clause for a period of ten years and the lease agreement for 23 screens is set to conclude over the next few months.  Under a new brand called Cineline, he plans the expand his existing screens in Mumbai and greater Mumbai, Nashik and Nagpur by adding around 50 new screens during FY23, taking the total number to close to 75. "Apart from western India, we want to move to the north and south," he had told Business Today. 

“Since India is still an under-penetrated market in terms of screens, where we have around 9000 screens and China has 84,000 screens, organic growth of screens will continue and all the multiplex chains big and small will continue on the growth trajectory of adding screens post this merger, too,” said Menon. 

PVR and INOX, both listed companies, have seen their revenues plummet during the pandemic owing to multiple lockdowns across the country to curb the spread of the coronavirus infection. PVR’s revenue nosedived from Rs 3,452 crore at the end of FY20 to Rs 310 crore by FY21. INOX’s revenue crashed from Rs 1,915 crore in FY20 to Rs 148 crore at the end of FY21. 

The boards of PVR and INOX approved the all-stock amalgamation of INOX with PVR on Sunday. The combined entity will be named PVR INOX Limited with the branding of existing screens to continue as INOX and PVR, respectively. New cinemas opened post the merger will be branded as PVR INOX. 

INOX’s Pavan Kumar Jain will be the non-executive chairman of the merged entity, while PVR’s Chairman and MD Ajay Bijli will be the MD. His brother Sanjeev Kumar Bijli will be the executive director and Jain will be non-executive, non-independent director in the combined entity. 

After the merger, INOX promoters will hold 16.66 per cent in the merged company, while PVR promoters will hold 10.62 per cent. The board of directors of the merged company would be re-constituted with a total board strength of 10 members and both the promoter families having equal representation on the board with two board seats each.  

The share exchange ratio for the amalgamation will be three shares of PVR for 10 shares of INOX.