New Delhi: India’s top two multiplex chains, PVR Ltd and INOX Leisure Ltd, have earmarked ₹500-550 crore annual capex to open up to 170 screens every year, post-merger. The merged entity will start its journey with a network of over 1,500 screens.
“Both companies already had a pipeline and some projects are under fit-out. Put together, we’re looking at 158-170 screen opening this financial year, and a similar number every year, which will entail an investment of ₹500-550 crore,” Ajay Bijli, managing director, PVR Ltd, said in an interview.
The balance sheets of both companies were completely battered during the 18 months of the covid shutdown, Bijli said. “The biggest rationale behind the merger was to make sure that the financial health of the two companies gets better. There was a crisis and within that, we found an opportunity to survive and make something positive out of it.”
Bijli said the merger couldn’t have happened without the pandemic.
While PVR opened a few luxury properties after the pandemic, Bijli said premium cinemas make up 10-15% of its portfolio. “In a country like India, you have to make your brand aspirational as well as accessible. If you make it inaccessible, you’re doing a disservice to the demographics you’re targeting. We want as many people as possible to walk through the doors and therefore, affordability of ticket is very important to us.”
Refuting criticism around cinemas increasingly becoming a medium for the elite, Bijli said average ticket prices at PVR haven’t risen by more than 5% post-pandemic, which is lower than the inflation rate of 7%.
Though expansion plans are governed by the growth of retail and shopping centres, South India is an under-penetrated market as far as multiplexes go, he said.
However, in the past few months, many new multiplexes came up in the south, with developers such as Lulu Group International, Prestige Group, Phoenix Group and Brigade Group taking the lead. “The strategy is to only go to catchments where there is a propensity among people to go and watch movies, and where there is a reputed developer who’s making a destination mall of a certain standard and quality that will stand the test of time, and which will have good tenants. As a coincidence, most of it is happening in the south but we’re also spread out elsewhere.”
The one-size-fits-all philosophy doesn’t work in India, so both formats and capital expenditure change depending on how big or small a location is. The Lulu Group has 12 more malls coming up in India; so it will bank on the same, he added.
To be sure, the PVR-INOX merger has left the film and exhibition sector divided with some speculating aggressive tactics to arm-twist distributors and producers on the share of box office revenues, and food and advertising vendors for rates that suit them.
“With size, comes responsibility. We realise where we have come back from, a point of being completely shattered and annihilated, so we’re in no position to dictate to anybody. However, the normal economies of scale and the synergies that come with scale, on the revenue and operating costs side, will play out,” Bijli said.
While some experts said the future of the theatrical business is uncertain due to the massive adoption of video streaming platforms, Bijli is optimistic. “I would not be spending over ₹500 crore per year on new screens if the trends were not positive,” he added.
‘The biggest Hindi (Pathaan) and Hollywood (Avatar 2) hits have happened post-pandemic. This business is about momentum and that will take some time. It’s only been 11 months since we opened so it’s too early to come to any conclusion.”
Bijli said titles such as Tu Jhoothi Main Makkaar, Bholaa, Creed III and Shah Rukh Khan’s Jawan will be watched out for in the next few months. Jawan has a pan-India appeal and could even break Pathaan’s record, he said.