PVR Inox to shut 70 screens in FY25, lower capex, adopt multi-pronged growth strategy

PVR Inox is looking at renegotiation of cinema rentals, a leaner organization structure and other overhead cost control as part of a four-pronged approach to drive growth. Further, it is transitioning towards a capital-light growth model, reducing capital expenditure by 25% in FY25 over FY24.

Lata Jha
First Published14 May 2024
PVR Inox reported a consolidated net loss of  <span class='webrupee'>₹</span>130 crore in the fourth quarter of FY24, down from  <span class='webrupee'>₹</span>333 crore reported in the year-ago period.
PVR Inox reported a consolidated net loss of ₹130 crore in the fourth quarter of FY24, down from ₹333 crore reported in the year-ago period.

PVR Inox Ltd is executing a strategic overhaul aimed at optimizing resources and maximizing returns. Following the closure of 85 underperforming screens in FY24, the multiplex chain plans to shutter 70 more properties in FY25, the company said, as part of its earnings announcements on Tuesday.

Simultaneously, the company is set to embark on an aggressive expansion spree with the launch of 120 new screens in FY25, honing in on the promising south Indian market, it added.

Emphasizing a shift towards a capital-light model, PVR Inox also seeks to reduce capital expenditure by 25% in FY25 compared to a year ago. Besides, it seeks to prioritizes operational efficiencies by renegotiating rental agreements, ensuring a leaner organizational structure, and implementing cost-control measures to maximize returns on investment.

According to PVR Inox, a key priority is to achieving a debt-free status, and the company is evaluating monetization of its real estate assets, valued at 300-400 crore.

Also read |  Can PVR Inox script a turnaround?

"The key strategic priorities should help the company in charting a new, less capital-intensive and incrementally-profitable growth path. Our endeavour is to redefine our growth strategy, focus on fixed cost reduction, thus improving profitability, resulting in enhanced return on capital and free cash flow generation,” Ajay Bijli, managing director, PVR Inox Ltd, said in a statement.

Overall, PVR Inox has identified four key strategic priorities to ensure medium to long-term growth. It aims to enhance profitability of the existing circuit by driving revenue through initiatives such as Movie Passport (a pre-paid weekday pass), Cinema Lovers Day (flat discounts at select properties to boost footfall), and screening events, such as film festivals, live concerts, and popular sporting leagues, besides other entertainment activities.

Besides, renegotiating rentals for operational cinemas and shutting down underperforming cinemas, the company also plans to collaborate with developers to jointly invest in new screens to  reduce capital outlay. 

Also read |  PVR Inox Q4 results: Net loss narrows to 130 crore, revenue rises 10% YoY

PVR Inox reported a consolidated net loss of  130 crore in the fourth quarter of FY24, down from  333 crore a yea earlier, while operating revenue rose 10% to  1,256 crore from  1,143 crore during the period.

In FY24, the company’s loss narrowed to  32 crore from  335 crore in FY23, while revenue grew from  3,751 crore to  6,107 crore.

According to the company, the quarter ended 31 March was the weakest of the year, leading to muted performance, with admissions at around 32.6 million. While films such as Bade Miyan Chote Miyan and Maidaan, among others, fell short of expectations, the ongoing general elections also impacted new releases. However, the situation is expected to stabilize by mid-June, it added.

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