Film production on the cards for merged PVR-INOX  

PVR-INOX is likely to foray into film production and ramp up its distribution and food & beverage businesses after the proposed merger of the two erstwhile rivals as the newly created multiplex giant will look to diversify its revenue streams given how Covid-19 decimated film exhibition revenues, PVR CMD Ajay Bijli and INOX Leisure Director Siddharth Jain told Business Today. 

“The core business will continue to remain exhibition but a lot of tentacles and verticals can come out of it and that's something we'll definitely be looking at. We already do distribution…one could look at production as well,” said Bijli, reasoning that the Covid taught him that being a specialist in just one business may not be the right strategy because “if something like this happens, your revenues come down.” 

The global health crisis, which necessitated theatres to open and shut in subsequent waves, ate into 90% of the revenues of both PVR and INOX in FY21. 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 to Rs 148 crore during the period. 

The merger announcement on March 27 said the merged entity will be called PVR-INOX and will have 1,546 screens together across 109 cities. Analysts estimate it will command a 50 per cent share among multiplex screens and 16 per cent in the overall market including single screens. The deal is expected to take 6-9 months to come to fruition after necessary approvals. 

According to Bijli, the risk around content business has come down. “I do believe that if you play your cards right, the content risk has come down now because there is somebody other than exhibitors also to buy that content,” he said, referring to the OTT players like Netflix and Amazon. 

The very same OTT players, which got a fillip because of the pandemic, have emerged as a threat to the movie theatre business given how they offer a barrage of content which is also available for multiple viewing at a fraction of movie-ticket prices. For about Rs 275 a month (based on annual subscription costs), you can subscribe to 3-4 top OTT platforms. On the other hand, a visit to theatres can set a couple back by Rs 1,000, including F&B spends. 

“Distribution can be get further augmented and so many other things that can be done in the digital space with just online brand equity that we've got. It’s definitely going to be on the cards,” Bijli added. 

INOX’s Jain, who will be a non-executive non-independent director in the merged entity, said there’s “tremendous scope” for “growing some of the existing businesses in distribution and the food and beverage” given what PVR and INOX are already doing.  

With plans for the merged entity to add 200 screens a year, Jain said they are looking at pumping in Rs 500 crore of capex a year for the exhibition space. “If there any ancillary businesses we decide to grow in the merged entity, certainly that would require a little more capex," he noted.

Bijli, who will be the Managing Director of the new entity, said their focus will be on developing their pipeline of properties and not on renovations and rebranding of existing multiplexes. 

In terms of shareholding in the merged entity, the INOX promoters will hold 16.66 per cent, while the PVR founders’ share will be 10.62 per cent. 

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

Also read: PVR-Inox combined pipeline at 2,000 screens; plan to double in 7 yrs: Inox Director