PVR-INOX Merger: Covid made merger more relevant, says PVR chairman Ajay Bijli

Merged entity to invest Rs. 700 cr on new screens and the rest on retrofitting: PVR MD
Javed Farooqui (THE ECONOMIC TIMES; March 2, 2023)

Mumbai: The merged entity of PVR and Inox Leisure is expected to spend Rs. 800-850 crores for adding new movie screens and retrofitting the existing ones, PVR managing director Ajay Bijli said. As much as Rs. 700 crores of this will go into new screen expansion and the rest for retrofitting screens.

They have set a 100-day action plan to complete the integration of the two firms, and once completed, the merger will generate annual cost and revenue synergies of Rs. 225 crores over the next 12-24 months, said Bijli.

As part of the action plan, the merged company will focus on integrating human resources, technology and operations, and once the integrations are complete, it will focus on unlocking cost and revenue synergies, said Bijli. They expect the synergy benefit to come from areas like box office, food & beverage and advertising in terms of revenue. The cost synergy is expected to accrue from areas like supply chain and overhead rationalization.

In the next two years, the merged entity plans to add 200 screens per year, Bijli added. In the current fiscal year to date, they together have launched 143 screens across 26 properties in 21 cities.

On Wednesday, PVR launched an 11-screen superplex in Lucknow’s Lulu Mall. With this launch, the company's screen count will increase to 158 screens in 32 properties across Uttar Pradesh.

The merged entity now has 438 screens in 100 properties across North India. PVR-Inox’s growth plan involves expanding the screen count in South India, tier-2 & tier 3 cities and increasing its share in the premium format segment, Bijli said.

The combined entity will be called PVR Inox, with Bijli serving as its MD. It, according to Bijli, will have an 18% market share in screens and 30% in box office collections in the country. The joint entity will have 1,642 screens in 113 cities and 354 properties in India.

On January 12, the National Company Law Tribunal sanctioned the scheme of arrangement between the cinema chains. In a February 23 regulatory filing, PVR announced that the company's board had approved the allotment of more than 36.70 million shares to equity shareholders of the erstwhile Inox Leisure.
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PTI (THE ECONOMIC TIMES; March 1, 2023)

Leading multiplex operator PVR is working on "getting economies of scale" after the merger of rival Inox Leisure and expects a double-digit growth in its top-line in FY24, said managing director Ajay Bijli. PVR is working on synergies on revenue from ticket prices, food & beverage, advertising, and operating costs, he said, adding that the merged entity has plans to add 200 screens every year, and tap the potential of smaller markets.

"If you look property by property, in certain places there are disparities in the ticket price. There are opportunities for improving programming, and scheduling the peak-hour ticket pricing," Bijli told PTI.

Besides, some of the properties would also have to be upgraded, he said.

"We both are operating in the same environment and look at the demographics in a similar way. But whatever tweaking needs to be done for both brands to give a consistent experience, we are working on it," Bijli added.

When asked about the growth in terms of the top-line of the merged entity in FY24, Bijli said he expects double-digit growth.

"In calendar year 2019 which was normal year of operations pre-pandemic, PVR and Inox recorded a combined turnover of about Rs 5,600 crore. We are adding about 200 screens every year with a capex of about Rs 700-750 crore," he said.

A merger of PVR and Inox Leisure is effective from February 06, 2023.

"We felt that coming together would make the balance sheet stronger and this business is all about scale... I truly believed that if we has not come together, there would have been a problem in growth, and we will grow together," he said.

Like in the F&B space, Inox was serving vegetarian food only and post-merger it will also have a non-vegetarian menu, which can take the ATP (Average Ticket Price) up.

"Advertising is another area, where the minutes on the screen, which we were charging can be taken up," he said.

Besides, Bijli also plans to share some benefits with the consumer from the economies of scale after the merger.

"Not everywhere it will be value-driven, it would be volume driven as well. Where ever we feel that ATP has to come down, it's fine for us," he said, adding, "the ATP will come down at several places."

According to Bijli, he is more concerned with film income rather than ticket price multiplied by the number of people.

"Our focus is more on getting more and more people inside, rather than looking at ticket price," he said.

Regarding the operation cost, Bijli said the joint entity PVR Inox would have 23,000 people and have operations in 113 cities.

Post-merger Inox Leisure would cease to exist and Bijli would head the merged entity PVR Inox as managing director.

After the merger with Inox, PVR on Wednesday announced the launch of an 11-screen 'superplex' at Lucknow at Lulu Mall, the largest shopping mall in the city.

This will have all formats, including the multi-sensory 4DX format, premium large screen format P[XL], two auditoriums of PVR's luxury format, LUXE along with 7 auditoriums with last-row recliners.

After this, PVR's foothold in Uttar Pradesh with 158 screens in 32 properties consolidates the merged entity's presence in north India with 438 screens in 100 properties.

In the current fiscal, the merged entity has opened 143 screens across 26 properties in 21 cities.