Showing posts with label Ajay Bijli interview. Show all posts
Showing posts with label Ajay Bijli interview. Show all posts
Merger was the best way to make balance sheet stronger-Ajay Bijli
8:28 AM
Vinod Mahanta and Javed Farooqui (THE ECONOMIC TIMES; March 27, 2023)
A key priority for PVR-Inox currently is improving margins through better capital and operating expenses, says managing director Ajay Bijli. In an interview with ET’s Vinod Mahanta and Javed Farooqui, Bijli talks about the contours of the deal to merge the two companies that has created the world’s fifth largest multiplex chain and what lies ahead for the combined entity. Edited excerpts:
What was the rationale behind the merger of PVR and Inox?
This (multiplex) business has always been about scale. Only when you reach a certain scale, do economies kick in. Achieving a certain scale allows for operating and cost efficiencies, as seen in large companies worldwide with 4,000-5,000 screens or more. The pandemic completely devastated our balance sheets and business. And, the best way to make our balance sheet stronger and address the challenges we faced was through the merger. The merger allowed us to take on the challenges that lay ahead in the the exhibition industry. But it also means we have more responsibility now with more screens, seats to fill, people to manage, and expectations to meet.
How is the integration process going on?
Fortunately, the integration process is going well. We started with the day-one structure and prioritized bringing people together. We hired Kornferry about three–four weeks ago to assist with this process. We developed the day-one structure to give clarity on everyone's roles and responsibilities, which was essential for our 23,000–24,000 employees. Now we are looking at synergies in every revenue line, and we have launched a new 100-day initiative called Parikrama. We're currently exploring ways to improve various aspects of our business, such as ticket prices, advertising revenue, and cost items, whether its capex or opex. There are about 13-14 initiatives that are going on simultaneously, which BCG is monitoring. We've informed the markets that it will take at least 12-24 months before we start seeing the benefits of our efforts. We have given it a value of Rs. 225 crore in synergy.
PVR and Inox promoters would own 10.6% and 16.9% of PVR-Inox, respectively. How will operational side of it work?
I have been appointed as the MD of the company by the board and shareholders, along with the Jain family as executive directors with equal representation on the board. The chairman is Pavan Jain. As MD, I am responsible for running the company for the next five years. At the operating level, we have two co-CEOs due to the large scale of our operations. We have roughly 1,700 screens, including 180 that are currently being fitted out. So, the span of control of Gautam Dutta, who is CEO of North and South, is equivalent to the span of control of Alok Tandon, who is looking after West, East and Central. Our focus is on economies of scale and adopting best practices from both companies.
Has occupancy reached pre-Covid levels? Will the higher ticket pricing hold after the Coronavirus bump subsides?
Occupancy rates vary by region, with the South having reached pre-Covid levels while West, North and East have not. We do think the ticket prices will hold. They haven't gone up by that much; it’s less than inflation in a three-year period. By the way, minimum wages have gone up, electricity has gone up, and so have all input costs. We have stayed below inflation.
Do you see a recovery in ad revenue once big-budget movies start doing better?
Everything is dependent on footfall — all our revenues are binary. The FY23-24 line-up is looking good. We have Ajay Devgn’s Bholaa releasing now, and John Wick: Chapter 4 has been released and has gotten a lot of traction. Then we have Karan Johar’s Rocky Aur Rani Ki Prem Kahani. Ajay Devgn’s Maidaan is coming.
Despite the second wave, cinemas will sustain themselves-Ajay Bijli
9:39 AM
Gaurav Laghate & Vinod Mahanta (ECONOMIC TIMES; June 19, 2021)
Though the second wave of the Coronavirus pandemic was worse than the first, cinemas will sustain themselves, said Ajay Bijli, chairman and MD, PVR Limited. In a chat with ET’s Gaurav Laghate & Vinod Mahanta, Bijli talks about the impact of the second Covid-19 wave on the multiplex industry, the competition from OTT and the recovery of the cinema exhibition sector. Edited excerpts:
How has the pandemic affected PVR and the film industry?
The world hasn't seen anything like this, and of course, our industry has got badly impacted. Short term, we've been extremely badly hit, but I do believe that in the long term, cinemas will sustain themselves. I'm not saying it just as a self-fulfilling prophecy. There are important engines of growth, which have moved us forward and made us survive all these years not just in India, but globally. India, as a market, has the highest number of movies that get released in the cinemas. It’s a heterogeneous, very disparate and very volume-driven market and it’s not just dependent on Hollywood content.
Was the first wave of Covid more dangerous or the second one for business?
During the first wave, because the government lockdown was so strict, and from March 15 till mid-October cinemas did not open, we could go to the developers and get rental reliefs. There was no ambiguity. From that point of view, we were able to control costs. Of course, the losses were phenomenal, but we could manage the costs, our people took a haircut, and so on. Even overall, if you look at it, how humanity suffered was not as bad as in the first wave.
The second wave is euphemistically being called a wave, but everybody knows it was a tsunami and it destroyed everything, and everybody was shell shocked. It created a lot of confusion in the minds of the consumers, mall developers and multiplexes. So, the second wave was worse from not just the point of business and overall humanity, but also for people's confidence levels.
When cinemas open, would you have enough films in the pipeline to have sustained interest from the audiences?
There are many films ready to release. One must understand that for economic reasons, and not for any romanticized emotional reasons, the film fraternity internationally, and in India, has realised that the first window of releasing the movie theatrically is still very important. And it's important not only for the exhibition industry, but also for the film industry. I would argue that even for the OTT industry, the theatrical window is important as it sets a quantitative and qualitative benchmark. You get to know how the movie has performed at the cinema – did people like it or not.
What were your thoughts when the filmmakers decided to release films directly on these OTT platforms?
To be honest, I had a very contrarian view. I did not panic when these movies were getting sold at all, and not because of some sort of belief in equanimity, but because the money was flowing back into the industry. I believe if the money flows back into the industry, they get encouraged to make more content. For economic reasons, cinema will always be there as first harbinger of this monetization journey of content as it is getting 70% of your revenues.
So you are pretty sure that cinemas will come back and will have no competition from OTT?
OTT has become extremely accentuated, because if my door is shut, and people are at home, what else are they going to do. But the two growth engines I spoke of have made us survive this long and will continue to make cinemas thrive. Also, earlier there was home entertainment, so it's not the first time. But it’s just that because there was no choice. I think water will find its own level when things normalise. Now you can argue, when will things normalise? And that is anybody's guess.
How do you see the recovery for the cinema exhibition sector?
I was reading the interview of the gentleman who owns the highest number of screens in the world. He said four factors have brought cinemas back into life in the UK and two of those factors are government support. One was all the furloughs, the bank loans and moratoriums that were given, and the second factor was the high level of vaccination. With these two factors in place, cinemas survived, and with that, consumers got the confidence to go to the cinemas and confidence came to the film fraternity. I think these are the ducks that must come in a row in India.
I don't know when we will open. Also, will consumer confidence come back with such a low percentage of vaccinations happening is a big question. I think vaccination is going to be the key and I am not the only CEO saying this.
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