PVR Inox is derisking the multiplex business by changing cost structures "from fixed to as variable as possible" to ensure that profitability is not hit at the country's largest multiplex chain even if a film doesn't do well, executive director Sanjeev Bijli said.

"We are looking at more revenue share, low rental deals with developers, rationalization of manpower costs, making our structures very lean, so margins can improve," Bijli told ET's The Morning Brief podcast.

The chain is shutting down 80-90 non-performing screens, and will set up 10 food courts in this financial year through its joint venture partner Devyani International, which operates KFC and Pizza Hut, to maximize pre-ticketing F&B sales, Bijli said.

"We are also really focused on reducing debt this year, by judiciously deploying capital to new projects only and having extra cash to reduce debt levels," he said. Some of the measures include pushing revenues through ticket pricing optimization, food and beverage sales, and segmentation and hyper-segmenting content to get more people in multiplexes, he said.

Measures to derisk the Friday-to-Friday release dependency also include screening live cricket, bulk ticket pricing, F&B promotions and non-traditional content such as concerts and conferences, he said.

PVR Inox, which operates 1,757 screens, has shut about 70 screens and going forward, will shutter 80-90 more screens, which the multiplex sees as non-performing assets.

"Half of the screens came from PVR; the other half came from Inox. We realized these were assets that were giving negative EBITDA and had come to an end of their product life cycles, also in terms of the malls they were in," he said. "It's then difficult to pull audiences to an empty mall, just for cinema watching, because it has to work together. The whole destination factor has to come together and work together," Bijli said.

At the same time, the chain plans to open 80-100 new screens this year. "We are committed to opening screens at good locations, where the propensity to spend and watch movies is high," he added.

Nuvama Institutional Equities wrote in a July 1 report that with its primary focus on the movie exhibition business, the combined entity of PVR Inox continues to ramp up margin-accretive segments such as F&B and ad revenues, which it noted would drive EBITDA expansion for the business.

"However, key risks could be unavailability of quality content, slowdown in consumer discretionary spends, delay in roll out of proposed multiplexes, and competition from OTT and digital video platforms," the Nuvama report said.

Multiplexes saw a subdued April and May because of the heat wave, which kept people indoors, and Lok Sabha elections and the IPL T20 when movie launches were staggered.

"Q1 was affected in months of April and May, but based on the movie line-up, both Q2 and Q3 look very strong, be it Hindi, Hollywood or regional," Bijli said. After Kalki 2898 AD, which is currently running in cinemas, Sarfira, Bad Newz, Khel Khel Mein and Deadpool & Wolverine are some of the big releases lined up.

On competition from OTT, he said while streaming platforms gained momentum during the pandemic amid closure of cinemas, now "water has found its own level".

"It's taken time... but now production houses are preferring to release films at cinemas first, because cinemas clearly are the bearer of success...box office numbers only come from a cinema."

PVR Inox's joint venture (JV) with Devyani International will help the company pivot from being a pure-play cinema exhibitor to also having a large role in the booming food and beverage (F&B) segment, a top company official said.

The multiplex operator recently inked a JV with Devyani International, which runs quick-service restaurants (QSRs) like KFC and Pizza Hut. Devyani will own 51% of the JV, with PVR holding the remaining 49% stake.

Speaking to analysts during the Q4 earnings call, PVR Inox executive director Sanjeev Bijli said the JV will allow the multiplex chain to grow its pre-ticketing F&B business.

Currently, it earns most of its F&B revenue post-ticketing, which is only when a consumer buys a movie ticket.

"We felt this partnership was a win-win one because we get to have some F&B revenues, which are pre-ticketed. We can get the opportunity to come up with some branded food courts," Bijli said.

He noted that most shopping malls lack branded food courts, and PVR Inox, which attracted 150 million moviegoers in FY24, can add value in this area.

The branded food courts are expected to help PVR increase its wallet share among existing consumers.

In FY24, PVR Inox's revenue from the sale of F&B jumped 21% to Rs 1958 crore, while F&B spend per head rose 11% to Rs 132.

PVR Inox will bring value to the JV in the form of negotiating better rental deals and locations with real estate developers. The food courts will be located adjacent to PVR Inox cinemas.

While declining to comment about the investments being made by the JV, PVR Inox CFO Nitin Sood said the initial plan was to open 5-6 food courts. "We are still in the process of developing a long-term business plan."

Bijli said the exit quarter of FY24 was soft due to the impact of the general elections on new movie releases and the underwhelming performance of Hindi films. In FY24, PVR Inox recorded the lowest quarterly collections of Rs 759 crore in Q4 due to box office volatility.

The company is expecting box office collections to improve post-elections due to a strong slate of Hindi and Hollywood movies.

PVR Inox is also transitioning to a capital-light model by reducing overall capex in FY25 by 25% from Rs 700 crore in FY24. The company is planning to install 120 screens at the gross level. The net screen addition is expected to be 50–60, as it is looking to phase out 60–70 screens.

The company is also adding screens through franchise-owned company-operated (FOCO) model under which the developer will make the entire investment in the cinema property while PVR Inox will generate revenue through management fee.

PVR Inox is looking to monetize real estate assets worth Rs 300–400 crore that it inherited from the Inox merger. The proceeds from the sale of real estate assets will be used to pay off debt.