Leading cinema exhibitor PVR INOX plans to close around 50 loss-making screens, having an accelerated depreciation. “The company plans to shut down approximately 50 cinema screens over the next 6 months,” said PVR INOX in its investor’s update for the fourth quarter and financial year ending on March 31, 2023.
These properties are loss-making, or housed in malls which have reached the end of their life cycle with little hope of any revival. “The company has taken an accelerated charge of the depreciation in its books and written off the WDV of assets,” it said.
PVR-INOX has been created after the merger of two leading cinema brands PVR and INOX Leisure. The merger was effective from February 6, 2023.
The merged entity is operating 361 cinemas with 1,689 screens across 115 cities by the end of FY23 in India and Sri Lanka.
Karan Taurani SVP of Elara Capital said: “There will be Rs 100 million of EBITDA impact (savings) by closing down of 50 screens. Most of these screens are across Tier I & II markets, he added.
Besides PVR INOX would continue to expand and intends to open 150–175 screens in FY24, it said.
“Of these, 9 screens have been opened till date, 15 screens are awaiting license for commercial opening and 152 screens are currently under various stages of fit out,” it said.
It has realigned all upcoming handovers of new sites for fit-outs till the time business fully recovers. “The company has robust pipeline of screens signed up for development over the next 5 years,” it added.
PVR INOX had on Monday reported a consolidated net loss of Rs 333.99 crore and revenue from operations was at Rs 1,143.17 crore for the fourth quarter that ended on March 31, 2023.
“We believe increased footfall growth is the only key driver of revenue growth in FY24, as SPH (Spend per head)/ATP (Average Ticket Price) are 16 percent/ 30 percent higher than pre-COVID level,” said Taurani.
Management is not concerned about losing some screens in the pipeline since there is a huge opportunity.