Leading movie theatre operator PVR INOX aims to close over 50 screens that are losing money and are depreciating quickly. According to PVR INOX’s investor update for the fourth quarter and financial year ending March 31, 2023, “The company plans to shut down approximately 50 cinema screens over the next 6 months.”
These properties are either loss-making or located in malls that are nearing the end of their usefulness and have limited potential for future growth. “The company has taken an accelerated charge of the depreciation in its books and written off the WDV of assets,” it stated.
After the merger of two well-known movie theatre brands, PVR Ltd and INOX Leisure, PVR-INOX Ltd was formed. Beginning on February 6, 2023, the merger took effect. By the conclusion of FY23, the combined company would be running 361 theatres with 1,689 screens over 115 cities in India and Sri Lanka.
“There will be Rs 100 million of EBITDA impact (savings) by closing down of 50 screens,” said Karan Taurani, SVP of Elara Capital. He said that the majority of these screens are in Tier I and II markets. In addition to PVR, INOX plans to open 150–175 screens in FY24 as part of its ongoing expansion.
“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,” the statement read. All upcoming handovers of new sites for fit-outs have been rescheduled till the time that business has completely recovered.
“The company has a robust pipeline of screens signed up for development over the next 5 years,” it added. PVR INOX announced on Monday that its consolidated net loss for the fourth quarter that ended on March 31, 2023, was Rs 333.99 crore and its operating revenue was Rs 1,143.17 crore.
As SPH (Spend per Head)/ATP (Average Ticket Price) are 16%/30% higher than pre-COVID level, Taurani stated, “We believe increased footfall growth is the only key driver of revenue growth in FY24.”
Given the enormous possibilities, management is not worried about losing some of the screens in the pipeline.