PVR INOX Plans Strategic Screen Reductions and Expansion
In an effort to enhance operational efficiency and focus on high-demand markets, PVR INOX, one of India’s leading multiplex operators, has unveiled plans for the fiscal year 2024-25. The company will close approximately 70 non-performing screens while simultaneously adding around 120 new screens across various locations, predominantly in South India.
Strategic Closures and Expansion Plans
PVR INOX’s annual report highlights the decision to shut down 70 underperforming screens as part of a broader strategy aimed at optimizing its offerings. This strategic move is aligned with the company’s commitment to maintaining profitability amidst fluctuating audience preferences and market dynamics. The closure will allow for the reallocation of resources towards more profitable ventures.
During FY2024, PVR INOX successfully opened 130 new screens across 25 cinemas, which reflects the company’s growth trajectory. However, the closure of 85 underperforming screens across 24 cinemas in the same year illustrates a focused strategy on quality over quantity in operational venues. The company’s Managing Directors, Ajay Kumar Bijli and Sanjeev Kumar, emphasized the significant potential in South India where the demand for movies continues to outpace supply. Consequently, they anticipate that 40% of new screens will be established in this region.
Capital Expenditure and Financial Goals
In a bid to cut down on capital expenditures, PVR INOX aims to reduce such spending by 25% to 30% in the current year. Utilizing a franchise-owned and company-operated (FOCO) model, the company plans to collaborate with developers to jointly invest in new screens. Despite this reduction, the company remains committed to expansion, projecting the opening of approximately 110-120 new screens in FY2025.
Debt Reduction and Monetization Strategy
To bolster its financial health, PVR INOX is determined to become a net-debt-free entity in the foreseeable future. With a reported net debt of ₹1,294 crore in FY2023-24, the company successfully reduced its debt by ₹136.4 crore last year. This is part of a larger strategy that involves evaluating the monetization of non-core real estate assets situated in key markets like Mumbai, Pune, and Vadodara.
Performance Highlights
| Key Performance Indicator | FY2023-24 |
|---|---|
| New Screens Opened | 130 |
| Underperforming Screens Closed | 85 |
| Net Debt Reduction | ₹136.4 crore |
| Increase in Ticket Prices | 10% |
| Increase in F&B Spend | 11% |
Future Outlook
The management team at PVR INOX expresses a strong belief in the company’s growth potential and market capture in underrepresented areas. By embracing a proactive approach to managing screen performance and financial health, PVR INOX is poised to navigate the evolving landscape of the entertainment industry effectively.
