India’s multiplex chain operator PVR-Inox has announced its plan to shut down around 50 cinema screens in the next six months. These screens either operate at a loss or are located in malls that have reached the end of their life cycle, with little possibility of rejuvenation. In response to this move, the company has accounted for an accelerated depreciation charge and written off the Written Down Value (WDV) of these assets in its financial records.
Despite the closures, PVR and INOX jointly introduced 168 new screens across 30 cinemas in the last fiscal year. The companies have set a target to open an additional 150-175 screens in FY’24. However, the company has decided to reschedule the handover of new sites for fit-outs to the next calendar year, as part of its strategy to ensure a robust recovery in the box office before proceeding with further expansions.
Currently, PVR’s screen portfolio consists of 1,689 screens across 361 cinemas located in 115 cities in India and Sri Lanka, including 38 management screens. The recent merger between PVR and Inox was successfully concluded in the quarter ending March. Ajay Bijli, the Managing Director of PVR Inox, expressed his views on the merger, stating that it will serve as a significant milestone for both the company and the Indian film industry as a whole.
Despite the underperformance and volatility of Hindi movies and significantly low releases from Hollywood in the previous year, the company witnessed a robust recovery during FY23. The exhibition business has witnessed strong growth, driven by the exceptional performance of regional cinema, an increase in ticket prices, and a substantial increase in consumption of food and beverages by patrons.
“The year gone by marks the 1st full year of uninhibited operations for the exhibition industry. There was considerable volatility in box office quarter on quarter. We believe that the 2 major factors that marred the industry in FY’23 – underperformance of Hindi films and less number of Hollywood releases, will both ease out in FY’24,” said Ajay Bijli, Managing Director, PVR INOX Ltd.
The company is confident of achieving operational synergies of INR 225 crore over the next 12-24 months from the recently concluded merger with INOX.