PVR INOX Plans Monetisation of Real Estate Assets in Mumbai, Pune, and Vadodara
Leading multiplex operator PVR INOX has announced its plans to close 70 non-performing screens in FY25. The company also intends to monetize its non-core real estate assets in prime locations such as Mumbai, Pune, and Vadodara. This move comes as part of PVR INOX’s strategy for profitable growth and optimization of its portfolio.
Shift towards a Franchise-Owned and Company-Operated Model
PVR INOX aims to reduce its capital expenditure on new screens addition by 25 to 30 percent in the current fiscal year. To achieve this, the company will partner with developers and shift towards a franchise-owned and company-operated (FOCO) model for new screen capex. This collaboration will allow for joint investments and provide PVR INOX with a capital-light growth strategy.
Evaluation of Real Estate Asset Monetization
In its efforts to become a “net-debt free” company, PVR INOX is evaluating the potential monetization of its non-core real estate assets. These assets, located in prime areas of Mumbai, Pune, and Vadodara, present an opportunity for the company to generate additional revenue and streamline its operations.
Focus on Expansion in South India
PVR INOX recognizes the high demand for films in South India and the comparative shortage of multiplexes in the region. As part of its medium to long-term growth strategy, the company plans to add approximately 40 percent of its total screen additions in South India. This strategic focus on underrepresented markets will enable PVR INOX to cater to the growing demand for cinema experiences in the region.
Optimization and Rationalization of Portfolio
In line with its strategy of profitable growth, PVR INOX opened 130 new screens across 25 cinemas in FY24. However, it also closed down 85 under-performing screens across 24 cinemas to optimize its portfolio. Closures were undertaken for the first time as a combined entity, marking the merged entity’s commitment to achieving operational efficiency.
PVR INOX’s Financial Performance
In FY24, PVR INOX reported revenue of Rs 6,203.7 crore and a loss of Rs 114.3 crore. The company’s net debt in FY24 stood at Rs 1,294 crore. However, PVR INOX aims to restore pre-pandemic operating margins, enhance return on capital, and drive free cash flow generation in the coming years.
Merger Integration and Future Growth
The merged entity, PVR INOX, achieved 80-90 percent of the targeted synergies in 2023-24. To maintain growth, the company plans to increase ticket prices and food and beverage spending per head, aligning them with long-term historical growth rates.
Moreover, PVR INOX intends to boost revenue through innovative customer acquisition and retention strategies. This includes cost efficiencies through negotiated rental contracts, closure of under-performing screens, adoption of a leaner organizational structure, and tighter control over overhead costs.
In conclusion, PVR INOX’s plans for asset monetization, adopting a franchise-owned and company-operated model, and expansion in South India demonstrate its commitment to profitable growth. The company’s efforts to optimize its portfolio, enhance financial performance, and achieve a net-debt free status position it for long-term success in the rapidly evolving entertainment industry.
