PVR | GEM Equity has acquired 3.5 lakh equity shares in company at Rs 1,315.11 per share on the NSE.
A framed photograph of the company's top management and officials celebrating the milestone of 400 screens is hung on a wall in the ‘Gladiator’ conference room of PVR’s Gurugram office. The photo dates back to December 2013. It also carries a message by the promoters -- the Bijli brothers -- exhorting the employees to aim for 1,000 screens by 2018. That target remains. Only the year of achieving it has been pushed back to 2020.
“The target remains but it is now stretched. We should now be there in 2020. Construction of malls hasn’t happened at the pace we expected,” Nitin Sood, Group Chief Financial Officer at India’s largest multiplex operator, told Moneycontrol.
Construction of a mall is central to PVR's expansion. It doesn’t own any multiplex of its own anymore nor does it lease standalone properties, choosing to house its multiplexes in malls where it is often the anchor tenant. The company thus ended up being a hapless bystander to the collapse in real estate construction that took place in the last 3 years.
In almost three-and-a-half years since, PVR has added 180 screens, the total count now standing at 580. If the company’s plans for the year goes as per plan, it will end 2017-18 with 650 screens.
Asked if the revised target of 1,000 screens by 2020 was stiff too, Sood cited the example of China where the number of screens more than doubled to 40,000 in 3 years.
“We are 2,000 screens today (as an industry). We can easily be 10,000 in 10 years,” Sood, a 16-year veteran of PVR, said. According to him, the company will mostly rely on organic growth to achieve its aim, there being very few targets in an industry that has consolidated considerably in the last two to three years.
In this period, South India-based Carnival Films acquired Big Cinemas, Mexico’s Cinepolis snapped up Fun Cinemas, Inox Leisure bought Satyam Cineplex while PVR brought DT Cinemas into its fold.
Not that its execution failed as it fell short of its 1,000-screen target, but to make sure it’s not missed this time, PVR is eyeing expansion in tier-3 and tier-4 cities and for this it is going to rely on ‘Talkies’, a brand of theatres it launched half-way into its now 20-year journey.
The company has only around 25 ‘PVR Talkies’ as of now. At that time, the leader in movie exhibition business wanted to take the multiplex concept to smaller towns with tickets priced between Rs 40 and Rs 60, much cheaper than those priced in metros but may be the population in those towns found that also too steep.
“We couldn’t add too many (PVR Talkies). The concept was ahead of its time. Some cities couldn’t meet the expectation on price. There will be a lot more screens opening in tier-3 and tier-4 now,” he said.
Talking about prices, the discussion with Sood veered towards the government placing entertainment business under the luxury category and hence bringing it under the highest tax rate of 28 percent in the Goods and Services Tax Act.
Ruling out any changes in ticket prices because of the 28 percent GST rate, Sood said, "It’s a bit of a dampener. If you look at it, there are 17 states representing 75 percent of screens that operated at less than 20 percent tax. In those states, the tax has gone up but we will also get input tax credit. So, I don’t see ticket prices going up at one place or down at another because of that. We will have to calibrate,” he said.
Sood said the content pipeline was strong for the rest of the year, the super success of ‘Baahubali 2 – The Conclusion’ more than balancing the jitters that were there on account of a line-up that otherwise looks quite modest for the first quarter of 2017-18.
The year will see release of Salman Khan-starrer Tubelight, Akshay Kumar’s Toilet: Ek Prem Katha and Rabir Kapoor’s Jagga Jasoos.