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Last Updated : Nov 03, 2015 03:57 PM IST | Source: CNBC-TV18

Star Wars, Spectre, Tamasha to make Q3 profitable: PVR

“Big Hollywood films like Spectre, Star Wars, Ranbir Kapoor's Tamasha, Dilwale, Bajirao Mastani and Salman Khan's movie coming on Diwali--Prem Ratan Dhan Payo—will be a temporary blip in the F&B income,” Ajay Bijli, CMD of PVR says.

Media firm PVR reported a robust September quarter earnings. The company's Q2 net profit surged 347 percent to Rs 41.1 crore from Rs 9.2 crore in corresponding quarter last fiscal.

Speaking to CNBC-TV18, Ajay Bijli, CMD of PVR says the spend per head (SPH) in food and beverages (F&B) was relatively lower because of a lot of regional movies played in PVR Cinemas. “There is a direct correlation between the type of movie that you play and the type of consumer that comes to the cinemas, therefore, the amount that they spend on F&B differs,” he explains.

However, Bijli believes the coming quarter will be profitable for the company on the back of movies that are “urban in nature”. 

“Big Hollywood films like Spectre, Star Wars, Ranbir Kapoor's Tamasha, Dilwale, Bajirao Mastani and Salman Khan's movie coming on Diwali--Prem Ratan Dhan Payo—will be a temporary blip in the F&B income,” he says.

The company garnered about 18.8 million footfalls in Q2 and F&B income stands at about Rs 70 per person, he says.

Below is the verbatim transcript of Ajay Bijli's interview with Nigel D'Souza and Sumaira Abidi on CNBC-TV18.

Sumaira: Let me get to this other income itself, what is this on account of?

A: Other income is some funds we had raised and those have been invested in mutual funds. So basically it is interest income from there but otherwise the operating profit and operating margins also are way above. Even if you don’t take this other income into account, it is way above the same quarter results last year.

Nigel: This other income will it be sustainable or is it just a onetime income that we could see on a yearly basis?

A: It is a onetime thing. It won't be sustainable. We are focusing on our operating margins and our profit after tax (PAT) margins more.

Nigel: How much of your revenues came in from advertising?

A: Advertising always contributes close to 10 percent and box office contributes about 65 percent and about 25 percent comes from food and beverages (F&B) income. So that split remains consistent every quarter.

Sumaira: After your best ever quarter, last time around, these numbers while operationally they may be good but they pale a little bit compared to the 20-23 percent margins that you had done last time, how much headroom is there to significantly take margins higher from what you have done this quarter and keep it at those more than 20 levels?

A: I think 20.7 percent margin compared to 23 last time’s is fine. There is a little dip but overall it has been a great year for films and margin is there, average ticket prices (ATPs) can go up, you can improve spend per head (SPH).

Our SPH was a bit down today which is spend per head on food and beverage and that was primarily because a lot of regional movies got played this year more and there is a direct correlation between the type of movie that you play, therefore the type of consumer that comes to the cinemas and the amount that they spend on F&B.

However, if you look at the coming quarter, we have got movies, which are going to be very urban in nature, we have got some big Hollywood films like Spectre, Star Wars, we have got Ranbir Kapoor's Tamasha coming, Dilwale coming, Bajirao Mastani coming. So a lot of Hindi and Hollywood content, which is coming. Salman Khan\\'s movie coming on Diwali day, Prem Ratan Dhan Payo. So I think this is a temporary blip in the F&B income which will come up.

Nigel: What was the average F&B spending per head in the last quarter and also could you tell us what were the total footfalls?

A: We have got about 18.8 million people. We have got 19 million in Q1 but 18.8 million. That is a big jump from last year. F&B income as I said is about Rs 70 per person.

Sumaira: The last time around when we had spoken to you post your previous earnings, you had said that debt was at about Rs 630 crore, what is the figure now and have you pared off some debt?

A: I am not aware of the debt figure but basically the accruals are enough to take care of our growth and there is no additional debt that is required by the company.

Nigel: What is the ATP, around Rs 185 odd?

A: About Rs 188 if I remember correctly. It was Rs 181 in previous year same quarter. It has gone up to Rs 188.

Nigel: Could you tell us will second half be better than the first half and could we see a topline then if we just walk on those numbers, more than Rs 1,000 crore on those numbers?

A: I think everyone knows that the last quarter is always slow in this business because of examinations and Indian Premier League (IPL) but Q3 is looking as good as Q1 simply because the line up of movies that I have just mentioned and also because of the way PVR's circuit is spread out. So we have a good set of cinemas in south, a good set of cinemas in west and north and east. So therefore regional content also plays a very important role in the kind of footfalls that we generate. So we are looking at similar footfalls, 19 million roughly people which will come in Q3 as well.

Sumaira: Would your second half revenue exceed Rs 1,000 crore?

A: No, as I said the last quarter is slower. We have done about Rs 950 crore already if you take first two quarters into accounts so this quarter will be again Rs 480-490 crore type of topline. Then last quarter is always slow. January-February is still okay but March brings it down a little bit.

Nigel: Any expansion plans, acquisitions on the cards?

A: No acquisitions on the cards. We have already opened 13 screens but we are opening about 50 more in the next six months. So we will have about 67 new screens opening by the end of the year.

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First Published on Nov 3, 2015 03:27 pm
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