In an interview to CNBC-TV18, Ajay Bijli, Chairman & Managing Director of PVR says that tax expenses like new bonus act and entertainment tax restricted growth in the quarter ended December 2015.
New bonus act impacted earnings in the third quarter of FY15, Ajay Bijli, Chairman & Managing Director of PVR said. Tax expenses, in the last quarter, increased to Rs 11.92 crore from Rs 32 lakh year-on-year.
Multiplex operator PVR reported a 5.29 percent decline in profit to Rs 29.88 crore while the income rose 19.1 percent to Rs 500.5 crore in Q3 against Rs 420.3 crore in the same period a year ago.
In an interview to CNBC-TV18, Bijli discusses the third quarter results and forecast for coming quarters.
Below is the transcript of Ajay Bijli’s interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar.
Reema: Could you start off by showing us a few details of what the average footfalls were this quarter, what was the increase in the average ticket price (ATP) which contributed to this 19 revenue growth?
A: We had about 16.5 million people which came to our cinemas. Last year we had about 16 million people. So, there has been an increase there but the real revenue growth for us is basically on ATP. So, the ATP has gone up to Rs 200. It was about Rs 185. So, it has gone up by almost 11 percent and our spend per head (SPH) has again gone up from Rs 67 to Rs 74.
But the biggest kicker this quarter has been our advertising revenue which is close to Rs 70 crore and has gone up by 26 percent. So, we are quite happy with the way sort of whatever was in our control has happened.
Latha: Considering that you are mentioning that both ticket realisations as well as ad revenues have gone up why is it that the margins are lower then?
A: Earnings before interest, taxes, depreciation and amortisation (EBITDA) margin got impacted by two or three things which were not in our control. One of them really is the entertainment tax in Delhi which has gone up dramatically and we are making lots of representations and because our circuit is in Delhi so, we got impacted there.
Secondly the new Bonus Act which has come that has also had an impact because that is a retrospective cost of about Rs 4.5 crore which has hit us this quarter itself and Rs 4 crore is roughly the entertainment tax implication.
So, these two factors have been a bit of dampener and I am also not happy with the fact that this Bajirao and Dilwale despite our communications with distributor got released on the same day that took about 15 lakh admissions.
So, the number would have been close to about 18 million but we have got 16.5 million. But our worst fears came true because both movies cannibalised each other and we lost some revenues there.
Reema: What is the content looking like in Q4 and will that aid in an improvement in your margins from the current 17 percent, what should we expect in Q4?
A: Q4 as you know in this business is always slow but nine months have been just fantastic. I don't think we have seen nine months like this ever but yet January looks very promising. We have had Airlift as our huge surprise hit. Next month again we have got Fitoor which is Abhishek Kapoor's movie with Katrina Kaif and Aditya Roy Kapur.
Movies come up to March 26 actually, we have got a big movie of John Abraham of which the director is very good. The same guy who made Force. We have got Batman and Superman coming. Then we have Ghayal of Sunny Deol coming. So, movie line up is still there. It will be a good quarter, but fourth quarter is always slower.
Latha: But entertainment and bonus issue doesn't look like - maybe the bonus issue is a onetime but entertainment tax will continue to dog you?
A: If Goods and Service Tax (GST) comes it won't but of course it gets subsumed in the GST and that will be a big kicker for us. But other than that we are making representations and Delhi government the way odd-even scheme where they experimented similarly they experimented with the entertainment tax how it is going to impact the business and the consumer.
So, it is very clear we need to go to Mr Kejriwal and tell him that the consumers cannot absorb this kind of a ticket hike and entertainment tax of this like is unheard of. So, we will have to speak to him and get it down.