PVR-INOX to Close 70 Screens, Monetise Real Estate

PVR-INOX, a leading name in the multiplex sector, is embarking on a strategic overhaul as part of its growth and profitability strategy for FY25. The company plans to shut down 70 underperforming screens while focusing on the monetisation of non-core real estate assets located in prime markets such as Mumbai, Pune, and Vadodara.

This move is outlined in their latest annual report, marking a pivotal shift in their operational focus. Despite this reduction, PVR-INOX will expand its footprint with the addition of 120 new screens in FY25. Of these new installations, approximately 40 percent will be concentrated in South India, a region identified for its robust demand and relatively low multiplex penetration. This strategic push aims to leverage the untapped potential of South India, aligning with the company’s medium to long-term growth objectives.

To support this growth trajectory while managing capital expenditure, PVR-INOX is adopting a capital-light model. This involves reducing capex on new screen additions by 25-30 percent and transitioning to a franchise-owned and company-operated (FOCO) model. This approach will see the company partnering with developers to share investment responsibilities, thereby optimising capital allocation.

The company’s real estate strategy is also undergoing a transformation. By evaluating the monetisation of its owned properties, PVR-INOX aims to achieve a “net-debt free” status. The company’s spokesperson highlighted that this includes potential sales of non-core real estate assets in key locations, reflecting a broader effort to enhance liquidity and financial health. In FY24, PVR-INOX opened 130 new screens but also closed 85 underperforming ones, reflecting a strategy geared towards optimising profitability. This rationalisation is part of the company’s broader strategy to improve operational efficiency and return on investment.

The net debt stood at Rs 1,294 crore for FY24, with a reduction of Rs 136.4 crore compared to the previous fiscal year. Despite reducing capital expenditure, PVR-INOX remains committed to growth, planning to open 110-120 screens in FY25. However, the company is also facing financial challenges, as evidenced by a consolidated net loss of Rs 179 crore in the June quarter of FY25, up from Rs 82 crore in the same period the previous year. Revenue from operations declined to Rs 1,190.7 crore, while expenses increased to Rs 1,457.5 crore, impacted by delayed film releases due to general elections. PVR-INOX’s strategic adjustments reflect a concerted effort to balance growth with financial prudence, aiming to restore pre-pandemic operating margins and enhance cash flow generation.