With its showbiz facing challenging times, PVR sees glamour in food court, bowling

Faced with a host of challenges like high real estate costs, taxes and the linearity in its bread-and-butter movie exhibition business, Ajay Bijli-promoted PVR Ltd has now set its sights on the retail entertainment business to push up its revenues.

And driving this agenda is the company’s chief executive officer, Pramod Arora.

At present, this segment includes its bowling alley brand Blu-O and contributes only about 4% to its total revenue.

“Given the small base of this business right now, we will see this segment grow at over 300% on year to contribute about 20% of our revenues in the next three to five years,” Arora said in an interview.

However, this growth is expected to come only after three years, as PVR plans to invest an estimated Rs 100 crore in the segment during the next two years, he said.

“Our plans for opening a skating rink as well as our food court plans are on track, so that will give some traction to the revenues in this segment,” said Arora.

He said the company is also actively looking at foraying into the gaming market that will add to the company’s revenues.

The company’s new Entertainment City venture — comprising multi-screen theatres, a bowling alley, a skating rink and food plazas — will open to public at Noida’s Logix City Centre in two-and-a-half years.

The project is being developed at a cost of Rs 50 crore.
Spread across 1.2 million square feet, the entertainment city will be part of the shopping centre being developed at the Logix City Centre in the city bordering Delhi.

Arora said PVR is expecting better operating margins in the current quarter ending September on the back of cost rationalisation and management team restructuring initiatives that the company has undertaken.

“We managed a robust growth last quarter not only due to the low base effect because of the producers’ strike last year, but also due to our efforts towards cost optimisation and change in our management structure,” said Arora.

Explaining the strategies that were deployed from May, Arora said, the focus is now on better utilisation of resources.

For example, the number of staff members would vary according to the attendance for a show. A morning show would require lesser number of people than an evening show, given the occupancy rates, Arora said.

Arora said PVR has also re-evaluated its concession prices, its IT solutions and wastage levels in its food and beverage department to optimally utilise resources.

As part of its focus on resource utilisation, the company has empowered mid-level management and given each senior manager multiple roles to get better returns per employee.
“We expect better margins in the current quarter as we continue to realise the benefits of these efforts,” he said.

During April-June, the operating margin of the company was 15%.
The company had posted a loss at the operating level last year as it was hit by the standoff between multiplex owners and movie producers and distributors over revenue sharing. The tussle meant no new movie was released in the quarter.

Arora said he expected income during Jul-Sep to grow in line with the growth a quarter ago.

On a year-on-year basis, ticket prices were increased by Rs 25 during the June quarter, while they had risen by an average Rs 23 in the previous quarter. For the June quarter, PVR reported a consolidated net income of Rs 103 crore, up 131% on year, while net profit grew to Rs 5.07 crore compared to a loss of Rs 12.85 crore a year ago.

“In the multiplex business, success depends 70% on efficiencies while 30% is dependent on intellect. So, if we can improve our efficiencies, then our profit will be better. That’s what we are trying to do,” Arora said.

Post its failure to acquire DLF Ltd’s multiplex chain DT Cinemas Ltd, the company has become conservative in its approach to more acquisitions.

“While we are always on the lookout for acquisitions, there is no such plan in the near future. We are happy with our organic growth,” Arora said, refusing to say when this self-imposed moratorium on buyouts will end.

Commenting on reports that talks between the two multiplex owners could be revived, Arora said, “It is not being revived from our end. I do not know about them (DT Cinemas).”

“We will look at companies that will help increase not merely the topline of the company but also the bottomline. We will not acquire a company only to get more presence in the country through more screens, but will look at the profitability that it will get us,” Arora said.

PVR is looking to add 45-60 screens in the current financial year.

NewsWire18