PVR Inox Aims To Cut Capex By 30% This Fiscal In Shift To Franchise Model

PVR Inox Ltd. is planning a few strategic changes like franchise-owned, company-operated model and reduction in capital expenditure to boost growth in the current financial year amid an expected resurgence in content, which will aid expansion.

"We are being very cautious with capital expenditure this year, planning to spend at least 30% less than last year," Chief Financial Officer Gaurav Sharma told NDTV Profit in an interview.

The company also aims to add 120 new screens and has adopted a capital-light transformation strategy. This involves partnering with developers to share the capex burden, according to Sharma.

"The new screens will follow the FOCO model, which reduces PVR Inox’s capital investment compared to the past. If this strategy proves successful in the next few years and improves return metrics, it will be a positive development," he said.

In the June quarter, PVR Inox posted wider-than-anticipated loss of Rs 179 crore as compared to Rs 82 crore in the previous quarter. After the results, the company is leveraging successful content to drive recovery. The box office success of Bollywood film Stree 2 is a key part of this strategy.

On the slower growth in ticket price in the first quarter, Sharma said this trend was due to the absence of major blockbusters. However, with some strong releases, such as Telugu film Kalki 2898 AD and Hollywood movie Deadpool & Wolverine, the company is poised for a strong recovery.

The CFO highlighted that the premium pricing strategy would be leveraged and expects this momentum to continue into the second half of the year, supported by a strong pipeline of films across various languages.

In Q1, the company's re-release strategy and the alternative content that was showcased in its cinemas resulted in footfall of 1.2 million. This approach is particularly effective during periods with gaps between major releases or when new films are underperforming, according to Sharma. "While it constitutes a small portion of our overall revenue, it is valuable for keeping the audience engaged and encouraging them to return to our cinemas."

Commenting on the success of the passport subscription, Sharma said: "Passport is performing well. The goal is to attract more people to theatres on weekdays when occupancy is lower, targeting price-sensitive consumers."

"We have sold over 4 lakh passports so far and plan to continue experimenting with this strategy and scaling it up in the future."