PVR is zooming in on metro moviegoers

Adopts cautious strategy for smaller towns, says tier-II markets not matured yet

MUMBAI: Unlike exhibitors in its category who are aggressively expanding in tier-II and III cities, PVR Cinemas is looking to solidify its existing presence in metros and tier-I cities.

In Mumbai, for example, PVR has two operational properties at Juhu and Mulund. In fiscal 2009, three more properties will get functional starting with a 7-screen multiplex at C R Retail Mall (a wholly owned subsidiary) at Phoenix Mills, followed by 6-screen properties under a rental model in city suburbs Goregaon and Ghatkopar.

The company is charting a similar strategy in Chandigarh with a 7-screen property at Ambience Mall, which adds to its existing presence across three centres in the city.

The rationale, explained Nitin Sood, chief financial officer, PVR Ltd, is to milk the high returns being offered by these cities. “The primary revenues are from the exhibition business and our average ticket price (ATP) of Rs140 could grow at 7-8%.”

PVR Cinemas is also expecting added revenues from recently introduced gaming (Major Cineplex) and food court (Lite Bite) businesses. “We’ll exploit our multiplex premises to set up over 200 bowling lanes in the country and also roll out our Lite Bite brand in a phased manner by the first quarter of fiscal 2009,” he said.

“This, along with a mix of debt, equity and internal cash accruals are sufficient to fuel further expansion,” he said.

PVR, a joint venture between Priya Exhibitors and Village Roadshow (Australia), set up India’s first multiplex at Delhi’s Priya Cinema in 1997. Today it has 95 multiplex screens in the country. About 60% of these are in North India, making it one of the dominant players over there. Going forward, Sood says, it is targeting setting up of about 150-200 screens by 2010 at a total investment outlay of Rs 250-300 crore. About 30-40 upcoming screens will belong to the PVR Premiere brand targeted at the premium (SEC A) category.

PVR Cinemas also operates a low-frills digital cinema property, PVR Talkies, which has screens at Aurangabad and Latur in Maharashtra. ATP here ranges between Rs 40 and Rs 80.

Why isn’t PVR going deeper into the smaller towns? Sood said: “Although our growth in the exhibition business will piggybank on the development of more malls in these cities, we are adopting a wait and watch strategy. These markets will take time to mature. The real-estate situation in these areas is such that too many malls will lead to cannibalisation of the population base.”

Meanwhile, PVR Ltd’s wholly owned film production and distribution arm, PVR Pictures, which tasted blood with its debut Taare Zameen Par, is adopting a similar working model for its upcoming projects. This includes Jaane Tu Ya Jaane Naa, directed by screenwriter Abbas Tyrewala of Munnabhai MBBS fame, followed by two other films by directors Madhurita Anand and Ram Gopal Varma.

Sood said the company is in no hurry to sign up actors and directors for multi-film deals yet. “The current investment in the co-production and distribution business is about Rs 35-40 crore. We are following a script-based approach. Our multi-pronged strategy in exhibition, production and distribution will compliment each other in the long run, thus adding to our margins,” he said.

Girish Swar, senior analyst, Anand Rathi financial services, expects PVR’s FY09 revenue from the exhibition business to be Rs 398 crore. For PVR Pictures, Swar expects operating revenues to shoot up to Rs 38.62 crore from Rs 3.49 crore in the last fiscal.
 
“Conservatively viewing the film business, we expect lower Ebitda margins compared with the exhibition business, but it could surprise if the co-produced films attract audiences and do well at the box-office, raising the rate of return per film,” he said.

c_arcopol@dnaindia.net