PVR Records Net Loss for Q4, What’s Next for Multiplexes?

The second wave, which has now gone past its peak in India, has left its mark on some sectors more than the others, the multiplex industry being one such sector. With lockdowns in several states as cases began to rise towards the second half of April, multiplexes much like other outlets had to be shut to curb the spread of the virus.

A case in point is the multiplex company, PVR Ltd. The company has 842 screens across the country and none are operational because of the lockdowns in various parts. The company came out with its fourth quarter and full fiscal year earnings announcement earlier this week. It has reported a net loss of nearly Rs 74 crore for the financial year that recently ended. For the fourth quarter, PVR has reported a loss of Rs 289 crore against a loss of Rs 74.5 crore in the same quarter of the earlier fiscal year. Revenues for the January-March quarter of 2021 was at Rs 263.3 crore, while the total revenues for the full year ended March 31, 2021 was at 263.3 crore, as compared to Rs 662 crore, a decline of 60 per cent year on year.

The fiscal year 2021 results may not be comparable because of the extraordinary circumstances of a national lockdown towards the end of March 2020 followed by staggered resumptions of shows and social distancing well into the second half of the year. In fiscal year 2020, PVR had reported a net profit of Rs 27 crore, before the pandemic changed the picture.

Cost containment and increased liquidity

However, the multiplex company focused on containment of costs and lowered its fixed costs in the fiscal year 2021 by 63 per cent when compared to the previous financial year. According to the company, it managed to keep down rent and common area maintenance (CAM) expenses by 71 per cent for the financial year ended March 2021. Its employee costs also dropped 45 per cent. The company also managed to raise extra liquidity of Rs 1600 crore for FY2021, and had an excess total liquidity of Rs 750 crore as of April 30, 2021. The cushion provided by this liquidity is likely to help the company as it awaits the lifting of curbs and reopenings across key cities in the country.

The other ray of hope for multiplexes in India comes in the form of good box-office collections in countries that have reopened their theatres. In the North America region, for instance, the recent four-day Memorial weekend saw cinemas raking in almost $100 million in the form of ticket sales, which was the best show put up ever since the beginning of the pandemic.

In India, the multiplex industry has over 2 lakh people working in it, as per news reports, and makes up for almost 60 per cent of the show biz revenues. The pandemic-induced curbs meant that the industry lost nearly Rs 5000 crore in terms of revenues, as reports suggest. For PVR and INOX, which are India’s two leading multiplex chains, the five states of Maharashtra, Gujarat, Karnataka, Uttar Pradesh and Tamil Nadu, make up for 56 per cent of their movie screens. In the nine-month duration ended December 31, 2020, PVR reported a net loss of Rs 458.67 crore.

Vaccination pace, relaxation of curbs may decide future

India Ratings and Research (Ind-Ra) has noted in an April 2021 note that if the cases are contained, the media and entertainment outlook may be positive as the second half of the year (H2) of fiscal year 2022 may see operations being normalised. Much depends on how quickly India manages to vaccinate its population as the second wave looks like it is declining. India recorded under 1.3 lakh fresh cases on Thursday, maintaining under 2 lakh new cases for the seventh day in a row, suggesting a decline. Plans are afoot to ramp up vaccinations to target one crore injections per day from mid July-August, reports say. If this is implemented and India manages to keep infections at bay, lockdowns and curbs may be lifted, auguring well for the multiplex industry.

A survey by the Multiplex Association of India in July 2020 during the first wave of the pandemic showed that 83 per cent of respondents missed watching movies at cinema halls. While over-the-top platforms and content have made a strong impression over the past year, the magic of big screen viewing may not have disappeared. For multiplex chains like PVR this is good news.

In terms of the stock market performance, cost containment by multiplex chains, liquidity and hopes of reopenings amid a prospective increase in vaccinations may push multiplex stocks in the future.

Conclusion

Multiplex chain PVR Ltd recently announced its Q4 and full year FY21 results, reporting a loss of Rs 289 crore for the Jan-March quarter and Rs 748 crore for the full year. Meanwhile, the company has ensured that it has lowered fixed costs and maintained liquidity. As the second wave recedes, reopenings albeit staggered may be on the cards and that may buoy the multiplex sector.