PVR Cinema – a flop show!

Coronavirus outbreak has jeopardised many sectors and the fears of extensive damage to many more with far reaching implications going into the future cannot be ruled out.
Echoing the above sentiment is multiplex chain operator PVR, which has taken hit in its revenue ever since the lockdown has been imposed across the country.
PVR management has spelt out the impact of COVID-19 outbreak on its earnings so far and expected decline there are after.

PVT says the business will be hit even after the nationwide lockdown is eased.
Malls and cinema halls have been closed since March 25 due to the nationwide lockdown to curb the spread of COVID-19.
PVR will have to tackle lower turnout for shows, reduce ticker rates amid little help from the property owners or landlords.
The company has guidelines in place to completely eliminate physical contact once multiplexes re-open. This would mean seats availability per show.

The management said PVR will separate rows in theatres to ensure social distancing.
The company is also assessing the number of shows and seats that will be provided after business resumes.
It has reduced their fixed costs by two-thirds. This can be controlled based on future occupancy levels.
The company has asked asked its landlords for rental waivers, and invoked the “force majeure” clause in their contracts.
PVR is hoping for some subsidy on electricity bills. A waiver on goods and services tax (GST) will help the company lower ticket prices.

Both Inox and PVR have indicated that they now intend to rein in critical fixed costs under present conditions. They have now written to mall developers and property owners to invoke Force majeure.
The closure will also result in subsequent cut in other costs such as manpower (through wage cut as well as contracted component), maintenance and power costs (through minimum charges only to be paid).

We hence believe that the closure impact will be felt through Q4FY20 and Q1FY21, and we expect optimum operations only from June, 2020 onwards

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