NO ONE CAN PREPARE FOR A PROBLEM LIKE THIS: PVR CMD
For the first time in four years, film ticket sales grew in 2019. Just as the industry was savouring it, coronavirus came along. Cinema chains were among the first to shut down. At 845 screens across India, the ~3,118-crore PVR Cinemas is the country’s largest theatre chain. Vanita Kohli-khandekar spoke to Chairman AJAY BIJLI on what social distancing means to an industry that depends on bringing people together. Edited excerpts:
What was your first reaction when the coronavirus hit?
I was doing a course in Harvard at the end of December when I first heard the news about a virus outbreak in China. My first thought was it would be in China only.
There was some thought about the things we get from China, like the components of the sound system. Then when the Bond film ( No
Time To Die) was postponed (March 4) I thought it made sense because China, Japan and South Korea were shut down.
For tentpole Hollywood films the China box-office is huge, so it was a setback. But in India, more than 90 per cent comes from the domestic box-office. We didn’t anticipate that something like this would happen here. The first salvo was when Jammu & Kashmir shut down theatres (March 11), then Kerala and Delhi followed suit.
If social gathering propagates the disease then we are happy to meet public guidelines. It is not just a business issue.
What does this mean for PVR?
We had done a ~500-crore QIP (qualified institutional placement of shares) late in 2019. Therefore, there are cash reserves and a strong balance sheet. It will see us through. At a cinema level, we haven’t laid off people but senior employees have taken a 50 per cent salary cut while others have taken a cut anywhere between 10 and 25 per cent. We have tried our best to soften the whole thing at lower levels.
What kind of impact could it have on smaller chains and single screens?
I am not a political person. But I see other governments lending support to the industries that are facing closure. Some sort of fiscal benefits from the government — GST deferment,renumeration for employees among others — would help.
We have made representations to the prime minister, finance minister and information and broadcasting minister through the Multiplex Association of India for relief measures. We have also made some representations through the Producers Guild, Exhibitors Association and written letters to them in our individual capacity. The Indian film industry is very small, not even a $2 billion (in box office revenues), while China’s industry is $9-11 billion. So, it needs support. I am not concerned about the overall fundamentals of the business. Human beings are social in nature. We are hardwired to meet, to go out. It is contrary to human nature to stay at home. So people will come out in droves once this is all over. The movie industry will continue to make movies. They will be bunched up for release. Hence, we will have a good problem of plenty.
What are your big learnings while handling this crisis?
No one can prepare for a problem like this. But when the going is good, no harm in deleveraging yourself. The
QIP was for deleveraging.
Since we are expanding and adding screens, the board decided to ensure a healthy capital structure. Nobody anticipated this. Second is communication. This (situation) is a true test of leadership. We are speaking to our 20 million registered loyalty members, communicating with them, telling them to stay safe. The spirit of PVR is beyond cinema. We talk to them about movies. We don’t want to be out of sight, out of mind.
What would be the long-term impact on PVR and the industry?
That depends on how long it lasts. From June to August period, we are okay. We have pushed down our expenses. But this question is really not applicable because it is difficult to forecast. On one hand, there are more cases coming up in the UK and Italy while on the other, one can draw hope from China being able to continue (after beating the virus).
In India, films are a solid business, selling around 1.5 billion tickets annually. If you believe in the Indian consumer, the film industry and the theatrical business, then you believe in PVR and its fundamentals. It employs 15,000 people in 845 screens with more than 110 million visitors a year. But this industry is fragmented. Unlike the US where two to three chains own 40,000 screens, India has 9,000 screens, of which 3,000 screens are owned by multiplexes. In a crisis like this, everybody — big or small — is in the same boat.
It all depends on how much fuel is there in your tank. This is not like a one quarter hit; it will take time. But the pent-up appetite (once things go back to normal) will be so much that we will have overflows. China has opened theatres on an experimental basis (500 screens) and is using re-releases; it is seeing 100 per cent occupancy.
The same thing will happen in India.
"AT CINEMA LEVEL, PVR HAS NOT LAID OFF PEOPLE BUT SENIOR EMPLOYEES HAVE TAKEN A 50 PER CENT SALARY CUT WHILE OTHERS HAVE TAKEN A CUT OF BETWEEN 10 AND 25 PER CENT"