June 25, 2021

PVR Limited: Rating reaffirmed

Summary of rating action

Previous Rated Amount Current Rated Amount

Instrument* Rating Action
(Rs. crore) (Rs. crore)
Commercial Paper 200.0 50.0 [ICRA] A1+; reaffirmed
Total 200.00 50.00
*Instrument details are provided in Annexure-1

Rationale
The reaffirmation of the rating takes into account PVR Limited (PVR’s) strong leadership position in the domestic film exhibition
industry, with 176 properties and a total of 842 screens across India as on June 2, 2021. Further, the company commands
strong brand value, which enables it to launch properties at premium locations.
The reaffirmation also factors in the company’s comfortable liquidity position as reflected by cash and equivalents of around
Rs. 732.2 crore and undrawn limits of Rs. 75.68 crore as on March 2021. Successful conclusion of the rights issue of Rs. 300
crore in August 2020 and qualified institutional placement (QIP) of Rs. 800 crore in February 2021 have supported the liquidity
position, while enabling the company to absorb losses in FY2021. The demonstrated track record of successful equity raising
over the years also reflects positively on PVR’s fund raising ability.
However, the rating is constrained by the Covid-19 impact on the business operations, which is significantly affecting the
revenues and cash accruals for the company. PVR reported a 91% decline in operating income (OI) and incurred net loss of Rs.
665 crore in FY2021 against profit of Rs. 131 crore in FY2020. Further, the ongoing wave of pandemic, the extended closure of
cinemas, restrictions on cinema halls, and fear of infection are expected to impact its revenues and cash accruals, at least over
the near term.
ICRA notes that the company reduced the fixed cost in FY2021 by 63% compared to FY2020, which cushioned the impact of
the pandemic. ICRA notes that a significant part of the cost of PVR is fixed in nature, resulting in high operating leverage of the
business. Of the fixed expenses, rental is one of the key items for which the company received almost 100% waiver during the
lockdown period in FY2021 (up to October 15, 2020). It also received reduction in the same by 79% and Common Area
Maintenance (CAM) by 42% in FY2021 on a year-on-year (YoY) basis. Further, for the current financial year as well, the company
is in discussion with the lessors for rent waivers. The management has also taken various steps to contain the other expenses—
by rationalising personnel costs, electricity & water charges and other overheads—which has led to savings of 45% of personnel
cost, 72% of electricity & water charges and 60% of other cost in FY2021 on a YoY basis. The extent of cinema closures, ramp-
up of operations post re-opening, movement in various costs and consequent impact on PVR’s liquidity and financial risk profile
will remain the key rating sensitivities going forward.
ICRA also notes the direct release of movies on over-the-top (OTT) platforms in FY2021 owing to Covid-19 that, if continued
over the long term, can have a negative structural impact on multiplex operators.

Key rating drivers and their description

Credit strengths

Sustained leadership position in Indian multiplex industry – PVR is the largest multiplex operator in the industry with 176
properties and a total of 842 screens across India as on June 2, 2021. The acquisition of SPI Cinemas (with 76 screens) in August

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 2018 further strengthened its leadership position. Despite the pandemic, the company added 13 screens in FY2021 and has 19
screens in the pipeline for opening in the current year. Going forward, the continued screen opening momentum, excluding
the impact of Covid-19 pandemic, is expected to help maintain the company’s market position.

Strong brand value – PVR, being the market leader, is able to command strong brand value, which enables it to launch
properties at premium locations. This in turn leads to higher average ticket prices and adequate occupancy levels. On a
consolidated basis, the occupancy for PVR remained at a healthy 34.9% in FY2020, with the average ticket price (ATP) and
spend per head also healthy in FY2020 at Rs. 204 and Rs. 99, respectively. The operating metrics in FY2021, however, witnessed
considerable moderation on account of Covid-19 and are expected remain constrained in the near term owing to various
restrictions on operations.

Adequate liquidity owing to successful conclusion of rights issue and QIP in FY2021 – PVR’s liquidity remains adequate at
around Rs. 807.88 crore, inclusive of cash balances of around Rs. 732.2 crore, generated primarily by raising Rs. 800 crore of
QIP in February 2021 and undrawn limits of Rs. 75.68 crore as on March 2021. Successful conclusion of the rights issue of Rs.
300 crore in August 2020 and QIP of Rs. 800 crore in February 2021 supported the cash flows, while enabling the company to
absorb the losses in FY2021. PVR has repayment obligations of Rs. 300 crore in FY2022. The multiple rounds of successful
equity raising also reflects company’s healthy financial flexibility.

Credit challenges

Disruption in business operations due to Covid-19; operating losses likely to extend into H1 FY2022 – The business operations
were severely impacted due to Covid-19, significantly affecting the company’s revenues and cash accruals. PVR reported a
decline of 91% in OI and incurred net loss of Rs. 665 crore in FY2021 against a profit of Rs. 131 crore in previous year. Further,
with ongoing second wave of the pandemic, the extended closure of cinema, restrictions on cinema halls and fear of infection
are expected to impact PVR’s revenues and cash accruals, at least over the near term.

Repayment obligations remain high for near to medium term; however, liquidity and financial flexibility provide comfort –
The debt remained elevated at the end of March 2021 with the total debt amounting to Rs. 1,355 crore. Further, the repayment
obligations scheduled over the next two fiscals are high at Rs. 550 crore. Given the pressure on accruals during this period, the
company is expected to be reliant on refinancing to meet part of its repayment obligations. Nonetheless, its strong track record
in raising debt and equity provides comfort in terms of financial flexibility.

Exposed to risks inherent in movie exhibition industry like piracy, substitution and high operating leverage – PVR continues
to be exposed to the inherent risks in the movie exhibition industry, such as increased availability of online content and other
forms of entertainment. These pose challenges in sustaining profitability and growth. The risk is further exacerbated by the
high fixed-cost nature of the business. ICRA also takes note of the direct release of movies on OTT platforms in FY2021 due to
Covid-19 pandemic that, if continued over the long term, can have a negative structural impact on multiplex players.

Liquidity position: Adequate

PVR has adequate liquidity, as reflected by the cash and equivalents of around Rs. 732.2 crore and undrawn limits of Rs. 75.68
crore as on March 2021. Successful conclusion of the rights issue of Rs. 300 crore in August 2020 and QIP of Rs. 800 crore in
February 2021 supported the liquidity position, while enabling the company to absorb the losses in FY2021. PVR has a
repayment obligation of ~Rs. 300 crore in FY2022, which coupled with expected cash losses due to the ongoing pandemic could
moderate its liquidity position.

Rating sensitivities

Positive factors – Not applicable.

Negative factors – Negative pressure on the rating could arise in case the cinema shutdowns extend for a prolonged period
due to ongoing second wave of the pandemic. Slower-than-expected ramp-up in operating metrics post resumption of

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 operations, resulting in prolonged weakness in PVR’s financial risk profile or moderation in net leverage position would also
be negative factors.

Analytical approach

Analytical Approach Comments

Applicable Rating Methodologies Corporate Credit Rating Methodology

Parent/Group Support Not applicable

Consolidation/Standalone Consolidated

About the company

PVR is a leading film exhibition company in India. It pioneered the multiplex industry in the country by establishing the first
multiplex cinema (four screens) in 1997. At present, it has a geographically diverse presence in India with 176 properties and
a total of 842 screens.

Key financial indicators (audited) - Consolidated

Standalone FY2019 FY2020 FY2021

Operating Income (Rs. crore) 3085.6 3414.4 280.0

PAT (Rs. crore) 189.4 26.8 -748.0
OPBDIT/OI (%) 19.00% 31.53% -119.64%
PAT/OI (%) 6.14% 0.79% -267.14%
Total Outside Liabilities/Tangible Net Worth (times) 1.61 3.88 2.87
Total Debt/OPBDIT (times) 2.19 1.20 -4.05
Interest Coverage (times) 4.58 2.23 -0.67
PAT: Profit after Tax; OPBDIT: Operating Profit before Depreciation, Interest, Taxes and Amortisation
Source: Company, ICRA research
Note: These are reported numbers.

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

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 Rating history for past three years
Chronology of Rating History
Current Rating (FY2021)
for the past 3 years
Amount Outstanding as Date & Rating in FY2019
of Mar 31, 2021 Date & Date & Rating in
Instrument Amount Date & Rating in FY2020
(Rs. crore) Rating in FY2021
Type Rated
(Rs. crore) June 25, 24-Jun-20
31-Mar-20 17-Mar-20 31-Dec-19 15-Mar-19 17-Aug-18 6-Jun-18
2021
Commercial Short
1 50 - [ICRA]A1+ [ICRA]A1+ [ICRA]A1+& [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]A1+& [ICRA]A1+
Paper Term
[ICRA]AA-
Long [ICRA]AA- [ICRA]AA- [ICRA]AA- [ICRA]AA-
2 Term Loans - - - (Negative); [ICRA]AA-& [ICRA]AA-&
Term (Positive) (Positive) (Stable) (Stable)
Withdrawn
[ICRA]AA-
NCD Long [ICRA]AA- [ICRA]AA- [ICRA]AA- [ICRA]AA-
3 - - - (Negative); [ICRA]AA-& [ICRA]AA-&
Programme Term (Positive) (Positive) (Stable) (Stable)
Withdrawn

Complexity level of the rated instruments

Instrument Complexity Indicator

Commercial Paper Very Simple

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely
payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial,
business, industry risks or complexity related to the structural, transactional, or legal aspects. Details on the complexity levels of the instruments, is available on ICRA’s
website: www.icra.in

Annexure-1: Instrument details

ISIN No Instrument Name Date of Issuance / Sanction Coupon Rate Maturity Date Amount Rated (Rs Crore) Current Rating and Outlook
NA CP (not placed) - - - 50 [ICRA]A1+
Source: Company

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 Annexure-2: List of entities considered for consolidated analysis
M3M Consolidation
Company Name
Ownership Approach
PVR Pictures Limited 100.00% Full Consolidation
SPI Entertainment Projects (Tirupati) Private Limited 100.00% Full Consolidation
PVR Lanka Limited 100.00% Full Consolidation
Zea Maize Private Limited 79.87% Full Consolidation
Source: PVR; as on March 31, 2021

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 ANALYST CONTACTS
Shubham Jain Mathew Kurian Eranat
+91 124-4545 306 +91 80-4332 6415
shubhamj@icraindia.com mathew.eranat@icraindia.com

Kapil Banga Pallavi Singh

+91 124-4545 391 +91 124 4545 393
kapil.banga@icraindia.com pallavi.singh@icraindia.com

RELATIONSHIP CONTACT
Jayanta Chatterjee
+91 80 4332 6401
jayantac@icraindia.com

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
communications@icraindia.com

Helpline for business queries

+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)
info@icraindia.com

About ICRA Limited:

ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services
companies as an independent and professional investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company,
with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit Rating Agency
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For more information, visit www.icra.in

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