MACROECONOMIC FACTORS AFFECTING

PVR CINEMAS

Name- Stuti Shrivastava

PGDM 2021-2023
Roll no.:- 21DM201
 About PVR
Cinemas
PVR (Priya village Roadshow) Ltd was founded in April 1995, as a
joint venture between Priya Exhibitors Pvt Ltd and Village Roadshow
Ltd of Australia. In 1997, the company founded the first multiplex
(PVR Saket) in Delhi and has since expanded its presence
significantly.

In 2012, PVR signed an agreement to acquire 69.27% of rival

multiplex operator Cinemax for Rs 395 billion (135 movie
screens).Currently 93.19% of the shares of Cine Hospitality Pvt. Ltd.
PVR was founded by Ajay Bijli, Chairman and CEO of PVR Cinemas.
Sanjeev kumar Bijli, brother of Ajay Bijli, is the co-managing director
of PVR Ltd. The company also runs an active CSR department under
PVR. The first PVR Gold Screen was unvieled at the Forum Mall in
Bangalore.

PVR has launched a joint venture with a major Thai-based Cineplex

Group to introduce Indian consumers to the concept of life
entertainment. It also holds a 100% stake in PVR Pictures, a film area,
it was decided to close the movie production business after the final
work “Shanghai” was released in June 2012.

Key Recent Developments:-

1. In May 2021, PVR Cinemas has announced free vaccination of
all its employees across the country as it cope with the
shutdown of movie theatres due to Covid-19 wave.
 2. After 2nd devarstrating wave of covid-19, the company has
partially started its commercial operations for few of its
theatres from Quarter-3 of FY-21.
3. The average ticket prices (ATP) for the third quarter of 2021
were down 22% year on year, while per capital spending was
down 5% year on year.

Macroeconomic Factors affecting PVR

Cinemas Pvt. Ltd

1)Inflation:-
Inflation is defined as an increase in the average price of goods
and services throughout the economy. A higher rate of inflation
is not a good news for entertainment industry as when the
higher rate of inflation hits, it does have an effect on
discretionary spendings. During such times consumers are
more inclined to spend more on food essentions rather than
entertainment, hence company did face a major impact. The
current rate of inflation is 8.62%.

2)GST:-
Before the GST implementation there was no VAT or Service tax
state specific entertainment tax ranging from 15% to 110% (an
average of 30%). with having GST the movie tickets ranging 100
or below: 18% GST and where price of tickets is more than 100,
the GST is 28%. Before GST the tax on entertainment industry
was higher levied by local bodies, since the overall tax burden
on the customers has reduced after GST, this has a positive
impact on thewhole industry as well as PVR.
3)Growth Rate :-
The media and entertainment business is estimated to grow
25% to reach Rs. 1.73 trillion (US$ 23.29 billion) in 2021.
Continuing growth in theatrical collections of movies, owing to
the rising number of multiplexes in tier 2 and tier 3 cities and
moderate rise in ticket prices, along with rising revenue from
ancillary streams such as cable, satellite and digital rights

The move to over-the-top (OTT) platforms is going to increase

the number of digital television subscriber base. Increased
availability of regional and original content on digital platforms
combined with player switching to a subscription based model
will drive the segment’s growth.
 Challenges faced by PVR and Media &
Entertainment Industry
Media & entertainment industry is one the sectors of India’s
economy that has been hit hardest by the on-going coronavirus
crises, which has been completely shut down since the beginning of
the nationwide lockdown. The Rs. 183 billion Indian film industry has
faced its worst phase because of the lockdown imposed due to
coronavirus pandemic.

1) Weak Demand:-
it took the demand for the entertainment sector on its knees
even after the lift of the lockdown, customers avoid to visit
theather and are more keen towards savings, avoiding
expenditure on non-essential service.

2) Losses due to the postponement of releases:-

according to a financial express report, the film industry faced a
decline of 29.1% in the first quarter of 2020, due to
postponement of major movie release which in turn lead the
customers to shift to other entertainment sources.

3) Increasing competion from OTT plateforms:-

the pandemic and the lockdown has paved the way for film
producers to release their movie on OTT plateforms like netflix,
amazon prime, which has created a shortage of content for film
theaters in future. Also strict government hygiene content
 guidelines for theaters are expected to impact the cost of
operations for exhibition owners

Solutions to overcome the Challenges

1) In order increase the demand, PVR should focus on attrating

more customers by giving price offers, safe experience .
2) PVR should avoid content losses and also should keep
alternative content sources and try to avoid postponements by
offering different medium or source of service
3) To compete with the competition, PVR should focus enhancing
their leadership in core competencies, try to innovate in new
areas and increase the quality of experience which they offer to
the customers.

Changes in personal tax and its impact on Sales

Turnover
Personal Tax Rate: - It is a type of tax that the government imposes
on income generated by individuals. This type of tax is levied on an
individual’s income such as wages, salaries and other incomes like
pensions, interests, and dividends.

Below is the tax rates, after 2019 the tax rates are kept unchanged
The sales turnover of PVR for the last 6 years is as follows:

1) The sales turnover for the year ended March 2016 were
1720.39 crore.
2) The sales turnover for the year ended March 2017 were
2002.01 crore.
3) The sales turnover for the year ended March 2018 were
2246.12 crore
4) The sales turnover for the year ended March 2019 were
3039.35 crore
5) The sales turnover for the year ended March 2020 were
3284.36 crore
6) The sales turnover for the year ended March 2021 were 225.75
crore
 Conclusion
As we can see, with the decrease in the personal tax rates, the sales
turnover of PVR ltd has increased:-

 In 2017 when the tax rates brought down to 10% from 20%, it
impacted PVR positively with an increase of 16.39% in total
sales turnover.
 Again in 2018 when the tax slabs were kept unchanged we still
saw an increase in sales turnover by 12.19%, however the
growth rate was low.
 The only exception we see is in the year 2021, the tax rate is 5%
but still we saw a sharp decline of 93.12% in the sales turnover
due to coronavirus outbreak and repeated lockdowns.