PVR-Inox merger, the only way to

strengthen balance sheet?

• A key priority for PVR-Inox currently, is improving margins through
better capital and operating expenses, as stated by the managing
director Ajay Bijli
• The contours of the deal to merge the two companies, has created the
world’s fifth largest multiplex chain
• The merger of PVR and INOX has created a multiplex behemoth with
1,650 plus screens across 350 plus properties in more than 110 cities.
Transformative impact of PVR-INOX merger to have on the industry

• Focus is on improving the well-being of all stakeholders involved,

including employees, customers, and developers. Being aware of their
needs and concerns and striving to address them.

• Currently, the main priority is improving margins through better CapEx

and OpEx. It is essential to stimulate consumer demand. There is a
segment—45 and up—that is taking time to come to cinemas. They are
very movie-driven. Also on the supply side, the film industry has to rev
up
 Operational side of the merger
• At the operating level, there are 2 co-CEOs due to the large scale of
operations. There are roughly 1700 screens, including 180 that are
currently being fitted out.
• Focus is on economies of scale and adopting best practices from both
companies. To ensure everyone has a clear role in the day-one
structure, involvement of everyone in the decision-making process is
vital. For such a large operation, there is a need for “all-hands-on-
deck” to achieve the goals.
 Expansion of the F&B business, with PVR-INOX's
position among the top 5 QSR players
• Plans to add more variety to the movie-watching experience beyond
just post-ticket options. One idea is to convert box offices, which are
becoming redundant due to the high percentage of online purchases,
into places where you can buy items before buying a ticket. Other
initiatives include pre-ticketing FnB options, such as home delivery
and proprietary items from PVR and INOX, as well as cloud kitchens.
 Will the combined earnings of PVR-Inox be able to
fund growth or will raising money be required?
• As stated by the managing director Ajay Bijli, the growth of PVR-
Inox after merger will be solely through accruals

Could diluting stake to raise money be an option

instead of a merger?
• Stock had come down to around Rs 700-800 during COVID. QIP was
done to raise funds, followed by another Rs 300 crore rights issue.
Post that business didn't pick up again. There were no revenues for 18
months. Hence, the merger was the only sensible decision.
 Plans with regards to rebranding
• PVR already has 900 screens operational, and Inox already has 700 to
800 screens operational. So there's already a history for both brands.
But there will be a descriptor that connects. If it says PVR, people will
get a PVR IMAX experience at the bottom. There will be enough
touch points because when people look at the stock exchange and look
at the PVR Inox ticker, they will know about the company. The
attributes of PVR and Inox will both coexist.
 How the deal finally materialised
• This deal happened, because of COVID. For 18 months, there was no
revenue. Survival was bleak. It just became very obvious that if PVR
and Inox came together, a business could be build. There were plenty
of intermediaries who also felt that if the two came together, the
balance sheet would become stronger and all the benefits of scale
would accrue. So respective holdings had to be overlooked. In a listed
company, one has to look at the interests of all the shareholders.