What a great coincidence, PVR Maison is opening just as Maharashtra theatres reopen?
Yes, it is a very happy coincidence. The Indian film industry still represents 90% of box office. Even though other states have opened, we have been only playing either regional films or Hollywood films. So Indian films are coming from November 5. Sooryavanshi is a big one which is getting launched. It is a big booster for the industry and this is our most experiential cinema. It is coinciding with the opening of Maharashtra in Mumbai, the heart of the cinema industry in India. It cannot be better! I am really excited that it is a happy coincidence.
The plan for Maison was on your table for what 10 years, if not more?
Yes, in 2003, I shook hands with the promoters and the developers but it took some time for the property to get built.
Are you nervous because metros had a very different experience with the second wave of Covid as opposed to the occupancy levels that you are running in a state like Punjab or the southern parts of the country etc.
I am not nervous, I am just excited because India is a very large country. 1.45 billion tickets were sold pre-pandemic. It is a very disparate market. Some people are rightly saying that they will stay at home. They will take their time to come out but there is another massive chunk of people between the age of 12 to 39 who are not designed to be incarcerated at home.
They are very keen to get out and whatever little previews we have got, have been fantastic. People have gone to see Hollywood films and even Shanghai Chinese films. Southern movies are doing exceedingly well, Punjab movies are doing very well. That gives me confidence rather than nervousness.
Inflation is dampening spirits across industries. You have invested so much in this Lux property of yours. How do you make money on this property? Are you going to up the ticket prices?
No, nothing can be higher because you cannot short charge the consumer. The way I work is you provide a certain facility, you do everything on your Excel sheet before you start capitalising anything. But we are a listed company, I am responsible to my shareholders. If you look at our results we have run at a 20% EBITDA margin in a normal period, not pandemic period and we look at about a five-year payback period for every property.
So one capitalises a property keeping in mind which consumer you are attracting in the radius of five to seven kilometres, how much he is ready to pay and then make horses for courses. We have cinemas in Latur, Aurangabad, Nanded, Ujjain where our ticket prices are Rs 100 but the input cost is also very low.
We thought that India is such a disparate, heterogeneous market and we want to be a pan India player. So we will make a high quality movie going solution for every consumer who wants to watch a movie and get out of his house. The boys are still working on the pricing. It will be nothing higher than what some of our already premium luxury cinemas are charging in other markets.
What is the strategy, is it now experiential cinema like Maison and drive in theatre which is going to come up very soon as well? Or is it going to be more of the regular PVRs that we have seen so far?
Experiential. It has to be experiential. Even the normal cinemas will have to be experiential. There are softer issues as well. This is the closest analogy I can give. I am a big fan of the Oberoi Group’s Rajvilas. I was keen to do at least one and for the demographic. If I plonk the cinema in another demographic, it may not work.
So I have to be very careful. I have responsibility to the shareholders. It is not my fiefdom to do anything I feel like.
Director’s Cut is another premium format of ours. It is there only in Vasant Kunj surrounded by Vasant Vihar or that area and it is also in a very affluent area in Gurgaon. It is coming up in another very affluent area in Noida and in Bangalore. So I have to be very careful where I build it. But even the other cinemas of PVR have become extremely experiential.
We took a leaf from the way Disney runs their theme park. They made it experiential. We have to make it experiential, we cannot be utilitarian so that is what we are working on.
PVR and chill and not just Netflix and chill?
Absolutely.
In the last two years of pandemic, we have seen a lot of single screen theatres shut down. Have you taken advantage of that?
We were in a survival, revival mode and our focus was more cost cutting which is through rentals, through salary cuts and unfortunately some layoffs had to happen. Our focus was shoring up liquidity because there was a burn rate. When a company which had revenues of Rs 3,500 crore and Rs 650 crore of EBITDA suddenly goes to zero in one day, one does not think about expansion. But yes, we are opportunistic wherever we find a good fit in value and price for PVR, we are open to acquisitions.
What is your message to the shareholders because you are on the cusp of a very big event with Maharashtra opening. Things are getting normal and hopefully the third wave should evade us?
The third wave for the sake of humanity, and not just because of my business, should be benign or should not come at all. We are an Indian consumption story. We are not selling anything alien. We are selling movies which have been part of a very important, significant and normal channel of going out. If people believe in the India consumption story, they will believe in the PVR story as well.
What happens to rental agreements post pandemic? Do they get changed considering you shook hands with the promoters a decade back but did have to rework on the maths of how the rental agreements are going to work?
PVR has got about 855 screens across 178 properties. Those do not get renegotiated. Only during the time of lockdown, we had a force majeure clause and the developers were incredible with us. They all came forward and they realised that it is not our fault that the cinemas are shut. So we got a huge relief, but post opening, business is back to normal and we are paying rents and revenue shares according to agreements.
But going forward, PVR will be careful about which properties we choose, qualitative expansion rather than quantitative expansion and of course we will be careful about rental because that is one line that is committed for 20-25 years in a lease agreement.
Content king hota hai (content is king). Tell me the lineup of movies.
We are talking about at least 800 films coming in the next eight months and so that is the line up. In India, there is so much pipeline that even if one or two movies do not do well, it does not really matter because there is always a sleeper hit. Pre-pandemic, there were so many movies with Ayushmann Khurrana, Rajkummar Rao. So many films which people thought would be big blockbusters have not done but the smaller movies compensate for that.
So India is a market of volumes. The highest number of movies come here in all different languages plus PVR is also spread out everywhere. About 30% of our screens are in the south, 30% in the west, and about 30% in the north. We are also not dependent on one kind of content. Plus demographically, we are in certain regions where English movies do very well, somewhere Hindi movies do very well. The line up which has been announced is phenomenon.
Yash Raj has committed itself to releasing about six odd movies
Sooryavanshi is coming, Akshay has got about four movies lined up, Aamir has got
Lal Singh Chaddha then Shahrukh has got a couple of movies.
Brahmastra is coming from Ranbir, plenty of movies from Ranveer. I am not bothered about content.
I am also eagerly waiting for all these movies that you just highlighted but tell me the theatrical window has also sort of gotten squeezed a little bit when do you actually see you get back to the pre-pandemic levels?
Well currently you know we wanted people to release movies so I think it has gone down to about four weeks but we see it coming back from April 22 to eight weeks which it was earlier.
What happens to distributor agreements I mean has there been any reworking in an of the big production houses saying that we need a bigger cut?
Windows is a only thing that happened but otherwise no changes in the agreement simply because as I said they are very supportive. I mentioned it earlier that 60% of the revenue still come from theatrical. The monetisation journey of any content has always been theatrical, then satellite or OTT and then it goes to other platforms.
Nobody wants to leave money on the table by not releasing it theatrically obviously they did not release it theatrically because theatres were shut all over the world but look at Disney’s announcement; they released
Black Widow on their own platform Disney plus as well as cinemas. Next month onwards, they announced all big movies are going to go on the cinemas first then they will go to OTT. So there is a monetisation journey.
I always tell people that 18 months cannot renounce something which has been working for so long.
