PVR and Inox target 4,000 screens in next 7 years

Just a week after the merger of PVR and Inox Leisure was announced, they have already announced a very aggressive plan to expand their screen presence across India.

While over 1,500 screens are active between PVR and Inox, the companies have confirmed that they currently have a combined pipeline of 2,000 screens and will plan to double this size in next 7 years, taking the total number of screens across India to 4,000 screens. 

This expansion is quite aggressive in the current market conditions and will entail an investment of Rs.4,000 crore. That would approximately entail an average capital expenditure of around Rs.2.50 crore per screen.

This was disclosed by the company as part of their Business Update Conference Call with investors. Both the companies remain very positive on the multiplex space, despite the growing threat of OTT as an alternative. 

It may be recollected that on the 27th of March; PVR and INOX Leisure had announced the mega merger deal to create the largest multiplex chain in India. Their existing network comprises of 1,500 active running screens and about 2,000 screens if the work in progress were also added to the list.

The idea of the merger was to jointly take on the challenge of OTT, tackle the post pandemic blues and unlock opportunities in Tier III, IV & V cities.
 

The understanding at this point of time is that the combined entity will be called PVR INOX Ltd. However, as per the merger agreement, the branding of existing screens will continue as PVR or INOX as the case may be.

However, all new screens opened after the effective merger date would be branded as PVR INOX, to reflect the merger. The merger also gives them the reach and the financial heft to take on competition from alternate sources. 

Both the companies have been silent about whether there would be any right sizing of the screens portfolio and streamlining to reflect the duplication of screens.

However, that is bound to happen because both PVR and Inox are present in most of the major cities in some of the most popular areas so some amount of consolidation is inevitable. While the two partners are non-committal, there is bound to be some right sizing to make it relevant. 

Currently, PVR operates 871 screens across 181 properties in 73 cities while INOX Leisure operates 675 screens across 160 properties in 72 cities.

As per the terms of the merger, shareholders of Inox Leisure will get 3 shares of PVR for every 10 shares of Inox Leisure held. 
 
Also, post-merger, the promoters of INOX will become co-promoters of the merged entity. PVR promoters will hold 10.62% stake in PVR Inox while Inox promoters will hold 16.66%. 

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