PVR to invest Rs 80-100 crore to upgrade technology

Company also expects to maintain double-digit growth in media sales - now stands at 12% of turnover

Leading cinema exhibition player PVR will invest Rs 80-100 crore in renovation and technology upgradation to evolve from 4K projection to laser projection. The company is also expecting to maintain double-digit growth in its media sales, which now stands at 12 per cent of its turnover.

"We are continually revamping our properties across the country to give them a fresh look as well as match the changing technology. These renovated properties have the latest technology in terms of projection and sound". With the industry moving from 2K to 4K, we too invested in 4K. Now with the advent of laser technology, we will soon be investing in laser projection," said Gautam Dutta, chief executive officer of PVR Limited.

The company anticipates a 4-5 year payback on the renovation expenditure.

Among business segments, PVR has seen decent growth in its media sales, which comes through in-cinema advertisements, among others, with the company expecting to close at Rs 200 crore.  

Coupled with its acquired Cinemax business, PVR has witnessed a compounded annual growth rate (CAGR) in sponsorship income of 35 per cent in the last five years. "Overall in-Cinema advertisements are getting more traction and recognition and we expect to maintain a double-digit growth rate in sponsorship income as well. We already have the top 100 brands advertising with us," Dutta said.

PVR's revenue share from non-box office sources has risen from 34 per cent in 2010-11 to 44 per cent in 2015-16.  These include both food and beverages as well as sponsorship income or media sales. Of PVR’s Rs 1,700 crore revenue, F&B has a share of 25 per cent.

Dutta said there was no significant impact of demonetisation on occupancy rates in the cinema exhibition business.

"There was a three-week lull in 2016 post-demonetisation. However, India as a market has had an occupancy of 32-36 per cent, which we are able to manage. In fact, India has the highest in occupancy in the world. Year on year, great content has been coming in and the occupancy level has been around 32-40 per cent and stabilises at around 36 per cent," said Dutta.

PVR already has 350 screens in the pipeline, with over 100 under construction. Annually, the company plans to add 65-75 screens.

Dutta said most of the consolidation in the industry had already happened, with a few small players still around which could be takeover targets.