ICRA retains PVR positive rating, sees bearing on revenue due to screen closure

ICRA on Wednesday said it has retained positive rating on film exhibitor PVR even as several state governments ordering closure of cinema halls due to Covid-19 may have some bearing on the revenues of the company.

The rating is based on a total loan of Rs 779 crore of the company, which includes non-convertible debenture of Rs 360 crore, Rs 200 crore from commercial paper and Rs 219 crore from fund based-term Loan.

"The ratings remain unchanged at the earlier ratings of AAA-(Positive)/A1+," it said.

"While ICRA takes cognizance of the impact that the closure of the screens is expected to have on the revenues and cash accruals of the company over the near term, the ratings remain supported by PVR's adequate liquidity, with available cash balances and unutilised working capital lines," it said.

Further, PVR's the low debt repayment obligations over the next few months, coupled with healthy financial flexibility, provides additional comfort.

"ICRA also notes that a significant part of the operating cost of the company is variable in nature which will enable it to reduce costs to some extent during this period of screen closure; however, on overall basis, the company is expected to report operating losses during the period of shutdown," it said.

ICRA further said that it will "continue to monitor the developments in this regard and the corresponding impact on PVR's liquidity and overall financial position".

Due to Covid-19 pandemic, several state governments have issued a directive for the closure of cinema halls till March 31, 2020.

"This has resulted in most of PVR's screens being shut down for the stated period. Additionally, several Bollywood and Hollywood movies are deferring release dates, which could also have some bearing on the revenues of the company," said ICRA.