After beating the pandemic blues, the country’s largest film exhibition company PVR is now in aggressive expansion mode. It has 854 screens in 75 cities and the PVR-INOX deal would increase the number to 1,500 at one go. But Ajay Bijli, Chairman & Managing Director, PVR, is not ready to rest on his laurels. After 25 years in the business, he is also planning to expand through organic mode as well as diversifying his business to edge against future crises. Bijli, in a candid chat with Business Today, shares his journey and plans for the future. Edited excerpts:
BT: How did you manage to survive the pandemic and how has been the recovery so far?
Ajay Bijli: I always believed that once the pandemic is under control things shall open up. The reason being, India is the largest market for in-theatre entertainment with highest number of tickets sold and the variety of content that is available. So, somewhere I was optimistic that if can keep the company running for two years, if we can keep the ship afloat, despite getting devastated - our revenue was zero during the lockdowns - the moment cinemas open up moviegoers will comeback. Because, not only I have the appetite (for growth) but also due to the fact that we have good content and offering great infrastructure.
However, we are not out of the woods yet. Overall, things are looking better in India than in any other market. We are now back to nearly 90 per cent of the pre-COVID levels of business but we have to sustain this momentum.
BT: PVR has completed 25 years in the business. What was your formula for success?
AB: Well, so much has happened in the last 25 years! I must say, I am blessed to have a very good team and great investors. Once you list the company, you know, you don’t have a choice of turning complacent. You got to keep pushing for growth. It's a big responsibility as I have to ensure that the investors get turns. So, after we got listed in 2006, I decided to keep moving forward and keep growing. India is a very big market but highly under-screened (penetration of screens is lower than other large markets). I also realised that this format of watching a movie in a premium environment at a higher cost compared to the traditional single screen cinemas, is going to thrive because people reward quality.
BT: But a large section of Indian consumers are cost conscious. How do you plan to overcome that hurdle?
AB: Yes, India is very heterogenous market where one size fits all formula would not work. Therefore, I got to offer the right quality for every market at the right price. On the one hand, there are customers with home theatres, staying farm houses and bungalows, on the other, there are people who are used to watching movies with Rs 100 tickets. I have to draw both to theatres. Thus, came director’s cut and gold class cinemas and so came PVR screens at Nanded, Ujjain, Aurangabad or Latur that cost Rs 120 per ticket.
Moreover, people have the convenience nowadays and can watch movies on the go. Why would they want come to cinemas? It is because of the ambience that we offer, the superior quality of sound and projection, hygiene, customer service, food & beverages - all these ingredients have to be perfectly blended and offered to them to draw them into cinemas. So, I was pushing quantity as well as quality.
BT: PVR is now in process to merge with the second largest player Inox. But it is not the first such move. Inorganic expansion has been a key factor in your growth…
AB: Yes, the chapter of inorganic growth started in 2013. Our first key acquisition was Cinemax. Then we got DT Cinemas (from DLF, in 2016). Then followed the Satyam deal (in 2018) down South because the way the content is diversified in India, I wanted our cinema circuit to be diversified. We were predominantly in the North and West. Therefore, I was not been able to take advantage of the vast South Indian movie industries at the time, when they were yet to attract a pan-India audience like now.
I delved into why other cinema operators are into this business? Are their compulsions as big as mine? I realised that it wasn’t as a deep a compulsion as mine. Thus, I realised if I talk to them, may be, they would be happy to merge with me.
BT: Why did PVR moved away from production business? Is the chapter now closed?
AB: I got into production but that was one my mistakes. It came at cost of the exhibition business. Being an entrepreneur, I have creative butterflies and one gets distracted at times. We had to close that business after the last movie and lost a lot of money and PVR’s stock price fell significantly. Thus, we decided to focus on our core business and right after that we acquired Cinemax. But the chapter is not closed permanently.
BT: Where do you see PVR 10 years from now?
AB: You know, the pandemic has taught us that putting all your eggs in one basket is not a good idea. So, going forward - be it in the long-term or in the recent future - while exhibition business will remain at the centre, we shall grow some tentacle, grow an ecosystem around the PVR brand. These could be in foods, hospitality. Also, in content distribution and creation. This is why I said, the production business is closed only temporarily. Also, in digital platforms. So, for next 10 years the focus would be in tapping the potential of the brand, which is widely known. The majority of the crowd that we attract lies in the age group of 25-34 years. We are contemplating on what else we can offer them. We have hired BCG (Boston Consulting Group) to explore such possibilities.
BT: So, what’s your expansion plans for the mid-to-long term?
AB: We want to cater to every type of consumers in this country and be present in every possible market. The plan is to add over 150 screens every year through the organic mode. This year we are adding 125 screens. This will require Rs 500 crore every year and we will meet that requirement from internal accruals.
BT: In the past few years OTTs have emerged as major threat to theatres…
AB: See, OTT is just another form of home entertainment. Home entertainment was always been there in some form or the other - be it television channels, VCRs or DVDs. But cinemas have thrived irrespective of that. Now, film makers are getting additional revenue from OTTs and that is helping them reinvest into making better movies or contents. The OTT releases are scheduled in such a manner that it doesn't catabolise. It is a win-win for film makers, us and them. I don’t see OTTs becoming a threat to us.
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