Covid-19 impacted many businesses, with one of the hardest hit being movie halls. This included PVR, India’s largest multiplex chain. However, it was able to raise funds during the pandemic, says chairman Ajay Bijli. The 54-year-old says his company is now in its revival phase and he isn’t overly worried about movies directly releasing on OTT platforms. He also talks about what keeps him going.
The Pandemic Effect
Let’s tackle the elephant in the room. What has been the effect of the Co-vid-19 pandemic on your business?
This particular year  has been an aberration. I’ve categorised people whose lives got interrupted, and people whose lives have been disrupted. People whose lives were disrupted are the ones who lost their loved ones and stuff like that. That is what I call devastation. For us, it’s an interruption.
From a business perspective, cinemas were asked to shut on March 15 . They were the first ones to be shut and last ones to open. Any business which equals zero revenue is definitely going to get impacted. But we were fortunate that the belief of people in both PVR and the industry stayed strong. Our first function was to curtail our expenditure. Internal costs had to be curtailed because of no revenue, and then for the external costs which are the fixed costs, which is your rental, we had to go to all the developers in 177 properties. It’s a testimony to the brand that we were able to get rental relief for almost 90% of the properties in almost all malls. We did not pay any rent till we opened again. We knew that the business is going to be volatile, and movies are not going to be coming as regularly, [and] people are still going to be very tentative. Plus, there was a 50% cap on our capacity. So, there was a lot of trepidation.
The second part was to make sure we had enough liquidity to take care of our running costs. You can’t keep raising debt. So, we did a rights issue. And we are happy that we did a ₹300-crore rights issue, that every single investor subscribed to it during a pandemic, where a lot of people had written off the industry. But that was not enough, because nobody realised that the impact of the pandemic was going to last this long. Finally, we had to do a QIP [qualified institutional placement, a way listed companies can raise money] and we have raised ₹800 crore because we need the liquidity to tide over the volatility that the business may face in the future.
We were in the rescue phase earlier; we are in the revival phase now; and then comes the reimagination phase. In the reimagination phase, we will definitely be looking at some diversification; but [it will be] a very small diversification because we still believe that our core—where we have a 100 million customers—is cinema. Therefore, what is the ecosystem that we can build around it is something we want to reimagine, relook at, and reinvent. For example, in food and beverage (F&B), we’re doing very well with our popcorn. We may look at some extensions of our F&B portfolio adjacent to cinema.Ajay Bijli, chairman, PVR.
How are you going to use the capital that you have raised?
There are a lot of screens which got bunched up, which need to be resumed. We have two malls coming up of 11 screens each—one in Lucknow and one in Thiruvananthapuram. There’s another one in Bengaluru. So there will be capital allocation. It will be a judicious mix of some [investment] into the new projects, where the handover is ready. When I say handover is ready, the mall is ready, the people are coming, retail outlets are all there, and now it is our turn. So, part of it [the capital raised] will go there, part of it will go to repay the debts, and a part of it will be to meet our running expenses. We need to be very judicious about the allocation of capital.
Producers are waiting for occupancies to rise before releasing films, but occupancies are low because there is no new content. What will come first?
Content has to come first. In the pecking order, cinemas getting 100% capacity means the producers need not be worried anymore. Their movies can do tremendously well. And they will do very well because the pent-up demand [from audiences] is massive. The movies have to come [as] consumers are ready. The only reason they’re [the consumers] not coming to the cinemas is not because of the confidence level [in terms of the theatre being safe], [but] because there is no new content. But Master, which is a regional Tamil movie, has paved the way for other new releases. Despite having a 50% cap, it has already turned in ₹228 crore...it’s a matter of time before the flow of movies starts again.
Do you have any plans of diversifying your business? Are you looking at any industry collaborations in the near future?
We were in the rescue phase earlier; we are in the revival phase now; and then comes the reimagination phase. In the reimagination phase, we will definitely be looking at some diversification; but [it will be] a very small diversification because we still believe that our core—where we have a 100 million customers—is cinema. Therefore, what is the ecosystem that we can build around it is something we want to reimagine, relook at, and reinvent. For example, in food and beverage (F&B), we’re doing very well with our popcorn. We may look at some extensions of our F&B portfolio adjacent to cinema.
We are not in a hurry to get into production. [But if we were to look at] distribution, definitely! We want to augment that piece of the business by a lot. We have a lot of movies coming up under the PVR Pictures banner.
Coming back to F&B, all our other sources of revenue are postticketed, like advertising. But with F&B, we can increase our portfolio of what can be unique to PVR. We don’t want to be another ‘me too’ in anything. Popcorn is one area we found which was unique to us, so that’s something that we are focussing on. Keeping that in mind, there is a play out there and what that play is we need to think through.
I’m not the type of guy who broods over what has happened. You have to stay positive and focussed, especially if you’re the leader of an organisation. You’ve got troops to rally and they should not see you bogged down. I’m privileged to have great investors and a great team. They all played a brilliant role.Ajay Bijli, chairman, PVR.
Are you worried about the fact that nowadays some movies are releasing directly on OTT platforms?
No. It’s a trend which started because cinemas were shut. People didn’t know what OTT meant. In the pandemic, all of a sudden, it has become a part of their lexicon. But otherwise, home entertainment through VCR, video, DVD, Netflixes of the world, etc. were always there.
Even they [the OTT platforms] were starved of content because shooting for long-form entertainment had also stopped during the pandemic and they needed content for their channels. So, they started buying movies. The producers did not have [a way to release movies] because cinemas were shut. Therefore, they [the producers] thought that they might as well send the films over to the OTT platforms. Now that the cinemas are opening, I think it [which movies go to OTT platforms vis-à-vis which release in cinemas] will find its own level.
If some movies go to OTT platforms, so be it. It’s too much of a gamble from both sides. The OTT platforms are paying without knowing the box office revenues of the movie, and what the word of mouth is. Because a movie is like a closed parachute. It may work or it may not work. Therefore, it made sense [for OTT platforms] to wait for the theatrical release to get over. On the other hand, the producers also don’t have a cap [on the number of releases].
But if you look at pre-pandemic times, most of the movies that did exceedingly well [on OTT platforms], with the exception of a few, were non-blockbuster movies to begin with. Moreover, OTT platforms will pay a fixed price to the producers. But they will not give you [the producers] a share of the revenue; we share our revenue.
I’m no soothsayer, but I can at least predict this about my business: If the pandemic does not come again, it is a matter of time till things fall into place.
What keeps you going despite all the challenges?
There is more to life than just business. There are other facets, like your family. I was very happy to be able to spend time with my mother. I was also happy to have my children with me.
Then, there are other aspects of life which keep you going. I’m fond of sports, for example, and I try to keep myself fit. I’m also fond of singing and music. In fact, I even became part of a band during the pandemic—something I always dreamed of. But, of course, business did go through a lot. It is only when the going gets tough that you look at the other things, and you begin counting your blessings.
I’m not the type of guy who broods over what has happened. You have to stay positive and focussed, especially if you’re the leader of an organisation. You’ve got troops to rally and they should not see you bogged down. I’m privileged to have great investors and a great team. They all played a brilliant role.
(This story first appeared in Fortune India's April 2021 issue).