Nitin Sood: Healthy financial figures rule at PVR

Cinemas Features

PVR outperforms its competition across practically all financial parameters, including EBITIDA as well as sponsorship and advertising revenues. Nobody knows this better than the company’s chief financial officer, Nitin Sood. “We achieved that success due to a great management team and selecting some great locations to building great cinemas and delivering great customer experience. This has helped us to build a dominating brand that commands respect from consumers and advertising clients alike, which in turn leads to higher revenues when compared to our competitors,” he asserts.

And the figures prove him right, as the rather healthy percentage spread goes to show: Approximately 56% of PVR’s total revenue currently is derived from box-office sales. The concessions business provides roughly 27%, and advertising and other ancillary income accounts for about 17%. Market capitalization looks excellent, too, currently lingering around the $1 billion mark.

“We are on a high growth trajectory and look at adding several new screens in India which should help us to deliver great shareholder returns and hence market capitalization growth,” Sood adds. This is excellent news, because PVR presently allocates between 25 and 30% of its annual capital-expenditure budget to upgrading and renovating existing theatres, while an enormous 70% is earmarked for opening new venues.

And investors indeed seem to flock to the company in droves, confident about their ROI as India’s underscreened cinematic landscape leaves plenty of room for profitable expansion. “We believe there is a great opportunity for growth for at least the next decade, hence investment into setting up new multiplexes is extremely important,” Sood confirms. But opening new venues doesn’t do the trick alone, of course. The setting, the ambience, the cinematic experience…all of them play crucial roles—and PVR has more than enough expertise to get those things right.

That also holds true when determining the admission ticket price charged at various venues across the circuit’s one dozen or so theatre brands. “The quality of the theatre, the format of the screen, the dispensable income of the target audience are taken into account to determine our ticket prices for each venue individually,” Sood explains. And while ATP is just over $3, which must seem shockingly low to exhibitors in Western countries, it is in the end all a matter of sensible leveraging. “Ticket prices at each of our cinemas are based on the affordability of the local catchment. Accordingly, they vary from theatre to theatre and also depend on whether it’s weekend or weekday screenings, morning or evening screenings. Although ATP is currently about $3, the actual pricing can be anything from $1.50 to $8 per ticket and our luxury screens are priced even higher, at between $12 and $20,” Sood elaborates, adding that the determination of ticket pricing is accomplished “more by experiment and experience rather than any formal studies.”

But any theatre chain cannot stay viable through box-office sales alone; hence concessions are an integral part of PVR’s business and extremely critical to the overall profitability of the company. The average PVR patron spends 40% of the ticket price on F&B, Nitin reports, and he believes there is excellent potential to drive this up even higher. “The gross margins on F&B are approximately 75 percent, so it has a very significant contribution to overall profits of the company.”

“Being honored as Exhibitor of the Year is a moment of great pride for the entire team at PVR and a great recognition for all its efforts.”—Nitin Sood