InvestorQ : Why is the board of PVR planning to raise nearly Rs.800 crore of capital in this year?
Riya Dwivedi made post

Why is the board of PVR planning to raise nearly Rs.800 crore of capital in this year?

shrinidhi Rajan answered.
6 months ago

The board of directors of PVR approved a capital raising plan to raise up to Rs.800 crore as per a filing made to the stock exchange. The fund raising will be done through a private placement via preferential offer to qualified institutional participants or QIPs. Just in Aug-20, PVR raised Rs.300 crore through rights while Inox Leisure had raised Rs.250 crore via QIP.

Incidentally, the plan to raise capital coincides with the theatres being allowed to open across the country from October. Most theatres and multiplexes had been shut since March this year, causing untold losses to multiplex companies. Even now, theatres and multiplexes are not allowed to function at full capacity and must maintain social distancing.

The initial experience on occupancy has not been too encouraging. Also, revenue streams like ad revenues are yet to pick up in a substantive manner. Multiplexes still have liquidity for now but that could fall short if the footfalls pick up faster than expected. The fund raising is designed to take care of any possible surge in growth.

Analysts are still confident about the long-term prospects for multiplexes with Indians having limited external entertainment options. However, in the Sep-20 quarter, revenue from operations fell from Rs.973 crore in Sep-19 to Rs.40 crore in Sep-20. As a result, PVR slipped from a profit of Rs.48 crore in Sep-19 quarter to Rs.184 crore loss in Sep-20.

PVR currently operates 845 screens across 176 cinemas multiplexes spread across 71 cities across India and Sri Lanka. PVR boasts of an aggregate seating capacity of approximately 1.82 lakhs seats at current capacity. PVR has aggressive plans to expand the capacity but that will obviously have to wait till there is greater stability in revenue growth in 2021.