HR case study

1. PVR-Inox merger, the only way
to strengthen balance sheet?
• A key priority for PVR-Inox currently, is
improving margins through better capital and
operating expenses, as stated by the managing
director Ajay Bijli
• The contours of the deal to merge the two
companies, has created the world’s fifth
largest multiplex chain
• The merger of PVR and INOX has created a
multiplex behemoth with 1,650 plus screens
across 350 plus properties in more than 110
cities.

2. Transformative impact of PVR-INOX
merger to have on the industry
• Focus is on improving the well-being of all
stakeholders involved, including employees,
customers, and developers. Being aware of their
needs and concerns and striving to address them.
• Currently, the main priority is improving margins
through better CapEx and OpEx. It is essential to
stimulate consumer demand. There is a segment—45
and up—that is taking time to come to cinemas.
They are very movie-driven. Also on the supply
side, the film industry has to rev up

3. Operational side of the merger
• At the operating level, there are 2 co-CEOs due
to the large scale of operations. There are
roughly 1700 screens, including 180 that are
currently being fitted out.
• Focus is on economies of scale and adopting
best practices from both companies. To ensure
everyone has a clear role in the day-one
structure, involvement of everyone in the
decision-making process is vital. For such a
large operation, there is a need for “all-
hands-on-deck” to achieve the goals.

4. Expansion of the F&B business, with
PVR-INOX's position among the top 5
QSR players
• Plans to add more variety to the movie-watching
experience beyond just post-ticket options. One
idea is to convert box offices, which are
becoming redundant due to the high percentage
of online purchases, into places where you can
buy items before buying a ticket. Other
initiatives include pre-ticketing FnB options,
such as home delivery and proprietary items
from PVR and INOX, as well as cloud kitchens.

5. Will the combined earnings of PVR-Inox
be able to fund growth or will raising
money be required?
• As stated by the managing director Ajay Bijli,
the growth of PVR- Inox after merger will be
solely through accruals
Could diluting stake to raise money be
an option instead of a merger?
• Stock had come down to around Rs 700-800 during
COVID. QIP was done to raise funds, followed by
another Rs 300 crore rights issue. Post that
business didn't pick up again. There were no
revenues for 18 months. Hence, the merger was
the only sensible decision.

6. Plans with regards to rebranding
• PVR already has 900 screens operational, and
Inox already has 700 to 800 screens
operational. So there's already a history for
both brands. But there will be a descriptor
that connects. If it says PVR, people will get
a PVR IMAX experience at the bottom. There will
be enough touch points because when people look
at the stock exchange and look at the PVR Inox
ticker, they will know about the company. The
attributes of PVR and Inox will both coexist.

7. How the deal finally materialised
• This deal happened, because of COVID. For 18
months, there was no revenue. Survival was
bleak. It just became very obvious that if PVR
and Inox came together, a business could be
build. There were plenty of intermediaries who
also felt that if the two came together, the
balance sheet would become stronger and all the
benefits of scale would accrue. So respective
holdings had to be overlooked. In a listed
company, one has to look at the interests of
all the shareholders.