COVID-19 impact: FY21 a washout for multiplex chains
The pandemic has played havoc across most segments of the economy, but few have fared as poorly as multiplex chains.
CHENNAI: The pandemic has played havoc across most segments of the economy, but few have fared as poorly as multiplex chains. With social distancing norms and intermittent lockdowns either reducing, or completely choking off, footfalls at cinemas, India’s multiplex chains have taken large losses.
On Wednesday, PVR Cinemas, with 842 screens spread across the country, reported a five-fold increase in its net losses during FY21-from Rs 131.04 crore in FY20 to Rs 665.64 crore. Its revenues crashed by 91 per cent, going from Rs 3,452.23 crore in FY20 to just Rs 310.43 crore. “FY21 was marked by never before seen challenges for the multiplex industry, which was one of the most impacted by the pandemic,” said Ajay Bijli, Chairman and Managing Director, PVR.
Inox Leisure, which operates 648 screens, has reported a net loss of Rs 257 crore for FY21 compared to a net profit of 141 crore in FY20 (excluding the impact of the adoption of the Ind AS 116 accounting standards). Its total revenue crashed 92.3 per cent from Rs 1,915 crore in FY20 to Rs 148 crore. The pandemic has put a significant dent on the films and film exhibition sector overall, with Ernst and Young estimating that revenues crashed in 2020 by more than half to around $1 billion (around Rs 7,600 crore) compared to 2019’s $2.6 billion (around Rs 19,100 crore).
With the second wave resulting in a spate of fresh lockdowns this summer, 2021 is looking bleak too. Inox CEO Alok Tandon noted during a post-earnings conference call with investors that while Q4 had offered some hope, the second wave has brought things back to square one during the April-June quarter of the current financial year (Q1FY22).
PVR noted in its investor presentation on Wednesday that none of its 842 screens were currently operational due to lockdowns implemented by various state governments. While the cinema chain opened 13 new screens during FY21, 16 screens had to be shut down during the year. “An additional 19 screens are completed and ready to commence operations,” it added. Inox plans to add 44 screens during FY22.
Both chains also reduced costs significantly during the financial year. According to PVR, it negotiated down rents during the year to reduce rent and common area maintanance (CAM) expenses by 71 per cent during the year. its employee expenses, meanwhile, fell 45 per cent. Inox saw rent and CAM costs fall by 66.5 per cent, while employee benefit costs fell 38.7 per cent.