NEW DELHI: Badly bruised by the COVID pandemic and the growing appeal of alternative OTT platforms, India’s leading multiplex operators Inox Leisure and PVR Ltd on Sunday decided to merge operations to create the largest multiplex chain in the country.
The joint entity, to be branded as PVR INOX, with the branding of existing screens to continue as PVR and INOX respectively. In all, it will operate 1,546 screens across 341 properties in 109 cities. While Inox operates 675 screens across 160 properties in 72 cities and PVR has 871 screens across 181 properties in 73 cities.
Post-merger, the promoters of INOX will become co-promoters in the merged entity along with PVR's promoters. INOX promoters will then have 16.66 per cent stake while PVR promoters will have 10.62 per cent in the combined entity. As per a regulatory filing, INOX shareholders will receive three shares of PVR for 10 shares of INOX.
PVR chairman and MD Ajay Bijli said, "Creating scale to achieve efficiencies is critical for the long-term survival of the business." However, he claimed the challenges of the last two years - COVID and the increasing decibel level of OTT - were not the trigger for the merger.
INOX director Siddharth Jain said, "The partnership would bring in enhanced productivity through scale, a deeper reach in newer markets and numerous cost optimisation opportunities." He expected the merger to be over in six to nine months. Both Bijli and Jain said the new entity would work towards taking world-class cinema experience closer to Tier 2 and 3 markets.
The COVID era has changed entertainment consumption worldwide and India is no exception. In the last few years, the growth of online entertainment has been so rampant that the number of OTT platform providers has grown from 2 in 2012 to over 3 dozen at present.
Giants such as Netflix, Amazon Prime and Disney have much larger budgets than conventional production houses when it comes to producing content and feeding it to viewers for a full year at a price of 2 multiplex ticket prices.
In a recent note, Boston Consulting Group had predicted that the OTT content market in India is likely to reach a market size of USD 5 billion by 2023. To note, the cinema industry had its worst fiscal in FY21 and FY22 is going to be no better, thanks to the omicron variant. PVR and Inox had jointly reported over Rs 1,000 crore loss in FY21.
The Board of Directors of the merged company would be re-constituted with total board strength of 10 members and both the promoter families having equal representation on the Board with 2 board seats each.
Pavan Kumar Jain would be appointed as the Non- Executive Chairman of the Board.
Bijli would be appointed as the MD and Sanjeev Kumar would be appointed as the Executive Director. Jain would be appointed as Non-Executive Non-Independent Director in the combined entity.
Regulatory approval
The merger is subject to approval of the shareholders of INOX and PVR, as well as stock exchanges, SEBI and other regulatory approvals. It is expected to inprove administration and cost optimisation to create synergy.
Their nearest rival is Cinepolis India, which operates 360 screens under the brand names of Cinepolis, Cinepolis VIP & Fun Cinemas