The ABCs of the PVR-INOX Merger

 The news:

It has been a little over two long years that the world was infected with the notorious COVID-19 virus. However, the implications that it brought with itself are far from gone.

Source: https://unsplash.com/photos/ctXGtk2Oy-I

Before I delve deep into the nitty-gritties of the aforesaid merger and what exactly can the merger of two entertainment biggies in India can bring to the table, let me first give a brief backdrop about the two major players in this story.

Backdrop:

According to The Business Standard, a leading daily here in India, PVR Ltd. is a leading and a premium brand that is involved in film production, distribution and exhibition of both international and national films. The history of the origin of PVR goes back as long as April 26^th 1995, as “Priya Village Roadshow”. In this context, it would do one good to remember that PVR was first incorporated on the said date, following a joint venture agreement between Priya Exhibitors Pvt. Ltd. and Village Roadshow Ltd.

Source https://www.moneycontrol.com/news/business/pvr-inox-deal-what-it-means-for-investors-should-you-buy-the-stocks-8282691.html

Similarly, INOX movies is an Indian movie exhibition/distribution and production chain. As of March 2022, reports have shown that INOX is a wholesome family of 160 multiplexes and as many as 675 single screens in around 72 Indian cities! The history of the origin of INOX also goes back as long as 1999. It was in 2006 that INOX went public for the very first time, by issuing 16500,000 equity shares of Rs. 10/- each. INOX is known to have begun their operations from Pune and Vadodara, subsequently transitioning to Kolkata, Goa and Mumbai and eventually adding more screens to their kitty at Bangalore, Jaipur, Darjeeling, Indore, Kota, Lucknow, etc.

The merger and the reasons stated for merging:

As mentioned above, both the major multiplex chains have decided to come together in their efforts to reinvent the entirety of cinematic experience. According to Mr. Siddharth Jain, Director, Inox Leisure Ltd., the prolonged effect of the COVID-19 influenced nation-wide lockdown that was imposed, along with the ever-growing competition from OTT platforms, are the two major reasons that influenced the announcement of the merger. Detailing the same, he said:

Source: https://www.moneycontrol.com/news/business/companies/pvr-inox-merger-to-take-6-9-months-to-add-200-screens-every-year-say-ajay-bijli-and-siddharth-jain-8281621.html

The multifaceted implications of the merger: How will the day-to-day operations of the merged entity run and what can it bring to the table in the near future?

èAfter the merger, the current promoters of present-day INOX are slated to become, co-promoters in the merged entity, coupled with the existing promoters of PVR. For the unversed, corporate promoters entail an individual or an organization that help raise money for the investment activities of the home organization that they are working for. As for their compensation, they are often compensated in the form of company stocks.
è In addition, to this, the board of directors of the merged company would be re-formulated with a total board strength of 10 members with an equal representation from both the participants of the merger.
è Present day PVR successfully operate 871 screens across 181 properties in 73 cities, while present day INOX as mentioned earlier, operate 675 screens across 160 properties in as many as 72 cities. It is actually a no-brainer to figure out that the merged entity will become the largest film exhibition body in the country, whilst operating 1546 screens and more, across the entire nation!
è According to analysts and experts, the merger is expected to fare well for the exponential growth and improvement of the Indian cinema/film exhibition industry. This merger is also expected to create more than enough value for all its stakeholders.
è If reports are to be believed, Mr. Ajay Bijli will be appointed as the MD and Mr. Sanjeev Kumar is slated to be appointed as the executive director of the merged entity.     

What were the challenged faced and what could be the challenges that could crop up in the near future?

n  Without a doubt, the first and foremost challenge that posed a threat to the existence of such film exhibition bodies, especially when COVID struck, was the emergence of Over-The-Top (OTT) platforms. INOX, during the quarter ended December 2021, had posted a loss of Rs. 1.31 crores while PVR made a loss of Rs. 24.53 crores.
n  This challenge could continue to pose a major threat in the upcoming few years. The merged entity is all geared up to combat the adversities brought on by these OTT platforms to the formers’ business. This merged body, which is to be known as PVR INOX Limited is all set to recapture the Indian cinema market by introducing a world class cinematic experience to tier 2 and tier 3 Indian cities.

Conclusion:

For ages now, Indian cinema has been an integral part and parcel of every Indian citizen’s leisure schedule. It is a well-known fact that although India is a land of diverse cultures and heritages. However, it would be more than safe to state that if there’s one element that ties all of us together, that would undoubtedly be Indian cinema. One can easily find evidence of this statement in the very joy that lights up the Indian cinema-goer’s eyes at the meagre mention of a Salman Khan blockbuster movie or in the intellect laced discussions that are still happening, post watching recent releases like Bhansali’s “Gangubai Kathiawadi” and Vivek Agnihotri’s “The Kashmir Files.”

Source: https://freshheadline.com/pvr-inox-announce-merger-new-combined-entity-to-be-named-pvr-inox-limited/125876/

No matter how big-scale or convenient OTT platforms are, nothing beats the joy of visiting your nearby cinema hall with your favorite set of people, grabbing an oversized bucket of popcorn and basking in the cinematic experience. I’m sure both of these entertainment biggies will do justice to the merger and to the revamped cinematic joyride that they promise to bring to the table, in the upcoming years!