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PVR has reported a cash burn of INR 140cr (Ex IND-AS) which is line with our expectation; cash burn was almost INR 30cr per month in Q1 and Q2 it dropped to almost INR 23cr per month due to cost cutting measures. Cinemas were allowed to open on pan india basis post 15th Oct,2020, however a larger portion of cinemas opened up only post 1st Nov; we had estimated a cash burn of INR 55-60cr per month post opening up for initial 3-6M due to inadequate flow of content, which in turn will negaitively impact occupancy. Occupancy rates still remain low at around 5% in Dec, we believe improved occupancy level will lead to a convergence in the cash burn basis steady flow of content in cinemas. We expect large Hindi films to release towards end of March or first week of April if the occupancy cap gets uplifted towards 75% or 100%

Quarter highlights

• PVR reported Q3FY21 revenue of Rs. 454mn impacted by the COVID-19 lockdown restrictions as cinemas were allowed to reopen from Oct 15th, 2020 onwards with 50% capacity, leading to dismal occupancy levels ranging between 4-5% during the quarter. Operational revenue for the quarter includes Tenet & Wonder-woman which was released on 4th & 25th Dec’20 respectively showing some encouraging signs of collections from theatres
• In terms of the COVID related operational changes & strategies : 1) On content, Post reopening, the film slate still continues to shift and settle. While stronger Bollywood titles are yet to announce dates, low-mid size Bollywood movies, stronger Hollywood and diverse regional content continues to debut. 2) On Private screenings, PVR has introduced the concept of private screenings, which is a premium and personalized offering wherein a small group of audience hires the entire auditorium to enjoy the content of their choice. 3) On day-to-day operations, contactless booking, tickets are available on our website and mobile application along with partner websites and mobile applications. Customers can also purchase tickets by scanning QR codes at entrance gates.
• PVR has reported an operating loss of INR 781mn(including Ind-AS impact), while operating loss of INR 1391mn(ex-Ind AS impact) largely in line with our estimates of INR 1400mn loss) vs an EBITDA of INR 3,073mn in Q3FY20 owing to weak operational revenues for theatres against which fixed costs cash burn continued pertaining to employee costs(down 54% YoY, up 19% QoQ), other expenses(down 74% YoY, down 23% QoQ) whereby Rental & CAM was down 67% & 83% YoY respectively while electricity & water expenses were down 71% YoY. Cash burn for the quarter has been INR 1590mn largely in line with our estimates of INR 1400mn, as eventhough cinemas opened up from 15th Oct,20, initial 15-20 days occupancy levels were extremely poor until Tenet released on 4th Dec,20 & thus initial cashburn until Nov-end was low & jumped up from December as occupancies started flowing in.
• PVR has done several cost rationalization measures including : 1) On employee costs, Salary cuts across various levels, Reduction in headcount by way of layoffs & deferral of increments. 2) On Rent & CAM charges, Settlements reached with Landlords for 88% of cinemas for complete or partial waiver / discounts for the lockdown period & post which discounted/revenue share based rentals till March’20. 3) Electricity & water charges drastically reduced due to closure of cinemas during lockdown period and this is gradually increasing as Cinemas are restarting operations. 4) Other overheads have witnessed a Significant reduction as Housekeeping / Security which were suspended & all discretionary spends were avoided.
• As on date, except for the state of Rajasthan and Jharkhand, all other states, where PVR has presence, have allowed Cinemas to re-open. As on date, PVR is yet to re-open 56 screens in 13 cinemas, since certain rental negotiations are currently on-going with the mall developers, landlords, lessors and partners.
• Company reported a net loss during the quarter(including SPI) of INR 493mn vs PAT of INR 363mn largely due weak operational performance, higher interest & depreciation costs by 4% & 6% YoY respectively during the quarter, which was partially offset rent concessions & waiver being accounted for in other income amounting to INR 2443mn). Net loss excluding the Ind-AS 116 impact was INR 3936mn vs PAT of INR 1694mn.