Warburg-backed PVR seeks ‘confidence capital’ as lockdown hammers business
Photo Credit: Reuters

PVR Ltd, operator of India’s biggest multiplex chain, plans to raise Rs 300 crore (about $40 million) after a months-long nationwide lockdown to battle the coronavirus pandemic pushed the company into a loss.

The company, backed by private equity firms Warburg Pincus and Multiples PE, said in a statement on Monday it plans to raise the so-called ‘confidence capital’ through a rights issue to its shareholders.

The fundraising plan comes as PVR and other multiplex operators have been struggling ever since the government imposed a nationwide lockdown in late March. While the government is now opening up the economy, despite rising infections, cinema chains are likely to be among the last businesses to get approval to resume operations.

The lockdown dragged PVR into the red for the three months through March. The company swung to a consolidated net loss of Rs 75 crore for the quarter while consolidated revenue slumped 22% from a year earlier to Rs 662 crore.

For the full year, consolidated revenue rose 11% but net profit plunged to Rs 27 crore from Rs 189 crore, helped by growth in previous quarters.

PVR said it is currently not generating any cash flow from operations and is implementing cost-cutting measures. The company has around Rs 316 crore in liquid assets.

While the lockdown directed affected PVR as it had to close its film theatres, it also impacted its film distribution subsidiary PVR Pictures Ltd. This is because many film producers decided to directly release their movies on streaming platforms such as Netflix and Amazon Prime Video instead of taking them to the theatres first. 

The lockdown has severely hurt PVR’s shares. The shares slumped to Rs 718 apiece at the height of the lockdown in May before bouncing back to around Rs 1,150 apiece on Monday.

The Ajay Bijli-led company counts US-based Warburg and homegrown PE firm Multiples Alternate Asset Management among its investors.

Multiples PE has been an investor in PVR since 2012. The firm made two partial exits, in 2014 and 2017, with handsome gains. It also put in additional money in 2015 to back an acquisition. 

Warburg Pincus acquired a 14% stake in PVR for about Rs 820 crore in January 2017.

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