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Edited Transcript of PVR.NSE earnings conference call or presentation 9-Jun-20 10:00am GMT

·52 min read

Q4 2020 PVR Ltd Earnings Call Gurgaon Jul 5, 2020 (Thomson StreetEvents) -- Edited Transcript of PVR Ltd earnings conference call or presentation Tuesday, June 9, 2020 at 10:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Ajay Bijli PVR Limited - Promoter, Founder, Chairman & MD * Kamal Gianchandani PVR Limited - Chief of Strategy * Nitin Sood PVR Limited - CFO * Pramod Arora PVR Limited - Chief Growth & Strategy Officer * Rahul Gautam PVR Limited - SVP of Finance ================================================================================ Conference Call Participants ================================================================================ * Abneesh Roy Edelweiss Securities Ltd., Research Division - SVP * Ankur Periwal Axis Capital Limited, Research Division - VP of Media and Logistics * Jignesh Kamani;GMO;Research Analyst * Naval Seth Emkay Global Financial Services Ltd., Research Division - Research Analyst * Nirbhay Singh;Macquarie;Vice President * Sanjesh Jain ICICI Securities Limited, Research Division - Research Analyst * Shantanu Basu;Stewart and Mackertich;Research Analyst * Swagato Sourya Ghosh Franklin Templeton Asset Management (India) Private Limited, Research Division ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, good day. And welcome to the PVR Limited Q4 FY '20 Earnings Conference Call hosted by Axis Capital Limited. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Ankur Periwal from Axis Capital. Thank you, and over to you, sir. -------------------------------------------------------------------------------- Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [2] -------------------------------------------------------------------------------- Thank you, Rio. Good evening, friends, and sincere apologies for keeping you all waited. We welcome you all to PVR's Q4 and FY '20 Year-End Post Results Earnings Call. The call will be initiated with a brief management discussion on the quarterly and full year performance, followed by an interactive Q&A session. From the management team, we have with us Mr. Ajay Bijli, Promoter, Founder, Chairman and Managing Director; Mr. Sanjeev Kumar, Promoter, Co-Founder and Joint Managing Director; Mr. Gautam Dutta, CEO, PVR Limited; Mr. Kamal Gianchandani, Chief Business Planning and Strategy and CEO, PVR Pictures; Mr. Pramod Arora, Chief Growth and Development Officer; and Mr. Nitin Sood, CFO, PVR Limited. I'll hand over it to Mr. Ajay Bijli first for his initial comments, post which we can open the floor for Q&A. Mr. Bijli, please. -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [3] -------------------------------------------------------------------------------- Thanks very much. Sorry for the delay. Good afternoon, everyone. Thanks for joining the call. We will be giving you a brief summary of our results a little later. But before I begin, I just want to wish everybody well. I hope all you guys are healthy, strong and safe during the absolutely extraordinary times. We are operating in a very, very unprecedented times just now. So on behalf of PVR, first of all, my heart goes out to all those who've been affected by COVID-19, and I hope nobody on this call has got anybody who is affected by this dreadful disease and also for all the heroes who are at the frontline, the doctors, everyone who are fighting against this coronavirus. So that's the most important thing. As far as PVR is concerned, we did have an excellent year, FY '20. We -- some of the highlights are that we were able to add 87 screens, which is the highest ever in the Indian Film Industry -- Indian Industry -- Exhibition Industry, and we also were able to get 100 million patrons during the year, which is an incredible feat for us, and we are very, very excited with that, obviously not without the support of our patrons, the devotion of people who work and all our stakeholders and partners. Even now, we're in constant communication with everybody, customers, developers, producers, employers in the difficult times. And we are very hopeful and optimistic that we will come out extremely stronger out of this crisis. And we hope that the crisis is over very soon. With this, I'll just hand over the call to our CFO, Nitin Sood, who can then give you a brief summary on the financial performance of the company. Thanks very much for your attendance. -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [4] -------------------------------------------------------------------------------- Good afternoon, everyone. Just a brief overview of the financial performance during the quarter, and then we'll move to Q&A. So total revenues during the quarter were INR 662 crores as compared to INR 846 crores during the previous corresponding quarter. So clearly, the financial performance of the company was impacted on account of shutdown of Cinemas, which began from 11th March onwards, and we were completely shut by 16th to 18th March, and next 1 week, almost all our (inaudible) was shut. As a result of this, we lost complete, almost, 17 days of operations and the audience had already started trickling down beginning of March. Our EBITDA for the quarter, reported EBITDA is INR 189 crores as against INR 169 crores. But the Ind-AS adjusted EBITDA was about INR 59 crores as compared to INR 169 crores last year, primarily on account of the losses during the month of March. We had a great January, one of the best months during the year. But January and February were good months, and March suddenly impacted the performance. We had a loss of INR 75 crores for the quarter, out of which INR 32 crores approximately was a onetime adjustment on account of remeasurement of deferred tax assets at the revised rate of 25% versus 0 tax rate, which was introduced during the year. So that's a onetime impact. If you look at how was the full year performance, the total revenues at INR 3,452 crores were up by 11% as compared to last year. Our consolidated EBITDA, which was adjusted for Ind-AS, was INR 614 crores as compared to INR 619 crores last year, almost at the same level. And the overall EBITDA margins were about 18% this year as -- and this is very less as compared to last year, largely due to the underperformance during this quarter on account of closure of Cinemas. So that's broadly a snapshot of financial numbers. In addition to that, like Ajay said, we've added 87 screens this year. So this has been one of the biggest years for us in terms of screen openings. We could have potentially added more screens, but to a later part of the year as cinemas were shut down, we could not do that. In addition to that, the company has also made an announcement yesterday where the Board of the company has given an enabling approval to raise INR 300 crores by way of a rights issue. So these are the key developments in the quarter. I'll now hand over the floor for Q&A, and we'll be open to take any questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) The first question is from the line of (inaudible) from [Tokio Marine]. -------------------------------------------------------------------------------- Unidentified Analyst, [2] -------------------------------------------------------------------------------- Can you hear me? Hello? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [3] -------------------------------------------------------------------------------- Yes, we can hear you. -------------------------------------------------------------------------------- Unidentified Analyst, [4] -------------------------------------------------------------------------------- Am I audible? Okay. Yes. Can you give us bit more explanation on those last 17 days? Are you able to say what was the revenue loss or what was the EBITDA loss? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [5] -------------------------------------------------------------------------------- No, we can't give any specific number, but you can broadly compare the revenue with the revenue of the previous quarter and effectively deduce the effective revenue loss from the estimated number. We run a large fixed cost business. So given that in mind, from a profitability situation in March, we went into losses, given the fixed cost nature of the business. And I would say that, clearly, that is the reason for a drop in profitability, as I said, January and February were great months. We were doing great. And March, effectively, we were shut down. So clearly, that has a big impact on the operating profitability. -------------------------------------------------------------------------------- Unidentified Analyst, [6] -------------------------------------------------------------------------------- Sure. And can you help us understand in terms of liquidity. So you have in your press release said that you have about, I think, INR 2,300 crore, or INR 2.3 billion of cash and you have the rights issue of another INR 3 billion. So with this, say, INR 5 billion, INR 6 billion of cash and your aim to reduce fixed cost by 75%. How much runway do you have in terms of number of months? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [7] -------------------------------------------------------------------------------- Yes. So the idea of doing this rights issue is essentially to shore up liquidity ahead of time and so that we have enough liquidity to tide us till end of the financial year. If you really look at our leverage position has actually turned out to what we were on 31st of March of 2019, we did a QIP in October and November beginning this year and had raised INR 500 crores of equity. And we have taken an enabling resolution to raise INR 300 crores more of equity to ensure that we have enough liquidity to take care of fixed costs as we tide through these uncertain times. -------------------------------------------------------------------------------- Unidentified Analyst, [8] -------------------------------------------------------------------------------- Sure. And is there any guidance you have in terms of how many months the rights issue plus the cash you have available now will give you in terms of -- based on your adjusted cost base in terms of your monthly run rate? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [9] -------------------------------------------------------------------------------- We would not like to give a specific guidance simply because there are a lot of moving pieces right now in terms of our ongoing negotiations, et cetera. But the idea is really to have enough liquidity on the balance sheet, which helps us tide through these uncertain times. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- (Operator Instructions) We take the next question from the line of Abneesh Roy from Edelweiss Securities. -------------------------------------------------------------------------------- Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [11] -------------------------------------------------------------------------------- 2, 3 weeks back, you had given us very good clarity on movie release on multiplex versus OTT. I wanted to understand now with lockdown opening up in all states and lot of the restaurants opening and malls also opening in many states, now obviously there is much better visibility on cinemas also opening, although clear date is still awaited because this will be in the last leg of the opening up. Now my question is, if I see Jahnvi Kapoor's Gunjan Saxena is going to release on Netflix. So wanted to understand what is the current update because last 3 weeks further, a lot of news flow has happened. Why is this kind of movie Gunjan Saxena, Karan Johar's movie, releasing on Netflix? And any other update on releases you can share because the other multiplex rights said that -- most of the movies have said that will release on multiplex. What's your stance on that? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [12] -------------------------------------------------------------------------------- Well, Kamal, you'd like to answer that? Why don't you answer that question? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [13] -------------------------------------------------------------------------------- Abneesh, I think it's a very good question. And your first part is, I think you answered the question while you were sharing the update on the fact that the economy has started opening. And with respect to Cinemas having been put in the third phase of reopening, so there is nothing more to add on that part. As far as Gunjan Saxena is concerned, since we spoke last, this is the first film since that interaction which has been announced to go back to OTT to a streaming platform. It's a midsized film. And our response remains the same that while there are some producers, who have decided, for different reasons -- each producer has a different reason for doing what they are doing. We've been having a lot of parallel conversations, and producers are fully comprehensively committed to theatrical platform. But there are specific concerns, issues that each producer faces. Unlike western markets, we tend to have much smaller producers in terms of balance sheet. Also, we don't have an organized source of funding. So a lot of producers end up funding their own productions through -- with their own money or with the money that they borrowed at expensive interest rate. So that could be -- so like I said, I mean, there are different reasons why producers have taken these calls. But our point of view remains the same. Overwhelming majority of our producers have come out and spoken vocally in support of theatrical distribution platform. It's been almost 2.5, 3 months now. We are in 3 months since we've been in a lockdown mode. And like you rightly touched upon, there is still some -- while, I mean, things are becoming very clear in terms of reopening of economy, there is still just a little bit of uncertainty on the exact date when Cinemas would be permitted to open. And that could be a reason why some of the producers have considered going out and releasing their films on streaming platform. But the overwhelming majority of our producers have decided to stay committed. Not only they have spoken vocally about their support for theatrical, but they have also come out and reschedule their releases. So films like Coolie No. 1, which are absolutely ready, films like Sooryavanshi and '83 and these are, of course, the big ones, but I mean, there is a long list of smaller films like Lootcase, Sandeep Aur Pinky Faraar, (inaudible) Chhalaang. These are midsized films which are almost ready, but the producers -- and I'm not even going into regional films and Hollywood films which are releasing, which are starting July which would be releasing in big numbers, starting with Unhinged on 1st July 1, Tenet on 17th July, Mulan on 24th July. So the larger point is that overwhelming majority of producers have rescheduled their releases. U.S. is opening cinemas. So distributors have also announced exact dates when they're releasing films. As soon as we have some more clarity in India with respect to the exact opening, our distributors, we've been having parallel conversations, they would also come out and announce their release. But most of the films, in fact, majority, I would say, more than 90%, 95% of our films, which were slated for theatrical release, continue to be slated for theatrical release, and it's a matter of time when they will come out and announce the theatrical release dates. -------------------------------------------------------------------------------- Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [14] -------------------------------------------------------------------------------- One follow-up on this -- if I see the FMCG or a Titan, they are handholding their vendors or stakeholders or other parts of value chains to financing needs. In your [case], I understand our balance sheet itself has some help, which is needed and that's why rights issue. But something can be done at the industry level. The multiplex guys supporting some of the marquee mid-budget movies. Is that something which is possible? Is some thinking happening on that? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [15] -------------------------------------------------------------------------------- It's a good question, and it's a fair observation. Without delving into exact details because this is all sensitive commercial information, I would only stop at saying that we are having some very constructive meaningful dialogue with all our distributors and producers. And both ends, exhibitors and distributor/producer on the other hand have been extremely collaborative. And we've not really come across any roadblocks as such. The only roadblock that we face today is some more clarity on the release, the reopening of cinemas. But if we do face roadblocks, we would be happy to look at those. -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [16] -------------------------------------------------------------------------------- And Abneesh, I'm Ajay Bijli here. I'd just like to add that India has the highest number of movies that get made here. So I am literally, not just a blind optimist, but I'm very sure that the -- there's an aberrative period, cinemas are closed and as producers are getting restless and some of them want to release their small movies just now. It won't make any difference in the long run because we -- there's too much at stake of letting go of theatrical revenues. Theatrical revenue still contribute more than 60% to 70% of their overall pie of any content. And after that only, you are able to then monetize your content better, if you go to other platforms. So I think there's too much at stake to give up on these revenues. Plus if you go to OTT straight away, you also are letting go off your overseas collections and you're also letting go off your music rights. So I think sum total of it is a lot for people to forego. And because it's a period, which is an exceptional period where we are shut, these kind of decisions are happening. Once the business comes back to normal, I doubt if -- it just doesn't make any economic sense for people to go out and sell to OTT directly and bypass the theatrical window, as I said for -- if nothing else for economic reasons, which are in their interest as well, not just in our interest. So this is a very exceptional period where we are shut. So if we are shut, then obviously, they need to monetize and do what they have to for the reasons that Kamal said. -------------------------------------------------------------------------------- Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [17] -------------------------------------------------------------------------------- My last question is on rental. So other retail operators in other formats, not in multiplex, they are seeing with malls still discussions on. Now since you are shut and now 2.5 months has gone, is there some clarity in your malls completely? So is there some clarity on rentals for the affected period? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [18] -------------------------------------------------------------------------------- Pramod, would you like to answer that, Pramod? -------------------------------------------------------------------------------- Pramod Arora, PVR Limited - Chief Growth & Strategy Officer [19] -------------------------------------------------------------------------------- Yes. So we are engaged with all the -- with all our development partners since the day of lockdown. And the outcome has been reasonably positive, wherein a couple of them have already come up and agreed to our plea or request of wavering off rentals during the lockdown and giving us a discount post lockdown up to the end of financial year. So I would seem to believe that many of our other development partners would also follow the towline, considering we have had exceptionally great relationship with all our development partners. So does that help? Does that answer your query? -------------------------------------------------------------------------------- Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [20] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- The next question is from the line of Swagato Ghosh from Franklin Templeton. -------------------------------------------------------------------------------- Swagato Sourya Ghosh, Franklin Templeton Asset Management (India) Private Limited, Research Division [22] -------------------------------------------------------------------------------- So follow-up on the rentals. Can you just help us understand what has happened to the March rentals because we did not operate for the last 17 days, but as I understand, the rentals are paid upfront. So was there any credit note given? And how did we account for that? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [23] -------------------------------------------------------------------------------- Sure. I'll answer that. See, as you rightly said, we are one of the best paymasters or retailers in the country in terms of paying to our developers. Since the Cinemas were ordered to shut down between 11th to 16th of March, we had almost paid full rentals for the month of March to all our development partners. Since the discussions are currently ongoing, we have still not received formal credit notes from a lot of development partners because we have still not reached a conclusion on our negotiations, and we've not reached formal agreement stage. So currently, on being on a conservative basis, we've already provided for what has already been paid. And as and when we get the credit notes on final settlement with the developers, they will get accounted for them. -------------------------------------------------------------------------------- Swagato Sourya Ghosh, Franklin Templeton Asset Management (India) Private Limited, Research Division [24] -------------------------------------------------------------------------------- Got it. And that would be the same approach for June quarter also -- as well? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [25] -------------------------------------------------------------------------------- Yes. So in June quarter -- so like effective 1st April, we haven't paid any rentals. So I think in the June quarter, we will revisit that based on whatever is required to be done from accounting prudence perspective. And by the time, I think we get over with quarter 1, we think we'll have a lot of reasonable clarity around the settlement with shopping mall developers. -------------------------------------------------------------------------------- Swagato Sourya Ghosh, Franklin Templeton Asset Management (India) Private Limited, Research Division [26] -------------------------------------------------------------------------------- Yes, understood. My second question is on your monthly OpEx burn. I could derive that the current number is around INR 35 crores to INR 40 crores per month. Can you help me understand what was this number, say, in Jan or Feb? Jan would be the right month because there were like 31 days. So what was the corresponding number for the month of Jan? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [27] -------------------------------------------------------------------------------- So if you look at our Q3 average, I can't specifically give month-wise number, but if you look at our Q3 fixed cost and excluding all the label costs, our Q3 average run rate of an expense including rent, cam, electricity and all other overheads put together was about INR 140 crores, INR 142 crores, which, like we mentioned, we've cut down that cost by almost 70%, 70% to 75%. -------------------------------------------------------------------------------- Swagato Sourya Ghosh, Franklin Templeton Asset Management (India) Private Limited, Research Division [28] -------------------------------------------------------------------------------- Yes. But just like I wanted some bifurcation of this because rental is obviously something that you have not paid. So of the other expenses, how much have we cut down? Can you give some color on that? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [29] -------------------------------------------------------------------------------- So if you look at our average rent and cam bill per month would be about INR 65-odd crores per month. So INR 140 crores minus INR 65 crores is roughly all other expenses put together. -------------------------------------------------------------------------------- Swagato Sourya Ghosh, Franklin Templeton Asset Management (India) Private Limited, Research Division [30] -------------------------------------------------------------------------------- Yes, that's very helpful. And one small housekeeping question. This time in the presentation, the comparable numbers are not there. Can you quickly help us with those numbers for the quarter? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [31] -------------------------------------------------------------------------------- Yes. The numbers are not comparable because we were shut down. So every single cinema is noncomparable because it is not operating for a similar period last year. -------------------------------------------------------------------------------- Swagato Sourya Ghosh, Franklin Templeton Asset Management (India) Private Limited, Research Division [32] -------------------------------------------------------------------------------- Okay. Okay. So a quick follow-up to that is for Jan and Feb, do we have any comparable numbers Y-o-Y for the same period? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [33] -------------------------------------------------------------------------------- We have, but unfortunately, we can't disclose monthly data right now. -------------------------------------------------------------------------------- Operator [34] -------------------------------------------------------------------------------- (Operator Instructions) The next question is from (inaudible) Capital. -------------------------------------------------------------------------------- Unidentified Analyst, [35] -------------------------------------------------------------------------------- My question was, on a slightly broader level, how does the management think about opening up, right, because from the numbers that you just gave, some of the cost, which appear to have been cut will suddenly bounce back up once you sort of start to -- start and decide to open up, whereas on the revenue side, a few films might be accounting for a bulk of the revenue and F&B sales. So as a management, how do you think on staggered opening once stable? As of now, we are not stable. But once stable, how are you willing to do that? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [36] -------------------------------------------------------------------------------- Yes, Gautam, you want to take this call, I think anybody can answer this. I mean, do you want me to give it a shot? So this is Ajay Bijli. I'll just, as Pramod said that, one rental -- rental cost is one cost. So we have negotiating with everyone until 31st March all the developers, so that, that cost also becomes less. So you're right, the revenues are going to be subdued to begin with. So therefore, that's one cost, which we will try to [carry] in. Also, our operating expenditure on the manpower also will be much lower because, again, obviously, if the footfalls are going to be less. So the manpower required to meet the guests will be low. So all our costs are controllable. And given -- we'll ramp it up as we see business ramping up. So obviously, we won't have very heavy fixed costs and even operating expenditures when our business is going to be down. So as business ramps up, new movie starts coming, people's confidence level goes up. Then we will ramp up our cost as well. -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [37] -------------------------------------------------------------------------------- If I may add to what Mr. Bijli said, he's covered the important aspects. This is Kamal. You would also know that India is not exactly a homogeneous market like the Western developed entertainment economies. We have these regions, which have their own dedicated film industry. So for example, Tamil Nadu has a very robust Tamil film production, same for Telugu, Malayalam, Kannad. We release almost 1,000 films in close to 12 to 13 languages, and this is a unique advantage, which only India has. So in context of your question with respect to staggered opening, this -- the fact that we don't just depend on Hindi or English or any one particular language would come really handy as soon as we start getting permissions in markets and once we feel confident about opening to public in terms of having trained our people, having all the SOPs and protocols in place. We would be very happy to go out because on the supply side, supply of content will not be a concern because there are a lot of ready films in almost every language. This is an addition to what Mr. Bijli shared with you. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- The next question is from the line of Swati M. from (inaudible). -------------------------------------------------------------------------------- Unidentified Analyst, [39] -------------------------------------------------------------------------------- Just one clarification on accounting for this quarter. So the rental expense you said you provided for whatever you already paid, but it's still -- on a sequential basis, it's still down. So there is some amount, which was not paid and not recognized? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [40] -------------------------------------------------------------------------------- No. What the situation is that in a lot of our developing -- developer partners, we have revenue share closures. Because March was completely shut, none of the revenue shares really kicked in, as a result of which you do not see any growth in rental expense. As I said, we have a decent amount of contracts which have a low MG and revenue share. In a good month, typically revenue shares will kick in. But because of the shutdown of cinemas, no revenue shares kicked in during the quarter, as a result of which the expenses are lower. -------------------------------------------------------------------------------- Rahul Gautam, PVR Limited - SVP of Finance [41] -------------------------------------------------------------------------------- This is Rahul. Just to add to what Nitin said, last year same quarter, quarter 4 was actually one of the biggest quarters for us. So the variable share in that period was significantly higher. -------------------------------------------------------------------------------- Unidentified Analyst, [42] -------------------------------------------------------------------------------- Okay. Can I just follow-up with the accounting for ad revenue and also the convenience fee because there is some long-term contract component in it. How are you accounting for those? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [43] -------------------------------------------------------------------------------- Yes. So on advertising revenue, I think we accounted for advertising revenue till the time our cinemas were opened clearly, and we have not recognized revenue for the period we were shut down. That only has been accounted for. Similarly, for convenience fees income. -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [44] -------------------------------------------------------------------------------- Absolutely. -------------------------------------------------------------------------------- Unidentified Analyst, [45] -------------------------------------------------------------------------------- Okay. If you can just -- second question from my end. If you can tell us about the CapEx plan for this year. I mean there is one CapEx which is discretionary. There is other CapEx which is more than 70% of the work must be done and then you just want to finish the project and get the screens ready. So what is the bare minimum CapEx one has to -- one can work with? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [46] -------------------------------------------------------------------------------- Sure. So as things stand, currently, all CapEx remains suspended. And I think any decision on restarting CapEx will only be taken once cinemas are open and we see occupancies back at cinemas. Also, we must be -- we will have to review the situation post lockdown to see some of the shopping malls under construction. Their work will also likely to get delayed. Our first priority will be to finish projects which are 70% to 80% complete and -- because bulk of the work is done. But we would revisit all CapEx only once cinemas are open, and we see things coming back to normal. -------------------------------------------------------------------------------- Unidentified Analyst, [47] -------------------------------------------------------------------------------- Would you be able to tell us how many screens are there where most of the work has been done? So at least there, there would be some incremental CapEx? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [48] -------------------------------------------------------------------------------- We won't be able to give specific numbers, but I can say between 20 to 50 screens are in fit-out right now between those -- and they are varying stages. Some of the screens are just about to open. They are in a fairly advanced stage. And some are mid- to early-stage of fit-out. But approximately that number. And we had a lot of schedule handovers which were due for this year. But I guess everything will have to be reviewed all over again once things come back to normal. -------------------------------------------------------------------------------- Operator [49] -------------------------------------------------------------------------------- The next question is from the line of Naval Seth from Emkay Global. -------------------------------------------------------------------------------- Naval Seth, Emkay Global Financial Services Ltd., Research Division - Research Analyst [50] -------------------------------------------------------------------------------- Yes, sir, I have questions on content release. You have been saying that content pipeline is strong and obviously, outcome or discussion with the distributor and producers is kind of positive. Have you kind of got any firm date, if at all, hypothetically one believes that on 1st July cinemas will start operating. Which producer will take that risk of releasing as a first movie in the cinemas, and nobody knows what can be the occupancy level or it will be done only after a few Hollywood movies are released, seeing how the occupancy trends are? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [51] -------------------------------------------------------------------------------- I think this is a very good question. And while we can't speak for a distributor/producer because ultimately deciding on a release date is a prerogative of a producer and distributor. But what I can tell you is that studios, both overseas and Indian studios, remain extremely buoyant about the prospects of pent-up demand once cinemas are permitted to open. The reason I say that is because U.S. is opening end of June. There are some small chains which have opened in U.S., but most of the large chains like AMC, Regal, Cinemark have decided to end of June. And one of the other -- with the big tent-pole Tenet directed by Christopher Nolan, who's been a big massive supporter of theatrical platform, they have scheduled their film on 17th of July. And before that, on 1st of July, there is another film Unhinged with Russel Crowe which has been slated for release. These are firm dates, which have been announced. If you Google, if you look at Internet, you would find tons of information on the release dates. Immediately after Tenet, there is a film called Mulan, which is a family audience targeting film, and this is being released by Disney. So clearly, the larger point I'm trying to make is that studios have enormous amount of confidence that there is a pent-up demand, want to capitalize on it, and -- which is the reason as soon as cinemas are reopening, they have scheduled their big blockbuster wide releases immediately after cinemas reopen date. Coming to India, like I said, we can't speak for the Indian producers. Ultimately, they will take a call on the release dates. And in all fairness, the producers, studios that we have in India are fairly small as compared to the U.S. counterparts. That said, there are 2 attitudes which are prevailing within the distributor/producer community. One attitude is that consumers will take time to warm up. They would like to see the safety protocols that cinemas have executed. And once they get confidence from those protocols, there would be enough and more positive word of mouth, which will attract people in roads and that's when they would like to release their midsize or big films. That's one attitude. Then there is second attitude, which where producers are thinking that this is an opportunity. There have been 0 brand-new films for the last 3 months. When cinemas reopen, there would not be any backlog of 15 or 20 films, which cinemas will have to carry forward which is usually the case. And a lot of people, a lot of producers are seeing this as an opportunity. And which is why, without getting into names, some midsize, some big films are being targeted for end July or middle of August. And as you know, films are a national product. So obviously, producer would expect that majority of cinemas are open before they can schedule, I'm talking about Hindi films. This point will not apply to regional sense because they will be concerned only about their home state. But for Hindi films, the national product, they would want majority of cinemas to be opened. And that's the information that they're waiting for. There are enough and more people who are seeing this as an opportunity, who, looking at what the international studios, their loads of massive experience of having released so many films in the past, having observed audiences for such a long time, having done so much of intelligent surveys, they have decided to release their big tent-pole films immediately after cinema reopening. A lot of local producers are taking confidence from that. Their attitude is, as soon as they have clarity, they will announce their release dates for India for their Hindi films. -------------------------------------------------------------------------------- Operator [52] -------------------------------------------------------------------------------- The next question is from the line of Sanjesh Jain from ICICI Securities. -------------------------------------------------------------------------------- Sanjesh Jain, ICICI Securities Limited, Research Division - Research Analyst [53] -------------------------------------------------------------------------------- Again, a question follow-up on the content. If I can understand in the near term, we have a pipeline of content, which will get released probably in a quarter once the cinemas are open. But more from probably 2 or 3 quarters, how many new launches are scheduled or how much producers will have conviction as of now to start a new production, which will build up a long pipeline for, say, next 6 months to 12 months? And this will be significantly dependent also on how the shows goes in the near term, that is whatever cinemas get released over next quarter or so. So how do you see a longer term pipeline? I understand in a medium term, that's a concern, in a longer time, I can understand there is too much of enthusiasm. I hear you that studios will come back, and we will have many more movies slot. But the concern is more from the medium-term once the existing pipeline dries up. How do you see the pipeline of movies getting -- coming up for us? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [54] -------------------------------------------------------------------------------- This is a good question, and we had addressed it in the last call that we did specifically on the issues surrounding content. So I would be repeating some of those points. But one thing which I think we have to consider is that while cinemas have been shut down, everything else also has been shut down. So which means at these 3 months when cinemas were shut down, have been practically turned into (technical difficulty) month, which means shootings have been delayed and those shootings now because the government has given permission in most of the states to commence shootings in a controlled environment with all the safety precautions in place, and post-production was permitted to start even before that. The work on producing, finishing unfinished films has already started. I think your question is more to do with how soon will producers greenlight new films. And if they don't do that soon enough, will there be an implication on releases, maybe in the fourth quarter of this financial year or first quarter of next financial year. Frankly, we have to be -- in all humility, I mean, it's tough to say what all producers and actors are thinking. But whatever interaction we've had with the creative community, whether be it actors or directors or producers, we've got some very encouraging response. Again, without getting into specific details, but there have been cases where actors have committed to start -- these were films which were committed in past. As you know, in most cases, actors have a backlog. So they commit films almost 1 year, 1.5 years in advance. So those sort of commitments which were made, there was an apprehension that there could have been a delay in starting those projects. That doesn't seem to be happening on ground. Producers have made arrangements. There are -- there is enough infrastructure available in India. There is Ramoji Rao studio in Hyderabad. And I know one instance, as an example, where a fairly large film, the actor has decided to go almost a week in advance to the studio, and they have decided to stay within that studio. They have planned the entire production in a manner that they can complete the entire work within that studio. And the studio has all the infrastructure -- all the possible infrastructure that we need to complete a film. So actors are planning their films, producers are planning their infrastructure, shooting schedule, all the requirements in a manner, so that they can go to one place, be there for those 40 days or 50 days or 80 days, whatever it takes to shoot a film, including quarantine days, maybe a week after they reach there, a week after they finish shooting, they would be in that place for those 2 to 3 months in which they'll finish the whole film, quarantine themselves for about 7 to 10 days and then return to Bombay to their families -- to Mumbai to their families. So people are already thinking and making these sort of arrangements to ensure the work goes on. And as you know, films (technical difficulty) for actors, directors, creative talent, I mean they have a short shelf life. Nobody wants to lose out on 1 year, 2 year because you don't want to be out of sight. You don't want to be -- if you have an opportunity to shoot, which is fairly safe, actors, creative people will go for it, is what our belief is. -------------------------------------------------------------------------------- Sanjesh Jain, ICICI Securities Limited, Research Division - Research Analyst [55] -------------------------------------------------------------------------------- No, that's helpful. My only apprehension is -- see all these big budget movies which have happened in the international location, traveling international so much, I think there could be a lull period for big budget movie. I don't know how right I am. So that's what the most important thing I was looking from that point. -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [56] -------------------------------------------------------------------------------- That's a good point. That's a good point. And my short answer to that is that, yes, people are making alternate arrangements. It is unlikely that people would -- people will schedule shootings outside of India, is highly unlikely. Most producers will shoot -- would prefer to shoot in India. But you also have to keep in mind that we have excellent special effects, VFX facilities in India. You can pretty much shoot a film or a scene in 1 room. You can have whatever background you want. You want that scene to look like as it was shot in Paris or London or New York, all of that is possible technologically. And we don't see a problem in terms of scale, in terms of creative imagination being compromised, we don't see that happening because we have the infrastructure and the technical sophistication to deal with these challenges. -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [57] -------------------------------------------------------------------------------- Kamal, also if you add like in the past also we've seen movies like Tanhaji and all, which was the biggest blockbuster that we've had, that was obviously not shot abroad. So all these movies which are doing well, in fact, have all been shot locally only. -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [58] -------------------------------------------------------------------------------- That's right. Because they're so heavy on special effects that you want to project. -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [59] -------------------------------------------------------------------------------- Gone are the days when producers and directors who often used to [shoot up] in London. I think the content is so varied now that they are basically very happy shooting at studios here now with all the facilities that are available. -------------------------------------------------------------------------------- Operator [60] -------------------------------------------------------------------------------- (Operator Instructions) We take the next question from the line of Shantanu Basu from Stewart and Mackertich. -------------------------------------------------------------------------------- Shantanu Basu;Stewart and Mackertich;Research Analyst, [61] -------------------------------------------------------------------------------- My questions have been answered. -------------------------------------------------------------------------------- Operator [62] -------------------------------------------------------------------------------- The next question is from Arun Prasad from Spark Capital. -------------------------------------------------------------------------------- Unidentified Analyst, [63] -------------------------------------------------------------------------------- Yes. I have one question, which is how much of your CapEx has been already committed and -- but it is yet to go out during the year versus the liquidity position. You already mentioned that INR 227 crores is the liquidity. And my second request is that can you just break this liquidity commission -- liquidity into 2 parts, that is the cash and the undrawn committed bank lines? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [64] -------------------------------------------------------------------------------- So as of now, this INR 227 crores of liquidity is all drawn cash, these are not committed lines. These are imbalances of the company. As far as committed CapEx is concerned, as I said, we are in several projects, which are currently under fit-out. So committed CapEx would be in the range of 50 to -- anything between INR 50 crores to INR 100 crores. But as I said, we will have to review post things come back to normal on which projects we will restart versus status of the shopping mall at that stage, whether the developer, how much time will it take to finish the shopping mall, et cetera. So I would say, while there is a commitment to do this and finish some of these projects, I think all of that will have to get reevaluated depending upon how the situation evolves post cinema start operations and once we come back to normal. -------------------------------------------------------------------------------- Unidentified Analyst, [65] -------------------------------------------------------------------------------- Okay. Can you just repeat the breakup of the INR 227 crores? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [66] -------------------------------------------------------------------------------- From what in terms of breakup? -------------------------------------------------------------------------------- Unidentified Analyst, [67] -------------------------------------------------------------------------------- Cash breakup. -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [68] -------------------------------------------------------------------------------- These are the bank balances of the company. -------------------------------------------------------------------------------- Unidentified Analyst, [69] -------------------------------------------------------------------------------- Okay. This is for entirely cash because it's (inaudible) undrawn committed bank lines also. -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [70] -------------------------------------------------------------------------------- Yes. So there is no undrawn committed line. This is the cash in bank balance of the company. -------------------------------------------------------------------------------- Unidentified Analyst, [71] -------------------------------------------------------------------------------- And second question for me is that on the treatment of AS 116 when -- see there are 2 types of industry, one is asset side and liability side. And in the right-to-use asset side, even if you don't pay, say, rent for this quarter, how will you account for it? You will still apply the depreciation, just simple bookkeeping questions? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [72] -------------------------------------------------------------------------------- No. So accretively, the AS 116 really leads to reevaluate effectively all your lease liabilities during the rental lease term and reexamine that. So depending upon what rental concessions we will get out for arrangements, we will have. The whole working will have to get recomputed. And again, that computation will need to be get redone because of the amendments in the rental contracts. So according to that, we will have to provide for it. But yes, the competition and the numbers could undergo a change based on what settlement we are able to reach with the shopping mall partners. -------------------------------------------------------------------------------- Operator [73] -------------------------------------------------------------------------------- The next question is from the line of Gautam Trivedi from Nepean Capital. -------------------------------------------------------------------------------- Unidentified Analyst, [74] -------------------------------------------------------------------------------- The question I had was I was reading an article today in the Los Angeles Times, the LA Times, which said that most likely in California, theaters will reopen, probably, by this Friday, which is great. What it also said is that likely curbs on the social distancing will be 25% occupancy and/or a maximum of 100 people, whichever is lower. Now I guess my question really to that effect is that here in India, I guess, it will be state wise, I assume, that each state will determine how much will be the occupancy out in this new social distancing environment? As a result of that, if it's not 25%, maybe it's 35%, maybe it's 40%, I hope it's higher, the better for you guys, but would that mean a potential increase in ticket prices for you guys? -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [75] -------------------------------------------------------------------------------- No. First of all, there's a dialogue going on between the government and every industry as to how opening up should happen. And the guidelines that we have given, they're not based on what's happening in California. The guidelines, globally, what is happening is that we've got a standard seating, which is that groups of 2, 3, 4 families, in any case, who are living together during lockdown, they go and only the adjacent seat has to be left empty and not the way California has done it. So therefore, the total occupancy loss or capacity loss rather is not more than 25%. In any case, there are studies now which have come out, which are very clearly indicating that in an auditorium, the droplet transmission doesn't really happen because everybody is wearing a mask and they're not talking to each other. So I think the people behavior in a social environment is also playing a very big role of this transmission -- the virus transmission. So various epidemiologists have come out with studies that we're looking at the screen and people don't talk in the auditorium in cinemas as opposed to other places. So keeping that in mind, I think even if we have a loss of 20%, 25%, that's okay because that's the -- weekend is where bulk of our audiences come. And during weekdays, in any case, we don't have a very high occupancy. So we'll be skewing our pricing in such a manner that the gap between the weekend pricing and the weekday price is not much, it's spread out more. And therefore, we don't have to increase the price for this type of capacity loss at all. -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [76] -------------------------------------------------------------------------------- And also then to add that these are all temporary measures in which -- because we -- I mean what capacity issues and all the rest of it has been week-wise in restaurants right now, week-wise capacity, restrictions, or airlines have their own set of guidelines. And maybe it's a central issue and not just a state issue because all these [states] have just given a blanket (technical difficulty) guideline, for the airlines, restaurants or hotels. So I think that's what we follow for us as well. And it will be temporary. So week on week, I think, we will -- everyone will decipher what's going on and then open up the way they're opening up the entire economy, and the whole idea is to open up everything in due time. -------------------------------------------------------------------------------- Unidentified Analyst, [77] -------------------------------------------------------------------------------- Sure. The other question I had was with respect to, I guess, the company that's been in the news for the past 6 to 7 weeks is Jio, and their talk about potentially releasing the movies on the same day. Now I know this has been done to that, and you've sort of addressed this in the past. But the question I had was with more to do with domestic movie producers. And what is their view? I mean, I'm sure you've had multiple conversations to figure out if they are in favor of releasing movies OTT on day 1 itself. -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [78] -------------------------------------------------------------------------------- Look, I'll jump in, and I'll try and address this question. I think the important thing is to look back and see what's really happened in these last 3 months. And in spite of all the speculation and a lot of media coverage on this matter, only 3 films, and I'm including Gunjan Saxena in this count, 3 Hindi films have on straight to OTT. And then there are, in addition to these 3 films, there are about 5 more films which are all mid-sized Tamil, Malayalam films which have gone straight to OTT. Given the fact that PVR, as a chain, releases close to 1,000 films every year, and with full respect to these films, without being disrespectful to any of these films, it's a very, very small number of films which have decided to go straight to a streaming platform. Like I shared earlier, overwhelming number of producers have come out and spoken in support of theatrical platform and not just that, but they've also rescheduled, they've delayed their films, they have agreed to reschedule their films as soon as we have more clarity on reopening of cinemas. In terms of new technologies or new concepts, I mean Jio is a fantastic company and what they have done in this country makes every country person, every country man and woman feel proud. But that said, cinema, as a format, has withstood lot of competition right from the beginning. So it's not just been competition from technologies, and there have been several technologies that cinemas have had to compete with. We've had television, VCR, streaming now. Of course, there have been terrorist attacks one after another. There have been epidemics in the past, not in India, which impacted cinema business. But internationally, there have been epidemics, which impacted cinema business. There have been world wars. And each time, there has been crisis, cinemas have emerged much stronger from those crisis. So I'm linking bit -- I'm talking about COVID as a crisis, but I'm also trying to address your specific question on Jio First Day First Show. As far as the perspective of producers is concerned, I think it's loud and clear from their actions. Producers don't really have to wait for Jio to launch their First Day First Show. They already have that opportunity in other streaming platforms. And very few firms have decided to go straight to OTT. Majority of films, large section of films, 95% -- 90%, 95% of our films have decided to wait for theaters to reopen and then they -- and then release. -------------------------------------------------------------------------------- Operator [79] -------------------------------------------------------------------------------- We'll be able to take one last question. We take the last question from the line of Nirbhay Singh from Macquarie. -------------------------------------------------------------------------------- Nirbhay Singh;Macquarie;Vice President, [80] -------------------------------------------------------------------------------- I had just two questions. One was on the follow-up on terms of perhaps limiting the capacity in terms of viewership. So how does it -- how do you see that impacting your revenue in terms of box office collections from a movie because earlier most of the collection used to happen in a week? So what will happen now? And does it impact your cost in that sense? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [81] -------------------------------------------------------------------------------- I'll take this question. And if my colleagues want to add, they would also add to the answer. But like Mr. Bijli and Mr. Kumar mentioned earlier, we already have enough and more capacity to deal with any constraints, which are suggested by the government, which are advised by the government. The specific case of 25% restriction on seats, California example, which one of the earlier speaker had mentioned, I would like to add to that. Californian government has also clearly announced that these are temporary measures. And within [2] weeks, we will be revisiting this capacity cap because in most of -- in U.S., as you know, it's a state issue. Most of the states have offered a 50% capacity cap on cinemas. California, because they've had more infections in terms of virus, they've gone in with 25% capacity cap, but they've also assured the cinema exhibition industry that they would be revisiting this cap within 2 weeks. And most people are expecting it will go up 50%. Now that's in U.S., which is a saturated market in terms of cinema screens. In India, we have much lesser number of screens. And which is why we've gone to the government and we've explained them that this is the protocol that we would like to offer in terms of distancing within the auditorium, which is to keep 1 seat empty after every customer. It is possible that some of the states may come up with a higher restriction. But at the same time, we also are hopeful that most of the states will accept our recommendation. But even in some states, if they come up with a high restriction, we have the ability to spread films over more number of auditoriums. And also, we can spread them over more number of weeks. So earlier if films were opening big with full capacity, they were also tapering off very, very quickly. Barring a few films which were having a long run at the box office, most of the films used to taper off after their first weekend or maybe after the first 4 or 5 days. We expect a change in this behavior because we expect a lot of customers to self-select and distance themselves from weekend to weekdays. Weekdays is a known fact that cinemas operate at very low occupancies. Customers are also very well aware of the fact and a lot of customers, we believe, would self-select and would like to place themselves on a weekday, they'll like to change their behavior. Instead of coming on a weekend, they would prefer coming on a weekday. So with some changes, with some support from customers, with the capacity that we have, even in states where there is a higher capacity cap than what we have proposed to the government, we would have absolutely no problem in tiding over. We would be able to do full justice to each film's potential and capability. -------------------------------------------------------------------------------- Unidentified Analyst, [82] -------------------------------------------------------------------------------- Okay. And just one quick follow-up question. Just in case, God forbid, if there is a COVID case happens when you are operational and one of your staff or whatever happens, then what is the thought of the government on that point? Does it again get into a shutdown mode or what happens? -------------------------------------------------------------------------------- Rahul Gautam, PVR Limited - SVP of Finance [83] -------------------------------------------------------------------------------- Kamal, do you want me to take? Shall I take this question? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [84] -------------------------------------------------------------------------------- Gautam, please. -------------------------------------------------------------------------------- Rahul Gautam, PVR Limited - SVP of Finance [85] -------------------------------------------------------------------------------- So basically, whatever little that we've got to know while no official communication on this regard has happened, the cinema, if at all this happens, if the establishment is supposed to shut down and all employees would be tested and what we are also creating is a backup team for every city. So technically, all employees would move out and we would have a backup team. For every city, one complete team will be made, and they take over and the cinema reopens once this testing and all sanitization is back in place. -------------------------------------------------------------------------------- Operator [86] -------------------------------------------------------------------------------- We'll be able to take one last question. The last question is from Jignesh Kamani from GMO. -------------------------------------------------------------------------------- Jignesh Kamani;GMO;Research Analyst, [87] -------------------------------------------------------------------------------- As you say, there'll be 20% to 25% impact on the occupancy to follow the social distancing norm, I believe it will be mostly on the Friday, Saturday, Sunday, as we have a high occupancy and less on the weekday. So what percentage of revenue for the last year came from the Friday, Saturday, Sunday where the occupancy was not high, and it's only this part can get infected? -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [88] -------------------------------------------------------------------------------- First of all, I would like to correct you that we are not expecting a 25% capacity cap in India. While we don't know what government would suggest and advise us, but that's not what we are expecting in it. Nitin, over to you to answer the second part of this question. -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [89] -------------------------------------------------------------------------------- Yes. So if you look at our average occupancy of roughly about 35% that we normally achieve in a year, it's a mix of healthy occupancy on a weekday and weekend. Our average weekend occupancy varies between 50% to 55%. And our average weekday occupancy is, I'm now giving country-wide average, between 25% to 27%, as a result of which, we achieve average occupancy of roughly between 35%, 36%. So like Kamal mentioned, some of the people will probably shift. On weekdays, we anyway don't have a concern. We have enough capacity available. It's quite possible that some of what we lose on a weekend, even with the restricted capacity, people will switch to a weekday, and the focus will be how do we create and give a good environment in the cinemas, make people safe and secure in the first 60, 75 days, so that they get a confidence to come back. All of this -- nobody knows the real answer on how this will evolve. But our sense is whatever social distancing guidelines every establishment will start with, will get reviewed every 4 weeks and will get relaxed depending upon how the situation evolves. -------------------------------------------------------------------------------- Jignesh Kamani;GMO;Research Analyst, [90] -------------------------------------------------------------------------------- My last question is on the F&B part and advertisement revenue. Since people will be wearing mask and there will be fear of you can get infected. Will F&B revenue drastically get impacted because of the wearing of masks and hygiene. And if you take on advertisement, many of them say, company has cut down all the cost, including advertisement. So that will also get impacted drastically in the next 6 to 9 months? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [91] -------------------------------------------------------------------------------- Not really. See, first and foremost, on the F&B part, while there will be precautions and people, you're right, would be wearing masks, but it's not as in the consumers aren't really sitting and talking to each other. So self-consumption is something which we see will continue to happen. And while it could be restricted, there are other areas of F&B that we are working on where we are digitizing the entire consumer journey, where he could order himself, pay himself and that would be a huge confidence booster to say that I'm in a place which is completely sanitized, clean and whatever I'm consuming is absolutely safe and healthy. So we believe that it could be slow, yes, you're right, in the beginning. But given the fact that all these precautions are being taken and the entire assembly line and the delivery chain is being modified, we believe we'll be able to garner that kind of confidence and see consumers coming back and eating as much they were eating earlier. Now on the advertising end again, what you said was right. At one end, there is suppression in the market, but on the other when -- what we are also seeing is there are clients which are very, very eager to advertise simply because they have huge inventory. Whether it's retail, whether it's fashion, whether it's electronics, they've just got tons and tons and hoards of stuff which is lying, which they need to get rid of. So on the -- these guys have all been starting to talk to us, already wanting to come back and advertise because this is a medium that really sort of connects with the consumer. And often, we've proven without doubt that it helps to sort of move inventories very, very effectively. So we believe as occupancies will grow, as confidence comes back in about a couple of weeks of opening, advertising and F&B, both should be on its step-up. And within a span of about 2 months, we should be able to sort of get all the numbers back. -------------------------------------------------------------------------------- Operator [92] -------------------------------------------------------------------------------- We'll take that as the last question. I would now like to hand the conference back to Mr. Ankur Periwal for closing comments. -------------------------------------------------------------------------------- Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [93] -------------------------------------------------------------------------------- Yes. Thank you, everyone, for joining in for today's call. Kamal, Nitin, will you like to add any final comments? -------------------------------------------------------------------------------- Nitin Sood, PVR Limited - CFO [94] -------------------------------------------------------------------------------- No. I'd just like to say we may not have been able to answer everyone on this call. But if any of you have any follow-up questions or want to -- want any specific answers, you can reach out to either me or Rahul, and we shall be happy to address your queries. Thank you for taking out time to join the call. -------------------------------------------------------------------------------- Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [95] -------------------------------------------------------------------------------- Sure. Thank you very much. -------------------------------------------------------------------------------- Kamal Gianchandani, PVR Limited - Chief of Strategy [96] -------------------------------------------------------------------------------- Thanks, everyone. Thank you very much. -------------------------------------------------------------------------------- Rahul Gautam, PVR Limited - SVP of Finance [97] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Ajay Bijli, PVR Limited - Promoter, Founder, Chairman & MD [98] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Operator [99] -------------------------------------------------------------------------------- On behalf of Axis Capital, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.