PVR buzzing on sale-and-lease back
Shares of PVR Ltd. are up 3% or by Rs. 14.75 per share at Rs. 499.55, after cooling down from day’s high of Rs. 511.60. India’s leading cinema exhibitor has sold its 4 screen property at Anupam Multiplex located at Saket, New Delhi for a consideration of Rs. 52 crore. Simultaneously, it has leased back the property under a long term agreement to operate the same. Many aviation companies have also resorted to such arrangements in the past.
Since the company will continue to operate the multiplex as before, this transaction will not have any operational impact. However, by easing pressure on cash flow and freeing precious for capex for the future, company will be able to maintain an asset light model, thereby improving its return on capital employed (RoCE) and scaling up faster. PVR had total debt of Rs. 601 crore as of 31st March 2013, as per its consolidated balance sheet, on networth of Rs. 643 crore, entailing debt equity ratio of 0.9:1.
Together with Cinemax which was acquired in January 2013, PVR currently operates 398 screens across 92 cinemas covering 37 Indian cities. In FY13, it entertained 55 million patrons, and is poised to entertain over 70 million viewers in FY14. Company plans to add 70-80 new screens every year to strengthen its brand and position in India’s movie exhibition space.