PVR INOX Limited (PVRINOX) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the PVR Limited Q3 FY '22 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.

Yes. Thank you, [ Indira ] . Good evening, friends, and welcome to PVR Limited's Q3 and 9 months FY '22 post results earnings call. The call will be initiated with a brief management discussion on the earnings performance, followed by an interactive Q&A session. Management team will be represented by Mr. Sanjeev Kumar, 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 Strategy Officer, PVR Limited; Mr. Nitin Sood, Chief Financial Officer, PVR Limited. I'll hand it over to Mr. Kumar for his initial remarks, post which we'll open the Q&A. Over to you, Mr. Kumar.

Thank you all. Dear all, I would like to welcome you all to the earnings call to discuss unaudited results for Q3 and 9 month FY '22. I hope you had the opportunity to review our presentation and results, which have been uploaded on our website as well as on the stock exchange. The quarter gone by has been the best quarter for us since March '20. We saw continuous improvement in financial metrics on a month-on-month basis, and stop burning cash after 6 continuous quarters. From an EBITDA loss in October '21 to 23.7% EBITDA margin in December '21. The business grew from strength to strength, with content from all 3 genres in regional, Bollywood and Hollywood doing well. In October, regional movies like Doctor, Honsla Rakh and No Time to Die and [indiscernible] from Bollywood did well. In November, during the Diwali week Annaatthe, Eternals and Sooryavanshi performed extremely well at the box office. Since then, we have had a continuous flow of content in the form of Antim, Satyameva Jayate 2, Tadap, Chandigarh Kare Aashiqui and 83 from Bollywood. Super hit content in the form of Spider-Man No Way Home and Pushpa, both in Hindi and Telugu also aided the superlative performance in December [ 23 ]. In fact, the revenue for the month of December '21, was lower by only 8% as compared to the month of December 2019, reflecting ability of the business to bounce back quickly and strongly, once the restrictions in operations are removed. Since the end of December '21, major metropolitan cities in India are under the grip of the third COVID wave, huge by the highly transmissible but less severe Omicron variant. This has resulted in blockbuster content, which are Jersey, RRR, Prithviraj, et cetera, deferring releases. Various states have reimposed restrictions on cinema operation, with more states opting to reduce capacity, mandating vaccinations and night curfew. Only Delhi and Haryana have already shut down cinema operation. We feel that recovery from the current wave should be much faster, and unlike the previous 2 waves, the content producers will also be more forthcoming in releasing their movies on the big screen, as soon as the COVID wave recedes and the restrictions in operations are relaxed. Till date, this year, we have launched 18 new screens. This includes the 4 screens in Narsipatnam, Andhra Pradesh, 7 screens in the iconic Jio Drive Mall, Mumbai, 4 Director`s Cut chains in Ambience Mall Gurgaon and 3 screens in Jamnagar, Gujarat. On the results, please note that the numbers I'm sharing are after adjusting for the impact of India's 116, relating to lease accounting and are different from the reported numbers we submitted to the stock exchange today. For the quarter ended 31st December 21, total revenue was INR 642 crores. EBITDA profit was INR 66 crores and PAT loss of INR 22 crores as compared to revenue of INR 63 crores EBITDA loss of INR 109 crores and PAT loss of INR 137 crores for the quarter ended December 31, 2020. For the 9-month period ended December 31, '21, total revenue was INR 155 crores, EBITDA loss was INR 137 crores, and PAT loss was INR 323 crores as compared to revenue of INR 120 crores, EBITDA loss of INR 306 crores and PAT loss of INR 394 crores for the 9-month period ended December 31, 2020. During the quarter, the company successfully managed to check the delicate line between increase in operations and managing fixed costs. As on date, the company has successfully concluded discussions around rental waivers, discounts, for wave 2 with landlord partners with respect to more than 97% of its properties, and has achieved rental savings of 57% in the ninth month period ending December '21. Fresh discussions are underway for the current ongoing wave for COVID. We continue to keep high levels of liquidity on the balance sheet, with a total liquidity of over INR 740 crores as on December 31, '21. To conclude, I would like to thank all the stakeholders, including employees, developers, content makers, bankers and investors for the unwavering commitment of the business. With a strong pipeline of content that is available for release over the next 12 months, we are confident that the business will bounce back very strongly. With these opening remarks, I open the platform for any question and answers. Thank you.

[Operator Instructions] Our first question is from the line of Aliasgar Shakir from Motilal Oswal.

And I must congratulate the strong cost control that we have insured despite cinemas now opening up. I'm just looking at your cost compared to your pre-COVID numbers on 3Q FY '20, and when I see your fixed cost, something like your employee and SG&A, I see that somewhere about high and mid-teens kind of comparable decline from 3Q FY '20 numbers. So the point I want to understand is that now that in 3Q most of your screens are opened and fully -- more or less, are fully up and running, should this be assumed as our stable state cost, even if I assume, 4Q would have been fully up and running? I mean, I'm just trying to understand what kind of cost savings on a stable state basis we are seeing come up in COVID numbers?

On the cost front -- yes, I'll take this question, sir. So on the cost front, we've done a lot of work, specific question on personnel costs. See, the cost has got ramped up during the quarter as October, we were still not open in Maharashtra. And November onwards, we started ramping up. We've been quite flexible on how we manage our headcount as the content...

Sorry, but I'm not just looking here headcount, but entire fixed OpEx, something which includes your end employees, whether your SG&A, I mean, I think the combined fixed OpEx, that side, that is still about close to 13%, 15% down. So I mean, should that be assumed as your stable state basis?

So they will not be stable state. I'll have to address each cost line by line because people costs will ramp up once we have full quarter of full operations. So these people costs are not reflective of what they will be, when we'll be operational for full 3 months. That number will definitely go up. But we do expect it to remain below pre-COVID level on the both cost front as well as the headcount front. On all our overheads also because a lot of overhead fixed costs that you have mentioned there are also directly linked to the properties being opened and performing. So a lot of these fixed costs will also go back once the properties have a full run. It's difficult to put an exact number on what these costs will look like, other fixed expenses, but our sense is they'll continue to remain below pre-COVID levels because of all the work that we've done over the last 2 years.

Got it. Just to follow-up here is I thought that 3Q would have already been mostly -- I mean, all your cinemas would be up and running. So I mean, I'm just needed to understand why would you think it would go from this level?

So cinemas were not up and running for the entire quarter. Cinema is part of the circuit, was opened in October. Some places were still shut, some places were still in the middle of rental. When we did open, it wasn't as if in the first week or the second week, we started to get content. So we were slow in ramping up on our HR costs. So what Nitin is trying to sort of allude on is that when we get a 90-day, all restrictions eased out, the cost will go up marginally.

Okay.

The bigger [indiscernible] where we have a sizeable number of cinema.

Understood. Second question is just one, I mean, you did mention on the impact of Omicron and the capacities are now constrained. But I mean, of course, it's difficult to anticipate, but do you think that once capacities will be again, cleared, this time, the releases will be very quick. So you won't wait for long once the cinemas are fully up and running. I mean, the way we saw, there was some gestation period even once the cinemas were 100% allowed, we still saw some gestation period for movie release to happen. This time, hopefully, that should not happen. I mean, it should be a much quicker recovery?

Yes. I mean, I think after wave 1, of course, people that, film producers were still apprehensive. But after wave 2 reopening the producers realized that there was no point in waiting and they should release the film as soon as cinemas are opened and restrictions in capacity has been lifted. And therefore, you saw Bell Bottom come out as soon as August. I think, we have the same sentiment now that they don't need to wait for the businesses to kind of settle down or cinemas to get ready as such. And they're all willing to release the films as soon as the restrictions are lifted. In fact, one of -- again, Akshay Kumar has already been announced for March -- early March or mid-March this year.

Got it. And just one thing I want to understand from the digital side, you've explained this point quite a few times that despite, I mean, all the OTT releases, I mean, cinemas are relatively much stronger in terms of weekend occupancy. But just to understand, I mean, when these large OTT guys are now paying big dollars in acquiring rights, the way we are actually being very clear that we need a 2-month exclusive period, have these guys also -- I mean, given that now, they are paying big dollars to acquire movie rights, are they also probably kind of trying to push and negotiate for a shorter, exclusive period for cinemas? I'm just trying to understand that from their point of view, is there any kind of push for negotiation?

We can't speak for the streaming platforms, but from what's prevailing on the ground is that there is a minimum 4-week window, which is in motion as we speak. This is a temporary measure and a broad understanding has been reached with producers that soon it will go back to the for 5-, 6- and 8-week window. 8-week window being the subscription VOD window and 6 week being the pay-per-view window. India, because it's a fragmented market and also producers don't have a conflict of interest in terms of having their own streaming platform, unlike the Hollywood studios. We do believe that India, as a market, will buck this trend, and we would manage to go back to the erstwhile windows.

We'll take our next question from the line of Abneesh Roy from Edelweiss.

My question is like Pushpa did really well in the Hindi belt, UP, Bihar. So do you see this as a new development or this is just last or is it just because quality content of core Hindi was not available? Because if it was actually a new development, this could make your content that much more diversified, so less risky, right, from a content pipeline going ahead?

Abneesh, we missed the first part of your question. Are you speaking about regional films dubbed in Hindi doing well? Is that what the question is?

Yes, yes. Pushpa. Continue with Pushpa. Yes, yes. I think -- sorry, go ahead.

Absolutely agree with your observation. We do think this is a trend in making. It's slightly early to speak about it as a trend. But the way Pushpa has performed with minimal publicity support, just goes to show that there is appetite for actors who've got recognition on television and streaming platform. Allu Arjun being the case, he's a big Telugu star, but he's had no success in Hindi, but clearly, there was a lot of recognition by way of his films, which had released on television platforms and streaming platforms. And as a result, when a good film came out, dubbed in Hindi, people lapped it up and supported the film in big numbers. So we do think there is a trend in making. We'll have to wait and see, but we are quite hopeful that this could result in 3 or 4 films of level every year going forward.

Maharashtra is the biggest state for movies. And there, suddenly, your own -- some part of your own space will become competition in FY '23. So does it lead to pricing coming down because that will be under a new brand, they will create a -- try to create a niche for themselves plus they don't have only this much screens in pipeline. They have said they want to scale it up eventually to a much bigger number. So does it become more competitive? I understand just 2%, 3% impact on EBITDA, but what happens on the pricing and competition?

Actually, the way we've analyzed this, they take away about 23-odd screen. And while on the EBITDA level, there is only 3%, the ATP is not under pressure at all because the people value a PVR experience. We believe that he is our consumer and there is a value to a brand. Because if we were to say that there is no value to a brand, there will be no power that PVR would have to have an increased ATP and SPH. So we believe that he belongs to us and he's our consumer and he would possibly travel a little extra, a little beyond to reach us. And the kind of circuit we have in Mumbai, most of the locations will be able to offer an alternate location to the consumer. And we believe there is nothing -- no pricing hit at all, on ATP or SPH, in that circuit. Leave alone national, but even in the West region, we do not see any impact of a -- negative impact on ATP or SPH.

In terms of SPH spectacular recovery, pre-COVID or now, anything you would like to call out in terms of consumption habits? Has anything changed dramatically?

Yes, a huge change. Actually, we are seeing both in terms of consumption of, what should I say, a premium format as well as the way people are coming out and consuming food clearly indicates that this is an experience that is hugely valued. People have been missing this experience and the stuff on which we had actually built our brand over the last 2 decades of saying that PVR is not just a place where people come to watch movies, but it's a holistic experience, really comes into play because people are coming out and sort of consuming the premium formats much better. So our occupancy, ATP, has all gone up significantly better in the premium format and on the overall food consumption, not only PVR, to sort of take the prices up of certain food articles, but also saw a 50% jump on the volume of sales. So people are eating more. And technically, we are also being allowed to take the prices of food up without really hampering on the SPH at all.

Sir, and last question. So now, cases are coming down dramatically in the bigger cities, COVID cases and vaccination also, now, kids are also getting vaccinated. So taking all this, it seems FY '23 is likely to be a very, very normal year. So taking all this into consideration, assuming no big wave so what would be your screen guidance for FY '23 and '24?

Abneesh, we don't want to focus too much in advance, but if business comes back, our rollout pipeline is quite massive. There is a huge number of screens, which are awaiting fit out where we deferred CapEx. So our CapEx, we already restarted CapEx in some screens. But I think, in the next couple of months, we'll take a call on the rollout of many more screens, which are awaiting handover. And if that is a normal year, then I think there is no reason why in next financial year, our screen rollout will not be what it was in a pre-pandemic year, which is between 80 to 100 screens. So we will quickly get back to that kind of a screen rollout as soon as, I think, the business normalizes.

[Operator Instructions] Our next question is from the line of Prateek Poddar from Nippon Indian Mutual Fund.

I have 2 questions. One is on Slide 13, where you talk about week 12 and week 13 footfalls. Just wanted to check on that because there were restriction over there, is it like-for-like? Or is it -- has there been a 100% capacity utilization possibility, the best number would have been substantially higher. So all I'm trying to ask is for Mumbai, despite 50% will you witness sales, footfalls as pre-pandemic?

Pramod, do you want to take that?

Yes. So this comparison, the first part of your question is with cities and states with restrictions being compared to the pre-COVID average, which was without restriction. So Mumbai City and other cities in towns in Maharashtra were at 50%. And what you have seen in week 12 that we did 112% of pre-COVID. So there, we are comparing with the average of 2019, '20 entire year average, weekly average, but without restriction. So if the restrictions weren't there, this number could have been higher. That's right.

Perfect. And just -- if you can talk about -- I think you did say about SPH sustainability. On your ATP of sustainability also if you can talk about how should we think about this very strong number of 20% growth on ATP as well as SPH 22%, the sustainability, and do you believe that going into FY '22, these numbers are sustainable?

Gautam, do you want to take this?

So I'll answer that. Given the fact that cinema industry has not seen any pricing growth, if you look at all around in the economy, there has been inflation over the last 2 years, cinemas have been shut. And even prior to that year, cinemas did not take a price hike, simply because of the GST rate cut, we passed on the benefit to the consumers. So we believe that cinema pricing has a massive room -- headroom for growth because pricing has been quite constant. And given the massive pipeline of content that we have, especially the amount of big 10 to 12 films you will see in the next financial year, next 12 months, there is a great headroom for pricing growth. If you actually look at the month of December, where we had all the big films releasing, because ticket pricing is also a function of the content. In the month of December, when we had big films, our average ticket pricing growth was close to 20% over what we did in the similar period last year. So we think the pricing growth will sustain and could potentially be better than this in the year ahead.

I would just like to add to what Nitin said and probably double down on the point which is making. So 2 points I would like to add. First is that the robust increase in prices in the Q3, especially when big films came out in November and December goes to indicate that this spend of business is intact. This whole debate about that the customer habit will change in the vehicles, a lot of films traveling to streaming platforms, that debate has come to an end. Clearly, the customer habit continues to favor the moviegoers or cinegoers who used to come out to cinemas continue to favor cinema as a platform as their first preference. And you also have to appreciate that these ticket prices have happened in the backdrop of Netflix, couple of other streaming platforms actually dropping the prices. While streaming platforms are becoming much more accessible, testable in terms of prices, cinemas have managed to not just increase ticket prices, but also end up with a very early growth on the SPH front. The second point I would like to make is that even with this increase in ticket prices, we are barely at $3, as average ticket price for the most successful chain in the country. PVR is the more successful largest -- the #1 premium offering -- chain with the #1 premium offerings. And we have an ATP average ticket price of less than $3 or close to $3. If you compare to what's happening in U.S. and some of the more developed markets where the average ticket price is about $8 for chains like AMC, Regal. They have managed to grow their ticket prices in 2020 to by almost 17%, 18%. So that -- those 2 show the kind of headroom, which is available to grow even in the markets which are more developed, which have a much higher average ticket price, almost 3x of what we have in India, and they are also managing to grow by 17%, 18%. So yes, just to double down on what Nitin was saying, tremendous opportunity, tremendous headroom to grow as well as the ticket prices go.

We'll take the next question from the line of Jaykumar Doshi from Kotak.

One quick question. Could you please elaborate a little bit on the benefits in Telangana now that you can increase ticket prices? And do you see similar opportunities in Andhra Pradesh or Tamil Nadu in the next -- in the foreseeable future? And what kind of price increase do you envisage in Telangana and what it means for your ATP?

Nitin, you want to take this?

Okay. I'll take that. So what has happened in this market is Telangana, ticket pricing has got revised for mainstream seats to INR 250 plus GST, and which was earlier, INR 150, which is all inclusive. So if you effectively look, the pricing cap has been doubled from INR 150 to about INR 290 plus there is a huge headroom to achieve the pricing growth across that belt. And we no longer have to go in. We were trying to do some of it in between by going and taking specific approvals. So that -- all of that has gone and the headroom is quite large. And for recliner, the pricing is now INR 300 plus GST, which is effectively an increase of 40% over what we were allowed to charge earlier. Telangana is a very big and important market for us, and almost 10% of our total admits in FY '20 came from that market. So we believe it will have a big positive rub out in next financial year, as the business bounces back and the film releases happen. So this headroom for pricing growth in this market will play out very well for chain like PVR.

Any other states, is there any opportunity in your view, AP or Tamil Nadu or not in near future?

In the near future, yes, we sort of keep lobbying with the government. But currently, as Nitin said, there is enough and more headroom. And for the -- over the next 10 to 12 months, I don't think there is any need. But as and when we believe that, that needs to be lobbied from MAI, we do lobby with the government and see these approvals.

Also to add on to what Gautam said, if you look at Tamil Nadu as a market, the pricing cap was relaxed like few years go there. And the ticket pricing headroom was increased to about INR 210 including GST, et cetera. If you look at still our average ticket pricing for most of the cinemas, pre-pandemic was about INR 160. So there is already a huge headroom to take pricing growth up other than the existing approvals in that market. So my sense is Tamil Nadu will -- we have a huge amount of headroom. We are lobbying and working to see if we can achieve a similar thing in Andhra. Our screen presence in Andhra is very small. We just have 2 properties in Andhra right now, so it is not big in relevant in the overall perspective. But both markets, Telangana and Tamil Nadu, which are big markets for us, and those markets, there is a huge headroom for our pricing growth within the existing capacity caps as they now exist.

Right. And I heard your comments on significant opportunity on pricing. So does it have to do with -- are you intending to take higher price increases in southern markets where the prices currently are significantly lower than India average and there is headroom to do that? Or do you intend to take similar price increase in Mumbai as well?

Kamal, you'd like to answer that?

So pricing is -- shall I go on?

Yes, sir. Please go ahead.

Yes. In response to your question, pricing is an iterated decision. It's also a localized decision. So we don't decide on the basis of -- do we decide on the basis of cinema to cinema, and within cinema, we decided on the basis of films that are releasing the kind of curiosity they have created. Answer to your question is, we are always trying to look at various ways in which we can create price action, various ways in which we can optimize ticket prices without impacting our occupancies. This is an ongoing process. Your earlier question on whether we have scope to further up the permissions, approvals in certain states, I think we have sufficient headroom in almost all states now. Barring Telangana, Andhra, Tamil Nadu, there is no restriction in other states. We can -- we have complete flexibility to increase or decrease price, depending on what we think is the most optimized offering for our customers. And in these 3 states also, we have fairly good amount of headroom to increase ticket prices wherever this warrant that sort of an increase in ticket price. So it's a localized decision to summarize, we don't look at it from city to city basis.

Understood. My second question is on Sooryavanshi, there were last minute discussions around distributor share or so higher cost. And I believe you may have agreed to pay slightly higher than what you usually do. So is that a one-off case? Or are you facing similar situations in -- is there a risk -- upside risk to your film higher cost assumption from a medium-term perspective?

I wouldn't like to get into specifics of Sooryavanshi discussion. I mean, these are ongoing discussions with our content partners, and they've happened before, they'll also happen in the future. This is part and parcel of our business. But your specific question on film hire, if you look at the film hire payout in Q3, you would notice, it's about 1.5% higher than the quarter in Q3 and 2019, '20, which is not a meaningful increase, 1.5% matters. But given the fact that we have this uncertainty about the other films can release, whether cinemas will have restrictions, in fact, a lot of states have had restrictions in Q3. In order to deal with these restrictions, in order to give comfort to our content partners, there have been certain films where we have extended slightly higher sharing to our content partners. But I must emphasize that this is a short-term measure. This is more of a tactical approach to ensure that we have a steady supply of films. As soon as we get into the next financial year, and fingers crossed, hoping that the COVID situation will soon come under control, we are very confident that we will go back to the pre-COVID film hire rate without any problem.

Understood. Final short quick one. Can you give us some color on how advertising revenue recovery was in the month of December? Because I understand that ATP and SPH has recovered very well, but when I look at full quarter's number for advertising, it is much below our December '19 quarter. So can you give a comparison of the month of December, where does this stand versus December 2019 months?

We are technically closer to about 50-odd percent of the overall quarter's revenue. And actually, in December, but slightly lower in terms of the quarter because October was fairly low for us. And these numbers really account for, in the big way, in November and December numbers. So from that perspective, these numbers are slated to go up much higher, once things normalize.

They're -- roughly about in December, they were -- advertising revenue was 50% of what was in the pre-pandemic period of December.

Our next question is from the line of Anurag Jain from Green Lantern Capital.

Am I audible?

Yes, yes, sir.

So again, just wanted some clarification on the cost with the expenses with. So compared to the quarter ending December '19, versus this quarter, how does expenses look like? How much down would they be if you can help us understand that?

If you look at our investor update, we've shared a full analysis of how the expense...

We have 9 months numbers there, but the 9 months this year contains 2 quarters of close, not the things not in your country. So that's why I was trying to understand quarter-to-quarter, there's -- most of the things were open in December '19 and this quarter as well. So if you can help us...

Q3 average fixed cost run rate, it's about INR 113 crores per month. That number was about INR 147-odd crores per month for the quarter ending December '19. So we are looking at around INR 30 crores, INR 35 crores lower cost per month basis in Q3 of this year compared to pre-pandemic.

Perfect. And there will be some -- slight increase, you said for this quarter, I mean, expenses as the full quarter of opening of the [indiscernible], I can use this number, right?

Yes. Because even in this quarter, our rental was still lower than our regular enter level. So there is some savings which will go away once things normalize. So that cost will increase, and there are obviously quarter -- this quarter was obviously partially operational because Maharashtra was shut for the month of October. As we have guided in the past, other than the occupancy cost on all other overheads, we expect, a 10% saving even when we go back to normalized levels of operations.

Perfect. Perfect. So we'll be, let's say, a 10% cost differential and 20% increase in different price involving ticket prices, what we are seeing...

That is correct.

Our next question is from the line of Nitin Shakdher from Green Capital Single Family Office.

This is Nitin Shakdher from the Green Capital Single Family Office. I just have a question -- 2 questions, rather. First is on do you think that the consumer sentiment has changed towards watching only large blockbusters in theaters like Spider-Man, 83, Batman coming up or Shamshera, Lal Singh Chaddha and avoiding regular content and only watching that later on OTT? Or what's the number -- research from the management say on that?

So we believe the consumer habits have not changed at all, as compared to pre-pandemic, yes, you're right, since we have opened after the second wave, the smaller Hindi films or the mid-segment Hindi films have not performed at the box office the way they were expected to perform. And as a result, there is this concern that maybe the mid-segment films or the smaller films will continue to underperform post-COVID. But if you look at the data closely, we've had, in October, a film called Doctor, which released in Tamil -- Tamil language film, which released in Tamil Nadu and other parts of South India. And it exceeded all expectations. And in fact, it performed at much better than pre-COVID level. It did something like INR 100 crores out of a box office, which for a Tamil film is a big benchmark. Now, this film is a mid-segment film or somewhere between small to mid-segment film. Just to note that this was not a case of fluke. There was another film called Maanaadu, which came out with -- again in Tamil with Simbu who's again a mid-segment hero. That, again, did terrific business at the box office. Before that, in September, October, a slew of Punjabi films overperformed at the box office. And all of this has not just happened in regional languages. If you look at Pushpa, which was dubbed in Hindi. Now, Pushpa, in Telugu was a big film, but in Hindi, it had absolutely no brand equity. Allu Arjun was a big star in Telugu cinema, also well known in south of India, has absolute no equity in the Hindi market. He's had no past releases, which are released in the Hindi belt. When I say Hindi belt, that including West, North and East of India, including, of course, the central part of the country. Allu Arjun has had absolutely no presence. So a Telugu film, dubbed in Hindi, released with zero marketing, because the confidence level of distributors and producers were so low that they invested practically nothing on marketing. Pushpa in Hindi has turned out to be a bigger hit than 83. It is approaching, it's almost cross INR 90 crores, it's approaching INR 100 crores. It's already in 6 or 7 week of its run. It's also available on Amazon Prime and it became available after 4-week window. But it needs to do well at the box office. So the point I'm trying to make is that not just in Tamil, Panjabi, but also in Hindi belt, smaller films, with non-heroes who are not established with marketing, which was nonexistent, films are doing INR 85 crores, INR 90 crores of business, which are leading us to believe that this could be the start of a new trend, even if we have 4 or 5 such films from Tamil, Telugu or Malayalam, the whole trajectory of the Hindi belt, Maharashtra, North and East and Central India, could change significantly. So answer to your question, in summary, I would say no. There is no change as far as customers are concerned. They view a film as a good film or a bad film. A bad film, no matter, whether it's a big production, a big star film will continue to underperform. A good film with a hero who doesn't have a brand equity, smaller production values will continue to perform well at the box office.

So worst case, let's say, a film like 83, which abruptly was stopped at theaters North belt because of the restrictions, now, if 83 were to be dubbed in Tamil or Telugu, would it show the same traction?

83, in fact, was dubbed in Tamil, Telugu, Kannada and Bengali. And unfortunately, did not perform well in the regional languages. Tamil was still better than the other languages. But overall, the performance in the dubbed languages was not so strong. 83, the bulk of business, the INR 102 crores sort of a business is done at the box office until now, and is still playing in theaters, has come from the Hindi language.

Okay. And second question is in relation to the high-margin F&B consumption, what has changed from the evolution that the SMB spends have gone down over the last 1, 2 years? In terms of consumer preference being changed, clearly, from a point of view of safety of not taking on markets and maybe avoiding tax during the COVID? Or any research on that, that you have seen?

the SMB spends have never gone down. Year-on-year, we have posted close to 9, 12-odd percent growth. This year has been phenomenal. After we opened, we've seen a phenomenal rise in SPH. And that clearly indicates that consumers are coming out for a holistic experience. They are wanting to try out. It's been -- and in a manner, it sort of reiterates what Kamal and Nitin have been making a point that cinema will stay and has a very unique position in the minds and hearts of consumers. It's not just about going and watching a film, it's about a holistic experience, and this is a testimony to that.

In our quarterly numbers, if you compare to pre-pandemic level, our SMB spend like we said, is up 28% over what we were doing pre-pandemic.

Sure. That could also be because of the new launches, right? 18 new screens added also?

No, no, no. This is -- that's got nothing to do with this. This is on a per consumer basis.

Okay. And how are the 18 new screens done in terms of the expectation of what they were supposed to do?

We just had, like I said, 1.5 months of operation, but all the screens are opened, have fantastic reviews. And I think, once we get a full quarter of operations, we'll be in a better position to tell, but all those screens have opened, have had great openings.

We'll take the next question from the line of Arun Prasath from Spark Capital.

So yes, want some precise answer this one on the ATP growth, usually, the high occupancy in South, also largely to the -- largely can be attributed to the one, craziness on the movie and also, the lowering ATP on the release week. But with the increase in the ATP for say Telangana or even eventually in Tamil Nadu, how do you see the lessening demand and how occupancy converges towards national average? Or how do you see that?

There's been absolutely no negative impact on occupancy. On the contrary, large numbers of people have come out and wanted to -- have been wanting to watch the film on Multiplex. Second, as I had said earlier, our recliners, IMAX, 4DX, all the premium formats within the cinema are also doing exceedingly well. They are the ones which are clearly seeing a higher growth in terms of occupancy, which clearly indicate that not only consumers are coming out and pricing is not a big concern. And these are also markets where pricing was artificially capped for a very, very long time. You need to understand, for the kind of experience PVR delivers to the point, again, that Kamal had made, our national ATP still is just about $3. So there is a huge headroom for growth there. And with consumers wanting this great five hour experience out of home, this still remains the most affordable and the most, I would say, premium formats in the country.

Okay. All right. That's -- Just one quick question. We see that there is no cash burn during the quarter. In fact, there is some cash generation as far as commentary, but the budget remains same on a sequential basis. Can you give broadly the reconciliation of the major line item?

Sorry. If you look at our net debt, net debt is actually lower than what we closed September quarter with. So we can discuss it offline, but during this quarter, like we said, we not...

I think the cash burn number that we were speaking about is from an operating level perspective, right? Once we improve debt repayment and everything, obviously, the cash balance number will gone down. But on an operating cash basis, on an operating expense basis, it's not the cash on top. That's the point we wanted to make.

No, no, that's right. Net debt reduction is largely again with the gross debt reduction, but the incremental cash that generated probably any working capital change, any CapEx, anything on that line?

Yes. So there is CapEx, which has obviously happened, I think, Q3 CapEx is about INR 27-odd crores of CapEx that we have done in Q3. And then, on top of that, working capital, in general has been positive impact on cash flow because as operations have come back, we've got tractions before than you face the vendor. So working capital had a positive impact on the cash flow.

Yes, and business as comes back, working capital will have a positive impact because the size and scale of business will move up. So that will have a positive impact on cash flow.

Our next question is from the line of Jinesh Joshi from Prabhudas Lilladher.

Sir, if I'm not mistaken, recently, the AP government passed 1 bill thereby made mandatory for cinema home screen sell the movie tickets through a government run online platform. So what I want to understand is that in other states, in South follow this route given the fact that this is going to minimize tax evasion? And secondly, what kind of impact will this have on our tie-up with BMS? Because now, our business with the BMS will get impacted and we have received some money for some tenants well. So do we need kind of repeat them? Or how will this arrangement actually work out?

AP government has come out with a bill and MAI, which is the advocacy body for multiplexes in India has filed a petition in the court against the decision taken by the government. Matter is sub judice, so we would not like to get into details. All I would say is that firstly, in Andhra, PVR has a very small presence. So in any case, the impact of those 2 theaters on the overall relationship with BMS or PTM or any other service provider would not be there. The other part of your question was whether this will impact other states? No, we don't think so. There is -- the reason why Andhra government has come out with this bill, and they've also taken another decision that they put a cap on the ticket prices, not for multiplex, but for the single screens, without getting into the rumors which are floating around in the marketplace, but we believe there is some sensitivity, which is more political in nature, which is a player. And we do think, after discussing this matter with the government at length, that the government is not in a position at this point to implement this sort of service. So while the government ordered us, say that ticket should be sold through the government portal but the fact is that there is no government portal. There is no team. There is no strategy, which has been deployed by the government department to have technology in place to have team in place to gather portal which can connect with all cinemas. So I think, in any case, implementation of this sort of decision will take many years, if not more. But to summarize, we filed a case against the government and matter is sub judice, so we would not like to get into further details.

Fair enough. And sir, one last question from my side. If I look at our presentation, we have given maybe pipeline for the month of Feb and March as well. I just have one question with respect to the pipeline. Do we kind of really believe that Gangubai Kathiawadi is expected to release in the month of February because if we look at Jan, it has been a washout because of rise in Omicron cases, and we have also seen quite a few movies having deferred their release date. So are we confident about the pipeline as far as the month of Feb is concerned?

It's a very good question. We've kept the dates intact because the producers have not come back and informed us of any changes in the date. But you're right. A lot of these films are expected to be pushed back. But at the same time, a lot of people have already announced the date. So for example, Akshay Kumar's next with Sajid Nadiadwala has been announced for Holi. In fact, today, Lal Singh Chaddha came out with an announcement confirming that they are coming out in April on the date which they had blocked along with KGF2. I think, the good news is that none of these films after having looked at the box office list of films that in October, November, December, none of these films, which are slated for release in the subsequent months, have decided to put any streaming platform directly. Even for films like Jersey, RRR, where the marketing was already ruling, and they had to push the film, cancel the release date at the last minute. Even such films after having invested a lot of money in marketing has decided to hold their films for a theatrical release. So I think that is a big, big positive. The negative is that, of course, depending on the COVID situation, there could be changes in the dates.

So sir, in nutshell, the segment of pipeline is tentative in nature. That is the correct, right?

A fair assessment, but I would also say that a lot of Tamil, Telugu, Malayalam, Kannada film are targeting Feb, release their films because they're not so much impacted by Delhi, Haryana being shut. So they are quite comfortable to go ahead with their releases even with part of North India market not being operational. So you would have releases, but these would be, by and large, regional films in Telugu, Tamil, Malayalam, Kannada.

Our next question is from the line of Piyush Sharma from Minerva India Under-served.

I just had a couple. For IMAX obviously had a screaming fourth quarter. And interestingly, it was better than even 2019 Q4. So then, when they had both Frozen and I think, Star Wars released. So just curious, what kind of tractions Spider-man had on viewership within premium formats in December for you guys? So maybe it will be helpful to know IMAX, 4DX, other streaming formats combined what percentage of December revenues for you versus, say, the full last calendar quarter of '19?

We won't have that data readily available, but Kamal, would you like to comment broadly. I have one data point which I could share, that IMAX occupancy, if you were to compare between December '21 and '19 pre-COVID, went up significantly, up by about 30%. So earlier, it was about 30%, 31%. We were operating at about 40% in December alone, and that's the fair month to look at. So clearly, IMAX occupancy as well as ATP, both took a very, very good jump. We were up on ATP by about 40-odd percent and occupancy by about 30-odd percent.

So just to get this right, you said 4Q '19 or let's say, the pre-pandemic, you used to see occupancy of close to 30%, December, alone was 40%.

December. I was saying only December. I need a disclaimer that I have numbers for the month of December.

Got it. Got it. And then secondly, just curious, roughly what was Maharashtra SPH versus your overall SPH in the pre-pandemic world?

We don't share specific numbers for each territory in each market. We would not like to share specific data. All we can say is similar growth is what the rest of the market.

Because I'm just curious where -- what were the drivers? And what are the offsets that took your SPH up nearly 30% versus Q3 '20, given what I would at least hypothesize that your biggest market or one of the biggest market on the SPH side was practically shut because SMB was not allowed inside. So I'm assuming, that's where most SMB gets consumed. And yet, SPH goes up 30%. I'm just curious, what are the drivers exactly?

So first of all, when Maharashtra was reopened, SMB was allowed to be consumed inside the cinemas. Secondly, Maharashtra is not our biggest market. If you look at our stream rollout circuit now, the South is our biggest market, followed by Western region and North is equally good market. And across all markets, we saw growth at the respective SPH levels, which most of these markets did. Some of these markets did slightly better than others, but Maharashtra did so well in the pricing growth as compared to the South and North markets.

Nitin, I would strictly talking about SPH. Did you say that your southern market...

Yes, I'm talking about SPH as well. I'm talking about SPH as well.

Okay. So you're saying that Karnataka had a higher SPH than Maharashtra. Is that correct?

In fact, Maharashtra is the best. In fact, if you look at the comparable numbers, when you see about a 28% SPH, right, in fact, Maharashtra did exceedingly well. I can only say the SPH growth in those markets was equal or better than rest of the others.

Our next question is from the line of Yogesh Kirve from B&K Securities.

[indiscernible]...

I'm sorry.

Sorry, Yogesh, you're not clear, we can't hear you.

I hope this is better.

Sir, if you're on a speaker mode or hands-free mode, just switch it to handset and speak.

Yes, I'm on handset now.

Okay.

Yes. Sir, this quarter was quite skewed towards the high-profile movies, Hollywood as well as the Hindi. So when in FY '23, we will have a full slate of movies of mid budget, small budget kind of movies. So will we be able to replicate same for SMB and ATPs in that year?

Yes. Largely, yes. Because overall, if you see the month, we do get a 1 blockbuster or a 2 blockbusters along with some, as we call it, the popular brand. So we believe that this is definitely possible. We could have a big regional film. And given the fact that we are equally sort of solid in all the 4 regions, the regional content also helped us hugely to boost up our ATP and SPH. So this is very much on the cards and consumers have already accepted this pricing. So there is absolutely no doubt that we will continue on the same journey.

Sure. Fair enough. Second question I have is more of a clarification. When you talked about the cost savings on the fixed cost trend, the 10% indicated number. So this is fixed cost excluding lease and CAM, right?

That's right, yes. That's right.

Ladies and gentlemen, that was the last question. I now hand the floor back to Mr. Ankur Periwal for closing comments. Over to you, sir.

Thank you, everyone, for your time, and thank you PVR management for answering all the questions. In case you still have any questions you may get back to us or to the management, and we'll try to address that. Nitin, would you like to add any closing comments?

No, I'd just like to say -- to thank everyone for taking time to attend the call. And if you have any follow-up questions, please feel free to reach out to us. We'll be happy to answer them on a one-on-one basis. Thank you.

Thank you very much. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.