Multiplex operator PVR on Monday said it has cut salary across various levels, laid off employees and deferred increments during the lockdown to mitigate adverse impact of COVID-19 on the business. The company said at present it is not generating any revenue from exhibition business and related activities as cinemas across the country are shut following the directions from the regulatory authorities.
According to the company, closure of screens during the lockdown will have a significant negative impact on profitability and liquidity. PVR has taken measures to reduce its personnel cost, including salary cuts across various levels in the organisation during the lockdown along with "reduction in headcount by way of layoffs/retrenchment" to mitigate the adverse impact of COVID-19 on the business.
Moreover, the board of the company, in its meeting held on Monday has also approved plan to raise Rs 300 crore through rights issue. "Since Cinema Exhibition is the only business segment, company is currently not generating any revenue from admissions, food and beverage sales or other revenue and cash flow from operations," said PVR in an update.
Beginning from March 11, PVR started closing its screens in accordance with the order passed by various regulatory authorities and within a few days most of our cinemas across the country were shut down, it added. The company will continue to incur committed cash outflows, including employee salary pay-outs, other overheads as well as payments for older working capital.
"This has and will have a significant negative impact on profitability and liquidity during lockdown and even thereafter till business comes to normalcy," it added.
Further, once the cinemas are re-opened, we may not be able to run our cinemas at normal capacity utilisation levels on account of social distancing measures that cinemas may be required to follow as well as health concerns that the patrons may have, the multiplex operator said.
"On account of this, our revenue and cash flow generation may be impeded even once we are allowed to restart operations," it added.
The company has also deferred decision on on increments to reduce its cost, it added. PVR has also written to developers for waiving rental and CAM (Common Area Maintenance)) charges for the lockdown period. It is in discussion with developers for reducing rentals post re-opening and has invoked force majeure clause in its agreements with them.
Besides, the company has raised additional borrowings from existing bankers to shore up liquidity. "As of March 31, 2020 the company had cash and bank balance of Rs 316 crore. As on June 7, 2020 cash and bank balance is Rs 227 crore (including undrawn bank lines)," it added.
Over reopening of theatres, PVR said that the government has come out with a phase wise schedule. In these guidelines cinema halls have been kept in the third phase of re-opening, where dates will be decided based on assessment of the situation.
"We are in continuous engagement with all regulatory authorities and hope to receive the necessary permissions for restarting opening in the near future," it added.
Currently PVR operates 845 screens in 176 properties in 71 cities.
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