India’s theatrical entertainment sector has witnessed strong growth despite the rapid rise of OTT. Now the multiplex industry is eyeing growth beyond the metro cities. PVR Inox has launched Smart Cinemas, a new format aimed at bringing an affordable cinematic experience to Tier III cities altogether. The company is targeting 1,000 new screens over the next five years. PVR INOX Managing Director, Ajay Bijli speaks to Times Now Digital on the expansion plans for the company. Given below is a short excerpt of the entire exclusive interaction.

Q. What led PVR INOX to focus on Tier-III cities and the launch of this plan now?

A. Growth in smaller cities, that’s the concept of SMART Cinemas, which we believe will be something that will give impetus to the company now. The first one is opening in Mazaffarpur, which is in Bihar…As I said 300 cities have been identified. We will be opening these SMART Cinemas shortly.

Q. From what I understand, tickets at SMART Cinemas are expected to cost roughly 40% below the average metro ticket price, which is around rupees 175. How will the economics work at this price point?

A. Well, whether we’re doing a high-end cinema like Director’s Cut and Insignia that we do, or whether we do a SMART Cinema, first of all, the capex itself is not more than 1.9 crores per screen, as opposed to a normal cinema which is 3.5 crores a screen. I mean, Directors Cut and all goes five crores a screen. So I think for us, every rupee that we invest, our return criteria of getting the money back in three or maximum four years remains the same. Our EBITDA margin at a unit level basis remains 20%. So because our opex and our capex is going to be much lower, the input cost itself is going to be lower. Therefore our return criteria doesn’t change. Also, all our deals are done on revenue sharing basis.

We are not going to be giving any fixed rentals. Also, you must have read about our FOCO model, where the entire investment is going to be made in certain cases by the developer. In certain cases, it will be an asset-light model, where a large amount of investment will be done by the developer, but the P&L will be on our side. So I think keeping the costs in mind, even the number of people that we employ will be less because the food will not be cooked in so many of our places.