PVR INOX Ltd (NSE: PVRINOX) Q4 2025 Earnings Call dated May. 12, 2025
Corporate Participants:
Ajay Bijli — Managing Director
Gaurav Sharma — Chief Financial Officer
Sanjeev Kumar — Executive Director
Analysts:
Harsh Shah — Analyst
Abneesh Roy — Analyst
Kavish Parekh — Analyst
Sameer Gupta — Analyst
Jinesh Joshi — Analyst
Unidentified Participant
Umang Mehta — Analyst
Arun Prasath — Analyst
Abhishek Kumar — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day, and welcome to the PVR Limited Q4 FY ’25 Results Call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star than zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Harsh Shah from Axis Capital Limited. Thank you, you and over to you, Sharsh.
Harsh Shah — Analyst
Yeah, thank you, Navia. Good afternoon, everyone, and welcome to PVR INOX Limited Q4 and FY ’25 post-results earning Call. The call will start with brief management remarks on the earnings performance, followed by an interactive Q&A session. PVR INOX management will be represented by Mr Ajay Digvi, Managing Director; Mr Sanjiv Kumar, Executive Director; Mr Gaurav Sharma, Chief Financial Officer; and other senior management personnel. Over to you, Mr Rajay, for your initial numbers.
Ajay Bijli — Managing Director
Thank you. I’d like-to-like to invite you all to discuss the audited results for the quarter and the 12 months ending, 31 March 2025. We have uploaded the earnings presentation and the results on our company’s website as well as the stock exchange’s website earlier today, and I hope you had a chance to review them. The box office in FY ’25 witnessed an uneven release slate across quarters resulting in noticeable gaps in content flow and fluctuations in theatrical performance.
Performance of Bollywood and Hollywood films was below expectations, leading to a 9% drop-in overall gross cost box office collections of the company. In the box office dropped by this year due to 14% fewer releases, no major super star firms and several postponements. Hollywood collections were down by 28% due to the impact of previous year’s strike and weak lineup of the tentpoles. On the other hand, Hindi dubbed collections surged by over 150% with titles like Pushpar 2 and resonating nationwide showing how audience states are shifting towards big and India stories.
Was the biggest hit of the 4th-quarter, grossing around INR700 crores at the box office, followed by, Vasu Tunam, Sky Force and. With lifetime collections of INR125 crores, Empuran became one of the highest-grossing ever. In contrast, starring Salman fell short of expectations and INR30 odd crores. We welcomed 30.5 million guests across our cinema in Q4 FY ’25 and 136.9 million guests in FY ’25. In terms of the financial results for the quarter, the following numbers were calculated.
After adjusting for the impact of India’s 116 on lease accounting. Total revenue for the quarter was INR1285 crores. EBITDA was INR25 crores and PAT loss was INR106 crores as compared to revenue of INR1 to INR90 crores, EBITDA of INR35 crores and PAT loss of INR90 crores in the same-period last year. Despite industry-wide headwinds stemming from a limited slate of Hindi and initial users, the company remained steadfast in executing its strategic priorities during the year.
We transitioned from managing footfalls to proactively manufacturing them, a shift that underscores our commitment to innovation in driving demand and enhancing audience engagement. Our strategic focus on curating re-releases delivered strong results, contributing an incremental 7.1 million footfalls and approximately INR124 crores in gross ticket collections during the year. With an aim to making cinema going more accessible and habitual,
FY ’25 saw the successful execution of four cinema levels days and one National Cinema Day, offering tickets such as 99. We have also launched Blockbuster Tuesdays, a weekly initiative offering tickets at INR99 or INR149 rupees. Despite content challenges, we balanced value promotions with strategic pricing on big releases, maintaining a steady ATP of 259, Same as previous year. The company remained committed to disciplined cost-control. On a comparable screen basis, total fixed costs were nearly flat at just 0.6% year-on-year growth. In fact, over a five-year period from FY ’20 to FY ’25, on a per screen basis, the company’s total fixed-cost per screen has increased by a CAGR of only 0.8% as compared to the CPR inflation rate of 5.3% in the economy. We’re actively transitioning towards a capital-light growth strategy. We have already signed 23 cinemas with a total of 101 screens under the capital-light model, most of which are expected to become operational over the next 12 to 24 months. In recent weeks, we inaugurated two new cinemas with nine screens under the model, one in and other in Raipur. As the strategy scales, we anticipate a significant reduction in new stream capex intensity, reinforcing our focus on efficient and sustainable growth. In-line with our focus on profitability growth, we made the strategic decision to exit 72 underperforming screens and opened 77 new screens during the year. We’re pleased to share that we continue to strengthen our balance sheet with net-debt reduced from INR1,430 crores in March 2023 to INR952 crores in March 2025, a significant reduction of INR478 crores since the merger. This reflects our sharp focus on capital efficiency, disciplined cost-control and proactive cash-flow management even amidst content volatility. The year ahead looks very excited with potential Bollywood tempos like and Apr, War II, House 5, Jolie LLB III, Delhi 5, Thama Alpha, among others. Regional movies also have a robust lineup with Thug Life,, Raja, Toxic and Kantara 2. Among other major titles from Hollywood are Mission Impossible, final reckoning, Fantastic Four, Formula 1, Balerina, Superman, Jurassic World, the Conjuring Avatar 3. Our current screen portfolio stands at 1743 screens across 352 cinemas in 111 cities in India and Sri Lanka. But I’d like to open the platform for any Q&A. Thanks once again for joining.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles., the first question is from the line of Abneesh Kumaroy from Nuvama. Please go-ahead.
Abneesh Roy
Yeah, thanks. My first question is on the Hindi movie content. So last week, when the geopolitical risk was there, we did see one Hindi movie shift to OTT. So if you could discuss the — are there more such examples or it was a one-off because of the geopolitical issue at that time? And the Hindi pipeline, if you see last few quarters always we are seeing bunching up and then weeks when no content is there. Are — is that issue getting resolved in terms of proper planning of the pipeline for the Hindi?
Ajay Bijli
Yeah. I mean, you know all these movies scenarios for War II, Household 5, Jolie LLP and all the various movies I basically talked about just now. They are all on-track to come on the big screen. We also started-off very well with Raid 2 before that K32 and Jard also released. So I think the momentum of Hindi movies has been very good and people are coming back to watch the big screen and even the industry believes that the big screen is the place where the movies must be released be released.
That was a one-off that happened and the matter is subsidious we last-minute decided to release a movie which was already being promoted at the cinemas for the last two months so we took the matter to court and we’ve got to stay against its release on the OTT platform and the matter is subjective. So at the moment, I can’t speak any further on it.
Abneesh Roy
And second question is on the expansion plan, two-parts to this. One is the FY ’25 net addition was hardly anything, five screens only. And now plan is to open say 100 to 110 screens in FY ’26. Could you tell us in terms of closure FY ’26, what’s the current number looking like? And second is in terms of your new initiative of low capex plus management contracts, what has been the initial response of the developers and any tweaking needed what is the feedback if you can share on that?
Ajay Bijli
Thank you yes. You see the screens that we closed are like any other retail business. Ultimately, if the malls become old or if the shopping center has — doesn’t have the infrastructure of lifts and escalators and there is no tenant left and newer properties and newer malls are coming up at the vicinity or our lease has come to an end and we don’t see any revival of that property. This is a very normal thing to do for any retail business and that’s why these 72 screens were exited and that has also saved INR8 crores of EBITDA loss that these cinemas are making.
So I think that’s a — that’s a positive and it will be ongoing. And even in this environment to open 77 screens, if I can say it myself, I think is a very positive step for the company because these are brand-new 77 screens in great catchments, great locations. Even — so this year also about 110 all screens will be there. As far as the exit risk is concerned, you know, we don’t have anything just now a plan. So we will continue. But if there are — if there is something that comes up which is not viable and is not value-accretive, that will be removed from the portfolio after taking all the legal precautions. As far as screen growth is concerned, I think the brand has got recognition in various parts of the country. And I think hospitality industry has done this since time memorial franchise operated and company-owned model and where the brand earns the management fee. So we are growing by that model.
And also in certain cases, there is a large contribution from the developer himself. So recently, we’ve opened an cut in the in DLF, Mall of India, Mall in and that’s also been with the a significant contribution from the developer. So I think we will be doing all three things. We will be doing the Focal model, we’ll be doing asset-light models and also wherever we do get an opportunity to where the — all the things are in-line, rent is good, the location is good and we can even spend our own capex as well.
But overall, the capex intensity will come down without compromising on the growth trajectory.
Abneesh Roy
Sir, one follow-up and that is the last. You have given guidance for new scheme addition in terms of the capex light model and management contract, what is the number you have in mind currently? It may not be a state guidance because the talks are ongoing, but what will be the intent that most of the new expansion will be essentially through these two routes and any existing properties also where say renewal is going to happen, do you think that there could be substantial number from there also?
Ajay Bijli
I mean, I don’t know exactly. 23 properties we have signed and 110 screens are coming in the asset-light model and the FOCO model. But coming up, there are some properties which were signed earlier, which are opening this year. So Gaurav, you have the number of how many are — there are opening this year are asset-light and how many are the normal model that we have.
Gaurav Sharma
I think the 1111 screens, 110 new screens that we’ll open this year, majority of these screens will be under asset-light. I think it’s very hard to put a number to that but it will be a combination of asset-light and management contract. We have already opened three cinemas, 20 screens under this model in the first month of this financial year, one in Jabalpur, one in model and one screen director in Noida, which is into an asset-light model. So you will see bulk of the screen this year will be under that model. Right.
Abneesh Roy
So thanks. That’s all from my side. Thanks.
Ajay Bijli
Thank you.
Operator
Thank you. The next question is from the line of Kavish Parik from D&K Securities. Please go-ahead.
Kavish Parekh
Hi, thanks for the opportunity. My first question is on your expansion opportunities. So over the past few quarters, we have laid out plans to expand via the asset-light models. However, no new screens were opened in 4Q. So were there any execution issues that seem to have emerged in this new model? And given the weak footfalls over a slightly longer period now, would it Impact your ability to ensure that developers are wanting to work with us and incur capex on their books? That was my first question. I’ll take the second question later.
Ajay Bijli
No, I just want to get some clarification on the first question. We’ve opened 77 screens and just in the first month itself, we’ve opened 20. So we are not seeing any challenge in opening screens. Where do you — where are you seeing a challenge here?
Kavish Parekh
No, so I understand that fourth — so as an end of nine months and as on end-of-the financial year, we had opened 77 odd screens. In the 4th-quarter, particularly no new screens came up. So I think that was on account of delays yes.
Ajay Bijli
Those got shifted to just in the first month itself, we’ve opened 20, the ones which were to open in the last quarter due to nothing on execution, but sometimes licenses take time. So due to licensing issues, they got delayed by one month.
Kavish Parekh
So understood. And given the footfalls, given that the footfalls have remained weak over a slightly longer period now. Do you think this has an impact on developers’ willingness to work with us and inter capex on their books?
Ajay Bijli
No, there is — I mean long-term, everybody realizes this the post-COVID period is a temporary period. Everybody realizes in the — in the Indian’s film fraternity as well as the consumer that in the — it’s a matter of time. In fact, this year itself, people will come back to the cinema. They are coming. Already we got 137 million people coming to our cinemas. It remains an integral part of any mall to generate footfalls. So these are temporary dips,
But everybody believes in the long-term of potential of this format of multiplexions in a country like India with 1,800 films get released every year and pre-COVID close to-1 billion tickets used to get sold. So I think this format of going out and watching movies on the big screen is not going anywhere and that reality is not lost on anyone.
Kavish Parekh
Understood. Understood. My second question is on your debt reduction plan. So most part of the year remains separate with the exception of a few movies that would do well sporadically and I understand the expectations for the next year, year are high. And the anticipated sale of certain key properties was to significantly aid deleveraging efforts, but those plans have been pushed for some quarters now.
So could you elaborate on the revised timeline and strategy for these monetization initiatives? How do you plan to balance operational recovery with meaningful debt reduction in the, say, near-to-medium term?
Ajay Bijli
You., would you like to answer that?
Gaurav Sharma
Sure. So even in last financial year, despite the volatility in content and pressure on earnings, we were able to reduce our net-debt levels by INR340 crores. We took various initiatives during the year in terms of aggressively expediting recovery of security deposits for properties that we exited targeted collecting GST tax refunds from authorities, also renegotiating terms with our creditors. As a result, we were able to sort of cushion the impact of operating cash flows
And we were able to achieve a INR350 crores reduction in our net-debt levels. I think going-forward, with uptick in earnings and in increase in occupancy levels, we will have significant operating cash-flow and the capex intensity in the business will come down as we transition towards the asset-light model. As a result, the operating cash-flow from the business will be more than enough to take care of our repayment obligation and achieve a further reduction in net-debt levels.
As far as your question on monetization of assets is concerned, I think we are very careful about making sure that we get the right value for the assets that we own in our balance sheet, they are high-value properties. And given that the business was organically generating sufficient cash-flow, which was deleveraging the balance sheet, we will be very careful and at the right time at the right value will make those decisions?
Kavish Parekh
Understood. Thanks a lot for that. The last question from my side is that on the increasing adoption of asset-light mortgage, what impact do you foresee on overall margins? And as such properties constitute a growing share of your portfolio. What level of margin enhancement do you anticipate and over what timeframe? And what is the estimated capex for FY ’26? Thank you.
Ajay Bijli
Okay. So I think in near-to-medium term, we will not see a material impact on the margins because we have an existing portfolio of 1,700 screens, which is on the lease model. As we are adding 60, 70 new screens every year-on the new model, overall margin impact will be immaterial, but overall cash-flow impact in near-term is going to be significant. In terms of our capex, we expect that financial year ’25, ’26, we will incur a total capex of roughly in the range of INR400 crores to INR425 crores, which will be split across new projects.
We will be spending slightly higher on renovating our existing high-value properties as well as maintenance and IT-related capex.
Kavish Parekh
Understood. Thanks a lot. That was it from my side. Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference. Please limit your questions to two per participant. We take the next question from the line of Sameer Gupta from IIFL Capital. Please go-ahead.
Sameer Gupta
Hi, good evening and thanks for taking my question. I have two. So firstly, sir, in your observations, how do you see the intensity from the OTT players on content buying currently? Is it coming down? Is the average window between therical and OTT releases increasing? Any sense on that would be helpful. Thank you.
Ajay Bijli
Well, you see the window is eight weeks just now and it is only going to increase. If you look at the recent announcement by even Anil Khan’s new movie Sitar is. In fact, he’s not releasing it on OTT at all. So I think people — the content makers have, you know, acknowledged the fact that if you make a movie and release it theatrical and there are end number of examples last year and this year has also started-off with RAID 2 and proving that there is no upper limit to how much a movie can earn.
So the biggest monetization window continues to remain theatrical, which was there pre-COVID and it’s now as well. And then after that it goes — can be then monetized by going to various windows. And so that’s how the journey of any content happens. And OTT platforms, of course, are also very careful now that they would like to see a theatrical performance of a movie before they buy. And because they use — they were buying a lot of movies because shootings have stopped in the middle and also they were not being able to create TV shows.
Now if you look at lot of intensity of TV shows have come, which used to be what used to be seen the long-form storytelling on OTT platforms, movies were always going to the big screen. But now after they see the theatrical performance, they know exactly how much to bid for the movie. So it works both for the OTT players as well as for the film industry, because if your movie is small, but has hit a jackpot and done very well, now you can charge not just on the base of your cost of production,
But you can charge on the base for the box office collections and there are a number of studies which have shown that movies which get downloaded on OTT platforms are the ones which have done — had a very good theatrical run. There’s certain recall value that comes when a movie does well. So I think Water has found its own level now and this — I think this whole question itself has become OTD now over-the-top because what every single platform has got its own place in the sun.
Sameer Gupta
Got it. Thanks for the detailed answer. Sir, second question is on the FOCO model or asset-light model. I understand that this question was asked by the previous participant, but I have a slight different version of this. Now suppose you are making INR100 EBITDA in the normal model. What is the anticipated EBITDA absolute amount that you will learn from this new model? So I understand your revenues will be lower, but you will earn a management fee.
So overall EBITDA might be on the lower side. So just getting a sense on those numbers.
Sanjeev Kumar
Sure. So it depends on what model is adopted. If it’s a management fee model, then we just get a share of overall revenues and we don’t get to consolidate the P&L in our books. In case of asset-light where there is a joint investment by PVR INOC and our development partner there we have some sort of revenue-share arrangement in view of the investment made by the developers. So — and it will vary from case-to-case depending on the quantum of investment.
If it’s a 50% capex investment, then the sharing will be different versus it’s an 80% capex investment. So there is no straight answer to that. But yes, you know the margins — EBITDA margins will be lower versus a classic lease model simply because you need to share something in return of the investment need by the.
Sameer Gupta
Got it. But this is like the finance cost Will come above the EBITDA line, something like that will happen probably.
Sanjeev Kumar
It will be structured in the way like any other rental arrangement is, it will be in the form of revenue-share that gets paid out as rental cost to the developer over the period of 15-year lease that we typically have for the cinemas that we open. But any ballpark number like just an example of the already 20 screens that you have signed, what is the kind of absolute EBITDA versus had you signed it in a class or versus if that was a classic model.
We have signed two cinemas, one in Raipur and Jabalpur under Foco, which is a management contract where I think the revenue-share is in the range of about 8.5%, 8.5% plus some of the fee which accrues to us on account of the IT services, right. So effectively about 10% of the revenues — revenues is what we end-up getting.
Kavish Parekh
Correct.
Sanjeev Kumar
So that is basically the that is the Foco model. When you come to an asset-light model, you have to think about the REITs and then combine the model with us. So in a REITs model, which is a real-estate investment trust, which most of the developers in the country basically end-up pursuing. So the yield is on the basis of REITs on the investment that the developer partner makes.
Sameer Gupta
Got it. This is helpful. And this revenue-share is on entire suite of revenue, including ad income, et-cetera. Apart from the
Sanjeev Kumar
There are two models out there like in Raipur, Raipur is an ad-free model. So there are no ads instead of the ads, there is an additional show that the developer partner ends up running. So we are basically making the fee out there. And in case there is ad on the ad revenues, we take 35% of the revenues.
Sameer Gupta
Got it. This is helpful, sir. Thank you. I’ll come back-in the queue for any follow-ups.
Operator
Thank you. We take the next question from the line of Jinesh Joshi from PL Capital. Please go-ahead.
Jinesh Joshi
Yeah. Thanks for the opportunity. Sir, I just want one clarification. I mean, out-of-the 100 to 110 screens that we plan to open in FY ’26, how many of them will be on Foco model because ultimately those three will not get consolidated into our P&L and the actual opening number could be slightly lower. So can you just share the FOCO account for FY ’23, sir.
Ajay Bijli
Okay, got it. And maybe you can give any color on that.
Sanjeev Kumar
I can tell you that bulk of more than 50% of the new will be under the capital and it will be a combination of and a joint investment that across. Many of these things are infrastructure sort of getting signed, the agreements are getting finalized. We’ve provided in our investor update also that about 46 screens across 11 cinemas, we have signed under the model and there are 55 screens across the world that have been put into the asset-light models.
So and typically it takes about 12 to 18 months for all these screens to get on out and all the licenses in-place and they open up. So it will stagger over the period of next 18 months and they will open as per their respective dates.
Ajay Bijli
So in terms of a very base guidance, it will be like a, 30% 70. So 30% of the screens would not be accounted for in our balance sheet because they will be under the FOCO model and 70% would be the ones which are effectively getting accounted for it in our book.
Jinesh Joshi
Got that. Got that. And sir, one bookkeeping question. So while our other income is up by about 40% in this quarter and we have stated in the footprint that it is predominantly due to income from distribution of movies like Sky Force, etc. But if I look at our movie distribution and sprint cost, that is down 10% Y-o-Y. So can you please explain the reason behind the cost-reduction when the income is up quite substantially?
Ajay Bijli
See there are various elements in the distribution income. You know, know, we get to have pure revenue-share from the proceeds that we collect like there is other elements around marketing promotion, et-cetera. So while you’re seeing a 40% uptick in the movie distribution revenues, but no, on the cost side, we have been able to control cost in a meaningful manner and there is almost a 10% reduction on the movie distribution cost.
Jinesh Joshi
So is this a new normal? I mean, I understood what you’re trying to convey, but the margin this time around on distribution appears to be quite high. So is there any change in terms which you would want to highlight or this is something which is which is kind of slightly one-off in nature.
Ajay Bijli
I think we should look at the distribution business and rather the entire exhibition business, the right way to look at it would be on an annual basis. There will be quarter-on-quarter variations because this is dependent on lineup of films and the rights that we get for distributing certain films in certain quarters. So if you look at overall increase in revenue from other operating income, which is largely distribution income.
On a year-on-year basis, the distribution income is up by 70% and so is the distribution, movie distribution and print charges. But quarter-on-quarter variation will always be there.
Jinesh Joshi
Got that. Sir, just one small clarification from my side. I think under the asset-light model, I mean, we have mentioned that the developer funds the majority of the capex and perhaps it is compensated by the MG and rep share. But do these properties also get capitalized on the balance sheet as ROE or how does it work-out?
Ajay Bijli
So the FOCO model, we don’t capitalize because there is zero investment from TVR. On asset-light model, we only capitalize the capex that we invest in the in the property. As far as the lease rentals are concerned, you know they are capitalized as per IndAS 116 lease accounting where the rentals are — the discounted rentals are recorded as ROU assets on the balance sheet and there is a corresponding lease liability that’s created on the liability side on the balance sheet.
Jinesh Joshi
Got that. Sir, just one small clarification. The ROU figure that has fallen from ’24 to 25, that could predominantly be because of the closures, right,
Ajay Bijli
Because green closures. That’s got that.
Jinesh Joshi
Got that. Thank you so much, sir. Thank you.
Operator
Thank you. We will take the next question from the line of from YES Securities. Please go-ahead.
Unidentified Participant
Hi, team. I just had a question regarding your FOCO model. So you mentioned that the revenue-share will be around 8.5% of the revenue. But is there any incentive in terms of — related to the performance of that particular screen? If a screen does particularly well, then is there an incentive of higher revenue-share?
Ajay Bijli
It’s covered up in the percentage itself, the percentage remains consistent. So effectively, if you look at the success rate in terms of the proposals that come to the table, so it’s about 20%. So if there are 10 people who end-up approaching us for a Foco model, only two get selected because there are very strong guardrails around the — around the brand, which we end-up working around. Unless the model is something that works for our development partner and us, we don’t end-up picking it up.
So it is not a straight-up franchisee model. While we Call-IT FOCO, which is franchisee-owned company-operated, the model is more like DoCo, which is developer owned company-operated model. And in this model, the feasibility studies are carried out on a very stringent basis where you know, there is no upside or a downside to the percentage it’s getting covered in the percentage itself. So there is no sweetener out there in terms of seeking a higher percentage at the as well.
Unidentified Participant
Understood. And my second question was on the Hollywood side. So Q4 also had decent light up in terms of lineup in terms of Hollywood movies like Captain America, then we had Snow White. And however, the box office collection for these movies was pretty low. And given that there is a good amount of movies lined-up on the Hollywood side for the coming two quarters, what kind of expectations do you have in terms of revival in footfalls for the Hollywood side?
Sanjeev Kumar
Kamal, would you like to take that question? This would be a strong year for Hollywood and if you look at the advance that we’ve had for Mission Impossible eight, which is coming out on 17th May that’s an indicator of things to come. Fortunately we have a lot of sequels, films from big franchises. Marvel has just delivered Thunderbolt really well so our expectation from Hollywood films is extremely buoyant this year.
We are feeling extremely positive. And by the way this is the same feeling which the entire world has including the North American box office because they are totally dependent on Hollywood films. There is buoyancy all across in the entire world.
Unidentified Participant
Understood, sir. And if I may just squeeze in one more question. On the — for the Q until now, how has been the box office collection so-far?
Ajay Bijli
Typically we don’t make forward-looking statements but if you look at the global box office that’s tracking about 70% higher than last year’s same-period in India, if you look at the first-quarter year till-date similar numbers.
Unidentified Participant
Got it, sir. Thank you so much for answering my questions. And all the best.
Operator
Thank you. We take the next question from the line of Umang Mehta from Kotak Securities. Please go-ahead.
Umang Mehta
Yeah. Hi, thanks for the opportunity. My question was on the cash balance. So while we acknowledge that gross debt has come down, any specific reason why we are accumulating cash, especially since incrementally capex is expected to decline?
Sanjeev Kumar
So as a strategy, Umang, we maintain a certain cash reserves in our balance sheet given the fixed-cost heavy nature of our business. You know, a lot of work has been done in terms of expediting collections across all our receivables. There’s been a lot of work around working with the ticket aggregators in terms of advances on convenience fee. And as a result, quarter-four, we saw a significant buildup of cash. We will continue to be conservative in terms of making sure that liquidity levels are healthy,
Given the recent volatility in the last couple of years we have seen in the business when there are gaps and months when the box office has not performed as per the expectation. So overall, I think the net-debt and the cash levels will — net-debt levels will continue to come down. They will obviously quarter-on-quarter variation. But on an overall year-on-year basis, we will continue to see a reduction in net-debt levels and a healthy cash balance sitting in the balance sheet.
Umang Mehta
Understood. And the second related question was on capex. So you mentioned that it will increase to INR400 plus because you’ll be renovating more than what you did in last year. Would it be possible to split the capex in maintenance and customer capex? That’s it. Thanks.
Ajay Bijli
And see I think broadly, we will spend roughly INR250 crores to INR300 crores on our new projects, which will include projects which are currently under fit-out and will open in the next few months, plus giving advances for new handovers that we take for and the balance we intend to spend across renovations, maintenance — maintenance of our existing circuit as well as IT-related capex.
Umang Mehta
Got it. Thank you so much and all the best.
Ajay Bijli
Thank you.
Operator
Thank you. And we take the next question from the line of from Green Age Wealth. Sir, please go-ahead.
Unidentified Participant
Yeah. Thank you for the opportunity. My first question is, this 1,800 movies a year, this number has been probably there for the last 10 years, but has the number of films who can do good at box office like that number — has it stabilized, like it’s been on a downtrend, but has it stabilized? So that’s question number-one. And question number two is, sir, if you can give some idea how these Bollywood content creators are thinking because see, how much ever we may say does not affect this Bollywood boycott thing is probably big.
And we saw this during the war period also that there are so many Bollywood actors who are either — like people do point out their pro-Pakistan behavior or things like that. So is that realization finally dawning upon that they’ll have to give up their old ways, probably figure out new things? Any comment you can make on this part?
Ajay Bijli
And to your first question, there was a significant drop-in mid-sized and big Hindi firms post COVID and in fact that number has been improving gradually year-on-year basis that number has been inching up. Last year was we had in terms of quantity of films, decent number of films, but unfortunately, we didn’t have enough big films. We had midsized films in small films, but we didn’t have enough big films.
But overall quantity was — and this year, quantity is a little better and the big films, sequels, mid-sized swims, sequels again, again that number has gone up which is making the outlook very positive. If you look at the April and May period, May period till now films like Jard K32, Raid 2, they have done extremely well at the box office. And of course, there is a general positive sentiment for Hindi films across the country. Your second question again because Hindi films are stabilizing.
So this is one industry where actors and directors and celebrity producers are constantly in news, media is very keen, there is a lot of curiosity around what celebrities think and their viewpoint on various aspects of social life, things which are happening at geopolitical level, media is very interested to know that and you know with this oversupply of views and information, often there will be missteps. So I think that’s part and parcel of the way media operates, the way celebrity culture operates.
But its impact on our business are not too much. And then there was this you know about Bollywood, people wanted to sort of not support Hindi film actors. But no, that’s been long dead. I don’t think that issue is there anymore. And I don’t think there’s any impact of any views actors have on our business?
Umang Mehta
Okay. Okay. Okay. That’s very clear. And my last and second question is, sir, on the cost side, we have done quite well last three years. What line-item of the cost do we still have some levers like will it be the trends or will it be the CAM or what line-item still have some levers left for us on the cost side?
Ajay Bijli
Yeah. So I think you know we continue to be working across all line items in our P&L to control cost. That’s what is fully under our control unlike content quality and other things on the revenue side. You know, rent and common area maintenance, which is occupancy cost is bulk of our fixed-cost and which is driven by lease contracts. We and our development team has been working very hard to negotiate with the developers to get a release on rentals.
So that is one-line item I think we will continue to work on. There are all other line items, including manpower cost, we will continue to see if there is more automation that we can bring in cinemas in terms of self-ticketing chaos and other initiatives that can reduce manpower as well as electricity utilities in some of our cinemas, we have deployed solar panels and moved to renewable energy that has resulted in controlling utility costs.
Cost in similarly on other line items. So there is a continuous regular review on each and every line-item in our P&L on the cost side and we are pretty hopeful that we will continue to be disciplined on our front on the cost front going-forward as well.
Umang Mehta
All right. All at all. That’s it from my side. Thank you so much.
Operator
Thank you. We take the next question from the line of Yash Sonthalia from Public Alternatives. Please go-ahead.
Unidentified Participant
Hi, thank you for the opportunity. So I have two questions. First, I need a small clarity, like in our FOCO model where we are getting 6% to of revenue-sharing. Is there any particular cost we will be inculcating in those screens or it will be only the revenue-sharing or cost cushioning over?
Ajay Bijli
There is no-cost that is — there is no physical cost which is basically getting incurred in this model.
Umang Mehta
So 100% of the revenue-sharing we are getting will be transferred into our EBITDA, right?
Ajay Bijli
Yes, absolutely. So when the streams are under development, including the cost of people reaching those sites is incurred by the development partner.
Unidentified Participant
Understood. And in our recent year, our variable-cost for movie exhibition has decreased a lot. So is it like something related to the mix of movie and the weeks the movie has run or is it a structural thing we have done by the efficiencies?
Ajay Bijli
No, our cost is normally in the range of 45% to 46%. However, in financial year ’25, it was 44.6% simply because you know there were no number of Movies which crossed crores plus were lesser. As a result in our Phil contract we there was less amount of bonus payouts that happened. Also, we did a lot of re-releases during the year. 5% of the admission during last year came from re-releases and re-releases typically have lower film had charges as compared to a fresh fill. So that’s why you’re seeing a 137 bps reduction in FSP. But I think going-forward, we will be in the range of 45% to 46% or 44.5% to 46%.
Unidentified Participant
Understood. That’s all from my side. Best of luck.
Operator
Thank you. Thank you. We take the next question from the line of Arun Prasad from Avendus Spark. Please go-ahead.
Arun Prasath
Good evening. Thanks for the opportunity. My question is on the asset-light models. So we have signed around 11 cinemas and management contracts and 12 asset-light model. So based on this, can you explain us what kind of developers are going for a management contract and what kind of developers are going for asset-like? Is there any commonality about this geography, geographically or the size of the developer?
Some light on this.
Ajay Bijli
So you know the way it really happens is the process of selection is strategic in nature. So in many of the territories where we already have existing lease models, we may perhaps go for an asset-light model. And the new territories wherein we do not have cinemas or we have cinemas which are sparsely spread-out, we may going for a franchisee-owned company-operated model. So that is one distinction that we end-up using in the selection process.
Other than that, there are certain matrices that we end-up using, wherein if the economies of scale happen to favor in the — in the FOCO model, then we will choose the FOCO model. In effect, to give you an example, if the development partner has certain leverages around the cost that is to be incurred into the cinema, we will end-up using it to our benefit and go for the Focu model instead of an asset-light model.
Arun Prasath
Sorry, I didn’t understand this leverage, but can you just explain,
Ajay Bijli
Let’s say if there is a development partner who is operating multiple malls or has a very large mall under his purview in terms of managing that mall or having developed a mall and then managing it, lots of costs are common costs. The security cost is a common cost wherein the same security agency gets used even for the cinemas. The housekeeping costs are common cost wherein the same housekeeping agency gets — ended-up getting used for that.
So in which case, we are able to save certain costs in the model and we end-up going towards the franchisee-owned company-operated model. So that is another side of the selection criteria that we end-up using. Other than that, it is a model which is agnostic of any Tier-1, Tier-2, Tier-3 cities. So we are even going to have the Foco Model cinema coming up in Mumbai by end-of-the year.
Arun Prasath
Right. So does the developer has a say on this or it’s — we present in this option and he has chose among that.
Ajay Bijli
So we are — we are managers who have guardrails around the brand the brand guardrails are given in. Other than that the developer has a lot of say within the model wherein needs empower to take certain calls in terms of, let’s say, a ticket price, let’s say some of the other things that he is looking at into the model. It’s a typical franchisee-owned company-operated model alongside the, the developer has a say in terms of the revenue matrices that we end-up doing for him.
Arun Prasath
No, I meant whether he can choose, say, we are offering him a management free model. Can the developer say sir, no, I want an model or I want a traditional model where it needs to be completely leased-out?
Sanjeev Kumar
Every right to choose and give every right to reject.
Arun Prasath
Okay. Understood. And when we are designing the so for example, in asset plate model, you have mentioned 40% to 80% capex by developer. How this is also decided?
Ajay Bijli
So this is a typical model wherein the development partner ends up investing a part of the capital into the fit-outs of the cinema. There are certain fit-outs which we call as the movable assets, certain are immovable assets. In the immovable assets, which amounts to about 60% plus, the development partner ends up investing the money. And in many of the movable assets, the company would end-up investing the money. In terms of the returns that the developer gets, there are two models that are in WOOC and that are getting practiced.
One is there is a yield driven model, which is akin to a REITs model, wherein the developer ends up getting a yield on the investment that he has made into these immovable assets on the cinema fit-outs. The other is, he may basically choose to go in with a higher revenue percentage sharing on the rental model, wherein he is able to get similar yield from the revenue-share that is there. There is an upside in the revenue-share model wherein if the cinema super performs, he ends up making superior monies on the revenue-share.
Arun Prasath
Okay. So on a REIT-based business model, he has a very little double size.
Ajay Bijli
So he has a very little downside, let’s say, let me give you an example. Let’s say, if the yield on a REIT model is going hovering around 8% and if we are giving a 9% yield, so he has a mark — he has a benefit on the table itself. For us, the asset is basically a being created by the developer wherein he gets a fixed yield over the time of the lease. If the model does not perform, let’s say, hypothetically in a period of five years or six years, then the lock-in triggers in and in which case you know we have the option to walk ROVI and the developer ends up being with the asset to be given to another operator.
Arun Prasath
Okay. Okay. So this 9% or 8% yield is irrespective of the content quality or how the content has performed. So that is basically kind of irrespective of the content quality.
Ajay Bijli
It is irrespective of the content quality. For the content quality, the developer has to choose the other model, wherein if he believes that the content is going to be super good and the mall or the shopping center is going to perform much better-than-anticipated, in which case he instead of choosing a fixed yield model, he ends up choosing a rev share model. So our standard rev share is 15% of the box office and the concessions revenues and we — the trigger basically depends either a 2% or a 3% over and above that model for the developer to cover his investment, in which case he will benefit if the content quality becomes better.
Arun Prasath
Understood. Finally, on the existing set of 1,700 screens, is there any possibility we will transition as and when the lock period hour ends or as and when the contract ends? We will give an option to the development option level.
Ajay Bijli
So lever play never is the thing. So it all depends how this whole traversing happens. And the potential opportunities cannot be negated as of today, but suggesting that is there a firm plan or something? No. Going-forward, there may be opportunities which may come on to the table in terms of being able to convert a regular model to a Foco model. And dependent on the financial viability, we may end-up using that.
Arun Prasath
Okay. Understood. Thank you very much. All the best.
Operator
Thank you. Thank you. We take the next question from the line of Abhishek Kumar from JM Financial Limited. Please go-ahead.
Abhishek Kumar
Yeah, hi, good evening. My question is also on the model and thanks for all the explanation. I’m still not able to figure out why is it attractive for a developer. I mean this is a business where you, despite the scale and so much efficiency are making barely breaking even. And in that, if the developer has to give you 10% of the revenue, for him with little expertise and little benefit of scale, you know-how will he make money?
Isn’t it more beneficial for him to just take 15% of our rent of revenue and leave the operations and the costs associated with it to you.
Ajay Bijli
So absolutely a great question, but he should have that availability from a top of the mine recall operator to be in his mall. So usually shopping centers work on the principle of five airs which is fun, food, fashion, self, films fitness these are the five F’s which gets covered in a shopping center development. Now you know in this so in this you know the film side that we represent we are talking about the fact that if he wants to be in bed with the top operator, then perhaps if the FOCO model or an asset-light model is available, he makes — he will — he will or may consider us.
So it’s an optionality which is there. Most of the shopping centers today as we see in the country are in complete if they do not have a cinema operation. So that is where it goes. And in terms of financial modeling, as you go up, so cinemas are usually placed on the third floor, which is the top floor of a shopping center. So shopping centers would get a yield of something like 25% on-the-ground floor. As they go up, this yield decreases to 12%. As you Go further, it decreases to 6%, so that your average yield basically is coming into the line of 15% to 18% from the whole shopping centre. So that’s how the mechanics of a shopping center model works.
Abhishek Kumar
Okay, my question was more around you know whether if he has to choose between a Foco model and the traditional model yeah, and you know not very clear if the risk-reward favours the developer, given you know-how the Bollywood and exhibition business is performed so is out here.
Ajay Bijli
Yeah. So two reasons out here. When you look at a development partner who is coming in with us, this is a very large country, unlike a small part of Europe or a small part of any other part of the world, this is a very large country. So most of the development partners that we come across actually know the consumer psyche perhaps a little better. So they have certain levers out there to be able to improve the revenue matrices. So they are able to help us give that support also as well.
Let me take an example of a concession pricing or even a ticket pricing. We are able to perhaps fine-tune it to better revenue modeling by giving in the inputs, in which case, they also feel empowered to be able to maximize their yield from the cinema asset. So that is one. Second is since they are they — there is — there is a little bit of a pride of having a APV or INOC cinema being your own cinema. So there is something connected on the emotional side also as well,
Which we end-up leveraging because the brand has been delivering consistent results year-after year. So one, you’re talking about the breakeven point not being achieved over the last two years. Now that has not been the case because this is like a 30-year game that one is talking about. There is a precedent of 30 years and there would be a precedent of an infinite number of years which will be available to the brand.
So most of these development partners believe in the long stay of the game. They are not living on a quarter-by-quarter basis unlike a financial institution.
Abhishek Kumar
Sure. That’s helpful. Thank you and all the best. Thank you.
Operator
Thank you. We take the last question from the line of Pankajan Hendirata from Bank of America. Please go-ahead.
Unidentified Participant
Thank you for the opportunity. Hi, management. Good evening. Three quick questions from my side. First one, your thoughts on Karnataka government’s budget announcement on capping the movie prices at INR200 where are we — you know, how much impact do you see? Have you gone back to the government and asked for further concessions out there?
Ajay Bijli
Or the government has not only taken any.
Gaurav Sharma
Sorry. So as of now, this was — this has not basically been implemented by the government. So as of now, it is in a balance. So till this time the matter comes up, there is no — there is no need of any analysted to be done on that.
Unidentified Participant
Okay. Got it. Cool. Second question is around the use of cash. So assumption is there is nothing inorganic as an opportunity probably out there. So would the Board have thought around doing dividends again or some buyback? Is there a sort of conversion happening around or not really?
Sanjeev Kumar
See, I think as I said earlier, our capital allocation strategy is very clear. We will focus on generating free-cash, which should be used towards deleveraging the balance sheet further.
Unidentified Participant
Yeah,
Gaurav Sharma
We would ideally want to come down to a negligible net-debt levels over the course of medium-term over the course of next two to three years. So that’s our priority number-one. And once we have achieved that goal, then the Board will decide on dividend and other alternatives
Unidentified Participant
Got it. Thanks, Gaurav. And so is it safe to say that once that happens and if there are the sale proceeds from the management contract cinemas, then one might expect that as a bullet payment for dividend? Could that be a scenario?
Gaurav Sharma
See, it’s I would not like to make a specific comment on that. That’s a decision that the Board will take at the right time. So I think we should leave it at that.
Unidentified Participant
Sure, thank you. That’s it from my side. Best of luck for future quarters.
Gaurav Sharma
All right. Thank you so much.
Operator
Thank you. Ladies and gentlemen, in the interest of time, that was the last question asked question. I would now like to hand the conference over to the management for closing comments. Thank you.
Ajay Bijli
Thank you. Thank you, everyone. Thanks so much for joining this call, taking out time today and you know, we were happy to address your questions in case there is any further questions that you may have, you can reach-out to the Investor Relations team at or you can write to me. Thank you so much.
Operator
On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.