The credit ratings agency has downgraded the long-term rating of bank loan facilities of the company to CRISIL A+/Negative from CRISIL AA-/Negative and short-term rating to CRISIL A1 from CRISIL A1+.
The rating action reflects CRISIL Ratings expectation of weakening of PVRs business risk profile over the medium term. Prolonged restriction on operations both in terms of time and capacity along with delayed opening of key states such as Maharashtra has led to deferment in release of Hindi content impacting the overall footfalls.
While cinema halls have been allowed to open in majority of the states across the country, but they are operating at varied level of restriction in terms of both time and capacity. Since Hindi content has been limited therefore regional and English movie releases have supported the operations so far.
PVR has undertaken steps to reduce cost and augment liquidity over the past 18 months. After the second wave of COVID-19, it has been successful in negotiating with majority of mall owners, wherever operations have been resumed, for waiving off rentals for the entire closure period along with revenue sharing arrangements or lower guaranteed payments from second quarter of fiscal 2022 onwards.
Besides, the company has also conserved cash by reducing its workforce and deferring maintenance outlay and capital expenditure (capex).
In August 2020 and February 2021, the company raised Rs 300 crore (rights issue) and Rs 800 crore (qualified institutional placement [QIP]), respectively, which augmented liquidity. cash and bank balance, undrawn committed bank lines and other liquid investments stood at above Rs 570 crore as on 31 August 2021.
Improvement in the current situation, leading to return of content, relaxation in restrictions in key states and ramp-up in occupancies, while operators continue to contain operating costs and maintain liquidity, will remain a key monitorable.
PVR is a world leader in the multiplex business. The company reported a net loss of Rs 219 crore on operating revenue of Rs 59 crore for the Q1 ended 30 June 2021, as compared to net loss of Rs 226 crore on operating revenue of Rs 13 crore in the corresponding period of the previous fiscal.
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