inox leisure ltd share price Management discussions

<dhhead>Management Discussion and Analysis</dhhead>


The second wave of COVID-19 had a significant impact on health but not on the economy. The economy rebounded in a K shape in FY 2021-22. After decreasing by 7.3 percent in FY 2020-21, India’s GDP grew by 8.7% in real terms during FY 2021-22. The service industry, particularly that demand human interaction, had been hit the hardest by the pandemic.

The total consumption grew by 7.0 percent in FY 2021-22, with significant contributions from Government spending.1 Gross Fixed Capital Formation has also surpassed pre-pandemic levels as a result of increasing public infrastructure expenditure. So far in 2021-22, both goods and services exports have been strong, but imports have returned sharply as a result of rising domestic demand and increased international commodity prices.

As a result of rising oil prices, increased input costs, and supply chain disruptions; inflation has been steadily rising since September 2021, hitting ~6.1 percent in February 2022.2 The industrial sector’s expansion is also hampered by a scarcity of semi-conductor chips and high commodity costs. Despite these obstacles, the economy is likely to continue to develop at a healthy pace. The country’s economic development is projected to be fuelled by the RBI’s monetary policies and government programmes such as Product Linked Incentives (PLI), the National Monetisation Plan (NMP), and PM Gati Shakti - National Master Plan.



India’s GDP is expected to expand by 7.2 percent in FY2022-23.3 As uncertainties fade, growth is likely to pick up in the second quarter of FY2022-23. Early geopolitical challenges might result in capital outflows and a rapid devaluation of the currency, although both are expected to rebound by the end of 2022. Overall, macroeconomic stability indicators indicate that India’s economy would be well positioned to deal with its challenges in 2022-23. India’s distinct response strategy is one of the reasons for its success.4


Media and Entertainment Industry

Media and entertainment are consumed by audiences of all demographics and through various mediums such as television, films, out-of-home (OOH), radio, animation, and visual effects (VFX), music, gaming, digital advertising, live events, filmed entertainment, and print. India has the second-largest digital population in the world. Its media and entertainment industry is booming over the world. The sector is still expanding quickly, owing to India’s appeal as a content creation and post-production powerhouse. In FY 2022, the industry grew by 16.4% to INR 1.61 trillion (US$21.5 billion). While television remained the most popular medium, digital media rose to the second place, followed by a resurgence of print. This year, many media companies were listed on the stock market.

The media and entertainment industry has seen tremendous changes due to technological advancements, shifting generational behaviours, and the impacts of the global pandemic. The industry’s growth is fuelled by India’s growing youth population, which comprises 385 million millennials, accounting for 65% of the country’s overall population, exhibiting evolving media consumption patterns and developing lifestyles.

During the COVID-19 outbreak, people sought out more media and entertainment at home, avoiding larger in-person activities. Digital media engagement remained strong even during the healthier summer, demonstrating that the pandemic has just exacerbated pre-existing trend towards the digital world. Smartphones are utilised by people in all parts of the country, including cities and rural areas. They may now access OTT, TV, YouTube, Instagram, Facebook, and Twitter to see a wide range of media material, including films, sports, news, music, and more.

Digital media expanded the highest with INR 68 billion, increasing its contribution to the M&E industry from 16 percent in 2019 to 19 percent in 2021 simultaneously.5 Since the outbreak of the pandemic, Indians have spent 52% more time on entertainment applications.6 Traditional media (Television, print, filmed entertainment, out-of-home, music, and radio) accounted for 68% of M&E sales in 2021, down from75% in 2019.

With individuals returning to work in 2021, the television industry had an overall reduction of 8% from the 2020 levels, and was also lower than overall 2019 levels. In 2021, the Hindi-Speaking Markets (HSM) fell by 10%, while the South Markets fell by 5%.8 South Market viewership stayed greater than that of 2019, while HSM viewership fell below that of 2019. The business model of the Local Cable Operator (LCO) is intended to be hybrid, with a linear TV wire and a broadband connection to provide efficient content services, internet connections, smart home services, and locality/community services.9


Indian Film Entertainment Segment

The film entertainment industry has seen a considerable development despite lockdowns and other restrictions on production and exhibition across states. The film industry grew by 28%, although it is still half of what it was pre-pandemic.10 In 2021, despite capacity limits throughout the year, more than 750 films were released, compared to just 441 in 2020.11

Film releases were at 37% of 2019 levels
Number of films released


2021 releases vs. 2019 releases (%)



2021 Vs 2019


Industry results in 2021 revealed a continuous public demand in blockbuster features as the country gained speed during the unlocking, aided in part by the release of effective vaccines. The year saw record-breaking footfall and occupancy levels at the theatres, similar to those seen in pre-COVID days. A solid slate of long-awaited tentpole films is likely to assist in the comeback of theatre attendance in the coming months.



In 2022, the Media and Entertainment industry is expected to grow by 17% to INR 1.89 trillion, and then rise at a CAGR of 11% to INR 2.32 trillion by 2025.11 The industry has a lot of space for growth because of increased money and changing lifestyles. Digital media, films, and television will be the primary drivers of this expansion, followed by animation and visual effects, and online gaming.

The Film industry is expected to have positive growth as the theatres opened up in 2021 and the audiences returned in record numbers. The industry is expected to recover its 2019 levels by the end of 2023. Theatres would evolve into experience zones offering multi-sensory content experiences.




The multiplexes, which were severely hampered by the pandemic, appear to be on the recovery road, with box-office revenue on the rise. Audiences are rushing back to the theatres in large numbers. To ensure audience safety, methods such as separated seating configurations, QR code-based food ordering, and regulated entry and departure strategies were employed. The auditoriums were also cleaned more frequently. Multiplexes that used to sell paper tickets have switched to virtual ticketing using QR codes for smooth check-ins.


INOX’s Strategy

INOX aims to provide a unique signature experience with each new multiplex. Before opening a multiplex, various criteria such as catchment potential, the mall developer’s profile, the mall’s design and interior, the shop mix, and other ancillary amenities are considered. With numerous viewing formats and dining concepts, each new INOX multiplex is curated to appease the audience based on this extensive research. Each INOX multiplex is special in terms of architecture and aesthetics.

INOX offers INOX INSIGNIA, the most luxurious movie viewing experience with leather recliners, butler on call, laser projection and an exceptional dining catalogue serviced by a LIVE kitchen. A format specially curated for the little guests,

Kiddles has bright & vibrant seats and interiors, along with a lobby, where kids can even rejoice and celebrate.

INOX had launched India’s first ScreenX with a 270-degree panoramic viewing experience now operating in two locations. INOX also offers IMAX which is the most immersive movie experience in the world at over six locations across India and MX4D, which offers the most advanced immersive environment at two locations.

INOX has been curating large-size experience driven cinema destinations called Megaplex, which are home to the most number of cinema viewing formats in the world. INOX currently operates two Megaplex cinemas - at Inorbit Mall, Malad in Mumbai and at Phoenix Palassio Mall in Lucknow.



INOX Leisure Limited (INOX/Company) is one of India’s most well-known multiplex operators. As on 30th June, 2022, INOX operates in 73 cities throughout India. It has 163 properties with 692 screens and a total seating capacity of 1,55,218. In the movie exhibition sector, INOX has set high standards for elegance, service, and technology.

The Company is engaged in diverse lines of businesses ranging from operating theatres and multiplexes, sale of food and beverage (F&B) products and generation of electricity.

The Company is one of the leading players in cinema and exhibition business offering redefined experienced-driven entertainment to its customers. The Company also actively engages in manufacturing and distribution of food and beverage (F&B) items which brings natural synergies and enhances customer experience adding to the brand value of the Company. The Company offers variety of food at its multiplexes including already prepared ready-to-eat meals along with extensive menu and food options to suit every customer’s needs. The Company has partnered with Zomato and Swiggy to deliver its F&B offerings to customers outside of multiplexes to reach wider customer base. Additionally, the Company is also engaged in generation of electricity through windmills which is partly used for captive consumption and additional units generated are sold to distribution companies.

The Board of Directors of the Company at its meeting held on 27th March 2022, approved the draft scheme of merger with PVR Limited which would be a value creation for its stakeholders including customers, lenders and employees and the business entity would benefit from increased scale, innovations in technology and widened reach.


Core Competencies

• The company has long been an integral part of developing the most advanced and cutting-edge technology.

• The company is one of India’s major multiplex chains, offering access to a diverse range of regional and international content.

• The company provides unrivalled and exceptional theatrical experiences.

• INOX Leisure Limited has a strong management team, solid financial support, and a commitment to staying ahead of the competition that propels the company to a prominent position in the movie exhibition market.

• Its premium multiplex properties are recognised for attracting huge footfall, owing to its technologically advanced and luxury offerings. It has cutting-edge projection and acoustic technology, luxurious seating configurations, sanitary surroundings, and a diverse menu of food and beverages.



It’s been over two years since the COVID-19 outbreak turned the food and beverage industry upside down, and restaurateurs are now witnessing a trend of returning to normalcy. As the rest of the world has adjusted to a new normal, many restaurants and chains have worked hard to accommodate customer needs while adhering to established safety measures which is giving the sector a push to grow.


INOX’s Strategy

INOX maintains a sharp focus on F&B to stay ahead on the ‘Experience’ curve. INOX has done a lot of menu re-engineering and added new cuisines and concepts to their

F&B offerings apart from making their food available on Swiggy and Zomato and also positioning themselves as complete restaurant brand. Furthermore, INOX enhanced the brand verticals they had under them i.e. Caf? Unwind, INSIGNIA and Delights and positioned them as full service restaurant brands, by offering dining in without tickets and amplifying their visibility to non-cinema consumers as well. From street cuisine to gourmet products, the Company’s F&B business features a comprehensive menu spanning across multiple F&B concepts to satisfy every appetite. It aspires to meet the highest dining standards in terms of variety, taste, and service.

INOX has also partnered with ITC Ltd.’s Ready-to-Eat, gourmet brand Kitchens of India to introduce a re-defined innovative

F&B experience across all multiplexes of INOX located across

India. With this first-of-its-kind partnership, INOX introduced a trusted range of 100% natural, Indian gastronomical delights. Moreover, INOX is the first cinema chain in India to get listed on the table reservation platform - EazyDiner. In view of rising health concerns, the INOX has implemented rigorous safety measures from farm to fork, ensuring that its clients have a safer experience. The company has also added immunity boosters to its food menu across cinemas in India, including turmeric latte, healthy soups and herbal teas apart from beverages, soups, and sandwiches, all of which contain elements that boost immunity.


Advertising Sales

Despite the disruptions caused by COVID-19, advertising sales in India rebounded from a 29 percent decline in 2020 to a stunning 25 percent increase in 2021. The upward trend is likely to continue in 2022, with a projected growth rate of 16%, bringing total advertising revenue to INR 865 billion. Advertising is predicted to expand at a healthy 12 percent CAGR till 2024, with digital media rising at 20% and conventional media growing at 8%.12

Key aspects which drive the growth of the industry include television, digital media, print media, OOH, radio and cinemas.



The notion of private screening has also been developed by multiplexes. Guests have the option of choosing their content and hosting live events such as stand-up comedy performances, open mics, etc. Multiplexes are also aiming to broadcast sporting events and Esports tournaments. Furthermore, multiplexes have evolved into the most preferred destination for discovering new content in a variety of languages, genres, and countries.


INOX’s Strategy

INOX has pioneered the use of alternate content to offer great experiences to their cinema audiences. Weather it is live screening of sporting events or screening of sponsored films or hosting live comedy events, INOX has innovated hugely in the space of alternate content to offer unique experiences. Introduction of Esports into cinemas is an opportunity to offer great alternate content experience to our guests. INOX has also tied up with ICC to screen Live matches at selected INOX cinemas. INOX also rolled out private screenings where a guest can reserve an entire INOX auditorium to conduct birthday parties, anniversary celebrations, seminars, webinars, trainings, workshops and corporate events.



Due to the slow-down experienced during the pandemic and with the thought of providing the audience with a more holistic and wholesome cinema experience, multiplex chains are trying to develop alternative verticals that generate revenue as well as provide the audience with a value-added service.


INOX’s Strategy

INOX launched the sale of official merchandise to help the guests foster a deeper connection with the superheroes and sportspersons they see on the big screens. This new vertical not only let fans find another dimension to show off their love but it was also connected to a cinema with that they have a deep connection already. Along with launching merchandise, INOX also engineers its food menu for every season and occasion to let out patrons celebrate these special moments with us.



Customers are now moving more towards digital for every aspect of their experience. From checking out what movies are playing to even booking the tickets, they prefer to do all that with the device available on the tips of their fingers. It is essential for all companies to have a strong digital presence to keep customers engaged.


INOX’s Strategy

With social media, we have been keeping customers updated about all the latest updates at INOX while also engaging influencers to visit and promote newer properties and initiatives. INOX also launched InstaPay, India’s first cinema wallet that makes the ticket and food purchase at INOX a hassle-free, quick and safe experience.



• Low number of screens per Capita

• Private Screenings

• Release of films in different languages

• Revenue streams other than box-office

• Alternative content ideas

Food & Beverage diversification



• Delays in releasing of films

• Scarcity of high-quality material

• Slow-paced real estate

• Complex regulatory environment



Some of the key operational highlights are given below -

• The Company launched India’s first Cinema Wallet, INOX InstaPay.

• The Company witnessed highest screen addition accounting to 32 in the industry for FY22.

• As on 31st March, 2022, the Company has the strongest liquidity position of more than Rs. 205 Crores in cash and cash equivalents.

• The Company recorded a footfall of 230 Lakhs in the year under review.

• The Company’s occupancy rate was witnessed as 19%.

• The Average Ticket Price of the Company was around Rs. 217.

• The Spending Per Head for the Company was registered at Rs. 91.



Key Financial Highlights

(H in Lakhs)

FY 2021-22

FY 2020-21

YoY Change (%)

Revenue from Operations
















Net Worth





*The figures above are based on Consolidated Financial Statements. *NM stands for Not Meaningful.


Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor. The key financial ratios are given below:

(H in Lakhs)

FY 2021-22

FY 2020-21

Ratios (Based on Consolidated Figures) Formula

(without INDAS 116 impact)

(without INDAS 116 impact)

Reasons for Change
Debtors Turnover (no. of days) (Average Trade Receivable/



Refer Note 1 below
Net Credit sales) * 365
Inventory Turnover (no. of days) (Average F&B Inventory /



Refer Note 1 below
COGS) * 365
Current Ratio (in times) Current Assets/



Refer Note 1 below
Current Liability
Net Debt Equity Ratio (in times) Total Net Debt (Excluding



Refer Note 1 below
Lease Liability)/Net Worth
Operating Profit Margin (in %) EBIT/Total Income



Refer Note 1 below
Net Profit Margin (in %) PAT/Total Income



Refer Note 1 below
Return on Net Worth (in %) PAT/Average Net worth



Refer Note 1 below


Note 1: The ratio was skewed in FY 2020-21 and FY 2021-22 on account of nationwide lockdown due to COVID-19. The business operations of both the financial years were adversely impacted; hence the ratios are not reflecting the fair position of the company.

Note 2: Interest Coverage Ratio is negative due to negative EBIT, therefore not applicable.



The Company believes that the employees are its most valuable assets. Its goal is to become an "Employer of Choice" by implementing best practices that will result in the highest level of employee satisfaction. It also wants to create a safe and secure working environment for its employees.



The employment mix is being reshaped by a more competitive corporate landscape, increased complexity, and the digital revolution. A multi-generational workforce exists, and knowledge has a shorter shelf life, putting a premium on reskilling and upskilling. The company ensures that its staff have the necessary abilities as they adopt to digital technologies and new methods of working. It gives access to learning that is available everywhere and at any time to help achieve the goal. The digital revolution has simplified tasks for the HR department, allowing them to focus on identifying, developing, and engaging high-potential employees. INOX has a 360-degree approach to employee well-being with a huge emphasis on mental and physical health.



The Company encourages open and regular discussion between managers and their team members through its initiative ‘Disha’ to understand what keeps its employees motivated and engaged. This provides a framework through which they may speak up, voice concerns, and take action to better their situation. The company conducts monthly interactions with the teams across all departments to understand what inspires them, listening to their suggestion and addressing their needs. At the end of every month, the company thanks and appreciate employee’s contribution through our ‘Long Service Awards’

"Wellness Matters @ INOX" is a collection of specially curated initiatives for employees’ physical and mental health, including vaccination drives, a 24x7 free Doctor-On-Call helpline, a free Dietician helpline, a free health assessment, a mental health workshop, and low-cost home delivery of medicines. Its employees are treated as family members, and financial support is provided to meritorious children of its employees.


Performances and Recognition

INOX has adopted a 360-degree comprehensive approach towards the performance appraisal system. The Company has established a complete approach for performance management that involves offering regular relevant feedback and appreciation, as well as holding individuals accountable and supporting ongoing growth, in order to reflect the goals and requirements of its employees. In addition, to ensure employees’ financial, social, mental and physical wellbeing, INOX offers them a wide range of benefits including medical support & conducting mental health and motivational workshops.


Leadership and Succession

The Company provides a number of cross-functional programmes to nurture management and leadership abilities in order to ensure that it develops future leaders for the company. The goal is to provide its employees with the skills they need to lead the company through change, develop their teams, manage performance, and assure business success while remaining true to the Company’s goals and values.


Business Transformation

The HR department assists in managing substantial Company changes. The team aids in the multiskilling of current employees in order to prepare them for the company’s structural changes. At INOX Leisure Limited, it has 1488 permanent employees as of March 31, 2022.



Financial, operational, and accounting controls are suitable for the Company’s size and scope. To ensure that its business is conducted in an orderly and efficient manner, the Company has devised and implemented numerous controls. Apart from routine/general checks, the Company has the following procedures/reviews in place to ensure the accuracy and completeness of accounting records, as well as the timely creation of trustworthy financial data. Reputable external professional companies are appointed to analyze the process to ensure that the Company benefits from their subject area expertise.

1. Internal Audit Deloitte Touche Tohmatsu India LLP
2. Internal Financial Deloitte Touche Tohmatsu India LLP
3. Enterprise Risk Sharp & Tannan Associates


Deloitte Touche Tohmatsu India LLP has been designated as the Company’s internal auditor. Internal Audit is carried out in accordance with an Internal Audit plan that is developed each year in cooperation with the Audit Committee. The Internal Audit process examines the effectiveness and efficiency of internal control checks and encompasses all important aspects of the Company’s operations.

Deloitte Touche Tohmatsu India LLP, also examines the Internal Financial Controls of the Company. Internal financial controls for the company’s major accounts and operations have been developed. The controls are intended to ensure the orderly and efficient conduct of business activities, such as adherence to the Company’s policies, asset protection, fraud and error prevention and detection, accounting record accuracy and completeness, and timely preparation of reliable financial information.

A company-wide Enterprise Risk Management (ERM) Framework is also in place. The ERM Framework is based on best-in-class standards and includes the Company’s various activities as well as key criteria for effectively managing the various types of risks it faces, such as strategic, operational, compliance, and financial risks. To combat threats and manage risks, the Company has implemented an effective control system. This is made possible by taking a systematic and proactive approach to identifying risks and adopting appropriate risk mitigation techniques. It not only assists in reducing the effect of risks, but it also promotes systematic resource allocation based on the Company’s risk appetite and risk impact rating.

Management makes strategic decisions in cooperation with the Board after carefully assessing secondary and residual risks. M/s. Sharp & Tannan, Chartered Accountants assess the ERM Framework on an annual basis, and their report is provided to the Audit Committee for evaluation.



This document contains forward-looking statements about expected future events, financial and operating results of INOX Leisure Limited. By nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause assumptions, actual future results, and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the management’s discussion and analysis of INOX Leisure Limited’s Annual Report, FY 2021-22.