Ladies and gentlemen, good day, and welcome to the PVR INOX Limited Q2 FY 2024 conference 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 the conference call, please signal an operator by pressing Star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anshul Periwal. Thank you, and over to you, sir. Yeah. Thank you, Anshul, and good afternoon, everyone, and welcome to PVR INOX Limited Q2 FY 2024 post-results earnings call. The call will be starting with a brief management discussion on the quarterly performance, followed by an interactive Q&A session. PVR INOX management will be represented by Mr. Ajay Bijli, Managing Director, Mr. Sanjeev Kumar, Executive Director, Mr. Nitin Sood, Group CFO, and other senior management personnel, including Mr. Alok Tandon, co-CEO, Central, West, and East, and Mr. Gautam Dutta, co-CEO, North and South. Over to you, Mr. Bijli, for the initial comments. Thank you very much. Good afternoon, everyone. I'd like to welcome you all to discuss our unaudited results for the quarter and half year ended September 30, 2023. I hope you've had the opportunity to review our presentation and results, which were uploaded earlier today on our company's website as well as the stock exchange's website. I'm delighted to share the quarter ended September 30, 2023, was a record-breaking quarter in company's history and highest ever ATP and SPH, leading to highest ever quarterly revenue, EBITDA and PAT. In Q2 of FY 2024, we welcomed 4.8 crore guests and delivered an ATP of 276 and SPH of 136, which represents a year-on-year growth of 64%, 25%, and 15%, respectively, over pro forma PVR and INOX numbers in Q2 FY 2023. Coming to the financial results for the quarter, the following numbers are after adjusting for the impact of Ind AS 116 relating. Total revenue for the quarter was INR 2,020 crore. EBITDA was INR 447 crore, and PAT was INR 207 crore. Pro forma financials of PVR and INOX combined for the same period last year were revenue of INR 1,082 crore, EBITDA of 16 crore, and PAT loss of INR 78 crore. The biggest highlight of the quarter was the historic performance of the Hindi box office. Jawan and Gadar 2, released during the quarter, emerged as two of the biggest grossing Hindi films of all times, recording over INR 760 crore and 620 crore at the box office, respectively. In addition, mid-scale movies like Rocky Aur Rani Kii Prem Kahaani and Oh My God 2, each grossed over INR 150 crore, while Dream Girl 2 and Fukrey 3 comfortably exceeded the INR 100 crore mark. Volatility in Hindi films' performance has reduced considerably with a marked improvement in the average collection of Hindi films, particularly in the case of mid-scale movies, which have been making a strong impact at the box office. Hollywood films helped the quarter start on a fantastic note. Blockbusters like Oppenheimer and Mission: Impossible – Dead Reckoning Part One grossed over INR 150 crore and 130 crore. Barbie and The Nun II also performed well and crossed the INR 50 crore mark at the box office. Regional movies across languages continue to demonstrate stable performance. Jailer, which is Tamil, was the highest grossing regional movie, with INR 390+ crores of box office collections. Baipan Bhaari Deva became the second-highest grossing Marathi movie, box office of INR 90 crores plus. The growing acceptance and attraction of regional content is demonstrated by the success of these movies. We are confident that regional films will continue to do well in the upcoming months. We're quite optimistic about the robust content lineup we have across all languages over the next few months. From Hindi, we have Ganapath and Tejas in October, Tiger 3 in November, and Animal, Sam Bahadur, Merry Christmas, Yodha, Dunki and Salaar in December. From Hollywood, we have Killers of the Flower Moon in October, The Marvels, Taylor Swift's The Tour movie, Napoleon in November, Wonka, and Aquaman and the Lost Kingdom in December. From the regional genre, we have Leo, Maujaan Hi Maujaan, and Tiger Nageswara Rao in October, Naal 2, and Japan in November, Captain Miller and Hi Nanna in December. In the first half of FY 2024, we have also reduced our net debt by INR 328 crore. This firmly places us on the path to attain a free cash flow positive status by the end of FY 2024. On the integration front of PVR and INOX, it is progressing seamlessly and is leading to substantial operational efficiencies, as outlined in our investor presentation. PVR INOX continues its strong growth momentum, adding 68 new screens in the first half of the system, while strategically exiting 33 underperforming screens. We are on course to open 150-160 new screens in FY 2024 and expect to exit a total of 60 screens in the current fiscal. Our screen portfolio stands at 1,702 screens across 358 cinemas in 115 cities in India and Sri Lanka. I now open the platform for any Q&A. Thanks once again. T hank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. 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 Roy from Nuvama Institutional Equities. Please go ahead. Thanks, and congrats on very good numbers. My first question is on your debt levels coming down by INR 307 crore. I wanted to understand, given now you are much more confident in the Hindi movie business, which was subsequently 50. What will be the plan for the one to two years perspective on the overall debt levels? You had rationalized these four openings, the cinema screen opening also earlier. Would that change, because of now it has no turning profitable sites? You're saying that we are opening of screens get impacted? Yes. No, because we, you know, we, we still have a pipeline, as I said, of 100-150 odd screens that we will be opening. And I think the accruals will be enough to take care of both. And every screen that we are opening is going to be rational feature. We are obviously very conscious of how, how to invest capital, where to invest capital, you know, which mall, which development, which catchment in India as well. And, keeping everything in mind, we should be able to maintain our growth strategy as well as, you know, pay down. So, just to understand, INR 1,100 for net debt actually, what is the long-term goal on this? Do you have any aim to make it almost negligible over the next two years? Will that be your vision? I'll let Nitin answer this question. Nitin, would you like to answer it, please? Yeah. So, Abneesh, you're right. I think as you've seen, our quote. So I think a reduction in net debt will not come at the cost of growth. You know, our operating earnings and cash flows will continue to grow, and they'll be sufficient to take care of our growth. And the surpluses will be, you know, used to reduce the net debt levels in the balance sheet. Our focus this year, you know, obviously, is to get down to a 1:1 debt to EBITDA. But over the next couple of years, reduce that from existing levels. Sure. My second question was on your promotions in F&B, specifically, this Rs. 99 Monday to Thursday kind of promotion here, because I think it's a great initiative. And on the other hand, you have this unlimited refill offer for the weekend. So, how is the response here, especially in the Monday to Thursday kind of a lean period, when footfalls are low? Even those footfalls, are you seeing a much stronger conversion than earlier? So some insight into that. So, largely, Rs.99 promotion was done to, one, correct the price perception, of cinema food being expensive. Number two, we wanted to drive higher conversion at the concession. Both the objectives were completely met, and, and this is something that we plan to, keep the promotions on for a long time. We are not going to sort of get off the promotions. So this is something which is going to be there, because we've realized that consumers today are looking at, movie experience, which is bundled in with F&B. Everyone who gets to the cinema would ideally want to eat. So from that perspective, a great successful program, is there and, and, we're trending well on both the parameters. Then last quick question on advertising revenue. I think it's a very good scale-up, and now that you are quite confident on the movie industry revival, which I think will be also good for advertisers, and overall, GT is doing also quite well. In that context, where do you see pre-COVID level getting reached in the outlook, from an outlook perspective, when do you see pre-COVID level on aadvertising getting breached? That will be next year. Largely, we, we'll come within the hitting range this year. You know, quarter three and quarter four are looking very good and positive. But in terms of reaching the pre-COVID PVR INOX combined revenue, it will be next year. We, we'll go ahead of that number next year. Okay, understood. Thanks a lot, Raja. Thank you so much. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah, good evening. I had a question on the synergy bridge. You mentioned in your release that the number is already INR 120 crores- 140 crores for the first half. So if you could just give us a guidance, just, you know, Hello, Mr. Kapoor? Yes. I'm sorry to interrupt you, sir, but your voice is echoing. Can you please come to a place where you could get a good reception? It is better? I'll just reconnect. Yes, yeah, you can connect. The next question is from the line of Mr. Jinesh Joshi, from Prabhudas Lilladher Private Limited. Please go ahead. Yeah, thanks for the opportunity. I was just trying to think through how the footfall count will be maintained for the subscription plan that you have just launched. Basically, the customer here is paying a fixed fee to buy the subscription. So irrespective of how many times he visits us, basically we have our money. Will every visit be considered as a separate count or how will it be basically? Please repeat your question, because there was a lot of echo. We couldn't sort of understand. Okay. I mean, is it better now or is it echoing? It's much, much better. Much better. Yeah, yeah. So I was just trying to think through how will the footfall count be maintained for the subscription plan that you have just launched? If I understand this right, the customer here is paying us a fixed fee to buy the subscription to the chain. And irrespective of how many times he visits us, we have got our money upfront. So how will the footfall count be actually maintained? Will every visit be considered as a separate footfall, or how will it be? This is like a subscription voucher which is being sold to a customer. Every time he comes to the cinema, a ticket will get issued to him, and that is how the subscription count will be captured. And the INR 699 is largely an advance with the company we are holding. Got that. And how will the revenue recognition happen? Will it be on the scale of the pass, or will it be amortized over the term of the plan? Sorry, I did not understand your question again. The revenue recognition, how will it happen? Because, this is a minimum three-month plan, if I'm not mistaken. So will we recognize the revenue right at the scale of the pass itself, or will it be amortized over the term of the plan? Yeah. So it's not a long-term pass, it's a monthly pass, so it will be recognized at the end of every month. It has a validity of 30 days. So INR 699 expires within 30 days, and within the 30 days, you get 10 movie vouchers. If you do not sort of end up using those 10 vouchers, there is an expiry, and then you move into the next month. Got that. Got that. One last question from my end. I mean, if I look at our screen portfolio down South, I think the screen mix for us is about 60%. If I look at our box office share in Jailer's collection, I think it is a bit low at about 20% or... Is there any specific reason to look into it? Because our screen concentration down South is pretty decent, but our share in Jailer is a bit low if I compare it with our screen mix? No, so that's an incorrect comparison. South is a very large market, which comprises of Karnataka, Kerala, Telangana, Andhra, and Tamil Nadu. Tamil Nadu is a subset of South India. Jailer, as a film, is a Tamil film which was primarily released in Tamil Nadu and did exceedingly well in Tamil Nadu. So you have to look at it in that context. And while we have about more than 700 screens in South India, the total screen count in South India, if you include single-screen cinemas as well, is in excess of 4,000 screens. So obviously, our market share in South India is much lower, and that's the reason we've been mentioning in all our calls and conversations. As more retail development happens in that part of the market, we want to add more and more multiplex screens, because we think that part of the market is under-screened in terms of multiplex screen capacity. Okay. Got that. Got that. Thank you so much and all the best. Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead, sir. Thank you. Thanks for the opportunity. The first question is on the advertisement revenue. I think, on a per-screen basis, we are still, at least 30% lower than the, pre-COVID levels. I think this is the best quarter we had, even recently, June 2022, almost double revenue, footfalls are also much higher. But, basically, on a per-screen basis, the growth is very, very, very, less. Is it a structural issue that advertisers are not coming into the cinema? Because this is something which is happening for the last three, four quarters. Instead of the strong footfalls, they are not, translating into the advertising revenue on a per-screen basis. Advertising technically works on big blockbuster films doing well. We've spoken about this in our earlier calls as well, and we were very positive that Q2 would have some big titles and on bases which advertising will go up, which is exactly what has happened. Even now, as we move forward, advertisers are coming back. There is absolutely no issues there. It's just that we need a certain momentum to be able to get the monies which advertisers earlier used to flow back into cinemas, which had gone into other media sources. So it takes time, and as I have just mentioned, by next year, we should definitely be reaching our 2019-2020 numbers and moving ahead. So it seems to be on the right path. Sorry, just a clarification. When you say that, advertisers are, have moved to other sources, what is the competition for you in this, in these sources? Is it- obviously, it cannot be, it has to be more hyperlocal. No, no, no. It's not that. It's, the fact of the matter is that when you rate a cinema media, it, it used to come in the fifth or the sixth preference for a media planner and buyer. So technically, when we were out of action, during the COVID time, you know, they started to put that money which was available for promotions and media into, you know, digital, into TV, into radio, into, outdoor mall activation. So, now we have to go back and start, getting all of those advertisers back. The good news is that, most of the brands are back, and it's out now when, you would see that, a bigger traction begins to play out as we move forward into some big blockbuster films releasing over the next two quarters. Look, just, just I'm trying, what I'm trying to get clarity on is that, what is your competition when it comes to this type of advertising? Is it like, outdoor, digital, or is it like, newspapers or, or, what is it you determine as- I won't be able to comment on this because the fact of the matter is, if you look at the total advertising pie, cinema advertising is only about 1% of the total pie. So it's very difficult for me to ascertain where that 1% is getting allocated in terms of any alternate media choices. Media planners have different choices available, and we are also a brand building, you know, media eventually. So that money could be being spent on digital, on radio, on any media that works best for that product category. So, difficult for me to put a finger to say the monies which were coming to me has now gone to outdoor or mall activation. Difficult for me to have an answer around this. Different clients have decided in different strategies, but to get back our share, we are already on it. We've shown a great growth this quarter, and we believe that we are on the right path. Understood. My second question is on your Rs. 99 subscription plan. It is still not extended to the South. Given that our less share we have on the South, is it, is there any reason why the South is excluded? Or, or we are, we don't want to cannibalize the existing revenues. What is the thought process behind this? So I have, we've all said in media that, you know, we've opened Passport for a big trial program. We are wanting to enroll only 20,000 Passport users in the first phase. We want to close the subscription after that and study the consumption pattern. Down South, the consumption is anyway very high, and this program is largely to propel more consumption. A market which is already fairly fertile, and also has price restrictions. We felt that in the first phase, we needed a better clarity on how it changes consumer consumption pattern. So in the next phase, after we've studied the consumer a little more closely and deeply, we may come out with a product for Down South as well in phase II. All right. Thanks, thanks for the clarification on this. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead, sir. Sure. Yeah. Thank you for the opportunity. First, on the synergy benefits overall, you know, your presentation does highlight, you know, benefits coming from F&B as well as, you know, advertising. Sorry, F&B box office as well as overall cost synergies. Just trying to understand, is the efficiency improvement because of, you know, price disparity and now everything is in sync in terms of pricing across INOX as well as PVR theaters? And secondly, on the F&B side, where are we in terms of, you know, updating the menu as well as veg, non-veg options, et cetera, you know, across the INOX screens? So Ankur, we're answering your first question first. Where ATP is concerned, yes, you've seen a significant growth in ATP, and that's because of, regular inflation increase, as well as, the contribution of, the entire synergy which has taken place, across the two companies. That's one. Where efficiency is concerned, yes, we have changed a lot of menu. Both companies have incorporated the best of menu of either, and whether it was the first twelve PVR or the first twelve INOX menus have been now, are available in most of the cinema halls across the country. So a lot of work and synergy has been done, as you see from the slide also. Whether it's ATP, which has gone up by about 13% year-on-year, which normally due to inflation, used to be between 3.5%-4.5%. A s well as F&B, STH has again witnessed a 13% growth, which used to be in the range of 7.5%-8.5%. So whether it's the menu tweaking, menu mix, all that has contributed to STH. As the ATP is concerned, yes, proper programming. If there are more cinemas in a cluster, they've been treated as one, so that a patron, whenever he comes, he watches a movie in a gap of 10-15 minutes. So this is what the result of synergy has been, over the last six months. Sure. So, just to clarify, so slide number 19, wherein we are highlighting the ATP growth, organic growth, as well as the implied synergy net growth. Will be fair to say that on a profa rma number, there will be a Rs. 2 0 higher ATP on an average, on an annual basis, henceforth, as a base case? Yeah. So, Ankur, the way to look at it is, you know, this year, like we had guided, we will see much higher ticket pricing, you know, as, you know, a lot of this stuff will get rationalized and synchronized between both the PVR and INOX properties. And we will see a significantly higher average ticket price growth than the normal averages that we achieve. It may marginally keep on varying quarter- on- quarter, because it's largely also linked to content. Content, yeah. Correct. But we are reasonably confident. Yeah, it will be, it will be a decent number. Whether that number will be Rs. 20 or 1 5 is difficult to comment, you know, at this stage, because part of it will be linked to, movie by movie performance as well. Sure, fair enough. And on the STH side, the full benefits, you know, presumably the launch across, as well as, you know, the acceptance of all the new menu may take maybe a quarter or so. The full benefit, will you expect it, let's say by the end of this year, just Q4, or probably we should look at FY 2025 number? FY 2025 first quarter, I think we should have largely everything rolled out. It would take about three more quarters for the entire synergy in terms of the back-end work and menu, you know, synchronization to happen. To your question on non-veg, already about 74 sites have been rolled out, and a few more are in the pipeline. So the work is happening, and by end of March, that piece will be largely out of the way. Just continuing, you know, the synergy bit on the advertisement side, while I take your point in terms of the overall macro, et cetera. But how has been, you know, the industry's response to the negotiation point of, you know, the negotiation now on the advertisement as well as, you know, the convenience fee bit? It's been tough, and to be very honest, and this year, we may not get too much synergies on the advertising front. While there will be growth, but the fact is, in terms of synergies, a major part of the synergy may roll out next year. We will look at a fairly decent growth this year in quarter three and four. Great, sir. And just last question from my side. On the windowing period, among the digital release and the theatricals, for Hindi and regional, where do we stand? Because as I understand, there were certain negotiations again, especially on the regional side, to expand the window? Kamal, would you like to answer that? Yes, so the window on Hindi films is eight weeks. Regional films varies from region to region. Punjabi films, for example, is eight weeks. Bengali films is eight weeks. Excuse me. Hollywood films, which are the international segment films, that's eight weeks. Tamil, Telugu, hovers between four weeks and six weeks. We would not like to comment on any actual negotiation, but suffice it to say that our endeavor is to sort of standardize windows as far as possible. Our aspiration is to take the windows to minimum eight weeks. That's our current position on it. Sure, Sir. That is helpful and that is it from my side. Thank you and all the best. Thank you. The next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management. Please go ahead. Thank you for taking my question, and congratulations on the results. Sir, I just want to understand the convenience fee a little bit more clearly. For the last few quarters, we are seeing a decline on a per admit level. So last quarter, when this question was asked, we mentioned that now both PVR and INOX are on a revenue basis, the deal with BookMyShow has come to an end. I was curious, why in the second quarter of FY 2024 on a per admit basis, we are down compared to first quarter FY 2024? Yeah, I think, Arjun, we answered this question last quarter alone. Our previous contract with online aggregators had a concept of a minimum guaranteed payment, irrespective of what the footfalls would be, and subject to a revenue share. Because, there is no minimum guaranteed payment under the existing contract, and, online aggregators underperform in terms of, what, effective admissions were in cinemas. Our effective realization due to the minimum guarantee commitment in the previous contract was higher than the revenue share commitment, which is not the case under the current contract, and as a result of which. That is, reflecting on a per admit basis lower. Sir, but that happened in the previous quarter, since you did allude to that in the previous quarter. So if I look at the second quarter versus first quarter, since the impact is already in the base, we have declined on a quarter-on-quarter level on a per admit basis, while our ATP has moved up from 246 to 276. So I just wanted to understand, is 15.15 the right number, or previous quarter of 15.69 the right number? Arjun, you know, our quarter one for the month of May, there was a minimum guarantee under the older contract. Okay, sure. April and start of May, and therefore, on a per admit basis, the convenience in quarter one was there. Sure. And then we committed to the new contract from May onwards, and that's why, you know, on a per admit basis, you see a drop, quarter-on-quarter. Sure. So since this quarter is fully on revenue, so this would be the base going forward? That's right. That's right. Sure. Perfect. Very helpful. Secondly, in terms of the number of screens that you're planning on closing, we have increased from 50 to 60, obviously, given what the multiplexes, where they're situated. Just wanted to understand, how do we look at our growth over this year, next year? Is the real estate availability, et cetera, largely on track for our growth path that we had clearly articulated? Yeah. Well, growth path is absolutely intact. We have lots of screens in the pipeline. And this year also, as Mr. Bijli said in his opening statement, that we'll be opening 160 screens, and 68, we've already opened. When we are shutting down only those screens which have come to the end of their life cycle, or are not profitable, or the mall is shutting down. So that's the way which we take going forward. And this year, we said that 33, we have already closed, and so we will in totality close 60 this year. So the answer to your question is that our growth is absolutely intact, and if we go by 160 screens per year, I think that's a very, very aggressive and a nice number for the industry. Sure. For the next year, so this closure of screens, is it just a one-time event this year, or do you see it to be repeated going forward in the future? No, it will not be a one-time event. We have a fairly mixed portfolio every year. We will continue to evaluate, you know, bottom 1%-2% of our screens, which we believe would have come to an end of their life cycle, and accordingly take decisions to move out. That's the constant part of any retail portfolio. Anyway, screens at the bottom end are not contributing to our profitability and margins. So you know, closure of these screens should only help positivity, positively, you know, are taking our operating margins higher and profitability higher. So, so if you are adding gross between INR 160 and net, assuming 1%-2%, that's around INR 15- 30 moving out. So essentially, on a net basis, we are looking at adding INR 130- 150. Is that the right way of looking at it? Yeah. Yes. Absolutely. Absolutely. Sure. Thank you very much. Wishing you all the best. Thank you. The next question is from the line of Mayank Babla from Enam AMC. Please go ahead. Hello. Hi, thank you for doing this session. Am I audible? Hello. Yes, sir, you are audible. Yeah, thank you. Congratulations on a great set of numbers. My question is around the screen openings. So in the earlier calls, we had mentioned that, you know, our strategy and vision is to open, expand more towards the south and around 60%-50% of the new screen openings will be in the south. Now, pertaining to that, I noticed that, you know, we have fairly concentrated around Karnataka, the new screen openings. So want to understand why the skewness towards Karnataka and what is the strategy as far as other states are concerned in the south? Well, you've seen that, yes, we opened a few in Karnataka. That does not mean that we will not open in other southern states. But those properties were ready, and we opened it. Going forward, you'll see more screens being opened in other parts of the country also. So as we always say, that we are a Pan-India player, and yes, south is important to us. And this time what you've seen is that we have opened a few properties down south, especially in Karnataka. But the strategy of the company is to be in all possible states. And the guidance which we had given that, yes, south is a preference, it is for all the four to five states which are over there, and if we get great properties, we will open it. But let me also tell you that in some other states other than Karnataka, our projects are going on, and you'll see opening of our properties very soon. Sure. Thank you so much. Thank you. The next question is from the line of Abhishek Banerjee from ICICI Securities. Please go ahead. Yeah. Hi, thanks for the opportunity and, congratulations on the numbers. So just a couple of questions on the outlook for Q3, right? So the lineup of screens is great. What exactly are you expecting from the movie lineup, vis-à-vis, Q2 results, Q2 numbers? And, if you could give us any update on how the screening of classics is going, that would be helpful. I see we'd not like to give any, you know, specific guidance on Q3 or Q4. All we can say is that the content lineup is quite strong. October and November have been slightly slower in terms of movie releases, but December is looking quite packed, so almost two big films releasing every month. So both Q3 and Q4 are looking quite strong and they should be decent quarters, but it will be tough to replicate what we managed to get in, you know, Q2, where all the films fired in one quarter, Hindi, regional, and English. That will be a tough act to repeat, but irrespective of that, I think Q3 and Q4 should be good decent quarters. Understood. In terms of your ROCE, right? Now that you have done the merger and you are kind of working with reducing the variability of earnings, so how do you look at ROCE in the steady state number going forward? No, you should see ROCE inching up strongly in the balance sheet, you know, on a gradual basis. We'll have a full year of, you know, stabilized earnings this year to some extent. You know, you will see ROCEs at mid-teens level, even in the end of the financial year. You know, it should get better as we move forward. So clearly, you know, we are very positive. I think, as the earnings stabilize and move up, with content flow coming in, you will see a significant increase in ROCE at the balance sheer level. Got it. And again, just coming back to the content side, earlier there was this trend of, Hindi movies, I mean, Bollywood was releasing more than one or two large budget Hindi movies in a quarter. Now that the number seems to be going up significantly. So, if you could comment on whether this is just, because of the bunching up of a lot of releases, or is it, something that you believe is a sustainable trend going forward? Kamal, will you take that? Sure. This is a sustainable trend. The business, the response that producers have seen for bigger films and, you know, without taking away any sheen from the mid-level films, their performance has been also very positive and very strong. But the bigger films have done extraordinary business. And taking a cue from the response that the audience has given to these mainstream ticket spoilers, which target every segment of the four quadrants, whether it's male, female, above 25, below 25, they are something for everyone. These sort of films, I think is a sustainable trend because a lot of producers are getting disproportionate return on their investments. Actors are sort of expanding on their reach, they're expanding on their brand equity, and which augurs well for them as well in the long term. And therefore, producers, actors, naturally would want to do more bigger films. The other trend, which would be helpful to exhibition and to film industry at large, is that the South Indian films especially, but even non-South Indian regional films, are getting pan-Indian acceptance. So films are getting dubbed in Hindi, and they've started to penetrate territories which till now were sort of focused only on Hindi films or Hollywood films dubbed in Hindi. Regional films are also finding acceptability. So I think this is a sustainable trend. You will see a lot of big films, big films in Hindi. You will continue to see a lot of regional big films being dubbed in Hindi and gaining a lot of success in territories which are on pan-India basis. Understood. And, in terms of, your brand portfolio, PVR and INOX continue to be two separate brands as of now. So what would be the vision for, each of these brands? Is there a case where you use one of these brands as a comparatively, more value effect, more premium, and one, has a more value brand and, you know, try to expand, the penetration of screens overall, you know, bring in more footfalls in, from the, lower, production categories? Yeah. So I'd answer that. You know, both PVR and INOX are very strong brands in the consumer, you know, space. Both the brands attract. These have an existence of over 20 years and have a very strong consumer affinity, you know, and consumer visitation behavior. So, INOX used to get about 70 million footfalls on an annual basis, you know, pre-COVID. PVR used to get 100 million footfalls pre-COVID. With such large footfalls and, you know, consumer base, we've decided that we will continue to run and operate both the brands on an individual basis. While the corporate identity of the company will be PVR and INOX, both the brands will continue, you know, their journey and will continue to coexist as far as consumers are concerned. No. So my question was more with regards to, is there a way of using maybe INOX as a more value brand that you know? No, we don't think. I've got your question, but, you know, we don't think there is any change we want to do with respect to how both the brands are currently posting. B oth the brands have a certain perception. We want to continue and maintain that perception and not use one brand as a, you know, premium brand or one brand as a value brand. That's not my idea. Understood. Thank you, sir. Thank you so much. The next question is from the line of Lavanya Tottala from UBS. Please go ahead. Hello. Yes, thank you for the opportunity, and congratulations, sir. So most of my questions are answered. Just one thing, when you mentioned ad revenue, you expected to recover next year, is it on absolute levels or screen basis that you expected to reach COVID levels next year? At absolute levels. Okay. So it will still be lower screen basis even in 505 then? Yes. Okay. And, one thing on the synergy bit, synergies, based on the ticket prices for quarter two, the Rs. 20 which is showing it has impact of higher Hollywood share, which we have seen in Q2. So most likely that might decline a bit in the coming, quarters, right? Yes, it could, because ATP is a function of, you know, the kind of content we get. Bigger blockbusters in Hollywood do drive ATP up. You're right. Partly, you know, and that point is quite valid. You know, it will obviously, ticket pricing will partly be also be impacted by big films. But if you look at, you know, the way we've calculated the synergy, we've not based it on Q2 numbers. Our average ticket pricing growth was 25% in Q2, and average ticket pricing growth in the first quarter was much lower at 2%. So what we've done is, we've, you know, we've calculated over an average of 13% growth, which we've achieved in the first half of the year, which basically we thought is a much more fairer representation because there will be ups and downs, and some quarters will have higher ticket pricing than others due to content. So just wanted to call that out. Yeah. So I just wanted to mention that because Q2 last year, our ticket price was much lower, like it was somewhere around INR 25. Sure. Even on average, high for the first quarter, sorry, first half. That, that's fair, and, what you've pointed out is fair. It's quite possible that the second half of the year, we may have a lower ticket price growth. And so it is not a, you know, multiply, multiplication formula. It can vary, and it could be lower in the second half of the year. That's possible. Yeah. But can we keep it largely sustainable, even for the second half? Is that understanding right? Yes, absolutely. It could be, yes, it. Okay. Thank you so much, sir. Thank you. Our next question is from the line of Favilo from Favilo Fund s. Please go ahead. Congratulations on a great set of numbers, Mr. Bijli, and thank you for the opportunity. So my question is on the price elasticity of the tickets. So what I understand is that tickets, even for a blockbuster like Jailer, are priced lower, even when there is demand, where there is demand, as compared to a Jawan and all. So why is this different? Is it because of the competition? Or if that is the case, are there because you are concentrating the next opening of screens is concentrated in South, right? So how, if this is the case, how are we going to work on the ATP to increase the ATP down south? And I'll come on to the second question later. See, Jailer was a Tamil film, and in Tamil Nadu, there, there's a price cap in tickets. There are a few southern states where there's a cap on tickets, and hence we can't increase it. So the comparison with Jawan and Jailer was not right, because Jawan plays all over the country and in states where there's absolutely free pricing. So that's one answer. And when you said that, how would we increase the ticket pricing? Once those movies which are released in Tamil Nadu or Andhra Pradesh or Telangana, we have to go as per the rates which are already subscribed. But in other states, depending on the demand of the movie, the cost structure of the property, or as per the paying capacity of the people, we can price the tickets accordingly. Just addition to what Alok said, the price of Jailer in Karnataka was higher than Jawan. That's because Jailer was a bigger film in Karnataka, where there is no price restriction. Ours is a very heterogeneous market. Each state, each city has its own dynamics and are governed by the local dynamics. Well, North India, West India, Central India, Jawan was a much bigger title than Jailer, which is the reason Jawan tickets were more expensive as compared to Jailer. Okay. On to the second question, does the overhead spend, that is, the food and beverage spend, also vary depending upon the movie? So, for example, the crowd that might come for a Jawan might spend more versus the crowd that is coming for another. S o has it really according to the movie too? Not significantly, it is more region specific. Yes, you know, titles which are, you know, not family titles or where we see, you know, films which are depressing in nature, you know, which are, you know, more serious films, you can have very selective and niche audience. So yes, there is a marginal impact, but largely what we've seen is that, it doesn't change for every film. The trend is normally homogeneous, but obviously for each market, the trend is different. More and more family films where, you know, the group sizes are larger, people come more often. There is definitely a positive impact on the average food spending at the cinemas. Okay. Okay, thank you. That was it from us. Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead. Hi, thanks for the follow-up opportunity, follow-up questions opportunity. My question is on synergy. So if you look at the previous line of combined numbers at this COVID level, we had around 19%-20% EBITDA margins. And going by the quantified synergy benefits we had, we have shown in this quarter, it looks like our steady-state margin should be at least 200 basis points higher than the pre-COVID levels. Is this a right understanding? And this is what we can build in our numbers? Absolutely. I think this is what we had guided once we realize the full synergy benefits. Clearly, that should have an impact of at least 200 basis points on our operating margins. So that means the end quarter margin is still below our because this is a very strong quarter that we just achieved around our steady-state margins. So in a future scenario, kind of a blockbuster quarter should result in a much higher margins. This quarter already reflects a very large portion of the merger synergies. But yeah, you know, a lot of, a lot of elements will play out, like advertising revenue is still to recover, you know, to the fullest extent. And, you know, if we continue to achieve these kind of level of occupancies, can we do better margins from here? You know, 12 months out, definitely. Thank you. Thanks for the discussion today. Thank you. The next question is from the line of Apurva Mehta from AM Investments. Please go ahead. Yes, sir. Congratulations on great set of numbers. Sir, how much could be the synergy benefits in the coming quarters left to, you know, to cancel out? We can't, you know, give any quarterly estimates. We've given a, you know- But maybe on the bulk of business, say, okay, we still have like 30% left, or we have 70% we have done with it, 30% still remaining. Not like to give any guidance, sir. Okay. And then the cost trend when we is comparing quarter-on-quarter, you know, the rentals are up by 12%, personnel expense is about 8%, and then other expense is about 16%, too. Because rentals are more or less fixed in nature, why, why is there so much of, you know, inflation in such costs? You know, can you just throw some light? So three factors. One, we've added a lot of new screens, new eight screens and new shopping centers. So one, there is screen addition. Number two, rentals are subject to annual inflation. Number three, a lot of our rental expense and a lot of properties is linked to revenue share. In quarters where we'll have much higher occupancies, we also end up sharing much higher revenues in form of rentals with the landlords. So all three factors put together is the reason for increase in, you know, revenues, for rental costs. For personal and other expense, other expense on fuel are up by almost 16%. And, you know, so, even the- Same logic, if you calculate, you know, wages are subject to average 7%-8% annual inflation, and we've added a lot of new screens. You should calculate on a per screen basis, the effective cost increase will be very minimal. But this is again on... We have not added any screens barring from Q1 to, you know, Q2. We are more or less at just adding around 57 screens. And the per screen, if you see the first, everything is going up, you know, other expenses are up, personnel expense s are up by 8%, fuel on quarter-on-quarter. We're not talking about year-on-year. Yeah. So on quarter-on-quarter basis also, see, when you look at the new screen additions that we've done, in terms of new property, on a net basis, you compare per screens. All the old properties that we are shutting down are small, you know, dilapidated screens. Whereas the new screens that we are opening are in all modern shopping centers with different quality of staff, more premium screens. One, obviously the cost of running those screens is not the same. Secondly, there is wage, annual wage inflation, minimum wage increases, which happen from state to state. Two states of Tamil Nadu and Karnataka alone have had a 29%-30% minimum wage inflation this year. So wage inflation definitely takes place. Thirdly, temporary manpower, because, you know, a lot of our manpower also goes up during the add manpower, when the footfalls are high on cinemas, because we run largely a weekend business, and when the occupancies are at their peak, we have to supplement headcount. So for one quarter, we've added headcount this quarter. Our admissions are up by from 3.3 crore admissions in Q1 to 4.8 crore admissions, almost 45% over Q1. So we need additional hands to take care of consumers and, you know, service them on a weekend. So these three factors put together are the reason for the people cost increase. 37 screens is not a less number to open in a quarter with big ticket items like Kanakapura, Bengaluru properties in Rourkela, Patna, Delhi, Dharwad, so hence all this add to the cost. The movie distribution and screen charges, which have also gone up substantially, it is because of this blockbuster which is coming in, and that's why the thing has gone up, or there is anything else again? That's largely related to our PVR Pictures business, and it will continue to vary quarter- on- quarter, depending upon what films that we are distributing. So it is not linked to our core cinema exhibition business. Okay. Okay, thanks a lot, and wish you all the best. Thank you. The next question is from the line of Yash from Dante Equity. Please go ahead. Hi, congratulations on the good set of numbers. I missed the first few minutes of the call, so I'm sorry if this is repetitive. But my question is regarding your debt. Can you... Are you giving a guidance on debt for the next two years? On how the debt number is in the next two years. And also, what's the net debt right now? So, one, our net debt at the end of this quarter is about INR 1,100 crore, as compared to 1,330 crore, which was at the beginning of the year. So we've reduced our net debt by INR 327 crore in the first six months. I think I can only give you a directional sense over the next two years. You know, depending upon how the business performs, our endeavor would be to reduce and tear down leverage from even the existing levels. Our current year, you know, endeavor is to get to 1x to 1 debt to EBITDA. You know, but over a period of next two years, we want to fund all our growth from internal accruals, be free cash flow positive, and use the free cash flow to reduce, you know, leverage even from the existing levels. So with the how are your expansion plans basically looking for the next two years? What you're trying to basically tell us that the next phase of expansion will basically come through internal accruals? That's correct. That's correct. Even current year, if you look at our presentation, you know, we are adding 160 screens. We've guided that we will, in the first half of the year, we are free cash flow positive after funding all our CapEx. And the endeavor would be that even for the full year, we are reasonably confident that we will be a free cash flow positive company after funding all our growth from internal sources. To conclude your answer, would it be safe to conclude that the debt for PVR INOX is peaked out? Absolutely, it has peaked up. In fact, it is now going down from its peak level. Could you give me the number for your interest, what really borrowing at, on a net level? Yeah. Our average cost to date is approximately 9%. Do you see that coming down anytime soon? Because you've become basically cash flow positive, right? I think that should alleviate you in terms of the security market. Yeah, we pretty much benchmark most of our borrowings to, you know, market. So it will move in line with how the interest rates move from the existing levels. Most of our borrowings are benchmarked to market rates. Thank you for taking my question. I appreciate you. Have a good day. Thank you so much. As there are no further questions, I would like to hand the conference over to the management for closing comments. Over to you, sir. Yeah. Thank, thanks everyone for taking out time to join, the earnings call. If you have any unanswered questions, please feel free to write to us, and we'll be happy to respond. Thank you. Thank you so much. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.