Ladies and gentlemen, good day and welcome to the PVR INOX LIMITED Q4 FY25 Results Call hosted by Axis Capital Ltd. 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Shah from Axis Capital Ltd. Thank you, and over to you, sir. Yeah, thank you, Navya. Good afternoon, everyone, and welcome to PVR INOX LIMITED Q4 and FY 2025 Post-Business Earning Call. The call will start with brief management remarks on the earning 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. Gaurav Sharma, Chief Financial Officer, and other senior management personnel. Over to you, Mr. Ajay, for your initial comments. Thank you. I'd like to invite you all to discuss the audited results for the quarter and the 12th months ending March 31st, 2025. We've 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've had a chance to review them. The box office in FY 2025 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 box office collections of the company. Indie box office dropped by 26% this year due to 14% fewer releases, no major superstar films, 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 Pushpa two and Kalki resonating nationwide, showing how audience tastes are shifting towards big pan India stories. Jawan was the biggest hit of the fourth quarter, grossing around INR 7,000,000,000 at the box office, followed by Sankranthiki Vasthunam, Sky Force, and Empuraan. With lifetime collections of INR 1,250,000,000, Empuraan became one of the highest-grossing Malayalam films ever. In contrast, Sikandar starring Salman Khan fell short of expectations at INR 300,000,000. We welcomed 30.5 million guests across our cinemas in Q4 FY 2025 and 136.9 million guests in FY 2025. In terms of the financial results for the quarter, the following numbers were calculated after adjusting for the impact of IND AS 116 on lease accounting. Total revenue for the quarter was INR 1,285 crore, EBITDA was INR 25 crore, and PAC loss was INR 106 crore as compared to revenue of INR 1,290 crore, EBITDA of INR 35 crore, and PAC loss of INR 90 crore in the same period last year. Despite industry-wide headwinds stemming from a limited slate of Hindi and English releases, 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 INR 124 crore in gross ticket collections during the year. With an aim to making cinema going more accessible and habitual, FY 2025 saw the successful execution of four Cinema Lovers Days and one National Cinema Day, offering tickets at just INR 99. We have also launched Blockbuster Tuesdays, a weekly initiative offering tickets at INR 99 or INR 149. Despite content challenges, we balanced value promotions with strategic pricing on big releases, maintaining a steady ATP of INR 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 2020 to FY 2025, 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 CPI 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 12-24 months. In recent weeks, we inaugurated two new cinemas with nine screens under the FOCO model, one in Jabalpur and the other in Raipur. As this strategy scales, we anticipate a significant reduction in new screen 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 open 77 new screens during the year. We're pleased to share that we continue to strengthen our balance sheet, with net debt reduced from INR 1,430 crore in March 2023 to INR 952 crore in March 2025, a significant reduction of INR 478 crore since the merger. This reflects our sharp focus on capital efficiency, disciplined cost control, and proactive cash flow management, even amid content volatility. The year ahead looks very exciting, with potential Bollywood tentpoles like Sitaare Zameen Par, War two, Housefull five, Jolly LLB three, Delhi Files, Thamma, Alpha, among others. Regional movies also have a robust lineup, with Thug Life, Coolie, Raja Saab, Toxic, and Kantara two. Among other major titles from Hollywood are Mission Impossible: Final Reckoning, Fantastic Four, Formula one, Ballerina, Superman, Jurassic World, The Conjuring, Avatar three. Our current screen portfolio stands at 1,743 screens across 352 cinemas in 111 cities in India and Sri Lanka. Now, I'd like to open the platform for any Q&A. Thanks once again for joining. 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 touchtone phone. If you wish to remove yourself from the question queue, you may press star and 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 1st question is from the line of Abneesh Kumar Roy from Nuvama. Please go ahead. Yeah, thanks. My 1st question is on the Hindi movie trend. Last week, when the geopolitical risk was there, we did see one Hindi movie shift to OTT. If you could discuss, are there more such examples, or it was a one-off because of the geopolitical issue at that time? The Hindi pipeline, if you see, last few quarters, always we are seeing bunching up and then weeks when no content is there. Is that issue getting resolved in terms of proper planning of the pipeline for the Hindi? Yeah, I mean, all these movies, Sitaare Zameen Par, War two, Housefull five, Jolly LLB three, and all the various movies I basically talked about just now, they're all on track to come on the big screen. We also started off very well with Raid two, before that, Kesari two, and Jaat also released. I think the momentum of Hindi movies has been very good, and people are coming back to watch the big screen. Even the industry believes that the big screen is the place where the movies must be released. That was a one-off that happened, and the matter is sub judice. Maddock, last minute, decided to release a movie which was already being promoted at the cinemas for the last two months. We took the matter to court, and we've got a stay against its release on the OTT platform. The matter is subjudiced, so at the moment, I can't speak any further on it. 2nd question is on the expansion plan. Two parts to this. One is the FY 2025 net addition was hardly anything, five screens only. Now plan is to open, say, 100-110 screens in FY 2026. Could you tell us, in terms of closure, FY 2026, what's the current number looking like? 2nd is, in terms of your new initiative of low CapEx plus management contracts, what has been the initial response of the developers? Any tweaking needed? What is the feedback, if you can share on that? You see, the screens that we closed are like any other retail business. Ultimately, if the malls become old or if the shopping center does not have the infrastructure of lifts and escalators and there is no tenant left, and newer properties and newer malls are coming up in the vicinity or our lease has come to an end and we do not see any revival of that property, this is a very normal thing to do for any retail business, and that is why these 72 screens were exited. That has also saved INR 80,000,000 of EBITDA loss that these cinemas are making. I think that is a positive, and it will be ongoing. 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. This year, also about 110 odd screens will be there. As far as the exit is concerned, we do not have anything just now planned. We will continue, but 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 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 the hospitality industry has done this since time immemorial. Franchise-operated and company-owned model, and where the brand earns the management fee. We are growing by that model. Also, in certain cases, there is a large contribution from the developer himself. Recently, we have opened in Director's Cut in DLF Mall of India Mall in Noida, and that has also been with the significant contribution from the developer. I think we will be doing all three things. We will be doing the FOCO model. We'll be doing asset-light model. Also, wherever we do get an opportunity to where all the things are in line, the rent is good, the location is good, and we can even spend our own CapEx as well. Overall, the CapEx intensity will come down without compromising on the growth trajectory. One quick follow-up, and that is the last. You have given guidance for a new screen edition. In terms of the CapEx-light model and management contract, what is the number you have in mind currently? It may not be a strict guidance because the talks are ongoing. 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 could be a substantial number from there also? I mean, I don't know exactly. 23 properties we have signed, and 110 screens are in the asset-light model and the FOCO model. Coming up, there are some properties which were signed earlier which are opening this year. Gaurav, you have the number of how many are opening this year are asset-light and how many are the normal model that we have? I think we're talking about 50, 50. Abnesh, 111 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 1st month of this financial year. One in Jabalpur, one in Raipur, they are under FOCO model, and one five-screen Director's Cut in Noida, which is into an asset-light model. You will see bulk of the screens this year will be under that model. Right. No, thanks. That's all from my side. Thank you. Thank you. Thank you. Next question is from the line of Kavish Parekh from B&K Securities. Please go ahead. Hi. Thanks for the opportunity. My 1st question is on your expansion strategy. 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. Were there any execution issues that seem to have emerged in this new model? 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 1st question. I'll take the 2nd question later. No, I just want to get some clarification on your 1st question. We've opened 77 screens, and just in the 1st month itself, we've opened 20. I am not seeing any challenge in opening screens. Where are you seeing a challenge here? No, so I understand that as an end of nine months and as an end of the financial year, we had opened 77 [old] screens. In the fourth quarter, particularly, no new screens came up. I think that was on account of delays. Yes. Yeah, yeah. Those got shifted to just now. In the 1st 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. Due to licensing issues, they got delayed by one month. Understood. 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 incur CapEx on their books? No. I mean, long-term, everybody realizes this post-COVID period is a temporary period. Everybody realizes in the Indian film fraternity, as well as the consumer, that it's a matter of time. In fact, this year itself, people will come back to the cinemas. They are coming. Already, we got 137 million people coming to our cinemas. It remains an integral part of any mall to generate footfalls. These are temporary dips, but everybody believes in the long-term potential of this format of multiplexes in a country like India, where 1,800 films get released every year. Pre-COVID, close to a billion tickets used to get sold. I think this format of going out and watching movies on the big screen is not going anywhere, and that reality has not lost on anyone. None of them have lost. Understood. Understood. My 2nd question is on your debt reduction plan. Most part of the year remains tepid, with the exception of a few movies that do well sporadically. I understand that expectations for the next year are high. The anticipated sale of certain key properties was to significantly aid deleveraging efforts, but those plans have been pushed for some quarters now. 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 near to medium term? Gaurav, would you like to answer that? Sure. Even in last financial year, despite volatility in content and pressure on earnings, we were able to reduce our net debt levels by INR 340 crore. We took various initiatives during the year in terms of aggressively expediting recovery of security deposits for properties that we exited, collecting GST tax refunds from authorities, also renegotiating terms with our creditors. As a result, we were able to cushion the impact of operating cash flows, and we were able to achieve an INR 350 crore reduction in our net debt levels. I think going forward, with uptick in earnings and 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 obligations 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. 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, we'll make those decisions. Understood. Thanks a lot for that. The last question from my side is that on the increasing adoption of asset-light models, what impact do you foresee on overall margins? As such, properties constitute a growing share of your portfolio. What level of margin enhancement do you anticipate, and over what timeframe? What is the estimated CapEx for FY 2026? Thank you. 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. Overall cash flow impact in near term is going to be significant. In terms of our CapEx, we expect that financial year 2025-2026, we will incur a total CapEx of roughly in the range of INR 400 crore-INR 425 crore, 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. Understood. Thanks a lot. That was it from my side. 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. Hi. Good evening, and thanks for taking my question. I have two. 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 theatrical and OTT releases increasing? Any sense on that would be helpful. 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 Aamir Khan's new movie, Sitaare Zameen Par. In fact, he's not releasing it on OTT at all. I think the content makers have acknowledged the fact that if you make a movie and release it theatrically, and there are N number of examples last year, and this year has also started off with Raid two in K-City proving that, that there's no upper limit to how much a movie can earn. The biggest monetization window continues to remain theatrical, which was there pre-COVID and now as well. After that, it can be then monetized by going to various windows. That's how the journey of any content happens. OTT platforms, of course, are also very careful now that they would like to see a theatrical performance of a movie before they buy. Because they were buying a lot of movies because shootings had stopped in the middle, and also they were not being able to create TV shows. Now, if you look at a 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. Now, after they see the theatrical performance, they know exactly how much to bid for the movie. It works both for the OTT players as well as for the film industry because if your movie is small, it has hit a jackpot and done very well, now you can charge not just on the basis of your cost of production, but you can charge on the basis of the box office collections. There are N number of studies which have shown that movies which get downloaded on OTT platforms are the ones which have had a very good theatrical run. There is a certain recall value that comes when a movie does well. I think water has found its own level now, and I think this whole question itself has become OTT now, over the top, because every single platform has got its own place in the sun. Got it, Gaurav. Thanks for the detailed answer. The 2nd 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 INR 100 EBITDA in the normal model. What is the anticipated EBITDA absolute amount that you will earn from this new model? I understand your revenues will be lower, but you will earn a management fee. Overall, EBITDA might be on the lower side. Just getting a sense on those numbers. Sure. It depends on what model is adopted. If it is a management fee model, then we just get a share of overall revenues, and we do not get to consolidate the P&L in our books. In case of asset-light, where there is a joint investment by PVR INOX and our development partner, there we have some sort of revenue share arrangement in view of the investment made by the developer. It will vary from case to case depending on the quantum of investment. If it is a 50% CapEx investment, then the sharing will be different versus it is an 80% CapEx investment. There is no straight answer to that, but yes, the EBITDA margins will be lower versus a classic lease model simply because you need to share something in return for the investment made by the developer. Got it. This is like the finance cost will come above the EBITDA line. Something like that will happen probably. 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 a 15-year lease that we typically have for the cinemas that we open. 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 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%. 8.5%. 8.5%. Plus some of the fee which accrues to us on account of the IT services. So effectively about 10% of the. Revenues. Revenues is what we end up getting. Correct. 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. In a REITs model, which is a real estate investment trust, which most of the developers in the country basically end up pursuing, the yield is on the basis of REITs on the investment that the developer partner makes. Got it. This is helpful. And this revenue share is on entire suite of revenue, including ad income, etc., apart from the distribution? There are two models out there. Like in Raipur, Raipur is an ad-free model. There are no ads. Instead of the ads, there is an additional show that the developer partner ends up running. We are basically making the fee out there. In case there is ad on the ad revenues, we take 35% of the revenues. Got it. This is helpful. Thank you. I'll come back in the queue for any follow-ups. Thank you. We take the next question from the line of Jinesh Joshi from PL Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, I just want one clarification. I mean, out of the 100-110 screens that we plan to open in FY 2026, how many of them will be on FOCO model? Because ultimately, those screens will not get consolidated into our P&L, and the actual opening number could be slightly lower. Can you just share the FOCO count for FY 2026? Okay. Got it. If you can give any further on the data for this year. I can directly tell you that bulk of more than 50% of the new screens will be under the capital. It will be a combination of FOCO and joint investment. Many of these screens are in the process of getting signed, the agreements are getting finalized. We have provided in our investor update also that about 46 screens across 11 cinemas we have signed under the FOCO model. There are 55 screens across 12 that have been under the asset-light model. Typically, it takes about 12-18 months for all these screens to get sorted out and all the licenses in place, and they open up. It will stagger over the period of next 18 months, and they will open as per their respective dates. In terms of a way guidance, it will be like a 30, 70. 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 in our balance sheet. Got that. Got that. Sir, one bookkeeping question. While our other income is about 40% in this quarter, and we have stated in the FOCO that it is predominantly due to income from distribution of movies like Sky Force, etc., if I look at our movie distribution and print cost, that is down 10% year-over-year. Can you please explain the reason behind the cost reduction when the income is up quite substantially? There are various elements in the distribution income. We get to have pure revenue share from the proceeds that we collect, plus there are other elements around marketing commission, etc. While you're seeing a 40% uptake in the movie distribution revenue, 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. 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. Is there any change in term which you would want to highlight, or is this something which is kind of slightly one-off in nature? I think you 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 the lineup of films and the rights that we get for distributing certain films in certain quarters. 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. Quarter-on-quarter variations will always be there. 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 a majority of the CapEx, and perhaps he gets compensated by the MG and rev share. But do these properties also get capitalized on the balance sheet as ROU, or how does it work out? The FOCO model, we don't capitalize because there is zero investment from PVR. On the asset-light model, we only capitalize the CapEx that we invest in the property. As far as the lease rentals are concerned, they are capitalized as per IND AS 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 in the balance sheet. Got that. Just one small clarification. The ROU figure that has fallen from 2024 to 2025, that could predominantly be because of the closures, right? The screen closures. That's it. Got that. Got that. Thank you so much, sir. Thank you. Thank you. We will take the next question from the line of Vaibhav Muley from YES SECURITIES. Please go ahead. Hi team. I just had a question regarding your FOCO model. You mentioned that the revenue share will be around 8.5% of the revenue. Is there any incentive in terms of related to the performance of that particular screen? If a screen does particularly well, is there any incentive of a higher revenue share? It's covered up in the percentage itself. The percentage remains consistent. Effectively, if you look at the success rate in terms of the proposals that come to the table, it's about 20%. 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 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. 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. In this model, the feasibility studies are carried out on a very stringent basis where there is no upside or a downside to the percentages. It's getting covered in the percentage itself. There is no sweetener out there in terms of seeking a higher percentage if the screen does well. Understood. My 2nd question was on the Hollywood side. Q4 also had decent lineup in terms of Hollywood movies like Captain America, then we had Snow White. However, the box office collection for these movies was pretty low. 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? Kamal, would you like to take that question? This would be a strong year for Hollywood. If you look at the advance that we've had for Mission: Impossible 8, 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 Thunderbolts really well. Our expectations from Hollywood films is extremely buoyant this year. We are feeling extremely positive. 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. Understood, sir. If I may just squeeze in one more question for Q1, till now, how has been the box office collection so far? Typically, we don't make forward-looking statements, but if you look at the global box office, that's tracking about 17% higher than last year, same period. In India, if you look at the first quarter year till date, similar numbers. Got it, sir. Thank you so much for answering my questions. All the best. Thank you. We take the next question from the line of Umang Mehta from Kotak Securities. Please go ahead. 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? As a strategy, Umang, we maintain a certain cash reserve in our balance sheet given the fixed cost-heavy nature of our business. A lot of work has been done in terms of expediting collections across all our receivables. There has been a lot of work around working with the ticket aggregators in terms of advances on convenience fee. 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 expectations. Overall, I think the net debt and the cash levels will net debt level will continue to come down. There will obviously be quarter-on-quarter variation, but on an overall year-on-year basis, you will continue to see a reduction in net debt levels and a healthy cash balance sitting in the balance sheet. Understood. The 2nd related question was on CapEx. You mentioned that it will increase to INR 400 million plus because you will be renovating more than what you did in last year. Would it be possible to split the CapEx in maintenance and new cinema CapEx? That's it. Thanks. See, I think broadly, we will spend roughly INR 250-300 crore on 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 fit-outs. The balance we intend to spend across renovations, maintenance of our existing circuit, as well as IT-related CapEx. Got it. Thank you so much. All the best. Thank you. We take the next question from the line of Digant Haria from GreenEdge Wealth. Please go ahead. Yeah. Thank you for the opportunity. My 1st question is, these 1,800 movies a year, this number has been probably there for the last 10 years. Has the number of films who can do good at box office, that number, has it stabilized? It's been on a downtrend, has it stabilized? That is question number one. Question number two is, sir, if you can give some idea on how these Bollywood content creators are thinking, because see, how muchever we may say, it does not affect. This Bollywood boycott thing is probably big. We saw this during the war period also that there are so many Bollywood actors who are either people do point out their pro-Pakistan behavior or things like that. Is that realization finally dawning upon Bollywood that they'll have to give up their old ways, probably figure out new things? Any comment you can make on this part? To your 1st question, there was a significant drop in midsize and big Hindi films post-COVID. In fact, that number has been improving gradually year-on-year basis. That number has been inching up. Last year we had, in terms of quantity of films, a decent number of films, but unfortunately, we did not have enough big films. We had midsize films and small films, but we did not have enough big films. Overall, quantity was decent. This year, quantity is a little better. The big films, sequels, midsize films, sequels 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 Jaat, Kesari two, Raid two, they have done extremely well at the box office. Of course, there is a general positive sentiment for Hindi films across the country. Your 2nd question, again, because Hindi films are stabilizing. This is one industry where actors and directors and celebrity producers are constantly in news. Media is very key, and 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. With this oversupply of views and information, often there will be missteps. I think that is part and parcel of the way media operates, the way celebrity culture operates. Its impact on our business, not too much. I mean, there was this whole thing about boycott Bollywood. People wanted to sort of not support Hindi film actors. No, that has 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. Okay. Okay. Okay. Thanks. That's very clear. My last and 2nd 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? Will it be the rents or will it be the CAM or what line item still has some levers left for us on the cost side? Yeah. I think we continue to be working across all line items in our P&L to control cost. That is what is fully under our control, like content quality and other things on the revenue side. Rent and common area maintenance, which is occupancy cost, is bulk of our fixed cost and which is driven by lease contracts. Our development team has been working very hard to negotiate with the developers to get reliefs on rentals. 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 our cinemas in terms of self-ticketing kiosks and other initiatives that can reduce manpower, as well as electricity, utility. In some of our cinemas, we have deployed solar panels and moved to renewable energy. That has resulted in controlling utility cost, similarly on other line items. There is a continuous regular review on each and every line item in our P&L on the cost side. We are pretty hopeful that we will continue to be disciplined on the cost front going forward as well. All right. All right. That's it from my side. Thank you so much. Thank you. We take the next question from the line of Yash Sonthaliya from Edelweiss Public Alternatives. Please go ahead. Hi. Thank you for the opportunity. I have two questions. 1st, I need a small clarity. In our FOCO model, where we are getting 6%-10% 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 [Foreign language]? There's no cost. There's no physical cost which is basically getting incurred in this model. hundred percent of the revenue sharing we are getting will be transferred into our EBITDA, right? Yeah. Absolutely. When the screens are under development, including the cost of people visiting those sites, it is incurred by the development partner. Understood. In our recent year, our variable cost for movie exhibition has decreased a lot. Is it 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? No, our film hire cost is normally in the range of 45%-46%. However, in financial year 2025, it was 44.6% simply because the number of movies which crossed INR 500 crore plus were lesser. As a result, in our film hire contracts, there was a less amount of bonus payouts that happened. Also, we did a lot of re-releases during the year. 5% of the admissions during last year came from re-releases, and re-releases typically have lower film hire charges as compared to a fresh film. That is why you are seeing a 137 basis points reduction in FSC. I think going forward, we will be in the range of 45%-46% or 44.5%-46%. Understood. That's all from my side. Best of luck. Thank you. We take the next question from the line of Arun Prasath from Avendus Spark. Please go ahead. Good evening. Thanks for the opportunity. My question is on the asset-light models. We have signed around 11 cinemas in management contracts and 12 in asset-light models. Based on this, can you explain to us what kind of developers are going for management contract and what kind of developers are going for asset-light? Is there any commonality about this geographically or the size of the developer? Some light on this will be helpful. The way it really happens is the process of selection is strategic in nature. In many of the territories where we already have an existing lease model, we may perhaps go for an asset-light model. In the new territories wherein we do not have cinemas or we have cinemas which are sparsely spread out, we may go in for a franchisee-owned company-operated model. 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 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 FOCO model instead of an asset-light model. Sorry, I didn't understand this leverage, but can you just explain? 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. A security cost is a common cost wherein the same security agency gets used even for the cinemas. The housekeeping costs are common costs wherein the same housekeeping agency ended up getting used for that. 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. 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 one, tier two, tier three series. We are even going to have the FOCO model cinema coming up in Mumbai by end of the year. All right. So does the developer have a say on this, or we present him this option and he has to choose among that? We are managers who have guardrails around the brand. Guardrails are given in. Other than that, the developer has a lot of say within the model wherein he's empowered to take certain calls in terms of, let's say, a ticket price, let's say, some of the other things that he's looking at into the model. It's a typical franchisee-owned company-operated model. Alongside the guardrails, the developer has a say in terms of the revenue matrices that we end up doing for him. 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 asset-light model," or, "I want a traditional model where it needs to be completely leased out? Yeah. He has every right to choose, and we have every right to reject. Okay. Understood. When we are designing the, so for example, in asset-light model, you have mentioned 40-80% CapEx per developer. How is this also decided? 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. 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 vogue and that are getting practiced. One is there is a yield-driven model, which is akin to a REIT 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. On a REIT-based business model, he has a very little downside? He has very little downside. Let me give you an example. Let's say if the yield on our REIT model is hovering around 8%, and we are giving a 9% yield, so he has a benefit on the table itself. For us, the asset is basically 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 which case we have the option to walk our way, and the developer ends up being with the asset to be given to another operator. Okay. So this 9% or 8% yield is irrespective of the content quality or how the content is performed? That is basically kind of fixed or? 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 instead of choosing a fixed yield model, he ends up choosing a rev share model. Our standard rev share is 15% of the box office and the concessions revenues. 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. Understood. Finally, on the existing set of 1,700 screens, is there any possibility we will transition as and when the lock-in period ends or as and when the contract ends? We will give an option to the developer to opt in. Never say never is the thing. It all depends how this whole traversing happens. The potential opportunities cannot be negated as of today. Suggesting that is there a firm plan or something? No. Going forward, there may be opportunities which may come onto the table in terms of being able to convert a regular model to a FOCO model. Depending on the financial viability, we may end up choosing that. Okay. Understood. Thank you very much, alluders. Thank you. We take the next question from the line of Abhishek Kumar from JM Financial Ltd. Please go ahead. Yeah. Hi. Good evening. My question is also on the FOCO model. 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. In that, if the developer has to give you 10% of the revenue, for him, with little expertise and little benefit of scale, how will he make money? Isn't it more beneficial for him to just take 15% as rent of revenue and leave the operations and the cost associated with it to you? Absolutely a great question. He should have that availability from a top-of-the-mind recall operator to be in his mall. Usually, shopping centers work on the principle of five Fs, which is fun, food, fashion, films, fitness. These are the five Fs which get covered in a shopping center development. In this, 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 will or may consider us. It is an optionality which is there. Most of the shopping centers today, as we see in the country, are incomplete if they do not have a cinema operation. That is where it goes. In terms of financial modeling, as you go up, cinemas are usually placed on the 3rd floor, which is the top floor of a shopping center. 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%-18% from the whole shopping center. That is how the mechanics of a shopping center model works. Okay. My question was more around whether if he has to choose between a FOCO model and the traditional model. Not very clear if the risk-reward favors a developer given how the Bollywood and general exhibition business has performed. Two reasons out here. Yeah. 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. Most of the development partners that we come across actually know the consumer psyche perhaps a little better. They have certain levers out there to be able to improve the revenue matrices. They are able to help us give that support also as well. Let me take an example of a concessions pricing or even a ticket pricing. They 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. That is one. 2nd is, since there is a little bit of pride of having a PVR INOX cinema being your own cinema. 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. One, you're talking about the break-even point not being achieved over the last two years. 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. Most of these development partners believe in the long stay of the game. They're not living on a quarter-by-quarter basis unlike a financial institution. Sure. That's helpful. Thank you, [audio distortion]. Thank you. We take the last question from the line of Pankaj Mendiratta from Bank of America. Please go ahead. Thank you for the opportunity. Hi, Management. Good evening. Three quick questions from my side. 1st one, your thoughts on Karnataka government's budget announcement on capping the movie prices at INR 200. Where are we? How much impact do you see? Have you gone back to the government and asked for further concessions out there? The government has taken in. Yeah. Yeah. Go ahead. No, no. Go on, please. I'm sorry. As of now, this has not basically been implemented by the government. As of now, it is in abeyance. Till such time the matter comes up, there is no need of any analysis to be done on that count. Got it. Cool. 2nd 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 conversation happening around or not really? See, I think, as I said earlier, our capital allocation strategy is very clear. We will focus on generating free cash, which will be used towards deleveraging the balance sheet further. We would ideally want to come down to negligible net debt levels over the course of the medium term, over the course of the next two to three years. That is our priority number one. Once we have achieved that goal, the board will decide on dividends and other alternative methods of the cash. Got it. Thanks, Gaurav. Is it safe to say that once that happens and if the sale proceeds from the management contract cinemas, then one might expect that as a bullet payment for dividend? Could that be a scenario? See, I would not like to make a specific comment on that. That's a decision that the board will take at the right time. I think we should leave it at that. Sure. Thank you. That's it from my side. Best of luck for future quarters. All right. Thank you so much. Thank you. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you, everyone. Thanks so much for joining this call, taking out time today. We will be happy to address your questions. In case there is any further question that you may have, you can reach out to the investor relations team at PVR INOX, or you can write to me. 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 lines.