PVR Ltd.'s Growth and Future Prospects
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Case Details:
Case Code : MKTG127
Case Length : 20 Pages
Period : 1995-2005
Organization : -
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Film Exhibition Industry
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Company Profile
The origins of PVR can be traced to March 1974 when Priya Exhibitors Private Limited (PEPL) was established. The private company operated a single-screen cinema hall called Priya at Vasant Vihar in Delhi.
The founder, Bijli Pahalwan, owned other businesses, chief among them being the Amritsar Transport Corporation Private Limited (ATCPL), a freight carrier company. Pahalwan's son, Ajjay Bijli (Bijli), joined the family business after graduating in 1988.
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From the beginning, Bijli felt that the cinema business was more glamorous than the transport business, and so paid more attention to PEPL.
In the early 1990s, the cinema exhibition business in India was passing through a bad patch because of the growing popularity of video cassette players. People were renting video cassettes of the latest movies and watching them in the comfort of their homes.
However, good quality theaters were still in demand. During this period, some theaters in Delhi like Chanakya
and Regent installed digital sound systems and were successfully screening
English movies.
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To end the monopoly of Chanakya, Bijli went in for a renovation of Priya at an investment of Rs. 4 million.
Around this time, on the suggestion of Mike Macclesfield, president of Universal Pictures,9 Bijli discussed the possibility of tying up with Village Roadshow Ltd.10 (VRL), one of the world leaders in the multiplex business, to build multiplexes in India.
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In April 1995, PEPL entered into a 60:40 joint venture with VRL to form Priya Village Roadshow Limited (PVRL). The company adopted the PVR 'Movies First' logo (Refer Exhibit I for the Company logo). In the same year, the group bought a single-screen theater called Anupam at Saket in Delhi and converted it into a four-screen multiplex at an investment of approximately Rs 70 million. Thus PVR Anupam, the first multiplex in the country, was born. PVRL broke even within two years. Priya was brought under the management of PVRL in January 2000. However, it continued to operate as a single screen theater and was called PVR Priya Cineplex. PVRL's revenues for 1999-2000 reached Rs 240 million. In the year 2000, on the advice of friend and guide, Sunil Mittal,11 Bijli attended a three-week 'Owner's Management Program' at Harvard Business School.
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In 2001, PVR started two new multiplexes -- PVR Naraina and PVR Vikaspuri -- in West Delhi. In early 2002, VRL decided to divest its investments in 18 countries including India. This was part of its strategy to confine itself to a few select areas. As per the divestment strategy, the company sold its entire shareholding in PVRL to PEPL.
On June 28, 2002, the name of the company was changed from PVRL to PVR Ltd. with no meaning attached to the alphabets. Though VRL sold its stake in PVRL, it continued to provide technical and marketing services to PVR. In March 2003, the India Advantage Fund-I managed by ICICI Venture12 invested Rs.380 million and acquired a stake in PVR (Refer Exhibit II for shareholding pattern of PVR Ltd).
In May 2003, PVR opened a seven-screen multiplex in Gurgaon, the biggest one in North India. In May 2004, it started a two-screen multiplex at Faridabad, and in November the same year, it opened one more multiplex there with three screens. PVR opened PVR EDM in Delhi in March 2005 and PVR Spice in Noida in November 2005.
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