PVR INOX executive exits after alleged

PVR INOX, India's largest multiplex chain, asked a senior executive to leave in April after an internal investigation into alleged kickbacks from developers. Sources told the Economic Times the alleged payments, made over several years, could aggregate up to ₹200 crore.

The executive is Pramod Arora, the former chief executive officer for growth and investment. People familiar with the matter said the allegations involve an executive close to the company's promoters, raising questions about the duration of the alleged scheme and awareness among others. The circumstances could also bring scrutiny on co-promoters Ajay and Sanjeev Bijli, who have run the company since the PVR and INOX merger became effective in February 2023.

A person with direct knowledge said, "This was going on for several years." The company learned of the allegations in April, after which Arora and a few others were asked to leave immediately. The investigation sought to establish the extent of the alleged wrongdoing and determine if others were involved, with the matter discussed by the company's board in recent meetings.

PVR INOX did not respond to questions from ET. WhatsApp messages to Pramod Arora went unanswered, and ET could not independently identify the developers allegedly involved.

Expansion Role and Aftermath

Pramod Arora played a key role in PVR's expansion into Tier II and Tier III markets through asset-light formats. These included franchise-owned, company-operated (FOCO) cinemas and the SMART/Smart Screen initiative, which offer lower-priced, digital-first multiplexes for value-conscious audiences in smaller towns.

According to a declaration signed by Arora, he is restricted from joining rival cinema chains and from contacting PVR INOX's existing vendors. The declaration provides for potential legal action in the event of a breach.

As part of the merger contract, Ajay Bijli is responsible for running the combined entity for the first five years starting March 2022.

Company Scale and Growth Plans

PVR INOX was created through the 2023 merger of PVR and INOX Leisure. As of late August, it operated 1,786 screens across 356 properties in 113 cities in India and Sri Lanka. The company plans to add another 1,000 screens over the next five years, largely through franchise-led expansion.

Financial Performance Context

The allegations emerge as PVR INOX's financial performance shows improvement. The company reported a consolidated net profit of Rs 56.5 crore for the April-June quarter of FY27, a swing from a loss of Rs 54.5 crore a year earlier.

Higher occupancy, a stronger film slate, and increased contributions from advertising and food and beverage helped expand the EBITDA margin. The company had net cash of Rs 80.7 crore at the quarter's end, and its board has approved a Rs 300-crore share buyback at Rs 1,450 per share. Promoters hold about 27.5% of the company, with the remainder held by foreign investors, domestic institutions, and public shareholders.