New Delhi, Jan 26 (PTI) Multiplex operator PVR INOX on Monday said it will divest its premium snacking business under the 4700BC brand to FMCG major Marico Ltd in an all-cash transaction valued at Rs 226.8
crore, a move aimed at reducing debt and sharpening focus on its core cinema operations.
PVR INOX expects this deal to "be completed within 30 days from the date of definitive agreements," following which the leading film exhibitor will become a "negligible debt" company, its CFO Gaurav Sharma told PTI.
The company's board has approved the sale of its 93.27 per cent stake in Zea Maize Pvt Ltd (ZMPL), which owns the 4700BC brand, according to a regulatory filing.
"This exit is in line with our strategy of strengthening the balance sheet by monetising assets or mature investments and improving capital efficiency," he said.
Created after the merger of PVR and INOX in February 2023, the company has been pivoting towards an asset-light model over the past three years, with a focus on reducing capex intensity and debt levels.
"So post this divestment, the proceeds will be used towards further reducing the debt and redeploying the capital in our core business. We will be a negligible net debt company after this transaction is completed," he said.
ZMPL reported a turnover of Rs 98.66 crore, contributing 1.71 per cent to PVR INOX's consolidated topline.
However, Sharma noted that despite strong revenue growth, the subsidiary has been loss-making at both EBITDA and PAT levels.
"This subsidiary ZMPL has been doing very well in terms of revenue, but it has been a loss-making subsidiary, both in terms of EBITDA and PAT," said Sharma, adding, "the next phase of growth for this company requires a significant amount of capital, as well as FMCG expertise in terms of wider distribution network, product expansion capabilities".
So from PVR INOX's perspective, this exit is in line with its strategy of strengthening its balance sheet by monetising assets.
4700BC is one of India's leading premium gourmet snacking brands, renowned for its popcorn and range of innovative snack offerings such as popped chips, makhana, crunchy corn, and nachos.
"PVR INOX has monetised its entire investment in its subsidiary ZMPL to Marico Ltd in an all-cash transaction for a total consideration of Rs 226.8 crore," said a joint statement from PVR INOX and Marico.
Upon completion of the said sale, ZMPL would cease to be a subsidiary of PVR Inox, it added.
"We have invested about Rs 94.6 crore as equity in 4700BC over time and this transaction has delivered a healthy return. This Rs 226.8 crore (deal size) translates to an IRR (Internal Rate of Return) of about 24.5 per cent on PBR INOX total equity investment," he said.
Confirming the development, Marico said it has "signed definitive agreements to acquire 93.27 per cent stake" in ZMPL from PVR INOX which owns "4700BC", one of India's leading premium gourmet snacking brands, renowned for its popcorn and range of innovative snack offerings such as popped chips, makhana, crunchy corn and nachos.
"Going forward, 4700BC will focus on driving accelerated growth through new product launches across emerging snacking segments, strengthening its multi-channel distribution network, and building a differentiated premium brand anchored in innovation," said Marico.
PVR INOX is monetising its non-core assets as per the ongoing strategic review by the leading cinema exhibitor to strengthen the balance sheet and reallocating resources towards its core cinema exhibition business.
It has also closed non-performing screens and, according to Sharma, the process is over now.
Moreover, "current arrangement for the sale of popcorn at 47 kiosks that are placed in some of our select locations will continue on the same terms that are there currently at an arm's length basis," he said, adding that this does not constitute a material share of PVR INOX's overall F and B revenue.
PVR INOX Managing Director Ajay Bijli said this transaction represents a "natural culmination of our strategic role and enables us to monetise a non-core asset".
"We recognised the potential in 4700BC at a very early stage and supported the brand through its formative years. From a niche gourmet popcorn offering, it has grown into a nationally recognised premium snacking brand. As it looks to scale further and broaden its ambition, the brand is well positioned under the stewardship of a scaled FMCG leader like Marico," he said.
Marico MD and CEO Saugata Gupta said, "The investment in 4700BC aligns well with Marico's ambition to participate in fast-growing food categories through distinctive, future-ready brands. We see immense potential in 4700BC as a premium snacking brand with deep consumer connect and proven execution."
The company, which owns popular brands as Saffola, Parachute, and Livon, will leverage 4700BC with its "existing scale in foods to broaden the brand's presence across channels," he said.
Mariwala-family promoted firm is expanding its play in food and premium personal care, where it expects them to contribute 25 per cent of its domestic revenue in the next three years.
Marico operates in the growing healthy, premium, and functional foods segment with brands such as Saffola, True Elements, Plix, and others. It had crossed the milestone of becoming a Rs 10,000-crore revenue company in FY25, and now it is aiming to be a Rs 20,000 crore company by 2030, growing its revenue two-fold in the next five years.
PVR INOX operates 1,783 screens across 357 properties in 112 cities in India and Sri Lanka. PTI KRH TRB
