PVR, Reliance Retail decide to skip rent payment

PVR Cinemas, Reliance Retail, have decided to inform malls and landlords that they would be invoking ‘force majeure’ clause in its rental contract to not pay rent for the entire period of shutdown across the country.

It has been nearly two weeks since malls have been shut in Chennai, while in some cities such as Bengaluru, the shutdown had kicked in before that.

The ‘Act of God’ clause comes into effect during unprecedented circumstances.

PVR Cinema, India’s largest multiplex chain with more than 870 screens, does not own properties and all of its screens operate on rent.

The operations of both,multiplex and mall have been affected for the past two weeks. It will be May 15 for things retail space and malls to normalise, even if the lockdown is lifted before schedule.

The central government’s order itself talks about ‘force majeure’ since these are things beyond anyone’s control.

Several states including Karnataka and Tamil Nadu ordered the closure of cinemas and malls, much before the 21-day lockdown announced by the Centre which came into force on March 25.

Not just retail shops and multiplexes in malls, even food court operators and companies maintaining parking spaces are hit.

They have zero revenue, but they have to pay salaries to their employees as per the directive from the Centre and the state governments.

PVR share have taken hit on the bourses. It witnessed a slide in price for six consecutive session. Today, it lost 8% to trade at Rs 1,088.

Multiplexes were the first casualty of the Covid-19 led lockdown.

The gradual closure of theatres from mid-March onwards and further till April 14 has meant that Q4FY20 as well as Q1FY21 will be hit badly.

We do not expect normalcy in operations at least till May and resumption of optimum operation only from June, 2020 onwards.

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