Amitabh Bachchan and Abhishek Bachchan
Abhishek Bachchan and Amitabh Bachchan coming out of PVR after watching 'X-Men: Days Of Future Past'Varinder Chawla

India's largest cinema chain PVR Cinemas has announced to acquire DT Cinemas for ₹500 crore, which would further strengthen its position in the cinema exhibition business in the country.

DT Cinemas is owned by India's largest real estate developer DLF and the acquisition is expected to help PVR gain more presence in North India. By selling DT Cinemas, DLF plans to trim its mounting debt, which stood at ₹20,965 crore in the March quarter of this year.

"As a result of the proposed acquisition, PVR will have a presence in 44 cities with 115 multiplexes and 506 screens," PVR wrote to stock exchanges.

Currently, DT Cinemas runs 29 screens in National Capital Region (NCR) and Chandigarh with a capacity of nearly 6,000 seats. The DLF-subsidiary is planning to add 10 more screens in two places in the next twelve months.

PVR's acquisition of DT Cinemas is yet to be approved by the regulators.

"It has been our strategy to expand our film exhibition business both organically and inorganically over the years. This acquisition in is pursuance of our core strategy to offer a world-class cinema experience to the discerning Indian consumer," Ajay Bijli, chairman and managing director of PVR, told Livemint.

However, analysts see the transaction as expensive, taking into account other similar acquisitions in the industry.

According to the deal, PVR will pay ₹12.82 crore per screen for 39 screens of DT Cinemas, which is way above the amount paid by Inox while buying Satyam Cinema's screens; Inox had paid at ₹5.8 crore for each screen last year.

The PVR management defended paying high cost for the deal by citing "asset quality and earnings potential".

"DLF has built great quality cinemas at some of the best locations. I think that is the key driver for us to go ahead with this transaction," PVR's chief financial officer Nitin Sood told NDTV.

PVR sees its revenues rising by ₹200-₹250 crore by the acquisition. The multiplex chain had also acquired Cinemax for ₹395 crore in 2012.

"We've been growing organically since we did the Cinemax acquisition, and we have been adding 60-70 screens annually which we plan to do for next 3-5 years. But if there are good inorganic opportunities, which are a right fit for our business, we will acquire it," said Bijli.