Net profit vaults 91% in Q1 2005-06

Business Scenario:
The current financial year has started off on an optimistic note. In April-May 2005, the Index of Industrial Production has shown a growth of 9.65 per cent against a growth of 7.9 per cent last year. The inflation rate is at sub 5 per cent levels. The Reserve Bank of India has estimated a growth of approximately 7 per cent in the current year.
The one uncertainty is oil prices, which are still ruling quite high at around $60 to a barrel. The growth rates will depend on inflation, which will depend on the government's decision to pass on the higher oil prices to consumers.
The print media industry in Mumbai is going through a lot of flux. The launch of three English dailies so close to each other is a very rare phenomenon. The electronic media is also seeing a spate of new launches, especially niche channels. A new radio policy for the second round of licensing has been announced by the government. The plan is to have around 330 new radio stations in the country.

Company Performance:
Your company has recorded an impressive 24 per cent growth in topline to Rs 2,961 lakh from Rs 2,392 lakh in the previous year. The topline for the group grew at 26 per cent to Rs 3,267 lakh for the quarter ended June 2005 compared to Rs 2,586 lakh for the corresponding period last year.
The cost of printing has increased significantly by 35 per cent to Rs 1,011 lakh in this quarter from Rs 748 lakh for the quarter ended June 2004. This is due to both, an up trend in the price of newsprint as well as the increase in circulation.

Site rentals have increased to Rs 298 lakh from Rs 241 lakh in the corresponding period in the previous year. This is primarily on account of a contracted increase in all our minimum guarantee contracts with BEST and MSRDC.

News expenses have declined 12 per cent to Rs 57 lakh from Rs 65 lakh. Staff cost has grown 17 per cent from Rs 381 lakh to Rs 448 lakh. Selling and distribution expenses have declined to Rs 156 lakh from Rs 226 lakh.

Rent, royalty, rates and taxes have increase significantly by 59 per cent from Rs 64 lakh in the previous year to Rs 102 lakh in the current year. This increase is on account of the rent for the new premises.

Other expenses have increased 4 per cent to Rs 327 lakh from Rs 312 lakh in the corresponding period last year.

Despite increase in key cost components, surplus from operations has increased 58 per cent to Rs 562 lakh from Rs 355 lakh for the quarter ended June 2004.

Other income has increased from Rs -5 lakh in the previous year to Rs 27 lakh in the current year. Interest and finance charges have increased significantly by 42 per cent from Rs 19 lakh to Rs 27 lakh in the current year. This is due to the interest on ECB, which we have taken for the new premises and new press equipment.

The company has paid fringe benefit tax of Rs 7 lakh for the current quarter. Depreciation is marginally higher at Rs 77 lakh compared to Rs 75 lakh for the corresponding quarter last year.
Profit before tax has increased substantially by 87 per cent to Rs 478 lakh for the quarter ended June 2005 compared to Rs 256 lakh for the corresponding period last year.

Net provision for tax for the quarter ended June 2005 is at Rs 161 lakh, up from Rs 90 lakh for the corresponding period last year.

The net profit after tax is at Rs 317 lakh for the quarter ended June 2005 compared to Rs 166 lakh for the quarter ended June 2004. This is an increase of 91 per cent.

The group has recorded a net profit after tax of Rs 143 lakh for the quarter ended June 2005 against a loss of Rs 41 lakh for the corresponding quarter in the previous year.

The group's net profit after tax is on the basis of full charge of radio licence fees. Since the new licence regime is effective April 1, 2005, group performance will be significantly better if we provide for licence fees as per the new norms.

Newsmedia : More colour imminent

Our flagship division has recorded a growth of 23 per cent in revenues to Rs 2,619 lakh for the quarter compared to Rs 2,122 lakh for the quarter ended June 2004. The PBIT for the segment is Rs 612 lakh for thisquarter against Rs 443 lakh for the quarter ended June 2004. This is an increase of 38 per cent.

While all other financial parameters in the Newsmedia business show a significant improvement from last year, the ROCE shows a decline due to increase in capital employed in the Newsmedia business. The investments are primarily in press equipment and premises.

The circulation of Mid Day has risen significantly during the period under review. Two new English dailies have already launched and a third one is expected shortly. The management is confident that these new launches will not dent our circulation. We plan to further increase the circulation of Mid Day.

Our new press will be up by the end of this year. This will enable us to cater to increased circulation of Mid Day and also add more colour pages to our publications.

Outdoor: JV with Clear Channel being hammered out
The topline for the Outdoor segment has grown 19 per cent to Rs 517 lakh from Rs 436 lakh. The PBIT is marginally higher at Rs -54 lakh against Rs -55 lakh for the quarter ended June 2004, despite the substantial increase in site rental charges.
Our major contracts are expiring shortly. We are in the process of negotiating a joint venture with Clear Channel Communications India Pvt Ltd to run the balance assets. We will cut our losses in this business due to this strategy. We will keep you informed of further progress in this matter.

Radio: Licence to rejoice!
We are pleased to inform you that the government has announced a new policy for the FM radio industry. It has approved a revenue share of 4 per cent.
Radio topline has shown a substantial growth of 76 per cent. It is at Rs 197 lakh for the quarter ensded June 2005 against Rs 112 lakh for the quarter ended June 2004. Despite a 15 per cent increase in licence fees from Rs 308 lakh for the quarter ended June 2004 to Rs 356 lakh for the quarter under review, the loss from this division is down 6 per cent from Rs 281 lakh to Rs 263 lakh for the quarter ended June 2005.
These numbers are taking into account a full charge for the radio licence fees as per the old fixed licence fee regime. The Radio and group numbers will be substantially better if the licence fee is calculated as per the new norms.