“Jagran Prakashan Limited Q1-FY10
Results Conference Call”
July 29, 2009
Moderators: Mr. Sanjay Gupta – Chief Executive Officer, Jagran Prakashan Limited.
Mr. R K Agarwal – Chief Financial Officer, Jagran
Prakashan Limited.
Mr. Vikas Mantri – Senior Analyst, ICICI Securities
Limited.
Moderator: Ladies
and gentlemen good morning and welcome to the Jagran Prakashan’s Q1FY2010
results conference call hosted by ICICI Securities Limited. As a reminder for
the duration of this conference, all participants’ lines will be in the
listen-only mode and there will be an opportunity for you to ask questions at
the end of today’s presentation. If you should need assistance during the
conference call, please signal an operator by pressing * and then 0 on your
touch-tone phone. Please note that this conference is being recorded. At this
time I would like to hand the conference over to Mr. Vikas Mantri of ICICI
Securities. Thank you and over to you sir.
Vikas Mantri: Good
morning everybody, welcome you all to the Q1-FY10 Jagran Prakashan con-call. We
have senior management from the company represented by Mr. Sanjay Gupta the CEO
and Mr. R K Agarwal the CFO, over to you sir for the opening remarks.
R K Agarwal: Good morning friends, we welcome
you to the conference call of JPL. We are pleased to present and discuss
exceptionally good results for the Quarter 1, thanks to the partial reversal of
adverse condition prevailing during the second half of the last fiscal, general
elections, management policy, and the constant effort of the management to keep
the cost under check.
The profit for the Q1
includes exchange fluctuation gains which might not repeat in remaining
quarters and high treasury income due to redemption of yearly FMP. Management’s
policy of not accumulating inventories has helped in having lower newsprint
cost on quarter to quarter basis. In fact if the economic scenario does not
worsen like second half of the previous year we are confident of achieving
minimum 50% expansion in the bottom-line. With these opening remarks we now
request you to have your questions which our CEO Mr. Sanjay Gupta and I will
endeavor to answer to your satisfaction.
Moderator: Thank you sir. Ladies and gentlemen
we will now begin the question and answer session. Anyone who wishes to ask a
question may press * and 1 on their touch-tone telephone. If you decide you remove
yourself from the question queue you may press * and 2. Participants are
requested to use handsets while asking a question. Anyone who has a question
may press * and 1 at this time. The first question is from the line of Abneesh
Roy from Edelweiss Capital. Please go ahead.
Abneesh Roy: Sir, congratulations on very good
set of numbers.
R K Agarwal: Thank you.
Abneesh Roy: My first question is on the ad
revenues, could you give us a sense what has been the election related ad
revenues? Why I am asking this is during election government DAVP ads are not
there.
R K Agarwal: That is right.
Abneesh Roy: So on a net basis how much have we
gained due to election as an event?
R K Agarwal: See as we discussed in the last
conference call .we estimated benefit of 7 to 8 Crores but ultimately when we further analyzed it, it came to be around 5
Crores.
Abneesh Roy: Net positive impact?
R K Agarwal: Yes.
Abneesh Roy: And sir how have outdoor and events
done sir?
R K Agarwal: Outdoor has remained flat. Event
has improved as compared to the corresponding quarter of the previous year.
Abneesh Roy: So sir how do I see this result
because you are saying just 5 Crores from incremental event of election, but
your ad revenue growth has been pretty strong?
R K Agarwal: That is pretty strong, thanks to
the local advertisements which we have been concentrating on for past four to
five years. And that is what has really helped. In fact the 15% growth if we
have to breakup then you can take increase in space to the extent of about 5%
and remaining came from conversion of black and white into color as well
increase in recovery. This is something very heartening because when we were
discussing the last quarter’s results, I mentioned that there was no impact of
rate increase.
Abneesh Roy: Okay. And any sense on rate hike in
the second half, I mean people are saying recovery can happen?
R K Agarwal: This second half you are talking
about?
Abneesh Roy: Yes this financial year.
R K Agarwal: This would be still better that is
what we feel. But, all depends on the economic conditions in fact.
Abneesh Roy: Okay. Sir wanted to get a sense of
our market share in the Hindi belt, one of your competitor has reported 32% in
the Hindi revenues but if I see on the net level the ad growth was not that
encouraging. So are we gaining market share in our core belt?
R K Agarwal: No there is no question of losing any
market share whatsoever 30% or 32% I do not know which competitor you are
talking about, but on lower base 30% could be 1% of my total growth.
Abneesh Roy: Okay. And sir regarding newsprint
what is the outlook can we see better margins even going forward or this is the
number we should look going ahead?
R K Agarwal: Newsprint prices are already very
low, unrealistically very low. And as we said in the past, 3rd Quarter should see some increase in the
prices, but impact of lower prices would be completely felt in the 2nd
Quarter of the current fiscal.
Abneesh Roy: And what kind of increase you are
expecting in 3rd Quarter because in the past the increase also has
been quite sharp…
R K Agarwal: We do not expect that kind of an
increase in next couple of years, but definitely I mean these prices are also unrealistically
low, they might go up to a level of 550 to 575 dollar by the year end.
Abneesh Roy: And sir my last question
would be on the I Next how has it done in terms of ad revenues and where do we
see it going forward?
R K Agarwal: I Next for the Quarter 1 has
remained more or less flat as compared to the previous year in fact which was
not very encouraging. We have taken certain steps which are likely to improve
the revenue in the remaining quarters. We know what was the problem and we have
taken the corrective steps.
Abneesh Roy: Sir that is a bit
difficult to understand because I Next would be targeting the local ads
compared to your main paper and you have said local ads have been the main
driver …?
R K Agarwal: But then that are different
targets. For I Next, there is a different target so we cannot construe since I
Next has remained flat local has not improved.
Vikas Mantri: Abneesh you would appreciate that I
Next has a very low geographical coverage compared to Jagaran. So you should
not compare a Jagran and I Next in that way.
Abneesh Roy: But sir local ads if I see in terms
of positioning they will always go to local media so ….
R K Agarwal: you are absolutely right, but what Mr. Vikas
is pointing out is I Next is city centric and Jagran is spread across…
Abneesh Roy: Okay sir that is all from my side,
thank you.
R K Agarwal: Yes.
Moderator: Thank you Mr. Roy. The next
question is from the line of Anand Shah from Angel Broking. Please go ahead.
Anand Shah: Yeah good morning sir,
congratulations on a very good set of numbers. Sir just has a couple of
questions, one is your depreciation has gone up by almost 50% so can you
indicate what is the CAPEX for this year and plans for next year?
R K Agarwal: We have planned about 100 Crores
for the current year and in fact the increase in depreciation is mainly on
account of capitalizations done in the last quarter and in the current quarter.
Anand Shah: Okay. Sir how much CAPEX was
incurred for FY2009?
R K Agarwal: More than 100 Crores, I do not
remember exactly, but it was I think 120 Crores or so.
Anand Shah: Okay. And sir second question was
this quarter we witnessed your INM selling some stake in Jagran because it has
its own issues globally. Sir can you give your comments on that?
R K Agarwal: They sold it in July, in fact not
in the last quarter as they have some financial difficulties because of which
they decided to sell off about 7.3% stake that is it.
Anand Shah: And sir can you give comment on who
acquired the stake this 7.3%?
R K Agarwal: Out of 7.3%, 5% was acquired by the
promoters and 2.3% has been acquired by others.
Anand Shah: Okay sir. And sir can you indicate
any plans or updates on your JV with TV 18 to release a daily?
R K Agarwal: In fact we have already accounted
for in the current quarter impairment loss on that investment as we have
decided to drop the project.
Anand Shah: Okay so it is officially been dropped
is it?
R K Agarwal: Yes.
Anand Shah: Okay, thank you sir.
Moderator: Thank you Mr. Shah. The next
question is from the line of Ruchit Mehta from HSBC. Please go ahead.
Ruchit Mehta: Yeah good morning sir and
congratulations. Just on the advertising revenues we grew almost 15% in this
quarter, at the beginning of the year you said you will be happy with 10%
growth what is your outlook now because I mean given that most people are
anticipating the second half recovery?
R K Agarwal: if that happens definitely 15% should not be a
problem, but let us see and wait, what people are expecting or what we are
expecting actually happens
Ruchit Mehta: Okay. And you mentioned that there
was some one time revenue figures or cost in this quarter could you elaborate
that please sir?
R K Agarwal: There are couple of items on the
revenue side, 1) exchange fluctuation gain, if you recall when we were
discussing March results I had mentioned that in Q4 of last year we had
accounted for exchange loss to the tune of about 8 Crores, Out of which I
mentioned that part has already got reversed, so that is roughly about 4
Crores. And 2) High treasury income that is to the extent of about 4 to 5
Crores. On the revenue side you have about 9 Crores which might not repeat in
remaining quarters.
Ruchit Mehta: Sure. And in terms of profitability,
can the dynamics of newsprint cost, I mean where do you see sustainable margins
at?
R K Agarwal: Sustainable margin is what you have
seen in the Q1 results. That is something very much sustainable.
Ruchit Mehta: Very much sustainable, okay. And
finally what is the debt and the cash profile on the books of the company?
R K Agarwal: Debt is, including working capital,
about 120 Crores. And cash is about I believe 275 Crores.
Ruchit Mehta: And what it the full year CAPEX
plans sir?
R K Agarwal: For current year we have planned
more than 100 Crores of which very little has been spent in the 1st
Quarter.
Ruchit Mehta: Could you give us a sense of what
the investment is going to be into?
R K Agarwal: Expanding the printing
capabilities, that is increasing the color capacities, modernization,
upgradation, and so and so forth.
Ruchit Mehta: Okay, thank you sir.
Moderator: Thank you Mr. Mehta. The next
question is from the line of Ritesh Poladia from Dolat Capital. Please go
ahead.
Ritesh Poladia: Sir, most of
my questions have been answered. Just one thing, sir you have guided for 15%
bottom-line growth?
R K Agarwal: I did not get?
Ritesh Poladia: Right now
you have guided for 15% bottom-line growth?
R K Agarwal: No not 15% what I said is, if the
economic conditions do not worsen be sure about minimum 50% expansion in the
bottom-line
Ritesh Poladia: 50 okay I
thought it was 15 so I was quite…
R K Agarwal: No I am not going to incur loss in
remaining quarters
Ritesh Poladia: I was like
quite, I thought that you have become too conservative now. Okay that is all
from my side, thank you sir.
Moderator: Thank you Mr. Poladia. The next
question is from the line of Swati Nangalia from IDFC SSKI. Please go ahead.
Bhushan Gajaria: Hi sir
Bhushan here. Just couple of questions, one is on the revenue front, this
quarter education is the significant contributor to our revenue, what will be
the contribution of education and how much it would have grown?
R K Agarwal: I do not have figures readily
available but that would be significant.
Bhushan Gajaria: Okay. Second sir you just
mentioned that there were some FOREX gains and one-off gains, so what would be
that?
R K Agarwal: Rs.4 Crores on account of long-term
foreign currency loan, as a result of reversal of loss which I could have very
well deferred last year when I accounted it for but being conservative I
preferred to account it for in the last quarter of the previous year. On 31st March I believe Dollar was
51 and 30th June it was 48 or so.
Bhushan Gajaria: Okay. So
this is part of your other income.
R K Agarwal: Yeah.
Bhushan Gajaria: Okay, yeah I
think that is all from my side, thanks a lot.
Moderator: Thank you. The next question is
from the line of Hiren Dasani from Goldman Sachs. Please go ahead.
Hiren Dasani: Yeah sir can you tell us what is
the average level of copies per day on each of the paper?
R K Agarwal: Sorry.
Hiren Dasani: What is the total circulation per
day on an average for each of the paper?
R K Agarwal: Dainik Jagaran 2.8 Million per day,
I Next about 3 lakhs and CityPlus about 3.25 lakhs per week.
Hiren Dasani: Okay. So not much increase from
what you reported in Q4 virtually the same levels, hello. Yeah so not much
increase from the Q4 numbers which you reported?
R K Agarwal: Yes.
Hiren Dasani: Okay. And do you think there will
be meaningful increase in circulation this year because of new additions…?
R K Agarwal: 4% to 5% circulation increase
always happens I mean in the 1st Quarter also there is an increase
of about 4% in circulation as compared to the corresponding quarter of the
previous year. So even if we do not do anything which we have not done, the
increase in the circulation to that extent is something which we cannot stop, In
fact last year we registered a growth of over 8%.
Hiren Dasani: Okay.
R K Agarwal: So by the year end if the growth in
circulations again could be in that range, I will not be surprised.
Hiren Dasani: What could be the average level of pagination
on these papers?
R K Agarwal: 20 pages.
Hiren Dasani: Across all of the three?
R K Agarwal: Sorry.
Hiren Dasani: Across all of the three papers?
R K Agarwal: No, Dainik Jagran is 20 pages, I
Next is 12 pages, I mean it is tabloid of 24 pages, And 12 pages CityPlus which is again tabloid.
Hiren Dasani: And we have not reduced or
increased any pagination right?
R K Agarwal: We have not reduced I mean like
there is no scope for reduction when you are registering a growth of 15% in
advertisement revenue rather it might increase in times to come.
Hiren Dasani: Sure. The other thing is sir like if
you look at this quarter margins they are probably one of the highest across so
many years which at least …?
R K Agarwal: That is right.
Hiren Dasani: So what gives you the confidence
that this can be sustained?
R K Agarwal: This is very much sustainable as
far as current year is concerned and in times to come also this should be
sustainable because many of the editions which were suffering losses have
turned into profit and they are expected now to continue to be in profit. For
example entire Bihar and Jharkhand came in profit last quarter of the previous
year. So they have continued to be in profit and they should be generating more
and more profit.
Hiren Dasani: Okay.
R K Agarwal: So still there are 5 to 6 editions
which are in losses they also have to turn into profit so I mean that is what
is the reason for our confidence and 30% margin in print media is not, still
very great margin.
Hiren Dasani: What would be the plans for using
all this cash which is being generated, you already are like a net cash company
and the business is throwing up good amount of cash?
R K Agarwal: Our many other plans which have been kept on hold till now
might be unfolded and then that might need some cash. In fact there
could be certain opportunities where you can have tie-ups for that also the
cash is required . Further, growing business also needs working capital . And
in any case we have been aggressive in distributing dividends this policy would
continue even in future.
Hiren Dasani: Okay. And the plans which you just
mentioned would be in the print side only or other media as well?
R K Agarwal: On this I would request our CEO also
to throw some light because this is something which relates to the strategy.
Sanjay Gupta: As far as utilizing cash
is concerned, I would like to
keep my concentration on Dainik Jagran
and I Next and some editions of CityPlus will also come in. By Q3 you may see new editions of I Next
being also launched, and then expansion of outdoors is on the plan in this
year. .
Hiren Dasani: Thanks a lot. That is it from my
side.
Moderator: Thank you Mr. Dasani.
The next question is from the line of Fatima Pacha from ICICI Prudential.
Please go ahead.
Fatima Pacha: Hello sir, great numbers. Sir just
I guess the ad revenue keeps on boggling us is there any way of quantifying how
much of volume growth you would have and how much of pricing growth?
R K Agarwal: 5% is the volume…
Fatima Pacha: Sir I am not talking about
circulation, I am talking about ad volumes.
R K Agarwal: Sorry.
Fatima Pacha: Ad volume growth.
R K Agarwal: Ad has grown by 15% and circulation
also has grown by 14%.
Fatima Pacha: Sir I meant in the 15% ad revenue
growth how much would be volume and how much would be price?
R K Agarwal: That is what I said, out of 15%, 5%
is a space then 10% comprises of conversion of black and white into color and
also the pricing.
Fatima Pacha: Okay. Sir if I have to say that
your circulation or whatever 3% to 4% keeps on happening what is you are going
to ads like I meant in circulation you do not expand in any new additions
whatever the stage at which you are right now remains for next two years, what
is the kind of ad revenue growth you believe you can sustain for next two
years?
R K Agarwal: See let me tell you as our CEO just
pointed out we are not going to be very aggressive as far as expanding Jagran
is concerned because we already have acquired the numbers which can get us the
desired growth, but there are plans to expand I Next, there are plans to expand
CityPlus. So I mean all those expansions should get us the additional growth,
but as far as Jagran is concerned 15% growth or something of that sort without
expanding it or without launching new editions is also very much possible.
Fatima Pacha: Sir do you see a lot of people has
started realizing that trend is seeming to be expensive in terms of a national
print, I can understand local yet, it is very reasonable, so would you believe
that some point of time or even if it is today that TOI say a Bombay editions
is garnering as much rate
as say your main state Kanpur is getting?
R K Agarwal: No, I think TOI Bombay is much-much costlier than what DJ in Kanpur is.
Fatima Pacha: In terms of your readership matrix.
R K Agarwal: Oh yes.
Fatima Pacha: Okay. But what would be the
difference like if 20% to 30% I think it will be …?
R K Agarwal: More than that, I think it could be
still 40% to 50%.
Fatima Pacha: Okay. So now I was trying to get at
that point that would the price increase somewhere hit a hurdle?
R K Agarwal: As it is, we did not have any
impact of price increase last year.In the 1st Quarter also, the
maximum impact could be in the range of about 4% to 5% which is less than
inflation, I mean like let us forget this minus inflation figures, but normal
inflation rate whatever has been so far increase
beyond that has not been possible, but once the economic scenario improves, I
am sure, there will not be any issue in passing
on 10% to 15% increase.
Fatima Pacha: And sir how is Punjab edition doing
now, would that be breakeven?
R K Agarwal: Punjab edition has improved very
significantly in the 1st Quarter, thanks to lower newsprint prices
and increase in advertisement revenue. So whatever losses we have suffered last
year will come down significantly .In case cover prices do not improve and remain
at the same level, we are going to have some loss, but the losses are going to
be reduced very significantly. And on increase in cover price, I will request
our CEO to share his views with you.
Sanjay Gupta: See in Punjab as you know that we
are in competition with one of a major Hindi daily and with that competition to
keep our Number#1 position intact we are subsidizing the newspaper to a great
extent, but this year, I am positive that competitive activities such as
continuing with lower cover prices may come down and therefore I see little
saving there, which will in fact help in improving the bottom-line.
Fatima Pacha: Sir, our cover price increase is
not at all implemented in Punjab, right?
Sanjay Gupta: At the moment no.
Fatima Pacha: Okay fine.
R K Agarwal: Because as I told you, if you
recall, there are already subscription schemes which are going on…
Fatima Pacha: Yeah. So you cannot increase it.
R K Agarwal: So neither we nor other one can
increase till then, but thereafter as CEO just mentioned, we might look at
that.
Fatima Pacha: Okay sir, thanks a lot sir.
Moderator: Thank you Ms. Pacha. The next
question is from the line of Arjun Khanna from Principal. Please go ahead.
Arjun Khanna: Congratulation sir on a good set of
numbers.
R K Agarwal: Thank you very much.
Arjun Khanna: Just trying to understand seeing
that Dainik Jagran what would our peak level of pagination be, you said that
current is around 20.
R K Agarwal: Peak level, if you are talking
about, I will just give an example, during Diwali season last year, Kanpur
edition carried 64 pages.
Arjun Khanna: Just trying to understand on
a blended basis, say on an average, say for a quarter being at 20 now what
level it could go given the lower newsprint price environment?
R K Agarwal: See it all depends on the
advertisement flow, if the advertisement flow is there definitely page levels
would go up which neither you nor we would mind.
Arjun Khanna: Sure. In terms of inventory
how much do we hold of imported and domestic?
R K Agarwal: We have inventory good enough for
consumption in one and a half month.
Arjun Khanna: Imported?
R K Agarwal: Both blended.
Arjun Khanna: Sure. In terms of IMIL stake, I
understand like you mention 7.3% was sold by them, any views on the remaining
part of it, would they be coming back in the market?
R K Agarwal: They have already gone on record to
say that, they do not intend to sell now even one share.
Arjun Khanna: Sure. The stake that we picked up 5%
was there any incremental latching by us for it or..?
R K Agarwal: We raised a loan to buy the stake.
Arjun Khanna: So the shares were on pledged per se
in that sense.
R K Agarwal: Yes.
Arjun Khanna: Sure, in terms of the OH
business you said we could deploy our incremental cash flow in it, are we
looking at bidding for these huge properties in terms of airports?
R K Agarwal: These are not our business models. Our
focus is now entirely in Jagran footprint area without loosing opportunities in
bigger town in case this is making a business sense.
Arjun Khanna: Sure, that would not really require
the larger levels of CAPEX?
R K Agarwal: That would not require but then
spending in our footprint area, might
require good amount of cash but then that cash would perhaps help us getting
many more properties than what we can get in bigger town.
Arjun Khanna: Sure, thank you very much sir.
Moderator: Thank you Mr. Khanna. The next
question is from the line of Amit Kumar from Kotak Securities. Please go ahead.
Amit Kumar: Very good morning to you sir, great
set of numbers. Sir just wanted to clarify, I am sorry I joined the con-call
late so please excuse me if this is a repeat.
R K Agarwal: Never mind please continue.
Amit Kumar: Just wanted to check what is, I
think there was some board meeting the last time on the 4th Quarter
result you had said that there will be some board meeting to decide on TV18 JV?
R K Agarwal: Yes we have dropped this project.
Amit Kumar: Okay we have completely dropped
this project.
R K Agarwal: And this is why I have accounted
for impairment loss, in 1st Quarter.
Amit Kumar: I am sorry, where is this
impairment loss booked?
R K Agarwal: It is booked under the head of other
expenditure.
Amit Kumar: Okay. And how much this would be?
R K Agarwal: That would be about 1.75 Crores.
Amit Kumar: Okay. So is there, I mean at the
company level is there a plan to go alone on this or are we completely facing
that we will not be launching a Hindi business daily at all?
R K Agarwal: I request Mr. Sanjay to share with
you his strategy on this.
Sanjay Gupta: Looking into the scenario of the
other Hindi Business daily, I do not think
I will be currently toying with
an idea of another Hindi Business Daily though if you have noticed in Delhi we
have launched National Delhi, which I plan to
expand in the coming years, given
the response received so far.
Amit Kumar: Okay.
R K Agarwal: National Daily would cover sufficiently
the economic part.
Amit Kumar: Okay sir, fine. Yes I just wanted
to get a sense on the key markets where you are present which is UP-Uttranchal,
Bihar-Jharkhand and CT-HP regions, how are, I mean if you just give us some
sense on how each of the individual markets are growing. And how Jagran is
doing in each of the markets?
R K Agarwal: Each of the market has been growing
as we always expected, I just shared with some of your colleagues, Bihar-Jharkhand
where we went in fact practically in 2003,( although Patna is there since 2000
but all other editions were launched since 2003 onwards) we have already come
in profit from the last quarter of the previous year. And in fact this year, those
two states are going to result in good amount of profits.
Amit Kumar: Great sir. And sir just wanted to
check with this the JV that you have for the MP market I think that is also off
the table right now. So does that in some sense prevent you from, is there some
clause as part of that JV which prevents you from going alone in MP city and the
strategy of that market?
R K Agarwal: Yes currently.
Amit Kumar: So you cannot enter that market at
least for a time being?
R K Agarwal: Yes.
Amit Kumar: What is the status of that dispute?
R K Agarwal: It will not take now much of time,
because two years have already gone. I believe within a year things would get
sorted out.
Amit Kumar: Okay fine. That is all from my
side, right now, I will come back if I have any, thank you so much.
Moderator: Thank you Mr. Kumar. The next
question is from the line of Ritwik Rai from MF Global. Please go ahead.
Ritwik Rai: Good morning sir and
congratulations, great result sir.
R K Agarwal: Thanks
Ritwik Rai: Sir I just wanted to check, would
you be able to give us some idea on how big each of the markets are in terms of
what is the total advertising that comes to Hindi newspapers in each of these
markets sir, UP and Bihar and Jharkhand and so on?
R K Agarwal: I will be grateful if you
come back to me off the line.
Ritwik Rai: Sure sir, I will do that.
R K Agarwal: Details I do not have currently.
Ritwik Rai: Sure sir, I will do that. My other
questions have been answered, thank you very much.
Moderator: Thank you Mr. Rai. The next
question is from the line of Ankit Kedia from Centrum Broking. Please go ahead.
Ankit Kedia: Sir could you share with us the
losses you have done in the out of home and events business during the quarter?
R K Agarwal: In Out-of-home
business we suffered a loss of about 2 Crores.
Ankit Kedia: And sir going forward for the year
what is the guidance?
R K Agarwal: We see outdoor business turning
into profit in the last quarter at least.
Ankit Kedia: Okay. And sir my second question is
could you give some sectoral breakup on the advertisement based on, are we
seeing some sectors coming back for advertisements where we have seen the
growth coming from?
R K Agarwal: Yes automobiles have started coming
back already, but they are yet to pickup the way it should.
Ankit Kedia: You said, do we do some forward
booking so in the sense in the 2nd Quarter and 3rd
Quarter are we seeing some bookings coming in already, which gives us the 15%?
R K Agarwal: No in case of advertisement you are
never allowed that luxury in this
industry, even if you have a booking and it stands cancelled earlier than publication you cannot
help.
Ankit Kedia: Right. And sir just one last
question.
R K Agarwal: We do deal on annual basis but then
you are never sure.
Ankit Kedia: Sir one last question is on the
newsprint front, could you share with us the average newsprint price for the
quarter?
R K Agarwal: For this quarter the blended was
about Rs.26 per kg, that is 26000 per ton.
Ankit Kedia: Right. Thank you sir that is all
from my side.
Moderator: Thank you Mr. Kedia. The next
question is from the line of Nitin Gupta from Ethos Advisors. Please go ahead.
Nitin Gupta: Good afternoon sir, congratulations
for good numbers. I just wanted to know, what is the mix, do you import any
newsprint as such, what would be the mix of local purchasing?
R K Agarwal: We do import. We do import and in
the quarter gone by had very low consumption of imported which is going to go
up, but our policy is to consume about 25% imported and rest indigenous, but
out of that 75% indigenous we consume roughly about 60% of the quality newsprint. Some of it is almost as
good as imported.
Nitin Gupta: Okay. And I was wondering if you
can share which business sectors are showing good traction in ad revenues in
the downturn, in the last quarter, if you can give best plate of your ad ….
R K Agarwal: Education is always recession
proof. So education till July will remain buoyant but then what is pleasing us
is you
see now white goods automobile, mobile all coming back, they had gone off almost completely from November to February.
Nitin Gupta: Okay. And what about real estate?
R K Agarwal: Real estate we have never been
beneficiary in a big way from real estate. It is only our NCR region which has
been benefiting from real estate, and since we were never big gainers, we were
never big loser too.. And now things are slightly better than what they were,
but not completely, they are not completely the way they should be.
Nitin Gupta: And would it be possible for you to
give on a percentage basis contribution to your ad revenue by the various sactor?
R K Agarwal: That is very insignificant, I have
never looked at it as a very significant category so I do not remember the
number but I do not think it would be more than
1.5% or maybe 2%.
Nitin Gupta: So maximum is education and how
much would be the percentage be?
R K Agarwal: Education should be now about 15%
Nitin Gupta: And for the other segments also if
you can give?
R K Agarwal: All others will be in the range of
about 6% to 7% except government, government still contributes about 15%.
Nitin Gupta: And if you can share some thoughts
on OH business because it did a loss of 2 Crores so what changes are you doing
in your strategy as such, you talked about….
R K Agarwal: Changes have already started
happening.
Nitin Gupta: So where did you go wrong?
R K Agarwal: One of the biggest changes is shifting
from leasing model to ownership models. Number two, focus in Jagran footprint
area, these are the two major changes which have been brought about since last
year. And in fact the losses have been substantially reduced, but definitely
the 1st Quarter because outdoor industry is yet to come out of that
slowdown, we have slightly higher losses but then I am sure going forward these
losses would come down and in the last quarter we should see some profit.
Nitin Gupta: And one final question, when you
talk say that you are moving from leasing to ownership, what would be the CAPEX
one should look at in your OH business?
R K Agarwal: I am not able to give exact figure but that
would not be huge. And in fact when I say leasing to ownerships, we would never
own any outdoor properties, This ownership
word is normally used in outdoor industry to refer to taking it from government direct and that is for longer
period. In case of leasing model, we take it from some middle man and that is
generally for shorter period. So that is the difference between leasing model
and ownership model, but essentially both are on rented basis, one is directly
from the government and there you have to incur CAPEX and in other phase you
have to take it from the middle man who had already done the CAPEX.
Nitin Gupta: Okay. Thank you very much sir and
congratulations once again.
Moderator: Thank you Mr. Gupta. The next
question is from the line of Nirav Dalal from Capital Markets. Please go ahead.
Nirav Dalal: Good morning sir, sir I wanted to
share the local advertising to the revenues, this quarter?
R K Agarwal: Local advertisement has further
grown up in this quarter that is roughly about 63% of the total revenues.
Nirav Dalal: Okay because last year it was about
60%.
R K Agarwal: You are right absolutely.
Nirav Dalal: And the government would be the DAVP
right because 15% that you spoke of.
R K Agarwal: Yeah.
Nirav Dalal: Okay, right sir, thank you.
Moderator: Thank you Mr. Dalal. The next
question is from the line of Tejas Shah from IL&FS. Please go ahead.
Tejas Shah: Good morning sir.
R K Agarwal: Good morning.
Tejas Shah: Congratulations on good set of
numbers. Sir my question pertains to a FOREX fluctuation, I guess it has
impacted both our top-line and cost structure also somewhere, so just wanted to
know, can you just quantify where and how much it has impacted?
R K Agarwal: See 4 crore is the exchange fluctuation
gain, which is accounted for as part of other income.
Tejas Shah: Okay the one which we accounted in
other expenditure, last year.
R K Agarwal: Yeah.
Tejas Shah: And sir and top-line?
R K Agarwal: In top-line there is no gain or
loss.
Tejas Shah: And we also talked about some
redemption of FMP can you quantify that too?
R K Agarwal: That is about 5 Crores additional
income.
Tejas Shah: Okay. And sir you mentioned that
you are carrying inventory of one and a half month, this seems to be growing concerns
that newsprint prices have bottomed out. So I was just wondering is this a
strategy that we are not raising up to three months that normally people do.
R K Agarwal: This policy we have never followed
and this is what has really helped in our 1st Quarter. If you look
at our newsprint consumption and if you look at other’s newsprint consumption
you will find a wide gap. So I mean that over the period of years we have never
tried to play with the inventory. And this policy has been found to be very effective.
Tejas Shah: True sir. And sir I just missed out
figures of cash and debt on books?
R K Agarwal: Debt on books is about 120 Crores
and cash-in-book is about 275 Crores.
Tejas Shah: Thanks a lot sir, I am done.
Moderator: Thank you Mr. Shah. The next
question is from the line of Ritesh Poladia from Dolat Capitals. Please go
ahead.
Ritesh Poladia: Just one
follow-up in the annual report we have invested something like 2.5 Crores in Skorydov
systems. So this is that ads for private model?
R K Agarwal: Yes, that is the only transaction
we have done so far.
Ritesh Poladia: Okay. And
any other transactions.
R K Agarwal: Others are
under consideration but we are very careful about it and we are not going to go
over board. We have already decided the limits within which we
have to operate and taking due care.
Ritesh Poladia: Okay. And
now you must have got good valuations or still valuations would be too high to
look at it?
R K Agarwal: Which valuations you are talking
about?
Ritesh Poladia: As for equity.
R K Agarwal: For equity interest we are considering
couple of proposals and they are in fact
listed companies.
Ritesh Poladia: Okay, yeah
that is all from my side, thank you.
Moderator: Thank you Mr. Poladia. Ladies and
gentleman due to time constraints we will be taking one last question from the
line of Vikas Mantri from B&K Securities. Please go ahead.
Vikas Mantri: Hello sir.
R K Agarwal: Hello.
Vikas Mantri: Sir congratulations on good set of
numbers. Sir I just missed out on newsprint prices and your expectation for the
entire year?
R K Agarwal: Newsprint prices are unrealistically
low, currently.
Vikas Mantri: So what was the average price for
us in the 1st Quarter?
R K Agarwal: That is something, leave it to me,
that is something which is confidential.
Vikas Mantri: Okay sir not an issue. Sir what is
the price that we are looking for the entire year?
R K Agarwal: In our business model we have
factored you know $575 per ton but I do not think that would be an average.
Vikas Mantri: Okay that will be an average?
R K Agarwal: That will not be …
Vikas Mantri: Okay, that would not be an average.
Okay that is all from my side sir.
Moderator: Thank you Mr. Mantri. I would now
like to hand the floor back to Mr. Vikas Mantri for closing comments. Please go
ahead sir.
Vikas Mantri: Thank you everybody for
participating in the call, over to you sir.
R K Agarwal: Thank you very much for sparing
your valuable time to attend our call.
Sanjay Gupta: Thank you everybody.
Moderator: Thank you Mr. Agarwal and Mr.
Gupta. Thank you Mr. Mantri. Ladies and gentleman on behalf of ICICI Securities
Limited that concludes this conference call. Thank you for joining us and you
may now disconnect your lines.
