Jagran Prakashan Limited
First Quarter Earnings Conference
Call, Financial Year 2008 -2009
July 30,
2008
Moderator: Good evening
Ladies and Gentlemen. I am Preetham, the moderator for this conference. Welcome to the Jagran Prakashan Conference Call hosted by ICICI
Securities. For the duration of the
presentation, all participants’ lines will be in the listen-only mode. I will be standing by for the question and
answer session. I would like to hand
over the floor to Mr. Vikas. Thank you and over to you
sir.
Mr. Vikas Mantri: Good
afternoon everybody. We at ICICI
Securities are pleased to organize the Q1-FY09 conference call Jagran Prakashan. We have with us the management of Jagran Prakashan, CEO- Mr. Sanjay
Gupta and the CFO Mr. R. K. Agarwal with us. Over to you sir for brief remarks.
Mr. R. K. Agarwal: Dear friends, a very good
afternoon. Welcome to conference call of
JPL. With me is our CEO, Mr. Sanjay
Gupta. Friends, the quarter gone by,
that is, quarter-ended
30th June 2008
has witnessed one of the lowest growth in revenues in the recent past. As we all know, yes, sentiments are not very
healthy, but let me assure you the ground realities are not that bad as these
are being portrayed. These negative
sentiments have sort of created a bit of doubt in the minds of advertisers
particularly the large budget advertisers, who preferred to hold their
advertisement budget and wait and watch for some time. Clearly, it adversely affected the national
advertising, resulting in lower than expected growth in advertisement
revenue. We, however, still expect that
these things would improve, and we should close the year with the
advertisements growth exceeding 20%. In
fact, if you look at the last quarter, apart from these bad sentiments,
diversion of revenue to IPL was also a bit of problem which did not help, and
which resulted in lower revenue.
At the same time, I
would also like to share with you a few positives as far as JPL is
concerned. According to recently
released data by AdEX, there was a growth of just 5%
in print advertising during the first half of the calendar year 2008. As against this, JPL recorded a growth of
nearly 15% in the first quarter of the calendar year and 11% in the
quarter-ended
June 30th 2008
, which is well above the industry’s overall
growth rate. Further in July 2008 till
now, advertisement revenue is growing by over 35% as compared to July 2007,
which indicates that things are improving. The main contributor to growth in the first quarter as well as in July
2008 has been education sector that reaffirms our belief that economic slowdown
does not affect the advertiser of necessity as much as it affects others. I am sure all of you must have had a look at
Hindustan Lever’s financials also. This was one of the best quarters for them
in recent past.
I also request you all
to view the growth of Q1 in the light of the fact that Q1 of financial year
2008 had some benefit of UP election, which was not there this time and as I
said earlier, there was some diversion of advertisements to IPL in Q1 of
2009.
The negative market
scenario made us look at measures to cut cost, primarily news print cost, which
in spite of unprecedented increase in the newsprint prices was kept under
control, and as a result, there was saving as compared to the budgeted
cost. Also, there was substantial
reduction in losses from new publication businesses and other verticals as
compared to Q4 of the last fiscal. As a
result, the profit could be achieved in line with our budgeted profit for the
current fiscal despite an adverse effect of exchange fluctuation (which, as we
all know, is not in our control) and reduction in treasury income which
happened due to deployment of funds for the objects ofIPO. We would also like to reiterate that though
nothing positive has been heard on the economic front including RBI’s review yesterday,
JPL’s commitment is to deliver to the best of its ability and add value for
all. We now welcome you to have your
questions which we would endeavor to answer to the best of your satisfaction.
Mr. Vikas Mantri: Yes, Preetham, can we take the questions please.
Moderator: Thank you very
much sir. We will now begin the Q&A
interactive session. Participants who
wish to ask questions, please press *1 on your telephone keypad. On pressing *1, participants will get a chance
to present their questions on a first-in-line basis. Participants are requested to use only
handsets while asking a question. To ask a question, please press *1 now. First in line we have Tanu from Quantum AMC. Over
to you.
Ms. Tanu: Yeah,
sir, I wanted to know something on the financial paper side- has anything been
launched regarding the JV that you all with TV 18?.
Mr. R. K. Agarwal: No, it has not yet been
launched.
Ms. Tanu: Okay.
Mr. R. K. Agarwal: It is kept on hold for
sometime.
Ms. Tanu: Alright,
fine, thanks. I will come back later if
I have any...
Moderator: Thank you very
much. Next in line we have Ritesh Doshi from First Global,
over to you.
Mr. Ritesh Doshi: Hello? Hello?
Mr. R. K. Agarwal: Yes.
Mr. Ritesh Doshi: Sir, can you please provide
a breakup of revenues like how much came from advertisements, subscription?
Mr. R. K. Agarwal: Yeah, I will give you. The advertisement revenue was 140 crores.
Mr. Ritesh Doshi: 140 crores?.
Mr. R. K. Agarwal: Yeah.
Mr. Ritesh Doshi: Subscription?
Mr. R. K. Agarwal: Subscription
was 47.28.
Mr. Ritesh Doshi: And sir, OOH in event
management?
Mr. R. K. Agarwal: Outdoor
was 11 crores.
Mr. Ritesh Doshi: Okay.
Mr. R. K. Agarwal: A growth of 22% as compared
to the corresponding quarter of the previous year.
Mr. Ritesh Doshi: Okay.
Mr. R. K. Agarwal: Event about 3 crores. If I am not mistaken, it was again, you know, more than
100%% growth.
Mr. Ritesh Doshi: Right. And sir like, how many
OOH properties do we have right now?
Mr. R. K. Agarwal: We
are having about 2000.
Mr. Ritesh Doshi: Okay, and sir, like personal
cost also increased by around 25%.
Mr. R. K. Agarwal: Yeah.
Mr. Ritesh Doshi: Is there any particular
reason for that?
Mr. R. K. Agarwal: Yeah, yeah. In fact, if you compare it with the last
quarter, that is,
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: Q4
of the financial year...
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: 2007-2008.
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: You
will not find any increase whatsoever.
Mr. Ritesh Doshi: Right, sir.
Mr. R. K. Agarwal: More
or less, you know, it was same.
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: So, as we explained in the
last quarter, there have been additions...
Mr. Ritesh Doshi: Right.
Mr. R. K. Agarwal: in the staff strength,
particularly in the new verticals. We have launched 7 more editions of Inext since June 2007.
Mr. Ritesh Doshi: Okay, after that, you have
launched 7 more editions?
Mr. R. K. Agarwal: 7
more editions.
Mr. Ritesh Doshi: And sir, this
miscellaneous expenses also… include mostly selling expenses, I assume?
Mr. R. K. Agarwal: No, no, it is not selling
expense. Other expenses comprise of
manufacturing expenses, selling expenses, administration expenses..
Mr. Ritesh Doshi: Okay.
Mr. R. K. Agarwal: Including
stores and chemicals.
Mr. Ritesh Doshi: Yeah. So that has also increased 22% while
sequentially it has declined 10%?
Mr. R. K. Agarwal: I
did not get you?
Mr. Ritesh Doshi: Sir, these other expenses
increased 22% year-on-year.
Mr. R. K. Agarwal: Yeah.
Mr. Ritesh Doshi: And has declined 10%
sequentially.
Mr. R. K. Agarwal: Yes.
Mr. Ritesh Doshi: So, any reason for that?
Mr. R. K. Agarwal: If you are talking about the
increase…
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: as
compared to the last quarter of the last fiscal?
Mr. Ritesh Doshi: Yeah, right, sir.
Mr. R. K. Agarwal: New
launches that is reason one. Number two is scaling up of outdoor and event management activities.
Mr. Ritesh Doshi: Okay. And sir, have you launched any edition in
this quarter?
Mr. R. K. Agarwal: We launched 2 editions of Inext in this quarter.
Mr. Ritesh Doshi: Sorry?
Mr. R. K. Agarwal: We launched 2 editions of Inext in this quarter.
Mr. Ritesh Doshi: 2 editions?
Mr. R. K. Agarwal: Yeah.
Mr. Ritesh Doshi: Okay, sir. Sir, like newsprint cost you have mostly
controlled I believe, like it has increased only 14%.
Mr. R. K. Agarwal: I
think it deserves, a compliment.
Mr. Ritesh Doshi: Yeah, that’s a compliment to
you.
Mr. R. K. Agarwal: to
the management.
Mr. Ritesh Doshi: Like, what is the outlook on
newsprint going forward?
Mr. R. K. Agarwal: Second quarter seems to be
worse..
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: And, from the end of the
third quarter..
Mr. Ritesh Doshi: Yeah.
Mr. R. K. Agarwal: we expect that newsprint
prices trend start looking a bit positive.
Mr. Ritesh Doshi: Okay, and so like who are
the major advertisers?
Mr. R. K. Agarwal: I will request our Marketing
Director who is also incidentally here to throw some light on that.
Mr. Shailesh Gupta: Okay. The major advertisers for this quarter have
been from education sector.
Moderator: Sir?
Mr. Shailesh Gupta: Education
is one of the topmost categories…..
Mr. Ritesh Doshi: Right.
Mr. Shailesh Gupta: …..that
has basically driven the last quarter for us, because all the FMCGs have been quiet, all the white goods have been quiet.
Mr. Ritesh Doshi: Yeah.
Mr. Shailesh Gupta: But they will now be…. because
for them the season starts now.
Mr. Ritesh Doshi: Right, and what about the
auto and realty sector?
Mr. Shailesh Gupta: Realty…. real estate and auto
have been slow.
Mr. Ritesh Doshi: Okay, okay, that’s it from
my side, thank you very much.
Mr. Shailesh Gupta: Thank
you.
Moderator: Mr. Ritesh, are you done with your question.
Mr. Ritesh Doshi: Thanks, sir.
Moderator: Thank you very
much. Next in line we have Mr. Jain from Principal
Mutual Fund, over to you.
Male Speaker: Sir, I was wondering
what traction did we have on the Yahoo portal, have we seen any revenues?
Mr. R. K. Agarwal: In fact, Yahoo portal has
started marketing only from January or February.
Male Speaker: Sure, sir.
Mr. R. K. Agarwal: There has been an increase
month after month, more than you know, 20% in the past 3 months, but still the
revenues are not very significant. We
hope that by the close of this year the revenues would start looking substantial.
Male Speaker: Sir, yesterday your
joint venture partner in Jagran 18 had disclosed that
they have a CAPEX of around 100 crores planned for
their newsprint business, so what kind of CAPEX are you seeing on your end?
Mr. R. K. Agarwal: I don’t know, I mean, like
they are into many other things also, I cannot say about their CAPEX plans.
Male Speaker: Sure, and sir, in our
Punjab
region sir, are we seeing an increase in
circulation revenues in the ticket size of Dainik Jagran increasing in price?
Mr. R. K. Agarwal: I will request our CEO to
throw light on that.
Mr. Sanjay Gupta: At this moment, we are not
going to increase any price in
Punjab
, so
there will not be any change in the circulation revenue in
Punjab
.
Male Speaker: Sure, thank you, sir.
Mr. R. K. Agarwal: But more importantly, let me
point it out to you that the increase in circulation has been maintained and as
a result revenues have started flowing in Punjab and we have done far better as
far as our recent revenue is concerned compared to the past.
Male Speaker: Sure, thank you, sir.
Moderator: Thank you very
much. Next in line, we have Ankit from Centrum Broking, over to you.
Mr. Ankit: Sir,
our advertisements have grown only by 10% year-on-year. I just wanted to know what was
the volume growth and what was the value growth in that, sir?
Mr. R. K. Agarwal: Volume growth figures, if you
can, talk to me after the conference call, I can share with you, I don’t have that figure readily available.
Mr. Ankit: Okay,
sir, I will do that, sir. And sir, even if I look at the circulation revenues which grew only
by 5.8%...
Mr. R. K. Agarwal: Circulation revenue has grown
by 8%, gentleman.
Mr. Ankit: Okay,
sorry, sir, but sir, after including so many editions, did we actually cut down
on the circulation in this quarter a bit to save on the newsprint which
increased?
Mr. R. K. Agarwal: No, we cannot stop the
organic growth, and, that is what is the trend, so
circulation grew by about 6% in the last quarter as compared to the
corresponding quarter of the previous year as far as our mother brand is
concerned.
Mr. Ankit: Okay,
and sir, how much losses did we make in out of home and events business for the
quarter?
Mr. R. K. Agarwal: Out of home and event
management both put together had a loss of about 150 Lakhs which is much reduced as compared to the last quarter of the previous year.
Mr. Ankit: Okay,
sir, and thank you sir, I will speak to you after the conference, sir. Thank you.
Moderator: Thank you very
much. Next in line we have Venkatesh from Edelweiss, over to you.
Mr. Venkatesh: Sir,
firstly, I mean, we are really finding it very difficult to hear you sir, I
think there is a problem with the line or maybe the phone there, could you
please be a little loud?
Mr. R. K. Agarwal: Is it okay now?
Mr. Venkatesh: Yeah,
it is better. Okay, my question was on firstly what is the cash level we have
currently?
Mr. R. K. Agarwal: Again about 200 crores.
Mr. Venkatesh: 200 crores, okay, and could you share the circulation
numbers please?
Mr. R. K. Agarwal: We have average circulation
of about 2.6 million for the quarter-ended
June 30th 2008
.
Mr. Venkatesh: Okay,
alright, thanks sir.
Mr. R. K. Agarwal: This is for Dainik Jagran.
Mr. Venkatesh: For Dainik Jagran.
Mr. R. K. Agarwal: Include the circulation of Inext which is another 3 Lakhs copies.
Mr. Venkatesh: 3 Lakhs?
Mr. R. K. Agarwal: Yeah.
Mr. Venkatesh: Alright. Alright, sir, thanks.
Moderator: Thank you very
much. Next in line we have Neerav Dalal from Capital Market,
over to you.
Mr. Neerav Dalal: Good afternoon sir. Sir, I wanted a take on the newsprint prices
and what are the current newsprint prices and what is the take for the year?
Mr. R. K. Agarwal: I will just explain. The second quarter seems to be worst although
there could be some hike in the third quarter as well, but by the end of the
quarter, things would start looking positive and for us, the average newsprint
cost for the first quarter of this current fiscal was about 27.25 rupees.
Mr. Neerav Dalal: 27.25 rupees, okay, and what
are the international prices as of the moment?
Mr. R. K. Agarwal: Between 850 to 900 dollars.
Mr. Neerav Dalal: Okay, sir, this you were
saying would come off by the end of the third quarter?
Mr. R. K. Agarwal: Third quarter, yes.
Mr. Neerav Dalal: Right, sir, and sir, in the
beginning you had said you would grow at 20%, right?
Mr. R. K. Agarwal: Yeah.
Mr. Neerav Dalal: That is that… we could not
hear you clearly.
Mr. R. K. Agarwal: Yes, 20%.
Mr. Neerav Dalal: 20%, right, thank you, sir.
Moderator: Thank you very
much. Next in line we have Mr. Amit from Motilal Oswal, over to you.
Mr. Amit: Yeah. Good afternoon sir, and thank you for the opportunity. I
just wanted to understand one thing, Sir, on the newsprint prices you had been
able to control the newsprint prices pretty well, so is it largely because you
have reduced the number of pages or what has been the, I mean, reason behind
this, just wanted to understand?
Mr. R. K. Agarwal: I think we had done a lot of
things.
Mr. Amit: Right, okay.
Mr. R. K. Agarwal: It is really difficult to
pinpoint one.
Mr. Amit: Okay,
Mr. R. K. Agarwal: We have been able to, you
know, control our waste. We have been
able to control our, you know, unsold copies, and so many other things.
Mr. Amit: Okay and what
is the average inventory that you keep?
Mr. R. K. Agarwal: Average inventory would not
take you anywhere, I mean….
Mr. Amit: Okay,
Mr. R. K. Agarwal: Like I don’t carry inventory
more than 1 month consumption, or say 1.25 months consumption.
Mr. Amit: But then
sequentially, there would be an absolute increase in the newsprint prices,
right, from fourth quarter and first quarter as far as your purchases are
concerned, right?
Mr. R. K. Agarwal: See, this is a slightly
difficult question, you know, for me to answer..
Mr. Amit: Okay,
Mr. R. K. Agarwal: In fact whatever deal we get,
we are not supposed to share.
Mr. Amit: Right, right,
no, I am just saying the trend, not the absolute number?
Mr. R. K. Agarwal: Trend, I mean, in terms of
percentage, yes, I can tell you. It is
roughly about 15% costlier in this quarter..
Mr. Amit: Okay,
Mr. R. K. Agarwal: Than
the last quarter.
Mr. Amit: Okay, okay,
because I was just trying to understand your advertising revenue has been just
about 10% so I thought that was…. was that there would be more decline in
volume due to the pages and hence improvement in..
Mr. R. K. Agarwal: No, no, I can not stop,
advertising just because of pages. In
any case, you know, if I have to advertise
additionally I would love to do that irrespective of the fact whether or not I
would have to increase pages.
Mr. Amit: Okay,
Mr. R. K. Agarwal: In any case, yield per
centimeter irrespective of the newsprint cost would always be higher.
Mr. Amit: Okay,
okay, thank you, sir.
Moderator: Thank you very
much. Next in line we have Rithwik from M. F. Global, over to you.
Mr. Rithwik: Hello,
sir.
Mr. R. K. Agarwal: Hello.
Mr. Rithwik: Yeah,
I just.. sir, wanted to get an idea of why, you know,
we had increased ad rates pretty aggressively, right at the end of the last
fiscal, so I just wanted to understand how that has not translated into much,
number one, and number two, I think did you say 35% growth in July and is that
a kind of a lag that those rates are getting passed on with..?
Mr. R. K. Agarwal: Yes, yes, that is again one
of the reasons and going forward, you will find the effect of that, you know,
more and more pronounced.
Mr. Rithwik: Okay,
and sir, could you give us the numbers for your total newsprint consumption in
million terms for this quarter and comparable last year quarter?
Mr. R. K. Agarwal: Again,
we can discuss it, a little later.
Mr. Rithwik: Sure,
sir.
Moderator: Thank you very
much. Next in line we have Tejas from IL&FS Investsmart,
over to you.
Mr. Tejas: Good
afternoon sir.
Mr. R. K. Agarwal: Good
afternoon.
Mr. Tejas: Sir,
I believe in the beginning of this year we were planning to acquire properties
in Jagran dominated areas like UP, Bihar for our out
of home business, so how many properties..
Mr. R. K. Agarwal: We
have started that, and in that direction..
Mr. Tejas: Okay,
Mr. R. K. Agarwal: ….after
acquiring the rights for whole of
Aligarh
city and UPSRTC bus stands.
Mr. Tejas: Okay.
Mr. R. K. Agarwal: We have acquired now rights
for the
Moradabad
railway station..
Mr. Tejas: Okay,
Mr. R. K. Agarwal: And we are in process of
acquiring a few more rights. There is a bit of uncertainty about, you know,
outdoor policy of the state government at the moment. That is why the
acquisition has not happened faster but it is going to be sorted out and we are
going to make a few more acquisitions very shortly.
Mr. Tejas: And
sir, in terms of number, how much would be that?
Mr. R. K. Agarwal: Pardon?
Mr. Tejas: In
terms of number, how much would be that? You said that 1000 properties we have as of today on.
Mr. R. K. Agarwal: More than 2000, I said.
Mr. Tejas: Okay,
Mr. R. K. Agarwal: And Aligarh itself has about
200.
Mr. Tejas: Okay,
okay, thank you, Sir.
Moderator: Thank you very much. Next in line we have Amit Kumar from Kotak
Securities, over to you.
Mr. Amit Kumar: Good afternoon, Sir, how
are you?
Mr. R. K. Agarwal: Very fine.
Mr. Amit Kumar: Sir, just wanted to
understand, you know, what is happening on the outdoor front, I mean, if you
look at your print-dominated areas, if we could just have a sense of, you know,
how many properties do you have in the core Hindi heartland and you know, the
other properties which you have, you know, in the metros Bombay, Delhi, and so
on, could you just give us some sense on that?
Mr. R. K. Agarwal: Yeah. See the clear-cut strategy was first to mark
the presence, in all metros which are contributing even now more than 50%-60%
in the total outdoor pie.
Mr. Amit Kumar: Okay,
Mr. R. K. Agarwal: That is where we are.
Mr. Amit Kumar: Right.
Mr. R. K. Agarwal: And for the past 3 months
only, we have started concentrating on our area of operations, and there we
have acquired a few properties. There are a few more properties which are under
discussions and at final stage.
Mr. Amit Kumar: Okay, sir, and what is the
outlook on outdoor because you know, with the economic sentiments down a bit, I
mean, it is generally believed that the hit on outdoor would be more than on
other advertising mediums like say a print or television, so are you seeing
something like that or because…
Mr. R. K. Agarwal: Sentiments matter only in
case of a few advertisers, not in general. We have already seen in the first quarter. Now, I mean, like how it will impact in future,
I am requesting our Director Marketing to tell you.
Mr. Shailesh Gupta: See for outdoor it will never
affect that much because basically outdoor is mostly the clients which you see
on outdoor is FMCG clients, right. And
FMCG clients, can you hear me?
Mr. Amit Kumar: Yes.
Mr. Shailesh Gupta: Yeah, okay, and FMCG clients are
always there any way. If the economy is slow, they still need to sell their
products, right. They still need to
market and they still need to launch new products. It will never affect outdoor
as much because outdoor is a much cheaper option compared to a press or a TV.
Mr. Amit Kumar: Okay, and sir, is there
some kind of a churn that is happening in your properties because, you know,
somewhere along the line you are stuck at that, you know, 1200 to 1400 to 1500,
I mean, number of properties..
Mr. Shailesh Gupta: we are optimizing the properties
right now, so what is happening is the properties
which are not making money, we are leaving them. We are picking up new properties which have
more potential of making money or if the properties are not going at a right price,right.
Mr. Amit Kumar: Right.
Mr. Shailesh Gupta: We are taking properties where
the margins are better than before.
Mr. Amit Kumar: Okay, fine. Thank you, Sir.
Mr. Shailesh Gupta: Thank you.
Moderator: Thank you very
much. Next in line we have Nikhil from Systematix, over to you.
Mr. Nikhil: Yeah. Good afternoon sir.
Mr. R. K. Agarwal: Good afternoon.
Mr. Nikhil: Sir, just
wanted to understand last quarter you had given guidance that we would not be
launching any more editions for the next few quarter, so what is the timeline
for that, I mean..
Mr. R. K. Agarwal: See, what we said was ..
Mr. Nikhil: Yeah.
Mr. R. K. Agarwal: Except for these few editions
which we have launched in the last quarter..
Mr. Nikhil: That is Inext.
Mr. R. K. Agarwal: Inext.
Mr. Nikhil: Yeah.
Mr. R. K. Agarwal: We will not launch anything
till 30th September and thereafter, we will review and take a call
depending on the newsprint prices and so many otherthings,
so that is what we still maintain.
Mr. Nikhil: So 37 editions
of Dainik Jagran as of now?
Mr. R. K. Agarwal: Yes.
Mr. Nikhil: Right, and so
what are we doing in Dainik Jagran-
are we like, you know, raised out of probably Kanpur, are we expanding at least
say probably to towns around Kanpur and making that a strong forte?
Mr. R. K. Agarwal: Let me, let me tell u. Jagran is seen
everywhere right from J&K to Siliguri.
Mr. Nikhil: Right.
Mr. R. K. Agarwal: So, practically we have
covered the entire Hindi belt except for Rajasthan.
Mr. Nikhil: Right.
Mr. R. K. Agarwal: Right. So now there could be a couple of editions
which we might think of, you know, launching. It could be anywhere but then this call we will take only after 30th September. There is no crying need as
such.
Mr. Nikhil: Right,
right.
Mr. R. K. Agarwal: There
is no emergency as such.
Mr. Nikhil: And sir, what
kind of ad rate hikes are we taking in Dainik Jagran year-on-year almost?
Mr. R. K. Agarwal: Every year in the past, if I
am not mistaken, 2 years, we have taken more than 30% rate hike.
Mr. Nikhil: 30%, and sir,
just wanted to understand in Inext, what kind of
investments have we been put in and, you know, if you have seen any standalone
profitability of Inext?
Mr. R. K. Agarwal: Inext-
standalone profitability last quarter, we had suffered a loss of about 6 crores.
Mr. Nikhil: Right.
Mr. R. K. Agarwal: …Which
has come down significantly in the first quarter. And so long as we do not launch of new
editions of Inext and continue with these 9 editions,
I expect it to be in profit by March.
Mr. Nikhil: Okay. Thanks, thanks.
Moderator: Thank you very
much. Next in line we have Vishal from ICICI Prudential AMC, over to you. Vishal, you can go
ahead.
Mr. Prashant Kotari: Hello, sir, this is Prashant Kotari. Just wanted to understand this ad revenue
growth number because you mentioned that the ad rate hike was like 30% plus and
we are able to increase our ad revenues only by 10% so was it a case of giving
higher discounts or was it a case of having lower volumes so that our ad credit
ratio was down, if you can explain something about that?
Mr. R. K. Agarwal: See, let me clarify a couple of things. First
of all, ad/edit
ratio is something which can be driven by the management. It has got nothing to do with the lower
volumes or higher volumes or increase in revenue or lower revenue.
Mr. Prashant Kotari: Okay.
Mr. R. K. Agarwal: Right. What is ad/edit ratio? I mean if I am having advertisement at 40%,
60% content, that is what is called 40-60 ad/edit ratio. And it depends on the number of pages. If I have more advertisements, then I have a
capability to print more pages.
Mr. Prashant Kotari: Sure.
Mr. R. K. Agarwal: So, ad/edit ratio has got
nothing to do with the revenue part of anything of that sort. Second thing is when we say over 30%, we have
may be 10,000 rates, so what we talk is 30% all-edition increase but it doesn’t
mean 30% increase is there across everything. Effectively all edition rate
might have been increased by 30%, on an average, it could be
15%-20%. That is another thing which I
want to clarify.
Mr. Prashant Kotari: So on an average how much was
the ad rate hike?
Mr. R. K. Agarwal: It is very difficult, you
know, I can give you just one ballpark figure because I have 10,000 rates.
Mr. Prashant Kotari: Okay,
Mr. R. K. Agarwal: So the problem is I have, 37
editions and more than 250 sub editions, so you have those many permutations
and combinations, those many rates I have. So it is very difficult ….we never work it out like that. But … what I would say ballpark figure which
I can give you, that could be in the range of 15%-20%.
Mr. Prashant Kotari: Okay.
Mr. R. K. Agarwal: So that is what it is. And as far as your question, whether volumes
dipped. No, volumes have not
dipped. The increase in rate, as
somebody else just enquired a few minutes back,has started getting reflected from the current
quarter, and going forward, it would get more and more pronounced. What happens is that we had done the deal -
Last year was the first year when we took the increase in the month of
March. Earlier we were taking in the
month of April, so in case of national advertisers, by the time deal is struck,
you know, it is end of June or something of that
sort. Deal is always for 12 months’
period. If we conclude a deal say on 30th June, it will be effective from 1st July to 30th June so
till deal is over, we cannot take the rate hikes.
Mr. Prashant Kotari: Okay. And can you also tell us the proportion of
color ads and how do they compare compared to last ….?
Mr. R. K. Agarwal: Color ad has been on
increase, you know, consistently, and that is why we have been investing in the
expansion of color capacities. Unfortunately, I don’t have figure readily available with me. You can take it from me, on some other day.
Mr. Prashant Kotari: And sir just, sorry for asking
this. You mentioned something about AdEX data in the beginning. Can you just repeat what you said?
Mr. R. K. Agarwal: I said industry has grown by
5% in terms of advertisement space in the first half of the current calendar
year.
Mr. Prashant Kotari: Okay.
Mr. R. K. Agarwal: As against that, Jagran has grown by 15% in the first quarter and by nearly,
11% in the second quarter.
Mr. Prashant Kotari: By ad space, you mean, the
volume growth?
Mr. R. K. Agarwal: Volume
growth.
Mr. Prashant Kotari: Okay, so for us, how much is the
volume growth, 12%?
Mr. R. K. Agarwal: What
did you say?
Mr. Prashant Kotari: You are saying the industry
volume growth is 5% and our volume growth is how much?
Mr. R. K. Agarwal: I gave you figure. I mean, they have given figure for 6 months.
Mr. Prashant Kotari: Yeah.
Mr. R. K. Agarwal: I
have broken it down into 2 parts.
Mr. Prashant Kotari: Right.
Mr. R. K. Agarwal: One
for first quarter and second for second quarter.
Moderator: Prashant, done with your question?
Mr. Prashant Kotari: No, I could not understand,
sorry, Sir. You are saying our volume
growth was 12% for this quarter?
Mr. R. K. Agarwal: We
will discuss, you know, after the call.
Mr. Prashant Kotari: Okay, Sir.
Moderator: Thank you very
much. Next in line we have Suresh from
Reliance Life Insurance, over to you.
Mr. Suraj: Hello,
sir, this is Suraj here. Sir, my question will be regarding the ratio
of your domestic and imported newsprint, so what is the ratio currently, sir?
Mr. R. K. Agarwal: Imported is in the range of
about 24%.
Mr. Suraj: Okay,
sir and sir, the number of loss making editions we have and how much of that
would be in
Punjab
?
Mr. R. K. Agarwal: We have considerably reduced
the number from nine last year to seven this year.
Mr. Suraj: Okay,
and sir, how much of that would be in
Punjab
,
sir?
Mr. R. K. Agarwal: I
think we are getting too specific about it.
Mr. Suraj: Okay,
sir, okay, sir. Thank you.
Moderator: Thank you very
much. Next in line we have Avinash Roy from Edelweiss Capital, over to you
Mr. Avinash Roy: Good afternoon sir.
Mr. R. K. Agarwal: Good
afternoon.
Mr. Avinash Roy: I
had a question on newsprint, you said after the end of
the third quarter, you expect the prices to come down.
Mr. R. K. Agarwal: Yes.
Mr. Avinash Roy: So
what is the logic exactly for that – is it related to Olympics…..
Mr. R. K. Agarwal: See there are so many things like the presidential elections, Olympics, and so and so forth
which have abnormally increased the consumption.
Mr. Avinash Roy: Yeah.
Mr. R. K. Agarwal: Because you cannot expect,
cost of production going up..
Mr. Avinash Roy: Correct.
Mr. R. K. Agarwal: From 550 or 600 dollar to1000
dollars in a year’s time.
Mr. Avinash Roy: Correct.
Mr. R. K. Agarwal: What is happening to the fuel
is happening to the newsprint.
Mr. Avinash Roy: Okay.
Mr. R. K. Agarwal: So I mean like the fuel has
gone down, from 146 to 120 within a week’s time- that is what, gives us
confidence that things would come to normal level..
Mr. Avinash Roy: Right.
Mr. R. K. Agarwal: by the end of the third
quarter and another reason is some pulp capacities which is the raw material for newsprint are coming up in the third quarter.
Mr. Avinash Roy: So
is it possible that we can see a very sharp decline in newsprint also..
Mr. R. K. Agarwal: No,
I don’t think.
Mr. Avinash Roy: That, you don’t think.
Mr. R. K. Agarwal: No,
I don’t think, I don’t think...
Mr. Avinash Roy: And
sir, second question was regarding your growth in outdoor and event, you have
said 20% overall – what kind of growth you will see in the outdoor and events …
Mr. R. K. Agarwal: No, when I said 20%, I was
talking about advertisement revenue from the print only.
Mr. Avinash Roy: Okay, so what kind of growth do you expect in
outdoor?
Mr. R. K. Agarwal: Outdoor
again it is expected exceeding 20%.
Mr. Avinash Roy: Yeah, and events also similar?
Mr. R. K. Agarwal: Events I think it should be
much, much sharper.
Mr. Avinash Roy: Okay, is it because of more property we want to
this year?
Mr. R. K. Agarwal: In
event?
Mr. Avinash Roy: Yeah.
Mr. R. K. Agarwal: Yes, in fact, last year was
an aberration in the sense we could not do to our potential for certain reasons
which were beyond our control..
Mr. Avinash Roy: Yeah.
Mr. R. K. Agarwal: This
year we will be back, you know, to the normal level.
Mr. Avinash Roy: Okay, okay, sir. Thanks.
Moderator: Thank you very
much. Next in line we have Mr. Vinay Paharia from Lotus Mutual
Fund, over to you.
Mr. Vinay Paharia: Good afternoon sir.
Mr. R. K. Agarwal: Good
afternoon gentleman.
Mr. Vinay Paharia: Sir, wanted to know, you said
during the call that this business paper is on hold that’s because of newsprint or ..?
Mr. R. K. Agarwal: No, there are various other
reasons. I don’t think, this is the right forum to share those strategies.
Mr. Vinay Paharia: Fine.
Mr. R. K. Agarwal: And when I say onhold, it could be, temporarily.
Mr. Vinay Paharia: Okay. And second question is you said during the call, you said what the average cost of this newsprint was
27.5 rupees per kg is it?
Mr. R. K. Agarwal: That’s right.
Mr. Vinay Paharia: Okay, and what is the current
domestic rate for newsprint which we are buying?
Mr. R. K. Agarwal: Again, domestic, as you know,
has various qualities. It ranges from
28, landed cost to 40, but that 40 is something very, very special which we
hardly buy.
Mr. Vinay Paharia: So that’s what, so what is
your type of newsprint which you buy on an average costing, say on a current
market price basis?
Mr. R. K. Agarwal: It
will be 28 to 35.
Mr. Vinay Paharia: 28 to 35?
Mr. R. K. Agarwal: Yeah.
Mr. Vinay Paharia: So maximum which you have.. yeah, okay, and this is what
the.. ….
Mr. R. K. Agarwal: And
40 is also substitute to import.
Mr. Vinay Paharia: Correct. So this is the rate which you feel maximum
you can go in say in third quarter end?
Mr. R. K. Agarwal: Yes.
Mr. Vinay Paharia: Okay, okay, sir, thanks.
Moderator: Thank you very
much. Next in line we have Aditya from Citigroup, over to you.
Mr. Aditya: Yeah,
hi, sir. I wanted to.. most of my questions have been answered. Just one more question regarding your ad
revenues. You say the ad revenues in
print would be about 20%, so I am just trying to understand, you know, given
the whole economic slowdown and it coming down to about 6%-7% GDP growth, how
do we expect to come up to something like 20%?
Mr. R. K. Agarwal: First of all, I don’t share
the thought that growth is going to be 6%-7%.
Mr. Aditya: Okay.
Mr. R. K. Agarwal: Because even RBI Governor yesterday
said that, he doesn’t have any reason to revise the GDP growth downwards from
8%. He is still hopeful of getting 8%
rate and there was one gentleman, who was a very imminent personality, speaking
yesterday onCNBC who still says that, GDP rate is not
going to be less than 8.5% to 9%. I am
one of those who believe in this. Having said that, I would not expect the same kind of, growth what we
had last year. It would affect us and
this is why I say 20%; otherwise I would have said, you know, again 30%.
Mr. Aditya: Okay.
Mr. R. K. Agarwal: The reason is if you recall I
mentioned in the beginning itself the economic slowdown and as my Director
Marketing explained in the beginning itself. Economic slowdown does not affect the local advertisement as much as it
affects national advertising. In fact,
it is the local advertisements which have helped us getting that kind of a
growth in the first quarter and that would continue to give. As far as national advertisers are concerned,
it is not that they were not spending money. If you had an opportunity to look at Zee results or other electronic
media, results, electronic media has performed well.
Mr. Aditya: Yeah.
Mr. R. K. Agarwal: Courtesy, you know, IPL. So, now after they have spent substantial
amount out of their budgets in the first quarter itself on electronics, the
balance has to come to now print.
Mr. Aditya: Okay. Okay, sir. Thank you.
Mr. R. K. Agarwal: I mean like if you look at
the growth in the local advertisement, it was pretty substantial even in the
first quarter.
Mr. Aditya: Okay,
Sir, thank you.
Moderator: Thank you very
much. Next in line we have Nitin Bhatia
from HDFC Mutual Fund, over to you.
Mr. Nitin Bhatia: Good
afternoon sir.
Mr. R. K. Agarwal: Good
afternoon.
Mr. Nitin Bhatia: Sir, you mentioned that
Q1-FY08 had some impact of UP elections.
Mr. R. K. Agarwal: Yes.
Mr. Nitin Bhatia: How much would have that
accounted for in the base year which is not there this time around?
Mr. R. K. Agarwal: See it could be.. what happens is whenever these elections happen, in
addition to direct flow of money from the contestants and all, there could be
some additional ad spend as well, and all put together, it might not be very
substantial but definitely, it might have resulted in at least 4%-5% less
revenue.
Mr. Nitin Bhatia: Okay,
of our total ad revenues?
Mr. R. K. Agarwal: Yes.
Mr. Nitin Bhatia: Okay. Sir, when is it that we take our annual rate
increases?
Mr. R. K. Agarwal: Last
year, we took it in March.
Mr. Nitin Bhatia: That
has been the norm for the last several years, is it?
Mr. R. K. Agarwal: No, last several years, we
were taking in April. This year, we took
it in March and who knows this time we will take it in Feb.
Mr. Nitin Bhatia: Okay, sir, one more
qualitative thing- you mentioned that education for one has been holding up
very well.
Mr. R. K. Agarwal: Sorry,
gentleman, I didn’t get your question.
Mr. Nitin Bhatia: You mentioned that
education is one category which has held up very well.
Mr. R. K. Agarwal: Yes.
Mr. Nitin Bhatia: However, you know,
obviously our growth rates have slowed. Would competition be one aspect which is basically
Hindustan
’s presence in more markets this year…?
Mr. R. K. Agarwal: No, I don’t think any
competitor has affected us at all and is not likely to affect us either in
future.
Mr. Nitin Bhatia: Yeah,
I have to, yeah. They have..
Mr. R. K. Agarwal: They
have not grown at our cost.
Mr. Nitin Bhatia: No, what surprises… I
mean I am not extrapolating the quarter’s trend but what surprises us is
probably that, you know, the markets that you are present in are in a phase of
some sort of a structural growth and around that, this cyclical trend- has it
deteriorated for a longer period or you think it was just this particular quarter
that has…?
Mr. R. K. Agarwal: No, I am really not able to
understand that, as far as our area of operation is concerned, there has not
been any deterioration as such. As I
mentioned just a few minutes back, it is my area of operations which has helped
us, you know, in getting that kind of a growth. Otherwise, it just would not have been possible.
Mr. Nitin Bhatia: Sure. Would there be any prominent categories which
should have been negative YoY in this first quarter, any categories of your
advertising..?
Mr. R. K. Agarwal: There
are negatives. All the national
advertisements..
Mr. Nitin Bhatia: Prominent
ones?
Mr. R. K. Agarwal: In
fact, there was hardly any growth.
Mr. Nitin Bhatia: Were there any
significant ones which you hope that they will return back to print in the..?
Mr. R. K. Agarwal: White
goods.
Mr. Nitin Bhatia: Okay,
white goods you would have declined YoY is it?
Mr. R. K. Agarwal: See, it really was not doing
that well even last year. It was still
worse in the first quarter.
Mr. Nitin Bhatia: Okay. So, white goods would have declined year over
year?
Mr. R. K. Agarwal: Yes.
Mr. Nitin Bhatia: Okay,
okay, thanks a lot for…
Mr. R. K. Agarwal: And they are picking up, and
they will pick up. I mean like
immediately after 30th June was over, we have started seeing the
advertisements coming from white good industry as well.
Mr. Nitin Bhatia: Great, Sir! For the balance 9 months, how many more
editions- Inext will not see any new launches?
Mr. R. K. Agarwal: No, I don’t think. After September, we will take a call.
Mr. Nitin Bhatia: Okay, okay, thank you
very much.
Mr. R. K. Agarwal: There is no emergency as such
and there is no hurry as such for launching new editions.
Mr. Nitin Bhatia: Okay, thanks a lot for
your time sir. Thank you.
Moderator: Thank you very
much. Next in line we have Ritesh from
Dolat Capital, over to you.
Mr. Ritesh: Good afternoon
sir. My question has been answered. Thank you.
Moderator: Thank you very
much. Next in line we have Amit from
Kotak Securities, over to you.
Mr. Amit: Yeah, thank
you, sir. My question has also been
answered.
Moderator: Thank you very
much. Next in line we have Guest from
Equity Master, over to you.
Female Speaker: Sir, what is the CAPEX plan
for this year and the coming next 2 years?
Mr. R. K. Agarwal: This year we have planned
roughly about 125 crores.
Female Speaker: Sir, how much?
Mr. R. K. Agarwal: 125 crores.
Female Speaker: 125 crores, so this is
including the maintenance CAPEX also?
Mr. R. K. Agarwal: Yes.
Female Speaker: And sir, over the next 2-3
years?
Mr. R. K. Agarwal: We don’t have any huge CAPEX
plan for next year or the year after that because we will be completing this
phase probably by
June 30th 2009
which we started immediately after IPO.
Female Speaker: Okay, sir. That’s it. Thank you.
Moderator: Thank you very
much. There are no further questions
from participants. I would like to hand
over the floor back to Mr. Vikas for final remarks.
Mr. Vikas Mantri: Thank you everybody for
participating in the call and thanks to the management for taking the
call. Thank you sir.
Mr. R. K. Agarwal: Thank you very much
gentleman.
Mr. Sanjay Gupta: Thank
you very much.
Mr. Vikas Mantri: Thank
you.
Moderator: Ladies and
Gentlemen, thank you for choosing WebEx Conferencing Service. That concludes this conference call. Thank you for your participation. You may now disconnect your lines. Thank you and have a nice day.
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