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Moderator: Good evening Ladies and Gentlemen. I am Sandhya, the moderator for this conference. Welcome to the Jagran Prakashan Limited Conference Call hosted by ICICI Securities Limited. 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 to Mr. Vikas Mantri. Thank you and over to you sir.
Mr. Vikas Mantri: Good evening everybody. We have Mr. R. K. Agarwal and Mr. Sanjay Gupta from the management who will be holding the call for you. Over to you sir for a brief remark.
Mr. R. K. Agarwal: Good evening friends. I am happy to have our CEO, Mr. Sanjay with me. Both of us will endeavor to answer your questions to your satisfaction, Just giving a brief on the last year’s operations, as you might have already noticed from the press release, this was another good year of performance. The results, particularly the bottom line would have been still better but for certain events and changes which were beyond our control, and one of them was change in the accounting with respect to lease rentals according to the Institute of Chartered Accountants of India’s opinion, the new launches of Inext and also the amendment to the Payment of Bonus Act by the government with retrospective effect. Definitely newsprint prices also started increasing from January 2008. These increases also had some adverse impact on the profits for the last quarter, but essentially the first three were the main reasons why performance for the year and particularly for the last quarter got impacted. If I have to talk about the losses from the new initiatives, the total loss for the last quarter was over 8 crores and for whole of the year, these losses were 15 crores. Similarly, the impact of change in accounting with respect to lease rentals resulted in an impact of nearly 1.75 crores. Then, Payment of Bonus Act, amendment to Payment of Bonus Act with retrospective effect had an adverse impact of nearly 2.75 crores. So, all put together, the real impact…real adverse impact on the profits for the year was to the tune of 20 crores. With this, I request you to have your questions and we will endeavor to answer to your satisfaction.
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. First question comes from Mr. Ritesh from Dolat Capital. Over to you sir.
Mr. Ritesh: Good evening sir. First, I would like to know the bifurcation of advertisement revenue and circulation revenue because it is not mentioned in the press release.
Mr. R. K. Agarwal: Yes, you are absolutely right. Advertisement revenue for the year 2008…
Mr. Ritesh: Yeah.
Mr. R. K. Agarwal: …was 499 crores…
Mr. Ritesh: Okay.
Mr. R. K. Agarwal: …an increase of 28.4% over the previous year.
Mr. Ritesh: Okay. And circulation and…
Mr. R. K. Agarwal: Circulation revenue was 183 crores, an increase of over 7% over the corresponding period of the previous year.
Mr. Ritesh: And out of home and other revenues?
Mr. R. K. Agarwal: Out of home and other revenues, I mean like out of home, event…
Mr. Ritesh: Okay.
Mr. R. K. Agarwal: …and short code services, all contributed about 57 crores.
Mr. Ritesh: Sir, if we take this 57 crores...
Mr. R. K. Agarwal: Yes.
Mr. Ritesh: …and in the last three quarters, it was like 46 crores, so this year quarter on quarter we have like 50% decline. So, what would be the reason for that?
Mr. R. K. Agarwal: No, decline in what?
Mr. Ritesh: Like in Q3 FY08...
Mr. R. K. Agarwal: Yeah.
Mr. Ritesh: …the other operating revenue was to the tune of about 20 crores.
Mr. R. K. Agarwal: Other operating revenues…
Mr. Ritesh: …was to the tune of 20 crores in Q3 FY08.
Mr. R. K. Agarwal: No, when you are talking about other operating revenues, you are referring to what?
Mr. Ritesh: SMS, out of home, and event business.
Mr. R. K. Agarwal: See, first of all let me clarify to you…
Mr. Ritesh: Yeah.
Mr. R. K. Agarwal: … the operating revenues comprise of advertisement, circulation, these three, and couple of more sources are there.
Mr. Ritesh: Okay.
Mr. R. K. Agarwal: So, I don’t know how you are coming to a figure of 20 crores.
Mr. Ritesh: Okay.
Mr. R. K. Agarwal: I mean , as far as other operating revenues are concerned, there has been a consistent growth throughout the year.
Mr. Ritesh: Okay, okay. I will again check back my calculation.
Mr. R. K. Agarwal: You do that…
Mr. Ritesh: Sure.
Mr. R. K. Agarwal: …and in case there is any further query, you can come to us.
Mr. Ritesh: Sure, sure sir. Thank you very much sir.
Moderator: Thank you very much sir. Next question comes from Mr. Avineshwar of Jagran. Over to you sir.
Mr. Avineshwar: Hello sir. Sir, if we see your top line, there is a dip in Q4 compared to Q3 and if we see the growth Y-o-Y, in Q1 it was about 34%, in Q3 it was 29%, while this time it is only 16%. So…
Mr. R. K. Agarwal: You are absolutely right.
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: In the fourth quarter, the growth of revenue was not in line with what we had been achieving, but you must appreciate that,, with higher and higher base in terms of percentage, the revenue cannot, I mean the growth in revenue cannot remain same.
Mr. Avineshwar: So, what kind of growth you are expecting FY09, will it be something like 15% to 18% overall?
Mr. R. K. Agarwal: No, I think it should be more.
Mr. Avineshwar: Okay. And sir, could you give me a breakup for the ad and circulation which you gave for FY08 full year, could you give us for Q4 sir?
Mr. R. K. Agarwal: Q4, the advertisement…advertisement revenues was 125 crores, a growth of 20%.
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: Circulation, the revenue was 45 crores, a growth of 5%.
Mr. Avineshwar: And full year, outdoor, how much we did sir?
Mr. R. K. Agarwal: Full year, we did 44 crores, but in case of outdoor, you know, I have to clarify one thing which is very, very important. Whatever revenue from outdoor is disclosed in our accounts is without service tax and is without inhouse billing. Supposing, this activity was to be run by an independent company…
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: … and if you add both these to 43 crores, then we reach a figure of about 53 to 54 crores, which is comparable with other industry players
Mr. Avineshwar: Okay.
Mr. R. K. Agarwal: And that way if I look at that , you know, within just two years’ time, our Jagran Engage has been able to acquire more than 4% market share.
Mr. Avineshwar: Okay. And how much have we done on event sir, full year?
Mr. R. K. Agarwal: Event, this year we did only 11 crores.
Mr. Avineshwar: Okay.
Mr. R. K. Agarwal: There was…I mean their performance was below expectations.
Mr. Avineshwar: Okay.
Mr. R. K. Agarwal: it was because, this year we thought to concentrate on government business and we never realized, you know, there is lot of, bureaucratic approach which resulted in delay in release of the purchase order.
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: That is why we could not, meet our expectations.
Mr. Avineshwar: And sir, what is the sense on news print because you said in Q4 there was an impact of only felt in only two months, in January there was not much impact. So, what is the sense…
Mr. R. K. Agarwal: No, honestly last quarter of the year saw the consumption more from, inventory as of 31st December.
Mr. Avineshwar: Correct.
Mr. R. K. Agarwal: Right.
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: So, I mean like in the first quarter also, the impact will be there, definitely impact will be much higher than what we had in the first quarter, I mean in the fourth quarter of the last year…
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: …but real impact, you know, one would feel in second and third quarters.
Mr. Avineshwar: So, our EBITDA margin in Q2, Q3 will be far lower, is it that…
Mr. R. K. Agarwal: No, no, no, see, although I don’t guide on the bottom line…
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: …but I can assure you at Jagran at least, we are not having fears of margins dropping or something of that sort., at least for present. It could be, you know, for a month or probably about two months, I mean could be for a quarter or so, but year on year margin, we feel still very confident that we should be doing, I mean there should not be any drop at least.
Mr. Avineshwar: So, will that be through higher revenue growth or other means also?
Mr. R. K. Agarwal: we don’t have any other means, I wish I could have had…
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: …but then it is going to be only from the operations…...
Mr. Avineshwar: Okay, okay. And newsprint, any sense sir, will it come down say after two quarters because a lot of people are saying…
Mr. R. K. Agarwal: Yes, now what people are saying, we also, you know, agree with that.
Mr. Avineshwar: And what will be the reasons for that?
Mr. R. K. Agarwal: See we have to look at the reasons, you know, why it has gone up.
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: Definitely there is no doubt about it that, there is more demand.
Mr. Avineshwar: Correct.
Mr. R. K. Agarwal: but in fact, people are putting pressure on the suppliers, this is why they have, you know, unreasonably increased the prices, I would say.
Mr. Avineshwar: Correct.
Mr. R. K. Agarwal: So, I mean once the demand goes down after Beijing Olympics , particularly from China, or we, the newspaper publishers…
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: …do not run after them. Definitely, there will be reduction in the prices and then I was reading somewhere, , some pulp capacities are going to come in operation, , in September-October.
Mr. Avineshwar: Yeah.
Mr. R. K. Agarwal: So, that would ease the pressure on the supply of raw material to the newsprint supplier….
Mr. Avineshwar: Okay. Okay sir, that’s all from my side. Thanks.
Moderator: Thank you very much sir. Next question comes from Mr. Anand Shah of Angel Broking. Over to you sir.
Mr. Anand Shah: Hello…yeah, good afternoon sir.
Mr. R. K. Agarwal: Good afternoon.
Mr. Anand Shah: Sir, this loss that you said about 20 crores, I mean because of these Bonus Act and lease rentals and others, I mean that is for the full year right?
Mr. R. K. Agarwal:Yes.
Mr. Anand Shah: So, how much of that can be attributed for the last quarter?
Mr. R. K. Agarwal: About 10 crores.
Mr. Anand Shah: About 12 crores.
Mr. R. K. Agarwal: …10- crores.
Mr. Anand Shah: And sir, this will be recurring as in the Bonus Act and lease rentals or like this was one time…
Mr. R. K. Agarwal: See, why bonus had additional impact because we had to provide for the last year also.
Mr. Anand Shah: Okay.
Mr. R. K. Agarwal: And …whatever additional liability has come…
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: …on account of change in salary limit …
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: …that would continue, but fact of the matter is once the salaries will increase…
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: …, this liability should go down and down only.
Mr. Anand Shah: Okay. And sir, can you tell me advertising growth, I mean how much was the volume and value growth?
Mr. R. K. Agarwal: Space grew by about 13%.
Mr. Anand Shah: 13%.
Mr. R. K. Agarwal: Yeah.
Mr. Anand Shah: This is for the full year you are saying?
Mr. R. K. Agarwal: I am talking about full year.
Mr. Anand Shah: So, I mean value would be 15%.
Mr. R. K. Agarwal: Yes. Then,you can’t attribute 15% to rate only.
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: It has a mix of…
Mr. Anand Shah: The mix of incremental color and all this also over there.
Mr. R. K. Agarwal: …color and black and white.
Mr. Anand Shah: Are you witnessing any slowdown in any particular category, for example, I mean real estate or something?
Mr. R. K. Agarwal: No, we don’t see any slowdown in any particular category, but then inflation is a real ghost.
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: I mean if… it is affecting other industry…
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: …we also cannot expect to remain absolutely untouched, but one thing we know for sure that whatever impact it has, we will be least impacted.
Mr. Anand Shah: But…sir, also one more thing, it terms of new product, new launches, you are looking to slow down, something like Inext or something?
Mr. R. K. Agarwal: I request our CEO to throw some light.
Mr. Sanjay Gupta: See, there is no question of slowing down, but strategically we will like to stagger the launches in the financial year and take a call in mid term on what will be the prospective date for launching either a DJ edition or an Inext edition.
Mr. Anand Shah: So, what kind of…how many editions are you looking for Inext in 09 and City Plus?
Mr. Sanjay Gupta: Inext probably no more editions this year, maybe in January we will take another call…
Mr. Anand Shah: Okay.
Mr. Sanjay Gupta: …or by October we take another call for strengthening our UP editions or some more editions in UP, but all that strategic calls will be taken once, six monthly performance is up to our mark and our expectation, .
Mr. Anand Shah: And sir City Plus?
Mr. Sanjay Gupta: Pardon.
Mr. Anand Shah: In City Plus?
Mr. Sanjay Gupta: City Plus, we are going ahead with two launches.
Mr. Anand Shah: Okay.
Mr. Sanjay Gupta: But …it is not a very significant impact on our expenditure. So, those launches will happen, and we are looking for a few more cities which I cannot disclose now.
Mr. Anand Shah: And sir, there are also talks, I mean there were some price cuts happening in some of your markets or I mean competition has heated up, say like Amar Ujala launched in Lucknow and all these.
Mr. Sanjay Gupta: Yeah.
Mr. Anand Shah: So, can you throw some light on that?
Mr. Sanjay Gupta: On what?
Mr. Anand Shah: As in, what would be your reaction, are you looking at price cuts or anything?
Mr. Sanjay Gupta: See, price cut is a selling strategy….
Mr. Anand Shah: Yeah.
Mr. Sanjay Gupta: these are part and parcel of a newspaper industry and these keep happening every year I would say, somewhere here or there, and I am not bothered about the Amar Ujala launch in Lucknow at all.
Mr. Anand Shah: Okay. So, why would…I mean they are strong as such in UP?
Mr. Sanjay Gupta: Pardon.
Mr. Anand Shah: As such, they are strong right, I mean…
Mr. R. K. Agarwal: No, that is right.
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: no point in talking about any competitor…
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: …but fact of the matter is Hindustan has been there since 1995.
Mr. Anand Shah: Right.
Mr. R. K. Agarwal: In fact, as many competitors Jagran has…
Mr. Anand Shah: Yeah.
Mr. R. K. Agarwal: … no other brand in the country has.
Mr. Anand Shah: Yeah, that is right sir. And sir, how is the rate hike being absorbed that you took 35% to 40%.
Mr. R. K. Agarwal: See, as our CEO has already explained, these are part and parcel of the, business.
Mr. Anand Shah: Okay.
Mr. R. K. Agarwal: So, I mean nothing to get worried too much about it.
Mr. Anand Shah: Okay.
Mr. R. K. Agarwal: And …I don’t know where you got this information that Amar Ujala is cutting the price and all...
Mr. Anand Shah: Okay.
Mr. R. K. Agarwal: …at least we are not aware.
Mr. Anand Shah: Okay. Okay sir, thanks a lot sir.
Moderator: Thank you very much sir. Next question comes from Mr. Rakesh of IL&FS. Over to you sir.
Mr. Rakesh Tarwe: Hello…
Mr. R. K. Agarwal: Hello.
Mr. Rakesh Tarwe: Hi sir, this is Rakesh Tarwe here.
Mr. R. K. Agarwal: Can you speak a bit loudly.
Mr. Rakesh Tarwe: This is Rakesh Tarwe here.
Mr. R. K. Agarwal: Yeah.
Mr. Rakesh Tarwe: Sir, actually I was just trying to match the numbers which you have given earlier. You said 499 crore rupees advertisement revenue, right sir?
Mr. R. K. Agarwal:That is right.
Mr. Rakesh Tarwe: 183 crore rupees of circulation revenue.
Mr. R. K. Agarwal: Yeah.
Mr. Rakesh Tarwe: And 57 crore is other operating income, OOH, events, and short code.
Mr. R. K. Agarwal: No, no, I did not say other operating income. 57 crore is operating revenue from outdoor events and short code service.
Mr. Rakesh Tarwe: So, these three…
Mr. R. K. Agarwal: There are other three-four, you know, revenue streams
Mr. Rakesh Tarwe: Okay, so these three put together is 739. So, 10 crore rupees apart from this.
Mr. R. K. Agarwal: 10 crore…I don’t know…
Mr. Rakesh Tarwe: Because these three put together is 739 crore rupees.
Mr. R. K. Agarwal: Yes.
Mr. Rakesh Tarwe: And your total revenue, net sales is 749 crore rupees.
Mr. R. K. Agarwal: Yeah, you can take, , another 10 crore or 11 crore rupees from others.
Mr. Rakesh Tarwe: From others right?
Mr. R. K. Agarwal: Yeah.
Mr. Rakesh Tarwe: Okay. One more question I had was you had taken some 35% rate hike this year.
Mr. R. K. Agarwal: No, in case of, , one particular edition, not in case of all other editions.
Mr. Rakesh Tarwe: No…
Mr. R. K. Agarwal: 35%, we have taken a rate hike.
Mr. Rakesh Tarwe: Yeah.
Mr. R. K. Agarwal: That was, you know, from 2350 to say 3200 or something of that sort.
Mr. Rakesh Tarwe: Yeah.
Mr. R. K. Agarwal: Right. That was for All Edition.
Mr. Rakesh Tarwe: Yeah, yeah, that is what I am saying.
Mr. R. K. Agarwal: That doesn’t mean that, , my average yield would be like that.
Mr. Rakesh Tarwe: What I am asking is how has been the response?
Mr. R. K. Agarwal: Response has been okay, I mean it has been accepted by the market, that is the rate at which we are selling apart from whatever discount, we have to extend that is something which is a normal feature.
Mr. Rakesh Tarwe: Are you increasing the discounts?
Mr. R. K. Agarwal: No, I don’t think we have increased.
Mr. Rakesh Tarwe: The discount in the card rate as on last year and this year is same?
Mr. R. K. Agarwal: Yes, more or less same.
Mr. Rakesh Tarwe: Okay. So, means your whatever ad rate…
Mr. R. K. Agarwal: See, don’t worry about that because, you know, still we are much cheaper than many others.
Mr. Rakesh Tarwe: Okay, okay.
Mr. R. K. Agarwal: CPT continues to be one of the lowest.
Mr. Rakesh Tarwe: CPT is still the lowest, yeah, that I know.
Mr. R. K. Agarwal: Not the lowest, but one of the lowest.
Mr. Rakesh Tarwe: Yeah, that I know.
Mr. R. K. Agarwal: Now, I am not comparing myself with, you know, other language players l.
Mr. Rakesh Tarwe: Okay. Okay, I got the point sir. Thanks.
Moderator: Thank you very much sir. Next question comes from Mr. Vinay Paharia of Lotus India AMC. Over to you sir.
Mr. Vinay Paharia: Good evening sir. Hello…
Mr. R. K. Agarwal: Hello…
Mr. Vinay Paharia: Yeah, good evening sir.
Mr. R. K. Agarwal: Good evening.
Mr. Vinay Paharia: Sir, my question was during the call you said fourth quarter raw material was serviced out of the old inventory.
Mr. R. K. Agarwal: Yeah.
Mr. Vinay Paharia: So, does it mean that the first quarter of next year will start seeing impact of the fresh prices or the current prices?
Mr. R. K. Agarwal: We have already felt.
Mr. Vinay Paharia: Pardon.
Mr. R. K. Agarwal: We have already felt, but that is something which is within our expectations, it has not gone beyond our expectations. In fact, it is less than what we have taken for the whole of the year on an average basis.
Mr. Vinay Paharia: The current price?
Mr. R. K. Agarwal: Yes.
Mr. Vinay Paharia: What would be the current price?
Mr. R. K. Agarwal: Current price should be, I mean like…current price we are talking on 1st July. In this quarter, we are expecting about 900 dollars which is going to be, according to us, the worst.
Mr. Vinay Paharia: So, current 900 per dollar and what was the price you paid for the fourth quarter inventory, fourth quarter 08.
Mr. R. K. Agarwal: See, I will not like to give you the exact figure as to what price, you know, we have purchased at , but be sure about it, at whatever price others are purchasing, we have got the material at slightly lesser price.
Mr. Vinay Paharia: No, I mean basically to find out basically what would be the increase in the raw material cost in the next quarter onwards.
Mr. R. K. Agarwal: Next quarter, I mean like let us concentrate first on the second quarter. We expect an impact of roughly about 20% or so in the current quarter, that is July to September and another 15%, you in the third quarter.
Mr. Vinay Paharia: So, basically 15% Y-o-Y hike in second quarter and…
Mr. R. K. Agarwal: On an overall basis, we assume that the impact would be…as compared to the previous year, in the range of 15% to 20%, not beyond that.
Mr. R. K. Agarwal: About 20% you can say.
Mr. Vinay Paharia: Okay. And my next question is what has been your card rate hikes across for all India editions?
Mr. R. K. Agarwal: We have…see, if you are talking about all edition rates…
Mr. Vinay Paharia: Yes.
Mr. R. K. Agarwal: …then increase in the black and white from 2350 to I think 3200.
Mr. Vinay Paharia: 3050 to 3300?
Mr. R. K. Agarwal: 2350 to 3200.
Mr. Vinay Paharia: Okay.
Mr. R. K. Agarwal:That is black and white and as far as other rates are concerned, we have, you know, numerous.
Mr. Vinay Paharia: So, across the board, it would be something like say about 30%...25% to 30% hike?
Mr. R. K. Agarwal: No, across the board, it won’t be like that, maybe 20% to 25%.
Mr. Vinay Paharia: 20% to 25%.
Mr. R. K. Agarwal: Yes.
Mr. Vinay Paharia: Okay.
Mr. R. K. Agarwal: On an average.
Mr. Vinay Paharia: Okay. Are you seeing any, I mean any difficulty in selling in the sense any discounts you need to offer or something like that?
Mr. R. K. Agarwal: No difficulty as such, …whatever rates we have, we don’t have a problem in selling at that rate. The problem is only a bit of inflation.
Mr. Vinay Paharia: Inflation in the sense of the raw material you are saying?
Mr. R. K. Agarwal: No, no, I am talking about in general, the inflation.
Mr. Vinay Paharia: Ah, in general…oh, okay, overall…the sentiment and the slowdown that is…
Mr. R. K. Agarwal: Yes.
Mr. Vinay Paharia: Okay. My third question is has your outdoor business broken even?
Mr. R. K. Agarwal: No, not yet.
Mr. Vinay Paharia: Not yet?
Mr. R. K. Agarwal: No.
Mr. Vinay Paharia: What would be the losses incurred on it because I think you have mentioned 8 crore as the combined loss for Inext as well as outdoor?
Mr. R. K. Agarwal: Yeah, I will be glad to, , keep myself confined to that only instead of giving the breakup.
Mr. Vinay Paharia: Any outlook on the outdoor business when it would break even?
Mr. R. K. Agarwal: Very aggressive.
Mr. Vinay Paharia: Pardon.
Mr. R. K. Agarwal: Very aggressive we are about the outdoor because it has already acquired, market share of more than 4% in just two years’ time. So, now this is…now the time….we are reaching fast to, reap the benefit of that business.
Mr. Vinay Paharia: So, when can we monetize this market share, in the sense when would this division break even?
Mr. R. K. Agarwal: See, it can happen, I mean like this year or it can happen anytime I would say because we have already got the properties.
Mr. Vinay Paharia: Right.
Mr. R. K. Agarwal: Now, we are sitting at a point in time which is a bit worrying in the sense that inflation is on rise and we are seeing some kind of slowdown in economy, but for that , we could have broken even maybe in the next three-four months’ time.
Mr. Vinay Paharia: In next three-four…at least, in this year you expect a breakeven?
Mr. R. K. Agarwal: ….six months’ time.
Mr. Vinay Paharia: Pardon.
Mr. R. K. Agarwal: Now, it might take six months’ time.
Mr. Vinay Paharia: Okay. And what is the percentage utilization of your sites currently?
Mr. R. K. Agarwal: I think we are getting too specific. We can discuss, you know, some other time.
Mr. Vinay Paharia: Fine. And sir what is the status on the TV18 JV, when are we launching the Hindi business daily?
Mr. R. K. Agarwal: We already announced, that , we should be doing it in the current quarter, maybe that, you know, some 15 days here and there.
Mr. Vinay Paharia: Okay, current quarter there will be a launch, okay. Thank you, I will be coming back with more questions if I have any. Thank you.
Moderator: Thank you very much sir. Next question comes from Mr. Ritesh of Dolat Capital. Over to you sir.
Mr. Ritesh: Sir, my question has been answered. Thank you.
Moderator: Thank you very much sir. Next in line, we have Mr. Hiren Dasani of Goldman Sachs. Over to you sir.
Mr. Hiren Dasani: Can you please tell me the number of copies per day for like Dainik Jagran, Inext, and City Plus?
Mr. R. K. Agarwal: The Inext, we are doing over 3 lakh copies.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: And Inext has already become number two paper after Dainik Jagran in a couple of markets.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: Jagran, we are doing about 2.7 million.
Mr. Hiren Dasani: Okay. And City Plus?
Mr. R. K. Agarwal: City Plus, the weekly circulation is I think in the range of about 1.75 lakh copies or 2 lakh copies.
Mr. Hiren Dasani: Okay. And this Dainik Jagran, you launched about like four-five new editions last year?
Mr. R. K. Agarwal: Six editions.
Mr. Hiren Dasani: Six editions last year right. And this year also, the plan is to launch three-four more editions if I am not wrong.
Mr. R. K. Agarwal: our CEO just explained, we will take a call after September.
Mr. Hiren Dasani: Okay. I was probably…okay, I thought that was he was referring to Inext edition.
Mr. R. K. Agarwal: No, , I mean that is even for Dainik Jagran, I mean that is…we will take a call after September.
Mr. Hiren Dasani: Okay. And sir, can you share the effective average ad/edit ratio like DJ, Inext, and City Plus?
Mr. R. K. Agarwal: Pardon.
Mr. Hiren Dasani: Effective ad/edit ratios or effective inventory utilization which you have….
Mr. R. K. Agarwal: Inventory utilization in Inext and City Plus…
Mr. Hiren Dasani: Yeah.
Mr. R. K. Agarwal: ….is very good. You can very well understand, Even main dailies have a tough time, you know, to get a revenue about 10 crore rupees in the very first year, but Inext has done that.
Mr. Hiren Dasani: Okay. So, out of like total ad revenues of about 500 crores, Inext is about 10 crores, is that…
Mr. R. K. Agarwal: That’s right.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: In spite of the fact that out of seven editions, five were launched only almost in the last quarter.
Mr. Mr. Hiren Dasani: Okay, okay. And what would be the contribution of City Plus roughly?
Mr. R. K. Agarwal: City Plus has not contributed much.
Hiren Dasani: Okay.
Mr. R. K. Agarwal: That was roughly about 1.5 to 2 crores.
Mr. Hiren Dasani: Okay, okay. And if you can just lastly tell me also the, I mean the cover price of these three papers.
Mr. R. K. Agarwal: See, City Plus is a free sheeter, we don’t charge anything for City Plus.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: And Inext is 1 rupee, and as far as Jagran is concerned, it is except in Punjab where we sell at a lower cover price, 3 or 3 rupees 50 paisa.
Mr. Hiren Dasani: Okay. Thanks a lot sir, thank you very much.
Moderator: Thank you very much sir. Next question comes from Mr. Karan Mittal of ICICI Direct. Over to you sir.
Mr. Karan Mittal: Good evening sir. Am I audible?
Mr. R. K. Agarwal: Yeah, you are audible.
Mr. Karan Mittal: Yeah, okay. Sir, can you tell me something about the CAPEX plans for this year and the cash we have on the balance sheet as of March?
Mr. R. K. Agarwal: As of March, we have about I think 175 crores cash.
Mr. Karan Mittal: Okay sir. And CAPEX plans?
Mr. R. K. Agarwal: CAPEX plan we have is about 125 crores.
Mr. Karan Mittal: Okay, okay. And sir some idea about the Punjab scenario, we were very aggressive on the Punjab front and we are looking at increasing our circulation and readership over there, any update on that sir?
Mr. R. K. Agarwal: That has been a tremendous success and we are going for large numbers.
Mr. Karan Mittal: Okay. Yes sir…
Moderator: Are you done with your question sir?
Mr. Sanjay Gupta: In Punjab, we are in competition with Dainik Bhaskar and Punjab Kesari, and we have a sizeable circulation exceeding 3 lakh copies.
Moderator: Sorry for the interruption sir. Sir, your voice is a bit feeble, can you please be a bit louder.
Mr. Sanjay Gupta: We have built a sizeable circulation base of 3 lakh copies in Punjab...hello…
Mr. Karan Mittal: Yes sir, you carry on sir.
Mr. Sanjay Gupta: Yeah. And I find it adequate to compete with the likes of Bhaskar and Punjab Kesari, and on a revenue front, we have also grown quite steadily.
Mr. Karan Mittal: Okay sir. Sir, and my third question would be any targets we have set for the TV18 and business daily, that you have also any average daily circulation that you are looking at.
Mr. R. K. Agarwal: Let us wait. We have already sort of finalized our plans.
Mr. Karan Mittal: Okay sir. Okay sir, thank you so much sir.
Moderator: Thank you very much sir. Next question comes from Mr. Amar from Kotak Securities. Over to you sir.
Mr. Amar: Very good afternoon to you sir. I just wanted to understand on your Inext side, you have done 10 crores last year and you have already launched seven more editions, so have you set some kind of targets for 09 as well, what kind of a revenue generation will you be looking from Inext side? Hello…
Mr. R. K. Agarwal: Yeah. We have very steep targets.
Mr. Amar: Hello…
Mr. R. K. Agarwal: We have a very steep target for Inext.
Mr. Amar: Okay sir. And on the cover price side, you will continue to stay with 1 rupee cover price on this as well?
Mr. R. K. Agarwal: No, already thought has been given…
Mr. Amar: Okay.
Mr. R. K. Agarwal: …to look at prices of certain editions.
Mr. Amar: Right. Thank you very much.
Moderator: Thank you very much sir. Next, questions are open for Mr. Ankit Kedia of Centrum Broking.
Mr. Ankit Kedia: Right. Sir, just wanted to know what is the mix of domestic and imported newsprints and are we looking at cutting down circulation a bit, a couple of percent points to save on that price as well?
Mr. R. K. Agarwal: No, we will not do anything like that because we don’t expect, you know, newsprint prices going beyond our expectations. Imported, yes, we are consuming about, , 30%. This might be reduced a bit, but besides that, we don’t have any plans to cut down on circulation or something of that sort, to, remain unaffected by the newsprint prices.
Mr. Ankit Kedia: Right. And sir, one question on the advertising. Sir, in the first quarter normally we get a lot of ads from the education institutes, do we see that trend in the first quarter as well?
Mr. R. K. Agarwal: Yes, yes, yes.
Mr. Ankit Kedia: And any sectors which we are seeing a good ramp-up coming from?
Mr. R. K. Agarwal: Yes.
Mr. Ankit Kedia: Sir, any new sectors where we see a ramp-up, where we have positive surprises from any sectors because auto was one thing which is not doing so well now for us.
Mr. R. K. Agarwal: , which was not doing that well, you know, earlier, even now it is not doing as good as it used to do maybe 1-1/2 years back.
Mr. Ankit Kedia: Okay sir.
Mr. R. K. Agarwal: But then, we are not depending on any specific sector as such. Our dependence is not, you know, that much on a specific factor.
Mr. Ankit Kedia: Okay sir.
.
Mr. Ankit Kedia: Okay sir. Thank you sir.
Moderator: Thank you very much sir. Participants who wish to ask questions may kindly press *1 on the telephone keypad. Next in line, we have Mr. Rakesh from IL&FS. Over to you sir.
Mr. Rakesh Tarwe: Hello…
Mr. R. K. Agarwal: Hello.
Mr. Rakesh Tarwe: Sir, to one of the previous questions, you said that your raw material cost will be…you expect to rise it by 20% next year?
Mr. R. K. Agarwal: I was comparing it with the previous year. I did not say anything about the next year.
Mr. Rakesh Tarwe: You are comparing it basically with FY07, right?
Mr. R. K. Agarwal: FY07-08, I was comparing what is going to be the material cost in 08-09…
Mr. Rakesh Tarwe: Okay.
Mr. R. K. Agarwal: ….and for 07-08.
Mr. Rakesh Tarwe: Okay, so that is what, you are saying it will be rising at 20% from 08-09?
Mr. R. K. Agarwal: Yes.
Mr. Rakesh Tarwe: Okay. So, what is your expectation…means right now you are saying 900 dollar is your imported newsprint cost right?
Mr. R. K. Agarwal: But then in the third quarter I expect it to come down.
Mr. Rakesh Tarwe: In the third quarter?
Mr. R. K. Agarwal: Yes.
Mr. Rakesh Tarwe: Okay. Can you share with us sir, in 2008 full year, what has been the total newsprint cost in absolute terms?
Mr. R. K. Agarwal: Roughly about 275 crores.
Mr. Rakesh Tarwe: No, that is the total raw material cost. I am asking just for the newsprint.
Mr. R. K. Agarwal: Okay, newsprint…
Mr. Rakesh Tarwe: Yeah.
Mr. R. K. Agarwal: Newsprint is about 250.
Mr. Rakesh Tarwe: 250 crore rupees right. Hello…pardon me sir.
Mr. R. K. Agarwal: Yes, yes, 250.
Mr. Rakesh Tarwe: Okay, thanks a lot sir.
Moderator: Thank you very much sir. Next question comes from Mr. Ritvik from MS Global. Over to you sir.
Mr. Ritvik: Hello…
Mr. R. K. Agarwal: Hello.
Mr. Ritvik: Good evening sir, this is Ritvik here. I just wanted to understand sir given that newsprint prices have risen by about like roughly 40% to 50% this year as compared with last year. How is that, you know, you are expecting only 10% to 15% kind of increase in newsprint expenses?
Mr. R. K. Agarwal: 20%,
Mr. Ritvik: Yes sir, but like what do you think is really saving costs for you there because…
Mr. R. K. Agarwal: See, we have taken various steps to keep the newsprint cost under control…
Mr. Ritvik: Yes.
Mr. R. K. Agarwal: …but not compromising on the quality.
Mr. Ritvik: Sir, in terms of…like I was just wondering because in terms of your ad/edit ratio, you are running optimal in most cases right, 35% or so.
Mr. R. K. Agarwal: Yeah, correct.
Mr. Ritvik: So, then, I mean are you considering thinning down the paper or something like that or what is it?
Mr. R. K. Agarwal: No, I mean like as I mentioned we have reduced the imported consumption a bit…
Mr. Ritvik: Okay.
Mr. R. K. Agarwal: …which is what has increased by 40% or 45%.
Mr. Ritvik: Okay.
Mr. R. K. Agarwal: Not the domestic one.
Mr. Ritvik: The domestic prices have not increased by as much sir.
Mr. R. K. Agarwal: Yes.
Mr. Ritvik: About how much would be the price increase in case of domestic newsprint sir, could you give us an idea.
Mr. R. K. Agarwal: May be 20%.
Mr. Ritvik: Okay, alright sir. Thank you sir.
Moderator: Thank you very much sir. Next question comes from Mr. Venkatesh from Edelweiss. Over to you sir.
Mr. Venkatesh: Hello…
Mr. R. K. Agarwal: Hello.
Mr. Venkatesh: Sir, could you tell me what are the receivable days in the end of the balance sheet?
Mr. R. K. Agarwal: 144 crores.
Mr. Venkatesh: 44 crores?
Mr. R. K. Agarwal: 144 crores.
Mr. Venkatesh: 144 crores.
Mr. R. K. Agarwal: Yeah.
Mr. Venkatesh: So, that is about 60 odd days.
Mr. R. K. Agarwal: About 70 days.
Mr. Venkatesh: 70 days.
Mr. R. K. Agarwal: 70-73 days.
Mr. Venkatesh: Okay. And sir, I didn’t get the cash balance amount, 175 crores is what you said is it?
Mr. R. K. Agarwal: Let me check the debtor figure once again…
Mr. Venkatesh: Yeah.
Mr. R. K. Agarwal: …because if you are working it out 60 days, I think it should be more.
Mr. Venkatesh: Yeah, debtors, net debtors are 158 crores.
Mr. Venkatesh: 158 crores.
Mr. R. K. Agarwal: Yeah.
Mr. Venkatesh: And it is about 70 days?
Mr. R. K. Agarwal: 70-72 days.
Mr. Venkatesh: 72 days. And I couldn’t get the cash amount, it is 175 crores what you said?
Mr. R. K. Agarwal: Yeah.
Mr. Venkatesh: Okay, fine. Just one question, a bit on Independent News and Media Limited, what exactly are they, you know, how are they helping you in terms of strategy in the out-of-home business, they have experience in other countries right?
Mr. R. K. Agarwal: Yeah, you are absolutely right. In fact, they have agreed to participate in any big out-of-home project on joint venture basis.
Mr. Venkatesh: Okay.
Mr. R. K. Agarwal: They have agreed to provide us the technical expertise…
Mr. Venkatesh: Okay.
Mr. R. K. Agarwal: …which becomes a prerequisite for many of the tenders and as it is, we keep getting, you know, other supports also from them.
Mr. Venkatesh: Okay. So, it is only for key and large kind of projects?
Mr. R. K. Agarwal: Yeah.
Mr. Venkatesh: Did we have any such projects in the past in the last one year?
Mr. R. K. Agarwal: We did not have any big project as such in the past and even now we don’t have that….
Mr. Venkatesh: Anything lined up.
Mr. R. K. Agarwal: …no strategy as such to run after those big projects because our strategy is entirely different, which is the biggest differentiator in our case from the rest.
Mr. Venkatesh: Okay, okay. So, in case something comes up in future, then they will…
Mr. R. K. Agarwal: We will not miss out an opportunity in case something good really comes.
Mr. Venkatesh: Okay, alright. Thanks a lot.
Moderator: Thank you very much sir. Next question comes from Mr. Hiren Dasani of Goldman Sachs. This is a followup question.
Mr. Hiren Dasani: Sir, you said CAPEX for next year is 125 crores, is it like, I mean is it more or less the recurring kind of a CAPEX or are you launching few more editions and that is why…
Mr. R. K. Agarwal: No, no, this is not recurring. Our maintenance CAPEX , given our scale, should be in the range of about 60-70 crore rupees per annum.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: This is part of the expansion plan which we initiated post IPO…
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: …that is to expand our capacity, current capacities in particular and modernize certain processes like CTPs.
Mr. Hiren Dasani: So, presently like how many of your editions will be having the color facility?
Mr. R. K. Agarwal: We have all editions in color.
Mr. Hiren Dasani: All editions in color.
Mr. Sanjay Gupta: But in a few editions the number of pages are less, so we are enhancing the page level.
Mr. Hiren Dasani: Okay. So, would it be fair to assume that over the next two to three years, the, you know, kind of enhancement of the capacity, in the sense black and white to color will also continue.
Mr. R. K. Agarwal: Yes, you are right. By next two to three years, our color capability will be nearly 100%.
Mr. Hiren Dasani: Will be nearly 100%.
Mr. R. K. Agarwal: Because we are increasing it, you know, the way the demand has been . We are not going whole hog making, you know, all pages color unnecessarily.
Mr. Hiren Dasani: Okay, okay. And the CAPEX for 08 was also in the similar range, about 100-125…
Mr. R. K. Agarwal: About 100 crores.
Mr. Hiren Dasani: About 100 crores.
.
Mr. Hiren Dasani: Okay. And the debt level at the end of 08 sir if you can just tell me…
Mr. R. K. Agarwal: Can you please repeat.
Mr. Hiren Dasani: Debt…loans.
Mr. R. K. Agarwal: Debt level?
Mr. Hiren Dasani: Yeah.
Mr. R. K. Agarwal: It is an absolutely debt free company.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: We have some working capital limits of about 70 crore.
Mr. Hiren Dasani: Okay. Because last year like there was about 107 odd crores…
Mr. R. K. Agarwal: Yeah, that again included… WC major portion of that was only working capital.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: Long-term debt was I think…last year about 30 crore.
Mr. Hiren Dasani: Okay.
Mr. R. K. Agarwal: Out of which only 6 remain, 24 have been paid off.
Mr. Hiren Dasani: Okay. And working capital is about 70 odd crores.
Mr. R. K. Agarwal: Yes.
Mr. Hiren Dasani: Okay. Thanks a lot sir.
Moderator: Are you done with your questions sir?
Hiren Dasani: Yes.
Moderator: Thank you very much. Next question comes from Mr. Vinay Paharia of Lotus India AMC. Over to you sir.
Mr. Vinay Paharia: Hello…Sir, can you tell us what is the ratio of color advertisement as the percentage of total advertisement revenue?
Mr. R. K. Agarwal: This year, it was 36% color.
Mr. Vinay Paharia: Currently, you are at about 36%?
Mr. R. K. Agarwal: Last year, 2007-2008.
Mr. Vinay Paharia: Okay.
Mr. R. K. Agarwal: I have not seen what was the figure for the first quarter.
Mr. Vinay Paharia: Okay. And what was this in FY07?
Mr. R. K. Agarwal: I think around 35%.
Mr. Vinay Paharia: 35?
Mr. R. K. Agarwal: Yeah.
Mr. Vinay Paharia: So, almost…it is almost similar?
Mr. R. K. Agarwal: No, why similar, once the space has grown by, , 13%, overall increase in the color space was about 10%.
Mr. Vinay Paharia: Okay, okay. And what is the proportion of imported newsprint, I think I missed that, in the total newsprint.
Mr. R. K. Agarwal: Last year, it was 30 imported.
Mr. Vinay Paharia: Pardon…34?
Mr. R. K. Agarwal: 30…30.
Mr. Vinay Paharia: 0.3?
Mr. R. K. Agarwal: Three-zero…three-zero.
Mr. Vinay Paharia: Okay, thank you, I am through with my question.
Moderator: Thank you very much sir.
Mr. Vikas Mantri: Sandhya, can we take the last question.
Moderator: As such, there are no further questions sir. I would like to hand over back to Mr. Vikas Mantri from the final remarks.
Mr. Vikas Mantri: Okay, thank you everybody for the call and thanks to the management as well. Thank you sir.
Mr. R. K. Agarwal: Thank you very much Vikas.
Mr. Sanjay Gupta: 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.
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