Despite the prevailing economic situation, ad revenues have seen sustained growth and will continue to remain strong, said Pradeep Dwivedi, Chief Marketing Officer, DB Corp. He expects double-digit growth on back of sustained growth from regional markets.
Dwivedi is confident of achieving around 15-20 percent advertising growth both in Q2,Q3 as projected in their Q1 conference call. He also does not see any significant impact of rupee depreciation on their P&L.
"We have not gone for any strong hedging, simply because hedging costs far outweigh the benefits or gains that we can do by tweaking our business model and the consumption pattern, to really meet cost objectives that we have on newsprint prices." he added.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: What is advertising revenue looking like for you in such a market and how are your regional papers doing at this point?
A: The advertising scenario in terms of revenues for us has seen sustained growth in this quarter and it continues to remain strong for us in spite of the recent prevailing economic situation.
A large part of our revenue draws sustenance from the regional markets. Tier II and tier III cities have to a significant extent been insulated from the economic issues because it tends to have a longer cyclical impact. So far we are seeing growth in double digits, which we had seen in quarter one as well getting sustained in this quarter as well.
Q: In your Q1 conference call you had indicated that for the next couple of quarters you expect to see 15-20 percent in terms of advertising growth but what about the full year, what kind of target have you outlined for FY14 in terms of ad growth?
A: Based on the trends that we have seen in Q1 where the results have been declared and the trends that we are seeing right now, we see no reason for not being able to meet those kind of growth objectives. And that is possible simply because of the fact that Q3, which is upcoming festive season period is usually the fairy god mother for this industry. There is large ad spend that takes place from almost all brands to promote their products and services. On basis of these three quarter trends, we are quite confident that we will be able to achieve the outlook for the year that we had projected in the previous investor conference.
If you see specific sectors like automobile, lifestyle, consumer durable and education we have seen strong and sustained growth in this quarter as well. So, at this point of time there are no specific concerns in terms of our being able to meet our growth objectives.
Q: What is the rupee depreciation doing for you all in terms of your margins in the sense how much of your newsprint is imported and hence how much of a margin impact could we see for the company on rupee depreciation?
A: The rupee depreciation started of as a matter of concern for us but we have seen that getting mitigated in the last three-four days including the strengthening that we have seen in the rupee today. As of now about 40 percent of our newsprint is imported and 60 percent is domestically procured. So, through a combination of a mix variance of domestic and imported as well as the improvement that we are seeing in rupee, we remain confident that we will not see any significant impact in terms of our P&L on account of forex related issues.
Also the fact that we have not gone in for any strong hedging, simply because hedging costs far outweigh the benefits or gains that we can do by tweaking our business model and the consumption pattern, to really meet cost objectives that we have on newsprint prices. So, by and large if the situation does not worsen from this point onwards, we are fairly in control in terms of our costs on newsprint.