Jagran Prakashan owned Music Broadcast had a stellar listing today as the scrip opened 24 percent above issue price of Rs 333.
Speaking to CNBC-TV18, RK Agarwal, CFO of Jagran Prakashan said that the company had no major capex plans for the near term and plans to pare debt worth Rs 150 crore in the month of March.
Below is the verbatim transcript of RK Agarwal's interview to Latha Venkatesh, Sonia Shenoy & Anuj Singhal.
Anuj: Music Broadcast is now listed so you maybe at liberty to talk about numbers. The kind of growth rate that you have seen over the last three-four years, do you think you will be able to sustain them as the base effect catches up?
A: The kind of foundation the company has created; I do not see any reason why it is not sustainable.
Sonia: What about on the margin front because that has been one of the standout performances for your company over the last five years. Margins have gone from 25 percent to 33 percent. Now that you have a bit of flexibility, can you tell us what could the margin levers be going ahead?
A: It is a fixed cost business in radio industry. Whatever you add after the breakeven to the topline, nearly 83 percent to 84 percent translates into the bottomline. Yes, when you are expanding there could be some blip in the margin but that is very temporary. So it is for anybody to understand because this is a business which can give margin anywhere around 40 percent or so.
Latha: With this money I believe that you are going to bring down your debt. Your debt currently stands at Rs 250 crore. How much of it will you pare down and therefore, how much of capex are you planning?
A: Currently we have Rs 300 crore of debt, of which we will be retiring Rs 150 crore immediately - that is in March and balance is falling due for payment next year as well as a year after next.
As far as capex is concerned, this industry does not need much of capex. However, what is needed is maintenance capex and that is in the range of about Rs 5-6 crore per annum. So, we do not have any major capex plan.
Anuj: Could you tell us how the advertising volumes and advertising rates are for you compared with the other big players?
A: In the past five years beginning of 2013 till now, we have been recording higher growth in volume and also in terms of value.
Anuj: Any numbers in terms of percentage. How much higher than the second player?
A: If you are talking about advertisement rates, there are few places where we are higher than our closest competitor and there are other few places where they are higher than the rates what we charge. However, I was talking about the gross value of the revenue which has been growing faster than the closest competitor in the past five years and in terms of volume also we have been growing faster than the closest competitor
Latha: You have grown from your presence in four cities to 37 cities. What is next?A: The issue is to strength the capital structure, keeping an eye over possible consolidation in the industry after the lock in period is over on March 31, 2018.