Jagran Prakashan confident of doing 30% operating margin

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS ToI at No1 spot in English daily, says readership survey ALSO READ See latest News about JagranPrakashan See previous management interviews See what other Experts & Brokerages are saying about JagranPrakashan BSE | NSE 10/02/12

In an interview with CNBC-TV18, RK Agarwal, Chief Financial Officer, Jagran Prakashan , spoke about the latest happenings in his company and his outlook for the sector. Below is a verbatim transcript.

Q: Can you take us through what kind of volume increases you have seen in readership over the past six months and what has it translated to in terms of subscription and other earnings?

A: Readership of any daily as a matter of fact has been constant for quite some time for at least two-three rounds of the Indian Readership Survey (IRS). We have noticed a decline also in case of all newspapers. But this is the first round after two-three rounds where we could see some rise in the readership and Jagran Prakashan also has added a few readers.

Q: Of late we have seen a couple of media companies, at least in the electronic space, hiking advertising rates, what is the scenario with newspapers from your side? We had seen some bit of recovery in the second quarter, what has been the trend in the third quarter?

A: As far as rate increase is concerned, for the next six months or so, I do not see any rate increase as such. But definitely from April onwards, we are going to increase the rates and I am sure the market will be able to absorb it.

Q: Do you have an estimate of what might be the impact on the profit and loss (P&L) in the second half because of the fire in your warehouse?

A: That was very insignificant and the entire newsprint was insured. So there is not going to be any loss whatsoever.

Q: How do you expect the margins in Q3 and Q4 to pan out given the prices of newsprint and the fact that you are not expecting ad revenues to increase?

A: We do expect increase in ad revenue on year-on-year (YoY) basis and we are pretty confident of doing at least 30% operating level margins for the whole year.

Q: In Q2 you had done about 34%, you think they will slip from those levels?

A: Yes it will slip because Q3 is not going to witness that kind of a profit for a simple reason that post festive season, it is very usual that the advertisement spends decline. But again in Q4, it will pick up. So now I will say that in Q3, you might not see that kind of a margin.

Q: Will you see an increase in your raw material cost?

A: Not really. In Q4 there will be some impact because newsprint prices have already started rising. And, as far as we are concerned, we have held ourselves by booking the quantities for the period right upto February. So in last quarter there could be some impact but I don't see it beyond 3-4%.