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Hope to outperform the industry in ad growth: HT Media

Published on Mon, Jul 18, 2011 at 10:19 | Source : CNBC-TV18

Updated at Mon, Jul 18, 2011 at 14:00

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HT Media 's result announced on Saturday exceeded the streets' expectation; reporting a 66% growth in PAT year on year and a 25% growth in revenue. ( click here for results ) Rajiv Verma, CEO, HT Media tells CNBC-TV18 in an exclusive interview that the company's English and Hindi portfolios are doing well, but it may see a drop in advertising growth in the future.

"We are witnessing a slowdown in advertising trends. Due to high capital expenditure, a lot of companies, especially real estate companies, are sluggish on advertising spending" he says.

He further adds that an uptrend in newsprint prices will continue, adding to advertisement expenditure of companies. However, he is hopeful of outperforming the industry in advertisement growth.

Below is a verbatim trancsript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Let me ask you to first start off by explaining the advertising side growth, both in the Hindi and the English publication and what kind of growth you have seen this time around?

A: It has been a great start to the New Year and we are very happy with the progress that our business has seen. We have grown the total revenue of the company by about 25%. Both our English and Hindi portfolios continue to do very well. This progress has come as a result of continuous innovations that our products are seeing, our continued investment on our brands. Overall in a very difficult environment, somewhat uncertain environment, we continue to grow very well. Also, our new businesses are coming off edge, both digital as well as radio, and other portfolios that we had launched couple of years ago are displaying robust performance. So we are very happy overall with the way our business has tracked this quarter.

Q: The earnings momentum is little weak for corporate India right now and lot of people we speak to seem to be indicating that may be they might go a bit slow on advertising budgets going forward. Any signs that you are picking up that things might just taper off a little bit for you?

A: You are quite right. Given the uncertainty which is there in the environment, we are also witnessing slowness in the advertising traction. But as I have shared, we have grown for the last two quarters, beginning of this year as well as the end of last year, by about 25% topline and this has been possible because of the strong traction our new businesses are seeing. While on the advertising side you might witness somewhat softer environment, but given the fact that our new businesses are very robust and are showing accelerated growth, we are hopeful that we will continue to outperform the industry.

Q: Do you think that the industry wide advertising growth might slowdown somewhat in the second half of this year and if you could just tell us which verticals our industry groups are showing some degree of early sluggishness?

A: Those businesses which are heavily dependent on availability of liquidity and which belong to high capex kind of industries are the ones where we are witnessing some slowness; typically industries like real estate are seeing a little bit of sluggishness. Also the banking financial and IPO industry, relative to last year, is seeing a little bit of slowness in growth. But I think while for some period of time you will see this uncertainty. Overall, I remain optimistic that given the innovation that we as a company are launching, new products that we continue to launch, we will be able to buck the trend.

Q: What do you think though might be acceptable or expected industry average growth rate on advertising for this year?

A: I will be happy to see a growth of anything around 14%, but it is somewhat uncertain to say whether that kind of growth will come or not. Therefore industry players will have to make sure that they are focusing on innovations, they are focusing on cost take out, if they want to maintain a continued profitable growth for the year.

Q: On circulation what is it that you expect to see and what has the performance been for your English product in markets like Mumbai?

A: We continued to invest behind growth engines whether it is Mint or it is Mumbai or our Hindi the portfolio, given the fact that those businesses where we have started to invest recently we are seeing enormous amount of traction, both from our consumers and from our customers. Therefore these businesses will continue to see robust investments coming from the company. While businesses which are in maturity like Delhi and other North portfolios, they will continue to be on sustenance more. But new businesses we will invest robustly behind them.

Q: Any pressure on margins expected going forward, because of news print or any other reasons?

A: News print prices again are rising and this is a trend which is likely to continue for some more time. Therefore, industry players do not have a choice but to go back to all the efficiency measures, which is what we have been doing; taking out all waste, figuring out ways and means of optimizing our cost structure and therefore there has been margin expansion on our underlying basis. Given the fact that new businesses are also now slowly getting into maturity phase, our margins continue to do very well. I am reasonably optimistic that on the margins side we will not see big disappointment coming from our business.

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