Prime Focus makes a killing, says FCCB to convert in Dec'12

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Prime Focus makes a killing, says FCCB to convert in Dec'12

The visual entertainment services company Prime Focus recorded a sharp surge in its net profit registered for the year ended on March 2011. The company’s CFO, Nishant Fadia tells CNBC-TV18, that the company has seen a rise in the EBITDA, from 26% to 33%.

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The visual entertainment services company Prime Focus recorded a sharp surge in its net profit registered for the year ended on March 2011. The company's CFO, Nishant Fadia tells CNBC-TV18, that the company has seen a rise in the EBITDA, from 26% to 33%.

Going forward, the company has big releases downloaded in the current year and Fadia confirms, "The traction from the US continues to be good."

Below is a transcript of Nishant Fadia's interview with CNBC-TV18. Also watch the accompanying video.

Q: What explains this fairly smart jump in profit?

A: There has been a huge amount of traction last year. On the 2D to 3D front we have seen a big rise in the amount of business coming through. Consolidated EBITDA has gone up from 26% to 33%, which is largely on the back of a lot of the work being executed in India. There is a clear labour arbitrage and therefore, we are seeing these expanded margins.

Q: Your exceptional loss has come in at Rs 7 crore and there is an other income which is fairly substantial at Rs 15 crore, last year you made Rs 7 crore can you explain both those items?

A: The exceptional loss occurred in our UK subsidiary that was liquidated and these are the assets raked into that. This is a one time write off that we have taken on the book. Also, on the other income there has been a certain commission income that we had over our revenue, therefore, again it is not a repetition but it will be a one time income.

Q: What do you expect you will be able to do by way of sales, in the current year?

A: 25-30% is on the radar as the traction from the US continues to be very good. We  delivered three big movies for the US market - Green Lantern that opened last week, Transformers - 3, which opens next week and then Harry Potter 7B which opens next month. We have seen a fair amount of traction on that side.

Q: Can you update us on your FCCB issue - when does it mature, what is the conversion price, what is cost, what is the yield?

A: FCCB converts in December 2012. Conversion price is Rs 111 and the yield on that is 7.37.

Q: Will you need to make revision for redeeming it because it is much higher than the price at which your share is quoting?

A: It is currently but we are still year and half away from the bond and business. It looks to be in extremely good mode. We have never reported such high profits so; we are in a good space right now.