Co kicks off broadcast from Kochi radio station: ENIL

Entertainment Network India Limited (ENIL) has commenced broadcast at its radio station in Kochi, confirmed Prashant Panday, MD & CEO, ENIL to CNBC-TV18. The Kochi operation, acquired for a licence fee of Rs 19 crore, is the second radio launch from stations that ENIL had bought in Phase III auctions, said Panday. ENIL has also invested an initial capex of Rs 3-4 crore on the Kochi station, he added. ENIL operates its radio broadcasting under its brand Radio Mirchi. Panday expects the Kochi business to break even in the next 4-6 quarters at an EBITDA level and, thereafter, the company will work on lifting the margins to about 30-35 percent in another 4-6 quarters.Below is the transcript of Prashant Panday’s interview with Ekta Batra and Latha Venkatesh on CNBC-TV18. Ekta: Take us through the operations. How much have you invested in this Kochi radio station? When do you expect to breakeven? A: Before that, let me tell you that Kochi and Kerala are extremely important radio markets. As you know, in the south, the penetration of radio is very high and also, because retail penetration is high, the advertising revenues in the south are very high. We have always had Thiruvananthapuram, but we have added now the city of Kochi and it is the biggest market in Kerala. Coming to the question that you asked, Kerala, we acquired the licence at about Rs 19 crore and then, that was the one time entry fee that we paid to the government and there are three other radio broadcasts already. So, we are the fourth guys in Kochi. And the capital expenditure (Capex), etc. is of the order of about Rs 3-4 crore. That is the total investment in Kochi at this point of time. Latha: What kind of margins? By when will you be able to finish all the investment that you have made and start making money? A: Our plan with respect to brand Radio Mirchi has always been the same that we must break even in 4-6 quarters at an earnings before interest, taxes, depreciation and amortisation (EBITDA) level and from that point on, lift the margins to the standard 30-35 percent in the next 4-6 quarters. So, that is exactly what we are planning to do. And our game plan is very simple. We will segment the market, we are not taking anybody on. We believe that there is a huge market left untapped in Kochi and we are doing a very interesting product over there. So, we have 50 percent of our product which is going to Hindi music and while Hindi is already present on some of the radio stations over there, it is not present in such a large quantity. And we believe that the younger audiences in Kerala and specifically in Kochi are really waiting for what they call as punchy music, which is Bollywood music. So, that is our game plan. Ekta: How many more radio stations are you going to launch under phase-III then? A: We have already launched Guwahati and we have launched Kochi now, so that is two more to our 36, that makes it 38. And we have another five cities which will come up where brand Mirchi will enter for the first time. That will take the footprint of brand Mirchi to 43 and in addition to that, we have 10 more cities where our second sequence will launch. So, that will begin with Bengaluru in the next week or 10 days time. Latha: So, just give us an idea of FY17 revenue growth, margins. A: FY17, we do not give guidance, but I will tell you that the radio industry, the core radio industry will expectedly grow between 13 and 14 percent. We have seen that in the last 3-4 years and then, the launch of new stations under phase-III will take the overall growth to somewhere in the region of about 20 percent. So, that is what we are expecting.