Kamal Jain, CFO of Eros International Media says the company has grown by 45% at Rs 490 crore in the first half of the year. â€œWe are very much pleased with our second quarter performance,â€ he told CNBC-TV18 in an interview.
Kamal Jain, CFO of Eros International Media says the company has grown by 45% at Rs 490 crore in the first half of the year. "We are very much pleased with our second quarter performance," he told CNBC-TV18 in an interview.
He says the outperformance was led by higher catalogue revenue and partial film revenue pre-booking. The company clocked sales at Rs 229.3 crore, up 31% (YoY). Jain said he expects even better performance in the second half of the year. "I think digitization will be a positive boost led by more content demand," he feels. Eros has launched three Hindi movies and sixteen in Tamil and other languages in the second quarter.
Q: Margin shrinkage seems a little obvious on a sequential basis as well as on a year-on-year (YoY) basis. Can you take us through the operating cost this time around? What sort of margin trajectory can we expect for the remaining part of the fiscal? Was this quarter an aberration?
A: We are very pleased to have a very strong set of results for Q2 and H1. On topline basis, I think we have grown by 45 percent at Rs 490 crore for H1 on quarterly basis about 37 percent at Rs 231 crore. So, I think we are pretty much pleased with the performances of the films we have delivered during this particular quarter as well as H1.
On margin fronts, yes, basically what we need to look at in our company is, one needs to track the results on annualized basis. Rather than looking at on quarterly basis. On quarterly basis we generally tend to club our catalogue monetization with the big slate films. It is a new released films during the particular period, which tends to generally skew towards the second half of the year which is H2.
So in that case, the revenue from the catalogue monetization gets booked during that particular period across our average during the year. So, basically because of that you may have some kind of amortization cost. It is there in Q1 and Q2 of this year. So that generally has given a little bit of margin shrinkage in this particular period.
Apart from that, yes, we had a very huge releases during this particular year. We have three big releases in Houseful2, Cocktail and couple of small other releases like Vicky Donor, etc. So in this case when you do a wide release across the board, you have a little higher cost. Due to this, I think the margin has got a little bit shrinkage.
But as I said, we need to track our company on an annualized basis. So, I feel we will be back on track, as far as margins are concerned on annualized basis. I do not think there are as such any problems on the margin front.
We are happy in terms of seeing that on the topline. On the PAT basis also, there is a growth on H1. There also I think we have grown by almost 17 percent on H1. So, we are pretty happy with that. We have very much positive with respect to the outlook also. I think you see the set of releases what we have just immediately after this Son of Sardar. It is a way big Diwali release. After that we have Khiladi 786 and then we have Kochadaiyaan, big release from Rajnikant which would be in Q4.
So, I think we are pretty much optimistic with respect to the Q3 and Q4 going to the very big slate. We have a pretty much strong slate for FY14 as well. Good and strong visibility across films for the next 18 months. So, we are pretty much optimistic with respect to the growth on topline and bottomline basis, going forward due to the kind of slate what we have.
Q: You spoke about the upcoming film slate that you have in the next couple of quarters, how much will you be able to do in terms of a revenue run rate? This time there has been a 30 percent YoY growth. Do you think you could continue to see that growth on your topline or would you do better?
A: As I mentioned, I think we are pretty much optimistic to the outlook during H2. We would be able to definitely perform quite better in H2 as compared to H1. Generally that is a tradition which we see. We are always performing better in second half of the year, which we will be continuing even in this year as well.
I am afraid, I would not be able to give any kind of numbers with respect to the growth percentage. We are in a silent period because of the NYSE listing which is going to be there. We will be starting after the holiday season in next year.
So, I do think we will be able to give any kind of forward looking statements with respect to the numbers.
Q: Can you give us a sense of projections of satellite rights for Eros International in terms of FY13-14? Do you see a huge amount of increase post digitization?
A: I think we are pretty much optimistic because of that. Infact, digitalization is definitely going to give a positive sense to us. Also because, if you see owing to digitalization, there will be a lot more demand of the content. A film content which is very much in demand on the television channels or on the satellite channels will definitely be there. We are certain about it. Definitely, we will be getting advantage of that situation as well. Because as per some forecast, I think the subscription revenues of the channel is going to be in terms of coming one year or two years and the advertising revenues which will be growing to double digits. So, I think if you see the subscription revenues are growing for the channels, they will definitely demand high quality content and film content always being the faovurite. I Eros International, are very positive and optimistic. We are in an advantageous situation because of the digitization which is happening around. We are positive about it.
Q: What about the losses in the subsidiary business that you have seen? This time Eros International has posted a loss to the tune of about Rs 7 crore, do you expect that to continue and thereby put pressure on your margins further?
A: On subsidiaries, basically as I said we always have amortization running in those subsidiaries. But, in this particular quarters or periods we do not have any revenues. We will see those losses in subsidiaries. But, when you look on subsidiaries and consolidated basis, I do not think there are any problems with respect to any kind of losses on subsidiaries also. So, we are pretty much hopeful even there, as well on annualized basis we will be able to perform quite better to what we have done on H1.
Q: How much you are raising via your NYSE listing? How exactly would the funds be deployed?
A: As a strategical move from the company, I think we are pretty much positive with respect to NYSE listing. I think the board believed that it is a huge strategic advantage for us. It gives us additional leverage. Also we will be compared with the peer group. So we are very much positive about it.
I think the transaction will restart on holidays. We will start with a revised of F1 which we have already done. But, at this point of time, it will be difficult for me, to tell in terms of how much money we are going to raise. It will depend on the market conditions. How the market is performing and what is the kind of valuation we are looking at.
Certainly, we will be opportunistic in terms of the best timing. So, we can generate the maximum out of the market conditions.