Entertainment firm Eros International has reported 18.86 percent increase in its consolidated net profit at Rs 109.34 crore for the third quarter ended December 31, 2014 as against Rs 91.99 crore in the corresponding period a year ago. Total income from operation during the quarter increased 13.41 percent to Rs 490.73 crore as against Rs 432.68 crore on a year-on-year basis.
Discussing the earnings, Jyoti Deshpande, Group CEO of Eros International, said the company has crossed Rs 100 crore PAT for the first time ever. The release of movie Action Jackson was the main contributor from Hindi films in the third quarter, she said.
ErosNow has declared 14 million users, gaining positive momentum. Even releases like Tevar and Shamitabh in the fourth quarter have added good value, Deshpande said. However, she expects the coming quarter (Q4) to be relatively slower as against Q3.
Below is the transcript of Jyoti Deshpande’s interview with Ekta Batra & Reema Tendulkar on CNBC-TV18.Ekta: Sales growth is 13.5 percent odd. Take us through what came through from your new releases as well as the library monetisation as well?A: Revenues up 14 percent, EBIT up 8.5 percent at Rs 147 crore, profit after tax (PAT) was up 19 percent and for the very first time we crossed Rs 100 crore PAT mark in any given quarter at Rs 109 crore. The strategy is based around monetisation of our portfolio along with catalog revenues. Catalog contributed about 20 percent of the total revenues, high margin contribution, so that was effective and the film slate was great combination of Hindi and Tamil films.Ekta: It’s a sales growth of 13.5 percent odd. Take us through what came through from your new releases as well as the library monetisation as well?A: Revenues up 14 percent, EBIT up 8.5 percent at Rs 147 crore, profit after tax (PAT) was up 19 percent and for the very first time we crossed Rs 100 crore PAT mark in any given quarter at Rs 109 crore. The strategy is based around monetisation of our portfolio along with catalog revenues. Catalog contributed about 20 percent of the total revenues, high margin contribution, so that was effective and the film slate was great combination of Hindi and Tamil films.
Reema: The company has also approved the acquisition of 100 percent stake in Universal Power Systems Private. Can you tell us what the enterprise value of this is because you will be issuing preferential shares? What will be the result in dilution and what does this acquisition bring to the company?A: I will answer the second part of the question first. In our result we announced, for the very first time we gave numbers for Eros Now. Eros Now has declared 14 million registered users with the current result, which is a very big number we are pleased about that. A large part of that 14 million registered users is WAP transcational user which we been able to attract through our relationship with Techzone. Techzone as you know is a mobile value-added service (VAS) player and has billing integration in place with all the major telcos so through this relationship we want to convert as many of Techzone customers to Eros Now customers is possible. As far as your first part of the question is considered I do not think I am at liberty to disclose the value of the acquisition due to procedural reasons. Since the consideration is in shares we will be going out with a notice once due compliance is formed. It is not a very big number when you look at the number that we are paying or this company but the value that we think this company will bring to us is much greater.
Ekta: What is Q4 looking like for you all and do you think you can do a profit of Rs 100 crore again?A: In Q4 we have already released Tevar and Shamitabh and we are just releasing Badlapur this Friday. Then we have NH10 and we also have Uttama Villain which is Kamal Haasan's Tamil film. So the slate is pretty robust but the weight of the slate is not as high as Q3 so Q3 will always continue to dominate. However Q4 is not an insignificant quarter although not as high as Q3. We hope to close the year on a very positive note too the expectations of the market.
Ekta: So you do not expect a profit of Rs 100 crore in Q4 then?A: No, slightly less relative to the slate of Q4. Reema: The expenditure also went up in the quarter it was up closed to about 16 percent but also to some extent wade on your operating margins. What was the reason for that and would the expenditure keep rising what is the sustainable margin rate that the company can hold on too? A: The way you look at expenditure or operating margins is one of the large items in that is the content amortisation so as you expand the slate and you invest in a larger slate of course your operating expenses is going to go up proportionately. However, the catalogue revenues and the higher margins contributing from the catalogue revenues offset that so we think these are fairly steady margins that we have got to.
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