Hope to be debt free by FY17: ENIL

Radio Mirchi owner, Entertainment Network (India) Ltd (ENIL) reported a mixed set of numbers in its third quarter result on Tuesday.

Revenue increased 22.7 percent to Rs 143.6 crore year-on-year (YoY) but EBITDA margins fell 360 basis point to 34.6 percent (YoY).

Speaking to CNBC-TV18, Prashant Panday, MD and CEO of ENIL said that the company is benefiting from increased e-commerce advertising and hopes to be debt free by FY17.Below is the verbatim transcript of Prashant Panday’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18. Ekta: Marketing expenses were higher, margins crunched down to 34 versus 38 percent year-on-year (YoY). What sustainable in terms of marketing expenditure as well margins? A: First let me clarify that it wasn’t weak quarter in operating terms. You have to remember that this is a quarter where we have invested hugely in phase three so almost Rs 700 crore of investments have happened during the quarter. So, a lot of a treasury income is really down and that is why you will notice that at profit after tax (PAT) level we are have reported a de-growth actually. If you therefore pass the business and look at how the business is by itself even our operating PAT for instances is up about 18-19 percent. So, the business has been strong in fact revenue growth at 23 percent reflects a very strong business. Now you asked about marketing and marketing is a sustained effort. I have been mentioned this for couple of quarters now that we will be stepping up marketing and that is exactly what we have done. So, you will notice that TV campaign of course much of that effect will come in this quarter but we are preparing for our roll out and I think that will be a sustained effort. Anuj: So this revenue growth if you could segregate that in terms of the rate increase that you may have taken or the volume growth that took place? A: I am very happy to report that again on a quarter-on-quarter (QoQ) basis we are focusing more on the price increase because there really isn’t much volume left in longer. So, if you look at the 23 percent revenue growth almost about two-third of that has come from a price increase and only about a third of it has come from volume increase. That is going to be the way going forward as well. Ekta: Where do you stand in terms of the phase III rollout? A: Hopefully, starting first quarter of next year may be another two months time from now. We are dependent on the government as you know for the acquisition and they do tend to be slow. However, I guess the first of those station will get off from April or thereabouts, mid April to end April. Anuj: Going forward what kind of revenue rate do you think you will be able to report? A: Radio continues to be in a very sweet spot and there are several reasons for it one of them of course being that the economic generally despite the 7.3 and 7.5 numbers is little weak on the ground that is one factor and that for radio always does better in weak economic conditions. Second thing is that remember whatever demand we have is coming more from the consumer side of the economy and that to very urban consumer side of the economy and that is exactly where radio is look at it today. Given, for instances e-commerce, e-commerce is a very urban and very consumer kind of category and all media companies are benefiting enormously from e-commerce. So, that is the way it is, I believe radio in the next five years is in a terrific sweet spot and we should see continue growth. Ekta: Guidance on margins considering phase III rollout? A: We don’t give margins but all that I can say is that while margins will dip obviously because of treasury income. I think underlying business to continue to remain very robust. Hopefully, by the end of FY17 we will again be a debt free company so that should tell you that we expect margins to be good. (Copy edited by Sidhartha Shukla, interview transcribed by Vrushali Sawant)