Q1 finance costs up on set top box purchase: Hinduja Ventures

Finance costs have risen for Hinduja Venture. This is due to the purchase of set-top boxes for the digitisation process of cable television, now in its third phase, says Ashok Mansukhani, Executive Vice-President, Hinduja Ventures.In an interview to CNBC-TV18, Mansukhani says the cost will be recovered as the set-top boxes get sold. This will lead to a decrease in finance costs, he says.Mansukhani said that the company has a stable income of Rs 40 crore from trading of securities. But income from the cable TV digitisation may vary.Below is the verbatim transcript of Ashok Mansukhani’s interview to Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Nigel: If I take a look at your total income has come in much higher while margins have seen a bit of a dip could you explain both these two factors for us what is the quarterly run rate we should look at? Last quarter you did around Rs 60 crore and on a year on a year basis it compares with a sub Rs 30 crore levels. What is the constant revenue run rate we can look at?A: Our normal run rate is based on income from trading from securities, sub-broking income etc. However, in this quarter a) there is the sale of set top boxes which has happened to our subsidiaries Grant Investrade and IndusInd Media & Communications. There is also some small fibre optic income which we get from our subsidiary. Therefore this quarters Rs 60 crore is slightly different to other quarters. However, typically this is what we would normally be able to achieve in the long run but as far as set top boxes are concerned it would largely depend on the further growth or progress of phase III of digitisation and then of course phase IV to come in January of 17.Reema: So Rs 60 crore is what you have done roughly in Q1. What this set you up for FY17 revenues and in terms of growth as well?A: As I said, our normal income is around Rs 40 crore that we have done from income from trading of securities, but a great variable in the balance quarters will depend as I said earlier on the progress of digitisation in phase 3, phase 4 which as you know is somewhat affected by couple of High Court cases that are happening in phase 3. On phase 4, we understand as per the taskforce meeting day before yesterday, the government is intending to go ahead, bit difficult right now to be able to state that but perhaps a little later it would be possible to state where are we going on the digitisation front in our country.Nigel: What’s the best case scenario that we can see in terms of revenues, for this year maybe for the next year as well FY18 what are you looking at and also could you tell us there is a big bump up in your finance cost, why did that happen, what’s your current loan book?A: The finance cost is happening because of the purchases of set-top boxes and therefore that is what is required the purchasing of set-top boxes naturally takes some amount of money, but then when they are sold off the money is realised, so we don’t see that as a major activity except that as and when the set-top box activity will reduce the finance cost would come down. That is not of great concern to us, but again to state that the reason I mentioned digitisation is, that our two main subsidiaries IndusInd Media & Communications Limited (IMCL) and Grant, their growth and their futures sustenance is on a steady path of digitisation. Now that is something that is a little bit of concern, but in the meanwhile as we have already informed the stock exchange we are going in for an arrangement between Grant, our 100 percent subsidiary and IMCL by which Grant will demerge its headend-in-the-sky business to IMCL, of course subject to government approval, court approval etc.We believe that this consolidation of the cable entity which will happen once all the approvals are in place would give us greater and perhaps greater visibility on the earnings and capacities of these two companies to function as one unit.