See advertisers favour radio; ad rate premium rising: ENIL

With more and more advertisers shifting to radio compared to other media, the second quarter as well as the month of October has been good for the company and the industry, says Prashant Panday, MD & CEO or Entertainment Network (India) Ltd., India’s leading private FM radio operator, popularly known as Radio Mirchi.According to him for most quarters now radio has been doing better than rest of the media industry.Till date, although the listenership share for radio is almost 30% the advertising share is only 5-6%, so there is a lot of headroom to grow, believes Panday because radio has seen a lot of growth from e-commerce, auto sector, retail and FMCG.According to him the ad rate premium his company enjoys over the next player varies market to market but on an average, in big cities, it is around 25-40 percent because of the brand quality.Talking about the company's financials in an interview to CNBC-TV18’s Latha Venkatesh and Anuj Singhal, he says there is no debt on the books. In fact the cash flow was around Rs 480 crore. Moreover, he is also hopeful of the auction process happening in next few months and sees the new government pushing it forward.He expects a steady double digit growth of around 10-12% for the company.On the economic front, he thinks although the sentiment seems to have turned positive, it hasn't translated into action on the ground yet.ENIL, which operates in the radio broadcasting segment, out-of-home media segment and experiential marketing segment.  second quarter saw a net profit growth of 41.9%. Profit after tax (PAT) of the Company for the quarter ended September 30, 2014 stood at Rs. 23.3 crores compared to Rs. 16.4 crores in Q2FY14.Revenues for Q2FY15 stood at Rs. 104.4 crores, compared to Rs. 86.5 crores in Q2FY14, up 20.6% over the previous year. The Company’s Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) stood at Rs. 31.7 crores, up 25.3%. The Company’s EBITDA margin improved from 29.2% in Q2FY14 to 30.3% during the current quarter.

Below is the transcript of Prashant Panday’s interview with Latha Venkatesh & Anuj Singhal on CNBC-TV18.Latha: Give us more colour we know that your total income went up about 20 percent as well that your margins improved by a bit, you are able to stay at 30 percent which is a very good number. What is going right, are advertisers obliging with a more open purse?A: What’s happening is that the advertisers have kind of found radio much more strongly over the last couple of years. If you notice in last couple of years every quarter radio is being doing better than the rest of the media industry. One of the reasons is that the listenership share that radio commands of the total media consumption pie is almost 30 percent but the share of advertising it gets is just about 5.50-6 percent. There is still a lot of headroom for radio to grow. More and more sectors are now kind of stumbling upon radio and finding its worth. E-commerce for instances was a big growth sector this time. Traditional retail has always been a big sector. Auto has been shifting money’s from other media into radio and FMCG continues to be a main stay. So there have been a lot of sector which have been doing very well and Q2 was an exceptionally good quarter for the radio industry over all.Anuj: If you could tell us the kind of Advertisement (ad) rates that you enjoy right now and did you have a premium over say the number two player.A: The premium that we have over the next player’s varies market by market. However on an average in the bigger cities like Delhi and Mumbai our premium is in the region of 25-40 percent over the next player. That’s largely not only because of the listenership leads that we have but also we believe that quality of the brand that we have created. The kind of advertising environment we provide we don’t have 35 minutes of advertising for instances. So somewhere or the other advertisers appreciate that and that certainly I play.Latha: What’s the sense you are getting about the turn in the economy itself. Ultimately your revenues will depend on that.A: There is a bit of a gap between what we are hearing and what is actually happening on the ground. We haven’t seen any dramatic any great stories coming from our client which says suddenly things have turned around. There are obviously individual companies and individual sectors which are doing better. I read recently that Samsung has done very well in its turnover this year. Latha: This Diwali was better than last Diwali?A: Diwali, October has been a very good month for the radio industry again partly because Diwali was a little early so there is some seasonality there as well. There is a gap between what we are hearing and what the action on the ground is. There is a lot of positive sentiment but I guess we have to wait a little longer.Latha: What’s your debt, what’s free cash flow?A: We don’t have any debt in fact we have Rs 480 crore of cash on our books so we are in a healthy state. Latha: And what will you do with it?There is a phase III and if you ask me a question on a phase III it is a thirteen quarter that you will be asking me a question on when phase III is coming and I can only tell you again for the thirteen time that phase III is just around the corner. This time it looks like it really is around the corner.The previous minister Mr Javadekar has brought it almost till a stage where the auctions are like around the corner as I mentioned. Hopefully now with FM Jaitley there, probably there should be no more hiccups and we should see the auctions happening in the next few months. The minister had said February end but I guess in a few months from now it should happen.Anuj: Now the base effect will catch up because you have been doing good, 20-25 percent sales growth, 40 percent on profit. What’s the reasonable run rate assumed going forward for top-line and bottom-line?A: I have always maintained that a 20 percent kind of number is not sustainable. The reason it happened this quarter is because we were coming of a low base. Traditionally Q2 is quarter where the volumes have been available and therefore we have been able to exploit that. However Q3 and Q4 will be tougher we have always said that the industry will grow in the double-digits but in the very early double-digits so I guess we will stick to that number I expect growth to be in the region of 10-12 percent on a steady state basis.