See circulation rev down to 4-5% in FY17: Jagran Prakashan

Jagran Prakashan , the publisher of leading Hindi daily Dainik Jagran for the third quarter ended December, 2015, reported 40.05 percent rise in consolidated net profit to Rs 93.29 crore, driven mainly by growth in advertisement revenue. The company had posted a net profit of Rs 66.61 crore in the October-December period a year-ago.RK Agarwal, CFO of Jagran Prakashan, while speaking to CNBC-TV18 about the Q3 numbers and the outlook going forward said he expects the subscription/circulation revenues to fall short of the guided 6-7 percent to 4-5 percent in FY16.The contribution of radio and digital has been good and is expected to be be good in FY17 too with 35 percent margins for radio. Digital revenues in FY17 would be in high double-digits to the tune of 35-40 percent, says Agarwal with continuation of investments in the next year too.Revenue from advertisement was up by 28.5 percent to Rs 434.82 crore during the third quarter of FY2015-16 as against Rs 338.35 crore of the same period last fiscal. However going forward Agarwal expects the ad revenue growth of only 15 percent in FY17. Below is the verbatim transcript of RK Agarwal’s interview with Reema Tendulkar, Sonia Shenoy and SP Tulsian on CNBC-TV18.Sonia: Can you tell us about the rest of the fiscal and FY17, what kind of ad revenue growth can you maintain?A: Q4 should witness similar kind of a growth. As far as 2016-2017 is concerned, we expect a growth of nearly 15 percent.Sonia: In ad revenues?A: Yes.Reema: You had guided for FY16 subscription revenues of 6-7 percent. How much of it has been achieved in the first nine months and are you on track to achieve your guidance?A: I believe circulation revenue will fall short of our initial guidance. Although we have taken steps and circulation revenue will pickup from here, but we may fall short of circulation revenue by couple of percentage.Reema: What will be your new guidance then?A: It should be in the range of about 4-5 percent.Reema: On circulation revenues?A: Yes.Reema: What about subscription?A: When you say circulation revenue it is subscription only.Tulsian: Just wanted to know about your other businesses also in which you have your presence like radio, digital, etc business. What are your views on the working or maybe the contribution from these businesses in FY17?A: Radio has been pretty well. There was a beautiful acquisition which the company did. Margins have risen to 39.2 percent and for the year 2016-2017 also we expect that the margin would remain in the range of about 35 percent because next year we will be having new stations coming up. So, they will pull down margin a bit. So, radio we expect 35 percent margin for the year 2016-2017.Digital continues to be in investment phase. We will be doing some more investment in 2016-2017. As far as growth in revenues is concerned, that would continue in high double digit that is exceeding 35-40 percent. So, on that front there is no issue whatsoever.Sonia: You said that ad revenue growth will be only 15 percent in FY17. It will slow down compared to this year, right? Is that just because of the base effect?A: Yes. Let me clarify one thing, this year’s 28 percent growth is because we have included radio revenues first time. So, that is because of the base effect. However, 15 percent revenue growth in case you get in 2016-2017, in terms of operating profit, in terms of bottomline, you will see much better spike.Tulsian: You have 11 titles and presence in 13 states and we know that now probably in FY17 you will be going to see the gains coming in from the elections which are coming largely maybe because of UP and West Bengal and all that. So, which are the titles and states on which you are banking more for FY17 which can be a good kicker for your FY17 performance in print business?A: I believe economy doing better because as far as elections are concerned, I have always maintained that if you gain something in the next quarter you may lose something because of election code of conduct, you lose government revenue and therefore whatever you bet out of the election revenue that more or less gets compensated. Of course there will be an advantage of 2-3 percent; that cannot be denied.(Copy edited by Vaishali Karulkar, interview transcribed by Priyanka Deshpande)