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Profit before tax was Rs 965 million, an increase of 5.3 per cent
as compared to the corresponding quarter last year. The results
include the financials of ETC Networks Limited (ETC) and Padmalaya
Enterprises Pvt. Limited (PEPL). The financials of Padmalaya Telefilms
Ltd., however, have not been consolidated.
“For reasons under investigation, PEPL’s holding in Padmalaya
Telefilms Limited (PTL) dropped below 50 per cent . Therefore financials
of PTL have not been consolidated in the numbers presented,” the
release said. In the corresponding quarter last year, PTL had contributed
Rs 261 million to revenues and Rs 33 million to operating profits.
"Zee finished the second quarter with a good performance,
highlighted by 7.7 per cent growth in revenues. Spread across both
advertising-based and non-advertising businesses, this performance
highlights the fundamental attributes of Zee’s assets, and our ability
to seize growth opportunities," said ZTL chairman and managing
director Subhash Chandra.
Commenting on the profitability, he said: "The reported profitability
of the Company includes start-up losses on the DTH activity, mainly
marketing and other expenses and also some losses incurred in film
distribution business. But for these losses, our net profit would
have shown a good growth, in line with trends in recent quarters.
The DTH business holds great potential for the company and we hope
to reap its benefits from the next financial year."
“The Company’s financial condition gained further strength, with
reduction in gross debt of Rs 4.0 billion since March 2004. This
move demonstrates Zee’s financial strength and flexibility,"
he added.
Revenue Streams
Zee’s revenues are generated primarily from advertising sales and
subscription revenues. Other sales and services include revenues
from film production and distribution, syndication, education sales
and sale of set top boxes. The following table sets forth the percentage
of revenues that each type contribute to consolidated revenues for
the second quarter of 2005 and 2004.
Zee’s advertising revenues rose 5.4 per cent to Rs 1537 million
for the second quarter of this Fiscal. Overall subscription revenues
registered an increase of 7.9 per cent over the corresponding quarter
last fiscal. Domestic pay revenues also continued to grow with 27.6
per cent increase over the corresponding period last year, checked
by a price freeze imposed on pay channels, by TRAI.
“The freeze has emboldened the cable operators to persist with
gross under-declaration, which has reflected in a lower growth of
subscription revenues,” the company said. Other sales and services,
which include the sale of set top boxes, recorded an increase of
18.6 per cent.
Expenditure
Zee’s programming and transmission cost went down 2.4 per cent compared
to the corresponding period last year. Total expenses were up 10.5
per cent. Operating profit has grown by 1.6 per cent to Rs 1,030
million, while operating profit margin was at 29.6 per cent, as
compared to 31.4 per cent achieved during the corresponding quarter
last year.
Due to capital restructuring, finance cost fell 60.1 per cent to
Rs 77 million for the second quarter of this Fiscal, down from Rs
192 million a year ago. During FY2005, Zee has repaid Rs 4.0 billion
from its gross debt. Overall, profit before tax has grown by 5.3
per cent to Rs 965 million.
Business Restructuring
The first phase of international restructuring aimed at consolidating
non-Indian operations into a single subsidiary has been completed.
During the quarter, a separate transmission beam was commenced for
Hong Kong, Singapore, Indonesia, Thailand, Philippines and Japan
providing a customised prime time viewing experience to subscribers
and a new revenue stream for Zee.
On the film production front, Zee has gone slow. The plan is running
behind schedule by six months, since the company wanted to mitigate
risks from the business model before expanding into film production.
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