Key takeaways of the call

Company's focus on implementing a centrally managed multi-pronged strategy to deal with the pandemic has ensured that operations of the company continued with minimal disruptions, while adhering to the Government's guidelines for health and safety of its stakeholders.

The company is confident of seeing this challenge through with its strong legacy of execution excellence, well implemented cost rationalisation measures and editorial excellence and are hopeful that this will be reflected in future performance when the impact of Covid-19 eases and resultant economy picks up.

Both circulation and advertisement revenues have shown signs of gradual pick up on a month-on-month basis as lockdown restrictions are easing out in various states and the overall economy too is gradually getting back on track.

Economic activity in Tier-II and Tier-III towns has already begun its path to normalcy and Dainik Bhaskar's strong position in these markets will help quicken the pace of its return to pre-Covid levels. Believe, worst is behind and the company is determined and working hard to recover the previous quarter's operating losses within next quarter.

On the Circulation front, efforts to educate readers through awareness campaign by experts paid off well. Circulation copies increased to 76% by 30th June and to 78% per day by end of July, thus registering continuous pick up in circulation. It further increased to 81% in second week of August 2020. Currently, circulation is 81% at overall level with key markets including Rajasthan, it has reached 84% of pre Covid level.

Advertising performance is improving month on month. Advertising that stood at 19%, 20% and 32% in April 2020, May 2020 and June 2020 of its corresponding previous month levels, has jumped to 53% of corresponding previous month level in July 2020. Steady improvement in advt revenue is despite sudden lockdown in states of MP, Chattisharh and Bihar.

After witnessing an operating loss in April 2020, the company managed to substantially reduce the loss in May 2020 and turn to positive EBIDTA in June 2020, facilitated by softer Newsprint rates and lower consumption along with strong cost control measures. The print EBIDTA margin further improved to around 20% in July 2020. Expect to get back to Net EBITDA positive by Q3FY21.

News Print rates continue to be soft with almost 4% QOQ drop in Q1FY21 to Rs 35850/- and is likely further correct by around 1-2% in coming quarters.

Apart from soft NP prices quantum of newsprint has gone down with lesser pages printed for each copy reducing the per copy losses for print media.

Similarly the advertisement of Radio business was at around 20% in April/May 2020 and it increased to 25% in June 2020 and jumped to 55% in July 2020.

At operating level, the radio business registered an EBITDA loss of Rs 6 crore in Apr/May 2020 and in the month of June 2020 there was Zero loss and in July 2020 there was positive Rs 1 crore.

Advertisement spend has shifted to Indian languages market with most of the metros shut even to recover their circulation. This will benefit the company given its leadership in Indian language newspaper market.

GoI has come out with a new print advertisement policy under which about 80% of advertisement spend has to go to Indian language newspaper. If state government also changes their policy in line with GoI, there will be significant shift in advertisement spend of government sector.

Expects cost savings of Rs 115 crore in FY21 and out of that Rs 30 crore was accounted in Q1FY21.

As and when the market is open the old circulation numbers are coming back.

Normal pages printed for news-paper is 21 pages and in Q1FY21 the company is printing an average of 14 pages.

No online subscription for digital format, the time spent on by readers has also increased apart from increase in users. Currently no advertisement revenue from digital platform but going forward thinking of monetising it.

In July 2020 most of the category advertisement has started coming back.

Educational category advertisement has shifted to July/August and even for Sep/Oct with delay in declaration of exam results as well as closure of educational institutions with uncertainty in opening up of schools/colleges. Coaching classes are waiting for physical classes to open to advertise.

July onwards 2/4 wheelers advertisements started picking up.

Festival season will start from Oct 15, 2020 and last till Nov 14/15, 2020 unlike a start of Sep in last year.

With no major project completion and dedication to nation, delay in floating of tenders etc the government lacks materials to advertise.

In q1FY21 average copies sold is 40lakh copies; per copy realisation was about Rs 2.64 paisa.

About 3% of circulation is sold at railway station and that is impacted now. Another 2% were cash point copies. Certain copies are distributed through railway network/state transportation network to distant villages this is also hit dueto suspension of service. Next affected segment is copies to offices. Once this segment opens up these circulation will come back.