Highlights of the call

For the quarter ended September 2011, ENIL reported 36% decline in operating revenues at consolidated level to Rs 70.1 crore. Y-o-Y comparisons are not prudent for consolidated numbers as the company has hived off its outdoor business. OPM was up 1130 bps to 24.8% resulting in rise in operating profit by 18% to Rs 17.38 crore. The consolidated net profit was up by 690% to Rs 8.32 crore.

The company has scrapped its managed event business as there were numerous small players in the segment and, hence, margins were under severe pressure. The management has indicated that it will continue to focus only on owned IP events. As a result, the event management business reported a revenue of Rs 1.2 crore against Rs 9 crore in Q2 FY11.

On standalone basis, the company's net sales revenue was up by 10% to Rs 69.15 crore. Ad revenue growth was higher at 12% led by volume growth. Revenue growth was also led by its top 8 radio stations, which saw revenue growth of 14% Y-o-Y to Rs 47.4 crore. OPM was up by 150 bps to 26.5% due to fall in other expenses and production expenses. The net profit was up by 80% to Rs 9.03 crore. The standalone PAT margin was at 13% vs 8% in Q2FY11 on account of lesser depreciation as the fixed assets are being utilized and due to higher interest income on account of significant amount of cash that the company holds apart from higher yield.

FMCG, realty, BFSI and auto continued to spend more on radio while telecom and durables showed de-growth.

The blended utilization level showed an increase from 58% to 65% on Y-o-Y basis. The utilization level in legacy stations was higher at 84% while that at smaller stations stood at 59%.

The management has indicated that H2 FY12 will be a very challenging environment for all media companies as advertisers are moving away from brand building advertising to result oriented advertising amid an economic slowdown, thus cutting down on their ad spends. The companies with a more innovative package of advertisements will be in a better position to survive the slowdown in H2 FY12.

Average yield per slot per station remained more or less flat at Rs 267 vs Rs 268.

The revenue from private treaty business was Rs 4.15 crore.

The company's market share is intact at 33% to 35%.

The management said that the policy changes in using more frequencies in the same spectrum, if implemented, will benefit the radio industry as they will be allowed to increase the number of channels.

The music royalty currently stands at 2% of net revenues for all music suppliers except for T- Series, which has a monopolistic nature with a collection of contemporary music. Nearly 75% of music is non T-Series one. However, with the decision pending on T Series in November, the management expects the music royalty to fall if T-Series is also shifted to the 2% of net revenues regime.

The company generated strong cash flow at Rs 24 crore in Q2 and has a cash levels at Rs 155 crore as of September 2011. The management has indicated that Phase III auction may happen between March and April 2012. However, it will start flowing into revenue post FY13. The company has a huge cash reserve and is best placed to participate in the Phase III radio auction, which would aid volume growth, going forward.

As per the Indian Readership Survey (IRS) 2011 Q2, Radio Mirchi is a clear leader with nearly 41 million weekly listeners across the country

It has launched two new Mirchi Properties named ‘Mirchi Upswing' & ‘Mirchi Folkmix.