Quarterly performance

Consolidated sales for the quarter was lower by 9% to Rs 598.75 crore as both printing & publishing business as well as radio business register fall in revenue for the period. While the revenue of the printing & publishing was down by 8% to Rs 561.75 crore (or 94% of sales) that of radio was down by 20% to Rs 37.15 crore. Lower revenue for printing and publishing is largely due to lower advertisement revenue as the circulation revenue stood higher for the period. While the advertisement revenue of P&P was down by 11% to Rs 387.8 crore that of circulation was up by 2% to Rs 132.1 crore. Marginal growth in circulation comes on account of increase in cover price in select markets over nearly flat circulation volume. The advertisement revenue of radio business was down by sharp 20% to Rs 37.2 crore.

However with OPM expand by 250 bps to 23.7%, the operating profit registered a growth of 1% to Rs 141.66 crore despite lower sales. Expansion in OPM seems largely due to softening of news print prices which reflected in lower material cost (as % of sales net of stocks) which was down by 460 bps to 33.5%. However the staff and OE have increased by 80 bps and 120 bps respective limiting the gain in material cost.

With OI stand higher by 60% to Rs 3.08 crore, the growth at PBIDT was 2% to Rs 144.74 crore. And with interest cost more than double (up 233%) to Rs 6.40 crore and depreciation up by 20% to Rs 29.93 crore, the PBT was dragged down by 6% to Rs 108.41 crore. With taxation (net of deferred tax) down by 32% to Rs 26.79 crore, the PAT was up by 8% to Rs 81.63 crore.

Nine month performance

Consolidated sales for the period was down by 7% to Rs 1737.17 crore dragged down by lower segment revenue of both P&P and Radio. While the segment revenue of P&P was down by 7% to Rs 1631.20 crore that of Radio was down by 8% to Rs 106.35 crore. But with OPM expand by 260 bps to 23.9%, the operating profit was up by 4% to Rs 415.56 crore despite lower sales. After accounting for lower OI, higher interest and depreciation the PBT was down by 5% to Rs 316.24 crore. With taxation down by 43% to Rs 65.31 crore, the PAT was eventually higher by 14% to Rs 250.93 crore.

Other developments

The company elected to exercise the option permitted under section 115BAA of the Income-tax Act, 1961 as introduced by the Taxation Laws (Amendment)Ordinance, 2019. Accordingly, the company has recognised Provision for Income Tax and re-measured its net Deferred Tax Liabilities basis the rate prescribed in the said section. The full impact of this change has been recognised in the Statement of Profit and Loss for the quarter ended September 30, 2019.

The company has adopted lnd AS 116, effective annual reporting period beginning April 1, 2019 and applied the standard to its leases, retrospectively, with the cumulative effect of initially applying the Standard, recognised on the date of initial application (April 1, 2019). Accordingly, the group has not restated comparative information, instead, the cumulative effect of initially applying this standard has been recognised as an adjustment to the opening balance of retained earnings as on April, 2019.

Management Comment

Commenting on the performance for Q3 & 9M FY 2019-20, Sudhir Agarwal, Managing Director, DB Corp Ltd said, "The present market conditions continue to be challenging on the back of weak consumer demand and a general economic slowdown. However, we are pleased that our innovative knowledge-driven product strategies and well implemented circulation expansion drive is yielding results. Dainik Bhaskar newspaper continues to garner market share in its newer markets while maintaining leadership position in its existing markets. Further, we are proud that Dainik Bhaskar is the only Indian news daily to feature amongst the world's top 3 most circulated newspapers, in 2019, as per WAN IFRA. Our consumer-centric focus coupled with strong on-ground execution has enabled us to build a position of strength that will help us capitalise on forthcoming opportunities. On the revenue front, growth continues to be challenging for the industry, however, softening newsprint prices is a silver lining. This coupled with our cost-rationalization measures has enabled us to improve profit margins. Going forward, we are optimistic about revival in consumer spending and better revenue scenario. The government has been meeting stakeholders from the industry and we hope that these interactions manifest in support in the upcoming budget. Big ticket reforms such as corporate tax cuts as well as the expansion of the infrastructure drive are also likely to culminate in helping to kick-start the economy. We believe that our efforts in creating a strong base will help the Company and we continue to strive for a better performance."

To pay second interim dividend of Rs 3.50 per equity share

The Board of Directors at its meeting held on January 23, 2020, has declared second interim dividend of Rs 3.50 per equity share of face value of Rs 10 each. The company has already paid an interim dividend of Rs 6.50 per equity share as approved by the Board on its meeting on Oct 16, 2019.