Entertainment Network India Ltd, which runs India’s leading FM radio channel Radio Mirchi, reported muted Q4 earnings. While revenues have grown by 18.5 per cent, net profit was down because of ₹725-crore investments for acquiring radio waves at auction, among other things. In an interview to Bloomberg TV India , ENIL CEO Prashant Panday explains the company’s future growth plans. The newly launched concerts business is growing very rapidly at more than 200 per cent per annum and in the next 2-3 years it is expected to become much bigger, he said. Price increase has been a major contributor to revenues and that trend will continue as prices are still lower compared with 2009, he added.
It’s been a muted Q4 for ENIL but the revenues have crossed ₹500 crore. What’s the outlook for FY17?
Q4 has been a really healthy quarter. We have grown revenues by 18.5 per cent and the PAT is down because of the fact that we invested Rs ₹725 crore in auction and migration, and hence the treasury income was reduced. Our EBITDA growth had been around 23 per cent in Q4 and this has been a very strong quarter.
All the major spends have already been completed. The auction fees have been paid to the government. The migration fees for the licences had to be paid upfront last fiscal year. What is left is a certain amount of capex and then of course there’s a regular operating business expenses. And talking about marketing spends of the last couple of years, as we embark on expansion and launch new brands, we will be spending more on the marketing. So that’ll definitely stay for another couple of years.
Price rise has resulted in a bump up in revenues even though volumes have been hurt. What’s the way forward?
Yes, price hikes are here to stay. And even in Q4, the larger part of revenue growth came from price hikes. Only small contributions have come from volumes. So that is going to stay because inventories are running full even as business picks up. Well, to be honest, we are still at a lower price compared with 2009 pricing. So there’s big headroom there and it will get covered in the next year or so. That aside, we have a very strong non-radio portfolio or business, which depends on radio but is not directly on advertising. So that continues to grow as well.
What’s the outlook for the activation business?
On the activation business, we have a lot of TV properties, solutions business and international business. So there’s quite a lot of action there.
What kind of growth levels would you envisage in that segment?
So that’s a faster growing business because that’s where we are expanding very significantly. To give an example, the concerts business, which is just five quarters old, is growing very rapidly at more than 200 per cent per annum. Obviously it has a relatively smaller base. So in the next 2-3 years, I expect the concert business to become much bigger because some of our earlier businesses have become bigger and that’s why activation business is very big now and it’s delivering good margins. We have a solutions business. And we tell them not to look at it only as radio broadcasters. Look at it as a solutions provider. So those businesses have a lot of opportunity even today in the years to come for non-radio products to become bigger.