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Delay in DAS Phase III impacts performance of Grant Investrade’s HITS project

MUMBAI: The delay in implementation of digital addressable system (DAS) in Phase III due to multiple court cases has impacted the performance of Grant Investrade, a wholly owned subsidiary of Hinduja Ventures which operates the headend-in-the-sky (HITS) project under the NXT Digital brand.

NXT-cover-logo_DIGITALGrant Investrade has posted a net loss of Rs 32.71 crore (Rs 327.1 million) for the fiscal ended 31 March 2016. The loss includes short provision for tax relating to previous year and deferred tax.

The company’s revenue stood at Rs 22.40 crore (Rs 224 million) on expenses of Rs 47.09 crore (Rs 470.9 million). Revenue from operations was Rs 18.65 crore (Rs 186.5 million). Under expenses head, other expenses accounted for almost half of the total expenses at Rs 24.46 crore (Rs 244.6 million). Television operation expenses stood at Rs 3.65 crore (Rs 36.5 million).

Pay channel charges stood at Rs 14.53 crore (Rs 145.3 million) while transponder charges were 16.63 crore (Rs 166.3 million). Including the pay channel and transponder charges, the television operation expenses actually added up to Rs 31.17 crore (Rs 311.7 million).

However, the company’s balance sheet shows that it has capitalised an amount of Rs 27.51 crore (Rs 275.1 million). After deducting the capitalised amount from the actual charges, television operation expenses come down to Rs 3.65 crore (Rs 36.5 million).

In the preceding fiscal year, the company had posted net profit of Rs 4.78 lakh (Rs 47.8 million) on revenues of Rs 11.51 crore (Rs 115.1 million) and expenditure of Rs 11.46 crore (Rs 114.6 million). The two financial years are not comparable as the service was launched in September 2015.

The company’s HITS brand NXT Digital was formally launched by former I&B minister Arun Jaitley in September 2015. NXT Digital is targeting Phases III and IV of DAS.

However, the delay in the implementation of Phase III due to multiple court cases put paid to NXT Digital’s plans of winning local cable operators (LCOs) on its side. The HITS provider also faced the huge task of procuring content from broadcasters.

In an earlier interaction, IndusInd Media & Communications Ltd (IMCL) MD & CEO and Grant Investrade MD Tony D’Silva had blamed the Ministry of Information & Broadcasting (MIB) and the Telecom Regulatory Authority of India (TRAI) for their apathy towards HITS technology, which has great potential to take cable TV services to far-flung areas of the country through satellite transmission. He had also bemoaned the unfair treatment meted out to HITS and Hinduja Group’s HITS project NXT Digital by broadcasters, who charge unrealistic rates for digitising while multi-system operators (MSOs) pay analogue rates to digitise their network.

According to D’Silva, broadcasters are charging digital fee from NXT Digital at Phase I and II rates. Broadcasters, he said, were discriminating between HITS and MSOs when there was not much difference between the two systems. “They are charging me a digital fee but not the MSO with whom they have analogue agreements. Why are they discriminating against us?” he added.

The company has taken up the issue with the MIB and TRAI, and has even filed cases in the TDSAT.

Meanwhile, Grant Investrade has availed a loan against share facility of Rs 295 crore (Rs 2.95 billion) from Yes Bank, which is repayable after 96 months from the date of disbursement.

Hinduja Ventures has given shortfall undertaking to the bank that in the event of any shortfall, it will infuse additional equity in Grant Investrade towards time, cost overrun and losses during the tenor of the loan.

Hinduja Ventures has also given an undertaking to various banks to retain shareholding to the extent of 51% in IMCL and 100% in Grant Investrade until all amounts outstanding under various facility agreements entered into by IMCL and Grant with the said banks are repaid in full by IMCL and Grant respectively.

Grant Investrade had hired seven C-band transponders from Thaicom. The HITS operator had selected Nagravision DLK for conditional access system (CAS), OpenTV1 for middleware, and Hansen Technologies for subscription management and billing solutions.

The company has two service models for the LCOs —’white label’ and ‘full service’.

In the white label service model, LCOs with a DAS licence have to do the content deals on their own by entering into a tripartite agreement with the broadcaster and NXT Digital. The LMO will pay subscription fee directly to the broadcaster.

The full service model is for LCOs who do not have a DAS licence. For these operators, NXT Digital will enter into tripartite contracts with the broadcasters and pay subscription fee to the broadcasters.

It may be recalled that the Hinduja Group has decided to have its cable TV and HITS businesses housed in a single entity.

The HITS business will move from Grant Investrade to IMCL, the company under which the cable TV business is run. As part of the process, Grant Investrade will demerge its HITS business. It will be merged with IMCL to create a consolidated powerhouse.

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