KXIP sees strong growth in FY19 due to higher rev share from IPL central pool
Driven by an increase in revenue share from the IPL central pool, KPH has posted a net profit of Rs 44.55 crore in FY19. This is a big increase from Rs 17.98 crore net profit in the previous fiscal.
KPH’s net profit of Rs. 44.55 crore in FY19 is after an extraordinary expense of Rs. 108.43 crore in the form of interest paid to the directors for the unsecured loans infused by them to support the business operations in the past.
Profit before interest lease depreciation and tax (PBILDT) for the fiscal jumped to Rs 164.63 crore compared to Rs 50.69 crore.
In FY19, the total operating income of the company increased significantly by about 217% on a year-on-year basis, on account of higher revenue sharing from the central pool by the IPL governing body (increased by 305% in FY19). This was on account of lucrative broadcast/ sponsorship tie-ups entered by the BCCI for the next 5 years (IPL-2018 to IPL-2022), for which FY19 (IPL-2018) was the first financial year.
In H1 FY20, the company has achieved a total operating income of Rs. 184.74 crore, which declined by 37% on a year-on-year basis from Rs. 294.76 crore in H1FY19. This was on account of higher revenue sharing by BCCI in IPL 11, since it had received extra payment from certain sponsors who paid 25% of the total deal amount in the first year followed by an 18.75% payment in the next four years each.
Also, the company booked revenue for three of its fourteen matches played of IPL 12 in FY19 since they were played in March 2019 due to the IPL commencing earlier. This also led to lower PBILDT margins in H1FY20 compared to H1FY19 (32.61% in H1FY20 compared to 43.84% in H1FY19) though they remained at a comfortable level since the company incurred almost the same players & support staff fees (on a proportionate basis) which form the major cost component for the company.
CARE Ratings has reaffirmed KPH’s short-term bank facilities of Rs 24 crore. The rating assigned to the bank facilities of KPH continues to derive strength from the strong promoter group, the comfortable financial risk profile of the company, strong liquidity position and high worldwide popularity of the Twenty20 format of the game. The rating is, however, constrained by the risks associated with any decline in the popularity of the game going forward.
The bank facilities availed by KPH are backed by personal guarantees from Mohit Burman, Preity Zinta, Ness Wadia, and Karan Paul, in the proportion of their shareholding in the company. These promoters have also provided an undertaking to meet the shortfall in the debt servicing and maintain their shareholding in the company during the tenor of the loan from the bank.
The company had an unencumbered cash & bank balance of Rs.98.89 crore as on 31st March 2019, with working capital limits remaining in a credit balance on an average in the last 12 months period ended, November-19. The company has cash and bank balance of Rs. 84.90 cr., as on 30th September 2019.
Due to comfortable liquidity position, the company has bought back shares (of Rs. 19.25 crore) from its promoters as per the existing shareholding pattern and has also paid dividend (Rs. 41.51 crore) to its shareholders in FY20 (both in October 2019) from the cash and bank balances maintained with the company.
KPH was incorporated in March 2008, with Dabur group’s Mohit Burman (having 48% shareholding in KPH, as on March 31, 2018), Wadia group’s Ness Wadia (23%), Bollywood actress Preity Zinta (23%), and Karan Paul of the Apeejay Surendra Group (6%) holding major stake in the company.
In April-2008, KPH acquired the right to operate the KXIP franchisee and became a member of the IPL against payment of consideration amount of Rs. 304 crore for a period of 10 years. After completion of 10 years, the franchisee is paying a consideration equivalent to 20% of the yearly revenue and it can go up to perpetuity as per the terms of the purchase agreement.