Media company Hinduja Ventures’ gameplan for FY20 is to become PAT positive, retire debt

MUMBAI: Hinduja Ventures Ltd (HVL), which recently became an operating media company, aims to become PAT positive in FY20 by reducing costs and increasing revenue. The other aim of the company is to retire debt.

The TV distribution of HVL was earlier housed under IndusInd Media and Communications Ltd (IMCL) with Vynsley Fernandes as its CEO. Fernandes continues to be at the helm of the TV distribution business comprising InDigital (cable) and NXT Digital (HITS).

HVL is the only company to provide service through dual-mode of transmission – digital cable and headend in the sky (HITS). It also provides broadband service through ONE Broadband brand.

Talking about the gameplan for FY20, Fernandes said that the company intends to go into the market with a combined offering of digital cable, HITS, broadband, and content.

“The very fact is that we offer digital cable, HITS, broadband and content will help us to grow ARPUs. We are not selling individual products. We can ringfence consumers as we offer a one-stop-shop solution. We can improve our solutions. We can bring in efficiencies in our backend which is the subscriber management system, the billing, processes, field forces etc. All of this amounts to 400 basis points if you look at a cost base,” Fernandes told

He further stated that the combined entity has a very healthy debt to equity ratio of 1:1. “We want to retire debt in this coming year. Our idea is to become a debt-free company. This will add Rs. 100 crore to the bottom line and the EPS benefits greatly. Overall it is a very clear, tight framework comprising of three steps. First, grow revenues through a combined product offering. Second, keep costs under control by synergising the backends of all the businesses. Third as a result of all this see the benefits trickle down to the bottom line.”

In terms of the re-organisation of the company’s media and communication business, he noted that the time was right based on the performance quarter on quarter. “If you look at the way our performance has improved over the last two quarters it has been incredible. We turned the corner in the last quarter of 2019 fiscal. In the first quarter of 2020, we had a positive EBITDA and a positive PAT and we felt that it was the right time to build shareholder value and also the right time to integrate the businesses more strongly.”

He added that the company’s vision is to be a strong media player and at the same time also be a boutique player. “We are not competing in the volume game. For us, it is the value game. It is about the fact that we are the biggest player in rural India. It is about the fact that a significant base of ours is the largest growing demographic which is rural India. These were the things that prompted us and we have very clear verticals and we felt that this was the right time to bring these entities together.”

He stated that the trigger point behind the reorganisation was the solid performance put up by IMCL in Q4. “Our parent company is Hinduja Ventures and so it made immense sense to work on the corporate action or the demerger into this company which now has integrated four verticals. That was the key reason but the trigger point was the consistent performance. It was not because of the NTO. We narrowed our losses in the previous year and grew our revenues by 11%. We tightened our expenses. We have brought our costs down under immense control.”

He said that the company has been able to grow its topline, subscriber base. He points to the fact that his company is the only platform with a 99.5 per cent pre-paid subscriber base. “This means that we are a negative working capital company as we are paid in advance in the beginning of the month. This combination is an excellent opportunity for a company considering this kind of an action.”

While the NTO has proven to be a challenge for DPOs and LCOs in terms of getting adjusted to a new system and putting in the backend he says that his company has achieved 100% migration.

“We have migrated 100% of our customer base to the new regime. We are the only company that did 150 workshops for our LCOs across India including in Andaman Islands, Kargil. We have that kind of foot on the ground presence. We did workshops both pre and post NTO. There were 2000 pin codes. The migration was seamless and our advantage was the pre-paid model. Customers could pick and choose what they wanted,. LCOs had acess all to packages.”

He added that while the company has crossed five million subscribers it is targeting 10 million through its managed service model. “We have already crossed five million in a very difficult period of the NTO when there was a lot of churn happening on the ground. But one factor that will catapult us to not seven but 10 million is our managed services model.”

He noted that there are a whole lot of small MSOs today with anywhere from there 10,000 to 150,000 subscribers” What is their future? Can they consolidate and become a big party? Some could depending on larger parties but by and large, most of them have a limited vision for the future. We are bringing them under our umbrella and there are three benefits for them. One is that they have access to technology without having to invest in it.

“Second is that they can continue to earn their revenue and manage their business while the backend is taken care of by IMCL. Third and the biggest advantage for them is that they will have access to multiples which they couldn’t earlier. Now being part of a company that has listing the benefit of multiples accrues to the. This is not something that I am just talking about. We already have several large customers and through them, we have crossed half a million as of today. The growth si not just organic but also inorganic where larger chunks of subscribers under a smaller MSO come under our umbrella. That also gives us a greater benefit as the cost per subscriber keeps on dropping with each subscriber added.”

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