MMCL invested Rs 154.5 cr in TV broadcasting subsidiary in FY18

MUMBAI: Malayala Manorama Company Limited (MMCL) had invested Rs 154.55 crore in its TV broadcasting subsidiary MMTV, which owns and operates GEC Mazhavol Manorama and news channel Manorama News.

MMCL’s total investment in subsidiaries and associated companies as on 31 March 2018 amounted to Rs. 204.01 crore out of which investment in MMTV was Rs.154.55 crore.

MMCL had extended Rs. 21 crore as advance to its Dubai based subsidiary Malayala Manorama Fujairah LLC during FY15 which was converted to equity investment during FY16.

In order to increase the printing speed and to reduce the operating cost, MMCL has been modernising its printing presses, since FY14. During FY19-20, the company plans to modernise its presses at Trivandrum, Calicut and Aroor apart from installing windmills of about 10 MW.

Overall, about Rs.226 crore is expected to be incurred for both the projects. While part of the project is expected to be debt funded, with healthy accruals the capital structure is expected to remain comfortable.

MMCL’s net profit in FY18 dropped to Rs 94.63 crore from Rs 151.8 crore. Revenue was marginally up at Rs 1219.6 crore from Rs 1200.6 crore.

During the fiscal, there was an increase in employee costs from Rs. 214 crore to Rs. 253 crore which impacted the margins. PBDIT margins saw a sharp drop to 19.02% in H1FY19 on account of the sharp increase in newsprint prices.

The floods in Kerala which was just before the festival season in Kerala also had an impact on advertisement revenues for the half year. The company reported a PBILDT and PAT of Rs. 116 crore and Rs. 36 crore on a total income of Rs. 610 crore in H1FY19.

Care Ratings had recently reaffirmed MMCL’s long-term and short-term bank facilities to the tune of Rs 379.05 crore.

The ratings assigned to the bank facilities of MMCL continue to derive strength from the long operational track record of MMCL, strong editorial & management team and the leadership position of ‘Malayala Manorama’ daily among regional language (Non-Hindi, Non-English) dailies in the country.

The ratings also take into account the comfortable financial position of the company characterised by comfortable capital structure, healthy coverage indicators and profitability margins and strong liquidity position.

The ratings are, however, constrained by the company’s dependence on a single publication catering to a semi-saturated Kerala market for the bulk of its revenues and regional nature of the operations confined largely to Kerala and exposure to volatile newsprint prices.

The rating also factors in MMCL’s exposure to its subsidiaries, the risk of which is, however, lower with improved performance of the subsidiaries. The ratings also factor in the on-going expansion plans and associated capital expenditure.

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