NTV-owner Rachana Television’s FY17 net jumps 17% to Rs 14.34 crore

MUMBAI: Rachana Television, the company that owns and operates three Telugu channels, has seen a 17.44% jump in its net profit to Rs 14.34 crore for the fiscal ended March 2017 compared to Rs 12.21 crore in the year-ago period.

The company’s revenue has increased 24% to Rs 81.97 crore compared to Rs 66.21 crore in the previous fiscal owing to the addition of new customers and increase in ad revenue.

The major revenue contributor for the company has been NTV accounting for 62% of the company’s revenue followed by Bhakthi TV which accounted for 33% of the revenue in FY2017. The operating margins of the company have remained healthy at 25.92% in FY2017.

The company has a low customer concentration risk with top 10 customers accounting for 15% of the total revenues during FY17. National advertising agencies and customers account for 40% of the revenues with the remaining contributed by local ad agencies and customers.

Incorporated in 2006 by T. Narendra Choudary, the company operates three channels, NTV which is a 24-hour Telugu News Channel and is the flagship channel of the company, Bhakthi TV, a devotional channel, and Vanitha TV which is a 24-hour women’s entertainment channel.

The company has its own studio with an area of 30,000 sq ft located in Jubilee Hills Hyderabad.

NTV was among the first few 24-hour Telugu news channels to be launched and has been among the top-three Telugu news channels, in terms of viewership, in Andhra Pradesh and Telangana region over the past four years.

As on March 2018, NTV is the second most watched channel among more than 15 Telugu news channels in the region. Also, Bhakthi TV has remained one of the top devotional channels in South India owing to limited competition from other regional players in this genre.

ICRA has reaffirmed the long-term rating at BB+ to the Rs. 11.50-crore unallocated limits of Rachana Television Private Limited (RTPL). The outlook on the long-term rating is ‘Stable’.

The rating factors in the established market position of NTV in the Andhra Pradesh and Telangana market with the channel ranking among the top-three Telugu news channels consistently in the past five years.

The working capital intensity continues to remain high at 72% in FY2017 owing to high debtors and inventory days. Debtor days are high owing to delays in payments from local advertising agencies and customers.

The inventory comprises of in-house recorded programmes or content purchased from other providers, especially for Bhakthi TV and Vanitha TV.

The stretched liquidity position is also reflected in the high average utilisation of 90% of working capital limits, despite enhancement in limits from Rs. 11.5 crore to Rs. 25 crore in October 2017.

The rating agency also noted that the Telugu News broadcasting industry consists of more than fifteen players operating in Andhra Pradesh and Telangana owing to low entry barriers and low capital intensity of operations.

This has given rise to intense competition limiting the pricing power and margins of the company.

The company’s high dependence on advertisement sales, with all three channels being free-to-air channels, exposes the company to the advertisement cycles increasing the volatility of the revenues.

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