Sakal Media’s broadcasting biz expected to drive future profitability

MUMBAI: Sakal Media Pvt Ltd’s (SMPL) profitability is expected to be supported by the strong performance of its broadcast division in the near to medium term, rating agency ICRA has said in its ratings report about the company.

ICRA noted that the company’s profitability from media business is expected to remain flat owing to prevailing competitive pressure.

While assigning a rating of Provisional A- to the Rs. 80 crore long-term fund-based term loan facilities and the Rs. 80 crore cash credit facilities, ICRA noted that the company’s credit profile is also likely to remain adequate, considering it does not have any major CapEx plans over the medium term.

SMPL has a presence in printing/publishing and TV broadcasting verticals. The company owns Marathi daily Sakal and news channel Saam TV.

In FY2018, the company had revamped the Saam TV from general entertainment channel (GEC) to news channel and brought in experienced professionals on board.

This, ICRA stated, has resulted in improved revenue and profitability performance of the broadcasting division. Going forward, the performance of the division is likely to improve due to various measures being taken.

Further, the performance might be supported by upcoming general and state elections in the calendar year 2019, the rating agency said.

SMPL was incorporated in March 2017 after de-merging from Sakal Papers Pvt Ltd (SPPL), which was initially engaged in the printing, publishing and broadcasting business of print media.

Post de-merger, the business activities of SPPL were transferred to SMPL whereas SPPL remained the asset holding company.

As per two different schemes of arrangement and orders issued on 4 October 2017 by National Company Law Tribunal (NCLT), the management has de-merged its printing business into SMPL, and television and broadcasting business into Saam Television Private Limited (STPL).

ICRA expects Sakal Media’s revenue growth in the near term to remain modest, supported to an extent by an incremental push from the upcoming general and state elections in the calendar year 2019.

The report further stated that SMPL has a concentration on Pune region as reflected in the sizeable share of the circulation revenue being derived from the Pune edition of Sakal. The same, it added, makes the company vulnerable to the risks associated with the micro market.

The company has an advertisement revenue driven business model as reflected in 69% of revenue coming from advertisements over the years.

In FY2018, on a provisional basis, the company reported a consolidated net profit of Rs. 36.3 crore on an operating income of Rs. 551.4 crore, as compared to a net profit of Rs. 31.2 crore on an operating income of Rs. 547.1 crore in the previous fiscal.

Apart from Sakal, other publications of SMPL include Sakal Times (an English newspaper), Gomantak and Gomantak Times (Marathi and English newspaper published in Goa region), Agrowon (a Marathi newspaper catering to farmers), Saptahik Sakal (a Marathi weekly magazine) and Tanishka (a Marathi women magazine).

Apart from the media business, SMPL also organises events and exhibitions at different cities in Maharashtra, with Sakal Utsav organised in Pune being a popular shopping event.