Topline was almost flat and slightly positive while the bottom line
was flat and slight negative. Dividend
was maintained at last year levels of Rs9.50.
Company successfully bid for the IPL franchise and has been awarded the
Hyderabad Franchise. Kal and South Asia FM had revenues of Rs112 cr
and 90cr. After minority interest, the
profit of two subsidiaries was around 10.85 cr and 6.5 cr. Both the subsidiaries have turned profit this
year and are likely to get better in the coming years. As per company, it has managed to have
dominant position in southern states and it is the only player with maximum
reach in the area it operates.
Primary
source for revenue is advertisement followed by subscription. Digitization of content and growth of
subscription abroad are the key opportunities identified. Company is very optimistic about the radio
business contribution in the future as well.
Popular programs and dominant viewership share give the company the
pricing power. Move to DTH is expected
to bring in the required revenues in future.
Some concerns that come out of the AR are that the
remuneration to the promoter director continues to be very high at around 56 cr
each. First the company spent large amount in building its corporate office and
now have bought again aircraft to replace the one that they bought few years
back. They spent around 295cr towards
aircraft purchase and the previous aircraft was sold for 189 cr. It has been bought to provide charter
services. Not sure why they would invest
into businesses not connected. It is
more concerning especially given the fact that the Sun group has interest in
Spice Jet. For the amount they spent on
aircraft, the revenue has only been 2.60 cr. Also, there seems to consistent
amount of debt that is taken and paid in the year, which may mean taking debt
and routing it for some other purpose during the year and paying it off during
balance sheet date. Amount involved is
around 875 cr.
Subscription revenue is half of advertising revenue. It looks like they completely got out of
movie distribution business as there were no revenues. Provision for doubtful debts has increased
this year and was at around 24 cr. Free Cash
flow improved compared to last year due to reduced expenditure of intangible
assets. Subscription revenue from Sun
direct is lower compared to last year which may mean that sun direct may be
losing market share or the revenue was reduced for sun direct. Aircraft charter
business got around 2.2cr from sun distribution pvt ltd.
There are lots of related party transactions between the
group businesses. Primarily transactions
are between Sun Direct and the company.
There is also a loan of around 32 cr to associate company.
While the business seems to be okay with good outlook in the
days to come due to digitization, growing advertising revenues, there are
concerns in the corporate governance that have cropped up.
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