Derisking is an ongoing process at Balaji Telefilms Ltd. The television software company plans to expand its basket of sponsored programmes on regional channels and gradually derisk the business. During the current quarter, the company launched one show each on Gemini TV (Telugu) and Surya TV (Malayalam).
"We are also looking at a Bengali show and will look at further additions to the basket of sponsored programmes," said Mr V. Devarajan, Chief Financial Officer, Balaji Telefilms.
The company has been comfortable with an 80:20 ratio in its mix of commissioned and sponsored programmes. Typically, most of the sponsored programmes are on regional channels, which operate in a manner akin to Doordarshan, where the slot is purchased by Balaji Telefilms and the free commercial time is sold.
Admittedly, profit margins for sponsored programmes are quite thin in comparison to those for commissioned programmes. But sponsored programmes allow for an immediate tweaking of advertisement rates based on the performance of the shows, said Mr Devarajan.
Balaji Telefilms has been able to maintain a robust growth in its commissioned programmes, which are mainly aired on Star Plus and other Hindi satellite channels. For the year ended March 31, realisations moved up by 18 per cent, primarily because of a hike in price at Star TV. "Realisations may not necessarily head northwards in the coming quarters, especially because we are expanding our basket of sponsored programmes," Mr Devarajan said.
Balaji has invested Rs 9.18 crore in production and post-production equipment and studios. This investment is expected to bring down its cost of production considerably in the current fiscal.
For the year 2004-'05, Balaji Telefilms should be able to maintain a 5-10 per cent growth in its topline, Mr Devarajan said. The company had ended with a 3.5 per cent decline in its profit after tax at Rs 55.41 crore (Rs 57.41 crore) on revenues of Rs 178.30 crore (Rs 185.96 crore).
During the second quarter of the current fiscal, the company will launch programmes for Times TV and MTV.
The company is also adding another element to its revenue mix this year: two films are in the process of completion. "Though both these films are small-budget projects, we should see some addition to our topline," Mr Devarajan said. Both the projects are slated for release around August-September 2004.
Our typical marketing budget is usually 10 per cent of the topline spend