Kings XI Punjab's FY20 operating income declined 43% to Rs 214.84 cr

The reduction is due to lower payment K.P.H Dream Cricket Private Limited received from the IPL central revenue pool

e4m by Javed Farooqui
Updated: Jan 21, 2021 3:26 PM
kings XI Punjab

K.P.H Dream Cricket Private Limited (KPH), the owner of IPL franchise Kings XI Punjab (KXIP), has seen a 43% decline in FY20 operating income at Rs 214.84 crore due to lower payment received from the IPL central revenue pool which is distributed by the Board of Control for Cricket in India (BCCI), the owner and organiser of the IPL.
The IPL franchises earn almost 80% of their revenue from the IPL central pool, which is the income generated by the BCCI through the sale of media rights and sponsorship. The IPL central pool is divided equally between BCCI and IPL franchises.
KPH received lower payment from BCCI in FY20 since the cricket board itself earned less from the media rights income due to the nature of its deal with Star India. As per the contract between BCCI and Star, the board received 25% (Rs 4086.87 crore) of the media rights payment in FY19 and will receive 18.75% (Rs 3065.15 crore) each in the subsequent years. In September 2017, Star India had paid Rs 16347.5 crore to acquire IPL media rights for five years till 2022.
In FY19, KPH's operating income stood at Rs 374.80 crore as the company had booked revenue for three of its fourteen matches played in IPL-12 in FY19 since they were played in the month of March 2019 due to the tournament commencing earlier. The media rights income was also higher since Star paid 25% of its media rights fee in FY19.
According to KPH's financial details accessed by CARE Ratings, the company's net profit increased to Rs 60.78 crore from Rs 44.55 crore while profit before interest, lease, depreciation, and tax (PBILDT) almost halved to Rs 84.57 crore from Rs 164.63 crore in FY19.

The PBILDT margin declined to 39.37% in FY20 from 43.93% in FY19. However, the PAT margins increased to 28.29% in FY19 from 11.89% in FY19 as no extraordinary expenses were booked by the company in FY20.

The company incurred an extraordinary expense of Rs 108.43 crore in FY19, in the form of interest paid to directors for the unsecured loans infused by them in the past. No such expenses were borne by the company in FY20, which led to an improvement in the PAT margins.

Without disclosing the total investments made by promoters, Kings XI Punjab co-owner Mohit Burman said that the team owners have finally recovered their investments. "Yes, finally after a decade," Burman said in response to a question whether the KPH promoters have fully recovered their investments.

Commenting on the FY20 financials, Burman said, "We were pretty much on course and are thankful to our sponsors and other partners who stood by us. The revenue split between the central pool and franchise sponsorship was 80:20."
Queried about the impact of IPL's shift to UAE in 2020, Burman said that the only part that can get affected is the ticketing one. He also said that the licensing & merchandising (L&M) income in India is nothing to talk about as it is very minuscule.
Due to a comfortable liquidity position, KPH has bought back shares worth Rs 19.25 crore from its promoters as per the existing shareholding pattern and has also paid a dividend of Rs 41.51 crore to its shareholders in FY20 from the cash and bank balances maintained with the company.

"The objective of buyback of shares was to return surplus funds to its shareholders. Considering the accumulated free reserves as well as the cash liquidity, the Board decided to distribute to the members through the buyback of shares," Burman noted.

KPH was incorporated in March 2008 with Dabur Group's Mohit Burman having a 48% stake followed by Wadia Group's Ness Wadia (23%), Bollywood actress Preity Zinta (23%), and Karan Paul of the Apeejay Surendra Group (6%).

In April-2008, KPH had acquired the rights to operate KXIP franchisee and became a member of the IPL against payment of Rs 304 crore for a period of 10 years. After completion of 10 years, the franchisee is paying a consideration equivalent to 20% of the yearly revenue IPL-2018 onwards. This arrangement can go up to perpetuity as per the terms of the purchase agreement.

The company also owns another franchisee St. Lucia Zouks in the Caribbean Premier League, which is organised by the West Indies Cricket Board (WICB). The company has acquired the franchisee for an initial period of 13 years against a payment of $4 million to be paid in five equal installments starting from FY21.

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