Despite curbing costs, NDTV piles up losses worth Rs 68.79 crore owing to top line depletion
The company registered a loss of Rs 54.82 crore after taxes, minority interest and share of associates in FY16
The financial results for the fiscal year ended March 31, 2017, can be best described as a mixed bag for the NDTV Group. From the standpoint of revenues, the news broadcasting giant’s total income plummeted by 7.2% from Rs 577.12 crore to Rs 535.21 crore. On the other hand, however, the company led by Prannoy Roy and Radhika Roy managed to outdo their expenditure from the previous year. Having keenly managed their costs especially during the latter half of the year, NDTV was successful in bringing down its expenses significantly from Rs 645.23 crore to Rs 593.02 crore.
Though the network remained entrenched in losses, the sum total reduction of costs by Rs 52.12 crore or 8.09% was a positive indicator for the company. While the losses incurred before tax deductions and exceptional items were cut short to Rs 57.81 crore, losses after taxes, minority interest and share of associates went up to Rs 68.79 crore.
Top line depletion
The 12 months from April 2016 to March 2017 saw NDTV accumulate Rs 522.67 crore as revenues from operations. The bulk of this money came from NDTV’s television media business and related operations. Segment-wise results placed the exact figure from the same at Rs 515 crore. The e-commerce/retail business simultaneously created revenues totalling Rs 14.34 crore. It is noteworthy to mention that the figure of Rs 522.67 crore was arrived at after deducting inter-segment revenues worth Rs 6.67 crore from the combined income of television and e-commerce business.
On a comparative basis, revenues from both the television and e-commerce business de-grew by 7.8% and 11.1%, respectively. During FY16, NDTV garnered Rs 559.13 crore from their television business whereas their e-commerce property brought in Rs 16.14 crore. De-growth from both ends ensured the erosion of revenues from operations by more than Rs 40 crore from Rs 565.76 crore to Rs 522.67 crore.
On a positive note, the top line positioning improved owing to an increase in revenues via other income to Rs 12.54 crore from Rs 11.36 crore earlier. As a result, NDTV’s total revenues in FY17 came to be Rs 535.21 crore, lower than Rs 577.12 crore in FY16.
With the notable exception of employee benefit expenses which went up from Rs 201.36 crore to Rs 213.21 crore, every other major business expenditure was successfully curbed. For instance, production expenses and cost of services went down from Rs 123.72 crore to Rs 120.84 crore. Similarly, operating and administrative expenses reduced to Rs 125.04 crore from Rs 132.76 crore.
Most importantly, NDTV saved almost Rs 40 crore on marketing, distribution and promotion expenses. The expenditure on these was curtailed to Rs 88.67 crore from Rs 126.63 crore previously. Besides these, depreciation and amortization costs, purchase of stock in trade and changes in inventories of stock in trade also decreased. Finance costs, however, increased. Nevertheless, the extensive cost-cutting across heads was not sufficient to turn NDTV profitable as its annual expenditure of Rs 593.02 crore outran its entire income totalling Rs 535.21 crore.
Unhealthy bottom line
At the end of the previous fiscal i.e. FY16, NDTV carried an after tax loss of Rs 54.82 crore to the reserves. Far from improving the dismal bottom line showing, NDTV’s losses after tax, minority interest and share of associates grew by 25.48% to Rs 68.79 crore. With the company already sitting above losses over Rs 300 crore, additional losses will only end up putting further stress on the bottom line.
Being one of the oldest private news broadcasters in the country, NDTV is now faced with the mighty task of managing its hapless bottom line standing. Though the market is making a comeback following the jolt of demonetisation in November last year, it will take a lot more than merely cutting costs for NDTV to be able to tackle losses amounting to Rs 370 crore.
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