MUMBAI: ETC Networks has reported a profit after tax of Rs 123.6 million (up 663 per cent) for the nine months ended 31 December 2002 as compared to Rs 16.2 million for the corresponding period in 2001. The board of directors of the company at its meeting held today, approved the unaudited results (click for more)for the quarter and nine month ended 31December 2002.
ETC Networks also posted a net profit of Rs 41.4 million for the quarter ended 31 December 2002 compared to Rs 1.39 million in the correspondoing period for 2001. The total income of the media major has increased from Rs 71.3 million in the quarter ended 31 December 2001 to Rs 107.1 million in the same period for December 2002.
On the BSE, the ETC Networks scrip climbed marginally to Rs 67.10 (up 0.68 per cent) from the previous close of Rs 66.65 with a total of 209,168 shares being traded during the day. Earlier, ETC Networks bounded up 3.53 per cent to Rs 69 in morning trades on BSE after registering the massive rise in net profit. The Zee scrip however continued its downward slide falling to Rs 97.85 (down 1.41 per cent).
An official press release states that the company continued on its solid path of growth and profitability despite the fact that the company had posted a loss of Rs 141.05 million for the fiscal ended 31March 2002.
The profit before tax during third quarter of fiscal 2002 rose to Rs 52.7 million as against Rs 1.5 million for the corresponding quarter last year. The increase in profits is mainly due to improved channel operations showing 50 per cent growth in total revenues and a simultaneous decrease of 30 per cent in overall cost during the period. During the quarter the company has re-negotiated its contract with satellite provider, effective from 1 December, resulting in more than 25 per cent saving in transponder cost.
The total revenue for the nine months ended 31 December 2002 stands at Rs 315.7 million as compared to Rs 233 million achieved during the corresponding period last year. The profit before tax has surged to Rs 142.2 million as compared to Rs 17.6 million achieved during the corresponding nine months period.
The good results are attributed to improvement in the company's efficiency after its merger with media major Zee Telefilms. In February 2002, Zee had proposed to acquire 48.38 per cent of the share capital of ETC for a consideration of Rs 178.4 million. The members of ETC, at the extra-ordinary general meeting (EGM) in end-March 2002, then approved the issue of up to 22,20,812 equity shares of Rs 10 each for a cash at a premium of Rs 21.52 per share aggregating Rs 6,99,99,994 (Rs 31.52 per share of ETC) to Zee Telefilms on preferential allotment basis.
The deal was a win-win situation for both companies. The companies now have less competition in two categories - the music and Punjabi segments. Also, the deal implied that Zee could enhance its bouquet of channels giving it more clout with cable operators. This opened another revenue stream for the channel network, as well. This should prove beneficial to ETC and Zee in the long run.
Zee has already started working on ETC so as to improve the latter's operational performance through better network synergies and lowering of overheads. ETC channels now have access to the large pool of resources of Zee in India and abroad. Both companies are in the process of effecting synergies between operations. This will also include content, copyrights of films and songs, marketing and sales network internationally.
ETC will be able to augment its revenue streams by content syndication and subscriptions from overseas markets especially for its most prestigious and valuable property 'Gurbani'. All these will have a direct and immediate impact on revenues and bottom line of ETC and benefit its stakeholders. This has already been visible from the ETC's current performance.
The ETC channel was launched in June 1999 as a 24-hour Indian music channel with the punch line of "Aakhir Dil Hai Hindustani". The company graduated from a music channel to a wholesome family entertainment channel.
ETC Punjabi was launched in June 2000. Within a short span of three months, ETC Punjabi became the No.1 Punjabi channel amongst stiff competition from other three channels of its genre. ETC Punjabi has bagged exclusive rights to telecast "Gurbani" Live from the Golden Temple, Amritsar.
A press release states that ETC has started exploiting its existing programmes in overseas markets using Zee's existing international platform. In the UK, a separate channel has been launched in the name of "Alpha ETC Punjabi" by Zee UK. Gurbani and ETC programmes are forming major part of the programming of that channel. Transfer pricing norms between ETC and international entities of Zee have been fixed and accounted for during the quarter ended 31December 2002.
A release states that the company's channels ETC Punjabi and ETC (Music) continued to command a lion's market share in their respective genre during the quarter under review. ETC Punjabi has dominated its market by taking 65 per cent market share among all Punjabi channels. ETC (Music) continued to maintain its market leadership with 40 per cent market share among the music channels in India.
All of the top 25 programmes of Punjabi channels are from ETC Punjabi while ETC (music) channel enjoys 15-20 programmes out of the top 25 programmes (as per
TAM).
As on September 2002, promoters held 51.01 per cent, while the public, institutions and foreign bodies held 14.78 per cent, 11.37 per cent and 5.49 per cent respectively in the equity capital of ETC Networks.