Radio Mirchi will enter Qatar & has signed an agreement for it: Prashant Pandey, MD & CEO at ENIL

Prashant Pandey, MD & CEO, Entertainment Network (I) Ltd (ENIL), speaks about the termination of its content license agreement with Adline Media, business aspect in Qatar, stock prices as well as revenue and profits during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Your brand and content license agreement with Adline Media FZ LLC, Dubai was terminated in the recent past. What could have led to this termination and how it will affect your revenue?
A: This was operational in Bahrain, but the company was registered in Dubai, hence the name of Dubai was raised. We have a separate operation in the UAE, which is running well at present. Bahrain's operation was a brand license agreement in which a local business party who took the brand license from us and was paying the brand licensing fee to us. It was running its business independently. However, it faced certain issues and viability in running its business independently in its own country and that's why we have broken our agreement with them. But, we are exploring the ways to enter Bahrain, as it is an important country, and there are other ways to enter the country and we are exploring them. Termination of the license will have a very small impact as it was a small brand licensing agreement and that's why it will not make any big difference in our Profit and Loss (P&L).

Q: Your company has forayed into Qatar in the recent past. What are your projections from the country in terms of the revenue?
A: We have not entered Qatar yet but have signed an agreement and with plans to take Radio Mirchi to the country. Qatar is an important country that will be hosting the Football World Cup 2022. And that's why its build-up to 2022 will be an interesting one. Qatar is going to be the second-biggest operation destination for us in GCC after the UAE. We are quite buoyant about it.

Q: Your stocks prices have dipped almost 44% in the last one month. What is the reason behind this steep fall?
A: Our stocks have always faced a weakness related to liquidity, which remains low. Because of this, selling off of even a small quantity of stocks by any particular or couple of investors creates a stir in the prices. Apart from, our silence is the second reason for the steep fall, as we were is a silence period and we're not talking with the investors. This silence would have created a thought that what is happening with the company. So, I would like to ascertain to people that the company is in a very strong position. However, if you have a look at the market, then the overall market is down at present. And everyone is aware of the fact that the advertising market is also down but our shares have turned stronger with the radio industry. Our revenue market share, in the radio segment, has grown by 1% in quarter 1.  

Besides, we have an important difference from the rest of the radio companies and it is that we are running a solution business. This solution business helps us in getting minimum impacts of the market slowdown. This platform, solution business, has a 35% contribution to our business last year and the remaining 65% came from the radio business. At times when the market conditions are bad, the advertisers say that they do not want to restrict themselves just to advertising but they need results. So, if we can deliver results along with solutions that are just not dependent on the radio but other mediums can be used for the purpose including digital then it is liked by the clients. We have the maximum digital presence in comparison to any other radio company. Our solution business has grown brilliantly in the last three years and we have reported 30% in quarter 1, at least when the market was quite down. Thus, the company's position is strong and there is nothing to ascertain the reason behind the fall in the last month.

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Q: Profitability is an essential component of a business. So, how will you close this financial year as compared to the last financial year at least when margins have declined and advertisement business is down? What is going to be the growth driver in future?
A: There is high operating leverage in the radio industry, i.e. there is a sudden increase in profits when there is an increase in the revenues and vice versa happens when there is a fall in revenue. Thus, the quarters when there is a pressure on revenues then there is a pressure on the profits of the quarter as well. As far as the end of the year is concerned then we hope that there will be a revival.

Secondly, the first quarter's revenue was not strong because the central government has stopped its advertisings due to elections. 15% revenue of radio industry comes from the central government and I think that the government will restart investing. This is why we haven't reduced our profits or overall revenues in our forecasts for the full year.