Jagran Prakashan - Wake Up Call

Jagran Net Jumps 135%

Kanpur-based publishing house Jagran Prakashan today reported 135.24 % jump in net profit to Rs 17.54 crore for the quarter ended September 30 this year, on the back of a rise in advertisement and circulation revenues and better performance of its outdoor and event management businesses. Cost reduction was also achieved by lesser use of imported newsprint. “During this quarter, the company’s businesses have done well. We have substantially increased our client base in our out of home and event management business,” Chairman and Managing Director Mahendra Mohan Gupta said.

The publisher, which brings out the country’s largest read newspaper ‘Dainik Jagaran’, reported 25.88 per cent rise in its revenues to Rs 141.72 crore from Rs 112.58 crore in the corresponding quarter last year. The net profit had stood at Rs 7.46 crores last year. The earnings per share (non-annualised) of Rs 3.49 was higher by 82.72 per cent. The advertisement revenue shot up 30.11 per cent to Rs 91.48 crore, driven by the increases both in rates as well as total space sold. Circulation revenue rose 8.40 per cent to Rs 42.70 crore over the quarter.

Jagran Engage, the outdoor advertising division with a pan-India presence, has already acquired marketing rights of various properties in Kanpur, Pune, Kolkata, Delhi, Mumbai and Bangalore. Another revenue driver, Jagran Solutions – the event management arm – has clients like Microsoft, Hutch, Godrej, TVS Motors, ICICI Prudential, Escorts, Standard Chartered Bank, Bajaj, TATA Indicom and Hindustan Lever on board.

Excerpts from CNBC-TV18's exclusive interview with RK Agarwal:

Q: What has been the growth in ad revenues in the last quarter?
A: The ad revenue grew by 30%.

Q: Where do the pressure on profits come in?
A: One was revenues from out of home advertising. In fact out of home advertising pegged up, but definitely till September 30, 2006, it was not able to breakeven. In October it is expected to breakeven.

Q: You have also seen an increased expenditure of 10%, is it only because of the new launches that you had and in Noida and the City Plus launch, or is there anything else, and will this be made up in the next quarter?
A: City Plus has seen tremendous success and the response has been very encouraging and good. Going forward, we are going to launch a couple of more editions in a month’s time.

Q: Are you making money or is it still running cost?
A: This is the typical model of a newspaper where we are making money right from the very first edition.

Q: So where has the cost gone up? Your expenditure is up about 10%, is this normal or is there something extraordinary here?
A: The first reason, which I gave, was out of home advertising, which has yet to breakeven and in October it has broken even. The second reason is that in fact, whatever circulation we had lost in the first quarter we have now recovered. There was a sharp increase in the circulation in the current quarter, which was another reason. The third reason is that the second quarter had a maximum hit on account of newsprint prices. But now from October, these prices appear to be stabilised.

Q: Are you contemplating any ad rate hikes considering the fact that October-December is really a time of festivities and we could be looking at higher ad rates at this quarter?
A: There is not going to be any increase in the ad rate, but definitely volumes are going to increase.

Q: On the newsprint cost front, what is the pressure that you are witnessing right now, is there any pressure at all and going forward, what is the outlook?
A: No, I do not see any pressure coming from newsprint prices, but definitely in our area of operation, competition is getting intensified.

Q: Are you looking at sourcing from China because the prices are competitive?
A: We have not yet started buying from China. As compared to other commodities, those prices are not as expected, but definitely they are good prices.

Q: What is your raw material cost as a proportion to sales? It was 48% in the last quarter?
A: In the last quarter, the raw material cost was roughly about 48% and it should be slightly more than that.