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Mid-Day Multimedia hits the right note with `feel good' factor

Latha Venkatraman

Mumbai , Dec. 18

NOTWITHSTANDING the speculation about the promoters' stake sale, Mid-Day Multimedia Ltd is expected to ramp up its financial performance during the second half of the current fiscal, primarily helped by an improvement in advertising revenue.

"For the first time in two to three years, we are seeing a volume growth in advertising revenue mainly because of the overall feel good factor," Mr Manajit Ghosal, Chief Financial Officer, Mid-Day Multimedia Ltd, said.

The company had reported sales of Rs 42.57 crore (Rs 39.70 crore) in the first half of current fiscal. With a net profit of Rs 3.07 crore in the first half, the company has almost touched the 2002-03 net profit of Rs 3.60 crore.

The company is looking at an expansion programme with a fund requirement of Rs 50 crore. The company's move to go in for a preferential allotment has resulted in an animated interest from various bidders. "The bids are of different structures, some seeking a merger, some wanting a majority stake, some looking at a joint venture. We are studying the bids now," Mr Ghosal said.

The company's expansion plan is on four fronts — newspaper, outdoor advertising, television and radio.

In the newspaper business, "We need to infuse capital because there is a gestation time between increase in circulation and advertising revenue catching up with it," Mr Ghosal said. The capital infusion would also cover promotional campaigns. The company also sees growth in community free-sheet `Metro' now spread over nine editions. The return on capital employed in the newspaper business is high around 70-75 per cent. But in the process of growing its newspaper circulation, margins do come down, Mr Ghosal explained.

The company had recently announced plans to set up a local satellite channel catering primarily to Mumbai. The channel is expected to focus on news and entertainment. Mid-Day recently announced its tie-up with Zee Television for a daily city-specific news programme `Mumbai Fast'.

The radio segment has also opened up opportunities for Mid-Day Multimedia with Government announcing plans to shift to a revenue sharing model from a licence fee regime. "Once this transition takes place there is a good opportunity for us to look at some more radio stations," Mr Ghosal said adding that the radio business would breakeven as soon as the licence fee regime ends.

With regard to outdoor advertising business, Mid Day is in the process of acquiring more properties. "We are in the process of asset creation," Mr Ghosal said. The return on capital employed in this business, according to him, is around 20-40 per cent. The company's model of high minimum guarantee contracts does not augur well financially. "We are looking at BOT projects in which profits are much higher," he said.

The next fiscal augurs well for Mid-Day Multimedia primarily because of the improvement in the economy as well internal growth plans.

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