Hari Bhoomi H1 FY21: Revenue, Profit remain subdued due to Covid-19 impact

Hari Bhoomi Communications Pvt. Ltd. (HBCPL), which owns the Hindi daily 'Hari Bhoomi' and TV channels Janta TV and INH, has reported a net profit of Rs. 0.71 crore on a total operating income of Rs. 33.87 crore in H1 FY21 on account of disruption in business activities due to the Covid-19 pandemic.

According to a report by CARE Ratings, there has been a significant decline in the circulation of the newspaper, affecting HBCPL’s circulation and advertisement income due to the lockdowns from March-end 2020.

Further muted commercial activities in Q1FY21 led to a significant decline in advertisement revenue in H1FY21.

However, the same was compensated to an extent by the decline in newsprint cost and cutting down on the number of pages of its daily subscription (reduced from 15-16 pages to 12 pages in H1FY21) and decline in the frequency of supplements, while keeping the cover price unchanged.

The major adverse impact of the Covid-19 pandemic is expected on the advertisement income of HBCPL during FY21 as the key advertisement sectors are already facing challenging times, thus their advertisement budgets may witness curtailment in the medium term.

Government spending on advertisement may also remain subdued in the medium term, as states too are facing challenging times in managing their deficit. The circulation revenue is also impacted due to the shift of the consumers to digital media.

The company has posted a net profit of Rs 64 lakh for the fiscal ended 31st March 2020 which is a drop from Rs 3.13 crore net profit in the previous fiscal. It reported a decline in total operating income by 10.4% y-o-y to Rs. 129.25 crore in FY20 on account of lower advertisement revenue.

In FY20, the company reported a loss of Rs. 3.76 crore on a total operating income of Rs. 11. 63 crore in the TV segment as against a profit of Rs. 0.23 crore on a total operating income of Rs. 3.53 crore in FY19.

In the digital media segment, the company reported a loss of Rs. 1.33 crore on a total operating income of Rs. 0.34 crore in FY20 as against a loss of Rs. 1.62 crore on a total operating income of Rs.0.23 crore in FY19.

HBCPL forayed into the television segment with the acquisition of Legend Travels Private Limited (which operated free-to-air 24x7 Hindi news channel ‘Janta TV’ in Punjab, Haryana, and Himachal Pradesh) in March 2017.

The license for operating ‘Janta TV’ was subsequently transferred to HBCPL in January 2019. The company is also operating another free-to-air 24x7 Hindi news channel- INH in Madhya Pradesh and Chhattisgarh. This apart, the company is expected to widen its reach to Uttar Pradesh and Uttarakhand by launching Janta TV in these states by January 2021.

Newsprint (NP) cost is the major raw material cost for HBCPL (constituting ~60% of the cost of sales in FY20). Since the raw material is the major cost driver and whose price is volatile in nature, the profitability of the company is susceptible to fluctuation in raw material prices. 

HBCPL mainly procures NP domestically. Domestic NP prices are linked to import prices as the majority of domestic NP demand is met through imports (~60% of the NP consumption in India is met through imports).

Meanwhile, CARE has reaffirmed HCBPL's credit rating. The rating assigned to the bank facilities of HBCPL continues to draw strength from the experienced promoter group with diversified business interests, qualified and experienced editorial team, leadership position in Chhattisgarh in Print Segment, and satisfactory capital structure.

The rating, however, continues to be constrained by geographical concentration risk, moderation in financial performance in FY20 (refers to the period April 01 to March 31) and H1FY21, low revenue with losses in TV segment and digital segment, profitability susceptible to volatility in newsprint prices and the adverse impact of Covid-19 pandemic on the circulation & advertisement income