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Sun Group confident of making profits from IPL from 3rd year

At worst company to see first year loss in funding of around Rs 30 cr in FY14

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Media tycoon Kalanithi Maran-owned Sun Television Network (Sun TV) has said that its investment in buying Hyderabad franchise will become a perceptual annuity with after tax of around Rs 60 crore from the sixth year. The company which acquired Hyderabad Franchise this year said that it is a significant move and the company is confident that it will make profit from the third year.

Recently the management told analysts that at worst the company will see first year loss funding of around Rs 30 crore in fiscal 2014, which will drop to Rs 4-6 crore in the second year and in the third year the company expects profit to more to Rs 16 crore and then to Rs 24 crore and 45 crore on the fourth and fifth year.

SL Narayanan, group CFO of Sun said that the company not likely to incur any losses in fiscal 2013 as the season starts towards end of fiscal 2013 and shall at worst bring in loss of around Rs 30 crore in fiscal 2014. He believes that the losses shall decline meaningfully in the very next year.

After the first five years, the company hopes that the franchise shall consistently bring in profits of around Rs 60 crore after tax, he said while not sharing the details of expected expenses. The company also stated that the IPL business has huge opportunities including the ones like IPL Jerseys which will increase the revenue.

He added during the current fiscal no major deployment company’s assets expects some working capital funding to be supported.

Sun TV's advertisement revenue

The company has said that it is optimistic and positive about the current fiscal and expected to post double digit growth as the advertisers have started showing some positive signs. Narayanan said, real momentum has started coming back and the mood has started changing. The fiscal which started with some sort of negative sentiment due to food inflation, high interest rate and other has now started changing which could be seen in the second quarter, which witnessed business confidence coming back.

The growth in advertisement was led by FMCG, which accounts for 55% of the advertisement revenue for Sun TV, while other sectors like automobile, consumer durables and others have started showing positive signs, banking and other financial sectors are still on the degrowth mode.

Radio business

The company's radio business has started turning around by reporting Rs 1 crore profit, said Sun TV’s CFO V C Unnikrishnan. He added that the business reported a topline of around Rs 50 crore and expected to report 10-15% growth. The business reported Rs 11 crore Earnings Before Interrest and Tax (EBITA).

DTH Business

Sun Direct, the DTH arm of Sun TV has reported sales growth by three times, this was due to the digitisation programme, which is being dragged in Chennai. According to Narayanan, industry as a whole in Chennai was selling around 300-400 connections a day which now increased by almost three times.

He added, the company is betting big on digitisation, especially the Phase II implementation, which is expected to bring around 11 million people under digitisation programme in the strong holds of Sun’s market. Sun also signed a deal with Tamil Nadu Government run MSO Arasu Cable Corporation, which increased its ratings. The company is expecting around Rs 7 crore revenue.

On the challenges, the company said one major concern is power cut in the state of Tamil Nadu and Andhra Pradesh which is impacting the prime time shows.

On capex

The company has said that it has invested around Rs 200 crore during the first half of the current fiscal on acquisition of movies and said it would continue to invest around Rs 80-90 crore on an average for the next three quarters for movie acquisition.

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