Odisha Television operating income crosses Rs 100 cr mark in FY18

Jay and Jagi Mangat Panda-promoted Odisha Television Ltd (OTL) has seen its operating income cross Rs 100 crore mark for the financial year ended March 2018.

The company, which owns and operates five Odiya language channels, has seen a jump in operating income to Rs 104.3 crore as against Rs 86.3 crore in FY17. Net profit for the fiscal has jumped to Rs 15.7 crore compared to Rs 9.5 crore in the year ago period.

Odisha TV’s portfolio of channels includes OTV (news), Tarang (GEC), Tarang Music (music), Prarthana (devotional), and Alankar (movie).

The company also operates Desh TV, which is a Chhattisgarh-based Hindi language NCA, launched in January 2013. The company had also set up a movie production house named Tarang Cineproductions in FY2015 and a radio channel called Radio Odisha in December 2017.

While OTV and Desh TV are free-to-air (FTA) channels, Tarang, Tarang Music, Prarthana and Alankar are pay channels. City Plus, a digital channel covering in-city events, has been hived off to a different entity.

Recently, ICRA had reaffirmed the long-term rating of [ICRA] A assigned to the Rs. 17.04-crore term loans and Rs. 14-crore fund-based bank limits of Odisha Television. The rating agency had stated that the outlook on the long-term rating has been revised to Positive from Stable.

ICRA said that the revision in the outlook factors in the expected increase in the scale of OTL’s operations, which is limited on an absolute basis at present, on the back of a likely increase in both advertising and subscription revenues.

Subscription income, in particular, is expected to be supported by the likely implementation of the TRAI Tariff Order. With the increase in business, operating profitability is also expected to witness some improvement, given economies of scale, ICRA noted.

The ad revenue continues to be the main driver of OTL’s revenues, contributing approximately 75% of the company’s operating income in FY2018. While advertising revenues witnessed a muted growth of 6% in FY2017 due to demonetisation and the overall slowdown in the Indian economy, a growth of around 16% was recorded in FY2018, driven by higher inventory utilisation and increased advertising rates.

According to ICRA, differentiated content, which resulted in higher viewership and in turn greater advertising demand, was the primary driver for the same.

Subscription revenues, which accounted for around 19% of the company’s operating income in FY2018, continued to be supported by increasing digitisation, recording a growth of 22% during the year.

THe promoters of OTL also own Odisha’s dominant cable distribution platform Ortel Communications. Around 12-15% of OTL’s subscribers are on Ortel’s network.

With the increase in both advertising rates and subscription revenues, together with the rise in inventory utilisation, the operating profit margin increased to 34% in FY18 from 29% in FY17. Better control on content costs also had a favourable impact on profitability.