RBNL narrows FY19 net loss to Rs 108.63 cr

Reliance Broadcast Network Ltd (RBNL) has narrowed its net loss for fiscal 2018-19 to Rs 108.63 crore from Rs 132.43 crore in the previous fiscal. In FY17, the net loss stood at Rs 210.22 crore.

The company is in the business of radio broadcasting (BIG FM). It had sold the TV broadcast business to ZEEL in November 2016 for a price consideration of Rs 298.4 crore.

RBNL incurred a loss at both the PBT as well as PAT levels in FY19. However, the net loss reduced from Rs. 132.43 crore in FY18 to Rs. 108.63 crore in FY19 mostly on account of the extraordinary expense of Rs. 22.45 crore incurred in FY18 against extraordinary income of Rs. 1.94 crore in FY19.

Further, the company has been incurring cash losses for the last few years with a cash loss of Rs. 74.09 crore in FY19 as against cash loss of Rs. 89.36 crore in FY18. In Q1FY20 RBNL incurred a net loss of Rs. 26.45 crore over the total operating revenue of Rs. 64 crore. For radio industry H1 is generally a lean period and H2 is peak period.

The company reported a total operating income of Rs. 313.91 crore in FY19 as compared to Rs. 318.27 crore in FY18. The PBILDT level reduced by 7.64% in FY19 on account of lower operating income and an increase in the expenditure. RBNL’s interest cost increased to Rs. 164.65 crore in FY19 mostly on account of increased borrowings.

RBNL reported continuous losses over the past few years have eroded the net worth of the company. RBNL reported a negative net worth over the past few years resulting in a negative net worth of Rs. 1116.27 crore as on 31st March 2019.

CARE Ratings has revised the rating assigned to the Non-Convertible Debenture issue (NCD)-4 factors in the non-payment of the principal of the NCD (ISIN INE445K07155), maturing on 8th October. The ratings assigned to the bank facilities, NCD- 2 and NCD-3 continue to be tempered by the weak financial performance of RBNL apart from its weak capital structure and debt coverage indicators and stretched liquidity position.

The ratings also factor in the long track record of operations of the company, proposed acquisition of RBNL by Music Broadcast Ltd. (MBL) and positive outlook for the radio industry. Improvement in the performance of the company with a reduction in losses and acquisition by MBL will be the key rating sensitivities.

The promoters of RBNL are in the process of divesting its entire stake to Jagran Prakashan Ltd. owned Music Broadcast Ltd. for a total consideration of Rs. 1050 crore. As per the deal, MBL will acquire 40 stations out of 58 stations of RBNL. The remaining 18 stations have an overlap with the MBL’s stations and hence are not included in the deal.

RBNL will sell the remaining 18 stations to other buyers at an estimated value of Rs. 150 crore. The deal is yet to be finalised. MBL will initially acquire a 24% equity stake of RBNL through preferential allotment for a total consideration of Rs.202 crore.

As per RBNL’s management, the entire transaction is expected to close in April 2020. RBNL, incorporated on 27th December 2005, is a part of the Anil Ambani-led Reliance Group.