Description
It explains about Industry Trends of Newspaper industry, PEST Analysis of newspaper Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Deccan chronicle, it's Finance performance, SWOT analysis of Deccan Chronicle and Various Strategies employed.
DECCAN CHRONICLE – COMPANY ANALYSIS
> ANALYSIS OF NEWSPAPER INDUSTRY When the first news paper was published , nobody would have imagined the role it would play in centuries to come. Newspaper brings the world to our door step. It is one of the important means of communicating news, spreading awareness, building opinion among the people.Newspaper has proved to be an effective tool in shaping the society. The newspaper cover a number of sections covering news related to National, International, State , Regional, Local ,Business and Personal Finance, Community news & Ordinary people, Sports, Arts, Crime-Courts &legal ,Disaster & Accidents, Education, Health, Home, Food, Fashion, Travel, Parenting, Relationships & Religion, Politics, Government & War, Pop Music, Science, Technology & Environment, Sports, Television & Movies, etc. targeting varied and a large number of readers. China was the first country to publish newspapers in the 16th century. A newspaper in the modern society has great social and educative value. It is a common media of giving news along with views.
> GLOBAL PERSPECTIVE POSITION OF NEWSPAPER LEVEL w.r.t DIFFERENT MEDIA AT GLOBAL
The newspaper industry is big business, both in print and in its multimedia manifestation. Globally the newspaper publishing industry produces revenue of about US$160 billion annually. And over three billion people, or 72% of literate adults worldwide read a newspaper regularly.
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Source: WAN-IFRA Globally, there are nearly twice as many newspaper readers as Internet users. AUDIENCES Globally, daily newspaper distribution reached 540 million copies in 2008, but has declined by 3.9% since. But within this, sales in Asia have risen by 15% between 2006 and 2010, and 5% in the most recent year. Latin America has also seen newspaper growth. In Europe and North America, the picture has been less encouraging, with circulations falling 20% in North America since 2006 and by 10% across Western and Eastern Europe
In developing markets, the growth reflects the staggering advances in wealth and education, and also a search for knowledge and freedom of expression, by citizens about society.. Such patterns are also reflected in the variance in the number of titles. Overall since 2006, the number of paid-daily newspapers published across the world has risen by 12.3% to 14,853.
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> INDIAN PERSPECTIVE The first major newspaper in India The Bengal Gazette was started in 1780 under the British raj by James Augustus Hickey. Since, the progress has been so much that every major newspaper from India has an internet edition and you can read an India newspaper online. According to the data released by the Registrar of Newspapers for India (RNI), the total number of registered newspapers stood at 82,237 of which 4,853 new newspapers were registered during 2010- 11. The largest number of newspapers and periodicals registered in any Indian language is in Hindi with a figure of 32,793. English had the second largest number of newspapers and periodicals. India leads the world in terms of newspaper circulation with nearly 330 million newspapers circulated daily. Across India there are hundreds of titles in regional dialects. The country's two topselling newspapers are Dainik Jagran and Dainik Bhaskar. Both are published in Hindi and continue to attract readers and revenue. .
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> PEST ANALYSIS OF NEWSPAPER INDUSTRY Political Regulatory measures have played an important part in defining the competitive scenario of the Indian Print Media Industry, which also had its impact on industry growth. Government of India in June 2002 had decided to allow 26% foreign direct investment (FDI) in news and current affairs print media. The decision, taken by the Union Cabinet, reverses the 1955 Cabinet resolution prohibiting any foreign investment in print media. Foreign investments in news agencies (eg. PTI), however, remain barred. The government has attempted to address the concerns of political parties that fear FDI in print might lead to foreigners controlling the Indian media. The pre-conditions to FDI in print media are: • At least three-fourth of the board of a print media company with FDI must be Indians. • All key editorial posts must also lie with resident Indians. • Any print media company wishing to change its share-holding pattern must get prior government approval. While general legislation exists to regulate monopolies and cartels i.e the Monopolies and Restrictive Trade Practices Act (MRTP) – this has been ineffective in curbing the formation of monopolies and cartels of private media companies. Media monopolists are generally pro-establishment and support the governments of the day to ensure that their monopoly positions are not threatened. Economic In the wake of economic slowdown, the corporate sector has become prudent and have restricted their advertising expenses which in-turn affects earnings of different media including the print media. While circulation revenues for newspaper companies are recession-resistant, their majority revenue, which comes from advertising is very sensitive to the overall trends in the economy. Any slowdown in the economy and the consequent impact on disposable income could adversely affect advertising income. Social Increased literacy is one reason for the rise in newspaper readership in India - not just in English but in regional languages also. Another reason for increased readership is the low cost of buying a newspaper. It is one of the important means of communicating news, spreading awareness, building opinion among the people.
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Technology With internet connection in almost every home, it has been gradually substituting the prints.Entry barriers like high capital cost, establishing distribution networks have been taken care by the internet and hence increased the competition for the established print publications. The technological progress and internet has changed readers’ habits and their perception of news, reduced readers’ demand to prints and resulted drop in circulation that has affected newspaper industry’s economy and drop in advertisement revenue.
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> SWOT ANALYSIS OF NEWSPAPER INDUSTRY Strengths Growing preference for local content: Readers prefer good mix of national and regional news. The regional dailies which cater to the demand of local news to the reader attract the readers to choose local paper over the national one. With number of news papers who are concentrating particular section of people as their target markets will result in better returns. Even national papers are coming out with add on supplements with their national copy in order to protect their territory. Strong Entry Barriers: Print media business has strong entry barriers due to the strong brand equity, readership loyalty and requirement of strong distribution network, capital required. The fact that the business model is based on how much advertisement revenue one news paper can generate in order to survive becomes key point and hence entry for the new players become very difficult. Weaknesses Unfavorable business model: One of the important factors Print media industry revolves around is the advertising revenues they generate. Major revenues of the company is generated through advertisements. Higher the circulation better will be the advertisement revenue. Highly competitive market: The competition levels in the print media industry is intense as all the regional players are trying to expand their business beyond territory and expanding circulation at any cost is resulting into offering various schemes to investors and reducing prices of the dailies which in turn result in lower margins. Opportunities Indian scenario: With easing government norms for FDI policy for media industry and high level of competition will lead to consolidation and reduction of inefficiencies in the industry. New avenues: All the major players are investing their surplus in new avenues of business in order to de risk their business model from print media as single avenue of business, be it Related diversification like HT media entering into radio business or Unrelated diversification like Deccan Chronicle entering into Entertainment cricket through buying IPL team Deccan Chargers. Multiple distribution platforms: Almost all leading newspapers and magazines in India have their online editions, providing free access to news and analysis. Generally the content is of similar nature to that of their print edition. But if one looks at the trend in foreign markets where the content in print edition and net copy are different. With growing popularity of internet this could be the next big thing.
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Threat Rising Newsprint Prices: The cost of production of news paper is directly correlated with that of Newsprint prices, which varies with the international prices of newsprint. The newsprint costs generally account for almost 55-70% of the total cost of the publishing business. Growing strength of other mediums of entertainment especially Television and Internet. Rising News Print prices: Indian News Print Industry is heavily dependent upon import of News print as quality of domestic news print is not of international standards. Almost 40-60% of the total cost constitutes to news print and any fluctuations in international prices will affect the growth of print companies
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> ANALYSIS OF DECCAN CHRONICLE HOLDINGS LTD (DCHL) COMPANY DESCRIPTION DCHL has its presence in Print, IPL, Retail and Software & Internet services, which is depicted below:
Deccan Chronicle Holdings Limited incorporated in 2002 is engaged in the printing and publishing of newspapers and periodicals in India. The company publishes: ? Deccan Chronicle, an english daily (largest circulated english newspaper in South India) ? Financial Chronicle, a financial daily ? Andhra Bhoomi , a regional daily. ? Asian Age, an English newspaper DCHL also operates the following divisions (which earlier were operated through wholly owned subsidiaries and since merged with the company with effect from 1-04-2010):
?
Deccan Chargers Sporting Ventures Ltd (Franchise team of IPL)
Deccan Chargers owns and operates the Hyderabad Team of the Indian Premier League created by Board of Control for Cricket in India (BCCI). Under the Franchise Agreement with BCCI, the company can operate the Cricket Team indefinitely as long as the IPL Tournament is conducted.
?
Odyssey India Limited (Retail Chain)
Odyssey aims to fulfill the aspirational needs of consumers, positioned as neighborhood leisure store offering consumer lifestyle products that includes books, music, stationery, gifts, toys, pens, eye ware etc., having over 50 stores
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spread across the States of Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, National Capital Region.
?
Sieger Solutions (Software and Internet Business)
Sieger Solutions acts as a link between the advertisers and DCHL. It also acts as an event management, outdoor advertising and digital ad sales company.
KEY EXECUTIVES /TOP MANAGEMENT
* The Managing Director of Deccan Chronicle Holdings Ltd, publishers of Deccan Chronicle, Mr N. Krishnan, resigned on July 25,2012.
LOCATIONS DCHL (Head Quarters) is based in Secunderabad, Andhra Pradesh, India Plant Locations : ? ? ? ? ? ? ? ? ? ? ? Industrial Estate, Vijayawada, A.P. Dowleswaram, Rajahmundry, A.P. MVP Colony, Visakhapatnam, A.P. Tapovanam Colony, Anantapur, A.P. Burranpur Village, Nellore, A.P. Vavilapally Colony, Karimnagar, A.P. Kompally, Hyderabad, A.P. Kondapur, Hyderabad, A.P. Industrial Estate, Guindy, Chennai, TN Bommasandra, Industrial Area, Bengaluru, Karnataka Kurudampalayam Vill., Coimbatore, TN
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SHARE-HOLDING PATTERN The table below highlights the change in share-holding pattern from FY 2011-12.
Source: DCHL website Note: In terms of Public Announcement dated 6 May,2011 for the buy back of equity shares, the company had bought back and extinguished 3,45,00,000 equity shares being the maximum equity shares authorised for buy back and accordingly the buy back was completed on 29 August 2011.
The table below presents the present Promoter's holding, FII's holding, and share holding by general public etc.of Deccan Chronicle Holdings Ltd. Shareholding pattern - Deccan Chronicle Holdings Ltd. Holder's Name No of Shares Promoters 154282250 General Public 18534745 Financial Institutions 14084332 Other Companies 11946885 Foreign Institutions 5475203 Others 2791690 Nationlised Banks / MutualFunds 1225000 Foreign NRI 632114 Source: www.moneycontrol.com
% Share Holding 73.83% 8.87% 6.74% 5.72% 2.62% 1.34% 0.59% 0.30%
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DCHL employed total number. of employees as under: a. Distribution of employees as per company is as below: Deccan Deccan Chronicle Chronicle Secunderabad Holdings Ltd Pvt.Ltd 560 82 Andhra Bhoomi Weekly Ltd 76 Deccan Chronicle Marketeers 133
Andhra Bhoomi 90
Total 941
b. Distribution of employees as per function is as below: Production Editorial Administration Marketing Contract & Temporary Total The above distribution pertains to FY 2005-06. Source: bseindia.com 329 200 205 42 165 941
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FINANCIAL PERFORMANCE OF THE COMPANY Mar'12 INCOME: Net Sales Turnover 869.40 Other Income 45.25 Total Income 914.65 EXPENSES Stock Adjustments 0.00 Raw Material Consumed 463.96 Power and Fuel 0.00 Employee Expenses 99.86 Administration and Selling Expenses 0.00 Research and Development 0.00 Expenses Expenses Capitalised 0.00 Other Expenses 138.71 Provisions Made 0.00 TOTAL EXPENSES 702.53 Operating Profit 166.87 212.12 EBITDA Depreciation 54.86 157.26 EBIT Interest 70.95 86.31 EBT Taxes 25.63 60.68 Profit and Loss for the Year Extraordinary Items 0.00 Prior Year Adjustment 0.00 Other Adjustments 0.00 Reported PAT 60.68 KEY ITEMS Reserves Written Back 0.00 Equity capital 41.79 Reserves and Surplus 0.00 Equity Dividend Rate 0.00 Agg. Non-Promoter Shares(lacks) 546.90 Agg. Non-Promoter Holding (%) 26.17 Government Share 0.00 Capital Adequacy Ratio 0.00 EPS (Rs.) 2.90 Source: Economic Times In FY 2012 there is a reduction of 11.3% in the net income w.r.t FY 2011. Mar'11 976.20 54.72 1,030.92 0.00 425.76 0.00 96.87 0.00 0.00 0.00 160.25 0.00 682.88 293.32 348.04 51.37 296.67 58.39 238.28 75.83 162.45 0.00 0.00 0.00 162.45 0.00 48.69 0.00 0.00 891.90 36.63 0.00 0.00 6.67 Mar'10 892.50 29.45 921.95 0.00 317.58 0.00 65.47 0.00 0.00 0.00 57.87 0.00 440.92 451.58 481.03 42.25 438.78 45.13 393.65 132.73 260.92 0.00 0.00 0.00 260.92 0.00 48.44 1,209.57 0.00 879.41 36.31 0.00 0.00 10.77 Mar'09 814.93 42.68 857.61 0.00 442.74 0.00 49.39 0.00 0.00 0.00 54.56 0.00 546.69 268.24 310.92 32.06 278.86 70.93 207.93 67.86 140.07 0.00 0.00 0.00 140.07 0.00 48.98 1,100.89 0.00 905.95 37.00 0.00 0.00 5.72 Mar'08 782.37 37.88 820.25 0.00 234.29 0.00 26.14 0.00 0.00 0.00 35.99 0.00 296.42 485.95 523.83 27.99 495.84 76.79 419.05 147.11 271.94 0.00 0.00 0.00 271.94 0.00 48.98 1,018.12 150.00 958.00 39.12 0.00 0.00 11.10
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This fiscal was challenging for DCHL on account of high inflation, high interest rates and a looming threat of slowdown in the GDP growth coupled with not so encouraging global economic environment as well. This resulted in reduced net income over the previous financial year. Political uncertainties in the southern states that DCHL operates in, added to the reduction in income. There is a reduction in operating profit on account of increase in various input costs such as raw material, employee expenses, interest, etc.
SWOT ANALYSIS OF DCHL 1.Strengths After the launch in Bengaluru, Deccan Chronicle has emerged as undisputed selling English daily in south. Traditionally Sothern states are considered to be safe heavens for the advertisers due to their large English readership and the high standard of living. Growing preference for local content : Readers prefer good mix of national and regional news. The regional dailies caters to the demand of local news. This provision is fulfilled by DCHL’s english as well as vernacular editions and hence attracts the readers to choose local paper over the national one. Andhra Pradesh (AP) is DCHL’s home market and remains the backbone of its operations generating strong revenues and cash flows. Deccan Chronicle is a dominant market leader in AP accounting for a significant % of the readership. It publishes seven editions in the region (Hyderabad, Vijaywada, Rajahmundhry, Vishakapatnam, Anantpur, Karimnagar and Nellore). Limited Geographical Reach w.r.t operating margin This turns out to be a strength while considering operating margins .DCHL’s limited proximity gives company better operational margins w.r.t other national level dailies as it is able to concentrate on the southern market.
2.Weakness > Limited Geographical Reach w.r.t penetration and expansion A major concern which hampers the valuations of the company is the limited geographical reach restricted to southern part of the country. The company is trying to expand in other regions of the country. 3. Opportunity The government has eased norms for FDI policy for Media industry. Considering the 1200Cr debt of DCHL, influx of foreign capital will provide much needed relief to the
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cash-starved company. FDI will also lead to high levels of competition will lead to consolidation and reduction of inefficiencies. 4.Threat Rising Newsprint Prices: The cost of production of news paper is directly correlated with that of Newsprint prices, which varies with the international prices of newsprint. The newsprint costs generally account for almost 55-70% of the total cost of the publishing business. Highly competitive market: The competition levels in the print media industry is intense as all the regional players are trying to expand their business beyond territory and expanding circulation at any cost is resulting into offering various schemes to investors and reducing prices of the dailies which in turn result in lower margins. Growing strength of other mediums of entertainment especially television and internet is posing a huge challenge to the newspapers.
> VARIOUS STRATEGIES CONDUCTING BUSINESS
EMPLOYED
BY
THE
COMPANY
IN
Seiger Solutions In order to venture in area of buying and selling advertisement, with an investment of Rs 25.11 crore DCHL promoted a 100% subsidiary - Sieger Solutions. Sieger Solutions acted as a link between the advertisers and DCHL. It bought the ad space from DCHL and sold it, in turn, to advertisers. It also acted as an event management, outdoor advertising and digital ad sales company. In FY 2011 DCHL amalgamated this subsidiary into itself w.e.f April1,2010. IPL Surprise-Deccan Chargers In 2008 DCHL created a wholly owned subsidy Deccan Chargers Sporting Ventures Ltd to purchase the team Deccan Chargers for $107 million (roughly Rs 590 crore) jointly with Group M, the media arm of the world's largest advertising firm WPP, which owns a 20% stake. This is one of the teams which achieved breakeven point in the first IPL season itself. Deccan Chargers won the IPL cup in 2009 led by former Australian wicket keeper Adam Gilchrist. In FY 2011 DCHL amalgamated this subsidiary into itself w.e.f April1,2010. Odyssey To cash on the growing digital market, DCHL’s Odyssey launched music portal. ‘Odyssey 360’. The music portal is an extension of Odyssey’s retail chain store which houses plethora of music varying from classical music to international hits. In FY 2011 DCHL amalgamated this subsidiary into itself w.e.f April1,2010.
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Other Ventures > The company has tied up with International Herald Tribune which is published by the New York Times Company to contribute a daily special Four-page global news section in Financial Chronicle. > The company’s Chennai Chronicle entered into an alliance with Sulekha.com to start Blog print that provides a platform to bloggers to print their article in the paper. > Deccan Chronicle Holdings had hiked its advertisement tariff across all its editions by 20% effective from October 1, 2009. The move came on the back of huge response to the company’s daily circulations in South India. During Jan-June 2009, it had a daily circulation of 2,44,902 copies in Bangalore while the total circulation on daily basis in South India was 13,49,959, as per an audit conducted by Audit Bureau of Circulation (ABC).
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> RECENT NEWS AND DEVELOPMENTS 1. Resignation of the MD In a statement to the stock exchanges on July 25, 2012, DCHL informed that Mr Krishnan’s resignation had resigned and he would be relieved from responsibilities from July 29. Personal reasons were sighted as cause of resignation. 2. Deccan Chargers put on the block Deccan Chronicle, defaulted payments to its lenders LIC,IFCI , United India Insurance and non-banking financial company Royal Sundaram, among others. The company owns close to R1,200 crore to its lenders. In July 2012 DCHL has put a reserve price valuation of Rs1,500 crore, nearly three times its original acquisition cost, to sell its IPL team . The Reddys who own 80% , will use the money to repay lenders. DCHL had also stated that multiple parties evinced interest in acquiring stake in Deccan Chargers. The Company has appointed Religare Capital Markets Ltd. to run a process and advise us of suitability of the offer(s). The above step is only exploratory and no conclusive / firm decision has been taken on the issue. The IPL team had a very bad season this year.
3. Reduction in Credit Rating by CARE DCHL has defaulted on short term Non Convertible Debentures (NCD). The company raised close to Rs 500 crore from institutional investors - including insurance funds, term lenders and mutual funds - a year ago. It managed to retire debt of about Rs 300 crore, but fell short on repayment to some institutional investor The ratings have been placed on ‘credit watch’ as CARE is in the process of seeking additional information/clarification from the company for default. CARE will take a view on the ratings once clarity is available on the same. Sources: ? ? ? ? ? WAN-IFRA DCHL website moneycontrol.com bseindia.com Economic Times
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doc_535168780.doc
It explains about Industry Trends of Newspaper industry, PEST Analysis of newspaper Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Deccan chronicle, it's Finance performance, SWOT analysis of Deccan Chronicle and Various Strategies employed.
DECCAN CHRONICLE – COMPANY ANALYSIS
> ANALYSIS OF NEWSPAPER INDUSTRY When the first news paper was published , nobody would have imagined the role it would play in centuries to come. Newspaper brings the world to our door step. It is one of the important means of communicating news, spreading awareness, building opinion among the people.Newspaper has proved to be an effective tool in shaping the society. The newspaper cover a number of sections covering news related to National, International, State , Regional, Local ,Business and Personal Finance, Community news & Ordinary people, Sports, Arts, Crime-Courts &legal ,Disaster & Accidents, Education, Health, Home, Food, Fashion, Travel, Parenting, Relationships & Religion, Politics, Government & War, Pop Music, Science, Technology & Environment, Sports, Television & Movies, etc. targeting varied and a large number of readers. China was the first country to publish newspapers in the 16th century. A newspaper in the modern society has great social and educative value. It is a common media of giving news along with views.
> GLOBAL PERSPECTIVE POSITION OF NEWSPAPER LEVEL w.r.t DIFFERENT MEDIA AT GLOBAL
The newspaper industry is big business, both in print and in its multimedia manifestation. Globally the newspaper publishing industry produces revenue of about US$160 billion annually. And over three billion people, or 72% of literate adults worldwide read a newspaper regularly.
Page No. 1/16
Source: WAN-IFRA Globally, there are nearly twice as many newspaper readers as Internet users. AUDIENCES Globally, daily newspaper distribution reached 540 million copies in 2008, but has declined by 3.9% since. But within this, sales in Asia have risen by 15% between 2006 and 2010, and 5% in the most recent year. Latin America has also seen newspaper growth. In Europe and North America, the picture has been less encouraging, with circulations falling 20% in North America since 2006 and by 10% across Western and Eastern Europe
In developing markets, the growth reflects the staggering advances in wealth and education, and also a search for knowledge and freedom of expression, by citizens about society.. Such patterns are also reflected in the variance in the number of titles. Overall since 2006, the number of paid-daily newspapers published across the world has risen by 12.3% to 14,853.
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> INDIAN PERSPECTIVE The first major newspaper in India The Bengal Gazette was started in 1780 under the British raj by James Augustus Hickey. Since, the progress has been so much that every major newspaper from India has an internet edition and you can read an India newspaper online. According to the data released by the Registrar of Newspapers for India (RNI), the total number of registered newspapers stood at 82,237 of which 4,853 new newspapers were registered during 2010- 11. The largest number of newspapers and periodicals registered in any Indian language is in Hindi with a figure of 32,793. English had the second largest number of newspapers and periodicals. India leads the world in terms of newspaper circulation with nearly 330 million newspapers circulated daily. Across India there are hundreds of titles in regional dialects. The country's two topselling newspapers are Dainik Jagran and Dainik Bhaskar. Both are published in Hindi and continue to attract readers and revenue. .
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> PEST ANALYSIS OF NEWSPAPER INDUSTRY Political Regulatory measures have played an important part in defining the competitive scenario of the Indian Print Media Industry, which also had its impact on industry growth. Government of India in June 2002 had decided to allow 26% foreign direct investment (FDI) in news and current affairs print media. The decision, taken by the Union Cabinet, reverses the 1955 Cabinet resolution prohibiting any foreign investment in print media. Foreign investments in news agencies (eg. PTI), however, remain barred. The government has attempted to address the concerns of political parties that fear FDI in print might lead to foreigners controlling the Indian media. The pre-conditions to FDI in print media are: • At least three-fourth of the board of a print media company with FDI must be Indians. • All key editorial posts must also lie with resident Indians. • Any print media company wishing to change its share-holding pattern must get prior government approval. While general legislation exists to regulate monopolies and cartels i.e the Monopolies and Restrictive Trade Practices Act (MRTP) – this has been ineffective in curbing the formation of monopolies and cartels of private media companies. Media monopolists are generally pro-establishment and support the governments of the day to ensure that their monopoly positions are not threatened. Economic In the wake of economic slowdown, the corporate sector has become prudent and have restricted their advertising expenses which in-turn affects earnings of different media including the print media. While circulation revenues for newspaper companies are recession-resistant, their majority revenue, which comes from advertising is very sensitive to the overall trends in the economy. Any slowdown in the economy and the consequent impact on disposable income could adversely affect advertising income. Social Increased literacy is one reason for the rise in newspaper readership in India - not just in English but in regional languages also. Another reason for increased readership is the low cost of buying a newspaper. It is one of the important means of communicating news, spreading awareness, building opinion among the people.
Page No. 4/16
Technology With internet connection in almost every home, it has been gradually substituting the prints.Entry barriers like high capital cost, establishing distribution networks have been taken care by the internet and hence increased the competition for the established print publications. The technological progress and internet has changed readers’ habits and their perception of news, reduced readers’ demand to prints and resulted drop in circulation that has affected newspaper industry’s economy and drop in advertisement revenue.
Page No. 5/16
> SWOT ANALYSIS OF NEWSPAPER INDUSTRY Strengths Growing preference for local content: Readers prefer good mix of national and regional news. The regional dailies which cater to the demand of local news to the reader attract the readers to choose local paper over the national one. With number of news papers who are concentrating particular section of people as their target markets will result in better returns. Even national papers are coming out with add on supplements with their national copy in order to protect their territory. Strong Entry Barriers: Print media business has strong entry barriers due to the strong brand equity, readership loyalty and requirement of strong distribution network, capital required. The fact that the business model is based on how much advertisement revenue one news paper can generate in order to survive becomes key point and hence entry for the new players become very difficult. Weaknesses Unfavorable business model: One of the important factors Print media industry revolves around is the advertising revenues they generate. Major revenues of the company is generated through advertisements. Higher the circulation better will be the advertisement revenue. Highly competitive market: The competition levels in the print media industry is intense as all the regional players are trying to expand their business beyond territory and expanding circulation at any cost is resulting into offering various schemes to investors and reducing prices of the dailies which in turn result in lower margins. Opportunities Indian scenario: With easing government norms for FDI policy for media industry and high level of competition will lead to consolidation and reduction of inefficiencies in the industry. New avenues: All the major players are investing their surplus in new avenues of business in order to de risk their business model from print media as single avenue of business, be it Related diversification like HT media entering into radio business or Unrelated diversification like Deccan Chronicle entering into Entertainment cricket through buying IPL team Deccan Chargers. Multiple distribution platforms: Almost all leading newspapers and magazines in India have their online editions, providing free access to news and analysis. Generally the content is of similar nature to that of their print edition. But if one looks at the trend in foreign markets where the content in print edition and net copy are different. With growing popularity of internet this could be the next big thing.
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Threat Rising Newsprint Prices: The cost of production of news paper is directly correlated with that of Newsprint prices, which varies with the international prices of newsprint. The newsprint costs generally account for almost 55-70% of the total cost of the publishing business. Growing strength of other mediums of entertainment especially Television and Internet. Rising News Print prices: Indian News Print Industry is heavily dependent upon import of News print as quality of domestic news print is not of international standards. Almost 40-60% of the total cost constitutes to news print and any fluctuations in international prices will affect the growth of print companies
Page No. 7/16
> ANALYSIS OF DECCAN CHRONICLE HOLDINGS LTD (DCHL) COMPANY DESCRIPTION DCHL has its presence in Print, IPL, Retail and Software & Internet services, which is depicted below:
Deccan Chronicle Holdings Limited incorporated in 2002 is engaged in the printing and publishing of newspapers and periodicals in India. The company publishes: ? Deccan Chronicle, an english daily (largest circulated english newspaper in South India) ? Financial Chronicle, a financial daily ? Andhra Bhoomi , a regional daily. ? Asian Age, an English newspaper DCHL also operates the following divisions (which earlier were operated through wholly owned subsidiaries and since merged with the company with effect from 1-04-2010):
?
Deccan Chargers Sporting Ventures Ltd (Franchise team of IPL)
Deccan Chargers owns and operates the Hyderabad Team of the Indian Premier League created by Board of Control for Cricket in India (BCCI). Under the Franchise Agreement with BCCI, the company can operate the Cricket Team indefinitely as long as the IPL Tournament is conducted.
?
Odyssey India Limited (Retail Chain)
Odyssey aims to fulfill the aspirational needs of consumers, positioned as neighborhood leisure store offering consumer lifestyle products that includes books, music, stationery, gifts, toys, pens, eye ware etc., having over 50 stores
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spread across the States of Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, National Capital Region.
?
Sieger Solutions (Software and Internet Business)
Sieger Solutions acts as a link between the advertisers and DCHL. It also acts as an event management, outdoor advertising and digital ad sales company.
KEY EXECUTIVES /TOP MANAGEMENT
* The Managing Director of Deccan Chronicle Holdings Ltd, publishers of Deccan Chronicle, Mr N. Krishnan, resigned on July 25,2012.
LOCATIONS DCHL (Head Quarters) is based in Secunderabad, Andhra Pradesh, India Plant Locations : ? ? ? ? ? ? ? ? ? ? ? Industrial Estate, Vijayawada, A.P. Dowleswaram, Rajahmundry, A.P. MVP Colony, Visakhapatnam, A.P. Tapovanam Colony, Anantapur, A.P. Burranpur Village, Nellore, A.P. Vavilapally Colony, Karimnagar, A.P. Kompally, Hyderabad, A.P. Kondapur, Hyderabad, A.P. Industrial Estate, Guindy, Chennai, TN Bommasandra, Industrial Area, Bengaluru, Karnataka Kurudampalayam Vill., Coimbatore, TN
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SHARE-HOLDING PATTERN The table below highlights the change in share-holding pattern from FY 2011-12.
Source: DCHL website Note: In terms of Public Announcement dated 6 May,2011 for the buy back of equity shares, the company had bought back and extinguished 3,45,00,000 equity shares being the maximum equity shares authorised for buy back and accordingly the buy back was completed on 29 August 2011.
The table below presents the present Promoter's holding, FII's holding, and share holding by general public etc.of Deccan Chronicle Holdings Ltd. Shareholding pattern - Deccan Chronicle Holdings Ltd. Holder's Name No of Shares Promoters 154282250 General Public 18534745 Financial Institutions 14084332 Other Companies 11946885 Foreign Institutions 5475203 Others 2791690 Nationlised Banks / MutualFunds 1225000 Foreign NRI 632114 Source: www.moneycontrol.com
% Share Holding 73.83% 8.87% 6.74% 5.72% 2.62% 1.34% 0.59% 0.30%
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DCHL employed total number. of employees as under: a. Distribution of employees as per company is as below: Deccan Deccan Chronicle Chronicle Secunderabad Holdings Ltd Pvt.Ltd 560 82 Andhra Bhoomi Weekly Ltd 76 Deccan Chronicle Marketeers 133
Andhra Bhoomi 90
Total 941
b. Distribution of employees as per function is as below: Production Editorial Administration Marketing Contract & Temporary Total The above distribution pertains to FY 2005-06. Source: bseindia.com 329 200 205 42 165 941
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FINANCIAL PERFORMANCE OF THE COMPANY Mar'12 INCOME: Net Sales Turnover 869.40 Other Income 45.25 Total Income 914.65 EXPENSES Stock Adjustments 0.00 Raw Material Consumed 463.96 Power and Fuel 0.00 Employee Expenses 99.86 Administration and Selling Expenses 0.00 Research and Development 0.00 Expenses Expenses Capitalised 0.00 Other Expenses 138.71 Provisions Made 0.00 TOTAL EXPENSES 702.53 Operating Profit 166.87 212.12 EBITDA Depreciation 54.86 157.26 EBIT Interest 70.95 86.31 EBT Taxes 25.63 60.68 Profit and Loss for the Year Extraordinary Items 0.00 Prior Year Adjustment 0.00 Other Adjustments 0.00 Reported PAT 60.68 KEY ITEMS Reserves Written Back 0.00 Equity capital 41.79 Reserves and Surplus 0.00 Equity Dividend Rate 0.00 Agg. Non-Promoter Shares(lacks) 546.90 Agg. Non-Promoter Holding (%) 26.17 Government Share 0.00 Capital Adequacy Ratio 0.00 EPS (Rs.) 2.90 Source: Economic Times In FY 2012 there is a reduction of 11.3% in the net income w.r.t FY 2011. Mar'11 976.20 54.72 1,030.92 0.00 425.76 0.00 96.87 0.00 0.00 0.00 160.25 0.00 682.88 293.32 348.04 51.37 296.67 58.39 238.28 75.83 162.45 0.00 0.00 0.00 162.45 0.00 48.69 0.00 0.00 891.90 36.63 0.00 0.00 6.67 Mar'10 892.50 29.45 921.95 0.00 317.58 0.00 65.47 0.00 0.00 0.00 57.87 0.00 440.92 451.58 481.03 42.25 438.78 45.13 393.65 132.73 260.92 0.00 0.00 0.00 260.92 0.00 48.44 1,209.57 0.00 879.41 36.31 0.00 0.00 10.77 Mar'09 814.93 42.68 857.61 0.00 442.74 0.00 49.39 0.00 0.00 0.00 54.56 0.00 546.69 268.24 310.92 32.06 278.86 70.93 207.93 67.86 140.07 0.00 0.00 0.00 140.07 0.00 48.98 1,100.89 0.00 905.95 37.00 0.00 0.00 5.72 Mar'08 782.37 37.88 820.25 0.00 234.29 0.00 26.14 0.00 0.00 0.00 35.99 0.00 296.42 485.95 523.83 27.99 495.84 76.79 419.05 147.11 271.94 0.00 0.00 0.00 271.94 0.00 48.98 1,018.12 150.00 958.00 39.12 0.00 0.00 11.10
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This fiscal was challenging for DCHL on account of high inflation, high interest rates and a looming threat of slowdown in the GDP growth coupled with not so encouraging global economic environment as well. This resulted in reduced net income over the previous financial year. Political uncertainties in the southern states that DCHL operates in, added to the reduction in income. There is a reduction in operating profit on account of increase in various input costs such as raw material, employee expenses, interest, etc.
SWOT ANALYSIS OF DCHL 1.Strengths After the launch in Bengaluru, Deccan Chronicle has emerged as undisputed selling English daily in south. Traditionally Sothern states are considered to be safe heavens for the advertisers due to their large English readership and the high standard of living. Growing preference for local content : Readers prefer good mix of national and regional news. The regional dailies caters to the demand of local news. This provision is fulfilled by DCHL’s english as well as vernacular editions and hence attracts the readers to choose local paper over the national one. Andhra Pradesh (AP) is DCHL’s home market and remains the backbone of its operations generating strong revenues and cash flows. Deccan Chronicle is a dominant market leader in AP accounting for a significant % of the readership. It publishes seven editions in the region (Hyderabad, Vijaywada, Rajahmundhry, Vishakapatnam, Anantpur, Karimnagar and Nellore). Limited Geographical Reach w.r.t operating margin This turns out to be a strength while considering operating margins .DCHL’s limited proximity gives company better operational margins w.r.t other national level dailies as it is able to concentrate on the southern market.
2.Weakness > Limited Geographical Reach w.r.t penetration and expansion A major concern which hampers the valuations of the company is the limited geographical reach restricted to southern part of the country. The company is trying to expand in other regions of the country. 3. Opportunity The government has eased norms for FDI policy for Media industry. Considering the 1200Cr debt of DCHL, influx of foreign capital will provide much needed relief to the
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cash-starved company. FDI will also lead to high levels of competition will lead to consolidation and reduction of inefficiencies. 4.Threat Rising Newsprint Prices: The cost of production of news paper is directly correlated with that of Newsprint prices, which varies with the international prices of newsprint. The newsprint costs generally account for almost 55-70% of the total cost of the publishing business. Highly competitive market: The competition levels in the print media industry is intense as all the regional players are trying to expand their business beyond territory and expanding circulation at any cost is resulting into offering various schemes to investors and reducing prices of the dailies which in turn result in lower margins. Growing strength of other mediums of entertainment especially television and internet is posing a huge challenge to the newspapers.
> VARIOUS STRATEGIES CONDUCTING BUSINESS
EMPLOYED
BY
THE
COMPANY
IN
Seiger Solutions In order to venture in area of buying and selling advertisement, with an investment of Rs 25.11 crore DCHL promoted a 100% subsidiary - Sieger Solutions. Sieger Solutions acted as a link between the advertisers and DCHL. It bought the ad space from DCHL and sold it, in turn, to advertisers. It also acted as an event management, outdoor advertising and digital ad sales company. In FY 2011 DCHL amalgamated this subsidiary into itself w.e.f April1,2010. IPL Surprise-Deccan Chargers In 2008 DCHL created a wholly owned subsidy Deccan Chargers Sporting Ventures Ltd to purchase the team Deccan Chargers for $107 million (roughly Rs 590 crore) jointly with Group M, the media arm of the world's largest advertising firm WPP, which owns a 20% stake. This is one of the teams which achieved breakeven point in the first IPL season itself. Deccan Chargers won the IPL cup in 2009 led by former Australian wicket keeper Adam Gilchrist. In FY 2011 DCHL amalgamated this subsidiary into itself w.e.f April1,2010. Odyssey To cash on the growing digital market, DCHL’s Odyssey launched music portal. ‘Odyssey 360’. The music portal is an extension of Odyssey’s retail chain store which houses plethora of music varying from classical music to international hits. In FY 2011 DCHL amalgamated this subsidiary into itself w.e.f April1,2010.
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Other Ventures > The company has tied up with International Herald Tribune which is published by the New York Times Company to contribute a daily special Four-page global news section in Financial Chronicle. > The company’s Chennai Chronicle entered into an alliance with Sulekha.com to start Blog print that provides a platform to bloggers to print their article in the paper. > Deccan Chronicle Holdings had hiked its advertisement tariff across all its editions by 20% effective from October 1, 2009. The move came on the back of huge response to the company’s daily circulations in South India. During Jan-June 2009, it had a daily circulation of 2,44,902 copies in Bangalore while the total circulation on daily basis in South India was 13,49,959, as per an audit conducted by Audit Bureau of Circulation (ABC).
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> RECENT NEWS AND DEVELOPMENTS 1. Resignation of the MD In a statement to the stock exchanges on July 25, 2012, DCHL informed that Mr Krishnan’s resignation had resigned and he would be relieved from responsibilities from July 29. Personal reasons were sighted as cause of resignation. 2. Deccan Chargers put on the block Deccan Chronicle, defaulted payments to its lenders LIC,IFCI , United India Insurance and non-banking financial company Royal Sundaram, among others. The company owns close to R1,200 crore to its lenders. In July 2012 DCHL has put a reserve price valuation of Rs1,500 crore, nearly three times its original acquisition cost, to sell its IPL team . The Reddys who own 80% , will use the money to repay lenders. DCHL had also stated that multiple parties evinced interest in acquiring stake in Deccan Chargers. The Company has appointed Religare Capital Markets Ltd. to run a process and advise us of suitability of the offer(s). The above step is only exploratory and no conclusive / firm decision has been taken on the issue. The IPL team had a very bad season this year.
3. Reduction in Credit Rating by CARE DCHL has defaulted on short term Non Convertible Debentures (NCD). The company raised close to Rs 500 crore from institutional investors - including insurance funds, term lenders and mutual funds - a year ago. It managed to retire debt of about Rs 300 crore, but fell short on repayment to some institutional investor The ratings have been placed on ‘credit watch’ as CARE is in the process of seeking additional information/clarification from the company for default. CARE will take a view on the ratings once clarity is available on the same. Sources: ? ? ? ? ? WAN-IFRA DCHL website moneycontrol.com bseindia.com Economic Times
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