Pritish Nandy is a well-known poet, journalist, editor, TV host and one of India's widely read columnists. He led The Times of India Group for almost a decade as its Publishing Director in the 80's. He was also Editor of The Illustrated Weekly of India, The Independent and Filmfare. Nandy is now a Member of the Indian Parliament.
Pritish Nandy Communications Ltd (PNC), a company promoted by him came out with a successful IPO of Rs 400 m in September last year. The first year of operations after the company went public was a tough one with the TV content industry facing several challenges.
In an interview with Equitymaster.com, Mr. Nandy spoke on various developments in PNC, reasons for variation in promised numbers and his vision for the company ahead.
EQTM: Kindly update us on the developments in PNC post IPO?
Mr. Nandy: I think we have lived up to the promises we had made to our investors at the time of IPO. Each one of the projects that we had listed is ready and that too on time. We have fulfilled each and every commitment we made in our IPO offer. The company has also progressed. I won’t say that the progress has been outstanding because there have been material changes in the environment. But considering the fact that we recorded a net profit growth of more than 92% is certainly reasonable. I would imagine that this year we would outperform even last year’s performance. That means that after the IPO two years of improved results.
The resources we raised went towards two main projects. One was more content we had promised to do. Our content motivation is very high. If you look at television content we have several shows on air, in the area. In the area of cinematic content, we are possibly India’s biggest cinematic content providers.
Secondly, what we look at content of is the theme places to drive physical brick and mortar presence on the ground, our wellness destination, “Moksh” is ready and is on track, despite Sept’11 and recession in the economy.
EQTM: As you said, though the performance of the company has been good. However, the projected numbers mentioned at the time of IPO nowhere matches the actual numbers. What in your view went wrong?
Mr. Nandy: I think the Indian economy as a whole collapsed. It was one of the reason we spend most of our time and effort on cinematic content. Two of the biggest channels, Zee and Sony went almost sick. India’s national distributor, Doordarshan went sick and is gasping for breath today. Out of the four major channel platforms, three died. The television tanked, leading to crash in ad-rates.
These all prevented us from logging substantial volume growth than what we were targeted. Considering this, the effect on our bottomline is not significant. I think, we have done the best we could do in bad times. We tightened our belts and focused on building and strengthening platforms that were least affected by recession. We discontinued some of the tele-serials. Some of the mega shows, which we have already produced, are on a hold. We are waiting for the market to improve.
EQTM: Kindly explain the rationale for the company’s diversification into big screen? What would be the business model?
Mr. Nandy: We believe that cinematographic content was less affected by recession, as here you directly deal with the customers. We decided we would go into content areas that are not necessarily driven by advertisement and sponsorship but which are driven by actual contribution from customers.
We plan to have a strong pipeline of cinematographic content. We currently have more than 15 films in our pipeline, which are at various stages of development. Regarding the cost, I feel we have very strong bargaining power. Owing to the reputation and goodwill we command in the market place we can produce films at a fraction of a cost. I don’t think there would be any major strain on the balance sheet because of these projects. We would deploy innovative ways of financing them. As a corporate group we would always get benefits that the un-organised sector is deprived of.
Initially, we plan to restrict ourselves only to our core area of content creation and not venture into film distribution, unless the proposition looks very attractive.
EQTM: How has been the response for the wellness center “Moksh”? What is the payback you expect from the project?
Mr. Nandy: Encouraging. The targeted membership is almost on track. We had given ourselves a target period of 6-8 months to breakeven. We have completed about 3-4 months of operation and we are confident that we would meet our targets. We expect Moksh to become self sufficient and viable within 6-8 months.
EQTM: Comments on other business interests i.e. event management?
Mr. Nandy: We plan to do 3-4 major events in tie-ups with Indiatimes.com, Videocon-Sansui group and other multinational companies during this year. I would say we are not exactly into event management business. For us, the event has to translate into content to be profitable. We don’t make money by holding events, but by televising events. We would only manage events where there is content exploitation potential.
We have dropped all our options in the Internet business. We would like to associate with others by using their platforms on the web.
EQTM: Where do you see PNC 2-3 years down the line? What would the business model look like then?
Mr. Nandy: We understand the business of creativity well and we know how to market it. We would continue to remain focused on creating quality content- multi tasking and multi-platform content. The means of developing and delivering content may be varied depending on the opportunities. I wish to create an identity for PNC, which is strong, respected and which will eventually help us create a profitable and significant presence in the content creation business.
EQTM: Any message for the shareholders?
Mr. Nandy: I would like them to realize that the business of media and entertainment is a unique business. It has some risks but huge potential. We are at the cut, when India is emerging as a major player in this business. There are huge cost advantages in India. The cost of making a television serial is a fraction of that in overseas markets. Also we have a huge market in India. And above all, what is important is that we have a huge talent base. If we can tap this opportunity India can become the biggest integrated media player in the world.
As the business shifts more and more towards corporates, we would benefit from the trend. As this business integrates further with the global industry, we believe that more and more players would come to India and would prefer working with serious corporates like us.
If we have produced outstanding results in a recession economy, we are confident of capturing a much bigger business in good times.
EQTM: Any explanations you would wish to give regarding auditors qualification in the latest balance sheet?
Mr. Nandy: I don’t think there was any qualification. That was a perception flaw.