Balaji Telefilms cuts costs; turns loss to profit

Media and entertainment company, Balaji Telefilms, turned the corner in the December 2010 quarter, compared to the September quarter or sequential basis. It earned a net profit of Rs 1.2 crore, compared to a loss of Rs 6.4 crore.
This is despite sales rising by a relatively low 3%.
Compared to the December 2009 quarter, its sales growth is flat, but net profit has fallen by 33%.

Balaji is cutting costs and in recent times has decided to exit non-core businesses. It has decided to spin off three businesses in the ICT domain (information and communications technology), and concentrate on its core businesses of producing TV serials and movies.

In a statement, the company said it lowered its operating losses by lowering costs. Its loss came down to Rs 42 lakh, compared to Rs 5 crore in the preceding quarter. Cost of production for its shows reduced by 8% sequentially on new commissioned shows, telecast on Star Plus, Star One and Imagine channels. General and administrative expenses have also reduced by 8%, sequentially. It attributed these savings to stabilisation of these programmes.

About 84% of its revenues are contributed by commissioned programmes, with the rest from sponsored programmes. Revenues rose by 1% and by 4% sequentially and overall by 1.4%. But total revenues have risen by twice this number, which could mean that the balance growth is attributable to commissioned programmes in the regional segment and event business.

Lower depreciation and higher other income also played an important role in its turnaround.

Some of the movie releases of the company during the year are ‘Once upon a time in Mumbai’ and ‘Shor’. Balaji Telefilms is also venturing into regional cinema.

The share price of the company currently closed at Rs 36 on January 27, down by 3% over its previous close.

Read the Balaji Telefilms management discussion and analysis here and read the financial table here.

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