Dish TV was the first company in India to roll out DTH services in India. It roped in Shahrukh Khan as its brand ambassador. Ever since Dish TV initiated itself, it is beset with problems. For a long time, Dish TV suffered operating losses. In the mean time, they underwent equity dilution couple of times.
In financial year March 2012, revenue from operations was Rs. 1957 crores, an increase of over 36% on Rs. 1436 crores of revenues registered last year. Operating Profits greatly improved at Rs. 566.7 crores at a margin of 29% as compared to Rs. 360.66 crores at a margin of 25%. The Net Loss suffered by the company is mainly because of Depreciation and Interest costs. Loans have greatly increased to Rs. 1214 crores from Rs. 648 crores over last year, an increase of 87% which can be a bit of concern. RoCE is coming out to be 50% for this year, which is quiet impressive in terms of business returns. This is mainly because Dish TV operates on negative working capital. The company has good positive operating cash flows despite Net Loss, mainly on account of huge Depreciations in the Profit and Loss statements.
Since, financial year ending March 2010, Dish TV has started giving positive Operating Profits and the Operating Margins have been improving by great leaps since. The Net Loss has also been reducing year by year as Dish TV is able to add on more and more subscribers while retaining older ones.
One major concern about Dish TV is that this company has a complex equity structure and also with frequent dilutions in form of ESOPs. Dish TV incurs heavy expenditure on Fixed Assets, especially on the part of Consumer Premise Equipment (CPE), which the company depreciates over 5 years and the one-time contribution towards by CPEs by customers is recognised as revenue by the company over a period of 3 years. Also, Dish TV has huge borrowings, mainly in terms of buyer's credit, which is understood, as bulk of equipments are imported by Dish TV into India. And since, the company is still to give Net Profits and to have easy liquidity at hands, it has no other route apart from availing buyer's credit.
Its a common knowledge that DTH services has a high gestation period because of enormous expenditure on creation of infrastructure and public awareness. Dish TV is struggling from the same fact but seems to be on the way to break even. Yet, its complex equity structure and ESOPs are going to be sore points for investors.
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