Earnings call: Zee says cash flows yet to be audited, provides for past RPTs

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Published: October 18, 2019 6:31:26 AM

The company on Thursday also made several disclosures on related-party transactions in the past, for which it had to provide for in the July-September quarter. Zee also saw its trade receivables rise, as the debtors have been higher during the quarter due to delayed payments from Dish and Citi.

 

Earnings call, Zee, cash flow, RPT, Zee Entertainment Enterprises, industry newsDuring the quarter, the company made a provision of Rs 171 crore over delays in payments from related parties.

Zee Entertainment Enterprises on Thursday said that its statement of cash flows for the six months ended September 30, 2018, have been approved by the company’s board of directors, but have not been subjected to a review. The company’s cash from operations remained negative, but the management expects it to turn positive by second half.

In an analyst call post its July-September earnings, Rohit Gupta, chief financial officer of Zee, said, “We are undertaking liquidation of debtors, which will release cash. Cash flows should improve in Q4 and by next year we should have positive free cash flows”.

The company on Thursday also made several disclosures on related-party transactions in the past, for which it had to provide for in the July-September quarter.
Zee also saw its trade receivables rise, as the debtors have been higher during the quarter due to delayed payments from Dish and Citi.

Punit Goenka, CEO of Zee Entertainment, said during an analyst call, “We have received binding and definite payment plans from both, so receivables should come down in Q3 and should come to normal levels by the end of fourth quarter 2019.”

During the quarter, the company made a provision of Rs 171 crore over delays in payments from related parties. The company stated that in an earlier year it had given an inter corporate deposit aggregating to Rs 150 crore. On account of delays in recovery of the amount, the ICD was assigned to certain related parties, to secure payment of Rs 170.62 crore (including accrued interest up to the date of assignment). Since, there are further delays in receiving payment from these related parties, during the September 30, 2019, the aforesaid amount has been provided for and disclosed as ‘exceptional item’. Interest on the aforesaid ICD has been received till March 31, 2019. “We expect the recovery to happen, but as it is delayed, we are making the disclosure,” Goenka explained.

The company also disclosed that it was in the process of investigating the liquidation of some deposits worth Rs 200 crore by a bank against some dues of related parties. During the second quarter, the bank prematurely, unilaterally adjusted the amount of the fixed deposit, which was maturing on September 10, 2019, against the dues of certain related parties. Subsequently, these related parties have reimbursed the amounts of the company, aggregating Rs 133 crore before September 30, 2019, (recorded as other financial liabilities) and Rs 66.70 crore after the quarter end. The company is in the process of investigating, seeking legal advise on the appropriate action to be taken as well as compliance with statutory and legal requirements. “A bank had unilaterally adjusted the amount of the fixed deposit against dues of certain related parties. While there is no financial loss to the company, we will be taking appropriate action,” Goenka said.

Meanwhile, the company reported a 6.7% year-on-year increase in its consolidated net profit at Rs 412 crore for the second quarter ended September. The total income during the quarter increased by 7.6% y-o-y to Rs 2,190 crore. Its operating income rose 2.5% y-o-y to Rs 693 crore, while margins stood at 32.7% during the quarter.

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