Hinduja Ventures consolidation to help expand digital offerings in rural market

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Published: August 29, 2019 4:48:05 AM

Speaking to FE, Vynsley Fernandes, CEO, IMCL, said the new structure in place should be able to improve margins by 400 basis points through unlocking the cost and capex synergies.

Hinduja Ventures, rural market, equity shares of HVL, IMCL, Hinduja Housing Finance, Gulf Oil,  New Tariff OrderThe exchange ratio for the proposed restructuring exercise shall be 10 equity shares of HVL fully paid up for each 125 equity shares of IMCL fully paid up.

Reorganisation in Hinduja Group’s media and communication business will aid the group in expanding its digital offerings in the rural market, along with the ability to enhance the reach of the group’s entire product portfolio to smaller towns and cities. The board of directors of Hinduja Ventures on Tuesday approved integration of IndusInd Media and Communications (IMCL – demerged company) with Hinduja Ventures (HVL – resulting company). The exchange ratio for the proposed restructuring exercise shall be 10 equity shares of HVL fully paid up for each 125 equity shares of IMCL fully paid up.

Speaking to FE, Vynsley Fernandes, CEO, IMCL, said the new structure in place should be able to improve margins by 400 basis points through unlocking the cost and capex synergies. “We are able to consolidate and simplify our IT and billing platform across all our entities. We have a single go to market sales team for cable, broadband, content, and now we will be able to integrate all overlapping functions to bring in economies of scale,” he said.

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With this move, Hinduja Group could look at digital or direct sales model to be able to offer products and solutions from the rest of the group – Ashok Leyland, IndusInd Bank, Hinduja Housing Finance, and Gulf Oil, among others. Company officials said, Hinduja Ventures – a commercial vehicle-to-finance conglomerate – plans to leverage IMCL’s wide cable operators network spread across 2,000 pincodes in India, making them direct selling agents for the group.

The IMCL business consists of digital content distribution using multiple platforms such as satellite and fibre. It also carries broadband and internet business carried out through its subsidiary OneOTT Intertainment (OIL). IMCL also has a dedicated unit that develops content for various platforms and owns a significant content library and movie negatives. IMCL has presence in 24 cities affiliated to 2800 Local Cable Operators (LCO) with a reach of over 3 million digital subscribers. Fernandes said the company plans to take the subscribers to 10 million soon.

The integration of television and digital is gaining ground in India fast, especially after Reliance Industries has upped the ante with his host of digital offerings. RIL has acquired controlling stakes in three leading Cable MSOs – Hathway, DEN and GTPL who have direct relationships with over 30,000 LCOs. Having spent on the upgradation of MCO infrastructure, the company is looking at these LCO partners to be able to offer a large bouquet of High-Definition channels to customers.

IMCL’s net loss narrowed to Rs 353 crore in the full year ended March 31, 2019 versus Rs 409 crore last year. The company’s total revenue increased 10% to Rs 589 crore during the year, while company posted a negative Ebitda of Rs 119 crore against Rs 168 crore in FY18.

IMCL said that the financials of FY18 and FY19 are not comparable since the business model in fourth quarter of FY19 went into a complete change due to Trai’s New Tariff Order (NTO) issued for broadcasters. IMCL’s debt for FY19 stood at Rs 572 crore, down from Rs 793 crore at the end of FY18.

According to HVL, the media business has a high growth potential, going forward due to a fast maturing industry and recent regulatory reforms like New Tariff Order. In a statement, HVL said that the consolidation into a single group will achieve flexibility, scale and financial strength. It will also help unlock shareholders value and efficiency in fund raising for future growth.

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