Reliance Media World lists at Rs 308, to breakeven in FY11

Reliance Media World listed on the exchanges today at Rs 308 per share. The company is part of Reliance Mediaworks which was formerly known as Adlabs Films. At 10:38 am, the stock was trading at Rs 140.9, down 54% from its previous value of Rs 338.95.

The radio business of Reliance MediaWorks (RML) was demerged into Reliance Media World (RMWL). As part of the demerger process, RMWL issued and allotted one fully-paid equity share of Rs 5 for every one equity share of Rs 5 held in RML.

Speaking on the same, Tarun Katial, CEO, Reliance Media World, says the company looking to break even at the operating level in FY10. "We are looking at a net breakeven in FY11."

He added that interest outflow stands at 11%.

Here is a verbatim transcript of an exclusive interview with Tarun Katial on CNBC-TV18. Also watch the accompanying video.

Q: Can you give us a picture of the revenue and bottomline so that your investors can asses and ascribe a fair value to Reliance Media? We have your fiscal year 2009 numbers. Can you give us some sense of fiscal year 2010?

A: In 2009, we ended the year with Rs 200 crore and we have ended first quarter with Rs 47 crore. As a single largest network in the country, we remain committed to enhancing our shareholder value continuously and consistently.

Q: On that Rs 200 crore topline last year, you had a loss of nearly Rs 100 crore. Will the profitability picture improve in fiscal year 2010?

A: We are looking to get an operational breakeven this year and move to a net breakeven next year. This is extremely critical for us.

Q: How is the first half of the financial year panned? We understand that even in the first quarter, you have EBITDA loss of about Rs 11 crore?

A: The advertising volumes have gone up in the first half. Lots of new sectors have opened up. Radio, as a medium, has been appreciated by the advertisers during the slowdown. Going forward, volumes and yields are looking better.

Q: What kind of scale up are you guiding to in terms of revenues for the full year? You did Rs 200 crore in the year gone by. What can that grow to in FY10?

A: Ours being the single largest radio network in a country has a big growth story coming up for itself, which is the anticipation of phase III by the government. We are looking for 250 cities and 700 frequencies opening up. This will add a huge amount of scale through this business in the coming months in year. It is one of the best things to happen to an industry, which is actually fairly underleveraged in the country.

If you look at radio spends, they are only about 3-4% of ad expense vis-à-vis 7-8% or even 10-12% in most matured markets. When you get such geographical penetration in business, the ad expense goes up on its own. We are all as a radio industry and individually being the single largest radio network in the country, we are waiting with great anticipation for that.

Q: Since you are not generating too much cash flow and you have almost RS 300 crore of debt, are you adequately capitalized? Would you need to raise any capital through this year?

A: As we go into the next phase III of radio and look at our Big Street business in a long-term perspective, yes we will look at our options.

Q: This is all debt payable to group companies. What is your interest outgo right now and who is your key debtor amongst the group companies?

A: The interest is at 11%.