Hindustan Media Ventures Ltd, the publisher of popular Hindi newspaper Hindustan, revealed a financial performance that suggest that the company is bouncing back faster than expectations.
In what could come as a surprise to many analysts, the company’s net profit for the Oct-Dec 2020 period was in fact higher than its net profit for the same three months of 2019, despite the disruption caused by the COVID-19 pandemic this year.
HMVL reported net profit of Rs 34.28 cr for the latest three months, higher than the Rs 32.09 cr posted in the same period last year.
This was enabled by a strong bounce-back in revenues, which, however, continued to remain below yesteryear levels.
A sharp fall in costs — especially that of newsprint — boosted the company’s margins, which were also lifted by higher non-operating revenues.
HMVL’s operating revenue came in at Rs 162.59 cr during Oct-Dec 2020, lower by 22%, or Rs 46 cr, compared with the same period of last year.
However, this shortfall of Rs 46 cr was more than compensated by a decline of Rs 35.3 cr in the company’s operational expenses, a saving of Rs 9.4 cr in tax expenses and an increase of around Rs 3.7 cr in the company’s income from non-operating activities such as investments.
As a result, HMVL’s net profit rose by around Rs 2.2 cr during final quarter of the calendar year.
Coming to cost cuts, out of the total savings of Rs 35.3 cr in the company’s non-tax expenses, Rs 23 cr was contributed by a decline in newsprint/material costs.
This is likely to have been on account of steep cut in the number of pages printed per edition in the wake of the drying up of advertisements in the post-pandemic situation.
It could also be because of the slight dip in circulation caused by the closing of public establishments, such as libraries and some offices.
Tax expenses were sharply down at Rs 5.09 cr during the quarter, compared to Rs 14.46 cr in the corresponding quarter of 2019.
Hindustan Media Ventures is part of the Hindustan Times Group.
The Hindi newspaper has been able to withstand the impact of the pandemic to a large extent because rural areas have been less impacted by COVID-19, compared to the big cities that form the core market for English language newspapers.
Even as the English division is yet to announce its results for the three months, there have been reports that another round of lay-offs took place last week — almost exclusively in the English language division.
The English language print media in India has been on a secular decline for several years now, with the pandemic accelerating the long-term trend.
However, Indian-language newspapers continue to grow, thanks to extremely low levels of penetration for such products in India, in turn the legacy of low levels of literacy in the rural population.