We Are A Very Survey And Research-focused Company

D B Corp is a multi-interest conglomerate with a strong presence in media, entertainment and printing. The group has soared to the top of the print media industry in India with its flagship Hindi daily, Dainik Bhaskar (one of the largest read newspapers) and the Gujarati frontrunner, Divya Bhaskar. While Dainik Bhaskar has a big presence in the north, Divya Bhaskar has its presence in Gujarat and Maharashtra. Divya Bhaskar is the largest circulated regional daily in Gujarat. The group’s media business includes ownership of print media and radio stations under brand name My FM in seven states and 17 cities. Prasanna Bidkar meets Girish Agarwaal, Director, D B Corp to understand the company’s future growth strategy. Excerpts...

Can you elaborate on your business and its reach?
We are one of the leading print media companies in India, publishing in three languages across 11 states of India. We publish seven newspapers, 48 newspaper editions and 128 sub-editions in three languages viz. Hindi, Gujarati and English.

Which are the regions where you command a leadership position and which are the most profitable states?
We have a leadership position in all the places where we operate, including Madhya Pradesh, Punjab, Chattisgarh, Haryana, Gujarat, Chandigrah, Himachal Pradesh and Uttarakhand. In Indore and Bhopal, for example, we have a lead of 150 per cent over the competitors while in Ahmedabad we have lead of 16 per cent over our competitors. In Jaipur, we have a lead of 44 per cent, in Chattisgarh a lead of 107 per cent and in the Chandigarh, Punjab and Haryana a lead of 40 per cent over the competition. It is important to be a leader in the prime markets because only then will the advertisers come to you. Our operations in all the markets have been very profitable. We have divided our business into four regions viz. Gujarat, Madhya Pradesh & Chattisgarh, the northern belt and Rajasthan.[PAGE BREAK]

Is it possible to get state-wise profitability?
We cannot disclose the state-wise figures due to competitive reasons. Suffice it to say that we are profitable in all the four regions.

What is your current readership?
It is 1.65 crore readers per day as per the IRS. As regards the distribution, around 39 per cent is in Rajasthan while Madhya Pradesh, including Chattisgarh, accounts for 23 per cent. In Gujarat it is 22 per cent and in the north it amounts to 16 per cent.

There is a stronger focus on Hindi No, that is a wrong perception.
In Hindi we are present in ten states but we have a strong presence with Gujarati in Gujarat and Mumbai.

Where do the major revenues come from?
Revenues are derived from every region we operate in. Our last year’s revenues were `1,063 crore in which the Gujarati newspaper accounted for around 15 per cent despite being present only in two regions.

What is your agreement as regards DNA?
DNA is published on a franchisee basis in Gujarat and Rajasthan. This is an arrangement between the parent company, DNA Bombay, and us. We have taken the franchise rights for the next 20 years to operate in these markets. DNA has a separate company wherein it there is an equal JV between the promoters of Bhaskar Group and Subhash Chandra. But DB Corp has no connection with DNA.

You have segregated your business into emerging and established areas. Where do you see the growth coming from?
Surely the larger pie of growth is coming from established markets like Madhya Pradesh, Gujarat and Rajasthan. Now it depends on how we define emerging and established businesses. Anything which is less than three to three and a half years of age is actually an emerging business. In our business it takes three to four years to break even. So till the time the edition is not making money, or is still taking support from the other markets, it is believed to be in an emerging market. The growth is derived from both the emerging as well as the established markets.[PAGE BREAK]

Since 75 per cent of the revenue comes from advertising, are there any special sectors that you are focusing on?
With the current education boom in India, a large part of our revenue is from this sector. Then automobile is another big sector and so are the segments of FMCG and lifestyle goods. The financial and real estate sectors are good too.

Did you have a different strategy to survive the downtrend in the media sector?
Out of our total advertisement revenues, 60 per cent comes from local retail. A retailer who has a shop is therefore more important to us than the corporate advertiser. During the recession phase all the corporates decided to reduce the advertisement budgets. But the retailers, who do business on a monthly basis, continued advertising. So that is why we managed to show 8 per cent growth in advertisement revenues even during such a difficult phase.

Going forward will you apply the same strategy?
 Yes, because today we operate with more than 3 lakh retail advertisers. In certain markets we are like marketing consultants for them. We also function as their ad agency because we design their ads, provide creative ideas to them, suggest them the schemes etc. It is not that everybody in every town has this facility. So it helps us get more advertisements and more importantly, retain them.

Are there any expansion plans?
Yes, we are launching our Jammu edition in the month of August as also the Jharkhand edition during that same period. Next year we are launching our Bihar edition. We will then have covered most of the markets.

What is the size of the Jharkhand and Bihar markets in terms of potential advertisement revenues?
I think Bihar and Jharkhand are `250 crore markets. They may double up in the next three to four years.  When do you expect break even in the Bihar and Jharkhand markets? As per our past experience from other markets, we could break even in a period of three and a half years.

What kind of pre-launch activities you do before launching new edition?
We believe in understanding what the readers want and then providing them with tailor-made products. It helps us design the product according to the needs of the readers. Therefore, the chances of failure are reduced a lot.[PAGE BREAK]

Have the ad rates been hiked?
We recently carried out an advertisement tariff revision of 11 per cent. But, frankly speaking, the revenue growth is mainly volume-driven. The advertiser is still holding on to the old rates but has agreed to give us volume.

There has been a 10 per cent growth in advertisements and 5 per cent growth in circulation. Do you feel the same will continue?
The growth will be more. Our Q1FY11 results show that the growth is 18 per cent more than our Q1FY10 figures that included election billing also which comes only once in five years. So if we were to ignore the election billing, the actual growth would be 26 per cent. Further, with the current revival in the markets we can now look at higher volume growth in advertising. As for circulation, we feel that the 4-5 per cent growth will continue.

How is the FM radio business moving?
It is definitely doing well. Our EBITDA broke even in just two and a half years. Secondly we have merged this subsidiary into DB Corp. There will be a third round of bidding for the licenses and we will be participating in the same.

Do you feel the future lies in online or digital media?
Nobody can predict the future. But yes, there will be growth in the online media and we are preparing ourselves for that phase. It is quite possible that a reader may prefer to read the newspaper on his laptop or mobile phone. We should be able to provide the news in whatever format the reader wants. We are not in the business of a newspaper. We are in the business of providing content and a newspaper is a vehicle or medium for communicating. But the medium may change and hence we should be equipped well.

What are your views on newsprint prices?
Newsprint is not something that I manufacture. But the only thing is that I exercise some caution while doing so which comes more from experience and foresight.

How do you manage printing and distribution?
We have a printing set-up at 38 places. The idea is that a newspaper should not travel more than 200-250 km. If you travel more than that, you need more than five hours in India due to our road conditions. If we have to travel for five hours and you need to distribute at 5 a.m., then it should get printed at around midnight. This means the printing has to start at 10 p.m. So the maximum limit for taking the news is about 8 p.m. [PAGE BREAK]

That means missing out on many important news stories that may came later in the night. But if we are closer to the distribution base, we can accept news stories even up to 1 am. That is what provides news value to the readers. Hopefully in the next 12 months time, the number of printing hubs will rise to 44.

What is your perspective about the premium charged by the English newspapers as compared to those in Hindi?
English newspapers have a typical privilege over the vernacular ones. In fact, a single reader of English was 12 times more expensive than a Hindi newspaper reader in 2003. But the gap is now only 7.2 times.