FY'08-09: Adlabs Films posts net loss of Rs 51 crore

Televisionpoint.com Correspondent | Mumbai
The recent turmoil in the film industry coupled with acquisition and expansion costs have weighed heavily on Adlabs Films, a member of Reliance ADAG (Anil Dhirubhai Ambani Group), which operates Big Cinemas. The company posted a consolidated net loss of Rs 51 crore for the year ended March 2009 against a net profit of Rs 47.5 crore last year.

Profitability was pulled down by interest rate and employee costs, both of which quadrupled during the year. Rise in costs was much faster than revenue growth, which doubled during the year to Rs 656 crore from Rs 306 crore in FY08.

However, the company's film services business, continues to generate healthy profits. In FY09, the division's operating margin rose to 32.1 per cent from 29.6 per cent last year.

In the digitising and processing business, the company is a dominant player with 219 films processed across Mumbai, Chennai and Kolkata. Its margin in exhibition business, however, declined to a negative 13.2 per cent. It has to bear the brunt of the dispute between multiplexes and producers over revenue sharing as about 70 per cent of the company's screen is in the form of multiplexes.

On a year-on-year basis, the company's employee costs increased to Rs 101.4 crore from Rs 25.9 crore. Its interest costs rose to Rs 63.6 crore from Rs 14.8 crore. It must be, however, noted that the company considered only nine month period in its financial year calculation, while in the financial year prior to last year, the company had observed a 15-month period in its financial year calculations.

Adlabs has been investing heavily to expand its businesses. For FY09, the company invested around Rs 300 crore, of which Rs 100 crore was invested in film services, while remaining Rs 200 crore was used to expand the number of screens to 429 screens from 147 screens.

Adlabs has made two important decisions as regards operations. First, it has quit production projects (movies). Second, it has de-merged its radio business. These two decisions make sense, considering the losses these divisions have been making.

The radio business for FY09 has made losses to the extent of Rs 25 crore. The company has plans to list the radio business – Big FM, which has 45 radio stations.