Original Story (14:30 hrs): Infomedia18, which owns various publications such as Overdrive, Chip, T3 and Better Interiors, and the classifieds portal Yellow Pages has posted a net loss of Rs 462 million as expenses spiralled during the fourth quarter 2009. Television18 India, part of the Network 18 Online group, holds a controlling stake in the company.
Infomedia18’s expenses rose to Rs 672 million due to rent, advertising and publicity which cost Rs 43.43 million and Rs 41.61 million respectively. The company has set aside Rs 6.04 million as doubtful debts – either protecting its future or for tax benefits. Other expenses clocked Rs 168.73 million.
Net sales fell by 15% to Rs 311.77 million on a quarter on quarter basis and by almost 22% from the same quarter last year when net sales stood at Rs 398.7 million. Publishing, which was to be developed into Infomedia’s growth engine according to the outlook given in the previous quarter, contributed Rs 248.8 million to revenues while printing contributed to Rs 62.1 million.
No Effect Yet Of Cost Cutting; Income Tax Issues
In the last quarter, Infomedia18 undertook a restructuring and right sizing exercise to cut costs, including vacating its leased offices, but the measures do not seem to have helped the firm yet. It had estimated annualised savings of Rs 140 million from the restructuring, the impact of which was to flow from Q4. It has cost Infomedia18 Rs. 23 million towards termination costs of employees and Rs. 20 million for impairment of assets held at leased offices during the quarter. The company had said that the impact of revising office space would occur in Q1 of fiscal ’10.
Infomedia18 is in a dispute with the income tax department for charging Rs 155.5 million for years 2005-06, 2006-07 and 2007-08. Given that the company incurred a loss of Rs 846.5 million during the year, they’re looking to raise money using a rights issue. Its holding company has already infused liquidity via Inter Corporate Deposits amounting to Rs 405 million.
AskMe Not Yet Launched?
Infomedia18 had acquired Burrp! to add the local information and social media asset to its service offerings; according to sources within Network18, Burrp was intended to complement their proposed local business information service AskMe, which was primarily intended to be a voice platform; AskMe is intended to be competition for Justdial. It was bought in June 2008.
This project appears to be delayed – Infomedia18 had announced in Q3 (investor update PDF, page 10) that it planned to launch Askme in Q4, but the website www.askme.in (domain registration) is not live yet, and remains cloaked behind a password. During the fourth quarter, Infomedia18 planned to expand and diversify its printing facility. It also bet on its online partnership with Alibaba.com for gaining traction in its classifieds business.
Reed Falls Apart; Consolidation
Reed Infomedia India’s net worth has been eroded completely and operations have been shut down. Reed Elsevier Overseas B.V has pulled out entirely from the joint venture and and will not provide any further financial support to the JV. Some 23 employees have been laid off; Rs. 29.4 million has been provided towards diminution in the value of Infomedia18’s investments in the JVand Rs 7.6 million has been provided in respect of the amount receivable from the JV. (More at ContentSutra)
Infomedia18 has said that it is adding new lines of business, consolidating existing products and introducing new products in the publishing segment. It claims to also be in the process of introducing new technologies in its product offering, so as to cater to newer markets and de-risk the revenue streams.
Infomedia18 has also announced to the BSE intention to reclassify 5 crore equity shares worth Rs 10 each and 1 crore preference shares of Rs 10 each into 6 crore equity shares of Rs 10 each. Authorised capital will be increased from Rs 60 crores to Rs 100 crore divided into 10 crores equity shares of Rs 10 each. This has been done to strengthen its financial position as it may be required to generate long term resources by issuing securities via rights issue, preferential issues etc.