8/2/2019 Analysis of Zee Entertainment Enterprises Limited

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Analysis Of Zee Entertainment Enterprises Limited

0

1000

2000

3000

4000

5000

6000

1 2 3 4 5 6

Profit after tax

Marketing

expenses

Profit after tax

Vs

Marketing

expenses

Advertising

36%

SalesPromotion

64%

Advertising Expenses vs Rebate vsSales Promption Expenses

2005

9%

2006

17%

2007

12%

2008

20%

2009

22%

2010

20%

Advertising Expenses

2005

9%2006

13%

2007

15%

2008

13%

2009

28%

201022%

Sales Promotion Expenses

0

200

400

600

800

1000

Advertising rebates & discount Sales Promotion

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Year Profit After Tax Total Income Marketing Expense

Mar-05 1622.7 6930.8 462

Mar-06 690.8 8868.3 634.9Mar-07 1662.1 9308.1 746.8

Mar-08 2951.2 11439.2 616.1

Mar-09 3097.4 13830.3 1347.1

Mar-10 5588.4 14464.8 1075.8

Year Selling and

Distribution

Expense

Advertising

Expense

Marketing

Expense

Distribution

Expense

Discount

Expense

Sales

promotion

Expense

722.4 255.6 462 4.8 462

Mar-05 1112.5 474.2 634.9 3.4 634.9

Mar-06 1085.2 337.5 746.8 0.9 746.8

Mar-07 1149.8 532.5 616.1 1.2 616.1

Mar-08 1935.2 584.7 1347.1 3.4 1347.1

Mar-09 1633.5 556.9 1075.8 0.8 1075.8

Mar-10 722.4 255.6 462 4.8 462

Analysis

According to the data provided by CMIE, Zee Entertainment Enterprises Limited has been a pioneer in the

entertainment industry and has been making net profits for the last 5 years. It has been spending most in the Sales

and promotion expenses on average basis while on the other hand nothing has been spent as Rebates & Discount

Expenses while a small amount was spent on advertising. After analysing the directors report it can be inferred that

the Company has incurred huge profits over past 5 years in spite of making vast expenses. In the financial year

2009-10 Zee made marketing and sales promotion expenses of 1075.8 million. At the same time it also made a huge

profit of Rs. 5588.4 million. The vast sales and promotion expenses were made to maintain the brand image and to

overcome the unique challenges of recession and unabated growth in number of new entrants. In addition to the

Companys ability to capitalize on such upcoming opportunities as digital platform growth, by leveraging the

strength of the Companys portfolio of offerings, to cater to multiple viewer groups and their evolving preferences

has put the Company ahead and at the forefront of a highly competitive market.

While the national channels Zee TV and Zee Cinema maintained their leadership, Zee regional channels also have

been leaders and trendsetters in their respective regional markets and continued to do so through the year,

registering strong growth in viewership, despite the high clutter and fragmentation due to scores of new channels.

Zee further expanded its business presence internationally increasing its reach within the non-penetrated markets

and growing its share within the South Asian subscription & advertising revenue pie. Zee International channels

were among the top rated in markets across US, UK, Middle East, South Africa & APAC thus consistently

generating viewer interest in both South Asian & mainstream audiences resulting in new advertisers & subscribers

coming on board.

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The Company has also made huge strides in the fast growing digital delivery space with a range of compelling and

exciting offerings for viewers subscribing to DTH and Digital Cable platforms. The positive effect is being reflected

in the growth in subscription revenues.

In the year 2009-10 Directors recommended a Final Dividend of Rs. 2/- per equity share of Re 1/- each, for the

Financial Year 2009-10. The total cash outflow on account of Dividend including the interim dividend already paidand the tax on such dividend distribution would aggregate to Rs. 2270 Million, resulting in a payout of 40% of the

profits of the Company. This has further strengthened the bond of shareholders with the company.