Kings XI Punjab Franchisee owners KPH Dream Cricket Private Limited (KPH) have declared a profit of ₹ 44.55 crore for the financial year 2019. This amounts to an almost 150% rise in the gross income of the India Premier League franchisee is reported on the back of a better share from the central revenue pool of the IPL.
The KPH Dream Cricket Private Limited had announced a ₹ 17.98 crore profit after tax in the previous financial year (2018).
The net profit for the financial year 2019 is achieved despite an extraordinary expense of ₹108.43 crore in the form of interest paid to the directors for the unsecured loans infused by them to support the business operations in the past, states a report by media and business news website televisionpost.
The gross profit, described as the profit before interest lease depreciation and tax (PBILDT), is reported at ₹ 164.63 crore, up from ₹ 50.69 crore a year ago, which amounts to more than 215% increase.
Among other important numbers, the KPH has reported a cash and bank balance of ₹ 98.89 crore as on March 31, 2019, while the half-yearly balance as on September 2019 is reported at ₹84.90 crore.
The comfortable liquidity position has also allowed the IPL franchisee owner company to buy back shares worth ₹19.25 crore from its promoters as per the existing shareholding pattern and has also paid dividend ₹ 41.51 crore to its shareholders in FY20 (both in October 2019) from the cash and bank balances maintained with the company, the website has reported.
KPH was incorporated in March 2008, with Dabur group’s Mohit Burman (having 48% shareholding in KPH, as on March 31, 2018), Wadia group’s Ness Wadia (23%), Bollywood actress Preity Zinta (23%), and Karan Paul of the Apeejay Surendra Group (6%) holding major stake in the company.
In April-2008, KPH acquired the right to operate the KXIP franchisee and became a member of the IPL against payment of consideration amount of Rs. 304 crore for a period of 10 years. After completion of 10 years, the franchisee is paying a consideration equivalent to 20% of the yearly revenue and it can go up to perpetuity as per the terms of the purchase agreement.
This was on account of lucrative broadcast/ sponsorship tie-ups entered by the BCCI for the next 5 years (IPL-2018 to IPL-2022), for which FY19 (IPL-2018) was the first financial year.
In H1 FY20, the company has achieved a total operating income of Rs. 184.74 crore, which declined by 37% on a year-on-year basis from Rs. 294.76 crore in H1FY19. This was on account of higher revenue sharing by BCCI in IPL 11, since it had received extra payment from certain sponsors who paid 25% of the total deal amount in the first year followed by an 18.75% payment in the next four years each.
Also, the company booked revenue for three of its fourteen matches played of IPL 12 in FY19 since they were played in March 2019 due to the IPL commencing earlier. This also led to lower PBILDT margins in H1FY20 compared to H1FY19 (32.61% in H1FY20 compared to 43.84% in H1FY19) though they remained at a comfortable level since the company incurred almost the same players & support staff fees (on a proportionate basis) which form the major cost component for the company.
CARE Ratings has reaffirmed KPH’s short-term bank facilities of Rs 24 crore. The rating assigned to the bank facilities of KPH continues to derive strength from the strong promoter group, the comfortable financial risk profile of the company, strong liquidity position and high worldwide popularity of the Twenty20 format of the game. The rating is, however, constrained by the risks associated with any decline in the popularity of the game going forward.
The bank facilities availed by KPH are backed by personal guarantees from Mohit Burman, Preity Zinta, Ness Wadia, and Karan Paul, in the proportion of their shareholding in the company. These promoters have also provided an undertaking to meet the shortfall in the debt servicing and maintain their shareholding in the company during the tenor of the loan from the bank.