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Tata Infomedia: A drab show

Krishnan Thiagarajan

TATA Infomedia (earlier known as Tata Donnelley) has turned in a lacklustre financial performance for the fourth quarter and year ended March 31, 2001.

The salient features of its financial performance for the year were:

*The net sales registered a 12 per cent increase to Rs 111.58 crore.

*The post tax earnings (excluding voluntary retirement compensation) inched up by 0.72 per cent to Rs 13.82 crore. After including the voluntary retirement compensation, the post tax earnings moved up by 9.05 per cent to Rs 11.44 crore. The improvement i n post tax earnings was on account of a decline in the retirement compensation for the year.

*The operating profit margins inched up by 0.02 percentage points to 17.85 per cent.

The highlights of the fourth quarter performance were:

*Net sales improved by 10.5 per cent to Rs 28.40 crore

*The post tax earnings (excluding voluntary retirement compensation) dipped by 49.5 per cent to Rs 2.58 crore. After including voluntary retirement compensation, the post tax earnings dipped by 90.1 per cent to Rs 0.20 crore.

*The operating profit margins improved by 2.88 percentage points to 15.88 per cent.

For the year, the yellow pages division accounted for 40 per cent of the revenues, the printing division - 34 per cent, special interest publications - 13 per cent, Direct Edge (its knowledge based services division) - nine per cent and the balance four per cent was contributed by other sources.

After Tata Sons bought out the equity stake of RR Donnelley during the year, the new management has decided to change focus from commercial printing (of annual reports, books and publicity material) to the value-added segment of content generation and ma nagement. The value-added segment includes special interest publications (particularly magazines), children's books, diaries and stationery products.

In a conscious shift in focus from the printing business, the company is planning to focus on a clutch of special interest/hobby publications.

These magazines range from better photography, search- an industrial source book, Overdrive -- an automobile magazine for auto enthusiasts, audio and video hardware magazine -- targeted at music lovers. In order to enhance its image, it also launched Aut o Monitor-a B2B fortnightly magazine targeted at the automobile industry in January 2001.

However, even in the future, one of the key sources of revenues will continue to be Tata Press Yellow Pages and Tata Press Exporters Pages. As the largest publisher of business directories in the country, the company will capitalise on its popularity and brand equity in the coming years. According to the management, 21 lakh copies of Yellow pages were distributed free-of-cost during the year across 12 cities.

And finally, Direct Edge, the fastest growing division catering to knowledge management services such as database marketing and management is slated to grow in the coming years and create opportunities for higher margins.

As this change in focus/strategy under Tata Sons is still at a nascent stage, it may take time to start yielding dividends. Considering the disappointing fourth quarter performance, investors will be better off waiting for a strong momentum in performanc e before taking an investment exposure in the stock. However, patient and risk averse investors can stay invested.