Hathway to be cash +ve only by FY12

Cable TV provider Hathway Cable & Datacom (HCDL) expects to balance its cash flow position in its favour after financial year 2010-11, MD and CEO K Jayaraman said.

The firm is looking to raise about Rs 500 crore (at the lower band) through an initial public offering of 27,750,000 equity shares in the price band of Rs 240 and Rs 265.

In FY09, HCDL’s two major lines of businesses — provisioning of
cable TV and broadband connectivity — contributed 62% and 38% respectively to its revenue of Rs 673 crore.

The firm has a history of net losses due to depreciation and amortisation expenses.  According to a disclosure in the firm’s Red Herring Prospectus (RHP), the firm had a loss of Rs 62.4 crore in FY07, Rs 66.8 crore in FY08, Rs 62.7 crore in FY09 and Rs 42.4 crore in the six months ended September 30, 2009.

During the same period, the firm’s depreciation expenses were Rs 39.2 crore, Rs 58.8 crore, Rs 96 crore and Rs 61.7 crore, respectively.

“As we continue to expand by way of acquisitions, we expect our depreciation and amortisation expenses to continue to increase and this may have material adverse effect on our results of operations,” the firm said in the RHP disclosure.

HCDL is now looking at investments to increase business depth.
“We shall be aggressively looking at digitisation of our network. We shall also be focusing on acquiring local  cable operators to make our last mile stronger. Pushing broadband and digitisation is going to be critical for us,” said Jayaraman.