You are present in cable TV network business for 20 years now. What's new you will be offering through NXT DIGITAL and what prompted you to increase your interests in this industry?
Yes. Our company IndusInd Media & Communications Ltd. (IMCL) is one of the largest multi system operator in the country, through which we offer DAS (Digital Addressable System), cable and broadband connections. However, through NXT DIGITAL we will be able to act as a complete backend solution provider for multi system operators (MSO) and Last Mile Owners (LMO) in India. Currently, our primary focus is to become a major player in the Phase III and IV digitization drive in India which covers some 100 million TV households. Headend-In-The-Sky or HITS - the technology on which NXT DIGITAL works - is a customized, technologically superior platform. Also, HITS technology is superior to other technologies available in the country. It offers content through MPEG 4, compared to widely used MPEG 2 format.
I believe, this industry will never fail irrespective of any macroeconomic shocks. Televisions are the cheapest form of entertainment which caters to each and every member of a household.
What is the benefit for an MSO or LMO to join hands with NXT DIGITAL?
There are many. While, now the MSOs have to negotiate with the broadcasters, set top box manufacturers etc. on their own. A bigger platform like NXT DIGITAL will have a better bargaining power and thus will be able to provide better products and solutions at a lower cost. We plan to provide set top boxes at the cost price to operators so that they can keep the entire profit. Also, NXT DIGITAL increase their product portfolio since it will also offer local channels and value added services, as per requirement.
Dispute regarding the payment of Entertainment tax is a major bone of contention among the various stakeholders in the industry and the government. How do you plan to manage that?
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Yes, it's a major issue in this industry. And I believe, this new model will prove handy. Under the existing system, MSOs are considered liable for paying service and entertainment taxes since according to the laws only the owner should be paying such taxes. But under this new model, since we will be serving all LMOs and MSOs directly, every partner will become an owner of their respective businesses - as par Govt.'s definition. Thus, government can now collect taxes directly from them.
How much do you plan to invest and by when? When do you expect to turn profitable?
According to our estimates, we are investing Rs 5,000 crore in next six to eight months to set up the infrastructure - COPE (Cable Operator Premise Equipment), set top boxes, networking equipment etc. While, the initial business plan suggested that it will take some four years to break-even, going by the kind of response that we are receiving and market surveys done later, revised estimates are we may turn profitable within two years from now.
Our strategy is very clear. When we started our MSO business, we had to incur losses up to Rs 500 crore. But as we could establish our hold over the market business turned profitable. Today, e-commerce companies are running on huge losses but their aim is to grab a bigger market share. Which, our experience says, eventually pays off.
You entered late - after phase I and II digitization is over and Phase III and IV is due to end in December. How do you plan to establish your business?
Our motto is 'make in India, digital India and skilled India' - in line with our Prime Minister Narendra Modi's vision. Apart from augmenting the digitization drive, this initiative will promote the other two missions as well. We are currently in advance level talks with set top box manufacturers like the ABS Group in India and with companies in China, Taiwan etc. And we insist on manufacturing these products in India. Apart from, providing end-to-end solutions to cable operators, we will train them, through various skill development agencies and associations, about the technical know-how of changes from analog to digital technology and how to sell value added service products like broadband. This will help them earn additional money.
And most importantly, Hinduja Group owned NBFCs (non-banking financial institutions) will provide the required finances to the local and/or small operators to set up their own COPE.
Talking about 'make in India', where do you see its future?
Our Prime Minister's 'make in India' initiative is very promising. However, to make it a real success there are some roadblocks which have to be removed. Issues like lack of clarity on land acquisition laws, labour laws and high cost of finance has to be sorted out. A uniform tax regime like the goods and services tax (GST) and availability of adequate power across all regions are going to give a push to the initiative as well.