Newspaper publisher Jagran Prakashan Ltd is in talks with a couple of regional players for partnerships or joint ventures in print media, a senior official told Reuters.
The firm may consider picking up at least 25-26 percent in order to have a say in the business, R.K. Agarwal, chief financial officer, said over the telephone from Kanpur.
"We are interested in becoming a strategic investor, there is no point in investing money just as a financial investor," he said. "We keep talking. We are talking to a couple of players. We are not averse to entering new territories as well."
Jagran, which mainly publishes in northern India, plans to fund these deals with cash in hand and does not have any immediate fund-raising plans, he added.
Jagran Prakashan publishes 37 editions of its flagship brand Dainik Jagran across 11 states as well as I-Next, a bilingual compact newspaper and City Plus, a weekly English tabloid. It also recently acquired the newspaper business of Mumbai-based Mid-Day Multimedia Ltd.
U.S.-based private-equity firm Blackstone Group had said in April in will invest about $50 million in Jagran Prakashan's parent and Agarwal said he plans to use this money as a 'warchest' to fund growth.
While Jagran is not keen on investing more money into Mid-Day's businesses immediately, it is considering launching its Urdu paper, which is currently published only in Mumbai, in more cities, Agarwal said.
There is "potential in J&K, Aligarh, Lucknow, Patna, Aurangabad and Delhi" he said. "We have already requested existing management to commission survey to identify where to launch and how many copies."
Jagran's shares, which were down as much as 1.6 percent before the announcement, pared losses and touched a day's high of 125.9, up 0.9 percent. At 10.29 a.m., they were down 0.6 percent at 124 rupees in the Mumbai market.
GROWTH OUTLOOK
Jagran expects advertising revenue to grow 17-18 percent in the year-ending March 2011 led by increased corporate spending, Agarwal said.
"Definitely there is a turnaround. What I have started seeing is even the big advertisers have started coming back with a bang. Overall the outlook looks pretty positive and the level of confidence is pretty high."
The firm has earmarked a capex of 1.25 billion rupees for FY11 for creating new assets, Agarwal added.
While Agarwal expects a topline growth of 14-15 percent, he said operating margins may shrink by 2-3 basis points to 29-30 percent in FY11 on rising newsprint cost and new launches.
Paper prices have been on an uptrend so far in 2010 on short-supply of pulp - key raw material used in paper-making - and rising demand.
He expects Mid-Day's acquisition to add to earnings only by the next financial year ending March 2012, he said. In 2008/09 Mid-Day had posted a net profit of 19.5 million rupees, according to stock exchange data.
"I am pretty positive, if High Court approvals are not unduly delayed, then even for the year 2010/11 it will be EPS accretive," he said.
