Zee Telefilms advanced further today on huge buying support from institutions on the back of hopes that the implementation of CAS will improve  the company's financials.

The scrip of the media major was the biggest gainer among BSE Sensex stocks, up by 3.59% at Rs 89.35 by 11:45 IST. A substantial volume of close to 24 lakh shares was recorded on the counter. In the last two sessions, the scrip rose by 13% from Rs 79.20 on 4 June 2003. Earlier, it shed 11.35% from Rs 89.35 on 2 June 2003.

Meanwhile, as per market buzz, Kotak Securities is said to be active on the Zee Telefilms (ZTL) counter in the last few sessions on hopes that the implementation of the conditional access system (CAS) will improve the company's financials.

In fact, the scrip has witnessed continuous uptrend from the level of Rs 60  following the  implementation of conditional access system (CAS) in four metros of India from 14 July 2003.

Earlier,  the ZTL stock had plunged on rumours that the CAS will not be implemented by the scheduled date. In fact,  the uncertainty over the implementation of CAS has already prompted a reduction in advertisement outlays by advertisers.

However, recently, there were reports that Centre has ruled out any extension of the 14 July 2003 deadline for the implementation of  CAS -based broadcasting. Players feel that the implementation of CAS will benefit ZTL by improving its subscription revenues.

The Centre has decided  to implement  CAS in Mumbai, Delhi, Kolkata and Chennai. The free-to-air (FTA) channel bouquet price  has been fixed at around Rs 72 without taxes. Further, it is not mandatory for the subscriber to take the FTA bouquet.

Meanwhile, ZTL is working towards implementing the digital head-end in the sky (Digital HITS) technology for distributing television broadcast signals for CAS through its subsidiary Siticable.

It hopes to reinforce its leadership position in the distribution business in India. Notably, the company has plans to invest close to Rs 220 crore in CAS, out of which it has already made investments of Rs 150 crore.

ZTL has tied up with Conax for the CAS software technology. Trials have been conducted for its implementation in the network.

The company maintains that set-top boxes (STBs) should mainly be funded by the consumers directly or by retail consumer financing. For the initial push, Siticable would be acquiring and providing STBs to the consumers . Later on, ZTL would issue authorised certificates to traders who would be selling these STBs.

There has been a change in Zee Turner's bouquet during the fourth quarter ended March 2003. While HBO moved out of the distribution platform effective 1 January 2003, CNBC has joined the platform with effect from 1 April 2003.

ZTL was the first to announce that its pay channel bouquet cost would not increase beyond the present Rs 55 in the CAS environment. The pay bouquet would comprise 15 channels including 11 channels of its own (including the new channel, Trendz), two channels of Turner (CNN, Cartoon Network), CNBC and Reality TV.

Meanwhile,  ZTLs results have beat expectations. For Q4 ended 31 March 2003, on a consolidated basis, it recorded a massive 75% rise in net profit to Rs 92.54 crore (Rs 52.83 crore) on a 15.8% increase in total sales to Rs 368.47 crore (Rs 315.82 crore).

The company recorded an extraordinary expense of Rs 38.61 crore (as against nil in Q4 of last year), after which net profit was merely 2% higher at Rs 53.93 crore.

The results beat projections of a capitalmarket.com poll of analysts -  net profit of Rs 55-75 crore and net sales of Rs 288-326 crore.

For 2002-03, the company's net profit, on a consolidated basis after adjusting for extraordinary expenses, rose by 16.6% to Rs 227.03 crore (Rs 194.60 crore) on a 10.5% increase in total sales to Rs 1,199.32 crore (Rs 1,076.24 crore).

For Q4 (on a standalone basis), the company recorded a massive 134.65% rise in net profit to Rs 32.57 crore (Rs 13.88 crore) on an 8.6% increase in total revenue to Rs 150.98 crore (Rs 139.01 crore). Net profit rose due to a massive cost-cutting exercise.

For the quarter, total expenses declined by 17.2% to Rs 84.82 crore (Rs 102.46 crore). For the year (on a standalone basis), the company posted a net profit of Rs 87.49 crore (Rs 97.26 crore) on total income of Rs 497.44 crore (Rs 483.21 crore).

But analysts pointed out that the growth in profitability is largely due to the cost-cutting exercise. Future growth of the company continues to be a cause for concern.

ZTL has also said that the business environment (in 2003-04) continues to be challenging in terms of advertising revenues, which are dependent on macro economic factors and the business confidence of major advertisers.

As on 31 March 2003, promoters held 51.77% stake in ZTL, while the public and institutions held 9.83% and 33.53%, respectively.