Q1 2006-2007 Highlights
• MML Topline lower by 14% on account of exit from Outdoor Business.
• Radio Topline up by 20% over Last Year.
• Newsmedia PBIT lower by 83% on account of increased newsprint, staff & bangalore launch cost
  and stagnant revenue.
• Bangalore edition launched on June 27, 2006.

Business Scenario

The Indian economy continues to exhibit resilience with GDP growing at 8.05% compared to 6.9% last year. The Index of Industrial production grew by 8.35% compared to 8.3% last year. Agriculture and allied activities increased by 2.6%, as compared to 1.1% in the previous year. Inflation remains below 5% despite steep hike in commodity prices. But with the gradual pass through of increase in oil prices, the inflation rate is bound to go up gradually.

Of all the three sectors, services have been the highest contributor to total GDP growth rate. As Current account deficit show signs of stabilizing the emerging markets economy research are bullish on Indian economy.

The Indian Entertainment and Media Industry have out-performed the Indian economy and is one of the fastest growing sectors in India. It is rising on the back of economic growth and rising income levels that India has been experiencing in the past years. This is significantly benefiting the entertainment and media industry in India as this is a cyclically sensitive industry and it grows faster when the economy is expanding. An added boost to the entertainment and media industry in India is from the demographic point of view where the consumer spending is rising due to increasing disposable incomes on account of sustained growth in income levels and reduction of personal income tax over the last decade.

The size of the industry as a whole is estimated at US$ 7 billion in 2004 and is expected to grow at a CAGR of 14 per cent to US$ 13 billion by 2009. The Filmed Entertainment and Television segment dominate the industry followed by the Print, Radio and the Music segments.
In most markets, radio manages to garner around 8% of the mass media spend. In India, currently radio is able to garner less than 3% of the total ad pie.

The key growth factor in the still infant radio industry is in reaching local audiences, which have till now been served largely by print media. The radio industry could grow by at least four times in the next five years.

Almost 51% of the people listen to FM for an average time of one hour and another 39% listen to FM for a longer period of 1-3 hours.

Management Analysis
The Company witnessed a drop of 14% in its turnover to Rs 2537 lakh for the quarter ended June 30, 2006 as compared to Rs 2961 lakh for the quarter ended June 30, 2005. The turnover decrease is due to our exit from the unprofitable outdoor business.

The cost of printing has increased by 10% to Rs. 1113 lakh from Rs. 1011 lakh in the previous year quarter. This increase is due to the continued increase in the price of newsprint as well as the increase in number of pages printed. The number of pages has increased on account of the increase in circulation and new sections added on to Mid Day.

News expenses have gone up by 33% from Rs. 57 lakh in the previous year quarter to Rs. 76 lakh in first quarter of current year. This is due to incremental expenses on account of wide coverage of FIFA 2006 event. Site rentals have declined by 100%. This is due to the exit from the outdoor business.

Staff cost has gone up by 36% in the financial year to Rs. 608 lakh from Rs.448 lakh in the previous year quarter. This is due to an increase in headcount as per the expansion plan of the Company and also the enhanced salary levels due to the increased competition

Selling and Distribution expenses have increased by 86% from Rs. 156 lakh in the previous year quarter to Rs. 290 lakh in the current year quarter under review. This is on account of expenses incurred for pre launch marketing and brand awareness in Bangalore. Distribution expenses have also increased in Mumbai due to the press shifting from Tardeo to Rabale.

Rent, rate, royalty and taxes have decreased by 14% to Rs. 88 lakh from Rs. 102 lakh when compared with relevant quarter of the previous year.

Other expenses have declined by 29% to Rs. 231 lakh from Rs. 327 lakh. This is on account of the Company exiting from the outdoor business.

Surplus from operations is Rs. 131 lakh in the quarter under review from Rs. 562 lakh, recording a fall of 77%.

Other income increased by 104% from 27 lakh in the first quarter of FY06 to Rs. 55 lakh in first quarter of FY07. Increase in other income is primarily due to income from mutual fund investments and other miscellaneous receipts.

EBIDTA has shown 68% decline from Rs. 589 lakh in the Q1 of FY06 to Rs. 186 lakh during the Q1 of FY 07.

Interest and Finance charges have increased by 37% to Rs.37 lakh in Q1 of FY07 as compared to Rs. 27 lakh in Q1 of FY06. This is due to an increase in borrowings to finance, expansion of the new press at Rabale, on account of term loan for expansion programmes and additional working capital facilities.

There is no change in depreciation. Certain assets got fully depreciated in the last fiscal year and hence there is no depreciation on those assets in the quarter for current year. However, this reduction in depreciation is compensated by increase in depreciation on plant and machinery at newly operational press at Rabale.

Profit Before Tax has shown downward trend by recording Rs. 72 lakh as against Rs. 485 lakh, a decrease of 85%.

After providing for taxes, the Profit After Tax decreased by 90% from Rs. 317 lakh in the previous year quarter to Rs. 33 lakh in the quarter under review.

Group Results:
The Group has recorded a top line of Rs. 2762 lakh in the quarter under review as compared to a top line of Rs. 3267 lakh in the corresponding quarter of the previous year. During the quarter under review the group has been operating at break-even inspite of weathering a storm of competition.

EBIDTA has decreased from Rs. 370 lakh to Rs. 56 lakh resulting in 85% fall in earnings.

Profit Before Tax is 217% negative at Rs. 266 lakh against the profit of Rs. 228 lakh in a quarter on quarter basis.

The Profit After Tax has declined from Rs. 5 lakh to a loss of Rs. 43 lakh.

News Media:
During the period under review the topline of this segment has declined by 3% to Rs. 2537 lakh against Rs. 2619 lakh in corresponding period in FY06. .It is significant to note that 3 new players have come into the market since Q1 FY06. The Company has been able to defend the topline despite stiff competition in this segment.

A combination of soaring expenditure (like printing charges, news expenses, selling and distribution costs) and stagnant revenue lowered the PBIT for this segment to Rs 103 lacs against Rs 619 lacs in the corresponding quarter last fiscal, a decline of 83%.

MiDDAY Bangalore edition was launched on June 27, 2006

Radio:

The radio topline posted a rise of 20% in first quarter of FY07 to Rs. 236 lakh against Rs. 197 lakh in corresponding quarter of previous year.

The Loss Before Interest and Tax at Rs. 206 lakh is 22% lower than the Loss of Rs. 263 lakh reported for the corresponding quarter in FY06. This is basically due to start up expenses incurred for setting up radio stations in various cities. Mumbai operations have turned cash positive.

The Company has re-launched its brand as "Radio One". It has now entered the mass play segment with the tagline "hit pe hit pe hit".

The stated intention is to be among the top 3 players in every market in which we operate.

Looking forward
- The Bangalore edition of MiD DAY has been launched. We plan to aggressively market the product
   in order to achieve the desired circulation level.
- We plan to launch Radio Mid Day in other cities starting with Bangalore, Delhi and Chennai.
- We are aggressively targeting an increase in the listener ship of our existing Mumbai station.
- We are hoping for a quick release of the High Court stay order on our film "Black Friday".
- We focus on growth in customer base; growth in earnings; and growth in the returns on the
  capital employed