Business Scenario

The manufacturing sector grew by 10.3 per cent between April-August, 2007 on top of 12.2 per cent during same period last year. Foreign institutional investors have invested close to 20,000 crore into the Indian stock markets during April-October, 2007. Assessment of some key macroeconomic indicators shows high growth momentum to continue for the rest of the financial year. Sensex touched lifetime high 20,000- point mark weathering threat on account of US Sub-prime mortgage crisis, ban on P-note by RBI for FII & surging crude oil prices.

A sustained performance of manufacturing sector, consumer price inflation, rising inflow of funds into the surging capital markets and the rupee appreciation are the benchmarks indicating positive outlook on economic growth. Economy is well poised to achieve GDP growth projection of 8.5% during 2007-08.

Media Industry

The latest FICCI report on the industry, prepared by PricewaterhouseCoopers, which was released in March 2007, estimates that media industry could balloon to Rs 1 lakh crore by 2011, translating into a cumulative growth of 18 per cent in the next five years. Increasing market penetration, technological advancements, new platforms for content delivery and a surge in foreign and private equity fund investments will be fuelling growth of this sector in the coming years.

Print media

The print media too is projected to grow from the current size of Rs 12,800 crore to Rs 23,200 crore by 2011, mirroring 13 per cent annual growth. Amit Mitra, secretary general, FICCI said at inaugural function of FICCI Frames 2007 that print media industry is poised to see heady days ahead. A strong economic growth, a rise in consumer spending and regulatory corrections are drawing foreign investments in the print media industry.

With the literate population on the rise, more people in rural and urban areas are reading newspapers and magazines today. Current estimates reveal that the reach of print media in India has increased to 222 million people.

Management Analysis

BEFORE WE ANALYSE THE NUMBERS FOR THE QUARTER, WE WOULD LIKE TO INFORM OUR ESTEEMED INVESTORS THAT DUE TO MULTIPLE EDITION LAUNCHES AND EXPANSION OF MID-DAY BRAND TO OTHER PARTS, WE WILL INCURE PRESSURE ON OUR BOTTOMLINE FOR SOME TIME. THIS IS NECESSARY TO MIGRATE MID-DAY FROM A SINGLE CITY OPERATION TO A NATIONAL BRAND.

The turnover has marginally decreased to Rs 2541 lakh for the quarter under revie was compared to Rs 2601 lakh for the corresponding quarter last year . The Circulation Revenue has decreased due to a reduction in cover price of Mid-DAY in Mumbai although the readership numbers show a positive trend as per Indian Readership Survey (IRS RII'07). Readership of Mid-day in Mumbai is up by 11%.

The cost of printing has increased by 3% to Rs. 1112 lakh from Rs. 1078 lakh in the previous year quarter. This increase is due to Delhi edition, which was absent in the corresponding quarter last year. Also Bangalore Mid-day edition, which was at teething stage in last year, Q2 has grown up with sizable circulation numbers.

The news expenses have gone up to Rs. 52 lakh. This shows an increase of 24% as compared to Rs 42 lakh for the corresponding quarter last year. This is due to incremental expenses on account of a Delhi edition, which was absent in last year Q2, & an increase in news content in Bangalore edition.

Staff cost has gone up by 27% at Rs. 811 lakh from Rs. 638 lakh in the previous year quarter on account of additional editorial, marketing & support staff in Delhi and higher cost of existing staff.

Re-branding of Mid-day as “Mid-Day makes Work Fun” and Launch of fashion & style supplement “Zing” have resulted in an increase in Selling and Distribution expenses by 56% from Rs. 225 lakh in the previous year quarter to Rs. 352 lakh in the current year quarter under review. This re-branding is a step towards national brand creation. This has also been impacted by Bangalore and Delhi editions.

Rent, rates and taxes show increase of 3% from Rs. 87 lakh in Q2 last year to Rs. 90 lakh in current year.

Other expenses have increased by 13% to Rs. 248 lakh from Rs. 220 lakh mainly due to Delhi edition.

Loss from operations is Rs. 124 lakh in the quarter under review from the surplus of Rs. 311 lakh in Q2 last year, recording a fall of 140%. This loss is mainly on account our efforts to create sizable circulation at our new editions i.e. Bangalore & Delhi

Interest and Finance charges have increased by 32% to Rs.62 lakh in Q2 of FY08 as compared to Rs.47 lakh in Q2 of FY07. This is due to higher rate of interest as compared to Q2 last year and also due to higher fund requirement in Delhi and Bangalore editions.

Depreciation has increased by 7% from Rs. 102 lakh in Q1 FY 07 to Rs. 109 lakh in Q1 FY 08.

Other income increased by 80% from 55 lakh in the second quarter of FY07 to Rs. 99 lakh in second quarter of FY08. Increase in other income is primarily due to income from mutual fund investments and foreign exchange gain on borrowings resulting from appreciation of Rupee against Dollar.

Profit Before Tax has shown downward trend by recording loss of Rs. 196 lakh as against profit of Rs. 217 lakh.

The Net loss after Tax for the quarter under review is Rs. 127 lakh, if compared to Profit after Tax reported in corresponding quarter last year Rs. 147 lakh.

Film

There is no further release. Company has recorded nominal revenue of Rs. 1.10 lac during the quarter.

Snapshot & Looking forward

Key milestones we achieved are

• Mumbai readership up by 11% (IRS 2007 RII)
• Innovative national branding of MiD-DAY as “Mid-Day makes Work Fun”
• Launch of new supplement “Zing”, which is all about Style and Fashion generating tremendous impact on Young Urban & Mobile Professionals of India (YUMPI)
• Combined circulation of new editions i.e. Delhi & Bangalore increased by 95% during H1 of current year

After creating necessary readership & national brand, we are expecting higher revenue growth during forthcoming festival season.