Q3 2005-2006 Highlights
• 10% growth in Newsmedia topline YTD. Company's Q3 topline down due to exit from Outdoor business.
• 20% growth in YTD Company PAT, 8% growth in company PAT for Q3
• One time non recurring expenses of Rs. 104 lacs incurred in Q3 impacts group PAT.
• BBC signs up as JV partner in Radio business.
• Mid-Day gets radio footprint in 7 metro cities.
• Group numbers will show marked improvement with radio license fee as per new revenue share regime.

At Mid-Day Multimedia Ltd we are focussed on key financial indicators which are tracked on a regular basis and compared to set benchmarks to ensure that shareholder wealth is being enhanced.

Increase in company topline: Economic Environment
The Indian economy is expected to grow at 7.5% this financial year. The reform process continues apace. This will be essential to ensuring sustainable GDP growth at 7-8% levels, which is very remarkable given the increasing base every year. However, inflation could reach 5.5% levels and could be a concern. There is still an overhang of the oil prices, which have still not been passed on to the consumer.

On the media front, the second phase of private FM radio licensing is being implemented by the Government. This segment is going to see a blistering growth given that the revenue share of radio in the total ad spends is at under 3% and is expected to grow to the 6-8% in the next 5 years. In print, the excitement of the new launches has died down. As stated earlier, it seems that the current incumbents are coming out trumps.

Management Analysis
The topline for the Company showed an increase of 4% in the 9 months ended December 2005 to Rs.7964 lakh against Rs.7680 lakh in the corresponding period in the last year. For Q3 FY06 the topline declined by 5% to Rs.2723 lakh against Rs.2875 lakh in Q3 FY05. This was primarily on account of the Company and the Group exiting from the Outdoor business.

The cost of printing increased to Rs.1042 lakh in Q3 FY06 from Rs.877 lakh in Q3 FY05, an increase of 19%. For the 9 month period the increase was at 24%, from Rs.2467 lakh in the period ended December 2004 to Rs.3055 lakh in the corresponding period this year. The cost of printing has increased on account of an increase in the newsprint prices as well as an increase in the number of pages and circulation of our flagship product "Mid Day".

News expenses have shown an increase of 9% in Q3 FY06 to Rs.63 lakh from Rs.58 lakh in Q3 FY05.

There are no site rental expenses for the quarter as we have exited the outdoor business. There is a write back of Rs.25 lakh in Q3 FY06 on account of a rebate towards site rentals. The site rental expense for the 9 month period ended December 2005 has also declined by 57% to Rs.355 lakh compared to Rs.826 lakh in the corresponding period last year for the same reason.

Staff cost has increased significantly for the quarter ended December 2005 to Rs.462 lakh against Rs.372 lakh in Q3 FY05. However for the 9 month period the increase is at 10% from Rs.1235 lakh in the 9 month period ended December 2004 to Rs.1357 lakh in the corresponding period this year. This is a result of the increased competition in the newspaper segment, wherein attracting new talent is more expensive.

Selling & Distribution expenses have declined from Rs.155 lakh in Q3 FY05 to Rs.146 lakh in Q3 FY06, a decline of 6%. For the 9 month period ended December 2005 the decline is 16% to Rs.415 compared to Rs.497 lakh in the corresponding period last year. Our selling & distribution expenses were on the higher side in the last year as we had focused on increasing our circulation.

Rent, rate, royalty and taxes have declined marginally by 5% to Rs.86 lakh in Q3 FY06 from Rs.91 lakh in the corresponding quarter last year. This was again on account of the rentals for the office space for our Outdoor Division being discontinued. For the 9 month period ended December 2005 the increase was at 34% to Rs.285 lakh from Rs.213 lakh in the corresponding period last year. This increase is on account of higher rentals for our new office premises.

Other expenses have been curtailed by 31% to Rs.205 lakh in Q3 FY06 from Rs.299 lakh in Q3 FY05. This again is on account of an exit from the outdoor business.

The surplus from operations has increased marginally by 3% to Rs.742 lakh in Q3 FY06 from Rs.717 lakh Q3 FY05. For the 9 month period ended December 2005, the surplus from operations has increased by 9%to Rs.1434 lakh from Rs.1321 lakh.

Other income declined by 56% to Rs 19 lakh in Q3 FY06 from Rs.43 lakh in Q3 FY05. However in the 9 month period ended December 2005, other income increased by 60% to Rs.112 lakh from Rs.70 lakh in the corresponding period last year.

Interest & Finance charges increased by 36% from Rs.25 lakh in Q3 FY05 to Rs.34 lakh in Q3 FY06. The increase in the 9 month period ended December 2005 was at 48% at Rs.93 lakh against Rs.63 lakh in the corresponding period last year. This increase was on account of an increase in loan utilization for our new office premises and the new press premises and equipment at Rabale.

Depreciation for the quarter ended December 2005 was at Rs.61 lakh from Rs.77 lakh in Q3 FY05, a decrease of 21%. This was primarily on account of
disposal of assets at our old office and those of the Outdoor Division.

Profit Before Taxes ended at Rs.666 lakh in Q3 FY06 from Rs.658 lakh in Q3 FY05 a marginal increase of 1%. For the 9 month period ended December 2005, the PBT increased by 13% to Rs.1246 lakh from Rs.1099 lakh in the corresponding period last year.

The Tax provision declined to Rs.208 lakh in Q3 FY06 from Rs.233 lakh in Q3 FY05. For the 9 month period, the tax provision was down by 1% to Rs.403 lakh from Rs 408 lakh in the corresponding period last year.

The Profit After Tax increased by 8% in Q3 FY06 to Rs.465 lakh from Rs.429 lakh in Q3 FY05. For the 9 month period ended December 2005 the Profit After Tax increased by 20% to Rs.845 lakh from Rs.704 lakh in the corresponding period last year.

The revenue for the Group declined by 8% in Q3 FY06 to Rs.2933 lakh from Rs.3173 lakh in the corresponding quarter last year. As stated earlier this was on account of the Group exiting the Outdoor business.

The Profit After Tax declined by 67% from Rs.587 lakh in Q3 FY05 to Rs.194 lakh in Q3 FY06. The PAT for the 9 month period ended December 2005 declined to Rs.222 lakh from Rs.377 lakh in the corresponding period last year. These results are after taking into account radio license fees at fixed charge as per the old license fee regime. If the results are taken into account after taking the new revenue share regime, the Profit After Tax for the 9 month period ended December 2005 will be Rs.1069 lakh.

A segment-wise look at Q3 2005-06 performance
Newsmedia: Revenue up 5%

The revenue for the newsmedia group increased by 5% for Q3 FY06 to Rs.2620 lacs from Rs.2503 lacs in Q3 FY05. However due to higher printing expenses as mentioned above, the PBIT of this segment has declined to Rs.601 lacs in Q3 FY06 from Rs.721 lacs in the corresponding quarter last year.

Our new press at Rabale is now functional. We have started trial printing in January and will start printing our newspapers from there soon.

The churn in this segment in Mumbai due to the launches of new newspapers is now settling down. We are very confident of emerging as winners as the new competition has not managed to significantly affect our topline.

Our stated intention is to take our flagship "Mid Day" to other cities in the next financial year. We are undertaking research to this end.

Outdoor: Wrapping up
The Group has completely exited the Outdoor business.

There is a PBIT of Rs.131 lakh from this segment. This is on account of a rebate received towards operational expenses. Our main focus in this business now is to recover the capital employed invested which is in the form of deposits to various Government authorities and Debtors.

Radio: License to rock India

A lot of developments have taken place in the radio segment. BBC Worldwide, a wholly owned subsidiary of BBC, has agreed to partner us in this segment. They have invested in our radio subsidiary, Radio Mid-Day West (India) Private Limited.

The FM radio broadcasting policy phase II is being implemented. We have bid for and won licenses for 6 more metro cities i.e. Delhi, Chennai, Kolkata, Bangalore, Ahmedabad and Pune. With radio stations in these cities, we will have a national footprint. The project implementation will take 12 to 15 months. For the quarter ended December 2005, the radio revenues have grown by 7% to Rs.219 lakh compared to Rs.205 lakh in Q3 FY05. The PBIT for this segment was at -353 lakh for Q3 FY06 compared to Rs.-202 lakh for Q3 FY05. The loss in this segment increased on account of a 15% increase in license fees and non-recurring one-time expenses incurred towards processing fees and share issue expenses.

The Loss of Rs.353 lakh turns around to a profit of Rs.38 lakh for this quarter after these adjustments are taken into account.

Looking forward
Our new press is to be made fully operational to enable us to give more value to our readers.
We plan to launch Mid Day in other cities in the next financial year.
The radio license we have won need to be made operational within the next 15 months.
We are focusing on recovering the Capital Employed in the Outdoor Business.
We are hoping for a quick release of the High Court stay order on our film "Black Friday".