Business Scenario
Overall, 38 percent of the increase in global output originated in developing countries, far exceeding their 22 percent share in world GDP.

India has experienced rapid economic growth in recent years, albeit at a slower pace than in China. In 2006, the Indian economy grew by 9 per cent and this strong expansion has continued into 2007 with the most recent figures for 2006 showing year-on-year growth of 9 per cent. GDP growth was mainly driven by the farm sector which surged by 6%.

In terms of the composition of growth, all sectors have grown over Q3 with the fastest growth seen in services, at 10.9 per cent year-on-year, followed by industry, at 10.3 per cent and agriculture and allied industries at 1.7 per cent. The service sector remains the principal sector in the Indian economy, accounting for around 60 per cent of total GDP. It has shown double digit growth since 2003/2004. The industrial sector continues to be driven by the manufacturing sub-sector that grew by 11.9 per cent.

The Indian media industry is expected to significantly benefit from this fast economic growth, as this cyclically sensitive industry grows faster when the economy is expanding.

The print media with current size of Rs 6,800 crore is gradually opening up to foreign investment due to a booming Indian economy, growing need for content and government initiatives. The sector with a CAGR of 12 per cent is estimated to grow to Rs 19,500 crore by 2010.

The radio industry is all set to boom, here again, after regulatory corrections. Availability of larger number of frequencies is expected to drive the segment by 22% over the next five years. The present market is still untapped to a larger extent and the segment is expected to almost treble its size to about Rs. 650 crore by 2009.

(Source : Annual edition of the FICCI - PricewaterhouseCoopers report Indian Entertainment and Media Industry -- Unravelling the potential.)

The total ad spend in media industry has grown by 23.48% from 13500 in 2005 to Rs. 16300 in 2006. The ad spend for radio has grown by 54.36% from Rs. 316.8 lakh in 2005 to Rs. 489 Lakh in 2006. The following pie chart explains the share of print and radio in total ad spend in media:

Management Analysis
On the financial front, sales volumes for the quarter fell by 2% at Rs. 2670 lakh as compared to Rs 2723 lakh for the quarter ended December 31, 2006. This quarter newsmedia division has witnessed marginal growth however exit from outdoor business has affected the company topline.

The cost of printing has increased by 12% from Rs. 1042 Lakhs in Q3 FY 05-06 to Rs.1165 lakh in Q3 FY 06-07. 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 as well as launch of Mid Day in Bangalore.

News Expenses have gone down by 11% from Rs. 63 lakh in the Q3 FY 05-06 to Rs. 56 Lakh in Q3 FY 06-07.

There is no expense of site rentals in Q3 FY 05-06 as compared to Rs. 23 lakh in Q3 FY 05-06 as the company has exited out of outdoor advertising business.

Staff cost has increased by 25.47% from Rs.479 lakh in Q3 FY 05-06 to Rs. 601 lakh in Q3 FY 06-07 and is mainly due to increase in headcount for supporting the expansion and retention strategy of the Company to enable control the attrition rate.

Selling and Distribution expenses have increased by 36.99% from Rs. 146 lakh in the Q3 FY 05-06 to Rs. 200 lakh in Q3 FY 06-07. This is on account of expenses incurred for marketing and brand awareness in Bangalore. Rent, royalty, rates and taxes have decreased by 1.16% from Rs. 86 lakh in Q3 FY 05-06 to Rs. 85 lakh in Q3 FY 06-07. Other expenses have increased by 6.38% from Rs. 188 lakh in Q3 FY 05-06 to Rs. 200 lakh in Q3 FY 06-07.

Surplus from operations is Rs. 363 lakh in the quarter under review from Rs. 742 lakh in the corresponding quarter of last year, recording a low of 51.08%.

Other income increased by 468.42% from Rs. 19 lakh in the Q3 FY 05-06 to Rs. 108 lakh in Q3 FY 06-07. Increase in other income is mainly due to increase in income from investment in mutual funds.

EBIDTA has shown a fall of 38.10% from Rs. 761 lakh in the Q3 of FY05-06 to Rs. 471 lakh during the Q3 of FY 06-07.

Finance charges have increased by 8.82% to Rs. 37 lakh in Q3 of FY07 as compared to Rs. 34 lakh in Q3 of FY05-06. This is due to an increase in borrowings to finance, expansion of the new press at Rabale and expansion programmes. Depreciation has increased by 57.37% from Rs. 61 lakh in Q3 FY 05-06 to Rs. 96 lakh in Q3 FY 06-07. This increase is due to additions in plant and machinery at Rabale press.

PBT has shown a downward trend by recording Rs. 338 Lakh as against Rs. 666 lakh, a decrease of 49.25%.

After providing for taxes, the Profit After Tax decreased by 52.47% from Rs. 465 lakh in the previous year quarter to Rs. 221lakh in the quarter under review.

Group Results:
The Group has recorded an increase in top line of 3.17% to Rs. 3026 lakh in the quarter under review as compared to a top line of Rs. 2933 lakh in the corresponding quarter of the previous year.

EBIDTA has decreased from Rs. 436 lakh to Rs. 120 lakh resulting in 72.48% fall in earnings.

Loss Before Tax is 228.26% at Rs. 354 lakh against the profit of Rs. 276 lakh on a quarter on quarter basis.

The group reported a consolidated loss of Rs. 253 lakh for third quarter of the current year as against the profit of Rs. 194 lakh for the corresponding quarter of the previous year.

News Media:
Due to the aggressive competition from the new entrants in the market the topline of this segment has decreased by 1.95% to Rs. 2670 lakh against Rs. 2723 lakh in corresponding quarter of the previous year.

A combination of soaring expenditure (like printing charges, staff cost and selling and distribution costs) and stagnant revenue lowered PBIT for this segment to Rs. 375 lakhs against Rs 700 lakhs in the corresponding quarter of last fiscal, posting a fall of 46.42%.

The company witnessed inorganic growth by acquisition of Delhi Mid day and tie up with Times group.

Acquisition of "Delhi Mid Day", an afternoon tabloid in Delhi has given a new meaning and dimension to Mid Day, thereby displaying the right balance of ambition and confidence. Mumbai's MiD Day tabloid has grown wings by embarking footprints in Delhi.

The company has entered into a strategic business co-operation arrangement with Times group. The tie-up or the business co-operation agreement will straddle three important areas - advertising sales, distribution and printing facilities.

Radio:
The radio topline posted a rise of 75.80% in Q3 FY 06-07 to Rs. 385 lakh against Rs. 219 lakh in corresponding quarter of previous year.

Expansion of stations in Delhi, Bangalore and Chennai, setup cost and preliminary expenses has resulted in 49.85% rise in the loss before Interest and tax at Rs. 529 lakh as against Loss of Rs. 353 lakh reported for the corresponding quarter in the previous year.

The beginning of the New Year' 07 witnessed launch of Chennai station.

Film

After obtaining clearance from Supreme Court the company is expecting to release "Black Friday" shortly.

Looking forward

-We are focusing on increasing the circulation of our flagship "MiD DAY" in Mumbai.

-It is our key aspiration to be the premier player in the market of Delhi and Bangalore.

-After launching radio stations in three cities we plan to consolidate all four stations to strengthen  our brand "Radio One" and to consolidate and monitor listeners.

-We plan to launch Radio stations in other cities starting with Pune, Ahemdabad, and Kolkatta.

-Our final aspiration is to maximize the returns for our shareholders.