Q4 2005-2006 Highlights
• Group EBIDTA up 401% to Rs 1935 lakh.
• Group achieves record PAT Rs 620 lakh
• Radio's Mumbai operations records profit in revenue share regime.
• Company EBIDTA up 31% to Rs 1700 lakh.
• Company PAT up 32% to Rs 809 lakh.
• Company surplus from operations increased up 27% to Rs 1525 lakh.

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.

Earnings, EBIDTA rise
Business Scenario
India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become the third major economic power within 10 years. Service Sector accounts for 54% of economic output and grew by an unprecedented 9.8%. Sensex created history by posting a fresh all time high of 12000 and there still are no signs of an impending reversal.

The Indian entertainment and media industry is witnessing a phenomenal growth and is slated to grow at 19 per cent to Rs 83,740 crore by 2010 from its current size of Rs 35,300 crore, according to a study.

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 newspaper business is growing at a rate of over 14 percent annually.

Radio, the cheapest form of entertainment will see drastic changes. The government has completed its second round of licensing for private FM broadcasting. This sector is expected to grow at a CAGR of 32 per cent and the segment size is forecast to grow four times from the present size of Rs 300 crore to Rs. 1200 crore by 2010, the survey said.

The study projects that the share of radio in the total advertisement pie would grow substantially over the next five to 10 years due to the explosive growth in the ad inventory as a result of commencement of operations of at least 300 stations over next couple of years.

Management Analysis
The Company recorded a marginal 1.86% increase in turnover to Rs.10434 lacs in the current financial year from Rs.10243 in the last financial year. The turnover increase is marginal due to our exit from the unprofitable outdoor business.

The cost of printing has increased by 24.74% to Rs 4215 lakh from Rs 3379 lakh in the previous year. 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 6.25% annually from Rs.240 lakh in the previous year to Rs.255 lakh in FY06. The increase is more pronounced in Q4 FY06 at 26.79% to Rs 71 lakh from
Rs 56 lakh in Q4 FY05.

Site rentals have declined by 69% to Rs 356 lakh in FY06 from Rs 1137 lakh in the previous year. This is due to the exit from the outdoor business.

Staff cost has gone up by 17% in the financial year to Rs 1897 lakh from Rs 1622 lakh in the previous financial year. The increase is more pronounced in Q4 FY06, as the costs have gone up by 40% from Rs 386 lakh in Q4 FY05 to Rs 540 lakh in Q4 FY06. This is due to an increase in headcount as per the expansion plan of the Company.

Operating Margin We have benchmarked as a target the OPM of similar companies around the world and will constantly drive to achieve that number and then exceed it

Earnings before Interest, Depreciation & Tax: Our effort is to remain EBIDTA positive on a group basis.

Selling and Distribution expenses have declined by 9% from Rs 740 lakh in the previous year to Rs 672 lakh in the financial year under review. Rent, rate, royalty and taxes have increased by 11% to Rs 366 lakh from Rs.329 lakh in the last year.

Other expenses have declined by 28% to Rs.1148 lakh from Rs 1602 lakh. This is on account of the Company exiting from the outdoor business.

Surplus from operations has grown to Rs 1525 lakh in the financial year under review from Rs 1194 lakh an increase of 28%.

Other income increased by 70% from Rs 103 lakh in the last financial year to Rs 175 lakh in FY06.

EBIDTA has shown a healthy 31% growth from Rs 1297 lakh in the previous year to Rs 1700 lakh during the financial year under review.

Return on Capital Employed Our focus is on improving the ROCE such that we achieve a positive EVA (an excess of return over the weighted average cost of capital) and then increase EVA every subsequent period.

Interest and Finance Charges have increased by 56% to Rs 136 lakh in FY06 as compared to Rs 87 lakh in FY05. This is due to an increase in borrowings to finance, expansion of the new press at Rabale.

Depreciation has decreased by 7% to Rs 289 lakh from Rs 311 lakh in FY05. This decrease is due to disposing off the assets of the outdoor division.
Profit Before Tax has increased to Rs 1275 lakh from Rs 899 lakh, an increase of 42%.

After providing for taxes, the Profit After Tax increased by 33% from Rs 609 lakh in the previous year to Rs 809 lakh in the financial year under review.

A segment-wise look at Q4 2005-06 performance
Newsmedia: Topline up

During the year under review the topline of this segment has grown by 9% to Rs 9922 lakh against Rs 9096 in FY05. This is despite the competition from 3 new players that has come into this segment in FY06.

The PBIT for this segment has however declined by 19% and closed at Rs 1456 lakh in FY06 against Rs 1796 lakh in the previous financial year.

The impact of the new launches has been taken in our stride and our plan for FY07 is to increase the circulation of our flagship Mid Day through aggressive promotions.

The press at Rabale is now fully functional with the newspaper being printed from there. This allows us to add more colour and more supplements to the newspaper.

As reported earlier, our plan for taking the newspaper to other cities is now crystallizing and our first launch will be in Bangalore.

Outdoor: Complete exit
The Company has made a marginal profit of Rs.15 lakh in FY06 in this segment. The exit from this business is complete. Our main focus in this business now is to recover the Capital Employed invested in this business.

Radio: Making waves

The company has won 6 new licenses apart from Mumbai, under the second phase of license regime. The new stations are at Delhi, Chennai, Bangalore, Ahmedabad, Pune and Calcutta.

The radio topline has grown by 43% in FY06 to Rs 866 lakh against Rs 607 lakh in FY05. The topline growth for the quarter is more impressive at 71% from Rs 150 lakh in FY05 to Rs.256 lakh in the year under review.
This segment reported a positive PBIT due to a write back of the license fees. We had accounted for the license fees on the basis of the fixed regime upto December 2005. However, we have written it back in Q4 FY06 and provided for license fees on the basis of the new revenue sharing regime.

The Loss Before Interest and Tax at Rs 136 lakh is 87% lower than the Loss of Rs 1054 lakh reported in FY05. This is on account of launching new stations outside Mumbai. The Mumbai operations have turned cash positive in this year.

We are currently implementing radio stations in the cities we have won licenses in the Phase II Policy on Private FM Broadcasting..

Looking forward
- We are targeting an increase in the circulation of our flagship Mid Day.
- We plan to launch Mid Day in other cities starting with Bangalore.
- 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”.