Business Scenario

The Indian economy witnessed robust growth during 2006-07 for the fourth year in succession. According to the advance estimates released by the Central Statistical Organisation (CSO), real Gross Domestic Product (GDP) growth is expected to accelerate from 9.0 per cent in 2005-06 to 9.2 per cent in 2006-07. The acceleration in growth during 2006-07 was driven by the continued momentum in the services and manufacturing sectors, both of which are expected to record double-digit growth.

The Indian Entertainment and Media (E&M) industry is poised to grow at 19% compounded annual growth rate (CAGR) to reach Rs 83,740 crore by 2010 from its present size of Rs 35,300 crore, according to 2005 annual edition of the FICCI - PricewaterhouseCoopers report Indian Entertainment and Media Industry -- Unraveling the potential.

A booming Indian economy, growing need for content and government initiatives that have opened up the sector to foreign investment are driving growth in the print media. With literate population on the rise, more people in rural and urban areas are reading newspapers and magazines, estimates reveal that the reach of print media in India has increased to 222 million people.

Radio is projected to post a robust growth of 32 percent over the next few years to touch Rs.12 billion in revenues by 2010 on the back of a robust economy and easing of stiff investment rules. The size of the industry is currently estimated at Rs.300 crores

Management Analysis
On the financial front, revenues have grown by 13% at Rs.2,785 lacs as compared to Rs 2469 lacs for the quarter ended Mar 31, 2006. This includes revenues from our film "Black Friday" which was released on February 9, 2007. On an annual basis, revenues have grown marginally by 1% from Rs.10,434 lacs to Rs.10,594 lacs. This is despite our exit from the outdoor business and a reduction in the cover price of "MiDDAY" our flagship product.

The cost of printing has reduced by 6% from Rs. 1,173 Lacs in Q4 FY 05-06 to Rs.1,100 lacs in Q4 FY 06-07. This is mainly due to reduction in newsprint prices and appreciation of Rupee against Dollar.

News Expenses have gone down by 23% from Rs. 55 lacs in the Q4 FY 05-06 to Rs. 71 Lacs in Q4 FY 06-07.

Staff cost has increased by 29 % from Rs.558 lacs in Q4 FY 05-06 to Rs. 718 lacs in Q4 FY 06-07. There has been an increase in the headcount due to the expansion strategy of the Company.

Selling and Distribution expenses have increased by 8% from Rs. 257 lacs in the Q4 FY 05-06 to Rs. 278 lacs in Q4 FY 06-07. On an annual basis these expenses have increased by a more significant 48% to Rs.992 lacs from Rs.672 lacs in the previous year. This increase is on account of expenses incurred for the launch of MiDDAY in Bangalore.

Due to consolidation of printing facility at Rabale; rent, rates & taxes have reduced by 11% from Rs. 82 lacs in Q4 FY 05-06 to Rs. 73 lacs in Q4 FY 06-07.

Other expenses have increased by 20% from Rs. 239 lacs in Q4 FY 05-06 to Rs. 286 lacs in Q4 FY 06-07 due to the operations in Bangalore and Delhi.

Surplus from operations is Rs.275 lacs in the quarter under review from Rs.88 lacs in the corresponding quarter of last year, recording an increase of 211%.

Other income increased by 155% from Rs.64 lacs in the Q43 FY 05-06 to Rs.163 lacs in Q4 FY 06-07. Increase in other income is mainly due to increase in interest income, income from investment in mutual funds and foreign exchange gains.

EBIDTA has shown a rise of 187% from Rs.152 lacs in the Q4 of FY05-06 to Rs.438 lacs during the Q4 of FY 06-07.

Finance charges have reduced by 6% to Rs.41 lacs in Q4 of FY 07 as compared to Rs.43 lacs in Q4 of FY 06. However on an annual basis, Finance charges have gone up by 18% from Rs.136 lacs in FY 06 to Rs.161 lacs in the current year. This is due to increase in borrowings for our Rabale press.

Depreciation has increased by 367% from Rs. 82 lacs in Q4 FY 05-06 to Rs. 383 lacs in Q4 FY 06-07. "Black Friday" has been treated as a fixed asset and its cost has been amortized.

Extraordinary item includes investments / loans written off worth Rs.266 lacs to our radio subsidiaries.

PBT has dropped to a loss of Rs. 253 Lacs during Q4 FY 06-07as against profit of Rs. 27 lacs in the corresponding quarter of last year.

After providing for taxes, the Loss After Tax increased by 712% from Rs.36 lacs in the previous year quarter to Rs. 289 lacs in the quarter under review.

Group:
The Group has recorded an increase in top line by 23% to Rs. 3364 lacs in the quarter under review as compared to a top line of Rs. 2725 lacs in the corresponding quarter of the previous year.

EBIDTA has decreased from Rs. 918 lacs to a loss of Rs. 17 lacs.

Profit Before Tax is reduced to a loss of Rs. 1193 lacs against the profit of Rs. 666 lacs during the corresponding quarter in the previous year.

The group reported a consolidated loss of Rs. 866 lacs for Q4 of the current year as against the profit of Rs. 397 lacs for Q4 of the previous year.

News Media:
The topline for the quarter at Rs.2,491 lacs, is an increase of 1% over the topline of Rs.2,469 lacs for Q4 FY 05-06. This is despite a reduction in the cover price of "MiDDAY".

The PBIT for this segment registered a loss of Rs.77 lacs for the quarter against a profit of Rs.56 lacs in the corresponding period last year. This is due to our losses because of new launches and stagnancy in revenues.

Our Bangalore "MiDDAY" has been well received by the readers and has reached a critical mass in terms of circulation in this quarter.

We have put our infrastructure in place for our Delhi re-launch as part of our expansion plan in this quarter.

Film

Black Friday was released in theatres on February 9, 2007.

Revenue from release is Rs. 294 lacs. The amortisation cost of the film is at Rs.288 lacs.

Radio:

The radio topline posted a rise of 122% in Q4 FY 06-07 to Rs. 569 lacs against Rs. 256 lacs in corresponding quarter of previous year.

Expansion of stations in Delhi, Bangalore and Chennai, setup cost and preliminary expenses has resulted in the loss before Interest and tax at Rs. 617 lacs as against profit of Rs. 759 lacs reported for the corresponding quarter in the previous year.

We have launched stations in Bangalore, Delhi and Chennai in the current year.

Looking forward

Print

In Bangalore, we are focusing on monetising our existing readership.

In Delhi, we aim to re-launch "MiDDAY" and build a critical readership mass

Radio

We aim to strengthen our brand "Radio One" and monetise listeners in our existing stations in Mumbai, Bangalore, Delhi and Chennai.

We will launch Radio stations in Pune, Ahmedabad, and Kolkatta.