Infomedia Press Ltd

a. Publishing Business

The publishing business reported an operating revenue of Rs.105.38 crores in 2010-11against Rs 68.59 crores in 2009-10. The business reported a growth in revenue by 21.60%over previous year's revenue. During the year, your Company has taken various initiativesacross the publishing business, including introduction of new products and addedimprovements to the look and feel of existing publications.The growth in the revenue isattributed to the product enrichment and improvements in macroeconomic scenario leading toincreased spending on advertising through print media. During the year based on ourproduct innovation and introduction of new sales strategy, on focusing on talentedmanpower and retaining the best talent in our Sales function has helped release of ahigher number of directories.

The Infomedia Yellow Pages Directory has been constantly undergoing innovations -Majority of our directories are having the new look and feel with a stunning red cover, cobranded with our information services website (ask me). The directories are being releasedin four colour printing on imported glazed newsprint, thereby enhancing the visual appealand referring experience for the users.

Look and feel of the 'Know Your City' magazine has been redesigned andstandardized.'Know Your City' - continue to get support both in database and content fromthe burrp! website, was introduced in two more cities last year, presently circulated inseven cities, namely Mumbai, Delhi, Chennai, Bangalore, Hyderabad, Jaipur and Goa.

Special interest publication division continued its growth momentum in the year. Thisyear "Intelligent Entrepreneur" celebrated it's first anniversary and hasestablished itself as a niche business publication. During the year, the leading B2Cmagazines of your Company, namely Overdrive, Better Photography and Better Interiors saw arefreshing facelift with new look and exciting formats.The division continued its focus ondiversifying its revenue portfolio - events, trade shows and awards nights were all wellconducted during the year.

Your Company continues to partner the telecast of a weekly auto show in CNBC TV18 as abrand extension of one of the specialty magazine "Overdrive" The show is alsotelecasted in other channels of the TV 18 group. The show has been adjudged as India'sbest Auto show at the News Television awards.

In line with the intent to expand the events platform, your Company conductedEngineering Expos at 4 cities across the country. The show was well received in thesecities. During the year, your Company also forayed into the B2C events space, with twosuccessful events associated with the "Better Photography" magazine, namely the"Photographer of the Year" and "Wedding Photographer of the YearAwards"

b. New Media

During the year, your Company undertook a number of steps towards establishing theVoice help line and online search operations through the launch of "yellowpages.co.inand continued development of "askme.in" beta site, and acquisition of the"askme.com" domain name. The local information and social media web-site,Burrp.com continues to be a favourite for foodies and has a loyal fan following in thesocial networking sites and is well received in the market. The website has been inexistence for three years now and in this period the site has acquired reasonablepopularity. Your Company believes that there will be greater synergies between thebusiness directories division along with the Askme and burrp! businesses.

Your Company has successfully launched burrp! Express.This is well received in themarket and hailed as one of the best search experiences, burrp! has been featured byGoogle on their chrome store. During the year under review burrper's Choice Awardsexpanded to include SPAs and 2010 awards were given out to 1400 businesses nationwide ascompared to 800 in 2009. Company has witnessed 120% growth in traffic (visitors andvisits). Now Nokia N8 includes burrp! as a featured application.

c Partnership with Alibaba

During the year your company terminated its partnership in India, in mutual consentwith Alibaba.com. However the company has transferred its employees engaged in thisproject to the entity nominated by Alibaba.

In the current financial year your Company has recorded revenues of Rs.7.68 crores fromthis business. (2009-10: Rs.6.30 crores)

d. Printing Business

The printing business reported a drop in the operating revenues as compared to theprevious financial year. The business reported operating revenues of Rs.27.85 crores in2010-11 as against Rs.32.35 crores reported in 2009-10. Your Company uses the press forprinting the inhouse publishing products and the spare capacity is used for otherpublishers.

2. Expenditure analysis

Fixed cost is almost flat as compared to previous year at the back of costrestructuring measures & reduced marketing spends.

Terms Loans and Working Capital Limits have been repaid out of the proceeds of theRights issue, resulting in significant savings in interest costs.

Manufacturing and distribution costs were higher by Rs.3.96 crores (from Rs.26.36crores in 2009-10 to Rs.30.32 crores in 2010-11). The increase in the expenditure ismainly on account of increased newsprint consumption, higher cost of buying and increasein number of copies of magazines printed.

The Employee costs were higher by Rs.8.07 crores (from Rs.50.08 crores in 2009-10 toRs.58.15 crores in 2010-11), on account of recognition of costs related to closure of amore business directories, salary increments and increase in manpower in the new mediafunctions. Other operating expenses went down by Rs.6.46 crores (from Rs.82.13 crores in2009-10 to Rs. 75.67 crores in 2010-11) on account of operating efficiency.

3. Exceptional Items

Your Company entered into a Share Purchase Agreement ('SPA') with Knowledge worksGlobal Private Limited, a Cenveo Inc. company, in May 2010 to sell its entire equity stakein its four subsidiaries carrying on the Publishing BPO business. The company has incurredloss of Rs.123.78 lakhs on sale of these subsidiaries. Further, excess impairmentprovision of Rs.75.60 lakhs in respect of fixed assets held in leased offices has beenreversed during the year. The net value of Rs.48.18 lakhs has been disclosed as anExceptional item in the financial statements for the year ended March 31,2011.

a. Global economic environment: The global economic environment even though comingout of the worst possible times, is still faced with the crisis in certain europeancountries and the uncertainty continues to remain. The Indian advertising and mediaindustry, is recovering from the slump. The credit risks across corporates and customershave to be carefully examined while doing business. We will need to engage more indiversifying our business model and extending our reach. We will need to offer valueproposition to the new customers to develop and grow this business further.

b. Currency Fluctuations related risk: The weakening of the Indian Rupee hasimpacted the import of our principal raw material - paper. The publishing business isheavily dependent on imported paper, given that local mills do not have the capability toproduce paper of a similar kind. The fluctuations in the rupee have adversely impacted ourbuying costs. As a Company policy we have not resorted to foreign exchange forward andoption contracts to hedge the risks against the currency fluctuations for the imports.

c Pricing Risks:The pricing across our publishing and printing business is underrisk due to competition and uncertain economic environment. We have been providing andoffering value added services and benefits to the customers to retain them. We are alsoinvesting towards brand building and awareness programme across our publishing verticalsto ensure adequate product differentiation.

d Hiring and Retention Risk: During the last two years, we have been restructuringour businesses and working on retaining the best talent in the industry to work with us.While, the restructuring process has weeded out the low performers, it will be a constantchallenge to retain the good talent. There is imminent short term risk from new entrantsand domestic players to hire talent from our Company. We have implemented a number ofemployee initiatives like variablizing compensation structures, innovative trainingprograms, job rotations etc., to retain and grow talent.

e. Customers Risk: The credit rating and credit worthiness of a number of entitieshave been impacted due to the economic slowdown. We have been very careful in extendingcredit to some of the high risk customers. We have also set up a collection cell in ourCompany to follow up with all the credit customers to ensure that dues are collected in areasonable period of time and proper credit checks are completed on new customers.

f. Regulatory Risk: Government of India had introduced Service tax levy on ourdirectories publishing business. The revenue in this business during the current financialyear continues to have been impacted due to the levy. Small and medium manufacturers andtraders form a significant portion of the customer base within the directory business -the levy of Service tax has indeed impacted their ability to renew advertisement with us.

g. Asset Risk: We have been conducting periodic maintenance activity at ourprinting press to ensure seamless and continuous production. Technological changes andcontinuous usage will lead to obsolescence of the fixed assets in the press as well as inour publishing business. It will be important for us to balance our capital investments inthe traditional printing business and the new business ventures that we have forayed inthe last few months.

h. Internal Control Systems: The Company has a well laid out internal controlsystem for the various business activities. The internal control systems are so designedto ensure that there is adequate safeguard on maintenance and usage of assets of theCompany. A detailed internal audit plan is worked out at the beginning of the financialyear, and the observations of the auditors are shared with the Audit Committee and withthe statutory auditors.

i. Human Resources

Employee relations continue to be cordial. The Company employs over 1,100 people, andwe would like to thank each and every member of the Infomedia family for their role andcontribution towards the Company's performance. The Company recognizes the key role playedby people - and has implemented various programmes to make Infomedia a truly great placeto work.

5. Outlook

a. The strategic intent of the Company to develop, build and grow the publishingbusiness into a dominant player in the industry remains. The new business initiatives, inthe voice and online platform that the Company has taken, will help foster growth in thepublishing space. With the group's strength and dominance in the electronic media, theCompany would also focus on building the brand through increased visibility in the mediaand build synergies through active participation in the electronic media.

CAUTIONARY STATEMENT

Statement in the Management Discussion and Analysis describing the Company'sobjectives, projections, estimate, expectations may be "forward-lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatcould influence the Company's operations include economic developments within the country,demand and supply conditions in the industry, input prices, changes in governmentregulations, tax laws and other factors such as litigation and industrial relations.