Management Discussion and Analysis

Forward-Looking Statements

This report contains forward-looking statements, which may be identified by their use of words like ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’ or other words of similar import. All statements that address expectations or projections about the future, including but not limited to statements about the Company’s strategy for growth, product development, market position, expenditure, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company’s actual results, performance or achievements could thus di3er materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

Overview

Indian Economy and Media and Entertainment Industry

Theeconomicgrowthfortheyear2015-2016isestimated to be same as it was a year before. Maintaining a growth of over 7% with the expectation of still higher growth in 2016-17 is truly incredible. The global economy has numerous challenges to address but India is expected to deliver a progressively higher growth because of its strong macroeconomic fundamentals, demographic advantage, strong domestic demand, government’s push on rural infrastructure and investment in general and other confidence building measures being taken up by the government. In the year 2016-17, urban as well as rural demand is expected to get an additional boost from the implementation of the recommendation of the 7th Pay commission as well as policy of One Rank and One Pension and a good monsoon after couple of years of drought.

We believe that India is currently at the inflection point of the next level of growth which will be achieved through a healthy mix of investment and consumption instead of growth which is only consumption driven and was the outcome of first phase of reforms. The blended growth now being targeted is more sustainable in the long term.

The performance of the media and entertainment industry is invariably an outcome of economic activity and the consumer sentiment. The industry gains additionally if the economic growth is driven as much by the consumption as it is driven by investment. We expect substantially increased consumer spend in the year 2016-17 in general and in particular in the states, which are investing in inclusive development. We, therefore, see a more rewarding 2016-17 for the media and entertainment industry.

The year 2015-16 witnessed the industry recording its highest growth in the past three years. While stability in the economy is one of the key reasons for the growth, we also believe that confidence that India is back on the path of a sustainable growth seems to be the real trigger for the industry.

Besides the growth, the year 2015-16 was remarkable even otherwise for all the segments of the industry. For the television industry, birth of Broadcast Audience Research Council (BARC) was a huge positive as the industry now has more relevant and credible viewership data which augurs well for future and faster growth. For the print industry, this was perhaps the only year in the last decade when the circulation revenue grew faster than the advertisement revenue.

In the Radio Industry, the long awaited Phase-III auction could conclude successfully. The roll out of new stations will expand the reach of this mass medium and the broadcast of news whenever allowed by the government will be the high point for the industry. While digital continues to grow dramatically it still has very low penetration at merely 1/3rd of the total population. Digital infrastructure and the high cost of internet compatible mobile handsets will continue to be the challenges for rapid expansion of this medium, but the government’s push behind digital is a welcome e3ort. We believe that the rollout of 4-G is likely to be a landmark step and it will go a long way in providing internet to the common man at a3ordable prices.

Other forms of media such as OOH continue to remain small in size in relation to the total media industry. The fragmentation and domination of this medium by the unorganised sector is the bottleneck in realising the true potential of this medium. The entertainment industry, of which film is the key constituent, is largely dependent on the mass appeal of the films. The year 2015 was far more satisfactory for the film industry as compared to the earlier year and therefore for whole of entertainment industry, which registered a growth of nearly 8% as against negligible growth in the previous year.

Print Industry

Print industry continues to grow and remains the second largest constituent of the media industry. This year too, there was an increase in circulation numbers as well as increase in cover prices. The purported price sensitivity of the media consumer in India has neither been experienced nor is expected to be experienced by this industry at least to the extent it is talked about by the people because India, unlike western world, continues to carry very low cover price with newspaper delivered at the door step.

While there continues to be strong advocacy of free content, we believe no credible quality content can be created without incurring costs. The reporters, editors/ producers and technology do not come free and expecting advertisers or others to pay for the consumers of content is unfair and economically unsustainable for the industry. The newspaper industry is the largest producer and provider of trustworthy content to the whole universe of the business of news through the tireless e3orts of millions of reporters / editors working fearlessly day in and day out risking at times their lives and digging out stories reaching some of the remotest areas, which no other media can hope to replicate. Therefore, it commands the price for its content not only from its readers but even from those who use its content to earn their revenues.

It is this ability of keeping people informed on the happenings surrounding them and trustworthiness of the print media which will ensure that it always remains relevant, in spite of the renewed debates about its fate in the face of the roll out of 4G. Globally, the print medium faced challenges due to a lack of focus on localisation of content, complacency by not embracing technology and allowing it to disrupt the existing business model and not developing the display advertisement market (in which local market has a key role to play) to the extent required. The Indian print industry has learnt from these mistakes and is ensuring that the same are not replicated.

There are also several socio cultural Differences between India and the western world which critics lose sight of. Some of the key Differences that support the Indian print industry are door delivery of newspapers coupled with extremely low cover price, significant advertisement spend by government and its newspaper friendly policies, deeper reach, the wide gap between " can read" and " do read" population and a very low consumption of media in general in the country. All forms of media complement each other and have to co-exist if India has to catch up with the global average of media consumption first and then the media consumption in advanced countries which is way ahead of the global average. India is a country where there is room for everyone to grow provided we have the agility to identify the need gap and the willingness and the ability to fill that gap e3ciently. If we fail to understand this, we can neither blame the industry nor anyone else but only ourselves for the loss. The industry would grow irrespective of whether we grow or not.

In terms of percentage, growth in advertisement revenue in the year 2015-16 was similar to that of the previous year but in reality it is better than what the numbers show as in the current year, inflation was lower. However, there was some loss of share of print in the total pie. Part of this loss can be attributed to magazines where the trend is not expected to be reversed and part of this loss is attributed to the rigidity of certain print players who allowed the advertisers either to shift their budget to other mediums or not to advertise at all; not out of choice but because of un-a3ordability.

We must also recognize that the loss of share is imminent when new mediums emerge and evolve. We believe all forms of media complement each other and if each vertical and player delivers desired profits and return on investment, the overall industry will feed off each other and grow. If print is losing some share, it is well placed to compensate this loss by increasing its share in digital which is an integral part of the print industry.

As far as various categories of advertisers are concerned, FMCG, Auto and Education continue to be the top 3 categories for print amongst commercial advertisers. Print showed a growth across almost all major categories including these three. The two important categories which did not do well were BFSI and Real Estate which are interest sensitive sectors but are now likely to do better with moderation in rate of interest.

Although there is neither a threat to the industry nor is it likely to starve due to lack of desired growth, it has its own problems which need quick redressal if it has to capitalise on the opportunities which Emerging India is offering to everyone. These include the uncertainty about an authentic readership survey which is the only relevant measurement tool for assessing the e3ectiveness of a newspaper in India, lack of innovation, slower adoption of technology, ine3ciencies in the system, fragmentation and unfair trade practices adopted by a select few publishers. The industry also needs to recognize that as it becomes larger in size with significant business and economic outcomes, it can no longer remain a vehicle of power or an entity meant for social good alone. Thus, in sum, the outlook for the print industry is bright provided it learns to become more adaptable in dealing with the highly competitive environment around it and demonstrates the acumen of a truly commercial enterprise.

Please also refer to an article titled "As Digital Fatigue Sets In, Readers are Waking Up to Newspapers" published by the Editor and Publisher on 2nd May 2016 on the future prospects of the newspaper in the world.

Web link to read the article: http://www.editorandpublisher.com/feature/as-digital-fatigue-sets-in-readers-are-waking-up-to-newspapers/

Radio Industry

A significant movement in current fiscal was the start of the next stage of growth with the completion of Part I of the Phase III auctions, migration of existing operators from Phase II to Phase III and the announcement of the hike in the foreign direct investment (FDI) cap for FM radio from 26% to 49%.

The radio players spent Rs. 1056 crores to acquire 91 new stations and Rs. 1967 crores for migration of their existing 243 stations to Phase III in 2015. Part I of Phase III rollout fortifies the government’s commitment to see FM radio proliferate to more than 85% of India – reaching newer cities and audiences and its rollout was the cause of much optimism within the industry.

Radio’s share of the overall pie is estimated to continue at 4% in the short term. However growth is likely to surpass the current CAGR of 14.5% and the industry can expect to reach a size of 6% of the advertising wallet in the medium term as and when Phase III is rolled out in its entirety.

In Phase III, some of the players acquired second frequency in the existing cities. However, we believe that acquisition of second frequency is not likely to increase the current listener base to attract more advertisement as the creation of Difference in content is unlikely. We also believe that given the similarity of content between two stations in the same city, acquisition of second frequency at such high prices will make the economic viability still more di3cult especially in cases where advertisement inventory is not yet fully utilised in the existing stations. However, Music Broad Cast Limited would be open to acquiring second station in a select few towns should the frequency become available at a later date at reasonable prices.

Digital media

The digital advertisement spend was higher than expected in 2015, growing almost by 38.2% over 2014 to reach Rs. 60 billion. It is expected to cross Rs. 255 billion in 2020. Currently, in India, the digital advertising constitutes about 12.6% of the total advertising market and is expected to grow to 26% of the total advertising market by 2020. Increasing second screen consumption, growing mobile internet and device penetration and technology innovations will drive digital advertising growth at a CAGR of 33.5% over the next five years.

One of the biggest growth drivers for digital advertising in India is regional markets where current internet penetration is still lower. The India internet story has to be driven by languages since 88% are non- English speakers. Increase in local language content on Internet will significantly increase the current Internet user base and as a result share of digital advertising in local language is expected to rise from 5% to 30% by 2020. This is where print players who are well versed with the local markets and are strengthening their digital presence will have an edge over others and attract good amount of revenue.

These expectations are of course dependent on creation of suitable digital infrastructure in the country at the earliest. Besides 4G, the government’s push will also go a long way in helping the cause.

The Company, its Subsidiaries and Associates (collectively referred to as Group)

The Group comprises Company, its two operating subsidiaries, two operating associates, and 5 other subsidiaries which do not have any business operations. Subsidiary Midday Infomedia Limited (MIL) is a publisher of English daily Midday, Gujrati daily Midday Gujrati and India’s largest read Urdu daily Inquilab. Its operations are primarily in Mumbai, although its Urdu daily is published and circulated in various towns of north including Delhi. The other operational subsidiary is Music Broadcast Limited (MBL) which operates FM radio in the brand name of Radio City from 20 stations across 9 states and has added 3 more states to its bouquet through phase III. The two operating associates are in the outdoor business and are not significant. The Company has plans to exit from these two associates with a complete exit from outdoor media. Out of the 5 non-operational subsidiaries, 3 namely Suvi Info -Management (Indore) Private Limited, Spectrum Broadcast Holdings Private Limited and Crystal Sound and Music Private Limited are in process of being amalgamated into the Company. The Group also includes Music Broadcast Employee Welfare Trust which is wholly controlled by the Company. The trust holds 7.18% of the equity capital of MBL with negligible transactions during the year.

In the year under report, the Group continued to expand and scale up its operations. The Group completed the acquisition of one of the strongest radio assets of the country known as Radio City, crossed the mark of Rs. 2000 crores in sales and went past Rs. 500 crores of operating profit. Foray into Radio Industry was strengthened by acquiring 11 new stations and finalising the takeover of a network of 8 stations from the promoters through the process of demerger. For strategic and focussed expansion of digital business, we worked closely with one of the foremost consultants in the digital space to outline the next 5 years going forward strategy with an objective of becoming a significant player in the digital media space, as Jagran is in the print space, both in terms of revenue share and consumer base. The going forward strategy would revolve around concentrating on the key verticals of high e-CPM categories and markets like UP and Bihar, which are markets of strength for the Group and will drive digital growth in future. The said plan has been rolled out.

While pursuing growth, we have never lost focus on profit and accordingly discontinued the publication of loss making English weekly City Plus from August 2015 and fortnightly magazine Josh Plus from April 2016. This step has not only saved significant recurring losses but more importantly this has also saved precious management bandwidth. The money saved will be invested in expansion of digital as discussed above.

As reported in the previous year, the management has already decided to exit from outdoor advertising and event management businesses as these are dominated by the unorganised sector and scalability remains an issue in both the cases. Even though outdoor advertising has some profits and event business too is expected to turn into profit in the current year, the management believes that the returns are not commensurate with the investment and the e3orts required to be put in. We have not yet succeeded in our endeavour but we continue to look for an exit that helps us recover our investment at least.

The Group’s existing print businesses once again outperformed the industry with a growth of 10% in advertisement revenue which is the best amongst comparable peers and far higher than the industry’s growth rate. The brand strength, market position, opportunity available in its areas of operation and its strategy to drive growth are the reasons for this remarkable performance. The Company invested in increasing circulation of Dainik Jagran as well as

I-Next which was converted into a broadsheet format from September 2015. The relaunched I-next had an immediate acceptance from the readers and its circulation shot up by more than 50%. It has also given incremental advertisement revenue but it will take some time before the expected revenues start flowing in. We are confident that despite increase in circulation and conversion from compact to full size newspaper, I-next will continue to remain in profit. Increase in circulation of Dainik Jagran was coupled with yet another improved Per Copy realisation.

Naidunia’s performance was better than the previous year as it has improved its profits through near a double digit growth as against no growth in advertisement revenue and cost control measures. However, as it had remained below expectations, the management restructured the top management team. Given the past track record and experience of the new team, it is hoped that Naidunia will deliver on the expected lines in the year 2016-17.

In terms of profit, the contribution of MIL and Punjabi Jagran was outstanding. MIL had an operating profit of Rs. 22.86 crores (previous year Rs. 13.04 Crores) with margin of 20.00%. Punjabi Jagran reported operating profit of

Rs. 6.38 Crores (previous year loss of Rs. 0.72 Crores) with margin of 30.42%. In case of MIL, its consistent growth in advertisement revenue since December 2015 is remarkable if it is seen considering the fact that its area of operation is primarily Mumbai which every media pundit considers to have already stagnated for print. This turnaround has come primarily through improved per copy realisation, growth against de-growth in advertisement revenue in second half of the year, stable cost structure, continued good performance of Inquilab. We remain optimistic about Midday and expect that 2016-17 to be still more rewarding. Punjabi Jagran surprised positively with its profit numbers achieved from a very high growth in advertisement revenue; albeit on a low base.

In the year 2015-16, with over 671 thousand Average Daily Visitors to its websites, the Group was ranked

#1 Language Media Group and #5 News Media Group in the country in digital. Despite the high intensity of competition, the Company’s education portal JagranJosh.com continues to be rated #1 and its news portal Jagran.com too has been rated #1 Hindi news portal by COMSCORE (Web + Mobile - March 2016). The Jagran digital network reached on an average of 15.35 Million monthly unique visitors and delivered

228 million page views in a month. We have added more languages and local coverage and have thus augmented the company’s online offerings. Its multi-platform approach now serves users on web, mobile and applications (apps).

Radio revenues grew at 13% over the previous year. The growth drivers were increase in e3ective rate (ER) of 7% in all markets and growth of around 8% in volume in identified focus markets in Tier-2. Additionally, there was increased focus on key clients and categories which helped increase the market share in the critical client list by 2% over our average share. E-commerce companies emerged as big spenders in 2015-16 in radio. Internet start-up companies were aggressive in their communication with high emphasis on tactical promotions and on customising their offers for local and regional markets. Radio City was able to garner a higher share of these clients through a focussed approach which resulted in a contribution of 8% from the E-commerce category, which was 1% higher than the rest of the industry. Other critical categories for Radio City were Government, Real Estate, Finance and Auto.

In Phase III, Radio City implemented its stated philosophy of expanding in top tier towns, building its footprint in key states like UP and Rajasthan, which were complementary to the Group and ensuring the possibility of creating cost e3ective networks like the Maharashtra network in its portfolio. Radio City also successfully concluded the migration of its current 20 stations to Phase III on payment of the originally anticipated amount of Rs. 211 crores. The Company’s radio business will further be strengthened after demerger of radio business currently run under the brand name Radio Mantra gets completed in this fiscal.

The balance sheet of the Group continues to be strong due to robust cash accruals from print as well as radio businesses and as a result CRISIL has rea3rmed its credit rating AA+Stable for long and medium term and A1+ for short term in respect of the Company, AA(-)/stable for long term in respect of MIL and AA Stable for long term in respect of MBL.

Awards and Recognitions

1. April 2015 : DainikJagran wins Silver at Asian Media Awards of WAN IFRA in the category "Best in Newspaper Marketing" for its campaign "E KachraCampaign"

2. April 2015 : DainikJagran wins Bronze at Asian Media Awards of WAN IFRA in the category "Best in Community Service" for its campaign "Jan Jagran for Democracy"

3. April 2015 : DainikJagran wins the Gold at the Asian Consumer Engagement Forum (ACEF) for the "Most Admired Customer Engaging Newspaper"

4. April 2015 : DainikJagran wins the Gold at the Asian Consumer Engagement Forum (ACEF) in the category "Best in Newspaper Promotion" for its campaign "JagranSanskarshala"

5. April 2015 : DainikJagran wins the Gold at the Asian Consumer Engagement Forum (ACEF) in the category "Best in Newspaper E3ectiveness" for its campaign "E KachraCampaign"

6. April 2015 : DainikJagran wins the Silver at the Asian Consumer Engagement Forum (ACEF) in the category "Successful Use of CSR Activity" for its campaign "Ganga Jagran"

7. April 2015 : DainikJagran wins the Silver at the Asian Consumer Engagement Forum (ACEF) in the category "Best in Newspaper Promotion" for its campaign "Ganga Jagran"

8. April 2015 : DainikJagran wins the Bronze at the Asian Consumer Engagement Forum (ACEF) in the category "Successful Use of CSR Activity" for its campaign "E Kachra Campaign"

9. April 2015 : DainikJagran wins the Silver at the Asian Consumer Engagement Forum (ACEF) in the category "Best in Newspaper Promotion" for its campaign "Jan Jagran for Democracy"

10. April 2015 : DainikJagran wins the Bronze at the Asian Consumer Engagement Forum (ACEF) in the category "Best in Newspaper E3ectiveness" for its campaign "Ganga Jagran"

11. April 2015 : DainikJagran wins the Gold at the Abby Awards at Goafest conducted by Bombay Ad Club in the category "Best Marketing of a Newspaper" for its campaign "Ganga Jagran"

12. April 2015 : DainikJagran wins the Silver at the Abby Awards at Goafest conducted by Bombay Ad

Club in the category "Best Cause Related Marketing Initiative" for its campaign "Ganga Jagran"

13. April 2015 : DainikJagran wins the Silver at the Abby Awards at Goafest conducted by Bombay Ad Club in the category "Best Cause Related Marketing Initiative" for its campaign "Bharat RakshaParv"

14. April 2015 : DainikJagran wins the Bronze at the Abby Awards at Goafest conducted by Bombay Ad Club in the category "Best Publishing Brand Activation" for its campaign "Ganga Jagran"

15. May 2015 : DainikJagran wins 1st Place at the INMA Awards in the category "Best Idea to Encourage Print Readership or Engagement" for its campaign "Jan Jagran for Democracy"

16. May 2015 : DainikJagran wins 3rd Place at the INMA Awards in the category "Best Public Relations or Community Service Campaign" for its campaign "E Kachra"

17. May 2015 : Radio City wins the award for RJ of the Year (Hindi)- RJ Ginnie at IRF Excellence in Radio Awards

18. May 2015 : Radio City wins the award for RJ of the Year (Kannada) - RJ Pradeepa at IRF Excellence in Radio Awards

19. May 2015 : Radio City wins the award for Excellence in New Media Initiative -Slappiesat IRF Excellence in Radio Awards

20. May 2015 : Radio City wins the award for Best Radio Promo (In-house) (Marathi)- Ganpati Guards at IRF Excellence in Radio Awards

21. May 2015 : Radio City wins the award for Best Radio Promo (In-House) (Tamil)-Radio City Blue Carpet at IRF Excellence in Radio Awards

22. May 2015 : Radio City wins the award for Best Radio Programme (Kannada)-City Mathuat IRF Excellence in Radio Awards

23. May 2015 : Radio City wins the award for Best Breakfast Program (Telugu)-RJ Shiv atIRF Excellence in Radio Awards

24. June 2015 : DainikJagran wins Bronze at the WOW Awards in the category "On Ground Promotion of the Year for Brand Awareness" for its campaign "JagranYuvaSampadak"

25. June 2015 : DainikJagran wins Silver at the WOW Awards in the category "Contact Programme of the Year" for its campaign "JagranSanskarshala"

26. June 2015 : Radio City wins Silver at the WOW Awards in the category "Digital Presence for a Property" for its campaign "Radio City Freedom Awards"

27. August 2015 :Jagran Prakashan Ltd wins the QCI – D L Shah Silver Award on excellent performance in continual process improvements in the field of ‘NEWSPRINT WASTE REDUCTION".

28. August 2015 : Jagran Prakashan Ltd was awarded the prestigious Dataquest Business Technology Award for ‘Excellence in the use of Technology for Business Benefits’

29. September 2015 : Radio City wins the award for RJ Promotion - Radio City Love Guru at Big Bang Awards – Bangalore

30. September 2015 : Radio City wins the award for Radio City Super Singer – Season 7 at Brand Excellence Awards

31. September 2015 : Radio City wins the award for CEO, Woman Personality of the year at Brand Excellence Awards

32. October 2015 : Jagran Prakashan bagged the prestigious PrintWeek Quality Award-- "Newspaper Printer of the year 2015".

33. Nov 2015 : Jagran Prakashan bagged The ICONIC IDC Insights award 2015 for Excellence in Innovation.

34. March 2016 : DainikJagran wins Bronze at Asian Media Awards of WAN IFRA in the category "Best in Community Service" for its campaign "Aligarh Lake Campaign"

Risks and Concerns

The management regularly reviews various businesses and operational risks. It has instituted appropriate control procedures to mitigate those risks. The Group’s senior management team identifies risks and the steps are taken to mitigate the same. The management works to make optimum use of the technology to strengthen the controls, minimise or eliminate human intervention in various processes to the extent possible and thereby mitigates the operational and reporting risks.

As on date, the management identifies following risks:-

Print:

1) Adverse change in macro-economic conditions

Low economic growth, high inflation, high interest rate and volatile global economic conditions may hurt the overall consumer sentiment which will negatively impact the consumption and thus media.

Management Perception

We do not expect any of the above risks except the volatility in global economic conditions and consequent low global growth. However, global event should not impact media enough to cause worry. Further, the management’s ability to identify adverse events in a timely fashion and take corrective action has always helped the Company minimise the impact of any adverse economic conditions. Additionally the Company’s business model provides enough flexibility to adjust its operation and scale to prevailing economic conditions.

2) Over dependence on advertisement revenue

The Group derives 74% of total revenue from advertisement. Shortfall in expected growth in revenue for any reason will disproportionately reduce the growth in profits or result in lower profits because advertisement revenue has high operating leverage

Management Perception

This is a risk applicable to whole industry and impact of low revenue growth cannot be fully nullified. Recognising this risk, the management always looks for opportunities in taking increase in cover price and utilising its printing and other infrastructure to generate revenue from other streams such as job work. Currently job work is being done at various printing facilities across the country to ensure optimum utilisation of available print facilities.

3) Competition

India’s print market is highly fragmented; there is sti3 competition, which challenges the profit earning capacity of a print company. Similarly, other media platforms, especially digital are also posing a threat.

Management Perception

The Company strongly believes that no media platform can be a substitute for the other. Print media has its own inherent advantages which include credibility, local content, easy accessibility and low cost of content. Therefore, it cannot be replaced by digital or any other media platform. Digital is simply a form of delivery of content, the largest producer of which is the print.

As far as competition from peers is concerned, the Company has always emerged as a winner on the strengt