D B Corp Ltd Management Discussions.

Economy Overview:

India has been the growth leader amongst major economies including emerging markets and developing economies over the last five years. India surpassed China in terms of real GDP growth in 2014 and has remained ahead since. However, the recently released first revised estimates for FY 2018-19 combined with the advanced estimates for FY 201920 indicate a fall in Indias real GDP growth in FY 2019-20 to a level below that of China. Growth in the Indian Economy is, however, expected to pick-up hereafter.

India shares 17.7% of the worlds total population and 2.4% of the worlds surface area. According to the International Monetary Fund World Economic Outlook (October 2019), Indias Nominal GDP was estimated at USD 2,936 billion in 2019, making it the fifth largest economy in the world. When measured on the basis of Purchasing Power Parity (PPP), India was estimated to be the third largest economy in 2019 at PPP USD 11,326. India contributed 3.4% of the worlds GDP in 2019 measured in nominal USD exchange rate basis.

Source: EY FICCI Report 2020 - The era of Consumer A.R.T.

Per-capita nominal GDP grew by 8.5% in 2019: Indias per-capita nominal GDP is estimated to have grown by 8.5% in 2019 to Rs. 1,54,600 as compared to a growth of 7.6% in China in the same year. This is projected to increase further to 9.8% in 2020 and to 10.2% in 2021. A higher per-capita income is expected to drive consumption growth, including that in the Media & Entertainment sector.

During the Union Budgets of FY 2019-20 and FY 2020-21, India rolled out one of the most important policy reforms which aimed at attracting overseas investments. This came in the form of an overhaul of the corporate tax rate (CIT) structure, along with related exemptions and deductions. With this, the corporate investments are expected to pick up gradually, as the capacity utilisation improves. Until then, the additional corporate savings may be used for additional dividend distribution, price reduction, reduction in corporate debt and financing buybacks, which may lead to an increase in the consumption demand.

The proposed National Infrastructure Pipeline (NIP) is another policy initiative taken by India to improve demand. The NIP is a six- year investment plan to augment infrastructure in different sectors of the Indian economy. The proposed cumulated investment of Rs. 102 trillion is to be financed by the Central Government including Central Public Sector Enterprises (CPSEs), state governments including State Public Sector Enterprises (SPSEs), and the private sector in the ratio of 39:39:22. The Centres budgetary support to the NIP is meant to serve a pivotal role in bringing together the states and the private sector.

Budget 2021: Providing a consumption-based push

The Union Budget 2021 has prescribed a consumption- based push for the economy. In order to push demand, the Government relaxed the fiscal deficit targets from 3.3% of GDP to 3.8% in FY 2019-20 (revised estimate) and from 3% to 3.5% in FY 2020-21 (budget estimate). Most of the additional borrowing is proposed to be spent on augmenting revenue expenditure. Additional stimulus has also been introduced

by providing an optional personal income tax rate structure and by abolishing the dividend distribution tax. The estimated magnitude of the stimulus provided through these two reforms amounts to Rs. 400 billion and Rs. 250 billion respectively. These initiatives are likely to add to the private disposable incomes, potentially raising consumption demand in the economy.

FDI policy initiatives: The Government has focussed on liberalising the FDI regime for both Telecom and Media and Entertainment sectors to attract investments for adequate infrastructure development.

Media and Entertainment Industry

While Indias economic growth has been lukewarm, the countrys Media and Entertainment industry has grown significantly at the rate of 9% last year. Though the industry is estimated to grow at a CAGR of around 10-11% till 2025, the rate of growth can bounce further on the back of various opportunities to serve the global audiences and international media companies, thus enabling the sector to contribute more towards Indias aspiration of becoming a USD 5 trillion economy. Currently, Indian content is being consumed in over 150 countries across all Media Properties.

The aggressive growth offers a compelling opportunity for global media players looking to tap into a vast, vibrant and diverse market. While the potential upside is significant, the sheer complexity and diversity of the Indian market

While Indias economic growth has been lukewarm, the countrys Media and Entertainment industry has grown significantly at the rate of 9% last year

demands global players to focus on localising their content and/or services. Whether the chosen strategy is to build, buy or partner, understanding the many nuances of the Indian market is now more crucial than ever before.

Print Media - Standing Strong on the Back of Credible Content

38% of India reads news publications; 5% read magazines and two-third of all readers are NCCS ABC

86% of circulated copies were in Hindi and other Indian languages

As per estimates, the print companies conducted over 3,000 events in 2019 which generated sponsorship and ticket sales revenues for them in addition to ad revenues

Circulation revenues grew by 2%

Margins improved as newsprint cost rationalised and cost reduction measures were implemented

Source: EY FICCI Report 2020 - The era of Consumer A.R.T

Hindi commands largest share of Newspaper ad volumes

Percentage share
Rank Publication language 2018 2019
1 Hindi 37% 37%
2 English 25% 24%
3 Marathi 9% 9%
4 Telugu 6% 6%
5 Tamil 5% 6%
6 Kannada 4% 5%
7 Gujarati 4% 4%
8 Malayalam 3% 3%
9 Oriya 3% 2%
10 Bengali 2% 1%
Others (3) 2% 2%

Circulation Revenues

Circulation supply chain is the most important aspect for the growth of Indian print segment - providing newspapers and magazines at readers doorsteps ensures reading habits continue Circulation revenues increased by 2% as newspaper companies tactically increased prices in certain Hindi and other regional markets

The scope for cover price increase is significant (and the need imminent when compared to the cost of production) but requires concerted action from all players in each market to enable the same Hindi (42%) and other Indian languages (43%) comprised the majority (86%) of daily newspaper circulation

Source: EY FICCI Report 2020 - The era of Consumer A.R.T.

Indian languages commanded 85% share in circulated copies

Contribution to circulation (by language)

Source: ABC Jan-Jun 2019, includes only certified publications/ editions

Importance of Events Increased

• Largest event companies in India are print players, producing over 3,000 events a year in totality

• A clear move towards ticketed events was seen in 2019 to increase revenues of popular IPs

Ad Volume Movement

English and Hindi language contributed to over 60% of newspaper ad volumes

Source: EY FICCI Report 2020 - The era of Consumer A.R.T. 86%

of total newspapers circulated were in Hindi and other Indian languages

DB Corp Ltd

Circulation at Rise:

Audit Bureau of Circulation (ABC) data reveals that the Indian language newspapers in India are witnessing a CAGR growth of around 4% over a 10-year period from 2009 to 2019

Source: ABC

Readership Base Expands 2019 Q4 over 2017

All India

Read in last 1 month (Cr)

Increase in

Growth (%)

IRS 2017 IRS 2019-Q4 Readers (Cr)
Dainik Bhaskar 4.63 5.33 + .69 15.03%
Any Regional Dailies 20.28 20.30 + .14 0.07%
Any Dailies 40.70 40.03 -.67 -1.65%

Source: IRS 2019 Q4

Huge Headroom for Print Growth

~20% of the Indian population currently reading newspapers

Can Read Population(in Cr) Any Publication (in Cr) Source: IRS 2019 Q4 Urban + Rural 4%

10-year CAGR growth of Indian language newspapers in India as per Audit Bureau of Circulation (ABC)

Indian print media differs from the trends displayed in western markets on account of key reasons mentioned below:

i

Population: Growing at ~1% p.a.

2

Literacy: Improved from 64% to 74% from 2001 to 2011

3

Credible content: No fake news

. Difference in lifestyle: Enough time in the morning

Huge headroom for future growth:

With ~20% current readership

5

6

Availability: Freely distributed

Hyper-Localisation: On-ground news coverage

8

Affordability: Low cost

Annual Report 2019-20

Age-wise Readership Growth

Indias push towards increasing literacy levels is helping deeper penetration and expansion of the readership base across demographics.

12-15

16-19

20-29

30-39

40-49

50+

TR Increase in Readers (000s) Growth (%) Increase in Readers (000s) Growth (%) Increase in Readers (000s) Growth (%) Increase in Readers (000s) Growth (%) Increase in Readers (000s) Growth (%) Increase in Readers (000s) Growth (%)
DB 151 2.43% 1,086 15.44% 1,978 14.86% 1,454 17.03% 1,159 20.77% 1,139 20.08%
Any Regional Dailies -454 -2.24% -1,178 -5.03% -433 -0.86% 290 0.73% 585 1.92% 1,335 3.48%
Any English Dailies 1,196 41.04% 1,402 35.60% 2,817 33.27% 1,020 22.28% 675 22.09% 279 6.09%

Source: IRS 2019 Q4

Radio Industry

Reach

• India had over 1,100 operational radio stations

• India had 33 private FM broadcasters in 2019, operating in 104 cities

• The broadcasters operate 367 FM radio stations, up from 355 stations in 2018

• I n addition, the public broadcaster ‘Prasar Bhartis All India Radio Service operates 470 broadcasting centres in 23 languages, reaching 92% of the country and over 99% of Indias population

• I ndia has 275 operational community radio stations in 2019 compared to 248 such stations in 2018

Listenership of Radio held its Ground

Radio Listenership Percentage

• Listenership of FM radio as per the Indian Readership Survey remained stable across the last three studies at 20%

• Proportion of urban radio listeners remain almost twice that of the rural listener base

• News, is expected to be permitted, but estimated to have a minimal impact in increasing overall listenership

• The number of new smartphones without FM receivers is a worrying trend, though all the top selling phones of 2019 had FM receivers

Non-Advertising Revenues Increased Further

• As per estimates, the non-FCT revenues now account for almost 7-8% of total radio segment revenues (as high as 20% for some radio companies)

• Many radio companies also invested in event IPs, such as Spell Bee, music awards, RJ hunts, regional music festivals, etc., which generated sponsorship revenues as well as ticket sales income

Solution Sales Commenced in Earnest

• Combined [radio + digital] sales and solutions were offered by almost all large radio companies during the year

• In addition, digital interactivity with end customers became a reality as radio companies launched products like contests, polls, bingo, etc.

• Interesting new models emerged where radio companies bundled inventory from other digital platforms (not their own) as well as OOH, activations, and print and regional TV to provide 360-degree solutions to the advertisers

Direct-to-Customer Communities will be Developed

• Radio to build stronger communities through RJs by using interactivity, gaming, quizzing etc. as effective tools to enable the generation of audience data and provide segmented audiences to the advertisers

• In addition, radio can also generate transactional revenues from the focussed/niche communities in which it enjoys a loyal base of audience, by meeting their varied requirements

• News and community podcasts could also enable D2C community building

Subscription Models will Emerge

• Given the limited ad inventory available due to licensing restrictions and tepid interest by advertisers, the need for radio to have a subscription element in the revenue mix is greatly felt

• Niche subscription offerings to loyal customer bases/ communities can be expected soon

• Partnering with music streaming platforms is another option, particularly around premium and differentiated content

Listenership of FM radio as per the Indian Readership Survey remained stable across the last three studies at 20%

Content Production will Increase in Importance

• Utilising the inherent entertainer DNA of its programming staff, content creation across short and episodic forms can be a huge revenue earning opportunity for radio; given that the smartphone penetration is estimated to be 3x TV screen penetration by 2025

• Voice products on smart speakers and smartphones will also provide growth opportunities to radio companies

The PPL Agreement is to be Renewed Shortly

• Radio has been paying music royalties to many labels at 2% of its revenues since the PPL judgement several years ago. This will be up for re-negotiation in 2021 and will result in a reset of the royalty amounts paid by radio companies to music labels

Source: EY FICCI Report 2020 - The era of Consumer A.R.T

Digital Industry

Digital Media Grew by 31% in 2019

• I ndia had 395 million smartphone users and around 4 million connected TVs in 2019

• Online video, audio, news and social media consumption increased significantly in 2019

• Digital advertising grew by 24%, driven by increased consumption of content on digital platforms and marketers tilt towards measurability and performance

• Paid digital subscribers crossed 10 million and subscription revenue grew by 106% as Indians paid for quality online content

• Subscription, which was 3.3% in the digital segment in 2017, increased to 13% in 2019

Internet Penetration Continued to Increase

Dec 2017 Dec 2018 Dec 2019
Total internet subscribers 446 604 723
Narrow band subscribers 83 79 61
Broadband subscribers 363 525 661
Urban internet subscribers 314 391 463
Rural internet subscribers 132 213 261

Source: FICCI-EY report, ‘A billion screens of opportunity (March 2019)

• Internet subscriptions grew by 20% between December 2018 and December 2019

• 91% of those accessing the internet used broadband

• Broadband subscriptions reached 661 million in 2019. While narrow band subscriptions fell by 23%, broadband subscriptions grew by 26% between December 2018 and December 2019. The urban internet subscriptions grew by 18% and rural internet subscriptions grew slightly faster at 22%

• According to IAMAI Report India Internet 2019 released in March 2019, 51 million people accessed the internet each month, which is estimated to cross 650 million by 2023

Device Growth

Smartphone Users Reached 395 million in 2019

• Smartphone user base increased to 395 million in 2019 from 340 million in 2018 - this shows that 40% of the Indian population below 15 years of age are using smartphones

• Smartphone subscriptions increased from 590 million to 660 million in 2019 and are estimated to reach 1.1 billion by 2025

Content Consumption

Overall Consumption Trends

Indians in 2019 spent over 3.5 hours a day on their phones

According to IAMAI Report India Internet 2019 released in March 2019, 51 million people accessed the internet each month, which is estimated to cross 650 million by 2023

Indian Media & Entertainment Industry - Opportunities and Threats Opportunities

India has been the growth leader amongst major economies including emerging markets and developing economies over the last five years. India surpassed China in terms of real GDP growth in 2014 and has remained ahead since. However, the recently released first revised estimates for FY 2018-19 combined with the advanced estimates for FY 201920 indicate a fall in Indias real GDP growth in FY 2019-20 to a level below that of China. Growth in the Indian Economy is, however, expected to pick-up hereafter.

India shares 17.7% of the worlds total population and 2.4% of the worlds surface area. According to the International Monetary Fund World Economic Outlook (October 2019), Indias Nominal GDP was estimated at USD 2,936 billion in 2019, making it the fifth largest economy in the world. When measured on the basis of Purchasing Power Parity (PPP), India was estimated to be the third largest economy in 2019 at PPP USD 11,326. India contributed 3.4% of the worlds GDP in 2019 measured in nominal USD exchange rate basis.

Indias per-capita nominal GDP is estimated to have grown by 8.5% in 2019 to Rs. 1,54,600 as compared to a growth of 7.6% in China in the same year. This is projected to increase further to 9.8% in 2020 and to 10.2% in 2021. A higher per- capita income is expected to drive consumption growth, including that in the Media & Entertainment sector.

Source: EY FICCI Report 2020 - The era of Consumer A.R.T

Threats

1. Piracy: The digital media sub-sector in India has not been able to fully monetise its content due to the prevalence of rampant piracy. Weak IP regulations and ineffective enforcement have been a deterrent to producing original content and IF! Also, with the growing global reach of the Indian Media and Entertainment industry and the growth of the Indian diaspora abroad, the international piracy of Indian content has also emerged as a key challenge.

2. Weak Indian Economy: The GDP Growth of Indian Economy is sliding to the level of sub 5% since last 3-4 years. Advertising, which is the main source of revenue for Media & Entertainment Industry, depends on the overall economic performance and continuation of weak economic performance may thus interfere with the industrys revenue growth.

3. Input Costs: The Indian newspaper industry imports more than 50% of its paper, mainly from the US, Russia and Canada. Being a significant component of cost, players are sensitive to fluctuations in the price of paper. Rising prices and depreciation of the Indian rupee are therefore generally a cause of concern for the industry.

DBCL Segmental Performance

D. B. Corp Ltd. (DBCL) is Indias largest media conglomerate with strong presence across Print, Radio and Digital segments. It is headquartered in Bhopal, Madhya Pradesh, India, with over 9,700 employees across the country. As Indias largest print media company, DBCL publishes 5 newspapers - Dainik Bhaskar (46 editions), Divya Bhaskar (9 editions), Divya Marathi (6 editions), Saurashtra Samachar and DB Star in 3 languages, i.e., Hindi, Gujarati and Marathi. DBCL is present across 12 states in India with a footprint in Madhya Pradesh, Chhattisgarh, Rajasthan, Haryana, Punjab, Chandigarh, Himachal Pradesh, Delhi, Gujarat, Maharashtra, Jharkhand and Bihar.

DBCLs other business interests span across radio and digital mediums. In the FM radio segment, the brand has a strong presence in ‘94.3 MY FM, which is available in 7 states and 30 cities, creating a valuable package for advertisers in Tier II and III cities, where Dainik Bhaskar is already a leader in the print business. DBCL also has a strong online presence with 8 internet portals and 4 mobile applications and a very formidable position in almost 67% of the Indian language media space. Further, it is the No.1 digital player in Hindi and Gujarati languages.

Print Segment

FY 2019-20 was a wonder year for the Circulation. It started with officially establishing Dainik Bhaskar as ‘No. 1 Newspaper in India with highest circulation as certified by Audit Bureau of Circulation s (ABC) January-June 2019 as well as July-December 2019 Report. Along with this, Dainik Bhaskar also garnered a position of No. 2 in Bihar through ABCs January-June 2019 Report.

Dainik Bhaskar also showed an increased Readership in many states despite a diminishing readership trend in general. It stands as the torchbearer of readership growth, adding 74.51 lakh readers (TR) during the last 2 years. This translates into a growth of 12.66%, majorly in the legacy markets of Madhya Pradesh, Chhattisgarh, Rajasthan, Haryana, Punjab, Gujarat and in the relatively new market of Bihar.

Dainik Bhaskar is

Worlds 3rd largest circulated newspaper as per WAN IFRA recent report.

FY 2019-20 was a wonder year for the Circulation. It started with officially establishing Dainik Bhaskar as ‘No. 1 Newspaper in India with highest circulation

Source: Audit Bureau of Circulations (ABC) Jan-June 2019 as well as July-December 2019 Report.

Annual Report 2019-20 I 47

This year, DBCL became the ‘Largest Newspaper Group of India as per a recent IRS 2019 Q4 survey. The flagship brand ‘Dainik Bhaskar continues to be the No.1 newspaper of NCCS A and NCCS AB segments of Urban India with a widening lead. It also rose to the most-awaited feat of being No. 1 in Rajasthan - both in terms of Circulation (ABC July-December 2019) and Readership (IRS 2019 Q4).

Some key achievements for Dainik Bhaskar in terms of Readership this year are stated as below:

• Dainik Bhaskar Group became No.1 newspaper group of India (excluding Financial Dailies); Source: IRS 2019 Q4 - AIR (U + R) : Main + Variant

• Dainik Bhaskar continues to be Urban Indias No.1 Newspaper in NCCS A & NCCS AB segments and is further increasing its lead; Source: IRS 2019 Q4 (AIR - Urban : Main + Variant)

• Dainik Bhaskar continues to hold an unwavering leadership position in two key markets i.e. Madhya Pradesh & Rajasthan; Source: IRS 2019 Q4 (AIR - U + R : Main + Variant)

• In Rajasthan, Dainik Bhaskar became the No.1 Newspaper, with greater dominance in Jaipur and top 5 cities of Rajasthan

Source: IRS 2019 Q4 (AIR - U +R : Main + Variant)

• Divya Bhaskar has increased its lead to 31% in the key market of Ahmedabad; Source: IRS 2019 Q4 (AIR) and has become the No.1 newspaper in major 4 cities and in the top 6 cities of Gujarat (AIR/TR)

• I n newer market of Bihar, Dainik Bhaskar has steadily increased its readership and gained a substantial market share. Total readership grew by 7% to 67.06 lakh readers. Further, Dainik Bhaskar has added 17.36 lakh new readers from Q1 to Q4

(Source: IRS 2019 Q4 TR - Urban+ Rural)

Towards the end of FY 2019-20, the impact of COVID-19 was felt by the Indian economy, with a bigger impact on the Newspaper Industry. However, Dainik Bhaskar remained

This year, DBCL became the ‘Largest Newspaper Group of India as per a recent IRS 2019 Q4 survey. The flagship brand ‘Dainik Bhaskar continues to be the No.1 newspaper of NCCS A and NCCS AB segments of Urban India with a widening lead*

*Source: IRS Q4 2019 AIR survey

; In newer market of Bihar, Dainik Bhaskar has steadily increased its readership and gained a substantial market share. Total readership grew by 7% to 67.06 , lakh readers. Further, Dainik Bhaskar has added 17.36 lakh new readers from Qi to Q4*

firm on maintaining continuity of the newspaper publication. This move of the Company, not just inspired other players in different states, but also led the Government to allow all print media companies to continue operations amidst the nationwide lockdown. DBCL expresses heartfelt gratitude to its journalists, circulation staff, agents and distributing vendors who showed enormous support and commitment towards continued circulation of the newspaper during this pandemic.

Moving forward, DBCL will continue to strive harder and aim for new milestones in circulation and readership, underpinned by a focussed marketing and circulation strategy.

Editorial Framework Major Activities

• Loksabha Election - Mahabharat 2019 - A special

dedicated daily page sharing elections insights, facts and analysis etc. on Loksabha Election and Bhaskar Yatra Ground Reporting

Abolish Article 370 from J&K: Detailed insights on Planning by Govt. and how and why was it applied across the provision of the constitution of J&K

, • Ayodhya Verdict: A special 6-page report on the

historical Ayodhya verdict by the Supreme Court, including on-ground report which portrayed the real situation on the day of verdict, the judgement and its possible consequences

Formation of Maharashtra Government: A special coverage on the formation of Maharashtra Government including headlines, photo stories and overall coverage with key facts and analysis

Dainik Bhaskar is the newspaper of Rajasthan with greater dominance in Jaipur and top 5 cities of the state*

A New Year special annual issue based on theme - "2020 - TT-$d^C ^T dirt - iol, • rtld1 ,^T

TtS aid1" - covered exclusive and contrasting pictures from the highest army base at Siachen and Ramlala from Ayodhya

No Negative Monday (5th anniversary): A special issue dedicated to the theme - "mRcik ^T d<Md 3ifT dWd" - which covered topics like appreciation, affection, respect, relations, mental growth, well-being, stability etc.

Edit Drive Campaign: A month-long special Edit Drive against porn websites in the interest of society

Corona Update (Daily page): Covers COVID-19 updates across India and rest of the world. Includes ground reports from Bhaskars ally reporters in various countries. Also initiated ‘^^4i$l sfc StffH

- a special page to highlight fake news/information on COVID-19

Radio Segment: 94.3 MY FM

MY FM has always been a true-blue leader of the ‘real Bharat. Our core corporate promise of ‘Indias Local FM Station has been our strength. In tune with our brand philosophy of "Aaj Kuch Achcha Sunte Hain", MY FM has been at the forefront, championing its vision to inform, entertain and enlighten the communities that DBCL is a part of, with a participative approach of progressive and positive inputs.

MY FM is a household name in most Tier II & III cities of our presence. These markets are amongst the ones that are fuelling the growth of the Indian Economy. In each of the 30 markets of its presence, MY FM commands market leading positions and is a force to reckon with on-air, on-ground and on-digital today.

MY FM Initiatives to Enhance Listener Engagement in FY 2019-20

Jingle (New Brand) Launch: The Jingle video crossed over 2.5 million views across all social media accounts. Other key events included:

Fun Mein Hai Vishwas with Kumar Vishwas

Mafia Stories with Hussain S Zaidi

MY FM Ke Rangrezz, Official Radio Partner for 19th ITA Awards

Major Awards - won by MY FM in FY 2019-20

Mera Indian New India Award (New Jersey)

MI Awards, 2020 - ‘MY FM Ke Rangrezz was awarded with Bronze in the category of ‘Best Brand Activation

Asian Customer Engagement Forum and Awards - ‘MY FM Ke Rangrezz bagged Gold Award under the ‘Most Effective BTL Campaign category

DIGITAL SEGMENT - DB DIGITAL DB Digitals Strategy & Progress:

During FY 2019-20, DB Digital intensified its focus on strengthening its loyal user base by revamping its direct properties, including its Android & iOS apps and websites. This is expected to enable a long-term growth and monetisation strategy by:

Creating an extremely loyal user base

Offering them a unique and innovative news experience

Reducing their dependence on third-party platforms by forming a direct connect relationship with its users

DB Digital is one of the fastest growing Hindi and Gujarati news Apps of FY 2019-20.

Major Focus Areas

1. Consumer Products

2. Technology & Personalisation

3. High Quality Content

4. Local & Video - Emerging Trends

Focus on Consumer Products:

In FY 2019-20, DB Digital revamped its entire Product & Technology team to operate like a lean start-up. It hired a highly experienced team, proficient in building consumer products for the Bharat market with a user base of more than 100 mn across India.

The core tenet is Kendra me Pathak (Customer Obsession at the Centre) and revolves around building product and content strategies to create a News product that can solve the real needs of its consumers.

MY FM is a household name in most Tier II & III cities of our presence. These markets are amongst the ones that are fuelling the growth of the Indian Economy

DB Digital is one of the fastest growing Hindi and Gujarati news Apps of FY 2019-20

Focus on Technology & Personalisation:

DB Digital revamped its technology infrastructure to enable a high-level data analysis and create scope for greater experimentation & personalisation. This was to optimise the product and enable its rapid execution to grow and touch more than 100 million users over the next decade. DB Digitals new engineering team has a past record of working with the top Indian tech start-ups and scaling the products and systems in line with user expectation and market trends.

Focus on High-Quality Content:

While the market continues to act short-term and reward low-quality viral content driving engagement and thus ad revenue on social platforms, DB Digital has clearly differentiated itself with qualitative, insightful, but engaging content without compromising on its journalistic values. It is constantly innovating on multiple categories and formats of content, to discover content that users will eventually be willing to pay for, to build a healthy subscription-driven digital business.

Focus on Local & Video Emerging Trends:

DB Digital is focussed at providing in-depth local news across more than 2,500 cities and towns in its core markets and scaling its reach further. Video-streaming is a huge unsolved and unaddressed public need which is evident and something DB Digital will focus on over the next few years.

Since a large segment of the news audience prefers video to reading articles, key focus is being placed on developing new and innovative video formats which are mobile-first, and not just rehashed TV channel clippings, packaged for a very engaging, differentiated consumption experience.

Market Opportunity & Potential Major Focus Areas:

1. Digital Content Industry Growth

2. Smartphone/Internet Penetration Growth

3. Vernacular Audience Growth (in Non-Metros etc.)

4. Digital Revenue Opportunity Growth/ Ad Spends/ Subscription Growth etc.

Risk Management and Controls

DBCL has a robust risk management process to identify key risks across the group and prioritise action plans to mitigate them. Its risk management framework is reviewed periodically by the Board and the Audit Committee. The proceedings of the review process include discussions on the managements submissions on risks, prioritisation of key risks and approval of action plans to mitigate such risks.

Some of the uncertainties and risks that can affect the business are technological changes, changing customer preferences and behaviour, competition, volatility in prices

of newsprint and macro-economic factors such as an economic slowdown. To maintain its competitive edge and minimise exposure to risks, DBCL has undertaken various initiatives such as enhancement of existing technological capabilities, automation of various processes and digital properties, increasing its geographical presence and continued investment in its print facilities. As far as volatility in newsprint prices is concerned, it is managed by a variation in the GSM quality of newsprint, page rationalisation, a dynamic hedging policy and effective cost management through total cost productivity.

Internal Controls and Vigil Mechanisms

DBCL has built up a strong and efficient internal controls mechanism, commensurate with the size of its operations. It has laid down standard operating guidelines and processes which ensure smooth functioning of activities and zero ambiguity in the minds of people who actually execute the operations. The policies, processes, guidelines and checklists relevant to the Standard Operating Procedures are available to all on DBCLs Intranet Portal.

Internal Controls

Over the years, DBCL has undertaken specific efforts to build up its processes and deploy Standard Operating Guidelines across all operational areas.

The Finance Heads at Corporate, State & Unit levels are accountable for financial controls. They report in line with DBCLs accounting policies and are fully responsible for the accuracy of books of accounts and preparation of financial statements. DBCL has deployed a vigorous internal controls and audit mechanism to facilitate an accurate and fair presentation of its financial results. This process not just ensures adherence to regulatory standards and meets statutory compliance requirements, but also confirms that DBCLs reporting is complete, reliable and understandable. In addition, there is a specific impetus on safeguarding investor interests with deployment of the highest levels of governance and regular communication with them.

During FY 2019-20, DBCL also appointed an independent Chartered Accountancy firm to assist in re-evaluation and testing of its Internal Financial Controls (IFC), which encompassed review, reclassification and rationalisation of controls.

Internal Audit

To support its internal audit structure, DBCL has engaged experienced Chartered Accountancy firms across all locations. A system of monthly internal audit reporting, reviewing and monitoring together with Surprise Audits are conducted to ensure effective adherence to establish processes, internal controls and internal audit mechanisms on a real-time basis.

Vigil Mechanism

DBCL is among the first few companies in India to take active steps towards establishing a ‘Whistle-blowing Mechanism. This initiative was taken to encourage employees to report irregularities in operations, besides complying with the statutory requirements under the Companies Act, 2013 and the Listing Regulations.

In order to maintain highest level of confidentiality, DBCL outsourced the complaint receipt and coordination with the whistleblower to an independent agency. All DBCL employees have daily access to the independent agency through a dedicated tollfree hotline, or through other channels like website, email or post. These reporting channels can be accessed in Hindi, English, Marathi and Gujarati. The whistleblower will be provided with a reference number by the agency for providing additional information and updates on the status of the complaint.

An Internal Ethics Committee has been established to operate this policy under the supervision of the Audit Committee. An ombudsperson, along with the Ethics Committee, decides the future course of action. Complaints are categorised and prioritised, based on their nature, and actions are commensurate. If the whistleblower is not satisfied with the actions taken, the mechanism also has an Escalation Protocol in place. Through this process, the mechanism considers and extends complete protection to the whistleblower.

Integrity and ethics have been the bedrock of DBCLs corporate operations. DBCL is committed to conducting its business in accordance with the highest standards of professionalism, honesty and ethical behaviour and has the best systems in place to nurture a similar working culture.

Financial Review and Operational Highlights

(All financial numbers are on a consolidated basis)

Income from Operations

On a consolidated financial basis, DBCL registered a degrowth of 9.80% YoY in its total revenues during FY 2019-20 at Rs. 22,363 Mn compared to Rs. 24,793 Mn for FY 2018-19.

Circulation Revenue

Circulation Revenue registered a de-growth by 2.2% YoY during FY 2019-20 to Rs. 5,122 Mn compared to Rs. 5,237 Mn for FY 2018-19. Over the past decade (FY 2009-10 to FY 201920), Dainik Bhaskar has delivered a 9.23% CAGR growth, driven by yields and copies in core legacy markets - much above the industry growth standards.

Advertising Revenue

Advertising revenues de-grew by 11% YoY during FY 2019-20 to Rs. 15,640 Mn compared to Rs. 17,625 Mn for FY 2018-19

Advertising revenue for the Print Segment de-grew by 10% YoY

Advertising revenue for the Radio Segment de-grew by 11% YoY

The weakness in the advertising revenue was on the back of a continuously weak economic performance

Raw Material Consumed

The cost of newsprint consumption reduced by 17% YoY to Rs. 7,664 Mn for FY 2019-20 as compared to Rs. 9,236 Mn for FY 2018-19. This decrease in cost was majorly on account of global decrease of newsprint prices.

Employee Cost

At a consolidated level, the employee cost declined by 4% YoY to Rs. 4,181 Mn for FY 2019-20 as compared to Rs. 4,351 Mn for FY 2018-19. Cost-efficiency measures executed by the management enabled optimisation of operating cost across each head.

Other Expenses

Other operating expenses reduced by 7% YoY to Rs. 5,578 Mn for FY 2019-20 as compared to Rs. 5,998 Mn for FY 2018-19, on account of very focussed and tight control on overheads and despite the impact of the Forex Loss to the tune of Rs. 86 Mn in FY 2019-20.

EBIDTA

The EBIDTA de-grew by 5% from Rs. 5,209 Mn (margin of 21%) in FY 2018-19 to Rs. 4,940 Mn (margin of 22%) in FY 2019-20, primarily due to the impact of reduction in advertisement revenue.

Depreciation

Depreciation and amortisation expenses grew by 22% to Rs. 1,207 Mn during FY 2019-20 from Rs. 986 Mn during FY

2018- 19, majorly due to the impact of Ind AS 116 "Leases".

Financial Cost and Foreign Exchange Fluctuation

Finance cost increased by 195% YoY to Rs. 251 Mn for FY

2019- 20 from Rs. 85 Mn for FY 2018-19, majorly due to the impact of Ind AS 116 "Leases".

Over the past decade (FY 2009-10 to FY 2019-20), Dainik Bhaskar has delivered a 9.23% CAGR growth, driven by yields and copies in core legacy markets - much above the industry growth standards

Profit after Tax (PAT)

The Operational PAT stood at Rs. 2,750 Mn during FY 2019-20 as compared to Rs. 2,738 Mn during FY 2018-19.

Capacity Utilisation

The quality and strength of the Balance Sheet of DBCL as on March 31, 2020 is satisfactory and can be gauged from the following ratios:

Sr. Ratios As on
No. March 31,2020
1. Return on Capital Employed 19.48%
2. Return on Tangible Net Worth 16.38%
3. Tangible Net Worth Rs. 16,784 Mn
4. Debt (Secured Long-Term) NIL
5. Cash & Bank Balance Rs. 1,352 Mn
6. Current Ratio 2.0 times
7. Debtor Turnover 3.5 times
8. Inventory Turnover 3.1 times
9. Interest Coverage Ratio* 81.06 times
10. Operating Profit Margin 22.00%
11. Net Profit Margin 12.00%

*Interest coverage ratio during FY 2019-20 stood at 81.06 times compared to 69.39 times for FY 2018-19 due to decline in interest expenses (excluding foreign exchange difference considered as borrowing cost and interest on leased liabilities).

Shareholder Value

DBCLs dividend distribution policy is aimed at sharing its prosperity with its shareholders, subject to maintaining an adequate chest for liquidity and growth.

100% Dividend Declaration

For the year ending March 31, 2020, DBCL has declared and paid an aggregate equity dividend of 100%, i.e. Rs. 10 per share which is a pay-out (including tax on dividend) of around 77% of Consolidated PAT for the year.

Human Resources

With an intention to empower employees to be self-sufficient for their basic needs and bring the routine transactions on the self-service mode, HR process automation was initiated during FY 2019-20. DBCL launched a new-age HRMS solution with various employee-friendly features and mobile- first philosophy. This helped in bringing most of the employee transactions online and enabling reduced dependency on people. The application included features like marking attendance, applying for leaves and approving them on the go, wishes, call directory, survey, announcements, salary related information, KRAs, etc. In future, the solution will also

feature recruitment, on-boarding, learning and travel module, making it a single integrated platform from an employee experience standpoint.

To further DBCLs philosophy of promoting home-grown talent, the Individual development plans for high potential employees were developed and implemented. The sustained effort on this has resulted in a large number of mid and senior level positions being filled internally.

Managing people costs has been one of the strategic priorities for DBCL. Thus, it looked at the structure critically and removed the redundancies, ensuring agility, and at the same time eliminating the unwanted costs. The philosophy of promoting home-grown talent and hiring mostly at the entry level also helped.

Late Chairman Shri Ramesh Chandra Agrawal has always been the source of inspiration for the Bhaskarites. Thus, DBCL decided to celebrate his birth anniversary, 30th November, as ‘Prerna Diwas every year. On this day, various activities like blood donation camp (where more than 12,000 units were donated in 2019), drawing competition for children, Ann Daan and Vastra Daan were organised, and ‘Prerna Puraskar was distributed to people who demonstrated the values of Simplicity, Humility, People Connect and Business Growth.

Employee care has been one of the top priorities for DBCL. The initiation of the Group Term life insurance policy, which was launched in August 2019, was a key initiative this year towards this end.

With an intention to empower employees to be self-sufficient for their basic needs and bring the routine transactions on the self-service mode, HR process automation was initiated during FY 2019-20. DBCL launched a new-age HRMS solution with various employee-friendly features and mobile-first philosophy.

Outlook Print Segment

Increased Focus on Subscription Revenues

The Print segment will need to focus on growing its subscription revenues through a combination of identifying new markets which are underpenetrated as well as increasing cover prices, for which newspapers and magazines will need to reinvent themselves as purveyors of not just news and opinions, but of in-depth analysis

Print brands, with years of heritage and trust, will broaden their scope to enable transactions and subscription models outside of pure content, to serve the wider needs of their reader communities

Platform-based Approach to Ad Sale

DBCL expects print companies to enable platforms for smaller agencies and SME advertisers in order to grow their reach and be able to handle larger number of advertisers

When coupled with their ad sales feet on the street, the combination would in effect make print companies act like advertisement agencies for their customers

Radio Segment Advertising Model will Evolve

Radio is expected to evolve towards performance advertising in 2020, with a heavier tilt towards SMEs and retail advertisers

Local brands are expected to increase spends across a city or geographically relevant city-clusters, while national advertisers will continue to advertise with an objective of general awareness and to induce sale/action. Such campaigns are expected to be integrated with the digital media campaigns of the respective brands

Digital Segment

Digital segment is expected to grow to Rs. 414 billion by 2022, at 23% CAGR

Advertising is expected to grow at a 22% CAGR, while subscription is estimated to grow at 30% CAGR, on the back of over 50 million paying video subscribers and 5 million paying audio subscribers

The number of internet connected smartphone screens is expected to double to 750 million by 2025, bringing the large: small screen ratio to 1:3. The change in screen ratio is expected to stir a massive increase in demand for content across short and interactive formats, driving up content prices further and at the same time ensuring that content libraries are shared increasingly

The demand for regional digital content is expected to rise much higher as growth will be driven by consumption in non-metro markets

Radio and print companies are poised to benefit from this change and will enable them to provide short and snackable content to meet this demand