Entertainment Network (India) Ltd Management Discussions.

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include cyclical demand and pricing in the Companys principal markets, changes in government regulations, tax regimes, economic developments in principal markets and other incidental factors. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements that speak only as of their dates.

A. Media Industry Structure and Developments

(1) Global Economy - A multispeed, incomplete recovery

The IMFs World Economic Outlook (WEO) of April 20211 says "Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic- induced disruptions and the extent of policy support. The outlook depends not just on the outcome of the battle between the virus and vaccines - it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.

Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions".

Among advanced economies, the United

States is expected to surpass its pre-COVID GDP level in 2021, expected to grow by 6.4%1, while many others in the group will return to their pre-COVID levels only in 2022. Similarly, among emerging market and developing economies, China had already returned to pre-COVID GDP in 2020 itself and is expected to expand by 8.4% in 2021 and 5.6% in 20221, whereas many others are not expected to do so until well into 2023. India, which suffered an 8.0% fall in GDP in 2020 is expected to grow by 12.5% in 2021 as per this report. However, other institutions have forecast a more difficult 2021 for India.

The Cumulative per capita income losses over 2020-22, compared to pre-pandemic projections, are equivalent to 20 percent of 2019 per capita GDP in emerging markets and developing economies (excluding China), while in advanced economies the losses are expected to be relatively smaller, at 11%1. The divergent recovery paths are likely to create significantly wider gaps in living standards between developing countries and others, compared to prepandemic expectations. 95 million people are thought to have entered the ranks of the extreme poor in 2020, and 80 million more are undernourished than before1.

Talking about India, the economy is seen growing 12.5% in 2021, up 3.7 percentage points from the October forecast after a stronger-than-expected recovering in 20201.

Table 1.1 - Source (World Economic Outlook April 2021 bylnternational Monetary Fund)

Projections Difference from January 2021 WEO Update1 Difference from October 2020 WEO1
2020 2021 2022 2021 2022 2021 2022
World Output -3.3 6.0 4.4 0.5 0.2 0.8 0.2
Advanced Economies -4.7 5.1 3.6 0.8 0.5 1.2 0.7
United States -3.5 6.4 3.5 1.3 1.0 3.3 0.6
Euro Area -6 6 4.4 3.8 0.2 0.2 -0.8 0.7
Germany -4.9 3.6 3.4 0.1 0.3 -0.6 0.3
France -8 2 5.8 4.2 0.3 0.1 -0.2 1.3
Italy -8.9 4.2 3.6 1.2 0.0 -1.0 1.0
Spain -11.0 6.4 4.7 0.5 0.0 -0.8 0.2
Japan -4.8 3.3 2.5 0.2 0.1 1.0 0.8
United Kingdom -9.9 5.3 5.1 0.8 0.1 -0.6 1.9
Canada -5.4 5.0 4.7 1.4 0.6 -0.2 1.3
Other Advanced Economies2 -2.1 4.4 3.4 0.8 0.3 0.8 0.3
Emerging Market and Developing Economies -2.2 6.7 5.0 0.4 0.0 0.7 -0.1
Emerging and Developing Asia -1.0 8.6 6.0 0.3 0.1 0.6 -0.3
China 2.3 8.4 5.6 0.3 0.0 0.2 -0.2
India3 -8.0 12.5 6.9 1.0 0.1 3.7 -1.1
ASEAN-54 -3.4 4.9 6.1 -0.3 0.1 -1.3 0.4
Emerging and Developing Europe -2.0 4.4 3.9 0.4 0.0 0.5 0.5
Russia -3.1 3.8 3.8 0.8 -0.1 1.0 1.5
Latin America and the Caribbean -7 0 4.6 3.1 0.5 0.2 1.0 0.4
Brazil -4.1 3.7 2.6 0.1 0.0 0.9 0.3
Mexico -8.2 5.0 3.0 0.7 0.5 1.5 0.7
Middle East and Central Asia -2.9 3.7 3.8 0.7 -0.4 0.7 -0.2
Saudi Arabia -4.1 2.9 4.0 0.3 0.0 -0.2 0.6
Sub-Saharan Africa -1.9 3.4 4.0 0 2 0.1 0.3 0.0
Nigeria -1.8 2.5 2.3 1.0 -0.2 0.8 -0.2
South Africa -7.0 3.1 2.0 0.3 0.6 0.1 0.5
World Growth Based on Market Exchange Rates -3.6 5.8 4.1 0.7 0.3 1.0 0.3
European Union -6.1 4.4 3.9 0.3 0.2 -0.6 0.6
Middle East and North Africa -3.4 4.0 3.7 0.9 -0.5 0.8 -0.2
Emerging Market and Middle-Income Economies -2.4 6.9 5.0 0.5 0.0 0.8 0.0
Low-Income Developing Countries 0.0 4.3 5.2 -0.8 -0.3 -0.6 -0.3
World Trade Volume (goods and services) -8.5 8.4 6.5 0.3 0.2 0.1 1.1
Advanced Economies -9.1 9.1 1.1 0.4 1.8 1.3
Emerging Market and Developing Economies -8.6 9.0 7.4 -1.1 0.3 -2.0 1.4
Advanced Economies -9.5 7.9 1.0 0.2 0.9 1.3
Emerging Market and Developing Economies -5.7 7.6 6.0 -0.7 -0.2 -1.9 0.3
Commodity Prices (US dollars)
Oil5 -32.7 41.7 -6.3 20.5 -3.9 29.7 -9.3
Nonfuel (average based on world commodity import
weights) 6.7 16.1 -1.9 3.3 -0.4 11.0 -2.4
Consumer Prices
Advanced Economies6 0.7 1.6 1.7 0.3 0.2 0.0 0.1
Emerging Market and Developing Economies7 5.1 4.9 4.4 0.7 0.2 0.2 0.1
London Interbank Offered Rate (percent)
On US Dollar Deposits (six month) 0.7 0.3 0.4 0.0 0.0 -0.1 -0.1
On Euro Deposits (three month) -0.4 -0.5 -0.5 0.0 0.1 0.0 0.0
On Japanese Yen Deposits (six month) 0.0 -0.1 0.0 0.0 0.1 -0.1 0.0

(2) Indian Economy - 2021, a repeat of 2020

The World Bank in its "Global Economics Prospects" report of June 2021 has scaled up its projections for Indias FY22 economic growth from 5.4% in its January 2021 report to 8.3 per cent due to strong rebound in private consumption and investment growth in the second and third quarters (July- December, 2020) of FY21. The Bank has pegged Indias GDP growth for FY23 at 7.5% in this report.

Writing in The Indian Express, Udit Misra says 2 "The last financial year (2020-21) started with the whole country being under one of the strictest (and, grossly ill-planned) lockdowns anywhere in the world. But at that time, few would have thought that April 2021 would be worse than April 2020 in terms of Covid cases". He mentions that as per Covid-19 India.org, Covid cases have registered a "V-shaped" recovery, and at the last count, India had 1.75 times more daily cases this time than during the past peak, which was in September 2020.

Writing in The Business Standard, Uma S Kambhampati says 3 : "The scale of the crisis in India is likely to mean that international restrictions will remain in place for longer than hoped". This has adversely impacted imports/exports and other businesses that depend on them. This too will have a large dampening effect on economic growth. On the other side, she continues "The pharmaceutical industry in India is the third largest in the world in terms of volume and 11th largest in terms of value. India produces 70% of the worlds vaccines".

Amid a fresh wave of Covid-19 cases in the country, the Reserve Bank of India (RBI) in its June 4th, 2021 report has projected a 9.5 per cent GDP growth for India in the 2021-22 fiscal.4 To reinforce the process of economic revival, the RBI has decided to keep the interest rates unchanged and maintain an accommodative stance owing to the surge in COVID-19 cases in India. The repo rate remains unchanged at 4 per cent to support growth. On the other hand, the reverse repo rate stands at 3.35 per cent.

The Union Budget 2021-22 is optimistically focusing on investment-led measures with increased allocations for capital expenditure; the expanded production-linked incentives (PLI) scheme; and rising capacity utilization (from 63.3 per cent in Q2:2020-21 to 66.6 per cent in Q3:2020-21).

CRISIL5 expects Indias gross domestic product (GDP) growth to rebound to 11% in fiscal 2022, after an estimated 8% contraction in FY21, as four drivers - people learning to live with the new normal, flattening of the Covid-19 affliction curve, rollout of vaccinations, and investment-focused government spending - converge.

However, as in this fiscal, the pace of growth will differ in the first and second halves next fiscal. While the first half will benefit optically because of low-base effect, the second half will see a more broad-based pick-up in economic activity.


2. https://indianexpress.com/article/explained/indian-economy-coronavirus-second-wave-lockdown-7269667/

3. https://www.business-standard.com/article/current-affairs/four-reasons-why-india-s-coronavirus-crisis-will-derail-the-world- economy-121050100373 1.html

4. https://www.livemint.com/industry/banking/rbi-cuts-economic-growth-forecast-for-current-fiscal-to-95-11622780151876.html

5. https://www.crisil.com/content/dam/crisil/events-tiles/india-outlook/2021/india-outlook-2021-is-the-investment-cycle-rebound-round- the-corner/crisil-india-outlook-report-2021.pdf

Despite the growth, the Indian economy will suffer a permanent loss of 11% of GDP in real terms over fiscals 2022-2025. The size of the economy next fiscal will be a mere 2% bigger in real terms than in fiscal 2020. As for corporate revenue, a study of ~800 firms across.

(3) Global Advertising Spends

Global advertising investment is forecast to grow by 5.8% globally in 2021, according to the first Dentsu Ad Spend Report 6 since the global pandemic began. The report combines data from 59 markets and anticipates that $579bn will be spent globally with all regions enjoying positive growth to offset a fall of 8.8% in 2020. Western Europe (7.5%), Asia- Pacific (5.9%) and North America (4.0%) will see particularly strong growth figures, which will be driven by uplifts in investment in key countries such as India (10.8%), the United Kingdom (10.4%) and France (8.9%).

The accelerated shift to digital that advertisers made in response to the significant restrictions placed on peoples lives through lockdowns will also endure. Digital will account for half of all spend for the first time, with Social (18.3%), Search (11.0%) and Video (10.8%) expected to benefit the most.

Meanwhile, the return of major sporting events that were delayed last year such as the Tokyo Olympics and Paralympics, and UEFA European Football Championships will also represent a significant driver of growth. TV is set to benefit in particular from these live events as advertisers look to capitalise on the huge global audiences they draw. It is expected to drive a 1.7% increase globally to $169bn TV spend, which accounts for a third of all ad spend globally.

Industry sectors that have been impacted the hardest by COVID-19 will also see the biggest bounce-backs. Based on analysis in eight markets, the Travel & Transport (28.4%), Media & Entertainment (14.5%) and Automotive (13.8%) sectors will all grow significantly after being hit hard by  the impact of COVID-19. There will also be consistent levels of growth for sectors such as Technology (6.0%), Finance (5.6%) and Telecoms (4.8%), which all proved relatively resilient in 2020.


6. https://www.dentsu.com/uk/en/media-and-investors/ad-spend-report-2021

Despite the positive signs of momentum in 2021, a return to pre-pandemic levels of advertising spend is unlikely until 2022, when spending is likely to reach US$619 billion and grow at a rate of 6.9%.

As per the following chart published in global marketing website and newsletter Marketingcharts.com7, radio has likely become bigger than newspapers globally in 2020 with a 5.8% share of advertising compared to 5.7% for newspapers.

(4) IndianAdvertising Industry Growth Forecasts

As per the latest joint report by FICCI & EY8, the Indian Media & Entertainment sector saw a contraction of around 24 per cent at RS.1.38 trillion in the pandemic-struck 2020. But the last quarter of 2020 showed a significant improvement in revenues for most segments and the sector is expected to rebound with 25% growth in 2021 to reach RS.1.73 trillion. The sector will continue to grow at CAGR of 13.7% to reach RS.2.23 trillion by 2023.

Television will remain the largest earner of ad revenues in 2021 with estimated revenues to grow by 11% to reach INR 760 bn and exceed 2019 levels by 2022. Regional channels received 27% more ad volumes than national channels in 2020. Major sport leagues got postponed, but IPL provided a much-needed revival push in sports viewership. Smart TV sets crossed the five million mark and grew their base by around a million homes. With people spending more time indoors the overall time spent watching TV increased by 9% over 2019.

Digital advertising (including E-commerce) at 32% of total advertising in 2021 became the second largest platform at RS.291 bn by overtaking print (RS.237 bn). Digital revenues are likely to grow by 24% in 2021 over 2020 on the back of increased allocation of ad spends by advertisers accelerating their investments in digital sales channels. SME advertisers continued to increase their spends on digital advertising and experimented more with online e-commerce platforms. Digital subscription grew by almost 50% as the pandemic and the consequent lockdown reduced fresh content on television, online sports went behind a paywall and the pandemic forced much of the population for longer periods indoors. Digital advertising is expected to outpace all other ad media by 2024 or 2025.

Paid OTT subscriptions crossed 50 million for the first time in 2020. It is estimated that demand for original content will double by 2023 from 2019 levels to over 3,000 hours per year. The share of regional language consumption on OTT platforms will cross 50% of total time spent by 2025. Growth was led largely by Disney+ Hotstar which put the IPL behind a paywall during the year, increased content investments by Netflix and Amazon Prime Video and launch of several regional language products.

Online gaming could be the fastest growing M&E segment in 2021 with an expected growth rate of 30% over 2020. The online gaming segment grew 18% in 2020 to reach RS.77 billion aided by work from home, school from home and increased trial of online multiplayer games during the lockdown. Online gamers grew 20% from 300 million in 2019 to 360 million in 2020. Transaction-based game revenues grew 21% on the back of fantasy sport, rummy and poker and casual gaming revenues grew 8%, led by in-app purchases. The segment will grow across all its verticals viz, esports, fantasy sport, casual gaming and other games of skill, but revenue growth will be led by mobile-based real-money gaming applications across these verticals.

Print, Radio & OOH has shown some signs of recovery with expected growth of 25%, 65% & 38% respectively in ad revenues over last year but they still have a long way to go to match pre-Covid levels. While the M&E sector is expected to recover in 2021, different segments will take different periods of time to regain their 2019 (pre-pandemic) revenue numbers. TV, Music and Films will recover within a year or two but hard-hit sectors like Print, OOH and Radio will take at least three years to recover, assuming no further setbacks.


7. https://www.marketingcharts.com/advertising-trends/spending-and-spenders-116193

8. Playing by new rules - EY https://assets.ey.com>ey-com>en in>topics>2021

Indian advertising sector is now redefining itself across these 4 verticals - Video (TV, video OTT), Experiential (Online gaming, cinem as,events,00 H),Textual (print, online news) sndAudio (radix, music, audio OTT).

2019 2020 2021E 2023E CAGR 2020-23
Television 787 685 760 847 7%
Digital media 221 235 291 425 22%
Print 296 190 237 258 11%
Online gaming 65 76 99 155 27%
Filmed entertainment 191 72 153 244 50%
Animation and VFX 95 53 74 129 35%
Live events 83 27 53 95 52%
Out of Home media 39 16 22 32 27%
Radio 31 14 23 27 24%
Music 15 15 18 23 15%
Total 1,822 1,383 1,729 2,234 17%

All figures are gross of taxes (INR in billion) for calendar years EY estimates

(5) TheIndianRadio

AsperthesameEY report referredtoabove8, radio industry revenues fell 54% in 2020 to INR14.3billion from INR 31.3 billion in 2019. Advolumesfell27%in 2020 while adprices fell over 37% on average. The revenue fall was highest, almost 81% in Q2of 2020(April to June 2020) but revenues recovered to 54% of 2019 levels by Q4 (October to December 2020). Radio segment generated 61% of its volume in the second half of 2020, showing continued quarter on quarter volume growth after Q2. Revenues are expected to recover to INR 23.3 billion in 2021.

Talking about revenue contributions, the report highlights the top five advertising sectors delivering 69% of radio ad volumes in 2020 were Services (26%), BFSI (1 2%), Food & Beverages (11%), Auto (10%) & Retail (9%). The local-national split of ad volumes is 36:64 with 2% increase in local advertising contribution over last year.

EY estimates that the sector can recover its 2019 revenue levels by 2024 from core broadcasting operations. Recovery will be driven by resumption of travel, revival of retail footfalls and growth in local services. As live event revenues faltered due to the pandemic, radio companies will have to increase their focus on creating online IPs and content production to sustain similar revenues. Given the relationships with retail and regional SME advertiser base, radio companies can develop concepts and solutions for brands and provide media related services for brands to implement and measure return on investment.

Looking at the current market trends for audio products, radio companies need to adjust to the new realities and invest in the future as the consumption patterns have evolved significantly over last two years. While radio continues to be an important element of most media plans and extremely effective at a local level, radio companies will need to explore adjacent possibilities and differentiate the product more from existing digital audio services, using their core strengths - a deep understanding of music, creation of audio content which resonates with communities and building brands. Many radio companies have already begun to expand its core offering on alternate e media platforms and in the services business using their creative capabilities. Apart from building audio and video content for digital, television, podcasts and other media, radio companies are also exploring gamification of content (contests, play-along games, etc.) to generate audience / consumer data for direct-to-customer engagement for brands. In near future, radio companies are expected to build-out new audio experiences using technology such as AR, VR, audio gaming, live audio collaboration, crowdsourced compositions, tune generators, etc. Talking about service business, most of the radio companies have already extended themselves towards influencer marketing using music talent and their own RJs, generating hyperlocal audio/video content production for brands and curating music plus content for digital platforms, events, retail spaces, etc.

Growth in radio penetration continues with 31 private FM broadcasters in 2020, across 111 cities who operates 385 FM radio stations in India. In addition, the public broadcaster Prasar Bhartis All India Radio service operates 479 stations in 23 languages reaching 92% of the countrys area. India also has 251 operational community radio stations as on September 2020.

B. Radio Industry (Future Outlook, Opportunities and Threats)- Navigating through the Pandemic Year

Like all media sectors. radio too was impacted severely by the Covid-19 outbreak in early 2020. But even before Covid struck, the media industry had been struggling, given the weak economic conditions prevailing in the country all through FY20. In fact, economic slowdown started immediately after Demonetization and continued ever since. This has impacted revenues of all media companies. The future is expected to get better though, as the economy lifts post Covid and as the Government takes fresh measures to boost the economy.

(1) Radio struggles but recovers partially in H2:

As the Covid pandemic spread, people were anxious about their health and wellness matters as well as matters of economic wellbeing. As with all emergencies, media had a key role to play in keeping people informed and in dispelling rumors floating on social media and elsewhere. While consumption of some media like newspapers and OOH was disrupted by the lockdowns, that of others like TV and radio grew rapidly. As per a research done by the radio industry body Association of Radio Operators of India (AROI), radio listenership during the initial days of the lockdowns, in April 2020, increased by nearly 28% compared to the pre-lockdowns period.

Despite higher listenership, the business of radio suffered till mid-2020. Advertisers who saw their businesses disrupted by supply problems and demand sluggishness stopped or reduced advertising. Retail businesses, a key constituent of radio advertisers, were particularly badly hit as shop fronts were forced to shut. Other big advertising segments - Airlines, Education, Real Estate, Auto, Durables and Media & Entertainment - also cut advertising spends. The only segments that did provide some relief, but that too only marginally, were BFI and public regulators (like RBI). The pandemic is the second successive crisis the radio industry has faced within the last two years, the first being the economic slowdown of FY20. As per the Pitch Madison report 9, the radio industry reported a 44% decline in advertising revenue in FY21 to reach RS.1,270 crore. With this drop, Radio has also lost one percent of the market share. This has brought down its share to 2% of the entire Media & Entertainment industry.

As restrictions were lifted, advertising volumes started to grow on radio. Starting Q3 of FY21, there was a palpable improvement in the business sentiment as advertising volumes started to grow. In smaller markets in particular, the sentiment was strong as the pandemic had had a lesser impact in these markets and lockdowns had been lifted earlier. National and retail brands returned to their advertising ways, under pressure to liquidate piled-up stocks and catch up on lost revenue. Radio being a local medium, brands preferred to use it for their local promotional needs. The bigger metros however continued to languish for some more time. It was only in the 4th quarter that the metros also started showing recovery, but even that recovery was only partial.

As lockdowns were lifted gradually, revenues started to recover. As per TRAI, revenues were down by 81% in Q1, 58% in Q2 and 37% in Q3 of FY21. As per industry estimates, revenues were down by 20% in Q4 of FY21. Revenue drop was on account of drop in both pricing and ad volumes. However, as the year progressed, ad volumes returned first. Ad volumes were down 74% in Q1, 27% in Q2, just 1% in Q3 and up 6% in Q4 of FY21 as per the Airchecks report. Radio pricing however continued to remain under pressure throughout the year, down between 20% to 50% for different players throughout the year.



As core radio faced pressure, broadcasters made attempts to cope. Mirchi was better prepared as it had a diversified product portfolio, with solutions accounting for as much as 1 /3rd of total revenues. Other broadcasters scrambled to add social media to their radio plans. The impact of these late initiatives was limited for most players. Every player was thus forced to adopt aggressive cost cuts. All cost heads including payroll, marketing, travel, rentals, electricity and other overheads were cut drastically. It is estimated that nearly 25% of radio employees lost their jobs with many of the remaining suffering painful pay cuts for long periods of time. Broadcasters gave up offices and renegotiated rentals including via rent waivers for several months. Programming initiatives that cost money were restricted to the most essential. Anything that could be cut was cut. However, costs related to payment to the Government of India and its companies proved to be sticky as the Government refused to give any relief. All the Government of India allowed was a 3-month deferment in 1st quarter license fees. Prasar Bharati gave no concessions for their tower rentals. BECIL gave a quarters waiver on monitoring charges, but that was all.

By the end of FY21, broadcasters were looking confident about a recovery in FY22. Many were expecting to go back to FY20 revenues and higher profits (because costs had been cut) in FY22. Indeed, FY22 began with a promise. April 2021 started off strong, but it wasnt before long that the devasting 2nd wave of Covid hit India. The start of FY22 has been very weak, though not as bad as in FY21 as most lockdowns were local in nature and not national like last year. Because of the second wave, the recovery expected in FY22 has been delayed by a quarter. Fundamentals of radio remain strong and if the pandemic recedes, there is confidence of a full recovery in the 2nd half of FY22.

(2) Digital grows. Broadcasters embrace digital products

The explosive growth of the past in digital slowed down in FY21, but it is creditworthy that growth continued to take place. It is estimated that more than 750 million Indians are now online with the smart phone being the primary device for digital consumption. Fueled by the internet boom and easy and cheap broadband access, todays audience is driven to distraction with options to access content of their choice, anytime, anywhere, across entertainment, education, news, spiritualism, wellness or pop culture. There is an abundance of online platforms across video and audio formats.

With music now easily available online, the radio industry faces competition for time from music apps. Music apps provide some obvious advantages to their users - the ability to play a song on demand, the option to skip songs that are not to their liking, the choice to download a song by paying a small charge etc. At one time, the FM radio industry was concerned about losing listenership to music apps. However, over time, it has become clear that music apps have created their followership, not taken away FM radio listeners, The 200+ million monthly listeners of radio continue to use the medium, but many of them are now also using music apps. In all, it is estimated that nearly 300 million users exist for music apps. FM radio and music apps have learnt to coexist with several partnerships now starting to form between them. For example, Mirchi has 18 radio stations playing on Gaana, and Gaana spends money on advertising and sponsorship on Mirchi.

The digital boom has in fact, provided radio broadcasters an opportunity to attract newer audiences by making their content available online (e.g., Podcasts, Web Radio Channels and more). Beyond that, social media helps RJs to connect with their listeners by allowing them to create text, audio and visual content. RJs have become strong influencers too, which helps broadcasters in monetization.

Even though digital consumption continues to spread on phones, radio rules in cars. Even in the developed world, where music apps are very popular, in-car listenership is still dominated by FM radio. The reasons are simplicity of use, the companionship provided by RJs and the curation of music which includes discovery of new music. Plus, the information on local and national utilities that FM radio stations provide - traffic, stock market information, time check etc. - makes FM radio a sticky product in cars. The Government in India realizes the power of FM radio for people on the move. Therefore, whenever there is a crisis - floods, terror attacks etc., it turns to FM radio stations for disseminating information to public thats on the move.

(3) Music royalties - new order passed

Radio broadcasters pay royalties to music companies. The rate of royalty was last set by the Copyright Board (CRB) in August 2010 and the order was valid for 10 years till August 31st, 2020. There was some apprehension amongst radio broadcasters about what the new order would look like.

Broadcasters approached the Intellectual Properties Appellate Board (IPAB), the body that replaced the CRB for such matters, for a new order. The IPAB first restrained music companies from filing infringement suits against broadcasters till the matter was being heard and new orders passed. The new order would be effective from 1st September 2020.

After an elaborate judicial process, in which several broadcasters and music companies as well as the society representing music companies, Phonographic Performance Limited (PPL) argued their case, the IPAB pronounced a new order towards the end of December. While the earlier royalty was based on revenues (2% of revenues), the new order was based on actual hours of music used by radio stations. The new order prescribed rates by "needle hours" (actual hours) of music used. It divided the day into prime-time, non-prime time and night time with different rates for each time band. The new order has been widely welcomed by the radio industry for several reasons. Firstly, the rates were seen to be broadly fair, protecting the interests of both music companies and broadcasters. The IPAB rejected many of the excessive demands of the music companies. The needle-hour order actually helped the music industry in FY21, earning them more royalties than they would have earned if the revenue based order had continued (since revenues fell in FY21). Secondly, its an order that applies to all music companies. The earlier order had been challenged by a few companies who managed to get orders in their favor and stay outside its purview, forcing broadcasters to negotiate voluntary licenses with them. Not only did this increase workload for broadcasters, it also subjected them again to the same old extreme demands of these companies. Thirdly, even though the order is valid only for only one year, the IPAB has clearly said that the basic rate structure would not be disturbed in the future. It thus gives certainty about music royalties in the future.

The IPAB however also entertained a request from the music artists (composers and lyricists), represented by their society, the Intellectual Properties Rights Society (IPRS), to prescribe royalty for them also.

Despite protests from broadcasters that various courts had opined that they didnt need to pay IPRS at all, IPAB went ahead and prescribed rates for them. A few days later, the Delhi High Court ruled in one more long pending case that radio broadcasters did not need any license from IPRS, and thus did not have to pay them, thus rendering the IPAB order for IPRS infructuous. Broadcasters have now appealed in the Delhi HC to annul the IPRS part of the IPAB order, while accepting the rates set for music companies. The music companies have also appealed against the order arguing that the rates are too low. The fact is that the rates are in line with international benchmarks.

(4) Pandemic stalls critical reforms:

A lot of reforms are pending with the Government. As are the next round of auctions. After the failure of Batch-2 auctions, when nearly 75% of the auctioned frequencies went unsold, and many broadcasters stayed away, there was a need for a change in the policy itself. The Reserve Fee and Auction formats are both reasons why Batch-2 auctions failed and there is a need to amend the policy accordingly. Broadcasters have suggested several amendments. However, the Government has not accepted them yet.

The matter of allowing broadcast of news and current affairs is important to broadcasters. With more radio consumption happening in cars, where radio is the only medium easily accessible, news would help increase stickiness of listenership. However, the Government continues to have reservations. There are other reforms needed too - city- level and national-level ownership caps are too restrictive and have hindered M&A activities. Selling a radio business is extremely difficult on account of some other restrictions as well. Finally, the Government needs to relook the formula it uses to set a floor on the annual license fees. This is making the whole industry unviable, especially when revenues drop sharply as in this year.

The Government should realize that if it does not conduct fresh auctions soon, the value of that FM spectrum will erode. This would be a serious loss to the exchequer and would harm public interest by not allowing more programming variety in the market.

C. Operating Performance

(1) FY21: Pandemic hits financial results:

FY21 financial results were badly hit by the pandemic. The first quarter was one of a strict lockdown in April and May, and then a partial re-opening in June. The second quarter saw more restrictions being removed. However, Covid cases increased dramatically in the 2nd quarter and peaked in mid-September. The result of this was that Q2 was very badly hit. The third and fourth quarters saw a smart recovery with festivals and "revenge shopping" creating a spurt in demand for consumer products. The impact of the pandemic by quarters is best captured by the trajectory of the countrys GDP growth which was -23.9%, -7.5%, +0.4% and +1.6% quarter-wise.

The radio industrys performance was worse than the performance of the GDP. The reason for this is simple. The radio industry depends heavily on retail businesses - shopfronts, auto dealerships, educational institutes, jewellery stores, MSMEs and so on. Most of these were badly hit, not only because of the lockdowns, but also because reverse migration had sent much of their labor force back to the villages. Overall, based on data put out by the Telecom Regulatory Authority of India (which also looks after the broadcasting sector), FM radio revenues fell by 81% in Q1,58% in Q2 and 37% in Q3 of FY21. The data for Q4 is not out yet, but it is estimated to be a drop of about 20%.

ENILs revenues also dropped in FY21 in line with the industry. Revenues were down 72% in Q1,59% in Q2, 42% in Q3 and 34% in Q4. As is seen, our 3rd and 4th quarter revenues were hit harder than the industry. This is because our 3rd and 4th quarters have a lot of on-ground activities and these were largely stalled.

All revenue lines of the Company were hit by the pandemic. Core radio was down 51%, On-ground businesses were down 92%, the TV impact properties business was down 37% and the digital content was down 48%. What is good to note is that the multi-media solutions business was down just 16% in a very bad year.

During the year, we also terminated the Advertising Sales Agreement for TV Todays three stations in Delhi, Mumbai and Kolkata- branded Ishq FM - and that brought our revenues from those sales down by 90% during the year.

While revenues took a hit all around, the Company tried to reduce costs to the extent possible. With on-ground and TV businesses down, the direct variable costs (DVCs) associated with those activities were down 61% during the year. The biggest cost head is HR, and on the back of the severe pay-cuts and loss of Management Incentive Program (MIP), the HR costs were own 31%. Staff welfare was down 79% as most people worked from home. We gave up some office space, and also renegotiated rates in some places. This led to a saving of 16% during the year. Thanks to the new royalty order mentioned earlier, costs were down 38% during the year. Marketing costs were pruned by 69% and travel virtually ground to a halt with costs down 90%. Other costs- office G&A, communications, repairs were also down significantly. Costs associated with the Central Govt and its corporates - Prasar Bharati and BECIL - were down very little. License Fees paid to the Govt were down just 8% despite a crash in revenues, because they are governed by a formula which sets the floor. Overall, costs were down 40% over FY20.

Since revenues were down 51% and costs only 40%, EBITDA went from RS.123.5 crores in FY20 to RS.16.3 crores in FY21, a drop of approx. RS.107 crores. Overall revenues were down by RS.274 crores compared to FY20, but overall costs reduced by only RS.167 crores. This brought down EBITDA by RS.107 crores. PBT before exceptional items was down RS.98 crores.

There were two exceptional developments during FY21. One was the royalty order which allowed us to write-back some past royalty provisions to the extent of RS.23.2 crores in Q3. The other exceptional event was Impairment of RS.97.5 crores in Q4.

As mentioned earlier, we terminated the Advertising Sales Agreement with TV Today for their three Ishq stations. Without these three metro stations, our Mirchi Love Network weakened significantly. Further, on account of the pandemic, overall advertising volumes in the market dropped. As a result, advertisers focused their spends on our legacy stations. This further weakened our Love stations. For the same reason, our 3rd frequency Kool FM in Hyderabad also suffered. We believe that the impact of the pandemic will continue on Mirchi Love and Kool FM at least into FY22 and possibly into FY23 as well. As a result of our revised forecast for these stations, we decided to take the impairment hit in Q4.

Post the exceptional items, and the impact on account of IndAS 116, our reported PBT went down from a profit of RS.18.8 crores in FY20 to a loss of RS.153.4 crores in FY21. Clearly, the pandemic had a very large impact on our financials.

(2) Solutions business:

As we have stated many times, the Solutions business is a strong component of the Mirchi product portfolio. At its core, the solutions business inverses the way the typical media selling process works. Our sales team, rather than selling ad-inventory, probes clients to understand their marketing challenges. We search for challenges that are local in nature. Every advertiser has different challenges in different states, even different cities. TV and Digital companies cannot address these challenges easily. Newspapers and Out- of-Home companies can, but they typically havent developed the skillset needed. Many radio companies also sell solutions, but it is usually limited to bundling ad-inventory with some programming on-radio innovations. Only Mirchi has the capability and the requisite skillset to provide solutions across local markets. Or rather, hyper local solutions across hyper local markets.

The Solutions opportunity is best understood with an example. If an advertiser faces a sales problem in say, Chandigarh, our team may design a solution that includes multiple media verticals - our FM radio, social media, videos in local language hosted on the Mirchi Punjabi channel on YouTube, an activation in a local mall or college, and if need be, even local newspaper or OOH advertising. The emphasis is on generating results - increasing footfalls, inducing trials, or spreading a message - rather than selling ad inventory. If the same client had the same problem in Chennai, we would put together a different solutions package effective for that city.

Because of the pandemic, the on-ground component of solutions was badly hit. It was down 92% over FY20. But our multi-media solutions component fared much better, dropping by only 16%. The solutions we designed for our clients using TV - what we call TV impact properties like Mirchi Music Awards - dropped by only 37%. Despite solutions products dropping, the margins of the solutions business rose strongly from 38% to 53%. Constant focus on improving margins has been yielding results over the years.

(3) Digital business:

During the year, Mirchi continued to leverage opportunities in the digital ecosystem across Social Media, YouTube and video- OTT platforms. Digital transformation is an important strategy for us and Mirchi continued to focus on it in FY21.

Mirchi operates web radio stations through its strategic partnership with Gaana. Gaana is one of the biggest music streaming platforms in India and Mirchi has been able to grow as Gaana has grown and reach new consumers. Mirchi now runs 18 web radio stations on Gaana including exclusive Punjabi and Marathi stations for metro markets like Delhi & Mumbai. Mirchis selected content is also available on Amazon Alexa, making us part of the growth story of smart speakers and smart homes in India.

Mirchi continues to strengthen its footprint not only in audio content but also in visual content. On YouTube. Mirchi runs one of the biggest independent Bollywood channels, Filmy Mirchi which now has close to 6 Mn subscribers. Mirchi Murga channel has close to 3 Mn subscribers. Mirchi has also grown its regional YouTube channels across eight regional languages, and two of these channels already have close to a million subscribers each.

As a focused business line, Mirchi continues to create original visual content (Web series) and thereby ride on the growth of video OTT platforms in India. While the number of shows created during the year were less due to Covid restrictions, this will continue to be a major thrust area for Mirchi in the days to come especially since Mirchis talent and capabilities in multiple Indian languages places us in a unique position to grow this vertical.

Mirchi continues to have a strong influencer marketing channel, using our RJs as social media influencers. With over 150 RJs who are local celebrities, we have been able to upsell our solutions by adding them as influencers as part of the client campaigns. Collectively, Mirchi RJs and corporate handles on Facebook, Instagram and Twitter have close to 30 million followers which becomes the audience for the solutions that Mirchi creates for clients.

(4) Mirchis international business:


Mirchi launched its first station in the US on Indias Republic Day, Jan 26th, in 2019, in the tri-state area of New York, New Jersey and Connecticut. By the end of May 2019, Mirchi had also expanded to Raleigh- Durham, Philadelphia, Baltimore, Cleveland, Columbus, Atlanta and St. Louis via a brand licensing arrangement with a local partner, using the HD radio technology.

The positioning for the brand across the US is "South Asias No. 1 Radio Station1, Now in America".

Targeted at the South Asian diaspora, which forms a significant portion of the South Asian population in these cities, the content on air is a winning combination of the best in Bollywood music, infotainment and comedy that Mirchi is known for. Some shows on the network are hosted by popular radio presenters from "back home", like Mirchi Sayema, Mirchi Rochie and Mirchi Shruti, to give the audience a "slice of their country". People can also tune in to sample the extremely popular Mirchi Murgas by RJ Naved and dance mixes on Club Mirchi on these stations.

However, our brand licensing agreement covering HD radio stations across several cities in the US under-performed as HD technology was unable to attract advertisers. In FY21, we decided to call off this arrangement. Also, the AM frequency which we had leased in New York was sold by its owner, with Mirchi being paid a "compensation" for the same. Our revenue spinner really was the New Jersey frequency and we were happy to give the New York frequency away.

As of March 2021, we now have a station only in New Jersey. US Mirchi is also available on www.radiomirchiusa.com, Amazon Alexa and on a newly created Radio Mirchi app (available for download on both the Apple and Android store).

We have concrete plans to expand to San Francisco, Washington DC, Chicago, Dallas, and other cities in the US, as well as a few cities in Canada, that have a considerable population of South Asians. These launches have been delayed because of the pandemic, but we will see some definite action by the second quarter of FY22.


We launched Radio Mirchi in the UAE with a brand licensing agreement with our partners Abu Dhabi Media Corporation (ADMC) in Jan 2012. Since then, we were voted UAEs most loved Hindi Station repeatedly in the Masala Awards, which is a testimony to our exceptional programming and marketing efforts. In listenership, we ranked as the No.1 brand across the UAE, across languages - Arabic, Hindi, English, Malayalam, and others. Incidentally the top 3 stations nationwide in UAE were all Hindi stations.

Radio Mirchi : 2.36 million
Radio4FM : 1.33 million
City FM : 1.08 million

(Source: Nielsen, Q2, 2019)

With the efflux of time, our brand licensing and content agreements with ADMC was terminated in June2020.

In March2021, we re-entered the market, this time in partnership with Dolphin Recording Studio, overhauling their old brand Suno FM to a brand new MirchRs.102.4FM. We believe we will soon win back the hearts of our erstwhile loyal listeners. Besides, now being in Dubai, it helps us to position the channel more effectively in the more prosperous city. Earlier, we were seen more as an Abu Dhabi station.


Our partner, Adline Media Network, with whom we had entered into a Brand Licensing agreement earlier, surrendered its license to the Government. The Government had then called for fresh tenders for 2 FM frequencies - Mirchi submitted its bid in November 2019. Mirchi won the bid, the results of which were declared in June2020. The pandemic delayed the launch, but Mirchi managed to launch in Bahrain again on 9th May 2021, this time through a wholly owned subsidiary.


A shareholder agreement has been signed between ENIL, Global Entertainment Network Limited (GENL), Marhaba FM and Mr. Salem Fahad S E Al-Naemi to operate a radio station in Doha, Qatar. Marhaba FM holds a commercial radio broadcasting station license in respect of the FM frequency 89.6 in the state of Qatar and it is currently operating under the brand name "One FM". GENL is the wholly owned subsidiary of Marhaba FM. In March2021 ENIL made an equity investment that gives us a 49% stake in the share capital of GENL. Basis the shareholding agreement executed by the Company with Marhaba FM, the Company is responsible for operating and managing GENL and is entitled to 75% of the distributable profits. Hence the Company has control over GENL based on which the investment made in GENL is treated as an investment in subsidiary as per Ind AS 110- Consolidated Financial Statements.

GENL will conduct business in Qatar in accordance with the terms and conditions set out in the Agreement. As part of the business, GENL shall provide services to Marhaba FM in connection with operating the Station under the brand name "MirchiOne" as per the terms and conditions agreed between GENL and Marhaba FM. Despite multiple obstacles faced, including travel restrictions, MirchiOne was launched in Qatar in March2021 to a rousing welcome by listeners and advertisers.

(5) Awards & Recognition won by ENIL

- ACEF 10th Global Customer Engagement Forum and Award 202110

Gold for Jamoora Tesan for Gulf Oil Lubricants India under the award category "Most Creative Mobile Marketing Campaign."

Gold for Jamoora Tesan for Gulf Oil Lubricants India under the award category "Most Effective Campaign on Non-Tradition Media."

Bronze for Street Dancer Challenge for Gulf Oil Lubricants India under the award category "Best Use of Celebrities in a Digital Marketing Campaign."

- 11th IAMAIs India Digital Awards 202011

Bronze for Jamoora Tesan for Gulf Oil Lubricants India under the award category Best Brand Awareness Campaign using Mobile."

- New York Festivals Radio Awards 202012

Bronze for "The DevDutt Pattanaik Show" under the award-category "Best Mini Series".

The Company does not have any pecuniary relationship with any awarding agency which could impact their independence.

(6) CSR Initiatives

One of the biggest casualties of Covid has been people losing their jobs, their livelihoods. Mirchi took the initiative to give away jobs. Mirchi collaborated with TimesJobs.com for a campaign called Baat Pe Jobs and reached out to multiple companies across India and identified 21 companies who were hiring. 1220 candidates were given jobs within the 45 days of this activity. Given the gloom and hopelessness of the Covid times, this was perhaps the most powerful act any media company could possibly do.

To help the most tragic victims of Covid-19 like maids, housecleaners, drivers, sweepers, cooks, etc., our Gujarat team with the help


10. https://globalcustomerengagement.com/winners/Winners 2021.html

11. https://iamai.in/GlobalSearch

12. https://radio.newyorkfestivals.com/winners/List/0ba71550-d2a9-40b0-9885-f3912b179fa3 of all RJs and all their social media handles got into a massive drive to collect funds for these families. With a mere 7 min video on IGTV, Mirchi collected RS.22 lakhs within 24 hours. This was immediately deployed to buy rations for a very large number of affected families with the help of multiple NGOs

In the South, apart from activities like helping people find livelihood and providing financial assistance, Mirchi identified the need to express gratitude to the nursing community in Kerala who were risking their lives to help Covid patients. Mirchi planned an entire activity (on ground, social media, on air) to thank these health care workers and handed over 5 kg rice to each one of them. Close on the heels of this activity, Mirchi organized another large-scale drive through multiple platforms, to make smartphones available to children for their online education.

Mirchi Shubh Yatra was an activity undertaken by Team Mumbai for migrant workers who were frantically leaving Mumbai. Mirchi, in association with Maharashtra Transport Authority and an NGO, distributed 4,000 Food and Water kits to over 1500 Families. Our RJs stood at bus stops and railway stations, handing out food and water to the departing migrants. And telling them that Mumbai would wait for them to return.

Not only in the metros and large towns, but also in smaller places like Srinagar, the Mirchi team was instrumental in helping local authorities facilitate the welfare of people. In a recent Covid related activity, the Govt Of Jammu & Kashmir, in an unprecedented move, decided to tie up with a private broadcaster - Mirchi - to conduct MasterClasses for Classes 10 & 12, during the early months of the lockdown. The fact that they did not go with their traditional partner - AIR - and instead opted for Mirchi, speaks for the community connect that Mirchi has built.

In addition to these pandemic related CSR activities, Mirchi continued to donate to Bennett University for the purpose of promoting education, including special education and employment enhancing vocational skills.

(7) HR Initiatives

FY21 was a year of rapid transformation towards digital. We dropped the Radio from our "Radio Mirchi" logo and rebranded ourselves as just Mirchi. The change in the branding strongly reflected our strategy of going beyond radio and into hyperlocal, multi-format and multi-platform content and solutions spanning digital, on-ground and FM platforms.

As a part of this transformation, we redesigned our organization structure in an attempt to become leaner and more productive. We reorganized ourselves from a 12-cluster structure into a 6-zone one. This should help us improve our speed to market and give our competent managers bigger roles. We also right sized the organization from 1124 employees at the end of last year to 910 at the end of this year. Throughout our transformation journey, we have been talking of the challenges & opportunities to our teams. With this Organization restructuring exercise and many team members got an opportunity to move into bigger and more challenging roles.

The year was very challenging due to the pandemic and our focus was to support the team in adjusting to this new world. We were anyway building our online training modules before the pandemic. During the lockdown we stepped up our efforts. We also focused towards "bite" sized training modules rather than long format full day long ones and grew our online content from 17 hours in FY20 to 28 hours in FY21. We clocked around 500 man-days of training and increased the number of trainings towards upskilling the team in Digital, Social media and influencer marketing.

We realized the importance of mental health and conducted awareness and training sessions covering all employees. In response to the pandemic, we changed our leave policies & encouraged on team members to consume their accrued leaves during the year itself instead of carrying them forward.

We felt that Work From Home (WFH) had increased the working hours & stress tremendously. We launched several schemes to alleviate the stress. As the vaccination drive commenced for the 18+ age group, we pushed our employees to get vaccinated. We also reimbursed them for the vaccination cost for themselves and their family members. Today, nearly 50% of our employees have taken the first shot and are awaiting their second one. We also covered our support staff hired from external sources under this exercise. Further, we extended loans on easy terms to people who had suffered through Covid. We also granted employees an extra weeks "recharge leave" after the 2nd wave hit many very hard.

Our employees strongly supported the Company in these adverse times. Many had to take pay cuts and they took them spiritedly. Everyone had to forego their MIP. They had to take on more responsibility with less people around to share it with. Services provided to group companies also helped us to reduce our overall payroll costs. Pay cuts were reversed for most employees from1st February 2021 and for the remaining from 1st April 2021. The Board also decided to give employees a pay increase in its meeting held on June 15th, 2021. The pay increase is effective from 1st July 2021. The year gone by has been stressful for employees, but the people-friendly initiatives taken by the Company have been appreciated by all.

D. Risks, Concerns and Challenges Facing the Company

(1) Macroeconomic risk/Dependence on advertising spends:

The radio industry, like all other media industries, depends largely on advertising spends. Unlike newspapers and TV channels, radio companies do not have circulation or distribution revenues. This makes us more vulnerable to economic slowdowns. Core radio in particular is highly sensitive to lockdowns because much of our business comes from shopfronts and other retail businesses. Our solutions business is better able to handle economic downturns but when lockdowns are imposed, our solutions business also gets hit because on-ground activations become impossible and because advertisers cut spends on solutions also.

(2) Growing digital, slowing traditional media:

The pandemic has boosted almost all digital services including media and entertainment services, while at the same time hit traditional businesses like print, OOH and radio. Online consumption of music and other entertainment products has grown strongly during the year. While online music streaming does not compete directly with FM broadcast, it does cut into the time spent by people on the medium. Many youngsters who consumed FM radio on their mobile phones earlier are unable to do so today because FM tuners are unavailable in many phone models. In the years ahead, FM radio could come under some pressure from digital products.

(3) Operational and Financial Risks:

The Risk Management Framework of the Company is regularly reviewed by the Board. Risks are reviewed and new risks are added to the framework as required. The management of the Company recognized the pandemic as a black swan event which disrupted our business. As a conscious strategy to better handle similar black swan events in the future, the Company has decided to transform even faster towards a digital-first avatar. Despite that, the Company does remain vulnerable to other unknown black swan events.

(4) High operating leverage is a risk during slowdowns:

The radio industry is characterized by high operating leverage. In good times, this is an advantage as incremental revenues largely go through to the bottom line. However, during period of economic slowdown, when revenues fall, the reverse happens. Decreased revenues hurt bottom lines in a big way. Since Demonetization, the economy has been on a slowdown and our bottom line has come under pressure. In FY21, on account of the pandemic, the Companys PAT turned negative on account of this operating leverage.

E. Segment- Wise Financial Performance

Management Discussion and Analysis of the Companys operations together with the discussion on financial performance with respect to operational performance should be read in conjunction with the financial statements and the related notes.

(1) ENIL - Radio Mirchi:

The pandemic led to a severe hit to the Companys revenues, which fell by nearly 51%. This led to the EBITDA dropping from RS.123.5 crores in FY20 to RS.16.3 crores in FY21. Reported PBT before exceptional items fell from RS.18.8 crores in FY20 to a loss of RS.79.1 crores in FY21. After exceptional items and taxes, Reported PAT fell from a profit of RS.14.6 crores in FY20 to a loss of RS.109.3 crores in FY21.

(2) Subsidiary Companies:

The Company has the following subsidiaries:

- Alternate Brand Solutions (India) Limited (ABSL), a 100% subsidiary based in India. ABSL recorded a total income of RS.38.79 lakhs during FY21. Profit after Tax stood at RS.31.34 lakhs for FY21.

- Entertainment Network, INC (EN, INC) and a step-down subsidiary, Entertainment Network, LLC (EN, LLC) based in the United States of America. EN, INC is a 100% subsidiary of the Company. EN, LLC is the 100% subsidiary of EN, INC. EN, INC and EN, LLC were incorporated in FY19, in the State of Delaware in United States. EN, INC recorded a total consolidated income of RS.644.68 lakhs during FY21. Consolidated loss after Tax stood at Rs (132.36) lakhs for FY21.

- Global Entertainment Network Limited (GENL) (A company incorporated under the laws of the State of Qatar having its registered office in Doha, Qatar). In March 2021, the Company acquired 49% equity of GENL. The remaining 51% of equity stake is owned by another Company (Marhaba FM). Basis the shareholding agreement executed by the Company with Marhaba FM, the Company has controlling interest over GENL. As a result, the investment made in GENL is treated as an investment in subsidiary as per Ind AS 110- Consolidated Financial Statements. GENL recorded a total income of Rs 1.44 lakhs during FY21. Loss after Tax stood at Rs (23.90) lakhs for FY21.


Internal Control Systems and their Adequacy:

The Company has a system of internal controls to ensure that all its assets are properly safeguarded and not exposed to risks arising out of unauthorized use or disposal. The Internal Control system is supplemented by programs of internal audit to ensure that the assets are properly accounted for and the business operations are conducted in adherence to laid down policies and procedures. The internal control system also focuses on processes to ensure integrity of the Companys financial accounting and reporting processes and compliance with the Companys legal obligations. The Company has a well-defined risk management programme for identifying and mitigating risks across all the functions, which is reviewed by the Risk Management Committee, Audit Committee and Board of Directors of the Company periodically.

The Company has an Audit Committee of the Board of Directors which meets regularly to review inter- alia risk management policies, adequacies of internal controls, the audit findings on the various segments of the business, the financial information and other issues related to the Companys operations.

The Company has adopted Integrated Reporting. The information related to the Integrated Reporting forms part of the Management Discussion & Analysis.

Material Developments in Human Resources/ Industrial Relations front, including Number of People Employed:

Specific need-based training and development programs for employees at all levels were imparted in order to optimize the contribution of the employees to the Companys business and operations. Occupational health safety and environmental management are given utmost importance. As on March 31, 2021, the employee strength (on permanent roll) of the Company was 910.


(Rs.In lakhs)

Type of services FY 2020-21 FY 2019-20
i. Debtors Turnover 2.29 3.65
ii. Inventory Turnover N.A. N.A.
iii. Interest Coverage Ratio N.A. N.A.
iv. Current Ratio 3.37 2.57
v. Debt Equity Ratio Nil Nil
vi. Operating Profit Margin (%) 6.09 22.85
vii. Net Profit Margin (%) (38.4) 2.63
viii. Return on Net worth (%) (12.7) 1.57

Due to Covid-19 situation, the figures do not represent normal operations and to that extent are strictly not comparable with last year.


Integrated reporting refers to representation of the financial and non-financial performance of a company in a single report. This helps in providing a greater context to the non-financial data such as how the company performs on environmental, social and governance (ESG) parameters, how sustainability is embedded in the core business strategy etc.

Integrated Report of the Company is for the financial year ended March 31, 2021 and forms part of the Management Discussion & Analysis report. This report is based on the Integrated Reporting (IR) framework prescribed by the International Integrated Reporting Council (IIRC) and the Company has followed the applicable guiding principles as prescribed by IIRC, while presenting this integrated report. This report primarily captures the business model of the Company and how does the Company create, sustain and enhance the value.

About the purpose of the business and business model:

1. Purpose of the business:

Entertainment Network (India) Limited [the Company/ ENIL/ Radio Mirchi/Mirchi] is, as the name suggests, in the business of Entertainment primarily but not exclusively, on FM radio through its brands Radio Mirchi, Mirchi Love, MirchRs.95 and Kool FM. In addition to FM radio, the Company provides entertainment in the form of videos, on-ground live events and even content that it creates for TV broadcast. Over the years, videos have become a strong area of focus of the programming teams. These videos are published on various social media platforms on accounts held either by the Company or its RJs. Videos are also produced and released on public platforms like YouTube as well as OTT platforms such as MX Player. The Company today describes itself as a city-centric music and entertainment Company.

2. Business model:

The core of our business model involves monetizing our listenership and viewership via advertising. Radio Mirchi is the No. 1 private FM radio network in India in terms of listeners as reported by the last IRS in 2019. About 2/3rd of the Companys revenues come from its core FM radio operations, while the rest comes from its solutions, digital and other products. Advertising revenues depend on several macro-economic factors such as growth in GDP, increase in consumerism, heightened competition, growth in media that compete with the Companys products etc. The Company monetizes not only its FM radio listenership, but also its extensive presence in onground events, TV properties, and the solutions that it provides to clients using multiple-media combinations. It also has an extensive bouquet of digital products which it offers to advertisers in its selling efforts.

3. Resources needed to carry out the business:

There are several resources that are needed to run a company like ENIL. First and foremost, the Company had won the FM radio frequencies through auctions held by the Government of India over several years. As per government policy, the Company has had to pay the entire auction value (called "One Time Entry Fee") as an advance. Then there is need for financial resources to build and operate studios and transmission facilities. After all physical infrastructure is created, the most important resource that is at the heart of a media and entertainment business is its people. There are creative people who create content and build a community of listeners and viewers. There are sales and marketing people who monetize this listenership and viewership. There are many other support people who ensure the Companys operations run smoothly.

4. Along the way - in doing business how does it impact the 6 capitals

Financial capital is required first to take part in auctions conducted by the Government and in setting up studios and transmission facilities. There are huge advances to be paid to the Government once the frequency is won in the auctions. Financial capital is also needed to fund operational requirements of working capital, advances to be paid, and other requirements. Then there is Human Capital, definitely one of the most important markers of any creative organization. We employ 910 people, spread across creative, sales, marketing, HR, finance, legal and other functions. It is on the back of these people that Mirchi has become the leader in its line of business. Then there is Intellectual capital in the form of various Intellectual Properties that the Company owns. Brand Mirchi is one of the most powerful brands in the country. Then there are other IPs that belong to the Company including iconic properties like the Mirchi Music Awards, the Mirchi Cover Star, the Mirchi Rock & Dhol, the Mirchi Neon Run, the Mirchi Top 20 and so many more. Our IPs help build strength for the Company in operations in all countries. In the UAE, we had risen to the pole position in listenership. One of the reasons was the familiarity of South Asian living in the UAE with brand Mirchi and the programming that its employees create.

5. Inputs: most material for the organization:

As covered above, financial capital, human capital and intellectual capital are the most important "materials" for the organization.

Kind of capital we depend upon and how we delivered value:

1. Financial capital and Manufactured capital:

Financial capital refers to the pool of funds available to an organization for use in the production of goods or provision of services, which is obtained through financing, such as equity, debt or generated through operations or investments. Manufactured capital refers to the manufactured physical objects that are available to an organization for use in the production of goods or the provision of services, including building, equipment, infrastructure, etc. Kindly refer to the Board of Directors Report (Para 1: Financial Highlights, Para 2: Financial Performance, Operations and State of the Companys affairs), Financial Statements; read with the Management Discussion & Analysis report (Para C: Operating Performance).

2. Intellectual capital:

As mentioned earlier, intellectual capital is represented in the form of the Companys IPs. The most important IP is brand Mirchi itself. There are several other IPs that the Company has created that are mentioned in a previous section.

3. Human Capital:

As on March 31,2021, the employee strength (on permanent roll) of the Company was 910. Specific need-based training and development programs for all levels of employees were imparted in order to optimize the contribution of the employees to the Companys business and operations. The Company constantly focuses on various measures in providing training & development, employees empowerment, constructive evaluation and employees engagement. Kindly refer to the Management Discussion & Analysis report (Para C: Operating Performance - HR Initiatives).

4. Social and Relationship Capital:

This relates to the relationships within and between communities, group of stakeholders and other networks, and ability to share information to enhance individual and collective well-being. Kindly refer to the Management Discussion & Analysis report (Para C: Operating Performance).

5. Natural Capital:

The Company is in the business of Media & Entertainment. The operations of the Company are not energy intensive. Nevertheless, continuous efforts such as installation of energy efficient electronic devices, implementation of SOPs etc. aimed at reducing energy consumption are being made by the Company and its employees to reduce the wastage of scarce energy resources.

How we create value:

1. ENIL is a non-hierarchy driven organization. Reasonable level of independence is given to the functional heads for taking day to day business decisions in alignment with the Companys core values and vision.

2. Business model of ENIL has been outlined hereof.

3. CSR initiatives: Relevant details regarding CSR Policy development and implementation has been stated in the Directors Report at para 1 2 (CSR Committee) read with the as Annexure B to the Board of Directors Report.

4. Awards received by the Company: Kindly refer to the Management Discussion & Analysis report (Para C: Operating Performance - Awards & Recognition).

How we sustain and enhance the value:

1. Application of good corporate governance practices: The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [Listing Regulations]. Kindly refer to the separate report on Corporate Governance, enclosed as a part of the Board of Directors Report.

2. Set of various Policies and Code of Conducts:

In compliance with the regulatory requirements and effective implementation of Corporate Governance practices, the Company has adopted various policies and codes in accordance with the applicable provisions of the Companies Act, 2013 and Listing Regulations. Kindly refer to the separate report on Corporate Governance, enclosed as a part of the Board of Directors Report.

3. Risk Management: Kindly refer to the Board of Directors Report (para 31 - Risk Management).

For and on behalf of the Board of Directors
Vineet Jain Chairman
Mumbai, June 15, 2021
Registered Office:
Entertainment Network (India) Limited,
CIN: L92140MH1999PLC120516,
4th Floor, A Wing, Matulya Centre,
Senapati Bapat Marg, Lower Parel (W),
Mumbai - 400 013.