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) Upswing in Global Economy:

As per the World Economic Outlook published by the IMF in April 2018, the global economic upswing that began around mid-2016 has become broader and stronger during 2017. The upswing in global investment and trade continued through 2017. At 3.8 percent, global growth in 2017 was the fastest since 2011.

With financial conditions still supportive, global growth is expected to tick up to a 3.9 percent rate in both 2018 and 2019. Advanced economies will grow faster than potential in both years. Aggregate growth in emerging markets and developing economies is projected to firm up further, with continued strong growth in emerging Asia. Europe is expected to report strong growth too. The current recovery offers a window of opportunity to advance policies and reforms that secure the current upswing and raise medium-term growth to the benefit of all. The only worrying point of concern is the growing trade protectionism around the world. If that continues, and in fact becomes worse, economic growth projections could go awry. Economic activity in 2017 ended on a high note—growth in the second half of the year was above 4 percent, the strongest since the second half of 2010, supported by a recovery in investment. With broad-based momentum and expectations of a sizable fiscal expansion in the United States over this year and the next, global growth is now projected at 3.9 percent for 2018 and 2019, a 0.2 percentage point upgrade for both years relative to the October 2017 World Economic Outlook forecast. Growth in emerging market and developing economies is expected to increase further from 4.8 percent in 2017 to 4.9 percent in 2018 and 5.1 percent in 2019. Although the high growth rate reflects primarily continued strong economic performance in emerging Asia, the projected pickup in growth reflects improved prospects for commodity exporters after three years of very weak economic activity. Beyond 2019, growth in emerging market and developing economies is projected to stabilize at about 5 percent over the medium term. Emerging Asia, which is forecast to continue growing at about 6 percent during 2018-19, remains the most important engine of global growth.

2) Indian Economy Recovery on Firm Footing:

Growth in India is projected to increase from 6.7 percent in 2017 to 7.4 percent in 2018 and 7.8 percent in 2019, lifted by strong private consumption as well as fading transitory effects of the demonetization initiative and implementation of the national goods and services tax. Over the medium term, growth is expected to gradually rise with continued implementation of structural reforms that raise productivity and incentivize private investment. The IMF database shows a rise in total investment as a percentage of GDP to 32% in FY18, from 31.7% in FY17. Its not a big jump, but at least the trough in investment demand is behind us.

As per Reserve Bank of India (RBI) governor Mr. Urjit Patel, India is witnessing a revival in investment activity after several quarters of downturn, putting the nations economic recovery on a surer footing. “There are now clearer signs that the revival in investment activity will be sustained. Global demand has been improving, which should encourage exports and boost fresh investments.” Also, Indias weather office has forecast a normal monsoon in 2018, which should not only mitigate farm distress but also boost overall demand.

The positive out look has also been corroborated by the United Nations latest World Economic

Situation and Prospects (WESP) report, which has projected Indias economic growth at

7.6% in fiscal year 2018-19, which will ensure that India remains the fastest growing major economy in the world.

3) Global Advertising Spends:

Zenith Advertising Expenditure Forecasts March 2018 predicts global ad expenditure will grow 4.6% in 2018, reaching US$ 579 billion by the end of the year. This forecast is substantially ahead of the 4.1% growth rate that Zenith had forecast in December and is the biggest quarterly upgrade since March 2011. Several markets have surprised on the upside.

The US will be the leading contributor of new ad dollars to the global market over the next three years, making up in scale what it lacks in speed. China will come second, combining large scale and rapid growth (though its growth is slowing as its scale increases). Between 2017 and 2020, we forecast global advertising expenditure to increase by US$77 billion in total. The US will contribute 26% of this extra ad expenditure and China will contribute 22%, followed by Indonesia, India, the UK and Japan, which will contribute 4% each. Seven of the ten largest contributors will be rising markets (China, Indonesia, India, Philippines, Brazil, Russia and South Korea).

In 2017, internet advertising overtook advertising on traditional television to become the worlds biggest advertising medium, accounting for 37.6% of total ad expenditure.

As internet advertising matures, its growth is slowing down, but it remains the fastest growing medium by some distance. Zenith estimates that internet adspend grew 14% year on year in 2017 and forecasts an average growth rate of 10% a year between 2017 and

2020. By 2020 it expects internet advertising to account for 44.6% of global adspend. Looking at internet adspend by device reveals the dramatic ascent of mobile advertising (by which we mean all internet ads delivered to smartphones and tablets.)

4) Indian Advertising Industry Growth Forecasts:

Magna (part of IPG Mediabrands) has estimated Indian advertising expenditure (adex) growth for 2018 to be 12.1% while Dentsu has forecast an adex growth of 12.5% for the year. GroupM – Indias largest media agency network – has forecast a growth of 13% This growth will be led not only by an increased need to advertise among companies, but also on the back of state-level elections to be held later in the year. Almost eight states will go to the polls this year including big ones such as Rajasthan, Chhattisgarh and Madhya Pradesh even as the country prepares for the general elections next year.

This year, FICCIs annual media and industry report was produced by EY, replacing KPMG which had made the report over the previous several years. EY has taken a far more conservative view of the entire media and entertainment industry compared to KPMG. As a result, forecast numbers for all media segments are far lower than KPMGs numbers. EY has also limited the forecast period to 2020, compared to KPMGs 2021. The two reports are thus not comparable. At ENIL, we believe the EY numbers to be too conservative and believe that radio will continue to remain the fastest growing traditional media segment. With this word of caution, we quote the projections of EY.

According to EY-FICCIs Indian Media and Entertainment Industry Report 2018, released in March 2018, the 5-year (2016-2020) growth forecast is a 11.6% CAGR (KPMG for 2016-21 15.3%). Segment-wise growth trends are tabulated as follows:

Indian Advertising Revenue (INR bn)

Segment

2016

2017

2018 (P)

2020 (P)

CAGR 2016-2020 (P)

TV

594

660

734

862

9.8%

Print

296

303

331

369

5.7%

Filmed Entertainment

122

156

166

192

11.9%

Digital Media

92

119

151

224

24.9%

Animation & VFX

54

67

80

114

20.4%

Live Events

56

65

77

109

18%

Online Gaming

26

30

40

68

27.5%

Out of Home Media

32

34

37

43

7.7%

Radio

24

26

28

34

8.6%

Music

12

13

14

18

10.6%

Total

1,308

1,473

1,660

2,032

11.6%

5) The Indian Radio Industry:

As per EY, the Indian radio industry grew by around 6.5% in 2017, hit by the lingering effect of demonetization and the impact of

GST. Over the next few years, it is expected to grow at a CAGR of 8.6% Key drivers of growth for the radio segment remain a large youth population, growth in the quality and quantity of film music, built-in FM receivers in most hand-phones sold in India, increased time spent out of home in transit, etc. A total of 162 new FM radio licenses were allotted in Phase 3 auctions spread across key cities including Mumbai and Delhi. Licenses were allotted in 17 new cities that had no operating FM licenses. New licenses in existing cities and proliferation of private radio in new cities is likely to increase the listener base. These launches created an increase in volume of advertising inventory available, which was one of the main reasons for growth of industry revenues. Volume growth has put pressure on effective rates at an overall level and going forward, the stations may need to curb inventory per hour to enable rate increases. As per EY-FICCI Report 2018 – “Re-imagining Indias M&E Sector”, number of stations by leading FM broadcasters after operationalization of all Phase 3 (Batch 1 and 2) licenses will be as follows:

B. Radio Industry Future Outlook, Opportunities and Threats

The radio industry was impacted by a host of macro and micro economic factors during FY18. Many of these factors would continue to have an impact on the performance of the sector in the years to come.

1) RERA:

The Real Estate (Regulation and Development) Act, 2016 is an Act which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act establishes a Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal. The bill was passed by both houses of Parliament in March 2016. The Act came into force on May 1, 2016 with 59 of 92 sections notified. The remaining provisions came into force on May 1, 2017. The Central and state governments were liable to notify the rules under the Act within a statutory period of six months.

The introduction of RERA temporarily disrupted the advertising activities of the real estate sector, as builders rushed to register their projects with the RERA authority in their state. This affected the business of radio companies adversely. There was a sharp cut in advertising revenues from the sector in FY18. The real estate sector also faced headwinds from the general slowdown growth is expected in the Indian economy in FY18. The number of unsold units is at a very high level. Several projects started before RERA came into existence are likely to enter the market in the years to come. The reduced demand coupled with increased supply has created an uncertain environment for the sector. As per reports, the number of new project announcements has reduced significantly during the year. Real Estate advertising has thus been under a cloud in

FY18. However, advertising is expected to start with a new gusto in FY19 as builders step up efforts to liquidate inventory. Since lower spends are required in radio compared to other media, we expect radio to benefit disproportionately from this renewed burst of advertising.

2) The Demonetization effect:

The Economic Survey 2017-18 suggests that the adverse impacts of demonetization on the

Indian economy came to an end only towards the end of FY18. Through FY18, the adverse effects continued to have an impact on the overall media and entertainment industry. At least in the short run, the rural & informal economy suffered disproportionately. Rural consumer sentiment took a hit, and a whole lot of consumer companies that depend on rural areas for revenues – two wheelers,

FMCG companies, durables, mobile phones– took a hit in their business. This led to a pullback in discretionary spends in marketing and advertising, the repercussions of which were felt across the M&E industry. The slowdown in the economy, which started before demonetization, became worse after demonetization. New project announcements declined sharply. While the negative effects of demonetization have all played out in the past, we expect the positive effects to start rolling out now.

3) Phase 3 raises radio reach substantially:

Almost all the stations auctioned under Batch-1 of the Phase-3 policy became operational during FY18. As many as 17 cities which had no FM stations earlier came under the ambit of the medium. As a result of this expansion, the listenership base of FM expanded. While revenues generated by these new stations in

FY18 were low, significant in the years to come. The growth of new stations in FY18 also pulled down the EBITDA of the radio sector temporarily as operational costs could not be fully offset by new revenues. Annual amortisation of one-time entry fees paid in advance, and depreciation of the newly created transmission and studio assets led to reduced PAT margins. In FY19 and the years ahead, we expect these new stations to contribute positively to the health of the radio industry. During FY19, we expect the stations auctioned under Batch-2 of Phase-3 policy to become operational. Though these stations are small, we expect them to contribute to making state-level networks stronger, thus attracting more advertising towards the whole state. This should benefit the business of older stations as well as the new ones.

4) Digital leading growth:

Rising internet broadband penetration, fast expanding multi-screen environment & falling data rates have led to more consumption of content and increased time spent on digital - making digital the top growing media segment again in 2017 over 2016. Advertisers shifted spends to digital which led to digital contributing 17% of total advertising in 2017. This is slated to grow to 22% by 2020.

Mobile data usage in India jumped 144 per cent (y-o-y) to 2,360 is a huge concern. Given petabytes, with average consumption per user in 4G broadband reaching 11 gigabyte per month in December 2017, says a Nokia MbIT 2018 report.

This surge in data usage is no doubt a result of the commercial launch of Reliance Jio and its aggressively cheap pricing, and the reaction of other telecom companies since then. Jio now provides 1.5GB of data per day for just INR5. This cheap pricing of data, combined with access to low cost handsets, has led to data consumption going through the roof. This is fueling the growth of digital ad spends. Over-the-top (OTT) apps in the video and audio fields have been growing rapidly on the back of this data revolution. The subscriber base of such OTT apps grew 50% in 2017. There are now about 2 million digital subscribers who pay subscription fees across different OTT app providers. Among these, about 1 to 1.5 million have moved almost entirely to digital media consumption. By 2020 its expected that the revenue generated from these digital subscribers will go to INR 20 billion. Key reasons for this fast growth are niche content being produced for mobile phones, global content becoming readily available, exclusive content being developed and live sports content being streamed.

Platforms such as Wynk, Gaana and Saavn are connecting with the young generation. Their growth has been fueled by a series of M&A deals in the sector during the last year. The current leaders of digital music streaming in India got fresh burst of investments, with Gaana raising $115 million from Chinas internet giant Tencent, and Saavn raising $124 million from Reliance Jio and merging with the Jio music business. During the year, Amazon Music entered the music OTT market. Amazon is offering its music streaming service free to Amazon prime members. There are also some stories of global leader Spotify entering the Indian market shortly. Given their global presence - operations across 65 countries, with over 159 million users (including 71 million premium subscribers), they are expected to launch with a big bang. While the revenues of the music apps are growing, profitability that royalties are at unreasonable rates, most of the digital streaming businesses are either chasing short term valuations or operating these services as loss leaders for their main businesses (like Amazon Music, Wynk, Jio). In order to avoid erosion of its audiences, it is critical that radio players establish their digital brands and customized channels on music platforms. Radio players have the ability to launch digital products around talk, news, comedy and many other formats on these platforms. They can leverage the popularity of their Radio Jockeys (RJs). They can launch video webisodes. There is a world of opportunity out there for the creative radio talent. Digital provides a huge opportunity for growth.

5) MRUC releases IRS17. Shows huge growth in radio:

The Indian Readership Survey (IRS) 2017, the world largest continuous study of media consumption, demographics, product ownership & usage, was released in January 2018 by the Media Research Users Council (MRUC). The research covers a sample of 3.2 lakh people. In the absence of comprehensive customized research for the radio industry, IRS is considered to be the most reliable research for listenership. IRS 2017 shows how strong the radio medium has become since the last IRS came out in 2014. Overall radio penetration has increased from 10% of the population to 19%. Urban radio penetration has increased by a huge 87% from 15% to 28%. The penetration of radio on an All India basis looks small because private radio is still not available across vast swathes of the country. In places where radio is available, the penetration is far higher. In the top 10 markets for example, the penetration of radio as per IRS 2017 is as follows: Delhi 45%; Mumbai 35%; Kolkata 37%; Bangalore 44%; Chennai 43%; Pune 45%; Hyderabad 27%; Ahmedabad 31%; Lucknow 57% and Kanpur 53%. This makes it an average of 42% across the top 10 cities.

IRS also shows the very strong consumption of radio amongst the affluent NCCS A consumers as well as young consumers between the ages of 12 and 29. In the same ten cities identified above, the penetration of radio amongst NCCS A consumers is on average about 8% higher (at 50%); amongst the 12-15 year olds is also about 8 to 9% higher (at 50%); amongst the 16-19 year olds is a whopping 13% higher (at 55%) and amongst the 20-29 year olds is 5% higher (at 47%). This is the kind of reach and profile is why we believe that radio will grow strongly in the years to come. This is also why we do not agree with the findings of the EY report as mentioned earlier.

6) GST impact on M&E sector: disruption even in the GST, the largest indirect tax reform in independent India, was introduced with effect from July 1, 2017. With the advent of GST, several taxes levied by the central and state governments in the past have been subsumed into one overarching GST. Introduction of GST is a significant step in the field of Indirect tax reforms in India founded on the notion of “one nation, one market, one tax”. By amalgamating a large number of Central and State taxes into a single tax and allowing set-off of prior-stage taxes, it would mitigate the ill effects of cascading and pave the way for a common national market. Several features in the Indian GST system have made the initial period after launch tumultuous. Businesses have struggled to adjust to the requirements of the new tax. Talking about the long-term benefits, it is expected that GST would not just mean a lower rate of taxes, but also minimum tax slabs. The industry leaders believe that the country would climb several ladders in the ease of doing business with the implementation of the most important tax reform ever in the history of the country.

The World Bank has said that with slabs, Indias GST structure is one of the most complex systems in the world. In addition to the five tax slabs, there are innumerable cess slabs which vary from 1% to 290% depending on the kind of product. Cesses were introduced to compensate states that lost tax revenues as a result of the switch to GST. This has made effective tax rates very high. For example, for high end cars, the GST rate is already high at 28%, and on top of that, a cess of 15% is levied.

The Indian GST rates are the second highest among 115 countries, which have a similar indirect tax regime.

There are other complications as well.

Exporters, who earlier were not subject to domestic indirect taxes, have been brought under the GST regime. Since then, they have been complaining about the trouble caused that advertisers are very keen on. This by the GST. Exporters have been grappling with working capital constraints due to delay in refunds pertaining to Integrated GST (IGST) as well as input tax credit (ITC) on outbound shipments.

There was significant quarter before the launch of GST. Since the indirect tax regime was changing, there was a major destocking of goods which happened in the distribution chain in the months before July. Dealers and distributors did not want to be left holding too many goods taxed under the old regime. This destocking was fully recovered in the months after July, but the supply chain disruption led to companies facing revenue volatility for a long period of time.

Revenue volatility always leads to a temporary cut in advertising, as businesses adjust their operations to manage the distribution pipeline. There were many factors related to GST that affected radio broadcasters: a) Registration in every state: Under the GST regime, every supplier is required to register in all the states from where the supply is made. This increases the compliance burden. b) Local body entertainment tax: If local body entertainment tax is introduced on entry into entertainment events, the effective rate of tax on such events could five tax be 30-40%. c) GST on sponsorship revenue – Sponsorship revenue earned by event management companies is liable to GST under reverse charge mechanism. Sponsor of an event is liable to deposit GST instead of event management company. This is detrimental to the event management company since this would result in reversal of GST credits and lead to additional cost.

d) Place of supply for advertisements: GST law provides that place of supply for advertising services provided to government shall be each state where the advertisements are disseminated. This resulted in lot of operational difficulties. The long term benefits of GST are well known. GST simplifies tax filing and allows for a seamless cascading of tax paid throughout the manufacturing cycle. This incentivizes even those businesses that today skirt taxes to come under the ambit of GST, thus increasing the number of tax payers, and improving tax compliance. Over a long period of time, this would lead to a reduction in overall tax rates.

This is why industry has welcomed the launch of GST. We believe that GST will provide a boost to long term growth in the country and is thus a verySince we were making such a big positive move for the entire radio industry.

7) Other developments:

Mergers and Acquisitions:

Music Broadcast acquires Friends FM in Kolkata: Mint reported in April 2018 “Private FM radio broadcaster Music Broadcast Ltd (MBL) on Monday announced that its board has approved the acquisition of the radio division of Ananda Offset Pvt Ltd (AOPL) in Kolkata by way of slump sale. Running under the brand name Friends 91.9 FM, the radio station of Ananda is operational since 2007. A statement from the company said the transaction allows MBL to tap the Kolkata market which is one e markets in the country, besides fiv ofthetop being able to explore the large potential it offers from national advertisers. MBL has had a sales alliance with AOPL for the last five years. The transaction is expected to be value accretive and help in improving the EBITDA margins. Under the terms of the agreement, MBL will acquire 100% ownership of the radio division of AOPL, subject to approval of the ministry of information and broadcasting”.

C. OPERATING PERFORMANCE

1) FY18 Operating results a strategic pause:

The financial results of your Company in

FY18 were hit by several factors. First, several government initiatives, as outlined in the previous section created disruption in the overall media landscape, leading to poor financial results across the spectrum. GST,

RERA and the tail end effects of demonetization impacted the business sentiment and consequently advertising revenues of media companies. Your Company was also impacted by these events.

In addition, your Company took a conscious call to curtail the amount of advertising it plays. This was in reaction to the constant feedback listeners were giving it that all radio stations were playing too many ads. Your Company was perhaps amongst those playing relatively fewer ads, but being the leader, it decided to act on the feedback received. During FY18, we voluntarily cut ad volumes by 15%. This not only improved the listenership experience, it also helped us gain advertisers trust and confidence. sacrifice, we requested our advertisers to help us with slightly higher ad rates. We partially succeeded in this. Our pricing for the year increased by 5.5%.

The ad volume cut also helped cement us as the clear leaders in listenership in the latest IRS report of 2017 also. This report was coming after a period of four years; so, it was important that during the interim period, we had not lost the lead. As things turned out, we emerged yet again as strong leaders in listenership. Apart from great programming and marketing, one of the reasons for this superior listenership performance was no doubt our decision to reduce ad volumes.

We decided to follow the same approach to advertising volumes in our new Phase-3 stations. We decided to cap ad volumes at 10 minutes per hour. For new stations, which do not have a listenership story to talk about yet, this proved to be the biggest selling point with advertisers. Advertisers hate it when their ads play inside an ad block that runs on for several minutes. A 10-minute ad cap ensures that advertisers get far more value for their money. In addition to smart programming and marketing, the ad volume capping is helping keep our pricing high. Our pricing of Phase-3 stations is super strong, thanks to the volume cap. In Bangalore, Mirchi 95 – our new Hindi station– commands a price premium over our Kannada Radio Mirchi 98.3 and is now the station with the highest pricing in the market. Ditto Mirchi 95 in Hyderabad. In other markets, where we have Mirchi Love as the second station, the pricing of Mirchi Love is starting to get to the top of the heap, just after Mirchi. This is the scenario in Ahmedabad and Pune, two of the biggest markets for Love. Pricing is also consistently high across the Love network. In markets where Mirchi launched its first station under Phase-3 policy, markets like Chandigarh, the Mirchi pricing is already at the top. It is our belief that setting the price in the market is like launching a satellite in the skies. It takes more effort at the start, but a big thrust pushes the satellite into a higher orbit, where it stays. Its the same with radio. The initial marketing, programming and selling effort and cost is typically higher, given the way we do things at Mirchi, but the price orbit in which we put the brand is also much higher. The benefits of a higher price orbit are forever. The pain and struggle is only temporary at the beginning. In addition to lowering ad volumes and increasing pricing, we also focused on improving the margins in our non-radio business. We dropped activation and concert ideas that were giving low margins or sometimes even losses and focused instead on those thatmonetary investment was made gave us high margins. After spending nearly two years in the concert business, we understand the drivers of the business much better. We know which ideas can generate profits, and which ones cant.

Our margins for the entire non-radio portfolio of products has increased from 19% to 24% in FY18.

FY18 also saw the scaling up of revenue generation for Ishq FM, the three metro stations (New Delhi, Mumbai and Kolkata) that belong to TV Today Network Limited (‘TVTNL) for whom we generate ad revenues. Revenue growth for Ishq was close to 168% in FY18 over FY17 led on the back of superior programming and marketing by the TVTNL team and strong sales effort put in by the ENIL team. In March 2018, the Company entered into a non-binding memorandum of understanding with TVTNL, for the proposed acquisition of the Radio Business of TVTNL, comprising of three radio stations in New Delhi, Mumbai and Kolkata currently operated under the frequency 104.8FM and ‘ISHQ 104.8FM brand name. In April 2018, once the 3-year lock-in period provided under Phase-3 policy was over, TVTNL made a joint application with the Company to the Ministry of Information & Broadcasting (MIB) for acquisition of the Radio Business of the aforesaid radio stations. The Company is awaiting the MIBs response to the application.

During FY18, several marketing activities of the Company achieved a bigger scale. The flagship Mirchi Music Awards (Hindi) completed 10 glorious years. For us, these awards are a way of giving back to the music industry and applauding them for their tremendous creative talent. As always, the whos who of the film and music fraternity were present in the show. The Company also converted its weekly radio show Mirchi Top 20 into a weekly TV show on Zoom TV. The initial results are exciting. Mirchi Top 20 is now a truly multi-media show with weekly runs on radio, print, TV and online. We also scaled up our flagship activation property Mirchi Neon Run and several others into bigger multi-city affairs. We organized close to 93 concerts during the year including the multi-city tour of YouTube sensation Vidya Vox. A significant in programming as well. We launched Indias first show on candid relationships featuring Bollywood producer par-excellence Karan

Johar. In his inimitable style, Karan offered frank and bold advice on all matters pertaining to love, and relationships to all who called, including to many big Bollywood stars. The show was also run of Ishqs network in Delhi, Mumbai and Kolkata under a content sharing agreement. The iconic Mahesh Bhatt and his daughter Pooja hosted a show on Mirchi, sharing the innermost secrets of Bollywood with our listeners. They covered many exciting topics relationships, drugs, affairs and breakups, success and failure and the much talked about but never openly discussed underworld connections. The show was an instant hit. Many other programming innovations were made during the year. It is on the back of these innovations that Mirchi has retained its strong listenership position in the IRS.

In FY18, total income of ENIL reduced from

Rs 575.4 crores in FY17 to Rs 545.9 crores in

FY18, a drop of 5.1%. Profit after Tax dropped by 35.5% from Rs 54.5 crores in FY17 to Rs 35.2 crores in FY18. We hope to recover in FY19 as we emerge strong after the strategic pause of FY18.

2) Digital:

Your Company continued to strengthen its digital online radio offerings in partnership with Gaana by adding more stations to the portfolio, taking the total number of its stations to 21. We added to our regional offerings by adding a Kannada Hits station, and Telugu Love station. Our online stations reach has grown to more than 3.5 million unique listeners in the last year, with listeners tuning in not just fromMedia Research across India but from across the world. Total streaming of Mirchi online stations increased by 47% to more than 400 million streams in FY18. We plan to continue investing in the online streaming business going ahead and be present across multiple digital platforms.

The overall digital reach of Radio Mirchi has continued to grow explosively in social media too.

We crossed 2 million Subscribers across our Youtube channels, with the flagship channel crossing 1.5 million subscribers, and making it to the top 100 Youtube channels of India

Radio Mirchi brought in a special focus on the Social Media Presence of its RJs and has a massive cumulative fan-base across all its RJs with 7Mn fans on Facebook, 1Mn on Instagram, and 2Mn on Twitter.

We have shifted all the online radio products of Radio Mirchi under the Umbrella identity of Mirchi Play on Gaana. This umbrella identity will help ENIL better market its diverse offerings of web-radio, online podcasts and FM radio. It will also help us aggregate our online listeners under one common offering and monetize them better. We plan to extend the Mirchi

Play digital identity across other online platforms too.

Radio Mirchi made a focused effort in Video content development and original IP creation and created the first superhit Tamil content series called Kalyaanam (with RJ Senthil), which generated more than 10 million views on Youtube. We also produced a Gujarati series called Jalsa Party (with RJ Dhvanit). Both of these have seen tremendous advertiser and listener interest and gives us the confidence to do more in the original video content space.

3) Listenership Performance:

According to the latest IRS data released recently, Radio Mirchi has once again emerged as the number one FM broadcaster in Delhi and Mumbai, as well as in the top 8 metros taken together. IRS 2017 was released recently by industry

Users Council non-profit

(MRUC) after a gap of nearly 4 years.

In Mumbai (including Vasai-Virar), Mirchi is heard by 25.4 lakh people weekly while in Delhi NCR, it is heard by a huge 44.6 lakh people, leading its nearest competitor in these two cities, Big FM, by 21% and 20% respectively. Taken together, in the top 8 metros that include Bangalore, Chennai, Kolkata, Ahmedabad, Pune and Hyderabad, Mirchi leads with 1.45 crore listeners, 32% ahead of the number 2 player Red FM. In the 7 metros that Radio City is present in (except Kolkata), Mirchi leads it by 46%. In the 7 metros that Big FM is present in (except Pune), it leads it by 28%. In the 6 metros that Fever FM is present in, Mirchi leads it by 65%. Mirchi also leads nationally with 2.9 crore listeners. In Bangalore and Hyderabad, Mirchis second channel, a Hindi channel called Mirchi 95, pulls in 9.6 lakh listeners. In Ahmedabad, Pune, Jaipur, Kanpur, Lucknow, Surat and Nagpur, Mirchis second channel, Mirchi Love has pulled in 19.5 lakh listeners. As per MRUC, nearly 20 crore people in India listen to FM radio every month, split nearly half-half between urban and rural areas. Radio listenership grew by 13% in urban areas since the last research in 2014. An important highlight of FM radios listenership is its premium listener profile. As many as 45% of listeners in the top 8 markets belong to the premium class, NCCS A. These listeners are the most prime audiences for advertisers. Even at a national level, NCCS A listeners are at 29%, nearly double of their share in the population. A reason for the high profile of radio listeners is listenership inside cars. As many as 25% of listeners in the 8 metros consume radio on their car stereos, a big jump since 2014.

4) Mirchis international presence:

UAE: Radio Mirchi has been present in the UAE for the last several years. We have a brand licensing agreement with our partners in the UAE – Abu Dhabi Media Corporation (ADMC). Over the last several years, we have done some exceptional programming and marketing. As soon as we entered, we won the prestigious Masala Awards for best Hindi radio station three times in a row. But leadership in listenership eluded us till very recently. Finally, in the Wave 1 research of Quarter 4, 2017, we were declared the number 1 brand across all UAE by Nielsen. This leadership position is across languages – Arabic, Hindi, English, Malayalam and others. The top 3 stations nationwide in the UAE are: Radio Mirchi : 2.25 million Radio4FM : 1.46 million Virgin : 1.40 million Not only is our reach the highest, our time-spent-listening (TSL) also is the highest amongst all Hindi station at 4 hours 29 minutes per week. Clearly, the power of brand Mirchi and the strength of our programming and marketing teams is visible from these numbers.

Bahrain: After scoring a resounding success in the UAE, we have entered into a brand licensing agreement with our partner in Bahrain, Adline Media Network. Like in the UAE, we will provide complete programming and marketing support to our partner in Bahrain.

Other countries: We are exploring opportunities in other GCC countries as well as in other parts of the world. The demand for brand Mirchi is high. The entry strategy in each country may vary, but what doesnt change is the traction that brand Mirchi has amongst South Asian listeners everywhere in the world.

5) Awards & Recognition:

Indian Content Leadership Awards

2018

– Radio Mirchi won Gold for “Most Engaging Content in A Mobile Campaign” category for Radio Rangeela initiative for Asian Paints

Excellence in Radio Awards (India Radio Forum 2018)

– Radio Mirchi Kolkata station won Gold for “Sunday Suspense” under the award category “Best Radio Programme (Bengali)”

– Radio Mirchi Ahmedabad station won Gold for “Kitli Kulture” under the award category “Best Radio Programme (Gujarati)”

– Radio Mirchi Delhi station won Gold for “Mirchi Murga” under the award category “Best Radio Sparkler (Hindi)”

– Radio Mirchi Kolkata station won Gold for “Sunday Suspense 8th Birthday Promo” under the award category “Best Radio Promo – In-house (Bengali)”

– Radio Mirchi CS Mumbai station won Gold for “Mothers Are Liars” under the award category “Best Radio Promo – In-house (English)”

– Radio Mirchi Kolkata station won Silver for “Hi Kolkata” under the award category “Best Radio Programme (Bengali)”

– Radio Mirchi Aurangabad station won Silver for “Hi Aurangabad” under the award category “Best Radio Programme (Marathi)”

– Radio Mirchi Ahmedabad station won Silver for “RJ Kunal” under the award category “RJ of The Year (Gujarati)”

– Radio Mirchi Aurangabad station won Silver for “RJ Shivani” under the award category “RJ of The Year (Marathi)”

– Radio Mirchi Kolkata station won Silver for “FIFA Under 17 World Cup

Inspiration Promo” under the award category “Best Radio Promo – In-house (Bengali)”

– Radio Mirchi Bangalore station won Silver for “Wild by Nature Song” under the award category “Best Radio Promo – In-house (English)”

– Radio Mirchi CS Delhi station won Silver for “Quaker Oats + Milk” under the award category “Best Marketing Campaign”

Golden Mikes 2018 (Radio Advertising

Awards)

– Radio Mirchi won a Gold for “GST Campaign - GST Ko Thoda Simple Banao, Mirchi 98.3 Lagao” under the award-category “Broadcasters” and sub-category “Best On Air Promotion by a Network of Radio Stations for Self- not sponsored”

– Radio Mirchi won a Silver for “Comio P1” campaign of Comio under the award-category “Creativity” and subcategory “Best Single Commercial- IT, Telecommunications & Digital Media”

– Radio Mirchi won a Bronze for “Knorr Confused Bhookh” campaign of HUL under the award-category “Creativity” and sub-category “Best Single Commercial-FMCG- Personal and Homecare, Beauty & Cosmetics”

– Radio Mirchi won a Bronze for “Channel V Pe Dekh” campaign of Star India under the award-category “Creativity” and sub-category “Best Single Commercial- Media & Entertainment (TV Shows/Films)”

– Radio Mirchi won a Bronze for “Flat 983” campaign of Investors Clinic under the award-category “Promotions” and sub-category “Best On-Air Promotion for a Client- Single Station”

Global Customer Engagement Award (Asia Customer Engagement Forum

2018)

– Radio Mirchi won a Gold for “RJ Jeeturaj” under the category Radio

Jockey of The Year in Individual Awards

– Radio Mirchi won a Gold for “Pepsi

Boom Box” under the category

Creativity in Events & Promotions

– Radio Mirchi won a Gold for “Dont Listen Kar Daal” campaign under the category Creativity in Radio

– Radio Mirchi won a Silver for “RJ Naved” under the category Radio Jockey of The Year in Individual Awards

– Radio Mirchi won a Silver for “Thaamb Mumbai Thaamb” campaign under the category Effectiveness in Radio

– Radio Mirchi won a Silver for “98. TREE” campaign under the category Innovation in Radio

– Radio Mirchi won a Silver for “Flat 983” campaign under the category Successful use of CSR activity in Radio

– Radio Mirchi won a Silver for “Pepsi

Boom Box” under the category

Innovation in Events & Promotions

– Radio Mirchi won a Bronze for “Pepsi

Boom Box” under the category

Effectiveness in Events & Promotions

– Radio Mirchi won a Bronze for “Navi Ki Toli” under the category Best Use of Celebrity Endorsement in Events & Promotions

– Radio Mirchi won a Bronze for “Navi Ki Toli” under the category Creativity in Events & Promotions

– Radio Mirchi won a Bronze for “A Pro Deserves A Pro” campaign under the category Best Use of Celebrity Endorsement in Radio

– Radio Mirchi won a Bronze for “Mothers Are Liars” campaign under the category Promotions in Radio

– Radio Mirchi won a Bronze for “Sadda Ghar Wapas Kar” campaign under the category Best Use of Customer Feedback in Radio

– Radio Mirchi won a Bronze for

“Fundraising for Devendra Kapri” campaign under the category Effectiveness in Radio

– Radio Mirchi won a Bronze for “Knorr- Confused Bhookh” campaign under the category Creativity in Radio

6) CSR Initiatives:

Bennett University (BU) is a body corporate under The Bennett University, Greater Noida, Uttar Pradesh Act, 2016. BU, a state private university in Uttar Pradesh, with the aim of providing Ivy League quality of education to undergraduate and postgraduate students. It fosters a proactive environment of Innovation and Entrepreneurship, while enhancing skills in all areas of higher education through the internationally acclaimed Centers of

Excellence such as Centre for Innovation & Entrepreneurship (CIE) and Centre of Executive

Education (CEE).

The Company has contributed Rs 201.50 lakhs to BU towards CSR initiatives and

Rs 9.50 lakhs towards Building CSR capacities including CSR manpower cost, expenditure on administrative overheads, etc. for the financial year 2017-18. Relevant details regarding CSR Policy development and implementation has been stated in the Directors Report at para 12 (CSR Committee).

7) HR Initiatives:

In todays competitive age the hunt for talent has increased manifold. We are seeing both the new age and traditional sectors compete fiercely for the same talent pool. We are happy to inform you that your Company continues to be the employer of choice for the top talent. The best talent scouters for any Company are its own people. Typically, one out of every three new employees are referred by our existing workforce. Not only does this increase the possibility of a high-quality hire, it is also an indicator of an engaged workforce.

Being a market leader, we have consciously opted for a “Build” as against a “Buy” approach to talent development. We regularly visit and interact with B-Schools & Media campuses to pick up the top talent and enroll them as a part of our Management Trainee Program. We believe that these investments are a must if we are to secure & strengthen the middle and top management talent pool in the next few years.

As a conscious strategy which we embarked upon last year, this year too we have increased our training spends to improve productivity. We clocked nearly 2000 person-days of training, amounting to almost 2 person-days of training per person. Around 65% of our workforce went through a formal training plan based on the developmental needs identified for them. This year we also added a few e-learning options. The millennial workforce is now increasingly becoming an on-demand generation. We will invest further in e-learning opportunities to provide our workforce with on-demand training content which they can consume at a time and location of their choice. Having said that, we are aware that creating a culture of learning is a never-ending process, and we are committed to continuing with this effort.

We have always prided ourselves on being an employee friendly organization. With a 30%+ workforce comprising of women, we are keen to continue remaining an employer of choice for talented women in the country. Recognizing that a healthy work culture needs to be maintained at all times, especially with the Mirchi footprint spreading into newer markets, your Company continues to reinforce its unique DNA in all markets of operation. Senior management of the Company and the HR team continue to be directly involved in training & related employee communication activities. ENILs talent has always commanded a premium in terms of its quality in the market place and with this added investment we hope to shift the quality of our talent up by a few notches.

D. Risks, Concerns and Challenges Facing the Company

1) Macroeconomic risk:

The radio sector is a true reflector of the strength of the consumer economy in the country. Anything that disturbs the sentiment of the consumer segment – like Demonetization, RERA and GST did in FY18– is likely to disturb the fortunes of the radio industry also. Your Company has been very careful in its bidding strategy for stations under Phase-3 policy. It has provided enough protection against disruptions caused by possible macroeconomic initiatives in the future.

2) Changing business environment:

In the changing business environment, advertisers are moving away from buying media to buying “solutions”. It is thus important for all radio players to stay alert to this changing environment. Your Company is a leader in providing solutions to clients, with the widest array of products to offer to clients. These clients include Activations, Concerts, TV properties, Multi-media solutions, digital, video, international and even original content.

3) Operational and Financial Risks:

The Risk Management Framework of the Company is the basis on which your Company manages its risks. The Board monitors the risks on a regular basis. Risks are periodically reviewed, added and deleted. Process owners take responsibility for the risks and brief management and the Board about the same. Risk Management process has been outlined in the Directors Report at para 31 (Risk Management).

4) Retaining Talent:

As mentioned earlier, the most important raw material that goes into producing great content, and thus making a great media business, is the quality of its talent pool. If it becomes difficult to attract suitable talent, a company is bound to lose its pace. Fortunately, at Mirchi, we have always been able to recruit the very best in the country. As seen in FY18, we are even able to attract the absolute topmost Bollywood talent to host shows on our channel – Karan Johan and Mahesh Bhatt being two prime examples.

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:

ENILs revenue from operations de-grew 3.4% to Rs 537.1 crores, EBITDA from operations de-grew 7.4% to Rs 116.6 crores and PAT de-grew by 35.5% to Rs 35.2 crores. Net Cash and Cash equivalents (after considering borrowings) of the Company as on March 31, 2018 was Rs 69.3 crores.

2) Subsidiary Company:

Alternate Brand Solutions (India) Limited (ABSL) is the Companys wholly owned subsidiary since 2007. ABSL recorded a total income of Rs 61.80 lakhs during the financial year 2017-18. Profit after Tax stood atRs 48.10 lakhs for the financial year under review.

GENERAL

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 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 the Integrated Reporting on a voluntary basis. The information related to the Integrated Reporting forms part of the Management Discussion & Analysis and as a part green initiative, Integrated Reporting has been hosted on the website of the Company (www.enil.co.in) at url: http://www.enil. co.in/financial s-annual-reports.php and same shall be kept open for inspection at the Registered Office of the

Company and shall also be available at the AGM.

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

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. Occupational health safety and environmental management are given utmost importance. As on March 31, 2018, the employee strength (on permanent roll) of the Company was 1084.

For and on behalf of the Board of Directors

sd/-

Vineet Jain

Chairman

[DIN: 00003962]

Mumbai, May 23, 2018

Registered Office:

Entertainment Network (India) Limited,

CIN: L92140MH1999PLC120516,

4th Floor, ‘A Wing, Matulya Centre,

Senapati Bapat Marg, Lower Parel (W),

Mumbai – 400 013.

www.enil.co.in