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- The Covid-19 Impact

World GDP growth was strong in 2017 and H1 of 2018. However, it slowed down in H2, 2018 because of rising trade tensions globally, especially between the US and China, and other factors. In the October 2018 World Economic Outlook (WEO) update, IMF projected a 3.7% growth for 2019 and 2020. In the October 2019 WEO update, IMF reduced the 2020 forecast from 3.7% to 3.4%. It also forecast growth in 2021 to be stronger at 3.6%. Then the Covid-19 pandemic broke in China, but IMFs January 2020 WEO update took only a minor note of it. It reduced the 2020 forecast down from

3.4% to 3.3% and the 2021 forecast down from 3.6% to 3.4% But little did it know that the pandemic was about to cause unimaginable economic destruction around the world.

In April 2020, after the pandemic had spread around the world, IMF reported that actual 2019 growth had been just 2.9%. Further, it drastically cut the forecast for 2020 to minus 3.0%, a huge drop attributed almost entirely to the pandemic. It now believes that the


Difference from January 2020 WEO Update1

Difference from October 2019 WEO1

2019 2020 2021 2020 2021 2020 2021
World Output 2.9 –3.0 5.8 –6.3 2.4 –6.4 2.2
Advanced Economies 1.7 –6.1 4.5 –7.7 2.9 –7.8 2.9
United States 2.3 –5.9 4.7 –7.9 3.0 –8.0 3.0
Euro Area 1.2 –7.5 4.7 –8.8 3.3 –8.9 3.3
Germany 0.6 –7.0 5.2 –8.1 3.8 –8.2 3.8
France 1.3 –7.2 4.5 –8.5 3.2 –8.5 3.2
Italy 0.3 –9.1 4.8 –9.6 4.1 –9.6 4.0
Spain 2.0 –8.0 4.3 –9.6 2.7 –9.8 2.6
Japan 0.7 –5.2 3.0 –5.9 2.5 –5.7 2.5
United Kingdom 1.4 –6.5 4.0 –7.9 2.5 –7.9 2.5
Canada 1.6 –6.2 4.2 –8.0 2.4 –8.0 2.4
Other Advanced Economies2 1.7 –4.6 4.5 –6.5 2.1 –6.6 2.2
Emerging Market and Developing Economies 3.7 –1.0 6.6 –5.4 2.0 –5.6 1.8
Emerging and Developing Asia 5.5 1.0 8.5 –4.8 2.6 –5.0 2.3
China 6.1 1.2 9.2 –4.8 3.4 –4.6 3.3
India3 4.2 1.9 7.4 –3.9 0.9 –5.1 0.0
ASEAN-54 4.8 –0.6 7.8 –5.4 2.7 –5.5 2.6
Emerging and Developing Europe 2.1 –5.2 4.2 –7.8 1.7 –7.7 1.7
Russia 1.3 –5.5 3.5 –7.4 1.5 –7.4 1.5
Latin America and the Caribbean 0.1 –5.2 3.4 –6.8 1.1 –7.0 1.0
Brazil 1.1 –5.3 2.9 –7.5 0.6 –7.3 0.5
Mexico –0.1 –6.6 3.0 –7.6 1.4 –7.9 1.1
Middle East and Central Asia 1.2 –2.8 4.0 –5.6 0.8 –5.7 0.8
Saudi Arabia 0.3 –2.3 2.9 –4.2 0.7 –4.5 0.7
Sub-Saharan Africa 3.1 –1.6 4.1 –5.1 0.6 –5.2 0.4
Nigeria 2.2 –3.4 2.4 –5.9 –0.1 –5.9 –0.1
South Africa 0.2 –5.8 4.0 –6.6 3.0 –6.9 2.6
European Union5 1.7 –7.1 4.8 –8.7 3.1 –8.8 3.1
Low-Income Developing Countries 5.1 0.4 5.6 –4.7 0.5 –4.7 0.4
Middle East and North Africa 0.3 –3.3 4.2 –5.9 1.2 –6.0 1.2
World Growth Based on Market Exchange Rates 2.4 –4.2 5.4 –6.9 2.6 –6.9 2.6
World Trade Volume (goods and services) 0.9 –11.0 8.4 –13.9 4.7 –14.2 4.6
Advanced Economies 1.5 –11.5 7.5 –13.8 4.3 –14.2 4.2
Emerging Market and Developing Economies –0.8 –8.2 9.1 –12.5 4.0 –12.5 4.0
Advanced Economies 1.2 –12.8 7.4 –14.9 4.4 –15.3 4.3
Emerging Market and Developing Economies 0.8 –9.6 11.0 –13.7 6.8 –13.7 6.6
Commodity Prices (US dollars)
Oil6 –10.2 –42.0 6.3 –37.7 11.0 –35.8 10.9
Nonfuel (average based on world commodity import weights) 0.8 –1.1 –0.6 –2.8 –1.2 –2.8 –1.9
Consumer Prices
Advanced Economies 1.4 0.5 1.5 –1.2 –0.4 –1.3 –0.3
Emerging Market and Developing Economies7 5.0 4.6 4.5 0.0 0.0 –0.2 0.0
London Interbank Offered Rate (percent)
On US Dollar Deposits (six month) 2.3 0.7 0.6 –1.2 –1.3 –1.3 –1.5
On Euro Deposits (three month) –0.4 –0.4 –0.4 0.0 0.0 0.2 0.2
On Japanese Yen Deposits (six month) 0.0 –0.1 –0.1 0.0 –0.1 0.0 0.1
Source: IMF staff.

world will recover strongly in 2021 and grow at 5.8% compared to the January 2020 forecast of 3.4%. However, this increase in growth rate is merely a statistical increase, considering the low base of the revised 2020 number. As far as India is concerned, in its April 2020 report, IMF forecast growth in 2020 surprisingly to be in the positive territory with +1.9%. For 2021, it forecasts a truly impressive growth of 7.4%. However, most would agree that IMF is being too optimistic. As per an RBI report of June 2020, Indias GDP is expected to contract by 1.5% in FY21 and grow at 7.2% in FY22. Many global and domestic analysts have forecast a worse contraction in FY21. Most agree that CY21 and FY22 will be a strong bounce back. However, no one knows the future course the pandemic will take. To that extent, we should remain guarded in making forecasts for now.

2) Indian Economy – Global risks impacting India

The World Bank estimates the growth of the Indian economy to have slowed down to 4.2% in FY20. It also projects output to contract by 3.2% in FY21. The growth rate of Indian Economy in FY17 was 7%, which dropped to 6.1% in FY18 and is estimated to be 4.2% in FY20.

Honble PM Shri Narendra Modi ordered a nationwide lockdown from March 25, 2020 to curb the spread of Covid-19 in the country. In May and June however, the lockdowns were lifted in steps. The full impact of the lockdowns on manufacturing and services in the June quarter will become clearer when the GDP numbers are released. Goldman Sachs has predicted a 45% contraction in GDP from a year ago.

Economists expect FY21 to see the worst economic contraction in four decades. Cutting its FY21 forecast to a 5% contraction, rating agency S&P said, “Economic activity will face ongoing disruption over the next year as the country transitions to a post-Covid-19 world”. Unlike that of advanced economies, Indias stimulus package has largely focused on subsidized credit to small businesses and farmers, while direct fiscal stimulus has been limited to around 1% of the GDP. The Reserve Bank of India cut policy rates by 40 basis points in May 2020 and has reduced its repo rate by a cumulative 115 basis points since February 2019.

However, there is faith in the ability of the Indian economy to recover, with its strength in consumption and public investment supported by fiscal and monetary policies. Weather forecasts for normal monsoon rains should help agriculture, giving hope that the rural sector can help support the millions of migrant workers who returned to their villages when the lockdown began. As per reports published by IMF, India is among the handful of countries projected to have a positive growth rate of 1.9% in FY21, the highest in G20 countries. RBI expects a V-shape recovery with GDP growing at 7.2% in FY22 while IMF has forecast a 7.4% GDP growth in CY21.


1. https://www.moneycontrol.com/news/business/ economy/india-economy-to-contract-by-3-2-in-fy21-world-bank-5376551.html

2. https://www.livemint.com/industry/manufacturing/ india-s-economy-seen-slowing-rapidly-in-march-quarter-with-worse-to-come-11590718431472.html

3. https://economictimes.indiatimes.com/news/ economy/indicators/rbi-governor-hopes-india-will-stage-sharp-v-shaped-recovery-in-2021-22/ articleshow/75196698.cms

4. https://www.business-standard.com/article/ economy-policy/india-to-grow-at-1-9-in-fy21-recover-to-7-4-path-in-2021-22-imf-120041401051_1.html

3) Global Advertising Spends

Global advertising spend for 2020 is expected to grow for both traditional media and online media. The rapidly spreading coronavirus pandemic and its yet-to-be-seen impact on the global economy has played a major role in the recent increase in online media spends. While traditional advertising spending is predicted to grow by 1.5% to reach $324.2 billion, forecast data shows that investment in online advertising will grow by 13.2%, reaching $335.4 billion this year. If this comes true, online ads will cross traditional advertising in 2020.

Published on MarketingCharts.com in March 2020 : Data Source: WARC

Due to overlap between online channels double counting should be avoided : Facebook includes WhatsApp, Messenger and Instagram Google = search revenue only; Alphabet includes Google, YouTube and Google Network members (prior to deduction of TAC) source: https://www.marketingcharts.com/television-112297

More than one-third (35%) of online spends will go to the duopoly of Alphabet (including Google, YouTube and Google Network members) and Facebook (including Instagram, WhatsApp and Messenger). With a combined predicted ad spend of $231.9 billion this year, advertisers will invest more in the duopoly than in TV ($192.6 billion). Other traditional channels such as out of home (+5.9%), cinema (+5%) and radio (1.8%) are also expected to see growth. However, print ad revenues will see a decline, with newspapers falling by 5.9% and magazines by 5.6% from last year. With recession on its way, globally; overall, decline in business spends, has surely impacted the marketing budgets, reducing advertisings share of global economic output below the levels recorded prior to the dotcom crash and the past global financial crisis. However, the impact varies greatly based on advertiser category; Travel, Sports and Science categories experienced the steepest ad spend declines, while News, Hobbies and Interests, and Technology & Computing saw distinct increases.

4) Indian Advertising Industry Growth Forecasts

The Covid-19 pandemic has impacted all sectors of the economy, and advertising is no exception. As a result of the pandemic, companies have curtailed their marketing spends at least till the situation stabilizes. According to an analysis based on 78 Media and Entertainment (M&E) companies rated by CRISIL, the M&E industrys revenue advertising and subscription is set to go down by 16% to Rs. 1.3 trillion this fiscal.This represents a drop of nearly Rs. 25,000 crores in FY21. Advertisement revenue, which accounts for 45% of the pie, will see a de-growth of 18%, while subscription revenue, accounting for 55%, is likely to decline by 14% in FY21. All the traditional segments television, print, radio, out-of-home media, and films would see a significant decline, more than 25%. Driven by increasing use of devices and applications, and easy availability of high-speed data, total digital revenues should grow by 8.6% to Rs.15,200 crores from Rs. 14,000 over FY20. As per the latest data from the Broadcast Audience Research Council (BARC), the viewership of news channels during the Covid-19 pandemic grew by 57%, and the advertising on them by 21%. Advertising on kids genre went up 27% while Hindi Movies genre and Hindi GEC witnessed a jump of 8% each. However, due to lack of new content on popular channels and postponement of major sporting events such as the IPL, TV ad and subscription revenues are expected to drop from Rs. 80,700 crores to Rs. 73,300 crores. A longer recovery time is forecast for Print since key advertiser industries such as automobiles, real estate and e-commerce, would keep ad spends muted. Talking about subscription revenues, out of top three segments - TV, print and cinema only TV continues to be healthy even during the lockdown. The movie business alone is estimated to drop from Rs. 23,600 crores to Rs. 12,700 crores in FY21.

The overall revenue loss of Rs. 25,000 crore for the industry will translate to significantlylower profits measures.


1. https://brandequity.economictimes.indiatimes. com/news/advertising/indian-ad-spends-estimated-to-grow-at-10-7-in-2020-digital-to-garner-65-of-incremental-ad-spends-groupms-tyny-report/73955019

2. https://www.livemint.com/news/india/covid-19-may-cut-media-entertainment-sector-fy21-revenue-by-16-crisil-11589189188009.html

5) The Indian Radio Industry

As per EYs report, radio segment revenues fell 7.5% to Rs. 31.1 billion in 2019 from 33.6 billion in 2018. Despite a 5% growth in the first half of 2019, it fell 18% in the second half on the back of economic slowdown. Overall ad volumes also fell by 11% due to fall in government spends on the medium and obvious impact of anticipated corona virus pandemic.

Talking about revenue contributions, the EY report highlights the top five advertising sectors delivering two-thirds of radio ad volumes in 2019 - Services (28%), Retail (11%), Auto (10%), Food and Beverages (9%) & Banking Finance (9%). The local-national split of ad volumes is 24 :76 with 2% increase in local advertising contribution over last year.

EY estimates that around 7-8% of total radio segment revenues were non-FCT revenues with this percentage being as high as 20% for some radio companies. Looking at current industry trends, this ratio is only set to increase with almost all major radio companies following combined [radio + digital + other outdoor media] sales and solutions strategy. In 2019 many interesting new models emerged where radio companies bundled inventory from other digital platforms (not their own) as well as OOH, activations and even print and regional TV to provide 360-degree solutions to advertisers. Many radio companies also invested in event IPs, music awards, regional music festivals etc., which generated sponsorship revenues as well as ticket sales income. However, it will be interesting to see how these strategies will be modified in 2020, given the limitations on events due to Covid-19. Growth in internet consumption on smartphones in the recent lockdown period, particularly on social media, increased demand for short and snackable content, mainly celebrity led, which led many radio companies to start creating video, for use as marketing and ad funded content production.

Growth in radio penetration continues with 367 private FM radio stations in India now, up from 355 stations in 2018. India had 33 private FM broadcasters in 2019, operating in 104 cities in addition to public broadcaster Prasar Bhartis All India Radio service operating 470 broadcasting centres. As per MRUCs Indian Readership Survey, listenership of FM radio remained stable at 20% across the last three studies in 2019 with urban radio listeners base being double than that of the rural listeners.

During the lockdown, radio listenership witnessed a big spike and grew by 28% as per research conducted by AROI (Association of Radio Operators of India). Looking at the current scenario, Radio is expected to evolve towards performance advertising in 2020, with a heavier tilt towards SMEs and retail advertisers. While local brands will increase spends across a city or geographically relevant city-clusters with a hope to cover up their lost revenues in late 2020, national advertisers will continue usage as a reminder and call-to-action medium, integrated with digital. Also combining radio with digital will become the new normal to demonstrate value to advertisers. Partnering with music streaming platforms is also seen as the way forward for radio companies to cut through the worrying threat of new smartphones manufactured without FM receivers.

B. Radio Industry Future Outlook, Opportunities and Threats combating the blow

Like all industries. radio industry too has been impacted severely by the Covid-19 outbreak in early 2020. But even before Covid-19 struck, the radio 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 has continued ever since. This has impacted the business of all media companies. The future is expected to get better though, as the economy lifts post Covid-19 and as the Government takes fresh measures to boost the economy.

1) Impact of Covid-19 on the radio business:

As the Covid-19 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 well informed and in dispelling rumors floating on social media and elsewhere. While some media like newspapers and OOH were disrupted by the lockdowns, others like radio saw rapid growth in consumption. 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. Advertisers who saw their businesses disrupted by supply problems and demand sluggishness, stopped advertising.

Retail advertisers, 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 last 15 days of March and the months of April and May have been catastrophic for all media companies. General

Entertainment TV channels (GECs) gained some viewership with people staying at home but suffered ad revenue losses as advertisers stayed away. With the IPL postponed, a huge chunk of advertisers stayed away. Only news TV channels fared better, but it is estimated that even they suffered substantial revenue losses. Newspapers suffered from distribution disruption, and consequently lost readers, and advertisers. OOH companies lost heavily too as airports shut down and traffic on the roads reduced drastically. Overall, radio companies suffered as much as TV GECs, OOH and newspaper companies. Digital companies continued to do well, but it is estimated that their growth rates also slowed down substantially.

The pandemic is the second successive crisis the radio industry has faced within a year, the first Overall, the radio industry is expected to report a contraction of up to 20% in revenue in FY202. In the first month of the lockdown itself i.e. April, revenues of the entire radio industry shrunk to Rs. 34 crore, from Rs. 198 crore in April 2019, a drop of nearly 83%. Compared to a profitbefore tax of Rs. 18 crore in April 2019, the industry as a whole, suffered a loss (before tax) of Rs. 104 crore. The radio industry is expected to witness a loss of over Rs. 600 crore in the 1st half of FY21, as advertising revenues nosedive3. While FM broadcasters are individually struggling to increase revenues through innovative sales approaches, cost reduction through lay off has been resorted to by almost all broadcasters. It is estimated that as many as 15-20% people working in radio companies have lost their jobs. A further 30-50% of employees have suffered temporary pay cuts and loss of incentive pay. The radio industry finds this report is being written. It has appealed to the Government of India for a relief package.

The relief sought is a waiver of annual license fees from March 2020 till March 2021 (13 months), a waiver of Prasar Bharati and BECIL tower rentals as well as a waiver on BECIL monitoring charges, all for the same 13 months period. AROI has also requested for a reduction of GST from the current 18% to 5% and has urged the Government to restore its advertising spends on FM radio back to what it used to be in earlier years (the Government had cut ad spends in FY20). AROI has also requested for an immediate clearing of long-due outstandings. As is well known, the media industry will rebound only after the business of its advertisers rebounds. General expectation currently is that the business of advertisers will stabilize by the 3rd quarter of FY21. If that happens, then media businesses should stabilize by the 4th quarter of FY21. All of this is on the expectation that the Covid-19 growth curve will be flattened soon and a second wave of infection wont come in the winter months.

Despite the near-term weakness in radio revenues, the industry is confident that its long term future remains bright. Radio listenership has grown during the pandemic as pointed out earlier. Radio listenership in cars has been growing for a few years now and this is of great interest to advertisers. At the same time, the youth continue to consume FM radio in a big way. FM radio has not only held its own in the face of a fast expanding digital ecosystem, with several music OTT apps available now, but has actually grown in reach.


1. https://www.moneycontrol.com/news/trends/ entertainment/coronavirus-impact-more-people-listen-to-it-now-but-radio-is-still-struggling-5232061. html

2. https://economictimes.indiatimes.com/news/ economy/policy/after-slowdown-fm-radio-industry-faces-covid-19-seeks-government-support/ articleshow/74766072.cms

3. https://economictimes.indiatimes.com/industry/ media/entertainment/media/radio-industry-seeks-rs-300-crore-for-survival/articleshow/75837916.cms

4. https://economictimes.indiatimes.com/industry/ media/entertainment/media/private-fm-radio-companies-write-to-pm-modi-for-urgent-relief/ articleshow/75437393.cms

5. https://www.timesnownews.com/columns/article/ vocal-for-local-and-its-relevance-in-the-global-village/595476

2) IRS Q4 2019 - Radio heard more this year than ever!

As per the latest IRS report for Q4, 2019 released in May20, the monthly radio listenership across the country grew strongly by 11.4% to 226 million people and the weekly listenership grew by 6.4% to 117.4 million over the 2017 survey. Radio numbers are not comparable with print and TV numbers since radio stations are not available throughout the country. They only cover approximately 350 urban centers. A sample of 3.28 lac households was covered in the survey and fieldwork was done between Nov 2018 - March 2020. This constant upward trajectory of listenership figures over the quarters, makes a strong statement in favour of the medium.

A very valuable feature of radio listenership is the diversity of listening devices and places of consumption. Despite an under 3% car penetration in the country, as much as 17% of radio listenership comes from car stereos.

As is well known, cars are concentrated in the bigger cities and are used by the wealthier sections of the population. This makes car audiences a much sought after target group for advertisers. Since most car users are male, a lot of male-targeted brands use radio. Further, as much as 53% of radio is heard over mobile phones. A lot of this listenership comes from the youth, and brands targeting the youth find radio attractive. Listenership over mobile devices could be during transit or at home.

Since most Indian households are single TV households, a lot of people cannot watch TV. Many of them listen to radio at home. In fact, as per IRS, as much as 40% of listenership happens at home. This makes radio attractive to FMCG companies that target women at home.

One more data point to prove the importance of Radio in peoples life is the latest research conducted by AROI through A to Z research that shows 82% of the population tuned into

FM Radio for credible information during the lockdown. The time spent listening to radio increased to 2 hours and 36 minutes daily, an increase by 23% over the pre-Covid-19 period, and second only to TV. Overall radio listenership (reach x time spent) has grown by

30% over the pre-Covid-19 period. The radio industry has now stepped up in a big way to expand its reach, by becoming accessible through music streaming apps. Either through live FM stations or genre-based stations or topical podcasts, the radio industry is attempting to overcome the limitations imposed by the FM signal. Indeed, digital presence of radio has added millions of listeners to its listenership base, making investment in radio the safest bet.

3) Digital leading growth

As has been the trend from earlier, FY20 also saw the explosive growth in the digital ecosystem continuing. It is estimated that more than 500 million Indians are now online. As many as 400 million people use different mobile apps. As per reports, as many as 300 million people viewed the IPL over the Hotstar app. The radio industry faces a competition of sorts from music OTT apps. It is estimated that 120 million Indians used music OTT apps last year. Music apps provide obvious advantages to their users the ability to play a song on demand, a choice to skip songs in a playlist that are not to their liking, the option to download a song by paying a certain charge etc. At one time, the

FM radio industry was concerned about losing its listenership to music apps. However, over time, it has become clear that music apps have created their followership not at the expense of FM radio, but by creating a new and bigger audience base. It has also created different occasions for music consumption from FM radio. For example, a lot of people who used to consume FM radio on their old phones are unable to do so now because their new phones dont have built-in FM tuners. These people typically consume music over music apps.

Time has also shown that FM radio and music apps are very different products. Typically, an FM station plays only about 30 minutes of music in an hour, with the rest of the hour being split between “funnies”, RJ talk, infotainment bits and of course, ads. It is this combination of features that makes FM radio so sticky.

This is why IRS shows that FM listenership is upwards of 45 minutes per day, while most music apps report far smaller usage times. FM radio also continues to remain the best way for listeners to discover music, a fact that music companies know very well. This is why when a new song or album releases, FM stations are flooded with requests from music labels to play songs on high rotates. Labels which often dont give rights to some FM stations provide special NOCs to play the music of their latest songs, only so that they can be promoted on FM. Once a song becomes popular on FM, its listenership increases on music apps. Labels then make a huge amount of royalty from music apps.

Even amongst older music, FM radio stations select their music by curating it. So, each station has a unique set of songs, curated as per its music policy. Most music app playlists in contrast are unintelligent and algorithm based, which lead to boredom after a few times. FM stations have also understood that in cars, they rule supreme. Even in the developed world, where music apps are very popular, the in-car listenership is dominated by FM radio. The reason is the simplicity of use. Plus, the utility information that FM radio stations provide traffic, stock market information, time check, and breaking news (not in India) makes FM radio a sticky product in cars. The companionship that an RJ provides is another reason for stickiness of FM radio.

The Government in India realizes the power of FM radio for people on the move. This is why whenever there is a crisis floods, terror attacks etc the Government turns to FM radio stations for disseminating information to the public.

Radio broadcasters have also been growing their social media footprint with RJs and corporate handles both showing growth.


1) FY20: Economic slowdown hurts radio broadcasters:

FY20 was a year the country faced severe economic difficulties. To be sure, economic slowdown started with Demonetization in

November 2016. Since then, several other

Government initiatives caused a degree of disruption in the economy, beginning with the launch of GST, the roll out of RERA, the regular increases in fuel taxes and the like. These moves may prove to be beneficial in the long run, but in the short run, they have caused a lot of pain. There were also initiatives, like the very significant taxes, which were progressive. Under normal circumstances, such a big tax cut should have led to a spurt in investments, and consequent GDP growth. However, the slowdown had set in by the then, and it is believed that reduced corporate taxes have so far been used by many companies to buy back their stock, thus increasing their EPS and stock prices. When the Government, under the leadership of Honble PM Shri Narendra Modi, got re-elected in May 2019, there was hope that the economy would revive in FY20. Unfortunately, FY20 ended up being worse than FY19. The year ended with just 4.2% GDP growth, compared to 6.1% in FY19. In the 4th quarter of FY20, GDP growth slowed down to 3.1%, an 11-year low. The Q4 GDP slide was partly on account of the Covid-19 pandemic, which entered India in a slow but steady way during the quarter. It disrupted business like nothing else has in a hundred years. As the Government worked to protect peoples lives, it announced lockdowns by end-March. Public transport was shut down, factories were shut down, retail outlets were shut down and offices were shut down. But the impact on business was felt from January 2020 itself, as the pandemic spread in China and other countries.

Your Companys success is highly dependent on the success of its clients - the advertisers. When their business grows, they spend more on advertising. In high growth periods, advertisers launch new products and consumer promotion schemes, enter new geographies, and engage in brand building. In low growth periods, they do the reverse and cut costs. One of the easiest costs to cut is advertising. Advertising spends are usually large sums. They are easy to cut as in the short run, cutting ad spends does not affect business growth. If all advertisers in a category cut spends, it does not even affect share of voice and revenue market shares. It has been seen in every crisis that advertising spends are the first to recovery happens, ad spends are the last to be reinstated, after all other cuts have been reversed. However, when ad spends restart, advertisers usually rush to spend in an effort to catch up and regain business momentum. In that sense, ad spends are stable in the long run, even if they are volatile in the short term. A slow growth period merely shifts the spending to a future date. Basis this, we expect ad spends to stage a smart recovery in FY22 and beyond, assuming that the pandemic runs its course by the end of FY21.

All radio broadcasters suffered revenue de-growth in FY20. As per estimates, the radio industry de-grew by 16% in FY20 over the previous year. ENILs revenues fell slightly less, by 12.9%. Because we de-grew less, our revenue market share increased by 1% in FY20 over FY19.

Our core radio business de-grew by 13.4% and our solutions business de-grew by 11.9%. The de-growth of the solutions business however was because we discontinued one line of business in FY20 concerts featuring international artists. In FY19, we had conducted two massive concerts featuring pop star Bryan Adams in one, and DJ Martin Garrix in the other. While a lot of revenues approx. Rs. 29 crores were made, we suffered huge losses nearly Rs. 9.5 crores in organizing these concerts. We however learnt several valuable lessons. At the right time, we will look at reentering this space, leveraging these learnings. However, in FY20, we stayed away, given the weak economic environment. Without these concerts, the revenue base in FY19 would be lower, and on that base, we recorded a 2.6% growth in solutions revenues in FY20. Though small, the positive growth in a very weak year, with the Covid-19 pandemic particularly hitting the on-ground IP component of the solutions business hard in the 4th quarter, actually is a sign of strength. Other radio broadcasters, who do not have a large solutions business fared worse. The 5 biggest broadcasters after Mirchi collectively de-grew around 17%. Despite the poor results, there were several positives in the years performance as well:

i) As mentioned earlier, our revenue market be cut. Equally,when share went up by 1% to nearly 27% in FY20.

Compared to FY18 shares, our share is now higher by 2%. In the 4th quarter when other broadcasters who dont have much of a solutions business were hit more than we were- our market share climbed by 5% to reach 33%. When the pandemic ends, the gains in market share will stand us in good stead.

ii) The margins in our solutions business have grown over the years. In FY20, we reported strong gross margins of 36.4%, better than 32.1% in FY19 (excluding concerts featuring international artists) and 28.6% in FY18. A number of initiatives taken designing solutions better, using more inhouse digital products, starting the selling process much more in advance, setting up a commercial team to negotiate costs have led to the margin increase.

iii) We had a strong cash position of Rs. 228 crores as on March 31st, 2020. Given that the pandemic is expected to cause a disruption in business in FY21, this cash position will give us strength. As others wither, we will stand tall.

iv) our listenership continued to remain strong, with more than 40 million listeners tuning in to us and our advertising sales partners channel Ishq FM on a weekly basis.

v) Our digital footprint has grown strongly in FY20. As on March 31st, 2020, we had 9.4 million YouTube subscribers, a growth of 52% in a year, nearly 19 million Facebook and Instagram followers across RJs and corporate handles, a growth of nearly 16%. Our digital assets are invaluable for our solutions business.

On account of a revenue de-growth in FY20, our EBITDA has de-grown by 12% to Rs. 136.3 crores, after taking into account the impact of IndAS 116. Our PAT has de-grown by nearly 73% to Rs. 14.6 crores.

2) Digital

Mirchi has been able to exploit many of the opportunities which have opened up in the digital ecosystem and will continue to focus on scaling them up in the years ahead. Mirchi is participating in the growth of the online music story through its strategic partnership with Gaana. With 30% of the market share, Gaana is the biggest music streaming platform in India and Mirchi has been able to grow along with it and reach new consumers. In this year, Mirchi added another 14 new products to its portfolio on Gaana, taking the total stations being streamed on

Gaana to 24. We also made some of our content available on Amazon Alexa, so we are very much part of the growth story of smart speakers and smart homes in India. Mirchi has benefited from the growth of online consumption of videos, with its flagship YouTube channel Filmy Mirchi becoming the biggest independent Bollywood channel on the Internet, with 5 million subscribers and over 30 million monthly views. This has also allowed Mirchi to build a new revenue stream that leverages its digital reach and Bollywood relationships. It also grew the regional YouTube presence across eight regional languages, and already has two of these channels at close to a million subscribers each. Mirchi has been able ride on the growth of video OTT platforms in India, by getting a share of their investment in content. Mirchi created and licensed multiple OTT series to MX player, which is the biggest video OTT platform in India. Mirchis talent and capabilities in multiple Indian languages places us in a unique position to grow this opportunity. This will continue to be a major thrust area for Mirchi. Mirchi has been able to tap into the influencer marketing budgets of brands, by 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 and Instagram have more than 19 million followers. These handles are extremely useful in the solutions that we create for clients.

3) Mirchis international presence

USA: Mirchi launched its firststation in the US on Indias Republic Day, Jan 26, 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 stations of US Mirchi are 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).

The positioning for the brand across the US is “South Asias No. 1 Radio Station, Now in


Targeted at the South Asian diaspora, which forms a significant 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.

We have decided to call off this arrangement. As of March 2020, we now have stations only in the Tri State area of New Jersey, New York and Connecticut. However, we still have plans to expand to San Francisco, Dallas and other cities in the US, as well as in Canada, that have a considerable population of South Asians, through Brand Licensing and Partnerships the opportunity is still huge and relatively untapped.

UAE: 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 have been voted UAEs most loved Hindi Station thrice as per Masala Awards, which is a testimony to our exceptional programming and marketing efforts. In listenership, we continue to be the No.1 brand across the UAE, across languages Arabic, Hindi, English, Malayalam and others. Incidentally the top 3 stations nationwide in UAE are all Hindi stations Radio Mirchi : 2.36 million

Radio4FM : 1.33 million City FM : 1.08 million

Not only is our reach the highest, our time-spent-listening (TSL) is also the highest amongst all Hindi station at 4 hours 2 minutes per week. In the UAE, our original brand licensing and content agreements with Abu Dhabi Media

Company (‘ADMC) had ended in April 2019 with efflux of time. We allowed them to continue using our brand even as we tried to hammer out a new agreement. However, during FY20, we could not realise any revenues from the arrangement beyond April 2019. Bahrain: Our partner, Adline Media Network, with whom we had entered into a Brand Licensing agreement with, surrendered its license to the Government. The Government has since called for fresh tenders for 2 FM frequencies Mirchi submitted its bid through its lawyers in Bahrain in November 2019. We are waiting for the Government to announce the results of the bidding, which has been delayed because of the Covid-19 related lockdown. With a weightage of 20% on Technical and Quality evaluation (Company Size, Previous work and Financial Status),

Mirchi has a strong chance to win the bid. Qatar: 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. ENIL shall make an equity investment in the share capital of GENL. GENL shall conduct the 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.

Due to some legal challenges that our partner is facing, we havent yet been able to kickstart operations. Once these are sorted out, we should be able to launch.

4) Awards & Recognition Won by ENIL

New York Festivals Radio Awards 2020

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

Media Brand Awards 2019 by AFAQS

Gold for “Kick the Plastic” under the award-category “Best Integrated Campaign”.

Gold for “Main Bhi Naved” under the award-category “Best Trade Media Campaign”.

Silver for “Kick the Plastic” under the award-category “Best Social Media Campaign”.

Silver for “The Naved Khan show” under the award-category “Best Online Campaign”.

Silver for “Phatto Returns” under the award-category “Best IPR Event”.

Bronze for “Zero Day On Mirchi” under the award-category “Best Online Campaign”.

Bronze for “Lift Wala Murga” under the award-category “Best IPR Event”.

SEAC 2019 Customer Engagement Awards, Singapore

Gold for “Radio Rangeela for Asian

Paints” under the award category “Excellence in Brand Strategy”

Gold for “Jasoos Arjun for GSKs Horlicks” under the award category “Most Effective Campaign”

Silver for “Britannia Campus Radio” under the award category “Excellence in Innovation”

ACEF Asian Leadership Awards 2019

Gold for “Jasoos Arjun for GSK Horlicks” under the award category

“Best Use of Mobile Marketing”

Silver for “Jasoos Arjun for GSK Horlicks” under the award category “Best Rural Activation for Brand


MOBBYs Awards 2019

Radio Mirchi was recognized by “Best Digital Marketing Campaign” award for “Britannia Campus Radio”

Radio Mirchi was recognized by “Best Use of Mobile Marketing” for “Jasoos Arjun for GSK Horlicks”

Indian Content Leadership Awards 2019

Radio Mirchi was recognized by

“Best Content in a Mobile Marketing Campaign (Overall)” for “Jasoos Arjun for GSK Horlicks”

Won by our Advertising Sales Partner ISHQ


Global Customer Engagement Award (Asia Customer Engagement Forum-2019)

Gold for “What Women Want with Kareena Kapoor Khan” under the award category “Online Media” and sub-category “Effectiveness

Gold for “Kareena Kapoor Khan” under the award category “Individual Award” and sub-category “Most Entertaining Radio Jockey of the Year”

Gold for “Karan Johar” under the award category “Individual Award” and sub-category “Path Breaking Radio Jockey of the Year”

Gold for “Excellence in Branding &

Marketing” under the award category

“Most Admired Brand of the year

Gold for “What Women Want with Kareena Kapoor Khan” under the award category “Most Admired

Branded Content of the year

Silver for “Calling Karan with Karan

Johar” under the award category “BTL Marketing” and sub-category “Innovation

Bronze for “Calling Karan with Karan

Johar” under the award category “PR” and sub-category “Effectiveness

Silver for “What Women Want with Kareena Kapoor Khan” under the award category “Excellence in Digital Transformation

Bronze for “Shades of Love” under the award category “Online Media” and sub-category “Innovation

Bronze for “Calling Karan with Karan Johar” under the award category “Most Admired Activation of the year

Bronze for “What Women Want with Kareena Kapoor Khan” under the award category “Marketing

Performance Measurement

Bronze for “What Women Want with Kareena Kapoor Khan” under the award category “Most Effective

Sponsorship & Event Marketing

DIGIES Digital Awards 2019

‘Best Brand Integration for Calling Karan with Karan Johar

‘Best Brand Integration for What Women Want with Kareena Kapoor


‘Best Short Form Teaser Video for What Women Want with Kareena Kapoor Khan

‘Best Use of Real-Time Video for Calling Karan Press Launch

‘Best Use of Viral Marketing for What Women Want Slam Poetry

‘Brand of the Year”

ERA Awards 2019 (Excellence in Radio) by India Radio Forum

Gold for “What Women Want with Kareena Kapoor Khan” under the award category “Excellence in New Media Initiative”

Gold for “What Women Want with Kareena Kapoor Khan” under the award category “Best Marketing Campaign”

Silver for “Kareena Kapoor Khan under the award category “RJ of the Year (English)”

5) CSR Initiatives

Audiobooks: Mirchi Cares, the CSR initiative of Radio Mirchi recorded over 35 audiobooks for the visually impaired friends. These were shared with Saugamya Pustakalaya and Pratham Books. The books were recorded as part of the ‘One Day One Story project of Pratham Books. The first Braille magazine called ‘White Print was also given audio by us. Mirchi Kolkata recorded a book for the Indian

Government called the “Directions by the

Speaker”, 8th Edition. This audiobook was sanctioned to Saksham, our knowledge partner and we gave the audio to it.

Audio-Descriptive Films: Mirchi Cares converted the Hindi film Andhadhun into an audio descriptive format. We were the outreach partners of Saksham in screening Dangal in blind schools across cities for Childrens Day.

6) HR Initiatives

At the beginning of the year, there was optimism that the economy would perform better in FY20 than it did in FY19. Keeping this in mind, we added about 100 people in H1 of FY20. However, by the middle of the year, it was becoming clear that the economy would remain sluggish. Consequently, we reversed the head count increase and went back to the year-beginning number. As on March end, 2020, we had 1124 people on our rolls. However, we added people to support our digital and solutions strategy. We increased head count in these two teams by 12% during the year, growing from 182 people to 203. We see this trend continuing into the future. Our focus on training continued. Training mandays in FY20 were 2784, an increase of 77%. These numbers are only for classroom training using internal and external faculty members. In addition, there were about 300 employees per month who used our online training modules through an app that we call Mirchi Classroom app. Training material available online increased from 7 hours at the end of FY19 to 17 hours at the end of FY20. Our focus on training will continue in the future as well, to support our strategy of rapidly growing our solutions and digital businesses.

Along with an emphasis on training, we also strengthened our performance management system by introducing KPIs for senior team members. KPIs were focused on outcomes, rather than KRAs which tend to typically be focused on the quality of work put in by team members. In order to support our strategy of solutions and digital, we introduced a lot of digital outcomes into the KPIs. For the first time, our senior Radio Jockeys also took on steep digital targets. We continued to embrace technology wherever possible. During the year, we introduced an automated system for employees to log in when they started work during the day.

The system allowed for remote log-in thus freeing up salespeople from cumbersome paperwork. We also introduced an Artificial Intelligence based chatbot, called Amber, who would interact with team members to get organizational and people-related insights. Towards the end of the year, your Company was amongst the first in the country to announce a compulsory Work from Home policy. We did this beginning March 16th, 2020. For a few people who came to office, even if infrequently, we ensured that officeswere sanitized regularly, and all protective care was taken.

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 of clients. Unlike newspapers and TV channels, radio companies do not have any circulation or distribution revenues. This makes us even more vulnerable to economic slowdowns. Core radio in particular is highly sensitive to economic slowdowns. Our solutions business is better able to handle downturns. In fact, during downturns, there is more demand for solutions from clients trying to fight the slowdown.

2) Dependence on Government revenues:

In general, the advertiser base of radio is very diversified with dependence on any one client limited to under 5% of total company revenues. However, over the years, the industrys dependence on Central and State governments has gone up significantly. In FY19, total government contribution to ENILs radio revenues was about 15%. In FY20, Central Govt drastically cut its ad spends and government contribution came down to about

10.5%. This caused a huge revenue loss to us. We are watchful of not letting any single client or category of clients become too big because that increases our vulnerability. Sometimes, it becomes difficult to bypass this risk.

3) Changing business environment:

In the past, the rapid growth of the digital business, supported by increase in smartphone numbers and easy availability of high speed data, has posed a degree of risk to all traditional media companies. The Covid-19 pandemic is also boosting the digital media while putting pressure on traditional media. Your Company is aware of this changing media environment, and has taken steps to boost its own play in digital media. However, if we are not able to grow our digital products quickly, there is risk of losing out on the opportunity.

4) 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.

5) High operating leverage is a risk during slowdowns:

The radio industry is characterized by high operating leverage. In good times, this is a big advantage as incremental revenues go through in a big way to the bottom line. However, during period of economic slowdown, and advertising slump, the reverse happens. Decreased revenues hurt bottom lines in a very big way. Since Demonetization, the economy has been on a slowdown and our bottom line has come under pressure as a result of this.

E. Segment- Wise Financial Performance

Management Discussion and Analysis of the

Companys operations together with the discussion on financialperformance 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 by 12.9% to Rs. 540.6 crores and EBITDA de-grew by 12% to Rs. 136.3 crores during the year. PAT was down by 73% to Rs. 14.6 crores. EBITDA numbers were boosted by the temporary impact of IndAS 116.

2) Subsidiary Companies:

Alternate Brand Solutions (India) Limited (ABSL) is the Companys wholly owned subsidiary. ABSL recorded a total income of Rs. 60.07 lakhs during the financial year 2019-20. Profit after Tax stood at Rs. 35.41 lakhs for the financial year under review. During the financial year 2018-19, the Company set up, in the United States of America (US), a wholly owned subsidiary, Entertainment Network, INC and its step-down entity, Entertainment Network, LLC to commence radio broadcasting related businesses targeting the South Asian community markets. Entertainment

Network, INC recorded a total consolidated income of Rs. 790.09 lakhs during the financial year 2019-20. Consolidated loss after Tax stood at Rs. (419.96) lakhs for the financial year under review.


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, 2020, the employee strength (on permanent roll) of the Company was 1124. Details of significant changes in key financial ratios:

FY 2019-20 FY 2018-19
i. Debtors Turnover 3.65 4.09
ii. Inventory Turnover N.A. N.A.
iii. Interest Coverage Ratio N.A. 41.84
iv. Current Ratio 2.57 2.32
v. Debt Equity Ratio Nil Nil
vi. Operating Profit Margin (%) 22.85% 22.53%
vii. Net Profit Margin (%) 2.63% 8.49%
viii. Return on Net worth (%) 1.57% 5.91%

Debtors Turnover ratio: In the current year, the ratio has declined due to slower collections in respect of receivables from Government.

Inventory Turnover ratio: Not Applicable to the Company.

Interest Coverage Ratio: In FY20, Interest cost represents interest on lease liabilities as per Ind AS 116. This has not been considered for computing the Interest

Coverage Ratio.

Current Ratio: Cash generated from operations improved during the current financial year. This has led to an improvement in the Current Ratio.

Debt Equity Ratio: The Company had no debt during the Financial Year 2019-20.

Operating Profit Margin: The change in the Operating Profit Margin is on account of the accounting impact of IND AS 116.

Net profit Margin:Net Profit Margin declined due to lower revenue on account of weak Advertisement markets, impact of Covid-19 pandemic, and adverse impact of Ind AS 116 accounting.

Return on Net Worth (RONW): The Company has invested more than Rs. 900 crores for migrating 35 stations and acquiring stations in Batch 1 and Batch 2. Batch 2 stations had a positive EBITDA in the current financial year. We expect this ratio to improve in the ensuing years when the advertisement markets recover, new stations stabilize, and our Solutions business scales up profitably.

For and on behalf of the Board of Directors sd/-

Vineet Jain


[DIN: 00003962]

Mumbai, June 19, 2020

Integrated reporting:

Integrated reporting refers to representation of the financial and non-financialperformance 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, 2020 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] is, as the name suggests, in the business of Entertainment primarily but not exclusively, on FM radio through its brands Radio Mirchi, Mirchi Love, Mirchi 95 and Kool

FM. After the hygiene needs of food, shelter and clothing, human beings from historical times have always felt the need to be entertained. For millenia, music, drama or theatre, and in the last hundred or so years movies have all met this need. While music, primarily film music, is Radio Mirchis core offering, it is embellished by talk, humour through characters like Mirchi Murga, and utilities like traffic updates, weather, sensex, information about local happenings in the city etc. There is also a powerful online presence on social media like Facebook, Instagram, YouTube etc.

2. Business model:

The core of our business model involves monetizing our listenership base by providing a connect with advertisers. Radio Mirchi is the No. 1 private FM radio network in India in terms of listeners as reported by the IRS in 2019. Monetization happens not just on the back of our listenership, but also on the back of the ability to provide solutions to the advertisers using the assets we have created beyond radio the aforementioned social media assets as well as properties like Mirchi Music Awards, various On-ground activations, concerts etc. The business model also involves a delicate balance between entertaining listeners and monetizing the same i.e. there has to be a balance between the number of minutes of advertising per hour and the need of listeners for more content. Too much advertising will drive away listeners, while too little advertising (which meets the entertainment needs of the listeners), will not help in meeting the financial goals of the business.

3. Resources needed to carry out the business:

The single most important resource in our business is the creative talent i.e. the Human Capital. The model is thus “physical” asset-light but intellectual capital-heavy. It is the managerial ability to create, monitor and manage the intangible process of creating and delivering entertainment every minute that is the key to carrying out the business. This has to be further coupled with the ability to monetize the listenership that accrues that will ultimately result in value to the stakeholders.

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

The most important capital as mentioned earlier is human capital. ENIL has approximately 300 creative people working in the creative field. Human capital goes beyond creative and covers the revenue generating teams as well. We have more than 500 people responsible for revenue generation, and each one of them has the creative capability to design solutions for clients and thus raise revenues for the Company. In addition to human capital, there is intellectual capital that is an important asset of the Company. The Companys brand name Mirchi is of tremendous brand value, as reflected in the market capitalization, the P/E ratio, and the sustained interest of shareholders and investors in our stock. In addition to the brand name itself, there are several IPs the Company has created in the form of Mirchi Music Awards, Mirchi

Top 20, Mirchi Neon Run, Mirchi Rock & Dhol and many more. The third capital that is vital for the Company is financial capital. Our ability to take risks has helped us to expand our business beyond core FM radio and into new exciting products like activations, concerts, TV properties, digital streaming, etc. It is because of the strength of our brand, and our ability to invest financial resources, that we have been able to set up the largest and most profitable network in the country. As on date, the ENIL network has 73 stations spread across 63 cities. We have also been able to roll out the brand to countries like the USA, UAE and there are plans to roll out to other countries as well. All this is thanks to the financial capital at the

5. Inputs: most material for the organization:

As covered above, human capital, intellectual capital and financial 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:

Intellectual capital refers to the knowledge based intangibles, including intellectual properties, copyrights, patents, rights, licenses, etc. (‘IP). The Company owns various IP properties. Radio

Mirchi made a focused effort in Video content development and original IP creation and built on the work done last year. It created news shows, in Gujarati, Marathi and Tamil and licensed the same to a leading OTT player, while retaining all rights in the shows. The business is now all set to be quickly scaled to newer heights, for which a concrete plan has been put together and is being implemented. Kindly refer to the Management Discussion & Analysis report (Para C: Operating Performance -


3. Human Capital:

As on March 31, 2020, the employee strength (on permanent roll) of the Company was 1124. 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 disposal. 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 12 (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 sd/-

Vineet Jain


[DIN: 00003962]

Mumbai, June 19, 2020