jagran prakashan ltd egm Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS

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

OVERVIEW OF INDIAN ECONOMY

Last two years have disrupted not only the global economy but also the human life to the extent not experienced so far by most of us in our lifetimes. Thanks to the scientist community, the pandemics gravity is under control but it seems that it will take some more time before we go back to pre-pandemic times. This disruption has caused fear and uncertainty and dented the sentiments, which does not augur well for the economy.

India is no exception but we must feel confident and elated that we have done far better on prevention, treatment and economic fronts than many others including advanced economies. Europe is already staring at stagflation and USA is facing worst of inflation coupled with hardly any growth. The current situation has resulted in flight of capital from emerging economies which were preferred investment destinations until a few months ago.

Worsening geo-political conditions is a severe setback to post pandemic recovery in global economy. Russia-Ukraine conflict and zero COVID policy of China have once again broken supply chain which had started normalising after two waves of COVID. For the first time in recent times, the world is facing extraordinary high inflation crossing double digit in some of the western countries which were never used to anything beyond 1%-2%. Current high inflation is from supply and not demand side which seems to be far stickier than demand driven inflation in an environment of global uncertainty. Indias growth rate too is suffering and the economists have been bringing down their predictions of growth ever since they pegged it around 8% before the Russian-Ukraine conflict.

However, Indian economy is well positioned to mitigate the impact of high inflation on growth and is doing well on export front. Indian economy is also aided by strong balance sheet of banking sector which is witnessing double digit growth in credit off take. Private sector too is not lagging behind and is going ahead with its capex plans and recruitments without much of concern about the developments which they believe are transitory in nature.

Indian high income households are showing no sign of hesitation and are shopping and travelling now prodigiously. As a result, demand for luxury goods and services and luxury real estate is higher than pre pandemic times. Further, with the improved consumer confidence in general due to universal vaccination, reducing impact of virus and improved mobility, contact based services such as movie theatres, hotels and restaurants are witnessing consistent growth; albeit slower than what one would have seen had there not been high inflation. Rural India though facing higher inflation than urban India is showing resilience seemingly owing to increase in per capita income or disposable income as an outcome of various measures taken by the government to augment income of farmers as well as stepped up export of agriculture produce in the midst of Russia- Ukraine conflict. Non-agriculture rural labour has stagnant income primarily because of excess supply caused by migrant labourers but situation should improve even for them with job opportunities returning/increasing.

With expectation of yet another good monsoon and employment opportunities opening up as discussed above, India will not only remain fastest growing economy but will reach near 8% growth as economists predicted before Russia-Ukraine conflict.

INDIAN MEDIA AND ENTERTAINMENT (M&E) INDUSTRY

After a massive COVID-19-led disruption in past two years, the Indian Media and Entertainment (M&E) is reporting strong recovery. As per E&Y-FICCI report, Indian M&E sector grew by 16.4% to Rs.1.61 trillion (US$21.5 billion) in calendar year 2021.

Share of traditional media stood at 68% of sector revenues. While television remained the largest segment, digital media cemented its position as a strong number two segment followed by a resurgent print media.

The industry is adopting the hybridisation approach triggered by the pandemic and is transforming itself by embracing technology, which is enabling new ways of creating and distribution of content. TV, Digital, Print, Radio and OOH platforms are coexisting, meeting specific but different needs of the consumers. The pandemic has also demonstrated the importance of credible content and those who are original producers of credible content are going to be the largest beneficiaries in times to come.

Cost rationalisation without compromising with quality and long term prospects has immensely helped the industry. Large media houses not only survived the crisis but also began to report profit soon after the first wave induced lockdown was lifted.

Availability and credibility is most critical for all the mediums in an era of fake news. Print media continues to lead on credibility despite restricted mobility during the pandemic, followed by Television and Radio. Backed by the credibility of the printed word and its unique position of being original producer especially of local content, print is set to make a strong comeback.

The pandemic has reshaped the world with increased focus on digital. The industry is mindful and is looking at it as an opportunity rather than threat to expand its reach as never before.

The major challenge print media industry faces today is the fast and exorbitant newsprint price increase primarily due to disruption in supply chain as a consequence of the Russia-Ukraine conflict coupled with shortage of waste paper used in recycling. However, this has offered an opportunity to correct cover prices which will strengthen newspaper industry business model and make it more predictable by reducing its dependence on advertisement revenue in course of time. The print industry has done well to respond with gradual but consistent increase in cover prices.

The radio industry witnessed massive dip in its revenues in first half of the year due to its dependence on metro markets for yield which continues to be less than pre-pandemic times but it has started improving and should reach old levels in a years time. However, the industry has done well to expand its advertiser base in non-metro towns, integrate its digital presence with radio and focus on non-FCT revenues.

Digital media has continued to grow. Social media and online video remain the strongest platforms on digital media. Consumers particularly the youth are spending more time on these platforms as it enables them to consume content of their liking. This is translating into high growth of advertising spends on digital media. With the rapid pace at which the internet infrastructure has been improving along with the advent of 5G technologies, spends on online video will continue to witness high growth in next few years.

Comscore data show that online news had a reach of 467 million in 2021 with the potential of increase by more than 50% by 2025. Majority of the digital news consumption is now in regional languages - as high as 95%. This indicates the potential what regional news portals hold to exploit. We expect that monetisation of digital news which currently is negligible will also become meaningful in times to come.

PRINT MEDIA INDUSTRY

FY 2022 witness recovery for the print media industry. As per E&Y estimates, the print segment grew 20% (reporting a revenue of Rs.227.2 billion) in calendar year 2021 to reach 77% of prepandemic level.

In the first half of FY2021, the industry suffered restrictions on distribution of newspaper as there was a widespread rumour that the virus may spread and reach our homes through newspaper but FY2022 brought some normalcy in distribution. However, during second wave of pandemic, newspaper distribution again suffered due to restriction on free movement and halting of trains in metro cities like Mumbai.

While digital consumption of news has increased, there is no evidence that the people have stopped reading newspapers. In fact, now there are more serious readers who matter to the advertisers. If circulation particularly of non- English newspapers is still a bit lower than FY 2020, there are many reasons for it ranging from stopping dumping of copies and rationalisation to forego unproductive circulation, to consistent increase in cover prices which has always caused knee jerk reaction from the readers who come back quickly.

According to the Pitch Madison Advertising Outlook Report 2022, advertisement spending on print media grew 39% to Rs.165.95 billion in 2021. Fast moving consumer goods, ecommerce and new-age companies emerged as the largest contributors to the growth. The share of print to the overall advertising expenditure (adex) in India last year was 22%, the highest in the world. Globally, this share is 5%. Hindi publications garnered a massive 40% of newspaper advertisement volumes, with English newspapers contributing 25%, followed by other regional languages.

As per E&Y-FICCI report, Circulation revenues grew by 12% in calendar year 2021. Revenue growth was contributed by improvement in per copy realization as well as copies in circulation. Print media companies are consistently focusing on improving their realisation per copy across their major publications, which places them in a position to minimise the impact of high newsprint prices. We expect 25-50% growth in average newspaper cover prices by 2025 from the current levels which is positive for the industry.

Strategic cost optimisation measures by print media companies helped in delivering strong operating profits and cash generations. Publishers have realised that increase in cover prices is the way forward to undo the damage caused by the pandemic and the high newsprint prices and reduce its dependence on advertisement revenue which is largely dependent on factors beyond control of the industry. We are however hopeful that the newsprint price will moderate in the second half of the current financial year.

With changing ecosystem, we expect faster integration of print with digital in order to improve the reach and reader loyalty for the newspaper brand, and at the same time provide integrated solutions to advertisers.

RADIO INDUSTRY

With advent of the pandemic, the radio industry equipped itself to constantly reinvent and search for new avenues for revenues. Integration of digital in radio offering was one such highly effective innovation. Following the trend of 2021, radio companies gave more ROI led opportunities to their clients and brought whole set of new clients on board. Hyper local and solution oriented approach coupled with digital integration will help the radio industry recoup lost revenue faster and reach pre-pandemic profits even faster given continued control over costs.

Currently, India has more than 1,200 operational radio stations, including over 300 community radio stations. According to the Pitch Madison Advertising Outlook Report 2022, advertisement spent on radio grew by 36%. Advertisers across Tier II and Tier III markets look at radio as a cost effective medium to deliver their message to the listeners.

Besides Radio Shows and other non-FCT offerings, industrys use of social media Influencer is likely to grow exponentially in times to come. Influencer marketing is already a Rs.9 billion market in India and is poised to grow at a CAGR of 25% to reach Rs.22 billion by 2025. Over the next few years, brands will explore new ways of roping in influencers to capture the trust of the new age consumer.

We also saw RJs become more than just being a voice on the speakers. Today a lot of RJs, be it from the metros or from the smaller cities, have become influencers and have a massive social media following. With radio influencer-brand collaborations, radios increasing role in creation of content and communication will help brands exploit their true potential in the coming years.

Globally, in countries like USA the size of the radio industry is about $13 billion while in India it hovers around $0.3 billion demonstrating the tremendous growth potential for the medium.

DIGITAL MEDIA

The rapid pace with which, India experienced, Digital adoption during the pandemic demonstrates our ability to embrace change. India has more than 600 million active internet users and is recognized worldwide as a Mobile first market. In the wake of pandemic, traditional media companies accelerated the digital transformation of their news operations.

The year started for the Indian Digital Industry with two major announcements made by the Finance Minister in the Union Budget 2022 which are Broadband expansion and 5G auction. The governments intent is clear to grow consumption and reach of the medium in Tier 2 and 3 cities via Broadband. New tech like XR, Metaverse, AR/VR will unfold and flourish on the back of 5G. Digital Advertising will grow exponentially owing to Video content consumption going up due to faster connectivity.

Digital emerged as the primary transactional tool for not just Work Delivery and Media & Entertainment but also Grocery, Utilities, Education, Upskilling and most importantly, Health and Medical assistance.

Social media and online video remain the strongest platforms and are consistently evolving by adding offerings of consumers liking. Consumers are therefore spending more time on these platforms, resulting in the high growth of advertising spends on digital media.

According to the Pitch Madison Advertising Outlook Report 2022, advertisement spent on digital media grew at 50% in 2021 to Rs.254.38 billion. In terms of verticals, Video contributes highest with a total share of 29%, followed by Social & Display at almost 20% each. E-commerce and Search contributes 16% each to overall digital adex pie. In terms of growth rate, E-commerce has grown significantly and display, video and search have also grown substantially.

As per E&Y-FICCI report, the digital media is expected to grow at a CAGR of 20% over the next three years.

On the news and information front, online news audience grew to over 460 million in 2021, which is approx. 56% of internet users. News companies have increased their focus on regional languages to target a larger demography and increase engagement. News aggregators contributed to a high app-based audience, while traditional news companies generated a high web-based audience.

THE COMPANY, ITS SUBSIDIARIES AND ASSOCIATES (COLLECTIVELY REFERRED TO AS GROUP)

The Group comprises the Company, its two subsidiaries and three associates. Wholly-owned Subsidiary, Midday Infomedia Limited ("MIL"/"Midday") is a publisher of English daily Mid-day, Gujarati daily Mid-day Gujarati and Indias largest read Urdu daily Inquilab. MIL also publishes Sunday Mid-day and a weekly Urdu tabloid, Taleemi. Its operations are primarily based in Mumbai. The other subsidiary Music Broadcast Limited ("MBL"/"Radio City") is listed at National Stock Exchange of India Limited and BSE Limited and operates FM radio in the brand name of Radio City from 39 stations across 12 states. The Companys Associates viz, X-Pert Publicity Private Limited ("X-Pert") and Leet OOH Media Private Limited ("Leet") are in the outdoor business and are not significant in relation to the Groups operations.

The Companys another associate, MMI Online Limited ("MMI") is managing and marketing Groups digital offerings, owns its popular web portal Onlymyhealth.com and fact checking website Vishwas. com, besides running its own digital business. MMI too is not significant in relation to Groups size of business but its association is significant owing to its key role in our digital business.

The Group delivered satisfactory performance on all counts during the year which continued to be difficult and full of uncertainties. Growth in revenues was remarkable but was still not enough to take the Group revenues to pre -pandemic levels in light of continuing impact of COVID.

The businesses, dependent on metros and other large cities for their revenues, suffered much more than other businesses. Among all Group businesses, MILs business was most hard even this year due to its dependence on Mumbai alone. Still, MIL grew its revenues by 61.91% and reduced losses at operating level by 40.80%. Radio also generates major part of its revenue from metro cities and therefore, MBL too could not achieve the desired growth. Its growth in revenues was 32.00% for the FY2022.

Since Outdoor and Event/Activation are contact based businesses, it was expected that their recovery post COVID would take longer time as these businesses unlike other mediums had nosedived during pandemic. However, both of them bounced back remarkably, and registered growth in operating revenue of 81.05% and 54.40% respectively and even reported operating profit with improved margins.

As far as circulation revenue is concerned, it was lower than the pre-pandemic times but was in line with our expectations, given unprecedented disruptions in distribution of newspapers. Circulation for all brands remains stable despite taking increase in cover price and incurring hardly any promotional expenses to push the circulation. Dainik Jagran continues to maintain its market position and in certain cases, increased its lead over the closest competitor.

Advertisement revenue (print including digital) witnessed a sharp recovery registering a growth of 26.95% from the previous year. Advertisement volumes increased with the increase in mobility and hence overall economic activity followed by festive season and elections in some states.

The Group has further strengthened its digital presence and is also supplementing other businesses including the largest business segment (i.e. printing and publication) and the second largest segment, which is Radio. Our digital business is on an impressive growth path and news and current affairs properties of the Company under its arm Jagran New Media continue to be rated amongst the top 10 in news and information category with around 100 million users. JNMs four main buckets of monetisation strategy are: advertisement inventory revenue, syndication revenue, production house and subscription revenue.

The Group has adopted an audience segmentation based approach and continually endeavours to provide segment specific content besides news like health, women, education, entertainment etc. through all the three formats viz., text, audio and video. Quality content in digital, consumption friendly format, data analysis and technology remain focus areas. Our collaboration with Google, Meta, JIO & Amazon has enhanced our content discovery, distribution and syndication capabilities.

We are happy to report that the Digital business of the Group with a revenue growth of approx. 33.13% has once again reported profit which is a remarkable achievement in the digital business.

MBL has reported a growth of 32.00% in operating revenues. This growth has been driven on the back of an increased focus on integrating radio with digital, credible RJ influencers and content syndication strategies. RJs are growing as influencers on social media as well, with some of them having large followers. MBL is working to capitalise on this opportunity which is going to become a significant revenue stream for the Company in due course of time.

MBLs growth in revenue falls short of expectations primarily because metro markets especially Mumbai, Delhi and Bangalore being the major contributors in industrys revenue are yet to fully come out from the pandemic impact. However, anticipating the delayed normalisation of these markets, MBL pre-emptively started working on smaller markets, besides integration of its digital offerings, non-FCT opportunities and maintaining control over cost. In terms of advertisement volume, it is near to prepandemic volume but the average advertisement rates continue to be low in comparison. MBL has put in place a plan to improve the rates in FY2023 itself.

MBL has reported operating profit as against loss in the previous year and has generated more than Rs.20 Crores from its operations. As various market reports suggest, Radio industry is expected to grow at 13% to Rs.18 billion in FY 2023.

MBLs Balance Sheet continues to be strong with comfortable liquidity of over Rs.230 Crores with no debt and no material capital commitment.

MBLs petition to Honble NCLT, Mumbai Bench for issuance of preference shares of Rs.100/- each (redeemable after 3 years @ Rs.120/- per share ) as bonus to non-promoter shareholders only has now been heard and we expect that the exercise which commenced in October 2020 will conclude in FY2023. The said bonus shares are proposed to be listed at NSE as well as BSE. As one preference share is to be issued for every 10 equity shares, the benefit of Rs.12/- per equity share will accrue to every nonpromoter shareholder.

Another subsidiary, MILs business was one of the most affected businesses of the Group for the reasons discussed elsewhere in this section. MIL has reported double digit growth in revenues and reduced its cash and net losses. There was nothing which MIL could have done better as its operations are largely concentrated in Mumbai, which was hit hardest by the pandemic.

MIL exercised prudent cost control in continuation of the last year and controlled the loss which could have been far more. Increase in cover price supported by its loyal readers helped additionally in containing the losses. Midday also gained market share in advertisement volume. MILs legacy brands continue to command loyalty of the readers which is evidenced from the fact that despite significant increase in cover prices, circulation has remained stable.

The digital business of Midday strives to nurture a loyal community of online Readers by providing exclusive, premium content which is fact checked. We also extend our extensive social media presence by leveraging the power of social media influencers including the ones from our newsrooms to further the reach of our brand and content.

The Company inducted Rs.4 Crores in MIL as capital and extended an interest-bearing loan of Rs.2 Crores to fund cash losses as we believe that MIL will deliver better results. The Company has also issued a letter of comfort to the tune of Rs.8 Crores against the working capital facility availed by MIL.

Two associates which are in outdoor business reported a growth in operating revenues. X-Pert has improved its profitability and Leet has successfully returned into profits. Both the companies have positive net worth and sufficient liquidity to manage their operations.

MMIs performance continues to be in line with the expectations. It has been managing the digital offerings of the Group efficiently. MMI continues to manage www.vishvasnews.com, and has further strengthened its association with IFCN (International Fact Check Network) to address the need of checking the fact in an era of fake news and content. MMI has also collaborated in 12 different languages with the World Health Organization and Press Information Bureau, IFCN, Facebook, Google New Initiative for fact-checking. It also conducts its media literacy program ‘Sach Ke Sathi to spread awareness against misinformation and educate the internet users about using verified information. Another digital property, Onlymyhealth.com offers health information and medical updates on healthy life ideas.

The Groups balance sheet continues to be strong with strong liquidity of over Rs.1000 Crores with debt of less than Rs.300 Crores. CRISIL has reaffirmed its credit rating AA+ Stable for long and medium term, and A1+ for short term in respect of the Company, AA(-)/stable for long term in respect of MIL and AA Stable for long term and A1+ Reaffirmed for short term in respect of MBL.

Awards and Recognitions

The Company is a recipient of awards and recognition by various national and international bodies and is proud to report that recognising Groups leadership position and commitment in different businesses, various distinguished bodies, on both national and international levels, have bestowed 30 Awards upon the Group during the year.

Brand	Award	No. of Awards
Dainik Jagran	Karpoor Chandra Kulish International Award	5
	Dainik Jagran Total	5
Radio City	Talentrack Awards	1
	Radio City Total	1
Dainik Jagran Inext	Maddys Award 2021	1
	Dainik Jagran Inext Total	1
Midday	Talent Track Awards	1
	Midday Total	1
Jagran New Media	Global Media Awards, INMA	5
	Great Place to Work	1
	World Marketing Congress	1
	"Indias Best Leaders in Times of Crisis" by "Great Place to Work Institute" (GPTW)	1
	Mobexx Awards	1
	South Asia Digital Media Awards, WAN	1
	Jagran New Media Total	10

Brand	Award	No. of Awards
Jagran IT Team	Women Influencer CIO of the Year	1
	CIO Powerlist 2021	1
	TekQ Technology Leader Award for Enterprise Applications	1
	Tech Circle Business Transformation award	1
	Insights CXO Awards 2021	1
	Digital Leader CIO Awards 2021	1
	Trendsetter CIO Awards 2021	1
	CIO 100 AWARD	1
	CIO 1000 Awards	1
	IDC INDUSTRY INNOVATION AWARDS 2021	1
	Iron Woman Award	1
	Trendsetter CIO Awards 2022	1
	Jagran IT Team Total	12
JPL Total		30

Additionally, JPL has recently been recognised as Media And Entertainment Icon at 8^th edition of CIO Power List presented by Core Media for its extraordinary vision and capabilities in the field of enterprise technology used to navigate effectively the marketplace disruption, ensure businesses continuity and improve the processes, customer touch points, and experiences for the users.

MAJOR RISKS AND CONCERNS:

The management regularly reviews business, operational, functional and reporting risks. It has put in place strategy and controls to mitigate these risks. The risks are identified and handled as an ongoing process. The management works to make optimum use of technology to strengthen controls and minimise or eliminate human intervention in various processes that helps the organisation in mitigating the operational and reporting risks.

As on date, the management identifies following risks:-

Outbreak of pandemic COVID-19 and Geopolitical disturbances:

As discussed in Section titled Indian Economy, Russia-Ukraine conflict has disrupted supply chain which has started normalising. It has caused elevated inflation which will hurt the economic growth as it will reduce the purchasing power of the consumers who will avoid discretionary spend. It will adversely impact entire M&E industry and the Group may not be able to achieve growth in revenues and profits.

The group has not yet noted any supply chain disruption due to the ongoing Russia-Ukraine war. The group has sufficient domestic supplies of the newsprint along with foreign suppliers and as such continues to operate its business being mindful of the prevailing situation.

Management Response

The Group is mindful of the prevailing situation and continues to monitor the same closely so that required change in strategy can be made. It continues to exercise control over the cost and do everything else which is in its control. The Group has successfully come out of unprecedented COVID crisis due to its agility in adapting to the changes necessitated by the uncertain environment and demonstrated resilience to adversities, thanks to its committed workforce, legacy of its brands, size of the businesses, business practices and the strategies which give us confidence that the Group will meet the newly developed crisis as well.

Please also refer to section Indian Economy, ‘Media & Entertainment Industry and ‘Print Industry of this chapter as well as note No. 2(a) and 2(a) to the standalone and the consolidated accounts respectively for more insight on the matter.

Over dependence on advertisement revenue:

The Group derives about 60.02% of its total operating revenue from advertisement (print including digital). Shortfall in expected growth in revenue for any reason will disproportionately reduce the growth in profits or result in lower profits as advertisement revenue has high operating leverage.

Management Response

This risk is applicable to the entire advertisement industry but given our leadership position shortfall if any is expected to be relatively less. Growth in advertisement revenue of the group was significantly higher than the industry growth because of its wide reach and strong market position even during 2021-22.

Having said that, there is no complacency and the management continues to work with client still more closely and build partnership that has helped and will immensely help in times like these. It was on account of this approach that the Group could get new pool of advertisers and partly compensate the loss of revenues from certain existing advertisers who were forced by the circumstances to cut their advertisement budget. We have seen new categories evolving and becoming a significant contributor to total revenues. This is likely to continue.

The management also keeps evaluating possibility of increasing the cover price as and when possible and more particularly at a time when advertisement revenue is under pressure. In any case, saving cost without compromising quality has become a priority for us and this is what is duly reflected even in the results for FY22. Further, with reduced cost base, continued control over fixed costs and improved per copy realisation, we are better placed to minimise the impact of shortfall if any, in the expected advertisement revenue.

Newsprint price fluctuation:

Newsprint as the primary raw material represents a significant portion of overall expenses. Any material upward movement in newsprint prices impairs the profitability significantly. Newsprint prices have surged to near USD $1,000 per tonne from USD $450 in 2019 because of spike in fuel and commodity prices as well as scarcity of newsprint which has been discussed in industry section.

Management Response

Increase in newsprint prices impacts us the same way as it impacts any commodity dependent industry. Our strategy is twofold to mitigate the impact (i) increasing the cover price of newspaper to pass on burden of increase to consumer without losing our market position and (ii) to reduce consumption by bringing in more efficiency in form of reducing wastage, optimisation of pages per copy and not increasing the circulation in the areas which do not matter to advertisers.

Having said that, we expect availability of newsprint to improve from H2FY23, which would see reduction in prices.

We are continuously monitoring the availability and prices of imported and domestic newsprint to control our overall newsprint cost. Our primary focus is to engage with vendors to retain the current prices and to avoid further increase.

Competition:

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

Management Response

The management believes that the print media has its own inherent advantages like credibility, local content, easy and affordable accessibility etc. Circulation of fake news has further strengthened print media particularly during pandemic. There is still very low per capita spend on consumption of media as compared to global standard and therefore we believe that all media platforms have potential to grow, though growth rates will vary depending on the penetration and maturity of a media platform. This was amply demonstrated during as well as post pandemic when all media platforms including those which were believed to have no future, bounced back with vengeance and continue to sustain growth to reach pre pandemic level revenues in a hurry. This phase has cemented our belief that no medium is redundant and consumers need each of them, though all of us have to be more efficient and consumer friendly than ever before.

Dainik Jagran is the largest read newspaper and has been maintaining its market leadership position since 2003 without break. The strong market position helped by popularity of brand and richness of content enable us to increase our cover price in most of our markets. In fact, pandemic has brought the competitors together in a manner never experienced before. If this collaboration continues in future, every stakeholder will be a gainer.

Digital:

If the Group is unable to maintain its position and scale up its operations, it may not be able to attract planned revenue. Further, it may face fierce competition for revenue from local as well as international giants like Google and Facebook which have lions share in digital pie. Further, significant dependence on advertisement revenue from network owned by the global giants and inability to price the content may make the business model unsustainable.

Management Response

The Groups digital strategy has seen positive momentum year after year and the results obtained (operational as well as financial) are in line with the managements expectations. The digital impetus provided by the government is helping higher growth in tier-I and tier-II towns and rural India which gives the Group an edge over the competitors and make the Groups digital offerings relevant for the consumers as well as giants like Google, which buy the content from players like us. Groups feat on ground vast network enables it to produce huge amount of original and credible local content which is unique and not available to other platforms. Jagran digital properties continue to be amongst top 10 (Source: Comscore Mar22) in the country in the news and information category despite stiff competition. The Groups endeavour to monetize content continues and it has brought some of its offerings under subscription.

The Group has diversified from news to segments such as health, women, education, entertainment and fact check in case of all the three formats of text, audio and video. With content, data and technology being at the core of strategy, we are working to maintain and improve growth rates of all revenue streams. Our strong partnerships with Google, Meta, JIO & Amazon will further strengthen our content discovery, distribution & syndication arm. We leverage the power of social media influencers including the ones from our newsrooms to further the reach of our brand and content.

Internal control systems and their adequacy

Adequate internal control has been put in place in all areas of operations. The role and responsibility of all managerial positions are established, monitored and controlled regularly. All transactions are authorised, timely recorded and reported truly and fairly.

To ensure adherence to the laid-down systems, apart from internal reporting and monitoring, the Company has put in place formal Internal Audit System commensurate with the size and nature of the business. Internal audit is conducted by one of the big four accounting firms who periodically submit their report to the audit committee, besides suggestions to the management for improvements in internal control including IT systems, optimisation of costs and efficiency improvement. They have also been mandated to ensure compliances with the suggestions that are agreed for implementation and report to the audit committee non-compliances if any. They also verify compliances with various applicable provisions of law.

The Group is fully committed to continually work in strengthening the systems and processes wherever possible so as to achieve the highest degree of transparency, efficiency and accuracy in reporting, monitoring and decision making and has done so during the year as well as part of an on-going exercise.

The repeated recognition year after year by the professional bodies of its capabilities in enterprise technology is a testimony to the Companys focus on embracing and strengthening the technology to strengthen its controls and processes to ensure optimum efficiency and transparency besides being in position to meet unforeseen challenges such as pandemic and resultant work from home culture which in absence of technology managed controls would have become completely unmanageable.

Segment performance

The Company did not have any reportable segment other than print in accordance with the requirements of IndAS-108-‘Operating Segment Reporting, notified under the Companies (Indian Accounting Standard) Rules, 2015.

Financial performance

The figures have been rounded off to nearest Lakh of rupees.

(A) The Company (Standalone) Profit and Loss:

REVENUE ANALYSIS

	(Rs. in Lakhs- rounded off to nearest Lakh)
Particular	2021-22	Percentage (In relation to Revenue from Operations)	2020-21	Percentage (In relation to Revenue from Operations)
Revenue from Operations	140,123	100.00	113,337	100.00

Revenue from operations:

Advertisement revenue accounted for 71.97% (previous year 68.65%) and Circulation revenue 26.10% (previous year 29.40%) of the total print and digital revenue, digital being an integral part of the print business. Advertisement revenue had a growth of 26.95% and circulation revenue grew by 7.47%. Digital, Outdoor and Event businesses reported growth of 33.13%, 81.05% and 54.40% respectively. Overall growth in operating revenue was 23.63% as against de-growth of 36.05% in the pandemic hit previous year.

Sharp growth was possible due to normalisation of domestic environment with business activities resuming after first and more lethal second wave of pandemic. Second wave had impact on Q1 but for which the growth would have been still higher.

Growth in advertisement revenue was volume driven but growth in circulation revenue was primarily due to improve per copy realisation. We expect correction in cover prices will continue.

For the view on industry, impact of pandemic and future expectations with regard to revenues, please refer to the section ‘Indian Economy, ‘Indian Media & Entertainment (M&E) Industry, ‘Print Industry and Risks and Concerns.

EXPENDITURE AND PROFIT ANALYSIS

				(Rs. in Lakh)
Particulars	2021-22	Percentage (In relation to Revenue from Operations)	2020-21	Percentage (In relation to Revenue from Operations)
Cost of Raw Materials consumed*	40,859	29.16%	30,021	26.49%
Employee Benefits	28,816	20.56%	29,631	26.14%
Expenditure towards CSR activities	581	0.41%	688	0.61%
Other Expenses	34,186	24.40%	27,564	24.32%
Total	104,442	74.54%	87,904	77.56%
Operating Profit	35,682	25.46%	25,433	22.44%
Depreciation and Amortisation	6,016	4.29%	6,857	6.05%
Net Finance Costs	(2,263)	-1.62%	(906)	-0.80%
Finance Costs	2,761	1.97%	2,833	2.50%
Less: Other Income	5,024	3.59%	3,739	3.30%
Exceptional Item	(564)	-0.40%	1,062	0.94%
Profit Before Tax (PBT)	32,493	23.19%	18,420	16.25%
Taxation	7,659	5.47%	4,866	4.29%
Profit After Tax (PAT)	24,834	17.72%	13,553	11.96%

* Includes increase/decrease in stock, which is insignificant.

Cost of Raw Materials consumed

Cost of Raw Materials increased by 36.10%. Raw Material comprises newsprint and ink. Steep increase in this cost was mainly due to higher newsprint prices and higher total pages printed.

Employee Benefit

Employee cost decreased by 2.75% in spite of annual increments granted to employees primarily due to reduction in employee strength as a result of exercise to optimise efficiency through automation. Further, Employee Benefits percentage in relation to revenue from operations reduced due to higher increase in operating revenues.

Expenditure towards CSR activities

Expenditure towards CSR activities has decreased by 15.57% primarily because 2% of three years average profit was lower. Please refer to the Board Report for the details.

Other Expenses

Other expenses represent production, direct expenses relating to businesses other than print, bad debts and provisions, administrative, selling and marketing expenses. Some of these like, direct expenses relating to other businesses viz. outdoor, event/activation and digital are variable, some like power and fuel and stores are semi variable and remaining expenses like promotion/ publicity, freight on newspaper distribution, communication cost and repairs are more or less fixed in nature and do not change with the change in scale of operation unless the change is material which was the case in FY21. Fixed expenses include expenses which are controllable in nature. Management closely monitors these expenses and constantly endeavours to rationalise and even cut these expenses, if the circumstances warrant.

However, while applying austerity measures, care is taken that long term business interest is not compromised. Control over these expenses has played a major role in strong recovery in profits despite operating revenues still remaining below pre-pandemic levels.

Other expenses increased by 24.02% primarily due to increase in direct expenses of Digital, Outdoor and Event businesses in line with the significant increase in scale of operations, increase in production related expenses like stores and spares again due to increase in total number of pages printed and increase in discretionary spend like promotion and publicity which was completely stopped last year.

Increase in direct expenses of Digital, Outdoor and Event business alone has contributed 13.94% increase in total increase of 24.02%.

Provision and recovery for government debts was once again a major contributory as recovery is not as expected. Write offs of old receivables has been as per the Companys policy. The Company however will continue to have legal recourse available to it to recover the amount so written off and continues to pursue the recovery.

We will continue to ensure that the cost savings that accrued to us due to control measures adopted during pandemic are not squandered with growth returning and are efficiently used to first meet the inflated news print cost and then to increase profits.

Operating Profit:

Operating profit increased as a result of above factors.

Depreciation and Amortisation:

Depreciation is provided as per Companys policies as detailed in the financial statements. On most of the assets, depreciation is provided as per the written down value method, as against the straight line method adopted by the peers as the company believes this method represents a realistic pattern of consumption of these assets over their useful life. As a result, the depreciation charge to profit and loss remains significantly higher in the initial years but goes down with the passage of time and helps in difficult times such as these.

There is decrease of 12.26% in the current year which is partly due to WDV method of depreciation and partly because there was hardly any addition to fixed assets.

Income tax expenses increased by 57.39% as compared to the previous year as a result of increase in profit before tax by 76.41%.

Finance Cost has decreased by 2.55% mainly due to decrease in interest accounted for on lease liabilities. This cost mainly include the interest expense incurred on borrowings of NCDs of Rs.250 Crores which were issued in April 2020 to create liquidity buffer to meet any contingent fund requirement emerging from pandemic.

Other Income:

Other income increased by 34.37%. This primarily comprises treasury income, miscellaneous income and profit on sale of assets. The substantial increase in income is on account of additional investments made out of surplus funds and improved returns achieved through change in investment strategy from investing in mutual funds alone to fixed income bonds/FDRs from the middle of the last year when RBI started cutting policy rates. It also includes profits on sale of surplus property.

Exceptional Item:

This represents reversal of provision for expected shortfall in recovery of our fire claim which has since been fully received.

Profit after Tax

Profit after Tax increased by 83.23% as a result of above factors.

(ii) Balance Sheet

	(Rs. in Lakhs - rounded off to nearest Lakh)
Particulars	2021-22	2020-21
Total Equity	166,198	149,329
Total Non-current Liabilities	39,819	38,078
Total Current Liabilities	31,693	28,611
Total Equity and Liabilities:	237,710	216,018
Total Non-current Assets	165,996	153,576
Total Current Assets	71,714	62,442
Total Assets:	237,710	216,018

Total Equity comprises of Equity Capital, Reserves, Retained earnings and Equity component i.e. the contribution from the promoter company in form of interest rate concession on the nonconvertible debentures subscribed by it in the past. The Equity Capital and Reserves have undergone change due to buyback of 14,526,773 equity shares at an average price of Rs.57.92 per share and Retained Earnings have changed due to the profit for the year. The Board of Directors had approved the buy back from open market upto Rs.118 Crores at a price not exceeding Rs.60 per share. In terms of approval, buy back commenced in March 2021 and closed in FY21-22. The promoters and promoter group did not participate in the buy back like last buyback of Rs.101 Crores.

Total Non-current Liabilities represent long term borrowings, leave encashment obligations, gratuity, lease liabilities and deferred tax liabilities. Lease liabilities represent future rent payable in respect of long term rented properties occupied for offices etc. This has increased due to renewal of lease on expiry of existing lease and taking new premises in Noida. Liability for employees benefit obligations has decreased primarily due to funding of the gratuity liability and reduction in strength. Deferred tax liabilities have also reduced due to lower timing difference between book income and tax income.

Total Current Liabilities represent short-term borrowings, trade payables, other current liabilities including current tax liability, employee benefit obligations and financial liabilities. Trade payables and other liabilities mainly represent the liability for material, unpaid expenses, interest accrued, but not due and security deposits from newspaper agents and statutory liabilities, such as deduction of provident fund from the employees and TDS. The Company has been regular in depositing statutory dues as well as paying its other liabilities on due dates.

These liabilities have increased primarily due to higher utilization of working capital limits, higher lease liabilities, higher other financial liabilities and higher trade payables due to higher scale of operations.

Total Non-current Assets comprise fixed assets, Goodwill, Right of use assets, investments with maturity exceeding one year, investment in subsidiaries and associates, investment properties and other current assets realisable/expected to be realised after one year. In the current year, there was no significant addition to fixed assets and some of the idle assets were disposed of. The Company tests the Goodwill for impairment at year end. There was no impairment required as recoverable amount was higher. Non-current investments increased due to investment of profits earned from the business.

‘Right-of-use assets represents the present value of rented properties accounted for in accordance with Ind AS 116 applicable with effect from 1st April 2020. The present value is discounted value of rent payable till expiry of lease taking into consideration the interim increases if any. Please refer to the discussions on lease liabilities as well.

Total Current Assets represent investments with maturity of less than one year, trade receivables, financial assets including insurance claim receivable, and inventories besides short term advances, current assets and cash and bank balances. Total value of these assets has increased primarily on account of increase in value of current investment, fixed deposits maturity within one year and inventories. Increase in current investment was mainly due to higher short term investments utilising the profits earned from business.

Increased efforts and focus on recovery helped recover significant amount of old debts resulting in no significant increase in provisions for bad and doubtful debts and trade receivables even though the scale of operations was substantially higher. Payments from government especially state governments and their departments continue to be extraordinarily delayed and no amount of persuasion is helping.

B) CONSOLIDATED

(i) Profit and Loss:

				(Rs. in Lakhs- rounded off to nearest Lakh)
Particulars	2021-22	Percentage (In relation to Revenue from Operations)	2020-21	Percentage (In relation to Revenue from Operations)
Revenue from Operations	161,595	100.00%	128,918	100.00%
Operating Cost	125,632	77.74%	106,144	82.33%
Operating Profit	35,963	22.26%	22,774	17.67%
Less: Depreciation and Amortisation	11,862	7.34%	12,859	9.97%
Net Finance Costs	(3,523)	2.18%	(1,843)	-1.43%
Finance Costs	3,149	1.95%	3,359	2.61%
Less: Other Income	6,673	4.13%	5,202	4.04%
Add: Share of net profit of associates accounted for using the equity method	32	0.02%	22	0.02%
Exceptional Item	(564)	-0.35%	1,062	0.82%
Profit Before Tax	28,221	17.46%	10,717	8.31%
Taxation	6,533	4.04%	2,886	2.24%
Profit After Tax (PAT)	21,688	13.42%	7,831	6.07%
Less/(Add): Share of Minority Interests in Profits/(Losses)	(573)	-0.35%	(998)	-0.77%
Add: Other comprehensive income	408	0.25%	641	0.50%
Total Comprehensive Income to Owners	22,668	14.03%	9,470	7.35%

(ii) Balance Sheet

	(Rs. in Lakhs- rounded off to nearest Lakh)
Particulars	2021-22	2020-21
Total Equity	235,175	221,536
Total Non-current Liabilities	44,931	44,503
Total Current Liabilities	37,384	32,764
Total Equity and Liabilities:	317,490	298,803
Total Non-current Assets	227,925	204,375
Total Current Assets	89,565	94,428
Total Assets:	317,490	298,803

(iii) Consolidated cash flow statement

The summary of cash flows is as follows:

	(Rs. in Lakhs- rounded off to nearest Lakh)
Particulars	2021-22	2020-21
(A) Net Cash Surplus/(Deficit) from operating activities	32,204	34,832
(B) Net Cash Surplus/(Deficit) from investing activities	(20,427)	(33,159)
(C) Net Cash Surplus/(Deficit) from financing activities	(12,283)	(179)
(D) Net Surplus/(Deficit) (other than surplus generated from operating activities) (B) + (C)	(32,710)	(33,338)
(E) Net Increase/(Decrease) in cash and cash equivalent (A) + (D)	(505)	1,494

Cash generation was lower than the previous year despite significantly higher profits because from the onset of pandemic itself, the Group had complete focus on reducing the receivables in line with reduction in scale of operations and achieved success as it was ahead in pandemic curve and the competitors. However, in the current year, higher cash profits were deployed in working capital primarily due to increase in scale of operations and also due to poor recovery from government.

Please refer to the section titled as "the Company, its Subsidiaries and Associates" of this Chapter that lists out the entities that have been considered while compiling the consolidated financial statements and define the relationship of each entity with the Company.

In this Section, percentages have been rounded off to nearest number.

Consolidated Profit and Loss

1) The contribution of subsidiaries Music Broadcast Limited and Midday Infomedia Limited in revenue, operating profit, profit before tax and profit after tax of the Group was as follows:-

	Music Broadcast Ltd. (%)		Midday Infomedia Ltd. (%)
	2021-22	2020-21	2021-22	2020-21
(i) Revenue	11	11	3	2
(ii) Operating profit	3	-5	-3	-7
(iii) Profit before tax	-3	-31	-5	-22
(iv) Profit after tax	-3	-31	-5	-23

Note: The above figures are without eliminating intra group transaction which is insignificant and will not materially change the same.

2) Please refer to section titled "the Company, its Subsidiaries and Associates" for the discussions on performance of subsidiaries and associates.

Consolidated Balance Sheet

1. Increase in Total Equity represents the excess of consolidated profit over the value of equity shares bought back by JPL in line with the Groups policy of rewarding the shareholders.

2. Total Non-current Liabilities increased marginally primarily due to renewal of lease on expiry of existing lease and taking new premises in Noida in -spite of lower deferred tax liabilities, lower borrowings, lower liabilities for employees benefit obligations on account of funding of the gratuity liability and reduction in strength as discussed while discussing standalone balance sheet.

3. Total Current Liabilities have increased primarily on account of higher short term borrowing and trade payables discussed as above.

4. Total Non-current Assets have increased primarily on account of increase in long term investments due to shifting of the short term investments to long term investments (maturing after one year) by the subsidiaries for better returns.

Total Non-current Assets also include goodwill of Rs.33,809 Lakhs which has arisen mainly on consolidation and relates to the acquisition of Naidunia print business in the year 2011-12 and radio business in the year 2015-16. The goodwill is tested for impairment at the end of every financial year and no such impairment has yet been observed. In addition to goodwill, there are other intangible assets as well. These intangible assets are computer software, brand, migration fees relating to radio business and part of consideration paid for acquisition of radio business that has been allocated to radio licences while consolidating the accounts. These intangible assets are being amortised on the basis of their useful lives.

5. Total Current Assets have decreased primarily due to substantial decrease in short term investments even after increase in inventories, bank balances and receivables primarily due to shifting the short term investments to long term investments (maturing after one year) by the subsidiaries for better returns.

Consolidated Cash Flow Statement

In continuation of the previous year, there was healthy cash generation from operations. The Company, its Subsidiaries and Associates all are generating cash profits and the Group has liquidity of over Rs.1,000 Crores including unutilized working capital limit as at 31st March 2022 which is sufficient to pursue organic and inorganic growth opportunities and meet contingency, if any.

Calculation of Ratios of Standalone financials for the year ending March 31, 2022 Standalone

S. no. Ratios	March 31, 2022	March 31, 2021	Reason for variation of more than 25%
	Ratio	Ratio
1 Debtors turnover ratio	4.14	2.93	The variance is on account of increase in revenue from operations and decrease in average trade receivables during the current year as compared to the previous year.
2 Inventory turnover	6.45	2.64	The variance is on account of increase in cost of material consumed and decrease in average inventory during the current year as compared to the previous year.
3 Interest coverage ratio	13.13	8.60	The variance is on account of higher profits due to higher revenues as discussed in this chapter.
4 Current ratio	2.26	2.18	-
5 Debt-Equity ratio	0.17	0.16	-
6 Operating Profit Margin%	25.46	22.44	-
7 Net Profit Margin %	17.11	11.58	The variance is on account of increase in net profit during the current year as compared to the previous year.
8 Return on net worth %	14.94	9.08	The variance is on account of higher profit as discussed in this chapter

Calculation of Ratios of Consolidated financials for the year ending March 31, 2022 Consolidated:

S.no. Ratios	March 31, 2022	March 31, 2021	Reason for variation of more than 25%
	Ratio	Ratio
1 Debtors turnover ratio	3.74	2.59	The variance is on account of increase in revenue from operations and decrease in average trade receivables during the current year as compared to the previous year.
2 Inventory turnover	6.38	2.60	The variance is on account of increase in cost of material consumed and decrease in average inventory during the current year as compared to the previous year.
3 Interest coverage ratio	11.61	6.47	The variance is on account of higher profits due to higher revenues as discussed in this chapter.
4 Current ratio	2.40	2.88	-
5 Debt-Equity ratio	0.13	0.12	-
6 Operating Profit Margin %	22.28	17.68	The variance is on account of increase in revenue as well as in profit during the current year as compared to the previous year.
7 Net Profit Margin %	12.89	5.84	The variance is on account of increase in net profit during the current year as compared to the previous year.
8 Return on net worth %	9.22	3.54	The variance is on account of higher profit as discussed in this chapter

Material development in Human Resources

Relationship with employees was cordial. During the pandemic, there was not one single day when the publication of newspaper or broadcast got disrupted despite many of them getting infected and a few of them even succumbing to the deadly virus. Their contribution and commitment will always be remembered.

Even if many of the media companies and other business houses resorted to cutting the salaries, the Company chose to sacrifice the profit for the good of its employees and did not cut the salaries.

The Group continuously works to provide work environment that encourages free expression of opinion, decision making and responsible execution of the task and is committed to do so even in future.

There were 4,865 permanent employees in the Company as on March 31, 2022 as against 4,953 as on March 31, 2021.