Music Broadcast Ltd Management Discussions

Overview:

The global economic environment worldwide is marked by significant uncertainty. From rising interest rates to geopolitical conflicts, the stability of supply chains continues to be at risk.

Despite this, India has shown exceptional resilience with a growth rate of 7.6% in FY24, according to the Second Advance Estimate. This is evidenced by several high-frequency indicators, including strong Goods and Services Tax (GST) collections. E-way bill transactions, robust bank credit growth, and a positive Purchasing Managers Index (PMI). Although merchandise exports have encountered difficulties, service exports have maintained stability, with recent figures indicating promising growth.

The global economy is expected to maintain a steady growth rate in CY24 and CY25, with the IMF estimating a global growth rate of 3.2% during these years. Among major economies, the US economy is projected to grow at 2.7% in CY24, the UK at 0.5% and China at 4.6%. Moreover, India is projected to become the worlds third largest economy by FY28, surpassing Germany and Japan.

Inflation in India for FY25 is forecasted to trend around 4.30%, indicating potential room for the RBI to consider interest rate cuts, supported by easing CPI inflation. Indias Consumer Price Index (CPI) inflation eased to 4.85% compared to February 2024, inching closer to the RBIs comfort level of 4%, with variations observed in urban and rural inflation rates.

Moreover. GST collections continue to show growth, with April 2024 collections crossing t 2 lakh crore, for the first time representing 12.4% year-on-year growth. For FY24 the total collection grew by 11.7% to reach RS. 20.18 lakh crore.

The digitalization landscape in India for FY25 is expected to witness significant advancements and growth, with a focus on leveraging emerging technologies, harmonizing data standards, maximizing the value of data, and fostering innovation and collaboration across the entire energy system. The State of Indias Digital Economy Report 2024 highlights Indias rapid digitalization driven by a large base, high growth, facilitated by Digital Public Infrastructures (DPIs), and strong gender and geographical convergence.

India is ranked third at the aggregate level and 12* at the user level among G20 countries, showcasing the countrys progress in digital transformation. Overall, Indias digitalization journey in FY25 is expected to focus on expanding technological expertise, maximizing the value of data, setting industry digital directions, and exploring innovation opportunities through collaboration and partnerships.

As consumer behavior continues to shift towards digital platforms, the media industry is undergoing a transformative journey, where adaptability and innovation are paramount. A fundamental restructuring with the fusion of traditional and

digital media is evolving. Radio is strategically placed and will create a new radigitalized face for itself in this changed environment.

Influencer Marketing has become a significant factor in Indias digital environment, providing marketers with a dynamic and efficient method to engage with consumers authentically. Through strategic collaborations with influencers, brands are enhancing their marketing initiatives, cultivating brand loyalty, and ultimately, attaining measurable business outcomes in the continuously evolving realm of digital marketing.

Traditionally, the growth rate in the media and entertainment sectors has outperformed that of Indias GDP growth rate. What makes this interesting is that consumer spending in this sector is discretionary. According to EY, the Media and Entertainment sector in India remains a beacon of growth, outperforming GDP rates with a projected CAGR of 10% by CY26. With the per capita outlook for the Indian economy looking to increase several notches in coming years, the consequent overall consumer spend outlook in the sector remains positive. In addition, favorable FDI policy in telecom and digital channels would impact investment trends positively across all segments.

Indias rural landscape is undergoing a transformative shift, with projections indicating a significant rise in rural per capita consumption by 2030, outpacing urban areas. In FY25, the rural sector is expected to witness robust growth due to increased government focus and spending on rural development. The governments multi-pronged approach includes empowering rural women, improving basic amenities, and enhancing program implementation. These efforts aim to drive rural growth, improve the quality of life, and bridge the urban-rural gap, offering ample opportunities for economic expansion and social development.

The Amrit Kaal in the economy for FY25 focuses on fiscal consolidation, emphasizing policy continuity, economic development through social welfare, and infrastructure investment. The projected fiscal deficit for FY25 is 5.1%, aligning with the governments policy trajectory and reflecting a prudent budget with a positive outlook.

Source: EY Report. IMF

Media and Entertainment Industry

The Indian M&E sector continued its growth trajectory; expanding by t 17,300 crore (8.1% y-o-y) to reach RS. 232,000 crore (USS 27.9 billion)

While the sector was 21% above its pre-pandemic levels, television, print and radio still lagged behind their 2019 levels.

The share of traditional media (television, print, filmed entertainment, live events, OOH, music, radio) stood at 57% of M&E sector revenues in 2023, down from 76% in 2019.

Television advertising revenues decreased by 6.5% from RS. 31,800 crore in 2022 to RS. 29,700 crore in 2023. Advertising volumes declined by 2.6% and ad rates fell by 4% on an average in 2023. Subscription revenue reversed its falling trend in 2023 to grow by 2%. ARPUs increased by approximately 4% to reach RS. 274 per month (gross of taxes).

Print experienced a 4% growth reaching RS. 26,000 crore from t 25,100 crore. Print growth was driven by 4% growth in advertising and 3% growth in circulation. Overall ad insertion volumes increased by 2% over 2022. Advertising in English publications recovered to 74% of pre COVID-19 levels, while advertising in Hindi and regional language publications recovered to around 93%. The share of advertising to the total income of print segment stood at 67%.

Digital media growth halved to 15% reaching RS. 65,400 crore in 2023 from RS. 57,100 crore in 2022. The advertising spends grew by 15% to RS. 57,600 crore and subscription which grew by 8% to RS. 7,800 crore.

Radio Industry

The radio segment is currently in a phase of recovery following the slowdown induced by the pandemic. While revenue is on the rise, it has yet to reach pre-2019 levels. Hyper-localisation has emerged as a crucial driver of growth in the radio industry. However, the ubiquitous presence of smartphones has not translated into universal access to radio, posing both challenges and opportunities for the sectors expansion in India.

As we examine at the current state of the radio industry, we observe a pattern woven with innovation and persistence. Radio stations have embraced digital platforms, utilisation social media and streaming services to broaden their audience reach and engagement. This digital transformation has not only expanded the industrys reach, but has also created new opportunities for monetisation and content experimentation. Recent data indicates that the radio industry in India was valued at around t 2,300 crores at the end of CY23, with experts anticipating a compound annual growth rate (CAGR) of 7-9%, potentially reaching t 2,700 crores by CY26.

With the advent of 5G technology and the emergence of smart devices, radio stands distinct in reinventing itself yet again, offering personalised experiences and immersive storytelling. Partnerships with advertisers and brands present attractive opportunities for revenue generation, underlining the industrys potential for sustained growth.

Radio remains a potent communication platform, leveraging its unique ability to connect with a vast audience and foster human interactions, even amidst the digital era. With evolving media consumption habits among Indian audiences, the radio industry is presented with a timely opportunity to embrace digital transformation while retaining radio as its core function. The widespread adoption of digital technologies has propelled the broadcasting industry forward, enabling radio stations to reach broader audiences and diversify content across multiple platforms. Advanced technologies like artificial intelligence are enhancing efficiency by identifying trending content and

music preferences, expanding audience reach, and facilitating interactive engagement with listeners.

The influence of artificial intelligence (Al) on the radio industry is poised to be transformative, with Al technologies enhancing content delivery, analysing listener preferences, and optimising advertising strategies, thereby enriching the overall listener experience in novel ways. According to a study by PwC, 73% of radio broadcasters are planning to invest in Al over the next three years, signalling a promising trajectory for the industrys future.

In addition to these advancements, the rise of podcasts and other on-demand audio content represents a significant trend in the current radio sector. Podcasts have emerged as a powerful medium for storytelling and information dissemination, offering listeners a diverse range of content on various topics. Radio stations are increasingly embracing podcasts as part of their programming, catering to the evolving preferences of their audience and expanding their content offerings.

Outlook

Looking ahead, innovation will play a central role not only in the resurgence of radio in India but also in the global radio landscape. While music curation remains fundamental, radio is diversifying into marketing solutions and extended platforms such as podcasts, audio shorts, AR/VR video, and OTT. The audio OTT industry has experienced significant growth, with eight million active subscribers. The global audio OTT market, valued at US$21.4 billion in CY22, is projected to grow at a robust CAGR of 29.3% from CY23 to CY30, reaching US$124.1 billion by CY30.

Through collaboration, creativity, and a dedication to excellence, the radio industry has the potential to pioneer novel paths, enrich lives, and amplify voices in the ever-changing landscape of Indian media and entertainment. With the projected growth and technological advancements, the radio industry is poised to remain a dynamic and integral part of Indias cultural and economic landscape in the years to come.

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 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 non- compliances if any. They also verify compliances with various applicable provisions of law.

The Company is fully committed to continually work in strengthening the systems and processes 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

Financial performance

Profit and Loss:

	Year ended March 2024	Percentage	Year ended March 2023	Percentage
Income
Revenue from operations	22,853.85	90.8	19,886.14	91.0
Other Income	2,056.47	8.2	1,736.60	7.9
Other gains and Losses	251.30	1.0	233.73	1.1
Total Income	25.161.62	100.0	21.856.47	100.0
Expenditure
Licence fees	2,019.22	8.5	1,943.30	9.1
Employee benefit expense	6,942.41	29.1	6,058.47	28.6
Depreciation and amortisation expense	3,343.13	14.0	3,279.57	15.4
Net impairment losses on financial assets	325.19	1.4	317.16	1.5
Other expenses	10,251.81	42.9	9,260.46	43.6
Finance cost	989.81	4.1	391.26	1.8
Total Expenses	23,871.57	100.0	21,250.22	100.0
Profit/(loss) before tax	1.290.05		606.25
Income tax
- Current tax	219.42		126.17
- Deferred tax	386.21		136.09
Profit for the year	684.42		343.99
Other comprehensive income(net of tax)	9.09		28.18
Total comprehensive income for the year	693.51		372.17

Revenue:

Total Income: Our total income increased by 15.1% from RS. 21,856.47 lakhs in FY23 to RS. 25,161.62 lakhs in FY24, primarily due to increase in revenue from operations by RS. 2,967.71 lakhs.

Revenue from operations: Revenues from operations representing Advertisement Revenue increased by 14.9% from 119,886.14 lakhs in FY23 to RS. 22,853.85 lakhs in FY24.

Other income: The other income has increased from RS. 1,736.60 lakhs in FY23 to t 2.0S6.47 lakhs in FY24 primarily represents interest accrued on corporate deposits and bonds.

Other Gains: This represents net fair value gain on financial assets mandatorily measured at fair value through profit and loss account, net gain on sale of investments and other miscellaneous income. Other gains have increased primarily due to increase in net gain on sale of investment by RS. 9.37 lakhs from RS. 133.00 lakhs in FY23 to RS. 142.37 lakhs in FY24.

Expenditure:

Total Expenditure: Our total expenses increased by 12.3% from RS. 21,250.22 lakhs in FY23 to RS. 23,871.57 lakhs in FY24 which is in line with increase in revenue growth.

License Fees: Amounts paid towards license fees increased by 3.9% from RS. 1,943.30 lakhs in FY23 to RS. 2,019.22 lakhs in FY24 mainly due to higher revenue.

Employee benefits expense: Employee benefit expenses increased by 14.6% from 16,058.47 lakhs in FY 2023 to RS. 6,942.41 lakhs in FY24 on account of increment and increase in head count.

Depreciation and amortisation expense: Depreciation and amortisation expense increased by 1.9% from t 3,279.57 lakhs in FY23 to 13,343.13 lakhs in FY24.

Net impairment losses on financial assets: Increase in net impairment loss is by 2.5% from RS. 317.16 lakhs in FY23 to t 325.19 lakhs in FY24.

Other expenses: Increase in other expenses is by 10.7% from RS. 9,260.46 lakhs in FY23 to RS. 10,251.81 lakhs in FY24 majorly on account of increase in programming, marketing and advertising and travel expenditure due to higher scale of business than previous year.

Finance costs: Increase in finance cost by 153.0% from t 391.26 lakhs in FY23 to RS. 989.81 lakhs in FY24; mainly on account of increase in provision of Non-Convertible Non-Cumulative Redeemable Preference Shares (NCRPS) premium of t 594.21 from RS. 193.52 lakhs in FY23 to RS. 787.73 lakhs in FY24.

Tax expenses: Tax increase of RS. 343.37 lakhs in the current year due to tax impact of above NCRPS premium from RS. 262.26 lakhs in FY23 to 1605.63 lakhs in FY24.

Net profit for the year increased from t 343.99 lakhs in FY23 to profit of t 684.42 lakhs in FY24 due to above.

Adjusting for the items that will not be reclassified to profit and loss account, total comprehensive profit for the year was FY24 RS. 693.51 lakhs as against t 372.17 lakhs in FY23.

(i) Balance Sheet:

		(RS. in lakhs)
	2023-24	: 2022-23
Total Equity	53,168.40	52,474.90
Total Non-current Liabilities	10,525.74	9,510.82
Total Current Liabilities	4,367.41	3,633.20
Total Equity and Liabilities:	68.061.55	65.618.92
Total Non-current Assets	50,044.16	50,780.63
Total Current Assets	18,017.39	14,838.29
Total Assets:	68,061.55	65,618.92

Total equity comprises of Paid-up equity share capital, reserves and surplus and other reserves. The increase in Reserves and surplus is due to the Profit for the year.

Non-current liabilities represent lease liabilities, employee benefit obligations expected to be settled after one year and Non-Convertible Non-Cumulative Redeemable Preference Shares (NCRPS) liabilities shown in Borrowing. Current year movement includes (i) NCRPS of RS. 787.54 lakhs (ii) increase of t 109.61 lakhs in lease liabilities {iii) increase in leave obligation by RS. 54.62 lakhs and (iv) increase of t 63.15 lakhs in gratuity liability.

Current liabilities consist of lease liabilities, trade payables, other current financial liabilities and other current liabilities. The increase in current liabilities is due to (i) increase in trade payables by RS. 470.21 lakhs (ii) increase in other financial liabilities 1358.21 lakhs and (iii) decrease in lease liabilities by t 87.71 lakhs, (iv) decrease in other current liabilities by 127.78 lakhs.

Non-Current Assets comprise tangible and intangible assets, right of use asset, long-term investments, financial assets, deferred tax assets, non- current tax assets and other non- current assets expected to be realizable after one year.

Tangible assets have increased on account of addition during the year which was partly offset by depreciation during the year. Intangible assets have reduced due to amortisation cost for the current fiscal. Increase in long term investment is due to purchase of long term bonds during the year. Decrease in deferred tax assets is mainly on utilization of accumulated losses during the year.

Current Assets consists of short-term investments, trade receivables, cash and cash equivalents, other bank balances, other financial and current assets expected to be realisable within next twelve months.

Current investments have increased due increase in short term investments and parked proceeds in long term bonds. Trade receivables have increased due to increase in business during the year.

further to the above, the financial ratios are as follows:

Sr. No Particulars	2023-24	2022-23
1 Debtors turnover	3.28	2.81
2 Inventory turnover	NA	NA
3 Interest coverage ratio	27.44	21.28
4 Current ratio	4.13	4.08
5 Debt equity ratio*	0.20	0.19
6 Operating profit margin	24.60%	21.51%
7 Net profit margin	2.99%	1.73%
8 Return on net worth	1.29%	0.66%

# The total outstanding debt of the Company is RS. 10,642.38 lakhs (including lease liabilities).

Current ratio has decreased primarily due to sale of current investments and parked proceeds invested in long term bonds.

Interest coverage ratio has improved due to better profitability during the current year.

Operating profit margin, net profit margin and return on net worth have improved due to increase in turnover and profit during the year.

Human Resources

In line with our commitment to fostering a learning- oriented and supportive environment for our employees. Radio City - HR has spearheaded several initiatives aimed at enhancing organisational capabilities and nurturing talent. These initiatives are designed to facilitate learning, growth and enjoyment within our workplace. Among the key initiatives undertaken this year are:

Knowledge Konnect for Sales: This program focuses on equipping our sales team with the necessary knowledge and skills for success in the digital environment. Through various sessions such as Video Editing, Digital and On- Ground Amplification, and Al Knowledge Training, employees have enhanced their capabilities to thrive in the digital landscape.

Skill developm ent workshops: A series of skill development workshops have been organised to empower employees with essential competencies. Programs like Winning Presentation, Excel with MS Excel, and AWE Training have equipped our workforce with valuable skills to excel in their roles.

Succession Planning: We have implemented robust succession planning strategies to ensure a pipeline of talented individuals ready to assume key roles within the organisation.

Campus Hiring: As part of our talent acquisition efforts, we conducted campus drives and hired 10 Management Trainees from reputable institutes. These MTs underwent rigorous training and contributed to projects under the guidance of senior leadership.

Rewards and Recognition: Our rewards and recognition programs, including Spotlight, Sher of the Quarter, and Cheers to Peers, celebrate the achievements and efforts of our employees, motivating them to strive for excellence

Employee Wellness: We prioritise the well-being of our employees through initiatives such as Daily Health Tips, Choosing Health, and the RC Wellness League, which encourage a healthy and balanced lifestyle.

Hobbies Masterclass: Hobby classes offer employees a chance to pursue their interests outside of work, leading to increased job satisfaction and overall well-being, reduces stress, leads to Team building.

As a result, of these initiatives, our organisations Great Place to Work (GPTW) score has increased by 2 basis points reaching 89 in 2023-24. This achievement reflects the trust and pride our employees have in the Radio City brand. Additionally, our commitment to continuous learning and development is evident from the increase in training days per employee and the successful integration of new hires from campus recruitment

As of March 31, 2024, Radio City employs 479 permanent employees, each contributing to our shared success and growth journey. We remain dedicated to nurturing talent, fostering a culture of learning and innovation, and creating a workplace where every individual can thrive and realise their full potential.