Balaji Telefilms

Dear Shareholders,
 
 At the end of yet another fiscal, I am reminded of the beautiful words
 of the Roman poet, Horace It is courage that raises the blood of life
 to crimson splendor. Fifteen years ago, Balaji dared to be different
 by foraying into soaps with a family drama theme. It was a time when no
 one had perceived it to be a revenue generating move. Balaji not only
 succeeded but also created a benchmark of sorts for others in the
 industry. Even today, Balaji believes in taking a leadership position
 in the market and inspite of the inertia in the industry owing to the
 global economic slowdown, Balaji is sure to prevail and be acknowledged
 as the leader in the content creation space.
 
 It has been a trying fiscal for all industry players and Balaji has not
 remained untouched from the heat of global economic meltdown. As
 compared to Rs. 8,793 lacs in 2007-08, PAT has come down to Rs. 2,267
 lacs in 2008-09. Whilst several things went wrong owing to unusual and
 unforseen developments across the globe, Balaji still managed to show
 profits. Besides the global meltdown Balaji encountered some
 unfortunate events further impacting the performance of the Company
 negatively.
 
 The strike called by the Federation of Western India Cine Employees and
 the Core Committee of Producers Association (IMPAA, Film and Television
 Producers Guild of India Limited and AMPTPP) in November 2008 brought
 the entire broadcasting industry to a standstill. All major
 broadcasters in the general entertainment space were running repeat
 content for nearly a month and the production of all new shows was
 stalled. During the current financialyear, certain trademark shows such
 as, Kyunki Saas Bhi Kabhi Bahu Thi and Kahani Char Char Kii went off
 air. Balaji also
 
 invested in new serials like Bandini, Kitni Mohabbat Hai, Koi Aane Ko
 Hai and others, with strong story lines and audience connect.
 
 During the year, Balaji built a set exclusively for the serial based on
 the epic of Mahabharat. Given the magnitude of the saga, it was
 expected to run for atleast three consecutive years and hence,
 magnificent sets were installed for the same.  Unfortunately, the
 serial went off air and Balaji was forced to depreciate the entire set
 value owingto the fact that the set had a periodic feel and thus could
 not have been utilized for any other serials that were on air. This
 resulted in an additional loss of Rs. 953.12 lacs. Related to this is
 also the provision made for bad debts of Rs. 1,816.38 lacs due to
 doubtful recovery of debts from the broadcaster. The Company generally
 invests its surplus funds in debt funds. However, small percentage of
 funds invested in equity funds led to a diminution in value of Rs. 440
 lacs.
 
 On the economic front, in general, the advertisement industry was worse
 affected by the meltdown. This had a cascading effect on all players in
 the value chain from broadcasters to distribution platforms to content
 providers. Further, with a fall in consumer discretionary spends,
 fortunes of the film industry also plunged.  As an integral part of the
 industry, Balaji is naturally exposed to these aspects.
 
 Balajis content continues to draw eye balls in the South. In fact, we
 share a great relationship with Sun Network with 6 serials across their
 4 regional channels: Sun TV in Tamil Nadu, Gemini TV in Andhra Pradesh,
 Udaya TV in Karnataka and Surya TV in Kerala. Some of the daily serials
 like Kasthuree on Sun TV, Kalyanee on Gemini TV and Kadambarii on Udaya
 TV have run over3-4years.
 
 Perception that Makes a Difference  Balaji has always been ahead of
 competition in terms of action and foresight. While competition is
 trying to impersonate the positioning that Balaji created almost a
 decade ago, we have moved on and are ready to re-invent our image
 again. We are ready to diversify our business and look at churning
 brand new content, which will be markedly different from the existing
 mix.  To further hedge our risks we have broad based our customers in
 terms of channel partners.
 
 I have faith in my new management team to steer the Company towards
 higher growth. I expect them to create and execute plans that position
 Balaji as the premier content creator in the industry, on television,
 film and new media. Going forward, we plan to establish relationships
 with many more channel partners, across the country. The accent is on
 maintaining and improving our operational efficiency standards whilst
 minimizing costs.
 
 Deepening our Competence
 
 Being a leader in the space comes with foresight and efficient
 planning. Over the years, Balaji has prudently worked towards enhancing
 productivity and optimizing costs. This has led to a strong balance
 sheet with Rs. 24,567 lacs of surplus cash (lying in various short term
 investments) that can be leveraged for business purposes. This offers
 us an edge over competition who are under resourced. This strength will
 allow Balaji to execute effective strategies without any compromise - a
 fact that will differentiate us and help us retain our peer position in
 a highly competitive market.
 
 I take this opportunity to thank our investors, partners, audience and
 our employees for their continued support and belief. It is the single
 most important factor in making Balaji a force to reckon with.
 
 With Regards, 
 jeetendra Kapoor