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It gives me great pleasure in welcoming you all to the 37th Annual General Meeting of your Company. As we come to the close of another financial year, it is time to take stock of what we have achieved and then look at the roadmap we have drawn for the future.
YEAR GONE BY:
The government at the Centre has continued to undertake a number of initiatives that have impacted economic growth in the short term. While the long-term implication of demonetization, new real estate regulations and a unified GST regime is probably positive, these measures have introduced a sense of uncertainty in the economy and slowed growth. Our singular revenue source is advertising. Uncertainty in the economy causes consumers to hold back on spending and marketers to hold back on advertising investments. These factors have an adverse impact on all media companies.
General Business Environment:
The year 2017 has been an eventful year for the Indian Media & Entertainment (M&E) Sector. The year 2017 saw India recover from demonetization only to face the new challenges and opportunities provided by the implementation of GST. However, the Indian Economy continued on its growth trajectory. Indian M & E Sector reached INR 1.5 trillion (USD 22.7 billion) in 2017, a growth of almost 13% over 2016. With this trajectory, it is expected to cross INR 2 trillion by 2020, at a CAGR of 11.6%.
[Source: FICCI-EY Report 2018 on Indian Media and Entertainment (M & E) Sector]
* CY denotes Calendar Year
M & E sector’s growth in 2017 was led by digital, film, gaming and events. While on average basis, sector grew by 13%, Radio segment just grew by 6.5%, on the back of the effect of demonetization and the impact of GST.
FM Radio Industry:
As stated above, Indian radio segment increased by around 6.5% in 2017 on the back of the effect of demonetization and the impact of GST. Key drivers of growth for the radio segment remain a large youth population, growth in the quality and quantity of film music on the radio, built-in FM receivers in most hand phones sold in India (76% of audiences listen to FM Radio via mobile devices), increased time spent out of home in transit etc.
Around 60% of the radio segment’s revenues are generated by the top 10 cities. The share of local advertising in the radio market has increased from 20%-30% in the early 2000s to up to 60% currently.
Impact of Phase III Licenses:
Phase III saw the launch of 162 new FM radio stations, including across the key markets of Mumbai and Delhi. Licenses were acquired in 17 cities that had no operating FM licenses. New stations in existing cities and proliferation of private radio to smaller cities are likely to increase listener base. These launches created an increase in the volume of inventory available, which was one of the main reasons for the growth of industry revenues. Volume growth has put pressure on effective rates at an overall level. Going forward, it is expected that stations will need to curb inventory per hour to enable rate increases.
The Indian Radio Industry faced a slightly muted year on account of pressure faced by a slowdown in advertising spend on account of implementation of GST and implementation of RERA in the real estate sector. Going ahead, the industry may witness an uptick in M & A Activity with large media groups looking to acquire regional/small radio networks, with lock-in on license migrated under the Phase-III regime expiring on 31st March, 2018. Moreover, any relaxation in the FDI limit, from the current 49% will result in further investment by global strategic players in Indian radio market.
As you all are aware, your Company operates through its subsidiary viz. Next Radio Limited (“NRL”) which is in the business of FM radio broadcasting. NRL operates under the brand “Radio One” in 7 cities across India viz. (i) Delhi, (ii) Mumbai, (iii) Chennai, (iv) Kolkata, (v) Bangalore, (vi) Pune, and (vii) Ahmedabad. NRL operates under frequency 94.3 MHz in all its cities except for the city of Ahmedabad where it operates under the frequency 95 MHz.
The Financial year 2017-18 was marked not only by challenges in the larger economy but also by increased competition in the space. This led to a dramatic increase in advertising inventory, a drop in effective rates and a resultant slowing of revenue growth.
Challenging times call for a renewed focus. Next Radio Limited has a strategy of content differentiation and audience super-engagement and it is because of this approach that we stand out in the market. In addition, during the year we have invested in people and new talent to address new competition in our cities and to sustain our position of being differentiated in each city where we operate.
We expect that the challenges in the economy and the industry will settle over the coming fiscal, and we are ensuring that we are well prepared to reap the benefits of growth as the winds of change and good fortune turn to our advantage.
Group Financial Performance for the Financial Year 2017-18:
This Group performance is in context of the performance of Next Mediaworks Limited (consolidated with Next Radio Ltd and other subsidiaries). Next Radio Limited is the substantive part of the group financial performance. Through this note, we are providing shareholders the details on the performance of the financial year ended March 31, 2018:
- During the year under review, on a standalone basis, Company’s total revenues stood at Rs. 188.32 lakhs as compared to Rs. 213.05 lakhs in 2016-17. The Company posted loss of Rs. 131.17 lakhs as against loss of Rs. 180.50 lakhs in the year 2016-17.
- On a consolidated basis, your Company’s total revenues were stable and stood at Rs. 7914.68 lakhs. The Company posted loss of Rs. 767.65 lakhs as against loss of Rs. 814.75 lakhs in the year 2016-17.
With Intent to increase the Shareholders’ value, the Board of Directors of your company have, at their meeting held on July 18, 2018 accorded in-principle approval to scheme of arrangement with Next Radio Limited, HT Media Limited and HT Music & Entertainment Company Limited. A brief note on the same is provided in the Directors’ Report for the information of shareholders.
I would like to end by thanking various Government bodies, banks, financial institutions and vendors for their support and our Board members for their guidance. I would also like to express my gratitude to our shareholders, employees and our listeners for their continued support and encouragement at an important phase of our journey. With your support we will continue to contribute towards addressing the increasing needs of all our customers.
Chairman & Managing Director