ENIL Investor Presentation May 2008
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PL Corporate Month May 26, 2008 1 Disclaimer Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in our business segments, change in governmental policies, political instability, legal restrictions on raising capital, and unauthorized use of our intellectual property and general economic conditions affecting our industry. ENIL may, from time to time, make additional written and oral forward looking statements, including our reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company. 2 Presentation Path • Times Group • Indian Media Industry • ENIL Overview • Financial Highlights • Strategic Direction 3 Times Group 4 We are part of Times Group – India’s Largest Media Conglomerate Bennett Coleman & Co Ltd Publishing Division Times Global Times Internet Broadcasting Limited (JV with Reuters) The Times of India The Economic Times Navbharat Times Times Maharashtra Times Infotainment News Channel – Sandhya Times Media Limited indiatimes.com TIMES NOW Vijay Times 58888 Wallet365.com Entertainment & Retail Mirchi Movies Ltd. Times Music Times Multimedia Entertainment Channel World Wide Media - Zoom Entertainment (JV with BBC) Network (India) Limited (ENIL) Times Business Radio Mirchi Solutions Ltd. Femina Timesjobs.com Filmfare SimplyMarry.com Other Magazines Magicbricks.com TIM ABSL Times OOH 360Degrees 5 Indian Media Industry 6 Ad Market – A Play on Economy 23.4% 25.0% 20.0% 20.0% 12.8% 13.7% 14.1% 12.9% 15.0% 11.8% 13.5% 8.7% 8.1% 9.6% 10.0% 7.5% 5.0% 0.0% 2002 2003 2004 2005 2006 2007 GDP Growth Ad revenue Growth • Nominal GDP expected to grow at a CAGR of 11% - 13% p.a. over the next ten years • Ad Market estimated to grow from Rs. 196bn in 2007 to Rs.453bn by 2012 at CAGR of 18% Source: Tam Adex, FICCI-PWC report, 2008 7 Indian Media Sector on the fast lane 2002 2003 2004 2005 2006 2007E India 0.36 0.40 0.45 0.46 0.51 0.51 Asia-Pacific 0.80 0.81 0.81 0.81 0.80 0.79 Latin America 0.74 0.74 0.73 0.74 0.70 0.72 Western Europe 0.76 0.74 0.75 0.75 0.75 0.75 North America 1.37 1.34 1.33 1.29 1.28 1.25 World Average 0.97 0.95 0.95 0.93 0.93 0.92 Source: Zenith Optimedia – October 2007 • Ad Spend/GDP is lowest in India but rising 8 Ad Revenue Landscape 2007 Out-of-home Online Radio 6.4% 1.4% 3.2% Television 41.2% Print 47.9% Source: FICCI-PWC Media report 2008 • New Media Categories are evolving 9 Ad Revenue Growth Across Media Amount in Rs. Billion 225.0 35% 200.0 200.0 32.0% 180.0 28% 24.0% 135.0 21% 20.0% 94.0 16.0% 90.0 80.0 14.0% 14% 45.0 7% 24.0 18.0 12.5 11.0 6.2 2.7 - 0% Print Television Out-of-home Radio Online 2007 2012F 2008-12 CAGR Source: FICCI-PWC Media report 2008 • Radio market expected to grow three times in next 5 years • OOH media market expected to double by 2012 10 India Media Industry - Growth Drivers GDP Growth rate of 8.7%, Ad spend growth – 20% Young nation with Higher spending Media & Low Media power Entertainment Penetration – Industry Untapped rural Largest workforce in markets the world Regulatory reforms (PPP) & Foreign Investment 11 ENIL Overview Our Vision is to be “A Leading City-centric Media Company By Delivering Unique Audiences Through Media Vehicles Like FM Radio, Experiential Marketing And Out-of-home Media” 12 Company Snapshot Headquarters: Mumbai, India Incorporated: 1999 Listed: February 15, 2006 Subsidiaries: Times Innovative Media Limited (TIM) Alternate Brand Solutions Limited (ABSL) Businesses: – ENIL Radio Broadcasting brand Radio Mirchi – TIM Out-of-home Media brand Times OOH – ABSL Experiential Marketing brand 360 0 Experience FY08 Consolidated Total Rs. 4,168.4 mn, including other income of Rs. 33.7 Income: mn FY08 Consolidated EBITDA: Rs. 354.9 mn EBITDA Margin: 8.5% 13 Poised For Growth • Completed rollout of phase II radio stations – Operational in thirty two cities – First Company to complete national network rollout in phase II – 22 new stations already profitable in Q4 FY08 • Favorable Supreme Court Order on Music License • Times OOH valued at over Rs. 12 bn – Goldman Sachs and Lehman Brothers acquired 16.56% stake (8.28% each) in Times Innovative Media Limited for Rs. two billion – Inflows to accelerate acquisition of media properties • Event management division hived off – 360 Degrees transferred to a new wholly-owned subsidiary company, Alternate Brand Solutions Ltd (ABSL) – Focus to help in achieving scalability and profitability 14 FM Radio - Evolution 2006- 07 • Multiple Frequency • License Tradability • Networking 1999-2005 • Radio ad spend share • Completion of Phase – - 8.5% II Licensing • Technology Before 1999 • Increased Competition developments • Phase – I Licensing • Improving profitability • Visual Radio • Limited Private Participation • Growth in radio ad • Internet Radio spend • Strict Regulatory norms Radio in growth phase • No privatisation • Introduction of revenue • Government Run radio sharing in 2005 2008 Channel Radio in infancy Radio a “dead industry” 15 FM Radio – TRAI Recommendations on Phase 3 • Need for Augmentation of Private FM Broadcasting – The geographical basis for bidding may be changed from City to District • Additional channels in the same city to existing players – At least three players excluding AIR in any district – Maximum number of channels to a radio operator not more than 50% of total channels in the district • News and Current affairs on FM Radio may be permitted • FDI /FII limit to 26% from present 20% for news radio channels and 49% to non-news radio channels • Change in ownership or further dilution shall be permitted after a period of three years from the date of operationalisation • Networking of FM radio programs across the radio network • Auto Renewal of the radio license 16 Mirchi – Presence across Key Indian Cities Ahmedabad Jallandhar Pune Aurangabad Kanpur Panjim Bangalore Kolhapur Raipur Bhopal Kolkata Rajkot Chennai Lucknow Surat Coimbatore Madurai Vadodara Delhi Mangalore Varanasi Hyderabad Mumbai Vijayawada Indore Nashik Vishakhapatnam Thiruvananthapuram Jabalpur Nagpur Jaipur Patna 17 Radio Mirchi – Operational Highlights • Mirchi market share remains strong at 46-48% of private FM market • Listenership continues to remain strong – As per RAM, Radio Mirchi is the top brand in the 3 markets of Delhi, Mumbai and Bangalore • At the recently announced RAPA awards, Mirchi received highest number of awards for creative excellence in radio • Favorable Supreme Court Order on Music Royalty for radio industry 18 Times Innovative Media Ltd. (Times OOH) Execution Times Innovative Media Ltd. Innovation Network 19 Milestones • Introduced LEDs in India 2008 • Won Patel Bridge, Dwarka Metro, DND Flyover & 2007 Kolkata Billboards 2006 • Investment by Goldman TIM is incorporated and Sachs and Lehman business is transferred • Won Delhi and Mumbai Brothers from TIML Aiports • Won contract in four • Won Pune Billboards new cities i.e. 2005 • Two long tenure contract Bangalore, Hyderabad, renewals Jaipur & Chandigarh 2002 Foray in OOH business with Mumbai BQS contract 20 Asset Snapshot Asset Particulars MIAL 300 + Units (Excl. Trolleys) +2 LEDs DIAL 150+ Units (Excl. Trolleys) DMRC - Dwaraka 6 Metro Stations – Sector 9-14 Chandigarh Mumbai BQS 1350 Units New Delhi Hyderabad BQS 200 Units Jaipur Bangalore BQS 281 Units New Delhi (BRT) 60 BQS Chandigarh BQS 8 units Mumbai Kolkatta DND Flyway 192 Display Units + 1 LED Pune Kolkata 65 Billboards Hyderabad Patel Bridge 2 Display Units Pune 8 Billboards Bangalore NDMC Kiosks 8,000 poles – >16,000 display sites Jaipur Unipoles 20 Unipoles 21 Alternate Brand Solutions Ltd. “Business of Ideas” Creative Solutions Property Ownership Driving Sustainability “Preferred Corporate Partner” Innovation in execution 22 360°Experience: Eventful Consumer Engagements • Focus on owned properties – Teen Tiva Beauty Pageant – Smart Living Awards – Mr. India World pageant • Managing large format events – Filmfare Awards – Miss India Pageant – IFFI Goa’07 – Pravasi Bharatiya Diwas’06 • Key strengths – National presence (8 branches) – Experienced team of professionals – Large bouquet of in-house events • Geared for aggressive growth 23 Financial Highlights 24 Condensed Statement Of Operations Standalone Q4 FY08 Q4 FY07 YoY (Rs. Million) Growth (%) Airtime Sales 631.7 452.4 39.6% Other Income 37.2 1.3 NM Total Income 668.9 453.7 47.4% Operating Expenditure 445.4 320.6 38.9% EBITDA 223.6 133.1 68.1% Margin (%) 33.4% 29.3% Depreciation 49.7 16.3 204.5% Amortization 53.3 31.2 70.7% Financing cost 46.5 1.1 NM Profit Before Tax (PBT) 74.0 84.4 (12.3%) Less: Taxation 11.1% 18.6% Profit After Tax (PAT) 70.9 104.4 (32.1%) Margin (%) 10.6% 23.0% 25 Condensed Statement Of Operations Standalone FY08 FY07 YoY (Rs. Million) Growth (%) Airtime Sales 2,252.2 1,672.0 34.7% Other Income 41.7 8.0 421.1% Total Income 2,293.9 1,680.1 36.5% Operating Expenditure 1,729.2 1,223.9 41.3% EBITDA 564.7 456.2 23.8% Margin (%) 24.6% 27.1% Depreciation 140.6 54.6 157.3% Amortization 180.6 124.8 44.7% Financing cost 80.2 (1.10) NM Profit Before Tax (PBT) 163.3 277.8 (41.2%) Less: Taxation 1.4 (13.0) Profit After Tax (PAT) 161.9 290.8 (44.3%) Margin (%) 7.1% 17.3% 26 FY08 Performance Review (All comparisons with FY07) • On a like-to-like basis (10 legacy stations): - Revenues up 10.6% to Rs.