ENTERTAINMENT NETWORK (INDIA) LIMITED Analyst/Investor Conference Call – May 24, 2017 Results – Quarter ended March 31, 2017 Moderator: Ladies and Gentlemen, Good Day and Welcome to Entertainment Network (India) Limited Q4 FY17 Earnings Conference Call. We have with us today from the Management Mr. Prashant Panday – MD & CEO, Entertainment Network (India) Ltd. and Mr. N. Subramanian – Group CFO, Entertainment Network (India) Ltd. As a reminder, all participant lines will be in the listen only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing '*' and then '0' on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prashant Panday. Thank you and over to you, sir. Prashant Panday: Thank you very much and welcome to this Investor Conference Call. I am happy to announce the numbers for Q4FY17 and FY17. As you would have seen from the investor presentation, we have achieved an 18.6% growth in Income from Operations in Q4FY17. You will notice that this is a very high number and I think in that respect at least the fourth quarter has been a good quarter for ENIL. In terms of EBITDA, it is down by 8.2% as compared to Q4FY16 and PAT is down by 42.2% as compared to Q4FY16. In absolute terms, we recorded Income from Operations of Rs.162.3 crores, EBITDA of Rs.35.2 crores and PAT of Rs.13.8 crores in Q4FY17. As I mentioned, our revenues grew by 18.6% and the radio industry revenues has grown by 4% to 5% in this quarter. This reflects that our market share has become stronger, much stronger in this quarter. __________________________________________________________________________________ Page 1 of 30 Now coming to FY17, Income from Operations grew by 11.6% to hit Rs. 549.5 crores. Our EBITDA de-grew by 20.5% to hit Rs. 125.9 crores and PAT de-grew by 49.5% to hit Rs. 54.5 crores. While our revenue growth was 11.6%, the entire radio industry has grown by 9% to 10%. Now the numbers that I have mentioned to you obviously include old and new stations. Radio Mirchi has been a key participant in the auction process in the past and therefore the numbers given also include the contribution from new stations. Revenues from new stations were Rs.15.9 crores, this is part of the Rs.162.3 crores overall number that we have reported. This has come at an EBITDA loss of Rs.6.3 crores and this is part of the overall Rs.35.2 crores of EBITDA that we have reported for this quarter. So, if you do the calculation you will realize that the core business of Radio Mirchi other than new stations has delivered an EBITDA of approximately Rs. 41.5 crores. Now let’s look at the revenue performance of these new stations for the whole year and that’s where it becomes interesting and very heartening. In FY17, the revenues from new stations was Rs.30.7 crores out of this the fourth quarter revenue as I mentioned to you earlier was Rs. 15.94 crores which means that the revenue in the first three quarters was Rs.14.76 crores. This shows that the new stations are already starting to show momentum. Now this obviously is because the stations were launched at different point in time and they are starting to take off as seen in the fourth quarter. Now look at the EBITDA performance, in the full year the new stations have delivered a loss of Rs.29.8 crores and in the fourth quarter the loss is just Rs.6.3 crores. This indicates that the bulk of the loss was reported in the period before this quarter which was Rs.23.5 crores. Now again it is not surprising, because we have kept you informed about this in the past that when we launch a new station, we invest a lot in marketing, upfront. We invest in people and of course the revenues take four to __________________________________________________________________________________ Analyst/Investor Conference Call – May 24, 2017 Page 2 of 30 eight quarters to build up. So, in the first few quarters EBITDA losses in the new station businesses are quite significant and then they start improving significantly. We believe that the breakeven is hit by the time the sixth or eight quarter is reached and then of course they turn profitable. In the case of the entire radio industry itself, like I mentioned to you there is contribution from new stations. Now let me give you the growth numbers without the new stations so that you know how the radio industry has fared without the benefits of phase 3. In the fourth quarter the radio business actually fell by 2% to 3%, if you do not take the impact of new stations and in the full year of FY17 the radio industry has just grown by 4% to 5%. This is the slowest growth rate recorded in the last several years and clearly FY17 numbers as well as Q4 numbers show the effects of demonetization on the radio industry. Now if you see the results released by various print companies and various television companies you will notice that even they have been impacted very severely by demonetization. Therefore, it can be safely concluded that demonetization impact was as strong, if not stronger in the Q4 as it was in Q3. Today Mirchi is operating in 49 radio stations in 39 cities. Till Sunday i.e. two days back it was 50 stations in 40 cities. As you may have read, we have surrendered Goa station but the decision to surrender the Goa station was taken, more than a year back when the renewal had come up for all phase 2 stations. We had decided back then and had informed the Government that we are not renewing the licence for Goa station. That licence ran its life of 10 years under phase 2 and expired on the Sunday that just went by. Today we are operating 49 stations in 39 cities. In 9 cities of Bangalore, Hyderabad, Ahmedabad, Pune, Kolkata, Lucknow, Nagpur, Surat and Jaipur, we are operating two frequencies and in Hyderabad we are __________________________________________________________________________________ Analyst/Investor Conference Call – May 24, 2017 Page 3 of 30 operating 3 frequencies. So, I am sure you are very curious to know how these new frequencies are doing, how the second brand is fairing so far. Now I am very happy to say that some of these frequencies have done phenomenally well. In fact, if I may be honest over here with you they have done better than what we had estimated at the time of their launch. To give you some numbers, Mirchi 95 in Bangalore and Hyderabad are Hindi stations and the language of first station in this markets is Kannada and Telugu respectively. The Kannada and Telugu stations are clear leader in their market but the good news is that the Hindi stations are also doing exceedingly well. The Hindi station in Bangalore is the number one Hindi station in listenership terms and Hindi station in Hyderabad is also ahead of its single Hindi rival in that market. In revenue terms, we believe that in Bangalore, we are already ahead of two or three incumbents in the fourth quarter, we are behind one incumbent in the Hindi Segment but that is a very quick progress. In Hyderabad, we are at the same revenue level as our competitor. However, we have followed a different strategy and I will come to that in just a minute. In Chandigarh where the Mirchi launched for the first time, it is already number one in the listenership, when we do listenership inside of cars. When we do research on listenership inside homes as per the latest report from IPSOS we have already pushed back one brand and we are at the number two position in Chandigarh. Again, in terms of revenue our performance has been very, very positive and we are snapping at the heels of number two player over there. So, we are making quick progress. It’s the same story in Guwahati, it’s the same story in Ahmadabad and Pune where we have launched Mirchi love as a brand and these brands are now gaining traction in these markets. So, in short I want to leave you with this thought that the second frequency brand that we have launched are doing very well. The new markets that we have entered are doing very well. Let me now give one other data __________________________________________________________________________________ Analyst/Investor Conference Call – May 24, 2017 Page 4 of 30 point which is for four radio stations that we have acquired from TV today. Those four radio stations are doing exceedingly well since the time that we took them over. The revenues of these four stations have I think has doubled and today we are operating those stations at about 25 to 26% EBITDA margin in our fourth quarter. New stations take about four to six quarters to breakeven but existing stations where Mirchi Brand is extended are delivering results so much faster. So, this is the thought that I want to leave you with we will of course answer all the questions that you may have on inventory and pricing. It has mostly been a pricing lead growth in this quarter. Our pricing has gone up by 12.4% in the this quarter.