Highlights of the call

• Operating revenues, on standalone basis, grew 20% to Rs 40.84 crore in Q1 FY 2007. The number of stations increased to 17 from 10 in the corresponding quarter last year. Operating revenues fo 10 radio stations advanced 15% to Rs 39.40 crore in Q1 Fy 2008 over Q1 Fy 2007. OPM improved 70bps at 16.2% on maturity of stations operating for more than 12 months. On the back of higher depreciation and amortisation on starting of new stations, the net profit dipped 69% at Rs 41 lakh.

• On consolidated basis, operating revenues were Rs 69.10 crore with radio business contributing Rs 40.84 crore, out-of-home (OOH)contributing Rs 19 crore, event management contributing Rs 11 crore including inter-segment revenues. At earnings before interest, tax depreciation and amortisation (EBITDA) level, OOH suffered loss of Rs 4.63 crore and event management Rs 1.34 crore. The net loss for the quarter stood at Rs 7.67 crore.

• The stations launched in Q1FY07 namely Bangalore, Hyderabad and Jaipur have reported EBITDA margin of 21.1%. ENIL launched seven new stations viz. Patna, Jalandhar, Bhopal, Rajkot, Baroda, Panjim and Kanpur in Q1 FY 2008. The seven new stations reported EBITDA loss of Rs 1.60 crore. They are working at inventory utilisation of 20-30%.

• It also launched stations in Nashik, Varanasi and Aurangabad in July 2007. The launches are on schedule with 25 operational by end August 2007 and the balance seven by end September 2007 against the earlier estimate of August 2007 for all the 32 stations.

• The revenue market share of Radio Mirchi was 49% for the quarter. Radio Mirchi is the leader in all the markets it operates. Industry volumes in the four metros have increased by 50% to 100% and that of Radio Mirchi by 40%.

• As per the management, generally a station breaks even by the end of the first 12 months of operations.

• The company has entered into sales alliance with Radio Mantra (Jagran group) and Radio Chaska (Gwalior Farms) – total nine stations in nine markets. This would help ENIl get a national presence and help negotiate a better price with advertisers.

• The capacity utilisation in Delhi and Mumbai has gone up to 70-80% from 60-70% last year. Currently, Delhi & Mumbai contribute 40% of the revenues of radio business.

• The pricing scenario is stable. The pricing is lower by 10-15% compared with the peak rates last year. ENIL raised pricing last year but with competition coming in, it had to lower prices by the end of the year. The management believes that once all the stations have matured, pricing would be the key driver of growth as competition is fully loaded in the main markets.

• However, going forward, the company believes that with the capacity utilisation of the competitors increasing, the industry would be able to take the price hike before the start of the season in October.

• Volume growth would be available in festival times where the advertising time can be increased to 15 minutes against the standard 12 minutes in an hour in normal times.

• The management believes that after all the stations in the industry are up and mature, the leader would have EBITDA margins of high 30s to early 40s.

• The roll out at the Delhi Airport is complete. At Mumbai Airport 50% roll out is complete with the balance by end Q2 FY 2008. The two airport contracts contributed revenues of Rs 4 crore. License fee charged was Rs 9.5 crore in Q1 FY 2008. Both the airport contracts are for three years starting from March and April. But ENIL is negotiating to change the terms to three years from date of handover of site. The base internal rate of return (IRR) taken for biding for the contracts was 18-19%.

• The management expects that the OOH market would be Rs 2100 crore by 2010 and the leader will get 25% of that. Currently, ENIL is the leader in this space.