Highlights of the call

• The management believes that the worst is over. The management is of the view that Radio industry has flattened and it would grow going forward. The Company believes that September 2009 would be turning point for advertising market.

• The Company is targeting 10% dip in costs for FY2010.

• The Company has reduced its workforce by 200 employees to 780 employees.

• The Company generated free cash flow of Rs 12.5 crore for the quarter. For FY2009, the free cash flows was Rs 17.6 crore.

• For the quarter ended June 2009, for radio business, net sales dipped 12% at Rs 50.22 crore with OPM up 20bps at 18.4% and PAT was loss of Rs 1.45 crore against profit of Rs 7 lakh in the corresponding quarter previous year. The profits and margins were impacted by Rs 2.59 crore being provision of losses on private treaty revenues, Rs 1.6 crore being one-time cash loss on account of re-classification carried out by BECIL a government organization which does Radio business infrastructure set up. The loss is mainly due to interest earlier given by BECIL for funds given to it for advance for infrastructure work which was later disallowed. The asset value has been increased accordingly. Finally, provision of doubtful debts of Rs 1.74 crore against Rs 0.53 crore in the corresponding quarter previous year.

• Private FM sector de-grew about 7-9% in the quarter under review. Radio industry is expected to grow at 18.1% in CY2009 over CY2008 and grow at CAGR of 18% over 2009 – 2013. the share of advertising pie would be 4.2%.

• The market share of "Radio Mirchi" was at 41-42% and it is the leader in all 4 markets for the last 7 weeks as per RAM.

• Out of the revenues of Rs 50.22 crore, the 10 legacy stations de-grew 12.5% on y-o-y basis at Rs 36.69 crore and against Rs 37.12 crore in the sequential quarter. EBITDA margins stood at 26.8% against 26.1% in the corresponding quarter previous year and 36.9% in the sequential quarter. EBITDA was at Rs 9.82 crore down 10.4% on y-o-y basis and Rs 13.71 crore in the sequential quarter. The 22 new stations had revenues of Rs 13.53 crore with EBITDA loss of Rs 0.6 crore against Rs 13.18 crore with EBITDA loss of Rs 0.27 crore in the sequential quarter.

• The Radio business had a net positive impact of the elections.

• The capacity utilization of 10 legacy stations is 71% and for the new 22 stations is 44%. The volumes have increased 25% on y-o-y basis and are flat on sequential basis.

• The hearing of the Copyright Board has started and the Company is expecting a solution very soon regarding music royalty.

Out of Home business (OOH)

• The Out of Home business (OOH) reported revenues of Rs 30.88 crore down 22% on y-o-y basis with EBITDA loss of Rs 13.94 crore up 182% on y-o-y basis and net loss of Rs 19.59 crore up 177%. On q-o-q basis, the revenues were up 1.4%, EBITDA loss down 551% and net loss down 42%.

• The occupancy for traditional OOH business i.e. billboard and bridge contracts have seen dip in volume of 12-15% and dip in pricing of 15-20%. Recently, the Company has seen improvement in occupancy of traditional property and that June was better than April.

• The occupancy at MIAL was 70-77% and for DIAL was 45-55%. There has been some improvement seen in pricing in DIAL.

• The bidding for the MIAL and DIAL would be on tender process. The number of players are limited this time round and the Company believes that their prospects are good. The contracts this time are for 15 years and on revenue sharing basis.

• The management expects OOH business to be net profit break even in Q4FY10.

• For the quarter event business reported revenues of Rs 6.74 crore with loss at EBITDA level of Rs 1.71 crore down 17% and loss at PAT level of Rs 1.68 crore down 24%.

• The management is focusing on profit growth rather than revenue growth for the segment.

• The focus is on the IP lead growth. It is planning an IP on design wars.

• The Company has reduced its headcount by half to 80 people.