In interaction with management of the Company.

Highlights of the Meet

OOH business

• The Delhi International Airport Ltd (DIAL) was going to expire in February 2010, which was extended upto July 2010. The Company re-negotiated on the terms of deal in terms of license fees and properties under contract.

• DIAL floated new RFP wherein the minimum guarantee was now fixed at 75% of the projected revenues share. The revenue sharing was to be bid by players. DIAL issued a letter of intent to TIM. From GMR conference call transcript we understand the revenue share payable by the Joint Venture Company (JV between the TIM & DIAL) to DIAL is 55% of revenues.

• The Mumbai International Airport Ltd (MIAL) deal is due to expire in July 2010. The recently floated RFP by MIAL is: for International terminal the contract is for 2 years and domestic terminal for 5 years. Also, the minimum guarantee is higher than the current contract.

• Bidding for the above 2 deals would mean additional financial burden on ENIL standalone business. Already ENIL (standalone) company has invested about Rs 32 crore in equity and Rs 56.5 crore of debt in the OOH business.

• The OOH business would have needed additional capex of more than Rs 100 - 120 crore: Rs 70 crore of the existing commitments for Delhi Airport and street furniture (traditional OOH) business and about Rs 35 - 40 crore for future contracts.

• This would put strain on the balance sheet of ENIL (standalone). ENIL's standalone net worth as on March 31, 2010 was approximately Rs 325 crore.

• The Company has sold its 83.45% stake in Times Innovative Media (TIM) for cash of Rs 45 crore and repayment of debt of Rs 56.50 crore to Bennett & Coleman Co Ltd (BCCL) its promoters. The offer from BCCL was the highest received for the stake in TIM, hence, the business for sold to BCCL.

• The Company of the size of BCCL would have the financial muscle and position to bid for future contracts and invest capital for existing requirement.

• The OOH media business is a long gestation business and would need frequent and sizeable investments before it can make operational profits.

Event management business

• The management expects that it would take about 3 - 4 years for the event management business to attain a size that would make any impact on the business as a whole. Hence for the time being there are no plans and no capex for this business

Radio business

• The management believes that for the Radio business the trigger for the short term would be the volume growth for new radio stations (22 such stations), margin growth for legacy station (10 such stations), while for the medium and long term would be Phase III.

• The management is seeing pick up in volumes. However, pricing improvement would take time. There could be a rate hike in the coming festival season. However, it would not be like the hike two times a year of about 15%.

• The Gross Effective Rates before slowdown were at Rs 12500 per 10 seconds went down as low as Rs 8500 per 10 seconds and have moved up to around Rs 8900 per 10 seconds.

• For FY2010, capacity utilization for 10 legacy stations was around 76 - 77% and the other 22 stations was around 47 - 48% resulting into 56% capacity utilization on an overall basis. For Q4FY2010, the utilizations was at 64% overall basis. The inventory calculation is done as 13 minutes per hour for 17 hours in a day.

• The utilization for the 22 new stations has grown at CAGR of 30% over the last 2 years. While it will take some more time before the price rise to kick in, the near term focus will be purely on volume growth. The legacy stations would continue to see some price rise in H2FY2011, which is the peak season for the company's business.

• The advertising from national players is at 64% down from 70% earlier.

• The music royalty per station is about Rs 50 - 55 lakh per annum. On an overall basis, it works to about 7% to 7.5% of ENIL's revenues. The industry is in continuous dialogue with the music industry and also the matter is going on in Copy Right Board for fixing the royalty rates. The industry has demanded that the music royalty should be linked to the revenue opportunities available in the town.

Phase III

• The management believes that Phase III would be the next growth opportunity for the Radio industry.

• The Company had paid about Rs 213 crore for the 32 radio stations acquired in Phase II.

• Phase III has many benefits for the Radio industry.

• It has 238+ new towns, 700+ new frequencies and 98 frequencies in existing cities.

• Phase III would reduce the period for which the promoter cannot sell its stake from 5 years to 3 years.

• Phase III would allow networking of stations, which would bring down the infrastructure/fixed costs of setting up multiple stations.

• The management expects investments of about Rs 100 - 300 crore for Phase III. This would depend on the final policy and market opportunities available post Phase III. The Company would be having enough cash and balance sheet size for the Phase III.

• Plus Phase III also permits to broadcasts much awaited news and current affairs though with restrictions on sourcing of news contents.