"This has been a pivotal year in our radio business. New competition and a choppyeconomy have led to some challenges in the business but we have continued to invest inpeople and our core strengths of differentiation and audience super engagement whiledelivering extraordinary returns on marketing investments to our advertisers."
It gives me great pleasure in welcoming you all to the 36th Annual GeneralMeeting of our Company. As we come to the close of another financial year it's time totake stock of what we have achieved and then look at the roadmap we have drawn for thefuture.
YEAR GONE BY:
The new government at the Centre has been undertaking a number of initiatives that haveimpacted economic growth in the short term. While the long-term implication ofdemonetization new real estate regulations and a unified GST regime is probably positivethese measures have introduced a sense of uncertainty in the economy and slowed growth.Our singular revenue source is advertising. Uncertainty in the economy causes consumers tohold back on spending and marketers to hold back on advertising investments. These factorshave an adverse impact on all media.
Facing headwinds from an adverse economic environment the FM radio industry had somesignificant developments in 2016-17. New licenses issued under the Phase III policy cameto market as operating stations increasing both competition for the listener and anincreased supply of advertising inventory. This has led to most existing players in the FMradio industry seeing an increase in costs and a flattening of advertising revenue in theshort term.
However despite the short term challenges there is broad consensus that the radioindustry is poised to grow at a rapid clip in the years to come. The FICCI report on themedia industry reflects an expectation that the industry will grow at a CAGR of 16% overthe next 5 years second only to the growth in digital advertising.
Projected advertising revenue
|Overall industry size (INR billion) (For calendar years) ||2016 ||2017P ||2018P ||2019P ||2020P ||2021P ||CAGR (2016-20121P) |
|TV ||201.2 ||225.4 ||256.9 ||298.0 ||342.7 ||349.1 ||14.4% |
|Print ||201.3 ||215.0 ||233.3 ||254.9 ||276.2 ||296.0 ||8% |
|Radio ||22.7 ||26.4 ||30.7 ||35.9 ||41.5 ||47.8 ||16.1% |
|Digital advertising ||76.9 ||101.5 ||134.0 ||174.3 ||226.5 ||294.5 ||30.8% |
|OOH ||26.1 ||29.0 ||32.5 ||36.4 ||40.8 ||45.7 ||11.8% |
[Source: KPMG India - FICCI Report 2017]
As you all are aware your Company operates through its subsidiary viz. Next RadioLimited (NRL) which operates as private FM radio broadcaster under the brand "RadioOne" in top 7 cities of the country viz. (i) Delhi (ii) Mumbai (iii) Chennai (iv)Kolkata (v) Bengaluru (vi) Pune and (vii) Ahmedabad.
The Financial year 2016-17 was marked not only by challenges in the larger economy butalso by increased competition in the space. This led to a dramatic increase in advertisinginventory a drop in effective rates and a resultant slowing of revenue growth. The warfor talent and the need to compete for the listener and advertiser has led to an increasein operating costs. You therefore see sluggish growth in revenue and a decrease in ourEBIDTA for the year from the previous period.
Challenging times call for a renewed focus. Next Radio Limited has a strategy ofcontent differentiation and audience super-engagement and it is because of this approachthat we stand out in the market. In order to further strengthen our differentiation weconverted our Bengaluru station from a Bollywood play to an International station. Thisalso creates the only International network across the three most significant markets inthe country: Mumbai Delhi and Bengaluru. In addition during the year we have invested inpeople and new talent to address new competition in our cities and to sustain our positionof being differentiated in each city where we operate.
We expect that the challenges in the economy and the industry will settle over thecoming fiscal and we are ensuring that we are well prepared to reap the benefitsof growth as the winds of change and good fortune turn to our advantage.
During the year under review on a standalone basis Company's revenuesincreased by 73.23% and stood at Rs. 112.24 lacs. The Company posted a loss of Rs. 274.36lacs.
Despite various operational challenges the revenue of Next Radio Limitedremained stable during the financial year 2016-17 at Rs. 8012.24 Lacs. While Next RadioLimited did manage to maintain stability in its top line the EBIDTA dipped by 19.31% andstood at Rs. 1557.61 Lacs.
On a consolidated basis your Company's revenues remained stable and stood atRs. 7889.82 lacs while posting a loss of Rs. 814.60 lacs.
This has been a pivotal year for the FM radio industry. Demonetization intensecompetition and a choppy economy did pose some challenges to our business but we havecontinued to invest in people and our core strengths of content differentiation andaudience super engagement while delivering extraordinary returns on marketing investmentsto our advertisers. The coming year will be one of slow consolidation as the economy risesand marketers start investing in advertising. However I am extremely excited about theopportunities post the recovery and as a measure of that excitement the promoters haveenhanced our investment in the company through a preferential allotment of shares in thisfiscal. The future is bright and we are excited to be a part of this journey.
I would like to end by thanking various Government bodies banks financialinstitutions and vendors for their support and our Board members for their guidance. Iwould also like to express my gratitude to our shareholders employees and our listenersfor their continued support and encouragement at an important phase of our journey. Withyour support we will continue to contribute towards addressing the increasing needs of allour customers.
Chairman & Managing Director