Dear Shareholders
IT HAS BEEN TWO YEARS SINCE a global pandemic of unprecedented scale hit all of us.While the magnitude of the devastation may be difficult to estimate there are some truthsthat cannot be contested--lives have been lost livelihoods have been snatched andeconomies have been severely impacted. In India the pandemic the lockdowns and othercurbs forced the economy to shrink by 6.6 per cent in 2020-21.
Now we have reached a stage where we are learning to live with the Covid-19 virus andstriving hard to return to some semblance of what we call "normal". Supported bywidespread vaccine coverage India handled the third wave triggered by a new variant ofthe coronavirus comparatively better than many countries worldwide. There was a directconsequence on the economy which looks in much better shape now than it was a year ago.As the World Bank report suggests our economy expanded by 17.8 per cent from Rs200.75lakh crore in 2019-20 to Rs236.44 lakh crore in 2021-22. The Economic Survey of 2021-22projects that India's GDP will grow at 8-8.5 per cent in the current fiscal. The AsianDevelopment Bank (ADB) has been even more conservative saying that the Indian economywill grow by 7.5 per cent in the current financial year and the growth will accelerate to8 per cent in 2023-24.
Our collective fightback armed with a mask and a couple of jabs will determine ifthese numbers could be reached or even surpassed. There are multiple challenges ahead. TheRussia-Ukraine war has caused multiple disruptions to global economy. India is notinsulated either. Global rating agency Moody's has said that the high commodity prices andsupply chain disruptions due to the war could expose about 42 per cent of Indiancompanies mainly in the oil gas and automotive sectors to significant risks.
The UN Conference on Trade and Development has already downgraded India's projectedeconomic growth for 2022 because of the war. The ADB report also cautions that higherglobal oil and commodity prices will contribute to rising inflation and a widening of thecurrent account deficit. India's retail inflation has been hovering around 7 per cent nowthe highest since October 2020. In order to tame inflation the Reserve Bank of India hasstarted raising the key lending rate gradually from May 2022 onwards. This is the firstrise in the repo rate by the RBI in over four years.
India's foreign exchange reserves fell below $600 billion in April 2022. This drop isreportedly due to heavy outflow by foreign investors. The general mood is of caution asthe global economic environment demands tightrope walking by policymakers and the moversand shakers of the Indian economy.
The media and entertainment sector (M&E) has not escaped the fury of the viruseither. According to a report by the Federation of Indian Chambers of Commerce andIndustry and Ernst & Young (FICCI-EY) the media and entertainment industry witnesseda decline of 24 per cent due to the pandemic to fall to Rs1.38 lakh crore in 2020 fromRs1.81 lakh crore in 2019. The next year it bounced back with a growth rate of 16.4 percent touching Rs1.61 lakh crore though it still has not reached the pre-pandemic level.It is now expected to grow by 17 per cent in 2022 to reach Rs1.89 lakh crore and then at acompound annual growth rate of 11 per cent to reach Rs2.32 lakh crore by 2024. Thecontributors to this growth will be digital films and television (contributing to 65 percent of the growth) followed by animation and VFX (14 per cent) and online gaming (7 percent). Although television remains the largest segment in the M&E sector the sharpestgrowth was seen in digital media. It cemented its position as a strong number twofollowed by a resurgent print. While the share of traditional media stood at 68 per centof the sector revenues the digital media increased its contribution to the M&E sectorfrom 16 per cent in 2019 to 19 per cent in 2021.
This is not surprising. As a significant proportion of the country's populationremained under different forms of curbs implemented to curtail the spread of Covid-19internet-driven video content got a big boost. New trends emerged in the consumption ofnews even in the text and audio formats. People opted for curated customised andinteractive news capsules. A study by Reuters showed that 73 per cent of users accessednews through smartphones. There was increased dependency on social media platforms likeYouTube Facebook WhatsApp and Twitter for news. The success of our digital-first Takchannels is just a validation of this trend. The growth in the digital infrastructure hasbeen most impressive. As per the FICCI-EY report India has 795 million broadbandconnections over 500 million smartphones and 10 million connected TVs apart from 170million active TV connections. The country is among the largest content producers in theworld and is seeing a growth of an ever-expanding market.
The online news audience grew from 454 to 467 million in 2021. Most of this newsconsumption is now in vernacular languages—as high as 95 per cent. Vernacular newsportals are most likely to see increased penetration with the proposed launch of low-costsmartphones by telcos. Your company's network of digital properties is well placed totake advantage of these developments.
According to a report published by IAMAI and Kantar Research India's internet usersare expected to reach 900 million by 2025 from 622 million in 2020 increasing at a CAGRof 45 per cent. As per FICCI it was only the digital media that showed no dip in itsrevenue from advertisement even during the peak of the pandemic in 2020 and in fact jumpedby nearly 29 per cent in 2021. While these numbers are certainly encouraging the key tothe survival and growth of a news organisation remains the credibility and relevance ofthe content it delivers to end-users. Your company has never compromised on the primaryobjective of journalism—to take the truth to its readers viewers or listeners. Thepandemic posed serious challenges to the 24X7 news turbine of the group restricting themovements of our reporters and adding stress on our resources. Many of our teammates fellprey to the virus we lost some of our most accomplished scribes yet we did not miss asingle newsworthy moment be it on TV print or our digital platforms. The commitment tothe gold standard of journalism is non-negotiable come what may. This was in full displayin our relentless reporting of the Ukraine war by the team of our intrepid journalists.The coverage is being appreciated by many. This unwavering commitment passion andresilience of our team have always been well recognised and rewarded. In fact winningrather sweeping almost all media awards has become a habit of your Company. The TVchannels of the Company and digital platforms swept the top honours at the prestigiousexchange4media News Broadcasting Awards (ENBA) 2022 cornering 90 trophies. This is areflection of the ever-growing reach and trust of the viewers in the group. Our flagshipHindi news channel Aaj Tak reached 50 million subscribers on YouTube the world's firstand only news channel to achieve this feat and win the coveted Custom Play Button forachieving this feat.
As the world remained enveloped in the pandemic-induced gloom TV Today embarked on ajourney to spread some smiles by launching a one-of-its-kind positive newschannel—Good News Today. At a time when personal views social media trolling andhigh-decibel hectoring have been packaged as news Good News Today broadcasts optimisticand inspirational stories. It has already created a stir across a broad spectrum of newsnetworks and has been received well by our audience. Continuing the legacy of bringingtogether diverse and newer mediums of storytelling your Company ventured into the digitalaudio vertical and launched its first podcast channel Aaj Tak Radio. We have alsolaunched India Today Podcasts with two brand new weekly shows in response to the growingneed for both enrichment and entertainment.
The overall financial performance of your Company during FY 2021-22 has beensatisfactory. The total income was 18.77 per cent higher than the previous year. Theprofit before tax also increased by 25.98 per cent to stand at Rs243.54 crore. Theoperating profit margin for this year was a healthy 24.59 per cent (on a standalonebasis). I take this opportunity to express my sincere appreciation to the Board ofDirectors for their guidance and support. I'm eternally grateful to all our shareholdersfor their continued support and trust in the Company. And finally on behalf of the boardand the shareholders I would like to thank each and every employee of the Company fortheir unwavering commitment and passion towards making it India's most credible newsorganisation.
