MANAGEMENT DISCUSSION & ANALYSIS

Statements in this Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or brdictions may be 'forward looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include cyclical demand and pricing in the Company's principal markets, changes in government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements that speak only as of their dates.

% Media Industry Structure and Developments

Growth estimates muted for World Economy:

The World Economic Outlook released in April 2016 by the IMF lowered the global growth estimate to 3.1% in 2015, 3.2% in 2016 and 3.5% in 2017 from 3.5% in 2015 and 3.8% for 2016 projected in April 2015.

In advanced economies, there has been a deceleration in growth momentum with growth projected to increase now by 1.9% in 2015 and 2016 and by 2% in 20171 compared to 2.4% in both 2015 and 2016 forecast last year. This deceleration can be attributed to the very real threat from global terrorism, the ongoing refugee crisis and the fluid political situation in the US and Europe (which is a result of an increasing economic inequality that has created a chasm between the elite and 'the others'). Another cause for weakening global growth is the weakening of investment demand leading to slower growth in international trade. As in brvious years, the US is likely to grow the fastest amongst advanced economies with growth forecast at 2.4% in both 2015 & 2016 and 2.5% in 20172. The outlook for the Euro area is more subdued - at 1.6% in 2015, 1.5% in 2016 and 1.6% in 201 73.

In emerging markets and developing economies, growth is projected to slow down to 4.0% in 2015, 4.1% in 2016 and increase to 4.6% in 20174 from 4.3% in 2015 and 4.7% in 2016 forecast earlier. Among the emerging markets, although China and India continue to grow approximately in line with earlier projections, trade growth has slowed down considerably. Growth in China is projected to sharply slow down to 6.9% in 2015, 6.5% in 2016 and 6.2% in 201 75. Inspite of the slowdown, growth in China remains stronger than brvious forecasts, indicating resilient domestic demand. Brazil and Russia remain in the grip of a recession.

Dropping oil prices adversely affected the economies of many nations like Russia, some CIS nations, sub-Saharan Africa and the Middle East.

Indian Economy - the 'bright spot' in a gloomy global scenario:

Although there seems to be a global economic slowdown, the Indian economy is expected to rebound in 2016. In his Union Budget Speech in February 2016, the Hon'ble Minister of Finance, Mr. Arun Jaitley, said that GDP growth had accelerated to 7.6%6 in FY16. Quoting from his speech, he also said:

"... CPI inflation has come down to 5.4%, providing big relief to the public. This was accomplished despite two consecutive years of monsoon shortfall of 13%,..."

The IMF, that has hailed India as a "bright spot" in a muted global economy, forecasts that growth in India is likely to be 7.5% in 2016-177 - well ahead of China. Lower energy prices and higher real incomes have benefited private consumption which in turn will fuel growth. Inflation has decreased unexpectedly fast due to lower crude and commodity prices, a range of supply side measures, and a relatively tight monetary stance. However, the report stresses that "upside risks to inflation could necessitate a tightening of monetary policy"8. A slowdown in trade growth is being seen which could be a cause for concern. Additionally, according to the IMF, for India's growth story to be sustained over the medium term, the need of the hour is continued fiscal consolidation, revenue

IMF's World Economic Outlook, April 2016, Chapter 1, Page 2 IMF's World Economic Outlook, April 2016, Chapter 1, Page 2 Budget 2016-17, Speech of Mr. Arun Jaitley, Hon'ble Minister of Finance, Point 4, Page 1 (<http://indiabudget.nic.in/ub2016-17/bs/> bs.pdf)

IMF's World Economic Outlook, April 2016, Chapter 1, Page 19 IMF's World Economic Outlook, April 2016, Chapter 1, Page 34reforms, and further reductions in subsidies, labor market reforms and dismantling of infrastructure bottlenecks, especially in the power sector.

The IMF's forecasts are broadly in line with those of other international agencies including the World Bank and the Asian Development Bank. In fact the World Bank's South Asia Economic Focus Spring 2016 report states that India ". remains the leading force for sustained regional growth"9 in South Asia. However, the World Bank also warns that the overall trends which seem to be favorable mask important underlying divergences - between urban and agricultural households; between domestic and external demand; and between public and private capital expenditure, which need to be addressed.

Good days expected as green shoots emerge:

In the past 2 years, the Government has focused on addressing major bottle necks in the economy. These include creation of infrastructure, resolving the issue of extremely high bad debts of banks and improving the ease of doing business in India.

The Insolvency and Bankruptcy Bill 2015 which was introduced in December 2015, if passed, will ensure that bankruptcy proceedings, which have so far been governed by multiple laws, are streamlined and have a quick resolution10. This will address the bad debt problem being faced by banks which in turn will help investors.

The government has also laid the Minimum Alternative Tax controversy to rest in the past year by exempting foreign companies without a permanent establishment in India and foreign portfolio investors from the MAT levy. This will encourage overseas investors to invest in India11.

The Goods & Services Tax Bill, which has already been passed by the Lok Sabha and is awaiting a nod in the Rajya Sabha, is expected to come into force by April 2017 and will also go a long way in simplifying and standardizing tax structure in India.

To follow through on its promise of "minimum government and maximum governance", some initiatives have been proposed in Budget 2016-17 so that government subsidies and financial assistance can be transferred to the actual beneficiaries in an efficient and streamlined manner. The initiatives proposed include a bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework; Direct Benefit Transfer in fertilizers (similar to the DBT for LPG that has already been introduced); and, automation of Fair Price shops in the country.

A major area of concern is the rising NPA issue of mainly state-run banks which has to be dealt with immediately for a healthy business environment to continue. In fact, after the release of the Financial Stability Report in December 2015, the RBI warned these banks against paying out high dividends as they were at risk from bad loans. The RBI also took the banks to task for getting into this situation. "While adverse economic conditions and other factors related to certain specific sectors played a key role in asset quality deterioration, one of the possible inferences from the observations in this context could be that banks extended disproportionately high levels of credit to corporate entities/promoters who had much less 'skin in the game' during the boom period," said the report.

The incremental reforms being introduced by the Government will definitely help the Indian economy to grow but for this it is essential that these reforms become law without any further delays.

Global Advertising Spends to Strengthen moderately:

Global advertising spend forecasts for 2016 indicate a slight improvement in growth over 2015 due to the fact that 2016 is a 'quadrennial' year - i.e. the year of the Summer Olympics, the US brsidential election and the UEFA football championship in Europe. These are expected to give a boost to advertising. The US will continue to be the biggest contributor of new ad dollars, followed by China, the UK and Indonesia.

According to Zenith Optimedia's Advertising Expenditure Forecasts - December 2015, global ad expenditure will likely grow 4.7% in 2016 compared to 3.9% achieved in 2015. The agency puts the global ad spends to be US$ 579 billion by the end of 2016. Growth forecast is 4.3% in 2017, followed by 4.2% in 2018. However, the agency forecasts that in "Fast-track Asia" - a bloc of which India is a part, advertising expenditure is expected to grow

Source: KPMG - FICCI 2016 report

at an average rate of 8.4% a year between 2015 and 2018, down from 14.7% a year between 2009 and 2014. This is primarily due to the slowdown in China which is expectedly going to cause a slowdown in the ad spends of the country, and thereby of the region as a whole.

The Indian Advertising Industry has been resilient in the face of a fairly turbulent economy in 2015:

After a bumper year in 2014 (buoyed by election spends and a renewal of hope in the economy which led to increased media spends), 2015 was a year when the industry got down to the task at hand. Small towns and the rural economy did not perform upto expectations which led to some decrease in media spends.

Among traditional media, television and radio performed well while print faced challenges. Digital advertising continued on its strong growth trajectory due to a steadily growing internet user base and increased media spends in this category by marketers. This year there has been a reduction in ad spends by smaller e-commerce companies but the larger ones like Flipkart, Olx, Amazon, Snapdeal, Paytm & Quikr have more than made up for the reduction.

According to KPMG-FICCI's Indian Media and Entertainment Industry Report 2016, released in March 2016, the advertising industry grew by 14.7% in 2015 over 2014 (estimated at Rs. 475 billion in 2015). The 5-year (2015-2020) growth forecast is a strong 15.9% CAGR. Segment-wise growth trends are as tabulated above.

The Indian Radio Industry - shows strongest growth among traditional sectors:

Like in the past, radio continued to hold its own in the ad spends and is projected to be the fastest growing traditional medium, trailing only behind the new medium - digital. Following the licensing of new stations under Phase-3 and consolidation in the industry, radio reach is increasing significantly, with radio entering hundreds of smaller towns and taking on existing media options like print and OOH.

E-commerce companies emerged as big spenders in 2015 on radio. These players use radio to communicate tactical promotions. Large e-commerce brands which are usually big spenders look for uniqueness and content differentiation in their communication. Radio is able to provide this effectively.

Renewed ad spending by regular brick-and-mortar retail, consumer durables, automobile and the financial services industry helped to drive growth in radio this year. One of the biggest advertisers on radio was the Government sector - with both Central and State governments using the medium to communicate their programs and achievements.

Radio Industry - Future Outlook, Opportunities and Threats

1) Phase 3 policy of FM radio expansion:

The much delayed Phase-3 auctions - the policy was first announced in July 2011 - finally took place last year bringing relief to the radio industry. But the auctions were split into two batches at the last moment. Batch-1 happened between July-September last year; batch-2 is expected in 2016. Batch-1 comprised left­over frequencies from Phase-2. In total about 135 frequencies in 69 cities were available for Batch-1. Batch-2 will include all the new towns that are proposed under Phase-3.

The auctions were hailed a success and the government netted Rs. 1,157 crores in the form of One Time Entry Fees (OTEF).

The splitting of the auctions into two batches created problems for radio broadcasters, especially the bigger ones. The "national cap" imposed by Phase-3 policy - no broadcaster can operate more than 15% of frequencies nationwide - was now applicable over a smaller base since only 135 frequencies were being auctioned in Batch-1, instead of the 950+ that were available in Phase-3. This created a cap of just 52 channels, not including the border towns, for each broadcaster. Naturally, the bigger ones who already operated 45 - 47 channels in Phase-2 were hurt the most as their ability to participate in the auctions was severely curtailed. ENIL also was impacted, but it was still able to grow its network from 32 stations (Phase-2) to 52. In addition, ENIL was also able to acquire a few border towns and take the tally further up to 56. Ideally, we would have liked to go further, but the national cap brvented us from doing so.

While the radio industry hailed the government's success in Batch-1, and praised it for transparency, there was also a major failure for the government. As many as 38 channels, out of 135, could not be auctioned off. This caused revenue loss to the government. There were two main reasons for the failure. First, the Reserve Prices (RPs) were too high in some cities. So not many broadcasters were interested. Second, there was the national cap, which stopped big broadcasters from bidding in smaller towns.

There were other issues with the auctions as well, which hurt the radio industry. Because there were very few frequencies available in the metros - Mumbai, Pune, Surat and Nagpur had 2 each, Delhi, Chennai, Bangalore, Ahmedabad and Jaipur just 1 - the bid prices went to irrational levels in some cases. Some broadcasters who have bid recklessly must be hurting from the "winner's curse". Having won at exorbitant prices, they must now be worried about generating returns from their investment. They will be forced to cut on marketing expenses, reduce hiring, and give up on experimenting with new programming  formats. All of this is bad news for the radio industry, as its growth could be stymied. The government must take a part of the blame. It could have offered more channels in each city if it had accepted TRAI's recommendation of reducing the separation between channels (and thus offering many more channels in each city). That would have cooled the bid prices and avoided the problems mentioned earlier. The government would also have made more revenues by auctioning more channels. Now, it is stuck holding spectrum, whose value will only drop in the coming decades, as digital broadcasting (streaming) gains strength.

There were also glitches noticed in the auction design itself. For example, there is virtually no restriction in the auction design to curb the activities of rogue broadcasters - those who are not interested in acquiring a license but only in raising bid prices for others. A very small "earnest money deposit (EMD)" enables rogue bidders to participate even in cities in which they have no interest. Besides this, announcing the EMD before the start of the auctions lets everyone know exactly how much each competitor is capable of bidding, and in some cases, in which category of cities. Further, announcing the exact "excess demand (ED)" and "aggregate demand (AD)" figures after every round of the auction - rather than mentioning them in broad "bands" - enables rogue bidders to play their dangerous game and keep raising bids till the very end. The industry has requested the government to look into these issues before Batch-2 auctions are announced.

With Batch-1 auctions over, the attention of the radio industry will now move to Batch-2. These are expected in the 2nd half of CY16. The national cap is a big problem. As explained earlier, it put a limit of 52 channels in Batch-1. Then there are other problems that need to be sorted as well - removing the 3-year lock-in period, allowing news in an unrestricted manner, increasing FDI to 49%, and removing the city-cap (40% of the number of channels in a city, rounded down to the lower integer) - that we hope the government will address before getting into Batch-2.

Then there is the continuing problem of high RPs for Batch-2 cities. The radio industry feels that TRAI's recommendations on RPs for small towns are impractical. The industry believes that lower RPs will ensure higher bidding intensity, and better determination of market prices. Low RPs will also ensure that all frequencies are allotted in the auctions and none is left behind like in Batch-1. The industry believes that the auction format (Simultaneous Multi Round Ascending -SMRA) takes care that the government does not lose revenues simply because the RPs are kept low. On the other hand, a low RP will ensure that someone acquires the licenses, and public interest is not sacrificed.

Despite the problems highlighted above, the radio industry is happy that Batch-1 auctions got completed last year. These new licenses will help the industry grow rapidly. We have always said that India remains vastly under-served by radio, and more channels are needed. We look forward to initiatives from the government towards increasing availability of spectrum. And hope it will accept the TRAI recommendation with respect to channel separation.

2) Renewal of Phase 2 licenses:

With Batch-1 auctions completed, the path to renewal (called "migration" in FM policy) of Phase-2 licenses was cleared up. By September 2015, new, 15-year licenses were issued by the government replacing Phase-2 licenses which were starting to expire or had already expired and were running on special extension. For the radio industry, the successful issuance of new licenses put to rest worries about continuance of business. It can now move ahead and focus on the next 15 years. It may be noted that the government netted nearly Rs. 2000 crores from incumbent broadcasters in the form of migration fees.

3) FM radio in the age of digital streaming :

Online radio consumption is still small in India, but we expect it to grow as internet and smart-phone penetration grows.

There are many factors holding back the growth of internet streaming. Many of these factors are brsent globally. The most important one is about extremely high royalty demands of the music industry. Global players like Spotify, Pandora and Apple Music each pays between 60-75% of their revenues to the music providers. In India, the figures are possibly worse, with players like Gaana and Saavn having to pay huge Minimum Guarantees (MGs) in addition to very high per-stream costs (A "stream" is basically one song played out to one listener. If 1 million listeners listen to 5 songs each for example, that's 5 million streams). MG makes the streaming business virtually a non-starter in India, as most streaming services incur more than 100% of their revenues in just music costs. This aside, the music industry issues licenses only for short periods of time - a maximum of two years. After that, they raise the MGs again, and usually very significantly. Streaming services which have managed to "catch-up" with brvious MGs suddenly find themselves back in the red again.

Then there is the global phenomenon of users not willing to pay for the service. This problem is especially true in developing countries. In China, out of nearly 500 million users of streaming services, not more than 10 million pay for the service. In India, overall streaming numbers are much smaller (Monthly Active Users - MAUs - are of the order of 30 million or so), but the free nature of the business is similar. As a result of this, streaming services are forced to rely on advertising revenues. Till the streaming numbers grow, and till a large number of people start using these services regularly, advertising monies will be slow to come. It is reported that streaming services are losing hundreds of crores of rupees every year and there is no certainty that this will come down in the near future. Global brands like Pandora and Spotify continue to make huge losses even after being in business for nearly a decade, even though their revenues have become quite large (Spotify revenues reportedly crossed $2 billion in CY2015).

Then there is the usual bandwidth and data cost issues that plague all developing countries. But with the launch of 4G services, and the imminent launch of Reliance Jio in particular, there is hope that data speeds will increase and data costs will reduce. However, the huge license fees paid by telecoms in their spectrum auctions will make it virtually impossible for them to offer cheap data, making the digital revolution possibly smaller in scale than the mobile revolution seen in India.

Despite high costs and low speeds, internet penetration has increased rapidly in India. It is estimated that there are 400 million users of the internet in India12. This rebrsents a growth of nearly 100 million in just the last year. As per industry estimates, internet penetration will cross 700 million by 202013. As internet penetration increases, and smart phone penetration increases, usage of video OTT (Over-The-Top) services like HotStar, NetFlix, ErosNow and more than 2 dozen others will surely increase. So also will consumption of audio apps like Gaana and Saavn.

4) Regulatory issues & Litigations continue to challenge radio industry:

With music industry: The Copyright Amendment Act 2012 and the rules thereof contain provisions for Statutory License (SL) for broadcasting which has a significant impact on the operations of a radio company as it ensures unfettered access to music at rates fixed by the Copyright Board (CRB).

The Constitutional validity of the provisions of statutory licensing as described above have been challenged by way of writs filed in different High Courts, notably by Super Cassettes Industries ("T Series") and Venus Worldwide Entertainment before the Hon'ble Delhi High Court, by Eskay Video before the Hon'ble Calcutta High Court and by the South Indian Music Companies Association (SIMCA) before the Hon'ble Madras High Court. Both Super Cassettes and Venus Worldwide Entertainment have withdrawn their petitions filed at Delhi and have filed applications before the Hon'ble Calcutta High Court in support of the petition files by Eskay

In a major boost to the Radio Industry the Hon'ble Madras High Court dismissed the petition filed by SIMCA and upheld the 12 IAMAI, Feb 2016 13 Groupe Speciale Mobile Association as mentioned in The Mint, November 27, 201 5 constitutional validity of the statutory licensing provisions of the Amendments.

The Copyright Board, a statutory authority which deals with important provisions of the Act including fixation of royalty, has not been constituted since April 2011. In a recent development the Union Cabinet has decided that the subject of copyrights will be shifted to the Department of Industrial Policy & Promotion (DIPP) from the Ministry of HRD.

DIPP will now be the nodal department to deal with all issues related to copyrights in the country. In light of this development and at the request of the Government, the Hon'ble Delhi High Court has given 2 months' time to the Government to initiate steps for appointment of the Chairman/ the Members of Copyright Board and directed the Government to take all steps to amend copyright rules to that effect.

With the Government of India: The radio industry was caught by surprise when incumbent Phase-2 broadcasters were asked to pay their "annual license fees" based on the One Time Entry Fee (OTEF) paid by new bidders in Phase-3, even though they had themselves only paid Migration Fees (MFs) to migrate to Phase-3. This provision of the policy has caused a deep erosion of profits of many radio companies. Radio broadcasters have argued against this policy in the TDSAT as well as in the Delhi High Court. Currently, they are paying the annual license fees under protest.

Radio broadcasters are also upset with the 3-year lock-in clause that Phase-3 policy brscribes for all broadcasters, even those who have already served a 5-year lock-in during Phase-2. This provision has created bottlenecks to "ease of doing business", a much vaunted part of the Government's economic strategy. Radio broadcasters are questioning the government's motivation for having such a clause in the policy.

FY16 - STRONG REVENUE GROWTH AND SUCCESSFUL AUCTIONS

1) FY 16 operating performance:

There was an improvement in the fortunes of the media industry in FY16. Print companies reported a marginal improvement in growth rates. TV companies have also reported better results, with GECs especially faring well on the back of price increases. The OOH business has also reported better results than in FY15. Maintaining this pattern, radio companies have also reported better results in FY16.

Your Company's revenue from operations grew by a strong 16% to Rs. 508.6 crores, compared to a growth of 14% reported last year. EBITDA from operations grew by 9.7% to Rs. 159.4 crores, a lower growth rate compared to 16.6% reported last year, largely because of higher spends in marketing and Phase-3 expenses. The underlying "like-to-like" EBITDA growth was much stronger at 14.8%. However, PAT de-grew by 5.6% to Rs. 100.0 crores, compared to Rs. 106 crores last year, on account of a reduction in treasury income. Treasury income declined due to payment of OTEF (Phase 3 auctions) and Migration Fees for Phase-2 license renewals. In FY16, your Company entered the elite list of companies with more than Rs. 500 crores revenues. As per available information, this puts your Company in the top 10 of listed Media & Entertainment companies and in top 5 of electronic media companies.

Your Company exercised the option to migrate to FM Phase 3 for 35 out of its 36 stations for an amount of Rs. 365.6 crores. We have decided to surrender the Goa license because of poor profit forecast for the station. Your Company participated in Phase-3 auctions and successfully won 17 licenses for Rs. 339.2 crores.

During the year your Company achieved another benchmark. In June 2015, CRISIL assigned its 'CRISIL AA+/Stable/ CRISIL A1+' rating to debt instruments and bank facilities of the Company. With the AA+ / Stable rating for its long term debt instruments your Company is among the top 3% of all companies rated by CRISIL. The rating reflects your Company's leadership position in the FM radio broadcasting industry, strong operating efficiencies, and healthy financial risk profile. The rating also factors in the strong parentage.

Your Company also made its maiden Commercial Paper (CP) issuance during the year. The CPs were issued to brpay the bank loans that were availed earlier for acquiring the Phase 3 licenses. We raised Rs. 249.43 crores through the issuance of the CPs. The CPs have a tenure of one year and will mature on March 17, 2017. The maturity value of the CPs is Rs. 270 crores. The CPs were issued to BNP Paribas and carry an yield 8.25% per annum

Your Company generated operating cash of Rs. 108.7 crores in FY16 and has a Net Debt (after considering the market value of investments in mutual funds) of Rs. 3.1 crores as on March 31, 2016.

Like the rest of the economy, your Company is also hopeful of better growth rates following a recovery in the coming years. The Company had announced a dividend of 10% (a dividend of Rs. 1 per equity share) last year. In light of Batch-2 of auctions scheduled for FY17, your Company has decided to maintain the dividend  at 10%.

2) Phase-3 auctions:

Notwithstanding the hurdle posed by the national cap (as discussed in section B of this MD&A), your Company participated aggressively in Batch-1 auctions. Our strategy was simple. Since the national cap was a modest 52, we decided to focus on the bigger cities. We bid successfully and acquired a second frequency in 9 cities out of the top 13 cities (called A+ and A categories by the Government). These 9 cities are Bangalore, Hyderabad, Ahmedabad, Pune, Kanpur, Lucknow, Jaipur, Nagpur and Surat. In these cities, we already have our first channel - Radio Mirchi 98.3FM. The second channel will give us a boost in listenership and revenue shares. In addition, we are hopeful of consummating the acquisition of TV Today's radio business, once the courts clear the deal, or the government approves it. Of the 7 cities that TV Today had, the government gave us permission to acquire 4 small cities - Jodhpur, Shimla, Amritsar and Patiala. This took our network strength up to 36, even before the auctions began. If we can now acquire the remaining three - Delhi, Mumbai and Kolkata, we will have a second-frequency network covering 12 of the top 13 cities.

These 12 cities account for nearly two thirds of the total radio market. This is akin to a TV broadcaster having a second GEC (General Entertainment Channel) in its bouquet. Star TV Group has Star Plus and Life OK and Zee TV Group has Zee TV and "&" TV. In a similar way, ENIL now will have a second channel in 12 of the 13 most important markets in the country. No other broadcaster has such a footprint. One competitor has a second channel in Delhi and Mumbai, while another one has a second channel in Mumbai and Chennai. No other competitor has a second channel at all. The advantage that this gives us is huge. As we rollout our second frequencies successfully, our market share would rise significantly from where it is brsently.

In addition to acquiring a second channel in the major cities, we also bid and won important cities that we were not already brsent in. These are Chandigarh (and along with Amritsar and Patiala acquired from TV Today, this has made our North footprint strong), Guwahati (the gate-way to the North East), Shillong (a buzzing border town), Kochi and Kozhikode (which, along with our existing Trivandrum, are the three biggest cities in Kerala) and Jammu and Srinagar (important border towns). With these seven cities, the core Mirchi brand will now be available in 43 cities (32 from Phase-2 + 4 acquired from TV Today + these 7). After Goa is surrendered, sometime in FY18, we will be left with a brsence in 42 cities.

While a brand launch in a new town is always difficult, we expect it to be a little easier for us. There is already a huge awareness (and demand) for brand Mirchi in these new towns. With a classy product on the lines of Mirchi nationally, we stand a good chance of rising quickly to the top-2 positions. Indeed, that is our short term goal. Our long term goal is to become the number 1 brand in all new cities.

We have also attempted something unique in Hyderabad. In this bustling metro, we have acquired a 3rd frequency as well. This allows us to experiment with programming. With diversified programming, we will be able to cater to different sections of Hyderabad. As the city grows, on the back of the I.T boom, we will get unparalleled brsence in the city. The Southern cities have anyway been big for radio, with radio listenership a habit. If our strategy works in Hyderabad, we may then pursue acquiring a 3rd frequency in other major cities in the future.

Channels acquired under Phase-3 Batch-1 auctions will be on-air only for a few months in FY17. From FY18 onwards, these cities will start contributing fully to revenues and profits. As estimated by KPMG, Phase-3 auctions will give a boost to radio growth. We agree with that assessment.

3) Digital:

Your Company has invested significantly in the digital business in the past. The fruits of these investments are there to see.

Your Company has strengthened its online streaming brsence, and today streams 14 radio stations online with many more in the pipeline. Our online stations are Meethi Mirchi (Hindi contemporary melodies), Purani Jeans (Hindi retro), Club Mirchi (Hindi club music), Filmy Mirchi (Latest Bollywood music), Pehla Nasha (Hindi '90s music), Mirchi Edge (Indi pop), Cassette Classics (English retro), Mirchi Rockistan (English Rock), Radio Romance (English Romance), Mirchi Tapaka (Telugu latest music), Mirchi Top Takkar (Tamil latest music), Devraag (devotional), Yo Punjabi Mirchi (Punjabi) and Wakao (cool Hindi retro). These are all 24x7 channels and can be consumed on mobiles as well as laptops/desktops. Except for a few, most can be consumed worldwide.

Our online radio stations have been launched on the Gaana.com platform. Our partnership with Gaana is helping us get a world class technology and marketing platform to reach online consumers.

Beyond online streaming, we have also developed a strong brsence across our website and social media.

¦ We now stream more than 10 million video views a month on our YouTube channel, with over 200,000 subscribers.

¦ We have a fan base of over 2.5 million on Facebook, and 50,000 on our national

Twitter "handle" (there are many more on our regional handles). Many of our Twitter campaigns "trend" nationally. Our campaigns on Mirchi Music Awards this year reached 22 million Facebook accounts, and 37 million Twitter accounts, making it one of the biggest social media activities of the year.

¦ Our website radiomirchi.com has become the number one site on the internet for searches related to terms like - 'Best Bollywood songs', 'Top Bollywood songs', 'Top Tamil songs' etc. We get more than 1.5 million unique users per month on our website.

4) Listenership performance:

The Indian Readership Survey (IRS) is the only pan-India Radio Listenership Survey and is conducted by Media Research Users Council (MRUC). The last available survey results were for 2014 and were declared in March 2015.

According to IRS 2014, Radio Mirchi is the No. 1 station in India. Radio Mirchi has always been a leader and that has been reaffirmed in IRS 2014 as well.

Your Company also conducts its own survey using global research agency IPSOS. The research is conducted monthly in the top 4 metros and once in two months in 4 other large cities. From January 2016, the research has been extended to 4 other large cities once in every two months. IPSOS research consistently puts your Company in pole position. Mirchi is ranked #1 in 8 cities on a regular basis out of 10 (of the remaining two cities, Mirchi has just launched in one and is not yet brsent in the other).

Your Company's listenership lead is recognized by the advertising fraternity. Clients repeatedly use the services of your Company in promoting their brands.

5) Awards & Recognition:

¦ 'Rudaali' TV ad wins at Adfest 2016 (Asia Pacific Advertising Festival):

Mirchi's 'Rudaali' TV commercial won the Silver Lotus in the Film Category at the brstigious Adfest 2016 held in Pattaya, Thailand.

¦ This television commercial also won the Silver in category of 'Film Single' at the Creative Abbys held at Goafest 2016.

¦ Radio Mirchi UAE's RJ Anup wins Best Asian RJ at Masala Awards 2015:

At the Masala Awards 2015 held in Dubai, UAE, Mirchi's RJ Anup was declared the Best Asian RJ. This goes to show how popular Mirchi is in the region!

¦ Mirchi wins at the IRF awards:

Radio Mirchi is synonymous with innovation and engagement. Bagging six awards in various prominent categories, Radio Mirchi has once again proved that it is India's most loved and admired radio station.

Radio Mirchi won the Best Radio Station Imaging Award. Radio Mirchi's Kolkata Station won two awards - Best Radio Programme (Bengali) for "The Hound of the Baskervilles" (Sunday Suspense) while the RJ of the Year (Bengali) went to  RJ Mir.

Radio Mirchi's Delhi station bagged two awards - one for Best FM Station and another for Excellence in New Media Initiative for "Viral Mirchi Delhi"!

Radio Mirchi's Pune station won the award for Best Radio Promo - In-House (Marathi) for "Ekda Kay Zhala".

¦ Golden Mikes Awards:

Radio Mirchi won 3 Golden Mikes awards this year - 2 awards for Effectiveness (Best Use of Radio and Best Use of Radio for Long-Term Effectiveness) and 1 award for Promotions (Best On-Air Promotion for a Client - Single Station).

¦ APAC Customer Engagement Awards: Radio Mirchi won 4 awards at the APAC Customer Engagement Awards - 1 gold in the BTL Activity Category (Successful Use of Technology for the Meera & Suren Show), 1 silver for Mirchi Neon Run for "Innovation" in the Events & Promotion category, 1 silver for "Innovation" in the Radio Category for Mirchi & Hero and 1 bronze for "Innovation" in the Radio Category for Flat 983

CSR Awards:

- Mirchi Cares, the CSR initiative of the Company has won numerous awards.

- ABP NEWS CSR Leadership Awards

2015-16 for outstanding social impact was won in February this year, during the World CSR Day conference in Mumbai. This was in regard to our all accessible menu card at Bombay Blues restaurant. It is the first of its kind in India and maybe the world, and it was much apbrciated since it has menu details in Braille as well as in Audio. In addition, the menu details are also available on the Good Food Talks App. The latter supported by Radio Mirchi gives the visually impaired, the elderly as well as autistic and dyslexic people the liberty to order food from a mobile and laptop/PC aided App with audio details of nearby restaurants, their menu and prices.

- Blue Dart Global CSR Excellence & Leadership Awards for 'Innovation in Corporate Social Responsibility Practices 2015-16 for the overall CSR initiative of Mirchi Cares with a highlight on the Good Food Talks project.

- ACEF -Asian Award for Excellence in Branding, Marketing with CSR & PR-2014 for the overall CSR initiative of Mirchi Cares highlighting the 3-in-1 all accessible restaurant menu.

- The 3-in-1 all accessible braille menu made for Bombay Blue restaurant in Mumbai was recognized for its innovative idea as well as social impact and was adjudged as the Finalist by the Grand Jury of Manthan Awards.

- The unique 3-in-1 accessible restaurant menu conceptualized by the Xavier's Resource Centre for the Visually Challenged (XRCVC) has found a mention in the LIMCA Book of Records 2016. XRCVC collaborated

with the Bombay Blue chain of restaurants and Radio Mirchi in 2014 to bring out this unique menu— which can be read using either your fingers, ears, or eyes. Radio Mirchi contributed by adding audio to all the menus.

6) CSR initiatives:

As part of CSR initiatives, your Company made donations to the AR Rahman Foundation, Nalanda Way and National Association for the Blind during FY 15-16. An overview of the assisted institutions and the donations is provided below:

a) AR Rahman Foundation (ARRF)

About the Foundation:

Located in Chennai & established in 2006, the AR Rahman Foundation, trains underprivileged kids in both Hindustani and Western Music.

Objective:

The school's vision flows from AR Rahman's idea that artists who play individual instruments are getting older while the younger generation is brferring digital synthesizers rather than traditional instruments. So, he wants to train a younger generation of artists to revive the art of playing traditional instruments.

Contribution:

ARRF identifies underprivileged students with potential for music for whom there is need for a teacher with specialized knowledge of western/symphony music for skill development so that the students become eligible for the next level.

ARRF also needs a functioning music hall for training the students and also to use the hall as a practice room

To this end your Company has contributed to the tune of X 48 lacs for two Professors to teach music, buying musical instruments and assistance to renovate the Sunshine hall which got ruined in the Chennai rains last year.

b) NalandaWay (<http://www.nalandaway>. org/)

About the Institution:

Located in Chennai and set up in the aftermath of 2002 riots in Gujarat, NalandaWay is, to quote from their website, "a non-profit that works with children from the poorest districts in India, helping them raise their voices and issues through theatre, visual arts, music, dance, radio and films."

Objective:

NalandaWay uses a project based approach that seeks to develop a sense of self-importance and individuality, encourage self-exbrssion and stimulate imagination among disadvantaged children through its art programmes.

What is the contribution needed for?

The methodology used to develop the above mentioned skills is through "Art Labs". which are run in Chennai and

Delhi.

Contribution:

Your Company has contributed for the operational expenses for 9-11 labs (of which 2 labs are in Delhi) to the tune of Rs.30 lacs - for the trainers/teachers and musical instruments.

c) National Association for the Blind (NAB) - Preparatory unit: (<http://www>. nabdelhi.in/):

We have been supporting NAB for many years now under the "Mirchi Cares" initiative. We increased the level of support this year. This fits in with the "spoken word" aspect of the brand.

About NAB, Preparatory unit:

Located in Delhi, Preparatory School is the basic foundation unit of education of NAB, where the blind children of age group of 4 to 7 years are brpared for integration into the main stream schools. Apart from this, the children learn music, games and craft. Parents of young visually impaired children are also trained in handling their children in these areas.

Contribution: Your Company has contributed Rs. 24.5 lacs towards supporting the studies of 55 students for the year.

d) Times Foundation for Social Justice Benefit and Welfare (Times Foundation)

Times Foundation is setting up a music academy at Bennett University - called the Mirchi Music Academy - which will be supported by Your Company.

Objective:

The Mirchi Music Academy at Bennett University will offer specific music courses (helping in promotion of employment enhancing vocational skills) which interested students may opt to study as "electives" as part of their degree/ diploma completion requirements.

One of the significant aspects of the Mirchi Music Academy will be a certificate course for under privileged' students who are not a part of Bennett University. Promising students from here can be trained further in the next higher levels.

Contribution: Your Company has contributed an amount of X 98.3 lacs to Times Foundation to set up the Mirchi Music Academy at Bennett University.

7) HR initiatives:

In today's competitive age the hunt for talent has increased manifold. We are seeing both the new age & traditional sectors compete fiercely for the same talent pool. More so for our sector which thrives on talent immensely, it becomes even more critical. The millennial generation also expect their companies to keep them updated, contemporary & engaged through developmental inputs.

Your Company is fully aware & geared up to cater to this. As a conscious strategy, we doubled up our training spends in the year gone by. This investment ensured that the person days of training trebled over the last year. More than 55% of our workforce went through

a formal training plan based on developmental plan identified for them. Going ahead too, we will ensure that the trajectory of investments on training & developing people continues to remain healthy. We also embarked on an ambitious Management Trainee System to meet our leadership requirements over the next 3-5 years & augment the Company's in-house talent. ENIL's talent has always commanded a brmium in terms of its quality in the employment market place & with this added investment we hope to shift our talent quality up by a couple of notches.

In anticipation of your Company's growing workforce & increasing footprints planned in the next few years, we have also invested in HR software to reap the benefits of automation of work processes & enhancing productivity. The year saw ENIL totally automate its performance management systems & bring in greater rigors to the job of assessing performance & rewarding talent.

¦ll Risks, Concerns and Challenges Facing the Company

1) Macroeconomic risk:

Since the advertising industry depends on advertisers, its fortunes depend on the fortunes of the advertisers. In periods of slowdown, the advertising industry faces headwinds. In such times, it is difficult for the Company to fully overcome the effects of the slowdown.

2) Operational and Financial Risks:

The Risk Management Framework of the Company is the basis on which your Company manages its risks. The Board monitors the risks on a regular basis. Risks are reviewed, added and deleted with time. Process owners assume the risks and brief management and the Board about the same.

3) Retaining Talent:

While all industries depend on talented teams, this is especially true in the Media & Entertainment industry. More than a quarter of our costs are people costs. In fact, they are one of the biggest cost items (the other being Marketing) in the Company's P&L. The secret sauce of your Company's success is that it has been able to attract the best talent available and keep them happily engaged. Being part of The Times of India group helps in the process. Our HR policies are amongst the best in the media industry, if not in the overall corporate sector.

Segment - Wise Financial Performance

Management Discussion and Analysis of the Company's operations and financial consolidation and segment-wise performance together with discussion on financial performance with respect to operational performance should be read in conjunction with the financial statements and the related notes.

ENIL - Radio Mirchi:

ENIL's revenue from operations grew 16% to Rs. 508.6 crores, EBITDA from operations grew 9.7% to Rs. 159.4 crores and PAT de-grew by 5.6% to Rs. 100.0 crores. Net Debt (after considering the market value of investments in mutual funds) of the Company as on 31st March, 2016 is Rs. 3.1 crores.

Subsidiary Company:

Alternate Brand Solutions (India) Limited (ABSL) is the Company's wholly owned subsidiary. ABSL recorded a total income of Rs. 138,231 during the financial year 2015-16. Loss after Tax stood at Rs. 134,671 for the financial year under review.

GENERAL

Internal Control Systems and their Adequacy

The Company has a system of internal controls to ensure that all its assets are properly safeguarded and not exposed to risks arising out of unauthorized use or disposal. The Internal Control system is supplemented by programs of internal audit to ensure that the assets are properly accounted for and the business operations are conducted in adherence to laid down policies and procedures. The internal control system also focuses on processes to ensure integrity of the Company's financial accounting and reporting processes and compliance with the Company's legal obligations. The Company

has a well-defined risk management programme for identifying and mitigating risks across all the functions which is reviewed by the Board of Directors of the Company periodically.

The Company has an Audit Committee of the Board of Directors which meets regularly to review inter alia risk management policies, adequacies of internal controls, the audit findings on the various segments of the business, the financial information and other issues related to the Company's operations.

Material Developments in Human Resources/ Industrial Relations front, including Number of People Employed

Specific need based training and development programs for all levels of employees were imparted in order to optimize the contribution of the employees to the Company's business and operations. Occupational  health safety and environmental management are given utmost importance. As on March 31, 2016, the employee strength (on permanent roll) of the Company was 806.

For and on behalf of the Board of Directors

sd/- Vineet Jain

Chairman [DIN:00003962]

Place : Mumbai,

date : May 19, 2016

Registered Office:

Entertainment Network (India) Limited, CIN: L92140MH1999PLC120516, 4th Floor, 'A' Wing, Matulya Centre, Senapati Bapat Marg, Lower Parel (W), Mumbai - 400 013. www.enil.co.in