MANAGEMENT DISCUSSION AND ANALYSIS 

Industry Overview:

The Media and Entertainment is one of the fastest growing sectors in India. While most sectors witnessed double-digit growth, the film industry witnessed a decline in revenues owing to content that failed to make a strong run at the box office. Television and print resumed their pace of growth as did radio and out of home. Meanwhile, with the growing popularity of digital platforms, content creators looked to build strong foundations to brpare themselves for the exciting road ahead. The type of expansion being witnessed in digital media is expected to continue at an increased rate. Television, radio, CAS, and DTH have already made their brsence felt. IPTV and mobile TV are still in the nascent stage and are yet to make a major mark on the broadcast arena. The broadcast segment is on a high growth path. New channels, new content, and new formats proliferate. In the last few years, a lot of development is happening in the broadcast segments.

Company Overview:

Brief Description of the Company

Raj Television Network Limited (BSE: 532826 and NSE: RAJTVEQ) is one of the largest Tamil television and broadcasting Company in southern region. The Company incorporated in 1994, broadcasts twelve channels brsently in various southern languages. Raj TV, its flagship television channel launched in 1994 was the first general entertainment channel of the Company. Besides Raj TV, the Company promotes Raj digital plus, an exclusive movie channel, three Raj Musix, Music Channels, one in each southern regional languages and three 24X7 News Channel. The Company gets its revenue primarily form advertisement and subscription of channels. The Company has also rolled into movie production and distribution business

Business of the Company

Raj TV currently operates 13 television channels in five languages including Tamil, Telugu, Kannada, Malayalam, etc. The company earns its revenue from following main segments:-

a. Advertisement

b. Air Time Charges

c. Pay Channel Distribution Revenue

d. Subscription Revenue

e. Sales export Revenue

Business Description

Raj TV, today, is an established Television Company in the Tamil broadcasting industry in South India. The Network is brsently runs 13 Channels and has 13 Channel licenses in various languages and genre and 3 more licenses are in the pipeline to launch 3 more channels. Raj TV has its own uplinking station and Exclusive Transponder facility. The broadcast of these two channels can be received in the whole of India, as well as parts of South East Asia, and the Middle East.

The company undertakes several production projects with the right mix of self produced and outsourced productions, to mitigate financial risk and obtain large revenues. With self-produced content, the company gets complete right over the content, and can build its own intellectual property base.

RAJ Network has an advantage of being a mass channel with its extensive line up of attractive programming to cater the entire family. The chan­nels of the network reach a wide variety of audiences as It satisfies people of all ages, The Channel offers a right mix of movies, serials, debates, cultural, educational, cookery, handicrafts and religious programmes satisfying the needs of the entire community ranging from Urban to the rural audience.

Opportunities:

The subscription revenue of the Company are expected to grow because of availability of various distribution platforms like cable, CAS, DTH, IPTV, OTT, VOD etc. Further, the increasing spends on advertisement by the industry houses will boost the further growth. 

 The South Indian television (TV) industry is continuously evolving and innovating in response to its environment, be it the Government's digitization drive, the impending ad-cap regulation or the demands of its viewers. It is attracting national advertisers, while helping local players to reach their target audience. Broadcasters are creating in-house non-fiction formats to counter the increasing production costs across the industry. They are also investing in niche content to cater to specific needs of the viewers. Players are investing in high definition (HD) technology as well as digital content viewing platforms, in order to meet the demands of today's discerning consumers. While industry participants agree that on-demand 'anytime anywhere' content is a key growth area, and even as the ecosystem to deliver such content is rapidly developing, effective monetization of such content remains a challenge. HD may brsent a more immediate revenue enhancement opportunity.

The South Indian TV industry was valued at RS. 13,470 Crores in FY 2013. Against the backdrop of sluggish economic growth, the industry grew at a lower-than- expected rate of 11% during FY 2013 (14% in FY 2012). The South Indian TV industry is estimated to grow at a CAGR of about 20% over the next 4 years, driven by subscription revenue growth; as consumers shift from analog to digital TV, and ARPU levels raise correspondingly. 

OVERVIEW OF SOUTH INDIAN TELEVISION MARKET 

Digitization

India's large analog cable market is in the process of getting digitized in four Phases, driven by a government mandate. While Phase 1 (four metro cities) have largely been digitized (except for Chennai), Phase 2 cities (38 cities with >1 Million population) are in focus currently.

Cable TV digitization level has reportedly touched 90% across 38 cities. 5 out of these 38 cities are in South India. Months after the Union Government's deadline for Phase II (March 31st 2013) has passed, cities of Bengaluru and Hyderabad in South India are said to have achieved 100% digitization, while others are in various stages of completion. The city of Mysore had achieved 80% digitization by the end of May 2013, while Coimbatore and Vishakhapatnam appear to be lagging, with only 30% digitization achieved by the end of March and April 2013 respectively. Even as DTH operators and MSOs continue to convert subscribers, as well as gradually increase ARPU levels, the industry faces challenges in achieving the deadlines set for digitization. Impact of Digitization Consumers

Digitization has led to an enhanced TV viewing experience for consumers. They can watch a greater variety of channels in digital quality and have the option of choosing and paying only for their favorite channels. It has also led to niche channels being launched by broadcasters in order to woo their consumers.

Distributors

Due to strong regulatory push for digitization, distributors are experienc­ing increasing traction with viewers for conversion to digital TV. MSOs are seeing assured monetary benefits with the help of revenue sharing agreements being entered into with LCOs. For example, Siti Cable Network Limited has signed a DAS interconnect agreement with 55% of its LCOs, working on a revenue-sharing basis of the carriage fee46. The cable TV distribution space in India is getting increasingly structured with monitoring mechanisms like KYC, CAF being put in place, as well as with consolidation into fewer and more efficient players.

Broadcasters

Broadcasters stand to gain an increased share of subscription revenues with all subscribers being accounted for. Digitization has also led to a reduction in the carriage fee to be paid by broadcasters to distributors. Regional as well as national broadcasters have seen a decline of about 30-40% in carriage fee post digitization (in digitized areas). 

Way Forward

The third Phase of digitization, including all urban areas not covered in Phase 1 or 2 is to be implemented by 30th Septem­ber 2014, while the last Phase covering rest of India is to be implemented by 31st December 2014. Digitization of cable will bring in several benefits to the ecosystem, as described earlier, and successful execution of digitization is key for the industry. At the same time, addressability needs to go hand-in-hand with digitization (i.e. seeding of STBs). MSOs are currently focusing on Phases 1 and 2 of digitization. As digitization moves into Phase 3 and 4, where subscriber density is typically low (weak­ening the business case for the setup of a head-end and other infrastructure for an MSO), other models for delivering cable may emerge, such as Head-end In The Sky (HITS). A HITS model would allow local cable operators to directly downlink content from a satellite, rather than source content through fibre,thus bypassing the need for a head-end on the ground. Various models of digitiza­tion are thus available, and the ingredi­ents seem to be in place to convert India into a fully digital C&S country.

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Market Size

TV advertising market in South India was valued at RS. 4,000 Crore during FY 2013, a growth of about 11% over FY 2012. Over 60% of TV ad revenues were garnered from the States of Tamil Nadu and Andhra Pradesh, with the rest being equally contributed by Karnataka and Kerala. Even though the South market is said to have grown at a rate higher than the national average in FY 2013, it is lesser than the growth rate attained during FY 2012 (15%). Reasons for this muted growth vary by State. For exam­ple, there were power cuts in Tamil Nadu which is estimated to have decreased TV consumption in the State. 

Going forward, TV ad revenues are estimated to grow at a CAGR of 14% to reach RS. 6,780 Crores in 2017. Growth is expected to be driven by both volume (new channel launches) and inflation in ad rates, against the backdrop of the 12 minute ad cap per clock hour being implemented. In South India, in fact, players have already started hiking ad rates. 

Impact of ad - cap regulation

The regulation

Recently, there has been increased spotlight around a TRAI regulation for TV channels. As per the regulation, a channel is allowed 10 minutes of commercials along with an additional 2 minutes for in-house ads per clock hour. The regula­tion requires time gap between an ad break and programming to be at least 15 minutes, except in the case of a live sports event. This time gap needs to be a minimum of 30 minutes while telecasting films. Popups, part screen, or drop-down advertisements are not allowed. The regulation also requires broadcasters to ensure that advertisement audio levels do not exceed the regular audio levels of the channel.

Response of broadcasters

The upcoming regulation, while being beneficial for viewers, will cause broadcasters and advertisers alike to re-think their strategies. Currently, news channels sometimes have 30 minutes of advertising per clock hour, and Hindi film channels have around 20-22 minutes. Hindi GECs have about 14-16 minutes of ad breaks per clock hour50. As the supply of ad inventory reduces, broadcasters expect ad rates to rise, though it may not fully compensate for the loss of revenue. Broadcasters may also launch new channels to compensate for the lost inventory - which entails some cost, and brings in some element of risk in terms of garnering viewership.

The Government however recognizes that implementation of the ad-cap regulation must be in sync with the digitization process taking place, so that potential loss of ad revenue may be compensated for by an increase in subscription revenue and / or decrease in carriage. The MIB has indicated that news channels may get an extension on implementation of the 12 minute ad-cap, at least till the final Phase of digitization is complete51. TDSAT has also stayed the implementation of the ad-cap regulation till the next date of hearing on October 21, 2013 and/ or November 11, 2013. This is expected to give broadcasters time to decrease ad inventory / increase ad rates in a gradual manner.

Content

Market Size

Content revenues in the South Indian TV industry were valued at RS. 510 Crore during FY 2013, a growth of 11% over the last fiscal. Content revenues are estimated to grow at a CAGR of 14% to reach RS. 879 Crore in 2017. 

The era of niche channels

With digitization providing a platform for a large number of channels, and consumers being able to exercise their choice about what kind of content they want to watch, broadcasters are investing in niche content. Higher channel carrying capac­ity, and the (expected) resulting lower carriage would make it cheaper for broadcasters to launch new channels in a digi­tized world.

Technology

HD - High Definition

HD or High Definition is a video content format with a resolution typically of 1920 X 1080 and an aspect ratio of 16:9, versus the conventional 720 X 480 or 720 X 576 4:3 TV format. HD pictures are much sharper and clearer, with 1080 rows of pixels available as compared to SD pictures which display only 480 rows of pixels. For optimal picture quality, content needs to be shot and edited in HD and then broadcast to HDTVs via HD-enabled STBs. This may also be termed as 'true HD content' as opposed to 'HD content' that is broadcast in HD but is shot in SD. In this case, content is shot in SD but "upgraded" to HD either during the postproduction process or even at the broadcast stage.

Interestingly, the next generation of HD is already rolling out to consumers. Described as 4K UHD or 'Ultra High Defini­tion', the video format offers a minimum resolution of 3840 pixels x 2160 lines; nearly twice the horizontal and vertical resolution of the 1080p HDTV format, with four times as many pixels overall.

Current Scenario

Even though consumers in India have had access to HDTVs for a few years now, there has been little motivation for the industry to provide content in HD. This is due to high capital investment required across the production, post-produc­tion, broadcasting, and distribution stages. However, with increasing consumer awareness and their willingness to pay for a better TV viewing experience, and with HD even acting as a differentiator, the industry has begun to showcase HD channels. About 35 HD channels are available for viewing in India and many more are in the process of being rolled out. Channels in other South Indian languages have also been made available in HD.

Way Forward

As the penetration of HD-enabled TV sets increases, and as income levels increase, the ecosystem is expected to move gradually towards greater HD penetration. Industry discussions suggest that broadcasters and distributors view HD as a key driver to raise subscription revenue, and most industry participants appear to have plans to expand their portfolio of HD channels. 

Implications for Indian M&E Industry

Coming to the Indian Television industry, the main players in the TV value chain constitute content creators, broadcasters and distributors, while consumers are the end users. Content creators produce the TV programming which is aggregated by broadcasters and aired to the end user through the distributors or pipe providers i.e., cable, DTH.

With digital TV moving towards wider adoption on the back of government mandate, the onus to provide the consumers, the programs of their choice lies heavily with the broadcasters, distributors and content creators as well. With the government's mandate to digitize the distribution of TV signals, in the entire country by Dec, 2014, the number of DTH connections and Set Top Boxes will rise tremendously. With this, the user base that would be ready to pay a brmium for value added services like recommended TV shows, films will also increase. With appropriate consumer analysis, such new age consumer demand may be addressed leading to improved consumer satisfaction and retention.

Also, the distributors could make strategic alliances with online shopping sites, retailers and may be, even, grocery shopping websites, so that orders can be made through the interactive selection facility on TV screen. This can not only provide a happy consumer base, but also, a source of revenue to the broadcasters whose primary source of revenue, as of now, happens to be adver­tising. With more user generated content available, the content creators may be able to understand the consumers' brferences and accordingly create content targeting a particular group of the viewers. The media companies which realize this potential of consumer analytics and effectively make use of it may be able to attract a loyal consumer base and also a larger portion of the revenues.

Sluggishness in the economy and valuations still being relatively high, investors are safeguarding themselves by undertaking all-encompassing robust due diligence processes. Indian corporate sector has been recently hit by frauds of large magnitude and hence investors are not leaving anything to trust. In addition to the traditional due diligence around financial, tax and legal matters, which by themselves have become more intense, other due diligence areas are also being looked at, in specific, Anti-Corruption and compliance, Human Resources, Information Technology and Regulatory. These are making the duration taken to close a transaction much longer.

In addition to heightened professional skeptism there are certain issues that have plagued this sector and make the investors weary of fresh investments. We have summarized some of these.

Business practices and structures are yet to become completely transparent and organized Media industry in India opened up in late nineties and has been growing and evolving since then. Media sector is still rebrsented by numerous mid-size and small players which are operated as family businesses. Though there has been a momentum towards having a corporate structure, there are still very few players who are organized. Consequently, industry follows business practices which are not very transparent and structured. On account of this investors are skeptical to provide investment. They tend to seek several guarantees and impose usage restrictions on proceeds invested in the Company. Since the companies reported balance sheets are lighter as compared to their operations providing collaterals and security for funding received also becomes a challenge.

Disparate accounting policies followed by various players which makes comparing peer performance a challenge Many matters pertaining to the Media sector are peculiar in nature and Indian accounting standards are not brscriptive about how to cater to these situations. This leads to potentially more than one interbrtation of the accounting rules.

M&A in Media-Key opportunities and challenges

Overview

Mergers and acquisition (M&A) in the Media industry has been quite buoyant with help of some large transactions in recent times despite muted overall M&A activity. M&A activity in media industry has been mainly driven by opportunities in the television distribution space, regional media (broadcasting and print) and film exhibition.

Implementation of digitization of Cable and Satellite (C&S) homes has resulted in large capital requirements for the operators to procure backend equipment's and Set Top Boxes (STBs). T his has been facilitated by increased FDI limits in distribution segment which were changed to 74% last year. Consequently, we have seen higher private equity interest levels in this segment. This was evidenced by Goldman Sach's 15% acquisition in DEN Networks, Providence Equity Partner's acquisition of 17.3% in Hathway Cable and Datacom and Sahara Groups acquisition of 90% in Digicable. Television distribution would be a growth space in near term. Some of the DTH players have already filed prospectus for IPOs and some others are planning to go public in coming future in India or abroad. Having said that the success of these would be subject to markets rebounding and being conducive for public offering.

Expansion and potential of regional media (television and print) has been a big factor for many of the large M&A transactions in recent times. National players are looking to increase their regional footprints as growth experienced by vernacular brss or regional media has been higher than those of national players. This was evidenced by acquisition of Eenadu TV by Network 18 group and Nai Dunia Media Private Limited by Dainik Jagran.

Tremendous growth in Film exhibition space mainly driven by box office successes of films (Regional and Bollywood) has made the segment attractive for investors. L Capital's and Multiples investment of 31.6% in PVR Cinemas and PVR Cinemas acquisition of Cinemax for USD 119 million in turn was a proof of ongoing interest of the financial investor community for further consolidation and fund raises to scale up.

Despite opportunities brsented by certain segments of the industry there is an overall uncertainty in view of the current macro environment. This could result in investors being very selective about their investments.

Steps to make companies more M&A friendly

Some of the issues identified above are macro issues where an individual Company may have little wherewithal to effect any major changes. However, based on our interaction with the investor community, we understand that following steps if taken by media companies can facilitate M&A process and spur investments: 

Implement strong financial systems with a professional set up

Perhaps the single biggest fillip for an M&A would be the appointment of a professional CFO and Financial controller. While financial discipline is usually an issue in any promoter-driven Company, this is much more brssing in the media space. In a sector driven primarily by creative impulses, the lack of financial controls is usually a major deal breaker. This could be avoided by having in place a competent finance person and empowering him with the right to question creative decisions that have a huge financial implication.

Institutionalize processes

It may sound counter-intuitive but there is a scope for a lot of science in what is essentially an art-driven industry. There needs to be strong processes in place to green light a film project. Extensive analytics needs to be undertaken on past collections in different geographies at different theatre classes and price points. As the industry evolves, there is a great need to treat this as a consumer product subject to the same rigors of process and analysis as the consumer goods indus­tries. It is no surprise that most of the organized media companies in Mumbai are headed by professionals from the FMCG sector.

Create strong IP's

Ultimately, content sells. Media compa­nies must recognize that as a service provider, the optimal levels of service excellence and track record will still get them only to a certain extent. The key value driver would be the IP that a Company holds. For example, in the western markets, TV production houses do not tend to make a profit on the initial show of their programs. It is only through multiple syndication (made possible by their ownership of IP) that they generate returns on their programs and several go on to become cash cows for the creators.

SCOT Analysis

Strengths:

RAJ TV has an advantage of being a mass channel with its extensive line up of attractive programming to cater the entire family. The channels of the network reach a wide variety of audiences as It satisfies people of all ages, The Channel offers a right mix of movies, serials, debates, cultural, educational, cookery, handicrafts and religious programmes satisfying the needs of the entire community ranging from Urban to the rural audience.

Over the years RAJ TV has extensively put together one of the largest movie database in Tamil Nadu. RAJTV holds the rights for around 2641 Tamil films comprising of old classics to recent blockbuster movies. Raj devotes most its resources in producing its own popular range of serials, films / non film based programmes and in the process employs some of the best directors & productions houses to deliver top quality programmes to the viewers.

The Company is led by a knowledgeable team of senior management professional under the guidance of our experienced directors each one focusing on core business functions. Most of our employees including the technical and non-technical Staff have been since inception and has one of the lowest attrition rates in the industry. Raj values its staff as its major asset and offers various schemes / incentives in- return to their loyalty.

Concerns

Recently, there has been increased spotlight around a TRAI regulation for TV channels. As per the regulation, a channel is allowed 10 minutes of commercials along with an additional 2 minutes for in-house ads per clock hour50. The regulation requires time gap between an ad break and programming to be at least 15 minutes, except in the case of a live sports event. This time gap needs to be a minimum of 30 minutes while telecasting films. Pop ups, part screen, or drop-down advertisements are not allowed. The regulation also requires broadcasters to ensure that advertisement audio levels do not exceed the regular audio levels of the channel. This will impact the revenue stream in the advertisement segment.

Mitigants

In South India, in fact, players have already started hiking ad rates. The developments suggest that leading broadcasters in South India have some degree of pricing power.

Opportunities

The Company has till date emphasized its market position as a regional player and a 'people's channel', delivering the required regional flavour. It has an ample scope to venture out in other regions and languages which will enhance their brand value and in turn the popularity of the network. The Company is actively exploring opportunities on web plat­form, mobile television. This will help the Company to generate incremental reve­nue to the Company. Digitization era will augment more subscription revenue. Movie bank will contribute all kind of future revenues from brsent and Future Internet Plat forms.RAJ TV has 21 years Experience in regional market with no political flavour.

Threats

The company's immediate competitors poses the threat of eating up its market share in the market and for that Raj Network will have to continuously upgrade its programme content and needs to venture out in different genres of entertainment to stay at par with its competitors. 

EXPANSION PROPOSALS 

RAJTV proposes to roll out future growth plan that comprises the following components

Strengthening the market position through better and captively produced content, Attract better revenues through better Advertisements and increased Subscriptions, Expand RAJTV reach through geographical expansions and Strengthening RAJTV's base by engaging in Technological Up gradation. Strengthening the market position through better and captively produced content RAJTV intends to set up a new production facility through by investing in new production studio to better the quality of content in our channels. RAJTV will invest in the production of new game shows, and live participatory talk shows, serials and movies to reinvigorate interest from past viewers and simultaneously entice new viewers from the market. It also intends to also increase the spectrum of its broadcast offerings by initiating new channels to appeal to particular segments of the audience. RAJTV would be restructuring our content base to arrive at new and improved production of movies and serials to provide better quality viewing. RAJTV also intends to undertake the production of short ilms, which can be viewed through both theatre and TV alike.

Attract better revenues through better Advertisements and increased Subscriptions

RAJTV believes that with sound marketing strategy applied in the past and with new distribution strategies, it will be able to gamer a large share in the Indian and overseas Tamil viewing market, which will push our subscription revenues. RAJTV believes that with the economy heading in the right direction, there will be a surge of advertisement revenues attributable to us. It also believes that the TV medium will surge and reach out to a larger mass in the years to come, and regional programming and viewing will further strengthen. Better penetration into market will also strengthen the subscriber's base which will in turn increase cur subscription revenues as we are a pay channel. In addition, regulatory reforms such as the expansion of Digital access systems and direct-to-home ("DTH') broadcasting will help address the currently brvalent underreporting of subscribers, which would have a positive effect on our revenues from viewers.

Expand Raj TV reach through geographical expansions

RAJTV intends to look international opportunities to expand its geographic coverage. It hopes to expand its viewership in the overseas market by catering to audiences demand regional channels such as theirs. This will entail entering into new markets in which there are large numbers of South Indian Audience across the world. Tamil audience today is not restricted to Tamil Nadu; they are avail tie in substantial population in Srilanka, Singapore, Malaysia, Europe. South Mauritius, Australia and Fiji. RAJTV plans to distribute its channels in these territories with local flavor and culture. It would like to enter into international distribution or our channels to cater to foreign markets. Nationally, it will also consider acquiring some other regional channels to expand into other language markets. New mediums of distribution platforms via Internet will augment a big expansion and currently the Network is fully available in electronic platforms and IPTV Platforms across the world.

Strengthening Raj TV's base by undertaking technological up gradation

RAJTV would be upgrading its current technological competence by investing in new technologies to help in archiving and digitizing its content assets. The Broadcasting Technology is changing very dynamically year to year and the New Digital Platforms requires complete change in technology to cater the requirements. RAJTV will be investing in new 3D camera setups, New Digital Studio and Broadcasting setup, ERP software for Integrated billing platforms. A new Air-conditioned studio with better equipment would be set up and also would be equipped in technologies such as digital play-out server and digital archiving systems, for better brservation and retrieval of its valuable content.

RAJTV also plans to exploit its content base through various new technological advancements such as broadband, IPTV and mobile apart from cable and DTH in India & overseas, which will enable them to reach and target new audience.

Threats

There may be a fall in margin on account of non-payment of debts, business risk, other legal risks, slow down of general economic trends and other macro and micro economic factors.

Outlook

As the Company's channels are now available in DTH, IPTV and other digital platforms besides cable distribution, the Company is hopeful of adding more subscription revenue. The Company is also expecting growth in advertisement revenue due to increase in advertisement spends by the business houses. 

Segment

The Company operates in "Broadcasting" segment.

Company Financials

The total turnover of the Company for the Financial Year 2014-15 is Rs. 8250.11 lakhs. The Profit before tax (PBT) and the Profit after tax (PAT) of the Company are Rs. 2577.23 lakhs and Rs. 815.83 lakhs respectively.

Earnings Per Share (EPS)

Earning per share for the financial year 2014-15 is Rs 1.57 on face value of Rs.5 per equity share

Human Resource

The Company firmly believes that human resources is an important instrument to provide proper communication of the Company's growth story to its stake holders and plays vital role in the overall prospects of the Company. So the Company takes possible steps for the welfare of its manpower. The employee relationship is cordial throughout the year.

Risk Analysis and Management

Like all business enterprise, the Company also operates in both risk and opportunity environment. Various risks which may affect the Company's performance and Company's brventive measures to avoid such risks are enumerated below:

Operational Risk

The Company's operational performance may be affected because of increasing competition in the market and more and more new players entering this industry.

Financial Risk

Cost of programming and content acquisition may affect its bottom line. The Company may from time to time launch new channels and may require more and more funds. The Company may need further funds for program­ming, contents for the new channels and movie production and distribution. So, the financial performance of the Company may slow down unless the Company becomes successful in its business strategies. Decrease in advertisement expenditure can impact the revenue of the Company.

Strategic and other Risks

It is very much unbrdictable to figure out the consumer's choice and taste. If the Company's strategy does not meet the consumer's expectation, then the Company's performance may be affected. Other risks like change in Government's policy, Exchange rate fluctuation, seasonal risks etc may affect the growth pattern of the Company. The Company continuously reviews the existing system of operation and upgrades any change in technology from time to time. It will help the Company to give good quality program for its viewers and maintain its subscription base in spite of competition.

Internal Control

The Company has a defined manage­ment reporting system and periodic reviews of it business to ensure timely check and decision-making. The Man­agement Information System (MIS) forms an integral part of the Company's control mechanism. Any material change in the business process is report­ed to the Board regularly.

FORWARD LOOKING STATEMENT 

Members are cautioned that this discussion contains forward looking statement that involve risk and uncertainties including but not limited to risk inherent in the Company's growth strategy, development plan, market position, expenditure and financial results etc. This statement is based on certain assumptions and expectation of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company's actual results and performance could thus differ materially from those projected in any such statement. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement on the basis of any subsequent developments, information or events.