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Project Rainbow

5 June 2012 Final Report

Strictly confidential

Amit Zutshi Partner

Vaibhav Saini Associate Vice President

Transaction Advisory Services Transaction Advisory Services

T +91 22 6192 0249 T +91 22 6192 2095

M +91 98 1931 9814 M +91 98339 62600

F +91 22 6192 3000 F +91 22 6192 3000

E [email protected] E [email protected]

Commercial Due Diligence

Ernst & Young copyright


Transmittal Letter

As requested, we enclose a copy of our final confidential report in accordance with our engagement letter and its attachments (our "Engagement Letter"). This report has been prepared on the basis of field work carried out up to April 25, 2012.

Our report is confidential and is released to you on the basis that it is not to be copied, referred to or disclosed, in whole or in part, without our prior written consent, save as permitted in our Engagement Letter. In accordance with that letter, you may disclose our report to your legal and other professional advisers in order to seek advice in relation to our work for you, provided that when doing so you inform them that, to the fullest extent permitted by law, we accept no responsibility or liability to them in connection with our report and our work for you.

The primary sources of data in preparing this report have been documented throughout this report. While we have made an attempt to source data from reputable sources, we do not accept responsibility for such information. Details of our primary information sources are stated throughout the report and we have satisfied ourselves, so far as possible, that the information presented in our report is consistent with other information which was made available to us in the course of our work in accordance with the terms of our Engagement Letter. We have not, however, sought to establish the reliability of the sources by reference to other evidence.

This engagement is not an assurance engagement conducted in accordance with any generally accepted assurance standards and consequently no assurance opinion is expressed. Our report makes reference to 'EY Analysis'; this indicates only that we have (where specified) undertaken certain analytical activities on the underlying data to arrive at the information presented; we do not accept responsibility for the underlying data.

The prospective financial information set out within our report has been based on the financial model built by the company and provided to us. This model has been prepared by the company based on several assumptions about key variables which are internal and external to the company; we do not accept responsibility for such information. In reviewing the assumptions in the prospective information, we have relied on published sources of data, third party organizations and discussion with the company's management. We must emphasize that the realisation of the prospective information is dependent on the continuing validity of the assumptions on which it is based. The assumptions will need to be reviewed and revised to reflect any such changes in economy, cost structures or the direction of the business as they emerge. We accept no responsibility for the realisation of the prospective financial information. Actual results are likely to be different from those shown in the prospective financial information because events and circumstances frequently do not occur as expected, and the differences may be material.

Our data gathering and analysis do not constitute recommendations to you as to whether or not you should proceed with the proposed transaction.




List of primary discussions

Company Category Interviewee Profile

Madison Media Planner Cadbury‟s Account Manager

HUL Advertiser Brand Manager

ITC Advertiser Brand Manager

Fulcrum Media Planner HUL Account manager

Digicable Network India Pvt. Ltd. MSO Head of AP Operations

A.C.N. Cable Pvt. Ltd. MSO Head of AP Operations

Zee Telugu Market player Ad Sales

Star Group Market player

Regional market expert Consultant to MSOs Ex-Zee Telugu; advisor to multiple MSOs in AP

Manager – Movie print processing lab

Film distribution Manager




Abbrevations

Term / Abbreviation Definition / Expansion

Term / Abbreviation Definition / Expansion

AP Andhra Pradesh HSM Hindi Speaking Market

Bn Billion INR Indian Rupee

Cr Crore Mn Million

CAGR Compounded Annual Growth Rate NPT Non Prime Time

C&S Cable and satellite PT Prime Time

CY Current year PTS Per Ten Second

ER Effective Rate TVR Television Viewership Rating

FCT Free Commercial Time

FTA Free To Air

FY Financial Year

GEC General Entertainment Channel

GRP Gross Rating Point

GSDP Gross State Domestic Product

Executive summary

Andhra Pradesh: Regional TV market

Assessment of Target’s business

- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel

Business plan assessment




Executive Summary (1/4)

Currently estimated at around INR 1,100 Cr and expected to grow to INR 2,000 Cr by FY16, Andhra Pradesh is an important regional market for television broadcasting in India Around 65% of the viewership in AP is for Telugu channels, with movies as the most popular content There could be some risks associated with the evolving regulatory framework for the industry

Andhra Pradesh (AP) is an important and evolved regional market for television broadcasting

► It is the second largest regional C&S market with around 14 Mn C&S households

► Telugu content commands ~8% of the overall viewership of televised content in India, second only to

Tamil among regional content

► ~85% of the Telugu speaking population in India lives in the home state i.e. AP (2); restof the Telugu

speaking population is nearly equally split in Tamil Nadu, Karnataka and Rest of India

Currently estimated at around INR 1,100 Cr, the growth in AP television broadcasting market is

likely to be driven by steady growth in advertising revenue and relatively high growth in

subscription revenue on the back of digitization

Viewership share of Telugu channels has remained stable at around 65% over the last few years

► Movies and movie-based content are the most popular content in AP market, commanding a stable

viewership share of around 50% over the last six quarters

► Serials (fiction content) seems to be the second most popular content category with a viewership share

ranging between 20-23%

The evolving regulatory framework for television broadcasting and distribution could pose some

risks and challenges for the broadcasting industry

► Restricting available Free Commercial Time (FCT) may impact the number of advertising slots available

for sale by the Target thereby affecting its advertising revenue

► Reduction in viewership for some existing pay channels post digitisation, due to low pull, may lead to

their migration to FTAs. This could exert pressure on Rainbow’s ability to continue to charge for its

channels

► TRAI’s discussion about split of subscription revenue between various industry stakeholders may lead to

a reduction in broadcaster’s share thereby impacting Target’s subscription revenue





Gemini is the market leader in AP; however, Rainbow, on account of recent channel launches, has gained market share and has established itself as the second largest broadcasting group

Gemini (Sun TV) is the market leader in AP with 26% of the GRPs in Mar-12; Rainbow has

established itself as the No. 2 player over the past few quarters

► Sun group (Gemini) has the widest range of Telugu channels, followed by Rainbow

► While Gemini’s share of GRPs has witnessed a decline from 32% to 26% over the last six quarters,

Rainbow has managed to nearly double its share to ~15% currently during this period; this could be

largely attributed to the launch of two new channels – Rainbow Movies and Rainbow Gold

► There has been consistent increase in the number of Telugu channels over the last four years, with a

majority of addition in the news and movies genres

► While smaller broadcasting houses have launched Telugu channels such as Xtra, UTV Action Telugu and

N TV in the last year, they have not been able to make a significant mark on the market so far

Rainbow has grown its revenues at 30% p.a. (INR 170 Cr in FY12) and improved its profitability to 25% (FY12) over the past four years Further, industry discussions suggest that there is potential for Rainbow to increase its advertising and subscription revenue in the future, provided it manages to gain market share However, Rainbow would face challenges in increasing the reach of Rainbow Gold

Rainbow has grown rapidly at ~30% p.a. from ~ INR 80 Cr in FY09 to ~ INR 170 Cr in FY12; it has

improved its profitability (EBIT)from 11% to 25% during this period

► Advertising revenue accounts for ~80% of Rainbow’s total revenues across the period; subscription

revenue is the other key revenue stream

Rainbow may be able to increase ad and subscription rates as it gains further market share and

realizes full benefit of its 2nd position in the market

► Significant dependence on national FMCG players such as HUL, P&G and ITC has limited Rainbow’s

ability to negotiate higher ad rates, particularly through the CPRP model; however, industry discussions

suggest potential for Rainbow to increase its ad rates (flat as well as CPRP) if it continues to narrow the

gap with Gemini

► Further, Rainbow’s subscription revenue is approximately a third of that of Gemini and half of Eenadu

TV (which is the third most popular group); industry discussions suggest that there is potential for

Rainbow to gradually increase subscription revenues as its channel bouquet is currently priced

significant below its regional peers

Increasing the distribution and reach for its new channel, Rainbow Gold on the DTH platform is

likely to be a challenge for Rainbow primarily on account of bandwidth constraints





While Rainbow‟s GEC has the second largest viewership in AP market, it is relatively weak in original fiction content Further, dependence on dubbed Hindi fiction content could pose risks in the future, particularly with respect to Viacom 18

Unlike other GEC channels, Rainbow‟s overall programming success is driven by movies and non-

fiction content; further, there is also dependence on dubbed Hindi fiction programs during prime

time slots

► Rainbow’s GEC channel has the second highest viewership in AP market, next only to Gemini

► Fiction and movies have strong traction in the Telugu market accounting for ~30% and ~20% of

programming duration respectively; however, Rainbow appears to have relative strength in movies and

non-fiction content

► Rainbow’s original fiction content rates poorly compared to its peer group; further, its Top-5 programs

are either non-fiction or dubbed Hindi fiction

► While there have long-term contracts for the dubbed Hindi fiction, its dependence on Hindi GECs,

particularly Viacom 18, could pose risks in the future

Rainbow‟s acquisition of satellite rights of recent blockbusters; rapid creation of movie library; and benefits from its association with top production houses, have contributed to the success of its movie channel

During a short period since its launch, Rainbow‟s movie channel has managed to gain market

share away from Gemini‟s movie channel; this has been on account of increasing inventory of

recent blockbuster Telugu movies

► Incumbent Gemini Moviescontinues to be the market leader in this category, with double the GRPs of

Rainbow’s channel; this is primarily due to perpetual rights to some of the biggest Telugu blockbusters

► Rainbow has increasingly acquired a larger base of satellite rights across all movie categories over the

last two years; it has acquired the rights for eight of the Top 20 Telugu movies in 2010 and 2011

► Additionally, it appears to have benefitted from its association with its related parties, Geetha Arts and

Annapurna Studios, acquiring rights for all their movies over the last two years; such benefits, which are

more in terms of an informal first right to their movies, might not be sustainable in the long run

Market demand for a channel with Rainbow Gold‟s concept would need some form of validation to determine its success in the future

The other two channels within Rainbow‟s bouquet contribute marginally to its GRP; the concept

for Rainbow Gold is largely untested

► Rainbow’s music channel is a close second to Gemini’s music channel and has stable GRPs of 45 – 55

► Rainbow Gold is a new channel offered by Rainbow and its concept is largely untested; there is a need

for proof of concept for the same





EY base case estimate is mildly lower than management estimates in terms of net revenue and EBITDA margin

Management estimates its net revenue to grow from INR 173 Cr in FY12 to INR 301 Cr by FY15

► Historical trends and industry discussions suggest that the growth in advertisement revenue may be

mildly lower than expected by the management

► Further, the EY base case considers lower revenue and EBITDA growth for the Rainbow Gold channel,

since the channel concept is still relatively new and untested in the regional market

► However, management has taken a conservative view on the distribution revenue. Digitization of cable

households is likely to lead to higher subscription revenue than estimated by the management

Synergies with MSM may lead to a potential revenue upside of ~INR 12 Cr over EY base case by FY15

Impact of synergies is expected to be realized starting FY14. The time for realizing the benefits

of synergies is largely dependent on the time taken for MSM to gain greater control of operations

at Rainbow

Key synergy areas include:

► Increase in ad rates

► Higher subscription revenue through improved bargaining position with MSOs

► Increase in digital, new media and international revenue through MSM’s network

FY12 FY13 P FY14 P FY15 P

Management case

Net revenue 173 220 259 301

- Advertising revenue 136 180 214 251

- Subscription revenue 33 35 39 44

- Other income 3 5 6 6

EY base case

Net revenue 173 215 251 290

- Advertising revenue 136 176 204 235

- Subscription revenue 33 35 41 48

- Other income 3 5 6 6

Management case EBITDA% 30% 27% 31% 31%

EY base case EBITDA% 30% 25% 27% 27%

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





Andhra Pradesh (AP) is the second largest regional C&S market with an estimated 14mn C&S households

Estimate of C&S Households in key regional markets (1)

2011

► Andhra Pradesh (AP) is estimated to be one of the largest regional markets in the country

► ~85% of the Telugu speaking population in India lives in the home state i.e. AP (2)

► Karnataka (KN) and Tamil Nadu (TN) are each estimated to have ~5% of the Telugu speaking population in the country (3)

► TAM divides AP into two parts „Hyderabad‟ and „Rest of AP‟ which are together estimated to have ~8% of the overall television households in the country and a comparable share of viewership (4)

Source: (1) IRS Q4 2011 ; (2) Analyst reports; (3) Industry discussions; (4) Annual Universe Update, TAM Media Research, 2012

Hindi, 50%

Tamil, 10%

English, 10%

Telugu, 8%

Marathi, 5%

Bengali, 4%

Malayalam, 2%

Others, 7%

Language wise viewership share for the country (2)

2011

16 14 14 9 8 7 6

0

4

8

12

16

20

No

. o

f C

&S

ho

use

ho

lds

(mn

)

89% 69% 56%

69% 39% 87% 52%

xx% C&S penetration

Telugu content commands ~8% of the overall viewership of televised content in India, second only to Tamil among regional content




► Advertising revenues for Telugu channels was estimated to be ~INR 900cr in FY12. Overall growth of the Andhra Pradesh (AP) economy, increasing consumerism and growth in advertising budgets of consumer product manufacturers are expected to drive growth of advertising revenue to INR 1,540cr by FY16

► The subscription revenue for Telugu channels (Gemini, ETV, Rainbow and Zee Telugu) is estimated to be ~INR 200cr in FY12. Increase in number of television households, greater penetration of addressable digital connections and onset of VAS are likely to contribute to the growth of subscription revenue for TV broadcasters

Size of the Telugu TV broadcasting market was estimated to be INR ~1,100cr in FY2012 and is expected to grow to ~INR 2,000cr by FY16

Source: (1) Analyst reports; (2) EY analysis;

Overall market size (INR cr)

1,112 1,291 1,502 1,758 2,037

Revenue build-up – Telugu television broadcasting in AP FY12 - FY16 (1)(2)

CAGR („11 – ‟15)

14-16%

23-25%

912 1040 1185 1351 1540 200

252 316

397 497

0

500

1,000

1,500

2,000

2,500

FY12 FY13 FY14 FY15 FY16

INR

cr

Advertising revenue Subscription revenue




Overall economic growth and increase in C&S households are expected to drive the growth of the market

CAGR FY05 and FY11

AP GSDP (1) 2006 – 2011

C&S households in AP (2) 2008 - 2011

2.5 2.7

3.1 3.2 3.4 3.7

0.0

1.0

2.0

3.0

4.0

2006 2007 2008 2009 2010 2011

Gro

ss S

tate

Do

me

stic

P

rod

uct(

INR

tr)

8.5%

CAGR FY08 and FY11

11%

10 12

12 14

-

2

4

6

8

10

12

14

16

2008 2009 2010 2011

C&

S h

ou

seh

old

s (m

n)

Macroeconomic growth is expected to make AP a more attractive consumer market driving an increase in advertising spends

► The AP economy has grown at 8.5% annually over the last five years

► With strong presence of large corporations in fast growing sectors such as IT, pharmaceuticals and power, the outlook for future growth appears positive

► Advertising spends typically have a strong correlation with overall economic growth suggesting further potential for growth of the market (3)

Growth in number of C&S households will drive the attractiveness of the market from both advertising and subscription revenue perspectives

► AP has seen a robust growth of 11% in the number of C&S households in the state

► With C&S penetration of ~67%, there appears to be further scope for growth in the addressable market

Source: (1) Andhra Pradesh Annual Plan 2011‐12; (2) IRS data (3) “Economic Growth and Advertising Expenditures in Different Media in Different Countries”, Richard van der Wurff, 2008

“AP is an exciting, fast growing market. Most advertisers use AP like a test market because of the number of young IT professionals in the state”

- Large regional GEC broadcaster

“AP is an important market for us. The large consuming class here makes it an attractive destination for any consumer product company”

- Large consumer products company




Increase in the number of digital addressable households is expected lead to greater visibility of subscribers reached and grow broadcasters‟ share of subscription revenues

Source (1) "TV Distribution - Opinion", 2010, Crisil Research; (2) Industry discussions

► While cable subscribers constitute over 70% of the total C&S subscribers in AP, due to significant under-declaration at the ground level, they account for only ~25% of the declared subscribers

► While broadcasters have started charging higher per user subscription fees to counter under-declaration, this continues to result in significant revenue leakage within the distribution system at the level of local operators

► 73% of the cable subscribers are estimated to contribute to only about ~45% of the overall subscription income earned by a broadcaster (3)

► Post digitisation, greater subscriber visibility is likely to help broadcasters‟ increase their share of subscription revenue from the current levels of ~15% to ~25%

14mn

Split of total cable and DTH subscribers in AP – 2011(1)

Subscriber declaration

DTH 27%

Cable 73% Cable DTH

20% to

40%

60% to

80%

100%

Declaration levels by cable operators varies significantly depending on the consumer pull and brand strength of a broadcaster




However, regulatory restrictions on free commercial time and introduction of FTA channels may hamper market growth

► TRAI released a consultation paper in Mar 2012, followed by an amendment in May 2012, recommending a reduction in the amount of free commercial time to improve subscriber viewing experience

► The consultation paper recommends a reduction in the available FCT to 20% of total available airtime i.e. 12 minutes per hour

► If implemented in its current form, the overall broadcasting industry may face some pressure on its revenues. The Indian broadcasting industry has strongly opposed the proposal and there continues to be uncertainty with respect to the implementation of the regulation. Further, the impact on shrinkage of ad-inventory (in case of implementation) is expected to be partially offset by increase in the ad rates

Regulation of Free

Commercial Time (FCT)

► With the roll out of digital addressable cable systems, subscribers will have the ability to pick and choose specific channels to subscribe to. This may lead to increased pressure on broadcasters both in terms of channel subscription fee and quality of content

► In Chennai, post implementation of addressable cable systems, around 67% of the subscribers, who opted for pay channels, subscribed to less than 15 channels, resulting in significant drop in viewership

► Fall in viewership, and consequently subscription and advertising revenues, prompted several regional channels to migrate from pay to FTA

► Similar increase in FTAs in the regional market may increase competitive intensity thereby impacting a broadcaster‟s business

Advent of new FTA channels

Resistance to regulation of advertising time andmandate for digitisation have prompted TRAI to review governance of other industry practices such as carriage fees, must carry diktat and subscription revenue split across the value chain (1)

“In the digital regime, while newer channels would be FTA, even some of the more popular GEC broadcasters are not sure if people would choose to pay for their channels”

- Leading GEC broadcaster

Source (1) Indiatelevision.com




Analysis indicates that the viewership share of Telugu channels has remained stable at around 65% over the last two years

A.P Market – GRP share of Telugu channels (1)

Dec 2010 – Mar 2012

65% 62% 67% 66% 66% 65%

35% 38% 33% 34% 34% 35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-10 Mar-11 Jun-11 Sep-11 Dec-12 Mar-12

GR

P s

ha

re (

%)

Share of Telugu channels Share of other channels

Regional content accounts for ~65% of the GRPs in AP compared to its Pan India share of ~34% (2)

► Bi-lingual regional markets such as Gujarat and Maharashtra see lower regional viewership due to competition from Hindi GECs

► South Indian states have typically seen high viewership of regional channels due to relatively low population of Hindi speaking audience

► High regional viewership shares make it imperative for advertisers to have a presence in regional channels to reach desired target population

Source: (1) TAM data; (2) “Indian media and entertainment”, FICCI, 2012

“Andhra Pradesh is a P1 market for my product (Tea). It is impossible to develop a media plan without including the regional channels in the advertising mix”

- Consumer products company

“AP is used as a testing ground by lot of companies.. Regional channels are important in these markets because of their strong reach”

- Media buying company




Movies account for the bulk of the viewership in the AP market with about 40% share of Telugu GRPs

GRP breakup for Telugu content in AP - by content type (1)

Dec 2010 – Mar 2012

39% 41% 42% 36% 39% 43%

23% 22% 20% 22%

23% 20%

9% 9% 8% 12% 10% 8%

5% 6% 6% 6% 6% 7% 4% 4% 3% 3% 3% 3% 3% 3% 5% 5% 5% 6%

16% 16% 15% 16% 14% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Ge

nre

wis

e G

RP

sh

are

(%

)

Movies Serials News Bulletin

Film Based Magazines Film Songs Game Shows/Quiz

Others

Movie and movie-based content dominates the AP market with about 40% of the GRPs of Telugu channels ► Share of movies and movie based content has remained

relatively stable over the last six quarters ► Serials (fiction content) seems to be the second most

popular content category with a similarly stable share of viewership (varying between 20-23%)

Viewership share of non-fiction content such as game shows and quizzes has doubled over the past two years, indicating a marginal shift in viewer preference Mythological dramas, reality, religious, cookery and talent shows are the major segments under „Others‟ accounting for ~50% of its GRPs in Mar 2012

Source: (1) TAM data;




The four large broadcasting networks in AP account for ~60% of the GRPs in AP; Gemini (Sun TV) is the dominant player with 26% of the GRPs in Mar „12

Share of GRPs by group (1)

March 2012

Gemini group 26%

Maa group 15%

Zee group 8%

Non-Telugu content 35%

ETV group 9%

Other Telugu content

7%

ETV, 8%

ETV2, 1%

ETV ETV2

Maa TV, 10%

Maa Movies, 3%

Maa Music, 1%

Maa Gold, 1%

Gemini TV, 16%

Gemini Movies, 7%

Gemini Music, 1%

2% Gemini news,

0%

Zee Telugu,

8%

Zee 24 Ghantalu

, 1%





Sun group has the widest range of Telugu channels, followed by Rainbow

Telugu channels of major broadcasters in Andhra Pradesh (1)

Group Channel

Sun TV network Ltd.

Gemini TV

Gemini TV - HD

Gemini movies

Gemini music

Gemini news

Gemini comedy

Kushi TV

Gemini Action

Gemini Life

Maa Television Network Ltd.

Maa TV

Maa Music

Maa Movies

Maa Gold

Ushodaya Enterprises Pvt. Ltd. ETV

ETV2

Zee News Ltd. Zee Telugu

Zee 24 Ghantalu

Channels launched in the last year by major broadcasters

Source: (1) TRAI




Consistent addition of Telugu channels in the last 4 years; 54% of the channels added in the last 3 years have been from the „News‟ and „Movies‟ genres Launch of new Telugu channels (1)

2009 - 2012

Source: (1) TRAI

0

1

2

3

4

5

6

2009 2010 2011 YTD 2012

Nu

mb

er

of

ch

an

ne

ls (

no

.)

Kids Kushi TV (a)

News Andhra Jyoti

News Sakshi TV

GEC MAA Junior

GEC Sitara TV (c)

Movie UTV Action

Movie Maa Movies

News T News

GEC Maa Gold (d)

Movie Gemini Action

Movie Xtra

Lifestyle Gemini Life

Music Raj Musix

Movies Gemini movies (b)

News Raj News

3 3

5

4

15 Telugu channels were added between 2009 and Q12012 at a rate of 3-5 channels each year ► Launch of 4 channels by Q1 2012 suggests a potential uptick in

the addition of channels for CY2012 ► „News‟ and „Movies‟ have been the more popular genres for

addition of channels with ~54% falling under one of the two genres ► Addition of „Movie‟ channels has particularly picked up between

2011 and Q1 2012 with 4 of the9 channels added falling under the „Movies‟ genre

► 50% of the new channels were launched by large regional players such as Gemini, Maa and Raj groups

Legend

Channel genre

Channel name

No. of channels

added

(a) – Kushi TV replaced Udaya news in 2009 (b) - Sitara TV was cancelled in 2010. Re-launched in 2011 (c) – Gemini movies replaced Navvulu in 2010 (d) – Maa Gold replaced Maa Junior in 2012

Channels discontinued by major broadcasters

Year Group Channel

2009 SUN 18 Media Services

Teja news

2010 SUN 18 Media Services

Navvulu

2012 MAA TV Network MAA Junior

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





Rainbow TV 87%

Rainbow Movies 0%

Rainbow Music 13%

Rainbow Gold 0%

Rainbow‟s share of Telugu channel GRPs has increased from 8% in Q4CY10 to 15% in Q1CY12

Rainbow‟s GRPs have grown by ~40% between Q3FY11 and

Q4FY12

► GRP share of Rainbow‟s GEC channel grew from 7% to 10% of

all channel GRPs in AP

► Rainbow‟s launch of two new channels in this period is one of

the key reasons for this increase

While Gemini‟s share of GRPs has fallen from 32% to 26%, other

large broadcasters have maintained market share in this period

► Reduction in Gemini group‟s GRPs have primarily been on

account of the fall in its GEC‟s GRP share from 20% to 16% of

the market in this period

Share of GRPs by Channel (1)

Q3FY11 – Q4FY12


Dec 2010 Mar 2012

GRP split across Rainbow‟s channel bouquet(1)

“Each time a new channel is launched in the

Telugu market, its effect can be seen on

Gemini’s GRPs. As the market leader, growth

of newer channels is usually at the cost of its

channel bouquet. Now, with the

establishment of newer channel groups its

dominant position is under serious threat”

– Large advertiser

385

Rainbow TV 71%

Rainbow Movies 19%

Rainbow Music 9%

Rainbow Gold 1%

615

Avg. weekly GRPs

32% 27% 27% 24% 25% 26%

8% 11% 14% 14% 15% 15%

10% 9% 10% 10% 10% 9% 8% 9%

9% 9% 9% 8% 7% 7%

7% 10% 9% 7%

35% 38% 33% 34% 34% 35%

0%

20%

40%

60%

80%

100%


GR

P s

ha

re (

%)

Gemini group Rainbow group

ETV group Zee group

Other Telugu channels Others




Subscription revenue FY09 - FY12

Advertising revenue FY09 - FY12

Rainbow‟s revenue has grown at an annual rate of ~30% over the last three years; advertising accounts for ~80% of the revenue generated

Source: (1) Information provided by Target

59 80

96

136

0

20

40

60

80

100

120

140

160

FY09 FY10 FY11 FY12

INR

cr

17 21

25 31

0

5

10

15

20

25

30

35

FY09 FY10 FY11 FY12

INR

cr

2 1

4

6

0

1

2

3

4

5

6

7

FY09 FY10 FY11 FY12

INR

cr

Other income FY09 - FY12

9 (11%) 19 (19%) 24(19%) 43(25%)

69

83 101

129

0

40

80

120

160

200

FY09 FY10 FY11 FY12

INR

cr

EBIT Operating expenses

78

Revenue and EBIT (1)FY09 - FY12

102

125

173 x Net revenue




Rainbow‟s advertising revenue is generated largely through advertisements placed by national FMCG brands such as HUL, ITC and P&G (81% in FY12)

Source: (1) TRAI

77% 85%

81%

13% 3%

7%

6% 3% 3%

2%

4% 3%

1% 3% 4%

1%

2% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY10 FY11 FY12

Sh

are

of

ad

ve

rtis

ing

inco

me

(%

)

FMCG Pharmaceuticals

IT services Telecom

Electronics Automotive

Advertiser wise break-up of advertising revenue (1)

FY10 - FY12 The majority of Target‟s advertising revenues have been through sales to large national FMCG companies

► The share of FMCG advertisers has seen some volatility in the last three years which is largely complemented by the change in share of pharmaceutical companies

► The relatively high share of income contributed by large FMCG companies have resulted in a higher proportion of CPRP and similar deals for the Target




Rainbow has not been successful in negotiating higher ad rates through the CPRP model in the past…

FY09 FY10 FY11 FY12

Flat rate 1,737 1,893 2,741 2,704

CPRP rate 839 793 637 788

69% 83%

71% 73%

31% 17%

29% 27%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

%

Flat rate CPRP

Revenue breakup by category(1)

FY09 - FY12

PTS slots breakup by category(1)

FY09 - FY12

Rainbow sold ~27% of the their ad slots at CPRP rates in FY12 to large FMCG players such as P&G and HUL which

contributed to 10% of their advertisement revenue (excluding slot sales)

► CPRP deals are done at a significant discount of ~70% to the flat rate deals

► Share of CPRP deals with large FMCG players has fluctuated between 17% and 31% of all ad slots sold by the Target

► Management has been successful in raising PTS rates for most advertisers by 16% over FY09-FY12. However CPRP rates

have fallen by 2% over FY09 - FY12

82% 92% 92% 90%

18% 8% 8% 10%

0%

20%

40%

60%

80%

100%

FY09 FY10 FY11 FY12

%

Flat rate CPRP

PTS Slot rate (1) (FY09-FY12)

Source: (1) Rainbow financial data




408 336 406

1,711

2,140 2,225

0

50

100

150

200

250

300

350

400

450

0

500

1,000

1,500

2,000

2,500

FY10 FY11 FY12

GR

Ps

INR

Avg weekly GRPs ER PTS

…however, industry discussions suggest that Rainbow may be able to increase ad rates as it gains further market share and realizes full benefit of its 2nd position in the market Rainbow‟s GEC channel‟s GRPs and blended ER (FY10-FY12) (1)

Rainbow‟s Effective Rate (ER) has grown at a rate of ~14%

annually between FY10 and FY12

► Industry discussions suggest there is a time lag in

advertisement rate and channels performance, which is also

reflected in the trends in Rainbow‟s GRP and ER

► Rainbow‟s ER increased by 25% in FY11 as the channel had

achieved high GRPs in FY10 making it the second most

watched channel

► However in FY12, ER increased by only 4%, less than media

inflation rate of 10-15% as channel‟s GRPs fell significantly

from 408 to 336

Rainbow has the headroom to negotiate for a higher ER

► In FY12, Rainbow has managed to reclaim its second

position by capturing high GRPs

► Industry discussion suggest that Rainbow, with a bouquet of

four channels, may be able to negotiate for a higher ER and

reduce the gap with Gemini, provided they are able to

consistently maintain their current share of GRPs Channel ER for 10 seconds

Gemini 8,200

Rainbow 2,225

ETV 2,216

Zee Telugu 2,100

Source: (1) Management information; EY Analysis (2) Industry discussions, EY Analysis

Telugu GEC channel ER (FY12) (2)

“Rainbow is currently selling its inventory at rates much lower than the competition”

– Leading FMCG player

“Rainbow sells its ad slots at one third of the rates offered by Gemini, with the gap between them coming down Rainbow can increase their rates”

– Large advertising agency

Utilisation 78 % 76% 86%




Comparison of subscription fee with other players indicates potential to increase subscription rates

GRPs and subscription fee of major regional broadcasters March 2012

14.5

6

11 11

0

2

4

6

8

10

12

14

16

0

200

400

600

800

1,000

1,200

Gemini Rainbow ETV Zee Telugu

INR

We

ekly

av

era

ge

GR

Ps

GRPs Subscription fee

Rainbow has consistently garnered the second highest GRPs for its channel bouquet in the AP market ► Rainbow accounted for over 14% of the overall GRPs in the

AP market in FY12 ► In comparison, ETV and Zee groups had a GRP share of

~10% each

Rainbow‟s channel bouquet is priced below most of its regional peers ► Rainbow‟s channel bouquet is currently priced at ~INR 6

per declared subscriber per month ► ETV‟s bouquet and Zee Telugu are priced at ~INR 11 while

Gemini‟s bouquet is priced at ~INR 15 While Rainbow intends to increase subscription fee for its channels, it is likely to face some resistance from the MSOs, ► Subscription fee negotiations between MSOs and

broadcasters are largely centered around consumer pull for a broadcaster‟s channel bouquet

► Discussions with the management indicate that they have initiated discussions with the MSOs for increase in subscription fee for Music, Movies and „Gold‟ channel. The management expects the rollout of the new prices to be a gradual process due to the resistance by MSOs

“In comparison to other players, their fee is much lower.. They can consider some increase in prices”

- MSO

“ETV is 11 rupees for only two channels.. Rainbow is 6 rupees for four channels..”

- MSO

Operators Gemini ETV Rainbow Zee Telugu

DTH 20 20 10 5

Cable 70 40 20 10

Subscription revenue breakup for FY12 (INR Crore)




Channel carrying fee for Rainbow has increased by ~5 times on account of the launch of their two new channels Rainbow Gold and Rainbow Movies

Channel carrying fee (1) (FY09-FY12)

Launched 2 new channels Rainbow Movies and Junior

Launched Rainbow Gold

► In FY08 and FY09, Rainbow paid carrying fee only to Hathway cable of INR 1.1 crore andINR 0.9 crorerespectively

► Carrying fee increased by ~5 times to INR 5.2 crore in FY11 on account of two new channels i.e. Rainbow Movies and Rainbow

Junior getting launched

► Management discontinued Rainbow Junior and launched Rainbow Gold in FY12 for which it had to continue to pay carrying fee to

ensure that the new channels have the reach

► In FY12, ~87% of the total carrying fee was paid to Hathway and Venkata Sai Media

Source: (1) Rainbow financial data

1.08 0.90

5.21 5.15

7% 6%

27% 26%

0%

5%

10%

15%

20%

25%

30%

0

1

2

3

4

5

6

FY09 FY10 FY11 FY12

%

INR

Cr

Channel carrying fee % of Cable revenues




The majority (58%) of the revenue generated by Rainbow through new media has been via Youtube

Youtube accounted for ~58% of the revenues generated through new media ► Rainbow simulcasts all serials and most of the movies (a)

screened on its television channels on Youtube for a share of the advertisement income captured by Youtube

► Increase in number of hits generated by Rainbow‟s content has led to rise in its CPM rate from USD 0.87 in FY11 to USD 2 in FY12

► Management expects FY13 revenue generated through Youtube to double from the current levels of ~INR 1cr

Rainbow provides its channel feed to some paid new media distributors such as Myplex, Istream (outside India) and Tata Photon and earns a share of the subscription revenue generated through them Management is also working towards the launch of applications for popular mobile platforms such as Apple‟s iOS and Google‟s Android which is expected to further increase Rainbow‟s reach in new media

Youtube 58%

Vuclip 9%

A T - Myplex 8%

A T - Mobile Tv 8%

A T - Photon 4%

A2 Media Pvt Ltd 3%

Raaga Llc 3%

Others 7%

INR 1.8cr

Rainbow - Revenue from new media

FY12




Of the 6 DTH operators, Dish is the only operator that carries Rainbow Gold; Videocon, Airtel and Tata Sky have not been carrying the channel despite agreements due to bandwidth constraints

DTH Player Rainbow Main Rainbow Movies

Rainbow Music Rainbow Gold Remarks

Sun Direct

Carries only the main channel, new agreement is also for the main channel. However, as per management the negotiation on rates is going on and all the four channels will be carried by them once they reach an agreement

Dish TV Agreement is for all the four channels

Videocon Agreement is for all the four channels, however operator does not carry Rainbow Gold

Airtel Agreement is for all the four channels, however operator does not carry Rainbow Gold

Reliance Agreement is only for main channel. As per management operator is facing bandwidth crunch, however once that is resolved they will carry all their four channels

Tata Sky Agreement is for all the four channels, however operator does not carry Rainbow Gold

Source: (1) Rainbow management, Agreements

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





772 720

770 727

689 699 666

705 735 804

855 786 761 733

643 685

432 365 370 347

379 434 411 408

362 339 334 310

387 422 405 412

0

100

200

300

400

500

600

700

800

900

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 08'09 FY 09'10 FY 10'11 FY 11'12

Av

g w

ee

kly

GR

Ps

Rainbow‟s GEC channel has the second highest viewership in Andhra Pradesh, after Gemini

AP market - Telugu GEC channel GRPs(FY08-FY12)

Source: TAM data, Rainbow management discussion

Overall Telugu GRPs 4,130 4,203 4,288 4,181

Rainbow GRPs 379 408 336 406

Rainbow was considered as movie and event channel with movies and events contributing to ~60% of GRPS

Rainbow’s GRPs jumpedto 408 on the back of the success of its dance and music reality shows like “Challenger” and “Super singer”

Rainbow lost significant market share because : Some of its newly launched shows like “Its my show”, “Gata Janma Rahasyam” did not do well and had to be discontinued Distribution issues with Hathway affected its reach in the Telugu market (Hyderabad)

Rainbow on the back of its strong dubbed fiction content managed to capture significant GRPs and became a distinct “No 2 Channel”

Gemini

Rainbow

ETV

Zee Telugu




Fiction and movies have strong traction in the Telugu market; Rainbow‟s programming strength is in movies and non fiction

Duration and GRP wise content breakup for Telugu GEC channels

Movies appears to have strong traction in the Telugu regional market, occupyijng ~30% (1) of the duration and contributing to ~41% (1) of the market GRPs

►Movies account for the majority share of Gemini‟s and Rainbow‟s GRPs with a 52% and 50% contribution respectively as they acquire rights for most of the blockbuster movies

►ETV has limited focus in movies and has not made any new movie acquisitions while Zee Telugu has a limited lower GRP/ duration ratio of ~1.2

Fiction has been a key driver for GRPs in Telugu market, with ~21% of programming duration generating 35% of the GRPs in Telugu GEC. Fiction content creates stickiness and loyalty to a channel, which both Gemini and ETV have achieved; Rainbow has shifted its focus to fiction with the share of its fiction GRPs increasing from 9% in FY09 to 23% in FY12

►Gemini TV has used slot sharing and exclusivity clauses with its producers to produce successful fiction shows

►ETV because of its legacy and focus on fiction has been successful in capturing a loyal audience for its long running shows such as Chandramukhi and Bharyamani

►Amongst GECs, Rainbow „s fiction programmes have the lowest GRP/ duration ratio (~1.4) primarily because of the relatively poor performance of its original fiction content

Non fiction occupies ~17% of the duration and contributes to ~18% of GRPs in Telugu GEC

►ETV and Rainbow have done well in the non fiction category with ~1.4 and ~1 GRP/ duration respectively

Source: TAM data, EY Analysis

23%

39%

23%

46%

20% 33%

17% 23%

5%

4% 17%

24%

24% 22%

22% 22% 31%

52%

25%

20%

36% 42%

26%

50% 38%

3% 30%

5% 20% 4%

34% 5% 4% 1% 4% 6%

0%

20%

40%

60%

80%

100%

Duration GRPs Duration GRPs Duration GRPs Duration GRPs

Gemini ETV Zee Rainbow

%

Fiction Non Fiction Movies Other Shows News

709

xx Avg weekly GRPs

362 403 331




Unlike other GEC channels, Rainbow‟s programming success is driven by non-fiction and dubbed fiction content

Programme GRPs Avg TVR Genre

Mogalirekulu 3,024 10 Fiction

Aparanji 1,534 5.9 Fiction

Devata 1,285 5.3 Fiction

No 23 Mahalaxmi Nivasam 1,167 5.1 Fiction

Rakthasambhadam 803 4.9 Fiction

Top 10 programmes 10,932 4.7

% GRP share of top 10 programmesfor the channel 30%


CID 1,470 2.4 Fiction dubbed

Modern Mahalaxmi 1,266 2.1 Non fiction

Chinnari Pellikooturu 1,140 2.7 Fiction dubbed

Bhale Chance 812 2.9 Non fiction

Airtel Challenge -3 531 1.5 Non fiction

Top 10 programmes 7,198 3

% GRP share of top 10 programmes for the channel 34%

Top programmes for Gemini Top programmes for Rainbow


Chandramukhi 1,380 4.3 Fiction

Bharyamani 1,270 3.9 Fiction

Manasu Mamata 1,229 3.7 Fiction

Aadadhe Aadharam 988 3.1 Fiction

Anthahpuram 830 2.6 Fiction

Top 10 programmes 9,600 2.6



Chinna Kodalu 1,116 3.2 Fiction-dubbed

Muddubidda 880 3.25 Fiction

Pasupu Kumkuma 748 2.7 Fiction dubbed

Radhakalyanam 576 1.6 Fiction

Kalavari Kodalu 543 2.2 Fiction

Top 10 programmes 5.940 2.1


Top programmes for ETV Top programmes for Zee Telugu

Original fiction content usually drives channel loyalty. However, fiction content does not appear to be one of Rainbow‟s top 5 programmes ► Gemini and ETV‟s Top five programmes are all fiction programmes. In contrast, Rainbow has only 2 fiction programmes amongst top 5. Further

these programmes are dubbed content ► Rainbow‟s dependence on top 5 programmes (viewership concentration) is in line with other players (except ETV)

Rainbow appears to haverelatively high dependence on dubbed fiction content from Hindi GECs (Colors and Sony); this could pose risks in terms of content continuity and associated risks

Source: TAMFY2012 data, EY Analysis




Rainbow‟s original fiction content is struggling to garner viewership; dubbed content, particularly CID, is doing well for Rainbow in prime time

Top show Channel Genre Rainbow Programme (Genre)

Jai Shree Krishna Gemini Fiction Sri Shanidevuni Mahimalu

(Fiction dubbed)

Shravani Subramanyam

Gemini Fiction Vasantha Kokila (Fiction dubbed)

Manthara Gemini Fiction Chinnari Pellikooturu

(Fiction dubbed)

Auto Bharathi Gemini Fiction Anna Chellelu

(Fiction original)

No. 23 Mahalakhmi Nivasam

Gemini Fiction MissammaO Aadapilla

(Fiction original)

Mogalirekulu Gemini Fiction Yedureetha

(Fiction original)

Aparanji Gemini Fiction Bhale Chance (Non fiction)

Devata Gemini Fiction Bhale Chance (Non fiction)

CID Rainbow Fiction

(Dubbed)

CID (Fiction dubbed)

CID Rainbow Fiction

(Dubbed)

CID (Fiction dubbed)

Gemini News Gemini News Challenge-3 (2)

0.8

1.7

2.5

2.6

2.4

3.7

4.0

3.5

1.8

1.2

0.7

1.1

2.1

3.6

5.1

6.8

9.2

5.2

4.9

3.7

3.7

3.0

0.8

2.7

3.6

3.8

3.7

2.1

2.4

2.7

3.7

2.1

1.5

0.5

1.0

2.5

2.8

2.3

2.4

3.4

2.9

3.5

2.0

1.2

0 2 4 6 8 10

23:00

22:30

22:00

21:30

21:00

20:30

20:00

19:30

19:00

18:30

18:00

Zee Telugu Vibgyor Gemini ETV

2

2

2

3

4

4

2

2

1

1

2

Viewership Ranking

Source: TAMCY2012 data, EY Analysis

Rainbow‟s ranking

falls in original fiction content

Prime time slots

Content produced by Annapurna - “Yuva” and “Pelli Pandiri” - which were telecast in prime time (19:30 to 20:30) between Jun-11 to Dec-11 had an average TVR of 1.15 Rainbow




~60% of the contribution from dubbed content comes from Viacom‟s library, the term period for which may not be extended on expiry

Serial Vendor Revenue (INR Crore)

Contribution*(INR Crore)

Contribution *%

Chinnari Pelli Kuthuru

Viacom 18 6.2 5.1 13%

CID MSM 6.0 4.3 11%

Vasantha Kokila Viacom 18 2.2 1.6 4%

Naadi Aadajanme Viacom 18 1.6 0.9 2%

Sri Shanidevi Mahimalu

Turner GEC 1.4 0.8 2%

Alajadi Viacom 18 0.6 0.4 1%

Kodala Kodala Koduku Pellama

Star India 0.4 0.3 1%

Contribution breakup content wise FY12

Channel has significant dependence on dubbed content at the overall margin level ► Dubbed fiction contributes to more than 30% of the overall channel level contribution. In contrast, channel‟s original content

contributes~1% ► Alajadi series, which generated ~1% of the overall channel contribution, recently concluded its last episode ► Management has negotiated for complete series contract for Balika Vadhu (Chinnari Pelli Kuthuru), Na Aana is Desh Main Ladoo

(Naadi Aadaianme) and Laagi Tujhse lagan (Vasantha Kokila)

Source: (1)Rainbow financials, Management discussion, Note: * Contribution = Advertisement revenue- Content procurement cost

INR 39cr

Movies 33%

Fiction Dubbed

34%

Fiction Original

1%

Non Fiction 22%

Events 0%

Slots 10%

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





Rainbow‟s movie channel, within months of its launch, appears to have gained market share from Gemini‟s movie channel

Movies is the most popular content on Telugu channels;

both Gemini and Rainbow have exclusive movie channels

► Gemini Movieshas had a head start and continues to be

the market leader in this category, with double the GRPs

of Rainbow‟s movie channel

► However, after the launch of Rainbow‟s movie channel in

early 2011, Gemini Movies has witnessed a significant

drop in its GRPs

Rainbow‟s GRPs have increased from 73 to 119, over the

last five quarters, an increase of 13%

► Rainbow has actively focused to increase its movie

inventory in the last 2 years

► Additionally, Rainbow has an exclusivity tie up with its

promoter‟s production houses, giving it an advantage to

acquire satellite rights

73

127 126 114 119

323

295

268

207

259

0

50

100

150

200

250

300

350

Q1'CY2011 Q2' CY2011 Q3'CY2011 Q4'CY2011 Q1'CY2012

Av

g W

ee

kly

GR

Ps

Vibgyor Movies Gemini Movies

Telugu movie channels- GRPs Jan-11- Mar-12

“Gemini has a strong movie library which is difficult to replicate.. While Rainbow is acquiring movies, it will take time”

– Regional broadcaster

“When Gemini started acquiring movie rights in the early 90s, they were given lifetime rights to some of the greatest classics Telugu cinema has seen. Newer movie rights are typically given for 7 years putting newer channels at a disadvantage ”

– Regional broadcaster

Rainbow




A sample analysis of Top 20 grossing movies released in 2010 and 2011 indicates that Rainbow is at par with Gemini with respect to acquisition of satellite rights for movies Top 10 movies: Satellite rights acquisition - by channel(2010-11)

► Of the sample of 20 top grossing movies in 2010 and 2011, Gemini Movies acquired the satellite rights of 9 movies(including

Endhiran, Sun‟s own production) while Rainbow had acquired rights for 8 movies. Zee Telugu appears to have become more active in

acquisition of movie satellite rights in 2011 (3 acquisitions)

► ETV appears to be relatively inactive in the acquisition of satellite rights in this category

Year Name Channel Satellite right cost (in INR Crs.)

Box-office collection (In INR Crs.)

2010

Endhiran Gemini TV Own Production 42.00

Simha Rainbow 3.10 33.50

Brindavanam Gemini TV 4.50 25.00

Darling Gemini TV 4.50 24.00

Maryada Ramanna Rainbow 3.50 21.00

Adurs Rainbow 4.05 20.00

Namo Venkatesa Rainbow 4.10 20.00

Don Seenu Gemini TV 3.85 19.00

Orange Rainbow 5.20 17.20

Komaram Puli Gemini TV 5.00 16.00

2011

Dookudu Rainbow 5.25 65.00

Mr. Perfect Gemini TV 5.20 32.00

Oosaravelli Gemini TV 5.50 29.00

Mirapakaya Zee Telugu 4.00 23.75

Teenmaar Rainbow 5.25 21.00

Kandireega Zee Telugu 3.50 18.50

Panjaa Gemini TV 5.75 18.00

Rangam Rainbow 1.05 14.50

Sri Rama Rajyam Zee Telugu 4.50 14.00

Gaganam Gemini TV 4.50 13.00

“Both Gemini and Rainbow are actively acquiring movie rights.. Zee Telugu is laidback .. their movie investments are low” – Ex employee, Regional broadcaster




However, the average cost of satellite rights of big budget movies has been increasing consistently over the years

INR Lacs FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12

Acquisition cost

106 720 485 1,970 1,025 - - - 1,270 3,920

Average Acquisition cost

106 240 243 246 114 - - - 423 356

Rainbow‟s satellite right acquisition and average costs by movie category 2009-2011

1

3 2

8

3

9

11

0

2

4

6

8

10

12

Blockbuster Maha Movies

Nu

mb

er

of

mo

vie

s

The average cost of acquisition for the satellite rights of Maha Movies and Blockbuster movies for Rainbow have been increasing

over the years

► The reduction in the average acquisition cost in FY12 appears to be due to the low acquisition costs for few successful dubbed Tamil

as well as low budget movies which have been considered as part of the blockbuster and Maha Movies categories; excluding these

movies, FY12 average costs are similar to those of FY11

Analysis of the movie rights price for some of the leading actors also suggests a consistent increase in costs

► While the average costs for Nagarjuna movies have increased from INR 1.35 Cr in 2007 to INR 5.25 Cr for his under-production

movie, the costs for Allu Arvind movies have increased from INR 70 Lacs to INR 5 Cr over the past six years

Blockbuster and Maha Movies in FY12 include dubbed Tamil movies(Gambler, Nene Ambani) as well as other low budget successful movies (Karma)

“Movie rights cost have increased significantly only over the past 2-3 years. We expect the costs to remain stable for a year or so now and then increase again” – AP-based company involved in movie distribution




While Maha and Blockbuster movies, together, account for ~9% of Rainbow‟s existing library, the cost of acquiring these movies is estimated to be 60% of the cost of the library Category-wise number and acquisition cost of movies acquired (1)(2)

Rainbow‟s movie library is categorized into dubbed, regular, blockbuster and Mahaa movies on the basis of each movie‟s expected performance in the box office

► Average movie acquisition cost varies significantly across movie categories with an average Mahaa movie (INR 4cr) costing over 50 times that of a dubbed movie (INR 7lakhs)

► Over 65% (32 movies) of Rainbow‟s Maha and blockbuster movie collection was built between FY10 and FY12. In comparison, the preceding three years contributed to the addition of 30% (15 movies) of Rainbow‟s Maha and blockbuster library

6%

3%

8%

Source: (1) Information from Target management; (2) EY analysis

200 100 0 100 200

Maha Movies

Blockbuster Movies

Regular Movies

Dubbed Movies

Number of movies (no.)

39%

289 52%

213

35

14

40 20 0 20 40

31%

29%

32%

15

56

52

57




Rainbow appears to have benefited from its association with its related parties and directors; such benefits may not be sustainable in the long run

The satellite rights of all movies released by Geetha Arts and

Annapurna Studios (related parties), over the last two years,

have been acquired by Rainbow

► Rainbow appears to have benefited from the preferential

treatment from these production houses

► Management discussions suggest that the rights for

„Magadheera‟ were sold to Rainbow for INR 5.5 Cr (for 7-

years right), even when Gemini was willing to offer INR 7 Cr

(for perpetual rights); similar instances have been cited for

the other movies produced by Geetha Arts

► Industry discussions suggest that apart from providing the

access to the rights to Rainbow, this decision is also driven

by the commercial considerations around gradual monetizing

of the movie rights

Rainbow has also managed to acquire 7 out of 16 movies

involving its promoters and their immediate family over the

last two years

Movie rights acquisition – Related parties and promoters (2010-11)

Movies Acquisition

cost (inr cr) Channel

Related Parties

Geetha arts Magadheera 5.5 Rainbow

100% Love 3.0 Rainbow

Badrinadh 5.0 Rainbow

Annapurna studios Rajanna 5.0 Rainbow

Promoters & family

Nagarjuna Kedi 4.00 Rainbow

Ragada 5.10 Gemini

Gaganam 4.50 Gemini

Rajanna 5.00 Rainbow

Damarukam 5.25 Gemini

Ram Charan Teja Orange 5.20 Rainbow

Naga Chaitanya Bejawada 4.00 Gemini

Ye Maaya

Chesave

2.80 Zee Telugu

Dhada 3.50 Rainbow

100% Love 3.00 Rainbow

Pawan Kalyan Teenmaar 5.25 Rainbow

Panjaa 5.75 Gemini

Komaram Puli 5.00 Gemini

Allu Arvind Vedam 4.00 Gemini

Varudu 4.10 Gemini

Badrinadh 5.00 Rainbow

Rights for all the movies for

related parties’ production were

purchased by Maa

Rainbow has also acquired 7 out of 16 movies for the actor promoters and their family

over the past two years “Only Geetha Arts and Annapurna Studios are related

parties, where we have an informal first right of refusal for the satellite rights. For other movies involving the promoters andtheir family, while they put in a word with the producers to consider us, eventually, it is the producer’s decision to sell it to us or not”

– Target‟s management team




Existing movie library is expected to contribute significantly to Rainbow‟s future revenue primarily on account of „Maha‟ and „Blockbuster‟ movies Category-wise expected revenue contribution of movies acquired (1)(2) (INR cr) FY13 – FY17

Existing Maha movies are estimated to account for the

majority of the future revenues expected from Rainbow‟s

existing movie library

► While Maha movies form around 5% of the movies in

Rainbow‟s library by number the category forms ~37% of

its movie earnings in FY12

► While the licenses for all the Maha movies in Rainbow‟s

library are expected to continue through FY17, licenses

of movies accounting for ~35%, ~40% and ~20% of the

TRPs are expected to expected to expire in the

blockbuster, regular and dubbed categories respectively

19 21 23 24 25

14 14 14 15 14 10 10 8 8 8 6 6 7 7 6

0

10

20

30

40

50

60

FY13 P FY14 P FY15 P FY16 P FY17 P Re

ve

nu

e c

on

trib

uti

on

(IN

R c

r)

- Maha movie - Blockbuster - Regular - Dubbed

57% 51% 45% 41% 36%

FY13F FY14F FY15F FY16F FY17F

Overall revenue attributable to Movies (INR cr) 86 101 116 133 148

Revenues attributable to present movie library (%) 60% 56% 53% 49% 46%

Adjustment for TRPs lost due to expiry of license (% lost)

- Maha movies 0% 0% 0% 0% 0%

- Blockbuster movies 12% 9% 3% 4% 7%

- Regular movies 4% 8% 22% 1% 3%

- Dubbed movies 8% 0% 0% 9% 5%

x% Existing library‟s share of overall movie revenue

Movies accounting for ~35%, ~40% and ~20%

of the TRPs are expected to expected

to expire in the blockbuster, regular

and dubbed categories respectively by FY17

Source: (1) Information from Target management; (2) EY analysis

Note: The estimate for overall revenue contribution of the existing movie library is based on the PPA analysis performed independently and historical movie category wise share of revenue. The above analysis has been conducted

based on assumptions that would require rigorous testing through further analysis of movie viewing behaviour

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





Rainbow Music GRPs share %

43% 38% 43% 48% 45%

Rainbow‟s music channel has ~45% share of the Telugu music channel GRPs

Telugu music channel GRPs(Jan 2011-March 2012)

► In the last few years overall Telugu music channel‟s share in Andhra Pradesh market GRPs has remained constant at ~3%

► In the Music category Gemini Music and Rainbow Music have emerged as the large players with 100% reach

► There are other players in the market like SS Music, City Music etc but have insignificant share because of limited reach

► Rainbow‟s share in Telugu music category has remained around 40-45% Rainbow has reduced its effective rates fromINR 263 PTS in FY09 to INR 176 PTS in FY12 to have a higher inventory utilisation

which has increased from 36% in FY09 to 62% in FY12

Source: TAM data, Rainbow management discussion

50 45 44

47

54

65

73

58

52

67

0

10

20

30

40

50

60

70

80

Q1'CY2011 Q2' CY2011 Q3'CY2011 Q4'CY2011 Q1'CY2012

Av

g.

we

ekly

GR

Ps

Vibgyor Music Gemini Music

Revenue and utilisation chart FY10-FY12

Effective rate (PT+NPT)

263 226 176

7

5

8

36% 38%

62%

0%

10%

20%

30%

40%

50%

60%

70%

0

1

2

3

4

5

6

7

8

9

FY10 FY11 FY12 %

INR

Cro

re

Revenue (net of service tax) Utilisation Rainbow

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





Management plans to use its Gold channel to reach out to urban youth through the 2nd TV viewer; so far Rainbow Gold has primarily focused on airing game shows

Source: TAM Data

52%

13% 11% 5% 5% 5% 3%

0%

31%

15% 10%

15%

2% 8%

1%

10%

0%

10%

20%

30%

40%

50%

60%

Pe

rce

nta

ge

sh

are

(%

)

GRP share Share of airtime

Rainbow Gold‟s programming mix

Target audience

► Urban audience in Hyderabad ► Kids and urban youth ► Targeting the second TV viewing audience which is ~70%1 of the TAM market, looking

for differentiated content

Rationale

► Expand Telugu GEC space with differentiated offering ► New viewing habits evolving with audience looking for differentiated content ► Opportunity to experiment with content




The 2nd GEC concept is still untested in the Telugu market, on comparisons with similar channels in HSM we get a wide range of GRPs

Rainbow Gold has an upside of 82 GRPs if it is able to emulate SAB TV‟s performance which is below management‟s target GRPs of 130 ► Rainbow Gold currently has managed to achieve 24 GRPs

and targets to achieve 130 GRPs by FY13 ► UTV Bindaas has on an average achieved ~0.6%2 of the

share of Top 4 GECs, which if Rainbow Gold emulates will result in fall in their GRPs from ~25 to ~18

► SAB TV, which is considered to be the most successful 2nd GEC channel, has achieved 4% share of the GRPs in the HSM market. If emulated by Rainbow Gold this may result in 107 GRPs for the channel

Source: (1)Management discussion, (2)TAM Data

While management plans to exhibit innovative content on their Gold channel, the concept is still evolving and is largely untested

“We are looking at creating a channel for the second TV viewing audience on the lines of UTV Bindaas”

– Rainbow management

“A focused channel with a different type of content is needed in this market as that is the best way to tell advertisers that they would find access to a new TG.”

– Large advertiser

Rainbow Gold- Potential up-side(2)

25 25 25

(7)

82

-20

0

20

40

60

80

100

120

140

Vibgyor Gold UTV Bindaas as % of HSM

Sab TV as % of HSM

Av

g. W

ee

kly

GR

Ps

Current performance Additional GRPs

Targeted GRPs: 130 107

18

Rainbow

Executive summary



- Company overview

- GEC channel

- Movies channel

- Music channel

- Gold channel





EY base case estimate is mildly lower than management estimates in terms of net revenue and EBITDA margin over net revenue

Comparison of estimated revenue and EBITDA margins: Management estimates vs. EY estimates FY11 – FY15

Revenue

► Management estimates its revenues to grow from INR173 crores in FY12 to INR 301 crores by FY15

► EY base case revenue estimate for FY15 is lower at ~ INR 290 crores; the lower revenue is primarily on account of lower advertising growth expected (than considered by the management case) and a more conservative view on Maa Gold‟s revenues

► Lower margin is primarily on account of lower revenue growth in EY base case

► Dip in revenue in FY 13 is largely due to

o Higher programming cost for Maa Gold and Music

o Increase in Tape and Telecast expense

o Increase in estimated carriage fees

Overall EBITDA (INR Crores)

FY11 FY12 FY13 P FY14 P FY15 P

Management estimate 28 48 60 80 92

EY estimate 32 * 52 * 54 68 79

125

173

220 259

301

125 173 215 251 290

25%

30%

27%

31% 31%

25%

30%

25% 27% 27%

0%

5%

10%

15%

20%

25%

30%

35%

-

50

100

150

200

250

300

350

FY 11 FY 12 FY 13 FY 14 FY 15

Management Estimate EY Estimate

*Represents adjusted EBITDA as identified during financial due diligence (adjustments – inventory amortization: INR 0.7 crores (FY 11), channel carriage fee: INR 3 crores (FY 11), INR 3.6 crores (FY 12), INR 0.1 crores (FY 12), uplinking costs: INR 0.6 crores (FY 12))




Net advertisement revenue projections for FY15 in EY base case are estimated to be ~ INR 158 crores for Maa GEC and INR 38 Crores for Maa Movies Rainbow GEC – Net Ad Revenue estimates (FY11 – FY15)

Rainbow Movies – Net Ad revenue estimates (FY11 – FY15)

► Management‟s overall revenue forecasts are largely in line with EY estimates

► The EY base case considers an annual revenue growth of 14-15% based on market feedback and last year‟s performance of MaaTV

► In addition, the utlisation percentage has not exceeded 90% in EY‟s base case compared to 100% for management case

► Maa Movies channel was launched in Q4-FY11. The channel witnessed strong growth in advertising revenues in FY12 mainly due to rise in GRPs and full 12 months of operation in FY12 against only 3 months of operation in FY11

► The channel‟s average weekly GRPs have now stabilized at around 120 GRPs

► The management‟s revenue growth expectations appear mildly aggressive given the stagnant GRPs

► EY base case revenue for the channel (based on last six months performance) is estimated to be ~ INR 29 Crores in FY13 and expected to reach INR 38 Crores by FY15

90 104

121 143

168

90 104 118 137 158 0

20

40

60

80

100

120

140

160

180

FY 11 FY 12 FY 13 FY 14 FY 15

Ad

re

ve

nu

e in

IN

R c

rore

s


1

22 28

35 40

1 22 29 33 38 -

5

10

15

20

25

30

35

40

45

FY 11 FY 12 FY 13 FY 14 FY 15

Ad

re

ve

nu

e in

IN

R c

rore

s





EY‟s base case estimates of net advertisement revenue for Rainbow Gold and Rainbow Music are lower than management estimates by INR 3 cr and INR 0.5cr respectively Rainbow Gold – Net Ad revenue estimates (FY11 – FY15)

Rainbow Music – Net Ad revenue estimates (FY11 – FY15)

► Management expects advertisement revenue of ~30 crores from Rainbow Gold by FY 15

► Rainbow Gold is a new channel and its performance and profitability depend largely on success of the new concept. However, the demand for such content in the local market is still untested

► Due to such uncertainties, EY base case analysis considers lower revenue of around 27 Crores by FY 15 – profit after tax from this channel is 0 in FY15

► Management estimates for ad revenue generated through Rainbow Music are largely in line with EY estimates

► Management plans to increase programming spends for the music channel to drive GRPS. This increase in programming expense outpaces the increase in advertising revenue

0 1

22 25

30

0 1 19 23 27 -

5

10

15

20

25

30

35

FY 11 FY 12 FY 13 FY 14 FY 15

Ad

re

ve

nu

e in

IN

R c

rore

s


5

8 10

11 13

5 8 9 11 13 -

2

4

6

8

10

12

14

FY 11 FY 12 FY 13 FY 14 FY 15

Ad

re

ve

nu

e in

IN

R c

rore

s





EY base case estimate for Cable and DTH subscription revenues is marginally higher than the management case

Cable subscription net revenue (FY11 – FY15)

DTH subscription net revenue (FY11 – FY15)

► The management plans to gradually increase the subscription fee for its bouquet for cable from INR 6 to INR 9

► However, the management‟s estimate does not consider impact of digitization and benefit expected to accrue to broadcasters on account of higher subscriber disclosures

► EY base case estimates consider partial rollout of digital set-top boxes over the next few years which are likely to lead to higher earnings for broadcasters

► For forecasting DTH revenue, management estimate has assumed a flat rate of around 12% annually across all service providers.

► EY base case estimate is based on the DTH subscriber growth expectations and current agreements of the company with the various players

► The EY revenue estimate is marginally higher than the management estimates. Potential upside may exist in case all of the company‟s channels are carried by Sun Direct and Reliance TV

6

9 11

12 14

6 9 11 13 15 -

2

4

6

8

10

12

14

16

18

FY 11 FY 12 FY 13 FY 14 FY 15

DT

H r

ev

en

ue

in I

NR

cro

res


19 21 21 24

26

19 21 21 25 30 -

5

10

15

20

25

30

35

FY 11 FY 12 FY 13 FY 14 FY 15

Ca

ble

su

bsc

rip

tio

n r

ev

en

ue

in

IN

R c

rore

s Management Estimate




5 3 4 4 13 16 18 21 12

23 26 30

9

12 13

15 35

41 44

53

1

2 2

2

44% 44% 41%

42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

20

40

60

80

100

120

140

FY 12 FY 13 FY 14 FY 15

%

INR

Cro

re

Events Serial Rights Programming Expenses Game Shows (Prime Time)

Movies Other programming expenditure % of Net revenue

Management estimates for programming cost appears to be reasonable

Programming content cost assumptions appear to be in line with Industry benchmark. Content cost as a percentage of net revenue is expected to reduce from 49% in FY12 to 42% in FY16 on account of stronger increase in revenue from ad rates and subscription rates

► There is an increase in programming cost from INR 75 crore in FY12 to INR 97 crore in FY13 on account of increase in programming budget for Rainbow Gold

► The content mix has been assumed as per historical mix with an estimated rate increase of ~14% for serial rights,~11% increase for game shows, events and other programming expense and ~18% increase for programming expense year on year

► The cost per episode appears to be in line with Industry average

Content Rainbow Industry discussion

Fiction-Original 100K 90K-110K

Non fiction (Reality shows) 220K 200k-250k

“The average cost per episode of fiction is around INR90k-110K, while that of non fiction is ~300K”

– Leading regional broadcaster

Management Programming content cost for all channels (FY12-FY16)

75

97 107

125




Carriage costs and telecast expenses are expected to rise in FY 13 due to addition of new channel

► Management„s carriage cost estimate is based on the current agreements of the company with the MSOs and factors in the additional payout on account of the new channels (especially Gold)

► The management has considered a lower growth of 6-7% in carriage fee, post FY13. This appears reasonable considering that the other competitors like ETV and Gemini currently do not pay any carriage fee

► The largest component of tapes and telecast expenses is MCPC charges. The MCPC charges forecasted by the management are supported by the current contract/arrangement with Tata communications

► Management case consider a sharp increase in FY13, followed by a 15% increase over the next two years

Tapes and telecast expense FY11 – FY15 E

2

5

7 8 8

2%

3%

3% 3%

3%

0%

1%

2%

3%

4%

0

2

4

6

8

10

FY 11 FY 12 FY 13 FY 14 FY 15

Pe

rce

nta

ge

of

rev

en

ue

(%

)

INR

cr

Channel Carrying fee Percentage of revenue

Carriage fees FY11 – FY15 E

4 6

9 11 12

3.4% 3.4%

4.3% 4.1% 4.1%

0%

1%

2%

3%

4%

5%

0

2

4

6

8

10

12

14

FY 11 FY 12 FY 13 FY 14 FY 15 Pe

rce

nta

ge

of

rev

en

ue

(%

)

INR

cr

Tapes & Telecast expense Percentage of revenue

*There may not be one to one mapping of the 'SG&A and others' cost heads due to difference in classification of expenses and EBITDA adjustments




Administrative and personnel expenses appear to be supported by historical trends

► Management‟s personnel cost estimates are largely in line with EY base case estimates

► Management expects sharp rise in personnel costs in FY13 mainly on account of increase in salaries and wages for the GEC channel

► Post FY13, management has considered an increase in personnel expenses at around 19% which is in line with historical rise of ~20%

► The administrative and SG&A cost assumptions are in line with the historical ratios :

► Admin costs at about 4% of the revenues

► SG&A expenses at about 4-5% of revenues

16 21 26 31 37

13% 12% 12% 12% 13%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

10

20

30

40

50

FY 11 FY 12 FY 13 FY 14 FY 15

Pe

rce

nta

ge

of

rev

en

ue

(%

)

INR

cr

Personnel Cost Percentage of revenue

Personnel fees FY11 – FY15 E

Administration cost FY11 – FY15 E

6 8 8 10 11

4.8%

3.7% 3.9% 3.8% 3.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0

2

4

6

8

10

12

1 2 3 4 5

Pe

rce

nta

ge

of

rev

en

ue

(%

)

INR

cr

Admin Cost Percentage of revenue




The synergy case factors in potential revenue upsides on account of higher ad rates, higher subscription fee and digital media revenues

Synergy area Description Start year for Synergy

Assumption

Increase in ad rates (ER) for Maa TV

MSM‟s experience and collective bargaining power could increase ad rates (ERs) for the Maa TV network

FY 15 (Post majority stake)

Discussions With MSM‟s team indicate that the ER for Maa TV could be increased by as much as 30-40% over a two year period, provided ad sales are managed by the MSM team

Increase in distribution revenues

Potential to increase subscription revenues exists through collective bargaining with MSOs and DTH players and offering through OneAlliance

FY14 ► 5% higher distribution revenue in FY14 ► 10% higher distribution revenue estimated in

EY base case in FY15 and the following years

Digital and New media, international revenue

Increase in digital and new media revenues through access to MSM‟s partners and joint sales Further, Rainbow could leverage MSM‟s international distribution network

FY14 Digital media revenues expected to double over the base case by FY16




High level assessment of potential synergies with MSM suggests an upside of INR 31cr and INR 24cr in revenue and EBITDA respectively by FY16 Comparison of estimated revenue and EBITDA margins: EY base case estimates vs. Synergy estimates FY11 – FY16

Revenue

► The synergy scenario is expected to emerge from FY 14 onwards

► Net revenue may increase from INR 251 crores to INR 254 crores in FY 14 in synergy case compared to base case

► The effect is expected to be more pronounced in FY 15 and FY 16 with net revenue increasing by 12 and 31 crores respectively

EBITDA

► EBITDA is expected to increase by 3 crores in FY 14 and 10 and 24 crores in FY 15 and FY 16 respectively

► Overall the margin may show incremental gain of 2% and 4% in FY 15 and FY 16 under the synergy case while it remains largely flat in the base case

Overall EBITDA (INR Crores)

FY11 FY 12 FY 13P FY 14P FY 15P FY 16P

EY base case estimate 32 * 52 * 54 68 79 94

Synergy estimate 32 52 54 70 88 118

125

173 215

251 290

332

125 173 215 254 302 362

25%

30%

25% 27%

27% 28%

25%

30%

25%

28%

29%

33%

0%

5%

10%

15%

20%

25%

30%

35%

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Base case estimate Synergy case estimate





Rainbow‟s high dependence for content from other broadcasters and absence of „proof of concept‟ for Rainbow Gold may pose risks to its business

► Around 34% of the Target‟s contribution is generated through content procured from other large broadcasting groups such as Viacom and Zee Turner and dubbed for the Telugu audience

► Target may face a challenge in extending contracts with some broadcasters due to potential competitive conflicts between its content providers and investors

► Inability to renew the contracts for all of its dubbed content may impact the annual revenue and contribution of Rainbow by INR 18cr and INR 13cr respectively

Dependence on content from third parties

► Rainbow‟s management plans to offer differentiated content targeted at urban youth audience on the Gold channel. However, the concept is still evolving and is largely untested

► While channels positioned similarly exist for the HSM audience, this type of content has not been tested in regional markets such as AP. Failure to gain traction may lead to loss of investments already made by Rainbow to create and market the channel

Untested concept – Rainbow gold




Changes to regulations governing the broadcasting sector may impact Rainbow‟s business

► TRAI has indicated its intent to exercise greater control on the split of subscription revenue between different stakeholders in the cable television distribution value chain

► TRAI‟s current stance suggests that ~70% of the subscription revenue generated through cable may be retained by LCOs. This may limit the opportunity for broadcasters

Regulation of television subscription revenue share

► If proposed FCT regulations is implemented in its current form, the overall broadcasting industry may face some pressure on its revenues.

► The Indian broadcasting industry has strongly opposed the proposal and there continues to be uncertainty with respect to the implementation of the regulation.

► Further, the impact on shrinkage of ad-inventory (in case of implementation) is expected to be partially offset by increase in the ad rates

Regulation of FCT

Emergence of FTAs

► Subscribers‟ ability to select specific channels may lead to a reduction in channel reach thereby negatively impacting both subscription and advertising revenue

► Loss in revenue may incentivize some popular regional channels to migrate from a Pay channel to an FTA

► Emergence of regional FTAs may exert downward pressure on Target‟s ability to price its channels thereby leading to a fall in its subscription revenue

Emergence of FTAs




Income statement

Parameters (INR cr) FY11* FY 12* FY13P FY14P FY15P FY 16P

Gross Revenue 138 190 241 281 325 372

Advertising Revenue 106 150 197 229 264 303

Distribution Revenue 28 36 39 46 54 61

Digital and New Media Revenue 3 4 5 6 7 8

Service Tax 13 17 26 31 35 40

Net Revenue 125 173 215 251 290 332

Programming expense* 61 73 97 110 127 145

Personnel Cost* 16 21 26 31 37 42

Admin Cost* 6 8 8 10 11 13

Other SG&A Expenses* 11 19 13 14 16 17

EBITDA * 32 52 54 68 79 94

Depreciation 4 6 5 6 7 8

Other Income 1 1 0 0 0 1

EBIT 28 47 49 62 72 87

Finance Charges 3 5 9 12 12 10

EBT 25 42 40 50 60 77

Tax 8 14 13 17 20 25

PAT 17 28 27 34 40 51





Balance sheet – Equity and liabilities

Equity and liabilities (INR cr) FY11 FY 12 FY13P FY14P FY15P FY 16P

Shareholders' funds 101 126 154 188 229 280

Share Capital 59 59 60 60 60 60

Reserves and Surplus 42 67 94 128 168 220

Non-current liabilities 11 8 12 12 12 8

Long-term borrowings 11 7.4 12 12 11 7

Deferred tax liabilities (Net) - - - 0 1 1

Other Long term liabilities - - - - - -

Long-term provisions 0 0 0 0 0 0

Current Liabilities 41 55 70 76 70 59

Short-term borrowings 21 35 53 56 47 39

Trade payables 4 3 4 5 6 6

Other current liabilities 14 15 10 12 13 10

Short-term provisions 2 2 3 3 4 4

TOTAL 153 189 235 276 311 348




Balance sheet – Assets

Assets (INR cr) FY11 FY 12 FY13P FY14P FY15P FY 16P

Non-current assets

Fixed assets (Net) 23 24 28 37 44 44

Tangible assets 23 24 28 37 44 43

Intangible assets 0 0 0 0 0 1

Capital WIP 0 - - - - -

Deferred tax assets (net) 0 1 0.4 - - -

Long- term loans and advances 6 6 2 1 0 0

Current assets 123 158 205 238 266 304

Inventories 70 101 129 157 182 204

Trade Receivables 28 40 51 60 69 79

Cash and Bank Balances 3 4 8 8 9 14

Short -term loans and advances (net of provisions) 19 11 13 9 2 2

Other current assets 3 3 3 4 4 5

TOTAL 153 189 235 276 311 348




Cash flow statement

Parameters (INR cr) FY 12 FY13P FY14P FY15P FY 16P

PAT 27 34 40 51

-Add Depreciation 5 6 7 8

-Increase/(Decrease) in deferred tax liabilities - 0 0 -

-Increase/(Decrease) in other long term liabilities - - - -

-Increase/(Decrease) in long term provisions (0) (0) 0 0

-Increase / (Decrease) in trade payables 1 1 1 1

-Increase / (Decrease) in other current liabilities (5) 3 1 (3)

-Increase / (Decrease) in short term provisions 0 0 1 1

-Decrease/(Increase) in deferred tax assets 1 0 - -

-Decrease/(Increase) in Inventories (28) (28) (25) (22)

-Decrease/(Increase) in trade receivables (11) (9) (9) (10)

-Decrease/(Increase) in other current assets (1) (1) (1) (1)

Cash flow from operating activities (11) 8 15 24

-Increase/(Decrease) in long term borrowings 4 0 (0) (4)

-Increase/(Decrease) in short term borrowings 19 2 (8) (8)

-Decrease/(Increase) in long term loans and advances 3 1 1 -

-Decrease/(Increase) in short term loans and advances (2) 4 7 -

Cash Flow from financing activities 24 8 (1) (12)

-Increase/(Decrease) in share capital 0 0 0 0

-Increase/(Decrease) in share premium 0 0 0 0

-Capex (9) (16) (14) (7)

Cash flow from investing activities (9) (15) (13) (7)

Net Cash Flow - 4 0 1 5

Opening Cash flow balance - 4 8 8 9

Closing Cash flow balance 4 8 8 9 14

Thank you

project kabel xx february 2011 draft report - wikileaks india/120605 project... · project rainbow...

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