C O M P A N Y

R E P O R T

India
16th April 2012

Reliance Broadcast Network

At an inflection point

Rs 53.45

Sector: Media
BSE Sensex Nifty 52 week high (Rs) 52 week low (Rs) NSE BSE Equity Shares (mn) Face Value (Rs) Market Cap (Rs mn) 17,151 5,226 99.25 40.20 RBN 533143 79.45 5 4,239

Reliance Broadcast Network (RBN) is rapidly building a strong presence in the Indian M&E industry. Within 6 years, BIG FM, with 45 stations, is largest by scale, second largest by revenues and EBIT positive. RBN has a 5 channel broadcasting portfolio within 18 months of first channel launch. RBN is a potent play of TV + Radio that offers local audiences as well as scale for national advertisers. Content initiatives BIG Productions and Live are creating a repute of their own besides in-house competencies. A high growth media play: Indian M&E industry is set for high growth of 15% over 2011-16, with Radio at 21% and television at 17% (FICCI-KPMG report 2012). RBNs FY11 revenues grew 36% YoY, higher than industry and at par with leaders to reach Rs 2.4bn. Radio had 71% share. In 9mFY12, RBNs revenues grew 30% to reach Rs 2.3bn. Radio was 67% and Production and TV began with 15% and 4% shares. RBNs total revenues are set to grow at 51% over FY11-15 as it becomes 100-150 FM network and ~ 9 channel broadcasters by FY15.

Share Price Performance (%) RBN Sensex 1 week 1 month 3 month 6 month 1 year -4.1 -3.3 -3.5 -22.0 -35.1 -0.4 -1.8 5.9 2.2 -11.5

Business game changers ahead in both radio and TV: Phase-III will increase radio reach ~3x to over 300 cities. Radio would be a national media like TV, with improved ability to deliver targeted local reach. Radios share in media ad-pie to increase from 3.8% presently to 5% by 2016. Digitalisation of cable TV will improve business economics for broadcasters.

Shareholding Pattern (Dec11) Promoters 65.2% FIIs/FVCIs MF/Banks Body Corporates Others 1.3% 1.3% 13.7% 18.5%

RBN well positioned to ride the change and turn profitable by FY14 RBN will be a 100-150 station network post Phase III with presence in key cities missing in its portfolio. BIG FM is already EBIT positive. In TV, RBN will establish as a strong focused play in English GEC and targeted regional belts with ~ 9 channel portfolio plus language and HD feeds. Content will be a mix of cutting edge international, dubbed and local through BIG Productions. TV to break-even by FY14. RBN trades at a P/E of 7.4x and EV/EBITDA of 4.7x of our projected FY14 numbers, at a significant discount to industrys ttm PE of 18x and EV/EBITDA of 11x. With FM Phase III process to start in a few weeks time, RBN is an attractive investment opportunity currently.
FY10* Revenue (Rs. Mn) EBITDA (Rs. Mn) PAT (Rs. Mn) EBITDA margin (%) ROaE (%) P/E Ratio (x) EV/Sales (x) EV/EBITDA (x) P/BV (x) D/E (x) 1,807 -162 -761 -9% NA NA 3.3 NA NA NA FY11 2,454 -64 -537 -3% NA NA 2.9 NA 2.9 0.5 FY12p 3,134 -451 -1,018 -14% NA NA 1.9 NA 4.1 1.4 FY13e 5,045 192 -318 4% NA NA 1.2 32.0 1.9 0.1 FY14e 8,936 1,544 940 17% 22% 7.4 0.8 4.6 1.5 0.1 FY15e 12,807 3,929 3,166 31% 49% 2.2 0.5 1.8 0.9 0.0

* standalone
Four-S reports are available on BLOOMBERG, Reuters and Thomson Publishers

Company Report: RBN

30 Mar12

Investment Rationale
One of the fastest growing media companies
36% FY11 growth, better than peer average
36% YoY growth in FY11 - higher than industry average

RBN achieved a turnover of Rs 2,454mn in FY11 with a YoY growth of 36%. This was at par with industry leaders and higher than peer average of 27%.
Revenue growth YoY Peer Average RBN
Source: Four-S Research

FY11 27% 36%

9mFY12 14% 30%

RBNs total revenues in FY11 were Rs 2,513mn.

Second highest growth in peer group in 9mFY12

RBN repeated the strong revenue performance in 9mFY12 with a YoY growth of 30% to reach Rs 2,315 in revenues. This included a onetime royalty write-back of Rs 209mn as other operating income. Even if we exclude that, RBNs revenue growth would be 19% YoY, still second highest in the peer group. While Radio grew at 21%, entry into new segments of production (Rs 358mn, or 15% share) and TV Broadcasting (Rs 90mn, or 4% revenue share) resulted in the high growth of overall revenues.

Top play in private FM Radio segment

Number 1 by scale in FM Radio industry
Number 1 in 15 radio markets

RBN has the largest private FM network in India with 45 stations covering 1,200+ towns and 50,000+ villages reaching 42.6mn listeners (IRS+RAM). BIG FM is number 1 in 15 markets and a top 3 player in 15 others by listenership. As per ADEX data for BIG FM markets, it has a combined FCT consumption share of 23% in Q3FY12.

Number 2 by revenues in Radio industry

RBN has become number 2 by revenues within five years of operations achieving revenues of Rs 1,750mn in FY11 with a YoY growth of 16%.
Radio Revenues hampered by absence from 7 key markets Rs Mn ENIL RBN Radio HT Radio DB Corp Radio # of stations 32 45 4 17 1st station launch Oct-2001 Sep-2006 Oct-2006 May-2006 FY10 2,297 1,505 431 350 FY11 2,722 1,750 704 469 Market Share** 27% 17% 7% 5%

* Segmental revenues for Radio not available for Sun, Jagran, Radio City (MBPL not listed)

Four-S Research

Company Report: RBN

**FY11 sales on FICCI-KPMG 2010 Radio Industry revenue of 10bn

30 Mar12

RBN can be expected to reduce the revenue gap with the market leader post Phase III auctions, when it will have presence in all key cities.

Makes de-risked entry into TV Broadcasting

Enters via JV with international broadcasters to start higher on learning curve, content USP and optimize costs

RBN made a de-risked entry into TV broadcasting by targeting segments of English GEC and Regional. It avoided the already cluttered segments of Hindi GEC, Movies, Sports and News. RBN has a portfolio of 5 channels at present 3 in English GEC, 1 in Regional Hindi and 1 in Punjabi. It has optimized its costs by using the JV route for English channels. RBN also distributes Bloomberg UTV in its portfolio. RBNs TV revenues were Rs 10.6mn in FY11 with four months of TV broadcasting operations. In 9mFY12, its TV revenues achieved a turnover of Rs 90mn, accounting for 5% share of RBNs revenues.

RBNs Regional play in Hindi Heartland BIG MAGIC

RBN launched BIG MAGIC in Apr-11 to cater to Hindi heartland of UP, MP and Bihar. This is RBNs first play in Regional TV. Within nine months of operations, the channel accounted for 12% Ad spend share of the peer set in Dec-11. Regional Hindi Channels ADEX for Dec-11

Spend Rs.mn 50.0 45.0

Duration (s) 500000 400000

Second largest ad earner in HSM within 9 months of launch

40.0

35.0 30.0
25.0 20.0 15.0 10.0 5.0 0 100000 200000

300000

Source: Company Data ADEX

Enters English GEC via 50:50 JVs with global leaders

RBNs strong International tieups have the potential to make

RBN has used the JV route to enter the English GEC segment. This not only optimizes its costs, but gives it preferential right to top and latest international content in SAARC region. More importantly, it has entered into JVs with two of the biggest

Four-S Research

Company Report: RBN

it Indias largest English GEC broadcaster

30 Mar12

names in global TV broadcasting: CBS, a leader in the US markets; and RTL Group, part of European media powerhouse Bertelsmann AG, the largest in Europe, which also owns reality TV content leader Freemantle Media. RBNs BIG-CBS JV RBN has a 50:50 JV with CBS Studios International, a division of CBS Corporation USA. The JV is called BIG CBS Networks Pvt. Ltd. CBS Studios International is the leading supplier of programming to the international television marketplace. The JV has rights to and has launched 3 English GEC channels in Nov10, Mar11 and Apr11 respectively named BIG CBS Prime, BIG CBS LOVE, and BIG CBS Spark. Through these channels, Indian audiences will have access to latest international content, a strong USP against English GEC Peers, which tend to play re-runs. CBSs popular shows include Survivor, Americas next top model, Sex and the City and Ringer.

BIG CBS, # 1 English Entertainment Network in India

BIG CBS has established itself as Number 1 English Entertainment network in India with a combined relative market share of 51% (TAM: CS 15-44, SEC A, MF, Wk 40, 2011, 7 Metros All Day).

Source: Company TAM Data - 15-44, SEC A, MF, Wk 40, 2011, 7 Metros All Day

English GEC channels ADEX for Dec-11

Spend Rs.mn 45.0 40.0 Duration (s) 500000

BIG-CBS Prime, at par with AXNs disc spends within a year of launch

35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Zee Caf Star world AXN BIG CBS NW

400000

300000

200000

100000

Source: Company ADEX Data

Four-S Research

Company Report: RBN

30 Mar12

BIG CBS Networks has launched three English channels in less than a year of operations. For the month of December 2011, the combined ADEX of the BIG CBS NW was ~60% more than AXN. In terms of Ad Durations, BIG CBS Network is ahead of Zee Caf and AXN and lags only 21% behind Star World. The first channel of the bouquet, BIG CBS Prime (launched 29th Nov-11) garnered a Discretionary Spend of Rs 11.86mn in Dec-11, higher than AXNs Rs 11.54mn.

Entry into Punjabi Market with Spark Punjabi

Spark Punjabi, first international Punjabi channel, becomes a leader within a month of launch

RBN has launched its first dubbed channel out of BIG-CBS JV to make an entry in the Punjabi market. This is RBNs second Regional TV play after BIG MAGIC. Spark Punjabi, within a month of its launch in Jan12, became the leader in the region with relative market share of 32% (TAM India: CS4+ Males, Punjab 1 Mn+, 7PM 12AM, Week 102012). With BIG FM reaching 8 cities in the region and BIG Streets 3000+ ambient media options across the markets, BIG CBS Spark Punjabi offers marketers an integrated media opportunity like none other in the region. RBNs RTL Group JV RBN entered into a 50:50JV with RTL Group SA to launch two themebased channels extreme action genre and the other in reality genre. RTL Group is part of Europes largest media firm, Bertelsmann AG. RBN will get access to RTLs library of content produced by its group production house, Fremantle Media Ltd, including shows such as The X Factor, American Idol and Americas Got Talent, and their various regional franchises. The first channel is ready to be rolled out in July - August 2012.

Strong programming skills to help TV foray

BIG Productions, more than in-house content USP
Has one of the most reputed production house and largest portfolio of televised IPs

RBN has entered content production with an eye on in-house competency. Its division BIG Productions is a reputed TV production house in its own right, with two of its shows completing 500 episodes milestone and a total of 950 hours of programming till date. RBN acquired BIG Productions from group company Reliance BIG Entertainment Private Limited effective from 1st of April 2011. BIG Productions already has 25 shows to its credit in 8 languages. In 9mFY12, the segment had revenues of Rs 358mn and an EBIT of Rs

Four-S Research

Company Report: RBN

5mn.

30 Mar12

BIG LIVE, makes a mark in live TV shows

BIG LIVE gives RBN the largest portfolio of televised IPs in India, with 23 IPs in FY11. RBN has discontinued its activation business with intent to turn the segment profitable. BIG LIVE develops national IPs like BIG Star Entertainment awards, local IPs like Regional Music industry awards and in-house IPs. RBN is in process of developing sports IPs. In 9mFY12, BIG LIVE had revenues of Rs 178mn and an EBIT loss of Rs 75mn.

Set to turn profitable in FY14

While RBN has made losses in its brief history, this is due to initial investments in setting up the businesses. While radio business is now profitable, OOH and TV will take a few more quarters to breakeven after which RBN should be strongly profitable. We expect RBN to have EBITDA margin of 31%, marginally lower than current peer average EBITDA of 33%. We expect RBNs PAT margins to reach 25% by FY15.

Radio achieves turnaround, is EBIT positive

RBN has managed a fast turnaround of FM radio, becoming EBIT positive in Q3 FY11 within five years of launch of first station and 3 years of launch of 45th station. In H2FY11, Radio had a positive EBIT of Rs 23mn, limiting the annual loss to Rs 74mn. In 9mFY12, Radio posted an EBIT of Rs 238mn with an EBIT Margin of 15.4% and ROCE of 10%.
EBIT Margins ENIL Radio RBN Radio FY10 8% -20% FY11 16% -6% 9mFY12 23%* 15%

Radio business EBIT positive with 15% margins in 9mFY12

Source: Four-S Research *ENIL does not report quarterly segmental numbers. In 9mFY12, it is in Radio and Events only, having sold its OOH business in FY11, so the margin can be considered a close approximation of Radio margin.

With a healthier FY11 balance-sheet

RBNs D/E was 0.5 in FY11, having reduced its debt from Rs 3bn in FY10 to Rs 1.4bn in FY11. RBN had raised Rs 2,832.5mn of equity by preferential issue of over 33.3mn shares to potential investors and promoters of the company in Sep-2010 at Rs 85 per share. This was at 25% premium to preceding 26 weeks average market price. A part of the fund raised was used to repay Rs 2bn of debt.

Four-S Research

Company Report: RBN

FY11 BS Ratios Peer Set Average RBN D/E 0.2 0.5 Total Asset Turnover 0.8 0.6 Working Capital Turnover 3.1 2.4

30 Mar12

Source: Four-S Research, Company Data

The entire debt as on March 31, 2011 is ICD from the promoters primarily Reliance Capital Limited and Reliance MediaWorks Limited. RBN, the youngest media company in the peer set, has turnover ratios only marginally lower than Peer set.

EBITDA to break-even in FY13, EBIT by FY14

RBNs Radio business is already EBIT positive. We expect the main TV channels launched in FY11-12 to break-even by FY14. The dubbed channels will have a quicker break-even due to lower operational costs. We expect TV segment to be overall EBIT positive by FY14. Radio to achieve EBIT margins of 26% by FY15
Radio to achieve 26% EBIT margins by FY15, driven by increased utilization, higher rates, reduced royalties. Phase III stations to have quicker break-evens.

RBNs Radio has an EBIT margin of 15% in 9mFY12 at blended utilization of 65% and blended Effective Rate of Rs 8,100 per 10 seconds for 45 stations. India has one of the lowest ad-spends on Radio, leading to enormous potential for growth. We expect utilizations of existing stations to improve to ~75% levels. Post-phase III, radio will become a PAN India Media, hence we expect the blended ERs to improve from Rs 8,100 per 10 seconds to Rs 11,200 per 10 seconds for the existing 45 stations. The Phase III stations have been assumed to generate slightly lower ER of Rs 11,500 per 10 seconds for additional 50-100 stations. This would be comparable to the ER of market leader which is in the range of Rs 9 to 10,000 for 32 stations currently. The recent royalty reduction to 2% of revenues, though still under contest, will further boost the bottom-line. We have taken, 4% for our projections, in tune with international standards. Phase III will allow ownership of multiple frequencies and networking of operations, which will result in lower operational costs per station. We expect Radio business to achieve an EBITDA margin of 39% by FY15 and an EBIT margin of 26%. Market leader ENIL has already achieved an EBITDA of 41% in Q3FY11. ENIL had launched its first FM station in 2001. TV Broadcasting to be EBIT positive in FY14

TV to break-even by FY14 as existing channels break-even and broadcasting profitability per se increases driven by digitization

RBN already has 3 main channels on its portfolio in the cost range of Rs 250-300mn. The channels will break-even within three years of operations, driven by increase utilization and ad-rate improvements. With digitization rollout, broadcasters will gain with increase in subscription revenue share along-with a decrease in carriage costs as digital cable will have much higher bandwidths. Driven by industry and RBNs operational improvement, we expect

Four-S Research

Company Report: RBN

30 Mar12

TV segment to break-even by FY14. The EBIT margin in FY14 would be 2%, and will reach 30% in FY15 as more channels break-even. Production already EBIT positive, BIG LIVE to break-even in FY13 BIG Productions posted a positive EBIT of Rs 5mn in 9mFY12 in first year of its operations. It will achieve EBITDA margins of 21% by FY15. BIG Live, with improved monetization per IP will break-even in FY13 with an EBITDA margin of 5% that will further improve to 14% by FY15. RBN has discontinued its activation business in FY12. OOH, will break-even by FY14 as trading takes traction, will achieve EBITDA margins of 18% by FY15.

While maintaining a healthy balance-sheet, new growth from equity

RBN will use equity route for funding TV operations and Radio Phase III auctions

As on Sep-11, RBNs D/E stood at 1.0x, with Rs 1.7bn of debt on its books. Out of this, Rs 1.2bn was ICD from promoters. We expect FY12 Debt level to be similar. RBN plans to be a low debt company and it will finance its growth Phase III auctions and channel launches mainly from equity. RBN is already in talks with players to raise Rs 3-4bn of fresh equity without diluting promoters stake.

Positive sector triggers ahead

Indian M&E set to grow at CAGR of 15% in 2011-16
Industry growth drivers current level of low ad spends, rural media consumption, Digitization, FM Phase III and Digital media penetration

Indias advertising to GDP ratio at 0.34% is almost half of the worlds average of 0.75% and one-third of North America (~1%). Media reach is also less than developed countries with TV households only 57% of total households. Under-penetration, low ad-spends coupled with Indias demographics - rising disposable incomes, youngest population, mobile penetration position Indian ME industry for good growth ahead. Indian M&E is expected to grow at CAGR of 15% in 2011-16 to reach revenues of Rs 1.46tn by 2016. The growth drivers would be increasing consumption in tier II and tier III cities, Digitization, FM Phase III and growth of digital media.

Royalty ruling to benefit FM radio industry margins

The royalty ruling at 2% of revenue sharing, as against the earlier fixed fee model, will result in higher operating margins and hence quicker break-evens for Phase III stations.

Phase III to transform FM Radio a PAN India media

Phase III will transform FM into a mass media option on

FM Phase III will extend industrys reach to 294 cities and increase the frequencies 2.4x. The reach will hence increase to more than 90% of population from the 30% at present.

Four-S Research

Company Report: RBN

advertisers media plan

30 Mar12

According to FICCI KPMG report, the ad-spends on radio which are at 3.8% of media ad spend as of today, will increase to 5% of media ad-spends by 2016. This will be the key industry growth driver making Radio grow at 21% till 2016. RBN has the potential to combine its Broadcasting and FM portfolio to emerge as the player with maximum reach. RBN also has the opportunity to create presence on the key 7 cities that create its revenue differential with ENIL. Phase III will allow networking of operations, that will lead to substantial reduction in costs, especially for new stations and result in faster break-evens.

Digitization, a reality now, to favour Broadcasters

Top-lines to be boosted by higher ARPU share and bottom-line by reduced carriage costs

The Indian Government is actively pursuing Digitization of Cable and Satellite with first phase of metros to be implemented by June 2012 and the entire country to be digitized by end of 2014.
Phase I 4 metros II Cities with population> 1mn III All urban areas IV Rest of India Deadline 30-Jun-12 31-Mar-13 30-Sep-14 31-Dec-14

This move will bring many benefits to the broadcasting industry: Increase bandwidth as digital signal will be able to carry over 500 channels compared to Analogs capability of 100+ channels Correct reporting of subscription base will lead to increase in subscription revenues MSOs will gain traction over LCOs leading. The ARPU revenue share to MSOs, as well as broadcaster, will increase. Broadcasters revenue share is expected to increase from the current 10-15% to 30-35%. As bandwidth increases, carriage cost per channel will go down, leading to margin improvement for broadcasters.

Essentially, TV channels post-digitization will achieve break-even faster. FICCI-KPMG estimates share of subscription revenues in TV industry to increase to 69% by 2016. As a new broadcaster, RBN stands to gain with quicker break-evens courtesy top-line increase from subscription and bottom-line increase from reduced carriage.

Regional Broadcasting gets significant

Regional TV now accounts for more than half-of TV advertising volumes

Regional Broadcasting has gained traction over past years driven by increased media consumption in tier II and III cities. According to industry estimates, Regional advertising grew faster in 2011 at 15% than national advertising. Increasing share of Regional TV in Overall ad volumes.

Four-S Research

Company Report: RBN

30 Mar12

Source: ADEX India

Trading at attractive valuations

RBN is trading at a discount of 29% on EV/Sales multiple and 24% on Price to Book multiple with respect to peer average.
Significant discount of over 25% w.r.t. peer average Peer Average RBN Discount EV/ Sales 2.7 1.9 -29% EV/EBITDA 11.7 PL P/E 18.1 PL P/BV 3.2 2.5 -24%

PL = Posted Loss ttm multiples, taken on quarter ending 31st Dec 2011, CMP 30th Mar 2012, NSE Prices

RBN is also trading lower than its historical multiples of EV/Sales and Price to Book ratios.
31Mar10 EV/ Sales (x) P/B (x) 3.3 NM 31 Mar11 2.9 2.7 30 Mar12 1.9 2.5

NM = Non Meaningful, as Networth was negative. Source: NSE, Four-S Research

Led by professional management team

Board an eclectic mix of Financial and Media veterans
RBNs board consists of reputed Chartered Account and Finance Industrys professionals Gautam Doshi, Anil Sekhri, Pradeep Shah and D.J. Kakalia and Media veterans, Rajesh Sawhney and Prasoon Joshi.

An able management team

Tarun Katial, CEO RBN is led by Tarun Katial with over 15 years of experience in media industry, with previous stints at Star TV and SET. Tarun Katial has led RBN to grow from a pure radio company to a

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Company Report: RBN

30 Mar12

multi-media conglomerate. Tarun is the NewsCorp Achiever for Asia and another for being included amongst the best in the India Today 30 under 30 list. Asheesh Chatterjee, CFO Asheesh Chatterjee is a Chartered Accountant and Cost Accountant with 15+ years of experience including stints at Moser Baer, Sony Entertainment Television, ICICI Prudential Asset Management & Ernst & Young. He leads the Finance and Legal aspects including fund raising, M&A and JVs whilst strengthening credibility and reputation of the Company within the investor community. Key Business Heads Rabe Iyer: Business Head, 92.7 BIG FM 15 years+ experience including previous stints at DB, Saatchi & Saatchi, Zenith Optimedia, Starcom MediaVest. Anand Chakravarthy: EVP Marketing & Business Head, BIG Magic 12 years+ experience including previous stints at Lowe India Simmi Karna, Business Head, BIG Productions 15 years+ experience, earlier Chief Revenue Office at Balaji Telefilms Praveen Malhotra: Executive VP, Sales 19 years+ experience including previous stints at Star TV, Times of India, Radio City Soumen Choudhury: Business Head, Technology 15 years+ experience including previous stints at Radio City Meenakshi Roy: Sr. VP, HR 20 years+ experience including previous stints at LOreal India, ABP Limited, Ties of India (NIE) & TATA Special Steels Gururaja Rao: VP (Legal), Company Secretary 12 years+ experience including previous stints at TCIL, UTV, McDonalds, Glaxo Pharmaceuticals & People Group

RBN, Indias youngest media company has a team with average age of 27 years.

Four-S Research

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Company Report: RBN

30 Mar12

Risk factors
Internal Factors
Delay in launch of channels, expansion
The company plans to expand its broadcasting portfolio with 2 JV channels with RTL planned for FY13 and also has plans for SAARC distribution and International distribution for MAGIC channel. We expect RBN to have at least 9 main channels in its broadcasting portfolio by FY15, up from the current 5. Any delay in launch of these initiatives will result in loss of revenue and profitability. Mitigant: RBN, till date, has demonstrated timely execution capabilities. Its distribution agreement for RTL channels with Reliance Digital TV are already in place. SAARC distribution has taken off with Sri Lanka.

Music royalties appeal still pending

RBN has stopped provisioning for royalties according to historical agreements and is accounting on a revenue share basis as per the recent ruling of Copyright Board. However, appeal filed against the Copyright Board by PPL and some music Labels is still pending. An adverse ruling could have negative impact on bottom-line. Mitigant: The revenue sharing arrangement for royalties is in line with international norms. The company is acting in tandem with other radio broadcasters to solve this issue.

External Factors
Regulatory risk
RBN is in a business where operational licenses are issued by the Government. If for some reason the licenses or contracts are cancelled, there could be loss of business. Companys revenue projections are based on FM Phase III bidding happening in FY13 and rollouts by FY14. Any delay from Government in auction of frequencies and/ or providing of infrastructure could delay the future operations.

Four-S Research

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Company Report: RBN

30 Mar12

Advertisement revenues depend on economic factors

RBNs revenues are Advertisement dependant. Any economic slowdown or event that causes advertisers to reduce radio spends, may adversely impact future revenues and profits. Mitigant: RBN has started de-risking its broadcasting model through increased focus on subscription revenues. It gets its revenues out of local market, which is less prone to recessionary meltdowns. On the other hand, it is continuously innovating into new inventories and new markets to keep the top-line growing.

Four-S Research

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Company Report: RBN

30 Mar12

Peer Benchmarking
Defining peer set
We have benchmarked RBN with listed Media players classified as follows: a) Print/ Radio presence: ENIL, HT, Jagran Prakashan, DB Corp b) Broadcasting/TV production/ Radio presence: Zee TV, Sun TV Network, TV 18 Broadcast
Vertical Zee RBN has presence across Broadcasting spectrum Sun TV NW TV 18 Brdcst DB Corp HT JPL ENIL RBN N+R N+R
N = National, R= Regional

Broadcasting N+R R N+R

Production N+R R

Publishing R R N R

Radio N R R R N N

Among the group listed above, Entertainment Network (India) Limited or (ENIL) and RBN are the only radio-heavy players. For others, radio is a small portion of their overall business. By FY15, when RBN is a 100-150 FM network and a ~ 9 channels broadcaster with a pan-India presence, RBN will be able to match the overall value proposition of its peers. Its competitive advantage would derive from being able to offer targeted regional campaigns to advertisers across India. It will also have a pan-Indian footprint to appeal to the advertisers for national campaigns.

Growing faster than peers

Above peer average in FY11, encores in 9mFY12
RBN grew at par with industry leaders in FY11, and grew better in 9mFY12

Youngest media player, RBN is in the high growing segments Radio (15% growth in 2011) and TV (10.8% growth in 2011). Revenue Growth in FY11, 9mFY12
FY11 Revenue Zee Sun TV NW DB Corp HT JPL TV 18 ENIL Peer Average RBN 2,454 30,136 20,135 12,600 17,674 12,211 7,998 4,542 YoY 37% 39% 19% 25% 30% 33% 8% 27% 36% 2,315 9mFY12 Revenue 21,715 13,304 11,032 15,143 9,341 9,107 2,156 YoY -2% -9% 16% 15% 12% 52% * 14%* 30%

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Company Report: RBN

Note: 1. 2. 9mFY12 average excludes ENIL. Sun TV and Jagran Prakashans 9mFY12 figures are standalone

30 Mar12

The strategy has paid off with RBN growing at par with industry leaders in FY11, and second highest in 9mFY12. It has performed higher than peer average in both the periods. 9mFY12 revenues include a one-time royalty write-back of Rs 209mn as other operating income. Even if we exclude that, RBNs revenue growth would be 19% YoY, still second highest in the peer group.

RBN is number 2 by revenues in Radio industry RBN is a strong number 2 by revenues as well as listenership.
Annual revenues (Rs mn) 9mFY12 revenues (Rs mn)

Source: Company reports Note: ENILs YTD FY12 revenues are income from operations as ENIL does not disclose segmental numbers. However since, ENIL has sold its outdoor business to BCCL, the revenues comprise mostly of radio operations. YTD FY11 revenues will include OOH revenues hence not comparable to YTD FY12

BIG Productions leaves a mark in its segment

Production revenues are onethird of listed leaders

RBNs BIG Productions has become one-third of the segment leader (listed), Balaji Telefilms revenues in 9mFY12.
9m Fy12 Revenues Balaji Telefilms BIG Productions % of BT
Source: Company reports

Rs mn 991 358 36%

Four-S Research

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Company Report: RBN

30 Mar12

Profitability lower than peers currently, to catch up

RBN currently in losses as it sets up its broadcasting business
Losses mainly on account of new segment of broadcasting in 9mFY12

RBNs EBITDA is a negative of Rs 4.6mn in FY11 and Rs 42.4mn in 9mFY12 as it is still setting up operations.
FY10 EBITDA Margins Peer Average RBN PAT Margins Peer Average RBN FY11 9mFY11 9mFY12

32% -7%

33% 0%

35% 3%

34% -19%

22% -42%

18% -22%

22% -19%

19% -36%

Note: Negative margins and TV18Broadcast excluded in average calculations.

FY11 losses reduced as Radio Business turned EBIT positive. 9mFY12 margins were impacted as RBN expanded its broadcasting operations with new channel launches and increased distribution. Going forward, TV Broadcasting will break-even by FY14, as Channels launched in FY11-12 break-even. The new channels will have relatively lower operational expenses, quicker Go-to-markets and revenue traction as existing broadcasting set-up moves up the learning curve. IP breaks-even in its second year of operations led by increased monetization. OOH will turn EBITDA positive by FY14, led by trading revenues traction. Radio and Production are already EBITDA positive, hence we expect, the company on the whole to be EBITDA positive by FY14.

Radio business turns a strong EBIT positive

RBNs radio business turned EBIT positive with YTD FY12 margin of 15%, compared to a loss posted in FY10 and FY11, leading to a positive ROCE of 10%. EBIT margins of Radio peers
The oldest player, ENIL has margins of ~23%, RBN Radio profitability will move up the learning curve to the same levels ENIL Radio RBN Radio HT Radio DB Corp Radio FY10 8% -20% -8% -5% FY11 16% -6% 17% -7% 9mFY12 23%** 15% -5% -2%

* Segmental revenues for Radio not available for Sun, Jagran, Radio City (MBPL not
listed) **ENIL does not disclose quarterly segmental numbers. However, after OOH sale in FY11, the 9mFY12 revenues would predominantly be radio revenues. Hence, total EBIT margin will be a close approximation to radio margin.

The market leader ENIL, is into operations since last 11 years, having launched its first station in Oct-2001. RBN and the rest of the peers (listed) launched their first stations post Phase II in 2006. Being one of the youngest Radio as well as Media company, being EBIT positive in 9mFY12 is quite commendable.

Four-S Research

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Company Report: RBN

30 Mar12

Balance sheet ratios will improve over FY12-14

Leverage higher than peers
Traditionally M&E sector has very low leverage, being a cash rich industry. RBN is the youngest peer set company. Presently, its leverage is higher than peer set.
D/E Zee Sun TV DB Corp HT JPL* TV18 ENIL Average RBN*
*FY10 standalone

FY11 0.0 0.0 0.3 0.2 0.3 0.8 0.2 0.5

Sep-11 0.0 0.1 0.3 0.3 0.4 1.0 0.3 1.0

RBN will use the equity route to raise funding for future initiatives. RBNs Board approved issue of equity shares to Qualified Institutional Buyers upto Rs 10bn in Sep11.

Turnover ratios
Youngest media players turnover ratios are only marginally lower than peer average

RBNs average asset turnover ratios are marginally lower than the peer group. As RBNs broadcasting business is completely rolled out, the ratios would improve.
Average Total Asset Turnover 0.7 0.7 0.8 0.8 0.9 0.6 0.9 0.8 0.6 Average Working Cap Turnover 1.9 2.7 3.5 14.3 5.6 1.4 3.3 3.1 2.4

FY11 Zee Sun TV Network DB Corp HT JPL* TV 18 ENIL Average RBN

Publishing players have higher turnover ratios than Broadcasters. RBNs TA turnover is comparable to TV18 and slightly lower than Zee and Sun TV. RBNs Working Capital turnover is better than TV18 and Zee and marginally lower than Sun TV.

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Company Report: RBN

30 Mar12

9mFY12 peer comparison

Revenue growth higher than industry peers
Revenue 9mFY12 Zee Sun TV NW DB Corp HT JPL TV18 ENIL Average 21,715 13,304 11,032 15,143 9,341 9,107 2,156 Growth YoY -2% -9% 16% 15% 12% 52% * 14% EBITDA Margin 9mFY11 27% 82% 34% 19% 33% PL 18% 35% 9mFY12 27% 81% 25% 16% 26% PL 31% 34% PAT Margin 9mFY11 19% 39% 23% 10% 20% PL PL 22% 9mFY12 20% 40% 14% 9% 15% PL 17% 19%

RBN has grown second-highest in the peer group. In losses, as TV operations are being set up.

RBN

2,315

30%

3%

PL

PL

PL

Source: NSE, Company data, Four-S Research

Revenue growth average excludes ENIL, Margins average excludes SUN TV NW RBN achieved revenue growth of 30% YoY in nine months ending Dec-11. RBNs growth was second highest in peer group. This includes royalty write-back revenue of Rs 209mn in other operating income. Excluding that YTD growth is 19% YoY, still second highest in the peer group. RBNs YTD losses were Rs 821mn mainly due to Rs 673mn loss in TV segment as the company is in the phase of launching new channel operations. Its Radio segment had a positive EBIT of Rs 238mn at a margin of 15% and Production has a positive EBIT of Rs 5mn at a margin of 1%.

Four-S Research

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Company Report: RBN

30 Mar12

Valuation Comparison
Trading at Attractive Multiples
EV/ Sales EV/EBITDA 4.0 14.9 6.4 8.0 2.9 11.5 1.8 11.2 2.8 11.7 1.5 474.9 3.3 12.5 2.7 11.7 1.9 PL P/E 19.7 16.1 19.9 16.2 17.8 PL 18.7 18.1 PL P/BV 3.7 4.5 4.2 2.4 4.0 1.3 2.6 3.2 2.5

RBN is trading at attractive valuations, on threshold of new growth as Phase III unfolds in few weeks time

Zee Ent Sun TV NW DB Corp HT JPL TV18 Broadcast ENIL Average RBN

*Valuation is based on TTM financials as of December 2011 and CMP of 30th Mar
2012; Consolidated results taken wherever available. Source: NSE, Company data, Four-S Research

RBN is trading at a discount of 29% on EV/Sales multiple and 24% on Price to Book multiple with respect to peer average. RBN is also trading lower than its historical multiples of EV/Sales and Price to Book ratios. 31Mar10 EV/ Sales (x) P/B (x) 3.3 NM 31 Mar11 2.9 2.7 30 Mar12 1.9 2.5

Source: NSE, Four-S Research

Four-S Research

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Company Report: RBN

30 Mar12

Valuation and Price Target

RBN will get valuations at par with industry as it evolves as 100+ FM stations and 9+ channels broadcaster and breaks-even

RBN plans to use equity route for funding to the tune of Rs 3-4bn in FY13, while maintaining promoters stake. RBN will require funds for launching more channels and Phase III auctions. We have assumed Shareholder Funds to increase by Rs 3bn, half from external investment and half from Promoter - ICD conversion plus additional investment, if any. We have taken the conversion price of Rs 60 per share, at a nominal premium to current market price for the equity dilution in FY13. For a total amount of increase in Shareholders funds by Rs 3bn, outstanding shares will increase from 79.45mn to 129.45mn.

March 2013 target price Rs 84

Over 50% upside to the stock price in next 12 months

Building the above dilution into projects, we arrive at a target price of Rs 84 by Mar13. This is based on an EV/sales multiple of 2x, and FY13 turnover of Rs 3.1bn. We have used the EV/sales metric as till FY13, EBITDA will still be much below stable values, while PAT would be negative. It is possible to apply more valuation metrics based on FY14 projections. The calculation below suggests a target price of Rs 114 for Mar14.
Method EV/ Sales (x) EV/EBITDA P/E Average Price Multiple 2.0 11.0 18.0 Price Target 136 129 131 132

Source: Four-S Research

Sensitivity to FY13 conversion price of Rs 60 per share

FY13 Conversion Price Price Mar13 Price Mar14 60 84 132 70 89 140 80 93 146 85 95 149

If the conversion happens at the historical allotment price (Sep2010) of Rs 85 per share, the price target for Mar13 would be Rs 95 and for Mar14 it would be Rs 149 per share.

Four-S Research

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Company Report: RBN RBNs Business

30 Mar12

Indias largest private FM network, now adding new verticals

A comprehensive play in Broadcasting (Radio, TV) and Content

Part of the Reliance Group, RBN is a emerging as a diversified entertainment business with play across radio, television, intellectual properties (IP), out of home (OOH) and television production. RBNs media brands are: 92.7 BIG FM India's largest FM Network with 45 stations, reaching over 42 mn Indians each week. BIG CBS 50:50 joint venture with International, USA's No.1 TV broadcaster. CBS Studios

BIG MAGIC India's first entertainment channel for Hindi Speaking Belt BIG RTL 50:50 joint venture with the leading European entertainment network RTL Group BIG LIVE Intellectual Properties BIG PRODUCTIONS Television content production house BIG STREET OOH properties

One of the fastest growing media companies

Second-highest revenue growth in peer set

RBN achieved a revenue growth of 36% YoY to reach a turnover of Rs 2,454mn in FY11.
Revenue Zee Sun TV NW DB Corp HT JPL* TV18 ENIL Average RBN* 1,807 2,454
* FY10 standalone, (Rs Mn) *Excludes ENIL, as 9m revenues not comparable YoY due to its OOH business sale.

FY10 21,998 14,258 10,578 14,129 9,419 6,035 4,221

FY11 30,136 20,134 12,600 17,674 12,211 7,998 4,542

FY11 Growth 37% 39% 19% 25% 30% 33% 8% 27% 36%

9mFY12 21,715 13,304 11,032 15,143 9,341 9,107 2,156 2,315

YoY -2% -9% 16% 15% 12% 52% ** 13%* 30%

RBNs revenue growth was higher than peer set average of 27% and at par with industry leaders Zee Entertainment and Sun Network. In 9mFY12, its growth was higher than the peer average and second highest in the group.

RBN began its journey in 2006 with BIG FM

RBN started operations in 2006, after successfully bidding for 45 licenses in FM Phase II rollout. A part of AdLabs, company now known as Reliance Mediaworks, it demerged in FY09. BIG FM the largest private FM network in India

Four-S Research

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Company Report: RBN

30 Mar12

RBN is the largest private FM player in India with 45 stations. RBN is number 1 in 15 markets and a top3 player in 15 others. It has a reach of 42.6mn listeners (IRS+RAM). Top 5 private FM players
RBN is the largest private FM network in India with 45 stations in operations.
45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 Radio Mirchi Big FM Red FM Radio City Suryan FM

Source: Listenership in millions, IRS Q4, 2011

RBNs BIG FM, started operations in 2006, whereas Radio Mirchi (ENIL),Red FM and Radio City have been in operations 2001-02 onwards, being Phase I entrants. Moreover, as FM becomes a PAN India medium post Phase III, measurement vehicles will have an extensive reach in tier II and tier III cities. This will better reflect BIG FMs performance. At present, the measurement vehicles are more oriented towards Metros and some Key cities. BIG FMs performance in key markets
RBNs absence in 7 key cities has led to revenue gap with market leader, a situation that maybe rectified with Phase III

RBN is a leader in key markets of Bangalore, Kolkata and in Hindi Speaking Markets. It has made significant progress in Mumbai market.
Company A+ ENIL (Radio Mirchi) RBNL (BIG FM) 4 4 # of stations A 9 4 B 1 1 1 0 C 7 2 4 D 1 3 Tota l 32 45

The market leader by revenues, ENIL has one-third or 33-35% of market share by revenues. ENIL, though has lower number of stations, it has maximum presence in A and A+cities. RBN is number 1 private FM in 15 cities, which are, Agra, Aligarh, Allahabad, Amritsar, Asansol, Bareily, Bikaner, Chandigarh, Guwahati, Gwalior, Jammu, Jodhpur, Mysore, Solapur and Goa. In phase II FM auctions, RBN missed out 7 key cities of Pune, Ahmedabad, Nagpur, Jaipur, Lucknow and Patna. RBN will rectify the situation in Phase III bidding. While Pune and Ahmedabad will help close the revenue gap with ENIL, Patna, Lucknow, Jaipur and Nagpur will help the lead in the Hindi Speaking Belt.

Four-S Research

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Company Report: RBN

30 Mar12

RBNs Radio business has turned EBIT positive with Rs 238mn of EBIT in 9mFY12, a margin of 15% and ROCE of 10%. BIG FM Advertisers profile
A well-diversified advertisers profile

RBN had 1,936 advertisers as on Q3 FY12. The advertisers are equally spread among national, local and regional advertisers.

Building a niche TV broadcasting business

RBN enters into Broadcasting in FY11
De-risked entry in TV broadcasting through JVs and acquisition

RBN entered into TV Broadcasting in Nov-2010, with the launch of BIG CBS channel, the first out of its 50:50 JV with USAs top broadcaster CBS Studios International. RBN has strategically targeted segments where it has potential to emerge as a segment leader with low capital expenditure targeting quick break-evens. RBN is a 5 channel broadcaster currently Within 14 months of first channel launch, RBN now operates a 5 channel bouquet of BIG CBS Prime, BIG CBS Love, BIG CBS Spark, Spark Punjabi and BIG Magic. RBN recently entered into distribution of Bloomberg UTV, India's premier business news channel. BIG CBS channels Prime Love and Spark cater to audience with urban sensibilities, while Spark Punjabi and BIG Magic cater to Punjabi and Hindi speaking markets respectively.

RBN-CBS JV BIG CBS Networks Ltd.

JV with USs CBS Studios gives an edge in English content

RBN entered into a 50:50JV in Aug 2010 with CBS Studio International, a division of Americas top broadcasting house CBS Corporation. The JV marks CBSs entry into Indian subcontinent. CBS Corporation is a mass media company present across US and in key international markets. Its 2011 revenues were $14.25bn, with net earnings of $1.32bn. CBS Broadcasting was #1 in US with 12.1mn viewers and 14 out of top 20 watched programs. With this JV, RBN will offer viewers 25 hours of fresh programming each week per channel, a strong USP in the English entertainment segment.

BIG CBS channels perform well in short span of time

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Company Report: RBN

30 Mar12

RBN has targeted the top end of the SEC pyramid through its BIG CBS and BIG RTL JVs for Tier 1 or Tier 2 cities. It targets urban audiences or audiences with urban sensibilities who demand latest international content. With BIG CBS JV, RBN has access to over 70,000 hours of content from CBS's vast program library. BIG CBS Prime, a premium GEC targeting urban male audiences BIG CBS Love, India's first and only international Women's entertainment channel BIG CBS Spark, India's first international Youth entertainment channel with music as central theme BIG CBS Spark Punjabi, Indias first international Punjabi channel

The first three channels are in Top 8 metros while Spark Punjabi targets the high GDP rich states of Punjab, Haryana, HP and Chandigarh. Relative Market Share of BIG CBS channels
BIG CBS Prime
Launch Nov-10, TAM week1012 (CS 15-24 SEC A MALE, 7 metros)

BIG CBS Love

Launch Mar-11, TAM Wk13-14, 2012 (CS 15+ SECA Female, 5Metros)

Prime and Love are doing well in their audiences in a short span of time

50%

56%

27%

23%

23%

21%

BIG CBS Prime

Star World

Zee Caf

BIG CBS Star Zee Caf Love World

Source: TAM Data, Week on Week GRP

BIG CBS Prime and BIG CBS Love channels are distributed to 42.5mn households having recently inked a deal with Dish TV.

BIG CBS Spark

Launch - Apr-11, (CS 4 - 24 AB MF, 5 metros)

Source: TAM, Week 13-14 2012, 8pm-midnight

BIG CBS Spark is a lower cost category channel compared to Prime and Spark. This entertainment channel has music as its central theme and its closest competitor is VH1.

Four-S Research

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Company Report: RBN

30 Mar12

ADEX Data for English GEC for the month of Dec-11

Spend Rs.mn 45.0 40.0 Duration (s) 500000

Prime at par with AXN, within over a year of launch

35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Zee Caf Star world AXN BIG CBS NW

400000

300000

200000

100000

Source: Company data - ADEX

In the month of Dec-11, BIG CBS Prime, within 12 months of operations, was at par with AXN by discretionary ad spends. BIG CBS Primes has already launched international content like Survivor, NCIS, CSI, The Defenders. It also has in-house produced content like Indias Sexiest Bachelor, BIG Wheels taking advantage of its in-house division LIVE. BIG CBS Love has in-house produced content like I Love Style, Indias Glam Diva and international shows like Ringer, Excused, Next Top Model, Oprah Winfrey Show, Rules of Engagement, Everybody loves Raymond. BIG CBS Spark has content like Spark Livewire, Non Stop Pop, Hip Hop Mcs and Power Chords in its stable. Spark Punjabi launch in 2012, marks entry into Punjabi market
First Punjabi channel from RBN, becomes a category leader within a month of launch

The first regional channel out of the BIG CBS JV, Spark Punjabi was launched on 14th Jan, 2012. It targets the GDP rich markets of Punjab, Haryana, Chandigarh, and Himachal Pradesh. It is presently distributed to over 6mn households in the region. Spark Punjabi, within a couple of months since its launch, has garnered 32% market share in Prime Time among Males in the region. Relative Market Share: TAM India: CS4+, Males, Punjab, 1mn+, 7PM-12AM, Week 10, 2012

Four-S Research

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Company Report: RBN

35%
30% 32%

30 Mar12

30%

25%
20% 15% 10% 5%

22% 16%

0% Spark Punjabi 9xTashan Mh1 PTC Chakde

Launched

Jan12

Aug11

Jun07

Aug08

With BIG FM, reaching 8 cities in the region and BIG Streets 3000+ ambient media options across the markets, BIG CBS Spark Punjabi offers marketers an integrated media opportunity like none other in the region.

BIG RTL
With RTL JV, RBN will target the lucrative market for Realty and Action content

With a market capitalization of $15.5bn, RTL Group is number one in TV and Broadcasting in Europe. It operates 40 TV channels and 31 radio stations across 10 countries. RTL is also the global leader in content production with 9,500 hours of TV programming per year across 54 countries with more than 300 programs on air world-wide. With its BIG RTL 50:50 JV, RBN will launch two channels in 2012: An action & thrill genre based content for men (CS 15+ SEC ABC Males) with both Hindi & English language audiences. A full-fledged reality based channel in English language

The market potential can be judged from the fact that while there are a number of Reality and Action programmes on TV, not a single channel focuses solely on the same.
Channel UTV Action MTV Channel V UTV Bindaas Programming Dubbed Hollywood movies Music + reality Music + reality Reality + Music ADEX Disc Spend CY 2011(Rs mn) 732 252 398 1371

BIG RTL has already signed a distribution deal with Reliance Digital TV.

English GEC Content USP

RBNs international JVs will give it an unmatched programming edge

Access to CBS and RTL libraries with first right of refusal. Can also leverage relationships that CBS and RTL have with other International content providers for access to content. The Company may launch local formats of the popular international content of CBS and RTL Group (including Freemantle) While the benefits are the not immediately visible, as CBS content contracts with other channels (for programs like Indian Idol, etc) expire, RBN will have the opportunity to become an English (nonmovie) Genre market leader with cutting edge, latest and unique

Four-S Research

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Company Report: RBN

30 Mar12

programming. RBN will also develop local programming for this audience segment. All CBS and RTL content is HD ready can be leveraged to launch HD channels going forward.

BIG MAGIC, #1 in Hindi Speaking Markets

BIG Magic is RBNs entry into the Regional GEC space targeting the underserviced market of UP + MP + Bihar +Jharkhand, featuring locally relevant content across humour, movies, music, reality shows, Bollywood, action, non-fictional local connect programs and dubbed programs. It is a leader in the category, with highest GRP and share among all Regional channels in Hindi Speaking Markets, as per TAM results. The channel has a distribution of ~10mn households in the HSM. BIG MAGIC delivered a 4 week unduplicated average reach of 12.5mn in Dec-11, 27% higher than Mahuaa and 17% higher than Dabangg. Relative Market Share of BIG MAGIC Week 5011 CS 4+ (TAM)

BIG Magic is 50% cost-effective than regional print, hence will gain at regional prints cost. Adex of Regional Hindi channels for Dec-11

Within 9 months of launch, BIG MAGIC has managed second highest discretionary spend among Hindi regional peers in Dec, 2011. The duration of Ads is lower than peer average, indicating that it has commanded a premium price in the market and the potential growth from increasing inventory fills.

BIG MAGIC + BIG FM, advantage RBN for HSM Four-S Research 27

Company Report: RBN

Regional TV + FM + OOH make RBN an attractive proposition for regional and local advertisers

30 Mar12

As BIG FM is a market leader in HSM cities of Agra, Aligarh, Allahabad, Moradabad and Ranchi, BIG Magic + BIG FM becomes a compelling propositions for advertisers, seeking to target HSM without literacy as a pre-condition. RBN aims to make the most out of it by focussing on Phase III frequencies in the region, especially the missed out stations Patna, Lucknow and Nagpur.

Distribution of Bloomberg UTV

RBN has included Indias premier Business News channel Bloomberg UTV in its Distribution portfolio. RBN will gain with having a de-risked option into news segment with this deal. With BIG RTLs first channel launch on cards in July - August 2012, RBN will be a 7 channel portfolio.

International distribution
International distribution a good addition to top-line

RBN has the rights to CBS and RTL channels across SAARC region. It has already started broadcasting the three CBS channels in Sri Lanka since Feb 2012. The distribution is through regions largest cable operator Lanka Broadband Network. The model is fixed license fee model and will ensure regular revenues. RBN has plans to distribute across the entire SAARC region including Bangladesh, Nepal, Bhutan, Maldives, Pakistan and Afghanistan. RBN also plans to distribute programming globally. BIG MAGIC and local Indian

RBNs plays in TV production, IPs and OOH

BIG Productions
BIG Productions and LIVE, cater to top broadcasters in India apart from in-house synergies

BIG Productions has created over 950 hours of programming in a short span of eighteen months since its launch right across genres and for both National and Regional channels. This includes, 'Sa Re Ga Ma Lil Champs' for Zee TV, 'Badmash Company' for Colours, 'Comedy Ka Maha Muqabala' for Star Plus, 'Star One Horror Nights' for Star One, 'Pardes Mein Mila Koi Apna' for Imagine, Super Woman for ETV, 'Swapnachya Palikadle' for Star Pravah, 'Moti Baa' for ETV Gujarati, 'Halla Bol' for ETV Marathi, 'Money Money' for Maa TV and more. Two shows have reached 500 episodes milestone Motibaa and 'Swapnachya Palikadle. BIG Productions will attract more third party programming as international media houses start outsourcing programming to India.

BIG LIVE
RBN is Indias largest owner of televised IPs, over 30 IPs within two years of inception. RBN has a multiyear contract with leading Hindi GEC channel to produce industry award show. In Dec-11, it announced second edition of BIG Star Entertainment Awards, with leading Bollywood actors as performers. The first show had ratings of 5.78 TVR, one of the highest ratings for a televised IP.

BIG Street OOH

BIG Street, one of the largest OOH

RBNs OOH division BIG Street is a complementary and tactical play

Four-S Research

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Company Report: RBN

plays in regulated space, is a market leader in Delhi

30 Mar12

to complete an advertisers bouquet. RBN operates in the regulated space and leverages Groups assets as inventory. With a presence in 75 cities, 5000+ Media vehicles, 25 Million PanIndia reach, BIG Street is the largest OOH player in the country. RBN has over 45% market share in key market of Delhi with key properties of Delhi Metro Rail Corporation (DMRC), Delhi Airport Metro Express (DAME) Line, DMRC LineII, DMRC Line III and DTTDC (Delhi Tourism and Transportation Development Corporation) Street Furniture Makeover project. RBN has launched innovative Digital Pods to further increase inventory in premium spaces like malls etc.

Four-S Research

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Company Report: RBN

30 Mar12

Financial Analysis and Growth Outlook

Inventory increase led growth
PHASE III stations, Broadcasting channels will add inventory

One of the youngest media companies, RBN will transform into 100150 network FM station and, ~9 channel broadcaster and a top content house in an industry that is growing twice the countrys GDP. We expect RBNs revenues to grow at a CAGR of 51% over FY11-15 to reach Rs 12.8bn.

Projected Revenues
Revenue (Rs. Mn)
14,000 12,807

12,000
10,000 8,000 6,000 4,000 2,000 0 FY10 (S) FY11 FY12p FY13e FY14e FY15e 2,454 3,134 5,045 8,936

1,807

Youngest media company will see improvement in Ad Rates as businesses gain traction

RBN has reached revenues of Rs 2,454mn in FY11. In FY12, it is expected to grow 27% YoY to reach Rs 3,106mn. It has already achieved a turnover of Rs 2,315mn in 9mFY12. The FY12 growth will be driven by 20% growth in Radio revenues, 53% growth in OOH, as DMRC properties go to market and trading. IP revenue has seen a decline, as RBN has discontinued its activation business is now focused only on televised IPs. The new segments of TV Broadcasting and Production are estimated to generate 5% and 14% of revenue share respectively, led by 3 new channels and demand for TV content.

Changing revenue mix FY11 revenue mix FY15e revenue mix

New segments, TV and Production, to account for 30% and 12% revenue share by FY15. Radio remains the biggest segment

Four-S Research

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Company Report: RBN

30 Mar12

Radio to grow at 34% CAGR, triggered by Phase III auctions

Phase III, a transformational trigger for Radio

RBNs Radio business will transform itself from 45 stations to be 100150 FM station network, post FM phase III auctions. The Government plans to start the bidding process as soon as June 2012. We expect the entire process to be over in FY13 itself, with revenue generation of new stations starting in early FY14. Hence, we expect Radio segment to generate revenues of Rs 5,578mn by FY15. Out of this, 54% will come from Phase II stations (45) and rest from Phase III stations. We have assumed RBN to bid and win 2A+ frequencies, 5 A category frequencies, 10B category frequencies and a minimum of 50 C and D category frequencies.
Key metrics/ assumptions Blended Utilization Phase II stations Blended Rate for 45 Phase II stations Blended Utilization Phase III stations Blended Rate Stations for 50-100 Phase III FY12P 65% Rs8,100 FY15e 75% Rs 11,200 52% Rs 11,500

Rate in Rs per 10 second

Radio will account for 44% of revenues in FY15, down from 71% share in FY11.

RBN will be a ~9 channel broadcaster by FY15

Broadcasting portfolio to double

RBN will launch two channels through its JV with Europes top broadcaster RTL Group. RBN will also launch more MAGIC-like channels with own programming to cater to other regional belts like Gujarati, Marathi, Punjabi, Bengali etc. Hence, the main channel portfolio of RBN will increase from 5 at present to ~9 by FY15. Additionally RBN will maximize regional advertising potential by launching feeds of the main channels. It will launch dubbed versions of its Main English channels as well as launch HD feeds. TV Broadcasting to gain traction, 30% of revenue share

RBN plans to emerge as a leading regional as well as English GEC Play with 9 main channels by FY15.

As RBN launches 2 BIG RTL channels, 3 additional BIG MAGIC channels and at least 8 more dubbed/ HD feeds of its Main English GEC channels by FY15, it will garner a bigger share of the revenue pie. We expect TV Broadcasting to generate revenues of Rs 3,843mn by FY15, accounting for 30% of RBNs revenues.
FY 15 metrics BIG MAGIC BIG CBS (50% JV) BIG RTL JV # of channels + feeds 4 3+9 2

Spark Punjabi is the first regional feed from BIG CBS Network.

Four-S Research

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Company Report: RBN

30 Mar12

BIG Productions to account for 12% FY15 revenue pie

Increase in broadcasting channels post digitization will help this business

As number of broadcasting channels increase post digitization and India gets recognized as an outsourcing destination for TV programming, we expect BIG Productions to reach revenues of Rs 1,568mn in FY15. It will account for 12% of RBNs revenues.

BIG LIVE or IP to account for 8% FY15 revenue pie

RBN already has developed ~30 televised IPs in a short time, a mix of National, Local and In-house IPs. Its national IP like Star BIG Entertainment received revenues of ~Rs 70mn in FY12. We expect BIG LIVE to develop and own ~60 televised IPs by FY15 and witness increased monetization per IP. The IP segment will achieve Rs 1,080mn in revenues by FY15 and account for 8% revenue share.

BIG Street to grow at 36% CAGR

As RBNs DMRC property gets monetized in FY13 onwards, and RBN starts marketing of external properties, we expect OOH to generate Rs 727mn in revenues by FY15. Most of RBNs DMRC contracts extend beyond FY15. Trading revenues will account for 30% of OOH revenues.

PAT turnaround in FY14, margins of 25% by FY15

Radio profitability, TV break-even to turn RBN PAT positive by FY15
RBN to be PAT positive by FY14

The radio business is already PAT positive. We expect TV and other segments to become profitable by FY14, making the company PAT positive.
FY11 60% 40% 20% 0% -3% -20% -40% -60% -80% EBITDA margin EBIT margin ROAE ROACE -14% -4% -17% -27% -12% -13% -6% 31% FY12e FY13e FY14e FY15e 49% 26% 10% 49%

17%
4%

22%

19%

-27% -50% -59%

Radio business is already PAT positive

Radio will achieve EBIT of 28% by FY15

RBNs Radio business is already EBIT positive with margins of 15% in 9mFY12. The recent royalty reduction to 2% of revenues, though still under contest, will further boost the bottom-line. We have taken, 4% for our projections, in tune with international standards. Phase III will allow ownership of multiple frequencies and networking of operations, which will result in lower operational costs per station.

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Company Report: RBN

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We expect Radio business to achieve an EBITDA margin of 39% by FY15 and an EBIT margin of 26%. Market leader ENIL has already achieved an EBITDA of 41% in Q3FY11.

RBNs Radio rates will grow closer to market leader

With FM emerging as PAN India medium with 1085 frequencies, it will get re-invented as mass media vehicle. Hence, the ad rates for the whole industry will also witness an increase. FICCI KPMG predicts Radios share in total advertising pie increase from 3.8% in 2011 to 5% in 2016. In particular, RBNs Radio rates could close the gap as RBN establishes presence in all key stations. We expect utilizations of existing stations to improve to ~75% levels. Post-phase III, radio will become a PAN India Media, hence we expect the blended ERs of existing stations to improve from Rs 8,100 per 10 seconds for 45 stations to ~ Rs 11,200 per 10 seconds. The current market leader gets range of Rs 9 to 10,000 for 32 stations presently.

TV Broadcasting to be EBIT positive in FY14.

RBN already has 3 main channels on its portfolio in the cost range of Rs 250-300mn. The channels will break-even within three years of operations, driven by increase utilization and ad-rate improvements. With digitization rollout, broadcasters will gain with increase in subscription revenue share (~30% of monthly ARPU from 15% at present) along with a decrease in carriage costs as digital cable will have much higher bandwidths. Driven by industry and RBNs operational improvement, we expect TV segment to break-even by FY14. The EBIT margin in FY14 would be 2%, and will reach 30% in FY15 as more channels break-even.

Production already EBIT positive, BIG LIVE to breakeven in FY13

BIG Productions posted a positive EBIT of Rs 5mn in 9mFY12 in first year of its operations. It will achieve EBITDA margins of 21% by FY15. BIG Live, with improved monetization per IP will break-even in FY13 with an EBITDA margin of 5% that will improve to 14% by FY15. OOH, will break-even by FY14 as trading takes traction, will achieve EBITDA margins of 18% by FY15.

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Company Report: RBN

30 Mar12

RBN to use equity for Capex, control debt, lower interest burden
Phase III auctions and rollouts will require additional expenditure to the tune of Rs 2 2.5bn. This is assuming a one-time license fee outgo of Rs 1.5bn, assuming RBN to bid for 50+ stations. The Phase III will involve more C and D category stations, for which, license fees would be lower. In some of the new D category stations, the fee can be as low as Rs 0.5mn per station. (Ministry of Broadcasting)
License Fees assumptions License Fees Stations per Category A+ - B C D Total Phase II Rs 1.6bn 18 24 3 45 Assumed new (Phase III) ~Rs 1.5bn 15+ 15+ 20+ 50+

RBN has already started the process to raise additional equity to the tune of Rs 3-4bn where promoter will match external equity to maintain stake. Funding/ BS Assumptions
Rs Mn Equity transactions External equity investment Promoters ICD conversion/ investment Shareholders Equity Dilution Debt transactions New Debt Repayment
* ICD Conversion

FY13 1,500 1,500 3,000

1,200*

We have assumed that RBN will manage to raise at least Rs 3bn of equity which will contain Rs 1.5bn from an external investor. Promoters will get ICD converted and if required put more to match the external equity.

BS Ratios improve over FY11-15

RBNs D/E will increase to 1.4 in FY12 maintaining the debt level disclosed as on Sep-11. RBN will convert its promoters ICD of Rs 1,200mn in FY13. Hence, D/E will reduce to 0.1x. As RBN gets PAT positive, it will repay all external debt to be nearly a debt-free company in FY15 as per media industry norms.

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Company Report: RBN

30 Mar12

RBNs activity turnover ratios will improve over the years as businesses mature and start breaking even.

9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 FY11 D/E FY12e FY13e FY14e Total Net Asset turnover 0.5 0.6 2.6 1.4 0.7 0.1 1.0 1.2 1.2 0.0 3.9 5.1 7.1

8.5

0.1

FY15e

Net Working Cap turnover

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Company Report: RBN

30 Mar12

Industry Analysis
Indian M&E sector New growth begins
Indian M&E sector will be a Rs 1.4 trillion industry by 2016

The Indian Media and Entertainment industry is a Rs 728bn industry today reaching 146mn TV households, 181.91mn readers, 132mn internet readers with over 623 channels, 82,000 newspapers and 893mn radio listeners. The industry grew at a CAGR of 9% since 2007 to cross the 700bn mark. It is at a threshold of accelerated growth of 15% in next five years driven by consumption in tier II and tier III towns and digital media.

Indian ME Yesterday and tomorrow

Rs bn

Source: FICCI-KPMG 2012 report

The industry had a growth of 11.7% in 2011, and is set to grow at 13% in 2012 to reach Rs 932bn by the year end.

Low ad spend, attractive demographics

India has the second largest population in world with a median age of 26.2 years. Its growing per capita consumption and the low media penetration are strong drivers for future growth. Indias advertising to GDP ratio is a low 0.34%, half of the worlds average of 0.75%.
1.20% 1.00%
0.80% 0.64% 0.34%

0.97%

0.60%
0.40%

0.44%

0.20% 0.00%
India North America Western Europe China

Source: E&Y report

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Company Report: RBN

30 Mar12

TV to retain leadership, account for half of the pie

Five years ahead, TV would be as big as the whole industry today

TV, the largest medium, currently accounts for 45% of industry revenues, or Rs 329bn. FICCI-KPMG predicts TV to grow at CAGR of 17%, higher than the industry, to reach Rs 735bn in revenues by 2016.

Source: FICCI-KPMG industry report

TV industry grew 10.8% in 2011 to reach Rs 329bn. Advertisement revenues contributed Rs 214bn or 35% of revenues while subscription revenues contributed 65%. The industry is expected to grow by 15.5% in 2012 to reach Rs 380bn by year end.

Under-penetration, Digitization, Regional to be future growth drivers

TV penetration in India is still ~60% compared to 90%+ in developed markets, leaving a good headroom for future growth. TV penetration in India could touch 70% by 2016 driven by rising incomes, and reducing cost of sets. TV Penetration in 2011

Source: FICCI-KPMG industry report

Presently, Cable and Satellite reaches 81% of TV households. DTH is growing fast driven by Governments digitization mandate and commitment. FICCI-KPMG expects subscription revenues to grow from Rs 116bn in 2011 at CAGR of 14.7% to reach Rs 230bn by 2016. Share of subscription revenues would increase to 69% in 2016. The growth drivers here would be increasing demand for paid content leading to higher ARPUs (expected increase from 160 at present to over 250 by

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Company Report: RBN

30 Mar12

2016) and increased penetration. Indian ARPUs are one of the lowest globally at $3.6 compared to $70 in US and $80 in UK. The number of C&S households is expected to be up to 188mn out of which 89% would be paid C&S. TV viewership in India is also low ~150 minutes compared to developed countries US (300+), UK (240). As TV content improves in quality and quantity, we can expect viewership times to increase. DTH reach was a subscriber base of 37mn in 2011, a penetration of 31% in C&S base. FICCI-KPMG expects DTH base to increase to 86mn by 2016. Digitisation game a changer for Broadcasters
RBN, and other broadcasters, will get revenue benefits from increase share of subscribers ARPU

The number of TV channels in India is ~623. With DTH expansion, Digitisation and launch of new channel formats like HD, Pay Channels, the number of channels will rise further leading to an increase in TV inventory. In 2011, TV ad revenues growth was only 10.3%, impacted by economic slowdown, as the economy recovers, ad spend growth will pick up. TV Advertisement revenues are expected to grow at a CAGR of 18.7% to reach Rs 505bn by 2016. The Government of India has passed the Digitization bill in Dec 2011, fixing a mandate for complete digitization by December 2014. C&S will move to DAS (Digital Addressable System) for distribution and will transmit only digital signals. TRAIs implementation of National Broadband plan by 2013 will be an enabler for the same. The phase-wise deadlines are:
Phase I 4 metros II Cities with population> 1mn III All urban areas IV Rest of India Deadline 30-Jun-12 31-Mar-13 30-Sep-14 31-Dec-14

Broadcasters will benefit from decreased carriage fee

Digitization will bring all around benefits for the TV industry. The consumers will get better quality reception and increased choice of channels. Dynamics of distribution industry will shift in favour of MSOs getting control over LCO. The subscription ARPU share to MSOs and Broadcasters will witness a significant increase post-digitization. ARPU Revenue Share
Stakeholder Consumer ARPU Pre-Digitization 100% Post 2016 100%

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Company Report: RBN

LCO Distributor MSO Broadcaster 65-70% 5% 15-20% 10-15% 35-50% 0-5% 25-30% 30-35%

30 Mar12

Source: FICCI-KPMG 2012 report

With ARPUs expected to increase 1.5x to Rs 254 by 2016, and broadcasters share increasing 2-3 times, we expect Broadcasters subscription revenues to increase at least 3.5x by 2016. FICCI-KPMG expects subscription revenues to account for 43% of Broadcasting revenues by 2016, compared to only 30% in 2011, an increase of ~2x.

Source: FICCI-KPMG 2012 report

Carriage fee will decline over next 2-3 years as DAS will give a bandwidth of over 500-600 channels compared to the limited bandwidth (~100 channels) of analog cable. Growth of the regional TV market Consumption in regional markets account for 73% of Indian Urban consumption (EY). Advertisers are shifting to regional media to capture this consumption. Regional advertising grew at 15% in 2011 to reach XXbn. The growth was higher than national advertising growth. Regional industry is less affected by economic slowdown. Regional TV was the largest genre having accounted for 33.4% of viewership in 2011, compared to 27.4% by Hindi GECs. Regional broadcasting has gained traction with many national players launching dubbed versions or acquiring regional channels (UTV Action Telugu, TV18 ETV, Discovery Tamil), etc. Hindi language accounts for 50% viewership share, followed by English (10%) and Tamil (10%).

Radio among the highest growing segments

Radio will become a truly PAN India

FICCI-KPMG predicts the top 3 fastest growing segments to be Digital Advertising (30% CAGR), Gaming (29% CAGR) and Radio

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Company Report: RBN

medium post Phase III rollouts

30 Mar12

(21% CAGR). Radio is the only traditional media in the top 3 growing at par with new age media models.

Source: FICCI-KPMG 2012 report

The Indian Radio industry grew 15% in 2011 to reach revenues of Rs 11.5bn. The industry witnessed ad rates increase of 7-10% and improved utilization. Top 8 metros have a utilization rate of 70-85% whereas non-metros have utilization 0f 50-65%. The growth is faster in non-metros as utilization increases. FICCI-KPMG expects Radio to grow at a high CAGR of 21% to reach Rs 29.5bn by 2016.

The cheapest media set for an explosive growth post Phase III
Current ad spend on radio in India is 3.8% in India compared to 10 12% globally. FICCI-KPMG expects ad-spend on radio to increase to 5% by 2016 driven by phase III rollouts and local media consumption increase. Radio is the only medium that has no prime time like TV or does not have a shelf life like a newspaper, is a good reminder medium; caters to the max TG across all SECs. The radio growth will also be driven by increase in listenership as more people will listen to radio from their cars and mobiles, an option other media can hardly offer. Reach of radio would grow to 90% of India post Phase III (higher than TV and print). Now players can aim to have the reach that All India radio enjoys and the emergence of larger players with higher reach will enable the Radio industry to pursue better measurement across more cities which will showcase the ad potential for the radio industry. One can easily expect listenership also to grow over 3 times. This will make Radio a very attractive medium for advertisers. The industry players expect the ad rates to grow 2 to 3 times in proportion to listenership.

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Company Report: RBN

30 Mar12

Set to evolve into the most potent national advertisement platform with Lowest Cost Per Thousand Phase III changing the game Phase III will address many challenges of Radio industry. 839 new FM channels covering all cities with population more than 100,000. 227 new cities. Ownership of multiple frequencies allowed subject to not more than 40% of total channels in the city. Networking allowed: This will help Radio players to reduce Capex and Operational costs for smaller stations as they will be able to operate a hub-and-spoke model. News, Sports and Current Affairs Allowed: Opportunities for additional content, Varied content License Period & M&A: License period increased to 15 years from current 10 years; M&A allowed - Promoters allowed to sell stake after 3 years of operation. FDI increased from 20% to 26%.

The process is expected to be kicked off as early as June 2012. With Phase III, FM will reach most of Indias population and will occur as a national mass media on advertisers media plan. On the one hand, owning multiple frequencies will allow increase in inventory especially in places and periods when inventory utilization crosses 100%. On the other hand, costs would get rationalized through a longer license period, networking of operations and relaxed norms for M&A.

Music Royalties verdict: Higher margins

Past year has been a victorious year for Radio industry with regards royalties. In July 2011, industry won a case against Indian Performing Right Society Limited (IPRSL) scrapping the IPRS royalties to be paid on radio broadcasting. Copyright Board Verdict has opted for fee based on a revenue based system. Many music companies have already moved to 2% revenue share agreements. Others like T-Series are still fighting, but sooner or later we would see radio industry moving towards International norms of 0.5% to 4% revenue share arrangements for royalties. This has had a direct impact on Radio margins, as earlier, royalties accounted for as high as 7-10% of revenues. This will also mean that the new radio stations launched in phase III will achieve break-even much faster through revenue-share as against fixed royalties.

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Company Report: RBN

Content production

30 Mar12

With implementation of digitisation, bandwidth constraints or earlier analog cable will go away leading to a significant increase in number of TV channels, both national and regional. This will increase the demand for original programming proportionately. India also offers cheaper production costs compared to developed countries. To take advantage of the cost arbitrage, international firms like Endemol and Freemantle have started producing local programming. Industry is moving to western model of production houses owning and syndicating IP

Outdoor
The OOH industry was impacted by the economic slowdown, growing at 7.6% in 2011 to reach Rs 17.8bn. FICCI-KPMG expect the growth to be better going forward at 10% CAGR and expect the segment to reach Rs 29bn in revenues by 2016. The share of Transit Media (Airports, Metros, trains etc.) has increased from 22% in 2009 to 30% in 2011. The segment growth will be driven by ad-spend revival and increased inventory of regulated spaces like malls, transit infrastructure, etc.

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Company Report: RBN

30 Mar12

Financial Annexure
Profit & Loss Statement
FY10* Income from operations Direct costs Personnel cost SGOE Total direct expenses EBITDA Depreciation & Amortisation EBIT Other Income Interest charges PBT Taxes PAT *Standalone 1,807 788 450 732 1,970 -162 364 -526 41 275 -761 -761 FY11 2,454 1,148 561 809 2,517 -64 363 -426 59 172 -539 -3 -537 FY12e 3,134 2,510 524 551 3,585 -451 394 -845 30 203 -1,018 -1,018 FY13e 5,045 3,623 579 652 4,853 192 405 -213 50 155 -318 -318 FY14e 8,936 5,369 785 1,239 7,392 1,544 632 912 89 121 940 940 (Rs mn) FY15e 12,807 6,815 863 1,200 8,878 3,929 650 3279 128 91 3,376 210 3,166

Segmental Revenue Break-up

Revenues Radio OOH IP Production Television Other segmental Less Inter-segmental Income from operations FY10* 83% 9% 8% 0% 0% 0% 0% 100% FY11 71% 9% 19% 0% 0% 2% 0% 101% FY12e 67% 10% 8% 14% 5% 3% -6% 100% FY13 43% 10% 12% 16% 18% 2% -1% 100% FY14 47% 7% 9% 13% 24% 1% -1% 100% FY15 44% 5% 8% 12% 30% 1% -1% 100%

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Company Report: RBN Common Size Metrics

FY10 Income from operations Direct costs Personnel cost SGOE Total direct expenses EBITDA Depreciation & Amortisation EBIT Other Income Interest charges PBT Taxes PAT 100% 44% 25% 40% 109% -9% 20% -29% 2% 15% -42% 0% -42% FY11 100% 47% 23% 33% 103% -3% 15% -17% 2% 7% -22% 0% -22% FY12e 100% 80% 17% 18% 114% -14% 13% -27% 1% 6% -32% 0% -32% FY13e 100% 72% 11% 13% 96% 4% 8% -4% 1% 3% -6% 0% -6% FY14e 100% 60% 9% 14% 83% 17% 7% 10% 1% 1% 11% 0% 11%

30 Mar12

FY15e 100% 53% 7% 9% 69% 31% 5% 26% 1% 1% 26% 2% 25%

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Company Report: RBN Balance Sheet

FY10 Sources of Funds Share Capital Reserves and Surplus P&L Balance Shareholder's funds Loan funds Total Liabilities Application of funds Gross Block Less accumulated depn/amort Net Block WiP including capital advances Goodwill Investments Current Assets Inventory Debtors Cash and Bank Balance Loans and Advances Total CA Current Liabilities CL Provisions Total CL Net CA Total Assets FY11 FY12e FY13e FY14e

30 Mar12

FY15e

231 1,440 -1,737 -66 3,066 3,000

397 4,097 -2,273 2,221 1,194 3,415

397 4,097 -3,291 1,203 1,708 2,911

647 6,847 -3,609 3,885 508 4,393

647 6,847 -2,668 4,826 508 5,333

647 6,847 498 7,992 8 8,000

3,529 1,109 2,420 66 -

3,624 1,492 2,133 77 174 10

3,722 1,885 1,837 85 174 10

3,817 2,290 1,527 93 174 10

6,468 2,922 3,546 102 174 10

6,628 3,572 3,056 113 174 10

3 705 121 523 1,353

101 834 87 986 2,009

73 814 123 1,083 2,093

150 1,179 1,298 1,935 4,561

186 2,077 259 2,448 4,970

243 2,991 2,862 3,509 9,605

812 27 839 514 3,000

956 31 987 1,021 3,415

1,253 35 1,288 805 2,910

1,935 38 1,973 2,588 4,393

3,428 42 3,469 1,501 5,333

4,912 46 4,958 4,646 8,000

(Rs mn)

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Company Report: RBN Cash Flow Statement

30 Mar12

CFS PAT Add Depreciation / Amortisation Add Interest Expense (Inc)/Dec in Sundry Debtors (Increase)/ Decrease in Loans and Advances (Increase)/Decrease in Inventories Increase/(Decrease) in Trade/Other Payables Cash Generated from Operations Provision for doubtful debts Operating Cash-flow- A

FY11 -577 363 172 -201 -369 -54 -10 -677 94 -583

FY12e -1,018 394 203 21 -97 28 301 -168 -168

FY13e -318 405 155 -365 -852 -77 685 -367 -367

FY14e 940 632 61 -898 -513 -36 1,496 1,682 1,682

FY15e 3,166 650 31 -913 -1,061 -57 1,489 3,305 3,305

Purchase of Fixed Assets Purchase of Investments Cash from Investing activities- B

-50 -254 -305

-106 -106

-104 -104

-2,660 -2,660

-170 -170

Proceeds from Share Capital (Repayment)/ Proceeds of Secured Loans Interest Paid

2,823 -2,020 -20

513 -203

3,000 -1,200 -155

-61

-500 -31

Cash from Financing activities- C Change in Cash= A+B+C Opening Balance Closing Balance

784 -103 121 85

310 36 87 123

1,645 1,175 123 1,298

-61 -1,039 1,298 259

-531 2,603 259 2,862

(Rs mn)

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Company Report: RBN Ratios

30 Mar12

FY11 Per Share Numbers EPS CEPS Book Value per Share Profitability EBITDA margin EBIT margin Net margin ROAE ROACE Growth Ratios Revenue growth Activity/Turnover Ratios Total Asset turnover Net Working Cap turnover Average Debtors turnover Debtor Days Average Payables turnover Payables Days Current Ratio Quick Ratio Cash Ratio Solvency Debt Equity Leverage Ratio Interest Coverage Valuation Ratios P/E P/BV EV/EBITDA EV/Sales -11.0 2.9 -110.0 2.9 0.5 1.5 -2 36% -3% -17% -22% -50% -13% -7 -2 26

FY12e -13 -8 13

FY13e -2 1 29

FY14e 7 12 36

FY15e 24 29 60

-14% -27% -32% -59% -27%

4% -4% -6% -12% -6%

17% 10% 11% 22% 19%

31% 26% 25% 49% 49%

28%

61%

77%

43%

0.6 2.6 2.9 124 2.6 142 2.0 1.9 0.1

0.7 3.9 3.8 96 2.8 129 1.6 1.5 0.1

1.0 5.1 5.1 72 3.2 115 2.3 1.7 0.7

1.2 7.1 5.5 66 3.3 110 1.4 1.4 0.1

1.2 8.5 5.1 72 3.1 119 1.9 1.4 0.6

1.4 2.4 -4

0.1 1.1 -1

0.1 1.1 15

0.0 1.0 106

-4.2 4.1 -13.0 1.9

-22.0 1.9 32.4 1.2

7.4 1.5 4.7 0.8

2.2 0.9 1.8 0.5

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Company Report: RBN

About Four-S Services

30 Mar12

Founded in 2002, Four-S Services is a financial boutique providing Research, Financial Consulting and Investment Banking services. We have executed more than 100+ mandates across diverse range of industries for Indian as well as global companies, investment firms and private equity and venture capital firms. Our clients value our focused, actionable advice which is based on deep domain expertise in Education, Financial Services, Media & Entertainment, Healthcare, Consumer Goods, Automotive, Energy, Logistics and Manufacturing. For further information on the company please visit www.four-s.com

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