Annual Report - Jagran Prakashan - 2009-2010

JAGRAN PRAKASHAN LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

FINANCIAL RESULTS:

The summarized financial performance of the Company for the financial year
ended March 31, 2010 as compared to previous year is as under:



(Rs. in Lakhs)
PARTICULARS Year ended
March 31, 2010
Sales and Other Income [including
increase/(decrease) in stock] 97611.18 84613.84

Total Expenditure 6595780 66671.11

Profit before Interest, Depreciation,
Prior Period Adjustments and 31653.38 17942.73
Tax (PBIDTA)

Less: Interest 656.77 590.05

Less: Depreciation 5074.66 3832.53

Profit before Prior Period Adjustment and Tax 25921.95 13520.15

Less: Prior Period Adjustment (net) Nil Nil

Profit Before Taxes (PBT) 25921.95 13520.15

Less: Tax Expense 8331.62 435710

Profit for the year (PAT) 17590.33 9163.05

Add: Balance of Profit brought forward 8610.09 7494.13

Balance available for Appropriation 26200.42 1665718

Appropriations:

Transfer to General Reserve 1800.00 1000.00

Interim Dividend 6023.41 Nil

Proposed Final Dividend 451756 6023.41

Corporate Dividend Tax 1791.44 1023.68

Balance carried to Balance Sheet 12068.01 8610.09

FINANCIAL HIGHLIGHTS:

During the year under review, the Company recorded an increase in operating
revenue of 14.39%, which was contributed by the increases in almost all
revenue streams including advertisement revenue, which increased by 15.71 %
and circulation revenue which increased by 9.38% as compared to the
previous year. The contribution in the total revenue from Out of Home
Advertising and Event Management was Rs. 7086 lakhs as against Rs.5502
lakhs, an increase of 28.79% over last year.

PBIDTA, PBT PAT and EPS have increased from the previous year primarily due
to lower newsprint cost, growth in advertisement revenue and improved per
copy realization due to increase in cover price taken in the second half of
2008-09. In relation to total revenue, PBIDTA increased from 21.21% to
32.43%, PBT increased from 15.98% to 26.56%, PAT increased from 10.83% to
18.02% and EPS increased from Rs. 3.04 to Rs. 5.84. Please also refer to
Management Discussion and Analysis forming part of this report for the
detailed discussions.

DIVIDEND:

The Board of Directors at their meeting held on October 27th, 2009 declared
interim dividend of Rs. 2 per equity share (100%) on 301170585 equity
shares of face value of Rs. 2 each amounting to Rs. 7047 lakhs, including
dividend tax.

The Board of Directors at their meeting held on May 27th, 2010 has
recommended a final dividend of Rs. 1.5 per equity share (75%) on 301170585
equity shares of face value of Rs. 2 each.

The final dividend, if approved by the shareholders, will entail an outgo
of Rs.5285 lakhs towards final dividend payout, including taxes and in that
case total dividend payout will be 12332 lakhs including dividend tax for
the year and percentage of dividend for the year will be 175% of the total
paid up capital.

The register of members and share transfer books will remain closed from
August 19, 2010 to August 26, 2010, both days inclusive. The Annual General
meeting has been scheduled for August 26, 2010.

FIXED DEPOSITS:

The Company has not accepted any deposit from public/ shareholders in
accordance with section 58A of the Companies Act, 1956 and, as such, no
amount on account of principal or interest on public deposits was
outstanding on the date of the Balance Sheet.

DIRECTORS:

Sir Anthony J.FO'Reilly and Mr. Anuj Puri has resigned from the Board
w.e.f. 27th October, 2009. Since Mr. Barry Mcauliffe was alternate director
to Sir Anthony J.FO'Reilly, he also ceased to be the alternate director to
Sir Anthony J.FO'Reilly. The Board has placed on record its appreciation of
the services rendered by them as Director of the Company.

Mr. Devendra Mohan Gupta, Mr. Naresh Mohan, Mr. Rajendra Kumar Jhunjhunwala
and Mr. Shailendra Mohan Gupta are directors liable to retire by rotation
and being eligible offer themselves for reappointment, which is as proposed
in the Notice of the ensuing Annual General Meeting.

The brief resume of the directors retiring by rotation and seeking re-
appointment at the ensuing Annual General Meeting, nature of his experience
in specific functional areas and the names of companies in which they hold
directorship and/or membership/chairmanship of the committees of the Board,
their shareholdings etc., as stipulated under clause 49 of the listing
agreement with the Stock Exchanges, are given in section 'Report on
Corporate Governance' of the Annual Report.

TAKE OVER OF PRINT BUSINESS OF MIDDAY MULTIMEDIA LIMITED:

Pursuing the object of inorganic growth, the board of directors of the
company, at their meeting held on May 05, 2010 has approved the proposed
Scheme of Arrangement between the Company, Mid-Day Multimedia Limited (MML)
and their respective shareholders and creditors which envisages the
demerger of the investment arm of MML, holding investment in Mid-Day
Infomedia Ltd ('MIL') comprising of the Print Business ('Demerged
Undertaking') and transfer it to the Company under the provisions of
Sections 391 to 394 of the Companies Act, 1956.

The Scheme is subject to various consents and approvals.

The salient features of the proposed Scheme are as under:

(i) Appointed Date of the Scheme is April 1, 2010;

(II) Effective Date of the Scheme is the date on which:

(a) last of the certified or authenticated copy of the orders of respective
High Courts or any other appropriate authority under sections 391 and 394
of the Act sanctioning the Scheme is filed with the Registrar of Companies,
Mumbai and the Registrar of Companies, Uttar Pradesh & Uttarakhand at
Kanpur, and/or:

(b) The date on which the approval of Ministry of Information &
Broadcasting, if required, is obtained,
whichever is later;

(iii) Upon the coming into effect of the Scheme and with effect from the
Appointed Date, the Demerged Undertaking (including all the estate, assets,
rights, claims, title, interest and authorities including accretions and
appurtenances of the Demerged Undertaking) pursuant to the provisions of
Sections 391 to 394 of the Act and Sections 2(19AA) and 72A of the IT Act
shall stand transferred to and vested in or deemed to be transferred to and
vested in the Company, as a going concern without any further act or deed;

(iv) The Company would issue shares to the shareholders of MML, as on the
Record Date, to be decided by the Board, based on the swap ratio of two
fully paid-up Equity Shares of Rs. 2 each of the Company for every seven
Equity Shares of Rs. 10 each held in MML as determined by the Independent
Valuer, Ernst & Young Private Limited.

This arrangement, which is subject to various approvals, will add fourwell
established and powerful print titlesviz. Mid Day, Sunday Mid Day, Gujrati
Mid Day and The Inquilab in addition to their hugely popular internet
properties to Company's bouquet. It will aid Company in expanding its
market share in the existing markets through. The Inquilab and over all
market share through all the four brands, apart from making Company richer
in on line domain.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 as amended by the
Companies (Amendment) Act, 2000, the Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting
standards have been followed except in case of AS-26. The departure has
been duly explained by way of Note to Accounts as well as in Report on
Corporate Governance.

(ii) The directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at March 31, 2010 and of the Profit of the Company for that
year;

(iii) The directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;

(iv) The directors have prepared the annual accounts on a going concern
basis.

AUDITORS:

M/s. Price Waterhouse, Chartered Accountants, Statutory Auditors of the
Company, hold office until the conclusion of the ensuing Annual General
Meeting and are eligible for reappointment.

The Company has received letter from M/s. Price Waterhouse, Chartered
Accountants, to the effect that their appointment, if made, would be within
the prescribed limits of section 224(1B) of the Companies Act, 1956, and
that they are not disqualified for such appointment within the meaning of
section 226 of the Companies Act, 1956.

AUDITORS' REPORT

The notes to Accounts referred to in the Auditors' Report adequately
explain the Auditors' qualification. Please also refer to Clause 12(iv)(c)
of the Report on Corporate Governance forming part of Annual Report.

CORPORATE GOVERNANCE:

A Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement entered with the Stock Exchanges, forms part of the
Annual Report.

Your Company has been in compliance with all the norms of Corporate
Governance as stipulated in Clause 49 of the Listing Agreement.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report on financial condition and
results of operations of the Company for the year under review as required
under Clause 49 of the Listing Agreement entered with the Stock Exchanges,
is given as separate statement forming part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY:

As responsible corporate citizen, your Company supports a specifically
dedicated organization, Pehel an arm of charitable trust Shri Puran Chandra
Gupta Smarak Trust to discharge its social responsibilities and provide
social services such as organizing workshops/seminars to promote various
social causes. Pehel is working with various national and international
organizations such as World Bank on various projects to effectively
discharge the responsibilities entrusted by the Company. The Company has
also been assisting trusts and societies dedicated to the cause of
promoting education, culture, health care etc. One of the charitable trusts
supported by the Company is Shri Puran Chandra Gupta Smarak Trust, which
has been promoting education and is currently running three public schools,
one degree college, two mass communication institutes and one management
institute providing education to nearly 4000 students.

STATUTORY INFORMATION:

A. PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975 as amended,
the names and other particulars of the employees are required to be set out
in Annexure to the Directors' Report. However, as per the provisions of
section 219(1)(b)(iv) of the said Act, the Annual Report excluding the
aforesaid information is being sent to all the Members of the Company and
others entitled thereto. Members who are interested in obtaining such
particulars may write to the Company Secretary of the Company at its
Registered Office.

B. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO

a) Conservation of Energy

Although the operations of the Company are not energy intensive, steps are
being taken to conserve energy in all possible ways. The details relating
to Disclosure of Particulars with respect to conservation of energy in Form
A to the Rules are not applicable to the printing and publication Industry.

b) Technology Absorption

The Company has not imported any specific technology for its printing and
publication operations, although it has advanced technology printing
machines, which are handled by the Company's in-house technical team.

c) Foreign Exchange Earnings and Outgo

The details of earnings and outgo in foreign exchange are as under:

(Rs. in Lakhs)
Year ended Year ended
March 31, March 31,
2010 2009
Foreign exchange earned
Advertisement 50.00 22.11

Revenue from Other 44.93 0.00

Operating Activities

Foreign exchange outgo

i. Import of Raw Materials 7059.67 5364.72

ii. Import of stores and spares 61.59 376.59

iii. Import of Capital goods 242.38 1654.97

iv. Advance for Capital Goods 83.42 0.00

v. Travelling Expenses 102.95 82.96

vi. Interest on Term loan 165.95 128.08

vii. Representative Office 49.95 15.83
Expenses

viii. Other Expenses 50.53 6.11

ACKNOWLEDGMENTS:

Your Directors would like to express their sincere appreciation of the
cooperation and assistance received from the Authorities, Readers, Hawkers,
Advertisers, Advertising Agencies, Bankers, Credit Rating Agencies, Stock
Exchanges, Registrar and Share Transfer Agents, Associates as well as our
Shareholders at large during the year under review.

Your Directors also wish to place on record their deep sense of
appreciation for the commitment, abilities and hard work of all executives,
officers and staff who enabled Company to deliver even in the difficult
economic conditions.

FOR AND ON BEHALF OF THE BOARD

MAHENDRA MOHAN GUPTA
CHAIRMAN AND MANAGING DIRECTOR
Place: Kanpur
Date : May 27, 2010

MANAGEMENT DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS:

This report contains forward-looking statements, which may be identified by
their use of words like 'plans', 'expects', 'will', 'anticipates',
'believes', 'intends', 'projects', 'estimates' or other words of similar
import. All statements that address expectations or projections about the
future, including but not limited to statements about the Company's
strategy for growth, product development, market position, expenditure, and
financial results, are forward-looking statements. Forward-looking
statements are based on certain assumptions and expectations of future
events. The Company cannot guarantee that these assumptions and
expectations are accurate or will be realized. The Company's actual
results, performance or achievements could thus differ materially from
those projected in any such forward-looking statements. The Company assumes
no responsibility to publicly amend, modify or revise any forward looking
statements, on the basis of any subsequent developments, information or
events.

OVERVIEW-FINANCIAL YEAR 2009-10:

The year 2009-10 began with carried forward economic slowdown and ended
with optimism. The Indian GDP growth for the last quarter is expected
anything above 8.5%. There is no doubt that the European crisis is looming
large but our Finance Minister has assured that it is not going to
materially affect the Indian economy as many people apprehend. The Prime
Minister estimates the GDP growth of 8.5% for the year 2010-11 and
therefore we need not get carried away by these developments and need to
reassure ourselves. We could not have agreed with them more if we look at
the performance of Indian economy in last two years. The year 2008-09 was
economically worst even for us in the recent past in the wake of global
melt down but still we were able to record GDP growth of 6.8%, which by no
means is unsatisfactory. The growth for the year 2009-10 is estimated to be
around 7%, despite bad monsoon. Even though it may not yet look very
impressive by Indian standard, what is important is the increased
confidence of the business community. These two years( one of which was
really bad and the second of which was not as good as an Indian would have
expected ) have highlighted and amply proved that India's resilience to
global economic slowdown or global recession is very high and atleast new
we should start admitting that Indian economy is somewhat, if not fully,
decoulped from world economy. This is because our economy is primarily
driven by self consumption unlike many others including China. Moreover,
demographic advantage and dependence for growth on smaller towns and rural
India which are yet to taste the fruits of growth, are other reasons for
India coming back to the desired growth path within less than 12 months of
one of the worst ever global recessions.

Basis the expected high GDP growth for the year 2010-2011 and renewed
confidence in economy, we expect current fiscal to be far better than the
previous year. In medium to long term, the rapidly expanding consumer base
in smaller towns and rural India (which house nearly 90% of the total
population) will be the real growth driver.

The past two years have also shown that education and health sectors remain
unaffected or get least affected by economic slowdown or recession, thanks
to the increasing awareness of Indians residing in non-metros, Tehsils and
villages. In the year 2009, education was top advertising category with its
share of 15% in total ad-spend on print media. These areas also lack
infrastructure and will therefore see huge infrastructure spend in times to
come.

Hence, we expect more inclusive prosperity and therefore firmly believe in
India's long term growth story.

As far as media and entertainment industry is concerned, it was once again
evident that it has a direct correlation with the GDP growth and there
would always be some time lag between the media and entertainment industry
gaining momentum and improved GDP growth. Accordingly, the second half of
the calendar year 2009 and first quarter of the calendar year 2010 were
better than the first half of the calendar year 2009. Due to de-growth in
or flat revenues in the first half of the calendar year 2009, whole of the
Indian media and entertainment industry as well as print media industry
suffered and registered a growth of less than 2% in calendar year 2009.

Besides improved economic environment in later part of the year 2009-10,
other significant positive for the print media was reversal in trend of
increasing newsprint prices which benefited the sector hugely. Further,
cost cutting measures adopted by the industry during difficult times
resulted in cost savings. Some of these are sustainable and augur well for
the industry in future. However, there was pressure on advertisement rates
during the year but those, who were innovative in approach, could still
manage to record much higher growth than others and beat the industry's
average by miles. Pressure on advertisement revenue in general was a
blessing in disguise as many of the publishers increased their cover price
to keep their head afloat. Intensity of the competition increased in
certain pockets of Hindi speaking belt but fortunately the print media was
not further fragmented.

The Company benefited from falling newsprint prices, depreciation in
dollar, increased per copy realization due to increase in cover prices
taken in second half of the year 2008-09 and more importantly growth of
respectively nearly 16%, 13% and 77% in advertisement revenue, outdoor
advertising and revenues from event management activity, which are far
higher than the industry's average growth rate. All these put together
along with cost control measures resulted in the highest ever growth in
margins for the Company. The superior growth in revenues became possible
due to Company's belief in and focus on tier-II and tier-III towns,
innovative marketing strategies implemented to combat slowdown, constant
monitoring of the cost and above all servicing to its valued customers.

The Company's flagship brand 'Dainik Jagran' continues to maintain its
numero-uno position since 2003 without break and even other publication
brands viz. I-next and City Plus, which are at infancy stage, continue to
grow in acceptability. There were three more editions of I-next launched in
Jharkhand and Uttar Pradesh and City Plus was expanded to Mumbai and
Hyderabad during the year.

Our strategic partner Independent News & Media PLC, Ireland has sold part
of its shareholding held through its wholly owned subsidiary to repay their
loans and are currently holding 5.7% of paid up capital of the Company but
we expect to continue to receive their valuable input for betterment of the
company.

Impressed by the Company's position in the industry, confidence in the
promoters, management team and the growth potential, the largest private
equity investor of the world Blackstone Capital Partners has agreed to
invest in Jagran Media Network Investment Private Limited which is going to
become the holding company of the Company. Their investment will augment
the financial capabilities of the Company without diluting its existing
shareholders. Their global expertise, knowledge of media industry and
relationships will add to Company's competitive strength and help Company
in more than one way including inorganic growth.

Their investment is subject to the approval of FIPB.

Pursuing the object of inorganic growth, the Company's Board of directors
has recently approved the takeover of print business of Mid Day Multimedia
Limited. This takeover,which is subject to various approvals, will add four
well established and powerful print titles viz. Mid Day, Sunday Mid Day,
Gujrati Mid Day and The Inquilab in addition to their hugely popular
internet properties to Company's bouquet. It will aid Company in expanding
its market share in the existing markets through The Inquilab and over all
market share through all the four brands, apart from making Company richer
in online domain. The business to be taken over is already in profit which
is expected to improve in the current fiscal. We have definite plans for
each of the brands and business to improve profit and will implement them
at relevant time in consultation with the existing management. The Company
is committed to strengthen the market position of Mid Day in Mumbai as
afternoon newspaper, Gujrati Mid Day as morning newspaper and expand. The
Inquilab. These brands also give us opportunity, with or without our own
brands, to expand our print operations to other parts of the country which
we would do in due course if and only if it makes the business sense.

Our confidence in Indian economy and various businesses of the company
remains high and therefore we are committed to expand our businesses as
hitherto.

The salient features of the year are reported below:-

1. Indian Readership Survey 2010 Q1 reaffirmed status of Dainik Jagran as
highest read newspaper in the country across all languages. This was 14th
time in a row. IRS has started to release readership numbers quarterly
instead of six monthly as hitherto and accordingly 2010 Q1 represents
quarter first of calendar year 2010.

2. Dainik Jagran won First Place award in category of Readership/Usage of
Print News Paper at 80th Annual International News Media Marketing
Association (INMA) leaving far behind all others for its most impactful
General Election Campaign 'Jan Jagran' aimed at reforming the Indian
Politics through votes.

3. The operating revenues, operating profit and net profits increased by
14.39%, 80.13% and 91.97% respectively.

4. Return on net worth was 28.72%.

5. Advertisement revenue grew by 15.71%, and growth in circulation (no. of
copies sold) of Dainik Jagran was 1%.

6. I-next and City plus continued to progress satisfactorily. During
theyear, 3 more editions of I-next were successfully launched in the states
of Jharkhand and Uttar Pradesh taking the total number of editions to 12.
I-next is planned to be expanded aggressively after detailed study of each
market. Indian Readership Survey (IRS) 2010 Q1 covered only 8 editions out
of 12. The total readership reported by IRS was over 2.1 million which is
very encouraging and has expanded the market. I-next's contribution in
total publishing revenue for the year 2009-10 was about 4.58%.

8. new editions of City Plus viz. 2 in Bangalore, 4 in Pune, 1 in Mumbai
and 1 in Hyderabad were launched taking the total number of editions to 22
as at March 31, 2010. Pursuing its strategy, management has planned to
expand City plus further beyond the foot print area of Dainik Jagran during
the year 2010-11.

7. Outdoor business has grown by 12.78% despite degrowth in over all
industry which has become possible due to focus on smaller towns, cost
cutting, additions of new properties and gradual shift from leasing model
to ownership model. Further, the operating loss has come down by over 50%
during the year 2009-10 and in the second half of the financial year, the
business would have been in operating profit but for the provisioning for
debts on conservative basis.

Going forward, the Company will continue to focus on tier-II and tier-III
towns without losing opportunity in bigger towns. For expansion of
business, it is aggressively looking for joint ventures with operators or
even acquisitions of their business especially in case of those who belong
to unorganized sector. During the year 2009-10, the Company has invested in
two of such entities.

8. Jagran Solutions, an event management division of the Company, continues
to receive recognitions and improve its market position in the industry.
The division registered a growth of 76.75% in turnover and was in profit.
During the year, it has diversified its customer base.

9. The Company continued to invest in internet properties and
commercialized its classified portal khojle.in and a gaming portal
jeetle.in. Both the new portals have started generating revenues.

10. Co-branded news portal www.jagran.yahoo.com has been progressing
impressively and has nearly 70 million page views per month with over 1.5
million unique users which make it the largest web portal across all Indian
language portals (Source: Vizi Sense). Although the revenues are currently
insignificant in relation to the total revenue of the Company, it has grown
manifold.

11. Proposal for final dividend @ 75% of the face value of the equity
shares, in addition to 100% interim dividend paid during the year.

Print Industry:

The industry is out of gloomy days and is doing well. We earnestly hope and
trust that lessons learnt during tough times will not be thrown to wind and
make all of us wiser and more prudent in approach, going forward.

The industry's biggest challenges continue to be the adverse effects of
fragmentation which fortunately did not increase in past two years and
monetization of readers base. This challenge is tougher or more pronounced
in case of Indian language news papers as English news papers are only a
few and have much smaller readership base.

There are about 62000 newspaper brands being published in India. Of 62000
newspaper brands, only 8% are in English and remaining 92% are in Indian
languages. The year 2008-09 (which was one of the most financially
difficult year)and the year 2009-10 (which too was not as good as Industry
would have expected) have most certainly made many publishers give a
serious thought to their future strategy but given the emotional
attachment, the industry has not yet seen the beginning of the process of
consolidation which is much needed in the interest of the industry as well
as consumers. However, it is expected that this would start sooner than
later.

Although there were not too many new launches in past two years, the
intensity of the competition has got intensified in certain pockets of
Hindi Speaking belt and we expect that with economy easing, this is going
to increase further in the current year. The competition in high potential
areas is quite expected and a healthy competition aimed at expanding market
by increasing the penetration or providing better contents is always
welcome. However, fact of the life is entirely different. If we look at the
penetration level of past few years, it is evident that it has not improved
significantly and is nowhere near the proportion in which new launches have
happened. This clearly shows and as the ground realities also corroborate,
most of the publishers have made launches in relatively high penetration
areas only and thus primarily attempted to eat into the market share of the
existing publishers by offering low cover prices coupled with attractive
gift schemes, which make newspaper virtually free for the consumer.
Similarly, the new entrants also offer advertisement space at throw away
prices. To protect the market share, existing players too toe the same line
and therefore in terms of value, either the market gets shrunk or the
growth tappers.

Thus, in reality there is hardly any expansion of market which is cited as
the reason for making entry into a new market. Instead, what happens is
that there is mainly duplicity of readership or to some extent replacement
in case of price sensitive readers who generally come back to their
original newspaper once the new entrant stops freebies.

This trend is unhealthy for the newspaper industry as it can not give an
investor the desired return on his investment on sustainable basis and will
make them wary of investing in the industry. The industry also has to
realise in its own interest that the readers can not infinitely and
limitlessly be subsidised by the advertisers for whom the print media is
becoming increasingly expensive and in difficult or uncertain times like
2009 when there was a negative growth in print advertisement revenue, they
will be forced to start looking at other media options ignoring the
efficacy of print media, much against their wishes. We believe that if the
publishers provide the compelling contents and attempt to expand the market
in letter and spirit, readers will not mind paying for the contents, cost
of creation and distribution of which is enormous which they understand.
They would also not like newspapers to have too much dependence on
advertisement revenue for survival because they do not want contents which
are driven by any kind of desperation of the publishers.

Having said that, Hindi newspapers have been increasing their market share
in terms of readership as well as advertisement space vis-a-vis English
newspapers or other Indian language newspapers. In calendar year 2009,
there was a growth of 13.5% in advertisement volumes as against drop of
1.5% in case of English newspapers and 0.1% in case of other Indian
language newspapers. Even in terms of penetration, there is CAGR growth of
3.2% in case of Hindi newspapers as against drop of 9.1% in case of English
newspapers if we compare IRS 2009 R-II with IRS 2007 R-II. During this
period, other Indian language except Marathi newspapers also declined in
readership. (Source: FICCI-KPMG Indian Media & Entertainment Report 2010).

In spite of much better reach and demography that qualitatively is not far
behind the English newspapers, the biggest challenge for Indian language
news papers and particularly Hindi newspapers lies in monetization of huge
readership base. Completely overlooking the fact that the potential is in
Hindi speaking belt, the advertisers are inclined to give huge premium to
English newspapers which are circulated in metros and big towns only. Even
if the correction is happening, the process is slow and this could perhaps
be one of the reasons why Hindi newspaper publishers do not prefer to
venture deeper into smaller towns and rural India where reach is a much
costlier proposition and logistically much more difficult than confining
themselves to the bigger towns.

In comparison with other media and entertainment platforms, the print media
revenues have grown in calendar year 2009 by about 1.75% which is lower
than the growth of new media and television but higher than the growth
recorded by films, radio and outdoor. The lower growth in print media is on
account of fall in revenues of English newspapers (which account for 45% of
total print media ad-spend) and revenues of other than Hindi Indian
language newspapers.

Industry is moving to digitalisation of contents and many print publishers
are making initiatives to expand the base of their content users and
optimise the benefit from their print properties by providing the exposure
to their advertisers on internet as well. We believe that these initiatives
of print publishers will help them sustain higher growth in long run but in
short to medium term, it is unlikely that digitalization of contents can
get them any significant revenue and therefore any huge investment therein
is undesirable at least in next 4-5 years.

The industry is also clearly witnessing the shift in requirements of the
consumers specially the youngsters and therefore it is unavoidable for news
papers to keep themselves updated, change with the time and provide the
consumers what they want instead of what the publishers want. It would
necessitate the high level of consumer connect, investment in upgrading the
product on regular basis and providing the contents of the likings of the
readers at affordable cost.

Overall penetration of print media continues to be very low in India. In
Hindi speaking belt and amongst lower-socioeconomic classes which are
showing signs of moving to next level and thus offer a huge base of
potential readers due to their sheer numbers, it is still poorer. This
offers huge opportunity to all print media owners.

Opportunities and Threats:

The industry in general and potential in our areas of operation backed by
huge loyal readers base in particular offer the tremendous opportunity to
us.

The expectations of robust economic growth supported by business friendly
government's policies, low ad-spend of 0.41% as against global average ad-
spend of 0.80% of GDP and low penetration of newspaper offer huge
opportunities for the media industry in foreseeable future.

Your company has appropriate plans to ensure organic, inorganic, short
term, medium term and long term growth. In short term, the focus is
primarily on growth in profitability without losing market share and for
medium to long term, the management has plans to achieve organic as well as
inorganic growth in market share as well as profitability. In medium to
long term the organic growth is going to be driven by strong GDP growth,
the potential in our areas of operation, maturity of our editions and our
focus on expanding the market size and market share in addition to our
initiatives to optimize the benefit from existing infrastructure and
business. Inorganic growth is planned preferably through the route of
acquisitions/joint ventures, which we have actively been looking for and
recent approval of proposal by the Board for takeover of print media
business of Mid-Day Multimedia Limited subject to applicable approvals is a
step in this direction.

Your Directors do not perceive that the Company as such has any threat
specific to its businesses or financial condition. Of course, every
business has risks and concerns, and we are no exception. Please refer to
the 'Risks and Concerns' for our views.

Outlook:

The low penetration of print media sector in smaller towns and rural India
offer opportunities for growth. According to FICCIKPMG Indian Media &
Entertainment Report, the industry is expected to register a CAGR growth of
9.1 % during the next 5 years starting from the year 2010. Advertising and
circulation revenues are estimated to grow at a CAGR of 11.6% and 5%
respectively during the aforesaid period in the country. The said report
also estimates the Indian ad-spend at 0.41% of GDP as against corresponding
global average of 0.80% and per capita ad-spend at merely USD 4 as against
USD 27 in China which clearly indicates that Indian advertisement industry
is no where near peak and has a long way to go.

Basis these estimates, we believe that growth in our areas of operation,
which houses nearly 60% of the country's population and primarily comprise
of tier-II and tier-III towns and rural India, is going to be much higher
than the over all growth rate and it will be sustainable in long term.

The media sector is also to benefit from the demographic impetus with
rising income levels, growing urban class and increasing Indian middle
class. As per McKinsey, income levels are likely to triple in India in next
two decades, with the country becoming the fifth largest consumer market
from twelfth at present. The Indian middle class is expected to swell by
over 10 times, increasing from the current size of 50mn to 583mn by 2025.
Also, as income levels rise with the burgeoning middle class, spending
patterns will shift to discretionary items rather than basic necessities.
Discretionary spending and consumption of lifestyle products augur well for
the advertising industry.

During the financial year 2009-10, we have out performed industry in terms
of growth in advertisement revenue from publication business, out door
advertising and revenue from event management activities and we expect that
this trend would continue even in future. Similarly, for other businesses
of the company mainly we believe the we will continue to out perform the
industry.

RISKS AND CONCERNS:

1) Economic slowdown

Any slowdown in economy would adversely impact the advertisement revenue.

Management Perception:

Our business model is not so heavily dependent on advertisement revenue as
to result in operating losses in the event of economic slow down unless and
until it is too steep, which we do not foresee. We are able to recover
substantial part of newsprint cost through the cover prices. We also
believe that the economic slow down does not impact our market as much as
it impacts metro market which has been adequately proved during the recent
economic down turn. Our increased focus on local market and rapid expansion
of its size will minimize the impact of any economic slow down.

2) Competition

The Indian newspaper industry in general and Hindi newspaper industry in
particular have become intensely competitive. In each of our markets, we
face competition from other newspapers for circulation, readership and
advertising. In addition, we face competition from other forms of media,
such as, television, radio and internet.

In the event of competition for circulation or advertisement revenue, we
may have to (1) increase number of pages per copy, (2) reduce the cover
price of our newspapers, (3) reduce our advertisement rates (4) offer other
price incentives or (5) offer promotional schemes. Any reduction in prices
or rates or the introduction of price incentives/promotional schemes will
have a material adverse effect on our results of operations.

Management Perception:

Like any other newspaper publisher, we too have competition but our
competitive strengths such as strong national brand, bouquet of titles,
offering of 3600 solution to the client, experienced management team,
reader connect, Pan-India infrastructure, strong net-worth, liquidity and
investment in product development and upgradation of technology on regular
basis enhance our capabilities to meet the competition effectively.
Further, we have competed successfully in the past and in the new markets
and we have always endeavored to expand the market size and make our own
readers base, more than targeting the readers of existing newspapers.
Acquisition or association with other publication brands will add to our
strength and increase our market share. Our ability to compete is
demonstrated in the fact that Dainik Jagran continues to be No.1 newspaper
since 2003 without break (Source: Indian Readership Survey) and our other
publication brands have successfully established themselves in a short span
of time.

3) Dependence on Advertisement Revenue-From Publication Business

We rely substantially on advertising customers for our revenue. During the
year ended on March 31, 2009 and March 31, 2010, we derived respectively
from advertisement revenues 74.30% and 72.12% of our total revenues from
publication business.

Ad-spend by our customers and our ability to attract new customers is
influenced largely by the circulation and readership of our newspapers, by
readership demographics, by the preference of advertising customers for one
media over another and, with respect to national advertising, the
geographical reach of our newspapers. In addition, ad-spend is influenced
by a number of factors including the Indian economy, the performance of
particular industry sectors, shifts in consumer spending patterns and
changes in consumer sentiments and tastes.

Management Perception:

Despite one of the most economically difficult financial year witnessed by
the newspaper industry in recent times, the Company registered a growth of
over 10% in the year 2008-09 and bettered it to nearly 16% in the year
2009-10, even if GDP growth for 2009-10 is not likely to improve
significantly from the previous year. The bouquet of print titles and other
businesses help company in providing 3600 solution to the customers, which
ability of the Company gives it an edge over its competitors. Further, our
competitive strength and leadership position in the fastest growing Hindi
segment will continue to attract readers and advertisers alike.

4) Newsprint price fluctuation

Newsprint forms the major raw material for our business and represents a
significant portion of our expenses. For the years ended March 31, 2009 and
March 31, 2010 newsprint costs represented 25.29% and 34.27% respectively
of our total income.

Management Perception:

The year 2008-09 has seen the peak of newsprint prices which were
unrealistically high. However, these prices came down significantly in the
year under report. We expect that the newsprint prices are not going to
reach the levels of the year 2008 in a year or two. The Company has always
been successful in minimizing the impact of sharp increase in international
prices given its flexible circulation model. Also, the Company has
sufficient quantity of imported newsprint tied up for whole of the
financial year 2010-11 and it therefore does not expect the adverse impact
of newsprint price rise beyond 8% to 9%.

5) Dependence of business on senior management team

We have a team of professionals to oversee the operations and growth of our
businesses. Our success is substantially dependent on the expertise and
services of our management team. The loss of the services of such
management personnel or key personnel could have an adverse effect on our
business and results of operations. Further, our ability to maintain our
leadership position in the print media business depends on our ability to
attract, train, motivate and retain highly skilled personnel.

Management Perception:

The Company has team of professional managers commensurate with its size of
operations, with dependence on no single person. We have second line
management in all our departments to takeover from seniors. Further, the
Company enjoying a leader's position, does not have threat of losing key
personnel, which is evident from the facts that we have not had any
significant turnover at senior management level and the company has been
attracting best of talent available in the industry.

6) Our foray into Out of Home Advertising

The Company has hoardings, kiosks, unipoles and similar properties on
short/medium term lease/sublease and has committed itself to security
deposits as well as rentals generally payable every month in advance on the
expectations that the Company would be able to use these properties for
displaying the advertisement of its clients and earn revenue. Many of these
contracts are not cancelable before the expiry. For the year under report,
the activity has again incurred a loss and in future our inability to
attract the customers may increase losses further.

Management Perception:

We have a dedicated team of experienced professionals. Further, the Company
draws benefit from its already existing strong base of customers, many of
whom are the advertisers even for outdoor. The focus of Company on tier-II
and tier-III towns in the foot print areas of Dainik Jagran gives an edge
over competitors owing to better knowledge of and existing infrastructure
in these markets. Also, outdoor media is yet to evolve in these areas,
which offer huge opportunity to the company. Although it was expected that
the outdoor business would break even at least at operating level in the
year 2009-10, it could not do so because the entire outdoor industry had a
tough time and registered a negative growth. In comparison with the
performance of over all industry, our outdoor business performed far better
due to its continued focus on rationalization of its properties, focus on
smaller towns, shifting from lease to ownership model and cost reduction.
As a result, it not only registered a growth of 12.78% in turnover but also
reduced the operating losses by over 50%. In fact, during the second half
of the financial year, there was hardly any operating loss and if we
exclude the provisions made for bad and doubtful debts, there was operating
profit.

7) Our investments in M.P based companies

Besides Rs. 10.50 lakhs invested in as equity, an aggregate amount of
Rs.2771.78 lakhs plus unpaid interest (Previous year: Rs. 3073.80 lakhs
plus unpaid interest) is outstanding from Jagran Publications Private
Limited and Jagran Prakashan (MPC) Private Limited as loan. The Company
(JPL) hold 50% voting rights. Balance 50% voting rights are held by another
group of shareholders (hereinafter referred to as 'Other Group') in these
two companies.

Various litigations have been initiated by Other Group against the Company.
In case of Jagran Publications Private Limited, the Company has also filed
the petition against Other Group, which is in management, alleging
mismanagement and oppression of the Company as shareholder and seeking a
direction from the Company Law Board against the Other Group to sell their
shareholding to company at a price to be determined by an independent
valuer or alternatively to vest the management rights with the Company.

These Other Group companies have also not been holding Board meetings nor
have they been supplying any financial information to the Company. Owing to
the stalemate situation the accounts of the these two companies have also
not been finalized since year 2006-07.

Jagran Prakashan (MPC) Private Limited owe approx Rs.9 crores including
interest to Allahabad Bank. The JPL nominee directors are guarantors to
this loan. It is understood that the bank has recalled the loan and have
put its assets to auction for sale now over a year. The sale has not
materialized pending the decision by the Debt Recovery Tribunal on an
appeal filed by the Other Group.

Articles of Association of these two Madhya Pradesh companies also restrict
the transferability of the shares in a manner that JPL cannot transfer
shares without the consent of other group of shareholders.

Given these litigations, the realization of outstanding loans for these two
companies might take unduly long time.

Management Perception:

In none of the litigations initiated against the Company by the Other Group
any interim reliefs has been granted by the Company Law Board or High
Courts. Rather, the petitions seeking striking off the Company's name from
the register of shareholders in Jagran Publications Private Limited has
been dismissed by Hon'ble Company Law Board. Other Group has since appealed
in the High Court which has neither stayed the impugned order nor has
passed any order so far.

As per legal advice received by the Company, decisions against the Company
in the suits/petitions filed by Other Group are unlikely as the Company has
merit in its petition filed against Other Group. Based on the legal advice
the management is of the view that the Company's investment in equity and
loan in these associate companies are fully realisable even in an unlikely
event of outcome going against it.

Despite having 50% voting power and having equal representation on the
Board with Company's nominee as the Chairman with a casting vote, the
Company is not in reality has been in a position to exercise any control
over these companies or influence any of the decision taken by Other Group.
In view of the aforesaid situation the investment in these two companies
has been classified as investment instead of as investment in Associate
Companies without prejudice to the legal rights with JPL.

(Also, refer to Note No.2 of Schedule 20B to annual accounts).

Internal control systems and their adequacy

We have put in place requisite internal control system in all areas of
operation. These systems have stood the test of time and ensure that the
activities are carried-on efficiently. The role and responsibility of all
managerial positions are established, monitored and controlled regularly.
All the transactions are authorized, timely recorded and reported truly and
fairly. However, as part of on going process, many of the steps have been
taken during the year to strengthen it further.

In order to ensure adherence to the laid-down systems, apart from internal
reporting and monitoring, we have also put in place formal Internal Audit
System commensurate with the size and nature of business. As part of
ongoing process, our focus is always on improving the systems and
procedures to improve efficiency, transparency and accuracy in financial
reporting.

SEGMENT PERFORMANCE

The Company continues to be primarily engaged in printing and publishing
newspaper and magazines in India. The Company also has various other
businesses such as out of home advertising, event management and digital
business including Short Code Service (57272) for mobile phone users.
However, for the fiscal under report, printing and publication business has
continued to be the only reportable segment in terms of Accounting Standard
17 issued by the Institute of Chartered Accountants of India as it had
contribution of 91.24% in total sales and other operating income of the
Company.

FINANCIAL PERFORMANCE

Previous year's figures have been regrouped/recast wherever necessary to
make them comparable to the corresponding figures of the current year and
therefore might not necessarily match with those reported in the previous
year. Further, the figures have been rounded off to nearest lakh.

REVENUE BREAK-UP
(Rs. in lakhs)
2008-09 Percentage 2009-10 Percentage
(In (In
relation relation
to Total to Total
Income) Income)
Sale and
other operating 82342 9731 94186 96.49

Income
Other Income 2272 2.69 3425 3.51

* Includes increase/decrease in stocks, which is insignificant.

Sales and other operating income

It comprises advertisement revenue, newspaper sales, revenue from out of
home advertising, revenue from event management, job charges, scrap and
waste paper sale, magazine/supplement sale and also revenue from digital
business. It had a growth of 14.39% over the previous year, which was
primarily contributed by increase in advertisement revenue by 15.71%,
circulation revenue by 9.38%, revenue from event management by 76.75% and

revenue from outdoor advertising by 12.78%. The growth in advertisement
revenue is attributed to increase in space as well as yield per square cm.
mainly driven by increase in color space.

Growth in operating revenue of 14.39% is way ahead of over all
entertainment and media industry's growth as well as print media industry's
growth, both of which are estimated to have grown at less than 2% in the
calendar year 2009.

Other Income

It primarily comprises treasury income, exchange fluctuation gain,
miscellaneous income representing write back of certain personal account
balances considered no longer payable, provision no longer required written
back and bad debts recovered. The sharp increase in other income is mainly
because of exchange fluctuation gain of Rs.8 crores approximately as
against loss of Rs.8.51 crores in the previous year.

EXPENDITURE ANALYSIS AND PROFITS
(Rs. in lakhs)
2008-09 Percentage 2009-10 Percentage
(In (In
relation relation
to Total to Total
Income) Income)

Materials consumed 34142 40.35 29588 30.31

Employees Cost 10653 12.59 12122 12.42

Other manufacturing
expenses 8428 9.96 9881 10.12

Selling, Administrative
and other Expenses 13448 15.89 14367 14.72

Total 66671 78.79 65958 6757

Profit Before Interest,
depreciation,
Extraordinary
Items, Prior 17943 21.21 31653 32.43

Period Adjustment and
Taxes (PBIDTA)

Interest 590 0.70 657 0.67

Depreciation 3833 4.53 5075 5.20

Profit Before Tax (PBT) 13520 15.98 25921 26.56

Taxation 4357 5.15 8331 8.54

Profit After Tax (PAT)

Materials consumed

It comprises cost of newsprint and art paper (used for magazine), ink and
stores which includes printing plates, chemicals, films etc. The newsprint
alone constituted 83.42% of the total value of material consumed in the
year 2009-10 as against 84.93% in the pervious year. Out of the total value
of consumption of newsprint, imported newsprint accounted for 20.65 as
against 21.52% in the previous year.

The fall in material consumption despite increase in revenues was on
account of fall in average cost of newsprint consumption by about 1721%
which resulted in saving of Rs.5132 lakhs (net of tax approximately Rs.3387
lakhs).

Employees cost

Employees cost increased by 13.79% compared with the previous year
primarily due to annual increments, dearness allowance and upward revision
in gratuity limit from Rs.3.50 lakh to Rs.10 lakh besides increase in
strength due to expansion of capacity and launch of new editions of I-Next
and City Plus.

Manufacturing and other Direct expenses

Other manufacturing expenses comprise direct expenses relating to outdoor
advertising, event management and digital business, news collection and
articles contribution charges, power and fuel, inward freight cartage on
items other than newsprint and repairs and maintenance of building and
plant and machinery including computer.

These expenses have increased by 1724% compared with previous year
primarily due to scaling up event management and outdoor businesses which
cumulatively recorded growth of 28.77%.

Selling Administrative and other expenses

These expenses aggregate to Rs. 1436731 lakhs (Previous year Rs. 1344750
lakhs) primarily include newspaper distribution, representative,
promotional, publicity, incentives to agencies/ advertisers, communication,
travelling, rent, donations, auditor's fees, foreign exchange fluctuation,
write offs and provisions. There was an increase of 6.84% as compared to
the previous year. The increase is marginal despite significant
provisioning for certain debts under litigation and donation to a
charitable institution. Rest of the increase which is not material is
primarily due to launch of new editions of I-next and City plus.

PBIDTA margin increased as a result of foregoing factors.

There was increase in interest expense of Rs.66.72 lakhs as compared to
previous year which is primarily due to interest on delayed installment of
advance tax. But for this provision, interest would have been lower than
the previous year due to negotiation of cheaper borrowing in form of
buyer's credit facility in foreign currency and stringent monitoring of
debt collection.

Depreciation is provided as per written down value method, as a result of
which charge to Profit & Loss Account on account of depreciation in the
initial years of additions to the gross block is higher. During the year,
depreciation was higher due to additions of Rs.8402 lakhs to the gross
block of fixed assets.

Taxation was higher due to increase in profits. Profit after tax increased
as a result of foregoing factors.

Share Capital

The Company's Share Capital consists of 301170585 Equity Shares of Rs.2
each with no change during the year.

Reserves and surplus

During the year under review, there was no change in security premium.

Further, transfer of Rs.1800 lakhs to General Reserve from Profit and Loss
Account was in compliance with statutory requirements.

The entire Reserves and Surplus as reflected in the Audited Accounts
represent either realized profit or premium received on issue of Shares.

Loans

Secured loans represent the loans raised from Indian as well as
International banks.

The Company has availed buyer's credit facility in foreign currency of
Rs.3056.42 lakhs and has an ECB loan of Rs. 5500.80 lakhs. ECB loan is
repayable in three installments after expiry of 3rd, 4th, 5th year from the
date of disbursement i.e. November 5, 08. The outstanding foreign currency
loan and buyer's credit are not hedged for fluctuation in foreign currency
as in our view cost of hedging is higher than the expected fluctuation. The
exchange fluctuation on the said borrowings is accounted for in accordance
with the accounting policy as disclosed in Schedule 20. Remaining secured
loan is the working capital limit from Central Bank of India.

The rate of interest on ECB and Buyer's credit is linked to LIBOR and on
cash credit facilities, it is linked to PLR.

Deferred Tax liability has been accounted for in accordance with Accounting
Standard 20 issued by the Institute of Chartered Accountants of India.
(Please refer to Note no.10 of Schedule 20B annexed to the Accounts for
details)

Fixed Assets

Assets worth Rs.8402 lakhs were added during the year, significant portion
of which relates to enhancing the printing and publishing capabilities.

Fixed Assets include Rs.1700 lakhs, being value of masthead 'Dainik Jagran'
described as 'Title'.' Non-amortisation by the company of value of 'Title'
has been commented upon by the Auditors. In the opinion of the company,
title has infinite life and does not need to be amortised and its non-
amortisation is also in accordance with the internationally accepted
accounting practices. Please also refer to paragraph 12 (IV) (C) of Report
on Corporate Governance.

Capital work in progress includes advances for capital goods which have
been given to the suppliers for supplying the equipments/plants needed to
enhance the existing printing and publishing capabilities. It also includes
machines and equipments under installation and advances to civil
contractors. The total value of orders for supply of equipments, plant,
purchase of land and construction of building pending for execution as at
March 31, 2010 were Rs.12045.30 lakhs.

Investment of Rs.16658.59 lakhs represents investments made out of surplus
generated from business and primarily comprise units of debt based mutual
fund and equity in companies in nature of trade investment which is not
substantial in relation to the total investment portfolio. The company has
also invested a portion of its surplus funds in Inter Corporate Deposits as
discussed hereunder. All the investments are by and large liquid. (Please
also refer to Schedule Number 5 for details).

Sundry debtors

The debtors turnover (net) continued to be 70 days which is same as
pervious year in spite of higher growth in revenue in last quarter due to
stringent targets fixed for collection and its monitoring.

Inventories were significantly higher due to purchases of higher quantities
in anticipation of increase in prices of newsprint and nearly 30% inventory
was in transit as at balance sheet date.

Other current assets includes security deposits of Rs.826.75 lakhs given to
the Promoters, Directors, their relatives and HUFs and also a group Company
in respect of premises taken from them on lease in terms of agreement with
them for company's use. These are interest free.

Other Current Assets have increased from the previous year primarily due to
increase in interest accrued on FDRs.

Loans and Advances

It includes an amount of Rs. 2771.78 lakhs (previous year Rs. 3073.80
lakhs) given to certain companies in which the Company has share holding,
having 50% voting rights. Out of this, an amount of Rs.350 lakhs was given
interest free to one of these associate companies when the Company was a
private limited Company. There is no stipulation with regard to repayment
of Rs.350 lakhs. Please also refer to the paragraph titled as 'Risks and
concerns' hereof in respect of these loans. It also includes ICDs
aggregating Rs. 268780 lakhs, out of which an amount of Rs.600 lakhs is
given to a company in which some of the directors and/or their relatives
are interested as shareholders/directors. All these ICDs are interest
bearing and rate of interest on these ICDs ranges from 10% per annum to 15%
per annum with ICD to aforesaid company at interest rate of 12% per annum.
None of these ICDs has tenure exceeding 12 months. Further, there have been
given loans to certain companies in which directors are interested as
directors or shareholders holding more than 2% shares. All these loans were
interest bearing and recovered during the year with the exception of one
having outstanding of less than Rs 100 lacs. Loans given to such companies
were not substantial and the company has business transactions with them.

Increase in loans and advances from the previous year is due to fresh ICDs.

Current liabilities

Current liabilities mainly represent the liability for unpaid expenses,
security deposits from Newspaper Agents and statutory liabilities such as
deduction of Provident Fund from the employees and TDS. The Company has
been regular in depositing statutory dues as well as paying its other
liabilities on due dates. The liabilities are higher as compared to the
previous year primarily due to higher purchases of newsprint in
anticipation of increase in prices.

Provisions are lower as compared to the previous year because of lesser
proposed final dividend and tax thereon as the Company has already given
100% interim dividend during the year.

Cash flow statement

The summary of cash flows is as follows:-

2008-09 2009-10
(Rs. in lakh)

(A) Surplus generated from 11964 20041
operations

(B) Deficit from investing activities (9072) (3866)

(C) Surplus/(Deficit) from financing 1717 (15932)
activities

(D) Net Surplus/(Deficit) (B+C) (7355) (19798)

(E) Net Increase/(Decrease) in cash 4609 242
and cash equivalent (A-D)

(F) Opening cash and cash equivalent 3666 8275

(G) Cash and cash equivalent at the 8275 8517
end (F+E)

For details, please refer to cash flow statement attached to the Audited
Accounts.

The cash low statement clearly shows that the Company was able to generate
higher operating cash surplus than the previous year. Increase in cash
surplus was higher by 68.14% as compared to previous year, owing to better
management of working capital particularly debtors.

Material development in Human Resources:

Our people are our key asset. We have been able to create a work
environment that encourages pro-activeness and responsibility. The
relationship with the employees has been harmonious during the year and the
Company did not have any work loss.