4.

1 Organization Structure of finance department

The finance department of a radio station set up is in- charge of handling the all revenues and
expenses in a controlled environment. The primary function this is to ensure that dues from
advertisers are collected in a timely manner and similarly all payments like utilities, salary and
others are done on time.
It also handles all legal or financial matters relating to mobilizing funds from the market. The
finance department additionally looks after departments like auditing and taxation.

4.2 Budgeting
Budget of a company is often compiled annually, but may not be a finished budget, usually
requiring considerable effort, is a plan for the short-term future, typically allows hundreds or
even thousands of people in various departments (operations, human resources, IT, etc.) to list
their expected revenues and expenses in the final budget.
If the actual figures delivered through the budget period come close to the budget, this suggests
that the managers understand their business and have been successfully driving it in the intended
direction. On the other hand, if the figures diverge wildly from the budget, this sends an 'out of
control' signal, and the share price could suffer.
Budget of the ENIL Company is mainly on advertising, radio show, other event and assets of
radio station.

4.3 Capital structure

The Capital Structure of Entertainment Network (India) Ltd. presents the Authorized Capital,
Issued Capital, and Paid-Up Equity Capital of the company over the period.
Capital Structure - Entertainment Network (India) Ltd.

Period

Instrument

From

To

2012

2013

2011

Authorized
Capital

Issued Capital

-PAIDUPShares (nos)

Face Value

Capital (Rs.
Cr)

(Rs. cr)

(Rs. cr)

Equity Share

120.0

47.7

47670415

10.0

47.7

2012

Equity Share

120.0

47.7

47670415

10.0

47.7

2010

2011

Equity Share

120.0

47.7

47670415

10.0

47.7

2009

2010

Equity Share

120.0

47.7

47670415

10.0

47.7

2008

2009

Equity Share

120.0

47.7

47670415

10.0

47.7

2007

2008

Equity Share

120.0

47.7

47656060

10.0

47.7

2006

2007

Equity Share

120.0

47.6

47584575

10.0

47.6

2005

2006

Equity Share

120.0

47.6

47563665

10.0

47.6

2004

2005

Equity Share

120.0

117.0

116960000

10.0

117.0

4.4 Internal audit policies and financial control system

4.4.1. Report on the Financial Statements
1. We have audited the accompanying financial statements of Entertainment Network (India)
Limited (the Company), which comprise the Balance Sheet as at March 31, 2013, and the
Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary
of significant accounting policies and other explanatory information, which we have signed
under reference to this report.
4.4.2. Managements Responsibility for the Financial Statements
2. The Companys Management is responsible for the preparation of these financial statements
that give a true and fair view of the financial position, financial performance and cash flows of
the Company in accordance with the Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956 of India (The Act). This responsibility includes the
design, implementation and maintenance of internal control relevant to the preparation and

presentation of the financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
4.4.3. Auditors Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the Standards on Auditing issued by the Institute of
Chartered Accountants of India.
Those Standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
4. An audit involves performing procedures to obtain audit evidence, about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditors consider
internal control relevant to the Companys preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness
of the accounting estimates made by Management, as well as evaluating the overall presentation
of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
4.4.4. Opinion
6. In our opinion, and to the best of our information and according to the explanations given to
us, the accompanying financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting principles
generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;
(b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date;
and
(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditors Report) Order, 2003, as amended by the
Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of
India in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to as the
Order), and on the basis of such checks of the books and records of the Company as we
considered appropriate and according to the information and explanations given to us, we give in
the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.
8. As required by section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge
and belief, were necessary for the purpose of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company
so far as appears from our examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this
Report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement
dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of
section 211 of the Act;
(e) On the basis of written representations received from the directors as on March 31, 2013 and
taken on record by the Board of Directors, none of the directors is disqualified as on March 31,
2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274
of the Act.
Referred to in paragraph 7 of the Independent Auditors Report of even date to the members of
Entertainment Network (India) limited on the financial statements as of and for the year ended
March 31, 2013
i. (a) The Company is maintaining proper records showing full particulars, including quantitative
details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased
programme designed to cover all the items over a period of three years which, in our opinion, is
reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the
programme, a portion of the fixed assets has been physically verified by the Management during
the year and no material discrepancies between the book records and the physical inventory have
been noticed.
(c) In our opinion, and according to the information and explanations given to us, a substantial
part of fixed assets has not been disposed of by the Company during the year.
ii. The Company is in the business of rendering services, and consequently, does not hold any
inventory.
Therefore, the provisions of Clause 4(ii) of the said Order are not applicable to the Company.
iii. The Company has not granted/taken any loans, secured or unsecured, to companies, firms or
other parties covered in the register maintained under Section 301 of the Act. Therefore, the
provisions of Clause 4(iii) [(b), (c) and (d) / (f) and (g)] of the said Order are not applicable to
the Company.

iv. In our opinion, and according to the information and explanations given to us, there is an
adequate internal control system commensurate with the size of the Company and the nature of
its business for the purchase of fixed assets and for the sale of services. Further, on the basis of
our examination of the books and records of the Company, and according to the information and
explanations given to us, we have neither come across, nor have been informed of, any
continuing failure to correct major weaknesses in the aforesaid internal control system.
v. (a) According to the information and explanations given to us, we are of the opinion that the
particulars of all contracts or arrangements that need to be entered into the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion, and according to the information and explanations given to us, the
transactions made in pursuance of such contracts or arrangements and exceeding the value of
Rupees Five Laths in respect of any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the relevant time.
vi. The Company has not accepted any deposits from the public within the meaning of Sections
58A and 58AA of the Act and the rules framed there under.
vii. In our opinion, the Company has an internal audit system commensurate with its size and the
nature of its business.
viii. We have broadly reviewed the books of account maintained by the Company in respect of
products where, pursuant to the rules made by the Central Government of India, the maintenance
of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act,
and are of the opinion that, prima facie, the prescribed accounts and records have been made and
maintained. We have not, however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
ix. (a) According to the information and explanations given to us and the records of the
Company examined by us, in our opinion, the Company is regular in depositing undisputed
statutory dues, including provident fund, investor education and protection fund, employees
state insurance, income tax, wealth tax, service tax, customs duty, excise duty and other material
statutory dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the Company
examined by us, there are no dues of income-tax, sales-tax, wealth-tax, service-tax, customs
duty, and excise duty which have not been deposited on account of any dispute.
x. The Company has no accumulated losses as at the end of the financial year and it has not
incurred any cash losses in the financial year ended on that date or in the immediately preceding
financial year.

xi. As the Company does not have any borrowings from any financial institution or bank nor has
it issued any debentures as at the balance sheet date, the provisions of Clause 4(xi) of the Order
are not applicable to the Company.
xii. The Company has not granted any loans and advances on the basis of security by way of
pledge of shares, debentures and other securities. Therefore, the provisions of Clause 4(xii) of
the Order are not applicable to the Company.
xiii. As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/
societies are not applicable to the Company, the provisions of Clause 4(xiii) of the Order are not
applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and
other investments.
Accordingly, the provisions of Clause 4(xiv) of the Order are not applicable to the Company.
xv. In our opinion, and according to the information and explanations given to us, the Company
has not given any guarantee for loans taken by others from banks or financial institutions during
the year. Accordingly, the provisions of Clause 4(xv) of the Order are not applicable to the
Company.
xvi. The Company has not raised any term loans. Accordingly, the provisions of Clause 4(xvi) of
the Order are not applicable to the Company.
xvii. The Company has not raised any loans on short term basis. Accordingly, the provisions of
Clause 4(xvii) of the Order are not applicable to the Company.
xviii. The Company has not made any preferential allotment of shares to parties and companies
covered in the register maintained under Section 301 of the Act during the year. Accordingly, the
provisions of Clause 4(xviii) of the Order are not applicable to the Company.
xix. The Company has not issued any debentures during the year and does not have any
debentures outstanding as at the beginning of the year and at the year end. Accordingly, the
provisions of Clause 4(xix) of the Order are not applicable to the Company.
xx. The Company has not raised any money by public issues during the year. Accordingly, the
provisions of Clause 4(xx) of the Order are not applicable to the Company.
xxi. During the course of our examination of the books and records of the Company, carried out
in accordance withthe generally accepted auditing practices in India, and according to the
information and explanations given to us, we have neither come across any instance of material
fraud on or by the Company, noticed or reported during the year, nor have we been informed of
any such case by the Management.

4.5Accounting policies:
4.5.1 Basis of Accounting:
The financial statements comply in all material aspects with all the applicable accounting
principles in India, the applicable accounting standards notified under the Companies
(Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the
Companies Act, 1956 ("The Act"). The financial statements are prepared under the historical cost
convention on an accrual basis. The accounting policies have been consistently applied by the
Company and are consistent with those followed in the previous year.
All assets and liabilities have been classified as current or non-current as per the criteria set out
in the Revised Schedule VI to the Act.
4.5.2. Use of Estimates:
The preparation of financial statements in accordance with the generally accepted accounting
principles requires the Management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates. Any revision to such accounting
estimates is recognized prospectively in the accounting period in which such revision takes
place.
4.5.3

Revenue Recognition:

a. Revenue from radio broadcasting is recognized on an accrual basis on the airing of clients
commercials. The revenue that is recognised is net of service tax.
b. Revenue from short period events is recognised according to the completed performance
method. Revenue from services provided over a longer term is recognised when the result of the
transactions can be determined with reliability and on the percentage completed basis.
c. Dividend income on mutual fund units is accounted for when the right to receive the dividend
is established by the Balance Sheet date.
d. Interest income is recognised on a time proportionate basis taking into account the amount
outstanding and the rate applicable.
e. Profit on sale of units of mutual funds is recognised at the time of redemption and is
determined as the difference between the redemption price and the carrying value.
4.5.4

Fixed assets and Depreciation:

Cost of fixed assets comprises purchase price, duties, levies and any directly attributable cost of
bringing the asset to its working condition and location for the intended use.
Borrowing cost directly attributable to fixed assets which take substantial period of time to get
ready forits intended use are capitalized to the extent they relate to the period till such assets are
ready to be put to use. Cost incurred on assets not ready for their intended use is disclosed as
Capital Work-in-Progress.

a) Tangible assets:
Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses, if
any. Depreciation on tangible fixed assets is provided on written down value method at the rates
and in the manner specified in Schedule XIV to the Act. The cost of leasehold improvements are
amortised over the primary period of lease of the property. Leasehold land is not amortised since
the term of lease is perpetual in nature. Tangible assets individually costing less than 5,000 are
depreciated fully in the year of purchase.

b) Intangible assets (other than Software):

Migration fees paid by the Company for existing licenses upon migration to Phase II of the
Licensing policy and One Time Entry Fees paid by the Company for acquiring new licenses have
been capitalised as an asset. The migration fee capitalised is being amortised, with effect from
April 1, 2005, equally over a period of ten years, being the period of the license. One Time Entry
Fees is amortised over a period of ten years, being the period of license, from the date of
operationalization of the respective stations. Goodwill is amortised over a period of five years.
c) Software:
i. Software obtained initially together with hardware is capitalised along with the cost of
hardware and depreciated in the same manner as the hardware. All subsequent purchases of
software licenses are treated as revenue expenditure and charged in the year of purchase.
ii. Expenditure on Enterprise Software such as SAP and Sales CRM where the economic benefit
is expected to be more than a year is recognised as Intangible Asset and amortised.
4.5.5. Foreign Currency Transactions:
Foreign currency transactions are recorded at the exchange rates prevailing on the date of the
transaction. Gains and losses arising out of subsequent fluctuations are accounted for on actual
payment or realization. Monetary items denominated in foreign currency as at the Balance Sheet
date are converted at the exchange rates prevailing on that day. Exchange differences are
recognised in the Statement of Profit and Loss.
4.5.6. Investments:
Investments that are intended to be held for not more than a year from the date of investment are
classified as Current investments. All other investments are termed as Long term investments.
The portion of Long term investments which is expected to be realized within twelve months
from the Balance Sheet date is classified as current investments.
Investment in buildings that is not intended to be occupied substantially for use by, or in the
operations of the Company, have been classified as investment property. The same has been
classified as long term investments. Investment property is carried at cost less accumulated
depreciation.

Current investments are carried at cost or fair value, whichever is lower. Long term investments
are stated at cost. However, provision for diminution in value is made to recognize a decline
other than temporary in the value of the long term investments.
4.5.7. Retirement Benefits:
a. Short Term Employee Benefits:
The employees of the Company are entitled to leave encashment as per the leave policy of the
Company. The liability in respect of leave encashment which is expected to be encased / utilized
within twelve months after the Balance Sheet date is considered to be of short term nature.
b. Long Term Employee Benefits:
Defined Contribution Plans:
The Company has Defined Contribution Plans for post-employment benefits such as Provident
Fund and Employees Pension Scheme, 1995. Under the Provident Fund Plan, the Company
contributes to a Government administered Provident Fund on behalf of its employees and has no
further obligation beyond making its contribution.
The Company contributes to a State Plan namely Employees Pension Scheme, 1995 and has no
further obligation beyond making its contribution.
The Companys contributions to the above funds are charged to revenue every year.
Defined Benefit Plans:
The Company has a Defined Benefit Plan namely Gratuity and Leave Encashment for all its
employees.
The liabilities in respect of Leave Encashment which is expected to be encased / utilized after
twelve months from the Balance Sheet date is considered to be long term in nature.
Liability for Defined Benefit Plan is provided on the basis of valuations, as at the Balance Sheet
date, carried out by an independent actuary. The actuarial valuation method used by the
independent actuary for measuring the liability is the Projected Unit Credit Method. Actuarial
losses / gains are recognised in the Statement of Profit and Loss in the year in which they arise.
C. Termination benefits are recognised as an expense as and when incurred.
4.5.8. Operating Leases:
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lesser are classified as operating leases. Payments made under operating leases are charged to the
Statement of Profit and Loss on a straight-line basis over the period of the lease.
4.5.9 Earnings per share:
Basic earnings per share are calculated by dividing the net profit or loss for the period
attributable to equity shareholders by the weighted average number of equity shares outstanding
during the period. Earnings considered in ascertaining the Companys earnings per share is the
net profit for the period after deducting preference dividends and any attributable tax thereto for

the period. The weighted average number of equity shares outstanding during the period and for
all periods presented is adjusted for events, such as bonus shares, other than the conversion of
potential equity shares that have changed the number of equity shares outstanding, without a
corresponding change in resources. For the purpose of calculating diluted earnings per share, the
net profit or loss for the period attributable to equity shareholders and the weighted average
number of shares outstanding during the period is adjusted for the effects of all dilutive potential
equity shares.
4.5.10 Income Taxes:
Tax expense comprises of Current and Deferred tax. Current income tax and deferred tax are
measured based on the amount expected to be paid to the tax authorities in accordance with the
Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with tax laws which give rise to future
economic benefits in the form of adjustment to future income tax liability is considered as an
asset, if there is convincing evidence that the Company will pay normal tax in future.
Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that the
future economic benefit associated with it will flow to the Company and the asset can be
measured reliably.
Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being
the difference between taxable incomes and accounting income that originate in one period and
are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised
only to the extent that there is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
4.5.11. Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any indication that asset may
be impaired. If any such indication exists, the Company estimates the recoverable amount of the
asset. If such recoverable amount of the asset or the recoverable amount of the cash generating
unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to
its recoverable amount.
The reduction is treated as an impairment loss and is recognised in the Statement of Profit and
Loss. If at the Balance Sheet date there is an indication that a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the
recoverable amount.

4.5.12. Provisions and Contingent Liabilities:

The Company recognizes a provision when there is a present obligation as a result of a past event
that probably requires an outflow of resources and a reliable estimate can be made of the amount
of the obligation. Provisions are not discounted to its present date value and are determined
based on best estimates of the amount required to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

A disclosure for a contingent liability is made when there is a possible obligation or a present
obligation that may, but probably will not; require an outflow of resources embodying economic
benefit. Where there is a possible obligation or a present obligation that the likelihood of outflow
of resources is remote, no provision or disclosure is made.
4.5.13. License Fees:
As per the Frequency Module (FM) broadcasting policy, effective April 1, 2005 license fees are
charged to revenue at the rate of 4% of gross revenue for the period or 10% of Reserve One
Time Entry Fee (ROTEF) for the concerned city, whichever is higher. Gross Revenue for this
purpose shall mean revenue on the basis of billing rates inclusive of any taxes and without
deduction of any discount given to the advertiser and any commission paid to advertising
agencies. Barter advertising contracts shall also be included in the gross revenue on the basis of
relevant billing rates. ROTEF means 25% of highest valid bid in the city.

4.6 Method to calculate depreciation

Depreciation on tangible fixed assets and intangible assets are provided on written down value
method at the rates and in the manner specified in Schedule XIV to the Act

4.7 Ratio analysis

Ratio analysis is a powerful tool for the interpretation of the financial statement. A ratio can be
defined as the indicated quotient of two mathematical expressions in financial analysis the
ratio is used as the benchmark for evaluating the financial position and performance of a firm.

4.7.1. Current Ratio:

Year
Current Ratio

2004
2.22

2005
1.11

2006
1.78

2007
1.42

2008
1.16

2009
2.03

2010
1.97

2011
2.29

2012
2.41

2013
1.73

The current ratio represents a margin of safety for creditor. The higher the current ratio, the
greater the margin of safety; the larger amount of current assets in relation to current liabilities,
the more firms ability to meet its current obligations. The current ratio of the ENIL reflects the
satisfactory current position of the firm. Current ratio of ENIL is decreased continuously after
2004 but after 2004 it is increased. It may be interpreted to be sufficiently liquidity in ENIL.

4.7.2. Quick Ratio:

Year

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Quick Ratio

2.22

1.11

1.78

3.28

3.35

3.06

2.12

2.16

2.41

1.73

Quick Ratio is an indicator of company's short-term liquidity. It measures the ability to use its
quick assets (cash and cash equivalents, marketable securities and accounts receivable) to pay its
current liabilities.
If quick ratio is higher, company may keep too much cash on hand or have a problem collecting
its accounts receivable. Higher quick ratio is needed when the company has difficulty borrowing
on short-term notes. A quick ratio higher than 1:1 indicates that the business can meet its current
financial obligations with the available quick funds on hand.
Quick ratio of ENIL is continually decreased after 2008 but it is also sufficient liquidity in the ENIL.

4.7.3. Debt Equity Ratio:

Year
Debt Equity Ratio

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
0 0.13 0.36 0.62 0.35
0.1
0
0
0

The debt-to-equity ratio is a measure of the relationship between the capital contributed by
creditors and the capital contributed by shareholders. It also shows the extent to which
shareholders' equity can fulfil a company's obligations to creditors in the event of liquidation.
Debt-Equity ratio of ENIL is decreased continuously after 2008. Low debt-equity ratio implies a
greater claim of owners than creditor.Low debt-to-equity ratios may also indicate that a company
is not taking advantage of the increased profits that financial leverage may bring.

4.7.4. Long Term Debt Equity Ratio:

Year
Long Term Debt
Equity Ratio

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0

0.13

0.26

0.4

0.29

0.07

In risk analysis a way to determine a company's leverage. The ratio is calculated by taking the
company's long-term debt and dividing it by the total value of its preferred and common stock.
The greater a company's leverage, the higher the ratio. Generally, companies with higher ratios
are thought to be more risky because they have more liabilities and less equity.

Long Term Debt Equity Ratio of ENIL Company is reducing after 2008. It is indicated that
company do not want to take more interest rate risk.

4.7.5. Debtors Turnover Ratio:

Year
Debtors Turnover
Ratio

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
4.28

4.19

4.02

3.92

3.62

3.64

3.2

3.08

3.53

Debtor turnover ratio measures company's efficiency in collecting its sales on credit and
collection policies. The lower the ratio is the longer receivables are being held and the risk to not
be collected increases.
A debtors turnover ratio implies that the company should re-assess its credit policies in order
to ensure the timely collection of credit sales that is not earning interest for the firm. A ratio that
is low by industry standards will generally indicate that your business needs to improve its credit
policies and collection procedures.
Debtor turnover ratio of ENIL is maintained between 3.2 to 4.28 times.

4.7.6 Asset Turnover Ratio:

Year
Asset Turnover Ratio

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0.84 1.76 0.71 2.78
0.5 0.49 0.59 0.74 0.73 0.72

The total asset turnover ratio measures the ability of a company to use its assets to efficiently
generate sales. This ratio considers all assets, current and fixed. Those assets include fixed assets,
like plant and equipment, as well as inventory, accounts receivable, as well as any other current
assets.
The lower the total asset turnover ratio as compared to historical data for the firm and industry
data, the more sluggish the firm's sales. This may indicate a problem with one or more of the
asset categories composing total assets - inventory, receivables, or fixed assets. The small
business owner should analyze the various asset classes to determine in which current or fixed
asset the problem lies. The problem could be in more than one area of current or fixed assets.
Total asset turnover ratio of the ENIL is not good. It is indicated company is not using its assets
vary well.

4.7.7. Gross Profit Margin (%):

Year
Gross Profit Margin (%)

2004
-40.81

2005
-16.15

2006
30.49

2007
27.1

2008
10.01

2009
4.69

2010
10.01

2011
19.24

2012
22.64

2013
21.42

Gross profit margin measures company's manufacturing and distribution efficiency during the
production process. It is a measurement of how much from each dollar of a company's revenue is
available to cover overhead, other expenses and profits.

The ideal level of gross profit margin depends on the industries, how long the business has been
established and other factors. Although, a high gross profit margin indicates that the company
can make a reasonable profit, as long as it keeps the overhead cost in control. A low
margin indicates that the business is unable to control its production cost.
Gross profit margin of ENIL is continuously increased it is good indication for the company.

4.7.8. Net Profit Margin (%):

Year
Net Profit Margin (%)

2004
-51.49

2005
-23.66

2006
24.77

2007
17.11

2008
6.83

2009
1.24

2010
7.65

2011
18.59

2012
18.05

2013
19.04

Net profit margin is an indicator of how efficient a company is and how well it controls its costs.
The higher the margin is, the more effective the company is in converting revenue into actual
profit.
Net profit margin of ENIL is continuously increased after 2005 excluding the year 2009 due to
global crisis.

4.7.9. Earnings per Share:

Year
Earnings Per Share

2004
-2.51

2005
-1.53

2006
6.2

2007
6.11

2008
3.4

2009
0.61

2010
3.75

2011
10.95

2012
11.85

2013
14.2

Earnings per share (EPS) ratio measures how many dollars of net income have been earned by
each share of common stock. It is computed by dividing net income less preferred dividend by
the number of shares of common stock outstanding during the period. It is a popular measure of
overall profitability of the company.
Earnings per Share of ENIL are increased after 2005 excluding the year 2009 due to global crisis

other wise company is given good return on share.

4.7.10. Return on Capital Employed (%):

Year
Return On Capital
Employed (%)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

-56.64

-51.39

8.88

7.52

6.39

3.69

7.07

15.15

18.12

17.81

A higher value of return on capital employed is favourable indicating that the company generates
more earnings per dollar of capital employed. A lower value of ROCE indicates lower

profitability. A company having less assets but same profit as its competitors will have higher
value of return on capital employed and thus higher profitability.
ROCE OF the ENIL is increased up to 18.12% in 2012. ROCE of the ENIL is continually
increased after 2005 it is good indication for the company.

4.7.11. Return on Net worth (%):

Year
Return On Net Worth
(%)

2004
-56.85

2005

2006

2007

2008

2009

2010

2011

2012

2013

-53.2 11.17

9.9

5.21

0.92

5.38

13.6 12.83 13.47

ROE indicates how well the firm has used the resources. In fact, this ratio is one of the most
important relationships in financial analysis. The earning of a satisfactory return is most
desirable objective of the business.
Company is using its assets to generate revenues it is unable to capitalize its advantage into
higher return on equity due to its lower financial leverage. Company can improve by using its
total assets more effectively in generating sales and company can improve by raising some debt.
ROE of ENIL Company is highest 13.47 % in 2013. It is continuously increased after 2009. It
knows that ENIL is slowly and gradually using its assets good.

4.8.1. Common size Balance Sheet

(Rs in Crs)
Year
SOURCES OF FUNDS :
Share Capital
Reserves Total
Equity Share Warrants
Equity Application Money
Total Shareholders Funds
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
Total Liabilities
APPLICATION OF FUNDS :
Gross Block
Less : Accumulated Depreciation
Less:Impairment of Assets
Net Block
Lease Adjustment
Capital Work in Progress
Investments
Current Assets, Loans &
Advances
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Total Current Assets

Mar
13

Mar
12

Contingent Liabilities

Mar
10

Mar
09

Mar
08

Mar
07

Mar
06

Mar
05

Mar
04

47.67
454.63
0
0

47.67
392.54
0
0

47.67
336.03
0
0

47.67
283.82
0
0

47.67
265.95
0
0

47.66
262.92
0
0

47.58
246.07
0
0

47.56
216.18
0
0

116.96
-83.26
0
0

116.96
-65.34
0
0

502.3

440.21

383.7

331.49

313.62

310.58

293.65

263.74

33.7

51.62

0
0

0
0

0
0

10
23.43

20
90.07

115.25
78

31.8
75

0
35

0
0

0
0.09
0.09

33.43

110.07

193.25

106.8

35

4.69

3.82

2.91

506.99

444.03

386.61

364.92

423.69

503.83

400.45

298.74

33.7

51.71

367.34
246.99
0
120.35
0
0
317.83

367
217.27
0
149.73
0
0.09
185.03

367.55
187.53
0
180.02
0
0.05
93.1

365.95
154.16
0
211.79
0
1.11
40.03

366.45
117.57
0
248.88
0
2.05
39.03

361.62
77.99
0
283.63
0
4.55
42.03

275.33
45.91
0
229.42
0
56.77
6.52

254.88
27.97
0
226.91
0
9.85
34.25

39.91
15.64
0
24.27
0
0
6.3

40.05
10.3
0
29.75
0
0
1.74

0
99.41
12.24
21.43

0
92.24
44.33
23.33

0
103.8
15.61
35.86

0
68.2
24.25
65.63

0
58.57
11.65
85.12

0
68.05
12.09
135.21

0
48.01
10.55
87.24

0
35.27
3.94
27.64

0
20.83
1.67
10.33

0
16.69
2.05
17.82

133.08

159.9

155.27

158.08

155.34

215.35

145.8

66.85

32.83

36.56

52.22
8.95
61.17
98.73

50.4
11.52
61.92
93.35

50.15
2.84
52.99
105.09

26.22
2.8
29.02
126.32

43.65
2.52
46.17
169.18

29.41
11.02
40.43
105.37

34.6
4.52
39.12
27.73

28.75
0.95
29.7
3.13

15.5
0.87
16.37
20.19

0
6.53
16.32
-9.79
20.24

0
10.97
19.82
-8.85
28.94

0
28.52
21.62
6.9
0

0
29.14
21.73
7.41
0

0
22.49
18.05
4.44
0

0
12.83
10.46
2.37
0

0
0
0
0
0

0
0
0
0
0

0.03
0
0
0
0

506.99

444.03

386.61

364.92

423.69

503.83

400.45

298.74

33.7

51.71

1.53

70.6

26

52.04

47.64

55.94

44.48

44.48

Less : Current Liabilities and Provisions

Current Liabilities
54.8
Provisions
24.14
Total Current Liabilities
78.94
Net Current Assets
54.14
Miscellaneous Expenses not
written off
0
Deferred Tax Assets
9.13
Deferred Tax Liability
12.79
Net Deferred Tax
-3.66
Other Assets
18.33
Total Assets

Mar
11

4.8.2. Fund Flow:

(Rs in Crs)
Year

13-Mar

12-Mar

11-Mar

10-Mar

9-Mar

8-Mar

7-Mar

6-Mar

5-Mar

4-Mar

97.39
0
0
0.87
0.78
0

86.25
0
0
0.91
0.51
0

85.58
0
0
0
0
0

54.46
0
0
0
1.44
0

42.49
0.01
0.12
0
0
3

48.27
0.08
0.66
86.45
0
0

47.02
0.02
0.81
71.8
0
27.73

41.8
0
269.97
35
0
0

0
0
0.01
0
0.14
0

0
0
0
0
0
22.5

40.37
0

4.26
0

0
0

21.74
0

39.89
0

0
0

0
0

0
0

17.06
0.03

4.29
0.03

139.41

91.93

85.58

77.64

85.51

135.46

147.38

346.77

17.24

26.82

0
0.81
0
0
132.8

0
0
0
0
91.93

0
0
30.52
0.54
53.07

0
0
76.64
0
1

0
0
83.18
2.33
0

0
0
0
34.07
35.51

0
0
0
67.37
0

0
69.4
0
224.82
27.95

12.59
0
0.09
0
4.56

23.31
0
0.83
2.68
0

0
4.77
1.03

0
0
0

1.45
0
0

0
0
0

0
0
0

65.88
0
0

80.01
0
0

24.6
0
0

0
0
0

0
0
0

139.41

91.93

85.58

77.64

85.51

135.46

147.38

346.77

17.24

26.82

Sources of funds
Cash profit
Increase in equity
Increase in other networth
Increase in loan funds
Decrease in gross block
Decrease in investments
Decrease in working
capital
Others
Total Inflow
Application of funds
Cash loss
Decrease in networth
Decrease in loan funds
Increase in gross block
Increase in investments
Increase in working
capital
Dividend
Others
Total Outflow

4.8.3. Cash Flow:

13-Mar
Cash Flow Summary
Cash and Cash Equivalents at
Beginning of the year
Net Cash from Operating Activities
Net Cash Used in Investing
Activities
Net Cash Used in Financing
Activities
Net Inc/(Dec) in Cash and Cash
Equivalent
Cash and Cash Equivalents at End
of the year

12-Mar

11-Mar

10-Mar

9-Mar

8-Mar

7-Mar

6-Mar

5-Mar

44.33

15.61

16.5

11.65

12.09

8.45

1.49

1.67

2.05

86.16

112.91

51.41

94.89

109.92

-53.77

15.22

22.84

4.03

-118.23

-84.19

-17.75

1.57

-12.9

-21.58

-81.68

-255.68

-4.12

-0.02

-34.55

-83.86

-97.46

78.99

73.42

232.66

-0.29

-32.09

28.72

-0.89

12.6

-0.44

3.64

6.96

-0.18

-0.38

12.24

44.33

15.61

24.25

11.65

12.09

8.45

1.49

1.67

4.8.4. Profit & Loss:

Year

Mar
13(12)

Mar
12(12)

Mar
11(12)

Mar
10(12)

Mar
09(12)

INCOME :
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income

338.39

301.43

279.96

230.13

228.28

338.39

301.43

279.96

230.13

228.28

16.97

11.52

17.41

3.6

6.54

355.36

312.95

297.37

233.73

234.82

EXPENDITURE :
Raw Materials

Power & Fuel Cost

10.57

9.08

8.17

8.26

9.06

Employee Cost

73.55

62.86

56.44

47.22

51.79

9.92

8.2

7.41

7.3

6.7

134.98

120.99

94.71

86.23

99.57

5.16

-0.39

22.26

22.24

11.25

Other Manufacturing Expenses

Selling and Administration Expenses
Miscellaneous Expenses
Less: Pre-operative Expenses Capitalised

Total Expenditure

234.18

200.74

188.99

171.25

178.37

Operating Profit

121.18

112.21

108.38

62.48

56.45

0.02

1.12

7.23

14.4

Gross Profit

121.16

112.21

107.26

55.25

42.05

Depreciation

31.72

32.46

33.6

36.98

40.09

Profit Before Tax

89.44

79.75

73.66

18.27

1.96

27.9

22.3

5.69

-0.1

2.02

Deferred Tax

-6.13

0.94

15.76

0.5

-2.97

Reported Net Profit

67.67

56.51

52.21

17.87

2.91

Extraordinary Items

2.35

0.63

7.84

0.17

1.08

Adjusted Net Profit

65.32

55.88

44.37

17.7

1.83

Interest

Tax
Fringe Benefit tax

Adjst. below Net Profit

P & L Balance brought forward
Statutory Appropriations
Appropriations
P & L Balance carried down
Dividend
Preference Dividend
Equity Dividend %
Earnings Per Share-Unit Curr

204.02

147.51

95.3

77.43

74.52

5.58

266.11

204.02

147.51

95.3

77.43

4.77

10

14.03

11.85

10.95

3.75

0.61

105.37

92.35

80.49

69.54

65.79

Earnings Per Share(Adj)-Unit Curr

Book Value-Unit Curr

4.9 Banks associated

HDFC bank associated with the Entertainment network India ltd.

4.10 Financial Highlights

Entertainment network India ltd is part of a fast growing industry the FICCI-KPMG report
states that FM radio will continue to be the fastest growing segment of the Indian media sector,
behind only the Internet, growing at a 5-year CAGR of over 16%.
Entertainment network India ltd is in excellent financial condition. It reported an EBITDA of Rs.
104 crores and PAT of Rs. 68 crores in FY13.
Its a matter of pride that ENIL has fared better than the radio industry. ENILs operating
revenues (not including other income) have grown by 12.3% during FY13, reaching 338.4
crores. ENILs profitability has been strong with PAT growing by 19.8% to 67.7 crores. ENIL
has ` 322.5 crores of free cash and cash equivalents in its books. It generated 100.1 crores of cash
flow during FY13.
The Company is well resourced to participate in Phase 3 bidding. ENILs strong revenue
performance has helped its revenue market share grow to 33-35% of the private FM industry.
Considering the consistent good performance of the Company year-on-year and the strong cash
position as on date, the Board of Directors have recommended a maiden dividend of 10% i.e. 1/per equity share of 10/-.

4.11 Share of firm in the industry

Strongest player in the segment; The Times group advantage: ENIL enjoys market
leadership in the radio space with revenue share of 33-35%. The Times Group network helps
bring in advertisements given its association with 25000+ advertisers. The company has one of
the strongest balance sheets in the industry with debt free status, cash of `300cr in its books.
These factors will be important in expanding reach with more stations during the Phase-III
Auctions.
The KPMG FICCI M&E 2013 report suggests a 16.6% CAGR in radio ad spend over 20122017. Radio is devoid of subscription revenues and depends upon ad spends. If radio advertising
were to rise to half the global standards of 0.9xGDP, ENIL and the industry have potential to
grow 4x.
TV ad-time restrictions and Elections to add to growth: TRAI regulations restrict TV Ad
times to 10min of external ads. Some channels have already implemented this with a resultant
sharp rise in ad rates given lower inventory. Hence, lower budget advertisers have shifted to
cheaper mediums on TV, print and even radio. Radio will be a key beneficiary if this is fully
implemented. Election advertising in the 4 recent state elections through Radio boosted revenues
and should add to revenues in view of the upcoming Central elections.

Phase-III auctions will drive growth beyond 2016: Phase-III auctions are expected to be
completed in 2014. Phase 3 will allow expansion to 100 stations. Given the cash on books and
strong cash flow generation, ENIL will be able to easily fund the capex for Phase-III. Phase-III
will allow strong growth beyond 2016, but will entail a one time large investment for the license,
migration fee and capex.
Valuations & View: ENIL will grow its revenues and PAT at 12% and 19% CAGR over FY13FY15E. Growth beyond FY15E will depend upon Phase-III auctions which will be a key trigger
in FY15E.

4.12 Recent financial performance

Market Data (As on Thursday, April 03, 2014 )
Price (Rs)
390.1
Lat. EPS(Rs)
18.43
Mkt. Cap.(Rs Cr)
1859.61
Lat. BV(Rs)
105.37

52 W H/L(Rs)
Lat. P/E
Lat.Eqty (Rs Cr)
Div. Yield (%)

442 / 198.1
21.17
47.67
0.26

We can see here share price of the ENIL is 390.1 as on Thursday, April 03, 2014. It is almost
nearer to 52 week. It can be said that ENIL is given good return in share market. It is also
increased P/E ratio and Dividend yield of the company.
We can see here graph of the ENIL and SENSEX and can be given conclusion that ENIL is
given more return than SENSEX.

4.13 Comparison with industry

Radio has made a comeback in the lifestyles of Indians. Radio has the reputation of being the
oldest and the cheapest medium of entertainment in India. The radio industry has been
completely reshaped by the various private players that entered the sector after the government
allowed foreign investment into the segment and opened the licenses to the private players.
The Indian government has already given 338 licenses for FM radio channels in 91 big and small
towns and cities. The current size of the radio market is India is Rs 300 crores and is expected to
achieve the highest growth rate of 32 per cent in coming years. The quality of the sound and the
music has improved significantly with the emergence and use of satellite radio. The audience

profile has also shifted to the high-income group. Local advertising, lower amount of money
spent by the companies to advertise on radio is an added attractiveness for the players. All India
Radio (AIR) - the national service provider owned and operated by the Ministry of Information
and Broadcasting under the Government of India - is the largest player in the industry.
To exploit the true potential of this sector, frequency modulation (FM) radio needs to step up its
penetration to at least 300 stations in 100 cities, which would further attract an investment of
US$ 899,160 per radio station frequency, the total additional investment required has been
estimated at US$ 247.3 million, according to industry sources.
Radio, like other sectors, was affected by the recession too. However, it is expected to grow at a
CAGR of 16 per cent over 2010-14 and reach a size of Rs 1, 640 crore by 2014. Where
Entertainment network India ltd is growing at a 5-year CAGR of over 16%. Entertainment
network India ltd is in excellent financial condition. It reported an EBITDA of Rs. 104 crores
and PAT of Rs. 68 crores in FY13.
Its a matter of pride that ENIL has fared better than the radio industry. ENILs operating
revenues (not including other income) have grown by 12.3% during FY13, reaching 338.4
crores. ENILs profitability has been strong with PAT growing by 19.8% to 67.7 crores. ENIL
has ` 322.5 crores of free cash and cash equivalents in its books. It generated 100.1 crores of cash
flow during FY13.