Jagran Prakashan Ltd.

Jagran Prakashan Ltd.BSE SENSEX/S & P NIFTY 19294/5817SectorPrinting & PublishingMarket Cap./Free Float ( ` Crs.) 2783/1068Market Price as on 10/7/13 ` (FV Rs. 2/-) 83.8552 Week High/Low Rs. 117.5/80.3Equity Shares Outstanding (in Crs.) 33.19P/E Ratio (Times) (for March '13) 11.0P/B (Times) (for March '13) 2.97EV/EBITDA (Times) (for March '13) 11.4ROE (%) (March '13) 26.8Highlightsu Jagran publications cover ~ 70% of the population inHindi belt. It is the market leader in UP with readership of 89lacs and 40% readership market share. In other states like Bihar,Uttarkhand, and Haryana it is one of the top two newspaperpublishers and third largest in Jharkhand.Shareholding Pattern as onJune ‘13 (%)u In most of the markets Dainik Jagran enjoys either No. 1or 2 positions. This helps in retaining market share despite risein competition.uWith economy growing at less than 5% in FY ’13, mediacompanies were hardest hit in the past decade, as it thrives on12%13%PromoterFIIDIIthe growing economy. JPL has done well in difficult times andhas controlled its cost while improving realization per copy ofnewspaper. Company continues to outperform the print industryby registering higher revenue growth.13%62%Othersu JPL has strong balance sheet and total debt is still ` 475Crs. even after making two acquisitions in the last three years.Company enjoys strong operational cash flows and total debt toequity is still lower at 0.55 x as on March ’13.PE Bandu With increased ad spend, the earnings growth will jumpin FY ’14 & FY ’15, subject to newsprint prices remaining stable.Although Company buys majority of its newsprint requirementsfrom domestic markets, Indian prices follow internationaltrends. Hence, weak rupee should result in more than 3-4% risein newsprint prices this year, as earlier expected by management,due to fresh bout of weakness in the Rupee.Jagran Prakashan Ltd. is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.u Exit circulation for Dainik Jagran for FY ’13 was 36 lacs, that for Naidunia 5.2 lacs and for Midday (estimated) was 4.2 lacs.Company expects to increase Naidunia’s circulation significantly during current year to achieve its goal of becoming strong No. 2 inMPCG (Madhya Pradesh & Chhattisgarh) market by FY ’15.uCompany expects 10% ad revenue growth for FY ’14 and claims that it does not include election business which will be overand above this growth.u Stock has been trading between 13-23x historical earnings in the last three years. After March ’13, it has come down by 10% totrade at 11 x historical earnings, due to general market volatility and provision of big losses in newly acquired subsidiaries. We feel thatwith ad revenues prospects looking up and expectation of reduction of losses in subsidiaries, share price should appreciate, keepingwith the quarterly earnings reported in the coming quarters.BackgroundDainik Jagran group is the publisher of 12 brands of newspapers and magazines and have presence in 15 states and has morethan 100 editions and 250 plus sub-editions in five different languages. Apart from publishing company it is also involved inoutdoor advertising, promotional marketing, event management, on ground activities and digital business. Out of 12 publications,8 are daily newspapers titles, covering 4 Indian languages and English. With a total readership of 6.8 Crs. for all its publicationtitles, the group is the largest print media group of the country. Dainik Jagran continues to be the No. 1 newspaper in the mostaffluent segment of the readers in the country – total readership of 5.65 Crs. - across all languages including English (Source IRS2012 - Qtr. 4). Leadership position in catering to premier audience increases JPL’s ability to charge premium for ad space. Other mainpublications are Mid-Day and Nai Duniya, both of which were acquired in last 3 years.Dainik Jagran has consistently topped the charts of readership among the Hindi language newspapers. According to IRSQ3 survey (Dec. ’12 qtr.) the newspaper had readership of 1.65 Crs., highest in the category and about 20 to 40 lacs higher than thesecond highest competitor. IRS survey has reported that Dainik Jagran has improved its position, and for the first time, has becomenumber two newspaper of Haryana and number three newspaper of New Delhi, while strengthening its position in all of its coremarkets. Drop in readership in Punjab was for everyone, and similarly in spite of drop in readership in Jharkhand, Dainik Jagrancontinues to be number three newspaper of the state after Prabhat Khabar and Hindustan. Jharkhand continues to be sufferingpolitically, and therefore, currently Company does not have any plan to invest further there.Jagran Prakashan Ltd. is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.Apart from Dainik Jagran, JPL publishes other 3 newspapers – I-Next, first ever bilingual newspaper published in 12 editionsfrom 5 states. City Plus is a weekly infotainment English newspaper published in 43 editions from 4 states and Punjabi Jagran ispublished in 2 editions from Punjab. Company also publishes two magazines – Sakhi, a monthly targeted at Women and Josh forcareer oriented youth.Among other divisions of the Company, Jagran Engage provides ‘Out of Home’ advertising services with a pan India footprint.Jagran Solutions carries on activities like promotional marketing, event management and on ground activities throughout thecountry. While outdoor advertising industry has also been hit by adverse macro economic conditions, Jagran Engage has reported31% growth in revenues in FY ’13 with improved occupancy of existing media and addition of new properties. Both these businessesare expected to turnaround in FY ’14.Company is also present in digital business through its news portals - Jagran.com, Jagranjosh.com Midday.com andJagranpost.com - which enjoy leadership positions. It also has gaming portal Jeetle.com and Jagran on mobile, m.jagran.com. J9 isthe value added services division of JPL which is currently working in the field of mobile value added services & home shopping inan active manner. It has just launched an Online Digital Classified platform (khojle.in). J9Mobile, which is the mobile vertical of J9offers Text, Voice & WAP services to users. J9Mobile also offers Enterprise & Brand solutions via 57272 platform. Digital advertisingrevenues grew by 120% in FY ’13 on a small base.Acquisitions and new launchesJagran has been consolidating its position in the last three years. In May 2010, it acquired 96.4% stake in the print business of Mid-Day Multimedia Ltd. (MML). MML is publisher of dailies - Midday English from Mumbai and Pune, Midday Gujarati from Mumbai(afternoon dailies focusing on metro markets especially Mumbai) and The Inquilab (Urdu daily) from Mumbai and the states ofMaharashtra, UP, Delhi and Bihar. In addition to its equity holding, the Company has invested Rs.25 Crs. in MML by subscribingto the Cumulative Non-convertible Redeemable Preference Shares of the aggregate face value of Rs.10 Crs. to retire high interestbearing debts and to strengthen MML’s capital base and also extended an unsecured interest bearing long term loan of Rs.7.65 Crs.These Preference Shares carry a coupon rate of 22.5% and are redeemable after 12 years or such other period as may be mutuallydecided between the Company and MML.Jagran Prakashan Ltd is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.Midday Media operating losses amounted to about ` 5 Crs. and net level losses about ` 15 Crs. during FY ’13, which werelower than budgeted as per management. This became possible as a result of expansion of circulation and expansion of Inquilabin North. During the year the Company took control of advertising marketing from October ’12, and complete control of themanagement from March ‘13. Ad revenue growth was flat in FY ’13, however, Mumbai market grew by 7%. The Midday Gujaraticontinues to strengthen its position as number two Gujarati newspaper of Mumbai, and the Inquilab continues to be number oneUrdu daily of the country. Management expects revenue growth for Midday in FY ’14 to be in the range of 18-20% and it is expectedto contribute to operating profit to the extent of ` 10-11 Crs. It is expected to breakeven in Q4 of FY ’14.Further, continuing its strategy to pursue the inorganic growth through acquisitions and partnerships, the Company acquired100% stake in Suvi Info Management (Indore) Pvt. Ltd. (SUVI) on 31/3/12 and also subscribed to the issue of fresh equity sharesfor an aggregate amount of ` 20 Crs. SUVI is the holding company of Naidunia Media Private Limited (“Naidunia”), a publisher ofninth largest Hindi daily ‘Naidunia’ with seven editions from Indore, Ujjain, Gwalior, Jabalpur, Raipur & Bilaspur. Naidunia alongwithNavdunia published from Bhopal is the second largest newspaper of MPCG, with readership base of over 20 lacs and circulation ofnearly 4 lacs. Through this acquisition, the Company has marked its entry into the states of MPCG. In order to take Naidunia to itspast glory and make it a strong No.2 player in MPCG, investment needs to be made for three years before it reverts to profit making.Proposed investment as per management is not significant and will be primarily met out of tax savings as a result of acquisition andsale of certain valuable surplus assets of Naidunia.After take over, Company closed New Delhi edition of Naidunia and rationalized employee strength in MPCG. It alsofocused on increasing circulation in MPCG, which was up 30%. Overall rise in advertising revenue at Naidunia was 12% in FY’13 and helped reduce losses by 40-45% to ` 11 Crs. in FY ’13 inspite of increase in circulation by 30% . The strong growth inthe advertising revenue was because of the 30% rise in its national advertising revenue which contributes about 27-28% in totalrevenue. Local advertising in Naidunia is more than 62%. Naidunia will start contributing to operating profits in Q4 of FY ’14and break even in Q4 of FY ’15. Company expects ad revenue to go up by 25% in FY ’14 driven by national advertising. The stronggrowth in the advertising revenue was because of the 30% rise in its national advertising revenue which contributes about 27-28%in total revenue. This reflects the leverage played out for Naidunia from Jagran’s national advertisement network. Jagran wouldfocus on increasing circulation in FY ‘ 14 also , as it aspires to make Naidunia a strong No. 2 in MPCH by FY ‘15. At present, it holdsa 13% share – 9% lower than the second largest.In FY ’12 Company also launched Punjabi Jagran in Punjab, expanded City Plus in Mumbai and The Inquilab in NorthernIndia. Punjabi Jagran continues to be under expansion phase and incurred losses of nearly ` 10 Crs. as expected. Punjabi Jagranhad 90% growth in advertising in FY ’13 although on a small base. It has gained acceptance of both readers and advertisers whichJagran Prakashan Ltd is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.Print IndustryThe Indian newspaper industry in general and Hindi newspaper industry in particular has become intensely competitive. Inall its markets JPL faces competition from other newspapers for circulation, readership and advertising. In addition, it facescompetition from other forms of media, such as, television, radio and internet.Indian print advertising has grown at healthy 11% in last five years from 2007 to 2012, as against degrowth of about 5%globally. Regional print media is reported to have grown at even higher rate of 14% during this period as against only 6% in Englishprint media. Growth in regional advertising was aided by growing readership and catch up in ad rates.Regional Print media enjoys high penetration with its niche positioning and has been less impacted by internet accessibility.It has been cornering higher portion of total newspaper ad spend from 50% in 2007 to 60% in 2012. This is expected to increase to70% in 2017. Out of regional print ad spend nearly half is Hindi regional media and other half is other regional languages. With lowcapital intensity and high market share the leaders like JPL are poised to derive maximum advantage out of higher share of regionalprint media in the ad spend.As per FICCI- KPMG report 2013, print industry grew at 7.3% y-o-y in calendar year 2012. Advertising revenues for printindustry grew by 7.6% in 2012 as against 10.6% in 2011. However, regional print advertisement pie grew by around 10% in spite ofweak economic conditions. After reaching the bottom in Q2 of FY ’13, ad revenues growth for Hindi Print media has started risingin the last two quarters. Print media continued to be the preferred choice of advertisers with dominant share of 46% of mediaadvertising revenue. Based on this, the size of Print media advertising is estimated to be about ` 15,000 Crs.Hindi and vernacular print markets are growing at faster pace than English on the back of huge population size of around90% residing in Tier II & III towns. With rising literacy, per capita income and per capita consumption and low print mediapenetration as well as continued tide of advertisers wanting to spend in these markets, both Hindi and Vernacular advertisementrevenue grew by 10% y-o-y in 2012 as compared to 11% & 17% respectively in 2011. In 2012, Hindi and Vernacular print marketincreased its share of print advertising to 61% from 59% in 2011.Print industry is expected to grow at CAGR of 8.7% over next 5 years with Hindi and Vernacular markets growing at around11% CAGR and English growing at 4.8%. Industry expects increase in market share of vernacular newspapers largely due to volumegrowth driven by launch of new local editions and gradual improvement in advertisement rates of these markets (Source - FICCI-KPMG report 2013).Jagran Prakashan Ltd. is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.In view of the slow economic growth and rising newsprint prices in India, Print media companies have been cutting corners,in terms of discontinuing loss making editions and cost control.Difficult economic environment has eased competition in the Hindi reading belt, allowing the players to increase coverprices of their publications. Circulation revenues are therefore expected to increase faster than ad revenues at least in the nearfuture.NewsprintGlobal demand for newsprint has been coming down since year 2000 due to drop in newspaper circulation in developed markets.Hence newsprint prices have been stable in the last 2-3 years. Although regional print media players buy from domestic market,local prices track international prices. With rupee depreciation, domestic newsprint prices have seen uptrend in last two years,although internationally prices have come down. We expect newsprint prices to remain stable adjusted for rupee depreciation.FinancialsThe overall revenue grew by 12.53% in FY ‘13 over the previous year, with advertisement revenues going up by 12.2% andcirculation revenues by 21.3%. The growth in advertisement revenue was attributed mostly to increase in space while yieldper square cm. came down.In FY ’13, out of total circulation revenue increase, an amount of about ` 15 Crs. was attributed to increase in per copyrealization of Dainik Jagran and i‐next. The Company also had a steep growth in digital advertising and outdoor advertising.Outboard advertising registered a steep growth in top line due to improved occupancy and addition of new properties. In case ofoutdoor business, the prices were under pressure and therefore, they could not deliver the expected profit. The event businesshad a huge dip in top line, and resulted in loss of nearly ` 15 Crs. The loss in top line was on account of loss of governmentrevenues due to Company’s decision of discontinuing a particular contract due to non‐payment by UP government. Loss wasalso on account of provisioning of nearly ` 14 Crs. for this government debt. However, as Company started focusing on corporatebusiness, it recorded steep growth of nearly 40% to 45% which augurs well for the future and will give a stabilized revenuestream.Jagran Prakashan Ltd. is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.For five competitive quarters starting from October ‘11 till September ‘12, Company has been registering one of thehighest growth in the industry. Only in the third quarter and the fourth quarter of FY ’13 Jagran registered the lower growth. Thereason for third quarter registering lower growth of 7% y-o-y was higher base in the previous year when Company registered agrowth of nearly 15%. In March ’13 quarter, Company had more or less flat revenue as compared to March ’12 due to again higherbase of 12% growth in that quarter, as a result of election impact. If election impact is eliminated, Dainik Jagran has grown by about5% y-o-y in March ’13 quarter. Overall growth for the year has crossed 10%.Acquisitions of Midday and Naidunia and launch of Punjabi Jagran resulted in net loss of ` 42 Crs. in FY ’13. Company expectsto reduce losses to ` 16-18 Crs. in FY ’14, which will mainly come from Naidunia operations, which is expected to turnaround in Q4of FY ’15. Due to acquisitions, Company has benefited by way of no taxation in FY ’13 and expects its tax liability to be around 25%in FY ’14 as against normal 34%. Besides this, JPL is also raising cash by selling surplus assets in Naidunia, resulting in less thananticipated investments in the acquired entity.Materials cost comprises of cost of newsprint and art paper (used for magazine) and ink. The newsprint alone constitutes about90% of the total material consumed. Newsprint accounted for 32% of total revenues in FY ’13. We expect newsprint prices toincrease much more than 3-4% (as expected by management) in FY ’14 as a result of heavy rupee depreciation.Management expects to incur capex of ` 60-70 Crs. in FY ’14, out of which expenditure for Naidunia will be about ` 23 Crs., net ofsurplus asset sale. JPL has invested over ` 200 Crs. in Naidunia in FY ’13.Revenue Break UpYear Ended (Rs. Crs.) FY '11 FY '12 FY '13Advertisement Revenue 853.99 938.46 1052.55Newspaper Subscription 236.6 263.11 319.16Magazines & Books 1.84 2.24Outdoor Activities 56.52 60.37 153.79 *Event Management 37.43 52.57Digital Services 6.69 8.24Job Work & Scrap Sale 28.02 30.671221.09 1355.66 1525.5*Revenues other than Advt. & SubscriptionJagran Prakashan Ltd. is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.ConcernsuCompany relies substantially on advertising customers for revenue. It derives nearly 75% of total revenues of publicationbusiness from advertisement revenues as against average 67% for print media industry.u Newsprint forms major raw material for the business and represents significant portion of expenses. For FY ’13, newsprintcost represented about 32% of total revenues. Newsprint prices track international prices, although Company buys its majorityrequirements from domestic markets. Rupee weakness is expected to increase newsprint prices substantially. Company has been ableto control newsprint cost in the past by reduced pagination and change in newsprint mix.Commentsu 60% of Company’s advertisement revenues are drawn from local advertisers, which is to an extent resilient to the slowgrowth in the economy. Renewed thrust in semi-urban and rural areas by companies in banking, auto, consumer durables, telecom andeducation sectors, suggest continued buoyancy in advertising revenues for the Company.u Ad spend which grew by only 4-7% in FY ’13, is expected to recover in next two years. Increased ad spend by advertisers in2H of FY ’14, rise in ad rates and scale up in National advertising both in Naidunia and Midday will drive revenues and profit growthin FY ’14.uWith Naidunia JPL has gained foothold in MP & Chhattisgarh markets. Company has been able to reduce losses in one year andhas started second phase of circulation expansion.u As against expected growth of 6-7% in ad revenue for the industry in FY ’13, JPL has recorded 12.1% growth, partly due tocontribution from Naidunia, steep increase in local revenues from Citiplus, I-next & Punjabi Jagran and 8% increase in space for DainikJagran. Company has taken increase in ad rates in double digits in FY ’13, which is being gradually accepted by advertisers.u In FY ’14 Company expects to grow its ad revenues by 10-11%, focusing on rate increase rather than space growth like FY ’13.It expects 4% growth in circulation of Dainik Jagran, 2-3% for Midday publications and significant growth for Naidunia.Jagran Prakashan Ltd. is also available on www.balance-equity.co.in

Jagran Prakashan Ltd.Consolidated Annual Financial ResultsYear Ended ( ` Crs.) FY '10 FY '11 FY '12 FY '13Revenue 941.89 1221.09 1355.66 1525.53Inc./Dec. in Inv. Of Fin. Goods 0.03 0.08 -0.04 0.02Materials Consumed 273.56 358.9 461.3 543.7Employee Cost 121.22 172.66 194.27 227.43Direct Expenses of Outdoor, Event& Digital Business60.84 74.73 91.1 93.95Stores & Spares 22.32 27.35 31 38.75Other Expenses 181.64 230.86 261.18 326.46Total Expenses 659.61 864.58 1038.81 1230.31EBITDA 282.28 356.51 316.85 295.22EBITDA Margin (%) 30.0 29.2 23.4 19.4Depreciation 50.75 65.46 70.94 125.53Interest 6.57 9.07 15.78 30.73Taxation 83.32 97.57 77.27 0.45Other Income34.25 25.88 25.47 119.02Adj for share of Ass. & MI 0 -0.21 -0.01 0.38Non Recurring Items 7.28 2.05 12.92 -6.74Net Profit 183.17 212.13 191.24 251.17Net Profit Margin (%) 19.4 17.4 14.1 16.5Equity Capital (FV ` 2/-) 60.23 63.25 63.25 66.38Equity Shares 30.115 31.625 31.625 33.19Reserves 552.26 638.97 688.64 869.13EPS (`) 6.1 6.7 6.0 7.6Book Value (`) 20.3 22.2 23.8 28.2ROE (%) 29.9 30.2 25.4 26.8Note:1) March ‘10 results are for Standalone operations.2) Print business of Midday Multimedia (MML)was transferred to the Company w.e.f. 1st April ‘10. 1.51 Crs.shares of the Company were issued for consideration. MML is 96.4% subsidiary as on March ‘133) Print business of Naidunia Media (Naidunia) transferred to the Company w.e.f. 1st April ‘12. 1.56 Crs.Shares of the Company were issued for consideration. Naidunia is 100% step down subsidiary as onMarch ‘13.Jagran Prakashan Ltd. is also available on www.balance-equity.co.in

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