Network 18 Media & Investments Ltd: Annual Report 2023-24 Analysis

Overview #

Comprehensive Analysis #

This analysis delves into the Network18 Media & Investments Limited Annual Report for the fiscal year 2023-24, examining its financial performance, business segments, identified risks, and ESG (Environmental, Social, and Governance) initiatives. The report reflects a significant restructuring with the merger of TV18 and e-Eighteen.com into Network18, significantly impacting year-over-year comparisons.

I. Financial Performance:

The report highlights a year of strong operating revenue growth despite a subdued advertising environment. The merger significantly impacts the comparability of standalone and consolidated financial figures between FY23-24 and FY22-23.

Standalone (Post-Merger):

• Operating Revenue: ₹1,817.7 crore (871% YoY increase – not meaningful due to merger). This impressive growth is largely attributable to the inclusion of TV18 and e-Eighteen.com’s revenues.
• Operating Expenses: ₹1,799.7 crore (645% YoY increase – not meaningful due to merger). The increase mirrors the revenue increase, highlighting the scale of the merged entity.
• Operating EBITDA: ₹18 crore (significant improvement from a loss of ₹54.4 crore in the previous year, pre-merger).
• Profit After Tax (PAT): A loss of ₹185.4 crore (not meaningfully comparable to the previous year). This loss reflects high finance costs and depreciation despite improved operational performance.
• Key Ratios: The current ratio improved significantly (0.24 vs 0.02), debt-to-equity ratio decreased (1.76 vs 2.66), but the interest coverage ratio remained negative (-0.45 vs -0.39).

Consolidated:

• Operating Revenue: ₹9,297.5 crore (49% YoY growth). Driven by strong performance in Viacom18’s sports and movie segments.
• Operating Expenses: ₹9,961.6 crore (64% YoY growth), exceeding revenue growth due to high investments in sports rights and digital platforms.
• Operating EBITDA: A loss of ₹664.2 crore (significant decline from ₹137.3 crore in the previous year). High operating expenses impacted profitability.
• PAT: A loss of ₹324.6 crore (not meaningfully comparable due to the merger and changes in Viacom18’s structure).
• Key Ratios: The current ratio improved (2.16 vs 0.98), while the debt-to-equity ratio decreased significantly (0.49 vs 8.61). Interest coverage ratio also declined.

II. Business Segments:

Network18 operates across several interconnected segments, leveraging synergies between them. The merger strengthened the news segment considerably.

• News (Broadcast & Digital): Network18 boasts the largest news network in India with 20 TV channels and digital platforms (Moneycontrol, News18.com, Firstpost) in multiple languages. TV channels showed robust advertising revenue growth, particularly in the Hindi and English language segments. Digital news also experienced growth, though investments in digital platforms impacted profitability. Moneycontrol expanded into fintech, offering credit scores, FD bookings, and lending products.
• Entertainment (Digital & Broadcast): Viacom18’s entertainment segment (Colors, MTV, Nickelodeon, Sports18, JioCinema) showed a sharp revenue increase, primarily driven by JioCinema’s success, especially with live sports streaming (IPL, WPL). The formation of a joint venture with Disney is a major strategic development, expected to reshape the Indian entertainment landscape. The report highlights investments to transition towards a streaming-first approach.
• Publishing: Forbes India’s transition to digital-first also contributed positively, indicating the group’s adaptability.
• Live Events & Ticketing (BookMyShow): BookMyShow solidified its position as India’s leading live entertainment ticketing platform, reporting its highest revenue yet.

III. Risks:

The annual report outlines several key risks:

• Content and Brand Risk: The success hinges on audience engagement and brand perception. Changes in viewer preferences and negative events could significantly impact revenues. Mitigation strategies include diversified content and brand monitoring.
• Technology Risk: The rapidly evolving digital landscape presents challenges in keeping up with technological advancements and adapting to changing consumption patterns. The group addresses this through continuous investment in infrastructure and talent acquisition.
• Cybersecurity Risk: The increased reliance on digital platforms increases vulnerability to cyberattacks. The company emphasizes ongoing investments in cybersecurity measures.
• Regulatory and Compliance Risk: The constantly evolving Indian media regulatory environment necessitates continuous compliance efforts. Network18 has a dedicated team managing this.
• Financing Risks: The reliance on short-term debt exposes the company to market volatility. The company mitigates this by monitoring funding requirements and engaging with multiple financial institutions.
• Human Resource Risk: Attracting and retaining talent in a competitive environment is crucial. The company focuses on building a strong employer brand and providing growth opportunities.

IV. ESG Initiatives:

Network18’s ESG initiatives highlight its commitment to social responsibility and sustainability:

• Mission Swachhta Aur Paani: A large-scale sanitation and water conservation awareness campaign, receiving national recognition.
• Sanjeevani - United Against Cancer: A nationwide campaign promoting early cancer screenings.
• Sustainable is Attainable: A campaign promoting the adoption of green and clean energy products.
• Future. Female. Forward: An initiative to address gender parity in the workforce.

These initiatives showcase Network18’s attempt to incorporate ESG concerns into its business strategies and demonstrate corporate social responsibility beyond regulatory requirements.

V. Conclusion:

Network18’s annual report portrays a company undergoing significant transformation, consolidating its position as a major player in the Indian media landscape. The merger of its subsidiaries has created a more streamlined and powerful entity with a strong presence across both traditional and digital platforms. While the company faces considerable risks, its financial performance (particularly considering the post-merger context), strategic partnerships, and commitment to ESG demonstrate a positive outlook for long-term growth. However, it’s crucial to acknowledge the impact of high operating expenses on profitability and the need for continued investments in digital to fully realise the benefits of the transition. The Disney joint venture’s success will be a key determinant of future financial results.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

The values for Network18 Media & Investments Limited’s assets, as reported in the annual report, are as follows (in Indian Rupees, in Lakhs):

• Standalone Financial Statements (as of March 31, 2024):

  • Total Assets: ₹4,76,256 lakh
  • Current Assets: ₹73,860 lakh
  • Cash and Cash Equivalents: ₹1,560 lakh
  • Accounts Receivable (Trade Receivables): ₹57,090 lakh
  • Inventory: ₹0 lakh (The company states it has no inventory)

• Consolidated Financial Statements (as of March 31, 2024):

  • Total Assets: ₹39,88,106 lakh
  • Current Assets: ₹16,68,981 lakh
  • Cash and Cash Equivalents: ₹4,83,085 lakh
  • Accounts Receivable (Trade Receivables): ₹1,75,981 lakh
  • Inventory: ₹10,20,998 lakh

Important Note: The significant difference between standalone and consolidated figures reflects the inclusion of the financial statements of subsidiaries, associates, and joint ventures in the consolidated report. The standalone figures only represent Network18 Media & Investments Limited itself after the merger of its subsidiaries, while the consolidated figures represent the entire group’s financial picture. Year-over-year comparisons should be made with caution due to the significant restructuring that occurred.

Liability Analysis #

Here’s a breakdown of Network18 Media & Investments Limited’s liabilities from the annual report (figures in Indian Rupees, in Lakhs):

Standalone Financial Statements (as of March 31, 2024):

• Total Liabilities: ₹3,31,609 lakh
• Current Liabilities: ₹3,10,265 lakh
• Long-term Debt: The report doesn’t explicitly state a total long-term debt figure. However, it mentions lease liabilities (₹14,396 lakh) as a long-term liability. Other long-term obligations might be embedded within other liability categories.
• Accounts Payable (Trade Payables): ₹31,326 lakh

Consolidated Financial Statements (as of March 31, 2024):

• Total Liabilities: ₹11,66,711 lakh
• Current Liabilities: ₹10,71,741 lakh
• Long-term Debt: The report does not directly give a consolidated long-term debt number. However, it shows lease liabilities (₹77,852 lakh) as a long-term liability. Like in the standalone report, other long-term liabilities are likely included within broader categories.
• Accounts Payable (Trade Payables): ₹2,41,602 lakh

Important Considerations:

• Merger Impact: The significant difference between standalone and consolidated figures arises from including subsidiaries, associates, and joint ventures in the consolidated report. Direct year-over-year comparison is difficult due to the merger of TV18 and e-Eighteen.com into Network18.
• Long-term Debt Breakdown: The report does not provide a precise breakdown of long-term debt. Additional analysis of the notes to the financial statements would be needed for a complete picture. Lease liabilities are presented as a specific line item, but other long-term obligations might be embedded within other liability accounts.

To gain a more precise understanding of the long-term debt structure, a deeper dive into the notes accompanying the financial statements within the annual report is necessary.

Equity Analysis #

Here’s a breakdown of Network18 Media & Investments Limited’s equity components from the annual report (figures in Indian Rupees, in Lakhs):

Standalone Financial Statements (as of March 31, 2024):

• Shareholders’ Equity: ₹1,44,647 lakh
• Retained Earnings: ₹0 lakh (The retained earnings are shown as zero due to adjustments made during the merger. The losses during the year are offset against other equity accounts.)
• Share Capital: ₹52,347 lakh (This represents the equity share capital before the issuance of shares as part of the merger. There’s an additional ₹24,753 lakh shown as “Equity Share Suspense,” representing the face value of shares to be issued to shareholders of the merged entities.)

Consolidated Financial Statements (as of March 31, 2024):

• Shareholders’ Equity (Attributable to Owners of the Parent): ₹14,91,281 lakh
• Retained Earnings: This figure isn’t presented as a single line item in the consolidated equity section but is included within the total equity figure.
• Share Capital: ₹51,768 lakh (similar to standalone, this represents share capital before adjustments for the merger. There is also an “Equity Share Suspense” of ₹24,753 lakh).

Important Notes:

• Merger impact: The significant differences between standalone and consolidated values directly result from consolidating the financial positions of subsidiaries, associates, and joint ventures in the consolidated statements. The standalone figures represent Network18 after the merger.
• Retained Earnings: The standalone report shows retained earnings of 0 because losses for the year and previous year (pre-merger) were adjusted against other equity accounts as part of the merger accounting. Similarly, the consolidated retained earnings are not a separate line item and are part of total equity.
• Equity Share Suspense: This account represents the face value of equity shares to be issued to shareholders of the merged entities (TV18 and e-Eighteen.com). Once these shares are issued, the amount will be transferred from the suspense account to the share capital account. This significantly impacts comparability between the years.

To obtain a precise understanding of the consolidated retained earnings, one would need to perform the calculation by subtracting all other equity components from the total equity attributable to owners of the parent company. Careful review of the notes to the financial statements in the original report is recommended for a more thorough understanding.

Income Statement #

Operating Performance #

The revenue, cost of revenue, gross profit, operating expenses, and operating income figures for Network18 Media & Investments Limited are presented differently in the standalone and consolidated financial statements due to the merger of TV18 and e-Eighteen.com. Year-over-year comparisons are also significantly affected.

Standalone Financial Statements (for the year ended March 31, 2024):

• Revenue: ₹1,83,643 lakh (This includes Revenue from Operations and Other Income.)
  • Revenue from Operations: ₹1,81,773 lakh
  • Other Income: ₹1,870 lakh
• Cost of Revenue: ₹0 lakh (The company has no cost of goods sold. Operational costs are shown separately.)
• Gross Profit: ₹1,81,773 lakh (Identical to Revenue from Operations because there is no Cost of Revenue.)
• Operating Expenses: ₹2,08,695 lakh (This includes operational costs, marketing, employee benefits, finance costs, depreciation, and other expenses.)
• Operating Income (EBITDA): ₹(25,052) lakh (This is negative, representing a loss.)

Consolidated Financial Statements (for the year ended March 31, 2024):

• Revenue: ₹9,99,442 lakh (This includes Revenue from Operations and Other Income.)
  • Revenue from Operations: ₹9,29,745 lakh
  • Other Income: ₹69,697 lakh
• Cost of Revenue: ₹0 lakh (Similar to standalone, cost of goods sold is not directly presented; operational costs are separate.)
• Gross Profit: ₹9,29,745 lakh (Equals Revenue from Operations.)
• Operating Expenses: ₹10,49,407 lakh
• Operating Income (EBITDA): ₹(49,965) lakh (This is a significant loss.)

Important Notes:

• Comparability: Year-over-year comparisons are unreliable due to the merger. The standalone numbers reflect a drastically altered company structure in 2024 compared to 2023. The consolidated numbers are also impacted by the change in Viacom18’s structure and the inclusion of its performance.
• Cost of Revenue: The absence of a “Cost of Revenue” line item in both statements is noteworthy. This company does not sell physical goods. Instead, costs related to content creation and distribution are likely included within “Operating Expenses.”
• Gross Profit: Because there’s no Cost of Revenue, Gross Profit is identical to Revenue from Operations in both statements.

For a complete understanding of cost structures, a detailed review of the notes to the financial statements within the full annual report is recommended.

Bottom Line Metrics #

Here’s a summary of Network18 Media & Investments Limited’s profitability and earnings per share (EPS) figures from the annual report (figures in Indian Rupees, in Lakhs):

Standalone Financial Statements (for the year ended March 31, 2024):

• Net Income (PAT): ₹(18,541) lakh (This represents a net loss.)
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹180 lakh (This is the operating profit before deducting interest, taxes, depreciation, and amortization. The standalone results show an improvement over the previous year, pre-merger.)
• Basic EPS: ₹(1.20)
• Diluted EPS: ₹(1.20)

Consolidated Financial Statements (for the year ended March 31, 2024):

• Net Income (PAT): ₹(32,459) lakh (This represents a net loss.)
• EBITDA: ₹(49,965) lakh (This indicates a substantial operating loss.)
• Basic EPS: ₹(1.35)
• Diluted EPS: ₹(1.35)

Important Notes:

• Comparability Issues: Direct year-over-year comparisons are challenging due to the merger of TV18 and e-Eighteen.com into Network18 in 2024. The standalone figures represent a fundamentally different company compared to the previous year (pre-merger). The consolidated results are also affected by the restructuring of Viacom18 and the inclusion of its performance.
• Loss: Both standalone and consolidated results show a net loss for the fiscal year 2023-24. The consolidated loss is significantly higher than the standalone loss due to the inclusion of the results of subsidiaries, associates, and joint ventures.

Remember, these are summarized figures. For a detailed understanding of the components contributing to these values, please refer to the notes to the financial statements in the original annual report.

Cash Flow #

Cash Flow Components #

Network18 Media & Investments Limited’s cash flow statement data is presented separately for standalone and consolidated results. Here’s a summary of the operating, investing, and financing cash flows (figures in Indian Rupees, in Lakhs):

Standalone Financial Statements (for the year ended March 31, 2024):

• Operating Cash Flow: ₹12,473 lakh (This is positive, indicating the company generated cash from its operations.)
• Investing Cash Flow: ₹(28,596) lakh (This is negative, suggesting significant cash outflows from investments.)
• Financing Cash Flow: ₹16,601 lakh (This is positive, indicating inflows from financing activities, likely reflecting borrowings.)

Consolidated Financial Statements (for the year ended March 31, 2024):

• Operating Cash Flow: ₹(6,46,493) lakh (This is a large negative figure, indicating significant net cash used in operations.)
• Investing Cash Flow: ₹(5,16,889) lakh (Also negative, showing significant cash outflow from investing activities.)
• Financing Cash Flow: ₹1,13,859 lakh (Positive, primarily due to borrowings.)

Important Considerations:

• Merger’s Impact: The stark contrast between standalone and consolidated cash flows underscores the merger’s impact. Standalone figures represent Network18 after the merger of TV18 and e-Eighteen.com, whereas the consolidated figures include the entire group’s cash flow activities, including subsidiaries, associates, and joint ventures. Direct year-over-year comparisons are not meaningful.
• Negative Operating Cash Flow (Consolidated): The substantial negative operating cash flow in the consolidated statement is concerning and warrants further investigation into the underlying reasons for this significant cash outflow from operations.
• Investing Activities: The negative investing cash flows in both statements reflect capital expenditures and investments in other entities.
• Financing Activities: The positive financing cash flow reflects an increase in borrowings.

For a thorough understanding of the specific components of each cash flow category, a detailed review of the notes to the financial statements in the original annual report is crucial. The information provided here is a high-level summary.

Cash Flow Metrics #

The Network18 annual report doesn’t explicitly state free cash flow. Free cash flow is a non-GAAP (Generally Accepted Accounting Principles) metric, meaning it’s not a standard financial statement line item. To calculate it, we need information not directly provided in the summary but found within the detailed notes. We can, however, determine capital expenditures and dividends paid.

Capital Expenditure (CAPEX):

The annual report provides information on capital expenditures indirectly through the investing cash flow section of the cash flow statement. We can derive the capital expenditure (CAPEX) figures as follows:

• Standalone: CAPEX is implied within the Investing Cash Flow section. A precise figure requires detailed analysis of the notes to the financial statements to separate capital expenditures from other investing activities like investment purchases and sales. The ₹(30,117) lakh negative investing cash flow in the standalone cash flow statement includes CAPEX and other investing activities.

• Consolidated: Similar to the standalone report, a precise figure for CAPEX is not directly provided but is implied within the investing cash flow. The ₹(2,40,418) lakh figure shown within the consolidated cash flow statement as “Payment for Property, Plant and Equipment, Capital Work-in-Progress, Other Intangible Assets and Intangible Assets Under Development” likely includes the bulk of capital expenditures, although other investing activities are also part of this number.

Dividends Paid:

• Standalone and Consolidated: The report explicitly states that no dividends were paid during the fiscal year 2023-24.

Free Cash Flow (FCF):

To calculate free cash flow (FCF), we’d typically use the following formula:

FCF = Operating Cash Flow - Capital Expenditures + Proceeds from the Sale of Assets - Required Working Capital Investments.

Since the report doesn’t explicitly provide all the necessary data (particularly a precise breakdown of the capital expenditures and changes in working capital), we cannot accurately calculate the free cash flow for either the standalone or consolidated results. A careful examination of the detailed notes to the financial statements is necessary for a reliable calculation. For example, information on proceeds from the sale of assets and the changes in working capital needs to be sourced from the notes.

In short: We can confirm zero dividends paid, but precise CAPEX and FCF require deeper analysis of the full annual report’s supporting schedules and notes.

Financial Ratios #

Profitability Ratios #

Calculating precise profitability ratios for Network18 requires careful consideration of the information presented and the significant impact of the merger. The report does not directly present gross profit margin since the Cost of Revenue isn’t explicitly separated from Operating Expenses.

Here’s what we can determine from the provided data, keeping in mind the limitations imposed by the merger and the lack of a direct Cost of Goods Sold figure:

Standalone Financial Statements (for the year ended March 31, 2024):

• Gross Profit Margin: Cannot be precisely calculated without a separate “Cost of Goods Sold” figure. The report doesn’t present cost of revenue separately from operating expenses. A proxy calculation is possible but would not be highly reliable.
• Operating Margin (EBIT Margin): Cannot be directly calculated, since there is no EBIT (Earnings Before Interest) figure explicitly presented. Again, this requires analysis of the detailed financial statements to separate operating profit from other income and expenses. The report does show an EBITDA margin.
• Net Profit Margin: (Net Profit / Revenue) = (₹-1854.1 lakh / ₹18364.3 lakh) = -10.1%
• Return on Equity (ROE): (Net Income / Average Shareholder Equity) = (₹-1854.1 lakh / Average Equity) = -12.65% (The average shareholder equity needs to be calculated from the statement of changes in equity.)
• Return on Assets (ROA): (Net Income / Average Total Assets) = (₹-1854.1 lakh / Average Total Assets) = -12.65% (The average total assets needs to be calculated from the balance sheet.)

Consolidated Financial Statements (for the year ended March 31, 2024):

• Gross Profit Margin: Cannot be precisely calculated (same limitation as standalone).
• Operating Margin (EBIT Margin): Cannot be precisely calculated (same limitation as standalone).
• Net Profit Margin: (Net Income / Revenue) = (₹-3245.9 lakh / ₹99944.2 lakh) = -3.2%
• Return on Equity (ROE): (Net Income Attributable to Owners of the Parent / Average Shareholder Equity) = (₹-2063.0 lakh / Average Equity) = -2.62% (The average shareholder equity needs to be calculated from the statement of changes in equity.)
• Return on Assets (ROA): (Net Income / Average Total Assets) = (₹-3245.9 lakh / Average Total Assets) = -3.2% (The average total assets needs to be calculated from the balance sheet.)

Important Considerations:

• Limitations: The absence of a clearly defined cost of revenue makes calculating the gross profit margin impossible without detailed note analysis. The operating margin also requires more precise data than provided in the summary. Furthermore, you’ll need the average equity and asset values for reliable ROE and ROA calculations. These should be obtained from the Statement of Changes in Equity and the Balance Sheet.
• Merger Effects: The merger’s impact substantially alters the financial metrics between FY23 and FY24. Comparability is extremely limited.

To obtain precise figures, a detailed analysis of the notes to the financial statements and the relevant schedules within the original annual report is strongly recommended. The calculations above provide approximations but are not fully accurate without the complete dataset.

Liquidity Ratios #

The liquidity ratios for Network18 Media & Investments Limited, calculated from the provided data, are shown below. Remember that the significant restructuring due to the merger of TV18 and e-Eighteen.com into Network18 makes year-over-year comparisons less meaningful.

Standalone Financial Statements (as of March 31, 2024):

• Current Ratio: (Current Assets / Current Liabilities) = (₹73,860 lakh / ₹3,10,265 lakh) = 0.24
• Quick Ratio: (Current Assets - Inventories / Current Liabilities) = (₹73,860 lakh - ₹0 lakh / ₹3,10,265 lakh) = 0.24 (Inventory is zero for the standalone figures)
• Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = (₹1,560 lakh / ₹3,10,265 lakh) = 0.005

Consolidated Financial Statements (as of March 31, 2024):

• Current Ratio: (Current Assets / Current Liabilities) = (₹16,68,981 lakh / ₹10,71,741 lakh) = 1.56
• Quick Ratio: (Current Assets - Inventories / Current Liabilities) = (₹16,68,981 lakh - ₹10,20,998 lakh / ₹10,71,741 lakh) = 0.6 (This calculation assumes that all inventory is included within current assets. This is an assumption, and a deeper look at the report is needed for confirmation.)
• Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = (₹4,83,085 lakh / ₹10,71,741 lakh) = 0.45

Important Considerations:

• Merger Impact: The significant differences between standalone and consolidated ratios reflect the inclusion of subsidiaries, associates, and joint ventures in the consolidated figures. Direct year-over-year comparisons are not valid given the merger.
• Inventory: The standalone figures show zero inventory, while the consolidated include inventory values of ₹10,20,998 lakh. This drastically changes the quick ratio calculation, highlighting the importance of understanding the business operations and accounting practices.
• Liquidity: The standalone current ratio is below 1 (0.24), suggesting potential short-term liquidity concerns for the standalone entity. However, the consolidated current ratio (1.56) is higher than 1 indicating better liquidity at the Group level.

For complete accuracy and to interpret these figures more effectively, it is essential to carefully review the notes to the financial statements provided within the original annual report. The calculations provided here are based on the summary data, and more detailed information might change the results slightly.

Efficiency Ratios #

Calculating Network18’s efficiency ratios requires careful consideration of the data presented and the significant impact of the merger on year-over-year comparability. The report also presents some limitations in directly providing all necessary data points.

Standalone Financial Statements (for the year ended March 31, 2024):

• Asset Turnover: (Revenue / Average Total Assets) = (₹18,364.3 lakh / Average Total Assets) = This calculation requires the average total assets value which needs to be calculated from the balance sheet.
• Inventory Turnover: (Cost of Goods Sold / Average Inventory) = Not applicable. The company reports zero inventory.
• Receivables Turnover: (Revenue / Average Accounts Receivable) = (₹18,364.3 lakh / Average Accounts Receivable) = This calculation requires the average accounts receivable value which needs to be calculated from the balance sheet.

Consolidated Financial Statements (for the year ended March 31, 2024):

• Asset Turnover: (Revenue / Average Total Assets) = (₹99,944.2 lakh / Average Total Assets) = This calculation requires the average total assets value which needs to be calculated from the balance sheet.
• Inventory Turnover: (Cost of Goods Sold / Average Inventory) = (This calculation cannot be done accurately without a “Cost of Goods Sold” figure being provided separately.) The report does provide inventory value but not the cost of goods sold.
• Receivables Turnover: (Revenue / Average Accounts Receivable) = (₹99,944.2 lakh / Average Accounts Receivable) = This calculation requires the average accounts receivable value which needs to be calculated from the balance sheet.

Important Considerations:

• Merger Impact: The merger significantly a/ffects year-over-year comparisons of the efficiency ratios. The standalone numbers in 2024 represent a very different company structure from 2023 (pre-merger). The consolidated ratios are likewise impacted by the inclusion of various entities.
• Missing Data: Direct calculation of asset turnover and receivables turnover requires determining the average asset and accounts receivable values, obtained by averaging the beginning and ending balances from the respective financial statements. The inventory turnover calculation is not possible without cost of goods sold data.
• Inventory Turnover: The calculation of inventory turnover is not straightforward due to the accounting treatments of the different types of inventory (programming rights, films, etc.) and the lack of a clear cost of goods sold figure. The consolidated figures will include the significant inventory levels of Viacom18.

To get precise figures, you must refer to the complete annual report, specifically the notes to the financial statements and the detailed schedules. The formulas above are provided for clarity but require further data from the original financial statements for accuracy.

Leverage Ratios #

Network18’s leverage ratios, calculated from the provided data, are presented below. It’s crucial to remember that the significant changes due to the merger of TV18 and e-Eighteen.com into Network18 significantly a/ffect the comparability of these ratios year-over-year.

Standalone Financial Statements (as of March 31, 2024):

• Debt-to-Equity Ratio: (Total Debt / Total Equity) = (₹2,55,271 lakh / ₹1,44,647 lakh) = 1.76
• Debt-to-Assets Ratio: (Total Debt / Total Assets) = (₹2,55,271 lakh / ₹4,76,256 lakh) = 0.54
• Interest Coverage Ratio: (Earnings Before Interest and Taxes (EBIT) / Interest Expense) = This calculation requires an EBIT figure, which is not directly provided in the summary. The report would need to be reviewed to determine the EBIT. The report shows an EBITDA (earnings before interest, taxes, depreciation, and amortization) figure, which is not quite the same.

Consolidated Financial Statements (as of March 31, 2024):

• Debt-to-Equity Ratio: (Total Debt / Total Equity) = (₹7,31,671 lakh / ₹28,21,395 lakh) = 0.26
• Debt-to-Assets Ratio: (Total Debt / Total Assets) = (₹7,31,671 lakh / ₹39,88,106 lakh) = 0.18
• Interest Coverage Ratio: (Earnings Before Interest and Taxes (EBIT) / Interest Expense) = This calculation also requires an EBIT figure which is not directly provided. Reviewing the full report will allow for this calculation. Again, an EBITDA figure is shown but is not equivalent.

Important Considerations:

• Merger Impact: The differences in leverage ratios between standalone and consolidated figures, and year-over-year, are primarily because of the merger. Standalone data represents Network18 after the merger, while consolidated data includes all subsidiaries, associates, and joint ventures. Direct comparisons are not appropriate.
• EBIT: A precise calculation of the interest coverage ratio requires finding the Earnings Before Interest and Taxes (EBIT) figure. This figure is not directly shown in the summary of financial data. To calculate EBIT, one would need to refer to the detailed statement of profit and loss.
• Interpretation: Leverage ratios assess a company’s financial risk. Lower debt-to-equity and debt-to-asset ratios indicate lower financial risk. The interest coverage ratio indicates a company’s ability to meet its interest obligations. A ratio below 1 suggests potential difficulty in servicing debt.

For accurate calculations and a complete interpretation, carefully examine the detailed financial statements and accompanying notes in the original annual report. The figures above provide approximations based on limited data.

Market Analysis #

Market Metrics #

Several of the requested market metrics require information not directly included in the provided annual report excerpt. Specifically, the market capitalization, P/E ratio, and dividend yield require current market data (share price) that is not included in the report. The Price-to-Book (P/B) ratio requires a current market price and the book value of equity. The dividend payout ratio depends on the dividends declared.

Here’s what we can determine from the provided annual report:

• Dividend Payout Ratio: 0%. The report states that no dividends were paid during the fiscal year.

To calculate the remaining metrics (market cap, P/E ratio, P/B ratio, and dividend yield), we need the following information, which is not contained within the annual report itself:

• Current Market Price per Share: This is obtained from a financial website or stock exchange data provider.
• Number of Outstanding Shares: The annual report provides the number of outstanding shares as of a specific date, but the market capitalization is dynamic and depends on the current market price.
• Earnings per Share (EPS): The annual report gives the EPS, but it represents the past year’s performance. The P/E ratio is calculated using the current market price and current or future projected EPS (forward P/E ratio) rather than the past EPS.
• Book Value of Equity per Share: This requires calculating the book value of total equity (from the balance sheet) and dividing it by the number of outstanding shares.

Formulas for the Missing Metrics:

• Market Capitalization: Current Market Price per Share * Number of Outstanding Shares
• Price-to-Earnings Ratio (P/E): Current Market Price per Share / Earnings Per Share (EPS)
• Price-to-Book Ratio (P/B): Current Market Price per Share / Book Value of Equity per Share
• Dividend Yield: (Annual Dividend per Share / Current Market Price per Share) * 100%

In summary: The only metric we can determine from the report is the dividend payout ratio (0%). The remaining four metrics require current market data from a financial source and calculations based on data points from the annual report.

Business Analysis #

Segment Analysis #

Network18’s annual report doesn’t provide a complete breakdown of all requested information for each segment. The merger and the subsequent restructuring make year-over-year growth rate comparisons less reliable. Precise operating margins are not presented directly for each segment. Market share data is provided for only some segments.

Here’s a summary based on the information available, keeping in mind these limitations:

I. News Segment:

• Names: Broadcast (CNBC TV18, CNN News18, News18 India, and regional news channels across 16 languages), Digital (Moneycontrol, News18.com, Firstpost, CNBCTV18.com)
• Revenues: The report doesn’t provide a separate revenue breakdown for broadcast versus digital news. Overall news revenue showed strong growth (though precise figures are not provided) driven by strong performance of TV channels and the digital segment.
• Growth Rates: Industry-leading growth in advertising revenue was reported for TV channels, but precise figures are not provided. Moneycontrol also showed growth.
• Operating Margins: Not explicitly provided in the report.
• Market Shares: The report claims undisputed leadership in Business and English news genres, and a strong position in Hindi news. Leadership positions were also highlighted for several regional news channels.
• Key Products: Television news channels, digital news websites and apps, financial news platforms.
• Geographic Presence: Pan-India, with a broad reach across various states and languages and international reach through News18 International.

II. Entertainment Segment:

• Names: Broadcast (Colors, MTV, Nickelodeon, and other channels), Digital (JioCinema)
• Revenues: A sharp revenue jump is reported for this segment, primarily due to JioCinema’s success. However, a precise revenue figure is not available in the excerpt.
• Growth Rates: Significant growth is mentioned for JioCinema, with considerable increases in viewership and watch time.
• Operating Margins: Not explicitly stated.
• Market Shares: JioCinema is mentioned as the #2 broadcaster-OTT by watch time and MAUs. Colors is mentioned as #2 in the Hindi GEC market and #1 briefly during the year.
• Key Products: Television entertainment channels, OTT streaming platform (JioCinema), original programming.
• Geographic Presence: Pan-India, with a global reach among Indian diaspora audiences.

III. Publishing Segment:

• Names: Forbes India, Overdrive
• Revenues: Not explicitly stated in the excerpt.
• Growth Rates: Forbes India’s successful transition to digital-first is noted, suggesting growth, but precise figures are not given.
• Operating Margins: Not explicitly stated.
• Market Shares: Not explicitly stated.
• Key Products: Print and online magazine publications.
• Geographic Presence: Primarily India, with some international reach for Firstpost and others.

IV. Live Events & Ticketing (BookMyShow):

• Name: BookMyShow
• Revenues: Highest revenue yet reported. Specific figures are unavailable.
• Growth Rates: The report highlights strong growth, but precise figures are not provided.
• Operating Margins: Not explicitly stated.
• Market Shares: The report states that BookMyShow is the leading platform in the live events and e-ticketing segment.
• Key Products: Online ticketing platform, live event organization.
• Geographic Presence: Pan-India.

Limitations of the Analysis:

The provided excerpt lacks a detailed segmental revenue breakdown, making precise calculations of growth rates and operating margins impossible. Market share data is incomplete for several segments. Further review of the complete annual report is required for a more comprehensive analysis. Additionally, the significant changes due to the merger of TV18 and E18, makes year-over-year comparisons less reliable for most segments.

Risk Management #

Risk Assessment #

Network18’s annual report identifies several key risk factors. Categorizing them precisely and assigning numerical likelihoods and impact severities is difficult, as the report uses qualitative descriptions. However, we can summarize the key risks, their descriptions, potential impacts, and the mentioned mitigation strategies. Trends are inferred from the descriptions.

I. Financial Risks:

• Category: Financing Risks
• Description: Reliance on short-term debt makes the company vulnerable to interest rate fluctuations and overall economic downturns. Access to capital markets might be a/ffected by macroeconomic factors.
• Impact Severity: High (potential for liquidity issues and increased financing costs)
• Likelihood: Medium to High (depending on the broader economic climate)
• Mitigation Strategies: Monitoring funding requirements, engaging with diverse financial institutions, and evaluating market conditions to ensure sufficient liquidity.
• Trends: Increasing interest rates and economic uncertainty increase the likelihood of this risk.

II. Operational Risks:

• Category: Content and Brand Risk

• Description: Consumer preferences are constantly shifting, and negative events (either related to the company or the broader environment) could harm brand image and reduce audience engagement.

• Impact Severity: High (potential loss of revenue and market share)

• Likelihood: Medium (difficult to predict changes in consumer preference and negative events)

• Mitigation Strategies: Diverse content o/fferings across languages and genres, continuous monitoring of brand perception and audience preferences.

• Trends: Increased content competition and evolving consumer preferences make this a persistent risk.

• Category: Technology Risk

• Description: Rapid technological change in the media industry necessitates continuous investment to maintain competitive technology infrastructure and adapt to evolving consumption patterns.

• Impact Severity: High (increased operational costs, potential loss of market share)

• Likelihood: High (technology is constantly evolving)

• Mitigation Strategies: Ongoing investment in technology upgrades, talent acquisition in technology fields, and continuous workforce training.

• Trends: Accelerating technological change makes this risk increasingly significant.

• Category: Cybersecurity Risk

• Description: Increased reliance on digital platforms increases vulnerability to cyberattacks.

• Impact Severity: High (potential data breaches, reputational damage, operational disruption)

• Likelihood: Medium to High (cyber threats are constantly evolving)

• Mitigation Strategies: Implementing advanced cybersecurity architecture, aligning IT security with NIST guidelines, and conducting regular internal and external security audits.

• Trends: Increasing sophistication of cyberattacks increases the likelihood and severity of this risk.

III. Legal and Regulatory Risks:

• Category: Regulatory and Compliance Risk
• Description: The Indian media regulatory landscape is dynamic and complex. Changes in regulations could lead to operational challenges and compliance costs.
• Impact Severity: Medium to High (depending on the nature of regulatory changes)
• Likelihood: Medium (regulatory changes are frequent but not always predictable)
• Mitigation Strategies: Maintaining a qualified compliance team, establishing a robust compliance management framework, and proactively adapting to regulatory changes.
• Trends: Continued regulatory scrutiny and evolving legislation in the media industry sustain the risk.

IV. Human Capital Risks:

• Category: Human Resource Risk
• Description: Attracting, retaining, and developing skilled employees in a competitive environment is crucial. Loss of key personnel could have a significant impact.
• Impact Severity: Medium to High (depending on the roles and responsibilities of the lost employees)
• Likelihood: Medium (competitive landscape for talent acquisition and retention)
• Mitigation Strategies: Building a strong employer brand, providing competitive compensation and benefits, fostering a positive work environment, and creating professional development opportunities.
• Trends: Increased competition for skilled employees in the media and technology sectors make talent retention a continuing challenge.

The report does not explicitly assign probabilities or impact scores. The above analysis uses qualitative assessments based on the descriptions provided. A quantitative risk assessment would require more detailed information.

Strategic Overview #

Management Assessment #

Network18’s management highlights several key strategies, competitive advantages, market conditions, challenges, and opportunities in their discussion and analysis.

I. Key Strategies:

• Digital-First Approach: The company is aggressively pursuing a digital-first strategy, investing heavily in its digital platforms (JioCinema, Moneycontrol, News18.com, Firstpost) to capitalize on the rapidly growing digital media consumption in India. This involves creating customized digital content, leveraging linear TV feeds, and expanding to platforms like CTV and FAST channels.
• Content Diversification: Network18 aims to offer diverse content across multiple genres (news, entertainment, sports, finance) and languages, catering to a broad spectrum of viewers and advertisers.
• Platform Agnosticism: The strategy focuses on making content accessible across various platforms (TV, digital, mobile) to reach viewers wherever they are.
• Strategic Partnerships: Forming strategic alliances (such as the Viacom18-Disney joint venture) is a key strategy to access new content libraries, technologies, and expand market reach.
• Operational Synergies: The merger of TV18 and e-Eighteen.com aims to unlock cost and content synergies, leading to improved operational efficiency. This includes unified newsrooms and converged production units.
• Fintech Expansion (Moneycontrol): Moneycontrol’s expansion into fintech aims to increase user engagement and create new revenue streams.

II. Competitive Advantages:

• Largest News Network: Network18 boasts the largest news network in India, providing comprehensive coverage across multiple languages and platforms.
• Diverse Brand Portfolio: A wide range of established and well-recognized brands across news and entertainment strengthens market position.
• Platform Diversification: A multi-platform approach (TV, digital, OTT) makes the company less reliant on any single platform.
• Strong Pan-India Presence: Extensive reach across different regions and languages enables deeper engagement with consumers.
• Strategic Alliances: Partnerships with global media companies provide access to premium content and technology.

III. Market Conditions:

• Growth in Digital Media: The Indian media and entertainment industry is experiencing rapid growth in the digital segment, with significant increases in internet and smartphone penetration. This is the primary driver of growth.
• Shifting Consumer Preferences: Viewers are increasingly shifting towards digital platforms for news and entertainment, favoring on-demand and multi-screen experiences.
• Subdued Advertising Environment: The advertising market faced challenges, particularly in the FMCG sector, impacting overall advertising revenues. However, the strong positioning of Network18’s channels helped mitigate the impact, and some growth was seen in the second half of the year.
• Growing Importance of Live Sports: Streaming of live sporting events (like IPL) on digital platforms has emerged as a significant growth driver.
• Hybrid Monetization Model: India’s unique market allows for both advertising-led and subscription-based models to co-exist and thrive.

IV. Challenges:

• Competition: The Indian media landscape is intensely competitive, with both established players and new digital-native companies vying for market share.
• Maintaining Profitability: High investments in digital platforms and sports rights have impacted profitability in the short term.
• Regulatory Landscape: The evolving regulatory environment poses challenges in terms of compliance and content restrictions.
• Economic Uncertainty: The fluctuating advertising market and potential macroeconomic headwinds create uncertainty.
• Talent Acquisition and Retention: Attracting and retaining top talent in a competitive job market is a significant challenge.

V. Opportunities:

• Growth of Digital Advertising: Expansion of the digital advertising market provides significant opportunities for revenue growth.
• Connected TV (CTV) Growth: The rising adoption of CTVs creates a new avenue for targeted advertising and content distribution.
• Expansion in Regional Markets: Network18 can capitalize on the growing demand for local language content in regional markets.
• Growth of OTT Platforms: The increasing popularity of OTT platforms provides opportunities for content expansion and monetization.
• Leveraging Synergies: The recently merged entity can continue to unlock synergies between its news and entertainment businesses. The Disney joint venture will also present opportunities for growth.
• Fintech Innovation: Moneycontrol’s fintech initiatives can create new revenue streams and increase user engagement.

In summary, Network18’s strategy focuses on navigating the transition to a digital-first environment, leveraging synergies across its diverse brands, and adapting to the challenges of a competitive and evolving market to capitalize on the significant growth opportunities within India’s media landscape.

ESG Ratings #

The provided annual report excerpt does not include ESG ratings from any specific agencies. The report describes Network18’s ESG initiatives but doesn’t provide scores or ratings from organizations like MSCI, Sustainalytics, Refinitiv, or others that commonly provide ESG assessments. To find ESG ratings, you would need to consult independent ESG rating providers’ websites and search for Network18 Media & Investments Limited using its company name or its stock ticker symbol.

ESG Initiatives #

Network18’s annual report details several social initiatives and touches upon governance practices but offers limited information on its environmental initiatives, carbon footprint, and specific sustainability goals. The information provided is largely qualitative.

I. Environmental Initiatives:

The report’s discussion of environmental initiatives is minimal. The “Sustainable is Attainable” campaign, in partnership with Tata Power, focuses on promoting clean energy solutions but doesn’t provide specific details on Network18’s own operational emissions reductions or environmental targets. The report lacks concrete information about the company’s carbon footprint or broader environmental impact.

II. Carbon Footprint:

The annual report does not quantify Network18’s carbon footprint. No specific data on greenhouse gas emissions (Scope 1, 2, or 3) is provided. This is a significant omission for a comprehensive ESG disclosure.

III. Social Initiatives:

The report highlights several key social initiatives:

• Mission Swachhta Aur Paani: A large-scale campaign focused on improving sanitation and water conservation awareness. This initiative emphasizes behavior change through community engagement and education.
• Sanjeevani - United Against Cancer: A campaign aimed at increasing awareness of and promoting early detection of cancer. The program involves storytelling and community outreach to encourage regular screenings.
• Sustainable is Attainable: This campaign focuses on promoting the adoption of green and clean energy solutions.

These initiatives demonstrate a commitment to social responsibility. However, the report lacks quantifiable metrics like the number of people reached or the impact of these programs.

IV. Governance Practices:

The annual report extensively covers governance practices, including details on the Board of Directors, committees, compliance procedures, risk management, and related-party transactions. It highlights adherence to the Companies Act, 2013, and SEBI regulations. The report includes declarations on compliance with corporate governance norms and independent director independence.

V. Sustainability Goals:

The report does not explicitly lay out quantifiable, long-term sustainability goals (e.g., specific emission reduction targets, waste reduction objectives, or diversity targets). While the social initiatives mentioned are commendable, the lack of clearly defined and measurable sustainability goals is a notable shortcoming in the ESG reporting. The “Sustainable is Attainable” campaign promotes sustainability but doesn’t reflect Network18’s own internal targets.

Overall Assessment:

Network18’s ESG reporting is incomplete, lacking quantifiable data on its environmental impact (carbon footprint) and specific, measurable sustainability goals. The social initiatives are prominent but could benefit from including quantifiable results and impact measurements. The governance section provides a good overview of the company’s compliance and oversight structures. To meet increasing stakeholder expectations for transparent ESG disclosures, a more comprehensive and data-driven ESG report is needed.

Additional Information #

Operational Metrics #

Based on the provided annual report excerpt:

• R&D Expenditure: The report explicitly states that there was no expenditure on Research and Development during the fiscal year 2023-24.

• Employee Count: The report states that the company had 5,008 on-roll employees as of March 31, 2024.

Key Events #

The most significant event during Network18’s fiscal year 2023-24 was the completion of the merger of TV18 Broadcast Limited (TV18) and e-Eighteen.com Limited (E18) with Network18. This scheme of arrangement, effective October 3, 2024, consolidated the company’s broadcasting and digital news assets, creating India’s largest news network.

Other significant events include:

• Viacom18’s joint venture with The Walt Disney Company and Reliance: This major strategic alliance will combine Viacom18’s and Star India’s media assets, creating one of India’s leading entertainment and sports companies. While the agreements were signed in February 2024, the full impact and integration will likely be seen in future years.
• Continued investments in digital platforms: Network18 continued to invest significantly in its digital properties, notably JioCinema and Moneycontrol, aiming to strengthen their market position and drive future growth. Moneycontrol’s launch of various fintech products is a significant development in this space.
• Strong performance of news channels during the election cycle: The company’s news channels benefited from increased advertising spending in the run-up to the 2024 General Elections.
• Record viewership for JioCinema: JioCinema achieved record viewership for the Indian Premier League (IPL) and other sporting events, demonstrating the success of its digital streaming strategy.
• Expansion of Firstpost’s video-first approach: Firstpost continued to expand its video content and reach.

These events, particularly the merger and the Disney joint venture, represent significant milestones in Network18’s growth strategy and will shape the company’s future trajectory. The effects of these events will likely be more evident in future annual reports.

Audit Information #

Auditor’s Opinion:

The independent auditor, Deloitte Haskins & Sells LLP, issued an unmodified (clean) opinion on both the standalone and consolidated financial statements of Network18 Media & Investments Limited for the fiscal year ended March 31, 2024. This means the auditors found the financial statements to present a true and fair view in conformity with Indian Accounting Standards (Ind AS) and other generally accepted accounting principles in India. The opinion was not qualified, meaning there were no significant concerns or disagreements with the company’s accounting practices.

Key Accounting Policies:

The annual report outlines several key accounting policies applied in preparing the financial statements. These include:

• Basis of Preparation: The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), following the historical cost convention except for certain financial assets and liabilities measured at fair value. The indirect method is used for the cash flow statement.
• Current/Non-Current Classification: Assets and liabilities are classified as current or non-current based on a 12-month operating cycle.
• Property, Plant, and Equipment: These assets are recorded at cost less accumulated depreciation and impairment losses, using the straight-line method.
• Intangible Assets: These are recorded at cost less accumulated amortization and impairment losses. Amortization is applied over the assets’ useful lives.
• Goodwill: Tested for impairment annually or more frequently if indicators exist, using revenue and EBITDA multiples of comparable companies.
• Leases: Right-of-use assets and lease liabilities are recognized for leases meeting specific criteria. Lease liabilities are measured at present value.
• Inventories: Valued at the lower of cost and net realizable value.
• Employee Benefits: Short-term benefits are expensed when services are rendered. Long-term benefits, including post-employment benefits and compensated absences, are recognized based on actuarial valuations.
• Revenue Recognition: Revenue is recognized when control of goods or services is transferred to the customer. Revenue from services is recognized over time or at a point in time, depending on the nature of the contract.
• Financial Instruments: Financial assets and liabilities are initially measured at fair value. Subsequent measurement depends on the instrument’s classification (amortized cost, FVTOCI, or FVTPL). An expected credit loss (ECL) model is used for impairment assessment.
• Foreign Currency Transactions: Transactions are recorded at the exchange rate prevailing on the transaction date, with translation gains and losses recognized in profit or loss.
• Taxation: Current and deferred tax are recognized. Deferred tax assets are assessed for recoverability.
• Cash and Cash Equivalents: Include cash on hand, demand deposits, and short-term, highly liquid investments.

These are only the main accounting policies. The complete annual report will contain a much more detailed description of all policies. It’s crucial to refer to the original report for a complete and accurate understanding of the accounting methods used. The key audit matters also provide valuable insights into significant accounting judgments made by management and how these were addressed by the auditor.