2008 – The Global Meltdown
Blood on the street
A Laqshya Perspective
April 2009
For details contact :- yuvraj@laqshya.com

PARTNERS IN CRIME
Customers FED Mortgage Investors
Brokers
Insurers
Credit Rating
Agencies
Investment
Banks

20
30
40
50
60
70
10
0
Citigroup 60.8
Wachovia 52.7
Source: Financial Times
Merrill Lynch 52.2
Washington Mutual 45.6
UBS 44.2
HSBC 27.4
Bank of America 21.2
JPMorgan Chase 18.8
Morgan Stanley 15.7
IKB Deutsche 14.3
Royal Bank of Scotland 13.8
Subprime losses by Big Banks
Lehman Brothers 13.8
Deutsche Bank 10.1
Credit Suisse 10.1
Wells Fargo 10
Crédit Agricole 8.6
Barclays 7.5
Canadian Imperial Bank of Commerce 7.1
Fortis 6.9
Bayerische Landesbank 6.7
HBOS 6.6
ING 6.5
Total write downs and credit losses since Jan 2007 ($bn)
Société Générale 6.4
Mizuho Financial Group 6.1

Those good old days are gone now!!

Impact of Financial crisis-felt across the globe

We have entered a severe recession that may last for years, and
may develop into a depression.
NASDAQ
Dow Jones
It’s a global recession:
Switz
UK France Germany
China
Russia
Brazil
Japan Australia
all charts for last 12 months; from bloomberg.com

Global Equity Markets
Lose 75% of wealth
India

October 2008

Impact on India

Layoffs across sectors
Corporate confidence at its lowest

Terror strikes in Mumbai had a major
impact
Mumbai Terror Attacks – Crisis of Safety?

Satyam Scandal- Crisis of
Corporate Governance

India Market: A 52-week Snapshot (BSE)

India to witness negative inflation in 2009!

Indian Entertainment and Media Industry badly hit by recession
For a sector that saw a 20 per cent growth in the heady two years before the financial meltdown recession
•Advertisers in real estate, banking, insurance and mutual
and painful advertising cuts has hit them the hard.
funds cut advertising budgets by 35-40 per cent
•Major advertisers in categories such as real estate, banking, insurance and mutual funds have reduced
advertising budgets by 35-40 per cent.
•Overall, advertising revenues are down by 25 per cent.
•Overall, advertising revenues are down by 25 per cent.
•Many media Delhi operations for two film shop
•UTV Software has shut thehouses are shutting and two youth channels and has asked 80
employees to leave.
•Employees are being shown Colors and CNBC-TV18 has given pink slips to over 50
•The Network18 group that owns channels such asthe pink slip
analysts and writers, who were hired for its e-broking joint venture with Ambit Finance and Centurion Bank.
•Advertising market
•Outlook group is up for sale expected to be in the slump for the next
•India Today has closed Bengali edition - will restart spends conditions improve.
3 years with 50% reduction in when market
•Business Standard has shut down its Gujarati edition.
•General entertainment channels, which could end up with an average annual loss of more Rs 300 crore.
•The INX network has huge distressed assets while NDTV is planning to raise more funds from the market.

Indian Media & Entertainment Industry CAGR 2009-2013
20000.0
18000.0
16000.0
14000.0
CAGR Growth %
12000.0
10000.0
8000.0
Growth in Adspend to reduce over the next 5 years
6000.0
4000.0
2000.0
0.0
CAGR % 2006- CAGR % 2009-
2009P 2010P 2011P 2012P 2013P
08 13
Television 16.7 8820 9710 11260 13170 15550 13.5
Print 16.0 11480 12380 13650 15360 17430 10.0
Radio 19.7 920 1030 1190 1390 1630 14.2
Internet 45.2 840 1100 1370 1710 2140 27.9
OOH 17.3 1770 1980 2240 2550 2930 12.8
Source : Group M & KPMG 2009

Regionwise split in OOH - 2008
Others
18% Mumbai
25%
Bangalore
6%
Hyderabad
7%
Kolkata
Delhi
9%
23%
Chennai
12%

Category split OOH 2007-2008
Automotive
FMCG 3%
Others
4%
5%
Entertainment and
Media
11%
Telecom Services
43%
Real Estate
13%
Banking & Financial
Category
21%

How do we get through it?
• Manage business on cash flow basis
• Increase efficiency of asset turnover; increase liquidity
• Intensify customer service initiatives
• Become innovative in controlling costs
– Outsource where appropriate
– Join Co-ops to spread costs over larger group
– Work together to achieve greater efficiencies
• Look for new ways to leverage existing employees and
infrastructure by investigating new ways of enhancing revenue or
exploring new products and markets. Be a solutions provider
• Secure access to bank credit; firm up bank lines

What’s on the other side?
• 2009 – The worst is yet to come
– Housing, infrastructure, real estate for a bad year
– Bank loan losses and liquidity crunch
– Unemployment peaks in the second half of this year
– Weak exports as the world is in a state of protracted recession
– Lower Energy Prices alleviate pressure on consumer spending – but
virtually no economic growth or recovery or demand
• New Government at the Centre
– Increased economic “bailout” and middle class spending programs.
Increased fiscal budget deficits. Can go upto 12% of GDP
– Chances of a hung assembly. Lack of decision
– GDP growth to hover between 4.5-5%

What’s on the other side?
• 2009 – Business
– Cost of goods declines from current levels as interest rates, labor costs and
commodity prices decline but business is facing zero consumer and
business demand.
– Corporate profits decline for most of this year
– Weak consumer spending
– Crisis of confidence in consumers, banks, corporate
– Banks highly risk averse and hence availability of loans difficult.
• August-September 2011 – Economy Makes Gradual
Cyclical Recovery
– Increased employment = increased consumer spending
– Increased Corporate Sales = increased corporate profits = increased capital
spending
– Increased interest rates and rising prices from higher demand and
continuing fiscal budget deficits

Future of Indian Outdoor Media????????
Economic slowdown effects city’s hoarding business – Indian Express, March
2009
The writing on the wall is clear!
Conserve cash or Perish!
Billboard prices across Mumbai, Hyderabad, Bangalore, Delhi have fallen by 30-
40% at least. Mahim Casusway where rentals were once Rs 12-15 lakhs per
month are now Rs 7-8 lakhs and in Peddar Road which was around 12 lakhs, is
now Rs 5-6 lakhs per month. The situation within the industry is one of panic.
Privately owned hoardings are trying to hold on without compromising on
their margin. There is blood everywhere.– Financial Express, February 2009

Will recession be the doomsday
for the growth of Out Of Home?
OR
We will be prudent, conserve
cash and survive!
Lets wait and watch
THANK YOU
For details contact :- yuvraj@laqshya.com