Dear Shareholders,

The combination of stable and sound financial systems, appropriate and timely policy response coupled with a bold stimulus package from the Government, resulted in an uptrend in industrial activities which helped the Indian economy withstand much of the adverse effects of the global slowdown.

Revival of the economic activity coupled with cautious governance provided by your Directors and the Management enabled NXTDIGITAL Limited (formerly known as Hinduja Ventures Limited) to post healthy working results for the year 2009-10, as reflected in the Annual Report in your hands.

As you are aware, your company’s core strategy has been to act as an incubator for new businesses in those sectors of the economy, which have great potential for rapid growth.  For example, our incubation of the media and entertainment subsidiary IndusInd Media and Communications Ltd (IMCL), which is now ready for value realization . During the year, IMCL has received court sanction to demerge its content business an associate company, IN Entertainment (India) Limited, which is being incubated for future value creation in the content space.

Accordingly, your company has been looking for investment opportunities in the lucrative Power (both conventional as well as non-conventional), Real Estate and Healthcare sectors which have greatest potential for growth.  I am confident that by this time next year we would have successfully closed on some of these initiatives.  Your company will continue to seek for fresh investment avenues but with caution.

Media Business

IMCL, the flagship cable subsidiary of the Company, continued to deliver strong performance during the year.  As you are aware, IMCL has outperformed this year by reporting net profits for the last few years in a challenging business environment.

With the return of stability in markets, the media sector also witnessed growth momentum. The outlook for the media sector continued to be positive. The media sector is expected to grow by 13.8% and reach Rs.1,092 bn from the current levels of Rs. 587 bn. The pay TV sector reached a total turnover of US $ 6.5bn in 2009 which included revenues from cable broad, placement fees and affiliate fees etc. This is expected to reach US $ 12.1bn by 2014. The pay – TV subscribers are expected to reach 149 million homes by 2014 from current levels of 105 million. Our goal is to lead in the growing distribution industry by increasing both TV homes and Average Revenue Per Unit (ARPU).

The Government of India is examining options of increasing digital penetration of Cable Television homes. These could include phasing out of analog cable, extending the Digital, Addressable regime beyond the existing select areas of Mumbai, Delhi and Kolkata. The Government and the Regulator are also working on a graded phase-wise digital addressability for all India cable homes.  

Digitizing the cable Television homes by installation of set top boxes would enable the customers to receive over 1000 television channels with additional benefits such as better picture quality, video-on-demand and other value added services. 

While the Cable TV industry has embarked on the path for large scale digital services, it faces competition and challenges posed by alternate delivery platforms such as DTH, IPTV, Mobile TV, etc., which are  digital addressable ready.

IMCL's future plan for growth

IMCL is among the top 3 MSOs with a pan-India footprint reaching around 8 mn (6.5 mn last year) subscribers in 27 cities as against 24 cities in the previous year. It provides more than 250 channels in its Digital Cable networks, which is currently the maximum number of channels provided in any distribution platform in India.

IMCL plans to continue to expand into key Tier II cities for its analog and digital services and proposes to continue making its investments in intra city fibre networks in order to have a robust backbone for delivering its services.  It is also examining alternate options such as building/leasing inter-city fibre and IP based connectivity.

The gauntlet thrown down by alternate distribution platforms will be effectively taken up by IMCL through its ability to deliver services at competitive rates and to prompt customer care through efficient field staff & local cable operators.

Your Company is evaluating all other options for shareholder value unlocking such as initial public offering or listing securities of this integrated media cable subsidiary.

Investments

The fiscal and monetary stimuli provided by the Government and return of institutional investment to the markets have lowered return on debt.  Anticipating the shifting trends, your Company shifted its treasury investments to long term equity and derived good returns.  However, with the philosophy of preserving capital, the Company will look for long term investments with ability to generate steady returns and value creation.

The philosophy of growing steady returns and creating long term value will be the guiding force while investing in any sector.
 
I take this opportunity to thank all stakeholders for the trust reposed on us and to all the employees for their commitment and co-operation