MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Directors have pleasure in presenting the Management Discussion and Analysis Reportfor the year ended 31 st March 2010.
The company was started to capitalize on the growing demand for 'quality' programmingof the mushrooming satellite channels.
The company has a good infrastructure for a total production environment for televisionsoftware, marketing television software, documentaries, events, and Television commercialsand trading in feature film and television program rights, world wide.
IN HOUSE PRODUCTION'S OBJECTIVES
To produce and market international quality television software for leading Indian andOffshore terrestrial and satellite television channels.
Produce and market relevant television software for India's leading terrestrial channel- Doordarshan that penetrates across the length and breadth of the country.
Export television software to countries in Asia, Europe, USA, Africa and the MiddleEast.
Acquire media properties on an ongoing basis including television software concepts,scripts and treatment, film concepts, television and feature film broadcast rights, musicrights for films and service contracts with leading actors, directors, cameramen, musicdirectors etc., on a project basis.
To build a library of television programs that may be exploited in the domestic andinternational markets.
The company has successfully created and produced some of the best television softwarein the country in genres such as soaps, sitcoms, thrillers, variety shows, events etc.,for local and International television stations and clients. New genres are becomingincreasingly popular and as a result more entrants are expected to participate which makesthe media more competitive.
INDUSTRY AND BUSINESS OVERVIEW
The Entertainment & Media Industry (E&M) witnessed a tough phase in 2009recording a marginal growth of 1.4% to Rs. 58,700 crores due to the economic slowdown andreduction in advertising spends. The industry performance in 2009 was a consequence of notonly the slowdown but also several internal factors that lowered the pace of growth forthe otherwise flourishing media and entertainment business in India.
The contribution of television to the overall revenues of the E&M industry has goneup considerably in 2009 compared to 2006 and is expected to continue increasing andachieve almost 48% of the total revenues in 2014. On the other hand, the contribution fromsectors like films, prints and music has come down in 2009. Television is expected to growat a higher rate of 15% over next 5 years compared to an almost 9% growth in both thefilms and print sectors.
The biggest highlight of 2009 was the lessons that the year presented to those in themedia and entertainment business. The pressure on margins and curtailed media spend byadvertisers brought a renewed focus on managing costs, innovation and creativity.
The improved market sentiment in 2010 has set the tone for a promising year ahead. TheIndian entertainment and media industry is slated to grow at a compounded annual growthrate of 13% over the next 5 years to Rs. 1,09,100 crores, according to a report by theFederation of Indian Chambers of Commerce and Industry and research firm KPMG. Theuntapped potential for growth in media reach, impact of digitization and convergence,better consumer understanding, sustained efforts in innovation and enhanced penetration ofregional markets all augur well for the industry.
FLOW AND PRODUCT MANAGEMENT
Regular ideation process backed by a strong shoot, logistics, product, talent and crewmanagement helped the company not only to save money and time but also has increased itsdelivery level to its peak, with less wastage and quick scalability. The tradingactivities and the medical division of the company has got very good response and thecompany should expect a good growth in the year's ahead.
THREATS, RISKS AND CONCERNS
The management of risk does not imply risk elimination but prudent risk management.Given the company's market position, any new entrant represents competition. The companyhas been one of the consistent content providers for the last few years it can withstandthe competition despite and increasing number of new players. Due to high attrition of keyprofessionals and actors the quality of the programs could suffer. The company strength ismore on the story lines, script and screenplay rather than on the actors and the companyhas performance oriented appraisal system thus resulting in low attrition level. Thecompany has moved very strongly in the area of trading in television software and films.But there is always a risk in sourcing good programs in a reasonable acquisition cost. Thecompany is quite confident to move ahead in this front with its contacts and past trackrecord in this field.
INTERNAL CONTROLS AND THEIR ADEQUACY
The company believes in formulating adequate and effective internal control systems andimplementing the same to ensure that the interests of the company are safeguarded andreliability of accounting data and its accuracy are ensured with proper checks andbalances. The senior management team meets to address issues like operational efficiency,protection and conservation of resources, accuracy and promptness in financial reportingand compliance with laws and regulation, at regular frequency to discuss various issuesthat influence the business and to take strategic decisions. The company has an internalaudit system, which submits report to the Chairman of Audit Committee periodically.
FINANCIAL AND OPERATIONAL PERFORMANCES
The last year has been a challenging one and we have tried to seek new opportunities inthe changing environment. Through a variety of strategies, our income from overalloperations i.e. from the Healthcare Division and from Media Operations has lowered fromRs. 1,230.63 lakhs to Rs. 875.27 lakhs on year to year comparison. The Company's turnoverdecreased compared to the previous year. However the Company was able to maintain itsoperating margin and profitability during the year under review. The Company is takingsuitable measures to improve the turnover and margins in future operations and to attainbetter efficiency.
As a knowledge database and service provider, we are fully conscious of ourresponsibility toward our customers. Our efforts are directed toward the fulfillment ofcustomer satisfaction through the quality of services. As the consolidation of thisindustry gains momentum, the need to develop a dedicated team of skilled manpower assumesurgency and importance.
We will continue to focus on training and motivation of manpower so as to develop teamsof qualified and skilled personnel to effectively discharge their responsibilities in anumber of projects and activities. It is, in this context, which we have been workingtowards promoting the skills and professionalism of our employees to cope with and focuson the challenges of change and growth.