Baba Arts Ltd Management Discussions

1. Industry Structure and Development (a) Indian Economy

According to the International Monetary Funds World Economic Outlook, Indian economy has been one of the fastest growing economies of the World during the year 2024. The Indian GDP is estimated to have grown at 6.8% during 2024. Niti Ayog has projected that India is all set to overtake Japan and become 4th largest economy by the year 2025 behind only to US, China and Germany.

(b) Industry Scenario

According to the recent report on Indian Media & Entertainment Industry published by EY "the Indian Media and Entertainment (M&E) sector grew 8.1% in 2023 from INR 1.73 triillion to INR 2.30 trillion (US$ 27.90 billion). Digital Media and Online Gaming were the leading growth drivers contributing INR 1.22 trillion in the overall growth of INR 1.73 trillion. The contribution of Digital Media and Online Gaming has recorded a jump from 20% in 2019 to 38% in 2024 and is poised to go up to 50% by 2026. The Indian music segment grew by 10% to reach INR24 billion in 2023, though most of it was advertising led on YouTube. Digital subscription for paid music grew from INR 5 Million to INR 8 Million in the year 2024.

2. Outlook for Company

Your Companys Digital Music Channels viz: Baba Films, Baba Beats and Baba Devotional of devotional songs which is available on various audio and video OTT platforms like "You Tube", "Face Book", "Instagram", "Spotify", "Jio-Saavan", "Amazon Music", "Wynk", "Gaana", "Bollywood Hungama", "Resso" among others has received an encouraging response from the subscribers and viewers and it has started generating a steady stream income for the Company. Your Company has recently acquired digital broadcasting rights of mythological TV shows viz: "Mere Sai", " Yashomati Maiya Ke Nandlala, "Sankatmochan Mahabali Hanuman" and "Suryaputra Karn". Your company is exploring to acquire digital distribution rights for other popular mythological and ctional TV contents and is hopeful to achieve signi cant growth in revenue from monetization of the said contents on digital media.

3. Opportunities, Threats and Challenges

Revenues from licensing of music and digital entertainment content is growing exponentially due to new and more active licensing practices. There are now more Televison Channels, Internet Websites, Mobile Apps and other outlets that need music and other digital entertainment content as primary or secondary content. The demand for digital content is likely to continue to grow giving a huge opportunity to the Company to grow its business. The main source of revenue for digital channels is by way of share of advertising revenue from various channels like "Youtube", "Facebook", "Saavan", "Spotify" etc. An amount of over INR 20,000 Crore was spent on digital advertising in 2023. It is estimated that digital advertising will be three times the print media by 2026 and will also overtake television advertising. Thus, there is tremendous scope of growth for your company in the digital space.

The main threat for the digital media industry is that large technology rms may corner major share of the advertising revenue thereby marginalizing small and medium sized companys like our Company. Similarly Social Media giants can abuse the digital media by exploiting the biases of users to push their content.

4. Internal Control System

The Company has adequate internal control system to ensure operational e ciency and compliance of laws and regulations. The internal control system is reviewed by the Audit Committee from time to time and its suggestions, if any, are implemented. The Company has appointed a rm of Chartered Accountants as Internal Auditor, which submits its report on a quarterly basis. Observations of Internal Auditor are noted and wherever necessary corrective steps are taken.

5. Financial Performance with respect to Operational Performance (i) Sales

Income from post production activity increased to Rs. 6.67 Lakhs from Rs. 6.46 Lakhs in the previous year.

Income from sale of rights of Films and Television Shows was at Rs. 405.09 Lakhs during the year as against Rs. 251.85 Lakhs in the previous year.

Income from monetization and sale of Digital Media content was Rs. 734.41 Lakhs.

(ii) Operating Pro t, Finance Charges, Depreciation and Net Pro t

The Company earned an operating pro t of Rs. 272.32 Lakhs against operating pro t of Rs. 133.24 Lakhs in the previous year. Finance charges during the year were at Rs. 0.26 Lakhs (Previous Year Rs. 0.87 Lakhs). After providing for Depreciation of Rs.5.40 Lakhs (Previous Year Rs. 5.89 Lakhs), and after providing for current taxation of Rs. 68.30 Lacs (Previous Year Rs. 36.03 Lakhs), prior years tax adjustment of Rs. 7.75 Lakhs (Previous Year write back of excess provision for tax Rs. 5.44 Lakhs) and recognition of Deferred Tax Asset of Rs. 1.15 Lakhs (Previous Year Deferred Tax Liability of Rs. 0.44 Lakhs), the Net Pro t of the Company during the current year was Rs. 197.42 Lakhs (Previous Year Rs. 102.21 Lakhs).

(iii) Capital Investment

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During the year ended on 31 March, 2024 the Company has made capital investment of Rs. 2.25 Lakhs (Previous Year Rs. 0.11 Lacs) out of its own sources.

(iv) Working Capital

The Company is not enjoying any working capital nance from bank. The Company is managing its activities with its own funds.

6. Human Resources

The Company maintains healthy, cordial and harmonious relations with all personnel and thereby enhancing the contributory value of the Human Resources.

7. Return on Net Worth

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The Companys return on net worth for the year ended on 31 March, 2024 increased to 7.82% as compared to 4.34% in the previous year. The increase in return on net worth is on account of substantial jump in revenue from monetization and sales of Digital Media content.

8. Changes in Key Financial Ratios

Sr. No.	Particulars	2023-24	2022-23	Details of signi cant changes (25% or more)
1.	Return on Networth (%)	7.82	4.34	Impact of increase in revenue from digital media channels launched by the Company.
2.	Debtors Turnover	24.49	2.30	Impact of increase in revenue and quick realization of sales proceeds.
3.	Inventory Turnover	2.23	The inventory comprises of under production lm/web series.	Not comparable since there was no turnover of inventory in the previous year.
			There was no turnover of inventory.
4.	Interest Coverage Ratio	Not Applicable as the Company does not have any borrowings.	Not Applicable as the Company does not have any borrowings.
5.	Current Ratio	9.83	33.32	Impact of payment to creditors
6.	Debt Equity Ratio	Not Applicable as the Company has no Debts.	Not Applicable as the Company has no Debts.
7.	Operating Pro t Margin (%)	21.82	34.83	Impact of increase in direct costs.
8.	Net Pro t Margin (%)	15.82	26.72	Impact of increase in current tax provision & prior year tax adjustment.

Cautionary Statement

Statements in this report on Management Discussion and Analysis describing the Companys objectives, estimates and expectations are "forward looking" statements. These statements are based on certain assumptions and expectations of future events. The actual results may di er materially from those expressed or implied. Important factors that could make a di erence to the Companys operations include economic conditions a ecting the Entertainment Industry, changes in government regulations, tax regimes, economic developments within India and outside the country and other factors such as litigations and industrial relations. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.