Baba Arts Ltd Management Discussions

1. Indury ructure and Development (a) Indian Economy

India is poised to lead e global economy once again, wi e International Monetary Fund (IMF) projecting it to remain e fae growing major economy over e next two years. According to e April 2025 edition of e IMFs World Economic Outlook, Indias economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead over global and regional peers.

(b) Indury Scenario

According to e recent report on Indian Media & Entertainment Indury published by EY "e Indian Media and Entertainment (M&E) sector grew 3.3% in 2024 from INR 2.30 triillion to INR 2.50 trillion (US$ 29.40 billion). Digital Media emerged as e large segment, accounting for 32% revenue share. However, subscription revenues fell due to a decrease in Pay TV homes and poor eatrical performances by lms. Overall, e sector is projected to grow by 7.2% in 2025, reaching INR 2.68 trillion (US$ 31.6 billion)..

2. Outlook for Company

e landscape of e Indian Media and Entertainment (M&E) has undergone a significant transformation, wi digital media nally breaking televisions 20-year ronghold to become e large segment in e indury. is hioric mileone marks e dawn of a new era, one where digital platforms rede ne not only e creation, diribution, and monetization of content but also e very core of what e M&E sector represents. Keeping in line wi e overall grow of digital media, your Companys Digital Music Channels viz: Baba Films, Baba Beats and Baba Devotional continue to generate eady ream of revenue to e Company. During e year your Company has launched a new channel "Haey Raho" which is also getting an encouraging response from e subscribers. Going forward, your Companys main grow driver will be in e digital media sector, which will be contributing major share of its revenue and pro tability.

3. Opportunities, reats and Challenges

e bigge advantage of digital media is at e digital content goes to e global audience. ere are no geographical limitations, ereby giving an opportunity to content creators to garner revenue from various countries. e ability to monetise digital content is not a limited practice and comes in many forms. Today, rough subscription models, pay-per-view and advertising rough digital media, companies can make eir pro ts.

One of e major challenges at has always plagued e media indury is Piracy. On account of piracy, revenues are lo rough violation of limited rights given to e users. Anoer significant problems is e issue of audience attention. e Audience is getting used to Short Videos and Reels.

irdly making money rough monetization of digital content is also not easy. Ads alone are not enough. Subscription model is also not very effective. New forms of generating revenue have to be developed.

To meet ese challenges and reats, it will be necessary for media companies to use advanced analytics, AI- driven recommendations to engage viewers and maintain a regular ream of revenue.

4. Internal Control Syem

e Company has adequate internal control syem to ensure operational efficiency and compliance of laws and regulations. e internal control syem is reviewed by e Audit Committee from time to time and its suggeions, if any, are implemented. e 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 eps are taken.

5. Financial Performance wi respect to Operational Performance ( i ) sales

e Companys Po Production udio did not generate any income during e year as again Rs. 6.67 Lakhs in e previous year.

Income from sale of rights of Films and Television Shows was at Rs. 184.54 Lakhs during e year as again Rs. 405.09 Lakhs in e previous year.

Income from monetization and sale of Digital Media content was Rs. 374.35 Lakhs vis a vis Rs. 734.41 Lakhs in e previous year.

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

e Company earned an operating profit of Rs. 194.07 Lakhs again operating profit of Rs. 272.32 Lakhs in e previous year. After providing for Depreciation of Rs. 6.00 Lakhs (Previous Year Rs. 5.40 Lakhs), and after providing for current taxation of Rs. 49.79 Lakhs (Previous Year Rs. 68.30 Lakhs), write back of excess provision for tax Rs. 0.28 Lakh (Previous Year short provision of tax in prior years Rs. 7.75 Lakhs) and provision for Deferred Tax Liability of Rs. 0.72 Lakhs (Previous Year recognition of Deferred Tax Asset of Rs. 1.15 Lakhs), e Net Pro t of e Company during e current year was Rs. 143.84 Lakhs (Previous Year Rs. 197.42 Lakhs).

(iii) Capital Invement

During e year ended on 31 March, 2025 e Company has made capital invement of Rs. 6.16 Lakhs (Previous Year Rs. 2.24 Lakhs) out of its own sources.

(iv) Working Capital

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

6. Human Resources

e Company maintains healy, cordial and harmonious relations wi all personnel and ereby enhancing e contributory value of e Human Resources.

7. Return on Net Wor

e Companys return on net wor for e year ended on 31 March, 2025 was 5.23% as compared to 7.82% in e previous year. e fall in return on net wor is on account of almo 50% reduction in total income from operations.

8. Changes in Key Financial Ratios

Sr. No.Particulars2024-252023-24Details of significant changes (25% or more)

1Return on Networ (%)5.237.82Impact of lower income from operations during e current year.

2.Debtors Turnover5.4024.49Impact of lower income from operations during e current year.

3Inventory Turnover1.012.23Impact of lower income from operations during e current year.

4Intere Coverage RatioNot Applicable as e Company does not have any borrowings.Not Applicable as e Company does not have any borrowings.

5Current Ratio10.439.83Impact of payment to creditors

6Debt Equity RatioNot Applicable as e Company has no Debts.Not Applicable as e Company has no Debts.

7Operating Pro t Margin (%)28.1921.82Impact of decrease in oer overheads.

8Net Pro t Margin (%)20.8915.82Impact of decrease in oer overheads.

Cautionary atement

atements in is report on Management Discussion and Analysis describing e Companys objectives, eimates and expectations are "forward looking" atements. ese atements are based on certain assumptions and expectations of future events. e actual results may differ materially from ose expressed or implied. Important factors at could make a difference to e Companys operations include economic conditions affecting e Entertainment Indury, changes in government regulations, tax regimes, economic developments wiin India and outside e country and oer factors such as litigations and indurial relations. e Company assumes no responsibility to publicly amend, modify or revise any forward-looking atements, on e basis of any subsequent developments, information or events.