Baba Arts Ltd Management Discussions

?‚? Industry Structure and Development

?‚? Indian Economy

India is poised to lead the global economy once again, with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. According to the April 2025 edition of the 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.

?‚? Industry Scenario

According to the recent report on Indian Media & Entertainment Industry published by EY "the 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 the largest segment, accounting for 32% revenue share. However, subscription revenues fell due to a decrease in Pay TV homes and poor theatrical performances by films. Overall, the sector is projected to grow by 7.2% in 2025, reaching INR 2.68 trillion (US$ 31.6 billion)..

?‚? Outlook for Company

The landscape of the Indian Media and Entertainment (M&E) has undergone a significant transformation, with digital media finally breaking televisions 20-year stronghold to become the largest segment in the industry. This historic milestone marks the dawn of a new era, one where digital platforms redefine not only the creation, distribution, and monetization of content but also the very core of what the M&E sector represents. Keeping in line with the overall growth of digital media, your Companys Digital Music Channels viz: Baba Films, Baba Beats and Baba Devotional continue to generate steady stream of revenue to the Company. During the year your Company has launched a new channel "Hastey Raho" which is also getting an encouraging response from the subscribers. Going forward, your Companys main growth driver will be in the digital media sector, which will be contributing major share of its revenue and profitability.

?‚? Opportunities, Threats and Challenges

The biggest advantage of digital media is that the digital content goes to the global audience. There are no geographical limitations, thereby giving an opportunity to content creators to garner revenue from various countries. The ability to monetise digital content is not a limited practice and comes in many forms. Today, through subscription models, pay-per- view and advertising through digital media, companies can make their profits.

One of the major challenges that has always plagued the media industry is Piracy. On account of piracy, revenues are lost through violation of limited rights given to the users. Another significant problems is the issue of audience attention. The Audience is getting used to Short Videos and Reels.

Thirdly making money through 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 these challenges and threats, it will be necessary for media companies to use advanced analytics, AI- driven recommendations to engage viewers and maintain a regular stream of revenue.

?‚? Internal Control System

The Company has adequate internal control system to ensure operational e ?ƒciency 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 firm 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.

?‚? Financial Performance with respect to Operational Performance ( i ) sales

The Companys Post Production Studio did not generate any income during the year as against Rs. 6.67 Lakhs in the previous year.

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

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

?‚? Operating Profit, Finance Charges, Depreciation and Net Profit

The Company earned an operating profit of Rs. 194.07 Lakhs against operating profit of Rs. 272.32 Lakhs in the 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), the Net Profit of the Company during the current year was Rs. 143.84 Lakhs (Previous Year Rs. 197.42 Lakhs).

?‚? Capital Investment

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

?‚? Working Capital

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

?‚? Human Resources

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

?‚? Return on Net Worth

The Companys return on net worth for the year ended on 31 st March, 2025 was 5.23% as compared to 7.82% in the previous year. The fall in return on net worth is on account of almost 50% reduction in total income from operations.

?‚? Changes in Key Financial Ratios

Sr. No.	Particulars	2024- 25	2023- 24	Details of significant changes (25% or more)
1	Return on Networth (%)	5.23	7.82	Impact of lower income from operations during the current year.
2.	Debtors Turnover	5.40	24.49	Impact of lower income from operations during the current year.
3	Inventory Turnover	1.01	2.23	Impact of lower income from operations during the current year.
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	10.43	9.83	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 Profit Margin (%)	28.19	21.82	Impact of decrease in other overheads.
8	Net Profit Margin (%)	20.89	15.82	Impact of decrease in other overheads.

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.