The Management Discussion and Analysis Report has been prepared in
accordance with the provisions of Regulation 34(2)(e) of Listing Regulations, read with
Schedule V(B) thereto, with a view to provide an analysis of the business and Financial
Statement of the Company for FY 2022-23 and should be read in conjunction with the
respective Financial Statements and notes thereon.
A. Economic Overview:
Global Economy:
The global economy is yet again at a highly uncertain moment, with the
cumulative effects of the past three years of adverse shocks most notably, the COVID-19
pandemic and Russias invasion of Ukraine manifesting in unforeseen ways. Spurred by
pent-up demand, lingering supply disruptions, and commodity price spikes, inflation
reached multidecade highs last year in many economies, leading central banks to tighten
aggressively to bring it back toward their targets and keep inflation expectations
anchored. Despite this global scenario, many market analysts believe that this could well
be Indias decade and there are enough reasons and data to back this claim. Recent
data revisions by India suggest that the economy has fared better than previously
believed, despite continuing global uncertainties. The International Monetary Fund (IMF)
expects India to grow by 5.9% in FY 2023 24 and growth estimates over the next five years
range between 6.1% to 7%. While betting on consumption-driven growth is obvious, given
Indias large, young, and rising share of the upper middle income population (with a
high propensity to spend), we believe that investment will play an important role over the
next two years. It is investments, that will provide India with necessary momentum to take
off on a path of sustained domestic demand led growth for decades to come.
Indian Economy:
The Indian economy has witnessed significant developments and
challenges in the financial year 2022-23 and which will continue to make its impact in
financial year 2023-24. The International Monetary Fund (IMF) and other organizations have
forecasted robust growth rates for India, reflecting the resilience of its economy. The
governments focus on infrastructure development, ease of doing business, and various
reforms is expected to drive economic growth. Policies such as Atmanirbhar Bharat and Make
in India are aimed at boosting domestic manufacturing and reducing dependency on imports.
The digital economy is likely to play a crucial role in Indias growth
story. The rapid adoption of technology, digitization of services, and the expansion of
e-commerce are expected to contribute significantly to the economy. The governments
emphasis on job creation and skill development initiatives is expected to improve
employment opportunities. Sectors such as manufacturing, information technology,
healthcare, and renewable energy are likely to witness increased job openings.
The governments focus on fiscal consolidation and reducing the fiscal
deficit will be crucial in ensuring long-term economic sustainability. Striking a balance
between expenditure on social welfare programs and infrastructure development will be a
key consideration. External factors such as international trade policies, geopolitical
tensions, and fluctuations in global commodity prices will continue to influence Indias
economic performance. Adapting to these dynamics and fostering strong trade relations will
be important for sustained growth.
B. Industry Overview
The cable TV industry in India has experienced significant changes and
challenges in recent years. The industry has undergone a major digital transformation with
the implementation of digital cable TV services. The rise of Over-The-Top (OTT) platforms,
such as Netflix, Amazon Prime Video, and Disney+ Hotstar, has presented new competition
for traditional cable TV operators. OTT platforms offer on-demand content and streaming
services, providing viewers with alternative options for entertainment. The industry has
witnessed consolidation among Multi-System Operators (MSOs), with larger players acquiring
smaller operators. This trend has led to the formation of larger MSOs with a wider reach
and stronger bargaining power.
Consumers are increasingly demanding personalized and on-demand
content. Cable TV operators are adapting to this trend by offering value-added services,
interactive features, and bundled packages that cater to the evolving preferences of
viewers. The cable TV industry has seen significant growth in rural areas, driven by
government initiatives like Digital India and the expansion of broadband connectivity.
The industry faces challenges in retaining subscribers and competing
with OTT platforms. However, it also presents opportunities for operators to innovate,
provide value-added services, and leverage technological advancements to enhance the
viewing experience. Its important to note that the cable TV industry in India is dynamic
and subject to ongoing changes and developments. Keeping pace with evolving consumer
demands, technological advancements, and regulatory frameworks will be crucial for the
industrys growth and sustainability.
C. Company Overview:
Catvision Limited, a public limited company incorporated under the
Indian Companies Act, 1956, is listed on the Bombay Stock Exchange (Code: 53118). The
Company was incorporated as Catvision Products Limited on 28th June 1985. The
name of the Company was changed to Catvision Limited after obtaining a fresh certificate
of incorporation from Ministry of Corporate Affairs, Government of India.
The company currently has two joint ventures with the Unitron Group,
Belgium under the names Catvision Unitron Pvt. Ltd., based in India and Unicat Ltd. based
in Dubai. The JV companies were set up to develop digital broadcast technology which was
then licensed to the JV partners. During the year under review the JV at Dubai, Unicat
Ltd., was liquidated w.e.f 12th December, 2023.
The company has its head office and factory at its premises in Noida.
It operates through 4 business divisions.
1. Cable TV & GPON: Manufacture and sales of cable TV and
GPON (Gigabit Passive Optical Network) products. These products are used in cable TV and
high-speed Internet access networks built on optic fibre cable.
2. Hospitality: Installation of IPTV systems and provision of
Pay TV services to premium hotels and hospitals.
3. Channel Distribution: Distribution of foreign TV channels to
cable, DTH and OTT operators.
4. Online Sales: Online sales of set top boxes and IOT devices.
D. Business Overview
The business prospects of the company can be assessed through a SWOT
analysis.
STRENGTHS: The company has not wavered from its core competence: sales
of video and internet products and services. Its business divisions are segmented on the
basis of customers of these products. In each division the company has positioned itself
as a niche player. For instance, the hospitality division targets only 5-star hotels. The
cable TV & GPON division targets cable operators and internet service providers in
tier-2 and tier-3 towns. Within these niches the company has acquired or has the potential
to acquire a leadership position.
WEAKNESSES: The new policy on the uplinking & downlinking of
television channels announced by the government has quadrupled the net worth requirement
for obtaining a license for a news channel. The companys current net worth falls
short of meeting this increase. That sets a cap on the no. of channels the company can
distribute. In the GPON business the company is a late starter. The online business
requires strong brand awareness which the company lacks in the consumer space.
OPPORTUNITIES: The Indian economy is the fastest growing large economy
in the world. This is lifting all boats. As a result, both hospitality and channel
distribution are growing well. Broadcasting is shifting to OTT. This represents a big
opportunity for the company to distribute OTT channels, more so because net worth is not
required for the purpose. The GPON business has enormous potential to grow as penetration
of wired internet is still only 17% in India. The market for IOT devices has enormous
potential as Indian homes become smarter.
THREATS: The main threat is from technological disruption. The
disruption in traditional broadcasting from linear (traditional TV) to non-linear (OTT)
has brought the big internet service providers into OTT channel distribution. GPON
networks are threatened by 5G and satellite-based internet. The online IOT devices market
has become big enough to attract big brands. It is to counter such threats that the
companys strengths come into play.
E. Risks and Concerns:
Industry Risk:
Your company has started manufacturing GPON products which are
classified as telecom products. Telecom products are subject to close regulation by the
government on account of security concerns
Company specific Risks:
Your company has a high dependency on imports in respect of which it
faces the risk in currency fluctuation.
F. Internal Control Systems:
Your Company has aligned its current systems of internal financial
control with the requirement of Companies Act 2013. The Internal Control is intended to
increase transparency and accountability in an organizations process of designing
and implementing a system of internal control. The Company has successfully laid down the
framework and ensured its effectiveness. Your companys internal controls are
commensurate with its size and the nature of its operations. These have been designed to
provide reasonable assurance with regard to recording and providing reliable financial and
operational information, complying with applicable statutes, safeguarding assets from
unauthorized use, executing transactions with proper authorization and ensuring compliance
with corporate policies. The Audit Committee of the Board oversees the adequacy of the
internal control environment through regular reviews of the audit findings and monitoring
implementations of the recommendations through compliance reports submitted to the
Company.
G. Changes in Key Financial Ratios:
Ratio |
2022-23 |
2021-22 |
Change |
Explanation to significant change (25% or
more change) |
Debtors turnover |
4.01 |
3.46 |
15.90% |
|
Inventory turnover |
1.78 |
1.54 |
15.6% |
|
Interest Coverage |
2.90 |
3.31 |
12.38% |
|
Current |
3.63 |
2.12 |
71.22% |
Due to increased current assets |
Debt-Equity |
0.26 |
0.60 |
56.66% |
Due to decreased liabilities on account
of loan repayment. |
Operating |
0.01 |
0.03 |
66.66% |
Due to high operating cost
and low profit margins. |
Profit Margin% |
|
|
|
|
Net Profit Margin% |
-0.03 |
0.01 |
-400% |
Due to high operating and
non-operating costs and low profit margins. |
Return on Net Worth% |
-0.04 |
0.01 |
-500% |
Due to decrease in overall
profitability of the Company. |
H. Human Resources/Industrial Relations, including number of people
employed:
Your Companys industrial relations continued to be harmonious
during the year under review. Your company conducts regular in-house training programs for
employees at all levels. The focus is on maintaining employee motivation at a high level
with stress on leadership development.
I.
Disclaimer Clause:
Statements, estimation and expectation made in this Management
Discussion and Analysis Report describing the
Companys expectation, objectives, and projections may be
"forward looking statements" within the meaning of applicable securities laws
and regulations. Actual results could differ materially from those expressed or implied in
the statement. The important factors that could make a difference to your Companys
operations include global and domestic demand and supply condition, economic conditions
affecting demand/supply, price conditions in the domestic and international markets, and
changes in Government regulations, tax laws, other statutes and such other factors which
are material to the business of the Company.
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