Chatterbox Technologies Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled "Risk Factors" on page 23Error! Bookmark not defined., which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources.

Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the ICDR Regulations and restated as described in the report of our auditor dated February 04, 2025 which is included in this Draft Red Herring Prospectus under "Financial Statements" on page 160. The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

Business Overview:

Our Company was incorporated in India under the provisions of the Companies Act, 2013 on March 03, 2016. The Corporate Identity Number of the Company is U93000MH2016PLC273833. The Company is primarily engaged in providing digital and influencer marketing services, and social media management services through two segments, viz.,

"Chtrbox" and "Chtrsocial".

The "Chtrbox" and "Chtrsocial" have been briefly discussed below:

C) Chtrbox:

Chtrbox is an influencer and marketing platform and agency in India, connecting brands/ products and social media influencers. Since 2016, the company has managed approximately thousand plus campaigns with approximately 500 Influencers and content creators to reach and engage large number of subscribers of social media platforms such as Instagram. Chtrbox uses the latest technology like HypeAuditor with the strategy to build influencer content and campaigns mainly for marketing and brand building on social media platforms. As of now we primarily operate in India, with our HQ in Mumbai.. We have successfully rendered our services outside India in international markets like Singapore, UAE, USA and UK helping us build a global footprint. As part of our expansion strategy, we are targeting key international markets such as the UAE and Southeast Asia, where influencer marketing is on the rise.

D) Chtrsocial:

ChtrSocial is the Social Media Management and Brand Design wing of Chtrbox. With creative talents in strategy, content, design and production ChtrSocial aims at humanizing brands with creative social media content, short form videos production and strategic storytelling. Key markets where ChtrSocial services provided in India includes Mumbai, Delhi, and Bangalore and Internationally, weve previously serviced inbound clients from the USA, however, as on date we are not providing Chtrsocial services to any of the international clients.

For more details of our Business, please refer to chapter titled "Our Business" on page 111.

Significant Developments Subsequent to the Last Financial Period

In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Draft Red Herring Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

Key factors affecting the results of operation:

Our results of operations and financial condition are affected by numerous factors, including those discussed in the section titled "Risk Factors" on page 23. In particular, we believe that the following specific factors have had a significant impact on our results of operations and financial condition during the period under review and may continue to impact our results of operations and financial condition in the future.

Our ability to geographical within India and Aboard;

Our ability to retain and increase revenue contributed by existing clients and establish new client relationships; Our ability to provide Integrated service offerings to our customers; Our ability to retain our existing exclusive influencers and to appoint/ hire new exclusive influencers; Our ability to changes with the ever-developing trends, technologies and preferences in the sectors we cater too; Our ability to manage manpower costs; Our ability to compete effectively against current and future competitors etc

RESULTS OF OPERATIONS

Description of the major components of revenue and expense items: -

Our total revenue consists of Professional fees from Digital and Influencer marketing and Professional fees from Social media management and Other income.

Revenue

Revenue from Operations: Our revenue from operations consists of Professional fees from Digital and Influencer marketing and Professional fees from Social media management.

Other income: Our Other Income mainly comprises of Interest Income on Bank Deposits.

Expenses

Cost of Services rendered comprised of payment to influencers, campaign expenses including ad production costs, equipment hire, charges towards social media management and other incidental direct costs. Employee Benefit expense includes, Directors Remunerations, salaries & stipend, contribution to PF and other funds and Gratuity expenses and staff welfare expenses.

Other expenses mainly include management fees, legal and professional fees, office rent, marketing and promotion expenses, server charges, bad debts write off etc.

Depreciation and Amortization Expenses: Depreciation and Amortization Expenses comprised depreciation on tangible fixed assets.

Tax Expense- Our tax expense or credit for the period represents the tax payable on the current periods taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary & permanent differences, as applicable.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under "Auditors Report and Financial Information of our Company" on page 101.

DISCUSSION ON RESULTS OF OPERATIONS:

The following discussion on results of operations should be read in conjunction with the audited financial results of our Company for the period ended December 31, 2024 and financial years ended March 31, 2024, 2023 and 2022.

For the period ended December 31, 2024

( lakhs)

Particulars	For the period ended 31.12.24	% of Total Income
Income
Revenue from Operations	4,477.22	99.49
Other Income	22.97	0.51
Total Revenue	4,500.19	100.00
Expenditure
Cost of Services rendered	3,111.95	69.15
Employee Benefit Expenses	405.67	9.01
Other Expenses	118.22	2.63
Total (B)	3,635.84	80.79
Profit Before Interest, Depreciation and Tax	864.35	19.21
Depreciation and Amortisation Expenses	7.82	0.17
Profit Before Interest and Tax	856.53	19.03
Financial Charges	0.00	-
Profit before Taxation	856.53	19.03
Total Taxes	214.20	4.76
Profit After Tax but Before Extra-ordinary Items	642.33	14.27

Total Income: We recorded Revenue from Operations of 4477.22 Lakhs and Other Income earned by us was 22.97 Lakhs. Total Income for the period ended December 31, 2024 was 4500.19 Lakhs. The operational revenue includes Rs 3946.88 Lakhs from Professional fees from Digital and Influencer marketing services and Rs 530.34 Lakhs from Professional fees from Social media management services. The other income is interest income from bank deposits and interest on outstanding balances of related parties.

Total Operating Expenses: The total operating expenditure amounted to 3,635.84 lakhs which was 80.79% of the Total Income. It includes payment towards Cost of Services rendered of 3,111.95 Lakhs, Employee benefit expenses of 405.67 Lakhs and Other Expenses as disclosed in next para.

Other Expenses stood at 118.22 lakhs which was 2.63% of the Total Income. Other expenses mainly include Legal and Professional fees Rs 46.87 Lakhs, Office Rent Rs 13.93 Lakhs, Marketing and Promotion charges Rs 8.28 Lakhs, Software & Technology costs Rs 17.70 Lakhs, loss due to foreign exchange fluctuations Rs 6.28 Lakhs, provision of doubtful debts Rs 4.78 Lakhs etc.

Employee Benefit Expenses stood at 405.67 lakhs which was 9.01% of the Total Income. The employee benefits expenses include director remuneration, salaries and stipend, contribution to PF and other funds, gratuity expenses and staff welfare expenses.

Depreciation and Amortization Expenses: Depreciation and Amortization cost worked out to 7.82 lakhs, which is 0.17% of our Total Income.

Financial Charges: Financial charges were Nil for the period.

Total Tax Expenses: Tax Expenses for the period were 214.20 Lakhs.

Profits: Our PBDIT stood at 864.35 lakhs for the period ended December 31, 2024 with the PBDIT margin of 19.21%. We recorded Net Profit after tax of 642.33 lakhs. Our Net Profit Margin stood at 14.27%.

Comparison of Financial Years ended March 31, 2024, 2023 and 2022

( lakhs)

Particulars	31.03.24	31.03.23	31.03.22
Income
Revenue from Operations	5,485.37	3,991.46	3,171.89
Increase/Decrease (%)	37.43%	25.84%
Other Income	51.60	28.53	26.49
Total Income	5,536.97	4,019.99	3,198.38
Increase/Decrease (%)	37.74%	25.69%
Expenditure
Cost of Services rendered	3,697.23	3,001.31	2,369.23
Increase/Decrease (%)	23.19%	26.68%
% to Total Income	66.77%	74.66%	74.08%
Employee Benefit Expenses	431.05	510.44	358.21
Increase/Decrease (%)	-15.55%	42.50%
% to Total Income	7.78%	12.70%	11.20%
Other Expenses	201.86	369.93	386.22
Increase/Decrease (%)	-45.43%	-4.22%
% to Total Income	3.65%	9.20%	12.08%
Total Operating Expenditure	4,330.14	3,881.68	3,113.66
Increase/Decrease (%)	11.55%	24.67%
% to Total Income	78.20%	96.56%	97.35%
PBDIT	1,206.83	138.31	84.72
Increase/Decrease (%)	772.55%	63.26%
% to Total Income	21.80%	3.44%	2.65%
Depreciation and Amortization Expenses	15.88	0.83	0.98
Increase/Decrease (%)	1813.25%	-15.31%
% to Total Income	0.29%	0.02%	0.03%
Profit Before Interest and Tax	1,190.95	137.48	83.74
Increase/Decrease (%)	766.27%	64.17%	10238.27%
% to Total Income	21.51%	3.42%	2.62%
Financial Charges	0.00	0.00	0.00
Increase/Decrease (%)	NA	NA
Particulars	31.03.24	31.03.23	31.03.22
% to Total Income	0.00%	0.00%	0.00%
Profit before Taxation	1,190.95	137.48	83.74
Increase/Decrease (%)	766.27%	64.17%
% to Total Income	21.51%	3.42%	2.62%
Total Tax Expenses	338.33	9.64	17.30
Increase/Decrease (%)	3409.65%	-44.28%
% to Total Income	6.11%	0.24%	0.54%
Profit After Tax but Before Extra ordinary Items	852.62	127.84	66.44
Increase/Decrease (%)	566.94%	92.41%
% to Total Income	15.40%	3.18%	2.08%
Total Adjustments for Extraordinary Items	0.00	0.00	0.00
Increase/Decrease (%)	NA	NA
% to Total Income	0.00%	0.00%	0.00%
Profit After Tax after Extra ordinary Items	852.62	127.84	66.44
Increase/Decrease (%)	566.94%	92.41%
% to Total Income	15.40%	3.18%	2.08%

Comparison of FY 2024 with FY 2023: Revenue from operations & Other Income Revenue breakup:

Particulars	31.03.24	31.03.24	31.03.23	31.03.23
	( in lakhs)	(%)	( in lakhs)	(%)
Chtrbox
Brand Solutions	2,713.08	49.46	2,413.05	60.45
Represent	2,420.75	44.13	1,432.40	35.89
Chtrsocial	351.54	6.41	146.01	3.66
Total	5,485.37	100.00	3,991.46	100.00

The Revenue from operations for the FY 2024 is 5,485.37 lakhs as compared to 3,991.46 lakhs during the FY 2023 showing an increase of 37.43%. This overall increase in sales was mainly due to increase in sales of Chtrsocial by more than 100% and increase in sales from Chtrbox Represent due to business generated by addition of exclusive influencers and more business generated by our existing exclusive influencers during the year.

FY 2024 compared to FY 2023.

The revenue during FY 2024 comprises of revenue from Chtrbox Brand Solutions services of 2,713.08 Lakhs, Chtrbox- Represent services of 2,420.75 Lakhs and Chtrsocial services of 351.54 Lakhs against FY 2023 revenue comprises of revenue from Chtrbox Brand Solutions services of 2,413.05 Lakhs, Chtrbox- Represent services of 1,432.40 Lakhs and Chtrsocial services of 146.01 Lakhs showing an overall increase of 37.43% during FY 2024.

Other Income for the FY 2024 and FY 2023 was 51.60 lakhs and 28.53 lakhs respectively, comprises of Interest on Bank Deposits, Interest on receipt of delayed payment under MSME act, profit from fluctuation of foreign exchanges, Interest on Income tax refund and sundry balances written off.

Hence the Total Income for the FY 2024 and FY 2023 was 5,536.97 lakhs and 4,019.99 lakhs respectively.

Expenditure: Cost of Services rendered

Cost of Services rendered was 3,688.82 lakhs for FY 2024 and 3,000.32 lakhs for FY 2023. Cost of Services rendered shows an increase of 22.95% during FY 2024 due to increase in Revenue. The below table indicates the breakup of Cost of Services based on revenue breakup described above:

Cost of Services breakup:

Particulars	31.03.24	31.03.24	31.03.23	31.03.23
	( in lakhs)	(%)	( in lakhs)	(%)
Break-up
Payment to influencers	3,604.44	97.49	2,939.18	97.93
Campaign and ad production related expenses	84.38	2.28	59.83	1.99
Social media marketing expenses	8.41	0.23	2.30	0.08
Total	3,697.23	100.00	3,001.31	100.00

Cost of Services rendered comprised of payment to influencers, campaign expenses including ad production costs, equipment hire, charges towards social media management and other incidental direct costs. The increase in cost of services during FY2024 is mainly on account of increase in revenue from operations.

Apart from payment to influencers, there was Campaign and ad production related expenses of 84.38 Lakhs and social media marketing spends 8.41 Lakhs for FY 2024 and Campaign and ad production related expenses of 59.83 Lakhs and social media marketing spends of 2.30 Lakhs for FY 2023.The increase campaign and ad production related expenses and social media marketing expenses is mainly due to increase in revenue of Chtrsocial.

From the above table, it can be understood that the overall cost of services has come down as a % of total revenue during FY 2024 to 66.77% as compared to 74.66% during FY 2023 showing a decrease of appx 8%. The main reason for the fall in cost of services is on account of higher revenue in chtrsocial and chtrbox brand solutions which includes consultancy and advisory services for marketing and branding, content strategy, social media strategy and digital marketing for the clients where our major cost is our employee cost.

Employee Benefit Expenses

Employee Benefit Expenses decreased from 510.44 lakhs for the financial year ended March 31, 2023 to 431.05 lakhs for FY 2024 showing a decrease of 15.55%. This decrease was mainly due to Nil directors remuneration in FY2024. Employee Benefit Expenses stood at 7.78% and 12.70% of Total income for FY 2024 and FY 2023, respectively.

Other Expenses

Other Expenses decreased to 201.86 lakhs for FY 2024 from 369.93 lakhs for FY 2023 showing a decrease of 45.43%. Other Expenses was 3.65% of Total income during FY 2024 as against 9.20% during FY 2023, this reduction was mainly due to reduction in management fees, legal and professional fees, provision for doubtful debts etc.

EBIDTA

EBIDTA increased from 138.31 lakhs for FY 2023 to 1,206.83 lakhs for FY 2024 mainly due to increase in overall revenue. Our gross profit (revenue less cost of services rendered) for FY 2024 stood at 1,787.17 lakhs and the same turnover normalized at gross profit rate of FY 2023 would have been 1,423.57 lakhs. Further increase in gross profit is on account of higher revenues in chtrsocial and chtrbox brand solutions which includes consultancy and advisory services for marketing and branding, content strategy, social media strategy and digital marketing. Apart from above, reduction in management fees, remuneration to director, legal and professional fees, provision for doubtful debts etc. contributed to EBIDTA margin of 21.80% of the Total income for FY 2024 as against 3.44% during FY 2023

Depreciation

Depreciation on fixed assets was 0.29% of Total income during FY 2024 as compared to 0.02% during FY 2023. The total depreciation during FY 2024 was 15.88 lakhs and during FY 2023 it was 0.83 lakhs.

Interest and Financial Charges

Interest and Financial Charges were Nil during both the period as there was no debts and accordingly there was no such charges.

Profit after Tax and restatement adjustment (PAT)

PAT increased from 127.84 lakhs for the FY 2023 to 852.62 lakhs in FY 2024. This increase was mainly on account of increase in EBITDA as explained above which has translated into higher PAT margin for our Company.

Comparison of FY 2023 with FY 2022:

Revenue from operations & Other Income

Particulars	31.03.23	31.03.23	31.03.22	31.03.22
	( in lakhs)	(%)	( in lakhs)	(%)
Chtrbox
Brand Solutions	2,413.05	60.45	2,268.98	71.53
Represent	1,432.40	35.89	902.91	28.47
Chtrsocial	146.01	3.66	0.00	0.00
Total	3,991.46	100.00	3,171.89	100.00

The Revenue from operations for the FY 2022 is 3,171.89 lakhs as compared to 3,991.46 lakhs during the FY 2023 showing an increase of 25.69% during FY 2023. This overall increase in sales was mainly due to addition of exclusive influencers and increased business generated by our exclusive influencers and further due to acqui-hire of Blazonion and launch of Chtrsocial during FY 2023 compared to FY 2022.

The revenue during FY 2022 comprises of revenue from Chtrbox Brand Solutions services of 2,268.98 Lakhs, Chtrbox- Represent services of 902.91 Lakhs and Chtrsocial services of Nil Lakhs against FY 2023 revenue comprises of revenue from Chtrbox Brand Solutions services of 2,413.05 Lakhs, Chtrbox- Represent services of 1,432.40 Lakhs and Chtrsocial services of 146.01 Lakhs showing an overall increase of 25.84% during FY 2023.

Other Income for the FY 2022 and FY 2023 was 26.49 lakhs and 28.53 lakhs respectively, comprises of Interest on

Bank Deposits, profit from foreign exchange fluctuations, and sundry balances written off during both the years. Hence the Total Income for the FY 2022 and FY 2023 was 3,198.38 lakhs and 4,019.99 lakhs respectively.

Expenditure: Cost of Services rendered

Cost of Services rendered was 2,369.23 lakhs for FY 2022 and 3,001.31 lakhs for FY 2023. Cost of Services rendered shows an increase of 26.68% during FY 2023 due to increase in Revenue. The below table indicates the breakup of Cost of Services rendered:

Cost of Services breakup:

Particulars	31.03.23	31.03.23	31.03.22	31.03.22
	( in lakhs)	(%)	( in lakhs)	(%)
Break-up
Payment to influencers	2,939.18	97.93	2,362.74	99.73
Campaign and ad production related expenses	59.83	1.99	6.49	0.27
Social media marketing expenses	2.30	0.23	0.00	0.00
Total	3,001.31	100.00	2,369.23	100.00

Cost of Services rendered comprised of payment to influencers, campaign expenses including ad production costs, equipment hire, charges towards social media management and other incidental direct costs. The increase in cost of services during FY2023 over FY 2022 is mainly on account of increase in revenue from operations.

Apart from payment to influencers, there was Campaign expenses of 6.49 Lakhs and professional charges towards social media management of Nil Lakhs for FY 2022 and Campaign expenses of 59.83 Lakhs and professional charges towards social media management of 2.30 Lakhs for FY 2023.

From the above table, it can be understood that the overall cost of services has remained at similar levels as a % of total revenue during FY 2022 to 74.08% as compared to 74.64% during FY 2023 showing a slight increase of 0.56%.

Employee Benefit Expenses

Employee Benefit Expenses increased to 510.44 lakhs for the financial year ended March 31, 2023 from 358.21 lakhs for FY 2022 showing an increase of 42.50%. This increase was mainly due to increase in Salaries and stipend to employees to 367.56 lakhs for the FY 2023 from 289.12 lakhs for FY 2022 due to acquihire of Blazonion (Chtrsocial) in July 2022 and increase in Directors Remuneration and remuneration to relative of directors to 130.34 lakhs for the FY 2023 from 58.00 lakhs for the FY 2022. Further, the total number of employees worked during the year increased to 118 for FY 2023 compared to 100 in FY2022. Employee Benefit Expenses stood at 11.20% and 12.70% of Total income for FY 2022 and FY 2023, respectively.

Other Expenses

Other Expenses remained to 386.22 lakhs for FY 2022 and to 370.92 lakhs for FY 2023 showing no much difference in absolute terms, however, Other Expenses was 12.08% of Total income during FY 2022 and 9.23% during FY 2023, this reduction was mainly due to reduction in management fees charged by parent Company due to reduction of services availed from QYOU Media Inc, increase in legal and professional charges and bad debts.

EBIDTA

EBIDTA increased to 138.31 lakhs for FY 2023 from 84.72 lakhs for FY 2022 mainly due to reduction in increase in revenue, reduction in management fees, increase in legal and professional charges and bad debts and increase in employee benefit expenses as discussed above. During FY 2022, our Company recorded EBIDTA margin of 2.65% of the Total income as against 3.44% during FY 2023.

Depreciation

Depreciation on fixed assets was 0.03% of Total income during FY 2022 as compared to 0.02% during FY 2023. The total depreciation during FY 2022 was 0.98 lakhs and during FY 2023 it was 0.83 lakhs.

Interest and Financial Charges

Interest and Financial Charges were Nil during both the period as there was no debts and accordingly there was no such charges.

Profit after Tax and restatement adjustment (PAT)

PAT increased to 127.84 lakhs for the FY 2023 from 66.44 lakhs in FY 2022. This increase was mainly on account of reduction in management fees, increase in legal and professional charges and bad debts and increase in employee benefit expenses as discussed above.

Cash Flows

The following table sets forth certain information concerning our cash flows for the periods indicated:

( in lakhs)

PARTICULARS	31.12.24	31.03.24	31.03.23	31.03.22
Net cash generated from operation	-131.63	430.78	-203.48	191.44
Net cash (used) in investing activities	237.04	-537.37	-194.00	23.58
Net cash generated/(used) in financing activities	0.00	0.00	0.00	0.00
Net Increase / (Decrease) in cash and bank balances	105.41	-106.59	-397.48	215.02
Cash and bank balances at the beginning of the year	152.94	259.53	657.01	441.99
Cash and bank balances at the end of the year	258.35	152.94	259.53	657.01

FACTORS THAT MAY AFFECT THE RESULTS OF THE OPERATIONS:

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, during the period/ years under review there have been no transactions or events, which in our best judgment, would be considered "unusual" or "infrequent".

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled ‘Risk Factors beginning on page 23 of the Draft Red Herring Prospectus. To our knowledge, except as we have described in the Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue, or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" on page 23 in the Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known.

Other than as described in the section titled "Risk Factors" beginning on page 23 of this Draft Red Herring Prospectus, to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

Changes in revenues during the last three fiscal years are explained in "Managements Discussion and Analysis of Financial Condition & Results of Operations" under the subsection "Comparison of Financial Years ended March 31, 2024, 2023 and 2022" under the respective paragraphs titled "Operating Revenue".

6. Total turnover of each major industry segment in which the issuer company operated.

Our Company is a influencer marketing platform and agency in India, connecting brands/ products and social media influencers. Relevant industry data, as available, has been included in the chapter titled "Industry Overview" on page 98 of this Draft Red Herring Prospectus. For more details, please refer chapter titled "Our Business" beginning on page 111 of this Draft Red Herring Prospectus.

7. Status of any publicly announced new products or business segment.

Please refer to the chapter titled "Our Business" beginning on page 111 of this Draft Red Herring Prospectus for new products or business segments.

8. The extent to which business is seasonal.

Our business is seasonal in nature. For details, please refer to "Risk Factor no. 8-Our results of operations and our key business measures are subject to quarterly variations that could cause fluctuations in our results of operations " on page 28 of the DRHP.

9. Any significant dependence on a single or few suppliers or customers.

Particulars	31.12.2024	FY 2024	FY 2023	FY 2022
Customers contribution Top 10 (%)	35.47	59.48	53.20	52.57
Suppliers contribution Top 10 (%)	33.16	37.63	24.12	23.10

10. Competitive conditions.

Competitive conditions are as described under "Industry Overview" and "Our Business" on pages 98 and 111, respectively.