Cineline India Ltd Management Discussions

Management Discussion and Analysis Report

Global Economy Overview

The global economy is expected to experience moderate growth, according to the IMFs World Economic Outlook (April 2026). While economic activity remains positive, the growth momentum is expected to soften in the near term. Global growth is projected to moderate to 3.1% in CY 2026 before improving marginally to 3.2% in CY 2027. These projections reflect a downward revision from earlier estimates.

The moderation is attributed to rising trade tensions and the outbreak of conflict in the Middle East at the end of February 2026. These developments affected commodity markets, inflation expectations and financial conditions. At the same time, continued technology-related investment and easing trade tensions are expected to support economic activity.

Growth in advanced economies is projected at 1.8% in CY 2026, compared with 1.9% in CY 2025. The US economy is expected to grow by 2.3%. The Euro Area and Japan are projected to expand by 1.1% and 0.7%, respectively.

Growth across emerging market and developing economies (EMDEs) is projected to moderate to 3.9% in CY 2026 from 4.4% in CY 2025. The slowdown reflects weaker expansion across several major economies. Chinas growth is projected at 4.4%, influenced by softer domestic demand and continued adjustments in the property sector.

India is projected to grow by 6.5% in CY 2026, supported by domestic consumption, investment activity and ongoing structural and policy reforms.

Real GDP Projections (% annual change)

Region/Economy	CY 2025	CY 2026 P	CY 2027 P
World Output	3.4	3.1	3.2
Advanced Economies	1.9	1.8	1.7
Emerging Market and Developing Economies	4.4	3.9	4.2

Indian Economy Overview

India sustained its position as one of the fastest-growing major economies. Real GDP has been estimated to grow by 7.7% in FY 2025-26, as per the First Advance Estimates of the National Statistics Office. Despite an uncertain global environment marked by geopolitical tensions and trade-related disruptions, economic growth was driven by domestic demand, upbeat services activity and public capital expenditure. Private consumption remained an important contributor to growth. Structural reforms and digital transformation also reinforced economic activity and macroeconomic stability.

Inflation moderated during the year, reflecting easing supply- side pressures and a stable macroeconomic environment. Financial conditions remained conducive to effective policy transmission and steady credit flow across sectors. The external sector remained stable despite global tariff uncertainties, exports maintained momentum, while the current account remained under control.

Private consumption continued to contribute to economic growth, supported by rising incomes and demand across urban and rural markets. Government initiatives focused on infrastructure development, digitalisation, ease of doing business, labour market reforms and investment facilitation continued during the year. Ongoing institutional reforms, public capital expenditure and private investment are expected to help India sustain its growth momentum over the medium term.

Real GDP Projections

Year	Growth Projections
FY 2022-23	7.0%
FY 2023-24	8.2%
FY 2024-25	7.1%
FY 2025-26E	7.7%
FY 2026-27E	6.6%

Industry Overview

India Media and Entertainment Industry

Indias media and entertainment industry continued its growth trajectory in CY 2025. The industry expanded by 9% year-on-year to 2.78 trillion, supported by rising digital adoption, growing advertising expenditure and increasing consumer engagement across multiple content platforms.

Alongside the continued strength of digital media, filmed entertainment is expected to perform well. A robust content pipeline, improving theatrical performance and expanding audience engagement are expected to support its growth. The industrys long-term outlook remains positive, underpinned by favourable demographics, increasing digital adoption, higher advertising investments and sustained consumer spending.

Indian Film Exhibition Industry

Indias film exhibition industry remains an integral part of the countrys media and entertainment ecosystem. Growth continues to be supported by a growing multiplex network and a large cinema-going audience. As of 2025, India had approximately 10,333 cinema screens, reflecting a 1% increase during the year.

The industry recorded its strongest- ever performance in CY 2025, with Indias gross box office collections reaching Rs.13,395 crore, surpassing the previous record achieved in 2023.

Hindi cinema emerged as the largest contributor to the overall box office, recording its highest-ever gross collections of Rs.5,504 crore. A total of 37 films crossed the Rs.100 crore milestone, compared with 22 films in the previous year, highlighting the growing depth of theatrical content. The year also witnessed Dhurandhar becoming the highest-grossing

Hindi film of all time with collections of Rs.950 crore. International films delivered their strongest postpandemic performance, registering 49% growth.

Supported by a robust content slate and increasing consumer preference for premium theatrical experiences, the Average Ticket Price (ATP) increased by 20%, from Rs.134 to Rs.161. This marked its sharpest increase in the last four years.

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Language-based Box Office Performance

The Indian film exhibition industry delivered a diversified language mix in CY 2025, reflecting the increasing acceptance of diverse content and the expanding reach of regional cinema. Domestic box office collections touched 13,395 crore, the highest ever in India, with 1,823 film releases across multiple languages. Regional industries made a significant contribution, reducing the markets dependence on a single language.

Hindi cinema retained its leadership position, contributing 41% of the domestic box office. While its market share moderated compared to the previous year, the segment delivered several blockbuster successes led by Chhaava, Dhurandhar, Saiyaara and War 2. Together, these titles reinforced Hindi cinemas ability to drive large-scale theatrical footfalls and nationwide collections.

Telugu cinema remained the second-largest contributor, accounting for 18% of collections. High-impact commercial releases such as Sankranthiki Vasthunam, They Call Him OG and Daaku Maharaaj ranked among the years leading performers. Tamil cinema accounted for 13% of the domestic box office. Successful releases such as Coolie, Vidaamuyarchi and Good Bad Ugly highlighted the enduring appeal of South Indian cinema.

Malayalam cinema increased its share to 9% of domestic collections. Three films - Lokah Chapter 1: Chandra, Thudarum and L2E Empuraan- crossed the 100 crore milestone.

This reflected its growing commercial scale while reinforcing its reputation for diverse storytelling. Kannada cinema contributed 4% of the domestic box office. The exceptional performance of Kantara: A Legend Chapter 1 helped the industry recover after two relatively weak years.

International films maintained a meaningful presence, contributing 10% of the domestic box office. Hollywood releases such as Mission: Impossible - The Final Reckoning, Avatar: Fire and Ash, Jurassic World: Rebirth and F1: The Movie continued to attract Indian audiences, complementing domestic content. Gujarati and Bengali cinema also registered encouraging growth, while Punjabi and Marathi cinema witnessed comparatively softer performance during the year.

The performance of CY 2025 reflects the evolution of Indias theatrical market into a diversified, multilingual ecosystem. A balanced mix of Hindi, regional and international content continues to broaden audience choice and improve screen utilisation. It reinforces the long-term prospects of the Indian film exhibition industry.

This trajectory extended during the first half of CY 2026. Domestic box office collections reached 6,398 crore during the January-June period, reflecting sustained audience demand and a steady pipeline of theatrical releases. Four of the first six months recorded box office collections exceeding 1,000 crore. This underlines the enduring appeal of theatrical exhibition and the preference for cinema as a shared entertainment experience. The industry also remains on track to surpass 15,000 crore in annual box office collections, supported by a strong release calendar in the second half of the year.

Hindi cinema further strengthened its market leadership, while Telugu films remained among the highest- grossing releases. Regional cinema continued to play an important role in theatrical performance, alongside sustained audience interest in international content. These trends reinforce the steady evolution of Indias multilingual theatrical market, supported by a balanced content pipeline and broad-based audience engagement.

Growth Drivers

Content Diversification and Pan-India Appeal

The growing acceptance of multilingual cinema and pan-India releases has expanded audience reach beyond regional boundaries.

A diversified content pipeline of Hindi, regional and international films is driving higher theatre occupancy and improving box office performance across markets.

Premium Cinema Experiences

Consumers continue to value theatrical entertainment as a distinct out-of-home experience, supported by premium formats and enhanced cinema infrastructure. The Indias movie and entertainment market was valued at USD 6,311.2 million in 2025 and is projected to reach USD 14,881.6 million by 2034, registering a CAGR of 9.70% during 2026-34.

Expansion into Emerging Markets

Regional cinema is broadening the industrys content base and audience reach. In 2025, 56% of digital content was produced in regional languages, reflecting the growing importance of regional storytelling. The increasing acceptance of multilingual content is further widening audience engagement across markets.

Stronger Theatrical Content Pipeline

A consistent pipeline of blockbuster franchises, regional productions and international releases is strengthening theatrical activity throughout the year. Diverse content offerings are reducing dependence on individual film industries while encouraging sustained audience footfalls.

Technology-led Enhancement

Investments in advanced projection systems, immersive sound technologies and premium viewing formats continue to elevate the cinema experience. Technology-led upgrades further differentiate theatrical exhibition from home entertainment platforms.

Evolving Consumer Preferences

Consumers increasingly view cinema as a premium social and leisure experience rather than solely a movie-viewing destination. Preference for high-quality entertainment, convenience, immersive experiences and food and beverage (F&B) offerings is reshaping exhibition formats, supporting higher per-visitor spending and encouraging repeat visits.

Expanding Alternative Content

Cinema operators are broadening auditorium utilisation through live concerts, sporting events and other non-film entertainment. This is creating additional revenue opportunities while improving asset utilisation beyond traditional film screenings.

Higher Admissions and Box Office Momentum

Domestic box office collections increased 21% year-on-year during the first half of 2026, reflecting healthy audience engagement.

Strong theatrical admissions and a steady release calendar continue to reinforce the resilience of the exhibition industry.

Company Overview

Cineline India Limited (‘Cineline or ‘The Company), part of the Kanakia Group, has been operating in the Indian film exhibition industry since 1997. Through its flagship brand MovieMAX, the Company is building a fast-growing multiplex network that combines technology-driven operations with contemporary moviegoing experience.

Building a Wider Entertainment Network

During FY 2025-26, Cinelines 22-cinema network spanned 15 cities across 7 states and 1 Union Territory, comprising 85 screens and over 21,100 seats. The Company added a new multiplex in Bareilly, entered Chennai, and launched its first Operations and Maintenance (O&M) model in Silvassa.

With a committed pipeline of 20-25 additional screens, Cineline aims to reach 105-110 screens by FY 2026-27. Its asset-light expansion strategy uses revenue-sharing models, joint developments and optimised 3-4 screen multiplexes to support capital- efficient growth across high-potential markets including O&M models.

Elevating Every Screen Experience

Cineline is elevating the movie-going experience through technology-led innovation and distinctive customer offerings. MovieMAX cinemas feature 2K and 4K projection systems, Real Laser technology, Double Beam 3D projection, Infinity Screens (large screen format) and Dolby Atmos and Dolby

7.1 surround sound. MovieMAX Edition adds an all-recliner premium format, complemented by the Max Recliner Club and MAX Cafes curated food and beverage offerings. Seamless digital booking and personalised customer engagement extend the experience beyond the auditorium, shaping a differentiated entertainment proposition.

A Year of Stronger Momentum

FY 2025-26 marked the Companys strongest financial performance since the launch of MovieMAX. Total revenue increased by 14% year-on-year to 24,205. EBITDA grew 46% year-on- year to 3,565 Lakhs, representing an approximately 6x increase over the past four years, reflecting stronger operating momentum and continued focus on profitability. The Company also crossed the 200 crore revenue milestone, strengthening its balance sheet and creating greater financial flexibility for its next phase of growth.

Box Office at a New High

Net Box Office Collections grew 8% to 15,092 Lakhs, while Net F&B Collections increased 21% to 6,874 Lakhs, supported by higher admissions. Average Ticket Price (ATP) increased to 259 in FY 2025-26, reflecting a 42.3% rise since FY 2022-23. Dhurandhar emerged as the Companys highest-grossing film of FY 2025-26, generating 2,423 Lakhs, further supporting box office performance.

Strengthening the F&B Canvas

Under the ‘MovieMAX House of Food concept, the Company has developed multiple in-house culinary brands, including Healthy Way, Farmers Pizza, Chefs Creations, Chaat Street, Wok-A-Way and MAX Ice Cream. In FY 2025-26, the Company continued to strengthen its Food and Beverage (F&B) business through MAX Cafe and its in-house offerings, contributing to revenue growth and margins. Net F&B collections increased 21% year-on-year to 6,874 Lakhs, accounting for 28.4% of total revenue while Spend Per Head increased 19% to 105.

The Company continued to focus on customer engagement through premium formats, curated menus and value- added services. Initiatives such as the Max Recliner Club, targeted promotional campaigns and digital ordering options supported customer spending and enhanced F&B monetisation.

Driving Engagement beyond the Screen

Cineline is expanding its premium proposition across formats, food and beverage and customer engagement. Through MAX Cafes curated offerings, targeted promotional campaigns and personalised initiatives, the Company is deepening customer relationships. These efforts are also encouraging repeat visits and strengthening customer loyalty.

Scaling through an Asset-Light Model

Cineline advanced its long-term growth strategy during FY 2025-26 through a focused capital-light expansion approach and ongoing business transformation. The Company focused on improving capital efficiency by adopting asset-light growth models, including revenue-sharing and Operations and Maintenance (O&M) arrangements, while pursuing disciplined network expansion. This strategic approach is expected to support sustainable growth, improve return ratios and strengthen long-term shareholder value.

Key Financial Ratios

	FY 2025-26	FY 2024-25
Current Ratio	0.69	1.13
Debt-to-Equity Ratio	-	0
Debt Service Coverage Ratio	-	(0.17)
Return on Equity	7.73%	(36.13%)
Inventory Turnover Ratio	5.64	5.31
Trade Receivables Turnover Ratio	124.50	81.32
Trade Payables Turnover Ratio	9.18	9.18
Net Capital Turnover Ratio	(11.37)	32.46
Net Profit Ratio	4.87%	(28.79%)
Return on Capital Employed	10.24%	1.46%
Return on Invested Capital	9.86%	2.30%

Business Outlook I

Cineline enters FY 2026-27 with a strengthened financial position and a clear roadmap for long-term growth. Following its transition to a debt-free Company, it is well placed to accelerate its expansion through a capital-efficient model.

With 85 screens across 22 cinemas in 15 cities, Cineline aims to reach 105-110 screens by FY 2026-27. A secured pipeline of 20-25 additional screens will support expansion in high-growth markets, particularly South & North India, while broadening its geographic footprint.

Future screen additions will primarily be pursued through revenue-sharing arrangements, joint investments with developers and the Operations and Maintenance (O&M) model. Alongside network expansion, the Company is enhancing operational efficiency and the moviegoing experience through MovieMAX Edition, Infinity Screens, the Max Recliner Club and other experience-led offerings.

A healthy cash position, a robust release pipeline and favourable industry trends provide a supportive backdrop for the Companys next phase. With a disciplined operating model and differentiated customer proposition, Cineline is positioned to create sustainable long-term value for its stakeholders.

Internal Control Systems

Cineline has implemented internal control systems aligned with the scale and nature of its operations. The Company maintains well-documented policies and procedures designed to monitor operational performance, safeguard assets, and uphold the integrity of financial reporting. The internal audit team regularly evaluates the adequacy and effectiveness of these controls, with management taking timely corrective action based on audit recommendations.

Human Resources

Cineline places emphasis on its people and recognises employees as an important part of its organisation. The Company is committed to fostering an engaging work environment and attracting skilled professionals across the industry. Structured learning and development initiatives support continuous employee development, while health and safety protocols promote employee well-being across operations. A transparent performance appraisal system links individual achievement with broader strategic objectives. As of 31 March 2026, the Companys workforce stood at 336 employees.

Cautionary Statement

The Management Discussion and Analysis includes statements regarding the Companys goals, forecasts, estimates, and expectations that may constitute forward-looking information. These statements are made in accordance with applicable laws and regulations and are based on informed assumptions and judgements. However, there is no assurance that past performance will continue, as future outcomes are subject to various risks and uncertainties. These risks may include, but are not limited to, general market conditions, macroeconomic trends, interest rate fluctuations, competitive dynamics, technological advancements, regulatory changes, and other significant factors that could impact the Companys operations and financial results.