Colorchips New Media Ltd Management Discussions

Business Review:

The global economy had largely recovered from the COVID-19 pandemic and the conflict between Russia and Ukraine by 2022, but it continued to endure unforeseeable crises. Inflation reached multi-decade highs in several economies in 2022 due to pent-up demand, supply disruptions, and rising commodity prices. This prompted central banks to aggressively tighten monetary policy in an attempt to return inflation to target levels. The global economy grew by 3.4% in 2022, slowed to 2.8% in 2023, and is now expected to grow by 2.3% in 2025, down from 3.0% in 2024, according to the World Bank and IMF.

The impact of recent liquidity issues following a string of global bank crises appears to have been contained through the swift intervention of central banks and regulators. Authorities effectively controlled the financial turbulence by implementing necessary stabilization measures in a timely manner. Advanced economies, which expanded by 2.7% in 2022, are expected to grow by just 1.3% in 2023, 1.4% in 2024, and moderate further to 1.4% in 2025, reflecting tighter financial conditions and fading post-pandemic momentum. Chinas reopening in late 2022 and sustained global financial conditions contributed to strong early performance in emerging markets in 2023.

Emerging markets and developing economies, which grew by 4.0% in 2022, posted 3.9% growth in 2023, followed by 4.2% in 2024, and are projected to grow by 3.8% in 2025. Impressive regional growth in India—expected to expand by 6.4% in 2025—and continued momentum across ASEAN nations will likely allow emerging markets to outperform advanced economies in the coming years.

Industry Structure & Developments and Outlook - Media and Entertainment Industry:

The Indian Media and Entertainment (M&E) industry is making robust strides, showcasing its resilience and readiness for the next growth phase. The sector rebounded strongly post-COVID and is now buoyed by surging consumer demand and reviving advertising revenues. In 2024, the Indian M&E industry reached approximately ^2.5 lakhcrore (US$29.4 billion), marking a 3.3% year-on-year gain, with digital media surpassing television to become the largest segment—contributing 32% of total revenues and growing 17% to around ^80,200 crore

Looking ahead, FICCI-EY projects the M&E sector to grow by 7.2% in 2025, reaching ^2.7lakhcrore (US$31.6 billion), and to continue expanding at a 7% CAGR to reach ^3.1lakhcrore (US$36.1billion) by 2027. PwC offers a slightly more optimistic outlook, forecasting the industrys size to hit ^3.65 lakh crore (US$19.2 billion, noting the difference in exchange assumptions) by 2028, at an 8.3% CAGR

Advertising continues to be a powerful growth engine. In 2024, ad revenues rose approximately 8.1%, led by performance advertising, digital out-of-home (OOH) media, and e-commerce platforms Digital media captured about 46% of Indias ^1 lakh crore ad market in fiscal 2025,

illustrating its dominance in ad spend share. Additionally, Bain & Company projects that Indias ad spend will climb from roughly 0.4% of GDP today to nearly 0.5% by 2029.

Within the sector, traditional television is facing headwinds, with publishers like Zee experiencing a 16.8% drop in advertising revenue in Q1 2025, though its streaming arm Zee5 is showing strong gains—helping narrow core losses and boost subscription revenue. Moreover, audio entertainment is gaining popularity—49% of surveyed users tune into more than 10 episodes daily, with half dedicating over 90 minutes each day to audio content.

Key growth themes include:

• Segment shifts: Digital media leads, followed by OOH, live events, and audio. Traditional and subscription revenues are under pressure.

• Advertising innovation: E-commerce, short-form video, and digital OOH are shaping the ad ecosystem.

• Emerging formats: Audio content is surging. Connected TV (CTV) and mobile apps continue to expand rapidly.

• Regulatory and competitive dynamics: Ongoing shifts in advertising patterns are influenced by evolving consumer preferences and regulatory scrutiny.

Digital leading growth:

The Indian Media and Entertainment (M&E) industry continues to be a substantial contributor to the countrys GDP and is on a robust growth trajectory. Deeply influential and transformative, this sector reaffirmed its adaptability by not only regaining its pre-pandemic standing but also redefining itself through rapid change. In 2024, the M&E industrys overall size reached ^2.5trillion (approximately US$29.4billion), reflecting a 3.3% year-on-year increase and contributing 0.73% to Indias GDP Digital media, for the first time, overtook television as the dominant segment—growing 17% to ^80,200 crore and accounting for 32% of total revenues Moving forward, the sector is projected to grow by 7.2% in 2025 to reach ^2.7trillion (US$31.6 billion), and maintain a CAGR of 7%, reaching approximately ^3.1 trillion (US$36.1 billion) by 2027

Television revenue continues to face challenges. In 2024, linear TV advertising revenues declined by 6%, and subscription revenues dropped by 3%. Approximately six million pay-TV homes were lost, while both Free TV and Connected TV adoption rose—Connected TV weekly active units increased from 23 million in 2023 to 30 million in 2024 To address cord-cutting, cable and DTH providers have started investing in IPTV platforms, prompted by a significant subscriber loss of over 30 million households . This trend has also led to widespread job losses—around 577,000 positions lost in the cable TV industry between 2018 and 2025

Emerging technologies are reshaping the sector as well. Reliances recent JioPC launch enables ordinary TVs to function as cloud-driven personal computers, potentially broadening digital access in households lacking traditional PCs. On the regulatory front, Google settled an antitrust case by offering optional licensing of its Play Store and services for Android smart TVs—ending mandatory bundling practices Additionally, the government cut GST on TVs larger than 32

inches from 28% to 18% (effective from September 22, 2025), making premium TVs more affordable and likely accelerating adoption of OTT and connected media

Indian Economy:

India has solidified its position as one of the worlds fastest-growing major economies. Based on the National Statistical Offices Second Advance Estimates, Indias real GDP growth for FY 2024-25 is projected at 6.5%, easing from 9.2% in FY 2023-24—which itself was the highest in 12 years. Nominal GDP for FY 2024-25 is estimated at ^331 lakh crore (~US $3.78 trillion) compared to ^301 lakh crore in FY 2023-24.

Reflecting on Q2 2025 (ending June), real GDP surged by 7.8% year-on-year, though equity markets showed muted enthusiasm due to weak corporate earnings and external headwinds Meanwhile, the RBI has held the repo rate steady at 5.5% since August, aiming to balance inflation control with growth needs.

The digital economy continues to expand rapidly. In FY 2024-25, UPI transactions jumped by ~42% in volume to 185.8 billion, and by ~30% in value to ^261 trillion, capturing 83.7% of all retail digital payment volumes. Overall digital payment volume increased 35% to 221.9 billion transactions, while their value grew ~18% to ^2,862 trillion. In August 2025 alone, UPI crossed a monthly milestone of 20 billion transactions, totaling ^24.85 lakh crore in value.To support high-value use cases, NPCI raised UPI transaction limits to ^5 lakh per transaction, enhancing its utility across sectors like education and capital markets.

Internal Control System and their adequacy:

The Company through its management is responsible for establishing and maintaining adequate internal control over financial reporting commensurate with its size and nature of business. Our internal control systems are effective to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with the generally accepted principles of accounting. The internal control systems provide for well-defined policies, guidelines, authorizations and approval procedures.

Opportunities:

The way in which we consume news and entertainment has changed dramatically over the past decade, creating both challenges and opportunities for traditional broadcasters. Think about it: Millennial spend more time streaming content than watching it on television, and more than 30 percent of them are viewing shows on their mobile devices.

The following are the opportunities:

• The rising interest in shorter forms of content such as serialized web and YouTube segments that are a mere six to ten minutes in length.,

• Content creators have a relationship with the end consumer like never before and derived insights about users allow for content and ads to be more personalized.

• Companies that can figure out how to push discovery of their content to consumers or help them discover it for themselves will have a leg up in this competitive space.

Threats:

1. Competition from other countries like Taiwan, Philippines, Korea and China;

2. Ever changing technology;

3. Lack of awareness in foreign countries;

4. Inadequate funding for capex and investment in manpower;

5. Lack of support from government.

Challenges, Risks and Concerns:

Digitization forms a new business frontier, with geographical barriers to trade in Asia being leapfrogged by technology. The rapid growth of both domestic and cross-border e-commerce, and particularly smart phone-focused mobile commerce (m-commerce) has created real-time access to previously inaccessible markets across Asia. It has also catalyzed entire new business models and value chains, and added speed and dynamism to both B2B and B2C procurement processes. As a result, individual entrepreneurs and tech start-ups as well as regional and multinational firms can utilize a multiplicity of channels to interact with existing, newly acquired and prospective customers and clients at any time of the day or night. But the catalytic impact of digitization also brings unique challenges. Cutting through the cluttered desert of data engages the regions brightest analytical and marketing minds, while cross-border trading and trading in untapped areas within the same country can create unexpected logistical, distribution and after-sales service challenges.

As a result, the quest to seamlessly manage digital and traditional channels is becoming more complex and more resource-intensive, and choosing a specialist Market Expansion Services partner to help deliver real competitive advantage is a critical business decision.

Discussion on Financial Performance with respect to Operational Performance:

During the year under review the Company has achieved a turnover of Rs.68 Lakh, loss after tax for the current financial year was Rs.1002 Lakhs. The paid-up capital of the Company as on March 31, 2025 is Rs. 17,00,99,000/- comprising of 1,70,09,900 equity shares of Rs. 10/- each. Kindly refer balance sheet for complete details and for details of key financial ratios along with explanation thereof. There is only a single segment. The Accounting treatment is in accordance with applicable Accounting standard. There is no different treatment from that prescribed in the accounting standard

Human Resources Development and Industrial Relations:

The Company firmly believes that Human Assets are more critical than physical and financial assets as they are the ones who manage and sustain the growth of physical and financial assets of the company. The Company is well on its way in establishing an integrated system of workforce, which endeavors to develop the capability of its employees that clearly aligns with the business objectives and performance. Further, we also encourage individual and team

awards to sustain and institutionalize the various workforce practices. This helped in giving lots of encouragement to the workforce who have been striving hard to achieve various goals.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objective, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Certain observations made on the industry and other players also reflect on opinion by the management and the management accepts no liability on such opinions. Actual results might differ materially from those either expressed or implied.

	FOR AND ON BEHALF OF THE BOARD SD/-
	SRINIVASA SUDHISH RAMABHOTLA CHAIRMAN & MANAGING DIRECTOR DIN: 00027816
08.09.2025
Hyderabad