divine multimedia india ltd Management discussions

OPPORTUNITIES:

The Global business environment is becoming more competitive than ever. As a result, this is forcing businesses to seek newer ways to improve their efficiency, lower operating costs, be more responsive to Customer needs, and brings new products to market faster.

The E&M industry in India has been growing faster than the Indian economy. The Government, on its part, has taken several positive measures in 2005 including liberalising the foreign investment regime and resolving some of the regulatory bottleneck in certain segments of the industry and is currently working on other policy initiatives to give a further impetus to the industry. With concerted efforts by industry players on deterrents such as piracy and other challenges, the E&M industry has the potential to evolve into a star performer of the Indian economy. Accordingly, television in India is the most preferred entertainment medium with the highest impact of advertising on the audiences. India has the third largest TV households globally, second to only China and the US. Indian film industry is proudly marching towards completion of 100 golden years. From the humble beginning through a silent film made in 1913 to Indian film-makers producing films in English, Indian film industry has truly come a long way. Going forward, the film segment in India is expected to further reap the benefits of going digital with digital prints, digital cinemas and more sophisticated digital production techniques. The future of Indias media and entertainment landscape looks extremely promising with changes such as analogue cable sunset date by 2014, and players in the overall media value chain attempting to provide improved content to viewers through effective marketing and delivery strategies.

THREATS:

The Indian box office is fairly seasonal in nature, with bigger releases and higher box office sale occurring during holidays periods and festival seasons. Moreover, viewership may be affected by major sports events, such as, Indian Premier League (IPL), World Cups, live gaming etc. Piracy continues to dampen the growth and reduces the revenue. Increased Competition is yet another threat to E&M Industry. The media and entertainment industries face both danger and opportunities in digital technology.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal control systems commensurate with the scale of operations of the company.

DISCUSSION ON FINANCIAL PERFORMANCE:

The Companys financial performance is discussed in details under the head "Results of Operations" in Directors Report to the Members.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

There are no material developments in human resources.

CAUTIONARY STATEMENT:

Statement in this report on Management Discussion and Analysis describing the Companys objectives, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.