Filmcity Media Ltd Management Discussions

COMPANY BACKGROUND

Filmcity Media Limited was incorporated in 1994 as Kavita Prakashan Private Limited. The company started its journey with publishing its own magazine Filmcity which became the number 1 weekly magazine on Hindi Films at that time. The company later diversified into electronic media by setting up a video studio with complete shooting and post production equipment. Over time the company established recognition and relations within the media industry and went on to produce many programmes for Doordarshan National and its local channels, we were also privileged to count Zee TV, Star Plus amongst some private network as our client base. With the gradual decline in the print media sector, and fierce competition in production media faced by the Company from its competitors, the TV programmes produced by the Company could not be telecasted and due to these reasons, the Company faced difficulty to survive in the market.

The Media and Entertainment industry has undergone a significant transformation over the past decade. The rise of OTT platforms has liberalised content production across short and long form video content formats. These changes can be attributed to advancements in technology, changes in consumer behaviour, and proliferation of smartphones with affordable data. Social media sites have expanded the marketing reach to a large section of audience in effect breaking geographical boundaries. This is further evident from the growth of the India OTT industry from USD 300 million in FY 2014-15 to USD 2 billion in FY 2020-21 registering a CAGR of 46%, further growth is projected to take the industry to USD 15 billion by FY 2029-30 (Source: BCG CII Report 2022). Regional OTT content has also emerged and further changed industry dynamics.

In our outlook last year, we discussed how we intend to start with development of stories and content creation, which can then be partially monetised and simultaneously used as a platform for creation of a content library. The initial and second stage of our business plan will allow to establish a revenue stream from partial monetisation of content and create brand value for our company and content, which will be critical in leveraging the complete revenue model through advertisement revenue, content syndication opportunities etc. Also, constant content creation will help in creation of a content library, which is critical for launching an OTT platform.

The timeline towards our ultimate target of launching an OTT platform will depend, firstly, on the market feedback on the content produced and the simultaneous creation of a content library. Secondly, internal revenue generation through sale of content in addition to any future fund raising will be evaluated at the time of initiation of development of the OTT platform. In this regard, we have taken the initial step towards sourcing and distributing content on contractual basis. Under this model, our team satisfies demands from clients with specific content requirements and source the content from suppliers present in the market. Similarly, we have also started monetising our content inventory to raise internal capital for future growth, which is evident from the profit earned by the company for the Financial Year ended March 31, 2024. The company further intends to follow the model of raising internal capital for its content development, and consequently, the company will also consider raising fresh capital in due course in line with further business opportunities.

A review of the companys performance during the Financial Year 2024-25; the company reported operating revenue/sales of INR 125.10 Lacs and a loss of INR 15.27 Lacs. This is due to the lack of financial resources required by the company for redevelopment of its current content inventory. In this respect, the company has been considering raising funds since its revocation during the financial year. However, with the market conditions not being favourable, this has caused significant delay to the desired fund raise. The company will execute its fund raising as early as possible under favourable market conditions. We believe that with a competent management team in place, and fund infusion, the company will be able to execute its business plan and become a household name like the namesake magazine which captured the hearts and minds of its readers.

Your Company recognises the need of talent and nurturing quality staff as a key to success. We will continue to focus on training and motivation of manpower so as to develop teams of qualified and skilled personnel to effectively discharge their responsibilities in a number of projects and activities. It is, in this context, which we have been working towards promoting the skills and professionalism of our employees to cope with and focus on the challenges of change and growth which is important to the segment your Company operates in.

The company believes in formulating adequate and effective internal control systems and implementing the same to ensure that the interests of the company are safeguarded and reliability of accounting data and its accuracy are ensured with proper checks and balances. The senior management team meets to address issues like operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulation, at regular frequency to discuss various issues that influence the business and to take strategic decisions. The company has an internal audit system, which submits report to the Chairman of Audit Committee periodically.

The management of risk does not imply risk elimination but prudent risk management. We can withstand the competition despite an increasing number of new players. Due to industry specific high attrition of key professionals the quality of the productions and their consistency could suffer. There is a risk of sourcing software at reasonable acquisition costs and the rapid changing market can be a threat. Your companys management is proactive to recognise risks & threats and make use of opportunity. Piracy is a major hurdle in our segment. Physical format is diminishing to an extent largely due to this. Besides regulatory frame work, subsidies, taxes and related policy can affect our industry.

Since, there was no business activity in the Company during the year under review therefore the details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, could not be provided.

Statements in the Management Discussion and Analysis and the annual report describing the Companys objectives, projections, estimates, expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations in India and other countries. Actual results could defer materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting the domestic market, in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors and unforeseen circumstances.