Ganesh Films India Ltd Management Discussions.

a) GLOBAL INDUSTRY:

The Global Media and Entertainment market expected to grow to around $2.6 trillion by 2023 as against $2.2 trillion in 2019. The sector is witnessing a resurgence as convergence is taking place within the media segment itself, as providers and distributors link up with one another in unprecedented and unexpected ways. The distinctions among varieties of media are collapsing and Companies that once offered only technology and distribution are moving into content and vice versa.

The Media & Entertainment industry is in the business of providing creative content through the adoption of latest technology coupled with consumer demands. By its inherent nature, the industry is largely dependent on factors such as markets, cultures, languages, and consumer segments. Technological advancements and change in individuals outlook towards life have greatly affected content production, demand and consumption as it has evolved over the years.

Its a period where consumers not only demand what they like but also, they select the format they wish to view it. There is a growing dependency on digital media in many developed and developing countries. In todays fast-moving generation, the media and entertainment companies are increasing working hard to reach customers through their content. While television and radio play its part as traditional mediums, having an innovative technology backed digital platform is what most companies vouch for. With the launch of digital platforms, viewers get access to consume their information on their personal schedules.

The year ahead looks promising as there are possibly exciting changes that are going to lead the M&E industry with new trends coupled with innovative technologies that create better opportunities for the growth of global Media & Entertainment industry. Video streaming, cord-cutting, personalized content and advertising and data privacy are expected to shape the world along with the launch of fifth-generation wireless technology that will be providing a host of new opportunities across Media & Entertainment industry.

The Global E&M market to reach US$2.6trn by 2023, Digital to account for a larger share of the industrys income.

Global E&M revenue and nominal growth forecast for next 5 years*

b) INDIAN INDUSTRY:

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. Proving its resilience to the world, Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenue. The industry has largely been driven by increasing digitization and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people.

Media is consumed by audience across demographics and various avenues such as television, films, out-of-home (OOH), radio, animation, and visual effect (VFX), music, gaming, digital advertising, and print.

The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38 per cent of Indias gross domestic product. By 2021, Indian media and entertainment industry will reach Rs 2.35 trillion.

India ranks 15 in the world in the music industry and is expected to enter the top 10 music markets by 2022.

Market Dynamics

The M&E industry will grow at a CAGR of 13.5 per cent during FY19-FY24. It is expected to reach around Rs 3.1 lakh crore (US$ 43.93 million) by 2024.

Indias advertisement market is projected to grow 10.62 per cent y-o-y to Rs 85,250 crore (US$ 12.06 billion) till 2021. Indias advertisement spending touched Rs 67,603 crore (US$ 9.67 billion) in 2019, up 11 per cent y-o-y. Digital advertising has emerged as the third largest advertising medium in India. It generated revenue worth Rs 15,467 crore (US$ 2.21 billion) in 2019. Digital will contribute 29 per cent of the ad market size by 2021.

The online video market in India is estimated to reach US$ 4 billion by 2025, with subscription services contributing more than US$ 1.5 billion and advertising adding US$ 2.5 billion.

The Indian film industry reached Rs 100 billion (US$ 1.43 billion) in 2019. Increasing share of Hollywood content in Indian box office and 3D cinema is driving the growth of digital screens in the country. Indias video streaming industry is expected to grow at a CAGR of 21.82 per cent by 2023.

Recent development/Investments

Foreign Direct Investment (FDI) inflow in the Information and Broadcasting (I&B) sector (including Print Media) for the period April 2000 - March 2020 stood at US$ 9.20 billion as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

Government Initiatives

The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to Fastrack the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector. The Government of India has agreed to set up National Centre of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Indian and Canadian Government have signed an audio-visual co-production deal to enable producers from both the countries exchange and explore their culture and creativity, respectively.

The Government of India has supported M&E industrys growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.

Road Ahead

Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate.

Growth is expected in retail advertisement on the back of several players entering the food and beverages segment, E- commerce gaining more popularity in the country, and domestic companies testing out the waters. Rural region is also a potentially profitable target.

(a) Opportunities and Threats:

Opportunities:

- Size of the Indian film industry is expected to touch US$ 3.22 billion by 2021, up from US$ 2.2lbillion in 2016 at a CAGR of 7.7 per cent.

- Increasing digital screens and 3D films are expected to help industry growth.

- In order to promote India as a location destination for foreign production houses, the government is setting up a single window clearance system for shooting permissions.

Threats:

- There continues to be increase in capacity of web series and shot video films which resulting in lack of audience in the Theater and it will ultimate results in the distribution of the films.

- However, your Company will mitigate this by targeting on the new and emerging market of short films as well as web series in near future.

(b) Segment-wise or product-wise performance:

- The company is primarily engaged in the distribution of regional films which includes Tamil, Telugu and Malayalam which constitute a single reportable segment.

(c) Outlook:

- The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to fastrack the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector. Your Companys business continued to perform well steered by strong focus on high growth specialty segments. While roll-out of the GST impacted operations across the industry, the Companys readiness enabled it to transition seamlessly to the new tax regime.

(d) Risks and concerns:

- The Company being a distributor of south Indian movies is always exposed to the general risks such as government regulations and policies, statutory compliances, etc. The Company from time to time identifies the risk and has put in its place appropriate measures for mitigating such risks.

(e) Internal control systems and their adequacy:

- Your Company has in place adequate internal control systems commensurate with size and nature of its operations. Internal control processes which consist of adopting appropriate management systems and implementing them are followed. The Company has a qualified Audit Committee, independent Statutory Auditors and also Internal Auditors who submit reports periodically which are reviewed and acted upon.

(f) Material developments in Human Resources / Industrial Relations front, including number of people employed:

- Your Company is giving special attention to Human Resources/Industrial relations development. Industrial relations remained cordial throughout the year and there were no incidences of strike, lock out etc. Total 4 employees are on the Companys payroll as on 31st March 2020. The working atmospheres for all the employees are very favorable and suitable systems are in place for optimum working efficiency of all the employees.

On behalf of the Board of Directors, On behalf of the Board of Directors
For Ganesh Films India Limited For Ganesh Films India Limited
Sd/- Sd/-
NambiRajan Yadav Jayalakshmi Nambirajan Yadav
Chairman & Managing Director Director
DIN:06533729 DIN:08104125
Place: Mumbai Place: Mumbai
Date: July 31, 2020 Date: July 31, 2020