Identical Brains Studios Ltd Management Discussions

INTRODUCTION:

Our company is a provider of computer-generated visual effects ("VFX") services, offering comprehensive suite of VFX services in diverse range of projects such as films, web series, TV series, documentaries, and commercials. Our operations are currently from India and our customers include some of the leading film and content producers, including major Bollywood Studios. We transform the imagination, ideas, and words into captivating visual realities. Our team of qualified, creative and technical professionals collaborates to bring forth creations that elevate storytelling and captivate audiences worldwide. Whether its breathing life into fantastical creatures or seamlessly integrating Computer-generated imagery ("CGI") elements into live-action footage, we are committed to pushing the boundaries of creativity and innovation in visual effects.

Our company has provided VFX services for films that have achieved significant industry recognition. Our portfolio includes upcoming projects like Tanaav 2, Criminal Justice 4, and completed projects include Khel Khel Mein, Murder in Mahim, Bad Cop, The Crew, Article 370, Mission Raniganj, Dream Girl 2, Adipurush, Indian 2, Rocket Boys, Bob Biswas, Kutch Express, Ek Villian Returns, Night Manager, Criminal Justice 3, Phone Bhoot, Satyamev Jayate 2, Angrezi Medium, Scam 1992: The Harshad Mehta Story, Good Newwz, Panipat and many more. Since 2019, our company has provided VFX services for films that has received two Filmfare OTT Awards nominations, one Filmfare Awards nomination, one Dadasaheb Phalke Awards nomination and one FOI Online Awards nomination for Best Visual Effects and has won two Filmfare OTT Awards for Best Visual Effects for Scam 1992: The Harshad Mehta Story (2020) and Rocket Boys (2022) in association with Variate Studios LLP and one Dadasaheb Phalke Awards for Phone Bhoot (2022) for Best Visual Effects.

As a TPN-audited VFX studio, we are dedicated to deliver exceptional VFX solutions tailored to meet the standards of the US and European markets. The Trusted Partner Network ("TPN") is a global, industry-wide film and television content protection initiative which helps us to prevent leaks, breaches, and hacks of our customers movies and television shows prior to their intended release establishing a benchmark of minimum-security preparedness. Currently, our company has also received approval for projects from Disney Hotstar and Amazon. With a relentless focus on reliability, cost effectiveness, and uncompromising quality, we consistently strive to provide our customers with the best value for their investment. Our commitment to competitive pricing ensures that our services remain accessible without compromising on excellence. One of our core strengths lies in our unparalleled flexibility, allowing us to seamlessly adapt to projects of any size or scope. Whether it is a small-scale production or a large-scale blockbuster, we have an agility to deliver results with expedited turnaround times while maintaining scalability for sustained long-term growth.

Our Promoter, Raghvendra Rai, has an extensive experience of around ten years in the VFX Industry and under his leadership, our company has rapidly emerged as a prominent player in developing proprietary workflow processes and technologies that enables our qualified, creative and technical personnel to provide cutting-edge VFX services to our customers. We have a strong track-record of delivering projects on time and within budget. His skills and unwavering dedication have been instrumental in driving our companys success and expansion. Further, our workforce is comprised of passionate individuals who thrive on pushing the boundaries of creativity and innovation. With a diverse range of talents and backgrounds, our team is adept at tackling projects of varying complexities with confidence and proficiency. Through a combination of expertise and employee experience, we consistently deliver exceptional results that elevate our customers projects to new heights of success.

MARKET SIZE:

The Indian VFX industry is experiencing a phenomenal growth spurt, witnessing a surge in market revenue over the past few years. The market has grown exponentially, from USD 107.7 million in CY 2020 to USD 647.2 million in CY 2023, reflecting an impressive CAGR of approximately 81.8%. This translates to a staggering growth rate exceeding 500% in just three years. This remarkable rise signifies a thriving domestic market and a growing global presence for Indian VFX studios.

Firstly, the Indian governments initiatives to promote the media and entertainment sector have created a supportive environment for VFX companies to thrive. Tax breaks, infrastructure development, and support for skill development programs have nurtured the growth of a domestic talent pool. A National Film Policy has been established, with a focus on harnessing the potential of the animation segment. This suggests a recognition of animations importance within the broader AVGC (Animation, Visual Effect, Gaming, and Comic) landscape.

The government has committed to setting up a National Centre of Excellence for Animation, Gaming, Visual Effects and Comics in Mumbai. This centre will likely provide crucial training, resources, and infrastructure to nurture talent across all these creative sectors. To further incentivize growth, the government has unveiled a financial program offering reimbursements for VFX, animation, and post-production projects. Studios can receive up to 30% back on a minimum spend, with an additional 5% bonus for projects that incorporate significant Indian content. This financial support makes it more attractive for studios to utilize Indian services for their projects, further boosting the domestic industry.

Secondly, India boasts a large pool of skilled and well-trained VFX artists. Educational programs focused on VFX are flourishing, ensuring a steady stream of talent to meet the ever-increasing demand. This skilled workforce, coupled with competitive pricing compared to traditional VFX hubs, makes Indian studios an attractive option for international productions.

Thirdly, the surge in demand for high-quality content from streaming services like Netflix and Disney+ has benefitted the Indian VFX industry. As these platforms churn out new shows and movies, Indian studios are well-positioned to contribute their expertise in creating visually captivating content.

The Indian VFX industrys growth isnt limited to just domestic projects. With its competitive edge and growing talent pool, India is actively collaborating with Hollywood studios on major blockbusters. This collaborative approach is pushing the boundaries of visual effects and solidifying Indias position as a prominent player in the global VFX market.

Market Segmentation

The movie segment reigns supreme, contributing a significant USD 256.9 million, or 39.7% of the total VFX market revenue in India for CY 2023. This dominance reflects the growing popularity of visually spectacular Indian cinema, particularly within genres like action, fantasy, and sci-fi. Studios are increasingly relying on VFX to create larger-than-life experiences and enhance storytelling, leading to a high demand for skilled VFX artists specifically focused on movie production.

The dominance of the movie segment in the Indian VFX industry is directly linked to the recent resurgence of Indian cinema. With a staggering 157.4 million people attending movies in 2023, a 29% increase compared to the previous year and exceeding pre-pandemic levels by 8%, theres a clear audience hunger for visually captivating experiences. This renewed interest in cinema is fuelling a significant rise in VFX budgets for Indian films.

Big-budget productions like "Brahmastra" and "RRR" are allocating a whopping 25-30% of their production costs to VFX, a testament to the growing importance of visual effects in contemporary Indian cinema. This trend perfectly aligns with the movie segment contribution capturing a significant 39.7% share of the total VFX market revenue in India for CY 2023. As audiences demand more immersive and visually spectacular experiences, Indian filmmakers are strategically utilizing VFX to enhance storytelling, create larger-than-life visuals, and ultimately, draw viewers back to the theatres. This flourishing collaboration between filmmakers and the VFX industry is propelling the movie segment to the forefront of the Indian VFX market and shaping the future of visual storytelling in Indian cinema.

Visual Effects or VFX encompasses the creation or manipulation of any imagery that isnt filmed during live-action shooting using techniques, including computer-generated imagery, compositing, and green screens, alongside services like 3D modeling, animation, rotoscoping, pre-visualization, concept art and more. The Indian VFX industry has grown exponentially, from USD 107.7 million in CY 2020 to USD 647.2 million in CY 2023 CAGR of approximately 81.8% and is projected to nearly triple in size, jumping from USD 647 million in CY 2023 to USD 1,823 million by CY 2030. In CY 2023, movies dominate the market with a 39.7% share, followed by television (27.6%), gaming (17.7%), advertisements (10.6%), and others (4.4%). This growth stems from a resurgence of Indian cinema, with 157.4 million people attending movies in 2023, a 29% increase compared to the previous year, and the rise of streaming platforms and mobile gaming. VFX is also used for diverse applications such as architectural visualization and educational content. Key factors driving this expansion include a skilled workforce, competitive pricing, technological advancements, and government support, such as the establishment of the National Centre of Excellence, the National Film Policy focused on the Animation, Gaming, Visual Effects, and Comic landscape, and reimbursements for VFX, animation, and post-production projects. The Indian media and entertainment sector is projected expand at a CAGR of ~9.9% from INR 2.32 trillion in CY 2023 to reach INR 3.08 trillion by CY 2026. Big-budget productions are allocating 25%-30% of the production costs to VFX, and the success of Indian VFX studios is evident in their contributions to major Hollywood blockbusters such as Avengers: Endgame, The Jungle Book and Life of Pi. The engagement with VFX content is increasing, particularly among younger demographics, with films like Pathaan and Adipurush featuring 3,000 and 4,000 VFX shots, respectively. The integration of emerging technologies such as Artificial Intelligence (AI), Machine Learning (ML), Virtual Reality (VR), and Augmented Reality (AR) will enable more efficient workflows while Indias animation sector is projected to be driven by evolving demand and shifting consumption patterns, emerging as the second-largest anime fan base and opportunities in adult animation markets. (Source: D&B Report).

MEDIA AND ENTERTAINMENT INDIA

Television

Print

Digital and OTT

Films

Animation, VFX and Post Production

Gaming

Out of Home

Radio

Music

OUR COMPETITIVE STRENGTHS

We believe that the following competitive strengths have contributed to our business growth and will continue to drive our success:

a) Integrated and highly scalable service delivery capabilities

Our integrated service delivery capabilities, allows us to leverage our workforce to complete projects on time, and to budget, while maintaining consistently high standards of quality. As a result, our Promoters believe that our company is well positioned to take advantage of the anticipated growth in the VFX services industry. Our service delivery model involves the following key attributes:

Operations in economically attractive location: Our presence in cost-advantaged location India, specifically in Palghar and Lucknow, enhances our ability to scale our workforce efficiently. For further details on our geographical presence, please see

"Properties" on page 177. Our creative personnel help expand the scale of our companys output capabilities and improve the efficiency of higher-cost, as compared to more experienced artists available in other metro cities, allowing them to focus on the creative work. Further, our commitment to effective budget management and competitive pricing is unwavering, all while maintaining uncompromising quality in our deliverables. We prioritize budget planning and resource allocation, ensuring that each project remains cost-effective without compromising on the high standards we set for ourselves. Our adeptness in optimizing resources allows us to offer competitive pricing models while consistently delivering top-tier quality in every aspect of our VFX services. This dedication to balancing cost efficiency with superior results underscores our commitment to customer satisfaction and industry excellence.

Integrated technology and infrastructure: Our integrated technology and infrastructure allow our workforce to collaborate across the facilities to efficiently implement our customers creative vision, utilising an integrated set of standardised creative tools and commercial and proprietary technologies that are continually enhanced and refined by a dedicated team of professionals. Our cutting-edge technology infrastructure serves as the backbone empowering our team of professionals to deliver exceptional shows within the VFX industry. With state-of-the-art software, hardware, and specialized tools, we ensure seamless integration, efficiency, and scalability in our production pipeline. This robust infrastructure enables us to handle intricate VFX requirements, from rendering to post-production, facilitating the creation of stunning visual experiences while meeting stringent deadlines and quality benchmarks.

Skilled creative and technical workforce: With our diverse blend of skilled creatives and technicians, we possess a powerhouse of capabilities crucial to the VFX industry. Our collective expertise spans technical prowess, creative excellence, and problem-solving finesse, allowing us to innovate and overcome multifaceted VFX challenges from various angles. Beyond technical proficiency, our professionals diversity fosters a deep cultural sensitivity, ensuring authentic and respectful representation of diverse cultures in our VFX projects. This adaptability and collaborative spirit not only enable us to resonate with diverse audience preferences but also guarantee market relevance, delivering high-quality and impactful visual effects that captivate a broad spectrum of viewers. Our highly-skilled creative and technical personnel also undergo continuous training and gain experience working on large and complex VFX projects in order to ensure they are capable of meeting our customers creative and quality expectations.

b) Reputation as a trusted provider of VFX Services with established relationships throughout the Entertainment

Establishing strong customer relationships and understanding their unique needs are fundamental components of our methodology. Building trusting relationships with our customers is a top priority for us. We encourage open lines of communication to gain a thorough understanding of their individual needs, preferences, and goals. We guarantee a customized and individualized approach to each project by closely connecting with customer vision, ensuring that our deliverables not only meet but beyond their expectations. Our dedication to producing outstanding results and building enduring relationships is based on this customer-centric approach.

Our Promoters believe that "IDENTICAL BRAINS STUDIOS" is recognised within the VFX industry for quality, reliability and a consistent track record of efficiently managing VFX projects. The strength of our reputation is reflected in its industry accolades. We have provided VFX services for films that has received two Filmfare OTT Awards nominations, one Filmfare Awards nomination, one Dadasaheb Phalke Awards nomination and one FOI Online Awards nomination for Best Visual Effects and has won two Filmfare OTT Awards for Best Visual Effects for Scam 1992: The Harshad Mehta Story (2020) and Rocket Boys (2022) in association with Variate Studios LLP and one Dadasaheb Phalke Awards for Phone Bhoot (2022) for Best Visual Effects. Moreover, our company has extensive experience working on many marquees, blockbuster projects containing significant VFX content, including Bambai Meri Jaan, Satyamev Jayate 2, Panipat, Phone Bhoot, Adipurush, Indian 2, Crakk and Bawaal.

c) Attractive business model, with significant revenue visibility and compelling opportunities for long-term margin expansion and cash flow generation

It is part of our culture to constantly adopt new methods and technology and to be at the forefront of industry trends. Our ability to stay ahead of the curve and push the frontiers of creative innovation is made possible by our proactive monitoring and assimilation of the most recent developments in the VFX landscape. Our dedication to lifelong learning and adaptability guarantees that we utilize state-of-the-art resources and techniques, enabling our staff to produce ground-breaking and aesthetically striking results while preserving our competitive advantage in the VFX sector. Further, we carefully plan and carry out projects and put efficiency first to meet deadlines producing outstanding results. Our methodical approach and strong processes optimize processes, guaranteeing that every facet of the project is painstakingly planned and carried out. We achieve exceptional outcomes in the VFX sector by meeting and frequently exceeding customer expectations via the combination of planning and flexible execution. Our commitment to successfully completing projects is still centric on this commitment to excellence and efficiency.

d) Experienced management team with managerial, creative and technical expertise and industry relationships

Our highly experienced management team complements our creative and technical workforce by combining managerial, creative and technical know-how with good industry experience. Our company has supplemented its management team with creative and technical talent, including experienced professionals who have been recognised for their creative and technical skills and achievements. As a result, we have a top-down commitment to creativity and technological innovation that further enhances our reputation and market position in the VFX industry. Raghvendra Rai, the Promoter and Managing Director, leads the company with approximately ten years of experience. His career includes key roles such as VFX Roto Supervisor at Digikore Studios Private Limited and Drishyam Films Private Limited, and consulting work with Maya Digital Studios Private Limited and Prime Focus Limited, showcasing his deep leadership in the industry. Sameer Rai, also a Promoter and the Executive Director, brings a robust background with eight years of experience. He began his journey as a Trainee at Drishyam Films Private Limited and advanced to Studio Head at Identical Brains in 2019. His growth and dedication have been pivotal to our companys success.

FINANCIAL HIGHLIGHTS:

Paid up Share Capital of the Company as on 31 March 2025, stands at 14,02,59,580 divided into 1,40,25,958 number of equity Shares of Rs. 10/- each fully paid up. Income from operation stood at Rs. 25,47,82,000/- for fiscal 2025.

Profit/Loss before Taxes of fiscal 2024 was Rs. 20,08,80,000/-. Basic Earnings per Share for fiscal 2025 was Rs 02.82.

Net Worth of the company stood at Rs. 34,05,92,000/- as on March 2025.

HUMAN RESOURCES

Our promoters, with their knowledge and experience are well-assisted by our Key Managerial Persons who have helped us retain entrenched relations with existing customers and also helped us engage new customers. We believe that our experience, knowledge and human resources will enable us to drive the business in a successful and profitable manner. Our Company is committed towards creating an organization that nurtures talent. We have employed a prudent mix of the experienced staff and youth which gives us the dual advantage. Our company also conducts regular training programs which is aimed towards strengthening skills, enhancing productivity and building sense of ownership among its employees.

INTERNAL CONTROL SYSTEMS AND ADEQUACY:

Internal Control System has been designed to provide reasonable assurance that assets are safeguard, transactions are executed in accordance with managements authorization and properly recorded and accounting records are adequate for preparation of financial statements and other Financial Information. Internal Check is conducted on a periodical basis to ascertain the adequacy and effectiveness of internal control system.

GOVERNMENT INITIATIVES

Skill India Initiative

Launched on July 15, 2015, the Skill India Initiative is a government program focused on enhancing skills across various sectors, including the VFX industry. By providing vocational training programs, the initiative aims to create a skilled workforce capable of meeting the demands of the rapidly evolving VFX sector. Skill India has significantly contributed to increasing employability and productivity by training thousands of individuals in creative and technical skills. This initiative helps bridge the skill gap and ensures a steady supply of skilled artists, thereby supporting the industrys growth and development.

Make in India

Launched on September 25, 2014, make in India is an initiative designed to promote the growth of the domestic VFX industry by encouraging local production and investment in creative sectors. This program has led to the establishment of new studios and facilities, bolstering the domestic industry and attracting foreign projects and collaborations. As a result, Indias share in the global VFX market has increased, enhancing the industrys competitiveness and encouraging innovation and investment in the creative economy.

Film Facilitation Office (FFO)

Established in 2015, the Film Facilitation Office (FFO) aims to promote India as a destination for film production, benefiting the VFX industry by facilitating international co-productions and collaborations. The FFO provides a single window clearance system for filmmakers, streamlining the process of shooting in India and making it an attractive destination for film production and post-production work. This initiative has increased international collaborations, driving growth in the VFX industry and expanding its reach in the global market.

Animation, Visual Effects, Gaming and Comics (AVGC) Task Force

Announced in the Union Budget of 2022-23, the Animation, Visual Effects, Gaming and Comics (AVGC) Task Force was formed by the Indian government to recommend strategies for boosting the AVGC sector. This task force focuses on policy formulation, skill development, and creating a favourable ecosystem for growth. By making recommendations to drive future policies and initiatives, the task force aims to support the VFX industrys expansion, enhancing its global positioning and ensuring sustainable development in the sector.

Digital India Initiative

Launched on July 1, 2015, the Digital India Initiative aims to transform India into a digitally empowered society, significantly impacting the VFX industry by enhancing digital infrastructure and promoting the use of advanced technologies. This initiative has facilitated better connectivity and access to digital tools, enabling studios to adopt cutting edge techniques and improve production quality. By supporting technological advancement, Digital India has played a crucial role in enhancing the capabilities of the VFX industry and strengthening its position in the global market.

IP rights regulation of VFX

Intellectual Property (IP) rights play a crucial role in protecting the interests of creators, studios, and other stakeholders in the VFX industry. In India, IP rights regulation for the VFX industry encompasses several aspects to safeguard creative works and ensure fair use.