Interworld Digi. Management Discussions


INTRODUCTION

Interworld Digital Limited is in the business as entertainment company and to organize, equip, arrange, write, manage, control, run, exhibit, distribute, direct, provide and to produce, promote, project, participate, manipulate, treat, process, prepare, alter, develop, expose, edit, make, remake, display, print, reprint, convert, finish, buy, sell, run, import, export, and to act as syndication, broker, agent, co-ordinator, distributor, organiser, proprietor, movie makers, copyright owners, video right owners, audio right owners, theatre owners, dubbing right owners, cinema studio owners, dance, music and provide complete technical. To own, undertake, carry on and operate directly or indirectly in India and abroad the business of editors, publishing producing, trading, commercial and industrial houses or for public in general in the interest of public relations which may include any all subject of common interest and to carry on the business of multilevel marketing , network marketing , digital marketing of products/services/consultancy and other forms of marketing and electronic services or devices including applications relating to media and entertainment..

MEDIA & ENTERTAINMENT INDUSTRY IN THE INDIAN ECONOMY:

The Indian media and entertainment (M&E) industry is a promising sector for the economy and is making significant progress in terms of growth. The rise in digital adoption, fast and affordable internet, a large smart phone and broadband userbase, and a rise in sales of consumer durables like smart phones have contributed to the growth of the sector. With "digital" holding the pen and outpacing all other segments, sections like OTT, gaming, animation, and VFX are leading the M&E sector and are expected to rule the market in the coming years. Indian OTT platforms are in the scaling stage with strong subscription growth and significant investments in premium and original content.

As per Crisil Report, during the year 2023-2024 Indian media and entertainment sector is likely to grow 12-14 per cent to clock Rs 1.6 lakh crore revenue in FY 24. "After the pandemic, digital has become the second-largest segment after TV in terms of ad spends. Together, they account for over three-fourths of the ad revenue for the M&E sector, followed by the print segment with a one-fifth share" As per the latest report by the PwC, Indias Media and entertainment Industry is expected to reach Rs. 4,30,401 crores (US$ 53.99 billion) by 2026. Advertising revenue in India is projected to reach Rs. 394 billion (US$ 5.42 billion) by 2024 .Television would account for 40% of the Indian media market in 2024, followed by print media (13%), digital advertising (12%), cinema (9%), and the OTT and gaming industries (8%).

Within the M&E sector, Animation, Visual Effects, Gaming and Comic (AVGC) sector is growing at a rate of ~29%, while the audio-visual sector and services is rising at the rate ~25%; is recognised as of one of the champion sectors by the Government of India. The AVGC sector is estimated to grow at ~9% to reach ~Rs. 3 lakh crore (US$ 43.93 billion) by 2024, stated Union Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles.

Overall Television segment is expected to reach 826 Billion by 2024 growing at a CAGR of 5% while the advertising segment is expected to grow at a CAGR of 8% and reach 394 Billion during the same period. This growth in television advertising will be driven by entry of new advertisers, existing brands advertising on television, upward correction in regional advertising rates and availability of new and fresh content. The Indian media and entertainment industry is one of the fastest growing media industries in the world and is projected to reach USD 100 billion by 2030, said by Apurva Chandra, Secretary, Ministry of Information and Broadcasting (MIB). There is tremendous growth in the Indian Media and Entertainment Industry. With the rising consumer demand and improving advertising revenues, the Indian M&E (Media & Entertainment) is on the cusp of a strong phase of growth. The Indian Industry is driven by increasing digitization and higher internet usage over the last decade. The Internet has become a major source of entertainment for a majority of people.

MARKETING INITIATIVES:

The Company has been working across regions to make brand in the industry. It strives to differentiate itself from the others with its innovative ideas and brilliant execution. The Companys mission is to drive engagement through trendy, youthful and quality content. We are also actively engaged in promoting and developing new initiatives that engage audience.

RECENT DEVELOPMENT/INVESTMENTS:

• Non-fungible tokens (NFTs) are emerging as a driving force for media companies to expand their content and IP engagement among their audience. This is triggering a future monetization model with markets maturing and the media sector welcoming these changes. Media and entertainment companies are collaborating and forming relationships with

NFT specialists and marketplaces to design offerings that empower consumers to engage in a new way with their favorite characters, movies, and TV show.

• Media and entertainment corporations are embracing and integrating emerging technologies to capture the met averse mainstream and offer their audiences meaningful viewing experiences.

• There has been a rise in video streaming platforms. In the last five years, online searches for Amazon Prime Video have increased by 231%. Video streaming (SVoD) revenue is anticipated to rise by over $139 billion per year by 2027. Hence it is no surprise that many media companies are introducing new streaming services. Paid over-thetop (OTT) platforms are emerging with incumbents, including Netflix, Hulu, and Amazon Prime Video.

• Social media platforms are embracing their algorithms to boost engagement. The live social media events are helping to spill over to other platforms, thus leading to the creation of new communities. Consumers can join global communities that align with their personal views on sustainability and responsibility. In 2023, brands will understand and integrate this motivation to form online communities and encourage engagement and adaptations. This will assist them in engaging with their consumers for future campaigns and connecting with their chosen audience.

GOVERNMENT INITIATIVES:

• Government of India has taken various initiatives like 100 per cent FDI allowed in teleports, multi-system operators, mobile TV, cable, and direct-to-home (DTH) satellite platforms; 100 per cent FDI allowed in publishing/printing of scientific and technical magazines/ speciality journals/ Periodicals under the government route and granting industry status to the film industry for easy access to institutional finance, have provided a boost to the sector.

• The governments plans to come out with a "Model Theatre Policy", "single-window clearance for theatres", and set up an animation, visual effects, gaming and comics (AVGC) task force indicate their intent to focus on the sector.

FUTURE OUTLOOK:

• In Indian economy the Indian Media and Entertainment industry is a growing sector backed by rising consumer demand and improving advertising revenues. Over the last decade, Indian Media and Entertainment industry has been driven by increasing dispensation and higher internet usage.

• Mobile is continuing to grow and by 2023 is expected to account for about 81 percent (nearly $130 billion) of all online advertising, with mobile video advertising becoming three times the size of non-mobile video advertising, according to a PwC report. Television advertising revenue will have little growth in the coming years, about 0.3 percent by 2023, and radio advertising will have only marginally better growth by comparison, of about 0.7 percent (to $18.4 billion) by 2023.

• Broadcast television will continue to experience significant changes as television continues to be more interactive and customized for viewers. In the last decade, the mandated change to digitized broadcasting coupled with the recession diminished broadcasters revenue—the decrease in program spending led to layoffs and a decline in employment. The trend toward online viewership of TV is expected to continue, yet advertisers will continue to spend on TV advertising due to its ongoing effectiveness. Online TV advertising spend was expected to grow from about $5 billion in 2019 to $5.8 billion in 2023. Advertisers will continue to face intense competition to gain viewers attention through various media and mobile devices. By 2023, there will be zero compound annual growth overall in the broadcast TV advertising sector and just .6 percent growth for cable networks, according to PwC.

• Indian OTT sector in the ‘scaling stage with strong subscription growth and high investment in premium and original content. Despite Covid challenges, Indias media and entertainment industry has revived to pre-Covid levels and is expected to grow to $55-70 billion by 2030 at 10-12 per cent CAGR, according to a report released by BCG-CII. The growth will be driven mainly by the OTT, gaming, animation and VFX segments.

INTERNAL CONTROL:

The Company has a robust Internal controls framework, commensurate with the size of its operations, geographical spread and changing risk complexity, impacted by varying internal and external factors. The Companys internal control systems comprises policies and procedures designed to ensure sound management of its operations, safekeeping of its assets, optimal utilisation of resources, reliability of its financial information, and compliance. The Company has appointed Chartered Accountant, to give independent, objective, and reasonable assurance on the sufficiency and effectiveness of the Internal Controls. The audit firm evaluates and tests the effectiveness and appropriateness of internal controls on a regular basis. The Audit Committee is informed of significant audit findings after the evaluation, and measures taken thereof. The various process owners implement corrective measures in their respective domains based on internal audit results, thereby strengthening controls. The Audit Committee approves the yearly internal audit plan, examines the internal control systems sufficiency and effectiveness, assesses key audit observations, and supervises the implementation of audit.

HUMAN RESOURCES:

The Company believes that employees are at the core of its strategies to achieve all present and future organizational goals. The Company has consciously developed a positive working atmosphere that provides a satisfying work environment, promotes career progression and encourages employee safety. In the current financial year, we have focused our efforts on enhanced learning and development programs, enhanced communications, making our policies more employee friendly, and overall nurturing a culture of collaboration and teamwork. Our concerted efforts to enable the growth of our employees along with the Company, has helped us significantly in ensuring enhanced employee satisfaction in Company.

OPPORTUNITIES/ ADVANTAGES:

The Indian media and entertainment (M&E) industry is one of the fastest growing industries in the country. Its various segments, film, television, advertising, print and digital have witnessed a tremendous growth in the last few years. The industry is highly driven by strong consumption in non-metro and small cities, intense emergence of regional media and burgeoning new media businesses and formats.

• ROBUST DEMAND: According to a report published by IAMAI and Kantar Research, India internet users are expected to reach 900 million by 2025, from ~622 million internet users in 2020, increasing at a CAGR of 45% until 2025. The advertising-based video on demand (AVoD) segment is expected to rise at a CAGR of 24% to reach US$ 2.6 billion by 2025.

• ATTRACTIVE OPPORTUNITIES: According to a FICCI-EY report, within the M&E sector, TV is expected to remain the largest segment and likely to post a CAGR of 7% to Rs. 847 billion (US$ 12.01 billion) by 2023. The Indian mobile gaming market is poised to reach US$ 7 billion, in value, by 2025. The Company foresee ample opportunities in Media

& Entertainment industry. The rapid urbanization is likely to boost metaphorical growth in years to come. All these would ultimately generate a demand to boost local economies. Further, the various government initiatives envisaging providing an experience to its citizen shall also offer opportunity to the M&E player to grow in years to come. The envisaged opportunities are discussed further. Your Company is favourably placed to participate in the opportunities arising from the home-state that is considered the Growth Engine of India.

THREATS & RISKS:

1. Copyright and piracy issues :

These challenges have been in the industry for a very long time now and it is very difficult to bring justice even if the laws are all stringent and in place. With the rise of digitisation, more big data problems have emerged such as sharing of account information through which multiple users can view content from the same account, using the password. It then becomes difficult for the production houses to categorise what genre of content is favourable to an adult and to a child. Pinpointing on the demographic details of an account user also becomes extremely difficult. Many people have started using the content available on online platforms for their own use pirate and spoof this data to make it look like their own new creation and upload it to generate revenue. This is another major issue faced by, in particular, the entertainment industry.

2. Cyber Attack Chatter

Attackers frequently use surface, deep and dark web chatrooms and forums to plan attacks, choose targets and sell hacking services. This chatter can become useful intelligence for media and entertainment agencies looking to thwart attacks on talent, fans and brand before they occur. Early warning of stolen credentials, account hacking attempts and impersonations is necessary to protect media brands and talent alike. Within the media and entertainment industry, ZeroFox identified 450,000 incidents related to cyber attack chatter within the specified time period.

3. Challenges with respect to taxation

Each business has to pay taxes, to the local government, to the state and the centre. The Income Tax department comes very heavily on the defaulters, from huge amounts of fines to even imprisonment. Taxation is a very slippery path and it is very important to be cautious as to how the media industry grows and grows safely (without having being a target to the tax structure). Hence it is very important that this industry has a very sound section to manage taxes.

4. Adaptation challenges

Only a few percentages of players in the media industry are welcoming new technologies to their area of work, while the majority are hesitant and are concerned about the backfire or the trouble these new "uncommon" solutions will cause. This results in dependency on outdated methodologies making it difficult for the players to communicate business between themselves. Use of terms like "big data", "artificial intelligence", "automation" etc have increased now more than ever, particularly as reporting tools and yet we are resilient in adapting these technologies for our benefit. The above ‘Management Discussion and Analysis Report is a forward looking Statement based on the Companys projections, estimates, expectations and perceptions within the meaning of applicable Securities Law and Regulations. These statements reflect the Companys current views with respect to the future events and are subject to risks and uncertainties. Actual results may vary materially from those projected here. Significant factors that could make a difference to the Companys operations include domestic and international economic conditions, changes in Government regulations, tax regimes and other statutes.

INTERNAL CONTROL SYSTEM

Pursuant to the acquisition, the Management of the Company is in the process ensuring that systems and processes for ensuring that Internal Financial Controls (?FC) have been laid down in the Company and that such controls are adequate and operating effectively. Consequently, an IFC framework, to commensurate with the size, scale and complexity of the Companys operations is being developed. The systems, standard operating procedures and controls forming part of the IFC will be reviewed by the internal audit team whose findings and recommendations will be placed before the Audit Committee. The Internal Audit team will be responsible for regularly monitoring and evaluating the efficacy and adequacy of internal control systems in the Company and its compliance with systems, procedures and policies at all locations of the Company. The internal control systems and procedure are continuously monitored to enhance its effectiveness and to be commensurate with the scale and nature of its operations.. During the year the Audit Committee of the Board regularly met to discharge its functions. The Audit Committee reviews compliance to the Revenue Recognition of the Company. Internal audit activities are undertaken as per the Annual Audit Plan as approved by the Audit Committee and the committee reviews compliance with the plan. The Audit Committee regularly meets with the statutory auditors to review their observations on the financial reports.

HUMAN RESOURCES

Our Company believes that targets of the Company can only be reached with efforts from all its employees. Our Company recognizes that job satisfaction requires congenial work environment that promotes motivation among employees and therefore results in enhanced productivity, and innovation and also provide avenues for employee training and development to identify their potential and develop their careers in the Company. The Company values contribution of its employees and follows the principle of informing all its employees about its future growth strategies.

CAUTIONARY STATEMENT

Investors are cautioned that this discussion contains statements that involve risks and uncertainties. Words like anticipate, believe, estimate intend, will, expect and other similar expressions are intended to identify "Forward Looking Statements". The company assumes no responsibility to amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Actual results could differ materially from those expressed or implied. Important factors that could make the difference to the Companys operations include cyclical demand and pricing in the Companys principal markets, changes in Government Regulations, tax regimes, economic developments within India and other incidental factors.

For and On Behalf of the Board
of Interworld Digital limited
Sd/-
Peeyush Kumar Aggarwal
Chairman
DIN: 00090423
Place: New Delhi
Date: 29.08.2023