JMD Ventures Ltd Management Discussions

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JMD Ventures Ltd Share Price Management Discussions

ANNUAL OVERVIEW AND OUTLOOK

In general, global economic shocks in the past were severe but spaced out in time. This changed in the third decade of this millennium. At least three shocks have hit the global economy since 2020. It all started with the pandemic-induced contraction of the global output, followed by the Russian-Ukraine conflict leading to a worldwide surge in inflation. Then, the central banks across economies led by the Federal Reserve responded with synchronized policy rate hikes to curb inflation. The rate hike by the US Fed drove capital into the US markets causing the US Dollar to appreciate against most currencies. This led to the widening of the Current Account Deficits (CAD) and increased inflationary pressures in net importing economies. The rate hike and persistent inflation also led to a lowering of the global growth forecasts for 2022 and 2023 by the IMF in its October 2022 update of the World Economic Outlook. The frailties of the Chinese economy further contributed to weakening the growth forecasts. Slowing global growth apart from monetary tightening may also lead to a financial contagion emanating from the advanced economies where the debt of the non-financial sector has raised the most since the global financial crisis. With inflation persisting in the advanced economies and the central banks hinting at further rate hikes, downside risks to the global economic outlook appear elevated. The Indian economy, however, appears to have moved on after its encounter with the pandemic, staging a full recovery in FY22 ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in FY23. Yet in the current year, India has also faced the challenge of reining in inflation that the European strife accentuated. Measures taken by the government and RBI, along with the easing of global commodity prices, have finally managed to bring retail inflation below the RBI upper tolerance target in November 2022. However, the challenge of the depreciating rupee, although better performing than most other currencies, persists with the likelihood of further increases in policy rates by the US Fed. The widening of the CAD may also continue as global commodity prices remain elevated and the growth momentum of the Indian economy remains strong. The loss of export stimulus is further possible as the slowing world growth and trade shrinks the global market size in the second half of the current year.

INDUSTRY OVERVIEW Media & Entertainment

As per the latest report by the PwC, India’s 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. 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, Mr. Piyush Goyal. The music industry is expected to reach US$ 366 million by 2024 from US$ 199 million in 2019. According to a study conducted by Kantar and VTION, an audience measurement and analytics company, Gaana, the streaming service owned by Times Internet Ltd., had 30% market share, followed by JioSaavn (24%), Wynk Music (15%), Spotify (15%), Google Play Music (10%), and others (6%) in 2020. Growth of the sector is attributable to the trend of platform such as YouTube that continues to offer recent and video content-linked music for free, which is expected to drive the paid OTT music sector reaching ~5 million end-users by 2023, generating revenue of ~Rs. 2 billion (US$ 27 million). By 2025, the numbers of connected smart televisions are expected to reach ~40-50 million. 30% of the content viewed on these screens will be gaming, social media, short video and content items produced exclusively for this audience by television, print and radio brands. In the third quarter of 2022, smart TV shipments from India increased by 38% YoY, due to rising expansion activities adopted by original equipment manufacturers (OEMs) for their smart TV portfolios. By 2025, ~600-650 million Indians, will consume short-form videos, with active users spending up to 55 to 60 minutes per day. According to the FICCI-EY media and entertainment industry survey, those who watch online videos through bundled packages (online video services bundled with mobile and broadband connections) will account for half of all online video viewers (399 million) by 2023, up from 284 million in 2020.

Investments in Shares & Securities

A rise in domestic investments has been one of the most significant contributors to the growth story of India. Domestic investments in India are divided into two parts - public investments and private investments. Private investments are further divided into two parts, which are household investments and corporate investments. Private domestic investments depend on a slew of factors - macroeconomic stability, high household savings, productivity, access to credit, resolution of non-performing assets, clearing up of balance sheets, etc. Domestic investments and foreign investments in India work hand-in-hand to help the growth of the country. Growth in emerging economies like India results mainly from innovations that allow domestic sectors to catch up with cutting-edge technology. The process of catching up with the leader in any sector requires the cooperation of a foreign investor who is familiar with the leading technology, and a domestic entrepreneur/investor who is familiar with the local conditions. The Indian private investing space has also been showcasing signs of maturity over the past few years. The market has revealed that new investments accounted for about 50% of VC transactions. The VC-to-PE pipeline has also become robust and consistent. The concept of Make in India - Atmanirbhar Bharat, various PLI schemes, and financial incentives provided by the government are a few examples of investor-friendly programmes that domestic companies are utilising to increase their production base and create new capacities, which leads to increasing domestic investments. There are multiple investors driving domestic investments in the country

OPPORTUNITIES & THREATS Background

The Company is mainly into the business of investments in Shares & Securities apart from its’ set business i.e. studio renting as well as income from music uploaded on YouTube.

Opportunities & Threats

With India envisioning a $10 trillion economy by 2034, there are challenges and opportunities that the country faces over the next decade. That was the crux of a debate at the Mint Mutual Funds Conclave 2022. Vivek Kaul, author of Easy Money trilogy, highlighted the challenges and said Indians should be aware of the risks of investing in mutual funds and stocks. They should not get carried away by the historical returns of Sensex, which are pegged at 17% since inception. “The bulk of these returns were generated in the first 15 years of the existence of the Sensex which was up until 1994 (since 1979). The returns have been subdued since then,“ said Kaul. Bumper returns over the past 2-2.5 years have been due to rising formalization of the economy and higher operating profits. Kaul believes that investors are underestimating the negative impact of the end of an era of easy money. For India specifically, he flagged that India’s demographic dividend was not in great shape and highlighted the data put out by the Centre for Monitoring Indian Economy (CMIE), International Labor Organization, suggesting a falling labour participation. The constant rise in corporate profits even amid the talks of gloom and doom bodes well for the stock markets, he said. Noting the retail participation in equity markets, he said the contribution via monthly SIPs is currently more than 12,000 crore, which has remained so amid tough market conditions. This has supported Indian markets amid widespread foreign sell-off. “If India continues this global outperformance on the back of domestic liquidity, all the global emerging market indices will give larger weight to India," he said. On the other hand, the fluctuating stock prices make equity investments risky. Risk-averse investors usually prefer to stay away from the share market. Whereas, the risk-takers invest aggressively in stocks to create wealth in the long-run. The dynamic nature of the share market makes it an intriguing prospect to venture into. One cannot predict the future performance of the stock market. This keeps the investor awake with whether to invest in or not. But why does the stock market tend to be dynamic in nature? What impacts the stock market so much that they keep on fluctuating? This blog tends to look at some of those factors that affect the Indian stock market. According to us, these are Government Policy, RBI Monetary Policy, Exchange Rates, Interest Rates, change in trend of investing by Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) etc.

RISKS AND CONCERNS

JMD Ventures Ltd. (JMD) has exposures in various line of business. JMD are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

MARKET RISK

The Company has quoted investments which are exposed to fluctuations in stock prices. JMD continuously monitors market exposure in equity and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility. In regard to the music segment, new digital equipments are being introduced almost on every day. The invention of digital tools has changed the experience of listening music for music lovers. But these improved equipments need a lot to be invested and it is challenge for the industry to keep it up to date. Old recording tools do not have any commercial value or demand in current market scenario.

LIQUIDITY AND INTEREST RATE RISK

The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Company’s business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Company’s control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility. The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.

CYBER SECURITY RISK

In the last few years, technology has evolved manifold and so have the risks attached to it. The proliferation of business data beyond data centres to the cloud, social media and digital platforms for B2B and B2C connect are impacting cyber security. In addition to data loss, cyber-attacks can impact business operations, machinery and human assets, and result in legal and regulatory liabilities.

DIGITAL ADVANCEMENT RISKS

Digital technologies are changing the way companies operate while creating new opportunities to improve efficiencies, and enhance customer experience and employee involvement. Adoption of such technologies requires management initiative, employee commitment and cultural transformation.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2021-2022, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Company’s Board of Directors and the Company’s Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

Mumbai, May 19, 2023 By order of the Board For JMD Ventures Limited

Registered Office: S/d-
Unit No. 323 & 324, 3rd Floor, Bldg. No. 9 Dhruva Narayan Jha
Laxmi Plaza, New Link Road DIN: 01286654
Andheri (W), Mumbai 400 053 Chairman & Managing Director

DETAILS OF RELATED PARTY TRANSACTIONS

A. (Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014) All related party transactions entered during the year were in ordinary course of business and on arms length basis and the same have been disclosed under Note No. 25 of the Notes to Financial Statements. No material related party transactions arising from contracts/ arrangements with related parties referred to in the Section 188(1) of the Companies Act, 2013 were entered during the year by the Company. The disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 in Annexure III have been provided elsewhere in this Report. B. Disclosures pursuant to Regulation 34(3) & 53(f) and Para A of Schedule V of SEBI (LODR) Regulations, 2015

Sl. No. In the Account of Disclosures of amount at the year end and the maximum amount of loans/advances/Investments outstanding during the year. Amount
1. Holding Company o Loans and advances in the nature of loans to subsidiaries by name and amount Nil
o Loans and advances in the nature of loans to associates by name and amount Nil
o Loans and advances in the nature of loans to Firms/Companies in which directors are interested by name and amount Nil
2. Subsidiary o Loans and advances in the nature of loans to subsidiaries by name and amount Nil
o Loans and advances in the nature of loans to associates by name and amount Nil
o Loans and advances in the nature of loans to Firms/Companies in which directors are interested by name and amount Nil
3. Holding Company o Investment by the loanee in the shares of parent Company and subsidiary Company has made a loan or advance in the nature of loan. Nil
Mumbai, May 19, 2023 By order of the Board
For JMD VENTURES LIMITED
Registered Office:
Unit No. 323 & 324, 3rd Floor, Bldg. No. 9 Dhruva Narayan Jha
Laxmi Plaza, New Link Road DIN: 01286654
Andheri (W), Mumbai 400 053 Chairman & Managing Director

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