MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Business Review:
The global economy had largely recovered from the COVID-19
pandemic and the conflict between Russia and Ukraine by 2022, but it continued to endure
unforeseeable crises. Inflation reached multi-decade highs in several economies in 2022 as
a result of pent-up demand, supply disruptions, and rising commodity prices. This prompted
central banks to aggressively tighten monetary policy in an attempt to return inflation to
target levels. The global economy is expected to grow by 2.8% in 2023 and 3.0% in 2024, as
compared to 3.4% growth registered in 2022.
The impact of the most recent liquidity issues following a
string of global bank crises appears to have been contained by the rapid intervention of
central banks. However, the authorities and government had effectively contained the
financial crisis by swiftly implementing the necessary measures to control it. The
advanced economies are expected to experience a GDP growth rate of 1.3% in 2023 and 1.4%
in 2024, as against 2.7% growth in 2022.
Chinas reopening in 2022 and sustained global financial
conditions have contributed to a strong beginning for emerging markets in 2023. Emerging
markets and developing economies, which grew by 4.0% in 2022, are anticipated to continue
to grow by 3.9% in 2023 and 4.2% in 2024. The impressive regional growth projections and
robust economic development in India and other ASEAN nations would lead to emerging
markets outperform other global markets in the future.
Media and Entertainment Industry:
The Indian Media and Entertainment (M&E) industry 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 Media and Entertainment industry has shown immense resilience and
has bounced back post the COVID blip. The industry is primed to drive a continuously
growing user base, consuming more and more content, through innovations on multiple
fronts.
Indias Media and Entertainment industry is poised for
substantial growth, with a projected market size of USD 53.99 billion by 2026. The Indian
M&E sector grew 20% to US$26.2 billion i.e., 10% above its pre-pandemic levels. While
television remained the largest segment, digital media cemented its position as a strong
number two segment followed by print media.
The M&E Sector is expected to grow 11.5% in 2023 to
reach US$29.2 billion and US$35.4 billion by 2025. The advertising sector in India is
expected to play a significant role in this growth, with advertising revenue projected to
reach USD 5.42 billion by 2024. Indias subscription revenue is projected to grow at 2%
and reach USD 4.94 billion.
In 2022 (i.e., in the months of January-July), PE/VC
investments in the media and entertainment industry was at USD 3,389 million. FDI inflows
in the information and broadcasting sector (including print media) stood at USD 9.85
billion between April 2000-September 2022. One of the key drivers of growth in the media
and entertainment industry in India is the increasing demand for content among users.
Within the media and entertainment sector in India,
television is projected to retain its position as the largest segment, with an expected
CAGR of 7%. TV segments revenue is expected to reach USD
12.01 billion by 2023. The Indian mobile gaming market is
poised to reach USD 7 billion, in value, by 2025. The advertising-based video on demand
(AVoD) segment is expected to rise at a CAGR of 24% to reach USD 2.6 billion by 2025.
The Government of India has increased the FDI limit from
74% to 100%. The growth of the media and entertainment sector in India is driven by
various factors, including the rise of platforms such as YouTube that provide free access
to recent and video content-linked music. This trend is expected to fuel the growth of the
paid over-the top (OTT) music sector, with an estimated 5 million end users by 2023. This
is projected to generate revenue of approximately USD 27 million.
Indias rural regions are anticipated to be the next
frontier for growth in the media and entertainment industry. With the adoption of 5G
technology and plans for 6G already in the pipeline, India is at the forefront of digital
advancement. This push towards digitalization, particularly in rural areas, presents
advertisers and publishers with significant opportunities to tap into untapped markets and
contribute to the growth of Indias media and entertainment industry.
Digital leading growth:
The Indian Media and Entertainment (M&E) industry has
been a major contributor to the countrys
GDP and has been growing rapidly. The M&E industry
exerts immense influence and transformational capacity over society. The industry has
demonstrated its adaptability and willingness to confront and overcome obstacles by
regaining its former appeal and outperforming its prepandemic performance. The following
table shows the health and future growth of media and entertainment Industry.
The Indian television industry recorded revenues of 709
billion in 2022, a decline of 2% compared to 720 billion in 2021. Despite the marginal
growth of 1.6% in the television advertising segment in 2022, the decline in growth of
approximately 3.7% in the distribution segment impeded the overall growth of the
television segment. Television advertising grew by 2% in 2022, as it is the most
cost-effective mass medium in terms of ad rates, and as a result of a slight decrease in
ad rates. We have huge number of households yet to be televised. Hence opportunity exists
for roll out of our offerings for a much longer period. Moreover, varieties of TV
manufactured by reputed International brands hasten the replacement of old models of TVs,
which further requires upgraded Set Top Boxes which are being offered by our Company.
Television subscription revenue experienced a decline of 4% YoY, due to a reduction of
five million pay TV homes and stagnant consumer-end ARPUs (Average Revenue Per User). The
decline in homes has been caused by both cord-cutting at the top of the consumer pyramid
and a shift to free DTH at the bottom of the pyramid. In 2022, broadcasters earned revenue
from 107 to 115 million paid subscriptions, compared to 110 to 130 million in 2021. The
decline in paid subscriptions can be attributed to subscribers leaving and migrating to
FTA (Free to Air) and/or digital streaming, including social media, short video, and
gaming platforms, as well as a small number of subscribers shifting their consumption to
connected TVs. Connected TV sets reached 25 million units in 2022 and are expected to
reach to 45 million units by 2025. In addition, the increased adoption of permanent and
temporary work-from-home cultures has resulted in a large ‘laptop audience, which
has been the primary reason for second TV sets not being reconnected and for pricing
parity between linear TV feeds and OTT. By creating lower-priced FTA packs, differential
pricing and bundling for rural markets in accordance with the Telecom Regulatory Authority
of India (TRAI) most of the cable dark households could be brought into the mainstream.
Moreover, reactivating millions of inactive set-top boxes through incentive schemes, and
creating relevant content bundles for unpenetrated markets, would also assist in demand
creation for the cable and broadcasting market.
Indian Economy:
India has emerged as a major global economy over the past
decade due to the governments consistent efforts to encourage balanced growth and
equitable development. When global markets began to show signs of slowing economic growth,
India remained resilient and is now the worlds fastest-growing economy, clocking 7.2% YoY
(Year over Year) GDP growth in FY 2022-23, according to the National Statistical Offices
Second Advance Estimates Report. The recent outperformance of Indias economy, 122 :
ANNUAL REPORT 2022-23 its enormous and expanding population, and its rapid ascent as a
manufacturing alternative to China have all attracted significant global investor
interest. During FY 2022-23, international exports of goods and services reached new
heights, with robust demand for Indian services fuelling the economic growth within the
country.
The Reserve Bank of India (RBI) tightened its monetary
policy to maintain a balance between inflation and growth as consumer inflation grew in FY
2022-23. The RBIs Monetary Policy
Committee (MPC) halted the repo rate increase cycle and
maintained its ‘withdrawal of accommodation stance after raising the repo rate from
4.0% in May 2022 to 6.5% in February 2023 over the course of five separate sessions. The
RBI anticipates that consumer inflation will decrease to 5.3% in FY 2023-24, and its SPF
(Survey of Professional Forecasters) report forecasts real GDP growth of 6.0% for FY
2023-24 and 6.4% for FY 2024-25. Digital India scheme was introduced in 2015 to transform
India into a digitally empowered society and knowledge-based economy.
Following the implementation of digital payment services in
India, e-commerce has experienced significant growth, especially in the aftermath of the
pandemic. According to the State of Indias
Digital Economy Report 2023 by ICRIER (Indian Council for
Research on International Economic Relations), approximately 23 billion digital payment
transactions were recorded in India during FY 2022- 23. Recent estimates indicate that
approximately 300 million Indians use UPI, making India the worlds second-largest digital
payment system after China. Moreover, it is anticipated that the Union Budget FY 2023-24s
emphasis on capital expenditure will stimulate private investment, increase job creation
and overall consumer demand, and enhance Indias growth potential. Several measures and
strategies have been implemented to facilitate the granting of credit to micro, small, and
medium-sized enterprises (MSMEs) and businesses. Accelerated digital transformation and
increased demand for high-speed data, increased adoption of 5G services, along with the
incorporation of cutting-edge technologies such as artificial intelligence, the Internet
of Things (IoT), and machine learning, would also significantly contribute to the digital
empowerment of the nation. We have seen green shoots in private capital expenditure, mild
increase in rural consumption, acceleration in services export and improved PMI in recent
months.
Internal Control System and their adequacy:
The Company through its management is responsible for
establishing and maintaining adequate internal control over financial reporting
commensurate with its size and nature of business. Our internal control systems are
effective to provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of our financial statements for external purposes in
accordance with the generally accepted principles of accounting. The internal control
systems provide for well-defined policies, guidelines, authorizations and approval
procedures.
Opportunities:
The way in which we consume news and entertainment has
changed dramatically over the past decade, creating both challenges and opportunities for
traditional broadcasters. Think about it: Millennial spend more time streaming content
than watching it on television, and more than 30 percent of them are viewing shows on
their mobile devices.
The following are the opportunities:
? The rising interest in shorter forms of content such as
serialized web and YouTube segments that are a mere six to ten minutes in length.,
? Content creators have a relationship with the end
consumer like never before and derived insights about users allow for content and ads to
be more personalized.
? Companies that can figure out how to push discovery of
their content to consumers or help them discover it for themselves will have a leg up in
this competitive space.
Threats:
1. Competition from other countries like Taiwan,
Philippines, Korea and China;
2. Ever changing technology;
3. Lack of awareness in foreign countries;
4. Inadequate funding for capex and investment in manpower;
5. Lack of support from government.
Challenges, Risks and Concerns:
Digitization forms a new business frontier, with
geographical barriers to trade in Asia being leapfrogged by technology. The rapid growth
of both domestic and cross-border e-commerce, and particularly smart phone-focused mobile
commerce (m-commerce) has created real-time access to previously inaccessible markets
across Asia. It has also catalyzed entire new business models and value chains, and added
speed and dynamism to both B2B and B2C procurement processes. As a result, individual
entrepreneurs and tech start-ups as well as regional and multinational firms can utilize a
multiplicity of channels to interact with existing, newly acquired and prospective
customers and clients at any time of the day or night. But the catalytic impact of
digitization also brings unique challenges. Cutting through the cluttered desert of data
engages the regions brightest analytical and marketing minds, while cross-border trading
and trading in untapped areas within the same country can create unexpected logistical,
distribution and after-sales service challenges.
As a result, the quest to seamlessly manage digital and
traditional channels is becoming more complex and more resource-intensive, and choosing a
specialist Market Expansion Services partner to help deliver real competitive advantage is
a critical business decision.
Discussion on Financial Performance with respect to
Operational Performance:
During the year under review the Company has achieved a
turnover of Rs.20,40,939/-, profit after tax for the current financial year was
Rs.15,68,301/-. The paid-up capital of the Company as on March 31, 2024 is
Rs.17,00,99,000/- comprising of 8,50,49,500 equity shares of Rs. 2/- each.
Human Resources Development and Industrial Relations:
The Company firmly believes that Human Assets are more
critical than physical and financial assets as they are the ones who manage and sustain
the growth of physical and financial assets of the company. The Company is well on its way
in establishing an integrated system of workforce, which endeavors to develop the
capability of its employees that clearly aligns with the business objectives and
performance. Further, we also encourage individual and team awards to sustain and
institutionalize the various workforce practices. This helped in giving lots of
encouragement to the workforce who have been striving hard to achieve various goals.
Cautionary Statement:
Statements in this Management Discussion and Analysis
describing the Companys objective, projections, estimates and expectations may be
‘forward looking statements within the meaning of applicable laws and regulations.
Certain observations made on the industry and other players also reflect on opinion by the
management and the management accepts no liability on such opinions. Actual results might
differ materially from those either expressed or implied.
FOR AND ON BEHALF OF THE BOARD SD/- SRINIVASA SUDHISH
RAMABHOTLA CHAIRMAN & MANAGING DIRECTOR DIN: 00027816
22.04.2024 Hyderabad
+91-9892691696
