Mukta Arts Ltd Management Discussions.

Industry performance

While the global economy continues its slow growth, the Indian economy, in contrast, has remained the fastest growing major economy for the past two years. The World Bank continues to expect India to substantially surpass the growth numbers of China in the next two years as well.

The major drivers of the Indian media and entertainment industry continued to be television, print and film entertainment though, like in the previous year, digital media continued to outgrow all the other media and entertainment sectors growing 42% in 2018.

Online gaming is another fast growing sector and continuing its 60+% growth rate, it is expected to become a substantial contributor to the Indian media and entertainment sector in the near future.

The film sector grew by 12.8% reaching Rs 174.50 billions crores in revenues in 2018, supported partly by Digital / OTT and overseas theatrical revenues. Screen count grew from 9,530 to 9,601 with increase in Multiplexes, though single screens reduced further.

New developments included the introduction of the digital only film market.

In the near to midterm future, Indian content is expected to reach wider global audiences using the Global OTT platforms. Content producers shall continue to benefit from the high demand and rates of the OTT space in India. Multiplex chains are expected to focus more on budget multiplex chains to cater to the large middle class population of the country.

Company performance

The company continues to focus on its education and the exhibition businesses, through its two main subsidiaries.

Whistling Woods International (WWI) is on the growth trajectory with student count now at 1,043 and another year of 17% growth taking its turnover to Rs 47 crores. Its bottom line was partly affected due to changes in accounting disclosure norms but operating profits continued to grow.

The 2018 CILECT Congress was successfully organised with delegates from many countries participating.

Further, in continuing with its goal of innovation in Film & Creative Arts Education and with the recent success in the field of VR, WWI has commenced development work in other areas of Emerging Media including Augmented Reality,

Cognitive Science, Artificial Intelligence, Computer Vision and Machine Learning. Working closely with leading individuals / institutions in these fields, WWI continues to march

steadily towards including more areas of emerging media within its teaching.

After a year of extremely conservative consolidation, the exhibition business of the Company has started carefully adding screens with 6 in its subsidiary and 3 in its Joint Venture with Asian Cinemas in the Andhra / Telangana region.

The subsidiary in Bahrain is slowly finding its feet and has during the year turned PBT positive as its patron base becomes more dedicated.

The Company continues to be bullish on the exhibition business and is aggressively scouting for suitable opportunities to invest in or manage multi-screen properties.

The programming business, Mukta VN Films continues to perform steadily.

Mukta Arts Ltd. constantly strives to create and monetise high quality content. With regard to this monetisation, the company has entered into a pathbreaking deal with Zee Entertainment for the rights to the companys film library. The deal cements Muktas library as the most sought after in the film industry as of today.

With Connect 1 (C.1), the digital content creation and distribution arm of Mukta Arts, continues to monetise its non-fiction content on YouTube and with the newly created Mukta Digital Studios, the company has created a range of public service films, including the awareness video for Tree Plantation by the Maharasthra Forest Department and the ‘Vote Dene Jayenge campaign by the Election Commission of India.

The main focus though, remains on creating contemporary fiction content for OTT Platforms and TV. The targets are placed both within India (includes Hindi and Regional markets) & overseas through an in-house production or co-production with strategic partners. The company is negotiating with multiple studios for partnerships in this area as well as leveraging the brand and library of Mukta Arts.

In the film business, the company continues to develop its script library with some of the best talent in the business. Scripts are developed and are readying for production with key talent being hired. The company has identified the regional space as the key focus area of development. The regional space allows for healthy P&Ls since the cost of production can be kept to a minimum and return on investment can be relatively assured. With this in mind, Mukta has recently launched its latest Marathi Film poster at Goa Marathi Film Festival. The film ‘Vijeta will be in production in Q3 and released in early 2020. The company is looking at expanding the Marathi segment and is working on multiple films to follow this one.

In the TV business, the companys key focus point for the near future is forging strategic partnerships with key players in the Hindi, Marathi, South and Bangla languages. Our relationships with the biggest channels in these spaces means that by year end, a strong pipeline will emerge for production in these languages.