1. GLOBAL ECONOMIC SCENARIO:
Global economy grew 3.4% in CY22, slowing from the post-COVID rebound of 6.2% in CY21.
Growth was in-line with pre-pandemic average (2015-19) of 3.4% despite Russia-Ukraine
conflict and aggressive rate hikes by central banks. Advanced economies (AEs) saw
above-trend growth of 2.7% in CY22, higher than the 2.1% average seen in the five years
prior to the pandemic. This was led by strong growth in both US and Euro area which grew
at 2.1% % and 3.5% respectively. Inflationary pressures remained near multi-decade highs
in AEs, with US inflation averaging 8% Y-o-Y (highest since 1980s), while Euro area
inflation also averaged a multi-decade high of 8.4%. Developed market central banks
aggressively tightened their monetary policy to address inflation, with US Federal Reserve
raising rates by 450bps in CY22, while European Central Bank hiked rates by 250 bps.
Emerging Market and Developing Economies (EMDEs) grew 4% in CY22, below the pre-pandemic
average of 4.4% due to slowdown in Chinese economy amidst frequent lockdowns. China growth
eased to 3%, well below the pre-pandemic average of 6.7% on continued zero-COVID policy
and housing downturn. Crude oil prices were elevated during FY 2023, averaging $93/bbl,
remaining above $100/bbl in first half of the fiscal year due to Russia-Ukraine conflict
but receding in the second half with Chinese demand slowing and release of strategic
petroleum reserves from OECD countries.
Presently, it appears that the global economic situation is once again characterized by
increased uncertainty. In mid-April 2023, both the IMF and World Bank issued concerning
statements regarding the state of the world economy. The IMF projected a challenging road
ahead with global growth hitting a bottom in 2023, while the World Bank warned of a lost
decade due to an aging workforce, reduced investment, and slower productivity that are
affecting the worlds potential growth (defined as the maximum rate of economic expansion
without causing inflation). In its World Economic Outlook released in April 2023, the IMF
projected global growth to decline to 2.8% in 2023 from 3.4% in 2022, before settling at
3% during 2024-28. The global economy is being burdened by various factors such as the
recent financial sector instability in the US and Europe, the persistence in global
inflation, the spillover effects of the ongoing conflict in Ukraine, and the persistent
impact of the pandemic, which includes new waves of infections. These issues are hindering
global growth. The IMF has also brought attention to an alternate scenario in which severe
stress in the financial sector could lead to a decline in global growth to 2.5% in 2023.
In the base case scenario, global headline inflation is anticipated to decrease from 8.7%
in 2022 to 7% in 2023. However, underlying core inflation may persist at elevated levels
for an extended period. Although consumer price inflation has decreased from its recent
peaks in many economies due to lower energy costs and a reduction in supply chain
disruptions, core inflation has proven to be resilient. Despite the recent easing of
inflation, headline inflation remains significantly above the target rate in most advanced
and emerging market economies.
2. INDIAN ECONOMY:
Indias economy is recovering from the Covid-19 pandemic. In a globalised world, large,
open economies like India are also affected by external events. The war in Ukraine, rising
interest rates and tightening of liquidity will affect Indias growth this year. Despite
all these uncertainties, the World Bank expects Indias GDP to grow at 6.3% in the coming
year. The spike in global commodity prices pushed up prices in India too, with retail
inflation peaking at 7.79% in April 2022, above the medium-term target band of 2%-6% of
the RBI. The RBI took stringent measures to combat the rising prices, hiking repo rate six
times in FY 2022-23, from 4% at the beginning of May 2022 to 6.5% at the close of the
financial year. Private consumption, however, witnessed a strong surge fuelling a boost in
production across sectors. Domestic sector services activity remained resilient with
average Services PMI higher at 57.5 in FY23 vs 52.2 in FY22. Manufacturing too remained
robust with average manufacturing PMI higher at 55.8 in FY23 vs 54.1 in FY22. Credit
growth gained traction with year-on-year growth of 15% (as of March 23) while deposit
growth lagged with year-on-year growth of 9.6%, leading to a rise in incremental
credit-deposit ratio.
3. MEDIA AND ENTERTAINMENT INDUSTRY IN INDIA:
The Indian M&E sector grew 20% to Rs. 2.1 trillion (US$26.2 billion), 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 Rs. 2.34 trillion (US$29.2 billion),
then grow at a CAGR of 10% to reach Rs. 2.83 trillion (US$35.4 billion) by 2025. a.
FILMED ENTERTAINMENT:
The filmed entertainment segment recovered as theatrical releases doubled, and
reclaimed the fourth position overtaking online gaming. Over 1,623 films were released in
2022, which is 9% higher than 2019 levels. 335 Indian films were released overseas. Gross
box Office (GBO) revenues increased almost three times the revenues of 2021 to Rs. 105
billion. The Rs. 100 billion mark in GBO collections was crossed only the second time in
Indian history. Filmed entertainment recovered to 90% of its pre-pandemic levels. We
expect the film segment to continue to grow, driven by theatrical revenues as Hindi movies
go mass in their storytelling, incorporate more VFX to enhance the movie-going experience
and expand into tier-II and III cities. As per the FICCI EY Report, the Filmed
Entertainment segment will grow to Rs. 228 billion by 2025 driven by higher per capita
income, which will expand the cinema audience base to 120 to 150 million, and by offering
segmented offerings classy and massey for distinct audience sets across markets and price
points.
b. REGIONAL MOVIES:
There is a large expansion in regional films. On the 1,623 movies released this year
across languages, the highest number of films were released in Telugu (278), Kannada
(233), followed by Tamil (288) and Malayalam (199). Only 194 films were released in Hindi.
Eight Hindi movies that crossed the Rs. 1 billion marks and four Hindi films were among
the top 10 grossing films of 2022. Gross box office revenues increased almost three times
the revenues of 2021 to Rs. 105 billion c. OUTLOOK FOR THE INDIAN MEDIA AND
ENTERTAINMENT (M&E) INDUSTRY: Indias Entertainment & Media industry is
expected to reach US$73.6bn by 2027 at 9.7% CAGR. These figures come from PwCs Global
Entertainment & Media Outlook 2023-2027, the 24th annual analysis and
forecast of E&M spending by consumers and advertisers across 53 territories in 13
sectors, according to PwCs Report on ‘Global Entertainment and Media Outlook
2023-2027. The Indian Internet advertising market is among the fastest-growing in the
world, with a 12.3% CAGR expected to see total revenue climb from US$4.4bn in 2022 to
US$7.9bn by 2027. There will be growth across the market over the forecast period, with
the strongest performances coming in the mobile sector, where an overall CAGR of 13.7% is
expected to push total revenue from US$3.1bn to US$5.8bn. In the wired sector, revenue
will increase from US$1.4bn to US$2.1bn, at a CAGR of 8.9%", the report said. Indias
consumer book market will increase at a 3.7% CAGR between 2022 and 2027, with total
revenue increasing from US$1.1bn to US$1.3bn. Most of the growth will come from the
electronic books sector, where revenue will see an impressive increase at a 10.3% CAGR. In
the print sector, growth will be more modest, with increase at a 1.7% CAGR expected. Print
still dominates the Indian market, accounting for 80.1% of total revenue in 2022, with
electronic books making up the other 19.9%. Electronic books will gain ground over the
forecast period, making up 27.2% by 2027", said PWC Report. With new launches from
international players and increasing "pay-lite" options, OTT revenue has surged
in recent years, expanding a further 25.1% in 2022 to reach US$1.8bn. This is over six
times the revenue of 2018. The market will continue to grow at an impressive rate,
increasing at a 14.3% CAGR to produce revenue of US$3.5bn in 2027. This will be driven by
the competitive SVOD sector, which accounted for 78.1% of market revenue in 2022. Although
subscription service revenue will expand at a 13.0% CAGR to reach US$2.6bn,
advertising-supported services (AVOD) will grow at a higher rate, albeit from a lower
base, the report added. Indias TV advertising market recovered rapidly from the COVID-19
pandemic downturn, with revenue expanding 19.0% in 2021 and 11.9% in 2022 to reach
US$4.7bn. There remains considerable room for growth with advertisers keen to access
Indias vast population and large live audiences. TV ad spend will grow at a 6.4% CAGR to
reach US$6.5bn in 2027. At this time, India will be the fourth-largest TV advertising
market globally, after the US, Japan and China. The markets expansion continues to be
based on economic development and an increasing proportion of households having television
sets", it said.
4. THE ROAD AHEAD:
Indian M&E industry is on an impressive growth path. The industry is expected to
grow at a much faster rate than the global average rate. Growth is expected in retail
advertisement on the back of several players entering the food and beverages segment,
E-commerce gaining more popularity in the country, and domestic companies testing out the
waters. Rural region is also a potentially profitable target.
Factors that will Propel the Growth of the Multiplex Industry over the Foreseeable
Future i. GDP Growth & Per Capita Consumption: India is the fastest growing
economy currently and is expected to grow at the fastest pace for the next few years. By
2030, India could become worlds third-largest economy. ii. Higher Disposable Income: People
have greater discretionary money when their per capita income rises, which raises their
standard of living. Indias per capita income has doubled from Rs. 86,647 in FY 2014-15 to
Rs. 1,72,000 in FY 2022-23. iii. Lack of Out of Home Entertainment Options in
India: Multiplexes continue to remain the cheapest form of out of home leisure
activity in India as compared to theme park visits, diningout and vacations. iv. Improving
Lifestyle: Footfall at multiplexes has increased as the lifestyle choices of a
youthful and vast working population have improved. The lack of out-of-home entertainment
options in India, combined with excellent audio and visual experiences, a pleasant
atmosphere, and comfortable seating, are some of the elements fueling this need. v. Increasing
Focus on Customer Experience: Multiplexes are increasingly focused on providing a
high-quality customer experience, with comfortable seating, high-quality sound and
picture, and a range of food and beverage options. This focus on customer experience is
likely to drive demand for multiplexes in the coming years. vi. Technological
Advancements: Technological advancements such as 3D and 4D screenings, as well as
virtual and augmented reality experiences, are likely to drive demand for multiplexes as
customers seek out new and immersive entertainment experiences. vii. Increasing Number
of Malls: Over the last decade, the number of malls has increased dramatically.
Previously only found in Metros and Tier-I cities, they are now finding their way into
Tier-II cities as well. The expansion of multiplexes will also be aided by this deepening
footprint.
viii. Diversification of Content: Multiplexes are no longer limited to screening
mainstream films but are also showing independent and foreign language films, as well as
live events such as concerts and sporting events. This diversification of content is
likely to appeal to a broader range of customers and drive demand for multiplexes.
5. RISK FACTORS & CONCERNS: a. Ever changing trends in Media sector:
It may not be possible to consistently predict changing audience tastes. Peoples
tastes vary quite rapidly along with the trends and environment they live in. This makes
it virtually impossible to predict whether a particular show or serial would do well or
not. With the kind of investments made in ventures, repeated failures would have an
adverse impact on the bottom line of the Company. b. New Business Models:
Entertainment companies now have to figure out how to diversify and compete on smaller
scales. The company needs to interface more directly with consumers via social media
posts, pushing new content directly to streaming services rather than focusing on physical
albums or DVDs first. c. Talent Risk:
The success of most entertainment companies is dependent on its stars. The artists and
performers that audiences pay to see and listen to. But when so much of an album, a movie
or television shoot, or a concert revolves around an individual, that individual presents
as much risk as opportunity. Entertainment companies typically carry cast insurance to
cover extra expenses associated with executing Plan B, but changing plans last-minute can
introduce or elevate other existing risks.
6. RISK MANAGEMENT & INTERNAL CONTROLS:
The Company has a robust Risk Management framework to identify, evaluate business risks
and opportunities. This framework seeks to create transparency, minimize adverse impact on
the business objectives and enhance the Companys competitive advantage. The business risk
framework defines the risk management approach across the enterprise at various levels
including documentation and reporting. The framework has different risk models which help
in identifying risks trend, exposure and potential impact analysis at a Company level as
also separately for business segments. The Company has identified various risks and also
has mitigation plans for each risk identified. The Risk Management Policy of the Company
is available on our website http://sdctech.in/InvestorRelation.php?act=Policy. The Board
has adopted the policies and procedures for ensuring the orderly and efficient conduct of
its business, including adherence to the Companys policies, the safeguarding of its
assets, the prevention and detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable financial disclosures.
7. DISCUSSION ON FINANCIAL PERFORMANCE:
During the year under review, the Company has earned a Net Profit of Rs. 33.17 lacs as
compared to Net Loss of Rs. 139.57 Lacs in previous year. Your Directors are continuously
looking for avenues for future growth of the Company in Media and Entertainment Industry.
Particulars |
31.03.2023 |
31.03.2022 |
Reasons for Change of 25% or more |
Debtors Turnover |
1.71 |
0.80 |
After the pandemic the company had increased operations which led to
increase in the turnover and increase in credit cycle thus leading to increase in trade
receivables ratio |
Inventory Turnover |
5.37 |
8.64 |
After the pandemic the company had increased operations which led to
increase in the turnover which has held in decreasing the inventory in the hands of the
company. |
Interest Coverage Ratio |
1.09 |
110.32 |
Interest on Loan was waived by one of the Lenders for last year. |
| Current Ratio |
7.83 |
8.79 |
NA |
| Debt Equity Ratio |
2.95 |
3.96 |
NA |
| Operating Profit Margin |
0.60 |
0.50 |
After the pandemic the company had Increased operations
which led to increase in the turnover thus increase in net profit |
| Net Profit Margin |
0.01 |
-0.21 |
| Return on Net Worth |
0.07 |
-0.31 |
8. MATERIAL DEVELOPMENT IN HUMAN RESOURCES:
The Company firmly believes that human resources is an important instrument to provide
proper communication of the Companys growth story to its stake holders and plays vital
role in the overall prospects of the Company. So the Company takes possible steps for the
welfare of its manpower. The employee relationship was cordial throughout the year. We as
on 31st March, 2023, have 61 permanent employees on our rolls.
By order of the Board of Directors FOR SDC TECHMEDIA LIMITED
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Sd/- |
Sd/- |
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FAYAZ USMAN FAHEED |
SAMIA FAHEED |
DATE : 31.08.2023 |
(DIN: 00252610) |
(DIN: 02967081) |
PLACE : CHENNAI |
MANAGING DIRECTOR |
DIRECTOR |
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+91-9892691696
