pooja entertainment films ltd Management discussions

Economy Scenario:

The Entertainment and Media industries, 2022 marked an important inflection point. Total global entertainment and media (E&M) revenue rose 5.4% in 2022, to US$2.32 trillion. That represents a sharp deceleration from the 10.6% growth rate in 2021, when economies and industries globally were starting to rebound from the upheaval caused by the covid-19 pandemic. And in each of the next five years, the rate of growth will decline sequentially, so that by 2027 revenue will grow just 2.8% from 2026. Thats slower than the 3.1% rate of overall economic growth that the International Monetary Fund (IMF) projects for that year. (Source: PwC.com)

Media and Entertainment Industry:

Indias media and entertainment industry are unique as compared to other markets. The industry is well known for its extremely high volumes and rising Average Revenue Per User (ARPU).

This significantly aided the countrys industry and made India leading in terms of digital adoption and provided companies with uninterrupted rich data to understand their customers better. India has also experienced growing opportunities in the VFX sector as the focus shifted globally to India as a preferred content creator.

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. According to a FICCI-EY report, the advertising to GDP ratio is expected to reach 0.4% by 2025 from 0.38% in 2019.

The Indian Media and Entertainment (M&E) sector grew 20% in 2022 to reach INR2.1 trillion (US$26.2 billion), 10% above its pre-pandemic levels in 2019. Digital media has grown significantly, reaching INR571 billion and increasing its contribution to the M&E sector from 16% in 2019 to an astonishing 27% in 2022. It is important to note that the digital segments share of the entire M&E sector would rise to 50% if data costs were also to be factored in.

Business Overview:

Pooja Entertainment And Films Limited (BSE Script Code: 532011) is a leading Entertainment content house in the India and an Integrated player in the Media and Entertainment Industry. It co-produces and produces films, as well as exploits and distributes films in India and also in overseas through music release, theatrical distribution, DVD and VCD release, television licensing, and other new media distribution avenues.

Business Strategy:

The Company is having a twofold focus approach; one with development of own high-quality content and second in distributing Bellwood as well as international movies.

Our focus is on growth while delivering exceptional values to our customers, viewers and stakeholders. We strive to build strong competitive position in M&E industry on the back of quality content.

We emphasis on the need of the consumer which varies based on various factors like age-group, geography and language. We maintain our position by predicting audience preferences.

At PEFL, we distribute our content globally, using a robust network that we have built over decades. We are able to use our distribution strength to effectively monetise content and capture higher value. Customer segmentation is driving a multi - strategy approach

Operational Overview:

During the year, PEFL has released 1 movie viz. Cuttputlli.

Company continues its focus on building a strong movie slate for the future.

Financial Performance Overview:

Financial Results (Standalone & Consolidated):

(Rs In Lakhs)

Particulars	Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Total Revenue	4042.06	948.19	4662.70	2459.47
Total Expenses	3746.89	918.59	4357.64	2169.29
Profit before exceptional items & tax	295.17	29.60	305.06	290.18
Exceptional items	0.00	0.00	0.00	0.00
Profit before Tax	295.17	29.60	305.06	290.18
Tax Expenses	(18.30)	(10.41)	(18.30)	(10.41)
Other comprehensive income (net of tax)	0.00	0.00	46.47	12.10
Total comprehensive income for the year	276.87	19.20	333.23	291.87

Operational Overview:

During the financial year 2022-23, total revenue on standalone and consolidated increased to Rs 4042.06 Lakhs and Rs 4662.70 Lakhs as against Rs 948.19 and Rs 2459.47 respectively in the previous year; Profit before Tax for the current year is standalone Rs 295.17 Lakhs and consolidated Rs 305.06 Lakhs as against standalone Rs 29.60 Lakhs and consolidated Rs 290.18 Lakhs in the previous year and the total comprehensive income for the current year stood at standalone Rs 276.87 Lakhs and consolidated Rs 333.23 Lakhs as against standalone Rs 19.20 Lakhs and consolidated Rs 291.87 Lakhs in the previous year.

Opportunities & Threats:

Its an exciting time to be in the M&E business, as we leverage the three pillars of the industry - content, commerce, and community, fuelled by technological innovation. The sector is expected to grow 11.5% in 2023 to reach INR 2.34 trillion and further grow at a CAGR of 10.5% to reach INR 2.83 trillion by 2025.

In 2023, indications show that change in the media and entertainment business is likely to continue. Studios and video streamers face the reality of their own market disruption, trying to find profits in a less profitable business. They not only compete with each other for attention, time, and revenues, but with social media, user-generated content, and video games. The latter have evolved more quickly, staying close to younger demographics.

After a stellar 2021, virtual reality (VR) continues to take steps towards becoming a mass-market proposition. VR gaming content is the primary contributor to total revenue, bringing in US$1.9bn in 2021 and highest CAGR for the forecast period. Total cinema revenue will rise globally over the forecast period, and the pandemic-driven losses experienced in 2020 will be reversed, with the market hitting new heights in 2023. Box office revenue is set to reach US$49.4bn in 2026. Internet advertising comfortably leads the way as the largest advertising segment. An exceptional 31.6% year-on-year rise in 2021 put total global Internet advertising revenue at US$468.4bn, up more than US$112bn in absolute terms in 2020.

Instead of betting billions on content, UGC-based services focus on data technologies that target users with streams of personalized content and advertising in shippable interfaces. Such services are no additional cost to users, and the content is almost free to the services. Gaming can soak up idle time with mobile games, offers sophisticated narrative and social multiplayer experiences, and directly monetizes content expansions and digital goods. Both UGC services and gaming are competing more directly with streaming video, but each offers them opportunities as well. More SVOD companies are expected to expand their portfolios into gaming, either through IP deals or acquisitions. They will likely also work to better leverage social media and content creators without having to become social networks and UGC providers themselves. They may never regain the historic revenues of cables prime years (before the great streaming disruption), but the path forward will likely reveal new innovations, business models, and opportunities.

Segment Wise Performance:

At present, the Company is engaged in the business of film production, distribution and entertainment activities and there is no separate reportable segment.

Outlook:

Indias Entertainment & Media industry is expected to reach INR 4,30,401Cr by 2026 at 8.8% CAGR. The Indian Media and Entertainment outlook for the next few years is quite unique. There is an exciting pace of growth of digital media and advertising led by the deeper penetration of internet and mobile devices in our market. At the same time, traditional media will hold their steady growth rate over the next few years.

We shall see a very different profile of media and entertainment related businesses and revenue models emerging in the digital space once we have the rollout of 5G.

Total OTT revenue more than doubled in 2020, partly driven by the absence of public entertainment and additional time at home. This trend continued in 2021, with revenue nearly doubling again. While growth rates will slow, the market will still expand at an impressive 14.1% CAGR to reach INR 21,032Cr in 2026. It is subscription services that are driving this rapid growth, accounting for 90.5% of revenue in 2021 and set to account for 95% in 2026.

India is the third-biggest market globally in terms of admissions after China and the US in 2021 and is set to grow at the highest growth rate amongst all the segments at a staggering 38.3% CAGR in the forecast period to reach INR 16,198Cr by 2026. In 2021 more than 379mn cinema tickets were sold in India, a healthy increase year-on-year on the 278mn admissions in 2020 (and higher than the 226mn admissions in the US in 2020) though that had been a huge (-85.4%) drop as compared to the 1.9bn tickets sold pre-pandemic.

Industry press tends to focus on the companies that have dominated the E&M industry. But it is the choices that billions of consumers make about where they will invest their time, attention and money that are fueling the industrys transformation and driving the trends. We are seeing the emergence of a global E&M consumer base for the coming years that is younger, more digital and more into streaming and gaming than the current consumer population. This is shaping the future of the industry.

Internal Control Systems and their Adequacy:

Adequate systems of internal controls that commensurate with the size of operation and the nature of business of the Company have been implemented. Risks and controls are regularly viewed by senior and responsible officers of the Company that assure strict adherence to budgets and effective and optimal use of resources. The Internal control systems are implemented to safeguard Companys assets from unauthorized use or disposition, to provide constant check on cost structure, to provide adequate financial and accounting controls and implement accounting standards.

Disclosure of Accounting Treatment:

In the preparation of the financial statements for the year ended 31 ^st March, 2023, the applicable Indian Accounting Standards (Ind AS) have been followed. Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017.

Human Resource Development:

The Company comprises a small team of professionals, who are result oriented, committed and loyal. The number of permanent employees on the rolls of Company as on 31.03.2023 was 7. The Company is in Media & Entertainment industry, Human Resource Management (HRM) plays a crucial role in ensuring smooth functioning of this industry. The Company provides regular training and development programs to its employees to ensure that they are equipped with the necessary skills and knowledge to perform their roles efficiently.

Key Financial Ratios:

In the key financial ratios for the Financial Year ended 31^st March, 2023, viz., the Debtors Turnover ratio, Inventory Turnover ratio, Interest Coverage ratio, Current ratio, Debt Equity ratio and Operating Profit margin, there were no significant changes (i.e., change of 25% or more) as compared to the immediately preceding Financial Year.

Ratios	Calculation	2023	2022	Explanations
Debtors Turnover Ratio	Sales Revenue	2.15	0.56	Due to Increase in sales and Decrease in average trade receivables
	Average Accounts Receivable
Inventory Turnover Ratio	Cost of Goods Sold	0.8	0.25
	Average Inventory
Interest Coverage Ratio	EBITDA	6.37	1.95	Due to Increase in Interest Expense which is incurred on funds required for working capital
	Interest Expenses
Current Ratio	Current Assets	1.62	2.25
	Current Liabilities
Debt Equity Ratio	Total Outside Liabilities Shareholders Equity	0.33	0.25	Higher ratio on account of acceptance of loan for working capital requirement
Operating Profit Margin	EBITDA Sales Revenue	8.70%	6.68%	Due to Increase in Sales Revenue
Net Profit Margin	Net Income after tax Sales Revenue	6.85%	2.04%	Due to Increase in Turnover
Return on Net Worth	Net Income after tax Shareholders Equity	7.31%	0.55%	Due to increase in Net Income after tax

Cautionary Statement:

Certain statements contained in this Managements Discussion and Analysis ("MD&A") constitutes "forward-looking statements". These include statements about Managements expectations, beliefs, intentions or strategies for the future, which are indicated by words such as "anticipate, intend, believe, estimate, forecast and expect" and similar words. All forward-looking statements reflect Managements current views with respect to future events, and are subject to numerous risks, uncertainties and assumptions that have been made. Actual results could differ materially from those expressed or implied, depending upon global and Indian demand-supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.

For and on Behalf of the Board of Directors of Pooja Entertainment and Films Limited

Puja Vashu Bhagnani	Deepshikha Deshmukh
Managing Director	Director
DIN: 00044593	DIN: 02146210
Place: London	Place: Mumbai
Date: 02-09-2023	Date: 02-09-2023