Prime Focus Ltd Management Discussions.

Section 1

Prime Focus Limited (PFL, hereafter referred to as the Company) is a world renowned independent full-service media player. The Company enjoys a strong leadership position in all the three verticals it operates in, creative services (visual effects, stereo 3D conversion and animation), tech/tech-enabled (CLEAR, Media ERP Suite and Cloud-enabled media services), and Indian Film and Media services (FMS) (visual effects/DI, color grading, equipment rental, digital intermediate, picture post). Its operations are spread across 18 cities in 5 continents covering 7-time zones with a team of over 10,446 professionals. The Company is recognised on the Fortune India Next 500 list.

The Company has established a strong foothold in the Media and Entertainment (M&E) industry with more than two decades of rich heritage. It is a preferred integrated media service provider amongst top global studios, broadcasters, advertisers and production houses. Rich and unique asset class of the Company include View-D™ (stereoscopic 2D to 3D conversion), CLEAR™ (Hybrid Cloud technology-enabled Media ERP Suite) and Primetime Emmy award winning DAX Digital Dailies. The Company has an unmatched competitive edge with its World Sourcing delivery model which it has successfully leveraged across Global Digital Pipeline, partnering with content creators at every stage of the process, ensuring creative enablement, workflow efficiencies and cost optimization. Its strong global network provides for highest quality, fastest time to market and efficient pricing.

Prime Focus and its subsidiaries, Prime Focus Technologies (Global Cloud Technology Business) and DNEG (International Creative Services) provide end-to-end services in M&E industry, creative services, technology product and services, production services and post production services. The Company continues to be recognized globally as one of the leading VFX players and was recently honoured with 4th coveted Oscar in last 5 years for their work on First-Man. The Company earns more than 80% of its revenue from overseas markets, reflecting close knit engagement with leading Hollywood studios like Disney, Warner Bros, Marvel, Paramount, 20th Century Fox, Universal and Sony as major clients.

The Company is well poised for a profitable growth with all three verticals, viz. International Creative Services, Tech/Tech-Enabled Services and Indian FMS exhibiting robust growth led by modern technologies, synergy integration and high visibility in order book. The robust business performance is reflecting the benefits of increased content spend across studios, OTT platforms and cable networks.

Section 2

Financial Year 2018-19 Key Highlights

Financial Year 2018-19-Growth led by creative services

The Company delivered stellar performance in the year gone by, both on the financial and operational fronts. Significant investments in people and infrastructure were made well ahead of time to cater to the burgeoning visible contracted orders. The relentless efforts by the Company are validated both by enhanced profitability and recognition by the industry through awards and accolades.

The year saw improvement in operational efficiencies and posted Adjusted EBITDA Margin of 20.1%, above the mid-term target set out by the Company as it went through the integration phase post the landmark transactions executed 4 years ago.

The Company continued to attract marquee clientele and delivered work on several Hollywood blockbusters with a healthy pipeline visibility. It worked on 8 out of Top 10 worldwide top grossers of 2018. It also delivered creative services in 7 of the top 10 global BO hits released in 20181-Avengers: Infinity War (US$2,048 million), Black Panther (US$1347 million), Bohemian Rhapsody (US$900 million), Venom (US$855 million), Mission Impossible Fallout (US$791 million), Deadpool 2 (US$779 million) and Fantastic Beasts: The Crimes of Grindelwald (US$654 million).

The Companys subsidiary DNEG won its second consecutive VFX Oscar, making it four VFX Oscars in the last five years, with its work on First Man bagging the Academy Award for Best Visual Effects. DNEG also won awards for First Man and TV series Altered Carbon at the Visual Effects Society Awards 2019. PFTs ground-breaking native media recognition Artificial Intelligence (AI) platform, CLEAR™ Vision Cloud won Product of the Year Award & TV Technologys Best of Show Award at NAB Show 2019, as well as TV Technologys 2018 Product Innovation Award. PFTs television commercial (TVC) for Oppo F7 Smartphone was featured in YouTubes Top 10 Ads of the Year.

The Companys combined order book continues to be robust led by strong macro tailwinds in creative services-both in international and domestic markets.

During the year, the Company forayed into a new business stream-Music IP creation, which look promising to bolster growth in the future. It also hived off its Digital Lab business into a separate legal entity.. The Company collaborated with music director Pritam Chakraborty and Kwan, a leading talent management company, to create Jam8, a musical platform for servicing the M&E industry as a 360-degree creative solution provider.

Creative Services

• Delivered Hollywood blockbusters like Avengers: Infinity War, Deadpool 2, Mission Impossible: Fallout, Ant Man & the Wasp, Bohemian Rhapsody, Fantastic Beasts: The Crimes of Grindelwald, Alita: Battle Angel and Greyhound.

• Worked on other top projects like First Man, Bad Times at El Royale, Holmes & Watson etc.

• Won their 5th Oscar overall [4th Oscar in last 5 years] under Best Visual Effects category for their outstanding in-camera FX work on First Man

• Honoured with two Visual Effects Society Awards at the 17th Annual VES Awards Gala for its work on First Man and Altered Carbon (Netflix)

• Talent Acquisition team won the gold award for Best International Recruitment at In-house Recruitment Awards (IHRA)

• Continues to focus on upscaling and upskilling Indian artists to enhance margin profile

• Strong execution of VFX projects and continued broad basing in revenues with higher share coming from OTT/TV

• Revenues from new geographies continue to bolster growth

• Continue to have a robust Order book with high visibility

• Continued on its profitable growth path with Adjusted EBITDA growing at a robust pace year on year with healthy Adjusted EBITDA margins at 22.1%

Tech/Tech-Enabled Services business

• PFTs CLEAR™ Vision Cloud won Product of the Year Award & TV Technologys Best of Show Award at NAB Show 2019

• CLEAR Vision Cloud bagged TV Technologys Product Innovation Award for 2018

• PFTs flagship product, CLEAR Media ERP won TVBEuropes Best of Show Award at IBC 2018 in the Content Management category

• PFTs TVC for Oppo F7 Smartphone featured in YouTubes Top 10 Ads of the Year

• PFTs digital film for Brooke Bond Red Label awarded a Creative Abby at Goafest 2019

• PFT won awards for Best Cinematography and Best Ad Film at the Dada Saheb Phalke Film Festival 2019

New Client Wins:

• Signed deal with Enterr10 Television for content ingest, processing and On Air Promos

• Signed deals with leading brands like Wildstone, Madura Coats, Liva Fashions, Swiggy, Brand Factory, Nihar Naturals, Google, Fashion at Big Bazaar and 82.5 Communications (Ogilvy)

• Signed deal with Times Internet Ltd. for On Air Promo production services

• Signed deal with Netflix Inc. for dubbing

• Produced Mega Icons Season 1 for National Geographic Channel India

• Signed a deal with Sony Pictures Networks India for dubbing

• Signed a deal with Cooper Media for CLEAR Cloud MAM

New Contracts with Existing Clients:

• Migrated existing clients to the new DAX Production Cloud, opening possibilities for them to leverage other modules of CLEAR

• Upgraded Insight TV to Unified CLEAR and increased overall value of contract

• Grew business with clients like Big Bazaar, Marico, Tata Motors, Brooke Bond Red Label, Tata Sky and Madison India

• Grew business with Hearst Communications, automated its Archival operations

• Signed a new dubbing deal with Star India and a new subtitling deal with Viacom 18

• Signed a deal with Disney for catalog re-mastering

• Signed a deal with Sonar Entertainment for closed captioning

• Other Initiatives:

• Continued to invest in business development and sales efforts globally

• Partnered with Virtual Artificial Intelligence (AI), a leading UK- based provider of AI solutions to enhance AI capabilities of the Media & Entertainment (M&E) industry

India FMS business

• Worked on top blockbusters1 like Raazi ( 120+ crore), Race 3 ( 165+ crore), Stree ( 125+ crore), 2.0 ( 185+ crore), Thugs of Hindostan ( 145+ crore) etc.

• Worked on other big projects like Parmanu: The Story of Pokhran, Andhadhun, Bhavesh Joshi, Blackmail, Mannikarnika, Love Yatri etc.

• Worked on Indias first Netflix original series Sacred Games

• Worked on TVCs for Oreo, Watsapp, Star TV, Hyundai, Keventers Agro, Colgate, Swiggy, Paytm, Netmeds, Coca-Cola etc

• Higher OTT spends to augment business demand

• Forayed into new business streams-Music IP creation

Section 3

Global & Indian Media & Entertainment Industry Landscape

World Economy

World output grew at 3.6% in 2018, 0.2% weaker than in the previous year owing to a subdued second half. This was triggered by elevated trade tensions, softening in manufacturing, weak financial market sentiments, new fuel emission standards in Germany, natural disasters in Japan, concerns about Chinas outlook, and deceleration in industrial production outside the United States (US). The outlook for the world economy remains weak with output projected to grow at 3.2% in 2019 and 3.5% in 2020. This will be led by a persistent decline advanced economies together with a temporary decline in emerging market and developing economies (EMDEs) in 2019. The decline in EMDEs reflects contractions in Argentina and Turkey, as well as the impact of trade actions on China and other Asian economies.

World Economic output growth in %

2017 2018 2019P 2020P
World output 3.8 3.6 3.2 3.5
Advanced economies 2.4 2.2 1.9 1.7
US 2.2 2.9 2.6 1.9
Euro Area 2.4 1.8 1.3 1.6
Japan 1.9 0.8 0.9 0.4
UK 1.8 1.4 1.3 1.4
Other advanced economies* 2.9 2.6 2.1 2.4
Emerging Markets and Developing Economies 4.8 4.5 4.1 4.7
China 6.8 6.6 6.2 6.0
India 7.2 7.1 7.0 7.2

"Excludes the G7(Canada, France, Germany, Italy, Japan, United Kingdom, United States) and euro area countries P= projections

Source: World Economic Outlook

Economic growth in advanced economies is expected to slow from 2.2% in 2018 to 1.9% in 2019 and 1.7% in 2020. The slowdown will be driven by the negative effects of tariff hikes by the United States and China, new fuel emission policy in Germany, sovereign and financial risk in Italy, weak financial market sentiment and contraction in Turkey.

Growth in emerging markets is also expected to slow from 4.5% in 2018 to 4.1% in 2019 and gradually pick up to 4.7% in 2020. Growth in second half on 2018 and 2019 is mainly impacted by slowing external demand, rising borrowing costs, and persistent policy uncertainties. Chinas economy is expected to slow due to the combined influence of needed financial regulatory tightening and trade tension with the US.

(Source: World Economic Outlook)

Indian Economy

As per provisional estimates of Central Statistics Office (CSO) Indias gross domestic product (GDP) is likely to grow at 7% in FY19, the slowest growth in five years. Indian economy lost momentum towards the end of the fiscal year in the approach to general elections dragged down by weaker consumer spending and investments, and a marked slowdown

in manufacturing sector. Amidst heightened political tensions with Pakistan, the country faces the risk of declining foreign investments and tourism.

GDP growth in % inflation rate in %
2013-14 6.6 5.8
2014-15 7.2 4.9
2015-16 7.6 4.5
2016-17 7.1 3.6
2017-18 7.2 4.7
2018-19P 7.0 4.9

Source: CSO, IMF

Indias per capita nominal GDP is estimated to have grown by 10.6% in 2018, a five-year high, to Rs.140,000, as compared to a growth of 8.5% in 2017. It was also higher than the 8.5% growth in per capita GDP of China in 2018. According to International Monetary Fund World Economic Outlook (October-2018), Indias economy is expected to reach US$2,958 billion in 2019 overtaking France and United Kingdom to become the fifth largest economy in the World.

Near term growth could witness some support from the government spending announced ahead of general elections. Another stimulus likely to the GDP growth is the announcement in Interim Budget 201920 on direct cash transfer programme for farmers and the middle-class tax relief measures. In February 2019, the government provided capital infusions to public sector banks. These measures, combined with the application of the Prompt Corrective Action (PCA) framework, which requires timely recognition of bad loans, and resolution of bad loans through the Insolvency and Bankruptcy Code, are helping to address solvency and asset quality challenges.

Indias retail inflation slowed to a 19-month low in January 2019 at 2.05% before jumping to a four-month high of 2.57% in February 2019 led by higher prices of non-food items. Indias factory output, measured by index of industrial production (IIP) recovered to 2.4% in December 2018 from 0.3% in November 2018 before slowing down to 1.7% in January 2019. The drag in IIP is mainly attributable to sluggish pace of growth seen in manufacturing sector.


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Indias GDP growth has witnessed pressure in the second half of the fiscal led by lack of growth in agriculture and government consumption. Indias growth needs to be supported by prudent macroeconomic policies warranting both fiscal and monetary accommodation. Ease in monetary policy would be opportune with RBI cutting interest rates by 25 bps in February depicting the inclination to drive consumption.

As per the IMF World Economic Outlook, Indias GDP growth is expected at 7% in 2019 and 7.2% in 2020. It will benefit from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease. Though India continues to be in a sweet spot growing faster than China, it will be important to address bottlenecks like moderate rural income and manufacturing sector growth to improve prospects.

Global Media and Entertainment (M&E) industry

The US$ 1.9 trillion Global M&E industry as in 2017 is undergoing a rapid evolution with broad-based and consistent growth that is unevenly distributed. Three imperatives are affecting every company in the industry: convergence, consumer connects and the need to build trust. As per the Global Entertainment & Media Outlook 2018-2022 by PricewaterhouseCoopers (PwC), the global Media & Entertainment (M&E) market is expected to reach US$2.4 trillion by 2022, growing at 4.4% CAGR. Global box office rose 4.3% in 2017, but saw decline in France, the US and Australia. Global TV advertising witnessed first ever decline in 2017 and is expected to witness slow growth of 2.7% CAGR over 2018-2022.

Global digital revenue as % of total revenue

Convergence is at centre-stage with the borders that once separated the entertainment and media, technology and telecom industries dissolving rapidly. Large Internet access providers and delivery platforms are integrating vertically, and online giants are expanding horizontally into content. Traditional segment distinctions are blurring between print and digital, video games and sports, wireless and fixed access, cable and online, social and traditional media. This is leading to reinvention of business models so all companies can tap into new revenue streams and create relevance at scale. Some required capabilities include targeting fans and connecting more effectively with consumers to develop a membership mind-set. These technological advances are making it imperative to build and sustain consumer and public trust amongst a highly challenging environment.

Within the industry, the fastest revenue growth will be in digitally driven segments with virtual reality leading the way, expected to grow at 40.4% CAGR over 2018-2022, albeit from a low base. OTT video is expected to follow at 10.1% CAGR. Traditional media like newspapers and magazines are expected to witness revenues decline while books, radio and traditional TV and home video is expected to grow at a CAGR of less than 2%. However, in India, newspaper revenue is expected to increase by close to US$1 billion by 2022. Among the most dynamic segments, the video games and e-sports segments are likely to see 7.2% and 20.6% CAGR respectively, and global recorded music to grow at 6.1% CAGR.

Amongst countries, Nigeria and Egypt are expected to be the fastest- rising markets through 2022 with M&E markets expected to grow at 21.1% and 17.2% CAGR respectively, driven largely by surging Internet access spending. Barring Internet access, India is expected to be the fastest-growing country, at 10.4% CAGR, followed by Indonesia at 8.4% CAGR. However, no market in Western Europe or North America are likely to exceed 3% CAGR. In terms of absolute growth, Chinas M&E market is expected to match that of the US, placing the two on an equal footing in terms of global importance, even though the US remains a larger market in absolute terms.

Major growth drivers will be mobile content consumption, with the number of high-speed mobile internet connections expected to increase by 2.2 billion globally by 2022. It is expected that in 2020, a symbolic tipping point will occur when total global data consumption via smartphones overtakes fixed-broadband data consumption. This is changing the landscape for advertisers. 2018 is expected to be the first year in which global mobile Internet advertising revenue will exceed its wired equivalent. Social media and technology platforms are outpacing traditional content creators in capturing consumers attention and a rising share of their spending. Some traditional content companies are rising to the occasion by developing their own platform-like businesses.

The ongoing wave of convergence is creating a challenging environment for entertainment and media companies. Players are expected to demonstrate their trustworthiness across content, data, monetization, social impact and the appropriateness of advertising content.

(Source: Perspectives from the Global Entertainment & Media Outlook 2018-2022)

Indian Media and Entertainment (M&E) Sector

The Indian M&E industry provides direct and indirect employment to five million people as of 2017. As per EY report A billion screens of opportunity, Indian M&E industry touched Rs.1.67 trillion (US$ 23.9 billion) in 2018, growing at 13.4% over 2017. The industry is expected to grow at 12% CAGR over 2018-2021 to touch Rs.2.35 trillion (US$ 33.6 billion) by 2021 with increasing influence of digital technologies. Indias media consumption has grown at 9% CAGR over 2012-18, almost nine times that of US and two times that of China. Proving its resilience to the world, the Indian M&E industry is on the cusp of a strong phase of growth. Barring internet access, India is expected to be the fastest-growing country in the world, with M&E spending growing at 10.4% CAGR over 2018-2022.

The growth in the sector is mainly led by rising consumer demand, improving advertising revenues, and sharp increase in digital access and consumption with continued investment by telecom operators in 4G and content.

An interesting trend has been the growing global acceptance of Indian content which is reflected in the success of Netflixs Sacred Games, where two of every three viewers were outside India. With global digital platforms buying more Indian content, there is an opportunity for Indian content creators to showcase their prowess and make India a content creation hub.

Indian M&E industry: size and projections (in Rs.billion)

2017 2018 2019E 2021E CAGR 2018 -2021
Television 660 740 815 955 8.8%
Print 303 306 317 338 3.4%
Filmed entertainment 156 175 194 236 10.6%
Digital media 119 169 223 354 28.0%
Animation and VFX 67 79 93 128 17.4%
Live events 65 75 86 112 14.0%
Online gaming 30 49 68 120 35.4%
Out Of Home media 34 37 41 49 9.2%
Radio 29 31 34 39 8.0%
Music 13 14 16 19 10.8%
Total 1476 1674 1887 2349 12.0%

Digital media witnessed 41.9% growth over 2017. Digital video has seen an explosion in terms of consumption with 250 million online video viewers out of a total of 450 million broadband users in FY18. The remarkable turning point was the increasing propensity of Indians to pay for online content. The number of Indians who paid for any content in 2018 (not including those who consumed content through bundled telco offerings) increased from 7.5 million in 2017 to 12-15 million in 2018. The digital subscription market grew 262% to reach Rs.14.2 billion, of which the majority was video subscription.

Despite the sharp rise in digital media, there has been a unique trend wherein traditional media continues to grow in tandem. Newspaper readership in India has increased by 40% to 407 million in 2017 from 295 million in 2014. The Government of India has supported this sectors growth by taking various initiatives. This includes digitising cable distribution to attract greater institutional funding, increasing Foreign Direct Investment (FDI) limit from 74% to 100% in cable and Direct- to-home (DTH) satellite platforms, and granting industry status to the film industry for easy access to institutional finance. Traditionally, only advertising has been a key source of revenue for M&E industry, but of late revenue from subscription and value-added services has also contributed significantly. With consumers willing to pay for content and extra services, the subscription segment will play an important role in the post digitisation era.

(Source: IBEF report on Media and Entertainment Industry February 2019, EY report ‘A billion screens of opportunity)

Indian Film Industry

The Indian film segment grew 12.2% in 2018 to reach Rs.174.5 billion, driven by a 59% and 20% growth in digital/OTT rights and overseas theatricals respectively over 2017. The home video segment continued to witness a decline. Domestic film revenues crossed Rs.100 billion with net box office collections for Hindi films reaching its highest ever at Rs.32.5 billion. Overseas theatricals grew to Rs.30 billion from Rs.25 billion in 2017 with China emerging as the largest international market for Indian content. Box office collections of Hollywood films in India (inclusive of all their Indian language dubbed versions) were at Rs.9.21 billion.

Film entertainment gross of taxes (in Rs.billion)

Revenues 2017 2018 2019E 2021E
Domestics theatricals 96.3 102.1 110.0 130.0
Overseas theatricals 25.0 30.0 35.0 45.0
Broadcast rights 19.0 21.2 23.0 26.0
Digital/OTT rights 8.5 13.5 17.0 24.0
In-cinema advertising 6.4 7.5 9.0 11.0
Home video 0.3 0.2 0.2 0.1
Total 155.5 174.5 194.2 236.1

Hindi films contributed approximately 42.1% of the net box office collections, despite comprising only 13.4% of the films released. The top 50 and top 10 Hindi films contributed approximately 98% and 52.5% of the total Hindi net box office collections respectively. Films in other regional languages accounted for approximately 81% of the films released and contributed approximately 46.9% to the annual domestic box office collections.

In 2018, thirteen films joined the Rs.1 billion club, which is the highest ever. The film Sanju emerged as one of Indias all-time blockbusters earning Rs.3.34 billion at the box office followed by Padmaavat, Simba, 2.0, Race 3, Baaghi 2, Thugs of Hindustan, Badhaai Ho, Stree, Raazi, Gold and Sonu ke Titu ki Sweety. Apart from these, films in regional languages such as 2.0, KGF Chapter 1, Rangasthalam, Bharat Ane Nenu, Kaala, Arvindha Sametha Veera Raghava and Geeta Govindam had worldwide collections exceeding Rs.1 billion.

The year saw the top mainline studios continuing to bet on the regional cinema market for production and distribution of films driven by rising demand for local content. In 2018, 237 Telugu films were released.

Ram Charan starrer Rangasthalam reportedly earned Rs.2.15 billion internationally with a budget of Rs.500 million. Gujarati comedy, Shu ThayuRs. earned Rs.65 million within four days, with a nominal screen count of 212 in the Mumbai and Gujarat circuit. International Gujarati Film Festival marked its debut in USA. 197 Tamil films were released in 2018 with big budget films like 2.0 putting Indian cinema in the global spotlight, and content-based small budget films such as Pariyerum Perumal, Raatchasan, 96 and Vada Chennai winning critical acclaim. 50 Punjabi films were released in 2018 with box office collection of Rs.3.3 billion.

Hollywood films accounted for 10% of the total box office in the country. Local dubbed versions of Hollywood films in Hindi, Tamil and Telugu languages make up 50-60% of revenues in India. The biggest earner in 2018 was Avengers: Infinity War with Rs.2.22 billion (about $31.8 million), making up one-fourth of all Hollywood revenue in India. It was followed by Jurassic World: Fallen Kingdom ( 826 million), Mission: Impossible-Fallout ( 802 million), Deadpool 2 ( 580 million), Aquaman ( 526 million) and Black Panther ( 525 million).

Streaming services have helped Bollywood, where satellite rights are earning strong revenue. Digital rights redefined the content consumption processes as the segment grew from Rs.8.5 billion in 2017 to Rs.13.5 billion in 2018. Online platforms invested heavily in exclusive film rights and a digital-only film market has emerged. Amazon is leading the race, having picked up 13 of top 25 box office earners between June 2017-18. Padmaavat was one of them, whose digital rights were sold for Rs.800 million (about $11.5 million). Sanju earned Rs.500 million (about $7 million) in satellite rights. The box office failure, Race 3, recovered much of its budget via broadcast rights amounting to Rs.1.5 billion (about $21.5 million), reportedly the highest ever in Bollywood. At the same time, broadcast rights market continued to grow from Rs.19 billion in 2017 to Rs.21.2 billion in 2018, as movies contributed 24% of television viewership.

The biggest hindrance to Indias film sector is the lack of screens and screen penetration in tier-II, tier-III and tier-IV cities. Indias screens count at 9,601 is 25% lower as compared to that in China (55,623) and the US

(40,837). Multiplexes account for a large portion of that and contributed to around 55% of the domestic box office. In-cinema advertising grew to INR7.5 billion in 2018 on the back of growing multiplex screens.

The government initiative to reduce GST rate is likely to give impetus to the Indian film industry. From 1 January 2019, the GST rate on film tickets costing less than Rs.100 was reduced to 12% from 18% and the rate on tickets costing more than Rs.100 was reduced to 18% from 28%.

One of the significant developments was emergence of OTT platforms as a feasible alternative to theatrical release and a strong revenue stream for theatrical released films as well. This has emerged as the new distribution channel for small budget films which are relying less on theatrical revenues with digital contributing around 70-80% of overall collections. The impact of digital media on film industry is well evident in the fact that in 2019 India is likely to produce 1,200 hours of original digital content with all big production houses making huge commitments to digital content.

VFX and Post-Production

The total animation, VFX and post-production segment reached Rs.78.9 billion in 2018, up 18% over 2017, with 27% growth in VFX, 10% in animation and 12% in driven majorly by a 35% growth in VFX, with animation remaining steady at a growth rate of 13%. By 2021, it is estimated that Indias animation, VFX and postproduction segment will reach Rs.127.6 billion. Animation and VFX has been one of the fastest growing segments of the M&E sector for the past two years. The growth has been driven by an increased demand in domestic markets and the emergence of digital content serving platforms across the world. Traditionally, India has been a hub for outsourced animation and VFX services, but the increase in domestic demand and improvement in skills works in favour of the segment. At the start of 2018, India had around 300 animation, 40 VFX and 250 game development studios with more than 15,000 professionals.

Animation, VFX and post production revenue (gross of taxes in Rs.billion)

2017 2018 2019E 2021E
Animation 17.0 18.8 20.7 24.4
Post Production 18.3 20.5 22.7 27.8
VFX 31.3 39.6 49.5 75.5
66.6 78.9 93.0 127.6

Source: EY

The revenues from animation segment reached Rs.18.8 billion in 2018, up 10% over 2017. By 2021, it is expected to reach Rs.24.4 billion. Domestic broadcasting animation, accounting for 30-35% of total revenues generated in the Indian animation segment, is witnessing robust growth rate of around 30% which is expected to continue. TV comprises 65% of all animation in India, followed by film and digital at 15% and advertising at 5%. TV broadcasters are beginning to commission original animated shows and build their own library. Traditionally India has been a hub for animation services as using Indian production houses have resulted in savings of up to 50% as compared to international markets. With development of animation quality and cost-effectiveness in the country, global media companies are increasingly utilizing services of Indian animation studios.

The revenues from VFX segment reached Rs.39.6 billion in 2018, up 27% over 2017. By 2021, it is expected to reach a size of Rs.75.5 billion. Several international studios are increasingly using Indian companies for VFX services due to the compelling cost advantages. Even the domestic market is gradually expanding for VFX influenced by emergence of global digital platforms like Netflix. Indian producers, earlier willing to spend only 5-10% of content budget on VFX, have now expanded their spending to 15-20% of the budget. This change has emerged due to the success seen in movies like Bahubali and 2.0, which have significantly better visual effects. The domestic VFX revenues is expected to grow at a robust rate of 40% in the coming few years.

The revenues from post production segment reached Rs.20.5 billion in 2018, up 12% over 2017 and is expected to reach Rs.27.8 billion by 2021 led by growth in domestic demand from digital, film and television. In 2018, about 70% of post-production work done was for the domestic market led by a surge in number of local TV channels and digital content. Digital content budgets are typically ten times than those for television and spend substantially higher amounts on quality post-production. With low margin profile of the segment and profit primarily being driven by volumes, Indian companies are looking to acquire global postproduction houses to gain direct international client relationships.

The next phase of growth for the VFX and post production segment is expected to be driven by the digital push, by not only the OTT players but traditional broadcasters as well. Government incentives and schemes continue to play a vital role for Indian companies to remain competitive with international counterparts. In February 2018, the Union Cabinet identified animation, under the audio-visual category, as one of the 12 champion sectors which have a dedicated fund of Rs.50 billion. Increased investments into building talent base (skills like storytelling for animated content) will be seen.

(Source: EYFICCI Report)

Section 4

Company/Business Overview

Prime Focus Limited, the worlds largest independent and integrated media services provider, offers creative services, tech products & services, and other post-production services to the media & entertainment industry. Its operations are spread across 18 cities in 5 continents covering 7-time zones with a team of over 10,446 professionals.

In 1997, Namit Malhotra sowed the seeds of this large enterprise in a garage in Mumbai. Today, PFL has presence in Abu Dhabi, Bangalore, Capetown, Chennai, Goa, Hyderabad, Johannesburg, Kolkata, London, Los Angeles, Mohali, Montreal, Mumbai, New York, Noida, Toronto, Sydney, Vancouver. PFL is credited with strong leadership position in all the three verticals it operates in driven by a robust business model, pool of skilled professionals, strong balance sheet and backing of reputed investors. Its investors include Standard Chartered Private Equity, Horizon Coast, , Reliance Capital and Ambit Pragma Private Equity.

PFL has mastered the art of proving comprehensive solutions to leading studios, broadcast and advertising industries worldwide. It boasts of delivering high-end franchise movies in collaboration with top-tier studios. Its range of products and services include:

• Creative services like visual effects, stereo 3D conversion and animation

• Tech/Tech-Enabled Services like Media ERP Suite and Cloud enabled media services

• Production and Post-production services like digital intermediate, picture post, equipment rental, shooting floors and sound stages

With over 80% of revenues being generated internationally, it is imperative for the Company to leverage talent and technological strength across geographies in a way that facilitates seamless blending of creative and technological aspects to provide holistic solutions to its clients. The Global Digital Pipeline and pioneering World Sourcing delivery model, facilitate partnering with content creators across all stages for creative enablement, deriving better efficiencies and cost optimization. PFL is listed on the BSE and the NSE of India. Over the years, the Company has undertaken several strategic mergers and acquisitions to enhance its capabilities and establish global presence. These include:

• Operational merger of PFLs Creative Services arm with DNEG, a global leader in visual effects, in 2014

• Operational merger operations with the film and media services business of Reliance MediaWorks in 2015

• Strategic tie-up with Canadas Gener8 Media Corp, a significant player in stereo 3D conversion technology in 2015

• Acquisition of DAX, creators of Primetime Emmy awardwinning Digital Dailies in 2014 and Academy Award-winning Lowry Digital in 2015 (part of Reliance MediaWorls)

• Divestment of 30% stake in Digital Domain-Reliance, LLC

Our Client Base:

• Studios-Warner Bros., Disney, Marvel, Universal Studios, Paramount, Sony, Twentieth Century Fox, Legendary Pictures, Lionsgate and DreamWorks

• Broadcast networks-Bloomberg, Disney, Star, Hearst, Associated Press and Zee

• Others-ICC, BCCI, Cricket Australia, JWT, Lowe Lintas, Netflix, Amazon and Sky

Key businesses Creative Services

In July 2014, the Company merged its creative services offering with Double Negative (DNEG) to expand its international operations. The Company now boasts of being one of the largest independent and integrated VFX players in the world. DNEG is amongst the leading tier one independent VFX providers in the world, and its ability to bundle VFX with industry-leading stereo 3D conversion services makes it a unique proposition for leading Hollywood studios.

PFL is also a leading creative provider of VFX services to the Indian M&E industry and has worked on several blockbuster titles this year.

Creative Services: Selected Projects 2018-19 Hollywood

• Avengers: Infinity War

• Deadpool 2

• Mission Impossible: Fallout

• Ant Man & the Wasp

• Bohemian Rhapsody

• Fantastic Beasts: The Crimes of Grindelwald,

• Alita: Battle Angel

• Greyhound

• First Man

• Bad Times at El Royale

• Holmes & Watson

• Venom Bollywood

Production & Post-Production Services

Production and post-production services is another key segment of the Company. PFL is a global post production major with facilities in Mumbai, New York and London catering to local content markets. It has a highly talented team of professionals offering Digital Intermediate/ color grading, sound and picture post. In 2015, the Company merged operations with Reliance MediaWorks to strengthen its offerings and capture market share.

Production & Post-Production: Selected Projects 2018-19

• Raazi

• Race 3

• 2.0

• Andhadhun

• Soorma

• Stree

• Thugs of Hindostan

• Parmanu: The Story of Pokhran

• Bhavesh Joshi

• Blackmail

• Mannikarnika

• Love Yatri

Tech/Tech-Enabled Services

PFT offers a unique blend of media and IT skills, well-supported by a deep understanding of the global M&E industry. PFTs award-winning Hybrid Cloud-enabled Media ERP Suite, CLEAR along with its high quality Cloud Media Services help broadcasters, studios, brands, and service providers drive creative enablement, enhance efficiencies, lower Total Cost of Operations (TCOP) and realize new monetization opportunities. PFT has a widespread network of facilities and WorldSourcing model supported by a global digital pipeline. This allows the company to cater to customers across the world, helping them lower costs by automating business processes around content and managing their business of content better.

• 1.5 million hours of content managed annually

• 220 Hybrid Cloud locations

• 400 TV shows powered by CLEAR daily

• VoD fulfillment of 10 million assets annually

• 35,000 hours of Subtitling and Closed Captioning annually

• 50% of US primetime scripted network television production use PFTs product


The Creative Services arm of PFL, DNEG, is adept in providing visual effects, stereo 3D conversion and animation services. In 2014, PFLs creative services division merged operations with DNEG, a leader in visual effects with experience in working with leading Hollywood studios (Marvel, Universal, Warner Bros, Paramount, Twentieth Century Fox, Sony, Disney and Lionsgate) and directors (Christopher Nolan, David Yates, Ron Howard, Zack Snyder and Steven Spielberg amongst others).

The merged entity has emerged as the largest independent creative services provider with presence in 9 cities across three continents, employing almost 5,000 professionals. The advantage of DNEGs VFX leadership position and its stereo 3D conversion leadership position, further enhanced by a strategic partnership with stereo conversion company Gener8, has enabled the Company to offer high-quality bundled services at competitive prices. DNEG and Gener8 combined are a global leader in the stereo 3D conversion space commanding nearly 30% market share. These competitive advantages make DNEG a house of choice for Hollywoods VFX and stereo 3D conversion requirements.

The Creative Services division in addition, provides animation services, partnering with content creators across the production life-cycle to facilitate development of beautifully animated CG content. The Company leverages its experience, scale of operations and pioneering delivery model (WorldSourcing) to deliver high-end projects whilst ensuring high efficiencies, quality and cost optimization.

Highlights: 2018-19

• Delivered Hollywood blockbusters like Avengers: Infinity War, Deadpool 2, Mission Impossible: Fallout, Ant Man & the Wasp, Bohemian Rhapsody, Fantastic Beasts: The Crimes of Grindelwald,

Alita: Battle Angel and Greyhound. Also worked on other top projects like First Man, Bad Times at El Royale, Holmes & Watson etc.

• Continued to focus on upscaling and upskilling Indian artists to create a better margin profile

• Strong execution of VFX projects and continued broad basing in revenues with higher share coming from OTT/TV

Awards & Accolades:

• Won their 5th Oscar for their outstanding in-camera FX work on First-man

• Honoured with two Visual Effects Society Awards at the 17th Annual VES Awards Gala for its work on First Man and Altered Carbon (Netflix)

• Talent Acquisition team won the gold award for Best International Recruitment at In-house Recruitment Awards (IHRA)

Order book continues to be robust with high visibility.

Prime Focus Technologies (PFT)

The Tech/Tech-enabled services subsidiary of PFL, Prime Focus Technologies (PFT), is the creator of Enterprise Resource Planning (ERP) software, CLEARTM for the Media & Entertainment (M&E) industry. It offers broadcasters, studios, brands and service providers transformational solutions that help them lower their Total Cost of Operations (TCOP) by automating business processes around content and managing their business of content better.

Being a cloud solutions provider with a global delivery model and the worlds largest digital media services cloud infrastructure at its disposal, PFT delivers a vast range of technical, creative and new media services on cloud with defined Service Level Agreements (SLAs). These include Localization (Subtitling, Dubbing, Access Services and Text to Text Localization), Digital Packaging & Delivery, 4K Remastering & Upconversion, Quality Check (QC), Digitization services, Audio services, Live services, Metadata services and Creative services among others. PFT works with major M&E companies like Turner, PBS, 21st Century Fox-owned Star TV, Hearst, CBS Television Studios, 20th Century Fox Television Studios, Lionsgate, Starz Media (a Lionsgate company), Showtime, A+E Networks, Complex Networks, HBO, IFC Films, FX Networks, Miramax, CNBC Africa, TERN International, Sony Music, Google, YouTube, Novi Digital-Hotstar, Amazon, HOOQ Viacoms Voot, Cricket Australia, BCCI, Indian Premier League and The Associated Press.

Highlights: 2018-19

• Signed deal with Enterr10 Television for content ingest, processing and On Air Promos

• Signed deals with leading brands like Wildstone, Madura Coats, Liva Fashions, Swiggy, Brand Factory, Nihar Naturals, Google, Fashion at Big Bazaar and 82.5 Communications (Ogilvy)

• Signed deal with Times Internet Ltd. for On Air Promo production services

• Signed deal with Netflix Inc. for dubbing

• Produced Mega Icons Season 1 for National Geographic Channel India

• Signed a deal with Sony Pictures Networks India for dubbing

• Signed a deal with Cooper Media for CLEAR Cloud MAM

• Migrated existing clients to the new DAX Production Cloud, opening possibilities for them to leverage other modules of CLEAR

• Upgraded Insight TV to Unified CLEAR and increased overall value of contract

• Grew business with clients like Big Bazaar, Marico, Tata Motors, Brooke Bond Red Label, Tata Sky and Madison India

• Grew business with Hearst Communications, automated its Archival operations

• Signed a new dubbing deal with Star India and a new subtitling deal with Viacom 18

• Signed a deal with Disney for catalog re-mastering

• Signed a deal with Sonar Entertainment for closed captioning

Awards & Accolades:

• PFTs CLEAR Vision Cloud won Product of the Year Award & TV Technologys Best of Show Award at NAB Show 2019

• CLEAR Vision Cloud bagged TV Technologys Product Innovation Award for 2018

• PFTs flagship product, CLEAR Media ERP won TVBEuropes Best of Show Award at IBC 2018 in the Content Management category

• PFTs TVC for Oppo F7 Smartphone featured in YouTubes Top 10 Ads of the Year

• PFTs digital film for Brooke Bond Red Label awarded a Creative Abby at Goafest 2019

• PFT won awards for Best Cinematography and Best Ad Film at the Dada Saheb Phalke Film Festival 2019

Financial performance and highlights

Prime Focus delivered stellar financial performance with significant improvement in profitability led by Creative Service. The Company reported Income from Operations of Rs.2540 crores in Financial Year 2018-19, with 83% and 11% contribution from Creative and Tech/ Tech- Enabled Services, respectively. EBITDA margin remained robust at 20.1% as revenue synergies realized in terms of cross-selling and execution from lower cost-centres, such as India and Vancouver, climbed. The Company returned to positive xlPAT after going through a phased Integration plan across geographies and businesses.

Financial Highlights of Financial Year 2018-19 (Consolidated Audited Financials):

• Total Income of the company is at Rs.2,664 crores, compared to Rs.2,292 crores for the year ended March 31, 2018

• Adjusted EBITDA Margin reached 20.1% above the mid-term target of 20%

• Cash Profit (PAT + Depreciation + ESOP) is at Rs.302 crore; Cash Profit Margin at 11.3%. All business divisions on profitable growth curve.

• Creative Services revenue has grown 22% to Rs.2,212 crores in Financial Year 2018-19 from Rs.1,817 crores in the year ended March 2018. This business now contributes 83% to Group revenues and has an Adjusted EBITDA margin of 22.1%

• Tech/Tech-Enabled Services revenue at Rs.302 crores in Financial Year 2018-19 as against Rs.349 crores in the year ended March 2018; Adjusted EBITDA Margin at 11%

• India FMS revenue up 18.6% to Rs.203 crores in Financial Year 2018-19 from Rs.172 crores in the year ended March 2018. Adjusted EBITDA Margin is at 41.2% in the price-competitive Indian Market, a testimony to PFLs quality work

• Net Debt (Debt-Cash) is at Rs.2,324 crores as of March 2019

• Constant efforts towards reducing high-cost India debt via refinancing with cheaper and longer-tenure debt

Ratios March 31, 2019 March 31, 2018 Change Remarks
1. Debtors turnover 6.51 7.25 -10%
2. Inventory turnover We are not in trading or manufacturing business this measure is not needed
3. Interest coverage ratio 0.75 0.82 -8%
4. Current ratio 0.71 0.66 8%
5. Debt equity ratio 4.79 3.36 43% Addition of studio loan on balance sheet after regulatory approvals on RMW studio transfer. Addition of working capital facilities in Creative Services during the year.
6. Operating profit margin (%) 7% 8% -9%
7. Net profit margin (%) -1% -2% -34% Expansion in Canada has led to increase in operational cost this year, benefits will start seeping in from 2020.
8. Return on networth -6% -8% -19% Increase in depreciation due to expansion in Canada, depreciation on RMW studio assets, increase in finance cost on early settlement of puttable instrument of subsidiary

Section 5

Business Strategy

Over the years, the Company has grown profitably. In about five years the Companys revenue has grown 3-fold with EBITDA margin of 20.1% in Financial Year 2018-19. Going forward, the Company aims to continue to continue this pace of profitable growth led by following key drivers:

• In Creative Services, the company continues to offer its services globally and expand its footprints to newer geographies. To drive revenue growth and cost optimization, the Company continues to cross-sell through bundled offering

• In Tech/Tech-Enabled Services, the Company entered into a channel partner relationship with ColorTime in Los Angeles, and joined hands with Microsoft and GrayMeta in order to open up new monetization avenues

• In Tech/Tech-Enabled Services, the Company signed contracts with new and existing clients, thereby expanding customer base and creating an opportunity to cross-sell other modules and increase revenue from existing clients

The Company and its subsidiaries continue to consider options to raise funding through equity (including through private placement and public offering) and debt, and unlock value across the Group with a view to enhancing growth, shareholder value and the efficiency of the business.

Section 6 Outlook

The M&E sector continues to show great potential and is expected to witness stable, sustained growth over the next three years. Indias thirst for knowledge and escapism will ensure the M&E product remains a necessity. Digital consumption will grow, and monetization avenues will see great innovation to cater to the new Indian customer segments. Being one of the worlds largest independent and integrated media services players catering to top international clients and having bagged several global prestigious awards across its field of operations, PFL is well- suited to deliver. The Companys profitability is set to accelerate given higher scale, access to cutting-edge technology, substantial combined order book and increasing efficiencies across geographies.

The landscape of India M&E industry is changing from being primarily traditional to becoming more global with the digital wave setting in. Rising incomes and evolving lifestyles have led to higher demand for aspirational digital products and services. Higher penetration and a rapidly growing young population coupled with increased usage of 3G, 4G and portable devices is further augmenting demand of digital media.

An important development in the industry will be increasing share of revenue from subscription and value-added services with advent of digital media. Consumers increasing willingness to pay for these services will only boost the momentum.

The growth of digital infrastructure is enabling Indians to fulfil the need for personal content consumption, across languages and genre. This is bringing about a large shift in consumer behaviour from mass produced content to specific content defined to audience segments. The players in the industry are compelled to be innovative and creative and spend larger amounts on visual effects to better engage with the consumer.

Section 7 Opportunities and Threats

The new age digital media has created a steep upward trajectory, leading to strong growth in the M&E industry. Technological disruptions are creating new opportunities for the sector. Indian M&E is likely to emerge as a world-class media-tech sector on the back of access to global audiences through online platforms, its large talent pool, storytelling capabilities, post-production and VFX expertise and policy and regulatory certainty.

Technological changes across content generation, emergence of different platforms, evolved marketing and distribution are happening all at once. This is providing significant opportunities to players to match global standards and serve the consumers better with enhanced and enriched content.

There is a tectonic shift in the consumer behaviour with the consumer having access to reliable and high-speed internet. Content continues to rule the game and is forcing players to step up on creativity. Content has emerged as the primary factor garnering success, evident from the success of low budget and strong story lines over those with high power talent. The consumer is now demanding customisation in content compelling the creators to produce content for well-defined audience segments.

Indian content has gained significant popularity world over, seen with the global popularity of Sacred Games. High prevalence of global platforms in India and more so of Indian platforms being available globally has given a new platform to the Indian M&E industry. This provides humungous opportunity to create content for the world and support global content creators with the Companys talent, production, animation and VFX capabilities.

The Government in a recent white paper has signalled the deployment of 5G technology in India by 2020. 5G endowed with high-resolution and high-speed download of video content will act as a game changer for the M&E industry, particularly the OTT platforms.

While rapid digitisation is accelerating the growth of M&E industry, it is also creating several disruptions and challenges. With policies and regulations governing the industry unable to keep pace with fast spread and growth of digital media, the industry is presented with unique threats. Several global content leaders have made their way into the Indian M&E industry and tech-savvy start-ups are increasingly mushrooming. The Governments are struggling to ensure privacy and data protection.

Section 8

Risks and Concerns

Strict internal processes and controls enable the Company to effectively tackle the business risks it encounters on account of its presence across various business verticals and geographies. The management team is prompt in early identification of important risk factors and its effective mitigation. The prime risks have been highlighted below along with the likely measures that can be adopted to mitigate the same.

Industry risk: Any slowdown in the macro-economic environment impacting growth prospects of M&E sector puts at risk the growth potential of the Company.

Risk mitigation: The Indian M&E industry is expected to continue its robust growth trajectory riding growing digital access and consumption. Robust GDP growth also supports strong domestic demand especially in the rural regions with increasing penetration in non-urban and regional user base. Given its diversified portfolio and robust order book the Company stands in a sweet spot to mitigate any risks arising due to macro-economic slowdown.

Competition risk: Led by attractive growth potential the M&E sector is exposed to ever increasing competition by both national and international players.

Risk mitigation: There has been a structural shift in the competitive landscape of M&E sector with convergence across telecom, media and technology companies. As the Company is competent to provide high- quality work at quick turnaround time it is securely placed in the sector against any competition. The Companys focus on diversification and innovation coupled with years of experience in delivering quality work for leading production houses in Hollywood and Bollywood, helps to mitigate competitive measures. The Company embarks on continuous research and development, hiring best-in-class professionals and strong collaboration with leading global media service providers. The Company has always been at the forefront of innovation and developing novel patented technologies to initiate path-breaking trends in the sector.

Talent Risk: The Company is heavily dependent on human capital due to the nature of the business. In such a scenario retaining manpower and attracting fresh talent is of prime importance.

Mitigation Strategy: To ensure organizational success the Company strives to maintain its talent pool by incorporating best employee practices and providing challenging training across leadership level. The Companys strong HR policies provide a motivational and progressive work culture. The HR team ensures that the personal goals of the employees are well-aligned with that of the organisation. A lucrative compensation further ensures high retention rate and industry low attrition levels.

Profitability risk: With production houses operating on tight budgets coupled with professional talent coming at exorbitant costs the companies operating in the M&E sector face profitability risk as they operate on wafer thin margins.

Mitigation Strategy: The audiences preference for animation, VFX, digitization, quality content and post production in India is witnessing similar level of enthusiasm as those witnessed globally. The entertainment factor of films endowed with high-quality visual effects and post-production are finding better acceptance and higher box office collections. The Company being a leader in the space with high capabilities in offering bundled services stands in a sweet spot. It has a strong track record of delivering internationally acclaimed projects, high audience appreciation and better returns to the film-maker. This makes PFL a preferred company for big production houses, enabling it to secure better margins in an otherwise competitive and low margin industry.

Project risk: The Company constantly needs to increase the number of projects it undertakes to ensure sustained profitability.

Mitigation Strategy: The Companys vast geographical presence across -four continents helps it to attract larger number of projects. On the domestic front the ever-increasing popularity of visual effects and animation portends huge opportunities for the Company. Bollywood is amassed with big budget production houses looking to exploit the growing trend of VFX, animation etc. The Company is well-placed to work with the big directors as well as regional (Tamil, Telugu and Kannada) filmmakers.

Information and Cyber Security Risk: With content being the king, creative media and broadcasting companies are high targets of cyber breaches and frauds. Enhanced sophistication and complexity to such attacks necessitates the Company to up the ante on cyber security.

Mitigation Strategy: The Company has in place a robust risk-mitigation strategy and a response plan in place to respond in case an incident occurs. It ensures regularly patching and backing up network and maintaining an updated incident response plan. To minimise risks associated with employee breaches, the Company is investing in educating them about common cyber security risks like phishing campaigns, and also has a set policy for using personal devices at work etc. The Company thrives to protect its confidential data and strengthen controls.

Section 9 Internal Control Systems and their Adequacy

The Company is committed to good corporate governance practices and has well-defined systems and processes covering all corporate functions and units. The Board of Directors monitors the internal financial controls based on the internal control over financial reporting criteria established by the Company. The Company also has an Audit function to provide reasonable assurance regarding the effectiveness and efficiency of operations, safe guarding of assets, reliability of financial records and reports and compliance with applicable laws and regulations. The

Company follows stringent procedures to ensure accuracy in financial information recording, asset safeguarding from unauthorised use, and compliance with statutes and laws. All employees adhere to high standards of ethical conduct inspired by formally stated and regularly communicated policies.

Section 10 Human Resources

The Company believes that the key to excellent business results is a committed talent pool. Human resources are the most critical element responsible for growth and the Company acknowledges their contribution and works towards their satisfaction as a top priority. The Company conducts regular trainings for the employees to ensure skill upgradation and personal development throughout the various organisational levels. This is ensured through a series of in-house programs further supported by external trainings focused on behavioural and management skill upgradation.

The Company values its talent pool and works hard to retain its best talent by providing ample opportunities to grow. Open door policy makes the work environment transparent and enables employees to voice their opinion freely. The Company ensures safe, healthy and progressive work environment. HR policies ensure working together with the employees for their personal and professional development. The company stresses on building an enabling work environment leading to high retention.

The Company doles out a number of health and wellness initiatives on an ongoing basis. The Company maintains cordial relationship with its employees at all its manufacturing units.

The total strength of the Companys workforce as on 31st March, 2019, was over 10,446.

Section 11 Cautionary Statement

This report contains statements that may be "forward looking" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to the Companys future business developments and economic performance. While these forward- looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. The Company undertakes no obligation to publicly revise any forward- looking statements to reflect future/likely events or circumstances.