Pritish Nandy Communications Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>

PRITISH NANDY COMMUNICATIONS LIMITED [ THE 32ND ANNUAL REPORT AND ACCOUNTS 2025 :

OVERVIEW OF THE BUSINESS AND ITS ENVIRONMENT

The year under review has seen intense activity for your Company in various stages of production and release across 3 original shows with the industry’s top 2 streaming platforms, Netflix and Amazon Prime Video. This was a first for us, but displayed abundantly to us, what we are capable of and set benchmarks for the future.

First up, the Company’s newest Amazon original series, Ziddi Girls, premiered on February 27, 2025, to much critical acclaim and audience fanfare and is currently in contention across award platforms and festivals for the diversity and originality of its content

Season 1 of the Company’s first Netflix original series, The Royals, premiered on May 9,2025 globally, and trended across 58 countries while holding onto its position in the top 10 shows of Netflix internationally for 4 weeks, a first for any Indian original till date. Netflix has since, additionally announced the second season of The Royals which is currently in developmental writing. Production of season 2 of The Royals is likely to commence during the current financial year.

During the year, the Company also Commenced the principal photography of Season 4 of the Company’s very popular and international Emmy nominated series, Four More Shots Please!, for Amazon Prime Video and the show is expected to release in the current financial year.

During the year under review, the Company’s total income reached ? 3,424.99 lakh with a net loss (after tax) of? 97.14 lakh. The Company continued to review advances for content as in the past and the Company has written off net amount of? 42.73 lakh incurred in developing content that is no longer viable to take up in the future.

As per the FICCIEY Report 2025, The Indian M&E sector continued to grow in 2024, at 3.3%. During 2024, the M&E sector grew by ? 81 billion to reach ? 2.5 trillion (US$ 29.4 billion). The M&E sector is expected to grow 7.2% in 2025 to reach ? 2.68 trillion (US$ 31.6 billion), then grow at a CAGR of 7% to reach ? 3,07 trillion (US$ 36.1 billion) by 2027. The Report has also shown a significant growth of digital media. With streaming platforms continuing to grow viewership, the immediate future of the content business looks stable and strong. Particularly for a Company like us, which makes shows for global streaming platforms. As per the FICCI EY Report 2025, Digital media overtook television for the first time to become the largest segment, contributing 32% of M&E sector revenues. The M&E sector contributes 0,73% to India’s GDP.

The PNC film library is streaming on multiple OTT platforms, giving our earlier work a new life, a new audience, apart from those who watch these films on satellite television on the Star TV platform. This growing viewership strengthens our Company’s repute as Storytellers to the World.

Our objective is to scale up our existing business primarily through continuing to create and make new content, both original series and movies, that top-rated global studios are ready to fund and acquire. Simultaneously, we intend to leverage our existing content library across various platforms on a global scale. Our business model intends to remain predictable, scalable, and sustainable, ultimately leading to profitability.

DIGITAL AND WELLNESS: THE SUBSIDIARIES

The Company has two subsidiaries viz. PNC Digital Limited and PNC Wellness Limited.

PNC Digital Limited

This subsidiary was kept in order to explore new opportunities that may emerge in the streaming business by leveraging the goodwill and stature of the PNC brand. One of its roles can be that of an intermediary providing distribution services to content makers who are struggling to shift from traditional media to digital, where our Company believes the future lies.

PNC Wellness Limited

This subsidiary operates in the wellness business segment which it pioneered in India when it opened Moksh: The Wellness Place in Mumbai. After a decade of innovative activity, with rentals increasing and the wellness business, like many others, shifting to digital platforms, Moksh was shut down.

The subsidiary however continues, intending to use the brand’s goodwill and reputation to build a digital opportunity at an appropriate time.

RISKS, CONCERNS AND THREATS

Like almost all businesses, the content business is also risk-prone. Shifting audience tastes and lifestyle patterns, continue to ensure that the theatrical market remains unpredictable for films. Distributors are risk averse and are reluctant to pay minimum guarantees upfront as are studios. The Company is currently focusing on de-risked strategies for recovering its investments in content. We currently make content that is pre-sold or commissioned. It is however possible that we may, in the future, if and when the market returns to normal, invest in shows and films where small investments may need to be made for a stake in the IPR.

The Company is constantly researching shifting audience tastes and trying to create innovative products that can meet the expectations of a maturing viewership which expects higher and higher standards of quality. For this, we are regularly updating our technological skills as well as anticipating trends. Global content consumption offers interesting insights as even the new generation of Indian viewers are increasingly watching the best of global content on streaming platforms.

The negatives of the Company’s archived filmed content are ageing and in the current digital scenario, can risk becoming technology-obsolete. To counter this and continue to generate income from these films, the Company has digitized its entire films archive. Our films, some of them over two decades old, continue to be shown on the best and most rewarding satellite and streaming platforms available.

INTERNAL CONTROL SYSTEMS

The Company has appropriate internal control systems in place. These systems constantly assess and vet creative ideas. There is collective responsibility at every stage of decision making and a Corporate Leadership Team, led by the CEO that includes representation from all key departments, examines and clears each project. The Company has in place an adequate system of internal controls of procedures covering all corporate functions. Systems of internal control are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls and compliance with applicable laws and regulations.

Adequate internal control measures are in the form of various policies and procedures adopted by the management covering all important activities like revenue management, production, purchase, finance, statutory compliances, human resources, systems management, safety and audit. These policies and procedures are updated from time to time. Compliance is monitored by internal audit. The effectiveness of internal controls is reviewed through the internal audit process, which is undertaken for every operational activity. The focus of these reviews is as follow:

• Identify weakness and areas of improvement

• Compliance with defined policies and processes

• Safeguarding of tangible and intangible assets

• Management of business and operational risks

• Compliance with applicable statutes

• Compliance with the PNC Code of Conduct

The business process under the supervision of the Audit Committee of the Board oversees the adequacy of internal control environment through regular reviews of the Internal Audit Report and monitoring implementations of internal audit recommendations through the compliance reports submitted to them. The Company is faced with different types of risks which need different approaches for mitigation.

On a primary basis our Company has identified and categorized the following risks:

Operational risks like injury to lead actor/s and/or technical crew, loss by fire, high personnel turnover, piracy, delay in production cycles for reasons beyond our control, censor certification, litigation, recovery of pending dues, unanticipated technological shifts, shifting trends in consumption patterns, and statutory and legal compliances. Financial risks like shortage of working capital, diminution of asset values, data loss, inventory loss, bad debts and theft/loss of cash and valuables. Intangible asset risks such as piracy, misuse of intellectual property rights and injury to the PNC brand image.

Depending on the nature, impact and probability of the risk, our Company has various mitigating solutions like providing for contingencies, taking insurance cover wherever possible, devising appropriate marketing strategies, aligning pay scale with industry standards, training staff and offering growth opportunities, maintaining work-life balance, providing for leisure, installing proper payment systems, ensuring effective project management, forming multiple teams with experienced team leaders, ensuring that the content complies with guidelines, ensuring proper contractual documentation of all acquired rights, ensuring clarifications are disseminated swiftly in the event of any mis-reporting, identifying new platforms, ensuring staff familiarity with the latest technology, identifying trends, carrying out research, ensuring proper filing of statutory documents and returns, ensuring proper budgetary planning and cash flow, complying with proper depreciation accounting policy, ensuring timely replacement of technology at best prices, maintaining proper inward and outward register for content, checking the library periodically, initiating legal action whenever required, monitoring cash levels and installing cash safe investing in liquid funds or fixed deposits, registering intellectual property with appropriate authorities and monitoring and managing brand imaging.

The Company has in place a Risk Management Policy, pursuant to provisions of S ection 13 4 of the Act and Regulation 17 of SEBI Listing Regulations. The Company has an organisational structure for managing and reporting on risks. The senior management periodically reviews the risk management framework to keep updated and address emerging challenges. Risk assessment and management procedures and status are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. In terms of Regulation 21 of SEBI Listing Regulations, the constitution of Risk Management Committee was not applicable during the financial year 2024-25.

FINANCIAL PERFORMANCE

During the year under review, the Company’s total income reached ? 3,424.99 lakh with a net loss after tax of? 97.14 lakh. The Company continued to review advances for content as in the past and the Company has written off an amount of? 42.73 lakh incurred in developing content that is no longer viable to take up in the future.

HUMAN RESOURCES

The Company is continuously building its talent base. Its Corporate Leadership Team has qualified and experienced members drawn from different specializations. The middle management cadre has been developed and strengthened. The Company, as a policy, sees its core content making business essentially as project management. It prefers to assemble talent teams for each content project and these teams are disbanded once the project is complete. The talent bank that PNC has access to remains independent and is yet available to the Company at short notice.

The Company enjoys cordial relations with its employees and the talent that it hires on a project basis.