sambhaav media ltd share price Management discussions


Economic Scenario:

Global Economic Scenario:

The global economy has almost gradually recovered from the impact of pandemic and at the same time facing new challenges emerging due to geopolitical conflicts mounting inflationary pressure. Many Central Banks are in process to build robust monetary policy and therefore it is expected to have a positive impact on global economies in general. Despite monetary tightening, inflation is persistent in many key economies and it is anticipated that global inflation will fall from 8.7% last year to 7% this year and will settle at around 5% in the year 2024.The International Monetary Fund has recently projected that global growth will experience a slowdown to 2.9% in the year 2023 but is expected to recover and increase by 3.0% in the year 2024.

Indian Economic Review:

After pandemic attack, tremendous recovery has been shown by Indian economy current scenario is well-positioned to resume its prepandemic growth by FY24, surpassing many other countries in the process.

India is expected to remain a bright spot amid the global growth slowdown:

GDP growth: cross country comparison The National Statistical Office (NSO) estimated Indias real GDP

growth at 7.0% in FY 23, as compared to 9.1% in FY 22. Growth 10 9.1 in FY 22 was high partly due to a favorable base effect on account

of a contraction of (5.7%) in the Covid year of FY 21.The IMF in its January 2023 issue of the World Economic Outlook Update has projected Indias growth to dip transitorily to 6.1% in FY 23 before improving to 6.8% in FY 24. Despite this, India is projected to remain the fastest growing major economy in the world. India is expected to contribute 15% of global growth in 2023. The IMF has attributed this primarily to Indias efforts towards digitalization and a strong policy framework. In particular, the 2023 (FY 24) Union Budget has signaled a resumption of fiscal consolidation while boosting capital expenditures and an increasing emphasis on transitioning to a green economy. These measures would enable laying down a strong foundation for a robust medium-term growth.

_g Indian Economy is performing outstanding and has made

remarkable progress over the last decade, ascending from the tenth to the fifth position in global economic rankings. It has been 2018 2019 2020 2021 2022 2023 2024 noted that India has also been the fastest-growing major economy

for three consecutive years, providing a beacon of hope amidst a India United states world economy grappling with recessions, high inflation, elevated

Euro Area EMDEs public debt, and dwindling household incomes.

—¦—China World In year 2023, Indian Economy has gained positive impact of in

terms of high public and private investment and consumption. In

Source (basic data): IMF World Economic Outlook October 2022;

addition to that export has also played remarkable role to escalate

IMF World Economic Outlook January 2023 update; NSO, MoSPI

Notes¦ growth of Indian economy. However, these gains were partially

offset by increased energy import bills, which deepened the current account deficit and reduced reserves. High growth in energy-related imports is mainly due to the challenging external environment. If the present energy import growth rate continues, the energy import bill will exceed the bill for all remaining merchandise imports in the next two years. And the energy import bill is likely to exceed the $1-trillion mark by December 2026. In late 2022, the Reserve Bank of India has implemented stringent policy measures to curb risks allied with foreign capital outflows, a weakening currency, and rising inflation. On a growing scale it is predicted that Indias share of global GDP growth will surpass that of France and the United Kingdom by 2028, establishing India as a vital driver of global economic growth. With 20 countries accounting for 75% of global growth, India ranks among the top contributors alongside China, the United States and Indonesia, solidifying its status as a key economic power.

According to the International Monetary Fund (IMF), the Indian economy is projected to grow by 5.9% for FY24. This positions India as the fastest-growing major economy globally. In comparison, China is expected to grow at a rate of 5.2% in 2023 and 4.5% in 2024. The United States anticipates a 1.6% growth in 2023, while France expects 0.7%. Germany and the United Kingdom are forecasted to experience negative growth of (0.1%) and (0.7%), respectively.Indian Banking Systems also well preformed in FY 22-23 to strengthen economy. Despite the pandemic, gross non-performing assets achieved a seven-year low of 5% as of September 2022. The Indian banking system has made significant progress in reducing nonperforming assets (NPAs) and deleveraging stressed balance sheets. Government also stepped forward in long term development. In Union budget special allocation is also reserved for increased capital expenditure to critical infrastructure projects, laying a robust foundation for long-term growth and facilitating Indias sustainable development.

In digital technology, Indian have expedite in adoption of digital technology, including government has also explored in digital era and that will have numerous positive effects on governance, financial inclusion and the creation of new markets, products and services for the private sector. Between 2014 and 2019, the digital economy grew at a rate of 15.6%, outpacing the growth of Indian GDP by 2.4 times. Indias digitalisation has been propelled by various factors, such as increased broadband penetration, technological breakthroughs, affordable data prices and the governments emphasis on building digital infrastructure. Over the past five years, the number of mobile broadband (MBB) subscribers has surged from 345 million to 765 million. India has been among the world leaders in data traffic utilisation between 2017 and 2021, with a compound annual growth rate (CAGR) of 53%. Furthermore, Indias 5G rollout has been one of the fastest globally, with 1,15,000 sites radiating 5G signals established within a short time frame of six months. Looking ahead to the next few decades, India represents a significant growth opportunity, poised to surpass Germany and Japan and become the worlds third- largest economy by 2030, trailing only China and the United States. According to EY research available publicly; Indias per capita GDP is projected to exceed US$15,000 in 25 years, with the economy at a size of US$26 trillion, six times its current level.

As India moves into its Amrit Kaal, it will be vital to plan for elements that can hamper growth. While the Government of India has been strategic in its macro-fiscal response during the pandemic and the geopolitical conflict, continued prudent macro-economic management focused on managing and stabilising inflation and currency, ensuring policy predictability, and proactively de-risking the economy will be critical for India to continue to attract domestic and global investors.

INDUSTRY REVIEW:

Indian Media & Entertainment sector grew 20% in 2022 to reach Rs. 2.1 trillion

2019 2020 2021 2022 2023E 2025E CAGR 2022-2025
Television 787 685 720 709 727 796 3.9%
Digital media 308 326 439 571 671 862 14.7%
Print 296 190 227 250 262 279 3.7%
Filmed entertainment 191 72 93 172 194 228 9.8%
Online gaming 65 79 101 135 167 231 19.5%
Animation and VFX 95 53 83 107 133 190 21.1%
Live events 83 27 32 73 95 134 22.2%
Out of Home media 39 16 20 37 41 53 12.8%
Music 15 15 19 22 25 33 14.7%
Radio 31 14 16 21 22 26 7.5%
Total 1,910 1,476 1,750 2,098 2,339 2,832 10.5%
1 Growth -23.2% 19.3% 19.9% 11.5%

All figures are gross of taxes (Rs. in billion) for calendar years : EY estimates

The Indian Media and Entertainment (M&E) sector maintained its impressive growth trajectory, recording a significant increase of Rs. 34,800 crore (19.9%) to reach Rs. 2,10,000 crore in 2022. This marked a 10% growth over its pre-pandemic levels in 2019.

While television remained the largest segment, digital media cemented its position as a strong number two segment, followed by a resurgent print.

The filmed entertainment segment recovered as theatrical releases doubled, and reclaimed the fourth position overtaking online gaming. The share of traditional media (television, print, filmed entertainment, OOH, music, radio) stood at 58% of M&E sector revenues in 2022, down from 71% in 2019.

We expect the M&E sector 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.

Segmental Performance:

Television:

Television advertising grew 2% to end 2022 just behind its 2019 levels, on the back of volume growth. Subscription revenue continued to fall for the third year in a row, experiencing a 4% de-growth due to a reduction of five million pay TV homes and stagnant consumer-end ARPUs. While linear viewership declined 7% over 2021,8 to 10 million smart TVs connected to the internet each day, up from around 5 million in 2021 Digital advertising:

Digital advertising grew 30% to reach Rs. 499 billion, or 48% of total advertising revenues. Included in this is advertising by SME and long- tail advertisers of Rs. 180 billion and advertising earned by e-commerce platforms of Rs. 70 billion.

Digital subscription:

Digital subscription grew 27% to reach Rs. 72 billion. 99 million paid video subscriptions across almost 45 million Indian households generated Rs. 68 billion, an amount which is over 60% of broadcasters share of TV subscription revenues. Due to a plethora of free audio options, just 4 to 5 million consumers bought music subscriptions, generating Rs. 2.2 billion while online news subscriptions generated Rs. 1.2 billion.

Print:

Advertising revenues grew 13% in 2022 as print remained a "go-to" medium for more affluent and nonmetro audiences. Subscription revenues grew 5% on the back of rising cover prices and has stabilized at 15% to 20% below the pre-COVID-19 levels. Digital revenues remain elusive for most newspaper companies.

Film:

The segment grew 85% to reach 90% of its 2019 levels as theaters re-opened. Over 1,600 films were released in 2022, theatrical revenues crossed Rs. 100 billion, and fewer films released directly on digital platforms. 335 Indian films were released overseas.

Online Gaming:

New players, marketing efforts, specialized platforms and brand ambassadors all worked to grow the segment 34% in 2022 to reach Rs. 135 billion. Regulatory clarity improved, and this could lead to more FDI in this segment. There were over 400 million online gamers in India, of which around 90- 100 million played frequently. Real money gaming comprised 77% of segment revenues.

Radio:

The survey comes as music to ears that 8 out of 10 people are listening to radio in tier II and tier III cities. The findings are as per Tolunas

study across 30 markets of India. Radio is widely consumed by working professionals and housewives as compared to students. The study also reveals that Radio is consumed mostly for entertainment purpose. Time spent listening to radio varies from 30 minutes to 2 hours every day. Another important point to highlight is 6 out of 10 people listen to radio at home. The data is in proportion to the research done in the year 2020.

Radio is one of the most effective medium for marketers who believed in traditional medium. No doubt radio was adversely affected during pandemic but it sailed through like a warrior and according to Pitch Madison advertising report there is increase in ad sales by 36%.Volume of advertising also increased by 25%in the year 2022 as compared to 2021.The year 2022 was of economic recovery for radio and the year 2023 and 2024 shall gain momentum for the medium.

With digital medium grasping interest of audience very rapidly, Radio is as always protagonist in experimenting. Be it content or solution, radio is providing 360 degree solution to client. Earning from on grounds, events by creating IPs and podcast is becoming new way to add money in the kitty.

Government advisory to have inbuilt radio in mobile handset shall boost listenership. It shall also help Radio to cater to clients who want to reach out to the end consumers.

Potential growth of Radio lies in expansion strategies, strategic tie ups and competitive pricing.

Animation and VFX:

As content production resumed, service demand - both domestic and exports - increased, resulting in the segment growing 29% and crossing Rs. 100 billion for the first time.

Out of Home (OOH):

OOH media grew 86% in 2022 and reached 94% of 2019 levels. Capacity utilization improved in 2022, but rates remained challenged. Digital OOH screens increased to around 100,000 and contributed 8% of total segment revenues.

5G use cases in M&E:

5G will make knowledge available on tap and on-location. It will democratise real-time status or information for better decision making, reducing errors of judgement and building efficiencies.4G enabled audiences became content creators and blurred the lines between viewers and creators. 5G will blur the lines between content creation & going live, physical and virtual, human device, etc.

Industry Regulatory Changes:

Animation, Visual Effects, Gaming and Comics (AVGC):

To realize the potential of the Indian AVCG segment, in the budget speech for the year 2022-2023, a formation of an AVCG Task Force headed by the Secretary of the Ministry of Information and Broadcasting ("MIB") was announced. The task force comprised members from the government ministry, the industry, and academia. The core task force thereafter divided into four sub task forces:

• Education

• Gaming

• Skilling

• Policy and industry

In December 2022, the Task Force presented its report to presented its report to MIB ("AVCG Report").The AVCG Report presented recommendations on (1) market access and development, (2) skilling and mentorships, (3)education, (4) access to technology, (5) financial viability, (6)promotion of high quality content, (7) diversity, equity and inclusion in the AVCG segment.

FM Radio:

In October 2022, certain provisions contained in the Policy Guidelines on Expansion of FM Radio Broadcasting Services through Private Agencies (Phase-III) (Private FM Phase-III Policy Guidelines) ("FM Radio Guidelines") were amended. The FM Radio Guidelines lay down the eligibility criteria,permission requirements, and procedure for obtaining permission for FM radio channels.

Television and Broadcasting:

The MIB issued the Guidelines for Uplinking and Downlinking of Television Channels in India ("Television Channel Guidelines") via a notification on 9 November 2022.Previous guidelines from 2011, i.e., the Policy Guidelines for Uplinking of Television Channels from India, 2011 and the Policy Guidelines for Downlinking of Television Channels, 2011 ("2011 Guidelines") have been replaced by these Television Channel Guidelines. The goal of the revised Television Channel Guidelines is to ease compliances and simplify processes: The Indian Telecommunication Bill, 2022 ("Telecommunication Bill") was released for public comments on September 21,2022. It is a consolidation and amendment of all laws pertaining to the operation and expansion of telecommunication services, networks, and relevant infrastructure. Owing to considerable technological advancement, three current legislations, namely, the Indian Telegraph Act 1885, the Indian Wireless Telegraphy Act 1933 and the Telegraph Wires (Unlawful) Possession Act 1950, will be repealed by the enactment of this Telecommunication Bill.

Social and Digital Media:

The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 ("IT Rules") have been modified by the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2022 ("Amendment Rules").

Future Outlook of Industry:

Direct-to-Customer communities will be developed

Radio will build-out communities through its RJs, using interactivity, gaming, quizzing etc., to enable the generation of audience data and providing segmented audiences to advertisers. In addition, radio can generate transaction revenues from the focused/ niche communities it has a loyal base in, by meeting other needs they may have. News and community podcasts could also enable D2C community building.

Content production will increase importance

Utilizing the inherent entertainer DNA of its programming staff, content creation across short and episodic forms can be a revenue earner for radio; given that smart phone penetration will be 3 x TV screen penetrations by 2025 - this could be a huge opportunity. Voice products on smart speakers and smart phones will also provide growth opportunities to radio Companies.

Rising popularity of internet radio

Internet provides radio users music search capabilities, curated and personalized radio channel sand playlists based on their listening habits along with enhanced sound quality. While most radio players have an online presence, they are also collaborating with online streaming portals to offer both online radio as well as curated streaming music services to users via the same platform.

Advertisers transition to digital audio

Radio advertisers are turning towards digital. It allows marketers to more definitively target specific locations and tailor messaging and ad creative as per consumers. In several cases, this still involves AM/FM radio stations, which offer national, regional and local clients a complete digital menu. Many media buying and planning tools (programmatic platforms) present buyers with ways to select inventory across national and local broadcasters, as well as traditional and pure-play offerings. While radio stations look to programmatic for workflow automation, additional revenues and inventory protection; ad buyers prefer programmatic to make ad campaigns more effective and efficient. Radio broadcasting industry is witnessing convergence with other media and technology companies to reduce cost of production. Radio players are increasingly looking at mergers or partnerships with other media companies to counter growing competition. Furthermore, media companies are looking to provide multiple services, such as music streaming, online radio under a single package. Similarly, some TV broadcasters also provide access to radio stations as well.

Radio automation software gaining traction:

Radio broadcasting Companies are using automation software to run their stations 24/7, streamline workflows across multiple markets and reduce operating costs. This helps creative teams to focus on new content creation, instead of operational effectiveness.

THE COMPANY:

Business Area

Your Company operates in M&E industry with newspaper, magazine in print media, News Channel in electronic media and GPS, Web portals, Web application in digital media. Your Company is a complete media house having presence in Print to Electronic and to Digital Media. The product portfolio of your Company (as mentioned in detail in the initial part of this report) comprises innovative, technology based and established products that have top-of-mind recall and are leaders in their respective categories. Your Company has successfully started all permitted FM frequency in 2022 and have presence at Gujarat i.e. Bhavnagar, Jamnagar, Junagadh, Porbandar, Veraval, Mehsana, Bharuch, Baderwah, Kathua, Poonch, Godhra, Kargil, Leh. This strategically puts your Company to advantage in saturating the Gujarat market, while diversifying the geographical presence.

The Company has developed a unique business model of print to digital media. Your Company has successfully leveraged the newspaper expertise to grow into other associated businesses like TV channels and such innovative products/solutions for readers, advertisers, viewers, and now listeners of FM and web portals applications. An integrated well-balanced print-to-digital presence provides hedging. This diversified model of business has shown great strength and resilience in the past years of challenging business environment. While Vehicle Tracking System contract of GSRTC assure timely and confirmed recovery of dues, whereas the advertisements ensure better profitability margins.

Project Selection and Execution

Your Companys comprehensive evaluation of opportunities in media projects includes the following parameters:

Advertiser: Constitution, financial strength, bureaucratic structure, track record with others/ us, contract management strength, appropriateness of advertisement for local market, etc.

Pre-development: Financing flexibility to fund the content generation, community/ political participation/ opposition, government stability over the life of the project, regulatory approval delays, etc.

Finance: Commercial viability of the project, capacity of the lender to evaluate and speed in providing the credit lines, repayment mechanism, credit availability on viable terms, etc.

Publishing/ broadcasting: Viability of the design/technology, availability of artists and content, outlook of content cost, content provider failure, etc.

Market: Local economic conditions, demand-supply outlook, interest/ inflation rate scenario, etc.

Your Company has developed fundamental understanding of the process and its many facets. To be successful, your Company must manage not only its own performance, but also the collaboration of numerous professionals representing multiple disciplines. Throughout this process, your Company has to identify and mitigate inherent risks that can threaten the viability of the project. It is

broadly evaluated in three parts: 1) preliminary considerations, market analysis, financial analysis, and strategic marketing 2) content selection and due diligence, royalties, entitlements, permissions, etc. and 3) publishing and broadcasting management. Hence, with sufficient due-diligence the project is selected and execution is carried-out accordingly by your Company. Your Companys Quality Management System is ISO 9001: 2015 accredited by QSA International, UK that include Planning, Design & Development, Execution and Operations Activities for Media Products.

Project Management and Monitoring:

Your Company has adopted an integrated system for planning, scheduling, monitoring and control of the approved project under implementation. To co-ordinate and synchronize all the support function of Project Management it relies on an Integrated Project Management Control System which integrates its project management, contract management and control function addressing all stages of project implementation from concept to commissioning. Various features for information delivery of ERP facilitate project tracking, issues resolution and management interventions on a regular basis. Integrated ERP platform for monitoring and controlling of critical project activities spread across various functions - projects, contracts, finance and execution. This will help in decision support through timely identification of critical input and provide a holistic approach towards project implementation and major project milestones. Financial Resources

The foremost source of finance of your Company has traditionally been internal accruals and borrowings from banks. Your Company has made financial arrangement with banks by availing credit facilities and reclassification of existing credit facilities and financial institutions for its various long-term and working capital requirements.

OPPORTUNITIES

Your Company foresee ample opportunities in M&E industry. The rapid urbanization is likely to boost metaphorical growth in years to come. All these would ultimately generate a demand to boost local economies. Further, the various government initiatives (e.g. Wise TV, Vehicle tracking system, etc.) envisaging providing an experience to its citizen shall also offer opportunity to the M&E player to grow in years to come. The envisaged opportunities are discussed further. Your Company is favorably placed to participate in the opportunities arising from the home-state that is considered the Growth Engine of India.

Government advisory to have inbuilt radio in mobile handset shall boost listenership. It shall also help Radio to cater to clients who want to reach out to the end consumers. With digital medium grasping interest of audience very rapidly, Radio is as always protagonist in experimenting. Be it content or solution, Radio is providing 360 degree solution to client. Earning from on grounds, events by creating IPs and podcast is becoming new way to add money in the kitty.

THREATS - RISKS & CHALLENGES:

Fast Changing Technology: The biggest threat being faced by the Media and Entertainment Industry is about fast changing technology. Only a few percentages of players in the media industry are welcoming new technologies to their area of work, while the majority are hesitant and are concerned about the back fire or the trouble these new "uncommon" solutions will cause. This results in dependency on outdated methodologies making it difficult for the players to communicate business between themselves. Use of terms like "big data", "artificial intelligence", "automation" etc.

Cyber Attack: The other most important threat presently being faced is increasing Cyber Attack instances. Attackers frequently use surface, deep and dark web chatrooms and forums to plan attacks, choose targets and sell hacking services. This chatter can become useful intelligence for media and entertainment agencies looking to attacks on talent, fans and brand before they occur. Early warning of stolen credentials, account hacking attempts and impersonations is necessary to protect media brands and talent alike. Within the media and entertainment industry, Zero Fox identified 450,000 incidents related to cyber attack chatter within the specified time period. Scale of audience: Understanding the scale of change of online audiences and digital media in India is constraints affecting growth and smooth functioning of your Company. The industry in which your Company operates is highly evolving and is becoming techno driven. The change is trend in society impacts substantially to the business of your Company.

Macroeconomic environment: Macroeconomic environment can be a potential source of risk. Moderating growth, along with high inflation, can adversely impact advertising revenues of your Company, which forms the largest component of your Companys revenues. Changing Trend: It may not be possible to consistently predict audience tastes. Peoples tastes vary quite rapidly along with the trends and environment they live in. In such markets it is virtually impossible to make prediction.

Competitive environment: Your Company operates in highly competitive environment that is subject to innovations, changes and varying levels of resources available to each player in each segment of business. Your Company has been able to maintain its business volumes in circulations and/ or advertisements despite of the major affecting factors e.g. changes in technology, social trends, lifestyle of the people, competition with the other local/regional media houses.

Apart that your Company has identified various risks associated with the business and its mitigating steps as under.

Risk Explanation Mitigation Approach
Pandemic risk Any epidemic/pandemic can cause interruption/disruption in the execution and business Your Company Operates in media sector which includes both kind of employees such as field work and non field work. Media sector is accountable for latest updates/impact/effect in economy and there actual status. Therefore strict adherence to the government/HSE guidelines in place and in addition to that your Company focuses to ensure the health and safety of all employees, labourers, suppliers and channel partners, while initiating stringent measures to control costs and strengthen cash flows.
Interest rate risk Your Companys interest costs are impacted by market rates. Your Companys liquidity and borrowing are managed by professional at Senior management level. The interest rate exposure of your Company is reduced by matching the duration of investments and borrowings.
Credit risk Your Companys Principals ability to pay can have an impact on the financial result. As per your Companys policy only well-established institutions/corporate are approved as counter parties. Exposure per counter party is continuously monitored.
Liquidity risk Acceptable liquidity levels are required in order to achieve desired financial results. In addition to its own liquidity, your Company enjoys credit facilities with the largest Bank of the country as well as other banks/financial institutions of high-standing and good repute. Processes and policies related to such risks are overseen by senior management. Management monitors the groups net liquidity position through rolling forecast on the basis of expected cash flows.
Competitor risk Competitors find ways to operate with better functioning/latest technologies. Your Company aims to be the cost and value leader, meaning striving to innovate and bring new and increased value through the innovation to our customers while at the same time working to assure that your Companys operations are world class in terms of efficiency, cost and popularity.
Economic down turn Your Companys customers could be impacted by a major economic down turn resulting in lower demand for their respective marketing. Your Company has a highly diversified and well balanced customer base. The risk is therefore spread very widely on customer, regional and industrial sector/ segment perspective. Your Companys flexible business model is capable to set operational priorities in the face of changing economic scenario. Your Company uses market data intelligence to follow and anticipate developments allowing proactive management of changing market conditions.
Execution risk It depends on various factors e.g. labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities, weather conditions, and absence of contingencies such as litigation. Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and repute printers, dedicated employees and well established compliance Framework.
Input cost fluctuations Significant changes in raw material costs and maintenance cost can impact the profitability. Your Company has established a proficient supply chain and well equipped with technical support which assures to play in a highly competitive manner. Raw material cost indexes could also be included in contractor/supplier agreements.
Labour disputes Industrial disputes lead to industrial action with impacts your Companys ability to meet principal/client demands. Your Company maintains an open and positive relationship with all the employees, sub-contractors, workers, etc.; as exemplified by not a single instance of any such dispute so far.
Corrupt or fraudulent actions carried out by your Companys representatives Your Companys employee or employees fail to adhere to your Companys Code of Conduct and related policies and requirements and act in a fraudulent or corrupt manner leading to financial penalties and reputation damage. Your Company takes a proactive approach to assure awareness of demanded ethical standards by education, compliance programmes including anticorruption, anti fraud and antitrust. The work to follow up adherence is facilitated by the whistle blower function and a risk-and incident based audit system.
Noncompliance with applicable laws The diverse nature of your Companys business and operations means that your Company is required to adhere to numerous laws and regulations related to all aspects of its activities. Failure to meet these requirements could lead to legal and financial consequences as well as damage to your Companys reputation. Your Company has put in place comprehensive and robust compliance programme which is based on your Companys Code of Conduct. The compliance programme is put in place to ensure that applicable laws and regulations are identified, understood and adhered to.
Legal risks relating to our business activities In connection with the revenue of your Company and in the purchase of materials and services from our suppliers, consultants, etc. large potential liabilities may occur in case of e.g. late delivery, delivery of defective products, unfulfilled service commitments and in correct advice. Therefore, it is important that all such risks are identified, that risk decisions are taken on the appropriate level and that carefully worded contractual provisions aiming at reducing your Companys liabilities are included in contracts. Your Company has put in place policies, procedures and training programs in order to make sure that legal risk relating to our business activities are identified and that risk decisions are taken on the appropriate level. In addition, independent professional legal counsels support your Company indentifying and handling legal risks. The legal counsels work closely with the Senior management and provide contract drafting and negotiation support, claim and litigation management, support, training and general advice.

RISK MANAGEMENT POLICY:

Your Company believes that Risk management is a holistic, integrated, structured and disciplined approach to managing risks with the objective of maximizing shareholders value. It aligns strategy, processes, people & culture, technology and governance with the purpose of evaluating and managing the uncertainties faced by the organization while creating value. With this vision to integrate risk management with the overall strategic and operational practices, an Enterprise Risk Management Framework has been established by the Company; as a comprehensive set of components that provide the foundations and organizational arrangements for designing, implementing, monitoring, reviewing and continually improving risk management throughout the organization. As explained herein above, the core team of the management continuously access and ascertain various risks and also work on mitigating factors. The risk management policy of the Company therefore includes two fundamental tasks to identify the risks at very nascent stages of processes and immediate thoughtful actions to minimize or mitigate the risks.

CORPORATE GOVERNANCE:

Your Companys Corporate Governance philosophy is based on conscience, openness, fairness, professionalism and accountability. These qualities are ingrained in its value system and are reflected in its policies, procedures and systems. Your Company not only believes in adopting the best corporate governance system but also in proactive inclusion of public interest in its corporate priorities. The Company has its mission, vision, goals and core values. The Company is being governed in accordance with the policies, code of conducts, charters and various committees are formed in accordance with the law to ensure governance. The Companies Act, 2013 and SEBI Listing Regulations have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the law and listing regulations. The Company has adopted the policies in line with new governance requirements including the Policy on Related Party Transactions, Policy on Material Subsidiaries and Whistle Blower Policy. These policies are available on the website of the Company at www.sambhaav.com. The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

Pursuant to Section 134(3) (a) and Section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014, a copy of the Annual Return is placed on the website of the Company and can be accessed at www. sambhaav.com. A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations. A Certificate of the CEO and CFO of the Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed.

WORK CULTURE AND HUMAN RESOURCES:

SAMBHAAV believes that its people are the biggest driver of success and the Company has a strong focus on attracting, developing and retaining talent. The people strategy of the Company is founded on three pillars - improving the employer brand, creating an

organizational context that inspires employees to do their best and being future ready through capability building and talent pipelining. All current and future interventions are focused on driving one or more of these outcomes. The management believes in team work and a corporate environment which is self-motivating. Your Company has successfully developed a work force of people over a period of time. The top management is acting as the governing force in creating and maintaining the corporate work culture. Our Vision is to raise our own benchmarks with every successive endeavor and it is possible only by making every employee a fully engaged and aligned team member.

INTERNAL CONTROL SYSTEM:

Companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors and cover key business areas. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Companys internal control processes and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management policies and systems. The Accounting Policies are reviewed and updated from time to time. Your Company has put in place comprehensive systems and procedural guidelines concerning other areas of business, too, like budgeting, execution, content management, quality, safety, procurement, asset management, human resources etc., which are adequate and necessary considering the size and level of operations of the Company. The Company has appointed an independent firm of Chartered Accountants M/s MBD & Co LLP to conduct Internal Audit of the Company.

The management has been making constant efforts to review and upgrade existing systems and processes to gear up and meet the changing needs of the business.

FINANCIAL PERFORMANCE:

Financial Performance of your Company during the year under review in comparisons to the previous financial year is given as under. Total Income:

The total income of your Company during the FY 2023 was Rs. 4245.41 Lakh as compared to Rs. 3606.26 Lakh during FY2022. There has been increase of 18% in the total income predominantly because of increased advertisements and campaign revenue from state election.

Revenue from Operations:

The revenue from Operations during FY2023 was Rs. 4020.90 Lakh as compared to Rs. 3364.35 Lakh during FY2022. There has been increase of 20% in operating revenue of the Company mainly because of elections, improved economic condition, increased in spending after advertisements and other favourable factors.

Expenditure other than Finance and Depreciation & Amortization:

Total Operational expenditure other than Finance Cost, Depreciation & Amortization, increased by 3% from Rs. 3306.57 Lakh during FY2022 to Rs. 3391.49 Lakh during FY2023. The primary reason for increase in this expenditure is increased cost of sales & marketing with a view to increase revenue and customer base.

Profitability:

The profitability of your Company is improved during the year as compared to previous year. The profitability at EBIDTA level increased by 185% from Rs. 299.69 Lakh during FY 2022 to Rs. 853.92 Lakh during FY2023 mainly due to revenue from operations are higher this year compared to last year while operational costs remain at par compared to previous year resulted into increase in profitability.

Net Worth:

The total net worth of the Company as on March 31,2022 was Rs. 8361.66 Lakh which has decreased to Rs. 8209.03 Lakh as on March 31, 2023 mainly because of loss of Rs. 14.06 Lakh incurred by the company at the end of year under review.

FINANCIAL POSITION:

Details of the financial position of your Company during the year under review, as compared to the previous financial year is given as under.

SOURCES OF FUNDS:

Share Capital, Reserves & Surplus:

The Paid-up Equity Share Capital of the Company as on March 31, 2023 stands at Rs. 1911.11 Lakh. There has been not change in the paid share capital of the Company during the year under review. While, Reserves & Surplus as on March 31, 2023 stands at Rs. 6297.92 Lakh as compared to Rs. 6450.55 Lakh as on March 31,2022. Since the company has incurred losses during the year under review, the Reserve & Surplus for the year is reduced to that extent.

Debt:

Total debt of company increased by Rs. 163.45 Lakh to Rs. 1092.90 Lakh as on March 31,2023 as compared to Rs. 929.45 Lakh as on March 31,2022. The primary reason of increase in debt is increased usage of working capital facility of banks compared to previous year. Your Company expanded its operations requiring additional working capital facility to support fund need.

Current Liabilities and Provisions: -

Current Liabilities and Provisions mainly representing Trade Payables, Statutory Dues, Advances received from Customers, short term provisions for Employee Benefits and other payables, Tax Liability etc. The same has increased by Rs. 78.28 Lakh to Rs. 583.05 Lakh as on March 31,2023 as compared to Rs. 504.77 Lakh as on March 31,2022.

APPLICATION OF FUNDS:

Non-Current Assets Fixed Assets:

At March 31, 2023, your Companys Fixed Assets increased by Rs. 4.14 Lakh from Rs. 5040.62 Lakh for FY 2022 to Rs. 5044.75 Lakh for FY 2023. As Fixed Assets are used or consumed in the companys operations, their values are systematically reduced in the financials through depreciation and amortization expenses.

Non-current Investments:

Non-current Investments have decreased by Rs. 74.66 Lakh from Rs. 746.24 Lakh at March 31,2022 as your company has reduced investment from subsidiary company.

Long term loans and advances:

There has been marginal increase in the long-term loans and advances, from Rs. 1225.63 Lakh during FY 2022 to Rs. 1314.70 Lakh during FY2023 mainly on account of business operations.

Current Assets:

Current Assets mainly represent Current Investment, Inventories, Trade Receivables, Cash & Bank Balances, Short Term Loans and advances and Other Current Assets. The increase in current assets by Rs. 799.78 Lakh from Rs. 2992.91 Lakh to Rs. 3792.69 Lakh is mainly attributable to increase in loans and advances and Business Operation Advances.

Inventories:

Raw Material and Components valued at Cost used by the Company increased by Rs. 3.44 Lakh from Rs. 14.43 Lakh at March 31,2022 to Rs. 17.87 Lakh at March 31,2023.

Trade Receivables:

Trade receivables stood at Rs. 1489.01 Lakh at March 31,2023 as against Rs. 1392.10 Lakh at March 31,2022. Major reason in decrease of trade receivable is efficient collection and recovery steps of outstanding customer payments, improved collection process and stringent credit policies adopted of the company.

Cash and Bank Balances:

The cash and bank balances lying with the Company, at March 31,2023 are Rs. 42.27 Lakh as against Rs. 26.14 Lakh at March 31,2022. Short Term Loans and Advances:

There has been increase of Rs. 674.83 Lakh in current portion of Inter corporate loan, other advances and Advance tax from Rs. 1544.79 Lakh at March 31,2022 to Rs. 2222.68 Lakh at March 31,2023.

Key Financial Ratios:

Ratio FY 2023 FY 2022
Days Sales Outstanding (in Days) 135 151
Interest Coverage Ratio (in Times) 1.04 (1.37)
Current Ratio (in Times) 2.26 2.34
Debt Equity Ratio (in Times) 0.34 0.27
Operating Profit Margin (%) 21.24 8.91
Net Profit Margin (%) (5.71) (0.39)
Return on Net Worth (%) (0.17) (3.76)

Explanations for changes in Ratios:

1. Days Sales Outstanding 135 days in FY 2023 compared to 151 days FY 2022, since your company has improved collection processes and tighten credit policies.

2. Interest Coverage Ratio has increased mainly due to increase in EBIT compared to last year.

3. Current Ratio has in FY 2023 is 2.26 times compared to FY 2022 2.34 times which is almost at par.

4. Net profit and Return on Net worth margin increased in FY 2023 due to the company is trying to improve operational efficiency, successful marketing campaigns compared last year.

Forward Looking Statement

This Annual Report contains forward-looking statements, which may be identified by their use of words like ‘plans, ‘expects, ‘will, ‘anticipates, ‘intends, ‘projects, ‘estimates, or other words of similar import. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market position, expenditure, and financial results, forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forwardlooking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward- looking statements, on the basis of any subsequent developments, information or events.