Saregama India Ltd Management Discussions

DIGITAL/ DIVERSE/ DYNAMIC

Saregama is known to be a legacy company, and the strength of our music catalogue is incontestable, but we dont rest on our laurels, rather much like the epithet of Steve Jobs, we aim to stay hungry, stay foolish. We are eager to try new things. We fail often, but we learn fast, and we are tuned into the dynamic nature of the content landscape, determined to weather each storm and always come out on top as a Digital, Dynamic and Diverse content business.

DIGITAL

The shift to digital is steadily accelerating. Digital touches every part of our lives, and content consumption is no exception. This change has driven a significant increase in advertising and subscription revenues, highlighting a major shift in how we consume media.

The rapid growth of the Indian economy has been the foundation of the entertainment sectors expansion. This growth suggests that digital platforms will play an even bigger role in how we consume and monetise entertainment. The convenience of accessing a vast range of content anytime, anywhere has changed consumer behaviour. With better

digital infrastructure, these platforms are becoming essential in our daily lives.

In India, where internet access is growing quickly, digital platforms offer incredible opportunities for content creators, producers, and distributors to reach a vast and diverse audience. This access not only democratises entertainment but also opens new revenue streams. Advertising, subscriptions, partnerships, merchandise sales, and exclusive content are all proving to be successful ways to generate revenue. Tailored content recommendations enhance user engagement and increase monetisation potential.

As digital platforms evolve, they are set to shape how entertainment is created, distributed, and consumed in India. This evolution underscores the dynamic nature of the digital economy, where technology and content merge to redefine traditional entertainment.

Saregama is uniquely positioned to understand and capitalise on this DIGITAL phenomenon. We have focussed on making technology a key part of decision making, while also understanding that harnessing the community built around creators is the way forward for businesses in the content space.

To this effect, we have undertaken several significant changes in how we see our business:

? We are using predictive AI to help us in content decision making, crunching vast amounts of data with a dedicated team to help us in making informed decisions about which artists to promote, which albums to buy and at what price, which genres to invest in, and how to optimise our music catalogue for maximum impact.

? We are focussed on building artists by investing in a new Talent vertical, which is tasked with enabling the next generation of musical superstars to shine

? We have created a Live Events vertical, to further create and galvanise communities around artists

? We have doubled our investments in New Music Content

In the coming year, we shall also be further deepening our investments in the video business, based on the insight that video, both short and long form, has seen tremendous growth and is the medium of the future for younger audiences in particular. It also strengthens our hand significantly in the new music acquisition and promotion space.

Further, we remain committed to our thrust into regional language content across our music and video businesses. As Indians get over post-colonial syndrome, a massive reshaping of identities around vernacular

languages, customs and content is underway, and Saregama has seen this developing over the last 7-8 years, constantly increasing our regional language base.

Our intention is clear: to quickly take pole position among music labels in India, and then contend to become the number one integrated content and artist company for Indians globally. This is the dynamism that defines the Saregama of FY 2023-24.

DYNAMIC —

The credo at play here is a restless desire for constant innovation.

We began our transition from a music label to a content company with the introduction of the Carvaan Digital Audio Player in FY 2016-17, followed by our foray into Digital Films and Series with Yoodlee Films the next year.

Along the way, there have been some successes but even more failures. Following our motto of Fail Fast we have evolved into a company that is unafraid of taking risks, we move fast with rational experiments into new areas and quickly evolve according to the various outcomes of each.

A large part of this is rooted in the desire to become increasingly relevant

to the younger demographic of digital first Indians.

With this in mind, we have completed the acquisition of Pocket Aces this year as a means to accomplish this aim. With a strong content business creating hit IPs on YouTube under the brand Filter Copy and OTT platforms like Netflix and Amazon Mini, Pocket Aces understands the entertainment needs of this young audience. This complements our already growing video businesses across Films and Series.

Additionally, Clout is the premiere agency that manages internet Content creators, who are taking up a greater share of time spent on short video platforms as well as advertising monies spent by brands.

Not only does this bolster our ability to offer bespoke end-to-end services to brands, but also helps us market our own music more effectively.

We can see a change coming in content consumption with a marked preference for short form over long form, a study by Techjury found that in CY 2023, 90% of global advertisers increased their investment in short- form videos, which are considered 2.5 times more engaging than long-form videos (Techjury).

Pocket Aces is the secret sauce that will help us transition to this newer form of content.

DIVERSE

Our journey from Music Label to Content Company relies on constant innovation and diversification.

We intentionally challenge our assumptions and learnings on a regular basis, and like to reassess our business verticals from the POV of the value they bring to our customers.

Over the past few years we have learned that the real value in the content business is created in the relationship between artist and audience. Today, digital is a boon (as seen earlier), but also a threat, as the means of content dissemination have become democratised. We realise we can create real value all along the valuechain if we become artist first by becoming a means for discovery of talent, and then nurturing the talent into the right monetisation avenues.

To this effect, we have invested in two new ventures:

? Talent Vertical: We discover and groom new talent, produce content for them, disseminate and market the content with the aim of creating communities for the talent. All of this is done with inputs from the predictive AI team and a slew of research and data. We have taken on 3 young performers initially, with a view to journey them into large popular music artists for Music, Films, Events and Brands.

? Events Vertical: With the YOLO vibe gaining prominence post Covid, consumers are starting to value experience over consumption. We are focussed on helping artists catalyse a community of superfans around their persona. By producing events that are focussed on a clean and safe consumer experience, we will create multiple touchpoints for an artist to engage with fans and monetise the community in the long run.

Growth of the Media & Entertainment Industry in CY 2023

According to FICCI, the Indian M&E sector grew by 8% in CY 2023, reaching Rs. 2.3 trn, and is expected to grow at a CAGR of 10%, reaching Rs. 3 trn by 2026. Key growth drivers include high smartphone penetration, increased digital consumption, reduced piracy, the shift of advertising revenues from traditional media to digital, and a steady rise in subscription services. Digital advertising grew by 15% last year to Rs. 576 Bn, contributing significantly to this growth.

Content consumption, including music and video streaming, and short-format content apps, is rapidly increasing.

The average mobile data usage per smartphone in India was 31 GB per month in CY 2023 and is projected to increase to 75 GB by CY 2029, with 78% of this time spent on media, entertainment, and social media.

The shift towards paid subscriptions is particularly noteworthy in the music industry. This transition from a free to a subscription-led economy is expected to potentially double the industrys size, despite initial revenue pressures seen in FY 2023-24 and anticipated in FY 2024-25.

Content streaming remains both accessible and affordable, with vast growth potential. Currently, only 200 Mn of the 750 Mn smartphone users in India use music streaming apps. Globally, over 667 Mn subscribers pay for music streaming, and 5 out of 8 music streaming platforms in India have fully moved towards a paywall model.

In CY 2023, Indias film industry grew by 15%, reaching Rs. 197 Bn, with 1,796 film releases, up 11% from CY 2022. Domestic box office revenue hit Rs. 120 Bn, driven by higher ticket prices. Indian films expanded to 38 countries with 339 releases as a growing diaspora and acceptance by foreign audiences came into play.

The industry is expected to record a 7% CAGR, reaching 238 Bn by CY 2026, fuelled by prosperity, quality content, and innovative pricing and distribution strategies.

Live events also saw a rebound, growing by 20% in CY 2023 to Rs. 88 Bn, and are expected to register a CAGR of 18% over the next three

years. This shift towards experiences over material goods is driven by a desire for creating lasting memories and emotional fulfilment, amplified by digital connectivity and social media, the very YOLO we spoke of earlier.

A significant shift is occurring in digital advertising, with brands finding Influencer marketing to be the most efficient way to create performance marketing. Indias influencer marketing industry is projected to expand at an 18% CAGR, reaching Rs. 3,375 crore by CY 2026. With 50% of mobile phone usage spent on social media, there is a clear shift towards relatable influencers over traditional celebrities. Instagram and YouTube are the preferred platforms, making influencer marketing a key strategy for brands.

Indian content is gaining global popularity, facilitated by its availability on global digital streaming platforms and an increasing acceptance of subtitles. This trend benefits Indian content creators, ensuring higher value for their work. Platforms will likely continue to collaborate with high- quality content creators due to the demand for diverse and substantial content.

Saregama, with its extensive experience in multiple languages in music, hit TV series, clutter breaking youth content, influencer marketing and high-concept films, is well- positioned in this ecosystem.

The Companys strengths in product development, marketing, data analytics, and a 239 Mn+ digital footprint make it the most unique content company in India.

Saregamas growth strategy focuses on four pillars: monetising existing IP, creating new IP, managing core artists, and organising events that showcase their talent and build their fan-base.

O Monetising Existing IP

The Global Music Industry grew 10.2% in CY 2023 on the back of growth in streaming revenue to reach USD 28.6 Bn.

In CY 2023, the Indian music segment grew by 10%, reaching Rs. 24 Bn.

While growth was slower due to some OTT platforms moving completely behind pay wall, the future is bright on the back of OTT platforms steadily adopting a subscription based business, which offers content owners a higher realisation per song stream than the current free structure.

Declining content piracy, due to the availability of curated songs on digital platforms and joint anti-piracy initiatives, will further propelled this growth.

Saregama has strategically positioned itself to capitalise on the global digital

explosion. The Company has digitised its extensive catalogue of over 150,000 songs, building rich metadata for each. These songs are the very soul of India, with irreplaceable gems that are precious to every Indian.

A special department was set up to create derivatives or cover versions of songs, resulting in the creation of over 8,500 new versions last year. Digital distribution has enabled Saregama to reach a global audience, unrestricted by traditional brick-and-mortar limitations. Due to these factors, our music licensing business has grown by over 20% annually for the past five years.

Saregama charges platforms on a per-stream basis plus a share of advertising revenues, however, as consumer preferences evolve, there is a shift towards ad-free premium paid services, which could significantly boost digital revenues and propel the Indian music market towards 100% growth.

This transition from free to paid usage of music streaming apps presents a substantial future revenue opportunity for Saregama, as our Company stands to receive a share of subscription revenues from all platforms.

The monetisation of our music catalogue on short format video applications like Instagram, YouTube Shorts, Snapchat and Share Chat is an exciting prospect. As these platforms move to a revenue-sharing model, content owners like Saregama, with a vast music library, stand to gain significantly. Our music ensures a fair share of consumption, translating to higher revenues once these platforms fully adopt revenue sharing.

Music Publishing and Licensing

Music publishing is another rapidly growing revenue segment for Saregama. Licenses are granted for our music (including lyrics and tunes) to social media platforms, video sharing apps, TV channels, new films, hotels, and event managers. Synchronisation deals, where our music is used in TV commercials, continue to grow. Additionally, branded content integration in our music videos offers new revenue streams. We are looking to expand this vertical further in the times to come, offering bespoke content solutions to brands spanning across our various verticals.

The rising popularity of video streaming platforms like Netflix, Disney+ Hotstar, and Amazon has led to increased licensing of Saregamas music, further boosting revenues.

This is significantly driven by a clearly increased audience affinity for video content that uses catalogue music gems as background music. The Company has built a browser-based search functionality, using the song metadata, helping content creators find the best song fit for their situation.

Saregamas music licensing revenue grew by 23% YOY, driven by strong new content performance and steady growth in the catalogue. New content investments are paying off, with 8 songs crossing 100 Mn views on YouTube, leading to a 27% growth in YouTube subscribers and an 85% increase in views.

Our music consistently features in chartbusters across different languages on OTT platforms with notable hits like What Jhumka and Tum Kya Mile from Rocky Rani Ki Prem Kahani, Tere Vaaste and Phir Aur Kya Chahiye from Zara Hatke Zara Bachke, Chamkeela Angeelese from Dasara, Neele Nilve from RDX.

o New IP Content Creation

MUSIC

Saregama continues to invest in new content to remain relevant. We are proud to say that our music vertical has moved from legacy to current, with 52% of our music revenues coming from music released in the 21^st century. Our New IP creation strategy focusses strongly regional content, recognising the growing popularity of regional culture and vernacular languages, and on profitability, with a 5-year payback period for music and a 15% margin guideline for films and series.

With a robust data analytics tool tracking over 380 Bn annual song usage data points, predictive models help in making informed decisions about song acquisitions.

In FY 2023-24, the Company doubled its investments in new content, with plans to invest Rs. 1,000 Cr over the next three years. The year saw releases of Diljit Dosanjhs Chamkila; Ranveer Singh and Alia Bhatt Starrer Rocky Aur Rani Ki Prem Kahani; Vicky Kaushal and Sara Ali Khan starrer,

Zara Hatke Zara Bachke; Vidhu Vinod Chopras 12th Fail, Yami Gautams Article 370; Kareena Kapoors Jaane Jaan in Hindi. Regional music for the Company was equally successful with releases such as Dhanushs Captain Miller, Venkateshs Saindhav, Mohanlals Malaikottai Valliban, Vijay Devarakonda and Samantha starrer Kushi.

The new music acquisition is closely guarded by our feasibility test of 5 year payback and aided by data analytics, localised decision making and listening sessions by our team members only below the age of 30. This has resulted into a rationale based investment pipeline for FY 2024-25 and FY 2025-

26 that takes into account historical data, present trends and financial viability.

The rising demand for content has enough room for different genres including the non-film music driven by artists. In order to stay ahead of the market dynamics, the Company has actively invested in non-film music in various languages such as Hindi, Bhojpuri, Gujarati along with devotional content and built excellent rapport with the prominent artists. We have tasted success with songs from artists like Diljit Dosanjh, Divine, Raftaar, Krsna and released songs by diverse artists such as Arijit Singh, Baadshah, Amy Virk, Shreya Ghoshal, Khesari Lai, Arvind Akela, Pawan Singh, Rakesh Barot and Kajal

Maheriya and more, giving our nonfilm music vertical a competitive edge in the market.

Among our Companys focus markets, we gained leadership position in Telugu, Malayalam, Bhojpuri and Gujarati markets. We are actively competing in Hindi, Tamil, Bengali, Marathi and Kannada markets.

During this financial year, Saregama acquired worldwide audio and video rights of 1200 plus new film and non-film songs, in perpetuity, with their monetisation kick-starting immediately via music streaming platforms. music video licensing, social media platforms.

FILMS

While the profitability pressures were felt by Video OTT platforms and the industry witnessed consolidation amongst the players, EY report highlights that value of OTT content production in terms of value grew by almost 20% in CY 2023 to touch Rs. 30 Bn.

FY 2023-24 saw a resurgence in large screen theatricals, while OTT viewership continued to grow. Saregamas Yoodlee Films, launched in FY 2016-17, focuses on regional language films, hedging investments by pre-licensing satellite and digital rights. The focus is on talent discovery, methodical decision-making in story selection, transparent processes and profit-sharing with talent. Our Companys rich music catalogue, coupled with our ability to partner with the best of local composers and singers, ensures high quality music becomes an integral part of these films and series.

In FY 2023-24, we released films in Malayalam and Punjabi languages in theatres as well as on digital platforms. Our films such as Warning 2,

Anweshippin, Kasargold garnered good responses. We also witnessed that the most anticipated movie did not perform as expected, however our fiscal discipline and risk averse strategy ensured that we restricted the losses on the project with no major dent to our Companys bottomline.

SERIES

Saregamas TV serial vertical produced popular shows for over 21 years, while retaining IP rights to enhance its library. Post the initial satellite broadcast, these shows are monetised on digital platforms, with our South TV YouTube channel garnering over 3.8 Bn views in FY 2023-24. Since we retain IP, we are able to create language remakes of these shows to further enhance revenues. This year we produced language remakes in Hindi, Telugu, Malayalam, Kannada and Marathi, which continue to dominate their respective time slots in the Broadcasters Channels and bring in similar margins to the original show.

New TV serials Iniya & Ilakkiya completed 400 plus episodes after replacing Roja and Chandralekha that completed 2000 plus episodes. Anbeva completed 1000 plus episodes. All our serials Anbe Vaa, and Iniya were the Slot Leaders in their respective time slots while Ilakkiya continued its No. 1 TV serial position in afternoon slot across all Tamil Channels.

3 Artist Management

In FY 2023-24, Saregama launched a new Artist Management segment. This innovation comes from a deep insight that as the means of disseminating music democratise, the real value is to be created in monetising the relationship between creator and fan.

This vertical focuses on building new artists by enhancing their skillsets, social media presence, and promoting them. Eventually, the aim is to build an artist like a brand, creating a long-term affinity for them with their consumer base.

We use a methodical and data driven approach to craft their songs and market them to the most relevant audiences. Long-term contracts with the talent ensure that Saregama remains part of their

growth story and gets increasing returns from various revenue streams like performances, brand endorsements, and more.

The vertical is dedicated to identifying, nurturing, and promoting emerging talent, as well as representing established artists, and works synergistically with our other revenue centres-music, film, and live events- empowering the talent we cultivate to realise their maximum potential and reach.

This initiative also allows us to spotlight untapped talent, contributing to the enrichment of the industry as a whole.

In addition to the artist management vertical, ^^Saregama actively provides opportunities for aspiring talents by allowing them to upload their creations on a dedicated channel, Saregama Open Stage. This platform allows us to acquire content with no upfront costs while offering artists a share in the revenue generated by streaming their songs.

L4J Events

We see the event vertical as an extension of the music business. It allows us to build a deeper relationship with artists as we partner them in growing to the coveted position of being able to sell concert tickets at scale.

The highlight of our year in events was the Diljit Dosanjh Dil-Luminati tour in Australia. We can see the benefits of deeper relationships with artists as we are the only music label in the recent past to actually get a song from Diljit with full IP rights transferred. His song Love Ya was one of the best performing songs last year.

Pocket Aces Acquisition

Saregamas acquisition of Pocket Aces Pictures Private Limited marked a new chapter in our growth story. Pocket Aces has a direct relationship with over 120 Mn younger digital-first customers across platforms like Instagram and YouTube.

Acquiring Pocket Aces has added on a whole new dimension of IP and a distribution network of over 120 Mn followers, which we will leverage to further popularise our music library among the 18-35 audience segment. It will also create synergies across the artiste, influencer management and long-format video creation businesses of the two companies. B

Pocket Acess vertical Clout is a leading influencer management company with 120 plus influences cross genres and creative fields. The influencer —^7 marketing as per EY report is currently an Rs. 19 Bn industry expected to grow at CAGR of 18% and , reach Rs. 34 Bn by CY j

2026. Pocket Aces is well placed to leverage this boom aided by high content consumption, growth in digital advertising and most importantly the edge that the influences have because of access to Saregamas 150k plus music content which when used in short format videos enhances the quality, popularity and probability of success.

Another segment for Pocket Aces is the video business that includes production and licensing of web series under the brand Dice Media and D2C business with revenues generated through branded content on companys own channels such Filtercopy, Gobble and Nutshell.

Most importantly. Saregama through Pocket Aces has successfully created its space amongst customers in the age B group of 15 to 25.

This acquisition adds a new dimension to Saregamas IP and distribution network, creating significant synergies across artist and influencer ™ management and long- format video creation.

Innovation and New Initiatives Saregama launched Padhanisa, an Al-based music learning app that aims to make Indian vocal learning simple, easy and accessible to everyone across the globe.

Padhanisa is an obvious extension from Saregama. The insight of the app comes from the fact that all Indians love to sing, be it any occasion or just to feel happy. We truly believe that there are no bad singers, but just untrained ones. So, our Company came out with an Al-based app which trains you to sing in Sur.

From beginners taking their first steps in the world of Indian vocal singing to performers looking to refine their skills, the app caters to singers of all levels and backgrounds. With its user-friendly interface, comprehensive lesson plans and interactive sessions, its never been easier to learn singing sitting literally from anywhere.

The app offers monthly, quarterly, semi-annual and annual plans along with a free trial to sample the app.

Music Retail

Saregama continued with the tradition of launching innovative products to cater to the consumer requirements by introducing Carvaan Sleep and Carvaan Plug and Play.

The Company plans to continue with the Carvaan product which will be only available on online channels and Modern trade. While the volumes and topline will shrink, we expect to improve the profitability margins through control of costs associated with physical distribution. The legacy of Carvaan continues to strengthen the popularity of our catalogue, thereby providing the required fillip to the music licensing business.

Conclusion

Leveraging our extensive music catalogue and new content acquisitions, driven by technology and data-enabled decisionmaking, Saregama is poised to become the premier content IP company for Indians around the world.

Diversifying into new business segments and tapping new customer demographics, we are confident in our ability to strengthen our position as a preferred partner for platform businesses and consumers alike.

We remain dynamic, much like the business environment in the Media and Entertainment space, hungry for growth, and with a deep cultural commitment to constant innovation. Saregama is not just a legacy music label, but Indias most exciting and ever- evolving Complete Content Company.

ENVIRONMENTAL. SOCIAL, AND GOVERNANCE (ESG) OVERVIEW

Introduction:

This report highlights Saregama India Limiteds progress in FY 2023-24, demonstrating our commitment to sustainable practices aligned with the United Nations Sustainable Development Goals (SDGs). By integrating ESG principles into our business model, we aim to create a positive impact on society and the environment through responsible business practices.

ENVIRONMENTAL INITIATIVES

Tree Plantation Drive:

At our Dumdum office in Kolkata, we planted 100+ saplings, enhancing green cover, reducing greenhouse gases, and promoting sustainability.

GHG Emission Oversight:

We have expanded our sustainability reporting to include Scope 3 emissions, starting with one category, demonstrating our commitment to comprehensive climate action.

Adoption of Wheat Straw-Based Paper:

Using wheat straw-based paper for office use, we support environmental conservation and reduce our ecological footprint.

Use of Biodegradable Garbage Bags:

Implementing biodegradable garbage bags across our facilities reduces nonbiodegradable waste in landfills.

Water Management through Sprinklers:

Installed water sprinklers to minimise water wastage, optimise usage, and maintain green spaces efficiently.

SOCIAL IMPACT Education:

Implementing CSR activities to promote education and foster growth and development.

Work Environment and Employee Welfare:

Prioritised health, safety, and well-being of employees through comprehensive health and safety training programs, ergonomic workplace designs, and wellness initiatives.

Health and Wellness Initiatives:

? Tata Marathon Participation

? Eye, Dental, and BMI Check-ups

? Nutrition and Dietician Workshops

? Bone Density Check-up

? Annual Health Check-up Camp

? Desk Yoga Sessions

? Fitness Workshops Professional Development:

? Provided skill-based training, including Microsoft Office and Six Thinking Hats workshops.

GOVERNANCE PRACTICES

Commitment to ESG Principles:

Integrated ESG principles into our operations, emphasising ethical governance and creating a sustainable business model.

Ethical Governance and Data Privacy:

Maintained robust governance practices to ensure transparency, fairness, accountability, and strong data privacy measures.

Conclusion:

The initiatives undertaken in FY 2023-24 reflect our commitment to environmental sustainability, social responsibility, and strong governance. By integrating ESG principles into our business strategy, we aim to create long-term value for our stakeholders and contribute positively to society and the environment. Our ESG journey is a continuous process of improvement and adaptation, with ambitious targets and transparent reporting to build a resilient and sustainable business.