SDC Techmedia Ltd Management Discussions

The global economy exhibited signs of continued resilience during the financial year 2024-25, despite persisting uncertainties arising from geopolitical developments, climate-related disruptions, and structural shifts in major economies. The International Monetary Fund (IMF) has projected growth of 3.2 per cent and 3.3 per cent for 2024 and 2025, respectively. Over the next five years, global growth is expected to average around 3.2 per cent, which is modest by historical standards. While the overall global outlook remains steady, growth varies across different regions. Nevertheless, this performance remains robust, particularly in the face of elevated interest rates and global supply chain realignments.

While inflation has been declining, growth remains subdued compared to pre-pandemic levels. The inflation is projected to decline further to 3.5%, signaling a continued disinflationary trend. Taking advantage of the steep decline in inflation, major central banks have implemented a policy pivot to lower policy rates. Given the differentials in the trajectories of economic activity across countries, the pace of policy rate reduction is bound to differ. There is also uncertainty regarding the levels of the year-ahead and terminal policy rates across economies at the end of the current monetary easing cycle. Meanwhile, unemployment is expected to decrease modestly to 5.2%, reflecting gradual labour market stability.

In 2024, according to PwCs Global Entertainment & Media Outlook 2025–2029, revenues rose by 5.5% to US$2.9 trillion, from US$2.8 trillion in 2023. Looking forward, we project that total E&M revenue will increase over the next five years at a compound annual growth rate (CAGR) of 3.7%, to reach US$3.5 trillion in 2029. The rate of growth will slow, to be sure. But this highly resilient sector will continue to expand steadily amid seismic technology changes as user engagement becomes more intense—and the sectors growth rate will exceed that of the global economy. There will be US$577 billion in incremental new revenues by 2029.

One of the defining features of 2024 was the sheer scale of elections worldwide, with billions heading to the polls. Interestingly, economic indicators such as GDP growth, unemployment rates, and inflation played a lesser role in shaping outcomes than broader concerns about the future.

A steady growth trajectory shapes the global economic outlook for 2024, though regional patterns vary. The near-term global growth is expected to be a shade lower than the trend level. The services sector continues to drive global expansion, with notable resilience in India.

The COVID-19 pandemic caused widespread disruptions to economies worldwide. Economic Survey 2023-24 compared the post-pandemic trends until Q4 FY24 with the pre-pandemic trajectory and concluded that the economy grew briskly enough to avert any permanent loss of output. This section extends the analysis to Q2 FY25 (ending September 2024) with a sectoral view of the economy.

Indias economy shows robust expansion, with real GDP for FY25 estimated at Rs. 1,87,97,000 crore (US$ 2.20 trillion), from Rs. 1,76,51,000 crore (US$ 2.06 trillion) in FY24 with a growth rate of 6.5%. This growth is driven by rising employment and stronger private consumption, supported by improving consumer sentiment, which is expected to keep the momentum going in the near future.

Trade remains a critical pillar of Indias growth story with exports reaching Rs. 37,31,000 crore (US$ 436.6 billion) in FY25, led by Engineering Goods (26.88%), Petroleum Products (13.86%) and Electronic Goods (8.89%). These exports helped the economy stay resilient during the pandemic when other sectors slowed. Union Minister of Commerce and Industry, projects exports to reach Rs. 85,44,000 crore (US$ 1 trillion) by 2030.

Indias ability to attract Foreign Direct Investment (FDI) has also strengthened. The country received record FDI inflows amounting to Rs. 4,21,929 crore (US$ 49.3 billion) in FY25 a 15% increase over FY24, supported by a stable policy environment, a large domestic market and steady economic growth positioning the country as a key destination for global capital. This capital inflow also complements government plans for increased investment in infrastructure and asset-building projects to further boost economic growth.

Indias external economic position is improving. The current account deficit narrowed to Rs. 1,98,726 crore (US$ 23.30 billion), or 0.6% of GDP, in FY25 from Rs. 2,21,754 crore (US$ 26.00 billion), or 0.7% of GDP, in FY24. This improvement was due to higher net receipts from services and secondary income, according to the Reserve Bank of India (RBI).

In 2024, the Indian M&E sector recorded a growth of 3.3%, falling significantly short of the nominal GDP growth rate of 6.5%. This underperformance can be attributed to a confluence of macroeconomic factors impacting consumer spending and sector-specific dynamics.

Between 2 to 2.5 million digital creators are influencing over Rs. 29,60,300 crore (US$ 350 billion) in annual consumer spending, a number expected to surpass Rs. 84,58,000 crore (US$ 1 trillion) by CY30.

In the Union budget of FY26 the Ministry of Information and broadcasting received Rs. 4,358 crore (US$ 515.5 million).

The Indian entertainment sector could unlock an estimated Rs. 50,724 crore (US$ 6 billion) in unrealised value by FY30, according to a recent industry report. This growth potential is attributed to international collaboration, technology adoption, and strategic changes in content creation.

Indian advertising revenues is projected to grow at a CAGR of 9.4% to reach Rs. 1,58,000 crore (US$ 19.2 billion) in FY28, which is 1.4x the global average of 6.7%. The online gaming and sports sector in India is growing at a CAGR of 19.2% and is projected to reach Rs. 39,583 crore (US$ 4.8 billion) by FY28. The total music (live, recorded and digital) revenue grew from Rs. 2,416 crore (US$ 293 million) in FY19 to Rs. 6,686 crore (US$ 811 million) in FY23. It is expected to cross Rs. 10,899 crore (US$ 1.3 billion) by FY28, growing at a CAGR of 10.3%. OTT platform revenues in India are projected to grow at a remarkable CAGR of 14.9%, the highest among the top 15 countries, to reach Rs. 35,061 crore (US$ 4.25 billion) by FY28.

Looking ahead, Indias Animation and VFX sector is projected to grow from US$ 1.3 billion in FY23 to US$ 2.2 billion by FY26, increasing its share of the media and entertainment (M&E) industry from 5% to 6%, according to a CII GT report.

FY25 was not a year of decline, but one of transformation. In a year marked by unprecedented content headwinds and industry volatility, the company transformed itself with a renewed focus on innovation and agility -positioning itself as a more resilient and forward-looking organization, ready to shape the future of cinema in 2025 and beyond.

a. Filmed Entertainment:

India is home to the worlds most prolific film industry in terms of volume, yet it remains significantly under screened. With only 9,918 (company estimates) cinema screens serving a population of over 1.4 billion, India has one of the lowest screen densities globally—just 7 screens per million people. The Indian box office grossed 11,833 Cr in 2024, making it the second-best year after 2023 (12,226 Cr). Hindi cinema saw a decline, with collections falling to 4,679 Cr from 5,380 Cr in 2023, and its market share dropping to 40%. Excluding dubbed versions of South Indian films, original Hindi films saw a sharp 37% decline. This was due to gaps in release calendar and lack of films from major superstars.

b. Regional Movies:

The expansion of regional cinema out of its home territory especially into the Hindi speaking belt is remarkable. The producers are increasingly investing in regional language films. This shift is driven by the success of Pan-India films, where Telugu, Tamil, Kannada, and Malayalam films have crossed linguistic boundaries to capture a national audience. The highest volumes of film releases were in Telugu (323), Tamil (252), Kannada (242), Hindi (221), and Malayalam (204). While South Indian language film releases declined marginally by 3%, other language segments grew by 11%. The regional film surge highlights Indias diverse linguistic markets and their contribution to overall industry growth.

c. Outlook for the Indian Media and Entertainment (M&E) Industry:

As per the EY FICCI report, the Indian film industry in 2024, recorded a total of 1,823 theatrical releases across various languages – including 204 dubbed film versions – compared to 1,796 releases in 2023. The highest volumes of film releases were in Telugu (323), Tamil (252), Kannada (242), Hindi (221), and Malayalam (204). While South Indian language film releases declined marginally by 3%, other language segments grew by 11%. Notably, more than 100 English-language films were released, which underscores Indias significance asa key international market for Hollywood.

d. Theatrical Releases

A theatrical release enhances a films promotional impact and overall asset value. Film Industry is witnessing a renewed interest in theatrical releases with the number of movies going for direct OTT release reducing significantly since Covid. During Covid, direct to OTT was not a choice but a compulsion for Film production companies to sustain themselves. Now production houses are again prioritizing a theatrical release as streaming platforms are offering much lower returns, when compared to a traditional theatrical release. The potential for earning outsized returns is the highest when a movie is released theatrically.

e. Digital and Internet Advertising

The Indian Internet advertising market is among the fastest-growing in the world, with a 12.3% CAGR expected to see total revenue climb from US$4.4bn in 2022 to US$7.9bn by 2027. There will be growth across the market over the forecast period, with the strongest performances coming in the mobile sector, where an overall CAGR of 13.7% is expected to push total revenue from US$3.1bn to US$5.8bn. In the wired sector, revenue will increase from US$1.4bn to US$2.1bn, at a CAGR of 8.9%.

f. Over-the-Top (OTT) Platforms

With new launches from international players and increasing "pay-lite" options, OTT revenue has surged in recent years, expanding a further 25.1% in 2022 to reach US$1.8bn. This is over six times the revenue of 2018. The market will continue to grow at an impressive rate, increasing at a 14.3% CAGR to produce revenue of US$3.5bn in 2027. This will be driven by the competitive SVOD sector, which accounted for 78.1% of market revenue in 2022. Although subscription service revenue will expand at a 13.0% CAGR to reach US$2.6bn, advertising-supported services (AVOD) will grow at a higher rate, albeit from a lower base.

g. Television and Broadcasting

Indias TV advertising market recovered rapidly from the COVID-19 pandemic downturn, with revenue expanding 19.0% in 2021 and 11.9% in 2022 to reach US$4.7bn. There remains considerable room for growth with advertisers keen to access Indias vast population and large live audiences. TV ad spend will grow at a 6.4% CAGR to reach

US$6.5bn in 2027. At this time, India will be the fourth-largest TV advertising market globally, after the US, Japan and China. The markets expansion continues to be based on economic development and an increasing proportion of households having television sets.

h. Consumer Publishing and Books

Indias consumer book market will increase at a 3.7% CAGR between 2022 and 2027, with total revenue increasing from US$1.1bn to US$1.3bn. Most of the growth will come from the electronic books sector, where revenue will see an impressive increase at a 10.3% CAGR. In the print sector, growth will be more modest, with increase at a 1.7% CAGR expected. Print still dominates the Indian market, accounting for 80.1% of total revenue in 2022, with electronic books making up the other 19.9%. Electronic books will gain ground over the forecast period, making up 27.2% by 2027.

i. Emerging Segments and Innovation

Experiential media, including live events, gaming, and Out of Home (OOH) advertising, are gaining traction, supported by rising consumer demand for interactive and immersive experiences. The gaming segment, particularly mobile gaming, is expanding rapidly, contributing significantly to digital media growth. Investments in VFX, animation, and regional content creation are enhancing Indias capabilities to compete globally in filmed entertainment and digital storytelling.

j. Policy and Fiscal Support

In the Union budget of FY26 the Ministry of Information and broadcasting received Rs. 4,358 crore (US$ 515.5 million). Continued investments in digital infrastructure, broadband expansion, and technology innovation are expected to enhance connectivity and content delivery across urban and rural markets. These factors collectively lay a strong foundation for robust medium-term growth in the Indian M&E sector.

Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate.

Indias Entertainment & Media industry is expected to reach INR 412656 Cr by 2025 at 10.75% CAGR. These figures come from PwCs Global Entertainment & Media Outlook 2021-2025, the 22nd annual analysis and forecast of E&M spending by consumers and advertisers across 53 territories.

Growth is expected in retail advertisement on the back of several players entering the food and beverages segment, E-commerce gaining more popularity in the country, and domestic companies testing out the waters. Rural region is also a potentially profitable target.

Film segment to continue to grow, driven by theatrical revenues as Hindi movies go mass market in their storytelling, incorporate more VFX to enhance the movie-going experience and expand more aggressively into tier-II and III cities.

Factors that will Propel the Growth of the Multiplex Industry over the Foreseeable Future

i. GDP Growth & Per Capita Consumption: India is the fastest growing economy currently and is expected to grow at the fastest pace for the next few years. By 2030, India could become worlds third-largest economy.

iii. Higher Disposable Income: People have greater discretionary money when their per capita income rises, which raises their standard of living.

iv. Lack of Out of Home Entertainment Options in India: In India, multiplexes remain one of the most affordable and accessible forms of out-of-home leisure when compared to theme parks, dining out, or vacations, making them a popular choice for entertainment.

v. Improving Lifestyle: Footfall at multiplexes has increased as the lifestyle choices of a youthful and vast working population have improved. The lack of out-of-home entertainment options in India, combined with excellent audio and visual experiences, a pleasant atmosphere, and comfortable seating, are some of the elements fueling this need.

vi. Increasing Focus on Customer Experience: Multiplexes are increasingly focused on providing a high-quality customer experience, with comfortable seating, high-quality sound and picture, and a range of food and beverage options. This focus on customer experience is likely to drive demand for multiplexes in the coming years.

vii. Technological Advancements: Technological advancements such as 3D and 4D screenings, as well as virtual and augmented reality experiences, are likely to drive demand for multiplexes as customers seek out new and immersive entertainment experiences.

viii. Increasing Number of Malls: The rapid growth of shopping malls across India, particularly in Tier-II cities, presents a significant opportunity for multiplex expansion. Malls provide a natural habitat for multiplexes, offering a convenient one-stop destination for shopping, entertainment and dining. ix. Diversification of Content: Multiplexes are no longer limited to screening mainstream films but are also showing independent and foreign language films, as well as live events such as concerts and sporting events. This diversification of content is likely to appeal to a broader range of customers and drive demand for multiplexes.

a. Ever changing trends in Media sector:

It may not be possible to consistently predict changing audience tastes. Peoples tastes vary quite rapidly along with the trends and environment they live in. This makes it virtually impossible to predict whether a particular show or serial would do well or not. With the kind of investments made in ventures, repeated failures would have an adverse impact on the bottom line of the Company.

b. New Business Models:

Entertainment companies now have to figure out how to diversify and compete on smaller scales. The company needs to interface more directly with consumers via social media posts, pushing new content directly to streaming services rather than focusing on physical albums or DVDs first.

c. Talent Risk:

The success of most entertainment companies is dependent on its stars. The artists and performers that audiences pay to see and listen to. But when so much of an album, a movie or television shoot, or a concert revolves around an individual, that individual presents as much risk as opportunity. Entertainment companies typically carry cast insurance to cover extra expenses associated with executing Plan B, but changing plans last-minute can introduce or elevate other existing risks.

d. Changes in Government policies:

Factors like Changes in GST rates, entertainment tax policies, affects the cinemas tickets rates resulting in audience preferring watching the movie over OTT platform instead on big screen, This may result in loss of revenue for the cinema industry.

The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments. The Company has identified various risks and also has mitigation plans for each risk identified. The Risk Management Policy of the Company is available on our website http://sdctech.in/InvestorRelation.php?act=Policy.

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

During the year under review, the Company has earned a Net Profit of Rs. 34.83 lacs as compared to Net loss of Rs. 299.84 Lacs in previous year. Your Directors are continuously looking for avenues for future growth of the Company in Media and Entertainment Industry.

The Company firmly believes that human resources is an important instrument to provide proper communication of the Companys growth story to its stake holders and plays vital role in the overall prospects of the Company. So the Company takes possible steps for the welfare of its manpower. The employee relationship was cordial throughout the year. We as on 31^st March, 2025, have 53 permanent employees on our rolls.

Statements in Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking within the meaning of applicable Securities Laws and Regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include a change in government regulations, tax laws, demand, supply, price actions, economic and political developments within and outside the country and such other factors.