Shalimar Productions Ltd Management Discussions

Pursuant to Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is as under:

Media & Entertainment industry

Introduction

The Media & Entertainment industry has immense power to influence, shape, and transform society. The industry is witnessing a massive transformation in the current scenario. It was a rollercoaster ride in the past few years for the whole industry when it came up with a few struggles, difficulties in producing content, the closure of cinema halls and a cut back in spending on advertisements during the pandemic. However, this situation was followed by a cycle of a strong revival. The agility and inclination to face and overcome challenges are being proved by this industry through the ways it has revived its charm and performed better than pre-pandemic. The core of this industry is to keep pace with the changing environment to produce quality and relatable content. The disruptive innovations which are at their peak are changing consumer behaviour, and technology leading to a risk for the irrelevancy of the media and entertainment industry. The popularity of YouTube videos, podcasts, Over-the-Top (OTT) media services, and digital broadcasting has given rise to a variety of occupations in the sector, including journalism, advertising, digital marketing, and public relations.

Some facts about the Media and Entertainment industry

? By 2024, it is expected that Indias media & entertainment industry will reach US$ 30.9 billion.

? By 2025, there will likely be more than 40 million smart connected TVs, up from 10 million in 2021.

? The digital media segment grew 29% to reach US$ 5.2 billion in 2021.

? The online gaming segment grew 28% in 2021 to reach US$ 1.2 billion and is expected to reach US$ 1.9 billion by 2024.

? In 2021, there was a 28% growth in the filmed entertainment segment. Around 757 films were released, with over 100 films released directly on video streaming platforms.

? In 2021, the animation and VFX segment grew 103% to reach US$ 1 billion and is expected to reach US$ 2.2 billion by 2024.

Industry Overview and Opportunities

India is the second-largest online news-consuming nation, the worlds second-largest market in terms of app downloads and the worlds largest fantasy sports market with a user base of 130 million. India also secures fourth rank in Information and Communication Technology (ICT) services export. The growth in television households will continue to grow at over 5% till 2025, which is driven by connected TVs. It is estimated to cross 40 million by 2025 and DD-free dishes could cross 50 million in the same year.

The subscriber base of the Indian telecommunications market is 1.18 billion which results in India being the worlds second largest in the segment. The mobile economy is booming at a good pace and constitutes around 98% of all telephone subscriptions.

Ministry of Electronics and Information Technology (MeitY) aims to have a tectonic shift in digital strategy to harness the opportunity to create an economic value addition of US$ 800 billion by the year 2024 and US$ 1 trillion by the year 2025 through the right digital interventions.

? With the rise in demand for regional content consumption, the share of regional content in TV and OTT consumption is expected to reach 60% and 50% respectively by 2025.

? The number of video viewers has increased to 497 million.

? Indians spent the maximum time (1.5 billion hours) on online sports worldwide, around a third of the global time spent on sports apps.

? It is estimated that digital ad spending in India will reach US$ 21 billion by 2028.

The industry growth is being supported by various government initiatives such as digitizing the cable distribution sector to attract greater institutional funding, increasing the FDI limit from 74% to 100% in cable and direct-to-home (DTH) satellite platforms, and granting industry status to the film industry for easy access to institutional finance. The Ministry of Information and Broadcasting set up Film Facilitation Office (FFO) which acts as a single window clearance and facilitation point for producers and production companies with a view to assist them in getting requisite filming permissions. In 2020, the government of India also announced the plan to support and develop a centre specifically for Animation, Visual-effects, Gaming, and Comic (AVGC).

Opportunities

India is the worlds second-largest telecommunications market with a subscriber base of 1.17 billion as of August 2022. In a country with 300 million households, there are around one-third of households who are still without television set and this data depicts that theres an opportunity for growth and development in the sector. The broadcasting industry can work as a powerful source which can educate, inspire, and empower viewers with strong opinions and views. Therefore, it is important that the government and industry work together to give every Indian home access to television.

Globally, the Animation, Visual-effects, Gaming and Comics (AVGC) sector is an industry of US$ 800 billion. However, India has a huge talent force supporting this industry while it accounts for less than one percent share in the industry. The AVGC sector has the potential to boom and become the next IT sector of India and the target could be around 5% in a year, which will be close to a US$ 40 billion opportunity. The same growth has the potential to create around 1,60,000 jobs across the nation. The gaming industry is booming as a high-growth segment along with the contribution of skill-based gaming. Under this segment, India has least percentage share if compared globally, however, India has a substantial growth opportunity with the availability of skills and policies supporting it.

Film making industry in India is being supported by nature itself, the opportunity expands with the beautiful and diverse locations and landscapes, good infrastructure, and high-quality manpower; India has all the ingredients required to unlock and expand this opportunity and become a preferred destination for international film shoots.

The opportunities are not only in India, but there is also an option to take Indian content to global audiences. South India has set a great example of the same across the globe as it has demonstrated that good content travels beyond boundaries and language barriers. India has a strong set of ecosystems of talent, production efficiencies and creative capabilities, and it generates huge opportunities to mark our strength and culture on the global stage. The industry can come together, explore, and create content that can break all global boundaries and become a storyteller to the world. The growth and stories of regional movies are better than other cumulative work. However, the industry has an opportunity to create masterpieces that can cross geographical boundaries and establish relatability around the globe. Moving towards print media, music, and radio, these subsectors continue to be important contributors to the industry. There are various changes in this industry with ongoing development and improvements.

Outlook

For the entertainment and media industries, 2022 marked an important inflection point. Total global entertainment and media (E&M) revenue rose 5.4% in 2022, to US$2.32 trillion. That represents a sharp deceleration from the 10.6% growth rate in 2021, when economies and industries globally were starting to rebound from the upheaval caused by the covid-19 pandemic. And in each of the next five years, the rate of growth will decline sequentially, so that by 2027 revenue will grow just 2.8% from

2026. Thats slower than the 3.1% rate of overall economic growth that the International Monetary

Fund (IMF) projects for that year.

The slowdown, caused in large measure by sluggish consumer spending, is pushing companies to reset expectations, refocus inward and seek ways to recharge growth. Theyre doing so by tapping into the many geographical and sectoral hotspots that offer opportunities and by harnessing emerging technology in particular, by exploring the power of generative AI as an engine of productivity for the creative process.

The causes of the slowdown are many. For some key sectors, the surge in revenue and attention that they experienced early in the pandemic ran out of steam. The creation of podcasts, which was among the industrys major success stories during the pandemic, fell by an estimated 80% between 2020 and 2022.

The Indian Digital Ecosystem

According to a report by EY, (as seen in the data below) the M&E industry increased by Rs. 348 billion (US$ 4.17 billion) (19.9%) to Rs. 2.1 trillion (US$ 25.2 billion), a 10% increase over pre-pandemic 2019 levels. Television remained the largest segment with 10% growth and 166 million households. The digital media reinforced its position as a strong number two with a growth rate of more than 30%, followed by a resurgent print. Digital media expanded the greatest, reaching Rs. 132 billion (US$ 1.58 billion), increasing its contribution to the M&E sector from 16% in 2019 to 27% in 2022.

Segment wise Revenue share of the Indian M&E Sector

Segments	2019	2020	2021	2022	2023E	2025E	CAGR 22-25
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	1910	1476	1750	2098	2339	2832	10.5%

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

The Way Forward

The media and entertainment industry has seen robust growth with continuous improvement and various approaches as well. For the past two years, the industry has shown immense resilience and there has been a bounce back to the pre-covid scenarios. The pandemic undoubtedly created a disruption in the consumption habits of consumers. However, with the advent of ongoing digitalization and new technologies, the media and film industry is expected to show significant growth over the next few years. The strong growth in OTT, gaming, animation and VFX is cumulatively estimated to contribute to around US$ 55-70 billion by 2030. The industry continuously showcases multimodal growth with digital video leading to a consumption boom, however the potential growth depends on the realization of supply and demand side factors. The integration of content and advertisement is growing more prevalent as digital advertising moves toward more "interactive" commercials. Platforms for short-form video are expanding and offer advertisers a special value proposition. With a more than ten-fold increase in gaming companies over the past ten years, India is also growing as a talent hotspot. Over the past few years, this has caused a boom in VC funding for the industry. After a challenging 2020, the film industry has demonstrated optimistic indications of resurgence. Future growth prospects include the expansion of content films, direct-to-digital releases, and regional box office growth. The development of the industrys infrastructure, intellectual capital, and financial incentives depends on the post-production, VFX, and animation sectors in India.

Company Overview

M/s. Shalimar Productions Limited (the "Company"), originally incorporated in 1985 and rebranded from Shalimar Agro Products Ltd to its current name in 2004, has long been a player in the media and entertainment industry. Over the years, the Company has made significant contributions to the production of regional albums and films.

In line with its vision to enhance its presence in the dynamic film and entertainment landscape, the Company is excited to announce the forthcoming launch of the NJOYMAX OTT platform. Management is confident that this platform will debut in the fiscal year 2024-25. The strategic shift towards digital content, including original films and web series, positions the Company to capitalize on the expanding digital production market.

Additionally, the Company has made notable strides in the North Indian Punjabi market with the successful release of the Punjabi film "Majnoo" earlier this year. This achievement has established a strong foothold in the region, and the Company anticipates gaining further traction and recognition within the Punjabi film industry in the future.

Financial Overview

Net Profit Ratio 3.53%

Current Ratio 31.12

Debt Equity Ratio 0.01

Debtors Turnover 2.73

Inventory Turnover 0.04

Operating Profit Margin -4.76%

Risk Management

The Company has established a risk management framework to identify, manage and mitigate risks arising from external and internal factors. A risk identification exercise is carried out periodically to identify various strategic, operational, financial and compliance related risks. These risks are evaluated for their likelihood and potential impact. Few risks and uncertainties that can affect the business include an accelerated shift in consumer preferences towards digital propositions, attraction and retention of right talent in new environment post the pandemic, adverse macroeconomic conditions including impact of geopolitical tensions influencing revenue growth and risk of newsprint price volatility & supply constraints resulting in higher direct costs. Further, an intense competitive landscape along with the risk of cyber threat and data breach remain some of the key concerns faced by the Company. The risks to the Company include, but are not limited to, the following factors:

? Consumer Preferences: Rapid shifts in consumer tastes toward digital content.

? Talent Acquisition: Challenges in attracting and retaining skilled professionals.

? Macroeconomic Conditions: Adverse economic factors and geopolitical tensions affecting revenue.

? Production Costs: Fluctuations in production costs and supply chain disruptions.

? Competition: Intense competition and pressure to differentiate offerings.

? Cybersecurity: Risks of cyber threats, data breaches, and technology advancements.

? Regulatory Compliance: Navigating complex regulations and ensuring compliance.

? Intellectual Property: Risks of IP theft, infringement, and licensing issues.

? Market Saturation: Oversaturation and fragmentation of the market.

? Revenue Volatility: Dependence on unpredictable advertising and subscription revenues.

? Content Quality: Risks of low-quality content damaging brand reputation.

? Expansion: Challenges in new market entry and localization.

Internal Control System & Adequacy

The Company has an effective system of internal controls corresponding with its size, nature of business and complexity of operations. The internal controls mechanism comprises a well-defined organizational structure with clearly laid out authority and responsibility matrix and comprehensive policies, guidelines and procedures governing the operations of respective functions. These controls have been designed to safeguard the assets and interests of the Company and its stakeholders and also ensure compliance with Companys policies, procedures and applicable regulations. The Company has an established Code of Conduct (CoC) framework and Whistle-blower mechanism, which is duly approved by the Board of Directors in compliance with the regulatory requirements.

Disclaimer

The information and opinions contained in this Management Discussion and Analysis Report (MDAR) are based on current expectations, estimates, and projections made by M/s. Shalimar Productions Limited (the "Company") as of the date hereof. These statements are forward-looking and inherently subject to uncertainties and risks, including but not limited to, changes in market conditions, economic factors, regulatory developments, and other risks as outlined in the risk factors section of this report. Actual results may differ materially from those expressed or implied in the forward-looking statements.

The Company assumes no obligation to update or revise any forward-looking statements or information, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

This MDAR should be read in conjunction with the Companys financial statements and other disclosures, which provide a more comprehensive understanding of its financial performance and position.

For and on behalf of the Board of Directors
Sd/-	Sd/-
Tilokchand Kothari	Vikramjit Singh Gill
Director	Director
DIN: 00413627	DIN: 08875328
Place: Mumbai
Date: 29/08/2024