Spicy Entertainment & Media Ltd Management Discussions.

Management Discussion & Analysis Report

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include cyclical demand and pricing in the Companys principal markets, changes in government regulations, tax regimes, economic developments in principal markets and other incidental factors. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements that speak only as of their dates.

Economy Scenario

With an overall slowdown in the global economy which is estimated to have contracted by around 3.3% in 2020 on account of COVID-19 pandemic, the prospects in 2021 have shown sizeable improvement and the negative growth is expected to be reversed with positive growth of 6% expected to moderate to 4.4% in 2022. These are unprecedented and uncertain times. Globally, the COVID-19 pandemic has caused massive disruptions across every sphere of human and business activity. There has been an adverse economic impact on people, communities and countries. The vaccination drive has picked up momentum pan-India and the outlook remains positive with the advent of new vaccines reaching the market. Emerging Markets like India have witnessed a slowdown and there is economic fallout registered on account of sustained lockdowns in various parts of the Country. Growth in India is estimated to have contracted to -7.3% in FY 2021 with the country witnessing a second wave of the pandemic in March, 2021. The localised lockdowns have resumed which are likely to impair economic activity. However, the COVID-19 pandemic has severely impacted economies worldwide. The measures taken by the government to contain spread of the COVID-19 pandemic have had an impact on the economic activities as well as on the data collection mechanisms. Estimates are, therefore, likely to undergo sharp revisions for the aforesaid causes in due course. V shaped economic recovery is expected due to mega vaccination drive, recovery in the services sector and strong growth in consumption and investment coupled with resurgence in high frequency indicators such as power demand, rail freight, e-way bills, GST collection, steel consumption, etc.

Indian Media and Entertainment Industry

The Indian Media and Entertainment (M&E) industry continued to grow during the year, albeit at a slower rate as compared to the previous year due to the weak macroeconomic environment. Movie industry growth was driven by domestic revenue while the revenue from international markets declined during the year.

As the coronavirus pandemic continues to wreak havoc around the world, businesses across sectors took a hit this year. While some are recovering in the second half of the year, others seem to still be in its grip. After being shut for seven months, theatres, despite being open now, are expected to take a 80-85% YoY hit this fiscal, according to credit rating agency ICRA Ltd. Similarly, print media which took a massive hit in distribution, is expected to register 30% YoY decline in revenues in FY2021. However, with advertisement back on track, ICRA estimates television to register 15-20% decline in revenue. "While the credit metrics of film exhibitors will weaken materially in FY2021 due to the pandemic, ICRA expects a moderate impact on the credit metrics of entities involved in print media and TV broadcasting segments," the reported stated. As per the report, Within the M&E industry, the pandemic took its biggest toll on the film exhibition segment. The film exhibition industry is characterised by high fixed costs. Around 40-45% of the total cost of the film exhibitors (primarily multiplexes) is fixed in nature, with lease rental being the major component, accounting for 20-22% of the total cost. To reduce the cash burn, multiplexes embarked upon a stringent cost rationalisation drive. While ICRAs previous estimation came to 66% reduction in fixed costs for the multiplexes during the shutdown period, the actual (fixed) cost savings reported by multiplexes stood higher at 77% YoY in H1 FY2021.

Opportunities & Threats

The health emergency that has force launched the biggest ever work from home experiment globally, putting a question mark on the relevance of workspaces in a post-Corona virus world. Lack of work due to COVID-19 has led to a reverse exodus of labourers. For an already-stressed realty sector, multiple measures are needed to turn the tide and restore normalcy. In the best of times, hiring labour for the industry is challenging. Now, the nationwide lockdown due to the COVID-19 pandemic has created an unprecedented predicament. Since millions of workers have migrated to their hometowns due to lack of work, employers are dreading a nightmare scenario. Even when the lockdown is lifted, kick-starting operations will be extremely difficult for almost all sectors.

The current lockdown owing to the corona virus crisis has hugely impacted the world economy as well as a majority of sectors across the globe, including film industry. However, there lies an opportunity in every crisis, and Covid-19 looks no different. The boom of YouTube, OTT platform(s), Content Developer and the availability of Content in the COVID-era growing manifolds.


This year presents unique challenges for India. The implied real GDP growth of 5 per cent for FY 2020-21 in the second advance estimates of the National Statistics Office, is now at risk from the pandemics impact on the economy. The government has introduced several short-term relief measures to uplift the Indian economy from the immediate impact of the lockdown. In India, the impact of the ongoing pandemic on business activities became more prominent since the beginning of March 2021.

Internal Control Systems and their Adequacy

Adequate systems of internal controls that commensurate with the size of operation and the nature of business of the Company have been implemented. Risks and controls are regularly viewed by senior and responsible officers of the Company that assure strict adherence to budgets and effective and optimal use of resources. The Internal control systems are implemented to safeguard Companys assets from unauthorized use or disposition, to provide constant check on cost structure, to provide adequate financial and accounting controls and implement accounting standards.

Company performance overview

The Company has reported loss during the year under review. The Financial & operational details are mentioned in the Financial Statements.