Sri Adhikari Brothers Television Network Ltd Management Discussions.

Indian Macroeconomics scenario

India is expected to become the fifth largest economy in 2019. According to International Monetary Fund World Economic Outlook (October-2018), GDP (nominal) of India in 2018 at current prices is US$ 2,690 billion. Indias per capita nominal GDP is estimated to have grown by 10.6% in 2018. India remained the growth leader in 2018 amongst major economies including Emerging Markets and Developing Economies (EMDEs) over the last five years.

Media and Entertainment Industry

(Source: EY FICCI Indian Media and Entertainment Industry Report 2019)

India is a huge market with very positive growth fundamentals across virtually every type of media. The market is strategically interesting to global players seeking to monetize content and capture growth upside, either as a participant via licensing or other commercial arrangements, or as an outright owner through an in-bound acquisition or organic investment approach.

With more than 850 TV channels and over 17,000 newspapers, the country is one of the most diverse and vibrant media markets globally. Yet the headroom for future growth is significant. Advertising, the lifeline of Indias M&E industry, remains amongst the lowest in terms of spend as a percentage of GDP. The country is also at an inflection point in wireless broadband connectivity and infrastructure that combined with its GDP growth and young demographics, offer new opportunities.

The Indian M&E sector reached INR1.67 trillion (US$23.9 billion), a growth of 13.4% over 2017. With its current trajectory, we expect it to grow to INR2.35 trillion by 2021 (US$33.6 billion).

Content Creation

With the growth in demand for content, driven by global OTT platforms localization strategy and domestic OTT platforms drive to grow their digital audiences, as well as the increasing number of regional television channels, the demand for original digital content increased by around 1,200 hours in 2018. This has led to an increase in content rates, and till such time as consolidation takes place in the OTT segment.

Indian content was made available on global platforms in 2018. Led by the success of Netflixs Sacred Games, where two of every three viewers were outside India, Indian content earned access to a non-diaspora audience in 2018. Global digital platforms are buying more Indian content, and this is an opportunity for Indian content creators to showcase Indias content prowess and make India a content creation hub for the global market. The opportunity for this can be significant, given that Netflix alone, with a budget of US$12 US$13 billion, has a content budget comparable with India as a country.

Television broadcasters will focus on customer database creation and experiment more with combined selling of impact properties across TV + OTT platforms. OTT platforms are sure to benefit due to increased parity between television and OTT content choice and costs.

Television: India is the second largest pay-TV market in the world in terms of subscribers after China, with 197 million TV households growing at 7.5%. Pay-TV penetration in India has more than doubled from 32% in 2001 to 66% in 2018 (by comparison in 2018 pay-TV penetration in the US was 78% and over 90% in China). While the size of the Indian pay-TV market in terms of revenue is smaller than its peers, the runway for continued growth provides exciting opportunities for global players. Regional pay-TV markets continue to be attractive, as they outpace national ones in terms of advertising. We expect global broadcasters to continue to build a presence in these markets by acquiring or partnering with local broadcasters.

Print: Print segment grew 0.7% in 2018 to reach INR305.5 billion. The segment is expected to reach INR338 billion by 2021, growing at a CAGR of 3.4%. The print segment also benefit from the general elections in 2019, particularly on the back of the DAVP rate increase, as well as stable newsprint prices.

Digital Industry: Digital Industry has grown significantly over the past few years, and continues to lead the growth charts on advertising. Subscription revenues are emerging and are expected to make their presence felt by 2020. In 2018, digital media grew 42%, with advertising growing by 34% and subscription growing 262%. Subscription, which was 3.3% of the segment in 2017, increased to 8.4% in 2018. India is amongst the top two to three countries in the world today when it comes to digital consumption of services and second only to China on an overall basis, with around 570 million internet subscribers, growing at a rate of 13% annually.

Growth Outlook:

W.r.t M & E outlook, India is a highly attractive market today with huge potential going forward based on demographic and economic factors. With growing middle class, young demographic, uptake on digital and a rise in the consumers income, the propensity to spend on media and entertainment is growing faster than the economy itself. Indias conducive regulatory environment and high volume of content consumption hold significant potential

At the same time, a vibrant domestic entrepreneurial community is powering the development of content and technology which augurs well in times to come.

Company Profile:

Sri Adhikari Brothers Group is a pioneer in the field of Indian Media and has gone through various stages of growth over the last 3 decades. The group not only has a fair amount of experience in the production of content but also in the broadcasting sector by creating a light humor centric television brand, SAB TV. Currently, the group has exposure across content production, broadcast and publishing. SAB Group was the first to introduce and champion the sponsorship based model as a production house. This has primarily ensured that the Intellectual Property Rights (IPR) remain with the group. Very few production houses in India have such a rich archive of IPR to take advantage of.

The Company is also the home to a creative services team called Katalyst Creates. Katalyst Creates has come a long way in the realm of production and post production. Katalyst looks at delivering cutting edge products, so as to become the most viable option for any enterprise interested in putting forth fresh and remarkably memorable audio-visual marketing campaigns.

The Companys revenue was contributed mainly from syndication of content and the Company is continuously trying hard to increase the same with new emerging mediums and platforms.



Largest Industry: The Indian film industry is one of the largest globally with a history of steady growth. With films being the most popular form of mass entertainment in India, the film industry has witnessed robust double-digit growth over the past decade.

Learning Curve: The immense experience of the promoters in the media industry has proved to be an added advantage in understanding the taste of audience and producing differentiated contents.

Digitization and Convergence: Digital platforms like DTH, digital cable, IPTV and convergence media is expected to transform the landscape of the industry by enabling players to leverage on cross media synergies and attract a whole set of new viewers. Each platform is expected to create its own demand for audio and video content.

Challenges and Threats:

External Risk:

Competition from other players Company operates in highly competitive environment across all its business segments that are subject to innovations, changes and varying levels of resources available to each player across segment. Failure to remain ahead of the curve or respond to competition may harm the business.

Differentiated Products: Due to increase in the number of production house, the project produced needs to be unique to attract viewers. Also, with a view to produce differentiated content, the production cost also increases.

Production cost: The risk of getting the production getting extended the projected date or the risk of over spending during production. It requires large outlays of money that cannot be recovered if the project fails at any stage. Delay in planned release also shoots the whole production cost high.

Piracy: Piracy continues to be one of the major issues affecting the Indian film industry with an annual loss of substantial revenues. Over time, movie piracy has shifted from CDs and DVDs to online platforms. The modus-operandi involves use of sophisticated smartphones and camcorders to record films in theatres and then publish them on websites. With increased penetration of smartphone devices and cheaper data charges, the situation is becoming worse each year.

Internal risk:

Change in Consumer Preference Risks:

The taste of the viewer is changing rapidly; accordingly the production has to match with the expectation of the audience. Many a times even after much work on the project, the project doesnt appeal the target audience as the target audience preferences are bound to change. The level of creativity required for the audience targeted varies with the available options to the consumers.

Technological Risks:

Advancement of the technology for production and distribution is necessary with the new technologies being adopted by the competitors.

Regulatory Matters:

The business may have a positive or a negative impact on the revenues in future due to changes in the regulatory framework and tax laws as compared to the current scenario.

Consumer analytics has become indispensable:

Analytics is being used extensively across the M & E now, as the organisations look to evolve their business models and address various challenges emerging in competitive markets. Analytics is being used to gauge the effectiveness of marketing efforts and thus helps in strategizing accordingly to achieve maximum Return on Marketing Investment (ROMI). With the evolution in technology, data availability increases and organisations need to invest significantly in gathering, analyzing and interpreting data to optimise customer engagement.

Artist attrition risk:

The reason for which the Companys content is preferred by the audience includes artist attraction also. These artists are an important part for the content produced by the Company. The attrition of these artists could affect the consumer preferences.

Revenue Risks

The Company earns revenue either by selling commissioned programs or Syndication of various content to various broadcasters, aggregators and satellite networks.

The sustainability of the programs is mainly dependent on the concept, content and the technical expertise. Apart from this, Television Rating Points (TRP) is one of the key indicators, which decide the popularity of the program as well as sustainability of the program.

Management continuously monitors and makes efforts to arrest decline or adverse output on any of these factors.


1. Share Capital

As on March 31, 2019, the Authorized Share Capital of the Company stood at Rs. 4,850 lakh divided into 4,610 lakh Equity Shares of Rs.10/- each and 240 lakh Preference Shares of Rs. 10/- each.

As on March 31, 2019, the Paid-up Share Capital of the Company stood at Rs. 3,730.55 lakh divided into Rs. 3,494.45 lakh comprising of 349.44 lakh Equity Shares of Rs.10/- each full paid-up and Rs. 236.10 lakh comprising of 23.61 lakh 0.01% Non Convertible Non-Cumulative Redeemable Preference Shares of Rs.10/- each fully paid-up.

2. Other Equity:

The total Other Equity as at March 31, 2019 amounted to Rs. (2,978.38) lakh, which include General Reserves of Rs. 2,025.99 lakh, the Security Premium Accounts of Rs. 3,798.96 lakh, retained earning Rs. (8,802.63) lakh and other comprehensive income Rs. (0.70) lakh.

3. Financial Liabilities Non-Current Liability:

The financial liabilities as at March 31, 2019 is Nil.

4. Financial Liabilities Current Liability:

The financial liabilities as at March 31, 2019 amounted to Rs. 16,120.09 lakh which includes term loan from banks.

5. Fixed Assets:

Depreciation of Rs. 2,398.07 lakh was charged to the statement of Profit and Loss. The Net Block of Tangible Fixed Assets and Intangible Fixed Assets as on March 31, 2019 was Rs. 4,070.48 lakh and Rs. 1,3011.00 lakh respectively. The Capital WIP as on March 31, 2019 amounted to Rs. 1,403.44 lakh.

6. Investments:

The total investments as on March 31, 2019 is Nil.

7. Revenues:

The Company earned total revenues of Rs. 1524.47 lakh during the year ended March 31, 2019 as against Rs. 5,748.63 lakh of the previous year ended March 31, 2018 from its content production and distribution business.

8. Expenses:

The operating expenses of the Company for the year ended March 31, 2019 is Rs. 956.24 lakh as against Rs. 5,740.77 lakh for the previous year ended March 31, 2018.

Critical accounting policies:

The principles of revenue recognition are as under:

Revenue from sale of program/content rights is recognized when the relevant program/content is delivered.

In respect of Interest Income, it is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Segment wise Performance

The Company is operating in single primary business segment i.e. Content Production and Syndication. Accordingly, no segment reporting as per Accounting Standard 17.

Internal Controls and Adequacy of those controls

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 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 financial and accounting controls and implement accounting standards.

Human Resources

The Company prides itself as a young and vibrant organisation and recognises its employees as its greatest assets. The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. As on March 31, 2019, the company had 2 permanent employees on its payroll.


Your company successfully leverages the value locked in the expensed out content lying in the library by sub-licensing of the content rights on the defined usage basis to the broadcasters and aggregators in India and abroad for various platforms. The management expects sizeable revenues in the form of exports in the future.

Cautionary Statement

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations may be “forward-looking statement” 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 economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.