Studio LSD Ltd Management Discussions

Overview

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our restated financial statements as of and for years ended March 31, 2025, 2024 and 2023 prepared in accordance with the Companies Act, 1956 and Companies Act, 2013 to the extent applicable and restated in accordance with the SEBI (ICDR) Regulations, including the schedules, annexure and notes thereto and the reports thereon, included in "Financial Information" chapter "Restated Financial Statements" beginning on page 199 of this Red Herring Prospectus.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those set forth in "Risk Factors" and "Forward-Looking Statements" beginning on pages 33 and 21 respectively, of this Red Herring Prospectus

Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year are to the 12 months ended March 31 of that year.

BUSINESS OVERVIEW

Our Company was incorporated as " LSD FILMS PRIVATE LIMITED " on February 02, 2017, as a Private Limited Company, in accordance with the provisions of the Companies Act, 2013, pursuant to a Certificate of Incorporation bearing CIN No. U92410MH2017PTC290116 issued by the Central Registration Centre. Subsequently the name of the company was changed from "LSD FILMS PRIVATE LIMITED" to "STUDIO LSD PRIVATE LIMITED" pursuant to a special resolution passed by our shareholders in the extra ordinary general meeting held on July 17, 2020, and a fresh certificate of incorporation dated September 03, 2020, was issued to our company by ROC Mumbai. Subsequently, our Company was converted to a public limited company, pursuant to a special resolution passed by our shareholders at the Extra Ordinary General Meeting held on August 9, 2024, and the name of our Company was changed to "STUDIO LSD LIMITED" and a fresh Certificate of Incorporation dated September 19, 2024, was issued to our Company bearing CIN No. U92410MH2017PLC290116 by the Registrar of Companies Central Processing Centre.

Studio LSD where LSD stands for Laxmi Saraswati and Durga, is a multimedia production house specialising in original and captivating stories, partnering with artists from the film and televisions industry. We are involved in every aspect of the content-making process, from idea to distribution and financing the projects, hiring actors and crew members, scouting locations, creating sets, managing the budgets, and overseeing the entire production and post-production process.

SUMMARY OF THE RESULTS OF OPERATION:

The following table sets forth select financial data from restated profit and loss accounts for the financial year ended on March 31, 2025, March 31, 2024 and March 31, 2023 and the components of which are also expressed as a percentage of total revenue for such periods.

( in lakhs)

Particulars	For the year ended March 31,
	2025	% of Total Revenu e	2024	% of Total Revenu e	2023	% of Total Revenu e
Revenue from operations (net)	10,447.81	99.50%	10,247.54	99.98%	4,667.69	99.92%
Other income	52.89	0.50%	1.94	0.02%	3.53	0.08%
Total Revenue	10,500.70	100.00	10,249.48	100.00	4,671.22	100.00
		%		%		%
Expenses
Cost of Services	7,350.42	70.00%	6,645.66	64.84%	3,301.31	70.67%
Change in Inventory	(897.84)	(8.55)%	20.24	0.20%	17.80	0.38%
Employee Benefits Expenses	485.68	4.63%	485.21	4.73%	186.28	3.99%
Finance Costs	0.08	0.001%	0.55	0.01%	9.81	0.21%
Depreciation and Amortisation	26.70	0.25%	17.63	0.17%	4.47	0.10%
Expenses
Other Expenses	1,958.16	18.65%	1,613.91	15.75%	787.86	16.87%
Total Expenses	8,923.20	84.98%	8,783.20	85.69%	4,307.53	92.21%
Profit Before Exceptional Items and Tax	1,577.50	15.02%	1,466.28	14.31%	363.69	7.79%
Exceptional Items	-	-	-	-	-	-
Profit Before Tax	1,577.50	15.02%	1,466.28	14.31%	363.69	7.79%
Tax Expenses
Current Year	400.00	3.81%	387.06	3.78%	84.26	1.80%
Current Tax relating to prior years	0.05	0.00%	0.01	0.00%	-	-
Deferred Tax	10.45	0.10%	(11.15)	(0.11%)	(0.07)	(0.00%)
Profit for the Year	1,167.00	11.11%	1,090.37	10.64%	279.50	5.99%

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO LATEST AUDIT PERIOD FOR YEAR ENDED AS AT MARCH, 31 2025

In the opinion of the Board of Directors of our Company, since the date of the last audited period i.e., March 2025, as disclosed in this Red Herring Prospectus, there are no circumstances that materially or adversely affect or are likely to affect the trading or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS:

Our business, results of operations and financial condition are affected by a number of factors, some of which are beyond our control. This section sets out certain key factors that we believe have affected our business, results of operations and financial condition in the past or which we expect will affect our business, results of operations or financial condition in the future. For a detailed discussion of certain factors that may adversely affect our business, results of operations and financial condition, see "Risk Factors" beginning on page 33 of this Red Herring Prospectus.

SIGNIFICANT ACCOUNTING POLICIES:

For Significant accounting policies please refer "Significant Accounting Policies", under Section titled " Financial Information" beginning on page 232 of this Red Herring Prospectus.

MAIN COMPONENTS OF PROFIT AND LOSS ACCOUNT

Income

Our Total Revenue comprises of Revenue from core business operations and Other Income.

Revenue from operations

The Revenue from operations consist of revenue from production of TV daily soaps and serials. Our revenue from operations as a percentage of total revenue was 99.50%, 99.98% and 99.92% for FY25, FY24 and FY23 respectively.

Other Income

Other Income comprises of Interest Income from Fixed Deposits with Banks, dividends and gains from mutual funds. Other Income as a percentage of Total Revenue was 0.50%, 0.02% and 0.08% for FY25, FY24 and FY23 respectively.

Expenditure

Our total expenditure primarily consists of Direct Expenses, Employee Benefit expenses, Finance Expenses, Depreciation & Amortization Expenses and Other Expenses which is 84.98%, 85.69% and 92.21% of total revenue for FY25, FY24 and FY23 respectively.

Direct Expenses:

Direct Expenses is represented mainly by Cost of Services and Changes in Inventory. Cost of Services includes Professional charges payable to Artists and supporting staff and other support cost expenses.

Cost of Services consumed forms 70.00%, 64.84% and 70.67% of the total revenue for FY25, FY24 and FY23 respectively.

Changes in Inventory includes untelecasted episodes of ongoing TV serials and untelecasted serials with pending agreements yet to be formalised with the channels, which forms -8.55%, 0.20% and 0.38% of the total revenue for FY25, FY24 and FY23 respectively

Employee Benefit Expenses:

Employee Benefit expenses include Salaries/Wages, Bonus & Allowances, Gratuity, Contribution to Provident Fund and Other Funds and Staff Welfare Expenses. Employee Benefit Expenses as a percentage of Total Revenue was 4.63%, 4.73% and 3.99% for FY25, FY24 and FY23 respectively.

Finance Expenses:

Finance Expenses includes Interest Expenses and Bank Processing Fee and Charges which form 0.001%, 0.01%, and 0.21% of total revenue for FY25, FY24 and FY23 respectively.

Depreciation & Amortization:

Depreciation & Amortization includes Depreciation on Tangible assets which forms 0.25%, 0.17% and 0.10% of total revenue for FY25, FY24 and FY23 respectively.

Other Expenses:

Other Expenses includes Legal and Professional Charges, Rent of studios, Insurance expenses, Provision for CSR, Payment to Contractors, Telephone expenses, Printing & Stationery, Travelling and Conveyance and Payment to Auditors which is 18.65%, 15.75% and 16.87% of the Total Revenue for FY25, FY24 and FY23 respectively.

FINANCIAL YEAR 2024-25 COMPARED WITH 2023-24

The Total Revenue for FY 2024-25 has increased by 2.45% from 10,249.48 lakhs for FY 2023-24 to 10,500.70 lakhs for FY 2024-25.

Revenue from Operations

Revenue from operations has increased by 1.95% from 10,247.54 lakhs for FY 2023-24 to 10,447.81 lakhs for FY 2024-25. The increase in revenue was majorly because of increase in number of episodes of serials/soaps.

Other Income

Other Income increased from 1.94 lakhs for FY 2023-24 to 52.89 lakhs for FY 2024-25. The decrease was majorly due to interest received on deposits in FY 2024-25.

Cost of Services

Cost of Services increased by 10.60% from 6,645.66 lakhs for FY 2023-24 to 7,350.42 lakhs for FY 2024-25. The increase commensurate with the increase in our revenue from operations.

Changes In Inventory

Changes in inventory has been increased from -20.24 lakhs for FY 2023-24 to 897.54 lakhs for FY 2024-25 mainly due to increase in number of untelecasted episodes and content under development.

Employee Benefit Expenses

Employee Benefit Expense has been increased by 0.10% from 485.21 lakhs for FY 2023-24 to 485.68 lakhs for FY 2024-25 mainly commensurate with the increase in our revenue from operations.

Finance Costs

Interest expenses included in finance costs has decreased from 0.55 lakhs for FY 2023-24 to 0.08 lakhs for FY 2024-25 due to less utilization of overdraft facility in FY 2024-25.

Depreciation & Amortization

Depreciation & Amortization expense has increased by 9.07% from 17.63 lakhs for FY 2023-24 to 26.70 lakhs for FY 2024-25 due to additions in fixed assets for an amount of 15.15 lakhs during FY 2024-25.

Other Expenses

Other Expenses has been increased by 21.33% from 1,613.91 lakhs for FY 2023-24 to 1,958.16 lakhs for FY 2024-25. The increase commensurate with the increase in our business operations.

Profit before tax

Profit before tax has increased by 7.59% from 1,466.28 lakhs for FY 2023-24 to 1,577.50 lakhs for FY 2024-25. The substantial increase in Profit before Tax was due to increase in margins as a resultant of increased number of serials.

Tax Expense

Tax Expense has increased by 9.20% from 375.91 lakhs for FY 2023-24 to 410.50 lakhs for FY 2024-25 The increase in tax expense incurred was primarily due to higher profit before tax for FY25 as compared to FY24.

Profit after tax

Profit after tax has increased by 7.03% from 1,090.37 lakhs for FY 2023-24 to 1,167.00 lakhs for FY 2024-

25. The resultant effect was due to higher increase in profit before taxes.

Other key ratios:

Particulars	For the Financial Years ended March 31,
	2025	2024
Return on Net worth %	53.78%	104.71%
Current Ratio	1.87	1.50

Return on Net- worth

This is defined as Net profit after tax by Average Net worth, based on the Restated summary statements.

Current Ratio

This is defined as total current assets by total current liabilities, based on the Restated Summary Statements.

FINANCIAL YEAR 2023-24 COMPARED WITH 2022-23

The Total Revenue for FY2023-24 has increased by 119.42% from 4,671.22 lakhs for FY 2022-23 to 10,249.48 lakhs for FY 2023-24.

Revenue from Operations

Revenue from operations has increased by 119.54% from 4,667.69 lakhs for FY 2022-23 to 10,247.54 lakhs for FY 2023-24. The increase in revenue was majorly because of increase in number of telecasted serials and also increase in number of episodes of earlier serials/soaps.

Other Income

Other Income decreased from 3.53 lakhs for FY 2022-23 to 1.94 lakhs for FY 2023-24. The decrease was majorly due to interest received on income tax refund in FY 2022-23.

Cost of Services

Cost of Services increased by 101.30% from 3,301.31 lakhs for FY 2022-23 to 6,645.66 lakhs for FY 2023-24. The increase commensurate with the increase in our revenue from operations.

Changes In Inventory

Changes in inventory has been increased by 13.67% from 17.80 lakhs for FY 2022-23 to 20.24 lakhs for FY 2023-24 mainly due to increase in number of untelecasted episodes.

Employee Benefit Expenses

Employee Benefit Expense has been increased by 160.48% from 186.28 lakhs for FY 2022-23 to 485.21 lakhs for FY 2023-24 mainly commensurate with increase in number of serials and episodes.

Finance Costs

Interest expenses included in finance costs has decreased by 94.41% from 9.81 lakhs for FY 2022-23 to 0.55 lakhs for FY 2023-24 due to repayment of overdraft facility from Cosmos Bank.

Depreciation & Amortization

Depreciation & Amortization expense has increased by 293.86% from 4.47 lakhs for FY 2022-23 to 17.63 lakhs for FY 2023-24 due to additions in fixed assets for an amount of 68.32lakhs during FY 2023-24.

Other Expenses

Other Expenses has been increased by 104.85% from 787.86 lakhs for FY 2022-23 to 1,613.91 lakhs for FY 2023-24. The increase commensurate with the increase in our business operations.

Profit before tax

Profit before tax has increased by 303.16% from 363.69 lakhs for FY 2022-23 to 1,466.28 lakhs for FY 2023-24. The substantial increase in Profit before Tax was due to increase in margins as a resultant of increased number of serials.

Tax Expense

Tax Expense has increased by 346.48% from 84.19 lakhs for FY 2022-23 to 375.91 lakhs for FY 2023-24 The increase in tax expense incurred was primarily due to higher profit before tax for FY24 as compared to FY23.

Profit after tax

Profit after tax has increased by 290.12% from 279.50 lakhs for FY 2022-23 to 1,090.37 lakhs for FY 2023-24. The resultant effect was due to higher increase in profit before taxes.

Other key ratios:

Particulars	For the Financial Years ended March 31,
	2024	2023
Return on Net worth %	104.71%	78.42%
Current Ratio	1.50	1.26

Return on Net- worth

This is defined as Net profit after tax by Average Net worth, based on the Restated summary statements.

Current Ratio

This is defined as total current assets by total current liabilities, based on the Restated Summary Statements.

CASH FLOW

The table below summaries our cash flows from our Restated Financial Information for financial years March 31, 2025, March 31, 2024, ended March 31, 2023:

( in lakhs)

Particulars	For the Financial Years ended March 31,
	2025	2024	2023
Net cash (used in)/ Generated from operating activities	576.08	757.86	100.02
Net cash (used in)/ Generated from investing activities	(916.38)	(236.31)	(19.61)
Net cash (used in)/ Generated from finance activities	0.12	(6.70)	(48.14)

Cah flow from operating activities:

For the year ended March 31, 2025

The Net cash Generated from operating activities is 576.08 lakhs. Our company made profit after taxes for an amount of 1,167.00 lakhs. Out of this, amount invested in working capital requirements is 622.06 lakhs and our non cash expenses amounted to 20.69 lakhs. The resultant added to our cash and cash equivalents for the year.

For the year ended March 31, 2024

The Net cash Generated from operating activities is 757.86 lakhs. Our company made profit after taxes for an amount of 1,090.37 lakhs. Out of this, amount invested in working capital requirements is 339.18 lakhs and our non cash expenses amounted to 17.83 lakhs. The resultant added to our cash and cash equivalents for the year.

For the year ended March 31, 2023

The Net cash generated from operating activities is 100.02 lakhs. Our company made profit after taxes for an amount of 279.50 lakhs. Out of this, amount invested in working capital requirements is 190.79 lakhs and our non cash expenses amounted to 11.39 lakhs. The resultant added to our cash and cash equivalents for the year.

Cash flow from Investing Activities:

For the year ended March 31, 2025

The Net cash used in Investing Activities is 916.38 lakhs primarily due to investment in mutual funds of 932.35 lakhs and purchase of fixed assets for an amount of 6.25 lakhs.

For the year ended March 31, 2024

The Net cash used in Investing Activities is 236.31 lakhs primarily due to investment in mutual funds of 168.40 lakhs and purchase of fixed assets for an amount of 68.32 lakhs.

For the year ended March 31, 2023

The Net cash used in Investing Activities is 19.61 lakhs primarily due to purchase of Fixed Assets of 22.50 lakhs.

Cash flow from Financing Activities:

For the year ended March 31, 2025

The Net cash used in financing activities is 0.12 lakhs primarily due to increase in share capital of 0.20 lakhs and payment of interest cost of 0.08 lakhs.

For the year ended March 31, 2024

The Net cash used in financing activities is 6.70 lakhs primarily due to repayment of business loan from HDFC Bank for an amount of 6.15 lakhs and payment of interest cost of 0.55 lakhs.

For the year ended March 31, 2023

The Net cash used in financing activities is 48.14 lakhs primarily due to repayment of overdraft facility with Cosmos Bank for an amount of 38.34 and payment of interest cost of 9.81 lakhs.

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. For further details, relating to our related party transactions, see "Restated Financial Statements Note 30 Related Party Disclosure" on page no. 225 of this Red Herring Prospectus.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our Companys Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Board of Directors is responsible for developing and monitoring the companys risk management policies. The companys risk management policies are established to identify and analyse the risk faced by our company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and our companys activities. The Companys Board of Directors oversees how management monitors compliance with the companys risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by our company. The Board of Directors is assisted in its oversight role by internal audit team. Internal audit team undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors.

Market Risk

Market risk is the risk that the changes in market prices such as foreign exchange rates, interest rates and equity prices will affect our companys income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The pre dominant currency of our companys revenue and operating cash flows is Indian Rupees (INR). There is no foreign currency risk as there is no outstanding foreign currency exposure at the year end.

Interest Rate Risk

Our company has taken term loans and working capital loans from bank and financial institutions. Our company exposes to the risk of changes in market interest rates as our companys long and short term debt obligations are of floating interest rate. Therefore, there are interest rate risks, since the carrying amount and the future cash flows will fluctuate because of change in market interest rates.

Credit Risk

Credit risk arises from the possibility that customers or counterparty to financial instruments may not be able to meet their obligations. To manage this, our company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Credit risks arises from cash and cash equivalents, deposits with banks, financial institutions and others, as well as credit exposures to customers, including outstanding receivables. Our company evaluates the concentration of risk with respect to trade receivables as low, as none of its customers constitutes significant portions of trade receivables as at the year end. Our company considers factors such as track record, size of institutions, market reputation and service standards to select banks with which balances and deposits are maintained. the balances and fixed deposits are generally maintained with the banks with whom our company has regular transactions. Further, Our company does not maintain significant cash in hand other than those required for its day to day operations. Considering the same, Our company is not exposed to expected credit loss of cash and cash equivalent and bank balances.

Liquidity Risk

Liquidity risk is the risk that Our company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our companys approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Our companys reputation. Management of the Company monitors rolling forecasts of Our companys liquidity position and cash and cash equivalents on the basis of expected cash flows to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration Our companys debt financing plans, covenant compliance and compliance with internal statement of financial position ratio targets.

Capital risk management

Our company manages its capital to ensure that it will be able to continue as a going concern so, that they can continue to provide returns to shareholders and benefits for other stakeholders and maintain an optimal capital structure to reduce cost of capital. Our company manages its capital structure and make adjustments to, in light of changes in economic conditions, and the risk characteristics of underlying assets. In order to achieve this overall objective, our companys capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings that define the capital structure requirements.

Consistent with others in the industry, Our company monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by equity. Net debt is calculated as total borrowing (including current and noncurrent) as shown in the balance sheet.

OTHER FACTORS

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

Unusual or infrequent events or transactions

To our knowledge there have been no transactions or events which, in our judgment, would be considered unusual or infrequent.

Significant economic changes that materially affected or are likely to affect income from continuing operations.

Other than as described in this section and the sections of this Red Herring Prospectus titled "Risk Factors" and "Industry Overview" on pages 33 and 114, respectively, there have been no significant economic changes that materially affected or are likely to affect our Companys income from operations.

Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue, or income from continuing operations.

Our business has been impacted and we expect will continue to be impacted by the trends identified above in "Managements Discussion and Analysis of Financial Condition and Results of

Operations Factors Affecting Our Results of Operations" and the uncertainties described in "Risk Factors" beginning on pages 230 and 33 respectively of this Red Herring Prospectus. To our knowledge, except as we have described in this Red Herring Prospectus, there are no known factors that we expect to have a material adverse impact on our revenues or income from operations.

Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known

Other than as described in the section "Risk Factors", and chapters "Our Business" and

"Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 33, 131, and 230 respectively of this Red Herring Prospectus, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

Total turnover of each major industry segment in which our Company operates

For the Financial Years 2025, 2024 and 2023, we have one primary business activity and operate in one industry segment, which is Media & Entertainment.

Status of any publicly announced New Products or Business Segment

Except as disclosed in the Chapter "Our Business" on Page 131 of this Red Herring Prospectus, our Company has not announced any new product or service.

Seasonality of business

Our business is not subject to seasonality.

Dependence on single or few customers or suppliers

Please refer to our section "Risk Factors" and also chapter "Our Business" on pages 33 & 131 respectively of this Red Herring Prospectus for clarity on the dependence on single or few customers or suppliers.

Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on pages 114 and 131 respectively of this Red Herring Prospectus.