Sungold Media & Entertainment Ltd Management Discussions.

• Company Overview:

Sungold Media And Entertainment Limited (SMEL) is engaged in the Media related business to own, undertake, carry on and operate directly or indirectly in India and abroad the business of publishers editors, writers, printing, publishing producing, selling and distributing books, periodicals, magazines, journals, house magazines, newspapers daily, weekly monthly. To carry on the business as entertainment company and to organise, equip, arrange, write, manage, control, run, exhibit, distribute, direct, provide and to produce, promote, project, participate, manipulate, treat, process, prepare, alter, develop, expose, edit, make, remake, display, print, reprint, convert, finish, buy, sell, run, import, export, and to act as syndication, broker, agent, co-ordinator, distributor, organiser, proprietor, movie makers, copyright owners, video right owners, audio right owners, theatre owners, dubbing right owners, cinema studio owners, dance, music and provide complete technical support.

• Industry Outlook and Opportunity

The Indian economy is growing at one of the fastest rates in the world and the market is on an expansion mode. However, execution of the reform agenda and kick starting the investment cycle will be key determinants of Indias economic performance. While currently inflation is benign, upside pressure on inflation from the vagaries of monsoon or sudden changes in the rupee, could have a significant bearing on inflation. Your company is very positive of the overall business prospects in the years to come. Your company has institutionalized a culture and mind-set of thrift through focused programs and formal organization structure. This will put your company in a better position to efficiently explore the potential opportunities.

Indian Media and Entertainment (M&E) industry


The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making high growth strides. Proving its resilience to the world, the Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenues. The industry has been largely driven by increasing digitization and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people.

The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38 per cent of Indias gross domestic product.

Market Dynamics

Indian media and entertainment (M&E) industry grew at a CAGR of 18.55 per cent from 2011-2017; and is expected to grow at a CAGR of 13.9 per cent to touch US$ 37.55 billion by 2021 from US$ 22.75 billion in 2017. The industry provides employment to 3.5-4 million people, including both direct and indirect employment in CY 2017.

Over FY 2016-21, radio will likely grow at a CAGR of 16.1 per cent, while digital advertising will grow at 30.8 per cent. The largest segment, Indias television industry, is expected to grow at a CAGR of 14.7 per cent, while print media is expected to grow at a CAGR of 7.3 per cent.

The number of newspaper readers in India has increased by 38 per cent between CY 2014 and CY 2017 to reach 407 million. India is one of the highest spending and fastest growing advertising market globally. The countrys expenditure on advertising is expected to grow at 12.1 per cent to Rs 68,334 crore (US$ 10.59 billion) by the end of 2018. Mobile advertisement spending in India is estimated to grow to Rs 10,000 crore (US$ 1.55 billion) by the end of 2018.

Recent development/Investments

The Foreign Direct Investment (FDI) inflows in the Information and Broadcasting (I&B) sector (including Print Media) in the period April 2000-September 2017 stood at US$ 6.86 billion, as per data released by Department of Industrial Policy and Promotion (DIPP).

• The Indian digital advertising industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 32 per cent to reach Rs 18,986 crore (US$ 2.93 billion) by 2020, backed by affordable data and rising smart phone penetration.

• India is one of the top five markets for the media, content and technology agency Wave maker where it services clients like Hero MotoCorp, Paytm, IPL and Myntra among others

• After bagging media rights of Indian Premier League (IPL), Star India has also won broadcast and digital rights for New Zealand Cricket upto April 2020.

Government Initiatives

The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to fast track the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector.

The Government of India has supported Media and Entertainment industrys growth by taking various initiatives such as digitizing the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.

Road Ahead

The Indian Media and Entertainment industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate.# TV advertising sector is expected to grow at a CAGR of 11.1 per cent during 2016-21, as against the global average of 2.8 per cent. Cinema in India is estimated to grow at 10.4 per cent compared to global average of 4.4 per cent. Internet video sector is expected to grow at a CAGR of 22.4 per cent while the global average is estimated to be 11.6 per cent. TV subscription will grow at CAGR of 11.6 per cent as against the global average of 1.3 per cent.

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

Exchange Rate Used: INR 1 = US$ 0.0155 as on January 4, 2017

Executive Summary

Second Largest TV Market

• Household televisions increased to 183 million in 2017* from 181 million in 2016 with 780 million TV viewing individuals.

• In 2017, television market generated revenue of Rs 660 billion (US$ 10.14billion).

One of the largest broadcasting markets

• As of 2016, India had one of the largest broadcasting industries in the world with approximately 892 private satellite television channels. As of 2016, there are 243 FM radio channels and 190 operational community radio networks.

• The Ministry of Information and Broadcasting (MIB) has officially completed all the four phases of digitization. As of March 2017, a total of 64.4 million set-top boxes (excluding Tamil Nadu) were set up in Phase 3 and Phase 4 areas

• Total of 243 FM channels (21 from the Phase-Iand 222 from Phase-II) are operational. Under the phase III, the Cabinet has already given permission to 135 FM channels in 69 cities to operate

• Telecom Regulatory Authority of India (TRAI) plans to introduce a policy for broadcasting sector with a vision of 2020. The policy aims to usher a new era in the broadcasting sector where MRP of the TV channel will be declared by broadcasters directly to the consumers, and will bring more transparency and choices to the consumers.

Fast Growing Animation Industry

• The animation and Visual Effects (VFX) industry showcased a growth of 24.07 per cent, largely led by a 34.91 per cent growth in VFX industry in 2017.

• During 2016-21, the segment is expected to grow at a higher CAGR of 17.2 percent, largely led by the continued growth in outsourced services and the swelling use of animation and VFX services in the domestic television and film space, respectively.

Exceptional Growth in Film Industry

• The Indian film industry in expected to grow at a rate of 10.4 per cent to become the third largest cinema market, after US and China by2021.

• Digitalization has played the major role in the growth of Indian film industry

• By 2019, cinema exhibition industry in India is expected to have over 3,000 multiplex screens

Rising no. of Subscribers

• Total subscriber base for Indian television industry is expected to increase to 195 million by 2019 from 183 million in 2017.

• As of December 2016, registered DTH subscriber base in India stood at around 97.05 million. As of December 2017 active DTH subscriber base in the country stood at around 67.56million.

• Threats, risks and concerns:

The Company recognizes that every business has its inherent risks and it is required to possess a proactive approach to identify and mitigate them. Your Company has embedded an efficient organizational risk management framework, which regularly scans all possible internal and external environments to identify risks, decide on possible mitigation plans and incorporate them in its strategic plans. Some of the key risks include industry risk, client concentration, technology risks and financial risks. The processes relating to minimizing of the above risks have already been put in place at different levels of management. The risk mitigation plans are regularly monitored and reviewed by the Audit Committee of your Company.

• Financial Risks:

The happenings and financial developments in the large markets that we operate in have very significant impact on our business conditions, but these are the things which are beyond our control but what is within our control is to make sure that we are not vulnerable to major event risks of this nature and therefore we conduct a business in a manner that we take these risks into account and we mitigate these risks by appropriate hedging strategies.

• Competition Related Risks:

Media companies are facing tremendous pressure on cost, productivity and ROI. Thus the Indian Media sector needs to make extra endeavor to remain competitive in terms of cost efficiency measures and scalability of various high end services to handle competition. The companys capability to offer innovative and value added services by integrating its diverse domain knowledge enables it to move ahead in an environment of increasing competition. Change in government policies, rise in inflation, unexpected events and increasing competition are some of the threats that can dampen the companys position and growth. Your company is capable and very vigilant to tackle all such threats. Your company has processes in place to address any challenges.

• Regulatory Risk:

The Media and Entertainment industry suffers from a plethora of Central and State levies including levies by local bodies and authorities. These multiple taxes, administered by different Government authorities add to the cost of business. The existing, as well as future rules and regulations, can impact the financial performance of the Company. Developments in terms of amendments in existing tax laws, new laws like Goods and Services Tax (GST), landmark judgments, notifications, etc., will lead to an ever changing regulatory framework that will pose a grave risk to the sector.

• Internal Control System and their adequacy

The Company has a system of internal controls focusing on all processes to ensure the integrity of the financial accounting and reporting processes of the Company to ensure compliance with all legal rules and regulations. The Company has an Audit Committee which meets once in every quarter to review internal control systems, accounting processes, financial information, internal audit findings and other related areas including their adequacies. Human resources and industrial relations: The Companys performance is critically dependent on the knowledge and skill of its people. Your company continues to focus strongly on attracting and retaining the best talent across various functions of its businesses. Your Company maintains a cordial relationship with its employees and it values the safety of its employees and constantly raises the bar in ensuring their safety.

• Cautionary Statement

Statements in this report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward looking statements within the meaning of applicable laws and regulations. Your Company undertakes no obligation or liability to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise actual results, the performance of achievements could differ materially from those either expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forwardlooking statements and read in conjunction with financial statements included herein.


All the data used in the initial sections of this report has been taken from publicly available resources and discrepancies, if, any, are incidental and unintentional.