Trilogic Digital Media Ltd Management Discussions

1. Industry structure and developments:

The Indian Media and Entertainment (M&E) Industry plays a critical role in creating awareness on issues affecting, channeling and building aspirations amongst the masses. 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. Major segments in media and entertainment industry includes Television/ broadcasting, gamming, Animation and VFX, Out of Home, Music, Radio, Digital advertising, Films, Print. In 2014, the Indian Media & Entertainment (M&E) industry was estimated at USD 12.70 billion and is expected to grow at a CAGR of 12% from 2014-2018 to reach USD 30.0 billion in 2018. The entertainment industry continues to be dominated by the television segment, accounting for 45% of market share in terms of revenues, which is expected to grow further to 50% by 2019. Television, print and films together account for 86% of market share in 2013. Print media would be the second largest sector and Out of Home (OOH), Music and Gaming is expected to contribute 2.5% each to the entire industry by 2018.

2. Outlook:

Broadcasting is one of the largest sub-sector under media and entertainment industry. India has one of the largest broadcasting industries in the world with approximately 800 satellite television channels, 245 FM channels and more than 100 operational community radio networks. Net sales of the media-broadcasting industry grew by 15% during the September 2016 quarter, over preceding two quarters i.e. March and June 2016. Sales grew within the range of 8%-10% during these quarters. It is expected that the net sales of media-broadcasting industry to grow by 10% in 201718 and it is expected to grow at CAGR 21% from 2016-17. The growth is likely to be backed by an increase in advertisement as well as subscription revenues.

3. Segment-wise or product-wise performance:

The Company operates in one segment only i.e. Media T.V. Business and content syndication.

4. Risks and concerns:

The media and entertainment sector is highly fragmented industry- that is no single enterprise has large enough share to influence the entire sector. The fixed cost involved is higher in television, films and radio segment. Threat of new entrant is low in as the sunk cost in media and entertainment is higher. Access to distribution network is difficult.

5. Internal control systems and their adequacy:

The Company has established internal control systems which is adequate commensurate with its size and nature of operations so as to ensure smoothness of operations and compliance with applicable legislation.

6. Material developments in Human Resources/Industrial Relations front, including number of people employed:

The Company seeks respects and values the diverse qualities and backgrounds that its people bring to it and is committed to utilizing the richness of knowledge, ideas and experience. The work environment is stimulating and development of core competencies through format training, job rotation and hands on training is an ongoing activity.

7. Cautionary Statement:

Statements in this report on Management Discussion and Analysis describing the companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectation of future events, actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include global and domestic demand-supply conditions, finished goods prices, raw material costs and availability, change in Government regulations and tax structure, economic developments within India and the countries with which the company has business contacts and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of forward looking statements which may be amended or modified in future on the basis of subsequent developments, information or events.