UFO Moviez India Ltd Management Discussions

Presented below is an analysis of the performance of the

Company for the Financial Year ended March 31, 2026 and

the outlook for the Financial Year 2026-27. UFO Moviez India

Limited and its subsidiaries have been collectively referred to as

"UFO or Company".

I. Overview of the Indian Economy

The global economy remained resilient during the year despite a complex macroeconomic and geopolitical environment. Global growth is projected at approximately 3.3% in 2026, supported by continued investments in technology and relatively accommodative financial conditions. However, uncertainties arising from geopolitical conflicts, trade policy developments and volatility in global financial markets continue to pose risks to the overall economic outlook.

Ongoing geopolitical tensions in West Asia remain an area of concern, particularly due to the risk of higher crude oil prices and possible disruptions in energy supply routes such as the Strait of Hormuz. Given Indias dependence on crude oil imports, any sustained increase in energy prices could impact inflation, consumption trends and overall economic activity. Recent announcements and advisories by the Government towards prudent fuel usage, moderation in discretionary spending and conservation of foreign exchange may temporarily influence consumer spending patterns and discretionary consumption across sectors.

Despite these global challenges, India continued to remain one of the fastest-growing major economies globally, supported by strong domestic consumption, infrastructure spending and a resilient services sector. Indias favourable demographics, rising urbanization and expanding middle class continue to support long-term consumption growth, creating a positive environment for consumer-driven sectors such as media and entertainment.

Sources: IMF World Economic Outlook 2026 and company analysis.

II. Overview of the Indian Film Entertainment Industry

The Indian film entertainment industry demonstrated resilience during the year despite evolving consumer preferences and increasing competition from digital platforms. The filmed entertainment segment reached around 205 billion during 2025, supported by improving theatrical monetization and a steady content pipeline across languages.

The industry witnessed release of more than 1,900 films during the year across Hindi, Tamil, Telugu, Malayalam, Kannada, Marathi, Bhojpuri and other regional languages, reflecting the scale and diversity of Indias content ecosystem. Theatrical performance continued to remain largely content-driven, with a limited number of high-

performing films contributing significantly to overall box office revenues.

Regional cinema continued to gain prominence during the year, with films increasingly transcending linguistic boundaries and achieving wider acceptance across markets. Pan-India releases, dubbed content and multilanguage releases continued to expand audience reach and strengthen theatrical consumption across regions.

The year also witnessed increasing preference for event- driven cinematic experiences, premium formats and large- scale productions, which continued to support theatrical footfalls. While digital platforms continued to influence content consumption patterns, theatrical exhibition remained an integral component of the entertainment value chain, particularly for large-format and immersive cinematic experiences.

For UFO, the continued growth in regional cinema and increasing volume of film releases across languages continued to support demand across the Companys digital cinema services and advertising businesses. The Companys extensive Pan-India network continued to enable wider reach for films across markets and supported exhibitors and distributors in maximizing audience accessibility.

Sources: FICCI Frames 2026 and company analysis.

III. Overview of the Indian Advertisement Industry

Indias advertising industry witnessed strong double-digit growth in 2025, expanding by approximately 13.5% to reach 1.5 trillion, reflecting increasing investments by corporates as well as small and medium enterprises. The growth was largely driven by the continued shift towards digital platforms, improved measurement capabilities, and the rising importance of performance-led marketing strategies.

Digital advertising remained the dominant segment, accounting for approximately 63% of total advertising revenues, driven by e-commerce, social media, and programmatic advertising. At the same time, traditional media continues to play a complementary role, particularly in delivering high-impact and mass-reach campaigns.

Cinema advertising, in particular, is emerging as an effective medium within the advertising mix, benefiting from improving theatrical footfalls and increased consumption of regional content. Its ability to deliver a captive and engaged audience, along with growing relevance in Tier II and Tier III markets, positions it as a strong platform for targeted and high-recall brand communication.

Sources: FICCI Frames 2026 and company analysis.

IV. Opportunities and Initiatives Expansion of Advertising Network

The Company continued to strengthen its market position through strategic partnerships and network expansion

initiatives during the year. Expansion of the advertising network across multiplex and regional screens enhanced the Companys ability to deliver wider audience reach and premium advertising inventory to advertisers.

During FY 2025-26, the Company entered into a strategic alliance with Miraj Cinemas, Indias third-largest cinema exhibition chain, for exclusive advertising rights across 239 screens across 49 cities and 72 locations to the Companys advertising network. With this addition, the Companys advertising network expanded to over 4,000 screens, including more than 2,500 multiplex screens,

,further strengthening its position as Indias largest multiplex on-screen advertising network with the highest number of multiplex screens under the UFO network.

India continues to remain under-screened compared to global benchmarks, particularly across Tier II and Tier III markets, with a large section of the population still lacking any access to cinema entertainment. This continues to present long-term growth opportunities for the theatrical exhibition ecosystem. The Company continues to focus on strengthening its presence across these markets through its extensive digital cinema network and exhibition relationships.

Sources: IMF World Economic Outlook 2026 and company analysis.

Advertisement Inventory Utilization

UFOs in-cinema advertising business has substantial headroom/opportunity for growth since the average inventory utilization of UFO is at ~ 4.14 minutes/screen/ show in FY26 as against average availability of around 20 minutes. The Company continued to focus on improving utilization of its advertisement inventory during the year by expanding its advertiser base and increasing presence across markets.

Growing participation from SMEs, retail advertisers and regional brands helped diversify advertising revenues. The Company also continued to focus on improving utilization across premium multiplex inventory and strengthening retail and hyperlocal advertising initiatives. Cinema advertising continued to remain an effective advertising medium due to its high level of audience engagement and strong brand recall.

Technology and Innovation

Technology and innovation continued to remain an important focus area for the Company. During the year, the Company, through its wholly owned subsidiary, entered into a strategic partnership with HeyLED for deployment of advanced HDR-enabled direct view LED cinema screen solutions across India, the Middle East and SAARC regions. The Company also entered into an exclusive tie-up with China Film Group promoted "CINITY", a Hollywood- approved Premium Large Screen Format (PLF), for the Indian market.

The initiative reflects the Companys focus on premium cinema formats and technology-led theatrical experiences. The Company continued to leverage its technology infrastructure to provide efficient digital cinema services and improve operational efficiencies across its business segments.

Operating Performance

In-Cinema Advertising Business

UFO is a leading provider of in-cinema advertising with advertising rights across 4,049 screens as on March 31, 2026, comprising 1,452 single screens and 2,597 multiplex screens, with presence across 1,370 cities and towns in India. The Companys high-impact advertising platform provides advertisers with an opportunity to connect with captive audiences across both premium and mass market segments.

The Companys in-cinema advertising business remained closely linked to theatrical performance and audience footfalls during the year. Strategic partnerships, network expansion initiatives and addition of premium multiplex inventory strengthened the Companys ability to deliver enhanced audience reach and diversified engagement opportunities to advertisers.

In addition to being a high-impact advertising medium, UFOs in-cinema advertising platform offers several advantages to advertisers, including:

• Targeted advertising capabilities enabling reach across desired demographics and geographies

• High levels of transparency through data logs of advertisements played across screens

• Remote scheduling capabilities allowing last-minute campaign scheduling and content changes

• Technology-enabled multi-language support and subtitling capabilities

These capabilities continue to make UFOs in-cinema advertising platform an effective and scalable advertising medium across markets.

In FY26, UFO generated advertisement revenue of Rs. 13,156.42 Lacs as compared to Rs. 11,515.13 Lacs in the previous year, reflecting improved advertiser sentiment and better theatrical engagement during the year. Corporate advertisement revenue, including PSUs, stood at Rs. 10,936.13 Lacs in FY26 as against Rs. 8,555.81 Lacs in FY25, supported by increased participation from corporates, retail advertisers and regional brands. Government advertisement revenue stood at Rs. 1,918.17 Lacs in FY26 compared to Rs. 2,642.29 Lacs in the previous year, primarily impacted by lower spending from the central government.

The in-cinema advertising business witnessed improved performance during FY26, supported by better theatrical

footfalls, stronger regional content performance and improved advertiser sentiment. A healthy pipeline of films across Hindi and regional languages, including successful large-scale releases, supported higher advertiser engagement during the year. The addition of new screens enhanced the Companys ability to provide wider audience reach and diversified advertising opportunities to brands across premium as well as mass market segments.

The Company also continued to focus on improving operational efficiencies, strengthening advertiser relationships and enhancing monetization across its advertising network. With improving industry sentiment, growing acceptance of cinema advertising and a stronger content pipeline, the Company remains optimistic about the long-term growth prospects of the in-cinema advertising business.

Theatrical Business

The theatrical business in FY26 witnessed improved momentum across quarters, supported by a stronger content pipeline and increasing audience engagement across languages and genres. The first quarter saw encouraging performance from films such as "Raid 2", "Housefull 5", "Sitaare Zameen Par", "Jaat", "Kesari Chapter 2" and regional releases including "Hari Hara Veera Mallu", while films like "Retro" received mixed responses at the box office. The quarter also benefited from continued traction in regional cinema, particularly across Telugu and Tamil markets.

The second quarter witnessed healthy theatrical activity led by releases such as "War 2", "Coolie", "The Raja Saab" and "Kantara Chapter 1", which generated strong audience interest across markets. Mid-budget and content-driven

V. Financial Performance (Consolidated)

Performance Overview (FY21 - 26)

films across Hindi and regional languages also contributed towards overall theatrical footfalls, reflecting continued audience preference for diverse content across genres.

The second half of FY26 continued to showcase the strength and diversity of the Indian theatrical industry. The third quarter featured releases such as "Dhurandhar", "Ikkis", "De De Pyaar De 2", "Tu Meri Main Tera" and "Tere Ishq Mein", along with multiple regional releases that supported consistent theatrical performance across markets. The quarter also witnessed improved contribution from dubbed and multi-language releases, further strengthening pan- India theatrical consumption.

The fourth quarter witnessed strong audience engagement supported by a healthy release calendar across Hindi and regional cinema. Major releases during the quarter included "Border 2", "Mardaani 3", "The Kerala Story 2", "O Romeo" and "Dhurandhar: The Revenge". The consistent flow of content across languages, combined with increasing preference for theatrical experiences, supported stable box office performance during the year and reflected the continued resilience of the Indian film exhibition industry.

For the current financial year, the companys theatrical revenue, Content Delivery Charges (CDC), amounts to Rs. 8,833.49 Lacs, compared to Rs. 8,371.14 Lacs in FY25.

Overall, FY26 witnessed improved momentum in the theatrical business, supported by a stronger content pipeline, increasing acceptance of regional and multilanguage films, and steady audience engagement across genres. Strong performance of key releases during the year contributed positively towards cinema footfalls, advertiser sentiment and overall industry growth, reaffirming the positive outlook for the theatrical exhibition industry.

Revenue Analysis

UFO receives revenues primarily from three sets of stakeholders. i.e.

(i) Advertisers, for in-cinema advertising,

(ii) Producers and Distributors, for secured delivery and screening of movies (Content Delivery Charges - CDC / VPF) and

(iii) Exhibitors, for equipment rentals and sales of digital cinema equipment and consumables.

Particulars	31-Mar-26	31-Mar-25	Growth	% Growth
	Rs. in Lacs	Rs. in Lacs	Rs. in Lacs
A. Revenue from operations
I. Advertisement revenue	13,156.42	11,515.13	1,641.29	14.25%
II. Revenue from Content Owners	12,465.84	11,555.62	910.22	7.88%
Content Delivery Charges (CDC)	8,833.49	8,371.14	462.35	5.52%
VPF Service Revenue	1,854.01	1,689.43	164.57	9.74%
Digitisation Income	1,778.35	1,495.05	283.30	18.95%
III. Revenue from Exhibitors	20,404.75	17,109.71	3,295.03	19.26%
Lease rental income	6,056.31	5,932.64	123.67	2.08%
Sale of Products	14,348.43	11,177.07	3,171.36	28.37%
IV. Other Operating Revenue	2,173.24	2,060.81	112.43	5.46%
A. Revenue from operations (I to IV)	48,200.24	42,241.27	5,958.97	14.11%
B. Other income	437.94	160.48	277.47	172.90%
Total Income (A+B)	48,638.18	42,401.75	6,236.43	14.71%

Expense Details

The following table gives an overview of the consolidated expenses of UFO.

Particulars	31-Mar-26	31-Mar-25	Growth	% Growth
	Rs. in Lacs	Rs. in Lacs	Rs. in Lacs
Operating direct costs	23,768.08	20,037.33	3,730.76	18.62%
Employee benefit expenses	9,465.34	8,729.33	736.01	8.43%
Other expenses	7,377.58	7,727.50	(349.92)	(4.53%)
Total Expenses	40,611.00	36,494.16	4,116.85	11.28%

Operating direct costs

Operating direct costs in financial year ended March 31, 2026 increased by Rs. 3,730.76 Lacs to Rs. 23,768.08 Lacs from Rs. 20,037.33 Lacs in financial year ended March 31, 2025 primarily on account of (i) advertisement revenue share paid to exhibitors was higher by Rs. 836.20 Lacs from Rs. 6,811.97 Lacs to Rs. 7,648.18 Lacs during the financial year ended March 31, 2026, (ii) increase in consumables and spares by Rs. 119.21 Lacs from Rs. 516.56 Lacs during the financial year ended March 31,2025 to Rs. 635.76 Lacs during the financial year ended March 31, 2026, (iii) Cost of goods sold was higher by Rs. 2,430.50 Lacs from Rs. 8,382.56 Lacs during the financial year ended March 31, 2025 to Rs. 10,813.07 Lacs during the financial year ended March 31, 2026, (iv) increase in Repairs, Maintenance & Bandwidth charges by Rs. 333.34 Lacs from Rs. 2,468.17 Lacs during the financial year ended March 31, 2025 to Rs. 2,801.41 Lacs during the financial year ended March 31, 2026. The operating direct cost during the year was higher compared to the previous year since these costs are directly linked to the revenues.

Employee benefit expenses

Employee benefit expenses during the financial year ended March 31, 2026 was higher by Rs. 736.01 Lacs to Rs. 9,465.34 Lacs in financial year ended March 31,2026 from Rs. 8,729.33 Lacs in financial year ended March 31, 2025.

Other expenses

Other expenses in financial year ended March 31, 2026 were lower by Rs. 349.92 Lacs to Rs. 7,377.58 Lacs from Rs. 7,727.50 Lacs in financial year ended March 31, 2025 primarily on account of (I) Provision for diminution in value of investment expenses was Rs. 365.04 Lacs as of March 31, 2025, and Nil as of March 31, 2026. (ii) decrease in legal, professional and consultancy charges by Rs. 128.94 Lacs from Rs. 2,091.12 Lacs during the financial year ended March 31, 2025 to Rs. 1,962.18 Lacs during the financial year ended March 31, 2026, (iii) decrease

in commission on other revenue by Rs. 78.58 Lacs from Rs. 229.93 Lacs during the financial year ended March 31, 2025 to Rs. 151.35 Lacs during the financial year ended March 31, 2026, (iv) decrease in electricity expenses by Rs. 61.77 Lacs from Rs. 289.08 Lacs during the financial year ended March 31, 2025 to Rs. 227.31 Lacs during the financial year ended March 31,2026 (v) decrease in travel & conveyance expenses by Rs. 32.16 Lacs from Rs. 104.22 Lacs during the financial year ended March 31, 2025 to Rs. 109.48 Lacs during the financial year ended March 31, 2026 (vi) Increase in commission on advertisement revenue by Rs. 164.55 Lacs from Rs. 1,384.40 Lacs during the financial year ended March 31, 2025 to Rs. 1,548.95 Lacs during the financial year ended March 31, 2026 due to increase in Advertisement sales, (vii) Increase in Bad Debts and provision for Bad & doubtful debts by Rs. 188.39 Lacs from Rs. 133.24 Lacs during the financial year ended March 31, 2025 to Rs. 321.63 Lacs during the financial year ended March 31, 2026.

Earnings before interest, tax, depreciation and amortization (EBITDA)

Consolidated EBITDA grew by Rs. 2,119.59 from Rs. 5,907.59 Lacs in the financial year ended March 31, 2025 to Rs. 8,027.18 Lacs in the financial year ended March 31, 2026.

Profit/ (Loss) before tax

Consolidated profit/ (loss) before tax grew by Rs. 1,903.09 from Rs. 1,673.73 Lacs in the financial year ended March 31, 2025 to Rs. 3,576.82 Lacs in the financial year ended March 31, 2026.

Profit/ (Loss) for the year attributable to equity shareholders of UFO

Consolidated profit/ (Loss) for the year attributable to equity shareholders of UFO grew by Rs. 1,534.20 from Rs. 957.24 Lacs in the financial year ended March 31, 2025 to Rs. 2,491.44 Lacs in the financial year ended March 31, 2026.

Key Financial Ratios

Particulars (Consolidated)	Unit	31-Mar-26	31-Mar-25
Debt Equity Ratio	Times (x)	0.24	0.23
EBITDA Margin	Percentage (%)	16.64	13.99
Net Profit Margin	Percentage (%)	5.17	2.27
Interest Coverage Ratio	Times (x)	5.37	3.39
Debtors Turnover Ratio	Days	105.09	91.40
Current Ratio	Times (x)	1.66	1.61

In accordance with the SEBI (Listing Obligations and Disclosures Requirements 2018) (Amendment) Regulation 2018, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

Explanation for ratios where there has been a change of 25% or more from March 31, 2025 to March 31, 2026:

The increase in net profit margin during the year was primarily driven by improved theatrical performance, which resulted in higher cinema footfalls and better advertising revenues.

The increase in Interest Coverage Ratio was primarily driven by improved operating profitability and higher earnings during the year.

The increase in Operating Profit Margin was primarily driven by improved theatrical performance, higher advertising revenues and better operational efficiencies during the year.

VI. Outlook

The outlook for the Indian theatrical industry remains positive, supported by a healthy content pipeline across Hindi and regional cinema, growing preference for theatrical experiences and increasing penetration of multiplex screens across emerging markets. Continued expansion across Tier II and Tier III cities, coupled with rising discretionary spending, is expected to support longterm industry growth.

Indias Media & Entertainment industry is expected to continue its growth momentum over the next few years, supported by increasing advertising spends, rising digital adoption and growing consumption of premium and experience-led entertainment. Increasing participation from SMEs and regional advertisers is also expected to support long-term growth in the cinema advertising segment.

With its extensive cinema network, technology-led infrastructure and strong relationships across exhibitors, advertisers and distributors, UFO remains well-positioned to benefit from improving industry trends and growth opportunities across the theatrical and advertising ecosystem.

The Company also continues to focus on strengthening its technology and exhibition initiatives through strategic partnerships and expansion of premium cinema formats. These initiatives, along with operational efficiencies and diversified revenue streams, are expected to support sustainable growth and long-term value creation for the Company.

VII. Threats / Risks and Concerns

The Companys performance continues to remain linked to overall macro-economic conditions, theatrical footfalls and advertising market trends. Any slowdown in economic activity, lower discretionary spending, geopolitical uncertainties, natural disasters, pandemics or other unforeseen events may adversely impact the Companys business and operating performance. The in-cinema advertising business remains dependent on advertiser spending patterns, availability of strong film content and overall audience engagement across theatres. Increased competition from television, print, digital platforms, OTT media services and other advertising mediums may impact advertising growth and inventory utilization. The theatrical exhibition industry continues to witness evolving consumer preferences and changing content consumption

patterns. Shorter theatrical release windows, early release of films on OTT platforms and increasing digital content consumption could impact cinema footfalls and advertiser interest. Box office performance may also be affected by quality of film content, marketing effectiveness and overall audience sentiment towards theatrical viewing.

The Company continues to closely monitor industry developments and undertakes appropriate business and operational measures to mitigate risks and strengthen long-term sustainability.

VIII. Risk Management

Similar to any other business, UFO is exposed to various risks that may impact its operating performance, cash flows and financial results. The Companys performance remains closely linked to theatrical footfalls, quality and consistency of film content, advertiser spending patterns and overall consumer sentiment.

Geopolitical conflicts, particularly in West Asia and other global regions, may lead to volatility in crude oil prices, inflationary pressures, supply chain disruptions and moderation in consumer spending. Further, fluctuations in foreign exchange rates, including depreciation of the Indian Rupee against the US Dollar, may impact costs relating to technology, equipment procurement and other imported services.

The Company has established a robust risk management framework focused on identification, assessment and monitoring of key business risks. While certain external factors remain beyond the Companys control, the risk management processes are regularly reviewed and strengthened to address evolving business conditions and emerging risks.

Overall, UFO continues to focus on improving processes, reducing operational risks, enhancing service quality and strengthening overall business performance.

IX. Internal Controls

The Company has in place adequate controls, procedures and policies that ensure orderly and efficient conduct of its business, including adherence to its policies, safeguarding of its assets, prevention and detection of fraud and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. Our internal control system is commensurate with the size, scale, and complexity of its operations. During the year, such controls were assessed and no reportable material weakness in the design or operations were observed.

UFO has engaged an independent firm of Chartered Accountants as its Internal Auditor. The scope of Internal Audit includes a review of the efficacy of business processes and a review of the procedures and policies in place as designed by the management across all functional areas and assessing the internal controls in all areas. Also,

the Internal Audit findings are discussed with the process owners and corrective action is taken as necessary.

The Audit and Risk Management Committee reviews reports submitted by internal and statutory auditors and meets the auditors to ascertain, their views on the adequacy of the internal control system and apprises the Board of Directors from time to time.

Based on the recommendation of the Audit and Risk Management Committee, the Board of Directors have concluded that as of March 31, 2026, its internal financial controls were adequate and operating effectively. The same is also confirmed by auditors through their report on Internal Financial Control.

X. Human Resources and Industrial Relations

FY26 was focused on strengthening organizational capability, leadership development and employee engagement through a structured and people-centric HR approach. During the year, the Company adopted a five- pillar framework — Enriching, Empowering, Engaging, Energizing and Elevating — aimed at enhancing employee experience while supporting business growth and organizational effectiveness.

Leadership development remained a key focus area during the year through initiatives such as EDGE (Empower to Develop, Grow & Excel) for Zonal Heads and structured Executive Coaching programs for leadership teams. The Company also continued to strengthen performance management processes, succession planning initiatives and digitization of HR systems and workflows.

Employee engagement and wellness continued to remain important priorities through CHRO-led Townhalls, Lets Connect sessions, pulse surveys, health check-up camps, Zumba sessions and the Fitter You workplace fitness program. The Company also organized various cultural and employee engagement initiatives during the year, including its 20th anniversary celebrations, festive events and community welfare initiatives such as blood donation drives and Joy of Giving activities.

The Company continued to focus on attracting quality talent and maintaining a stable workforce aligned with long-term business priorities. As on March 31, 2026, the

total employee strength, including group companies, stood at 521.

Material developments in human resources: Recruitment and Selection:

UFO has a talented pool of employees and prides itself in providing effective and efficient services to its clients. The focused recruitment and selection process followed by the Company ensures that it hires the best talent for the job aligning with the overall goals of the organization. UFO takes pride in having a stable manpower strength coupled with a low rate of attrition that gives it a strategic advantage in realizing its long-term business objectives.

Training and Development:

The Company from time to time plans and arranges for the training of its employees for their overall development to achieve its long-term business objectives.

Industrial Relations:

UFO believes in maintaining cordial and friendly relations with its employees and resolves conflict, controversies and disputes, if any, between the employees and management in an amicable manner.

Cautionary Statement

Certain Statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations or predictions, estimates and others may be forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections and so on whether express or implied. Important factors that could make a significant difference to the Companys operations are demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business 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.