Universal Arts Ltd Management Discussions

1. INDIAN ECONOMY AND BUSINESS ENVIRONMENT

The Indian economy continues to demonstrate resilience amid evolving global economic conditions. The growth outlook remains supported by strong domestic consumption, infrastructure development, increasing digitalisation, policy initiatives and continued economic reforms. Indias expanding middle class, rising disposable incomes and increasing adoption of digital platforms continue to provide a favourable environment for growth across various sectors of the economy.

The increasing penetration of smartphones, affordable internet connectivity and digital platforms has significantly influenced consumer behaviour and created new opportunities across the media and entertainment industry. The long-term outlook for the Indian economy remains positive, supported by its large consumer base, technological advancement and expanding digital ecosystem.

The Indian Media & Entertainment (M&E) industry continues to undergo significant transformation, driven by rapid digitalisation, changing consumer preferences and the increasing consumption of content across multiple platforms. Digital media, streaming platforms and online content have emerged as important drivers of growth, while traditional television and theatrical entertainment continue to remain relevant components of the industry.

The sector continues to face challenges arising from intense competition, evolving audience preferences, changing content consumption patterns and increasing content acquisition and production costs. The availability of content through multiple platforms has also resulted in greater competition for audience attention and increased pressure on monetisation.

The Indian television and film industry continues to evolve with the rapid growth of digital and Over-The-Top (OTT) platforms. The increasing availability of affordable internet services and digital devices has resulted in a significant shift in the manner in which audiences consume entertainment content.

OTT platforms have provided viewers with greater flexibility and access to a wide range of domestic and international content. The increasing convergence of theatrical, television and digital distribution channels has also changed the traditional content monetisation cycle. The industry continues to witness strong competition among established and emerging players, leading to increased focus on content quality, intellectual property and efficient content acquisition.

The film rights and content distribution segment remains competitive and requires careful evaluation of commercial opportunities, content potential and available financial resources. While the industry presents opportunities for companies engaged in the acquisition and

trading of film and content rights, market conditions require prudent financial management and selective deployment of resources.

The Company is primarily engaged in the business of buying and selling film rights. During the Financial Year 2025-26, the Company did not generate revenue from its principal business activities.

During the year under review, the Company continued to focus on maintaining its existing operations and managing its available resources prudently. The Company has adequate resources to meet its current operational requirements and routine expenditure. However, considering the competitive nature of the media and entertainment industry and the financial resources presently available to the Company, the Company has adopted a cautious and selective approach towards undertaking new business opportunities.

The management continues to evaluate suitable opportunities in the film and entertainment sector, with emphasis on commercial viability, prudent deployment of resources and sustainable returns.

The Indian media and entertainment industry is expected to continue evolving with increasing digital consumption, expansion of OTT platforms and growing demand for diverse and regional content. These developments are expected to create opportunities across various stages of the content value chain, including acquisition, distribution and monetisation of film and digital rights.

The Company intends to leverage its experience and existing business domain to identify suitable opportunities as and when commercially viable. While the Company remains cautious in committing significant resources in the current environment, it continues to assess opportunities that can contribute to the growth and financial performance of the Company.

The Company operates in a highly competitive and rapidly changing industry. Key risks include changes in consumer preferences, increasing competition, fluctuations in the value of film and content rights, changing distribution models, technological developments and increasing content acquisition costs.

The media and entertainment industry is also exposed to the impact of geopolitical tensions, armed conflicts and wars in different parts of the world. Prolonged conflicts and unstable geopolitical conditions may lead to economic uncertainty, inflationary pressures, disruption in international trade and reduced consumer and business confidence. Such conditions may adversely influence consumer spending, advertising budgets and overall demand for entertainment and digital content. They may also affect film production, content distribution, theatrical releases, international content licensing and the timing of monetisation of content rights, particularly where businesses have exposure to affected markets.

Further, volatility in global economic and financial conditions arising from geopolitical

developments may indirectly affect the Indian media and entertainment ecosystem through changes in operating costs, content acquisition costs, exchange rates, investment sentiment and consumer behaviour. While the Company primarily operates in the domestic film rights and content segment, it recognises that developments in the global environment may have an indirect impact on the availability, valuation and commercial prospects of film and content rights.

The Company seeks to manage these risks through careful evaluation of business opportunities, prudent financial planning and controlled deployment of resources.

The Company has adequate internal control systems commensurate with the nature and size of its operations. The internal control framework is designed to ensure proper safeguarding of assets, efficient utilisation of resources, accuracy of financial records and compliance with applicable laws and regulations.

The management periodically reviews the operational and financial activities of the Company and takes necessary measures to strengthen the internal control environment wherever required.

The Company recognises that its human resources are an important contributor to its operations and future growth. The Company seeks to maintain an appropriate organisational structure and workforce commensurate with the scale of its present operations.

The management continues to focus on efficient utilisation of available human resources while maintaining a professional and supportive working environment.