Vels Film International Ltd Management Discussions

ANNEXURE - I

ECONOMIC SURVEY BUDGET 2025 HIGHLIGHTS:

Indias Economic Survey 2024-25 emphasizes deregulation for growth, citing the impact of global uncertainties. Key highlights include a 6.4% GDP growth, resilient services sector, and improved rural demand. The survey stresses balanced energy transition, AI-driven skilling, and agricultural productivity. The banking sector shows asset quality improvement, with regulatory reforms and investment in infrastructure. Indias Economic Survey for 2024-25 was tabled in Parliament. Finance Minister Nirmala Sitharaman tabled the report in Lok Sabha before the Union Budget. The Survey reviews the current financial years economic performance and identifies national challenges. It also suggests future reforms and growth strategies.

The Economic Survey prioritises deregulation as the driving force for Indias domestic growth and resilience in the face of global economic and political shifts. Given the slowing pace of global trade, the survey emphasizes the importance of domestic growth drivers. The survey advocates for a balanced approach to energy transition, promoting electric mobility and public transport while also addressing the need for skilling and education to leverage technological advancements like AI.

Here are all the key highlights from the Economic Survey 2025: Global Economic Overview:

The global economy experienced steady but uneven growth in 2024, with a manufacturing slowdown.

Geopolitical tensions, conflicts, and trade policy risks add to global economic instability.

Indias Economic Performance:

Indias real GDP is estimated to grow by 6.4% in FY25, driven by agriculture and services.

Rural demand improved due to record Kharif production.

Manufacturing faced pressure from weak global demand.

Macroeconomic stability was maintained through fiscal discipline and a strong external balance.

Money supply (M3) growth moderated to 9.3% (YoY) as of December 2024. A higher money multiplier indicates increased liquidity in the economy.

Outlook for FY26:

Balanced outlook with headwinds from global uncertainties and commodity price shocks.

Domestically, investment pick-up, improved consumer confidence

Summary and Key Takeaways from Economic Survey 2025: Global Economic Context:

Global growth slowed to 3.3% in 2023, with IMF projecting an average of 3.2% over the next five years.

Rising trade protectionism and Chinas dominance in global manufacturing (one-third of global output) pose challenges. Indias economy remains steady despite global headwinds, with real GDP growth pegged at 6.4% in FY25 and expected to grow between 6.3% and 6.8% in FY26.

Domestic Economic Performance:

GDP and GVA: Real GDP growth estimated at 6.4% in FY25, close to the decadal average. Gross Value Added (GVA) grew by 6.4%, driven by strong performance in construction, electricity, and utilities.

Private Consumption: Private final consumption expenditure grew by 7.3%, supported by a rebound in rural demand. Inflation : Retail headline inflation softened to 4.9% (April-December 2024), but food inflation rose to 8.4% due to supply chain disruptions and weather vagaries. Employment : Unemployment rate declined to 3.2% in 2023-24, with improved labor force participation and worker-to-population ratios.

Sectoral Growth:

Agriculture: Expected to grow at 3.8% in FY25, supported by record Kharif foodgrain production (1647.05 lakh metric tonnes). Industry: Estimated to grow by 6.2%, with strong performance in construction and utilities.

Services: Robust growth of 7.2%, driven by financial, real estate, and professional services. Services exports surged by 12.8% (April-November 2024).

Fiscal Health and Capex:

Capital expenditure grew by 8.2% (July-November 2024), with a focus on infrastructure development. Gross tax revenue increased by 10.7% (April-November 2024), but net tax revenue growth was modest due to higher devolution to states.

States revenue expenditure grew by 12%, with subsidies and committed liabilities driving spending.

External Sector:

Merchandise exports grew by 1.6% (April-December 2024), while imports rose by 5.2%. Services exports and remittances supported a current account deficit (CAD) of 1.2% of GDP in Q2 FY25.

Forex reserves stood at $634.6 billion (January 2025), covering 10.9 months of imports and 90% of external debt.

Banking and Financial Stability:

Gross NPAs declined to a 12-year low of 2.6% of gross loans.

Capital-to-risk-weighted assets ratio (CRAR) for banks stood at 16.7% (September 2024), well above regulatory norms.

Infrastructure and Renewable Energy:

Railway network expanded by 2031 km (April-November 2024), with 17 new Vande Bharat trains introduced.

Renewable energy capacity increased by 15.8% (December 2024), driven by solar and wind power.

Port efficiency improved, with average container turnaround time reduced to 30.4 hours (FY25).

Social Sector and Health:

Government health expenditure increased from 29% (FY15) to 48% (FY22), reducing out-of-pocket expenses from 62.6% to 39.4%. Social services expenditure grew at 15% annually (FY21-FY25), with initiatives like Samagra Shiksha Abhiyan and PM POSHAN.

MSME and Deregulation:

The Rs. 50,000 crore Self-Reliant India Fund launched to support MSMEs.

Economic Survey advocates systematic deregulation under Ease of Doing Business 2.0 to boost growth and competitiveness.

AI and Future Workforce:

Collaborative efforts between government, private sector, and academia needed to address AI-driven labour market transformations.

Emphasis on education and skill development to prepare the workforce for AI-augmented jobs.

New Concepts Highlighted in the Economic Survey 2024-25:

1. Systematic Deregulation:

A three-step process for states to review and reduce regulatory burdens: Identify areas for deregulation.

Compare regulations with other states and countries.

Estimate the cost of regulations on enterprises.

2. Geo-Economic Fragmentation (GEF):

Acknowledges the impact of global economic fragmentation on trade and investment.

Calls for strengthening domestic growth levers to mitigate risks.

3. AI-Driven Labor Market Transformation:

Emphasizes the need for collaborative efforts between government, private sector, and academia to address AIs societal effects.

Focuses on education and skill development to prepare the workforce for AI-augmented jobs.

4. Mittelstand Concept for Indias SME Sector:

Advocates creating a robust SME sector akin to Germanys Mittelstand.

Aims to foster innovation, competitiveness, and economic growth through deregulation and policy support.

5. Risk-Based Regulation:

Proposes a shift towards risk-based regulatory frameworks to reduce compliance costs and improve business efficiency.

INDUSTRY REVIEW

The Indian Media and Entertainment Sector - Outlook

The Indian Media and Entertainment (M&E) industry reached a total value of Rs 2.5 trillion (US$29.4 billion) in 2024, reflecting a growth of Rs 81 billion from the previous year, which marks a 3.3% increase, according to the latest FICCI-EY report. However, the growth rate slowed down to 3.3% in 2024 from 8.3% in 2023, primarily due to falling subscription revenues and a global decline in outsourced animation and VFX work to India.

The report forecasts that the M&E sector will grow by 7.2% in 2025, reaching Rs 2.7 trillion, with a compound annual growth rate (CAGR) of 7%, pushing the industrys value to Rs 3.1 trillion by 2027.

One of the major shifts identified in the report is the rise of digital media, which grew by 17% in 2024, reaching Rs 802 billion, overtaking television to become the largest segment in the M&E industry. Television, which had been the largest segment for 20 years, saw a decline in revenues, with both advertising and subscription revenues falling by 6% and 3%, respectively. The number of Pay TV homes dropped by six million, while Free TV and Connected TV homes increased, with weekly active Connected TVs growing from 23 million in 2023 to 30 million in 2024. Despite these declines in traditional media, the Indian M&E sectors advertising revenues grew by 8.1%, driven largely by performance advertising on digital platforms, including e-commerce websites, and a surge in demand for premium and digital Out-of-Home (OOH) media. Digital media, live events, and OOH media have been key drivers of this growth, alongside the resilience of print and radio retail advertising revenues.

Key findings of the FICCI-EY report:

Indian advertising grew 8.1% in 2024. Digital media comprised 55% of total ad spends M&A value grew 9.5 in 2024 with 9 deals over Rs 5 billion each Digital media is expected to be the first M&E segment to cross Rs 1 trillion in ad revenues in 2026 Looking ahead, the Indian M&E sector is expected to grow by 7.2% in 2025, reaching Rs 2.7 trillion (US$31.6 billion), and then expand at a Compound Annual Growth Rate (CAGR) of 7% to reach Rs 3.1 trillion (US$36.1 billion) by 2027. This growth trajectory is poised to be shaped by innovative business models, strategic alliances, and industry consolidation.

Segmental performance in 2024

Digital advertising: Digital advertising grew 17% to reach Rs 700 billion, which is 55% of total advertising revenues. Growth was led by short video and social media (11%) and e-commerce advertising (50%), which reached Rs 147 billion. Included in digital advertising are spends by SME and long-tail advertisers of over Rs 258 billion Digital subscription: Revenues grew 15% to Rs 102 billion. Paid video subscriptions increased to 111 million, across 47 million households. Paid music subscriptions rose from 7 million to 10.5 million, while news subscriptions remained at 3.1 million Live events: The organized segment grew 15% driven by increased spends across government and election related events, personal events and weddings, and ticketed events, including several international acts and concert formats that played to packed venues in India OOH: OOH media grew 10% in 2024 across both traditional and transit media. Premium properties and locations led the growth. Digital OOH grew 78% and contributed 12% of total segment revenues, up from 7% in 2023 Radio: Radio segment revenues grew 9% in 2024 to Rs 25 billion on the back of a growth in ad volumes, and alternate revenue streams.

On an average, 20% of radio revenues are related to events, content production and other revenue streams Print: Ad revenues grew 1% in 2024, with premium ad formats driving growth.

Subscription revenues fell 1%, while digital revenues remained sub scale, at under 5% of total print revenues Music: Revenues fell by 2% due to a push to reduce free music consumption and lower streaming royalty rates. Paid subscriptions grew from 7 million to 10.5 million. Free alternatives like YouTube and radio limit the growth of the paid subscriber base Online gaming: Growth slowed significantly due to imposition of 28% GST on deposits and the rise of illegal offshore sites. Accordingly, net revenues for transaction-based gaming fell by 6%. However, casual and free-to-play gaming grew by 16%, resulting in an overall 2% decline in the segment

Film: Though over 1,600 films released in 2024, theatrical admissions declined, and only 11 Hindi films grossed Rs 1 billion, down from 17 in 2023. Revenues dropped 5% to Rs 187 billion.

Both digital and satellite rights values fell by 10% as broadcast and OTT buyers focused on profitability.

Television: Linear TV revenues fell for the second consecutive year with a 6% drop in advertising revenue and a 3% decline in subscription revenue. Pay TV homes decreased by six million, while Free TV and Connected TV homes increased. Weekly active Connected TVs grew to 30 million in 2024 from 23 million in 2023.

Animation and VFX: The Hollywood writers strike and struggling international studios led to a 9% revenue decline in 2024. Reduced broadcast ad revenues also impacted the production of animated content in India.

Future projections stated in the FICCI-EY report:

Key trends will include a focus on growing subscription revenues, 360-degree monetisation of content intellectual property, consolidation within segments and increased exports of content and content services making in India for the world All segments will focus on digital extensions or integrations, and measurement will evolve to provide an integrated view of audiences across platforms The online gaming segment could struggle unless illegal offshore platforms are not curbed, and Indian companies could look to build out business in foreign countries with a more conducive regulatory environment Artificial intelligence will play a large role in bringing efficiencies across content production, distribution and personalization, as well as operating efficiencies

Kevin Vaz, Chairman, FICCI, Media and Entertainment Committee, said, “The Indian media and entertainment industry is at a defining moment, driven by rapid digital adoption and evolving consumer preferences. This transformation is unlocking immense opportunities for content creators, advertisers, and technology innovators across all segments of the M&E ecosystem. With Indias media and entertainment market expected to surpass Rs 3 trillion by 2027, the future is brimming with untapped potential. FICCI remains committed to fostering collaboration and innovation to ensure that Indias M&E sector continues to thrive as a global powerhouse.”

Ashish Pherwani, Partner and Media & Entertainment Leader, EY India, said, “The digital revolution has not only transformed how content is created and consumed but has also redefined the very essence of the M&E industry. From immersive storytelling and interactive experiences to innovative business models and strategic alliances, the landscape is continually reshaping itself. As digital media overtakes traditional mediums, we are witnessing a paradigm shift, where the value delivered across information, escapism, materialism, and self-actualization becomes the new benchmark for success.”

Jyoti Vij, Director General, FICCI ”The FICCI-EY report reaffirms the resilience and dynamism of Indias Media & Entertainment sector, which continues to thrive despite global economic headwinds. The impressive 8.1% rise in advertising revenues and the exponential growth of digital media underscore Indias leadership in content creation and consumption. As the industry undergoes rapid transformation, FICCI remains steadfast in driving policy reforms, fostering strategic collaborations, and shaping a future-ready ecosystem that not only fuels sustainable growth but also strengthens Indias global influence in the M&E landscape.” Source: Made in Media, Article Mar 2025

OUR BUSINESS

Our Company was incorporated in Chennai as “VELS Film International Limited” on 25th October, 2019 under the Companies Act, 2013 vide certificate of incorporation issued by the Registrar of Companies, Chennai, Tamil Nadu. The Corporate Identity Number of our Company is L74999TN2019PLC132235.

Our Company is primarily in the business of production of films and sale of film rights. Vels Film International Limited is the result of the vision of Dr. Ishari K Ganesh to produce feature films in various languages.

Our company is a member of South Indian Film Chamber of Commerce. The companys contribution to the South Indian Film Industry is growing in fast pace particularly to the Tamil Film Industry which is the third biggest in India. Dr. Ishari K. Ganeshs late father Shri Ishari Velan was a renowned comedian in Tamil Cinema of yesteryears and that inspired him to act in several films as well. Being born to a great actor and comedian, entering the film industry was a natural progression for Dr. Ishari K. Ganesh. Our promoter is involved in film industry since the movie ‘Vaaku Moolam in the year 1991. He has acted in multiple movies and the last movie in which he acted was S. Shankars ‘2.0 which released in 2018.

Later our promoter started working in the education sector. With a modest beginning as a humble educationist, our Promoter, Dr. Ishari K. Ganesh, started the Vaels Educational Trust in the year 1992 with 36 students. In 2017, the Vels Group celebrated its 25 years of commitment to excellence in education with more than 25,000 students, 25 institutions and 5,000 staff with centers in Singapore and United Kingdom. His efforts to provide quality education to all sections of the society are renewed every year. Our promoter is an educationist, philanthropist and a business magnate.

After successfully setting up various schools, medical colleges and university in the year 2016 our promoter drifted his attention to film production in Tamil film industry in the memory of his actor father. He associated himself with Mr. Prabhu Deva, known for his choreography, and alongside him co-produced the film ‘Devi in 2016 along with other films. Later in 2019, ‘LKG was produced by M/s Vels Film International (sole proprietorship of our promoter). After producing few more films, we decided to corporatize our film production business and therefore formed Vels Film International Limited.

Following are the completed projects under our production banner by our company since our incorporation in 2019:-

Mookuthi Amman, Kutty Story, Joshua, Imai Pol Kaakha, Vendhu Thanindhathu Kaadu , Singapore Saloon

1. The released movies during 2024 -25 are a. PT Sir, b. Chutney Sambar, c. Agathiyaa d. Sumo 2. Movies yet to be relased : a. Genie 3. Projects on Floor: a. Mookuthi Amman-2 a. D53 (with Dhanush) c. Gatta Kusti -2 d. Dynagaram 4. Upcoming Projects : a. D54 (with Dhanush) b. Untitled project with Dhanush and Vetrimaran c. Untitled project with Vishnu Vishaal d. Untitled project with Vishnu Vishaal and Sathish e. Untitled project with Jayam Ravi

SWOT ANALYSIS a. Strengths:

Achieved phenomenon growth in short timeframe.

Highly task-oriented team.

The growing middle class with higher disposable income.

Multiplexes with prime locations with average ticket price & spread of OTT trend. b. Weakness:

The Entertainment sector in India is highly fragmented.

Lack of familiarity in other regional language films segment. c. Opportunities:

Growing market conditions.

Opening in other regional languages market.

Avenues available in OTT and other digital platforms.

Increase in no. of multiplexes. d. Threats:

Competition from established production houses.

Change in government policies.

Piracy, violation of intellectual property rights.

Frequent changes in technology at high cost

INFORMATION SECURITY

We manage sensitive and confidential data for our clients. Maintaining the confidentiality, integrity and security of such data is of paramount importance to us. We have installed CCTV cameras, Biometric access, Password sensitive central storage for protection of classified data and intellectual property.

SALES AND MARKETING

A strong and robust sales and marketing team ensures pitching for prime projects at the appropriate time. The team ensures compatibility and reliability with the clients servicing their needs and requirements efficiently. This is the reason major clients continue to associate with our Company year on year. We have appointed a full-time public relation officer to facilitate the marketing goals.

COMPETITION

The competitive landscape within the Indian film industry is rapidly changing. The language in which we primarily produce the movies is ‘Tamil. We face competition from the regional players such as Sun Pictures, AGS Entertainment, Lyca Productions, etc. Our Company also faces competition from large players in the films and content streaming segments. Some of the companies that have entered this sector in past few years are Reliance, UTV, Eros and other players. Further, on digital platforms (OTT) we face competition from these players as well as the other local and international players. We compete with these companies to enter directly into deals with talent, such as actors and directors.

COLLABORATIONS / JOINT VENTURES

As on the date of the Annual report, our Company has not entered into any technical or other collaboration or join ventures.

HUMAN RESOURCE

We believe that our employees are the key to the success of our business. As on March 31^st , 2025, we have the total strength of 10 full-time employees in various departments. Our company does not enter into long term contracts with contractual based manpower. Company enters into short term (project based) contracts only with the ‘key persons involved in a film project such as Director(s), Actors, etc. Our company pays to the manpower such as background artists, dance artists, spot boys, etc. involved in every film project on daily basis. From our past experience we believe that such manpower (excluding key persons) may vary from 60 to 120 personnel per film.

FINANCIAL REVIEW

In FY 24-25, the Companys total income stood at Rs.3426.60 lakhs as against Rs. 1075.30 Lakhs in FY 23-24. The company registered an EBIT profit of Rs. 2318.10 lakhs during the year as compared to a loss of (Rs.1216.11) lakhs in the previous year. The company recorded a profit after tax of Rs. 1360.18 lakhs for F.Y 2024-25 and profit and a loss after tax of Rs.1345.20 Lakhs in F.Y 2023-24.

RISK MANAGEMENT

The Risk Management framework includes Risk Management Policy and identification of risks at Company Level, Strategic Level and Operational level. The risk mitigation procedures associated with the business and prioritization of risks include scanning the business environment and having periodic risk review.

The risks associated with the Companys businesses are broadly classified in following categories:

Economic Risk: Due to adverse political situations or downturn which may negatively impact the Companys organizational objectives. External events and factors beyond the control of the Company, such as politics, laws and regulations, can impact its business operations. Regulatory Risk: Due to government regulations or any other statutory violations and amendments, which may lead to litigations and loss of reputation.

Operational Risk: Ability to attract and retain clients.

INTERNAL CONTROL SYSTEMS

The Company has adequate internal controls required in the nature of its business and operations. The company can safeguard its assets and financial transactions with adequate checks and balances, while adhering to accounting policies. Systems are reviewed and improved regularly. With the Companys budgetary control system, it monitors revenue and expenditure with actual vs. approved budget. The Company has its own corporate internal audit function which monitors and assesses the adequacy and effectiveness of the Internal Controls and Systems. Deviations from standard operating procedures are periodically reviewed and compliance is ensured.

Cautionary Statements

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward-looking statements within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic developments in India or globally, demand and supply conditions in the industry, changes in Government regulations, tax laws, litigations, employee relations and others.

	By order of the Board of Directors,
	For Vels Film International Limited
	-Sd-
Chennai	SAMPATH KUMAR SUJATHA
12.06.2025
	Company Secretary
	& Compliance Officer
	M.No: A32181