Baweja Studios Ltd Management Discussions

You should read the following discussion of our financial position and results of operations together with our Restated Financial Statements which have been included in this Draft Red Herring Prospectus. The following discussion and analysis of our financial position and results of operations is based on our Restated Financial Statements for the financial year ended March 31, 2023, for financial year ended March 31, 2022 and for financial year ended March 31, 2021 including the related notes and reports, included in this Draft Red Herring Prospectus prepared in accordance with requirements of the Companies Act and restated in accordance with the SEBI Regulations, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Company has not attempted to explain those differences or quantify their impact on the financial data included in this Draft Red Herring Prospectus and it is urged that you consult your own advisors regarding such differences and their impact on our Companys financial information. Our Financial Statements, as restated have been derived from our audited financial statements for the respective period and years. Accordingly, the degree to which our Restated Financial Statements will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS, Companies Act, SEBI Regulations and other relevant accounting practices in India. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" beginning on pages 30 and 20, respectively, and elsewhere in this Draft Red Herring Prospectus.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Baweja Studios Limited and, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the financial year ended March 31, 2023, for the Financial Year 2022 and for the Financial Year 2021 beginning on page no. 166 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

We are a technology-based content production house that specializes in all formats of commercial films with an aim to push the boundaries of storytelling and technology advancements in our field. Our organization which is based in Mumbai, specializes in research & development of scripts, end-to-end production of content, Intellectual Property creation and monetization. We are a one of the worldwide players in the media and entertainment sector with a proven track record of producing high quality content.

Our Companys business model revolves around content production whereby we source content either through in-house developments, content acquisition, remake rights or books. After which a thorough selection process is carried out at various levels before green lighting the project for production. Our management committee then selects an appropriate model (production or co-production/acquisition) for the project. We then serve as line producers wherein we produce the movies and deliver it to our clients as per the agreement for a pre-agreed fees ensuring predictable profits.

Our Company has diversified into Web Series, Digital Films, Animation Films and Punjabi Films. Baweja Studios is one of the leaders in the industry in terms of production quality and film-making across all formats. Our Company has been steadily growing in the field of motion picture production since its inception, having produced over 15 films to date, with over 6 films under production and another 7 in pre-production for the forthcoming year, followed by a host of others in the research & development stage

For further details, please refer chapter titled "Business Overview" beginning on page 119 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL PERIOD i.e. MARCH 31, 2023

1. The Board of Directors of the Company approved the Initial Public Offering of our Company in their meeting held on June 15, 2023.

2. The Shareholders of the Company approved the Initial Public Offering of our Company in their meeting held on June 15, 2023

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the chapter titled "Risk Factors" beginning on page 30, of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

> Volatility in supply and pricing of products;

> Our ability to successfully implement our growth strategy and expansion plans;

> Our ability to attract and retain qualified personnel;

> Substantial capital expenditure & working capital requirements;

> Uncertainty in relation to continuing effect of the COVID-19 pandemic on our business and operations;

> Default or delay in payment from customers;

> Changes in laws, rules & regulations and legal uncertainties;

> Pricing pressures from the competitive business environment;

> Economic and Demographic condition;

> The occurrence of natural disasters or calamities;

> Other factors beyond our control and

> Our ability to manage risks that arise from these factors.

SIGNIFICANT ACCOUNTING POLICIES

For more details kindly refer to Annexure 4 chapter titled "Restated Financial Statements" beginning on page 166 of this Draft Red Herring Prospectus.

Key Performance Indicators of our ComDanv

Particulars	March 31, 2022	March 31, 2021	March 31, 2020
Revenue from operations	7,379.05	4,071.02	1,944.54
Growth in Revenue from Operations	81.26%	109.36%	28.52%
EBITDA	902.06	421.86	1,158.73
EBITDA Margin	12.22%	10.36%	59.59%
PAT	796.91	275.94	764.60
PAT Margin	10.80%	6.78%	39.32%
Net Worth	1,986.28	724.07	448.13
Capital Employed	2,128.65	990.93	627.73
RoE	40.12%	38.11%	170.62%
RoCE	52.55%	44.08%	185.63%

*Not annualized Notes:

Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements.

Growth in Revenue from Operations (%) is calculated as Revenue from Operations of the relevant period minus Revenue from Operations of the preceding period, divided by Revenue from Operations of the preceding period.

EBITDA is calculated as Profit before tax + Depreciation + Finance Cost - Other Income ‘EBITDA Margin is calculated as EBITDA divided by Revenue from Operations ‘PAT Margin is calculated as PAT for the period/year divided by revenue from operations.

Net worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account

Return on Equity is ratio of Profit after Tax and average Shareholder Equity

Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as shareholders equity plus total borrowings {current & non-current}.

DISCUSSION ON RESULTS OF OPERATIONS

The following table sets forth financial data from our restated financial statements of profit & loss for the financial year ended March 31, 2023, for the financial year ended March 31, 2022 and for the financial year ended March 31, 2021, the components of which are also expressed as a percentage of total revenue for such periods:

	Year ended March 31, 2023		Year ended March 31, 2022		Year ended March 31, 2021
Particulars	Rs in lakhs	%*	Rs in lakhs	%*	Rs in lakhs	%*
(A) REVENUE
Revenue from Operations	7,379.05	96.73	4,071.02	99.37	1,944.54	99.51
Other Income	249.26	3.27	25.77	0.63	9.57	0.49
Total Revenue	7,628.31	100.00	4,096.79	100.00	1,954.11	100.00
(B) EXPENDITURE
Operational expenses	6261.42	82.08	3,492.19	85.24%	524.05	26.82
Employee Benefits Expenses	57.07	0.75	18.95	0.46	14.37	0.74
Other expenses	150.94	1.98	122.12	2.98	195.10	9.98
Finance expenses	49.03	0.64	28.01	0.68	7.61	0.39
Depreciation	32.72	0.43	10.84	0.26	3.02	0.15
Loss on sale of investment	-	-	3.99	0.10	52.29	2.68
Preliminary expenses	7.56	0.10	11.89	0.29	-	0.00
Total Expenditure	6,558.74	85.98	3,688.00	90.02	796.43	40.76
Profit/(Loss) Before Tax	1,069.57	14.02	408.78	9.98	1,157.69	59.24
Tax Expense:
(1) Current tax	273.34	3.58	116.59	2.85	376.99	19.29
(2) Deferred tax	(5.37)	(0.07)	3.28	0.08	(6.43)	-0.33
(3) Short/(Excess) Provision of Income Tax of Earlier Years	4.69	-	12.97	0.32	22.53	1.15
Profit/(Loss) for the period	796.91	10.45	275.94	6.74	764.60	39.13

Key Components of our Statement of Profit and Loss Based on our Restated Financial Statements Income

Our total income comprises of revenue from operations and other income.

Revenue from Operations

Our revenue from operations represents sale of our products. The Company is engaged in the business of technology-based content production house that specializes in all formats of commercial films with an aim to push the boundaries of storytelling and technology advancements in our field. Our organization which is based in Mumbai, specializes in research & development of scripts, end-to-end production of content, IP creation and monetization. We are a worldwide player in the media and entertainment sector with a proven track record of producing high quality content. For detail, please refer to chapter "Business Overview" on page 119 of this Draft Red Herring Prospectus.

Other Income

Other income includes Dividend Received, Interest Income & Miscellaneous Income Expenditure

Our total expenditure primarily consists of Operational expenses, Employee benefit expenses, Other expenses, Finance expenses, Depreciation, Loss on sale of investment & Preliminary expenses.

Employee Benefit Expenses

Employee benefit expenses comprises of Salaries & Staff Welfare Expenses Depreciation & Amortisation Cost

Depreciation expenses consist of depreciation on the tangible assets of our Company i.e., depreciation on fixed assets.

Finance costs

Finance cost includes Bank & other Finance Charges, Interest Paid & Interest on Statutory dues.

Other Expenses

Other expenses are divided into two categories: Auditors Remuneration, Conveyance & Travelling, Corporate social responsibility expenses, Electricity Expenses, Legal & Professional Fees, Insurance Expenses, Membership & Subscription, Miscellaneous Expenses, Rates and Taxes, Rent, Repairs & Maintenance & Telephone & Mobile Expenses.

Operational Expenses

Operational Expenses include Cost of Content Production & Promotion Provision for Tax

The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date.

COMPARISON OF FINANCIAL YEAR ENDED MARCH 31, 2023 TO FINANCIAL YEAR ENDED MARCH 31, 2022

Income:

Total Revenue

Our total revenue increased by 86.20% to Rs7,628.31 Lakhs for Fiscal 2023 from Rs 4,096.79 Lakhs for Fiscal 2022.

Revenue from Operations

Our revenue from operations increased by 81.26% to Rs 7,379.05 Lakhs for Fiscal 2023 from Rs 4,071.02 Lakhs for Fiscal 2022. The increase in revenue generation can be attributed to a number of projects completing various stages of development in Fiscal 2023 as compared to Fiscal 2022.

Other Income

Our other income increased by 867.35% to Rs 249.26 Lakhs for Fiscal 2023 from Rs 25.77 Lakhs for Fiscal 2022. The primarily attributable to sundry balances written back (net) towards abandoned projects, advance written back/written off, loans amounting to Rs 187.21 Lakhs in Fiscal 2023.

Expenditure

Operational expenses

Our cost of operational expenses was increased by 79.30% to Rs 6,261.42 Lakhs for Fiscal 2023 from Rs 3,492.19 Lakhs for Fiscal 2022. This increase in total production costs is primarily attributable to a number of project developments being undertaken in the fiscal year 2023 as compared to the previous fiscal.

Employee Benefits Expenses

The employee benefits expense increased by 201.13% to Rs 57.07 Lakhs for Fiscal 2023 from Rs 18.95 Lakhs for Fiscal 2022. This was primarily attribute to increase in production activity during FY23.

Finance Cost

The finance costs increased significantly by 75.01% to Rs 49.03 Lakhs for Fiscal 2023 from Rs 28.02 Lakhs for Fiscal 2022. The substantial increase in finance costs can be attributable to the increase in Bank & Other finance charges and Interest paid during FY23.

Depreciation and amortization expense

Our depreciation and amortization expense increased by 201.73% to Rs 32.72 Lakhs for Fiscal 2023 from Rs 10.84 Lakhs for Fiscal 2022. This substantial increase is due to the multifold increase in the property, plant and equipment from Rs 49.22 Lakhs to Rs 162.49 Lakhs.

Other Expenses

Our other expenses increased by 23.60% to Rs 150.94 Lakhs for Fiscal 2023 from Rs 122.12 Lakhs for Fiscal 2022. The principle attribute was generally in line with increase in rent and miscellaneous expenses.

Tax expenses

Our tax expenses increased from Rs 132.84 Lakhs to Rs 272.65 Lakhs for Fiscal 2023, primarily due to a increase in Profit before Tax.

Profit after Tax (PAT)

For the reasons discussed above, our profit after tax increased by 188.79 % to Rs 796.91 Lakhs for Fiscal 2023 from Rs 275.94 Lakhs for Fiscal 2022. Profit has improved due to increase in total income.

COMPARISON OF FINANCIAL YEAR ENDED MARCH 31, 2022 TO FINANCIAL YEAR ENDED MARCH 31, 2021

Income:

Total Revenue

Our total revenue increased by 109.65% to Rs 4,096.79 Lakhs for Fiscal 2022 from Rs 1,954.11 Lakhs for Fiscal 2021.

Revenue from Operations

Our revenue from operations increased by 99.37% to Rs 4,071.02Lakhs for Fiscal 2022 from Rs 1,944.54 Lakhs for Fiscal 2021. The increase in revenue generation can be attributed to a number of projects completing various stages of development in Fiscal 2022 as compared to the limited production activity during FY2021.

Other Income

Our other income increased by 169.20% to Rs 25.77 Lakhs for Fiscal 2022 from Rs 9.57 Lakhs for Fiscal 2021. The primarily attributable to interest received for delay in payment by another party.

Expenditure

Operational expenses

Our cost of operational expenses was increased by 566.38% to Rs 3,492.19 Lakhs for Fiscal 2022 from Rs 524.05 Lakhs for Fiscal 2021. This increase in total production costs is primarily attributable to a number of project developments being undertaken in the year post Covid-19.

Employee Benefits Expenses

The employee benefits expense increased by 31.91% to Rs 18.95 Lakhs for Fiscal 2022 from Rs 14.37 Lakhs for Fiscal 2021. This was primarily attribute to increase in production activity post Covid-19.

Finance Cost

The finance costs reduced marginally by 269.19% to Rs 28.01 Lakhs for Fiscal 2022 from Rs 7.59 Lakhs for Fiscal 2021. The substantial increase in finance costs can be attributable to the increase in borrowings during the same period.

Depreciation and amortization expense

Our depreciation and amortization expense decreased by 259.42% to Rs 10.84 Lakhs for Fiscal 2022 from Rs 3.02 Lakhs for Fiscal 2021. This substantial increase is due to the multifold increase in the property, plant and equipment from Rs 10.46 Lakhs to Rs 49.22 Lakhs.

Other Expenses

Our other expenses decreased by 37.41 % to Rs 122.12 Lakhs for Fiscal 2022 from Rs 195.12 Lakhs for Fiscal 2021. The principle attribute was generally in line with decrease in Legal & Professional Fees and Repairs and Maintenance Cost.

Tax expenses

Our tax expenses decreased by Rs 132.84 Lakhs form Fiscal 2022 from Rs 393.08 Lakhs for Fiscal 2021, primarily due to a decrease in Profit before Tax.

Profit after Tax (PAT)

For the reasons discussed above, our profit after tax decreased by 63.91 % to Rs 275.94 Lakhs for Fiscal 2022 from Rs 764.60 Lakhs for Fiscal 2021. Profit has improved due to increase in sales.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three (3) years.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the chapter entitled "Risk Factors" beginning on page 30 of this Draft Red Herring Prospectus. To our knowledge, except as we have described in this Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Income and Sales on account of major product/main activities

Business of producing, buying, selling, trading, importing, exporting, exploiting, conducting, managing, developing, exhibiting sponsoring presenting feature films, video films, television films, advertising firms, documentary films, cartoon films, animation films, animation films, television and

interest softwares, cable television, satellite radio programs, other entertainment events, shows concerts, dramas, plays, etc..

4. Whether the Company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

5. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under chapter titled "Risk Factors" beginning on page 30 of this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

6. Extent to which material increases in net sales or revenue are due to increase in services

Increases in revenues are by and large linked to increases in volume of business.

7. Total turnover of each major industry segment in which the issuer company operated.

The Company is engaged in technology-based content production house that specialises in all formats of commercial films with an aim to push the boundaries of storytelling and technology advancements in our field. Our organization which is based in Mumbai, specializes in research & development of scripts, end-to-end production of content, IP creation and monetisation, as available, has been included in the chapter titled "Business Overview" beginning on page 119 of this Draft Red Herring Prospectus.

8. Status of any publicly announced new products or business segment.

Our Company has not announced any new services or business segment.

9. The extent to which business is seasonal.

Our Companys business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers.

Significant proportion of our revenues have historically been derived from a limited number of customers. The % of contribution of our Companys customers and suppliers vis a vis the revenue from operations and raw materials purchase respectively for the financial year ended March 31, 2023 and March 31, 2022 based on Restated Financial Statements are as follows:

	Suppliers		Customers
Particulars	As on March 31, 2023	As on March 31, 2022	As on March 31, 2023	As on March 31, 2022
Top 10 suppliers/ customers (Rsin Lakhs)	497.10	595.49	7291.18	3303.24
% to cost of content production and promotion / sales	66.64%	17.37%	98.81%	81.14%

11. Competitive conditions.

Competitive conditions are as described under the chapters titled "Industry Overview" and "Business Overview" beginning on pages 100 and 119, respectively of this Draft Red Herring Prospectus.

Material developments subsequent to March 31, 2023

Except as disclosed in this Draft Red Herring Prospectus, there are no significant developments or circumstances that have arisen since March 31, 2023 the date of the last financial statements included in this Draft Red Herring Prospectus:

Further, except as disclosed in this Draft Red Herring Prospectus, there are no circumstances that have arisen since March 31, 2023, the date of the last financial statements included in this Draft Red Herring Prospectus, which materially and adversely affect or is likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months.