Cyber Media Research & Services Ltd Management Discussions

Investors are hereby informed that statements in this Management Discussion & Analysis describing the objectives, projections, estimates and expectations of Cyber Media Research & Services Limited ("CMRSL"/"the Company") may be ‘forward-looking statements within the meaning of applicable laws and regulations. The following discussions and analysis should be read in conjunction with the Companys financial statements included herein and the notes thereto.

This MDA covers the overall business of Cyber Media Research & Services Ltd including its subsidiary. The financial figures are for the consolidated business of the group. If stand-alone numbers are considered, they are highlighted as such.

Industry Overview

This chapter has been extracted/ derived from the "Dentsu-e4m Digital Report 2023"

The India economy is growing at an unprecedented pace, bringing the future of digital economy closer to us. The new digital economy is revolutionising the Indian advertising industry. At present, digital advertising industry stood at a market size of Rs. 29,784 crore, growing at 39.5% over 2021 and is forecasted to reach Rs. 51,110 crore, with a compounded growth rate of 31% by 2024. Television has the largest advertising spend share of 40%, followed by digital media at 35% and print media at 21%. The digital media spend is expected to overtake that of television in 2023. Digital media spend is driven by social media with a contribution of 30% followed by 28% on online video and 23% on paid search. Video and app consumption will continue to remain key growth drivers in the industry. These continue to expand the market at rapid pace while presenting new opportunities as well.Due to the rapid adoption of the next generation of artificial intelligence technologies, as well as the development of the mass market, Indian consumers expectations are set to evolve towards convenience, commerce, and experimental media and marketing. The future of the digital economy will revolutionise businesses at all levels, including the grassroots levels, and will usher us into a new dawn of immersive marketing and creativity.

Digital Ad Market Size in 2023

Among digital media advertising formats, social media takes the largest spends share of 30% (Rs. 8,757 crore), closely followed by online video (28%, Rs. 8,319 crore).

Spends on paid search contribute 16% (Rs 4,816crore) to Indian digital advertising market.

Social media and online video formats have consistently been the strongest and largest advertising formats on digital media. Online video has seen the fastest growth due to the rapid increase in the number of consumers of this medium, owing to the widespread availability of low-cost smartphones and high-speed connectivity.

Content consumption on digital media has been driven primarily by online video and social media. We expect online video advertising formats to have the highest compounded growth rate of 34% to reach spends share of 29% by 2024 and be at par with social media. Social media is expected to grow at a compounded rate of 31% to reach spends share of 29% by the end of 2024. Paid search is expected to have a compounded growth rate of 28% and will have spends share of 22% by the end of 2024.

Segments that are up-and-coming and expected to fuel growth in the coming years include programmatic media buying, connect TV, digital out-of-home, and Web3 technologies.

Digital media spends across industry verticals

The FMCG segment makes the biggest contribution of 38% (Rs 11,403 crore) and has grown 28% over the previous year. This is followed by e-commerce category contributing 20% (Rs 5,982 crore) to the digital media industry in India. The contribution by the e-commerce segment has grown around three times as compared to the previous year. The majority of the FMCG categorys digital media budget is spent on online video (43%), followed by social media (25%). The e-commerce segment spends 52% of its digital media budget on paid search and 19% on social media. Spends on paid search by e-commerce segment has grown six times over the previous year. The consumer durables category spends 35% of its digital media budget on paid search, followed by 20% on social media and display banners respectively. The pharmaceutical industry spends 53% of its digital media budget on paid search, which has increased eleven times in a year.

Auto industry spends 31% of its digital media budget on paid search and 26% on online video. The telecom sector spends 28% on online video, 27% on social media and 25% on paid search. The education category spends 35% of its digital media budget on online video while the BFSI industry spends 42% on paid search, followed by 27% on display banners. Social media accounts for 38% of the retail categorys digital media spends, followed by paid search (29%), and display banners (20%).

(Source - Dentsu-e4m Digital Report 2023)

CMRSLs Business

CMRSL businesses continue to increase its customer base while increasing the share of wallet from its existing customer base as well. FY2022-23 was the best performance for the Company in its history and the management expects the growth to accelerate in the current financial year as well.

With macro-economic factors looking positive, CMRSL has also invested in expanding its technology and sales teams so as to create a larger footprint in the market. on the marketing ItisrelevanttonotethatAI willhavesignificant industry. New technology platforms such as OpenAIs ChatGPT will bring forward more technology adoption, automation, simplification and data-centric decision. In line with this CMRSL has initiated investments towards integrating AI powered solutions within its technology stack, across our business streams. The Company clearly sees this as an opportunity to increase market share, and ramp up its offerings for clients in advertising, programmatic and data analytics. Given the recency of this technology CMRSL will continue to invest its resources towards building its technology stack. The long-term prospects for CMRSL continue to remain positive both at a macro-level, as well as based on strategic bets being made by the Company in new areas of growth.

Advertiser

CMRSLs advertiser business has been a key revenue driver. Advertisers continue to invest across digital and as the share of the pie increases the Company is looking at continuing to gain more customers both in India and abroad. Our media buying and performance marketing services continue to provide data driven ROI to advertisers. These campaigns involve campaign management, app installs, advisory services, creative services, social media planning, and social media execution. However, in addition to providing services the Company is ramping up more resources towards its martech SaaS offering – CMGalaxy. CMGalaxy is a virtual CMO assistant. It is market intelligence tool that allows advertisers to map their entire marketing funnel across multiple demand channels. It delivers a high degree of automation that is powered by AI, and simplifies multiple marketing functions. This fast and clear data flow enables advertisers to be competitive and ensure their marketing budget utilization is done effectively. Our AI/ML engine processes the data to provide better understanding of user behavior and this significantly improves the advertisers ability to plan their future marketing campaigns.

Programmatic

Advertisers and ad agencies need quality inventory to deliver digital marketing campaigns for their clients for which they use multiple supply partners. Programmatic advertising drives performance marketing which drives higher sales for customers. The Company, through its platform CyberAds performs ad match in real-time to enable the right ad to be viewed by relevant audiences. CyberAds platform provides an automated, machine learning driven programmatic and media buying solutions. Our targeting engine provides brands and agencies end-to-end media buying creating better targeting and ROI across campaigns. CyberAds automated platform leverages deep understanding of user behaviour and cross-device targeting that allows brands to target inventory across multiple publishers to reach users in targeted manner. This allows them reach to new potential customers at lower costs.

The Companys programmatic offerings have grown in the past year at a rapid pace, and build a healthy network of industry relationships that allow steady growth to the business.

Data Analytics

CMRSL is a premier research and consulting firm offering customers strategic and tactical insights in the form of market intelligence, market ecosystem mapping and go-to-market services. The Companys research and advisory services operates with premium data across technology, telecom, life sciences, automotive, manufacturing, and other industry verticals. This includes key sectoral trends, definite viewpoints on emerging markets and providing in-depth consumer insights. Among key initiatives includes building more market trackers, custom data and custom dashboards for clients. The Company provides its customers with ability to collect, process, visualize, and effectively deliver insights against large data sets. The team primarily deals with large enterprise clients, and has successfully onboarding large enterprise customers.

Publisher

The Company ties up with web channels & publishers to monetize their ad inventory. This is monetized via demand platforms such as Google, Pubmatic, Magnite, among others. Publishers earn by monetizing this inventory via several advertisers. The Company is a Google Publishing Partner on GAM360, AdSense and AdX products.

Auxo Ads platform allows publishers to optimize revenues and manage their traffic more effectively. Auxo Ads captures large data regarding users and their behavior that helps publishers understand their user better. The data collected is utilized to build better predictive models to improve monetization, analysis and targeting.

The Publisher business has experienced a slow down in FY 2022-23 due to significant changes made by Google. Furthermore, increased competition in this sector requires an investment towards creating improved offerings for clients. The Company expects a revival of its Publisher business through the current financial year.

Opportunities and Threats Opportunities

Segments that are up-and-coming and expected to fuel growth in the coming years include programmatic media buying, connectTV, digital out-of-home, and Web3 technologies.

The AI Opportunity

Artificial intelligence based on large-language models will create substantial shifts across the advertising industry. Being a digital marketing organization that has its own technology stack, the Company sees this as a necessary space of investment and growth. Brands are likely to adopt and require large set of AI driven marketing solutions. CMRSL will rapidly look to enter this space and fill this need across advertisers. This initiative will further strengthen the offering to attract more international clients as well.

Expand our Current Business Relationships

CMRSLs goal is to build long-term, sustainable business relationships with our customers to generate increasing revenues. The Company will expand the scope and range of services provided to our existing customers by continuing to build expertise and extending capabilities into new and emerging marketing technologies. In addition, the Company intends to continue to invest towards building more powerful martech and ad-tech solutions. In addition, the Company intends to continue to build relationships with various global companies as business partners which can provide us with better benefit by introducing local clients.

Optimal Utilization of Resources & Establishing Better Processes

The Company constantly endeavours to improve its technical process, and will increase service activities to optimize the utilization of resources. For FY 2022-23, developments include deployment of HRMS SaaS for all Cyberites, deployment of internal finance platform that automates multiple functions, roll-out of OKRs to track better productivity across teams, usage of Jira project management tool to track technology development, more effective cashflow management systems, among other steps towards good governance.

CMRSL has developed effective internal systems, and intends to continue to establish systems and processes to ensure effective management control and team betterment.

Attract, develop and retain highly-skilled employees

CMRSL employees are one of its most important assets. The Company focuses on the quality and level of performance that our employees deliver by investing in recruitment, training, retention practices, maintenance of a culture of innovation. The Company also creates a balance between a challenging and rewarding work environment. CMRSLs talent development strategy focusses on engaging, motivating and developing a high performing workforce and aim to create and sustain a positive workplace culture for the employees. The Company also has a competency training framework, seamlessly integrated into our business that has been designed for new employees to be "project-ready".

Threats

The increasing spread of fake and bad quality content has emerged as a major concern for social media. Further, with dynamic technological innovations taking place, the media sector is facing considerable uncertainty.

As we continue to foray ahead, we anticipate increased competition in the digital domain from other businesses trying to emulate us, as well as from several niche enterprises in the digital media, social media, and other online services, with whom we are competing, using our expertise and brand position in the market as a single-stop shop.

The company is continuously monitoring the various threats which can hamper growth and is taking appropriate and effective steps in this regard.

Operating segment-wise performance

The highlights of segment wise overall performance on consolidated basis are as under:

	Digital Services
Particulars	2022-23	2021-22
Income	6,317.68	5,678.13
Expenses	5,878.10	5,327.60
Earnings before interest, tax, depreciation and amortization (EBITDA)	439.580	350.53

Business Outlook

CMRSL has continued to increase its customer base while increasing the share of wallet from its existing customer base as well. The Companys goal is to build long-term, sustainable business relationships with our customers to generate increasing revenues. The Company will expand the scope and range of services provided to our existing customers by continuing to build expertise and extending capabilities into new and emerging marketing technologies.

The Company constantly endeavours to improve its technical process, and will increase service activities to optimize the utilization of resources. The Company ties up with web channels & publishers to monetize their ad inventory. This is monetized via demand platforms such as Google, Pubmatic, Magnite, among others. Publishers earn by monetizing this inventory via several advertisers.

Risks and Concerns

The Company has established a risk management framework to identify and mitigate risks arising from external and internal factors. A risk identification exercise is carried out periodically to identify various strategic, operational, financial and compliance-related risks.

Few risks and uncertainties that can affect the business include the inherent risk of cybercrimes and data breach that may impact reputation, exposure to litigations and competition from emerging digital platforms and other social media apps.

Potential risks are reviewed on an ongoing basis and mitigating controls are deliberated upon as an integral part of decision-making. To stay ahead of the competition and minimize exposure to risk, the Company has taken various initiatives like continuous engagement with the editorial team and upgradation of editorial processes to ensure factual accuracy of content published, greater focus on reaching newer segments and geographies. Further, to monitor status of statutory compliances across all locations/ functions helps the Company to minimize its exposure to any non-compliance to statutory and legal requirements.

Further, the Company is continuously evaluating the evolving situation and taking necessary steps to mitigate its impact, while ensuring business continuity. The Company is also taking cost optimization efforts across businesses and functions.

Information Security

The Company accords great importance to the security of its information assets. To ensure that this gets desired focus and attention,

Information Officer is entrusted with the task of ensuring that your Company has the requisite security posture.

Internal Control Systems and their Adequacy

CMRSL has aligned its current systems of internal financial control with the requirement of Companies Act 2013. The Company has adopted the internal control integrated framework which is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The framework requires a company to identify and analyze risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness. CMRSLs internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies. CMRSL has a well-defined delegation of power with authority limits for approving contracts as well as expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down. CMRSL uses a state-of-the-art enterprise resource planning system that connects all parts of the organization, to record data for accounting, consolidation and management information purposes. It has continued its efforts to align all its processes and controls with best practices.

CMRSL management assessed the effectiveness of the companys internal control over financial reporting(asdefinedin Regulation 17 of the Listing Regulations as of March 31, 2023).

M/s. Goel Minrti & Associates, the statutory auditors of CMRSL have audited the financial statements included in this annual report and have issued an attestation report on the companys internal control over financial reporting (as defined in section 143 of Companies 2013).

CMRSL has appointed M/s. R R R S & Associates, Chartered Accountants to oversee and carry out internal audit of its activities. In line with best practice, the conduct of internal audit is oriented towards the review of internal controls and risks in the companys operations such as service delivery, accounting and finance, procurement, employee engagement, statutory compliances

The audit committee reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets CMRSLs statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations periodically.

Based on its evaluation (as defined in section 177 of the audit committee has concluded that, as of March 31, 2023, the companys internal financial controls were adequate and operating effectively.

Financial performance

The discussions in this section relate to the consolidated financial statements of Cyber Media Research & Services Limited and its subsidiary (collectively referred to as ‘CMRSL or ‘the Company) are prepared in accordance with the Indian Accounting Standards (referred to as ‘Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements.

The following table gives an overview of the consolidated financial results of the company:

	2023			2022
Particulars	Revenue	% of Revenue	% Growth	Revenue	% of Revenue
Revenue from operations	6,312.63	100	11.48	5,662.34	100
Earnings before interest, tax, depreciation and amortization (EBITDA)	439.58	6.96	25.40	350.53	6.19
Profit before tax (PBT)	329.80	5.22	42.55	231.35	4.09
Profit after tax (PAT)	211.83	3.36	32.39	160.01	2.83
Earnings per share (in Rs.)	7.79	-	-	6.35	-

Human Resources

The Companys culture and reputation as a leader in digital technologies, adtech, data analytics, AI tools, and next-generation services enable us to attract and retain high quality talent. The competency development of our employees continues to be a key area of strategic focus for us. There is a constant endeavor to conduct training and team building activities that help in maintaining camaraderie, knowledge, motivation and culture within the organization.

The Company invested in building tighter control systems improving processes and operational efficiencies as a result. By establishing smooth WFH processes and remote collaboration, our operation teams are able to ensure that client service level agreements are met and project milestones delivered on time.

Balancing employee well-being, the Company has explored new ways of remote and hybrid working and managing the changing expectations of employees. This continual pursuit has led to high retention rates among employees. Your company believes and recognises the employees as asset of the Company. The overall attrition rate of employees of the Company was 18 percent at March 31, 2023. In order to ensure smooth functioning, maintain employees overall data in one place, viz. attendance, leave records, declarations, leave and WFH approval process etc., the Company maintains ‘Zimyo application.

The Company believes and maintain the diversity of employees and in order to support the women, during the year, the women employees percentage was 32 percent.

The Company will continue to connect with all stakeholders on a regular basis, communicate in an open and transparent manner that yield desired results. The total number of employees in the Company as on March 31, 2023 were 68.

Key financial ratios

Key financial ratios on consolidated basis are given as under:

Particulars	Unit	2022-23	2021-22
Profitability Ratios
PBITD / Total Income	%	6.96	6.17
PBIT / Total Income	%	5.65	4.54
PBT / Total Income	%	5.22	4.07
PAT / Total Income	%	3.35	2.82
Financial Ratios
Return on Networth	Times	0.17	0.42
Net Debt / Equity	Times	0.54	2.58
Debtors Turnover	Days	106	80
Current Ratio	Times	1.58	1.07
Interest Coverage	Times	4.99	3.50

Sexual Harassment Policy

The Company is committed to creating and maintaining an atmosphere in which employees can work together, without fear of sexual harassment, exploitation or intimidation. Every employee is made aware that the Company is strongly opposed to sexual harassment and that such behaviour is prohibited both by law and by CMRSL. Your Company has formed an Internal Complaints Committee pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaints were received by the Company during the year under review. There was no pending complaint at the opening and closing of the financial year under review.

Cautionary Statement

Some of the statements in this management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in industry, significant changes in political and economic environment in India and abroad, tax laws, import duties, litigation and labour relations.