Den Networks Ltd Management Discussions

Global Economy

Throughout 2022, the global economy faced multiple challenges that significantly impacted economic activity. These challenges included the worldwide fight against inflation, Russias war in Ukraine, and the resurgence of COVID-19 in China. Unfortunately, these factors are expected to continue weighing on the global economy throughout 2023.

Despite these obstacles, the third quarter of 2022 saw surprisingly strong growth in real GDP across several economies, including the United States, the euro area, and significant emerging markets and developing economies. The main drivers behind this growth were primarily domestic, including stronger-than-expected private consumption and investment, tight labour markets, and more significant fiscal support than anticipated. Households spent more to satisfy pent-up demand, particularly on services, by drawing down their savings as economies reopened. Business investments rose to meet the growing demand and easing supply-side constraints and declining transportation costs reduced pressures on input prices, enabling a rebound in previously constrained sectors such as motor vehicles. Additionally, energy markets adjusted quickly to the shock of Russias invasion of Ukraine.

The year ahead is expected to see a slowdown in most major economies, apart from the United States. High-frequency activity indicators like business and consumer sentiment, purchasing manager surveys, and mobility indicators suggest a general slowdown elsewhere. Nevertheless, US growth remains strong, with consumers continuing to spend from their savings, unemployment remaining at historic lows, and ample job opportunities. Despite this growth, the Federal Reserve raised its target interest rate by a quarter-percentage point again in March 2023, despite the turbulence faced by the banking system due to its previous rate increases, which may continue to weigh on the economy.

Exhibit 1: World GDP, Growth YoY (in %)

Year	World	Advanced Economies	Emerging Market & Developing Economies
2020	-3.1	-4.5	-2.0
2021	6.2	5.4	6.7
2022	3.4	2.7	3.9
2023	2.9	1.2	4.0
2024	3.1	1.4	4.2

Source: IMFs World Economic Outlook update (WEO), January2023.

According to International Monetary Funds (IMF) World Economic Outlook Update (WEO) in January 2023 which shows that, in 2020, the worlds GDP growth rate was -3.1%, which indicates that the global economy contracted due to the COVID-19 pandemic. The advanced economies saw a contraction of 4.5%, while the emerging market and developing economies contracted by 2.0%.

In 2021, the global GDP growth rate showed a sharp recovery to growing by 6.2%, which indicates a significant recovery from the previous year. The advanced economies grew at a rate of 5.4%, while the emerging market and developing economies grew at a rate of 6.7%.

For 2022 to 2024, the global GDP growth rate is projected to be between 2.9% and 3.4%, which suggests a return to a more moderate pace of growth compared to the growth rate in 2021. The advanced economies are projected to grow at a rate of 1.2% to 2.7%, while the emerging market and developing economies are projected to grow from 3.9% to 4.2%. These projections suggest that emerging markets and developing economies are expected to grow faster than advanced economies in the coming years.

Indian Economy:

As per the IMF WEO January 2023 reports, the Indian economy is the only country that will be able to maintain a growth rate of more than 6% in the coming couple of years. Which makes India the fastest- growing economy in the world. The report mentions that the Indian economy will show resilience in domestic demand despite external headwinds. In its report on Indias economy, Deloitte reiterates that healthy domestic drivers will help India grow at a 5.8% - 6.3% rate range in 2023-24.

During the February Monetary Policy Committee (MPC) meeting, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, announced that the real GDP growth for FY24 is estimated at 6.4%. The first advance estimate projected FY23 GDP growth at 7%. As per the MPCs forecast, the growth for Q1FY24 is expected to be 7.8%, followed by 6.2% in Q2, 6% in Q3, and 5.8% in Q4.

In 2022-23, the gross value added (GVA) at basic prices increased by 6.6%, according to the SAE, slightly lower than the 6.7% recorded in the FAE. The growth in GVA was primarily attributed to the agriculture and services sectors, whereas the industrial sector slowed down due to increased input costs.

In February 2023, the daily average fuel consumption peaked, while the percentage of electric vehicle sales in total vehicle retail sales rose rapidly from 1.2% in February 2021 to 6.0% in February 2023. This trend is encouraging, and the number of electric vehicles sold has consistently surpassed one million units per month since Oct- 2022.

In February 2023, the merchandise trade deficit increased to US$ 17.4 billion due to a larger sequential contraction in exports than imports. Additionally, data from the Controller General of Accounts (CGA) showed that the gross fiscal deficit (GFD) of the central government for April-January 2022-23 stood at 67.8% of revised estimates (RE), higher than the previous year due to higher expenditure growth than revenue.

As of February 2023, India held the fifth-largest foreign exchange reserves in the world (Chart 56a). Indias foreign exchange reserves recorded a decline of US$ 11.7 billion in February 2023 and stood at US$ 560.0 billion as on March 10, 2023 (Chart 56b), covering more than nine months of imports projected for 2022-23. On a cumulative basis, Indias forex reserves have increased by US$ 27.3 billion since September 2022.

The Reserve Bank of India (RBI) has increased the key lending rate, also known as the Repo Rate, by 25 basis points to 6.50% for the fourth time in a row to combat inflation caused by the surging dollar and rising costs. The history of Repo Rate increases in 2022 includes four hikes, with the latest hike in December 2022, bringing the rate to 6.25%. The Reverse Repo Rate remains unchanged at 3.35%,

while the new Repo Rate is now 6.50%. RBI looks better positioned to pause on the interest rate increase even as the Federal Reserve and The ECB may continue to fight inflation.

Industry Overview:

Indian Media & Entertainment (M&E) Industry:

According to the Confederation of Indian Industry (CII) and FICCI EY Media and Entertainment Report, 2022, the Indian M&E industry has shown a great comeback after the COVID-19-led disruptions. The Indian M&E industry is expected to grow 17% in 2022 to reach INR 1,889 billion in FY22. It is expected to be at INR 2,320 billion in 2024 by strong growth in Digital Media, Filmed Entertainment, Animation, VFX, Live Events, and Out of Home media.

Exhibit 2: Media & Entertainment 2021: Key Trends (EY Estimates)

	2019	2020	2021	2022E	2024E	CAGR 2021-24
Television	787	685	720	759	826	5%
Digital Media	221	235	303	385	537	21%
Print	296	190	227	241	251	3%
Online Gaming	65	79	101	120	153	15%
Filmed entertainment	191	72	93	150	212	32%
Animation and VFX	95	53	83	120	180	29%
Live Events	83	27	32	49	74	32%
Out-of-Home Media	39	16	20	26	38	25%
Music	15	15	19	21	28	15%
Radio	31	14	16	18	21	9%
Total	1823	1386	1614	1889	2320	13%

Source: All figures are gross of taxes (INR billion) for calendar years EY estimates

The estimated gross revenue figures (INR billion) for Indias media and entertainment industry from 2019 to 2024. It highlights the CAGR (compound annual growth rate) for the period 2021-2024. The digital media sector is expected to witness the highest CAGR of 21%, while live events and filmed entertainment are projected to have a CAGR of 32% and 29%, respectively. Television and out- of-home media are expected to have a CAGR of 5% and 25%, respectively. The industry is expected to grow at a CAGR of 13%, with the estimated revenue reaching INR 2,320 billion in 2024.

The Indian television industry has significantly contributed to the countrys media and entertainment sector, one of the fastest- growing sectors in the Indian economy. The industry has witnessed significant growth over the years, with the number of television households in the country increasing at a rapid pace. According to a report by the Broadcast Audience Research Council (BARC) and Nielsen, the number of television households in India is expected to grow to 210 million by 2025.

Even though the industry is undergoing significant changes due to the emergence of new digital platforms such as Amazon Prime, Netflix, and Hotstar, among others. These platforms offer a range of original content and are challenging the traditional players dominance. The industrys revenue is expected to grow at a CAGR of 7.1% from 2020 to 2025, driven by advertising and subscription revenues. Advertising remains the primary source of revenue for the industry, accounting for over 70% of the total revenue. However, the share of subscription revenue is expected to increase, driven by the rise of digital platforms and the shift toward pay channels.

As per a report by KPMG, the share of regional content in the Indian television industrys overall revenue is expected to increase from 30% in 2020 to 35% by 2025. This trend is driven by the increasing popularity of regional language channels, which cater to the diverse language preferences of the Indian audience.

Indias gaming industry has been growing rapidly in recent years, driven by factors such as increasing smartphone usage, affordable data plans, and the availability of local and global games. The industry was valued at $930 million in 2020, with mobile gaming accounting for most revenues. One of the key drivers of the industrys growth is the increasing number of gamers in the country. As of 2021, India has an estimated 365 million online gamers, making it the second-largest gaming market in the world after China. Most of these gamers are under the age of 24, indicating a strong potential for future growth.

As of 2021, the Indian film industry has been significantly impacted by the COVID-19 pandemic. The closure of movie theatres and the halt in production schedules have led to a significant decline in revenue for the industry. However, with the reopening of theatres and the resumption of production, the industry is expected to recover gradually over the next few years.

According to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and consulting firm EY, the Indian media and entertainment industry (which includes the film industry) is expected to grow at a compound annual growth rate (CAGR) of 10.1% from 2020 to 2025. This growth is expected to be driven by factors such as the increasing adoption of digital technologies, the rise of regional cinemas, especially south Indian movies, direct-to- digital releases, and the expansion of the middle class.

The report also predicts that the Indian film industry specifically is expected to grow at a CAGR of 8.9% during the same period, with revenues reaching INR 274.3 billion (approximately USD 3.7 billion) by 2025. The growth is expected to be driven by the increasing popularity of regional cinema, the rise of streaming platforms, and the increasing interest of international audiences in Indian films.

India Broadcasting and Cable TV market:

FICCI EY Media and Entertainment Report, 2022, estimates that subscription revenues for the broadcasting and cable/DTH markets are expected to be INR 432 billion (gross of taxes) by 2024, and advertising revenues are expected to reach INR 394 billion (gross of taxes) by 2024. The major factors contributing to the growth of the market in India are favourable regulations, technological advancements, and growing investment opportunities in the broadcasting and cable TV market. The increasing demand for TV sets, especially in rural India, is also one of the key factors supporting the growth of this market. In addition to higher TV penetration in Indian households, higher adoption of international TV channels and shows, along with regional content, will propel the growth of the Indian broadcasting and cable TV market through this decade.

In India, the digitisation of cable TV is advanced with market-driven content innovation and product offerings. Direct-to-home (DTH) subscriptions are proliferating with the countrys increasing per capita disposable income. Despite the Covid impact, the subscription base of live TV service providers for DTH (VideoconD2H+, Tata Play, Airtel, Sun Direct, and Free Dish) and Cable (Den Networks, Siti Networks, Hathway Digital, GTPL Hathway, NxtDigital, Fastway, Asianet, among others) is expected to increase over the next few years due to the affordable nature of media delivery. The Indian Telecom Services Performance Indicators July-Sep 2022 report, there are 1750 registered MSOs in India. The Indian Telecom Services Performance Indicator Report states that there are 860 registered ISPs in India. There are more than 1,00,000 local cable operators (LCOs) operating in the country.

Television Segment:

Despite the changing dynamics of the entertainment industry after the rise of Streaming Services, it is interesting to note that the television market is still a significant contributor to the Media and Entertainment Industry in India. The projected growth of the television industry in India, as stated in the FICCI EY Media and Entertainment Report, indicates a positive trend in the industry.

The reduction in the number of television channels, particularly in the free-to-air category, suggests that broadcasters may be shifting towards more monetizable pay channels. The expected growth in the LED TV segment by Samsung India further supports the notion that consumers are still investing in traditional television viewing experiences.

However, as mentioned, the influx of new content creation and delivery strategies has changed the way consumers consume content. The rise of over-the-top (OTT) platforms and multi-screen solutions has created new challenges for broadcasters and content providers to ensure convenient and reliable access to content. The need to explore the entire value chain of non-linear broadcasting suggests a shift towards a more comprehensive approach to content distribution and monetization.

Overall, Indias media and entertainment industry continues to evolve, and it will be interesting to see how traditional and new media channels coexist and adapt to the changing consumer landscape.

According to the report presented by the Confederation of Indian Industry (CII) and Boston Consulting Group at the CII Big Picture Summit 2022, the television market size is predicted to reach $11-12 billion by 2030. Despite the growing popularity of digital videos and gaming, TV continues to be a preferred medium for family viewing, with 82% of consumers reporting co-viewing, with an average of 3.5 co-viewers per household in 2022. With the most extensive audience reach, TV is an ideal platform for sports broadcasting, and over 90% of TV audiences watch sports, with cricket being the most popular sport with 79% of sports viewership. Additionally, the report highlights that the average time spent watching TV per day has increased by 0.6 hours since 2019.

Television Broadcasters:

India is a unique country that regulates broadcasting to achieve not only efficient spectrum allocation but also economic objectives. TV penetration in India is estimated to reach 76% in 2026 compared to 70% in 2020, with both FTA and Pay TV registering strong growth, according to KPMG analysis. Despite high penetration, the market is not yet saturated. Video subscription revenues grew by 27% in 2021 to INR 5400 crore, accounting for around 50% of broadcasters share of TV subscription revenues. In 2020, paid video subscriptions crossed 50 million for the first time and further increased to 80 million in 2021 across almost 40 million households in India. Additionally, audio subscriptions are expected to cross 7 million as subscription sharing gains scale. In 2021, audio subscriptions grew by 49% (on a much smaller base) as paying consumers reached around three million.

Exhibit: Broadcasting & Cable Services in 2021-2022.

Number of private satellite TV channels permitted by the Ministry of I&B for uplinking only/downlinking only/ both uplinking and Downlinking	885
Number of Pay TV Channels as reported by broadcasters	353
Number of private FM Radio Stations (excluding All India Radio)	388
Number of total active subscribers with pay DTH	65.58
Operators	million
Number of Operational Community Radio Stations	374
Number of pay DTH Operators	4

Source: The Indian Telecom Services Performance Indicators, Jul-Sep 2022 Report

Company Overview:

DEN Networks is a leading Indian mass media and entertainment company that was established in 2007 and spearheaded by diverse and seasoned management under the able guidance of Mr. Sameer Manchanda, a veteran of the television industry, as its Non-Executive Director and Chairman. The Companys mission is to provide a digitally enhanced cable TV experience to the Indian population while offering the best value for money. DENs portfolio comprises digital cable entertainment (DEN Cable) and high-speed broadband services (DEN Broadband).

DEN is committed to providing unparalleled visual entertainment through cable TV and broadband services. With one of the largest customer bases of any cable company in India and a presence in over 500 cities and towns in 13 states, DEN has a dominant market presence in Delhi, Uttar Pradesh, Karnataka, Maharashtra, Gujarat, Rajasthan, Haryana, Kerala, West Bengal, Jharkhand, Bihar, Madhya Pradesh, and Uttarakhand.

DEN is a technology-driven enterprise with a robust fiber optic network and has invested in DOCSIS 3.0 technology to provide broadband speeds of up to 100 Mbps. Headquartered in New Delhi with a registered office in Maharashtra, the Company enjoys a strong foothold in the strategically vital Hindi-speaking markets (HSM). DEN curates high-quality media content from various broadcasters across a wide range of genres to provide unsurpassed entertainment to households in India.

Operational Highlights for FY2023:

Structural Improvement:

During the year seventeen (17) wholly owned subsidiaries have been merged with M/s Futuristic Media Entertainment Limited (a wholly owned subsidiary of DEN). The scheme of amalgamation for the merger was confirmed by the Regional Director through its order dated February 16, 2023. The purpose of this merger is to rationalize and optimize the groups legal entity structure, leading to greater alignment with the businesses by reducing the number of legal entities. This consolidation expects to provide operational synergies, eliminating inefficiencies and streamlining corporate structures and cash flows.

The consolidation will result in a single operating entity, leading to better-centralized management and oversight, cost efficiencies, and supporting the groups competitive growth.

Improved engagements:

The main objective behind the development of the LCO Light House app is to enhance LCO engagement, promote awareness and establish a loyalty program - a critical component of business expansion. The app offers a range of features, such as Courses, Announcements, Contests, Schemes, Industry news, and more, to provide informative and captivating content to our LCOs and deliver a hassle-free experience. This initiative has effectively increased the LCO communitys awareness regarding the Companys marketing endeavours, the latest industry developments, and news.

Process Improvements:

By implementing automation, we have minimized the need for human intervention in mundane and repetitive tasks. This has resulted in streamlined business processes, reduced costs, increased employee motivation, and enhanced transparency of data. Our efforts towards process improvement in SAP during the year included several initiatives such as the reservation and consumption process, API linkage with OBRM, digital signatures on invoices, and GST automation.

Segment-wise performance:

Cable Business:

DENs Cable & Broadband operations cover over 500 cities/towns across Uttar Pradesh, Karnataka, Maharashtra, Gujarat, Rajasthan, Haryana, Kerala, West Bengal, Jharkhand, Bihar, Madhya Pradesh, and Uttarakhand in India.

Financial Highlights:

Revenues of the Cable business stood at INR 1,089 crores compared to Rs 1,163 crores in the previous year.

The detailed breakup of revenues is given below:

(Rs in Crore)

Details	FY2023	FY2022	Variance	%Contribution FY2023	%Contribution FY2022
Subscription	580	653	(-) 73	53%	56%
Placement	389	367	(+) 22	36%	32%
Others	120	143	(-) 23	11%	12%
Total	1,089	1163	(-) 74	100%	100%

The detailed breakup of operating costs is given below:

(Rs in crore)

Details	FY2023	FY2022	Variance	%Contribution FY2023	%Contribution FY2022
Content	599	613	(-) 13	65%	64%
Personnel	78	78	(-) 0	8%	8%
Other Opex	245	251	(-) 6	27%	26%
Provision forD/d & Advances	1	18	(-) 16	0%	2%
Total	923	959	(-) 36	100%	100%

Broadband Business:

DEN Broadband Limited, a wholly owned subsidiary of DEN Networks Limited, was incorporated on December 5, 2011, under the Companies Act 1956. The Companys registered office is located at 236, Okhla Industrial Estates, Phase III, New Delhi - 110020. It operates as a category "A" ISP (ISP-IT License No. 820-990/2007-LR dated 2008). Effective from April 1, 2016, the ISP business of DEN Networks Limited, also known as "Broadband," was transferred into DEN Broadband Limited as per the Demerger Order of September 15, 2017. The existing ISP License Agreement expired on 05.02.2023 and Department of Telecommunication has awarded a Unified License - ISP Category "A" No. DS-11/448/2022-DS-III to DEN Broadband Limited on 04.02.2023.

The Companys broadband business logged 890 thousand homes passed as of March 31,2023.

Financial Highlights:

Revenues of the Broadband business stood at INR 41 crores compared to Rs 63 crores in the previous year.

The detailed breakup of revenues is given below:

Details	FY2023	FY2022	Variance	%Contribution FY2023	%Contribution FY2022
Subscription	41	58	(-) 17	98%	92%
Others	1	5	(-) 4	2%	8%
Total	41	63	(-) 21	100%	100%

The detailed breakup of operating costs is given below:

(Rs in crore)

Details	FY2023	FY2022	Variance	% Contribution FY2023	% Contribution FY2022
Personnel	6	7	(-) 1	10%	11%
Other Opex	50	56	(-) 7	90%	89%
Total	55	63	(-) 8	100%	100%

Consolidated Financial Performance:

Details	FY2023	FY2022	Variance
Total Revenue from Operation	1,130	1,226	-8%
Total Expenditure	978	1,022	-4%
EBITDA	152	203	-25%
% EBITDA	13%	17%
PBT	143	174	-18%
PAT	236	171	38%

Financial Ratios:

1 Details	FY2023	FY2022	Variance	Explanation
Interest coverage ratio	NA	NA	NA	Due to zero debt company
Operational Ratio Margin (%)	13%	17%	-19%	Due to decrease in revenue
Current Ratio	6.64	6.48	3%
Net Debt (Rs. In Crore)	(2,693)	(2,547)	6%
Net Profit Margin (%)	21%	15%	48%	On account of recognition of deferred tax income in view of probable future taxable profits against which it is expected to be utilized
Return on Net Worth (%)	8%	6%	28%
Operating cash flow % to operating revenue	12%	11%	17%	On account of income tax refund received during FY23

SCOT Analysis:

Strengths:	Opportunities:
• Presence in over 500 cities/towns and 13 states, serving a wide range of households.	• Increasing demand for regional content in the M&E industry presents an opportunity for DEN Networks to create and distribute more regional content to meet this demand.
• Strong market position in key Hindi-speaking markets (HSM).
• One of the top players in the Indian Cable MSO and DTH industry.	• Digitisation of the cable distribution sector will attract institutional funding and improve the value chain, leading to better profitability.
• It is backed by a supportive parent company, with access to Jios high-quality STB device.
	• We are leveraging the potential growth offered by the TRAI order on Cable TV subscription revenues once the impact has stabilised.
• Diverse portfolio, offering digital cable entertainment and highspeed broadband services.
	• We are utilising their existing cable TV reach and infrastructure to cross-sell other value-added services (VAS) in India and expand their geographical presence.
• Technology-driven enterprise with a robust fiber optic network and investment in advanced DOCSIS 3.0 technology.
• We are committed to providing unparalleled visual entertainment through cable TV and broadband services.	• The growing popularity of OTT platforms presents an opportunity for DEN Networks to create and distribute original content.
• Large customer base and strong brand recognition in the Indian entertainment industry.	• Expanding their broadband services to provide faster internet speeds and better connectivity to their customers.
	• Offering bundled services that include cable TV, broadband, and OTT subscriptions to cater to the changing preferences of consumers.
Challenges:	Threats:
• The M&E sector has faced significant disruption with the COVID-19 lockdowns forcing all forms of outdoor entertainment to shut down and content supply chains to dry up.	• The Company faces increasing competitive intensity due to the entry of new players into Cable TV services and alternative platforms such as OTT, Fixed Line Broadband space, and telecom players.
• Advertising spending has declined as all primary advertisement spending sectors witnessed their business continuity challenges.
	• Newer market entrants are willing to sacrifice short-term profitability to create or acquire compelling content, putting pressure on established media companies operating margins until they gain sufficient scale through subscriber growth.
• As future growth is expected in Tier 3 and Tier 4 cities (regional markets), it requires an upfront cost to improve the infrastructure. This will increase the total costs of operations and CAPEX for expanding the reach. Being a leading MSO, Den Networks Limited is best suited to deliver localized content as per the needs of the target audience.
	• Increased competition may drive up content costs, affecting the Companys operating margin, cash flow, and credit metrics.
	• There is a potential threat from internet TV delivered via the ISP service, which could bypass the Companys bespoke setup entirely.
• Another challenge is the need to continuously upgrade and expand the network infrastructure, which requires investments.
• Increased competition in the cable and DTH market may impact market share and profitability.	• The availability of high-definition content on internet video hosting sites could also impact the cable TV segment in the future.
• Rapid technological advancements in the M&E industry require regular up-gradation of equipment and systems, which can be a high cost for the Company.

Internal Control system:

The DEN network has implemented Standard Operating Procedures (SOP) for crucial business processes, incorporating internal controls to optimize performance, mitigate risks, and comply with regulatory norms and SOP. Adherence to all regulatory requirements under Company laws, industry regulations, and securities market rules is of utmost importance. DEN has engaged highly-regarded statutory and internal audit mechanisms to conduct regular audits of its business operations and financial records. The audit committee, along with the Board of Directors, meet quarterly to provide oversight and monitor their respective areas of responsibility. The Board has also approved and implemented a Risk Management Framework to manage and mitigate potential risks.

Identification and mitigation of Risks:

1) Slowdown in Economic Growth in India.

The performance and growth of a business are inherently linked to the overall state of the Indian economy. Several factors, such as increasing interest rates, inflation, natural calamities, rising commodity and energy prices, trade protectionism in other countries, and other factors, could have an adverse impact on the Indian economy and subsequently affect our business.

Mitigation:

Despite the possibility of a growth slowdown, the Company is anticipated to persist as a utility and essential business without any notable decline. Furthermore, the Company is executing a programme to optimise costs to handle and alleviate potential risks.

2) Challenges and Risks Faced by Global Economy Due to COVID-19 and Geopolitical Tensions:

There are several factors contributing to concerns about the global economy, including the ongoing impact of COVID-19 and the possibility of another pandemic on the horizon. Additionally, rising inflation and supply chain disruptions

due to events such as the Russia-Ukraine war are adding to the uncertainty. These issues have led to a decline in confidence and financial markets, as well as disruption in the travel sector and supply chains. As a result, all G20 economies in 2020, particularly those closely linked to China, have experienced downward revisions.

Mitigation:

Despite the challenges posed by the COVID-19 pandemic and other potential risks, the Company has successfully navigated through these difficult times as a provider of essential services. Our business is considered an essential service, enabling us to continue operations with minimal disruption compared to other industries.

3) Risk of losing market share:

The Company faces a potential risk of losing its current market share due to increasing competition from new entrants and existing players. This may be caused by the swapping of Set Top Boxes (STBs) by existing Multiple System Operators (MSOs) or the entry of competitors into markets where DEN is currently present.

The following are the potential risks faced by the Company due to competition:

• The churn of the existing subscriber base to competitors such as Direct-to-Home (DTH), Over-The-Top (OTT) platforms, or other MSOs, may result in a decrease in the Companys market share in the current markets.

• Reduction in Average Revenue Per User (ARPU) due to competitive pricing, resulting in lower profitability for the Company.

• Failure to up-sell to existing consumers due to competitive pricing, thereby limiting potential revenue growth.

• Difficulty in penetrating existing markets or entering

new markets to add new subscribers, resulting in limited market expansion opportunities.

Mitigation:

In order to sustain and increase our market share across the cable business, we have aligned our strategy with the groups overall strategies. This includes maintaining strong relationships with our existing business partners, particularly our distributors and LCOs, and organizing periodic stakeholder meetings to address any issues in real time. Additionally, we have launched the LCO Lighthouse app to improve communication and engagement with our LCO partners. Through these measures, we aim to enhance our ability to compete in the market and ensure continued success for our business.

4) Technological Shifts:

The entertainment, media, and ISP industries are prone to rapid technological advancements and new product introductions. Cable distribution services have witnessed technological advancements such as content recording features and interactive content changes. Furthermore, consumers now have access to digital media content through various platforms such as mobile phones, computers, and tablet devices. These changes may impede our ability to maintain, upgrade or expand our systems and respond to competitive pressures. Additionally, the proposed 5G network implementation presents a challenge for the ISP industry.

Mitigation:

To mitigate the risks associated with rapid changes in technology, the Company will ensure alignment with the Parent Company in adopting new technologies. This will help us remain competitive in the market and enable us to maintain, expand or upgrade our systems. Additionally, we will keep a close eye on consumer trends and preferences and tailor our services accordingly. As for the challenge posed by the proposed implementation of a 5G network, we will monitor developments closely and take proactive steps to adapt and evolve our ISP services accordingly.

6) Risks associated with Cyber Security:

The shift towards remote work practices due to COVID-19 has increased the adoption of modern technologies, creating an ideal situation for cybercriminals to launch various hacking strategies such as malware, ransomware, and phishing emails, posing a significant risk to the IT infrastructure of organisations across industries.

Mitigation:

The Company has implemented several measures. Firstly, access to servers is provided to employees only through secured VPN connections. Secondly, 24/7 soft monitoring is conducted on P1 servers to ensure their safety. Lastly, the Company is regularly sending mailers to employees regarding IT risks, data backup, phishing, and other related risks. These measures will ensure the safety of the Companys IT infrastructure and protect against cyber threats.

Human Resource Management:

At DEN, the Human Resource Management function serves as a strategic partner in achieving the organizations goals. It ensures that all departments contribute to the organizations success and each employee understands their role in contributing to this success.

This year, the Company faced a significant challenge in attracting and retaining critical talent from various industries. Despite this, DEN successfully recruited talent from across industries for critical roles in Operations, Strategy, Finance, Legal, and HR. The Companys focus was on performance recognition, creating a culture of differentiation, and pay for performance. To promote this culture, DEN identified high- potential employees and provided them with leadership roles or new assignments.

Throughout the year, DEN continued to pursue ongoing initiatives to achieve its HR objectives, including the following:

Employee Engagement Portal:

DEN has launched an Employee Engagement Portal that serves as a central hub for collaboration, communication, social engagement, and knowledge management. This intranet portal enables employees to access quick information on important events such as birthdays and work anniversaries, as well as a People Directory, Service Desk, Policies, and ESS. We Connect a private, secure online network that facilitates content creation, communication, task management, event planning, and company culture development. The portal focuses on communication, collaboration, and connections among users, while maximizing efficiency.

High-Performance Culture:

DEN continues to build a high-performance culture that recognizes and rewards productivity and performance. We have implemented monthly performance tracking for our PAN India Operations team, identifying high performers for acknowledgment and low performers for improvement. Additionally, incentive schemes have been implemented to motivate and encourage high levels of performance.

Top performers were awarded the rewards under R&R scheme, featuring annual and quarterly performance showcasing individual and team excellence.

Employee Recreation Activity:

DEN has organized recreational activities such as Yoga, sports, and health sessions for employees, with a particular focus on enhancing engagement and morale in the organization. Health experts have been invited to create awareness sessions among women employees.

HR Operations:

DEN is committed to maintaining continuous employee training and engagement by providing various platforms for addressing grievances, suggestions, and ideas. Genuine concerns such as interpersonal relations, performance management, employee security, and infrastructural requirements are noted, and presented to stakeholders in the HO, and appropriate solutions are proposed and implemented.

CAUTIONARY STATEMENT

Certain statements in this section may be forward looking statements within the meaning of applicable laws and regulations. Such statements involve several risks and uncertainties that could cause actual performance to differ materially from that suggested or implied in forward-looking statements. Major developments that could affect the Companys operations to cause such a difference include factors such as risks inherent in Companys growth strategies; general economic & business conditions in India and other countries; regulatory changes and its ability to respond to them; its ability to implement the strategy successfully, its growth & expansion plans; technological changes; exposure to political risks; unanticipated turbulence in interest rates, foreign exchange rates, etc.; changes in domestic and foreign laws, regulations and taxes; changes in industry competition, and many other factors. The following discussions and analysis should be read in conjunction with the Companys financial statements included herein and the notes thereto. The Company may, from time to time, make additional written and oral forward-looking statements to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.