Vels Film International Ltd Management Discussions

INDIAN ECONOMY INSIGHTS

India to witness GDP growth of 6.0 per cent to 6.8 per cent in 2023-24, depending on the trajectory of economic and political developments globally.

Economic survey 2022-23 projects a baseline GDP growth of 6.5 per cent in real terms in FY24

Economy is expected to grow at 7 per cent (in real terms) for the year ending March 2023, this follows an 8.7 per cent growth in the previous financial year

Credit growth to the Micro, Small and Medium Enterprises (MSME) sector has been remarkably high, over 30.5 per cent, on average during Jan- Nov 2022.

Capital expenditure (capex) of the Central Government, which increased by 63.4 per cent in the first eight months of FY23, was another growth driver of the Indian economy in the current year. RBI projects headline inflation at 6.8 per cent in FY23, which is outside its target range return of migrant workers to construction activities helped housing market witnessing a significant decline in inventory overhang to 33 months in Q3 of FY23 from 42 months last year

Surge in growth of exports in FY22 and the first half of FY23 induced a shift in the gears of the production processes from mild acceleration to cruise mode

Private consumption as a percentage of GDP stood at 58.4 per cent in Q2 of FY23, the highest among the second quarters of all the years since 2013- 14, supported by a rebound in contact-intensive services such as trade, hotel and transport.

Survey points to the lower forecast for growth in global trade by the world trade organisation, from 3.5 per cent in 2022 to 1.0 per cent in 2023.

The optimistic growth forecasts stem from a number of positives like the rebound of private consumption given a boost to production activity, higher capital expenditure (capex), near-universal vaccination coverage enabling people to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return of migrant workers to cities to work in construction sites leading to a significant decline in housing market inventory, the strengthening of the balance sheets of the corporates, a well- capitalised public sector banks ready to increase the credit supply and the credit growth to the Micro, Small and Medium Enterprises (MSME) sector to name the major ones.

The Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman tabled the Economic Survey 2022-23 in the Parliament, which projects a baseline GDP growth of 6.5 per cent in real terms in FY24. The projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI, domestically.

It says, growth is expected to be brisk in FY24 as a vigorous credit disbursal, and capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors. Further support to economic growth will come from the expansion of public digital platforms and path-breaking measures such as PM Gati Shakti, the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output. The Survey says, in real terms, the economy is expected to grow at 7 per cent for the year ending March 2023. This follows an 8.7 per cent growth in the previous financial year.

Despite the three shocks of COVID-19, Russian- Ukraine conflict and the Central Banks across economies led by Federal Reserve responding with synchronised policy rate hikes to curb inflation, leading to appreciation of US Dollar and the widening of the Current Account Deficits (CAD) in net importing economies, agencies worldwide continue to project India as the fastest-growing major economy at 6.5-7.0 per cent in FY23.

According to Survey, Indias economic growth in FY23 has been principally led by private consumption and capital formation and they have helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund. Moreover, Worlds second-largest vaccination drive involving more than 2 billion doses also served to lift consumer sentiments that may prolong the rebound in consumption. Still, private capex soon needs to take up the leadership role to put job creation on a fast track.

It also points out that the upside to Indias growth outlook arises from (i) limited health and economic fallout for the rest of the world from the current surge in Covid-19 infections in China and, therefore, continued normalisation of supply chains; (ii) inflationary impulses from the reopening of Chinas economy turning out to be neither significant nor persistent; (iii) recessionary tendencies in major Advanced Economies (AEs) triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 6 per cent; and (iv) this leading to an improvement in animal spirits and providing further impetus to private sector investment.

The Survey says, the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 30.6 per cent, on average during Jan-Nov 2022, supported by the extended Emergency Credit Linked Guarantee Scheme (ECLGS) of the Union government. It adds that the recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme (ECGLS) is easing their debt servicing concerns.

Apart from this, increase in the overall bank credit has also been influenced by the shift in borrowers funding choices from volatile bond markets, where yields have increased, and external commercial borrowings, where interest and hedging costs have increased, towards banks. If inflation declines in FY24 and if real cost of credit does not rise, then credit growth is likely to be brisk in FY24.

The Capital Expenditure (Capex) of the central government, which increased by 63.4 per cent in the first eight months of FY23, was another growth driver of the Indian economy in the current year, crowding in the private Capex since the January- March quarter of 2022. On current trend, it appears that the full years capital expenditure budget will be met. A sustained increase in private Capex is also imminent with the strengthening of the balance sheets of the Corporates and the consequent increase in credit financing it has been able to generate.

Dwelling on halt in construction activities during the Pandemic, the Survey underscores that vaccinations have facilitated the return of migrant workers to cities to work in construction sites as the rebound in consumption spilled over into the housing market. This is evident in the housing market witnessing a significant decline in inventory overhang to 33 months in Q3 of FY23 from 42 months last year.

It also says that the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has been directly providing jobs in rural areas and indirectly creating opportunities for rural households to diversify their sources of income generation. Schemes like PM-Kisan and PM Garib Kalyan Yojana have helped in ensuring food security in the country, and their impact was also endorsed by the United Nations Development Programme (UNDP). The results of the National Family Health Survey (NFHS) also show improvement in rural welfare indicators from FY16 to FY20, covering aspects like gender, fertility rate, household amenities, and women empowerment.

The Survey notes with optimism that Indian economy appears to have moved on after its encounter with the pandemic, staging a full recovery in FY22 ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in FY23. Yet in the current year, India has also faced the challenge of reining in inflation that the European strife accentuated. Measures taken by the government and RBI, along with the easing of global commodity prices, have finally managed to bring retail inflation below the RBI upper tolerance target in November 2022. It, however, cautions that the challenge of the depreciating rupee, although better performing than most other currencies, persists with the likelihood of further increases in policy rates by the US Fed. The widening of the CAD may also continue as global commodity prices remain elevated and the growth momentum of the Indian economy remains strong. The loss of export stimulus is further possible as the slowing world growth and trade shrinks the global market size in the second half of the current year.

Therefore, the Global growth has been projected to decline in 2023 and is expected to remain generally subdued in the following years as well. The slowing demand will likely push down global commodity prices and improve Indias CAD in FY24. However, a downside risk to the Current Account Balance stems from a swift recovery driven mainly by domestic demand, and to a lesser extent, by exports. It also adds that the CAD needs to be closely monitored as the growth momentum of the current year spills over into the next.

The Survey brings to the fore an interesting fact that in general, global economic shocks in the past were severe but spaced out in time, but this changed in the third decade of this millennium, as at least three shocks have hit the global economy since 2020.

It all started with the pandemic-induced contraction of the global output, followed by the Russian-Ukraine conflict leading to a worldwide surge in inflation. Then, the central banks across economies led by the Federal Reserve responded with synchronised policy rate hikes to curb inflation. The rate hike by the US Fed drove capital into the US markets causing the US Dollar to appreciate against most currencies. This led to the widening of the Current Account Deficits (CAD) and increased inflationary pressures in net importing economies.

The rate hike and persistent inflation also led to a lowering of the global growth forecasts for 2022 and 2023 by the IMF in its October 2022 update of the World Economic Outlook. The frailties of the Chinese economy further contributed to weakening the growth forecasts. Slowing global growth apart from monetary tightening may also lead to a financial contagion emanating from the advanced economies where the debt of the non- financial sector has risen the most since the global financial crisis. With inflation persisting in the advanced economies and the central banks hinting at further rate hikes, downside risks to the global economic outlook appear elevated.

Macroeconomic and Growth Challenges in the Indian Economy

After the impact of the two waves of the pandemic seen in a significant GDP contraction in FY21, the quick recovery from the virus in third wave of Omicron contributed to minimising the loss of economic output in the January-March quarter of 2022. Consequently, output in FY22 went past its pre-pandemic level in FY20, with the Indian economy staging a full recovery ahead of many nations. However, the conflict in Europe necessitated a revision in expectations for economic growth and inflation in FY23. The countrys retail inflation had crept above the RBIs tolerance range in January 2022 and it remained above the target range for ten months before returning to below the upper end of the target range of 6 per cent in November 2022.

It says that the Global commodity prices may have eased but are still higher compared to pre-conflict levels and they have further widened the CAD, already enlarged by Indias growth momentum. For FY23, India has sufficient forex reserves to finance the CAD and intervene in the forex market to manage volatility in the Indian rupee.

Outlook: 2023-24

Dwelling on the Outlook for 2023-24, the Survey says, Indias recovery from the pandemic was relatively quick, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment. It says that aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible and more importantly, compensating for the private sectors caution in capital expenditure, the government raised capital expenditure substantially.

Budgeted capital expenditure rose 2.7 times in the last seven years, from FY16 to FY23, re- invigorating the Capex cycle. Structural reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code enhanced the efficiency and transparency of the economy and ensured financial discipline and better compliance, the Survey added.

Global growth is forecasted to slow from 3.2 per cent in 2022 to 2.7 per cent in 2023 as per IMFs World Economic Outlook, October 2022. A slower growth in economic output coupled with increased uncertainty will dampen trade growth. This is seen in the lower forecast for growth in global trade by the World Trade Organisation, from 3.5 per cent in 2022 to 1.0 per cent in 2023.

On the external front, risks to the current account balance stem from multiple sources. While commodity prices have retreated from record highs, they are still above pre-conflict levels. Strong domestic demand amidst high commodity prices will raise Indias total import bill and contribute to unfavourable developments in the current account balance. These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure.

Entrenched inflation may prolong the tightening cycle, and therefore, borrowing costs may stay higher for longer. In such a scenario, global economy may be characterised by low growth in FY24. However, the scenario of subdued global growth presents two silver linings - oil prices will stay low, and Indias CAD will be better than currently projected. The overall external situation will remain manageable.

Indias Inclusive Growth

The Survey emphasises that growth is inclusive when it creates jobs. Both official and unofficial sources confirm that employment levels have risen in the current financial year, as the Periodic Labour Force Survey (PLFS) shows that the urban unemployment rate for people aged 15 years and above declined from 9.8 per cent in the quarter ending September 2021 to 7.2 per cent one year later (quarter ending September 2022). This is accompanied by an improvement in the labour force participation rate (LFPR) as well, confirming the emergence of the economy out of the pandemic-induced slowdown early in FY23.

In FY21, the Government announced the Emergency Credit Line Guarantee Scheme, which succeeded in shielding micro, small and medium enterprises from financial distress. A recent CIBIL report (ECLGS Insights, August 2022) showed that the scheme has supported MSMEs in facing the COVID shock, with 83 per cent of the borrowers that availed of the ECLGS being micro-enterprises. Among these micro units, more than half had an overall exposure of less than Rs10 lakh. Furthermore, the CIBIL data also shows that ECLGS borrowers had lower non-performing asset rates than enterprises that were eligible for ECLGS but did not avail of it. Further, the GST paid by MSMEs after declining in FY21 has been rising since and now has crossed the pre-pandemic level of FY20, reflecting the financial resilience of small businesses and the effectiveness of the pre- emptive government intervention targeted towards MSMEs.

Moreover, the scheme implemented by the government under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been rapidly creating more assets in respect of "Works on individuals land" than in any other category. In addition, schemes like PM-KISAN, which benefits households covering half the rural population, and PM Garib Kalyan Anna Yojana have significantly contributed to lessening impoverishment in the country.

The UNDP Report of July 2022 stated that the recent inflationary episode in India would have a low poverty impact due to well-targeted support. In addition, the National Family Health Survey (NFHS) in India shows improved rural welfare indicators from FY16 to FY20, covering aspects like gender, fertility rate, household amenities, and women empowerment.

So far, India has reinforced the countrys belief in its economic resilience as it has withstood the challenge of mitigating external imbalances caused by the Russian-Ukraine conflict without losing growth momentum in the process. Indias stock markets had a positive return in CY22, unfazed by withdrawals by foreign portfolio investors. Indias inflation rate did not creep too far above its tolerance range compared to several advanced nations and regions.

India is the third-largest economy in the world in PPP terms and the fifth-largest in market exchange rates. As expected of a nation of this size, the Indian economy in FY23 has nearly "recouped" what was lost, "renewed" what had paused, and "re-energised" what had slowed during the pandemic and since the conflict in Europe.

The global economy battles through a unique set of challenges

The Survey narrates about six challenges faced by the Global Economy. The three challenges like COVID-19 related disruptions in economies, Russian-Ukraine conflict and its adverse impact along with disruption in supply chain, mainly of food, fuel and fertilizer and the Central Banks a cros s e cono m ies l ed by Federa l R eserve responding with synchronised policy rate hikes to curb inflation, leading to appreciation of US Dollar and the widening of the Current Account Deficits (CAD) in net importing economies. The fourth challenge emerged as faced with the prospects of global stagflation, nations, feeling compelled to protect their respective economic space, thus slowing cross-border trade affecting overall growth. It adds that all along, the fifth challenge was festering as China experienced a considerable slowdown induced by its policies. The sixth medium-term challenge to growth was seen in the scarring from the pandemic brought in by the loss of education and income-earning opportunities.

The Survey notes that like the rest of the world, India, too, faced this extraordinary set of challenges but withstood them better than most economies.

In the last eleven months, the world economy has faced almost as many disruptions as caused by the pandemic in two years. The conflict caused the prices of critical commodities such as crude oil, natural gas, fertilisers, and wheat to soar. This strengthened the inflationary pressures that the global economic recovery had triggered, backed by massive fiscal stimuli and ultra- accommodative monetary policies undertaken to limit the output contraction in 2020. Inflation in Advanced Economies (AEs), which accounted for most of the global fiscal expansion and monetary easing, breached historical highs. Rising commodity prices also led to higher inflation in the Emerging Market Economies (EMEs), which otherwise were in the lower inflation zone by virtue of their governments undertaking a calibrated fiscal stimulus to address output contraction in 2020.

The Survey underlines that Inflation and monetary tightening led to a hardening of bond yields across economies and resulted in an outflow of equity capital from most of the economies around the world into the traditionally safe-haven market of the US. The capital flight subsequently led to the strengthening of the US Dollar against other currencies - the US Dollar index strengthened by 16.1 per cent between January and September 2022. The consequent depreciation of other currencies has been widening the CAD and increasing inflationary pressures in the net importing economies.

INDUSTRY REVIEW

The Indian Media and Entertainment Sector - Outlook

Five trends shaping a new ecosystem of engagement Streaming video, social media, and gaming are helping to enable new business models and reshaping media and entertainment. But the real story for 2023 is that these three sectors are increasingly becoming more interdependent as part of a broader and richer media and entertainment ecosystem. Successful companies will likely develop strong visions that span these sectors and pull their entire industries forward.

Adapting to continuous change in the industry

In 2023, indications show that change in the media and entertainment business is likely to continue. Studios and video streamers face the reality of their own market disruption, trying to find profits in a less profitable business. They not only compete with each other for attention, time, and revenues, but with social media, user-generated content, and video games. The latter have evolved more quickly, staying close to younger demographics.

While streaming video on demand (SVOD) services spend billions on content to tempt fickle subscribers, social media services have more free video content than they can manage. Top social media services are leaning into user-generated video content (UGC), emphasizing users interests more than their connections — and looking more like a new kind of personalized TV. While the creator economy has supported social media and brought independent creators closer to their audiences, creator incomes are still lean and unreliable. Leading UGC services seem unsure how best to support their content creators and brand ambassadors while keeping their own costs down. At the same time, more socializing may be shifting into messaging services that lean into utility more than entertainment.

This years outlook doesnt have its own chapter on video games. Instead, gaming is represented throughout. In 2023, the story of gaming is that it is impacting every part of the media and entertainment industry. All entertainment strategies should consider video games, from simple mobile games to massively multiplayer services and rich hyper-realistic narrative game worlds. Gaming may also highlight the tight communities and fandoms that can help sustain and amplify entertainment franchises. In 2023, it may become clear that video, social, messaging, and interactive are all part of the same ecosystem of engagement.

FILM INDUSTRY

Every year, the Indian film industry churns out movies in multiple languages, but only a select few achieve the status of being a box office hit by crossing the Rs. 100-crore mark. In 2023, several Indian movies accomplished this remarkable feat and entered the prestigious ¹ 100-crore club at the worldwide box office. Here are top 20 movie hits across various languages that achieved the feat.

Hindi films

In the realm of Hindi cinema, 2023 saw several movies making a mark in the 100 crore Club. Leading the charge was Pathaan, an action- packed film featuring the iconic Shah Rukh Khan alongside Dipika Padukone and John Abraham. The movie performed exceptionally well at the box office, crossing an impressive Rs. 1,050.05 crore according to sacnilk. Followed by Adipurush, starring Prabhas, Kriti Sanon, and Saif Ali Khan, earned Rs. 392.7 crore. Tu Jhoothi Main Makkaar starring Ranbir Kapoor, Shradhaa Kapoor, Dimple Kapadia had worldwide gross collection of Rs. 223 crore.

The Kerala Story, starring Adah Sharma, Yogita Biham and Sonia Balani, had worldwide gross collection of Rs. 302 crore. Kisi Ka Bhai Kisi Ki Jaan starring Salman Khan, Puja Hegde and Venkatesh D had worldwide gross collection: Rs. 184.6 crore.

Rocky Aur Rani Kii Prem Kahaani, starring Ranveer Singh, Alia Bhatt and Jaya Bachchan, is the latest Hindi movie to enter the club with worldwide gross collection of Rs. 180.10 crore.

Zara Hatke Zara Bachke, starring Vicky Kaushal, Sara Ali Khan and Rakesh Vedi, had worldwide gross collection of Rs. 116 crore. Bholaa, starring Ajay Devgn, Tabu and Deepak Dobriyal, had worldwide gross collection of Rs. 123 crore.

Tamil films

The Tamil film industry also witnessed some remarkable achievements in the 100-crore Club like Ponniyin Selvan: II, Varisu, Thunivu and Vaathi.

Bollywood movies saw a jump in revenue in 2023, as compared to last year

Meanwhile, South Indian movies saw a decline, which can mostly be attributed to the Kannada industry.

The overall box office performance for all Indian films has marginally decreased in comparison to 2022 at the same point, even though Hindi movies have shown an improvement. According to analyst firm Ormax Medias bi-annual report charting the film industrys commercial performance, Indian movies have grossed a total of Rs 4868 crore between the months of January and June.

This represents a 15% year-on-year decline, but the margin is expected to reduce by December, 2023 is projected to end at Rs 9736 crore, with major titles such as Jawan, Salaar and Tiger 3 lined up for release. Only two years have generated more than Rs 10000 in gross revenue — 2019, and 2022. This years highest-grossing film remains Shah Rukh Khan-starrer Pathaan.

The action spy film contributed to 13% of overall collections this year. The Hindi language share rose from 33% in 2022 to 37% this year, while Kannada movies dropped from 8% to 2% this year. January was the biggest month of the year, followed by June, which saw the release of Adipurush, Satyaprem Ki Katha and Zara Hatke Zara Bachke.

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 U74999TN2019PLC132235.

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 produced and upcoming films by our company since our incorporation in 2019 :-

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

1. The various ongoing projects are:

a. Black & White

b. PT Sir

c. Corana Kumar

d. Singapore Saloon

e. Chutney Sambar

f. Genie 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.

A. Weakness:

• The Entertainment sector in India is highly fragmented.

• Lack of familiarity in other regional language films segment.

B. Opportunities:

• Growing market conditions.

• Opening in other regional languages market.

• Avenues available in OTT and other digital platforms.

• Increase in no. of multiplexes.

C. 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 this Prospectus, our Company has not entered into any technical or other collaboration or Joint venture.

HUMAN RESOURCE

We believe that our employees are the key to the success of our business. As on January 31, 2023, we have the total strength of 12 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 23, the Companys total consolidated income stood at Rs.5992.12 lakhs as against Rs. 2662.06 Lakhs in FY 22. The company registered an EBIT profit of Rs. 277.01 lakhs during the year as compared to a profit of Rs.487.29 lakhs in the previous year. The consolidated profit for the year stood at Rs.52.40 lakhs as compared to Rs.325.27 lakhs in FY 22.

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.

OUTLOOK

The disruption brought in by COVID-19 has forced people to stay indoors and has led to restrictions on social gatherings and greatly reduced people to people contact. The new normal has led to the increase in demand for content as people are spending most of their time indoors. Even the pattern of content consumption and consumer behaviour has changed. As the cinema halls and malls remain shut, the audience has converged on the OTT platforms (digital platforms) and these platforms continue to gain popularity at the expense of other sources of entertainment, including television channels.

The pandemic has made the Company re- strategize operational and legal aspects of the business, such as project timelines, production costs and schedules. The Company has a large content library, of its own as well as on its group OTT platform Eros Now, and with the rise in new content consumption patterns, its existing content is becoming more valuable.

We expect the resumption of normalcy to be marked by the recovery of the sector and provide all the players in the M&E space, across mediums and segments, a much-needed boost and the Company is well prepared with its existing huge content library to exploit any and all digital opportunities that come its way in the meantime.

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.