MANAGEMENT DISCUSSION AND ANALYSIS REPORT Industry Structure & Development - Media and Entertainment Industry The Indian M&E industry grew from Rs. 918 Billion in 2013 to Rs. 1026 billion in 2014, registering an overall growth of 11.7%. Although the macro-economic environment remained cautious, but the Industry started seeing benefits from digitisation, steady growth of regional media and fast emerging new media businesses. The industry is estimated to achieve a growth rate of 12.96% in 2015 to touch Rs.1,159 Billion. The sector is projected to grow at a healthy CAGR of 13.9 % to grow from Rs.1026 billion to reach Rs. 1,964 billion by 2019. The Indian media and entertainment industry has benefited from some fundamental growth drivers, which have facilitated its double digit growth in the recent past. Increasing per capital consumption of the Indian population along with the influx of foreign capital and brands has led to the emergence of an ever increasing & a large consuming class. This population is globally aware and acquisitive in nature thereby increasing their propensity to spend on entertainment activities. Majority of this spend is directed towards television subscription, film & print, thereby positively impacting the 3 largest sub sectors in the media & entertainment industry. Compared to global average, India is lower on penetration of media, thereby signifying a large scope of growth in the coming future. The growing middle class is expected to drive the Indian media economy to its potential with increased spend on leisure & entertainment activities. Favourable demographic composition of the nation, commonly referred to as the 'demographic dividend', which essentially implies that a large proportion of the country's populace is young and in the working age group, thus allowing for greater future consumption upside. The digitization of cable TV worked wonders for the television industry, according to a FICCI-KPMG report released ahead of FICCI Frames 2015. The Indian M&E industry grew from INR 728 billion in 2011 to INR 1026 billion in 2014, registering an overall growth of 40.93 percent in past 4 years. India offering the largest work force an expanding middle-class consisting one of the biggest consumer market. The global economy is struggling to gain momentum, as China suffers a slowdown, the Euro Zone slips into deflation, Bankruptcy of Greece and soft economy of Japan. While, 2014-15 was a challenging year for the industry, with some improvement in the global economy in 2015 India's economy on strong footing estimated 7.4% of GDP in FY 2015 while in FY 2016 has been paged at 8 to 8.5%, the prognosis for the Industry looks much better going forward. Given the impetus introduced by digitization, continued growth of regional media, upcoming elections, continued strength in the film sector and fast increasing new media businesses, the industry is estimated to achieve a healthy CAGR. Business Overview The Indian Entertainment and Media Industry have out-performed the Indian economy and is one of the fastest growing sectors in India. It is rising on the back of economic growth and rising income levels that India has been experiencing in the past years. As the company belongs to Media & Entertainment industry which reveled opened door for the company to Film industry, television, print, music and radio, the different main components of Indian media and entertainment sector. At the same time it require to infuse huge funds to start film production with greater risk and whereas the company had experienced financial distress in past. We, at Cinerad Communications Limited, decided to add Trading Activity to the Object in MOA of the company to generate revenue from trading business activity and thankful to our investors in this respect to adopt and approve the resolution adding Trading Activity to the Object in MOA. Opportunities The Media and Entertainment (M&E) industry is one of the forecast going sector in India. The industry primarily involves the creation, aggregation and distribution of the content, products and service, news and information advertising and entertainment through various channels and platforms such as Television, Print, Radio and Films. The business services firm's new Global Entertainment & Media Outlook 2012-2017 forecasts that the sector will rise in value to $2.2 trillion worldwide in 2017, up from $1.7 trillion in 2012. While television and print continued to dominate the Indian M&E industry, sectors such as gaming, digital advertising, and animation VFX grew at a faster rate and show tremendous potential in the coming years. By media channel, online advertising is expected to record the sharpest increase in expenditure. Segment-wise Reporting The Company has only one segment and segment-wise reporting does not apply to it. Future Outlook The Indian Entertainment and Media Industry have out-performed the Indian economy and is one of the fastest growing sectors in India. It is rising on the back of economic growth and rising income levels that India has been experiencing in the past years. This is significantly benefiting the entertainment and media industry in India as this is a cyclically sensitive industry and it grows faster when the economy is expanding. An added boost to the entertainment and media industry in India is from the demographic point of view where consumer spending is rising due to increasing disposable income on account of sustained growth in income levels and reduction of personal income tax over the last decade. According to a report by the FICCI and research firm KPMG the growth of media and entertainment in times to come was going to be led by factors like increasing media penetration and per capita consumption in the sector across India, potential for growth in leisure platforms, immense penetration potential in the towns and rural markets, scope for digitization with film studios and music companies adopting digital prints and rising demand for same, rising consumer understanding enabling players to target their consumers specifically and build loyalty and regional media channels gaining popularity, different tastes of the audience and thereby different content and growth of the importance of the media. Additionally, convergence between entertainment, information and telecommunication is increasingly impacting India's overall media and entertainment industry. As the company belongs to e-media & entertainment industry which reveled opened door for the company to Film industry, television, print, music and radio, the different main components of Indian media and entertainment sector. The key growth drivers for the industry are expansion of multiplex screens resulting in better realizations, an increase in the number of digital screens facilitating wider releases, higher cable and satellite revenues, improving collections from the overseas markets and ancillary revenue streams like DTH, digital downloads, etc, which are expected to emerge in future. Internal Control & Systems The Company maintains an adequate and effective internal control system commensurate with its size and complexity. We believe that these internal control systems provide a reasonable assurance that transactions are executed with management authorization and that they are recorded in all material respects to permit brparation of financial statements in conformity with established accounting principles and that the assets of the company are adequately safe-guarded against significant misuse and loss. Significant findings of the Internal Auditor are brought to the notice of the Audit Committee of the Board and corrective measures recommended for implementation. Material development in Human Resources / Industrial Relations The Company believes that the people are the key ingredient to the success of an Organisation. During the year under review, the Company recognized the importance and contribution of its human resources towards its growth and development and is committed to the development of their people. Financial and Operational Performance During the FY 2014-15 your company achieved revenue of Rs. 12.59 lakhs as against Rs. 13.30 lakhs in the brvious year. During the year under review, the Company has incurred an operating Loss of Rs. 1.65 lakhs as against operating profit of Rs. 1.91 lakhs for the brvious year and recorded a total profit of Rs. 14.93 lakhs as against the loss of Rs.12.87 lakhs in the Financial Year 2013-14. Cautionary Statement The Statements forming part of the Director's Report may contain certain forward-looking remarks within the meaning of applicable securities laws and regulations. Many factors could cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements that may be exbrssed or implied by such forward looking statements. For and on behalf of the Board of Directors Vinita Daga Managing Director (DIN : 00080647) Place : Kolkata Date : May 26, 2015 |