MANAGEMENT DISCUSSION AND ANALYSIS

COMPANY OVERVIEW:

During the year under review, your Company has seen a growth of 27% in terms of revenue which was contributed by growth mainly from syndication of its owned and acquired IPR contents. During the year, Company has leveraged its syndication business by sublicensing its owned IPR content on limited usage basis to various Broadcasters / aggregators for various platforms.

At brsent, the group is operating of 5 (Five) channels namely, MASTIII, DABANGG, DHAMAAL, MAIBOLI and DILLAGI. MASTIII, the music television channel continues to maintain the number one position in the target market. DABANGG, the Regional Entertainment Channel continued its leadership position against its competitors. "DHAMAAL", the Regional Entertainment Channel, also increased its reach. The regional Marathi channel 'MAIBOLI' has established itself as a strong player into the Marathi segment with its unique programming mix. In continuation of the growth strategy the group has launched a new channel 'DILLAGI'. 'DILLAGI' aims to revolutionize the television space by being the first channel in national language catering to LC1 regions which caters to large Indian population base across all age groups.

INDUSTRY OVERVIEW:

The Indian Media & Entertainment Industry witnessed a moderate growth in 2014.The industry grew from Rs. 918 billion in 2013 to Rs. 1026 billion in 2014, registering a growth rate of 12%.

Television Sector grew from Rs. 417 billion in 2013 to Rs. 475 billion in 2014, registering a growth of 14% and is expected to grow at CAGR of 15.5% to reach Rs. 975 billion in 2019. (Source: FICCI- KPMG Indian Media & Entertainment Industry Report 2015). The Television Industry is one of the largest chunks of the Indian Media & Entertainment Industry and has transformed completely in the last few years. The number of channels beamed on the TV Screen of Cable and Satellite viewers in India has exploded to over 786 now from about 120 in 2003. There has been rapid growth in number of channels in news and other niche segment such as lifestyle, news, sports, infotainment, kids, apart from National General Entertainment Channel (GEC) and Regional entertainment Channels.

Total advertising spend across Media was Rs. 414 billion in 2014 contributing to 40% of Media and Entertainment Industry revenues. In light of the continued economic growth, advertising revenues saw a growth of 14% in 2014. On account of improving monetization due to digitization, in 2014, subscription revenues grew at an annualized growth rate 16%. (Source: FICCI- KPMG Indian Media & Entertainment Industry Report 2015)

It was another landmark year for the Television Industry in many ways. Financial year 2015 saw the formation of the viewership measurement system by Broadcast Audience Research Council (BARC). BARC is expected to deliver superior viewership data on account of more relevant classification parameters, tracking of substantially higher viewership universe (-150 mn Households) including rural household, as well as higher quality of data monitoring through audio watermarking of channel feeds.

The Regional Entertainment Channels comprises of Regional GECs, Regional Movies and Regional Music accounted for 23.3 °% of the viewership share in 2014, marginally higher than 23.1 %> in 2013. The key drivers of the growth in the Regional Broadcasting spaces are richness of content, continuous innovation and strong cultural and regional affirmative and direct engagement with the viewer's making it possible to reach their hearts. (Source: FICCI- KPMG Indian Media & Entertainment Industry Report 2015)

The Entertainment and Media industry has all that it takes to be a star performer of the Indian economy.

OPPORTUNITIES AND THREAT

Opportunities

Learning Curve: The immense experience of the promoters in the Media Industry has proved to be an added advantage in understanding the taste of audience and producing differentiated contents.

Launch of New Channels: Growth in number of channels especially in niche categories will give the Company/Group new

opportunities to expand and create various genres of programming based on demand.

Digitization and Convergence : Digital platforms like DTH, digital cable, IPTV and convergence media is expected to transform the landscape of the industry by enabling players to leverage on cross media synergies and attract a whole set of new viewers. Each platform is expected to create its own demand for software.

Challenges and Threats

Differentiated Products: Due to increase in the number of channels the content produced in them needs to be unique to attract viewers.

Low Entry Barriers: Vast plethoras of channels are available at viewer's disposal which has given rise to increased competition. Increased Payouts: With a view to produce differentiated content, the production cost has increased. Consistency: Consistency of programming quality is essential to maintain targeted revenues. Financials

1. Share Capital

As on 31st March 2015, the Authorized Share Capital of the Company stood at Rs. 400 millions divided into 40 millions Equity Shares of Rs. 10/- each. The paid up Equity Capital of the Company as on 31st March, 2015 was Rs. 349.45 million comprising of 34.94 million Equity Shares of Rs.10/- each.

2. Reserves and Surplus:

The total Reserves and Surplus as at 31st March 2015 amounted to Rs. 2026.30 millions. The reserves include Capital Reserves of Rs. 187.63 millions, General Reserves of Rs. 202.60 millions, the Security Premium Accounts of Rs. 1578.57 millions and surplus as per the statement of Profit and Loss of Rs. 57.50 millions.

3. Secured Loans:

The total Secured Loans as at 31st March, 2015 stood at Rs. 762.96 millions comprising of Term Loans from Banks of Rs.750.70 millions and Vehicle Loans of Rs. 12.26 millions.

4. Unsecured Loans:

There are no Unsecured Loans as on 31st March, 2015.

5. Fixed Assets:

Debrciation of Rs. 118.48 millions was charged to the statement of Profit and Loss. The Net Block of Fixed Assets as on 31st March, 2015 was Rs. 1186.08 millions. The Capital WIP amounted to Rs.137.73 millions.

6. Investments:

The total investments as on 31st March, 2015 stood at Rs. 944.11 millions comprising of investment in wholly owned Subsidiary Companies and in Associates Concerns.

7. Revenues:

The Company earned total revenues of Rs. 912.55 millions for the year ended 31st March 2015 as against Rs. 716.04 million of the brvious year ended 31st March 2014.

8. Expenses:

The operating expenses of the Company for the year ended 31st March, 2015 is Rs. 666.41 million as against Rs. 545.52 million for the brvious year ended 31st March, 2014.

Critical accounting policies

The principles of revenue recognition are as under:

Revenue from sale of program/content rights is recognized when the relevant program/content is delivered.

In respect of Interest Income, it is recognized on a time proportion basis, taking into account the amount outstanding and the rate applicable.

Segment wise Performance

The Group's reportable operating segments have been determined in accordance with the internal management structure, which is organized based on the operating business segments. During the year Group has two operating Business Segments i.e. a) Content production and Distribution and b) Broadcasting. The group does not have any segment based on geographical location.

Internal Controls and Adequacy of those controls

The Company has customized accounting packages, which has built in security, which prohibits deletions and overwriting once accounting entry is passed. The Company has introduced checks and balances at various levels to monitor the expenses and has also formulated and adopted Internal Financial Control Policy.

Human Resources

Human capital is a very important asset in a media company. Over the years, the Company has built up a human resource structure, which has enabled the company to grow and take up challenges. The Company has a qualified team of professionals.

Business Risks

Change in Consumer Preference Risks

The Content developed by the Company need not appeal the target audience always as the target audience brferences are bound to change. The level of creativity required for the audience targeted varies with the available options to the consumers.

Artist Attrition Risk

The reason for which the Company's content is brferred by the audience includes artist attraction also. These artists are an important part for the content produced by the Company. The attrition of these artists could affect the consumer brferences.

Revenue Risks

The Company earns revenue by selling commissioned programs or Syndication to various broadcasters, aggregators and satellite networks.

The sustainability of the programs is mainly dependent on the concept, content and the technical expertise. Apart from this, Television Rating Points (TRP) is one of the key indicators, which decide the popularity of the program as well as sustainability of the program.

Technological Risks

Advancement of the technology for creation of the content is necessary with the new technologies being adopted by the competitors.

Regulatory Matters

The business may have a positive or a negative impact on the revenues in future due to changes in the regulatory framework and tax laws as compared to the current scenario.

Management continuously monitors and makes efforts to arrest decline or adverse output du e to any of these factors.

Outlook

Companies in the Indian Media and Entertainment Industry are currently poised for substantial growth, organic as well as inorganic. The digital transformation of the industry has finally entered the implementation phase. Given the impetus introduced by digitization, continued growth of regional media, strength in the film sector and fast increasing new media businesses The mid and long-term outlook remains positive, and India continues to remain a key strategic market for leading international broadcasters (Source: FICCI- KPMG Indian Media & Entertainment Industry Report 2015)

Exports

Your Company successfully leverages the value locked in the expensed out content lying in the library by sub-licensing of the content rights on the defined usage basis to the broadcasters and aggregators in India and abroad for various platforms. The management expects sizeable revenues in the form of exports in the future.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations may be "forward - looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.