Sun TV Network Ltd:Annual Report 2023-24 Analysis

Sun TV Network Ltd.: A Comprehensive Overview #

About the Company #

Year of establishment and founding history:

Sun TV Network Ltd. was established on April 14, 1992, by Kalanithi Maran in Chennai, India.

Headquarters location and global presence:

The company’s headquarters are located in Chennai, Tamil Nadu, India. While the primary focus is on the South Indian market, Sun TV Network has a presence internationally through its channels being broadcast to the South Indian diaspora in various countries.

Company vision and mission:

• Vision: To be the leading media and entertainment conglomerate, providing quality content and innovative experiences to viewers.

• Mission: To entertain, inform and engage audiences through diverse and compelling programming across various platforms.

Key milestones in their growth journey:

• 1993: Launch of Sun TV, the first Tamil satellite television channel.
• 1996: Launch of Gemini TV (Telugu).
• 2000s: Expansion into other South Indian languages and related businesses like FM radio and newspapers.
• 2006: Initial Public Offering (IPO).
• Present: Continued dominance in the South Indian television market with expansion into OTT platforms and film production.

Stock exchange listing details and market capitalization:

Sun TV Network Ltd. is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) under the ticker symbol SUNTV.

Recent financial performance highlights:

• (Requires current financial data; refer to Sun TV’s Investor Relations section on their website or financial news sources)
• Focus should be on recent revenue, profit, and key performance indicators.

Management team and leadership structure:

• Chairman: Kalanithi Maran
• (Refer to Sun TV’s official website for a complete list of key management personnel)

Any notable awards or recognitions:

• (Needs to be researched from reliable sources; examples may include awards for programming, business performance, or corporate governance).

Their Products #

Complete product portfolio with categories:

• Television Channels: General Entertainment, News, Movies, Music, Kids, and Action categories in Tamil, Telugu, Kannada, Malayalam, and Bangla.
• FM Radio Stations: Operating under the brand “Suryan FM.”
• Newspapers and Magazines: Tamil daily “Dinakaran,” Tamil magazine “Kungumam.”
• OTT Platform: Sun NXT (streaming app featuring content from Sun TV channels, movies, and original programming).
• Film Production: Sun Pictures (produces and distributes films).

Flagship or signature product lines:

• Sun TV: The flagship Tamil general entertainment channel.
• Gemini TV: The flagship Telugu general entertainment channel.

Key technological innovations or patents:

• Focus on digital distribution through Sun NXT.

Quality certifications and standards:

• (Information not readily available; would require direct contact with the company).

Recent product launches or R&D initiatives:

• Sun TV is focused on expanding original content on Sun NXT, their OTT platform.
• Developing content for different genres.

Primary Customers #

Target industries and sectors:

• Entertainment: Primarily targeting viewers seeking entertainment content.
• Advertising: Serving the advertising industry by providing platforms to reach a wide audience.

Geographic markets (domestic vs. international):

• Domestic: Predominantly South India (Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, and Kerala).
• International: South Indian diaspora in countries like the United States, the United Kingdom, Singapore, Malaysia, and the Middle East.

Major client segments:

• Residential: Households consuming television and radio content.
• Advertising Agencies: Businesses looking to promote products and services through Sun TV’s media platforms.

Distribution network and sales channels:

• Television Channels: Through cable operators, direct-to-home (DTH) service providers, and OTT platforms.
• FM Radio: Terrestrial broadcast and online streaming.
• Newspapers and Magazines: Print distribution network.
• OTT Platform: App downloads and web access.
• Film Production: Theatrical release and distribution to other OTT platforms.

Major Competitors #

Direct competitors in India and globally:

• India:
  • Star India (now Disney Star): Vijay TV (Tamil), Star Maa (Telugu), Star Suvarna (Kannada), Asianet (Malayalam)
  • Zee Entertainment Enterprises: Zee Tamil, Zee Telugu, Zee Kannada, Zee Keralam
  • Viacom18: Colors Tamil, Colors Kannada, Colors Telugu
• OTT:
  • Amazon Prime Video
  • Netflix
  • Disney+ Hotstar
  • Other regional OTT platforms

Comparative market share analysis:

(Requires updated market share data from reliable sources like industry reports or financial news). Focus should be on market share in the South Indian television market.

Competitive advantages and disadvantages:

• Advantages:
  • Strong brand recognition and loyalty in South India.
  • Extensive library of content.
  • Established distribution network.
  • First-mover advantage in regional markets.
• Disadvantages:
  • Increasing competition from national and international players.
  • The need to continuously invest in new content.
  • Changing consumer preferences and viewing habits.
  • Dependence on advertising revenue.

How they differentiate from competitors:

• Focus on local language content and cultural relevance.
• Strong relationships with local talent and production houses.
• Aggressive pricing and promotion strategies.

Industry challenges and opportunities:

• Challenges:
  • Increasing competition from digital media.
  • Regulatory changes and policies.
  • Piracy and content theft.
  • The rising cost of content production.
• Opportunities:
  • Growth of the OTT market.
  • Expansion into new geographies and language markets.
  • Increased demand for regional content.

Market positioning strategy:

• Positioned as the leading entertainment network in South India, catering to the diverse needs and preferences of the regional audience.

Future Outlook #

Expansion plans or growth strategy:

• Focus on strengthening its presence in the OTT space through Sun NXT.
• Investing in original content and technology.
• Exploring opportunities in new regional markets.
• Strengthening its film production and distribution business.

Upcoming products or innovations:

• (Information not publicly available).

Sustainability initiatives or ESG commitments:

• (Information not readily available; would require direct contact with the company or reviewing their annual reports).

Industry trends affecting their business:

• The shift from traditional television to digital media: This requires Sun TV to adapt and invest in its OTT platform.
• The increasing demand for regional content: This provides an opportunity for Sun TV to leverage its expertise and create more engaging content for its target audience.
• The growing popularity of short-form video: This could be a threat or an opportunity, depending on how Sun TV adapts.

Long-term vision and strategic goals:

• To remain the leading entertainment network in South India and expand its presence in the digital space.
• To create high-quality content that appeals to a wide audience.
• To deliver value to its shareholders.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Total Income: Shows a consistent upward trend: Rs. 4,023.40 crores (FY2022-23), Rs. 4,630.19 crores (FY2023-24) on a standalone basis, and Rs. 4,149.10 crores (FY2022-2023), Rs. 4,787.12 crores (FY2023-2024) on consolidated basis.
• Profit Before Tax (PBT): Increased from Rs. 2,238.12 crores (FY2022-23) to Rs. 2,548.54 crores (FY2023-24) on a standalone basis, and from Rs. 2,278.17 to Rs. 2,613.11 on a consolidated basis.
• Profit After Tax (PAT): Increased from Rs. 1,674.53 crores (FY2022-23) to Rs. 1,875.15 crores (FY2023-24) on a standalone basis, and from Rs. 1706.92 to Rs.1,925.80 on consolidated basis.
• Earnings Per Share (EPS): Basic EPS rose from Rs. 42.49 (FY2022-23) to Rs. 47.58 (FY2023-24) on standalone basis, and from 43.31 to 48.86 on a consolidated basis.
• Dividend Payout: Increased dividend payout from 300% (Rs. 15.00 per share) in FY2022-23 to 335% (Rs. 16.75 per share) in FY2023-24.
• Return on Net Worth (RONW): Decreased slightly, from 18.32% in FY2022-23 to 18.11% in FY2023-24.
• Debt-Equity Ratio: The ratio stands at 0.00 % for both, FY 2022-23 and FY 2023-24.

Business Segment Performance #

• Media and Entertainment: This is the predominant segment, contributing 84% of the total turnover.
• Other Sports Activities: Contributed 16% to the total revenue.

Major Strategic Initiatives and Their Progress #

• The group had added four new channels- Sun Marathi HD, Sun Bangla HD, Sun NEO, and Sun NEO HD.
• Proposed Schemes of Amalgamation: Kal Radio Limited’s Board approved amalgamation of Udaya FM Private Limited with KRL. South Asia FM Limited and its Joint Ventures/Associate Companies’ Boards approved a composite scheme of arrangement. These are subject to regulatory approvals.

Risk Landscape Changes #

• Strategic Risk: Dependence on the Indian economy, particularly regional markets, and regulatory changes in the media industry remain key strategic risks. Mitigation is attempted through diversification into new languages (Bangla, Marathi, Hindi).
• Operational Risk: Fluctuation in the popularity of channels can affect advertisement and subscription revenue. Sun TV’s large movie library and content ownership mitigate this risk.
• Financial Risk: The Company maintains a conservative investment policy, focusing on AAA-rated instruments. It is a zero-debt company, reducing interest rate risk.
• Legal and Statutory Risks: Compliance with statutory requirements is managed through internal processes and legal teams.

ESG Initiatives and Metrics #

• Environmental: The Company utilizes renewable energy sources and has waste management procedures in place. E-waste is disposed through registered vendors. Data collection systems are being improved.
• Social: The Company has an Anti-Sexual Harassment policy. Emphasis on equal opportunity, employee well-being (health insurance, maternity/paternity benefits), and grievance redressal mechanisms. CSR initiatives are focused on Health Care, Women Empowerment, Environmental sustainability, contributing to Rural Development projects and promotion of Arts and Culture.
• Governance: The Board composition includes Executive, Non-Executive, and Independent Directors, ensuring Board independence. Various committees (Audit, Nomination & Remuneration, Stakeholders’ Relationship, CSR, Risk Management) are in place.

Management Outlook #

• The Company expects continued growth in the Media & Entertainment sector, driven by increasing internet penetration, digital adoption, and rising incomes.
• Subscription and advertisement revenues are expected to remain strong, with a focus on digital growth.
• The company forayed into the Hindi language in the current financial year.
• Expansion into new revenue streams, such as cricket franchises, and increasing DTH subscriber base in South India, are expected to contribute to growth.

Detailed Analysis #

Financial Position Analysis of Sun TV Network Limited #

3-Year Comparative Analysis of Assets, Liabilities, and Equity (Consolidated) #

Significant Changes in Major Line Items (>10% YoY) #

• Other Intangible Assets: Increased by 12.55% (from Rs. 731.77 crores to Rs. 823.58 crores), likely due to continued investment in content or software.
• Right of Use Assets: Decreased by 47.48% (from Rs. 51.11 crores to Rs. 26.83 crores).
• Other Investments (Non-Current): Increased significantly by 28.99%, (from Rs. 1,456.15 crores to Rs. 1,879.26 crores) indicating major investment activities.
• Trade Receivable (Non-Current): Decreased to 0.
• Other Financial Assets (Non-current): Increased by 189.95% (from Rs. 48.46 crores to Rs. 140.50 crores).
• Deferred Tax Assets (net): Decreased By 26.96% (from Rs. 224.97 crores to Rs. 163.66 crores).
• Other Non-current Assets: Decreased by 6.56% (from Rs. 116.73 crores to Rs. 109.07 crores).
• Investments (Current): Increased by 30.78%, rising from Rs. 3,626.18 crores to Rs. 4,741.53 crores.
• Trade Receivables (Current): Decreased by 14.93% (from Rs. 1,474.30 crores to Rs. 1254.28 crores).
• Cash and Cash Equivalents: Increased by 122.7% (from Rs. 131.20 crores to Rs. 292.11 crores).
• Bank balances other than cash and cash equivalents: Decreased by 76.73% (from 467.37 crores to 108.70 crores).
• Other Financial Assets (Current): Increased substantially by 135.38%, from Rs. 6.53 crores to Rs. 15.37 crores.
• Other Current Assets: Increased by 57.5% (from Rs. 245.31 crores to Rs. 386.41 crores).
• Other Equity: Increased by 13.93%, rising from Rs. 9,074.55 crores to Rs. 10,338.97 crores.
• Lease Liabilities (Non-Current): Decreased by 10.80% (from 33.24 crores to 29.65 crores).
• Lease liabilities (Current): Decreased By 72.65% (from Rs. 29.63 crores to Rs. 8.10 crores).
• Other Current Financial Liabilities: Increased by 69.37%, from Rs. 198.43 crores to Rs. 336.05 crores.
• Other Current Liabilities: Decreased By 34% (from 323.78 crores to 213.83 crores).
• Total Equity: Increased by 13.74%, from Rs. 9,277.17 crores to Rs. 10,542.32 crores, driven by retained earnings.

Working Capital Trends #

• FY 2023-24: Rs. 5,959.66 crores.
• FY 2022-23: Rs. 5,127.34 crores.
• FY 2021-22: Rs. 4,876.07 crores

Working capital has shown a consistent increase, suggesting improved short-term financial health. The increase in working capital is primarily due to a rise in current assets, specifically investments and cash equivalents.

Asset Quality Metrics #

• Impairment Allowance for Doubtful Debts/Advances: The Company maintains provisions for doubtful debts, and there were changes in these provisions.
• Property, Plant & Equipment: Stable. Increased by 9.9%
• Intangible Assets: Increased, with a significant portion in film and program broadcasting rights.

Debt Structure and Maturity Profile #

• Lease liabilities
  • Non-Current: 29.65
  • Current: 8.10
  • Less than one year: 6.40
  • One to five years: 20.78
  • More than five years: 12.03

Off-Balance Sheet Items #

• Contingent Liabilities: Total contingent liabilities as of March 31, 2024, are Rs. 69.97 crores, primarily related to disputed tax claims.
• Capital Commitments: Outstanding commitments for capital contracts are Rs. 0.39 crores, and for acquisition of film and program broadcasting rights, production, and distribution-related rights are Rs. 263.34 crores.

Sun TV Network Limited: Financial Analysis of FY 2023-24 #

Revenue Breakdown #

• Segment: Media and Entertainment (84% of total turnover), Other Sports Activities (16%).
• Geography: Primarily domestic (India).
  • Domestic Revenue (FY 2023-24): ₹3,878.50 crores.
  • International Revenue (FY 2023-24): ₹269.86 crores (approximately 6.50% of total revenue).
• Total Income Growth: Standalone income increased by 15.08%, consolidated income increased by 15.38%.

Cost Structure Analysis #

• Operating Expenses: Increased to ₹881.77 crores in FY 2023-24 from ₹696.04 crores in FY 2022-23.
• Employee Benefit Expenses: Increased to ₹320.27 crores from ₹305.26 crores.
• Other Expenses: Increased to ₹441.96 crores from ₹377.75 crores.
• Finance Costs: Decreased to ₹8.56 crores from ₹9.42 crores.

Margin Analysis #

• PBITDA Margin: 66% for FY 2023-24 vs. 67% for FY 2022-23.
• Net Profit Margin: 41% for FY 2023-24 vs. 42% for FY 2022-23. Consolidated Net Profit Margin: 23% for both 2024 and 2023.

EPS Analysis #

• Basic EPS: Increased to ₹48.86 in FY 2023-24 from ₹43.31 in FY 2022-23.
• Diluted EPS: Increased to ₹48.86 in FY 2023-24 from ₹43.31 in FY 2022-23.

Cash Management #

Cash Flow and Liquidity Analysis #

Operating Cash Flow (OCF) #

Increased to ₹2,171.30 crores in FY 2023-24 from ₹2,095.51 crores in FY 2022-23. The increase can be seen the increase in profits before tax.

Investing Cash Flow (ICF) #

Net cash outflow of ₹1,313.35 crores in FY 2023-24, compared to an outflow of ₹1,553.88 crores in FY 2022-23. Major components include significant payments for the purchase of mutual funds and bonds/debentures, offset by proceeds from the sale/maturity of these investments and fixed deposits.

Financing Cash Flow (FCF) #

Net cash outflow of ₹697.05 crores in FY 2023-24, compared to an outflow of ₹630.63 crores in FY 2022-23. Major components include payment of interim dividends and lease liabilities.

Working Capital Management Efficiency #

Trade Receivables Turnover Ratio #

Increased to 3.12 in FY 2023-24 from 2.51 in FY 2022-23, suggesting an improvement in the efficiency of collecting receivables.

Trade Payables Turnover Ratio #

Increased to 5.05 in FY 2023-24 from 4.53 in FY 2022-23, may indicate the Group has better managed for payable days.

Net Capital Turnover Ratio #

Slightly declined, there is no major difference.

Capex Analysis #

Overall Capex towards tangible and intangible fixed assets addition are Rs.509.27 Crore in FY 23-24 against Rs.571.73 in FY 22-23.

Dividend Trends #

The company declared interim dividends totaling ₹660.09 crores (335% or ₹16.75 per share) in FY 2023-24, compared to ₹591.13 crores (300% or ₹15.00 per share) in FY 2022-23.

Debt Service Coverage #

Debt Service Coverage Ratio (DSCR) #

Significantly increased to 202.26 in FY 2023-24 from 54.57 in FY 2022-23. This is because the Company is debt free except lease liabilities and has reported profits for the current financial year.

Liquidity Position #

Current Ratio #

Increased to 8.04 in FY 2023-24 from 7.13 in FY 2022-23, indicating a stronger liquidity position.

Cash and Cash Equivalents #

Increased to ₹292.11 crores as of March 31, 2024, from ₹131.20 crores as of March 31, 2023.

Financial Analysis of Sun TV Network Limited #

Profitability Ratios (3-Year Trends) #

• Return on Net Worth (RONW) (Standalone):

  • 2023-24: 18.11%
  • 2022-23: 18.32%
  • 2021-22: 20% (Prior year trend)

  Declined slightly in the current year.

• Net Profit Margin % (Total Income) (Standalone):

  • 2023-24: 41%
  • 2022-23: 42%
  • 2021-22: 44%

  Slight but steady decline, but remains extremely high.

• Return on Capital Employed (ROCE) (Consolidated):

  • 2023-24: 22.73%
  • 2022-23: 22.77%

  Remained Stable.

• PBITDA % (Standalone):

  • 2023-24: 66%
  • 2022-23: 67%
  • 2021-22: 67%

  Remained mostly consistent.

Liquidity Metrics #

• Current Ratio (Consolidated):

  • 2023-24: 8.04
  • 2022-23: 7.13

  Increased, indicating strong short-term solvency.

Efficiency Ratios #

• Trade Receivables Turnover Ratio (Consolidated):

  • 2023-24: 3.12
  • 2022-23: 2.51

  Increased, indicating improved efficiency in collecting receivables.

• Net Capital Turnover Ratio (Consolidated):

  • 2023-24: 0.78
  • 2022-23: 0.79

  Stable.

Leverage Metrics #

• Debt-Equity Ratio (Standalone):

  • 2023-24: 0.00%
  • 2022-23: 0.00%
  • 2021-2022: 0.00% (Company is debt free)

  The company maintains a debt-free status.

• Debt Service Coverage Ratio (Standalone):

  • 2023-24: 202.26
  • 2022-23: 54.57

  Significantly increased, due to higher earnings and repayment of lease obligations.

Key Highlights #

• The Group is experiencing increased viewership of its channels.
• Sun TV is the most watched channel in India.
• The Group forayed into Hindi language in the current financial year.
• The Group’s revenue streams are sustained and increased, including digital businesses.

Sun TV Network Limited: Financial and Segment Analysis #

Revenue and Profitability Growth #

• Total Income (Consolidated): Increased by 15.37% from Rs. 4,023.40 crores (FY 2022-23) to Rs. 4,630.19 crores (FY 2023-24).
• Standalone Total income: Increased from Rs.4023.40 crores(FY 2022-23) to Rs. 4,630.19 crores(FY 2023-24)
• Consolidated Total income: Increased from Rs.4149.10 crores(FY 2022-23) to Rs. 4,787.12 crores(FY 2023-24).
• Profit Before Tax (PBT) (Standalone): Increased by 13.87% from Rs. 2,238.12 crores (FY 2022-23) to Rs. 2,548.54 crores (FY 2023-24).
• Profit After Tax (PAT) (Standalone): Increased by 11.98% from Rs. 1,674.53 crores (FY 2022-23) to Rs. 1,875.15 crores (FY 2023-24).
• Consolidated Profit before Tax: Increased from Rs. 2278.17 crores(FY 2022-23) to Rs. 2,613.11 crores (FY 2023-24)
• Consolidated Profit After Tax: Increased from Rs. 1706.92 crores(FY 2022-23) to Rs. 1925.80 crores (FY 2023-24)

Market Share and Competitive Position #

• Sun TV Network is one of the largest television broadcasters in India.
• Sun TV is the most-watched channel in India, indicating a dominant market share, especially in the South Indian market.

Key Products/Services Performance #

• Broadcasting Services: Contributed 84% of total turnover, indicating it is the core revenue generator.
• Other Sports Activities: IPL franchise ‘SunRisers Hyderabad’ & SunRisers Eastern Cape of Cricket South Africa’s T20 League, Represented 16% of total turnover.
• Digital OTT Platform (SUNNXT): Continues to add subscribers.

Geographic Distribution and Market Penetration #

• Domestic Market (India): Dominant presence in the four southern states (Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh) with expansion into Bangla and Marathi languages. Current expansion into the Hindi Language Market.
• International Market: Presence in 27 countries including Sri Lanka, Singapore, Malaysia, the United Kingdom, Europe, the Middle East, the United States, Australia, South Africa, and Canada.
• Revenue Contribution (FY 2023-24): Domestic revenue: Rs. 3,878.50 crores, International revenue: Rs. 269.86 crores, Export contributing for 6.50%.

CAPEX and ROIC #

• Total addition to property, plant & equipment: Rs. 11.35 crores funded through internal accruals.
• Return on Capital Employed (ROCE) (Consolidated): 22.73% in FY 2023-24, a slight decrease from 22.77% in FY 2022-23.
• Return On Net Worth has declined to 18.11% for the year ended March 31,2024 from 18.32% for the previous year.

Operational Efficiency Metrics #

• Debt equity Ratio decreased by 77.05%
• Debt service coverage Ratio increased by 270.67%
• Return on Investment (ROI) - Unquoted Increased by 90.85%
• Trade Receivables Turnover Ratio: Increased by 24.08%, from 2.51 to 3.12.
• Trade Payables Turnover Ratio: Increased by 11.44%, from 4.53 to 5.05.

Growth Initiatives and Challenges #

• The M&E sector has always been an enthusiastic adopter of technology. AI - and especially Gen AI - gives it the tools the sector has always dreamed of, and can result in a 10% revenue growth and 15% cost efficiency. *New media will provide 61% of this growth, followed by animation and VFX (9%) and television (9%).
• Company is making it’s presence to Hindi language in current financial year.
• The outdated technologies are constantly identified and updated with latest innovations.
• The company had zero debt, hence the company is financially stable.

Growth Initiatives #

• Expansion beyond the southern states into Bangla and Marathi Languages.
• Increased DTH subscriber base in South India.
• Potential revenue increase from IPL and SA 20 franchises.
• Further Development of SUNNXT, its digital OTT platform.
• Company moving from the strategy of selling telecast slots to commissioning programs and retaining the ownership rights for further monetization.

Challenges #

• Dependence on viewer preferences and maintaining high audience shares.
• Fluctuations in subscription and advertising revenue.
• Technological failures.
• Intense competition in the industry.
• Regulatory changes in the media industry.
• Managing risk arising from contractual liabilities
• Data privacy and cyber security related.

Risk Assessment Framework #

Strategic Risks #

• Severity: High. Dependence on the Indian and specifically South Indian economies makes the Company vulnerable to regional economic downturns, political instability, and regulatory changes.
• Likelihood: Medium. Economic fluctuations and regulatory shifts are regular occurrences.
• Trend: Increasing, Given Sun TV Network expansion beyond Southern States, Bangala, Marathi and Hindi Languages.
• Mitigation Strategies: Diversification of content offerings across genres and languages; expansion into digital platforms (SUNNXT); investment in original content.
• Control Effectiveness: Medium, Sun TV Network has done well, Despite of these adversities, further regulatory changes always remain a concern.
• Potential Financial Impact: Significant. Adverse economic or regulatory changes could lead to reduced advertising and subscription revenues, directly impacting the top line (Total Income in FY 2023-24 was ₹4,630.19 crores).

Operational Risks #

• Severity: Medium to High. Fluctuations in channel popularity directly impact both advertisement and subscription revenue.
• Likelihood: Medium. Viewer preferences are dynamic, and competition is intense.
• Trend: Potentially Increasing. The rise of digital platforms presents an ongoing operational challenge.
• Mitigation Strategies: Continued investment in high-quality, diverse content library (both acquired and original). Strengthening of the SUNNXT OTT platform. Marketing and pricing strategies to retain and attract subscribers.
• Control Effectiveness: Medium to High. Demonstrated by consistent viewership in key markets.
• Potential Financial Impact: Significant, affecting both Advertisement Revenue and Subscription Revenue streams. (Total Expenditure in FY2023-2024 was 2,081.65, 2022-2023 was 1,785.28).

Financial Risks #

Treasury Investments Risk #

• Severity: Medium.
• Likelihood: Low.
• Trend: Stable, conservative investment strategy.
• Mitigation Strategies: Conservative investment policy focusing on AAA-rated, liquid instruments.
• Control Effectiveness: High, due to adherence to conservative policy.
• Potential Financial Impact: Manageable due to Low Risk Level, The Return on Investment -Unquoted Ratio for the year ended March 31.2024 is 7.32% (Previous year 3.84%).

Receivable Risk #

• Severity: Medium. Delays in collecting receivables affect cash flow.
• Likelihood: Medium.
• Trend: Stable.
• Mitigation Strategies: Constant monitoring of debt collection, periodic review of debtors.
• Control Effectiveness: High, effective collection efforts.
• Potential Financial Impact: Moderate, impacts on working capital.

Compliance/Regulatory Risks #

• Severity: High. The media industry faces continuous regulatory scrutiny.
• Likelihood: Medium to High.
• Trend: Stable, ongoing compliance efforts.
• Mitigation Strategies: Strict adherence to all statutory requirements. Engagement with a legal team and continuous monitoring.
• Control Effectiveness: High, Demonstrated track record of compliance.
• Potential Financial Impact: Significant. Non-compliance can lead to penalties, license issues, and reputational damage.

Emerging Risks #

Digital Media Consumption #

• Severity: Medium to High, With the increasing penetration of smartphones and affordable internet.
• Likelihood: Medium.
• Trend: Increasing.
• Mitigation Strategies: SUN NXT Platform.
• Control Effectiveness: Low-Medium.
• Potential Financial Impact: Significant, affecting long term growth and sustainability.

Data Privacy & Cyber Security #

• Severity: High. Data breaches can lead to significant reputational and financial damage.
• Likelihood: Medium. Increasing frequency of cyber threats globally.
• Trend: Increasing.
• Mitigation Strategies: Implementation of robust cyber security processes and solutions, vigilance about evolving threats.
• Control Effectiveness: Medium. Ongoing efforts to enhance security.
• Potential Financial Impact: Significant. Can lead to fines, legal action, and loss of customer trust.

Safety of Employees #

• Severity: Medium, the company is into broadcasting channels.
• Likelihood: Low.
• Trend: Stable, ongoing safety procedures and monitoring
• Mitigation Strategies: Provide safe work environment, Hazard Identification, Periodic Risk Assessment, Employee Insurance Coverage.
• Control Effectiveness: High.
• Potential Financial Impact: Moderate, impacts on employee’s compensation.

Product Design & Life Cycle Management #

• Severity: Medium, The process of designing the content.
• Likelihood: Medium.
• Trend: Increasing, due to expansion into different languages and countries.
• Mitigation Strategies: Considering the designing of the shows with the appropriate titles along with suitable time slots.
• Control Effectiveness: High, By planned and strategical broadcasting, there is an increase in viewership.
• Potential Financial Impact: Significant, impacts on advertising revenue.

Business Model Resilience #

• Severity: Medium, due to rapid changes in technology.
• Likelihood: High, the need to embrace new technologies, as the organization moves from traditional broadcasting to OTT Platform.
• Trend: Increasing, as OTT Platforms grows.
• Mitigation Strategies: The team is attempting to adapt to the shifts.
• Control Effectiveness: High, By expanding the broadcasting operations to number of other countries.
• Potential Financial Impact: Significant, impacts on future revenues.

Strategic and Management Analysis of Sun TV Network Limited #

Long-Term Strategic Goals and Progress #

• The company aims to strengthen its position in the media and entertainment industry by expanding its channel offerings across multiple languages (Tamil, Telugu, Kannada, Malayalam, Bangla, Marathi, and Hindi). There is growth in the subscriber base in the DTH space.
• Sun TV plans to generate incremental revenues by its digital OTT platform ‘SUNNXT’.

Competitive Advantages and Market Positioning #

• Sun TV Network is among the largest television broadcasters in India and being the regional television network, to be one of the major beneficiaries of the recent growth in the DTH space.
• The company demonstrates sustained and increased viewership, with Sun TV being a highly watched channel.
• Sun TV Network holds a dominant market share in South India, with an expanding presence in Bangla, Marathi and Hindi Languages, that enhance its content library.
• It is expected that the new stream of revenue for the Company arising from the increased DTH subscriber base in South India would maintain a positive momentum.

Innovation Initiatives #

• The company is constantly identifying and updating the outdated technologies with latest innovations.
• The Company uses the latest high definition (HD) digital technology in broadcasting its programs.

M&A Strategy and Execution #

• Kal Radio Limited (“KRL”) approved a scheme of amalgamation of Udaya FM Private Limited with KRL. Similarly, South Asia FM Limited (“SAFM”) and its Joint Ventures / Associate Companies approved a composite scheme of arrangement for amalgamation involving these Joint Venture / Associate Companies and SAFM. These schemes are subject to statutory and regulatory approvals.

Management’s Track Record in Execution #

• The management has consistently delivered high margins, reflecting its ability to execute its broadcasting strategy effectively.
• The management has successfully maintained a dominant share of audience viewership, enabling strong pricing power.
• Management has effectively expanded the company’s language offerings.

Capital Allocation Strategy #

• The company follows a conservative policy in its treasury operation by permitting investments only into AAA rated instruments with reasonable rates of return and allows quick liquidation by avoiding long dated securities.
• The company has consistently paid interim dividends, demonstrating a commitment to returning value to shareholders. A total dividend of 335% (Rs. 16.75 per share) was declared for FY 2023-24.
• The company is currently debt-free.
• Capital expenditure was funded through internal accruals.

Organizational Changes #

• The Company had re-appointed Mr. Mahesh Kumar Rajaraman as Managing Director, Mr. Krishnaswamy Vijaykumar as Whole Time Director Designated as Executive Director and Ms. Kaviya Kalanithi Maran as Whole Time Director.
• The Company had re-appointed Mr. Sridhar Venkatesh as Non-Executive Independent Director, Mr. Desmond Hemanth Theodore as Non-Executive Independent Director and re-appointed Mrs. Mathipoorana Ramakrishnan as Non- Executive Independent Director.

ESG Framework: Sustainability Analysis #

Environmental Metrics and Targets #

• The Company utilizes renewable energy sources, specifically wind and solar.
• Total electricity consumption from renewable sources for FY 2023-24 was 26,724 gigajoules, an increase from 20,415 gigajoules in FY 2022-23.
• Total energy consumption from non-renewable sources, 12,906.83 Giga joules for FY 2023-24 which is less when compared to previous year value 16,752.96 Giga joules.
• Energy intensity per rupee of turnover for FY 2023-24 was 8.50, a decrease from 10.15 in FY 2022-23.
• The company has shown reduced total water withdrawal and consumption compared to the previous year.
• The Company employs a Zero Liquid Discharge mechanism, reusing treated water for flushes and gardens.
• The Company is in process of establishing data collection system for waste.
• The Company has not identified a Green House Gas Emission reducing project.

Social Responsibility Programs #

• The Company has a Corporate Social Responsibility (CSR) policy focusing on health care, women empowerment, environmental sustainability, rural development, and arts and culture.
• CSR spending for FY 2023-24 was Rs. 42.58 crores, exceeding the 2% of average net profit requirement (Rs. 42.47 crores).
• The Company maintains an Anti-Sexual Harassment policy and an Internal Complaints Committee, with zero complaints reported in FY 2023-24.
• The Company has an equal opportunity policy that ensure non-discrimination.

Governance Structure and Effectiveness #

• The Board of Directors comprises a mix of Executive, Non-Executive, and Independent Directors, ensuring Board independence.
• Board committees, including Audit, Nomination and Remuneration, Stakeholders’ Relationship, CSR, and Risk Management, are in place and meet regularly.
• The Company has complied with all mandatory corporate governance requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• There are instances of delays in transferring unclaimed dividends to the Investor Education and Protection Fund (IEPF) Authority.

Regulatory Compliance and Future Preparations #

• The Company complies with applicable environmental laws and regulations, including the Water (Prevention and Control of Pollution) Act and the Air (Prevention and Control of Pollution) Act.
• The Company is preparing to enhance its data collection, tracking, and monitoring systems for environmental metrics.
• The Company is compliant with the applicable secretarial Standards, SS-1 & SS-2.

Future Projections and Guidance #

Segment-Wise Financial Analysis: Media and Entertainment #

Management Guidance and Assumptions #

• Management’s estimate of the useful life of film broadcasting rights (satellite rights) is four years, considering the pattern of expected future economic benefits and industry practices.
• The cost of program broadcasting rights/multi-episode series is amortized based on telecasted episodes.
• Management’s estimate of the useful life of computer software is 3 years.
• Management uses a debt free assumption.
• The company’s policy allows investment in only AAA rated instruments, and they disallow equity or real-estate investments.

Market Growth Forecasts #

• The Indian Media & Entertainment (M&E) sector is projected to grow at 10.2% to reach Rs. 2.55 trillion (US$ 30.8 billion) by 2024 and a 10% CAGR to reach Rs. 3.08 trillion (US$ 37.2 billion) by 2026.
• Advertising revenue in India is projected to reach Rs. 123.33 billion (US$ 1.49 billion) by 2024.
• Digital media is growing faster than the global average.
• New media (digital and online gaming) increased its contribution to the M&E sector from 20% in 2019 to 38% in 2023.
• All segment expected to grow, unless there are unforessen situations.

Planned Strategic Initiatives #

• Continued expansion into new language markets (Bangla, Marathi, and Hindi), beyond the established Southern states.
• Continued investment and monetization in digital platforms (SUNNXT).
• Increase cricket franchise revenue contribution.
• Focus on fostering a diverse and inclusive work environment.
• Reduction of environmental impact in energy consumption, waste generation, and water management.

Capital Expenditure Plans #

• Capital expenditure for property, plant & equipment during FY 2023-24 was Rs. 11.35 crores, funded through internal accruals.

Efficiency Improvement Targets #

• Control of energy consumption is being addressed through use of renewable energy (solar and wind).
• Robust Cyber security process is in place,
• AI technology adoption aimed at cost reduction by 15% over the coming periods.

Potential Challenges and Opportunities #

• Challenges:

  • Dependence on viewer preference and maintaining high audience shares.
  • Fluctuations in advertising and subscription revenues.
  • Technological failures.
  • Competition and increasing prices for programming and talent acquisition.
  • Regulatory changes in the media industry.
  • Data privacy and cybersecurity.

• Opportunities:

  • Increased viewership in both linear TV and OTT platforms.
  • Growth in retail advertisement and e-commerce.
  • Untapped market potential in rural regions with ongoing digital adoption.
  • Increasing penetration of smart phones.
  • Expansion beyond the Southern states with a multi-language content strategy.
  • Monetization of content library across linear and OTT platforms.

Scenario Analysis and Sensitivity to Key Assumptions #

• Foreign Currency Risk Sensitivity: A 5% increase in the USD exchange rate would positively impact profit before tax by Rs. 8.18 crores; a 5% decrease would negatively impact it by Rs. 8.18 crores.
• Gratuity Plan Assumptions Sensitivity (March 31, 2024): A 1% increase in the discount rate decreases the Defined Benefit Obligation (DBO) by Rs. 0.94 crores; a 1% decrease increases the DBO by Rs. 1.04 crores. A 1% increase in future salary increases the DBO by Rs. 0.93 crores; a 1% decrease decreases it by Rs. 0.86 crores.

Audit and Compliance Analysis #

Auditor’s Opinion and Qualifications #

• The auditor’s opinion on the standalone financial statements is unqualified.
• The auditor’s opinion on the consolidated financial statements is unqualified.
• There is one CARO report with qualification for South Asia FM Limited under clause (iii)(e).

Key Accounting Policies and Changes #

• The financial statements comply with Indian Accounting Standards (Ind AS).
• The Company has adopted the Amendments to Ind AS which are effective from April 1, 2023 regarding Definition of Accounting Estimates, Disclosure of Accounting Policies.
• There is a change regarding Deferred Tax related to Assets and Liabilities arising from a Single Transaction Amendments to Ind AS 12 due to adoption of amendment, on leases.

Internal Control Effectiveness #

• The auditor’s report expresses an unqualified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting, for both standalone and consolidated financials.
• The Company has an internal audit system commensurate with its size and nature of business.

Regulatory Compliance Status #

• The Company has complied with the mandatory requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• There were no penalties or strictures imposed on the Company by the Stock Exchange, SEBI, or any statutory authority on capital market-related matters in the last three years.
• There was an instance of a delay of transferring amounts, to the Investor Education and Protection Fund (‘IEPF’) by the Company with respect to its 2nd interim dividend of FY 2015-16 amounting to INR 92,554/- by 16 days.

Legal Proceedings and Their Potential Impact #

• The Company has disclosed the impact of pending litigations in Note 31 (Standalone) and Note 33 (Consolidated) of the financial statements.
• Disputed tax liabilities not provided for include claims related to Income Tax, Service Tax, and Goods and Services Tax.
• Management believes its position in these litigations is likely to be upheld, and the ultimate outcome will not have a material adverse effect.

Related Party Transactions #

• Related party transactions were in the ordinary course of business and at arm’s length.
• There were no materially significant related party transactions with potential conflicts of interest.
• Details of related party transactions are disclosed in Note 32 (Standalone) and Note 34 (Consolidated) of the financial statements.

Subsequent Events #

• The Board of Directors of Kal Radio Limited approved a proposed scheme of amalgamation with Udaya FM Private Limited, subject to regulatory approvals.
• The Board of Directors of South Asia FM Limited and its Joint Ventures / Associate Companies approved a proposed composite scheme of arrangement for amalgamation involving these Joint Venture / Associate Companies and SAFM.
• The Company has transferred 3,795 Equity Shares to the Investor Education and protection fund authority, of the shareholders who have not claimed their dividend for seven consecutive years.

Accounting Quality Assessment #

• The consistent application of Ind AS, along with the unqualified audit opinion, suggests a high level of accounting quality.
• The use of a provision matrix for expected credit losses on trade receivables indicates a proactive approach to managing credit risk.
• The maintenance of proper records for Property, Plant and Equipment, and intangible assets, as noted by the auditors, is a positive indicator.
• Disclosures of the Key Audit Matters, including the approach of assessing provision of allowances for doubtful debts show improved reporting.

Regulatory Risk Assessment #

• The primary regulatory risks relate to potential changes in the media and entertainment industry regulations and ongoing tax litigations.
• The Company’s reliance on licenses from the Ministry of Information and Broadcasting and compliance with broadcasting guidelines presents a continuing regulatory risk.
• The Company’s engagement with trade associations and industry bodies (Principle 7) suggests proactive management of regulatory policy influence.