Shemaroo Entertainment Ltd:Annual Report 2023-24 Analysis

Shemaroo Entertainment Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: Shemaroo Entertainment Ltd. was established in 1962 by Shri Buddhichand Maroo as a book circulating library. The name “Shemaroo” is derived from the combination of the founders’ (Shi)vratlal (Ma)roo and (Roo)pchand.

Headquarters Location and Global Presence: The company’s headquarters are located in Mumbai, India. Shemaroo has a global presence, with distribution networks reaching various international markets, including the USA, UK, Middle East, and Southeast Asia.

Company Vision and Mission: (Specific current vision/mission data not publicly available. Research on Shemaroo’s official website and recent investor reports is recommended to fill this section.)

Key Milestones in Their Growth Journey:

• Early Years (1962-1980s): Transitioned from a book circulating library to a video rental business and then to content distribution.
• 1990s: Expansion into home video distribution of Bollywood films.
• 2000s: Diversification into television content syndication, digital distribution, and new media ventures.
• 2010s: Focus on digital growth with the launch of platforms like ShemarooMe (OTT platform) and expansion of YouTube channels.
• Present: Continued emphasis on digital content, strategic partnerships, and content acquisition.

Stock Exchange Listing Details and Market Capitalization: Shemaroo Entertainment Ltd. is listed on the Bombay Stock Exchange (BSE: 538685) and the National Stock Exchange (NSE: SHEMAROO). (Market capitalization data fluctuates and should be sourced from financial websites like Google Finance, Yahoo Finance, or BSE/NSE websites).

Recent Financial Performance Highlights: (Specific, up-to-date financial data is not accessible. Consult recent annual reports, quarterly results, and investor presentations on Shemaroo’s website or financial news sources like Bloomberg, Reuters, or The Economic Times.) This section should include:

• Revenue trends
• Profitability (Net Profit, EBITDA)
• Key financial ratios (e.g., Debt-to-Equity ratio)
• Performance in digital vs. traditional segments

Management Team and Leadership Structure: (Specific details change. Check Shemaroo’s official website and corporate governance reports for current information). Generally, it includes:

• CEO/Managing Director
• CFO
• Heads of various departments (e.g., Content, Digital, Marketing, Finance)

Any Notable Awards or Recognitions: (This is an area requiring further research. Search for press releases and news articles mentioning awards received by Shemaroo).

Their Products #

Complete Product Portfolio with Categories:

• Digital Platforms: ShemarooMe (OTT platform), YouTube Channels (e.g., Shemaroo Filmi Gaane, Shemaroo Comedy)
• Television Content Syndication: Licensing content to TV channels.
• Home Video: Distribution of DVDs and Blu-rays (though declining in relevance).
• Movie Production and Acquisition: Producing and acquiring rights to films.
• Content Aggregation and Distribution: Licensing content to various platforms.
• Broadcast Business: Shemaroo TV and Shemaroo Umang channels

Flagship or Signature Product Lines:

• ShemarooMe: OTT platform featuring a wide range of content, including Bollywood classics, regional movies, kids’ content, and live streaming of events.
• YouTube Channels: Large network of YouTube channels with a focus on Indian cinema, music, and comedy.

Key Technological Innovations or Patents: (Requires further research. Shemaroo’s innovation would likely focus on its digital platforms and content delivery systems.)

Recent Product Launches or R&D Initiatives: (Requires up-to-date research. This section should highlight recent content acquisitions, partnerships, or platform updates). Recent activity includes investment in TV channels and digital platforms.

Major Competitors #

Direct Competitors in India and Globally:

• Indian Competitors: Eros International, Zee Entertainment Enterprises, Sun TV Network, Tips Industries, Saregama India.
• Global Competitors (in the OTT space): Netflix, Amazon Prime Video, Disney+ Hotstar.

Competitive Advantages and Disadvantages:

• Advantages: Extensive library of classic Bollywood films, established brand reputation, strong presence on YouTube, focus on Indian diaspora.
• Disadvantages: Intense competition from global OTT giants with larger budgets, dependence on content acquisition costs.

How they differentiate from competitors: Focus on classic Bollywood content and targeted offerings for specific segments (e.g., kids, devotional content) on ShemarooMe.

Market Positioning Strategy: Targeting the Indian diaspora and consumers interested in classic Bollywood and regional content through a combination of digital platforms and traditional distribution channels.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on expanding the subscriber base of ShemarooMe.
• Strategic content acquisitions to strengthen its library.
• Partnerships with other platforms and content providers.
• Growth in TV channel audience.

Industry Trends Affecting Their Business:

• Growth of OTT platforms and digital content consumption.
• Increasing demand for regional content.
• Consolidation in the media and entertainment industry.
• The rise of short-form video platforms.

Long-Term Vision and Strategic Goals: (Specific long-term vision/strategic goals not publicly available. Research on Shemaroo’s official website and recent investor reports is recommended to fill this section.)

Comprehensive Performance Overview #

Detailed Analysis #

Balance Sheet Analysis #

Operating Performance #

Income Statement #

Cash Management #

Cash Flow and Liquidity Analysis #

Key Performance Indicators #

Shemaroo Entertainment Limited (FY 2023-24) Financial Analysis #

Revenue and Profitability #

• Revenue Performance:

  • Consolidated total income for FY 2023-24: INR 7,120.8 million (27.1% YoY increase from INR 5,600.3 million in FY 2022-23).
  • Standalone total income for FY 2023-24: INR 6,818.9 million (up from INR 5,382.4 million in the previous year).
  • Segmental Revenue (Consolidated):
    • Traditional Media Revenue: INR 4,581 million (64.8% of total operating revenue), 37.6% YoY growth.
    • Digital Media Revenue: INR 2,491 million (35.2% of total operating revenue), 11.4% YoY growth.
  • Growth primarily driven by the broadcasting business and B2B businesses.

• Profitability:

  • EBITDA (Consolidated): EBITDA loss of INR 3 million in FY 2023-24 (vs. positive EBITDA in prior years).
  • Net Profit/Loss (Consolidated): Net loss of INR 406.7 million (vs. net profit of INR 93.6 million in FY 2022-23).
    • Net Profit Margin (Consolidated): -5.8% (FY24) vs. 1.7% (FY23).
  • Net Profit/Loss (Standalone): Net loss of INR 426.3 million (vs. net profit of INR 72.8 million in FY 2022-23).
    • Net Profit Margin (Standalone): -6.3% (FY24) vs. 1.4% (FY23).
  • Margins were subdued due to a tough advertising market, continued investments in B2C initiatives, and an inventory charge-off in Q4 FY24.

Market Share and Competitive Position #

• Broadcasting (Hindi GEC):
  • Shemaroo TV and Shemaroo Umang accounted for approximately 7% of the total Hindi GEC viewership as of March 2024.
• Digital (YouTube):
  • Over 50 channels with 200M+ cumulative subscribers, 100M+ average daily views.
  • “Shemaroo Filmi Gaane”: 68M+ subscribers, ranking as the 9th most subscribed channel in India and 22nd globally.
  • “Shemaroo Entertainment”: Ranked 48th among the top 50 most subscribed YouTube channels globally.
• Digital (OTT - ShemarooMe Gujarati):
  • Positioned as a leading destination in the Gujarati entertainment industry, driving significant subscription growth.
• Industry Context:
  • Indian M&E sector grew 8.1% in 2023 (to INR 2.32 trillion). Digital media is expected to surpass television in 2024.
  • Television segment degrew by 1.8% in 2023.
  • Digital media segment grew 14.5% in 2023.

Key Products/Services Performance #

• Traditional Business:

  • Broadcasting:
    • Portfolio: ShemarooTV, Shemaroo MarathiBana, Shemaroo Umang, and Chumbak TV.
  • Syndication:
    • Content library: +2,000 perpetual titles, +1,800 period titles.
    • Syndicates content to leading satellite channels, cable networks, terrestrial networks, and international broadcasters.
    • Partners with DTH service providers and airlines.

• Digital Business:

  • AVOD (YouTube & Facebook):
    • 50+ channels, 200M+ subscribers, 100M+ average daily views.
  • SVOD (ShemarooMe OTT):
    • Consistent user base growth and engagement.
    • ShemarooMe Gujarati: Key driver with direct-to-digital movie releases, plays, and original web series.
  • Partnerships:
    • Partners with major telecom platforms and video platforms like Amazon Prime, Jio Cinema.

Risk Analysis: Shemaroo Entertainment Limited (FY 2023-24) #

Strategic Risks #

• Severity: High
• Likelihood: High
• Trend: Increasing
• Analysis: Shemaroo faces strategic risks due to a dynamic Media & Entertainment (M&E) landscape. The Indian M&E sector’s growth slowed to 8.1% in 2023. Digital media is a growth driver (14.5% growth in 2023, 35% of Shemaroo’s topline) but faces market recalibration. Traditional media (65% of revenue) is challenged by television’s declining contribution. Shifting audience preferences demand continuous content innovation. Competition is intensifying, particularly in the digital OTT space. A key risk is reliance on advertising revenue, which impacted FY24 profitability.
• Mitigation Strategies: Diversification into new ventures (broadcasting, OTT), streamlining operations, investments in original content, people, and technology. Launch of “Chumbak TV” targets youth. Focus on ShemarooMe Gujarati for regional growth and international expansion.
• Control Effectiveness: Revenue has surpassed pre-pandemic levels, but translating growth into profitability remains a challenge. The leadership team has been strengthened.
• Potential Financial Impact: Continued pressure on advertising revenues could impact profitability. Failure to adapt to consumer preferences could lead to market share loss. The company reported a consolidated net loss of ₹406.7 million in FY24.
• Year-over-Year Change: The risk profile has increased due to the advertising slowdown, continued losses, and M&E sector recalibration.

Operational Risks #

• Severity: Medium to High
• Likelihood: Medium
• Trend: Stable to Increasing
• Analysis: Operational risks stem from content management, efficient operation of channels and platforms, and talent management. Valuation and amortization of the content library (+2,000 perpetual titles, +2,000 period titles) is a Key Audit Matter (KAM). Revenue recognition complexities are also a KAM. Maintaining viewer loyalty for TV channels requires robust programming and distribution. An “inventory charge-off taken in the fourth quarter” impacted margins.
• Mitigation Strategies: Focus on creating original content, content differentiation, extensive distribution, and leveraging the brand. Relationships in content creation and distribution. Investments in technology (ShemarooVerse). The Board’s Report asserts adequate internal control systems.
• Control Effectiveness: Steady viewership for Hindi GEC channels and growth in YouTube subscribers are positive, but the inventory charge-off and KAMs suggest areas for strengthening controls around content valuation and revenue assurance. Internal and statutory auditors provide oversight.
• Potential Financial Impact: Inefficient content monetization or further inventory write-downs could pressure margins. Operational disruptions could affect revenue streams. The inventory charge-off contributed to the subdued margins in FY24.
• Year-over-Year Change: The inventory valuation as a KAM and the significant charge-off indicate an increased operational risk in this area.

Financial Risks #

• Severity: High
• Likelihood: High
• Trend: Increasing
• Analysis: The company’s financial health deteriorated in FY24.
  • Profitability: Shifted to a consolidated net loss of ₹406.7 million. Consolidated EBITDA loss was ₹3 million (margin -0.04%).
  • Margins: Operating and Net Profit Margins declined sharply due to the advertising market, B2C investments, and inventory charge-offs.
  • Debt & Gearing: Consolidated Debt Equity Ratio increased to 0.61. The company is prioritizing debt repayment.
  • Credit Rating: CARE Ratings revised the long-term bank facilities rating downwards during the year.

Shemaroo Entertainment Limited (FY 2023-24) - Financial Analysis Report #

Long-Term Strategic Goals and Progress #

Shemaroo’s long-term strategy centers on sustainable growth through reinvention, resource leverage, and identifying high-potential opportunities. The company prioritizes content quality, partnerships, employee well-being, and innovation. A strategic pivot in 2018 focused on a business mix aligned with long-term objectives, resulting in revenues surpassing pre-pandemic levels. For FY2023-24, the focus was on capitalizing on past investments, strengthening the core, enhancing the sales team, increasing original content creation, and improving process efficiencies.

Progress is evident in diversification into new ventures (e.g., broadcasting, OTT) and streamlining operations. The company aims for market leadership, emphasizing growth with value creation. Key pillars for future growth include its businesses, people, assets, partnerships, and infrastructure.

Competitive Advantages and Market Positioning #

Shemaroo leverages several competitive advantages:

• Brand & Legacy: A 60-year-old brand establishes trust and industry recognition.
• Extensive IP Library: Over 2,000 perpetual and period titles across multiple languages, genres, and formats, including a significant film library (over 1,200 Hindi films, over 1,000 regional films/plays).
• Strong Relationships: Established ties within the content creation and distribution ecosystem, including leading broadcasters (Zee, Sony, Star, Viacom), digital platforms (Netflix, Amazon Prime, Jio Cinema, Disney+ Hotstar), international players, DTH providers, and airlines.
• Experienced Management: A strong management team with industry professionals.
• Multi-Platform Presence: Monetization across broadcasting (ShemarooTV, Shemaroo MarathiBana, Shemaroo Umang, Chumbak TV), OTT (ShemarooME), AVOD (50+ YouTube channels), linear subscription services, syndication, and in-flight entertainment.

Market positioning highlights:

• Traditional TV: Hindi GECs (Shemaroo TV, Shemaroo Umang) commanded approximately 7% of total Hindi GEC viewership as of March 2024.
• Digital (YouTube): Shemaroo Filmi Gaane is the 9th most subscribed channel in India and 22nd globally (over 68 million subscribers). Overall YouTube presence garners over 100 million daily views with a cumulative subscriber base exceeding 200 million.
• Digital (OTT): ShemarooME Gujarati is positioned as a formidable B2C player in Gujarati entertainment.
• In-Flight Entertainment: Holds a leading position, syndicating content to over 100 airlines.

Innovation Initiatives and R&D Effectiveness #

Innovation is a stated core value.

• Content Innovation: Focus on creating fresh original content across TV channels (8 new original shows in FY24) and digital platforms (ShemarooME released over 52 new titles, including original web series and direct-to-digital movies).
• Platform Innovation: Early adopter of YouTube for content distribution. Launch of “Chumbak TV,” a youth-focused entertainment channel.
• Technological Innovation: Launched ShemarooVerse, a digital universe integrating Web3.0 and Artificial Intelligence.

The effectiveness is partially evidenced by viewership numbers, subscriber growth on digital platforms, and industry awards.

Management’s Track Record in Execution #

Management demonstrates a track record of adapting to market changes and pursuing strategic objectives:

• Strategic Pivot: Successfully navigated a strategic business model pivot since 2018, leading to revenues surpassing pre-pandemic levels.
• Broadcasting Business Growth: Expanded to four channels and established brands that resonate with audiences.
• Digital Expansion: Successfully grew its digital presence, particularly on YouTube and with the ShemarooME Gujarati OTT platform.
• Revenue Growth (FY24): Achieved consolidated revenue of INR 7,072 million, a 27.1% YoY increase. Digital media revenue grew 11.4% to INR 2,491 million; traditional media revenue grew 37.6% to INR 4,581 million.
• Profitability Challenges (FY24): Despite revenue growth, the company reported a consolidated EBITDA loss of INR 3 million and a net loss of INR 407 million.
• Balance Sheet Strengthening: Implemented measures in Q4 FY24 to accelerate inventory charge-offs and prioritize debt repayment.

Overall, management has shown capability in growing revenue and market presence, but faces current challenges in translating this to bottom-line profitability.

Capital Allocation Strategy #

Shemaroo’s capital allocation strategy appears focused on:

• Investment in Growth Drivers: Significant past investments in people, technology, and processes. Continued investments in B2C initiatives.

ESG Framework #

ESG and Sustainability Analysis #

Environmental Metrics and Targets #

The company states that due to the nature of its operations in the media and entertainment industry, detailed reporting on energy conservation metrics is not applicable. However, it affirms an endeavor to support environmental sustainability through the adoption of environment-friendly practices within its office premises. Specific quantitative environmental metrics, targets for reduction of emissions, waste, or water usage are not detailed in the report for FY 2023-24.

Financial Analysis: Shemaroo Entertainment Limited (FY 2023-24) #

Overall Financial Performance (Consolidated) #

Shemaroo Entertainment Limited reported revenue of INR 7,072 million in FY 2023-24, a 27.1% YoY growth from INR 5,600.3 million in FY 2022-23. This growth was primarily driven by the broadcasting business.

EBITDA for FY 2023-24 was a loss of INR 3 million, a stark contrast to the positive EBITDA of INR 424.3 million in the previous year.

Financial Analysis Report: Shemaroo Entertainment Limited - FY 2023-24 #

Auditor’s Opinion and Qualifications #

Standalone Financial Statements #

The Statutory Auditors, M/s. Mukund M Chitale & Co., issued an unmodified opinion, stating that the standalone Ind AS financial statements give a true and fair view of the state of affairs as at March 31, 2024, and its loss, total comprehensive loss, changes in equity, and cash flows for the year, in conformity with Indian Accounting Standards (Ind AS).

Consolidated Financial Statements #

An unmodified opinion was also issued for the consolidated Ind AS financial statements, affirming they present a true and fair view.

Emphasis of Matter (Both Standalone and Consolidated) #

The auditors drew attention to Note 33.6 (Standalone) / 34.7 (Consolidated) regarding a search operation by the CGST and Central Excise Department. The company paid ₹1,200 lakhs under protest (provisioned for), and the department claimed inadmissible Input Tax Credit (ITC) of ₹7,025.62 lakhs, which is being contested. The auditors’ opinion is not modified in respect of this matter.

Key Audit Matters (KAMs) (Both Standalone and Consolidated) #

1. Valuation & amortization estimate of inventory of copyrights: Due to the significant inventory balance and management’s assessment involving judgments about future predictions.
2. Recognition of Revenue: Critical due to multiple complex contracts for advertisement, subscription, and syndication, requiring judgment in assessing fulfillment of obligations.

Other Matters (Consolidated Audit Report) #

• Financial statements of one subsidiary (total revenue Nil, net loss ₹0.43 lakhs) were audited by another auditor, and the opinion relies on their report.
• Financial information of one subsidiary (total revenue ₹508.89 lakhs, net loss ₹38.12 lakhs) was unaudited and furnished by management; this was deemed not material to the Group. The opinion was not modified for these matters.

Secretarial Audit Report #

M/s. Manish Ghia & Associates issued a Secretarial Audit Report (Annexure C to Board’s Report) stating that the company has complied with the listed statutory provisions and has proper Board processes and compliance mechanisms. No qualifications were noted, but the report mentions the CGST search and a compounding of non-compliance under the Legal Metrology Act, 2009 (₹18,000 levied).

Key Accounting Policies and Changes #

• The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) on a historical cost basis, except for certain financial assets and liabilities measured at fair value. The functional currency is Indian Rupees (₹), with amounts rounded to the nearest lakh.

Revenue Recognition (Ind AS 115) #

• Sale of Content, Production, Distribution, Syndication: Recognized when control is transferred per agreed terms.
• Broadcasting (Advertisement): Recognized when ad appears; (Subscription): Recognized on time basis.
• Sale of Goods (Physical Media): Recognized when significant risks and rewards of ownership pass.
• Contract Assets (Unbilled Revenue) & Contract Liabilities (Deferred Revenue) are recognized based on performance obligations and consideration received/due.

Inventories (Copyrights) #

Stated at lower of cost/carrying cost or net realizable value. Valued at a percentage of cost based on the nature of rights, as estimated by Management. Accelerated impairment is made if warranted. Projects in progress and movies under production are stated at cost.

Property, Plant & Equipment (PPE) & Intangible Assets #

Stated at cost less accumulated depreciation/amortization and impairment. Depreciation on PPE is on a straight-line basis over useful lives estimated by management or prescribed by Schedule II of the Companies Act. Software is amortized over 5 years.

Impairment of Non-Financial Assets #

Assessed at each reporting date for indicators of impairment.

Financial Instruments (Ind AS 109) #

• Financial Assets: Initially recognized at fair value. Subsequent measurement at amortized cost, FVTOCI, or FVTPL based on business model and cash flow characteristics. Investments in subsidiaries are at cost. Impairment uses an ‘Expected Credit Loss’ (ECL)