TIPS MUSIC LIMITED — Investor Presentation 2021

Jul 28, 2021

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July 28, 2021

To, To, Listing Department Listing Department BSE Limited National Stock Exchange of India Limited P.J Towers, Dalal Street, Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Fort, Mumbai – 400 001 Bandra Kurla Complex, Bandra (E), Mumbai – 400 050 Scrip Code: 532375 Symbol: TIPSINDLTD

Subject: Submission of Presentation of Analysts/Investors Meeting

This is further to our letter dated July 26, 2021 on the Investor/ Analyst call scheduled on July 28, 2021 and pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, we enclose herewith a copy of Investor Presentation with respect to Unaudited Financial Results of the Company for the quarter ended June 30, 2021.

The same shall be uploaded on our website www.tips.in

We request you to kindly take the above information on record.

Thanking you,

For Tips Industries Limited

Digitally signed by PATEL BIJAL PATEL BIJAL RAMJIBHAI RAMJIBHAI Date: 2021.07.28 10:00:27 +05'30'

Bijal R. Patel Company Secretary

Encl: a/a

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Tips Industries Limited

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Investor Presentation July 2021

Safe Harbor

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This presentation has been prepared by and is the sole responsibility of Tips Industries Limited (the “Company”). By accessing this presentation, you are agreeing to be bound by the trailing restrictions.

This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer or recommendation to purchase or subscribe for, any securities of the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment thereof. In particular, this presentation is not intended to be a prospectus or offer document under the applicable laws of any jurisdiction, including India. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. There is no obligation to update, modify or amend this communication or to otherwise notify the recipient if the information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Certain statements contained in this presentation that are not statements of historical fact constitute “forward-looking statements.” You can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “goal”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would”, or other words or phrases of similar import. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Important factors that could cause actual results, performance or achievements to differ materially include, among others: (a) our ability to successfully implement our strategy, (b) our growth and expansion plans, (c) changes in regulatory norms applicable to the Company, (d) technological changes, (e) investment income, (f) cash flow projections, and (g) other risks.

This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. The Company may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such change or changes.

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2

Music Industry…

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23 billion
In 2023
15 billion
In 2020
+15% CAGR
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Indians love their Music

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23.9hrs
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Indian
youth
21.5hrs
(16-24 years
age group)
India
17.8hrs
Global Hours/week
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#19

#14

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India’s rank in the
global digital
revenues
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India’s rank in the global music market

• ✔ According to YouTube, musicians owned the majority of videos that have achieved more than 1 billion lifetime views and/or have made it to the top 10 most watched videos of all time

• ✔ No. of monthly active audio-streaming users has grown from 165 million in 2019 to 200 million in 2020

• ✔ According to an IFPI survey of 19 leading geographic markets in 2019, 54% of 35- to 64-year-olds used a streaming service to listen to music , representing an increase from 46% in 2018, which was the highest rate of growth for use of streaming services across all age groups.

• ✔ Average monthly stream count was over 10 billion streams in first half of 2020 and crossed 11 billion streams per month during lockdown (other than YouTube)

• ✔ Industry leaders estimated a 53% increase in music consumption during leisure and 25% increase during fitness activities in 2020

• ✔ Paid subscriptions generated 9.1% of the Indian music industry’s streaming revenues in 2019, is expected to grow to 31% by 2024. Paid consumers on streaming apps increased by 15% post COVID-19

• ✔ The FICCI–EY Media & Entertainment Report 2020 expects paid subscribers for music streaming in India to cross 5 million by 2023.

*Source: Ericsson Mobility Report November 2019 (EMR-19) & FICCI–EY Media & Entertainment (M&E) Report (2021) and RIAA, IFPI Industry report (2018, 2019 & 2020), Indian Music Industry’s (IMI) — Digital Music Study

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…is bound to grow

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Strong growth in India’s digital userbase with 90% of new users to have vernacular affinity and Tier-2/3/rural shoppers to be over 1.6x of Metro/Tier-1 shoppers by 2023

4Bn new connected consumer devices to be added by 2025 globally

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4Bn new connected consumer devices to be added
to have vernacular affinity and Tier-2/3/rural shoppers to be
by 2025 globally
over 1.6x of Metro/Tier-1 shoppers by 2023
Devices in Billion Users in Millions
2.0 1,050
820
1.2 1.2
528
Smart Home Devices Consumer Electronics Others 2018 2025 2030
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Devices in Billion

Increasing usage of Smart Devices & Increasing penetration of internet users widens the target audience for music companies

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4

Source: GSMA Mobile Economy Report, 2020 I KPMG India’s Digital Future Report, 2019 I Redseer – Vernacular in Now Report, 2019

Global Music Subscription Update

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USA

On Demand Audio streaming in the US was up ~17% y-o-y. 76 Mn Music services subscribers v/s 74 Mn subscribers of Netflix

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Netherlands

Proportion of Streaming doubled in last 8 years & ~60% have premium subscriptions

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Paid streaming contributes ~75% of revenue for Music Labels

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Brazil
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Slightly under 1/3rd of population of France is Slightly under 1/3rd of population is using Streaming serv ces & of that morus i ng Streaming s e than rvices & off that more than ~62% of people are using ~62% of people using paid streaming servicespaid streaming services France

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Russia

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China

Music revenue grew by ~50% in 2019 and streaming grew by ~76% for 2020, this was partially aided by high profile launch of Spotify

Number of paid subscribers doubled in 2 years to 60 Mn; Second highest globally but still under 5% penetration of country’s total population.

Listenership on audio streaming services grew by 40% Y-o-Y in first half of 2020 India

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Source: MusicAlly

Music is the most valuable content

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Ranking on repeated monetization

Music is now an internet business

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20%
Content that can be
2%
Music monetized multiple times
2020
naturally commands 11%
greater economic value
Films 68%
Web Series
Internet Sync
Performance
Physical
Rights
Music ranks at the top of
TV Serials the content pyramid
when ranked on Internet platforms comprised
repeated monetization of total revenues in 2020, up
News 54% in 2018, for the Global Music
Industry
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Internet platforms comprised 68% of total revenues in 2020, up from 54% in 2018, for the Global Music Industry

• *Japan has the largest share. India’s share is less than 2% as more than 80% of music has been digitized

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*Source: IFPI Industry report (2020)

Digital Advertising – Key Driver of Indian Music Industry

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Indian Digital Ad Industry

INR Crs

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23,673
+22%
18,938
15,782
13,683
10,859
8,202
6,228
2016 2017 2018 2019 2020 2021f 2022f
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AD spends on Digital Media by formats & verticals

Social Media Paid Search Display Banners Other incl. Classified Online Video

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23% 26% 24% 27%
32% 34% 31% 34%
45% 0%
9% 1%
0%
3% 1% 0% 13% 13% 3%
31%
21% 15%
42% 2% 18%
24%
19%
49%
34% 20% 41%
32% 26%
16% 17%
21%
25%
14% 15% 18% 17% 15% 19% 18%
10%
FMCG Auto E-commerce Retail Telecom BFSI Media & Consumer Others
Entertainment Durables
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• Digital media is expected to grow at a CAGR of 22% to cross the Rs. 23,600 crores by the end of 2022

• This sustained growth can be attributed to the technological advancements, improvements in data science & analytics, introduction of policies & regulations among others

• Advertising spends on Digital Media is led by Social Media with the largest share of 29%, contributing Rs. 4,596 crore to the Indian digital advertising pie

• Social Media is new revenue stream for Music Industry

• On an average, Indians spend 2-3 hours on Social Media, which is at par with the global average

• 73% of the audience belonging to the age group of 45 years to 54 years use YouTube to watch online content

Source: Dentsu Aegis Network Report 2021

7

Ecosystem Supporting Growth

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Convenience

Listeners no longer need to carry separate devices; smartphone apps make music available 24x7 with a tap 01 and a swipe.

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05
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Smart Phone

Only 450mn smartphone connections in India so far. Increasing smartphone penetration in urban as well as rural India will lead to high data consumption for audio & video platforms

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02
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Rising Data Consumption
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Mobile Data Traffic to grow at 21% CAGR between 2019 and 2025 in India

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More Subscribers

72 crore mobile Internet subscriptions in India today & expected to touch 134 crs by 2025. Current tele-density in rural areas is 03 only 57%

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06

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07

Partnerships

Multiple partnerships with various OTT & Digital platforms to provide annuity revenue stream

Rising AVOD Spends

Digital advertising growing ~30% p.a. in India. Increasing AVOD spend will further boost music & videos streaming online

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Cheap Data & Faster Network

Easy & Cheap availability of data & faster network. 58% of Indian cell phone users are on 3G or 4G networks 04

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08
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Technological Advancements

Evolving technologies like AI & Data analytics will play an important role in understanding consumer preference to enhance listenership

*Source: Ericsson Mobility Report November 2019 (EMR-19) & FICCI–EY Media & Entertainment (M&E) Report (2020) and RIAA, IFPI Industry report (2018)

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8

Company Overview

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Established in 1988, Tips Industries is one of the large corporate houses in the field of music and films

Catalogue is licensed to

Collection of over 29,000 songs across all genres and major languages

Consistent success in creating and acquiring high quality music I.P.R.

Since 1990, Tips has been amongst players with the highest number of gold and platinum discs to their credit

• OTT platforms

• Content Aggregators

• TV Channels

• Telecom Companies

• Radio Stations,

• Advertisers

Extensive catalogue of Film, Non-Film, Devotional, Pop, Remixes

• Event Management Companies

• Hotels, Restaurants, and Others

Hindi Punjabi Gujarati Bhojpuri & many others…

Presence across platforms

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Corporate Philosophy

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Our Vision

To maintain and grow a MUST HAVE HITS catalogue

Our Mission

To create, acquire and deliver quality music to a wide range of audiences

Our Purpose Deliver Entertainment

Our Core Values

• Honesty

• Commitment

• Teamwork

• Passion

• Positive attitude

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…generating multiple revenue streams

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29,000+ Songs

Large and diversified music library

Our catalogue comprises film, non-film, pop, remixes devotional songs and bhajans, created by some of the leading artistes and musicians of this country.

Rich & Evergreen Catalogue

Digitized catalogue comprises over 29,000 songs in multiple Indian languages and genres with new additions every year

Digitally available

Catalogue is available on all the leading online music stores, applications, and web platforms including YouTube, Resso, Amazon Prime, JioSaavn and Facebook

Over YouTube channel 54 Mn subscribers/followers

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Rich content can be leveraged to generate multiple annuity revenue streams via following

Sync Deals

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Broadcast Partners

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Two Pronged Content Acquisition Strategy

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Our endeavour to add right content for larger target audience

Content Cost

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Produce Strategy

• To introduce promising singers (TIPS) is in our DNA

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• We have a strong A&R team which engages with artistes across genres and languages which allows us to present upcoming talent to our listeners.

• Our team has a deep understanding of music which allows us to create and build a repertoire of “Must Have Hits”

Purchase Strategy

• We also engage with other producers to buy music rights to complement our repertoire

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• Our understanding of music and its creative process provides us deep insights on costs and returns and therefore we always remain cost conscious while acquiring music rights

100% of Content cost is charged off to profit & loss account in the year of release, thus no Capitalization & no write-offs in the future. Company follows this policy since inception

Content acquisition cost is only funded Conten isition cost is only funded through through internal accruals internal ac ruals

Strong A&R team to acquire content across languages & genres. 5 Artist signed exclusively

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Growing listenership & Increasing Content Addition

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Youtube Views (in. Bn)
38.5
+41%
26.6
19.3
FY19 FY20 FY21
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New Songs Added

Evergreen & Rich content of 61 215 over 29,000 songs New releases across genres, languages & in Q1FY22 decades giving us high 100 visibility of music revenue FY20 FY21 Existing Content + Continuous Additions : Increasing Music Revenue

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Youtube Views (in. Bn)
+66%
12.8
11.8
+8%
9.8
9.2
7.6 7.7
5.9
Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22
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13

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Financial Highlights

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Segmental Performance - Music

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Revenue (Rs. in Crs)

EBIT (Rs. in Crs)

EBIT Margins (%)

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+88% +91%
28.1 22.8
15.0 11.9
Q1FY21 Q1FY22 Q1FY21 Q1FY22
Revenue (Rs. in Crs) EBIT (Rs. in Crs)
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+2%
-8%
27.6 28.1 24.9
22.8
Q4FY21 Q1FY22 Q4FY21 Q1FY22
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79.5% 80.9%
Q1FY21 Q1FY22
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EBIT Margins (%)
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89.9%
80.9%
Q4FY21 Q1FY22
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15

Q1FY22 Profit & Loss Statement

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Particulars (Rs. in Crs)	Q1 FY22	Q1 FY21	Y-o-Y	Q4 FY21	Q-o-Q	FY21
Revenue From Operations	28.1	15.0	87.3%	27.6	1.8%	90.5
Other Income	1.0	0.7		2.9		4.9
Total Income	29.1	15.6		30.5		95.4
Cost of Production / Distribution of Expenses	0.0	0.0		0.0		0.0
Employee Benefits Expenses	2.2	1.9		2.2		8.1
Other Expenses	7.2	4.9		6.4		27.3
EBITDA	19.6	8.8	122.7%	21.9	-10.5%	60.1
EBITDA %	67.3%	56.0%		71.9%		62.9%
Depreciation and Amortisation Expense	0.2	0.2		0.2		0.8
EBIT	19.4	8.6		21.7		59.2
Finance Costs	0.0	0.0		0.0		0.0
PBT	19.4	8.6		21.7		59.2
Tax	4.8	2.5		3.5		15.8
PAT	14.6	6.1	139.3%	18.3	-20.2%	43.5
PAT %	50.1%	38.9%		59.9%		45.6%
EPS	11.4	4.3		14.4		32.7

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16

Consolidated Historical Profit & Loss Statement

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Particulars (Rs. in Crs)	FY21	FY20	FY19	FY18
Revenue From Operations	90.5	91.0	203.2	47.5
Other Income	4.9	17.8	4.5	2.4
Total Income	95.4	108.8	207.7	49.9
Cost of Production / Distribution of Expenses	0.0	28.7	162.2	17.5
Employee Benefits Expenses	8.1	7.4	7.1	6.6
Other Expenses	27.3	56.9	27.7	13.8
EBITDA	60.1	15.8	10.8	12.0
EBITDA %	62.9%	14.5%	5.2%	24.1%
Depreciation and Amortisation Expense	0.8	1.2	1.3	1.4
EBIT	59.2	14.6	9.5	10.6
Finance Costs	0.0	0.3	2.2	6.6
PBT	59.2	14.4	7.3	4.0
Tax	15.8	3.0	4.4	0.9
PAT	43.5	11.3	2.8	3.1
PAT %	45.6%	10.4%	1.4%	6.3%
EPS	32.7	7.9	2.0	2.2

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17

Consolidated Balance Sheet

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Particulars (Rs. in Crs)	Mar-21	Mar-20	Mar-19	Mar-18
ASSETS
Non-Current Assets
Property, plant and equipment	2.0	1.8	2.1	1.8
Investment Property	12.5	12.8	13.1	21.6
Financial Assets
(i) Investments	18.0	5.6	0.1	0.1
(ii) Loans	5.3	5.2	5.2	5.2
(iii) Other financial assets	0.1	0.1	0.1	3.3
Other non-current assets	4.5	6.7	12.1	9.4
Current Assets
Inventories	-	-	28.7	57.5
Financial Assets
(i) Trade receivables	15.1	18.1	10.6	9.0
(ii) Cash and cash equivalents	31.1	26.0	8.7	5.6
(iii) Bank balances other than (ii) above	2.4	0.4	0.6	2.3
(iv) Other financial assets	0.2	0.2	0.1	0.2
Current Tax (Net)	1.0	4.3	3.7	1.8
Other Current Assets	55.9	8.9	9.5	84.8
TOTAL ASSETS	148.2	90.2	94.7	202.4

Particulars (Rs. in Crs)	**Mar-21 **	**Mar-20 **	**Mar-19 **	Mar-18
Equity
Equity Share Capital	13.0	14.3	14.3	14.3
Other Equity	88.3	66.1	56.4	55.4
Total Equity	101.3	80.4	70.7	69.7
Liabilities
Non-Current Liabilities
Financial Liabilities
(i) Borrowings	-	1.9	2.0	13.7
(ii) Other Financial Liabilities	0.2	0.2	0.2	0.2
Deferred Tax Liabilities	2.4	2.7	2.9	0.0
Employee Benefit Obligations	0.3	0.3	0.5	0.3
Other Non-current Liabilities	37.3	-	-	-
Current Liabilities
Borrowings	-	-	-	5.0
Trade Payables	6.3	4.3	17.8	4.7
Other Financial Liabilities	0.1	-	-	17.1
Employee Benefit Obligations	0.0	0.0	0.0	0.0
Other Current Liabilities	0.5	0.4	0.5	91.6
Total Liabilities	47.0	9.8	24.0	132.7
TOTAL EQUITY AND LIABILITIES	148.2	90.2	94.7	202.4

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18

Abridged Consolidated Cash Flow Statement

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Particulars(Rs. in Crs)	Mar-21	Mar-20	Mar-19	Mar-18
Net Profit Before Tax	59.2	14.4	7.3	4.0
Adjustment for Non-Operating Items	-0.5	14.4	1.9	8.1
Operating Profit/(Loss) Before Working Capital Changes	58.7	28.7	9.2	12.1
Adjustment for WC	-4.6	5.6	19.2	30.9
Cash Generated From Operations	54.1	34.3	28.4	43.0
Direct Taxes Paid	-12.9	-3.8	-3.4	0.3
Net Cash From Operating Activities	41.2	30.5	25.0	43.3
Cash Flow From Investing Activities	-11.5	-4.7	9.3	0.3
Cash Flow From Financing Activities	-24.6	-8.6	-31.2	-38.8
Net Increase/(Decrease) In Cash And Cash Equivalents	5.1	17.3	3.1	4.8
Cash and cash equivalents at the beginning of the year	26.0	8.7	5.6	0.8
Cash and cash equivalents at the end of the period	31.1	26.0	8.7	5.6

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19

Key Ratios

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Cash Flow from Operations (Rs. in Crs)

Net Cash Company (Rs. in Crs)

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43.3
41.2
30.5
25.0
Mar-18 Mar-19 Mar-20 Mar-21
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ROCE (%)
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87.4%
26.2%
13.2% 14.9%
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Mar-18

Mar-19

Mar-20

Mar-21

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Cash & Cash Equivalents
Borrowings
51.5
31.9
18.7
9.4
8.0
2.0 1.9
0.0
Mar-18 Mar-19 Mar-20 Mar-21
ROE (%)
42.9%
14.1%
4.5% 4.0%
Mar-18 Mar-19 Mar-20 Mar-21
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20

Music Industry today

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Music Monetization:

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Rising adoption of subscription:

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Digital Piracy:

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Investments in Music:

• Music labels own IPR for their repertoire for 60 years as per the Copyright Act 2012, an opportunity to monetize music rights for over half a century

• IPR provides longevity to the repertoire

• Although there are about 4-5 active players in the Hindi Music business, each has a unique repertoire and follows a different content acquisition strategy and therefore there is little or no overlap in their offerings when viewed on titleby-title basis

• Aggressive auction type situations don’t exist in content acquisitions

• FICCI–EY Media & Entertainment Report 2020 expects paid subscribers for music streaming in India to cross 5 million by 2022.

• According to Indian Music Industry’s (IMI) — Digital Music Study 2019, paid streaming subscription revenues account for 27% of all recorded music industry revenues in India

• Subscription streaming revenues grew 33% to Rs 292.8 crs. while ad supported streaming revenues grew 43.6% to Rs 257 crs.

• • Clearly, paid streaming has already started contributing more to the Industry

• Technology has disrupted piracy the most • Free services such as You Tube, and other OTT platforms also provide free music listening experiences to their users

• When licensed music is available for free, and data costs are negligible, the economic incentive for piracy is miniscule

• Economic impact of Piracy on Music Industry has declined substantially compared to its impact during the era of physical sale

• Music labels acquire music rights for future growth and expense acquisition costs annually since the outcome is unknown at the beginning; Just like the Pharma industry expenses its investments in R&D annually

• Existing repertoire of music provides a steady cash flow stream to purchase new rights

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Music Industry Business Model

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Streaming platforms

Music Creators Film Producer Music Label Streaming platforms Music creators include Film producers use these Music labels owns the IPR Streaming platforms licence lyricists, composers, and compositions in films and sell (Intellectual Property Rights) the content and make it singers who create songs and the music rights to music and licence the music to accessible to consumer get paid for the same labels various platforms Music labels pay film Streaming platforms give Producer pays the artists the Music label pays the producers upfront (advance) minimum guarantee + a value for the music that is producer for the rights of the + royalty in perpetuity (post variable fee based on number created songs the recovery of upfront cost) of streams

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Thank You

Company Details:

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Investor Relations Advisors:

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Tips Industries Limited

CIN: L92120MH1996PLC099359

Email id: investorrelations@tips.in

Orientcapital (a division of Link Intime India Pvt Ltd)

Ms. Payal Dave: +91 9819916314 payal.dave@linkintime.co.in

Ms. Neha Shroff: +91 7738073466 neha.shroff@linkintime.co.in