Chennai-based OTT streaming platform Ullu Digital has reported a 16% decline in profits for FY24, even as its revenue surpassed the INR 100 crore milestone. The company, which had filed for an IPO on the BSE SME platform, is now navigating regulatory challenges related to its content, potentially impacting its public listing timeline.
Ullu Digital’s profit after tax (PAT) fell to INR 12.68 crore in FY24 from INR 15.14 crore in the previous fiscal year. However, the company managed to grow its operational revenue by 7%, reaching INR 99.67 crore, up from INR 93.15 crore in FY23. Including other income of INR 51.51 lakh, the platform’s total revenue exceeded INR 100 crore for the first time.
The profit decline comes at a crucial juncture for the Chennai-based startup, which filed its draft red herring prospectus (DRHP) in February 2024, aiming to raise between INR 135-150 crore through a fresh issue of 62.63 lakh shares on the BSE SME platform.
Vibhu Agarwal, Founder and CEO of Ullu Digital, commented, “While our profitability has seen a temporary setback, our focus remains on sustainable growth and addressing regulatory compliance. We’re confident about our revised timeline for going public by March 2025.”
The company’s path to the public markets has been complicated by regulatory scrutiny over its content. The National Commission for Protection of Child Rights (NCPCR) raised concerns about the platform’s content accessibility to minors, triggering a joint investigation by SEBI, the corporate affairs ministry, and MeitY.
Financial analysis reveals significant shifts in the company’s operational expenses. Employee benefit expenses saw a 41% increase to INR 11.89 crore, reflecting investments in human capital. However, the platform reduced its advertising spend by 26% to INR 14.96 crore and cut its content acquisition costs (Purchase of Stock-in Trade) by 13% to INR 27.33 crore.
“The current regulatory challenges facing Ullu Digital highlight the growing pains of Tamil Nadu’s digital entertainment sector,” notes Priya Ramachandran, Senior Analyst at TechVantage Research. “As the state’s startup ecosystem matures, companies must balance growth with regulatory compliance, especially in content-sensitive sectors.”
The case has broader implications for Tamil Nadu’s burgeoning OTT and digital media startup ecosystem, which has seen rapid growth in recent years. Industry experts suggest that Ullu’s experience could lead to more stringent self-regulation among content platforms and potentially influence future fundraising strategies for entertainment-tech startups in the region.
For the Tamil Nadu startup ecosystem, which has been positioning itself as a hub for media and entertainment technology, Ullu’s regulatory challenges and eventual resolution could set important precedents for content moderation and compliance frameworks.
Looking ahead
Ullu Digital’s ability to navigate these regulatory hurdles while maintaining its growth trajectory will be crucial not only for its IPO prospects but also for setting benchmarks for other digital content platforms emerging from Tamil Nadu’s startup ecosystem.
