Hi Jmanis,
Cultural competitions are conducted to exhibit the hidden talents of the employees. I have referred to signing and dancing as examples. It could be anything - a team of employees may perform a drama, skit, mime, magic show, etc. The role of HR is to keep the employees entertained, engaged, involved, and proud to be part of the organization. It all depends on the employer's budget for the annual day celebration. Depending on the budget, you may even invite film or TV celebrities, which would make the event more joyful.
Thank you.