Eros International Media Ltd.
|BSE: 533261||Sector: Media|
|NSE: EROSMEDIA||ISIN Code: INE416L01017|
|BSE 15:46 | 27 Mar 2018||Eros International Media Ltd|
|NSE 05:30 | 01 Jan 1970||Eros International Media Ltd|
|Mkt Cap.(Rs cr)||1,607|
|Mkt Cap.(Rs cr)||1,607|
Eros International Media Ltd. (EROSMEDIA) - Director Report
Company director report
The Board of Directors of your Company is pleased to present the 21st AnnualReport of your Company along with the standalone and consolidated Audited Accounts for thefinancial year ended 31 March 2015.
1. FINANCIAL RESULTS
Financial Results of the Company for the year under review along with the figures forprevious year are as follows:-
During the fiscal 2014-2015 your Company successfully released 64 films in multiplelanguages consisting of 44 Hindi films and 20 Tamil/Telugu films as against 69 filmsduring FY 2014 which included 37 Hindi 30 Tamil/Telugu and 2 other regional languagefilms.
Of the Company's total release portfolio of 64 films during the year major theatricalreleases included Action Jackson' Tevar' NH10' Shamitabh'Badlapur' Lingaa (Multi-lingual) Kaththi' (Tamil) Aagadu'(Telugu) Mary Kom' (Overseas) Ek Villain' (Overseas) Kochadaiyaan'(Multi Lingual) amongst others.
During the fiscal your Company significantly augmented its FY2015-2016 film slate withsome impressive signings. The Company partnered with Salman Khan Films for the GlobalDistribution Rights of Bajrangi Bhaijaan' & Hero' acquired internationalrights of Excel Entertainment's eagerly awaited films Dil Dhadakne Do' &Bangistan' . Your Company signed an agreement with Viacom18 Motion Pictures forinternational distribution of four films: Mary Kom' (Released in FY15);Gabbar' (FY16); Golu Pappu' (FY16); & Santa Banta' (FY16).
The year gone by saw your Company's strategy of entry into Regional cinema pay-off welland contribute notably to the portfolio of releases. Building further on its regionalfootprint the Company announced its entry into the Malayalam market by partnering withleading director Jeethu Joseph for Life of Josootty'.
In fiscal 2014-15 your Company launched a Motion Pictures Production Division TrinityPictures which will be focusing on developing intellectual property in-house. While theCompany's acquisition and co-production model fuel scalability and increased market sharethe Trinity label will primarily focus on quality success rate and building franchiseswith lasting value complementing our overall content strategy.
Your Company also enjoys a competitive advantage through its extensive film librarycomprising of 2000+ films which include recent and classic titles across diverse genresbudgets and languages. There is also growing potential for the digital revenue throughErosNow a dedicated online entertainment portal ErosNow owned by the parent ErosInternational PLC offers full length films music videos television and originals as itcontinues to expand its reach through various strategic collaborations. With improvinginternet connectivity in the coming years supported by exponential growth expected insmartphone user base in India appetite for on-the-go entertainment should increasesignificantly.
With a view to strengthen the financial position of the Company your Directors did notrecommend any dividend for its equity shareholders.
No percentage of profits was transferred to General reserve as dividend was notrecommended for the financial year 2014-2015.
4. RESULTS OF OPERATIONS
In the financial year 2014-2015 the Company recorded consolidated revenue of ' 144103lacs as against ' 113964 lacs in the previous financial year registering a growth of26.45 %. The earnings before interest and tax (EBIT) increased by 20.63 % to ' 36155 lacsas compared to ' 29971 lacs in previous year. The Profit after tax (after minorityinterest) (PAT) at ' 24706 lacs was higher by 23.72 % over last year (' 19969 lacs in FY2013-2014). Diluted EPS increased by 22.19 % to ' 26.43 as compared to ' 21.63 infinancial year 2013-14.
On standalone basis the revenues from operations for the financial year 2014-2015stood at ' 109071 lacs which was higher by 26.93% as compared to previous year which was' 85929 lacs. The earnings before interest and tax (EBIT) increased by 8.47 % to ' 23631lacs as compared to ' 21785 lacs in previous year.
The Profit after tax (PAT) at ' 12419 lacs was higher by 9.26% over last year ('11367lacs in FY 20132014). Diluted EPS decreased by 7.88 % to ' 13.28 as compared to ' 12.31 infinancial year 2013-14.
5. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
As on 31 March 2015 the Company had 13 subsidiaries (comprising of 8 directsubsidiaries and 5 indirect subsidiaries) as listed below:
Eros International Films Private Limited (Direct Subsidiary)
Big Screen Entertainment Private Limited (Direct Subsidiary)
E M Publishing Private Limited (Direct Subsidiary)
EyeQube Studios Private Limited (Direct Subsidiary)
Eros Animation Private Limited (Direct Subsidiary)
Colour Yellow Productions Private Limited (Direct Subsidiary)*
Digicine PTE Limited (Direct Subsidiary)
Copsale Limited (Direct Subsidiary)
Ayngaran International Limited (Indirect Subsidiary)
Ayngaran International UK Limited (Indirect Subsidiary)
Ayngaran International Mauritius Limited (Indirect Subsidiary)
Ayngaran International Media Private Limited (Indirect Subsidiary)
Ayngaran Anak Media Private Limited (Indirect Subsidiary)
*During the year your Company acquired 50% stake in Colour Yellow Productions PrivateLimited and holds majority of the control of Board of Directors.
Further during the year the Company had placed a proposal to the shareholder foracquisition of 100% stake of Universal Power Systems Private Limited from its existingpromoters and shareholders who approved the same vide Postal Ballot results dated 26March 2015. The acquisition procedure shall commence on receipt of approval from ForeignInvestment Promotion Board (FIPB) for making downstream investment.
The Company's Policy for determining material subsidiaries is available on theCompany's website on the following link viz. http://www.erosintl.com/EROS/media/Images/Policy-on-Determination-of-Material- Subsidiary.pdf. None of the subsidiarycompanies is material non-listed Indian subsidiary as per Clause 49 (V) of the ListingAgreement. Further there are no associate companies within the meaning of Section 2(6) ofthe Companies Act 2013. There has been no material change in the nature of the businessof the subsidiaries.
The financial statements of all the subsidiary companies as on 31 March 2015 formspart of consolidated financial statements in compliance with Section 129 and otherapplicable provisions if any of the Companies Act 2013 and the same are prepared inaccordance with applicable accounting standards. The financial statements both standaloneand consolidated are prepared in accordance with applicable accounting standards and asper Schedule III of the Companies Act 2013 and applicable rules thereto.
In addition to the consolidated financial statements a detailed financial statementcontaining the salient features of the financial statement of each of the subsidiarycompanies as included in the consolidation of financial statements as on 31 March 2015 isannexed herewith as Annexure A (AOC 1) and forms part of this Report.
The financial statements of the subsidiary companies and related information areavailable for inspection by the members at the Corporate Office of your Company duringbusiness hours on all days except Saturdays Sundays and public holidays upto the date ofthe Annual General Meeting (AGM) as required under Section 136 of the Companies Act 2013.Any member desirous of obtaining a copy of the said financial statements may write to theCompany Secretary at the Corporate Office of your Company.
As required by the Act the financial statements of the Company including consolidatedfinancial statements alongwith relevant documents and separate audited accounts in respectof each of the subsidiaries are made available on the website of the Company.
In compliance with Section 149 152 Schedule IV and other applicable provisions of theCompanies Act 2013 read with Companies (Appointment and Qualification of Directors)Rules 2014 and Clause 49 of the Listing Agreement the shareholders of the Company attheir meeting held on 25 September 2014 approved the appointments of Mr. Naresh ChandraMr. Dhirendra Swarup and Dr. Shankar Nath Acharya as Independent Directors of the Companyfor a first term of five years and to hold the office till the conclusion of AnnualGeneral Meeting to be held in the calendar year 2019.
At the said AGM Mr. Kishore Lulla was re-appointed as an Executive Director of theCompany liable to retire by rotation for a period of three (3) years commencing from 25September 2014 till 24 September 2017.
During the year Mr. Vijay Ahuja Executive Director of the Company was re-designatedas Non-Executive Non Independent Director of Company w.e.f 13 February 2015.
Pursuant to the provisions of Section 152 of the Companies Act 2013 and applicablerules thereto
Ms. Jyoti Deshpande Executive Director of the Company is liable to retire by rotationat the ensuing Annual General Meeting and being eligible seeks re-appointment. YourDirectors recommend her reappointment for your approval.
The Board of Directors at their meeting held on 29 May 2015 re-appointed Mr. SunilLulla as Executive Vice Chairman and Managing Director for another period of five yearscommencing from the end of the present tenure i.e. from 28 September 2015 till 27September 2020 and have recommended the proposed re-appointment for approval of theshareholders. Your Directors recommend his re-appointment for your approval.
Dr. Shankar Nath Acharya Non Executive Independent Director of the Company tenderedhis resignation w.e.f. 30 April 2015. The Board placed on record its deep appreciationfor Dr. Shankar Nath Acharya and thanked him for his significant contributions andvaluable guidance during his association with the Company.
Based on the application received from one of the member proposing the candidature ofMr. Rakesh Sood as Independent Director the Board of Directors of the Company at theirmeeting held on 30 April
2015 appointed Mr. Rakesh Sood as an Independent Additional Director w.e.f. 1 May2015 who shall hold his office till the next Annual General meeting. The proposedresolution for appointment of Mr. Rakesh
Sood as Independent Director forms part of the Notice convening Annual General Meeting.Your Directors recommend his appointment for your approval.
Necessary disclosures/declarations as per the Companies Act 2013 and applicable rulesthereto are received from all the Directors seeking appointment/ re-appointment(s). Asrequired under Clause 49 of the Listing Agreement entered with Stock Exchanges theinformation including brief profile(s) of the Directors proposed forappointment/re-appointment(s) are mentioned at length in the explanatory statement annexedto the Notice convening the Twenty First Annual General Meeting.
Declaration of Independence by Independent Directors & adherence to theCompanys Code of Conduct for Independent Directors
All the Independent directors of the Company have submitted their disclosure to theeffect that they fulfill all the requirements/criteria of independence as per Section149(6) of the Companies Act 2013 as well as Clause 49 of the Listing Agreement. Furtherall the independent directors have affirmed that they have adhered and complied with thecompany's Code of Conduct for Independent Directors which is framed in accordance withSchedule IV of the Companies Act 2013.
Meetings conducted during the year
During the year under review the Board met four (4) times in a year i.e. on 29 May2014 14 August 2014 12 November 2014 and 13 February 2015 apart from one separatemeeting of Independent Directors held on 25 September 2014. The maximum time gap betweenany two meetings of the Board was not more than one hundred and twenty days as stipulatedunder the Listing Agreement entered with Stock Exchanges.
Constitution of various committees
The Board of Directors of the Company has constituted following committees:
a. Audit Committee
b. Nomination and Remuneration Committee
c. Stakeholders Relationship Committee
d. Corporate Social Responsibility Committee
e. Risk Management Committee
f. Management Committee
Details of each of the Committees stating the composition terms of reference andothers are covered at length in Corporate Governance Report attached to and forming partof this report.
Annual Evaluation of Board Committees and individual Directors
In accordance with Board Performance Evaluation Policy of the Company a formal annualevaluation was carried out by the Board of its own performance and that of its committeesand individuals directors on rating sheet methodology and in accordance with theprovisions of the Act and the Corporate Governance requirements as prescribed bySecurities and Exchange Board of India (SEBI) under clause 49 of the ListingAgreement.
The performance evaluation was done in an independent and fair manner. Evaluatorsundertook the evaluation process which includes filing and deliberation of evaluationrating sheet followed by individual interviews and explanations. Results of all types ofevaluation were consolidated in a report along with the final ratings. Evaluation reportsprepared by Nomination and Remuneration Committee were tabled before the Board which wasdeliberated upon at its meeting.
Familiarization Programme for Independent Directors during the year
Familiarization Programme for Independent Directors is mentioned at length in CorporateGovernance Report attached to this report and the details of the same have also beendisclosed on website of the Company and are available at the following link:http://www.erosintl.com/ eros/media/images/videos/familiarization-programme-of-independent-directors.pdf.
7. KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company had appointed Mr. Sunil Lulla Executive ViceChairman and Managing Director Mr. Kamal Kumar Jain erstwhile Chief Financial Officer ofthe Company and Ms. Dimple Mehta Company Secretary and Compliance Officer of the Companyas Key Managerial Personnel in accordance with the provisions of Section 2(51) Section203 of the Companies Act 2013 read with Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
During the year Mr. Kamal Kumar Jain Chief Financial Officer of the Company hadresigned from his office as such w.e.f. 30 November 2014 and a new Key ManagerialPersonnel Mr. Dinesh Modi was appointed by the Board of Directors in his place w.e.f. 25November 2014.
8. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of the directors' report.
A detailed statement of disclosure required to be made in accordance with theNomination and Remuneration Policy of the Company disclosures as per Companies Act 2013and applicable rules thereto and Listing Agreement is attached as Annexure B hereto andforms part of this report.
9. EMPLOYEES STOCK OPTION PLAN (ESOS)
The Nomination and Remuneration Committee of the Board of Directors inter aliaadministers and monitors the Employees Stock Option Scheme of the Company which was inaccordance with the Securities and Exchange Board of India (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines 1999 (the SEBI Guidelines').
Details of Scheme being implemented by the Company including the summary of informationon the stock options provided by the Company is attached as Annexure C to this report andforms part of this report.
During the year pursuant to the grants made to the employees under the Company'sEmployees Stock Option Scheme 2009 the employees had exercised 534084 stock optionsagainst which equivalent number of shares were issued and allotted by the Company.
Based on the recommendations of Nomination and Remuneration Committee the Board ofDirectors of the Company had granted additional 691961 stock options to its existing andnew joinees during the financial year.
10. ISSUE OF EQUITY SHARES
Your Company issued and allotted 534084 Equity shares of the Company against exerciseof equal number of stock options pursuant to Eros Employee Stock Option Scheme 2009thereby resulting in increase in the Company's paid up capital from ' 919731900 to '925072740 as on 31 March 2015.
11. AUDITORS & AUDITORS REPORT
M/s. Walker Chandiok & Co LLP Chartered Accountants were appointed as thestatutory auditors of the Company by the shareholders at their meeting held on 25September 2014 for a period of three (3) years till the conclusion of 23rd Annual GeneralMeeting to be held in 2017 subject to ratification of their appointment at every AGM.
Your director recommends that the appointment of M/s. Walker Chandiok & Co LLPChartered Accountants needs to be ratified at the Annual General Meeting. Your Companyhas received letters from M/s Walker Chandiok & Co LLP Chartered Accountants to theeffect that their appointment if ratified would be within the prescribed limits underSection 141(3)(g) of the Companies Act 2013 and that they are not disqualified from beingappointed as the Auditors of the Company.
M/s Walker Chandiok & Co LLP Chartered Accountants audited the financialstatements of the Company both standalone and consolidated and issued Auditors Reportthereon. The auditors' report does not contain any qualifications reservations or adverseremarks.
The notes to the Accounts referred to in the Auditors' Report are self explanatory andtherefore do not call for any further clarifications under Section 134(3)(f) of theCompanies Act 2013.
12. SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act 2013 the Company has appointed M/sBankim Mehta & Associates Practicing Company Secretaries (COP- 8959) as theSecretarial Auditor for FY 2014-2015 whose report dated 29 May 2015 is attachedseparately to this report as Annexure D.
The Secretarial Auditors' Report is unqualified and do not contain any adverse remarks.The Report is self explanatory and therefore do not call for any further clarificationsunder Section 204 of the Companies Act 2013.
13. CREDIT RATING
During the year Credit Analysis and Research Limited (CARE) upgraded theCompany's rating for its Long Term facilities from CARE A+ to CARE AA- and ratings forshort term facilities were reaffirmed at CARE A1+. The rating for NCDs (that may be issuedby the Company in future depending on various factors) was upgraded from CARE A+ to CAREAA- and the ratings for Commercial Papers (CPs) were reaffirmed at CARE A1+.
14. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act 2013 and the rulesmade thereunder as amended has been given in the Annexure E appended hereto and formspart of this report. The Company had 5 employees who were employed throughout the year andwere in receipt of remuneration of more than ' 60 lacs per annum and 6 employee(s) wereemployed for part of the year and were in receipt of remuneration of more than ' 5 lacsper month.
15. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY
The particulars of loans guarantees and investments made /given by the Company in theyear 2014 -2015 as per Section 186 of the Companies Act 2013 is stated in the Notes toAccount which forms part of this Annual Report.
16. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
None of the transactions with related parties falls under the scope of Section 188(1)of the Companies Act 2013. Information on transactions with related parties pursuant toSection 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules 2014are given in Annexure F in Form AOC-2 and the same forms part of this report.
17. POLICY ON RELATED PARTY TRANSACTIONS
The Company has adopted a policy on Related Party Transaction and the same has beendisplayed on the Company's website: http://www.erosintl.com/EROS/media/Images/Policy-on-dealings-and-materiality-of- Related-Party-Transaction.pdf.
18. VIGIL MECHANISM
The Company has established a vigil mechanism for reporting of genuine concerns throughWhistle Blower Policy of the Company. This Policy inter alia provides a direct access tothe Chairman of Audit Committee of the Company on his dedicated email-ID firstname.lastname@example.org. The Whistle Blower Policy is posted on the Company's website athttp://www.erosintl.com/eros/ media/images/whistle-blower-policy.pdf.
19. PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has formulated and implemented Anti Sexual Harassment Policy in accordancewith Section 21 and 22 of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 to protect the interest of women employees at workplace. TheCommittee comprising of executive director and senior executives of the Company has beenset up to redress the complaints received regarding sexual harassment. All employees(permanent contractual temporary trainees) are covered under this policy. Details ofnumber of cases filed under Sexual Harassment and their disposal is as under:
20. EXTRACT OF THE ANNUAL RETURN
As per Section 92(3) of the Companies Act 2013 the extract of annual return is givenin Annexure G in the prescribed Form MGT-9 which forms part of this report.
All the insurable interests of your Company including properties equipment stocksetc. are adequately insured.
22. DEPOSITS LOANS AND ADVANCES
Your Company has not accepted any Public Deposits falling within the purview of Section73 of the Companies Act 2013. As such no amount on account of principal or interests onpublic deposits was outstanding as on 31 March 2015. The details of loans and advanceswhich are required to be disclosed in the Company's annual accounts pursuant to Clause 32of the Listing Agreement with the Stock Exchanges are mentioned in Notes to accountsforming a part of this Report.
23. DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of section 134(5) of the Companies Act 2013 theBoard confirms and submit the Director's Responsibility Statement stating that:
a. in the preparation of the annual accounts the applicable accounting standards hasbeen followed along with the proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the company for that period;
c. the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors had laid down internal financial controls to be followed by theCompany and that such financials controls are adequate and were operating effectively; and
f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequately and operating effectively.
24. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE
The provisions of Section 134(3)(m) of the Companies Act 2013 relating to conservationof energy and technology absorption do not apply to the Company. The Company has beencontinuously and extensively using technology in its operations.
Particulars of foreign currency earnings and outgo are as under:
25. INTERNAL AUDIT
The Company has developed stringent Internal Control systems in its various businessprocesses commensurate with the size and nature of its business. The Company hasentrusted the internal audit to M/s. Ernst & Young LLP Chartered Accountants. Themain thrust of the internal audit process is test and review of controls independentappraisals of risks business processes and benchmarking internal controls with bestpractices.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthenthem.
The Audit Committee of the Board of Directors Statutory Auditors and the BusinessHeads are periodically apprised of the internal audit findings and corrective actionstaken.
26. CORPORATE GOVERNANCE
The Company has been observing the best corporate governance practices on an on-goingbasis. A separate section on Corporate Governance and a Certificate from M/s. Bankim Mehta& Associates Practicing Company Secretaries (Registration No COP- 8959/Membership-7831) regarding compliance of the conditions of Corporate Governance asstipulated under Clause 49 of the Listing Agreements with the Stock Exchanges forms partof the Corporate Governance Report annexed herewith.
27. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As per clause 49 of the Listing Agreement entered into with the stock exchangesManagement Discussion and Analysis Report is attached herewith and forms part of thisreport.
28. CORPORATE SOCIAL RESPONSIBILTY
The Board of Directors at its meeting held on 29 May 2014 approved the Corporate SocialResponsibility Policy of the Company which was duly reviewed and recommended by CSRCommittee in accordance with Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014.
The thrust areas of CSR Policy inter alia are education and empowerment of women.Disclosures on CSR activities as required under Rule 9 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 are reported in Annexure H forming part of this reportand is also available on the website of the Company.
During the financial year 2014-2015 the Company spent a sum of ' 55 lacs only towardsits CSR activities out of total CSR amount of ' 3.58 crores (being 2% of average netprofit of last three years) required to be spent in the entire financial year. As theCompany is still in the process of identifying the right charitable trust/ societies to beassociated with in accordance with the CSR Policy of the Company the Company ended upspending short on its CSR activities in FY 2014-2015.
29. RISK MANAGEMENT
The Board of Directors at its meeting held on 12 November 2014 constituted the RiskManagement (RM) Committee comprising of the Directors and executives as its Members andapproved the Risk Management Policy. The Policy deals with the process which includesinter alia identification of elements of risk which in the opinion of the Board maythreaten the existence of the Company assessment thereof and minimisation procedures. Thedetails about Risk Management Committee and its charter are available on the website ofthe Company on following link http:// www.erosintl.com/EROS/media/Images/Charter-of-Risk-management-Committee.pdf.
The Board of Directors take this opportunity to express their sincere appreciation forsupport and the co-operation from the Banks Financial Institutions ShareholdersVendors Customers and all other business associates.
Your Directors sincerely appreciate the high degree of professionalism commitment anddedication displayed by employees at all levels. Your Directors also wish to place onrecord their gratitude to all the stakeholders for their continued support and confidence.
For and on behalf of Board of directors