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Directors Report of Accel Transmatic Ltd.

Mar 31, 2015

Dear Members,

Your Directors have pleasure in presenting the 29th Annual Report of ACCEL TRANSMATIC LIMITED (the Company) Standalone financial statement along with the audited financial statements for the financial year ended 31 March, 2015,

FINANCIAL RESULTS INR in Millions

Particulars 2015 2014

Income from Operations 10.85 15.07

Profit /(Loss) before interest,

depreciation and tax (30.25) (5.78)

Interest 8,71 21.87

Depreciation & Amortisation 26,53 39.73

Profit/fLoss) after tax (70.66) (67.36)

REVIEW of operations

During the financial year 2014-15, your company recorded total Income of Rs. 10.85 mn (Previous Year Rs, 15.07 mn)comprising income from Animation services 7,73 mn and other services Rs.3.12mn. The company reported a net loss of 70,65 mn mainly due to the high interest outgo on borrowings from Banks and amortization of its Intellectual properties without realizing a matching revenue by monetizing the same through distribution. During the year, the animation division reported a negative EBITDA of Rs.(30,25)mn (previous year, a negative EBITDA of Rs.9.431 mn).

The company continued to carry on the business of content development services in Animation and Visual Effects in a small way during the year under review, and also pursued its efforts to monetize the IPRs. During the financial year 2015-16, the company has started its Engineering Services Division at its factory premises in Chennai for contract manufacturing and Engineering services. The management: is hopeful of scaling operations in both the divisions substantially during the coming years.

The highlights of the performance are discussed in detail in the management: discussion and analysis report attached as Annexure to this report.

GOING CONCERN

The company has suffered losses for the past several years. The accumulated losses as ondate of the Balance sheet is more than 102,75mn (184 %) of its networth. However, considering the expected future cash flows and the commitment of the promoters to try and revive the operations in the coming years, the potential cash flows expected to be received by the company from exploiting its IPRS, the management is of the opinion that the company would be in a position to continue as a going concern and hence the accounts have been drawn up on such basis. The proposal of merging of the holding company with the company also will assist the company to shore up it finances and operations.

DIVIDEND:

The Directors have not recommended dividend for the financial year ended 31st March 2015 considering the losses and the necessary to conserve resources,

PARTICULARS OF EMPLOYEES:

The information required under section 197 of the Act and rules made there-under, in respect of employees of the company, is not required to be provided since there are no employees covered under the provision.

DISCLOSURE AS PER SEXUAL HARRASMENT OF WOMAN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

"The company has in place an Anti-Sexual Harassment policy in line with the requirements of The Sexual Harassment of Women at the workplace ( Prevention , Prohibition & Redressal) Act, 2013. Internal Complaints committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy The following is a summary of Sexual harassment complaints received and disposed off during the year 2014-15, No of complaints:- Nil No of Complaints disposed off- Nil DOCUMENTS PLACED ON THE WEBSITE(www.acceltransmatic.com):

The following documents have been placed on the company's website in compliance with the Companies Act:

1. Financial Statements of the Company.

2. Separate audited accounts in respect of subsidiaries as per fourth proviso to Section 136(1).

3. Details of Vigil Mechanism for directors and employees to report genuine concerns as per proviso to Section 177(10).

4. The Terms and Conditions of appointment of independent directors.

5. Details of unpaid dividend as per Section 124(2).

CORPORATE GOVERNANCE REPORT REQUIRED UNDER THE COMPANIES ACT, 2013 AND LISTING AGREEMENT

As per Clause 49 of the Listing Agreement entered into with the stock exchanges, Corporate Governance Report with Auditors' Certificate on Compliance with the conditions of Corporate Governance are attached and form part of this report.

MANAGEMENT DISCUSSION &ANALYSIS

The Management Discussion and Analysis and various initiatives and future prospects of the company are enclosed, separately as Annexure-II to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:

i, in the preparation of the annual accounts for the financial year 2014-15, the applicable accounting standards have been followed and there are no material departures:

ii, they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Loss of the Company for the financial year;

iii, they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Rule 8(3) of the Companies (Accounts) Rules, 2014, are set out in an Annexure- III to this Report

FIXED DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

CEO/CFO CERTIFICATION;

The Chairman and the Whole time Director and CFO the Company have submitted a certificate to the Board regarding the financial statements and other matters, as required under Clause 49(V) of the Listing Agreement.

DIRECTORS:

Mr.N.Gopalakrishnan Nair Director of the Company retire by rotation and is proposed to be reappointed.

Ms, Shruthi Panicker was co-opted as an Additional Director with effect from 31st March 2015 and is proposed to be reappointed.

QUALITY MANAGEMENT:

Your company's quality policy is to enhance customer satisfaction through continued improvement of skills, processes and technologies, During the year the company continued to invest in technologies, infrastructure and processes in order to keep our quality management systems updated

AUDITORS REPORT:

M/s. Varma & Varma, Chartered Accountants, Chennai, auditors of the Company retire at the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. The Company has received confirmation from them that their appointment will be within the limit prescribed under section 139 of the Companies Act, 2013, The Audit Committee of the Board has recommended their reappointment, The necessary resolution is being placed before the shareholders for approval.

The auditors have emphasized in their report about the realization of intangible assets, that the Company has incurred cash loss, networth has been eroded and the current liabilities exceeds the current assets.

The Board of Directors would like to clarify as below regarding "emphasis matter" expressed by the auditors in their report annexed with this Annual Report

1, The Company continued to incur losses during the period under review, due to various reasons like lack of viable service orders, interest cost on the borrowings made for investments in fixed assets and delays in monetizing the assets due to market slowdown for animated content. The management is confident of sustaining the operations and recovering the investments made in the business.

2, The promoters have lent funds to sustain the operations during the years, the Company incurred losses. These amount have been shown under current liabilities and hence the mismatch between current assets and current liabilities. The holding company has already converted Rs. 5 Cr out of these funds into cumulative preference shares to strengthen the equity base of the company and also to improve the current ratio.

Further, the promoters have proposed to merge the holding company M/s, Accel Limited with the company under a scheme of arrangement of amalgamation,

3, The company is taking adequate steps to liquidate certain real estate assets owned by the company to reduce the bank liabilities,

4, The management is committed to grow the media business and also venture into new business and is confident of carrying on the business as a going concern basis and would bring in necessary support to the extent: possible as and when required,

5, The Company had availed an asset backed loan for Rs.7,67 crores from a bank which is payable over a period of 83 month and hence long term is nature. The long term assets were acquired / developed out of funds infused by the promoter companies.

6. The management is confident that it will be able to realise the intangible assets and with the support of its holding company and also as explained m the notes to accounts and also explained above, will continue to operate as a going concern.

INTERNAL CONTROL SYSTEMS;

Your company has adequate internal control procedures commensurate with the size arid nature of its operations. The Audit Committee constituted by the Board of Directors is functioning effectively. The Internal Audit for the year 2014-2015 was carried out by M/s, Vijayakumar&Easwaran covering all areas of operations. All significant observations were discussed in the Audit Committee, which met 4 times during the year under review

DEPOSITORY SYSTEMS;

Your Company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e., National Securities Depository Limited (NSDL.) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, members are requested to avail of the facility of dematerialization of the Company's shares on either of the Depositories as aforesaid,

ACKNOWLEDGEMENT;

Your directors would like to express their grateful appreciation for the assistance and co-operation received from Central and State governments, financial institutions, banks, government authorities, customers, suppliers and investors during the year under review. Your Directors also wish to place on record their deep sense of appreciation, towards the dedicated and sincere services rendered by the employees of the company for its success.

For and on behalf of the Board of Directors

Chennai. N.R. Panicker 13/11/2015 Chairman


Mar 31, 2014

Dear shareholders,

The Directors are pleased to present the 28th annual report together with the audited accounts of the company for the year ended March 31, 2014.

(Rupees in Millions)

Particulars 2014 2013

Income from operations 15.07 36.83

Profit/(Loss) before interest, depreciation and tax (5.76) (9.43)

Interest 21.87 24.31

Depreciation and Amortisation 39.73 51.67

Profit/(Loss) after tax (67.36) (65.42)

Review of operations:

During the financial year 2013-14, your company recorded total income of Rs. 15.07 mn (previous year Rs 36.83 mn) comprising income from Animation Services of Rs. 13.78 mn, other services Rs. 1.28 mn. The company reported a net loss of Rs. 67.36 mn mainly due to the high interest outgo on borrowings from Banks and amortization of its Intellectual properties without realizing a matching revenue by monetising the same through distribution. During the year, the animation division reported a negative EBITDA of Rs. 5.76 mn (previous year, a negative EBITDA of Rs. 9.43 mn).

The company continued to carry on the business of content development services in Animation and Visual Effects during the year under review. During the year under review the company completed the pilot for a new project finalized to produce 6.5 hours of content in 3 D stereo for a domestic customer.

The highlights of the performance are discussed in detail in the management discussion and analysis report attached as Annexure to this report.

Going Concern

The company has suffered losses for the past several years. The accumulated losses as on date of the Balance Sheet is more than 50% of its net worth. However, considering the expected future cash flows and the commitment of the promoters to try and revive the operations in the coming years, the potential cash flows expected to be received by the company from exploiting its IPRs, the management is of the opinion that the company would be in a position to continue as a going concern and the hence the accounts have been drawn up on such basis.

Report on conservation of energy, technology absorption etc.

Information as required under section 217 (1) (e) of the Companies Act, 1956 read with Companies (disclosure of particulars in the report of board of directors) rule, 1988 regarding conservation of energy, technology absorption are given in Annexure I to this Report. The details regarding foreign exchange earnings and outgo are mentioned in the Notes to the Accounts.

Management discussion and analysis

The management discussion and analysis and various initiatives and future prospects of the company are enclosed, separately as Annexure II to this Report.

Report of Corporate Governance

A report on Corporate Governance on compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided in Annexure III to this Report.

Auditors Certificate on corporate governance

The certificate issued by the auditors of the company on corporate governance is given in Annexure IV to this Report.

Directors responsibility statement

The directors responsibility statement pursuant to sub section 2 AA of Section 217 of the Companies Act 1956 is given in Annexure V to this Report.

CEO/CFO Certification

The Chairman and Managing Director and the Company Secretary & Compliance Officer have submitted a certificate to the Board regarding the financial statements and other matters, as required under Clause 49 (V) of the Listing Agreement. This is provided as Annexure VI to this Report.

Particulars of employees

For the financial year 2013-14, there was no such employee who was meeting the criteria on payment of remuneration attracting the provisions of section 217 (2A) of the companies act 1956.

Dividends

Considering the losses and the necessity to conserve resources, the Directors do not recommend any dividend on the equity shares.

Directors

Mr. N.R. Panicker and Mr. A. Mohan Rao, Directors of the company, retire by rotation.

Mr. N.R. Panicker being eligible for re-appointment offers himself for reappointment.

Mr. A. Mohan Rao, though being eligible for reappointment, do not intend to offer himself for reappointment and it has been decided that such vacancy is not filled up.

Mr. A. Mohan Rao has been the Director of the company since 07-10-2004. Your Directors place on record the valuable guidance, support and advise extended by Mr. A. Mohan Rao during his tenure as a Director.

Mr. N. Gopalakrishnan Nair was co-opted as an Additional Independent Director in the Board meeting held on 14th November 2013.

Mr. K.R. Chandrasekaran was co-opted as an Additional non-Independent Director with effect from 21.02.2014.

Mr. M.R. Narayanan, Director retired at the AGM held on 14th August 2013 and ceased to be a Director.

Mr. M.R. Narayanan has been the Promoter of the company and a Director since its inception. Mr. M.R. Narayanan continued to be associated with the company even after Accel took over the company in 2004. Your Directors place on record the valuable guidance, support and advise extended by Mr. M.R. Narayanan during his tenure as a Director.

Mr. S.T. Prabhu resigned as a Director with effect from 21.02.2014.

Quality Management

Your company''s quality policy is to enhance customer satisfaction through continued improvement of skills, processes and technologies. During the year the company continued to invest in technologies, infrastructure and processes in order to keep our quality management systems updated.

Auditors and other observation

M/s Varma & Varma, Chartered Accountants, Chennai, auditors of the Company retire at the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. The company has received confirmation from them that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their reappointment. The necessary resolution is being placed before the shareholders for approval.

The auditors have emphasised in their report about the realisation of intangible assets, that the company has incurred cash loss, net worth has been eroded and the current liabilities exceeds the current assets.

The board of directors would like to clarify as below regarding "emphasis matter" expressed by the auditors in their report annexed with this annual report.

1. The company continued to incur losses during the period under review, due to various reasons like lack of viable service orders, interest cost on the borrowings made for investments in fixed assets and delays in monetising the assets due to market slowdown for animated content. The management is confident of sustaining the operations and recovering the investments made in the business.

2. The promoters have lent funds to sustain the operations during the years, the company incurred losses. These amounts have been shown under current liabilities and hence the mismatch between current assets and current liabilities. The holding company has already converted Rs. 5 cr out of these funds into cumulative preference shares to strengthen the equity base of the company and also to improve the current ratio. Further they have agreed to convert Rs. 9.50 crores again into cumulative preference shares during 2014-15.

3. The company is taking adequate steps to liquidate certain real estate assets owned by the company to reduce the bank liabilities and pay statutory liabilities.

4. The management is committed to grow the media business and is confident of carrying on the business as a going concern basis and would bring in necessary support to the extent possible as and when required.

6. The company had availed an asset backed loan for Rs. 7.67 crores from a bank which is payable over a period of 83 month and hence long term in nature. The long-term assets were acquired/developed out of funds infused by the promoter companies.

The management is confident that it will be able to realise the intangible assets and with the support of its holding company and also as explained in the notes to accounts and also explained above, will continue to operate as a going concern.

Internal control systems

Your company has adequate internal control procedures commensurate with the size and nature of its operations. The Audit Committee constituted by the Board of Directors is functioning effectively. The Internal Audit for the year 2013-2014 was carried out by M/s. Vijayakumar & Easwaran covering all areas of operations. All significant observations were discussed in the Audit Committee, which met 4 times during the year under review.

Depository systems

Your Company''s shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, members are requested to avail of the facility of dematerialization of the Company''s shares on either of the Depositories as aforesaid.

Acknowledgement

Your directors would like to express their grateful appreciation for the assistance and co-operation received from Central and State governments, financial institutions, banks, government authorities, customers, suppliers and investors during the year under review. Your Directors also wish to place on record their deep sense of appreciation, towards the dedicated and sincere services rendered by the employees of the company for its success.

For and on behalf of the Board of

Chennai. N.R. Panicker Date : August 14, 2014 Chairman


Mar 31, 2013

Dear shareholders,

The Directors are pleased to present the 27th annual report together with the audited accounts of the company for the year ended March 31, 2013.

In INR Millions

Standalone Financial results 2013 2012

Income from operations 36.83 237.42

Proft before interest, depreciation & tax (9.43) 85.77

Interest 24.31 30.90

Depreciation 51.67 51.97

Provision for tax

Proft /(loss) after tax (65.42) 2.89

Review of operations:

During the fnancial year 2012-13, your company recorded total income of Rs 36.83 mn (previous year Rs 237.42 mn) comprising income from animation services of Rs 11.62 mn , other services Rs.5.21 mn and incentives on sale of technologies division of Rs 20 mn. The company reported a net loss of Rs 65.42 mn.

The company during the year continued to focus on content development services in Animation and Visual Efects and other activities in entertainment space.

During the year the animation division reported a negative EBITDA of Rs 12.92 mn (previous year, a negative EBITDA of Rs.67.54 mn) and reported a loss of Rs 88.32 mn mainly due to the high interest outgo on the term loan availed for creation of infrastructure and the amortization of its Intellectual properties without realizing a matching revenue by exploiting the same through global distribution. During the fnancial year under review, the company capitalized amounts spent on development of a seventy minute series meant for DVD sales amounting to Rs 0.94 mn.

The highlights of the performance are discussed in detail in the management discussion and analysis report attached as Annexure to this report.

Report on conservation of energy, technology absorption etc.

Information as required under section 217 (1) (e) of the Companies Act, 1956 read with Companies (disclosure of particulars in the report of board of directors) rule, 1988 regarding conservation of energy, technology absorption are given in Annexure I to this Report. The details regarding foreign exchange earnings and outgo are mentioned in the Notes to the Accounts.

Management discussion and analysis

The management discussion and analysis and various initiatives and future prospects of the company are enclosed, separately as annexure II to this Report.

Report of Corporate Governance

A report on Corporate Governance together with auditor''s certifcate on compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided in Annexure III to this Report.

Auditors Certifcate on corporate governance

The certifcate issued by the auditors of the company on corporate governance is given in Annexure IV to this Report.

Directors responsibility statement

The directors responsibility statement pursuant to sub section 2 AA of Section 217 of the Companies Act 1956 is given in Annexure V to this Report.

CEO /CFO Certifcation

The Chairman and Managing Director and the Company Secretary & Compliance Ofcer have submitted a certifcate to the Board regarding the fnancial statements and other matters, as required under Clause 49 (V) of the Listing Agreement. This is provided as Annexure VI to this Report.

Particulars of employees

The company has not employed any person attracting the provision of section 217 (2a) of the companies act 1956 during the year.

Dividends

Considering the losses and the necessity to conserve resources, the Directors do not recommend any dividend on the equity shares.

Directors

Mr. A. Mohan Rao and Mr. M R Narayanan Directors of the company, retire by rotation.

Mr. A. Mohan Rao being eligible for re-appointment ofers himself for reappointment..

Mr. M R Narayanan, though being eligible for reappointment, do not intend to ofer himself for reappointment and it has been decided that such vacancy is not flled up.

Mr. S.T. Prabhu who has appointed as additional director holds ofce up to the date of AGM and the company has received a notice proposing his candidature for appointmet as a director.

Quality Management

Your company''s quality policy is to enhance customer satisfaction through continued improvement of skills, processes and technologies. During the year the company continued to invest in technologies, infrastructure and processes in order to keep our quality management systems updated.

Auditors and their report

M/s Varma & Varma, Chartered Accountants, Chennai, auditors of the Company retire at the ensuing Annual General Meeting, and being eligible, ofer themselves for reappointment. The company has received confrmation from them that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their reappointment. The necessary resolution is being placed before the shareholders for approval.

The auditors have emphasised in their report about the realisation of intangible assets, that the company has incurred cash loss, networth has been eroded and the current liabilities exceeds the current assets.

The board of directors would like to clarify as below regarding " emphasis matter" expressed by the auditors in their report annexed with this annual report.

1. The company continued to incur losses during the period under review, due to various reasons like lack of viable service orders, interest cost on the borrowings made for investments in fxed assets and delays in monetising the assets due to market slowdown for animated content. The management is confdent of sustaining the operations and recovering the investments made in the business.

2. The promoters have lent funds to sustain the operations during the years, the company incurred losses. These amounts have been shown under current liabilities and hence the mismatch between current assets and current liabilities. The holding company has already decided to convert into Rs 5 cr out of these funds into cumulative preferential shares to strengthen the equity base of the company and also to improve the current ratio.

3. The company is taking adequate steps to liquidate certain real estate assets owned by the company to reduce the bank liabilities and pay statutory liabilities.

4. The management is committed to grow the media business and is confdent of carrying on the business as a going concern basis and would bring in necessary support to the extent possible as and when required.

5. The company had given corporate guarantee to a bank for the fnancial facilities enjoyed by a group company when the same was a subsidiary of the company. Subsequently the borrower company , which ceased to be a subsidiary, has repaid all loans taken from the bank except to the extent of Rs. 50 lacs, enjoyed as a cash credit which is expected to be closed during the current year.

6. The company had availed a term loan for Rs. 10.50 crores from a bank to fund the fxed assets, which were payable over a period of fve years and hence long term in nature. The only short-term borrowing are in the form of cash credit facility and public deposits which are supported by Accounts Receivables. The long-term assets were acquired/ developed out of funds infused by the promoter companies.

The management is confdent that it will be able to realise the intangible assets and with the support of its holding company and also as explained in the notes to accounts and also explained above, will continue to operate as a going concern.

Internal control systems

Your company has adequate internal control procedures commensurate with the size and nature of its operations. The Audit Committee constituted by the Board of Directors is functioning efectively. The Internal Audit for the year 2012–2013 was carried out by M/s. Vijayakumar & Easwaran covering all areas of operations. All signifcant observations were discussed in the Audit Committee, which met 4 times during the year under review.

Depository systems

Your Company''s shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages ofered by the Depository system, members are requested to avail of the facility of dematerialization of the Company‘s shares on either of the Depositories as aforesaid.

Acknowledgement

Your directors would like to express their grateful appreciation for the assistance and co-operation received from Central and State governments, fnancial institutions, banks, government authorities, customers, suppliers and investors during the year under review. Your Directors also wish to place on record their deep sense of appreciation, towards the dedicated and sincere services rendered by the employees of the company for its success. By Order of the Board of Directors,

Chennai. N.R. PANICKER

30th May 2013 CHAIRMAN

Registered Ofce:

17/27, Jagathy,

Trivandrum – 695 014.


Mar 31, 2012

The directors are pleased to present the 26th annual report together with the audited accounts of the company for the year ended March 31,2012.

INR in million

Financial results 2012 2011

Total Income 237.42 202.69

Profit before interest, depreciation & tax 85.77 30.85

Interest 30.90 22.30

Depreciation 51.97 45.06

Provision for tax - -

Profit /(loss) after tax 2.89 (36.52)

Review of operations:

During the financial year 2011-12, your company recorded total income of Rs 237.42 mn (previous year Rs 202.69 mn) comprising income from technology services of Rs 72.95 mn, animation services of Rs 17.18 mn , other services Rs.6.74 mn and profit on sale of technologies division of Rs 140.55 mn. During the year, the company completed development of its second intellectual property" Raju The Rickshaw The company reported a net profit of Rs 2.89 mn.

During the year, the company sold its technology services business with effect from 15.08.2011 to M/s Accel Frontline Limited for cash consideration of Rs. 199.70 mn after obtaining necessary approval of the shareholders. The net tangible assets of the division on the date of transfer stood at Rs.59.15 mn, resulting in a profit on sale of undertaking of Rs.140.55 mn.The amount realized was used to repay liabilities of the company, apart from funding production of Intellectual properties, Raju the Rickshaw and Shaktimaan etc. During the financial year the company incurred cash losses mainly on account of Animation Business and the same was also funded from the consideration.

With the transfer of the technologies division, the company's future focus will be in content development services in Animation and other activities in media & entertainment space.

During the year the animation division reported a negative EBITDA of Rs 67.54 mn (previous year, a positive EBITDA of Rs.0.60 mn)and reported a loss of Rs 146.38 mn mainly due to the high interest outgo on the term loan availed for creation of infrastructure and the amortization of its Intellectual properties without realizing a matching revenue by exploiting the same through global distribution. During the financial year under review, the company capitalized amounts spent on development of the second intellectual property and a co production property amounting to Rs 38.34 mn.

The highlights of the performance are discussed in detail in the management discussion and analysis report attached as Annexure to this report.

Report on conservation of energy, technology absorption etc.

Information as required under section 217 (1) (e) of the Companies Act, 1956 read with Companies (disclosure of particulars in the report of board of directors) rule, 1988 regarding conservation of energy, technology absorption are given in Annexure I to this Report. The details regarding foreign exchange earnings and outgo are mentioned in the Notes to the Accounts.

Management discussion and analysis

The management discussion and analysis and various initiatives and future prospects of the company are enclosed, separately as Annexure II to this Report.

Report of corporate governance

A report on Corporate Governance together with auditor's certificate on compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is provided in Annexure III to this Report.

Auditors Certificate on corporate governance

The certificate issued by the auditors of the company on corporate governance is given in Annexure IV to this Report.

Directors responsibility statement

The directors responsibility statement pursuant to sub section 2 AA of Section 217 of the Companies Act 1956 is given in Annexure V to this Report.

CEO /CFO Certification

The Chairman and the Company Secretary have submitted a certificate to the Board regarding the financial statements and other matters, as required under Clause 49 (V) of the Listing Agreement. This is provided as Annexure VI to this Report.

Particulars of employees

The particulars regarding employees of the company pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given in Annexure VII to the Director's Report. However, in terms of sec 219 (1) (b) (iv) of the Companies Act, 1956 the Directors Report (excluding Annexure VII) is being sent to all the shareholders of the company. Any shareholder interested in obtaining a copy of the said Annexure may write to the Company Secretary at the registered office of the company.

Dividends

Considering the losses and the necessity to conserve resources, the Directors do not recommend any dividend on the equity shares.

Directors

Mr. N.R. Panicker and Mr. Philp John Directors of the company, retire by rotation.

Mr. N R Panicker being eligible for re-appointment offers himself for reappointment.

Mr. Philip John, though being eligible for reappointment, do not intend to offer himself for reappointment and it has been decided that such vacancy is not filled up.

Quality management

Your company's quality policy is to enhance customer satisfaction through continued improvement of skills, processes and technologies. During the year the company continued to invest in technologies, infrastructure and processes in order to keep our quality management systems updated.

Auditors

M/s Varma & Varma, Chartered Accountants, Chennai, auditors of the Company retire at the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. The company has received confirmation from them that their appointment will be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their reappointment. The necessary resolution is being placed before the shareholders for approval.

Internal control systems

Your company has adequate internal control procedures commensurate with the size and nature of its operations. The Audit Committee constituted by the Board of Directors is functioning effectively. The Internal Audit for the year 2011-2012 was carried out by M/s. Vijayakumar & Easwaran, Chartered Accountants, Trivandrum covering all areas of operations. All significant observations were discussed in the Audit Committee, which met 4 times during the year under review.

Depository systems

Your Company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, members are requested to avail of the facility of dematerialization of the Company's shares on either of the Depositories as aforesaid.

Acknowledgement

Your directors would like to express their grateful appreciation for the assistance and co-operation received from Central and State governments, financial institutions, banks, government authorities, customers, suppliers and investors during the year under review. Your Directors also wish to place on record their deep sense of appreciation, towards the dedicated and sincere services rendered by the employees of the company for its success.

For and on behalf of the Board of

Chennai. N.R.Panicker

Date: 29th May 2012 Chairman

 
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