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Directors Report of DQ Entertainment (International) Ltd.

Mar 31, 2014

Dear members,

The directors have pleasure in presenting the Seventh annual report on the business and operations of DQ Entertainment (International) Limited ("the Company") and its subsidiaries (together referred to as the Group or DQE) for the period ended March 31, 2014.

1. FINANCIAL HIGHLIGHTS Rs. in Millions

Particulars For the For the year ended year ended 31-Mar-14 31-Mar-13

Income from Production 1,873 1,820

Income from Distribution 523 474

Other Income 249 34

Total Income 2,645 2,328

Total Expenditure 2,197 1,915

profit before tax 448 413

Tax Expense (Current Tax Deferred Tax [Net of 20 40 MAT credit entitlement])

profit after tax 428 373

2. performance review

During the last couple of years, DQE has remained focused on building its own television content production and distribution business while also leveraging its resources to benefit from alternate channels and platforms.

The animation production market continues to face difficult times due to lack of financial support on account of the overall depressed conditions globally. However, your Company has been able to sustain itself and grow, though marginally. While the revenue from production has been flat, the revenue from distribution has increased by 10% as compared to the previous year. Profit before tax has increased by 21% over the previous year. This is because of the cost efficiencies brought in terms of manpower costs.

During the year we have completed and delivered 13 projects, while we have signed 5 new projects that will go into production in this current year. Currently 14 projects are in production.

Furthermore, we continue to develop and progress on our feature film production which will complement our existing production pipeline and also adding several new intellectual properties to our portfolio that comprise the foundation of our business.

Our licensing and distribution group has performed well, concluding 23 new agreements with international broadcast partners as well as 31 licensing deals for variety of merchandise products.

3. DIVIDEND

Your Company has earned reasonable profits, and continues to invest its internal accruals in the development of the IP''s so as to build a strong IP portfolio to ensure sustainability and growth for the future. In view of the above, the directors have not recommended any dividend to the equity shareholders for the financial year 2013-14.

4. SUBSIDIARIES

Our Company has three wholly owned subsidiaries, DQ Entertainment (Ireland) Limited, DQ Powerkidz Private Limited and DQE ITES Park Private Limited.

Pursuant to the general exemption granted by the Central Government under the provisions of Section 212(8) of the Companies Act, 1956; the Company has not included the detailed financial statements of its subsidiaries in this Annual Report. The detailed financial statements and audit reports of each of the subsidiaries are available for inspection at the registered office of the Company during office hours between 11 am to 1 pm and upon written request from a shareholder, your Company will arrange to send the financial statements of subsidiary companies to the said shareholder.

The annual accounts of DQE Ireland and the related detailed information shall be made available to any member of the Company seeking such information. They will also be kept open for inspection by any of the shareholders at the registered office of the Company and of DQE Ireland. The Company shall furnish a copy of detailed accounts of DQE Ireland to any of the shareholders on demand.

5. DIRECTORS

In accordance with the Articles of Association, Ms. Rashida Adenwala, shall retire by rotation at the ensuing Annual General Meeting and being eligible, has offered herself for re-appointment. Details regarding directors proposed to be appointed at the Annual General Meeting to be held on September 30, 2014, due to changes arising from the implementation of the Companies Act, 2013 are provided in the annexure to the Notice convening the Annual General Meeting.

The detailed profiles of all the directors are available under the chapter Board of directors.

6. AUDITORS

M/s. MZSK & Associates, Chartered Accountants, Hyderabad, the statutory auditors of the Company, shall retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if reappointed.

7. fixed deposits

During the year under review, the Company has not accepted any public deposits. As such no amount of principal or interest was outstanding as on the Balance Sheet date.

8. particulars of employees and other

ADDITIONAL INFORMATION

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of concerned employees are required to be set out in the Annexure to the Directors'' Report.

However, the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956 exempt the Company from publishing the same in the Annual Report.

Hence, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said statement is open for inspection at the Registered Office of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT, FOREIGN EXCHANGE EARNINGS AND OUTGO.

(i) Energy Conservation: The operations of the Company involve low energy consumption. Adequate measures have however been taken to conserve energy.

(ii) Technology Absorption: We have developed in-house plug-ins to maximize technology absorption at minimal cost. The Company produces majority of the content in the 3D stereoscopic technology which is the latest offering in the entertainment industry.

(iii) Research & Development: It is the Company''s constant endeavor to be more efficient and effective in planning of production activities for achieving and maintaining the highest standards of quality.

10. DIRECTORS'' RESPONSIBILITY STATEMENT

On behalf of the directors, we confirm that as required under Section 217 (2AA) of the Companies Act, 1956,

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same;

b) We have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for the period;

c) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) We have prepared the annual accounts on a going concern basis.

11. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

As per clause 49 of the Listing Agreements entered into with the Stock Exchanges, Corporate Governance Report and Management Discussion and Analysis are attached and form part of this report.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR initiatives taken by the Company continued during the year under review. A detailed mention of the CSR activities carried out by the Company through its CSR wing - DQ Smile Foundation is given as a part of the HR report on Page 31.

13. GREEN INITIATIVE

Out of our total shareholders, almost 50% receive shareholder communications by e-mail. We are sending the print version of the annual report only to the shareholders whose email addresses are not registered with their Depository Participant(s) and to those shareholders who have opted for receiving the physical copies.

We encourage the other shareholders and request them to support us on this nationwide Green Initiative by registering/updating their email addresses with their Depository Participant(s) as required for receiving the notices and other documents via email.

14. ACKNOWLEDGEMENT

Your directors would like to take this opportunity to express their sincere gratitude to all the employees, clients, vendors, investors, advisors, bankers, government authorities and local bodies for their support. The directors appreciate and value the contributions made by every member of the DQE family globally and look forward to their continued support in the future.

The Annual General Meeting of the Company will be held on Tuesday, September 30, 2014.

May 30, 2014 For and on behalf of the Board DQ Entertainment (International) Limited

Tapaas Chakravarti CMD & CEO


Mar 31, 2013

To, The Members of DQ Entertainment (International) Limited

The Directors have pleasure in presenting the Sixth annual report on the business and operations of DQ Entertainment (International) Limited ("the Company") and its subsidiaries (together referred to as the Group or DQE) for the period ended March 31, 2013.

1. PRINCIPAL ACTIVITIES Rs. in Millions

For the year For the year

Particulars ended ended 31-Mar-13 31-Mar-12

Income from Productions 1, 820 1,755

Income from Distribution 474 517

Total income 2,294 2,272

Total Expenditure 1,916 1,933

Profit before tax 413 430

Tax Expense (Current

Tax Deferred Tax [Net of 40 100

MAT credit entitlement])

Profit after tax 373 330

2. PERFORMANCE REVIEW

With continuing downfall in the global economic scenario, where many companies in our domain have gone in red your Company has resiliently sustained itself and generated a total revenue of Rs. 2,294 mn during the year under review (2012: Rs. 2, 272 mn). Our EBIDTA margins to revenue have gone up from 42% for the financial year ended March 2012 to 49% in the current year. This is due to the well planned cost reduction/ operational policies and as well as improved production efficiencies across the organization.

DQE is now uniquely positioned as an integrated entertainment production and distribution company, focused on 360 degree monetization across all platforms. Investing in iconic co- productions, developing our own Intellectual Properties and establishing the global licensing and distribution business have been conscious and strategic decisions by the Company.

As of now only one home-grown IP i.e. The Jungle Book TV Series Season 1 has been launched in the market on a global scale and the story of its success is evident from the excellent worldwide ratings received for ''The Jungle Book'' shows and quality of deals signed for licensing/ merchandising. The licensing and distribution revenues currently represent approximately 21% of total revenues and have progressed very well during the year under review to close at Rs. 474 mn.

Your Company had signed a major licensing and merchandising contract during the previous year, with a leading licensing agency in the USA for a period of four years. The said contract was on a non-cancellable basis resulting into an upfront recognition of distribution revenue of Rs. 16.39 crores. Under Indian GAAP and IFRS guidelines non-cancellable licensing revenues must be recognized immediately and not spread over the licensed term. This resulted in an unbudgeted gain of Rs. 14.40 crores during the year ending March 2012. Barring the above windfall gain the L & D revenues have progressed very well during the year under review.

The year ahead is well covered with productions of The Jungle Book Second Season, The New Adventures of Peter Pan Second Season, Lassie & Friends, 5 & IT 3D TV series, Winds in the Willows, Lanfeust First Season, NFL Rush Zone Second Season, The Rising Star and other developments including the Jungle Book Feature Film. These will also give a major boost to our licensing & distribution revenues and the Company is confident of achieving its targeted growth in the years to come.

The Profit after tax is up by 13% to Rs. 373 mn (2012: Rs. 330 mn). In spite of the global liquidity squeeze, the Group has managed to invest substantial amount from its internal accruals for development of its intellectual properties, the majority of which is for the pre-production of ''The Jungle Book'' feature film. The Group is making considerable efforts to reduce the amount of its debtors and improve the cash flow position.

3. OPERATIONS REVIEW:

Global economic growth remains historically low for the second year running with major centers of economic activity. Increased aversion to risks by investors and perceived growth uncertainty have led to equity price declines, capital outflows and currency depreciation.

Even in the backdrop of adverse global economic scenario, DQE remained focused on creating the highest quality of content for the kids'' entertainment segment and strived to distribute that content in many strategic and profitable ways. We are focused to achieve our objectives, by deriving maximum efficiencies in our production pipeline through optimal deployment of resources and ride on the global distribution and licensing of key TV series and content of our library.

The production pipeline remains healthy with signing of new projects such as:

- raz and Benny - 52 x 11'', CGI TV series with Foot Hill Entertainment, Europe

- Leo & Pisa Gang - 52 x 11'' CGI TV series with MPP ,Germany

- nFL rush Zone 3 - 20 x 22'' CGI & 2D TV Series with Rollman Entertainment, USA for Nick Toons(USA)

- Miles From Tomorrow Land - 26x26'' CGI TV series with Wild Canary(USA)

- iesodo -10x13'' CGI TV series with Rollman Entertainmen (USA)

- Manav - 65'' 2D TV Feature with Disney India

while successfully concluding prestigious projects such as ''Mickey Mouse Club House'' (fourth & fifth season) for Walt Disney Television Animation, ''The New Adventures of Peter Pan'' with ZDF Group and France Television, Charlie Chaplin with Method Animation, ''Little Prince'' (second season) with France Television & Method Animation, ''Keymon TV Feature'' with Nickelodeon India, ''Omkar'' (third season) with Turner Group and Cartoon Network.

We have made substantial progress in licensing & distribution of our Intellectual Properties and have concluded several deals with leading networks and licensees globally. With the second season in production ''The Jungle Book'' has continued to gain traction with merchandisers across the globe. Licensing & Merchandising for our second international IP ''The New Adventures of Peter Pan'' is also on fast track. 31 new merchandising deals were signed in relation to "The Jungle Book" while 8 were signed for "The New Adventures of Peter Pan" More than 26 new broadcasting and home video agreements have been signed for a variety of properties including Ironman , Lassie, Jungle Book, peter Pan and Tara Duncan. Next year and years to come will see steady flow of revenues from these streams.

Development of our first international feature film ''The Jungle Book'' is progressing well with leading writers and directors on board. We are gathering momentum for closing the production budget and to finalise on the global distributors.

New developments on the digital front have encouraged us to monetize through the digital world and utilize our IP library for various new platforms. DQE has signed a non-exclusive agreement with Budge Studios, Canada for the Jungle Book Mobile App on IOS & Android Platforms for worldwide digital market. The apps are expected to be available in the exponentially growing and potential mobile digital market very soon. While in-house development of games based on DQE IPS for mobiles - (Android and IOS) is underway and will be a new business vertical for monetizing its portfolio of iconic global IPs.

4. DIVIDEND:

The members are aware that the Group is currently involved in the development of various intellectual properties. In order to meet the investment requirements for various ongoing projects, which will contribute to the shareholders'' wealth in the long term, the Directors have not recommended any dividend to the equity shareholders for the financial year 2012-13.

5. SUBSIDIARIES:

Our Company has three wholly owned subsidiaries, DQ Entertainment (Ireland) Limited, DQ Powerkidz Private Limited and DQE ITES Park Private Limited.

Pursuant to the general exemption granted by the Central Government under the provisions of Section 212 of the Companies Act, 1956; the Company has not included the detailed financial statements of its subsidiaries in this Annual Report.

The annual accounts of subsidiaries and the related detailed information shall be made available to any member of the Company seeking such information. They will also be kept open for inspection by any of the shareholders at the registered office of the Company and of the subsidiaries. The Company shall furnish a copy of detailed accounts of subsidiaries to any of the shareholders on demand.

6. DIRECTORS

In accordance with the Articles of Association, Mr. K. Balasubramanian and Mr. Girish Kulkarni shall retire by rotation at the ensuing Annual General Meeting. Both the directors being eligible have offered themselves for re-appointment.

Since the balance sheet date, Ms. Rashmi Chakravarti has resigned as an Executive Non Independent Director of the Company and Mr. V. Santhanaraman has been appointed as an Alternate Director to Mr. K. Balasubramanian.

The detailed profiles of all the directors are available under the chapter Board of directors.

7. AUDITORS

M/s. Haribhakti & Co., Chartered Accountants, Hyderabad, the statutory auditors of the Company shall retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if reappointed.

8. FIXED DEPOSITS

During the year under review, the Company has not accepted any deposits under the provisions of the Companies Act, 1956. As such no amount of principal or interest was outstanding as on the Balance Sheet date.

9. PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL INFORMATION

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of concerned employees are required to be set out in the Annexure to the Directors'' Report.

However, the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 exempt the Company from publishing the same in the Annual Report.

Hence, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said statement is open for inspection at the Registered Office of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT, FOREIGN EXCHANGE EARNINGS AND OUTGO.

Energy Conservation: The operations of the Company involve low energy consumption. Adequate measures have however been taken to conserve energy.

(ii) Technology Absorption: We have developed in-house plug- ins to maximize technology absorption at minimal cost. The Company produces majority of the content in the 3D stereoscopic technology which is the latest offering in the entertainment industry.

(iii) Research & Development: It is the Company''s constant endeavor to be more efficient and effective in planning of production activities for achieving and maintaining the highest standards of quality.

Note: The above figures have been extracted from standalone financial statements, both for current and previous year.

11. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act 1956, your Directors confirm that;

i) in the preparation of the annual accounts for the financial year ended on March 31, 2013, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any.

ii) the directors 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 as at March 31, 2013 and of the profit of the Company for that period.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts of the Company have been prepared on a ''Going Concern Basis''.

12. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

A report on the Corporate Governance standards followed by your Company forms part of this report as also a Management Discussion and Analysis statement.

13. GREEN INITIATIVE

During the previous fiscal we started a sustainability initiative with an aim of going green and minimizing our impact on the environment. Like last year, we are sending the print version of the annual report only to the shareholders whose email addresses are not registered with their Depository Participant(s) and to those shareholders who have opted for receiving the physical copies.

The Ministry of Corporate Affairs has taken a "Green Initiative" in the Corporate Governance by allowing paperless compliances by the companies. We request our shareholders to support us on this nation wide Green Initiative by registering/updating their email addresses with their Depository Participant(s) as required for receiving the notices and other documents via email.

14. ACKNOWLEDGEMENTS

Your directors would like to take this opportunity to express their sincere gratitude to all the clients, vendors, investors, advisors, bankers, government authorities, local bodies for their continued support during the year. We place on record our appreciation for the commitment shown by our employees in supporting the Company in its journey to be ''A Global Entertainment Powerhouse''. Our consistent growth was made possible by their hard work, solidarity, co-operation and support. We look forward to their continued support in the future.

The Annual General Meeting of the Company will be held on September 27, 2013.



May 30, 2013 for and on behalf of the Board

DQ Entertainment (International) Limited



Tapaas Chakravarti

CMD & CEO


Mar 31, 2012

To,The Members of DQ Entertainment (International) Limited

The Directors have pleasure in presenting the Fifth annual report on the business and operations of DQ Entertainment (International) Limited ("the Company or DQE") and its I 00% subsidiary "DQ Entertainment (Ireland) Limited" (together referred to as the Group) for the period ended March 3I, 20I2.

For the year For the year Particulars ended ended

3I-Mar-I2 3I-Mar-II

Ircome from Productions 1,755,077 1,852,956

Income from 5I6,877 225,5I2

Distribution

Total Income 2,271,954 2,078,468

Total I,947,306 I,823,283

Expenditure

Profit before tax 429,86I 352,460

Tax Expense (Current Tax

Deferred 99,634 73,880

Tax [Net of

MAT credit

entitlement])

Profit after tax 330,227 278,580

2. PERFORMANCE REVIEW

The Group generated revenue growth of 9.3% to Rs 2,272 mn (20II: Rs 2,078 mn). The revenues from production did not witness significant growth. The reasons for the same were two-fold - delay in commissioning of some of the new projects and deliberate stoppage of deliveries so as to recover the overdue payments from the customers. However on the other hand the Company, in line with its business vision and plan saw a I29% increase in its revenues from distribution and licensing to Rs 5I7 mn from Rs 226 mn. This growth is an indication that the decisions made by the Company to invest in its own IPs and develop its own content for a 360 degree monetization have been in the right direction.

The management is confident that slowly and steadily the returns from such investments will continue to accrue in the future.

The Profit before tax was up by 22% to Rs 430 mn (20II: Rs 352 mn) and the net profit after tax was up by I8% amounting to Rs 330 mn (20II: Rs 279 mn).

3. OPERATIONS REVIEW

The challenges faced by key global economies have had trickledown effect especially in terms of the interest rates hikes, delay in collection of receivables, longer working capital cycles, increased borrowings, decrease of outsourcing work and to top the list the ever rising inflation.

However inspite of the adverse global economic scenario, DQE remained focused on creating the highest quality of content for the kids' entertainment segment and strived to distribute that content in many strategic and profitable ways.

The production pipeline remains robust with signing of new projects such as:

- 'Robin Hood Mischief in Sherwood' with TFI

- France, ZDF - Germany, ATV - Turkey, DeAgostini - Italy and Method Animation - France

- 'Escape Hockey' with IMIRA - Spain,

- 'Lanfeust' - with Alphanim - France

- 'Franco and Formula Fun' with Formula Fun Entertainment Limited - UK and Telegael - Ireland

- 'Mickey Mouse Club House - Season 5' for Disney - USA

- 'Omkaar - Season 3' with Turner Group, Cartoon Network

while successfully concluding prestigious projects such as Iron man (second season), Casper (second season), Feluda (TV series for Disney India) and Keymon TV series (with Nickelodeon India).

The progress on the licensing & merchandising side has risen substantially after successful launch of The Jungle Book TV series - Season

I. We have increased our ability to monetize our content across geographies through licensing and merchandising of intellectual properties owned and developed by us.

Development of our first international feature film 'The Jungle Book' is progressing well with leading writers and directors on board. It is scheduled for world wide release in the summer of 20I4.

The industry is witnessing considerable advancements in areas like technology, marketing, exhibition with rampant digitalization across the value chain; resulting in enhanced reach and access to high quality content.

New developments on the digital front have encouraged us to monetize through the digital world and utilize our IP library for mobile applications, mobile games and mobile porting, for all major platforms such as iPhone, iPad, ipod, itunes, blackberry, android, tablets, windows and mobile internet platforms.

These innovations at DQE in the digital space will further strengthen our position as a market leader in the dynamic international markets.

4. DIVIDEND:

The members are aware that the Group is currently involved in the development of various Intellectual Properties. In order to meet the investment requirements for various ongoing projects, which will contribute to the shareholders' wealth in the long term, the

Directors have not recommended any dividend to the equity shareholders for the financial year 20II-I2.

5. SUBSIDIARY

Our Company has a wholly owned subsidiary, DQ Entertainment (Ireland) Limited ("DQE Ireland"), incorporated in Ireland. DQE Ireland is engaged in the business of content development/ distribution for animation, live action TV series, movies and various other medias.

Pursuant to the general exemption granted by the Central Government under the provisions of Section 2I2 of the Companies Act, I956; the Company has not included the detailed financial statements of its subsidiary DQE Ireland in this Annual Report.

The annual accounts of DQE Ireland and the related detailed information shall be made available to any member of the Company seeking such information. They will also be kept open for inspection by any of the shareholders at the registered office of the Company and of DQE Ireland. The Company shall furnish a copy of detailed accounts of DQE Ireland to any of the shareholders on demand.

6. DIRECTORS

In accordance with the Articles of Association,

Ms. Rashmi Chakravarti and Mr. S. Sundar shall retire by rotation at the ensuing Annual General Meeting. Both the directors being eligible are liable for re-appointment.

The detailed profiles of all the directors are available under the chapter Board of Directors.

7. AUDITORS

M/s. Haribhakti & Co., Chartered Accountants, Hyderabad, the statutory auditors of the Company shall retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if re- appointed.

8. FIXED DEPOSITS

During the year under review, the Company has not accepted any deposits under the provisions of the Companies Act, I956. As such no amount of principal or interest was outstanding as on the Balance Sheet date.

9. PARTICULARS OF EMPLOYEES AND OTHER

ADDITIONAL INFORMATION

In terms of the provisions of Section 2I7 (2A) of the Companies Act, I956, read with the Companies (Particulars of Employees) Rules, I975, the names and other particulars of concerned employees are required to be set out in the Annexure to the Directors' Report.

However, the provisions of Section 2I9 (I) (b)

(iv) of the Companies Act, I956 exempt the Company from publishing the same in the Annual Report.

Hence, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said statement is open for inspection at the Registered Office of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT, FOREIGN EXCHANGE EARNINGS AND OUTGO

(i) Energy Conservation: The operations of the Company involve low energy consumption. Adequate measures have however been taken to conserve energy.

(ii) Technology Absorption: We have developed in-house plug- ins to maximize technology absorption at minimal cost. The Company produces majority of the content in the 3D stereoscopic technology which is the latest offering in the entertainment industry.

(iii) Research & Development: It is the Company's constant endeavor to be more efficient and effective in planning of production activities for achieving and maintaining the highest standards of quality.

(iv) Foreign Exchange Earnings and Outgo:

For the year For the year Particulars ended ended

CIF Value of Imports 31-Mar-12 31-Mar-11

Capital Goods 22,37I 253,920

Earnings in Foreign Currency

Income from production 1,639,026 I,309,472

License Fees/Others

3I9,033 I6I,570

income

Expenditure in Foreign Exchange

(Subject to deduction of tax where applicable)

Travel 3,598 3,333

Production Expenses I84,299 I38,640

Professional and

_ 2I,473 40,263

Consultancy Charges

Financial Charges I6,042 968

225,412 183,204

Note: The above figures have been extracted from standalone financial statements, both for current and previous year.

11. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 2I7 (2AA) of the Companies Act, I956, your Directors confirm that;

i) In the preparation of the annual accounts for the financial year ended on March 3I, 20I2, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any.

ii) the directors 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 as at March 3I, 20I2 and of the profit of the Company for that period.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, I956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts of the Company have been prepared on a 'Going Concern Basis'.

12. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

A report on the Corporate Governance standards followed by your Company forms part of this report as also a Management Discussion and Analysis statement.

13. GREEN INITIATIVE

During the previous fiscal we started a sustainability initiative with an aim of going green and minimizing our impact on the environment. Like last year, we are sending the print version of the annual report only to the shareholders whose email addresses are not registered with their Depository Participant(s) and to those shareholders who have opted for receiving the physical copies.

The Ministry of Corporate Affairs has taken a "Green Initiative" in the Corporate Governance by allowing paperless compliances by the companies. We request our shareholders to support us on this nation wide Green Initiative by registering/updating their email addresses with their Depository Participant(s) as required for receiving the notices and other documents via email.

14. ACKNOWLEDGEMENTS

Your directors would like to take this opportunity to express their sincere gratitude to all the clients, vendors, investors, advisors, bankers, government authorities, local bodies for their continued support during the year. We place on record our appreciation for the commitment shown by our employees in supporting the Company in its journey to be 'A Global Entertainment Powerhouse'. Our consistent growth was made possible by their hard work, solidarity, co-operation and support. We look forward to their continued support in the future.

The Annual General Meeting of the Company will be held on August I0, 20I2.

May 28, 20I2

for and on behalf of the Board

DQ Entertainment (International) Limited

Sd/-

Tapaas Chakravarti

CMD & CEO


Mar 31, 2011

The Members

DQ Entertainment (International) Limited

The Directors have pleasure in presenting the Fourth annual report on the business and operations of DQ Entertainment (International) Limited ("the Company or DQE") and its 100% subsidiary company DQ Entertainment (Ireland) Limited for the period ended March 31, 2011.

FINANCIAL HIGHLIGHTS

Rupees in thousands

For the year For the year Particulars

ended ended

31-Mar-11 31-Mar-10

Total Income 2,162,602 1,766,067

Total Expenditure 1,810,142 1,497,555

Profit before tax 352,460 268,512

Tax Expense

(Current Tax Deferred Tax [Net (73,880) (1,791) of MAT credit entitlement])

Profit after tax 278,580 266,721

BUSINESS REVIEW

DQE has continued to progress the animation value chain, into IP creation and distribution of animation content globally We have been developing and co-producing famous IPs such as The Jungle Book, Peter Pan, 5 & IT, Charlie Chaplin, Iron Man, Lassie, as well as Indian IPs such as Balkand, Omkar, Mysteries and Feluda, Suryaputra. This has added famous brands to DQE's programming portfolio to exploit revenues in perpetuity.

DQE's first home grown international IP The Jungle Book 1 has been a global success. It is airing on marquee networks with highest viewership ratings. The Jungle Book has attracted strong support and interest from licensees worldwilde.

DQE's portfolio now consists of over 600 hours of animated content for exploitation and will see further enhancement of the same with addition of some more classical brands such as Charlie Chaplin, Young Robin Hood , Lassie, Casper and others in 2011-12.

DQE's feature film division has successfully completed the production of 3D stereoscopic animated feature film "The Prodigies" for Warner Bros, Fidelite Films, Studio 37 and Onyx Films, France. Three new 3D stereoscopic feature films are in development for the world market scheduled for release from 2013 onwards.

The Company will continue to expand its portfolio of classical properties for worldwide exploitation across all platforms of audio-visual formats while licensing and distribution will add to the production revenues of the Company. Exploitation through newer delivery formats such as online and mobile content will be a focus area for exploration and growth for the company's owned IP.

DIVIDEND

The Directors do not recommend payment of any dividend for this financial year.

SUBSIDIARY

Our Company has a wholly owned subsidiary, DQ Entertainment (Ireland) Limited ("DQE Ireland"), incorporated in Ireland which is engaged in the business of content development for animation and live action for TV series, movies and various other media.

Pursuant to the general exemption granted by the Central Government in relation to the provisions of Section 212 of the Companies Act, 1956 for not attaching the balance sheet of the subsidiary company; the Company has not included the detailed financials of its subsidiary DQE Ireland in this report.

The annual accounts of DQE Ireland and the related detailed information shall be made available to shareholders of the Company and DQE Ireland seeking such information at any point of time. The annual accounts of DQE Ireland shall also be kept for inspection by any shareholders at the registered office of the Company and of DQE Ireland. The Company shall furnish a hard copy of detailed accounts of DQE Ireland to any shareholder on demand.

DIRECTORS

Ms. Rashida Adenwala was appointed as an Additional Director of the Company w.e.f October 1, 2010.

As per Article 109 to 115 of the Articles of Association, Mr. K. Balasubramanian and Mr. Girish Kulkarni shall retire by rotation at the ensuing Annual General Meeting. Both the directors being eligible are liable for re- appointment.

The detailed profiles of all the directors are available under the chapter Board of Directors.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants has resigned as the joint statutory auditor of the Company.

M/s Haribhakti Co., Chartered Accountants, Hyderabad, the existing statutory auditor of the Company shall retire at the ensuing Annual General Meeting and has confirmed its eligibility and willingness to accept office, if re-appointed.

PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL INFORMATION

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of concerned employees are required to be set out in the Annexure to the Directors' Report.

However, the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 exempts the Company from publishing the same in the Annual Report.

Hence, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said statement is open for inspection at the Registered Office of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

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

(i) Energy Conservation: The operations of the Company involve low energy consumption. Adequate measures have however been taken to conserve energy.

(ii) Technology Absorption: We have developed in-house plug- ins to maximize technology absorption at minimal cost. The Company produces majority of the content in the 3D stereoscopic technology which is the latest offering in the entertainment industry.

(iii) Foreign Exchange Earnings and Outgo:

Rupees in thousands

For the year For the year ended ended

CIf value of Imports 31-Mar-11 31-Mar-10

Capital Goods 253,920 2,237

- -

earnings in foreign - - Currency

Income from production 1,523,306 1,358,447

License Fees 156,857 90,516

- -

expenditure in foreign - - exchange

(Subject to deduction of - - tax where applicable)

Travel 3,359 1,837

Production Expenses 200,946 62,693

Professional and 93,542 7,516

Consultancy Charges

Financial Charges 7 5,242

Others (Capex) 320,904 1,523

Total 618,759 78,811

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that;

i) In the preparation of the annual accounts for the financial year ended on March 31, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) The directors 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 as at March 31, 2011 and of the profit of the company for that period.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Directors have ensured prepartion of the annual accounts of the Company on a 'Going Concern Basis'.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

A report on the Corporate Governance standards followed by your Company and Management Discussion and Analysis statement are given in the respective sections of the Annual Report.

ACKNOWLEDGEMENT

Your directors would like to take this opportunity to express their sincere gratitude to all the clients, vendors, investors, advisors and bankers for their continued support during the year. We place on record our appreciation for the commitment shown by our employees in supporting the Company in its journey to be "A Global Entertainment Powerhouse". Our consistent growth was made possible by their hard work, solidarity, co-operation and support. We look forward to their continued support in the future.

The Annual General Meeting of the Company will be held on September 23, 2011.

for and on behalf of the Board

DQ Entertainment (International) Limited

Tapaas Chakravarti

CMD & CEO

Place: Hyderabad

Date: August 10, 2011












Mar 31, 2010

The Directors have pleasure in presenting the third annual report on the business and operations of DQ Entertainment (International) Limited ("The Company") and its 100% subsidiary company DQ Entertainment (Ireland) Limited (together referred to as the Group) for the period ended March 31, 2010.

BUSINESS

The year gone by has been quite eventful and exciting especially as the Group is slowly and steadily making its way into the distribution, licensing and merchandising segment of the entertainment industry. DQE has established itself as a recognized entertainment group world wide with marquee brand ownerships such as The Jungle Book, Charlie Chaplin, Peter Pan, Iron Man and many more.

The total income for 2009-10 has gone up by 17 % from Rs. 1509.08 million in Fiscal 2009 to Rs. 1766.07 million during fiscal 2010. Our revenues from Licensing and Distribution have increased from Rs. 74.63 million to Rs. 215.10 million at a growth rate of 188%. Profit after tax increased by 65% to Rs. 266.72-million as against Rs. 161.23 million in the previous year.

Our strategy has been to expand our footprint in the entertainment segment and consolidate our portfolio of global and Indian IPs for worldwide distribution, licensing and merchandising.

Currently our library has a little over 450 hours of content for TV broadcast with rights in various territories including South East Asia, Australia-New Zealand, Arabic nations, Europe etc. DQEs library comprises legendary brands including Iron Man, Casper, Jungle Book, Peter Pan, Charlie Chaplin, Little Prince, Feluda, Tara Duncan, Lassie for revenue exploitation.

DQEs first home grown IP, The Jungle Book is being produced with International partners as a high end 3D 52x1 1 minutes TV series and is slated for release in mid 201 while several Indian IPs like Mysteries & Feluda, Omkar, Balkand I, II and III are being produced with International Broadcasters.

During the year DQE had an impressive foray into the production of 3D animated stereoscopic feature films



FINANCIAL HIGHLIGHTS Rs in Thousands

Particuiars For the For the year ended year ended March 32, March 31, 2010 2009

Total Income 1,766,067 1,509,076

Total Expenditure 1,497,555 1,309,986

Profit before tax 268,512 199,090

Tax Expense (Current (1,791) (37,858)

Tax-i- Deferred Tax+

Fringe Benefit Tax)

Profit after ta 266,721 161,232



DIVIDEND

The Directors do not recommend payment of any dividend for this financial year.

INITIAL PUBLIC OFFER

As you are aware, the Companys Initial Public Offer ("IPO") which was open from March 8th to March 10th 2010, received an overwhelming response from investors and was subscribed 86.33 times. The HNI portion was subscribed 272.88 times. The qualified institutional and retail investors reserved portions were subscribed 93.86 times and 19.45 times, respectively. The equity shares of the Company were listed on the Bombay Stock Exchange Limited (BSE) on March 29 2010. The opening price was Rs. 135 per share, representing a premium of around 68.75% to the issue price of Rs. 80 per share. SBI Capital Markets Limited, were the book running lead managers and the syndicate members to the issue were SBICAP Securities Limited, India Infoline Limited and Yes Bank Limited. Karvy Computershare Private Limited is the Registrar to the issue.

We would like to thank the investors for their overwhelming response and trust in the fundamentals of the Company.



INCREASE IN SHARE CAPITAL

Authorised Capital: The authorised share capital of Rs. 38,100,000 divided into 3,010,000 Equity Shares and 800,000 % Redeemable Optionally Convertible Non Cumulative Preference Shares of Rs. 10 each was reclassified and increased to Rs. 800,000,000 divided into 80,000,000 Equity Shares of Rs. 10 each, pursuant to a resolution of the shareholders passed on September 15, 2009.

Paid up Capital: On September 17, 2009, the Company had issued 58,01 1,920 bonus shares in the ratio of 40: I pursuant to capitalisation of the share premium account. The Company had allotted an aggregate of 3,772,771 Equity Shares for cash at a price of Rs. 68.1 I per Equity Share (including a share premium of Rs. 58.1 I per Equity Share) on December 23, 2009 and January 06, 2010. Further, the Company issued 16,048,01 I equity shares of Rs. 10 each for cash at an issue price of Rs.80 determined through the 100% book-building mechanism in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009 in the Initial Public Offering ("IPO").

Due to this, the outstanding issued, subscribed and paid-up equity share capital increased from 1,422,912 shares in March 31, 2009 to 79,283,000 shares as at March 31, 2010.

SUBSIDIARY

Our Company has a wholly owned subsidiary, DQ Entertainment (Ireland) Limited ("DQ Ireland"), incorporated in Ireland which is engaged in the business of content development for animation and live action for TV series, movies and various other media.

The Company has been granted exemption for the year ended March 31, 2010 by the Ministry of Corporate Affairs from attaching to its Balance Sheet, the individual Annual Report of its subsidiary company. As per the terms of the Exemption Letter, a statement containing brief financial details of the Companys subsidiary for the year ended March 31, 2010 is included in the Annual Report. The annual accounts of this subsidiary and the related detailed information will be made available to any Member of the Company/its subsidiary seeking such information at any point of time and are also available for inspection by any Member of the Company/ its subsidiary at the Registered Office of the Company/ its subsidiary and would be posted on the website of the Company.



DIRECTORS

Mr. Rusi Brij, the co-promoter and Director of the Company unexpectedly passed away on May 20, 2009. The Board of Directors and all the associates of DQE condone this untimely demise and stand by the family with full support.

Mrs. Rashmi Chakravarti was appointed as Additional Director on May 25, 2009 and was regularized at the Annual General Meeting held on September 15, 2009.

Mr. K Balasubramanian, Ms. Theresa Plummer Andrews, Mr. Girish Kulkarni and Mr. Sanjay Saxena were appointed as Additional Directors of the Company on August 26, 2009 and regularized at the Annual General Meeting held on September 15,2009.

Mr. Akula Ramakrishna and Mr. Laxminarayana Nagu resigned from the Board on August 26, 2009. Mr. Sanjay Saxena resigned from the Board on September 17, 2009.

On April 30,2010, Mr. Neelesh Wagle was appointed as an Alternate Non-Executive Director to Mr. Girish Kulkarni.

On July 26, 2010, Mr. S Sundar was appointed as an Additional Director of the Company.

As per Article 109 to 115 of the Articles of Association, Mrs. Rashmi Chakravarti and Ms.Theresa Plummer Andrews shall retire by rotation at the ensuing Annual General Meeting. Mrs. Rashmi Chakravarti and Ms. Theresa Plummer being eligible are liable for re-appointment.

The detailed profiles of all the directors are available under the chapter Board of Directors.

AUDITORS

M/s. Deloitte, Haskins and Sells, Chartered Accountants, Hyderabad, the statutory auditors of the Company shall retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL INFORMATION

In terms of the provisions of Section 217 (2A) of the Companies-Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are required to be set out in the Annexure to the Directors Report. However, the provisions of Section 219 (I) (b)(iv) of the Companies Act, 1956 exempts the Company from publishing the same in the Annual Report. Hence, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

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

(i) Energy Conservation: The operations of the Company involve low energy consumption. Adequate measures have however been taken to conserve energy.

(ii) Technology Absorption: We have developed in- house plug- ins to maximise technology absorption at minimal cost. The Company produces TV series in the 3D stereoscopic technology which is the latest offering in the entertainment industry.

(iii) Foreign Exchange Earnings and Outgo:

(Rs. in Thousands) (Rs.in Thousanda)

2009-10 2008-09

a) Value of export earnings:

Income from production 1,358,447 1,344,366

License Fees 90,516 43,472

b) Value of export out flows towards:

Travel 1,837 4,229

Production Expenses 62,693 17,928

Professional and Consultancy 7,516 19,459

Charges

Financial Charges 5,242 16,634

Others 1,523 4,963



DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm that;

i) In the preparation of the annual accounts for the financial year ended on March 31, 2010, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any.

ii) The directors had selected such accounting policies and applied them consistently and made judgements 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 profit of the company for that period.

iii) Proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of this Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) The Directors had prepared the annual accounts for the financial year ended on March 31, 2010 on a Going Concern Basis.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

STATEMENT

A report on Corporate Governance is attached to this Report as also a Management Discussion and Analysis statement.

ACKNOWLEDGEMENT

Your directors would like to thank all the clients, vendors, investors, advisors and bankers for their continued support during the year. We place on record our appreciation for the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support. We look forward to their continued support in the future.

The Annual General Meeting of the Company will be held on September 29, 2010

Place: Hyderabad/ For and on behalf of the Board

Date: July 26, 2010 DQ Entertainment (International) Limited

Tapaas Chakravarti

CMD & CEO

 
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