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Directors Report of DQ Entertainment (International) Ltd.

Mar 31, 2016

To,

The Members,

The Directors have pleasure in presenting their Ninth Annual Report on the business and operations of DQ Entertainment (International) Limited (“the Company” or DQE India) together with the Audited Statement of Accounts for the financial year ended March 31, 2016.

1. FINANCIAL RESULTS

During the year under review, performance of your company was as under: INR in Mn

Particulars

Standalone

Consolidated

For the year ended

For the year ended

For the year ended

For the year ended

31-Mar-16

31-Mar-15

31-Mar-16

31-Mar-15

Income from Production

1,645

1,726

1,643

1,423

Income from Distribution

65

90

461

525

Other Income

196

29

533

13

Total Income

1,906

1,845

2,637

1,961

Total Expenditure

1,583

1,489

2,256

2,092

Profit before tax

323

356

381

(131)

Tax Expense

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

82

66

82

66

Profit after tax

241

290

299

(197)

Standalone: Profit before tax and Profit after tax includes the exceptional item by way of notional foreign exchange of approximately INR 169 Mn for the period ended 31st March 2016 (2015: INR (24) Mn) as well as Bad debts write off / provisioning for bad debts to the tune of INR 103.76 Mn (2015: INR 0.78 Mn)

Consolidated: Profit before tax and Profit after tax includes the exceptional item by way of notional foreign exchange of approximately INR 312 Mn for the period ended 31st March 2016 (2015: INR (351) Mn) as well as Bad debts write off / provisioning for bad debts to the tune of INR 373.01 Mn (2015: INR 0.78 Mn)

After adjustment of the notional loss and gain as well as the bad debts write off / provision, the profit before tax and profit after tax is as under for the consolidated financials:

INR in Mn

31 March 2016

31 March 2015

Adjusted Profit before tax

443

221

Adjusted Profit after Tax

361

155

Cash & Cash Equivalent

204

747

2. PERFORMANCE AND OPERATIONS

The financial year 2015-16 saw the beginning of the turnaround in the operations after very difficult period from 2012 -13 onwards. Slowly and steadily your company is receiving new orders and the development of its own IP’s is also progressing well.

Income from operations in 2015-16 on a consolidated basis was INR 2,104 Mn as compared to INR 1,948 Mn over the same period last year, an increase of 8%, which is indeed very encouraging.

The Company earned a profit before tax of INR 381 Mn as compared to a loss of INR (131) Mn over the same period last year, while profit after tax was INR 299 Mn, compared to a loss after tax of INR (197) Mn over the same period last year. However after considering the adjustments of exceptional items the profit after tax for the current year is INR 361 mn as compared to INR 155 mn in the previous year. There is a decrease of Adjusted EBITDA which is INR 891 Mn, compared to adjusted EBITDA of INR 1,067 Mn over the same period last year as a result of the write-off / provision made for debtors to the tune of INR 373 mn.

All efforts are being made to collect the old outstanding. In some of the cases we have made good progress while some parties are still struggling to get the financing in place. However, we have confirmations from all parties that they are committed to pay their dues.

As of now, we have a strong visibility of orders for production for next 18-24 months.

BUSINESS REVIEW:

Our focus on improving operational efficiencies and the consolidation of artistic and technical skill sets continues, with productivity improvements being recognized across all processes of production.

Operating Highlights for FY 2015-16:

Animation:

- Successfully completed and delivered our proprietary production ‘The New Adventures of Peter Pan’ season II with production partners Method Animation and other coproduction partners ZDF Germany, France Television, Telequebec and DeA Kids.

- Completed and delivered Popples - TV series, a co-production with Zag Toons, Saban Brands USA and Method Animation, France, which has debuted on Netflix world-wide.

- Another notable spin off ‘The Jungle Book the Christmas movie’ was also delivered during the year. It has suitable length for TV features, DVD release and online SVOD.

- Disney projects under production are: Miles from tomorrow land season II, Sheriff Callie’s Wild West season II, The Hive - Season 2, Puppy Dog Tales and Mickey Road Racers.

- Other service projects that were in production include Black Beauty, Magic Lamp, Persian Gift, Rainbow City, Magic Wand and Dream land.

- Projects which commenced production include Zak Storm- TV series, Super 4 - TV series,

- Commenced production of Our own IP’s The Jungle Book season III, 5&IT TV series, Jungle Book Halloween Special, Peter Pan Christmas Special and other spin offs.

- Seven Dwarfs and Me, produced by Method Animation and supported by DQE, ZDF, RAI and France TV a hybrid show combining high quality CGI with live action footage is nearing completion.

- Several co-production and service agreement were finalized during the year to name a few Robinhood Season II Co pro with Method Animation, Sammy 2 being produced by Zag Toons, USA and Method Animation, France, Pio the Chick TV series, an adaptation from Pulcino Pio (the hugely successful online musical sensation with more than a billion views) with the main producer Rai Commercial, Italy in partnership with Italian producer Gruppo Alcuni and Planeta Jr, Italy.

VFX:

- DQE’s VFX division was involved in elements of this year’s highly acclaimed films, SS Rajamouli’s ‘Bahubali’ and Gunasekhar’s ‘Rudrama Devi’. DQE VFX team is currently working on Telugu/Tamil bilingual starring Nagarjuna & Karthi directed by Paidipally Vamshi. Complex sequences for Dil Raju’s Krishnastami and Sai Dharam Tej’s new movie Thikka are under production.

Distribution:

- DQE’s licensing and distribution division has achieved a turnover of INR 461 Mn during 201516. Several deals are under negotiation and the revenue is expected to substantially increase in the current financial year.

- The Company’s digital platforms continue to perform satisfactorily and are gaining traction with third party properties soon being hosted on ‘Power Kids’ and ‘Tiny Toonz’ channels.

3. DIVIDEND

Considering the current expansion plans as well as the financial health of the Company, the Board has not recommended any dividend to the equity shareholders for the financial year 2015 -16.

4. SHARE CAPITAL

The authorized share capital of the Company as on 31st March, 2016 was Rs. 800,000,000/- divided into 80,000,000 equity shares of Rs.10/- each and paid-up capital was Rs. 792,830,000/- divided into 79,283,000 equity shares of Rs.10/- each.

The Company has neither issued shares with differential rights as to dividend, voting or otherwise nor issued shares (including sweat equity shares) to the employees or Directors of the Company, under any Scheme.

5. MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT

Management’s Discussion and Analysis Report for the year under review, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations, 2015] is presented in a separate section forming part of the Annual Report.

6. CORPORATE GOVERNANCE

The report on Corporate Governance as stipulated under the SEBI (LODR) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Practicing Company Secretary of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

The declaration by CEO/CFO that the Board Members and Senior Management Personnel have complied with the Code of Conduct forms part of the Annual Report.

7. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 (“the Act”) and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statements are provided in the Annual Report.

8. DIRECTORS’ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (C) OF THE COMPANIES ACT, 2013

Your Directors state that:

a) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) 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, 2016 and of the profit of the Company for the year ended on that date;

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

d) the Directors have prepared the annual accounts on a ‘going concern’ basis;

e) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

9. TRANSACTIONS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm’s length basis.

Pursuant to Reg. 23(8) of SEBI (LODR) Regulations, 2015, the material related party transactions entered into prior to the date of notification of SEBI (LODR) Regulations, 2015 and which are likely to continue beyond such date are placed for approval before the members at the ensuing Annual General meeting.

Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form AOC-2 and the same forms part of this report.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company’s website at the link: http:// www.dqentertainment.com/ Investors.aspx

10. EXTRACT OF ANNUAL RETURN

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure II in Form MGT- 9, which forms part of this report.

11. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As part of the CSR activities, the Company intends to initiate projects aimed at promoting quality education and employability for vulnerable sections of society, either directly or through DQ Smile Foundation.

Due to financial liquidity issues faced by the Company, the Board was unable to spend any amount on CSR activities during the year.

The CSR Policy may be accessed on the Company’s website and can be viewed on http:// www. dqentertainment.com/Investors.aspx.

The CSR annual report is attached separately and forms part of this report as Annexure III.

12. RISK MANAGEMENT

The Company is exposed to inherent uncertainties owing to the sectors in which it operates. The Company’s Risk Management process focuses on ensuring that these risks are identified on a timely basis and addressed. The Company has developed and implemented a Risk Management policy, which includes:

- ensuring that all the current and future material risk exposures of the company are identified, assessed, quantified, appropriately mitigated and managed;

- establishing a framework for the company’s risk management process and to ensure the group wide implementation;

- ensuring systematic and uniform assessment of risks related with the intellectual property and production services rendered;

- enabling compliance with appropriate regulations, wherever applicable, through the adoption of best practices and

- assuring business growth with financial stability.

The Risk Management Policy was reviewed and approved by the Audit Committee. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

13. INTERNAL FINANCIAL CONTROLS

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. The details on the internal control system are more elaborately explained in the Management’s Discussion and Analysis Report.

14. DIRECTORS & KEY MANAGERIAL PERSONNEL

a. Appointment

Mr. B.N.Sirish and Mr. Auknoor Goutam were appointed as Independent Directors for a period of five years with effect from 30th September 2015, by the members of the Company in the 8th Annual General Meeting (AGM) held on September 30, 2015 pursuant to the provisions of Section 149 & 152 of Companies Act 2013.

The Board at its meeting held on August 12, 2016 appointed Mr. Sachin Guha as Company Secretary and Compliance Officer of the Company w.e.f. August 23, 2016.

b. Retirement by rotation

In accordance with the provisions of the Act and the Articles of Association of the Company, Ms. Rashida Adenwala, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible has offered herself for re-appointment.

c. Resignation

Ms. Sindhu M.S. resigned as Company Secretary & Compliance Officer with effect from March 28, 2016. The Board places on record its gratitude for the services rendered by Ms. Sindhu M.S. during her association with the Company.

d. Board evaluation

Pursuant to the provisions of the Act, the SEBI (LODR) Regulations, 2015 and the policy adopted by the Company for performance evaluation, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees i.e., Audit, Nomination & Remuneration, Stakeholders’ Relationship and Corporate Social Responsibility.

The performance of the Board and Committees was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board/ committee composition and structure, effectiveness of Board/committee processes, information and functioning, etc.

The Board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive Directors and non-executive Directors.

e. Board Diversity

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Board Diversity Policy is available on our website, http:// www.dqentertainment.com/Investors.aspx

f. Policy on Directors’ Appointment, Remuneration and Other Details

The Company’s policy on Directors’ appointment, remuneration and other matters as provided in Section 178(3) of the Act is given as Annexure IV, which forms part of this report.

g. Familiarization programme of Independent Directors

The details of programme for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, and related matters are put up on the website of the Company at the link http:// www.dqentertainment.com/Investors. aspx

Further, at the time of appointment of an independent Director, the Company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities as a Director. The format of the letter of appointment is available on our website, http:// www. dqentertainment.com/Investors.aspx.

h. Declaration by Independent Directors

The Company has received necessary declaration from each independent Director under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

15. MEETINGS OF THE BOARD

During the Financial Year 2015-16, four meetings of the Board of Directors of the Company were held during the year on May 27, 2015, August 13, 2015, November 9, 2015 and February 12, 2016. For further details, please refer report on Corporate Governance of this Annual Report.

16. AUDITORS AND AUDITORS’ REPORT

a. Statutory Auditors

Your Company has at its Annual General Meeting held on September 30, 2014, appointed M/s. MZSK & Associates, Chartered Accountants, Hyderabad, as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment M/s. MZSK & Associates, Chartered Accountants, Hyderabad, as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

The Auditors’ Report does not contain any qualification, reservation or adverse remark. No frauds have been reported by the auditors in terms of Section 143(12) of the Act.

b. Secretarial Auditors

Mr. R. Ramakrishna Gupta of M/s. PI & Associates, Practicing Company Secretaries, New Delhi, was appointed by the Board to conduct the secretarial audit of the Company for the financial year 2015 -16, as required under Section 204 of the Companies Act, 2013 and Rules there under. The secretarial audit report forms part of the Annual Report as Annexure V to the Board’s report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

17. COMMITTEES

The Board has formed the following Committees:

(i) Audit Committee

(ii) Nomination and Remuneration Committee

(iii) Corporate Social Responsibility Committee

(iv) Stakeholders Relationship Committee

The details of the membership and attendance of the meetings of the above Committees of the Board are included in the Corporate Governance Report, which forms part of this report.

18. VIGIL MECHANISM

As part of our corporate governance practices, the Company has formulated a Whistle Blower Policy to provide Vigil Mechanism for employees including Directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and SEBI (LODR) Regulations, 2015. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company’s website at the link- http:// www.dqentertainment.com/Investors.aspx

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

20. DEPOSITS

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.

21. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO REQUIRED UNDER THE COMPANIES (ACCOUNTS) RULES, 2014

The particulars as prescribed under Sub-section (3) (m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are given hereunder:

(i) Energy Conservation: The operations of the Company involve low energy consumption. The Company has undertaken various energy efficient practices to conserve energy and strengthened the Company’s commitment towards becoming an environment friendly organization.

(ii) Technology Absorption: We have developed inhouse 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: The Company constantly endeavors 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:

Amount in INR

Particulars

For the year ended

For the year ended

31March16

31March15

Earnings in Foreign Currency

Income from production

1,627,126,687

1,710,690,035

Others income

5,056,040

16,944,309

Distribution Income

62,271,448

87,500,989

Expenditure in Foreign Exchange

(Subject to deduction of tax where applicable)

Overseas business travel

3,240,388

7,163,715

Production Expenses

14,818,925

525,142

Consultancy and other expenses

21,293,228

2,003,344

Financial Charges

-

9,959,515

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

22. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required under Section 197(12) of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended is provided as Annexure VI to the Board’s report.

The information required pursuant to Section 197(12) of the Act read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, in respect of the employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.

23. GOING CONCERN

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

24. INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2014

Your Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules there under for prevention and redressal of complaints of sexual harassment at workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

25. DETAILS OF SUBSIDIARIES/JOINT VENTURES/ASSOCIATE COMPANIES

DQ Entertainment (Ireland) Limited is the wholly owned subsidiary of the Company in Ireland. Further, there has been no material change in the nature of the business of the subsidiary. During the year, DQ Entertainment USA LLC was incorporated as wholly owned subsidiary of DQ Entertainment (Ireland) Limited in USA.

The Company’s two Indian subsidiaries - DQ Powerkidz Private Limited and DQE ITES Park Private Limited have been, on an application by the company, struck off by the Registrar of Companies on October 15, 2015.

DQ Entertainment (International) Films Limited is a Joint Venture between DQ Entertainment (International) Limited and DQ Entertainment plc, which was formed for the production and distribution of the Jungle Book Feature Film. The sharing ratio of DQE Plc is 60% and DQE India is 40% in the JV. The objective to form the JV was to benefit from the synergies of both the companies and to ensure that the interests of all the stakeholders are aligned.

There are no associate companies of DQE India within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). Method Animation S.A.S. is an associate company of DQ Entertainment plc, the Ultimate Holding Company.

Further, the report on the performance and financial position of the subsidiary and Joint venture and salient features of the financial statements in the prescribed form AOC - 1 is annexed as Annexure VII to the Boards report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of its subsidiary, DQ Entertainment (Ireland) Limited, are available on the Company website.

The policy for determining Material Subsidiaries is disclosed on the company’s website and is accessible on http:// www.dqentertainment.com/Investors.aspx.

26. GREEN INITIATIVE

Electronic copies of the Annual Report 2015 -16 and Notice of the 9th Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2016 and the Notice of the 9th Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company.

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.

The Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. The instructions for e-voting are provided in the Notice.

27. ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by every member of the DQE family.

Hyderabad For and on behalf of the Board

August 12, 2016 DQ Entertainment (International) Limited

Tapaas Chakravarti

CMD & CEO


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


Mar 31, 2009

The Directors have pleasure in presenting the second annual report on the business and operations of the Company and its subsidiary company (the Group) together with the audited annual accounts of DQ Entertainment (International) Private Limited (“The Company”) for the period ended March 31, 2009.

FINANCIAL HIGHLIGHTS

The financial highlights of the Company during the last year are as follows:

(Rs. in Thousands)

For the year ended Particulars March 31, 2009

Total Income 1,509,076

Total Expenditure 1,309,713

Profit before tax 199,363

Tax Expense (Current Tax+Deferred 37,858

Tax+ Fringe Benefit Tax)

Profit after tax 161,505

Principal activities

DQ Entertainment (DQE) is a Global player in the ever-growing market of media and entertain- ment. It has slowly and steadily paved its way as a trusted leading partner and high quality producer and global distributor of TV series, direct-to-home videos, feature films as well as Game art for on- line, mobile and next-generation console games across all formats not only in traditional and digital animation and VFX but has also made its foray into live action television and feature production and distribution.

Since its beginning as a service providing company for traditional 2D Animation, DQE has consistently expanded its product mix and moved up the value chain by adapting its business model from one of pure service to co-producing major iconic brands with well-known international partners as well as developing own IP for domestic and international markets.

DIVIDEND

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

CHANGES AMONG DIRECTORS

Rusi Brij, the co-promoter and Director of the Com- pany unexpectedly passed away on May 20, 2009. Rusi’s untimely demise is a tragic loss for his family, friends, and colleagues at DQE.

To fill in the casual vacancy caused by the sad de- mise of Mr. Rusi Brij, Mrs. Rashmi Chakravarti has been appointed as an additional director of the Com- pany with effect from May 25, 2009. Mrs. Rashmi Chakravarti’s term of office shall expire at the con- clusion of ensuing Annual General Meeting.

She is eligible for regularisation as Director of the Company by the shareholders at the ensuing annual general meeting.

AUDITORS

M/s Deloitte, Haskins and Sells, Chartered Accoun- tants, Hyderabad statutory auditors of the company shall retire at the ensuing annual general meeting and have offered themselves to be re-appointed as statutory auditors and tax auditors of te Company. M/s Deloitte, Haskins and Sells have confirmed that if appointed, the same will be in accordance with the limits specified in the Companies Act and other statutory provisions.

SECRETARIAL COMPLIANCE CERTIFICATE

The company has obtained a Secretarial Compliance Certificate from M/s R. & A Associates, a firm of practic- ing Company Secretaries as to the Compliance of the provisions of the Companies Act, 1956 for the financial year 31st March 2009.

PARTICULARS OF EMPLOYEES AND OTHER ADDITIONAL INFORMATION

The details of the employees of the company as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given as Annexure I.

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

(i) Energy Conservation: This provision is not applicable as the company does not belong to the category of the companies that are required to disclose the particulars as required under section 227(1)(e) of the Com- panies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

(ii) Technology Absorption: This provision is not applicable as the company did not use or absorbed any technology.

(iii) Foreign exchange earnings and outgo:

(Rs. in Thousands) 2008-09

a) Value of export earnings:

Sales 359,845

Other Incomes 31,962

b) Value of export out flows towards:

Purchases 97,872

Others 257,757

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, 2009, the applica- ble accounting standards had been followed along with proper explanation relating to material depar- tures, if any.

ii) The directors had selected such accounting poli- cies and applied them consistently and made judge- ments and estimates that are reasonable and pru- dent 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 pe- riod.

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

iv) The Directors had prepared the annual accounts for the financial year ended on March 31, 2009 on a ‘going concern basis’.

ACKNOWLEDGEMENT

Your Directors wish to place on record their deep sense of appreciation to the dynamic and efficient management team and employees having varied industry experience and very strong relationships with the group and its partners and its clients for their incredible teamwork, excellent professionalism and fervent contribution during the year. Your Directors are also grateful to shareholders, bankers, custom- ers and suppliers of the company for their continued valued support.

The Annual General Meeting of the Company will be held on September 15, 2009.

For and on behalf of the Board of DQ Entertainment (International) Private Limited

Place: Hyderabad (Tapaas Chakravarti)

Date: July 25, 2009 CMD & CEO

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