Mar 31, 2018
Corporate Information
Eros International Media Limited (the âCompanyâ) was incorporated in India, under the Companies Act, 1956. The Company is a global player within the Indian media and entertainment industry and is primarily engaged in the business of film production, exploitation and distribution. It operates on a vertically integrated studio model controlling content as well as distribution and exploitation across multiple formats globally, including cinema, digital, home entertainment and television syndication. Its shares are listed on leading stock exchanges in India (BSE Scrip Code: 533261; NSE Scrip Code: EROSMEDIA).
These separate financial statements were authorised for issue in accordance with a resolution passed in the Board of Directors meeting held on 23 May 2018.
Basis of preparation
The separate financial statements are prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013 (âthe Actâ) read with Companies (Indian Accounting Standards) Rules, 2015 and relevant provisions of the Act (as amended from time to time).
The financial statements have been prepared on accrual basis of accounting using historical cost basis, except certain investment and Employee Stock Option Plan (âESOPâ) Compensation measured at fair value.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Act. The Company considers 12 months to be its normal operating cycle.
All values are rounded to the nearest rupees in Lakhs, except where otherwise indicated. Amount in zero (0) represents amount below rupees fifty thousand.
1. Significant accounting judgements estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and reviewed at each balance sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures.
a. Intangible Assets
The Company is required to identify and assess the useful life of intangible assets and determine their income generating life. Judgment is required in determining this and then providing an amortization rate to match this life as well as considering the recoverability or conversion of advances made in respect of securing film content or the services of talent associated with film production.
Accounting for the film content requires Managementâs judgment as it relates to total revenues to be received and costs to be incurred throughout the life of each film or its license period, whichever is the shorter. These judgments are used to determine the amortization of capitalized film content costs. The Company uses a stepped method of amortization on first release film content writing off more in year one which recognizes initial income flows and then the balance over a period of up to nine years. In the case of film content that is acquired by the Company after its initial exploitation, commonly referred to as Library, amortization is spread evenly over the lesser of 10 years or the license period. Managementâs policy is based upon factors such as historical performance of similar films, the star power of the lead actors and actresses and others. Management regularly reviews, and revises when necessary, its estimates, which may result in a change in the rate of amortization and/or a write down of the asset to the recoverable amount.
Intangible assets are tested for impairment in accordance with the accounting policy. These calculations require judgments and estimates to be made, and in the event of an unforeseen event these judgments and assumptions would need to be revised and the value of the intangible assets could be affected. There may be instances where the useful life of an asset is shortened to reflect the uncertainty of its estimated income generating life.
b. Employee benefit plans
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future. For further details refer to Note 41.
c. Fair value measurement of ESOP Liability
The fair value of ESOP Liability is determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 41.
d. Trade receivable
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
e. Depreciation
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.
f. Impairment of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
g. Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgment to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
h. Fair value measurement
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
d) Details of employee stock options issued during the last 5 years
During the period of five years immediately preceding the reporting date, the Company has issued total 2,149,567 equity shares (31 March 2017: 1,220,890) on exercise of options granted under the employees stock option plan (ESOP) wherein part consideration was received in the form of employee services.
e) Details of equity share issued for consideration other than cash during the last 5 years
During the period of five years immediately preceding the reporting date, the Company has issued total 900,970 equity shares (31 March 2017: 900,970) to the shareholders of Universal Power Systems Private Limited at a premium of Rs. 586 per share in exchange for the entire shareholding of Universal Power Systems Private Limited.
f) Rights, preferences, restrictions of equity shares
The Company has only one class of equity shares having par value of Rs. 10 per share. Every holder is entitled to one vote per share. The dividend, if any, proposed by the Board of Directors and approved by the Shareholders in the Annual General Meeting is paid in Indian rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Secured short term borrowings include:
Cash credit carry an interest rate between 10% - 13% , secured by way of hypothecation of inventories and receivables relating to domestic rights operations on pari passu basis.
Bills discounted carry an interest rate between 10% - 11% for INR bills and LIBOR 3.5% for USD bills, secured by document of title to goods and accepted hundis with first pari passu charge on current assets.
Packing credit carry an interest rate between 10% - 11% for INR and LIBOR 3.5% for USD, secured by hypothecation of films and film rights with first pari passu charge on current assets.
Short term borrowings are further secured by equitable mortgage of companyâs immovable properties situated at Mumbai (India), amount held in margin money, corporate guarantee of Eros International Plc (the ultimate holding company),residual value of equipments and existing rights of hindi films with nil book value.
*Loan from others are secured by security provided by holding company.
Notes:
1) During the year ended 31 March 2015, the Company received a show cause notice from the Commissioner of Service Tax to show cause why an amount aggregating to Rs. 15,675 lakhs for the period 1 April 2009 to 31 March 2014 should not be levied on and paid by the Company for service tax arising on temporary transfer of copyright services and other matters.
In connection with the aforementioned matters, on 19 May 2015, the Company received an Order-in-original issued by the Principal Commissioner, Service Tax, wherein the department confirmed the demand of Rs. 15,675 lakhs along with interest and penalty amounting to Rs. 15,675 lakhs resulting into a total demand of Rs. 31,350 lakhs.
On 3 September 2015, the Company filed an appeal against the said order before the authorities. The Company has paid Rs. 1,000 Lakhs under protest. Considering the facts and nature of levies and the ad-interim protection for the period 1 July 2010 to 30 June 2012 granted by the Honorable High Court of Mumbai, the Company expects that the final outcome of this matter will be favourable. Accordingly, based on the assessment made after taking appropriate legal advise, no additional liability has been recorded in the financial statements.
2) Company has received notice for reversal of CENVAT credit for the period 2013-14 to 2015-16 Rs. 187 lakhs and for the period January 2016 to March 2017 Rs. 204 lakhs. Further Company also received notice for Non levy of Service tax on Import of Services for the period 2013-14 to 2015-16 for Rs. 70 Lakhs.
3) In addition, the Company is liable to pay service tax on use on temporary transfer of copyright in the period 1 July 2010 to 30 June 2012. The Company filed a writ petition in Mumbai High Court challenging the constitutionality and the legality of this entry and received ad-interim protection and accordingly, no amounts were provided for by the Company for the period 1 April 2011 to 30 June 2012.
4) It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above, pending resolution of the respective proceedings.
5) From time to time, the âCompanyâ is involved in legal proceedings arising in the ordinary course of its business, typically intellectual property litigation and infringement claims related to the Companyâs feature films and other commercial activities, which could cause the Company to incur expenses or prevent the Company from releasing a film. While the resolution of these matters cannot be predicted with certainty, the Company does not believe, based on current knowledge or information available, that any existing legal proceedings or claims are likely to have a material and adverse effect on its financial position, results of operations or cash flows.
2 Employment benefits
a) Gratuity
The following table set out the status of the gratuity plan as required under Indian Accounting Standard (Ind AS) - 19, Employee benefits, and the reconciliation of opening and closing balances of the present value of the defined benefit obligation:
I Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision.
II Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the planâs liability.
III Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Company has to manage pay-out based on pay as you go basis from own funds
IV Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
b) Compensated absences
The Company incurred Rs. 29 lakhs (31 March 2017 : Rs. 129 lakhs) towards accrual for compensated absences during the year.
c) Provident fund
The Company contributed Rs. 168 lakhs (31 March 2017 : Rs. 181 lakhs) to the provident fund plan, Rs. 5 lakhs (31 March 2017 : Rs. 4 lakhs) to the Employee state insurance plan and Rs. 11 lakhs (31 March 2017 : Rs. 10 lakhs) to the National Pension Scheme during the year.
d) Share-based payment transactions
The Company has instituted Employeesâ Stock Option Plan âESOP 2009â and "ESOS 2017" under which the stock options have been granted to employees. The scheme was approved by the shareholders at the Extra Ordinary General Meeting held on 4 December 2009 and Annual General Meeting held on 28 September 2017 respectively. The details of activity under the ESOP 2009 scheme are summarized below:
3 Operating Segment
Description of segment and principal activities
The Company acquires, co-produces and distributes Indian films in multiple formats worldwide. Film content is monitored and strategic decisions around the business operations are made based on the film content, whether it is new release or library. Hence, Management identifies only one operating segment in the business, film content. The Company distributes film content to the Indian population in India and worldwide and to non-Indian consumers who view Indian films that are subtitled or dubbed in local languages. As a result of these distribution activities, the management examines the performance of the business from a geographical market perspective.
4 Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of a fair value hierarchy. The three Levels are defined based in the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e as price) or indirectly (i.e. derived from price)
Level 3: unobservable inputs for the asset or liability
*Exclude financial instruments of investment in subsidiaries carried at cost.
During the year ended 31 March 2018 there was no transfers between level 2 and level 3 fair value hierarchy.
Fair value of cash and short term deposits, trade and other short term receivables, trade payables, other current liabilities and short term borrowings carried at amortised cost is not materially different from its carrying cost largely due to short term maturities of these financial assets and liabilities
Fair value of the borrowing items fall within level 2 of the fair value hierarchy and is calculated on the basis of discounted future cash flows.
Non-listed shares and other securities fall within level 3 of the fair value hierarchy. Valuation is based on the discounted future cash flow method.
Financial instruments with fixed and variable interest rate fall within level 2 of the fair value hierarchy and are evaluated by Company based on parameters such as interest rate, credit rating or assessed credit worthiness.
*Exclude financial instruments of investment in subsidiaries carried at cost.
During the year ended 31 March 2017 there was no transfers between level 2 and level 3 fair value hierarchy.
Fair value of cash and short term deposits, trade and other short term receivables, trade payables, other current liabilities and short term borrowings carried at amortised cost is not materially different from its carrying cost largely due to short term maturities of these financial assets and liabilities
5 Financial instruments and Risk management
The Company is exposed to various risks in relation to financial instruments. The Companyâs financial assets and liabilities by category are summarised in note 44 The main types of risks are market risk, credit risk and liquidity risk.
The Companyâs risk management is coordinated in close cooperation with the board of directors and audit committee meetings.
The Company has established objectives concerning the holding and use of financial instruments. The underlying basis of these objectives is to manage the financial risks faced by the Company.
Formal policies and guidelines have been set to achieve these objectives. The Company does not enter into speculative arrangements or trade in financial instruments and it is the Companyâs policy not to enter into complex financial instruments unless there are specific identified risks for which such instruments help mitigate uncertainties.
Management of Capital Risk and Financial Risk
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Company monitors capital using a gearing ratio, which is net debt divided by total capital. For the purpose of the Companyâs capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. Net debt is calculated as borrowing (refer note 19,25,26 and 27) less cash and cash equivalents.
Financial risk management objectives
Based on the operations of the Company, Management considers that key financial risks that it faces are credit risk, currency risk, liquidity risk and interest rate risk. The objectives under each of these risks are as follows:
- credit risk: minimize the risk of default and concentration.
- currency risk: reduce exposure to foreign exchange movements principally between INR and USD.
- liquidity risk: ensure adequate funding to support working capital and future capital expenditure requirements.
- interest rate risk: mitigate risk of significant change in market rates on the cash flow of issued variable rate debt.
Credit Risk
The Companyâs credit risk is principally attributable to its trade receivables, loans and bank balances. As a number of the Companyâs trading activities require third parties to report revenues due to the Company this risk is not limited to the initial agreed sale or advance amounts. The amounts shown within the Balance Sheet in respect of trade receivables and loans are net of allowances for doubtful debts based upon objective evidence that the Company will not be able to collect all amounts due.
Trading credit risk is managed on a customer by customer basis by the use of credit checks on new clients and individual credit limits, where appropriate, together with regular updates on any changes in the trading partnerâs situation. In a number of cases trading partners will be required to make advance payments or minimum guarantee payments before delivery of any goods. The Company reviews reports received from third parties and in certain cases as a matter of course reserve the right within the contracts it enters into to request an independent third party audit of the revenue reporting.
The credit risk on bank balances is limited because the counterparties are banks with high credit ratings as signed by international credit rating agencies.
The Company from time to time will have significant concentration of credit risk in relation to individual theatrical releases, television syndication deals or digital licenses. This risk is mitigated by contractual terms which seek to stagger receipts and/or the release or airing of content. As at 31 March 2018 51% (31 March 2017: 66%) of trade account receivables were represented by the top 5 customer, out of which as at 31 March 2018 15% (31 March 2017: 33%) of trade account receivables were represented by the related parties. The maximum exposure to credit risk is that shown within the statement of financial position.
As at 31 March 2018, the Company did not hold any material collateral or other credit enhancements to cover its credit risks associated with its financial assets, except certain secured debtors as disclosed in note 11.
Currency Risk
The Company is exposed to foreign exchange risk from foreign currency transactions. As a result it faces both translation and transaction currency risks which are principally mitigated by matching foreign currency revenues and costs wherever possible.
The Company has identified that it will need to utilize hedge transactions to mitigate any risks in movements between the US Dollar and the Indian Rupee and has adopted an agreed set of principles that will be used when entering into any such transactions. No such transactions have been entered into to date and the Company has managed foreign currency exposure to date by seeking to match foreign currency inflows and outflows as much as possible such as packing credit repayment in USD is matched with remittances from UAE in USD. Details of the foreign currency borrowings that the Company uses to mitigate risk are shown within Interest Risk disclosures.
The Company adopts a policy of borrowing where appropriate in the foreign currency as a hedge against translation risk. The table below shows the Companyâs net foreign currency monetary assets and liabilities position in the main foreign currencies, translated to Indian Rupees(T) equivalents, as at the year end:
A uniform decrease of 10% in exchange rates against all foreign currencies in position as of 31 March 2018 would have decreased in the Companyâs net profit before tax by approximately Rs. 102 lakhs (31 March 2017: loss of Rs. 801 lakhs). An equal and opposite impact would be experienced in the event of an increase by a similar percentage.
Liquidity risk
The Company manages liquidity risk by maintaining adequate reserves and agreed committed banking facilities. Management of working capital takes account of film release dates and payment terms agreed with customers.
A maturity analysis for financial liabilities is provided below. The amounts disclosed are based on contractual undiscounted cash flows. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rates as at 31 March in each year.
Interest rate risk
Fluctuation in fair value or future cash flows of a financial instrument because of changes in market interest rates gives rise to interest rate risk. A uniform increase of 100 basis in interest rates against all borrowings in position as of 31 March 2018 would have decreased in the Companyâs net profit before tax by approximately Rs. 317 Lakhs (31 March 2017: net profit before tax of Rs. 213 Lakhs). An equal and opposite impact would be experienced in the event of a decrease by a similar basis.
6 Based on the information available with the Company, there are no dues payable as at the year end to micro, small and medium enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006. This information has been relied upon by the statutory auditors of the Company.
7 As per the provision of the Act, a Corporate Social Responsibility (CSR) committee has been formed by the Company. CSR objects chosen by the Company primarily consist of promoting education, promoting gender equality, empowering women, setting up homes and hostels for women and orphans etc. As per the provisions of the Act, gross amount required to be spent by the Company is Rs. 448 lakh (31 March 2017 : Rs. 427 lakh), of which Rs. 0 lakhs (31 March 2017 : Rs. 10 lakh) have been spent during the current year.
8 Post reporting date events
No adjusting or significant non-adjusting events have occurred between 31 March 2018 and the date of authorisation of these standalone financial statements.
Mar 31, 2017
21 Significant accounting judgments, estimates and assumptions
The preparation of the financial statements requires management to make judgments, estimates and assumptions, as described below, that affect the reported amounts and the disclosures. The Company based its assumptions and estimates on parameters available when the financial statements were prepared and reviewed at each balance sheet date. Uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the reported amounts and disclosures.
a. Intangible Assets
The Company is required to identify and assess the useful life of intangible assets and determine their income generating life. Judgment is required in determining this and then providing an amortization rate to match this life as well as considering the recoverability or conversion of advances made in respect of securing film content or the services of talent associated with film production.
Accounting for the film content requires managementâs judgment as it relates to total revenues to be received and costs to be incurred throughout the life of each film or its license period, whichever is the shorter. These judgments are used to determine the amortization of capitalized film content costs. The Company uses a stepped method of amortization on first release film content writing off more in year one which recognizes initial income flows and then the balance over a period of up to nine years. In the case of film content that is acquired by the Company after its initial exploitation, commonly referred to as Library, amortization is spread evenly over the lesser of 10 years or the license period. Managementâs policy is based upon factors such as historical performance of similar films, the star power of the lead actors and actresses and others. Management regularly reviews, and revises when necessary, its estimates, which may result in a change in the rate of amortization and/or a write down of the asset to the recoverable amount.
The Company tests annually whether intangible assets have suffered any impairment, in accordance with the accounting policy. These calculations require judgments
and estimates to be made, and in the event of an unforeseen event these judgments and assumptions would need to be revised and the value of the intangible assets could be affected. There may be instances where the useful life of an asset is shortened to reflect the uncertainty of its estimated income generating life.
b. Employee benefit plans
The cost of the employment benefit plans and their present value are determined using actuarial valuations which involves making various assumptions that may differ from actual developments in the future.
For further details refer to Note 41a
c. Fair value measurement of ESOP Liability
The fair value of ESOP Liability is determined using valuation methods which involves making various assumptions that may differ from actual developments in the future. For further details refer Note 41d
1. The Companyâs immovable property situated in Mumbai, India is pledged against the borrowings as explained in note No. 19 and 25
2. As explained in note 48, the Company has used Indian GAAP carrying value of its Property, plant and equipment on date of transition as deemed cost, accordingly , the net carrying amount as per Indian GAAP as on 1 April 2015 has been considered as gross carrying value under Ind-AS 101.
During the year, the Company has issued total 269,553 shares (2016: 180,920 ; 2015: 534,084) on exercise of options granted under the employees stock option plan (ESOP) wherein part consideration was received in the form of employees services.
On 25 February 2015, the Company entered into a share purchase agreement to acquire a controlling stake in Universal Power Systems Private Limited, trading by the name Techzone (âUPSPLâ or âTechzoneâ). On 20 July 2015, the Company received approval from Foreign Investment Promotion Board (âFIPBâ) to acquire Techzone. On 1 August 2015, the Company allotted 900,970 equity shares to the shareholders of UPSPL at a premium of Rs, 586 per share in exchange for the entire shareholding of UPSPL. Shares so purchased have been classified as non- current investment.
d) Details of employee stock options issued during the last 5 years
During the period of five years immediately preceding the reporting date, the Company has issued total 1,220,890 shares (2016: 1,281,194 ; 2015: 1,100,274) on exercise of options granted under the employees stock option plan (ESOP) wherein part consideration was received in the form of employee services.
e) Rights, preferences, restrictions of equity shares
The Company has only one class of equity shares having par value of Rs, 10 per share. Every holder is entitled to one vote per share. The dividend, if any, proposed by the Board of Directors and approved by the Shareholders in the Annual General Meeting is paid in Indian rupees.
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
*Term loans from banks carry an interest rate between 12% - 13% are secured by pari passu first charge on the DVD/ satellite rights acquired for the domestic market, actionable claims, revenue and receivables arising on sales of the rights and negatives of films. Term loans are further secured by
a) Equitable mortgage of Companyâs immovable properties situated at Mumbai, India;
b) Amounts held as margin money;
c) Corporate guarantee of Eros International PLC, the ultimate holding company;
d) Residual value of equipments and vehicles; and
e) Existing rights of Hindi films with nil book value.
Loans are repayable in monthly/ quarterly installments over a period of 2 - 5 years.
# Car loans are secured by hypothecation of vehicles acquired there against, carrying rate of interest of 10%-10.50% which are repayable in monthly installments over a period of 3 years.
Note : There is no default, continuing or otherwise as at the balance sheet date, in repayment of any of the above loans.
Notes:
1 During the year ended 31 March 2015, the Company received a show cause notice from the Commissioner of Service Tax to show cause why an amount aggregating to Rs, 15,675 lakhs for the period 1 April 2009 to 31 March 2014 should not be levied on and paid by the Company for service tax arising on temporary transfer of copyright services and other matters.
In connection with the aforementioned matters, on 19 May 2015, the Company received an Order-in-original issued by the Principal Commissioner, Service Tax, wherein the department confirmed the demand of Rs, 15,675 lakhs along with interest and penalty amounting to Rs, 15,675 lakhs resulting into a total demand of Rs, 31,350 lakhs.
On 3 September 2015, the Company filed an appeal against the said order before the authorities. The Company has paid Rs, 1,000 Lakhs under protest . Considering the facts and nature of levies and the ad-interim protection for the period 1 July 2010 to 30 June 2012 granted by the Honorable High Court of Mumbai, the Company expects that the final outcome of this matter will be favourable.
Accordingly, based on the assessment made after taking appropriate legal advise, no additional liability has been recorded in the financial statements.
2 Company has received notice for reversal of CENVAT credit for the period 2013-14 to 2015-16 Rs, 187 Lakhs and for the period Jan 16 to March 2017 Rs, 204 Lakhs. Further Company also received notice for Non levy of Service tax on Import of Services for the period 2013-14 to 2015-16 for Rs, 70 Lakhs.
3 I n addition, the Company is liable to pay service tax on use on temporary transfer of copyright in the period 1 July 2010 to 30 June 2012. The Company filed a writ petition in Mumbai High Court challenging the constitutionality and the legality of this entry and received ad-interim protection and accordingly, no amounts were provided for by the Company for the period 1 April 2011 to 30 June 2012.
4 It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above, pending resolution of the respective proceedings.
5 From time to time, the âCompanyâ is involved in legal proceedings arising in the ordinary course of its business, typically intellectual property litigation and infringement claims related to the Companyâs feature films and other commercial activities, which could cause the Company to incur expenses or prevent the Company from releasing a film. While the resolution of these matters cannot be predicted with certainty, the Company does not believe, based on current knowledge or information available, that any existing legal proceedings or claims are likely to have a material and adverse effect on its financial position, results of operations or cash flows.
6 The Company does not expect any reimbursements in respect of the above contingent liabilities.
âActuarial loss of Rs, 22 lakhs and actuarial gain of Rs, 13 lakhs (31 March 2016) is included in other comprehensive income.
b) Compensated absences
The Company incurred '' 129 lakhs (31 March 2016 '' 63 lakhs) towards accrual for compensated absences during the year.
c) Provident fund
The Company contributed Rs, 181 lakhs (31 March 2016 Rs, 193 lakhs) to the provident fund plan, Rs, 4 lakhs (31 March 2016 Rs, 3 lakhs) to the Employee state insurance plan and Rs, 10 lakhs (31 March 2016 Rs, 8 lakhs) to the National Pension Scheme during the year.
d) Share-based payment transactions
The Company has instituted Employeesâ Stock Option Plan âESOP 2009â under which the stock options have been granted to employees. The scheme was approved by the shareholders at the Extra Ordinary General Meeting held on 17 December 2009. The details of activity under the ESOP 2009 scheme are summarized below:
There were no cancellations or modifications to the awards in 31 March 2017 or 31 March 2016.
The expected life of options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may differ from the actual.
2 Segment Reporting
Description of segment and principal activities
The Company acquires, co-produces and distributes Indian films in multiple formats worldwide. Film content is monitored and strategic decisions around the business operations are made based on the film content, whether it is new release or library. Hence, Management identifies only one operating segment in the business, film content. The Company distributes film content
to the Indian population in India and worldwide and to non-Indian consumers who view Indian films that are subtitled or dubbed in local languages. As a result of these distribution activities, the management examines the performance of the business from a geographical market perspective.
For the year ended 31 March 2017 and 31 March 2016 no third party customers accounted for more than 10% of the entityâs total revenues.
* Sales to UAE includes sales to its related party Eros Worldwide FZ LLC.
âCompany has obtained declarations from nominee shareholders stating that Eros International Media Limited is the beneficial owner of the shares held by them in below companies, thereby making below companies wholly owned subsidiaries of Eros International Media Limited:
> EM Publishing Pvt Ltd
> Eros Animation Pvt Ltd
> Eyeqube Studios Pvt Ltd
> Eros International Films Pvt Ltd
List of Key management personnel (KMP)
Mr. Sunil Lulla - Executive Vice Chairman and Managing Director Mr. Kishore Lulla - Executive Director Ms. Jyoti Deshpande - Executive Director
Mr. Vijay Ahuja - Non Executive, Non Independent Director (retired by rotation as on 29 September 2016) Mr. Dinesh Modi -Group Chief Financial Officer (India) (w.e.f. 11 November 2014)
Mr. Kamal Jain -Group Chief Financial Officer (India) (upto 30 November 2014)
Ms. Dimple Mehta - Vice President - Company Secretary and Compliance Officer
Relatives of KMP with whom transactions exist Mrs. Manjula K Lulla (wife of Mr. Kishore Lulla)
Mrs. Krishika Lulla (wife of Mr. Sunil Lulla) Entities over which KMP exercise significant influence Shivam Enterprises
Eros International Distribution LLP Eros Television India Private Limited Fellow subsidiary company Eros Digital Private Limited
Eros International Limited, United Kingdom Eros Digital FZ LLC
*Exclude financial instruments of investment in subsidiaries carried at cost (refer note 48).
3. Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the balance sheet are grouped into three Levels of a fair value hierarchy. The three Levels are defined based in the observability of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
*Exclude financial instruments of investment in subsidiaries carried at cost (refer note 48).
4. Financial instruments and Risk management
The Company is exposed to various risks in relation to financial instruments. The Companyâs financial assets and liabilities by category are summarized in note 44. The main types of risks are market risk, credit risk and liquidity risk.
The Companyâs risk management is coordinated in close cooperation with the board of directors and audit committee meetings.
The Company has established objectives concerning the holding and use of financial instruments. The underlying basis of these objectives is to manage the financial risks faced by the Company.
Management of Capital Risk and Financial Risk
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Company monitors capital using a gearing ratio, which is net debt divided by total capital. For the purpose of the Companyâs capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. Net debt is calculated as borrowing (refer note 19,25,26 and 27) less cash and cash equivalents.
Financial risk management objectives
Based on the operations of the Company , Management considers that key financial risks that it faces are credit risk, currency risk, liquidity risk and interest rate risk. The objectives under each of these risks are as follows:
® credit risk: minimize the risk of default and concentration.
® currency risk: reduce exposure to foreign exchange movements principally between INR and USD.
® liquidity risk: ensure adequate funding to support working capital and future capital expenditure requirements.
® interest rate risk: mitigate risk of significant change in market rates on the cash flow of issued variable rate debt.
Credit Risk
The Companyâs credit risk is principally attributable to its trade receivables, loans and bank balances. As a number of the Companyâs trading activities require third parties to report revenues due to the Company this risk is not limited to the initial agreed sale or advance amounts. The amounts shown within the Balance Sheet in respect of trade receivables and loans are net of allowances for doubtful debts based upon objective evidence that the Company will not be able to collect all amounts due.
Trading credit risk is managed on a customer by customer basis by the use of credit checks on new clients and individual credit limits, where appropriate, together with regular updates on any changes in the trading partnerâs situation. In a number of cases trading partners will be required to make advance payments or minimum guarantee payments before delivery of any goods. The Company reviews reports received from third parties and in certain cases as a matter of course reserve the right within the contracts it enters into to request an independent third party audit of the revenue reporting.
The credit risk on bank balances is limited because the counterparties are banks with high credit ratings as signed by international credit rating agencies.
The Company from time to time will have significant concentration of credit risk in relation to individual theatrical releases, television syndication deals or digital licenses. This risk is mitigated by contractual terms which seek to stagger receipts and/or the release or airing of content. As at 31 March 2017 66 % (31 March 2016: 84 %; 1 April 2015: 96% ) of trade account receivables were represented by the top 5 customer, out of which as at 31 March 2017 33 % (31 March 2016: 56 %; 1 April 2015: 67 % ) of trade account receivables were represented by the related parties. The maximum exposure to credit risk is that shown within the statement of financial position.
As at 31 March 2017, the Company did not hold any material collateral or other credit enhancements to cover its credit risks associated with its financial assets, except secured debtors.
Currency Risk
The Company is exposed to foreign exchange risk from foreign currency transactions. As a result it faces both translation and transaction currency risks which are principally mitigated by matching foreign currency revenues and costs wherever possible.
The Company has identified that it will need to utilize hedge transactions to mitigate any risks in movements between the US Dollar and the Indian Rupee and has adopted an agreed set of principles that will be used when entering into any such transactions. No such transactions have been entered into to date and the Company has managed foreign currency exposure to date by seeking to match foreign currency inflows and outflows as much as possible such as packing credit repayment in USD is matched with remittances from UAE in USD. Details of the foreign currency borrowings that the Company uses to mitigate risk are shown within Interest Risk disclosures.
As at the Balance Sheet date there were no outstanding forward foreign exchange contracts. The Company adopts a policy of borrowing where appropriate in the local currency as a hedge against translation risk. The table below shows the Companyâs net foreign currency monetary assets and liabilities position in the main foreign currencies, translated to Indian Rupees(INR) equivalents, as at the yearend:
A uniform decrease of 10% in exchange rates against all foreign currencies in position as of 31 March 2017 would have decreased in the Companyâs net profit before tax by approximately Rs, 801 Lakhs (2016: gain of Rs, 1,585 Lakhs and 2015: gain of Rs, 1,713 Lakhs). An equal and opposite impact would be experienced in the event of an increase by a similar percentage.
Liquidity risk
The Company manages liquidity risk by maintaining adequate reserves and agreed committed banking facilities. Management of working capital takes account of film release dates and payment terms agreed with customers.
A maturity analysis for financial liabilities is provided below. The amounts disclosed are based on contractual undiscounted cash flows. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rates as at 31 March, in each year.
At 31 March 2017, the Company had facilities available of Rs, 70,990 Lakhs (31 March 2016: Rs, 44,283 Lakhs, 1 April 2015: Rs, 47,323 Lakhs) and had net undrawn amounts of Rs, 1,444 Lakhs ( 31 March 2016: Rs, 2,250 Lakhs , 1 April 2015: Rs, 152 Lakhs) available.
Interest rate risk
The Company is exposed to interest rate risk as the Company has borrowed funds at floating interest rates. The risk is managed as the loans are at floating interest rates which is aligned to the market.
A uniform increase of 100 basis in interest rates against all borrowings in position as of 31 March 2017 would have decreased in the Companyâs net profit before tax by approximately '' 213 (2016: net profit before tax of Rs, 63 and 2015: net profit before tax of Rs, 72). An equal and opposite impact would be experienced in the event of a decrease by a similar basis.
5. Disclosure on Specified Bank Notes (SBNs)
During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated 31 March 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:
6.First time adoption of Indian Accounting Standards (Ind AS)
For all periods, up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
These financial statements for the year ended 31 March 2017 have been prepared in accordance with Indian Accounting Standards (âInd-ASâ) consequent to the notification of The Companies (Indian Accounting Standards) Rules, 2015 (the Rules) issued by the MCA. These are the first Ind-AS financial statements of the Company, wherein the Company has restated its Balance Sheet as at 1 April 2015 and financial statements for the year ended and as at 31 March 2016 also as per Ind-AS.
Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below.
A Exemptions and Exceptions availed:
Set out below are the Ind AS 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
(a) Deemed Cost
There is no change in the functional currency of the Company and accordingly, the Company has opted para D7 AA and accordingly considered the carrying value of property, plant and equipments and Intangible assets as deemed cost as at transition date.
(b) Classification and measurement of Financial Assets
The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist on the date of transition to Ind AS.
(c) Business Combinations
I nd AS 103 on Business Combinations has not been applied to acquisitions of businesses that occurred before 1 April 2015. Use of this exemption means that assets and liabilities acquired under a business combination and eligible for recognition under Ind
AS will be the Indian GAAP carrying values on the acquisition date.
(d) Share based options
I nd AS 102 on share-based payment has not been applied to equity instruments in share-based payment transactions that vested before the date of transition to Ind AS.
(e) Leases
Appendix C to Ind AS 17 requires the Company to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all relevant arrangements for classification of leases based on facts and circumstances existing at the date of transition to Ind AS.
(f) Investment in subsidiaries
In accordance with the exemption given in Ind AS 101, the Company has recorded investment in subsidiaries at deemed cost i.e. Indian GAAP carrying amount except investment in Universal Power Systems Private Limited. (Refer note 5)
(g) Estimates
Upon an assessment of th e estimates mad e und er Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS except as a part of transition where following estimates were required by Ind AS and not required by Indian GAAP Impairment of financial assets based on expected credit loss model.
C Notes to first time adoption of Ind AS:
(i) MAT Credit
Under Previous GAAP, MAT credit was disclosed under noncurrent assets. In accordance with Ind AS
12, deferred tax asset shall include any carry forward unused tax credits. Hence, MAT credit entitlement has been included in deferred tax liabilities.
(ii) Expected Credit Loss
Under Indian GAAP allowances of doubtful debt was provided as per management estimate whereas under Ind AS allowances are based on expected credit loss model as per Ind - AS 109 - Financial Instruments.
(iii) ESOP accounting
Under Ind-AS, it is measured using grant date fair value whereas under Indian GAAP, ESOP liability was accounted for at intrinsic value.
(iv) Equity settled business combination
Under Ind-AS, the same has been accounted for at fair value of equity shares on the acquisition date as per Ind-AS 103 - Business Combinations whereas under Indian GAAP, the acquisition of a subsidiary by issuing equity shares to the transferor was accounted for at fair value of those equity shares on the date of agreement.
(v) Other comprehensive income (OCI)
I nd-AS requires preparation of Statement of Other Comprehensive Income in addition to Statement of Profit and Loss. Re-Measurement gain/loss on defined benefit plans earlier accounted for in statement of profit and loss under Indian GAAP has been reclassified to OCI as required by Ind-AS 19 -Employee Benefits.
(vi) Borrowings
Under Indian GAAP, transaction costs incurred in connection with borrowings were disclosed as prepaid expenses and charged to statement of profit and loss on a systematic basis. Under Ind AS, borrowings are recorded initially at fair value less transaction costs and are subsequently measured at amortized cost as per the Effective Interest Rate (EIR) method.
(vii) Deferred Tax
Deferred tax under Ind AS has been recognized for temporary differences between tax base and the book base of the relevant assets and liabilities. Under IGAAP the deferred tax was accounted based on timing differences impacting the profit or loss for the period. Deferred tax on aforesaid Ind AS adjustments has been created for both periods - as on 31 March
2016 and 1 April 2015.
(viii) Effect of Ind AS adoption on Statement of Cash Flow
The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31 March 2016 as compared with the Indian GAAP,
(ix) Retained Earnings
Retained earnings as at 1 April 2015 has been adjusted consequent to the above Ind AS transition adjustments.
7. Based on the information available with the Company, there are no dues payable as at the year end to micro, small and medium enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006. This information has been relied upon by the statutory auditors of the Company.
8. As per the provision of the Act, a Corporate Social Responsibility (CSR) committee has been formed by the Company. CSR objects chosen by the Company primarily consist of promoting education, promoting gender equality, empowering women, setting up homes and hostels for women and orphans etc. As per the provisions of the Act, gross amount required to be spent by the Company is Rs, 427 lakh (31 March 2016: Rs, 374 lakh), of which Rs, 10 lakhs (31 March 2016: Rs, 20 lakh) have been spent during the current year.
9. Post reporting date events
No adjusting or significant non-adjusting events have occurred between 31 March 2017 and the date of authorisation of these standalone financial statements
10. Authorisation of financial statements
The financial statement for the year ended 31 March 2017 (including comparatives) were approved by the board of directors on 26 May 2017
Mar 31, 2016
1. EMPLOYMENT BENEFITS
a) Gratuity
The following table set out the status of the gratuity plan as required
under Accounting Standard (AS) - 15 Employee benefits and the
reconciliation of opening and closing balances of the present value of
the defined benefit obligation:
The estimates of future salary increases, considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
b) Compensated absences
The Company incurred Rs. 63 lakhs (Previous year Rs. 65 lakhs) towards
accrual for compensated absences during the year.
c) Provident fund
The Company contributed Rs. 193 lakhs (Previous year Rs. 113 lakhs) to
the provident fund plan, Rs. 3 lakhs (Previous year Rs. 4 lakhs) to the
Employee state insurance plan and Rs. 8 lakhs (Previous year Rs. Nil)
to the National Pension Scheme during the year.
d) Employee stock compensation (ESOP 2009 Scheme):
The Company has instituted Employees'' Stock Option Plan "ESOP 2009"
under which the stock options have been granted to employees. The
scheme was approved by the shareholders at the Extra Ordinary General
Meeting held on 1 7 December 2009.
2. SEGMENT REPORTING
As permitted by Accounting Standard -17, ''Segment Reporting'', if a
single financial report contains both consolidated financial statements
and separate financial statements of the parent, segment information
needs to be presented only on the basis of consolidated financial
statements. Accordingly, disclosures mandated by AS-1 7 have been made
in the consolidated financial statements.
3. Based on the information available with the Company, there are no
dues payable as at the year end to micro, small and medium enterprises
as defined in The Micro, Small & Medium Enterprises Development Act,
2006. This information has been relied upon by the statutory auditors
of the Company.
4. The Company is engaged in the production and trading of film rights,
which requires various types, qualities and quantities of raw materials
and inputs in different denominations. Due to the multiplicity and
complexity of items, it is not practicable to maintain quantitative
record or continuous stock register, as the process of making films is
not amenable to it. Hence, quantitative details are not maintained by
the Company. This practice is generally followed by companies in the
industry.
5. As per the provision of the Act, a Corporate Social Responsibility
(CSR) committee has been formed by the Company. CSR objects chosen by
the Company primarily consist of promoting education, promoting gender
equality, empowering women, setting up homes and hostels for women and
orphans etc. As per the provisions of the Act, gross amount required to
be spent by the Company is Rs. 374 lakh (previous year Rs. 358 lakh),
of which Rs. 20 lakhs (previous year Rs. 55 lakh) have been spent
during the current year.
Mar 31, 2015
1 CORPORATE INFORMATION
Eros International Media Limited (the 'Company') was incorporated in
India, under the Companies Act, 1956. The Company is a global player
within the Indian media and entertainment industry and is primarily
engaged in the business of film production, exploitation and
distribution. It operates on a vertically integrated studio model
controlling content as well as distribution and exploitation across
multiple formats globally, including cinema, digital, home
entertainment and television syndication. Its shares are listed on
leading stock exchanges in India (BSE Scrip Code: 533261; NSE Scrip
Code: EROSMEDIA).
2 SHARE CAPITAL
a) Details of employee stock options issued during the last 5 years
During the period of five years immediately preceding the reporting
date, the Company has issued total 1,100,274 shares (2014: 566,190) on
exercise of options granted under the employees stock option plan
(ESOP) wherein part consideration was received in the form of employee
services.
b) Rights, preferences, restrictions of Equity Shares
The Company has only one class of equity shares having par value of
Rs.10 per share. Every holder is entitled to one vote per share. The
dividend, if any, proposed by the Board of Directors and approved by
the Shareholders in the Annual General Meeting is paid in Indian
rupees.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
3 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED
FOR)
Rs. in lacs
As at As at
March 2015 31 March 2014
a) Contingent liabilities
(i) Claims against the Company not
acknowledged as debt
Sales tax claims disputed by 314 72
the Company
Service tax on non-theatrical sales 15,675 -
Income tax liability that may arise 43 53
in respect of matters in appeal
Bills of exchange with recourse, - 5,799
accepted but not due
Maharashtra VAT and Central sales - 1,365
tax on theatrical sales
(ii) Guarantees
Guarantee given in favour of various 86 86
government authorities
Guarantees given on behalf of others - 2,500
Total 16,118 9,875
Note:
1) In addition, the Company is liable to pay service tax on use on
temporary transfer of copyright in the period 1 July 2010 to 30 June
2012. The Company filed a writ petition in Mumbai High Court
challenging the constitutionality and the legality of this entry and
received ad-interim protection and accordingly, no amounts were
provided for by the Company for the period 1 April 2011 to 30 June
2012.
2) During the year ended March 2015, the Company received a notice from
the Commissioner of Service Tax to show cause why an amount aggregating
to Rs. 15,675 lacs for the period 1 April 2009 to 31 March 2014 should
not be levied on and paid by the Company for service tax arising on
temporary transfer of copyright services and other matters.
On 19 March 2015, the Company filed its objections against the said
notice before the authorities. Considering the facts and nature of
levies and the ad-interim protection for the period 1 July 2010 to 30
June 2012 granted by the Honourable High Court of Mumbai, the Company
expects that the final outcome of this matter will be favorable.
Accordingly, based on the assessment made after taking appropriate
legal advise, no additional liability has been recorded in the
financial statements
3) It is not practicable for the Company to estimate the timing of cash
outflows, if any, in respect of the above, pending resolution of the
respective proceedings.
4) From time to time, the 'Company' is involved in legal proceedings
arising in the ordinary course of its business, typically intellectual
property litigation and infringement claims related to the Company's
feature films and other commercial activities, which could cause the
Company to incur expenses or prevent the Company from releasing a film.
While the resolution of these matters cannot be predicted with
certainty, the Company does not believe, based on current knowledge or
information available, that any existing legal proceedings or claims
are likely to have a material and adverse effect on its financial
position, results of operations or cash flows.
5) The Company does not expect any reimbursements in respect of the
above contingent liabilities.
b) Commitments
Rs. in lacs
As at As at
March 2015 31 March 2014
Estimated amount of contracts remaining 126,156 54,928
to be executed on capital account
126,156 54,928
Total 142,274 64,803
4 Compensated absences
The Company incurred Rs. 65 lacs (Previous year Rs. 21.02 lacs) towards
accrual for compensated absences during the year.
5 Provident fund
The Company contributed Rs. 113 lacs (Previous year Rs. 86 lacs) to the
provident fund plan and Rs. 4 lacs (Previous year Rs. 3 lacs) to the
Employee state insurance plan during the year.
6 Employee stock compensation (ESOP 2009 Scheme):
The Company has instituted Employees' Stock Option Plan "ESOP 2009"
under which the stock options have been granted to employees. The
scheme was approved by the shareholders at the Extra Ordinary General
Meeting held on 17 December 2009.
For the options exercised during the year, the weighted average share
price at the exercise date was Rs. 153 per share (31 March 2014: Rs. 98
per share)
The range of exercise prices for the options outstanding at the end of
the year was Rs. 10 to Rs. 175 per share (31 March 2014: Rs. 75 to Rs.
175 per share).
The Company incurred Rs. 469 lacs (Previous year Rs. 235 lacs) towards
employees stock compensation plan during the year
The weighted average fair value of stock options granted during the year
was Rs. 303 (31 March 2014: Rs. 55). Black Scholes valuation model has
been used for computing the weighted average fair value considering the
following inputs:
7 SEGMENT REPORTING
As permitted by Accounting Standard -17, 'Segment Reporting', if a
single financial report contains both consolidated financial statements
and separate financial statements of the parent, segment information
needs to be presented only on the basis of consolidated financial
statements. Accordingly, disclosures mandated by AS-17 have been made
in the consolidated financial statements.
8 RELATED PARTY DISCLOSURES
a) Names of related parties
Ultimate holding company Eros International PLC, Isle of Man
Holding company Eros Worldwide FZ LLC, Dubai
Subsidiary companies Eros International Films Private Limited
Copsale Limited
Big Screen Entertainment Private Limited
EyeQube Studios Private Limited
EM Publishing Private Limited
Eros Animation Private Limited
Digicine PTE Limited
Colour Yellow Productions Private Limited
(w.e.f 24 May 2014)
Ayngaran International Limited
(Isle of Man)
Ayngaran International UK Limited
Ayngaran International Mauritius Limited
Ayngaran International Media Private
Limited
Ayngaran Anak Media Private Limited
Fellow subsidiary companies Eros Digital Private Limited
with whom transactions
exist Eros International Limited,
United Kingdom
Key management personnel Mr. Sunil Lulla - Executive Vice Chairman
(KMP) and Managing Director
Mr. Kishore Lulla - Executive Director
Mrs. Jyoti Deshpande - Executive Director
Mr. Vijay Ahuja - Non-Executive Director
(w.e.f. 13 February 2015)
Mr. Kamal Jain - Group Chief Financial
Officer (India)
(upto 30 November 2014)
Mr. Dinesh Modi - Group Chief Financial
Officer (India)
(w.e.f. 11 November 2014)
Ms. Dimple Mehta - Company Secretary and
Compliance Officer
Relatives of KMP with Mrs. Manjula K Lulla (wife of Mr.
whom transactions exist Kishore Lulla)
Mrs. Krishika Lulla (wife of Mr.
Sunil Lulla)
Entities over which KMP exercise significant influence Shivam Enterprises
9 Based on the information available with the Company, there are no
dues payable as at the year end to micro, small and medium enterprises
as defined in The Micro, Small & Medium Enterprises Development Act,
2006. This information has been relied upon by the statutory auditors
of the Company.
10 The Company is engaged in the production and trading of film rights,
which requires various types, qualities and quantities of raw materials
and inputs in different denominations. Due to the multiplicity and
complexity of items, it is not practicable to maintain quantitative
record or continuous stock register, as the process of making films is
not amenable to it. Hence, quantitative details are not maintained by
the Company as is the practice generally followed by companies in the
industry.
11 As per the provision of the Act, a Corporate Social Responsibility
(CSR) committee has been formed by the Company. CSR objects chosen by
the Company primarily consist of promoting education, promoting gender
equality, empowering women, setting up homes and hostels for women and
orphans etc. As per the provisions of the Act, gross amount required to
be spent by the Company is Rs. 358 lacs, of which Rs. 55 lacs have been
spent by the Company.
Mar 31, 2014
CORPORATE INFORMATION
Eros International Media Limited (the ''Company'') was incorporated in
India, under the Companies Act, 1956. The Company is a global player
within the Indian media and entertainment industry and is primarily
engaged in the business of film production, exploitation and
distribution. It operates on a vertically integrated studio model
controlling content as well as distribution and exploitation across
multiple formats globally, including cinema, digital, home
entertainment and television syndication. Its shares are listed on
leading stock exchanges in India (BSE Scrip Code: 533261; NSE Scrip
Code: EROSMEDIA).
Amounts Rs. in lacs
As at As at
31 March 2014 31 March 2013
NOTE 1 : CONTINGENT LIABILITIES AND
COMMITMENTS (TO THE EXTENT NOT
PROVIDED FOR)
(a) Contingent liabilities
(i) Claims against the Company not
acknowledged as debt
Sales tax claims disputed by
the Company 72 72
Maharashtra VAT and Central
sales tax on theatrical sales 1,365 1,355
Income tax liability that may
arise in respect of matters
in appeal 53 53
Legal claims against the Company - 3,413
Bills of exchange with recourse,
accepted but not due 5,799 5,798
(ii) Guarantees
Guarantee given in favor of various 86 25
government authorities
Guarantees given on behalf of others 2,500 -
9,875 10,716
Notes:
1 In addition, the Company is liable to pay service tax on temporary
transfer of copyright in the period 1 July 2010 to 30 June 2012. The
Company filed a writ petition in Mumbai High Court challenging the
constitutionality and the legality of this entry and received
ad-interim protection and accordingly, no amounts were provided for by
the Company for the period 1 April 2011 to 30 June 2012.
2 It is not practicable for the Company to estimate the timings of cash
outflows, if any, in respect of the above, pending resolution of the
respective proceedings.
3 Guarantee has been given by the Company to a film producer under
co-production agreement for financing the release of an upcoming film.
4 The Company does not expect any reimbursements in respect of the
above contingent liabilities.
NOTE 2 : SEGMENT REPORTING
As permitted by paragraph 4 of Accounting Standard -17, ''Segment
Reporting'', if a single financial report contains both consolidated
financial statements and separate financial statements of the parent,
segment information needs to be presented only on the basis of
consolidated financial statements. Accordingly, disclosures mandated by
AS-17 have been made in the consolidated financial statements.
NOTE 3
Based on the information available with the Company, there are no dues
payable as at the year end to micro, small and medium enterprises as
defined in The Micro, Small & Medium Enterprises Development Act, 2006.
This information has been relied upon by the statutory auditors of the
Company.
NOTE 4
The Company is engaged in the production and trading of film rights,
which requires various types, qualities and quantities of raw materials
and input in different denominations. Due to the multiplicity and
complexity of items, it is not practicable to maintain quantitative
record or continuous stock register, as the process of making films is
not amenable to it. Hence, quantitative details are not maintained by
the Company as is the practice generally followed by companies in the
industry.
NOTE 5
Previous year figures have been regrouped/ reclassified, wherever
required, to conform to current year classification.
Mar 31, 2013
1 CORPORATE INFORMATION
Eros International Media Limited (BSE Scrip Code: 533261; NSE Scrip
Code: EROSMEDIA) is a global player within the Indian media and
entertainment arena. It operates on a vertically integrated studio
model controlling content as well as distribution and exploitation
across multiple formats globally, including cinema, digital, home
entertainment and television syndication.
I. BASIS OF PREPARATION
Eros International Media Limited (the ''Company'') is engaged in the
business of sourcing Indian film content either through acquisition,
co-production or production of such films, and subsequently exploiting
and distributing such films in India through music release, theatrical
distribution, DVD and VCD release, television licensing and new media
distribution avenues such as cable or DTH licensing; and trading and
exporting the International Rights to its parent Eros Worldwide FZ LLC
as per pre-agreed transfer pricing norms. The Company''s financial
statements have been prepared and presented under the historical cost
convention on the accrual basis of accounting and comply with the
applicable Accounting Standards (''AS'') as notified by the Central
Government under the Companies Act, 1956 to the extent applicable.
II. USE OF ESTIMATES
The preparation of the financial statements in conformity with
generally accepted accounting principles (''GAAP'') requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Management
believes that the estimates made in the preparation of financial
statements are prudent and reasonable. Actual future period''s results
could differ from those estimates. Any revision to accounting estimates
is recognized in the period in which revisions are made.
NOTE 2.1 : SEGMENT INFORMATION
a) Primary segment information
The Company is solely engaged in the business of film production and
exploitation. The entire operations are governed by the same set of
risks and returns and hence, have been considered as representing a
single primary segment.
b) Secondary segment information
The Company''s operating divisions are managed from India. The
principal geographic areas in which the Company operates based on
location of customers are ''Within India'' and ''Outside India''.
NOTE 2.2 : CONTINGENT LIABILITIES
a) The Company has given bank guarantees in favour of various
Government authorities to the extent of Rs. 25 lacs (Previous year Rs. 200
lacs).
b) Corporate guarantees given on behalf of subsidiary company are Nil.
(Previous year Rs. 500 lacs).
c) Sales tax/cess claims disputed by the Company Rs. 72 lacs (Previous
year Rs. 1,671 lacs).
d) Income tax and interest demands raised by authorities and disputed
by the Company Rs. 53 lacs (net of Income tax demand adjusted against
refund due) (Previous year Rs. 47 lacs).
e) Claims against the Company not acknowledged as debts Rs. 3,413 lacs
(Previous year Rs. 1,597 lacs). There are certain legal cases against the
company the value for which are unascertainable.
f) Maharashtra Value Added Tax and Central Sales Tax levied on the sale
or lease of copyrights under the Maharashtra VAT Act 2002, for the
period 1 April 2012 to 31 March 2013 totaling to Rs. Nil (Previous year
Rs. 3 lacs) is disputed by the Company. The cumulative total of tax
disputed as at 31 March 2013 is Rs. 1,355 lacs (Previous year Rs. 1,409
lacs). In line with film industry consensus the Company is of the
opinion that there are no grounds for levying VAT on film distribution
activity.
g) The Finance Act 2010 has levied service tax on transferring
temporarily of permitting use or enjoyment of movies copyrights with
effect from 1 July 2010 to 30 June 2012. For the said period, the
Industry has jointly protested through various actions and also few
leading film studios and production houses have filed the Writ Petition
in Mumbai High Court challenging the constitutionality and the legality
of this entry, since it is already a taxing entry with State
Governments as sales by way of transfer of the right to use and is
already subjected to Sales Tax / Value Added Tax. The company has also
filed the writ on the same and has challenged the constitutional
validity of the levy.
h) Bill of Exchanges accepted but not due Rs. 5,798 lacs ( Previous year
Nil)
NOTE 2.3 DEFERRAL OF EXCHANGE DIFFERENCES
The Company has, consequent to the notification issued by the Ministry
of Corporate Affairs on 29 December 2011 giving an option to the
companies to amortize the exchange differences pertaining to long term
foreign currency monetary items up to 31 March 2020 (from 31 March 2012
earlier), adopted the said option given under paragraph 46 of
Accounting Standard 11. Net foreign exchange aggregating to Rs. 49 lacs
has been capitalized to the Intangibles during the year out of which
the Company has charged an amount of Rs. 29 lacs to the Statement of
Profit and Loss as per the amortization policy of the Company.
NOTE 2.4 EARNINGS PER SHARE
The basic earnings per equity share are computed by dividing the net
profit attributable to the equity shareholders for the reporting period
by the weighted average number of equity shares outstanding during the
reporting period. The number of shares used in computing diluted
earnings per share comprises the weighted average number of shares
considered for deriving basic earnings per share and also the weighted
average number of equity shares, which may be issued on the conversion
of all dilutive potential shares, unless the results would be anti
dilutive.
The earnings per share is calculated as under:
NOTE 2.5 OPERATING LEASES
The Company has various operating lease agreements for office
facilities and residential premises for employees. These agreements
are for tenures between 12 months and 3 years and are renewable by
mutual consent on mutually agreeable terms.
NOTE 2.6 EMPLOYEE BENEFITS
The relevant disclosures in pursuance of Accounting Standard [AS 15
(Revised) 2005] "Employee Benefits" notified by the Companies Act,
1956 are as follows:
i) The Company has recognized, in the Statement of Profit and Loss the
following expense under defined contribution plan.
NOTE 2.7 EMPLOYEES STOCK OPTION PLAN (ESOP)
ESOP 2009 scheme:
The Company has instituted Employees'' Stock Option Plan i.e. ESOP
2009 under which the stock options have been granted to the employees.
The scheme was approved by our shareholders at the Extra Ordinary
General Meeting held on 17 December 2009
NOTE 2.8 DUES TO MICRO, SMALL AND MEDIUM ENTERPRISE
Based on the information available with the Company, there are no dues
payable as at the year end to micro, small and medium enterprises as
defined in The Micro, Small & Medium Enterprises Development Act, 2006.
This information has been relied upon by the statutory auditors of the
Company.
NOTE 2.9
Balances of certain trade receivables, loans and advances and trade
payables in respect of certain films are subject to
confirmation/reconciliation and subsequent adjustment, if any. In the
opinion of the management such adjustments are not likely to be
material.
NOTE 2.10
The Company is engaged in the production and trading of film rights,
which requires various types, qualities and quantities of raw materials
and input in different denominations. Due to the multiplicity and
complexity of items, it is not practicable to maintain the quantitative
record/continuous stock register, as the process of making films is not
amenable to it. Hence, quantitative details are not maintained by the
Company as is the practice generally followed by companies in the
industry.
NOTE 2.11
The previous year figures have also been reclassified to conform to
this year''s classification.
Mar 31, 2012
1 Corporate Information
Eros International Media Limited (BSE Scrip Code: 533261; NSE Scrip
Code: EROSMEDIA) is a global player within the Indian media and
entertainment arena. It operates on a vertically integrated studio
model controlling content as well as distribution and exploitation
across multiple formats globally, including cinema, digital, home
entertainment and television syndication.
NOTE 1.1 : SEGMENT INFORMATION
a) Primary segment information
The Company is solely engaged in the business of film production and
exploitation. The entire operations are governed by the same set of
risks and returns and hence, have been considered as representing a
single primary segment.
b. Secondary segment information
The Company's operating divisions are managed from India. The principal
geographic areas in which the Company operates based on location of
customers are 'Within India' and 'Outside India'.
NOTE 1.2 CONTINGENT LIABILITIES:
a) The Company has given bank guarantees in favour of various
Government authorities to the extent of Rs. 200 Lakhs (Previous year
Rs. 200 Lakhs).
b) Corporate guarantees given on behalf of subsidiary company Rs. 500
Lakhs (Previous year Rs. 500 Lakhs).
c) Sales tax/cess claims disputed by the Company Rs. 1671 Lakhs
(Previous year Rs. 1671 Lakhs)
d) Income tax and interest demands raised by authorities and disputed
by the Company Rs. 47 Lakhs (net of Income tax demand adjusted against
refund due) (Previous year Rs. 236 Lakhs).
e) Claims against the Company not acknowledged as debts Rs. 1,597 Lakhs
(Previous year Rs. 1,590 Lakhs). There are certain legal cases against
the Company the value for which are unascertainable.
f) Maharashtra Value Added Tax and Central Sales Tax levied on the sale
or lease of copyrights under the Maharashtra VAT Act 2002, for the
period 1 April 2011 to 31 March 2012 totaling to Rs. 3 Lakhs (Previous
year Rs. 852 Lakhs) is disputed by the Company. The cumulative total of
tax disputed as at 31 March 2012 is Rs. 1,409 Lakhs (Previous year Rs.
1,456 Lakhs). In line with film industry consensus the Company is of the
opinion that there are no grounds for levying VAT on film distribution
activity.
g) The Finance Act 2010 has levied service tax on transferring
temporarily of permitting use or enjoyment of movies copyrights with
effect from 1 July 2010. The Industry has jointly protested through
various actions and also few leading film studios and production houses
have fled the Writ Petition in Mumbai High Court challenging the
constitutionality and the legality of this entry, since it is already a
taxing entry with State Governments as sales by way of transfer of the
right to use and is already subjected to Sales Tax / Value Added Tax.
The Company has also fled the writ on the same and has challenged the
constitutional validity of the levy.
NOTE 1.3 DEFERRAL OF EXCHANGE DIFFERENCES
The Company has, consequent to the notification issued by the Ministry
of Corporate Affairs on 29 December 2011 giving an option to the
companies to amortise the exchange differences pertaining to long term
foreign currency monetary items up to 31 March 2020 (from 31 March 2012
earlier), adopted the said option given under paragraph 46 of
Accounting Standard 11. Net foreign exchange aggregating to Rs. 124
Lakhs has been capitalised to the Intangibles during the year out of
which the Company has charged an amount of Rs.75 Lakhs to the Statement
of Profit and Loss as per the amortisation policy of the Company
2.0 EMPLOYEES STOCK OPTION PLAN (ESOP)
ESOP 2009 scheme:
The Company has instituted Employees' Stock Option Plan i.e. ESOP 2009
under which the stock options have been granted to the employees. The
scheme was approved by our shareholders at the Extra Ordinary General
Meeting held on 17 December 2009
NOTE 2.1 DUES TO MICRO, SMALL AND MEDIUM ENTERPRISE
Based on the information available with the Company, there are no dues
payable as at the year end to micro, small and medium enterprises as
defined in The Micro, Small & Medium Enterprises Development Act, 2006.
This information has been relied upon by the statutory auditors of the
Company.
NOTE 2.2 Balances of certain trade receivables, loans and advances and
trade payables in respect of certain films are subject to
confrmation/reconciliation and subsequent adjustment, if any. In the
opinion of the management such adjustments are not likely to be
material.
NOTE 2.3 The company is engaged in the production and trading of film
rights, which requires various types qualities and quantities of raw
materials and input in different denominations. Due to the multiplicity
and complexity of items, it is not practicable to maintain the
quantitative record/continuous stock register, as the process of making
films is not amenable to it. Hence, quantitative details are not
maintained by the company as is the practice generally followed by
companies in the industry.
NOTE 2.4 The financial statements for the year ended 31 March 2011 had
been prepared as per the then applicable, pre-revised schedule VI to
the Companies Act, 1956. Consequent to the notification of Revised
Schedule VI under the Companies Act, 1956, the financial statements for
the year ended 31 March 2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year's classification. The adoption of Revised Schedule
VI for previous year figures does not impact recognition and measurement
principles followed for preparation of financial statements.
Mar 31, 2011
I. Nature of Operations
Eros International Media Limited (the Company) and its subsidiaries
including step down subsidiaries (hereinafter collectively referred to
as the ÃGroupÃ) are engaged in the business of sourcing Indian film
content either through acquisition, co-production or production of such
films, and subsequently exploiting and distributing such films in India
through music release, theatrical distribution, DVD and VCD release,
television licensing and new media distribution avenues such as cable
or DTH licensing; and trading and exporting the International Rights to
its parent Eros Worldwide FZ LLC as per pre-agreed transfer pricing
norms. The Group also includes a visual effects studio named EyeQube
that provides production planning and visual effects services for films
and the Group includes Ayngaran group of companies which is involved in
the acquisition, production and distribution of Tamil films worldwide
2. Balances of certain debtors, advance and creditors in respect of
certain films are subject to confirmation / reconciliation and
subsequent adjustment, if any. In the opinion of the management such
adjustments are not likely to be material.
3. Consolidated Statement of Contingent Liabilities
Rs. in thousands
Particulars As at 31 March As at 31 March
2011 2010
Bank Guarantees in favour
of various Government
Authorities 27,044 275
Corporate guarantee to a
bank for loans availed by 50,000 50,000
subsidiary company
Sales tax/cess claims
disputed by the
Company 167,102 159,935
Claims against the Company
not acknowledged as debts 159,727 159,752
Income tax and interest
demands raised by
authorities and 3,394 11,711
disputed by the Company
Maharashtra Value Added
Tax and Central Sales Tax
Liability 125,928 82,234
on the sale or lease of
Copy Rights under the
MVAT Act and disputed by
the Company and the
Industry.
TOTAL 533,195 463,907
The Finance Act 2010 has levied service tax on transferring temporarily
of permitting use or enjoyment of movies copyrights with effect from 1
July 2010. The Industry has jointly protested through various actions
and also few leading film studios and production houses have filed the
Writ Petition in Mumbai High Court challenging the constitutionality
and the legality of this entry, since it is already a taxing entry with
State Governments as sales by way
of transfer of the right to use and is already subjected to Sales Tax /
Value Added Tax. The Company has also filed the writ on the same and
has challenged the constitutional validity of the levy.
4. Related party information
In accordance with the requirements of Accounting Standard 18, ÃRelated
Party Disclosuresà notified under the Companies Act, 1956, the details
of related party transactions are given below:
a. List of related parties:
Nature of relationship Name of related parties
Ultimate Holding Company Eros International PLC, Isle of Man
Holding Company Eros Worldwide FZ LLC, Dubai
Entities having common
control Eros International Ltd United Kingdom.
Fellow Subsidiary Eros Digital Private Limited
Entities having signifi
cant influence Shivam Enterprises
Key Management
Personnel Mr. Naresh Chandra à Non Executive
Chairman and Independent Director
Mr. Sunil Lulla à Executive Vice Chairman
and Managing Director
Mr. Kishore Lulla à Executive Director
Ms. Jyoti Deshpande à Executive Director
Mr. Dhirendra Swarup à Non Executive
Independent Director
Dr. Shankar Nath Acharya à Non Executive
Independent Director
Mr. Vijay Ahuja à Executive Director
Relatives of Key
Management Mrs.Meena A. Lulla
Personnel
Mrs. Meena A. Lulla
Mrs. Manjula K. Lulla
Mrs. Krishika Lulla
Ms. Nitu Lulla
5. Segment information
a. Primary segment information
The Company is solely engaged in the business of film production and
exploitation. The entire operations are governed by the same set of
risks and returns and hence, have been considered as representing a
single primary segment.
b. Secondary segment information
The principal geographic areas in which the Company operates based on
location of customers are Within India and Outside India.
7. The Company had exercised the option granted vide notification F.
No. 17/33/2008/CL-V dated 31 March 2009 issued by the Ministry of
Corporate Affairs and accordingly the exchange differences arising on
revaluation of long term foreign currency monetary items for the year
ended 31 March 2008 had been recognized over the shorter of the
maturity period or 31 March 2011. Due to this the profit for the
current year is lower by Rs. 580 thousands (Previous Year Rs. 10,938
thousands).
10. Dues to Micro, Small and Medium enterprise
Based on the information available with the Group, there is no dues
payable as at the year end to micro, small and medium enterprises as
defined in The Micro, Small & Medium Enterprises Development Act, 2006.
This information has been relied upon by the statutory auditors of the
Company.
11. The Company has completed the Public issue of 20,000,000 equity
shares of Rs. 10 each for cash at a price of Rs. 175 per equity share,
aggregating Rs. 35,000 Lakhs. The public issue constituted 21.88% of
the fully diluted equity share capital of the Company. The total share
premium amounting to Rs. 33,000 Lakhs (@ Rs. 165 per equity share) has
been credited to Share Premium Account and expenses related to the
Initial Public Offer are charged to the Share Premium account.
Pursuant to the public issue, the equity shares of the Company are
listed on Bombay Stock Exchange and National Stock Exchange, effective
6 October 2010.
12. Previous year figures have been reclassified wherever necessary, to
conform to current yearÃs classification.