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Notes to Accounts of Eros International Media Ltd.

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.

 
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