Mar 31, 2018
1. Related Party Disclosures: 31 March 2018
A. Names of related parties and description of relationship as identified and certified by the Company: Holding Company
DQ Entertainment (Mauritius) Limited DQ Entertainment Plc - Parent of holding company Entity under common control
DQ Entertainment (Ireland) Limited - Subsidiary company DQ Entertainment USA, LLC- Subsidiary of Subsidiary company
DQ Entertainment (International) Films Limited - Joint Venture company by DQ Entertainment (Internnational) Limited and DQ Entertainment Plc
Associate of Holding Company
Method Animations SAS
Key Management Personnel (KMP)
Mr. Tapaas Chakravarti - Managing Director & Chief Executive Officer Mr. Sanjay Choudhary - Chief Financial Officer Ms. Annie Jodhani - Company Secretary
Relatives of Key Management Personnel (KMP)
Mrs. Rashmi Chakravarti Miss Nivedita Chakravarti Mr. Hatim Adenwala
Firm in which a Director is a partner
R&A Associates
D. Terms and conditions of transactions with related parties:
The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 3I March 20I8, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (3I March 20I7: I,903,253,897, I April 20I6: I,45I,708,056). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
2.Leases
Operating leases where Company is a lessee:
The Company has entered into lease transactions mainly for leasing of office premise and Office Equipment for a period between I to I0 years. The terms of lease include terms of renewal, increase in rents in future periods, which are in line with general inflation, and terms of cancellation. The operating lease payments recognized in the Statement of Profit and Loss amount to INR 45,024,650 (3I March 20I7: INR 46,905,I25) included in Note 29.
3. Financial instruments - fair value and risk management
Fair value hierarchy
The section explains the judgment and estimates made in determining the fair values of the financial instruments that are:
a) recognized and measured at fair value
b) measured at amortized cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Indian Accounting Standard.
Accounting classification and fair value
The following table shows the carrying amount and fair value of financial assets and financial liabilities:
Investment in equity shares are not appearing as financial asset in the table above being investment in subsidiaries and associates accounted under Ind AS 27, Separate Financial Statements which is scoped out under Ind AS 109.
Fair value hierarchy
Level 1: Level I hierarchy includes financial instruments measured using quoted prices. This includes investment in equity, preference securities, mutual funds and debentures that have quoted price.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for investment in unquoted preference securities and non-convertible debentures included in level 3.
Fair valuation method
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
A. Financial Assets:
Loans, Trade receivables, Cash and cash equivalents and other assets: Fair value of all these financial assets are measured at balance sheet date value, as most of them are settled within a short period and so their fair value are assumed to be almost equal to the balance sheet date value.
B. Financial Liabilities:
1. Borrowings: It also includes cash credit and overdraft facilities, working capital loan and bill discounting facilities. These short-term borrowings are classified and subsequently measured in the financial statements at amortized cost. Considering that the interest rate on the loan is reset on a monthly/quarterly basis, the carrying amount of the loan would be a reasonable approximation of its fair value.
2. Trade payables and other liabilities: Fair values of trade and other liabilities are measured at balance sheet value, as most of them are settled within a short period and so their fair values are assumed to be almost equal to the balance sheet values.
4. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk ;
- Liquidity risk ; and
- Market risk.
Risk management framework
The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Board oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
i.) Credit risk
Credit risk is the risk of financial loss to the Company, if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors. The carrying amount of financial asset represent the maximum credit exposure.
Trade and other receivables
The Companyâs exposure to credit risk is influenced mainly by its customers. However, the management also considers the factors that may influence the credit risk of its customer base.
The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references.
The Company limits its exposure to credit risk from trade receivables by establishing a maximum payment period of one to three months for customers. The Company does not have trade receivables for which no loss allowance is recognized because of collateral.
Expected credit loss assessment for corporate customers as at 1 April 2016, 31 March 2017 and 31 March 2018 are as follows:
The Company uses an allowance matrix to measure the expected credit loss of trade receivable from customers.
Based on industry practices and the business environment in which the entity operates, the management considers that trade receivables are in default (credit impaired) if the payments are more than 360 days past due.
Movement in allowance for impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows.
ii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
Management monitors rolling forecast of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Companyâs objective is to maintain a balance between cash outflow and inflow. Usually, the excess of funds is invested in fixed deposit. This is generally carried out in accordance with practice and limits set by the Company. The limits vary to take into account the liquidity of the market in which the Company operates.
The table below provides details regarding the contractual maturities of significant financial liabilities as at 3I March 20I8, 3I March 20I7 and I April 20I6. The amounts are gross and undiscounted contractual cash flow and includes contractual interest payment and exclude netting arrangements:
(Amount in INR, unless otherwise stated)
iii) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Companyâs income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
a) Foreign Currency risk
The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the respective functional currency of the Company.
Exposure to currency risk
The summary quantitative data about the Companyâs exposure to currency risk as reported to management is as follows:
Sensitivity analysis
A reasonably possible strengthening (weakening) of the foreign currencies against INR at 3I March 20I8 and 3I March 20I7 would have affected the measurement of financial instruments denominated in foreign currency and affected equity and profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain
b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs does not have any borrowings which exposes it to interest rate risk.
5 Capital management
For the purpose of the Companyâs capital management, capital includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximize the shareholder value and to ensure the Companyâs ability to continue as a going concern.
The Company has not distributed any dividend to its shareholders. The Company monitors gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of non-current borrowing which represents liability component of Convertible Preference Shares and current borrowing from ultimate holding company of the Company. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
The prescribed CSR expenditure required to be spent in the year 20I7-I8 as per the Companies Act, 20I3 is Nil, in view of average net profits of the Company being Nil (under section I98 of the Act) for last three financial years.
6. Figures of previous year have been regrouped/rearranged/reclassified to confirm presentation as per Ind As as required by Schedule III of the Act.
Mar 31, 2016
1. Company overview:
The company is engaged in the business of providing services relating to animation production for television and film production companies and rendering training for acquiring skills for production services in relation to the production of animation television series and movies. The Company also does licensing of programmed distribution rights to broadcasters, television channels and home video distributors.
2. Rights, preferences and restrictions attached to shares:
The company has one class of equity shares having a par value of Rs. I0 per share. Each share holder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subjected to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. Further, 75% of the shares of DQ Entertainment (Intl.) Ltd., have been pledged with the Bond Holders i.e. OL Masters at DQ Mauritius Limited.
3. During the year, there was change of control in DQ Entertainment Plc (DQE Plc or the Ultimate Holding Company) as well as at DQ Entertainment (Mauritius) Ltd (DQE Mauritius or the Holding Company), due to which a default event was triggered in the case of bond agreement between OL Masters (Bond holders) and DQE Mauritius. In consequence of this the bond holders have issued a notice to DQE Mauritius and reserved a right to take any remedial action as they may deem fit.
4. Details of shares held by shareholders holding more than 5% of the aggregate shares in the company.
75% of the shares i.e.59,462,2I8 Equity Shares of Rs.I0/- each fully paid up are held by the holding company DQ Entertainment (Mauritius) Limited. The ultimate holding company is DQ Entertainment Plc.
5. Details of shares held by holding company and ultimate holding company.
75% of the shares i.e.59,462,2I8 Equity Shares of Rs.I0/- each fully paid up are held by the holding company DQ Entertainment (Mauritius) Limited. The ultimate holding company is DQ Entertainment Plc.
Receivables include amounts which are due for more than a year of Rs. 2,566.17 Mn. The company is following up with the customers to make early collection. There are no disputes with the customers and the balances have been confirmed by them. The customers have also expressed their willingness to settle the balances. The management has also evaluated the dues and has made provision for debts considered doubtful. The payments are delayed in view of the prevailing market & industry conditions in Europe and other places where the customers are located. In the opinion of the management these balances are good and are fully recoverable.
Cash and cash equivalants as of 31 March 2016 and 31 March 2015 includes restricted bank balances of Rs. 88,477,301 and Rs. 68,684,777, respectively. The restrictions are primarily on account bank balances held as margin money deposits against guarantees and customs authorities
6.. The companyâs operations are conducted in units set up in Software Technology Parks (STPs) and Special Economic Zones (SEZs). Income from SEZs is fully exempt for the first five years, 50% exempt for the next five years and 50% exempt for another five years subject to fulfilling certain conditions. Currently tax provision on book profit is provided as per the provisions of section II5JB (MAT) of the Income tax act, 1961.
7. Leases
The Companyâs leasing arrangement is in respect of operating lease for premises. The Company has exclusive right to cancel the lease with prior notice. The aggregate lease rents payable are charged as rent in the Profit and Loss Account. The aggregate amount of Lease rentals charged to Profit and Loss account is Rs. 28,087,293 (3I.03.20I5: Rs. 26,743,544).
8. Segmental Reporting as per Accounting standard 17: 34.1 Business Segment
The Company comprises the following main business segments:
Animation:
The production services rendered to production houses and training rendered for acquiring skills for production services in relation to the production of animation television series and movies.
Distribution:
The revenue generated from the exploitation of the distribution rights of animated television series and movies acquired by the Company.
The company has not spent 2% of the average net profit of the last three financial years towards its CSR expenditure for the year. The Company has formulated the CSR policy and constituted the CSR committee. The company has also identified the activities proposed to be undertaken. The company expects to spend the amount on its CSR activities during the FY 20I6-I7
9. Figures of previous year have been regrouped/rearranged/reclassified wherever necessary to conform to the current year presentation.
Mar 31, 2015
1 Related party disclosures
1.1 Related parties and their relationships
i) Holding and Subsidiary Companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Plc - Parent of holding company
c. DQ Entertainment (Ireland) Limited - Subsidiary company
d. DQ Powerkidz Private Limited - Subsidiary company
e. DQ Entertainment (International) Films Limited - Joint Venture
company by DQE India and DQE Plc.
f. DQE ITES Parks Private Limited - Subsidiary company
ii) Key management personnel
Mr. Tapaas Chakravarti - Managing Director & Chief Executive Officer
Mr. Sanjay Choudhary - Chief Financial Officer
Ms. Sindhu Maladath Sisupalan - Company Secretary
iii) Relatives of Key management Personnel with whom the Company had
transactions during the year -
Mrs. Rashmi Chakravarti (wife of Mr. Tapaas Chakravarti) Ms. Nivedita
Chakravarti (Daughter of Mr. Tapaas Chakravarti)
iv) Associate of the ultimate Holding Company
Method Animation SAS
v) Firm in which a Director is a partner
R & A Associates
vi) Relative of a director
Mr. Hatim Adenwala - Senior Vice president Human Resources
2 Leases
The Company's leasing arrangement is in respect of operating lease for
premises. The Company has exclusive right to cancel the lease with
prior notice. The aggregate lease rents payable are charged as rent in
the Profit and Loss Account. The aggregate amount of Lease rentals
charged to Profit and Loss account is Rs. 26,743,544 (31.03.2014:
Rs.29,710,099).
3 Segmental Reporting as per Accounting standard 17:
3.1 Business Segment
The Company comprises the following main business segments:
Animation:
The production services rendered to production houses and training
rendered for acquiring skills for production services in relation to
the production of animation television series and movies.
Distribution:
The revenue generated from the exploitation of the distribution rights
of animated television series and movies acquired by the Company.
4. Amount Spent on Corporate Social Responsibility
(a) Gross amount required to be spent by the company during financial
year 2014-15. 6,809,232
(b) Amount spent during the financial year 2014-15 :- Nil
The company has not spent 2% of the average net profit of the last
three financial years towards its CSR expenditure for the year. The
Company has formulated the CSR policy and constituted the CSR
committee. The company has also identified the activities proposed to
be undertaken. The company expects to spend the amount on its CSR
activities during the FY 2015-16
5. Figures of previous year have been
regrouped/rearranged/reclassified wherever necessary to conform to the
current year presentation.
Mar 31, 2014
1. Company overview:
The company is engaged in the business of providing services relating
to animation production for television and film production companies
and rendering training for acquiring skills for production services in
relation to the production of animation television series and movies.
The Company also does licensing of programmed distribution rights to
broadcasters, television channels and home video distributors.
2. Rights, preferences and restrictions attached to shares:
The company has one class of equity shares having a par value of Rs. 10
per share. Each share holder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subjected to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend.
2.1 Details of shares held by shareholders holding more than 5% of the
aggregate shares in the company.
75% of the shares i.e.59,462,218 Equity Shares of Rs.10/- each fully
paid up are held by the holding company DQ Entertainment (Mauritius)
Limited. The ultimate holding company is DQ Entertainment Plc.
2.2 Details of shares held by holding company and ultimate holding
company.
75% of the shares i.e.59,462,218 Equity Shares of Rs.10/- each fully
paid up are held by the holding company DQ Entertainment (Mauritius)
Limited. The ultimate holding company is DQ Entertainment Plc.
3. The company''s operations are conducted in units set up in Software
Technology Parks (STPs) and Special Economic Zones (SEZs). Income from
SEZs is fully exempt for the first five years, 50% exempt for the next
five years and 50% exempt for another five years subject to fulfilling
certain conditions. Currently tax provision on book profit is provided
as per the provisions of section 115JB (MAT) of the Income tax act,
1961.
Amount in Rs.
4. particulars 31 March 2014 31 March 2013
Contingent Liabilities (to the extent
not provided for)
a) Bonds executed in favour of customs
and excise authorities 2,770,049 2,162,500
b) Letters of Credit (includes
guarantee on behalf of DQ Entertain- 1,224,909,501 777,476,625
ment Ireland Rs. 1,060,397,701
(31.03.2013: 449,525,000)
c) Income tax assessment of DQ Entertainment (International) Limited
has been completed till Assessment Year 2009-10 (financial year
2008-09).
5 Related party disclosures
5.1 Related parties and their relationships
i) Holding and Subsidiary Companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Plc - Parent of holding company
c. DQ Entertainment (Ireland) Limited - Subsidiary company
d. DQ Powerkidz Private Limited - Subsidiary company
e. DQ Entertainment (International) Films Limited - Joint Venture
company by DQE India and DQE Plc
f. DQE ITES Parks Private Limited - Subsidiary company
ii) Key management personnel
Mr. Tapaas Chakravarti - Managing Director & Chief Executive Officer
iii) Relatives of Key Management Personnel with whom the Company had
transactions during the year
Mrs. Rashmi Chakravarti (wife of Mr. Tapaas Chakravarti)
Ms. Nivedita Chakravarti (daughter of Mr. Tapaas Chakravarti)
iv) Associate of the Ultimate Holding Company
Method Animation SAS
v) Firm in which a Director is a partner
R & A Associates
vi) Relative of a director
Mr. Hatim Adenwala - Senior Vice president Human Resources
6. Leases
The Company''s leasing arrangement is in respect of operating lease for
premises. The Company has exclusive right to cancel the lease with
prior notice. The aggregate lease rents payable are charged as rent in
the Profit and Loss Account. The aggregate amount of Lease rentals
charged to Profit and Loss account is Rs. 29,710,099 (31.03.2013:
Rs.38,204,573).
7. Segmental Reporting as per Accounting standard 17:
7.1 Business Segment
The Company comprises the following main business segments:
Animation: The production services rendered to production houses and
training rendered for acquiring skills for production services in
relation to the production of animation television series and movies.
Distribution: The revenue generated from the exploitation of the
distribution rights of animated television series and movies acquired
by the Company.
Mar 31, 2013
1. Company overview:
The company is engaged in the business of providing services relating
to animation production for television and film production companies
and rendering training for acquiring skills for production services in
relation to the production of animation television series and movies.
The Company also does licensing of programmed distribution rights to
broadcasters, television channels and home video distributors.
2. The company''s operations are conducted in units set up in Software
Technology Parks (STPs) and Special Economic Zones (SEZs). Income from
SEZs is fully exempt for the first five years, 50% exempt for the next
five years and 50% exempt for another five years subject to fulfilling
certain conditions. Currently tax provision on book profit is provided
as per the provisions of section 115JB (MAT) of the Income tax act,
1961.
3. The company has recognized a deferred tax asset of Rs.60,28,865 on
unabsorbed depreciation as claimed in the returns for the respective
years. In the assessment orders passed for the assessment years 2004
-05 and 2006 -07 unabsorbed depreciation has been determined to be Rs
NIL. The Company has preferred appeals in Hon''ble High Court against
the subject orders. In the opinion of the management the manner of
adjustment of unabsorbed depreciation and carry forward of business
losses by the department is not appropriate and based on professional
advice the management is confident of succeeding in appeals and get the
unabsorbed depreciation/ carry forward of business losses restored. On
a prudent basis the company has not recognized any deferred tax asset
on such unabsorbed depreciation contested before the Hon''ble High
court.
4.
Amount in Rs.
Particulars 31 March 2013 31 March 2012
Contingent Liabilities
(to the extent not
provided for)
a) Bonds executed in favour
of customs and excise
authorities 2,162,500 2,162,500
b) Letters of Credit
(includes guarantee on
behalf of DQ Entertainment
Ireland 777,476,625 1,198,430,253
Rs. 449,525,000 (31.03.2012:
705,093,878)
c) Income tax assessment of DQ Entertainment (International) Limited
has been completed till Assessment Year 2009-10 (financial year
2008-09). The Company has preferred an appeal for the Assessment Years
2008-09 and 2009-10. No demand has been raised by the Department on the
above, and for the assessment year 2008-09 (including transfer pricing)
the cases are pending with hon''ble Income Tax Appealate Tribunal ITAT)
and for the assessment year 2009-10 the case is pending with hon''ble
CIT(Appeals). d)Claims against the Company not acknowledged as debts is
Rs.9,642,147 (31.03.2012: Rs. 9,642,147). This comprise of demands
raised by the Income Tax department for non deduction of TDS on
payments to non residents on which the Company has gone on appeal and
the appeal is allowed before the Commissioner of Income Tax (Appeals),
Hyder- abad in favor of the company. The department has gone for an
appeal and the same is pending before the Income tax appellate tribunal
(ITAT). (e) Interest and penalty proceedings on import of services of
Rs. 13,201,091 up to the 31.03.2009 received from Commissioner
(Appeals), Service Tax department and it has been defended at CESTAT
5. related party disclosures
5.1 related parties and their relationships
i) Holding and subsidiary Companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Plc - Parent of holding company
c. DQ Entertainment (Ireland) Limited - Subsidiary company
d. DQ Powerkidz Pvt. Limited - Subsidiary company
e. DQ Entertainment (International) Films Limited - Joint Venture
company by DQE India and DQE Plc.
f. DQE ITES Parks Private Limited - Subsidiary company
ii) key management personnel
Mr. Tapaas Chakravarti - Managing director & Chief executive officer
iii) relatives of key Management Personnel with whom the Company had
transactions during the year -
Mrs. Rashmi Chakravarti (wife of Mr. Tapaas Chakravarti) Ms. Nivedita
Chakravarti (Daughter of Mr. Tapaas Chakravarti)"
iv) associate of the ultimate Holding Company
Method Animation SAS
v) Firm in which a key management personnel is a partner
R & A Associates
vi) relative of a director
Hatim Adenwala - Senior Vice president HR
6. Leases:
The Company''s leasing arrangement is in respect of operating lease for
premises. The Company has exclusive right to cancel the lease with
prior notice. The aggregate lease rents payable are charged as rent in
the Profit and Loss Account. The aggregate amount of Lease rentals
charged to Profit and Loss account is Rs. 40,016,597 (31.03.2012:
Rs.43,947,883).
7. segmental reporting as per accounting standard 17:
7.1 Business segment
The Company comprises the following main business segments:
animation:
The production services rendered to production houses and training
rendered for acquiring skills for production services in relation to
the production of animation television series and movies.
Distribution:The revenue generated from the exploitation of the
distribution rights of animated television series and movies acquired
by the Company.
8. Figures of previous year have been
regrouped/rearranged/reclassified wherever necessary to conform to the
current year presentation.
Mar 31, 2012
1 Company overview:
The Company is engaged in the business of providing services relating
to animation production for television and film production companies
and rendering training for acquiring skills for production services in
relation to the production of animation television series and movies.
The Company also does licensing of programmed distribution rights to
broadcasters, television channels and home video distributors.
2.1 Rights, preferences and restrictions attached to shares:
The company has one class of equity shares having a par value of Rs. I0
per share. Each share holder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subjected to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend.
2.2 Details of shares held by shareholders holding more than 5% of the
aggregate shares in the company.
75% of the shares i.e.59,462,2I8 Equity Shares of Rs.I0/- each fully
paid up are held by the holding company DQ Entertainment (Mauritius)
Limited. The ultimate holding company is DQ Entertainment Plc.
2.3 Details of shares held by holding company and ultimate holding
company.
75% of the shares i.e.59,462,2I8 Equity Shares of Rs.I0/- each fully
paid up are held by the holding company DQ Entertainment (Mauritius)
Limited. The ultimate holding company is DQ Entertainment Plc.
3 The company's operations are conducted in units set up in Software
Technology Parks (STPs) and Special Economic Zones (SEZs). Income from
STPs were tax exempt for the earlier of I0 years commencing from the
fiscal year in which the unit commences software development, or March
3I, 20II. Income from SEZs is fully exempt for the first five years,
50% exempt for the next five years and 50% exempt for another five
years subject to fulfilling certain conditions. Currently tax
provision on book profit is provided as per the provisions of section
II5JB (MAT) of the Income tax act, I96I.
The company has recognized a deferred tax asset of Rs.60,28,865 on
unabsorbed depreciation as claimed in the 27 returns for the respective
years. In the assessment orders passed for the assessment years 2004
-05 and 2006 -07 unabsorbed depreciation has been determined to be Rs
NIL. The Company has preferred appeals in Hon'ble High Court against
the subject orders. In the opinion of the management the manner of
adjustment of unabsorbed depreciation and carry forward of business
losses by the department is not appropriate and based on professional
advice the management is confident of succeeding in appeals and get the
unabsorbed depreciation/ carry forward of business losses restored. On
a prudent basis the company has not recognized any deferred tax asset
on such unabsorbed depreciation contested before the Hon'ble High
court.
Amount in Rs
Particulars 31 March 2012 31 March 2011
Contingent Liabilities (to the
extent not provided for)
a)Bonds executed in favour of
customs and excise authorities 2,I62,500 43,250,000
b)Letters of Credit (includes
guarantee on behalf of DQ
Entertainment
Ireland Rs.705,093,878
(3I.03.20II: 697,669,760) 98,430,253 I,253,636,938
c) Income tax assessment of DQ Entertainment (International) Limited
has been completed till Assessment Year 2009-I0 (financial year 2008-09).
The Company has preferred an appeal for the Assessment Years 2004-05
and 2006-07 and is pending before the Hon'ble High court . No demand
has been raised by the Department on the above, and for the assessment
year 2008-09 (including transfer pricing) the cases are pending with
hon'ble DRP and for the assessment year 2009-I0 the case is pending
with hon'ble CIT(Appeals).
d)Claims against the Company not acknowledged as debts is Rs. 9,642,I47
(3I.03.20II: Rs. 9,642,I47). This comprise of demands raised by the
Income Tax department for non deduction of TDS on payments to non
residents on which the Company has gone on appeal and the appeal is
allowed before the Commissioner of Income Tax (Appeals), Hyderabad in
favor of the company. The department has gone for an appeal and the
same is pending before the Income tax appellate tribunal (ITAT).
(e) Interest and penalty proceedings on import of services of Rs.
I3,20I,09I up to the 3I.03.2009 received from Commissioner (Appeals),
ST department and it has been defended at CESTAT
4 Related party disclosures
4.1 Related parties and their relationships
i) Holding and Subsidiary Companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Plc - Parent of holding company
ii) Key management personnel
Mr. Tapaas Chakravarti - Managing director & Chief executive officer
iii) Relatives of Key Management Personnel with whom the Company had
transactions during the year - Mrs. Rashmi Chakravarti (wife of Mr.
Tapaas Chakravarti)
Ms. Nivedita Chakravarti (Daughter of Mr. Tapaas Chakravarti)
iv) Associate of the ultimate Holding Company
Method Animation SAS
v) Firm in which a Key management personnel is a partner
R & A Associates
vi)Relative of a director
Hatim Adenwala - Senior Vice president HR
5 Leases
The Company's significant leasing arrangement is in respect of
operating lease for premises. The Company has exclusive right to cancel
the lease with prior notice. The aggregate lease rents payable are
charged as rent in the Profit and Loss Account. The aggregate amount of
Lease rentals charged to Profit and Loss account is Rs. 43,947,883
(3I.03.20II: Rs.37,I48,894).
6 Segmental Reporting as per Accounting standard 17:
6.1 Business Segment
The Company comprises the following main business segments:
Animation:
The production services rendered to production houses and training
rendered for acquiring skills for production services in relation to
the production of animation television series and movies.
Distribution:
The revenue generated from the exploitation of the distribution rights
of animated television series and movies acquired by the Company.
7 Figures of previous year have been regrouped/rearranged/reclassified
wherever necessary to conform to the current 43 year presentation.
Mar 31, 2011
1 Company overview:
The Company is engaged in the business of providing services relating
to animation production for television and film production companies
and rendering training for acquiring skills for production services in
relation to the production of animation television series and movies.
The Company also provides services for gaming consoles and licensing of
programme distribution rights to broadcasters, television channels and
home video distributors.
Pursuant to a special resolution of the members passed at an Annual
General Meeting on July 25, 2009, DQ Entertainment (International)
Private Limited became a public limited company and the name was
changed to DQ Entertainment (International) Limited. A fresh
certificate of incorporation consequent to conversion of Company from
private to public was granted on September 10, 2009 by the Registrar of
Companies, Andhra Pradesh at Hyderabad.
2 share Capital:
authorised share capital
On 15th September 2009 the Company increased its authorised equity
share capital from 3,010,000 shares of face value of Rs 10/- each to
80,000,000 shares of face value of Rs 10/- each and cancelled the
800,000 1% Redeemable Optionally Convertible Preference share capital.
Issued, subscribed & Paid up
a) Equity Shares :
The Company made an Initial Public Offer ("IPO") of 16,048,011 equity
shares of Rs.10/- each. Out of 16,048,011 equity shares, 172,960 equity
shares were allotted to employees at a premium of Rs.63 per share and
15,875,051 equity shares to others at a premium of Rs.70 per share. The
Company made a pre-IPO placement of 3,772,771 equity shares of Rs.10/-
each at a premium of Rs.58.11 per equity share. The aggregate share
premium received in IPO and pre-IPO is Rs. 1,341,385,859 million. On 29
March 2010, the equity shares of the Company were listed on the Bombay
Stock Exchange.
Conversion: After the expiry of twenty four months from the date of
issuance of the Preference Shares and to the extent the Preference
Shares have not been redeemed by the Company, the holders of the
Preference Shares shall be entitled, at their option to call for
conversion for all or part of such Preference Shares in one or more
trenches into Equity Shares at a conversion ratio of 1:1, i.e., issue
and allotment of 1 (One) Equity Share for each converted Preference
Share.
Maturity: The Preference Shares shall (unless converted into Equity
Shares or redeemed in the manner stated above) be redeemed at the
Redemption Price at the expiry of sixty months from the date of
issuance thereof.
The terms and conditions of the 1% Redeemable Optionally Convertible
Non Cumulative Preference Shares may be varied by the Board of
Directors of the Company subject to the applicable provisions of the
Act.
3 Reserves and surplus
Capital Subsidy :
Erstwhile DQ Entertainment Limited was sanctioned a Capital Subsidy of
Rs. 800,000 (31.03.2010: Rs.800,000) under clause 7(f) of ICT Incentive
Policy of the Government of Andhra Pradesh
4 distribution Rights
Distribution rights (Schedule 4 of the financial statements)
aggregating to Rs.1,443,444,901 (31.03.2010: Rs.1,029,662,841)
represent the costs incurred in acquiring distribution rights. The
Company started acquiring these rights from the year 2003-04 and till
date 42 series (31.03.2010: 30) of Animation rights have been acquired
for different territories across the globe. The Company has started
earning revenues from usage of rights since 2006-07. The Company has
performed testing for impairment of intangibles which resulted in an
impairment loss of Rs.6,862,541 (31.03.2010: Rs.16,067,608) on account
of recoverable amount of intangibles being less than its carying
amount. These have been included in the line item "Depreciation &
Amortisation" in the Statement of Profit and Loss. The accumulated
Impairment Loss as at 31.03.2011 on distribution righhts amounted to
Rs. 85,107,474(31.03.2010: Rs.78,244,933).
5 Capital work-in-progress
a) Includes Rs. 25,125,004 (31.03.2010: Rs.48,572,918) on account of
advances to suppliers of capital goods and Rs. 241,310,025
(31.03.2010: Rs.318,608,602) incurred under various co-production
agreements for which distribution rights are yet to be received.
Pending receipt of distribution rights and considering the potential
benefits likely to accrue to the Company in future, the carrying amount
of Capital work-in-progress have been valued at cost.
b) Includes Rs.6,061,050 (31.03.2010: Rs.35,510,728) incurred towards
projects under development to be exploited as Telivision Series/Films
and others. Based on review of estimated future realizations the
management is of the view that estimated future recoverable amount from
these projects are more than its carrying unamortized cost and
consequently no provision for impairment is considered necessary by the
management at this stage.
6 (a) The company is an Export Oriented Unit registered with Software
Technology Parks of India and Special Economic Zone and its business
income is exempted from tax in terms of section 10A & 10AA of the
Income Tax Act, 1961. Currently Tax provision on book profit is
provided as per the provisions of Section 115JB (MAT) of the Income Tax
Act, 1961.
6 (b) The company has recognised a deferred tax asset of Rs. 54,082,894
on unabsorbed depreciation as claimed in the returns for the respective
years. In the assessment orders passed for the assessment years 2004
-05 and 2006 -07 unabsorbed depreciation has been determined to be Rs
NIL. The Company has preferred appeals in Hon'ble High Court against
the subject orders. In the opinion of the management the manner of
adjustment of unabsorbed depreciation and carry forward of business
losses by the department is not appropriate and based on professional
advice the management is confident of succeeding in appeals and get the
unabsorbed depreciation/ carry forward of business losses restored. On
a prudent basis the company has not recognised any deferred tax asset
on such unabsorbed depreciation contested before the Hon'ble High
court.
31 March 31 March 2010
2011
Rs. Rs.
7 Contingent Liabilities
a) bonds executed in favour of
customs and excise authorities 43,250,000 37,250,000
b) Letters of Credit 1,253,636,938 302,192,625
c) Income tax assessment of DQ Entertainment (International) Limited
has been completed till Assessment Year 2007-08 (financial year
2006-07). The Company has preferred an appeal for the Assessment Years
2004-05 and 2006-07 and is pending before the Hon'ble High court . No
demand has been raised by the Department on the above.
d)Claims against the Company not acknowledged as debts is Rs.9,642,147
(31.03.2010: Rs. 9,642,147). This comprise of demands raised by the
Income Tax department for non deduction of TDS on payments to non
residents on which the Company has gone on appeal and the appeal is
allowed before the Commissioner of Income Tax (Appeals), Hyderabad in
favor of the company. The department has gone for an appeal and the
same is pending before the Income tax appellate tribunal (ITAT).
8 Micro, small and Medium enterprises development act, 2006
The Company has received intimation from certain "suppliers" regarding
their status under the Micro, Small and Medium Enterprises Development
Act 2006 confirming that they do not fall under the Micro, Small &
Medium Enterprises Category while other "Suppliers have not intimated
regarding their status, and hence disclosures, if any, relating to
amounts unpaid as at the year end together with interest paid/payable
as required under the said Act have not been given.
9 Related party disclosures
9 (a) Related parties and their relationships
i) holding and subsidiary Companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Plc - Parent of holding company
c. DQ Entertainment (Ireland) Limited - Subsidiary company
ii) key management personnel
Mr. Tapaas Chakravarti - Managing director & Chief executive officer
iii) Relatives of Key Management Personnel with whom the Company had
transactions during the year - Mrs. Rashmi Chakravarti (wife of Mr.
Tapaas Chakravarti) (Director with effect from 25 May 2009) Ms.
Nivedita Chakravarti (Daughter of Mr. Tapaas Chakravarti)
iv) associate of the ultimate holding Company
Method Animation SAS
v) firm in which a key management personnel is a partner
R & A Associates
vi)Relative of a director
Hatim Adenwala - Senior Vice president HR
10 Leases
The Company's significant leasing arrangement is in respect of
operating lease for premises. The Company has exclusive right to cancel
the lease with prior notice. The aggregate lease rents payable are
charged as rent in the Profit and Loss Account. The aggregate amount of
Lease rentals charged to Profit and Loss account is Rs.37,148,894
(31.03.2010: Rs.43,654,269).
11 segmental Reporting as per accounting standard 17:
11 (a) business segment
The Company comprises the following main business segments:
Animation:
The production services rendered to production houses and training
rendered for acquiring skills for production services in relation to
the production of animation television series and movies.
Gaming:
The services provided for the contents in Console / Mobile / Other
platforms.
Distribution:
The revenue generated from the exploitation of the distribution rights
of animated television series and movies acquired by the Company.
12 Figures of previous year have been regrouped/rearranged/reclassified
wherever necessary to conform to the current year presentation.
Mar 31, 2010
1 Company overview:
The Company is engaged in the business of providing services relating
to animation production for television and film production companies
and rendering training for acquiring skills for production services in
relation to the production of animation television series and movies.
The Company also provides services for gaming consoles and licensing of
programme distribution rights to broadcasters, television channels and
home video distributors.
Pursuant to a special resolution of the members passed at an Annual
General Meeting on July 25, 2009, DQ Entertainment (International)
Private Limited became a public limited company and the name was
changed to DQ Entertainment (International) Limited. A fresh
certificate of incorporation consequent to conversion of Company from
private to public was granted on September 10, 2009 by the Registrar of
Companies, Andhra Pradesh at Hyderabad.
2 Share Capital:
Authorised share capital
On 15th September 2009 the Company increased its authorised equity
share capital from 3,010,000 shares of face value of Rs 10/- each to
80,000,000 shares of face value of Rs 10/- each and cancelled the
800,000 I % Redeemable Optionally Convertible Preference share capital.
Issued, Subscribed & Paid up
a) Equity Shares:
The Company made an Initial Public Offer ("IPO") of 16,048,011 equity
shares of Rs. 10/- each. Out of 16,048,011 equity shares, 172,960
equity shares were allotted to employees at a premium of Rs.63 per
share and 15,875,051 equity shares to others at a premium of Rs.70 per
share. The Company made a pre-IPO placement of 3,772,771 equity shares
of Rs. 10/- each at a premium of Rs.58.11 per equity share. The
aggregate share premium received in IPO and pre-IPO is Rs.
1,341,385,773 million. On 29 March 2010, the equity shares of the
Company were listed on the Bombay Stock Exchange.
b) Preference Shares:
During the period out of 203,767 1% Redeemable Optionally Convertible
Non Cumulative Preference Shares of the face value Rs. 101- each.
27,381 shares are converted in to 27,381 equity shares of Rs 10/- each
and the balance of 176,386 I % Redeemable Optionally Convertible Non
Cumulative Preference Shares were redeemed for cash at Rs 10/- per
share.
c) Dividepds:
Each Preference Share shall carry an annual preference dividend of 1%
(one percent), such dividends to be non cumulative and payable annually
prior to the payment of dividends on the equity shares. The Preference
Shares being non-cumulative in nature, any dividend unpaid for any
financial year shall not be carried forward and/or accumulate in the
subsequent financial year. No dividend shall be paid on the Equity
Shares if the preference dividends or any portion thereof on Preference
Shares are in arrears.
Redemption: The Company shall be entitled, at its option to call for
redemption of all or part of the Preference Shares in one or more
trenches, at a redemption price of Rs. 10/- per Preference Share plus
an amount equal to any accrued but unpaid dividend on such Preference
Shares.
3 Reserves and Surplus
Capital Subsidy:
Erstwhile DQ Entertainment Limited was sanctioned a Capital Subsidy of
Rs. 2,000,000 under clause 7(f) of ICT Incentive Policy of the
Government of Andhra Pradesh, to be released in five equal annual
installments of Rs.400,000 each as per G.O.Rt.No.284 dated 10th
September 2004. The Company has received Rs.800,000 (31.03.2009:
Rs.800,000) and has been transferred to Capital Subsidy.
4 Distribution Rights
Distribution rights (Schedule 4 of the financial statements)
aggregating to Rs1,029,662,841 (31.03.2009: Rs.470,531,887) represent
the unamortized value of costs incurred in acquiring distribution
rights. The Company started acquiring these rights from the year
2003-04 and till date 30 series (31.03.2009:23) of Animation rights
have been acquired for different territories across the globe. The
Company has started earning revenues from usage of rights since
2006-07. The Company has performed testing for impairment of
intangibles which resulted in an impairment loss of Rs. 16,067,608
(31.03.2009: Rs.62,177,325) on account of recoverable amount of
intangibles being less than its carying amount. These have been
included in the line item "Depreciation & Amortisation" in the
Statement of Profit and Loss.The accumulated Impairment Loss as at
31.03.2010 on distribution righhts amounted to Rs.78,244,933
(31.03.2009: Rs.62,177,325).
5 Capital Work-in-progress
a) Includes Rs.48,572,918 (31.03.2009: Rs. 19,503,551) on account of
advances to suppliers of capital goods and Rs. 318,608,602
(31.03.2009: Rs.535,788,957) incurred under various co-production
agreements for which distribution rights are yet to be received.
Pending receipt of distribution rights and considering the potential
benefits likely to accrue to the Company in future, the carrying amount
of Capital work-in-progress have been valued at cost.
b) Includes Rs.35,510,728 (31.03.2009: Rs.71,390,998) incurred towards
projects under development to be exploited as Telivision Series/Films
and others. Based on review of estimated future realizations the
management is of the view that estimated future recoverable amount from
these projects are more than its carrying unamortized cost and
consequently no provision for impairment is considered necessary by the
management at this stage.
6 (a) The company is an Export Oriented Unit registered with Software
Technology Parks of India and its business income is exempted from tax
in terms of section 10A of the Income Tax Act, 1961. Currently Tax
provision on book profit is provided as per the provisions of Section
115JB (MAT) of the Income Tax Act, 1961. As a measure of prudence, in
the absence of virtual certainty of future profits and having regard to
the nature of Companys busines, the deferred tax asset of Rs.
12,474,002 has not been recognized.
7(a) Particulars of Loans and Advance in the nature of loans as
required by clause 32 of the listing agreement
During the year there are no loans and advances which are in the nature
of loans given to subsidiary.
8 Contingent Liabilities
31 March 2010 31 March 2009
Rs. Rs.
a) Bonds executed in favour of
customs and excise authorities 37,250,000 37,250,000
b) Letters of Credit 302,192,625 316,578,819
c) Income tax assessment of DQ Entertainment (International) Limited
has been completed till Assessment Year 2007-08 (financial year
2006-07). Income Tax department has preferred an appeal for the
Assessment Years 2004-05 and 2006-07 and is pending before the Income
Tax Appellate Tribunal (ITAT). No demand has been raised by the
Department on the above. d)Claims against the Company not acknowledged
as debts is Rs.9,642,147 (31.03.2009: Rs. 9,642,147). This comprise of
demands raised by the Income Tax department for non deduction of TDS on
payments to non residents on which the Company has gone on appeal and
the appeal is allowed before the Commissioner of Income Tax (Appeals),
Hyderabad in favor of the company. The department has gone for an
appeal and the same is pending before the Income tax appellate tribunal
(ITAT).
9 (a) The company uses Forward Exchange Contracts and Currency Options
to hedge its exposures in foreign currency related to firm commitments
and highly probable forecasted transactions. The information on
Derivative instruments is as follows:
(b) Exchange difference in respect of forward exchange contracts to
be recognised in the Profit and Loss Account in the subsequent
accounting period amounts to Rs. 783,375 (31.03.2009: Rs.299,000).
10 Micro, Small and Medium Enterprises Development Act, 2006
The Company has received intimation from certain "suppliers" regarding
their status under the Micro, Small and Medium Enterprises Development
Act 2006 confirming that they do not fall under the Micro, Small &
Medium Enterprises Category while other "Suppliers have not intimated
regarding their status, and hence disclosures, if any, relating to
amounts unpaid as at the year end together with interest paid/payable
as required under the said Act have not been given.
11 Related party disclosures
11 a) Related parties and their relationships
i) Holding and Subsidiary Companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Pic - Parent of holding company
c. DQ Entertainment (Ireland) Limited - Subsidiary company
ii) Key management personnel
Mr. Tapaas Chakravarti - Managing director & Chief executive officer
Ms. Sumedha Saraogi, (Vice President - Management Office and After
Sales)
iii) Relatives of Key Management Personnel with whom the Company had
transactions during the year - Mrs. Rashmi Chakravarti (wife of Mr.
Tapaas Chakravarti) (Director with effect from 25 May 2009) Ms.
Nivedita Chakravarti (Daughter of Mr. Tapaas Chakravarti) iV) Associate
of the Ultimate Holding Company
Method Animation SAS f
11 b) Transactions with above in the ordinary course of business ã
12 Leases
The Companys significant leasing arrangement is in respect of
operating lease for premises. The Company has exclusive right to cancel
the lease with prior notice. The aggregate lease rents payable are
charged as rent in the Profit and Loss Account. The aggregate amount
of Lease rentals charged to Profit and Loss account is Rs.HI ,263,801
(31.03.2009: Rs.l+Lt,697,657).
13 Segmental Reporting as per Accounting standard 17: 22 (a) Business
Segment
The Company comprises the following main business segments:
Animation":
The production services rendered to production houses and training
rendered for acquiring skills for production services in relation to
the production of animation television series and movies.
Gaming:
The services provided for the contents in Console / Mobile / Other
platforms.
Distribution:
The revenue generated from the exploitation of the distribution rights
of animated television series and movies acquired by the Company.
14 Figures of previous year have been regrouped/rearranged/reclassified
wherever necessary to conform fo the current year presentation.
Mar 31, 2009
1. Company overview
The Company is engaged in the business of providing services relating
to animation production for television and film production companies
and rendering training for acquiring skills for production services in
relation to the production of animation television series and movies.
The Company also provides services for gaming consoles and licensing of
programme distribution rights to broadcasters, television channels and
home video distributors.
2. Share Capital Preference Shares :
1% Redeemable Optionally Convertible Non Cumulative Preference Shares
of the face value Rs.10/- (Rupees Ten) having the following rights,
privileges and preferences :
Dividends: Each Preference Share shall carry an annual preference
dividend of 1% (one percent) per annum, such dividends to be non
cumulative and payable annually prior to the payment of dividends on
the equity shares. The Preference Shares being non-cumulative in
nature, any dividend unpaid for any financial year shall not be carried
forward and/or accumulate in the next financial year. No dividend shall
be paid on the Equity Shares if the preference dividends or any portion
thereof on Preference Shares are in arrears.
Redemption: The Company shall be entitled, at its option to call for
redemption of all or part of the Preference Shares in one or more
tranches, at a redemption price of Rs. 10/- per Preference Share plus
an amount equal to any accrued but unpaid dividend on such Preference
Shares.
Conversion: After the expiry of twenty four months from the date of
issuance of the Preference Shares and to the extent the Preference
Shares have not been redeemed by the Company, the holders of the
Preference Shares shall be entitled, at their option to call for
conversion for all or part of such Preference Shares in one or more
tranches into Equity Shares at a conversion ratio of 1:1, i.e., issue
and allotment of 1 (One) Equity Share for each converted Preference
Share.
Maturity: The Preference Shares shall (unless converted into Equity
Shares or redeemed in the manner stated above) be redeemed at the
Redemption Price at the expiry of sixty months from the date of
issuance thereof.
The terms and conditions of the 1% Redeemable Optionally Convertible
Non Cumulative Preference Shares may be varied by the Board of
Directors of the Company subject to the applicable provisions of the
Act.
3. Reserves and Surplus
Capital Subsidy :
Erstwhile DQ Entertainment Limited was sanctioned a Capital Subsidy of
Rs. 2,000,000 under 7(f) of ICT Incentive Policy of the Government of
Andhra Pradesh, to be released in five equal annual installments of
Rs.400,000 each as per G.O.Rt.No.284 dated 10th September 2004 . The
Company has received Rs.800,000 (31.03.2008 : Rs.800,000) and has been
transferred to Capital Subsidy.
4. Distribution Rights
Distribution rights (Schedule 4 of the financial statements)
aggregating to Rs.470,531,887 (31.03.2008: Rs.335,392,706) represent
the unamortized value of costs incurred in acquiring distribution
rights. The Company started acquiring these rights from the year
2003-04 and till date 23 series (31.03.2008 : 20) of Animation rights
have been acquired for different territories across the globe. The
Company has started receiving revenues from exploita- tion of rights
from the previous year. The Company has performed testing for
impairment of intangibles which resulted in an impairment loss of
Rs.62,177,325 (31.03.2008 : Nil) on account of recoverable amount of
intangibles being less than its carrying amount. These have been
included in the line item ÃDepreciation & Amortisationà in the
Statement of Profit and Loss.
5. Capital Work-in-progress
Capital work-in-progress includes Rs.19,503,551 (31.03.2008:
Rs.140,666,122)on account of advances to suppli- ers of capital goods
and Rs.535,788,957 (31.03.2008:Rs.198,234,517) incurred under various
co-production agree- ments for which distribution rights are yet to be
received. Pending receipt of distribution rights and considering the
potential benefits likely to accrue to the Company in future, the
carrying amount of Capital work-in-progress have been valued at cost.
Capital Work in Progress also includes Rs.71,390,998 (31.03.2008:Rs
18,464,531) incurred towards projects under development to be exploited
as TV Series/Films and others. Based on review of estimated future
realisations the management is of the view that estimated future
recoverable amount from these projects are more than its carrying
unamortised cost and consequently no provision for impairment is
considered necessary by the management at this stage.
6. Taxation
The company is an EOU Unit registered with Software Technology Parks of
India and its business income is exempt- ed from tax in terms of
section 10A of the Income Tax Act, 1961. Currently Tax provision on
book profit is provided as per the provisions of Section 115JB (MAT) of
the Income Tax Act, 1961. As a measure of prudence, in the absence of
virtual certainty of future profits and having regard to the nature of
CompanyÃs busines, the deferred tax asset has not been recognized
during the previous year Financials Statements amounting to
Rs.18,322,476/-.
7 Contingent Liabilities 2008-09 2007-08
Amount Rs. Amount Rs.
a) Bonds executed in favour of
customs and excise 37,250,000 35,125,000
authorities
b) Letters of Credit 316,578,819 268,548,218
c) Income Tax Assessment of DQ Entertainment (International) Private
Limited has been completed till Assess- ment Year 2006-07 (financial
year 2005-06). Income Tax department has prefered an appeal for the
assessment year 2004-05 and 2006-07 and is pending before the Income
Tax Appellate Tribunal (ITAT). No demand has been raised by the
Department on the above.
Claims against the company not acknowledged as debts is Rs.9,642,147
(31.03.2008: Nil). This comprise of demands raised by the Income tax
department for non deduction of TDS on payments to non residents on
which the company has gone on appeal and the appeal is pending before
the Commissioner of Income Tax (Appeals), Hyderabad.
8 a) The company uses Forward Exchange Contracts and Currency Options
to hedge its exposures in foreign currency related to firm commitments
and highly probable forecasted transactions. The information on
Derivative instruments is as follows:
Ãb) Exchange difference in respect of forward exchange contracts to be
recognised in the Profit and Loss Account in the subsequent accounting
period amounts to Rs. 2.99 lakhs (2007-08 : Rs.35.16 Lakhs)
The year end foreign currency exposures that have not been hedged by a
derivative instrument or otherwise are given below.
9 Micro, Small and Medium Enterprises Development Act, 2006 The
Company has received intimation from some of the Ãsuppliersà regarding
their status under the Micro, Small and Medium Enterprises Development
Act 2006 confirming that they do not fall under the Micro, Small &
Medium Enterprises Category while other ÃSuppliers have not intimated
regarding their status, and hence disclosures, if any, relating to
amounts unpaid as at the year end together with interest paid/payable
as required under the said Act have not been given.
10 Related party disclosures as per Accounting Standard - 18
a) Related parties and their relationships
i) Holding and subsidiary companies
a. DQ Entertainment (Mauritius) Limited - Holding company
b. DQ Entertainment Plc - Parent of holding company
c. DQ Entertainment (Ireland) Limited - Subsidiary company
ii) Key management personnel
Mr. Tapaas Chakravarti - MD & CEO Mr. Akula Ramakrishna - Director Mr.
Laxminarayana Nagu - Director
iii) Relatives of Key Management Personnel with whom the Company had
transactions during the year - Mrs. Rashmi Chakravarti (wife of Mr.
Tapaas Chakravarti)
iv) Associate of the Ultimate Holding Company
Method Animation SAS
11 Leases
The CompanyÃs significant leasing arrangement is in respect of
operating lease for premises. The Compa- ny has exclusive right to
cancel the lease with prior notice. The aggregate lease rents payable
are charged as rent in the Profit and Loss Account. The aggregate
amount of Lease rentals charged to Profit and Loss account is
Rs.44,697,657 (2007-08 Rs.23,474,714)
12 a)Segmental Reporting as per Accounting standard 17: Business
Segment
The Company comprises the following main business segments:
Animation:
The production services rendered to production houses and training
rendered for acquiring skills for production services in relation to
the production of animation television series and movies.
Gaming:
The services provided for the contents in Console / Mobile / Other
platforms.
Distribution:
The revenue generated from the exploitation of the distribution rights
of animated television series and movies acquired by the Company.
13.Figures of previous year have been regrouped/rearranged/reclassified
wherever necessary to conform to the current year presentation.