Mar 31, 2019
DIRECTORSâ REPORT
To the Members,
The directors have pleasure in presenting the fifteenth report on the business and operations of your Company for the year ended March 31, 2019.
RESULT OF OPERATIONS
The financial performance of your Company on a standalone and consolidated basis for the year ended March 31, 2019 is summarized below:
(Rs, in Lacs)
Particulars |
Standalone |
Consolidated |
||||
FY19 |
FY18 |
Growth |
FY19 |
FY18 |
Growth |
|
Revenue from Operations |
42,417.54 |
42,406.13 |
0.03% |
60,938.25 |
59,057.22 |
3.09% |
Other Operating Income |
50.50 |
245.72 |
-386.57% |
247.89 |
345.74 |
-39.47% |
Other Income |
69.02 |
113.65 |
-64.66% |
498.99 |
292.90 |
41.30% |
Total Income |
42,537.06 |
42,765.50 |
-0.54% |
61,685.13 |
59,695.86 |
3.22% |
Total Expenses |
30,613.96 |
28,818.64 |
5.86% |
44,857.73 |
42,403.14 |
5.47% |
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) |
11,923.10 |
13,946.86 |
-16.97% |
16,827.40 |
17.292.72 |
-2.77% |
EBITDA Margin |
28.03% |
32.61% |
- |
27.28% |
28.97% |
- |
Depreciation and Amortization |
5,643.51 |
6,166.20 |
-9.26% |
7,358.00 |
7,983.28 |
-8.50% |
Earnings before Interest and Tax (EBIT) |
6,279.59 |
7,780.66 |
-23.90% |
9,469.40 |
9,309.44 |
1.69% |
Finance Cost |
889.96 |
607.84 |
31.70% |
1,102.41 |
918.08 |
16.72% |
Finance Income |
(1,016.63) |
(3,677.51) |
-261.74% |
(1,224.22) |
(798.35) |
34.79% |
Profit before Tax and share of profit from associates |
6,406.26 |
10,850.33 |
-69.37% |
9,591.21 |
9,189.71 |
4.19% |
Share of profit from associates (net) |
- |
- |
- |
357.93 |
648.58 |
-81.20% |
Profit before tax and after share of profit from associates |
6,406.26 |
10,850.33 |
-69.37% |
9,949.14 |
9,838.29 |
1.11% |
Tax |
2,348.04 |
2,662.77 |
-13.40% |
3,447.30 |
3,784.14 |
-9.77% |
Profit after Tax (PAT) |
4,058.22 |
8,187.56 |
-101.75% |
6,501.84 |
6,054.15 |
6.89% |
Other Comprehensive Income |
(34.15) |
3.42 |
110.01% |
187.81 |
(16.87) |
108.98% |
Total comprehensive income for the year, net of tax |
4,024.07 |
8,190.98 |
-103.55% |
6,689.65 |
6,037.28 |
9.75% |
Profit for the year attributable to equity shareholder |
- |
- |
- |
6,653.54 |
6,285.65 |
5.53% |
Profit for the year attributable to Non-controlling interest |
- |
- |
- |
(151.70) |
(231.50) |
-52.60% |
Other comprehensive income attributable to equity Shareholder |
- |
- |
- |
187.81 |
(17.71) |
109.43% |
Other comprehensive income attributable to Non controlling interests |
- |
- |
- |
- |
0.84 |
-100% |
For a detailed analysis of the financial performance, please refer to the âManagement Discussion and Analysisâ Section, forming part of the Annual Report.
There are no material changes or commitments affecting the financial position of the Company between the end of the financial year in question and the date of this report.
DIVIDEND
Based on the Company''s performance, the directors are pleased to recommend for approval of the members a final dividend of Rs, 2.50 per share for the financial year 2018-19. The final dividend on equity shares, if approved by the members, would involve a cash outflow of Rs, 854.46 lacs including dividend tax resulting in a payout of 21.06% of the standalone profits of the Company. Further, the Board on May 21, 2019 had declared an interim dividend of Rs, 27.50 per share which includes a one-time special dividend of Rs,15.00 per share for the financial year 2018-19 which involved a cash outflow of Rs, 9,399.06 lacs including dividend tax resulting in a payout of 231.61% of the standalone profits of the Company.
SHARE CAPITAL
The paid up equity share capital of the Company as on March 31, 2019, was Rs, 2,835.08 lacs. During the year under review, the Company has not issued any new shares.
EMPLOYEE STOCK OPTIONS
The Company operates the ''UFO Moviez India Limited -Employee Stock Option Scheme - 2014'' (ESOP Scheme 2014), which is compliant with SEBI ESOP Regulations.
During the year under review, on April 3, 2018, the Board of Directors of the Company, on the recommendations of the Compensation Committee of the Board of Directors, granted 2,08,578 employee stock options at an exercise price of '' 400 per option to the employees of the Company and its subsidiaries.
Further, on May 15, 2018, members of the Company through special resolutions passed by way of postal ballot had approved reprising and change in exercise period of 6,28,503 employees stock options granted on December 12, 2014. The exercise price of 6,28,503 employees stock options is reprised from Rs, 600 per option to Rs, 400 per option and the exercise period is extended up to December 11, 2020.
Mr. Kapil Agarwal, Joint Managing Director and Key Managerial Personnel of the Company i.e. Mr. Ashish Malushte, Chief Financial Officer, Mr. Rajesh Mishra, Chief Executive Officer -Indian Operations and Mr. Sameer Chavan, Company Secretary have voluntarily provided an undertaking to the Company that they will not dispose-off the equity shares arising out of conversion of the options (which are being reprised) for a period of 2 years from the date of members'' approval for revision of exercise price.
The details of employee stock options form part of the notes to accounts of the financial statements in the Annual Report and relevant disclosures as per the requirements of the SEBI (Share Based Employee Benefits) Regulations, 2014 are available on the Company''s website under the web link: http://www. ufomoviez.com/IR_Finance.aspx
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in the Annual Report.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as âAnnexure-1â to this report.
FINANCIAL STATEMENTS
Your Company prepares its financial statements in compliance with the requirements of Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)
Rules, 2015 and relevant amendment rules issued thereafter as notified under Section 133 of the Companies Act, 2013, the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable. Further, in the financial statement for the year ending March 31, 2019, the financial statements for the previous year ended March 31, 2018 and the Balance Sheet as at March 31, 2018, have been prepared and presented as per Ind AS so as to make comparisons. The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which have been measured at fair value. The financial statements are presented in Indian Rupees (INR) and all values are rounded to the nearest lacs, except when otherwise indicated. The estimates and judgments relating to the financial statements are made on a prudent basis so as to reflect in a true and fair manner, the form and substance of the underlying transactions and to reasonably present the state of affairs as on March 31, 2019 and the profit including other comprehensive income and cash flow and the changes in equity of the Company for the year ended March 31, 2019.
There is no qualification in the standalone or in the consolidated financial statements by the Statutory Auditors for the year under review.
The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with relevant Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter as notified under Section 133 of the Companies Act, 2013 form part of the Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the Company''s going concern status and its operations in the future.
SCHEME OF ARRANGEMENT I) Amalgamation of Southern Digital Screenz India Private Limited, V. N. Films Private Limited, Edridge Limited and UFO International Limited with the Company:
On July 26, 2016, the Board of Directors of the Company had approved the Scheme of Arrangement for the amalgamation of Company''s wholly owned subsidiaries including step down subsidiaries namely Southern Digital Screenz India Private Limited (''SDS''), V. N. Films Private Limited (''VNFPL''), Edridge Limited (''EL'') and UFO International Limited (''UIL'') (together referred to as the ''merging companies'') with the Company, subject to all the necessary statutory / regulatory approvals (''the Scheme''). The appointed date for the amalgamation for VNFPL, EL and UIL is April 1, 2016 and for SDS, the appointed date is July 1, 2016.
The Company had filed the Scheme with the Bombay High Court on October 4, 2016. Pursuant to notification of Section 232 of the Companies Act, 2013 on December 9, 2016, the Company filed the Scheme with National Company Law Tribunal (NCLT), Mumbai Bench on January 20, 2017.
On June 22, 2018 NCLT had approved the Scheme. Consequent to fulfillment of all the conditions relating to the Scheme including filing of certified copy of the order with the registrar of companies, the Scheme was effective on June 29, 2018 with effect from the appointed date of April 1, 2016 for the amalgamation of VNFPL, EL and UIL with the Company and the appointed date of July 1, 2016 for SDS.
II) Composite Scheme Arrangement and Amalgamation amongst UFO Moviez India Limited and Qube Cinema Technologies Private Limited and Qube Digital Cinema Private Limited and Moviebuff Private Limited and PJSA Techno soft Private Limited:
The members of the Company in their meeting held on May 21, 2018 had approved the Composite Scheme of Arrangement and Amalgamation amongst UFO Moviez India Limited (âUFO'') and Qube Cinema Technologies Private Limited (âQCTPL'') and Qube Digital Cinema Private Limited (âQDCPL'') and Moviebuff Private Limited (âMPL'') and PJSA Technosoft Private Limited (âPJSA'') and their respective shareholders and creditors (Qube Merger Scheme'').
On May 25, 2018 the Company and PJSA had jointly filed the petition with the Hon''ble National Company Law Tribunal (NCLT), Mumbai Bench to obtain its sanction for the aforesaid Qube Merger Scheme. NCLT in a hearing held on January 21, 2019, had dismissed the said petition. The Company and PJSA had filed an appeal on February 25, 2019 before the National Company Law Appellate Tribunal (âNCLATâ) challenging the aforementioned order of the NCLT. The said appeal is currently pending before NCLAT.
SHARE WARRANTS
As on March 31, 2019; a total of 15,25,000 share warrants of Rs, 10 each were outstanding. Each share warrant, which were allotted at an issue price of Rs, 400.13/- each is convertible into one equity share. These share warrants are held by promoters as per details given below:
Name of Allottee No. of share warrants
Mr. Sanjay Gaikwad 2,50,000
Mr. Narendra Hete 2,50,000
Valuable Media Limited 10,25,000
The share warrants are exercisable within a period of 18 months from the date of their allotment i.e. December 16, 2017, in one or more tranches. The share warrants will lapse if not exercised within a period of 18 months from their allotment i.e. by June 15, 2019.
The Company had received a subscription amount of Rs, 1,525.50 lacs, i.e. 25% of the issue price of the share warrants at the time of subscription and remaining 75% of the issue price of the share warrants will be received by the Company once these share warrants are exercised.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âthe Listing Regulations''), the Management Discussion and Analysis is set out in the Annual Report.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
As at March 31, 2019, your Company had 6 direct subsidiaries, 6 step-down subsidiaries and 5 associates.
During the year under review, the Company has made an investment of '' 60 lacs in Valuable Digital Screens Private Limited (VDSPL), a subsidiary company of the Company, by purchasing remaining 2,895 equity shares (representing 20% of equity share capital of VDSPL) from the existing shareholder of VDSPL. Post this acquisition, VDSPL became a wholly owned subsidiary of the Company.
Further, upon effect of amalgamation of Southern Digital Screenz India Private Limited, V. N. Films Private Limited, Edridge Limited and UFO International Limited, wholly owned subsidiaries with the Company with effect from June 29, 2018, the said wholly owned subsidiary companies ceased to exist from the said date.
Also, the name of United Film Organizers (UFO) (Mauritius) Private Limited has been removed from the Register of Companies as per the local laws of Mauritius and ceased to exist with effect from June 8, 2018.
Further, during the year under review, Scrabble Entertainment Limited (SEL), wholly owned subsidiary of the Company has made an investment of Rs, 2,400 lacs in Scrabble Digital Limited (SDL), associate company of SEL, by purchasing 3,95,428 equity shares (representing 66.67% of equity share capital of SDL) from existing shareholders of SDL. Post this acquisition, SDL became a wholly owned subsidiary of the SEL and thereby became step-down wholly owned subsidiary company of the Company.
Also, during the year under review, Scrabble Audio Visual Equipment Trading LLC - Dubai, an associate company, was incorporated by one of the step-down subsidiary of the Company i.e. Scrabble Entertainment DMCC, with holding of 49% partner''s share capital through total investment of Rs, 28.27 lacs (AED 1,47,000).
During the year under review, the Board of Directors reviewed the affairs of the subsidiaries. The consolidated financial statements of the Company and all its subsidiaries have been prepared in accordance with Section 129(3) of the Companies Act, 2013, and form part of the Annual Report. Further, a statement containing the salient features of the financial statements of the subsidiaries of the Company in the prescribed format AOC-1 is attached to the financial statements. The statement also provides the details of performance and financial position of each of the subsidiaries and associates.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the
Company''s website under the web link: http://www.ufomoviez. com/IR_Finance.aspx These documents are also available for inspection during business hours at the Company''s registered office in Mumbai, India.
CORPORATE GOVERNANCE
The Corporate Governance Report for the financial year ended March 31, 2019, forms part of the Annual Report.
BOARD DIVERSITY
Your Company recognizes and embraces the benefits of having a diverse Board that possesses a balance of skills, experience, expertise and diversity of perspectives, appropriate to the requirements of the businesses of the Company. The Company sees increasing diversity at the Board level as an essential element in maintaining competitive advantage. A truly diverse Board will include and make good use of the differences in the skills, regional and industry experience, and background among directors. These differences are considered in determining the optimal composition of the Board. The Board has adopted a Board Diversity Policy which sets out its approach in this regard. The Board Diversity Policy is available on the Company''s website under the web link: http://www.ufomoviez.com/IR_ Corporate_Governance.aspx
NUMBER OF MEETINGS OF THE BOARD
The Board met 9 times during the financial year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between any two consecutive board meetings was within the period prescribed by the Companies Act, 2013.
POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
The current policy is to have an optimum combination of executive and non-executive directors with an independent, nonexecutive chairman to maintain the independence of the Board, and to separate the functions of governance and management in the Company.
As on March 31, 2019, the Board consisted of 7 members, 2 of whom are executive directors and 5 are non-executive directors. Out of the 5 non-executive directors, 3 are independent directors. The Board periodically evaluates the need for change in its composition and size.
The policy of the Company on directors'' appointment and remuneration, including the criteria for determining the qualifications, the positive attributes, independence and other matters, provided under Section 178(3) of the Companies Act, 2013 is adopted by the Board. The silent features of the said policy is appended as âAnnexure-2â to this report. The remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company. During the year under review, the Company has modified its Nomination and Remuneration Policy to the extent of change in definition of senior management as per amendments in the Listing Regulations.
The Nomination and Remuneration Policy of the Company is available on the Company''s website under the web link: http:// www.ufomoviez.com/IR_Corporate_Governance.aspx
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and under the Listing Regulations.
BOARD EVALUATION
Regulation 4(2)(f) the Listing Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
The performance evaluation of all the individual directors, the Board as a whole and that of its committees was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as recommended by the Chairman of the Nomination and Remuneration Committee.
TRAINING OF INDEPENDENT DIRECTORS
The Company familiarizes its Directors including independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes. These include orientation programme upon induction of new Directors, as well as other initiatives to update the Directors on a continuing basis.
The familiarization programme for Independent Directors is disclosed on the Company''s website under the web link: http:// www.ufomoviez.com/IR_Corporate_Governance.aspx
The Managing Director and the Joint Managing Director also have one-on-one discussion with the Directors on a regular basis. In addition, the Senior Management of the Company interacts regularly with the Directors both individually and collectively. The above initiatives help the Directors to understand and keep themselves updated about the Company, its business and the regulatory framework in which the Company operates and equip themselves to effectively fulfill their role as Directors of the Company.
Further, at the time of appointment of an independent director, the Company issues a formal letter of appointment outlining his/ her role, function, duties and responsibilities as a director. The terms and conditions of their appointment are available on the Company''s website under the web link: http://www.ufomoviez. com/IR_Corporate_Governance.aspx
INDUCTIONS
There were no fresh appointments of Directors during the year under review.
RETIREMENT AND RE-APPOINTMENTS
In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Raaja Kanwar retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his reappointment.
The Companies Act, 2013, provides for the appointment of independent directors. Section 149(10) of the Companies Act,
2013 provides that independent directors shall hold office for a term of up to five consecutive years on the Board of a Company and shall be eligible for re-appointment on passing a special resolution by the shareholders of the Company. Accordingly, all the independent directors, were appointed by the shareholders at the general meeting as required under Section 149(10) for a period of 3 years with effect from November 20, 2014.
Further, all the independent directors, were re-appointed for a second term by the shareholders at the general meeting as required under Section 149(10) for a period of 5 years with effect from November 20, 2017.
Further, according to Section 149(11), no independent director shall be eligible for appointment for more than two consecutive terms of 5 years. Sub-section (13) states that the provisions of retirement by rotation as defined in Section 152(6) and 152(7) of the Companies Act, 2013 shall not apply to such independent directors.
Mr. Sanjay Gaikwad, Managing Director of the Company had been re-appointed for a period of 5 years from October 17, 2013 to October 16, 2018 and Mr. Kapil Agarwal, Joint Managing Director of the Company had been reappointed for a period of 5 years from March 1, 2014 to February 28, 2019.
The members of the Company at their Annual General Meeting held on August 8, 2018 re-appointed Mr. Sanjay Gaikwad as Managing Director of the Company for period of 5 years from October 17, 2018, and Mr. Kapil Agarwal as Joint Managing Director of the Company for a period of 5 years from March 1, 2019 and approved their remuneration.
RESIGNATIONS / RETIREMENT
During the year under review, none of the directors resigned from the Board of the Company.
During the year under review, Mr. Varun Laul, Director of the Company retired by rotation.
INDEPENDENT DIRECTORS'' MEETING
The Independent Directors met on June 14, 2018 and May 20, 2019 inter alia, to:
(a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;
(b) review the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors
(c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
INTERNAL FINANCIAL CONTROLS
Your Company has laid out an Internal Control Framework which is commensurate with the size, scale and complexity of its operations. This framework ensures the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Controls have been identified along with risks and mitigation processes covering major areas across all business functions. These Internal controls were reviewed by the Internal auditors.
Strengthening of controls is a continuous and evolving process in the Company. Based upon observations, findings and recommendations of the internal auditors, process owners develop preventive and corrective actions which are then deployed across the organization.
Based on the Board''s evaluation, it was determined that the Company''s internal financial controls are adequate and were operating effectively as of March 31, 2019.
COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee of the Company as on March 31, 2019 comprised of 3 Independent Directors, Mr. Sanjeev Aga, Mr. S. Madhavan and Ms. Lynn de Souza and
1 Non Executive, Non-Independent Director, Mr. Ameya Hete. Mr. Sanjeev Aga is the Chairman of the Committee.
All members of the Audit and Risk Management Committee possess requisite experience and knowledge of accounting and financial management. For further details on the Audit and Risk Management Committee, please refer to the Corporate Governance Report forming part of the Annual Report.
COMPOSITION OF STAKEHOLDERS'' RELATIONSHIP COMMITTEE
The Stakeholders'' Relationship Committee of the Company as on March 31, 2019 comprised of 1 Independent Director, Ms. Lynn de Souza; 1 Non-Executive Director, Mr. Ameya Hete and 2 Executive Directors, Mr. Sanjay Gaikwad and Mr. Kapil Agarwal. Ms. Lynn de Souza is the Chairperson of the Committee. For further details on the Stakeholders'' Relationship Committee, please refer to the Corporate Governance Report forming part of the Annual Report.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances.
The details of the Whistle blower policy are available on the Company''s website under web link: http://www.ufomoviez. com/IR_Corporate_Governance.aspx For further details on the Whistle blower policy, please refer to the Corporate Governance Report forming part of the Annual Report.
RISK MANAGEMENT
The Company has developed and implemented Risk Management plans in accordance with the provisions of the Companies Act, 2013 and the Listing Regulations. The Risk Management plans define the risk management approach of the Company and includes a periodic review of such risks and also the documentation, mitigating measures, and reporting mechanism of such risks.
DIRECTORS'' RESPONSIBILITY STATEMENTS REQUIRED UNDER SECTION 134(3)(C) OF THE COMPANIES ACT, 2013
Based upon the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the Internal, Statutory and Secretarial Auditors, and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and operating effectively during the financial year 2018-19.
Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
(a) the financial statements for the financial year ended March 31, 2019 have been prepared on a going concern basis in accordance with relevant Indian Accounting Standards (Ind AS), and there are no material departures from the same;
(b) the accounting policies selected were applied consistently and the judgments and estimates related to financial statements have been made on a reasonable and prudent basis so as to reflect in a true and fair manner, the form and substance of the underlying transactions and to reasonably present the state of affairs as on March 31, 2019 and the profit including other comprehensive income and cash flow and the changes in equity of the Company for that period ;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and are operating effectively; and
(e) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad as Chairman with Ms. Lynn de Souza and Mr. Kapil Agarwal as Members. The Committee is responsible for formulating and monitoring the CSR policy of the Company. The Company has adopted a CSR policy in compliance with the provisions of the Companies Act, 2013. The same is available on the website of the Company under web link: http://www. ufomoviez.com/IR_Corporate_Governance.aspx
The average net profit of the Company, computed as per Section 198 of the Companies Act, 2013, during the three immediately preceding financial years was Rs, 8,128.76 lacs. It was hence required to spend a minimum of Rs, 162.58 lacs on CSR activities during the financial year 2018-19, being 2% of the average net profits of the three immediately preceding financial years.
The Company has contributed an amount of Rs, 163.00 lacs towards CSR activities against its obligation of Rs, 162.58 lacs for the financial year 2018-19.
The annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as âAnnexure-3â forming part of this Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as âAnnexure-4â to this report.
GREEN INITIATIVES
Your Company is publishing only the statutory disclosures of the Annual Report in the print version. Additional information is available on the Company''s website www.ufomoviez.com. Electronic copies of the Annual Report 2018-19 and Notice of the 15th Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2018-19 and the Notice of the 15th Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company.
AUDITORS
Statutory Auditors
At the 14th Annual General Meeting held on August 9, 2018, M/s. B S R & Co. LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office from the conclusion of 14th Annual General Meeting of the Company until the conclusion of the 19th Annual General Meeting for a consecutive term of five years. As per the commencement of notification of Section 40 of the Companies Amendment Act, 2017 with effect from May 7, 2018, the first proviso of Section 139 of the Companies Act, 2013 which was referring to ratification of the appointment of Statutory Auditor at every Annual General Meeting of the Company has been omitted. Hence, the Company is not required to ratify the appointment of M/s. B S R & Co. LLP, Chartered Accountants as the Statutory Auditors of the Company for the financial year 2019-20.
During the year under review, the Statutory Auditors have not reported any instances of frauds committed in the Company by its Officers or Employees, to the Audit and Risk Management Committee under Section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.
Secretarial Auditor
Mr. Dharmesh Zaveri of M/s. D.M. Zaveri & Co., Practicing Company Secretaries was appointed to conduct the secretarial audit of the Company for the financial year 2018-19, as required under Section 204 of the Companies Act, 2013 and Rules there under. The secretarial audit report for financial year 2018
19 forms part of the Annual Report as âAnnexure-5â to this report. There are no qualifications or adverse observations by the Secretarial Auditor of the Company for the year under review.
SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to âMeetings of the Board of Directors'' and âGeneral Meetings'', respectively.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as âAnnexure-6â to this report. Also, the same is also available on the Company''s website under the web link at http:// www.ufomoviez.com/IR_Corporate_Governance.aspx
HUMAN RESOURCES
Your Directors believe that the key to success of any Company are its employees. Your Company has a team of able and experienced professionals, whose dedicated efforts and enthusiasm has been an integral part of your Company''s growth. Your Directors would like to place on record their deep appreciation of their continuous effort and contribution to the Company.
Particulars of employees
The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 disclosing the ratio of the remuneration of each director to the median employee''s remuneration and such other details is appended as âAnnexure-7â to this report.
A statement containing the names of every employee employed throughout the financial year 2018-19 and in receipt of remuneration for the said financial year which, in the aggregate, was not less than '' 102 lacs and employed for a part of the financial year 2018-19, was in receipt of remuneration for any part of the said financial year, at a rate which, in the aggregate, was not less than Rs, 8.50 lacs per month and top 10 employees in terms of remuneration, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms an integral part of this report. The same is not being sent along with this annual report to the members of the Company in line with the provisions of Section 136 of the Companies Act, 2013.
Members who are interested in obtaining these particulars may write to the Company Secretary at the registered office of the Company and the same will be furnished on request.
Policy on prevention, prohibition and redressal of sexual harassment at workplace
The Company has zero tolerance for sexual harassment at workplace, and has adopted a policy against sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee as per the provisions of the said act to inquire into complaints of sexual harassment and recommend appropriate action. The Company has not received any complaint of sexual harassment during the financial year 2018-19.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion & Analysis describing the Company''s objectives, projections, estimates, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Important factors that could influence the Company''s operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws, economic developments within the country and other incidental factors.
ACKNOWLEDGMENT
Your directors thank all customers, vendors, investors, bankers, and all other business partners for their excellent support during the year. They wish to place on record appreciation of the strong commitment and contribution made by employees of the Company at all levels.
Your directors also take this opportunity to place on record their appreciation for continued co-operation and unstinted support received from the film producers, distributors, exhibitors, and advertisers who have contributed to the success of the Company.
Your directors thank the Central Government, various State Governments and other Government agencies and bodies for their support, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
Kapil Agarwal Ameya Hete
Joint Managing Director Director
DIN:00024378 DIN: 01645102
Place: Mumbai
Date: May 21, 2019
Mar 31, 2018
DIRECTORSâ REPORT
To the Members,
The directors have pleasure in presenting the fourteenth report on the business and operations of your Company for the year ended March 31, 2018.
RESULT OF OPERATIONS
The financial performance of your Company on a standalone and consolidated basis for the year ended March 31, 2018 is summarized below:
(Rs, in Lacs)
Particulars |
Standalone |
Consolidated |
||||
FY18 |
FY17 |
Growth |
FY18 |
FY17 |
Growth |
|
Revenue from Operations |
40,819.14 |
38,688.17 |
5.5% |
59,057.22 |
59,661.95 |
-1.0% |
Other Operating Income |
220.72 |
45.39 |
386.3% |
345.73 |
233.54 |
48.0% |
Other Income |
115.46 |
87.45 |
32.0% |
292.90 |
169.91 |
72.4% |
Total Income |
41,155.31 |
38,821.01 |
6.0% |
59,695.86 |
60,065.39 |
-0.6% |
Total Expenses |
28,488.08 |
25,841.37 |
10.2% |
42,403.14 |
41,376.47 |
2.5% |
Earnings before Interest, Tax, |
12,667.24 |
12,979.64 |
-2.4% |
17,292.72 |
18,688.92 |
-7.5% |
Depreciation and Amortisation (EBITDA) EBITDA Margin Depreciation and Amortisation |
31.0% 6,087.41 |
33.5% 6,148.63 |
-1.0% |
29.3% 7,983.28 |
31.3% 9,160.72 |
-12.9% |
Earnings before Interest and Tax |
6,579.82 |
6,831.00 |
-3.7% |
9,309.44 |
9,528.20 |
-2.3% |
(EBIT) Finance Cost |
607.79 |
802.58 |
-24.3% |
918.08 |
1,372.01 |
-33.1% |
Finance Income |
(3,424.07) |
(1,662.12) |
106.0% |
(798.35) |
(799.72) |
-0.2% |
Profit before Tax (PBT) |
9,396.11 |
7,690.55 |
22.2% |
9,189.71 |
8,955.91 |
2.6% |
Profit from Associates |
- |
- |
648.58 |
677.78 |
-4.3% |
|
Profit before tax and after of |
9,396.11 |
7,690.55 |
22.2% |
9,838.29 |
9,633.68 |
2.1% |
profit from associates Tax |
2,145.13 |
2,253.21 |
-4.8% |
3,784.14 |
3,621.12 |
4.5% |
Profit after Tax (PAT) |
7,250.99 |
5,437.33 |
33.4% |
6,054.15 |
6,012.57 |
0.7% |
Other Comprehensive Income |
5.07 |
(41.34) |
-112.3% |
(19.28) |
(162.28) |
-88.1% |
Total comprehensive income for |
7,245.91 |
5,395.99 |
34.3% |
6,034.86 |
5,850.29 |
3.2% |
the year, net of tax Profit for the year attributable to |
6,285.65 |
6,051.48 |
3.9% |
|||
equity shareholder Profit for the year attributable to |
(231.50) |
(38.91) |
494.9% |
|||
Non controlling interests Other comprehensive income |
(20.13) |
(152.06) |
-86.8% |
|||
attributable to equity shareholder Other comprehensive income |
0.84 |
(10.22) |
-108.3% |
|||
attributable to Non controlling interests Earnings per share of '' 10/- each (for the quarters, not annualised): (a) Basic |
26.06 |
19.71 |
6.71 |
22.59 |
21.93 |
2.99 |
(b) Diluted |
26.01 |
19.70 |
6.70 |
22.55 |
21.93 |
2.83 |
For a detailed analysis of the financial performance, please refer to the âManagement Discussion and Analysisâ Section, forming part of the Annual Report.
There are no material changes or commitments affecting the financial position of the Company between the end of the financial year in question and the date of this report.
DIVIDEND
Based on the Company''s performance, the directors are pleased to recommend for approval of the members a dividend of '' 12.50 per share for the financial year 2017-18. The dividend on equity shares, if approved by the members, would involve a cash outflow of '' 4,272.30 lacs including dividend tax resulting in a payout of 58.88% of the standalone profits of the Company.
SHARE CAPITAL
The paid up equity share capital of the Company as on March 31, 2018, was Rs, 28,35,08,010. During the year under review, on December 16, 2017; the Company had issued and allotted 7,50,000 equity shares and 15,25,000 share warrants, each convertible into one equity share on a preferential basis to the promoters of the Company. The Company has not issued any shares with differential voting rights. Also, during the year under review, the Company has not issued any sweat equity shares.
As on date and as on March 31, 2018; Mr. Sanjay Gaikwad, Managing Director of the Company holds 2,50,000 share warrants, each convertible into one equity share of the Company. As on date and as on March 31, 2018, none of other Directors of the Company hold instruments convertible into equity shares of the Company except stock options granted under the employee stock options scheme of the Company.
EMPLOYEE STOCK OPTIONS
The Company operates the ''UFO Moviez India Limited -Employee Stock Option Scheme - 2014Rs, (ESOP Scheme 2014), which is compliant with SEBI ESOP Regulations. During the year under review, the Company has not granted any stock options under the said ESOP Scheme 2014.
On April 3, 2018, the Board of Directors of the Company on the recommendations of the Compensation Committee of the Board of Directors granted 2,08,578 employee stock options at an exercise price of Rs,400 per option to the employees of the Company and its subsidiaries.
Further, members of the Company through special resolutions passed by way of postal ballot have approved reprising and change in exercise period of outstanding 6,28,503 employees stock options granted on December 12, 2014. The exercise price of 6,28,503 employees stock options is reprised from Rs,600 per option to ''400 per option and the exercise period is extended up to December 11, 2020.
Mr. Kapil Agarwal, Joint Managing Director and Key Managerial Personnel of the Company i.e. Mr. Ashish Malushte, Chief Financial Officer; Mr. Rajesh Mishra, Chief Executive Operations - Indian Operations and Mr. Sameer Chavan, Company Secretary have voluntarily provided an undertaking to the Company that they will not dispose-off the equity shares arising out of conversion of the options (which are being reprised) for a period of 2 years from the date of member''s approval for revision of exercise price.
The details of employee stock options form part of the notes to accounts of the financial statements in the Annual Report and also available on the Company''s website under the web link: http://www.ufomoviez.com/IR_Finance.aspx.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in the Annual Report.
PUBLIC DEPOSITS
Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as âAnnexure-1â to this report.
FINANCIAL STATEMENTS
Your Company prepares its financial statements in compliance with the requirements of Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter as notified under Section 133 of the Companies Act, 2013, the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable. In this financial statements for the year ended March 31, 2018, the financial statements for the previous year ended March 31, 2017 and Balance Sheet as at March 31, 2017, have been prepared and presented as per Ind AS for like-to-like comparison. The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which have been measured at fair value. The financial statements are presented in Indian Rupees (INR) and all values are rounded to the nearest lacs, except when otherwise indicated. The estimates and judgments relating to the financial statements are made on a prudent basis so as to reflect in a true and fair manner, the form and substance of the underlying transactions and to reasonably present the state of affairs as on March 31, 2018 and the profit including other comprehensive income and cash flow and the changes in equity of the Company for the year ended March 31, 2018.
There is no qualification in the standalone or in the consolidated financial statements by the Statutory Auditors for the year under review.
The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with relevant Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter as notified under Section
133 of the Companies Act, 2013 form part of the Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the Company''s going concern status and its operations in future.
SCHEME OF ARRANGEMENT
I) Amalgamation of Southern Digital Screenz India Private Limited, V. N. Films Private Limited, Edridge Limited and UFO International Limited with the Company:
On July 26, 2016, the Board of Directors of the Company had approved the Scheme of Arrangement for the amalgamation of Company''s wholly owned subsidiaries including step down subsidiaries namely Southern Digital Screenz India Private Limited (''SDS''), V. N. Films Private Limited (''VNFPL''), Edridge Limited (''EL'') and UFO International Limited (''UIL'') (together referred to as the ''merging companies'') with the Company, subject to all the necessary statutory / regulatory approvals (''the Scheme''). The appointed date for the amalgamation for VNFPL, EL and UIL is April 01, 2016 and for SDS, the appointed date is July 01, 2016.
The Company had filed the Scheme with the Bombay High Court on October 4, 2016. Pursuant to notification of Section 232 of the Companies Act, 2013 on December 9, 2016, the Company filed the Scheme with National Company Law Tribunal (NCLT), Mumbai Bench on January 20, 2017.
The Company had final hearing with NCLT Mumbai on May 17, 2018 where the Scheme was approved. However, formal order from the NCLT is still awaited hence effect of the Scheme is not given in these financial results for the year ended March 31, 2018.
II) Composite Scheme of Arrangement and Amalgamation amongst UFO Moviez India Limited and Qube Cinema Technologies Private Limited and Qube Digital Cinema Private Limited and Moviebuff Private Limited and PJSA Technosoft Private Limited:
The members of the Company have vide their meeting held on May 21, 2018; approved the Composite Scheme of Arrangement and Amalgamation amongst UFO Moviez India Limited (''UFO'') and Qube Cinema Technologies Private Limited (''QCTPL'') and Qube Digital Cinema Private Limited (''QDCPL'') and Moviebuff Private Limited (''MPL'') and PJSA Technosoft Private Limited (''PJSA'') and their respective shareholders and creditors (''Scheme'').
On May 25, 2018 the Company has filed the petition with the Hon''ble National Company Law Tribunal, Mumbai Bench to obtain its sanction embodied to the aforesaid Scheme. Operation of the Scheme
The said Composite Scheme of Arrangement and Amalgamation will operate simultaneously in four stages as under:
- all the businesses of QCTPL which are synergic with the Company will be demerged into QDCPL on a going concern basis leaving behind businesses in QCTPL that are not synergic or have limited growth potential,
- amalgamation of MPL which holds various intellectual properties into QDCPL and thereby consolidating and combining the businesses of QCTPL and MPL in QDCPL and consequent dissolution of MPL without winding up,
- amalgamation of QDCPL into UFO and consequent dissolution of QDCPL without winding up.
- slump sale of the transferred undertaking of UFO into PJSA
Rationale and Key features of the Scheme:
- QCTPL and UFO are engaged in similar business. UFO has developed an efficient satellite delivery mechanism for delivery of content into theatres using MPEG4 technology. QCTPL, on the other hand, uses MPEG2 technology and also developed its own DCI compliant servers. The resultant entity will thus have all the complementary technologies at its disposal and will be in a position to offer its clients a comprehensive bouquet of services. Additionally, based on evaluation of technologies, the resultant entity will be able to use best features of these technologies for growth of its business in a competitive manner.
- While QCTPL has a very strong presence in southern regions of India, UFO has a higher number of its screens in northern regions with reasonable presence in southern regions of India. Thus, the proposed restructuring will ensure an all India presence for the combined entity thereby facilitating provision of wholesome offering across the country to its advertising clients. This will help in substantial growth of the advertising business for the resultant Company.
- The Scheme will bring about synergy of operations and benefit of scale since duplication of administrative efforts and legal and regulatory compliances will be unified.
- The Scheme will provide an opportunity to employees and shareholders of QCTPL to become part of a listed entity. The resultant entity will be able to provide better and more efficient and comprehensive services to all the stakeholders of the industry such as exhibitors, distributors, advertisers etc.
- QCTPL has developed certain new software, technologies and processes (''QCTPL Products'') which are currently in the process of commercialization. UFO, in addition to its screen network in India, also has a network of screens overseas. QCTPL products have global application and the combined network post amalgamation will allow faster monetization of QCTPL products not only in India but overseas as well. Post merger of QDCPl into UFO, the business relating to the QCTPL Products i.e. IP business will be hived off into PJSA, thereby creating pure technology play. The IP business derives value significantly from the technical expertise and talent of the QCTPL promoters. Further, synergies will be derived from such talent acquisitions pursuant to the Scheme. Accordingly, the continual support of the QCTPL promoters would be required upon implementation of the Scheme for the technology aspects.
ISSUE AND ALLOTMENT OF EQUITY SHARES AND SHARE WARRANTS ON PREFERENTIAL BASIS
During the year under review, the Company, on preferential basis, had allotted 7,50,000 equity shares and aggregate of 15,25,000 share warrants to certain promoter entities .
Salient features of the Preferential Issue:
- The preferential allotment proceeds will be used for general corporate purposes (which could include partly funding the Company''s acquisition of shares in Qube Digital Cinema Private Limited) and to fund the long term growth of the Company.
- The equity shares and share warrants were allotted at an issue price of '' 400.13/- each determined in accordance with the Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements), Regulations, 2009. The Company had allotted 7,50,000 equity shares to Valuable Media Limited at an issue price of '' 400.13/- each, aggregating to '' 3,000.98 Lacs and 2,50,000 share warrants to Mr. Sanjay Gaikwad; 2,50,000 share warrants to Mr. Narendra Hete and 10,25,000 share warrants to Valuable Media Limited aggregating to '' 6,101.98 Lacs.
- The share warrants are exercisable with a period of 18 months from the date of their allotment i.e. December 16, 2017, in one or more tranches.
- The Company has received a subscription amount of '' 1,525.50 Lacs, i.e. 25% of the issue price of the share warrants at the time of subscription and remaining 75% of the issue price of the share warrants will be received by the Company at the time of exercising of the said share warrant. The share warrants will lapse if not exercised with a period of 18 months from their allotment and subscription amount received by the Company will be forfeited.
MANAGEMENTâS DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âThe Listing Regulationsâ) the Management Discussion and Analysis is set out in the Annual Report.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
As at March 31, 2018, your Company had 7 direct subsidiaries, 9 step-down subsidiaries and 5 associates.
During the year under review, the Company has made an investment of '' 1 Lac in PJSA Technosoft Private Limited (PJSA) by purchasing 10,000 (representing 100% of equity share capital of PJSA) equity shares from existing shareholders of PJSA. Post this acquisition, PJSA became a wholly owned subsidiary of the Company.
During the year under review, the Board of Directors reviewed the affairs of the subsidiaries. The consolidated financial statements of the Company and all its subsidiaries have been prepared in accordance with Section 129(3) of the Companies Act, 2013, and form part of the Annual Report. Further, a statement containing the salient features of the financial statements of the subsidiaries of the Company in the prescribed format AOC-1 is attached to the financial statements. The statement also provides the details of performance and financial position of each of the subsidiaries, associates and joint ventures.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the Company''s website under the web link: http://www.ufomoviez.com/IR_Finance.aspx. These documents are also available for inspection during business hours at the Company''s registered office in Mumbai, India.
CORPORATE GOVERNANCE
The Corporate Governance Report for the financial year ended March 31, 2018, forms part of the Annual Report.
BOARD DIVERSITY
Your Company recognizes and embraces the benefits of having a diverse Board that possesses a balance of skills, experience, expertise and diversity of perspectives, appropriate to the requirements of the businesses of the Company. The Company sees increasing diversity at the Board level as an essential element in maintaining competitive advantage. A truly diverse Board will include and make good use of the differences in the skills, regional and industry experience, and background among directors. These differences are considered in determining the optimum composition of the Board. The Board has adopted a Board Diversity Policy which sets out its approach in this regard. The Board Diversity Policy is available on the Company''s website under the web link: http://www.ufomoviez.com/IR_Corporate_Governance.aspx
NUMBER OF MEETINGS OF THE BOARD
The Board met 9 times during the financial year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between any two consecutive board meetings was within the period prescribed by the Companies Act, 2013.
POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
The current policy is to have an optimum combination of executive and non-executive directors with an independent, nonexecutive chairman to maintain the independence of the Board, and to separate the functions of governance and management in the Company.
As on March 31, 2018, the Board consisted of eight members, two of whom are executive directors and six are non-executive directors. Out of the 6 non-executive directors, 3 are independent directors. The Board periodically evaluates the need for change in its composition and size.
The policy of the Company on directors'' appointment and remuneration, including the criteria for determining the qualifications, the positive attributes, independence and other matters, provided under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is appended as âAnnexure-2â to this report. The remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and under the Listing Regulations.
BOARD EVALUATION
Regulation 4(2)(f) of the Listing Regulations mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
The performance evaluation of all the individual directors, the Board as a whole and that of its committees was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as recommended by the Chairman of the Nomination and Remuneration Committee.
TRAINING OF INDEPENDENT DIRECTORS
The Company familiarizes its Directors including independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes. These include orientation programme upon induction of new Directors, as well as other initiatives to update the Directors on a continuing basis.
The familiarization programme for Independent Directors is disclosed on the Company''s website under the web link: http:// www.ufomoviez.com/IR_Corporate_Governance.aspx
The Managing Director and the Joint Managing Director also have one-on-one discussion with the Directors on a regular basis. In addition, the Senior Management of the Company interacts regularly with the Directors both individually and collectively. The above initiatives help the Directors to understand and keep themselves updated about the Company, its business and the regulatory framework in which the Company operates and equip themselves to effectively fulfill their role as Directors of the Company.
Further, at the time of appointment of an independent director, the Company issues a formal letter of appointment outlining his/ her role, function, duties and responsibilities as a director. The terms and conditions of their appointment are available on the Company''s website under the web link: http://wwwufomoviez.com/IR_Corporate_Governance.aspx
INDUCTIONS
There were no fresh appointments of Directors during the year under review.
RETIREMENT AND RE-APPOINTMENTS
In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Varun Laul retires by rotation at the forthcoming Annual General Meeting. However, Mr. Laul has expressed his unwillingness to get re-appointed as a Director of the Company due to some other commitments.
The Companies Act, 2013, provides for the appointment of independent directors. Sub-section (10) of Section 149 of the Companies Act, 2013 provides that independent directors shall hold office for a term of up to five consecutive years on the Board of a Company and shall be eligible for re-appointment on passing a special resolution by the shareholders of the Company. Accordingly, all the independent directors, were appointed by the shareholders at the general meeting as required under Section 149(10) for a period of three years with effect from November 20, 2014.
Further, according to Sub-section (11) of Section 149, no independent director shall be eligible for appointment for more than two consecutive terms of five years. Sub-section (13) states that the provisions of retirement by rotation as defined in Sub-sections (6) and (7) of Section 152 of the Companies Act, 2013 shall not apply to such independent directors.
During the year under review, Mr. Sanjeev Aga, Ms. Lynn de Souza and Mr. S. Madhavan were re-appointed as Independent Directors of the Company w.e.f. November 20, 2017 for the second term of five years.
The Board of Directors of the Company upon the recommendation of the Nomination and Remuneration Committee, and subject to approval of the members of the Company, have re-appointed, Mr. Sanjay Gaikwad as Managing Director and Mr. Kapil Agarwal as Joint Managing Director of the Company for a further period of 5 years from the expiry of their present term of office.
The notice of the 14th Annual General Meeting of the Company contains the resolutions for re-appointment of Mr. Sanjay Gaikwad as Managing Director and Mr. Kapil Agarwal as Joint Managing Director of the Company for a term of five years.
RESIGNATIONS
During the year under review, none of the directors resigned from the Board of the Company.
INDEPENDENT DIRECTORS'' MEETING
The Independent Directors met on May 17, 2017, July 11, 2017 and June 14, 2018 inter alia, to
(a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;
(b) review the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors;
(c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
INTERNAL FINANCIAL CONTROLS
Your Company has laid an Internal Control Framework which is commensurate with the size, scale and complexity of its operations. This framework ensures the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Controls have been identified along with risks and mitigation processes covering major areas across all business and functions. Internal controls were reviewed by Internal Auditors and based on the evaluation, it was concluded that the Company''s internal financial controls are adequate and were operating effectively as of March 31, 2018.
Strengthening of controls is a continuous and evolving process in the Company. Based upon observations, findings and recommendations of the internal auditors, process owners develop preventive and corrective actions which are then deployed across the organization.
COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee of the Company as on March 31, 2018 comprised of three Independent Directors, Mr. Sanjeev Aga, Mr. S. Madhavan and Ms. Lynn de Souza and one Non Executive, Non-Independent Director, Mr. Varun Laul. Mr. Sanjeev Aga is the Chairman of the Committee.
All members of the Audit and Risk Management Committee possess requisite experience and knowledge of accounting and financial management. For further details on the Audit and Risk Management Committee, please refer to the Corporate Governance Report forming part of the Annual Report.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances. The details of the Whistle blower policy are available on the Company''s website under web link: http://www.ufomoviez.com/IR_Corporate_Governance.aspx. No complaint has been received during the year under review. For further details on the Whistle blower policy, please refer to the Corporate Governance Report forming part of the Annual Report.
RISK MANAGEMENT
The Company has developed and implemented Risk Management plans in accordance with the provisions of the Companies Act, 2013 and the Listing Regulations. The Risk Management plans defines the risk management approach of the Company and includes a periodic review of such risks and also the documentation, mitigating measures, and reporting mechanism of such risks.
DIRECTORSâ RESPONSIBILITY STATEMENTAS REQUIRED UNDER SECTION 134(3) (C) OF THE COMPANIES ACT, 2013
Based upon the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the Internal, Statutory and Secretarial Auditors, and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and operating effectively during the financial year 2017-18.
Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
(a) the financial statements for the financial year ended March 31, 2018 have been prepared on a going concern basis in accordance with relevant Indian Accounting Standards (Ind AS), and there are no material departures from the same;
(b) the accounting policies selected were applied consistently and the judgments and estimates related to financial statements have been made on a reasonable and prudent basis so as to reflect in a true and fair manner, the form and substance of the underlying transactions and to reasonably present the state of affairs as on March 31, 2018 and the profit including other comprehensive income and cash flow and the changes in equity of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and are operating effectively; and
(e) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad as Chairman with Ms. Lynn de Souza and Mr. Kapil Agarwal as Members. The Committee is responsible for formulating and monitoring the CSR policy of the Company. The Company has adopted a CSR policy in compliance with the provisions of the Companies Act, 2013.
The average net profit of the Company, computed as per Section 198 of the Companies Act, 2013, during the three immediately preceding financial years was Rs, 6,797.78 lacs. It was hence required to spend a minimum of Rs, 135.96 lacs on CSR activities during the financial year 2017-18, being 2% of the average net profits of the three immediately preceding financial years.
The Company has contributed an amount of Rs, 218.19 lacs towards CSR activities against its obligation of Rs, 135.96 lacs for the financial year 2017-18.
The annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as âAnnexure-3â forming part of this Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Sub-section (3) (m) of Section
134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as âAnnexure-4â to this report.
GREEN INITIATIVES
Your Company is publishing only the statutory disclosures of the Annual Report in the print version. Additional information is available on the Company''s website www.ufomoviez.com. Electronic copies of the Annual Report 2017-18 and Notice of the 14th Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2017-18 and the Notice of the 14th Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company.
AUDITORS Statutory Auditors
As per the provisions of Section 139 of the Companies, Act, 2013, no listed Company can appoint or re-appoint an audit firm as an auditor for more than two terms of five consecutive years. The second term of M/s. S.R. Batliboi & Associates LLP, Chartered Accountants, as Statutory Auditors of the Company will expire on the conclusion of the ensuing 14th Annual General Meeting scheduled to be held on August 9, 2018. Accordingly, the Board of Directors of the Company, at their meeting held on May 29, 2018, subject to the approval of members of the Company, have approved the appointment of M/s. B S R & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company to hold office from the conclusion of this 14th Annual General Meeting untill the conclusion of 19th Annual General Meeting for a consecutive term of five years. In this regard, the Company has received a certificate from M/s. B S R & Co. LLP, Chartered Accountants to the effect that if they are appointed as statutory auditors of the Company for the financial year 201819, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
Secretarial Auditor
Mr. Dharmesh Zaveri of M/s. D.M. Zaveri & Co., Practising Company Secretaries was appointed to conduct the secretarial audit of the Company for the financial year 2017-18, as required under Section 204 of the Companies Act, 2013 and Rules there under. The secretarial audit report for financial year 201718 forms part of the Annual Report as âAnnexure-5â to this report. There are no qualifications or adverse observations by the Secretarial Auditor of the Company for the year under review.
SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as âAnnexure-6â to this report.
HUMAN RESOURCES
Your Directors believe that the key to success of any Company are its employees. Your Company has a team of able and experienced professionals, whose dedicated efforts and enthusiasm has been an integral part of your Company''s growth. Your Directors would like to place on record their deep appreciation of their continuous effort and contribution to the Company.
Particulars of employees
The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 disclosing the ratio of the remuneration of each director to the median employee''s remuneration and such other details is appended as âAnnexure-7â to this report.
A statement containing the names of every employee employed throughout the financial year 2017-18 and in receipt of remuneration for the said financial year which, in the aggregate, was not less than Rs, 102 lacs and employed for a part of the financial year 2017-18, was in receipt of remuneration for any part of the said financial year, at a rate which, in the aggregate, was not less than Rs, 8.5 lacs per month and top 10 employees in terms of remuneration, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as âAnnexure-7â to this report.
Policy on prevention, prohibition and redressal of sexual harassment at workplace
The Company has zero tolerance for sexual harassment at workplace, and has adopted a policy against sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee to inquire into complaints of sexual harassment and recommend appropriate action. The Company has not received any complaint of sexual harassment during the financial year 2017-18.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion & Analysis describing the Company''s objectives, projections, estimates, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Important factors that could influence the Company''s operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws, economic developments within the country and other incidental factors.
ACKNOWLEDGMENT
Your directors thank all customers, vendors, investors, bankers, and all other business partners for their excellent support during the year. They wish to place on record appreciation of the strong commitment and contribution made by employees of the Company at all levels.
Your directors also take this opportunity to place on record their appreciation for continued co-operation and unstinted support received from the film producers, distributors, exhibitors, and advertisers who have contributed to the success of the Company. You directors thank the Central Government, various State Governments and other Government agencies and bodies for their support, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
Sanjay Gaikwad Kapil Agarwal
Managing Director Joint Managing Director
DIN: 01001173 DIN: 00024378
Place: Mumbai
Date: June 14, 2018
Mar 31, 2017
To the Members,
The directors have pleasure in presenting the thirteenth report on the business and operations of your Company for the year ended March 31, 2017.
RESULT OF OPERATIONS
The financial performance of your Company on a standalone and consolidated basis for the year ended March 31, 2017 is summarized below:
(In Rs,Mn)
Particulars |
Standalone |
Consolidated |
||||
FY17 |
FY16 |
Growth |
FY17 |
FY16 |
Growth |
|
Revenue from Operations |
3,861 |
3,490 |
10.6% |
5,949 |
5,655 |
5.2% |
Other Operating Income |
6 |
6 |
-20.1% |
23 |
46 |
-50.0% |
Other Income |
6 |
12 |
-47.2% |
17 |
20 |
-19.2% |
Total Income |
3,873 |
3,508 |
10.4% |
5,989 |
5,721 |
4.7% |
Total Expenses |
2,587 |
2,235 |
15.7% |
4,144 |
3,873 |
7.0% |
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) |
1,286 |
1,273 |
1.0% |
1,845 |
1,848 |
-0.2% |
EBITDA Margin |
33.2% |
36.3% |
30.8% |
32.3% |
||
Depreciation and Amortization |
615 |
588 |
4.6% |
838 |
774 |
8.2% |
Earnings before Interest and Tax (EBIT) |
671 |
685 |
-2.1% |
1,007 |
1,074 |
-6.2% |
Finance Cost |
69 |
98 |
-30.0% |
102 |
140 |
-27.1% |
Finance Income |
(165) |
(137) |
20.4% |
(54) |
(47) |
14.5% |
Profit before Tax (PBT) |
767 |
724 |
5.9% |
959 |
981 |
-2.2% |
Tax |
224 |
214 |
4.6% |
362 |
346 |
4.6% |
Profit after Tax (PAT) |
543 |
510 |
6.5% |
597 |
635 |
-5.9% |
Profit from Associates |
- |
- |
69 |
39 |
-75.2% |
|
Minority Interest |
- |
- |
(34) |
(39) |
12.7% |
|
Profit after Tax, Profit from Associates & Minority Interest |
- |
- |
- |
632 |
635 |
-0.5% |
For a detailed analysis of the financial performance, please refer to the âManagement Discussion and Analysisâ Section, forming part of the Annual Report.
There are no material changes or commitments affecting the financial position of the Company between the end of the Financial Year in question and the date of this report.
DIVIDEND
Based on the Companyâs performance, the directors are pleased to recommend for approval of the members a dividend of Rs, 10.00 per share for the financial year 2016-17. The dividend on equity shares, if approved by the members, would involve a cash outflow of Rs, 332.20 Mn including dividend tax resulting in a payout of 61.20% of the standalone profits of the Company.
SHARE CAPITAL
The paid up equity share capital of the Company as on March 31, 2017 was Rs, 276,008,010. During the year under review, the Company has allotted 101,425 equity shares pursuant to the exercise of the rights granted to the employees of the Company under the Employee Stock Option Scheme 2006 and the Employee Stock Option Scheme 2010, to convert their employee stock options into equity shares. The Company has not issued any shares with differential voting rights. Also, during the year under review, the Company has not issued any sweat equity shares. As of March 31, 2017 none of the Directors of the Company hold instruments convertible into equity shares of the Company except stock options granted under the relevant employee stock option schemes of the Company.
EMPLOYEE STOCK OPTIONS
During the year under review, employees had exercised employee stock options granted to them under the Employee Stock Option Scheme 2006 and the Employee Stock Option Scheme 2010. Pursuant to the exercise of options by employees, your Company had allotted 2,736 equity shares under the Employee Stock Option Scheme 2006 and 98,689 equity shares under the Employee Stock Option Scheme 2010 to the employees against the same numbers of options exercised by them. As on date there are no outstanding options under Employee Stock Option Scheme 2006 and Employee Stock Option Scheme 2010, and both schemes stand terminated.
Currently, the Company operates the Employee Stock Option Scheme 2014, which is compliant with SEBI ESOP Regulations.
During the year under review, the Company has not granted any employee stock options under employee stock options schemes of the Company.
The details of employee stock options form part of the notes to accounts of the financial statements in the Annual Report and also available on the Companyâs website under the web link: http://www.ufomoviez.com/IR_Finance.aspx
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in the Annual Report.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as âAnnexure-1â to this report.
FINANCIAL STATEMENTS
Your Company prepares its financial statements in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The financial statements have been prepared on a historical cost basis. The estimates and judgments relating to the financial statements are made on a prudent basis so as to reflect in a true and fair manner, the form and substance of the underlying transactions and to reasonably present the state of affairs as on March 31, 2017 and the profits and cash flows of the Company for the year ended March 31, 2017
There is no qualification in the standalone or in the consolidated financial statements by the Statutory Auditors for the year under review. The Statutory Auditors have, in their report to the Board of Directors on the financial statements of the Company made the comments which are categorized as âMatter of emphasis, which are self-explanatory and hence no comments in this regard have been offered by your directors.
The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of the Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the Companyâs going concern status and its operations in future.
SCHEME OF ARRANGEMENT
The petition for sanction of the Scheme of Arrangement among Southern Digital Screenz India Private Limited, V. N. Films Private Limited, Edridge Limited, UFO International Limited (âTransferor Companiesâ) and UFO Moviez India Limited (âTransferee Companyâ) and their respective shareholders and creditors is pending before the National Company Law Tribunal.
Following are the key features of the Scheme of Arrangement:
i. The Transferor Companies viz. Southern Digital Screenz India Private Limited, V. N. Films Private Limited, Edridge Limited, UFO International Limited are wholly owned subsidiaries of UFO Moviez India Limited. With a view of consolidating the digital cinema business, it is proposed that the Transferor Companies be merged with UFO Moviez India Limited.
ii. The amalgamation will also result in reduction in multiplicity of legal entities and thereby reduction in regulatory compliances required at present and will also enhance its ability to compete effectively in the highly competitive digital cinema market in India.
iii. The proposed amalgamation will reduce managerial overlaps, which are necessarily involved in running multiple entities.
iv. The amalgamation shall be accounted for in the books of account of the Transferee Company according to the âPooling of Interests Methodâ of accounting as per the Accounting Standard (AS) 14, âAccounting for Amalgamationsâ.
v. Appointed Dateâ for the Scheme is: a) for the purpose of this scheme relating to amalgamation of Transferor Company 1 (i.e. Southern Digital Screenz India Private Limited) with the UFO Moviez India Limited means July 1, 2016 and b) for the purpose of this scheme relating to amalgamation of Transferor Company 2 (i.e. , V. N. Films Private Limited), Transferor Company 3 (i.e. Edridge Limited) and Transferor Company 4 (i.e. UFO International Limited) with UFO Moviez India Limited means April 1, 2016.
vi. Upon the Scheme coming into effect, the debit balance in profit and loss account of Transferor Companies and the difference arising on account of net assets and reserves acquired and the cancellation of investments in the Transferor Companies shall be adjusted against Securities Premium of the UFO Moviez India Limited.
MANAGEMENTâS DISCUSSION AND ANALYSIS
In terms of the provisions of regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI (LODR) Regulations, 2015â), the Management Discussion and Analysis is set out in the Annual Report.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
At the beginning of the year, your Company had 6 direct subsidiaries, 10 step-down subsidiaries, 4 associates, and 1 joint venture. During the year under review, the joint venture company has become the associate of the Company.
During the year under review, the Board of Directors reviewed the affairs of the subsidiaries. The consolidated financial statements of the Company and all its subsidiaries have been prepared in accordance with Section 129(3) of the Companies Act, 2013, and form part of the Annual Report. Further, a statement containing the salient features of the financial statements of the subsidiaries of the Company in the prescribed format AOC- 1 is attached to the financial statements. The statement also provides the details of performance and financial position of each of the subsidiaries, associates and joint ventures.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the Companyâs website under the web link: http://www. ufomoviez.com/IR_Finance.aspx These documents are also available for inspection during business hours at the Companyâs registered office in Mumbai, India.
During the year under review, the Company has made an investment of '' 140 Mn in Southern Digital Screenz India Private Limited (SDS), a subsidiary company of the Company, by purchasing 680,117 (representing 15.82% of equity share capital of SDS) equity shares from existing shareholders of SDS. Post this acquisition, SDS became a wholly owned subsidiary of the Company.
The Board of Directors of the Company in its meeting held on May 17, 2017 has approved purchase of 66,609 equity shares of Scrabble Entertainment Limited (Scrabble), a subsidiary company of the Company, from the existing equity shareholder of Scrabble at a total consideration of '' 145.34 Mn. After completion of share transfer formalities Scrabble will become wholly owned subsidiary of the Company.
CORPORATE GOVERNANCE
The Corporate Governance Report for the financial year ended March 31, 2017, forms part of the Annual Report.
BOARD DIVERSITY
Your Company recognizes and embraces the benefits of having a diverse Board that possesses a balance of skills, experience, expertise and diversity of perspectives, appropriate to the requirements of the businesses of the Company. The Company sees increasing diversity at the Board level as an essential element in maintaining competitive advantage. A truly diverse Board will include and make good use of the differences in the skills, regional and industry experience, and background among directors. These differences are considered in determining the optimum composition of the Board. The Board has adopted a Board Diversity Policy which sets out its approach in this regard. The Board Diversity Policy is available on the Companyâs website under the web link: http://www.ufomoviez.com/IR_ Corporate_Governance.aspx
NUMBER OF MEETINGS OF THE BOARD
The Board met 7 times during the financial year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between any two consecutive board meetings was within the period prescribed by the Companies Act, 2013.
POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
The current policy is to have an optimum combination of executive and non-executive directors with an independent, non- executive chairman to maintain the independence of the Board, and to separate the functions of governance and management in the Company.
As on March 31, 2017, the Board consisted of eight members, two of whom are executive directors and six are non-executive directors. Out of the six non-executive directors, three are independent directors. The Board periodically evaluates the need for change in its composition and size.
The policy of the Company on directorsâ appointment and remuneration, including the criteria for determining the qualifications, the positive attributes, independence and other matters, provided under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is appended as âAnnexure-2â to this report. The remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and under the SEBI (LODR) Regulations, 2015.
BOARD EVALUATION
Regulation 4(2)(f) the SEBI (LODR) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
The performance evaluation of all the individual directors, the Board as a whole and that of its committees was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as recommended by the Chairman of the Nomination and Remuneration Committee.
TRAINING OF INDEPENDENT DIRECTORS
The Company familiarizes its Directors including independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes. These include orientation programme upon induction of new Directors, as well as other initiatives to update the Directors on a continuing basis.
The familiarization programme for Independent Directors is disclosed on the Companyâs website under the web link: http:// www.ufomoviez.com/IR_Corporate_Governance.aspx
The Managing Director and the Joint Managing Director also have one-on-one discussion with the Directors on a regular basis. In addition, the Senior Management of the Company interacts regularly with the Directors both individually and collectively. The above initiatives help the Directors to understand and keep themselves updated about the Company, its business and the regulatory framework in which the Company operates and equip themselves to effectively fulfill their role as Directors of the Company.
Further, at the time of appointment of an independent director, the Company issues a formal letter of appointment outlining his/ her role, function, duties and responsibilities as a director. The terms and conditions of their appointment are available on the Companyâs website under the web link: http://www.ufomoviez. com/IR_Corporate_Governance.aspx
INDUCTIONS
There were no fresh appointments of Directors during the year under review.
RETIREMENT AND RE-APPOINTMENTS
In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Ameya Hete retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment. The Board recommends his reappointment.
The Companies Act, 2013, provides for the appointment of independent directors. Sub-section (10) of Section 149 of the Companies Act, 2013 provides that independent directors shall hold office for a term of up to five consecutive years on the board of a company and shall be eligible for re-appointment on passing a special resolution by the shareholders of the Company. Accordingly, all the independent directors, were appointed by the shareholders at the general meeting as required under Section 149(10) for a period of three years with effect from November 20, 2014.
Further, according to Sub-section (11) of Section 149, no independent director shall be eligible for appointment for more than two consecutive terms of five years. Sub-section (13) states that the provisions of retirement by rotation as defined in Sub-sections (6) and (7) of Section 152 of the Companies Act,
2013 shall not apply to such independent directors.
The first term of Mr. Sanjeev Aga, Ms. Lynn de Souza and Mr. S. Madhavan as Independent Directors of the Company will expire on November 19, 2017. The Notice of 13th Annual General Meeting of the Company contains the resolution for their appointment for second term of five years.
RESIGNATIONS
During the year under review, Mr. Biswajit Subramanian has resigned from the Board of the Company due to his other professional commitments. The Board while accepting the resignation has recorded its appreciation and gratitude for the invaluable contributions made Mr. Biswajit Subramanian as Director of the Company.
INDEPENDENT DIRECTORSâ MEETING
The Independent Directors met on July 26, 2016, May 17, 2017 and July 11, 2017 inter alia, to
(a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;
(b) review the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors;
(c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
INTERNAL FINANCIAL CONTROLS
Your Company has laid an Internal Control Framework which is commensurate with the size, scale and complexity of its operations. This framework ensures the orderly and efficient conduct of its business, including adherence to the Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Controls have been identified along with risks and mitigation processes covering major areas across all business and functions. Internal controls was reviewed by Internal Audit Department and based on the evaluation, it was concluded that the Companyâs internal financial controls are adequate and were operating effectively as of March 31, 2017
Strengthening of controls is a continuous and evolving process in the Company. Based upon observations, findings and recommendations of the internal audit team, process owners develop preventive and corrective actions which are then deployed across the organization.
COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee of the Company as on March 31, 2017 comprised of three Independent Directors,
Mr. Sanjeev Aga, Mr. S. Madhavan and Ms. Lynn de Souza and one Non Executive, Non-Independent Director, Mr. Varun Laul. Mr. Sanjeev Aga is the Chairman of the Committee.
All members of the Audit and Risk Management Committee possess requisite experience and knowledge of accounting and financial management. For further details on the Audit and Risk Management Committee, please refer to the Corporate Governance Report forming part of the Annual Report.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances. The details of the Whistle blower policy are available on the Companyâs website under web link: http://www.ufomoviez.com/IR_Corporate_Governance.aspx. For further details on the Whistle blower policy please refer to the Corporate Governance Report forming part of the Annual Report.
RISK MANAGEMENT
During the year under review, the Company has developed and implemented Risk Management plans in accordance with the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. The Risk Management plans defines the risk management approach of the Company and includes a periodic review of such risks and also the documentation, mitigating measures, and reporting mechanism of such risks.
DIRECTORSâ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (C) OF THE COMPANIES ACT, 2013
Based upon the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the Internal, Statutory and Secretarial Auditors, and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and operating effectively during the financial year 2016-17
Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
a) the financial statements for the financial year ended March 31, 2017 have been prepared on a going concern basis by following the applicable accounting standards, and there is no material departure from the accounting standards;
b) the accounting policies selected were applied consistently and the judgments and estimates related to financial statements have been made on a reasonable and prudent basis so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and are operating effectively; and
e) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad as Chairman with Ms. Lynn de Souza and Mr. Kapil Agarwal as Members. The Committee is responsible for formulating and monitoring the CSR policy of the Company. The Company has adopted a CSR policy in compliance with the provisions of the Companies Act, 2013.
The average net profit of the Company, computed as per Section 198 of the Companies Act, 2013, during the three immediately preceding financial years was '' 480.48 Mn. It was hence required to spend a minimum of '' 9.61 Mn on CSR activities during the financial year 2016-17, being 2% of the average net profits of the three immediately preceding financial years.
The Company has contributed an amount of '' 15.00 Mn towards CSR activities against its obligation of '' 9.61 Mn for the financial year 2016-17
The annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as âAnnexure-3â forming part of this Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Sub-section (3) (m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as âAnnexure-4â to this report.
GREEN INITIATIVES
Your Company is publishing only the statutory disclosures of the Annual Report in the print version. Additional information is available on the Companyâs website www.ufomoviez.com. Electronic copies of the Annual Report 2016-17 and Notice of the 13th Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2017 and the Notice of the 13th Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company.
AUDITORS
Statutory Auditors
At the Annual General Meeting held on September 4, 2014,
S.R. Batliboi & Associates LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2018. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of S.R. Batliboi & Associates LLP, Chartered Accountants, as statutory auditors of the Company for the financial year 2017-18, is placed for ratification by the members of the Company. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed as auditors of the Company for the financial year 2017-18, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
Secretarial Auditor
Mr. Dharmesh Zaveri of D. M. Zaveri & Co., Practicing Company Secretaries was appointed to conduct the secretarial audit of the Company for the financial year 2016-17, as required under Section 204 of the Companies Act, 2013 and Rules there under. The secretarial audit report for financial year 2016-17 forms part of the Annual Report as âAnnexure-5â to this report. There are no qualifications or adverse observations by the Secretarial Auditor of the Company for the year under review.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as âAnnexure-6â to this report.
HUMAN RESOURCES
Your Directors believe that the key to success of any company are its employees. Your Company has a team of able and experienced professionals, whose dedicated efforts and enthusiasm has been an integral part of your Companyâs growth. Your Directors would like to place on record their deep appreciation of their continuous effort and contribution to the Company.
Particulars of employees
The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 disclosing the ratio of the remuneration of each director to the median employeeâs remuneration and such other details is appended as âAnnexure-7â to this report.
A statement containing the names of every employee employed throughout the financial year 2016-17 and in receipt of remuneration for the said financial year which, in the aggregate, was not less than '' 1,02,00,000/- and employed for a part of the financial year 2016-17, was in receipt of remuneration for any part of the said financial year, at a rate which, in the aggregate, was not less than '' 850,000/- per month and top 10 employees in terms of remuneration, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as âAnnexure-7â to this report.
Policy on prevention, prohibition and redressal of sexual harassment at workplace
The Company has zero tolerance for sexual harassment at workplace, and has adopted a policy against sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee to inquire into complaints of sexual harassment and recommend appropriate action. The Company has not received any complaint of sexual harassment during the financial year 2016-17
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion & Analysis describing the Companyâs objectives, projections, estimates, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Important factors that could influence the Companyâs operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws, economic developments within the country and other incidental factors.
ACKNOWLEDGMENT
We thank all our customers, vendors, investors, bankers, and all other business partners for their excellent support during the year. We place on record our appreciation of the strong commitment and contribution made by our employees at all levels.
We also take this opportunity to place on record our appreciation for continued co-operation and unstinted support received from the film producers, distributors, exhibitors, and advertisers who have contributed to the success of our Company.
We thank the Central Government and the various State Governments and other Government agencies and bodies for their support, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
Sanjay Gaikwad Kapil Agarwal
Managing Director Joint Managing Director
DIN: 01001173 DIN: 00024378
Place : Mumbai
Date : July 11, 2017
Mar 31, 2016
To the Members,
The directors have pleasure in presenting the twelfth report on the business and operations of your Company for the year ended March 31, 2016.
RESULT OF OPERATIONS
The financial performance of your Company on a standalone and consolidated basis for the year ended March 31, 2016 is summarized below:
(In Rs. Mn)
Particulars |
Standalone |
Consolidated |
||||
FY16 |
FY15 |
Growth |
FY16 |
FY15 |
Growth |
|
Revenue from Operations |
3,490 |
3,000 |
16.3% |
5,655 |
4,772 |
18.5% |
Other Operating Income |
6 |
5 |
11.0% |
46 |
13 |
238.5% |
Other Income |
12 |
3 |
276.1% |
20 |
8 |
143.7% |
Total Income |
3,508 |
3,008 |
16.6% |
5,721 |
4,793 |
19.4% |
Total Expenses |
2,235 |
1,906 |
173% |
3,873 |
3,185 |
21.6% |
Earnings before Interest, Tax, Depreciation and |
1,273 |
1,102 |
15.5% |
1,848 |
1,608 |
14.9% |
Amortization (EBITDA) |
||||||
EBITDA Margin |
36.3% |
36.6% |
32.3% |
33.6% |
||
Depreciation and Amortization |
588 |
595 |
-1.1% |
774 |
769 |
0.6% |
Earnings before Interest and Tax (EBIT) |
685 |
507 |
35.0% |
1,074 |
839 |
28.0% |
Finance Cost |
98 |
151 |
-35.2% |
140 |
201 |
-30.2% |
Finance Income |
(137) |
(42) |
228.9% |
(47) |
(50) |
-7.1% |
profit before Tax (pBT) |
724 |
398 |
81.8% |
981 |
688 |
42.5% |
Tax |
214 |
143 |
50.0% |
346 |
179 |
92.6% |
profit after Tax (pAT) |
510 |
255 |
99.6% |
635 |
509 |
24.7% |
Profit from Associates |
- |
- |
39 |
19 |
109.4% |
|
Minority Interest |
- |
- |
(39) |
(39) |
0.0% |
|
profit after Tax, profit from Associates & Minority |
- |
- |
- |
635 |
488 |
30.0% |
Interest |
For a detailed analysis of the financial performance, please refer to the âManagement Discussion and Analysisâ Section, forming part of the Annual Report.
There are no material changes or commitments affecting the financial position of the Company between the end of the Financial Year in question and the date of this report.
DIVIDEND
Based on the Companyâs performance, the directors are pleased to recommend for approval of the members a final dividend of Rs. 3.00 per share for the FY 2015-16, taking the total dividend to Rs. 8.00 per share. The final dividend on equity shares, if approved by the members, would involve a cash outflow of Rs. 99.3 Mn including dividend tax. The total dividend on equity shares including dividend distribution tax paid thereon for FY 2015-16 would aggregate Rs. 264.8 Mn, resulting in a payout of 51.93% of the standalone profits of the Company.
SHARE CAPITAL
The paid up equity share capital of the Company as on March 31, 2016, was Rs. 274,993,760. During the year under review, the Company has allotted 1,601,707 equity shares in different tranches, pursuant to the exercise of the rights granted to the employees of the Company under the Employee Stock Option Scheme 2006 and the Employee Stock Option Scheme 2010, to convert their employee stock options into equity shares. The Company has not issued any shares with differential voting rights. Also, during the year under review, the Company has not issued any sweat equity shares. As of March 31, 2016, none of the Directors of the Company hold instruments convertible into equity shares of the Company except stock options granted under the relevant employee stock option schemes of the Company.
employee stock options
During the year under review, employees had exercised employee stock options granted to them under the Employee Stock Option Scheme 2006 and the Employee Stock Option Scheme 2010. Pursuant to the exercise of options by employees, your Company had allotted 208,315 equity shares under the Employee Stock Option Scheme 2006 and 1,393,392 equity shares under the Employee Stock Option Scheme 2010 to the employees against the same numbers of options exercised by them.
Further on May 3, 2016, pursuant to the exercise of option by employees, your Company had allotted 2,736 equity shares under the Employee Stock Option Scheme 2006 and 98,689 Equity Shares under the Employee Stock Option Scheme 2010, to the employees against the same numbers of options exercised by them. As on date there are no outstanding options under Employee Stock Option Scheme 2006 and Employee Stock Option Scheme 2010, and both schemes stand terminated.
Currently, the Company operates the Employee Stock Option Scheme 2014, which is compliant with SEBI ESOP Regulations.
During the year under review, the Company has not granted any employee stock options under employee stock options schemes of the Company.
The details of employee stock options form part of the notes to accounts of the financial statements in the Annual Report and also available on the website of the Company www.ufomoviez.com
particulars of loans, guarantees or investments
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in the Annual Report.
public deposits
Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as âAnnexure-1â to this report.
FINANCIAL STATEMENTS
Your Company prepares its financial statements in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The financial statements have been prepared on a historical cost basis. The estimates and judgments relating to the financial statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of the underlying transactions and to reasonably present the state of affairs, and the profits and cash flows of the Company for the year ended March 31, 2016.
There is no qualification in the standalone or in the consolidated financial statements by the statutory auditors for the year under review. The Statutory Auditors have, in their report to the Board of Directors on the financial statements of the Company made the comments which are categorized as âMatter of emphasis, which are self-explanatory and hence no comments in this regard have been offered by your directors.
The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered Accountants of India form part of the Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts or tribunals which impact the Companyâs going concern status and its operations in future.
SHIFTING OF REGISTERED OFFICE
Pursuant to the application filed by the Company for shifting its registered office from the National Capital Territory of Delhi to the state of Maharashtra and the order passed by the Regional Director, Northern Region, Ministry of Corporate Affairs, Government of India upon it, the registered office of the Company was shifted from Office No. 12, 3rd Floor, 312 Surya Kiran Building, 19 Kasturba Gandhi Marg, New Delhi-110001 to Valuable Techno Park, Plot No. 53/1, Road No. 7, MIDC, Andheri (East), Mumbai - 400 093 with effect from June 15, 2016.
MANAGEMENTâS DISCUSSION AND ANALYSIS
In terms of the provisions of regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI (LODR) Regulations, 2015â), the Management Discussion and Analysis is set out in the Annual Report.
subsidiaries, associates and joint ventures
At the beginning of the year, your Company had 6 direct subsidiaries, 10 step-down subsidiaries, 4 associates, and 1 joint venture. As on March 31, 2016 there is no change in the same.
During the year under review, the Board of Directors reviewed the affairs of the subsidiaries. The consolidated financial statements of the Company and all its subsidiaries have been prepared in accordance with Section 129(3) of the Companies Act, 2013, and form part of the Annual Report. Further, a statement containing the salient features of the financial statements of the subsidiaries of the Company in the prescribed format AOC-1 is attached to the financial statements. The statement also provides the details of performance and financial position of each of the subsidiaries, associates and joint ventures.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the Companyâs website www.ufomoviez.com. These documents are also available for inspection during business hours at the Companyâs registered office in Mumbai, India.
During the financial year 2014-15, the Company was a foreign owned and controlled company in terms of the provisions of the Foreign Exchange Management Act (FEMA) and the circulars / notifications issued by the Reserve Bank of India. Accordingly, the downstream investments made by the Company during the financial year 2014-15 were subject to the applicable guidelines and instructions for such downstream investments including obtaining a certificate from the statutory auditors regarding status of compliance with such instructions on downstream investments made and compliance with FEMA provisions.
However, during the financial year under review, after the Companyâs equity shares were listed on stock exchanges with effect from May 14, 2015, it ceased to be a foreign owned and controlled company in terms of the provisions of FEMA. Further, from April 1, 2015 till May 13, 2015; while the Company was a foreign owned and controlled company, it did not make any downstream investments in its subsidiaries. In view of this position, it was not mandatory to obtain a compliance certificate under the provisions of FEMA from the statutory auditors for the financial year under review.
The Company has made an investment of Rs. 140 Mn in Southern Digital Screenz India Private Limited (SDS), a subsidiary company of the Company, by purchasing 680,117 (representing 15.82% of equity share capital of SDS) equity shares from existing shareholders of SDS on June 20, 2016. Post this acquisition, SDS became a wholly owned subsidiary of the Company.
corporate governance
The Corporate Governance Report for the financial year ended March 31, 2016, forms part of the Annual Report.
BOARD DIVERSITY
Your Company recognizes and embraces the benefits of having a diverse Board that possesses a balance of skills, experience, expertise and diversity of perspectives, appropriate to the requirements of the businesses of the Company. The Company sees increasing diversity at the Board level as an essential element in maintaining competitive advantage. A truly diverse Board will include and make good use of the differences in the skills, regional and industry experience, and background among directors. These differences are considered in determining the optimum composition of the Board. The Board has adopted a Board Diversity Policy which sets out its approach in this regard. The Board Diversity Policy is available on the Companyâs website www.ufomoviez.com
number of meetings of the board
The Board met 10 times during the financial year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between any two consecutive board meetings was within the period prescribed by the Companies Act, 2013.
POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
The current policy is to have an optimum combination of executive and non-executive directors with an independent nonexecutive chairman to maintain the independence of the Board, and to separate the functions of governance and management in the Company.
As on March 31, 2016, the Board consisted of nine members, two of whom are executive directors and seven are non-executive directors. Out of the seven non-executive directors, three are independent directors. The Board periodically evaluates the need for change in its composition and size.
The policy of the Company on directorsâ appointment and remuneration, including the criteria for determining the qualifications, the positive attributes, independence and other matters, provided under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is appended as âAnnexure-2â to this report. The remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and under the SEBI (LODR) Regulations, 2015.
BOARD EVALUATION
Regulation 4(2)(f) the SEBI (LODR) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.
The performance evaluation of all the individual directors, the Board as a whole and that of its committees was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as recommended by the Chairman of the Nomination and Remuneration Committee. None of the independent directors are due for re-appointment.
TRAINING OF INDEPENDENT DIRECTORS
Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of your Company, the executive directors / senior managerial personnel make presentations to the inductees about the Companyâs strategies, operations, product and service offerings, markets, organization structure, finance, human resources, technology, quality, facilities and risk management. The details of such familiarization programmes are available on the Companyâs website www.ufomoviez.com.
Further, at the time of appointment of an independent director, the Company issues a formal letter of appointment outlining his/ her role, function, duties and responsibilities as a director. The terms and conditions of their appointment are available on the Companyâs website www.ufomoviez.com.
INDUCTIONS
There were no fresh appointments of Directors during the year under review.
retirement and re-appointments
In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Biswajit Subramanian retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment. The Board recommends his re-appointment.
The Companies Act, 2013, provides for the appointment of independent directors. Sub-section (10) of Section 149 of the Companies Act, 2013 provides that independent directors shall hold office for a term of up to five consecutive years on the board of a company; and shall be eligible for re-appointment on passing a special resolution by the shareholders of the Company. Accordingly, all the independent directors, were appointed by the shareholders at the general meeting as required under Section 149(10) for a period of three years.
Further, according to Sub-section (11) of Section 149, no independent director shall be eligible for appointment for more than two consecutive terms of five years. Sub-section (13) states that the provisions of retirement by rotation as defined in Sub-sections (6) and (7) of Section 152 of the Companies Act, 2013 shall not apply to such independent directors.
None of the independent directors will retire at the ensuing Annual General Meeting.
resignations
During the year under review, none of the Directors resigned from the board of the Company.
independent DIRECTORSâ MEETING
The Independent Directors met on July 23, 2015 and July 26, 2016 inter alia, to:
(a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;
(b) review the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors;
(c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
INTERNAL FINANCIAL CONTROLS
Your Company has laid an Internal Control Framework which is commensurate with the size, scale and complexity of its operations. This framework ensures the orderly and efficient conduct of its business, including adherence to the Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Controls have been identified along with risks and mitigation processes covering major areas across all business and functions. Internal controls was reviewed by Internal Audit Department and based on the evaluation, it was concluded that the Companyâs internal financial controls are adequate and were operating effectively as of March 31, 2016.
Strengthening of controls is a continuous and evolving process in the Company. Based upon observations, findings and recommendations of the internal audit team, process owners develop preventive and corrective actions which are then deployed across the organization.
composition OF AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee of the Company as on March 31, 2016 comprised of three independent Directors, Mr. Sanjeev Aga, Mr. S. Madhavan and Ms. Lynn de Souza and one Non Executive Non-Independent Director, Mr. Varun Laul. Mr. Sanjeev Aga is the Chairman of the Committee.
All members of the Audit and Risk Management Committee possess requisite experience and knowledge of accounting and financial management. For further details on the Audit and Risk Management Committee, please refer to the Corporate Governance Report forming part of the Annual Report.
All the Independent Directors were present during all the Audit and Risk Management Committee meetings held during the year under review.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances. The details of the Whistle blower policy are available on the Companyâs website www.ufomoviez.com. For further details, refer to the Corporate Governance Report forming part of the Annual Report.
RISK MANAGEMENT
During the year under review, the Company has adopted a Risk Management Policy in accordance with the provisions of the Companies Act, 2013 and the (SEBI LODR) Regulations, 2015. The Risk Management Policy defines the risk management approach of the Company and includes a periodic review of such risks and also the documentation, mitigating measures, and reporting mechanism of such risks.
DIRECTORSâ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (C) OF THE COMPANIES ACT, 2013
Based upon the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the Internal, Statutory and Secretarial Auditors, and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and operating effectively during the financial year 2015-16.
Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
a) the financial statements for the financial year ended March 31, 2016 have been prepared on a going concern basis by following the applicable accounting standards, and there is no material departure from the accounting standards;
b) the accounting policies selected were applied consistently and the judgments and estimates related to financial statements have been made on a reasonable and prudent basis so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and are operating effectively; and
e) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
corporate SOCIAL responsibility (CSR)
The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad as Chairman with Ms. Lynn de Souza and Mr. Kapil Agarwal as Members. The Committee is responsible for formulating and monitoring the CSR policy of the Company. The Company has adopted a CSR policy in compliance with the provisions of the Companies Act, 2013.
The average net profit of the Company, computed as per Section 198 of the Companies Act, 2013, during the three immediately preceding financial years was Rs. 379.14 Mn. It was hence required to spend a minimum of Rs. 758 Mn on CSR activities during the Financial Year 2015-16, being 2% of the average net profits of the three immediately preceding financial years.
The Company had in the previous financial year 2014-15, contributed an amount of Rs. 16.59 Mn towards CSR activities against its obligation of Rs. 5.45 Mn for the said financial year. Thus, the Company had contributed Rs. 11.15 Mn over and above its obligation during the financial year 2014-15 which was already in excess of the Companyâs obligation to spend a minimum amount of Rs. 758 Mn during the current financial year 2015-16, although during the year under review, the Company had not contributed to CSR activities.
The annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as âAnnexure-3â forming party of this Report.
CONSERVATION OF ENERGY, RESEARCH AND
development, technology absorption, FOREIGN
EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Sub-section (3) (m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as âAnnexure-4â to this report.
GREEN INITIATIVES
Your Company is publishing only the statutory disclosures in the print version of the Annual Report. Additional information is available on the Companyâs website www.ufomoviez.com. Electronic copies of the Annual Report 2015-16 and Notice of the 12th Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2016 and the Notice of the 12th Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company.
auditors
Statutory Auditors
At the Annual General Meeting held on September 4, 2014,
S.R. Batliboi & Associates LLP, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2018. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of S.R. Batliboi & Associates LLP, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the members of the Company. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed as auditors of the Company for financial year 2016-17 it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
Secretarial Auditor
During the year under review, Mr. Chetan Joshi, Practicing Company Secretary had resigned as the Secretarial Auditor of the Company. Mr. Dharmesh Zaveri of D. M. Zaveri & Co., Practicing Company Secretaries was appointed to conduct the secretarial audit of the Company for the financial year 2015-16, as required under Section 204 of the Companies Act, 2013 and Rules thereunder. The secretarial audit report for financial year 2015-16 forms part of the Annual Report as âAnnexure-5â to this report. There are no qualifications or adverse observations by the Secretarial Auditors of the Company for the year under review.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3) (a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as âAnnexure-6â to this report.
HUMAN RESOURCES
Your Directors believe that the key to success of any company are its employees. Your Company has a team of able and experienced professionals, whose dedicated efforts and enthusiasm has been an integral part of your Companyâs growth. Your Directors would like to place on record their deep appreciation of their continuous effort and contribution to the Company.
particulars of employees
The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 disclosing the ratio of the remuneration of each director to the median employeeâs remuneration and such other details is appended as âAnnexure-7â to this report.
A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as âAnnexure-7â to this report.
policy on prevention, prohibition and redressal of sexual harassment at workplace
The Company has zero tolerance for sexual harassment at workplace, and has adopted a policy against sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee to inquire into complaints of sexual harassment and recommend appropriate action. The Company has not received any complaint of sexual harassment during the financial year 2015-16.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion & Analysis describing the Companyâs objectives, projections, estimates, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Important factors that could influence the Companyâs operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws, economic developments within the country and other incidental factors.
acknowledgment
We thank all our customers, vendors, investors, bankers, and all other business partners for their excellent support during the year. We place on record our appreciation of the strong commitment and contribution made by our employees at all levels.
We also take this opportunity to place on record our appreciation for continued co-operation and unstinted support received from the film producers, distributors, exhibitors, and advertisers who have contributed to the success of our Company.
We thank the Central Government and the various State Governments and other Government agencies and bodies for their support, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
Sanjay Gaikwad Kapil Agarwal
Managing Director Joint Managing Director
DIN: 01001173 DIN: 00024378
Place : Mumbai
Date : July 26, 2016
Mar 31, 2015
Dear Members,
The directors have pleasure in presenting the eleventh report on the
business and operations of your Company for the year ended March
31,2015.
RESULT OF OUR OPERATIONS
The financial performance of your Company on a standalone and
consolidated basis for the year ended March 31, 2015 is summarized
below:
(in Rs. Million)
Particulars Standalone
FY15 FY14 Growth
Revenue from Operations 2,999 2,691 11.5%
Other Income 9 9 4.2%
Total Income 3,008 2,699 11.4%
Total Expenses 1,906 1,711 11.4%
Earnings before interest, tax, 1,102 988 11.5%
depreciation and amortisation
(EBITDA)
EBITDA Margin 36.6% 36.6%
Depreciation and Amortisation 594 546 8.8%
Earnings before interest and 507 442 14.9%
tax (EBIT)
Finance Cost 151 154 (2.3)%
Finance Income (42) (23) 78.7%
Profit before tax (PBT) 398 311 28.2%
Tax 143 (39) NA
Profit after tax (PAT) 255 349 (26.9)%
Profit from Associates - - -
Minority Interest - - -
Profit after tax, Profit - - -
from Associates & Minority
Interest
Particulars Consolidated
FY15 FY14 Growth
Revenue from Operations 4,758 4,242 12.2%
Other Income 35 8 320.2%
Total Income 4,793 4,250 12.8%
Total Expenses 3,185 2,918 9.1%
Earnings before interest, tax, 1,608 1,332 20.7%
depreciation and amortisation
(EBITDA)
EBITDA Margin 33.6% 31.3%
Depreciation and Amortisation 769 655 174%
Earnings before interest and 839 677 24.0%
tax (EBIT)
Finance Cost 201 199 1.3%
Finance Income (50) (34) 47.7%
Profit before tax (PBT) 688 512 34.3%
Tax 180 (11) NA
Profit after tax (PAT) 509 523 (2.8)%
Profit from Associates 19 (8) NA
Minority Interest 39 39 1.7%
Profit after tax, Profit 488 477 2.4%
from Associates & Minority
Interest
For a detailed analysis of financial performance, please refer to the
"Management Discussion and Analysis" section which is forming part of
the Annual Report.
There are no material changes or commitments affecting the financial
position of the Company between the end of the Financial Year in
question and the date of this report.
SHARE CAPITAL
The paid up equity share capital as on March 31,2015 was
Rs.258,976,690/-. During the year under review, the Company has not
issued any shares with or without differential voting rights. Further,
during the year under review, the Company introduced a new employee
stock option scheme (ESOP-2014) and has granted 932,500 stock options
to the employees thereunder. Further, during the year under review,
the Company has also not issued any sweat equity shares. As at March
31,2015, none of the Directors of the Company hold instruments
convertible into equity shares of the Company except stock options
granted under the relevant employee stock option schemes of the Company
EMPLOYEES STOCK OPTIONS
The Company has three employee stock options schemes viz ESOP-2006,
ESOP-2010 and ESOP-2014. The Board has terminated ESOP-2006 and
ESOP-2010 and no options can be granted under these employee stock
option schemes other than the stock options already granted.
ESOP 2010 has been amended in October 2014 accelerate vesting of the
unvested options. The exercise period has been amended for all vested
options, which were granted under ESOP 2010 and are not exercised, from
October 25, 2014 to until the expiry of one (1) year from the date of
listing of the equity shares of the Company.
Your Company was an unlisted company at the time of grant of employee
stock options and was hence not required to be compliant with the SEBI
ESOP Regulations with respect to employee stock options.
ESOP-2006 was compliant with the SEBI ESOP Regulations, except to the
extent of clauses with respect to formation/ composition of the
compensation committee; appointment of a registered merchant banker;
placing of the auditors' certificate before the annual general meeting
of the company and disclosures required to be made to the option
grantees at the time of the grant and in the directors' report.
ESOP-2010 was compliant with the SEBI ESOP Regulations, except to the
extent of clauses with respect to inclusion of consultants, promoters,
persons belonging to the promoter group and directors holding more than
10% of the outstanding equity shares for grant of employee stock
options; formation/ composition of the compensation committee;
cancellation of all vested options which were not exercised as on the
date of submission of resignation or date of termination of the option
grantee prior to listing of shares of the company; allowing for earlier
vesting of options in case the existing shareholders intend to sell
more than 50% of their equity shares held in the company prior to
listing of the equity shares of the company; appointment of a
registered merchant banker; placing of the auditors' certificate before
the annual general meeting of the company and disclosures required to
be made to the option grantees at the time of the grant and in the
directors' report.
ESOP-2014 was compliant with the SEBI ESOP Regulations.
The following directors and key managerial personnel were granted stock
options during the year under review:
1) Mr. Kapil Agarwal, - 212,500 stock options
Joint Managing Director
2) Mr. Rajesh Mishra, - 45,000 stock options
CEO - Indian Operations
3) Mr. Ashish Malushte, CFO - 37,500 stock options
4) Mr. Sameer Chavan, - 6,500 stock options
Company Secretary
Mr. Kapil Agarwal, Joint Managing Director of the Company, received a
grant of 212,500 stock options amounting to 5% or more of the options
granted during the year under review.
There are no Directors or employees who were granted options during any
one year equal to or exceeding 1% of the issued capital (excluding
outstanding warrants and conversions) of your Company at the time of
grant.
The details of employee stock option schemes and grants made in three
years prior to the Initial Public Offering under each scheme of the
Company are available on the website of the Company www.ufomoviez.com
The details of employee stock options form part of the notes to
accounts of the financial statements in the Annual Report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the
Companies Act, 2013 form part of the notes to the financial statements
provided in the Annual Report.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits within the meaning of
Section 73 of the Companies Act, 2013, read with the Companies
(Acceptance of Deposits) Rules, 2014 and, as such, no amount of
principal or interest was outstanding as of the Balance Sheet date.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred
to in Section 188(1) of the Companies Act, 2013, in the prescribed Form
AOC-2, is appended as "Annexure-1" to this report.
FINANCIAL STATEMENTS
Your Company prepares its financial statements in compliance with the
requirements of the Companies Act, 2013 and the Generally Accepted
Accounting Principles (GAAP) in India. The financial statements have
been prepared on a historical cost basis. The estimates and judgments
relating to the financial statements are made on a prudent basis, so as
to reflect in a true and fair manner, the form and substance of the
underlying transactions and reasonably present the Company's state of
affairs, profits and cash flows for the year ended March 31, 2015.
The auditors have modified the consolidated audit report under the
Companies (Auditor's Report) Order, 2015 ('the Order') to the extent of
stating that the controls relating to customer contracting and tracking
of amounts billable in the joint venture of your Company (viz. Mukta VN
Films Limited) need to be strengthened. The operating management of
that entity has assured the Company's management that requisite
corrective steps are being taken to strengthen the internal controls in
the area of contracting and invoicing and this will be monitored by the
nominee directors of your Company in that joint venture's Board of
Directors.
Apart from the above, there is no other qualification in the standalone
or in the consolidated financial statements by the statutory auditors
for the year under review.
The consolidated financial statements of the Company and its
subsidiaries, prepared in accordance with relevant Accounting Standards
(AS) viz. AS 21, AS 23 and AS 27 issued by the Institute of Chartered
Accountants of India form part of the Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators
or courts or tribunals impacting the going concern status and the
Company's operations in future.
MANAGEMENT'S DISCUSSION AND ANALYSIS
In terms of the provisions of Clause 49 of the Listing Agreement with
the stock exchanges, the Management discussion and analysis is set out
in the Annual Report.
INITIAL PUBLIC OFFERING
During the year under review, your Company was an unlisted public
limited company. On April 28, 2015, the Company made an Initial Public
Offering of 96,00,000 equity shares of a face value of Rs. 10 each for
cash at a price of Rs. 625 per equity share including a share premium
of Rs. 615 per equity share aggregating to Rs. 600 crore through an
'Offer For Sale' by certain existing shareholders of the Company. The
equity shares of the Company was listed with the BSE Limited (BSE) and
National Stock Exchange of India Limited (NSE) on May 14, 2015.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
At the beginning of the year, your Company had 5 direct subsidiaries,
10 step-down subsidiaries, 4 associates and 1 joint venture. As on
March 31,2015, your Company has 6 direct subsidiaries, 10 step-down
subsidiaries, 4 associates and 1 joint venture.
During the year under review, the Board of Directors reviewed the
affairs of the subsidiaries. The consolidated financial statements of
the Company and all its subsidiaries have been prepared in accordance
with Section 129(3) of the Companies Act, 2013, and form part of the
Annual Report. Further, a statement containing the salient features of
the financial statements of the subsidiaries of the Company in the
prescribed format AOC-1 is attached as annexure to the financial
statements. The statement also provides the details of performance and
financial position of each of the subsidiaries, associates and joint
ventures.
In accordance with Section 136 of the Companies Act, 2013, the audited
financial statements, including the consolidated financial statements
and related information of the Company and audited accounts of each of
its subsidiaries, are available on the Company's website
www.ufomoviez.com. These documents are also available for inspection
during business hours at the Company's registered office in New Delhi,
India.
During the year under review, the Company had made investments in
Valuable Digital Screens Private Limited, which consequently become a
subsidiary of your Company. Further, the Company had also made
investments in its subsidiaries Scrabble Entertainment Limited and
Southern Digital Screenz India Private Limited. The details of these
investments are available in the financial statements provided in the
Annual Report.
During the year under review, the Company was a foreign owned and
controlled company in accordance with the provisions of the Foreign
Exchange Management Act, 1999 and notifications / circulars issued by
the Reserve Bank of India and was hence required to obtain a
certificate from the statutory auditors regarding the status of
compliance with the instructions on downstream investments of the
Company under the provisions of the Foreign Exchange Management Act,
1999. The statutory auditors of the Company have issued a certificate
that the Company is in compliance with the instructions governing
downstream investments of the Company and in compliance with Foreign
Exchange Management Act, 1999 provisions for the year ended March
31,2015 except that the Company did not notify the Foreign Exchange
Promotion Board and Secretariat for Industrial Assistance, Department
of Industrial Policy and Promotion of its downstream investments within
30 days of such investment. However, the Company has subsequently
notified these agencies of its downstream investments in the prescribed
format.
CORPORATE GOVERNANCE
The Corporate governance report for the financial year ended March
31,2015 forms part of the Annual Report.
BOARD DIVERSITY
Your Company recognizes and embraces the benefits of having a diverse
Board that possesses a balance of skills, experience, expertise and
diversity of perspectives, appropriate to the requirements of the
businesses of the Company. The Company sees increasing diversity at the
Board level as an essential element in maintaining competitive
advantage. A truly diverse Board will include and make good use of the
differences in the skills, regional and industry experience,
background, race, gender and other distinctions between directors.
These differences are considered in determining the optimum composition
of the Board and wherever possible balanced appropriately. The Board
has adopted a Board Diversity Policy which sets out its approach in
this regard. The Board Diversity Policy is available on the Company's
website www.ufomoviez.com.
NUMBER OF MEETINGS OF THE BOARD
The Board met 10 times during the financial year, the details of which
are given in the Corporate Governance Report that forms part of the
Annual Report. The intervening gap between any two board meetings was
within the period prescribed by the Companies Act, 2013.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The current policy is to have an optimum combination of executive and
non-executive directors with an independent non- executive chairman to
maintain the independence of the Board, and separate the functions of
governance and management in the Company.
As on March 31,2015, the Board consisted of nine members, two of whom
are executive and the balance seven are non- executive directors. Out
of the seven non-executive directors, three are independent directors.
The Board periodically evaluates the need for change in its composition
and size.
The policy of the Company on directors' appointment and remuneration,
including the criteria for determining the qualifications, the positive
attributes, independence and other matters, provided under Sub-section
(3) of Section 178 of the Companies Act, 2013, adopted by the Board, is
appended as "Annexure-2" to this report. The remuneration paid to the
directors is as per the terms laid out in the Nomination and
Remuneration Policy of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each
independent director under Section 149(7) of the Companies Act, 2013,
that he/she meets the criteria of independence laid down in Section
149(6) of the Companies Act, 2013 and Clause 49 of the Listing
Agreement with the stock exchanges.
BOARD EVALUATION
Clause 49 of the Listing Agreement with the stock exchanges mandates
that the Board shall monitor and review the Board evaluation framework.
The Companies Act, 2013 states that a formal annual evaluation needs to
be made by the Board of its own performance and that of its committees
and individual directors. Schedule IV of the Companies Act, 2013 states
that the performance evaluation of independent directors shall be done
by the entire Board of Directors, excluding the director being
evaluated.
The performance evaluation of all the individual directors, the Board
as a whole and that of its committees was conducted based on the
criteria and framework adopted by the Board. The Board approved the
evaluation results as collated by the Chairman of the Nomination and
Remuneration Committee. None of the independent directors are due for
re-appointment.
TRAINING OF INDEPENDENT DIRECTORS
Every new independent director of the Board attends an orientation
program. To familiarize the new inductees with the strategy, operations
and functions of your Company, the executive directors / senior
managerial personnel make presentations to the inductees about the
Company's strategy, operations, product and service offerings, markets,
organization structure, finance, human resources, technology, quality,
facilities and risk management. The details of such familiarization
programme are available on the Company's website www.ufomoviez.com.
Further, at the time of appointment of an independent director, the
Company issues a formal letter of appointment outlining his/ her role,
function, duties and responsibilities as a director. The terms and
conditions of their appointment are available on the Company's website
www.ufomoviez.com.
INDUCTIONS
On the recommendations of the Nomination and Remuneration Committee,
the Board appointed Mr. Sanjeev Aga, Mr. S. Madhavan and Ms. Lynn de
Souza as Independent members of the Board for a period of three
consecutive years with effect from November 20, 2014. The Board has
also appointed Mr. Sanjeev Aga as the Chairman of the Board for a
period of three consecutive years with effect from November 20, 2014.
We thank the shareholders for their support in confirming Mr. Sanjeev
Aga, Mr. S Madhavan and Ms. Lynn de Souza's appointment at the
Extra-ordinary General Meeting held on November 20, 2014.
RETIREMENT AND RE-APPOINTMENTS
In accordance with the provisions of Section 152 of the Companies Act,
2013 and in terms of the Articles of Association of the Company, Mr.
Raaja Kanwar retires by rotation at the forthcoming Annual General
Meeting and, being eligible, offers himself for re-appointment. The
Board recommends his re-appointment.
The Companies Act, 2013, provides for the appointment of independent
directors. Sub-section (10) of Section 149 of the Companies Act, 2013
provides that independent directors shall hold office for a term of up
to five consecutive years on the board of a company; and shall be
eligible for re-appointment on passing a special resolution by the
shareholders of the Company. Accordingly, all the independent
directors, were appointed by the shareholders at the general meeting as
required under Section 149(10) for a period of three years.
Further, according to Sub-section (11) of Section 149, no independent
director shall be eligible for appointment for more than two
consecutive terms of five years. Sub-section (13) states that the
provisions of retirement by rotation as defined in Sub-sections (6) and
(7) of Section 152 of the Companies Act, 2013 shall not apply to such
independent directors.
None of the independent directors will retire at the ensuing Annual
General Meeting.
RESIGNATIONS
During the year under review, the following Directors resigned from the
directorship of the Company. Mr. Tushar Agarwal resigned as
non-executive director with effect from October 31, 2014. Mr. John Carl
Hahn resigned as non-executive director with effect from November 7
2014. Mr. Manu Chandra and Mr. Samir Palod resigned as non-executive
directors with effect from November 10, 2014. These Directors have
resigned from the directorship of the Company during the process of
restructuring of the Board for complying with the listing requirements
regarding Board's composition for the purposes of the Company's Initial
Public Offering.
The Board has placed on record its appreciation for the outstanding
contributions made by Mr. Tushar Agarwal, Mr. John Hahn, Mr. Manu
Chandra and Mr. Samir Palod during their respective tenures in office.
INDEPENDENT DIRECTORS' MEETING
During the year under review, the Independent Directors met on July 23,
2015 inter alia, to:
(a) review the performance of the Non-Independent Directors and the
Board of Directors as a whole;
(b) review the performance of the Chairman of the Company, taking into
account the views of Executive Directors and Non-Executive Directors;
(c) assess the quality, content and timeliness of the flow of
information between the Company Management and the Board that is
necessary for the Board to effectively and reasonably perform its
duties.
All the Independent Directors were present during the Meeting. KEY
MANAGERIAL PERSONNEL
During the year under review, the Company has designated the following
persons as key managerial persons under Section 203 of the Companies
Act, 2013:
Sr. Name of the Designation
No. Person
1 Mr. Rajesh Mishra Chief Executive Officer-Indian
Operations
2 Mr. Ashish Malushte Chief Financial Officer
3 Mr. Sameer Chavan Company Secretary
INTERNAL FINANCIAL CONTROLS
Your Company has adopted the policies and procedures for ensuring the
orderly and efficient conduct of its business including adherence to
the Company's policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness of
the accounting records, and the timely preparation of reliable
financial information.
COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee of the Company as on March
31,2015 comprised of two independent Directors, namely Mr. Sanjeev Aga
and Mr. S. Madhavan and one Non Executive Non-Independent Director
namely Mr. Varun Laul. Mr. Sanjeev Aga is the Chairman of the
Committee. All members of the Audit and Risk Management Committee
possess strong knowledge of accounting and financial management. For
further details on the Audit and Risk Management Committee, please
refer to the Corporate Governance Report forming part of the Annual
Report.
WHISTLEBLOWER POLICY
The Company has a whistleblower policy to report genuine concerns or
grievances.The details of the Whistleblower policy are available on the
Company's website www.ufomoviez.com. For further details, refer to the
Corporate Governance Report forming part of the Annual Report.
RISK MANAGEMENT
During the year under review, the Company has adopted a Risk Management
Policy in accordance with the provisions of the Companies Act, 2013 and
Clause 49 of the Listing Agreement with the stock exchanges. The Risk
Management Policy defines the risk management approach of the Company
and includes a periodic review of such risks and also the
documentation, mitigating measures and reporting mechanism of such
risks.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3)
(C) OF THE COMPANIES ACT, 2013
Based on the framework of internal financial controls and compliance
systems established and maintained by the Company, work performed by
the Internal, Statutory and Secretarial Auditors and the reviews
performed by the Management and the relevant Board Committees,
including the Audit Committee, the Board is of the opinion that the
Company's internal financial controls were adequate and effective
during the financial year 2014-15.
Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the
Companies Act, 2013, the Board of Directors, to the best of their
knowledge and ability, confirm that:
a) the financial statements for the financial year ended March 31,2015
have been prepared on a going concern basis following the applicable
accounting standards, and there is no material departure from the
accounting standards;
b) the accounting policies selected were applied consistently and the
judgments and estimates related to financial statements have been made
on a reasonable and prudent basis so as to give a true and fair view of
the state of affairs of the Company at the end of the financial year
and of the profit of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
d) proper systems have been devised to ensure compliance with the
provisions of all applicable laws and such systems were adequate and
operating effectively.
CORPORATE SOCIAL RESPONSIBILITY
The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad
as Chairman with Ms. Lynn de Souza and Mr. Kapil Agarwal as Members.
The Committee is responsible for formulating and monitoring the CSR
policy of the Company. The Company has adopted a CSR policy in
compliance with the provisions of the Companies Act, 2013.
The average net profit of the Company, computed as per Section 198 of
the Companies Act, 2013, during the three immediately preceding
financial years was Rs. 2155.13 lacs. It was hence required to spend a
minimum of Rs. 43.10 lacs on CSR activities during the Financial Year
2014-2015, being 2% of the average net profits of the three immediately
preceding financial years.
As part of its efforts under the CSR initiative, during the year under
review, the Company had contributed to the Swachh Bharat Mission
Campaign of the Ministry of Information and Broadcasting, Government of
India by screening the Swachh Bharat Mission Campaign, free of cost, in
the cinema theatres under its digital cinema distribution network
empaneled with the Directorate of Advertising and Visual Publicity for
a total value of Rs. 165.94 Lacs. The screening of the Swachh Bharat
Mission Campaign in the cinema theatres is in accordance with Schedule
VII of the Companies Act, 2013 and the Company's CSR Policy.
The annual report on CSR activities as required under the Companies
(Corporate Social Responsibility Policy) Rules, 2014 is set out as
"Annexure-3" forming party of this Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Sub-section (3) (m) of Section 134
of the Companies Act, 2013, read with the Companies (Accounts) Rules,
2014, are enclosed as 'Annexure-4" to this report.
GREEN INITIATIVES
Your Company is publishing only the statutory disclosures in the print
version of the Annual Report. Additional information is available on
the Company's website www.ufomoviez.com. Electronic copies of the
Annual Report 2014-15 and Notice of the 11th Annual General Meeting are
sent to all members whose email addresses are registered with the
Company / Depository Participant(s). For members who have not
registered their email addresses, physical copies of the Annual Report
2015 and the Notice of the 11th Annual General Meeting are sent in the
permitted mode. Members requiring physical copies can send a request to
the Company.
AUDITORS
Statutory Auditors
At the Annual General Meeting held on September 4, 2014, S.R. Batliboi
& Associates LLP, Chartered Accountants, were appointed as statutory
auditors of the Company to hold office till the conclusion of the
Annual General Meeting to be held in the calendar year 2018. In terms
of the first proviso to Section 139 of the Companies Act, 2013, the
appointment of the auditors shall be placed for ratification at every
Annual General Meeting. Accordingly, the appointment of S.R. Batliboi
& Associates LLP, Chartered Accountants, as statutory auditors of the
Company, is placed for ratification by the members of the Company. In
this regard,the Company has received a certificate from the auditors to
the effect that if they are reappointed as auditors of the Company for
financial year 2015-16,it would be in accordance with the provisions of
Section 141 of the Companies Act, 2013.
Secretarial Auditor
Mr. Chetan Anant Joshi, Practicing Company Secretary was appointed to
conduct the secretarial audit of the Company for the financial year
2014-15, as required under Section 204 of the Companies Act, 2013 and
Rules thereunder. The secretarial audit report for financial year
2014-15 forms part of the Annual Report as "Annexure-5" to this report.
There are no qualifications or observations by the Secretarial Auditors
of the Company for the year under review.
The Board has appointed Mr. Chetan Anant Joshi, Practicing Company
Secretary, as Secretarial Auditor of the Company for the financial year
2015-16.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3) (a) of the Companies Act, 2013, an
extract of the annual return in the prescribed format is appended as
"Annexure-6" to this report.
HUMAN RESOURCES
Your Directors believe that the key to success of any company are its
employees. Your Company has a team of able and experienced
professionals, whose dedicated efforts and enthusiasm has been an
integral part of your Company's growth. Your Directors would like to
place on record their deep appreciation of their continuous effort and
contribution to the Company.
Particulars of employees
The table containing the names and other particulars of employees in
accordance with the provisions of Section 197(12) of the Companies Act,
2013, read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 disclosing the ratio
of the remuneration of each director to the median employee's
remuneration and such other details is appended as "Annexure-7" to this
report.
A statement containing the names of every employee employed throughout
the financial year and in receipt of remuneration of Rs.60 lakh or
more, or employed for part of the year and in receipt of Rs. 5 lakh or
more a month, under Rule 5(2) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, is enclosed as
"Annexure-7" to this report.
Policy on prevention, prohibition and redressal of sexual harassment at
workplace
The Company has zero tolerance for sexual harassment at workplace, and
has adopted a policy against sexual harassment at the workplace in line
with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules there
under. The Policy aims to provide protection to employees at the
workplace and prevent and redress complaints of sexual harassment and
for matters connected or incidental thereto, with the objective of
providing a safe working environment, where employees feel secure. The
Company has also constituted an Internal Complaints Committee to
inquire into complaints of sexual harassment and recommend appropriate
action. The Company has not received any complaint of sexual harassment
during the financial year 2014-15.
SHIFTING OF REGISTERED OFFICE
During the year under review the registered office of the Company was
shifted from 1-B, First Floor, Sagar Apartments, 6, Tilak Marg, New
Delhi 110001 to Office No. 12, 3rd Floor, 312 Surya Kiran Building, 19
Kasturba Gandhi Marg, New Delhi-110 001.
CAUTIONARY STATEMENT
Statements in this Report and the Management Discussion & Analysis
describing the Company's objectives, projections, estimates,
expectations or forecasts may be forward-looking within the meaning of
applicable securities laws and regulations. Actual results may differ
materially from those expressed or implied in the statement. Important
factors that could influence the Company's operations include economic
conditions affecting demand/supply and price conditions in the domestic
and overseas markets in which the Company operates, changes in
government regulations, tax laws, economic developments within the
country and other incidental factors.
ACKNOWLEDGMENT
We thank all our stakeholders viz. customers, vendors, investors and
bankers and other business partners for their excellent support
received during the year. We place on record our appreciation of the
contribution made by our employees at all levels for their commitment
and continued contribution to our Company.
We also take this opportunity to place on record our appreciation for
continued co-operation and unstinted support received from the film
producers, distributors, exhibitors and advertisers who have
contributed to the success of our Company.
We thank the Central Government and the various State Governments and
other Government agencies/bodies for their support, and look forward to
their continued support in the future.
For and on behalf of the Board of Directors
Sanjay Gaikwad Kapil Agarwal
Managing Director Joint Managing Director
DIN: 01001173 DIN: 00024378
Place: Mumbai
Date: July 23, 2015