DIRECTORS REPORT TO THE MEMBERS OF PRIME FOCUS LIMITED Your Company's Directors are pleased to present the Eighteenth Annual Report and the Audited Statements of the Accounts for the financial year ended June 30, 2015. 2. OPERATIONS AND PERFORMANCE REVIEW During the year under review, on consolidated basis, total income of the Company and its subsidiaries stood to be Rs. 160758.54 lacs as compared to Rs. 108141.87 lacs in the previous year. On standalone basis, total income during the year was Rs. 12359.5 lacs as compared to Rs. 27530.19 lacs in the previous year. Profit before exceptional items and and tax during the period was Rs. 1103.28 lacs as compared to Rs. 5764. 26 lacs in the previous year. The Net (loss)/profit after tax was Rs. (2811.01) lacs as compared to Rs. 6,382 lacs in the previous year. A detailed analysis on the Company's performance, both Consolidated & Standalone, is included in the "Management Discussion & Analysis" Report which forms part of this Annual Report. 3. DIVIDEND In view of the losses in Financial Year 2014-15, your Board did not recommend any dividend for its equity shareholders 4. SHARE CAPITAL During the year under review, the Authorised Share Capital of the Company was increased from Rs. 25,00,00,000 (Rupees Twenty Five Crores Only) divided into 25,00,00,000 (Twenty Five Crores) equity shares of Rs. 1/- (Rupee One Only) each to Rs. 35,00,00,000 (Rupees Thirty Five Crores Only) divided into 35,00,00,000 (Thirty Five Crores) equity shares of Rs. 1/-(Rupee One Only) each. The Company had issued and allotted 90,384,615 equity shares of Rs. 1/- each to Reliance MediaWorks Limited and 23,076,923 equity shares of Rs. 1/- each to Monsoon Studio Private Limited aggregating to 113,461,538 equity shares of Rs. 1/- each on April 7, 2015 at a price of Rs. 52/- per share (including a premium of Rs. 51/- per share) on Preferential basis thereby triggering an open offer limit of 26%. Hence Reliance MediaWorks Limited together with Person Acting in Concert namely Reliance Land Private Limited, Namit Malhotra, Naresh Malhotra and Monsoon Studio Private Limited made open offer to the shareholders of the company for the acquisition up to 7,77,08,534 fully paid up equity shares of face value Rs. 1/- each from the public shareholders of the company constituting 26% of the full diluted voting equity capital of the company. During the process of open offer, Reliance MediaWorks Limited acquired 4,36,95,446 equity shares and Monsoon Studio Private Limited acquired 44,29,172 equity shares from the public shareholders pursuant to Chapter II Regulation 3(2) of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011. Consequent to the aforesaid allotment, the issued, subscribed and paid-up equity share capital of the Company increased to Rs. 29,88,78,974/- comprising of 29,88,78,974 equity shares of Rs. 1/-each from Rs. 18,54,17,436/- comprising of 18,54,17,436 equity shares of Rs. 1/-each. 5. EMPLOYEE STOCK OPTION SCHEME (ESOP) In the Board of Directors' meeting held on July 02, 2014, approval was granted to introduce and implement Employee Stock Option Scheme titled 'PFL-ESOP Scheme 2014' whereby stock options up to 6% of the paid up capital of the Company (post aforesaid preferential allotment) aggregating 17,932,738 stock options would be issued to eligible employees of the Company, its subsidiaries and associates. The said scheme was approved by the shareholders in the Extra-ordinary General Meeting held on August 01, 2014. 6. MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY During the year under review, following material changes took place: A. Merger of Double Negative Holdings Limited (Double Negative) with PFW's VFX business: Effectively July 01, 2014, Prime Focus World N.V. ('PFWNV') forming part of the group, closed the transaction relating to the merger of Double Negative, one of the largest Visual effects services providers to the global film industry pursuant to a share sale agreement date June 25, 2014. This agreement has created the World's largest independent VFX, stereo conversion and animation company serving the Hollywood film industry and Double Negative has now become a wholly owned subsidiary of PFWNV. B. Prime Focus and Gener8 signed Technology Licensing Partnership Prime Focus had entered into a licensing and 3D conversion partnership with Canadas Gener8 Media Corp. ("Gener8" or "the Company"), a global leader in 3D conversion technology, which shall secure an exclusive worldwide license to use the Company's proprietary 3D conversion technology G83D™ throughout the entertainment industry. C. Acquisition of Film and Media business: The Company acquired the Film and Media Services business of Reliance MediaWorks Limited ("RMW") on a slump sale basis as a going concern along with the assets and liabilities at a lump sum consideration of Rs. 350 crore. There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of financial year of the Company to which the Financial Statements relate and the date of this Report. 7. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS During the year under review, there were no significant or material orders passed by the Regulators or Courts or Tribunal which would impact the going concern status of the Company and its future operation 8. RISK MANAGEMENT The Board of the Company has formed a Risk Management Committee and a policy to frame, implement and monitor the risk management plan for the Company. The Policy covers the various risks associated with the Company while executing its object. The Policy aims to assess the risk, manage it and monitor it so as to keep the risk at zero level or minimum level. The Risk Management Committee shall be responsible to monitor and review the risk management plan of the Company. The Company is committed to manage risk in a manner appropriate to achieve its strategic objectives. For further details, please refer to the Management Discussion and Analysis Report which forms part of the Annual Report. 9. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company is constantly endeavouring to improve the standards of internal control in various areas and taking steps to strengthen the internal control system to make it commensurate with the size of the respective entities and the nature of their business. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company's risk management policies and systems. For further details, please refer to the Management Discussion and Analysis Report which forms part of the Annual Report. 10. HUMAN RESOURCES Human Resource is considered as one of the most critical resource in the business which can be continuously smoothened to maximize the effectiveness of the organization. Human Resources build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening the Company's Policies and Systems. All personnel continue to have healthy, cordial and harmonious approach thereby enhancing the contributory value of the Company. The Company has generally enjoyed cordial relations with its personnel. Further, the total number of personnels of the Company as on June 30, 2015 is over 6,000. 11. PREVENTION OF SEXUAL HARASSMENT The Company has zero tolerance for sexual harassment at workplace and has a mechanism in place for prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company is committed to providing equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological. All employees (permanent, contractual, temporary, trainees) are covered. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the year under review, Company has not received any complaints on sexual harassment. 12. DEBENTURES During the year under review, Company issued 4,891 unlisted, unrated Redeemable Debentures not convertible into Equity Shares of the Company of Rs. 100,000/- each aggregating to Rs. 48.91 Crore to meet general corporate purposes. 13. PUBLIC DEPOSITS The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013("Act") read with the Companies (Acceptance of Deposits) Rules, 2014. 14. EXTRACT OF ANNUAL RETURN The Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed as ANNEXURE-A to this Report. 15. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with the provisions of the Act read with the Companies (Accounts) Rules, 2014, applicable Accounting Standards and the provisions of the Listing Agreement with the Stock Exchanges and forms part of the Annual Report. Pursuant to Section 129(3) of the Act, a statement containing the salient features of the financial statements of the subsidiary companies is attached to the Financial Statements in Form AOC-1. The Company will make available the said financial statements and related detailed information of the subsidiary companies upon the request by any member of the Company or its subsidiary companies. These financial statements will also be kept open for inspection by any Member at the Registered Office of the Company. Pursuant to the provisions of section 136 of the Act, the Audited financial statements of the Company, consolidated financial statements along with relevant documents and separate Audited Accounts in respect of subsidiaries, are available on the website of the Company viz.www.primefocus.com 16. SUBSIDIARY COMPANIES, JOINT VENTURE AND ASSOCIATE COMPANIES During the year, the following changes have taken place in subsidiary companies: a. Companies which have become subsidiaries: 1. Gener8 India Media Services Limited (formerly known as Prime Focus Entertainment Services Limited/Reliance MediaWorks Entertainment Services Limited) -Subsidiary of the Company 2. Reliance MediaWorks (Mauritius) Limited - Subsidiary of the Company 3. Reliance Lowry Digital Imaging Services Inc. - Subsidiary of Reliance MediaWorks (Mauritius) Limited 4. Double Negative Holdings Limited - Subsidiary of Prime Focus World N.V. 5. Gener8 Digital Media Services Limited - Subsidiary of PF World Limited 6. Double Negative Limited - Subsidiary of Double Negative Holdings Limited 7. Double Negative Singapore Pte. Limited- Subsidiary of Double Negative Holdings Limited 8. Double Negative Films Limited- Subsidiary of Double Negative Holdings Limited 9. Double Negative Canada Productions Limited - Subsidiary of Double Negative Holdings Limited b. Companies ceased to be subsidiary companies Based on the approval of the Board of Directors of the Company vide Resolution dated March 31, 2015, the entire holding of 21,492,003 ordinary shares in Prime Focus London Plc, a Company incorporated in the UK was sold at a total consideration of £ 399,751.26 (@1.86 pence each). Prime Focus London Plc and its following subsidiaries cease to be subsidiaries of Prime Focus Limited c. Joint Venture / Associates Companies a. Joint Venture No Company has become / ceased to be a joint venture during the financial year 2014-15. b. Associates Companies Acquired 30% ownership interest in Digital Domain - Reliance LLC during the financial year 2014-15. The Company has adopted a Policy for determining Material Subsidiaries in line with Clause 49 of the Listing Agreement. The Policy, as approved by the Board, is uploaded on the website of the Company (URL: <http://www.primefocus.com/sites/default/files/pdf/> Policy on Material Subsidiaries.pdf) 17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A) CONSERVATION OF ENERGY i) The steps taken to or impact on conservation of energy- Although the Company is not engaged in manufacturing activities, the Company makes every effort to conserve energy as far as possible in its post-production facilities, Studios, Offices, etc. The Company also takes significant measures to reduce energy consumption by using energy efficient computers and by purchasing energy-efficient equipment. The Company purchases PCs, laptops, air conditioners etc. that meet environment standards, wherever possible and replace old equipment with more energy-efficient equipment ii) The Steps taken by the Company for utilizing alternate sources of energy- Not applicable iii) The capital investment on energy conservation equipments- The Company constantly evaluates new developments and invests into latest energy efficient technology. B) TECHNOLOGY ABSORPTION i) The efforts made towards technology absorption - The Company adopts the latest trends in the technology development and introduces the same so as to ensure reduction in cost with best quality output. ii) The benefits derived like product improvement, cost reduction, Product development or import substitution- Not applicable C) IMPORTED TECHNOLOGY i) The details of technology imported- Not Applicable ii) The year of import - Not applicable iii) Whether the technology has been fully absorbed - Not applicable iv) If not fully absorbed - Not applicable Expenditure incurred on Research and Development (R&D): Your company is predominantly a service provider and therefore has not set up a formal R&D unit, however continuous research and development is carried out at various development centers as an integral part of the activities of the Company. 18. MANAGEMENT DISCUSSION AND ANALYSIS Management's Discussion and Analysis Report for the financial year ended June 30, 2015 as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is included as a separate section forming part of the Annual Report. 19. CORPORATE GOVERNANCE REPORT A separate section on Corporate Governance forming part of the Directors' Report and the certificate from the Practicing Company Secretary confirming compliance of Corporate Governance norms as stipulated in clause 49 of the Listing Agreement with the Stock Exchanges is included in the Annual Report. 20. DIRECTORS Pursuant to Section 149(10) of the Act, read along with the Rules framed thereunder, the Members had at the Annual General Meeting of the Company held on December 24, 2014, approved the appointment of Independent Directors [viz. Mr. Srinivasan KodiRaghavan (DIN: 00012449), Mr. Rivkaran Singh Chadha (DIN: 00308288) and Mr. Padmanabha Gopal Aiyar (DIN 02722981)] from the conclusion of 17th Annual General Meeting to the conclusion of 22nd Annual General Meeting i.e. for a period of five consecutive years. Further, pursuant to the Section 149(13) and 152 of the Act, provisions for the retirement of rotation of directors shall not apply to such Independent Directors. At the said Annual General Meeting, Mr. Naresh Malhotra was re-appointed as a Whole-time Director, liable to retire by rotation for a term of five years commencing from April 1, 2015. In the Extra-Ordinary General Meeting held on August 1, 2014, Mr. Ramakrishnan Sankaranarayanan (DIN: 02696897) was appointed as Managing Director and Mr. Namit Malhotra (DIN: 00004049) was appointed as Chairman (Executive Director) and Chief Executive Officer of the Company. They have been appointed for a tenure of three years with effect from June 25, 2014 and their period of office is liable to retire by rotation. Dr. (Mrs.) Hemalatha Thiagarajan (DIN: 07144803) was appointed as an Additional Director (Non-Executive Independent) under Section 149 and Section 161 of the Act w.e.f. March 31, 2015, subject to consent by the Members of the Company at the ensuing Annual General Meeting. Further, Mr. Amit Bapna (DIN: 00008443) was appointed as an Additional Director (Nominee on behalf of Reliance MediaWorks Limited) w.e.f. September 16, 2015. Notices pursuant to Section 160 of the Act have been received from the Member proposing the appointment of Dr. (Mrs.) Hemalatha Thiagarajan and Mr. Amit Bapna as Directors of the Company. In accordance with the provisions of Section 152 of the Act and Articles of Association of the Company, Mr. Ramakrishnan Sankaranarayanan (DIN: 02696897) shall retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer himself for re-appointment. The Board recommends these appointment / re-appointment. Items seeking your approval on the above are included in the Notice convening the Annual General Meeting. All the Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149(6) of the Act and Clause 49 of the Listing Agreement. Brief resumes of the directors being appointed / re-appointed forms part of the Notice of the ensuing Annual General Meeting. The Company has incurred loss for the Financial Year 2014-2015. Accordingly, the disclosure required under Schedule V, Part II, proviso of Section II B (iv)(IV) of the Act forms part of the Corporate Governance Report. 21. RECEIPT OF REMUNERATION OR COMMISSION FROM HOLDING COMPANY OR SUBSIDIARY COMPANY Mr. Ramakrishnan Sankaranarayanan, Managing Director of the Company was appointed as an Executive Director in Prime Focus Technologies Private Limited ("PFT"), a subsidiary company on June 25, 2014. He is in receipt of Rs. 34,00,000/- p.a. as remuneration in his capacity as an Executive Director of PFT. 22. KEY MANAGERIAL PERSONNEL (KMP) During the year under review, Mr. Namit Malhotra was appointed as a CEO and Executive Director. Mr. Vikas Rathee was appointed as Chief Financial Officer (CFO) of the Company w.e.f. August 01, 2014 in place of Mr. Nishant Fadia who stepped down as CFO with effect from July 31, 2014. Ms. Kirti Desai was appointed as the Company Secretary and Compliance Officer with effect from August 01, 2014 in place of Mr. Navin Agarwal who resigned with effect from July 31, 2014. Ms. Kirti Desai had resigned from the post of Company Secretary and Compliance Officer with effect from July 07, 2015. Further, Ms. Parina Shah was appointed as the Company Secretary and Compliance Officer of the Company w.e.f. September 12, 2015. The Company has designated following personnel as KMPs pursuant to the provisions of Section 203 of the Act and the rules made thereunder. > Mr. Ramakrishnan Sankaranarayanan, Managing Director > Mr. Namit Malhotra, Chief Executive Officer > Mr. Vikas Rathee, Chief Financial Officer > Ms. Parina Shah, Company Secretary 23. BOARD EVALUATION Pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI under Clause 49 of the Equity Listing Agreement, the Board of Directors ("Board") has carried out an annual evaluation of its own performance, and that of its Committees and individual Directors. The performance of the Board and individual Directors was evaluated by the Board seeking inputs from all the Directors. The performance of the Committees was evaluated by the Board seeking inputs from the Committee Members. The Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual Directors. A separate meeting of Independent Directors was also held to review the performance of Non-Independent Directors; performance of the Board as a whole and performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors. The criteria for performance evaluation of the Board included aspects like Board composition and structure; effectiveness of Board processes, information and functioning etc. The criteria for performance evaluation of Committees of the Board included aspects like composition of Committees, effectiveness of Committee meetings etc. The criteria for performance evaluation of the individual Directors included aspects on contribution to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition the Chairperson was also evaluated on the key aspects of his role. Selection and procedure for nomination and appointment of Directors The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements. The Committee is also responsible for reviewing and vetting the CVs of potential candidates' vis-a-vis the required competencies, undertake a reference and due diligence and meeting potential candidates, prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee. Criteria for Determining Qualifications, Positive Attributes and Independence of a Director The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and Clause 49 of the Listing Agreement, which is annexed as "Annexure-B". Familiarisation Programme for Independent Directors Pursuant to requirement of Securities and Exchange Board of India vide Circular no. CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014, the Company has in place a programme for familiarisation of the Independent Directors with the Company, details of which is available on the website of the company: (<http://www.primefocus.com/sites/> default/files/pdf/Familiarisation_programme_for_Independent_ Directors.PDF). 24. NOMINATION AND REMUNERATION POLICY The Company has in place a Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and other Employees pursuant to the provisions of the Act and Clause 49 of the Listing Agreement.. The policy forms a part of this report and is annexed as "Annexure-C". 25. BOARD MEETINGS During the year, fourteen Board Meetings were held. The details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Act and Clause 49 of the Listing Agreement. Details of the composition of the Board and its Committees and of the Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report. **Mr. Amit Bapna was appointed as a member of the Committee with effect from September 16, 2015. Further, details relating to the Audit Committee are provided in the Corporate Governance Report. 27. VIGIL MECHANISM The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The policy of vigil mechanism is available on the Company's website (Weblink: <http://www.primefocus.com/sites/default/files/pdf/Vigil> Mechanism_Policy.pdf ) 28. PARTICULARS OF EMPLOYEES The information on employees who were in receipt of remuneration of not less than Rs. 60 lakhs during the year or Rs. 5 lakhs per month during any part of the said year as required under Section 197 (12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. The said statement is also open for inspection at the registered office of the Company. Any member interested in obtaining a copy of the same may write to the Company Secretary. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with the Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to the Report as "Annexure D". 29. CORPORATE SOCIAL RESPONSIBILITY (CSR) The brief outline of the CSR Policy of the Company alongwith the Annual Report on CSR activities is set out in "Annexure E" of this report. The policy is available on the Company's website (Weblink: <http://www.primefocus.com/sites/default/files/pdf/CSR> Policy.pdf) 30. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The particulars of Loans given, Investments made,Guarantees given and Securities provided during the year under Section 186 of the Act are stated in the Notes to Accounts of Standalone Financial Statements which forms part of this Annual Report. 31. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All contracts/arrangements/ transactions entered by the Company with the Related Parties during the financial year were on an Arm's length basis and were in compliance with the applicable provisions of the Act and the Listing Agreement. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The particulars of contracts or arrangements with related parties referred to in Section 188 (1) of the Actin Form AOC-2 pursuant to Section 134 (3) (h) of the Act and Rule 8 (2) of the Companies (Accounts) Rules, 2014 is attached as ANNEXURE-F to this Report. All Related Party Transactions are placed before the Audit Committee as also before the Board for approval. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website (URL:<http://www.primefocus>. com/sites/default/files/pdf/policy on related parties.pdf.) 32. AUDITORS Statutory Auditors In the last AGM held on December 24, 2014, M/s Deloitte Haskins & Sells (DHS), Chartered Accountants (Registration No. 117364W), have been appointed as Statutory Auditors of the Company to hold office from the conclusion of 17th Annual General Meeting till the conclusion of 22nd Annual General Meeting of the Company, subject to ratification of their appointment by the Members at every Annual General Meeting. Further, DHS have under Section 139(1) of the Act and the Rules framed there under furnished a certificate of their eligibility and consent for appointment. The Auditor's Report on the consolidated financial statements contains qualification as regards figures for certain components included in the consolidated financial statements being unaudited for part of the year as under: i.) The financial statements / the consolidated financial statements of certain subsidiaries whose financial statements / consolidated financial statements for the year ended 31st March, 2015 have been audited by us / other auditors reflect total assets of Rs. 2,893.31 crore as at 31st March, 2015, total revenues of Rs. 953.34 crore and net cash outflow amounting to Rs. 0.52 crore for the year ended on that date. The financial information of the said subsidiaries for the year ended 30th June, 2015, as considered in the consolidated financial statements, has been derived by making appropriate adjustments, based on the management accounts approved by the board of directors of the Holding Company, to the financial information as per the aforementioned audited financial statements/consolidated financial statements for the year ended 31st March, 2015. The financial information so derived of the said subsidiaries reflect total assets (net) of Rs. 73.63 crore as at 30th June, 2015, total revenues of Rs. 372.18 crore and net cash inflows amounting to Rs. 19.98 crore for the year ended on that date, as considered in the consolidated financial statements. Our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on our reports and that of the other auditors and the aforementioned management accounts. ii.) The consolidated financial statements include unaudited standalone financial information in respect of certain subsidiaries which reflect total assets of Rs. 45.70 crore as at 30th June, 2015, total revenue of Rs. Nil, cash inflows amounting to Rs. 2.69 crore for the year then ended. These unaudited financial information as approved by the Board of Directors of the Company have been furnished to us by the Management and our report in so far as it relates to the amounts and disclosures included in respect of the subsidiaries is based solely on such approved unaudited standalone financial information. The response of Directors with respect to the above are as follows:- During the financial year 2014-15, the following material events took place: 1. Double Negative UK Holdings Ltd became a subsidiary of Prime Focus World NV (a subsidiary of the company) in July 2014. This entity has operating subsidiaries in UK, Singapore and Canada; 2. Licensing and 3D conversion partnership with Canada's Gener8 Media Corp, a global leader in 3D conversion technology, in March 2015; and 3. Acquisition of the global Film and Media Services business ('FMS business') from Reliance MediaWorks Limited in April 2015; There were various local auditors, the annual closing of all the subsidiaries being April - March, unlike July-June for the holding company, local accounting rules and conversion of the same to Indian GAAP for audit of financials of the above mentioned acquisitions. In view of the above-mentioned facts, it was difficult for the Company to complete the audit of component financial statements within the available time frame. Secretarial Auditors Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. S. N. Ananthasubramanian & Co., Practicing Company Secretaries, to undertake Secretarial Audit of the Company for the financial year 2014-15. The report of the Secretarial Auditor is annexed to this report as "Annexure G". The Secretarial Audit Report does not contain any qualifications, reservation or adverse remarks. 33. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the directors had prepared the annual accounts on a going concern basis. e) the directors had laid down internal financial controls to be followed by the company and such internal financial controls are adequate and the Company is constantly endeavouring to improve the standards of internal control in various areas and taking steps to strengthen the internal control system to make it commensurate and effective with the size of the respective entities and the nature of their business. f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 34. ACKNOWLEDGEMENT Your Directors would like to express their sincere appreciation to its stakeholders financial institutions, bankers and business associates, Government authorities, customers and vendors for their co-operation and support and looks forward to their continued support in future. Your Directors also place on record, their deep sense of appreciation for the committed services by the employees of the Company. On behalf of the Board of Directors Naresh Malhotra Whole-Time Director DIN:00004597 Ramakrishnan Sankaranarayanan Managing Director DIN:02696897 Date: September 16, 2015 Place: Mumbai |