DIRECTORS' REPORT To, The Members of Cineline India Limited Your Directors have pleasure in presenting their Thirteenth Annual Report together with the Audited Accounts and Auditors' Report of the Company for the Year ended March 31, 2015. OPERATIONAL REVIEW: Gross revenues increased to Rs. 2659.75 Lacs, a growth of around 17.12% against Rs. 2270.98 Lacs in the previous year. Profit before depreciation and taxation was Rs. 1965.16 Lacs against Rs. 1604.26 Lacs in the previous year. After providing for depreciation and taxation of Rs. 611.27 Lacs & Rs. 396.04 Lacs respectively, the net profit of the Company for the year under review was placed at Rs. 394.94 Lacs as against Rs. 310.58 Lacs in the previous year. 2. DIVIDEND AND RESERVES: With a view to conserve the resources for future operations, your Directors have thought it prudent not to recommend dividend on equity shares for the financial year 2014-15. During the year under review, no amount was transferred to General Reserve. 3. SHARE CAPITAL: The paid up equity share capital as on March 31, 2015 was Rs. 14.00 Crores. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. 4. FINANCE: Cash and cash equivalents as at March 31, 2015 were Rs. 131.81Lacs. The company continues to focus on judicious management of its working capital, Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring. 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 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 transactions and reasonably present the Company's state of affairs, profits and cash flows for the year ended March 31, 2015. There is no audit qualification in the financial statements by the statutory auditors for the year under review. 5. SUBSIDIARY COMPANIES: The Company does not have any subsidiary. 6. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY: No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors' Report. 7. PUBLIC DEPOSIT: Your Company has not accepted any public deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. 8. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: There are no significant and material orders passed by the regulators / courts that would impact the going concern status of the Company and its future operations. 9. DIRECTORS AND KEY MANAGERIAL PERSONNEL: Your Company has Six (6) directors consisting of Whole Time Director, Managing Director, Non-executive Director and Three (3) Independent Directors as on 31.03.2015. 9.1 Independent Directors: In terms of the definition of "Independence" of Directors as prescribed under Clause 49 of the Listing Agreement entered with the Stock Exchanges and section 149(6) of the Companies Act, 2013 and based on the confirmation / disclosure received from the Directors, the following Non-Executive Directors are Independent Directors: 1. Mr. Kranti Sinha 2. Mr. Utpal Sheth 3. Mr. Anand Bathiya 9.2 Woman Director: In terms of the provision of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has appointed Mrs. Hiral Kanakia as Additional Woman Director on the Board of the Company. 9.3 Directors retiring by rotation: During the year under review, Mr. Himanshu Kanakia, Managing Director of the Company retires by rotation and, being eligible, offers himself for re appointment. The Board of Directors recommends Mr. Himanshu Kanakia for re-appointment. 9.4 Appointment / Resignation from the Board of Directors: D u r i n g t h e y e a r u n d e r r e v i e w, M r. Shivaramakrishnan Iyer, an Independent director and Mr. Sanjay Sanghavi, a Non-Executive Director have submitted their resignations to the Board on February 5, 2015 due to their other pre-occupations. The same was accepted by the Board in its meeting held on February 5, 2015. The Board hereby places on record their sincerest thanks and gratitude for the invaluable contribution made by Mr. Shivaramakrishnan Iyer and Mr. Sanjay Sanghavi towards the growth and development of the company during their tenure as a directors. During the Year under review, Mr. Anand Bathiya and Mrs. Hiral Kanakia joined the Board of the Company as Additional Independent Director and Non-Executive, Additional Director respectively with effect from February 05, 2015. Further, the proposal for appointment of Mr. Anand Bathiya and Mrs. Hiral Kanakia as Independent Director and Executive Director respectively, is being placed before the shareholders for approval in the ensuing AGM; the relevant details are forming part of the AGM Notice. 9.5 Key Managerial Personnel: 10. MEETINGS: A calendar of meeting is prepared and circulated in advance to the Directors. During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report which forms part of Annual Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 11. DIRECTOR'S RESPONSIBILITY STATEMENT: In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: i. In the preparation of the annual accounts for the year ended 31-03-2015, the applicable accounting standards have been followed. ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review. iii. The Directors have 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. iv. The Directors have prepared the annual accounts on a going concern basis. v. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. vi. The Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. 12. COMPOSITION OF AUDIT COMMITTEE: The Board has constituted the Audit Committee which comprises of Mr Kranti Sinha, Independent Director as Chairman and Utpal Sheth, Independent Director, Mr. Anand Bathiya, Independent Director, as the members. More details on the Committee are given in the Corporate Governance Report which forms part of this Annual Report. 13. PERFORMANCE EVALUATION OF THE BOARD: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Appointment & Remuneration Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. 14. FAMILIARIZATION PROGRAMME: The Company had conducted various sessions during the financial year to familiarize Independent Directors with the Company, their roles, responsibilities in the Company, and the technology and the risk management systems of the Company. Further, the Directors are encouraged to attend the training programmes being organized by various regulators/bodies/ institutions on above matters. The details of such familiarization programmes are displayed on the website of the Company (www.cineline.co.in). 15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Your Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal and operational audit is entrusted to M/s Delloite Haskins & Sells, a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors, Statutory Auditors and the Senior Management are periodically apprised of the internal audit findings and corrective actions taken. Audit provides a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee. 16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The company has not given any loans, guarantees or investments covered under the provisions of section 186 of the Companies Act, 2013 and accordingly information required to be provided under Section 134 (3) (g) of the Companies Act, 2013 in relation loans, guarantees or investments covered under the provisions of section 186 are not applicable to the Company. 17. RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in form AOC-2 is not required. Further, there are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company. All such Related Party Transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval was obtained from the Audit Committee for the related party transactions which are of repetitive nature and for normal arm's length transactions which cannot be foreseen. A statement of related party transaction giving details of all related party transactions entered into by the Company are placed before the Audit Committee and Board for review and approval on a quarterly basis. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company and the link for the same is (<http://www.cineline.co.in/investor/corporate->governance.html). 18. EXTRACT OF ANNUAL RETURN: Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2015 forms part of this report as Annexure 1. 19. POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION: The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down the criteria for selection and appointment of Board members. The Remuneration Policy forms part of this report as Annexure 2. 20. WHISTLE BLOWER POLICY: The Company has a whistle blower policy to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time. The Whistle Blower policy has been posted on the Company's website www.cineline.co.in 21. RISK MANAGEMENT: Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a risk management committee. At present the company has not identified any element of risk which may threaten the existence of the company. 22. CORPORATE SOCIAL RESPON SI BILI TY INITIATIVES: Pursuant to section 135 of the Companies Act, 2013, the company has constituted a Corporate Social Responsibility Committee and has adopted Corporate Social Responsibility Policy. As per the provisions of the Act, Company is not required to undertake any CSR activities for the financial year 2014-15 and accordingly information required to be provided under Section 134 (3) (o) of the Companies Act, 2013 read with the Rule 9 of the Companies (Accounts) Rules, 2014 in relation to disclosure about Corporate Social Responsibility are currently not applicable to the Company. 23. MANAGEMENT DISCUSSION AND ANALYSIS: The Management Discussion and Analysis Report covering a wide range of issues relating to Performance, outlook etc., is annexed as Annexure-A to this report. 24. CORPORATE GOVERNANCE: The Company is committed to maintain the highest standards of the Corporate Governance. The detailed report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms Annexure-B to this report. The Statutory Auditors of your Company have examined the Company's compliance and have certified the same as required under the listing agreement. The certificate is reproduced as Annexure-C to this report. 25. MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER CERTIFICATION: The Managing Director and Chief Financial Officer Certification as required under clause 49 of the Listing Agreement, certifying that the financial statements do not contain any untrue statement and these statements represent a true and fair view of the Company's affairs. The said certificate is annexed is furnished in Annexure-D to this report. 26. AUDITORS: 26.1 Statutory Auditors M/s. Walker Chandiok & Co. LLP, Chartered Accountants, Mumbai, will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company.Accordingly, the Board of Directors has recommended the re-appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company to hold office from the ensuing AGM till the conclusion of the next AGM on remuneration to be decided by the Board or Committee thereof to the shareholders for approval. 26.2 Secretarial Audit Pursuant to Section 204 of the Companies Act 2013, your Company had appointed Mr. Dharmesh Zaveri, a Company Secretary in Whole-time Practice having Certificate of Practice No. 4363 and Membership No. 5418 as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2014-15. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Secretarial Audit Report is included as Annexure-3 and forms an integral part of this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Since the Company does not own any manufacturing facility, the other particulars relating to conservation of energy and technology absorption stipulated in the with rule (8)(3) of the Companies (Accounts) Rules, 2014 are not applicable to the Company. The Company has not made any foreign exchange outgo towards traveling, marketing and import of Capital Goods. 28. SEXUAL HARASSMENT DISCLOSURE: 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. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. During the year no complaints of sexual harassment were received. 29. HUMAN CAPITAL AND PARTICULARS OF EMPLOYEES: Your Company had 25 employees as of March 31, 2015. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read along with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to the Company as no employees were in receipt in remuneration above the limits specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read along with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure 4 and forms part of this Report. 30. CODE OF CONDUCT: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form and the Board has laid down the directives to counter such acts. The Code has been posted on the Company's website www.cineline.co.in The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. 31. PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. 32. ACKNOWLEDGEMENTS: Your Board takes this opportunity to thank the Licensee, vendors, business partners, shareholders and bankers for the faith reposed in the Company and also thank the Government of India, various regulatory authorities and agencies for their support and looks forward to their continued encouragement. Your Directors are deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth was unattainable. Your Directors wish to thank the investors and shareholders for placing immense faith in them and the plans designed for growth of your Company. Your Directors seek and look forward to the same support in future and hope that they can continue to satisfy you in the years to come. For and on behalf of the Board of Directors Rasesh B. Kanakia Chairman Date : May 27, 2015 Place: Mumbai |