DIRECTORS' REPORT DEAR MEMBERS, Your Directors take pleasure in submitting their 10th Annual Report on the business and operations of your Company together with the Audited Financial Accounts for the financial year ended March 31, 2015. Review of Operations During the year under review, the Standalone Revenue from Operations & Other Income increased to Rs. 32,345 Lacs as against Rs. 26,334 Lacs in the previous year and the Consolidated Revenue from Operations & Other Income increased to Rs. 32,471 Lacs as compared to Rs. 26,407 Lacs in the previous year. Your Company had a standalone growth with a Net Profit after tax of Rs. 4,181 Lacs as compared to the Net Profit after tax of Rs. 2,785 Lacs in the previous financial year and a consolidated growth with a Net Profit after tax of Rs. 4,092 Lacs as compared to the Net Profit after tax of Rs. 2,716 Lacs in the previous financial year. Subsidiaries and Associate Companies As on March 31, 2015 your company has 2 (two) foreign wholly owned subsidiary companies, namely, Shemaroo Entertainment INC (USA) and Shemaroo Entertainment (UK) Private Limited, 1 (One) Indian wholly owned subsidiary company, Shemaroo Films Private Limited and 1 (One) Associate company, Vistaas Digital Media Private Limited. Pursuant to Section 129(3) read with Rule 8 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial positions of the subsidiaries/associate company in Form AOC-1 for the financial year ended March 31, 2015 is provided under Consolidated Financial Statements of the Company. Pursuant to Clause 49 of the Listing Agreement, the Company has also formulated a Policy for determining material subsidiaries which is uploaded on the website of the Company i.e.<http://www.shemarooent.com/Rs.p=Code_of_Conduct>. Consolidated Financials The consolidated financial statements presented by the Company are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and Listing Agreement as prescribed by the Securities and Exchange Board of India (SEBI). The consolidated financial statements have been prepared on the basis of audited financial statements of the Company, its subsidiary and associate companies, as approved by their respective Board of Directors. Management Discussion and Analysis A detailed Management Discussion and Analysis forms part of this report. Initial Public Offering (IPO) It is a moment of immense pride that your Company has successfully completed the Initial Public Offering (IPO) of its equity shares. The success of our IPO has shown us the trust & confidence that our customers, business partners and markets are having in the brand 'Shemaroo'. During the financial year under review, your Company made an Initial Public Offering of 7,333,335 equity shares of face value of Rs.10 per equity shares at a price of Rs.170 per equity share including a share premium of Rs.160 per equity share aggregating to Rs.12000 lacs. The Company also offered a discount of 10% (i.e. Rs. 17) to all Retail Individual Bidders. The Bid issue was opened on September 16, 2014 and closed on September 18, 2014. The IPO saw a good response across various categories of investors and overall our issue was subscribed 7.90 times. Retail Individual bidders quota was subscribed 8.29 times and Non institutional bidders quota was subscribed 9.11 times Qualified Institutional bidders (excluding anchor investors) quota was subscribed 6.24 times and Anchor investors quota was subscribed 1 times. The equity shares of the Company are listed on BSE Limited (Designated Stock Exchange) and National Stock Exchange of India Limited. The annual listing fee for the financial year 2015-2016 has been paid. Utilisation of funds raised through Initial Public Offering (IPO) of equity shares to fund working capital requirements is as follows. Pursuant to Clause 43 of the Listing Agreement, there are no variations between the projected utilisation of funds and/ or projected profitability statement made in prospectus and the actual utilisation of funds and / or actual profitability and pursuant to Clause 43A of the Listing Agreement, there are no material deviations in the use of proceeds of Public Issue from the objects stated in the offer document. Dividend Based on the Company's performance, the Directors are pleased to recommend for approval of the members, a final dividend of Rs.1.20 (Rupee One and twenty paisa only) per fully paid-up equity shares of Rs.10 each (i.e. 12% of the paid-up equity share capital of Company) for the financial year ended March 31, 2015. The final dividend on equity shares, if approved by the members would involve a cash outflow of Rs.392.59 Lacs including dividend distribution tax. Appropriations - Transfer To General Reserve We propose to transfer Rs.105 Lacs to the general reserve out of the amount available for appropriation and amount of Rs.4,285 Lacs is proposed to be retained in the profit and loss account. Capital Structure During the Financial year 2014-2015, your Company has made an Initial Public Offering of 7,333,335 equity shares of face value of Rs.10 each for cash at a price of Rs.170 per equity share including a share premium of Rs.160 per equity share, aggregating up to Rs.12,000 lacs. The issue constituted 26.98% of the fully diluted post-issue paid up capital of your company. Accordingly, the Company's issued, subscribed and paid-up share capital of the Company increased from Rs.19,84,89,040 to Rs.27,18,22,390. Of the total paid up share capital of the Company, 65.82% is held by Promoters and Promoter Group, all in dematerialized form. The balance i.e. 34.18% of the total paid up share capital of the Company is held by persons other than Promoters and Promoter Group of which 96.73% of shares are held in dematerialized form. Number of meetings of the Board During the financial year under review, five (5) Board meetings were held. For details of the meeting of the Board, please refer to the Corporate Governance report, which forms part of this report. Directors & Key Managerial Personnel At present your Company's Board of Directors has an optimum mix of Executive and Non-Executive Directors. Out of total Ten (10) Directors, the Board comprises of Three (3) Executive Directors [(i.e. Two (2) Managing Directors and One (1) Whole Time Director & CFO)], Two (2) Non-Executive Non-Independent Directors and Five (5) Non-Executive Independent Directors [includes 1(one) Women Director]. The Chairman of the Board is a Non-Executive Director related to the Promoters and accordingly, Half (1/4) of the Board consists of Independent Directors. i) Appointment of Independent Directors In accordance with the provisions of the Companies Act,1956, the Company had appointed Mr. Jayesh Parekh, Mr. Vasanji Mamania, Mr. Gnanesh Gala, Mr. Kirit Gala and Mr. Shashidhar Sinha as Independent Directors on the Board of our Company on August 29, 2011. Pursuant to the provisions of section 149 of the Act and any other applicable provisions of the Companies Act, 2013 with respect to the Independent Directors which came in to effect from April 1, 2014, the Board of directors decided to adopt the provisions with respect to appointment and tenure of Independent Directors which is in consonance with the provisions of the Companies Act, 2013 and the Listing Agreement, as amended. Accordingly, the Board in its meeting dated April 26, 2014, subsequently approved by the shareholders in its Extra Ordinary meeting dated May 26, 2014, re-appointed Mr. Jayesh Parekh, Mr. Vasanji Mamania, Mr. Gnanesh Gala, Mr. Kirit Gala and Mr. Shashidhar Sinha, as Independent Directors of the Company, whose term of office shall not be subject to retirement by rotation, for a term of 5 (five) years up to May 25, 2019. ii) Chief Financial Officer (CFO): Pursuant to the provisions of Section 203 of Companies Act, 2013, the Company was required to appoint a Whole Time Key Managerial Personnel as the Chief Financial Officer of the Company. Accordingly, keeping in view the compliance of the provisions of the Companies Act, 2013, the Board appointed Mr. Hiren Gada, Whole Time Director of the Company, as the Chief Financial Officer of the Company, designated as 'Whole Time Director - Chief Financial Officer'. iii) Key Managerial Personnel: Pursuant to the provisions of Section 203 of Companies Act, 2013, read with Rule 9 of the Companies (Appointment and Remuneration Personnel) Rules 2014, your Company has noted the appointment of the following Whole Time Key Managerial Personnel of the Company in its Board Meeting dated November 11, 2014: - Mr. Raman Maroo - Managing Director - Mr. Atul Maru - Jt. Managing Director - Mr. Hiren Gada - Whole Time Director & CFO - Mr. Vinod Karani - Vice-President of the Broadcast Syndication and Content Acquisition division. - Mr. Hemant Karani - Vice-President of the Studio division - Mr. Bipin Dharod - National Head for Marketing and Sales of the Home Video division - Mr. Ketan Maru - Head of the Film Production division - Ms. Smita Maroo - Head of the Animation division - Mr. Harakhchand Gada - Head of Accounts division - Ms. Mansi Maroo - Co-producer in the Film division - Ms. Kranti Gada - Assistant Vice-President in New Media and Technologies division - Mr. Ankit Singh - Company Secretary & Compliance Officer iv) Retirement by Rotation: Pursuant to the provisions of Section 152 of the Companies Act, 2013 and applicable rules thereto, Mr. Atul Maru, Jt. Managing Director of the Company, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, seeks re-appointment. Your Directors recommend his re-appointment for your approval. v) Resignation: Mr. Jayesh Parekh, who was an Independent Director on the Board, has resigned with effect from March 28, 2015, due to time constraints and other pre-occupancies. He served as an Independent Director approximately for a period of 4 years. The Board places on record its deep appreciation for the valuable contributions made by him during his tenure as an Independent Director on the Board of the Company. vi) Appointment: The Board recommends the appointment of CA Reeta Bharat Shah, who was appointed as an Additional Director of the Company with effect from March 28, 2015, pursuant to the provisions of Section 161 of the Companies Act, 2013 to hold office till the date of Annual General Meeting and in respect of whom the Company has received a requisite notice in writing from a member proposing CA Reeta Bharat Shah, for appointment as an Independent Director of the Company. As required under Clause 49 of the Listing Agreement entered with Stock Exchanges, the information including brief profile(s) of the Directors proposed for appointment and re-appointment are mentioned at length in the Notice of ensuing Annual General Meeting. vii) Declarations: The Company has received declarations from all the Independent Directors of the Company under sub-section (7) of Section 149 confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement entered with the Stock Exchanges, as amended. viii) Board performance evaluation: Pursuant to Clause 49 of the Listing Agreement and the Companies Act, 2013 the Company has formulated Nomination and Remuneration Policy for the purpose of performance evaluation of Independent Directors, Board, Committees and other individual directors which includes criteria for performance evaluation of the non-executive directors and executive directors. The Nomination and Remuneration Committee has evaluated the annual performance of the Board and that of its committees, individual directors, Chairman and Independent Directors, and the same has been approved and considered by the Board in its meeting. ix) Familiarization of Independent Directors: Your Company has put in place a structured induction and familiarization programme for the Independent Directors. The Company through such programme familiarizes the Independent Director, with a brief background of the Company, nature of the industry in which it operates, its business model, operations and makes the Independent Directors aware about their roles, responsibilities and liabilities as per Companies Act, 2013 and other applicable laws. The familiarization programme for Independent Directors has been detailed in Corporate Governance which forms part of the Annual Report. The familiarization programme for Independent Directors in terms of provisions of Clause 49 of the Listing Agreement is uploaded on the website of the Company and can be accessed through the following link: <http://> www.shemarooent.com/Rs.p=Code_of_Conduct Public Deposits During the Financial year 2014-2015, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Auditors and Auditors Report - Statutory Auditors: In accordance with the provisions of the Companies Act, 2013, M/s. M. K. Dandeker & Co., Chartered Accountants (Firm Registration No. 000679S) were re-appointed as the Statutory Auditors of the Company to hold office from the conclusion of the 9th Annual General Meeting (AGM) upto the conclusion of the 11th AGM of the Company to be held in the year 2016 (subject to ratification of their appointment by the Members at every AGM held after the 9th AGM). As required under the provisions of section 139(1) of the Companies Act, 2013, the Company has received a written consent from M/s. M. K. Dandeker & Co., Chartered Accountants to their appointment and a Certificate, to the effect that their appointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed there under and that they satisfy the criteria provided in section 141 of the Companies Act, 2013. The Members are requested to ratify the appointment of the Statutory Auditors as aforesaid and to authorize the Board to fix their remuneration. The Statutory Audit Report does not contain any qualification, reservation or adverse remark and forms part of the Annual Report. - Secretarial Auditors: M/s. Manish Ghia & Associates, Practicing Company Secretary (Membership no. FCS 6252 and Certificate of Practice no. 3531) has conducted Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013, for the financial year 2014-15. M/s. Manish Ghia & Associates has submitted the Report confirming compliance with the applicable provisions of Companies Act, 2013 and other rules and regulations issued by SEBI and other regulatory authorities. There was no qualifications, reservations or adverse remarks made by the Practicing Company Secretary in their report. Directors Responsibility Statement Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to Directors Responsibility Statement, the Directors hereby confirm that: 1. in the preparation of the Annual Accounts for the year ended March 31, 2015, the applicable Accounting Standards have been and that no material departures have been made from the same. 2. the Directors have 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 year ended March 31, 2015 and of the profit of the Company for that period; 3. the Directors have taken proper and sufficient care to the best of their knowledge and ability 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; 4. that the Directors have prepared the Annual Accounts for the year ended March 31, 2015 on a going concern basis; 5. the Directors have laid down internal financial controls to be followed by the Company and that such internal controls are adequate and are operating effectively; and 6. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Annual Return Pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return is given in Annexure 'A' which forms part of Annual Report. Contracts / Arrangements with Related Parties All contracts and arrangements with related parties under Section 188(1) of the Act, entered by the Company during the financial year, were in the ordinary course of business and on an arm's length basis. No Material Related Party Transactions were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3) (h) of the Companies Act, 2013, in Form AOC - 2 is not applicable. All Related Party Transactions are placed before the Audit Committee for approval. An omnibus approval of the Audit Committee is obtained for related party transactions which are repetitive in nature. The Audit Committee reviews all transactions entered into pursuant to the omnibus approval(s) so granted on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website and can be accessed at the Web link: <http://www.shemarooent>. com/Rs.p=Code_of_Conduct. Particulars of Loans Guarantees or Investments made under section 186 of the Companies Act 2013 Details of Loans, Guarantees or Investments made under Section 186(4) of the Companies Act, 2013 read with Clause 32 of the Listing Agreement are as follows Notes: 1. All loans given to unrelated corporate entities / others at an interest ranging from 9% to 18%. 2. All loans are short term in nature. 3. All the loans are provided for business purposes of respective entities, repayable on demand with prepayment option to the borrower. B. Investments made There are no investments by the Company other than those stated under Note 2.11 in the Financial Statements. C. Guarantees given There are no guarantees given during the year. D. Securities given There are no securities given during the year. Whistle Blower Policy / Vigil Mechanism Your Company has adopted Whistle Blower Policy / Vigil Mechanism to comply with the regulatory requirements and to provide a framework to promote responsible and secure whistle blowing. This policy helps to protects employees wishing to raise a concern about serious irregularities within the Company. This mechanism provides for adequate safeguards against victimization of persons who use such mechanism. The policy on Whistle Blower Policy / Vigil Mechanism as approved by the Board is placed on the company's website <http://www.shemarooent.com/Rs.p=Code_of_Conduct>. Composition of an Audit Committee Your Company has originally constituted Audit Committee at the Board meeting held on August 29, 2011, ("Audit Committee"). Further it was re-constituted by the Board at its meeting held on May 29, 2014. Risk Management Policy Pursuant to the provisions of Section 134 of the Companies Act, 2013, your Company has adopted the policy and procedures with regard to risk management. The Company has laid down the framework to identify risks inherent in any business operations of the Company and provides guidelines to define, measure, report, control and mitigate the identified risks. This Policy ensures the sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the Company's business. In terms of Clause 49 of the Listing Agreement, the Constitution of Risk Management Committee was not applicable during the financial year 2014-2015. Sexual Harassment Policy The Company has in place policy on Sexual Harassment in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees are covered under this policy. Your Company has constituted Complaints Committee to redress complaints received regarding sexual harassment. During the year under review, no complaints were received in this regards. Internal Control System and Compliance Framework The Company has an Internal Control System, commensurate with size, scale and its operations. The Internal Financial controls are adequate and are operating effectively so as to ensure orderly and efficient conduct of business operations. In regards to the aforesaid, your company has appointed M/s. Mahajan & Aibara as Internal Auditors of the Company. The Internal Auditors carry out audit, covering inter alia, monitoring and evaluating the adequacy of internal control systems in the company, its compliance with operating systems, accounting procedures and policies and submit their periodical internal audit reports to the Audit Committee. Based on the Internal Audit report and review of the Audit Committee, your company undertakes necessary actions in their respective areas. The Board has also put in place requisite legal compliance framework to ensure compliance of all the applicable laws and that such systems are adequate and operating efficiently. Managerial Remuneration and Particulars of Employees The information required pursuant to 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, is appended as Annexure 'B' and forms part to the Director's report of this Annual Report. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employees were in receipt of remuneration of Rs. 60 lacs or more per annum and Rs. 5 lacs or more per month. Hence, no separate disclosure is made by the Company in this regard. Your Company has paid the remuneration to all the Directors / Key Managerial Personnel's / Employees as per the Nomination and Remuneration Policy. Corporate Governance Your Company is committed to maintain the highest standards of corporate governance, the internal governance policies are well documented and the Company has put in place a formalised system of Corporate Governance setting out the structure, processes and practices of governance within the Company. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite certificate from the Practicing Company Secretaries confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49 is attached to the Report on corporate governance. Significant and material Orders passed by the Regulators/ Courts, if any There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of your Company and its future operations. Conservation of Energy, Technology Absorption and Foreign Exchange Your Company consumes power to the extent required in administrative functions. Considering Company's business activities, information required under Section 134(3)(m) of the Companies Act,2013, read with the Companies (Disclosure of Particulars in the Directors Report) Rules, is not applicable to the Company. 1. Conservation of Energy Your Company, being a service provider, requires minimal energy consumption and every endeavour is made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible. The operations of the Company are not energy-intensive. The Company constantly evaluates and invests in new technology to make its infrastructure more energy efficient and also under cost reduction. Following energy conservation measures were taken during the year under review: • Administration keep a regular check on whether the Computer systems provided to the employees have been shut down properly at the time of closure of office etc. • Optimization of lighting by replacing tube lights with CFLs / LED. Further, since energy costs comprise a very small part of your Company's total expenses, the financial implications of these measures are not material. 2. Technology Absorption The sector in which the Company is engaged does not involve any specialized or innovative use of technology. The Company's technological initiatives are mainly used in Studio functions of the Company which uses latest state of art technology. The Company is an established Filmed Entertainment "Content House" and considering our business there is limited scope of technology absorption, adaptation and innovation. However, the Company believes that only progressive research and development will help to measure up to future challenges and opportunities. During the year under review, expenditure on research and development is not significant in relation to the nature size of operations of your Company. 3. Foreign Exchange Earnings & Outgo Details of foreign exchange earnings and outgo during the year are given in Note 2.28 and 2.30 of the Financial Statements forming part of Annual Report. Human Resources Human Resources are of paramount importance for the sustenance and growth of any industry. Being in the business of creativity, to ensure sustainable business growth, over the years your Company has been focusing on strengthening its talent management. The Company has always valued its employees. The HR department is geared towards ensuring recruitment, retention and development of the best talent in the industry with focus to contribute, strive towards excellence continuously. Your company continues to give maximum thrust to its Human Resources Development. The HR department are reviewing the Individual performance(s) on Quarterly basis. The performance(s) are measured through Key Result Areas which provide an opportunity for employees to stretch themselves and contribute to the overall success of organization. Human Resource Policies and Practices are regularly reviewed and revised to suit the employees and organization needs. The Company practices various interactive sessions on Team Building, Motivation and Stress Management to keep the employees motivated and improve their work style. The total employee strength at the end of financial year 2014-15 is 340. Your Directors wish to place on record their appreciation for the sincere and devoted efforts of the employees at all levels. Corporate Social Responsibility - Social Commitments As per the provisions of Companies Act, 2013, all companies having a net worth of Rs. 500 crore or more, or turnover of Rs.1000 crore or more or a net profit of Rs. 5 crore or more during any financial year is required to constitute a Corporate Social Responsibility (CSR) Committee of the Board comprising 3 or more directors, at least one of whom shall be an Independent Director. Pursuant to the provisions of Section 135 of the Companies Act, 2013, Corporate Social Responsibility Committee (CSR) has been constituted. The said Committee has adopted a CSR Policy with primary focus on Rural Transformation, Health care, Environment, Education and Culture, besides these focus areas, your company shall also undertake the CSR activities listed in Schedule VII of the Companies Act, 2013. The Committee shall monitor the CSR Policy and implement the same from time to time. Past from many years before the Corporate Social Responsibility (CSR) had become mandatory responsibility of the corporates, your Company has engaged in such activities for decades for improving the living standards of economically weaker section of the society. Your Company has been striving to achieve a fine balance between economic and social imperatives, while also paying attention to the needs and expectations of our internal as well as external stakeholders. Our Corporate Social Responsibility is not limited to Philanthropy, but encompasses holistic community development. Your Company is striving to fulfil its social responsibilities through donations in trusts and helping them in accomplishment of their social activities along with taking initiatives for the societies / schools which are formed for disabled persons. Accordingly, your Company spent Rs.56.69 Lacs towards CSR activities in FY 2014-2015. Implementation of some of the CSR activities did not commence before end of the financial year. The contents of the CSR policy and initiatives taken by the Company on Corporate Social Responsibility during the year 2014-15 is attached as Annexure 'C' to this Report and contents of the CSR policy is available on our website at <http://www>. shemarooent.com/Rs.p=Code_of_Conduct. Cautionary Statement Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis, describing the Company's objectives, projections, estimates and expectations,may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Company's operations includes but not limited to changes in exchange rate fluctuations, tax laws, litigation, labour relations, interest costs, political and economic environment. Acknowledgement Your Directors take this opportunity to express their sincere appreciation for the continued assistance and co-operation received from customers, shareholders, suppliers, bankers, business partners / associates, financial institutions and Central and State Governments / regulatory authorities viz. the Ministry of Information & Broadcasting, Ministry of Corporate Affairs, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Depositories and other stakeholders for their consistent support and encouragement to the Company. Your Directors recognize and appreciate the hard work and commitment of all the employees of the Company and its subsidiaries. Their dedication and competence has ensured that the Company continues to remain in the forefront of Media and Entertainment business. For and on behalf of the Board of Directors Raman Maroo (DIN: 00169152) Managing Director Atul Maru (DIN: 00169264) Jt. Managing Director Place : Mumbai date : July 30, 2015 |