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7Seas Entertainment Ltd.

BSE: 590116 Sector: IT
NSE: N.A. ISIN Code: INE454F01010
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OPEN 13.36
52-Week high 18.00
52-Week low 10.10
P/E 12.35
Mkt Cap.(Rs cr) 16.60
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 13.36
CLOSE 14.50
52-Week high 18.00
52-Week low 10.10
P/E 12.35
Mkt Cap.(Rs cr) 16.60
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

7Seas Entertainment Ltd. (7SEASENTER) - Director Report

Company director report


The Members of M/s 7Seas Entertainment Limited

We have pleasure in presenting the Twenty fourth Annual report together with

Audited accounts for the year ended 31st March 2015.


The performance during the period ended 31st March 2015 has been as under:


Particulars 2014-15 2013-14
Total Income 3298530 17403162
Total Expenditure 177811779 65034154
Profit Before Tax (174513249) (47630992)
Provision for Tax - (10422166)
Profit/(Loss) after Tax (174513249) (37208827)
Transfer to General Reserves - -
Profit available for appropriation (174513249) (37208827)
Provision for Proposed Dividend - -
Provision for Corporate Tax - -
Balance Carried to Balance Sheet (144585346) 29927903


The Company has recorded a turnover of Rs. 3298530 and sustained a Loss of Rs.174513249 in the current year against the turnover of Rs. 17403162 and a Loss of Rs.37208827 in the previous financial year ending 31.03.2014.


There were no material changes and commitments affecting financial position of thecompany between 31st March and the date of Board's Report.


During the year the Company has not changed its business activities.


Your Directors have decided not to recommend dividend for the year as the Company donot have profit.


The Board of Directors met 6 times during the year on 15.05.2014 22.05.201414.08.2014 14.11.2014 14.02.2015 and 27.03.2015 and the maximum gap between any twomeetings was less than four months as stipulated under Clause 49.


During the year Ms. L. Hemalatha and Mr. B. Mohan Rao were appointed as the Directorsof the Company.

Notices have been received from Members proposing candidature of Ms. L. Hemalatha andMr. B. Mohan Rao for the office of Director of the Company.

In accordance with the Companies Act 2013 read with Articles of Association of thecompany the Director namely Mr. L. Maruti Sanker retires by rotation and being eligibleoffers himself for re-appointment at this ensuing Annual General Meeting. Your Directorsrecommend his re-appointment.


1. Scope:

This policy sets out the guiding principles for the Nomination & RemunerationCommittee for identifying persons who are qualified to become Directors and to determinethe independence of Directors in case of their appointment as independent Directors ofthe Company.

2. Terms and References:

2.1 "Director" means a director appointed to the Board of a Company.

2.2 "Nomination and Remuneration Committee means the committee constitutedin accordance with the provisions of Section 178 of the Companies Act 2013 and clause 49of the Equity Listing Agreement.

2.3 "Independent Director" means a director referred to in sub-section(6) of Section 149 of the Companies Act 2013 and Clause 49(II)(B) of the Equity ListingAgreement.

3. Policy:

Qualifications and criteria

3.1.1 The Nomination and Remuneration Committee and the Board shall review on annualbasis appropriate skills knowledge and experience required of the Board as a whole andits individual members. The objective is to have a board with diverse background andexperience that are relevant for the Company's operations.

3.1.2 In evaluating the suitability of individual Board member the Nomination andRemuneration Committee may take into account factors such as:

• General understanding of the company's business dynamics global business andsocial perspective;

• Educational and professional background

• Standing in the profession;

• Personal and professional ethics integrity and values;

• Willingness to devote sufficient time and energy in carrying out their dutiesand responsibilities effectively.

3.1.3 The proposed appointee shall also fulfill the following requirements:

• shall possess a Director Identification Number;

• shall not be disqualified under the companies Act 2013;

• shall Endeavour to attend all Board Meeting and Wherever he is appointed as aCommittee Member the Committee Meeting;

• shall abide by the code of Conduct established by the company for Directors andsenior Management personnel;

• shall disclose his concern or interest in any company or companies or bodiescorporate firms or other association of individuals including his shareholding at thefirst meeting of the Board in every financial year and thereafter whenever there is achange in the disclosures already made;

• Such other requirements as any be prescribed from time to time under thecompanies Act 2013 Equity listing Agreements and other relevant laws.

3.1.4 The Nomination & Remuneration Committee shall evaluate each individual withthe objective of having a group that best enables the success of the company's business.

3.2 criteria of independence

3.2.1 The Nomination & Remuneration Committee shall assess the independence ofDirectors at time of appointment/ re-appointment and the Board shall assess the sameannually. The Board shall re-assess determinations of independence when any new interestor relationships are disclosed by a Director.

3.2.2 The criteria of independence shall be in accordance with the guidelines as laiddown in companies Act 2013 and Clause 49 of the Equity Listing Agreement.

3.2.3 The independent Director shall abide by the "code for independent Directors"as specified in Schedule IV to the companies Act 2013.

3.3 other directorships/committee memberships

3.3.1 The Board members are expected to have adequate time and expertise and experienceto contribute to effective Board performance Accordingly members should voluntarily limittheir directorships in other listed public limited companies in such a way that it doesnot interfere with their role as director of the company. The Nomination and RemunerationCommittee shall take into account the nature of and the time involved in a directorservice on other Boards in evaluating the suitability of the individual Director andmaking its recommendations to the Board.

3.3.2 A Director shall not serve as director in more than 20 companies of which notmore than 10 shall be public limited companies.

3.3.3 A Director shall not serve an independent Director in more than 7 listedcompanies and not more than 3 listed companies in case he is serving as a whole-timeDirector in any listed company.

3.3.4 A Director shall not be a member in more than 10 committee or act chairman ofmore than 5 committee across all companies in which he holds directorships.

For the purpose of considering the limit of the committee Audit committee andstakeholder's relationship committee of all public limited companies whether listed ornot shall be included and all other companies including private limited companiesforeign companies and companies under section 8 of the companies Act 2013 shall beexcluded.

Remuneration policy for Directors key managerial personnel and other employees

1. Scope:

1.1 This policy sets out the guiding principles for the Nomination and Remunerationcommittee for recommending to the Board the remuneration of the directors key managerialpersonnel and other employees of the company.

2. Terms and Reference:

In this policy the following terms shall have the following meanings:

2.1 "Director" means a director appointed to the Board of the company.

2.2 "key managerial personnel" means

(i) The Chief Executive Officer or the managing director or the manager;

(ii) The company secretary;

(iii) The whole-time director;

(iv) The chief financial Officer; and

(v) Such other office as may be prescribed under the companies Act 2013

2.3 "Nomination and Remuneration committee" means the committee constitutedby Board in accordance with the provisions of section 178 of the companies Act 2013 andclause 49 of the Equity Listing Agreement.

3. Policy:

3.1 Remuneration to Executive Director and key managerial personnel

3.1.1 The Board on the recommendation of the Nomination and Remuneration (NR) committeeshall review and approve the remuneration payable to the Executive Director of the companywithin the overall approved by the shareholders.

3.1.2 The Board on the recommendation of the Nomination and Remuneration committeeshall also review and approve the remuneration payable to the key managerial personnel ofthe company.

3.1.3 The remuneration structure to the Executive Director and key managerial personnelshall include the following components:

(i) Basic pay

(ii) Perquisites and Allowances

(iii) Stock Options

(iv) Commission (Applicable in case of Executive Directors) (v) Retrial benefits (vi)Annual performance Bonus

3.1.4 The Annual plan and Objectives for Executive committee shall be reviewed by theNR committee and Annual performance Bonus will be approved by the committee based on theachievement against the Annual plan and Objectives.

3.2 Remuneration to Non – Executive Directors

3.2.1 The Board on the recommendation of the Nomination and Remuneration Committeeshall review and approve the remuneration payable to the Non – Executive Directors ofthe Company within the overall limits approved by the shareholders as per the provisionsof Companies Act 2013.

3.2.2 Non – Executive Directors shall be entitled to sitting fees attending themeetings of the Board and the Committees thereof.

3.3. Remuneration to other employees

3.3.1. Employees shall be assigned grades according to their qualifications and workexperience competencies as well as their roles and responsibilities in the organization.Individual remuneration shall be determined within the appropriate grade and shall bebased on various factors such as job profile skill sets seniority experience andprevailing remuneration levels for equivalent jobs.


The Company has received necessary declaration from Mr. M. Rama Mohan Rao and Mr. A.Seetarama Murthy Independent Directors of the Company under Section 149(7) of theCompanies Act 2013 that they as Independent Directors of the Company meet with thecriteria of their Independence laid down in Section 149(6).(Annexure II)


The Audit Committee of the Company is constituted in line with the provisions ofClause 49 of the Listing Agreements with the Stock Exchanges read with Section 177 of theCompanies Act 2013.

II) The terms of reference of the Audit Committee include a review of the following:

• Overview of the Company's financial reporting process and disclosure of itsfinancial information to ensure that the financial statements reflect a true and fairposition and that sufficient and credible information is disclosed.

• Recommending the appointment and removal of external auditors fixation of auditfee and also approval for payment for any other services.

• Discussion with external auditors before the audit commences of the nature andscope of audit as well as post-audit discussion to ascertain any area of concern.

• Reviewing the financial statements and draft audit report including quarterly /half yearly financial information.

• Reviewing with management the annual financial statements before submission tothe Board focusing on:

1. Any changes in accounting policies and practices;

2. Qualification in draft audit report;

3. Significant adjustments arising out of audit;

4. The going concern concept;

5. Compliance with accounting standards;

6. Compliance with stock exchange and legal requirements concerning financialstatements and

7. Any related party transactions

• Reviewing the company's financial and risk management's policies.

• Disclosure of contingent liabilities.

• Reviewing with management external and internal auditors the adequacy ofinternal control systems.

• Reviewing the adequacy of internal audit function including the auditcharacter the structure of the internal audit department approval of the audit plan andits execution staffing and seniority of the official heading the department reportingstructure coverage and frequency of internal audit.

• Discussion with internal auditors of any significant findings and follow-upthereon.

• Reviewing the findings of any internal investigations by the internal auditorsinto the matters where there is suspected fraud or irregularity or a failure of internalcontrol systems of a material nature and reporting the matter to the Board.

• Looking into the reasons for substantial defaults in payments to the depositorsdebenture holders shareholders (in case of non-payment of declared dividends) andcreditors.

• Reviewing compliances as regards the Company's Whistle Blower Policy.

III) The previous Annual General Meeting of the Company was held on 30.09.2014 andChairman of the Audit Committee attended previous AGM.

IV) The composition of the Audit Committee and the attendance of each member of theAudit Committee are given below:

The Company has complied with all the requirements of Clause 49 (II) (A) of the ListingAgreement relating to the composition of the Audit Committee. During the financial year2014-2015 (5) four meetings of the Audit Committee were held on the 22.05.201414.08.2014 14.11.2014 and 14.02.2015.

The details of the composition of the Committee and attendance of the members at themeetings are given below:

1) Mr. M. Ramamohan Rao -- Chairman

2) Mr. A.S.R. Murthy -- Member

3) Mr. L. Maruti Sanker -- Member

4) Ms. L. Hemalatha -- Member

Name Designation Category No. of meetings held during their tenure No. of meetings attended
Mr. M. Rammohan Rao Chairman NED (I) 4 4
Mr. ASR Murthy Member NED(I) 4 3
Mr. L. Maruti Sanker Member ED(P) 4 4
* Ms. L. Hemalatha Member ED (P) 0 0

NED (I): Non Executive Independent Director

ED (P): Executive Director Promoter

* Appointed w.e.f 27.03.2015


The details of composition of the Committee are given below:

Name Designation Category No. of meetings held during their tenure No. of meetings attended
Mr. A.S.R. Murthy Chairman NED (I) 4 3
Mr. M. Ramamohan Rao Member NED(I) 4 4
Mr. L. Maruti sanker Member ED (P) 4 4
* Ms. L. Hemalatha Member ED (P) 0 0

NED (I): Non Executive Independent Director

ED (P): Executive Director Promoter

* Appointed w.e.f 27.03.2015

Terms of reference:

The main term of reference of the Committee is to approve the fixation/revision ofremuneration of the Managing Director/Whole Time Director of the Company and whileapproving:

• To take into account the financial position of the Company trend in theindustry appointee's qualification experience past performance past remuneration etc.

• To bring out objectivity in determining the remuneration package while strikinga balance between the interest of the Company and the Shareholders.

Remuneration Policy:

The objectives of the remuneration policy are to motivate Directors to excel in theirperformance recognize their contribution and retain talent in the organization and rewardmerit.

The remuneration levels are governed by industry pattern qualifications and experienceof the Directors responsibilities shouldered individual performance etc.

No remuneration has been paid to the Executive Directors during the year.


Composition meetings and the attendance during the year:

The Shareholders/Investors Grievance Committee was constituted to look into theredressing of Shareholders and Investors complaints concerning transfer of shares nonreceipt of Annual Reports and non receipt of Dividend and other allied complaints.

A. The details of composition of the Committee are given below:

Name Designation Category No. of meetings held during their tenure No. of meetings attended
Mr. L. Maruti Sanker Chairman ED (P) 4 4
M. Rammohan Rao Member NED(I) 4 4
Mr. A.S.R. Murthy Member NED(I) 4 4
*Ms. L. Hemalatha Member ED (P) 0 0

NED (I): Non Executive Independent Director

ED (P): Executive Director Promoter

* Appointed w.e.f 27.03.2015

B. Powers:

The Committee has been delegated with the following powers:

• to redress shareholder and investor complaints relating to transfer of sharesDematerialization of Shares non-receipt of Annual Reports non-receipt of declareddividend and other allied complaints.

• to approve transfer transmission and issue of duplicate / fresh sharecertificate(s)

• Consolidate and sub-division of share certificates etc.

• To redress approve and dispose off any other complaints transactions andrequests etc. received from any shareholder of the company and investor in general.

The Board has delegated the power to process the transfer and transmission of shares tothe Registrar and Share Transfer Agents who process share transfers within a week oflodgment in the case of shares held in physical form.

The Company has designated an e-mail ID called forredressal of shareholders ' complaints/grievances.


A.) Composition:

The Details of composition of the Committee are given below:

Name Designation Category
Mr. L. Maruti Sanker Chairperson ED(P)
Mr. M. Rama mohan Rao Member NED(I)

NED (I) : Non Executive Independent Director

NED (NI) : Non Executive Non-Independent

Role and Responsibilities of the Committee includes the following:

• Framing of Risk Management Plan and Policy

• Overseeing implementation of Risk Management Plan and Policy

• Monitoring of Risk Management Plan and Policy

• Validating the process of risk management

• Validating the procedure for Risk minimization.

• Periodically reviewing and evaluating the Risk Management Policy and practiceswith respect to risk assessment and risk management processes.

• Continually obtaining reasonable assurance from management that all known andemerging risks have been identified and mitigated or managed.


Vigil Mechanism Policy has been established by the Company for directors and employeesto report genuine concerns pursuant to the provisions of section 177(9) & (10) of theCompanies Act 2013. The same has been placed on the website of the Company.


Pursuant to the provisions of Sec. 134(5) of the Companies Act 2013 the Board ofDirectors of your Company hereby certifies and confirms that: a. In the preparation of theAnnual Accounts the applicable accounting standards have been followed along with properexplanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistentlyand made judgment and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

c. The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the Assets of the Company and for preventing and detecting fraud and otherirregularities;

d. The Directors have prepared the Annual accounts on a going concern basis.

e. The Directors of the Company had laid down internal financial controls and suchinternal financial controls are adequate and were operating effectively.

f. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.


The Company has complied with the required provisions relating to statutory compliancewith regard to the affairs of the Company in all respects.


Your Company does not have any subsidiary.


As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report (FORMAT IN ANNEXURE I)


M/s. M.M Reddy & Co Chartered Accountants Statutory Auditors of the Companyretire at the ensuing Annual General Meeting and being eligible have expressed theirwillingness for re-appointment. Your directors propose the appointment of M/s. M.M Reddy& Co Chartered Accountants as statutory auditors to hold office until the conclusionof the next Annual General Meeting of the company.


M/s. Chanamolu & Co. Chartered Accountants Hyderabad are the internal Auditors ofthe Company.


Pursuant to the provisions of Section 134(3)(f) & Section 204 of the Companies Act2013 Secretarial audit report as provided by M/s. S. S. Reddy & AssociatesPracticing Company Secretaries is annexed to this Report as annexure.


(a) Statutory Auditors Report:

The Board has duly reviewed the Statutory Auditor's Report on the Accounts for the yearended March 31 2015 and has noted that the same does not have any reservationqualification or adverse remarks. However the Board decided to further strengthen theexisting system and procedures to meet all kinds of challenges and growth in the marketexpected in view of the robust capital market in the coming years.

(b) Secretarial Audit Report:

The Board has duly reviewed the Secretarial Audit Report on the Compliances accordingto the provisions of section 204 of the Companies Act 2013 and noted that the secretarialAudit Report contains the following observations.

The Board has duly reviewed the Secretarial Audit Report on the Compliances accordingto the provisions of section 204 of the Companies Act 2013 and noted is at the same thatthe company has not appointed company secretary CFO and Internal Auditor during the yearbut the company is taking necessary measures to appoint the same at the earliest.


The required information as per Sec.134 (3) (m) of the Companies Act 2013 is providedhereunder:

A. Conservation of Energy

Adequate measures have been taken to reduce energy consumption wherever possible.Total energy consumption and energy consumption per unit of production is not applicableas company is not included in the industries specified in the schedule.

B. Technology Absorption

1. Research and Development (R&D) : Nil
2. Technology absorption adoption and innovation : Nil

C. Foreign Exchange Earnings and Out Go

1. Foreign Exchange Earnings : Rs. 1954141/-
2. Foreign Exchange Outgo : Nil


Your Company has not accepted any deposits falling within the meaning of Sec.73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014 duringthe financial year under review.


During the period under review there were no significant and material orders passed bythe regulators or Courts or Tribunals impacting the going concern status and the company'soperations in future.


The company's properties have been adequately insured against major risks. All theinsurable interests of your Company including machinery stock and liabilities underlegislative enactments are adequately insured.


The company has not given loans Guarantees or made any investments during the yearunder review.


Your Company follows a comprehensive system of Risk Management. Your Company hasadopted a procedure for assessment and minimization of probable risks. It ensures that allthe risks are timely defined and mitigated in accordance with the well structured riskmanagement process.


Since your Company does not have the net worth of Rs. 500 Crores or more or turnoverof Rs. 1000 Crores or more or a net profit of Rs. 5 Crores or more during the financialyear so section 135 of the Companies Act 2013 relating to Corporate SocialResponsibility is not applicable to the Company and hence the Company need not adopt anyCorporate Social Responsibility Policy


During the year the Company had not entered into any contract/arrangement/transactionwith related parties which could be considered material in accordance with the policy ofthe company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website


As per section 149 of the Companies Act 2013 read with clause VII (1) of the scheduleIV and rules made thereunder the independent Directors of the company had a meeting on27.03.2015 without attendance of non-independent directors and members of management. Inthe meeting the following issues were taken up:

(a) Review of the performance of non-independent Directors and the Board as a whole;

(b) Review of the performance of the Chairperson of the company taking into accountthe views of executive directors and non-executive directors;

(c) Assessing the quality quantity and timeliness of flow of information between thecompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties.

The meeting also reviewed and evaluated the performance of non-independent Directors.The company has 3 (three) non-independent Directors namely:

i) Mr. L. Maruti Sanker ii) Mr. B. Mohan Rao iii) Ms. L. Hemalatha

The meeting recognized the significant contribution made by non-independent directorsin the shaping up of the company and putting the company on accelerated growth path. Theydevoted more time and attention to bring up the company to the present level.

The meeting also reviewed and evaluated the performance of the Board as whole interms of the following aspects:

• Preparedness for Board/Committee meetings

• Attendance at the Board/Committee meetings

• Guidance on corporate strategy risk policy corporate performance andoverseeing acquisitions and disinvestments.

• Monitoring the effectiveness of the company's governance practices

• Ensuring a transparent board nomination process with the diversity ofexperience knowledge perspective in the Board.

• Ensuring the integrity of the company's accounting and financial reportingsystems including the independent audit and that appropriate systems of control are inplace in particular systems for financial and operational control and compliance withthe law and relevant standards.

It was noted that the Board Meetings have been conducted with the issuance of propernotice and circulation of the agenda of the meeting with the relevant notes thereon.


Cost Audit is not applicable to your Company.


Under section 197(12) of the Companies Act 2013 and Rule 5(1)(2) & (3) of theCompanies(Appointment & Remuneration) Rules 2014 a remuneration of Rs. 2400000/-p.a. is being paid to Mr. L. Maruti Sanker Managing Director of the Company.

The required disclosures are given as Annexure.


Since the paid up capital of the Company is less than Rs. 10 Crores and Net worth ofthe Company is less than Rs. 25 Crores Corporate Governance is Not Applicable.


The Company is not a NBFC Housing Companies etc. and hence Industry based disclosuresis not required.



1 Issue of sweat equity share NA
2 Issue of shares with differential rights NA
3 Issue of shares under employee’s stock option scheme NA
4 Disclosure on purchase by company or giving of loans by NA
it for purchase of its shares
5 Buy-back shares NA
6 Disclosure about revision NA
7 Preferential Allotment NA


Your Directors are pleased to record their sincere appreciation of the contribution bythe staff at all levels in the improved performance of the Company.

None of the employees is drawing Rs. 500000/- and above per month or Rs. 6000000/-and above in aggregate per annum the limits prescribed under Section 134 of the CompaniesAct 2013.


The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaint Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposedduring the calendar year.

No. of complaints received : Nil
No. of complaints disposed off : Nil


Your directors would like to express their grateful appreciation for assistance andco-operation received from clients banks investors Government other statutoryauthorities and all others associated with the company. Your directors also wish to placeon record their deep sense of appreciation for the excellent contribution made by theemployees at all levels which enabled the company to achieve sustained growth in theoperational performance during the year under review.

For and on behalf of the Board of

M/s. 7Seas Entertainment Limited

Sd/- Sd/-
L. Maruti Sanker L. Hemalatha
Place: Hyderabad Managing Director Whole time Director
Date: 14.08.2015 (DIN: 01095047) (DIN: 02226943)