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Pentamedia Graphics Ltd.

BSE: 500329 Sector: Media
NSE: PENTSFWARE ISIN Code: INE202A01022
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VOLUME 122863
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P/E 24.00
Mkt Cap.(Rs cr) 30
Buy Price 0.72
Buy Qty 23360.00
Sell Price 0.74
Sell Qty 5891.00
OPEN 0.71
CLOSE 0.72
VOLUME 122863
52-Week high 0.90
52-Week low 0.53
P/E 24.00
Mkt Cap.(Rs cr) 30
Buy Price 0.72
Buy Qty 23360.00
Sell Price 0.74
Sell Qty 5891.00

Pentamedia Graphics Ltd. (PENTSFWARE) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Fortieth Annual Report on the business andoperations of your company together with the Audited Financial Statements for the yearended 31st March 2016. The Management Discussion and Analysis is given as part of thisReport.

Financial Highlights

Rs. in Crore

Particulars 2015-2016 2014-2015
Gross Income 4.17 5.44
Profit before interest and depreciation 1.56 3.13
Depreciation and Amortisation expenses 1.36 3.12
Profit before tax 0.20 0.03
Provision for tax
- Tax expense - 2.46
- Deferred tax asset 0.19 0.62
Exceptional items written off (51.00) (147.84)
Net Profit / Loss after tax (50.99) (149.65)
Balance of Profit / Loss carried forward (326.67) (275.68)

Financial Performance

The Gross profit amounted to Rs.1.56 Crore which is 37% of Gross income as againstRs.3.13 Crore of 58% of Gross income of previous year. The Profit before tax andexceptional items amounted to Rs.0.20 Crore as against Rs.0.03 Crore of previous year. Thegroupings have been done accordingly the new standards. The Company is not havingsubsidiaries hence consolidated statements are not applicable.

Business Overview

Your Company is continuing its activities of Projects Products Consultancy Trainingin Edutainment Infotainment and Entertainment for big small and personal screens.

Content Creation

During the year the Company successfully completed an Animation project for a Belgiumbased Multinational Company M/s.WABCO Chennai for its auto components unit. Freshproposal have been given for their other branches which will be executed next year.Proposal to a Major Infrastructure Company to do an animation project viz. “SewageWater Plant” is under process.

As reported earlier Digital 3D Animation film “Mustafa Vs Magician” viewablethrough 3D Glass is under post production and we are planning to release the same duringthis Christmas/Festival holidays. More Episodes 2D TV series viz.” ThirukkualStories” ”Zen Stories” & “Proverb Stories” are in progress.

Content Distribution

During the year the Company have engaged in content distribution for live action andanimated films for Theatrical Broadcasting CableTV Internet/Online Merchandising. Aspart of distribution and exhibition the Company's online streaming APP & Web is knownas PMGflic is showcased to host others contents for viewers on subscription model.

Content Publishing

The Company has published so far the following technical books and comics in both paperback and E-book forms with prices range from Rs.150 to Rs.700 and the same are availablein the leading online stores viz. “Amazon.Com” “Pothy.Com” etc.:

Text Books Comics
H Visual Effects - Theory and Practice H Legend of Buddha
H Cloud Computing
H 3D Printing H Gulliver & Lilliputs with 3D Glass

The Compilation of other Books viz. “Internet of Things”“Blender-An Animation Tool” “Apps Development for Mobile OperatingSystems” are in pipeline and will be released shortly.

APPS on Mobile & Tablets

In order to participate in the recent revolution of OTT (Over-the-top) video streamingin India along with other channels the Company launched “PMGFlic” an Appfor Mobile & Tablets and also www.pmglflic.com web for online streaming of Animationvideos the contents that are being exhibited from the Company archives stored in digitallibrary which were earlier screened in NumTV.Com is now enable to stream for Mobile /Tablets via App “PMGFlic” for individual consumers both India &International to view online. Later this App will host other's contents for viewers tosubscribe. We have developed a client based Mobile App for a Pharma Company. Otherin-house Apps viz. “The Legend of Buddha” (Comic) & “Gulliver andLilliputs” (3D Comic with Glass) have been developed and being made available inGOOGLE PLAY STORE. The Company is in the process of constructing e-commerce store viz.PENTAMALL APP for Mobile and Tablet and other Apps for Food & Beverage PersonalDocument System Healthcare & E-publishing are being developed.

Training

Company has been conducting the skill based training programmes viz.:

Digital Media Software
> 2D/3D Animation > App Development in Android & iOS
> VFX/Special Effects > Web Design and Development
> Video Editing > Robotics
> Gaming > Cloud Computing
> Graphic Designing and 3D Printing etc. > Core Java / C & C++

Trained students are being used for Content creation & APPs development. Thetraining programmes are extended online by an exclusive portal(www.pentamedia.in/elearning ) in Digital Media & Software. The ELearning aninteractive realtime/online system with audio & video content enables the learner tohave face to face classrooms simulation.

The company is focussing its training towards preparing the students to have knowledgeskill and employibility by developing Apps and creating contents for big small andpersonal screens. The training is also for virtual and Augumented Relaity (AR) gaming. Thecompany conducted seminars and campus training programmes in Education institutions viz.Adiparasakthi Engineering College Chennai Vellamal Engineering College Chennai St.Joseph Engineering College Cuddalore Parisutham College of Engineering Tanjore MadrasChristian College School Chennai in Software & Animation.

The trend of re-visiting our old film contents such as Pandavas Buddha and TV contentsviz. Bible Stories Panchtantra Stories etc. will be recreated using the latest technologyof Digital 3D for Big Small and Personal Screens.

Dividend & Reserves

Taking into account overall financial performances of the Company Your Directors do notrecommend any dividend for the financial year 2015-16. Consequently no amount istransferred to General Reserve Account.

Share Capital

The paid-up equity share capital of the Company as on 31st March 2016 stood at Rs.41.50Crore. During the year under review the Company has not raised its issued capital withdifferent voting rights nor has granted any stock options or sweat equity and none of thedirectors hold instruments that are to be converted as equity shares as on 31st March2016. Mrs. Sumathi Sridharan (DIN: 00162055) Director holds 10000 equity shares in thecompany.

Deposits

During the year under review Your Company has not accepted any Deposits within themeaning of provisions of Chapter V of the Companies Act 2013 (Acceptance of Deposits byCompanies) read with the Companies (Acceptance of Deposits) Rules 2014.

Risk Management

Your Company has a robust Risk Management policy The Company through a steeringcommittee oversees the Risk Management process including risk identification impactassessment effective implementation of the mitigation plans and risk reporting. Adetailed Risk Management policy of the Company to have good Corporate Governance is hostedin the Company's official website www. pentamedia.in

Internal Control Systems and Their Adequacy

Your Company is having a sound internal system which enables that all assets areprotected against loss from unauthorized use and all transactions are recorded andreported correctly. The classification and accounting of assets is carried out as per thestandard procedures followed by the Company. This system is further supplemented byinternal audit carried out by an independent Chartered Accountant and periodical review bymanagement. The Audit Committee of the Board of Directors Statutory Auditors and Headsare periodically appraised of the internal audit findings and corrective actions taken.

Directors

During the year under review Mr.R.Swaminathan (DIN 02052310) was appointed asIndependent Director for a period of 5 years with effect from 3rd September 2015 for aterm upto the conclusion of 44th Annual General Meeting to be held in the calendar year2020 not liable to retire by rotation. Mr.S.D.Viswanathan (DIN 00162156) IndependentDirector has resigned from the board with effect from 27.09.2015 At the 39th AnnualGeneral Meeting held on 3rd September 2015

Based on the recommendation of the Nomination & Remuneration Committee and theapproval of the Board Mrs.Sumathi Sridharan Director who retire by rotation and beingeligible offer herself for re appointment. The Directors recommend Mrs.Sumathi Sridharanfor re-appointment.

Finance & Accounts

Your Company prepares its financial statements in compliance with requirements ofSection 134 of Companies Act 2013 and generally accepted accounting principles (GAAP) inIndia.

MANAGEMENT DISCUSSION AND ANALYSIS

Media & Entertainment Industry

The Indian Media and Entertainment (M&E) industry is a sunrise sector for theeconomy and is making high growth strides. Proving its resilience to the world the IndianM&E industry is on the cusp of a strong phase of growth backed by rising consumerdemand and improving advertising revenues.The industry has been largely driven byincreasing digitisation and higher internet usage over the last decade. Internet hasalmost become a mainstream media for entertainment for most of the people.

The Indian media & entertainment sector is expected to grow at a Compound AnnualGrowth Rate (CAGR) of 13.9 per cent year-on- year to reach Rs 196400 crore (US$ 28.82billion) by 2019. In 2015 the overall Media and Entertainment industry grew 11.7 per centover 2014@. The largest segment India's television industry is expected to maintain itsstrong growth momentum led by subscription revenues representing a year-on-year growth ofabout 13.2 per cent to reach Rs 60000 crore (US$ 8.8 billion) in 2015. Industry estimatesreveal that video games industry grew at a record 22.4 per cent in 2014 over 2013 whereinits net worth rose to US$ 392 million. The Indian animation industry was valued at US$ 748million in 2014 and is forecasted to grow at 15-20 per cent per annum. The Foreign DirectInvestment (FDI) inflows in the information and broadcasting (I&B) sector (includingprint media) in the period April 2000 - December 2015 stood at US$ 4.55billion as perdata released by Department of Industrial Policy and Promotion (DIPP).... (Source FICCI)

The animation and visual effects (VFX) segment within the M&E industry is lookingquite positive. VFX has shown tremendous growth from doing mainly pre- and post-productionjobs procured from overseas to serving films television and commercials with world-classcontent. In the coming years India animation studios will develop content to cater toglobal consumers via digital platforms such as Apple iTunes Android Netflix and Windows.The animation and VFX market is driven by growth in the children's television genre andvisual effects in movies

Software

IT & ITeS

India will remain the world's fastest growing information technology (IT) market in2016 as it is expected to spend more than $72 billion on IT services products andhardware up from 7.2% from the current year. The growth will come on the back of thedigitization wave catching up with Indian companies and the growing number of connecteddevices that form the Internet of Things (IoT).

India's IT market is projected to grow annually at a rate of 4.95% between 2015 and2019—the fastest globally—to touch $85.3 billion by the end of 2019.The robustgrowth will help India overtake Australia to become the second largest IT market in theAsia-Pacific by 2019 behind China. Devices which include mobile phones personalcomputers and tablets will account for almost 33% of the overall IT spend in Indiagrowing at 9.3% in 2016. While data centre systems will grow 3.9% in 2016 IT serviceswhich accounts for 18.1% of the overall IT spend will be the fastest growing segment in2016 with 13.8% growth year on year. Software which accounts for nearly 7% of IT revenuein India will grow 12.7%. Communication services will continue to account for the largestshare of IT spend: 39.2% of revenue in 2016. However this will also be the slowestgrowing segment with a 2.1% rise in revenue in 2016. As per the research firm's survey ofchief information officers Indian IT budget growth of 11.7% is one of the highest in theworld while global average is 1%. “The IT industry is being driven by digitalbusiness and an environment driven by a connected world. (Source Gartner)

Apps on Mobile & Tablet

India witnessed the highest number of internet users via Mobile & Tablets per yearvs. any other country in the world. As of June 30 2015 52 million consumers gainedaccess to the Internet vs the prior year according to More importantly over 60% ofconsumers access the internet via their mobile devices — 213 million people by end ofJune to be exact. (Source The Internet and Mobile Association Of India). Mobile sitesreport a third of their sales through their mobile apps in India! Mobile payment apps arealso experiencing rapid growth. Another area where mobile apps are growing is streamingonline videos music etc.. It is clear that mobile apps play a dominant role in shapingconsumer behavior in India. An example to highlight this point is the following graphwhich shows the rapid growth of paid app revenue in India (2016).

Internet & E-Commerce

Internet & E-Commerce market in India is likely to touch $128 billion in 2017 fromthe current level of $42 billion in 2015 due to increase in mobile and internetpenetration m-commerce sales payment options exciting discounts according to the jointstudy brought out by ASSOCHAM and Deloitte. With an increasing mobile and internetpenetration m-commerce sales advanced shipping and payment options exciting discountsand the push into new international markets by e-businesses are the major drivers of thisunprecedented growth. The big retailers are increasingly focusing on their digitalstrategies in order to gain the obvious benefits of online platforms - wider reach alwayson personalization to name a few. The e-commerce companies are concentrating theirefforts on increasing the penetration of their mobile apps for higher growth. Big playersin this space claim to have more than 50% of their revenue coming from mobile apps.

The future of e-commerce is bright and growth will come from mobile platformspersonalization social media analytics omni-channel service and sharing economybusiness models. The e-commerce industry is an exciting place with the interplay ofsocial mobility analytics cloud (SMAC) digital 3D and virtualization. The currenthigh valuations in spite of losses perhaps are indicative of the future potential.Online travel one of the key drivers of India's e-commerce market accounts for nearly71% of e-commerce business in India. Though the online retail market in India currentlyat $1.6 billion is a miniscule fraction of India's overall $500 billion retail industry;retail e-commerce has recorded a three-fold growth since 2011 predominantly driven bymillion dollar investments by domestic and foreign investors.

On the other hand mobile commerce (m-commerce) is growing rapidly as a stable andsecure supplement to the e-commerce industry. Shopping online through smart phones isproving to be a game changer and industry leaders believe that m-commerce couldcontribute up to 70% of their total revenues.

Around 75% of Indian internet users are in the age group of 15 to 34 years. Thiscategory shops more than the remaining population. Peer pressure rising aspirations withcareer growth and fashion trends encourage this segment to shop more than any othercategory and India. This category therefore clearly enjoys a demographic dividend thatfavours the growth of the India e-commerce sector. (Source ASSOCHAM).

E-book Publishing

India's book market is the sixth largest in the world and second among the Englishlanguage ones.The statistics cited earlier came from an India Book Market Report byNielsen with the Association of Publishers in India and the Federation of IndianPublishers. It values the print book market in India including imports at $3.9 billion(Rs 26000 crore). Its compounded annual growth was 20.4 per cent between 2011-12 and2014-15. Literacy in India is rising rapidly from 65 per cent in 2001 to 74 per cent in2011 and it is predicted to reach 90 per cent in 2020. The Indian e-book market has alsoseen a major overhauling with internet expansion and spread of mobile phones speciallysmartphones. Many gaps are present and a look at India's neighbours is interesting.Foreseeing a rosy outlook for the publishing sector 2016-2018 will see a dramatic changein the way it is going to function.

Operational & Financial challenges

Implementing “Green Initiative”

The Company's equity capital is Rs.41.50 Crore with par value of Re.1 from 2008 and thetotal shareholders as on date is 1.82 lacs. As per the shareholding pattern there are 0.62lacs shareholders are holding shares from 1 to 100 & the shareholders those who havenot registered the e-mail ids. are 1.1 lacs. As You are aware that the Government's“Green Initiative” programme requires communicating all information in digitalformat for efficient savings. The cost involved in sending the physical documents toshareholders involves substantial cost in printing postage etc. The Company isconsidering the effective options to follow this initiative with shareholders support.

Income Tax Claims & Refund

Pentamedia & Pentasoft were under 100% EOU as per STPI/EHTP Scheme if Government ofIndia till 2010. Both the companies have paid Rs.48.26 Crores the appeals are in variousforums in IT and courts for the refund. A detailed report given in the Notes on Accountsof this Annual Report.

Exceptional items of Rs.51 Crore

This exceptional item is the liability settled to Dallah Albaraka (DAL) Ireland. DALgot an order in 2006 from Queens Court London(UK) against Pentasoft towards the advancetaken in 2001 for various projects for the value of $ 9.95 million. Pentasoft merged withPentamedia vide High Court of Madras order dated 03.08.2009 (O.A Nos.28 & 29 of 2009)w.e.f 01.10.2008. DAL appealed in various courts in India and abroad for implementation ofQueens Court Order. After appeals and counter appeals in various courts DAL got anattachment order from High Court of Madras attaching Pentamedia's property at KodambakkamChennai vide order dated 19.06.2012 (O.A No. 299 of 2011). To have smooth internationalbusiness and to leverage the assets our legal counsel advised to have a settlement withDAL and the Company entered into an agreement for settlement of Rs.51 Crore as per theorder of High Court of Madras dated 16.03.2016 (A. NO. 1399 of 2016) and RBI PermissionNo.Che.FED.IMD/4506/04.01005/2015-16 dated 25.02.2016. The Company has paid Rs.25 Crore inMarch 2016 Rs.15 Crore was paid in May 2016 through sale of part of the property inKodambakkam Chennai and the balance of Rs.11 Crore will be paid on or before 31stDecember 2016.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as “Annexure A” as per section 92 of the Companies Act 2013.

Key Managerial Personnel

During the year under review the Company has not appointed/resigned any persons as KeyManagerial Personal.

Evaluation of Board's Performance

As per the provisions of Section 134(3)(p) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas evaluation of the working of its Audit Committee Nomination and RemunerationCommittee Risk Management Committee and Stakeholders Relationship Committee. The mannerin which the evaluation has been carried out is explained in the Corporate GovernanceReport.

Number of the meetings of the Board

The Board had met (4) times during the financial year ended 31st March 2016 on 29thMay 2015 24th July 2015 13th November 2015 and 29th January 2016. The details of themeetings are given under the Report on Corporate Governance.

Familiarization Programme for Independent Directors

The details of familiarization programmes to Independent Directors with the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company at the link www.pentamedia.in

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 (Act) stating that the IndependentDirectors of the Company met with the criteria of Independence laid down in Section 149(6)of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Particulars of LoansGurantees or Investments By Company (u/s 186)

The complete details of loans guarantees and Investments as per the provisions ofSection 186 of Companies Act 2013 are given in the notes on accounts of the financialstatements.

Vigil Mechanism/Whistle Blower Policy

The Company has taken steps to establish the Vigil Mechanism/Whistle Blower Policy asis stipulated in the clause 49 of the Listing Agreement and Pursuant to Section 177(9)& 177(10) of the Companies Act 2013. This provides a mechanism to raise concerns aboutactual or suspected frauds unethical behaviour safeguards against victimization ofemployees etc and the same has been posted in the offi cial website of the Companywww.pentamedia.in .

Nomination and Remuneration Committee

Pursuant to Section 178 of the Companies Act 2013 the Board has constituted aNomination and Remuneration Committee consisting of the following members

1. Mr.R.Kalyanaraman - Chairman
2. Mrs.Sumathi Sridharan - Member
3. Mr.R Swaminathan - Member

The said committee has been empowered and authorized to exercise powers as entrustedunder the provisions of Section 178 of the Companies Act 2013. The Company had laid outand following the policy on director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under sub section 3 of Section 178 of the Companies Act 2013.

Policy on Criteria for Board Nomination and Remuneration policy is available in thewebsite of the Company link www.pentamedia.in Related Party Transactions

All transactions entered by the Company with Related Parties were in the ordinarycourse of business and at arms' length basis and that provisions of Section 188 of theCompanies Act 2013 are not attracted. Hence the disclosure in form AOC-2 is not required.Further there are no material related party transactions during the year under reviewwith the promoters directors or key managerial personnel. All related party transactionswere placed before the audit committee and board for approval and a omnibus approval wasobtained on quarterly basis.

The Company has formed a policy on related party transactions through standardoperating procedures for the purpose of identification and monitoring of such transactionwhich has hosted in the Company's official website www.pentamedia.in

Significant and Material Orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company.

Directors Responsibility Statement

Pursuant to the requirement under Section 134 (3)(c) of the Companies Act 2013 inrelation to the Annual Financial Statements for the Financial Year 2015-2016 yourDirectors confirm that:

a) The Financial Statements of the Company comprising of the Balance Sheet as at 31March 2016 and the Statement of Profit & Loss for the year ended on that date havebeen prepared on a going concern basis following as per the applicable accountingstandards along with proper explanation relating to material departures;

b) Accounting policies selected were applied consistently and the judgments andestimates related to the financial statements have been made on a prudent and reasonablebasis so as to give a true and fair view of the state of affairs of the Company as at 31March 2016 and of the profit of the Company for the year ended on that date; and

c) Proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 to safeguard theassets of the Company and to prevent and detect fraud and other irregularities.

d) that the annual accounts for the year ended 31st March 2016 have been prepared ona ‘going concern' basis;

e) that the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

f) that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Statutory Auditors

Pursuant to Section 139 of the Act and Rules made there under Messrs. Babu Peram &Associates Chartered Accountants were appointed as statutory auditors of the Company atthe annual general meeting held on 28th August 2014 for a period of 5 years commencingfrom the closure of the 38th Annual general Meeting till the closure of the 43rd AnnualGeneral Meeting subject to ratification by the members at every AGM. Accordingly yourdirectors recommend the ratification of the appointment of Messrs. Babu Peram &Associates Chartered Accountants as statutory auditors of the Company from theconclusion of the 40th Annual General Meeting till the conclusion of the 41st AnnualGeneral Meeting.

Internal Auditors

The Company has appointed M/s.Anand & MadhanChartered Accountants (Firm Reg.No.009671S)Chennai as Internal Auditors of the Company for the financial year 2015-16.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed Mr.R.Sridharan of M/s.R.Sridharan & AssociatesCompany Secretaries in Practice (CP No.3239) Chennai to undertake the Secretarial Auditof the Company. The Secretarial Audit Report is annexed to this report as Annexure -B.

Explanation and Comments

The reports of Statutory auditors and that of the Secretarial Auditors are selfexplanatory and have no adverse comments

Material Change

There is no material change or commitments after the closure of the financial year.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the workplace (Prevention Prohibition &Redressal) Act 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-16.

No. of complaints received - Nil

No. of complaints disposed off - Not Applicable

COMPOSITION OF AUDIT COMMITTEE

Pursuant to Section 177 of the Companies Act 2013 the Audit Committee was constitutedby the Board of Directors and consists of the following members:

1. Mr. R. Kalyanaraman - Chairman
2. Mr. R Swaminathan - Member
3. Mrs. Sumathi Sridharan - Member

The Board has accepted the recommendations of the Audit Committee and there were noincidences of deviation from such recommendations during the financial year under review.

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

The Company through its Corporate Social Responsibility Committee had formulated a CSRpolicy as required under Section 135 of the Companies Act 2013.

The following is the composition of the Corporate Social Responsibility Committee.

a) Mr. R. Kalyanaraman - Chairman
b) Mr. R. Swaminathan - Member
c) Mrs. Sumathi Sridharan - Member

SCOPE OF CSR POLICY

This policy will apply to all projects/programmes undertaken as part the Company'sCorporate Social Responsibility and will be developed reviewed and updated periodicallywith reference to relevant changes in corporate governance international standards andsustainable and innovative practices.

The policy will maintain compliance and alignment with the activities listed inSchedule VII and Section 135 of the Companies Act 2013 and the rules framed there underas amended from time to time.

CSR POLICY IMPLEMENTATION

The Company shall undertake CSR project/programmes identified by the CSR Committee andapproved by the Board of Directors in line with the CSR Policy. The CSP Policy of theCompany is uploaded in the website of the Company www.pentamedia.in . The spending on CSRactivities is not applicable to our Company.

VIGIL MECHANISM

The Company has devised a vigil mechanism in pursuance of provisions of Section 177(10)of the Companies Act 2013 for Directors and employees to report genuine concerns orgrievances to the Audit Committee in this regard and details whereof are available on theCompany's website.

CORPORATE GOVERNANCE REPORT

All material information was circulated to the directors before the meeting or placedat the meeting including minimum information required to be made available to the Boardas prescribed under Part A of Schedule II of Sub- Regulation 7 of Regulation 17 of theListing Regulations.

In terms of Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 a Report on CorporateGovernance along with a Certificate from the Statutory Auditor's of the Company confirmingthe compliance with the conditions of Corporate Governance as stipulated under Part E ofSchedule V of Sub- Regulation 34(3) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is attached to this report.

Human Resources

The Company takes pride in the commitment competence and dedication shown by itsemployees (including outsourced) in all areas of business. The Company is committed tonurturing enhancing and retaining top talent through superior learning & organizationdevelopment as a part of Corporate HR function. It is a critical pillar to support theorganization growth and its sustainability over the long run.

Conservation of Energy Technology Absorption and Foreign Exchange and Outgo

The Company's core business activities in Software & Digital Media for ProductsProjects Consultancy & Training. Since this business does not involve anymanufacturing activity most of the Information required to be provided under Section134(3)(m)) of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 areNil / Not applicable.

However the information as applicable are given hereunder:

a) Conservation of Energy

During the year due to power scarcity the consumption of power & fuel were Rs 8.17lacs as against Rs 7.69 lacs of pervious year. The Company is taking all the measurementsfor optimal use of energy to avoid wastages and conserve energy as far as possible

b) Technology Absorption

Your Company using latest technology into its Digital Media & Software with Audioand Video compression to make available the Edutainment Entertainment & Infotainmentin single platform to a common man through APPs & Digital Contents and also theconversion of old contents having low resolution into latest 4K resolution.

c) Foreign Exchange Earnings and Outgo

During the year foreign exchange earnings & outgo is NIL

Particulars of Employees

The ratio of remuneration of each Director to the median of employees' remuneration asper Section 197(12) of the Companies Act 2013 read with Rule 5 of the Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014 is annexed to andforms part of this report.

Listing Agreement

The Securities and Exchange Board of India (SEBI) on 2nd September 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effectivefrom 1st December 2015 and accordingly all listed entities were required to enter intothe listing agreement within six months from the effective date. The Company entered intoListing Agreement with BSE Limited during January 2016.

Listing of Securities in Stock Exchanges

The Company's Equity Shares are presently listed on BSE Ltd

Appreciation

Your Company to express its appreciation for the continued co-operation of theStatutory Authorities both state and central Banks & Financial InstitutionsAssociates vendors and major shareholder M/s.Kotak Mahindra Bank Ltd.

Your Company also wish to thank all employees including the outsourced for theircontribution and support throughout the year.

General

Your Directors place on record their appreciation for the continued co-operationsupport and assistance extended to the Company by its Bankers Shareholders Government ofIndia and Government of Tamil Nadu.

On behalf of the Board of Directors
Chennai V.Chandrasekaran R.Kalyanaraman
29th July 2016 Managing Director Director
DIN: 00158019 DIN:00041770

STATEMENT OF EMPLOYEES' REMUNERATION

A. No employee was paid remuneration in excess of Rs.5 Lacs per month or Rs.60 lacs perannum during 2015-16 and hence there is no disclosure requirement as per Rule 5(2)of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014.

Name and Designation Remuneration Qualification/ Experience (Years) % of equity shares held in the company Whether relative of any director or manager
Mr. V. Chandrasekaran Managing Director Rs. 2400000 M.E. in Computer Science (34 Years) Nil No

C. The details of remuneration during the year 2015-16 as per Rule 5(1) of theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are asfollows:

(i) Median remuneration 2014-15 - Rs.242400/-.

(ii) Median remuneration 2015-16 - Rs.240000/-.

(iii) Percentage increase/decrease in the median remuneration of employees - (1%)

(iv) Number of permanent employees on the rolls of the company - 31 March 2015 - 1231 March 2016 - 18*

(v) Explanation on relationship between average increase in remuneration & companyperformance

(a) Average increase in remuneration - (1%)

(b) Company Performance - Revenue increase - (23%)

(c) Explanation on relationship - These increase is the effect of both Company's andindividual performance & other external factors.

(vi) Comparison of remuneration of Key Managerial Personnel and each Key ManagerialPersonnel against the performance of the Company

CFO & Company Secretary appointed for part of previous year (2014-15). Hence %increase cannot be calculated.

PAT was Rs.(51) Crore for 2015-16 as compares to Rs.(149.65) Crore in 2014-15

(vii) Variations in the market capitalization of the company

31.03.2015 31.03.2016
Market Capitalization of the Company (in Rs. Crores) 34.45 27.80
Closing Price at the BSE Ltd. (in Rs.) 0.83 0.67
Price Earnings Ratio as at the closing date (0.25) (0.23)

(viii) Percentage increase / decrease in market quotations of the shares of the Companyin comparison with the last public offer - Not Applicable as the last public offer wasmade more than 3 decades back and the data would be incomparable.

(ix) (a) Average percentage increase already made in the salaries of employees otherthan the managerial personnel in the last financial year -

(b) Percentage increase in the managerial remuneration - Not applicable as noremuneration was paid to Directors and Manager was appointed only for part of the year andincrease cannot be quantified.

(c) Comparison of the above and justification thereof - Not Comparable

(d) Point out if there is any exceptional circumstances for increase in the managerialremuneration - None

(e) Key parameters for any variable component of remuneration availed by the Directors- Not Applicable as no remuneration was paid to Director's

(f) Ratio of remuneration of the highest paid director of that of the employees who arenot directors but receive remuneration in excess of the highest paid director during theyear - Not Applicable as no remuneration was paid to Director's

* The company is having employees other than full-time are part-time freelancersand outsourced depends on the required skills for production pre & post productionmarketing training product development projects and consultancy to work on man-hourbasis as and when required.