Your Directors have pleasure in presenting the 22nd Annual Report on the business andoperations of the Company and Audited Financial Statements for the year ended March 312017.
1. Financial Highlights
(Rs. in lakhs)
|PARTICULARS ||Financial Years |
| ||2016-17 ||2015-16 |
|Income from Operations ||200201 ||172039 |
|Other Income ||6018 ||6117 |
|Total ||206219 ||178156 |
|Less: Total Expenditure ||171269 ||145762 |
|Earnings before interest tax and depreciation amortization (EBITDA) ||34950 ||32394 |
|Less: Finance Cost ||7997 ||8336 |
|Depreciation & Amortization Expenses ||12239 ||9851 |
|Profit before Tax ||14714 ||14207 |
|Total Tax expenses/ (Credit) ||5422 ||4856 |
|Net Profit after Tax ||9292 ||9351 |
|Other Comprehensive Income/(Loss) (Net of Tax) ||(142) ||20 |
|Total Comprehensive Income for the year ||9150 ||9371 |
|Earnings per equity share || || |
|Basic (After Other Comprehensive Income) ||19.58 ||20.74 |
|Diluted (After Other Comprehensive Income) ||19.58 ||20.72 |
|Balance as per last financial statement ||28182 ||21043 |
|Profit available for appropriation ||37332 ||30414 |
|Less: Appropriations || || |
|Dividend on Equity Shares ||(971) ||(466) |
|Tax on Equity Dividend ||(198) ||(95) |
|Transfer to Debenture Redemption Reserve ||(2269) ||(1671) |
|Transfer from Debenture Redemption Reserve ||50 || |
|Net Surplus in the Statement of Profit and Loss ||33944 ||28182 |
Your Directors have recommended a Final dividend of Rs. 2/- (Rupees Two) per EquityShare for the financial year ended March 31 2017 for your approval. The Dividend outgowill amount to Rs. 935 lakhs (exclusive of Dividend Distribution Tax of Rs. 190 lakhsapproximately).
3. Transfer to Reserve:
The Company has transferred Rs. 2269 lakhs to the Debenture Redemption Reserve.
4. Financial Review:
During the year under review Your Company entertained 75.2 million patrons in itscinemas up by 8% as compared to the previous year Net Box office revenues during theFinancial Year 2016-17 has grown by 13% Food and beverage showed a strong growth of 18%%in Financial
Year 2016-17. This could be achieved due to our success of the various strategicinitiatives taken by the company. Sponsorship Income showed a robust growth of 19% oversame period last year. During the year the company added 65 screens currently operate anetwork of 579 screens spread over 126 properties in 50 cities across the country. Thecompany continues its aggressive expansion plan and intends to add approx 65-70 screensduring the Financial Year 2017-18. During the Financial year ended March 31 2017 thetotal income has increased from Rs. 1781 crores during the preceding financial year toRs. 2062 crores in the year under review registering a growth of 15%.
Kindly refer to Management Discussion & Analysis and Corporate Governance Reportswhich forms part of this report for a detailed operation and business performance.
5. Future Outlook
We are optimistic regarding the box office prospects in Financial Year 17-18 on back ofstrong content pipeline and consumer demand. Our relentless pursuit of innovationdelivering the best movie viewing experience & growing circuit of high quality cinemasremain critical factors in our ability to generate positive operating results over thelong-term. We are the leading multiplex player in India and will surpass the 600 screensmark in current financial year.
6 Report on the Performance & Financial Position of Subsidiaries
As on March 31 2017 the Company had three Subsidiary companies namely PVR PicturesLimited PVR Bluo Entertainment Limited and Zea Maize Private Limited.
The Company has on August 9 2016 incorporated PVR Lanka Limited for setting up ofMultiplexes in Sri Lanka. The Company has invested USD 59993 for subscription of 91249shares of LKR 100/- each of PVR Lanka Limited on May 18 2016.
Pursuant to Section 129(3) of the Companies Act 2013 and Accounting Standard 21 issuedby the Institute of Chartered Accountants of India Consolidated Financial Statementspresented by the Company include the Financial Statements of its subsidiary companies.
Pursuant to Section 134 of the Companies Act 2013 and Rule 8(1) of the Companies(Accounts) Rules 2014 report on performance and financial position of subsidiaries isattached as per Annexure 1' which forms part of this report.
In terms of provisions under Section 136 of the Companies Act 2013 audited accountsof the subsidiary companies are placed on its website at www.pvrcinemas.com.
The Company will make available physical copies of these documents upon request by anyshareholder of the Company. These documents shall also be available for inspection at theregistered office of the Company during business hours up to the date of Annual GeneralMeeting.
7. Corporate Governance
The Company is committed to uphold the highest standards of corporate governance andbelieves that the business relationship can be strengthened through corporate fairnesstransparency and accountability. Your Company complies with all the mandatory provisionsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
A report on Corporate Governance with a certificate from a practicing Company Secretaryis enclosed and forms part of the Annual Report. A certificate from Chairman cum ManagingDirector and Chief Financial Officer of the Company confirming the correctness of thefinancial statements compliance with Company's Code of Conduct and adequacy of theinternal control measures as enumerated and reporting of matters to the Audit Committee interms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isenclosed and forms part of this report.
The Board of Directors in the meeting held on May 30 2017 appointed Mr. VishalMahadevia as an Additional Director on the Board of the Company
Mr. Sanjay Kapoor an Independent Director resigned from the Company w.e.f September 92016. Mr. Vicha Poolvaraluk another Director of the Company who could not attend anyBoard Meeting in last 12 months has ceased to be on the Board of the Company pursuant toprovisions of Section 167(1)(b) of Companies Act 2013.
Pursuant to Section 149 read with Section 152 and other applicable provisions if anyof the Companies Act 2013 one-third of the retirable Directors shall retire every yearand if eligible may offer for re-appointment. Consequently Mr. Ajay Bijli who retiresby rotation at the ensuing Annual General Meeting and being eligible offer himself forreappointment in accordance with the provisions of the Companies Act 2013.
Your Directors recommend his appointment at the ensuing Annual General Meeting.
Pursuant to the provisions under Section 134(3)(d) of the Companies Act 2013 withrespect to statement on declaration given by Independent Directors under Section 149(6) ofthe Act the Board hereby confirms that all the Independent Directors of the Company havegiven a declaration and have confirmed that they meet the criteria of Independence asprovided in the said Section 149(6).
9. Key Managerial Personnel
The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of theCompanies Act 2013 are as follows:
|Mr. Ajay Bijli || Chairman cum Managing Director |
|Mr. Naresh Chandra Gupta || Company Secretary |
|Mr. Nitin Sood || Chief Financial Officer |
During the year there was no change (appointment or cessation) in the office of anyKMP.
10. Policy on Directors appointment and Remuneration Policy
Pursuant to the requirements under Section 134(3)(e) and Section 178(3) of theCompanies Act 2013 the policy on appointment of Board Members including criteria fordetermining qualifications positive attributes independence of a director and the policyon remuneration of directors KMP and other employees is attached as Annexure 2' respectivelywhich forms part of this report.
11. Particulars of remuneration of Directors/ KMP/ Employees
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is attached as Annexure 3' which forms partof this report.
In terms of Section 136 of the Act the report and accounts are being sent to theMembers and others entitled thereto excluding the information on employees particularswhich is available for inspection by the members ta the registered office of the Companyduring business hours on working days of the Company up to the date of ensuing AnnualGeneral Meeting. Any member interested in obtaining such particulars may write to theCompany Secretary at the registered office of the Company and the same will be furnishedon request.
12. Employees Stock Option Plan
During the year 34650 Equity Shares under PVR Employees Stock Option Scheme 2012 and17000 Equity Shares under PVR Employees Stock Option Scheme 2013 were allotted to thepermanent employee(s) of the Company against same numbers of options exercised by them.
13. Meetings of the Board of Directors
During the Financial Year 2016-17 six Board Meetings were held. The details of BoardMeetings and Committee Meetings held are given in the Corporate Governance Report.
14. Performance Evaluation of the Board its Committees and Directors
Pursuant to applicable provisions of the Companies Act 2013 and the Listing Agreementwith Stock Exchanges the Board in consultation with its Nomination & Remuneration
Committee has formulated a framework containing inter-alia the criteria forperformance evaluation of the entire Board of the Company its Committees and IndividualDirectors including Independent Directors.
In order to evaluate the performance and various aspects of the functioning of theBoard and its Committees such as adequacy of the Constitution and Composition of the Boardand its Committees are assessed matters addressed in the Board and Committee Meetingsprocesses followed at the meetings Board's focus regulatory compliances and CorporateGovernance etc are reviewed. Similarly for evaluation of Directors' performance his/herprofile contribution in Board and Committee Meetings execution and performance ofspecific duties obligations regulatory compliances and governance are evaluated.
During the financial year under review the Independent Directors had met separatelywithout the presence of any Non-Independent Directors and the members of management anddiscussed inter-alia the performance of Non-Independent Directors and Board as a wholeand reviewed the performance of the Chairman of the Company after taking into account theviews of Executive and Non-Executive Directors.
The performance evaluation of all the Independent Directors have been done by theentire Board excluding the Director being evaluated.
The Directors expressed their satisfaction with the evaluation process.
In compliance with the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the performance evaluation of the Board was carried outduring the year under review details of which are given in Corporate Governance Report.
. Directors' Responsibility Statement
Pursuant to requirements of Section 134(3)(c) of the Companies Act 2013 with respectto Directors' Responsibility Statement the Directors confirm:
a. That in the preparation of the annual accounts the applicable accounting standardshave been followed and no material departures have been made from the same; b. That suchaccounting policies have been selected by them and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the profit andloss of the Company for the year ended on that date;
c. That proper and sufficient care has been taken by them for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; & MDA
d. That the annual accounts have been prepared by them on a going concern basis;
e. That they have laid down proper internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively and
f. That they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
16. Statutory Auditors and their Report
Messrs S R BATLIBOI & Co. LLP Chartered Accountants (Firm Registration No.301003E/E300005) Statutory Auditors of the Company would retire on the conclusion of thisAnnual General Meeting on completion of their term of appointment.
Since Messrs S R BATLIBOI & Co. LLP Chartered Accountants are not eligible forre-appointment as Statutory Auditors of the Company as per Companies Act 2013 the Boardof Directors on recommendation of the Audit Committee recommended the appointment ofMessrs B S R & Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022)as Statutory Auditors of the company for a term of 5 years in place of Messrs S RBATLIBOI & Co. LLP to hold office from the conclusion of 22nd Annual General Meetinguntil the conclusion of 27th Annual General Meeting subject to ratification of theirappointment at every Annual General Meeting. Consent cum certificate has been receivedfrom Messrs B S R & Co. LLP to the effect that their appointment as Statutory Auditorsof the Company if appointed at ensuing Annual General Meeting would be according to theterms and conditions prescribed under Section 139 of the Act and Rules framed there under.
A resolution seeking their appointment forms part of the Notice convening the 22ndAnnual General Meeting and the same is recommended for your consideration and approval.
There are no observations (including any qualification reservation adverse remark ordisclaimer) of the Auditors in their Audit Report received by the Company that may callfor any explanation from the Directors. Further the notes to accounts referred to in theAuditor's Report are self-explanatory.
17. Secretarial Auditors and their Report
The Company has appointed M/s Arun Gupta & Associates a firm of CompanySecretaries in Practice to undertake the Secretarial Audit. The Report of the SecretarialAudit Report in MR-3 is annexed as Annexure 4'.
There are no qualifications or observations or other adverse remarks of the SecretarialAuditors in the Report issued by them for the financial year 2016-17 which call for anyexplanation from the Board of Directors.
18. Consolidated Financial Statements
In compliance with the applicable provisions of Companies Act 2013 including theAccounting Standard 21 on Consolidated Financial Statements this Annual Report alsoincludes Consolidated Financial Statements for the Financial Year 2016-17.
During the period under review Consolidated Turnover grew by 14.04% to Rs. 218168lakhs as compared to Rs. 191304 lakhs in the previous year. Net Profit after Tax for theyear is Rs. 9584 lakhs as compared to Rs. 9862 lakhs in the Previous Year.
The audited consolidated financial statements together with Auditors' Report forms partof the Annual Report.
19. Internal Financial Control System
According to Section 134(5)(e) of the Companies Act 2013 the term Internal FinancialControl (IFC) means the policies and procedure adopted by the company for ensuring theorderly and efficient Conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information.
The Company has a well placed proper and adequate Internal Financial Control System inplace which ensures that all assets are safeguarded and protected and that thetransactions are authorised recorded and reported correctly. The Company's InternalFinancial Control System also comprises due compliances with Company's policies andStandard Operating Procedures (SOPs) audit and compliance by Company's Internal AuditorM/s KPMG. The Internal Auditors independently evaluate the adequacy of internal controlsand concurrently audit the majority of the transactions. Independence of the audit andcompliance is ensured by direct reporting by Internal Auditors to the Audit Committee ofthe Board.
20. Adequacy of Internal Financial Controls with reference to the Financial Statements
The Companies Act 2013 requires an effective Internal Financial Control System in theCompany. The system should be designed and operated effectively. Rule 8(5)(viii) ofCompanies (Accounts) Rules 2014 requires the information regarding adequacy of InternalFinancial Controls with reference to the financial statements to be disclosed in theBoard's report. To ensure effective Internal Financial Controls the Company has laid downthe following measures: All operations are executed as per prescribed procedures and isupdated and validated periodically. All legal and statutory compliances are ensured on amonthly basis. Non-compliance if any is seriously taken by the management and correctiveactions are taken immediately. The Company follows a robust 2-tier internal audit process:Tier-1: Cinema audits are conducted on a regular basis throughout the year.
Tier-2: Transaction audits are conducted regularly to ensure accuracy of financialreporting safeguard and protection of all the assets. The audit reports for the aboveaudits are compiled and submitted to Audit Committee for deliberations review andnecessary action. The Company uses Microsoft Navision Software for maintaining books ofaccounts and transactions are executed through prescribed procedures to ensurecorrectness/effectiveness of all transactions integrity and reliability of reporting.
The Company has a comprehensive risk management framework.
30 PVR Limited
The Company has a robust mechanism of building budgets at an integratedcross-functional level. The budgets are reviewed on a periodically basis so as to analyzethe performance and take corrective action wherever required.
The Company has in place a well-defined Whistle Blower Policy/Vigil Mechanism.
The Company has a system of Internal Business Reviews. All departmental heads discusstheir business issues and future plans in monthly Review Meetings. They review theirachievements in the Review Meetings. Compliance of secretarial functions is ensured by wayof secretarial audit and audit by the Internal Auditors M/s KPMG.
21. Development and Implementation of Risk Management
Pursuant to section 134(3)(n) of the Companies Act 2013 the company has constituted abusiness risk management committee. The details of the committee and its terms ofreference are set out in the Corporate Governance Report forming part of the BoardsReport. At present the company has not identified any element of risk which may threatenthe existence of the company.
22. Conservation of Energy Technology Absorption Foreign Exchange Earning and Outgo
Pursuant to provisions of Section 134 of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 the details of Conservation of Energy TechnologyAbsorption Foreign Exchange Earning and Outgo are attached as Annexure 5' whichforms part of this report.
23. Details of Policy developed and implemented on Corporate Social Responsibilities(CSR) initiatives
The Company has in place a CSR Policy in line with Schedule VII of the Companies Act2013. As per the policy the CSR activities are carried by PVR Nest which focusesinter-alia on: a) Education and social development of the most vulnerable sections of oursociety b) Hunger Poverty Malnutrition and Health. c) Sanitation and Safety d) GenderEquality e) Environmental Sustainability The annual report on CSR activities is furnishedin Annexure 6A & 6B' which forms part of this report.
24. Business Responsibility Report
PVR is privileged to be among the top 500 listed companies in the country. This bringsus within the ambit of Business Responsibility Report (BRR) as required by regulation 34of the SEBI Listing Regulations 2015. The Annual Report 2017 contains BRR.
25. Change in Capital Structure and Listing of Shares
The Company's shares are listed on the National Stock Exchange of India Limited (NSE)and BSE Ltd (BSE) NSE effective from March 31 2017 has admitted Company's shares forour trading in derivative segment.
During the year under review following shares were allotted and admitted for trading onNSE and BSE.
The Company allotted 34650 Equity Shares under PVR Employees Stock Option Scheme 2012and 17000 Equity Shares under PVR Employees Stock Option Scheme 2013 to the permanentemployee(s) of the Company against same numbers of options exercised by them.
The paid up equity share capital as on March 31 2017 was Rs. 467385880. During theyear under review the Company issued 51650 equity shares. The company has not issuedshares with differential voting rights nor granted stock options nor sweat equity.
26. Extract of Annual Return
Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 the extract of Annual Return as on March 312017 in the prescribed Form No. MGT-9 is attached as Annexure 7' and formspart of this report.
27. Particulars of Loans Guarantee or Investment under Section 186 of the Companies
Pursuant to Section 134(3)(g) of the Companies Act 2013 (Act) a statement containingof loans guarantee or investment under Section 186 of the Act as at end of the FinancialYear 2016-17 is attached as Annexure 8' which forms part of this report.
28. Contracts or arrangements with Related Parties under section 188(1) of theCompanies Act 2013
With reference to Section 134(3)(h) of the Companies Act 2013 (Act) all contracts andarrangements with related parties under Section 188(1) of the Act entered by the Companyduring the financial year were either in the ordinary course of business and on an arm'slength basis.
During the year the Company has not entered into any contract or arrangement withrelated parties which could be considered material' according to the policy of theCompany on Materiality of Related Party Transactions.
Your attention is drawn to the Related Party Disclosures set out in the StandaloneFinancial Statements.
29. Disclosure on Audit Committee
The Audit Committee as on March 31 2016 comprises of the following independentdirectors.
Mr. Sanjai Vohra (Chairman) Mr. Amit Burman Mr. Vikram Bakshi Mr. Sanjay Kapoor andMr. Sanjay Khanna as members.
Consequent upon resignation of Mr. Sanjay Kapoor an Independent Director from theCompany w.e.f September 9 2016 the Audit Committee was reconstituted on September 202016 by the Board of Directors of the Company having Mr. Sanjai Vohra (Chairman) Mr. AmitBurman Mr. Vikram Bakshi and Mr. Sanjay Khanna as members.
Further all recommendations of Audit Committee were accepted by the Board ofDirectors.
30. Disclosure on Vigil Mechanism
The Company has a vigil mechanism through Whistle Blower Policy to deal with instanceof fraud and mismanagement if any. In staying true to our values of Strength Performanceand Passion and in line with our vision of being one of the most respected companies inIndia the Company is committed to the high standards of Corporate Governance andstakeholder responsibility. The Company has Whistle Blower Investigation Committee whichprovide for adequate safeguards against victimization of persons and also provide fordirect access to the Chairman of the Audit Committee and also to the members of theCommittee.
The policy ensures that strict confidentiality is maintained whilst dealing withconcerns and also that no discrimination will be meted out to any person for a genuinelyraised concern.
The company has always provided a congenial atmosphere for work to all employees freefrom discrimination and harassment including sexual harassment. It has provided equalopportunities of employment to all without regard to their caste religion colourmarital status and sex. The Company has also framed a policy on "Prevention of SexualHarassment" at the workplace.
31. Disclosure on Deposit under Chapter V
The Company has neither accepted nor renewed any deposits during the Financial Year2016-17 in terms of Chapter V of the Companies Act 2013.
32. Code of Conduct
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings / behaviours of any form and the Board has laid down thedirectives to counter such acts. The code laid down by the Board is known as "code ofbusiness conduct" which forms an Appendix to the Code. The Code has been posted onthe Company's website. The Code lays down the standard procedure of business conduct whichis expected to be followed by the Directors and the designated employees in their businessdealings and in particular on matters relating to integrity in the work place in businesspractices and in dealing with stakeholders. All the Board Members and the SeniorManagement personnel have confirmed compliance with the Code. All Management Staff weregiven appropriate training in this regard.
33. Transfer to Investor Education and Protection Fund
The Company has transferred a sum of Rs.101431/- to the Investor Education andProtection Fund established by the Central Government in compliance with the CompaniesAct 2013. The said amount represents unclaimed dividends which were lying with theCompany for a period of seven years from their respective due dates of payment.
The Hon'ble Delhi High Court has approved the merger of Bijli Holdings Private Limitedwith the Company vide Order dated September 2 2016 and merger of PVR Leisure Limited andLettuce Entertain You Limited with the Company effective from April 1 2015 vide Orderdated October 19 2016.
35. Dividend Distribution Policy
Pursuant to Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has in place a formal policy on dividenddistribution. The policy on dividend distribution is attached as Annexure 9' whichforms part of this report.
36. Prevention of Sexual Harassment Policy
The Company is committed to provide a protective environment at work place for all itswomen employees to ensure that every woman employee is treated with dignity and respectand as mandated under "The Sexual Harassment of Women at workplace (PreventionProhibition and Redressal) Act 2013". The Company has in place a formal policy forprevention of sexual harassment of its women employees. The total number of complaintsfiled during the Financial Year 2016-17 were 18 and total number of complaints disposedwere 18 and the total numbers of complaints pending during at the end of the FinancialYear 2016-17 is Nil.
Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for the excellent supportreceived from them during the year. The Directors place on record their sincereappreciation to all employees of the Company for their unstinted commitment and continuedcontribution to the Company.
| ||For and On behalf of the Board |
| ||For PVR Limited |
|Place: New York ||Ajay Bijli |
|Date: May 30 2017 ||Chairman cum Managing Director |