Your Directors are pleased to present the Seventieth Annual Report of Saregama IndiaLimited along with the audited accounts for the year ended 31st March 2017.
1. FINANCIAL SUMMARY
The performance of your Company for the year ended 31st March 2017 is summarizedbelow:
| || || || ||(Rs. in Lakhs) |
| ||Consolidated ||Standalone ||Consolidated ||Standalone |
| || |
Year ended 31st March 2017
Year ended 31st March 2016
|Total income ||22725.81 ||21971.77 ||23384.66 ||22476.56 |
|Profit/(Loss) from operations ||1455.31 ||1606.51 ||2070.25 ||1939.29 |
|Exceptional item ||Nil ||Nil ||1158.88 ||960.09 |
|Provision for Contingencies ||Nil ||Nil ||Nil ||Nil |
|Profit before tax ||1455.31 ||1606.51 ||911.37 ||979.20 |
|Provision for Taxation || || || || |
|Deferred Tax Charged/(Credit) ||27.46 ||27.46 ||(302.67) ||(302.67) |
|Current tax ||995.56 ||995.56 ||527.44 ||527.44 |
|Excess Provision of Earlier Years Written Back ||(187.60) ||(187.60) ||Nil ||Nil |
|Net profit (after tax and exceptional items) ||619.89 ||771.09 ||686.60 ||754.43 |
|Proposed Dividend (including tax thereon) ||314.18 ||314.18 ||314.18 ||314.18 |
|Transfer to general reserve ||Nil ||Nil ||Nil ||Nil |
|Reserves (excluding revaluation reserves) ||13510.73 ||15105.25 ||12652.75 ||14334.16 |
Your Board is pleased to report a profit of ' 619.89 lakhs for the year 2016-17.
Your Board is pleased to recommend a dividend of ' 1.50 /- per equity share of ' 10/-each for the year ended 31st March 2017.
3. SHARE CAPITAL
The paid-up equity share capital of the Company as on March 31 2017 was ' 174029380comprising of 17402938 equity shares of ' 10/- each. There was no change in theCompany's Share Capital during the year under review.
Music Audio Business
The company has consolidated its position into B2B businesses like Telecom OTT andYoutube posting steady growth in various vectors. The music publishing has also offeredsmart revenue growth with help of many initiatives. The company has strengthened its lastyear's foray into B2C part of the business by offering new products. The Company haswitnessed launch of newer initiatives like Retail Music Card re-entry into New MusicContent Acquisition both in Hindi and Tamil Films. Steady growth in Telecom OTT andYouTube sectors.
OTT and Youtube
Your company has expanded its reach on all domestic and international OTT musicplatforms like Gaana Saavn Wynk Reliance Jio Idea Music Lounge iTunes etc andmade available its entire catalog along with relevant album art and metadata. The adverseimpact of drop in per unit realization from YouTube has been balanced with the help ofincreasing overall YouTube views through structured activities and content offerings. Inorder to ensure visibility for its content your company works very closely with thecontent & editorial teams of these digital music stores & You tube by way ofcreating various artiste mood & theme based compilations and having them featured invarious sections of these stores. These compilations provide visibility to your company'scatalog which further helps in enhancing consumption.
The overall industry has witnessed lack of growth of traditional music products likeCRBT WAP & IVR. The company could however maintain its market share in CRBT segmentby working closely with content and marketing teams of the telecom companies. For thevectors of WAP & IVR the thrust has been to maintain targeted profitability throughstrict control on the costs.
Both domestically and internationally the music publishing business has shown smartgrowth. Number of initiatives were undertaken to increase the customer reach andproactively helping the customers to utilize company's catalogue. Smaller TV networks werebrought into legitimate licensing through concerted education on copyrights and reasonablecommercials. Internationally almost all the active countries have been covered byappointment of specialized sub publishers knowing local domain.
Focus was on music that appeals to the youth hence genres like remixes andre-interpretation music was big this year. Some songs like " Ek ladki bheegi bhaagiSi " by Meiyang Chang & DJ Aqeel Sanam Puri's song " Yeh Raat BheegiBheegi" gave us decent viewership and audio streams. The company resumed new filmmusic acquisitions in Hindi & Tamil. The music rights of the film "Kahaani 2 inHindi ""Kadavul Irukaan Kumaru" "Maaveeran Kittu" and"Motta Shiva Ketta Shiva" in Tamil were added to the library. The songs likeArijit's Mehram GV Prakash's Locality Boys Jitinraj & Pooja s Kannadikkala Amrish's Hara Hara Mahadevki were the few revenue grossers for the company. SaregamaClassical App got rejuvenated with fresh content of audio-videos featuring greatHindustani maestros like Ustad Amjad Ali Khan Pt. Hari Prasad Chaurasia Pt. Jasraj Pt.Ronu Majumdar Purbayan Chatterjee Kaushiki Chakraborty Bickram Ghosh Carnatic maestroslike O.S. Arun Nithyashree Rajesh Vaidya and many more. The company remains the onlymusic label to own latest audio-visual recordings of the late legendary Carnatic vocalistDr. M Balamuralikrishnan; taking a total of 53 tracks of this artiste being offered by thecompany. Saregama Shakti - company's devotional application got updated with a nichecontent featuring a hands on guide "how to do traditional poojas with ease athome". This new Pooja content not only got popularity and but also a good productreview from the subscribers.
The South TV Business is associated with leading Sun TV Network over decade and iscurrently producing two megas - Chandralekha and Valli and one-hour weekly -Bhairavi inTamil. Chandralkeha and Valli are the top shows in the noon band of Sun TV competing with7 other serials. This financial year the company also launched a serial in Kannada titledJo Jo Laali.
National TV business offered two successful shows "Savdhan India" on LIFEOK being a one-hour episodic format and a daily Soap "Sanyukt" on ZEE TV; withdecent TRPs.
Your Company publishes the weekly current affairs magazine "OPEN" through itssubsidiary Open Media Networks Pvt. Ltd. Aimed at the intelligent Indian reader it catersto a high value category of advertisers and readers.
5. CORPORATE GOVERNANCE
Your Company has adopted a Code of Conduct (the Code) for its Directors and SeniorManagement personnel who have affirmed compliance with the Code.
The adoption of the Code stems from the fiduciary responsibility that the Directors andthe Senior Management have towards the stakeholders of the Company. Your Directors andSenior Management act as trustees in the interest of all stakeholders of the Company bybalancing conflicting interest if any between stakeholders for optimal benefits.
Your Board ofDirectors is committed to good governance practices based on principles ofintegrity fairness transparency and accountability for creating long-term sustainableshareholder value.
The Report on Corporate Governance as stipulated as per relevant provisions ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 as referred to in Regulation 15(2) forms part of the Annual Report.
A certificate of chartered accountant regarding compliance of the Corporate Governancerequirements as per relevant provisions of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as referred to in Regulation15(2) for the year ended 31st March 2017 forms part of the Annual report.
6. PREVENTION OF SEXUAL HARASSMENT
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. An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment at workplace. During the year underreview Company has not received any complaints on sexual harassment.
7. PUBLIC DEPOSITS
The Company has not accepted any deposits from the public falling within the ambit ofSection 73 of the Act read with the Companies (Acceptance of Deposits) Rules 2014.
8. EXTRACT OF ANNUAL RETURN
The Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Act andRule 12 of the Companies (Management and Administration) Rules 2014 is annexed as ANNEXURE-Ato this Report.
9. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiaries have beenprepared in accordance with the provisions of the Act read with the Companies (Accounts)Rules 2014 applicable Accounting Standards and the SEBI (Listing Obligation andDisclosure requirements) Regulations 2015 and it forms part of the Annual Report.Pursuant to Section 129(3) of the Act a statement containing the salient features of thefinancial statements of the subsidiary companies for the F.Y. 2016-17 is attached to theFinancial Statements for the F.Y. 2016-17 in Form AOC-1. The Company will make availablethe said financial statements and related detailed information of the subsidiary companiesupon request by any member of the Company or its subsidiary companies. These financialstatements will also be kept open for inspection by any Member at the Registered Office ofthe Company.
Pursuant to the provisions of section 136 of the Act the Audited financial statementsof the Company consolidated financial statements along with relevant documents andseparate Audited Accounts in respect of subsidiaries are available on the website of theCompany viz.www.saregama.com .
10. SUBSIDIARY COMPANIES JOINT VENTURE AND ASSOCIATE COMPANIES:
During the year under review there are no companies which have become/ceased to be asubsidiary companies/Joint venture company or associate company.
As per the relevant provisions of Companies Act 2013 and SEBI (LODR) Regulations2015 during the period under review the following changes in Directors are detailed asfollows:
Mr. Pradipta K. Mohapatra Director of the Company has expired on 13 th March 2017 andaccordingly he ceased to be a Director of the Company.
Mrs. Sushila Goenka (DIN 00087692) is liable to retire by rotation pursuant to theprovisions of Companies Act 2013.
Mr. G. B. Aayeer shall be re-appointed as a Whole-Time Director of the Company tillJune 18 2018 subject to approval of shareholders at the ensuing Annual General meeting.Details of remuneration proposed to be paid to Mr. G. B. Aayeer are mentioned in CorporateGovernance Report which forms part of the Annual report and Notice of Annual GeneralMeeting.
12. KEY MANAGERIAL PERSONNEL
During the year under review there were no changes in the Key Managerial Personnel ofthe Company. Mr. Tony Paul Company Secretary resigned from the Company with effect fromthe close of business hours of April 12 2017.
13. BOARD EVALUATION
Pursuant to the provisions of the Act and the corporate governance requirements asprescribed by SEBI (Listing Obligation and Disclosure requirements) Regulations 2015 theBoard of Directors ("Board") has carried out an annual evaluation of its ownperformance and that of its Committees and individual Directors.
The criteria for performance evaluation of the Board included aspects like Boardcomposition and structure; effectiveness of Board processes information and functioningetc. The criteria for performance evaluation of Committees of the Board included aspectslike composition of Committees effectiveness of Committee meetings etc. The criteria forperformance evaluation of the individual Directors included aspects on contribution to theBoard and Committee meetings like preparedness on the issues to be discussed meaningfuland constructive contribution and inputs in meetings etc. In addition the Chairperson wasalso evaluated on the key aspects of his role.
14. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to requirement of Securities and Exchange Board of India vide Circular no.CIR/CFD/POLICY CELL/7/2014 dated September 15 2014 the Company has in place a programmefor familiarisation of the Independent Directors with the Company details of which isavailable on the website of the companyhttp://r.saregama.com/resources/pdf/investor/familiarization_programme_for_independent_director.pdf
15. NOMINATION AND REMUNERATION POLICY
The Company has in place a Remuneration Policy for the Directors Key ManagerialPersonnel Senior Management and other Employees pursuant to the provisions of the Act andRegulation 19 of the SEBI (Listing Obligation and Disclosure requirements) Regulations2015. The Nomination and Remuneration policy forms a part of this report and is annexed as"ANNEXURE-B".
16. BOARD MEETINGS
During the period under review 4 (four) Board Meetings were held. The details of whichare given in the Corporate Governance Report. The intervening gap between the meetings waswithin the period prescribed under the Act and Regulation 17 of SEBI (Listing Obligationand Disclosure requirements) Regulations 2015.
Currently the Board has Five (5) committees namely Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility ('CSR'') CommitteeStakeholders' Relationship Committee and Committee of Directors.
Details of the composition of the Board and its Committees and of the Meetings heldattendance of the Directors at such Meetings and other relevant details are provided inthe Corporate Governance Report.
17. AUDIT COMMITTEE
The Audit Committee comprises of following members:
|Name of the Directors ||Position ||Category of Director |
|Mr. B. Raychaudhuri ||Chairman ||Non-executive Independent Director |
|Mr. U. Kanoria ||Member ||Non-executive Independent Director |
|Mr. P. K. Mohapatra * ||Member ||Non-executive Independent Director |
|Mr. Shantanu Bhattacharya** ||Member ||Non-executive Independent Director |
* Expired on 13.3.2017.
** W.e.f. 25th April 2017.
Note - Further details relating to the Audit Committee are provided in the CorporateGovernance Report forming part of the Annual report.
18. VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Company's Code ofConduct or ethics policy. The Policy provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee. It is affirmed that no personnel of the Companyhas been denied access to the Audit Committee. The policy of vigil mechanism is availableon the Company's website (Weblink: http://rsaregama.com/resources/pdf/investor/whistle_blower_policy.pdf )
19. PARTICULARS OF EMPLOYEES
The information on employees who were in receipt of remuneration of not less than '10200000 (Rupees One Crore and two lakh only) during the year or ' 850000 (RupeesEight Lakh Fifty Thousand Only) per month during any part of the said year as requiredunder Section 197 (12) of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in the Annexure forming partof the Report. In terms of proviso to Section 136(1) of the Act the Report and Accountsare being sent to the shareholders excluding the aforesaid Annexure. The said statement isalso open for inspection at the registered office of the Company. Any member interested inobtaining a copy of the same may write to the Company Secretary.
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 are annexed to the Report as "ANNEXURE C")
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The brief outline of the CSR Policy of the Company alongwith the Annual Report on CSRactivities is set out in "ANNEXURE D" of this report. The policy isavailable on the Company's website. (Weblink:http://rsaregama.com/resources/pdf/investor/csr_policy.pdf )
21. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The particulars of Loans given Investments made Guarantees given and Securitiesprovided during the period under Section 186 of the Act are stated in the Notes toAccounts which forms part of this Annual Report.
22. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements/ transactions entered by the Company with the RelatedParties during the financial period were on an Arm's length basis and were in compliancewith the applicable provisions of the Act and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. There were no materially significant transactions enteredinto by your company during the year and hence no information is required to be providedunder Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014.
23. MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of financial year of the Company to which theFinancial Statements relate and the date of this Report.
24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review there were no significant or material orders passed bythe Regulators or Courts or Tribunal which would impact the going concern status of theCompany and its future operation.
25. RISK MANAGEMENT
The Company is exposed to inherent uncertainties owing to the sectors in which itoperates. A key factor in determining a company's capacity to create sustainable value isthe risks that the company is willing to take (at strategic and operational levels) andits ability to manage them effectively. Many risks exist in a Company's operatingenvironment and they emerge on a regular basis. The Company's Risk Management processesfocusses on ensuring that these risks are identified on a timely basis and addressed.
The Company is well aware of the above risks and as part of business strategy has putin a mechanism to ensure that they are mitigated with timely action. The Company has aRisk Management framework to identify evaluate business risks and opportunities. Thisframework seeks to create transparency minimize adverse impact on the business objectivesand enhance the Company's competitive advantage.
26. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Audit Committee reviews adequacy and effectiveness of the Company's internalcontrol environment and monitors the implementation of audit recommendations includingthose relating to strengthening of the Company's risk management policies and systems.
A) Statutory Auditors
At the AGM held on July 312015 M/s. Price Waterhouse (Firm Registration No. 301112E)Chartered Accountants were appointed as Statutory Auditors of the Company to hold officetill the conclusion of Annual General Meeting to be held in calendar year 2017 subject toratification of their appointment by the Members at every Annual General Meeting.Accordingly the term of M/s. Price Waterhouse (Firm Registration No. 301112E) shallexpire at the Annual General Meeting to be held on July 28 2017.
In view of expiry of term of M/s. Price Waterhouse it is proposed to appoint M/s BSR& Co. LLP Chartered Accountants Firm Registration No. 101248W/W-100022 as StatutoryAuditors of the Company for a period of 5 years subject to approval of the shareholders inthe ensuing Annual General Meeting. The Statutory Auditors report does not contain anyqualification.
B) Secretarial Auditors
Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s M R andAssociates Practicing Company Secretaries has been appointed as Secretarial Auditor toundertake Secretarial Audit of the Company for the financial year 2016-17. The report ofthe Secretarial Auditor is annexed to this report as "ANNEXURE E". TheSecretarial Audit Report does not contain any observation.
C) Internal Auditors
M/S Ernst and Young have been appointed as Internal Auditors for FY 2016-17.
28. DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors acknowledge the responsibility for ensuring compliances with theprovisions of section 134(3)(c) read with section 134(5) of the Companies Act 2013 in thepreparation of the annual accounts for the year ended on March 31 2017 and to the best oftheir knowledge and ability confirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed alongwith proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at the March 31 2017 and of theprofit and loss of the company for that year on that date;
c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis
e) the directors had laid down proper systems of internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating 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
29. INDEPENDENT DIRECTORS DECLARATION
The company has received the necessary declaration from Independent Directors that theymeet the criteria of independence as provided in Section 149 of the Companies Act.
30. REPORTING OF FRAUD BY AUDITORS
There are no instances of fraud reported by the Auditors during FY 2016-17.
31. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
Pursuant to the requirement of Section 134(3)(m) of the Companies Act 2013 read withrule 8(3) of the Companies (Accounts) Rules 2014 the relevant data pertaining to theConservation of Energy and Technology Absorption is given below:
A) CONSERVATION OF ENERGY
i) The steps taken to or impact on conservation of energy- Although the Companyis not engaged in manufacturing activities. However as a responsible corporate citizenwe continue to pursue and adopt appropriate energy conservation measures.
ii) The Steps taken by the Company for utilizing alternate sources of energy- Notapplicable
iii) The capital investment on energy conservation equipment's- The Companyconstantly evaluates new developments and invests into latest energy efficient technology.
A) TECHNOLOGY ABSORPTION
i) The efforts made towards technology absorption - The Company adopts thelatest trends in the technology development and introduces the same so as to ensurereduction in cost with best quality output.
ii) The benefits derived like product improvement cost reduction Productdevelopment or import substitution- Not applicable
B) IMPORTED TECHNOLOGY
i) The details of technology imported- Not Applicable
ii) The year of import - Not applicable
iii) Whether the technology has been fully absorbed - Not applicable
iv) If not fully absorbed - Not applicable
Expenditure incurred on Research and Development (R&D):
Your company is predominantly a service provider and therefore has not set up a formalR&D unit however continuous research and development is carried out at variousdevelopment centers as an integral part of the activities of the Company.
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.
| || ||(Rs. in Lakhs) |
| ||Current Year ||Previous Year |
|Foreign Exchange used ||512.83 ||232.04 |
|Foreign Exchange earned ||4793.32 ||4687.07 |
32. EMPLOYEE BENEFIT SCHEME
The Members of the Company at its Annual General Meeting held on 26th July 2013approved the implementation of Saregama Employees Stock Option Scheme - 2013. Your Companyis desirous to extend the said benefits also to employees (including directors whetherwhole time directors or not) of the subsidiary companies.
Your Company has further formulated the Saregama Stock Appreciation Rights Scheme -2014 for benefit of its employees as per applicable regulations of Securities and ExchangeBoard of India as amended from time to time.
Pursuant to the provisions of SEBI (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines 1999 as amended the details of stock options as on March 312017 under the Employee Stock Option Scheme are annexed as "ANNEXURE F" tothis report.
33. RIGHTS ISSUE
Out of the 5338628 equity shares issued for cash at a premium of ' 35/- (issue price- ' 45/-) pursuant to the Rights Issue in 2005 allotment of 5290 (31.03.2016 - 5290)equity shares (relating to cases under litigation/pending clearance from concernedauthorities) are in abeyance as on 31st March 2017.
Your Directors would like to express their sincere appreciation to its stakeholdersfinancial institutions bankers and business associates Government authorities customersand vendors for their co-operation and support and looks forward to their continuedsupport in future. Your Directors also place on record their deep sense of appreciationfor the committed services by the employees of the Company.
|FOR AND ON BEHALF OF THE BOARD OF DIRECTORS || |
|Vikram Mehra ||G. B. Aayeer |
|Managing Director ||CFO and Whole-time Director |
|DIN: 03556680 ||DIN: 00087760 |
|Date: May 25 2017 || |
|Place: Kolkata || |