UFO Moviez India Ltd.
|BSE: 539141||Sector: Media|
|NSE: UFO||ISIN Code: INE527H01019|
|BSE 15:40 | 19 Feb||420.20||
|NSE 15:32 | 19 Feb||421.25||
|Mkt Cap.(Rs cr)||1,191|
|Mkt Cap.(Rs cr)||1191.27|
UFO Moviez India Ltd. (UFO) - Director Report
Company director report
To the Members
Your directors have pleasure in presenting the twelfth report on the business andoperations of your Company for the year ended March 312016.
RESULT OF OPERATIONS
The financial performance of your Company on a standalone and consolidated basis forthe year ended March 31 2016 is summarized below:
For a detailed analysis of the financial performance please refer to the"Management Discussion and Analysis" Section forming part of the Annual Report.
There are no material changes or commitments affecting the financial position of theCompany between the end of the Financial Year in question and the date of this report.
Based on the Companys performance the directors are pleased to recommend forapproval of the members a final dividend of Rs. 3.00 per share for the FY 2015-16 takingthe total dividend to Rs. 8.00 per share. The final dividend on equity shares if approvedby the members would involve a cash outflow of Rs. 99.3 Mn including dividend tax. Thetotal dividend on equity shares including dividend distribution tax paid thereon for FY2015-16 would aggregate Rs. 264.8 Mn resulting in a payout of 51.93% of the standaloneprofits of the Company.
The paid up equity share capital of the Company as on March 31 2016 was Rs.274993760. During the year under review the Company has allotted 1601707 equityshares in different tranches pursuant to the exercise of the rights granted to theemployees of the Company under the Employee Stock Option Scheme 2006 and the EmployeeStock Option Scheme 2010 to convert their employee stock options into equity shares. TheCompany has not issued any shares with differential voting rights. Also during the yearunder review the Company has not issued any sweat equity shares. As of March 31 2016none of the Directors of the Company hold instruments convertible into equity shares ofthe Company except stock options granted under the relevant employee stock option schemesof the Company.
EMPLOYEE STOCK OPTIONS
During the year under review employees had exercised employee stock options granted tothem under the Employee Stock Option Scheme 2006 and the Employee Stock Option Scheme2010. Pursuant to the exercise of options by employees your Company had allotted 208315equity shares under the Employee Stock Option Scheme 2006 and 1393392 equity sharesunder the Employee Stock Option Scheme 2010 to the employees against the same numbers ofoptions exercised by them.
Further on May 3 2016 pursuant to the exercise of option by employees your Companyhad allotted 2736 equity shares under the Employee Stock Option Scheme 2006 and 98689Equity Shares under the Employee Stock Option Scheme 2010 to the employees against thesame numbers of options exercised by them. As on date there are no outstanding optionsunder Employee Stock Option Scheme 2006 and Employee Stock Option Scheme 2010 and bothschemes stand terminated.
Currently the Company operates the Employee Stock Option Scheme 2014 which iscompliant with SEBI ESOP Regulations.
During the year under review the Company has not granted any employee stock optionsunder employee stock options schemes of the Company.
The details of employee stock options form part of the notes to accounts of thefinancial statements in the Annual Report and also available on the website of the Companywww.ufomoviez.com
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in the Annual Report.
Your Company has not accepted any fixed deposits within the meaning of Section 73 ofthe Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014 andas such no amount of principal or interest was outstanding as of the Balance Sheet date.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS
MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as"Annexure-1" to this report.
Your Company prepares its financial statements in compliance with the requirements ofthe Companies Act 2013 and the Generally Accepted Accounting Principles (GAAP) in India.The
financial statements have been prepared on a historical cost basis. The estimates andjudgments relating to the financial statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of the underlying transactionsand to reasonably present the state of affairs and the profits and cash flows of theCompany for the year ended March 312016.
There is no qualification in the standalone or in the consolidated financial statementsby the statutory auditors for the year under review. The Statutory Auditors have in theirreport to the Board of Directors on the financial statements of the Company made thecomments which are categorized as "Matter of emphasis which are self-explanatory andhence no comments in this regard have been offered by your directors.
The consolidated financial statements of the Company and its subsidiaries prepared inaccordance with relevant Accounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued bythe Institute of Chartered Accountants of India form part of the Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals which impact the Companys going concern status and its operations infuture.
SHIFTING OF REGISTERED OFFICE
Pursuant to the application filed by the Company for shifting its registered officefrom the National Capital Territory of Delhi to the state of Maharashtra and the orderpassed by the Regional Director Northern Region Ministry of Corporate AffairsGovernment of India upon it the registered office of the Company was shifted from OfficeNo. 12 3rd Floor 312 Surya Kiran Building 19 Kasturba Gandhi Marg NewDelhi-110001 to Valuable Techno Park Plot No. 53/1 Road No. 7 MIDC Andheri (East)Mumbai - 400 093 with effect from June 15 2016.
MANAGEMENTS DISCuSSION AND ANALYSIS
In terms of the provisions of regulation 34(2) of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 (SEBI(LODR) Regulations 2015) the Management Discussion and Analysis is set out in theAnnual Report.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURES
At the beginning of the year your Company had 6 direct subsidiaries 10 step-downsubsidiaries 4 associates and 1 joint venture. As on March 312016 there is no change inthe same.
During the year under review the Board of Directors reviewed the affairs of thesubsidiaries. The consolidated financial statements of the Company and all itssubsidiaries have been prepared in accordance with Section 129(3) of the Companies Act2013 and form part of the Annual Report. Further a statement containing the salientfeatures of the financial statements of
the subsidiaries of the Company in the prescribed format AOC- 1 is attached to thefinancial statements. The statement also provides the details of performance and financialposition of each of the subsidiaries associates and joint ventures.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on theCompanys website www.ufomoviez.com. Thesedocuments are also available for inspection during business hours at the Companysregistered office in Mumbai India.
During the financial year 2014-15 the Company was a foreign owned and controlledcompany in terms of the provisions of the Foreign Exchange Management Act (FEMA) and thecirculars / notifications issued by the Reserve Bank of India. Accordingly the downstreaminvestments made by the Company during the financial year 2014-15 were subject to theapplicable guidelines and instructions for such downstream investments including obtaininga certificate from the statutory auditors regarding status of compliance with suchinstructions on downstream investments made and compliance with FEMA provisions.
However during the financial year under review after the Companys equity shareswere listed on stock exchanges with effect from May 14 2015 it ceased to be a foreignowned and controlled company in terms of the provisions of FEMA. Further from April 12015 till May 13 2015; while the Company was a foreign owned and controlled company itdid not make any downstream investments in its subsidiaries. In view of this position itwas not mandatory to obtain a compliance certificate under the provisions of FEMA from thestatutory auditors for the financial year under review.
The Company has made an investment of Rs. 140 Mn in Southern Digital Screenz IndiaPrivate Limited (SDS) a subsidiary company of the Company by purchasing 680117(representing 15.82% of equity share capital of SDS) equity shares from existingshareholders of SDS on June 20 2016. Post this acquisition SDS became a wholly ownedsubsidiary of the Company.
The Corporate Governance Report for the financial year ended March 312016 forms partof the Annual Report.
Your Company recognizes and embraces the benefits of having a diverse Board thatpossesses a balance of skills experience expertise and diversity of perspectivesappropriate to the requirements of the businesses of the Company. The Company seesincreasing diversity at the Board level as an essential element in maintaining competitiveadvantage. A truly diverse Board will include and make good use of the differences in theskills regional and industry experience and background among directors. Thesedifferences are considered in determining the optimum composition of the Board. The Boardhas adopted a
Board Diversity Policy which sets out its approach in this regard. The Board DiversityPolicy is available on the Companys website www.ufomoviez.com
NUMBER OF MEETINGS OF THE BOARD
The Board met 10 times during the financial year the details of which are given in theCorporate Governance Report that forms part of the Annual Report. The intervening gapbetween any two consecutive board meetings was within the period prescribed by theCompanies Act 2013.
POLICY ON DIRECTORS Rs. APPOINTMENT AND REMuNERATION
The current policy is to have an optimum combination of executive and non-executivedirectors with an independent nonexecutive chairman to maintain the independence of theBoard and to separate the functions of governance and management in the Company.
As on March 312016 the Board consisted of nine members two of whom are executivedirectors and seven are non-executive directors. Out of the seven non-executive directorsthree are independent directors. The Board periodically evaluates the need for change inits composition and size.
The policy of the Company on directors Rs. appointment and remuneration including thecriteria for determining the qualifications the positive attributes independence andother matters provided under Sub-section (3) of Section 178 of the Companies Act 2013adopted by the Board is appended as Annexure-2" to this report. Theremuneration paid to the directors is as per the terms laid out in the Nomination andRemuneration Policy of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and under the SEBI (LODR)Regulations 2015.
Regulation 4(2)(f) the SEBI (LODR) Regulations 2015 mandates that the Board shallmonitor and review the Board evaluation framework. The Companies Act 2013 states that aformal annual evaluation needs to be made by the Board of its own performance and that ofits committees and individual directors. Schedule IV of the Companies Act 2013 statesthat the performance evaluation of independent directors shall be done by the entire Boardof Directors excluding the director being evaluated.
The performance evaluation of all the individual directors the Board as a whole andthat of its committees was conducted based on the criteria and framework adopted by theBoard. The Board approved the evaluation results as recommended by the Chairman of theNomination and Remuneration Committee. None of the independent directors are due forre-appointment.
TRAINING OF INDEPENDENT DIRECTORS
Every new independent director of the Board attends an orientation program. Tofamiliarize the new inductees with the strategy operations and functions of your Companythe executive directors / senior managerial personnel make presentations to the inducteesabout the Companys strategies operations product and service offerings marketsorganization structure finance human resources technology quality facilities and riskmanagement. The details of such familiarisation programmes are available on theCompanys website www.ufomoviez.com.
Further at the time of appointment of an independent director the Company issues aformal letter of appointment outlining his/ her role function duties andresponsibilities as a director. The terms and conditions of their appointment areavailable on the Companys website www.ufomoviez.com.
There were no fresh appointments of Directors during the year under review.
RETIREMENT AND RE-APPOINTMENTS
In accordance with the provisions of Section 152 of the Companies Act 2013 and interms of the Articles of Association of the Company Mr. Biswajit Subramanian retires byrotation at the forthcoming Annual General Meeting and being eligible offers himself forre-appointment. The Board recommends his re-appointment.
The Companies Act 2013 provides for the appointment of independent directors.Sub-section (10) of Section 149 of the Companies Act 2013 provides that independentdirectors shall hold office for a term of up to five consecutive years on the board of acompany; and shall be eligible for re-appointment on passing a special resolution by theshareholders of the Company. Accordingly all the independent directors were appointed bythe shareholders at the general meeting as required under Section 149(10) for a period ofthree years.
Further according to Sub-section (11) of Section 149 no independent director shall beeligible for appointment for more than two consecutive terms of five years. Sub-section(13) states that the provisions of retirement by rotation as defined in Sub-sections (6)and (7) of Section 152 of the Companies Act 2013 shall not apply to such independentdirectors.
None of the independent directors will retire at the ensuing Annual General Meeting.
During the year under review none of the Directors resigned from the board of theCompany.
INDEPENDENT DIRECTORS Rs. MEETING
The Independent Directors met on July 23 2015 and July 26 2016 inter alia to:
(a) review the performance of the Non-Independent Directors and the Board of Directorsas a whole;
(b) review the performance of the Chairman of the Company taking into account theviews of Executive Directors and Non-Executive Directors;
(c) assess the quality content and timeliness of the flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform its duties.
INTERNAL FINANCIAL CONTROLS
Your Company has laid an Internal Control Framework which is commensurate with thesize scale and complexity of its operations. This framework ensures the orderly andefficient conduct of its business including adherence to the Companys policies thesafeguarding 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. Controls have been identified along with risks andmitigation processes covering major areas across all business and functions. Internalcontrols was reviewed by Internal Audit Department and based on the evaluation it wasconcluded that the Companys internal financial controls are adequate and wereoperating effectively as of March 312016.
Strengthening of controls is a continuous and evolving process in the Company. Basedupon observations findings and recommendations of the internal audit team process ownersdevelop preventive and corrective actions which are then deployed across the organization.
COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee of the Company as on March 312016 comprised ofthree independent Directors Mr. Sanjeev Aga Mr. S. Madhavan and Ms. Lynn de Souza andone Non Executive Non-Independent Director Mr. Varun Laul. Mr. Sanjeev Aga is theChairman of the Committee.
All members of the Audit and Risk Management Committee possess requisite experience andknowledge of accounting and financial management. For further details on the Audit andRisk Management Committee please refer to the Corporate Governance Report forming part ofthe Annual Report.
All the Independent Directors were present during all the Audit and Risk ManagementCommittee meetings held during the year under review.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances. Thedetails of the Whistle blower policy are available on the Companys website
During the year under review the Company has adopted a Risk Management Policy inaccordance with the provisions of the Companies Act 2013 and the (SEBI LODR) Regulations2015. The Risk Management Policy defines the risk management approach of the Company andincludes a periodic review of such risks and also the documentation mitigating measuresand reporting mechanism of such risks.
DIRECTORS Rs. RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (C) OF THECOMPANIES ACT 2013
Based upon the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the Internal Statutoryand Secretarial Auditors and the reviews performed by the Management and the relevantBoard Committees including the Audit Committee the Board is of the opinion that theCompanys internal financial controls were adequate and operating effectively duringthe financial year 2015-16.
Accordingly pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013the Board of Directors to the best of their knowledge and ability confirm that:
a) the financial statements for the financial year ended March 312016 have beenprepared on a going concern basis by following the applicable accounting standards andthere is no material departure from the accounting standards;
b) the accounting policies selected were applied consistently and the judgments andestimates related to financial statements have been made on a reasonable and prudent basisso as to give a true and fair view of the state of affairs of the Company at the end ofthe financial year and of the profit of the Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) internal financial controls to be followed by the Company have been laid down andthat such internal financial controls are adequate and are operating effectively; and
e) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad as Chairman withMs. Lynn de Souza and Mr. Kapil Agarwal as Members. The Committee is responsible forformulating and monitoring the CSR policy of the Company. The Company has adopted a CSRpolicy in compliance with the provisions of the Companies Act 2013.
The average net profit of the Company computed as per Section 198 of the CompaniesAct 2013 during the three immediately preceding financial years was Rs. 379.14 Mn. Itwas hence required to spend a minimum of Rs. 758 Mn on CSR activities during the FinancialYear 2015-16 being 2% of the average net profits of the three immediately precedingfinancial years.
The Company had in the previous financial year 2014-15 contributed an amount of Rs.16.59 Mn towards CSR activities against its obligation of Rs. 5.45 Mn for the saidfinancial year. Thus the Company had contributed Rs. 11.15 Mn over and above itsobligation during the financial year 2014-15 which was already in excess of theCompanys obligation to spend a minimum amount of Rs. 758 Mn during the currentfinancial year 2015-16 although during the year under review the Company had notcontributed to CSR activities.
The annual report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure-3" forming party ofthis Report.
CONSERVATION OF ENERGY RESEARCH AND
DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Sub-section (3) (m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are enclosed asAnnexure-4" to this report.
Your Company is publishing only the statutory disclosures in the print version of theAnnual Report. Additional information is available on the Companys website
At the Annual General Meeting held on September 4 2014 S.R. Batliboi & AssociatesLLP Chartered Accountants were appointed as statutory auditors of the Company to holdoffice till the conclusion of the Annual General Meeting to be held in the calendar year2018. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of S.R. Batliboi & Associates LLP CharteredAccountants as statutory auditors of the Company is placed for ratification by themembers of the Company. In this regard the Company has received a certificate from theauditors
to the effect that if they are reappointed as auditors of the Company for financialyear 2016-17 it would be in accordance with the provisions of Section 141 of the CompaniesAct 2013.
During the year under review Mr. Chetan Joshi Practicing Company Secretary hadresigned as the Secretarial Auditor of the Company. Mr. Dharmesh Zaveri of D. M. Zaveri& Co. Practicing Company Secretaries was appointed to conduct the secretarial auditof the Company for the financial year 2015-16 as required under Section 204 of theCompanies Act 2013 and Rules thereunder. The secretarial audit report for financial year2015-16 forms part of the Annual Report as Annexure-5" to this report. Thereare no qualifications or adverse observations by the Secretarial Auditors of the Companyfor the year under review.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3) (a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as "Annexure-6" to thisreport.
Your Directors believe that the key to success of any company are its employees. YourCompany has a team of able and experienced professionals whose dedicated efforts andenthusiasm has been an integral part of your Companys growth. Your Directors wouldlike to place on record their deep appreciation of their continuous effort andcontribution to the Company.
Particulars of employees
The table containing the names and other particulars of employees in accordance withthe provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 disclosingthe ratio of the remuneration of each director to the median employees remunerationand such other details is appended as Annexure-7" to this report.
A statement containing the names of every employee employed throughout the financialyear and in receipt of remuneration of Rs. 60 lakh or more or employed for part of theyear and in receipt of Rs. 5 lakh or more a month under Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed asAnnexure-7" to this report.
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment at the workplace in line with the provisions of theSexual Harassment of Women at Workplace (Prevention Prohibition
and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has alsoconstituted an Internal Complaints Committee to inquire into complaints of sexualharassment and recommend appropriate action. The Company has not received any complaint ofsexual harassment during the financial year 2015-16.
Statements in this Report and the Management Discussion & Analysis describing theCompanys objectives projections estimates expectations or forecasts may beforward-looking within the meaning of applicable securities laws and regulations. Actualresults may differ materially from those expressed or implied in the statement. Importantfactors that could influence the Companys operations include economic conditionsaffecting demand/supply and price conditions in the domestic and overseas markets in whichthe Company operates changes in government regulations tax laws economic developmentswithin the country and other incidental factors.
We thank all our customers vendors investors bankers and all other businesspartners for their excellent support during the year. We place on record our appreciationof the strong commitment and contribution made by our employees at all levels.
We also take this opportunity to place on record our appreciation for continuedco-operation and unstinted support received from the film producers distributorsexhibitors and advertisers who have contributed to the success of our Company.
We thank the Central Government and the various State Governments and other Governmentagencies and bodies for their support and look forward to their continued support in thefuture.