Entertainment Network (India) Ltd.
|BSE: 532700||Sector: Media|
|NSE: ENIL||ISIN Code: INE265F01028|
|BSE 16:00 | 15 Apr||142.30||
|NSE 15:57 | 15 Apr||142.00||
|Mkt Cap.(Rs cr)||678|
|Mkt Cap.(Rs cr)||678.34|
Entertainment Network (India) Ltd. (ENIL) - Director Report
Company director report
Your Directors have pleasure in presenting the Twentieth Annual Report together with the audited financial statements of Entertainment Network (India) Limited ['the Company'/ 'ENIL'/ 'Radio Mirchi'] for the financial year ended March 312019.
The financial statements for the year ended March 31 2019 are prepared under Indian Accounting Standards (Ind AS).
1. Financial Highlights
2. Financial Performance Operations and the state of the Company's affairs
Total income of the Company increased from Rs. 54590.52 lakhs during the previous year to Rs. 63541.42 lakhs during the year under review. Profit after tax increased from Rs. 3515.89 lakhs during the previous year to Rs. 5391.85 lakhs during the year under review.
On a consolidated basis total income of the Company increased from ' 54652.33 lakhs during the previous year to Rs. 63648.69 lakhs during the year under review. Profit after tax increased from Rs. 3563.99 lakhs during the previous year to Rs. 5389.92 lakhs during the year under review.
During the year your Company continued to work in the direction set by its strategy. The strategy looks at the business as two parts the first being core radio and the second the solutions business. The solutions business is where we develop solutions to the marketing challenges faced by clients.
Typically solutions include core radio but they go beyond radio and include new media options like social media native videos on YouTube original content podcasts as well as traditional media options like events Out of Home newspapers and in some cases even TV.
In FY19 your Company benefited from the strategic pause it had taken last year. As you may recall the strategic pause included reducing ad inventory levels by 15% in the legacy stations keeping a tight ad cap on new stations at 10 minutes improving the gross margins in the solutions business and rapidly growing news opportunities in the digital space. We are happy to report that the Company has made substantial progress as envisaged last year. As a result of the volume reduction your Company was able to grow its pricing in legacy stations by a marginal amount in a weak market where other players were forced to reduce pricing. As a result of the 10 minute hard cap in new stations your Batch-1 and Batch-2 stations (Phase-3) have started off with high pricing. In the media business starting with the right pricing is very important. Further the gross profit of the solutions business has improved significantly from 30.1% to 32.3%. This is however excluding concerts featuring international artists. Your Company executed a 5-city concert tour featuring internationally renowned Bryan Adams and a 2-city concert featuring Dutch DJ Martin Garrix ranked #1 in the world in 2016 2017 and 2018 as per British magazine DJ Mag. Unfortunately both concerts made losses. We couldn't raise enough sponsorship revenues in the Bryan Adams concert series though ticket sales were excellent. In the Martin Garrix concerts however we couldn't raise enough sponsorship revenues and ticket sales both. Your Company has learnt its lessons - we need to plan much better and ahead of time. In the future we will ensure that we do such concerts with much better planning.
The digital part of your Company performed exceptionally reporting revenue growth of 90% albeit on a low base. Another good point is that the digital business nearly broke even reporting a small loss of 3.6%.
The core radio also performed very well in FY19 growing by 12.7%. Growth was led by Phase-3 stations. The 17 stations of Batch-1 grew by 33.0% during FY19. 16 of the 21 Batch-2 stations were launched in FY19. Together they also contributed to the radio growth figure. Batch-1 stations reported EBITDA of 12.7% while Batch-2 stations reported an EBITDA loss (since they were operational for only part of the year).
During the year your Company created a new IP in its TV Impact properties portfolio called Mirchi Cover Star. This was a singing talent hunt and the winner got to perform at the 11th Mirchi Music Awards in Mumbai. The IP was well received by advertisers and in its very first year it reported a gross profit of 29.7%. Your Company also extended an IP called Mirchi Neon Run that it had created 3 years back to 19 cities (13 last year). It also generated a gross profit margin of nearly 18% on this IP. Overall your Company's strategy of creating more IPs is showing traction with other IPs like Mirchi Music Awards Mirchi Rock & Dhol and Mirchi Spell Bee also showing positive movement.
Your Company expanded its international operations by entering the biggest radio market in the world the United States. We launched in the tristate area of New York New Jersey and Connecticut on our Republic Day January 26th 2019. We soon expanded into other prominent cities like Philadephia (Pa) Baltimore (Md) Raleigh-Durham (NC) Cleveland (Oh) Columbus (Oh) Atlanta (Ga) and St Louis (Mo). These launches were in a tie- up with a US partner with whom we have a brand licensing agreement. The initial response from listeners to our launch has been amazing. Plans are afoot to launch in many other cities there. Your Company also plans to launch in another country in the Gulf after having entered the UAE and Bahrain. There is strong demand from other countries for Mirchi as well. To focus on this opportunity your Company has created a new position of Head - International operations.
In January 2019 the Company fully repaid the Unsecured Commercial Papers (CPs) amounting to Rs. 110 crores. These CPs were issued in January 2018.
One area where progress was not made was in our efforts to acquire TV Today's three metro stations in Delhi Kolkata and Mumbai. These operate under the Ishq brand name and your Company has an Advertising Sales Agreement with it. Despite the 3-year lock-in period expiring on April 1 2018 the acquisition could not be completed due to various legal reasons. Your Company is hopeful of completing the acquisition soon.
Given your Company's strong position in the radio as well as solutions business the future looks very promising.
There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which these financial statements relate and the date of this Report. There has been no change in the nature of the business of the Company.
3. Transfer to reserves
The Board of Directors of your Company has decided not to transfer any amount to the reserves for the financial year under review.
Your Directors are pleased to recommend a dividend @ 10% i.e. Rs. 1.00 (Rupee one only) per equity share of Rs. 10/- each for the financial year ended March 31 2019 aggregating Rs. 574.69 lakhs including dividend distribution tax of Rs. 97.99 lakhs. The dividend payment is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM). The dividend payout is in accordance with the Company's Dividend Distribution Policy.
The dividend if declared at the AGM would be paid/ dispatched within thirty days from the date of declaration of dividend to those persons or their mandates:
whose names appear as beneficial owners as at the end of the business hours on July 29 2019 in the list of the Beneficial owners to be obtained from the Depositories i.e. National Securities Depository Limited [NSDL] and Central Depository Services (India) Limited [CDSL] in respect of the shares held in electronic/ dematerialized mode; and
whose names appear as Members in the Register of Members of the Company as on July 29 2019 after giving effect to valid share transfers in physical forms lodged with the Company/ Registrar & Share transfer Agents in respect of the shares held in physical mode.
As per Section 124 of the Companies Act 2013 dividends not claimed within seven years from the date of transfer to the Company's Unpaid Dividend Account will be transferred to the Investor Education and Protection Fund (IEPF). Details of
the unclaimed dividend amount is available on the Company website- www.enil.co.in at the url: http:// www.enil.co.in/unclaimed-dividend.php. Calendar for transfer of unclaimed dividend to IEPF has been stated in the notes to the Notice convening the AGM. Pursuant to the guidelines issued by the IEPF Authority Company Secretary has been nominated as the Nodal officer to facilitate the refund of the claims of the unpaid (unclaimed) dividend (e-mail ID: email@example.com).
The Company has not accepted any deposit from the public / members under Section 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014 during the financial year under review. Consequently there is no requirement of furnishing details related to deposit covered under Chapter V of the Companies Act 2013.
6. Directors and Key Managerial Personnel
In accordance with the provisions of the Companies Act 2013 ('the Act') read with the applicable rules thereto including any statutory modification(s) or re-enactment thereof for the time being in force Mr. Prashant Panday (DIN: 02747925) retires by rotation at the ensuing AGM and being eligible offers himself for reappointment.
The Nomination and Remuneration Committee based on the performance evaluation of Mr. Subramanian Narayanan (Mr. N. Subramanian) (DIN: 03083775) approved and recommended to the Board of Directors his appointment as an Additional Director and the Executive Director & Group Chief Financial officer of the Company. Board of Directors at their meeting held on November 2 2018 unanimously accepted the recommendation of the Nomination and Remuneration Committee and approved the appointment of Mr. N. Subramanian as an Additional Director and the Executive Director & Group Chief Financial officer.
Mr. N. Subramanian holds the office up to the date of this AGM pursuant to Section 161 of the Act and is eligible to be appointed as the Director and he is not disqualified to become a director under the Act. His term of appointment is for the five consecutive years commencing from November 2 2018 to November 1 2023 on continuation basis without any interruption/ break in service liable to retire by rotation subject to the approval of the Members.
The Board of Directors state that keeping in view the knowledge background experience and contribution made by Mr. N. Subramanian during his tenure his appointment as the Executive Director & Group Chief Financial Officer would be in the interest of the Company. The Company has received relevant declarations and confirmation from Mr. Subramanian to the effect that he is not disqualified to become the director under the Act.
At the 15th AGM of the Company Mr. Richard Saldanha (DIN: 00189029) Mr. Ravindra Kulkarni (DIN: 00059367) and Mr. Narayanan Kumar (Mr. N. Kumar) (DIN: 00007848) were inter alia appointed as the Independent Directors on the Board of the Company for a term of five consecutive years commencing from August 12 2014 pursuant to the provisions of Sections 149 152 and Schedule IV of the Act read with the Companies (Appointment and Qualification of Directors) Rules 2014 and the erstwhile Clause 49 of the Listing Agreement with the Stock Exchanges.
The Nomination and Remuneration Committee based on the outcome of performance evaluation exercise for Independent Directors recommended to the Board of Directors of the Company the re-appointment of the said Independent Directors for the second term of five consecutive years commencing from August 12 2019 to August 11 2024.
The Board of Directors at its meeting held on May 30 2019 based on the outcome of the performance evaluation exercise recommendations of the Nomination and Remuneration Committee background experience acumen and contributions made by Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar during their tenure approved the re-appointment (not liable to retire by rotation) of the said Independent Directors for the second term of five consecutive years commencing from August 12 2019 to August 11 2024 subject to approval of the Members of the Company. The Board of Directors state that the re-appointment of Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar would be in the interest of the Company.
The Company has received declarations from Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar that they meet the criteria of independence as prescribed under Section 149 of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations 2015 ('the Listing Regulations') (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force). Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar are not disqualified from being appointed as Directors in terms of Section 164 of the Act and have consented to act as Independent Directors of the Company. The Company has received the requisite Notices from a Member in writing proposing their re-appointment as the Independent Directors.
In the opinion of the Board Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar fulfil the conditions for re-appointment as Independent Directors as specified in the Act and Listing Regulations. Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar are independent of the management.
Further as per the Regulation 17 (1A) of the Listing Regulations no listed company shall appoint or continue the directorship of a person as a nonexecutive director who has attained age of seventy five years unless a special resolution is passed to that effect. Mr. Saldanha has attained seventy five years on February 3 2019; Mr. Kulkarni will be attaining seventy five years on May 23 2020. In order to comply with the aforesaid Regulation special resolutions are proposed at the ensuing AGM for reappointing and continuing the directorship of Mr. Ravindra Kulkarni and Mr. Richard Saldanha as the Independent Non- Executive Directors of the Company with the justification as indicated in the explanatory statement annexed to the Notice convening the AGM.
Justification and rationale for re-appointment of Mr. Richard Saldanha Mr. Ravindra Kulkarni and Mr. N. Kumar has been stated in the Notice convening the AGM with other relevant disclosures.
The Company has received the consent declarations and confirmations from all the Independent Directors of the Company pursuant to the provisions of Section 149 and all other applicable provisions of the Act and the Listing Regulations stating that they meet the criteria of independence as provided under the Act and the Listing Regulations and that they are not disqualified to become directors under the Act. All the Independent Directors also confirmed that they are not aware of any circumstance or situation which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence and that they are independent of the management. The Board of Directors took on record the said declarations and confirmations submitted by the Independent Directors under applicable provisions of the Act and the Listing Regulations after undertaking due assessment of the veracity of the same. In the opinion of the Board of Directors all the Independent Directors fulfill the criteria of independence as provided under the Act rules made thereunder read with the Listing Regulations and that they are independent of the management.
The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and the Code of Conduct for directors and senior management personnel formulated by the Company.
The Company has received all the relevant consent documents declarations confirmation from the directors proposed to be appointed re-appointed and they are not disqualified to become the director under the Act.
As per the requirement of the circular from the stock exchange (no: LIST/Comp/14/2018-19 Dated June 20 2018) the Board of Directors and its Nomination and Remuneration Committee while considering the appointment and re-appointment of the directors have verified that they are not debarred from holding the office of director pursuant to any SEBI order. Accordingly the Company affirms that the Directors proposed to be appointed re-appointed are not debarred from holding the office of director by virtue of any SEBI order or any other such authority.
Certificate from the Company Secretary in practice has been attached with the Report of Corporate Governance confirming that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board (SEBI)/ Ministry of Corporate Affairs or any such statutory authority.
As stipulated under the Listing Regulations and Secretarial Standards details in respect of the directors seeking appointment re-appointment at the AGM inter alia age qualifications experience details of remuneration last drawn by such person relationship with other directors and Key Managerial Personnel of the Company the number of Meetings of the Board attended during the year and other directorships membership/ chairmanship of the committees of other Boards shareholding etc. are annexed to the Notice convening the AGM.
None of the Directors are related with each other or key managerial personnel (inter-se).
The Board recommends the aforesaid re-appointment appointment and continuation as the Directors of the Company.
Details of the number of meetings of the Board of Directors and Committees and attendance at the meetings have been furnished in the Report on Corporate Governance.
Following persons are designated as the Key Managerial Personnel (KMP):
Mr. Prashant Panday: Managing Director & CEO
Mr. N. Subramanian: Executive Director & Group CFO
Mr. Mehul Shah: SVP Compliance & Company Secretary
7. Annual evaluation of performance of the Board its Committees and individual directors
The Board of Directors is committed to continued improvement in its effectiveness. Accordingly the Board its Committees and individual directors participated in the annual formal evaluation of its performance. This was designed to ensure amongst other things that the Board its Committees and each director continue to contribute effectively.
Evaluation of the Board its Committees and individual directors involved structured questionnaire-driven discussions that covered a number of key areas / evaluation criteria including the roles and responsibilities size and composition of the Board and its Committees meaningful and constructive contribution and inputs in the meetings dynamics of the Board and its Committees and the relationship between the Board and management. Chairman of the Board of Directors had meeting with the Independent directors. Chairman of the Nomination & Remuneration Committee had meeting with the Non- Independent directors. Independent directors at their Meeting led by the Chairman of the Nomination & Remuneration Committee conducted the performance review of the Chairman Non-Independent Directors and the Board as a whole in respect of the financial year under review. The Independent Directors in the said meeting also evaluated the quality quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. These meetings were intended to obtain Directors' inputs on effectiveness of the Board/ Committee processes. The results of the evaluation were discussed with the relevant Committees and collectively by the Board as a whole. Constructive feedback was also sought on the contributions of individual directors.
Formal Annual Evaluation was made in compliance with all the applicable provisions of the Act and the Listing Regulations. During the Board Evaluation it was observed that the Board of Directors as a whole is functioning as an integrated body helping the board discussion to be rich and value adding. The Directors were satisfied with the evaluation results which reflected the overall engagement of the Board and its Committees with the Company.
8. Board Familiarization Program
At the time of appointment of a new director through the induction process he/ she is familiarized with the Company director's roles rights responsibilities in the Company nature of the industry in which the Company operates business model of the Company etc. Detailed presentations are made before the Board Members at the Board and its Committee meetings covering various areas including business strategy branding programming financial performance and forecast compliances/ regulatory updates audit reports risk assessment and mitigation etc. The details of the familiarization program are available on the Company's website at: www.enil.co.in at web link: http://www.enil.co.in/policies-code-of-conduct.php
9. Policy on directors' appointment and remuneration
The Company's Policy on the Directors' appointment and remuneration including criteria for determining qualifications positive attributes independence of director and other matters as provided under Section 178 of the Act is titled as Nomination & Remuneration Policy and is available on the Company's website at: www.enil.co.in at http.// wwwenil.co.in/policies-code-of-conduct.php and also appended as Annexure A to this Report.
10. Vigil Mechanism
The Company has a 'Whistle Blower Policy' /'Vigil Mechanism' in place. The objective of the Vigil Mechanism is to provide the employees directors customers vendors contractors and other stakeholders of /in the Company an impartial and fair avenue to raise genuine concerns about unethical behaviour actual or suspected fraud or violation of the Company's code of conduct and seek redressal in line with the Company's commitment to the highest possible standards of ethical moral and legal business conduct and fair dealings with all its stakeholders and constituents and its commitment to open communication channels. Vigil Mechanism provides adequate safeguards against victimization of persons who use such mechanism for whistle blowing in good faith. The Board of Directors affirms and confirms that no personnel have been denied access to the Audit Committee. The Policy contains the provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases.
Whistle Blower Policy/ Vigil Mechanism is available on the Company's website at: www.enil.co.in at http://www.enil.co.in/policies-code-of-conduct.php
11. Audit Committee
The Audit Committee of the Company presently consists of the following Directors as on the date of this Report:
Mr. N. Kumar - Chairman (Independent NonExecutive Director)
Mr. Ravindra Kulkarni (Independent NonExecutive Director)
Mr. Richard Saldanha (Independent NonExecutive Director)
The Internal Auditors of the Company report directly to the Audit Committee. All the recommendations of the Audit Committee were accepted by the Board of Directors. Brief description of terms of reference and other relevant details of the Audit Committee have been furnished in the Report on Corporate Governance.
12. CSR Committee
The constitution composition quorum requirements terms of reference role powers rights obligations of 'Corporate Social Responsibility Committee [CSR Committee]' are in conformity with the provisions of Section 135 and all other applicable provisions of the Companies Act 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014 and all other applicable rules made under the Companies Act 2013 (including any statutory modification(s) or re-enactment or amendments thereof).
The CSR Committee of the Company presently consists of the following Directors as on the date of this Report:
Mr. Vineet Jain (Non- Executive Director)
Mr. Ravindra Kulkarni (Independent NonExecutive Director)
Mr. Prashant Panday (Managing Director & CEO)
During the financial year under review the Committee met four times i.e. on May 23 2018 August 3 2018 November 2 2018 and February 6 2019.
Brief description of terms of reference of the Committee inter alia includes:
To formulate and recommend to the Board of Directors (Board) a Corporate Social Responsibility (CSR) Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act 2013;
To approve CSR activities;
To monitor the CSR Policy of the Company from time to time;
To institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the Company;
To carry out any other functions as authorized by the Board of Directors from time to time or as enforced by statutory/ regulatory authorities.
CSR Policy development and implementation:
The CSR Policy is available on the Company's website at www.enil.co.in at http://www.enil.co.in/ policies-code-of-conduct.php
CSR Policy Statement and Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules 2014 have been appended as Annexure Bto this Report.
13. Nomination and Remuneration Committee
The Nomination and Remuneration Committee of the Company presently comprises of the following Directors as on the date of this Report:
Mr. N. Kumar - Chairman (Independent NonExecutive Director)
Mr. Ravindra Kulkarni (Independent NonExecutive Director)
Mr. Richard Saldanha (Independent NonExecutive Director)
Mr. Vineet Jain (Non- Executive Director)
Brief description of terms of reference and other relevant details of the Nomination and Remuneration Committee have been furnished in the Report on Corporate Governance.
14. Stakeholders Relationship Committee
The Stakeholders Relationship Committee of the Company presently comprises of the following Directors as on the date of this Report:
Mr. Richard Saldanha - Chairman (Independent Non- Executive Director)
Mr. Ravindra Kulkarni (Independent NonExecutive Director)
Mr. Prashant Panday (Managing Director & CEO)
Brief description of terms of reference and other relevant details of the Stakeholders Relationship Committee have been furnished in the Report on Corporate Governance.
15. Audit Report
The Audit Report does not contain any qualification reservation or adverse remark or disclaimer. The Statutory Auditors of the Company have not reported any details in respect of fraud as specified under Section 143(12) of the Act.
At the fifteenth AGM held on August 12 2014 the Members had approved the appointment of S. R. Batliboi & Associates LLP Chartered Accountants (ICAI Firm Registration number - 101049W/ E300004) as the Statutory Auditors of the Company to hold the office from the conclusion of the fifteenth AGM till the conclusion of the twentieth AGM. As per the provisions of Section 139 of the Act audit firm can be re-appointed for the second term of five consecutive years i.e. from the conclusion of the twentieth AGM till the conclusion of the twenty fifth AGM.
S. R. Batliboi & Associates LLP Chartered Accountants have provided their consent for re-appointment as the Statutory Auditors of the Company along with a certificate under Section 139 of the Act inter alia stating that they satisfy the criteria provided in Section 141 of the Act. Other relevant information has been furnished at the Resolution No. 5 read with the explanatory statement of the Notice convening the AGM proposing re-appointment of S. R. Batliboi & Associates LLP as the Statutory Auditors of the Company.
17. Secretarial Auditor and report
The Board of Directors had appointed M/s. Hemanshu Kapadia & Associates Company Secretaries (C. P No: 2285) to conduct Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for the financial year ended March 31 2019 is appended as Annexure C-1 to this Report. The Secretarial Compliance Report for the financial year ended March 31 2019 is appended as Annexure C-2 to this Report.
The Secretarial Audit Report and Secretarial Compliance Report dated May 7 2019 contain one qualification for not appointing a woman director as per the provisions of Section 149 of the Companies Act 2013 and Regulation 17 of the Listing Regulations during the financial year under review. The Company wishes to place on record that a woman director (Ms. Punita Lal - DIN: 03412604) was on the Board since March 28 2016. She resigned from the Board with effect from November 15 2017. As per the provisions of Section 149 of the Companies Act 2013 read with the applicable rules thereto any intermittent vacancy of a woman director shall be filled- up by the Board at the earliest but not later than the immediate next Board meeting or three months from the date of such vacancy whichever is later.
the Board of Directors had identified Ms. Sukanya Kripalu (DIN: 06994202) for her induction as the Independent Non- Executive Director on the Board of the Company and had completed all the regulatory procedures including applying to the Ministry of Information & Broadcasting ('MIB') for their approval/ no objection on February 13 2018. The Company had thus completed all the regulatory formalities for induction of woman director before the due date.
Post approval received from the MIB Ms. Sukanya Kripalu was appointed as the Independent NonExecutive Director for a term of five consecutive years commencing from May 23 2018 to May 22 2023 in terms of Sections 149 150 152 161 and other applicable provisions of the Companies Act 2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) not liable to retire by rotation. With effect from May 23 2018 composition of the Board of Directors is in compliance with the applicable provisions of the Act and Listing Regulations.
18. Cost Auditor and report
The Board of Directors on recommendation of the Audit Committee and pursuant to Section 148 and all other applicable provisions of the Act read with the Companies (Audit and Auditors) Rules 2014 and all other applicable rules made under the Act (including any statutory modification(s) or re-enactment thereof for the time being in force) has approved the appointment and remuneration of the Cost Auditors M/s. R. Nanabhoy & Co. Cost Accountants (Firm registration number- 00010) to conduct the audit of the cost records of the Company for the financial year ending on March 31 2020. the aforesaid appointment of M/s. R. nanabhoy & Co. is subject to the relevant notifications orders rules circulars etc. issued by the Ministry of Corporate Affairs and other regulatory authorities from time to time. The remuneration payable to M/s. R. nanabhoy & Co. shall be Rs. 475000 (Rupees four lakhs seventy five thousand only) plus out of pocket expenses and applicable taxes for the aforesaid audit. The remuneration payable to the Cost Auditors is required to be ratified subsequently by the shareholders. Accordingly consent of the members has been sought for passing the resolution as set out at Item No. 6 of the notice convening the AGM for ratification of the remuneration payable to the Cost Auditors for the financial year ending on March 312020.
Maintenance of cost records as specified by the Central Government under Sub-section (1) of Section 148 of the Companies Act 2013 is required by the Company and accordingly such accounts and records are made and maintained.
The Cost Audit Report for the financial year 201718 was filed on August 30 2018. the Cost Audit Report for the financial year 2018-19 will be filed on/ before the due date.
19. Conservation of Energy Technology absorption and Foreign exchange earnings and Outgo
The Company is in the business of Private FM Radio Broadcasting. Hence most of the information required to be provided relating to the Conservation of energy and Technology absorption is not applicable.
However the information as applicable is given hereunder:
i) Conservation of energy:
Steps taken or impact on conservation of energy and the steps taken by the Company for utilising alternate sources of energy: Your Company uses energy efficiently in day to day operations. The operations of the Company are not energy intensive. Nevertheless continuous efforts such as replacement of conventional lighting with LED lighting across all the locations installation of star-rated energy efficient air conditioners installation of energy efficient electronic devices implementation of SOPs etc. aimed at reducing energy consumption are being made by the Company and its employees to reduce the wastage of scarce energy resources. Your Company has customized and adapted a smart cabinet system for 2 Transmitter setups. The cabinet/ rack has an in-built cooling system that cools the entire rack. This circumvents the need of cooling the entire room and hence will generate potential energy savings. The solution was pioneered by us and innovated along with the OEM. The OEM is now marketing the racks to transmitter suppliers who can offer it as a comprehensive package to FM/AM broadcasters worldwide. the Company has installed State-of-the-art power efficient compact transmitters at 14 new stations.
Capital investment on energy conservation equipments: Rs. 438.48 lakhs.
ii) Technology absorption:
The efforts made towards technology absorption and benefits derived like product improvement cost reduction product development or import substitution:
- Implemented the networking model for the Phase 3 Batch 2 project in 14 out of 16 new stations. The content synchronization model (ArcServe) helps replicate the existing (Hub) stations with the transmission (CTI) sites. this resulted in significant Capex and Opex savings in building and maintaining the studios.
- Installed State-of-the-art power efficient compact transmitters at 14 new stations.
- Implemented open office design for the new corporate office leading to space optimization and savings in operating expenses.
Imported technology (imported during last three years reckoned from the beginning of the financial year):
The Company has not imported any new technology in this financial year. Nevertheless the Company has continued to use the latest equipment and software for its the business activities.
The expenditure incurred on Research & Development (R & D):
The Company has not spent any amount towards research and development activities. The Company has been active in harnessing the latest technology available in the industry.
iii) Foreign exchange earnings and outgo:
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.
20. Particulars of Employees
Disclosures pertaining to remuneration and other details as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are appended as Annexure D to this Report.
The Managing Director and Executive Director of the Company do not receive any remuneration or commission from the Company's holding or subsidiary companies.
As per the provisions of Section 197 of the Act read with the Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statement showing the names and other relevant particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of the Annual Report. As per the first proviso to Section 136(1) of the Act the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is made available for inspection at the Registered Office and Corporate office of the Company during working hours for a period of 21 days before the date of AGM. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The Annual Report is available on the Company's website at: www.enil.co.in .
21. Extract of Annual Return
Extract of Annual Return of the Company as required under Section 92 of the Act is attached as Annexure E to this Report in the Form MGT 9. In compliance with Section 134(3)(a) of the Act annual return referred to in Section 92(3) of the Act will be placed at the Company's website: (www.enil.co.in ) at url: http://www.enil.co.in/financials-annual-reports.php.
22. Share Capital & Listing of Securities
During the financial year under review the Company has not issued:
any equity shares with differential rights as to dividend voting or otherwise;
any shares to its employees under the Employees Stock Option Scheme;
any sweat equity shares.
The equity shares of the Company are listed and admitted to dealings on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) since February 15 2006. Annual Listing Fee has been paid to each exchange. As required under the Listing Regulations the Company has executed the Uniform Listing Agreement with BSE and NSE.
23. Management Discussion and Analysis Report
Management Discussion and Analysis Report for the financial year under review as stipulated under Regulation 34 of the Listing Regulations is set out in a separate section forming part of this Report.
The Company has adopted the Integrated Reporting. The information related to the Integrated Reporting forms part of the Management Discussion & Analysis and as a green initiative Integrated Reporting has been hosted on the website of the Company (www.enil.co.in) at url: http://www. enil. co. in/financials-annual-reports. php.
24. Business Responsibility Report
As per the Regulation 34 of the Listing Regulations the Company has published a separate Business Responsibility Report ('BRR') for the financial year under review. BRR is in line with the key principles stated in the 'National Voluntary Guidelines on Social Environmental and Economic Responsibilities of Business' framed by the Ministry of Corporate Affairs and is attached as Annexure F to this Report.
25. Corporate Governance
The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated under the Listing Regulations. A separate report on Corporate Governance is enclosed as a part of this Report along with the Certificate from the practicing Company Secretary.
26. Secretarial Standards
The Company complies with the applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.
27. Directors' Responsibility Statement
Pursuant to the provisions of Section 134 of the Companies Act 2013 the Directors hereby confirm that:
a) in the preparation of the annual accounts for the financial year ended on March 31 2019 the applicable accounting standards have been followed and that there are no material departures from the same;
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended on March 31 2019 and of the profit of the Company for that period;
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
28. Contracts and arrangements with related parties
All contracts / arrangements / transactions entered into by the Company during the financial year under review with related parties were in the ordinary course of business and on an arm's length basis.
Bennett Coleman & Company Limited ('BCCL') is the holding company and a related party under Section 2(76) of the Companies Act 2013 and Regulation 2(1)(zb) of the Listing Regulations. As on date BCCL holds 33918400 equity shares in the Company (i.e. 71.15% of the paid up capital of the Company).
Pursuant to the provisions of Section 188 of the Act read with the Companies (Meeting of Board and its Powers) Rules 2014 related party transactions beyond the prescribed threshold limit require prior approval of the company by a resolution. However if the proposed transactions with the related parties are at arm's length and in its ordinary course of business the said approval of the company is not required. Further in terms of Regulation 23 of the Listing Regulations transaction with a related party shall be considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year exceeds ten percent of the annual consolidated turnover of the company as per the last audited financial statements of the company.
In order to achieve efficiencies in Ad sales business synergies economics of scale and also to optimize costs the Company and BCCL have entered into various contracts/ arrangements/ transactions relating to the transfer and / or availing of resources services or obligations in the past and propose to continue with such contracts/ arrangements/ transactions in the future too.
In compliance with Regulation 23 of the Listing Regulations on January 23 2017 the Company sought the approval from the Members of the Company by way of postal Ballot for the contracts/ arrangements/ transactions entered into and/ or to be entered into with Bennett Coleman & Company Limited ('BCCL') the holding company relating to the transfer and / or availing of resources services or obligations for the Financial Year 2016-2017 and subsequent financial years exceeding ten percent but not exceeding twenty five percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company relevant for the respective financial years.
Details of the Material Related Party Transactions i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements entered during the year by the Company as required under Section 134(3) (h) of the Act (in the Form AOC 2) is attached as Annexure Gto this Report.
The Company's Policy on Materiality of related party transactions and dealing with related party transactions is available on the Company's website at: www.enil.co.in at http://www.enil.co.in/policies- code-of-conduct.php.
The related party transactions are entered into based on business exigencies such as synergy in operations profitability market share enhancement etc. and are intended to further the Company's interests. In accordance with the applicable accounting standards transactions with related parties are furnished in the financial statements.
29. Dividend Distribution Policy
The Company has formulated a Dividend Distribution Policy as required under the Regulation 43A of the Listing Regulations. The said Policy is appended as Annexure H to this Report and also uploaded on the Company's website at www.enil.co.in.
30. Particulars of loans given investment made guarantees given and securities provided
The Company has not given any loans guarantees or provided any securities under Section 186 of the Act. Particulars of investments made by the Company during the financial year 2018-19 are provided in the financial statements. please refer to the Note no. 8 and 11 to the standalone financial statements for details of investments made by the Company.
31. Risk Management
The Board of Directors is entrusted with various key functions including framing implementing and monitoring the risk management plan for the Company ensuring the integrity of the Company's accounting and financial reporting systems including the independent audit and that appropriate systems of control are in place in particular systems for risk management financial and operational control and compliance with the laws and relevant standards.
The Company has adopted Risk Management Policy pursuant to the provisions of Section 134 and all other applicable provisions of the Companies Act 2013 and Listing Regulations and also established related procedures to inform Board Members about the risk assessment and minimization procedures. The Company has a strong Enterprise Risk Management framework which is administered by the Senior Management team and monitored by the Risk Management Committee. Major risks are identified adequately mitigated continuously and the same are reported to the Audit Committee and Board of Directors along with the action taken report. Risk Management Policy envisages assessment of strategic risks operational risks financial risks regulatory risks human resource risks technological risks.
Risk Management Policy adopted by the Company involves identification and prioritization of risk events categorization of risks into High Medium and Low based on the business impact and likelihood of occurrence of risks and Risk Mitigation & Control.
The Risk Management Committee of the Company presently comprises of the following members as on the date of this Report:
Mr. Vineet Jain (Non- Executive Chairman)
Mr. Prashant Panday (Managing Director & CEO)
Mr. N. Subramanian (Executive Director & Group CFO)
The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations including those relating to strengthening of the Company's Risk Management policies systems and procedures. Internal Audit for the financial year under review has been carried out by Deloitte Haskins & Sells LLP ('Deloitte') the independent Internal Auditors. Internal Audit covers all the radio stations at pan India level and corporate office as per the annual audit plan approved by the Audit Committee. Internal Audit report is presented to the Audit Committee on regular basis and the Chairman of the Audit Committee briefs the Board of Directors about the same.
32. Internal Financial Controls
The Company has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business including adherence to the Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The Company has in place adequate internal financial controls with reference to the financial statements. The Company's internal control systems including internal financial controls are commensurate with the nature of its business and the size and complexity of its operations and same are adequate and operating effectively. These systems are periodically tested and no reportable material weakness in the design or operation was observed. The Audit Committee reviews adequacy and effectiveness of the Company's internal control system including internal financial controls.
33. Consolidated Financial Statements
In accordance with the Companies Act 2013 and applicable accounting standard the audited Consolidated Financial Statements are provided and form part of the Annual Report.
34. Subsidiary Companies
Alternate Brand Solutions (India) Limited (ABSL) is the Company's wholly owned subsidiary. ABSL recorded a total income of Rs. 75.62 lakhs during the financial year 2018-19. Profit after Tax stood at Rs. 63.27 lakhs for the financial year under review.
During the financial year under review the Company set up in the United States of America (US) a wholly owned subsidiary Entertainment Network INC and its step-down subsidiary Entertainment Network LLC to commence radio broadcasting related businesses targeting the South Asian community markets. Entertainment Network INC recorded a total consolidated income of Rs. 34.74 lakhs during the financial year 2018-19. Consolidated loss after Tax stood at ' (65.21) lakhs for the financial year under review.
As per Section 129 of the Companies Act 2013 a separate statement containing the salient features of the financial statements of the Subsidiary Companies is attached along with the financial statements in the prescribed Form AOC-1. The Company does not have any associate company or joint venture. There has been no change in the nature of the business of the subsidiaries.
The Company shall make available the financial statements and the related detailed information of its subsidiaries to any Member of the Company or its subsidiaries who may be interested in obtaining the same at any point of time and same is also available on the website: www.enil.co.in. These documents will also be available for inspection during business hours at the Registered office and Corporate office of the Company. the Consolidated Financial Statements presented by the Company include financial results of its Subsidiary Companies.
The audited financial statements including consolidated financial statements and all other relevant documents required to be attached thereto are available on the Company's website: www.enil. co.in.
The Policy for determining material subsidiaries is available on the Company's website: www.enil.co.in at http://www.enil.co.in/policies-code-of-conduct. php.
35. Significant and material order
During the financial year under review no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.
36. Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013
Your Company has always believed in providing a safe and harassment-free workplace for every individual working in the Company. The Company has complied with the applicable provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 including having a relevant policy in place and also constitution of the Internal Complaints Committee. During the financial year under review four complaints pertaining to sexual harassment were reported to the Internal Complaints Committee of the Company. After detailed investigation and following due procedure under the applicable law guidelines and regulations said four complaints were appropriately dealt with during the financial year under review and appropriate action was taken.
Your Directors take this opportunity to convey their appreciation to all the members listeners advertisers media agencies dealers suppliers bankers regulatory and government authorities and all other business associates for their continued support and confidence in the management of the Company. Your Directors are pleased to place on record their appreciation of the consistent contribution made by employees at all levels through their hard work dedication solidarity and co-operation and acknowledge that their efforts have enabled the Company to achieve new heights of success.
Entertainment Network (India) Limited
4th Floor A-Wing Matulya Centre
Senapati Bapat Marg Lower Parel (West)
Mumbai - 400 013.