Eros International Media Limited
Your Board of Directors are pleased to present 25th Annual Report of ErosInternational Media Limited (hereinafter referred to as "the Company")covering the business operations and Audited Financial Statements of the Company for thefinancial year ended 31 March 2019.
1. FINANCIAL RESULTS
The Financial Performance of your Company for the year ended 31 March 2019 issummarized below:
| || || |
र in lakhs
| ||Standalone Year Ended ||Consolidated Year Ended |
|Particulars ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Sales and other Income ||86980 ||72857 ||113969 ||101001 |
|Profit before Tax ||13677 ||14043 ||31763 ||28735 |
|Less: Tax Expenses ||4941 ||6342 ||5115 ||5613 |
|Net Profit for the year from continuing operations ||8736 ||7701 ||26648 ||23122 |
|Profit for the year attributable to: || || || || |
|Equity shareholders of the Company ||- ||- ||26908 ||22934 |
|Non-controlling Interests ||- ||- ||(260) ||188 |
|Other Comprehensive Income/(Loss) (net of taxes) ||40 ||56 ||5134 ||51 |
|Total Comprehensive Income for the Year ||8776 ||7757 ||31782 ||23173 |
|Attributable to: || || || || |
|Equity Shareholders of the Company ||- ||- ||32042 ||23207 |
|Non-controlling Interests ||- ||- ||(260) ||(34) |
|EPS (Diluted) in र ||9.10 ||8.03 ||28.02 ||23.92 |
2. FINANCIAL PERFORMANCE
On a consolidated basis the Company has recorded the revenues of र 113969lakhs which is an increase of 12.84% as compared to previous year of र 101001lakhs. The profit before tax increased by 10.54% to र 31763 lakhs as compared toprevious year of र 28735 lakhs. The profit after tax attributable to equityshareholders was र 26908 lakhs which was an increase of 17.33% as compared toprevious year of र 22934 lakhs. Diluted EPS increased by 17.14% to र 28.02 ascompared to previous year of र 23.92.
On standalone basis the Company has recorded revenues of र 86980 lakhswhich was an increase of 19.38% as compared to previous year of र 72857 lakhs. Theprofit before tax decreased by 2.61% to र 13677 lakhs as compared to previous yearof र 14043 lakhs. The profit after tax at र 8736 lakhs an increase of13.44 % as compared to previous year of र 7701 lakhs. Diluted EPS increased by13.33% to र 9.10 as compared to previous year of र 8.03.
3. OPERATIONAL PERFORMANCE
During the Financial Year 2018-19 your Company released a total of 72 Films of which7 medium budget and 65 low budget Films as compared to 24 Films released in correspondingperiod last year of which 1 were high budget 4 medium budget and 19 low budget Films.Amongst the 72 Films released during the financial year 2018-19 15 Hindi films 7Tamil/Telugu film and 50 regional films. Major releases for FY 2018-19 included: BhaveshJoshi Super Hero (Hindi) Saakshyam (Telugu) Happy Phirr Bhag Jayegi (Hindi) Manmarziyan(Hindi) Patakhaa (Hindi) Amar Akbar Anthony (Telugu) Savyasachi (Telugu) Boyz 2(Marathi) Tumbbad (Hindi) Mumbai Pune Mumbai 3 (Marathi) and others.
Your Company's key asset is a film library of over 2000 films. In an effort to reach awide range of audiences we maintain rights to a diverse portfolio of films spanningvarious genres generations and languages. These include rights to films in Hindi andseveral regional languages Tamil Telugu Kannada Marathi Bengali Malayalam andPunjabi.
With a view to conserve resources and to strengthen the financial position of theCompany your Directors did not recommend any dividend to its members for the financialyear 2018-19.
The Dividend Distribution policy adopted by the Company in terms of SEBI (ListingObligations & Disclosures Requirements) Regulations 2015 ("SEBI ListingRegulations"). This Policy is uploaded on the website of the Company atwww.erosplc.com
No percentage of profits was transferred to General Reserve as dividend was notrecommended for the financial year 2018-19.
6. EMPLOYEES' STOCK OPTION SCHEME & CHANGES IN SHARE CAPITAL
During the year under review the Nomination and Remuneration Committee of the Boardhad issued and allotted 309642 Equity Shares of the Company to its employees againstexercise of equal number of stock options pursuant to Eros Employee Stock Option Scheme2009 ("EROS ESOP 2009") and 226621 Equity Shares of the Company to itsemployees against exercise of equal number of stock options pursuant to Eros EmployeeStock Option Scheme 2017 ("EROS ESOP 2017"). This resulted in increase in theCompany's Paid up Share Capital to र 955081400 as on 31 March 2019 as againstर 949718770 in the previous year. The disclosures as required under Regulation 14of Securities Exchange Board of India (Share Based Employee Benefits) Regulations 2014read with SEBI Circular No. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015 is attached tothis report as Annexure A hereto and is also available on website of the Company atwww.erosplc.com. A certificate from the statutory auditors certifying that both theschemes viz. EROS ESOP 2009 and EROS ESOP 2017 has been implemented in accordance withSEBI (Share Based Employee Benefits) Regulations 2014 and in accordance with theresolution(s) passed by the members would be placed at the Annual General Meeting of theCompany for inspection by the members.
7. SUBSIDIARIES JOINT VENTURE AND ASSOCIATE COMPANIES
As on 31 March 2019 the Company has 11 subsidiaries. There has been no material changein the nature of the business of the Company and its subsidiaries. Pursuant to theprovisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts)Rules 2014 a statement containing salient features of the financial statements of theCompany's subsidiaries and joint venture its performance and financial position isprovided in the prescribed Form AOC-1 is attached to this Report as Annexure B.None of the subsidiary companies except Copsale Limited (a British Virgin Island Company)are material subsidiary in terms of Regulation 16(c) of the SEBI Listing Regulations (asamended) and in accordance with Company's policy on "Determination of materialsubsidiaries" which is uploaded on the website of the Company at www.erosplc.com.
In accordance with Section 136 of the Act the financial statements of the subsidiarycompanies are available for inspection by the members at the Corporate Office of theCompany during business hours on all days except Saturdays Sundays and public holidaysbetween 11:00 A.M. to 1:00 P.M. up to the date of the Annual General Meeting of theCompany. Any member desirous of obtaining a copy of the said financial statements maywrite to the Company Secretary at the Corporate Office of the Company. The financialstatements including the consolidated financial statements financial statements ofsubsidiaries and all other documents required to be attached to this report have beenuploaded on the website of the Company at www.erosplc.com.
8. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152(6) of the Act and in terms of theArticles of Association of the Company Mr. Kishore Lulla Executive Director (DIN:02303295) retires by rotation at the ensuring Annual General Meeting and being eligiblehas offered himself for re-appointment. The first term of office of Mr. Dhirendra Swarupas an Independent Director expires at the ensuing Annual General Meeting of theCompany.
The Board of Directors on recommendation of Nomination and Remuneration Committee hasrecommended re-appointment of Mr. Dhirendra Swarup as an Independent Director of theCompany for a second term of Five (5) consecutive years on the expiry of his current termof office.
As per the provisions of the Act Independent Directors have been appointed for aperiod of five years and shall not be liable to retire by rotation. All other Directorsexcept the Managing Director are liable to retire by rotation at the Annual GeneralMeeting of the Company. The brief details of the Directors proposed to be reappointed asrequired under Secretarial Standard 2 issued by the Institute of Company Secretaries ofIndia and Regulation 36 of the SEBI Listing Regulations is provided in the Noticeconvening Annual General Meeting of the Company.
All the Directors of the Company have confirmed that they are not disqualified to actas Director in terms of Section 164 of the Act. As on the date of this Report Mr. SunilArjan Lulla Managing Director Mr. Farokh P. Gandhi Group Chief Financial Officer(India) and Mr. Abhishekh Kanoi VP-Company Secretary & Compliance Officer are the KeyManagerial Personnel of your Company in accordance with the provisions of Section 2(51)read with Section 203 of the Act.
Declaration of Independence by Independent Directors & adherence to the Company'sCode of Conduct for Independent Directors
All the Independent Directors of the Company have submitted their disclosure to theeffect that they fulfill all the requirements/criteria of independence as per Section149(6) of the Act. Further all the Independent Directors have affirmed that they haveadhered and complied with the Company's Code of Conduct for Independent Directors which isframed in accordance with Schedule IV of the Act.
Meetings conducted during the Year
The Board met four (4) times during the financial year under review the details ofwhich are given in the Corporate Governance Report that forms part of this Report. Theintervening gap between any two meetings of the Board was not more than one hundred andtwenty (120) days as stipulated under the Act and SEBI Listing Regulations.
Constitution of various Committees
The Board of Directors of the Company has constituted following Committees: a.Audit Committee b. Nomination and Remuneration Committee c. Stakeholders RelationshipCommittee d. Corporate Social Responsibility Committee e. Management Committee Details ofeach of the Committees stating their respective composition terms of reference and othersare uploaded on our website at www.erosplc.com and are stated in brief in the CorporateGovernance Report attached to and forming part of this Report.
Annual Evaluation of Board its Committees and Individual Directors
The Company has devised a Policy for performance evaluation of the Board itsCommittees and other individual Directors (including Independent Directors) which includescriteria for Performance Evaluation of the Non-Executive Directors and ExecutiveDirectors. The evaluation process inter alia considers attendance of Directors at Boardand Committee Meetings acquaintance with business communicating inter se Board Memberseffective participation domain knowledge compliance with code of conduct vision andstrategy benchmarks established by global peers etc. which is in compliance withapplicable laws regulations and guidelines.
The Board carried out annual evaluation of the performance of the Board its Committeesand Individual Directors and Chairperson. The Chairman of the respective Board Committeesshared the report on evaluation with the respective Committee Members. The performance ofeach Committee was evaluated by the Board based on report on evaluation received fromrespective Board Committees. The reports on performance evaluation of the IndividualDirectors were reviewed by the Chairman of the Board.
Familiarization Programme for Independent Directors
Familiarization Programme for Independent Directors is mentioned at length in CorporateGovernance Report attached to this Report and the details of the same have also beendisclosed on the website of the Company at www.erosplc.com.
Policy on appointment and remuneration and other details of Directors
The remuneration paid to the Directors is in line with the Nomination and RemunerationPolicy formulated in accordance with Section 178 of the Act and Regulation 19 of the SEBIListing Regulations (including any statutory modification(s) or re-enactment(s)thereof for the time being in force).
The Company's policy on directors' appointment and remuneration and other matters asprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of this Report.
A detailed statement of disclosure required to be made in accordance with theNomination and Remuneration Policy of the Company disclosures as per the Act andapplicable Rules thereto is attached to this Report as Annexure C hereto and formspart of this Report.
9. AUDITORS & AUDITORS' REPORT
Chaturvedi & Shah LLP (erstwhile known as Chaturvedi & Shah) (FirmRegistration No. 101720W/W100355) were appointed as Statutory Auditors of the Company atthe 23rd Annual General Meeting of the Company held on 28 September 2017 forthe term of Five (5) years i.e. from the conclusion of 23rd Annual GeneralMeeting until the conclusion of 28th Annual General Meeting to be held in theyear 2022. They have confirmed that they are not disqualified from continuing as Auditorsof the Company.
There are no qualifications adverse remarks reservations or disclaimer made byChaturvedi & Shah LLP Statutory Auditors in their report for the financial yearended 31 March 2019. The notes to the Accounts referred to in the Auditor's Report are self-explanatoryand therefore do not call for any further explanation and comments.
Pursuant to provisions of Section 143(12) of the Act the Statutory Auditors have notreported any incidence of fraud to the Audit Committee during the year under review.
10. SECRETARIAL AUDITORS' AND ITS REPORT
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Board has appointed MakarandM. Joshi & Co. a firm of Company Secretaries in Practice to undertake the SecretarialAudit of the Company for the financial year 2018-19. The Secretarial Audit Report for thefinancial year ended 31 March 2019 in the prescribed Form MR-3 is attached to thisReport as Annexure D which is self-explanatory. The Secretarial Audit Report doesnot contain any qualification reservation adverse remark or disclaimer.
11. PARTICULARS OF EMPLOYEES
The requisite disclosures in terms of the provisions of Section 197 of the Act readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 along with statement showing names and other particulars of employees drawingremuneration in excess of the limits prescribed under the said Rules is annexure to thisReport as Annexure E.
12. LOANS GUARANTEES OR INVESTMENTS
Particulars of loans given investments made or guarantees given or securityprovided by the Company as required under Section 186(4) of the Act and the SEBI ListingRegulations are contained in Notes to the Standalone Financial Statements of the Companyforming part of this Annual Report.
13. RELATED PARTY TRANSACTIONS
In line with the requirements of the Act and SEBI Listing Regulations your Company hasformulated policy on Related Party Transactions duly approved by the Board which is alsoavailable on the Company's website at www.erosplc.com. The Policy intends to ensure thatproper reporting approval and disclosure processes are in place for all transactionsbetween the Company and Related Parties.
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were on an arm's length basis in the ordinary course ofbusiness and in compliance with the applicable provisions of the Act and SEBI ListingRegulations. Prior omnibus approval had been obtained for the transaction which are of aforeseeable and repetitive in nature and such transactions are reported on a quarterlybasis for review by the Audit Committee as well as the Board.
Pursuant to Section 134 of the Act read with Rule 8(2) of the Companies (Accounts)Rules 2014 the particulars of contracts / arrangements / transactions entered into withrelated parties during the financial year 2018-19 in terms of Section 188(1) of the Actand applicable Rules made thereunder is attached to this Report as Annexure F inthe prescribed Form AOC-2.
All other contracts / arrangements / transactions with related parties are in theusual course of business and at arm's length basis and stated in Notes to Accounts to theFinancial Statements of the Company forming part of this Annual Report.
14. WHISTLE BLOWER / VIGIL MECHANISM
Your Company promotes ethical behavior in all its business activities and your Companyhas adopted a Policy on Vigil Mechanism and Whistle Blower in terms of Section 177(9) andSection 177(10) of the Act and Regulation 22 of the SEBI Listing Regulations for receivingand redressing complaints from employees directors and other stakeholders to reportconcerns about unethical behaviour actual or suspected fraud.
The Policy is appropriately communicated within the Company across all levels and hasbeen displayed on the Company's intranet for its employees and website at www.erosplc.comfor stakeholders. Protected disclosures are made by a whistle blower in writing to theOmbudsman on Email-ID at email@example.com and under the said mechanism noperson has been denied direct access to the Chairperson of the Audit Committee. The AuditCommittee and Stakeholders Relationship Committee periodically reviews the functioning ofthis Mechanism.
15. PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has formulated a Policy on Prevention of Sexual Harassment at Workplace inaccordance with the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules thereunder. All employees (permanent contractualtemporary trainees) are covered under the Policy. Further the Company has constituted anInternal Complaints Committee where employees can register their complaints againstsexual harassment.
During the year under review the Company has not received any complaints on sexualharassment.
16. EXTRACT OF THE ANNUAL RETURN
The extract of Annual Return in the prescribed Form MGT-9 as required under Section92(3) of the Act read with Companies (Management & Administration) Rules 2014 isplaced on the website of the Company at www.erosplc.com and is set out in Annexure Gto this Report.
All the insurable interests of your Company including properties equipment stocksetc. are adequately insured.
Your Company has not accepted any deposit from public under Chapter V of the Act.
19. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained in terms of Section 134 of the Act your Directors confirms that:
a. in the preparation of the annual accounts for the financial year ended 31 March2019 the applicable Accounting Standards read with the requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame;
b. such accounting policies have been selected and applied consistently and judgmentsand estimates made that are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company as at 31 March 2019 and of the profit of the Companyfor the year ended on that date;
c. proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; d. theannual accounts have been prepared on a going concern' basis;
e. internal financial controls were followed by the Company and such internal financialcontrols are adequate and are operating effectively; and
f. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
20. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE
Your Company is into the business of production acquisitions marketing anddistributions of cinematograph films. Since this business does not involve anymanufacturing activity the Information required to be provided under Section 134(3)(m) ofthe Act read with the Companies (Accounts) Rules 2014 are not applicable to the Company.However the Company has been continuously and extensively using technology in itsbusiness operations.
The particulars of foreign currency earnings and outgo are as under:
| || ||र in lakhs |
|Particulars ||Year ended 31 March 2019 ||Year ended 31 March 2018 |
|Expenditure in foreign currency ||520 ||372 |
|Earnings in foreign currency ||16526 ||11014 |
|CIF Value of Imports ||NIL ||NIL |
21. NT I ERNAL FINANCIAL CONTROLS
Your Company maintains adequate and effective internal control systems whichcommensurate with the nature size and complexity of its business and ensure orderly andefficient conduct of the business. The internal control systems of the Company areroutinely tested and verified by Independent Internal Auditors and significant auditobservations and follow-up actions are reported to the Audit Committee. The
Audit Committee reviews the adequacy and effectiveness of the Company's internalcontrol requirement and monitors the implementation of audit recommendations.
22. CORPORATE GOVERNANCE
In accordance with the provisions of the SEBI Listing Regulations a detailed report onCorporate Governance along with Compliance Certificate issued by the Secretarial Auditorof the Company is attached and forms an integral part of this Annual Report.
23. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of Regulation 34 and Schedule V of the SEBI Listing Regulations ManagementDiscussion and Analysis Report is presented in separate sections forming part of thisAnnual Report.
24. CORPORATE SOCIAL RESPONSIBILITY
The disclosures on Corporate Social Responsibility activities as required under Rule 9of the Companies (Corporate Social Responsibility Policy) Rules 2014 are reported in AnnexureH forming part of this Report and is also available on the website of the Company atwww.erosplc.com.
25. RISK MANAGEMENT
The Audit Committee of the Board has been vested with powers and functions relating toRisk Management which inter alia includes (a) review of risk management policies andbusiness processes to ensure that the business processes adopted and transactions enteredinto by the Company are designed to identify and mitigate potential risk; (b) laying downprocedures relating to Risk assessment and minimization. The objective of the riskmanagement framework is to enable and support achievement of business objectives throughrisk intelligent assessment while also placing significant focus on constantly identifyingand mitigating risks within the business. Further details on the Company's risk managementframework is provided in the Management Discussion and Analysis report.
26. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and till the date of this Report except fordowngrade of credit rating by CARE Rating Limited in June 2019 from CARE BBB- to CARE Dfor Long term facilities and CARE A3 to CARE D for Short Term Facility on account of delayin debt servicing for more than 30 days.
27. DETAILS OF SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS Therehave been no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future.
28. OTHER DISCLOSURES
During the year under review the Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits)
Rules 2014 (including any statutory modification(s) or re-enactment(s) thereoffor the time being in force);
Your Company has complied with the provisions of all applicable Secretarial Standardsissued by the Institute of Company Secretaries of India on Meeting of Board of Directors[SS-1] and General Meetings [SS-2];
The Company has not issued equity shares with differential rights as to dividendvoting or otherwise.
The Board of Directors take this opportunity to express their sincere appreciation forsupport and co-operation from the Banks Financial Institutions Members VendorsCustomers and all other business associates.
Your Directors sincerely appreciate the high degree of professionalism commitment anddedication displayed by the employees at all levels. Your Directors also wish to place onrecord their gratitude to all the stakeholders for their continued support and confidence.
|For and on behalf of the Board of Directors || || |
|Sunil Arjan Lulla ||Subramaniam Lakshminarayanan ||Sunil Srivastav |
|Executive Vice Chairman & Managing Director ||Non-Executive Independent Director ||Non-Executive Independent Director |
|DIN: 00243191 ||DIN: 07972480 ||DIN: 00237561 |
|Place: Mumbai || || |
|Date: 23 May 2019 || || |