Your Board of Directors we are presenting herewith the Forty Second Annual Report onthe business and operations of your company together with the Audited Financial Statementsfor the year ended 31st March 2018. The Management Discussion and Analysis is given aspart of this Report
| || ||(Rs. In Crores) |
|PARTICULARS ||Year Ended 31st March 2018 ||Year Ended 31st March 2017 |
|Revenue from Operations ||3.24 ||4.24 |
|Other Income ||0.00 ||5.74 |
|Total Income ||3.24 ||9.98 |
|Total Expenses ||3.30 ||9.54 |
|Exceptional Items ||Nil ||Nil |
|Profit Before Tax ||(.06) ||0.44 |
|Provision for Taxation (net) / Deferred Tax ||0.17 ||0.41 |
|Profit after Tax ||0.11 ||0.85 |
The board of directors have taken note that company performance has not been to thedesired level. This is mainly due to the adverse condition prevailing in animation filmindustry in India. The board is working on restructuring the business in order tosubstantially improve the performance of the company
The Company was mainly into System Integration and Training for Corporates. It alsoconducted seminars and workshop imparting hands on training for various collegesinstitutions and schools. The Company also developed APP for leading Multiplexes to selltheir Food and Beverages.
The Company is vigorously working for the marketing of its animation film Mustafa& the Magician in the overseas market. The Company is also in talks with the Netflixand Amazon Prime for streaming film through internet.
Taking into account overall financial performances of the Company Your Directors do notrecommend any dividend for the financial year 2017-18. Consequently no amount istransferred to General Reserve Account.
The paid-up equity share capital of the Company as on 31st March 2018 stood at Rs.41.50Crore. During the year under review the Company has not raised its issued capital withdifferent voting rights nor has granted any stock options or sweat equity and none of thedirectors hold instruments is to be converted as equity shares as on 31st March 2018.
During the year under review Your Company has not accepted any Deposits within themeaning of provisions of Chapter V of the Companies Act 2013 (Acceptance of Deposits byCompanies) read with the Companies (Acceptance of Deposits) Rules 2014.
Your Company has a robust Risk Management Policy the Company through a steeringcommittee oversees the Risk Management process including risk identification impactassessment effective implementation of the mitigation plans and risk reporting. Adetailed Risk Management policy of the Company to have good Corporate Governance is hostedin the Company's official website www. pentamedia.in
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Your Company has adequate internal control systems combined with Delegation of Powersand periodical review of the process. The control system is also supported by internalaudits and management reviews of documented policies and procedures.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Management of the Company was carried out by:
1. Mr.R. Kalyanaraman
2. Mr. V. Venkataramanan
3. Mr. C. V. Ravi
4. Mrs. Parvathy
During the year under review following Appointment/Resignations has taken place
|Name ||Appointment /resignation ||Designation ||Date |
|Mr. V. Chandrasekaran ||Resigned ||Managing Director ||31/10/2017 |
|Mr. V.Venkataramanan ||Appointed ||Whole-time Director ||01/11/2017 |
|Mr. R. Swaminathan ||Resigned ||Director ||30/11/2017 |
|Mr. B. Karthick ||Resigned ||Company Secretary ||30/11/2017 |
|Mr. C.V.Ravi ||Appointed ||Additional Director ||01/12/2017 |
|Mrs. S. Sumathi ||Resigned ||Director ||29/12/2017 |
|Mrs. V. N. Parvathy ||Appointed ||Additional Director ||12/01/2018 |
Mr. V. Chandrasekaran's term ended as Managing Director with effect from 31stOctober 2017. He did not seek extension and also got relived as Director due to healthreasons He was involved with the company from the inception and it is his vision andrelentless efforts which enabled the company grow into a renowned Global organization.During his illustrious tenure as CEO The Company adopted pioneering Technologies in Mediaand won many Prestigious International and National Awards . The Mangement places onRecord its Appreciation and Gratitude for the great service rendered by him.
Mrs. Sumathi Sridharan resigned from the post with effect from 29thDecember 2017 due to personal reasons She enabled the Company to attain leadershipPosition in Software and Media Technology Training. The Mangement places on record itsappreciation for her services
EVALUATION OF BOARD'S PERFORMANCE
As per the provisions of Section 134(3)(p) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board of Directors carriedout annual performance evaluation of the Board the directors individually as well asevaluation of the working of its Audit Committee Nomination and Remuneration Committeeand Stakeholders Relationship Committee. The manner in which the evaluation has beencarried out is explained in the Corporate Governance Report.
MANAGEMENT DISCUSSION & ANALYSIS
Although Media industry in India is growing at a very healthy rate of about 15% CAGRAnimation film Industry continues to suffer and has negligible share in the total market.This is basically because the Animation Movies are still perceived to be Children'scategory in India. Foreign Animation film producers like Disney Pixar and others arespending huge resources which are 30 to 40 times the amount being spent by the Indiananimation film producers. This makes the quality of Their Production far superior and theIndian Animation Film Industry is unable to compete with these high-quality films in theglobal market. In addition substantial amount must be spent in promotion and prereleaseactivities for the animation films rendering them unviable.
With the advent of Cloud computing and availability of shared High cost Computerresources Individual animators and Small groups with necessary skills can produce specialeffects and computer graphics required for live action film industry at a very low costmaking it not possible for the corporate to compete. Though quality and creativity arewell appreciated by the media industry they are not well rewarded with revenues.
These aspects have been analyzed and The Management has decided to discontinue theproduction of animation films. The Management proposes to leverage its Brand Equity withoutsourced Contents to build a resilient Business Model. The company is also in theprocess of entering Rights acquisition and Distribution of Live action films with theobjective reducing the turnaround period of resources and maximizing the revenue andprofits. The company plans to enter streaming and broadcasting industry which are growingat a very rapid rate. The management is reasonably confident with this restructuring ofthe business model; they will be able to generate healthy revenue and profits with asustained growth and bring back the Company to its past glory.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure 1 as per section 92 of the Companies Act 2013.
NUMBER OF THE MEETINGS OF THE BOARD
The Board had met Eight (8) times during the financial year ended 31st March 2018 on29/05/2017 12/07/2017 24/07/ 2017 28/07/2017 30/10/2017 15/12/2017 12/01/2017 and29/03/2018. Particulars of meetings held and attended by each Director are detailed in theCorporate Governance Report which forms part of this Report.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The details of familiarization programmes to Independent Directors with the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company at the link: www.pentamedia.in.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 (Act) stating that the IndependentDirectors of the Company met with the criteria of Independence laid down in Section 149(6)of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The complete details of loans guarantees and Investments as per the provisions ofSection 186 of Companies Act 2013 are given in thenotes on accounts of the financialstatements.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has taken steps to establish the Vigil Mechanism/Whistle Blower Policy asis stipulated in the Regulation 22 of the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 and Pursuant to Section 177(9) & 177(10) of theCompanies Act 2013. This provides a mechanism to raise concerns about actual or suspectedfrauds unethical behavior safeguards against victimization of employees etc and thesame has been posted in the official website of the Company www.pentamedia.in.
NOMINATION AND REMUNERATION COMMITTEE
Pursuant to Section 178 of the Companies Act 2013 the Board has constituted aNomination and Remuneration Committee consisting of the following members
|Mr. Kalyanaraman ||: Chairperson |
|Mr. C V Ravi ||: Member |
|Mr. V.N.Parvathy ||: Member |
The said committee has been empowered and authorized to exercise powers as entrustedunder the provisions of Section 178 of the Companies Act 2013. The Company had laid outand following the policy on director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under sub section 3 of Section 178 of the Companies Act 2013.
Policy on Criteria for Board Nomination and Remuneration policy is available in thewebsite of the Company link www.pentamedia.in.
RELATED PARTY TRANSACTIONS
The Audit Committee and the Board of Directors have approved the Related PartyTransactions Policy and the same has been uploaded on the Company's websitewww.pentamedia.in. The Company has a process in place to periodically review and monitorRelated Party Transactions. All the related party transactions were in the ordinary courseof business and at arm's length disclosure of the same is made in AOC 2 Annexure2 to this report. There were no materially significant related party transactionsthat may have conflict with interest of the Company
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 (3)(c) of the Companies Act 2013 inrelation to the Annual Financial Statements for the Financial Year 2017-2018 yourDirectors confirm that:
a) The Financial Statements of the Company comprising of the Balance Sheet as at 31March 2018 and the Statement of Profit & Loss for the year ended on that date havebeen prepared on a going concern basis following as per the applicable accountingstandards along with proper explanation relating to material departures;
b) Accounting policies selected were applied consistently and the judgments andestimates related to the financial statements have been made on a prudent and reasonablebasis so as to give a true and fair view of the state of affairs of the Company as at 31March 2018 and of the profit of the Company for the year ended on that date; and
c) Proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 to safeguard theassets of the Company and to prevent and detect fraud and other irregularities.
d) that the annual accounts for the year ended 31st March 2018 have been prepared ona going concern' basis;
e) that the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f) that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Pursuant to Section 139 of the Act and Rules made thereunder Messrs. BabuPeram&Associates Chartered Accountants were appointed as statutory auditors of the Company atthe Annual General meeting held on 28thAugust 2014 for a period of 5 yearscommencing from the closure of the 38th Annual general Meeting till the closureof the 43rd Annual General Meeting.
The Company has appointed M/s. Anand & Madhan Chartered Accountants (Firm Reg.No.009671S) Chennai as Internal Auditors of the Company for the financial year 2017-18.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed Ms. J. Anusuya of M/s. J Anusuya& AssociatesCompany Secretaries in Practice (CP No. 19510) Chennai to undertake the Secretarial Auditof the Company. The Secretarial Audit Report is annexed to this report as Annexure -3.
EXPLANATION AND COMMENTS
The reports of Statutory Auditors and that of the Secretarial Auditors is selfexplanatory and have no adverse comments.
1. For the AYs 1996-97 1997-98 & 1998-99
The Company is a 100% EOU registered under STP/EHTP scheme. Units under STP /EHTP areeligible for providing training . As per the Notification No. SO388 (E) dated 30.04.1995in clause 2.12 permitted Use of Computer system in STP for Training purpose will beallowed subject to the condition that no computer terminal will be installed outside theSTP for this purpose'.
EOUs are eligible for 100% exemption of profit from Income Tax as per 2ndproviso to sub section 1 Section 10 B.
Department has ignored these facts while making the demand and the companyis contestingthe same
2. For the AY 2000-01
The demand is due to the erroneous valuation of Goodwill and interpretation of noncompete fee. The company has contested the same through MP No.1 of 2012 there is also astay order vide WP No. 2357/2010 dated 15.07 2010.
3. For AYs 2001-022002-03 2003-04 & 2004-05
The Company has filed revised returns for the above years and has also obtained a courtdirection vide order 11.01.2010 to consider the revised returns filed. Hence no provisionshave been made by the company.
4. For AYs 2004-05.2005-06 & 2006-07
The company has appealed against the same in the High Court of Madras and has obtaineda stay order. When the revised returns are considered there will be no demand because ofthe carry forward losses.
5. For the AYs 2008-092009-10.2010-112012-13 2013-14 & 2014-15
These matters are now with the Commissioner of Income Tax (Appeals). These issues willbe addressed when the revised returns filed by the company are taken up.
6. Pentasoft Technologies (now merged with Pentamedia Graphics)
The company has filed the revised returns as per the Court orders for these issue sameas above. When they are taken into consideration there will be no demand.
There is no material change or commitments after the closure of the financial year.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the workplace (Prevention Prohibition &Redressal) Act 2013.
Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed offduring the year 2017-18.
|No. of complaints received ||Nil |
|No. of complaints disposed off ||Not Applicable |
COMPOSITION OF AUDIT COMMITTEE.
Pursuant to Section 177 of the Companies Act 2013 the Audit Committee was constitutedby the Board of Directors and consists of the following members:
|Mr. R. Kalyanaraman ||: Chairperson |
|Mr. C V. Ravi ||: Member |
|Mrs. V.N.Parvathy ||: Member |
The Board has accepted the recommendations of the Audit Committee and there were noincidences of deviation from such recommendations during the financial year under review.
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY
The Company through its Corporate Social Responsibility Committee had formulated a CSRpolicy as required under Section 135 of the Companies Act 2013.
The following is the composition of the Corporate Social Responsibility Committee.
|Mr. R. Kalyanaraman ||: Chairperson |
|Mr. C V. Ravi ||: Member |
|Mrs. V.N.Parvathy ||: Member |
SCOPE OF CSR POLICY
This policy will apply to all projects/programmes undertaken as part the Company'sCorporate Social Responsibility and will be developed reviewed and updated periodicallywith reference to relevant changes in corporate governance international standards andsustainable and innovative practices.
The policy will maintain compliance and alignment with the activities listed inSchedule VII and Section 135 of the Companies Act 2013 and the rules framed there underas amended from time to time.
CSR POLICY IMPLEMENTATION
The Company shall undertake CSR project/programmes identified by the CSR Committee andapproved by the Board of Directors in line with the CSR Policy.
The CSR Policy of the Company is uploaded in the website of the Companywww.pentamedia.in.
The spending on CSR activities is not applicable to our Company.
The Company has devised a vigil mechanism in pursuance of provisions of Section 177(10)of the Companies Act 2013 for Directors and employees to report genuine concerns orgrievances to the Audit Committee in this regard and details whereof are available on theCompany's website.
CORPORATE GOVERNANCE REPORT
All material information was circulated to the directors before the meeting or placedat the meeting including minimum information required to be made available to the Boardas prescribed under Part A of Schedule II of Sub- Regulation 7 of Regulation 17 of theListing Regulations.
In terms of Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 a Report on CorporateGovernance along with a Certificate from the Practicing Chartered Accountant confirmingthe compliance with the conditions of Corporate Governance as stipulated under Part E ofSchedule V of Sub-Regulation 34(3) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is attached to this report"Annexure 4".
The Company takes pride in the commitment competence and dedication shown by itsemployees (including outsourced) in all areas of business. The Company is committed tonurturing enhancing and retaining top talent through superior learning & organizationdevelopment as a part of Corporate HR function. It is a critical pillar to support theorganization growth and its sustainability over the long run.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE AND OUTGO:
Your Company is into the business of Production of Digital Contents for FilmTelevision & Internet and Development of APPs on Mobile Tablet. Since this businessdoes not involve any manufacturing activity most of the Information required to beprovided under Section 134(3)(m) of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 are Not applicable.
However the information as applicable is given hereunder:
a) CONSERVATION OF ENERGY
The Company is taking all the measurements for optimal use of energy to avoid wastagesand conserve energy as far as possible.
b) TECHNOLOGY ABSORPTION
Your Company is continuously absorbing and applying the latest state of art technologyin Digital Media & Software for Content creation APPs Development & SkillDevelopment Training
c) FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year foreign exchange earnings & outgo is Nil
PARTICULARS OF EMPLOYEES
Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are also attached as Annexure 5 to the Board's Report.
LISTING OF SECURITIES IN STOCK EXCHANGES
The Company's Equity Shares are presently listed on BSE Ltd & GDRs listed onLuxembourg Stock Exchange.
Your Directors thank and express their gratitude for the support and co-operationreceived from the Central and State Governments Regulatory authorities Banks &Financial Institutions Colleges/ UniversitiesEducational Institutes and Ministry ofCorporate Affairs Reserve Bank of India Securities and Exchange Board of India BSE Ltd.and Depositories and other stakeholders viz. Distributors Vendors Investors&Employees.
| ||On behalf of the Board of Directors || |
|Place: Chennai ||V Venkataramananan ||R Kalyanaraman |
|Date: 10/08/2018 ||Director ||Director |