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Pritish Nandy Communications Ltd.

BSE: 532387 Sector: Media
NSE: PNC ISIN Code: INE392B01011
BSE 14:12 | 01 Oct 13.60 -0.70
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NSE 13:56 | 01 Oct 14.05 0.15
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OPEN 14.30
PREVIOUS CLOSE 14.30
VOLUME 120
52-Week high 19.75
52-Week low 7.50
P/E 18.13
Mkt Cap.(Rs cr) 20
Buy Price 13.60
Buy Qty 490.00
Sell Price 14.40
Sell Qty 100.00
OPEN 14.30
CLOSE 14.30
VOLUME 120
52-Week high 19.75
52-Week low 7.50
P/E 18.13
Mkt Cap.(Rs cr) 20
Buy Price 13.60
Buy Qty 490.00
Sell Price 14.40
Sell Qty 100.00

Pritish Nandy Communications Ltd. (PNC) - Director Report

Company director report

To

The Members

Pritish Nandy Communications Limited

Your Directors present the 26th Annual Report on the business and operationsof the Company together with the audited financial accounts for the financial year endedMarch 312019.

FINANCIAL HIGHLIGHTS

Total income for this year was Rs 1568.91 lakh as compared to Rs 2005.21 lakh for theearlier year. The Company made a profit of Rs 86.01 lakh before tax as compared to aprofit of Rs 157.59 lakh before tax in the preceding year.

In Rs lakh
Particulars

Standalone

Year ended March 312019 Year ended March 312018
Income from operations 1504.27 1955.53
Other income 64.64 49.67
Total turnover 1568.91 2005.21
Total expenditure 1482.90 1847.61
Profit/(loss) before exceptional and extraordinary items and tax 86.01 157.59
Current tax 27.23 20.00
Profit/(loss) after current tax 58.78 137.59
Deferred tax (35.06) (72.74)
Profit/(loss) after deferred tax 93.84 210.33
Dividend (%) 0 0
Transfer to reserves 0 0
Balance in statement of profit and loss (189.17) (280.00)
Paid up capital 1446.70 1446.70
Earnings per share ( Rs ) 0.65 1.45
Book value per share ( Rs ) 56.67 56.04

PRESENT ECONOMIC SITUATION AND PERFORMANCE OF THE COMPANY

The increasing demand for content—both filmed entertainment and serialised digitalstreaming shows- added to your Company's revenues and we are optimistic of furtherdeveloping our footprint in the growing content market. Your Company is strategically wellpositioned to address the viewing preferences of today's youth the largest consumers ofcontent across all different platforms. It is an audience your Company has beensuccessfully addressing in the past as well. But a new orientation is now taking place anda shift in the market that allows for more OTT content to be shown. Your Company hasdemonstrated its ability to successfully relate to the content expectations of new viewerson mainstream OTT platforms that are today reaching out not just to Indian but also toglobal audiences.

Your Company visualizes an increasing opportunity for creating more such shows. Tobegin with your Company has successfully delivered the first season of an Amazon PrimeOriginal Four More Shots Please which has been widely appreciated by both audiences andcritics. All ten episodes of the first season of the show were dropped for binge-watchingon January 25 2019 across 200 countries and territories on the Amazon Prime Videoplatform. What should particularly interest our stakeholders is the fact that the show hasbeen conceived and creatively developed in-house. Both the creator and the associatecreator who double up as the show-runners of More Shots Please are senior in-houseprofessionals. This is the talent hot-house that the Company set out to be 26 years agoand today we take pride not only in the sustainable model of business that we havecreated in the content business but also in the talent we have built up over the years toproduce and execute our own creative projects.

The positive audience response to the show has resulted in your Company beingcommissioned by Amazon Prime Video to additionally and simultaneously develop the secondand third seasons of Four More Shots Please. Apart from the development and writing theprincipal photography for season two is also now complete and post production work hasalready commenced. Your Company has as is true to your Company's reputation and workethics successfully worked within the budget and deadlines for season one and we intendto repeat that success in the coming two seasons.

Two more shows are being currently developed for OTT one a fiction show like Four MoreShots Please and the other a non-fiction series in the true crime genre. Your Company hasbeen approached by other OTT platforms as well for developing new shows both scripted andunscripted and work is underway for the same.

Your Company also continues to remain engaged in the development and production offilmed entertainment content. Two new feature film projects are in various stages ofdevelopment. Here too we are looking at releasing the filmed entertainment content onOTT platforms which would entirely de-risk the projects and help us to explore theexpectations of the new generation of viewers on such platforms.

Your Company has also reissued the satellite broadcasting rights of its film library toStar TV.

The film library is also being streamed on a non-exclusive basis on several OTTplatforms including Netflix Hotstar Jio Sony LIV ErosNow MX Player and Spuul.

Moving into its 27th year of operations yourDirectors are of the viewthatyour Company is well poised to make and deliver innovative content for screening onmultiple platforms in India and overseas.

DIVIDEND

To conserve cash resources your Directors do not recommend any dividend for this year.

LISTING WITH THE STOCK EXCHANGES

The equity shares of the Company continue to remain listed with the Bombay StockExchange Ltd (BSE) and National Stock Exchange of India Ltd (NSE). The listing feespayable to both the stock exchanges for the year 2019-2020 have been paid.

TRANSFER TO RESERVES

Your Company has not transferred any amount to the general reserve.

DEPOSIT FROM PUBLIC

The Company has not accepted any deposits within the meaning of sections 73 74 and 76of the Companies Act 2013 (the Act) and the rules framed thereunder.

SUBSIDIARIES

The Company has two subsidiaries: PNC Digital Ltd and PNC Wellness Ltd. There are noassociate companies within the meaning of section 2(6) of the Act. There has been nomaterial change in the nature of the business of its subsidiaries.

Pursuant to section 129(3) of the Act in addition to the financial statements providedunder section 129 (2) of the Act consolidated financial statements of the Company and itssubsidiaries in the same form and manner as that of its own shall also be laid before theAnnual General Meeting (AGM) of the Company. A statement containing salient features ofthe financial statements of the Company's subsidiaries inFormAOC-1 is appended as AnnexureI. Pursuant to the provisions of section 136 of the Act the financial statements andconsolidated financial statements of the Company along with relevant documents andseparate audited accounts in respect of its subsidiaries are available on the Company'swebsite.

PNC Digital Ltd

There has been no material change in the nature of the business of this subsidiary. Itsprincipal business is sourcing content for digital streaming setting up niche deliverysystems for digital streaming and running the business of content aggregation as well asany other technology business using the internet as its primary delivery platform. Effortstill date have not translated into revenue generation but this subsidiary will continueits efforts. Essentially this subsidiary will function as a bridge between contentproducers and digital distributors. There is no revenue generated in the year 2018-19resulting in a loss.

PNC Wellness Ltd

There has been no material change in the nature of the business of this subsidiary. Itis in dialogue with other business enterprises to expand the Company's wellness businessthrough the digital medium. This subsidiary owns several wellness brands like Moksh PowerYoga Passion Yoga Cool Yoga and Couple Yoga and is exploring ways and means tocommercialise these brands by introducing them into a joint venture wellness enterprise.Considering that there was no revenue generation during the year your Company has madefurther provision for diminution in values of its investments by 1/5* of its book value.The holding Company is facilitating and supporting the revival of this subsidiary'sbusiness.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 134(5) of the Act the Board of Directors to the best of theirknowledge and ability confirm that:

a. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;

c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets 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 to be followed by the Company andsuch internal financial controls were adequate and operating effectively;

f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Act and articles of associations of theCompany Pallab Bhattacharya Director of the Company retires by rotation at the ensuingAGM and being eligible offers himself for reappointment.

The Directors expressed their sorrow for the untimely death of Nabankur GuptaNon-Executive Independent Director of the Company on December 7 2018. The Directors placeon record their deep appreciation for his invaluable guidance and support during histenure as a Director. Mr Gupta was also Chairman of the Nomination and RemunerationCommittee Stakeholders' Relationship Committee and Corporate Social ResponsibilityCommittee (CSR) and a Member of the Audit Committee of the Board of Directors of theCompany.

Pursuant to Regulation 17(1) of the SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2015 on recommendation of Nomination andRemuneration Committee the Board of Directors vide its circular resolution passed onFebruary 28 2019 have appointed Pradeep Guha as an additional Independent Director on theBoard to comply with aforesaid regulation. Mr Guha's appointment is subject to approval bythe shareholders in the ensuing AGM of the Company.

Mr Guha is currently Managing Director of 9X Media Pvt Ltd. Prior to this he was ChiefExecutive Officer of Zee Entertainment Enterprises Ltd and before that President andExecutive Director of The Times of India Group. He is also on the board of Raymond LtdPuravankara Ltd and Whistling Woods International Ltd.

COMPLIANCE ON CRITERIA OF INDEPENDENCE BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each independent Director undersection 149(7) of the Act that he/she meets the criteria of independence laid down insection 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.

During the year except for the sitting fees the independent Directors of the Companyhad no other pecuniary relationship or transactions with the Company.

PARTICULARS OF EMPLOYEES

This disclosure required to be furnished pursuant to section 197(12) read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is appended as Annexure II.

BOARD MEETINGS HELD DURING THE YEAR

As required under the Act and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 during the year four meetings of the Board of Directors were held andone meeting of independent directors was also held. The details of the meetings of theBoard are furnished in the Corporate Governance Report.

ANNUAL EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors including independent Directors pursuant to theprovisions of the Act and the Corporate Governance requirements as prescribed by theSecurities and Exchange Board of India (SEBI) and the SEBI Listing Regulations.

Further the independent Directors at their exclusive meeting held during the year onFebruary14 2019 reviewed the performance of the Board its Chairman and Non-ExecutiveDirectors and other items as stipulated under the SEBI Listing Regulations.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANYFROM THE END OF FINANCIAL YEAR AND TILL THE DATE OF REPORT

There has been no material change and commitment affecting the financial performanceof the Company occurred between the end of the financial year of the Company to which thefinancial statements relate and the date of this report.

POLICY ON DIRECTORS'APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company's policy on Directors' appointment and remuneration and other mattersprovided in section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of this Directors' report.

AUDITORS

Statutory Auditors

BD Jokhakar and Co. Chartered Accountants (FRN 104345W) were appointed as StatutoryAuditors of the Company for a period of four consecutive years at the AGM of the Membersheld on September 24 2018 on a remuneration mutually agreed upon by the Board ofDirectors and the Statutory Auditors. Pursuant to the amendments made to section 139 ofthe Companies Act 2013 by the Companies (Amendment) Act 2017 effective from May 72018the requirement of seeking ratification of the Members for the appointment of theStatutory Auditors has been withdrawn from the Statute. Hence the resolution seekingratification of the Members for continuance of their appointment at the ensuing AGM is notbeing sought.

There is no audit qualification reservation or adverse remark for the year underreview.

AUDITORS' REPORT

The Auditors' Report does not contain any qualifications reservations or adverseremarks.

In the Emphasis of Matter paragraph the auditors have stated

"We draw attention to Note 36(a) on the standalone financial statements whichrelates to investment in wholly owned subsidiary "PNC Wellness Ltd.". Theinvestment in this subsidiary stands at Rs 116.40 lakh whereas the net worth of thesubsidiary is Rs 33.42 lakh as at March 31 2019. Considering that the Company has madeprovision for diminution in value of investment in this subsidiary by 1/5* of its bookvalue and considers the balance retained book value as fully realizable no furtherprovision is made for the diminution in book value of investment which is considered astemporary.

We further draw attention to Note 36(b) on the standalone financial statements whichrelates to investment in subsidiary "PNC Digital Ltd.". The investment in thissubsidiary stands at Rs 70.20 lakh whereas the net worth of the subsidiary is Rs 7.56 lakhas at March 31 2019. The Company has agreed to provide its films to this Subsidiary toexplore revenue opportunities on the digital platform and exploit it to its commercialadvantage. In view of the fact that this subsidiary has unfettered access to the filmcontent of the Holding Company and requires no additional substantive capital deploymentto generate revenue no provision for diminution in value of investment which isconsidered temporary has been made in the accounts.

We further draw attention to Note 38(a) on the standalone financial statements whichdescribe the facts related to the legal proceedings initiated by the Company for therecovery of an advance of Rs 150 lakh. The management considers the same as good and fullyrecoverable. The legal opinion obtained by the Company supports this. We have relied onthe opinion and consequently the Company has not made provision of any amount thereagainst. We further draw attention to Note 38(b) on the standalone financial statementswhich describes that the Company has received an award of Rs 352 lakh in its favour in thearbitration case filed against White Feather Films. The Company has also received arevised order for the amount of interest which the Company has not found satisfactory andhence it has moved an appeal with the Bombay High Court. White Feather Films has gone inappeal against the above said award and has been directed to deposit an amount of Rs 300lakh by the Bombay High Court. Proceedings are ongoing and in view of the sameoutstanding of Rs 317.53 lakh is considered as fully recoverable.

We further draw attention to Note 39 on the standalone financial statements whichdescribes the facts related to the arbitration proceedings initiated by the Companyagainst Prasar Bharati on account of wrongful encashment of bank guarantee of Rs 750.50lakh. The Company has obtained legal opinion from Justice AM Ahmadi former Chief Justiceof Supreme Court of India which supports the Company's stand that the amount is fullyrecoverable and hence no provision is made there against.

Our opinion is not modified in respect of the above matters."

Your Directors confirm that the matters referred to in the segment relation to Emphasisof Matter by the independent auditors in their report have been clarified in Notes 36(a)36(b) 38(a) 38(b) and 39 on the financial statements forming part of the balance sheetand Statement of Profit and Loss and are self-explanatory and reproduced below

Note 36 (a)

PNC Wellness Ltd

The Company has an investment of '116.40 lakh (PY Rs 174.60 lakh) in equity shares ofwholly owned subsidiary viz PNC Wellness Ltd. The net worth of this subsidiary is '33.42lakh as on March 31 2019. There was no revenue generation by this subsidiary during theyear under review. This Subsidiary which owns several wellness brands like Moksh and subbrands like Power Yoga Passion Yoga Cool Yoga Couple Yoga etc. is exploring avenues tocommercialise its aforesaid brands. This subsidiary is inthe process of realigning itsbusiness by making efforts to commercialise and lease its various brands throughcollaborative arrangements with other parties. The Company is facilitating and supportingthe revival of this subsidiary's business. Considering that there was no revenuegeneration during the year under review the management has made provision for diminutionin value of investment in this subsidiary by 1/5* of its book value and considers theretained book value as fully realisable. No further provision is made for the diminutionin book value of investment which is considered as temporary.

Note 36 (b)

PNC Digital Ltd

The Company has an investment of Rs 70.20 lakh (PY Rs 70.20 lakh) in equity shares ofsubsidiary viz PNC Digital Ltd. The net worth of this subsidiary is Rs 7.56 lakh as onMarch 31 2019. The Company has agreed to provide its films to this Subsidiary to explorerevenue opportunities on the digital platform and exploit it to its commercial advantagebut this subsidiary was not able to generate income from its operational activities in theyear gone by. This subsidiary will continue its efforts in future. In view of the factthat this subsidiary has unfettered access to the film content of the holding Company andrequires no additional substantive capital deployment to generate revenue no provision fordiminution in value of investment which is considered temporary has been made in theaccounts. This Company will leverage its market standing to facilitate other smallerproduction houses to gain access to large digital content distributors to facilitate themgetting better prices and commercial terms for their content.

Note 38 (a)

The legal proceedings initiated by the Company for the recovery of an advance of '150lakh which was given against the Music Asian and Indian Satellite rights of a film wherethe Company has lien over the exploitation of the said rights. The management of theCompany considers the same as good and fully recoverable. Legal opinion obtained by theCompany supports this. Auditors have relied on the opinion and consequently no provisionhas been made in the accounts at this stage.

Note 38 (b)

The Company has received an award of '352 lakh in its favour in the arbitration casefiled against White Feather Films. The Company has also received a revised order for theamount of interest which the Company has not found satisfactory and hence it has moved anappeal with the Bombay High Court. White Feather Films has gone in appeal against theabove said award and has been directed to deposit an amount of Rs 300 lakh by the BombayHigh Court. Proceedings are ongoing and in view of the same outstanding amount of Rs317.53 lakh is considered as fully recoverable and no provision made of any amount thereagainst.

Note 39

Arbitration proceedings initiated by the company against Prasar Bharati on account ofwrongful encashment of bank guarantee of Rs 750.50 lakh. The Company has obtained legalopinion from Justice AM Ahmadi former Chief Justice of Supreme Court of India whichsupports the Company's stand that the amount is fully recoverable and hence no provisionis made there against.

SECRETARIAL AUDITORS' REPORT

VN Deodhar and Company practicing Company Secretaries was appointed to conduct theSecretarial Audit of the Company for the fiscal year2019 as required under section 204 ofthe Act 2013 and rules thereunder.

The Secretarial Auditors' Report is given as Annexure III which forms part of thisreport. The Secretarial Auditors' report states that during the period under review theCompany has complied with the provisions of the Act Rules Regulations GuidelinesStandards etc. mentioned therein except in the following case:

Your Company has filled up the vacancy of Chief Financial Officer (CFO) by appointingSantosh Gharat Company Secretary of our Company a suitable candidate for the post asthe Chief Financial Officer of the Company in its meeting of the Board of Directors heldon April 162019.

MANAGEMENT DISCUSSIONS AND ANALYSIS

A detailed report on Management Discussion and Analysis is enclosed with this report.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function iswell defined in the organization. To maintain its objectivity and independence theInternal Auditor submits his report to the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of the internalcontrol system of the Company its compliance with operating systems accountingprocedures and policies of the Company. Based on the report of the Internal Auditorofficers undertake corrective action in their respective areas and thereby strengthencontrol. Significant audit observations and corrective actions suggested are presented tothe Audit Committee of the Board.

RISK MANAGEMENT

The Company has adopted a Risk Management Policy pursuant to the provisions of section134 of the Act which enables identification and evaluation of business risks andopportunities. This policy seeks to create transparency minimize adverse impacts onbusiness objectives and enhance the Company's competitive advantage. The Company hasconstituted a Business Process and Risk Management Committee to monitor the risks andtheir mitigating actions continuously.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

TRANSACTIONS WITH RELATED PARTIES

All Related Party Transactions entered into during the financial year were on an arm'slength basis and in the ordinary course of business. Details of Related Party Transactionsare disclosed in Note 34 of the Audited Financial Statements of the Company.

EXTRACT OF ANNUAL RETURN

Under section 92(3) of the Act the extract of annual return is given in Annexure IV inthe prescribed form MGT-9 which forms part of the report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 (‘POSH Act') and Rules made thereunder yourCompany has constituted an Internal Complaints Committees (ICC). While maintaining thehighest governance norms the Company has within the ICC appointed an externalindependent person who has worked in this area and has the requisite experience inhandling such matters.

During the year no complaint of sexual harassment was received by the Company. Tobuild awareness in this area the Company has been conducting induction and refresherprogrammes in the organisation on a continuous basis.

REPORTING OF FRAUDS

There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/ or Board under section 143(12) ofAct and Rules framed thereunder.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company's CSR policy is aimed at demonstrating care for the community through itsfocus on education skill development health wellness and research on content.

Further in accordance with the provisions of section 135 of the Act and rules framedthereunder the Company has adopted and constituted a CSR Committee of Directorscomprising of the following:

1. Udayan Bose(Chairman)

2. Pallab Bhattacharya

3. Hema Malini

The detailed policy and constitution of the committee is available on the Company'swebsite.

No CSR provision is applicable for the financial year ended March 312019as the averagenet profit of the Company for the last three financial years is a loss and inadequateprofit.

However the Company has put in place a policy that ensures all excess and unconsumedfood for unit people including cast and crew during production shoots are immediatelygiven away to the NGO Feeding India for urgent distribution to the needy and hungry.

DISCLOSURE REQUIREMENT

As per SEBI Listing Regulations Corporate Governance Report with auditors' certificatethereon and Management Discussion and Analysis are attached which form part of thisreport.

Details of the familiarization programme of the independent Directors are available onthe website of the Company.

Policy for determining material subsidiaries of the Company is available on the websiteof the Company.

Policy on dealing with related party transactions is available on the website of theCompany.

The website of the Company is www.pritishnandycom.com.

The Company has formulated and published a Whistle Blower Policy to provide vigilmechanism for employees including Directors of the Company to report genuine concerns. Theprovisions of this policy are in line with the provisions of section 177(9) of the Act andthe SEBI Listing Regulations with stock exchanges.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As per section 134(3) (m) of the Act the particulars of Energy Conservation Researchand Development and Technology Absorption are not applicable to your Company.

Foreign Exchange Earnings and Outgo during the year are given in Annexure V which formspart of the report.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

There are no amounts which remained unclaimed and unpaid for a period of 7 years fromthe date of declaration of dividend.

ACKNOWLEDGMENT

The Board thanks all stakeholders in the Company clients bankers and financialinstitutions for their continued support during the year. It also wishes to record itsappreciation of the efforts put in by all staff and associates of the Company.

For and on behalf of the Board of Directors

Pallab Bhattacharya Udayan Bose
Wholetime Director and CEO Director
Mumbai May 282019 DIN:00008277 DIN:00004533