Your Directors take pleasure in submitting their 12th Annual Report on thebusiness and operations of your Company together with the Audited Financial Accounts forthe financial year ended March 312017.
1. FINANCIAL RESULTS
| || || |
( Rs. in Lakhs)
|Particulars || |
Current year 2016-2017
Previous year 2015-2016
|Revenue from Operations and other income ||41950 ||37694 |
|Direct Operational Expenses ||34861 ||31925 |
|Changes in inventories of finished goods and work-in-progress ||(11357) ||(9587) |
|Employee benefit expense ||3031 ||2269 |
|Financial Costs ||3232 ||2283 |
|Depreciation and amortization expense ||417 ||370 |
|Other expenses ||2174 ||1823 |
|Total expenditure ||32358 ||29082 |
|Profit Before Taxation ||9591 ||8612 |
|Tax Expenses ||3424 ||3069 |
|Profit After Taxation ||6168 ||5543 |
|Balance brought forward from previous years ||18027 ||13081 |
|Profit available for Appropriation ||24195 ||18624 |
|Less: Appropriations || || |
|General Reserve ||- ||(139) |
|Proposed DividendA ||- ||(381) |
|Dividend Distribution TaxA ||- ||(77) |
|Balance carried to the Balance Sheet ||24195 ||18027 |
ACompany has not accounted for proposed dividend as a liability as at March312017 as per revised Accounting Standard (AS) 4
2. OVERVIEWOF COMPANY'S FINANCIAL PERFORMANCE
During the year under review the Standalone Revenue from Operations & Other Incomeincreased to Rs. 41950 Lakhs as against Rs.37694 Lakhs in the previous year and theConsolidated Revenue from Operations & Other Income increased to Rs.42850 Lakhs ascompared to Rs. 37664 Lakhs in the previous year.
Your Company had a standalone growth with a Net Profit aftertax of Rs.6168 Lakhs ascompared to the Net Profit after tax of Rs.5543 Lakhs in the previous financial year anda consolidated growth with a Net Profit after tax of Rs.6148 Lakhs as compared to the NetProfit after tax of Rs.5215 Lakhs in the previous financial year.
There are no material changes and commitments affecting the financial position of yourCompany which have occurred between the end of the financial year 2016-17 and the date ofthis Report.
3. CONSOLIDATED FINANCIAL STATEMENT
The consolidated financial statements of your Company for the financial year 2016-17are prepared in compliance with applicable provisions of the Companies Act 2013("the Act") applicable Accounting Standards and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations"). Theconsolidated financial statements have been prepared on the basis of audited financialstatements of the Company its subsidiaries and associate companies as approved by theirrespective Board of Directors.
Pursuant to the provisions of Section 136 of the Act the Financial Statements of theCompany the Consolidated Financial Statements along with all relevant documents andtheAuditors' Report thereon form part ofthisAnnual Report and are also available on thewebsite of the Company www.shemarooent.com under Investor Centre section.
4. SUBSIDIARIES AND ASSOCIATE COMPANIES
As on March 31 2017 the Company has 5 subsidiaries and 1 associate company. There hasbeen no change in the nature of business of the subsidiaries / associate during the yearunder review.
During the year under review the Company's capital contribution in ShemarooThinkTankEntertainment LLP has increased from 65% to 99.99%.
In accordance with Section 136 of the Companies Act 2013 the financial statements ofthe subsidiary companies are available on Company's website www.shemarooent.com underInvestor Centre section. These documents will also be available for inspection at theRegistered Office of the Company during working hours upto the date of the Annual GeneralMeeting(AGM).
Pursuant to Section 129(3) of the Act a statement in Form AOC-1 containing the salientfeatures of the financial positions of the subsidiaries / associate company forms part ofthis Report.
During the year ended March 31 2017 the Company does not have any material subsidiarycompanies as defined in the SEBI Listing Regulations. The Policy for determining MaterialSubsidiaries of the Company is available on the Company website at www.shemarooent.comunder Investor Centre section.
5. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is presented in a separate section whichforms part of this Report.
Your Directors recommend payment of Rs.1.40 per fully paid- up equity shares ofRs.lOeach (i.e. 14% of the paid-up equity share capital of Company) as final dividend forthe financial year 2016-17 for approval of shareholders at the ensuing AGM.
The final dividend on equity shares if approved by the shareholders would involve acash outflow on account of Rs. 458.02 Lakhs including dividend distribution tax.
7. TRANSFERTO RESERVE
The Company proposes to retain the entire amount of Rs. 6168 Lakhs in the profit andloss account.
8. PUBLIC DEPOSITS
During the Financial Year under review your Company has not accepted any depositswithin the meaning of Section 73 of the Act read with Companies (Acceptance of Deposits)Rules 2014.
9. ANNUAL RETURN
Pursuant to the provisions of Section 92 of the Act read with Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT 9 isenclosed as Annexure 'A'to the Board's Report.
10. PARTICULARSOFLOANSGUARANTEESOR INVESTMENTS
Particulars of loans guarantees given and investments made duringtheyearas requiredunderSection 186 of the Act and Schedule V of the SEBI Listing Regulations are provided inNotes 2.11 2.12 2.17 & 2.26 of the Standalone Financial Statements.
11. CREDIT RATING
CARE and India Ratings and Research (Ind-Ra) a Fitch Group Company continued toreaffirm their rating of "CARE A; Stable" and "IND A/Stable"respectively for Long Term Bank Facilities of Rs. 1250 million and Rs. 225 million.
12. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS
During the year under review there were no significant or material orders passed byRegulators / Courts / Tribunals against the Company impacting its going concern status andoperations in future.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement underSection 134(5) of the Act the Board of Directors tothe best of their knowledge and ability confirm that:
1. in the preparation of the Annual Accounts for the year ended March 31 2017 theapplicable Accounting Standards have been followed along with proper explanationrelatingto material departures;
2. the Directors have selected such Accounting Policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a fair viewof the state of affairs of the Company at the year ended March 31 2017 and of the profitof the Company forthat period;
3. proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;
4. the Annual Accounts for the year ended March 31 2017 have been prepared on a goingconcern basis;
5. proper internal financial controls to be followed by the Company has been laid downand that such internal controls are adequate and were operating effectively; and
6. proper systems to ensure compliance with the provisions of all applicable laws hasbeen devised and that such systems were adequate and operating effectively.
14. BAORD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
a. Board Composition
Your Board currently comprised of total 10 Directors including 3 Executive Directors 2Non-Executive NonIndependent Directors and 5 Non-Executive Independent Directors. TheComposition of the Board is in conformity with the Act read with Rules made thereunderand SEBI Listing Regulations.
b. Retire by rotation
In accordance with the provisions of the Companies Act 2013 Mr. Jai Maroo (DIN:00169399) is liable to retire by rotation at the 12th Annual General Meeting(AGM) and being eligible has offered himself for re-appointment. His re-appointment isbeing placed for your approval at the AGM. Your Directors recommend his re-appointment asthe Non-Executive Director of your Company.
c. Key Managerial Personnel
Pursuant to Shareholders approval at the 11th Annual General Meeting held onSeptember 26 2016 Ms.Smita Maroo-Sr. VP-Animation Kids Digital L&M & Ms.Kranti Gada - Sr. VP - New Business Development were re-appointed fora period of fiveyears with effect from April 012017.
During the year under review Mr. Ankit Singh has resigned as Company Secretary andCompliance Officer of the Company with effect from the close of business hours of July 222016 and Mr. Dipesh Gosar has been appointed as the Company Secretary and ComplianceOfficer of the Company with effect from August 032016.
The Key Managerial Personnel of the Company as on date are:
|i. Mr. Raman Maroo ||- ManagingDirector |
|ii. Mr.AtulMaru ||- Jt. Managing Director |
|iii. Mr. Hiren Gada ||- WholeTimeDirector & CFO |
|iv. Mr. Dipesh Gosar ||- CompanySecretary& Compliance Officer |
|v. Ms.SmitaMaroo ||- Sr.VP-Animation Kids Digital L&M |
|vi. Ms. Kranti Gada ||- Sr.VP-NewBusiness Development |
|vii. Ms. Mansi Maroo ||- Co-producer-Film |
|viii. Mr.VinodKarani ||- EVP - Broadcast Syndication & Acquisition |
|ix. Mr. Hemant Karani ||- Sr. VP - Studio |
|x. Mr. Ketan Maru ||- Sr. VP - Film Production |
|xi. Mr. Bipin Dharod ||- Sr.VP-PhysicalSales & Distribution |
|xii. Mr. Harakhchand Gada ||- Sr.VP-Accounts |
d. Number of meetings of the Board
During the year under review the Board met 4 times. The details of the Board meetingsand the attendance of the Directors are provided in the Corporate Governance Report whichforms part of this report.
e. Board Independence
The Independent Directors have submitted the Declaration of Independence as requiredpursuant to the provisions of Section 149 of the Act and SEBI Listing Regulations statingthat they meet criteria of independenceas providedtherein.
f. Audit Committee
The Audit Committee comprises of three members. The Chairman of the Committee is anIndependent Director. The Committee met four times during the year. The details pertainingto composition of the Audit Committee and terms of reference are included in the CorporateGovernance Report which forms part of this Report.
g. Annual Performance Evaluation
As per the provision of the Act and Regulation 17 of the SEBI Listing Regulations theannual evaluation process for the performance of the Board as well as of its Committeesand Individual Directors including Chairman of the Board was carried out internally. Thisexercise was carried out through a structured questionnaire prepared separately for BoardCommittee Chairman and Individual Directors by the Nomination and Remuneration Committee.The Securities Exchange Board of India ("SEBI") had issued Guidance Note onBoard Evaluation dated January 05 2017 in order to provide guidance on various aspects ofBoard Evaluation. Accordingly the questionnaire and evaluation process was reviewed andnecessary alignment was made with the requirement.
The questionnaire for Board evaluation was prepared taking into consideration variousaspects of the functioning and overall level of engagement of the Board and its Committeeson the parameters such as adequacy of the constitution composition contributiontransparency board deliberations independence of judgment timeliness of the informationflow etc.
A report on such evaluation was taken on record by the Board and the Directorsexpressed their satisfaction withtheevaluation process.
h. Familiarisation of Independent Directors
The Company undertook familiarization programme for familiarizing Director's with theCompany's operations and other relevant information which would enable them to take wellinformed decisions discharge the responsibilities and functions conferred on them.Details of familiarization programme imparted is placed on Company's website atwww.shemarooent.com under Investor Center section
i. Remuneration Policy
In accordance with the provisions of the Act and the SEBI Listing Regulations theCompany has formulated a Policy on Nomination & Remuneration of Directors and SeniorManagement Employees on the recommendation of Nomination & Remuneration Committee. Themain objective of the said policy is to identify person for appointing on the Board and atsenior management level of the Company level and composition of remuneration isreasonable and sufficient to attract retain and motivate. The details of the Policy aregiven in the Corporate Governance Report.
15. AUDITORS AND AUDITORS REPORT
a. Statutory Auditors
M/s. M. K. Dandeker & Co. Chartered Accountants (ICAI Firm Registration No.000679S) were appointed as Statutory Auditors for a term of 5 years at the 11th AnnualGeneral Meeting of the Company held on 26th September 2016 subject toratification of their appointment at every subsequent Annual General Meeting.
M/s. M. K. Dandeker & Co have expressed their willingness to continue as theStatutory Auditors of the Company and has furnished a certificate of their eligibility andconsent under Section 141 of the Act and the rules framed there under. In terms of theSEBI Listing Regulations the Auditors have confirmed that they hold a valid certificateissued by the Peer Review Board of the ICAI.
A resolution seeking ratification of their appointment forms part of the noticeconvening the 12th Annual General Meeting and the same is recommended foryourconsideration and approval.
The Report given by the Auditors on the financial statements of the Company is part ofthe Annual Report. There has been no a qualification reservations or adverse remarks ordisclaimers given by the Auditors in their Report that may call for any explanation fromthe Directors. Further Statutory Auditors have not reported any incident of fraud to theAudit Committee of the Company in the year under review.
b. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Act read with rules framed thereunderthe Company has appointed M/s. Manish Ghia & Associates Practicing Company Secretaryto undertake the Secretarial Audit of the Company. The Secretarial Audit Report is givenas an annexuretothis report.
There are no qualifications or reservations or adverse remarks in the Report issued bythem for the financial year 2016-17 which may call for any explanation from the Board ofDirectors.
16. RELATED PARTYCONTRACTSOR ARRANGEMENTS
All Related Party Transactions executed in financial year 2016-17 were on arms' lengthbasis and in the ordinary course of business. All related party transactions are placedbefore the Audit Committee for their prior approval and the details of the related partytransactions undertaken during a particular quarter are placed at the meeting of the AuditCommittee held in the succeeding quarter.
During the year there were no related party transactions which were materiallysignificant and that could have a potential conflict with the interests of the Company atlarge. Accordingly there are no transactions that are required to be reported in Form AOC2. All related party transactions are mentioned in the notes to the accounts.
The policy on Related Party Transactions as approved by the Board is placed on thecompany's website at www.shemarooent.com under Investor Center section.
17. MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES
The disclosure with respect to remuneration as required under Section 197(12) of theAct read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is appended as Annexure 'B' to the Board's Report.
The information as per Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. However as per Section136(1) of the Act the Annual Report and Financial Statements are being sent to theshareholders of the Company excluding the aforesaid information. The said information isavailable for inspection by shareholders at the Registered Office of the Company duringworking hours for a period of 21 days before the ensuing Annual General Meeting and shallbe made available to any shareholder on request.
18. INTERNAL CONTROL SYSTEM AND COMPLIANCE FRAMEWORK
The Company has well defined and adequate Internal Control System commensurate withnature of its business size scale and complexity of its operations.
The Company has laid down certain guidelines processes and structure which enablesimplementation of appropriate internal financial controls across the organisation whichensures that all assets are safeguarded and protected and that the transactions areauthorised recorded and reported correctly. The Company's internal financial controlsystem also comprises due compliances with Company's policies and Standard OperatingProcedures (SOPs) for various processes. It includes control processes both on manual andIT applications including the ERP application wherein the transactions are approved andrecorded.
The Company has also appointed M/s Gawande & Associates Chartered AccountantsInternal Auditors of the Company. It formulates the audit plan scope functioning andmethodology which are reviewed every year in a manner that they cover all areas ofoperations. The Audit Committee periodically deliberates on the operations of the Companywith the Members ofthe Management. Reports of the internal auditors are regularly reviewedby the management and corrective action is initiated to strengthen the controls andenhance the effectiveness of the existing systems. Significant audit observations andfollow up actions thereon are reported to the Audit Committee.
19. RISK MANAGEMENT
The Company has in place a Risk Management Policy pursuant to the provisions ofSection 134 of the Act and Regulation 17 ofthe SEBI Listing Regulations. This robust RiskManagement process enables timely identification evaluation of business risks andopportunities defines adequate mitigation strategy and supports the management instrategic decision making. It also describes the risk management approach across theCorporate level and Business Segment level.
The Senior management periodically reviews the risk management framework to keepupdated and address emerging challenges. Risk assessment and management procedures andstatus are discussed at the meetings of the Audit Committee and the Board of Directorsofthe Company.
In terms of Regulation 21 ofthe SEBI Listing Regulations the Constitution of RiskManagement Committee was not applicable during the financial year 2016-2017.
20. WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company have formulated a Whistle Blower Policy pursuant to the provisions ofSection 177 ofthe Act and SEBI Listing Regulations.
The Company provides formal vigil mechanism to the Directors and employees to reporttheir concerns about unethical behaviour actual / suspected fraud or wrongful conductwithin the Company. The Policy provides for adequate safeguards against victimization ofemployees who avail ofthe mechanism and also provides for direct access to the Chairman ofthe Audit Committee. It is affirmed that no personnel ofthe Company has been denied accessto the Audit Committee.
The details ofthe Whistle Blower Policy are available on the website of the Company atwww.shemarooent.com under Investor Center section.
21. TRANSFER OF UNCLAIMED DIVIDEND / SHARE APPLICATION MONEY DUE FOR REFUNDTOIEPF
Pursuant to the provisions of Section 124 and 125 ofthe Act and the Investor Educationand Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 allshares on which dividend has not been paid or claimed share application money due forrefund debenture interest and interest on deposits as well as the principal amount ofdebentures and deposits remaining unclaimed / unpaid for seven consecutive years or moreshall be transferred to an IEPF suspense account.
Shareholders who have not claimed their dividend warrants or share application moneydue for refund are requested to immediately send their request for issue of duplicatewarrants.
The details of unclaimed dividend / application money as on March 312017 are asfollows:
|Sr. No. ||Particular ||Date of declaration ||Due date for transfer to IEPF |
|1. ||Unclaimed Final Dividend for FY 2015-2016 ||26.09.2016 ||01.11.2023 |
|2. ||Unclaimed Final Dividend for FY 2014-2015 ||21.09.2015 ||28.10.2022 |
|3. ||Unclaimed Application Money ||27.09.2014 ||27.09.2021 |
The Company has placed on its website www.shemarooent.com. the information on dividendsand application money which remain unclaimed with the Company. The information is alsoavailable on the website of the Ministry of Corporate Affairs www.mca.gov.in.
22. CORPORATE GOVERNANCE
The Company has complied with the corporate governance requirements as stipulated underSEBI Listing Regulations. The Report on Corporate Governance alongwith Certificate fromthe Auditors of the Company confirming compliance with the conditions of CorporateGovernance as stipulated under the SEBI Listing Regulations is annexed and forms part ofthis Report.
23. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
The Company does not have manufacturing operations and hence our processes are notenergy intensive. Therefore particulars relating to conservation of energy and technologyabsorption stipulated under Section 134(3)(m) of the Act read with Companies (Accounts)Rules 2014 are not applicable.
1. Conservation of Energy
The operations of your Company are not energy intensive. However adequate measureshave been initiated to reduce energy consumption. Some of these measures are as follows:
- Advocated switching off of lights and Air Conditioners when not required turning offof PCs when not in use setting higher temperatures on air conditioners etc. to reduceconsumption.
- Put controls on usage of Lifts Air Conditioners Common Passage lights and otherelectrical equipments.
- Changing of lights to energy efficient LED.
- Ensuring that air-conditioning equipment are switched on or off based on occupancy.
2. Technology Absorption
In view of the nature of activities which are being carried on by the Company theinformation in connection with technology absorption is Nil.
3. Foreign Exchange Earnings & Outgo
Details of foreign exchange earnings and outgo during the year are given in Note 2.28and 2.30 of the Standalone Financial Statements forming part of this Report.
24. HUMAN RESOURCES
The Company recognizes that the employees are the most valuable resource for anyestablishment and key players of business success and sustained growth. Employees are ourmost valuable asset and your Company places the engagement development and retention oftalent as its highest priority to enable achievement of organisational vision.
The Company continued to conduct various employee benefit recreational and teambuilding programs to enhance employee skills motivation as also to foster team spirit. Weare committed to partnering with employees and strengthening our talent pool by providingthem with growth and career enhancement opportunities. Company also conducted in-housetraining programs to develop leadership as well as technical / functional capabilities.Succession planning career planning job rotation Hi-potential identification and talentpipeline development process continues to be our priority towards building sustainablebench strength for the future. The total employee strength at the end of financial year2016-17 is 453.
Your Directors wish to place on record their appreciation for the sincere and devotedefforts of the employees at all levels.
25. SEXUAL HARASSMENT
Your Company has in place policy for the prevention of sexual harassment at workplace.As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 and Rules made thereunder your Company has anInternal Complaints Committees (ICC) to redress complaints relating to sexual harassment.During the year under review no complaints were received in regards to sexual harassment.
26. CORPORATE SOCIAL RESPONSIBILITY
The composition of the CSR Committee is disclosed in the Corporate Governance Report. Abrief outline of the CSR Policy of the Company the CSR initiatives undertaken during thefinancial year 2016-17 together with progress thereon and the report on CSR activities asrequired by the Companies (Corporate Social Responsibility Policy) Rules 2014 are setout in Annexure 'C' to the Board's Report.
Your Company is fully committed to make contributions towards CSR Activities of yourCompany as per the requirement of Section 135 of the Act. Your Company has contributedwith an amount Rs. 14.61 Lakhs for the financial year 2016 - 2017 instead of the requiredcontribution amount of Rs. 129.78 Lakhs (i.e. 2% of the average net profit of your Companymade during the three immediately preceding financial year). Your Company has not spentbalance CSR contribution amount of Rs. 115.17 Lakhs. The members of the CSR Committee aswell as the members of the Board has decided to go ahead with CSR activities with properresearch and planning and decided to make the required contribution as and when yourCompany finds proper projects or area in the coming financial years. The Company is in theearly stages with several initiatives aligned to the Improving & Promoting RuralEducation Health Care Hygiene & Medical Facilities Rural Transformation and SocialWelfare strategic areas and has conserved expenditure with the objective of scaling upthese initiatives in future. Hence the full amount was not spent during the year.
The CSR policy is available on our website at www.shemarooent.com under InvestorCenter section.
27. CAUTIONARY STATEMENT
Statements in the Annual Report particularly those which relate to ManagementDiscussion and Analysis describing the Company's objectives projections estimates andexpectations may constitute 'forward looking statements' within the meaning of applicablelaws and regulations. Although the expectations are based on reasonable assumptions theactual results might differ substantially or materially from those expressed or implied.Important developments that could affect the Company's operations includes but not limitedto changes in exchange rate fluctuations tax laws litigation labour relations interestcosts political and economic environment.
Your Board wishes to place on record its sincere appreciation to its CustomersVendors Investors Financial Institutions Bankers Business Associates and GovernmentAuthorities fortheircontinued support.
The Board of Directors also appreciates the contribution made by the employees at alllevels for their dedicated service co-operation and firm commitment to the goals &vision of the Company. The Board of Directors would also like to thank all stakeholdersfor the continued confidence and trust placed by them with the Company. We look forward tocontinued support of all these partners in progress.
For and on behalf of the Board of Directors
|sd/- ||sd/- |
|Raman Maroo ||Atul Maru |
|Managing Director ||Jt. Managing Director |
|DIN:00169152 ||DIN:00169264 |
|Mumbai || |
|May 09 2017 || |