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Tips Industries Ltd.

BSE: 532375 Sector: Media
NSE: TIPSINDLTD ISIN Code: INE716B01011
BSE 10:06 | 25 Sep 240.95 10.75
(4.67%)
OPEN

236.65

HIGH

259.00

LOW

235.75

NSE 09:59 | 25 Sep 239.90 9.50
(4.12%)
OPEN

237.00

HIGH

248.00

LOW

235.75

OPEN 236.65
PREVIOUS CLOSE 230.20
VOLUME 1830
52-Week high 320.00
52-Week low 64.55
P/E 22.21
Mkt Cap.(Rs cr) 313
Buy Price 240.00
Buy Qty 58.00
Sell Price 240.80
Sell Qty 4.00
OPEN 236.65
CLOSE 230.20
VOLUME 1830
52-Week high 320.00
52-Week low 64.55
P/E 22.21
Mkt Cap.(Rs cr) 313
Buy Price 240.00
Buy Qty 58.00
Sell Price 240.80
Sell Qty 4.00

Tips Industries Ltd. (TIPSINDLTD) - Director Report

Company director report

TIPS INDUSTRIES LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT TO THE MEMBERS In accordance with section 217 of the Companies Act, 1956 and with the view to give the shareholders a glimpse of the activities which took place during the previous year along with the financial and to enlighten them regarding the future outlook of the Company, your Directors hereby present their Report as on 31(st) March, 2012. Financial Highlights: (Rs. in `Lacs') Particulars 2011-12 2010-11 Income 7713.12 6724.18 Profit/(Loss) before Depreciation, Interest, Provision for Contingencies and Taxation 1760.42 1211.53 Less: Depreciation and Interest 695.20 804.21 Profit/(Loss) before Provision for Taxation, Extraordinary and Prior Period year items 1065.22 407.32 Less: Provision for Taxation Current Tax 154.67 90.46 Wealth Tax 2.52 0.83 Excess/Short Provisions 23.27 0.35 Profit/(Loss) after Provision for Taxation but before Extraordinary and Prior Period year items 884.76 315.68 Less: Prior Period Expenses 4.14 17.38 Profit/(Loss) after Taxation 880.62 298.30 Add: Balance Brought Forward 2987.54 2936.01 Profit/(Loss)after Taxation available for Appropriation 3868.16 3234.31 Dividend 319.17 199.48 Dividend Tax 51.77 32.36 General Reserves 376.50 310.50 Share Capital 1595.87 1595.87 Reserves & Surplus 6861.56 6351.89 Dividend: Your Directors recommend a dividend of @ 20% i.e. Rs. 2/- per share on 15958700 fully paid-up Equity Shares of Rs. 10/- each of the Company for the year ended March 31, 2012. The proposed dividend, if approved at the Annual General Meeting, will absorb a sum of Rs. 319.17 lacs (Previous Year being Rs. 199.48 lacs) and Dividend Tax of Rs. 51.77 lacs (Previous Year being Rs. 32.36 lacs). The Dividend Tax is provided at the rate applicable on the day on which the Accounts were approved by the Board of Directors. Transfer to Reserves: An amount of Rs. 66 Lacs is transferred to General Reserves in the Balance Sheet. Review of Operations: (a) Turnover: There has been an upward revision in the turnover of the Company during the year under review as compared to previous year. The figures for 2011-12 in comparison with the previous year 2010-11 are as under: Rs. in Lacs Particulars FY 2011-12 FY 2010-11 Royalty 3483.27 3672.90 Film Production & Distribution 3621.62 2906.25 Audio Product Sales 24.30 78.08 Other Income 34.85 50.33 Artists Management 68.00 - Total Turnover 7232.02 6662.27 (b) Business Spheres: Your Company operates dynamically in two spheres viz., Film Production & Distribution and Exploitation of Music. Film Production and Distribution: During the year under review, the Company had acquired the entire copyrights worldwide in perpetuity of the Punjabi Film 'Jihne Mera Dil Lutiya' starring Gippy Grewal, Diljit Dosanjh, Neeru Bajwa, Jaswinder Bhalla and produced by Batra Showbiz Pvt. Ltd. The movie saw the biggest opening ever for a Punjabi movie. It went on to run successfully for over 7 weeks in the theatres and made a record breaking box office collection of over Rs. 10 crores. On 24th February, 2012 Tips came up with its production, a romantic comedy - 'Tere Naal Love Ho Gaya' featuring the couple Ritiesh and Genelia Deshmukh and directed by Mandeep Kumar. The film being very entertaining, received a good response from the viewers with the box office Rs. 25 crores globally. Music: Tips has been venturing and exploring new avenues for exploitation of music digital in India and across the globe. It has been contracting with various websites and licensing its extensive repertoire for exploitation through streaming and download service. Tips has made its presence on I Tunes globally across the markets of United Kingdom, Canada, Australia, Germany, New Zealand, USA, Belgium, Netherlands. Also, exploitation through mobile services like caller ring back tones, full track downloads, videos of the songs, dialogues, wallpapers, etc. continues to be a significant revenues of the Company. Television has also been an added source of revenue through licensing of song videos to channels for broadcast. (c) Sale of Machinery: The Company owned a machinery for manufacture of Audio Cassettes, the Net Asset Value of which was Rs. 3,76,17,524/-. Since, the audio cassettes no longer exist, the machine had no utility. Hence, the machinery was sold for Rs. 4,69,000/-. Acquisitions by the Promoters: During the year, the promoters have acquired 717,794 equity shares of the Company from open market thereby raising the promoter holding to 1,02,27,528 shares representing 64.09% of the paid up capital of the Company as against 9,517,084 shares representing 59.64% of the paid up capital during the previous year. Details of the acquisitions are given in the Corporate Governance Report which forms a part of this Annual Report. Future Outlook: India has the potential to be one of the world's leading markets for the creative industries - both foreign and domestic. The country produces the greatest number of films in the world and boasts a creative and diverse music market and is continuously growing. Hence, the scope of expansion of the Company in this industry is alluring with the penetration of the Company in diversified areas of production, distribution as well as music. With constant technology improvements and introduction of more areas of exploitation in films and music, the Company's outlook includes keeping pace with the advancements in the industry and absorbing the same. The Company is currently in process of shooting of the film 'Race 2' starring Saif Ali Khan, John Abraham, Deepika Padukone, Amisha Patel, Anil Kapoor and others and being directed by Abbas- Mutan. It is also in process of producing a film titled 'Jayantabhai ki Love Story' starring Vivek Oberoi, Neha Sharma & others and being directed by Vinnyl Markan. The Company has already sold the distribution rights of Race 2 to UTV Motion Pictures. Other projects starring Abhishek and to be directed by Mohit Suri and starring Shahid Kapur to be directed by Siddharth Anand are yet to commence. On the music front, availability of quality audio cd's and digital music has enhanced the end users experience in listening to music. With internet playing the most significant role Company has been expanding its scope by licensing its repertoire to various websites. The growing dominance of the mobile as a music playing device with its potential to go beyond the current rage of caller ring back tones, its ability to explore the long tail of music with the search and explore features, the Company aims at increasing exploitation of its music through mobile services. Directors: In accordance with the provision of the Companies Act, 1956, and the Company's Article of Association, Mr. Ramesh Taurani, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. His detailed profile forms a part of this Annual Report. Mr. Kumar Taurani was appointed as Chairman & Managing Director and Mr. Ramesh Taurani was appointed as Managing Director for the period from 01- 04-2008 to 31-3-2013 on a remuneration of Rs. 90,00,000/- (Rupees Ninety Lacs only) per annum. The Remuneration Committee and the Board has approved their re-appointment for a period of 3 years w.e.f. 01-06-2012 to 31-5-2015 at an increased remuneration of Rs. 1,50,00,000/- (One Crore Fifty Lacs only) per annum i.e. Rs. 12,50,000/- (Rupees Twelve Lacs Fifty Thousand only) per month. Approval of the shareholders is sought for the same in the ensuing Annual General Meeting. Public Deposits: During the year, under review, the Company had accepted deposits from public within the meaning of Section 58A of the Companies Act, 1956 and the rules made thereunder and that none of matured deposits have been unpaid to the depositor(s). Moreover, most of the deposits have been repaid which has brought the outstanding deposits as on 31(st) March 2012 to Rs. 276 lacs as against Rs. 2119 lacs as on 31(st) March, 2011. Auditors: M/s. B.K. Khare & Co.,Chartered Accountants, holds office up to the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. They have furnished the necessary certificate as required under Section 224 (1B) of the Companies Act, 1956. The Board recommends their re-appointment. Internal Control: The Company has appointed M/s. Maheshwari & Co. -Chartered Accountants as its Internal Auditors to check the internal controls and functioning of the activities and recommend ways of improvement. The Internal Audit is carried out quarterly and the report is placed in the Audit Committee Meeting and the Board Meeting for their consideration and direction. Their scope of work is as decided by the Audit Committee and the Board of Directors. Particulars of Employees: Particulars of employees required in accordance with the provisions of Section 217(2A)of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended. Directors' Responsibility Statement: Pursuant to Section 217(2AA) of the Companies Act, 1956, your directors based on the representation received from the management state that: 1. In the preparation of the accounts, the applicable accounting standards have been followed and there are no material departures 2. Accounting policies selected were applied consistently. Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for that period. 3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities. 4. The annual accounts of the Company have been prepared on a going concern basis. Conservation Of Energy: Our operations are not energy intensive. However significant measures have been taken to reduce the energy consumption by purchasing latest technology energy efficient equipments. Technology Absorption, Adoption and Innovation: During the year, Company has not absorbed or imported any technologies. Foreign Exchange Earnings & Outgoing: During the year ended March 31, 2012, the Company has incurred/received foreign exchange towards the following: Particulars 2011-12 2010-11 (Rs. in Lacs) (Rs. in Lacs) Outgoing: (A) Traveling Expenses 59.92 26.06 (B) Payments to Artist's 50.05 - (C) Music Expenses - 10.56 Earnings: (A) F.O.B. value of Exports 1.43 27.02 (B) Royalty (net) 257.34 122.68 Corporate Governance: Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance is annexed hereto and forms part of this Report. A certificate from M/s. B.K. Khare & Co, Chartered Accountants, and Statutory Auditors of the Company, regarding compliance of conditions of corporate governance stipulated by the Stock Exchanges is annexed to this Report. The Company also submits to the stock exchange quarterly corporate governance report as required by Clause 49 of the Listing Agreement. The Company publishes on its website various information relating to business of the Company, quarterly results, balance sheet & profit & loss account, Directors Report, Auditors Report, Shareholding pattern to keep the shareholders updated about the Company Affairs. Management Discussion and Analysis: In accordance with the Listing Agreement, the Management Discussion and Analysis Report is annexed hereto and forms part of this Report. Auditors' Report: In the opinion of the Directors, the notes to accounts are self-explanatory and adequately explain the matters, which are dealt within the Auditors' Report. Appreciation: The Directors firstly, would like to acknowledge and appreciate the efforts of the employees of the Company which they recognize as one of the prime factors in growth of the Company. Secondly, the Directors give their sincere thanks to the shareholders for their support and trust in the Company. Lastly, the Directors are grateful to the bankers, lenders, customers and associates of the Company for their co-operation at all times. The Directors strongly believe the Company has been able to reach its current level because of the constant support and best wishes of all these people. For and on behalf of the Board of Directors Place: Mumbai Kumar S. Taurani Date : May 18, 2012. Chairman & Managing Director Management Discussion and Analysis (Fy 2011-2012): Global economy: 2011 has been a challenging year not only for the larger world economy but also for the Indian economy and the Indian Media & Entertainment Industry. Challenges faced by key global economies were reflected in the US sovereign rating downgrade and continued weakness in the Euro zone, this impacted India through a trickledown effect. In addition, the RBI's interest rate hikes to battle inflation impacted GDP growth as did some other structural and regulatory issues that limited the reforms process and investment growth. Indian economy: While India is still expected to grow at a healthy pace, growth may be lower than earlier expectations. The Central Statistical Organization's (CSO's) advance estimates indicate a 6.9% real GDP growth rate for the year 2011-12. This is lower than the actual growth of 8.4 percent in 2010-11, and substantially lower than the 9 percent growth for 2011-12 projected by the finance minister in the union budget in Feb 2011. Outlook for Indian economy: Going forward, the outlook for the economy in the next 1-2 years is muted vis-&-vis earlier expectations, and real GDP growth is expected to reach 8 percent in 2013-14. Despite the outlook impacting advertising budgets, projections of private consumption still remain strong and are a positive sign for the Media & Entertainment Industry. Indian Media & Entertainment Industry: The Indian Media & Entertainment industry grew from INR 652 billion in 2010 to INR 728 billion in 2011 (calendar year), registering an overall growth of 12 percent, backed by strong consumption in Tier 2 and 3 cities, continued growth of regional media and fast increasing new media businesses. 2011 has been a dynamic year for the Indian Media & Entertainment(M&E) industry - A year in which the transformation of the industry began to take hold. It was also a year of mixed fortunes, with advertising growth being robust in the first half (January to June), and muted in the second (July to December). In terms of performance, 2011 proved to be a year with mixed results across different sub sectors. The traditional media businesses experienced a slow down compared to last year, especially in the second half of the year. However, the new media segments like animation and VFX, on-line and gaming witnessed strong growth rates. Overall Industry size in INR billion: (Calendar year) 2007 2008 2009 2010 2011 Growth in 2011 over 2010 TV 211.0 241.0 257.0 297.0 329.0 10.8% Print 160.0 172.0 175.2 192.9 208.8 8.3% Film 92.7 104.4 89.3 83.3 92.9 11.5% Radio 7.4 8.4 8.3 10.0 11.5 15.0% Music 7.4 7.4 7.8 8.6 9.0 4.7% OOH 14.0 16.1 13.7 16.5 17.8 7.6% Animation and 14.0 17.5 20.1 23.6 31.0 31.2% VFX Gaming 4.0 7.0 8.0 10.0 13.0 30.0% Digital Advertising 4.0 6.0 8.0 10.0 15.4 54.0% Total 514 580 587 652 728 11.7% Overall Industry size in INR billion: (Calendar year) 2012P 2013P 2014P 2015P 2016P CAGR (2011-16) TV 380.0 435.0 514.0 618.0 735.0 17% Print 226.0 246.8 270.0 294.9 323.4 9% Film 100.0 109.7 121.1 134.5 150.3 10% Radio 13.0 16.0 20.0 24.0 29.5 21% Music 10.0 11.3 13.1 15.4 18.2 15% OOH 19.5 21.5 23.6 26.0 29.0 10% Animation and 36.3 43.0 51.1 61.0 69.0 17% VFX Gaming 18.0 23.0 29.0 37.0 46.0 29% Digital Advertising 19.9 25.8 33.5 43.7 57.0 30% Total 823 932 1076 1254 1457 14.90% The year saw important developments in terms of growing commitment from the cable industry to pursue digitization as per the government's mandate, regional markets defying recessionary trends in terms of growth of television and print, the government's commitment towards phase 3 for radio and the growth of new media. Outlook: Going forward 2012, is ought to be a relatively more buoyant year in terms of growth for the industry. Since there will be action in the television distribution space, and in radio, as both industries undergo regulatory changes. It will also be interesting to see print players adapt to the growing challenge being posed due to new media and changing news consumption habits. Lastly, new media such as Animation/VFX, digital advertising, and gaming are expected to continue their growth momentum. The overall Media & Entertainment market in India is expected to achieve a growth of 13 percent in 2012 to touch INR 823 billion and to reach INR 1.4 trillion in 2016 at a compounded annual growth rate of 15 percent per annum over the next five years. The Indian Media & Entertainment Industry is poised to grow in the future with the following developments. * Potential for increase in media penetration * Growing importance of regional markets * Increasing consumption in tier 2 and 3 cities * Positive Impact of regulatory changes, * Emphasis to focused consumer research, * Innovation in content, marketing and delivery platforms to serve different niches, * Increasing device penetration like mobiles, tablets, PCs etc., Films: The Indian Film industry in 2011 recovered from a two year slowdown. Last year there were only 40 weekends available for film releases since first four months of the year were taken up by the cricket world cup and IPL. There were 5 films('Bodyguard', 'Singham', 'Ready','Ra. One' and 'Don 2')which crossed the INR 100 cr. mark in Domestic theatrical collection. In terms of size and growth, the Indian film Industry was estimated to be INR 93 bn. in 2011 as compared to 83.3 bn. in 2010, registering a growth of 11.5%. Size of India Film Industry: Film Industry (INR billion) 2007 2008 2009 2010 2011 CAGR (2007-11) Domestic Theatrical 71.5 80.2 68.5 62.0 68.8 -1.0% Overseas Theatrical 8.7 9.8 6.8 6.6 6.9 -5.5% Home Video 3.3 3.8 4.3 2.3 2.0 -12.0% Cable & Satellite Rights 6.2 7.1 6.3 8.3 10.5 14.0% Ancillary Revenue Streams 2.9 3.5 3.5 4.1 4.7 12.3% Total Industry Size 92.6 104.4 89.4 83.3 92.9 0.1% Size of India Film Industry: Film Industry (INR billion) 2012P 2013P 2014P 2015P 2016P CAGR (2011-16) Domestic Theatrical 73.5 80.2 88.0 97.2 108.0 9.4% Overseas Theatrical 7.5 8.3 9.2 10.2 11.5 10.5% Home Video 1.7 1.4 1.2 1.0 0.9 -15.0% Cable & Satellite Rights 12.0 13.7 15.6 17.8 20.3 14.2% Ancillary Revenue Streams 5.4 6.2 7.2 8.3 9.6 15.4% Total Industry Size 100.1 109.8 121.2 134.5 150.3 10.1% 2012 is expected to be a good year for the Indian Film Industry with several high budget hindi films like 'Ektha tiger', 'Joker', 'Dabbang 2' etc. set to be released in this year. It is expected to grow to INR 150 billion in 2016. Domestic theatrical revenue is expected to dominate the overall pie in the future with C&S rights and ancillary revenue stream is expected to increase its share as a part of the total revenue. Overseas theatrical revenue is poised to grow with increase in overseas marketing. Music: The Indian music industry achieved revenues of INR 9 billion in 2011, registering a growth of 5 percent over 2010. Last year provided users viable options of music consumption through different digital platforms such as pay per download, unlimited music streaming and subscription based music services as viz-&-viz 2010 in which the structural shift from physical formats to digital ones took place. The music industry is estimated to grow to INR 18.2.bn. by 2016 with digital music dominating the industry by having ~79% market share. Future outlook: Segment (INR billion) 2012P 2013P 2014P 2015P 2016P CAGR (2011-16) Physical 2.2 1.8 1.5 1.3 1.1 -16.5% Digital 6.4 7.8 9.6 11.7 14.3 22.4% Radio & TV 0.7 0.8 0.9 1.0 1.2 15.0% Public Performance 0.7 0.9 1.1 1.3 1.6 22.0% Total 10.0 11.3 13.1 15.3 18.2 15.1% Source: KPMG in India Analysis Business overview: TIPS is in the business of music promotion and film production and is among the leading media companies in the country. Digitalization is the key to future growth in the M&E industry and the company has taken pro active steps to take advantage of the next phase of growth coming with increase in digitalization. The company has digitalised and rolled out more than 10000 tracks in different formats, platforms and devices to capture the growing market of internet, mobile and other music playing devices. The revenues from music which comprises of royalty received is Rs. 3483.26 lacs as on March 2012. This income is further expected to increase with growth in digitalization and more exploitation of the music library through ever growing formats and revenue streams. In 2011 the company hit the box office with two successful films. First the company released a Punjabi movie 'JIHNE MERA DIL LUTIYA' which was a super hit and this success created a hat trick of three consecutive successful Punjabi movies released by the company with the distinction of having not repeated the same actors in any of the three films. The movie had a total box office collection of Rs 10 Crores against a cost of Rs 2.3 Crores. Second film released by the company was a Hindi film named 'TERE NAAL LOVE HO GAYA 'starring Genelia and Ritiesh Deshmukh. The film was well accepted at the box office and registered a total collection of over Rs 25 Crores. The success of these two films in the last year has increased the revenue for the company in the film segment from Rs. 2906.25 Lacs in 2011 to Rs.3621.62 Lacs 2012. In future the company plans to launch quality films with the aim of releasing 3-4 films the number of releases in the coming years to achieve its target of releasing 6 films per year by 2016-17. In the current financial year the company plans to release two films which are RACE 2 and JAYANTABHAI KI LOVE STORY. The company, to entice the audience as it did in 2009 with the release of 'RACE' will be releasing 'RACE 2' in January 2013 with star studded star cast and believes it to be a great success. The movie is one of the big budget awaited movie of recent times. The second movie slated to be released by the company in this year is a romantic comedy named 'JAYANTABHAI KI LOVE STORY', the movie has a star cast comprising of Vivek Oberoi and Neha Sharma and is scheduled to release in October 2012. Opportunities: New Media: Increasing importance of new media along with customers increasingly adapting their preferences to the new media devices and technologies, the media and entertainment sector certainly is marching towards new horizons of growth. Regulations: The next growth wave in the industry is expected to come from the implementation of recently enacted regulations on digitization for cable. The other awaited events are copyright clarification and Phase 3 for Radio. The Phase 3 license would extend FM radio services to about 227 new cities and would result in coverage of all cities with a population of one lakh and above through private FM channels, this in turn will increase the consumption of music and will benefit companies like TIPS which have a vast music content library. Roll out of 4G will also be a positive for the industry since it will increase the consumption of music and video viewing with increase in Internet speed. Regionalisation: Regional media consumption is expected to grow phenomenally in foreseeable future. Realizing the potential and power of regional media, many national and foreign players have already forayed into the segment, and many others are likely to follow suit, going forward this foray will increase regional media consumption. Consumer preferences: There is a huge demand for premium and special interest content like comedy, thriller, horror and action movies and demand for different type of music is also increasing. This can be seen with so many dedicated music channels coming up on television. To tap this niche market and understand the preferences of the consumer in this market through user behavior, creating/repurposing content for different platform is needed and this will effectively open more channels to monetize content leading to growth of the industry and the company. Risk Management: Economy risk: The downturn in Economy as a whole will have an adverse effect on the Media & Entertainment industry since the consumer spending will reduce, negatively impacting the Media & Entertainment industry. Since Films is the most popular form of mass media and demand for quality films will always exist. TIPS with its aim to create quality films will not be highly affected with the downturn in the economy. High Talent cost: There has been a constant increase in the talent cost leading to increase in cost of production and making it difficult to recover the cost. TIPS has deep relationships with artists at every level which help them sign stars at correct costs, thereby keeping a check on unreal production costs. Competition: The company can face competition from other players in the film and music industry from both within and outside the country. Poor content and unrealistic budget harm the industry more than the effect of recession. Thus TIPS is focused on creating high quality movie which appeal to the masses. The Company has its finger is evident from the library of successful movies and music that it has created over the last few decades. Besides, Indians have an insatiable appetite for movies. Thus as long as the product entertains, there will always be a market for the same. High Production cost: Production cost is ever increasing and this is forcing producers to look for innovative ways to cut cost and improve the production efficiency. Production houses are getting involved right from the scripting stage till release for large budget films to control costs, where as they continue to directly source quality smaller budget films from independent producers all this is being done to reduce the cost. TIPS has a robust budget control business model. Also the Company has made XX movies in the past which gives it the required experience to keep a check on the cost of production. Piracy: The Problem of piracy has been a pain-point for years leaving players across the value chain with low realization. Steps taken to curb piracy include setting up of formal alliances and associations such as Motion Pictures Distributor's Association of India, Alliance Against Copyright Theft (AACT). Though these initiatives have taken concerted steps to curb piracy and spread awareness, government intervention is required to set up targeted anti-piracy measures that help effective enforcement. TIPS has also taken measures to prevent loss by piracy. The Company had entered into an understanding with an anti-piracy solution provided during the period of theatrical exhibition of the film' Tere Naal Love Ho Gaya' to avoid unscrupulous downloads over internet of the said Film. This shall be a continued practice for the Company to reduce losses due to piracy. Shrinking theatrical window: Shrinking theatrical window is making it difficult for films to recover its cost since the first 3 days are crucial for films success. TIPS recognizes the importance of marketing and promotion. It undertakes an integrated marketing campaign involving producers, distributors and exhibitors to attract audiences and enhance magnetization within the limited available theatrical window. Internal control systems: The company recognizes the importance of internal controls and their adequacy and has taken commensurate steps in this regard. The company has in process the systems that are needed to manage the business of the scale and size which the company has evolved into. Risks and controls are regularly viewed by senior and responsible officers of the company that assure strict adherence to budgets and effective and optimal use of resources. Discussion of financial analysis: There has been a substantial jump in the EBIDTA and PAT of the company in FY 2011-2012 mainly due to the success of its movie 'Jihne Mera Dil Lutiya' which was distributed by TIPS and saw the biggest opening ever for a Punjabi movie , Secondly, good response received for 'Tere Naal Love Ho Gaya' which was produced by TIPS and on the music front, revenues increased due to royalty income from PPL and income from licensing of TIPS content to various websites for exploitation through streaming and download service in India and abroad. Income: The Company recorded total income of INR 77.1 crore in 2011-12, as compared to INR 67.24 crore in the previous year an increase of 15% on Year-on-Year basis. EBIDTA: The Company's EBIDTA stood at INR 17.6 crore in 2011-12 as against INR 12.11 crore in 2010-11. PAT: Profit after tax stood at INR 8.8 crore in 2011-12 as against INR3 crore in the previous year a jump of almost 3 times. Human resources: TIPS firmly believes in and has consistently practiced progressive HR values. The Companys philosophy is reflected by the values of transparency, professionalism and accountability. The Company endeavors to improve on these aspects on an ongoing basis and thereby perpetuate it to generate long-term, socio-economic values for its shareholders, customers and employees. At TIPS, people from divergent disciplines work in perfect harmony to attain greater growth and development. This has been made possible through a consistent emphasis on every individual's sense of responsibility and ability to exercise initiative and judgment while working as a member of the team. As on 31st March, 2012, the number of employees on payroll was 50. Cautionary statement: This report contains forward looking statements that involve risks and uncertainties including, but not limited to, risk inherent in the company's growth strategy, acquisition plans, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors. Actual results, performances or achievements could differ materially from those expressed or implied in such forward looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto.