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UFO Moviez India Ltd.

BSE: 539141 Sector: Media
NSE: UFO ISIN Code: INE527H01019
BSE 00:00 | 20 Jun 366.70 0.10






NSE 00:00 | 20 Jun 367.85 1.75






OPEN 376.55
52-Week high 610.95
52-Week low 316.00
P/E 14.34
Mkt Cap.(Rs cr) 1,040
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Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 376.55
CLOSE 366.60
52-Week high 610.95
52-Week low 316.00
P/E 14.34
Mkt Cap.(Rs cr) 1,040
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

UFO Moviez India Ltd. (UFO) - Director Report

Company director report

To the Members

Your directors have pleasure in presenting the thirteenth report on the business andoperations of your Company for the year ended March 312017


The financial performance of your Company on a standalone and consolidated basis forthe year ended March 31 2017 is summarized below:

(In Rs. Mn)




FY17 FY16 Growth FY17 FY16 Growth
Revenue from Operations 3861 3490 10.6% 5949 5655 5.2%
Other Operating Income 6 6 -20.1% 23 46 -50.0%
Other Income 6 12 -47.2% 17 20 -19.2%
Total Income 3873 3508 10.4% 5989 5721 4.7%
Total Expenses 2587 2235 15.7% 4144 3873 7.0%
Earnings before Interest Tax Depreciation and Amortisation (EBITDA) 1286 1273 1.0% 1845 1848 -0.2%
EBITDA Margin 33.2% 36.3% 30.8% 32.3%
Depreciation and Amortisation 615 588 4.6% 838 774 8.2%
Earnings before Interest and Tax (EBIT) 671 685 -2.1% 1007 1074 -6.2%
Finance Cost 69 98 -30.0% 102 140 -271%
Finance Income (165) (137) 20.4% (54) (47) 14.5%
Profit before Tax (PBT) 767 724 5.9% 959 981 -2.2%
Tax 224 214 4.6% 362 346 4.6%
Profit after Tax (PAT) 543 510 6.5% 597 635 -5.9%
Profit from Associates - - 69 39 -75.2%
Minority Interest - - (34) (39) 12.7%
Profit after Tax Profit from Associates & Minority Interest - - - 632 635 -0.5%

For a detailed analysis of the financial performance please refer to the"Management Discussion and Analysis" Section forming part of the Annual Report.

There are no material changes or commitments affecting the financial position of theCompany between the end of the Financial Year in question and the date of this report.


Based on the Company's performance the directors are pleased to recommend for approvalof the members a dividend of Rs. 10.00 per share for the financial year 2016-17 Thedividend on equity shares if approved by the members would involve a cash outflow of Rs.332.20 Mn including dividend tax resulting in a payout of 61.20% of the standalone profitsof the Company.


The paid up equity share capital of the Company as on March 31 2017 was Rs.276008010. During the year under review the Company has allotted 101425 equity sharespursuant to the exercise of the rights granted to the employees of the Company under theEmployee Stock Option Scheme 2006 and the Employee Stock Option Scheme 2010 to converttheir employee stock options into equity shares. The Company has not issued any shareswith differential voting rights. Also during the year under review the Company has notissued any sweat equity shares. As of March 31 2017 none of the Directors of the Companyhold instruments convertible into equity shares of the Company except stock optionsgranted under the relevant employee stock option schemes of the Company.


During the year under review employees had exercised employee stock options granted tothem under the Employee Stock Option Scheme 2006 and the Employee Stock Option Scheme2010. Pursuant to the exercise of options by employees your Company had allotted 2736equity shares under the Employee Stock Option Scheme 2006 and 98689 equity shares underthe Employee Stock Option Scheme 2010 to the employees against the same numbers of optionsexercised by them. As on date there are no outstanding options under Employee Stock OptionScheme 2006 and Employee Stock Option Scheme 2010 and both schemes stand terminated.

Currently the Company operates the Employee Stock Option Scheme 2014 which iscompliant with SEBI ESOP Regulations.

During the year under review the Company has not granted any employee stock optionsunder employee stock options schemes of the Company.

The details of employee stock options form part of the notes to accounts of thefinancial statements in the Annual Report and also available on the Company's websiteunder the web link:


Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in the Annual Report.


Your Company has not accepted any fixed deposits within the meaning of Section 73 ofthe Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014 andas such no amount of principal or interest was outstanding as of the Balance Sheet date.


Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as‘Annexure-1" to this report.


Your Company prepares its financial statements in compliance with the requirements ofthe Companies Act 2013 and the Generally Accepted Accounting Principles (GAAP) in India.The financial statements have been prepared on a historical cost basis. The estimates andjudgments relating to the financial statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of the underlying transactionsand to reasonably present the state of affairs as on March 312017 and the profits andcash flows of the Company for the year ended March 312017

There is no qualification in the standalone or in the consolidated financial statementsby the Statutory Auditors for the year under review. The Statutory Auditors have in theirreport to the Board of Directors on the financial statements of the Company made thecomments which are categorized as "Matter of emphasis which are self-explanatory andhence no comments in this regard have been offered by your directors.

The consolidated financial statements of the Company and its subsidiaries prepared inaccordance with relevant Accounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued bythe Institute of Chartered Accountants of India form part of the Annual Report.


There are no significant and material orders passed by the regulators or courts ortribunals which impact the Company's going concern status and its operations in future.


The petition for sanction of the Scheme of Arrangement among Southern Digital ScreenzIndia Private Limited V. N. Films Private Limited Edridge Limited UFO InternationalLimited ("Transferor Companies") and UFO Moviez India Limited (‘TransfereeCompany") and their respective shareholders and creditors is pending before theNational Company Law Tribunal.

Following are the key features of the Scheme of Arrangement:

i. The Transferor Companies viz. Southern Digital Screenz India Private Limited V. N.Films Private Limited Edridge Limited UFO International Limited are wholly ownedsubsidiaries of UFO Moviez India Limited. With a view of consolidating the digital cinemabusiness it is proposed that the Transferor Companies be merged with UFO Moviez IndiaLimited.

ii. The amalgamation will also result in reduction in multiplicity of legal entitiesand thereby reduction in regulatory compliances required at present and will also enhanceits ability to compete effectively in the highly competitive digital cinema market inIndia.

iii. The proposed amalgamation will reduce managerial overlaps which are necessarilyinvolved in running multiple entities.

iv. The amalgamation shall be accounted for in the books of account of the TransfereeCompany according to the "Pooling of Interests Method" of accounting as per theAccounting Standard (AS) 14 Accounting for Amalgamations'.

v. Appointed Date" for the Scheme is: a) for the purpose of this scheme relatingto amalgamation of Transferor Company 1 (i.e. Southern Digital Screenz India PrivateLimited) with the UFO Moviez India Limited means July 1 2016 and b) for the purpose ofthis scheme relating to amalgamation of Transferor Company 2 (i.e. V. N. Films PrivateLimited) Transferor Company 3 (i.e. Edridge Limited) and Transferor Company 4 (i.e. UFOInternational Limited) with UFO Moviez India Limited means April 12016.

vi. Upon the Scheme coming into effect the debit balance in profit and loss account ofTransferor Companies and the difference arising on account of net assets and reservesacquired and the cancellation of investments in the Transferor Companies shall be adjustedagainst Securities Premium of the UFO Moviez India Limited.


In terms of the provisions of regulation 34(2) of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 (‘SEBI(LODR) Regulations 2015') the Management Discussion and Analysis is set out in theAnnual Report.


At the beginning of the year your Company had 6 direct subsidiaries 10 step-downsubsidiaries 4 associates and 1 joint venture. During the year under review the jointventure company has become the associate of the Company.

During the year under review the Board of Directors reviewed the affairs of thesubsidiaries. The consolidated financial statements of the Company and all itssubsidiaries have been prepared in accordance with Section 129(3) of the Companies Act2013 and form part of the Annual Report. Further a statement containing the salientfeatures of the financial statements of the subsidiaries of the Company in the prescribedformat AOC- 1 is attached to the financial statements. The statement also provides thedetails of performance and financial position of each of the subsidiaries associates andjoint ventures.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on the Company'swebsite under the web link: http://www . These documents arealso available for inspection during business hours at the Company's registered office inMumbai India.

During the year under review the Company has made an investment of Rs. 140 Mn inSouthern Digital Screenz India Private Limited (SDS) a subsidiary company of the Companyby purchasing 680117 (representing 15.82% of equity share capital of SDS) equity sharesfrom existing shareholders of SDS. Post this acquisition SDS became a wholly ownedsubsidiary of the Company.

The Board of Directors of the Company in its meeting held on May 17 2017 has approvedpurchase of 66609 equity shares of Scrabble Entertainment Limited (Scrabble) asubsidiary company of the Company from the existing equity shareholder of Scrabble at atotal consideration of Rs. 145.34 Mn. After completion of share transfer formalitiesScrabble will become wholly owned subsidiary of the Company.


The Corporate Governance Report for the financial year ended March 312017 forms partof the Annual Report.


Your Company recognizes and embraces the benefits of having a diverse Board thatpossesses a balance of skills experience expertise and diversity of perspectivesappropriate to the requirements of the businesses of the Company. The Company seesincreasing diversity at the Board level as an essential element in maintaining competitiveadvantage. A truly diverse Board will include and make good use of the differences in theskills regional and industry experience and background among directors. Thesedifferences are considered in determining the optimum composition of the Board. The Boardhas adopted a Board Diversity Policy which sets out its approach in this regard. The BoardDiversity Policy is available on the Company's website under the web link: Corporate_Governance.aspx


The Board met 7 times during the financial year the details of which are given in theCorporate Governance Report that forms part of the Annual Report. The intervening gapbetween any two consecutive board meetings was within the period prescribed by theCompanies Act 2013.


The current policy is to have an optimum combination of executive and non-executivedirectors with an independent non- executive chairman to maintain the independence of theBoard and to separate the functions of governance and management in the Company.

As on March 312017 the Board consisted of eight members two of whom are executivedirectors and six are non-executive directors. Out of the six non-executive directorsthree are independent directors. The Board periodically evaluates the need for change inits composition and size.

The policy of the Company on directors' appointment and remuneration including thecriteria for determining the qualifications the positive attributes independence andother matters provided under Sub-section (3) of Section 178 of the Companies Act 2013adopted by the Board is appended as "Annexure-2" to this report. Theremuneration paid to the directors is as per the terms laid out in the Nomination andRemuneration Policy of the Company.


The Company has received the necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and under the SEBI (LODR)Regulations 2015.


Regulation 4(2)(f) the SEBI (LODR) Regulations 2015 mandates that the Board shallmonitor and review the Board evaluation framework. The Companies Act 2013 states that aformal annual evaluation needs to be made by the Board of its own performance and that ofits committees and individual directors. Schedule IV of the Companies Act 2013 statesthat the performance evaluation of independent directors shall be done by the entire Boardof Directors excluding the director being evaluated.

The performance evaluation of all the individual directors the Board as a whole andthat of its committees was conducted based on the criteria and framework adopted by theBoard. The Board approved the evaluation results as recommended by the Chairman of theNomination and Remuneration Committee.


The Company familiarizes its Directors including independent directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company etc. through variousprogrammes. These include orientation programme upon induction of new Directors as wellas other initiatives to update the Directors on a continuing basis.

The familiarization programme for Independent Directors is disclosed on the Company'swebsite under the web link: http://

The Managing Director and the Joint Managing Director also have one-on-one discussionwith the Directors on a regular basis. In addition the Senior Management of the Companyinteracts regularly with the Directors both individually and collectively. The aboveinitiatives help the Directors to understand and keep themselves updated about theCompany its business and the regulatory framework in which the Company operates and equipthemselves to effectively fulfill their role as Directors of the Company.

Further at the time of appointment of an independent director the Company issues aformal letter of appointment outlining his/ her role function duties andresponsibilities as a director. The terms and conditions of their appointment areavailable on the Company's website under the web link: http://www.ufomoviez .com/IR_Corporate_Governance.aspx


There were no fresh appointments of Directors during the year under review.


In accordance with the provisions of Section 152 of the Companies Act 2013 and interms of the Articles of Association of the Company Mr. Ameya Hete retires by rotation atthe forthcoming Annual General Meeting and being eligible offers himself forre-appointment. The Board recommends his reappointment.

The Companies Act 2013 provides for the appointment of independent directors.Sub-section (10) of Section 149 of the Companies Act 2013 provides that independentdirectors shall hold office for a term of up to five consecutive years on the board of acompany and shall be eligible for re-appointment on passing a special resolution by theshareholders of the Company. Accordingly all the independent directors were appointed bythe shareholders at the general meeting as required under Section 149(10) for a period ofthree years with effect from November 20 2014.

Further according to Sub-section (11) of Section 149 no independent director shall beeligible for appointment for more than two consecutive terms of five years. Sub-section(13) states that the provisions of retirement by rotation as defined in Sub-sections (6)and (7) of Section 152 of the Companies Act 2013 shall not apply to such independentdirectors.

The first term of Mr. Sanjeev Aga Ms. Lynn de Souza and Mr. S. Madhavan as IndependentDirectors of the Company will expire on November 19 2017 The Notice of 13thAnnual General Meeting of the Company contains the resolution for their appointment forsecond term of five years.


During the year under review Mr. Biswajit Subramanian has resigned from the Board ofthe Company due to his other professional commitments. The Board while accepting theresignation has recorded its appreciation and gratitude for the invaluable contributionsmade Mr. Biswajit Subramanian as Director of the Company.


The Independent Directors met on July 26 2016 May 17 2017 and July 112017 interalia to

(a) review the performance of the Non-Independent Directors and the Board of Directorsas a whole;

(b) review the performance of the Chairman of the Company taking into account theviews of Executive Directors and Non-Executive Directors;

(c) assess the quality content and timeliness of the flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform its duties.


Your Company has laid an Internal Control Framework which is commensurate with thesize scale and complexity of its operations. This framework ensures the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. Controls have been identified along with risks andmitigation processes covering major areas across all business and functions. Internalcontrols was reviewed by Internal Audit Department and based on the evaluation it wasconcluded that the Company's internal financial controls are adequate and were operatingeffectively as of March 312017

Strengthening of controls is a continuous and evolving process in the Company. Basedupon observations findings and recommendations of the internal audit team process ownersdevelop preventive and corrective actions which are then deployed across the organization.


The Audit and Risk Management Committee of the Company as on March 312017 comprised ofthree Independent Directors Mr. Sanjeev Aga Mr. S. Madhavan and Ms. Lynn de Souza andone Non Executive Non-Independent Director Mr. Varun Laul. Mr. Sanjeev Aga is theChairman of the Committee.

All members of the Audit and Risk Management Committee possess requisite experience andknowledge of accounting and financial management. For further details on the Audit andRisk Management Committee please refer to the Corporate Governance Report forming part ofthe Annual Report. WHISTLE BLOWER POLICY

The Company has a whistle blower policy to report genuine concerns or grievances. Thedetails of the Whistle blower policy are available on the Company's website under weblink: . For further details on theWhistle blower policy please refer to the Corporate Governance Report forming part of theAnnual Report.


During the year under review the Company has developed and implemented Risk Managementplans in accordance with the provisions of the Companies Act 2013 and the SEBI (LODR)Regulations 2015. The Risk Management plans defines the risk management approach of theCompany and includes a periodic review of such risks and also the documentationmitigating measures and reporting mechanism of such risks.


Based upon the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the Internal Statutoryand Secretarial Auditors and the reviews performed by the Management and the relevantBoard Committees including the Audit Committee the Board is of the opinion that theCompany's internal financial controls were adequate and operating effectively during thefinancial year 2016-17

Accordingly pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013the Board of Directors to the best of their knowledge and ability confirm that:

a) the financial statements for the financial year ended March 312017 have beenprepared on a going concern basis by following the applicable accounting standards andthere is no material departure from the accounting standards;

b) the accounting policies selected were applied consistently and the judgments andestimates related to financial statements have been made on a reasonable and prudent basisso as to give a true and fair view of the state of affairs of the Company at the end ofthe financial year and of the profit of the Company for that period;

c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) internal financial controls to be followed by the Company have been laid down andthat such internal financial controls are adequate and are operating effectively; and

e) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively.


The Board has constituted a CSR Committee headed by Mr. Sanjay Gaikwad as Chairman withMs. Lynn de Souza and Mr. Kapil Agarwal as Members. The Committee is responsible forformulating and monitoring the CSR policy of the Company. The Company has adopted a CSRpolicy in compliance with the provisions of the Companies Act 2013.

The average net profit of the Company computed as per Section 198 of the CompaniesAct 2013 during the three immediately preceding financial years was Rs. 480.48 Mn. Itwas hence required to spend a minimum of Rs. 9.61 Mn on CSR activities during thefinancial year 2016-17 being 2% of the average net profits of the three immediatelypreceding financial years.

The Company has contributed an amount of Rs. 15.00 Mn towards CSR activities againstits obligation of Rs. 9.61 Mn for the financial year 2016-17

The annual report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as ‘Annexure-3" forming part ofthis Report.


The particulars as prescribed under Sub-section (3) (m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are enclosed as‘Annexure-4" to this report.


Your Company is publishing only the statutory disclosures of the Annual Report in theprint version. Additional information is available on the Company's . Electronic copies of the Annual Report 2016-17 and Notice of the 13thAnnual General Meeting are sent to all members whose email addresses are registered withthe Company / Depository Participant(s). For members who have not registered their emailaddresses physical copies of the Annual Report 2017 and the Notice of the 13thAnnual General Meeting are sent in the permitted mode. Members requiring physical copiescan send a request to the Company.


Statutory Auditors

At the Annual General Meeting held on September 4 2014 S.R. Batliboi & AssociatesLLP Chartered Accountants were appointed as Statutory Auditors of the Company to holdoffice till the conclusion of the Annual General Meeting to be held in the calendar year2018. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of S.R. Batliboi & Associates LLP CharteredAccountants as statutory auditors of the Company for the financial year 2017-18 isplaced for ratification by the members of the Company. In this regard the Company hasreceived a certificate from the auditors to the effect that if they are reappointed asauditors of the Company for the financial year 2017-18 it would be in accordance with theprovisions of Section 141 of the Companies Act 2013.

Secretarial Auditor

Mr. Dharmesh Zaveri of D. M. Zaveri & Co. Practicing Company Secretaries wasappointed to conduct the secretarial audit of the Company for the financial year 2016-17as required under Section 204 of the Companies Act 2013 and Rules thereunder. Thesecretarial audit report for financial year 2016-17 forms part of the Annual Report as‘Annexure-5" to this report. There are no qualifications or adverse observationsby the Secretarial Auditor of the Company for the year under review.


In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as ‘Annexure-6" to thisreport.


Your Directors believe that the key to success of any company are its employees. YourCompany has a team of able and experienced professionals whose dedicated efforts andenthusiasm has been an integral part of your Company's growth. Your Directors would liketo place on record their deep appreciation of their continuous effort and contribution tothe Company.

Particulars of employees

The table containing the names and other particulars of employees in accordance withthe provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial

Personnel) Rules 2014 disclosing the ratio of the remuneration of each director to themedian employee's remuneration and such other details is appended as"Annexure-7" to this report.

A statement containing the names of every employee employed throughout the financialyear 2016-17 and in receipt of remuneration for the said financial year which in theaggregate was not less than Rs. 10200000/- and employed for a part of the financialyear 2016-17 was in receipt of remuneration for any part of the said financial year at arate which in the aggregate was not less than Rs. 850000/- per month and top 10employees in terms of remuneration under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure-7" to thisreport.

Policy on prevention prohibition and redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment at the workplace in line with the provisions of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013and the Rules there under. The Policy aims to provide protection to employees at theworkplace and prevent and redress complaints of sexual harassment and for mattersconnected or incidental thereto with the objective of providing a safe workingenvironment where employees feel secure. The Company has also constituted an InternalComplaints Committee to inquire into complaints of sexual harassment and recommendappropriate action. The Company has not received any complaint of sexual harassment duringthe financial year 2016-17


Statements in this Report and the Management Discussion & Analysis describing theCompany's objectives projections estimates expectations or forecasts may beforward-looking within the meaning of applicable securities laws and regulations. Actualresults may differ materially from those expressed or implied in the statement. Importantfactors that could influence the Company's operations include economic conditionsaffecting demand/supply and price conditions in the domestic and overseas markets in whichthe Company operates changes in government regulations tax laws economic developmentswithin the country and other incidental factors.


We thank all our customers vendors investors bankers and all other businesspartners for their excellent support during the year. We place on record our appreciationof the strong commitment and contribution made by our employees at all levels.

We also take this opportunity to place on record our appreciation for continuedco-operation and unstinted support received from the film producers distributorsexhibitors and advertisers who have contributed to the success of our Company.

We thank the Central Government and the various State Governments and other Governmentagencies and bodies for their support and look forward to their continued support in thefuture.

For and on behalf of the Board of Directors

Sanjay Gaikwad Kapil Agarwal
Managing Director Joint Managing Director
DIN: 01001173 DIN: 00024378

Place : Mumbai

Date : July 112017