Cinemax India Ltd Merged Directors Report

To,

The Members of

CINEMAX INDIA LIMITED

(Formerly known as Cinemax Exhibition India Limited)

Dear Shareholders,

Your Directors have pleasure in presenting the 2^nd Annual Report on the business and operations of the Company and Audited Financial Statements for the year ended March 31, 2013.

Financial Highlights

(Rs. In Lakhs )

	2012-13	Period from 30.09.2011 to 31.03.2012
Income from Operations	35,422.57	-
Other Income	497.90	-
Total	35,920.47	-
Less: Expenditure	28,842.18	15.84
Earnings before depreciation/ amortization interest and tax (EBDITA)	7078.29	(15.84)
Less : Depreciation & Amortization Expenses	1911.14	-
Finance Cost	1219.44	-
Profit before Exceptional Item & Tax	3947.71	(15.84)
Exceptional Item	751.71	-
Provision for Tax Credit/ (Expense) (net)	722.78	-
Net Profit after Tax	2473.22	(15.84)
Earnings/(losses) per share
Basic	8.83	(15.84)
Diluted	8.83	(15.84)

FINANCIAL REVIEW:

During the Financial year ended March 31, 2013, your Company earned a total income of Rs. 359.20 Crores and a net profit of Rs. 24.73 Crores. The Revenues and Net Profits of your Company have substantially increased as compared to the previous year on account of demerger and vesting of the theatre Exhibition business of erstwhile Cineline India Limited in your Company with effect from 01^st April 2012 ("the appointed date").

OPERATIONS REVIEW

Kindly refer to Management Discussion & Analysis Report covered under Corporate Governance which forms part of this Annual report for a detailed Operational Review.

DIVIDEND

With a view to plough back the profits of the Company for future operations, your Directors have thought it prudent not to recommend dividend for the financial year 2012-13.

SUBSIDIARIES

Your Company has five subsidiaries, namely, Cinemax Motion Pictures Limited, Vista Entertainment Limited, Growel Entertainment Limited, Nikmo Entertainment Limited and Odeon Shrine Multiplex Limited. Further, Nikmo Entertainment Limited is a subsidiary of Growel Entertainment Limited.

During the year under review, Vista Entertainment Private Limited, Growel Entertainment Private Limited, Nikmo Entertainment Private Limited and Odeon Shrine Multiplex Private Limited have converted themselves from Private Limited to Public Limited Company.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with the Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the Financial Year 2012-13.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT, 1956

The Ministry of Corporate Affairs, Government of India has granted a general exemption from attaching the audited accounts of the subsidiaries in the Consolidated Accounts of the Company vide General Circular No. 2/2011 dated 8th February, 2011 issued by Ministry of Corporate Affairs, Government of India.

Accordingly, your Company has decided to publish consolidated accounts for financial year 2012-13 without detailed audited accounts of its subsidiaries. However, summery containing highlights of financial results shall be provided along with published annual accounts of the Company.

FIXED DEPOSITS

During the year under review, your Company has not accepted any fixed deposits under Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposit) Rules 1975.

DEMERGER & VESTING OF THEATERE EXHIBITION BUSINESS:

The Hon’ble High Court of Judicature at Bombay vide its order dated 9^th March 2012 inter alia demerged the Theater Exhibition Business from Cineline India Limited (Formerly known as Cinemax Properties Ltd.) and vested it in your Company on a going concern basis. The name of your Company was changed to its present name vide a fresh certificate of incorporation dated 22^nd June 2012, issued by Registrar of Companies, Mumbai.

LISTING OF EQUITY SHARES

Subsequent to the aforesaid demerger, your Company listed its Equity Shares on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) effective from 18^th October, 2012.

CHANGE OF MANAGEMENT:

During the year under review, PVR Limited through its wholly owned subsidiary Cine Hospitality Private Limited ("CHPL"), pursuant to a share purchase Agreement dated 29^th November 2012, acquired controlling stake ie 19,394,816 Equity Shares representing 69.27% of the paid-up Capital of your Company from Kanakia family, the erstwhile promoter’s of the Company. Subsequently, Cine Hospitality Private Limited (Acquirer) and PVR Limited (Person acting in Concert) in compliance with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 acquired 66,97,189 Equity Shares representing 23.92% of the Paid-up Capital through a Open Offer from Public Shareholders of the Company.

Pursuant to the aforesaid acquisitions, PVR through CHPL presently holds 93.19% the paid up capital of your Company. Consequent to the signing of the Share Purchase Agreement with inter alia CHPL for the transfer of entire 69.27% equity share capital of the Company from Kanakia family to CHPL all the erstwhile directors of the Company resigned effective from 08^th January, 2013.

The Company appointed Mr. Ajay Bijli, Mr. Sanjeev Kumar and Mr. Sanjay Khanna effective from 8th January 2013 whereas Ms. Renuka Ramnath and Mr. Ravinder Singh Thakran were co-opted on the Board effective from 30th January 2013. Subsequently, Mr. Vikram Bakshi, Mr. Sanjai Vohra and Mr. Amit Burman were co-opted on the Board effective from 17th January 2013, 21st March 2013 and 28th March 2013 respectively.

For the convenience of managing the corporate affairs of the Company more efficiently and smoothly the registered office of the Company is being shifted from Mumbai to New Delhi.

CORPORATE GOVERNANCE

The Company is committed to uphold the highest standards of corporate governance. Your Company strongly believes that this relationship can be strengthened through corporate fairness, transparency and accountability. Your Company complies with all the mandatory provisions of Clause 49 of the Listing Agreement.

A report on Corporate Governance, along with a Certificate from a Practicing Company Secretary is enclosed. A Certificate from Managing Director and Chief Financial Officer confirming the correctness of the financial statements, adequacy of the internal control measures as enumerated in Clause 49 of the Listing Agreement is also enclosed.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, is presented in a separate section forming an integral part of this Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, the Directors confirm:

i. That in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;

ii. That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii. That they had taken proper and sufficient care 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 fraud and other irregularities;

iv. That they had prepared the annual accounts for the Financial Year ended 31^st March, 2013 on a going concern basis.

AUDITORS REPORT

The Auditor’s of the Company vide Clause (ix)(a) of the annexure to the Audit Report have stated that ESIC and Service Tax have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases.

In this regard it is hereby clarified that delay in depositing of ESIC for more than 6 months was on account of non availability of Registration No. under ESIC sub code for on line payment for Company’s Pune Inorbit Multiplex. However, the Company in due course has obtained the ESIC sub code for the said unit and has duly deposited the overdue amount of ESIC with the appropriate authorites.

Further, the delay in deposit of Service Tax towards Hindustan Coke’s outstanding was on account of delay in receipt of payment from them. Similarly, in few other cases, there was delay in deposit of Service Tax pertaining to convenience fees income. However, in all such cases the outstanding amount has been duly deposited with the Service Tax authorities on 26^th April 2013 and proper system has been put in place to ensure timely compliances.

APPOINTMENT OF STATUTORY AUDITORS

The Statutory Auditors of the Company M/s Walker, Chandiok & Co., Chartered Accountants, vide their letter dated 3^rd June 2013 have expressed their unwillingness to be re-appointed as the Statutory Auditors of the Company at the ensuing Annual General Meeting.

The Board of Directors of the Company recommends the appointment of M/s. S.R. Batliboi & Co., LLP, as the Statutory

Auditors of the Company at the ensuing Annual General Meeting to hold office up to the conclusion of next Annual General Meeting. M/s. S.R. Batliboi & Co., LLP have confirmed that their reappointment if made shall be within the limits of Section 224(1B) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

A statement giving details of Conservation of Energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given as Annexure - I hereto and forms part of this report.

PARTICULARS OF EMPLOYEES

The information as required in accordance with Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is set out in Annexure ‘II’ to the Directors’ Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and the Accounts are being sent to all the shareholders of the Company excluding the aforesaid information.

Any shareholder interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company.

ACKNOWLEDGMENT

Your Directors take this opportunity to express their grateful appreciation for the excellent assistance and co-operation received from Clients, Vendors, Financial Institutions, Bankers, Business Associates and various Governmental, as well as Regulatory Agencies for their valuable support. Your Directors also wish to place on record their appreciation for the contribution made by the employees.

	For and on behalf of the Board
Place: Gurgaon, Haryana	Ajay Bijli
Date: 7th June 2013	Chairman

ANNEXURE – I TO DIRECTORS REPORT

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars required under Section 217(1) (e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are as mentioned herein below:

i) Conservation of Energy

Energy conservation measures taken:

• Power factor is being maintained above 0.95 with the use of capacitor banks. These banks are used to neutralize the inductive current by providing capacitive current. As a result a power factor improves and gets rebate applicable on energy bills from Electricity Distribution Companies.

• Switching on/off procedure is being followed for entire lighting and other load within the premises.Timers are being used to ensure this.

• The air conditioning system preventive maintenance routine services are monitored to make the system efficient. Also regulation of the AHU timings for proper utilization has further helped in saving electricity consumption.

• All the new fittings are with CFL or energy saver which uses less electrical power as compared to old GL lamps.

• Temperature sensors are being put in Audi’s for better control on AC.

• Seat lights of LED’s are used in place of GSL light to save energy.

• Outside consultants have been appointed to suggest energy saving measures over and above the existing system. They will suggest on optimization of energy distribution, Lux level of various areas, design aspects of electrical and HVAC system etc. so that other aspects of energy conservation and equipment efficiency can be maintained.

• Installed Variable Frequency Drives (VFD) for various Air Handling Units (AHU’s) to conserve energy.

• Close monitoring of AC Plant, AHU’s, pumps, running hours by installation of Running Hours Meters & Energy Meters.

• Building Signage with LED’s based Technology to save energy and longer life span.

• Postal windows in all cinemas having copper chokes have been replaced with electronic ballast to conserve energy and to enhance the light of tube lights and also reduce the numbers of tube lights from 4 to 2 in each poster window to conserve Energy.

ii) Technology Absorption:

Since the Company has no subsisting Technology Agreement hence not applicable.

iii) Foreign Exchange Earnings & Outgo

	March 31,2013	March 31,2012
	(Rs.) In Lakhs	(Rs.) In Lakhs
Earnings in foreign currency (on accrual basis)	NIL	NIL
Total	NIL	NIL
CIF Value of Imports	28.57	NIL
Total	28.57	NIL

 

	For and On behalf of the Board
Place: Gurgaon, Haryana	Ajay Bijli
Date : 7th June 2013	Chairman

Annexure II to the Directors Report

Detail of Directors seeking appointment/re-appointment at the forthcoming Annual General Meeting (Pursuant to clause 49 of the listing Agreement)

Name of Director	Date of Birth	Qualification	Nature of Expertise in specific Functional Areas	Board Membership in other Companies as on 31.03.2013	Chairman/ Members/of Committees of the Board of Directors of the Company as on 31.03.2013	Chairman/ Members of Committees of the of Board Directors of other Companies as on 31.03.2013	No. of Shares held in the Company as on 31.03.2013
Mr. Ajay Bijli	9/2/1967	B.Com. from Hindu College, Delhi University and Owners President Management Progam from Harward Business School.	23 years of experience in Cinema Exhibition Business	PVR Ltd.	2	3	Nil
				Priya Exhibitors Pvt. Ltd.
				Bijli Investment Pvt. Ltd.
				ATC Carriers Pvt. Ltd.
				The Amritsar Transport Co. Pvt. Ltd.
				PVR Pictures Ltd.
				Kriros Private Ltd.
				PVR bluO Entertainment Ltd.
				Bijli Holdings Pvt. Ltd.
				PVR Leisure Ltd.
				Lettuce Entertain You Ltd.
				ODEAN Shrine Multiplex Pvt. Ltd.
				Cinemax Motion Pictures Ltd.
				Growel Entertainment Pvt. Ltd.
				Vista Entertainment Pvt. Ltd.
				Nikmo Entertainment Pvt. Ltd.
Mr. Sanjeev Kumar	1/4/1972	Bachelor’s degree in finance and accounts from Salford University Manchester & MBA from London University	22 Years of experience in cinema exhibition business.	PVR Ltd.	1	1	Nil
				Bijli Holdings Pvt. Ltd.
				Priya Exhibitors Pvt. Ltd.
				Bijli Investments Pvt. Ltd.
				PVR Pictures Ltd.
				PVR bluO Entertainment Ltd.
				PVR Leisure Ltd.
				Lettuce Entertain You Ltd.
				ODEAN Shrine Multiplex Pvt. Ltd.
				Cinemax Motion Pictures Ltd.
				Growel Entertainment Pvt. Ltd.
				Vista Entertainment Pvt. Ltd.
				Nikmo Entertainment Pvt. Ltd.
Mr. Sanjay Khanna	21/04/1960	B.Com	30 years of experience in Textile trading business.	PVR Ltd.	2	1	Nil
Ms. Renuka Ramnath	14/09/1961	Bachelor of Engineering and MBA from University of Mumbai & Advanced Management Program from Harward Business School	Over 25 years of Experience in Private Equity, Investment Banking and Structured Finance	PVR Ltd.	-	-	Nil
				Subhiksha Trading Services Ltd.
				Subhiksha Retail Ltd.
				Multiples Alternate Asset
				Management Pvt. Ltd.
				Multiples Equity Fund
				Trustee Pvt. Ltd.
				Shri Nath G Corporate Management
				Services Pvt. Ltd.
			.	Arvind Ltd.
				Indian Energy Exchange Ltd.
				Mogae Media Pvt. Ltd.
				B2RTechnologies Pvt. Ltd.
Mr. Ravinder Singh Thakran	21/05/1963	Masters in Science and Masters in Business Administration IIM Ahmadabad.	More than 25 years of experience in various streams of business.	FAB India Overseas PvT. Ltd.	-	-	Nil
				PVR Ltd.
				PVR Leisure Ltd.
				LVMH Watch and Jwellery India Pvt Ltd
Mr. Vikram Bakshi	06.01.1955	B.Sc. from Delhi University	Over 25 years of Experience in Banking Industry, Private Finance and Risk Manage- ment.	Vikram Bakshi and Company Pvt. Ltd	1	4	Nil
				Jupitar Estates And Builders Pvt. Ltd.
				Bakshi Holdings Pvt. Ltd.
				Crescent Printing Works Pvt. Ltd.
				Bakshi Vikram Vikas Construcion Co. Pvt.Ltd.
				Connaught Plaza Restaurants Pvt. Ltd.
				Golden Diamond Estates Pvt. Ltd.
				Panita Properties Pvt. Ltd.
				Kalanidhi International Pvt. Ltd.
				Brite India Pvt. Ltd.
				Karmyogi Finlease Pvt. Ltd.
				Bee Gee Promoters Pvt. Ltd.
				Ascot Hotels And Resorts Pvt. Ltd.
				Penguin Resorts Pvt. Ltd.
				PVR LimitedAscot Utilities Pvt. Ltd.
				Acot Inns Pvt. Ltd.
				Arabian Sea Resorts Ltd.
				Canacona Condos Pvt. Ltd.
				Kassowlie Inn Pvt. Ltd.
				Jagran Prakashan Ltd.
				Ascot GTM Mehtab Compelx
				Jallandhar Pvt. Ltd.
				Ascot Suites and Inns Pvt. Ltd.
Mr. Sanjai Vohra	5/9/1960	Science graduate from St. Stephens College, New Delhi & PGDM from IIM Ahmadabad.	Over 25 years of Experience in Banking Industry, Private Finance and Risk Manage- ment.	PVR Ltd.	-	2	Nil
				Pawaa Software Pvt. Ltd.
				PVR Leisure Ltd.
				PVR Limited.
Mr. Amit Burman	16/07/1969	Bachelor of Science from Lehigh University USA, Masters in Science from Columbia University, USA & MBA from Cambridge university, UK	Over 22 years of experience in various streams of businesses.	Angel Softech Pvt. Ltd.	-	1	Nil
				Gyan Enterprises Pvt. Ltd.
				Dabur India Ltd.
				Lite Bite Foods Pvt. LTd.
				Ratna Commercial Enterprices Pvt. Ltd.
				Chowdry Associates QH Talbros Ltd.
				Dabur Securities Pvt. Ltd.
				Oriental Structural Engineers Pvt. Ltd.
				Natures Bounty Wines and allied Products Pvt. Ltd.
				Consortium Consumercare Pvt. Ltd.
				H&B Stroes Ltd.
				A.B. Propmart Pvt. Ltd.
				Lite Eat Out Foods Pvt. Ltd.
				Jetage Infrastucture Ltd.
				Talbros Automotive Components Ltd.
				Shree Investment Pvt. Ltd.
				Micromax Informatics Ltd.
				Passionate Foods Pvt. Ltd.
				LBF Trading Co. Pvt. Ltd.
				Lite Bite Travel Foods Pvt. Ltd.