Eros International Media Ltd Directors Report.
Eros International Media Limited
Your Board of Directors are pleased to present 25th Annual Report of Eros International Media Limited (hereinafter referred to as "the Company") covering the business, operations and Audited Financial Statements of the Company for the financial year ended 31 March 2019.
1. FINANCIAL RESULTS
The Financial Performance of your Company for the year ended 31 March 2019 is summarized below:
Rs. in lakhs
|Standalone Year Ended||Consolidated Year Ended|
|Sales and other Income||86,980||72,857||1,13,969||1,01,001|
|Profit before Tax||13,677||14,043||31,763||28,735|
|Less: Tax Expenses||4,941||6,342||5,115||5,613|
|Net Profit for the year from continuing operations||8,736||7,701||26,648||23,122|
|Profit for the year attributable to:|
|Equity shareholders of the Company||-||-||26,908||22,934|
|Other Comprehensive Income/(Loss) (net of taxes)||40||56||5,134||51|
|Total Comprehensive Income for the Year||8,776||7,757||31,782||23,173|
|Equity Shareholders of the Company||-||-||32,042||23,207|
|EPS (Diluted) in Rs.||9.10||8.03||28.02||23.92|
2. FINANCIAL PERFORMANCE
On a consolidated basis, the Company has recorded the revenues of Rs. 1,13,969 lakhs which is an increase of 12.84% as compared to previous year of Rs. 101,001 lakhs. The profit before tax increased by 10.54% to Rs. 31,763 lakhs as compared to previous year of Rs. 28,735 lakhs. The profit after tax attributable to equity shareholders was Rs. 26,908 lakhs, which was an increase of 17.33% as compared to previous year of Rs. 22,934 lakhs. Diluted EPS increased by 17.14% to Rs. 28.02 as compared to previous year of Rs. 23.92.
On standalone basis, the Company has recorded revenues of Rs. 86,980 lakhs which was an increase of 19.38% as compared to previous year of Rs. 72,857 lakhs. The profit before tax decreased by 2.61% to Rs. 13,677 lakhs as compared to previous year of Rs. 14,043 lakhs. The profit after tax at Rs. 8,736 lakhs an increase of 13.44 % as compared to previous year of Rs. 7,701 lakhs. Diluted EPS increased by 13.33% to Rs. 9.10 as compared to previous year of Rs. 8.03.
3. OPERATIONAL PERFORMANCE
During the Financial Year 2018-19, your Company released a total of 72 Films, of which 7 medium budget and 65 low budget Films as compared to 24 Films released in corresponding period last year, of which 1 were high budget, 4 medium budget and 19 low budget Films. Amongst the 72 Films released during the financial year 2018-19, 15 Hindi films, 7 Tamil/Telugu film and 50 regional films. Major releases for FY 2018-19 included: Bhavesh Joshi Super Hero (Hindi), Saakshyam (Telugu), Happy Phirr Bhag Jayegi (Hindi), Manmarziyan (Hindi), Patakhaa (Hindi), Amar Akbar Anthony (Telugu), Savyasachi (Telugu), Boyz 2 (Marathi), Tumbbad (Hindi), Mumbai Pune Mumbai 3 (Marathi) and others.
Your Companys key asset is a film library of over 2,000 films. In an effort to reach a wide range of audiences, we maintain rights to a diverse portfolio of films spanning various genres, generations and languages. These include rights to films in Hindi and several regional languages, Tamil, Telugu, Kannada, Marathi, Bengali, Malayalam and Punjabi.
With a view to conserve resources and to strengthen the financial position of the Company, your Directors did not recommend any dividend to its members for the financial year 2018-19.
The Dividend Distribution policy adopted by the Company in terms of SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 ("SEBI Listing Regulations"). This Policy is uploaded on the website of the Company at www.erosplc.com
No percentage of profits was transferred to General Reserve as dividend was not recommended for the financial year 2018-19.
6. EMPLOYEES STOCK OPTION SCHEME & CHANGES IN SHARE CAPITAL
During the year under review, the Nomination and Remuneration Committee of the Board had issued and allotted 3,09,642 Equity Shares of the Company to its employees against exercise of equal number of stock options pursuant to Eros Employee Stock Option Scheme 2009 ("EROS ESOP 2009") and 2,26,621 Equity Shares of the Company to its employees against exercise of equal number of stock options pursuant to Eros Employee Stock Option Scheme 2017 ("EROS ESOP 2017"). This resulted in increase in the Companys Paid up Share Capital to Rs. 95,50,81,400 as on 31 March 2019 as against Rs. 94,97,18,770 in the previous year. The disclosures as required under Regulation 14 of Securities Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with SEBI Circular No. CIR/CFD/POLICY CELL/2/2015 dated 16 June 2015, is attached to this report as Annexure A hereto and is also available on website of the Company at www.erosplc.com. A certificate from the statutory auditors certifying that both the schemes viz. EROS ESOP 2009 and EROS ESOP 2017 has been implemented in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014 and in accordance with the resolution(s) passed by the members would be placed at the Annual General Meeting of the Company for inspection by the members.
7. SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES
As on 31 March 2019, the Company has 11 subsidiaries. There has been no material change in the nature of the business of the Company and its subsidiaries. Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Companys subsidiaries and joint venture, its performance and financial position is provided in the prescribed Form AOC-1 is attached to this Report as Annexure B. None of the subsidiary companies except Copsale Limited (a British Virgin Island Company) are material subsidiary in terms of Regulation 16(c) of the SEBI Listing Regulations (as amended) and in accordance with Companys policy on "Determination of material subsidiaries", which is uploaded on the website of the Company at www.erosplc.com.
In accordance with Section 136 of the Act, the financial statements of the subsidiary companies are available for inspection by the members at the Corporate Office of the Company during business hours on all days except Saturdays, Sundays and public holidays between 11:00 A.M. to 1:00 P.M. up to the date of the Annual General Meeting of the Company. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Corporate Office of the Company. The financial statements including the consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of the Company at www.erosplc.com.
8. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152(6) of the Act and in terms of the Articles of Association of the Company, Mr. Kishore Lulla, Executive Director (DIN: 02303295) retires by rotation at the ensuring Annual General Meeting and being eligible, has offered himself for re-appointment. The first term of office of Mr. Dhirendra Swarup as an Independent Director expires at the ensuing Annual General Meeting of the Company.
The Board of Directors, on recommendation of Nomination and Remuneration Committee has recommended re-appointment of Mr. Dhirendra Swarup as an Independent Director of the Company for a second term of Five (5) consecutive years on the expiry of his current term of office.
As per the provisions of the Act, Independent Directors have been appointed for a period of five years and shall not be liable to retire by rotation. All other Directors, except the Managing Director, are liable to retire by rotation at the Annual General Meeting of the Company. The brief details of the Directors proposed to be reappointed as required under Secretarial Standard 2 issued by the Institute of Company Secretaries of India and Regulation 36 of the SEBI Listing Regulations is provided in the Notice convening Annual General Meeting of the Company.
All the Directors of the Company have confirmed that they are not disqualified to act as Director in terms of Section 164 of the Act. As on the date of this Report, Mr. Sunil Arjan Lulla, Managing Director, Mr. Farokh P. Gandhi, Group Chief Financial Officer (India) and Mr. Abhishekh Kanoi, VP-Company Secretary & Compliance Officer are the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) read with Section 203 of the Act.
Declaration of Independence by Independent Directors & adherence to the Companys Code of Conduct for Independent Directors
All the Independent Directors of the Company have submitted their disclosure to the effect that they fulfill all the requirements/criteria of independence as per Section 149(6) of the Act. Further, all the Independent Directors have affirmed that they have adhered and complied with the Companys Code of Conduct for Independent Directors which is framed in accordance with Schedule IV of the Act.
Meetings conducted during the Year
The Board met four (4) times during the financial year under review, the details of which are given in the Corporate Governance Report that forms part of this Report. The intervening gap between any two meetings of the Board was not more than one hundred and twenty (120) days as stipulated under the Act and SEBI Listing Regulations.
Constitution of various Committees
The Board of Directors of the Company has constituted following Committees: a. Audit Committee b. Nomination and Remuneration Committee c. Stakeholders Relationship Committee d. Corporate Social Responsibility Committee e. Management Committee Details of each of the Committees stating their respective composition, terms of reference and others are uploaded on our website at www.erosplc.com and are stated in brief in the Corporate Governance Report attached to and forming part of this Report.
Annual Evaluation of Board, its Committees and Individual Directors
The Company has devised a Policy for performance evaluation of the Board, its Committees and other individual Directors (including Independent Directors) which includes criteria for Performance Evaluation of the Non-Executive Directors and Executive Directors. The evaluation process inter alia considers attendance of Directors at Board and Committee Meetings, acquaintance with business, communicating inter se Board Members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers, etc., which is in compliance with applicable laws, regulations and guidelines.
The Board carried out annual evaluation of the performance of the Board, its Committees and Individual Directors and Chairperson. The Chairman of the respective Board Committees shared the report on evaluation with the respective Committee Members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Board Committees. The reports on performance evaluation of the Individual Directors were reviewed by the Chairman of the Board.
Familiarization Programme for Independent Directors
Familiarization Programme for Independent Directors is mentioned at length in Corporate Governance Report attached to this Report and the details of the same have also been disclosed on the website of the Company at www.erosplc.com.
Policy on appointment and remuneration and other details of Directors
The remuneration paid to the Directors is in line with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 of the SEBI Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).
The Companys policy on directors appointment and remuneration and other matters as provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of this Report.
A detailed statement of disclosure required to be made in accordance with the Nomination and Remuneration Policy of the Company, disclosures as per the Act and applicable Rules thereto is attached to this Report as Annexure C hereto and forms part of this Report.
9. AUDITORS & AUDITORS REPORT
Chaturvedi & Shah LLP (erstwhile known as Chaturvedi & Shah), (Firm Registration No. 101720W/W100355) were appointed as Statutory Auditors of the Company at the 23rd Annual General Meeting of the Company held on 28 September 2017 for the term of Five (5) years i.e. from the conclusion of 23rd Annual General Meeting until the conclusion of 28th Annual General Meeting, to be held in the year 2022. They have confirmed that they are not disqualified from continuing as Auditors of the Company.
There are no qualifications, adverse remarks reservations or disclaimer made by Chaturvedi & Shah LLP, Statutory Auditors, in their report for the financial year ended 31 March 2019. The notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further explanation and comments.
Pursuant to provisions of Section 143(12) of the Act, the Statutory Auditors have not reported any incidence of fraud to the Audit Committee during the year under review.
10. SECRETARIAL AUDITORS AND ITS REPORT
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Makarand M. Joshi & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Secretarial Audit Report for the financial year ended 31 March 2019 in the prescribed Form MR-3 is attached to this Report as Annexure D, which is self-explanatory. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
11. PARTICULARS OF EMPLOYEES
The requisite disclosures in terms of the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 along with statement showing names and other particulars of employees drawing remuneration in excess of the limits prescribed under the said Rules is annexure to this Report as Annexure E.
12. LOANS, GUARANTEES OR INVESTMENTS
Particulars of loans given, investments made or guarantees given or security provided by the Company as required under Section 186(4) of the Act and the SEBI Listing Regulations are contained in Notes to the Standalone Financial Statements of the Company forming part of this Annual Report.
13. RELATED PARTY TRANSACTIONS
In line with the requirements of the Act and SEBI Listing Regulations, your Company has formulated policy on Related Party Transactions duly approved by the Board, which is also available on the Companys website at www.erosplc.com. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.
All contracts/arrangements/transactions entered by the Company during the financial year with related parties were on an arms length basis, in the ordinary course of business and in compliance with the applicable provisions of the Act and SEBI Listing Regulations. Prior omnibus approval had been obtained for the transaction which are of a foreseeable and repetitive in nature and such transactions are reported on a quarterly basis for review by the Audit Committee as well as the Board.
Pursuant to Section 134 of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contracts / arrangements / transactions entered into with related parties during the financial year 2018-19 in terms of Section 188(1) of the Act and applicable Rules made thereunder, is attached to this Report as Annexure F in the prescribed Form AOC-2.
All other contracts / arrangements / transactions with related parties, are in the usual course of business and at arms length basis and stated in Notes to Accounts to the Financial Statements of the Company forming part of this Annual Report.
14. WHISTLE BLOWER / VIGIL MECHANISM
Your Company promotes ethical behavior in all its business activities and your Company has adopted a Policy on Vigil Mechanism and Whistle Blower in terms of Section 177(9) and Section 177(10) of the Act and Regulation 22 of the SEBI Listing Regulations for receiving and redressing complaints from employees, directors and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud.
The Policy is appropriately communicated within the Company across all levels and has been displayed on the Companys intranet for its employees and website at www.erosplc.com for stakeholders. Protected disclosures are made by a whistle blower in writing to the Ombudsman on Email-ID at email@example.com and under the said mechanism, no person has been denied direct access to the Chairperson of the Audit Committee. The Audit Committee and Stakeholders Relationship Committee periodically reviews the functioning of this Mechanism.
15. PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has formulated a Policy on Prevention of Sexual Harassment at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 and the Rules thereunder. All employees (permanent, contractual, temporary, trainees) are covered under the Policy. Further, the Company has constituted an Internal Complaints Committee, where employees can register their complaints against sexual harassment.
During the year under review, the Company has not received any complaints on sexual harassment.
16. EXTRACT OF THE ANNUAL RETURN
The extract of Annual Return in the prescribed Form MGT-9 as required under Section 92(3) of the Act read with Companies (Management & Administration) Rules, 2014 is placed on the website of the Company at www.erosplc.com and is set out in Annexure G to this Report.
All the insurable interests of your Company including properties, equipment, stocks etc. are adequately insured.
Your Company has not accepted any deposit from public under Chapter V of the Act.
19. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained, in terms of Section 134 of the Act, your Directors confirms that:
a. in the preparation of the annual accounts for the financial year ended 31 March 2019, the applicable Accounting Standards read with the requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
b. such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2019 and of the profit of the Company for the year ended on that date;
c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the annual accounts have been prepared on a going concern basis;
e. internal financial controls were followed by the Company and such internal financial controls are adequate and are operating effectively; and
f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
Your Company is into the business of production, acquisitions, marketing and distributions of cinematograph films. Since this business does not involve any manufacturing activity, the Information required to be provided under Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014, are not applicable to the Company. However, the Company has been continuously and extensively using technology in its business operations.
The particulars of foreign currency earnings and outgo are as under:
|Rs. in lakhs|
|Particulars||Year ended 31 March 2019||Year ended 31 March 2018|
|Expenditure in foreign currency||520||372|
|Earnings in foreign currency||16,526||11,014|
|CIF Value of Imports||NIL||NIL|
21. NT I ERNAL FINANCIAL CONTROLS
Your Company maintains adequate and effective internal control systems which commensurate with the nature, size and complexity of its business and ensure orderly and efficient conduct of the business. The internal control systems of the Company are routinely tested and verified by Independent Internal Auditors and significant audit observations and follow-up actions are reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Companys internal control requirement and monitors the implementation of audit recommendations.
22. CORPORATE GOVERNANCE
In accordance with the provisions of the SEBI Listing Regulations, a detailed report on Corporate Governance along with Compliance Certificate issued by the Secretarial Auditor of the Company is attached and forms an integral part of this Annual Report.
23. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of Regulation 34 and Schedule V of the SEBI Listing Regulations, Management Discussion and Analysis Report is presented in separate sections forming part of this Annual Report.
24. CORPORATE SOCIAL RESPONSIBILITY
The disclosures on Corporate Social Responsibility activities, as required under Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, are reported in Annexure H forming part of this Report and is also available on the website of the Company at www.erosplc.com.
25. RISK MANAGEMENT
The Audit Committee of the Board has been vested with powers and functions relating to Risk Management, which inter alia includes (a) review of risk management policies and business processes to ensure that the business processes adopted and transactions entered into by the Company are designed to identify and mitigate potential risk; (b) laying down procedures relating to Risk assessment and minimization. The objective of the risk management framework is to enable and support achievement of business objectives through risk intelligent assessment while also placing significant focus on constantly identifying and mitigating risks within the business. Further details on the Companys risk management framework is provided in the Management Discussion and Analysis report.
26. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and till the date of this Report except for downgrade of credit rating by CARE Rating Limited in June 2019 from CARE BBB- to CARE D for Long term facilities and CARE A3 to CARE D for Short Term Facility on account of delay in debt servicing for more than 30 days.
27. DETAILS OF SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.
28. OTHER DISCLOSURES
During the year under review, the Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force);
Your Company has complied with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India on Meeting of Board of Directors [SS-1] and General Meetings [SS-2];
The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.
The Board of Directors take this opportunity to express their sincere appreciation for support and co-operation from the Banks, Financial Institutions, Members, Vendors, Customers and all other business associates.
Your Directors sincerely appreciate the high degree of professionalism, commitment and dedication displayed by the employees at all levels. Your Directors also wish to place on record their gratitude to all the stakeholders for their continued support and confidence.
|For and on behalf of the Board of Directors|
|Sunil Arjan Lulla||Subramaniam Lakshminarayanan||Sunil Srivastav|
|Executive Vice Chairman & Managing Director||Non-Executive Independent Director||Non-Executive Independent Director|
|DIN: 00243191||DIN: 07972480||DIN: 00237561|
|Date: 23 May 2019|