Gradiente Infotainment Ltd Directors Report.

GRADIENTE INFOTAINMENT LIMITED ANNUAL REPORT 2011-2012 DIRECTORS REPORT To The Members We have pleasure in presenting the 20th Annual Report with Audited Statements of Accounts for the year ended 31st March 2012. Financial Results: On Standalone basis (Rs. in Lakhs) Particulars 2011-2012 2010-2011 Total Revenue 3707.48 6331.04 Profit before interest, tax and depreciation (PBIDT) 212.65 1202.17 Less: Interest and financial charges 23.92 11.32 Profit before depreciation & tax (PBDT) 188.73 1190.84 Less: Depreciation 8.16 4.92 Profit before tax 180.57 1185.92 Tax Provision (current, fringe and deferred) 55.79 393.85 Net profit for the year 124.78 792.06 Appropriations 0.07 4.00 Dividend (including corporate tax thereon) 0.00 0.00 Transfer to debenture redemption reserve 0.00 0.00 Transfer to general reserve 1227.44 1596.27 Balance carried forward to next year 1350.75 2384.33 PERFORMANCE REVIEW: A) STANDALONE: The Ministry of Corporate Affairs (MCA) vide notification no. S.O. 447(E) dated 28th February, 2011 amended the existing Schedule VI to the Companies Act, 1956. The Revised Schedule VI is applicable from financial year commencing from 1st April, 2011. The financial statements of your Company for the year ended 31st March, 2012 have been prepared in accordance with the Revised Schedule VI and accordingly, the previous years figures have been reclassified/ regrouped to conform to this years classification. The Company has recorded a turnover of Rs. 3707.48 Lakhs and the profit of Rs. 124.78 Lakhs in the current year against the turnover of Rs. 6331.04 lakhs and profit of Rs. 792.06 Lakhs in the previous financial year ending 31.03.2011. The Company has been continuously working on quality up gradation and austerity measures for achieving efficient running of the organization. DIVIDEND: Keeping the Companys expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year. PUBLIC DEPOSITS: Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review. Audit Committee: The composition of Audit Committee is given below: SL. Name Position held in No. the committee 1. Mr. T. Venkateshwa Rao Chairman 2. Mr. Sudheep Raj Member 3. Mr. N. Madan Mohan Member 4. Mr. K. Mohan Acharya Member Report on Corporate Governance: Your Company is committed to maintain the highest standards of Corporate Governance. As required under Clause 49 of the Listing Agreement with the Stock Exchanges a report on Corporate Governance is given as annexure to this annual report. Certificate of the Auditor regarding compliance with the conditions of corporate governance is also given. LISTING: The equity shares of your company are listed on Bombay Stock Exchange, Calcutta Stock Exchange and Bangalore Stock Exchange. CAPITAL OF THE COMPANY: The Authorised Capital of the company stands at 30000000 equity shares of Rs.10/- each and paid up capital of the company stands at 23168400 equity shares of Rs.10/- each. MANAGEMENT DISCUSSION AND ANALYSIS: A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report. DIRECTORS: In accordance with the Companies Act, 1956 read with Articles of Association of the company, the Directors namely Mr. Sudheep Raj and Mrs. Sunitee Raj retire by rotation and is being eligible for re-appointment. Your Board recommends the re-appointment of the Directors above. Mr. K. Narsing Rao and Mr. N. Madan Mohan who were appointed as additional director during the year is regularized for the office of directorship. Statutory Auditors: M/s. Komandoor & Co, Chartered Accountants, as Statutory Auditors of the Company hold office until the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from M/s. Komandoor & Co, Chartered Accountants to the effect that their appointment, if made, would be within the prescribed limits under Section 224 (IB) of the Companies Act, 1956, and that they are not disqualified for such appointment within the meaning of Section 226 of the Companies Act, 1956. Legal Advisors: During the year under review your Company re-appointed M/s. Gokhale Bilolikar & Co., Hyderabad as legal advisors for the Company. Directors Responsibility Statement: In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000, your directors confirm i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures. ii) That the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year. iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and deleting fraud and other irregularities. iv) That the directors had prepared the annual accounts on a going concern basis. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT GO: The required information as per Sec.217(1)(e) of the Companies Act 1956 is provided hereunder: A. Conservation of Energy: Your Companys operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment. B. Technology Absorption: 1. Research and Development (R&D) : NIL 2. Technology absorption, adoption and innovation : NIL C. Foreign Exchange Earnings and Outgo: Foreign Exchange Earnings : NIL Foreign Exchange Outgo : NIL PARTICULARS OF EMPLOYEES: There is no employee who is falling under section 217 (2A). Therefore, the disclosures required to be made under section 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable. CODE OF CONDUCT: The Code of Conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of Conduct has also been placed on the website of the company. A declaration signed by the Managing Director is given in Annexure. AUDITORS: Your directors propose the appointment of M/s. komandoor & co . as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company. CORPORATE GOVERNANCE: As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, Forms part of this Report as Annexure. CHANGE IN REGISTERED OFFICE: During the financial year the Companys registered office shifted from Ground Floor, Siri Balaji Residency, Hill Colony, Khairatabad, Hyderabad, Andhra Pradesh - 500004 to Flat No. 306, 3rd Floor, MayFair Gardens, Road No. 12, Banjara Hills, Hyderabad-500034. ACKNOWLEDGEMENTS: Your directors would like to express their grateful appreciation for assistance and co-operation received from clients, banks, investors, Government, other statutory authorities and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at all levels, which enabled the company to achieve sustained growth in the operational performance during the year under review. Declaration by Managing Director of affirmation by Directors and senior Management personnel of compliance with the code of conduct The shareholders I, Vimal Raj Mathur, Managing Director of the Company do hereby declare that the directors and senior management of the Company have exercised their authority and powers and discharged their duties and functions in accordance with the requirements of the code of conduct as prescribed by the company and have adhered to the provisions of the same. For and on behalf of the Board, Gradiente Infotainment Limited Sd/- Date : 01.09.2012 Vimal Raj Mathur Place: Hyderabad Managing Director MANAGEMENT DISCUSSION & ANALYSYS MEDIA & ENTERTAINMENT The Entertainment & Media industry is rife with opportunities for growth in all its segments. The Indian film industry is witnessing increased corporatisation and several companies, especially those in film distribution and exhibition, came out with IPOs in recent years. The television industry has witnessed the mushrooming of more niche channels. Here again, emerging technologies such as broadband, DTH, IPTV and digitalization have resulted in more growth. The GDP forecast is at 8% for the present year 2011-2012. The radio industry saw a lot of action, with as many as 338 FM radio licenses being up for grabs across the country. Digital media, has burgeoned as a vehicle for the industry and has opened the flood gates to communicate via web and electronic avenues like never before. With growing literacy, global technology standards, and geometric progression in the use of computers, laptops, hand-held devices and new generation gadgets in India, the sector of the E&M industry is poised to witness unprecedented growth. With presence, penetration and programs that deploy all these modes of communication, conventional and new age, in the E&M segment, Gradiente is poised for a quantum leap in the domain in this FY. TELEVISION INDUSTRY Television Industry is estimated to grow from $265.5 Billion in 2009 to 488.0 Billion in 2014, with an overall growth of 183.80%. Gradiente, with deep anchoring in the film and television industry for decades, is producing serials for television that are slated to be launched across leading channels in India. We have standing orders worth over 200 crores to deliver program based content to leading TV channels over the next 3 years. Media Partners Asia (MPA) states that India is poised to become the worlds largest DTH satellite pay TV market with 36.1 million subscribers by 2012.It also stated that Indias DTH subscriber base will incvrease to 45 million by 2014 and 58 million by 2020. Gradiente is equipped to make its presence felt in broadcast and content creation with programs catering to the entire gamut of viewer-base in diverse linguistic forms, though predominantly Hindi. FILM & ENTERTAINMENT Filmed Entertainment Industry is estimated to grow from 95 Billion in 2009 to $170.5 Billion in 2014, showing the growth of 179.5%. TV commercials, music videos, soundtracks for Movies and TV serials are key areas and Gradiente has processes to augment its presence in the Television segment with audio and music programming, for its in-house programs as well as for client commercials. In the light of emerging trends and potential for high growth, plans are under way to initiate a foray into feature films with renewed focus. Indian Film Industry represents 18% of the total M&E segment and as per reports is slated to grow at a CAGR of 9% and expected to touch US$3.02 billion in the period ranging from 2009-2014. The burgeoning of multiplexes in malls across the country with digital screens facilitating wider releases are well on their way to transforming the industry landscape. NEW MEDIA New media tools - blogs, websites, web apps, and other user-generated media have brought media and entertainment on to I-pad, cell phone and laptop screens like never before. Broadband, Bluetooth, Wi-Fi, 3G are the progressive technologies with talk of 4G now. Interactivity, the digitalization of media, and media synergy, many-to-many web of communication - the convergence of new methods of communication with new technologies has revamped the scenario in tandem with software/video game design, television, radio, and particularly movies, advertising and marketing, through which industry seeks to gain from the advantages of two- way dialogue with consumers primarily through the Internet. Mobile phone usage being ubiquitous, PC and laptop penetration on a rapid rise across regions, never before bandwidth an affordable reality, the mode of connecting with user bases has changed the very flow of information and shaping of public opinion. The monopoly of cinema and small screen is no longer a paradigm and the shift has been noticeable and visibly felt by individuals as well as corporates.