Prime Focus Ltd Directors Report.
The Members of,
Prime Focus Limited
Your Companys Directors are pleased to present the Twenty-Second Annual Report together with Audited Financial Statements for financial year ended March 31, 2019.
1. FINANCIAL PERFORMANCE SUMMARY
The Consolidated and Standalone Audited Financial Results for the financial year ended March 31, 2019 are as follows:
|Income from services||2,510.62||2,227.52||152.56||136.44|
|Other operating income||29.63||29.96||9.53||8.88|
|Total revenue from operations||2,540.25||2,257.48||162.09||145.32|
|Add: Other income||123.49||34.44||41.12||26.76|
|Less: Finance costs||236.68||212.30||57.39||74.13|
|Less: Tax expense||(25.48)||5.63||0.06||(12.83)|
|Less: Minority interest||(10.24)||8.78||-||-|
|Loss for the year||(22.71)||(53.18)||(33.27)||(56.60)|
2. OPERATIONS AND PERFORMANCE REVIEW
During the year under review, total revenue from operations of the Company and its subsidiaries stood at Rs.2,540.25 crores as compared to Rs.2,257.48 crores in the previous year. Loss before tax during the year was Rs.(58.42) crores as compared to Rs.(38.77) crores in previous year. The Net Loss after tax was Rs.(22.71) crores as compared to Rs.(53.18) crores in previous year.
Total revenue from operations of the Company during the year was Rs.162.09 crores as compared to Rs.145.32 crores in the previous year. Loss before tax during the year was Rs.(33.21) crores as compared to Rs.(69.43) crores in the previous year. The Net Loss after tax was Rs.(33.27) crores as compared to Rs.(56.60) crores in the previous year.
A detailed analysis on the Companys performance, both Consolidated & Standalone, is included in the "Management Discussion & Analysis" Report which forms part of this Annual Report.
In view of the losses in Financial Year 2018-19, your Board did not recommend any dividend for its equity shares.
4. TRANSFER TO RESERVES
During the year under review, the company has transferred Rs.22.28 crores from Debenture Redemption Reserve to General Reserve.
5. SHARE CAPITAL
The paid-up equity share capital of the Company as on March 31, 2019 was 299,182,312 comprising of 299,182,312 equity shares of Rs.1/- each. During the year under review, the Company has allotted 16,667 equity shares of Rs.1/- each pursuant to exercise of employee stock options. The Company has neither issued share with differential voting rights nor sweat equity. As on March 31, 2019, none of the Directors of the Company hold instruments convertible into equity shares of the Company.
6. SECRETARIAL STANDARDS
The Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and approved by the Central Government under Section 118 (10) of the Companies Act, 2013 (the Act) for the Financial Year ended 2018-19.
7. EMPLOYEE STOCK OPTION SCHEME (ESOP)
The Company has implemented PFL-ESOP Scheme 2014 compliant with the SEBI (Share Based Employee Benefits) Regulations, 2014 to reward and retain the qualified and skilled employees and to give them an opportunity to participate in the growth of the Company; these schemes are administered by the Compensation Committee of the Company.
Pursuant to the applicable provisions of the Act and the Securities Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, PFL-ESOP Scheme 2014 Clause 3.13 has undergone amendment wherein "Exercise Period" has now been increased to 5 years from 2 years.
A certificate from the Statutory Auditors of the Company as required under Regulation 13 of the SEBI (Share Based Employee Benefits) Regulations, 2014 shall be placed at the ensuing Annual General Meeting for inspection by the Members. The disclosures as required under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI Circular dated June 16, 2015 are accessible on Companys website at http://www.primefocus.com/sites/default/ files/pdf/ESOP Disclosure 2018-19.pdf . The details of Employee Stock Options form part of the Notes to accounts to financial Statements in this Annual Report. No employee of the Company received grant of options during the year amounting to 5% or more of the options granted or exceeding 1% of issued capital of the Company.
8. MATERIAL CHANGES AND COMMITMENT 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 financial year of the Company to which the Financial Statements relate and the date of this Report. There has been no change in the nature of business of the Company.
9. DISPOSAL OF INVESTMENT HELD BY THE COMPANY IN GENER8 INDIA MEDIA SERVICES LIMITED (CURRENTLY KNOWN AS DNEG INDIA MEDIA SERVICES LIMITED), ITS WHOLLY OWNED SUBSIDIARY
The Company has executed a share purchase agreement on January 31, 2019 for sale of 100% equity shares of its wholly owned subsidiary, Gener8 India Media Services Limited (currently known as DNEG India Media Services Limited), to DNEG Creative Services Limited (formerly known as Prime Focus World Creative Services Private Limited), a subsidiary of the Company, for an aggregate consideration not exceeding 1,309,800,000/- (Rupees One Hundred and Thirty Crores and Ninety Eight Lakhs only) and on the terms and conditions as contained in the said share purchase agreement.
10. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review, there were no significant or material orders passed by the Regulators or Courts or Tribunal which would impact the going concern status of the Company and its future operation.
11. RISK MANAGEMENT
The Company is exposed to inherent uncertainties owing to the sectors in which it operates. A key factor in determining a Companys capacity to create sustainable value is the risks that the company is willing to take (at strategic and operational levels) and its ability to manage them effectively. Many risks exist in a Companys operating environment and they emerge on a regular basis. The Companys Risk Management processes focuses on ensuring that these risks are identified on a timely basis and addressed.
The Company is well aware of the above risks and as part of business strategy has a robust risk management framework to identify, evaluate and mitigate business risks with timely action. This framework seeks to enable growth, create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage by undertaking effective steps to manage risks.
12. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management policies and systems. For further details, please refer to the Management Discussion and Analysis Report which forms a part of the Annual Report.
13. HUMAN RESOURCES
Human Resource is considered as one of the most critical resource in the business which can be continuously smoothened to maximize the effectiveness of the organization. Human Resource build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening the Companys Policies and Systems. All personnel continue to have healthy, cordial and harmonious approach thereby enhancing the contributory value of the Company. The Company has generally enjoyed cordial relations with its personnel. Further, the total number of permanent employees of the Company as on March 31, 2019 is 581.
14. PREVENTION OF SEXUAL HARASSMENT
The Company has zero tolerance for sexual harassment at workplace and has a mechanism in place for prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Company is committed to provide equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological. All employees (permanent, contractual, temporary, trainees) are covered.
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment at workplace. During the year under review, Company has not received any complaints on sexual harassment and as such the Company has not disposed of any complaints. There are no complaints pending as on the end of the Financial Year 2018-19 on sexual harassment.
15. REDEMPTION OF DEBENTURES
During the financial year under review, your Company has made payment of redemption amount and interest to debenture holders. The details of redemption are as mentioned below:-
|Sr. No.||Type of Security||Redemption Date||No. of Security||Face Value (Rs.)|
|1||Series B-Zero Coupon Unsecured Redeemable Non-Convertible Debentures||November 02, 2018||891||1,000,000/-|
16. PUBLIC DEPOSITS
The Company has not accepted any deposits from the public falling within the ambit of Section 73 and 76 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
17. EXTRACT OF ANNUAL RETURN
The Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed as Annexure-A to this Report and is available on the website of the Company at http://www. primefocus.com/sites/defauit/files/pdf/Annual Return 2018-19.pdf .
18. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Act, Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations") and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2018-19, together with the Auditors Report form part of this Annual Report.
19. SUBSIDIARY COMPANIES, JOINT VENTURE AND ASSOCIATE COMPANIES
A statement containing the salient features of financial statements of subsidiaries/joint venture companies of the Company in the prescribed Form AOC-1 forms a part of Consolidated Financial Statements (CFS) in compliance with Section 129 (3) and other applicable provisions, if any, of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014.
The said Form also highlights the financial performance of each of the subsidiaries included in the CFS of the Company pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.
In accordance with Section 136 of the Act, the financial statements of the subsidiary and associate companies are available for inspection by the members at the Registered Office of the Company during business hours on all working days except Saturdays and national holidays upto the date of the Annual General Meeting of the Company i.e,September 30, 2019. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of the Company. The financial statements including the CFS, and all other documents required to be attached to this report have been uploaded on the website of the Company at www.primefocus.com.
The company has 44 subsidiaries as on March 31, 2019. During the financial year, the following changes have taken place in subsidiary companies:-
a. Companies which have become subsidiary Company:
1. Apptarix Mobility Solutions Private Limited
2. Prime Focus MEAD FZ LLC
3. Re:Define FX Ltd.
Note: Jam8 Prime Focus LLP became subsidiary of the Company w.e.f. April 22, 2019
b. Companies which ceased to be Subsidiary Company:
1. DNEG India Media Services Limited (formerly known as Gener8 India Media Services Limited) ceased to be a direct subsidiary of Prime Focus Limited w.e.f. January 31, 2019.
2. Double Negative Canada Productions Ltd, Gener8 Digital Media Services Ltd, Prime Focus Creative Services Canada Inc Amalgamated Into Double Negative Canada Productions Ltd and pursuant to amalgamation the shares in the amalgamated company were transferred from Double Negative Holdings to Prime Focus World NV.
3. Double Negative Montreal Productions Ltd, Prime Focus Creative Services Montreal Inc, Gener8 Digital Montreal Media Services Ltd amalgamated into Double Negative Montreal Productions Ltd and pursuant to amalgamation the shares in the amalgamated company were transferred from Double Negative Holdings to Prime Focus World NV.
c. Name changes:
1. Name of Prime Focus Visual Effects Private Limited has been changed to Prime Focus Production Services Private Limited w.e.f. August 06, 2018
2. Name of Prime Focus 3D India Private Limited was changed to PF Digital Media Services Private Limited w.e.f. August 06, 2018. Further, pursuant to the conversion of the company from "Private Limited" to "Public Limited" the name of the Company changed from PF Digital Media Services Private Limited to PF Digital Media Services Limited w.e.f. March 26, 2019.
3. Name of Prime Focus VFX Limited has been changed to Re:Define FX Ltd. w.e.f. November 09, 2018.
4. Name of Gener8 India Media Services Limited has been changed to DNEG India Media Services Limited w.e.f. March 27, 2019.
5. DNEG Creative Services Private Limited has been converted from a private limited company to a public limited company and consequently it is named as DNEG Creative Services Limited w.e.f. April 16, 2019.
d. Joint Venture/Associate Companies:
During the financial year under review, there are no Companies which has become or ceased to be Associate/Joint Venture.
20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
A. CONSERVATION OF ENERGY
i. The steps taken to or impact on conservation of energy-
Although the Company is not engaged in manufacturing activities, as a responsible corporate citizen, we continue to pursue and adopt appropriate energy conservation measures. The Company makes every effort to conserve energy as far as possible in its postproduction facilities, Studios, Offices, etc. The Company also takes significant measures to reduce energy consumption by using energy efficient computers and by purchasing energy efficient equipment. The Company purchases PCs, laptops, air conditioners etc. that meet environment standards, wherever possible and replace old equipment with more energy-efficient equipment.
ii. The Steps taken by the Company for utilizing alternate sources of energy-Not applicable.
iii. The capital investment on energy conservation equipments-The
Company constantly evaluates new developments and invests into latest energy efficient technology.
B. TECHNOLOGY ABSORPTION
i. The efforts made towards technology absorption-The Company adopts the latest trends in the technology development and introduces the same so as to ensure reduction in cost with best quality output.
ii. The benefits derived like product improvement, cost reduction, Product development or import substitution
- Not applicable.
iii. IMPORTED TECHNOLOGY
(a) The details of technology imported-Not Applicable
(b) The year of import-Not applicable
(c) Whether the technology has been fully absorbed-Not applicable.
(d) If not fully absorbed-Not applicable
iv. Expenditure incurred on Research and Development (R&D):
Your company is predominantly a service provider and therefore has not set up a formal R&D unit, however continuous research and development is carried out at various development centers as an integral part of the activities of the Company.
(C) PARTICULARS OF FOREIGN CURRENCY EARNINGS AND OUTGO:
|Particulars||March 31, 2019||March 31, 2018|
|Foreign Exchange Earned: Revenue from operations and interest income||2.86||7.53|
|Foreign Exchange Outgo: Technical service cost, repairs and maintenance, interest and others||3.65||0.75|
21. MANAGEMENT DISCUSSION AND ANALYSIS
Managements Discussion and Analysis Report for the financial year ended March 31, 2019 as stipulated under Regulation 34 of SEBI Listing Regulations, is included as a separate section forming part of this Annual Report.
22. CORPORATE GOVERNANCE REPORT
A separate section on Corporate Governance forming part of the Directors Report and the certificate from the Practicing Company Secretary confirming compliance of Corporate Governance norms as stipulated in Regulation 34 read along with schedule V of SEBI Listing Regulations is included in the Annual Report for the Financial Year 2018-19.
As per the relevant provisions of the Act and SEBI Listing Regulations, during the financial year under review, the following changes in Directors are detailed as follows:
i) Resignation of Directors
Mr. Amit Bapna (DIN: 00008443) (Nominee of Reliance Mediaworks Financial Services Private Limited, wholly owned subsidiary of Reliance Mediaworks Limited) resigned as Non-Executive Director w.e.f. May 30, 2018 due to pre-occupancy.
Upon the recommendation of Nomination and Remuneration Committee of the Board, Mr. Anand Natarajan (DIN: 00061109) was appointed as an Additional Director of the Company (as a Nominee of Reliance Mediaworks Financial Services Private Limited, wholly owned subsidiary of Reliance Mediaworks Limited) w.e.f. May 30, 2018 in place of Mr. Amit Bapna and his appointment was regularized by the Members of the Company as Non-Executive Non Independent Director at the Annual General meeting of the Company on September 28, 2018. Due to pre-occupation, Mr. Anand Natarajan, Non-executive Non Independent Director of the Company resigned as a Director w.e.f. December 21, 2018.
The Board placed on record its appreciation for the services rendered by Mr. Amit Bapna and Mr. Anand Natarajan during their tenure with the Company.
ii) Appointment of Directors
At the last Annual General Meeting of the Company held on September 28 2018, Mr. Ramakrishnan Sankaranarayanan (DIN: 02696897), was re-appointed as a Director of the Company, liable to retire by rotation and special resolution was passed by the Shareholders of the Company towards continuation of directorship of Mr. G. P Aiyar (DIN: 02722981), as Non-Executive Independent Director of the Company.
iii) Change in designation
Designation of Mr. Namit Malhotra (DIN 00004049), Director of the Company was changed to Non-Executive Director from Chairman, Chief Executive Officer and Executive Director of the Company w.e.f. February 14, 2019 and Mr. Naresh Malhotra (DIN 00004597), Whole Time Director of the Company was also appointed as Chairman of the Company w.e.f. February 14, 2019.
iv) Retirement by Rotation
In accordance with the provisions of Section 152 of the Act read with Companies (Management & Administration) Rules, 2014, Mr. Namit Malhotra (DIN: 00004049), Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.
v) Re-appointment of Independent Directors whose term of office is expiring at the ensuing Annual General Meeting:
a. Mr. Srinivasan Kodi Raghavan (DIN: 00012449),
Mr. Padmanabha Gopal Aiyar (DIN: 02722981) and Mr. Rivkaran Singh Chadha (DIN: 00308288) were appointed as Independent Directors of the Company at the 17th Annual General Meeting to hold office for 5 (five) consecutive years upto the conclusion of the ensuing Annual General Meeting and being eligible and seeking re-appointment, have consented to act as Independent Directors of our Company, in respect of whom the Company has received a notice in writing under Section 160 of the Act from a member proposing their candidature in the ensuing Annual General Meeting for another term of 5 years upto the conclusion of the 27th Annual General Meeting of the Company. The Board has recommended their re-appointment pursuant to the recommendation of Nomination and Remuneration Committee.
b. The term of office of Dr. (Mrs.) Hemalatha Thiagarajan (DIN: 07144803), Independent Director, will expire on March 30, 2020. Dr. (Mrs.) Hemalatha Thiagarajan being eligible and seeking re-appointment, has consented to act as Independent Director of your Company, in respect of whom the Company has received a notice in writing under Section 160 of the Act from a member proposing her candidature in the ensuing Annual General Meeting for another term of 5 years w.e.f. March 31, 2020 to March 30, 2025. The Board has recommended her re-appointment pursuant to the recommendation of Nomination and Remuneration Committee.
The Board recommends for the above appointment /reappointment. Items seeking your approval on the above are included in the Notice convening the Annual General Meeting. Brief resume and other requisite details as stipulated under SEBI Listing Regulations and Secretarial Standard- 2 on General Meetings of the directors being appointed/re-appointed/whose remuneration is proposed to be increased/fixed forms part of the Notice of the ensuing Annual General Meeting.
24. DECLARATION BY INDEPENDENT DIRECTORS
Every Independent Director, at the first meeting of the Board after appointment and thereafter at the first meeting of the Board in every financial year or whenever there is change in the circumstances which may affect his status as the independent director, is required to provide the declaration that he/she meets the criteria of independence as provided under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations.
In accordance with the above, the Company has received necessary declaration from each independent director under Section 149(7) of the Act, that he/she meets the criteria of independence laid down in Section 149(6) of the Act and Regulation 16(1)(b) of SEBI Listing
Regulations. 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.
In the opinion of the Board, all the Independent Directors fulfills the criteria of independence as provided under the Act, Rules made thereunder, read with the SEBI Listing Regulations and are independent of the management.
25. KEY MANAGERIAL PERSONNEL (KMP)
During the year under review, designation of Mr. Namit Malhotra was changed from Chairman, Chief Executive Officer and Executive Director to Non-Executive Director of the Company w.e.f. February 14, 2019.
Further, the following Directors/Executives continued as KMPs during Financial Year 2018-19:
^ Mr. Ramakrishnan Sankaranarayanan, Managing Director ^ Mr. Nishant Fadia, Chief Financial Officer ^ Ms. Parina Shah, Company Secretary and Compliance Officer
26. BOARD EVALUATION
Pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI Listing Regulations, annual evaluation of the performance of the Board, its Committees and of individual directors has been made.
The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of the Chairman and the Non Independent Directors were carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors.
The criteria for performance evaluation of the Board included aspects like Board composition and structure; effectiveness of Board processes, information and functioning etc. The criteria for performance evaluation of Committees of the Board included aspects like composition of Committees, effectiveness of Committee meetings etc. The criteria for performance evaluation of the individual Directors included aspects on contribution to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition the Chairperson was also evaluated on the key aspects of his role. The Criteria for performance evaluation of Independent Directors included aspects like Invests time in understanding the company and its unique requirements; Brings in external knowledge and perspective to the table for discussions at the meetings; Expresses his/her views on the issues discussed at
the Board; and keeps himself/herself current on areas and issues that are likely to be discussed at the Board level.
Criteria for Determining Qualifications, Positive Attributes and Independence of a Director
In terms of the provisions of Section 178(3) of the Act,and Regulation 19 of the SEBI Listing Regulations, the Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualifications, positive attributes and independence of Directors, the key features of which are as follows:
Qualifications-The Board nomination process encourages diversity of thought, experience, knowledge,age and gender. It also ensures that the Board has an appropriate blend of functional and industry expertise.
Positive Attributes-Apart from the duties of Directors as prescribed in the Act the Directors are expected to demonstrate high standards of ethical behavior,communication skills and independent judgment. The Directors are also expected to abide by the respective Code of Conduct as applicable to them.
Independence-A Director will be considered independent if he/she meets the criteria laid down in Section 149(6) of the Act, the Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations.
Familiarisation Programme for Independent Directors
Pursuant to Regulation 25(7) of the SEBI Listing Regulations and the requirement of Securities and Exchange Board of India vide Circular no. CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014, the Company has in place a programme for familiarisation of the Independent Directors, details of which are available on the website of the company: http://www.primefocus.com/investor- center#Results Reports.
27. NOMINATION AND REMUNERATION POLICY
The Company has in place a Nomination and Remuneration Policy for the Directors, Key Managerial Personnel, Senior Management and other Employees pursuant to the provisions of the Act and Regulation 19 of the SEBI Listing Regulations.
The salient features and objectives of the Nomination and Remuneration policy which was amended by the Board of Directors at its meeting held on February 14, 2019 pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 are as follows:
- To formulate the criteria and terms to determine qualifications, attributes and independence of Directors;
- To identify the qualification, key attributes and profile required of persons who may be appointed in Senior Management and Key Managerial positions;
- To determine remuneration of the Directors, Key Managerial Personnel and Senior Management employees and other employees based on the Companys size of business, financial position and trends and practices prevailing in similar companies in the industry;
- To devise mechanism and carry out evaluation of the performance of Directors;
- To devise and achieve diversity on the composition of Board, an essential element to support quality of performance;
- To retain, motivate and promote talent and create a sense of participation and ownership;
- To carry out such other functions as is mandated by Board of Directors and perform such other functions as may be necessary or appropriate for performance of duties.
Further, the Nomination and Remuneration policy of the Company is available on the website of the Company at http://www. primefocus.com/sites/default/files/pdf/NOMINATION AND REMUNERATION POLICY.pdf .
28. BOARD MEETINGS
During the financial year under review, Six (6) Board Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Act and Regulation 17 of SEBI Listing Regulations.
Currently, the Board has Five (5) committees, namely, Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and ESOP Compensation Committee.
During the year ended March 31, 2019, a separate meeting of the Independent Directors was held in compliance with the requirements of Schedule IV to the Act and Regulation 25 (3) of the SEBI Listing Regulations.
Details of the composition of the Board and its Committees along with the Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report.
29. AUDIT COMMITTEE
The Audit Committee comprises of following members:
|Name of the Members||Positions|
|Mr. Rivkaran Chadha||Chairman|
|Mr. Kodi Raghavan Srinivasan||Member|
|Mr. Padmanabha Gopal Aiyar||Member|
|Mr. Amit Bapna*||Member|
|Name of the Members||Positions|
|Mr. Samu Devarajan||Member|
|Mr. Anand Natarajan**||Member|
* Mr. Amit Bapna resigned from Audit committee w.e.f. May 30, 2018 and ceased to be a member of the Committee ** Mr. Anand Natarajan was appointed as a member in audit committee w.e.f. May 30, 2018 and ceased to be a Member of Audit Committee w.e.f. December 21, 2018 due to his resignation.
Further, details relating to the Audit Committee are provided in the Corporate Governance Report.
30. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who can avail the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Chairperson of the Audit Committee. The Audit Committee periodically reviews the functioning of this Mechanism. The policy of vigil mechanism is available on the Companys website at http://www.primefocus. com/sites/default/files/pdf/WHISTLE BLOWER POLICY.pdf.
The Vigil Mechanism/Whistle-blower Policy of the Company was amended by the Board at its meeting held on February 14, 2019, in light of the recent amendments introduced through the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018 and the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2019. The details of the Vigil Mechanism/ Whistle Blower Policy are given in the Report on Corporate Governance.
31. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to the Report as Annexure B.
In terms of Section 136 of the Act, the Report and Accounts are being sent to the members, excluding the information on employees particulars which is available for inspection by the Members at the Registered Office of the Company during the business hours on all working days except Saturdays and national holidays upto the date of Annual General Meeting of the Company i.e, September 30, 2019. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.
32. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted Corporate Social Responsibility Committee in compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014. The brief outline of the CSR Policy of the Company alongwith the Annual Report on CSR activities is set out in Annexure C of this report. The policy is available on the Companys website at http://www.primefocus.com/sites/default/files/pdf/ CORPORATE SOCIAL RESPONSIBILITY POLICY.pdf.
33. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of Loans given, Investments made, Guarantees given and Securities provided during the financial year under Section 186 of the Act are stated in the Notes to Accounts which forms part of this Annual Report.
34. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements/ transactions entered by the Company with the Related Parties during the financial period were on an Arms length basis and were in compliance with the applicable provisions of the Act and the SEBI Listing Regulations. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions were entered into only with prior approval of the Audit Committee, except transactions which qualify under Omnibus approval as permitted under the law. A statement of all Related Party Transactions entered is placed before the Audit Committee and Board for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.
Transactions of the Company with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the company are stated in the Notes to Accounts which forms part of this Annual Report.
The policy on Related Party Transactions which was amended by the Board on February 14, 2019 pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 is available on the Companys website at http://www.primefocus.com/sites/default/files/pdf/RELATED PARTY TRANSACTION POLICY.pdf. There are no transactions that are required to be reported in Form AOC-2 and as such do not form part of the Report.
35. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the provisions of Section 124 and other applicable provisions, if any of the Companies Act 2013 and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has transferred 9485 shares in respect of which dividend has not been paid or claimed for seven consecutive years or more to IEPF Authority including shares held in unclaimed suspense account on November 30, 2017.
The members, whose unclaimed shares have been transferred to IEPF, may claim the same by making application to the IEPF authority in Form No. IEPF-5 available on www.iepf.gov.in for details of unclaimed shares transferred to IEPF please refer companys website viz. www.primefocus.com
M/s Deloitte Haskins & Sells, Chartered Accountants, were appointed as Statutory Auditors of the Company for the year 2013-14 for a period of 1 (One) year. Further, at the AGM held on December 24, 2014, M/s Deloitte Haskins & Sells (DHS) were appointed as Statutory Auditors of the Company to hold office from the conclusion of 17th Annual General Meeting till the conclusion of the 22nd Annual General Meeting. According to the Section 139 of Companies Act, a firm can be appointed as an auditor for not more than two terms of five consecutive years. Accordingly, the Board of Directors has recommended the re-appointment of DHS, Chartered Accountants (Firm Registration No. 117364W), as Statutory Auditors of the Company for another term of 4 (four) consecutive years to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the 26th Annual General Meeting.
Deloitte Haskins & Sells have confirmed their eligibility and qualification required under the Act for holding the office, as Statutory Auditors of the Company.
The Auditors Report for the Financial year 2018-19 does not contain any qualification, reservation or adverse remark.
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of SEBI Listing Regulations, M/s. D. M. Zaveri & Co. (CP No. 4363), Practicing Company Secretaries has been re-appointed as Secretarial Auditor, to undertake Secretarial Audit of the Company for the financial year 2018-19. The report of the Secretarial Auditor in the prescribed Form MR-3 is annexed to this report as Annexure D.
The Secretarial Auditors Report for the Financial year 2018-19 does not contain any qualification, reservation or adverse remark except that the Company has failed to comply with Regulation 30 to be read with Schedule III Part A(a)(4)(h) w.r.t. filing of Audited Financial Statements of the Company for the year ended March 31, 2018, within 30 minutes of the closure of the Board Meeting held on May 30, 2018 to approve the Audited Financial Statements. The Board represents that the above non-compliance was due to the technical error.
In accordance with the SEBI Circular No. CIR/CFD/ CMD1/27/2019 dated February 08, 2019, the Company has obtained the Annual Secretarial Compliance Report from the Secretarial Auditor for the financial year 2018-19. The same is also submitted to the Stock Exchanges.
37. COST RECORDS
Maintenance of Cost records as prescribed under Section 148 of the Act is not required by the Company.
38. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OF THE ACT
During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under section 143(12) of the Act.
39. DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors acknowledge the responsibility for ensuring compliances with the provisions of section 134(3)(c) read with section 134(5) of the Act in the preparation of the annual accounts for the year ended on March 31, 2019 and to the best of their knowledge and ability, confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) 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 as at the March 31, 2019 and of the loss of the Company for that year on that date;
c) 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 detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down proper systems of internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
40. MANAGING DIRECTOR & CHIEF FINANCIAL OFFICER CERTIFICATION
In terms of Regulation 17(8) of SEBI Listing Regulations, the Company has obtained compliance certificate from the Managing Director and Chief Financial Officer.
Your Directors would like to express their sincere appreciation to its stakeholders financial institutions, bankers and business associates, Government authorities, customers and vendors for their co-operation and support and looks forward to their continued support in future. Your Directors also place on record, their deep sense of appreciation for the committed services by the employees of the Company.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
|Ramakrishnan Sankaranarayanan||Naresh Malhotra|
|Managing Director||Chairman & Whole-Time Director|
|DIN: 02696897||DIN: 00004597|
|Date : May 30, 2019|