Silly Monks Entertainment Ltd Directors Report.

To

The Members,

M/s. Silly Monks Entertainment Limited.

Your directors have pleasure in presenting their Sixth (6th) Annual Report on the business and operations of the company together with the audited financial statements along with the report of the Auditors for the financial year ended 31st March, 2019.

1. FINANCIAL RESULTS: The performance of Silly Monks Group & Silly Monks ("The Company") for the current year in comparison to the previous year are as under:

CONSOLIDATED PERFORMANCE OF SILLY MONKS GROUP:

(Amount in Rs.)
Particulars 2018-19 2017-18
Revenue from Operations 20,91,96,881 15,66,29,082
Add: Other Income 29,57,539 9,53,700
Total Revenue 21,21,54,420 15,75,82,782
Expenses
Employee Benefit Expenses 4,18,66,865 1,55,08,869
Depreciation 70,54,061 38,11,792
Finance Charges - 7,41,386
Other Expenses 15,42,98,508 11,63,59,687
Total Expenses 20,32,19,434 13,64,21,734
Net Profit / Loss Before Tax (PBT) 89,34,985 2,11,61,047
Current Tax 21,07,792 23,78,489
Previous Year Income Tax Short Provision 15,40,311 -
Deferred Tax -16,88,054 3,56,159
MAT Credit Entitlement 2,67,963 -2,31,532
Net Profit (PAT) 67,06,973 1,86,57,931
Earning Per Share 1.52 4.92

Your Company, along with its 100% Foreign Subsidiary, two of its Indian Subsidiaries and two of its Subsidiary LLPs as a Group, posted good financial results during the year under review. Turnover of the Group is Rs.2091.96Lakhs and the net profit of the Company is Rs.67.0697 Lakhs.

It is to be noted that, your Company has disinvested its investment from both the Subsidiary LLPs and from one of the Indian Subsidiaries with effect from 05th January, 2019. So, accordingly the financial figures for Consolidation have been considered till the date of disinvestment.

STANDALONE PERFORMANCE OF THE COMPANY:

(Amount in Rs.)
Particulars 2018-19 2017-18
Revenue from Operations 11,03,62,038 8,40,07,972
Add: Other Income 19,55,173 9,53,700
Total Revenue 11,23,17,211 8,49,61,672
Expenses
Employee Benefit Expenses 3,24,74,843 1,55,08,869
Depreciation 60,30,603 32,77,867
Finance Charges 7,41,386
Other Expenses 6,42,49,246 5,36,58,733
Total Expenses 10,27,54,692 7,31,86,855
Net Profit / Loss Before Tax (PBT) 95,62,519 1,17,74,817
Current Tax 19,77,792 22,43,691
Previous Year Income Tax Short Provision 15,40,311
Deferred Tax -16,52,158 3,56,159
MAT Credit Entitlement 2,34,163 -2,31,532
Net Profit (PAT) 74,62,411 94,06,499
Earning Per Share 1.61 2.43

2. COMPANY PERFORMANCE

During the FY 2018-19, the total income was Rs. 1123.17 lakhs as compared to Rs. 849.61 lakhs in the previous FY 2017-18.

During the FY 2018-19, the revenue from operations was Rs. 1103.62 lakhs as compared to Rs. 840.07 lakhs in the previous FY 2017-18, registering an increase of 31.37%.

Profit before tax (PBT) during the FY 2018-19 was Rs.95.62 lakhs as compared to Rs. 117.74 lakhs in the previous FY 2017-18 showing a decrease of 18.79%.

Profit After tax (PAT) during the FY 2018-19 was Rs.74.62 lakhs as compared to Rs. 94.06 lakhs in the previous FY 2017-18 showing a decrease of 20.67%.

The Company is looking forward to increasing its profits in the coming financial years with the support of all the stakeholders of the Company.

3. DIVIDEND

Your Directors have recommended for your approval a final dividend of Rs.1/- per equity share for the FY 2018-19.

The final dividend, if approved at the ensuing Annual General Meeting ("AGM") of the Company, shall be paid to the eligible members within the stipulated time-period. The final dividend, if approved at the ensuing AGM, will absorb a sum of Rs.46,41,500/- lakhs and tax on dividend will be Rs.9,54,292/- lakhs.

Total cash outflow from the company will be Rs.55,95,792/- (Rupees Fifty Five Lakhs Ninety Five Thousand and Five Hundred and Seventy Four only) including dividend distribution tax.

4. TRANSFER TO RESERVES

During the FY 2018-19, the Company has not transferred any amount towards General Reserve.

5. SUBSIDIARIES

Dream Boat Entertainment Pte Limited (Hong Kong)

Dream Boat Entertainment Limited is a wholly Owned Subsidiary of the Company incorporated in Hong Kong, involved in the business similar to that of the Company.

During the Financial year 2018-19 the Company has acquired the following Companies:

Name of the Company Details of Shares acquired Date of Approval of Board
INANI Media Private Limited 51% of the total paid up share capital of the Company 19th July, 2018
Chintala Sports Private Limited 51% of the total paid up share capital of the Company 02nd August, 2018

Upon such acquisition of shares in the aforesaid Companies, both the Companies have become Subsidiary Companies to your Company in terms of provisions of section 2 (87) of the Companies Act, 2013 ("The Act"), by virtue shareholding.

INANI Media Private Limited (CIN: U74900TG2016PTC103046), is a Private limited Company incorporated on 03rd February, 2016, under the provisions of the Companies Act, 2013, and the Company is a creative animation and visual story telling studio engaged in the business of Promotion, development and production of cartoons, characters, caricature, images, illustrations, audio clips, video clips, Cartoon publications, comics, cartoon strips animation etc., Companys digital artists are unique in areas of visual effects production, including concept art, modeling, and animation.

Chintala Sports Private Limited* (CIN: U74999TG2016PTC1133820), is a Private limited Company incorporated on 13th December, 2016, under the provisions of the Companies Act, 2013, Chintala Sports establishing itself as a leading sports management company out of Southern India and the business of the Company is to bid, acquire/purchase, run, operate, and manage a professional kabaddi, badminton, cricket and any other sports team and related activities, including managing and operating an academy and training players, and other officials in relation to sports and conducting of Sports Leagues.

*During the financial year 2018-19, your Company has disinvested its entire stake in Chintala Sports Private Limited (Chintala Sports) on 05th January, 2019, upon such disinvestment, Chintala Sports will no longer be a Subsidiary Company to your Company.

The statement containing the salient features of the financial statements of Subsidiary, Pursuant to SubSection 3 of Section 129 of the Companies Act, 2013, in Form AOC-1 is herewith annexed to this report and marked as Annexure - I. The statement also provides the details of performance, financial position of the subsidiary.

Your Company does not have any Associate Companies or Joint Ventures.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company does not have any CSR policy and Company did not form any CSR Committee, as the provisions of section 135 of the Companies Act, 2013, pertaining to Corporate Social Responsibility are not applicable to the Company, as the company does not fall under the criteria specified under Section 135 of the Act and the rules made there under.

7. DIRECTORS & KEY MANAGERIAL PERSONAL

7.1 Director Retiring by Rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Anil Kumar Pallala, Whole Time Director of the Company, being longest in the office amongst the Directors liable to retire by rotation and is proposed to retire at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment at the said Meeting of the Company.

7.2 Changes in the Board of Directors of the Company.

The Board of Directors have appointed Dr. Rama Koti Reddy Kondamadugula as an Additional Director (Independent Director) of the Company at their board meeting held on 29th day of May 2018, and his appointment had approved by the members at their 05th Annual General Meeting.

7.3 Changes in Key Managerial Personnel

During the year under review Mr. Boda Narsing Rao has resigned as the Chief Financial Officer (CFO) of the Company, with effect from 31st May, 2018.

The Board of Director of the Company on the recommendations of Nomination and remuneration Committee at its board meeting held on 29th May, 2018, have appointed Mr. Guna Venkat Rama Naidu, as Chief Financial Officer of the Company with effect from 01st June, 2018.

7.4 Declaration by Independent Directors

The Company has received requisite declaration from both the Independent Directors of the Company that they meet the criteria of independence prescribed under section 149(6) of the Companies Act, 2013.

7.5 Separate Meeting of Independent Directors

In accordance with the provisions of Schedule IV to the Act and Regulation 25(3) of the SEBI (LODR), 2015, separate meetings of the Independent Directors of the Company were held on January 05, 2019 to discuss relevant items including the agenda items as prescribed under the applicable laws. The meetings were attended by all the Independent Directors of the Company.

7.6 Annual Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own Performance, the Directors individually as well as the evaluation of the working of its Audit and other Committees.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.

8. AUDITORS

8.1 Statutory Auditors:

The Shareholders of the Company At their Annual General Meeting (AGM) held on 18th December 2014, have appointed M/s. Ramasamy Koteswara Rao and Co LLP (Formerly Known as M/s. Ramasamy koteswara Rao & Co.), Chartered Accountants, (Registration No. 010396S/S200084), Hyderabad, as Statutory Auditors of the Company to hold office from the conclusion of that AGM till the conclusion of the 06th AGM at such remuneration as may be decided by the Board of Directors.

The Board of Directors of the Company (‘the Board), on the recommendation of the Audit Committee (‘the Committee), recommended for the approval of the Members, for the re-appointment of the M/s. Ramasamy Koteswara Rao and Co LLP, Chartered Accountants for further period of five years from the conclusion of this AGM till the conclusion of the 11th AGM.

Accordingly, a resolution seeking approval of Shareholders for the appointment of Statutory Auditors f the Company for a term of 5 (Five) years is included at Item No.4 of the Notice convening the Annual General Meeting.

8.2 Internal auditors:

The Board of Directors based on the recommendation of the Audit Committee have re-appointed M/s. NSVR & Associates LLP, Chartered Accountants, Hyderabad, as the Internal Auditors of your Company for the F Y 2019-20.

8.3 Secretarial Auditors:

Pursuant to the provisions of section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of managerial personnel) Rules, 2014, as may be amended from time to time, M/s. P. S. Rao & Associates, Practicing Company Secretaries were appointed to conduct the Secretarial Audit of the Company for the financial year 2018-19.

8.4 Cost Audit

The provisions of Section 148 of the Companies Act 2013 read with the Companies (Cost and Audit) Rules, 2014and Rule 14 of the Companies (Audit and Auditor) Rules, 2014 are not applicable to the Company.

9. STATUTORY AUDITORS REPORT

There are no qualifications, reservations or adverse remarks made by M/s. Ramasamy Koteswara Rao and Co LLP, Chartered Accountants, Statutory Auditors in their report for the Financial Year ended 31st March 2019.

10. SECRETARIAL AUDIT REPORT

There are no qualifications, reservations or adverse remarks made by M/s. P. S. Rao & Associates, Practicing Company Secretaries in their report for the Financial Year ended 31st March 2019. The secretarial audit report for F.Y. 2018-19 forms part of this Report as Annexure- III.

11. REPORTING OF FRAUDS

During the year under review, there was no instance of fraud review, which required the Statutory Auditors to report to the Audit Committee and /or Board under Section 143(12) of the Companies Act, 2013 and the rules made thereunder.

12. BOARD MEETINGS

During the FY 2018-19, 7(Seven) Board Meetings were held on May 29, 2018, July 19, 2018, August 02, 2018, August 31, 2018, September 29, 2018, November 14, 2018, and January 05, 2019.

Date of Board Meeting
Sl. No. Name of the Director 29.05.2018 19.07.2018 02.08.2018 31.08.2018 29.09.2018 14.11.2018 05.01.2019
1 Tekulapalli Sanjay Reddy
2 Anil Kumar Pallala
3 Swathi Reddy
4 Rama Koti Reddy Kondamadugula
5 Prasada Rao Kalluri

13. COMMITTEES

The Company as on date of the report has the following Committees:

1. Audit Committee;

2. Nomination and Remuneration Committee; and

3. Stakeholder Relationship Committee.

The Composition of the Committees as on the date of the report are as follows:

a) Audit committee

Sl. No. Name of the Director Position in the Committee
1. Dr. Rama Koti Reddy Kondamadugula Chairman
2. Mr. Prasada Rao Kalluri Member
3. Mr. Tekulapalli Sanjay Reddy Member

All the recommendations made by the Audit Committee of the Company have been considered and accepted by the Board of Directors of the Company.

b) Nomination and Remuneration Committee

Sl. No. Name of the Director Position in the Committee
1. Dr. Rama Koti Reddy Kondamadugula Chairman
2. Mr. Prasada Rao Kalluri Member
3. Mrs. Swathi Reddy Member

c) STAKEHOLDERS RELATIONSHIP COMMITTEE

Sl. No. Name of the Director Position in the Committee
1. Dr. Rama Koti Reddy Kondamadugula Chairman
2. Mr. Prasada Rao Kalluri Member
3. Mr. Tekulapalli Sanjay Reddy Member

14. NOMINATION AND REMUENRATION POLICY

A committee of the Board named as "Nomination and Remuneration Committee" has been constituted to comply with the provisions of section 178 of Companies Act, 2013 and to recommend a policy of the Company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters and to frame proper systems for identification, appointment of Directors & KMPs, Payment of Remuneration to them and Evaluation of their performance and to recommend the same to the Board from time to time. The policy is also posted in the investors section of the companys website.

15. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS MADE BY THE COMPANY UNDER THE PROVISIONS OF SECTION 186 OF THE COMPANIES ACT, 2013

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

16. DEPOSITS

The Company has neither accepted nor renewed any deposits in terms of Chapter V of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the FY 2018-19.

17. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors confirm that:

i) In preparation of annual accounts for the financial year ended 31st March, 2019, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

ii) The Directors have 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 ended 31st March, 2019 and of the profit and loss of the Company for the year

iii) The Directors have taken proper and sufficient care for their maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors had prepared the annual accounts for the F Y 2018-19 on a ‘going concern basis;

v) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

vi) 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.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the FY under review, transactions were conducted by the Company pursuant to the Agreements entered into with its Related Parties during previous years; the same were on an arms length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel or any related party which may have a potential conflict with the interest of the Company at large.

The details of related party transactions which were entered during the previous year / current year are provided in Financial Statements, under the head measurement and disclosures as per the Accounting Standards.

The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 are given in Form AOC-2 is herewith annexed as Annexure II to this report.

19. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Your Company did not have any funds lying unpaid or unclaimed which were required to be transferred to Investor Education and Protection Fund (IEPF) under section 125 of Companies Act, 2013.

20. SHARE CAPITAL

The Authorised Share Capital of the Company as on date of Balance Sheet is Rs. 5,00,00,000/- divided into 50,00,000 equity shares of Rs.10/- each.

The paid-up share capital of the company as on date of balance sheet is Rs. 4,64,15,000/- divided into 46,41,500 equity shares of Rs. 10/- each.

There is no change in the Share Capital of the Company during the year 2018-19.

During the year under review, the Company has not issued shares with differential voting rights, sweat equity shares or Employee Stock Options.

21. EXTRACT OF ANNUAL RETURN:

An Extract of Annual return prepared in accordance with the provisions of the section 92 (3) of the Companies Act, 2013 in the form MGT-9 is Annexed as Annexure IV to this report.

22. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to Regulation 34 (2) (e) of SEBI (LODR) Regulations, 2015, a report on Management Discussion & Analysis is herewith annexed as Annexure-V.

23. RISK MANAGEMENT POLICY

The Company has developed and implementing a risk management policy which includes the identification therein of elements of risk, which in the opinion of the board may threaten the existence of the Company.

24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

a) Conservation of Energy, Technology Absorption:

The particulars prescribed by section 134(3)(m) the Companies Act, 2013, pertaining to disclosure measures taken in relation to conservation of energy and technology absorption are not applicable.

b) Foreign Exchange earnings and Outgo:

Foreign Exchange Earnings: Rs. 3,78,79,699/-

Foreign Exchange Outgoings: 0

25. HUMAN RESOURCES:

Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Companys vision. Your Company appreciates the spirit of its dedicated employees.

Particulars of Employees (Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014) Information in accordance with the provisions of Section 197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 regarding remuneration and other details is annexed as ‘Annexure VI to this Report.

26. CORPORATE GOVERNANCE REPORT:

As the securities of the Company are listed on National Stock Exchange of India Limited - SME platform Emerge, by virtue of Regulation 15 of securities and Exchange Board of India (Listing Obligations and Disclosure) Regulation, 2015 (The Regulations), the compliance with the corporate Governance provisions as specified in regulation 17 to 27 and Clause (b) to (i) of sub-regulation 2 of Regulation 46 and para C, D & E of Schedule V of the regulations, are not applicable to the Company. Hence the Corporate Governance does not form part of this Boards report.

27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has an adequate system of internal financial controls with reference to financial statements, including but not limited to safeguard and protection of assets from loss, their unauthorized use or disposition. All the transactions were properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting in the financial statements. Your Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.

28. LISTING AND DEPOSITORY FEE

Your Company has paid Annual Listing Fee for the financial year 2019-20 to National Stock Exchange of India Ltd. according to the prescribed norms & regulations. Company has also paid Annual Custody Fee to National Securities Depository Limited and Issuer Fee to Central Depository Services (India) Limited for the financial year 2019-20

29. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY FOR DIRECTORS AND EMPLOYEES :

Your Company promotes ethical behaviour in all its business activities and has put in place a mechanism wherein the employees are free to report illegal or unethical behaviour, actual or suspected fraud or violation of the Companys Codes of Conduct or Corporate Governance Policies or any improper activity to the Chairman of the Audit Committee of the Company or Chairman of the Board.

The Whistle Blower Policy has been duly communicated within your Company. Under the Whistle Blower Policy, the confidentiality of those reporting violation(s) is protected, and they are not subject to any discriminatory practices. No personnel have been denied access to the Audit Committee in this regard.

The Vigil Mechanism and Whistle Blower Policy may be accessed on the Companys website www.sillymonks.com.

30. POLICY ON SEXUAL HARASSMENT:

The company has adopted policy on prevention of sexual harassment of women at workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. As per the said Policy, an Internal Complaint Committee (ICC) is duly constituted by the Company.

During the financial year ended March 31, 2019, the company has not received any complaints pertaining to sexual harassment. The policy adopted by the Company for Prevention of Sexual Harassment is available on its website at www.sillymonks.com.

31. PARTICLARS OF EMPLOYEES

The information required pursuant to Section 197 (12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company is herewith annexed as Annexure- VI.

In terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company does not have any employee who is employed throughout the financial year and in receipt of remuneration of Rs. 120 Lakhs or more, or employees who are employed for part of the year and in receipt of Rs. 8.50 Lakhs or more per month.

The Company does not have any employee who is employed throughout financial year or part thereof, who was in receipt of remuneration in financial year under review which in aggregate, or as the case may be, at a rate which in the aggregate is in excess of that drawn by the Managing Director or Whole time director and holds by himself/herself or along with his/her spouse and dependent children not less than 2% of the equity shares of the Company.

32. CEO AND CFO CERTIFICATION

The Compliance with CEO and CFO Certification as provided under Sub-regulation 8 of Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to your Company as your Companys securities are listed on Emerge platform of NSE. Hence, the same does not form part of this report.

33. OTHER INFORMATION

(i) Significant and material orders passed by the regulators

No significant and material orders have been passed during the FY 2018-19 by the regulators or courts or tribunals affecting the going concern status and Companys operations in the future.

(ii) Material Changes & Commitments

There were no material changes and commitments affecting the financial position of the Company that have occurred between the end of the Financial Year 2018-19 of the Company and the date of the report.

(iii) Change in Nature of business, if any

There is no change in the nature of business of the Company during the year under review.

(iv) Compliance with Secretarial Standards

The Company has complied with the secretarial standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

34. ACKNOWLEDGMENT AND APPRECIATION:

The Board of Directors expresses their sincere appreciation to all the stakeholders of the Company for the trust, confidence and support bestowed upon us. The Board of Directors is also grateful to the fellow subsidiary companies for their contribution towards the growth and success of the Company.

The Board of Directors assures to uphold the Companys commitment towards acting with honesty, integrity and respect and to be responsible and accountable to all the stakeholders of the Company.

Further the board conveys their appreciation for the whole hearted and committed efforts by all its employees.

Your Directors gratefully acknowledge the ongoing co-operation and support provided by the Central and State Governments, Stock Exchanges, RBI and other Regulatory Bodies.

By Order of The Board of Directors
For Silly Monks Entertainment Limited
Sd/-
Tekulapalli Sanjay Reddy
Place: Hyderabad Chairman & Managing Director
Date: 23.08.2019 DIN: 00297272