universal media network ltd Directors report

UNIVERSAL MEDIA NETWORK LIMITED ANNUAL REPORT 2001-2002 DIRECTORS REPORT Dear Shareholders Your Directors have pleasure in presenting the 11th Annual Report of the Company with the Audited Statement of Accounts and the Auditors Report thereon for the Financial year ended 31st March, 2002. DIVIDEND In view of marginal profit of the Company during the year, the Directors express their inability to recommend any dividend for the Year ended 31.03.2002 BONUS SHARES Board of Directors has recommended Bonus Shares in its Board Meeting to members in the ratio of 1 : 5 i.e. One Fully Paid-up Bonus Shares for every Five number of Equity Shares held in the Company, subject to approval of members in General Meeting. A sum of Rs. 3,00,00,000/- ( Rupees Three Crores Only ) is proposed to be capitalized from Share Premium Account by issuance of 1,50,00,000 Equity Shares of Rs.2/-. REVIEW OF OPERATIONS During the year under review your company performance was satisfactory and your directors are confident of improvement in performance of the company in the current year. FOREIGN EXCHANGE EARNINGS AND OUTGO The Company had no foreign exchange earnings during the period under review. The foreign exchange outgo during the year was Rs.65,000/- PARTICULARS OF EMPLOYEES None of the employee of the Company was in receipt of remuneration in excess of limits prescribed under Section 217(2A) of the Companies Act, 1956. Hence, particulars as required under the Companies (Particulars of Employees) Rules, 1975 are not given. DIRECTORS Shri Santosh Kumar Jain and Shri Siddhartha Srivastava resigned from the Board of Directors of the Company with effect from 30 st October, 2001 and 15 th November, 2001, respectively. The Board of Directors place on record their appreciation forthe valuable services rendered by them during the tenure of their office. Shri Manish A. Pardiwala has been appointed as an additional Director of the Company with effect from 30 th October, 2001. In terms of section 260 of the Companies Act, 1956, he holds office upto the date of ensuing Annual General Meeting. The Company has received notice from a member pursuant to section 257 of the Companies Act, 1956 signifying his intention to propose the candidature of Shri Manish A. Pardiwala as Director of the Company. The appointment of Director requires the approval of members, for which necessary resolution has been incorporated in the notice of Annual General Meeting. In accordance with the provisions of the Companies Act, 1956 and the Companies Articles of Association, Shri P .R. Parasuram retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. DIRECTORS RESPONSIBILITY STATEMENT In accordance with the provisions of section 217(2AA) of the Companies Act, 1956, your Directors confirm that: i) in the preparation of the annual accounts, the applicable accounting standards have been followed; ii) they have 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 31 st March, 2002 and of the profit of the Company for the year ended on that date; iii) they have taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of The Company and for preventing and detecting fraud and other Irregularities; iv) they have prepared the annual accounts on a going concern basis. FIXED DEPOSIT The Company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956 and the rules made thereunder. AUDIT COMMITTEE Pursuant to Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement the Board has constituted the Audit Committee comprising of the following Directors as its members: 1) ShriRR.Parasuram 2) Shri Paresh Shah 3) Shri Santosh Kumar Jain 4) Shri Manish Pardiwala CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Your company is not covered by schedule which requires to furnish details in Form A & B as per the provision of Section 217(1) (e) of the Companies Act, 1956 read with the Companies ( Disclosures of Particulars in the report of Board of directors ) Rules, 1988. AUDITORS M/S P K. Ajitsaria & Co., Chartered Accountants, Auditors of the Company, have expressed their desire not to seek reappointment as Auditors of the Company. The Board therefore recommends the appointment of M/S. Prodyot Bhattacharya & Associates, Chartered Accountants, Mumbai, as the Auditors of the Company at the ensuing Annual General Meeting. The Company has received a consent letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224 (1 B) of the Companies Act, 1956. The Notes to Accounts referred to in the Auditors Report are selfexplanatory, do not call for any further comments. COMPLIANCE CERTIFICATE A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report. ACKNOWLEDGEMENTS The Board expresses its sincere gratitude to the shareholders, bankers and clients for their continued support. The Board also wholeheartedly acknowledges the dedicated efforts of all the staff and employees of the Company. For and on behalf of the Board of Directors ASHOK KUMARMISHRA RR.PARASURAM Managing Director Director Place: Mumbai Date: 4 th July, 2002. MANAGEMENT DISCUSSION AND ANALYSIS REPORT INDUSTRY STRUCTURE AND DEVELOPMENTS: Entertainment is now thought of as a commodity which continuously evolved with the current market supply and demand factors. It is a potential revenue generator for the economy, though currently the share of entertainment revenue in Indias GDP is not even a percentage. The increased avenues & with latest technologies in entertainment, this industry is ready to "take-off". Factors that induces the growth of this industry by improving access to more and better avenues of entertainment are higher standard of living, increased urbanisation and advancement in technology. The industry needs to invest in technology and infrastructure to scale up operations, for which it will require funds. It has to organise its activities in a very systematic manner if it intends to source funds from capital market, private equity investors or from any financial institution. Television continues to be the leading entertainment medium in India. Cable & satellite television has been primarily responsible for the rapid growth of television in India. It reaches to almost 50.6% of the total population of the Country. Digital technology is now being used in every segment of the entertainment industry. Going forward, digital technology is expected to pervade the industry. This will revolutionise both creation and delivery of entertainment content. The major broadcasters in India have already gone digital. Channels are also focusing on acquiring the best technology available worldwide, be it cameras, editing equipment, special effects gizmos or graphic design devices. The Channel industry is a capital intensive one with high cost of equipments. In the initial stages, the company has to bear heavy depreciation and interest costs as a result of additional purchase of equipments. OPPORTUNITIES,THREATS,RISKSANDCONCERNS Television continues to be the leading entertainment medium in India, with television viewership accounting for the largest slice of an urban Indians media consumption pie. According to the Indian Readership Survey 2001 ( IRS 2001 ), the share of television has increased from 62% of media consumption in 1995 to 72% in 2001. Television garnered 40.5% of the total advertising expenditure (ad spend) in the country in 2001, second only to the print media, as per the industry estimates. The Rs 94 on television industry in India is broadly segmented into television broadcasting, cable television and television software with the 3 segments accounting for 38%, 43% and 19% of total industry size respectively. Television accounted for 40.5% of total ad spend in 2001, up from 39.4% in 2000, according to industry resources. In urban areas, it reached 78.7% of the population, up from 78% in 2000, and in rural areas, its reach increased to 39.8% from 35% in 2000. The Government of India (Gol) has liberalised the uplinking policy to allow the country to develop as a centre for broadcasting. . The political and economic environment in India is quite fluid and has its impact on the policy of the Government. Although the GDP has grown by 5.4%, it has no impact on entertainment industry. Recessionary conditions in the domestic and global economies appear to have hardened. Weak independent channels not forming part of a package or bouquet would find it hard to survive. They might fold up or may be acquired by a package or bouquet. The main sources of revenue for the channels will be from ad revenues and this will continue for at least next 3 to 4 years. There will be growth in demand, but it will be only for quality programme. In the coming days, more channels and bouquets are expected to come together to form larger bouquets. This consolidation will be driven by the need for bouquets to offer the full range of programming genre and for more effective ground distribution. Standard entertainment will no longer be acceptable and channels will need standout programmes that create an identity for the channel. The content will be the driver of channel success. FUTURE OUTLOOK Looking ahead, the outlook of the industry appears to be strong and the primary engines of growth for the entertainment industry will be growth in GDP, change in population demographics and increasing adoption of digital technology by the industry In terms of future prospects, the television broadcasting segment is expected to grow to a size of Rs 80.93 bn by 2006. According to industry, reports on advertising trends, the total adspend (calculated on the basis of current prices) in the country in 2001 was Rs 78.55 bn. Total adspend is expected to increase to Rs 85.93 bin in 2002, Rs 96.52 bn in 2003 and Rs 103.83 bn in 2004. The principal driver for this increase would be growth in GDP, which is expected to be about 10% in nominal terms. The trends in the current year are encouraging. The economy is picking up. The company also expects increase in adspend and demand for quality content. The company is also exploring possibilities for uplinking of Channels. During the current year the company expects improvement in the overall operation and profitability. The long term objective of the Company is to remain as strong player in the entertainment industry with strong emphasis on quality programme and technology upgradation. Your company is focusing on acquiring the best technology. With increase in the number of channels and heightened competition for viewership, content will be the most important factor for the success of any channel.The channel will have to create an identity for themselves by producing quality programmes. The Company will strive to improve its position in the market place. Your companys outlook in the near term remains positive. Based on initiatives already in place, and those under implementation, your company looks forward, confidently, to successfully take on competition from existing as well as new players. INTERNAL CONTROL SYSTEMS ANDTHEIRADEQUACY The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business .these procedures are designed to ensure * That all assets and resources are used efficiently and are adequately protected; * That all internal policies and statutory guidelines are complied with; * The accuracy and timing of financial reports and management information. FINANCIAL OPERATIONAL PERFORMANCE. During the year under review, the sale of software aggregated Rs 92.64 lacs and resulting in a Profit AfterTax of Rs 10.48 lacs. In the current year, the company is expecting good revenue from sale of software. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT NUMBER OF PEOPLE EMPLOYED. The Company believes that people are the key ingredient to the success of an organization. The Company recognizes the importance and contribution of its Human resources for its growth and development and is committed to the development of its people. The Company has started introducing methods and practices for Human Resources Development. CAUTIONARY STATEMENT Statement in the Managements Discussion and Analysis describing the Companys projections estimates, expectations or predictions may be forward looking predictions within the meaning of applicable securities laws and regulations. These forward looking statements are based on certain assumptions and expectations of future events over which the Company exercises no control. The Company can not guarantee that these assumptions and expectations are accurate or will be realised. Actual results may differ materially from such estimates, projections, etc. whether expressed or implied. Significant factors that could make a difference to the Companys business include, government regulations, policy of Cable operators and other statues. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of subsequent development, information or events. For and on behalf of the Board of Directors ASHOK KUMARMISHRA PR.PARASURAM Managing Director Director Place: Mumbai Date: 4 th July, 2002.