CONTENT MULTIPLE CONTENT MONETISATION CHANNELS CINEMA HINDI AND REGIONAL PLAY EXPANDING REACH DIGITAL IN FOCUS TALENT RELATIONSHIPS LONG-STANDING TALENT RELATIONSHIPS EROS INTERNATIONAL MEDIA LIMITED PRESENTS A WINNING SCRIPT CARRYING THE HALLMARK OF CREDIBILITY, CONSISTENCY AND SUPERIOR CONTENT, EROS HAS CAPTURED THE WORLD’S IMAGINATION WITH POWERFUL FILMS. WE INSPIRE, ENGAGE AND DELIGHT GENERATIONS. WE JUST DON’T EMBRACE THE FUTURE, WE SCRIPT IT. ANNUAL REPORT 2014-15 WHAT’S INSIDE 02/27 CORPORATE OVERVIEW 02 EROS – A Preview 04 The FY2015 Big Picture 06 Consistently Delivering the Hits 08 Executive Vice Chairman & Managing Director’s Message 10 A Winning Script 22 Content Slate for FY2016 24 Eros PLC 26 Board of Directors 28/86 GOVERNANCE REPORTS 28 Directors’ Report 60 Management Discussion and Analysis 68 Corporate Governance 87/146 FINANCIAL STATEMENTS STANDALONE 87 Independent Auditor’s Report 90 Balance Sheet 91 6WDWHPHQWRI3URĆWDQG/RVV 92 Cash Flow Statement 94 Notes CONSOLIDATED 117 Independent Auditor’s Report 122 Balance Sheet 123 6WDWHPHQWRI3URĆWDQG/RVV 124 Cash Flow Statement 126 Notes 147 Notice Forward-looking Statement In this Annual Report, we have disclosed forward looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements - written and oral - that we periodically make contain forward looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise. Governance Reports Management Discussion and Analysis Entertainment is a dynamic business. Viewer preferences change more rapidly WKDQLQDQ\RWKHUĆHOGDQGWKHUHLVQRçRQHVL]HĆWVDOOèDSSURDFKWKDWRQHFDQ follow. However, much depends on the manner in which the underlying script is crafted and executed. Despite the vagaries of the operating environment, a good script always carries the day and proves successful. This philosophy is at the heart of how we view our business at Eros International. We believe that we must fortify our enterprise with the right business model and diligent execution. We keep in focus the emerging aspirations of the viewers, and strive to take steps that will reinforce our longstanding leadership and create superior stakeholder value. For us, a winning script means an integrated business model, multiple revenue streams for content monetisation, expanding into regional cinema, long-standing partnerships with key talent and a global distribution presence. This HQVXUHVVFDOHRIRSHUDWLRQVDVZHOODVDGLYHUVLĆHG risk-managed operating model. Simultaneously, we are preparing for the digital paradigm with an anytime, anywhere content access, and creating newer avenues for growth. At Eros, we are consistently investing in strengthening our winning script! Eros International Media Limited 1 EROS – A Preview EROS INTERNATIONAL MEDIA LIMITED (EROS INTERNATIONAL) IS A LEADING GLOBAL COMPANY IN THE INDIAN FILM ENTERTAINMENT INDUSTRY. WE CO-PRODUCE, ACQUIRE AND DISTRIBUTE INDIAN LANGUAGE FILMS IN MULTIPLE FORMATS WORLDWIDE, INCLUDING THEATRICAL, CABLE, SATELLITE AND DIGITAL NEW MEDIA PLATFORMS. Our success largely revolves around the relationships that have been cultivated over the past three decades with leading talent, production companies, exhibitors and other key participants in our industry. We distribute content globally through multiple distribution channels: theatrical, which includes multiplex chains and stand-alone theatres; television syndication, which includes satellite television broadcasting, cable television and terrestrial television; and digital, which includes primarily Internet protocol television, video-on- demand, Internet channels and ErosNow. FILM CONTENT ACROSS 210+ 2,000+ HINDI AND REGIONAL NEW RELEASES OVER THE LANGUAGES MOVIE LIBRARY LAST THREE FISCAL YEARS 2 Annual Report 2014-15 Corporate Overview EROS – A Preview KEY COMPETITIVE STRENGTHS • &RSURGXFHUDQGDFTXLUHURIQHZ,QGLDQĆOPFRQWHQWZLWKDQH[WHQVLYHĆOPOLEUDU\ • (QGXULQJUHODWLRQVKLSVZLWKOHDGLQJWDOHQWIRUFRPSHOOLQJFRSURGXFWLRQĆOPVODWH • 0XOWLFKDQQHOJOREDOGLVWULEXWLRQQHWZRUNVSDQQLQJFRXQWULHV • 'LYHUVLĆHGUHYHQXHVWUHDPVDQGSUHVDOHVWUDWHJLHVWRPLWLJDWH ULVNDQGSURPRWH FDVKćRZJHQHUDWLRQ • 6WURQJDQGH[SHULHQFHGPDQDJHPHQWWHDP 50+ 25+ 7 COUNTRIES WITH MULTI- LANGUAGES WITH LANGUAGES FILM CHANNEL GLOBAL SUBTITLED/DUBBED RELEASES DISTRIBUTION CONTENT PARENT, EROS INTERNATIONAL PLC, IS THE 14+ 1ST INDIAN MEDIA COMPANY TO SUCCESSFULLY LIST ON THE MILLION SUBSCRIBERS NYSE IN NOVEMBER, 2013 FOR EROSNOW IN INDIA (URV,QWHUQDWLRQDO0HGLD/LPLWHG 3 The FY2015 Big Picture Major Releases during FY2015 FILM NAME STAR CAST/ (DIRECTOR) RELEASE DATE (QUARTER) NH10 Anushka Sharma (Navdeep Singh) Q4 FY2015 Tevar Arjun Kapoor, Sonakshi Sinha, Manoj Bajpayee (Amit Sharma) Q4 FY2015 Badlapur Varun Dhawan, Nawazuddin Siddiqui (Sriram Raghavan) Q4 FY2015 6KDPLWDEK Dhanush, Amitabh Bachchan (R Balki) Q4 FY2015 $FWLRQ-DFNVRQ Ajay Devgan, Sonakshi Sinha (Prabhu Dheva) Q3 FY2015 Happy Ending Saif Ali Khan, Ileana D’Cruz (Raj Nidimoru, Krishna D.K.) Q3 FY2015 Lingaa (Multilingual) Rajinikanth, Sonakshi Sinha, Anushka Shetty (K.S. Ravikumar) Q3 FY2015 Kaththi (Tamil) Vijay, Samantha Ruth Prabhu (A. R. Murugadoss) Q2 FY2015 Aagadu (Telugu) Mahesh Babu, Tamannaah (Srinu Vatila) Q2 FY2015 6LQJKDP5HWXUQV (Overseas) Ajay Devgan, Kareen Kapoor (Rohit Shetty) Q2 FY2015 0DU\.RP(Overseas) Priyanka Chopra (Omung Kumar) Q2 FY2015 4 Annual Report 2014-15 Corporate Overview The FY2015 Big Picture FILM NAME STAR CAST/ (DIRECTOR) RELEASE DATE (QUARTER) (N9LOODLQ (Overseas) Siddharth Malhotra, Shraddha Kapoor (Mohit Suri) Q1 FY2015 Main Tera Hero (Overseas) Varun Dhawan, Ileana D’Cruz (David Dhavan) Q1 FY2015 Kochadaiiyaan (Multilingual) Rajinikanth, Deepika Padukone (K.S. Ravikumar) Q1 FY2015 Top 2 Releases in Calendar Year 2015 are Eros Films RANK FILM NAME LEAD STARS/ (DIRECTOR) INDIA NET BOX OFFICE (` in Million) 1 Bajrangi Bhaijaan Salman Khan, Kareena Kapoor (Kabir Khan) 2,407.2* 2 Tanu Weds Manu Returns Kangana Ranaut, R. Madhavan, (Anand L. Rai) 1,512.6 *First 10 days, still running successfully (URV,QWHUQDWLRQDO0HGLD/LPLWHG 5 6 ( Revenue Consistently Delivering ` CAGR 17.1% CAGR in Million) FY2010 6,535 Annual Report 2014-15 FY2011 7,159 FY2012 9,632 FY2013 10,744 FY2014 11,396 FY2015 14,410 ( EBIT CAGR ` inMillion) FY2010 1,213 24.4% FY2011 1,613 FY2012 2,257 FY2013 2,262 FY2014 2,997 FY2015 3,616 ( 3URĆW$IWHU7D[ CAGR 24.5% CAGR ` inMillion) FY2010 826 FY2011 1,182 FY2012 1,491 FY2013 1,558 FY2014 1,997 FY2015 2,471 the Hits ( 'LOXWHG( CAGR 18.6% CAGR ` ) FY2010 11.27 FY2011 14.35 PS FY2012 16.16 FY2013 16.81 FY2014 21.63 FY2015 26.43 Corporate Overview Consistently Delivering the Hits `14,410PQ TOTAL INCOME ` 3,616 PQ EBIT ` 2,471PQ PROFIT AFTER TAX 'LYHUVLĆHG Revenue ML[ (%) Total Income increased by WR 31.3% ` 14,410 million in FY2015, compared to ` 11,396 million LQ)<RQDFFRXQWRIQHZĆOPUHOHDVHVDQGUREXVW PRQHWLVDWLRQRIFDWDORJXHĆOPV 38.0% EBIT increased by WR` 3,616 million in FY2015 from ` 2,997 million in FY2014, backed by higher revenues and strong contribution from high-margin catalogue sales. ,Q)<SURĆWDIWHUWD[LQFUHDVHGE\WR 30.7% ` 2,471 million, compared to ` 1,997 million in FY2014. Theatrical Revenue Overseas Revenue Other Revenue (URV,QWHUQDWLRQDO0HGLD/LPLWHG 7 Executive Vice Chairman & Managing Director’s Message Dear Shareholders, Today, our consolidated position as FY2015 was a landmark year for the Company; and I am delighted to report that our overall performance has been DPDUNHWOHDGHUKDVEHHQDFKLHYHG H[WUHPHO\HQFRXUDJLQJ,WUHćHFWVWKHVWUHQJWKRIRXU SULPDULO\GXHWRRXUH[SHULHQFHG VWUDWHJ\LQLQYHVWLQJLQFRQWHQWGULYHQĆOPVDQGOHYHUDJLQJ our distribution rights on a multi-territory, multi-platform PDQDJHPHQWWHDPDQGWKHEHVW EDVLV7RGD\(URVVWDQGVRQWKHWKUHVKROGRIDVLJQLĆFDQW industry talent. opportunity. India’s Media & Entertainment sector is evolving like never before, and so are the viewing preferences of audiences. The challenge is to feel the pulse of the new- age audience, innovate aggressively and provide engaging entertainment with an edge. India’s Media and Entertainment (M&E) market is poised to grow at a CAGR of 13.9% from ` 1,026 billion in FY2014 to reach ` 1,964 billion by FY2019. Digital media advertising in India grew by 44.5% in FY2014. The sector is also taking a cue from the current Government’s optimistic outlook on business sentiment, strengthened by a strong vision of Digital India and taking the right initiatives to create Broadband Highways, Universal Access to Phones, Public Internet Access Programmes etc. The industry is on the cusp of a strong phase of growth, driven by media convergence and rising discretionary VSHQGV&DWHJRU\$ĆOPVLQ%ROO\ZRRGFRQWLQXHWRKROGVZD\