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BOARD OF DIRECTORS Mr. Subhash Ghai, Chairman & Managing Director Mr. Parvez A. Farooqui, Executive Director Mrs. Meghna Ghai Puri Mr. Anil Harish Mr. Vijay Choraria Mr. Pradeep Guha
Company Secretary & Compliance Officer Mr. Ravi B Poplai
Auditors M/s Shamit Majmudar Associates Chartered Accountants
Bankers Punjab National Bank Limited HDFC Bank Limited Standard Chartered Bank
Registrar & Transfer Agents Intime Spectrum Registry Limited C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (W) Mumbai - 400 078
Registered Office 6, Bashiron, 28th Road TPS -III, Bandra (W) Mumbai - 400 050
CONTENTS
Financial Highlights 2 Chairman's Statement 3 Management Discussion & Analysis 5 Notice 7 Directors' Report 9 Corporate Governance 13 FINANCIALS Mukta Arts Limited 21 Consolidated Financial of Mukta Arts Limited & 39 it's Subsidiaries Whistling Woods International Limited 52 Connect. 1 Limited (Formerly known as Mukta Art International Limited) 72 Mukta Tele Media Limited 81
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Performance at a glance Rupees in millions Year Year Year ';-'•- \. •--JperiocP, /. .v'V;'-'',?.'--;, ,^::if~i ended .ended , .ended '.',-. ended S: ;'>; 7;. ' 'OQCJ flO ''' Realisation from productions, 965.21 374.80 !:! 451.44 1 \ ;"-„ ' \;COO«W ProfiV(Loss) before Interest, >,v-,.-,^;-..r^c,-..r. Depreciation and Tax 167.04 (27.15) (134.86) $8:36 ^Ig^n : Depreciation 22.64 29.98 32.14 '\ ;;'; 29.61 >;/;^%|| : ; Interest 0.63 0.60 0.56 .•';'• "•'. 0,30v^:^: :c|50;" Profit/Loss) before Tax 143.77 (57.73) (167.56) ;V58.45 !@3^^ ProfiV(Loss) after Tax 137.16 (56.46) (169.67) .•/•'.,' 33:93 ,'\ \ u"/ "',^ * , V/j/Vi,,- \- Dividend 45.16 22.58 Dividend Rate 40% ., 20% i n 'v " M > i , , O(SiD *7>1r ' I Gross Fixed Assets 313.31 369.84 361.98 343.82 " ^ •• ' •. OUO. r -*r\ ' \' ;" 1 - ,"1 ;--'"j" ' ''' ;."'- "~ Net Fixed Assets 157.09 184.06 204:73 2ie:i4 "t QA ftR Total Assets 1,279.66 1,195.53 1i1 44.66 1,314.89 "-JVi^l^; ; Equity Share Capital 112.92 112.92 , 112.92 112.92 r;;;^^^ Reserves and Surplus 1,060.92 975.25 1,029.60 1,199.55 ||t,iayf; Net Worth 1,173.83 1,088.17 1,142.52 1,312.47 n;^i304^;; Earnings per Share (EPS) : 1 '?'•''"•" '; -' ;",',' ^i'''-' ''.' In Rupees • \'v, ' ' ' - " \ ' x EPS Basic 6.07 - - '•;•'/"' 1.50 ';T:-;^;tK'3:f EPS Adjusted to Rs. 5 6.07 - 1 - ; 1.50 S" ;3P www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net CHAIRMAN'S STATEMENT In my statement last year I had indicated that the Company had begun its upward march and I assured you that the outlook for the Company would only get better hereafter. I am pleased to inform you that in the year under review, the Company has delivered the promise with its best ever performance to date, a top line growth of over 130% which is twice the highest turnover ever before and one of the highest post tax profit that the Company has ever shown. Some cynics and analysts may conclude that this performance was largely due to a one-off revenue earning owing to the Satellite re-issue rights deal done with a TV channel. Let me dispel this mistaken notion. Anyone who understands financial statements would be aware that the Company has been consistently following a policy of amortizing 100% of the costs of a film in the year of release of the film, despite the fact that a film by its nature has a commercial longevity and shelf life that runs into decades if not perpetuity. This policy pushes forward profits to future years while booking all costs immediately. If one were to normalize the revenues from library sales and pursue amortization policies followed by most other film production houses, the Company would show far larger profits currently instead of in years to come. Many of the film production companies tend to amortise only 60-65% of the production costs in the year of release of the film thereby recording higher profits immediately but pushing forward the contingent liability of the unamortized value of the film. The total earning potential of the fully amortised library of 26 movies|of Mukta Arts is upward of Rs. 400 millions in every five year window. The revenue earning potential comes from re-issue rights of Satellite, DTH, cable, home video, terrestrial TV and other electronic media rights. This implies that the Company would on an average harvest about Rs. 80 millions per annum from its fully amortised library alone. Add to this the fact that the Company has been paying Rs. 40 millions as Keyman Insurance premium (which is also a current expenditure for a future gain) and if the amortization was readjusted you would have better profits than those posted. I am happy to inform you that in the year under review the Company released four movies "Shaadi Se Pehle" directed by Satish Kaushik starring Akshaye Khanna, Ayesha Takia, Mallika Sherawat, "36 China Town" directed by Abbas-Mastan, starring Akshaye Khanna, Kareena Kapoor, Shahid Kapur, "Apna Sapna Money Money" directed by Sangeeth Sivan starring Riteish Deshmukh, Shreyas Talpade, Riya Sen, Celina Jetley, Koena Mitra and "Khanna and Iyer" directed by Hemant Hegde starring Sarwar Ahuja and Aditi Sharma the winners of the "Zee Cinestar Ki Khoj". The de-risking policy of the Company of selling some territories and distributing other territories itself ensured profits for each of these movies despite the movies being fully amortised. The Company also undertook during the period, production of several new projects to ensure a strong pipeline. Movies in the pipeline include my own film "Black & White" starring Anil Kapoor, Anurag Sinha and others. Other movies released/expected to be released during 2007-08 include "Good Boy Bad Boy" directed by Ashwini Chaudhary which has already been released, "Bombay to Bangkok" directed by Nagesh Kukunoor, starring Shreyas Talpade, "Cycle Kick" a teenage growing up angst story directed by Shashi Sudigala, and "Right Yaaa Wrong" a film by Neeraj Pathak starring Sunny Deol, Irfan Khan and others. A Marathi film, Kaande Pohe" the first regional film under the MALPIX banner of Mukta Arts Limited is also on the floors and expected to be released in 2007-08. During the year Mukta Arts has been able to consolidate the distribution and exhibition business and take on additional theatres for booking including the Fun (E-City) and PVR theatres. We have seen significant growth in the exhibition business of the Company. Having put on track Whistling Woods International as promised, I now have more time to devote to my creative urges. I am aware the market is expecting me to direct movies. While "Black & White" will be f.3 released in the coming year, I am starting "Yuvraaj" starring Anil Kapoor, Salman Khan, Katrina Kaif www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net and Zayed Khan with music by A. R. Rahman by September 2007 and the film will be ready for release in 2008-09. Whistling Woods International, which commenced last year, has received very good response from the student community, parents of the students, media and educationists. The Institute's first P&L statement indicates that we are on track as proposed and the first year losses should be seen as investments by the Company. We have seen investor interest in Whistling Woods International, but we would consider offers only if it brings good strategic value to the Company. In the meanwhile we have accepted the offer made by Whistling Woods International and invested further 200 millions from Mukta Arts Limited in WWI into cumulative 8% coupon redeemable preferential shares. This includes the surrendered preferential shares of our JV partners MFSCDC Ltd. (Film City). We believe that the Company's investments in Whistling Woods International will yield slow but rich dividends in years to come. During the period, Whistling Woods International has had key personalities visiting the Institute and/or addressing the students including Raj Kumar Hirani, Nagesh Kukunoor, Farah Khan, Shah Rukh Khan, Karan Johar, Rakeysh Omprakash Mehra, Kunal Kohli, Vishal Bhardwaj, Shabana Azmi, Syd field, Victor Tsao and many others. The Institute as of September 2007 has over 200 students. We expect to reach peak capacity of about 400 students by 2009. I am happy to inform you that the Audeus Commercial Complex project is progressing as per schedule and already the pile foundation and the dual basement blocks are completed. Work above the ground has commenced. We expect to complete the complex before the end of the calendar year 2008. This complex would contribute over 50,000 sq.ft. of FSI to the Company in the prime Andheri Link Road area located opposite Yash Raj Studios. The Company will take a decision on the use of this valuable space in a way to maximize revenues and profits for the Company. During the year, the Company had tendered for a partly constructed Communication Centre in Film City opposite Whistling Woods International. The Company saw in this building an opportunity to consolidate all the Company's offices in a single premise. Mukta Arts Limited's bid emerged victorious against Adlabs, the other bidder. The Company will commence work on this building soon. This building consisting of 57,000 sq.ft. FSI would house the Company's offices. We expect the Mukta Tower in Film City to be ready by end 2008. The surplus FSI will be exploited gainfully. The office shift in 2009 will help Mukta Arts redevelop its properties in Bandra or sell these off and book profits. I am increasingly concerned that with the growing number of TV channels and new content outlets such as DTH, VoD, mobile phones, internet down loads etc the Company needs to focus on its core strength of delivering movies. I am therefore proposing that Mukta would focus on entertaining big budget movies for theatres and Mukta Searchlight would focus on mid budget movies with good quality and a new brand MALPIX has been introduced for production of low budget and regional movies. We expect that in years to come we should be able to add upto 12 movies a year to our library including movies produced for release directly on digital format. Imagine the strength of the Company with its IPR value once our library size crosses a hundred movies. The talent from Whistling Woods International will certainly ensure this acceleration. I am aware that we were unable to reward the shareholders in the previous two years, and hence the management declared 40% interim dividends in the current year, keeping in mind the good profits made by the Company. I am grateful to all investors who have shown confidence in me, the Company and my management team and we would like to assure you that we would do all that we must to ensure growth and adequate returns minimizing the risk of the shareholders. While the stock prices of the Company have shown significant growth (and volatility) I can only assure you quoting Warren Buffet that "If the business does well, the stock eventually follows" and "It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price". Subhash Ghai www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net MANAGEMENT DISCUSSION AND ANALYSIS (On Operations and Select Financial Data) The accounting statements have been are INX, NDTV, BAG and TV 18. Since many of prepared in compliance with the Companies Act these channels are high cost Hindi General 1956 (as amended up to date) and in conformity Entertainment Channels the competition in this with the generally accepted accounting standards segment is expected to increase. The and practices in India. The review of annual undisputed monopoly of Sfar Plus with Zee TV operations and discussions on select financial closing in on the leader, establishes once again data have been made on a prudent and that the success of a few programmes does not reasonable basis in order that the financial necessarily mean that channel loyalty is assured. statements reflect in a true and fair manner A channel will have to churn out consistently the Company's state of affairs for the period. programmes acceptable to audiences in order Industry Performance: As per the Price to retain eyeballs. Waterhouse Cooper report for the year 2007 Management sees in the growth of Television a presented at FICCI Frames 2007, the Film and growing opportunity for good content. Television industry continues to outpace the GDP During the year, there was significant expansion growth of about 8% by clocking 18% growth in in cinema systems and UFO itself has now over the Film sector and 31 % growth in the Television 650 screens with about a third of them in "A" sector during the year. The growth in Television centres. The growth of digital exhibition in "A" sector is partly owing to the growth in DTH with 4 centres and multiplexes is likely to throw up new millions subscribers on Doordarshan DTH, over opportunities for the production sector to produce 2 millions on Dish TV, over one million on Tata movies for distribution in HD format. During the Sky. It is expected that this growth will further year, growth in multiplexes was significant and accelerate as DTH is expected to make in-roads this growth is now moving into tier 2 cities. into the cable dominated market. The in-road is likely to be spurred once CAS becomes A REVIEW OF OPERATIONS: mandatory in tier 2 and tier 3 cities. CAS itself The Company during the year released four did not make significant progress during the year movies "Shaadi Se Pehle" directed by Satish and the conversion to CAS in the notified areas Kaushik starring Akshaye Khanna, Ayesha Takia, of the metros has been below expectation, Mallika Sherawat, "36 China Town" directed by particularly in Delhi and Calcutta. The expansion Abbas-Mastan, starring Akshaye Khanna, of CAS is also on hold due to the delay of several Kareena Kapoor, Shahid Kapur, "Apna Sapna issues including pricing, sharing of revenues, cap Money Money" directed by Sangeeth Sivan on price of each channel, consumer resistance starring Riteish Deshmukh, Shreyas Talpade, and political issues. The growth of television Celina Jetley, Riya Sen, Koena Mitra and revenues is heavily dependant on CAS and its "Khanna and Iyer" directed by Hemant Hegde free market pricing policies. On the DTH front starring Sarwar Ahuja and Aditi Sharma the Sun, Reliance and Bharati Telemedia the other winners of the "Zee Cinestar Ki Khoj". licensees are waiting to launch their services. India would be the first country in the world to The Company clocked the highest ever turnover have six DTH operators. Across the world, there doubling the earlier highest turnover of Rs. 511.6 are only one or two DTH players per country given millions. The top line growth over the previous the high investments involved. In years to come year was 130%. It also clocked one of the highest we can expect consolidation in this area. ever profit of about Rs.143 millions. While it is Television however continues to be attractive for true that the satellite deal with a TV channel has investors and several companies have contributed significantly to the top line and bottom announced major plans of increasing existing line, this has only been the reaping of efforts in channels or launch new channels. Among these the earlier year. Similarly, activities and www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net production of recent years would contribute to for booking by tying up with PVR for their revenues and profits in years to come. As properties at Juhu, Mulund, Indore, Hyderabad, explained in the Chairman's Statement, the Aurangabad and Latur. Exhibition has contributed normalization of the so-called one-off revenues about 34% of the Company's revenues. This is actually indicates that the Company's profits a low margin business but with low capital would have been better. deployment. During the year, the Company distributed several movies in some select Fluctuations in quarterly reports do continue territories, these included "Nishabd", "Corporate", to pose a challenge to the management as the "Aparichit", "Risk", "Aryan", "I See U", "Banares", variations depend on release of a movie "Casino Royale", "Superman", "Zindagi Rocks" in a quarter. Management does plan to address etc. apart from the Company's own productions, this problem by enhancing the bandwidth of "Shaadi Se Pehle", "36 China Town", "Apna production of movies. The Company does Sapna Money Money" and "Khanna and Iyer". plan to enter into production of small budget movies by cherry picking talent from among WHISTLING WOODS INTERNATIONAL: Whistling Woods International students One of the Company's major achievements was and producing movies in high definition for digital launching the Whistling Woods International exhibition in cinemas followed by release on institute on July 18th 2006. The Institute was DVD and satellite channels, inaugurated by the Minister of Information & The Company also has the following under Broadcasting, Shri Priyaranjan Dasmunshi on th production movies "Bombay to Bangkok" directed July 18 2006 in the presence of Shri Praful Patel, by Nagesh Kukunoor, starring Shreyas Talpade, Shri Dilip Kumar, Shahrukh Khan and many other "Cycle Kick" a teenage growing up angst story celebrities. As of July 2007, the institute has over directed by Shashi Sudigala, "Right Yaaa Wrong" 200 students and by 2009 we expect to nearly a film by Neeraj Pathak starring Sunny Deol, Irfan double the number. Khan and others, "Black & White" directed by OTHER INCOME: Subhash Ghai starring Anil Kapoor, Anurag Sinha The investment of surplus funds in debt related and "Kaande Pohe" a Marathi film directed by mutual funds and permissible investment have Rajiv Patil. yielded decent returns. A loan of Rs. 150 millions The Company has paid the last installment has been given to subsidiary Whistling Woods of Keyman Insurance and expects to cash in on International Limited at 9% interest. The the insurance on maturity in 2011. The Company has also subscribed to the cumulative Company's library now has strength of 26 movies 8% coupon redeemable preferential shares of and although this library is indicated as zero value Whistling Woods International Limited. in the books of accounts, it has capacity to raise OUTLOOK: Rs. 400 millions in every five year window. This is a significant hidden value. Among the other In the forthcoming year the Company expects to hidden values of the Company are the Audeus release four or five movies including one by Complex which would be ready by 2008 adding Subhash Ghai. The Company has sold a part of about 50,000 sq.ft of commercial FSI which the its video rights to Shemaroo Entertainment Pvt. Company can gainfully exploit and the recently Ltd for Rs. 32.5 millions for a period offive years. bagged 57,000 sq.ft. of FSI in the partly The Company has also sold the remake rights completed building known as Communication of its film "Karz" to T-series. The Company Centre in Film City. expects to launch Greenlight Films in 2008-09 .as a division of Mukta Arts Limited and'will focus DISTRIBUTION AND EXHIBITION: on movies made: by cherry picked talent from The Company showed significant growth in; Whistling Woods International students. These distribution and exhibition during the year and may be for direct release through digital exhibition this year has further added additional theatres in cinemas followed by satellite and DVD release. www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net NOTICE Notice is hereby given that the 25* Annual General Meeting of Mukta Arts Limited will be held on Saturday, the 29th of September, 2007 at 4.00 p.m. at the Whistling Woods Institute Auditorium,.Dada Saheb Phalke Chitra Nagari, Goregaon (E), Mumbai- 400 065 to .transact the following business: . Ordinary Business: 1 To receive, consider, and adopt the audited Profit and Loss Account of the Company for the year ended 31s1 March, 2007 and the Balance Sheet as at that date together with the Director's Report and Auditor's Report thereon. 2 To appoint a Director in place of Mrs. Meghna Ghai Puri who retires by rotation and, being eligible, offers herself for reappointment. . , . 3 To consider and pass with or .without modifications, the following resolution as an Ordinary Resolution: ..'..' "RESOLVED THAT pursuant to section 224 of the Companies Act, 1956 M/s. .Shamit Majmudar Associates, Chartered .Accountants, Mumbai, be and are hereby appointed as the Statutory Auditors of the Company to hold :office from.the . conclusion of.the Twenty-fifth Annual General Meeting until the conclusion.of the Twenty-sixth Annual General Meeting, on such remuneration as: may be approved by the Board of Directors?' ... . . ' . ; ;; Special Business: V. '."..., •'•'''•;' •'••.;••••'• .-,V\''••',' •'•'•.' :~ ••'. . .'• : •. "•.'.;.' -: S'. ./'.'••;.".'-':' •'.' • ' ', ':. '":V'- .••;'. ' '.•'.-• '/'••• 4 To consider and if thought fitto pass with or without modification(s).theiollowihg resolution as a.Special.Resolution: .. "RESOLVED THAT pursuant to the provisions of the Companies Act, 1956. (including any amendment thereto or modifications(s) of re-enactments(s) thereof) and in accordance with the provisions of the Memorandum and Articles of Association of the Company and the regulations/guidelines, if any, prescribed by the Securities and Exchange Board of India (SEBI) and all other concerned and relevant authorities form time to time, to the extent applicable and subject to such approvals, consents, if any the Board of Directors be and are hereby authorised to allot 800,000 Equity shares of the aggregate nominal face value not exceeding Rs. 4,000,000 (Rs. Four Millions Only) to the present and future Senior Employees of the Company under an employee stock purchase scheme ( hereinafter referred to "ESPS) on the terms and conditions as set out in the Explanatory Statement to this item and on such other terms and conditions and in such trench/s as may be decided by the Board/Remuneration Committee in its absolute discretion. FURTHER RESOLVED THAT the allottment of 400,000 Equity Shares of face value of Rs. 51- each aggregating to Rs. 2,000,000 to Mr. Ravi Gupta, Chief Executive Officer (CEO) of the Company as part of "ESPS" be and is hereby approved and the decision of the Board of Directors for transferring 200,000 Equity Shares out of the above said 400,000 Equity Shares taken at the Board Meeting held on 31s1 July, 2006 and also approved by the Remuneration Committee at their duly held Meeting on 19lh July, 2006 be and is hereby ratified 5 To consider and if thought fit to pass with or without modification(s) the following resolution as a Special Resolution "RESOLVED THAT pursuant to Section 314 of the Companies Act, 1956 and other applicable provisions, if any, and subject to the permission of the.Central Government.in this regard, approval is hereby given to the reappointment of Mr. Siraj.A. Farooqui as Chief Operating Officer ( Production and Studio) of the Company, relative.of Mr. ParvezA. Farooqui, (Executive Director), for a period of five years with effect from 1st April, 2007 on the,terms and conditions contained in the draft agreement placed before the meeting and initialled by the Chairman for the sake of identification." Registered Office: By Order of the Board 6, Bashiron, 28th Road TPS - III, Bandra (W) . Mumbai - 400 050 . Ravi B Poplai Company Secretary Place: Mumbai Date : 27th August 2007 NOTES: 1 A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY / PROXIES INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXY FORMS, TO BE EFFECTIVE SHOULD BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LATER THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING. 2. The Explanatory Statement pursuant to section 173 of the Companies Act, 1956 that sets out details relating to the Special Business under Item No. 4 & 5 is annexed hereto. 3. The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, the 22nd September, 2007 to Saturday, the 29th September, 2007 (both days inclusive). 4. Members seeking any information or clarification on the Accounts are requested to send in written queries to the Company, at least seven days before the date of the meeting. Replies to such written queries received, will be provided only at the meeting. 5. Members/proxies should bring the Attendance Slip sent herewith, duly filled in, alongwith the Annual Report for attending the meeting. Registered Office: By Order of the Board 6. Bashiron, 28lh Road TPS - III, Bandra (W) Mumbai - 400 050 Ravi B Poplai Company Secretary Place: Mumbai Date : 27th August 2007 : www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net ANNEXURE TO NOTICE EXPLANATORY STATEMENT PURSUANT TO SECTION 173 (2) OF THE COMPANIES ACT, 1956: To consider and if thought fit to pass Special Resolution for ESPS The Company has always believed in aptly rewarding and motivating the employees with the intention to attract and retain the best talent. One of the measures adopted by the Company towards this end is to grant Company's Shares to the employees form time to time. To achieve this purpose the Trust namely MAL EMPLOYEES WELFARE TRUST was formed and the shares were purchased by the trust. The Remuneration Committee of the Company is empowered to issue shares in the name of the eligible employees on the following terms and conditions. 1. The ESPS scheme has been set up so as to encourage outstanding talent that can bring value to Mukta Arts and its subsidiaries to join the Company and to motivate them to stay with the Company and have a feeling of partnership in the Company. 2. The Trust shall procure from the market shares and build a corpus for allotment of the shares to achieve the objective stated in (1) above. 3. The scheme shall be applicable to senior executives only of and above the level of General Manager/ Vice President. 4. ESPS's shall be allotted to only those employees who can bring value to the Company by way of their industry contacts, past experience and proven vision. 5. The scheme shall be applicable to such employees who have demonstrated capability of generating good results for the Company and have demonstrated loyalty to the Company. 6. The amount of ESPS to be allotted in each case shall be decided from time to time by the Trustees and shall be co-related with the potential of the employee to bring value to the Company. 7. ESPS may be allotted to an employee in pursuance of negotiated terms of contract with the employee at the time of joining the Company. 8. ESPS will be granted at par value of the shares or at a premium which shall be below the market value as may be decided by the Trustees. 9. The value at which the ESPS is granted to the employee will be payable by the employee within 30 days of allotment. 10. The Trust may decide on such lock in period of the shares allotted under ESPS as the Trust deems appropriate. 11. Taxes or capital gain taxes if any applicable shall be payable by (he employee. 12. All the guidelines of SEBI or any other government regulatory body shall be applicable as appropriate. Therefore, the above resolutions no. 4 is recommended for your approval. None of the Directors is interested in the resolution. Item No. 5: To consider and if thought fit to pass Special Resolution for reappointment of Mr. Siraj A. Farooqui is Chief Operating Officer (Production and Studio) Mr. Siraj A. Farooqui is Chief Operating Officer (Production and Studio) of the Company and has experience of over 30 years in Film Industry. He has been associated with Mukta Arts Limited since its inception and has had experience in cinematography, editing, special effect, art direction etc. His continued association with the Company would prove to be an asset for the Company. This reappointment is for a period of 5 years from 1sl April, 2007 on the terms and conditions outlined below. SALARY: Basic salary starting with Rs.90,000/- per month - with the liberty to the Board to review and increase the same from time to time up to and not exceeding Rs. 200,0001- per month during the tenure of his contract of five years. PERQUISITIES: In addition to the aforesaid salary, the Chief Operating Officer (Production and Studio) shall be entitled to the following perquisites: a) HRA at the rate to be decided from time to time. b) Annual bonus not exceeding the monthly basic salary. c) A car with driver for official purpose. d) Telephones (including Mobile phone), fax and other communication facilities at residence for official purpose. All personal usage will be charged to his account, e) Performance Bonus as may be decided from time to time. f) Contribution to provident fund, superannuation fund or annuity fund to the extent these either singly or put together are not taxable under the Income Tax Act, 1961, and g) Gratuity at rate not exceeding half month salary for each completed year of service, and h) Leave as per Company's rules. Your Directors recommend the reappointment of Mr. Siraj A. Farooqui as Chief Operating Officer (Production and Studio) of the Company. None of the Directors other than Mr. Parvez A. Farooqui is interested in this resolution. A Draft Copy of the agreement to be entered into between the Company and Mr. Siraj A. Farooqui will be available for inspection at the Registered Office of the Company during business hours and will also be available at the meeting. Brief profile of Mrs. Meghna Ghai Puri Director, who retires by rotation and is eligible for re-appointment. Mrs. Meghna Ghai Puri became Director of the Company on 24.03.2000 as Additional Director. Subsequently she became Director of the Company at an Annual General Meeting held on 16.04.2001. Mrs. Meghna Ghai Puri is B.Sc. (Hons) in Business Management from Kings College London, University of London and has experience in matters relating to the Film Industry. She was Director- Business Development from 01.05.2002 till 30'" June, 2006. Currently she is President of Whistling Woods International Limited and is handling the affairs of the said Company. By Order of the Board Ravi B Poplai Company Secretary Place :Mumbai Date :27th August 2007. www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net DIRECTORS' REPORT To the members, Your Directors take pleasure in presenting the twenty-fifth Annual Report and Audited Statement of Accounts of the Company for the Accounting year ended 31st March, 2007 Financial Results: (Figures in millions) Particulars Year ending 'Year ending 31.03.2007 31.03.2006' (Rs.) Profit / (Loss) before interest, depreciation & tax 167.04 J27.'15)' Less: Interest 0.63 ': 0,60 Profit / (Loss)after interest, before depreciation & tax 166.41 ' (27,75);, Less: Depreciation 22.64 "; 29.98! Profit / (Loss) before tax 143.77 (57:73) Less: Provision for taxation 6.00 Fringe Benefit Tax 1.48 \0.97 Deferred Tax Liability/ (Asset) (0.87) ,(2.25),. Profit / (Loss)for the year 137.16 (56.45) Add'. Balance brought forward (56.35) (2.00) Less: Interim Dividend 45.16 Tax on Interim Dividend 6.33 Income Tax of earlier years Profit / (Loss) Carried forward to Balance Sheet 29.32 (56.35) Dividend The Company has declared Interim Dividend of 40% and distributed the same before the 31st March, 2007 and the same has been treated as final dividend. Company's Performance During the year the total revenues of the Company rose to Rs. 1016.55 millions as compared to Rs. 436 millions of last year. This is the highest turnover of the Company for any financial year till date. The Company's performance has been discussed in the Management Analysis in details. New Initiatives The development work of building a commercial complex at the Audeus, prime location has begun in May 2006. Share Capital The Share Capital remained the same during the year under review. Directors During the year Mr. Pradeep Guha was appointed as Director. Mrs. Meghna Ghai Puri, Director, retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for reappointment. The requisite particulars in respect of director seeking re-appointment are given in Annexure I. Employees Stock Purchase Scheme During the year 200,000 shares of the Company have been transferred in the name of Mr. Ravi Gupta, Chief Executive Officer of the Company on the recommendation of the Remuneration Committee and as approved by the Board of Directors. Auditors' Report and Certificate The Company's explanation to the Auditors' observation in their Report have been detailed in Note Nos. 2 (f) & 2 (g) in the notes forming part of Accounts contained in Schedule "P" which forms part of the Annual Report. The Auditors have also certified the Company's Compliance of the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement and the same is enclosed as an Annexure to the Report on Corporate Governance. www.reportjunction.com