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SANSCO SERVICES - Annual Reports Library Services - www.sansco.net H1UKTA ARTS LlffllTED mUKTA ARTS LHTUTED ANNUAL REPORT for the year ended 31st March 2009 www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net BOARD OF DIRECTORS Mr. Subhash Ghai, Chairman & Managing Director Mr. Parvez A. Farooqui, Executive Director Mr. Rahul Puri, Executive Director Mr. Anil Harish Mr. Vijay Choraria Mr. Pradeep Guha Company Secretary & Compliance Officer Mr. Ravi B Poplai Auditors M/s Shamit Majmudar Associates Internal Auditors M/s EDO Haribhakti Consulting Pvt. Ltd. Bankers Punjab National Bank Limited HDFC Bank Limited IDBI Bank Limited Kotak Mahindra Bank Limited Registrar & Transfer Agents Link Intime India Private 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 & it's Subsidiaries 39 Whistling Woods International Limited 52 Connect. 1 Limited 73 K. Mukta Tele Media Limited 82 1 Coruscant Tec Private Limited 92 www.reportjunction.com SANSCO SERVICES - Annual Rennrts TJhrarv Services - www.sansco.net mUKTA ARTS LimiTED PERFORMANCE Performance at a glance Rupees in millions Year ended Year ended Year ended Year ended Year«rtded 31st March 31st March 31st March 31st March 31stMansh 2009 2008 2007 2006 2005 Realisation from productions, 1,651.04 1,094.66 965.21 374.80 451.44 distribution & exhibition Equipment Hire Income 7.30 12.07 2.22 25.09 28.60 Other Income 19.16 24.93 49.12 36.12 31,59 TOTAL INCOME 1,677.50 1,131.66 1,016.55 436.01 511.63 Profit/(Loss) before Interest, Depreciation and Tax 89.27 166.41 167.04 (27.15) (134.88) Depreciation 18.89 17.64 22.64 29.98 32.14 Interest 9.60 0.43 0,63 0.60 0.56 Profit/(Loss) before Tax 60.78 148.34 143.77 (57.73) (167.56) Profit/(Loss) after Tax 41.01 130.30 137.16 (56.46) (169.67) Dividend 22.58 45.16 45.16 - - Dividend Rate 20% 40% 40% - • - Gross Fixed Assets 407.89 364.48 313.31 369.84 361.98 Net Fixed Assets 211.62 187.10 157.09 184.06 204.73 Total Assets 1,547.59 1,402.21 1,279.66 1,195.53 1,144.66 Equity Share Capital 112.92 112.92 112.92 112.92 112,92 Reserves and Surplus 1,152.97 1,138.38 1,060.92 975.25 1,029.60 Net Worth 1,265.89 1,251.30 1,173.83 1,088.17 1,142.52 Earnings per Share (EPS) In Rupees EPS Basic 1.82 5.77 6.07 - - EPS Adjusted to Rs. 5 1.82 5.77 6.07 - - www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net CHAIRMAN STATEMENT 2009 It has been a tough year for business in almost all sectors and all segments of industry. Although some believe that the entertainment industry is recession proof, this is not fully true. The financial cycle of film production has been affected and has led to a slow down at the trade level, although consumer confidence in good films continues unabated. The spiraling costs of 'A' listed stars and related production costs have resulted in margins being completely eroded with greatly increased risks of film making. The industry has realized its mistake, undergone a reality check and a correction. Mukta Arts Ltd, inspite of strong fundamentals and consistent performance, has also been affected by these economic conditions. In addition, the strike lasting from April - June 2009 has affected the business, margins & profitability of our films. In last three years financial years of 2006-07, 2007-08 & 2008-09, Mukta Arts has been able to generate good profits and to pay dividend in the range of 20% to 40%. At present, we have three movies ready for release and three new projects in the pipeline to be launched later this year including movies to be directed by Abbas-Mastan, Subhash Ghai and a newcomer, Vishnu Shyamaprasad. Mukta Arts is proud to have active film distribution offices across India. Although the Exhibition business added substantially to the top line of the Company, it affected the profitability of the Company due to a wafer thin profit margin. Hence, the Company took a prudent business decision to reduce the exhibition services to multiplexes where our investments were in excess of our profits last year, We continue to run this business, albeit at 40% of the volume as it was last year. We are however, working towards consolidating our Distribution business to make it stronger. The positive side of an otherwise difficult year is that we showed our best performance in terms of the top line crossing Rs.165 crores. This is a growth of about 50% of over the previous year top line. During the year, we released two films "Sanai Choughade" and "Yuwraaj". Although two other films were almost complete and could have been released in the last quarter of the year, we chose not to do so owing to the IPL timing and impasse between the producers and multiplex operators over the revenue share dispute. We still have three films in the pipeline (apart from "Paying Guests" released in June 2009) but I have decided to go slow on the production given the current external trade environment. As Warren Buffet said "Sometimes it's best not to do anything and just go out and play golf". I do not play golf, so I am going to do what I love most, write scripts. So I am going to do just that and maybe it will pay off very well in years to come. As a cost cutting exercise, the Mukta Arts offices will be shifted to the Communication Centre which is located opposite to WWI once the same is complete, Mukta will be housed in the top floor of this beautiful building. The Communication Centre is expected to be complete by September and we may brand it as MUKTA/SG HOUSE. This exercise will consolidate all the Mukta Arts activities under one roof. This would also release the office space in Bandra for sale, redevelopment or lease. During the year, the Audeus complex was completed. However given the difficult Real Estate phase, the offers coming our way are below our expectation. We would rather wait and go with the right party at the right time for the right price, rather than rush into a distress deal. The Company exited completely from its subsidiary, Red Carpet Films Limited as the Company did not have the administrative control on the same and the management decided rather to concentrate more on its own business. Accordingly shares were sold off to the promoters of Red Carpet films at par. The film "Paying Guests" directed by Paritossh Painter starring Shreyas Talpade, Chunky Pandey, Ashish Chaudhary, Javed Jafferey, Vatsal Seth, Celina Jetley, Neha Dhupia, Riya Sen, Sayali Bhagat, Johny Lever and others has already been released theatrically worldwide on 19th June 2009 immediately after the strike by the Producers and Distributors was called off, Although the film has not fared well theatrically but we are sure to recover further out of Satellite Rights, Terrestrial Rights, Home Video Rights etc. The other films in pipeline are "Hello Darling" directed by Manoj Tiwari starring Isha Koppikar, Celina Jaitley, Gul Panag, Javed Jaffrey and others, "Right Yaaa Wrong" directed by Neeraj Pathak starring Sunny Deol, Irrfan Khan, Isha Koppikar, Konkona Sen Sharma and others, and a Bengali Film "Nouka Dubi" directed by Rituparno Ghosh. On the Whistling Woods International front there has been a lot of development with three batches now having graduated from this prestigious Institute. The Second Convocation was held recently and Lord Bhiku Parekh, a well known economist, was the Chief Guest. The industry feedback on the graduate students has been very positive. The intake of students has been satisfactory. We have taken some new initiatives during the year. Among those that have taken off the ground is an MBA Programme in Media Management which was launched last year with Manipal University. This year the students of the first MBA batch will be spending a year with WWI to do their industry exposure and projects. We have finalized a similar proposal with Manipal, Dubai which launches the MBA in Media Management this year and their students would come to Whistling Woods International starting next year. www.reportjunction.com SANSCO SERVICES - Annual Reports Library Services - www.sansco.net milKTA ARTS LIMITED We have also finalized a TV Broadcast Studies Programme and put in place the curriculum and faculty. The media launch took place in June in the presence of the TVBS Academic Advisory Board members. This is a one year programme and is focused on Television and Radio giving the students exposure to creative and business aspects of Broadcasting. We have also finalized another major international initiative with Centre of Education Ciudad- de la Luz(CDLL), a state of the art Film School based in the Film City of Alicante on the Mediterranean Sea and promoted by the Valencian Provincial Government. This agreement will allow us to launch Whistling Woods International programmes in Spain. CDLL is Europe's largest Film City and the most modern film school. Since CDLL's infrastructure meets the standards of WWI, we are happy that students will now have a choice and be able to pursue WWI film making programme internationally.