ANNUAL REPORT PEN LIMITED 2016-2017 TABLE OF CONTENTS

CORPORATE FINANCIAL OVERVIEW STATEMENTS 1 Corporate Information 47 Standalone Financial 2 About Statements 3 Our Journey - Independent Auditors’ Report 4 Business Overview - Balance Sheet 12 Awards and Accolades - Statement of Profit and Loss 14 Key Strengths - Statement of Cash Flows 15 Future Strategy - Notes 16 Board of Directors 18 CMD’S Message 78 Consolidated 20 Financial Highlights Financial Statements - Independent Auditors’ Report - Consolidated Balance Sheet STATUTORY REPORTS - Statement of Consolidated Profit 23 Management Discussion and Loss and Analysis - Statement of Cash Flows 30 Board’s Report - Notes - Form AOC-1 CORPORATE INFORMATION

STATUTORY AUDITORS M/s. A. Bafna & Co., Chartered Accountants

BANKERS HDFC Bank Limited YES Bank Limited Bank of State Bank of India

REGISTRAR & SHARE TRANSFER AGENTS Big Share Services Private Limited E- 2, AnsaInd Estate, Saki Vihar Road, Andheri(E), Sakinaka , Maharashtra-400072

BOARD OF DIRECTORS REGISTERED OFFICE (Television Division) Mr. Jayantilal Gada PEN INDIA LIMITED, PEN House, Asha Colony Chairman & Managing Director Juhu Tara Road Juhu, Mumbai-400049 Mr. Dhaval Gada Investor Contact: [email protected] Non Executive Director

Mr. Akshay Gada CORPORATE OFFICE Non Executive Director (PEN Studios) 1101, B wing, Fortune Terraces Mr. Opp. Citi Mall & PVR ECX & Tanishq, New Link Road Non – Executive Professional Director Andheri (W), Mumbai-400053

Mr. Independent Director DIGITAL OFFICE ( Times and Play My Movie) Mr. Tilak Raj Bajalia S-6 & S-9, Pinnacle Business Park, Shanti Nagar Independent Director Mahakali Caves Road Andheri (E), Mumbai-400093 GROUP PRESIDENT – C&MA and GROUP COMPANY SECRETARY CORPORATE IDENTITY NUMBER Mr. Rajendra Kumar Haran U72200MH2000PLC128481

Annual Report 2016-17 1 ABOUT PEN INDIA LIMITED

Mr Jayantilal Gada began his entrepreneurial journey in 1984, in the media and entertainment industry with a video library called Popular Video Cassette Company. He subsequently ventured into trading video rights and distributing video cassettes across OUR VISION India, soon becoming the largest video library not just in India but also in Asia. “To consistently provide delightful and innovative entertainment experiences In 1992, the business was restructured under the name ‘Popular by engaging audiences and nurturing Entertainment Network’ and began to acquire video rights for talent with current formats and movies to be distributed over various mediums such as video cassettes, satellites, terrestrial platforms etc. The Company technology” subsequently forayed into theatrical and distribution rights of movies. PEN India Limited was incorporated in the year 2000. OUR BUSINESS Over the years, the company has successfully adapted to The company is an established the changing trends in content consumption, by expanding integrated media content house in India into content aggregation and distribution for broadcasting engaged in the following activities: on television platforms. It has been one of the most effective content aggregators for the broadcasting channel Zee. Between • Movie production, acquisition & sale 2004 and 2016, the company aggregated more than 2,500 of movie rights, theatrical & satellite movies for a cumulative value of more than INR 3,000 cr. The distribution, as well as marketing of company also has access to a diverse content library, which has been growing continuously with the addition of new releases movies as well as through catalogue acquisitions. This enables the • Intangibles & copyrights company to distribute to platforms catering to a wide range of • Royalty & advertising audiences. Over the years, PEN has become one of the largest • Consultancy in purchase of rights independent content and rights aggregators of Bollywood movies in India.

The company further ventured into producing and co-producing Hindi and regional movies, which received much acclaim from the Bollywood fraternity and critics, and also yielded strong box office returns. The company focuses on partnering with the best creative producers and directors in the industry and promptly Between 2004 and 2016 monetizing all movie rights primarily in the pre-release stage, thereby de-risking itself from the uncertainties of the movie production industry. 2,500+ Gearing up for the next growth spurt in the media and entertainment industry - which will primarily be fuelled by the Movies Aggregated growth of digital media platforms through mediums such as smartphones and tablets - PEN is setting up its own digital media platforms and will offer unique services at reasonable For prices for Indian consumers. >3,000 Cr. Cumulative value (INR)

2 Pen India Limited OUR JOURNEY

COMPLETED

Ventured into Digital Platforms, 1986 Induction of Mr Satish Kaushik as Professional Director and 2016 - Till Date 2016 Mr Javed Akhtar and Mr Tilak Raj Bagalia as Independent YEARS Directors.

Launched TV production business and produced / producing Uddan, Dil Ki 2011-2015 Batein Dil Hi Jaane, Rishton Ka Saudagar - Baazigar, Naamkaran and produced its first movie “”

Started an animation divisionand produced animation like Krishna, Raavan, Ganesh, Ghatotkach, 2006-2010 Mahabharat etc.

Became Exclusive agency to ZEE for 2001-2005 acquisitions of Hindi feature films for ZEE cinema

Launched VCD and DVD and formed PEN 1996-2000 India Limited Restructured Popular Entertainment Network Limited (PEN) and started dealing in copyrights of Hindi feature films vizvideo, satellite and 1991-1995 Launched Audio CDs Trading of video rights & distribution of VHS tapes across India. 1986-1990 Mr Jayantilal Gada started with a video library called “Popular Video Cassette Co” in 1983

Annual Report 2016-17 3 BUSINESS OVERVIEW

FEW MAJOR MOVIES PRODUCED/CO-PRODUCED BY THE COMPANY

MOVIE PRODUCTION, CO-PRODUCTION AND DISTRIBUTION

PEN is primarily engaged in the production, co-production and distribution of Hindi movies. The company’s strategy is to monetise its movies early in the pre-release stage and de-risk itself from the uncertainties of the box office. The company has also ventured into producing and co-producing various regional films. It continues to expand its portfolio of companies under its banner PEN across Hindi and regional movies in Tamil, Telugu, Kannada and Gujarati languages. Pen Group has also expanded its production business to television serials and has successfully produced serials such as Udaan (Colors), Dil Ki BaateinDil Hi Jaane (Sony) and Rishton Ka Saudagar Baazigar (Life Ok) and Naamkaran (Star Plus).

4 Pen India Limited Serial started on 16th August, 2014 on Viacom 18, Colors at 8.30 pm Monday to Friday. Successfully completed 818 Episodes upto 30th June, 2017 and still continuing. Serial started on 12th September, 2016 on Star Plus at 9.00 pm Monday to Friday. Successfully completed 232 Episodes upto 30th June, 2017 and still continuing.

Produced by Dhaval Jayantilal Gada & Guroudev Bhalla 2004 Tarzan The Wonder Car Aitraaz - and (Wednesday, Phir Hera Pheri , Baby, M.S. Dhoni - Fame, Neeraj Pandey) 2006 Vivah 3 - , , 2007 - Super Hit series, last 2 parts and now directed by Navnit Singh Welcome 3 - , - Super Hit series - Tare Zammen Par Last 2 parts and now same director 2008 Rang Rasiya Kahaani 3 - Super Hit jodi again for Part 3, Directed by Sujoy 2011 Tanu Weds Manu Ghosh only Don 2 Commando 3 - Vidyut, Vipul Shah, Reliance, PEN - Again for part 3 2012 Kahaani

UPCOMING MOVIES S3 - PEN made Tamil Super Hit with SURYA. And now in Hindi, 2013 Race 2 this Brand gets more powerful with SUNNY DEOL; Directed by Chennai Express K. Ravi Chandran Gumnaam - The Game of Unknown - PEN trying for this brand Mahabharat to also make it big for PEN, like KAHAANI. A Thriller, Directed

2014 Main tera Tera Hero HINDI by E. Niwas 3D Entertainment UPCOMING MOVIES Singh is Bling REGIONAL 2015 Gujjubhai 2 - Gujarati - Siddharth Randeria, Again a super hit brand 2016 Chitkaar - Gujarati - Super Brand Drama. Filming with Latesh Shah and Kahaani 2 Sujata Mehta Baaghi Sandakozhi 2 – Tamil - Super Brand name again. and Lingusamy 2017 Commando 2 Machine Kumki 2 - Tamil - Super Brand again. ELEPHANT MOVIE, Directed by SOME MOVIES RELEASED AND ACQUIRED PEN BY Singham 3 - Tamil Prabhu Solomon

MOVIE AGGREGATION

Since its inception, PEN has diversified its business from solely being a video cassette library to trading video rights and distributing video cassettes, and subsequently to acquiring and distributing copyrights of Hindi feature films for video, satellite, terrestrial and other mediums The company continues to own rights to more than 500 films, more than 10,000 songs, 1,000 plus Digital films’ rights and more than 10,000 films’ data for digital.

Following our investment strategy in movie content acquisitions, we have closed various deals in the current financial year, the major ones being: • Exclusive perpetual dubbing rights for satellite movies of 150 South Indian language movies which will convert into 1500 films • Remaking rights for titles such as Kahani, Chatrapati Leader, Nayak Returns, Paiya, Aakhiree Rasta, Andha Khanoon, Chalbaaz and many others • Remaking rights for Mahabharat film and 139 episodes of Mahabharat Katha television series for the next ten years • Fresh making rights for titles such as Gumnaam, The Game of Unknown, S3 and Total Dhamaal

Annual Report 2016-17 7 FEW MOVIES AGGREGATED/ DISTRIBUTED BY PEN

DIGITAL MEDIA PLATFORMS

YouTube Pen Movies is available on > the YouTube Platform and 3.57 Lakh has more than 3.57 Lakh Subscribers Subscribers

STILL ON DEMO Bollywood Times (BT) Launching Soon + BT is a multi-platform model available as a mobile app, website and on social media 1,000 platforms such as Facebook, Twitter and Instagram. It is the first-of-its-kind digital Downloads platform for promoting movies as well as booking tickets for movies and for other Bollywood entertainment. The user-friendly interface on BT’s app and web platform provides a seamless booking experience. The interface allows users to:

• Search, select and book tickets for newly released movies in nearby theatres 4.5 through the ‘In Cinema’ section Rating

Source: Google Play 8 Pen India Limited ALREADY BUILT MOVIE A DATABASE OF NEWS TICKETS MORE THAN 10,000 FILMS

• Browse through an encyclopaedia of Bollywood Movies through the ‘BTDB’ section, which provides information such as movie trailers, star casts, producers, directors, synopses, release dates, etc

• Watch trailers and songs from upcoming movies in the ’Trending Now’ section

• Read exclusive movie reviews, celebrity interviews, latest trends, top news and more information about films in the ‘BT News’ section TRENDS

TRIVIA

PMM is a pure play movie streaming platform, available via mobile (IOS and Android) and web platforms, with an option for the user to download content for viewing without an internet Play My Movie (PMM) connection. Downloads are restricted to the mobile application. Launching Soon A few films will be free to watch; others will be available via PMM is a digital platform that provides online video-on-demand subscription and also on a pay-per-view basis at very affordable services. Through PMM, users can access a wide range of Hindi rates so as to make this platform easily accessible to the mass movies, regional movies in Marathi, Gujarati, Punjabi, Bengali market. PMM is developed and operated by Play My Movie and Bhojpuri, and global movies that are dubbed in various Private Limited, a 100% subsidiary of Pen India Limited. languages.

A COLLECTION OF MORE THAN 1,000 MOVIES, ALREADY

A DIGITAL PLATFORM THAT PROVIDES ONLINE VIDEO-ON-DEMAND SERVICES

Annual Report 2016-17 9

ENTERING SOON FOR SHOWCASING PEN’S MOVIE IN A BETTER WAY.

M Tunes • M Tunes will cater to all music lovers with latest and the best Bollywood songs in all their glory and in HD quality too.

• M Tunes, with its high-energy packaging will make each song sound more beautiful.

• M Tunes understands music better and its perfectly matched mood-mapped songs promises to match and enhance the viewer’s experience.

• M Tunes is the most sought after prime time music channel by Bollywood and Music industry.

iLove • iLove, a music TV channel that captures eternal love in all its forms across generations of Bollywood movies.

• iLove boasts of the largest collection of love songs ever to have been contained in one TV channel. Ranging from the exquisite melodies of the 60s’ to the energetic and playful romantic songs of 70s’ and 80s’ to more recent soulful renditions of love.

• Each song on the channel has been lovingly handpicked and placed in the playlist. The older song visuals have been restored passionately to their former glory and the sound remastered to match modern viewing technology making it a television experience never created before in India.

BT News • BT NEWS, Bollywood’s only news TV channel that will pick up issues and subjects that have been unexplored and all this in its trademark witty style.

• BT News, in its bold and daring red and white packaging, will provide its own unique perspective of Bollywood, as never seen before on Indian television.

• BT NEWS believes in being ahead of the competition by knowing and dishing out the latest news before anybody else.

Annual Report 2016-17 11 AWARDS AND ACCOLADES

2001 Kutch Shakti Entertainment Gauravvanta Gujarati Award Award International Creative Arts Society

2011 2016 Jago Vagad Awareness GIFA Golden Award Gujarati Award Iconic Film Awards

PRESTIGIOUS AWARDS RECEIVED BY 2013 MR JAYANTILAL GADA Dhirubhai Ambani Memorial Award - 13th Annual Gujarati Screen & Stage Awards

12 Pen India Limited Sr. Award Year of Award Category Recipient No.

1 South Asian Rising Star Film Sep-12 Best Screenplay Sujoy Ghosh Awards (SAIFF)

2 Fiji International Film Oct-12 Best Film Kahaani

3 Big Star Entertainment Dec-12 Best Thriller Kahaani

4 ETC Business Awards Jan-13 Surprise Hit of the Year Kahaani

5 Jan-13 Best Film (Jury) Kahaani Best Actress Best Director Sujoy Ghosh Best Story Sujoy Ghosh Best Editor Namrata Rao 6 Jan-13 Best Production Designer Kaushik Das & Subrata Barik Best Editor Namrata Rao Best Sound Design Sanjay & Allwyn Best Story Sujoy Ghosh Best Actress Vidya Balan 7 Jan-13 Best Editor Namrata Rao Best Cinematography Setu Best Sound Design Sanjay & Allwyn Best Actress Vidya Balan Best Director Sujoy Ghosh 8 Stardust Awards Jan-13 Best New Film Producer Sujoy Ghosh & Kushal Gada Best Actress (Thriller) Vidya Balan Best Supporting Actor (Male) Nawazuddin Siddique 9 Mirchi Music Awards Feb-13 Best Background Music Clinton Cerejo

10 Apsara Awards Feb-13 Best Actress Vidya Balan Best Director Sujoy Ghosh Best Screenplay Sujoy Ghosh Best Sound Design Sanjay & Allwyn 11 Gujrati Screen Awards Mar-13 Special Awards for Kahaani Dhaval Gada & Kushal Gada

12 National Awards Mar-13 Best Original Screenplay Sujoy Ghosh Best Editor Namrata Rao Special Jury Award Nawazuddin Siddique 13 TOIFA (Times of India Film Apr-13 Best Editor Namrata Rao Awards) Best Story Sujoy Ghosh Best Screenplay Sujoy Ghosh 14 IIFA Jul-13 Best Editor Namrata Rao Best Actress Vidya Balan

Annual Report 2016-17 13 KEY STRENGTHS

3 Diversified distribution platforms The company has a strong presence in various distribution platforms such as television, home entertainment, digital new media and other media. The company has an extensive distribution network, which is its key strength and gives it a sustainable competitive advantage. The company’s distribution reach is a key advantage, giving it the ability to offer entertainment ’anytime, anywhere’ to its consumers. This also gives the company a direct insight into consumer preferences and consumption patterns across platforms, enabling it to further cross-leverage these insights.

4 Experienced promoters/directors and management team The promoters and business management group are experienced within their respective specialized segments, as well as in the entertainment industry. The main promoter Jayantilal Gada has with over 30 years’ business experience and 1 has essayed a prominent role in the growth and development of Established and reputed the business and the PEN brand. The company’s management brand name team comprises senior professionals who have vast domain Since 1995, the PEN brand has been used by the company knowledge and experience, having acquired and distributed for various media-related activities, including their video rental content for several years. As a result, the company is well- business, content aggregation, content distribution, home video positioned to focus on its continued expansion, and on distribution and content creation. This gives the PEN brand strengthening its content library and distribution network. considerable and constant media visibility. The group has been in existence for over three decades.

5 Strong relationships 2 in the industry Vast, diverse and growing As an established entity that is engaged in various aspects of content library the Indian entertainment industry, the company has created, The company has a diverse content library, which has been maintained and built goodwill with other industry participants. growing continuously with the addition of new releases as well This has led to repeated business transactions with known as through catalogue acquisitions. This enables the company names in the industry for the acquisition of content as well as to distribute to platforms catering to a wide range of audiences. for content distribution to platforms such as Zee TV, Sony TV, Further, the company is also expanding its library beyond filmed Colors and Star Plus, among others. entertainment content to various types of content such as special interest, music, devotional and MVAS content, among others. This has helped the company to diversify its revenue mix.

14 Pen India Limited FUTURE STRATEGY

The overall strategy of the group is structured on its Enhancing monetization of the content content library and its ability to successfully monetize the same through diversified platforms across the world. The library through existing and emerging media strategy is designed to address predictability, scalability and platforms sustainability, ultimately resulting in profitability. Over the last few years, television has emerged as a key The key elements of the group’s strategy are as follows: monetization medium for the distribution of films. The company believes that this will lead to better monetization of content, resulting in more demand and increased revenue for content Scaling up the content library by shared via the television platform. The company intends to broad driving return-on-investment base its revenue streams by further increasing its distribution of PEN’s vision is to be a leading entertainment content aggregator content through new media avenues, such as MVAS, internet and by acquiring content that it can exploit over various existing video on demand services platforms. The company believes that and emerging distribution platforms. Guided by entertainment increasing volumes of internet and mobile phone subscribers, consumption patterns and return on investment, the company’s combined with the growth of internet and mobile bandwidth, will strategy is to focus on acquiring additional content as follows: be key growth drivers and will help the company to diversify its revenue streams, while also monetizing its content library. Perpetual rights The company’s aim is to own the complete intellectual property rights of a film by acquiring perpetual rights, as well Enhancing revenue predictability as, to monetize these over a maximum number of distribution through strategically packaged sales platforms. This will contribute to the long term sustainability of As non-theatrical revenues gain more importance, the company the company’s business model. believes that its vast and diverse content library will allow it to monetize satellite licensing, digital new media licensing and Television broadcast rights and new media rights including home video distribution more efficiently as the company will be music-based rights able to aggregate and package several films together, instead of Over the last few years, television has emerged as a key monetizing each title on an individual basis. monetization medium for films. Hence, the company’s strategy is to further strengthen its competitive advantage by building on and augmenting its aggregation rights for television broadcasts, Optimizing content monetization and to further leverage its portfolio approach. across its lifecycle Managing the monetization of content across various distribution Remake Rights owned by PEN platforms over its lifecycle is a crucial aspect of the company’s Hindi Regional strategy to enhance profitability and generate revenue. Aakhiree Rasta Chatrapathi Andha Khanoon Leader Chalbaaz Paiya Ek Hi Bhool Pandiya Nadu John Jani Janardhan Vidiyum Munn Sansaar Endrendum Punnagai Maang Bharo Sajna Kirumi Kahaani Moodar Koodam Nayak Returns Thamizuka En Ondrai A

Fresh Making Rights owned by PEN Gumnaam - The Game Unknown S3 Total Dhamaal

Annual Report 2016-17 15 BOARD OF DIRECTORS

MR. JAYANTILAL GADA MR. DHAVAL GADA MR. AKSHAY GADA Chairman & Managing Director Non-Executive Director Non-Executive Director

He has over 30 years of experience in Aged 28 years, Dhaval Gada is an Akshay Gada, aged 20 years, began his the entertainment industry and has been entrepreneur, and Indian films and career in the movie industry under the associated with the company since its television producer. He is the son guidance of his father Jayantilal Gada inception. He has successfully led the of Jayantilal Gada, the founder and and his older brother Dhaval Gada. He company through the transition from promoter of PEN India Limited and started out by actively participating in video, audio and terrestrial to satellite PEN Group. He has more than nine the production of the company’s movies. and now digital. He started his journey years of experience in the business of At the young age of 19, he founded by operating a video library shop producing television serials. He joined and developed his own complete named Popular Video Cassette Library top management of PEN India Limited on entertainment digital portal called at Lamington Road, Mumbai. By 1992, November 3, 2014, becoming one of the Bollywood Times. He aspires to direct Popular Video Cassette Library was youngest producers in the Bollywood film films someday. restructured into Popular Entertainment industry. Mr. Gada has since produced Network Limited, and the PEN brand was and co-produced several well-known created. He then ventured into supplying films under the PEN banner, including Hindi feature films to Door Darshan Singh Is Bling, and Kahaani. Besides (DD). In the early 1990s when the private playing an active role in PEN India’s television channels took off in India, he top management, he also entered the became the leading distributor for all television industry in 2014 with Udaan, major networks, including Zee, Sony, which recorded the highest TRPs on Sahara and Star, among others. In 2004, Colors. He has also produced daily Zee Entertainment Limited approached soaps like Dilki Baatein Dil hi Jaane and Mr. Gada to provide consultancy Naamkaran. Mr. Gada’s passion for the services to exclusively purchase TV and Bollywood industry is even seen on broadcasting rights for movies, for their digital platform through the planned channels owing to his business acumen, launch of his own app Play My Movie. astute judgment and deep knowledge of the movie industry. By 2011, Mr. Gada was involved in movie production and co-production, and had produced the Hindi movie Kahaani, which was a great success and received numerous awards and accolades.

16 Pen India Limited MR. SATISH KAUSHIK MR. JAVED AKHTAR MR. TILAK RAJ BAJALIA Non-Executive Professional Director Independent Director Independent Director Javed Akhtar is the son of the legendary Tilak Raj Bajalia is a commerce graduate Satish Kaushik is a graduate from the writer and poet Jan Nissar Akhtar. He and member of The Institute of Cost & prestigious , born in Gwalior, schooled in Lucknow, Works Accountants of India. He served New and subsequently studied at and graduated from Saifiya College in as a Deputy Managing Director at Small the Film and Television Institute of India Bhopal. Mr. Akhtar is a legendary poet, Industries Development Bank of India in Pune. A renowned Indian film director, lyricist and screenwriter in the Indian film from October 4, 2012 to December 31, producer and actor in Indian theatre and industry. He was awarded the civilian 2013 and was Executive Director of IDBI the Hindi film industry, he started his honour of Padma Shri by the Government Limited. Mr. Bajalia served as the Head career as an assistant director to Shekhar of India in 1999, followed by the Padma of SME Vertical. He has been associated Kapoor for the film Masoom. His first film Bhushan in 2007. In 2013, he received the with CII and FICCI for the development as a director was Roop Ki Rani Choron Sahitya Akademi Award in Urdu, India's and growth of SMEs. He started his Ka Raja (1993). He has directed many second highest literary honour, for his banking career in 1974 at Bank of India other movies such as Prem, TereNaam, poetry collection Lava. He has also won and joined IDBI in 1983. He served as a Mujhe Kucch Kehna Hai, Hum Aapke five National Film Awards and eleven Director of Small Industries Development Dil Mein Rehte Hain, Hamara Dil Aapke Filmfare awards for his work as a lyricist Bank of India since 2009 and a Member Paas Hai and Milenge Milenge. He has and dialogue writer. Out of the 24 films of the committee constituted by Reserve acted in over a hundred films such as Mr. he wrote with Salim Khan, 20 were hits. Bank of India for restructuring cases with India, , Saajan Chale Saural, Some of his hits include Andaz, Seeta exposure of less than INR 100 million. Mr. and Chhote Aur Geeta, Zanjeer, Deewar and Sholay. Bajalia is a director in many private sector Miyan Bade Miyan. He also co-wrote and Mr. Akhtar was a member of the Rajya companies. anchored a television countdown show Sabha, the upper house of the Indian named Philips Top Ten, for which he won Parliament from 2010-16. He is a Director the Screen Videocon Award. His latest TV in Indian Spinal Injuries Centre and many Show Sumit Sambhal Lega won him much private sector companies. appreciation. His foray into international cinema includes Sarah Gavron's Brick Lane and Dev Benegal's Road Movie. He recently turned RJ and his programme Filmy Calendar Show is a tremendous success on 91.9 Radio Nasha. He is a director in Delhi Film Council and other private sector companies.

Annual Report 2016-17 17 CMD’s MESSAGE

I am delighted to write to you at the end of what has been a very satisfying financial year for Pen India. I express my gratitude for your consistent support and encouragement throughout our journey.

Our journey began as a small video cassette retail shop, way back in 1983. Over the years, the group has successfully adapted to changing content consumption patterns by expanding into content aggregation and distribution for broadcasting on television platforms, and production and co-production and distribution of Indian movie rights, as well as by foraying into the digital space. Today, we have evolved into one of the largest and well-diversified Media & Entertainment (M&E) corporate groups. I believe that we were able to come to this far on the back of our three decades of experience in the M&E industry, as well as our ability to gauge the pulse of the masses throughout the years and pick out correct content at competitive costs. We are also supported by our strong understanding of the industry’s dynamics and our willingness to move ahead with the changing times and industry dynamics. We have longstanding established relationships across the M&E industry.

The M&E industry has been undergoing a rapid transformation over the last few years, with the beginning of new era of digitization. Indian theatrical revenues are increasing at a fast pace, driven by increased footfalls and higher average price of tickets. In movie production and distribution, Pen India continued to drive higher growth backed by the industry’s demand for fast-growing multiplexes and digital platforms. We have continued our strategy of expanding our movie content library and investing in quality content. India is currently witnessing a digital revolution, with content consumption increasing multi-fold across platforms. We are well positioned to benefit from the rapidly growing M&E industry.

Digitization has been disrupting conventional business models in every aspect of the M&E industry and, in the process, creating many opportunities. The ever-widening reach of

18 Pen India Limited mobile internet, lower internet tariffs, continued penetration of Equipped with a strong balance sheet, a large content library affordable mobile devices and the increased availability of smart and our more than three decades-long standing in the M&E devices at affordable rates are bringing more consumers across industry, we will continue to capitalize on new opportunities. I the country into the digital age. All these trends continued to believe that our company has strong business visibility for the drive the shift in consumption to digital platforms. Audiences next few years and will leverage multiple monetization channels are clearly looking beyond traditional media and this trend, we as facilitated by the digital revolution. We are ready to capitalize believe, is here to stay. The core mantra of the M&E industry the strong growth opportunity presented by the M&E industry remains unchanged – entertaining the masses. and hope to generate good top-line and bottom-line growth for next few years. I would like to thank you for your continued support and trust in the Pen Group. I would also like to thank our This digital revolution augurs well for our digital platforms, dynamic workforce who is the main reason for our success story. namely Play My Movies (mobile app for providing online video- I remain grateful to all our stakeholders and assure you that we on-demand) and Bollywood Times (mobile app for providing will continue our quest to build a wholesome family. online ticketing, movie promotion and Bollywood news), which are both our wholly-owned subsidiaries. We believe that we are Thank you. well poised for a phase of repaid growth in our digital business in the coming years. Yours sincerely,

Our company’s operations were focused on distribution of films across theatrical, television and digital channels, along with monetization of our content library. The financial year 2016- 17 was indeed eventful for our company. Our company’s total income for the year was INR 153.01 cr compared to last year’s Jayantilal Gada INR 146.43 cr. Our Profit After Tax was INR 18.06 cr against last Chairman & Managing Director year’s INR 12.34 cr, clocking 46% growth in our YoY profitability. This growth was primarily driven by another year of strong performance in our movie production, and distribution and sale of rights businesses. We also closed the year with record EBITDA margins of 22%. India’s high GDP growth rate along with rapidly-growing disposable incomes, presented a great opportunity for growth in the M&E industry. With the exception of print media, all segment of the M&E industry are expected to grow at double digit rates for the next five years.

Annual Report 2016-17 19 KEY CONSOLIDATED FINANCIAL HIGHLIGHTS

REVENUE (Rs. In Lakhs) EBITDA MARGIN (%)

15,300 38.5% 14,642

9,628 12.6%

5,783 11.1% 12.6% 7.0% 1,228

FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17

PAT MARGIN (%) EPS (In Rs.)

23.1% 119

88

10.9% 8.4% 5.7% 28 33 2.4% 17

FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17

NETWORTH (Rs. In Lakhs ) RoCE (%)

4,960

26.2% 26.6% 3,203 21.6% 17.3% 1,969 15.7% 1,432 961

FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17

20 Pen India Limited

PEN IS EXCLUSIVE RIGHT HOLDER TILL 31ST DECEMBER,

2030. MANAGEMENT DISCUSSION AND ANALYSIS

GLOBAL ECONOMY OVERVIEW the country will be the key growth driver for the entertainment industry. As the proportion of working age population in the total population increases, the GDP is expected to grow higher. Per capita income is expected to expand at a CAGR of 5.6 % for the period 2010-20

RISING PER-CAPITA INCOME IN INDIA (USD)

3000 12% 2500 10% 2000 8%

6 6% 1500 2 3 5 9 7 6 4 8 4% 1000 9 7 1581. The global economy is in the midst of a decade-long slow growth 1456. 2% 1444. 1747. 1874. 2026. 2207. 2402. environment, characterized by an imminent productivity growth 500 1576. 0% 1387. 1455. crisis. The looming labour shortage in mature economies and skill 0 -2% deficiencies in emerging markets will further add to the challenges of global economic prospects. Global financial markets continue to FY10 FY11 FY12 FY13 FY14 FY15 FY16EFY17FFY18FFY19FFY20F face elevated levels of uncertainty, notwithstanding the resilience to the outcomes of the Brexit referendum and the US election.

Global growth is expected to be 3.5% for 2017. The US has led this The introduction of GST and the recent demonetization programme improvement by growing at 2-3%. Fiscal easing is also likely under are likely to boost the country’s GDP. Despite some delays in the Trump administration. Europe’s growth forecast is 1.5%, which domestic policy reforms and enduring fragilities in the banking is consistent with the gradual improvement in the labour market. system, investment demand is supported by the monetary easing Japan’s growth rate is in the range of 1% due to a weakness in cycle, rising FDI, and the government’s efforts in infrastructure its demographics and a decline in its working age population. investments and public-private partnerships. Economic activity China is expected to grow by 6.5%; long term concerns remain is beginning to firm after demonetization shocked the economy, due to the continued rapid debt growth, which has a potential resulting in massive cash shortages and economic disruptions for financial weakness. Growth is projected to pick up from at the end of the last year. The manufacturing PMI crossed into 2017 onwards, almost entirely on account of developments in expansionary territory in January 2017, and imports rebounded. emerging markets and developing economies. This primarily Despite the backdrop of more moderate growth, the government reflects two factors: the gradual normalization of macroeconomic stuck to a market-friendly budget for FY 2017. The budget pursued conditions in several countries experiencing deep recessions and growth-supportive policies while targeting a narrower deficit of the increasing weight of fast-growing countries in this group, in 3.2% of GDP, and was met with a positive market reaction. the world economy. MEDIA AND ENTERTAINMENT INDUSTRY INDIAN ECONOMY OVERVIEW With more than 800 television channels, 100 million pay-TV The Indian economy has been performing well despite the impact households, 70,000 newspapers and 1,000 films produced of demonetization. While the GDP in FY17 grew at 7.1%, it is further annually, India’s vibrant M&E industry provides attractive growth expected to grow above 7% in FY18. Incomes have risen at a brisk opportunities for global corporations. The Indian M&E sector is pace in India and will continue rising given the country’s strong poised to grow from INR 1,157 billion in 2015 to reach INR 2,260 economic growth prospects. Nominal per capita income have billion by 2019, at a CAGR of 14.3% – a growth rate that is more recorded a CAGR of 8.87 % over 2000–15. Rising incomes and than three times that of the global M&E industry, which is expected the consequent positive impact on the consumer base across to grow at 4.4%.

Annual Report 2016-17 23 In FY16, the Indian M&E industry registered growth of 9.1% over SIZE OF MAJOR INDUSTRY SEGMENTS 2015 & reached USD 18.7 billion, in terms of value. During 2015- 20, the industry is expected to grow at a CAGR of 14.33% from 2015-20 with the market expected to reach to USD 35.2 billion by 2020. MARKET SIZE (USD Bn)

70 0.8 60 0.7

2 0.6

50 9 0.5 62. 4 9 2020P 9 0.4

40 30. 23. 5 30.

7 0.3 16 26. 30 9 17.

7 0.2 13. 18 18.77 16. 14.4 20 17 0.1 12. 0.0 10 -0.1 0 -0.2

FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17PFY18PFY19PFY20PFY25P

Advertising revenue is expected to touch USD 14.8 billion by 2020, growing at a CAGR of 9.76% between 2011 and 2020. Print The next five years will see digital technologies increasing their media and television contributed for 76.2% of total revenue from influence across the industry, leading to a sea change in consumer advertising in 2016. Television advertising generated USD 2.99 behaviour across all segments The entertainment industry is billion in revenue in 2016. Mobile advertising has emerged as the projected to be worth more than USD 62.2 billion by FY25. third-largest advertising medium in India after television and print advertising. Spending on mobile advertising in India is expected The entertainment industry continues to be dominated by the to grow to USD 1.53 billion by the end of 2018. television segment, with the segment accounting for 44.24% of revenue share in 2016, which is expected to grow further to ADVERTISING REVENUE SHARE 48.56% by 2020.

Television, print and films together accounted for 79.54% of market share in 2016, in terms of value. In 2016, total spending on advertising across all media across the Indian entertainment industry stood at USD 7.85 billion, which is expected to touch USD 8.1 billion in 2016. Print was the largest contributor, accounting for 39.9% of the advertising share in 2015 and is projected to be 37.3% in 2016. 2016 SIZE OF MAJOR INDUSTRY SEGMENTS

Apart from the impact of rising incomes, the recent widening of the consumer base will also be aided by the expansion of the middle class, increasing urbanization and changing lifestyles. 2016 The entertainment industry will benefit from a continued rise in the propensity to spend among individuals; empirical evidence points to the fact that a decreasing dependency ratio leads to higher discretionary spending on entertainment. Traditionally, only advertising has been a key source of revenue for the M&E industry; in recent times, however, revenue from subscriptions and value-added services has also contributed significantly.

24 Pen India Limited With consumers willing to pay for content and extra services, the subscription segment will play an important role in the post- digitisation era.

The implementation of GST is likely to streamline multiple incidences of taxes that are currently being levied by both the central and state governments. While the introduction of GST is likely to have varied levels of impact across various media segments, the M&E industry is expected to be a net beneficiary. This is primarily due to the availability of input credits across the board and the inclusion of entertainment tax within the ambit of GST.

Government policy and initiatives have had a significant impact on the M&E industry. Implementation was a challenge, resulting in few glitches in the medium term. Demonetization resulted in a reduction in discretionary spending on marketing and advertising, which affected the M&E industry. Advertising revenues across print, television and radio were impacted to a great extent. Cinema halls, in particular single screens and live events, were also the large number of films and theatre admissions, the industry affected. However, the impact will not be felt for a longer period continues to be a minor player as compared to global industries of time. The consumption and advertising demand has increased in terms of revenue. since, and spending levels are expected to bounce back. In India, the film industry’s gross realization stands at USD In the long run, the widening of the tax base and formalisation of 2.1 billion versus gross realization of USD 11 billion in the US the economy could yield a positive impact on the country’s GDP and Canada which produces a significantly lower number of and advertising spends. films (approximately 700 films). This is mainly due to low ticket realizations and occupancy levels, lack of quality content and rampant piracy. Overall, the industry is projected to grow at a INDIAN FILM INDUSTRY CAGR of 7.7% until 2021, to encompass a net worth of INR 206.6 billion. The key growth drivers are expansion of multiplexes in The Indian film industry is the largest in the world in terms of smaller cities, investments by foreign studios in domestic and the number of films produced, with around 1,500 to 2,000 films regional productions, the growing popularity of niche movies, produced every year in more than 20 languages. The industry and the emergence of digital and ancillary revenue streams. also received the second-highest footfalls in the world in 2015 The domestic box office contributes the majority of revenue, (over 2.1 billion) following China (almost 2.2 billion). Despite representing 70% of the total industry.

FILM INDUSTRY PERFORMANCE

Revenues 2012 2013 2014 2015 2016 2017p 2018p 2019p 2020p 2021p 2015-16 CAGR (INR Billion) (YoY 2016-2017 growth)

Domestic Theatrical 85.1 93.4 93.5 101.4 99.8 106.6 111.8 117.9 124.2 131.2 -1.60% 5.60%

Overseas Theatrical 7.6 8.3 8.6 9.6 10.9 11.8 12.5 13.4 14.3 15.3 14% 7.20%

Home video 1.7 1.4 1.2 1 0.9 0.8 0.7 0.6 0.6 0.5 -13% -11.20%

Cable & Satellite Rights 12.6 15.2 14.7 15.9 15.3 16.2 17 18 19.1 20.2 -4% 5.70%

Ancillary Revenue streams 5.4 7 8.4 10.2 15.5 19.6 23.9 28.3 33.4 39.4 51% 20.60%

Total 112.4 125.3 126.4 138.2 142.3 155 166 178.2 191.6 206.6 3% 7.70%

Annual Report 2016-17 25 Cable and Satellite (C&S) rights contributed 11% of the overall multiplex industry is projected to add screens at a similar pace industry revenue in 2016. However, this segment witnessed (150-200 screens per annum) while single screens are likely to negative growth of 4% from INR 15.9 billion in 2015 to INR 15.3 recover from the prevailing drop in occupancy levels. billion in 2016. This can be attributed to a steep decline in the C&S rights market of Tamil and Telugu movies. Overseas revenue has been aiding the film industry. A considerable 8% of the overall theatrical collection comes from the overseas The Indian film industry is dominated by Bollywood, the Hindi markets. Southern films are key drivers in this regard. The US film industry, which contributes 43% of its revenue. Regional (30%), UK (20%) and Middle East (25%) are three prime overseas and international films contribute the remaining 50% and 7% markets for Indian films. Over the next five years, this segment is respectively. Within the regional film industry, Tamil and Telugu expected to grow at a CAGR of 7%. are the largest segments comprising approximately 36% of net box office revenues followed by Bengali, Kannada and Several international film studios such as Warner Bros, Disney, Malayalam films. Currently, the international films segment is Fox and Dreamworks, have not only set up distribution houses small but growing, driven by rising numbers of English and other in India, but have also entered into partnerships with local film foreign-language speakers, as well as rising numbers of dubbed production houses through acquisitions and co-production international movies being released across the country. agreements. For example: Walt Disney acquired a 50% stake in UTV and now has BOX OFFICE REVENUE SPLIT BY LANGUAGE a controlling stake in UTV Software Communications. Viacom18, a JV between Viacom and Network 18, was the first studio model- based production house. Viacom18 engages in production, syndication, marketing and worldwide film distribution.

Additionally, a key example of collaboration is Fox Star joining hands with Dharma Productions, in a deal valued at INR 5,000 million. Fox has produced almost 30 Bollywood films, as well as a few Tamil and Malayalam language films. Local film production can leverage the experience of these international studios to expand their international reach and incorporate enhanced project planning and cost controls.

Impact of Digitization in Indian Film Industry

Digitization of movies enables wider distribution of films across various regions and curbing piracy. Key benefits of digitization can be witnessed across the value chain:

The inconsistency of quality content is another reason for the poor Film-makers: performance of films as a medium in India. In 2016, Bollywood Digital printing costs 80% less than conventional printing, allowing raked up a sum of INR 37 billion from 225 movies. However, producers to scale up to five times the number of screens than the catch is that only 50 films contributed 96% of the total box originally allowed by the same budget. Due to this, digitization office share. Demonetisation was held responsible for the poor has enabled the penetration of content to smaller cities and performance of the industry in the last couple of months of 2016. towns. In the current scenario, over 60% of box office collections However, the Aamir Khan starrer Dangal proved that convincing are realized in the first week of a movie’s release. Increased stories and organic content will always evoke the passion of penetration, simultaneous release across theatres and front- theatre-watchers, irrespective of other factors. ending of revenue has resulted in a drastic increase in the number of films generating over INR 1 billion in box office revenues. In India, theatre ticket sales comprise roughly 70% of the total revenue; however, the decreasing number of screens is eroding Distributors and exhibitors: this number. The shutting down of single-screen theatres and Digitization of content has resulted in the reduction of costs the inadequate presence of multiplexes in the country can incurred during physical transportation and print manufacturing. be a major setback to the medium. The density of screens in Digital content is delivered by way of satellite or hard drives, India is as low as eight per million viewers, with the majority of adding convenience and cost-effectiveness to the process. screens being present in urban and semi-urban areas. CY2017 Nearly all theatres have adopted digital technology, resulting in is expected to see domestic theatricals recovering from the a shift from large-sized projection systems to smaller and more impact of demonetisation. Films, especially regional films, which efficient digital projection systems. Although digital projection deferred their release dates to 2017, are likely to contribute to 2017 systems involve a heavy initial investment, the running costs as revenues, supplementing the originally-planned releases. The compared to analogue are minimal.

26 Pen India Limited Consumers: The emergence of Free to Air channels as a major source of Digital projection in cinemas enables superior quality of images, reach and viewership has the potential to translate into a large which is also not subject to deterioration with the passage of time. It advertising market in the future. However, this comes at a risk of has given viewers access to technologies such as VFX, animation cannibalizing subscription revenues. Even though factors such as and 3D films. Digital cinema has also helped in addressing piracy. slow consumption pickup, Broadcast Audience Research Council With the advent of digital technologies, piracy of films and songs (BARC) data recalibration and 2016’s demonetisation programme has decreased tremendously. With digital distribution, movies brought down advertising spends, this blip is not likely to last are released on the same day in all places and checks can be beyond 2017. kept on where movies are showing and how many times they are screened – this results in a tremendous reduction in the scope Looking ahead to 2017, advertising revenues are likely to for piracy. experience similar growth levels as in 2016, on account of the first quarter impact of demonetisation and the Indian economy recalibrating to GST later in the year. The long-term forecast for TELEVISION INDUSTRY advertising growth remains robust at 14.4% CAGR over 2016- 21, on account of economic fundamentals remaining sound and The television industry grew by 8.5% over 2015 and the size of India continuing to remain a mass-market consumption story. On the television industry was INR 588 billion in 2016. It is expected the subscription growth front, the intent behind TRAI’s tariff and to register a CAGR of 14.7% and touch INR 116 billion by 2021. interconnect guidelines could help in alleviating certain issues, Television had a steady run in 2016, with another year of double- combined with the inevitable although delayed completion of digit growth, despite headwinds on account of demonetisation. digitisation, leading to a projected 14.8% CAGR over 2016-21.

The growth in subscription revenues was affected by the slow There has been a paradigm shift in the overall operations of pace of digitisation and Average Revenue per User realisations the television sector due to the on-going cable digitisation; from the addressable C&S base. Television advertising was however, constant delays in the supply of Set-Top-Boxes, seeding stable at 11% growth in 2016; there was strong support for sports and challenges pertaining to addressability, gross billing, per properties such as IPL and T20 cricket World Cup. This growth subscriber billing and roll out of packaging, remain a major was also supplemented by the launch of 4G services in the concern amongst stakeholders. It is now expected that digitisation second half of the year. will largely be completed in CY2017, with related benefits flowing through at a slow pace, based on historical indicators.

TV INDUSTRY SIZE (INR Bn) Due to demonetization, advertising revenues were impacted across television, print and radio. As per estimates, annual advertising growth rates for television, print and radio were adversely impacted by about 1.5-2.5%. However, the impact of demonetisation was short-lived, as since January 2017, there has been an upswing in consumption and advertising demand. However, spend levels continue to remain lower than in the same period of the previous year. As customers are increasingly adopting e-payment options, demonetisation will have a positive impact on companies in the long run. It will reduce cash collection overheads and bring down bad debts. In the next six to eight months, major DTH operators are envisaging e-payments contributing majorly to their recharges and collections.

The long-term forecast for advertising growth in the television industry remains robust at 14.4% CAGR over 2016-21, due to strong economic fundamentals and India remaining a mass market consumption story. On the subscription growth front, Indian television viewership continues to be dominated by the the intent behind TRAI’s tariff and interconnect guidelines could general entertainment genre, with Hindi and regional GECs help to alleviate some of the issues, combined with the inevitable leading the way. The viewership share of GECs was in the range though delayed completion of digitisation, leading to a projected of 55-60% in 2016, following a similar growth rate of 58% in 2015. 14.8% CAGR over 2016- 21. The movie genre accounted for 22-25% of viewership share in 2016, which was slightly higher than 2015’s 20% share. Hindi movies accounted for the bulk of viewership.

Annual Report 2016-17 27 BROADCASTER INDUSTRY SIZE (INR Bn) Good broadband speeds are essential for consumers to have a rich internet-based experience. The average broadband speed in India is 4.1 mbps (3Q-2016), which has marked a 62% increase YoY. The broadband (4 mbps) adoption (IPv4) in India is at 30%, representing a 116% YoY change. Parallely, the adoption of IPv6 internet protocol is improving in India, which creates the necessary infrastructure to connect more devices, support higher speeds, increase security of communication and reduce latency. As of 2016, IPv6 adoption in India was at 16.4%. How fast telecom companies are able to transition to this new protocol will lay down the foundation for the adoption of new age technology such as Internet of Things.

The number of wireless users in India is likely to cross 389 million in 2016 and reach 969 million in 2021, and 4G connections are expected to grow five-fold from 2016 to 2021 at a CAGR of 38%. The number of 3G connections is expected to surpass 2G connections by 2019. Further, 3G and 4G connections are BARC (Urban and Rural) data was available across the entire 52 expected to represent 80% of overall connections by 2021, up weeks for the first time in 2016. BARC also introduced the metric from 25% in 2016. of ‘000 Impressions in January 2016, as a measurement tool for viewership. The coverage of rural viewership by BARC opened With increasing accessibility and the affordability of smartphones, up several new marketing opportunities for broadcasters and users are increasingly consuming content through their phones. advertisers in 2016. Ratings pushed Free-To-Air GEC channels The number of internet-enabled mobile phones crossed 300 of the top broadcasters, along with DD National, to the top 10 million in 2016 and is expected to touch 700 million in 2021. The category. This has resulted in ad rates for these channels penetration of mobile devices in India is growing steadily; mobile increasing by about 50-70% during the year. Free-to-Air channel remains the primary device to cater to Indians’ digital needs. launches were broad-based, covering Hindi movies, news (Hindi A digital customer’s appetite for rich content, especially video, and regional), music and even children’s programmes at the end continues to grow on the go, requiring higher bandwidth. The of the year. A YoY comparison shows a rise in TV impressions and rate of growth of 4G networks will be multi-fold as compared to the average time spent in rural India by 30% and 26% respectively. the growth in wired connections and Wi-Fi access. Mobile video This is higher than the overall growth in TV impressions of 24% traffic is expected to grow 11.5 times during 2016-21 at a CAGR of and average time spent of 21%. 63%, and the number of video-capable devices and connections is expected to grow 2.2 times between 2016 and 2021, crossing 800 million. DIGITAL MEDIA DIGITAL ADVERTISEMENT SPEND (INR Bn)

Digital advertising was marginally impacted by demonetisation, but continued its growth trajectory with 28% growth in 2016 and contributed 15% of overall advertising revenues. With a rapid increase in internet penetration, advertisers’ interest has also increased to match the continuing shift in consumption towards

28 Pen India Limited digital media. The launch of Reliance Jio provided an added CONTRIBUTION OF CONSUMPTION impetus as data costs have been falling. Digital advertising is CATEGORIES TO MOBILE INTERNET IN INDIA expected to grow at a robust CAGR of almost 31% between 2016 and 2021, to emerge as the fastest-growing segment in the M&E industry. Also, the digital advertising industry will contribute more than 27% to total advertising spends. The mobile advertisements spend is expected to grow from INR 16.9 billion in 2016 to reach INR 132 billion in 2021 at 50.9% CAGR.

With improved network, better access to internet and smart mobile devices, digital platforms are expected to drive more 2016 media consumption.

INTERNET USERS (In Millions)

2021

The Government of India, through its umbrella Digital India initiative, continues to invest and drive several digital initiatives to improve the digital infrastructure and digital ecosystem of the country.

About 1,12,871 km of optical fibre cable has already been laid out under BharatNet for high connectivity. Mumbai is expected to be fitted with 1,200 Wi-Fi hotspots for free usage and Google is working with Railtel to provide free Wi-Fi at over 400 railways stations in the next few years. Bharat Sanchar Nigam Limited has Sources: also built over 2,500 free Wi-Fi hotspots across the country. The https://www.conference-board.org/economic-outlook2017/ government’s initiative to connect remote parts of the country has boarded 8,621 villages already, and plans to onboard over 55,000 https://www.imf.org/external/pubs/ft/weo/2016/02/pdf/c1.pdf villages by 2019. https://www.ibef.org/download/Entertainment-June-2017.pdf

Today, video content dominates mobile internet usage and the http://www.focus-economics.com/countries/india same trend is likely to continue going ahead. Video is expected https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/03/ to represent 60% of the overall mobile data traffic and is expected FICCIFrames2017.pdf to grow to 78% by 2021. Online video is part of the daily lives of Deloitte Report on The Indian Film Industry – Indywood September 85% of mobile data consumers in India, who watch such content 2016 at least once a week; 39% of connected consumers watch online videos daily. Urban consumers have been early adopters of video, http://www.focus-economics.com/countries/india especially in the age group of 15-34, constituting 70-75% of the total internet base. With on-demand accessibility, aggressively- priced high speed 4G data services, and a latent demand for differentiated content, OTT Video on Demand services have seen an upsurge in the last year.

Annual Report 2016-17 29 BOARD’S REPORT

Dear Members, The Board of Directors hereby submits the report of the business and operation of your Company along with the audited financial statements, for the year ended 31st March, 2017. The consolidated performance of the Company and it’s subsidiaries has been referred wherever required.

1. Results of our operations During the year under review, performance of your company as under: (In Lakhs) Sr. Particulars Standalone Consolidated No. Year ended Year ended Year ended 31-03-2017 31-03-2016 31-03-2017# 1 Revenue from operation 14,679.07 13,723.01 14679.22 2 Other Income 621.93 919.93 620.53 3 Total Revenue (1+2) 15,301.00 14,642.94 15299.75 4 Expenses: (a) Cost of Sales 11,392.76 12,375.28 11392.65 (b) Employee benefit expense 193.31 85.21 193.31 (c) Financial Costs 662.77 204.00 744.82 (d) Depreciation and amortization expense 37.45 30.81 70.59 (e) Other Expenses 400.59 332.51 418.32 5 Total Expenses 12,686.90 13,027.84 12819.69 6 Profit/(Loss) before exceptional and extraordinary items and tax 2,614.10 1,615.09 2480.06 7 Tax Expenses: (a) Current Tax 876.40 522.14 838.67 (b) Deferred Tax (-)46.46 (-)0 .53 (-)45.18 (c) Short/(Excess) Tax Provisions for Earlier Years (-) 18.53 (-) 140.63 (-)18.54 8 Profit/(Loss) after tax 1,802.70 1,234.11 1705.11 Earning Per Equity Shares (a) Basic 128.76 88.15 121.79 (b) Dilute 128.76 88.15 121.79

# Previous year figures not available since one years of consolidation activities

• Financial Review Companies are yet to start commercial operation in full Over Company’s business involving the distribution of fledged manner. film across theatrical, television and digital channel. During the year under review, the Standalone Revenue A detailed discussion on the business performance is from operations of the Company is Rs. 15301.01 lacs presented in the Management Discussion and Analysis over the previous year’s Rs. 14642.95 lacs. However, Section of the Annual Report. your Company had a substantial growth of 46.07% over the previous year’s with a Net profit after tax of • Appropriation Rs.1802.70 lacs during the year as compared to net Your Company is in a phase of development where it is profit of Rs. 1234.11 lacs of previous year. financially prudent to build up a healthy reserve base so as to serve as a source for meeting the financial As per the Consolidated Accounts, the total revenue requirements of the company for the effectuation of its from operations is Rs. 15299.76 lacs as subsidiaries plans in the years to come.

30 Pen India Limited It is keeping with this financial policy that your directors 7. Subsidiaries and Associates have decided to plough back the profits of the company During the year under review the Company has invested in into its business rather than declaring dividend for the following 3 Companies and consequent to Section 2(87) of the financial year 2016-17. It is felt that a sound financial base Companies Act, 2013, the said Companies are subsidiaries in the Company would in the long run lead to improved of the Company. As on 31st March, 2017, the Company has 3 share valuations, culminating into maximization of subsidiaries and 4 Associate Companies. returns for the shareholders. • Bollywood Times Private Limited • Transfer to reserves • Play My Movie Private Limited No amount is proposed to be transferred in reserves at • Propmax Developers and Holders Private Limited the standalone level. 1. Bollywood Times Private Limited (BTPL) 2. Particulars of loans, guarantees or investments BTPL was incorporated on 17.03.2016 as 100% Loans, guarantees and investments covered under Section subsidiary of Pen India Limited. The Company is in 186 of the Companies Act, 2013 form part of the Notes to the digital entertainment industry. BTPL has developed and financial statements provided in this Annual Report. operates a digital platform in the name of Bollywood Times (BT) which is a multi-platform model as a mobile 3. Fixed Deposits app, Website & social media. BT is a digital platform We have not accepted any fixed deposits and as such, no for online movie promotion & ticket booking besides amount or principal or interest was outstanding as of the providing details, trends review of movies. The Company Balance Sheet date. is yet to start its operation in full fledged manner as it is having total revenue of Rs. 0.15 lacs during the year 4. Particulars of contracts or arrangements made with ended 31.03.2017. related parties Particulars of contracts or arrangements with related parties 2. Play My Movie Private Limited (PMMPL) referred to in Section 188(1) of the Companies Act, 2013 in PMMPL was incorporated on 08.03.2016 as 100% the prescribed Form AOC-2 is appended as Annexure 1 to subsidiary of Pen India Limited. PMMPL is developing a the Board’s report. digital platform in the name of Play My Movies (PMM) for providing online Video-on-demand services available 5. Material changes and commitments affecting financial on mobiles & web platform. The company is yet to start position between the end of the financial year and date its operation on commercial scale. of the report 3. Propmax Developers and Holders Private Limited • The Board at its meeting held on 27th May, 2017 has (PDHPL) approve issue and allotment of 2,94,00,000 fully paid- PDHPL was incorporated on 01.07.2014, however it has up equity shares of face value of Rs.10/- each to the become as 100% subsidiary of Pen India Limited during shareholders of the Company in proportion of 21:1 the current year. PDHPL is taking care of real estate by issue of bonus equity shares by capitalization of activities of the company. The company has acquired Rs.29,40,00,000/- from the Securities Premium Account, one property in the current year. The Company is yet to General Reserves or any other permitted reserves/ start generate income, however suffered a loss of Rs. surplus as per the Audited Accounts of the Company for 125.86 lacs mainly towards interest and depreciation the financial year ended 31st March, 2016 to the Equity cost. Shareholders and consequently, the paid-up share capital of the Company increased from 14,00,000 Equity The Company has prepared the consolidated financial Shares to 3,08,00,000 Equity Shares. statements of the Company, which form part of this Annual Report. Further, a statement containing the • The Company existing paid-up share capital of salient features of the financial statements of our 30,800,000 Equity Shares are registered with National subsidiaries in the prescribed format AOC-1 is appended Securities Depository Ltd vide ISIN INE644X01019 for below as Annexure 2 to the Board’s Report. dematerialization. Out of 30,800,000 Equity Shares, 14,00,000 are in dematerialized form and 2,94,00,000 8. Report on Corporate Social Responsibility are in physical form. Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 6. Management Discussion and Analysis: 2014 has been appended as Annexure - 3 and forms an Management Discussion and Analysis is attached, which integral part of this Report. form part of this Report.

Annual Report 2016-17 31 9. Corporate Governance: Sr. Name of the Director Designation Our Corporate Governance philosophy: No. Corporate governance is about maximizing shareholder Chairman & value, ethically and sustainably. The Company believes that 1 Mr. Jayantilal Gada Managing Director the goal of the corporate governance is to ensure fairness for every stakeholder. The Company always seeks to ensure 2 Mr. Dhaval Gada Member that performance is driven by integrity. Your Board exercises 3 Mr. Akshay Gada Member its fiduciary responsibilities in the widest sense of the term.

10. Disclosures: iii. Nomination and Remuneration Committee: • Meeting of the Board: The role of Nomination and Remuneration The Board met 19 (Nineteen) times during the financial Committee is as follows: year. These were held on 2nd April, 2016, 11th April, 2016, 21st April, 2016, 14th May, 2016, 18th May, 2016, • Determine/recommend the criteria for 1st June, 2016, 18th June, 2016, 24th June, 2016, 15th appointment of Executive, Non-Executive and July, 2016, 10th September, 2016, 19th September, Independent Directors to the Board; 2016, 20th September, 2016, 10th October, 2016, 28th • Determine/recommend the criteria for October, 2016, 2nd November, 2016, 23rd December, qualifications, positive attributes and 2016, 30th January 2017, 22nd February, 2017 and 15th independence of Director; March, 2017. • Identify candidates who are qualified to become Directors and who may be appointed in the • Committees: Management Committee and recommend to i. Corporate Social Responsibility Committee: the Board their appointment and removal; The Corporate Social Responsibility Committee • Review and determine all elements of comprises following Directors: remuneration package of all the Executive Directors, i.e. salary, benefits, bonuses, Sr. Name of the Director Designation pension etc.; No. • Review and determine fixed component and performance linked incentives for Directors, Chairman & 1 Mr. Jayantilal Gada along with the performance criteria; Managing Director • Determine policy on service contracts, notice 2 Mr. Dhaval Gada Member period, severance fees for Directors and Senior 3 Mr. Akshay Gada Member Management; • Formulate criteria and carry out evaluation of One Meeting of the Corporate Social Responsibility each Director’s performance and performance Committee held on 19th September, 2016. of the Board as a whole.

The Corporate Social Responsibility Committee The Nomination and Remuneration Committee was is reconstituted by the Board of Directors at their constituted by the Board of Directors w.e.f. 5th July, meeting held on 5th July, 2017 with the following 2017 and it does comprise the following Directors Directors as the Members of the said Committee: as the Members of the said Committee:

Sr. Name of the Director Designation Sr. Name of the Director Designation No. No. 1 Mr. Javed Akhtar Chairman 1 Mr. Javed Akhtar Chairman 2 Mr. Satish Kaushik Member 2 Mr. Satish Kaushik Member 3 Mr. Tilak Raj Bajalia Member 3 Mr. Tilak Raj Bajalia Member

ii. Management Committee: Board Evaluation: The day-to-day management of the Company is The Company would formulate criteria for vested with the Management Committee, which performance evaluation of the Directors and the is subjected to the overall superintendence and Board as a whole. control of the Board. The Committee is constituted by the Board of Directors w.e.f. 27th May, 2017 and it does comprise the following Directors:

32 Pen India Limited iv. Stakeholders Relationship Committee: operations; The Stakeholder Relationship Committee have • Scrutinising of inter-corporate loans and entrusted with the following Role: investments made by the Company; • Reviewing with management the annual • Oversee and review all matters connected with financial statements as well as investments the transfer of the Company’s shares made by the unlisted subsidiary companies; • Approve issue of the Company’s duplicate • Reviewing, approving or subsequently share certificates modifying any Related Party Transactions in • Consider, resolve and monitor redressal of accordance with the Related Party Transaction investors’ / shareholders’ grievances related Policy of the Company; to transfer of shares, non-receipt of Annual • Approving the appointment of Chief Financial Report, non-receipt of declared dividend etc. Officer after assessing the qualifications, • Oversee the performance of the Company’s experience and background, etc. of the Share Transfer Agent candidate; • Recommend methods to upgrade the standard • Recommending the appointment, of services to investors remuneration and terms of appointment • Monitor implementation and compliance with of Statutory Auditors of the Company and the Company’s Code of Conduct for Prohibition approval for payment of any other services; of Insider Trading • Reviewing and monitoring the auditor’s • Carry out any other function as is referred by independence and performance, and the Board from time to time and / or enforced effectiveness of audit process; by any statutory notification/amendment or • Reviewing management letters / letters of modification as may be applicable internal control weaknesses issued by the • Perform such other functions as may be Statutory Auditors; necessary or appropriate for the performance • Discussing with Statutory Auditors, before the of its duties commencement of audit, on the nature and scope of audit as well as having post-audit The Stakeholders Relationship Committee was discussion to ascertain area of concern, if any; constituted by the Board of Directors w.e.f. 5th July, • Reviewing with management, Statutory 2017 and it’s comprises following Directors as the Auditors and Internal Auditor, the adequacy of Members: internal control systems; • Reviewing the financial statements, in Sr. Name of the Director Designation particular, the investments made by the No. unlisted subsidiaries; • Recommending appointment, remuneration 1 Mr. Javed Akhtar Chairman and terms of appointment of Internal Auditor of 2 Mr. Jayantilal Gada Member the Company; • Reviewing the adequacy of internal audit v. Audit Committee: function and discussing with Internal Auditor The Audit Committee of the Company is entrusted any significant finding and reviewing the with the responsibility to supervise the Company’s progress of corrective actions on such issues; internal controls and financial reporting process • Evaluating internal financial controls and risk and, inter alia, performs the following functions: management systems; • Valuating undertaking or assets of the • Overseeing the Company’s financial reporting Company, wherever it is necessary; process and disclosure of financial information • Reviewing the functioning of the Whistle to ensure that the financial statements are Blowing mechanism; correct, sufficient and credible; • Reviewing and examining with management the The Committee is governed by the terms of quarterly financial results before submission to reference which are in line with the regulatory the Board for approval; requirements mandated by the Companies Act. • Reviewing and examining with management the annual financial statements and the The Audit Committee was constituted by the Board auditors’ report thereon before submission to of Directors w.e.f. 5th July, 2017and it’s comprises the Board for its approval; following Directors as the Members of the said • Reviewing management discussion and Committee: analysis of financial condition and results of

Annual Report 2016-17 33 Sr. Name of the Director Designation of independence laid down in Section 149(6) of the No. Companies Act 2013. 1 Mr. Tilak Raj Bajalia Chairman 11. Directors and Key Managerial Personnel: 2 Mr. Javed Akhtar Member • Appointment: 3 Mr. Jayantilal Gada Member The following appointments were made till the date of the report: vi. Initial Public Offer Committee (IPO Committee): IPO Committee is entrusted with the following powers: a. Appointment of Shri Jayantilal Gada as the Chairman & Managing Director of the Company • The IPO Committee has been constituted to w.e.f. 1st April, 2016. decide the terms and conditions of the Issue, b. Appointment of Shri Dhaval Gada as a Non- • Finalisation and filing of the Draft Red Herring Executive Directorof the Company w.e.f. 1st April, Prospectus and this Red Herring Prospectus 2016. with SEBI, the Stock Exchanges and other c. Appointment of Shri Javed Akhtar, as an regulatory bodies as may be required; Independent Director w.e.f. 27th May, 2016. • Handle all matter relating to appointment of d. Appointment of Shri Satish Kaushik as a Non- intermediaries and advisors in relation to the Executive Professional Director w.e.f. 27th May, 2016 IPO; e. Appointment of Shri Tilak Raj Bajalia as an • Deciding on allocation of the equity shares to Independent Director w.e.f. 5th July, 2017 specific categories of persons; • Opening of bank accounts, securities account, The Company has received notices under Section 160 of the escrow or custodian accounts, submitting Companies Act, 2013, proposing appointment of Shri Jhaved applications and seeking listing of Equity Akhta and Shri Tilak Raj Bajalia as an Independent Director Shares with the Stock Exchanges; and Shri Satish Kaushik as a Non-Executive Professional • Determining and finalising the price band, Director at the ensuing Annual General Meeting of the Company. bid opening and closing date of this Issue, approving and finalising the ‘Basis of Allocation’; • Re-appointments: • Determining the price at which the Equity As per provisions of the Companies Act, 2013, Shri Shares are to be offered to the investors; Dhaval Gada and Shri Akshay Gada retires by rotation at • Settling difficulties and doubts arising in the ensuing Annual General Meeting and being eligible, relation to the IPO; seeks re-appointment. The Board recommends their • Empowering the authorized officers to appointment. enter into and execute any agreements or arrangements in relation to the IPO; and • Resignation: • Carry out all acts and take all decisions as may be a. Due to personal reason Shri Kantilal Gada Promoter necessary for the purposes of the IPO and listing. and First Director of the Company has resigned as a Director with effect from 14th May, 2016. The Board The IPO Committee was constituted by the Board places on record its appreciation for the services of Directors w.e.f. 5th July, 2017and it’s comprises rendered by Shri Kantilal Gada during his tenure following Directors as the Members of the said with the Company. Committee: b. Due to personal reason Shri Kushal Gada resigned as a Director with effect from 14thMay, 2016. The Sr. Name of the Director Designation Board places on record its appreciation for the No. services rendered by Shri Kushal Gada during his tenure with the Company. 1 Mr. Jayantilal Gada Chairman c. Due to unavailability of time Shri Dhaval Gada 2 Mr. Tilak Raj Bajalia Member resigned from the office of the Managing Director 3 Mr. Akshay Gada Member of the Company with effect from 1st April, 2016. However, Shri Dhaval Gada continues to remain Mr. Rajendra Kuamr Haran, appointed as the in the Board as a Non-Executive Director of the Convener of the IPO Committee. Company.

vii. Declaration by Independent Directors: 12. Internal financial control and its adequacy: The Company has received necessary declaration The Board has adopted policies and procedures for ensuring from independent director under Section 149(7) of the orderly and efficient conduct of its business, including the Companies Act, 2013 that he meets the criteria adherence to the Company’s policies, the safeguarding

34 Pen India Limited of its assets, the prevention and detention of fraud, error • Statutory Auditors reporting mechanisms, the accuracy and completeness of In accordance with the provisions of Companies Act, the accounting records, and the timely preparation of reliable 2013, at the Annual General Meeting held on 30th financial disclosure. September, 2015, the shareholders had appointed M/s A.Bafna & Co., Chartered Accountants, as Statutory 13. Significant and material orders Auditors of the Company, for a period of 5 years i.e. upto There are no significant and material orders passed by the conclusion of 20th Annual General Meeting to be the regulations or courts or tribunals impacting the going held for the adoption of accounts for the financial year concern status and Company’s operation in future. ending 31st March, 2020.

14. Extract of Annual Return M/s A. Bafna & Co, Chartered Accountants, have In accordance with Section 134(3)(a) of the Companies Act, consented to be the Auditors of the Company, if their 2013, an extract of the annual return in the prescribed format appointment is ratified by the members at the Annual is appended in Annexure 4 of the Board’s report. General Meeting and have also confirmed that their appointment is as per the provisions of Section 141 15. Directors’ responsibility statement of the Companies Act, 2013 and Rule 4 of Companies These financial statements are prepared in accordance with (Audit and Auditors) Rules, 2014. the Indian Generally Accepted Accounting Principles in India under the historical cost convention on accrual basis. GAAP 17. Policy Relating to Sexual Harassment: comprises mandatory accounting standards as prescribed As per the requirement of The Sexual Harassment of Women under section 133 of the company’s Act,2013("The Act") at Workplace (Prevention, Prohibition & Redressal) Act, read with Rule 7 of the companies (Accounts) Rule 2014,the 2013 (‘Act’) and Rules made thereunder, your Company has provision of the act (to the extend notify). Accounting policies constituted Internal Committees (IC). have been consistently applied, except where newly-issued accounting standard is initially adopted or a revision to an No complaints have been received during the year. existing standard requires a change in the accounting policy hitherto in use. 18. Particulars of Employees and Related Disclosures: Disclosures pertaining to remuneration and other details as The Directors confirm that: required under Section 197(12) of the Act, read with Rule • In the preparation of the annual accounts for the year 5(1) of the Companies (Appointment and Remuneration of ended 31st March, 2017, the applicable accounting Managerial Personnel) Rules, 2014 are annexed to this report standards read with requirements set out under [Annexure 5]. schedule III to the Act, have been followed and there are no material departures from the same; In terms of the provisions of Section 197(12) of the • They have selected such accounting policies and Companies Act, 2013 read with Rules 5(2) and 5(3) of the applied them consistently and made judgments and Companies (Appointment and Remuneration of Managerial estimates that are reasonable and prudent so as to give Personnel) Rules, 2014, a statement showing the names a true and fair view of the state of affairs of the Company and other particulars of employees drawing remuneration in at end of the financial year of the profit and loss of the excess of the limits set out in the said Rules forms part of the Company for that period; Report. However, having regard to the provisions of the first • They have taken proper and sufficient care towards proviso to Section 136(1) of the Companies Act, 2013, the the maintenance of adequate accounting records Annual Report excluding the aforesaid information is being in accordance with the provisions of this Act for sent to the Members of the Company. The said information is safeguarding the assets of the Company and for available for inspection at Registered Office of the Company preventing and detecting fraud and other irregularities; during working hours. Any member interested in obtaining • They have prepared the annual accounts on a ‘going such information may write to the Company, at the registered concern’ basis; office and the same will be furnished on request. • They have laid down internal financial controls, which are adequate and are operating effectively; and 19. Internal Controls and Risk Management • They have devised proper systems to ensure compliance The Company has in place a mechanism to identify, assess, with the provisions of all applicable laws and that such monitor and mitigate various risks to key business objectives. systems are adequate and operating effectively. Major risks identified by the business and functions are systematically addressed through mitigating actions on a 16. Audit Report and Auditors: continuing basis. These are discussed at the meeting of the • Audit Reports: Board of Directors of the Company. The Auditors’ Report for fiscal 2017 does not contain any qualification, reservation or adverse remark.

Annual Report 2016-17 35 The Company’s internal control systems are commensurate c. Information regarding imported technology with the nature of its business and the size and complexity of (Imported during last three years): its operations. The Board of Directors reviews adequacy and The Company has not imported any technology effectiveness of the Company’s internal control environment during the last three years. and monitors the implement of audit recommendations. d. Expenditure incurred on research and 20. Particulars of Energy Conservation, Technology development: Absorption and Foreign Exchange Earnings and Outgo: Nil A. Conservation of Energy C. Foreign exchange earnings and outgo: a. Steps taken for conservation of energy: The Company is not engaged in any manufacturing i. Income in Foreign Currency or processing activity. Considering the nature of Theatrical Revenue - Rs.1,30,268/- the Company activities, there is not reporting to be made on conservation of energy. ii. Expenditure in Foreign Currency (accrual basis) Professional Fees - Rs.8,71,301/- Notwithstanding this, the Company recognizes the importance of energy conservation in decreasing 21. General: the adverse effects of global warming and climate Your Directors state that no disclosure or reporting is change. The Company carries on its activities in an required in respect of the following items as there were no environmental friendly and energy efficient manner. transactions on these items during the year under review:

b. Steps taken by the Company for utilizing • Issue of equity shares with differential rights as to alternate sources of energy: dividend, voting or otherwise. Since the principal operations of the Company are • Issue of shares (including sweat equity shares) to not power intensive all operations are presently employees of the Company under any scheme save and being carried out using conventional energy except Employees’ Stock Option Scheme referred to in sources. As and when a substitute alternate energy this Report. source which is viable is made available in the • The Company does not have any scheme of provision of market, the Company will make all efforts to switch money for the purchase of its own shares by employees to the alternate source of energy. or by trustees for the benefit of employees. • No significant or material orders were passed by the c. The capital investment on energy conservation Regulators or Courts or Tribunals which impact the going equipment: concern status and Company’s operations in future. The Company has not made any capital investment • No fraud has been reported by the Auditors to the Audit on energy conservation equipment. Committee or the Board. • The Managing Director of the Company is not receiving any B. Technology Absorption remuneration or commission from any of its subsidiaries.

a. Efforts made towards technology absorption: 22. Acknowledgement: None Your Directors would like to express their sincere appreciation for the assistance and co–operation received from the b. The benefits derived like product improvement, financial institutions, banks, Government authorities, cost reduction, product development or import customers, vendors and members during the year under substitution: review. Your Directors also wish to place on record their None deep sense of appreciation for the committed services by the Company's executives, staff and workers.

For and on behalf of the Board of Directors For Pen India Limited

(Jayantilal Gada) Place: Mumbai Chairman & Managing Director Date : 6th July 2017 DIN No.: 00726688

36 Pen India Limited ANNEXURES TO THE BOARD’S REPORT

Annexure 1 Particulars of contracts/arrangements made with related parties

[Pursuant to Clause (h) of sub-section (3) of Section 134 of the Companies Act, 2013, and Rule 8(2) of the Companies (Accounts) Rules, 2014 – AOC-2]

The Form pertains to the disclosure of particulars of contracts/ arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013, including certain arm’s length transactions under third proviso thereto.

The paid-up share capital of the Company increased from Rs.1,40,00,000/- to Rs.30,80,00,000/- w.e.f. 27-05-2017. The Board prior approval necessary before availing or rendering services with related parties in terms of Section 188 of the Companies Act, 2013. However, no approval of the Board of Directors are require any related party transactions entered during the year are in Ordinary Course of the Business and at Arm’s Length basis.

Details of contracts or arrangements or transactions not at arm’s length basis: There were no contracts or arrangements or transactions entered into during the year ended 31st March, 2017, which were not at arm’s length basis.

Details of material contracts or arrangements or transaction at arm’s length basis: The details of material contracts or arrangement or transactions at arm’s length basis for the year ended 31st March, 2017 are as follows:

Name of related party Nature of relationship Duration of Nature of Amount in Rs. contracts Transaction Shri Jayantilal Gada Chairman & Managing Director Not Applicable Sale of Car 5,58,932/- M/s Popular Enterprises where Key Management 5 Years Leasing of 8,40,000/- Entertainment Network Personnel or their relatives are able to exercise Immovable Pvt. Ltd. significantInfluence(Lessor) Property M/s Pen Music Pvt Ltd. Enterprises where Key Management Personnel Not Applicable Availing of 4,00,000/- or their relatives are able to exercise significant services Influence (Service Provider)

For and on behalf of the Board of Directors For Pen India Limited

(Jayantilal Gada) Place: Mumbai Chairman & Managing Director Date : 6th July 2017 DIN No.: 00726688

Annual Report 2016-17 37 N.A. N.A. N.A. N.A. 100% 100% 100% % of Shareholding consolidation Not considered in in considered Not (Jayantilal Gada) (Jayantilal DIN 00726688 No.: For Pen India Limited After Tax (-) 2,51,513 (-) (-) 7,22,209 (-) Profit/(Loss (-) 1,25,86,506(-) (-) 7,187/- (-) 7,173/- (-) 7,000/- (-) 7,000/- (-) NIL NIL Profit / (Loss) for the year Chairman & Managing Director Managing Chairman & 1,28,236 consolidation consolidation Considered in Taxation Provision for For and on behalf of the Board of Directors Rs.17,813/- Rs.17,828/- Rs.18,000/- Rs.18,000/- (-) 2,51,513 (-) (-) 5,93,973(-) Before Tax Sheet Profit/(Loss) Profit/(Loss) (-) 1,25,86,506(-) Net worth attributable to to attributable shareholding as NIL NIL per latest Balance 15,000 Turnover N.A. N.A. N.A. N.A. NIL NIL consolidated Reason why the associates is not 5,50,00,000 Investments 29,06,493 82,33,772 Rs. 25,000/- Rs. 25,000/- Rs. 25,000/- Rs. 25,000/- Rs. 16,67,43,409 (excluding (excluding associate Amount of and surplus) and reserves shares capital capital shares investment in Total Liabilities 50% 50% 50% 50% 80,75,329 7,71,77,354 Total Assets 15,42,51,038 profit of LLP of profit Share of PEN in the (-) 7,29,139 Reserves Reserves (-) 2,58,443(-) and Surplus and (-)125,92,371 Unaudited Unaudited Unaudited Unaudited 1,00,000 1,00,000 Share Capital Last Audited 7,50,00,000 Balance Sheet date ended Period Period Financial 31-03-2017 31-03-2017 31-03-2017

Name of the Subsidiary Breakthrough LLP Films Brightlight Pictures LLP Wizart Entertainment LLP Pen Production No 1 LLP Name of the entity Bollywood Times Bollywood Times Private Limited Play My Movie Private Limited Propmax Holders and Developers Private Limited Annexure 2 companies/joint statements subsidiaries/associate of the financial of features the salient Statement containing ventures [Pursuant to first proviso to sub-section of (3) Section of the 129 Companies Act, read 2013, with Rule 5 of the Companies (Accounts) Rules, – AOC-1] 2014 Associates of List Date : 6th July 2017 Date Mumbai Place:

38 Pen India Limited Annexure 3 Report on Corporate Social Responsibility

A. Focus areas: The Company supports various bodies in carrying out activities in the areas of rural development, education, promoting health care, general semantics etc.

CSR Objectives: To attain its CSR objectives in a professional manner and integrated manner, the main objectives are:

1. To promote, carry out, support activities relating to: Education and Training including in Science and Technology, Humanities etc; Healthcare; Welfare of Children, Women, Senior Citizens, and differently Abled Persons; Employment enhancing Vocational skills; Sanitation; Water management; Agriculture; Horticulture; promotion of Culture; Art & Craft; Conservation of Natural Resources; Promotion and development of traditional Arts & Handicrafts; Employment Generation; Environment Sustainability; Science & Technology; Rural Development; Animal Welfare; welfare and development measures towards reducing inequalities faced by Socially and Economically Backward groups; and such activities may include establishing, supporting and / or granting aid to institutions engaged in any of the activities referred to above.

2. To conduct and support studies & research; publish and support literature, publications & promotion material; conduct and support discussions, lectures, workshops & Seminar in any of the areas covered above.

3. To promote, carry out, support any activities covered in Schedule VII to the Companies Act, 2013, as amended from time to time.

Overview of projects or programs proposed to be undertaken: The Company would take undertake activities relating to Promoting Education, Healthcare, Rural development and Sanitation in the coming financial years.

B. The Composition of the CSR Committee as on 31st March, 2017 is as follows: The CSR Committee comprises the following Directors as its Members:

Shri JayantilalGada – Chairman Shri DhavalGada – Member Shri AkshayGada – Member

C. Average net profit of the Company for last three financial years: Financial Years Profit in Rs. 2015-16 16,15,09,926/- 2014-15 57,287,939/- 2013-14 4,95,08,426/-

The average Net Profit amount is Rs. 8,94,35,430/-

D. CSR Expenditure (2% of the amount as in item 3 above): Rs. 17,88,709/-

Annual Report 2016-17 39 E. Details of CSR spent during the financial year: a. Total amount spent for the financial year – Rs. 28,00,000/- b. Amount unspent, if any – Rs. Nil.

F. Annual Report on Corporate Social Responsibility (CSR) Activities Manners in which the amount spend during the financial year is detailed below:

Sr. CSR Project/ Sector Locations Budget for Amount Cumulative Amount No. Activity projects / spent: Direct Expenditure spent: Direct/ programmes on projects/ up to reporting Implementing programmes period Agency

1 Shri Navjivan Gujarat Bhachau - Rs.18,00,000/- Direct on Rs.18,00,000/- Implementing Viklang Sevashray Kutch Projects Agency 2 Shri Navjivan Gujarat Bhachau - Rs.10,00,000/- Direct on Rs.10,00,000/- Implementing Viklang Sevashray Kutch Projects Agency

G. Our CSR Responsibilities We hereby affirm that the CSR Policy, as approved by the Board, has been implemented and the CSR committee monitors the implementation of the projects and activities in compliance with our CSR objectives.

For and on behalf of the Board of Directors For Pen India Limited

(Jayantilal Gada) Place: Mumbai Chairman & Managing Director Date : 6th July 2017 DIN No.: 00726688

40 Pen India Limited Annexure 4 Form No. MGT-9

Extract of annual return as on the financial year ended on 31-03-2017 [Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. Registration and other details:

i. CIN U72200MH2000PLC128481 ii. Registration Date 29/08/2000 iii. Name of the Company Pen India Limited iv. Category/Sub-Category of the Company Public Limited Company v. Address of the Registered office and contact details Pen house, Asha Colony, Juhu Tara Road, Juhu, Mumbai- 400049 vi. Whether listed company No Name, Address and Contact details of Registrar and vii. N. A. Transfer Agent, if any

II. Principal Business Activities of the Company All the business activities contributing 10% or more of the total turnover of the company shall be stated

Sr. Name and Description NIC Code % to total turnover No. of main products/services of the Product/ service of the company 1. Movies Production and distribution 99961210 100%

III. Particulars of Holding, Subsidiary and Associate Companies

Sr. Name and Address of the CIN/LLPIN Holding/ % of shares Applicable No. Company Subsidiary held Section /Associate 1. Propmax Developers & Holders U70102MH2014PTC255788 Subsidiary 100.00 Section Private Ltd. 2(87) of the 2. Play My Movies Private Ltd. U74999MH2016PTC274023 Subsidiary 100.00 Companies 3. Bollywood Times Private Limited U74900MH2016PTC274558 Subsidiary 100.00 Act, 2013 4. Wizart Entertainment LLP AAG-2474 Associate 50.00 Section 2(6) of 5. Pen Production No.1 LLP AAG-3170 Associate 50.00 the Companies 6. Bright Light Pictures LLP AAG-2473 Associate 50.00 Act, 2013 7. Breakthrough Films LLP AAG-2475 Associate 50.00

IV. Shareholding Pattern (Equity Share Capital Breakup as percentage of Total Equity) ii. Category-wise Shareholding

Category of No. of Shares held No. of Shares held % Change Shareholders at the beginning of the year at the end of the year during The Year Demat Physical Total % of Total Demat Physical Total % of Total Shares Shares A. Promoter 1. Indian a. Individual/ HUF - 14,00,000 14,00,000 100 - 14,00,000 14,00,000 100 0% b. Central Govt ------

Annual Report 2016-17 41 Category of No. of Shares held No. of Shares held % Change Shareholders at the beginning of the year at the end of the year during The Year Demat Physical Total % of Total Demat Physical Total % of Total Shares Shares c. State Govt(s) ------d. Bodies Corp ------e. Banks / FI ------f. Any Other ------Sub-total (A) (1) - 14,00,000 14,00,000 100 - 14,00,000 14,00,000 100 0% 2. Foreign ------g. NRIs-Individuals ------h. Other-Individuals ------i. Bodies Corp. ------j. Banks/FI ------k. Any Other ------Sub-total (A) (2) ------B. Public Shareholding ------1. Institutions ------a. Mutual Funds ------b. Banks/FI ------c. Central Govt ------d. State Govt(s) ------e. Venture Capital Funds ------f. Insurance Companies ------g. FIIs ------h. Foreign Venture Capital ------Funds i. Others (specify) ------Sub-total (B) (1) ------2. Non Institutions ------a. Bodies Corp. i. Indian ------ii Overseas ------b. Individuals i. Individual shareholders ------holding nominal share capital upto Rs. 1 lakh ii. Individual shareholders ------holding nominal share capital in excess of Rs. 1 lakh c. Others (Specify) ------Sub-total (B) (2) ------Total Public Shareholding ------(B)=(B)(1)+ (B)(2) C. Shares held by Custodian for ------GDRs & ADRs Grand Total (A+B+C) - 14,00,000 14,00,000 100 - 14,00,000 14,00,000 100 0%

42 Pen India Limited ii. Shareholding of Promoters

Sr. Shareholder’s Shareholding at the beginning of the Shareholding at the end of the year % Change No Name year in share holding No. of % Of Total % Of Shares No. of % Of Total % Of Shares during the Shares Shares Pledged / Shares Shares Pledged / year of the encumbered of the encumbered Company to total Company to total shares shares 1 Shri Jayantilal Gada 13,99,950 99.99 0 13,99,950 99.99 0 0 2 Smt Bhavita Shah 10 0.0007 0 10 0.0007 0 0 3 Smt Hansa Gada 9 0.0006 0 9 0.0006 0 0 4 Shri Dhaval Gada 1 0.00007 0 1 0.00007 0 0 5 Shri Kantilal Gada 10 0.0007 0 10 0.0007 0 0 6 Shri Akshay Gada 0 0 0 10 0.0007 0 0 7 SmtVasanti Gada 10 0.0007 0 10 0.0007 0 0 8 Shri Rajni Acharya 10 0.0007 0 0 0 0 0 TOTAL 14,00,000 100 0 14,00,000 100 0 0

ii. Change in Promoters' Shareholding (Please specify, if there is no change)

Sr. Shareholding at the beginning of Cumulative Shareholding during No the year the year No. of shares % of total No. of shares % of total shares of the shares of the company company 1 At the beginning of the year - - - - 2 Date wise Increase/Decrease in Promoters - - - - Shareholding during the year specifying the reasons for increase/decrease (e.g. allotment/ transfer/bonus/sweat equity etc) 3 At the End of the year - - - -

V. Indebtedness (Equity Share Capital Breakup as percentage of Total Equity) Indebtedness of the Company including interest outstanding/accrued but not due for payment

SecuredLoans Unsecured Deposits Total excluding Loans Indebtedness deposits Indebtedness at the beginning of the financial year 57,99,21,113 15,41,65,041 - 73,40,86,154 i. Principal Amount ii. Interest due but not paid iii. Interest accrued but not Total(i+ii+iii) 57,99,21,113 15,41,65,041 - 73,40,86,154 Change in Indebtedness during the financial year (-) 1,13,01,841 (-) 15,41,58,630 - (-) 16,54,60,471 - Addition - Reduction Net Change (-) 1,13,01,841 (-) 15,41,58,630 - (-) 16,54,60,471

Annual Report 2016-17 43 SecuredLoans Unsecured Deposits Total excluding Loans Indebtedness deposits Indebtedness at the end of the financial year 56,86,19,172 6,411 - 56,86,25,583 i. Principal Amount ii. Interest due but not paid iii. Interest accrued but not due Total (i+ii+iii) 56,86,19,172 6,411 - 56,86,25,583

VI. Remuneration of Directors and Key Managerial Personnel A. Remuneration to Managing Director, Whole-time Directors and/or Manager

Sr. Particulars of Remuneration Total Amount No Shri Shri Shri Jayantilal Gada Dhaval Gada Akshay Gada 1 Gross salary 75,00,000 5,40,000 5,40,000 a. Salary as per provisions contained in section 17 (1) of the Income-tax Act, 1961 b. Value of perquisites u/s 17 (2) Income-tax Act, 1961 c. Profits in lieu of salary u/s 17 (3) Income-tax Act, 1961 2 Stock Option - - - 3 Sweat Equity - - - 4 Commission - - - - as % of profit - others, specify 5 Others (Bonus) 25,000 25,000 25,000 Total (A) 75,25,000 5,65,000 5,65,000 Ceiling as per the Act Rs. 16,80,88,024/- (being 11% of the Net Profit of the company as calculated as per Section 198 of Companies Act, 2013)

B. Remuneration to other Directors

Sr. Particulars of Remuneration Name of Total No MD/WTD/Manager Amount 1 Independent Directors • Fee for attending board committee meetings • Commission • Others, please specify Total (1) 2 Other Non-Executive Directors • Fee for attending board committee meetings • Commission • Others, please specify Total (2) Total (B) = (1+2) Total Managerial Remuneration Overall Ceiling as per the Act

44 Pen India Limited C. Remuneration to Key Managerial Personnel Other Than MD/Manager/WTD

Sr. Particulars of Remuneration Key Managerial Personnel Total No CEO Company CFO Secretary 1 Gross salary - - - - a. Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 b. Value of perquisites u/s 17 (2) Income-tax Act, 1961 c. Profits in lieu of salary u/s 17 (3) Income-tax Act, 1961 2 Stock Option 3 SweatEquity 4 Commission - as % of profit - others, specify Total

VII. Remuneration of Directors and Key Managerial Personnel

Type Section of the Brief Details of Authority[RD Appeal made. companies Act description Penalty/ /NCLT/Court] If any(give Punishment/ details) Compounding fees imposed A. Company Penalty - - None - - Punishment Compounding B. Directors Penalty Punishment Compounding C. Other Officers In Default Penalty Punishment Compounding

For and on behalf of the Board of Directors For Pen India Limited

(Jayantilal Gada) Place: Mumbai Chairman & Managing Director Date : 6th July 2017 DIN No.: 00726688

Annual Report 2016-17 45 Annexure 5 Particulars of Employees

3(a) Compensation relating to financial year 2016-17 for Managing Director, Whole-time Director, Director and other KMP as on 31st March, 2017 as follows:

Name of the KMP Currency Financial year Base/Fixed Pay Bonus and Total Incentive compensation Shri Jayantilal Gada INR 2016-17 75,00,000/- p.a. 25,000/- 75,25,000/-

Information as per Rule 5(1) of Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

3(b) Remuneration to Managing Director/Whole-Time Director:

Name of the Director Title Remuneration Remuneration % Increase in Ratio of Ratio of Directors Identification in financial year in financial year remuneration in remuneration to remuneration to Number 2016-17 2015-16 financial year 2016-17 MRE excluding MRE including (DIN) as compared to financial to MD/WTD MD/WTD year 2015-16 Shri Jayantilal 00726688 Chairman & Rs.75,00,000/- Rs.12,00,000/- 525% 67.64 56.82 Gada Managing Director

3(c) Remuneration of other key managerial personnel (KMP):

Name of the Title Remuneration Remuneration % increase of Ratio of Ratio of No. of RSUs KMP in financial in financial remuneration in remuneration to remuneration to granted in the year 2016-17 year 2015-16 financial year 2016-17 MRE excluding MRE including financial year as compared to financial to MD/WTD MD/WTD 2016-17 year 2015-16 Shri Jayantilal Chairman & Rs.75,00,000/- Rs.12,00,000/- 525% 67.64 56.82 NIL Gada Managing Director

3(d) Information as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: To employees in terms of remuneration drawn during the year

Employee Name Designation Educational Experience in Remuneration in Previous employment and qualification years the financial year designation 2016-17 (in Rs.) Shri Jayantilal Chairman & S.S.C. Passed 16 Years Rs.75,00,000/- Pen India Limited, Chairman Gada Managing Director & Managing Director

For and on behalf of the Board of Directors For Pen India Limited

(Jayantilal Gada) Place: Mumbai Chairman & Managing Director Date : 6th July 2017 DIN No.: 00726688

46 Pen India Limited INDEPENDENT AUDITOR’S REPORT

To The Members, Pen India Limited,

Report on the Standalone Financial Statements 1. We have audited the accompanying standalone financial statements of Pen India Limited(“the Company”) which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss, the Cash Flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements 2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements, that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended).

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility 3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion 8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2017, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements 9. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

Annual Report 2016-17 47 10. Further to our comments in annexure A, as required by Section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The standalone Balance Sheet, the Statement of Profit and Loss, the Statement of Cash Flow dealt with by this report are in agreement with the books of account; d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rule issued thereunder;

e. On the basis of the written representations received from the directors as on 31st March, 2017 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March,2017 from being appointed as a director in terms of Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

g. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

1. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. Refer note 27 to the standalone financial statements;

2. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

3. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

4. The Company has provided requisite disclosures in its standalone Financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note 38 to the standalone Financial Statements.

For and on behalf of A. Bafna & Co. Chartered Accountants Firm Registration No.:03660C

CA. Jinendra Kumar Sethi Partner Membership No. 072006

Place: Mumbai Date : 6th July 2017

48 Pen India Limited Annexure A to the Independent Auditor’s Report Referred to in paragraph 1 under the heading ‘Report on Other Legal & Regulatory Requirement’ of our report of even date to the standalone financial statements of Pen India Limited for the year ended March 31st 2017

1. Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

c. There are no immovable properties held in the name of the Company.

2. As per the information received by us, the inventory has been physically verified (copyrights of film verified with reference to title documents/ agreements) by the management at reasonable intervals during the year. As explained to us, no discrepancies were noticed on physical verification as compared to the book records.

3. The Company has granted unsecured loans to 2 companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

i. In our opinion the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under Section 189 of the Act were not, prima facie, prejudicial to the interest of the Company.

ii. The schedule of repayment of principal has been stipulated where in the principal amounts are repayable after a period of 3 years and since these re - payments are not due during the year, in our opinion, the question of repayment of the principal amount does not arise;

iii. The principal amounts of loans are repayable after a period of 3 years and since these re - payments are not due during the year there is no overdue amount in respect of loans granted to such companies.

4. In our opinion, company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.

5. In our opinion, the Company has not accepted any deposits from the public. Accordingly, the provisions of clause 3(v) of the Order are not applicable.

6. As informed to us the, the maintenance of Cost Records has not been specified by the Central Government under sub-section (1) of Section 148 of the Act, in respect of the activities carried by the company.

7a. According to information and explanations given to us and on the basis of our examination of the books of account, and, records, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2017 for a period of more than six months from the date on when they become payable.

Annual Report 2016-17 49 7b. According to the information and explanations given to us, there are no dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax outstanding on account of any dispute except the following:

Name of Nature of Amount Period to which the Forum where dispute is pending/appeal Statute Dues (in Rs.) amount relates in the process of being lodged Service tax Service Tax 43,43,002/- 2008-09 to 2011-12 Office of Assistant Commissioner, Demand Division VII, Service tax-VI, Mumbai Service tax Service Tax 63,43,795/- 2009-10 & 2010-11 Office of the Commissioner of Demand Service tax, Audit-I, Mumbai

8. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to bank, financial institutions.

9. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. The Company had opening term loans which have been repaid in part or full during the year.

10. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

11. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.

14. Based upon the audit procedures performed and the information and explanation given by the management, the company has not made any preferential allotment or private placement of share or fully or partly convertible debentures during the year under review. Accordingly, the provision of clause 3 (xiv) of Orders are not applicable to the Company and hence not commented upon.

15. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16. In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provision of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

For and on behalf of A. Bafna & Co. Chartered Accountants Firm Registration No.:03660C

CA. Jinendra Kumar Sethi Partner Membership No. 072006

Place: Mumbai Date : 6th July 2017

50 Pen India Limited “Annexure B” to the Independent Auditor’s report on the Internal Financial Controls Under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the act”) on the Standalone Financial Statements of Pen India Limited

1. In conjunction with our audit of the standalone financial statements of Pen India Limited (“the Company”) as of and for the year ended 31st March2017, we have audited the internal financial controls over financial reporting (IFCoFR) of the company as of that date.

Management’s Responsibility For Internal Financial Control 2. The Company’s management is responsible for establishing and maintaining internal financial controls based on the criteria established by the Company considering the essential components of internal control as stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the company’s business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility 3. Our responsibility is to express an opinion on the Company’s IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate IFCoFR were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls Over Financial Reporting 6. A company’s IFCoFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s IFCoFR includes those policies and procedures that

• Pertain to the maintenance of records that , in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting 7. Because of the inherent limitations of IFCoFR, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the IFCoFR to future periods are subject to the risk that IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Annual Report 2016-17 51 Opinion 8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

For and on behalf of A. Bafna & Co. Chartered Accountants Firm Registration No.:03660C

CA. Jinendra Kumar Sethi Partner Membership No. 072006

Place: Mumbai Date : 6th July 2017

52 Pen India Limited BALANCE SHEET AS AT 31 MARCH, 2017

Particulars Note No. As on As on 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) EQUITY & LIABILITIES 1. Shareholders' Funds a. Share Capital 3 14,000,000 14,000,000 b. Reserves & Surplus 4 486,313,105 306,332,066 2. Non - current Liabilities a. Deferred tax liabilites (Net) 5 - 1,324,346 b. Long Term Provisions 6 510,521 - 3. Current Liabilities a. Short Term borrowings 7 568,625,583 734,086,154 b. Trade payables 8 87,647,617 21,301,482 c. Other Current Liabilities 9 257,801,722 143,426,168 d. Short Term Provisions 10 130,876 - TOTAL 1,415,029,424 1,220,470,216

ASSETS 4. Non Current Assets a. Property, Plant and Equipment 11A 9,929,464 13,232,773 b. Intangible Assets 11B - - c. Non Current Investments 12 75,271,640 - d. Deferred Tax Assets(net) 5 3,322,421 - e. Long Term Loans and Advances 13 30,104,099 112,388,725 5. Current Assets a. Current Investments 14 669,679,989 503,165,960 b. Inventories 15 452,229,465 432,282,068 c. Trade Receivables 16 103,153,569 15,047,808 d. Cash and Cash Equivalents 17 19,682,746 60,362,745 e. Short term Loans and Advances 18 50,073,380 82,853,703 f. Other Current Assets 19 1,582,651 1,136,434 TOTAL 1,415,029,424 1,220,470,216 Significant Accounting Policies & Notes to Financial Statements 1 to 41

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

Annual Report 2016-17 53 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH, 2017

Particulars Note No. Year ended Year ended 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) I Revenue from operations 20 1,467,907,430 1,372,301,152

II Other Income 21 62,193,235 91,993,616

III Total Revenue 1,530,100,665 1,464,294,768

IV Expenses: Cost of Sales 22 1,139,276,827 1,237,528,632 Employee benefit expenses 23 19,331,006 8,521,747 Finance cost 24 66,277,243 20,400,846 Depreciation and amortisation expenses 25 3,745,942 3,081,915 Other Expenses 26 40,059,187 33,251,701

Total Expenses 1,268,690,205 1,302,784,841

V Profit before tax 261,410,460 161,509,926

VI Tax Expenses: 1. Current Tax 87,640,991 52,214,884 2. Deferred Tax (4,646,767) (53,005) 3. Short/(Excess)Tax Provision for Earlier Years (1,853,940) (14,063,012) 81,140,285 38,098,867

VII Profit / (loss) for the period (XI - XIV) 180,270,175 123,411,060

VIII Earings per equity share 34 1. Basic 128.76 88.15 2. Diluted 128.76 88.15 Significant Accounting Policies & Notes to Financial Statements 1 to 41

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

54 Pen India Limited CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2017

Particulars Year ended Year ended 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) A Cash flow from operating activities Net Profit before Taxation 261,410,460 161,509,926 Adjustments for - - Fixed Assets Written Off/Sold 1,289,474 - Depreciation 3,745,942 3,081,915 Interest Income (44,787,029) - Share of Loss in Associate LLP's 28,360 Interest Expense 66,277,243 20,400,846 Profit on sale of Mutual Funds (16,643,379) (11,152,440) Profit on sale of asset (55,121) Dividend Received - (8,869,818) 9,855,489 34,60,504

Operating profit before working capital changes 271,265,949 164,970,430 Adjustments for - Increase in Trade and Other Receivable (55,771,655) (90,605,843) Decrease/(Increase) in Inventories (19,947,398) (94,645,850) Increase in Trade and Other Payables 181,073,950 (514,295,726) 105,354,898 (699,547,419)

Cash generated from operations 376,620,847 (534,576,989) Direct Taxes paid (net of refund of taxes) (5,073,676) (11,887,193) Net cash from operating activities 381,694,522 (546,464,182)

B Cash flow from investing activities Expenditure on property, plant and equipment (1,751,875) (1,060,407) Long term loan recd back /(given) (8,576,100) 6,307,751 Purchases of Investments ( Current & Non Current) (416,814,029) (678,165,960) Proceeds from sale of Investments 191,643,379 641,152,439 Proceeds from sale of property, plant and equipment 74,890 Interest Income 44,787,029 - Dividend Received - 8,869,818 Net cash used in investing activities (190,636,706) (22,896,359)

C Cash flow from financing activities Proceeds / (Repayment) from/(of) Long-term Borrowings - 109,020,493 Issue of Equity share capital - - Proceeds / Repayment from/(of) Short-term Borrowings (165,460,571) 531,886,226 Interest paid (66,277,243) (20,400,846) Net cash used in financing activities (231,737,814) 620,505,873

Annual Report 2016-17 55 Particulars Year ended Year ended 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Net (decrease)/increase in cash and cash equivalents (A+B+C) (40,679,997) 51,145,331

Cash and Cash Equivalents at beginning of the year 60,362,745 9,217,414 Cash and Cash Equivalents at end of the year 19,682,746 60,362,745

Notes: 1. The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard – 3 on Cash Flow Statements, issued by the Institute of Chartered Accountants of India. 2. Cash and cash equivalents at the end of the year represents cash and bank balances.

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

56 Pen India Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2017

1. Nature of Operations assumptions that affect the reported amount of assets The Company was incorporated on 29th August 2000 and liabilities , revenues and expenses, as well as to carry on the business of to purchase, take on hire or disclosure of contingent liabilities on the date of the otherwise acquire, films and television and video with the financial statements. Key estimates made by the exhibiting and renting of the same and to sell, give on hire Company in preparing these financial statements. Key or otherwise the films, talkies and the right so acquired and estimates made by the company in preparing these the company’s production with their exhibiting, distributing financial statement include useful lives of assets as well and renting rights to theatres both in India and outside, as utilization of economic benifits from these assets, satellite rights, other media rights & to carry on the business accrual of expenses , recoverability of trade receivables as manufacturers, sellers, distributors, dealers, buyers and deffered tax assets . Management belives that the importers,exporters of audio and video cassettes, records, estimates made in the preparation of financial statement compact disc, laser disc, electro magnetic devices in any are prudent and resonable . Actual results may differ formats, televisions, radios, amplifiers, tape recorders, video from those estimates. Any revision to accounting recorders, digitalelectronics and other control systems, estimates is recognised prospectively, in the period in sound/video transferring and processing, videographics, which revisions are made. video vision. c. Revenue Recognition 2. Statement of Significant Accounting i. Revenue from Sale of Rights is recognised on Policies fulfillment of the following criteria • Persuasive evidence of a sale or licensing These financial statements are prepared in accordance with arrangement with a customer exists. the Indian Generally Accepted Accounting Principles in India • The film is complete and, in accordance with under the historical cost convention on accrual basis. GAAP the terms of the arrangement, either has been comprises mandatory accounting standards as prescribed delivered or is available to be delivered. unser section 133 of the companies Act, 2013 ("The Act") • The gross revenue is fixed or determinable. read with Rule 7 of the companies (Accounts) Rule 2014,the • The license period of the arrangement provision of the act (to the extend notify). Accounting policies has begun and the customer can begin its have been consistently applied, except where newly-issued exploitation or exhibition. accounting standard is initially adopted or a revision to an • Collection is reasonably assured. existing standard requires a change in the accounting policy hitherto in use. ii. Revenue from film exhibition is recognised when the said film is exhibited in theatres and the final All the assets and liabilities have been classified as current account of the said film is received from various and non-current as per the Company's normal operating cycle theatre owners. If the film is exhibited in the last and other criteria set out in Schedule III to the Companies 3 months of the Financial Year, the gross revenue Act, 2013. Based on the nature of operations and the time received from theatrical owners would be reduced between the acquisition of assets and their realization in from the cost of the film and if there is any balance cash and cash equivalents, the Company has ascertained cost, the same would be carried forward to the its operating cycle as 12 months for the purpose of current / subsequent year to be written off in the subsequent non-current classification of assets and liabilities. year after adjustments of any receipts in subsequent year and if there is a credit balance in the cost after The significant accounting policies are as follows - crediting the receipts to the cost of the film, the same would be transferred to profit & loss account. a. Basis of Accounting - The financial statements are prepared in accordance iii. Revenue from Sale of Compact Discs and with the historical cost convention under accrual method VideoTapes is recognised upon passing of title to of accounting and as a going concern. the customers, which generally coincides with the delivery. b. Use of Estimates The preparation of the financial statements in conformity iv. Advertisement Revenue is recognised when the with generally accepted accounting principles commercial appears before the public i.e. on ('GAAP') requires management to make estimates and telecast.

Annual Report 2016-17 57 v. Royalty Income is recognised on the basis of h. Investments information submitted by the customer. i. Investments that are readily realisable and intended to be held for not more than a year are classified d. Other Income as current investments. All other investments are i. Interest income is recognised on a time proportion classified as long-term investments. basis taking into account the amount outstanding and the rate applicable. ii. Current investments are carried at lower of cost and fair value determined on an individual investment ii. On disposal of investments , the difference between basis. the carrying amount and the disposal proceeds is recognised in the Statement of Profit and Loss. iii. Long-term investments are carried at cost. However, provision for diminution in the value of investments, e. Property, plant and equipment: if any, is made to recognise a decline, other than Property, plant and equipment are stated at cost, less temporary in nature. accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until i. Inventories the property, plant and equipment are ready for use, as Items of inventory are valued on the basis given below: intended by the Management. The Company depreciates i. Stock of Work in Progress - The cost of production property, plant and equipment over their estimated of various films are accumulated under this head. useful lives using the straight-line method. The useful All the cost incurred for production of a particular lives and residual values of the Company’s assets are film is debited to particular picture account and is determined as per Schedule II of the Companies Act, transferred to revenue account only when the said 2013. Depreciation for assets purchases / sold during a particular film is released / exibited in theatres. period is proportionately charged. ii. Stock of Rights - Finished Goods - Stock of Rights Repairs and maintenance costs are recognized in net are valued at cost of purchase. profit in the Statement of Profit and Loss when incurred. The cost and related accumulated depreciation are j. Impairment of Assets eliminated from the financial statements upon sale or Impairment loss is provided to the extent the carrying retirement of the asset and the resultant gains or losses amount of assets exceed their recoverable amount. are recognized in the Statement of Profit and Loss. Recoverable amount is the higher of an asset’s net selling price and its value in use. Value in use is the f. Intangible assets present value of estimated future cash flows expected Intangible assets are stated at cost less accumulated to arise from the continuing use of an asset and from amortization and impairment. Intangible assets are its disposal at the end of its useful life. Net selling price amortized over their respective individual estimated is the amount obtainable from the sale of an asset in useful lives on a straight-line basis, from the date that an arm’s length transaction between knowledgeable, they are available for use. The estimated useful life of willing parties, less the costs of disposal. an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, k. Provisions & Contingencies competition, and other economic factors (such as A provision is recognised when an enterprise has a the stability of the industry, and known technological present obligation as a result of past event and it is advances), and the level of maintenance expenditures probable that an outflow of resources will be required required to obtain the expected future cash flows from to settle the obligation, in respect of which a reliable the asset. Amortization methods and useful lives are estimate can be made. Provisions are not discounted reviewed periodically including at each financial year to its present value and are determined based on best end. estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet g. Content Advances date and adjusted to reflect the current best estimates. Advances arepaid to producers/owners of the film , Contingent liabilities are not recognised but are in terms of the agreements entered into with them , disclosed in the financial statements. Contingent assets for acquisition of associated rights . All advances are are neither regognised nor disclosed in the financial reviewed by the management periodically , considering statements. facts of each case, to determine recoverability. These advances are transferred to film rights at the point of exploitation.

58 Pen India Limited exchange rates prevalent on the date of the transaction. l. Employee Benefits Foreign currency monetary assets and liabilities at i. Short-term Employee Benefits the period end are translated using the exchange a. Short term employee benefits are recognised rates prevailing at the end of the period. All exchange as an expense at the undiscounted amount in differences are recognised in the Statement of Profit the profit and loss account of the year in which & Loss . Non monetary foreign currency items are the related service is rendered. recorded using the exchange rates that existed when the values were determined accordingly. The reporting ii. Long-term Employee Benefits currency of the Company is Indian Rupee a. Defined Contribution Plans The company has Defined Contribution Plans o. Taxes on Income for post employment benefits in the form of Provision for current tax is made after taking into Provident Fund which is administered through consideration benefits admissible under the provisions Government of India. Provident Fund Scheme of the Income-tax Act, 1961. Deferred tax resulting from is classified as Defined Contribution Plans as “timing differences” between taxable and accounting the company has no further obligation beyond income is accounted for using the tax rates and laws that making the contributions. The company's are enacted or substantively enacted as on the balance contributions to Defined Contribution Plans sheet date. The deferred tax asset is recognised and are charged to the Profit and Loss Statement carried forward only to the extent that there is a virtual as incurred. The expense related to other certainty that the asset will be realised in future. post employment and long term benefits is recognised at the present value of the amounts p. Earnings per Share payable determined using actuarial valuation Basic earnings per share are calculated by dividing techniques. Actuarial gains and losses in the net profit or loss for the year attributable to equity respect of post employment and other long shareholders (after deducting preference dividends term benefits are charged to the profit and loss and attributable taxes, if any) by the weighted average account. number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per m. Leases share, net profit or loss for the year attributable to equity The Company has evaluated all existing leases as shareholders and the weighted average number of "Operating Leases". Aggregate of lease rentals payable shares outstanding during the year are adjusted for the under non - cancellable operating lease arrangemnts effects of all dilutive potential equity shares. ( over the initial and subsequent periods of lease ) are charged to the Statement of Profit and Loss on a straight q. Cash and cash equivalents line basis over the non-cancellable period of the lease. Cash and cash equivalents for the purposes of cashflow statement comprise cash at bank and in hand and n. Foreign Currency Transactions short-term investments with an original maturity of three Transactions in foreign currencies are accounted at months or less.

Annual Report 2016-17 59 3. Share Capital Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Authorized shares: 50,00,000 Equity shares of Rs.10/-each 50000000 50,000,000 50,000,000 50,000,000

Issued, Subscribed and fully paid up shares 14,00,000 Equity Shares of Rs. 10/- each fully paid-up 14,000,000 14,000,000 Total issued, subscribed and fully paid up share capital 14,000,000 14,000,000

3.1 Reconciliation of the shares at the beginning and at the end of the reporting period Particulars 31.03.2017 31.03.2017 31.03.2016 31.03.2016 (Nos.) (Amt Rs.) (Nos.) (Amt Rs.) Equity shares of Rs. 10/- each At the beginning of the period 1,400,000 14,000,000 1,400,000 14,000,000 Add: Issued during the period - - - - Outstanding at the end of the period 1,400,000 14,000,000 1,400,000 14,000,000

3.2 Terms/rights attached to equity shares The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled for one vote per share.

In the event of liquidation of the Company, the equity shareholders are entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.3 List of Shareholders holding more than 5% of total Issued Shares Particulars 31.03.2017 31.03.2017 31.03.2016 31.03.2016 (Nos.) (% Holding) (Nos.) (% Holding) Mr. Jayantilal V. Gada 1,399,950 99.99% 1,399,950 99.99%

4. Reserves & Surplus Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) I Securities Premium Reserve Balance as per last Balance Sheet 36,000,000 36,000,000 Add: Premium on shares issued during the year - - Closing Balance 36,000,000 36,000,000

II Surplus - Balance in the Statement of Profit and Loss Balance as per last Balance Sheet 270,332,066 146,921,006 Add: Profit for the year 180,270,175 123,411,060 Less: Charge on account of transitional provisions under Accounting 289,136 - Standard 15 (Net of Deferred Tax) Net Surplus in the Statement of Profit and Loss 450,313,105 270,332,066 Total Reserves and Surplus 486,313,105 306,332,066

60 Pen India Limited 5. Deferred tax Asset/(Liabilities) (Net) Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Deferred tax Asset/(liability) on account of Depreciation 3,100,433 53,005 Gratuity 181,083 - Leave Encashment 40,905 -

Deferred Tax Assets and Deferred Tax Liabilities have been offset as they relate to the same government taxation laws. Opening Net Liability -1,324,346 1,377,351 Closing Net Asset/(Liability) 4,646,767 1,324,346 Current Year Deferred Tax Asset / (Liability) 3,322,421 53,005

6. Long Term Provisions Provision for Employee Benefits Provision for Gratuity 476,708 - Provision for Leave Encashment 33,813 - 510,521 -

7. Short Term Borrowings a. Secured Loans repayable on demand from Banks - Overdraft 568,619,172 371,293,441 Others - India Infoline - 208,627,671

Bank Overdraft from YES Bank Limited is secured against Property i.e. Pen House (owned by M/s Popular Entertainment Pvt Ltd, a related company) and personal guarantee of Chairman and Managing Director Mr.Jayantilal Gada, Outstanding as on 31.03.2017 Rs. 1.77 Crs.Previous year Bank Overdraft from Yes Bank was secured against Mutual Funds owned by the company and Popular Entertainment Network Private Limited(Related Party) (PY Rs. 17.19 Crs) Bank Overdraft from BNP Paribas Bank and HDFC Banks are secured against Mutual Funds owned by the company and Popular Entertainment Network Private Limited(Related Party) Loan from India Infoline is also Secured against Mutual Funds.

b. Unsecured Loans Loan from Director 6,411 14,656,997 Loans and Advances from Related Parties - 1,275,157 Loan from others - 138,232,887 568,625,583 734,086,154 The above unsecured loans are interest free

The Company does not have any default as on Balance Sheet date in repayment of any loan or interest, wherever applicable.

Annual Report 2016-17 61 8. Trade Payables Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Trade Payables - Trade Payables due to Micro and Small Enterprises 979,680 - Trade Payables due to other than Micro and Small Enterprises 86,667,937 21,301,482

For the year and as at March 31, 2017 and March 31, 2016, there are no inter- 87,647,617 21,301,482 ests due/paid/payable to Micro and Small Enterprises The details of amounts outstanding to Micro, Small and Medium Enterprises is based on information available with the Company

9. Other Current liabilities Statutory Liabilities 37,213,375 1,229,124 Advances Received From Customers 220,588,347 142,197,044 257,801,722 143,426,168

10. Short Term Provisions Provision for Employee Benefits Provision for Gratuity 46,501 - Provision for Leave Encashment 84,375 - 130,876 -

11A. Property, Plant and Equipment The Changes in the carrying value of Property, plant and equipment for the year ended March 31,2017 are as follows: Particulars Plant & Computer Furnitures Motor Car Office Total Machinery (Amt. Rs.) & Fixtures (Amt. Rs.) Equipments (Amt. Rs.) (Amt. Rs.) (Amt. Rs.) (Amt. Rs.)

Gross Carrying value as of April 1, 2016 3,957,603 2,506,179 21,517,604 20,632,127 987,678 49,601,190 Additions 98,402 824,237 129,236 - - 1,051,875 Deletions/Write off - - - 19,930,127 - 19,930,127 Gross Carrying value as of March 31, 2017 4,056,005 3,330,416 21,646,840 702,000 987,678 30,722,938

Accumulated Depreciation as of April 1, 2016 3,227,816 2,176,290 11,521,427 18,790,925 651,958 36,368,416 Depreciation 193,108 279,285 2,053,190 376,551 143,809 3,045,942 Accumulated Depreciations on deletions/write off - - - 18,620,884 - 18,620,884 Accumulated Depreciation as of March 31,2017 3,420,923 2,455,574 13,574,617 546,592 795,768 20,793,474

Carrying value as of March 31, 2017 635,081 874,841 8,072,223 155,409 191,911 9,929,464

Carrying value as of April 1, 2016 729,787 329,889 9,996,176 1,841,202 335,720 13,232,774

62 Pen India Limited The Changes in the carrying value of Property, plant and equipment for the year ended March 31,2016 are as follows: Particulars Plant & Computer Furnitures Motor Car Office Total Machinery (Amt. Rs.) & Fixtures (Amt. Rs.) Equipments (Amt. Rs.) (Amt. Rs.) (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2015 3,666,420 2,264,560 20,989,998 20,632,127 987,678 48,540,783 Additions 291,183 241,619 527,605 - - 1,060,407 Deletions ------Gross Carrying value as of March 31, 2016 3,957,603 2,506,179 21,517,603 20,632,127 987,678 49,601,190

Accumulated Depreciation as of April 1, 2015 3,002,396 2,126,016 9,524,714 18,169,076 464,300 33,286,502 Depreciation 225,420 50,274 1,996,713 621,849 187,659 3,081,915 Accumulated Depreciations on deletions ------Accumulated Depreciation as of March 31,2016 3,227,816 2,176,290 11,521,427 18,790,925 651,959 36,368,417

Carrying value as of March 31, 2016 729,787 329,889 9,996,176 1,841,202 335,719 13,232,773

Carrying value as of April 1, 2015 664,024 138,544 11,465,284 2,463,051 523,378 15,254,281

11B.Intangible Assets The Changes in the carrying value of Intangible Assets for the year ended March 31,2017 are as follows: Particulars Software Total (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2016 - - Additions 700,000 700,000 Deletions - - Gross Carrying value as of March 31, 2017 700,000 700,000

Accumulated Amortization as of April 1, 2016 - - Amortization Expenses 700,000 700,000 Accumulated amortizations on deletions - - Accumulated Amortization as of March 31,2017 700,000 700,000

Carrying value as of March 31, 2017 - -

Carrying value as of April 1, 2016 - -

The Changes in the carrying value of Intangible Assets for the year ended March 31,2016 are as follows:

Particulars Software Total (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2015 - - Additions - - Deletions - - Gross Carrying value as of March 31, 2016 - -

Annual Report 2016-17 63 Particulars Software Total (Amt. Rs.) (Amt. Rs.) Accumulated Amortization as of April 1, 2015 - - Amortization Expenses - - Accumulated amortizations on deletions - - Accumulated Amortization as of March 31,2016 - -

Carrying value as of March 31, 2016 - -

Carrying value as of April 1, 2015 - -

12. Non Current Investments (Unquoted) Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) (Valued at cost less other than temporary diminution in value, if any) 1 Investment in fully paid- up Equity Shares (Refer Note 29) i. Wholly owned subsidiaries 10,000 Equity Share of Rs 10/ - each of Propmax Developers & Holders 100,000 - Private Limited (P.Y. Nil) 10,000 Equity Share of Rs 10/ - each of Play My movie Private Limited (P.Y. 100,000 - Nil) 75,00,000 Equity Share of Rs 10/ - each of Bollywood Times Private Lim- 75,000,000 - ited (P.Y. Nil) 75,200,000 -

2 Investment in Associates (LLP's) (Refer Note 36) Share in Breakthrough Films LLP 25,000 - Debit Balance in Current Account of Breakthrough Films LLP -7,000 - Share in Brightlight Pictures LLP 25,000 - Debit Balance in Current Account of Brightlight Pictures LLP -7,187 - Share in Pen Production No 1 LLP 25,000 - Debit Balance in Current Account of Pen Production No 1 LLP -7,173 - Share in Wizart Entertainment LLP 25,000 - Debit Balance in Current Account of Wizart Entertainment LLP -7,000 -

71,640 - Total 75,271,640 -

13. Long term Loans and Advances Unsecured, considered good (unless otherwise stated) a. Capital Advances - 2,855,741 b. Security Deposits 101,470 601,470 c. Loans and advances to related parties Loans and advances to wholly owned subsidiary companies (Refer Note 29 ) 15,128,428 -

All the above loans and advances have been given for business purposes. Loans and Advances shown above, fall under the category of ‘Long Term Loans & Advances’ in nature of Loans and are re-payable after 3 years

64 Pen India Limited Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) d. Other Loans & Advances Advance Income tax (Net of provisions) 8,772,698 99,633,424 MVAT Receivable 82,872 29,459 Other Loans & Advances 6,018,631 9,268,631 30,104,099 112,388,725

14. Current Investments a. Investment in Liquid Mutual Funds Units BSL Medium Term Plan 204,600,000 100,000,000 Deutsche Mutual Fund - 50,000,000 Franklin Templeton Mutual Fund Collection A/c 150,000,000 150,000,000 Icici Regular Income Fund- Growth 78,165,960 78,165,960 IDFC Arbitrage Fund- Collection Account - 50,000,000 KOTAK EQUITY ARBITRAGE FUND - 75,000,000 DSP Blackrock Mutual Fund Collection Account 54,700,000 - ICICI PRUDENTIAL FMP SERIES 79-1218 FUND 50,000,000 - Kotak Medium Term Fund- Growth 82,214,029 - Reliance Regular Savings Fund 50,000,000 -

669,679,989 503,165,960

Aggregate amount of quoted investments 669,679,989 503,165,960 Market value of quoted investments 745,923,059 503,165,960 Aggregate amount of unquoted investments - -

15. Inventories Work-in-progress (Various Films) 264,436,620 432,282,068 Finished Goods (Stock of Rights) 187,792,845 - 452,229,465 432,282,068

16. Trade Receivables Aggregate amount of Trade Receivables outstanding for a period exceeding six months from the date they are due for payment. Unsecured, considered good (A) 2,302,934 13,316,231

Other Trade receivables (Due for a period less than six months) Unsecured, from companies under the same management 8,700 1,432,103 Unsecured, considered good (B) 100,841,935 299,474 103,153,569 15,047,808

17. Cash and cash equivalents i. Cash and cash equivalents a. Balance with Banks in current accounts 11,613,472 51,596,753 b. Cash on hand 8,069,274 8,765,992 19,682,746 60,362,745

Annual Report 2016-17 65 18. Short-term loans and advances Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Other loans and advances 50,073,380 82,853,703 50,073,380 82,853,703

19. Other Current Assets i. Prepaid Expenses 533,459 - ii. Advance to vendors 1,049,192 1,136,434 1,582,651 1,136,434

20. Revenue from operations (a) Sale of Rights/ products 737,363,455 558,009,158 (b) Sale of Services 118,572,448 115,367,158 (c) Distribution & Theatrical Revenue 670,321,637 722,644,754 (c) Other Operating revenue 30,172,339 1,647,240 1,556,429,878 1,397,668,310 (d) Less: Service Tax 88,522,448 25,367,158 Net revenue from operations 1,467,907,430 1,372,301,152

21. Other Income Interest Income 44,787,029 68,280,075 Other non-operating income 17,406,205 23,713,541 62,193,235 91,993,616

22. Cost of Sales Stock at the beginning of the period 43,419,194 Purchase - Rights 1,273,109,750 1,116,169,113 - Compact Discs / Video Tapes - 485,892 - Distribution Cost 98,497,399 77,339,017 - Marketing Cost 129,019,322 - - Other Cost 90,879,821 115,416 1,591,506,293 1,237,528,632

Less : Stock at the end of the period Under Production - Films 264,436,620 - Stock in Trade - Rights 187,792,845 - 1,139,276,827 1,237,528,632

23. Employee benefits expenses Salaries and wages 18,378,065 7,501,627 Contribution to provident fund and other funds 430,166 359,152 Staff Welfare Expense 522,775 660,968 19,331,006 8,521,746

66 Pen India Limited 24. Finance Cost Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Interest on Bank OD and Cash Credit 66,277,243 20,400,846 66,277,243 20,400,846

25. Depreciation and amortisation expenses Depreciation on Property, Plant and Equipment 3,045,942 3,081,915 Amortization on Intangible Assets 700,000 - 3,745,942 3,081,915

26. Other Expenses Electricity expenses 919,341 858,196 Rent, Rates and Taxes 1,580,964 1,406,773 Repairs and maintenance 770,354 1,038,740 Legal & Professional Charges 12,375,712 14,916,968 Travelling, Conveyance & Lodging 803,046 602,624 Travelling Expenses(Foreign) 42,447 185,575 Postage, Courier & Telephone/Internet Expenses 520,500 552,920 Printing and Stationery 3,727,848 62,999 Octroi Charges - 2,223 Auditors Remuneration 630,000 550,000 Profession Tax for Company 10,000 31,078 Office expenses 664,478 662,839 Interest on Statutory dues 189,426 1,781,142 Bank Charges 1,177,404 20,281 Prior Period Expenses - 394,741 Service Tax 1,701,333 373,844 MVAT Paid 14,540 576,811 Water Charges 33,442 43,894 Advertisement Expenses 1,196,000 294,955 Donation 9,033,300 6,502,200 Others 2,311,464 1,339,770 Food & Beverage 284,554 169,850 Insurance Expenses 111,798 133,812 Motor Car Expenses 86,153 342,129 Registration,Subscription, Renewal & Membership Fees 309,638 100,186 Share of Loss in Associate LLP's 28,360 - Property Tax 806,543 307,152 Fixed Assets Written off 730,542 - 40,059,187 33,251,701

Payment to Auditor (Excluding service tax) Stat Audit Fees 530,000 450,000 Tax Audit Fees 100,000 100,000 Total 630,000 550,000

Annual Report 2016-17 67 27. Contingent Liability Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Claims against the company not acknowleged as debt 10,686,795 -

Name Nature of Amount(Rs.) Period to which the Forum where dispute is of dues amount related pending/appeal in the Statue process of being lodged Service Service 43,43,002/- 2008-09 to 2011-12 Office of Assisstant Tax Tax Commissioner , Division VII, Demand Service tax -VI, Mumbai Service Service 63,43,793/- 2009-10 & 2010-11 Office of the Commissioner Tax Tax of Service tax , Audit-I, Demand Mumbai

28. Employee Benefits The Company has adopted provisions of Accounting Standard 15 “Employee Benefits” for the first time during the year. In accordance with the stipulations of the Standard, the Company has adjusted Rs. 4,42,172/- (net of deferred tax aggregating to Rs. 1,53,036/-) towards the additional liability of Defined Benefit obligation in respect of gratuity and leave encashment up to 31st March, 2016 against the balance of Opening Profit and Loss Balance as at 1st April, 2016.

The company has classified various employee benefits as under:

A. Defined Contribution Plans The company has recognised the following amounts in the Profit and Loss Account for the year: i. Contribution to Provident Fund 430,166 359,152

B. Defined Benefit Plans

1. Valuation in respect of Gratuity have been carried out by actuary, as at the Balance Sheet date, based on the following assumptions: a. Mortality IALM(2006-08) Ult. IALM(2006-08) Ult. b. Discount Rate (per annum) 6.84% 7.79% c. Rate of increase in Compensation Levels 10.00% 10.00% d. Rate of Return(Expected) on Plan Assets - - e. Withdrarwal Rates 10.00% 10.00%

i. Changes in the Present Value of Obligation a. Present Value of Obligation of period ( as on 31.03.2016) 327,660 - b. Interest Cost 25,525 - c. Past Service Cost - - d. Current Service Cost 162,010 - e. Curtailment Cost/(Credit) - - f. Settlement Cost/(Credit) - - g. Benefits Paid - -

68 Pen India Limited Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) h. Actuarial (Gain)/Loss 8,014 - i. Present Value of Obligation at end of period (as on 31.03.2017) 523,209 -

ii. Changes in the Fair value of Plan Assets a. Fair Value of Plan Assets at beginning of period - - b. Expected Return on Plan Assets - - c. Actuarial Gain/(Loss) - - d. Employers' Contributions - - e. Benefits Paid - - f. Fair Value of Plan Assets at end of period - -

iii. Fair value of Plan Assets a. Fair Value of Plan Assets at beginning of period - - b. Adjustment to Opening Fair Value of Plan Assets - - c. Actual Return on Paln Assets - - d. Contributions - - e. Benefits Paid - - f. Fair Value of Plan Assets at end of period - - g. Funded Status -523,209 - h. Excess of actual over estimated return on Plan Assets - -

iv. Actuarial Gain/(Loss) Recongnized a. Actuarial Gain/(Loss) for the period (Obligation) -8,014 - b. Actuarial Gain/(Loss) for the period (Plan Asset) - - c. Total Gain/(Loss) for the period -8,014 - d. Actuarial Gain/(Loss) recognized for the period -8,014 - e. Unrecognized Actuarial Gain/(Loss) at end of period - -

v. Amount recognised in the Balance Sheet a. Present Value of Obligation as at end of period 523,209 - b. Fair Value of Plan Assets as at end of period - - c. Funded Status -523,209 - d. Unrecognized Actuarial Gain/(Loss) - - e. Net Asset/ (liability) recognized in the Balance Sheet -523,209 -

vi. Expenses recognised in the Profit and Loss Account a. Current Service Cost 162,010 - b. Past Service Cost - - c. Interest Cost 25,525 - d. Expected Return on Plan Assets - - e. Curtailment Cost/(Credit) - - f. Settlement Cost/(Credit) - - g. Net actuarial (Gain)/Loss for the period 8,014 - h. Total Expenses recognised in the Profit and Loss Account 195,549 -

Annual Report 2016-17 69 Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) vii. Movements in the Liability recognized in Balance Sheet a. Opening Net Liability 327,660 - b. Adjustments to Opening Fair Value of Plan Assets - - c. Expenses as Above 195,549 - d. Contribution Paid - - e. Closing Net Liability 523,209 -

viii. Experience Analysis - Liabilities a. Actuarial (Gain)/Loss due to Change in Bases 48,258 - b. Experience (Gain)/Loss due to change in Experience -40,244 - Total 8,014 -

Experience Analysis - Plan Assets Experience (Gain)/Loss due to change in Plan Assets - -

ix. Schedule III Details Current Liability 46,501 - Non-current Liability 476,708 -

2 Leave Encashment i. Assumptions as at 31.03.2017 31.03.2016 Mortality IALM(2006-08) Ult. IALM(2006-08) Ult. a. Discount Rate (per annum) 6.84% 7.79% b. Rate of increase in Compensation 10.00% 10.00% c. Rate of Return on Plan Assets - - d. Withdrawal rates 10.00% 10.00%

ii. Changes in present value of obligations a. Present Value of Obligation of period (as on 31.03.2016) 114,512 - b. Interest Cost 8,450 - c. Past Service Cost - - d. Current Service Cost 62,080 - e. Curtailment Cost/(Credit) - - f. Settlement Cost/(Credit) - - g. Benefits Paid -12,089 - h. Actuarial (Gain)/Loss -54,765 - i. Present Value of Obligation at end of period (as on 31.03.2017) 118,188 -

iii. Changes in fair value of plan assets a. Fair Value of Plan Assets at beginning of period - - b. Adjustment to Opening Fair Value of Plan Assets - - c. Expected Return on Paln Assets - - d. Contributions 12,089 - e. Benefits Paid -12,089 - f. Fair Value of Plan Assets at end of period - -

70 Pen India Limited Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) iv. Fair value of plan assets a. Fair Value of Plan Assets at beginning of period - - b. Adjustment to Opening Fair Value of Plan Assets - - c. Actual Return on Paln Assets - - d. Contributions 12,089 - e. Benefits Paid -12,089 - f. Fair Value of Plan Assets at end of period - - g. Funded Status -118,188 - h. Excess of actual over estimated return on Plan Assets - -

v. Actuarial Gain/(Loss) Recognized a. Actuarial Gain/(Loss) for the period (Obligation ) 54,765 - b. Total Gain/(Loss) for the period 54,765 - c. Actuarial Gain/(Loss) recognized for the period 54,765 -

vi. Amounts to be recognized in the balance sheet and statement of Profit & Loss Account a. Present Value of Obligation at end of period 118,188 - b. Fair Value of Plan Assets at end of period - - c. Funded Status -118,188 - d. Unrecognized Actuarial Gain/(loss) - - e. Net Asset/(liability) Recognized in the Balance Sheet -118,188 -

vii. Expenses recognised in the Profit and Loss Account a. Current Service Cost 62,080 - b. Interest Cost 8,450 - c. Expected Return on Plan Assets - - d. Net actuarial (Gain)/Loss recognized for the period -54,765 - e. Total Expenses recognised in the Profit and Loss Account 15,765 -

viii. Movements in the liability recognized in balance sheet a. Opening Net Liability 114,512 - b. Expenses as above 15,765 - c. Contribution paid -12,089 - d. Closing net liability 118,188 -

ix. Experience Analysis - Liabilities a. Actuarial (Gain)/Loss due to change in bases 2,944 - b. Experience (Gain)/Loss due to change in experience - 57,709 - Total -54,765 -

x. Schedule III Details Current Liability 84,375 - Non-Current Liability 33,813 -

Annual Report 2016-17 71 29. The Company has made investments in 100% subsidaries namely Bollywood Times Private Limited (BTPL), Propmax Developer & Holders Pvt. Ltd. and Play My Movie Private Limited agreegating to Rs. 752 Lacs. Further, the Company has also given loans & advances aggregating to Rs. 151.28 Lacs to Propmax Developer & Holders Pvt. Ltd. and Play My Movie Private Limited. The Compnay is also a 50% holder in Wizart Entertainment LLP, Pen Production No.1 LLP, Bright Line Pictures LLP, Breakthrough Films LLP. As per the latest audited Financial Statements of Bollywood Times Private Limited (BTPL), Propmax Developer & Holders Pvt. Ltd., Play My Movie Private Limited for the year ended March 31, 2017 , they have reported losses in the current financial year aggregating to Rs. 135.60 lacs. As per the unaudited Financial Statements of Wizart Entertainment LLP, Pen Production No.1 LLP, Bright Light Pictures LLP, Breakthrough Films LLP provided to us by the management for the year ended March 31, 2017, they have reported losses in the current financial year aggregating to Rs. 28,360/- (Share of Pen India Limited). However, no provision for diminution in value of the investments of subsidiaries is considered as necessary as these companies are in incumbency stage and the investments in them are strategic long -term investments and the diminution in the value is temporary in nature. Investments in Associate LLP's is carried forward net of losses incurred.

30. Managerial Remuneration Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Salary & Allowances 8,655,000 2,475,000 8,655,000 2,475,000

31. Related Party Disclosures List of Related Parties : a. Key Management Personnel Mr.Jayantilal Gada Mr.Dhaval Gada Mr.Akshay Gada

b. Relative of Key Management Personnel Mrs. Hansa Gada

c. Enterprises where Key Management Personnel or their relatives are M/s Popular Entertainment Network Pvt. able to exercise significant influence Ltd. M/s Dhaval & Guroudev Productions Pvt. Ltd. M/s Play My Movie Pvt.Ltd M/s Play My Song Pvt.Ltd M/s Bollywood Times Pvt. Ltd. M/s Ethnic Enterprises M/s Propmax Developers & Holders Pvt. Ltd. M/s Wizart Entertainment LLP M/s Pen Production No.1 LLP M/s Bright Light Pictures LLP M/s Breakthrough Films LLP M/s Final Cut Media Pvt Ltd. M/s Pen Music Pvt Ltd. M/s Propmind Holding and Developers Pvt Ltd. M/s Maxima Holding and Developers Pvt Ltd.

72 Pen India Limited Disclosure of transactions between the company and related parties and outstanding balances as at the year end: Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) a. Key Management Personnel Remuneration - - a. Mr.Jayantilal Gada 7,500,000 1,200,000 b. Mr.Dhaval Gada 540,000 1,200,000 c. Mr.Akshay Gada 540,000 -

Professional Fees - - a. Mr.Jayantilal Gada - 7,000,000 b. Mr.Dhaval Gada 360,000 - c. Mr.Akshay Gada 360,000 360,600

Bonus Paid a. Mr.Jayantilal Gada 25,000 25,000 b. Mr.Dhaval Gada 25,000 25,000 c. Mr.Akshay Gada 25,000 25,000

Loan Taken From Mr.Jayantilal Gada 43,026,363 65,258,072

Loan Repaid to Mr.Jayantilal Gada 57,676,949 50,747,852

Outstanding Loan Mr.Jayantilal Gada 6,411 14,674,697

Remuneration/Professional Fees Payable (Outstanding Balance) a. Mr.Jayantilal Gada - 118,964 b. Mr.Dhaval Gada 130,697 36,241 c. Mr.Akshay Gada 10,920 -

Sale of Car Mr.Jayantilal Gada 558,932 -

b. Relative of Key Management Personnel Professional Fees Mrs. Hansa Gada 2,050,000 -

Bonus Paid Mrs. Hansa Gada 25,000 -

c. Enterprises where Key Management Personnel or their relatives are able to exercise significant Rent Paid M/s Popular Entertainment Network Pvt. Ltd. 840,000 840,000

Annual Report 2016-17 73 Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Professional Fees M/s Pen Music Pvt Ltd. 400,000 -

Professional Fees Payable M/s Pen Music Pvt Ltd. 360,000 -

Interest Income M/s Play My Movie Pvt Ltd. 50,621 - M/s Propmax Developers & Holders Pvt. Ltd. 89,287 -

Loan Taken M/s Popular Entertainment Network Pvt. Ltd. - 8,416,238

Loan Repaid M/s Popular Entertainment Network Pvt. Ltd. 2,115,157 3,994,529

Loan given to wholly owned subsidiaries M/s Play My Movie Pvt Ltd. 5,102,511 - M/s Propmax Developers & Holders Pvt. Ltd. 9,900,000 -

Outstanding Loan taken M/s Popular Entertainment Network Pvt. Ltd. - 1,275,158

Outstanding Loan given M/s Play My Movie Pvt Ltd. 5,148,070 - M/s Propmax Developers & Holders Pvt. Ltd. 9,980,358 -

Investment in Wholly owned subsidiaries 10,000 Equity Share of Rs 10/ - each of Propmax Developers & Holders 100,000 - Private Limited (P.Y. Nil) 10,000 Equity Share of Rs 10/ - each of Play My movie Private Limited (P.Y. Nil) 100,000 - 75,00,000 Equity Share of Rs 10/ - each of Bollywood Times Private Limited 75,000,000 - (P.Y. Nil)

Investment in Associates (LLP's)(50% Share) Breakthrough Films LLP 25,000 - Brightlight Pictures LLP 25,000 - Pen Production No 1 LLP 25,000 - Wizart Entertainment LLP 25,000 -

Business Auxilliary services rendered to M/s Dhaval & Guroudev Productions 560,000 1,411,910 Pvt. Ltd. O/s Receivable from M/s Dhaval & Guroudev Productions Pvt. Ltd. (Business - 1,411,910 Auxilliary) O/s Receivable from M/s Dhaval & Guroudev Productions Pvt. Ltd. (Current A/c) 8,700 20,193

74 Pen India Limited 32A.Income in Foreign Currency Particulars 31.03.2017 31.03.2016 (Amt Rs.) (Amt Rs.) Theatrical Revenue 130,268 - 130,268 -

32B.Expenditure in Foreign Currency (Accrual Basis) Professional Fees 871,301 - 871,301 -

33. Disclosures for Operating Leases a. Lease payments recognised in the Profit and Loss Account 840,000 840,000

b. Significant leasing arrangements i. The company has not paid any interest free security deposits under certain agreements. ii. Certain agreements provide for increase in rent. iii. Some of the agreements contain a provision for their renewal.

c. Future minimum lease payments under non-cancellable agreements i. Not later than one year 840,000 840,000 ii. Later than one year and not later than five years 840,000 840,000 iii. Later than five years - -

34. EPS Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The company has not issued any potential equity shares and accordingly, basic earnings per share and diluted earnings per share are the same. Earnings per Share has been computed as under:

Basic/ Diluted Profit after Taxation (Rupees) 180,270,175 123,411,060

Weighted average number of shares 1,400,000 1,400,000

Basic EPS (Rs. per Equity Share of Rs. 10 each) - 128.76 88.15

35. Segment Reporting The company acquires, co-produces and distributes Indian films in multiple formats. Film content is monitored and strategic decisions around the business operations are made based on the film content, whether it is new release or library. Hence, Management identifies only one operating segment in the business i.e. film content.

Annual Report 2016-17 75 36. Details Relating Investment in Limited Liability Patnership (LLP) in the current year As at 31.03.2017 As at 31.03.2016 Name of the LLP Name of the Total Capital Share of each Name of the Share of each partner in LLP (Amt. Rs.) partner in the partner in partner in the profit of LLP LLP profit of LLP

1 Wizart Entertainment LLP Pen India Ltd. 50,000 50% NA - Reshma Kadakia 50,000 50% NA -

2 Pen Production No.1 LLP Pen India Ltd. 50,000 50% NA - Reshma Kadakia 50,000 50% NA -

3 Bright Light Pictures LLP Pen India Ltd. 50,000 50% NA - Reshma Kadakia 50,000 50% NA -

4 Breakthrough Films LLP Pen India Ltd. 50,000 50% NA - Reshma Kadakia 50,000 50% NA -

37. Particulars of loans given and investment made as required by clause (4) of Section 186 of the Companies Act, 2013 Name Nature As at As at Period Rate of 31.03.2017 31.03.2016 Interest (Amt. Rs) (Amt. Rs.) 1 Propmax Developers & Long Term Loans & 9,980,358 - After a period 9% p.a. Holders Private Ltd. Advances of 3 years

2 Play My Movies Private Ltd. Long Term Loans & 5,148,070 - After a period 9% p.a. Advances of 3 years

3 Non Current Investment Investment 75,271,640 - NA NA (Refer Note 12)

4 Current Investment Investment 669,679,989 503,165,960 NA NA

38. Details of Specified Bank notes Particulars SBN Other Total (Rs.) denomition (Rs.) Notes (Rs.) Closing Cash in hand as on 08.11.2016 - 8,009,479 8,009,479 Add:- Permitted Receipts - 270,000 270,000 Less:- permitted payments - 294,704 294,704 Less:- Amount deposited in banks - - - Closing Cash in hand as on 30.12.2016 7,984,775

76 Pen India Limited 39. As required by the Companies Act, a Corporate Social Responsibility (CSR) committee has been formed by the Company. CSR objects chosen by the Company primarily consist of promoting education, including special education and employment enhancing vocation skills especially among children,women,elderly and the differently abled and livelihood enhancement projects ; setting up homes and hostels for women and orphans etc. As per the provisions of the Act, gross amount required to be spent by the Company is 17,88,709/- (previous year Rs.9,96,566/-). A total of Rs. 28 lakhs has been spent by the Company during the current year.

40. All loans and advances and accounts receivables are subject to confirmations and considered good and recoverable. Other current assets have a value on realization in the ordinary course of the business at least equal to their carrying amounts .

41. Previous year's figures Previous year's figures have been reworked, regrouped, reclassified wherever necessary.

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

Annual Report 2016-17 77 INDEPENDENT AUDITOR’S REPORT

To The Members, Pen India Limited,

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Pen India Limited (hereinafter referred to as ‘‘the Holding Company’’), it’s subsidiaries (collectively referred to as ‘the Group’) and its associates, comprising of the Consolidated Balance Sheet as at 31 March 2017, the Consolidated Statement of Profit and Loss and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information(hereinafter referred to as “the consolidated financial statements”).

Management’s Responsibility for the Financial Statements The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 (‘the Act’), (particularly Accounting Standard 21, Consolidated Financial Statements).

The respective Board of Directors of the companies included in the Group and of its associates are responsible for maintenance of adequate accounting records for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Holding Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained by us and by the other auditors in terms of their reports referred to in Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on Consolidated Financial Statements.

Opinion In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of other auditors, referred to in the Other Matter paragraph below, the aforesaid consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: i. In the case of the consolidated balance sheet, of the state of affairs of the Group and its associates as at March 31, 2017;

78 Pen India Limited ii. In the case of the consolidated statement of profit and loss, of the profit of the Group and its associates for the year ended on that date; and iii. In the case of the consolidated cash flow statement, of the cash flows of the Group and its associates for the year ended on that date.

Other Matters a. We did not audit the financial Statements of subsidiary Companies whose financial statements reflect total assets of Rs. 23.94 crores as at March 31, 2017, total revenues of Rs. 15,000/- and net cash flows of Rs.11.58 Lakhs for the year then ended. These fi- nancial statements have been audited by other auditors whose reports have been furnished to us and our opinion is based solely on the reports of the other auditors. b. We have relied on the unaudited financial statements of four associates wherein the Group’s share of net loss aggregates Rs. 28,360/- for the year ended March 31, 2017. These unaudited financial statements as approved by the Board of Directors of the Company has been furnished to us by the Management and our report in so far as it relates to the amounts included in respect of these associates, is based solely on such approved unaudited financial statements.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements certified by the Management.

Report on Other Legal and Regulatory Requirements 1. As required by section 143(3) of the Act, we report that.

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated financial statements.

d. In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors of the Holding Company as on March 31, 2017 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies, none of the directors of these entities is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls; refer to our Report in “Annexure A”, which is based on the auditors’ reports of the subsidiary companies, incorporated in India.

g. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, and to our best of our information and according to the explanations given to us:

i. The consolidated financial statements disclose the impact of pending litigations as at 31st March 2017 on the consolidated financial position of the group and its associates – Refer Note 31 – to the consolidated financial statements.

ii. The Group and its associates did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

Annual Report 2016-17 79 iii. As per information received and as confirmed by the management, there were no amounts which were required to be transferred, to the Investor Education and Protection Fund by the Holding Company, its subsidiary companies and associates incorporated in India.

iv. The Holding Company has provided requisite disclosures in its consolidated financial statements as to holdings as well as dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8th November, 2016 of the Ministry of Finance, during the period from November 8, 2016 to December 30, 2016. Based on audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of accounts maintained by the Holding Company and the respective group entities, as produced to us and based on the consideration of report of other auditors, referred to in the Other Matters paragraph above. Refer Note No. 40 to the consolidated financial statements.

For and on behalf of A. Bafna & Co. Chartered Accountants Firm Registration No.:03660C

CA. Jinendra Kumar Sethi Partner Membership No. 072006

Place: Mumbai Date : 6th July 2017

80 Pen India Limited Annexure ‘’A” to the Independent Auditors' Report on the Consolidated Financial Statements of Pen India Limited (Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub - section 3 of Section 143 of the Companies Act, 2013 (“the Act”) In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended 31 March 2017, we have audited the internal financial controls over financial reporting of Pen India Limited (hereinafter referred as the “Holding Company”) and its subsidiaries (the holding company and its subsidiaries together referred to as “the group”) incorporated in India, as of that date.

Management’s Responsibility for Internal Financial Controls The respective Board of Directors of the Holding Company and its subsidiaries, all incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by these entities, considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility Our responsibility is to express an opinion on, the Holding Company, its subsidiaries and associates incorporated in India, internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by ICAI and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence obtained by us and the other auditors in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Holding Company, its subsidiaries, associates incorporated in India, internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Annual Report 2016-17 81 Opinion In our opinion, the Holding Company and its subsidiary companies, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal control over financial reporting criteria established by the respective companies, considering the essential components of internal control stated in the Guidance Note.

Other Matters Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting in so far as it relates to standalone financial statements of 3 subsidiaries incorporated in India, is based on the corresponding audited reports of such companies.

For and on behalf of A. Bafna & Co. Chartered Accountants Firm Registration No.:03660C

CA. Jinendra Kumar Sethi Partner Membership No. 072006

Place: Mumbai Date : 6th July 2017

82 Pen India Limited CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2017

Particulars Note No. As on 31.03.2017 (Amt Rs.) EQUITY & LIABILITIES 1. Shareholders' Funds a. Share Capital 5 14,000,000 b. Reserves & Surplus 6 481,965,232 2. Non - current Liabilities a. Long Term Borrowings 7 148,747,723 b. Long Term Provisions 8 510,521 3. Current Liabilities a. Short Term borrowings 9 568,625,583 b. Trade payables 10 90,819,138 c. Other Current Liabilities 11 267,754,596 d. Short Term Provisions 12 598,888 TOTAL 1,573,021,682

ASSETS 4. Non Current Assets a. Property, Plant and Equipment 13A 166,201,685 b. Intangible Assets 13B - c. Intangible Assets under Development 13C 3,746,515 d. Goodwill on Consolidation 9,232,081 e. Non Current Investments 14 55,071,640 f. Deferred Tax Assets(net) 15 3,194,185 g. Long Term Loans and Advances 16 14,688,791 h. Other Non-current Assets 17 1,345,480 5. Current Assets a. Current Investments 18 669,679,989 b. Inventories 19 469,419,530 c. Trade Receivables 20 103,153,569 d. Cash and Cash Equivalents 21 21,146,178 e. Short term Loans and Advances 22 53,515,907 f. Other Current Assets 23 2,626,132 TOTAL 1,573,021,682 Significant Accounting Policies & Notes to Financial Statements 1 to 42

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

Annual Report 2016-17 83 CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH, 2017

Particulars Note No. Year ended 31.03.2017 (Amt Rs.) I Revenue from operations 24 1,467,922,430

II Other Income 25 62,053,327

III Total Revenue 1,529,975,757

IV Expenses: Cost of Sales 26 1,139,264,621 Employee benefit expenses 27 19,331,006 Finance cost 28 74,481,644 Depreciation and amortisation expenses 29 7,059,196 Other Expenses 30 41,832,463

Total Expenses 1,281,968,929

V Profit before tax 248,006,827

VI Tax Expenses: 1. Current Tax 87,640,991 2. Deferred Tax (4,518,531) 3. Short/(Excess)Tax Provision for Earlier Years (1,853,940) 81,268,521

VII Profit / (loss) for the period (XI - XIV) 166,738,307

VIII Earings per equity share 38 1. Basic 119.10 2. Diluted 119.10 Significant Accounting Policies & Notes to Financial Statements 1 to 42

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

84 Pen India Limited CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2017

Particulars Year ended 31.03.2017 (Amt Rs.) A Cash flow from operating activities Net Profit before Taxation 248,006,827 Adjustments for - Fixed Assets Written Off 1,289,474 Depreciation 7,059,196 Interest Income - 44,647,121 Interest Expense 74,481,644 Profit on sale of Mutual Funds -16,643,379 Profit on sale of asset -55,121 21,484,693 Operating profit before working capital changes 269,491,520 Adjustments for - Increase inTrade and Other Receivable -55,771,655 Decrease/ (Increase) in Inventories -37,137,462 Increase in Short Term Loans and Advances 11,685,901 Increase in other Non-Current Assets -1,337,220 Increase in Other Current Assets -1,042,301 Increase in Short Term Provision 745,963 Increase in Other Current Liabilities 9,956,053 Increase in Trade and Other Payables 184,233,971 111,333,250 Cash generated from operations 380,824,770 Direct Taxes paid (net of refund of taxes) (5,073,676) Net cash from operating activities 385,898,445

B Cash flow from investing activities Expenditure on property, plant and equipment -165,083,865 Long term loan recd back /(given) -8,576,100 Purchases of Investments ( Current & Non Current) -396,914,029 Proceeds from sale of Investments 191,643,379 Proceeds from sale of property, plant and equipment 74,890 Interest Income 44,647,121 Dividend Received - Net cash used in investing activities (334,208,604)

Annual Report 2016-17 85 Particulars Year ended 31.03.2017 (Amt Rs.) C. Cash flow from financing activities Proceeds / (Repayment) from/(of) Borrowings 120,987,498 Capital Introduced by Partners(Associate LLP's) - Loan Taken from Directors or shareholders 27,743,425 Proceeds / Repayment from/(of) Short-term Borrowings (165,460,572) Interest paid (74,481,644) Net cash used in financing activities (91,211,293)

Net (decrease)/increase in cash and cash equivalents (A+B+C) (39,521,452)

Cash and Cash Equivalents at beginning of the year 60,667,631 Cash and Cash Equivalents at end of the year 21,146,178

Notes: 1. The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard – 3 on Cash Flow Statements, issued by the Institute of Chartered Accountants of India. 2. Cash and cash equivalents at the end of the year represents cash and bank balances. 3. Opening cash and cash equivalents have been taken from previous years Audited Balance Sheets.

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

86 Pen India Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2017

1. Corporate Information recognised in the financial statements as Goodwill or PEN INDIA LIMITED (“the Company”) is a closely held Public Capital Reserve, as the case may be. Limited Company incorporated in India. ii. In case of associates where the company directly or 2. Principles Of Consolidation: indirectly through subsidiaries holds more than 20% The consolidated financial statements relate to PEN India of equity, Investments in associates are accounted for Limited (‘the Company’), its subsidiary companies and using equity method in accordance with Accounting associates. The consolidated financial statements have been Standard (AS) 23 - "Accounting for investments in prepared on the following basis: associates in consolidated financial statements" issued by the Institute of Chartered Accountants of India. As i. The financial statements of the Company and its per the Transitional Provisions of Accounting Standard subsidiary companies have been combined on a line- 23 - "Accounting for investments in associates in by-line basis by adding together the book values of like consolidated financial statements" investment in an items of assets, liabilities, income and expenses, after associate is accounted for in consolidated financial fully eliminating intra-group balances and intra-group statements in accordance with this Standard. The transactions resulting in unrealised profits or losses as carrying amount of investment in the associate should per Accounting Standard 21 – "Consolidated Financial be brought to the amount that would have resulted had Statements" notified by Companies (Accounting the equity method of accounting been followed as per Standards) Rules, 2006.The difference between the cost this Standard since the acquisition of the associate. of investment in the subsidiaries, over the net assets at The corresponding adjustment in this regard should the time of acquisition of shares in the subsidiaries is be made in the retained earnings in the consolidated financial statements.

The list of subsidiary companies and associates which are included in the consolidation and the Group’s holdings therein are as under:

Name of the Company Ownership Country in % of Incorporation Indian Subsidiaries: M/s Propmax Developers & Holders Private Limited 100% India M/s Play My Movie Private Limited 100% India M/s Bollywood Times Private Limited 100% India

Associates: M/s Breakthrough Films LLP 50% India M/s Brightlight Pictures LLP 50% India M/s Pen Production No 1 LLP 50% India M/s Wizart Entertainment LLP 50% India

3. Nature of Operations The Holding Company was incorporated on 29th August as manufacturers, sellers, distributors, dealers, buyers 2000 to carry on the business to purchase, take on hire or importers,exporters of audio and video cassettes, records, otherwise acquire, films and television and video with the compact disc, laser disc, electro magnetic devices in any exhibiting and renting of the same and to sell, give on hire formats, televisions, radios, amplifiers, tape recorders, video or otherwise the films, talkies and the right so acquired and recorders, digitalelectronics and other control systems, the company’s production with their exhibiting, distributing sound/video transferring and processing, videographics, and renting rights to theatres both in India and outside, video vision. satellite rights, other media rights & to carry on the business

Annual Report 2016-17 87 The subsidiary companies, M/s Bollywood Times Private from those estimates. Any revision to accounting Limited and M/s Play My Movie Private Limited, are involved estimates is recognised prospectively, in the period in in the business of development of software applications which revisions are made. and M/s Propmax Developers and Holders Private Limited is involved in the business of acquiring and providing real c. Revenue Recognition estate on lease and rentals. i. Revenue from Sale of Rights is recognised on fulfillment of the following criteria All the associate LLP's have been formed to venture into new • Persuasive evidence of a sale or licensing business opportunities related to allied businesses of the arrangement with a customer exists. Holding Company. • The film is complete and, in accordance with the terms of the arrangement, either has been 4. Statement of Significant Accounting delivered or is available to be delivered. Policies • The gross revenue is fixed or determinable. • The license period of the arrangement These financial statements are prepared in accordance has begun and the customer can begin its with the Indian Generally Accepted Accounting Principles in exploitation or exhibition. India under the historical cost convention on accrual basis, • Collection is reasonably assured. unless mentioned. GAAP comprises mandatory accounting standards as prescribed under section 133 of the companies ii. Revenue from film exhibition is recognised when Act,2013("The Act") ,the provisions of the Act (to the extent the said film is exhibited in theatres and the final notified). Accounting policies have been consistently account of the said film is received from various applied, except where newly-issued accounting standard is theatre owners. If the film is exhibited in the last initially adopted or a revision to an existing standard requires 3 months of the Financial Year, the gross revenue a change in the accounting policy hitherto in use. received from theatrical owners would be reduced from the cost of the film and if there is any balance All the assets and liabilities have been classified as current cost, the same would be carried forward to the and non-current as per the Company's normal operating cycle subsequent year to be written off in the subsequent and other criteria set out in Schedule III to the Companies year after adjustments of any receipts in subsequent Act, 2013. Based on the nature of operations and the time year and if there is a credit balance in the cost after between the acquisition of assets and their realization in crediting the receipts to the cost of the film, the cash and cash equivalents, the Company has ascertained same would be transferred to profit & loss account. its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities. iii. Revenue from Sale of Compact Discs and VideoTapes is recognised upon passing of title to The significant accounting policies are as follows - the customers, which generally coincides with the delivery. a. Basis of Accounting- The financial statements are prepared in accordance iv. Advertisement Revenue is recognised when the with the historical cost convention under accrual method commercial appears before the public i.e. on of accounting and as a going concern. telecast.

b. Use of Estimates v. Royalty Income is recognised on the basis of The preparation of the financial statements in conformity information submitted by the customer. with generally accepted accounting principles ( ' GAAP') requires management to make estimates vi. Revenue is recognised to the extent that it is and assumptions that affect the reported amount of probable that the economic benefits will flow to assets and liabilities , revenues and expenses , as well the Company and the revenue can be reliably as disclosure of contingent liabilities on the date of measured. Revenue comprises the fair value of the the financial statements. Key estimates made by the consideration received or receivable for the sale of Company in preparing these financial statements. Key goods, net of goods and service tax, rebates and estimates made by the company in preparing these discounts. financial statement include useful lives of assets as well as utilization of economic benifits from these assets, vii. Service Income : Revenue is recognised upon the accrual of expenses , recoverability of trade receivables rendering of services. Revenue is not recognised to and deffered tax assets . Management belives that the the extent when there are significant uncertainties estimates made in the preparation of financial statement regarding recovery of the consideration. are prudent and resonable . Actual results may differ

88 Pen India Limited d. Other Income reviewed by the management periodically , considering i. Interest income is recognised on a time proportion facts of each case, to determine recoverability. These basis taking into account the amount outstanding advances are transferred to film rights at the point of and the rate applicable. exploitation.

ii. On disposal of investments, the difference between h. Investments the carrying amount and the disposal proceeds is i. Investments that are readily realisable and intended recognised in the Statement of Profit and Loss. to be held for not more than a year are classified as current investments. All other investments are e. Property, plant and equipment: classified as long-term investments. Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs ii. Current investments are carried at lower of cost and directly attributable to acquisition are capitalized until fair value determined on an individual investment the property, plant and equipment are ready for use, as basis. intended by the Management. The Company depreciates property, plant and equipment over their estimated iii. Long-term investments are carried at cost. However, useful lives using the straight-line method. The useful provision for diminution in the value of investments, lives and residual values of the Company’s assets are if any, is made to recognise a decline, other than determined as per Schedule II of the Companies Act, temporary in nature. 2013. Depreciation for assets purchases / sold during a period is proportionately charged. i. Inventories Items of inventory are valued on the basis given below: Repairs and maintenance costs are recognized in net In case of Holding Company - profit in the Statement of Profit and Loss when incurred. i. Stock of Work in Progress - The cost of production The cost and related accumulated depreciation are of various films are accumulated under this head. eliminated from the financial statements upon sale or All the cost incurred for production of a particular retirement of the asset and the resultant gains or losses film is debited to particular picture account and is are recognized in the Statement of Profit and Loss. transferred to revenue account only when the said particular film is released / exibited in theatres. Fully depreciated assets are retained in the financial statements until they are no longer in use. The gain or ii. Stock of Rights - Finished Goods - Stock of Rights loss on disposal or retirement of an item of fixed assets are valued at cost of purchase. recognised in the income statement is the difference between the net sales proceeds and carrying amount In case of Subsidiary Companies - of relevant assets. The cost of finished goods and work-in-progress included cost of material and supplies, labour cost, and f. Intangible assets other direct costs as well as the appropriate portion of Intangible assets are stated at cost less accumulated production overheads. amortization and impairment. Intangible assets are amortized over their respective individual estimated j. Impairment of Assets useful lives on a straight-line basis, from the date that Impairment loss is provided to the extent the carrying they are available for use. The estimated useful life of amount of assets exceed their recoverable amount. an identifiable intangible asset is based on a number of Recoverable amount is the higher of an asset’s net factors including the effects of obsolescence, demand, selling price and its value in use. Value in use is the competition, and other economic factors (such as present value of estimated future cash flows expected the stability of the industry, and known technological to arise from the continuing use of an asset and from advances), and the level of maintenance expenditures its disposal at the end of its useful life. Net selling price required to obtain the expected future cash flows from is the amount obtainable from the sale of an asset in the asset. Amortization methods and useful lives are an arm’s length transaction between knowledgeable, reviewed periodically including at each financial year willing parties, less the costs of disposal. end. The Company reviews the carrying values of tangible g. Content Advances and intangible assets for any possible impairment Advances arepaid to producers/owners of the film , at each balance sheet date. If any such indication in terms of the agreements entered into with them , exists, the asset's recoverable amount is estimated. for acquisition of associated rights . All advances are An imapairment loss is recognised whenever the

Annual Report 2016-17 89 carrying amount of an asset or its cash-generating unit year, the same is computed by applying the exceeds its recoverable amount. Impairment losses are present salary rate on the accumulated leave recognised in the income statement. to the credit of employees.

k. Provisions & Contingencies m. Leases A provision is recognised when an enterprise has a The Company has evaluated all existing leases as present obligation as a result of past event and it is "Operating Leases" . Aggregate of lease rentals payable probable that an outflow of resources will be required under non - cancellable operating lease arrangemnts to settle the obligation, in respect of which a reliable ( over the initial and subsequent periods of lease ) are estimate can be made. Provisions are not discounted charged to the Statement of Profit and Loss on a straight to its present value and are determined based on best line basis over the non-cancellable period of the lease. estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet n. Foreign Currency Transactions date and adjusted to reflect the current best estimates. Transactions in foreign currencies are accounted at Contingent liabilities are not recognised but are exchange rates prevalent on the date of the transaction. disclosed in the financial statements. Contingent assets Foreign currency monetary assets and liabilities at are neither regognised nor disclosed in the financial the period end are translated using the exchange statements. rates prevailing at the end of the period. All exchange differences are recognised in the Statement of Profit l. Employee Benefits & Loss . Non monetary foreign currency items are In case of Holding Company - recorded using the exchange rates that existed when i. Short-term Employee Benefits the values were determined accordingly. The reporting a. Short term employee benefits are recognised currency of the Company is Indian Rupee. as an expense at the undiscounted amount in the profit and loss account of the year in which o. Taxes on Income the related service is rendered. Provision for current tax is made after taking into consideration benefits admissible under the provisions ii. Long-term Employee Benefits of the Income-tax Act, 1961. Deferred tax resulting from a. Defined Contribution Plans “timing differences” between taxable and accounting The company has Defined Contribution Plans income is accounted for using the tax rates and laws that for post employment benefits in the form of are enacted or substantively enacted as on the balance Provident Fund which is administered through sheet date. The deferred tax asset is recognised and Government of India. Provident Fund Scheme carried forward only to the extent that there is a virtual is classified as Defined Contribution Plans as certainty that the asset will be realised in future. the company has no further obligation beyond making the contributions. The company's Deferred tax is recognised, subject to the consideration contributions to Defined Contribution Plans of prudence in respect of deferred tax assets, on timing are charged to the Profit and Loss Statement differences, being the difference between taxable as incurred. The expense related to other income and accounting income that originate in one year post employment and long term benefits is and are capable of reversal in one or more subsequent recognised at the present value of the amounts years. payable determined using actuarial valuation techniques. Actuarial gains and losses in p. Earnings per Share respect of post employment and other long Basic earnings per share are calculated by dividing term benefits are charged to the profit and loss the net profit or loss for the year attributable to equity account. shareholders (after deducting preference dividends and attributable taxes, if any) by the weighted average In case of Subsidiary Companies - number of equity shares outstanding during the year. Retirement Benefits: For the purpose of calculating diluted earnings per a. The Companies are not covered under the share, net profit or loss for the year attributable to equity provisions of Provident Fund Act. shareholders and the weighted average number of shares outstanding during the year are adjusted for the b. Gratuity is accounted on cash basis. effects of all dilutive potential equity shares.

c. Provision for Leave Encashment is accrued q. Cash and cash equivalents and provided for at the end of the financial Cash and cash equivalents for the purposes of cashflow

90 Pen India Limited statement comprise cash at bank and in hand and s. As this is the first time that the Consolidated Financial short-term investments with an original maturity of three Statements of Holding company are prepared and the months or less. relationship of Holding - Subsidiary - Associate has come into existence, according to Transitional Provisions of r. As far as possible, the consolidated financial statements Accounting Statndard - 21 on "Consolidated Financial are prepared using uniform accounting policies for like Statements" notified by Companies (Accounting transactions and other events in similar circumstances Standards) Rules, 2006, comparative figures for the and are presented in the same manner as the Company's previous period are not presented. separate financial statements. 5. Share Capital Particulars 31.03.2017 (Amt Rs.) Authorized shares: 50,00,000 Equity shares of Rs.10/-each 50,000,000 50,000,000

Issued, Subscribed and fully paid up shares 14,00,000 Equity Shares of Rs. 10/- each fully paid-up 14,000,000 Total issued, subscribed and fully paid up share capital 14,000,000

5.1 Reconciliation of the shares at the beginning and at the end of the reporting period Particulars 31.03.2017 31.03.2017 (Nos.) (Amt Rs.) Equity shares of Rs. 10/- each At the beginning of the period 1,400,000 14,000,000 Add: Issued during the period - - Outstanding at the end of the period 1,400,000 14,000,000

5.2 Terms/rights attached to equity shares The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled for one vote per share.

In the event of liquidation of the Company, the equity shareholders are entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

5.3 List of Shareholders holding more than 5% of total Issued Shares Particulars 31.03.2017 31.03.2017 (Nos.) (% Holding) Mr. Jayantilal V. Gada 1,399,950 99.99%

6. Reserves & Surplus Particulars 31.03.2017 (Amt Rs.) I Securities Premium Reserve Balance as per last Balance Sheet of Holding Company 36,000,000 Add: Premium on shares issued during the year - Closing Balance 36,000,000

Annual Report 2016-17 91 Particulars 31.03.2017 (Amt Rs.) II Surplus - Balance in the Statement of Profit and Loss Balance as per last Balance Sheet of Holding Company 270,332,066 Add : Current Year Profits 166,738,307 Add : Pre-acquisition Loss of Subsidiary Companies of Current year 9,212,356 Less: Share of Loss in Associate LLP's 28,360 Less: Charge on account of transitional provisions under Accounting Standard 15 (Net of De- 289,136 ferred Tax) Net Surplus in the Statement of Profit and Loss 445,965,232

Total Reserves and Surplus 481,965,232

7. Long Term Borrowings Particulars 31.03.2017 (Amt Rs.) Unsecured Borrowings Loan From Directors 27,760,225 27,760,225 Loans from Director Mr Jayantilal Gada are interest free and long term in nature.

Secured Borrowings HDFC Limited-Term Loan 120,987,498 HDFC Limited Term Loan is secured against commercial property in the name of M/s Propmax 120,987,498 Developers & Holders Private Limited

The Company does not have any default as on Balance Sheet date in repayment of any loan 148,747,723 or interest, wherever applicable.

8. Long Term Provisions Provision for Employee Benefits Provision for Gratuity 476,708 Provision for Leave Encashment 33,813 510,521

9. Short Term Borrowings a. Secured Loans repayable on demand from Banks - Overdraft 568,619,172

Bank Overdraft from YES Bank Limited is secured against Property i.e. Pen House (owned by M/s Popular Entertainment Pvt Ltd, a related company) and personal guarantee of Chairman and Managing Director Mr.Jayantilal Gada, Outstanding as on 31.03.2017 Rs. 1.77 Crs. Bank Overdraft from BNP Paribas Bank and HDFC Banks are secured against Mutual Funds owned by the company and Popular Entertainment Network Private Limited (Related Party)

92 Pen India Limited Particulars 31.03.2017 (Amt Rs.) b. Unsecured Loans Loan from Director 6,411

568,625,583

The above unsecured loans are interest free The Company does not have any default as on Balance Sheet date in repayment of any loan or interest, wherever applicable.

10. Trade Payables Particulars 31.03.2017 (Amt Rs.) Trade Payables - a. Trade Payables due to Micro and Small Enterprises 979,680 b. Trade Payables due to other than Micro and Small Enterprises 89,839,458

For the year and as at March 31, 2017 and March 31, 2016, there are no interests due/paid/ 90,819,138 payable to Micro and Small Enterprises The details of amounts outstanding to Micro, Small and Medium Enterprises is based on information available with the Company

11. Other Current liabilities Statutory Liabilities 37,213,375 HDFC Limited (Current Maturities of Long Term Debt) 9,906,494 Advances Received From Customers 220,588,347 Other Payables Audit fees payable 34,500 Electricity Bill Payable 11,880 46,380 267,754,596

12. Short Term Provisions Provision for Employee Benefits Provision for Gratuity 46,501 Provision for Leave Encashment 84,375 130,876

Provision for Duties & Taxes EPF 394,059 ECIS 61,041 Equalisation Levy Tax 13,037 Profession Tax -125 468,012

598,888

Annual Report 2016-17 93 13A. Property, Plant and Equipment The Changes in the carrying value of Property, plant and equipment for the year ended March 31,2017 are as follows: Particulars Building Plant & Computer Furnitures Motor Car Office Total (Amt. Rs.) Machinery (Amt. Rs.) & Fixtures (Amt. Rs.) Equipments (Amt. Rs.) (Amt. Rs.) (Amt. Rs.) (Amt. Rs.)

Gross Carrying value as of April 1, 2016 - 3,957,603 2,506,179 21,517,604 20,632,127 987,678 49,601,190 Additions 156,943,617 98,402 4,052,416 179,256 - - 161,273,691 Deletions/Write off - - - - 19,930,127 - 19,930,127 Gross Carrying value as of 156,943,617 4,056,005 6,558,595 21,696,860 702,000 987,678 190,944,754 March 31, 2017

Accumulated Depreciation as of - 3,227,816 2,176,290 11,521,427 18,790,925 651,958 36,368,416 April 1, 2016 Depreciation 3,313,254 193,108 279,285 2,053,190 376,551 143,809 6,359,196 Depreciation of Subsidiaries shown in Cost - - 631,589 4,752 - - 636,341 of Sales Accumulated Depreciations on deletions/ - - - - 18,620,884 - 18,620,884 write off Accumulated Depreciation as of 3,313,254 3,420,923 3,087,163 13,579,369 546,592 795,768 24,743,069 March 31,2017

Carrying value as of March 31, 2017 153,630,363 635,081 3,471,432 8,117,491 155,409 191,911 166,201,685

Carrying value as of April 1, 2016 - 729,787 329,889 9,996,176 1,841,202 335,720 13,232,774

The Changes in the carrying value of Property, plant and equipment for the year ended March 31,2016 are as follows : Gross Carrying value as of April 1, 2015 - 3,666,420 2,264,560 20,989,998 20,632,127 987,678 48,540,783 Additions - 291,183 241,619 527,605 - - 1,060,407 Deletions ------Gross Carrying value as of - 3,957,603 2,506,179 21,517,603 20,632,127 987,678 49,601,190 March 31, 2016

Accumulated Depreciation as of - 3,002,396 2,126,016 9,524,714 18,169,076 464,300 33,286,502 April 1, 2015 Depreciation - 225,420 50,274 1,996,713 621,849 187,659 3,081,915 Accumulated Depreciations on deletions ------Accumulated Depreciation as of - 3,227,816 2,176,290 11,521,427 18,790,925 651,959 36,368,417 March 31,2016

Carrying value as of March 31, 2016 - 729,787 329,889 9,996,176 1,841,202 335,719 13,232,773

Carrying value as of April 1, 2015 - 664,024 138,544 11,465,284 2,463,051 523,378 15,254,281

94 Pen India Limited 13B.Intangible Assets The Changes in the carrying value of Intangible Assets for the year ended March 31,2017 are as follows: Particulars Software Total (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2016 - - Additions 700,000 700,000 Deletions - - Gross Carrying value as of March 31, 2017 700,000 700,000

Accumulated Amortization as of April 1, 2016 - - Amortization Expenses 700,000 700,000 Accumulated amortizations on deletions - - Accumulated Amortization as of March 31,2017 700,000 700,000

Carrying value as of March 31, 2017 - -

Carrying value as of April 1, 2016 - -

The Changes in the carrying value of Intangible Assets for the year ended March 31,2016 are as follows:

Particulars Software Total (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2015 - - Additions - - Deletions - - Gross Carrying value as of March 31, 2016 - -

Accumulated Amortization as of April 1, 2015 - - Amortization Expenses - - Accumulated amortizations on deletions - - Accumulated Amortization as of March 31,2016 - -

Carrying value as of March 31, 2016 - -

Carrying value as of April 1, 2015 - -

Annual Report 2016-17 95 13C.Intangible Assets Under Development The Changes in the carrying value of Intangible Assets under Development for the year ended March 31,2017 are as follows: Particulars Software Total (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2016 - - Additions 3,746,515 3,746,515 Deletions - - Gross Carrying value as of March 31, 2017 3,746,515 3,746,515

Accumulated Amortization as of April 1, 2016 - - Amortization Expenses - - Accumulated amortizations on deletions - - Accumulated Amortization as of March 31,2017 - -

Carrying value as of March 31, 2017 3,746,515 3,746,515

Carrying value as of April 1, 2016 - -

The Changes in the carrying value of Intangible Assets under Development for the year ended March 31,2016 are as follows:

Particulars Software Total (Amt. Rs.) (Amt. Rs.) Gross Carrying value as of April 1, 2015 - - Additions - - Deletions - - Gross Carrying value as of March 31, 2016 - -

Accumulated Amortization as of April 1, 2015 - - Amortization Expenses - - Accumulated amortizations on deletions - - Accumulated Amortization as of March 31,2016 - -

Carrying value as of March 31, 2016 - -

Carrying value as of April 1, 2015 - -

14. Non Current Investments (Unquoted) Particulars 31.03.2017 (Amt Rs.) (Valued at cost less other than temporary diminution in value, if any) 1. Investment in Associates (LLP's) Initial Cost of Investment in M/s Breakthrough Films LLP 25,000 Add/(Less) : Goodwill/(Capital Reserve) at the time of Acquisition -

Post Acquisition Share in Loss of M/s Breakthrough Films LLP -7,000

18,000

96 Pen India Limited Particulars 31.03.2017 (Amt Rs.) Initial Cost of Investment in M/s Brightlight Pictures LLP 25,000 Add/(Less) : Goodwill/(Capital Reserve) at the time of Acquisition - Post Acquisition Share in Loss of M/s Brightlight Pictures LLP -7,187 17,813

Initial Cost of Investment in M/s Pen Production No 1 LLP 25,000 Add/(Less) : Goodwill/(Capital Reserve) at the time of Acquisition - Post Acquisition Share in Loss of M/s Pen Production No 1 LLP -7,173 17,827

Initial Cost of Investment in M/s Wizart Entertainment LLP 25,000 Add/(Less) : Goodwill/(Capital Reserve) at the time of Acquisition - Post Acquisition Share in Loss of M/s Wizart Entertainment LLP -7,000 18,000 Total 71,640

2. Investments in Mutual Funds (Quoted) ICICI Prudential Mutual Fund 55,000,000 Market Value of Quoted Investments 55,086,317 Total 55,071,640

15. Deferred tax Asset/(Liabilities) (Net) i. PEN India Limited(Holding Company) Deferred tax Asset/(liability) on account of - Depreciation 3,100,433 Gratuity 181,083 Leave Encashment 40,905

Deferred Tax Assets and Deferred Tax Liabilities have been offset as they relate to the same government taxation laws. Opening Net Liability -1,324,346 Closing Net Asset/(Liability) 4,646,767 Current Year Deferred Tax Asset / (Liability) 3,322,421

ii. Bollywood Times Private Limited(subsidiary) Opening Net Liability - Closing Net Asset/(Liability) -128,236 Current Year Deferred Tax Asset / (Liability) -128,236

Annual Report 2016-17 97 16. Long term Loans and Advances Particulars 31.03.2017 (Amt Rs.) Unsecured, considered good (unless otherwise stated) a. Capital Advances - b. Security Deposits 101,470 c. Loans and advances to related parties - d. Other Loans & Advances Advance Income tax (Net of provisions) 8,485,818 MVAT Receivable 82,872 Other Loans & Advances 6,018,631 14,688,791

17. Other Non-Current Assets Preliminary Expenses 1,345,480 1,345,480

18. Current Investments a. Investment in Liquid Mutual Funds Units BSL Medium Term Plan 204,600,000 Deutsche Mutual Fund - Franklin Templeton Mutual Fund Collection A/c 150,000,000 ICICI Regular Income Fund- Growth 78,165,960 IDFC Arbitrage Fund- Collection Account - KOTAK EQUITY ARBITRAGE FUND - DSP Blackrock Mutual Fund Collection Account 54,700,000 ICICI PRUDENTIAL FMP SERIES 79-1218 FUND 50,000,000 Kotak Medium Term Fund- Growth 82,214,029 Reliance Regular Savings Fund 50,000,000

669,679,989

Aggregate amount of quoted investments 669,679,989 Market value of quoted investments 745,923,059 Aggregate amount of unquoted investments -

19. Inventories Work-in-progress (Various Films) 264,436,620 Work-in-progress (Software Applications) 17,190,065 Finished Goods (Stock of Rights) 187,792,845 469,419,530

20. Trade Receivables Aggregate amount of Trade Receivables outstanding for a period exceeding six months from the date they are due for payment. Unsecured, considered good (A) 2,302,934

98 Pen India Limited Particulars 31.03.2017 (Amt Rs.) Other Trade receivables (Due for a period less than six months) Unsecured, from companies under the same management 8,700 Unsecured, considered good (B) 100,841,935 103,153,569

21. Cash and cash equivalents i. Cash and cash equivalents a. Balance with Banks in current accounts 13,051,169 b. Cash on hand 8,095,009 21,146,178

22. Short-term loans and advances Capital Advances 3,442,527 Other loans and advances 50,073,380 53,515,907

23. Other Current Assets i. Prepaid Expenses 770,927 ii. Advance to vendors 1,405,925 iii. Preliminary Expenses 449,280 2,626,132

24. Revenue from operations a. Sale of Rights/ products 737,363,455 b. Sale of Services 118,572,448 c. Distribution & Theatrical Revenue 670,321,637 d. Licence Fees 15,000 e. Other Operating revenue 30,172,339 1,556,444,878 f. Less: Service Tax 88,522,448 Net revenue from operations 1,467,922,430

25. Other Income Interest Income 44,647,121 Other non-operating income 17,406,205 62,053,327

26. Cost of Sales Stock at the beginning of the period Purchase - Rights 1,273,109,750 - Compact Discs / Video Tapes - - Distribution Cost 98,497,399 - Marketing Cost 129,019,322

Annual Report 2016-17 99 Particulars 31.03.2017 (Amt Rs.) - Application Development Expenses and related Expenses 17,177,858 - Other Cost 90,879,821 1,608,684,151

Less : Stock at the end of the period Under Production - Films 264,436,620 Stock in Trade - Rights 187,792,845 Application Software under Development 17,190,065 1,139,264,621

27. Employee benefits expenses Salaries and wages 18,378,065 Contribution to provident fund and other funds 430,166 Staff Welfare Expense 522,775 19,331,006

28. Finance Cost Interest on - Bank OD and Cash Credit 66,277,243 HDFC Term Loan 8,204,401 74,481,644

29. Depreciation and amortisation expenses Depreciation on Property, Plant and Equipment 6,359,196 Amortization on Intangible Assets 700,000 7,059,196

30. Other Expenses Electricity expenses 952,047 Rent, Rates and Taxes 1,580,964 Repairs and maintenance 1,030,569 Legal & Professional Charges 12,375,712 Travelling, Conveyance & Lodging 803,046 Travelling Expenses(Foreign) 42,447 Postage, Courier & Telephone/Internet Expenses 520,500 Printing and Stationery 3,727,848 Auditors Remuneration 756,500 Profession Tax for Company 10,000 Office expenses 664,478 Interest on Statutory dues 189,426 Bank Charges 1,177,404 Service Tax 1,701,333 MVAT Paid 14,540 Water Charges 33,442

100 Pen India Limited Particulars 31.03.2017 (Amt Rs.) Advertisement Expenses 1,196,000 Donation 9,033,300 Others 2,312,586 Food & Beverage 284,554 Insurance Expenses 111,798 Motor Car Expenses 86,153 Registration,Subscription, Renewal & Membership Fees 309,638 Registration Fees 217,400 Society Maintenance 410,788 Premilinary Expenses Written off 253,480 Property Tax 1,305,968 Fixed Assets Written off 730,542 41,832,463

Payment to Auditor (Excluding service tax) Stat Audit Fees 656,500 Tax Audit Fees 100,000 Total 756,500

31. Contingent Liability Claims against the Holding company not acknowleged as debt: 10,686,795

Name Nature of Amount Period to which the Forum where dispute is pending/appeal in the of dues (Rs.) amount related process of being lodged Statue Service Service 43,43,002/- 2008-09 to 2011-12 Office of Assisstant Commissioner, Division VII, Tax Tax Service tax -VI, Mumbai Demand Service Service 63,43,793/- 2009-10 & 2010-11 Office of the Commissioner of Service tax, Audit-I, Tax Tax Mumbai Demand

32. Employee Benefits The Holding Company has adopted provisions of Accounting Standard 15 “Employee Benefits” for the first time during the year. In accordance with the stipulations of the Standard, the Company has adjusted Rs. 4,42,172/- (net of deferred tax aggregating to Rs. 1,53,036/-) towards the additional liability of Defined Benefit obligation in respect of gratuity and leave encashment up to 31st March, 2016 against the balance of Opening Profit and Loss Balance as at 1st April, 2016. The company has classified various employee benefits as under:

A. Defined Contribution Plans The company has recognised the following amounts in the Profit and Loss Account for the year: i. Contribution to Provident Fund 430,166

Annual Report 2016-17 101 Particulars 31.03.2017 (Amt Rs.) B. Defined Benefit Plans 1. Valuation in respect of Gratuity have been carried out by actuary, as at the Balance Sheet date, based on the following assumptions: a. Mortality IALM(2006-08) Ult. b. Discount Rate (per annum) 6.84% c. Rate of increase in Compensation Levels 10.00% d. Rate of Return(Expected) on Plan Assets - e. Withdrarwal Rates 10.00%

i. Changes in the Present Value of Obligation a. Present Value of Obligation of period ( as on 31.03.2016) 327,660 b. Interest Cost 25,525 c. Past Service Cost - d. Current Service Cost 162,010 e. Curtailment Cost/(Credit) - f. Settlement Cost/(Credit) - g. Benefits Paid - h. Actuarial (Gain)/Loss 8,014 i. Present Value of Obligation at end of period (as on 31.03.2017) 523,209

ii. Changes in the Fair value of Plan Assets a. Fair Value of Plan Assets at beginning of period - b. Expected Return on Plan Assets - c. Actuarial Gain/(Loss) - d. Employers' Contributions - e. Benefits Paid - f. Fair Value of Plan Assets at end of period -

iii. Fair value of Plan Assets a. Fair Value of Plan Assets at beginning of period - b. Adjustment to Opening Fair Value of Plan Assets - c. Actual Return on Paln Assets - d. Contributions - e. Benefits Paid - f. Fair Value of Plan Assets at end of period - g. Funded Status -523,209 h. Excess of actual over estimated return on Plan Assets -

iv. Actuarial Gain/(Loss) Recongnized a. Actuarial Gain/(Loss) for the period ( Obligation) -8,014 b. Actuarial Gain/(Loss) for the period ( Plan Asset) - c. Total Gain/(Loss) for the period -8,014 d. Actuarial Gain/(Loss) recognized for the period -8,014 e. Unrecognized Actuarial Gain/(Loss) at end of period -

102 Pen India Limited Particulars 31.03.2017 (Amt Rs.) v. Amount recognised in the Balance Sheet a. Present Value of Obligation as at end of period 523,209 b. Fair Value of Plan Assets as at end of period - c. Funded Status -523,209 d. Unrecognized Actuarial Gain/(Loss) - e. Net Asset/ (liability) recognized in the Balance Sheet -523,209

vi. Expenses recognised in the Profit and Loss Account a. Current Service Cost 162,010 b. Past Service Cost - c. Interest Cost 25,525 d. Expected Return on Plan Assets - e. Curtailment Cost/(Credit) - f. Settlement Cost/(Credit) - g. Net actuarial (Gain)/Loss for the period 8,014 h. Total Expenses recognised in the Profit and Loss Account 195,549

vii. Movements in the Liability recognized in Balance Sheet a. Opening Net Liability 327,660 b. Adjustments to Opening Fair Value of Plan Assets - c. Expenses as Above 195,549 d. Contribution Paid - e. Closing Net Liability 523,209

viii. Experience Analysis - Liabilities a. Actuarial (Gain)/Loss due to Change in Bases 48,258 b. Experience (Gain)/Loss due to change in Experience -40,244 Total 8,014

Experience Analysis - Plan Assets Experience (Gain)/Loss due to change in Plan Assets -

ix. Schedule III Details Current Liability 46,501 Non-current Liability 476,708

2. Leave Encashment i. Assumptions as at Mortality IALM(2006-08) Ult. a. Discount Rate (per annum) 6.84% b. Rate of increase in Compensation 10.00% c. Rate of Return on Plan Assets - d. Withdrawal rates 10.00%

Annual Report 2016-17 103 Particulars 31.03.2017 (Amt Rs.) ii. Changes in present value of obligations a. Present Value of Obligation of period ( as on 31.03.2016) 114,512 b. Interest Cost 8,450 c. Past Service Cost - d. Current Service Cost 62,080 e. Curtailment Cost/(Credit) - f. Settlement Cost/(Credit) - g. Benefits Paid -12,089 h. Actuarial (Gain)/Loss -54,765 i. Present Value of Obligation at end of period ( as on 31.03.2017) 118,188

iii. Changes in fair value of plan assets a. Fair Value of Plan Assets at beginning of period - b. Adjustment to Opening Fair Value of Plan Assets - c. Expected Return on Paln Assets - d. Contributions 12,089 e. Benefits Paid -12,089 f. Fair Value of Plan Assets at end of period -

iv. Fair value of plan assets a. Fair Value of Plan Assets at beginning of period - b. Adjustment to Opening Fair Value of Plan Assets - c. Actual Return on Paln Assets - d. Contributions 12,089 e. Benefits Paid -12,089 f. Fair Value of Plan Assets at end of period - g. Funded Status -118,188 h. Excess of actual over estimated return on Plan Assets -

v. Actuarial Gain/(Loss) Recognized Actuarial Gain/(Loss) for the period ( Obligation ) 54,765 Total Gain/(Loss) for the period 54,765 Actuarial Gain/(Loss) recognized for the period 54,765

vi. Amounts to be recognized in the balance sheet and statement of Profit & Loss Account a. Present Value of Obligation at end of period 118,188 b. Fair Value of Plan Assets at end of period - c. Funded Status -118,188 d. Unrecognized Actuarial Gain/(loss) - e. Net Asset/(liability) Recognized in the Balance Sheet -118,188

vii. Expenses recognised in the Profit and Loss Account a. Current Service Cost 62,080 b. Interest Cost 8,450

104 Pen India Limited Particulars 31.03.2017 (Amt Rs.) c. Expected Return on Plan Assets - d. Net actuarial (Gain)/Loss recognized for the period -54,765 e. Total Expenses recognised in the Profit and Loss Account 15,765

viii. Movements in the liability recognized in balance sheet a. Opening Net Liability 114,512 b. Expenses as above 15,765 c. Contribution paid -12,089 d. Closing net liability 118,188

ix. Experience Analysis - Liabilities a. Actuarial (Gain)/Loss due to change in bases 2,944 b. Experience (Gain)/Loss due to change in experience - 57,709 Total -54,765

x. Schedule III Details Current Liability 84,375 Non-Current Liability 33,813

33. 'The Holding Company has made investments in 100% subsidaries namely M/s Bollywood Times Private Limited (BTPL), M/s Propmax Developer & Holders Pvt. Ltd. and M/s Play My Movie Private Limited agreegating to Rs. 752 Lacs. Further, the Company has also given loans & advances aggregating to Rs.151.28 Lacs to M/s Propmax Developer & Holders Pvt. Ltd. and M/s Play My Movie Private Limited. The Company is also a 50% holder in M/s Wizart Entertainment LLP, M/s Pen Production No.1 LLP, M/s Bright Line Pictures LLP, M/s Breakthrough Films LLP. As per the latest audited Financial Statements of M/s Bollywood Times Private Limited (BTPL), M/s Propmax Developer & Holders Pvt. Ltd., M/s Play My Movie Private Limited for the year ended March 31, 2017, they have reported losses in the current financial year aggregating to Rs. 135.60 lacs. As per the unaudited Financial Statements of M/s Wizart Entertainment LLP, M/s Pen Production No.1 LLP, M/s Bright Light Pictures LLP, M/s Breakthrough Films LLP provided to us by the management for the year ended March 31, 2017, they have reported losses in the current financial year aggregating to Rs. 28,360/- (Share of M/s Pen India Limited).

34. Managerial Remuneration Salary & Allowances 8,655,000 8,655,000

35. Related Party Disclosures List of Related Parties : a. Key Management Personnel Mr.Jayantilal Gada Mr.Dhaval Gada Mr.Akshay Gada

b. Relative of Key Management Personnel Mrs. Hansa Gada

Annual Report 2016-17 105 c. Enterprises where Key Management Personnel or their relatives M/s Popular Entertainment Network Pvt. Ltd. are able to exercise significant influence M/s Dhaval & Guroudev Productions Pvt. Ltd. M/s Play My Song Pvt.Ltd M/s Ethnic Enterprises M/s Final Cut Media Pvt Ltd. M/s Pen Music Pvt Ltd. M/s Propmind Holding and Developers Pvt Ltd. M/s Maxima Holding and Developers Pvt Ltd.

Disclosure of transactions between the company and related parties and outstanding balances as at the year end: Particulars 31.03.2017 (Amt Rs.) a. Key Management Personnel Remuneration a. Mr.Jayantilal Gada 7,500,000 b. Mr.Dhaval Gada 540,000 c. Mr.Akshay Gada 540,000

Professional Fees a. Mr.Jayantilal Gada - b. Mr.Dhaval Gada 360,000 c. Mr.Akshay Gada 360,000

Bonus Paid a. Mr.Jayantilal Gada 25,000 b. Mr.Dhaval Gada 25,000 c. Mr.Akshay Gada 25,000

Loan Taken From Mr.Jayantilal Gada 43,026,363

Loan Repaid to Mr.Jayantilal Gada 57,676,949

Outstanding Loan Mr.Jayantilal Gada 27,766,636

Remuneration/Professional Fees Payable (Outstanding Balance) a. Mr.Jayantilal Gada - b. Mr.Dhaval Gada 130,697 c. Mr.Akshay Gada 10,920

Sale of Car Mr.Jayantilal Gada 558,932

106 Pen India Limited Particulars 31.03.2017 (Amt Rs.) b. Relative of Key Management Personnel Professional Fees Mrs. Hansa Gada 2,050,000

Bonus Paid Mrs. Hansa Gada 25,000

c. Enterprises where Key Management Personnel or their relatives are able to exercise significant Rent Paid M/s Popular Entertainment Network Pvt. Ltd. 840,000

Professional Fees M/s Pen Music Pvt Ltd. 400,000

Professional Fees Payable M/s Pen Music Pvt Ltd. 360,000

Loan Taken M/s Popular Entertainment Network Pvt. Ltd. -

Loan Repaid M/s Popular Entertainment Network Pvt. Ltd. 2,115,157

Outstanding Loan taken M/s Popular Entertainment Network Pvt. Ltd. -

Business Auxilliary services rendered to M/s Dhaval & Guroudev Productions Pvt. Ltd. 560,000 O/s Receivable from M/s Dhaval & Guroudev Productions Pvt. Ltd. (Business Auxilliary) - O/s Receivable from M/s Dhaval & Guroudev Productions Pvt. Ltd. (Current A/c) 8,700

36A.Income in Foreign Currency Theatrical Revenue 130,268 130,268

36B.Expenditure in Foreign Currency (Accrual Basis) Professional Fees 871,301 871,301

37. Disclosures for Operating Leases a. Lease payments recognised in the Profit and Loss Account 840,000

b. Significant leasing arrangements i. The company has not paid any interest free security deposits under certain agreements.

Annual Report 2016-17 107 Particulars 31.03.2017 (Amt Rs.) ii. Certain agreements provide for increase in rent. iii. Some of the agreements contain a provision for their renewal.

c. Future minimum lease payments under non-cancellable agreements i. Not later than one year 840,000 ii. Later than one year and not later than five years 840,000 iii. Later than five years -

38. EPS Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The company has not issued any potential equity shares and accordingly, basic earnings per share and diluted earnings per share are the same. Earnings per Share has been computed as under:

Basic/ Diluted Profit after Taxation (Rupees) 166,738,307

Weighted average number of shares 1,400,000

Basic EPS (Rs. per Equity Share of Rs. 10 each) - 119.10

39. Segment Reporting The holding company acquires, co-produces and distributes Indian films in multiple formats. Film content is monitored and strategic decisions around the business operations are made based on the film content, whether it is a new release or library. The subsidiary companies, M/s Bollywood Times Private Limited and M/s Play My Movie Private Limited, are involved in the business of development of software applications and M/s Propmax Developers and Holders Private Limited is involved in the business of acquiring and providing real estate on lease and rentals.The company has identified three segments viz. Film Content, Development of Software Applications and Real Estate Lease Rentals. Business segments have been identified taking into account the nature of Products and services, the differring risks and returns and the internal business reporting systems.However, according to "Accounting Standard - 17 on Segment Reporting", different identified business segments are not identified as a reportable Segment since - (a) their revenue from sales to external customers and from transactions with other segments are not equal to 10 per cent or more of the total revenue,external and internal, of all segments; (b) their segment results, whether profit or loss, are not equal to 10 per cent or more of - (i) the combined result of all segments in profit, or (ii) the combined result of all segments in loss, whichever is greater in absolute amount; (c) their segment assets are not equal to 10 per cent or more of the total assets of all segments.

40. Details of Specified Bank notes Particulars SBN Other Total (Rs.) denomition (Rs.) Notes (Rs.) a. Holding Company (PEN India Limited) - Closing Cash in hand as on 08.11.2016 - 8,009,479 8,009,479 Add:- Permitted Receipts - 270,000 270,000 Less:- permitted payments - 294,704 294,704 Less:- Amount deposited in banks - - - Closing Cash in hand as on 30.12.2016 7,984,775

108 Pen India Limited Particulars SBN Other Total (Rs.) denomition (Rs.) Notes (Rs.) b. Subsidiary Company (M/s Bollywood Times Private Limited) - Closing Cash in hand as on 08.11.2016 12,000 23,498 35,498 Add:- Permitted Receipts - 110,000 110,000 Less:- permitted payments - 113,837 113,837 Less:- Amount deposited in banks 12,000 - 12,000 Closing Cash in hand as on 30.12.2016 19,661

c. Subsidiary Company(M/s Propmax Developers & Holders Private Ltd.) - Closing Cash in hand as on 08.11.2016 - - - Add:- Permitted Receipts - - - Less:- permitted payments - - - Less:- Amount deposited in banks - - - Closing Cash in hand as on 30.12.2016 - - -

d. Subsidiary Company(M/s M/s Play My Movies Private Ltd.) - Closing Cash in hand as on 08.11.2016 - - - Add:- Permitted Receipts - - - Less:- permitted payments - - - Less:- Amount deposited in banks - - - Closing Cash in hand as on 30.12.2016 - - -

41. As required by the Companies Act, a Corporate Social Responsibility (CSR) committee has been formed by the Holding Company. CSR objects chosen by the Company primarily consist of promoting education, including special education and employment enhancing vocation skills especially among children,women,elderly and the differently abled and livelihood enhancement projects ; setting up homes and hostels for women and orphans etc. As per the provisions of the Act, gross amount required to be spent by the Company is 17,88,709/- (previous year Rs.9,96,566/-). A total of Rs. 28 lakhs has been spent by the Company during the current year.

42. All loans and advances and accounts receivables are subject to confirmations and considered good and recoverable. Other current assets have a value on realization in the ordinary course of the business at least equal to their carrying amounts .

As per our report of even date For and on behalf of the Board A. Bafna & Co. Firm Registration Number 03660C Chartered Accountants

CA. Jinendra Kumar Sethi R K Haran Jayantilal Gada Akshay Gada Partner Group President - C&MA and Chairman & Managing Director Director Membership No. 072006 Group Company Secretary (DIN No.00726688) (DIN No.07283493)

Date : 6th July 2017 Place : Mumbai

Annual Report 2016-17 109

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