13th Annual Report 2005

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13th Annual Report
2005 - 2006
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BOARD OF DIRECTORS
Ms. Anurradha Prasad
Mr. Rajiv Shukla
Mr. Surendra Singh
Mr. Bhupindar Singh
Ms. Pallavi S Shroff
Dr. Anuradha Mishra
Mr. Nalin Satykam Konli
Mr. Rajeev Shankar
Chairperson &
Managing Director
Director
Director
Director
Director
Director
Director
Director
ANNUAL GENERAL MEETING 2005 - 2006
Date
: 20th September, 2006
Day
: Wednesday
Time
: 4:00 P.M.
Place
: Airforce Auditorium,
Subroto Park, Delhi Cantt,
New Delhi - 110010
COMPANY SECRETARY
Deepanjali Gulati
STATUTORY AUDITORS
Joy Mukherjee & Associates
Page No.
CONTENTS
BANKERS
HDFC Bank Ltd.
Ansals Fortune Arcade,
K - Block, Sector-18,
Noida - 201 301
Notice
1
Directors' Report
3
Management Discussion and Analysis Report
7
REGISTERED OFFICE
C-4, Shivalik,
Near Malviya Nagar Market,
New Delhi - 110 017
Report on Corporate Governance
10
Auditors' Report
16
Balance Sheet
18
Profit & Loss Account
19
Schedules
20
Balance Sheet Abstract
33
Cash Flow Statement
34
Section-212 Report
35
B.A.G. Infotainment Pvt Ltd (Subsidiary Company)
36
B.A.G. Films Limited (Consolidated)
45
CORPORATE OFFICE
FC -23, Sector- 16A,
Film City, Noida - 201 301
REGISTRAR AND SHARE TRANSFER AGENT
Alankit Assignments Ltd.
Alankit House,
2E / 21, Jhandewalan Extension,
New Delhi -110055
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NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the 13* Annual General Meeting of the members of B.A.G. Films Ltd. will be held as under:
Day
Date
Time
Venue
V
:
:
:
:
Wednesday
20th September, 2006
4:00 P.M.
Air force Auditorium, Subroto Park,
Delhi Cantt, New Delhi -110 010
to transact the following business:
ORDINARY BUSINESS
1.
2.
3.
4.
5.
To receive, consider and adopt the balance sheet as at March 31, 2006 and the profit and loss account for the year ended on that date
and the report of the directors and auditors thereon.
To declare dividend for the year ended 31a March, 2006
To appoint a director in place of Mr. Rajiv Shukla who retires by rotation and being eligible, offers himself for reappointment.
To appoint a director in place of Mr. Rajeev Shankar who retires by rotation and being eligible, offers himself for reappointment.
To appoint auditors to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix
their remuneration.
SPECIAL BUSINESS
6.
7.
8.
To consider and if thought fit, to pass the following resolution with or without modifications, as an Ordinary Resolution:
"RESOLVED THAT pursuant to Section 257 of the Companies Act, 1956 and other applicable provisions, if any of the Companies Act,
1956, Mr. Nalin Satykam Kohli be and is hereby elected as a director of the Company, whose period of office shall be liable to retire by
rotation."
To consider and if thought fit, to pass the following resolution with or without modifications, as an Ordinary Resolution:
"RESOLVED THAT pursuant to Section 257 of the Companies Act, 1956 and other applicable provisions, if any of the Companies Act,
1956, Dr. Anuradha Mishra be and is hereby elected as a director of the Company, whose period of office shall be liable to retire by
rotation."
To consider and if thought fit, to pass, with or without modifications, the following resolution as a Special Resolution:
"RESOLVED THAT subject to such consents, permissions or sanctions as may be.required from any authority and pursuant to all other
provisions of the Companies Act, 1956, guidelines, rules etc. framed by SEBI in this regard, the security of the Company be got delisted
from Delhi Stock Exchange Association Limited."
By order of the Board of Directors
For B.A.G Films Limited
Place : Noida
Date : 3rd June, 2006
Deepanjali Gulati
Company Secretary
NOTES:
1.
2.
3.
4.
5.
6.
7.
8.
Brief resume of directors proposed to be appointed/ re-appointed, nature of their expertise in specific functional areas, names of the
companies in which they hold the directorship and the membership of the committees of the Board and shareholding (both own or held
by/ for other persons on a beneficial basis) of the directors in the company are given in the section on Corporate Governance.
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote, on the poll only, instead of himself
and the proxy so appointed need not be a member of the company. Proxies in order to be effective must reach at the registered office
of the company not less than 48 hours before the time fixed for meeting.
An Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 is annexed hereto
The Register of Members and the Share Transfer Books of the Company shall remain closed from 16th September, 2006 to 20th
September, 2006 (both days inclusive)
Shareholders / Proxy Holders are requested to produce at the entrance the admission slip forwarded to them, duly completed and
signed in accordance with the specimen signature registered with the Company.
Subject to the provisions of Section 206A of the Companies Act, 1956, dividend as recommended by the Board of Directors, if approved
by the shareholders at the Annual General Meeting, will be payable to those members whose names appear on the Register of Members
as on 20th September, 2006 and in respect of shares held in electronic form, to those "beneficiaries" whose names appear on the
statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSL) for this purpose.
The instrument of share transfer completed in all respect should be sent to the Company/ Registrar and Transfer Agent well in advance,
so as to reach to the Company prior to book closure. Shares under any defective transfer (unless defect is removed prior to book
closure) and/or instrument of transfer received during the period of book closure shall be considered after reopening of the books.
Members are requested to bring their copy of Annual Report, as no copies will be distributed at the Annual General Meeting.
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9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Members desirous of getting any information about the accounts under reference and operations of the Company are advised to
address their queries to the Company Secretary of the Company well in advance, so that the same may reach her at least seven days
before the date of the meeting to enable the management to keep the required information readily available at the meeting.
Members are requested to inform the Company or M/s Alankit Assignments Limited, immediately of any change in their address.
Members holding shares in dematenalized form are requested to intimate all changes with respect to their address, bank details, and
mandate etc. to their respective Depository Participants. These changes will then be automatically reflected in the Company's records.
This will help the Company to provide efficient and better service to the members.
Members are requested to address all correspondences to the Registrar and Share Transfer Agent, Alankit Assignments Limited,
Alankit House, 2E/21, Jhandewalan Extension, New Delhi- 110 055
Members are requested to quote folio numbers/ DPID and Client ID, as the case may be, in all correspondence with the Company.
Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company in the prescribed Form No. 2B
(which will be made available on request). Shareholders are requested to avail this facility.
We are pleased to offer the facility of electronic credit of dividend directly to your bank account through ECS. This facility is currently
made available at New Delhi, Kanpur, Jaipur, Chandigarh, Ahmedabad, Mumbai, Nagpur, Hyderabad, Bangalore, Chennai, Calcutta.
Bhubaneshwar, Guwahati, Patna and Thiruvananthapuram.
Shareholders holding shares in the physical form, who wish to avail ECS facility, may authorize the Company with their ECS mandate
in the prescribed form, which is enclosed herewith separately. Similariy shareholders nolding shares in the demat form, who wish to
avail ECS facility, may send the same to the Depository Participant. Requests for payment of dividend through ECS for the year 20052006 should be lodged with the company/M/s Alankit Assignments Limited or Depository participant as the case may be on or before
20th September, 2006.
The company would not reimburse the to and fro to members for attending the meeting.
For security reasons briefcases, transistors, bags, tiffin boxes, cameras, binoculars etc. are not allowed inside the Auditorium.
The company would not distribute gifts or coupons to the shareholders for attending the Annual General Meeting.
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
ITEM 6
In order to broad base the Board of Directors of the Company, Mr. Nalin Satykam Kohli was inducted as Additional Director by the Board of
Directors on December 30, 2005, in accordance with the provisions of Section 260 of the Companies Act, 1956 and Articles o! Association of
the Company. Under the above said appointment the Additional Director shall hold the office until the ensuing Annual Genera! Meeting of the
Company. In this regard the Company has received request along with requisite fee of Rs. 500/- from a member of the Company proposing his
name for appointment as Director of the Company in accordance with the provisions of Section 257 and all other applicable provisions of the
Companies Act, 1956.
The Board feels that the presence of Mr. Kohli on the Board is desirable and would be beneficial to the company and hence recommend
resolution No. 6 for adoption.
None of the Directors, except Mr. Nalin Satykam Kohli is concerned or interested in this resolution.
ITEM 7
In order to broad base the Board of Directors of the Company, Dr. Anuradha Mishra was inducted as Additional Director by the Board of
Directors on December 30, 2005, in accordance with the provisions of Section 260 of the Companies Act, 1956 and Articles of Association of
the Company. Under the above said appointment the Additional Director shall hold the office until the ensuing Annual General Meeting of the
Company. In this regard the Company has received request along with requisite fee of Rs. 500/- from a member of the Company proposing
her name for appointment as Director of the Company in accordance with the provisions of Section 257 and all other applicable provisions of
the Companies Act, 1956.
The Board feels that the presence of Dr. Mishra on the Board is desirable and would be beneliciai to the company and her.ce tecomrrsna
resolution No.7 for adoption.
None of the Directors, except Dr. Anuradha Mishra is concerned or interested in this resolution.
ITEMS
The company is presently listed with National Stock Exchange of India Limited (NSE), Bombay Stock Exchange Limited (BSE) and Delhi
Stock Exchange Association Limited (DSE). As per new SEBI Guidelines on delisting a company can delist its securities without following any
stringent provisions provided its securities are listed on stock Exchange having nation wide trading terminals. It has been observed since
dematerialization, trading at Delhi Stock Exchange is very thin and of very low volume. Keeping this in view it is proposed to deiist the equity
shares of the company at Delhi Stock Exchange. Hence special resolution under item no. 8 of the notice of the AGM is put before you for your
approval.
None of the Directors is concerned or interested in the above resolution.
By order of the Boara of Directors
For B.A.G Films Limited
Place : Noida
Date : 3rd June, 2006
Deepanjall Gulati
Company Secretary
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DIRECTOR'S REPORT
To,
The Members.
B.A.G Films Limited
Your Directors are pleased to present their Report together with the Audited Statement of Accounts for the financial year ended March 31,
2006.
FINANCIAL RESULTS
(Rs. in Lacs)
Particulars
2005-06
2004-05
Total Income
4412.86
3703.15
810.88
643.75
Profit before depreciation and financial charges
Financial charges
7.43
70.79
Cash Profit
740.09
Depreciation
261.06
89.30
Profit before Tax
479.03
547.02
141.64
149.04
636,32
Provision for Tax
Current Tax
Fringe Benefit Tax
Deferred Tax
Profit after Tax
Proposed Dividend (%)
28.40
-
2.57
306.42
60.61
337.37
10%
10%
DIVIDEND
Your Directors are pleased to recommend a Final Dividend @10% per paid-up equity share of Rs. 21- each for the year ended 31SI March,
2006. The said dividend if, declared at the Annual General Meeting will be tax free in the hands of the members.
PERFORMANCE REVIEW
During the year the company has achieved a cash profit of Rs. 740.09 lakhs as against Rs 636.32 lakhs in the year 2004-2005. You will be
pleased to know that during the year the company received strong endorsement of its abilities and competencies winning awards such as:
(a)
5lh Annual Hero Honda ITA awards-2005 for "Poll Khol" for Best News and current'affair show, while "Siddhanth" for best dramatization
(b)
5lh Gamier Lite- Indian Telly Awards, 2005 for Pawan Shankar of "Siddhanth" and to Juhi Parmar of "Kumkum" won critic award.
(c)
5lh Indian Telly Awards.'Trade Technical Channel and Programming 2006"for "Siddhanth for best social message.
(d)
4lh Vatika Star Parivaar Awards, 2006 for Kumkum (Juhi Parmar) for Best Bahu, Sumeet (Hussain) for Best Bhai, Mr. Wadhwa (Arun
Bali) for Best Dadaji and Sumeet (Hussain) for Best Pati.
You will be pleased to know that in the year 2005-2006. your company has consolidated its presence across all its business segments so as
to create a strong growth platform that will enable the Company to take advantage of the opportunities going forward:
—
Television Software:
Your company is producing popular programmes like Poll Khol- a political satire, Sansani- a crime show, Red Alert-an investigative
show and Kaun Hai a show on haunted places on Star News, Kumkum- Ek Pyara Se Bandhan - a soap - on Star plus & Woh Hue Naa
Hamaare on DDL News magazines like Rozana & Khabrein Bollywood Ki on DD News are also produced by the company.
Your company works with channels like: Doordarsan, Sony Entertainment Television, Star News, Star Plus, Star One etc. The company
today stands out as a highly respected television software producer in the Indian news & entertainment industry.
—
Media School
B.A.G. Films in collaboration with the Missouri School of Journalism, USA, the oldest school of journalism in the world has set up an
'International School of Media and Entertainment Studies (iSOMES), with modern and technologically advanced facilities and infrastructure
that incubates high caliber, performance oriented, professional talent for the Media and Entertainment Industry. The school is one of its
kinds that offer Post-Graduate Diploma in Broadcasting Journalism, Television Production & Direction and Media Management. The
school also offers short term courses like Acting for Camera, TV Direction & Production & Television Editing. The school offers a fullfledged course with theory and practical work.
—
Feature Film Production:
You will be pleased to know that your company has already forayed in production of feature films. First feature film, in Hindi.titled
"ZINDAGGI ROCKS" stars Sushmita Sen and Shiney Ahuja. The film is scripted and directed by Tanuja Chandra and the music is by
Anu Malik. The second film, in Punjabi, called "MANNAT" has Jimmy Shergill & Kulraj Randhawa. The film is directed by Gurbir S
Grewal. It is expected that both these films will be released in this financial year.
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New Media:
Your company provides voice content including news, cricket & sports, jokes, astro forecasts, celebrity interviews, Bollywood reviews
and music album reviews in four languages namely Hindi, English, Tamil and Malayalam on Mobile Phones.
Detailed discussions of the company's business activities have been carried in a separate section under the title 'Management's discussion
and analysis'.
FUTURE PROSPECTS
The company wishes to increase its areas of operation and enhance aggressively its offerings to the media industry. For this company has
already drawn expansion plans for vertical integration by foraying into FM Radio Business.
The company's vision is also to become the country's integrated content company creating, aggregating and delivering high quality media and
entertainment content in all genres and all media platforms.
FM Radio:
Entering in FM Radio business for B.A.G was a natural stride towards forward integration.
B.A.G Infotainment Private Limited, a 100% subsidiary of the Company, has won ten FM Radio frequencies in Phase II expansion for category
B, C & D cities across India.
The successful bids are for the circles of Jabalpur in Madhya Pradesh, Ahmednagar, Dhule & Jalgaon in Maharashtra, Patiala in Punjab,
Shimla in Himachal Pradesh, Hissar & Karnal in Haryana, Ranchi in Jharkhand and Muzzafarpur in Bihar. The total amount bid by the
Company amounts to Rs 50 million. Significantly, in almost all the circles B.A.G. Infotainment was amongst the lowest bidders
DIRECTOR
In accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company, Mr. Rajiv Shukla and Mr. Rajeev
Shankar are liable to retire by rotation at the ensuing Annual General Meeting and they being eligible have offered themselves for re-appointment.
Your Board of Directors recommends their re-appointment.
UTI vide its letter had withdrawn the nomination of Dr. Vinayshil Gautam as director from the board of the company. Mr. Nalin Satykam Kohli
and Dr. Anuradha Mishra were appointed by the Board as Additional Directors on December 30, 2005 and will hold office till the ensuing
Annual General Meeting of the company. The Board recommends their appointment as Directors of the company.
Brief resume of the above Directors, nature of their expertise in specific functional areas and names of companies in which they hold the
directorship and the membership/ chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the
Stock Exchanges, are given in the section on Corporate Governance in the Annual Report. ,
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed chapter on "Management Discussion and Analysis Report" pursuant to clause 49 of the Listing Agreement is given in the Annual
Report.
CORPORATE GOVERNANCE
B.A.G believes that the essence of Corporate Governance lies in the phrase "Your Company". It is "Your" Company because it belongs to youthe Shareholders. The Chairperson and Directors are "Your" fiduciaries and trustees. Their objective is to take the business forward in such a
way that it maximizes "Your" long term value. Your Company is committed to benchmark itself with global standards in all areas including
appropriate standards for Good Corporate Governance. Towards this end, an effective "Corporate Governance System" has been put in place
in the Company, which also ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with. A report on Corporate
Governance along with Auditors' Certificate on its compliance is annexed hereto.
The Company has implemented a Code of Conduct for all its Board Members, who have affirmed compliance thereto. A Code of Conduct has
also been formulated for the senior management of the Company.
LISTING
The shares of your company are presently listed with National Stock Exchange of India Limited (NSE), Bombay Stock Exchange Limited
(BSE), and Delhi Stock Exchange Association Limited (DSE).
The Annual Listing fee for the Financial Year 2006-2007 has already been paid to all the above Stock Exchanges.
Since dematerialization, trading at Delhi Stock Exchange is very thin and of very low volume. Considering this it is proposed to get equity
shares of the company delisted at Delhi Stock Exchange.
FIXED DEPOSITS
During the year under review, the Company has not accepted any deposit under section 58A and section 58AA of the Companies Act, 1956
read with Companies (Acceptance of Deposits) Rules, 1975.
DIRECTOR'S RESPONSIBILITY STATEMENT
As required under section 217(2AA) of the Companies Act, 1956, the Directors of the Company hereby state and confirmwww.reportjunction.com
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That in preparation of the accounts for the financial year ended 31st March, 2006, the applicable accounting standards have been
followed along with proper explanation relating to material departures, if any;
That the Directors have selected accounting policies and applied them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of profit and loss
of the Company for that year;
That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
That the accounts for the financial year ended 31st March 2006 have been prepared on a "going concern" basis.
WHOLLY OWNED SUBSIDIARY COMPANY
As required under the provisions of Section 212 of the Companies Act, 1956, the audited accounts together with Directors' Report and
Auditors' Report of the wholly owned subsidiary company are appended and form part of the Annual Report. The statement pursuant to
Section 212 of the Companies Act, 1956 is attached.
As required by Accounting Standard Accounting Standard-21 issued by the Institute of Chartered Accountants of India, the financial statements
of the Company reflecting the Consolidation of the Accounts of its wholly owned subsidiary company to the extent of equity holding of the
Company in this company are included in this Annual Report.
The Company is presenting consolidated accounts of its wholly owned subsidiary company prepared in accordance with Indian Generally
Accepted Accounting Practices (GAAP) and the same are attached herewith. The accounts of the wholly owned subsidiary company have
been separately audited as per Generally Accepted Accounting Principles/ Practices
AUDITORS
M/s Joy Mukherjee & Associates, Chartered Accountants, Statutory Auditors of the Company will retire at the conclusion of the ensuing
Annual General Meeting, and being eligible, offer themselves for reappointment. The company has received a certificate from the auditors to
the effect that their re-appointment, if made, would be in accordance with section 224(18) of the Companies Act, 1956. The Audit Committee
recommends their re-appointment.
AUDITORS' REPORT
As regards the Auditors' Report, the respective Notes to the Accounts are self explanatory and therefore, don't call for any comments.
CASH FLOW STATEMENT
As required by Clause-32 of the Listing Agreement a Cash Flow Statement is annexed. •
HUMAN RESOURCE
Your Directors would like to place on record their deep appreciation of all employees for rendering quality services to every constituent of the
company be it viewers, producers, regulatory agencies, creditors or shareholders. The unstinting efforts of the employees have enabled your
company to remain in the forefront of media and entertainment business, making its offerings best in the genre.
None of the employees are covered under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975.
INFORMATION REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The company is not engaged in manufacturing activities and as such, particulars relating to conservation of energy and technology absorption
are not applicable. However, in studios, post production facilities etc. adequate measures are being taken to conserve energy as far as
possible.
Research and development of new services, designs, frameworks, processes and methodologies continue to be of importance at B.A.G. This
allows your Company to increase quality, productivity and customer satisfaction through continuous innovation. Since business and technologies
are changing constantly, continuous initiatives in research are of paramount importance.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars regarding foreign exchange earnings and outgo are given in point no. 8(a) (Notes to Accounts) of the Annual Accounts.
ACKNOWLEDGEMENT
Your Directors take this opportunity to express their deep gratitude to the viewers, producers, vendors, investors and banks for their continued
support during the year. Your directors also wish to place on record their appreciation for the dedicated services rendered by the employees
of the Company at all levels, who, through their competence, hard work, solidarity, cooperation and support, have enabled the company to
achieve consistent growth. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.
For and on behalf of the Board of Directors
Place : Noida
Date : 3'" June, 2006
Anurradha Prasad
Chairperson and Managing Director
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AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE
To
The Members of
B.A.G. Films Limited
We have examined the compliance of the conditions of Corporate Governance by B.A.G Films Limited ("the Company") for the
year ended on March 31, 2006 as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges
in India.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited
to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the
Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has
complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.
On the basis of our review and according to the information and explanations given to us, we state that in respect of investor
grievances received during the year ended March 31, 2006, no investor grievances are pending against the Company.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
For Joy Mukherjee & Associates
Chartered Accountants
Place : Noida
Dated : 3rd June, 2006
Joy Mukherjee
Partner
Membership No.: 74602
CERTIFICATION ABOUT COMPLIANCE OF CODE OF CONDUCT
We, Anurradha Prasad, Chief Executive Officer cum Managing Director and Mr. Gulab Makhija, V.P Accounts of
M/s B.A.G Films Limited, to the best of our knowledge and belief, certify that:
a.
We have reviewed financial statements and the cash flow statement for the year.
b.
Based on our knowledge and information these statements do not contain any untrue statement or omit any material fact
or contain statements that might be misleading with respect to the statement made.
c.
Based on our knowledge and information the financial statements and other financial information included in this report
present a true and fair view of the company's affairs and are in compliance with existing accounting standards, applicable
laws and regulations.
d.
To the best of our knowledge and belief, no transactions entered into by the company during the year are fraudulent,
illegal or violative of the company's code of conduct.
e.
We are responsible for establishing and maintaining internal controls for financial reporting and we have evaluated the
effectiveness of internal control systems of the company pertaining to financial reporting and we have disclosed to the
auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are
aware and the steps we have taken or propose to take to rectify these deficiencies.
f.
We
i)
ii)
iii)
g.
We, further declare that all board members and senior managerial personnel have affirmed compliance with the code of
conduct for the current year.
further certify that
There is no significant changes in internal control over financial reporting during the year;
There is no significant change in accounting policies during the year.
There is no instance of significant fraud of which we have become aware and the involvement therein, of the
management or an employee having a significant role in the company's internal control system over financial reporting.
Place: Noida
Date : 3rdJune, 2006
Anurradha Prasad
(CEO & Managing Director)
Gulab Makhija
(V.P-Accounts)
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MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A.
INDUSTRY STRUCTURE AND DEVELOPMENTS
With a population of over 1.1 billion, a stable political and economic climate, robust GDP growth of over 8% p.a and strengthening forex reserves,
the Indian economy is clearly on a strong growth path. And the media sector is definitely not lagging behind. New opportunities have been created
with the recent relaxation of the regulatory environment with respect to overseas investments in the entertainment and media sector.
The Frames FICCI Frames Price waterhouse Coopers report 2006 indicates that the entertainment and media industry is poised to grow at an
annual compounding rate of 19% per annum over the next five years. This growth is being driven by rising incomes, along with 'consumerism'
and 'technological advances', with more incomes been spent on leisure and entertainment. The growth can hence be expected to come from
all media segments, namely print, television, radio, films as well as entertainment. The present low media penetration in lower socio-economic
classes and low ad spends, also offer significant upside for the media and entertainment industry.
In FY 2006 your Company has continued to endeavour to strengthen its position across all its business segments by leveraging its proven
strengths in content and ideating while simultaneously taking advantage of the numerous opportunities thrown open by the advancements in
technology, broadcasting and customized content.
Programming : Television continues to be a key communication medium in India.
Your Company's performance in the segment has been encouraging with a combination of long running programmes and new launches with
650 hours of programming in the financial year 2005-06
Kumkum, the continuing Star Parivaar award-winning daily afternoon soap has completed over 775 episodes and has now taken a 20 year
generation leap which has helped to infuse new interest among viewers. Dimple Inamdar, (Ek ladki Anjani Si and Dekho Magar Pyar Se fame)
will be seen as Kamya Verma in the serial. The TRP ratings continue to remain consistently high with the serial enjoying the highest viewership
in the afternoon time slot.
The serial also bagged four reputed STAR Parivaar Awards 2006, as under:
•
Favourite Bahu Award - Kumkum (Juhi Parmar)
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Best Bhai Award - Sumeet (Hussain)
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Best Pati Award • Sumeet (Hussain)
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Favourite Dadaji Award - (Arun Bali)
The one-hour law series, Siddhanth on Star One channel won the following awards during 2005-06:
•
"Promax 2005 BDA Gold award" for "Best Programme Title sequence"
•
"Hero Honda Indian Telly Academy Awards 2005" for "Best Fresh New Face" to Pawan Shankarr
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"5" Annual Hero Honda ITA Awards 2005" for "Best in dramatization"
•
"5th Indian Telly Awards - Trade Technical Channel and Programming" for "Best social message Award"
Apart from these awards, Ms. Anurradha Prasad, Managing Director of B.A.G Films bagged the "Kalpana Chawla Excellence Awards 2006"
for her sterling contribution in the field of television production. This award was presented by Mr. Robert Blake, Deputy Chief of Mission,
American Embassy
The recently launched weekly programme, Kaun Hai on STAR News enjoys a healthy viewership. The bi-weekly family drama newly launched
on Doordarshan under the fiction space, Woh Hue na Hamare, is also gaining more viewership in the evening slot space, tapping the conventional
yet wider base of DD viewers.
B.A.G. Films has sustained its strong position in the 'News and Current Affairs' genre too. Some of the most popular news based programmes
are today developed by your Company. Sansani, a daily crime show on STAR News has completed over 390 episodes and has attained a
leadership position in the 'News and Current Affairs' category with a marketshare of 47% in November 2005 according to the TAM ratings and
is the Number 1 show in the 11.00 pm slot across all News channels. On a continual basis, this programme remains among the Top 10
programmes in the news and current affairs category..
The tongue in cheek political satire, Pol Khol, featuring on STAR News during the weekends represents one of the most successful offering of
B.A.G. Films in the news genre. It has completed over 186 episodes and is the winner of the "Hero Honda Indian Telly Academy Awards 2005"
for the "Best News and Current Affairs Show".
Red Alert on STAR News has completed over 130 episodes and continues to receive high acclaim. Rozana and Khabrien Bollywood Ki
telecast on Doordarshan channels also enjoy a top tier rating in terms of viewership and rating.
The television segment is expected to grow from its present size of Rs 148 billion to Rs 427 billion by 2010, according to a Federation of Indian
Chambers of Commerce and Industry (FICCI) and PricewaterhouseCoopers (PwC) report. B.A.G. Films continues to demonstrate its ideated
innovations across all the well-linked broadcasters of the country viz. Star Network, Sony Entertainment Television, Doordarshan, Zoom
Television, Sahara Network, History channel and Media Content and Communications (India) Private Limited. This widespread presence
promises the viewers with more diversity over the years ahead.
Feature Films : The Indian film industry is the largest in the world in terms of number of films produced and number of tickets sold annually.
There has been a visible increase in corporatization in the spheres of film production, film exhibition and marketing. Availability of institutional
finance as well as emergence of new revenue streams has significantly reduced the risk of piracy and quality of prints. With this, the business
is said to grow at a CAGR of 18% in the next five years.
B.A.G. Films has espoused a portfolio approach, focussing on production of medium and low budget Hindi and regional films, studying the
favourable risk return ratio for these films. Your Company has exploited the increase in corporatization of the industry by following the
philosophy of content creation with talented script writers and directors.
Your Company is working on two medium budget Hindi films and two low budget regional films, which are estimated to be completed in the
next six to nine months. These projects are as mentioned below:
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Project I, titled "Zindaggi Rocks"
This project is targeted to release in September-October 2006, with the starcast of the former Miss Universe Sushmita Sen as the lead
actress, directed by Tanuja Chandra and music composed by Anu Malik.
•
Project II titled "Mannaf
The Punjabi film has been completed and is scheduled to release by September-October 2006, with a starcast of Jimmy Shergil and
Kulraj Randhawa (Kareena Kareena Fame) as the lead actors. The film is directed by Gurbir S Grewal and music composed by Jaidev
Kumar
Company has identified 2 more concepts on which work is on and the shooting of the same would start witnin this financial year.
The film industry is becoming increasingly corporatised and on the back of a growing number of multiplexes and a number of companies
opting for public offerings in India. Additionally, with the Government of India entering into various co-production treaties with foreign governments
like Italy, Canada, UK and China to name a few, B.A.G. Films plans to use the co-production route with the objective of reducing the cost of
production and increase revenue potential by releasing it to the international audience.
Media School: During the period under review, iSOMES, the incubator of talent further set to commence a clutch of three short term courses,
which comprised:
•
Camera workshop (Three months, full time)
•
Editing workshop (Three months, full time)
•
Radio jockey (Three months, full time)
The other long term courses offered by the Company comprise:
•
Post Graduate (Full time) Diploma in Broadcast Journalism
•
Post Graduate Diploma in Television (Production and Direction)
•
Post Graduate Diploma in Media Management
Apart from this, iSOMES also conducts workshops for school children in disciplines such as Television appreciation, Theatre and Acting. The
school offers a full-fledged course with theory and practical work.
iSOMES also forayed into hardcore production with the students' productions getting aired on Doordarshan. Students of iSOMES got actively
involved into three telefilms in the series Aur Ek Kahani, produced for Doordarshan channel. The first film so produced, Behroop (The
Impostor) was telecasted on 24 April 2006 got critically acclaimed and has been approached by a disability organization with the request to
take the film to a competitive festival abroad, where similar sensitive films on disability themes will be on show.
iSOMES proposes to develop a spectrum of new courses over the years for training in all facets of information technology, telecom and media
and entertainment sectors.
New media : With technological advancements and growing penetration of mobiles, personal computers, laptops and the internet, segments
like animation, internet advertising and gaming are witnessing an unprecedented growth. Television content is becoming interactive with
extensive internet usage and live entertainment growing at a fast-clip; organized players are exploiting these emerging segments waiting to be
explored by private players in the entertainment arena.
The mobile subscribers currently downloading games are about 2% of the total subscribers, which is projected to be 4.5% in the next five
years. B.A.G. Films is working with various telecom service providers to create dedicated video content for its mobile phone network capable
of handling streaming video. Your Company has exploited the wireless handheld devices by delivering through different technology-services
such as Interactive Voice Response (IVR), automatic speech recognition and short-term messaging service platforms in Hindi, English, Tamil,
Telugu and Kannada.
Your Company presently works with most of the leading mobile service providers in the country providing the below mentioned offerings:
Nature of content
Voice based
SMS
XML (Extended markup language)
Video streaming
Details
News, Cricket, Sports, Bollywood gossip, Astrology, Jokes
News, Cricket, Business, Sports, Gossip
Location guide for ATM, hospitals, embassies, restaurants, etc., TV Guide (NDTV/Star),
Recipes, Airline /Railway enquiry
Lakme Fashion Week, Movie trailers
While the current offerings and revenues of B.A.G. Films is considerably modest, there is no denying the potential given the rapid digitalization
of content, falling bandwidth prices and growing demand of the end-users.
Radio: FM Radio Broadcasting services has been witnessing a sea-change ever since the key policy initiatives were made by the Government in
2005, keeping in mind the liberalization of the policies made relating to migration to a revenue share regime, allowing foreign investment into the
segment and opening of licenses to private players. This would aid to unlock the latent potential of Indian radio. As per the FICCI report this year,
the radio industry is projected to quadruple its growth at a CAGR of 32% within the next five years from the current size of Rs. 3 billion.
B.A.G. Films has set up a wholly owned subsidiary - B.A.G. Infotainment Private Limited for its FM foray. With this, your Company has bagged
the FM Radio rights for Haryana, himachal Pradesh, certain parts of Punjab, Bihar, Jharkhand, Maharashtra and Madhya Pradesh. The
objective is to provide non stop entertainment to a total of 10 cities, viz. Hissar, Karnal, Shimla, Patiala, Muzaffarpur, Ranchi, Ahmednagar,
Jaigaon, Dhule and Jabalpur.
There is a lot more scope of growth for your Company since more than 300 licenses have been given out by the Indian government for FM radio
channels in 91 cities. New concepts like satellite, internet and community radio have also begun to hit the market.
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