National Film Development Corporation Limited

2013 - 14

National Film Development Corporation Limited

(A Government of India Enterprise)

6th Floor, Discovery of India Building, Nehru CentreDr. Annie Besant Road, Worli, Mumbai 400 018

T +91 22 6628 8288 | F +91 22 2495 2262 E [email protected] | www.nfdcindia.com

CIN U92100MH1975GOI022994

Annual Report

National Film Development Corporation Limited(A Government of India Enterprise)

39th Annual Report 2013 – 14

QISSATHE TALE OF A LONELY GHOST

A FILM BY ANUP SINGH

HEIMATFILM & NFDC presents

T H E M A T C H F A C T O R Y P R E S E N T S A H E I M A T F I L M A N D N A T I O N A L F I L M D E V E L O P M E N T C O R P O R A T I O N ( I N D I A ) P R O D U C T I O N I N C O P R O D U C T I O N W I T H A U G U S T U S F I L M C I N É - S U D P R O M O T I O N A N D Z D F / D A S K L E I N E F E R N S E H S P I E L I N C O L L A B O R A T I O N W I T H A R T E W I T H I R R F A N K H A N T I L L O T A M A S H O M E T I S C A C H O P R A R A S I K A D U G A L D A N I S H A K T H A R I S U P P O R T E D B Y N A T I O N A L F I L M D E V E L O P M E N T C O R P O R A T I O N ( I N D I A ) F I L M - U N D M E D I E N S T I F T U N G N R W E U R I M A G E S T H E N E T H E R L A N D S F I L M F U N D F I L M F Ö R D E R U N G S A N S T A LT

F O N D S S U D C I N É M A M I N I S T È R E D E L A C U LT U R E E T D E L A C O M M U N I C A T I O N - C N C M I N I S T È R E D E S A F F A I R E S É T R A N G È R E S E T E U R O P É E N N E S I N S T I T U T F R A N Ç A I S D E U T S C H E R F I L M F Ö R D E R F O N D S M E D I E N B O A R D B E R L I N - B R A N D E N B U R G M E D I A I 2 I A U D I O V I S U A LC E N T R E N A T I O N A L D U C I N É M A E T D E L ´ I M A G E A N I M É E P R O D U C E D W I T H S U P P O R T O F T H E H U B E R T B A L S F U N D O F T H E I N T E R N A T I O N A L F I L M F E S T I V A L R O T T E R D A M W R I T T E N B Y A N U P S I N G H M A D H U J A M U K H E R J E E D I R E C T O R O F P H O T O G R A P H Y S E B A S T I A N E D S C H M I D

M A K E - U P & H A I R D E S I G N B Ä R B E L S C H E I D C O S T U M E D E S I G N D I V Y A & N I D H I G A M B H I R P R O D U C T I O N D E S I G N T I M P A N N E N S O U N D D E S I G N P E T E R F L A M M A N S O U N D R E C O R D I S T S I M O N E G A L A V A Z I C O M P O S E R B É A T R I C E T H I R I E T E D I T O R B E R N D E U S C H E R L I N E P R O D U C E R R A K E S H M E H R A A S S O C I A T E P R O D U C E R S A H A B N A R A I N A S S O C I A T E P R O D U C E R S Z D F C L A U D I A T R O N N I E R / A R T E D O R I S H E P P E X E C U T I V E P R O D U C E R V I K R A M J I T R O Y C O - P R O D U C E R S N I N A L A T H G U P T A B E R O B E Y E R T H I E R R Y L E N O U V E L P R O D U C E D B Y J O H A N N E S R E X I N B E T T I N A B R O K E M P E R D I R E C T E D B Y A N U P S I N G H

Silver Gateway Award

Mumbai Film Festival 2013

Best Asian Film NETPAC Award 2013

Dioraphte Audience Award

Rotterdam 2014

Best Actress

Abu Dhabi 2013

Best Director Best Actor

Best ActressBest Cinematography

International Film FestivalQueensland, 2014

I R R FAN

KHANTISCA

CHOPR ATILLOTAMA

SHOMERASIK A

DUGAL

Annual Report 2013–14 3

Board of Directors ..........................................................................................................................................................5

About us ........................................................................................................................................................................7

Production .....................................................................................................................................................................9

Distribution ...................................................................................................................................................................11

Promotion ....................................................................................................................................................................13

Training & Development ..............................................................................................................................................15

Notice ..........................................................................................................................................................................16

Chairman’s Letter To Shareholders .............................................................................................................................17

Directors’ Report ..........................................................................................................................................................19

Management Analysis Report .....................................................................................................................................28

Report on Corporate Governance ...............................................................................................................................34

Auditors’ Certificate on Corporate Governance ...........................................................................................................39

Balance Sheet as at 31st March, 2014 ........................................................................................................................40

Statement of Profit and Loss for the year ended 31st March, 2014 ............................................................................41

Cash Flow Statement for the year ended 31st March, 2014 .......................................................................................42

Notes on Accounts ......................................................................................................................................................44

Auditor’s Report ...........................................................................................................................................................64

Annexure to the Auditors’ Report ................................................................................................................................66

Comments of the Comptroller and Auditor General of India under Section 619 (4) of the Companies Act, 1956

on the Accounts of National Film Development Corporation Limited for the year ended 31st March 2014. ..............68

Reply of Management to the Comments of the Comptroller and Auditor General of India

on the accounts of the Company .................................................................................................................................69

Contents

Annual Report 2013–14

Registered Office MumbaiDiscovery of India Building (6th Floor),Nehru Center, Dr. Annie Beseant Road,Worli, Mumbai – 400 018. CIN U92100MH1975GOI022994

Regional Offices Chennai1st Floor, Co-optex Warehouse Building,350, Pantheon Road, EgmoreChennai – 600 008.

KolkataR.I.C. Industrial ,Estate Compound,Upen Banerjee Road, Parnasree,Behala, Kolkata – 700 060.

New Delhi4th Floor, Soochana Bhavan,Phase I, C.G.O. Complex, Lodhi Road,New Delhi – 110 003.

Camp office ThiruvananthapuramChitranjali Studio Complex Thiruvananthapuram – 695 027

Bankers H.D.F.C Bank

State Bank of India

State Bank of Travancore

Indian Bank

Punjab National Bank

IDBI Bank

Yes Bank

Bank of India

Auditor M/s C. B. Chhajed & Co.Chartered AccountantsDGP House, Ground Floor, 88-C, Old Prabhadevi Road,Mumbai – 400 025.

5Annual Report 2013–14

Board of Directors(As on 31/03/2014)

Ramesh Sippy

Chairman

Nina Lath GuptaManaging Director

Sahab NarainDirector (Finance)

Full-time Directors

Bharathi S. SihagGovernment Nominee Director

Raghvendra SinghGovernment Nominee Director

Part-time Directors (Official)

Jawahar Lal Wattal A.K.Bir

Independent Directors

6 Annual Report 2013–14

Vision

To create domestic and global appreciation and celebration of the Cinemas of India.

Mission

NFDC aims at fostering excellence in cinema and promoting the diversity of its culture by supporting and encouraging films made in various Indian languages.


About usIncorporated in the year 1975, National Film Development Corporation Limited (NFDC) was formed by the

Government of India with the primary objective of planning, promoting and organizing an integrated and

efficient development of the Indian film industry.

While its recent successes include films like The Lunchbox by Ritesh Batra, The Good Road by Gyan

Correa, NFDC boasts of a catalogue of noteworthy films with acclaimed filmmakers like Agantuk by Satyajit

Ray, Gandhi by Richard Attenborough, The Making of the Mahatma by Shyam Benegal, Salaam Bombay by

Mira Nair, Dance of the Wind by Rajan Khosa, Rudaali by Kalpana Lajmi, Party by Govind Nihalani, Jaane

Bhi Do Yaaro by Kundan Shah amongst many others.

With more than 300 films in 21 regional languages, NFDC’s architecture aims towards creating domestic

and global appreciation of the Cinemas of India. In addition to planning, promoting and funding independent

films in India and international markets, NFDC develops new talent and facilitates the growth of Indian

cinema in all languages through productions and co – productions, script development and need – based

workshops. Having commissioned 30 productions / co-productions in 17 Indian languages and introduced

19 new filmmakers, NFDC has restored 87 titles and digitised 31 titles under its brand Cinemas of India and

recently launched a Video-on-Demand platform currently hosting more than 75 titles available for Free, Pay-

Per-View, and Subscription Video-On-Demand.

NFDC also organizes Film Bazaar, South Asia’s Global Film Market, in Goa which is the biggest

co – production and distribution market for the entire South Asian region.



ProductionNFDC’s Film Production Department supports and drives NFDC’s mission through the Cinemas of India. It

continuously seeks to create an environment conducive to the making of cinema that reflects India’s most

imaginative, diverse and vibrant film culture.

The Department endeavours to support, through production and collaboration, a community of versatile and

emerging filmmakers who embody diversity, innovation and uniqueness.

Apart from production of films, NFDC also produces advertisements, documentaries, short films, TV series,

web advertisements, radio series and thematic musical anthems.



DistributionAt NFDC, the focus is to establish a sustainable mechanism for distribution of films in India, both its own

productions and also films of independent filmmakers with limited access to domestic markets.

With effect from FY 2011 – 12, the newly restructured Distribution Division has launched the brand Cinemas

of India to facilitate distribution of its own films, to begin with, and subsequently films of independent film

makers in the second phase.

The Multifaceted Distribution Platform – with products under the brand ‘Cinemas of India’ currently comprises

• Home Video

• Theatre Releases

• Satellite Syndication

• YouTube Internet Channel

There are several other innovative platforms in the offing such as –

• Internet VOD Platform –

‘www.cinemasofindia.com’

a pay – per – view and subscription model, available worldwide.

• Mobile Platforms – Cinemas of India channel across various mobile service providers.

In addition, NFDC releases media campaigns across Television, Radio, Digital Theatres, Web, Mobiles, and

Public LCDs for more than 30 government clients, including Incredible India, National Rural Health Mission,

NREGA, Ministry of Agriculture and Department of Customs etc.



Promotion Organized by the National Film Development Corporation (NFDC), Film Bazaar is a platform exclusively

created to encourage collaboration between the international and South Asian film fraternity.

The Bazaar is focused on discovering, supporting and showcasing South Asian content and talent, in the

realm of filmmaking, production and distribution. A converging point for film buyers and sellers from all over

the world, the Bazaar also aims at facilitating the sales of world cinema in the South Asian region.

First held in 2007, Film Bazaar has evolved into South Asia’s global film market, witnessing an increased

South Asian and International participation with every edition. The 2013 market saw an attendance of 831

delegates from 36 countries including dedicated country delegations from Australia, Canada and Poland.


NFDC LABSLABSMASTERCLASSES

SCREENWRITING | DIRECTING | CREATIVE PRODUCING

EDITING | CINEMATOGRAPHY | SOUND

NFDC LABSNFDC LABS


Training & DevelopmentGiven the gap in the area of mid – career training opportunities in the film sector, as also the need for greater

focus on research and development in content creation, the Training & Development Division was set up in

2012.

It has been established under the brand NFDC Labs to deliver two outputs for the NFDC & Indian Film

community –

• Training for Professional filmmakers, providing workshops and master – classes in core disciplines;

Directing, Writing, Editing, Cinematography and Producing.

• Establish a development arm within the NFDC itself to support script and project development to ensure

a steady flow of quality projects towards the NFDC production department and towards the Industry at

large.

Training activities include long running staged development programmes for scripts in different states

across the subcontinent, including international industry immersion programmes in overseas film markets

& festivals.

NFDC also conducts various training programmes in Avid & FCP Digital Non – Linear Editing, Audio Dubbing,

Digital Cinematography, Multimedia Subtitling, etc., for students under State Government sponsored

schemes.


Notice is hereby given that the 39th Annual General Meeting of National Film Development Corporation Limited will be held on Monday, the 29th September 2014 at 12.00 noon in the Board Room of NFDC, at 7th Floor, Discovery of India Building, Nehru Centre, Dr. Annie Besant Road, Worli, Mumbai – 400 018 to transact the business mentioned herein below:

Ordinary Business:

1. To read, consider and adopt the Director’s Report and Audited Annual Accounts of the company for the year ended 31st March 2014 and Auditors’ Report and the comments of Comptroller and Auditor General of India thereon and to pass with or without modification the following Resolution as an Ordinary Resolution.

“RESOLVED that the Audited Balance sheet as on 31st March, 2014 and the Profit and Loss Account for the year ended 31st March, 2014 together with the Director’s Report and the Auditors Report and the comments of the Comptroller and Auditor General of India are hereby read, considered and adopted.”

Special Business:

2. To pass with or without modification the following Resolution as a Special Resolution.

“RESOLVED that approval is hereby given for borrowing upto Rs. 100 Crores, where the money to be borrowed, together with the money already borrowed by the Company will exceed aggregate of its paid-up Share Capital and free reserves, apart from temporary loans obtained from the company’s bankers in the ordinary course of business.”

Explanatory Statement Persuant To Section 102 of The Companies Act 2013 In Relation To The Above Item 2.

As per Section 180 of the Companies Act, 2013, the Board of directors of a Company shall borrow money only with the consent of the Company by special resolution, when the money to be borrowed, together with money already borrowed by the Company will exceed aggregate of its paid-up Share Capital and free reserves, apart from temporary loans obtained from the company’s banker’s in the ordinary course of business.

Currently the Company has borrowed around Rs. 2.63 Crores from Punjab National Bank, Chennai for renovation of theatre. There are plans to construct sound studio in Kolkata for which also money may have to be borrowed. Funds are also required for further expansion plans of the Company. Further the Company has asked for a loan of Rs. 16.85 Crores from the Central Government for meeting its day to day business expenses including payment of salary to staff. Thus the total borrowings of the Company may exceed its paid up Share Capital and free reserves. It is in this connection the above resolution has been put up for the approval of the shareholders.

None of the directors, key managerial personnel, neither their relatives are interested in the above resolution.

By Order of the Board of DirectorsFor National Film Development Corporation Limited

Date: 15th September 2014Place: Mumbai

(E.J. PAUL)Company Secretary

Notice


Chairman’s Letter to Shareholders

On behalf of the Board of Directors of the National Film Development Corporation Ltd. (NFDC), I am happy to present a report on NFDC for the year 2013-14.

Having earned profits for three years in a row with a positive net worth as on 31 March 2013, NFDC was declared a Turnaround PSU by the Department of Public Enterprises in September 2013. Further more, NFDC’s achievements significantly exceeded the projections committed to in the revival plan for NFDC that was approved by the Government of India in September 2010. The performance of NFDC in terms of the Memorandum of Understanding signed with the Ministry of Information & Broadcasting (the administrative Ministry), Government of India for the FY 2012-13 has been rated as “Excellent”.

The robust performance of the company faced a setback when the Ministry of Information and Broadcasting, the administrative ministry, vide letter no. 1/9/2009-MUC dated 13th June 2013 changed the EMA Policy and de-notified NFDC carrying out audio-visual publicity work of Govt. / PSUs. This change in the policy has acutely affected the performance of the company. This segment of business had been contributing as much as 80% to 85% of the gross turnover of NFDC and was instrumental in revival of the company.

As a result, turnover of the company slid down to Rs.12693 lakhs in the FY 13-14 from a turnover of Rs. 25124 lakhs in previous year. The profitability of the company is also severely affected. During the FY 2013-14, NFDC incurred a loss of Rs. 321 lakhs (PBT) in comparison to a PBT of Rs. 831 lakhs in the FY 2012-13.

Your company is carrying on a business model where most of the business activities are development oriented. These activities are generally loss making and therefore, to meet its overhead cost and capital cost for expansion, a supportive profit oriented business activity (ies) is required to sustain operating costs and cross subsidizing developmental initiatives.

The Board for Reconstruction of Public Sector Enterprises (BRPSE), while approving the Revival Plan of NFDC, recognized this factor and approved the proposed business plan of NFDC taking cognizance of the initiative of the Ministry of Information and Broadcasting allowing NFDC to carry out audio-visual publicity of the Government / PSU etc. in 2009.

NFDC was on nascent stage of recovery when the Media Business activity was abruptly stopped. Board for Reconstruction of Public Sector Enterprise (BRPSE) in its meeting held on 29th August 2013, took note of the same and recommended that “ The ministry should continue NFDC as one of the agency for the business of advertisement under the Electronic Media Advertisement policy along with DAVP as it is a part of revival plan of NFDC recommended by BRPSE and approved by the Government.” NFDC is looking forward to an early restoration of the activity in order to ensure sustainability of the enterprise.

NFDC has continuously endeavoured to encourage a balanced growth of India’s multi-lingual and diverse cinema by encouraging new talent and undertaking 100% production of the first feature films, developing new scripts, co-producing good quality films in partnership with Indian and foreign filmmakers, and creating domestic and international markets to promote these films.

The company has partnered in some path breaking films that have received critical acclaim and awards across the globe. It has created cinema in various Indian languages that reflect India’s diverse and vibrant film culture.

A significant step to promote Indian cinema was taken by setting up a Video On Demand (VOD) platform, www.cinemasofindia.com to upload and stream Indian films across geographical, social & cross-cultural barriers.


The Film Club Initiative is continuing its efforts to roll out its Film Club wherein tie-ups are proposed with school / education boards to showcase films in order to build audiences for critically acclaimed cinema.

In the offing, NFDC intends to set up a Film Cultural Centre in Mumbai. This Centre would be a place where film screenings, workshops, lectures, research material, and interactions with the film fraternity can be offered to cine lovers, youth and local residents. NFDC strongly believes that a unique Film Centre in Mumbai will encourage a deeper understanding and appreciation of the art, aesthetics, history and technology of filming.

The company adheres to the requirements of corporate governance notified by the Department of Public Enterprises and has been given a certificate to this effect by the statutory auditors of the Corporation. Its commitment to ensuring customer satisfaction

continues, as is evident from the customer rating of 4.50 given on a scale of 1 to 5 by clients for whom NFDC carries out production work and publicity campaigns, as also the 4.70 rating given by the film fraternity towards the steps taken by NFDC for promoting Indian cinema in film markets abroad.

On behalf of the Board of Directors and all officials of the Company, I would like to convey my sincere gratitude to the Hon’ble Union Minister of State (Independent charge) of Information & Broadcasting, Shri Prakash Javadekar, and Secretary, Ministry of Information & Broadcasting, Shri Bimal Jhulka, for the immense support and guidance received from them.

I would also like to express my thanks and appreciation to my esteemed colleagues on the Board and to all employees of NFDC, as also to the other stakeholders of the Company for their valuable support and cooperation to the Company.

Ramesh SippyChairman


Directors’ Report

Parameters 2013-14 2012-13 2011-12

Gross Revenues 12,693 25,124 25571

Gross Margin (EBIDTA)

(116) 953 587

Profit / (Loss) Before Tax

(321) 831 408

Net Worth 1957 2,278 1643

ParticularsPre-Revival Post Revival

FY 09-10 FY 10-11 FY 11-12 FY 12-13

Share Capital – Paid up

1399.85 4539.98 4539.98 4539.98

Accumulative Losses C/f

3475.39 3306.76 2896.80 2262.16

Net Worth (3475.39) 1233.22 1643.18 2277.82

Total Revenue

6820 18500 25571 25112

Profit / (Loss) Before Tax

(713) 168 408 831

(` in Lakhs)

(` in Lakhs)

b. NFDC had been making profits in immediate preceding three years after revival of the company in 2010-11. In June 2013 (F.Y. 2013-14), the Ministry of Information & Broadcasting amended the Electronic Media Policy and de-notified NFDC to carry out Audio-Video publicity of various departments / ministries of Government of India. This decision adversely affected the profitability and turnover of the company. It is hoped that the Ministry of Information & Broadcasting would give back the business of Electronic Media Advertising in order to enable the company to resume its trajectory of growth and profitability.

Discontinuation of Media business by the ministry was also reviewed by the Board for Reconstruction of Public Sector Enterprises (BRPSE), in its meeting held on August 29, 2013 and recommended that

“The ministry should continue NFDC as one of the agency for the business of advertisement under the Electronic Media Advertisement policy along with DAVP as it is a part of revival plan of NFDC recommended by BRPSE and approved by the Government.”

The Ministry is yet to amend EMA policy enabling NFDC to carry out the Media business.

c. Turnaround

NFDC was declared sick by BRPSE in 2008. Government of India approved the revival package of NFDC in

The Board for Reconstruction of Public Sector Enterprises (BRPSE), after reviewing NFDC’s performance declared NFDC as a “Turnaround PSE” on 31st October 2013.

September 2010 by converting its existing loan into equity and infusion of Rs. 300 lakhs as fresh equity. The financial performance of NFDC had been escalating consistently since then. Revenues of the company increased from Rs. 6820 lakhs in the FY 2009-10 to Rs. 25112 lakhs in FY 2012-13. On the other hand profitability of the company jumped from a loss of Rs. 713 lakhs in the FY 2009-10 to a profit of Rs.831 lakhs in FY 2012-13.

To,

The Shareholders

The Directors have pleasure in presenting the Thirty Ninth Annual Report together with Audited accounts of the Company for the financial year ended March 31, 2014

1. Performance Highlights

a. The highlights of performance of the company for the year 2013-2014 as against the performance in F.Y. 2012-2013and FY 2011-12 are as under


(` in Lakhs)

Particulars 2013 - 2014 2012 - 2013

Gross Income 12,693.31 25,123.60

EBIDTA (116.50) 952.55

Financial Expenses 8.58 13.78

Depreciation 84.88 107.71

Profit / (Loss) Before Tax (320.64) 831.06

Provision for Tax, etc. Nil 196.43

Profit / (Loss) After Tax (320.64) 634.64

Less: Profit / (Loss) Brought forward

(2264.49) (2,899.13)

Balance Carried to Balance Sheet

(2585.14) (2,264.49)

d. Dividend

Due to accumulated and carried forward losses of Rs. 2585 Lakhs as on March 31, 2014, as also losses for F.Y. 2013-14, payment of dividend is not recommended for the year ended March 31, 2014

2. Financial Review

a. Summary of Financial Results

The summary of financial results of the company for the year ended March 31, 2014 is given below

b. Growth

In the financial year 2013-2014, the company achieved a turnover of Rs. 12,693 lakhs which is not inconsistent with the turnover achieved in earlier year. The discontinuation of the Electronic Media Advertisement business by the Ministry of Information & Broadcasting has however adversely affected the working of the company across all realms of its functioning.

c. Net Worth

The net worth of the company stands at Rs.1957.18 Lakhs as on March 31, 2014 (Previous year Rs.2277.82 Lakhs).

d. Particulars regarding conservation of Foreign Exchange Earnings and Outgo

The particulars regarding foreign exchange outgo during the year under review are given in note no. 44 to Notes on Accounts forming part of the Annual Accounts. Earnings in foreign exchange are Rs. 227.73 Lakhs against

Rs.142.25 Lakhs in the previous year and expenditure in foreign currency is Rs. 421.20 Lakhs (previous year Rs. 519.08 Lakhs).

3. Directors’ Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed that –

i. In the preparation of the Annual Accounts for the period ended March 31, 2014, the applicable accounting standards have been followed, along with proper explanation relating to material departures, if any;

ii. Such accounting policies are selected and applied consistently, and judgments and estimates made 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 the profit or loss of the company for that period.

iii. Proper and sufficient care is taken for 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.

iv. The annual accounts have been prepared on a going concern basis.

4. Activities Of The Company

Film Production

Under the 12th Five Year Plan Scheme of the Ministry of Information and Broadcasting titled “Production of films in various Indian languages”, the Film Production Department produces /co-produces feature films that embody the Cinemas of India. Under the Scheme, NFDC produces/co-produces films under its extant guidelines for film production, whereby it encourages debutant filmmakers by undertaking 100% production of their first feature film and co-production of good quality films in partnership with private players both from India and abroad.

The Production Department supports and drives NFDC’s mission to create artistic content with the intent of fostering excellence in cinema and to promote Indian culture through the cinemas of India. The Production Department, in keeping with this directive, is continuously seeking to create an environment that facilitates and nurtures filmmakers who bring India’s varied and lively film culture to life. The Production Department endeavors to support, through production and collaboration, a community of versatile and emerging filmmakers who embody diversity, innovation and uniqueness.


Film Name Language Director Category

Manjhi – The Mountain Man

Magadhi Ketan Mehta Co-Production

Vees Manjhe Vees

MarathiUday Bhandarkar

Own Production

Tasher Desh BengaliQaushik Mukherjee

Co-Production

Qissa Punjabi Anup Singh Co-Production

Jal Hindi Girish Malik Co-Production

The Lunchbox Hindi Ritesh Batra Co-Production

• During the period April 2013 to March 2014, NFDC produced/completed the following films, of which three were directed by debutant filmmakers. Details of these films are as under –

• Some of the outstanding achievements accomplished by the films produced/co-produced by NFDC between April 2013 and March 2014 were as follows:

1. NFDC’s own production The Good Road, made by first-time director Gyan Correa, was released across theatres in Gujarat in July 2013. The film was also India’s official entry into the Best Foreign Film category at the 86th Academy Awards (Oscars).

2. Punjabi film Qissa, directed by Anup Singh and co-produced by NFDC and Heimatfilm of Germany premiered at the Toronto International Film Festival 2013 and won the NETPAC (Network for the Promotion of Asian Cinema) Award for the Best Asian Film at the same festival. The film has since generated a buzz with International Trade Magazines and Films Festivals. Actress Tillotama Shome was awarded the Best Actress title in the New Horizons Competition of the seventh Abu Dhabi Film Festival for her role in the film.

Qissa was also honoured as the opening film at the International Film Festival of Rotterdam 2014 to celebrate the 25th anniversary of the Hubert Bals Fund. It also won the Diophrate Award, as known as the Audience Award there. At Vesoul International Film Festival 2014, Qissa received a special mention from the jury and received the Prix Jury Langues O’, while at the Curacao International Film Festival at Rotterdam 2014, it was adjudged the ‘Best of the Fest’ by the audience, along with Paolo Sorrentino’s La Grande Bellezza and Sebastian Leilo’s Gloria.

3. The Lunchbox, made by debutant director Ritesh Batra and co-produced by NFDC along with Anurag Kashyap Films, Dar Motion Pictures, ROH Films (Germany), ASAP Films(France), Cine Mosaic (USA), was screened at the

QissaAnup Singh |Punjabi

Vees Mhanje VeesUday Bhandarkar | Marathi

Festival de Cannes 2013, where it won the Grand Rail d’Or Award, popularly known as the Cannes Critics Award. From there it went to the Toronto International Film Festival 2013 and won The Church of Iceland Award (Special Mention) at the Reykjavik Film Festival 2013. The Dubai International Film Festival 2013 saw Irrfan Khan win the Best Actor Award in the Muhr Asia Africa Feature category and Writer/Director Ritesh Batra get a special mention for the screenplay.

The film won the best Screenplay Award and shared the Grand Jury Prize at the Asia Pacific Screen Awards 2013, and subsequently won Outstanding Achievement Award for lead actor Irrfan Khan, Best Supporting Actor for Nawazuddin Siddiqui and the Best Screenplay Award for Ritesh Batra. It was also adjudged the Best Film at the London Indian Film Festival 2013, and the Best Feature at the Oslo Films from the South Festival 2013. Irrfan Khan and Ritesh Batra also won the Best Actor and Best Script Awards respectively at the Asian Film Awards 2014.

The Lunch Box has been the most successful Indian film at the box office in non-traditional markets across the world in recent years.


Training and Development

NFDC LABS has been established by NFDC to provide a framework of professional development for Indian filmmakers already established in the work-field or developing their careers following Film and/or Media studies.

NFDC Labs seeks to deepen and enhance the working practice of talented writers, directors and producers, through project-based workshops, labs, and master-classes.

DEVELOPMENT work in NFDC is operational in synchronicity with the Production department, providing analyses, evaluation and direct intervention, script development sessions on Board–Recommended projects, etc. Further the development department liaises constantly with creative community players in relation to upcoming or completing (editing) projects which may have an NFDC component or future talent acquisition interest.

Distribution

• Cinemas of India- NFDC’s production & distribution brand Cinemas of India gained further momentum with a host of theatrical releases including Cinemas Of India, a multifaceted distribution platform, was launched in the early 2012, to facilitate showcasing of Indian cinemas. It also plays an important role in bridging the gap between the maestros of Indian Cinema and the new age filmmakers, by presenting their work in various formats. The main segments are Home Video, theatrical distribution, Video On Demand and television syndication.

• The much-anticipated www.cinemasofindia.com has been launched to showcase films online whereby films can be viewed for free and Pay-Per-View basis. Work towards having films available in packages for Subscriptions basis is on. The website currently hosts 75 titles, of which three films have been introduced under the Pay-Per-View category. All

NFDC Labs


films on the Cinemas of India VOD website are available for viewing with Adaptive Streaming - that allows the film to switch it's picture quality depending on the viewer's internet speeds, English subtitles and social media sharing and commenting abilities.

• Work towards the creation of the Cinemas of India App for Android, iPad and iPhone devices has also begun with the basic templates, functionality and design already being shared with our development team.

• NFDC successfully released more than 30 titles in DVDs in 2011-12 under the brand, “Cinemas Of India”. This process saw the release of 21 titles in 2013-14, in DVD and VCD format. This list included the highly acclaimed title, Om Dar B Dar by Kamal Swaroop and Salaam Bombay by Mira Nair, The year also saw the release of NFDC’s new films, Tasher Desh and The Good Road. List of DVDs released in the FY 13-14 is as under:


Sl. Film Name Language Director

1 Five By Four Malayalam Roopa Swaminathan

2 Limited Manuski Marathi Nachiket Patwardhan

3 Dance Like A Man English Pamela Rooks

4 Nirbachana Oriya Biplab Ray Choudhury

5 1:1:6 An Ode To Lost Love English Madhu Ambat

6 Dance of The Wind Hindi Rajan Khosha

7 Char Adhyay Hindi Kumar Sahani

8 Gaman Hindi Muzaffar Ali

9 Miss Beatty’s Children English Pamela Rooks

10 Galige Kannada M. S. Sathyu

11 The Good Road Gujarati Gyan Correa

12 Sammohanam Malayalam C. P. Padmakumar

13 Mahri Da Diva Punjabi Surinder Singh

14 Salaam Bombay Hindi Mira Nair

15 Tasher Desh Bengali Qaushik Mukherjee (Q)

16 10 DVD Pack Miscell. A Collection of 10 films

17 Mukta Marathi Jabbar Patel

18 Women Special DVD Pack Hindi A Collection of 3 films

19 Om Dar-B-Dar Hindi Kamal Swaroop

20 Paar Hindi Gautam Ghose

21 Sanghat Bengali Pinaki Choudhury

22 Antareen Bengali Mrinal Sen

List of NFDC Films – DVD Released From 01.04.2013 to 31.03.2014

Theatrical Release – This year saw the release ofnew titles, The Good Road (Gujarati), Tasher Desh (Bengali) and Om Dar Ba Dar (Hindi)across various cinemas.


Promotion of Indian Cinema in Festival & Markets abroad

The Overseas division works towards building the presence of Indian Cinema at International Film Festivals & Markets. With the International Film community’s ever-increasing interest in Indian Cinema, the division primarily focuses on promoting and showcasing Cinemas of India and Indian talent at International Film Festivals & Markets. The division has also fostered partnerships with private and government film institutions from across the world.

To facilitate visibility of Indian Cinema in global markets, and promotion of India as a filming destination, the Ministry of Information & Broadcasting has entrusted the task of promoting Indian films at various International Film Festivals and markets in India and abroad to the Corporation. Under these initiatives the Corporation sets up India Pavilions/India Stands at various markets including the Cannes Film Festival, Toronto International Film Festival, MIPCOM, American Film Market, European Film Market and Filmart. Mindful of its responsibility of ensuring that such promotion meets the needs of the Filmmakers, NFDC obtains a feedback and evaluation from participant filmmakers. For the year 2013-14, NFDC’s activities in this field received a rating of 4.70 out of total of 5 (Excellent Rating) for its efforts.

Film Bazaar

NFDC set up Film Bazaar India in 2007 in Goa alongside the International Film Festival of India with the objective of creating a production & sales platform that would ensure greater visibility of Indian Cinema across world markets. In 2010, the market was expanded to cater to the needs of cinemas of South Asia.

Film Bazaar is now a full-fledged and the only South Asian Film Market, a converging point for buyers and sellers of film rights from all over the world in this region. It is a window to South Asian Cinema for Film Festival Directors/Programmers for possible selection and a platform for Producers seeking South Asian stories for Co-production.

The event has now become a regular feature on the International Market calendar for the International film industry. From a tentative start in 2007 with 170 delegates, Film Bazaar in 2013 saw the attendance of 831 delegates from 36 countries. Film Bazar currently stands as the most effective platform for promoting Indian Cinema & has enable the discovery of some of the most acclaimed films of India in the International circuit in recent years.

5. Human Resource Development

a. Schedule Caste / Schedule Tribe Reservation

The directives issued by the Government of India regarding reservation for SC/ST in appointment and promotion to various posts, were complied with.

b. Training & Human Resource Development

Training and human resource development is receiving a place of priority and a programme to impart suitable training to employees in technical and soft skills is being implemented. During the year under report 81 man days of training were imparted to officers and employees of the Company. An assessment of specific skill sets and potential of each employee, based on the responsibilities discharged by them during their years of employment, is also currently underway through a professional HR agency.

c. Industrial Relations

Industrial relations continued to be healthy, cordial and harmonious. There were no strikes.

A Knowledge Series session in progress at Film Bazaar, 2013 Goa

Producers’ Lab sessions at Film Bazaar 2013 at Film Bazaar, 2013 Goa


6. MOU With Ministry of Information and Broadcasting

The performance of NFDC in terms of Memorandum of Understanding signed with the Ministry of Information and Broadcasting (the administrative Ministry) Government of India for the FY 2012-13 has been rated as “Excellent”.

However, in case of MOU signed with the administrative ministry for the FY 13-14, the target fixed by the task force of DPE needs revision due to non-fulfillment of commitments given by the administrative ministry in the MOU to continue NFDC as an agency to undertake audio-visual publicity work of Govt./PSUs.

Ministry of I&B, vide letter no. 1/9/2009-MUC dated 13th June 2013 changed the EMA Policy and made DAVP the sole agency for undertaking audio-visual publicity work of Govt. / PSUs. This change in the policy has acutely affected the performance of the company in view of the fact that this segment of business contribute as much as 80% to 85% of the gross turnover of NFDC.

NFDC is poised to get an “EXCELLENT” rating considering its achievements against REVISED target.

7. Official Language Implementation

The Official Language Act, along with the Rules thereof and orders issued from time to time by the Department of Official Language, Ministry of Information and Broadcasting, and the Department of Public Enterprises regarding use of Hindi, were implemented in the Company during the year. Meetings of the Official Language Implementation Committee were held regularly to review the use of Hindi in the Company and steps taken to implement the Annual Program for the year 2013-2014 issued by the Department of Official Language, Ministry of Home Affairs, Government of India.

8. Report On Conservation Of Energy, Technology Absorption, etc.

Information in accordance with the provisions of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Director) Rules, 1988 regarding Conservation of Energy, Technology Absorption is not applicable to the Company.

9. Particulars of Employees Receiving Salary as Per Secton 217 (2A)

There was no employee of the Company who received remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

10. Vigilance Matters

A Chief Vigilance Officer is due to be appointed by the Ministry of information and Broadcasting. However, the company has designated an officer in the rank of Deputy General Manager to oversee vigilance matters.

11. Board of Directors and Board Meetings

The Company’s directors are appointed and their remuneration is fixed by the Government of India. Currently there are three independent directors appointed by the Government of India. The company has no role in the appointment of its directors.

During the year the Ministry of Information and Broadcasting, Government of India, has appointed Smt. Bharathi S. Sihag as part time Government Director of the company with effect from September 4, 2013.

During the Financial Year 2013-14, six Board Meetings were held on 30/04/2013, 30/05/2013, 12/07/2013, 20/10/2013, 27/11/2013 and 01/02/2014.

12. Auditors

The Comptroller and Auditor General of India appointed M/s. C.B. Chhajed & Co., Chartered Accountants, DGP House, Ground Floor, 88-C, Old Prabhadevi Road, Mumbai – 400 025 as Auditors of the Company for the year 2013-2014 under Section 619(2) of the Companies Act 1956.

The auditors have audited the Accounts of the Company for the year ended March 31, 2014. The audited accounts with required annexure and reports are annexed to this report.

13. Right to Information Act, 2005

Necessary action has been taken by the Company towards implementation of Right to Information (RTI) Act 2005 in NFDC. RTI Machinery is in place to attend to RTI applications and follow-ups

1. Chief Public Information Officer R. Harish, Manager (Legal/ P&A)

2. Appellate Authority N.K.Vyas, Deputy General Manager (P&A)

14. Vigil Mechanism

In order to practice better Corporate Governance, NFDC has adopted a Policy for Prevention of Fraud. The objective of the policy is to provide a system for detection and prevention of fraud,


Name of the Director

DesignationPosition in Committee

Ramesh Sippy Independent Director Chairman

Nina Lath Gupta Managing Director Member

Bharathi S. Sihag Govt. Nominee Director Member

A.K. Bir Independent Director Member

Jawahar Lal Wattal Independent Director Member

Director Finance, Internal Auditors and Statutory Auditors are standing invitees in the Audit Committee meetings. Senior functional executives are also invited as and when required to provide inputs to the Committee.

16. Comments on the Auditors Report

PARA (a)Arbitration awards have been issued in favour of the Company against two parties for recovery of the deposit amounting to Rs.18 Lakhs. In respect of the balance amount of Rs.12 Lakhs, arbitration proceedings are still underway. Since the Corporation is hopeful of getting arbitration award in its favour, no provision has been made for the same in the books of accounts.

PARA (b)The accounting of overseas distribution income for the film “Gandhi”, which is distributed half yearly (June & December) on calendar year basis by the collection agent, is accounted for in the books as per the statement received from the agent. Since the practice has been followed consistently, there will not be any major impact due to accounting of this income on calendar year basis.

PARA (c)No comments

Place: MumbaiDate: 15th September, 2014

(Ramesh Sippy)Chairman

PARA (d) It is expected that there will be no negative impact on the net profits of the Company and respective assets and liabilities on account of the issues raised by the auditors in Paras (a) to (c).

17. Risk Management Policy

The Board of directors review internal & external risks of the business periodically so as to take timely corrective action. In order to review its internal weaknesses and various external threats periodically, reports are placed before the Board of directors.

18. Acknowledgements

The Board thanks the Company’s business partners for their support and confidence in NFDC and look forward to sustaining and building this mutually supportive relationship in the future as well. The Board also gratefully acknowledges the support and guidance received from the Union Government of India, various Ministries of the Government of India, particularly the Ministry of Information and Broadcasting, in the Company’s operations and expansion plans. The Directors also express their grateful appreciation to the Department of Public Enterprises, Comptroller and Auditor General of India, Chairman and Members of the Audit Board, Statutory Auditors, Internal Auditors, Bankers, patrons and customers of the Company. The Board records its deep appreciation for the enthusiastic and dedicated work of the members of NFDC. Their outstanding team effort was invaluable for the smooth functioning of the Company during the year under report.

For and on behalf of the Board of DirectorsFor National Film Development Corporation Ltd.

reporting of any fraud that is detected or suspected and for fair dealing of matters pertaining to fraud.

The Head of Departments, General Managers, and Regional Managers are designated as the Nodal officers for this Fraud Policy and will co-ordinate all activities as per the Policy.

15. Audit Committee

The composition of the Audit Committee as on 31st March 2014 is as under:


The Company:

National Film Development Corporation Limited is a Public Sector Undertaking established to encourage the good cinema movement in the country. The primary goal of the NFDC is to plan, promote and organize an integrated and efficient development of the Indian Film Industry and foster excellence in cinema. Over the years, NFDC has provided a wide range of services essential to the growth of Indian Cinema. The NFDC (and its predecessor the Film Finance Corporation) has so far funded / produced over 300 feature films. These films, in various Indian languages, have been widely acclaimed and have won many national and international awards. It is also exploring ways and means to develop audiences and distribute critically acclaimed cinema to the same.

NFDC also aims to promote the growth of Indian Cinema through other activities such as Script development, promotion of films made by independent filmmakers in markets abroad, and creation of platforms for greater interaction between Indian filmmakers and members of the international film fraternity through the Film Bazaar organized by NFDC alongside the International Film Festival of India in Goa since November, 2007.

NFDC consider itself responsible for facilitating growth in areas of the Indian film industry, which cannot be undertaken by the private sector due to commercial constraints. In a fast-growing industry like India’s, new challenges emerge at every stage. NFDC aims at stepping into these areas and filling the gaps to supplement the efforts of the industry.

Legal Status and Autonomy

The company is a legal entity and is legally, functionally, and financially autonomous, operates under the corporate laws as an independent commercial enterprise. However, the Government of India through the Ministry of Information & Broadcasting and the Department of Public Enterprises under the Ministry of Heavy Industries, monitors its performance through a system of Memorandum of Undertaking (MoU) as regards targets to be achieved every year as part of accountability to the Parliament in respect of all Government companies. Government can and does issue guidelines to regulate and bring about some uniform pattern in the functioning of the Company. Company is managed and run under the superintendence, control and direction of its Board of Directors as per the Companies Act.

Management Analysis Report

Overall Industry Size & Projections

Overall industry size (INR Billion)

2008 2009 2010 2011 2012 2013Growth in 2013 over

20122014p 2015p 2016p 2017p 2018p

CAGR 2013-18

TV 241.0 257.0 297.0 329.0 370.1 417.2 12.7% 478.9 567.4 672.4 771.9 885.0 16.2%

Print 172.0 175.2 192.9 208.8 224.1 243.1 8.5% 264.0 287.0 313.0 343.0 374.0 9.0%

Films 104.4 89.3 83.3 92.9 112.4 125.3 11.5% 138.0 158.3 181.3 200.0 219.8 11.9%

Radio 8.4 8.3 10.0 11.5 12.7 14.6 15.0% 16.6 19.0 23.0 27.8 33.6 18.1%

Music 7.4 7.8 8.6 9.0 10.6 9.6 -9.9% 10.1 11.3 13.2 15.1 17.8 13.2%

OOH 16.1 13.7 16.5 17.8 18.2 19.3 5.9% 21.2 23.1 25.2 27.5 30.0 9.2%

Animation and VFX 17.5 20.1 23.7 31.0 35.3 39.7 12.5% 45.0 51.7 60.0 70.2 82.9 15.9%

Gaming 7.0 8.0 10.0 13.0 15.3 19.2 25.5% 23.5 28.0 32.3 36.1 40.6 16.2%

Digital Advertising 6.0 8.0 10.0 15.4 21.7 30.1 38.7% 41.2 55.1 69.7 88.1 102.2 27.7%

Total 580 587 652 728 821 918 11.8% 1039 1201 1390 1580 1786 14.2%

Source: KPMG in India analysis

(` in Billion)

Industry Overview

Coming off 2012, a record year, 2013 saw the industry record a strong performance, both in terms of content and box office collections. The year was marked with films that scored well at the box office with stronger stories, grander sets, experimental concepts, new faces, multi-starrers and strategic marketing initiatives. While the capital poured in through organised and

unorganised channels, the industry still faced challenges in delivering robust bottom line results. The audiences stayed away from the regular run-of-the-mill concepts, barring a few mega starrers that were able to pull in viewers based on star persona and past successes.

Content has always been ‘the king’, but it used to struggle to reach the audience on time while content owners grappled with issues


such as piracy.The necessary digital infrastructure has now been developed to allow this content to travel quickly to its audiences in both metros and regional parts of India. The Indian film industry’s growth has been fuelled by the expansion of the multiplexes that have enabled players to effectively segment the market. While the audience now have access to a greater variety of content, available at various price points, production houses can now seek to develop theme-based movies that attract a niche audience but deliver a strong positive return on investment.

The industry has benefitted greatly from digitisation; from shooting the movie on digital formats and distributing content across various locations, to marketing the film on various social media platforms to monetizing content on video on demand (VoD) platforms. While monetising of content on digital delivery platforms remains a concern in the short term, the industry is buoyant about its long term potential due to improved internet access at affordable prices.

The industry is also observing greater interaction across the regional language markets from exchange of talent to remake movies in different languages. Most of this has been possible due to studios forming alliances with regional players and co-producing movies.

Film Production

The Indian film industry has players like Yash Raj Films, Dharma Productions, Rajshri Productions, Mukta Arts, and others, who have been involved in film production since the 1960s and 1970s. These larger production houses and international players, including corporate houses like Disney India, Viacom18 Motion Pictures, Fox Star Studios, Reliance Entertainment, etc., continue to drive a professional and management-driven approach to production, distribution and marketing of films. Indian production companies are increasingly shifting away from producing star-driven films to content-oriented films with new talent. The move is primarily driven by considerable increase of over 15-30 per cent in production costs. While the cost structure varies for different films; artist fees continue to constitute a major portion of the overall film’s budget. Corporatisation is leading the industry to become more prudent in producing movies. The pre-production phase of movies has become more structured, with greater emphasis given to acquisition of script, planning, budgeting and financing activities.

Emerging Trends

With the theatrical business being extremely content sensitive, there is a constant need for exhibitors to increase revenue per user, resulting in alternate revenue streams becoming an important source for driving sustainable business value. BIG Cinemas has taken initial steps towards building a business model whereby it can leverage its existing multiplex network to bring about a change in the way Indians shop.

One of the key breakthroughs expected to be adopted in the future is the use of laser phospor projectors in film theatres, which will bring along advantages of longer service life, immediate dimming and lower operating costs. However, regulatory and safety concerns regarding their use are still being explored. Industry discussions indicate towards leveraging the historical success of certain movies and build strong franchises around them by producing sequels. Some sequels lined up in 2014 include, Hate Story 2, Welcome Back and Singham 2. Also, the successful Hollywood trend of converting TV shows into movies may soon be witnessed by the Indian film industry, with the makers of Bigg Boss deciding to adopt the celebrity reality show into a movie.

Videos on demand platforms (VoD) are soon expected to replace DVDs as an online content delivery network portal for audio-video streaming services. It is becoming easier with telecom and internet providers offering inexpensive and convenient services and platforms like Google Play Movies where one can rent movies starting INR 50. Google plans to bring YouTube to television screens in India through DTH providers. The next wave of significant growth is expected to be driven by rapid expansion of multiplex infrastructure, which will be a function of performance of the real estate industry and growth of organized retail in India.

Challenges faced by the Industry

The growing internet user base is fuelling piracy like never before. With the advent of technology and the proliferation of the internet in tier II and tier III markets, physical piracy has transformed into online piracy, which operates through peer-to-peer networks. This technology does not leave a footprint and thus makes it difficult for the authorities to clamp down on the perpetrators. The Ministry of Information & Broadcasting has proposed to address the issue of intellectual property theft by declaring piracy as a non-bailable offence. Also the industry is looking at reducing the release window of films from 3-4 months in 2012 to 2-3 months in 2013. Filmmakers are also making a conscious effort to create awareness about the ill effects of piracy and the connection between piracy and organised crime among their audience.

The concentration of power in the hands of a few top actors and now directors and technicians, a characteristic, which is prominent across all language markets and more strongly in case of Bollywood and the South Indian film industry is unsustainable from a long-term perspective as the high talent acquisition costs leads to higher risks and in certain cases impact the return.

Lack of spaces to screen films is becoming a source of much discontentment in the industry. Mismanagement, coupled with low footfalls and poor brand pull led to the shutdown of several malls and multiplexes, and put on hold the plans of building more such avenues for film exhibition. Almost 150 multiplexes in India are trapped in project delays because of the market slowdown.


These challenges have come at a time when films are ready to be released on wider platforms due to digitization, but do not have quality cinema theatres to screen these films. Independent cinema faces a bigger challenge here in not having dedicated venues for their release to provide an exclusive space where filmmakers can nurture their niche audience.

Distribution is another key issue faced by independent filmmakers in India. Indian independent filmmakers usually work with constrained budgets and are hence unable to market and promote their films in the most desirable manner. Hence, several independent films skip audience attention and are completely out of sight in less than a week of their release.

India’s film merchandising market is still very premature, unlike other countries, such as the US, UK and China. Some of the reasons for low uptake of the category include limited focus and reach of Indian filmmakers, piracy – where lookalikes and best copies of original film merchandise are sold in grey/open markets for a much lesser price, diverse audience to be reached with different propositions and price points, absence of iconic figures in Indian cinema, product quality and utility concerns and limited popularity period for such merchandise.

Competitive Position of NFDC

NFDC was set up to promote the growth of the Indian Film Industry in accordance with the economic objective of the Government as laid down from time to time. Keeping this objective in mind, NFDC is positioned to facilitate the growth of the film industry and strategize the development work from time to time as per the need of the film industry.

Along with production of regional and art films, which promote Indian culture through the cinemas of India, NFDC is now focused on development of content and talent, an area that needs improvement. NFDC also plays a very crucial role in research and development of content development in order to deliver quality films.

As the industry grows and diversifies, there are new challenges and shortfalls faced at each stage of growth, and NFDC identifies and develops new initiatives to supplement the growth and efforts of the industry.

NFDC’s role and efforts are parallel to its commercial counterpart, the private sector. It is a development corporation and therefore needs constant review in accordance with the needs of the industry at a given point of time, to supplement the efforts of, and not compete with the private sector.

Products & Services

NFDC’s offers the following services.

Film Production

NFDC’s Film Production Department supports and drives NFDC’s mission through the Cinemas of India. It continuously seeks to create an environment conducive to the making of cinema that reflects India’s most imaginative, diverse and vibrant film culture.

The Department’s endeavour is to support, through production and collaboration, a community of versatile and emerging filmmakers who embody diversity, innovation and uniqueness.

Apart from production of films, NFDC also produces advertisements, documentaries, short films, TV series, web advertisements, radio series and thematic musical anthems.

Distribution

At NFDC, the focus is to establish a sustainable mechanism for distribution of films in India, both its own productions and also films of independent filmmakers with limited access to domestic markets. The Distribution Division has launched the brand Cinemas of India to facilitate distribution of its own films and also films of independent filmmakers.

The Multifaceted Distribution Platform – with products under the brand ‘Cinemas of India’ currently comprises –

• Home Video • Theatre Releases • Satellite Syndication • YouTube Internet Channel • Internet VOD Platform – ‘www.cinemasofindia.com’a pay –

per – view and subscription model, available worldwide. • Mobile Platforms – Cinemas of India channel across various

mobile service providers.

In addition, NFDC releases media campaigns across Television, Radio, Digital Theatres, Web, Mobiles, and Public LCDs for more than 30 government clients.

Training & Development

Given the gap in the area of mid – career training opportunities in the film sector, as also the need for greater focus on research and development in content creation, the Training & Development Division was set up in 2012.


It has been established under the brand NFDC Labs to deliver two outputs for the NFDC & Indian Film community –

• Training for Professional filmmakers, providing workshops and master classes in core disciplines; Directing, Writing, Editing, Cinematography and Producing.

• Establish a development arm within the NFDC itself to support script and project development to ensure a steady flow of quality projects towards the NFDC production department and towards the Industry at large. Training activities include long running staged development programmes for scripts in different states across the subcontinent, including international industry programmes in overseas film markets & festivals.

NFDC also conducts various training programmes in Avid & FCP Digital Non – Linear Editing, Audio Dubbing, Digital Cinematography, Multimedia Subtitling, etc., for students under State Government sponsored schemes.

Film Bazaar

Organized by the National Film Development Corporation (NFDC), Film Bazaar is a platform exclusively created to encourage collaboration between the international and South Asian film fraternity. The event is focused on discovering, supporting and showcasing South Asian content and talent, in the realm of filmmaking, production and distribution. A converging point for film buyers and sellers from all over the world, the Bazaar also aims at facilitating the sales of world cinema in the South Asian region.

The Film Bazaar is held every year from November 20 to 24 at the Goa Marriott Resort, alongside the International Film Festival of India (IFFI).

Services to Various Government Departments

NFDC provides various services to government departments / PSUs and also executes various plan / non plan schemes of government departments relating to film production / exhibition / marketing / etc.

NFDC also executes the media production work like production of advertisements, documentaries, short films, TV series, web advertisements, radio series and thematic musical anthems.

Preview Theatres

NFDC gives on hire its 81 seaters Preview Theatre at Mumbai and 100 seater Preview Theatre at Chennai, for exhibition of film to various government / non-government clients. The theaters are equipped with latest technology to show films in analog and digital platforms, including 3D projection facilities.

SWOT ANALYSIS

Strength

The NFDC has the largest catalogue in India of award winning and critically acclaimed films. It has so far funded/produced over 300 feature films. It has also produced the largest number of international co-productions, having co-produced more than 20 films.

NFDC enjoys considerable experience in the field and has strong links with the international film fraternity and film funding bodies of other countries. Recognized as the launching pad for young talent, it is becoming a destination for not only the debutant directors / artist but also for established filmmakers.

NFDC enjoys a prestigious position in international markets where NFDC has successfully organized many international markets / festivals and the same has been rated “Excellent” by independent experts.

NFDC also emerged as an agency to undertake publicity assignment of various Government departments and able to capture a substantial business share by providing a “Total Customer Satisfaction”. Government Departments has rated NFDC as 4.91 on a scale of 5 (Excellent).NFDC also developed skills in production work like production of advertisements, documentaries, short films, TV series, web advertisements, radio series and thematic musical anthems.

NFDC has a streamlined procedure for screening scripts & production of good quality films. This combined with its production activities has the potential of creating an organization of formidable strength. NFDC also has a substantial international presence and widespread global contacts.

Weaknesses

Even after having a good distribution network, NFDC film which are non-stream films face several hurdles - (a) visibility of films to be screened is very low due to lack of high P&A and marketing budgets; (b) Box-office Clutter leaves no screen-space for non-mainstream films thus leading to exhibition roadblocks; (c) Hollywood and Bollywood films have extensive pan-India release supported by innovative marketing strategies and high spends thus creating distribution bottlenecks, making it more attractive for distributor to pick up these films rather than non-mainstream films.

Opportunities

Given the hurdles NFDC face for film distribution and exhibition spaces, there is scope to exploit the digital platform for marketing and exhibiting its films online.


There is also an opportunity to have a Film Centre in Metros, a space for films beyond the cinema hall, where children and adults can learn more about the movies, find research material, meet young filmmakers, attend short courses on film appreciation or film editing, enjoy screenings of children’s films, see the best of regional and world cinema and discover new ways of approaching the study of Indian Film. NFDC is presently working on a project to build a Film Cultural Centre in Mumbai.

Building audiences for good cinema is also an absolute necessity. Children in schools do not have access to good regional and world cinema. NFDC Film Club programme, which is in the offing, is targeted at school children, and will capitalize on students’ natural interest in cinema and use it as a tool to instill social and aspirational values, nation building, and as a medium of art. This programme will make good films accessible to all the school boards of India.

Threats

Small-budget, non-star, independent films, find it difficult to reach its audiences due to low P&A and marketing budgets leading to low footfalls. For this reason distributers and exhibitors are not willing to give prime slots to these films, as they are not commercially viable. This is a real threat to NFDC films.

Further, lack of development of audiences for alternative kinds of cinema makes distribution of such films an even bigger challenge for NFDC.

NFDC was nominated as an authorized agent to carry on business of Audio-Visual Publicity of Government Department / PSUs alongside DAVP by amending Electronic Media Policy of Ministry of Information and Broadcasting, Government of India. Any change in Policy would adversely affect the profitability of the company.

Internal Control Systems and Their Adequacy

The company has adequate internal control and Internal Audit System commensurate with its size and nature of business. The company has formulated various policies and procedures, as a part of Internal Control Systems, for orderly and efficient conduct of its business. The Management takes reasonable care and ensures safeguard of assets, prevention and detection of fraud and error, accuracy and completeness of accounting records and timely preparation of reliable financial information.

Internal control is being ensured through internal audit by independent firms of Chartered Accountants. The nominated firms conducts periodical Internal audits of regional / corporate office allotted to them. Additionally, the Company also commissions concurrent audit of its primary business activities of Feature Film Production, Non-Feature Film Production and Publicity assignment of various government departments through independent auditors.

Internal Audit Reports are being reviewed by the Audit Committee on quarterly basis. Internal audit reports are also being reviewed by Statutory Auditors of the company appointed by the Comptroller and Auditor General of India. Books of Accounts are also being audited by the Comptroller and Auditor General of India.

Future Outlook

As per FICCI-KPMG Report 2013, the CAGR of the Film Industry and the anticipated size of the industry are as under. As can be seen, theatrical revenues would continue to dominate the distribution sector and ancillary streams of revenue would continue to be dependent upon the returns from the theatrical box-office as is the case in present.

Future Outlook - Role of NFDC

NFDC, from time to time, identifies need gaps in the film industry that requires attention and development in the areas so as to contribute to the overall growth of the industry. NFDC has thus increased its focus on the aspects of film development, film production, film marketing and distribution and film exhibition. Given the objectives stated above, NFDC proposes to include the following activities in its plans for the next five years:

i. NFDC will support films in Indian languages that aim at artistic excellence with a focus to present better quality films to more audiences across the country.

ii. After successfully opening the Tagore Film Centre in Chennai, the focus is now to open a Film Cultural Centre in Mumbai. This Centre will aim to fulfill needs of educating adults and children about movies, find research material, meet young filmmakers, attend short courses on film appreciation or film editing, enjoy screenings of children’s films, see the best of regional and world cinema and discover new ways of approaching the study of Indian Film.

iii. NFDC’s main objective is to build audiences by promoting films that act as a medium for value-based social change and dissemination of the cinematic art form in addition to entertainment. The Film Club programme that will come into action this year hopes to expose the students to the wealth and variety of cinema from India and across the globe.

iv. With a fast growing internet user base of over 200 million internet users, the potential of the industry to enhance engagement with audience and generate revenue from digital media is indeed vast. To exploit this platform the www.cinemasofindia.com - a pay per view Internet model – plans to showcase films by other talented Indian


Size of the Indian Film IndustryIndustry performance

Revenue 2008 2009 2010 2011 2012 2013p 2014p 2015p 2016p 2017p2011-12

(YoY growth)

CAGR 2012-2017

Domestic Theatrical 80.2 68.5 62.0 68.8 85.1 92.4 104.7 115.3 127.6 142.2 23.8% 10.8%

Overseas Theatrical 9.8 6.8 6.6 6.9 7.6 8.3 9.0 9.8 10.8 11.9 9.0% 9.4%

Home Video 3.8 4.3 2.3 2.0 1.7 1.4 1.2 1.1 1.0 0.9 -15.0% -12.0%

Cable & Satellite Rights 7.1 6.3 8.3 10.5 12.6 14.1 16.2 19.1 22.8 27.3 20.0% 16.8%

Ancillary Revenue Streams 3.5 3.5 4.1 4.7 5.4 6.2 7.2 8.3 9.6 11.1 15.2% 15.5%

Total 104.4 89.3 83.3 92.9 112.4 122.4 138.3 153.6 171.7 193.3 21% 11.5%

(` in Billion)

filmmakers, in addition to the NFDC films, to give the film buffs a choice of good cinema.

COI will upload and stream Indian films across geographical, social & cross-cultural barriers. The website is engineered to act as a carrier of Indian cinema in the global culture of film. The campaign aims to encourage and make available online to an audience, deserving Indian films.

v. To develop film-related talent by organizing international-level training workshops for film professionals in the spheres of script writing, film production management, film direction and international marketing and distribution. In addition to the existing in-house training programs being held by NFDC, more expansive training with leading names from the industry, Indian as well as global, will be conducted regularly.

vi. To promote a quality film culture by playing a greater role in film festivals and actively organizing seminars, workshops and screenings. NFDC also conducts a series of lectures, presentations and panel discussions on the various aspects of film production, development and distribution,

known as the Knowledge Series. Currently confined only to the Film Bazaar, NFDC intends to develop it into a year-round facility and make it available in different regions of the country.

vii. India is a country full of diverse culture and landscapes, with each state has its own uniqueness and style. NFDC, to promote India as a film-shooting destination for filmmakers globally, has started consultation services for assisting State Government to formulate Film Policies. These policies will put systems into place and make processes easier for filmmakers and their unit to shoot film in that particular State.

Corporate Social Responsibility

Due to accumulated and carried forward losses of Rs. 2585 lakhs as on March 31, 2014, the company is not incurring any expenditure on Corporate Social Responsibility. The Department of Public Enterprises vide their Office Memorandum forwarding minutes of MoU negotiations, exempted NFDC from undertaking any performance targets relating to Corporate Social Responsibility, sustainable development, and Research and Development, in view of its accumulated losses.


Report on Corporate Governance

Functional Directors

Name of the Director Designation

Nina Lath Gupta Managing Director

Sahab Narain Director (Finance)


Raghvendra Singh Government Nominee Director

Bharathi S. Sihag (w.e.f. 04.09.2013) Government Nominee Director

Ramesh Sippy Chairman & Non-official Director

A.K. Bir Non-official Director

Jawahar Lal Wattal Non-official Director

Non Executive Directors

b. Other provisions as to Board and Committees

(i) Details of Board Meeting held during the Financial Year 2013-14

During the Financial Year 2013-2014, six Board Meetings were held on i. e. on 30/04/2013, 30/05/2013, 12/07/2013, 20/10/2013, 27/11/2013 and 01/02/2014.

The Board has complete access to all the relevant information within the Company enabling Board of Directors and Committees thereof to take informed and efficient decision.

The composition of the Board as on 31st March 2014 is as follows:

A Public Sector Enterprise of Government of India, NFDC follows the extant Guidelines on Corporate Governance issued by Department of Public Enterprises (DPE), Ministry of Heavy Industries and Public Enterprises, Government of India.

A Brief report on Corporate Governance is given below:-

1. Company’s Philosophy On Code Of Corporate Governance.

NFDC is committed to good Corporate Governances supported by appropriate transparent systems and practice to protect promote and safeguard the interests of all its stakeholders.

NFDC is committed to act as a competitive, client-friendly and development-oriented organization for promotion of good cinema in the country and abroad. It is also committed to providing client friendly best services to all its customers in a transparent manner.

2. Board Of Directors

a. Composition of Board

The Board of Directors of NFDC comprises of Seven Members out of which Two are Functional Directors and Five are Directors of whom two are the nominees of the Government of India and three are Non-official Directors. The Directors bring to the Board wide range of experience knowledge and skills.


(ii) Details of Number of Board Meetings attended by Directors, attendance at last AGM number of other Directorship (in Public Limited Companies) / Committee Memberships held by directors during the year 2013-2014 are tabled below :-

Sr. No.

Name of Director

Designation

Board MeetingAttendances at Last AGM

(held on 30.09.2013)

No. of other Directorships

as on 31/3/2014

No. of other Committee

Memberships as on 31/3/2014

Held during

the tenure

AttendedAs

ChairmanAs

Member

1 Ramesh Sippy Chairman 6 5 No 5 3 Nil

2Nina Lath Gupta

Managing Director 6 6 Yes Nil Nil 3

3 Sahab Narain Director (Finance) 6 5 Yes Nil Nil 2

4Jitendra Shankar Mathur

Government Nominee Director

3 1 NA Nil Nil 1

5Bharathi S. Sihag


3 1 Yes Nil Nil 1

6Raghvendra Singh


6 3 Yes Nil Nil 2

7 A.K. BirIndependent Director

6 6 NA Nil Nil 2

8Jawahar Lal Wattal

Independent Director

6 1 NA 1 Nil 2

(iii) None of the Directors on the board is a member of more than 10 Committees.

(iv) Brief Profile of new Directors Smt. Bharathi S. Sihag was appointed as part-time Government Director with effect from 04.09.2013. She is working as

Additional Secretary & Financial Advisor, Ministry of Information and Broadcasting.

(c) Code of Conduct

The Company has prepared a policy on Code of Conduct for the Board members and Senior Management Personnel in alignment with Company’s mission and objectives and aims at enhancing ethical and transparent process in managing the affairs of the Company. Further the Company has formulated a policy on Fraud Prevention. Both the policies are in the process of approval by its Board of Directors.

3. Commitees of The Board of Directors

3.1 The Committees constituted by the Board are as follows:

• Audit Committee • Personnel Sub Committee • Remuneration Committee


Sl. No

Name of the Director Designation Position in Committee

1 Ramesh Sippy Independent Director Chairman

2 Nina Lath Gupta Managing Director Member

3 Bharathi S. Sihag Government Nominee Director Member

4 A.K. Bir Independent Director Member

5 Jawahar Lal Wattal Independent Director Member

Director Finance, Internal Auditors and Statutory Auditors are standing invitees in the Audit Committee meetings. Senior functional executives are also invited as and when required to provide inputs to the Committee.

(ii) The terms of reference of the Audit Committee are as under:

(a) to comply with the requirements laid down in Section 292A of the Companies Act:

(b) to take on record and /or to review unaudited/audited quarterly/half-yearly/annual financial statements of the Company-

3.1.2 Personnel Sub Committee

The compositions of Personnel Sub Committee of Board of Directors as on 31st March 2014 are as follows:

Sl. No

Name of the Director Designation Position in Committee



3 Sahab Narain Director (Finance) Member

4 Raghvendra Singh Government Nominee Director Member

5 Jawahar Lal Wattal Independent Director Member

Sl. No


Position in the Committee

No. of Meeting held during their tenure

Meeting attended

1 Ramesh Sippy, Independent Director Chairman 4 3

2 Nina Lath Gupta, Managing Director Member 4 4

3 Jitendra Shankar Mathur, Government Nominee Director Member 1 0

4 Bharathi S. Sihag, Government Nominee Director Member 3 1

5 A.K. Bir, Independent Director Member 4 4

6 Jawahar Lal Wattal, Independent Director Member 4 0

During the year 2013-2014 four Audit Committee Meetings were held on 12.07.2013, 20.10.2013, 27.11.2013 and 01.02.2014. Meeting attended by individual members during the year 2013-2014 are detailed below:-

3.1.1 Audit Committee

(i) The composition of the Audit Committee as on 31st March 2014 is as under:

The terms of reference of the Personnel Sub Committee are as under:

To consider the promotion of officers from Junior Officer up to the level of Deputy General Manager and Welfare issues and other policy matters related to personnel.

During the year 2013-2014 no Personnel Sub Committee Meeting was held.


Sl.No Name of the Director Designation Position in Committee



3 Sahab Narain Director (Finance) Member

4 Raghvendra Singh Government Nominee Director Member

5 A.K. Bir Independent Director Member

3.1.3 Remuneration Committee:

The composition of Remuneration Committee as on 31st March 2014 is as follows:

The terms of reference of the Remuneration Committee are as under:

To decide the annual bonus/variable pay pool and policy for its distribution across the executives and non unionized supervisors within the prescribed limits.

During the year 2013-2014, no Remuneration Committee Meeting was held.

Ms. Nina Lath Gupta, Managing Director was paid a remuneration of Rs. 20,22,795/- and Shri Sahab Narain, Director (Finance) was paid a remuneration of Rs. 18,37,181/- for the F.Y. 2013-2014. None of the other directors were paid any remuneration during the financial year 2013-2014.

4. Annual General Meeting

No Year Location Date & TimeWhether any

special resolution passed

36th 2010-11 Registered Office 6th floor, Discovery of India Building, Nehru Centre, Dr .A. B .Road, Worli, Mumbai – 400 018

24.09.2011 2.00 AM

No

37th 2011-12 Registered Office 6th floor, Discovery of India Building, Nehru Centre, Dr .A. B .Road, Worli, Mumbai – 400 018

28.09.2012 11.00 AM

No

38th 2012-13 Registered Office 6th floor, Discovery of India Building, Nehru Centre, Dr .A. B. Road, Worli, Mumbai – 400 018

30.09.2013 11.00 AM

No

39th 2013-14 Registered Office 6th floor, Discovery of India Building, Nehru Centre, Dr .A. B. Road, Worli, Mumbai – 400 018

On or before 30.09.2014 during office

hours

To be passed

5. Disclosures

(i) There are no materially significant transactions with related parties i.e. promoters, directors or the management conflicting with the Company’s interest.

(ii) The Company affirms that no personnel have been denied access to the Audit Committee. (iii) The Company has adopted suggested items to be included in the Report on Corporate Governance. (iv) There is no inter-se relationship between Directors of the Company. (v) No penalties or strictures have been imposed on the company by any statutory authority, on any matter related to any

guidelines issued by Government, during the last three years.


Additional disclosures as required under the Guidelines on Corporate Governance for CPSEs issued by Department of Public enterprises:

(i) Items of expenditure debited in books of accounts, which are not for the purpose of business: NIL

(ii) Expenses incurred which are personal in nature and incurred for the Board of Directors and Top Management: NIL

(iii) Administrative and office expenses as a percentage of total expenses for the year 2013-2014 is 4.43% (Previous year 2.31%) and as a percentage of financial expenses for the year 2013-2014 is 4.46% (Previous year 2.32%)

(iv) Information on adoption/non-adoption of non-mandatory requirements is given hereunder:

Non-mandatory Requirements

i. The Board : The Company is headed by a Managing Director. All the Independent Directors on the Board of the company were

appointed for tenure of three years and none of the Independent Directors having/had tenure exceeding, in aggregate, a period of nine years.

ii. Remuneration Committee: There was no Remuneration Committee of the Company in the Financial Year 2010-11. However in accordance with the

directions of DPE the Board of NFDC has constituted a Remuneration Committee on 21.06.2011 to decide the annual bonus/variable pool and policy for its distribution across the executives and Non Unionized supervisors within the prescribed limits.

iii. Shareholders Rights: As of now there is no system of sending half yearly financial performance including summary of the significant events in the

last six months to each shareholder.

iv. Audit Qualification: Auditors report annexed.

v. Training to Board Member: It is need based.

vi. Whistle Blower Policy: Policy for Prevention of Frauds” is being adopted by the Company, wherein a Whistle Blower mechanism is in place for

detection, prevention and reporting of fraud. This policy applies to any fraud or suspected fraud involving employees as well as stakeholder, consultants, vendors, lenders, borrowers, contractors, outside agencies doing business with the Company, employees of such agencies, and/or any other parties with a business relationship with the Company.

6. Means of Communication

The Company communicates with its shareholders through its Annual Reports, General Meeting and Disclosures through website. All important information pertaining to the Company is also mentioned in the Annual Report for each financial year containing inter alia Audited Accounts, Directors Report, Auditors Report which is circulated to the members and others entitled thereto.


To,The MemberNational Film Development Corporation Limited.

We have examined the compliance of condition of Corporate Governance by National Film Development Corporation Limited, (“the Company”) for the year ended 31st March 2014 as stipulated in Clause 8.2.1 of Guidelines on Corporate Governance issued by the Department of Public Enterprises for Central Public Sector Enterprises (CPSEs).

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to review of the procedures and implementation thereof, adopted by the company, for ensuring the compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion of financial statements of the Company.

In our opinion and to the best of our information and according to the explanation given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 8.2.1 of Guidelines on Corporate governance issued by the Department of Public Enterprises for Central Public Sector Enterprises (CPSEs).

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 C.B. Chhajed & CoChartered Accountants

(FRN 101796W)

Date: 3rd September 2014Place: Mumbai

C.P. Bhatia(Partner)

Membership No. 045210

Auditors’ Certificate on Corporate Governance


Particulars Notes As at 31.03.2014 As at 31.03.2013

EQUITY AND LIABILITIES

Shareholders’ Funds

(a) Share Capital 3 45,39,98,500 45,39,98,500

(b) Reserves and Surplus 4 (25,82,80,786) (22,62,16,363)

Non-Current Liabilities

(a) Long Term Borrowings 5 90,78,689 –

(b) Trade Payables 6 6,74,99,495 3,75,26,503

(c) Other Long-Term Liabilities 7 9,34,20,435 17,16,39,273

(d) Long-Term Provisions 8 5,74,78,823 5,06,02,750

Current Liabilitis

(a) Trade Payables 6 13,95,78,700 1,21,36,65,024

(b) Other Current Liabilities 9 1,03,44,29,493 1,02,01,98,851

(c) Short-Term Provisions 10 2,30,40,062 2,11,05,246

TOTAL 1,62,02,43,411 2,74,25,19,784

ASSETS

Non-Current Assets

(a) Fixed Assets

Tangible Assets 11 4,32,32,429 4,95,31,535

Intangible Assets 265 260

Capital Work-in-Progress 1,58,19,975 57,534

(b) Long-Term Loans and Advances 12 95,18,819 1,01,55,868

(c) Cash and Bank Balances 15 – 15,95,21,784

(d) Trade Receivables 13 13,46,06,952 6,44,38,563

Current Assets

(a) Inventories 14 7,68,472 5,60,030

(b ) Trade Receivables 13 12,01,51,119 54,18,78,804

(c) Cash and Bank Balances 15 98,03,20,001 1,46,30,33,047

(d ) Short-Term Loans and Advances 16 29,42,32,301 43,09,50,504

(e) Other Current Assets 17 2,15,93,077 2,23,91,855

TOTAL 1,62,02,43,411 2,74,25,19,784

Significant Accounting Policies 2

Notes 1 to 46 are integral part of Financial Statement

Balance Sheet as at 31st March, 2014(Amount in `)

As per our report of even date For and on behalf of Board of Directors

For C. B. CHHAJED & CO. Chartered Accountants (FRN 101796W)


DIN No. : 00350722

C. P. Bhatia (Partner) M.No. 045210


DIN No. : 03641879

Place: Mumbai Dated: 1st July 2014

E. J. PaulCompany Secretary / Manager ( F & A)

M.No. FCS 4521


Statement of Profit and Loss for the year ended 31st March, 2014

Particulars Notes Year 2013-14 Year 2012-13

INCOME

Revenue from Operations 18 1,16,61,35,987 2,38,64,91,814

Other Income 19 10,31,95,084 12,58,68,375

TOTAL 1,26,93,31,071 2,51,23,60,189

EXPENSES

Operating Expenditure 20 1,13,14,36,764 2,26,56,29,033

(Increase) / Decrease in Inventory 21 (2,08,442) (3,90,324)

Employee Benefits Expenses 22 9,26,33,554 9,56,83,480

Other Expenses 23 5,71,18,834 5,61,83,279

Finance Cost 24 8,58,150 13,77,558

Depreciation 84,88,201 1,07,70,842

TOTAL 1,29,03,27,062 2,42,92,53,868

PROFIT / (LOSS) BEFORE EXCEPTIONAL ITEMS AND TAX (2,09,95,990) 8,31,06,320

Exceptional Items 25 1,10,68,433 -

PROFIT / (LOSS) BEFORE TAX (3,20,64,423) 8,31,06,320

Less : Tax Expense

Current Tax - 1,59,00,000

Deferred Tax - -

Tax Balances for Earlier Year Written Off - 37,42,744

PROFIT / (LOSS) AFTER TAX (3,20,64,423) 6,34,63,576

Earnings Per Equity Share:

(1) Basic (7.06) 13.98

(2) Diluted (7.06) 13.98

Significant Accounting Policies 2

Notes 1 to 46 are integral part of Financial Statement




DIN No. : 00350722



DIN No. : 03641879



M.No. FCS 4521

(Amount in `)


Cash Flow Statement for the year ended 31st March, 2014

Particulars Year 2013-14 Year 2012-13

I. Cash Flows from Operating Activities

Net Profit Before Taxation And Extraordianry Items (3,20,64,423) 8,31,06,320

Adjustments for

Loss / (Profit) on Sale of Fixed Assets (3,285) 24,20,912

Depreciation & Impairment 84,88,201 1,07,70,842

Provision for Gratuity 80,10,539 70,27,888

Provision for Leave Encashment 42,58,075 94,18,621

Provision for Doubtful Debts 8,05,064 18,44,910

Bad Debts Written off 9,18,906 30,67,842

Service Tax Written off 1,10,68,433 –

Value Added Tax Written off 17,67,348 –

Credit Balance Written off (1,46,157)

Interest Income (8,50,54,469) (10,45,15,176)

Interest Expenses 8,58,150 13,77,558

Total of (a) (4,90,29,194) (6,85,86,603)

Operating Cash Profit Before Working Capital Changes (8,10,93,617) 1,45,19,717

Adjustments for

(Increase) / Decrease in Inventories (2,08,442) (3,90,065)

(Increase) / Decrease in Non-Current Sundry Debtors (7,18,92,360) (6,32,91,501)

(Increase) / Decrease in Current Sundry Debtors 42,17,27,685 18,75,25,316

(Increase) / Decrease in Long Term Loans & Advances 6,37,049 (3,69,227)

(Increase) / Decrease in Short Term Loans & Advances 11,56,99,959 (13,16,12,266)

Increase / (Decrease) in Non-Current Sundry Creditors 3,01,19,149 1,33,31,830

Increase / (Decrease) in Current Sundry Creditors (1,07,40,86,324) (6,27,50,716)

Increase / (Decrease) in Long Term Liabilities & Provision (7,13,42,764) 7,38,62,136

Increase / (Decrease) in Short Term Liabilities & Provision 21,18,079 41,10,65,984

Total of (b) (64,72,27,970) 42,73,71,491

Cash Generated from Operations (72,83,21,586) 44,18,91,208

Income Tax (Paid) / Refund - Net 81,82,463 59,16,549

Cash Flows Before Extraordinary Item (72,01,39,123) 44,78,07,757

Net Cash from Operating Activities (A) (72,01,39,123) 44,78,07,757

II. Cash Flows from Investing Activities

Capital Work In Progress (1,57,62,441) 4,81,795

Purchases of Fixed Assets (22,56,538) (68,97,203)

Intangible Assets (5) (260)

Sale of Fixed Assets 70,727 18,39,246

Bank Deposit 33,64,68,460 (44,03,61,631)

Interest Received 8,58,53,247 9,03,52,721

Net Cash used in Investing Activities (B) 40,43,73,450 (35,45,85,333)

(Amount in `)


III. Cash Flows from Financing Activities

Long Term Borrowngs 1,07,49,066

Interest Paid (7,49,763) (13,77,558)

Net Cash from Financing Activities ( C ) 99,99,303 (13,77,558)

Net Increase in Cash and Cash Equivalents (A + B + C) (30,57,66,370) 9,18,44,866

Opening Balance of Cash and Cash Equivalents 1,09,85,26,758 1,00,66,81,892

Closing Balance of Cash and Cash Equivalents 79,27,60,388 1,09,85,26,758

Componant of Cash and Cash Equivalents

Balances with Banks

In Current Account 8,98,32,422 29,98,58,491

Fixed Deposits with maturity of less than 3 months 70,28,42,089 79,26,74,511 79,85,59,688 1,09,84,18,179

Cash on Hand 85,877 1,08,579

Total Cash And Cash Equivalents (Note No.15) 79,27,60,388 1,09,85,26,758

Cash Flow Statement for the year ended 31st March, 2014(Amount in `)




DIN No. : 00350722



DIN No. : 03641879



M.No. FCS 4521



Note: 1. Corporate Information

National Film Development Corporation Limited (“the Company”) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956.The Company is engaged in production of various Indian language films, organizing film bazaar and international film festival in India as well as Abroad. The Company has its Head Office in Mumbai and Regional offices at New Delhi, Chennai and Kolkata.

The Company was set up with the objective to plan, promote and organize an integrated and efficient development of the film industry in accordance with the national economic policy and objectives laid down by the Central Government from time to time. Over the years, NFDC has funded/produced more than 300 films in eighteen Indian languages.

Note: 2. Significant Accounting Policies

A. Basis of Accounting and Use of Estimates.

i. Financial statements are prepared under the historical cost convention , on accrual basis of accounting in accordance with the accounting principles generally accepted in India and in compliance with the provisions of Companies Act 1956, and comply with the mandatory Accounting Standards specified in Companies (Accounting Standard) Rules 2006, prescribed by the Central Government.

ii. The preparation of financial statements, in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the Revenue and Expenditure of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

B. Recognition of Revenue and related expenses

B.1 Amortization of cost of: Films, prints, TV rights, own production of films, taken

over films and Corporation’s share in-

a) Indian co-production films b) Foreign Co-production films, is done by following, i.e.

B.1.1 Where the film is ready for release for exhibition on Commercial basis before the close of the financial year, the entire cost of production/acquisition of the films is

charged to Statement of Profit & Loss. Where the film is completed but not ready for release during the year the entire cost of production/acquisition is shown as inventory.

B.2 Cost of production of Indian Television serials/acquired programme and films purchased for TV rights are charged off in the financial year in which the first telecast of such films/serials take place or in the Financial Year, in which the rights expired, whichever is earlier.

B.3 Rights in films for distribution through Television acquired by the Company wherein no telecast is made are accounted as advance to the extent of the amounts paid thereof. No provision is made for the unpaid acquisition price thereof, since actual liability shall arise only in the event of telecast as per terms of the agreement.

B.4 Exploitation expenses in respect of co-production films Exploitation expenses in respect of co-production films

are carried forward in the Balance Sheet to be recouped against future revenues earned from the exploitation over the period of twelve months from the date of exploitation. The amount of exploitation expenses which are not recouped within the period of twelve months are charged to Statement of Profit and Loss.

B.5 Income from Non-Performing Loans

Interest on loans for Films and Purchase of Equipments/Constructions of Theatres is accrued and accounted in the income only to the extent equal to principal amount and no further credits are recognized thereafter unless the same is actually realized.

B.6 Revenue and Expense in respect of Media Campaigns released on behalf of various ministries / clients are recognized in the year in which the related advertisement or commercial spots are telecast / broadcast / appear before the public and in respect of which necessary intimation is received by the agency from the channel / theatre / website for successful telecast / broadcast. Campaigns commencing in a financial year and concluding in next financial year are recognized in the respective financial years on the basis of advertisement or commercial spots telecasted / broadcasted during that year.

B.7 Revenue and Expense in respect of Non-Feature Film undertaken during the year on behalf of various ministries / clients are not recognized until the goods have been formally accepted by the client or the client has done an act adopting the transaction.

Notes on Accounts


B.8 Film Production in various Indian languages

The funds received from the Govt. of India for Film Production in various Indian languages and the expenditure incurred up to 31.03.2014 out of the same is shown on net basis under other long term liabilities on the liabilities side. The actual expenditure incurred on the film production in various Indian languages which are incomplete at the year end and to the extent certified by Chartered Accountants is shown as Inventory. The amount received and the expenditure incurred on production of respective films is shown as Income and Expenditure respectively when the Film is ready for release. The Company accounts for its income by way of Commission at 10% of the Cost of Production of such films when the film is ready for release.

B.9 Income from Service projects is recognized on Accrual basis.

C. Fixed Assets & Depreciation

C.1 Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation and impairment losses. Cost of acquisition or construction is inclusive of freight, duties, taxes, incidental expenses relating to acquisition, cost of installation/erection, attributable interest and financial cost till such time assets are ready for its intended use.

C.2 Depreciation on assets has been provided on the “Written Down Value” basis at the rates prescribed by Schedule XIV of the Companies Act, 1956 unless otherwise stated below.

C.3 Leasehold land is amortized over the period of lease.

C.4 Depreciation in respect of video cassettes recording equipment / telecine equipment, subtitling unit, 16 MM infrastructure and Laser sub-titling, video studio has been provided @ 10% on Straight line method.

C.5 Depreciation on the Avid Airplay and Special Effects Studio has been provided @ 25% on Straight Line Method considering the life span of the equipments.

C.6 In case of Straight Line Method Depreciation is charged upto 95% of capitalized value.

C.7 Depreciation has been provided on pro-rata basis from the date of addition/upto the date of sale as the case may be.

C.8 Individual Assets purchased during the year costing upto Rs.5000/- are depreciated fully in the year of purchase.

C.9 Assets purchased for film production and other special project including festivals and markets is to depreciate @ 100%. In case of assets depreciated @ 100% a residual cost of Rs. 1/- is to maintain for physical counting purposes.

C.10 Completed films for which rights have not been sold out are valued at nominal value of Rs. 1/- each.

D. Impairment of Assets

In accordance with Accounting Standard 28 (AS 28) on “ Impairment of Assets, where there is an indication of impairment of the Company’s assets, the carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any impairment based on internal/external factors. An impairment loss, if any, is recognized in the Statement of Profit & Loss, wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of the assets is estimated at the higher of its net selling price and its value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

E. Foreign Currency Transactions

Transactions in foreign exchange are accounted for at the date of transaction. Foreign currency monetary items of assets & liabilities are reported using exchange rates prevailing at the close of the year and exchange difference arising there from is charged/credited to the Statement of Profit & Loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

F. Inventories

F.1 Inventories include Unamortized cost of –

a) exploitations rights in imported films, b) Company’s share in foreign co-production films; films

under production; Completed films; Stock of blank video cassettes, DVD’s and Gold.


F.2 Inventory of video-cassettes and DVD’s have been valued at lower of cost and net realizable value, cost is determined as per FIFO method.

F.3 Gold is valued at historical cost.

G. Taxation

Provision for current tax is made after taking into consideration benefit admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting “timing differences” between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

H. Earning Per Share

Earning Per equity share (Basic / Diluted) is calculated by dividing the Net Profit or (Loss) for the year attributable to Equity Shareholders (after deducting attributable taxes) by the weighted average number of Equity Shares outstanding during the year.

I. Employee Benefits

(i) Defined Contribution Plan

The Company’s Employee’s Provident Fund administered through Government Provident Fund and Labour Welfare Fund are considered as Defined Contribution Plans. The Company’s contributions paid / payable towards these defined contributions plan are recognized as expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The interest rate payable by the said funds to the beneficiaries

every year is being notified by the Government. The Company has no obligation to make good the shortfall, if any between the return from the investment and the interest rate.

(ii) Defined Benefit Plan

Company’s liabilities towards gratuity, long term compensated absences are considered as Defined Benefit Plans. The present value of the obligations under such Defined Benefit Plans are determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gains and losses are recognized immediately in the statement of profit and loss. The obligation is measured at the present value of estimated future cash flows using a discount rate that is determined by reference to market yields at the balance sheet date on Government securities.

J. Leases

Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

K. Provisions and Contingencies

Provisions are liabilities that can be measured only by using substantial degree of estimation. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. Contingent liability is disclosed in case of possible obligation where the probability of outflow of resources is not certain or where reliable estimate of the amount of obligation cannot be made.


ParticularsAs at 31 March 2014 As at 31 March 2013

Number Amount Number Amount

Authorised

Equity Shares of 100/- each 45,40,000 45,40,00,000 45,40,000 45,40,00,000

Issued

Equity Shares of 100/- each 45,39,985 45,39,98,500 45,39,985 45,39,98,500

Subscribed & Paid up

Equity Shares of 100 each fully paid 45,39,985 45,39,98,500 45,39,985 45,39,98,500

Total 45,39,985 45,39,98,500 45,39,985 45,39,98,500

Note: 3 Share Capital

ParticularsEquity Shares as on 31.03.2014 Equity Shares as on 31.03.2013

Number Amount Number Amount

Shares outstanding at the beginning of the year 45,39,985 45,39,98,500 45,39,985 45,39,98,500

Allotment during the year – – – –

Shares outstanding at the end of the year 45,39,985 45,39,98,500 45,39,985 45,39,98,500

(Amount in `)

(Amount in `)

Details of Shareholders holdng more than 5% of shareholding

Name of Shareholder As at 31 March 2014 As at 31 March 2013

No. of Shares held % of Holding No. of Shares held % of Holding

President of India through Secretary Minstry of I&B, New Delhi

4539983 99.999956% 4539983 99.999956%

Of the above 28,40,000 Shares are alloted in conversion of Government Loan and interest accured theron into Share Capital.Terms / Rights attached to Equity SharesThe Company has only one class of equity shares having par value of Rs. 100/- per share. The Company declare and pays dividend in Indian Rupees .

Note: 4 Reserves and Surplus

Particulars As at 31 March 2014 As at 31 March 2013

a. Capital Reserves 21,875 21,875

b. Other Reserves

Special Reserve (Exports) 2,10,861 2,10,861

c. Surplus

Balance as per last financial statement (22,64,49,099) (28,99,12,675)

(+) Net Profit/(Net Loss) for the current year (3,20,64,423) 6,34,63,576

Closing Balance (25,85,13,522) (22,64,49,099)

Total (25,82,80,786) (22,62,16,363)

(Amount in `)


Note: 7 Other Long Term Liabilities

ParticularsAs at 31 March

2014As at 31 March

2013

A. Advance received from Ministry of Information and Broadcasting

Received in Earlier Year 49,60,00,000 36,00,00,000

Received in Current Year – 13,60,00,000

49,60,00,000 49,60,00,000

B. Add : Funds from Sale/Revenue Generation Ploughback

In Earlier Year 3,28,96,049 1,09,64,000

In Current Year 64,27,325 2,19,32,049

3,93,23,374 3,28,96,049

Total Fund available for Film Production (A) 53,53,23,374 52,88,96,049

Less : Expensed During Current Year 12,85,48,190 11,34,53,966

: Expensed in Earlier Year 26,15,38,899 14,80,84,933

: Inventory of Regional Film 5,22,25,117 9,61,40,244

Total Fund Expensed for Film Production (B) 44,23,12,206 35,76,79,143

As allocated for various films Balance ( A-B) 9,30,11,168 17,12,16,906

Deposits Received 4,09,267 4,22,367

Total 9,34,20,435 17,16,39,273

(Amount in `)

ParticularsNon-Current Current

As at 31 March 2014

As at 31 March 2013

As at 31 March 2014

As at 31 March 2013

Secured

Term Loan from Bank 90,78,689 – 16,70,377 –

Less : Amount disclosed under other current – – 16,70,377 –

Liabilities (Note No.9)

Total 90,78,689 – – –

Note: 5 Long Term Borrowings

a) Term loan was sanctioned from bank of Rs. 2,62,50,0000/- for construction of theater out of which Rs. 1,07,49,066/- was utilised during the year and carries interest @ 15.25% p.a. The said term loan is repayable 78 equal instalment of Rs. 336538/- plus interest starting from April 2014.

Note: 6 Trade Payables


As at 31 March 2014 As at 31 March 2013 As at 31 March 2014 As at 31 March 2013

Trade Payable 6,74,99,495 3,75,26,503 13,95,78,700 1,21,36,65,024

Total 6,74,99,495 3,75,26,503 13,95,78,700 1,21,36,65,024

(Amount in `)

(Amount in `)


Note: 8 Long Term Provisions


Provision for Employee Benefits

Gratuity 3,23,24,546 2,58,20,000

Leave Encashment 2,51,54,277 2,47,82,750

Total 5,74,78,823 5,06,02,750

Note: 9 Other Current Liabilities


Current maturities of Long Term Borrowing 16,70,377 –

Interest accured but not due on Borrowing 1,08,387 –

Advance from Customers 23,23,59,877 46,43,40,084

Advance for Production 69,55,74,548 34,22,06,109

Others Advances 4,69,48,577 5,11,83,876

Deposit received for rented Premises 55,46,400 53,24,400

Statutory Dues 62,94,088 12,02,62,603

Other Liabilities 4,59,27,239 3,68,81,779

Total 1,03,44,29,493 1,02,01,98,851

Note: 10 Short Term Provisions


(a) Provision for Employee Benefits

Gratuity 34,59,937 20,95,199

Leave Encashment 36,80,125 31,10,047

(b) Provision for Taxation

For Income Tax 1,59,00,000 1,59,00,000

Total 2,30,40,062 2,11,05,246

(Amount in `)

(Amount in `)

(Amount in `)


Not

e N

o. 1

1 : F

ixed

Ass

ets

and

Dep

reci

atio

n

Sr.

No.

Pa

rtic

ular

s

Gro

ss B

lock

[At C

ost]

Dep

reci

atio

n N

et B

lock

AS

AT

01.0

4.20

13

AD

DIT

ION

D

EDU

CTI

ON

A

S A

T 31

.03.

2014

U

PTO

01

.04.

2013

D

EDU

CTI

ON

F

OR

TH

E YE

AR

T

OTA

L U

PTO

31

.03.

2014

A

S A

T 31

.03.

2014

A

S A

T 31

.03.

2013

A Ta

ngib

le A

sset

1 Le

aseh

old

Land

1,

38,0

00–

–1,

38,0

0045

,026

–1,

453

46,4

7991

,521

92,9

74

2 Bu

ildin

g - 1

6 M

m

5,72

,487

––

5,72

,487

5,72

,486

––

5,72

,486

11

3 Bu

ildin

g - S

ub-T

itlin

g 5,

66,2

86–

–5,

66,2

864,

38,0

46–

6,41

24,

44,4

581,

21,8

281,

28,2

41

4 O

ffice

Pre

mis

es

94,8

0,43

5–

–94

,80,

435

57,6

3,87

3–

1,85

,828

59,4

9,70

135

,30,

734

37,1

6,56

2

5 O

wne

rshi

p Fl

ats

4,08

,885

––

4,08

,885

3,18

,510

–4,

519

3,23

,028

85,8

5790

,375

6 VC

R E

quip

men

ts

11,7

6,37

7–

–11

,76,

377

8,66

,390

–68

,538

9,34

,928

2,41

,449

3,09

,987

7 16

MM

Infra

61

,578

––

61,5

7856

,028

–70

356

,731

4,84

75,

550

8 Vi

deo

Stud

io

3,66

,60,

924

3,92

,374

–3,

70,5

3,29

83,

07,7

6,44

5–

5,56

,315

3,13

,32,

760

57,2

0,53

758

,84,

479

9 C

inem

a Eq

uipm

ents

(Exh

ib)

68,8

9,40

43,

65,6

25–

72,5

5,02

929

,92,

544

–7,

93,5

9637

,86,

140

34,6

8,88

938

,96,

860

10

Cin

ema

Equi

pmen

ts (D

ist)

65,9

53–

–65

,953

65,8

41–

2265

,863

9011

2

11

Offi

ce E

quip

men

ts

1,37

,56,

465

2,68

,952

54,7

501,

39,7

0,66

747

,74,

986

12,4

3612

,71,

210

60,3

3,75

979

,36,

908

89,8

1,47

9

12

Com

pute

rs

1,14

,43,

678

9,59

,114

77,1

301,

23,2

5,66

279

,65,

860

52,0

0215

,07,

229

94,2

1,08

729

,04,

575

34,7

7,81

8

13

Furn

iture

& F

ixtu

re

2,95

,07,

074

2,62

,473

–2,

97,6

9,54

795

,11,

898

–36

,64,

264

1,31

,76,

162

1,65

,93,

385

1,99

,95,

176

14

Vehi

cles

24

,80,

215

––

24,8

0,21

512

,75,

348

–3,

11,9

4015

,87,

288

8,92

,927

12,0

4,86

7

15

Lase

r Stu

dio

4,13

,33,

597

––

4,13

,33,

597

3,98

,99,

398

–72

,083

3,99

,71,

481

13,6

2,11

614

,34,

199

16

Elec

trica

l Fitt

ings

4,

11,8

45–

–4,

11,8

4598

,990

–43

,518

1,42

,508

2,69

,337

3,12

,855

17

Tem

pror

y St

ruct

ure

97,2

03–

–97

,203

97,2

03–

–97

,203

––

18

Soun

d St

udio

–

8,00

0–

8,00

0–

–57

157

17,

429

–

Tota

l 15

,50,

50,4

0722

,56,

538

1,31

,880

15,7

1,75

,064

10,5

5,18

,872

64,4

3884

,88,

201

11,3

9,42

,635

4,32

,32,

429

4,95

,31,

534

B In

tang

ible

Ass

et

–26

5–

265

––

––

265

260

C

Cap

ital W

IP

57,5

341,

57,6

2,44

1–

1,58

,19,

975

––

––

1,58

,19,

975

57,5

34

Tota

l15

,51,

07,9

411,

80,1

9,24

41,

31,8

8017

,29,

95,3

0410

,55,

18,8

7264

,438

84,8

8,20

111

,39,

42,6

355,

90,5

2,66

94,

95,8

9,32

8

Prev

ious

Yea

r 20

,55,

05,3

0769

,15,

408

5,73

,12,

773

15,5

1,07

,941

14,7

3,00

,646

5,25

,52,

615

1,07

,70,

842

10,5

5,18

,872

4,95

,89,

069

5,82

,04,

660

Not

esTh

e pe

riod

of L

ease

hold

Bui

ldin

g 16

MM

has

exp

ired

and

the

Cor

pora

tion

cont

inue

to u

se th

e sa

me

. The

refo

re th

is a

sset

s is

sho

wn

at R

e.1

in th

e N

et B

lock

(Am

ount

in `

)


Note: 14 Inventories


Finished Goods

Stock of Blank Video Cassettes 1,06,238 1,06,238

Stock of DVD 6,60,295 4,51,853

Gold 1,938 1,938

Total 7,68,472 5,60,030

(Amount in `)

Note: 12 Long Term Loans and Advances


1) Loans and advances to Staff

Unsecured, Considered Good, 2,95,671 2,95,671 7,66,030 7,66,030

2) Loans for Production of Films

Doubtful 1,44,02,720 1,44,02,720

Less : Provision for doubtful loans 1,44,02,720 – 1,44,02,720 –

3) Loans for Construction of Theatres

Doubtful 2,98,703 2,98,703

Less : Provision for doubtful loans 2,98,703 – 2,98,703 –

4) Deposits

Unsecured, Considered Good 92,23,148 93,89,838

Considered Doubtful 31,230 31,230

Less : Provision for Doubtful Deposits 31,230 92,23,148 31,230 93,89,838

Total 95,18,819 1,01,55,868

(Amount in `)

Note: 13 Trade Receivables


As at 31 March 2014

As at 31 March 2013

As at 31 March 2014

As at 31 March 2013

Unsecured

a) Trade Receivables outstanding more than six months

Considered Good 13,46,06,952 6,44,38,563 1,78,14,343 2,21,56,615

Considered Doubtful 20,35,20,983 20,54,28,425 – –

33,81,27,935 26,98,66,988 1,78,14,343 2,21,56,615

Less: Provision for Doubtful Debts 20,35,20,983 20,54,28,425 – –

13,46,06,952 6,44,38,563 1,78,14,343 2,21,56,615

b) Others

Considered Good – – 10,23,36,776 51,97,22,189

Total 13,46,06,952 6,44,38,563 12,01,51,119 54,18,78,804

(Amount in `)

As the due date of collection has not been defined hence bill date is considered as due date.


Note: 15 Cash and Bank Balances


As at 31 March 2014

As at 31 March 2013

As at 31 March 2014

As at 31 March 2013

1. Cash and Cash Equivalent

a) Balances with Banks

In Current Account – – 8,98,32,422 29,98,58,491

Fixed Deposits with maturity of – – 70,28,42,089 79,85,59,688

less than 3 months

b) Cash on Hand – – 85,877 1,08,579

Sub Total – – 79,27,60,388 1,09,85,26,758

2. Other Bank Balance

a) Balances with Banks

Fixed Deposits with

maturity for more than 3 – – 18,67,69,040 36,37,76,616

months but less than 12 months

b) Fixed Deposits with

maturity for more than 12 months – 15,95,21,784 – –

c) Fixed deposits with banks as security

against borrowings – – 7,90,573 7,29,673

Sub Total – 15,95,21,784 18,75,59,613 36,45,06,289

Total – 15,95,21,784 98,03,20,001 1,46,30,33,047

(Amount in `)

Note: 16 Short Term Loans and Advances


1) Loans and advances to Staff

Unsecured, Considered Good 5,49,592 5,49,592 2,22,159 2,22,159

2) Advances recoverable in cash or kind for value to be received

Unsecured, Considered Good 3,33,88,044 3,99,53,545

Considered Doubtful 12,18,000 12,18,000

Less: Provision for Doubtful Loans 12,18,000 3,33,88,044 12,18,000 3,99,53,545

Service Tax Receivable 16,77,82,013 28,75,67,533

VAT Receivable 22,66,760 47,78,913

Advance Payment of Tax 9,01,43,959 26,01,92,732 9,83,26,422 39,06,72,868

3) Advances for Own Production of Films

Unsecured, Considered Good 1,01,932 1,01,932 1,01,932 1,01,932

Total 29,42,32,300 43,09,50,504

(Amount in `)


Note: 17 Other Current Assets


Interest Accured on Fixed Deposit 2,15,93,077 2,23,91,855

Total 2,15,93,077 2,23,91,855

(Amount in `)

Note: 18 Revenue From Operation


Feature Film Production 12,82,43,518 11,34,53,967

Non Feature Film Production 27,56,38,310 31,17,61,863

Media Campaign 64,10,55,920 1,74,42,46,809

Distribution of Films

Overseas 1,66,31,153 87,96,882

Domestic 3,33,67,332 4,99,98,485 4,84,97,139 5,72,94,021

Service Projects

Sub-titling 11,99,969 87,62,382

Hiring of Equipments 31,948 11,96,123

Workshop / Market / Film Bazaar 4,14,31,097 14,08,46,627

Training / Workshop 75,23,913 19,39,568

Service Project Income 1,38,25,678 –

Preview Theatre 71,87,150 69,90,455

Total 1,16,61,35,987 2,38,64,91,814

(Amount in `)

Note: 19 Other Income


Rent from Office Premises 1,08,64,876 1,06,29,604

Interest on Staff Advance 9,228 18,211

Interest on Tax Refund 46,57,729 50,86,471

Interest on Bank Fixed Deposit 8,50,54,469 10,40,17,252

Interest on Savings Bank 3,32,739 4,97,924

Other Income 3,61,926 4,29,177

Prior Period Items 3,21,526 17,73,907

Profit on Sale of Assets 3,285 –

Profit on Foreign Exchange Fluctuations 14,43,148 4,06,873

Credit Balances Written Back 1,46,157 30,08,955

Total 10,31,95,084 12,58,68,375

(Amount in `)


Note: 20 Operating Expenditure


Feature Film Production 11,72,28,764 10,57,27,698

Non Feature Film Production 22,84,27,296 26,45,69,361

Media Campaign 64,01,95,187 1,72,76,62,397

Distribution of Films

Overseas 1,24,86,805 53,58,674

Domestic 4,00,52,066 5,25,38,870 2,86,26,612 3,39,85,286

Service Projects

Sub-titling 1,69,897 26,78,904

Hiring of Equipments 3,100 3,72,382

Workshop/Market/Film Bazaar 7,80,97,214 12,91,00,562

Training / Workshop 29,14,908 –

Training & Development 43,87,285 –

Service Project Expenses 60,61,602 –

Preview Theatre 14,12,642 15,32,443

Total 1,13,14,36,764 2,26,56,29,033

(Amount in `)

Note: 21 (Increase) / Decrease In Inventories

Particulars Year 2013-14 Year 2012-13 (Increase) /

Decrease Year 2013-14

(Increase) / Decrease Year

2012-13

Stock of DVD 6,60,295 4,51,853 (2,08,442) (4,51,853)

Stock of Blank Video Cassettes 1,06,238 1,06,238 – 61,529

Total 7,66,534 5,58,091 (2,08,442) (3,90,324)

(Amount in `)

Note: 22 Employee Benefit Expenses


Salaries, Wages and Bonus 7,44,48,813 7,34,48,688

Contributions to Provident Fund 51,35,129 46,31,682

Contributions to Other Fund 54,400 52,902

Leave Encashment 42,58,075 94,18,621

Gratuity 80,10,539 70,27,888

Staff Welfare Expenses 7,26,598 11,03,698

Total 9,26,33,554 9,56,83,480

(Amount in `)


Note: 23 Other Expenses

Particulars Year 2013–14 Year 2012–13 Year 2013–14 Year 2012–13

Advertisement and Publicity 34,423 3,21,000

Auditors Remuneration 4,50,000 4,50,000

Bank Charges 1,18,690 87,789

Bad Debts Written Off 36,31,413 88,70,052

Less : Provision for Doubtful Debts Utilised 27,12,506 58,02,210 9,18,906 30,67,842

Corporate Entertainment 5,95,878 12,34,506

Director's Travelling Expenses 22,24,223 28,77,621

Electricity Charges 32,57,647 26,34,476

Filing Fees 10,500 –

Insurance 2,87,819 4,58,184

Legal Expenses 27,44,979 13,97,543

Loss on Sale of Assets – 24,20,912

Office General Expenses 33,20,869 25,01,729

Postage,Telgrams, Telex and Telephone Expenses 26,98,683 27,93,200

Printing & Stationery 15,04,794 13,52,530

Professional Charges 82,21,778 78,43,356

Provision for Doubtful Debts/Loan/Advance 8,05,064 18,44,910

Rates & Taxes 52,68,698 27,45,574

Rent Paid 1,06,27,516 98,28,081

Repairs & Maintenance 40,26,249 32,03,153

Security Srevices Charges 15,00,646 11,10,604

Servce Tax Paid 9,009 12,43,677

Travelling and Local Conveyance Expenses 66,39,418 67,51,166

Value Added Tax Written Off 17,67,348 –

CST/VAT Paid 85,698 15,427

Total 5,71,18,834 5,61,83,279

Payments to the Auditor Year 2013-14 Year 2012-13

for Audit Fees 3,50,000 3,50,000

for Tax Audit Fees 1,00,000 1,00,000

Total 4,50,000 4,50,000

(Amount in `)

(Amount in `)


Sr. No. Particulars Year 2013-14 Year 2012-13

1. Bank Guarantees 4,95,000 4,95,000

2. Legal cases against the Company. 6,36,96,811 5,98,77,811

3.Claim against Company for increase in rental for the premises not acknowledge as debts pending in Civil Court.

10,38,080 10,38,080

4.Balance salary payable to Senior General Manager, suspended earlier on the charges of mis-representation of facts and impounding of documents.

8,46,016 8,46,016

5.Income Tax demand for the assessment year 2006-07 as per Order u/s 154 of the Income Tax Act 1961

99,54,320 –

6.Income Tax demand for the assessment year 2011-12 as per Order u/s 156 of the Income Tax Act 1961

19,30,850 –

Total: 7,79,61,077 6,22,56,907

Note: 26. Contingent Liabilities not provided for (Amount in `)

Note: 27

The balances in Sundry Debtors, Loans and Advances, Deposits and Current Liabilities including outstanding balances since last few years are subject to confirmation and consequential adjustment, if any on reconciliation. The financial impact, if any, is unascertainable.

Note: 28.1 Provision for Bad and Doubtful Debts

During the year provision for bad and doubtful debts of Rs. 8,05,064/- (Previous year Rs. 18,44,910/-) has been made towards Sundry Debtors and Loans and Advances. Provision of Rs. 27,12,506/- (Previous year Rs. 58,02,210/-) towards bad and doubtful debts has been utilized for the bad debts during the year.

Note: 28.2 Service Tax Written off

Service Tax balances of earlier years has been written off to the extent of Rs 1,10,68,433/- to match with the closing balances as per the service tax return. This activity has been carried out for reconciliation of old balances appearing in books of account.

Note: 28.3 Creditors Written Back

The management of the Company has decided to write off creditors in cases were there is no likelihood of liability arising. Accordingly during the year creditors amounting to Rs. 1,46,157/- (Previous year Rs. 30,08,955/-) have been written back.

Note: 24 Finance Cost


Interest Expense 8,58,150 13,77,558

Total 8,58,150 13,77,558

Note: 25 Exceptional Items


Service Tax Written Off 1,10,68,433 –

Total 1,10,68,433 –

(Amount in `)

(Amount in `)


(Amount in `)

Note: 29 Employee Benefits

Valued as per Actuarial valuation using Projected Unit Credit Method

(i) Expense recognized in the Statement of Profit & Loss Account

DescriptionGratuity (Funded)

Gratuity (Funded)

Gratuity (Funded)

Leave Encashment (Unfunded)



March 31, 2014 March 31, 2013 March 31, 2012 March 31, 2014 March 31, 2013 March 31, 2012

Current Service Cost 13,06,430 9,49,173 8,40,575 8,35,326 5,48,332 23,87,042

Interest Cost 24,30,901 18,52,691 14,53,007 22,31,424 16,34,074 14,27,709

Expected Return on Plan Assets

(2,14,983) (1,99,741) (97,707) – – –

Net Actuarial (Gains) / Losses

44,88,191 44,25,765 27,02,464 11,91,324 14,58,932 (4,46,228)

Past Service Cost – – – – 57,77,283 –

Difference in Opening – – (9,31,579) – – –

Total 80,10,539 70,27,888 39,66,742 42,58,074 94,18,621 33,68,523*

(ii) Net Assets / (Liability) recognized in the Balance Sheet


Gratuity (Funded)

Gratuity (Funded)





Present Value of Defined Obligation

3,68,93,004 3,03,86,263 2,31,58,634 2,88,34,402 2,78,92,797 1,92,24,405

Fair Value of Plan Assets

11,08,521 24,71,064 13,56,296 – – –

Funded Status [Surplus /(Deficit)]

– – – – – –

Net Asset / (Liability) (3,57,84,483) (2,79,15,199) (2,18,02,338) (2,88,34,402) (2,78,92,797) (1,92,24,405)

(Amount in `)


(iv) Change in Assets during the year


Gratuity (Funded)

Gratuity (Funded)





Fair Value of Plan Assets at thebeginning of the Year

24,71,064 13,56,296 3,49,611 – – –

Expected Return on Plan Assets

2,14,983 1,99,741 97,707 – – –

Contribution by Employer

1,41,255 9,15,027 9,08,978 – – –

Actual Benefits Paid (16,91,558) – – – – –

Actuarial Gains/(Losses) on Plan Assets

(27,223) – – – – –

Fair Value of Plan Assets at the year end

11,08,521 24,71,064 13,56,296 – – –

(Amount in `)

(iii) Change in Obligation during the year


Gratuity (Funded)

Gratuity (Funded)





Present Value of the Defined Benefit Obligation at the beginning of the Year

3,03,86,263 2,31,58,634 1,81,62,588 2,78,92,797 1,92,24,405 1,65,70,488

Past Service Cost – – – – 57,77,283 –

Current Service Cost 13,06,430 9,49,173 8,40,575 8,35,326 5,48,332 23,87,042

Interest Cost 24,30,901 18,52,691 14,53,007 22,31,424 16,34,074 14,27,709

Actuarial (Gains) / Losses

44,60,968 44,25,765 27,02,464 11,91,324 14,58,932 (4,46,228)

Benefit Payments (16,91,558) – – (33,16,469) (7,50,229) (7,14,605)

Present Value of the Defined Benefit obligation at the end of the year

3,68,93,004 3,03,86,263 2,31,58,634 2,88,34,402 2,78,92,797 1,92,24,405

(Amount in `)


(v) Actuarial Assumptions


Gratuity (Funded)

Gratuity (Funded)





Discount Rate 9.03% 8.00% 8.00% 9.03% 8.50% 8.50%

Rate of Return on Plan Assets

8.70% 9.00% 5.00% – – –

Salary Escalation Rate

7.00% 5.00% 5.00% 7.00% 7.00% 7.00%

Financial Year 2010-11 actuarial data is not available . *Including Leave Benefit availed during the year which is accounted in Salary paid during the year.

a) The estimates of future salary increases considered in actuarial valuation takes into account the inflation rate on Long term basis. b) The employees of the company retire at the age of 60 years as per the policy of the Company.

Note: 30

Ministry of Information and Broadcasting entrusted NFDC to execute its scheme of “Production of films in various Indian languages” under its planned scheme of main secretariat. Under the scheme an amount of Rs. 49.60 Crore was received upto 31st March 2013. Revenue generated an amount of Rs. 64,27,325/- during the year (Previous Year Rs. 219,32,049/-) is ploughed back by Company in the sustaining scheme.

The Company, out of above funds received, commissioned 29 films in various Indian languages. Out of 29 films, 5 films were completed during the year. The Company has expensed out of Rs.11,65,85,015/- during the year (Previous year Rs. 10,31,39,969/-) from the amount received on the basis of CA certificate and actual amount incurred by the Company. An amount of Rs.12,82,43,518/- (Previous year Rs.11,34,53,967/-) is recognized as revenue in Statement of Profit & Loss Account.

The expenditure incurred on films which are in progress, to the extent certified by CA amounting to Rs.5,22,25,117/- (Previous year Rs.9,61,40,244/-) is shown as an Inventory. The amount of fund received under the plan scheme and the balance amount of Rs. 9,30,11,168/- (Previous year Rs.17,12,16,906/-) is shown as Other long term liabilities.

Note: 31

The Board of Directors in their meeting held on 15th September 2009, considered the letter No.202/21/2009–F(PSU) dated 06/08/09 received from the Ministry of Information & Broadcasting and was of the view that NFDC should be given a Producer Fee of 10% of the total cost of production of a film and 15% Commission on all sales effected by it in accordance with industry norms. Accordingly the Company has accounted for Rs. 1,16,58,502/- (Previous year Rs.1,03,13,997/-) as Producer Fees in the

current year in respect of six film completed during the year and Rs.11,34,234/- (Previous year Rs.38,70,362/-) as commission on sale of films which is included in Distribution of films.

Note: 32

Revenue recognition for Media Releases, Revenue and Expense of respective Media Campaign undertaken during the year is accounted for after due verification /certification by a Chartered Accountant of the actual value of telecast /broadcast/appearance of the advertisement out of the Release amounts approved by the client / ministry. Revenue and Expenses in respect of media campaigns for which verification/certification of the actual value of successful telecast /broadcast/appearance of advertisement is in process, are accounted for on the basis of Release amounts of the respective campaign, after taking effect of estimated shortfall of 15% in telecast / broadcast /appearance of advertisements.

Note: 33

In the opinion of the Board, the current assets, loans and advances have been stated at amounts that would be realized in the ordinary course of business. The provision of depreciation and for all known liabilities is adequate and not in excess of amounts considered reasonably necessary.

Note: 34

The Company has not received any intimation from Suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid or payable as required under the said Act have not been given. Sundry creditors at the year end are subject to confirmation from the respective parties. The Company has provided for all known liabilities as on the Balance Sheet Date.


Note: 35

The Company participated in various film festivals in India and Abroad on behalf of the Ministry of Information & Broadcasting and the Ministry of Tourism. Rs.2,71,00,000/- (Previous year Rs.5,76,11,472/-) was sanctioned by the Ministry of Information & Broadcasting and Rs. NIL/- (Previous year Rs. 4,67,28,609/-) by the Ministry of Tourism. The Company has spent an amount of Rs.2,86,80,938/- (Previous Year Rs.11,87,80,956/-) on the various items of expenditure as per Chartered Accountants Certificate.

Note: 36

During the year, the company started a Training and Development division called framework of professional development for Indian filmmakers already established in the work-field or developing their careers following films and /or media studies. The company organized 12 such workshops and trained 67 professionals. An amount of Rs 43,87,285/- spent on this activity (Previous Year - Nil).

Note: 37

Deposits of Rs.30,00,000/- (Previous Year 30,00,000/-) placed with three parties in 1991 are secured against mortgage of immovable properties. The parties have not refunded the deposits

and securities are also not liquidated. The Company has initiated arbitration proceedings against the parties for recovery of the deposits. Awards have been issued in favour of the Company against two parties for recovery of the deposit amounting to Rs.18,00,000/- (Previous Year 18,00,000/-) for the balance amount of Rs.12,00,000/- (Previous Year Rs.12,00,000/-) the arbitration proceedings are still continuing. No provision has been made for the same in the books of accounts.

Note: 38

In case of Film ‘Gandhi’ the accounting of profits and distribution fee has been done on accrual basis except that these are accounted on calendar year basis instead of financial year basis. The fees and distribution fees are accounted based on statement of accounts received from the agents appointed under the agreement which are prepared on calendar year basis. The Company has ensured that the fees receivable are considered for the entire year on calendar year basis instead of financial year basis.

Note: 39

The recoverability of TV marketing debtors against which the Company has filed cases in the court of law is not certain. The impact of the outcome arising out of the legal cases on the financial statement is not ascertainable

In the absence of virtual certainty supported by convincing evidence that future taxable profit will be available to get setoff of carried forward business loss, deferred tax assets on carried forward business loss has not been recognized

ParticularsAs at March 31, 2014 As at March 31, 2013

Rs. Rs.

Deferred tax Assets arising on account of timing difference due to :

Depreciation 3,158,129 3,203,475

Provision for Employee Benefits 20,965,598 18,106,904

Provision for Doubtful debts / loans 70,812,392 71,431,262

Brought forward Losses 37,635,604 37,635,604

Net deferred tax assets 132,571,723 130,377,245

Note: 40 Deferred Tax Assets (Net) (Amount in `)


Note: 43 Particulars of Directors Remuneration

Particulars 2013-2014 2012-2013

Managing Director – Remuneration 18,59,487/- 16,51,017/-

– Contribution to EPF 1,63,308/- 2,64,231/-

Director (Finance) – Remuneration 16,87,290/- 15,27,780/-

– Contribution to EPF 1,49,891/- 1,30,740/-

(Amount in `)

Note: 41 Related Party DisclosuresReporting Enterprise: National Film Development Corporation Ltd.

Key Management Personnel: a. Ms. Nina Lath Gupta (Managing Director)b. Mr. Sahab Narain (Director Finance)

Transactions with the Related Parties as required by AS -18 is given below:Key Management Personnel

Name of the Director Designation Nature of TransactionAmount (Rs.)

2013-2014Amount (Rs.)

2012-2013

Nina Lath Gupta Managing Director Remuneration 20,22,795/- 19,15,248/-

Sahab Narain Director (Finance) Remuneration 18,37,181/- 16,58,520/-

(Amount in `)

Note: 42 Earnings per Share

Particulars 2013-2014 2012-2013

Net Profit / (Loss) attributable to Equity Shareholders (3,20,64,423) 6,34,63,576

Weighted Average No. of Equity Shares for Basic (EPS) 45,39,985 45,39,985

Weighted Average No. of Equity Shares for Diluted (EPS) 45,39,985 45,39,985

Nominal Value of Share 100.00 100.00

Equity Per Share – Basic (7.06) 13.98

Earnings Per Share – Diluted (7.06) 13.98

(Amount in `)


Part

icul

ars

2013

-14

2012

-13

Film

Prod

uctio

nFi

lmD

istr

ibut

ion

Serv

ice

Proj

ect

Med

iaC

ampa

ign

Oth

erTo

tal

Film

Prod

uctio

nFi

lmD

istr

ibut

ion

Serv

ice

Proj

ect

Med

iaC

ampa

ign

Oth

erTo

tal

Segm

ent R

even

ue

Exte

rnal

Sal

es40

,38,

81,8

285,

02,0

6,92

67,

11,9

9,75

564

,10,

55,9

2010

,31,

95,0

841,

26,9

5,39

,513

42,3

1,15

,448

5,76

,91,

387

15,9

9,32

,840

1,74

,81,

15,4

7412

,82,

92,6

642,

51,7

1,47

,813

Inte

r seg

men

t Sal

es–

––

––

––

––

––

–

Tota

l Rev

enue

40,3

8,81

,828

5,02

,06,

926

7,11

,99,

755

64,1

0,55

,920

10,3

1,95

,084

1,26

,95,

39,5

1342

,31,

15,4

485,

76,9

1,38

715

,99,

32,8

401,

74,8

1,15

,474

12,8

2,92

,664

2,51

,71,

47,8

13

Segm

ent E

xpen

ses

34,5

6,56

,060

5,25

,38,

870

9,30

,46,

647

64,0

1,95

,187

–1,

13,1

4,36

,764

37,0

6,78

,032

3,39

,81,

882

13,3

7,40

,251

1,72

,64,

19,4

66–

2,26

,48,

19,6

30

Ope

ratio

n Pr

ofit/

(Los

s)5,

82,2

5,76

8(2

3,31

,944

)(2

,18,

46,8

92)

8,60

,733

10,3

1,95

,084

13,8

1,02

,749

5,24

,37,

417

2,37

,09,

505

2,61

,92,

589

2,16

,96,

008

12,8

2,92

,664

25,2

3,28

,183

Inte

rest

Exp

ense

s–

––

–8,

58,1

508,

58,1

50–

––

–7,

12,9

347,

12,9

34

Dep

reci

atio

n7,

249

––

–84

,80,

952

84,8

8,20

125

,93,

548

––

–1,

07,6

5,02

31,

33,5

8,57

1

Una

lloca

ted

Expe

nses

––

––

14,9

7,52

,388

14,9

7,52

,388

––

––

15,9

4,98

,767

15,9

4,98

,767

Inco

me

Taxe

s–

––

––

––

––

–1,

59,0

0,00

01,

59,0

0,00

0

Prof

it/(L

oss)

from

or

dina

ry a

ctiv

ities

5,82

,18,

519

(23,

31,9

44)

(2,1

8,46

,892

)8,

60,7

33(5

,58,

96,4

06)

(2,0

9,95

,990

)4,

98,4

3,86

92,

37,0

9,50

52,

61,9

2,58

92,

16,9

6,00

8(5

,85,

84,0

60)

6,28

,57,

911

Exce

ptio

nal I

tem

––

––

1,10

,68,

433

1,10

,68,

433

––

–5,

72,0

7833

,588

6,05

,665

Net

Pro

fit /(

Loss

)5,

82,1

8,51

9(2

3,31

,944

)(2

,18,

46,8

92)

8,60

,733

(6,6

9,64

,839

)(3

,20,

64,4

23)

4,98

,43,

869

2,37

,09,

505

2,61

,92,

589

2,22

,68,

086

(5,8

5,50

,473

)6,

34,6

3,57

6

Oth

er in

form

atio

n–

––

––

––

Segm

ent A

sset

s23

,19,

62,6

846,

65,6

6,93

04,

96,6

8,00

58,

96,7

7,34

01,

18,2

3,68

,451

1,62

,02,

43,4

1121

,69,

47,4

1822

,75,

30,0

342,

35,2

2,35

912

,24,

64,7

011,

70,3

5,16

,481

2,29

,39,

80,9

93

Una

lloca

ted

Cor

pora

te

Asse

ts–

––

––

––

––

––

–

Tota

l Ass

ets

23,1

9,62

,684

6,65

,66,

930

4,96

,68,

005

8,96

,77,

340

1,18

,23,

68,4

511,

62,0

2,43

,411

21,6

9,47

,418

22,7

5,30

,034

2,35

,22,

359

12,2

4,64

,701

1,70

,35,

16,4

812,

29,3

9,80

,993

Segm

ent L

iabl

ities

83,7

8,57

,146

3,90

,30,

062

1,61

,67,

737

36,7

5,95

,490

16,3

8,75

,263

1,42

,45,

25,6

9844

,71,

01,4

153,

83,4

2,79

336

,87,

296

1,17

,96,

17,9

2640

,06,

61,0

562,

06,9

4,10

,486

Una

lloca

ted

Cor

pora

te

Liab

ilitie

s–

––

––

––

––

––

–

Tota

l Lia

bilit

ies

83,7

8,57

,146

3,90

,30,

062

1,61

,67,

737

36,7

5,95

,490

16,3

8,75

,263

1,42

,45,

25,6

9844

,71,

01,4

153,

83,4

2,79

336

,87,

296

1,17

,96,

17,9

2640

,06,

61,0

562,

06,9

4,10

,486

Cap

ital E

xpen

ditu

re–

–1,

57,6

4,13

0–

55,8

451,

58,1

9,97

51,

01,7

58–

––

77,7

2,03

278

,73,

790

Oth

er–

––

––

––

––

––

–

Tota

l Cap

ital

Expe

nditu

re–

–1,

57,6

4,13

0–

55,8

451,

58,1

9,97

51,

01,7

58–

––

77,7

2,03

278

,73,

790

Dep

reci

atio

n7,

249

––

–84

,80,

952

84,8

8,20

15,

819

––

–1,

07,6

5,02

31,

07,7

0,84

2

Oth

er–

––

––

––

–

Tota

l Dep

reci

atio

n7,

249

––

–84

,80,

952

84,8

8,20

15,

819

––

–1,

07,6

5,02

31,

07,7

0,84

2

Non

cas

h ex

pens

e ot

her t

han

depr

ecia

tion

––

––

––

––

––

–-

Not

e : 4

4 Se

gmen

t Rep

ortin

gTh

e se

gmen

t inf

orm

atio

n re

quire

d as

per

acc

ount

ing

stan

dard

17

is g

iven

bel

ow :

(Am

ount

in `

)


(Amount in `)

(Amount in `)

(Amount in `)

Note: 45 Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of the part II of Schedule VI to the Companies Act, 1956 to the extent applicable.

i) Earnings in Foreign Exchange

Particulars 2013-2014 2012-2013

Export on goods/rights calculated on FOB basis 2,27,73,428 1,42,24,785

Particulars 2013-2014 2012-2013

Foreign Tours/ Participation Expenses 4,21,20,017 5,19,08,030

Particulars 2013-2014 2012-2013

Audit Fees 3,50,000 3,50,000

Tax Audit Fees 1,00,000 1,00,000

ii) Expenditure in Foreign Currency

iii) Payment to Auditors

Note: 46 Previous year figures have been re-classified to confirm with current year presentation, wherever applicable.

For C.B.CHHAJED & CO.,Chartered Accountants(FRN 101796W)

For and on behalf of Board


DIN No. : 00350722

C.P. Bhatia(Partner )M. No. 045210 Sahab Narain

Director (Finance)DIN No. : 03641879

Place: MumbaiDated: 1st July 2014


M. No. FCS 4521

Signature to Notes Financial Statements


To the Members of National Film Development Corporation Limited.

Report on the Financial Statements

We have audited the accompanying financial statements of National Film Development Corporation Limited (‘the Company’), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Management is responsible for the preparation of these 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 Standards notified under the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13th September, 2013 of Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control 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

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Auditor’s Report

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis for Qualified Opinion

(a) No provision has been made in respect of deposits of Rs 30 Lacs placed with 3 parties in 1991 which are secured against mortgage of certain immovable properties. The parties have not refunded the deposits and relevant securities are also not liquidated. The Company had initiated arbitration proceedings against the parties for recovery of deposits and Arbitration Awards have been made in favour of the company for two parties for recovery of deposit amounting to Rs 18 Lacs. For the balance amount of Rs 12 Lacs arbitration proceedings are still continuing. ( Refer note 37)

(b) In case of film Gandhi the accounting of profits and distribution fee has been done on accrual basis except that these are accounted on calendar year basis instead of financial year basis. The profit and distribution fees are accounted based on the statement of account received from the agents appointed under the agreement which are prepared on calendar year basis. The Company has ensured that the fees receivable are considered for the entire year on calendar year basis instead of financial year basis.(Refer note 38)

(c) The recoverability of TV marketing debtors against which the Company has filed cases in the court of law is not certain. The impact of the outcome arising out of the legal cases on the financial statement is not ascertainable.(refer note 39)

(d) The impact of our remarks in (a) to (c) above on the net profits of the company and the respective assets and liabilities is not ascertainable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the 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:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(ii) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and


(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) (‘the Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

For C.B. Chhajed & Co.Chartered Accountants

(Firm’s Regn Number: 101796W)

Place: MumbaiDate: 1st July, 2014

C. P. Bhatia(Partner)

Membership No: 045210

c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13th September, 2013 of Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

e) As per notification No GSR 829(E) dated 21-10-2003 the Government Companies are exempted from the provisions of clause 274 (1) (g) of the Companies Act 1956.


(Referred to in paragraph 1 of ”Report on other legal and regulatory requirements” of our report of even date)

To the Members of National Film Development Corporation Limited (‘the Company’)

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) The fixed assets are physically verified by the management according to a phased program designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3.(a) In our opinion and according to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii) (b) to (iii) (d) of paragraph 4 of the Order are not applicable to the Company for the year.

(b) In our opinion and according to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms

Annexure to the Auditors’ Report

or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii)(f) to (iii)(g) of paragraph 4 of the Order are not applicable to the Company for the year.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section. Accordingly, commenting on transactions made in pursuance of such contracts or arrangements does not arise.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Accordingly clause (vi) of paragraph 4 of the Order is not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8. To the best of our knowledge and based on explanation given to us, the Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company. Accordingly, clauses (viii) of paragraph 4 of the Order are not applicable to the Company for the year.

9.(a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, there


For C.B. Chhajed & Co.Chartered Accountants

(Firm’s Regn Number: 101796W)

Place: MumbaiDate: 1st July, 2014

C. P. Bhatia(Partner)

Membership No: 045210

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term purpose.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures. Accordingly, clause 4(xix) of Paragraph 4 of the order is not applicable.

20. The Corporation has not raised any money by way of public issue during the year. Therefore, the provisions of clause (xx) of the Order are not applicable to the Company.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

10. The accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the financial year and do not have incurred any cash losses in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank.

12. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the Company is not a chit fund / nidhi / mutual benefit fund/ society. Accordingly, Clause (Xiii) of paragraph 4 of the order is not Applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly, clause (xiv) of paragraph 4 of the Order is not applicable to the Company for the year.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

Name of Statute

Nature of Dues

Amount in (Rs.)

Period to which the amount relates

Forum where the dispute is

pending

Income Tax Act,

1961

Income Tax

19,30,850A.Y.

2011-12

Commissioner (Appeal) CIT

(A) – III

Income Tax Act,

1961

Income Tax

99,54,320A.Y.

2006-07

Commissioner (Appeal) CIT

(A) – III

are no dues of sales tax, wealth tax, custom duty, service tax, excise duty and cess which have not been deposited on account of any dispute. The income tax dues which are not deposited on account of disputed matters pending before appropriate authorities are as under:


Comments of the Comptroller and Auditor General of India under Section 619 (4) of the Companies Act, 1956 on the Accounts of National Film Development Corporation Limited for the year ended 31st March 2014. The preparation of financial statements of National Film Development Corporation Limited for the year ended 31st March 2014 in accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 619 (2) of the Companies Act, 1956 are responsible for expressing opinion on these financial statements under Section 227 of the Companies Act, 1956 based on the independent audit in accordance with the Standards on Auditing prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 01.07.2014.

I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 619(3) (b) of the Companies Act, 1956 of the financial statements of National Film Development Corporation Limited for the year ended 31st March 2014. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records.

Based on my supplementary audit, I would like to highlight the following significant matter under section 619 (4) of the Companies Act, 1956 which has come to my attention and which in my view is necessary for enabling a better understanding of the financial statement and the related Audit Report.

For and on the behalf ofthe Comptroller and Auditor General of India

Place: New Delhi. Date: 01.10.2014

(V.A. Patwardhan)Principal Director of Commercial Audit &

Ex-Officio Member, Audit Board-IV


Sr. No.

CAG Comments Management Reply

A (i)

BALANCE SHEET EQUITY AND LIABILITIESCURRENT LIABILITIESOther Current Liabilities Note 9- Rs.103,44,29,493Advance for production Rs.69,55,74,548

This is understated by Rs.21.44 Lakh plus interest earned on Rs.4.78 Crore received in March 2007 from Ministry of Culture for production of film on First War of Independence 1857 and allied events which was dropped by the Ministry subsequently. Consequently, the above head is understated by Rs.21.43 Lakh plus interest earned on Rs.4.78 Crore from March 2014, which is not quantified.

Ministry of culture vide letter no 1-5/2006 (Special Cell) dated 21st March 2007 sanctioned an amount of Rs.4,78,30,000/- for the production of film on First War of Independence 1857. NFDC started the work, on behalf of the ministry, immediately thereafter and incurred an amount of Rs. 18.84 Lakhs on various direct expenditure e.g. hiring of agencies, traveling etc. The money was spent out of the funds received from Ministry of Culture and was debited against the advance given by the ministry. Subsequently, In 2009, the ministry shelved the project and, vide sanction order no. F.No 1-36/2007-special cell (Pt.II) dated 20th November 2009, directed NFDC to distribute DVDs/CDs to various Schools/Colleges/Universities and Research Institutions out of the same funds earlier provided for the production of the film. NFDC, started the work on the same and expensed an amount of Rs. 2.60 lakhs from the ministry’s funds. Ministry of Culture, subsequently, shelved this project also.

The cost of Rs. 21.44 Lakhs ( Rs. 18.84 Lakhs + Rs. 2.60 Lakhs) incurred by NFDC to launch and initiate these projects on the direction of the Ministry of Culture are chargeable to the ministry. Therefore the advance account of the ministry is legitimately reduced with the same accordingly. Final settlement of the same with the ministry is in process.

Sanction order no. 1-5/2006 (Special Cell) dated 21st March 2007 through which Ministry of Culture sanctioned the amount for the production of the film on first war of independences, does not include any clause for the payment of interest to the ministry. Therefore, provision for payment of interest on the funds received was not provided in this year and in earlier years.

Therefore, the Advance for Production head of account shown under the current liabilities is not understated by Rs. 21.44 Lakhs plus interest on 4.78 crores received from Ministry of Culture.

A (ii)

Short-Term Provisions-Provision for Taxation – For Income Tax Rs.1,59,00,000

Above represents erroneous provision for TAX/MAT for Financial Year 2012-13, while the actual MAT Liability was Rs.44 Lakh as per the IT Return (30th September 2013) it filed with Income Tax Department for the year 2012-13. The liability for Income Tax for 2012-13 therefore was overstated by Rs.1.15 Crore, leading to overstatement of Short Term Provisions and understatement of Reserves and Surplus by Rs.1.15 Crore.

The company created a Provision of Tax of Rs. 1.59 Crore for Financial Year 2012-13 however, the actual MAT Liability works out to be Rs.44 Lakh as per the IT Return filed with Income Tax Department for the year 2012-13. The company did not reverse the excess provision during the financial year 2013-14, on the conservative side, as income tax assessment for the FY 2012-13 is not finalized yet.

However, during the FY 14-15, the same will again be reviewed with the consultation with the tax consultant.

B NOTES ON ACCOUNTSNote-2 SIGNIFICANT ACCOUNTING POLICIES Recognition of Revenue and related expenses

The fact that impact due to changes in Accounting Policies B.1.1. regarding treatment of cost of production of films and B.2 regarding treatment of cost of production of television serials/acquired programmes are not material has not been disclosed in the Financial /statements for 2013-14, which is mandatory as per Accounting Standard 5

This is to be stated that change in accounting policy, during the FY 2013-14, in the accounting policy of the company of “Recognition of Revenue and related expenses” is not having any material impact.

Reply of Management to the Comments of the Comptroller and Auditor General of India on the accounts of the Company

2013 - 14

National Film Development Corporation Limited

(A Government of India Enterprise)

6th Floor, Discovery of India Building, Nehru CentreDr. Annie Besant Road, Worli, Mumbai 400 018

T +91 22 6628 8288 | F +91 22 2495 2262 E [email protected] | www.nfdcindia.com

CIN U92100MH1975GOI022994

Annual Report

Documents

National Film Development Corporation Limited