DECCAN CHRONICLE HOLDINGS LIMITED
ANNUAL REPORT 2010-2011
Your Directors take pleasure in presenting the 9th Annual Report and the
Audited Accounts of your Company for the year ended 31st March, 2011
together with the Auditors' Report thereon.
Your Company's summarized financial results for theyear under review is as
(Rs. in Lakhs)
Particulars 2010-11 2009-10
TotalRevenue 1,03,091.48 92,194.54
Profit before interest tax and
depreciation 34,747.12 48,102.12
Less: Interest and financial charges 5,901.16 4,512.53
Profit before depreciation & tax 28,845.96 43,589.59
Less: Depreciation 5,157.35 4,224.85
Profit before tax 23,688.61 39,364.74
Tax charge (current and deferred) 7,430.31 13,272.93
Net profit for the year 16,258.30 26,091.81
Appropriations & Adjustments:
Dividend (including dividend tax thereon) - 8,532.71
Effect of change in treatment of
franchise rights/others 5,136.48 96.04
Transfer to debenture redemption reserve 5,000.00 1,302.12
Transfer to general reserve 6,000.00 3,000.00
Surplus for the year 121.82 13,160.94
Balance in Profit & Loss Account 52,616.65 39,455.71
Balance carried forward 52,738.47 52,616.65
The above results for the year under review are not strictly comparable
with that of the previous year, as the figures for the year under review
includes the results of the subsidiaries viz., Deccan Chargers Sporting
Ventures Ltd., NetlinkTechnologies Ltd. and Odyssey India Ltd. which were
amalgamated with the company.
Amalgamation of subsidiaries
During the year under review company's subsidiary Netlink Technologies
Limited was amalgamated with the company pursuant to a Scheme of
Amalgamation sanctioned by the Hon'ble High Court of Andhra Pradesh vide
its Order dated 9th March 2011; and the other two subsidiaries viz., Deccan
ChargersSporting Ventures Limited and Odyssey India Limited were
amalgamated with the company pursuant to a Scheme of Amalgamation
sanctioned by the Hon'ble High Court of Andhra Pradesh vide its Order dated
15th April 2011. The effective dates of the aforesaid Scheme of
Amalgamation are 11th April 2011 and 4th May 2011 respectively.
The Appointed Date of amalgamation under both the Schemes being 1st April
2010, the financials for the year under review have been prepared after
giving effect to the Amalgamation.
In view of the ongoing buyback programme and the need to conserve liquid
resources of the company, your Directors do not propose payment of dividend
for theyear under review.
Management Discussion and Analysis
A detailed Management Discussion and Analysis covering operations review
and outlook is provided in the Annual Report.
Buy backof Equity Shares
In terms of the provisions of Companies Act, 1956 and the Securities and
Exchange Board of India (Buy Backof Securities) Regulations,1998 and
pursuant to the approval of shareholders obtained by Postal Ballot and the
approval of SEBI, the Company announced its Offer to buy backa minimum of
1,00,00,000 equity shares, a maximum of 3,45,00,000 equity shares at a
price per share not exceeding Rs.180/- at a total outlay not exceeding
Rs.270 crores through stock market mechanism. The buy back offer commenced
on 16 May 2011 and the scheduled closing is on 3,d January 2012 or such
other earlier date as the Board may decide in this regard.
Pursuant to the aforesaid Buy Back Offer the Company, as of date of this
report, has bought back 2,61,73,133 Equity Shares and out of which
1,87,82,870 Equity Shares has been extinguished and the remaining 73,90,263
Equity Shares are being extinguished in duecourse.
Ratings for Term Funding
During the year CARE has reaffirmed 'PR1+' for short term funding & 'AA for
long term funding signifying high-credit quality and low credit risk, which
signifies high degree of safety with regard to timely payment of interest
and principal on the instruments.
Mr. Krishan Premnarayen, Mr.T. Vinayak Ravi Reddy, and Mr. G. Kumar retire
by rotation at the ensuing annual general meeting and being eligible have
offered themselves for reappointment.
Report on Corporate Governance
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges a report on Corporate Governance is given in the Annual Report.
Certificate of the Auditor regarding compliance with the conditions of
corporate governance is alsogiven.
During the year under review, your company has neither invited nor accepted
any deposits from the public.
M/s. C B Mouli & Associates, Chartered Accountants, Statutory Auditors of
the Company, hold office, in accordance with the provisions of the Act up
to the conclusion of the forthcoming Annual General Meeting. The Company
has received letter from M/s.C B Mouli & Associates, Chartered Accountants
to the effect that their appointment, if made, would be within the
prescribed limits under Section 224 (IB) of the Companies Act, 1956, and
that they are not disqualified for such appointment within the meaning of
Section 226 of the Companies Act, 1956.
Particulars of Employees
Information as per Section 217(2A) of the Companies Act, 1956 read with the
Companies (Particulars of employees) Rules 1975 as amended from time to
time forms part of this report. However, as per the provisions of Section
219(1) (b)(iv) of the Act, the Report and Accounts are being sent to all
members excluding the statement containing the particulars of employees to
be provided under section 217(2A) of the Act. Any member interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
Pursuant to provisions of Section 217 (2AA) of the Companies Act, 1956 with
respect to'Directors' Responsibility Statement', it is hereby confirmed;
(i) that in the preparation of the annual accounts for the financial year
ended 31st March, 2011, the applicable Accounting Standards have been
followed along with proper explanations relating to material departures;
(ii) that the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit or loss of the
Company for the year under review;
(iii) that the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities:
(iv) that the directors had prepared the annual accounts for the financial
year ended 31st March, 2011 on a going concern basis.
Conservation of Energy, Technology Absorption:
Particulars regarding conservation of energy, technology absorption are not
applicable to printing and publishing of newspapers and periodicals.
Foreign Exchange Earnings and Outgo
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 Directors) Rules, 1988, the information relating to foreign
exchange earnings and outgo is provided as under and the details of which
is mentioned in Note No. 3.3 of the Notes to the Accounts.
(Rs. in Lakhs)
Particulars 2010-11 2009-10
Foreign Exchange Earnings Nil Nil
Foreign Exchange Outgo 22,304.82 18,232.85
The Directors take this opportunity to thank Company's customers,
suppliers, bankers, financial Institutions for their consistent support to
the Company. Your Directors express their appreciation for the dedicated
and sincere services rendered by the employees of the Company at all
levels. Your Directors also wish to express their gratitude to the
Shareholders for the confidence reposed by them in the Company and for the
continued support and co-operation.
For and on behalf of the Board
Date : August 13, 2011
MANAGEMENT DISCUSSION AND ANALYSIS
The financials of theyear under review are not strictly comparable to that
of previous year as Netlink Technologies Ltd., Odyssey India Ltd., and
Deccan Chargers Sporting Ventures Ltd., the subsidiaries of the company,
were amalgamated with the company from the appointed date of 1.04.2010.
The year 2010-11 was difficult and challenging for the company as the
continued uncertain situation in the markets in which the company operates
has led to a decreased spend on advertisements thereby affecting the
advertisement revenue growth. Consequently, there was fall in the
profitability with profit after tax at Rs.16,258.30 lakhs compared to
26,091.81 lakhs in the previous year.
Deccan Chronicle, the flagship newspaper of the company continues to be the
leading newspaper of South India. During the year under review, your
company launched editions of Deccan Chronicle from Coimbatore as a measure
of consolidating its position in Tamil Nadu and from Kochi in Kerala to
make its maiden foray in that state. While Coimbatore edition of the paper
has received good response, that in Kochi is promising.The above launches
are expected to increase the readership and reach. Your company plans to
consolidate its leadership in South India by launching few more editions
starting with Thiruvananthapuram shortly and also increase the circulation
and readership in the existing centres.
The circulation of Deccan Chronicle grew over 3%; as per Audit Bureau of
Circulations (ABC) for the period Jul-Dec 2010 the average daily
circulation is 14.23 lakhs copies as against Jul-Dec 2009 circulation of
13.79 lakhs copies.
The breakup of averagedaily circulation (in lakhs) is asunder:
Jul-Dec 2010 Jul-Dec 2009
Hyderabad 5.94 5.72
Rest of Andhra Pradesh 2.61 2.51
Chennai 3.15 3.11
Bengaluru 2.53 2.45
Total 14.23 13.79
The Hyderabad IPL Franchise 'Deccan Chargers' owned by the company is
expected to enhance the brand value of the company and visibility. This is
further indicated by the addition of two new teams in the league, the
highest at a price of nearly Rs.1700 crores.
In IPL 3 the team qualified to the semi finals level though could not reach
the same in IPL 4. The IPL 3 home matches were not played in Hyderabad due
to local conditions, however the IPL 4 home matches conducted in April-May
2011 were played in Hyderabad. The financials for the year under review
include the resultsoflPL3.
The performance of 'Odyssey' chain of leisure stores of your company
offering consumer lifestyle products of books, music, stationery and gifts
during the year under review was impacted owing to reduced margins,
decrease in consumer spend on leisure and lifestyle products on account of
inflation, increase in the real estate and staff costs. The company is
taking effective steps to rationalize stores, reduce costs to have positive
impact on overall performance.
During the year under review, the Indian Economy continued to show
resilience. However higher inflation of commodity and food prices continues
to be a key concern, due to which Reserve Bank had to raise interest rates
multiple times during the year.
The Indian Economy is expected to maintain its growth rate in the coming
years not with standing external shocks, which is likely to translate to an
increased advertisement spend, and the print media being a preferred medium
is likely to derive a major benefit of the same.
Share capital as at March 31,2011 is 4,869.44 lakhs comprising of
24,34,72,219 Equity shares of 21- each fully paid up. The Equity share
capital has increased during the year from Rs. 4,844.46 lakhs to 4,869.44
lakhs on account of allotment of 12,49,435 Equity Shares of Rs.2/- each
upon conversion of 3,000 Foreign currency convertible bonds.
Reserves and Surplus
Reserves and surplus as at March 31,2011 is Rs.1,23,145.03 lakhs as
againstRs. 1,20,957.03 lakhs in the previous year a net increase of Rs.
2,188 lakhs. Retained Earnings accounted 57.57% of the Reserves and
Secured long term debt as at March 31,2011 is 31,311.61 lakhs as against
Rs. 32,886.56 lakhs in the previous year a decrease of Rs.1,574.95 lakhs.
Fixed Assets and Capital workin progress
The net block of fixed assets and Capital work in progress is Rs.92,671.31
lakhs as against 80,773.05 lakhs in the previous year the increase in block
of assets is on account of amalgamation, expansion/modernization of the
There are no investments as at March 31, 2011;all thesubsidiary companies
have been amalgamated and the other investment was sold.
Inventories as at March 31, 2011 is 13,340.94 lakhs as against Rs. 6,203.71
lakhs in the previous year, the increase in inventory is on account of
inventory of amalgamated subsidiaries.
Debtors as at March 31, 2011 is 25,836.15 lakhs as against Rs. 19,554.84
lakhs, increase in debtors is due to uncertain market condition.
Cashand Bank balances
Cash and bank balances as at March 31,2011 is 70,379.60 lakhs as againstRs.
Loans and Advances
The loans and advances decreased to Rs.15,161.89 lakhs from Rs.18,551.13
lakhs in the previous year, primarily on account of amalgamation of
Current liabilities and Provisions
The Current liabilities and Provisions increased to Rs.49,736.98 from
37,305.91 lakhs in the previous year, primarily on account of amalgamation
Printing and Other Operative Expenses
The increase in printing and operative cost from 31,758.25 lakhs
to Rs.42,608.55 lakhs is primarily an account of cost of merchandise and
franchisee fee paid of amalgamated subsidiaries.
Overheads comprise personnel cost, sales and administrative expenses,
Interest and financial charges. The overheads for the year areRs. 31,636.97
lakhs compared to Rs.16,846.70 lakhs for the previous year. The current
year financials includes the operating costs of theamalgamated
The Company provides depreciation on straight-line basis at the rates
prescribed in Schedule XIV of the Companies Act, 1956. The depreciation
charge has increased from Rs.4,224.85 lakhs to Rs.5,157.35 lakhs due to
The total tax charge (including deferred tax) has decreased from
Rs.13,272.93 lakhs to Rs.7,430.31 lakhs on account of reduced profits.
Internal Control Systems
The Company has adequate internal control systems to monitor all aspects of
operations and managerial functions.There are well defined procedures and
policies laid out to perform the various functions. All functions are
regularly reviewed and the results of the same are discussed by the senior
management and Audit Committee. The recommendations are duly implemented.
All businesses are subject to internal and external risks. The internal
risks are controllable risks and the senior management has identified such
risks and formulated such actions to mitigate the effect of such risks. The
external risks like change in government policies are not within the
control of the management.
The print media industry is enjoying growth on the basis of the growing
economy, high-income levels and increasing literacy amongst the people. Any
variations in these can have an impact on the industry.
Raw Material Risk
Newsprint constitutes the major raw material for the newspaper industry.
Therefore continuous supply of newsprint at competitive price is essential
for the business.
The Company has appointed good quality reporters who provide on daily basis
proper and authenticated information. The Company has also deployed good
quality machines for printing the newspaper without any breakdowns.
The fundamentals of higher economic growth remaining intact notwithstanding
concern on inflationary pressures, the economy is expected to maintain its
current growth rate which will further lead to increasing standards of
living and literacy level which will fuel growth. As such print media
sector is considered to have a robust future within I ndia for a number of
years to come.
Readers are cautioned that this section may contain forward looking
statements by the management that involves certain risks and
uncertainties.This section should be read in conjunction with the Company's
financial statements and relevant notes attached thereto.