Your Directors have the pleasure in presenting the Ninth Annual Report on the business& operations of your Company along with the Consolidated & Standalone AuditedFinancial Statements for the year ended March 31 2016.
(Rs. in million)
|Particulars || |
| ||Financial year ended March 31 2016 ||Financial year ended March 31 2015 ||Financial year ended March 31 2016 ||Financial year ended March 31 2015 |
|Net Revenue ||13252.32 ||12174.52 ||11443.99 ||9434.71 |
|Operating profit/(loss) before interest depreciation and taxes ||1930.27 ||1802.24 ||693.91 ||714.76 |
|Interest ||848.87 ||823.04 ||762.61 ||765.51 |
|Depreciation ||2306.45 ||1859.48 ||1479.49 ||1086.79 |
|Net Profit/(loss) before Tax and exceptional items ||(1225.05) ||(880.28) ||(1548.19) ||(1137.54) |
|Exceptional items ||649.60 ||- ||493.30 ||- |
|Net Profit/(loss) before Tax after exceptional items ||(1874.65) ||(880.28) ||(2041.49) ||(1137.54) |
|Provision for taxes/deferred tax ||425.93 ||336.20 ||7.92 ||(29.47) |
|Minority interest ||308.63 ||223.73 ||- ||- |
|Profit/(loss) after tax ||(2609.21) ||(1440.21) ||(2049.41) ||(1108.07) |
During the year under review the total revenue of your Company was Rs. 11443.99million on standalone basis and Rs. 13252.32 million on consolidated basis as compared tothe last years revenue of Rs. 9434.71 million on standalone basis and Rs. 12174.52million on consolidated basis respectively. The Post Tax Loss of your Company was Rs.(2049.41) million on standalone basis and Rs. (2609.21) million on consolidated basis ascompared to the last years Post Tax Loss was Rs. (1108.07) million on standalone basisand Rs. (1440.21) million on Consolidated basis respectively.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Accounting Standard AS-21 on Consolidated Financial Statements read withAccounting Standard AS23 on the Accounting for Investments in Associates inConsolidated Financial Statements and Accounting Standard AS27 on FinancialReporting of Interests in Joint Ventures specified under section 133 of the CompaniesAct 2013 the Audited Consolidated Financial Statements are provided in this AnnualReport.
Your Directors do not recommend any Dividend for the financial year ended March 312016.
TRANSFER TO RESERVES
Your Company has not made any transfer to the Reserves during the financial year2015-16.
DEN Networks Limited ("DEN") is one of the largest cable television companiesin India engaged in the distribution of analogue and digital cable television services.DEN offers analogue cable services in over 300 cities and digital cable services over 250cities across India with an aggregate subscriber base of around 13 million and marketshare of 13% in the cable TV segment. Since inception DEN has successfully acquired andintegrated more than 140 Multi-System Cable Operators (MSOs) and has built a strongpresence in 13 states viz. Delhi Uttar Pradesh Karnataka Maharashtra Guj aratRajasthan Haryana Kerala West Bengal Jharkhand Bihar Madhya Pradesh and Uttarakhand.DEN gains strength from its considerable market share across the economically importantHindi Speaking Markets (HSM) belt. DEN Networks and its subsidiaries and associatecompanies are engaged in the following businesses:
Cable TV Distribution: DEN is one of the largest MSOs in terms of subscriber baseand is engaged in the distribution of television channels through analogue (~ 3.0 millionsubscribers) and digital cable distribution network (~ 10.0 million subscribers). At theend of FY 2016 DEN converted about 4.4 million subscribers in DAS III and IV.
High - Speed Broadband business: The Company forayed into the high speed broadbandservices business in 2014. Presently the Company has 95000 broadband subscribers andprovides high speed broadband services of up to 100 mbps speed through optic fibrenetwork.
Soccer: In 2014 DEN acquired the Delhi Dynamos FC' team of the Indian SuperLeague a new soccer league in India.The football venture was originally entered into asan advertising platform for the group. The Company has divested controlling stake of 55%in the business.
TV Commerce: In 2014 the Company entered into a Joint Venture with e-commercegiant Snapdeal and launched a TV channel for the sale of products. The channel is a24-hour home shopping channel with a subscriber base of ~30.0 million. In July' 2016 thecompany entered into an agreement for increasing equity stake of the Company to 82.87%.
Star Den: Star Den was a Joint Venture Company between Star India Pvt. Ltd. andDen wherein both parties were holding equal shareholding. In March' 2016 the Companysold off its entire 50% equity stake to Star India Pvt. Ltd. for a consideration of Rs40.35 Crores (Rupees Forty Crore Thirty Five Lacs Only).
From inception till FY 2011 the Company grew aggressively through the acquisition of~140 smaller MSOs and increased its subscriber universe to 13 million. Post implementationof DAS policy framework in 2011 the Company has focused on steady increase in ARPUs fromits existing subscriber base through digitization. Presently the Company has about 10million digital subscribers from DAS Phases I II and III. The balance 3 mn analoguecustomers are expected to be digitized in FY 2017 (Phase IV).
A report on the performance and financial position of each of the subsidiariesassociates and joint venture companies as per the Companies Act 2013 and its rules areprovided as annexure to the consolidated financial statement and hence not repeated herefor the sake of brevity. The Policy for determining material subsidiaries as approved maybe accessed on the Company's website at the link: http://www.dennetworks.com/
Details of Companies/entities which have become or ceased as subsidiary companyassociates and joint ventures during the year under review are as under:
|Name of Company ||Relationship ||Details of Changes ||Date of Change |
|Star Den Media Services Pvt. Ltd. ||Joint Venture ||Ceased to be Joint Venture ||30-03-2016 |
|DEN Sports & Entertainment ||Wholly Owned Subsidiary ||Became Associate Company pursuant to ||30-03-2016 |
|Pvt. Ltd. ||Company ||selling of proportionate stake || |
The financial statements of the subsidiary companies and related information areavailable for inspection by the members at the Registered Office of your Company duringbusiness hours on all days except Saturdays Sundays and public holidays up to the date ofthe Annual General Meeting as required under Section 136 of the Companies Act 2013. Anymember desirous of obtaining a copy of the said financial statements may write to theCompany Secretary at the Registered Office of your Company.
Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. The Company's internal controls are commensurate with its size andthe nature of its operations. These have been designed to provide reasonable assurancewith regard to recording and providing reliable financial and operational informationcomplying with applicable statutes safeguarding assets from unauthorized use executingtransactions with proper authorization and ensuring compliance of corporate policies. Ithas continued its efforts to align all its processes and controls with global bestpractices.
MEETINGS OF THE BOARD AND COMMITTEES
Five meetings of the Board of Directors were held during the year. For further detailsregarding meeting of board and committees please refer report on Corporate Governance ofthis Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2016 and of the loss ofthe Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern' basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
KEY MANAGERIAL PERSONNEL & DIRECTORS
In terms of the Articles of Association of the Company Mr. Ankur Ambika Sahu Directorof the Company is liable to retire by rotation and being eligible has offered himselffor reappointment. The Company has received requisite notice in writing from a member forappointment as Director.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under CompaniesAct 2013 and under applicable regulation(s) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 if any. The Companyhas devised a Policy for performance evaluation of Independent Directors BoardCommittees and other individual Directors which include criteria for performanceevaluation of the non-executive directors and executive directors. The details ofprogrammes for familiarization of Independent Directors with the Company their rolesrights responsibilities in the Company nature of the industry in which the Companyoperates business model of the Company and related matters are put up on the website ofthe Company at the link: http://www.dennetworks.com/corporate_gov .
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligation andDisclosure Requirements) Regulations 201 5 the Board has carried out an evaluation ofits own performance the directors individually as well as the evaluation of the workingof its Audit Nomination & Remuneration Committees. The manner in which the evaluationhas been carried out has been explained in the Corporate Governance Report. The ScheduleIV of the Companies Act 2013 states that the performance evaluation of the IndependentDirectors shall be done by the entire Board of Directors excluding the Director beingevaluated.
AUDITORS & AUDITORS' REPORT
At the Annual General Meeting held on September 29 2015 M/s. Deloitte Haskins &Sells Chartered Accountants were appointed as Statutory Auditors of the Company to holdoffice till the conclusion of 11th Annual General Meeting to be held in thecalendar year 2018. In terms of Section 139 of the Companies Act 2013 the appointment ofauditors shall be placed for the ratification at every Annual General Meetingaccordingly the appointment of M/s. Deloitte Haskins & Sells as Statutory Auditors ofthe Company is placed for the ratification by the shareholders of the Company.
The Board has duly examined the Report issued by the Statutory Auditors' of the Companyon the Accounts for the financial year ended March 31 2016. The notes to the financialstatements as presented in this Annual Report are self explanatory in this regard andhence do not call for any further clarification. The Auditors' Report does not contain anyqualification adverse remark.
EXTRACTS OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure A".
Pursuant to provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Neelesh Jain Company Secretaries in practice of M/s NKJ & Associates toundertake the Secretarial Audit of the Company. The Secretarial Auditors' Report does notcontain any qualification reservation or adverse remark. The Secretarial Audit report isannexed herewith as "Annexure B"
CERTIFCATE ON CORPORATE GOVERNANCE FROM PRACTICING COMPANY SECRETARIES
In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Practicing Company Secretaries' certificate on corporate governance is forming part ofCorporate Governance Report. The certificate for the financial year ended on March 2016does not contain any qualification reservation or adverse remark.
M/s Ajay Kumar Singh & Company Cost Accountants have been re-appointed as CostAuditors for the financial year 2015-16 to conduct cost audit of the accounts maintainedby the Company. However necessary approvals if any shall be taken as may be required bythe applicable provisions. Full particulars of the Cost Auditor are as under:
M/s Ajay Kumar Singh & Company 1/26 2nd Floor Lalita Park LaxmiNagar Delhi-110092 Tel. No. : 011-45595822; Email ID email@example.com (Firm'sMembership No. 30778)
Your Board has duly examined the Report issued by the Cost Auditors' of the Company onthe Accounts for the financial year ended March 31 2016. The Cost Auditors' Report doesnot contain any qualification reservation or adverse remark. Your Company hasre-appointed M/s Ajay Kumar Singh & Company Cost Accountants as Cost Auditor underSection 148 of the Companies Act 2013 for Cost Audit for the financial year 201617.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The details of the loans guarantees given and investments made by company are given inthe notes to the financial statements.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. The Policy on materiality of related party transactions and dealing with relatedparty transactions as approved by the Board may be accessed on the Company's website atthe link: http://www . dennetworks.com/corporate_gov.htm
Your Directors draw attention of the members to Notes to the financial statement whichsets out related party disclosures.
The details of credit rating of company are as followed:
|Instrument ||Rating Agency ||Rating ||Outlook |
|Long Term Debt ||ICRA ||A- ||Stable |
|Short Term Non Fund based limit ||ICRA ||A2 + ||Stable |
|Long Term/Short Term unallocated limit ||ICRA ||A- ||Stable |
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirement)Regulations 2015. It is presented in a separate section forming part of the AnnualReport.
EMPLOYEES' STOCK OPTION SCHEME
The Nomination and Remuneration Committee of the Board of Directors of the Company interalia administers and monitors the Employees' Stock Option Scheme of the Company inaccordance with the applicable SEBI Guidelines. The applicable disclosures as stipulatedunder the SEBI Guidelines as on March 31 2016 with regard to the Employees' Stock OptionScheme (ESOS) are provided in "Annexure C" to this Report.
The Company has received a certificate from the Auditors of the Company that the Schemehas been implemented in accordance with the SEBI Guidelines and the resolution passed bythe members. The certificate would be placed at the Annual General Meeting for inspectionby members.
Voting rights on the shares issued to employees under the ESOS are either exercised bythem directly or through their appointed proxy.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility and Governance Committee (CSR&G Committee) hasformulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which has been approvedby the Board. The CSR Policy may be
accessed on the Company's website at the link: http://www .dennetworks.com/corporate_gov.htm
The key philosophy of all CSR initiatives of the Company is guided by three corecommitments of Scale Impact and Sustainability.
The Company has identified following focus areas of engagement which are as under:
|Rural Transformation ||Creating sustainable livelihood solutions addressing poverty hunger and malnutrition |
|Health ||Affordable solutions for healthcare through improved access awareness and health seeking behavior |
|Education ||Environmental sustainability ecological balance conservation of natural resources |
|Arts Heritage and Culture ||Protection and promotion of India's art culture and heritage |
|Environment ||Environmental sustainability ecological balance conservation of natural resources |
|Disaster Response ||Managing and responding to disaster |
|Promotion of Sports ||Training to promote rural sports nationally recognized sports Paralympics sports Olympic sports and promote sports at gross root level |
|Community Development ||Promoting gender equality empowering women setting up homes and hostels for women and orphans setting up old age homes etc. |
|Other Initiatives ||To undertake other need based initiatives in compliance with Schedule VII of the Companies Act 2013 |
The Company has spent Rs. 5(five) lakhs on CSR activities. The Annual Report on CSRactivities is annexed herewith marked as "Annexure D".
The Board of Directors have constituted a Risk Management Committee consisting threeDirectors has been entrusted with the responsibility to assist the Board in (a)Overseeing and approving the Company's enterprise wide risk management framework; and
(b) Overseeing that all the risks that the organization faces such as strategicfinancial credit market liquidity security property IT legal regulatoryreputational and other risks have been identified and assessed and there is an adequaterisk management infrastructure in place capable of addressing those risks. A Group RiskManagement Policy was reviewed and approved by the Committee. The Company's managementsystems organizational structures processes standards code of conduct and behaviorstogether form the DEN Management System that governs how the Group conducts the businessof the Company and manages associated risks.
CODE OF CONDUCT:
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings/behaviors of any form and the Board has laid down thedirectives to counter such acts. The code laid down by the Board is known as "code ofbusiness conduct" which forms an Appendix to the Code. The Code has been posted onthe Company's website www.dennetworks.com . The Code lays down the standard procedure ofbusiness conduct which is expected to be followed by the Directors and the designatedemployees in their business dealings and in particular on matters relating to integrity inthe work place in business practices and in dealing with stakeholders. The Code givesguidance through examples on the expected behaviour from an employee in a given situationand the reporting structure. All the Board Members and the Senior Management personnelhave confirmed compliance with the Code. All Management Staff were given appropriatetraining in this regard.
The composition of the Audit Committee is in conformity with the provisions of Section177 of the Companies Act 2013. The Audit Committee comprises of :-
|S.No. ||Name of the Member ||Designation |
|1. ||Mr. Ajaya Chand ||Chairman |
|2. ||Mr. Robindra Sharma ||Member |
|3. ||Mr. Krishna Kumar P.T. Gangadharan ||Member |
All the recommendations made by the Audit Committee were accepted by the Board.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism Policy to deal with instance of fraud andmismanagement if any. In staying true to our values of Strength Performance and Passionand in line with our vision of being one of the most respected companies in India theCompany is committed to the high standards of Corporate Governance and stakeholderresponsibility.
PREVENTION OF INSIDER TRADING:
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and Designated Employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code. All Board Directors and the Designated Employees haveconfirmed compliance with the Code.
PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 of Companies Act 2013 read with rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of remuneration details as required in Rule 5(1) and details of employees of theCompany as required in Rule 5(2) of (Appointment and Remuneration of Managerial Personnel)Rules 2014 will be provided upon request.
In terms of Section 136 of the Act the reports and accounts are being sent to themembers and others entitled thereto excluding the information on details of remunerationof directors and employees' particulars which are available for inspection by the membersat the Registered office of the company during business hours on working days of thecompany up to the date of ensuing Annual General Meeting. If any member is interested ininspecting the same such member may write to the company secretary in advance.
OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
In order to prevent sexual harassment of women at work place as per the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 theCompany has set up an Internal Complaints Committee to look into complaints relating tosexual harassment at work place of any women employee. However during the year Companyhas not received any complaint of harassment.
DETAILS OF UNCLAIMED SHARES AS PER SEBI (LISTING OBLIGATIONS AND DISCLOSUREREQUIREMENTS) REGULATIONS 2015
Dematerialization credit of equity shares of Rs.10 each for allottees could not happentill date due to incorrect particulars of account holders. The Company through itsRegistrar and Share Transfer Agent M/s Karvy Computershare Private Limited had sentseveral reminders to these allottees and in the absence of any response from any of themhad finally transferred the aforesaid equity shares to Den Networks Limited Unclaimed Securities Suspense Account. As required under SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 following is the status of outstanding shareslying in the aforesaid account as on March 31 2016:
|Particulars ||No. of Shareholders ||No. of Equity Shares |
|Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the beginning of the year i.e. 1st April 2015/transferred to Account during the year ended 31st March 2016 ||4 ||309 |
|Number of shareholders who approached to the Company/RTA for transfer of shares from Unclaimed Suspense Account during the year ended 31st March 2016 ||Nil ||Nil |
|Number of shareholders to whom shares were transferred from Unclaimed Suspense Account during the year ended 31st March 2016 ||Nil ||Nil |
|Aggregate Number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the end of the year i.e. as on 31st March 2016. ||4 ||309 |
The voting rights on these shares are frozen till the rightful owner of these sharesclaims the shares.
Corporate Governance is about maximizing shareholders value legally ethically andsustainably. At DEN the purpose of corporate governance is to entrust justice for everyshareholder. We believe sound Corporate Governance is critical in enhancing and retainingstakeholders trust. Our priority is attainment of all performance goals with integrity.The Company is committed to maintain the highest Standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. A certificate frompracticing Company Secretary regarding compliance of the conditions of CorporateGovernance as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is attached to the Report on Corporate Governance. Certificate of theCEO/CFO inter alia confirming the correctness of the financial statementscompliance with Company's Code of Conduct adequacy of the internal control measures andreporting of matters to the Audit Committee is attached in the Corporate Governancereport and forms part of this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Pursuant to provisions of the Companies Act 2013 and applicable rules thereof thefollowing information is provided:
Conservation of Energy
Your Company is not an energy intensive unit; however possibilities are continuouslyexplored to conserve energy and to reduce energy consumption at production & editingfacilities studios workstations of the Company.
Your Company is conscious of implementation of latest technologies in key workingareas. Technology is ever-changing and employees of your Company are made aware of thelatest working techniques and technologies through workshops group e-mails discussionsessions for optimum utilization of available resources and to improve operationalefficiency.
Foreign Exchange Earnings and Outgo
Disclosure of foreign exchange earnings and outgo as required under Rule 2(C) is givenin "Notes to the financial statements" forming part of the Audited AnnualAccounts.
| ||(Rs. in million) |
|Foreign Exchange Earnings : - ||NIL |
|Foreign Exchange Outgo : - ||3191.27 |
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review
1) Details relating to deposits covered under Chapter V of the Act.
2) Issue of equity shares with differential rights as to dividend voting or otherwise.
3) Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report.
4) Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.
5) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
6) Material changes and commitments affecting the financial position of the company.
7) Change in the nature of business
8) Disclosure u/s 67(3) in respect of voting rights not exercised by employees inrespect of shares to which the scheme relates
9) Re-appointment of independent director after 5 years u/s 149(10)
Your Directors further state that during the year under review there were no cases ledpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
Your Directors place on record their gratitude to the Central Government StateGovernment Company's Bankers and business partners/for the assistance co-operation andencouragement they extended to the Company. Your Directors also wish to place on recordtheir sincere thanks and appreciation for the continuing support and unstinting efforts ofinvestors vendors dealers business associates and employees in ensuring an excellentall around operational performance.
For and on behalf of the Board of Directors
| ||Sd/- |
| ||Chairman Managing Director |
|Place: New Delhi || |
|Date: 05/09/2016 || |