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Network 18 Media & Investments Ltd.

BSE: 532798 Sector: Others
NSE: NETWORK18 ISIN Code: INE870H01013
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VOLUME 75747
52-Week high 64.00
52-Week low 33.50
P/E
Mkt Cap.(Rs cr) 5,046
Buy Price 0.00
Buy Qty 0.00
Sell Price 48.20
Sell Qty 2144.00
OPEN 48.20
CLOSE 48.30
VOLUME 75747
52-Week high 64.00
52-Week low 33.50
P/E
Mkt Cap.(Rs cr) 5,046
Buy Price 0.00
Buy Qty 0.00
Sell Price 48.20
Sell Qty 2144.00

Network 18 Media & Investments Ltd. (NETWORK18) - Director Report

Company director report

BOARD'S REPORT

Dear Members

The Board of Directors are pleased to present the 22nd Annual Report and the Company'saudited Financial Statement for the financial year ended March 31 2017.

Financial Results

The financial performance of the Company (Standalone and Consolidated) for the yearended March 31 2017 is summarized below: ( Rs. in crore)

Particulars Standalone Consolidated
2016-17 2015-16 2016-17 2015-16
Revenue from operations 66.86 67.30 1491.03 1527.29
Profit / (loss) before interest and depreciation (39.75) (16.42) (101.08) 237.18
Less: Interest 70.37 52.83 80.17 66.82
Depreciation 8.53 5.83 79.90 57.72
Profit/(loss) before tax (118.65) (75.09) (261.15) 112.64
Less: Current Tax - - 30.34 15.03
Deferred Tax 0.04 0.00 (20.70) 1.40
Profit/(loss) for the year (118.69) (75.09) (270.79) 96.21
Add: Other Comprehensive Income 0.14 (2.18) 9.96 2.59
Total Comprehensive Income for the Year (118.55) (77.27) (260.83) 98.80
Less: Total Comprehensive Income attributable to Non Controlling Interest (recovery) (41.78) 79.33
Total Comprehensive Income Attributable to Owners of the Company (219.05) 19.47
Less: Appropriation Transfer to General Reserve - - - -
Earnings Per Share (Basic) (In Rs. ) (1.13) (0.72) (2.25) 0.25

Figures for financial year 2015-16 have been restated as per Indian AccountingStandards (Ind AS) and therefore may not be comparable with financials for financial year2015-16 approved by the Board of Directors and disclosed in the financial statement ofprevious year.

Indian Accounting Standard

The Ministry of Corporate Affairs (MCA) on February 16 2015 notified that IndianAccounting Standards (Ind AS) are applicable to certain classes of companies from April 12016 with a transition date of April 1 2015. Ind AS has replaced the previous Indian GAAPprescribed under Section 133 of the Companies Act 2013 ("the Act") read withRule 7 of the Companies (Accounts) Rules 2014. Ind AS is applicable to the Company fromApril 1 2016.

The reconciliations and descriptions of the effect of the transition from previous GAAPto Ind AS have been set out in Note No. 42 in the notes to accounts in StandaloneFinancial Statement and Note 41 in the notes to accounts in the Consolidated FinancialStatement.

Results of operations and the State of Company's affairs

During the year under review the Company recorded an operating turnover of Rs. 66.86crore (previous year Rs. 67.30 crore). The consolidated revenue from operations was Rs.1491.04 crore as against Rs. 1527.30 crore in previous year. The loss before interestdepreciation and tax on standalone basis stood at Rs. 118.65 crore.

The Company improved its market-standing and continued investing for growth in what wasa challenging year for the media industry. Sustained investments into new businesses andentry into more regional markets impacted the financial performance.

Dividend

In view of the losses the Board of Directors have not recommended any dividend for theyear under review.

The Dividend Distribution Policy of the Company is annexed as Annexure I to thisReport.

Deposits

The Company has discontinued accepting fresh Fixed Deposits or renewing any depositsw.e.f. April 1 2014. The Company has repaid all fixed deposits and interest thereon.However as on March 31 2017 deposits and interest thereon aggregating to Rs. 2.52 croreremained unclaimed.

Scheme of Amalgamation and Corporate Restructuring

During the year under the review the Board of Directors of the Company on therecommendation of the Audit Committee approved the Scheme of Amalgamation of thefollowing direct or indirect wholly owned subsidiaries of the Company namely:

(1) Digital18 Media Limited

(2) Capital18 Fincap Private Limited

(3) RVT Finhold Private Limited

(4) RRK Finhold Private Limited

(5) RRB Investments Private Limited

(6) Colosceum Media Private Limited

(7) Setpro18 Distribution Limited

(8) Reed Infomedia India Private Limited

(9) Web18 Software Services Limited

(10) Television Eighteen Media and Investment Limited

(11) Television Eighteen Mauritius Limited

(12) Web18 Holdings Limited

(13) E-18 Limited and

(14) Network18 Holdings Limited

into the Company with appointed date as April 01 2016 under the applicable provisionsof the Act.

The said Scheme of Amalgamation is subject to receipt of further approvals of theCentral Government and / or National Company Law Tribunal and / or Stock Exchanges and/orSecurities and Exchange Board of India ("SEBI") and/or Shareholders and/orLenders/ Creditors and/or such other competent authority(ies) as may be required underthe extant applicable provisions of the law.

The Company in July 2017 hived off its business of food and restaurant search andrecommendation engine operated under the name of Burrp on slump sale basis pursuant to abusiness transfer agreement entered into with Foodfesta Wellcare Private Limited (asubsidiary of Big Tree Entertainment Private Limited). The said transaction was on arms'length basis. Burrp had insignificant contribution to the revenue and net-worth of theCompany and was a non-core business.

Material Changes Affecting the Company

There have been no other material changes and commitments affecting the financialposition of the Company between the end of the financial year and date of this Report.There has been no change in the nature of business of the Company.

Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review as stipulatedunder the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") is presented in aseparate section forming part of the Annual Report.

Employees' Stock Option Schemes

There were no outstanding options as at March 31 2017 as all the exercisable optionslapsed during the year. Further the Company is not making any further grants underEmployees' Stock Option Schemes and all the existing schemes are discontinued.

Credit Rating

Credit Analysis & Research Limited (CARE) – the Credit Rating Agency hasassigned following Credit Ratings to the Company:

Particulars Ratings
Long Term/Short Term Bank CARE AAA; Stable/CARE A1+ (Triple
Facilities of Rs. 1000 crore A); Outlook: Stable/A One Plus
Commercial Paper issue of CARE A1+ (A One Plus)
Rs. 1000 Crore

ICRA Limited – the Credit Rating Agency has assigned following Credit Ratings ofthe Company:

Particulars Ratings
Long-term Borrowings of Rs. 500 Upgraded rating to [ICRA] AAA
crore (pronounced ICRA triple A)
Long-term /short-term fund /non- Long-term - [ICRA] AAA
fund based limits of Rs. 500 crore (pronounced as ICRA triple A)
Short-term - [ICRA] A1+
(pronounced as ICRA A One Plus)
Commercial Paper issue of Rs. 1000 [ICRA] A1+ (pronounced as ICRA A
crore One Plus)

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI.

The detailed Corporate Governance Report of the Company in pursuance of the ListingRegulations forms part of the Annual Report of the Company. The requisite Certificate froma Practicing Company Secretary confirming compliance with the conditions of CorporateGovernance as stipulated under the Listing Regulations is attached to the CorporateGovernance Report.

Business Responsibility Report

As per Regulation 34 of Listing Regulations and circular issued thereunder the Companybeing in top 500 listed entities based on market capitalization is required to include inits Annual Report a Business Responsibility Report describing initiatives taken by theCompany from an environmental social and governance perspective. Accordingly theBusiness Responsibility Report is attached as part of the Annual Report.

Directors and Key Managerial Personnel

Mr. P.M.S. Prasad and Mr. K.R. Raja were appointed as Additional Directors (Non-Executive) w.e.f. January 14 2017 and they shall hold office as Additional Directorsupto the date of the ensuing Annual General Meeting. The Company has received requisitenotices in writing from members proposing their candidature for appointment at the ensuingAnnual General Meeting as Non-Executive Directors liable to retire by rotation.

During the year under review Mr. Rohit Bansal and Mr. Vinay Chhajlani Non-ExecutiveDirectors resigned from the Directorship of the Company w.e.f. January 14 2017. TheBoard places on record its appreciation for the valuable contribution made by them duringtheir tenure as Directors of the Company.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under sub-section (6)of Section 149 of the Act read with Regulation 16 of Listing Regulations.

The following policies of the Company are annexed herewith and marked as AnnexureIIA and Annexure IIB respectively: a) Policy for selection of Directors anddetermining Directors Independence; and b) Remuneration Policy for Directors KeyManagerial Personnel and other employees.

During the year Mr. Yug Samrat ceased to be the Company Secretary and ComplianceOfficer of the Company w.e.f. October 14 2016 and Mr. Hariharan Mahadevan ceased to bethe Chief Financial Officer of the Company w.e.f. January 14 2017. Mr. Ratnesh Rukhariyarwas appointed as the Company Secretary and Compliance Officer of the Company w.e.f.October 15 2016 and Mr. Ramesh Kumar Damani was appointed as the Chief Financial Officerof the Company w.e.f. January 15 2017.

Save and except aforementioned changes there was no other change in Directors and KeyManagerial Personnel of the Company.

Performance Evaluation

The Company has formulated a Policy for Performance Evaluation of IndependentDirectors Board Committees and other individual Directors. The evaluation process inter-aliaconsiders attendance at meetings acquaintance with business effective participationdomain knowledge compliance with code of conduct vision and strategy etc.

On the basis of aforesaid policy a process of performance evaluation was carried out.

Consolidated Financial Statement

In accordance with the provisions of the Act the Listing Regulations and Ind AS 110– Consolidated Financial Statements read with Ind AS 28 – Investments inAssociates and Ind AS 31 – Interests in Joint Ventures the audited ConsolidatedFinancial Statement is provided in the Annual Report.

Subsidiaries / Joint Ventures / Associate Companies

The development in business operations/performance of the major subsidiaries/ JointVentures / Associate Companies forms part of the Management's Discussion and AnalysisReport.

During the year under review Big Tree Entertainment Private Limited (Big Tree) ceasedto be a subsidiary of the Company and became an associate Company of the Company.Consequent to cessation of Big Tree as subsidiary all the subsidiaries of Big Tree viz.Spacebound Web Labs Private Limited Fantain Sports Private Limited Big TreeEntertainment Singapore Pte Limited and PT Big Tree Entertainment Indonesia ceased to besubsidiaries of the Company. Further Prism TV Private Limited also ceased to besubsidiary of the Company during the year. IndiaCast Distribution Private Limited ceasedto be subsidiary of the Company w.e.f. April 1 2017.

The performance and financial information of the Subsidiary Companies / Joint Ventures/ Associate Companies is provided as Annexure to the Consolidated Financial Statement.

The audited Financial Statements including the Consolidated Financial Statements andrelated information of the Company are available on our Company's websitewww.network18online.com. The Financial Statements of each of the subsidiaries of theCompany may also be accessed at Company's website www.network18online. com. Thesedocuments will also be available for inspection on all working days (i.e. exceptSaturdays Sundays and Public Holidays) during business hours at registered office of theCompany.

The Company has formulated a Policy for determining Material Subsidiaries and the sameis placed on the website at http://www.network18online.com/reports/policies/Policy%20for%20determining%20Material%20Subsidiaries1.pdf.

Directors' Responsibility Statement

Pursuant to the requirement under Section 134 of the Act with respect to Directors'Responsibility Statement it is hereby confirmed that: i) in the preparation of the annualaccounts for the financial year ended March 31 2017 the applicable Accounting Standardsread with the requirements set out under Schedule III to the Act have been followed andthere are no material departures from the same; ii) the Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at March 31 2017 and of the loss of the Company for the year ended on thatdate; iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;iv) the Directors have prepared the annual accounts of the Company for the financial yearended March 31 2017 on a ‘going concern' basis; v) the Directors have laid downinternal financial control to be followed by the Company and that such internal financialcontrol are adequate and were operating effectively; and vi) the Directors have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.

Number of Meetings of the Board

During the financial year ended on March 31 2017 five (5) Board Meetings were held.Further details of the meetings of the Board and its Committees are given in CorporateGovernance Report forming part of the Annual Report.

Audit Committee

The Audit Committee of the Company comprises Mr. Adil Zainulbhai (Chairman) Mr. DeepakShantilal Parekh Mr. Dhruv Subodh Kaji Independent Directors and Mr. K.R. Raja Non-Executive Director. All the recommendations made by the Audit Committee were accepted bythe Board.

Risk Management

The Board of Directors of the Company is responsible for the direction andestablishment of internal controls to mitigate material business risks. The Company hasformulated and adopted a Risk Management Policy to identify the element of risk forachieving its business objective and to provide reasonable assurance that all the materialrisks will be mitigated.

More details on Risk Management are given in report on Management's Discussion andAnalysis Report which forms part of the Annual Report.

Internal Financial Controls

The Company has adequate system of internal financial controls to safeguard and protectthe Company from loss unauthorized use or disposition of its assets. All the transactionsare properly authorized recorded and reported to the Management. The Company is followingthe applicable Accounting Standards for properly maintaining the books of accounts andreporting financial statements.

The internal financial controls have been embedded in the business processes. Assuranceon the effectiveness of internal financial controls is obtained through managementreviews continuous monitoring by functional leaders as well as testing of the internalfinancial control systems by the Internal Auditors during the course of their audits.

The Audit Committee reviews adequacy and effectiveness of Company's Internal Controlsand monitors the implementations of audit recommendations.

Corporate Social Responsibility

The Corporate Social Responsibility (CSR) Committee of the Company comprises Mr. AdilZainulbhai (Chairman) Mr. Rajiv Krishan Luthra Mr. P.M.S. Prasad and Mr. K.R. Raja. TheCommittee's prime responsibility is to assist the Board in discharging its socialresponsibilities by way of formulating and monitoring implementation of the objectives setout in the ‘Corporate Social Responsibility Policy'.

The CSR Policy of the Company is available on its website and may be accessed at thelink:http://www.network18online.com/reports/policies/Network18%20-%20Policy%20on%20Corporate%20 Social%20Responsibility.pdf.

In terms of CSR Policy of the Company the focus areas of engagement are as under:?Addressing identified needs of the unprivileged through initiatives directed towardsimproving livelihood alleviating poverty promoting education empowerment throughvocational skills and promoting health and well-being

? Preserve protect and promote art culture and heritage? Environmentalsustainability ecological balance and protection of flora and fauna

The Company would also undertake other need based initiatives in compliance withSchedule VII of the Act.

The Company has not yielded any profits during the previous three financial yearshence in terms of Section 135 of the Act the Company was not required to spend anyamount on CSR activities.

Vigil Mechanism

The Company promotes ethical behavior in all its business activities. Towardsthis the Company has adopted a Policy on Vigil Mechanism and Whistle Blower. The Companyhas constituted an Ethics & Compliance Task Force to process and investigate aprotected disclosure made under the policy. The confidentiality of those reportingviolations is maintained and they are not subjected to any discriminatory practice orvictimization. The Audit Committee oversees the Vigil Mechanism. The policy on VigilMechanism and Whistle Blower is available on the Company's website and may be accessed atthe link: http:// www.network18online.com/reports/policies/vigilmechanism_whistleblower_NW18_F.PDF.

Related Party Transactions

All the related party transactions were entered on arm's length basis and were in theordinary course of business. Further the transactions with related parties were incompliance with applicable provisions of the Act and the Listing Regulations. Omnibusapproval is obtained for the transactions which are foreseen and repetitive in nature. Astatement of all related party transactions is presented before the Audit Committee on aquarterly basis.

During the year the Company had not entered into any contract/ arrangement/transactions with related parties which could be considered material in accordance withthe Policy of the Company on materiality of Related Party Transactions or which isrequired to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section188 of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014. The Policy onMateriality of Related Party Transactions and on Dealing with Related Party Transactionsis posted on the Company's website and may be accessed at the link:http://www.network18online.com/reports/policies/Policy%20of%20Materiality%20of%20Related%20Party%20Transactions%20and%20on%20Dealing%20with%20Related%20 Party%20Transactions.pdf.

The details of the transactions with Related Parties are provided in Note No. 33 to theStandalone Financial Statement.

Particulars of Loans given Investments made Guarantees given and Securities provided

Details of Loans given Investments made Guarantees given and Securities provided bythe Company alongwith the purpose for which the Loan or Guarantee or Security is proposedto be utilised by the recipient are provided in Standalone Financial Statement. Pleaserefer Note No. 3 4 8 12 33 and 48 to the Standalone Financial Statement.

Auditor and Auditors' Report

Statutory Auditor

Walker Chandiok & Co LLP Chartered Accountants (ICAI Firm Regn No.001076N/N500013) have expressed their unwillingness to be appointed as Statutory Auditorsin the ensuing Annual General Meeting of the Company. Keeping this in view it is proposedto appoint Deloitte Haskins & Sells Chartered Accounts (ICAI Firm Registration No.117366W/W-100018) as the Statutory Auditors of the Company for a term of five (5)consecutive years. Deloitte Haskins & Sells Chartered Accounts have confirmed theireligibility and qualification required under the Act for holding the office as StatutoryAuditors of the Company.

The Notes on Financial Statement referred to in the Auditors' Report areself-explanatory and do not call for further comments. The Auditors' Report does notcontain any qualification reservation adverse remark or disclaimer.

Cost Auditor

The Board had appointed M/s Pramod Chauhan & Associates Cost Accountants as theCost Auditors of the Company for the financial year 2016-17 for conducting the audit ofthe Cost Records of the Company.

Secretarial Auditor

The Board had appointed M/s Chandrasekaran Associates Company Secretaries to conductthe Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed with this report and marked as AnnexureIII. The Secretarial Audit Report does not contain any qualification reservationadverse remark or disclaimer.

Particulars of Employees and Related Information

The information required in terms of the provisions of Section 197(12) of the Act readwith Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed with this report.

Disclosure pertaining to remuneration and other details as required under Section197(12) of the Act read with Rules 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are also provided in the Annual Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.

Extract of Annual Return

Extract of the Annual Return in the prescribed format is annexed with this report andmarked as Annexure IV.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 relevant disclosure are given below:

a) Conservation of Energy

The Company is not an energy intensive unit hence alternate source of energy may notbe feasible. However regular efforts are made to conserve the energy. The Companyevaluates the possibilities and various alternatives to reduce energy consumption.Further use of low energy consuming LED lightings is being encouraged.

b) Technology Absorption

The Company is conscious of implementation of latest technologies in key working areas.Technology is ever- changing and employees of the Company are made aware of thelatest working techniques and technologies through workshops group e-mails and discussionsessions for optimum utilization of available resources and to improve operationalefficiency. The Company is not engaged in manufacturing activities therefore certaindisclosures on technology absorption and conservation of energy etc. are not applicable.

During the year there is no expenditure on Research and Development.

c) Foreign Exchange Earnings and Outgo

During the year under review the Company earned Rs. 28.51 crore of foreign exchange andused Rs. 4.34 crore of foreign exchange both on actual basis.

General

During the year under review:

1. The Company had not issued any equity shares with differential rights as todividend voting or otherwise.

2. The Company had not issued any shares (including sweat equity shares) to employeesof the Company under any scheme. Voting rights on the shares issued to employees inearlier years under Employees' Stock Option Schemes of the Company are either exercised bythem directly or through their appointed proxy.

3. No significant and/or material order was passed by any Regulator/ Court/Tribunalwhich impacts the going concern status of the Company or its future operations.

4. No fraud has been reported by Auditors to the Audit Committee or the Board.

Acknowledgment

The Board of Directors wish to place on record their appreciation for the faith reposedin the Company and continuous support extended by all the employees members customersjoint venture partners/ associates investors government authorities bankers and variousstakeholders.

For and on behalf of the Board of Directors

Adil Zainulbhai

Chairman

Place: Mumbai

Date: July 18 2017