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Den Networks Ltd.

BSE: 533137 Sector: Media
NSE: DEN ISIN Code: INE947J01015
BSE 09:28 | 21 Jun 58.20 0.10
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57.25

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58.20

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56.80

NSE 09:19 | 21 Jun 57.50 -0.65
(-1.12%)
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57.60

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OPEN 57.25
PREVIOUS CLOSE 58.10
VOLUME 12315
52-Week high 115.05
52-Week low 41.60
P/E 11.30
Mkt Cap.(Rs cr) 2,777
Buy Price 58.10
Buy Qty 4801.00
Sell Price 58.20
Sell Qty 1601.00
OPEN 57.25
CLOSE 58.10
VOLUME 12315
52-Week high 115.05
52-Week low 41.60
P/E 11.30
Mkt Cap.(Rs cr) 2,777
Buy Price 58.10
Buy Qty 4801.00
Sell Price 58.20
Sell Qty 1601.00

Den Networks Ltd. (DEN) - Director Report

Company director report

Dear Members

The Board of Directors is pleased to present the Company's ThirteenthAnnual Report and the Company's audited financial statements for the financial year endedMarch 312020.

1. FINANCIAL RESULTS

The financial performance of the Company (Standalone and Consolidated)for the year ended March 312020 is summarized below:

(Rs in million)

Particulars

Standalone

Consolidated

2019-20 2018-19 2019-20 2018-19
Revenue from operations 11954.83 10093.41 12914.52 12060.65
Profit/(loss) before interest depreciation and exceptional items 3213.07 1325.37 3873.27 2290.37
Less: Interest 310.32 556.49 318.33 586.55
Depreciation and amortisation expenses 1663.90 1452.68 2467.86 2415.70
Exceptional items - 1507.00 - 2111.00
Share of profit/ (loss) of Associates - - 11.26 (53.94)
Profit/(loss) for the year 1238.85 (2190.80) 1098.34 (2876.82)
Total tax expense (including Current tax and deferred tax) 375.85 - 511.96 128.68
Profit/(loss) after tax 863.00 (2190.80) 586.38 (3005.50)
Add: Other Comprehensive Income (5.48) 9.15 (4.91) 13.57
Total Comprehensive Income for the year 857.52 (2181.65) 581.47 (2991.93)
Earning Per Share (in t) (Basic & Diluted) 1.81 (9.19) 1.47 (11.63)

2. Transfer to Reserve

The Board of Directors of the Company has not proposed to transfer anyamount to the Reserves for the year under review.

3. Results of Operations and State of Company's affairs

During the year under review the total revenue from operations was Rs11954.83 million on standalone basis and Rs 12914.52 million on consolidated basis ascompared to the last year's revenue of Rs 10093.41 million on standalone basis and Rs12060.65 million on consolidated basis respectively. The Post-Tax Profit of your Companywas Rs 863.00 million on standalone basis and Rs 586.38 million on consolidated basis ascompared to the last year's Post Tax Loss of Rs 2190.80 million on standalone basis andRs 3005.50 million on consolidated basis respectively.

4. Operational Highlights

A. Implementation of New TRAI Order

During the year we have successfully migrated majority of the STBsfrom post-paid model to the pre-paid model under the new Tariff order which has improvedour revenue and collection processes. Additionally this has resulted in better workingcapital management as the Company collects the subscription before rendering its services.Moreover the content is now pass-through because of which the increased content cost asper the new order possesses no challenge. Telecommunication (Broadcasting and Cable)Services (Eighth) (Addressable Systems) Tariff (Second Amendment) Order 2020 notified bythe Telecom Regulatory Authority (TRAI) on January 12020 is currently subjudice.

B. Process Improvement

The Company has removed mundane and routine tasks and replace themwith a system that does not need much human interaction. Using atomization we haveimproved our business processes which has led to lower costs motivated employees andhappier customers. During the year the Company also automated its banking processallowing LCOs to generate e-agreements. Other process improvement initiatives include SAPprocess improvements virtual account setup facilities online collection tools such asCDM cards Host-to-Host integration.

C. Composite Scheme of Amalgamation and Arrangement

During the year under review the Board of Directors of the Company onrecommendation of the Audit Committee approved the Composite Scheme of Amalgamation andArrangement between the Company Hathway Cable and Datacom Limited (Hathway) TV18Broadcast Limited (TV18) Network18 Media & Investments Limited (Network!8) Media18Distribution Services Limited (Media18) Web18 Digital Services Limited (Web18) andDigital18 Media Limited (Digital!8) and their respective shareholders and creditors withappointed date February 12020 under the applicable provisions of the Companies Act 2013("the Act").

The Scheme inter - alia provides for amalgamation of the Company TV18and Hathway into Network18 and transfer of the cable broadband and digital businesses byNetwork18 to it's 3 (three) separate wholly owned subsidiaries namely Media18 Web18 andDigital18 respectively.

The said Scheme is inter alia subject to approval from shareholders andcreditors of the companies which are party to the Scheme approval of the BSE Limited theNational Stock Exchange of India Limited the Securities and Exchange Board of India(SEBI) the Central Government the Hon'ble National Company Law Tribunal the Departmentof Telecommunication and any other appropriate authorities as may be required.

5. Dividend

The Board of Directors of the Company has not recommended any dividendon Equity Shares for the year under review.

The Dividend Distribution Policy of the Company is annexed herewith andmarked as Annexure A to this Report and the same is put up on the Company's website andcan be accessed at https://www.dennetworks.com/upload/code_conduct/Dividend-Distribution-Policy.pdf.

6. Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under reviewas stipulated under the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") is presentedin a separate section forming part of the Annual Report.

7. Credit Rating

The details of credit ratings are disclosed in the Corporate GovernanceReport which forms part of the Annual report.

8. Consolidated Financial Statement

In accordance with the provisions of the Act and Listing Regulationsread with Ind AS-110 (Consolidated Financial Statement) Ind AS-28 (Investments inAssociates and Joint Ventures) the consolidated audited financial statement forms part ofthe Annual Report.

9. Change in Registered office of the Company

The Registered Office of the Company is situated at New Delhi in theNational Capital Territory (NCT) of Delhi. The Board of Directors of your Company at itsmeeting held on February 17 2020 has approved shifting of the Registered Office of theCompany from the NCT of Delhi to the State of Maharashtra i.e. within the Jurisdiction ofthe Registrar of Companies Maharashtra at Mumbai subject to requisite approvals. TheShareholders of the Company through Postal Ballot dated March 27 2020 have accorded theirapproval for shifting of the Registered Office as aforesaid.

10. Employees' Stock Option Schemes

The Company had adopted the DEN Employee Stock Option Scheme in 2010and DEN Employee Stock Option Scheme- Plan B in 2014 ("DEN ESOP Schemes"). Sincethere were no outstanding options (whether vested or unvested) and the Company does notpropose to grant any new stock options to its employees under DEN ESOP Schemes the Boardof Directors at its meeting held on February 17 2020 gave its approval to discontinue DENESOP Schemes.

11. Subsidiaries Joint Ventures and Associate Companies

During the year under review and till the date of this report nocompany has become or ceased to be subsidiary joint venture or associate of the Company.

A statement providing details of performance and salient features ofthe financial statements of Subsidiary/ Associate/ Joint Venture companies as per Section129(3) of the Act is provided as "Annexure B" to this Report.

The audited financial statement including the consolidated financialstatement of the Company and all other documents required to be attached thereto is put upon the Company's website and can be accessed at https://www.dennetworks. com/Investors.The financial statements of the subsidiaries as required are put up on the Company'swebsite and can be accessed at https://www.dennetworks.com/Investors.

The Company has formulated a Policy for determining MaterialSubsidiaries and the same is placed on the Company's website at the link:https://www.dennetworks. com/upload/code_conduct/Policy%20on%20material%20 subsidiary.pdf

12. Secretarial Standards

The Directors state that applicable Secretarial Standards i.e. SS-1and SS-2 relating to 'Meetings of the Board of Directors' and 'General Meetings'respectively have been duly followed by the Company.

13. Directors' Responsibility Statement

The Board of Directors state that:

a) in the preparation of the annual accounts for the year ended March31 2020 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there were no material departures from thesame;5

b) the Directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 312020and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) the Directors have prepared the annual accounts on a 'going concern'basis;

e) the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and

f) the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.

14. Corporate Governance

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

The detailed Corporate Governance Report of the Company in pursuance ofthe Listing Regulations forms part of the Annual Report of the Company. The requisiteCertificate from a Practicing Company Secretary confirming compliance with the conditionsof Corporate Governance as stipulated under the Listing Regulations is attached to theCorporate Governance Report.

15. Business Responsibility Report

As stipulated under the Listing Regulations the BusinessResponsibility Report (BRR) describing the initiatives taken by the Company from anenvironmental social and governance perspective is attached as part of Annual Report.

16. Contracts and arrangements with Related Parties

All contracts / arrangements / transactions entered by the Companyduring the financial year with related parties were in its ordinary course of business andon an arm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions orwhich is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read withSection 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014.

Members may refer Note 33 to the Standalone Financial Statement whichsets out related party disclosures pursuant to Ind AS/applicable accounting standards.

The Policy on Materiality of Related Party Transactions and on dealingwith Related Party Transactions as approved by the Board is put up on the Company'swebsite and can be accessed at https://www.dennetworks.com/upload/code_conduct/Related%20Party%20Transactions%20Policy-DEN. pdf

There were no materially significant related party transactions whichcould have potential conflict with interest of the Company at large.

17. Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.

In terms of the CSR Policy the focus areas of engagement shall beaffordable healthcare solutions access to quality education promotion of sportsenvironmental sustainability and other need based initiatives.

The Company's average net profit for the three immediately precedingfinancial years was negative. Hence in terms of the Act during the year under reviewthe Company was not required to spend any amount on CSR activities.

The CSR Policy may be accessed on the Company's website atwww.dennetworks.com/index.php/corporate- announcement#corporate-governance

18. Risk Management

The Company has in place Risk Management Committee which hasestablished a robust Risk Management Policy and an adequate risk management infrastructurein place capable of addressing all the risks that the organization faces such asfinancial credit market liquidity security IT (cyber risk) legal regulatoryreputational risks and such other risks.

The Risk Management Committee manages monitors and reports on theprincipal risks and uncertainties that can impact its ability to achieve its strategicobjectives. The Company's management systems organisational structures processesstandards code of conduct and behaviors that governs how the Company conducts thebusiness and manages associated risks.

19. Internal Financial Controls

The Company has adequate internal financial controls commensurate withthe size of the business and nature of its operations designed to provide reasonableassurance with regard to the accuracy and completeness of the accounting records andtimely preparation and provision of reliable financial statements.

20. Directors and Key Managerial Personnel

In accordance with the provisions of the Act and the Articles ofAssociation of the Company Shri. Anuj Jain (DIN: 08351295) Director of the Companyretires by rotation at the ensuing Annual General Meeting and being eligible has

offered himself for re-appointment. The Board of Directors hasrecommended his re-appointment.

During the year the Board of Directors of the Company has appointedMr. Rajendra Dwarkadas Hingwala (DIN: 00160602) as an Additional Director designated asan Independent Director of the Company for a period of 3 (three) consecutive years fromDecember 212019. Appointment of Shri Rajendra Dwarkadas Hingwala as an IndependentDirector of the Company was subsequently approved by the Shareholders of the Companythrough Postal Ballot on March 27 2020.

In the opinion of the Board Shri Rajendra Dwarkadas Hingwala carriesrich experience in taxation and foreign investments matters and it is expected that theCompany would be immensely benefited from the rich experience of Shri Hingwala.

The Company has received separate declarations from all IndependentDirectors of the Company respectively confirming that

(i) they meet with the criteria of independence as prescribed underSection 149(6) of the Act and the Listing regulations and

(ii) they have registered their names in the Independent Directors'Databank.

The Company has devised inter alia the following Policies:

a) Policy for Selection of Directors and determining Directors'independence; and

b) Remuneration Policy for Directors Key Managerial Personnel SeniorManagement and other employees.

The aforesaid policies are put up on the Company's website atwww.dennetworks.com/index.php/corporate- announcement#corporate-governance.

The Policy for selection of Directors and determining Directors'independence sets out the guiding principles for the Nomination and Remuneration Committeefor identifying persons who are qualified to become Director and to determine theindependence of Directors in case of their appointment as Independent Directors of theCompany. The Policy also provides for the factors in evaluating the suitability ofindividual Board members with diverse background and experience that are relevant for theCompany's operations.

There has been no major change in the aforesaid policy during the year.

The Remuneration Policy for Directors Key Managerial Personnel andother employees sets out the guiding principles for the Nomination and RemunerationCommittee for recommending to the Board the remuneration of the Directors Key ManagerialPersonnel and other employees. There has been no change in the policy during the currentyear.

21. Performance Evaluation

The Company has a policy for performance evaluation

of the Board Committees and other individual Directors (includingIndependent Directors) which include criteria for performance evaluation of Non-executiveDirectors and Executive Directors.

In accordance with the manner specified by the Nomination andRemuneration Committee the Board carried out annual performance evaluation of the Boardits Committees and Individual Directors. The Independent Directors carried out annualperformance evaluation of the Chairperson the non-independent directors and the Board asa whole. The Chairman of the respective Committees shared the report on evaluation withthe respective Committee members. The performance of each Committee was evaluated by theBoard based on report on evaluation received from respective Committees. A consolidatedreport was shared with the Chairman of the Board for his review and giving feedback toeach Director.

22. Auditors and Auditors' Report

A. Statutory Auditors

M/s. Chaturvedi & Shah LLP Chartered Accountants (FirmRegistration Number 101720W/W100355) were appointed as Auditors of the Company for a termof 5 (five) consecutive years at the Annual General Meeting held on September 23 2019.They have confirmed their eligibility and qualifications required under the Act forholding office as Auditors of the Company.

The Notes on financial statement referred to in the Auditors' Reportare self-explanatory and do not call for any further comments. The Auditors' Report doesnot contain any qualification reservation adverse remark or disclaimer.

B. Secretarial Auditor

The Board of Directors of the Company had appointed M/s. NKJ &Associates Company Secretaries to conduct Secretarial Audit for the financial year201920. The Secretarial Audit Report for the financial year ended March 31 2020 isannexed herewith marked as "Annexure C" to this Report. The Secretarial AuditReport does not contain any qualification reservation adverse remark or disclaimer.

C. Cost Auditor

The Board of Directors of the Company has appointed M/s. Ajay KumarSingh & Company Cost Accountants (Firm Registration no. 000386) as Cost Auditors ofthe Company to conduct the audit of the cost records of the Company for the financial year2019-20 under Section 148 of the Act read with the Companies (Cost Records and Audit)Rules 2014. Further the Company has appointed M/s. Ajay Kumar Singh & Company CostAccountants to conduct the audit of the cost records of the Company for the financialyear 2020-21.

23. Disclosures

A. Meetings of the Board

During the financial year ended on March 31 2020 6 (Six) BoardMeetings were held. Further details of the meetings of the Board are given in theCorporate Governance Report forming part of this report.

B. Audit Committee

The Audit Committee of the Company comprises Shri Ajaya Chand(Chairman) Shri Atul Sharma Dr. (Ms.) Archana Niranjan Hingorani Non-ExecutiveIndependent Directors and Shri Saurabh Sancheti NonExecutive Director as members. Duringthe year all the recommendations made by the Audit Committee were accepted by the Board.

C. Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee comprises Shri AjayaChand (Chairman) Dr. (Ms.) Archana Niranjan Hingorani Non - Executive IndependentDirectors and Shri Sameer Manchanda Executive Director as members.

D. Nomination and Remuneration Committee

The Nomination and Remuneration Committee of the Company comprises ShriAjaya Chand (Chairman) Dr. (Ms.) Archana Niranjan Hingorani Non-Executive IndependentDirectors Shri Sameer Manchanda Executive Director and Shri Saurabh SanchetiNonExecutive Director as members.

E. Stakeholders' Relationship Committee

The Stakeholders' Relationship Committee of the Company comprises ShriAjaya Chand (Chairman) Dr. (Ms.) Archana Niranjan Hingorani Non-Executive IndependentDirectors and Shri Sameer Manchanda Executive Director as Members.

F. Other Board Committees

In compliance with the provisions of the Act and Listing Regulationsthe Board has constituted Risk Management Committee.

The details of the composition dates of meetings attendance and termsof reference of each of the Committees are disclosed in the Corporate Governance Reportwhich forms part of this report.

G. Particulars of loans given investments made guarantees given andsecurities provided

Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilised by the recipient are provided in the Standalone FinancialStatement (Please refer Note 44 to the Standalone Financial Statement).

H. Vigil Mechanism

The Vigil Mechanism of the Company also incorporates a whistle blowerpolicy. Protected disclosures can be made by a whistle blower through an e-mail or aletter to the Compliance Officer or to the Chairman of the Audit Committee. The VigilMechanism and Whistle Blower Policy may be accessed on the Company's website atwww.dennetworks.com/index.php/ corporate-announcement#corporate-governance.

During the year under review no protected disclosure concerning anyreportable matter in accordance with the Vigil Mechanism and Whistle Blower Policy of theCompany was received by the Company.

24. Prevention of Sexual Harassment at Work Place

As per the requirement of the Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 ("POSH Act") and Rules madethereunder the Company has formed Internal Committee for various work places to addresscomplaints pertaining to sexual harassment in accordance with the POSH Act. The Companyhas a policy for prevention of Sexual Harassment which ensures a free and fair enquiryprocess with clear timelines for resolution. There were no cases/complaints filed duringthe year under POSH Act.

25. Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo

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

i) Conservation of Energy:

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

ii) Technology absorption:

The Company is conscious of implementation of latest technologies inkey working areas. Technology is ever- changing and employees of the Company are madeaware of the latest working techniques and technologies through workshops group e-mailsand discussion sessions for optimum utilization of available resources and to improveoperational efficiency. The Company is not engaged in manufacturing activities thereforecertain disclosures on technology absorption and conservation of energy etc. are notapplicable.

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

iii) Foreign Exchange Earnings and Outgo:

The summary of foreign exchange earnings and outgo are mentioned below:

(Rs in million)
Foreign Exchange Earnings : - NIL
Foreign Exchange Outgo : - Rs 174.20

26. Annual Return

As required under Section 134(3)(a) of the Act the Annual Return isput up on the Company's website and can be accessed at https://www.dennetworks.com/upload/annuallpdf/4727_001.pdf. Extracts of the Annual return in form MGT 9 for the FY 2019-20can be accessed at https:// www.dennetworks.com.

27. Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names of top ten employees in terms ofremuneration drawn and names and other particulars of the employees drawing remunerationin excess of the limits set out in the said rules forms part of this Report.

Disclosures relating to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this Report.

Having regard to the provisions of the second proviso to Section 136(1)of the Act and as advised the Annual Report excluding the aforesaid information is beingsent to the members of the Company. Any member interested in obtaining such informationmay write to the Company on email id investorrelations@denonline.in

28. General

The Board of Directors state that no disclosure or reporting isrequired in respect of the following items as there were no transactions or applicabilityon these items during the year under review:

i) Details relating to deposits covered under Chapter V of the Act.

ii) Issue of equity shares with differential rights as to dividendvoting or otherwise.

iii) Issue of shares (including sweat equity shares) to employees ofthe Company under any scheme save and except Employees' Stock Options Schemes referred toin this Report.

iv) Significant or material orders passed by the Regulators or Courtsor Tribunals which impact the going concern status and Company's operations in future.

v) Fraud reported by the Auditors to the Audit Committee or the Boardof Directors of the Company.

vi) Scheme of provision of money for the purchase of its own shares byemployees or by trustees for the benefit of employees.

vii) Payment of remuneration or commission from any of its holding orsubsidiary companies to the Managing Director of the Company.

viii) There has been no change in the nature of business of the Company

29. Acknowledgement

The Board of Directors would like to express their sincere appreciationfor the assistance and co-operation received from the financial institutions banksGovernment authorities business partners customers vendors and members during the yearunder review. The Board of Directors also wish to place on record their deep sense ofappreciation for the committed services by the Company's executives staff and workers.

For and on behalf of the Board of Directors
Sameer Manchanda
Chairman Managing Director
DIN:00015459
Date: April 21 2020
Place: Gurugram Haryana