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Diligent Media Corporation Ltd.

BSE: 540789 Sector: Media
NSE: DNAMEDIA ISIN Code: INE016M01021
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VOLUME 313
52-Week high 6.01
52-Week low 0.30
P/E
Mkt Cap.(Rs cr) 5
Buy Price 0.44
Buy Qty 2787.00
Sell Price 0.42
Sell Qty 7051.00
OPEN 0.44
CLOSE 0.42
VOLUME 313
52-Week high 6.01
52-Week low 0.30
P/E
Mkt Cap.(Rs cr) 5
Buy Price 0.44
Buy Qty 2787.00
Sell Price 0.42
Sell Qty 7051.00

Diligent Media Corporation Ltd. (DNAMEDIA) - Director Report

Company director report

To the Members

Your Directors take pleasure in presenting the 13th Annual Report of your Companytogether with Audited Financial Statements for the year ended March 31 2018 prepared asper Indian Accounting Standards prescribed under Section 133 of the Companies Act 2013and the first Annual Report since Listing of the Equity Shares of your Company on theStock Exchanges in December 2017.

FINANCIAL HIGHLIGHTS

The financial performance of your Company for the year ended March 31 2018 issummarized below. The financial performance for FY 2017-18 includes e3ect of a NCLTapproved Scheme which became e3ective on and from July 28 2017 and accordingly are notcomparable with the financial statements of previous year.

(Rs. in Millions)

Particulars 31-3-2018 31-3-2017
Revenue from Operations 1240.35 853.12
Other Income 30.85 63.21
Total revenues 1271.20 916.33
Total expenses 1870.96 1304.83
Loss before tax (599.76) (388.50)
Tax Expenses (Net) 382.00 (133.34)
Loss for the year (981.76) (255.16)

There have been no material changes and commitments that have occurred after close ofthe financial year till the date of this report which a3ect the financial position of theCompany. Based on internal financial control framework and compliance systems establishedin the Company and verified by the statutory and internal auditors and reviews performedby the management and/or the Audit Committee of the Board your Board is of the opinionthat Company’s internal financial controls were adequate and e3ective during thefinancial year 2017-18.

DIVIDEND

In view of the carry forward losses and losses during the year your Board expresstheir inability to recommend any dividend for the year under review.

REVIEW OF OPERATIONS

The year under review witnessed opening of a new chapter of your Company’sjourney with re-launch of erstwhile franchise editions of DNA in Jaipur & Ahmedabadas independent editions in June 2017 Company’s entry in regional newspaper marketwith launch of a Marathi weekly newspaper Zee Marathi Disha in December 2017 and listingof Company’s equity shares on the Stock Exchanges in December 2017 in pursuance of aScheme. With these launches your Company currently has 4 editions of English dailynewspaper DNA (Mumbai Delhi Jaipur and Ahmedabad) a weekly Marathi language newspaperand digital editions of these newspaper in its business portfolio.

While the New Delhi edition of DNA has managed to carve out a distinct niche in theminds of urban consumers the Company has been able to build-on and expand the existingreadership & advertiser base in Jaipur and Ahmedabad. Zee Marathi Disha yourCompany’s latest o3ering has also been received well by the readers and advertisersdriving on its content and brand connect with Zee Marathi a leading Marathi GeneralEntertainment Channel. Additionally with view to increase Customer connect and o3ergreater value to the advertisers your Company had enhanced its focus on on-ground eventsbusiness by organizing events like DNA Eco-Ganesha DNA Auto Show etc.

With the above expansion your Company continues to focus on achieving operationale3ciencies by re-vamping editorial team refreshing content and utilizing spare capacityat the Printing press by printing for others on job-work basis. As part of this exerciseit is proposed to dispose-o3 non-core asset of the Company being immovable propertycomprising of part of leasehold land and building adjacent to the existing printing pressat Mahape in Navi Mumbai Maharashtra. A proposal seeking shareholders’ approvalpursuant to Section 180(1)(a) of the Companies Act 2013 for sale/lease of the immovableproperty forms part of the Notice of ensuing Annual General Meeting. The funds receivedupon sale of immovable property shall be used to repay debt and/or fund the businessrequirements.

With these expansions along with continued focus on achieving operational e3cienciesand projected growth in the Indian economy your Company is expected to achieveoperational break-even at a faster pace and enter a high growth trajectory in near future.

CORPORATE RESTRUCTURING

During the year under review the Print Media business carried on by the Company itserstwhile Holding Company Zee Media Corporation Limited (ZMCL) and other Print Mediasubsidiaries of ZMCL viz. Mediavest India Private Limited (Mediavest) and Pri-MediaServices Private Limited (Pri-Media) was consolidated under and vested with the Companyin pursuance of a Scheme of Arrangement and Amalgamation approved by the Mumbai Bench ofthe Hon’ble National Company Law Tribunal (NCLT) vide an Order dated June 8 2017.In pursuance of the said Scheme the Print Media Undertaking of ZMCL along with the assetsand liabilities of the said undertaking including the equity investment of ZMCL inMediavest & Pri-Media was vested with the Company and post such vesting the PrintMedia Subsidiaries of ZMCL viz. Mediavest and Pri-Media along with their assets andliabilities merged with the Company with e3ect from Appointed Date of April 1 2017.

Further in pursuance of the said Scheme the entire Pre-Scheme Paid-up Equity ShareCapital of the Company held by Mediavest stood cancelled. The Pre-Scheme Equity ShareCapital along with the balances lying in the Securities Premium Account and CapitalReserve Account (including the reserves generated in pursuance of the Scheme) was adjustedagainst the debit balance in the Statement of Profit & Loss Account of the Company.

As per the Scheme and in consideration of the Demerger on October 9 2017 yourCompany issued and allotted 117708018 Equity Shares of ` 1 each to the Shareholders ofZMCL in the ratio of 1 (one) Equity Share of ` 1 each of the Company for every 4 (four)Equity Shares of ` 1 each held in ZMCL as on Record Date and the Equity Shares of theCompany got listed on BSE Limited and National Stock Exchange of India Limited on and fromDecember 11 2017.

The above Scheme on one-hand consolidated the Print Media business under the Companyenabling charting of an independent strategy and growth path for the business and on theother unlocked the value for Shareholders of ZMCL.

CAPITAL STRUCTURE

In pursuance of above Scheme:

• Consequent to combination of Authorised Share Capital of Mediavest and Pri-Mediaupon amalgamation the Authorised Share Capital of the Company stood increased to `6005.50 Million comprising of 1635.50 Million Equity Shares of ` 1 each and 4370Million Preference Shares of ` 1 each; and

• The entire Pre-Scheme Paid-up Equity Share Capital stood cancelled and uponallotment of 117708018 Equity Shares of ` 1 each to the Shareholders of ZMCL inpursuance of the Scheme the Paid-up Share Capital of the Company as at March 31 2018 was` 4480.40 Million comprising of 117708018 Equity Shares of ` 1 each and 4362656265– 6% Non-Cumulative Non-Convertible Redeemable Preference Shares of ` 1 each.

REGISTERED OFFICE

Your Company shifted its Registered Office within the city limits to 18th Floor AWing Marathon Futurex N M Joshi Marg Lower Parel Mumbai 400 013 with e3ect fromOctober 1 2017.

CORPORATE GOVERNANCE & POLICIES

Post listing your Company is in compliance with all applicable Corporate Governancerequirements under Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (‘Listing Regulations’). A Report onCorporate Governance as stipulated in the Listing Regulations as also a ManagementDiscussion and Analysis Report forms part of this Annual Report. Certificate from theStatutory Auditors of the Company M/s. B S Sharma & Co. Chartered Accountantsconfirming compliance with the provisions of Corporate Governance as stipulated under theListing Regulations is annexed to the said Corporate Governance Report.

In compliance with the requirements of the Companies Act 2013 and the ListingRegulations your Board had approved various Codes and Policies including Code of Conductfor Directors & Senior Management Policy for determining Material Events Policy forPreservation of Documents and Archival of Records Related Party Transaction PolicyWhistle Blower and Vigil Mechanism Policy and Remuneration Policy. All these Codes andPolicies along with the terms and conditions of appointment of Independent Directors andbrief on Directors Familiarization Programs can be viewed on Company’s websitewww.dnaindia.com.

In compliance with regulatory requirements the Nomination and Remuneration Committeeof your Board has fixed criteria for nominating a person on the Board which inter aliainclude desired size and composition of the Board age limit qualification/experienceareas of expertise and independence of individual. The Committee had also approvedin-principle that the initial term of an Independent Director shall not exceed 3 years.

DIRECTORS & KEY MANAGERIAL PERSONNEL

As at March 31 2018 your Board comprised of 4 (Four) Directors including two (2)Independent Directors one (1) Non-Executive Director and one (1) Executive Director.Independent Directors provide declarations both at the time of appointment and annuallyconfirming that they meet the criteria of independence as prescribed under Companies Act2013 and Listing Regulations. During FY 17-18 your Board met 4 (four) times details ofwhich are available in the Corporate Governance Report annexed to this report.

During the year under review Mr. Himanshu Mody resigned as Director of the Companywith e3ect from September 1 2017. Mr. A V Ramachandran Executive Director of erstwhilePri-Media Services Private Limited (merged with the Company) was appointed as anAdditional Director in the category of Executive Director of the Company and alsonominated as Occupier under the Factories Act 1948 with e3ect from September 1 2017.The said appointment of and payment of remuneration to Mr. A V Ramachandran as anExecutive Director was based on the recommendation of the Nomination and RemunerationCommittee and subject to approval of the Shareholders at the ensuing Annual GeneralMeeting. In terms of Section 161 of the Companies Act 2013 Mr. A V Ramachandran holdsOffice upto the ensuing Annual General Meeting. The Company has received a notice from aMember proposing appointment of Mr. A V Ramachandran as a Director liable to retire byrotation and requisite proposal seeking your approval for his appointment as a Directorand also his appointment and payment of remuneration as Executive Director of theCompany for a period of three years with e3ect from September 1 2017 forms part of theNotice of ensuing Annual General Meeting. Your Board recommends the said proposals forapproval of the Members.

Subsequent to the year end Mr. Mukund Galgali resigned as Director of the Company withe3ect from August 1 2018.

At the meeting held on July 20 2018 your Board had while taking on record resignationof Mr. Mukund Galgali approved appointment of Mr. Ashok Venkatramani as an AdditionalDirector with e3ect from August 1 2018. In terms of Section 161 of the Companies Act2013 Mr. Ashok Venkatramani shall hold Office till the ensuing Annual General Meeting.The Company has received a notice from a member proposing appointment of Mr. AshokVenkatramani as Director and a proposal seeking Shareholders approval for his appointmentas Director of the Company liable to retire by rotation forms part of Notice of ensuingAnnual General Meeting. Your Board recommends the said appointment for your approval.

As at March 31 2018 Mr. Sanjeev Garg Chief Executive Officer Mr. Dinesh AgarwalChief Financial Officer and Mr. Prathamesh Joshi Company Secretary were nominated as KeyManagerial Personnel (KMP) in compliance with the requirements of Section 203 of theCompanies Act 2013. Subsequent to the year end Mr. Sanjeev Garg resigned as CEO of theCompany with e3ect from April 18 2018.

During the year under review consequent to resignation of Mr. Jagdish Chandra as CEOwith e3ect from July 10 2017 Mr. Sanjeev Garg was appointed as CEO on September 1 2017.Mr. Dinesh Agarwal and Mr. Prathamesh Joshi were nominated as KMP in the category of CFOand Company Secretary respectively with e3ect from October 1 2017 replacing Mr. KamalDhingra and Mr. Mehul Somaiya the CFO and Company Secretary respectively of the Companytill September 30 2017.

BOARD EVALUATION

In a separate meeting of Independent Directors held without the presence of otherDirectors and Management the Independent Directors had based on various criteriadetailed in a structured assessment sheet evaluated performance of the Chairman andExecutive Director and also performance of the Board and various Board Committees. Areport on such evaluation done by Independent Directors was taken on record by the Boardand further the Board had in compliance with the requirements of Companies Act 2013evaluated performance of all Independent Directors based on various parameters includingattendance contribution etc. The details of the evaluation process forms part of theCorporate Governance Report annexed to this report.

BOARD COMMITTEES

In compliance with the requirements of Companies Act 2013 and Listing Regulationsyour Board had constituted various Board Committees including Audit Committee Nomination& Remuneration Committee and Stakeholders Relationship Committee. Details ofconstitution of these Committees which are in accordance with regulatory requirementshave been uploaded on the website of the Company. Further the details of constitutionterms of reference number of meetings of the Board Committees held during Financial year2017-18 along with the details of attendance of Committee Members therein forms part ofthe Corporate Governance Report annexed to this report.

AUDITORS

Statutory Audit: M/s. B. S. Sharma & Co. Chartered Accountants holding FirmRegistration No. 128249W was appointed by the Members at the 12th Annual General Meetingheld on July 20 2017 as Statutory Auditor of the Company to hold such Office for thesecond term of five (5) years until the conclusion of 17th Annual General Meeting to beheld in the year 2022 subject to ratification by the Members at every Annual GeneralMeeting.

As per recent amendment to Section 139 of the Companies Act 2013 e3ective May 7 2018the requirement of seeking Shareholders ratification for continuation of a StatutoryAuditor at every Annual General meeting has been done away and accordingly the Notice ofensuing Annual General Meeting does not include any proposal in this regard. The Companyhas received certificate of eligibility in accordance with the provisions of the CompaniesAct 2013 from M/s B S Sharma & Co Chartered Accountants and a confirmation thatthey continue to hold valid Peer Review Certificate as required under Listing Regulations.

Secretarial Audit: In terms of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit for the Financial Year 2017-18 was carried out by Mr. Satish K ShahPracticing Company Secretary (holding ICSI Certificate of Practice No. 3142).

The reports of Statutory Auditor and Secretarial Auditor forming part of this Annualreport do not contain any qualification reservation or adverse remarks. The Statutory

Audit report includes an emphasis of matter drawing shareholders attention to a noterelating to the Scheme of Arrangement and Amalgamation inter alia for demerger andvesting of Print Media business in the Company.

During FY 17-18 the Statutory Auditor had not reported any matter under Section143(12) of the Companies Act 2013 and therefore no disclosures are required pursuant toSection 134(3) (ca) of the Companies Act 2013.

The Company is not required to maintain cost records and/ or appoint Cost Auditor asper Section 148 of the Companies Act 2013 read with Companies (Cost Records & Audit)Rules 2014.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Requisite Information under Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 for the year ended March 31 2018 is annexedto this Report as Annexure A.

PARTICULARS OF EMPLOYEES

Your Company had 425 employees as at March 31 2018. The information required under theprovisions of Section 197 of the Companies Act 2013 read with Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 along with statementshowing names and other particulars of top 10 employees including employees drawingremuneration in excess of the limits prescribed under the said rules is annexed to thisreport as Annexure B.

DISCLOSURES

i. Particulars of loans guarantees and investments: Particulars of loans guaranteesand investments made by the Company as required under Section 186(4) of the Companies Act2013 are given in Note No. 33 to the Financial Statements.

ii. Transactions with Related Parties: All contracts/ arrangements/transactions enteredby the Company during the financial year 17-18 with related parties were on arm’slength basis in the ordinary course of business and in compliance with applicableprovisions of the Companies Act 2013 and Listing Regulations. During the year underreview there have been no materially significant transactions of the types prescribedunder Section 188(1) with related parties as defined under Section 2(76) of the CompaniesAct 2013 (Act) and accordingly the information as prescribed under Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 in Form AOC-2 are notprovided.

Related party transactions proposed to be entered into by the Company are placed beforethe Audit Committee for its approval and statement of all executed related partytransactions are placed before the Audit Committee for its review on quarterly basis.

Notice of ensuing Annual General Meeting includes a proposal seeking Shareholders’approval/ratification for material related party transaction by the Company with ZeeEntertainment Enterprises Limited (ZEEL) an Essel Group Company and a related party asper Indian Accounting Standards. These material related party transactions for

(a) payment of License fees by the Company to ZEEL for usage of brand/logo of ZeeMarathi in Zee Marathi Disha a weekly Marathi newspaper of the Company; and

(b) receiving proportionate advertisement revenue earned by the Company fromadvertisement sold by ZEEL as combo-deals at negotiated rates on arm’s length basiswould be in the interest of the Company and therefore recommended by your Board for yourapproval.

iii. Deposits: Your Company has not accepted any public deposit under Chapter V of theCompanies Act 2013.

iv. Extract of Annual Return: Extract of Annual Return in Form MGT-9 as required underSection 92(3) of the Act read with Companies (Management & Administration) Rules 2014is annexed to this report as Annexure C.

v. Sexual Harassment: Your Company has zero tolerance towards sexual harassment atworkplace and has adopted a Policy on prevention prohibition and redressal of sexualharassment at workplace in line with the requirement of Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 (POSH Act) and the Rulesthereunder. In accordance with POSH Act your Company has constituted Internal ComplaintsCommittee. There was no complaint on sexual harassment during the year under review.

vi. Regulatory Orders: No significant or material orders were passed by any regulatorsor courts or tribunals which impact the going concern status and Company’s operationsin future.

vii. Internal Financial Controls and their adequacy: Your Company has implementedinternal financial controls and policies / procedures for orderly and e3cient conduct ofthe business including safeguarding of assets prevention and detection of frauds anderrors ensuring accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act 2013 in relationto the Annual Financial Statements for the Financial Year 2017-18 your Directors confirmthat:

a) The Financial Statements of the Company comprising of the Balance Sheet as at March31 2018 and the Statement of Profit & Loss for the year ended on that date have beenprepared on a going concern basis;

b) In preparation of the Financial Statements applicable accounting standards havebeen followed and there are no material departures;

c) Accounting policies selected were applied consistently and the judgments andestimates related to the financial statements have been made on a prudent and reasonablebasis so as to give a true and fair view of the state of affairs of the Company as atMarch 31 2018 and of the loss of the Company for the year ended on that date;

d) Proper and su3cient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Act to safeguard the assets of theCompany and for preventing and detecting fraud and other irregularities;

e) Requisite Internal financial controls were laid down and that such financialcontrols are adequate and operating e3ectively; and

f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating e3ectively.

ACKNOWLEDGEMENTS

Your Board takes this opportunity to place on record its appreciation for thededication and commitment of employees shown at all levels which have contributed to thesuccess of your Company. Your Directors also express their gratitude for the valuablesupport and co-operation extended by all stakeholders including banks financialinstitutions customers vendors service providers and regulatory authorities.

For and on behalf of the Board
Mukund Galgali
Chairman
Place: Mumbai A V Ramachandran
Date : July 20 2018 Executive Director