The Board of Directors are pleased to present the 25th Annual Report and theCompany's Audited Financial Statements for the financial year ended March 31 2020.
The financial performance of the Company (Standalone and Consolidated) for the yearended March 31 2020 is summarized below:
(Rs in crore)
|Particulars ||Standalone ||Consolidated |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Revenue from Operations ||111.44 ||111.58 ||5357.15 ||5116.18 |
|Profit/(Loss) Before Interest Depreciation and Amortisation Expense and Exceptional Items ||(102.76) ||(164.91) ||603.70 ||109.87 |
|Less: Interest ||127.76 ||116.02 ||235.87 ||198.47 |
|Depreciation and Amortisation Expense ||7.23 ||7.28 ||174.63 ||142.05 |
|Exceptional Item ||233.56 ||346.16 ||50.00 ||- |
|Profit/(Loss) Before Tax ||(471.31) ||(634.37) ||143.20 ||(230.65) |
|Less: Tax Expenses* || || || || |
|(*includes current tax deferred tax short/ excess provision of tax relating to earlier years) ||0.50 ||0.28 ||87.06 ||(53.05) |
|Profit/(Loss) for the Year ||(471.81) ||(634.65) ||56.14 ||(177.60) |
|Add: Other Comprehensive Income ||(55.22) ||(10.46) ||(61.95) ||(20.02) |
|Total Comprehensive Income for the Year ||(527.03) ||(645.11) ||(5.81) ||(197.62) |
|Less: Total Comprehensive Income Attributable to Non- Controlling Interest ||- ||- ||288.79 ||120.80 |
|Total Comprehensive Income Attributable to Owners of the || || || || |
| ||- ||- ||(294.60) ||(318.42) |
|Company || || || || |
|Less: Appropriation (Transfer to General Reserve) ||- ||- ||- ||- |
|Earnings Per Share (Basic) (in `) ||(4.51) ||(6.06) ||(2.29) ||(2.93) |
Results of operations and the State of Company's affairs
The Highlights of the Company's Performance (Standalone)
During the year under review on standalone basis the Company recorded an operatingturnover of Rs 111.44 crore (previous year Rs 111.58 crore). The loss before interestdepreciation exceptional items and tax was Rs 102.76 crore (previous year Rs 164.91crore).
Financial Performance Review and Analysis (Consolidated)
The consolidated revenue from operations was Rs 5357.15 crore (previous year Rs5116.18 crore) and Profit Before interest depreciation exceptional items and tax of Rs603.70 crore (previous year Rs 109.87 crore).
A weak macro-environment and regulatory change in channel distribution draggedadvertiser spending especially on entertainment. However the dip in ad-revenue wasoffset by a growth in TV subscription revenue and acceleration in Digital syndication.Profitability improved led by broad-based cost controls improved ratings for flagshipchannels and operating leverage from non-ad revenue streams.
In view of the losses the Company does not propose to transfer any money to thereserves.
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 and the same is put up on the Company's website and can be accessed athttp://www.nw18.com/reports/ reports/policies/Dividend%20Distribution%20Policy_NW18.pdf.
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 2020 deposits and interest thereon aggregating to Rs 1.82crore remained unclaimed.
Material changes from the end of the financial year till the date of this Report
The outbreak of Coronavirus (COVID -19) pandemic globally and in India is causingsignificant disturbance and slowdown of economic activity. The COVID-19 pandemic is amajor blackswan event which has dragged the economy and the advertising environment as aresult. The Company has evaluated impact of this pandemic on its business operations andbased on its review and current indicators of future economic conditions there is nosignificant impact on its financial statements. However the severity of the pandemic andpace of its containment remain a key monitorable. The Company remains confident that itsportfolio of genre-defining brands shall weather this storm and emerge even stronger.
Scheme of Amalgamation and Arrangement
During the year under review the Board of Directors of the Company on therecommendation of the Audit Committee approved the composite Scheme of Amalgamation andArrangement between the Company Den Networks Limited (DEN) Hathway Cable and DatacomLimited (Hathway) TV18 Broadcast Limited (TV18) Media18 Distribution Services Limited(Media18) Web18 Digital Services Limited (Web18) and Digital18 Media Limited (Digital18)and their respective shareholders and creditors with appointed date February 1 2020under the applicable provisions of the Companies Act 2013 ("the Act").
The Scheme inter-alia provides for amalgamation of Den Hathway and TV18 into theCompany and transfer of the cable broadband and digital businesses to 3 (three) separatewholly owned subsidiaries of the Company namely Media18 Web18 and Digital18respectively.
The said Scheme is inter-alia subject to approval from shareholders and creditors ofthe companies which are party to the Scheme approval of the BSE Limited the NationalStock Exchange of India Limited the Securities and Exchange Board of India the CentralGovernment the Hon'ble National Company Law Tribunal the Department of Telecommunicationand any other appropriate authorities as may be required.
Management Discussion and Analysis Report
Management 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.
The Company has obtained credit rating for its Borrowing Programme viz.Long-term/Short-term and Commercial Paper Programme from CARE Ratings Limited ICRALimited and India Ratings & Research Private Limited. The details of Credit Ratingsare disclosed in the Corporate Governance Report which forms part of the Annual Report.
Consolidated Financial Statement
In accordance with the provisions of the Act the Listing Regulations read with Ind AS110 - Consolidated Financial Statements Ind AS 28 - Investments in Associates and Ind AS31 - Interests in Joint Ventures the audited consolidated financial statement forms partof 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 Discussion and Analysis Report.
During the year under review the Company has incorporated three wholly ownedsubsidiaries namely Digital18 Media Limited Web18 Digital Services Limited and Media18Distribution Services Limited. Further during the year under review TV18 Home ShoppingNetwork Limited ceased to be Associate of the Company.
A statement providing details of performance and salient features of financialstatements of subsidiary companies/joint ventures/ associate companies as per Section129(3) of the Act is provided as Annexure to the Consolidated Financial Statement andtherefore not repeated to avoid duplication.
The audited Financial Statement including the Consolidated Financial Statement of theCompany and all other documents required to be attached thereto are put up on theCompany's website and can be accessed at http://nw18. com/annualReport#scrollHere. Thefinancial statement of the subsidiaries of the Company are also put up on the Company'swebsite and can be accessed at http://nw18.com/finance-subsidiary.
The Company has formulated a Policy for Determining Material Subsidiaries and the sameis available on the website of the Company and can be accessed at http://www.nw18.com/reports/reports/policies/Network18-PolicyfordeterminingMaterialSubsidiaries.pdf.
The Company has followed applicable Secretarial Standards i.e. SS-1 and SS-2 relatingto "Meetings of the Board of Directors" and "General Meetings"respectively.
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 annual accounts for the financial year ended March 312020 the applicable Accounting Standards read with the requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame;
ii) 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 2020 and of the loss ofthe Company for the year ended on that date;
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 financialyear ended March 31 2020 on a going concern' basis;
v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by the Securities and ExchangeBoard of India ("SEBI").
The Corporate Governance Report of the Company in pursuance of the Listing Regulationsforms part of the Annual Report.
The requisite Certificate from a Practicing Company Secretary confirming compliancewith the conditions of Corporate Governance is attached to the Corporate GovernanceReport.
Business Responsibility Report
The Business Responsibility Report as stipulated under the Listing Regulationsdescribing initiatives taken by the Company from an environmental social and governanceperspective is attached as part of the Annual Report. This report inter-alia containsinitiatives w.r.t. stakeholder relationship customer relationship sustainability healthand safety.
Contracts or Arrangements with Related Parties
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in its ordinary course of business and on an arm's lengthbasis. Further the transactions with related parties were in compliance with applicableprovisions of the Act and the Listing Regulations. Omnibus approval was obtained for thetransactions which were foreseen and repetitive in nature. A statement of all relatedparty transactions was presented before the Audit Committee on a quarterly basis.
During the year the Company had not entered into any contract/ arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions or which is required tobe reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of theAct and Rule 8(2) of the Companies (Accounts) Rules 2014.
The Policy on Materiality of Related Party Transactions and on Dealing with RelatedParty Transactions is put up on the Company's website and can be accessed athttp://www.nw18.com/reports/reports/policies/Network18-PolicyonMaterialityofRPTanddealingwithRPT.PDF.
The details of the transactions with Related Parties are provided in Note No. 40 to thestandalone financial statement.
Corporate Social Responsibility
The Corporate Social Responsibility ("CSR") Committee's prime responsibilityis to assist the Board in discharging its social responsibilities by way of formulatingand monitoring implementation of the objectives set out in the Corporate SocialResponsibility Policy' ("CSR Policy"). The CSR Policy of the Company inter-aliacovers CSR vision and objective and also provides for governance implementationmonitoring and reporting framework. There has been no change in the policy during theyear.
The CSR policy of the Company can be accessed athttps://www.nw18.com/reports/reports/policies/Network18%20-%20Policy%20on%20Corporate%20Social%20Responsibility.pdf.
In terms of Company's CSR objectives and policy the focus areas of engagement are asunder:
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.
Ensuring environmental sustainability ecological balance and protection of flora andfauna.
The Company would also undertake other need based initiatives in compliance withSchedule VII to the Act.
The Company has not yielded any Profits during the previous three financial years.Hence in terms of Section 135 of the Act the Company was not required to spend anyamount on CSR activities.
The Company has an elaborate Risk Management Framework which is designed to enablerisks to be identified assessed and mitigated appropriately. The Board of Directors ofthe Company has constituted Risk Management Committee which has inter-alia beenentrusted with the responsibility of Overseeing implementation/Monitoring of RiskManagement Plan and Policy; and continually obtaining reasonable assurance from managementthat all known and emerging risks have been identified and mitigated or managed.
Further details on Risk Management activities are covered in Management Discussion andAnalysis section 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 implementation of audit recommendations.
Directors and Key Managerial Personnel
In accordance with the provisions of the Act and the Articles of Association of theCompany Ms. Jyoti Deshpande Director retires by rotation at ensuing Annual GeneralMeeting of the Company. The Nomination and Remuneration Committee and Board of Directorshave recommended her re-appointment.
Ms. Bhama Krishnamurhty was appointed as an Additional Director (Independent) w.e.f.October 15 2019 for a period of 5 (five) years upto October 14 2024 and she shall holdoffice as an Additional Director of the Company up to the date of ensuing Annual GeneralMeeting. Considering her expertise integrity and experience the Nomination andRemuneration Committee and Board of Directors have recommended her appointment.
During the year under review Ms. Renuka Ramnath Independent Director resigned fromthe Directorship of the Company w.e.f. October 15 2019. The Board places on record itsappreciation for the valuable contribution made by her during her tenure as Director ofthe Company.
The Company has received declarations from all the Independent Directors of the Companyconfirming that: (i) they meet the criteria of independence as prescribed under the Actand Listing Regulations; (ii) they have registered their names in the IndependentDirectors' Databank; and (iii) they have complied with the Code for Independent Directorsprescribed in Schedule IV to the Act.
Save and except aforementioned there was no other change in Directors and KeyManagerial Personnel of the Company.
The Company has in place Policy for Selection of Directors and determiningDirectors' Independence' and Remuneration Policy for Directors Key ManagerialPersonnel and other employees.' These policies are put up on the Company's website and canbe accessed at http://nw18.com/reports/reports/policies/Network18-PolicyonSelectionofDirectors&DeterminingIndependence.pdf andhttp://nw18.com/reports/reports/policies/Network18-RemunerationPolicyforDirectorsandKMP.pdf.
The Policy for Selection of Directors and determining Directors' Independence sets outguiding principles for Nomination and Remuneration Committee for identifying persons whoare qualified to become directors and determining directors' independence if the personis intended to be appointed as independent director. There has been no change in thispolicy during the year under review.
The Remuneration Policy for Directors Key Managerial Personnel and other employeessets out guiding principles for Nomination and Remuneration Committee for recommending tothe Board the remuneration of Directors Key Managerial Personnel and other employees.There has been no change in the policy during the year under review.
The Company has a policy for performance evaluation of the Board Committees and otherindividual Directors (including Independent Directors) which includes criteria forperformance evaluation of Non-Executive and Executive Directors.
In accordance with the manner specified by the Nomination and Remuneration Committeethe Board carried out performance evaluation of the Board its Committees and IndividualDirectors. The Independent Directors separately carried out evaluation of ChairpersonNon-Independent Directors and Board as a whole. The performance of each Committee wasevaluated by the Board based on views received from respective Committee Members. Thereport on performance evaluation of the Individual Directors was reviewed by theChairperson of the Board and feedback was given to Directors.
Auditor and Auditors' Report
Deloitte Haskins & Sells LLP Chartered Accountants (ICAI Firm Regn. No. 117366W /W - 100018) were appointed as Statutory Auditors of the Company for a term of 5 (five)consecutive years at the Annual General Meeting held on September 25 2017. The Companyhas received confirmation from them to the effect that they are not disqualified fromcontinuing as Auditors of the Company.
The Notes on financial statements 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.
In accordance with the provisions of Section 148(1) of the Act read with the Companies(Cost Records and Audit) Rules 2014 the Company has maintained cost accounts andrecords. The Board had appointed M/s Pramod Chauhan & Associates Cost Accountants asthe Cost Auditor of the Company for conducting the audit of the cost records for thefinancial year 2019-20. Further they have been appointed as the Cost Auditor by the Boardfor the financial year 2020-21.
The Board had appointed M/s Chandrasekaran Associates Company Secretaries to conductthe Secretarial Audit for the financial year 2019-20. The Secretarial Audit Report for thefinancial year ended March 31 2020 is annexed with this report and marked as AnnexureII to this Report. The Secretarial Audit Report does not contain any qualificationreservation adverse remark or disclaimer.
(i) Meetings of the Board
During the financial year ended on March 31 2020 5 (Five) 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.
(ii) Audit Committee
The Audit Committee of the Company comprises Mr. Adil Zainulbhai (Chairman) Mr. DhruvSubodh Kaji Ms. Bhama Krishnamurthy and Mr. P.M.S. Prasad. During the year all therecommendations made by the Audit Committee were accepted by the Board.
(iii) Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee comprises Mr. Adil Zainulbhai (Chairman)Mr. Rajiv Krishan Luthra and Mr. P.M.S. Prasad.
(iv) Nomination and Remuneration Committee
The Nomination Remuneration Committee comprises Mr. Dhruv Subodh Kaji(Chairman) Mr. Adil Zainulbhai and Mr. P.M.S. Prasad.
(v) Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee comprises Mr. Adil Zainulbhai(Chairman) Mr. Dhruv Subodh Kaji and Mr. P.M.S. Prasad.
(vi) Vigil Mechanism
The Company promotes ethical behavior in all its business activities. Towards this theCompany has adopted a policy on Vigil Mechanism and Whistle Blower. The Company hasconstituted an Ethics & Compliance Task Force to process and investigate the protecteddisclosures made under the policy. The confidentiality of those reporting violations ismaintained and they are not subjected to any discriminatory practice or victimization. TheAudit Committee oversees the Vigil Mechanism. The policy on Vigil Mechanism and WhistleBlower is available on the Company's website and can be accessed athttp://nw18.com/reports/reports/ policies/vigilmechanism_whistleblower_NW18_F.PDF.
(vii) Prevention of Sexual Harassment at Workplace
The Company has complied with the provisions relating to the constitution of InternalComplaints Committee as specified under Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The other disclosures under this Actare given in Business Responsibility Report which forms part of the Annual Report.
(viii) Particulars of Loans given Investments made Guarantees given and Securitiesprovided
Particulars of Loans given Investments made Guarantees given and Securities providedby the Company along with the purpose for which the Loan or guarantee or security isproposed to be utilized by the recipients are provided in Standalone Financial Statement.Please refer Note No. 6 7 16 40 and 45 to the Standalone Financial Statement.
(ix) Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
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 the latestworking 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 14.46 crore of foreignexchange and used Rs 10.70 crore of foreign exchange both on actual basis.
(x) Annual Return
As required under Section 134(3)(a) of the Act Annual Return is put up on the websiteof the Company and can be accessed athttp://nw18.com/reports/reports/Notices%20and%20Events/ NW18_Annual_Return_2018_19.pdf.Extract of the Annual Return in form MGT-9 for the FY 2019-20 can be accessed athttp://nw18.com/reports/reports/Notices%20and%20Events/NW18_Extract_of_Annual_Return_2019-20.pdf.
(xi) Particulars of Employees and Related Information
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names of the top ten employees in terms of remuneration drawn andnames and other particulars of the employees drawing remuneration in excess of the limitsset out in the said rules forms part of this Report.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 also form part of this report.
Having regard to the provisions of the second 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. Any member interested in obtaining such information may write tothe Company Secretary to e-mail id email@example.com.
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 directorsor employees of the Company under any scheme. Voting rights on the shares issued toemployees in earlier years under Employee Stock Option Schemes of the Company are eitherexercised by them directly or through their appointed proxy.
3. The Company does not have any scheme of provision of money for the purchase of itsown shares by employees or by trustees for the benefit of employees.
4. 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.
5. No fraud has been reported by Auditors to the Audit Committee or the Board.
6. There is no Corporate Insolvency Resolution Process initiated under the Insolvencyand Bankruptcy Code 2016.
7. There has been no change in the nature of business of the Company.
The Board of Directors wish to place on record its appreciation for the faith reposedin the Company and continuous support extended by all the employees members customersinvestors government and regulatory authorities bankers and various stakeholders.
| ||For and on behalf of the Board of Directors |
|Date: April 23 2020 ||Adil Zainulbhai |
|Place: Mumbai ||Chairman |