The Board of Directors are pleased to present the 24th Annual Report and theCompany's Audited Financial Statement for the financial year ended March 312019.
The financial performance of the Company (Standalone and Consolidated) for the yearended March 312019 is summarized below:
| || || || || |
(' in crore)
|Particulars || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from operations ||111.58 ||95.22 ||5116.18 ||1839.00 |
|Profit/(loss) before interest depreciation and exceptional items ||(164.91) ||20.53 ||109.87 ||73.58 |
|Less: Interest ||116.02 ||85.97 ||198.47 ||96.24 |
|Depreciation ||7.28 ||7.89 ||142.05 ||88.74 |
|Exceptional Item ||346.16 ||- ||- ||- |
|Profit/(loss) before tax ||(634.37) ||(73.33) ||(230.65) ||(111.40) |
|Less: Tax Expenses* (* includes current tax deferred tax short/excess provision of tax relating to earlier years) ||0.28 ||0.22 ||(53.05) ||61.93 |
|Profit/(loss) for the year ||(634.65) ||(73.55) ||(177.60) ||(173.33) |
|Add: Other Comprehensive Income ||(10.46) ||4.77 ||(20.02) ||6.20 |
|Total Comprehensive Income for the Year ||(645.11) ||(68.78) ||(197.62) ||(167.13) |
|Less: Total Comprehensive Income attributable to Non- Controlling Interest ||- ||- ||120.80 ||(17.65) |
|Total Comprehensive Income Attributable to Owners of the Company ||- ||- ||(318.42) ||(149.48) |
|Less: Appropriation (Transfer to General Reserve) ||- ||- ||- ||- |
|Earnings Per Share (Basic) (in ') ||(6.06) ||(0.70) ||(2.93) ||(1.49) |
Financial figures for the previous financial year 2017-18 have been restated in orderto give effect to the Scheme of Merger by Absorption duly approved by National CompanyLaw Tribunal Mumbai Bench. The Scheme became effective from November 1 2018 with anappointed date of April 1 2016. Therefore the previous year's figures may not becomparable with figures given in the financials and Board's Report of the previous year.
Results of operations and the State of Company's affairs
During the year under review on standalone basis the Company recorded an operatingturnover of ' 111.58 crore (previous year ' 95.22 crore). The loss beforeinterest depreciation exceptional items and tax was ' 164.91 crore.
The Company consolidated its operations and continued to enhance its prominence in theMedia and Entertainment sector during a challenging year for the industry. Despitecompetitive pressures the Company reported revenue from operation of ' 5116.18crore and Profit Before interest depreciation exceptional items and tax of '109.87 crore on a consolidated basis.
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.
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 2019 deposits and interest thereon aggregating to ' 2.02crore remained unclaimed.
Scheme of Merger
The National Company Law Tribunal Mumbai Bench ('NCLT) has approved the Scheme ofMerger by Absorption ('the Scheme') of Digitall8 Media Limited Capitall8 Fincap PrivateLimited RVT Finhold Private Limited RRK Finhold Private Limited RRB Investments PrivateLimited Setpro18 Distribution Limited Reed Infomedia India Private Limited Web18Software Services Limited Television Eighteen Media and Investment Limited TelevisionEighteen Mauritius Limited Web18 Holdings Limited E-18 Limited and Network18 HoldingsLimited direct or indirect wholly owned subsidiaries with the Company with appointeddate as April 12016. The Scheme became effective on November 12018.
Pursuant to the aforesaid Scheme the Authorised Share Capital of the Company increasedto र 28214200000 (Rupees Two Thousand Eight Hundred Twenty One Crore and Forty Two LakhOnly) from र 27365000000 (Rupees Two Thousand Seven Hundred Thirty Six Crore and FiftyLakh Only).
Material Changes Affecting the Company
There have been no material changes and commitments affecting the financial position ofthe Company between the end of the financial year and date of this Report. There has beenno 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.
The Company has obtained credit rating for its Borrowing Programme viz.Long-term/Short-term Commercial Paper Programme and proposed Non-Convertible Debenturesfrom CARE Ratings Limited and ICRA Limited. Further details on the Credit Ratings aregiven in the Corporate Governance Report which forms part of this Report.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out by Securities and Exchange Boardof India ("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
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-aliacontains initiative w.r.f. stakeholder relationship customer relationshipsustainability health and safety.
Directors and Key Managerial Personnel
In accordance with the provisions of the Companies Act 2013 ("the Act") andthe Articles of Association of the Company Mr. P.M.S. Prasad Non-Executive Directorretires by rotation at ensuing Annual General Meeting of the Company.
Ms. Renuka Ramnath was appointed as an Additional Director (Independent) w.e.f. April12019 for a period of 5 (five) years upto March 312024 and she shall hold office as anAdditional Director of the Company up to the date of ensuing Annual General Meeting. TheCompany has received requisite notice in writing from a member proposing her candidaturefor appointment at the ensuing Annual General Meeting of the Company as an IndependentDirector not liable to retire by rotation.
The aforesaid re-appointment and appointment have been recommended by the Nominationand Remuneration Committee and Board of Directors of the Company.
During the year under review Ms. Nirupama Rao and Mr. Deepak Shantilal ParekhIndependent Directors resigned from the Directorship of the Company w.e.f. May 29 2018and April 1 2019 respectively. The Board places on record its appreciation for thevaluable contribution made by them during their tenure as Directors of the Company.
Mr. Rahul Joshi was appointed as the Managing Director of the Company for a period ofthree years w.e.f. July 9 2018. Considering appointment of Managing Director Ms. KshipraJatana resigned from the post of Manager of the Company w.e.f. July 9 2018.
The terms of office of Mr. Dhruv Subodh Kaji and Mr. Rajiv Krishan Luthra asIndependent Directors will expire on November 26 2019. The Board of Directors based onthe performance evaluation and as per the recommendations of Nomination and RemunerationCommittee has recommended their reappointments as Independent Directors of the Companyfor a second term of 5 (five) consecutive years on the expiry of their current term ofoffice. The Board considers that given their background experience and contribution madeby them during their tenure the continued association of Mr. Dhruv Subodh Kaji and Mr.Rajiv Krishan Luthra would be beneficial to 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 IndependentDirectors have also confirmed that they have complied with the Code for IndependentDirectors prescribed 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 determining Directors'Independence' and 'Remuneration Policy for Directors Key Managerial Personnel and otheremployees.' These policies have been uploaded on the website of the Company atwww.nw18.com.
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 major change inthis policy during the year under review. The criteria of independence number ofdirectorships and committee memberships prescribed in the policy has been changed to alignthe policy with the amendment made in this regard in the Act and the Listing Regulations.
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.
In accordance with the manner specified by the Nomination and Remuneration Committeethe Board carried out performance evaluation of the Board its Committees and IndividualDirectors (including Independent Directors). The Independent Directors separately carriedout evaluation of Chairperson NonIndependent Directors and Board as a whole. Theperformance of each Committee was evaluated by the Board based on views received fromrespective Committee Members. The report on performance evaluation of the IndividualDirector was reviewed by the Chairperson of the Board and feedback was given to Directors.
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 in Associates and IndAS 31 - Interests in Joint Ventures the audited consolidated financial statement isprovided 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 pursuant to the Scheme of Merger by Absorption ('Scheme')sanctioned by the National Company Law Tribunal Mumbai Bench (NCLT) Capital18 FincapPrivate Limited Digital18 Media Limited RRK Finhold Private Limited RVT Finhold PrivateLimited Setpro18 Distribution Limited Reed Infomedia India Private Limited RRBInvestments Private Limited Web18 Software Services Limited E-18 Limited Network18Holdings Limited Web18 Holdings Limited Television Eighteen Media and Investment Limitedand Television Eighteen Mauritius Limited direct and indirect wholly owned subsidiaries (collectively referred as 'the Transferor Companies') merged with the Company with effectfrom November 1 2018 and the said Transferor Companies ceased to be subsidiaries of theCompany.
Further during the year under review Aeon Learning Private Limited ceased to be anAssociate of the Company.
Further pursuant to another Scheme sanctioned by the National Company Law TribunalMumbai Bench (NCLT) Equator Trading Enterprises Private Limited Panorama TelevisionPrivate Limited RVT Media Private Limited and ibn18 (Mauritius) Limited (collectivelyreferred as 'the Transferor Companies') merged with TV18 Broadcast Limited a subsidiaryof the Company with effect from November 12018. Accordingly these Transferor Companiesalso ceased to be subsidiaries of the Company.
The performance and financial information of the Subsidiary Companies/JointVentures/Associate Companies is provided as Annexure to the Consolidated FinancialStatement.
The audited Financial Statement including the Consolidated Financial Statement andrelated information of the Company are available on Company's website www.nw18.com. Thefinancial statement of each of the subsidiaries of the Company may also be accessed atCompany's website www.nw18.com. These documents will also be available for inspection onall working days (i.e. except Saturdays Sundays and Public Holidays) during businesshours at Registered Office of the Company.
The Company has formulated a policy for determining Material Subsidiaries and the sameis placed on the website at http://www.nw18.com/reports/reports/policies/Network18-PolicyfordeterminingMaterialSubsidiaries.pdf
The Company has complied with the provisions of the applicable Secretarial Standardsi.e. SS-1 (Secretarial Standard on Meetings of the Board of Directors) and SS-2(Secretarial Standard on General Meetings).
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) i n the preparation of the annual accounts for the financial year ended March 312019 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 312019 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) t he Directors have prepared the annual accounts of the Company for the financialyear ended March 31 2019 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.
Number of Meetings of the Board
During the financial year ended on March 31 2019 6 (Six) 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.
The Audit Committee of the Company comprises Mr. Adil Zainulbhai (Chairman) Mr. DhruvSubodh Kaji Independent Directors and Mr. P.M.S. Prasad Non-Executive Director. Duringthe year all the recommendations made by the Audit Committee were accepted by the Board.
Other Board Committees
In compliance with the provisions of the Act and Listing Regulations the Board hasconstituted Nomination and Remuneration Committee Stakeholders' Relationship CommitteeCorporate Social Responsibility Committee and Risk Management Committee.
The details of the composition dates of meetings attendance and terms of reference ofeach of the Committees are disclosed in the Corporate Governance Report which forms partof this report.
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 indicating development and implementation of RiskManagement policy including identification of elements of risk and their mitigation arecovered in Management's Discussion and Analysis section which forms part of the AnnualReport.
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 Independent Directors and Mr. P.M.S.Prasad Non-Executive Director. The Committee's prime responsibility is to assist theBoard in discharging its social responsibilities by way of formulating and monitoringimplementation of the objectives set out in the 'Corporate Social Responsibility Policy'The CSR Policy of the Company inter-alia covers CSR vision and objective and alsoprovides for governance implementation monitoring and reporting framework. There hasbeen no change in the policy during the year.
The complete CSR policy of the Company is available on its website and may be accessedat the link: http://www.nw18.com/ reports/reports/policies/Network18%20-%20Policy%20on%20Corporate%20Social%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 directedtowards improving livelihood alleviating poverty promoting education empowermentthrough vocational skills and promoting health and well-being
Preserve protect and promote art culture and heritage
Ensuring environmental sustainability ecological balance and protection offlora and fauna
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 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 a protecteddisclosure 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 may be accessed at the link:http://www.nw18. com/reports/reports/policies/vigilmechanism-whistleblower- NW18-F.PDF
Related Party Transactions
All the related party transactions were entered on arms' 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 was obtained for the transactions which were foreseen and repetitive in nature. Astatement of all related party transactions was 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 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. The Policyon Materiality of Related Party Transactions and on Dealing with Related PartyTransactions is posted on the Company's website and may be accessed at the link:http://www.nw18.com/reports/reports/policies/Network18- Policyon Materiality of RPT anddealing with RPT.PDF
The details of the transactions with Related Parties are provided in Note No. 37 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 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 12 16 37 and 43 to the standalone financial statement.
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 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.
In accordance with the provisions of Section 148(1) of the Act the Company hasmaintained cost accounts and records. The Board had appointed M/s Pramod Chauhan &Associates Cost Accountants as the Cost Auditors of the Company for conducting the auditof the cost records for the financial year 2018-19. Further they have been appointed asthe Cost Auditors by the Board for the financial year 2019-20.
The Board had appointed M/s Chandrasekaran Associates Company Secretaries to conductthe Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for thefinancial year ended March 31 2019 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.
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 forms part of this report.
Disclosure 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 forms 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. 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 shall be furnished on request.
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 this Report. During theyear under review no complaint was received by the Company.
As required under Section 134(3)(a) of the Act Annual Returns for the year 2018-19 and2017-18 are put up on the website of the Company and may be accessed at the linkhttp://www.nw18.com/reports/reports/Notices%20and%20Events/ExtractofAnnualReturn-2018-19.pdf and http://www.nw18.com/reports/reports/Notices%20and%20Events/ ExtractofAnnualReturn-2017-18.pdf
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 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 ' 15.20 crore of foreignexchange and used ' 11.23 crore of foreign exchange both on actual basis.
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 (Statutory Auditor Secretarial Auditor orCost Auditor) to the Audit Committee or the Board.
6. There is no Corporate Insolvency Resolution Process initiated under the Insolvencyand Bankruptcy Code 2016.
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 customersinvestors government authorities bankers and various stakeholders.
| ||For and on behalf of the Board of Directors |
|Date: April 15 2019 ||Adil Zainulbhai |
|Place: Mumbai ||Chairman |