To the Members
Your Directors have pleasure in presenting the 13th AnnualReport of your Company together with the Audited Financial Statements for the financialyear ended March 31 2019 prepared as per Indian Accounting Standards (Ind-AS) asprescribed under Section 133 of the Companies Act 2013 (Act).
The financial performance of your Company for the year ended March 312019 is summarised below:
| || || || ||(र in million) |
|Particular ||Standalone ||Consolidated |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from operations ||8212.75 ||8378.08 ||14421.34 ||14104.01 |
|Other Income ||213.58 ||107.80 ||322.38 ||159.73 |
|Total Income ||8426.33 ||8485.88 ||14743.72 ||14263.74 |
|Total Expenses ||6579.36 ||7391.24 ||11185.24 ||11018.54 |
|EBIDTA ||1846.97 ||1094.64 ||3558.48 ||3245.20 |
|Less : Finance cost ||1537.33 ||1273.46 ||1707.16 ||1395.49 |
|Less : Depreciation ||2093.03 ||1830.15 ||3649.67 ||3261.70 |
|Profit/(Loss) before share of profit/(loss) of associates and joint ventures exceptional item and tax ||(1783.39) ||(2008.97) ||(1798.35) ||(1411.99) |
|Share of profit/(loss) of associates and joint ventures ||0.00 ||0.00 ||(1.42) ||(5.80) |
|Profit/(Loss) before exceptional item and tax ||(1783.39) ||(2008.97) ||(1799.77) ||(1417.79) |
|Exceptional items ||1940.88 ||46.80 ||742.66 ||163.41 |
|Profit /(Loss) before tax & exceptional items ||(3724.27) ||(2055.77) ||(2542.43) ||(1581.20) |
|Provision for taxation (net) ||0.00 ||0.00 ||100.40 ||117.77 |
|Profit/(Loss) after tax & exceptional items ||(3724.27) ||(2055.77) ||(2642.83) ||(1698.97) |
|Remeasurement of defined benefit liability ||(1.51) ||1.73 ||(2.18) ||3.91 |
|Total comprehensive profit/ (loss) for the period ||(3725.78) ||(2054.04) ||(2645.01) ||(1695.06) |
There have been no material changes and commitments that have occurredafter close of the financial year till the date of this report which affect the financialposition of the Company. Based on the internal financial control framework and compliancesystems established in the Company the work performed by Statutory Internal SecretarialAuditors and reviews performed by the Management and/or Audit Committee of the Board yourBoard is of the opinion that the Company's internal financial controls were adequateand working effectively during financial year 2018-19.
Your Company (SITI) ended the year with subscription revenue of र 9537million for FY 2018-19 which is a 19% increase YoY. Collection efficiency improved frompre-Tariff Order era and near 100% prepaid was achieved by the end of Q4 FY 19. This shiftto prepaid collection model has enabled SITI to manage working capital more efficientlyand will do away with the issues of short collection ailing the industry. This isespecially important in the Phase 3 and Phase 4 markets where SITI's significantbase lies where efficiency realization & ARPU will increase significantly. InBroadband SITI maintained focus on making home pass more effective and increase ARPU& penetration level in existing markets.
With the implementation of NTO next few quarters will bring anindustry wide change in a positive direction. Your Company has successfully upgraded itsIT and subscriber management systems and this upgrade along with other system improvementhas helped us implement NTO in the most efficient and effective manner.
Post implementation of NTO we expect an improvement in ARPU andstreamlining of processes where there is a defined share for all the stakeholders. NTOalso makes the content and channel pull as the driver for its demand in long term thusthe market demand will now decide the relevance and price of channels and DPOs will act asservice provider for which they will get paid.
Simultaneously your Company worked on strengthening the organizationby working on many fronts with focus on the ideologies of "Right people on RightJob" & "More from less" thus emphasizing on efficiency in theorganization. In line with the above strategy the organization structure was alsorevamped.
SITI conducted a thorough review of our infrastructure acrossgeographies and accordingly have internally restructured the operations to make it moreefficient and agile.
The expenses for the Company grew due to increased stress in financialsector and conversion of a few LOU in term loans. Depreciation and amortization expensessaw an increase due to a full year of depreciation incurred in the books.
In Broadband your Company is working on a bottom up strategy toincrease penetration level in the existing market and working on business models which canprovide a profitable long term growth in the ever-changing market scenario prevailing inthe market.
Content deals have been tied up with all content providers under newNTO regime and your company is working along with all the broadcasters to provide best inthe market entertainment to all its customers.
Your Company is committed to improve EBITDA levels and increase ARPU innext financial year by providing rich & entertaining content at pricing which provideour customers the highest value. Your Company is committed to appreciateshareholder's wealth and bring steady growth to all stakeholders.
Directors' Responsibility Statement
Pursuant to Section 134 of the Companies Act 2013 in relation toAnnual Financial Statements for the financial year 2018-19 your Directors hereby confirmthat:
i. the Financial Statements of the Company comprising of the Balance Sheet as at March31 2019 and the Statement of Profit & Loss for the year ended on that date have beenprepared on a going concern basis;
ii. in preparation of these Financial Statements the applicable accounting standardshave been followed and there are no material departures;
iii. 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 2019 and of the profit/loss of the Company for the year ended on that date;
iv. proper and sufficient 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;
v. requisite internal financial controls to be followed by the Company were laid downand that such financial controls are adequate and operating effectively; and
vi. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
Directors & Key Managerial Personnel
Your Board currently comprises of five (5) Directors including four (4)Independent Directors and one (1) Executive Director. Independent Directors providedeclarations both at the time of appointment and annually confirming that they meet thecriteria of Independence as prescribed under the Act and SEBI (Listing Regulations andDisclosure Requirements) Regulations 2015 ("Listing Regulations"). During thefinancial year 2018-19 your Board met five (5) times details of which are available inthe Corporate Governance Report annexed to this report.
During the year under review your Board had based on recommendationsof Nomination & Remuneration Committee approved the appointment of Mr. Suresh Aroraas an Additional Director in the category of Non-Executive Non-Independent Director witheffect from March 29 2019 and subsequently as a Whole Time Director of the Company for aperiod of 3 years with effect from June 14 2019. In terms of Section 161 of the CompaniesAct 2013 Mr.Suresh Arora shall hold office up to the date of the ensuing Annual GeneralMeeting of the Company. The Company has received a notice under Section 160 from a memberproposing appointment of Mr.Suresh Arora. Accordingly necessary resolution is beingplaced for approval of the Members at the 13th Annual General Meeting of theCompany.
Your Board had based on recommendations of Nomination &Remuneration Committee approved the appointment of Mr.Deepak Mittal and Mr.Bhanu PratapSingh as Additional Directors in the category of Independent Directors with effect fromApril 1 2019. In terms of Section 161 of the Companies Act 2013 Mr.Deepak Mittal andMr.Bhanu Pratap Singh shall hold office up to the date of the ensuing Annual GeneralMeeting of the Company. The Company has received separate notices under Section 160 frommembers signifying their intention to propose appointment of Mr.Deepak Mittal and Mr.BhanuPratap Singh. Accordingly necessary resolutions are being placed for approval of theMembers at the 13th Annual General Meeting of the Company.
Further during the year under review in compliance with Regulation17(1A) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (hereinafter referred to as SEBI Listing Regulations) asamended Mr.Brijendra K. Syngal and Mr.Vinod Kumar Bakshi Independent Directors whoseage exceeded 75 years had voluntarily stepped down from the Board of the Company witheffect from the close of business on March 31 2019.
Mr.Sidharth Balakrishna who was Whole Time Director of the Companyhad resigned from the Board and Committees of the Company with effect from close ofbusiness hours of April 15 2019 on account of other professional obligations andcommitments.
In compliance with the requirements of Section 203 of the CompaniesAct 2013 Mr. Suresh Arora Whole-Time Director Mr. Sanjay Berry Chief FinancialOfficer and Mr. Suresh Kumar Company Secretary of the Company are Key ManagerialPersonnel of the Company. Pursuant to the provisions under Section 134(3)(d) of theCompanies Act 2013 with respect to statement on declaration given by IndependentDirectors under Section 149(6) of the Act the Board hereby confirms that all theIndependent Directors of the Company have given a declaration and have confirmed that theymeet the criteria of independence as provided in Section 149(6) read with Regulation 16 ofSecurities and Exchange Board of Indian (Listing Obligations and Disclosures Requirements)Regulations 2015 (SEBI Listing Regulations).
In compliance with the requirements of Companies Act 2013 and SEBIListing Regulations your Board had constituted various Board Committees including AuditCommittee Nomination & Remuneration Committee Stakeholders Relationship Committeeand Corporate Social Responsibility Committee. Details of the constitution of theseCommittees which are in accordance with regulatory requirements have been uploaded onthe website of the Company viz. www.sitinetworks.com.
Details of scope constitution terms of reference number of meetingsheld during the year under review along with attendance of Committee Members therein formpart of the Corporate Governance Report annexed to this report.
At a separate meeting of Independent Directors held without presence ofother Directors and management the Independent Directors had based on various criteriaevaluated performance of the Executive Directors and performance of the Board as a wholeand various Board Committees. A report on such evaluation done by Independent Directorswas taken on record by the Board and further the Board had in compliance with therequirements of Companies Act 2013 evaluated performance of all Independent Directorsbased on various parameters including attendance contribution etc. The details of theevaluation process are set out in the Corporate Governance Report which forms part of thisReport.
Pursuant to Section 139 of the Companies Act 2013 and the Rules madethereunder the current Statutory Auditors of the Company M/s Walker Chandiok & Co.LLP Chartered Accountants having Firm Registration No. 001076N/ N500013 were appointedby the Members at 9th Annual General Meeting of the Company to hold officeuntil the conclusion of the 14th Annual General Meeting scheduled to be held inyear 2020 subject to ratification of their appointment by Members at every Annual GeneralMeeting (AGM). The requirement to place the matter relating to appointment of Auditors forratification by Members at every AGM has been done away by the Companies (Amendment) Act2017 with effect from May 7 2018. Accordingly no resolution is being proposed forratification of appointment of Statutory Auditors at the ensuing AGM and note in respectof the same has been included in the Notice of AGM.
The Company has received certificate of eligibility from M/s WalkerChandiok & LLP in accordance with the provisions of the Companies Act 2013 read withrules thereunder and a confirmation that they continue to hold Peer Review Certificate asrequired under SEBI Listing Regulations.
During the year the Statutory Auditors had not reported any matterunder Section 143(12) of the Act and as such no detail is required to be furnished underSection 134(3)(ca) of the Act.
M/sAmit Agrawal & Associates Company Secretaries in Whole TimePractice having Firm Registration No. I2001DE191600 were appointed as SecretarialAuditors of the Company for the financial year 2018-19 pursuant to Section 204 of theCompanies Act 2013. The Secretarial Audit Report submitted by them in the prescribed formMR-3 is annexed to this report as Annexure I and forms part thereof.
The reports of Statutory Auditors and Secretarial Auditor forming partof this Annual Report do not contain any qualification reservation or adverse remark(s).
Additionally in line with SEBI Circular No. CIR/CFD/ CMD/1/27/2019dated February 8 2019 an Annual Secretarial Compliance Report confirming compliance ofall applicable SEBI Regulations Circulars and Guidelines by the Company was issued by theSecretarial Auditor and filed with Stock Exchanges.
In compliance with the requirement of Section 148 of the Companies Act2013 read with Companies (Cost Records and Audit) Rules 2014 as amended M/s A.K. Gupta& Co. Cost Accountant having Firm Registration No. 100770 has been appointed tocarry out Audit of the Cost Records of the Company during financial year 2019-20.Requisite proposal seeking ratification/approval of remuneration payable to the CostAuditor for financial year 2019-20 by the Members as per Rule 14 of the Companies (Auditand Auditors) Rules 2014 forms part of Notice of ensuing Annual General Meeting.
Subsidiaries & Joint Ventures
During the financial year under review:
Siti Bhatia Network Entertainment Private Limited ("SBNEPL")ceased to be subsidiary company as the Company had sold 10409 equity shares (being theentire stake of the Company constituting 51%) of SBNEPL on June 14 2018; In consequenceof SBNEPL ceased to be subsidiary company of the Company Siti Chhattisgarh MultimediaPrivate Limited wherein SBNEPL was holding 41% equity shares ceased to be associatecompany of the Company.
Axom Communications & Cable Private Limited ("Axom")which was subsidiary company of Indian Cable Net Company Limited ("ICNCL")ceased to be subsidiary company of ICNCL as it ceased to effectively control thecomposition of the Board of Directors of Axom.
Accordingly as on March 31 2019 your Company had 23 no. ofsubsidiary companies as compared to 25 no. of subsidiary companies as on March 31 2018.
Variety Entertainment Private Limited ("VEPL") which iswholly owned subsidiary company of the Company: had acquired/purchased 49% Equity stake inSiti Godaari Digital Services Private Limited ("SGDSPL") on May 29 2019. Aftersuch acquisition/purchase SGDSPL (wherein the Company already holds 51% Equity stake)becomes wholly owned subsidiary company of the Company; had acquired further 4.75% Equitystake in Voice Snap Services Private Limited ("VSSPL") on July 21 2019.Accordingly Equity stake of VEPL in VSSPL has increased to 40% and the same continues tobe associate company of the Company. your Company had incorporated a wholly owned LimitedLiability Partnership namely Siti Networks India LLP on May 7 2018.
Apart from the above there was no change in number ofSubsidiary/Associate/Joint Venture of the Company either by way of acquisition ordivestment or otherwise during the year under review.
In line with amendments of threshold for determining MaterialSubsidiary as stated in Regulation 16(1)(c) of SEBI Listing Regulations effectiveApril 1 2019 Indian Cable Net Company Limited one of the subsidiary company of theCompany continues to be Material Subsidiary of your Company.
Pursuant to the provisions of Section 129(3) of the Companies Act2013 a statement containing the salient features of financial statements of theCompany's subsidiaries and associate company(ies) in Form AOC-1 is annexed to thisreport as Annexure II and forms part thereof.
Further pursuant to the provisions of Section 136 of the Act thefinancial statements of the Company consolidated financial statements along with relevantdocuments and separate audited financial statements in respect of subsidiaries areavailable on the website of the Company www.sitinetworks. com. These documents will alsobe available for inspection during business hours on all working days (except Saturday) atthe Registered Office of the Company.
During the year under review your Company has not accepted or invitedany deposits as defined under Section 2(31) read with Chapter V of the Companies Act 2013and Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules 2014.
With a view to conserve the resources for future business requirementsand expansion plans and in view of losses during the year your Board has not recommendeddividend for the year under review.
Employee Stock Option Scheme
In pursuance of Employees Stock Option Scheme of the Company (SITI ESOP2015) your Company had granted 4663500 options to eligible employees on September 32015. During the year under review neither any option was granted nor any grantee hadexercised vested option(s).
The applicable disclosures as stipulated under Regulation 14 of theSecurities and Exchange of India (Share Based Employee Benefits) Regulations 2014 withregard to SITI ESOP 2015 are annexed to this report as Annexure - III. The saiddisclosures on SITI ESOP 2015 will also be available on Company's websitewww.sitinetworks.com. A Certificate of Statutory Auditors M/s Walker Chandiok & Co.LLP Chartered Accountants confirming that the SITI ESOP 2015 has been implemented inaccordance with SEBI Regulations and the resolution passed by the shareholders will beplaced at the 13th Annual General Meeting.
During the period under review there is no change in Authorised ShareCapital of the Company. As on March 31 2019 the Authorised Capital of the Company is र1300 million comprising of 1290000000 Equity Shares of र 1/- each and 10000000Preference Shares of र 1/- each and the Paid-up Share Capital of the Company is र 872.69million comprising 872053848 Equity Shares of र 1/- each and 23436 Preference Shares ofर 1/- each and 1227123 forfeited Equity Shares of र 1/- each paid up र 0.50/- perEquity Shares.
During the year under review the Registered office of the Company iscontinued to be situated at Unit No. 38 1st Floor A wing MadhuIndustrial Estate P. B Marg Worli Mumbai 400013'.
Corporate Governance & Policies
Your Company is in compliance with the Corporate Governancerequirements mentioned under SEBI Listing Regulations and applicable provisions of theCompanies Act 2013. In terms of Schedule V of the Listing Regulations a detailed reporton Corporate Governance together with the
Compliance Certificate issued by Secretarial Auditor of the Company isattached to and forms an integral part of this report. Management Discussion and AnalysisReport as per Listing Regulations are presented as separate section forming part of theAnnual Report.
In compliance with the requirements of Companies Act 2013 and SEBIListing Regulations your Board has approved various Policies including Code of Conductfor Directors
& Senior Management Material Subsidiary Policy Insider TradingCode Document Preservation Policy Material Event Determination and Disclosure PolicyFair Disclosure Policy Corporate Social Responsibility Policy Whistle Blower and VigilMechanism Policy Related Party Transaction Policy Dividend Policy and RemunerationPolicy. All these policies and codes have been uploaded on Company's website www.sitinetworks.com.Additionally Directors Familiarisation Programme and Terms and Conditions for appointmentof Independent Directors can be viewed on Company's website www.sitinetworks.com.
In compliance with the requirements of Section 178 of the CompaniesAct 2013 the Nomination & Remuneration Committee of your Board had fixed variouscriteria for nominating a person on the Board which inter alia include desired sizeand composition of the Board age limits qualification/experience are as of expertiseand independence of individual. The Committee had also approved in-principle that theinitial term of an Independent Director shall not exceed three (3) years.
Corporate Social Responsibility
The provisions of Section 135(5) of the Companies Act 2013 whichprovides for spending in every financial year at least two percent of the average netprofits of the Company made during the three immediately preceding financial years is notapplicable to the Company as the Company had incurred losses during the three immediatelypreceding financial years.
Disclosures i. Particulars of Loans Guarantee or Investments:
Particulars of loans guarantees and investments made by the Companyrequired under Section 186(4) of the Companies Act 2013 are contained in Note No. 46 ofthe Standalone Financial Statements and are not reproduced for the sake of brevity.
ii. Related Parties Transactions: All contracts/ arrangements/transactions entered by the Company during the financial year with related parties were onarm's length basis in the ordinary course of business and in compliance with theapplicable provisions of the Companies Act 2013 and Listing Regulations.
During the financial year 2017-18 there are no materially significantrelated party transactions by the Company with Promoters Directors Key ManagerialPersonnel or other designated persons if any which may have a potential conflict withthe interest of the Company at large. Details of related party transactions will beavailable on Company's website www.sitinetworks.com.
All related party transactions specifying the nature value and termsand conditions of the transactions including the arms-length justification are placedbefore the Audit Committee for its approval and statement of all related partytransactions carried out is placed before the Audit Committee for its review on aquarterly basis. During the year under review there have been no materially significantrelated party transactions by the Company as defined under Section 188 of the Act andRegulation 23 of the Listing Regulations and accordingly no transactions are required tobe reported in Form AOC-2 as per Section 188 of the Companies Act 2013.
iii. Extract of Annual Return: The extract of annual return inMGT-9 as required under Section 92(3) of the Companies Act 2013 read with Companies(Management & Administration) Rules 2014 will be available on the website of theCompany www.sitinetworks.com.
iv. Internal Financial Control systems and their adequacy:
Your Company has approved internal financial controls and policies/procedures for orderly and efficient conduct of the business including safeguarding ofassets prevention and detection of frauds and errors ensuring accuracy and completenessof the accounting records and the timely preparation of reliable financial information.The Audit Committee evaluates the internal financial control system periodically. YourCompany has adopted accounting policies which are in line with the Indian AccountingStandards (Ind-AS) notified under Section 133 of the Companies Act 2013 read with theCompanies (Indian Accounting Standards) Rules
2015. These are in accordance with Generally Accepted AccountingPrinciples in India.
v. Vigil Mechanisms/Whistle Blower Policy: The Company hasestablished a vigil mechanism/framed a whistle blower policy. The policy enables theemployees and other stakeholders to report to the management instances of unethicalbehavior actual or suspected fraud or violation of the Company's code of conduct orethics policy.
vi. Sexual Harassment: The Company has zero tolerance for SexualHarassment at work place and has adopted a Policy on prevention of Sexual Harassment inline with the provisions of Sexual Harassment of Woman at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder.
During the year under review your Company has not received anycomplaint on sexual harassment.
vii. Regulatory Orders: No significant or material orders werepassed by the regulators or courts or tribunals which impact the going concern status andCompany's operations in future.
Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
The Company is a Multi System Operator (MSO) and is carrying onbusiness of inter alia reception of signals of channels of various Broadcastersand distribution of same through cable networks. Since this does not involve anymanufacturing activity most of the Information required to be provided under Section134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 arenil / not applicable. The information as applicable are given hereunder:
|Conservation of Energy: || |
|i. The steps taken or impact or conservation of energy ||Your Company being a service provider has minimal energy consumption. Though every endeavour is made to ensure optimal use of energy avoid wastages and conserve energy as far as possible. |
|ii. The steps taken by the Company for utilizing alternate sources of energy || |
|iii. The capital investment on energy conservation equipments || |
|Technology Absorption: || |
|i. The efforts made towards technology absorption ||Your Company uses latest technology and equipment for distribution of Cable TV signals. |
|ii. The benefits derived like product improvement cost reduction product development or import substitution || |
| ||However since the Company is not engaged in any manufacturing the information in connection with technology absorption is Nil. |
|iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- || |
|a. the details of technology imported || |
|b. the year of import; || |
|c. whether the technology been fully absorbed || |
|d. if not fully absorbed areas where absorption has not taken place and the reasons thereof || |
|iv. The expenditure incurred on Research and Development || |
Foreign Exchange Earnings and Outgo: During the year under reviewyour Company had foreign exchange earnings of र 29.81 million and outgo of र 941.36million.
Human Resources & Particulars of Employees
The differentiator in today's world between any two organizationis the Human Capital while technology and capital are accessible equally to businessorganization challenge lies in attracting and hiring the talent.
SITI has always strived to attract and retain best of the talentconstantly grooming its work force.
Human Resource (HR) function and leadership team ensures that talentmanagement and performance management run as a symbiotic & complimenting processacross the organization and permeates at all levels. While the performance of theorganization is propelled by the challenging business dynamics and superior performanceand are equipped to handle the volumes and scales.
We have identified the High Potential performers in 2018-19 annualappraisals. These High Pots will be put on track which differentiates them for propellingthe organization further by furthering the business and there by developing the secondline of leadership.
The home-grown talent will be nurtured through a very well thoughtmentoring program which would ensure their retention and carve a growth path giving themvisibility cross functionally and vertical movement through the lattices.
For capacity development and out of the box thinking synergies arecreated between the people with experience from the industry and hand-picked talent fromcross industry experience. This blend has brought a lot of value add to SITI and has ledto path breaking synergies.
In terms of the provisions of Section 197(12) of the Companies Act2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 a statement showing the names and other particulars ofthe employees drawing remuneration in excess of the limits set out in the said rules isattached as Annexure IV which forms part of this report.
The Board of Directors wish to pace on record their sincereappreciation for the contribution made by the employees at all levels but for whose hardwork and support your Company's achievements would not have been possible. The Boardof Directors also wish to express their sincere appreciation for the assistance andco-operation received from the financial institutions banks various GovernmentalAuthorities including Ministry of Information and Broadcasting Telecom and RegulatoryAuthority of India Stock Exchanges Depositories and other stakeholders including localcable operators viewers broadcasters vendors.
| ||For and on behalf of the Board |
|Suresh Arora ||Kavita Kapahi |
|Whole Time Director ||Independent Director |
|DIN 00299232 ||DIN 02330706 |
|Noida August 12 2019 || |