Your Directors are pleased to present the Thirty Sixth Annual Report of your Company'sbusiness and operations along with the Audited Financial Statements ('Annual Accounts')for the financial year ended March 31 2018.
1. RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act 2013 ('the Act') in relation to theAnnual Accounts for the Financial Year 2017-18 your Directors confirm that:
a. The Annual Accounts of the Company have been prepared on a going concern basis;
b. In the preparation of the Annual Accounts the applicable accounting standards hadbeen followed and there are no material departures;
c. The accounting policies selected were applied consistently and the judgments andestimates related to these annual accounts 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 profits of the Company for the year ended on that date;
d. Proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 to safeguard theassets of the Company and to prevent and detect any fraud and other irregularities;
e. Requisite internal financial controls to be followed by the Company were laid downand that such internal financial controls are adequate and operating effectively; and
f. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.
2. FINANCIAL RESULTS
The Financial Performance of your Company for the year ended March 31 2018 issummarized below:
| || |
Standalone Year Ended
Consolidated Year Ended
|Particulars ||31.03.2018 ||31.03.17* ||31.03.2018 ||31.03.17* |
|Revenue from Operations ||57956 ||50249 ||66857 ||64342 |
|Other Income ||9818 ||3479 ||4403 ||2240 |
|Total Income ||67774 ||53728 ||71260 ||66582 |
|Total Expenses ||40463 ||38047 ||49431 ||49802 |
|Share of Associates/Joint Ventures ||- ||- ||12 ||(5) |
|Exceptional Items ||- ||470 ||1346 ||12234 |
|Profit Before Tax ||27311 ||16151 ||23187 ||29009 |
|Provision for Taxation (net) ||8192 ||6467 ||8409 ||6808 |
|Profit after Tax ||19119 ||9684 ||14778 ||22201 |
Note: * FY 17 results have been restated to incorporate the effect of certain businessundertakings vested with the Company as at 31 March 2017 in pursuance of Scheme ofArrangement.
There have been no material changes and commitments that have occurred after close ofthe financial year till the date of this report which affect the financial position ofthe Company. Based on the internal financial control framework and compliance systemsestablished in the Company the work performed by Statutory Internal SecretarialAuditors and reviews performed by the management and/or the Audit Committee of the Boardyour Board is of the opinion that the Company's internal financial controls were adequateand working effectively during the Financial Year 2017-18.
In accordance with the Dividend Distribution Policy adopted by your Board and availableon the website of the Company www.zeeentertainment. com your Directors recommend paymentof Equity Dividend of Rs.2.90 per equity share of Rs.1/- each and such Equity Dividendupon approval by the Members of the Company at the ensuing Annual General Meeting shallbe payable on the outstanding equity capital as at the Record Date i.e. July 10 2018. Theoutflow on account of equity dividend and the tax on such dividend distribution based oncurrent Paid-up Equity Share Capital of the Company would aggregate to '3357.87 millionresulting in payout of 25% of the Consolidated Net Profits for the Financial year 2017-18.
In accordance with the terms of Listed 6% Cumulative Redeemable NonConvertiblePreference Shares issued as Bonus in 2014 (Bonus Preference Shares) and Unlisted Series B- 6% Cumulative Redeemable NonConvertible Preference Shares issued in accordance with theScheme (Unlisted Series B Preference Shares) the Company had remitted an aggregatePreference Dividend of Rs.1194.54 Million comprising of:
Pro-rata Preference Dividend of Rs.0.11145 on the redemption value of Rs.2 perBonus Preference Share for the period from April 1 2017 till Redemption date;
Preference Dividend of Rs.0.48 per share for FY 2017-18 on the Bonus PreferenceShares of Rs.8 per share post redemption; and
Pro-rata Preference Dividend of Rs.0.41 per share on the Unlisted Series BPreference Shares of Rs.10 each for the period from date of allotment till March 31 2018
4. BUSINESS OVERVIEW
During fiscal 2018 your Company delivered another strong year of performance despitecertain challenges and uncertainties in the macroenvironment. The advertising revenueswere impacted in the first half due to disruptions caused by implementation of Goods andServices Tax (GST) - an unified taxation regime which led to cut-back in ad spends byadvertisers. However FMCG and other consumer discretionary categories launched newproducts and stepped up their spending on campaigns and activations during the second halfof the fiscal aiding the growth of advertising revenues. On the subscription businessTRAI's tariff order on MRP based channel distribution and the lack of clarity on thestatus of this regulation resulted in temporary delays in monetization in newly digitizedPhase III markets for the broadcasters besides the exit of a DTH player affecting thesubscription growth for the industry. Overall as per FICCI-EY report the Indian Mediaand Entertainment (M&E) industry registered a growth of 12.6% in CY17 reaching '1473billion in size and is forecasted to register 11.3% CAGR over the next three years withall segments of M&E industry registering growth over this period.
FY18 was an eventful year for your company. On completion of 25 years of broadcastoperations your Company adopted a refreshed brand philosophy of 'Extraordinary Together'with new brand logos across all business verticals and the initiative was accompanied byiconic 360o marketing campaigns enhancing the brand equity and brand recallsignificantly.
ZEE5 - your Company's new OTT offering in digital space was launched with 100000+hours of content across genres in 12 languages. The initial response has been encouragingand your Company plans to significantly ramp-up original content production for usage inthe platform in fiscal 2019. In the domestic broadcast business your company was the #1player in the non-sports entertainment segment with an all-India viewership share of 18%.This was led by strong performance by the flagship channel - Zee TV market share gains inregional channels portfolio and integration of two channels of RBNL.
During the year under review:
Zee TV was the number one Hindi GEC with 200 bps increase in market share;
Zee Anmol and the portfolio of Hindi movie channels continued to be leader intheir respective categories;
Zee Marathi Sarthak and Big Ganga in regional channels space maintained theirleadership positions and other regional channels such as Zee Telugu Zee Bangla Zee Tamiland Zee Kannada witnessed market share gains and most of the channels narrowed gap withthe leader;
& Prive HD was launched as a premium English movie channel which quicklyclimbed to be the #1 position since launch;
Zee Studios the movie production business released 10 movies across threelanguages - Hindi Marathi and Punjabi all of which were received well at the box office.'Mom' won the National Award for Best Actor - Female;
Zee Music Company continued to expand its music catalogue across languages andthe music label has gained strong traction in just four years of its launch and is alreadythe #2 music channel by subscribers on YouTube; and
In the international business your Company expanded the reach of its channelsacross geographies and has entered into new distribution partnerships in markets like USAand MENAP to gain a wider audience. In select markets like UK the channels moved to thebasic pack of some of our distributors. These initiatives have helped to increase thereach of ZEEL's content to 578 million people across 170+ countries.
5. CORPORATE RESTRUCTURING
During the year under review your Company:
Acquired the General Entertainment Broadcasting business of Reliance ADAG grouphoused under Reliance Big Broadcasting Pvt Ltd Big Magic Limited and Azalia BroadcastPrivate Limited in pursuance of a Composite Scheme of Arrangement approved by the MumbaiBench of Hon'ble National Company Law Tribunal vide order passed on July 13 2017 The saidScheme inter alia provided for Demerger of 6 (six) Television Channels of RelianceADAG group companies viz. Big Magic (Hindi GEC in Comedy genre) Big Ganga (RegionalChannel in Bhojpuri language) Big Magic Punjab (Regional channel in Hindi) Big Magic HDBig Gaurav and Big Thrill vesting with the Company with effect from Appointed Date ofMarch 31 2017. This acquisition enabled the Company to expand its portfolio of theChannels into newer genres; and
Consolidated certain businesses carried on by some of the Domestic Subsidiariesin pursuance of a Composite Scheme of Arrangement and Amalgamation inter alia for(a) Demerger of Demerged Undertakings (as defined in the Scheme) of Zee DigitalConvergence Limited India Webportal Pvt Ltd and Zee Unimedia Limited vesting with theCompany; and (b) Amalgamation of Sarthak Entertainment Pvt Ltd with the Company witheffect from Appointed Date of April 1 2017. The said
Composite Scheme of Arrangement and Amalgamation was approved by the Mumbai bench ofHon'ble National Company Law Tribunal vide order passed on April 11 2018 and becameeffective on and from May 3 2018. The consolidation of the businesses of the DomesticSubsidiaries in pursuance of the Scheme is expected to enable efficient cash flowmanagement better tax efficiency and avoidance of duplication of administrativeoverheads.
The effect of above Scheme(s) have been given in the Audited Financial Statements ofthe Company for FY 2017-18 and accordingly as required under Indian Accounting Standardsthe Financial Statements for the previous financial year 16-17 has been restated to makeit comparable.
6. CAPITAL STRUCTURE
During the year under review your Company had:
Issued and allotted 3949105 - Unlisted 6% Cumulative RedeemableNon-Convertible Preference Shares of Rs.10/- each (Series B Preference Shares) on July24 2017 as consideration in pursuance of the Composite Scheme of Arrangement foracquisition of General Entertainment Broadcasting Business of Reliance ADAG groupentities;
Redeemed 20% of Nominal value of Listed 6% Cumulative Redeemable Non-ConvertiblePreference Shares of Rs.10/- each (Bonus Preference Shares) on the 4th anniversary of itsissuance as per the terms of the issue resulting in outflow of Rs.4033.88 Million towardsredemption at the rate of Rs.2 per Preference Share. As required under Section 55 of theAct the amount equivalent to Redemption value was credited to Capital Redemption ReserveAccount of the Company. Further pursuant to the provisions of Income Tax Act 1961 thesaid redemption amount paid was treated as Dividend pay-out and accordingly was subjectedto payment of Dividend Distribution Tax by your Company; and
Issued and allotted 4900 Equity Shares of Rs.1 each upon exercise of optionsgranted under Company's ESOP Scheme.
Consequent to the above issuance/redemption the Paid-up Share Capital of the Companyas at March 31 2018 stood at Rs.17135483166/- comprising of 960453620 Equity sharesof Rs.1/- each; 2016942312 of Bonus Preference Shares of Rs.8/- each; and 3949105Unlisted Series B Preference Shares of Rs.10/- each.
Subsequent to closure of the financial year your Company had issued and allotted 9450Equity Shares of Rs.1 each upon exercise of stock options granted under the ESOP Scheme.
During the year under review Brickwork Ratings India Private Ltd had re-affirmed therating assigned to the Bonus Preference Shares of the Company at 'BWR AAA' which denotesthat the instruments with this rating are considered as having highest degree of safetyregarding timely servicing of financial obligations.
7. SUBSIDIARIES & JOINT VENTURES
As at March 31 2018 your Company had 29 Subsidiaries (28 Subsidiaries as on March 312017) 2 Associates (3 as at March 31 2017) and 1 Joint Venture Company (1 as at March31 2017).
Your Board confirms that as at March 31 2018 none of the Subsidiaries of the Companyqualifies to be considered as Material Subsidiary as per SEBI Listing Regulations andCompany's policy on determining Material Subsidiary.
International Operations: As at March 31 2018 the International
Operations of the Company are carried out through 21 direct and indirect subsidiaries(21 as at March 31 2017).
During the year under review:
Zee Studio International Limited Canada a step-down wholly owned overseassubsidiary of the Company through ATL Media Limited Mauritius incorporated a whollyowned subsidiary in the Province of British Columbia in the name of Pantheon ProductionsLimited;
Zee Radio Network Middle East FZ LLC a Step down wholly owned overseassubsidiary of Company through Asia Today Limited Mauritius was de-registered and ceasedto exist with effect from December 23 2017;
The second phase of Sale of Sports Broadcasting business housed under erstwhiledomestic subsidiary Taj Television (India) Pvt Ltd and overseas step down subsidiary TajTV Ltd Mauritius to Sony group was concluded upon receipt of aggregate consideration ofUSD 366.32 Million after certain adjustments as per terms of Agreement;
Taj TV Ltd Mauritius - a wholly owned step-down overseas subsidiary boughtback 12150 Ordinary Shares of USD 1000 each held by its Holding Company ATL MediaLimited Mauritius at an aggregate consideration of USD 111.59 Millions and consequentlythe paid-up capital of Taj TV Ltd stood reduced to 4800 Ordinary Shares of USD 1000 eachheld entirely by ATL Media Limited; and
ATL Media Limited - a wholly owned overseas subsidiary redeemed PreferenceShares of USD 110.5 Million held by the Company and remitted the redemption amount alongwith Preference Dividend of USD 8.66 Million. Additionally ATL Media Limited remittedEquity Dividend(s) aggregating to USD 118.51 Million during the year to the Company.
India Operations: As at March 31 2018 the Company had 8 direct and indirectdomestic subsidiaries (7 as at March 31 2017).
During the year under review your Company acquired:
Balance 49% equity stake in India Webportal Private Limited - a Joint Ventureentity from its existing shareholders thereby making it a Wholly Owned Subsidiary of theCompany;
Balance 51% equity stake in Fly-By-Wire International Private Limited - anassociate entity from its existing shareholders thereby making it a wholly ownedsubsidiary of the Company;
80% equity stake in Margo Networks Private Limited a technology startup whichhas developed a technology to set-up server and compute infrastructure which will enablecontent consumption and has the potential to significantly drive-up the digital contentconsumption scenario;
12.5% stake (on fully diluted basis) in Tagos Design Innovations Pvt Ltd atechnology start-up engaged in development of in-video discovery platform with an intentto expand digital platforms for the Media content.
Further in pursuance of the Composite Scheme of Arrangement and Amalgamation approvedby Hon'ble National Company Law Tribunal vide order passed on April 11 2018
Sarthak Entertainment Pvt Ltd - a wholly owned subsidiary merged with theCompany and dissolved without winding-up with effect from Appointed Date of April 1 2017;and
Certain business undertakings of the wholly owned subsidiaries viz. Zee DigitalConvergence Limited Zee Unimedia Limited and India Webportal Pvt Ltd stood demerged andvested with the Company and your Company's investment in these wholly owned subsidiariesstood reduced consequent to reduction of the paid-up capital of these subsidiaries toreflect the remaining business after such demerger.
Apart from the above no other Subsidiary/Joint-venture/Associate was acquired ordivested during the financial year 2017-18. In compliance with Section 129 of the Act astatement containing requisite details including financial highlights of the operation ofall the subsidiaries in Form AOC-1 is annexed to this report as Annexure A.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of the subsidiaries are available on the website ofthe Company www. zeeentertainment.com These documents will also be available forinspection during business hours on all working days (except Saturday) at the RegisteredOffice of the Company.
Your Company has obtained a certificate from its Statutory Auditors certifying that theCompany is in compliance with the FEMA regulations with respect to the downstreaminvestments made during the year under review.
8. EMPLOYEE STOCK OPTION SCHEME
In pursuance of ZEEL ESOP Scheme 2009 during the year under review the Nomination andRemuneration Committee had granted 18900 Stock Options to Mr Punit Misra CEO - DomesticBroadcast Business resulting in aggregate grant of 28700 Stock Options to Mr Punit Misraas at March 31 2018. The said Stock Options are convertible into equivalent number ofEquity Shares upon payment of Exercise Price of Rs.1/- per share by the Option Grantee.Accordingly as per the terms of grant and upon exercise of vested Stock options by MrPunit Misra 4900 Equity Shares were issued and allotted to him during FY 17-18 and23800 unvested Stock Options were outstanding as at March 31 2018.
Requisite disclosures as required under Regulation 14 of Securities and Exchange Boardof India (Share Based Employee Benefits) Regulations 2014 is annexed to this report asAnnexure B. The Statutory Auditors of the Company M/s Deloitte Haskins & Sells LLPChartered Accountants have certified that the Company's Employee Stock Option Scheme hasbeen implemented in accordance with SEBI Regulations and the resolution passed by theshareholders. The said disclosure on Company's ESOP Scheme will also be available on theCompany's website www. zeeentertainment.com as part of the Annual report.
Subsequent to closure of the financial year the Nomination and Remuneration Committeeapproved grant of 17300 additional Stock Options to Mr Punit Misra on similar terms andhad issued and allotted 9450 Equity Shares to Mr Punit Misra upon exercise of optionsvested in April 2018.
9. CORPORATE SOCIAL RESPONSIBLITY
Corporate Social Responsibility (CSR) at Zee is all about engaging in long-termsustainable programs that actively contribute to and support the social and economicdevelopment of the society. Accordingly as an unified approach towards CSR at Essel Grouplevel and with an intent to support long term projects focused on developing andempowering society your Company had along with other Essel group entities established aSection 8 Company in the name of Subhash Chandra Foundation. The CSR contributions of theEssel group companies are pooled into the Foundation to fund long-term projects.
During the year under review CSR Committee approved commitment to CSR projects spendsaggregating to Rs.293.90 Million in the spheres of education citizen empowermentcommunity development and preservation of cultural and national heritage. The saidcommitment inter alia included 2 long term CSR projects requiring need/milestonebased funding staggered over a period of 2 years which includes
a. An Education and Skill development project taken up by Subhash Chandra Foundationby expanding the Community Empowerment Platform Sarthi to the States of Bihar andJharkhand. The said project was established last year as Pilot run in the States of MadhyaPradesh and Chattisgarh with focus on education skill development & alternatelivelihood and had a good impact on the society wherein Sarthi partnered with 434organizations to increase its reach. Based on learnings during the pilot run SubhashChandra Foundation proposed to expand the platform to the States of Bihar and Jharkhand ata project cost of Rs.215 Million committed by your Company and required to be funded intranches over a period of 2 years.
b. An Integrated Rural Development Project taken up by Subhash Chandra Foundation incollaboration with Ekal Gramothan Foundation by setting up a Gramothan Resource Centre(GRC) which will serve around 100 surrounding villages by facilitating creation ofselfsustainable opportunities enhance farm productivity promote and support ruralmicro-entrepreneurs and help arrest migration. As part of the project Subhash ChandraFoundation proposes to set-up a GRC in Haryana at a project cost of Rs.50 Millioncommitted by your Company and required to be funded in tranches over a period of 2 years.
During the year under review as against the committed and approved CSR spend ofRs.293.90 Million your Company had released an aggregate of Rs.68.90 Million and thebalance amounts would be spent/remitted towards long term CSR Projects mentioned aboveover a period of next financial year from out of the CSR budget of FY 17-18.
Annual report on Corporate Social Responsibility activities initiated by the Companyduring the year under review in compliance with the requirements of Companies Act 2013is annexed to this report as Annexure C. The said Annual Report on CSR activities for FY17-18 does not include CSR spend of Rs.2.50 Million by Sarthak Entertainment Pvt Ltdwhich got amalgamated with the Company with effect from April 1 2017 for promoting anintegrated Agri-rural development project in the State of Haryana.
10. CORPORATE GOVERNANCE AND POLICIES
In order to maximize shareholder value on a sustained basis your Company has beenconstantly reassessing and benchmarking itself with well-established Corporate Governancepractices besides strictly complying with the requirements of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015('Listing Regulations') applicable provisions of Companies Act 2013 and applicableSecretarial Standards issued by the Institute of Company Secretaries of India.
In terms of Schedule V of Listing Regulations a detailed report on CorporateGovernance along with Compliance Certificate issued by the Statutory Auditors of theCompany is attached and forms an integral part of this Annual Report. ManagementDiscussion and Analysis Report and Business Responsibility Report as per ListingRegulations are presented in separate sections forming part of the Annual Report. The saidBusiness Responsibility Report will also be available on the Company's websitewww.zeeentertainment.com as part of the Annual Report.
In compliance with the requirements of Companies Act 2013 and Listing Regulationsyour Board has approved various Policies including Code of Conduct for Directors &Senior Management Material Subsidiary Policy Insider Trading Code Document PreservationPolicy Material Event Determination and Disclosure Policy Fair Disclosure PolicyCorporate Social Responsibility Policy Whistle Blower and Vigil Mechanism Policy RelatedParty Transaction Policy Remuneration Policy and Dividend Distribution Policy. Thesepolicies & codes along with the Directors Familiarization Program and Terms andConditions for appointment of Independent Directors have been uploaded on Company'scorporate website and can be viewed on https://www.zeeentertainment.com/investors/investor-governance.
In compliance with the requirements of Section 178 of the Companies Act 2013 theNomination & Remuneration Committee of your Board had fixed various criteria fornominating a person on the Board which inter alia include desired size andcomposition of the Board age limits qualification/experience areas of expertise andindependence of individual. The Committee had also approved in-principle that the initialterm of an Independent Director shall not exceed 3 years.
11. DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year there has been no change in the constitution of your Board whichcomprises of 8 Directors including 4 Independent Directors an Executive Director and 3Non-Executive Directors. Independent Directors provide their declarations both at the timeof appointment and annually confirming that they meet the criteria of independence asprescribed under Companies Act 2013 and Listing Regulations. During FY 2017-18 your Boardmet 8 (eight) times details of which are available in Corporate Governance Report annexedto this report.
Mr Ashok Kurien Non-Executive Director is liable to retire by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for re-appointment. YourBoard recommends his re-appointment.
The Notice of ensuing Annual General Meeting includes a proposal seeking Membersapproval by way of Special Resolution for re-appointment of Mr Adesh Kumar Gupta as anIndependent Director for the second term of 3 years from expiry of his current term onDecember 29 2018. Your Company has received a notice from a Members proposing suchre-appointment of
Mr Adesh Kumar Gupta as Independent Director for second term and based on performanceevaluation process and communication received from Mr Adesh Kumar Gupta confirming that hecontinues to meet the criteria of Independence your Board recommends his re-appointmentas an Independent Director for the second term of 3 years upon expiry of the current termon December 29 2018.
During the year under review consequent to Mr Mihir Modi moving to handle otherfunctions within the group Mr Bharat Kedia was appointed as Chief Financial Officer ofthe Company with effect from August 1 2017. Accordingly the Key Managerial Personnel ofthe Company as at March 31 2018 comprised of Mr Punit Goenka Managing Director &CEO Mr M Lakshminarayanan Chief Compliance Officer & Company Secretary and Mr BharatKedia Chief Financial Officer.
Subsequent to closure of FY 2017-18 Mr Bharat Kedia resigned as Chief FinancialOfficer of the Company with effect from the close of business on April 28 2018 andpending appointment of new Chief Financial Officer by the Board the finance functions ofthe Company are currently being discharged by Mr Sundeep Mehta Finance Controller.
12. PERFORMANCE EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations theevaluation of annual performance of the Directors/Board/Committees was carried out for thefinancial year 2017-18. The details of the evaluation process are set out in the CorporateGovernance Report annexed to this Report.
13. BOARD COMMITTEES
In compliance with the requirements of Companies Act 2013 and Listing Regulations yourBoard had constituted various Board Committees including Audit Committee Risk ManagementCommittee 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. zeeentertainment.com. Details of scope constitutionterms of reference number of meetings held during the year under review along withattendance of Committee Members therein form part of the Corporate Governance Reportannexed to this report.
At the 35th Annual General Meeting held on July 12 2017 the Shareholders had approvedappointment of M/s Deloitte Haskins & Sells LLP Chartered Accountants having FirmRegistration No. 117366W/W- 100018 as Statutory Auditors of the Company until conclusionof 40th Annual General Meeting to be held in the year 2022 subject to ratification by theShareholders every year. Pursuant to recent amendment to Section 139 of the Companies Act2013 effective May 7 2018 ratification by the Shareholders every year for theappointment of Statutory Auditors is no longer required and accordingly the Notice ofensuing Annual General Meeting does not include the proposal for seeking Shareholdersapproval for ratification of Statutory Auditors appointment. The Company has receivedcertificate of eligibility from M/s Deloitte Haskins & Sells LLP in accordance withthe provisions of the Companies Act 2013 read with rules thereunder and a confirmationthat they continue to hold valid Peer Review Certificate as required under ListingRegulations.
During the year under review the Secretarial Audit was carried out by M/s Vinod Kothari& Co. Company Secretaries (Firm Registration No. P1996WB042300) in compliance withSection 204 of the Companies Act 2013.
The reports of M/s Deloitte Haskins & Sells LLP. Chartered Accountants asStatutory Auditors and M/s Vinod Kothari & Co. Company Secretaries as SecretarialAuditor forming part of this Annual report do not contain any qualification reservationor adverse remarks. During the year under review the Statutory Auditors had not reportedany matter under Section 143 (12) of the Act and therefore no detail is required to bedisclosed under Section 134 (3) (ca) of the Act.
In compliance with the requirements of Section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 M/s Vaibhav P Joshi & Associates CostAccountants (Firm Registration No. 101329) was engaged to carry out Audit of Cost Recordsof the Company for Financial Year 2017-18. Requisite proposal seeking ratification ofremuneration payable to the Cost Auditor for FY 2017-18 by the Members as per Rule 14 ofCompanies (Audit and Auditors) Rules 2014 forms part of the Notice of ensuing AnnualGeneral Meeting.
15. HUMAN RESOURCES & PARTICULARS OF EMPLOYEES
Being in the business of creativity your Board believes that people are the ultimatedifferentiators in your Company and efforts are taken to attract develop and retainemployees. In order to ensure sustainable business growth and become future ready yourCompany over the years has been focusing on strengthening its talent managementperformance management & employee engagement processes. Employees of your Company aretrained to drive values and they believe live and demonstrate the 7 core values of thecompany - namely Customer First Go for Big Hairy Audacious Goals (BHAG) Be FrugalRespect Humility and Integrity Speed and Agility Solve big Problems and Accountabilityfor Results. During the year your Company has moved on to build a high-trusthigh-performance culture and as a result has been ranked amongst the top 100 'India's BestCompanies to Work For 2017' as well amongst the Best Company to work for in the MediaIndustry in a study conducted by Great Place to Work Institute and The Economic Times.Your company has been institutionalizing the people philosophy framework"SAMWAD" (Effective Conversation) to ensure that as part of the key objectivespeople managers deliver on organization's expectations of managing outcome and developingpeople by focusing on their talents. Your company continues to build talent pipeline byengaging and hiring fresh talent from renowned campuses building capabilities in keybusiness functions through training and development initiatives breaking the barriers ofcommunication building a culture of appreciation recognizing top talent and offering aseamless employee experience by migrating to SAP's SuccessFactors Human Capital Management(HCM). As on March 31 2018 your Company had 1776 employees.
Requisite disclosures in terms of the provisions of Section 197 of the Act read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014along with statement showing names and other particulars of employees drawing remunerationin excess of the limits prescribed under the said rules is annexed to this report asAnnexure D.
16. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
Your Company is into the business of Broadcasting of General Entertainment TelevisionChannels and extensively uses world class technology in its Broadcast Operations. Howeversince this business does not involve any manufacturing activity most of the Informationrequired to be provided under Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 are Nil/Not applicable. The information as applicableare given hereunder:
Conservation of Energy
Your Company being a service provider requires minimal energy consumption and everyendeavor is made to ensure optimal use of energy avoid wastages and conserve energy asfar as possible.
Your Company accelerated the use of enabling technologies towards its "customerfirst initiatives" with special emphasis on quality of content delivery andreliability results of which will be evident in the coming years.
The new technology initiatives by your Company span across production transmission anddistribution of content which ensures unparalleled high- quality content delivery with thelowest time to air across any network in India. Production of content for premium channelsis based on use of 4K equipment and the transmission networks are upgraded to use highefficiency modes with near doubling of capacities across its multiple satellite leaseswhich reflect in customer perceived video quality (PVQ) on its channels. Most of thedistribution network of your Company has been revamped with the use of very high gradeprofessional multichannel decoders which match the changing ground paradigm ofagglomeration of networks and larger DTH and MSO networks delivering content to millionsof digital customers.
Foreign Exchange Earnings & Outgo:
During the Financial Year 2017-18 the Company had Foreign Exchange earnings of Rs.9789Millions (which includes Rs.7816 Millions being the Dividend received from an overseasSubsidiary) and outgo of Rs.566 Millions.
i. Particulars of loans guarantees and investments:
Particulars of loans guarantees and investments made by the Company as required undersection 186 (4) of the Companies Act 2013 and the Listing Regulations are contained inNote No. 37 to the Standalone Financial Statements.
ii. Transactions with Related Parties:
All contracts/arrangements/ transactions entered by the Company during the financialyear with related parties were on an arm's length basis in the ordinary course ofbusiness and in compliance with the applicable provisions of the Companies Act 2013 andListing Regulations. During FY 2017-18 there are no materially significant Related PartyTransactions by the Company with Promoters Directors Key Managerial Personnel or otherdesignated persons which may have a potential conflict with the interest of the Company atlarge.
All related party transactions specifying the nature value and terms of thetransactions including the arms-length justification are placed before the AuditCommittee for its approval and statement of all related party transactions carried out isplaced before the Audit Committee for its review on a quarterly basis. During the yearunder review there have been no materially significant related party transactions by theCompany as defined under Section 188 of the Act and Regulations 23 the Listing Regulationsand accordingly no transactions are required to be reported in Form AOC-2 as per Section188 of the Companies Act 2013.
iii. Risk Management:
Your Company has well-defined operational processes to ensure that risks are identifiedand the operating management is responsible for identifying and implementing mitigationplans for operational and process risk. Key strategic and business risks are identifiedand managed by senior management team with active participation of Risk ManagementCommittee. The Risks That Matters (RTM) and their mitigation plans are updated andreviewed periodically by the Risk Management Committee of your Board and integrated in theBusiness plan for each year. The details of constitution scope and meetings of the RiskManagement Committee forms part of the Corporate Governance Report. In the opinion of theBoard there are no risks that may threaten the existence of the Company.
iv. Internal Financial Controls and their adequacy:
Your Company has adequate internal financial controls and processes for orderly andefficient conduct of the business including safeguarding of assets prevention anddetection of frauds and errors ensuring accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information. The Audit Committeeevaluates the internal financial control system periodically and at the end of eachfinancial year.
Your Company has adopted accounting policies which are in line with the IndianAccounting Standards notified under Section 133 of the Companies Act 2013 read togetherwith the Companies (Indian Accounting Standards) Rules 2015. These are in accordance withGenerally Accepted Accounting Principles in India.
v. Deposits & Unclaimed Dividend/Shares:
Your Company has not accepted any public deposit under Chapter V of the Companies Act2013.
During the year under review in terms of provisions of Investors Education andProtection Fund (Awareness and Protection of Investors) Rules 2014 unclaimed dividenddeclared by the Company for financial year 2009-10 both interim and Final aggregating toRs.2.28 Million was transferred to Investors Education and Protection Fund.
Additionally in compliance with the requirements of The Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (IEPFRules) as amended your Company had during the year under review transferred 113370Unclaimed Equity Shares of Rs.1 each to the beneficiary account of IEPF Authority. Thesaid Unclaimed Dividend and/or the Equity Shares can be claimed by the Shareholders fromIEPF authority after following process prescribed in IEPF Rules.
vi. Extract of Annual Return:
The extract of Annual Return in Form MGT-9 as required under Section 92(3) of theCompanies Act 2013 read with Companies (Management & Administration) Rules 2014 isannexed to this report as Annexure E.
vii. Sexual Harassment:
Your Company is committed to provide safe and conducive working environment to all itsemployees and has zero tolerance for sexual harassment at workplace. In line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and rules thereunder your Company has adopted a Policy onprevention prohibition and redressal of sexual harassment at workplace and hasconstituted 8 Internal Complaints Committee functioning at various locations to redresscomplaints regarding sexual harassment.
During the year under review 3 (three) complaints were received by the Company andwere investigated in accordance with the procedure and resolved.
viii. Regulatory Orders:
No significant or material orders were passed by the regulators or courts or tribunalswhich impact the going concern status and Company's operations in future.
Employees are our vital and most valuable assets. Your Directors value theprofessionalism and commitment of all employees of the Company and place on record theirappreciation of the contribution and efforts made by all the employees in ensuringexcellent all-round performance. Your Board also thank and express their gratitude for thesupport and cooperation received from all stakeholders including viewers producerscustomers vendors advertising agencies investors bankers and regulatory authorities.
| ||For and on behalf of the Board of Directors |
| ||Punit Goenka |
| ||Managing Director & CEO |
| ||Adesh Kumar Gupta |
| ||Director |
|Place: Mumbai || |
|Date: May 10 2018 || |