ZEE NEWS LIMITED
ANNUAL REPORT 2011-2012
To the Members
Your Directors take pleasure in presenting the 13th Annual Report of your
Company together with Audited statement of Accounts for the year ended
march 31, 2012.
The financial performance of standalone operations of your Company during
the Financial Year 2011-12 is summarized in the following table:
(Rs. in millions)
Particulars For the year ended
March 31, March 31,
Total Revenues 2,878.34 2,538.97
Total Expenses 2,538.80 2,383.20
Profit before tax and exceptional 339.54 155.77
Exceptional items (166.74) -
Profit before tax 172.80 155.77
Provision for taxation 110.80 57.97
Profit after tax 62.00 97.80
Balance brought forward 1,223.22 1,125.42
Balance carried to balance sheet 1,285.22 1,223.22
with a view to conserve the resources for future business requirements and
expansion plans, your Directors are of view that the current year's profit
be ploughed back into the operations and hence no dividend is recommended
for the year under review.
OPERATIONS & STRATEGY
while there was general euphoria of growth in the media industry at the
beginning of 2011-12, it began to die down as the year progressed.
Eventually, the second half was a sluggish period wherein the advertisement
spends by the corporate tapered significantly in addition to the margins
taking a hit for the media industry in general. However, your Company like
the previous slowdown period, not only swam strongly against the tide, but
also emerged as one of the most successful television news operators in the
Several Network leveraged properties led to healthy advertisement revenues
as well as marketing impact for the company. Ananya samman, your Company's
endeavour to honour the real heroes of our country has been executed across
the length and breadth of the nation. the brand has been extended to honour
Doctors through Swasth Bharat Samman, Industrialists through Udyami Samman
in Uttar Pradesh and Andhra Pradesh and Farmers through Agri Awards. Over
100 odd revenue generating events were conducted to connect with viewers
and enhance brand imagery.
The Network through its focus on rational and serious news ensured that it
had the highest Time Spent Per Viewer in the 8 metros for the year in the
core news viewers segment (Source: TAM, CS 25 + M ABC, FY 2011-12,8
The flagship channel, Zee News, stuck to its content strategy of
concentrating on concerns related to the common man through non-frivolous
news. It was No. 2 in terms of Time Spent Per Viewer in 8 metros (Source:
TAM, CS 15 + , FY 2011-12, 8 metros).
Zee Business powered on with emphasis on stock market hours and presenting
actionable information to the retail investors and SMEs. It was No. 2 in
terms of reach in key business viewers segment (Source: TAM, CS 25 + M ABC,
FY 2011-12, HSM).
Your Company's Bengali news offering, 24 Ghanta recovered its leadership
during the second half of the year, bouncing back after it had lost the top
spot post state elections and change of government (Source: TAM, CS 25 + M
AB, Oct 2011 to Mar 2012, wB).
The Marathi news channel, Zee 24 Taas, remained extremely popular in Mumbai
and was No. 2 channel reaching about 3.5 Million viewers (Source: TAM, CS
15 + , FY 2011-12, Mumbai).
Amongst the newly launched channels, Zee News Uttarakhand & Uttar Pradesh
continued its leadership in the Hindi heartland (Source: TAM, CS 15 + , FY
Zee 24 Gantalu and Zee Punjabi executed various events like Spoorthi (woman
Entrepreneur Awards) and Anhad Samman (Ananya Samman) respectively to
honour the key contributors to the social and economical progress of these
Your Company now has comprehensive and more options for the new age news
consumer. Zeenews.com - the mother site in English - was the fastest
growing news website in India as per ComScore Direct and Google Analytics.
Regional websites for Zee 24 Taas and 24 Ghanta were also launched during
the year in addition to the inauguration of the Hindi website.
while the viewership performance has been impressive, the financials are
encouraging too, as your Company follows strategy of leveraging Network
strength to efficiently keep costs under check. The EBITDA grew from
Rs.265.4 Million to Rs.402.5 Million, a significant growth of 52% year on
Overall, your Company has been growing on a year on year basis since
demerger of the Regional General Entertainment Channels (R-GECs). As has
been said before, the growth has come despite difficult market conditions
and is significant considering the performance of the other Television News
During the year under review, your Company has not accepted or renewed any
deposits within the meaning of Section 58A of the Companies Act, 1956 and
rules made there under.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is a key part of your Company's
business. Apart from it being a responsible member of the Fourth Estate,
your Company also executes several initiatives throughout the year which
benefit the society in general. In addition, there is significant amount of
content which is devoted to helping the viewers through the programme Zee
Helpline, wherein the Network ensures that the rights of the common man are
protected and his queries are resolved by the administration.
Our flagship CSR initiative Ananya Samman truly turned national when it was
executed in all our Network channels. It is a unique nationwide initiative
to identify and honour unsung heroes, who silently contribute to our
society. Another environmental campaign 'My Earth My Duty' was appreciated
by none other than the United Nations. My Earth My Duty is one of the
largest climate awareness campaigns wherein we planted trees across India.
The nation's largest voter awareness initiative 'Apka Vote Apki Taqat'
truly created an impact in the states where elections took place and was
one of the factors leading to increased voter turnout.
Apart from these, your Company, as part of the Essel Group of Companies,
has at a unified and centralized level, put in place a CSR policy. During
the year under review, Essel Group continued to support cause of Ekal
Vidyalaya Foundation, an NGO that works to bring about basic literacy and
health awareness amongst the tribal and rural population of India; Global
Vipassana Foundation which helps propagate Vipassana, the non-sectarian
rational process of self-purification with the aim of bringing about peace
both within the individual and the society in general; Global Foundation
for Civilizational Harmony, a body which aims to create a peaceful and
harmonious society; and National Foundation of Communal Harmony, an
autonomous organization set up by Ministry of Home Affairs.
EMPLOYEES STOCK OPTION SCHEME
Till date of this report your Company has not granted any Stock Option
either to its employees or Directors under 'ZNL ESOP Scheme 2009' approved
by the Members at the 10th Annual General Meeting held on August 18, 2009.
In view of this, particulars as required under Clause 12 (Disclosure in the
Directors' Report) of Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999,
are Nil and Company has not obtained any certificate from the Statutory
Auditors confirming implementation of the Employees Stock Option Scheme in
accordance with SEBI guidelines and the resolution passed by the
In addition to strictly complying with Clause 49 of the Listing Agreement,
your Company is committed to adherence of the highest standards of
Corporate Governance. In line with your Company's commitment to excel in
implementing best Corporate Governances practices, your Board had earlier
approved and implemented a Corporate Governance Manual which serves as
guide to every business activity / decision making in the Company. Report
on Corporate Governance as stipulated under the Listing Agreement(s) with
the Stock Exchanges as also a Management Discussion and Analysis Report
forms part of the Annual Report.
Certificate from the Statutory Auditors of the Company, M/s MGB & Co.,
Chartered Accountants, confirming compliance with the provisions of
Corporate Governance as stipulated in Clause 49, is annexed to the said
Corporate Governance Report.
Mr. Vinod Bakshi, Director, retires by rotation at the ensuing Annual
General Meeting and being eligible has offered himself for re-appointment.
Your Board has recommended his re-appointment.
Your Company continues to hold 60% equity stake in its Subsidiary, Zee
Akaash News Private Limited. Statement pursuant to Section 212 of the
Companies Act, 1956 in connection with Zee Akaash News Pvt. Ltd., is
attached herewith and forms part of this report.
In accordance with Accounting Standard AS 21 - Consolidated Financial
Statements read with Accounting Standard AS 23 -Accounting for Investments
in Associates, and Accounting Standard AS 27 - Financial Reporting of
Interests in Joint Ventures, the audited Consolidated Financial Statements
are provided in and forms part of this Annual Report.
As the Members are aware, the Ministry of Corporate Affairs has provided
general exemption to companies from complying with Section 212 (8) of the
Companies Act, 1956, provided such companies publish the audited
consolidated financial statements in the Annual Report. Your Board has
decided to avail the said general exemption and accordingly, the Annual
Accounts of Zee Akaash News Private Limited for the financial year ended
March 31, 2012 are not being attached with this Annual Report. Requisite
financial highlights of the said subsidiary is annexed to this Report. The
audited Annual Accounts and related information of the subsidiary will be
made available, upon request or for inspection at the registered office, by
any shareholder of the Company.
Statutory Auditors, M/s MGB & Co., Chartered Accountants, having Firm
Registration No. 101169VV, hold office until the conclusion of the ensuing
Annual General meeting and are eligible for re-appointment.
The Company has received communication from the statutory Auditors
confirming that (i) their re-appointment, if made, would be within the
limits prescribed under section 224(1B) of the Companies Act, 1956; (ii)
that they are not disqualified for re-appointment within the meaning of
section 226 of the said Act; and (iii) they have been provided a valid
certificate from the Peer Review Board of the Institute of Chartered
Accountants of India.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
Your Company is into the business of Broadcasting of News & Current Affairs
Channels in Hindi and various regional languages. since this does not
involve any manufacturing activity, most of the information required to be
provided under section 217(1) (e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988, is not applicable.
However the information as applicable is given hereunder: Conservation of
Your Company, being a service provider, requires minimal energy consumption
and every endeavor has been made to ensure optimal use of energy, avoid
wastages and conserve energy as far as possible.
in its endeavor to deliver the best to its viewers and business partners,
your Company has been constantly active in harnessing and tapping the
latest and best technology in the industry.
Foreign Exchange Earnings and Outgo:
Particulars of foreign exchange earnings and outgo during the year are
given in Note No. 37 to 39 of Note to the Financials statements of the
PARTICULARS OF EMPLOYEES
The information required under section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975 as amended
are set out in an annexure to this Report. However, in terms of section
219(1)(b)(iv) of the Act, these details are not being sent as part of this
Report and any shareholder interested in obtaining copy of the same may
write to the Company secretary.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of section 217(2AA) of the Companies Act, 1956,
and based on representations received from the operating management, the
directors hereby confirm that:
(i) in the preparation of the Financial statements for the year ended March
31, 2012, the applicable Accounting standards have been followed and there
are no material departures;
(ii) they have selected such accounting policies in consultation with the
statutory Auditors and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company as at the end of the financial
year and of the profit of the Company for the financial year ended march
(iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act, 1956. they confirm
that there are adequate systems and controls for safeguarding the assets of
the Company and for preventing and detecting fraud and other
(iv) they have prepared the Annual Financial statements on a going concern
Your Board takes this opportunity to place on record its appreciation for
the dedication and commitment of employees shown at all levels which have
contributed to the success of your Company. Your Directors also express
their gratitude for the valuable support and co-operation extended by
various Governmental authorities, including ministry of information and
Broadcasting, department of telecommunication and other stakeholders
including bankers, financial institutions, viewers, vendors and service
For and on behalf of the Board
Punit Goenka Naresh Kumar Bajaj
Managing Director Director
Date : May 16, 2012
MANAGEMENT DISCUSSION AND ANALYSIS
The figures have been stated in Rs. millions in this MD&A for better
Investors are cautioned that this discussion contains forward looking
statements that involve risks and uncertainties including, but not limited
to, risks inherent in the Company's growth strategy, acquisition plans,
dependence on certain businesses, and dependence on availability of
qualified and trained manpower and other factors. The following discussion
and analysis should be read in conjunction with the Company's financial
statements included herein and the notes thereto.
Zee News Limited (ZNL) (BSE Code: 532794, NSE Code: Zee News eq.) is
India's leading news television organization with interests in national as
well as regional channels. The Company was incorporated as Zee Sports
Limited on Aug 27, 1999. The name of the Company was changed to Zee News
Limited on May 27, 2004 after obtaining a fresh Certificate of
Incorporation from the Registrar of Companies, Mumbai. To comply with the
News Up-linking Guidelines of Government of India, Zee Entertainment
Enterprises Limited (ZEEL) transferred its news-gathering activities to Zee
News Limited w.e.f. October 2005. To enable clear management focus and
direction to be imparted to the various properties of the Company, ZEEL
transferred its regional entertainment channels to ZNL by way of a de-
merger scheme approved by the Hon'ble High Court of Bombay vide its Order
dated November 17, 2006 from March 31, 2006. Thereafter, the Company got
listed at Bombay Stock Exchange, National Stock Exchange & Calcutta Stock
Exchange in January 2007. The Equity Shares of the Company were
subsequently delisted from Calcutta Stock Exchange in 2009.
ZNL, before January 1, 2010, had national news, regional news and Regional
General Entertainment as its focus areas. However, considering that the
future of TV News industry was getting brighter and ZNL was strongly poised
to leverage the potential, it was decided to separate the Regional General
Entertainment Channel business from the News Business. Under the Scheme of
Arrangement for de-merger, RGEC business of the Company, were transferred
to Zee Entertainment Enterprises Limited (ZEEL) from the Appointed Date,
January 1, 2010, which was approved by the Hon'ble Bombay High Court vide
order passed on March 19, 2010, and become effective on and from March 29,
2010 upon filing of the order the Hon'ble Bombay High Court with the
Registrar of Companies of Maharashtra, Mumbai. Zee News Limited's prime
focus, now, is to create 24x7 news channels in prominent Indian languages
with the required focus on news operations. ZNL has consolidated its
operations and experienced significant growth so far..
ZNL also runs a 24X7 Bengali news channel called '24 Ghanta' through a JV
M/s Zee Akaash News Pvt. Ltd. wherein it holds 60% equity stake while
another JV partner is M/s Sky B (Bangla) Pvt. Ltd. holds the remaining 40%
The Company runs news channels in the following domains:
i. Hindi General News: Zee News
ii. Hindi Business News: Zee Business
iii. Marathi News: Zee 24 Taas
iv. Telugu News: Zee 24 Gantalu
v. Uttar Pradesh and Uttarakhand News: Zee News UP
vi. Punjabi: Zee Punjabi
vii. Bengali News: 24 Ghanta
MEDIA & ENTERTAINMENT INDUSTRY
In 2011-12, inflation, interest rates, fuel prices, Consumer Price Index,
etc., were at high levels. The Euro sovereign crisis, slow US recovery and
the tensions in Middle East added to the overall slowdown in the Indian
As per FICCI-KPMG Indian Media and Entertainment Industry Report 2012, the
industry grew from Rs.652 billion in 2010 to Rs.728 billion in 2011,
growing at a rate of 11.7%. Television grew slightly slower by 10.8%
reaching Rs.329 billion in 2011 from Rs.297 billion. The television ad
revenues grew to Rs.116 billion from Rs.103 billion, a growth of 12.6%.
It is projected to grow by 12% to reach Rs.130 billion in 2012.
While DTH subscribers have been growing at a fast pace, the government's
decision to fast track digitization across India is a significant step
forward to address various issues of the broadcasting industry starting
from more options to the viewer to reduction in leakage of subscription
revenues to reduction in carriage fees. Digitization would help address the
lopsided business model of the television industry, especially of news
While overall television advertising grew by 12.6%, news segment, as per
our estimates, was flat. This was due to the overall reduction in
advetisement budgets of advertisers and shifting of spends to GEC and
Meanwhile, viewership bucked the past few year's trends and increased as
compared to the previous year. Major 'newsy' events like India Against
Corruption movement, terror strikes in Delhi & Mumbai, elections in 5
states which saw a change of guards in some, kept the viewers glued to news
In terms of newsgathering, the Company has the largest network of news
bureaux & correspondents with a pan-India presence. The Company's
newsgathering capabilities are significantly enhanced by its KU Band
network and strong relationships with international news agencies. The
Company is equipped with state-of-art technology in content creation,
packaging and broadcasting.
The Company had an arrangement with Zee Turner Ltd. to distribute its pay
channels bouquet in India and neighboring countries including the Company's
bouquet of pay channels on various DTH platforms across the country. On May
26, 201 1, ZEE had announced formation of Media Pro Enterprise India
Private Limited ('Media Pro') as a joint venture between Zee Turner and
Star Den, which started operations from July 1, 2011. Accordingly the
distribution agreement with Zee Turner got discontinued from June 30, 201 1
and Media Pro distributes Company's channels in India with effect from July
1, 2011. The financial results for FY12 includes Subscription Revenues as
received from Media Pro, which is net of expenses incurred by Media Pro. As
a result, the recognition of revenues from domestic subscription business
is now being done net of expenses. Hence, subscription revenues are not
comparable to those in the previous years.
Up-linking of Channels
The Company has an arrangement with Dish TV India Limited for up-linking of
its channels through their teleport. Dish TV has a license for up-linking
of TV channels from the competent Government authority.
Business Overview - All Round Performance
Your Company's focus on current deliverables coupled with efficient Network
operations has resulted in robust growth in EBITDA, in a period where
growth of most of the companies is expected to be low. Our decision of
discontinuation of Zee Tamil operations helped us excel in the adverse
market conditions. Your Company had an all-round performance in which all
the individual channels grew more than their competitors. The Network
benefited from the continued emphasis on generating advertisement revenues
through properties and special initiatives.
The Network's flagship channel Zee News enhanced its sensible and
responsible news channel positioning itself with the tagline Jazba Soch Ka
which had an underlying thought to empower and enlighten its viewers on the
power of thought and the positive difference it can make. Zee News did in-
depth coverage of the recent state elections across India with special
campaigns and India's largest voter awareness drive Apka Vote Apki Taqat in
which the channel made the voter aware of the rights and duties. The
healthy voter turnout has encouraged us to continue undertaking this
initiative in the future. Zee News held a plethora of events and conducted
campaigns like Ananya Samman, Agri Awards, Swasth Bharat Samman, Future of
Education Summit with Zee Learn, My Earth My Duty, etc.
Zee Business continued with its legacy of creating content and engagements
relevant to its core target audience - the retail investor. It executed
seasoned properties like Hunt for India's Smart Investor, a show aiming to
foster the need for financial planning through a unique and engaging
reality show format inducing a lot of consumer participation; Emerging
Business Forum, a series for SMEs to gain from newer business
opportunities, and Real Estate Investors Forum. It also joined hands with
world's leading self regulatory professional body -RICS to introduce the
'Zee Business - RICS Real Estate Awards'. Another property named 'Investor
Ki Kahaani Uski Zubaani' was launched which focused on ways to overcome
common mistakes made by the investors. Zee Business, through a Group
association, was made available in USA and has being highly complimented by
the viewers across USA.
24 Ghanta regained its viewership leadership in West Bengal in the second
half of the year despite the fragmented market wherein the competition news
channels were showcasing football content. The flagship event of the
channel, Ananya Samman' was held in August wherein India's greatest singer
Lata Mangeshkar was bestowed with lifetime achievement honour. Besides,
tribute was also paid to several known faces and unsung heroes from West
Bengal, who have made significant contribution to the society. A
comprehensive and much appreciated Pujo coverage culminated in a standout
event 'Dashabhuja,' wherein the women participants were judged on a
multitude of skills. The channel carried out a massive social campaign
called 'Sankalpa', by way of which the channel and the viewers pledged to
create awareness about various issues like disappearing tigers and water
bodies to salinity of the Ganges to increasing pollution. We connected with
our viewers through our flagship city connect event series Amar Shahar
which was taken across 18 major cities/towns.
Zee 24 Taas continued to strike a chord with the Mumbaikars, as well as the
rest of Maharashtra. A highly effective multimedia campaign called
'Sansanit Kanakhali' (One Tight Slap) forcing accountability for the sorry
state of Mumbai roads during monsoons was launched, leading to huge
responses as well as a constructive reaction from the Administration. The
channel became the first Marathi News channel to take up the Guest Editor
concept on a regular basis and it had eminent personalities coming on air
with their views on social, economic and political aspects of the life of a
Maharashtrian. The channel also executed one of its oldest properties Aapla
Shahar Aapla Awaaz. This is an initiative to connect with various cities in
Maharashtra to discuss issues plaguing the city and the solutions for the
same. Our flagship CSR property Ananya Sanman saw veteran actors Ramesh Deo
and Seema Deo (of Anand movie fame) being conferred with the Lifetime
Achievement honour, apart from several unsung heroes from the field of
education, sports, social work, etc being awarded.
Zee News UP/UK continued to churn out innovative and relevant content for
the viewers of Uttar Pradesh and Uttarakhand. Taking the Samman series
forward, the channel held Udyami Samman, an event honouring the key
contributors to the industrial development in the states. The channel
reaffirmed its role as a neutral and analysis oriented channel during state
elections. it introduced new programming on elections starting from the
report card of the incumbent government and its post holders, the aspirants
and expectations of the public in general.
Zee Punjabi was switched on in Punjab. The channel took initiatives like
Anhad Samman, and Saanjh Suran Di commemorating the 12th anniversary of one
of the longest running regional channels in the country. it also began the
popular Zee Punjabi Sa Re Ga Ma Pa.
Zee 24 Gantalu took initiatives like Animuthyalu (Ananya Samman),
Parishramika Puruskarulu (Udyami Samman) and Spoorti (Women Entrepreneur
Taking advantage of the increasing consumption of news online, your company
launched websites in Hindi (zeenews.com/hindi), Marathi (24taas.com) and
Bengali (24ghanta.com). The existing Zeenews.com - in the English language
- put up a phenomenal performance and received huge traffic during the
The initial strategy of expansion of bouquet and leveraging of cost worked
for ZNL and it is a robust performance considering the slowing economy has
resulted in news channels advertisement revenues being flat for the
The Company continues with its strategic steps (i) increased efficiency
through rationalization of cost (ii) Focus on innovation (iii) Focus on
subscription revenue (iv) Leveraging the growing viewership of our channels
(v) Leveraging network operation to rationalize cost as well as maximize
revenue (vi) Judicious expansion.
The current focus of your Company is on leveraging digitization. As your
Company has kept its focus on subscription front, it is expected to enjoy
significant competitive advantage in digitized era, compared to its
competition. As per Ministry of i&B, the Phase 1 of digitization, wherein
the cable operators in 4 metros are to be digitized, is to be done by June
30, 2012. in Phase 2 all the 1 lakh+ population cities are to be digitized
by Mar 31, 2013. in Phase 3, the balance urban areas are to be digitized by
sep 30, 2014, while in Phase 4 the rest of india is to be digitized by Dec
OTHER COMPANY INFORMATION
ZEE NEW LIMITED
1. Internal Control Systems
The Company has in place adequate internal control systems, commensurate
with its size and nature of operations so as to ensure smoothness of
operations and compliance with applicable legislation. The Company has a
well-defined system of management reporting and periodic review of
businesses to ensure timely decision-making. it has an internal audit team
with professionally qualified financial personnel, which conducts periodic
audits of all businesses to maintain a proper system of checks and control.
The management information system (Mis) forms an integral part of the
Company's control mechanism. All operating parameters are monitored and
controlled. Any material change in the business outlook is reported to the
Board. Material deviations from the annual planning and budgeting, if any,
are reported to the Board on quarterly basis. An effective budgetary
control on all capital expenditure ensures that actual spending is in line
with the Capital Budget.
2. Human Resources
The Company seeks respects and values the diverse qualities and backgrounds
that its people bring to it and is committed to utilizing the richness of
knowledge, ideas and experience that this diversity provides. The work
environment is stimulating and development of core competencies through
formal training, job rotation and hands on training is an ongoing activity.
The Company's Employee strength as on March 31, 2012 was 1,268 in
comparison to 1,278 as on March 31, 2011. Reduction in Employee strength
was due to shut down of Zee Tamil on March 31, 2011.
The Company operates in a highly competitive industry that is attracting a
raft of new players and is subject to technological and regulatory changes:
With increasing number of players entering the Broadcasting industry, more
specifically News Broadcasting, competition is ever increasing.
Technological and regulatory changes have spawned new distribution
platforms. To maintain its competitive edge in such a scenario, the Company
will need to anticipate viewer preferences to create, acquire, commission
and produce compelling content and maintain viewer-pull. While the Company
proposes to make investments in content and technology to stay ahead of the
game, it is impossible to predict how future changes could affect the
Company's competitiveness. Barring a few players, most of the news
television ventures are not profitable. This might dampen the interest of
investors in the news television industry.
New channel launches might take longer than expected to break even:
Recent launches as well as future launches may not be accepted by the
audiences. This could be due to a variety of reasons including quality of
programming, price, marketing support,
competition, etc. There can be no assurance that all new launches will be
A decline in advertising revenues overall could adversely affect the
Company in a given period:
Advertising revenues make up about 71% of the Company's revenues and the
trend of high levels of contribution of advertising revenues to aggregate
revenues is likely to continue for the foreseeable future. in this
scenario, if our Company's programming is unable to sustain high levels of
viewership rating, the consequent decline in advertising revenues will
manifest itself as a significant dip in aggregate revenues. Business and
economic cycles also have a cascading effect on advertising budgets of
companies. A downturn could cause a decline in our revenues and profits. if
future trends favour other forms of advertising media like radio, outdoor,
print, etc., our Company could be adversely affected.
Poor implementation of measures like Digital Access System (DAS) could
While Phase i of DAs has been targeted to finish by June 30, 2012, the
latest developments in Metros give indications that it is unlikely that the
target will be achieved. We, hence, believe that poor and tardy
implementation and expansion of Digital Access system by the cable
operators could result in delay for us to achieve the related benefits as
Regulatory changes related to Carriage Fees under DAS regime may not
While Ministry of i&B has mooted removal of Carriage Fees in DAs areas, the
implementation of the same is pending. The regulatory change may not take
place and Carriage Fees could continue to be charged from the broadcasters
leading to increase in expenses and a negative impact on margins.
Ministry of I&B guidelines on Ad cap would adversely affect the ad
TRAI and Ministry of information & Broadcasting, in a recent development
have suggested the channels to stick to 12 minutes per hour of ad inventory
without partial screen ads. implementation of this policy would affect the
overall inventory availability and is likely to lead to reduction in ad
Ad revenues may decrease due to inability to service the Government and
Ministries ad campaigns due to low ad rates decided by DAVP:
In a recent development, Department of Audio Visual & Publicity (DAVP), the
nodal agency releasing the ad campaigns of central ministries and
departments, has released effective rates for various television channels.
Due to low effective rates it could become difficult to service the ad
campaigns with the current
Inventory utilization levels. This may lead to reduction in ad revenues.
The Company depends significantly on its senior management and other
skilled personnel and may be adversely affected if it loses their services
and fails to find equally skilled replacements:
The Company's success to a large part depends on the abilities and
continued services of its senior management, as well as other skilled
personnel, including creative and programming personnel. The Company's
senior management is particularly important to its business because of
their experience and knowledge of the media industry. The loss or non-
availability to the Company of any of its senior management could have
significant adverse affect. The Company may also not be able to either
retain its present personnel or attract additional qualified personnel as
and when needed. To the extent the Company will be required to replace any
of its senior management or other skilled personnel, there can be no
assurance that the Company will be able to locate or employ similarly
qualified persons on acceptable terms or at all.
The Company relies on intellectual property and proprietary rights which
may not be adequately protected under current laws:
The Company relies on trademark, copyright and other intellectual property
laws to establish and protect its rights in these products. There can be no
assurance that the Company's rights will not be challenged, invalidated or
circumvented or that the Company will successfully renew its rights or
licenses. Further, the weak enforcement regime in india coupled with the
high levels of cable, satellite and video piracy could impose an increased
burden on the Company to protect the intellectual property rights in its
television and film programming.
The Company's business is heavily regulated and changes in regulations or
failure to obtain required regulatory approvals could adversely affect its
ability to operate:
Media, specifically news media, is a strongly regulated industry in india.
The regimes that affect your Company's business include broadcasting,
cable, advertisement, telecommunications, intellectual property, consumer
and competition (anti-trust) laws and regulations. Relevant authorities may
introduce additional or new regulations applicable to its business. Changes
in regulations relating to one or more of licensing requirements, access
requirements, programming transmission, uplinking requirements, spectrum
specifications, consumer protection, or other aspects of the Company's or
any competitor's business, could have an adverse effect on the Company's
business and results of operation. There can be no assurance that the
Company will succeed in obtaining all requisite approvals in the future for
its operations with or without the imposition of restrictions, which may
have an adverse consequence to the Company nor that compliance issues will
not be raised.
The Company may be subject to claims based on the content it provides over
its network and third party networks:
As a broadcaster and distributor of content, the Company faces potential
liability relating to content that it broadcasts and distributes, including
defamation, negligence, copyright, patent or trademark infringement and
other claims based on the nature and content of the programmes that it
broadcasts or distributes. The Company does not carry general liability
insurance that will cover these types of liabilities.
FINANCIALS AND FINANCIAL POSITION Standalone and Consolidated Financials
Table below presents Standalone & Consolidated Financials for the Current
and Previous Financial Year.
Rs. in million
Statement of Profit and Loss
for the year ended March 31, 2012 2011 2012 2011
Revenue from Operations 2,733.3 2,430.5 3,072.2 2,767.9
Other Income 145.0 108.5 155.5 113.2
Total Revenues 2,878.3 2,539.0 3,227.7 2,881.1
Operational Cost 638.4 514.3 703.7 588.6
Employee Benefits Expense 660.1 626.3 744.8 692.5
Other Expenses 1,032.3 1,024.5 1,090.2 1,062.7
Total Expenses 2,330.8 2,165.1 2,538.7 2,343.8
Operating Profit 547.5 373.9 689.0 537.3
Finance Cost 106.6 125.7 106.6 125.7
Depreciation/Amortisation Expense 101.4 92.4 112.1 100.8
Profit before Exceptional
Items and Tax 339.5 155.8 470.3 310.8
Exceptional Items 166.7 - 166.7 -
Profit before Tax and
Minority Interest 172.8 155.8 303.6 310.8
Tax Expense 110.8 58.0 152.5 103.1
Profit before Minority Interest 62.0 97.8 151.1 207.7
Minority Interest - - (35.6) (43.9)
Profit for the year 62.0 97.8 115.5 163.6
Rs. in million
Balance Sheet as at March 31, 2012 2011 2012 2011
EQUITY AND LIABILITIES
Share Capital 239.7 239.7 239.7 239.7
Reserves and Surplus 1,548.5 1,486.5 1,654.2 1,538.8
1,788.2 1,726.2 1,893.9 1,778.5
Minority Interest - - 126.0 108.9
Long Term Borrowings 178.1 363.3 178.2 363.4
Long Term Provisions 77.2 62.3 82.6 66.0
255.3 425.6 260.8 429.4
Short Term Borrowings 412.8 - 412.8 -
Trade Payables 439.0 651.2 455.7 665.4
Other Current Liabilities 318.0 299.3 329.0 316.8
Short Term Provisions 3.2 2.5 6.2 4.5
1,173.0 953.0 1,203.7 986.7
Total 3,216.5 3,104.8 3,484.4 3,303.5
Tangible Assets 686.9 739.9 806.8 853.3
Intangible Assets 22.1 9.1 23.9 10.9
Capital work-in-progress 13.9 46.6 13.9 50.6
Non-Current Investments 83.3 144.2 - 60.9
Deferred Tax Assets (Net) 38.7 15.9 27.0 5.4
Long Term Loans and Advances 33.9 17.9 33.9 17.9
Other Non-current Assets 4.4 177.5 4.4 145.2
883.2 1,151.1 909.9 1,144.2
Inventories 9.8 220.5 9.9 221.1
Trade Receivables 904.9 771.0 996.4 896.4
Cash and Bank Balances 154.0 805.5 275.1 875.6
Short Term Loans and Advances 1,261.1 155.8 1,282.5 162.3
Other Current Assets 3.5 0.9 10.6 3.9
2,333.3 1,953.7 2,574.5 2,159.3
Total 3,216.5 3,104.8 3,484.4 3,303.5
A. RESULTS OF OPERATIONS
Consolidated Financial Information for the year ended March 31, 2012
compared to the year ended March 31, 2011. Zee News Limited has only one
Subsidiary Company i.e., Zee Akaash News Private Limited (ZANPL) (60%
Equity holding) which operates a 24 X 7 Bengali News Channel, '24 Ghanta'.
Analysis of Consolidated Financials has been done after knocking off the
effect of the services between these two Companies and after taking the
consolidation effects, if any.
Total Revenue increased by Rs.346.6 million or 12% from Rs.2,881.1 million
in FY11 to Rs.3,227.7 million in FY12.
Revenue from Operations
Revenue from Operations includes Advertisement Income, Subscription Income,
Sale of Programs & Film Rights and Franchisee Fees. Revenue from Operations
increased by Rs.304.3 million or 11% from Rs.2,767.9 million in FY11 to
Rs.3,072.2 million in FY12. As per our estimates overall advertisement
revenues for television news industry remained flat, whereas the Company
showed a marginal growth of 2-3% in FY12, this was due to Company's new
businesses started getting traction, which led to growth in revenue. Post
the formation of Media Pro Enterprise Limited (A joint venture between Zee
Turner & Star Den), Subscription Revenue figures are now being reported net
of expenses. Hence Subscription Revenue figures for current year are not
comparable with previous year's figures.
The increase in revenue from Sale of Programs & Film Rights is mainly due
to the unexploited programs and films rights sold to ZEEL pertaining to Zee
Tamil post its closure w.e.f. March 31, 2011, which was a onetime
Interest & Other Income increased by Rs.42.3 million or 37% from Rs.113.2
million in FY11 to Rs.155.5 million in FY12.
The increase was mainly due to the writing back of excess provisions for
liabilities made during previous years which was no longer required.
Operational Cost increased by Rs.115.1 million, or 20% from Rs.588.6
million in FY11 to Rs.703.7 million in FY12.
The increase is mainly due to the amortization of exploited programs of Zee
Tamil till March 31, 2011 which was due to be amortized in next 2 years as
per the existing program amortization policy, but due to the closure of the
channel amortized in this financial year and the unexploited programs and
film rights were sold to ZEEL. Meanwhile, Zee Tamil closure has led to
savings in costs. However, during the year your Company has conceptualized
and executed many new events opening a new revenue stream which further led
to increase in operational costs.
Overall Personnel Cost increased by Rs.52.3 million or 8% from Rs.692.5
million in FY11 to Rs.744.8 million in FY12, which also has the effect of
cost reduction post the closure of Zee Tamil. Cost of ZANPL increased by
18.4 million or 28%, this was due to annual increments, annual incentives
and employees welfare cost.
Other Expenses which includes all Administrative, selling and Distribution
Expenses increased by X21.5 million or 3% from Rs.1,062.7 million in FY11
to Rs.1,090.2 million in FY12. With the development of Media Pro
subscription revenue is being reported net of expenses, which has led to
reduced commission cost for the year also closure of Zee Tamil has its
share in cost reduction for the year. Other Expenses of ZANPL increased by
51% from Rs.38.2 million in FY11 to X51.8 million in FY12, due to higher
spend on advertising and publicity expenses.
Finance cost decreased by Rs.19.1 million or 15%, from Rs.125.7 million
in FY11 to Rs.106.6 million in FY12, due to efficient and regular
monitoring of working capital requirement and maintaining the Cash Credit
utilization at the lowest possible level.
Depreciation and Amortization
Depreciation increased by Rs.11.3 million or 11% from Rs.100.8 million in
FY11 to Rs.112.1 million in FY12, this is due to the additions of software
and technology related fixed assets during the year, which have higher rate
Profit before Tax & Exceptional Items.
Profit before Exceptional items and Tax increased by Rs.159.5 million or
51%, from Rs.310.8 million in FY11 to Rs.470.3 million in FY12. Profits
increased due to excellent operational efficiencies of the channels and
reduced cost on account of shut down of Zee Tamil.
During the year the Company has provided for Rs.166.7 million towards
diminution in value of strategic investments and provision for doubtful
advance share application money given to a Media Company as Exceptional
items which has led to reduction of Profits.
Provision for Taxation
Provision for Taxation increased by Rs.49.4 million or 48% from Rs.103.1
million in FY11 to Rs.152.5 million in FY12, which are in line with the
rates of taxes taking in account the relevant provisions of income Tax Act.
Profit After Tax for the Period
Profit for the year after Tax & Minority interest is Rs.115.5 million.
Profits reduced by 29%, this was mainly due to the impact of Exceptional
items in ZNL.
B. FINANCIAL POSITION
Equity & Liabilities Share Capital
Equity share Capital of Rs.239.76 million continued to remain the same as
Reserves & Surplus
Reserves & surplus stood at Rs.1,654.2 million as against Rs.1,538.8
million in the year 2011. The increase is Rs.115.4 million which is Profit
after Tax for the current year.
Long Term Borrowings
Long Term Borrowings stood at Rs.178.2 million as on March 31, 2012 as
against Rs.363.4 million as on March 31, 2011. The decrease is due to
repayment of secured Term Loan from Bank. ZANPL has no Long Term
Long Term Provisions
Long Term Provisions increased from Rs.66 million as on March 31, 2011 to
Rs.82.6 million as on March 31, 2012.
Current Liabilities includes short Term Borrowings, Trade Payables, short
Term Provisions & Other Current Liabilities. Current Liabilities stood at
1,203.7 million as on March 31, 2012 as against Rs.986.7 million as on
March 31, 2011. The increase was due to short Term Borrowings facility
availed for the period by ZNL.
Non Current Assets Fixed Assets
Net Block of Fixed Assets stood at Rs.830.7 million as on March 31, 2012
against Rs.864.2 million as on March 31, 2011. There has been additions of
software and technology related fixed assets during the year, which have
higher rate of depreciation and also certain obsolete assets are discarded.
Capital Work-in-Progress decreased by Rs.36.7 million to Rs.13.9 million
as on March 31, 2012, this reduced due to capitalization of sAP.
Non Current investments stands to be nil as on March 31, 2012 as against
Rs.60.9 million as on March 31, 2011. The Company provided for Rs.60.9
million towards diminution in value of strategic investments in a Media
Company during the year.
Other Non Current Assets
Other Non Current Assets reduced to Rs.4.4 million as on March 31, 2012 as
against Rs.145.2 million as on March 31, 2011. The Company provided for
Rs.105.8 million towards provision for doubtful advance share application
money given to a Media Company during the year.
Current Assets Inventories
inventories stood at Rs.9.9 million as on March 31, 2012 as against
Rs.221.1 million as on March 31, 2011. The decrease in inventory value was
due to sale of Programs & Film Rights pertaining to Zee Tamil, which was
shut down as on March 31, 2011 and zero purchases during the year.
Trade Receivables stood at Rs.996.4 million as on March 31, 2012 as
against Rs.896.4 million as on March 31, 2011. Average Collection Period
stood at 118 days.
Cash & Bank Balances
Cash & Bank Balances stood at Rs.275.1 million as on March 31, 2012 as
against Rs.875.6 million as on March 31, 2011. A few short term deposits
got matured as on March 31, 2011 which led to huge Cash & Bank Balances,
the same got deployed during the year 2012.
Short Term Loans & Advances
Loans & Advances stood at Rs.1,282.5 million as on March 31, 2012 as
against Rs.162.3 million as on March 31, 2011. increase in Loans &
Advances was due to Loans given to Related Parties out of the surplus Cash
& Bank Balance available as on March 31, 2011.