Annual Report – 2006-07 (full download) - Dish TV
Annual Report – 2006-07 (full download) - Dish TV
Annual Report – 2006-07 (full download) - Dish TV
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INDEX<br />
DIRECTORS’ REPORT............................................................................................... 18<br />
STATEMENT PURSUANT TO SECTION 212 .............................................................. 21<br />
CORPORATE GOVERNANCE REPORT ........................................................................ 22<br />
SHAREHOLDERS’ INFORMATION ............................................................................. 27<br />
MANAGEMENT DISCUSSION AND ANALYSIS .......................................................... 30<br />
FINANCIALS............................................................................................................. 33<br />
CASH FLOW STATEMENT ........................................................................................ 59<br />
CONSOLIDATED FINANCIAL STATEMENTS .............................................................. 61
GROUP<br />
DIRECTORS' REPORT<br />
To the Members,<br />
Your Directors take pleasure in presenting the 19 th <strong>Annual</strong> <strong>Report</strong><br />
together with the Audited Statement of Accounts of the Company for<br />
the year ended March 31, 20<strong>07</strong>.<br />
RESPONSIBILITY STATEMENT:<br />
In terms of and pursuant to Section 217(2AA) of the Companies Act,<br />
1956, your Directors, in relation to the <strong>Annual</strong> Statement of Accounts<br />
for financial year <strong>2006</strong>-20<strong>07</strong>, state and confirm that:<br />
a) the Accounts had been prepared on a 'going concern' basis and<br />
in such preparation the applicable accounting standards had<br />
been followed with proper explanation relating to material<br />
departures;<br />
b) your Directors had selected such accounting policies and applied<br />
them consistently and made judgements and estimates that are<br />
reasonable and prudent so as to give a true and fair view of the<br />
state of affairs of the Company at the end of the financial year,<br />
and of the loss of the Company for that year; and<br />
c) your Directors had taken proper and sufficient care for<br />
maintenance of adequate accounting records in accordance with<br />
the provisions of the Companies Act, 1956 as amended, for<br />
safeguarding the assets of the Company and for preventing and<br />
detecting fraud and other irregularities.<br />
FINANCIAL HIGHLIGHTS:<br />
During the year <strong>2006</strong>-20<strong>07</strong> total revenue of your Company has<br />
increased from Rs. 314.62 Million to Rs. 1,943.34 Million as compared<br />
to last year 2005-<strong>2006</strong> which is an increase around 517.66%.<br />
The financial highlights of your Company for the year ended March<br />
31, 20<strong>07</strong> are summarised below:<br />
(Rs. in Million)<br />
Particulars Year ended Year ended<br />
31.03.20<strong>07</strong> 31.03.<strong>2006</strong><br />
Sales & Services 1,909.37 314.62<br />
Other Income 33.97 Nil<br />
Total Income 1,943.34 314.62<br />
Total Expenses 4,454.16 1,189.48<br />
Profit/(Loss) before<br />
Tax and Exceptional Item (2,510.82) (874.86)<br />
Provision for Taxation (net) 2.50 0.32<br />
Profit/(Loss) after Tax<br />
before Exceptional item (2,513.33) (875.18)<br />
Add: Exceptional Item Nil 1,203.43<br />
Profit/(Loss) after Tax (2,513.33) (2,<strong>07</strong>8.61)<br />
Prior Period Adjustments (5.48) (0.29)<br />
Net - Income/(Loss)<br />
Profit/(Loss) for the Year (2,518.81) (2,<strong>07</strong>8.32)<br />
Add: Balance brought (3,268.59) (1,190.26)<br />
forward<br />
Less: Transfer to (3,268.59) Nil<br />
Restructuring Account<br />
Amount available for (2,518.81) (3,268.59)<br />
appropriations<br />
Appropriations:<br />
Dividend Nil Nil<br />
Tax on Dividend Nil Nil<br />
General Reserve Nil Nil<br />
Balance carried forward (2,518.81) (3,268.59)<br />
BUSINESS OVERVIEW:<br />
Over the last one year, a lot of effort has gone into putting the<br />
fundamentals in place in the areas of organisation development, hiring<br />
of high quality talent and further strengthening of the Sales, Distribution<br />
and Service functions. We have created an infrastructure which is<br />
equipped to handle the pressures of operating in a high growth and<br />
highly competitive service environment. In order to create a stronger<br />
customer facing organisation and improve speed to market, 7<br />
geographic zones have been carved out, each headed by an<br />
empowered senior professional. Service reach has been expanded<br />
considerably and our distribution now extends to almost 4,000 towns.<br />
A host of new features like Near Video on Demand and several new<br />
Games have strengthened our portfolio of offerings. We have also<br />
made rapid strides in urban markets, which are now increasing their<br />
contribution to the overall subscriber base. Implementation of CAS in<br />
parts of Delhi, Mumbai and Kolkata also created an opportunity that<br />
gave a fillip to the DTH Industry with a 20% switchover happening<br />
from cable to DTH. <strong>Dish</strong> <strong>TV</strong> <strong>full</strong>y leveraged this opportunity through<br />
increased marketing spends on a series of brand building and<br />
promotional initiatives in both Urban and Rural markets, thereby giving<br />
our brand a strong national footprint.<br />
All the above initiatives resulted in strong subscriber growth. We<br />
added 1.1 million subscribers, resulting in a year end subscriber<br />
base of 2.0 million, representing a dominant market share of 75%.<br />
Throughout the year, <strong>Dish</strong> <strong>TV</strong> has maintained its leadership position<br />
despite the advent of competition.<br />
DTH is a very well entrenched technology in the broadcasting industry<br />
and is one of the most prevalent modes of distribution of television<br />
channels internationally, though it is still in its infancy in India. It has<br />
various advantages over traditional cable systems. With the increase<br />
in scope of CAS in India and with rapid television penetration expansion,<br />
18
the DTH industry will continue to increase its market share in the<br />
distribution space. Your Directors are confident of this Company riding<br />
on this growth and maintaining its leadership position in the years to<br />
come.<br />
Going forward, the competition will be more intense for which<br />
strategies are in place to maintain our lead and sustain the growth on<br />
a continuous basis.<br />
DEMERGER OF BUSINESS UNDERTAKINGS:<br />
Upon receipt of approvals from the Hon'ble High Courts of Bombay<br />
and Delhi, and other Regulatory Authorities, the process of (a) demerger<br />
of the Direct Consumer Services business undertaking of Zee<br />
Entertainment Enterprises Limited (formerly known as Zee Telefilms<br />
Limited - 'ZEEL'), and (b) merger of Siti Cable Network Limited and<br />
New Era Entertainment Network Limited were success<strong>full</strong>y concluded<br />
during the year. The Scheme was approved by the Hon'ble High Court<br />
of judicature at Delhi on December 18, <strong>2006</strong> and Hon'ble High Court of<br />
judicature at Bombay on January 12, 20<strong>07</strong> and became effective from<br />
January 19, 20<strong>07</strong> on filing certified copies of High Court Orders with<br />
Registrar of Companies at Mumbai and NCT of Delhi and Haryana.<br />
Subsequently the equity shares of your Company, both those issued<br />
to the shareholders of ZEEL and the existing reorganised shares, were<br />
listed at the Stock Exchanges effective April 18, 20<strong>07</strong>.<br />
SUBSIDIARY OPERATIONS:<br />
Pursuant to the scheme of arrangement M/s. Integrated Subscriber<br />
Management Services Limited (ISML), a wholly owned subsidiary of<br />
Siti Cable Network Limited became wholly owned subsidiary of the<br />
Company with effect from April 1, <strong>2006</strong>. Pursuant to Section 212(1) of<br />
the Companies Act,1956, the Audited Accounts alongwith the Auditors'<br />
<strong>Report</strong>, Directors' <strong>Report</strong> and Cash Flow Statement of all the<br />
Subsidiary Companies are separately attached.<br />
As required by Accounting Standard-21 issued by the Institute of<br />
Chartered Accountants of India, the financial statements of the<br />
Company reflecting the Consolidation of the Accounts of its<br />
subsidiaries to the extent of equity holding of the Company in this<br />
company are included in this <strong>Annual</strong> <strong>Report</strong>.<br />
SHARE CAPITAL:<br />
During the year, as approved by the Members at the Extra Ordinary<br />
General Meeting held on September 16, <strong>2006</strong>, the share capital of the<br />
Company was sub-divided from 73,000,000 equity shares comprising<br />
of Rs.10/- each to 730,000,000 equity shares of Re.1/- each. Pursuant<br />
to the Scheme of Arrangement, besides reorganisation of the share<br />
capital, your Company had issued and allotted 249,300,890 equity shares<br />
of Re. 1/- each to shareholders of Zee Entertainment Enterprises Limited.<br />
CHANGE OF NAME:<br />
To reflect the major business segment of your Company, the Members<br />
had approved, at their meeting held on December 18, <strong>2006</strong>, change of<br />
name of the Company. Consequent to receipt of all relevant approvals,<br />
change in the name of the Company from ASC Enterprises<br />
Limited to <strong>Dish</strong> <strong>TV</strong> India Limited had become effective from<br />
March 7, 20<strong>07</strong>.<br />
PUBLIC DEPOSITS:<br />
During the year, your Company has not accepted any Deposits under<br />
Section 58A and Section 58AA of the Act, read with Companies<br />
(Acceptance of Deposits) Rules, 1975.<br />
CORPORATE GOVERNANCE:<br />
A separate report on Corporate Governance together with Auditors'<br />
Certificate on compliance is attached to this <strong>Annual</strong> <strong>Report</strong> as also a<br />
Management Discussion and Analysis statement.<br />
DIRECTORS:<br />
During the year Messrs. Punit Goenka, Rajagopalan Chandrasekhar,<br />
Laxmi Narain Goel and Ashok Kumar Goel resigned as Directors.<br />
Your Directors wish to place on record their appreciation of the<br />
contribution of these Directors.<br />
Your Board had appointed Mr. Jawahar Lal Goel, Mr. B. D. Narang,<br />
Mr. Arun Duggal and Mr. Ashok Kurien with effect from January 6,<br />
20<strong>07</strong> as Additional Directors of the Company. Mr. Jawahar Lal Goel<br />
was also appointed as the Managing Director of the Company with<br />
effect from January 6, 20<strong>07</strong>. The Shareholders of the Company had<br />
approved the appointment of all the Directors including the appointment<br />
of Mr. Jawahar Lal Goel as the Managing Director of the Company in<br />
the meeting held on February 2, 20<strong>07</strong>.<br />
Your Board had also appointed Dr. Pritam Singh with effect from April<br />
27, 20<strong>07</strong> as an Additional Director of your Company. Dr. Pritam Singh<br />
will vacate his office at the ensuing <strong>Annual</strong> General Meeting and has<br />
filed his consent to act as Director of the Company. Notice has been<br />
received from a Member of the Company under Section 257 of the<br />
Companies Act, 1956 for the appointment of Dr. Singh as Director.<br />
Appropriate resolution seeking your approval to his appointment is<br />
appearing in the Notice convening the 19 th <strong>Annual</strong> General Meeting of<br />
the Company.<br />
AUDITORS:<br />
Statutory Auditors M/s. MGB & Co., Chartered Accountants, Delhi,<br />
retire at the ensuing <strong>Annual</strong> General Meeting and, being eligible, offer<br />
themselves for re-appointment.<br />
19
GROUP<br />
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN<br />
EXCHANGE EARNINGS AND OUTGO:<br />
Information required to be provided under Section 217(1)(e) of the<br />
Companies Act, 1956 read with the Companies (Disclosure of<br />
Particulars in the <strong>Report</strong> of the Board of Directors) Rules, 1988 in<br />
relation to Conservation of Energy and Technology Absorption are<br />
currently not applicable to the Company.<br />
Particulars of foreign currency earnings and outgo during the year are<br />
given in Schedule 35.3 to the Notes to the Accounts forming part of<br />
the <strong>Annual</strong> Accounts.<br />
PARTICULARS OF EMPLOYEES:<br />
Information required to be furnished in terms of Section 217(2A) of the<br />
Companies Act, 1956 ('Act') read with the Companies (Particulars of<br />
Employees) Rules, 1975 is required to be set out in an annexure to<br />
this report. However, in terms of Section 219(1)(b) of the Act, the<br />
<strong>Report</strong> and Accounts are being sent to the shareholders excluding the<br />
aforesaid annexure. Any shareholder interested in obtaining copy of<br />
the same may write to the Company Secretary at the Corporate Office.<br />
None of the employees listed in the said annexure are related to any<br />
Director of the Company.<br />
ACKNOWLEDGEMENTS:<br />
Your Directors take this opportunity to place on record their<br />
appreciation of the dedication and commitment of employees at all<br />
levels that has contributed to the success of your Company. Your<br />
Directors thank and express their gratitude for the support and cooperation<br />
received from the Central and State Governments - mainly<br />
the Ministry of Information and Broadcasting and the Department of<br />
Telecommunications - and other stakeholders including viewers,<br />
vendors, bankers, investors, service providers as well as regulatory<br />
and Governmental authorities.<br />
For and on behalf of the Board of Directors<br />
Place : Noida Jawahar Lal Goel B. D. Narang<br />
Date : June 28, 20<strong>07</strong> Managing Director Director<br />
20
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES<br />
ACT, 1956 RELATING TO SUBSIDIARY COMPANIES<br />
1. Name of the subsidiary Integrated Subscriber Agrani Satellite Agrani Convergence<br />
Management Services Limited Limited<br />
Services Limited<br />
2. Financial year ended March 31, 20<strong>07</strong> March 31, 20<strong>07</strong> March 31, 20<strong>07</strong><br />
3. Holding Company’s interest 100% 100% 51%<br />
4. Share held by the Holding Company in the subsidiary 50,000 Equity 94,401,004 Equity 12,470,544 Equity<br />
Shares of Rs. 10/- each Shares of Rs. 10/- each Shares of Rs. 10/- each<br />
5. The net aggregate of profits or (losses) for the current<br />
financial year of the subsidiary so far as it concerns<br />
the members of the Holding Company<br />
a) dealt with or provided for in the accounts of the Holding Company Nil Nil Nil<br />
b) not dealt with or provided for in the accounts of the Holding Company Rs. (2,270,636) Nil Rs. (4,288,463)<br />
6. The net aggregate of profits or losses for the current<br />
financial year of the subsidiary so far as it concerns<br />
the members of the Holding Company<br />
a) dealt with or provided for in the accounts of the Holding Company Nil Nil Nil<br />
b) not dealt with or provided for in the accounts of the Holding Company Rs. 9,655,527 Nil Rs. (401,564,324)<br />
Note : As the financial year of the subsidiary companies coincides with the financial year of the Holding Company, Section 212(5) of the Companies Act, 1956 is not<br />
applicable.<br />
For and on behalf of the Board<br />
Jawahar Lal Goel<br />
Managing Director<br />
Rajeev K. Dalmia<br />
Chief Financial Officer<br />
B. D. Narang<br />
Director<br />
Jagdish Patra<br />
Company Secretary<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
21
GROUP<br />
REPORT ON CORPORATE GOVERNANCE<br />
The Company confirms that it has complied with all mandatory<br />
requirements to Clause 49 of the Listing Agreement. The Equity Shares<br />
of the Company got listed on the National Stock Exchange (NSE) and the<br />
Bombay Stock Exchange (BSE) on April 18, 20<strong>07</strong> and on the Calcutta<br />
Stock Exchange (CSE) on June 6, 20<strong>07</strong>. Although the provisions pertaining<br />
to the Listing Agreement is not strictly applicable as on March 31, 20<strong>07</strong>,<br />
however as a good management practice, we have provided information<br />
upto the date of approval of the <strong>Annual</strong> Accounts i.e. June 28, 20<strong>07</strong>.<br />
BOARD'S PHILOSOPHY ON CORPORATE GOVERNANCE<br />
At <strong>Dish</strong> <strong>TV</strong> we firmly believe that good corporate governance is critical<br />
to sustaining corporate development, increasing productivity and<br />
competitiveness. The governance process should ensure that the<br />
available resources are utilised in a manner that meets the aspirations<br />
of all its stakeholders. Your Company's essential charter is shaped<br />
by the objectives of transparency, professionalism and<br />
accountability. The Company continuously endeavour to improve on<br />
these aspects on an ongoing basis.<br />
Company believes that Corporate Governance is the commitment to<br />
compliance with all Laws, Rules and Regulations that apply to it with<br />
the spirit and intent of high business ethics, honesty and integrity<br />
resulting in the effective control and management system in the<br />
organisation leading towards the enhancement of medium and long<br />
term shareholders’ value and interest of other stakeholders. It brings<br />
into focus the fiduciary and the trusteeship role of the Board to<br />
align and direct the actions of the organisation towards creating wealth<br />
and shareholders’ value.<br />
BOARD OF DIRECTORS<br />
a) Composition and Category of Directors<br />
<strong>Dish</strong> <strong>TV</strong> Board has an optimum combination of Executive and<br />
Non-Executive Directors, to ensure independent functioning. Non-<br />
Executive Directors include persons drawn from amongst<br />
eminent professionals with experience in business/finance/<br />
taxation/technology.<br />
Composition of the Board as on June 28, 20<strong>07</strong><br />
22<br />
Category of Directors No. of % to total<br />
Directors No. of<br />
Directors<br />
Executive Director 1 17<br />
Independent Directors 3 50<br />
Other Non-Executive Directors 2 33<br />
Total 6 100<br />
The particulars of Directors, their attendance at the <strong>Annual</strong> General<br />
Meeting and Board Meetings held from April 1, <strong>2006</strong> up till June<br />
28, 20<strong>07</strong> and also their other directorships in Public Companies<br />
and membership of Audit Committee and Shareholders' Grievance<br />
Committee as on June 28, 20<strong>07</strong> are as under:<br />
Name of Category Attendance at No. of No. of<br />
Director Board 18th Directorship Member-<br />
Meetings AGM held of other ships of<br />
(Total 26 on Sept. 29, Companies Board Sub-<br />
Meetings) <strong>2006</strong> Committees<br />
Mr. Subhash PD,NED 1 No 7 1<br />
Chandra<br />
(Chairman)<br />
Mr. Jawahar ED 9 N.A 8 1<br />
Lal Goel*<br />
(Managing<br />
Director)<br />
Mr. Ashok PD,NED 5 N.A 2 3<br />
Kurien**<br />
Mr. B. D. NED,ID 6 N.A 3 2<br />
Narang**<br />
Mr. Arun NED,ID 5 N.A 9 5<br />
Duggal**<br />
Dr. Pritam NED,ID 1 N.A 3 4<br />
Singh***<br />
Mr. Rajagopalan NED,ID 4 No N.A N.A<br />
Chandrasekhar****<br />
Mr. Laxmi PD,NED – No N.A N.A<br />
Narain<br />
Goel****<br />
Mr. Ashok PD,NED 18 Yes N.A N.A<br />
Kumar<br />
Goel****<br />
Mr. Punit PD,NED 18 Yes N.A N.A<br />
Goenka****<br />
* Appointed as Additional Director and also Managing Director w.e.f. January<br />
6, 20<strong>07</strong>.<br />
** Appointed as Additional Director w.e.f. January 6, 20<strong>07</strong>.<br />
*** Appointed as Additional Director w.e.f. April 27, 20<strong>07</strong>.<br />
****Resigned as Director w.e.f. January 6, 20<strong>07</strong>.<br />
PD: Promoter Director<br />
ED: Executive Director<br />
(b)<br />
NED: Non-Executive Director<br />
ID: Independent Director<br />
From April 1, <strong>2006</strong> till June 28, 20<strong>07</strong>, 26 meetings of the Board<br />
were held on April 11, <strong>2006</strong>, April 27, <strong>2006</strong>, May 10, <strong>2006</strong>, May<br />
18, <strong>2006</strong>, August 8, <strong>2006</strong>, August 18, <strong>2006</strong>, August 21, <strong>2006</strong>,<br />
August 25, <strong>2006</strong>, August 30, <strong>2006</strong>, September 25, <strong>2006</strong>, October<br />
4, <strong>2006</strong>, October 27, <strong>2006</strong>, November 4, <strong>2006</strong>, November 15,<br />
<strong>2006</strong>, November 24, <strong>2006</strong>, November 27, <strong>2006</strong>, December 1,<br />
<strong>2006</strong>, January 6, 20<strong>07</strong>, January 23, 20<strong>07</strong>, February 22, 20<strong>07</strong>,<br />
March 2, 20<strong>07</strong>, March 15, 20<strong>07</strong>, March 22, 20<strong>07</strong>, April 10, 20<strong>07</strong>,<br />
April 27, 20<strong>07</strong> and June 28, 20<strong>07</strong>. The intervening period between<br />
the Board Meetings were well within the maximum time gap<br />
prescribed under Companies Act, 1956 and Clause 49 of the<br />
Listing Agreement.<br />
Board Meetings of the Company are governed by a structured<br />
agenda. The Company Secretary in consultation with
Chairman/Managing Director drafts agenda of the Board<br />
Meetings. All major agenda items, backed up by<br />
comprehensive background information, are sent well in<br />
advance of the date of the Board meetings to enable the Board<br />
to take informed decision. Any Board member may, in<br />
consultation with the Chairman, bring up any matter for<br />
consideration by the Board. The Chief Executive Officer and<br />
Heads of Departments of Finance and Projects are normally<br />
invited to attend the Board meetings to provide necessary<br />
insights into the working of the Company and discussing<br />
corporate strategies.<br />
The Board periodically reviews Compliance <strong>Report</strong>s in respect<br />
of laws and regulations applicable to the Company.<br />
Brief profile of the Directors:<br />
1. Mr. Subhash Chandra : Mr. Chandra is the Chairman of Zee<br />
Entertainment Enterprises Limited and promoter of Essel<br />
Group of Companies. His leading industry businesses<br />
includes, television networks and film entertainment, cable<br />
systems, satellite communications, theme parks, flexible<br />
packaging, family entertainment centres and online gaming.<br />
Mr. Chandra leads the Board of Directors and works together<br />
with heads of various businesses and the corporate team<br />
to help set Zee's strategy.<br />
Mr. Chandra has been the recipient of numerous honorary<br />
degrees, industry awards and civic honours, including being<br />
named 'Global Indian Entertainment Personality of the Year'<br />
by FICCI for 2004, 'Business Standard's Businessman of<br />
the Year' in 1999, 'Entrepreneur of the Year' by Ernst &<br />
Young in 1999 and 'Enterprise CEO of the Year' by<br />
International Brand Summit. The Confederation of Indian<br />
Industry (CII) chose Mr. Chandra as the Chairman of the CII<br />
Media Committee for two successive years. Mr. Chandra<br />
has made his mark as an influential philanthropist in India.<br />
He set up TALEEM (Transnational Alternate Learning for<br />
Emancipation and Empowerment through Multimedia), an<br />
organisation which seeks to provide access to quality<br />
education and to promote research in various disciplines<br />
relating to health & family life, social & cultural<br />
anthropology, communication and media. He is also the<br />
trustee for the Global Vippassana Foundation a trust set up<br />
for helping people in spiritual upliftment.<br />
2. Mr. Jawahar Lal Goel : Mr. Goel took the position of<br />
Managing Director of the Company on January 6, 20<strong>07</strong>.<br />
Mr. Goel is actively involved in creation and expansion of<br />
Essel Group of Industries. He heads the business of <strong>Dish</strong><br />
<strong>TV</strong>. He has been a prophet in pioneering the Direct To Home<br />
(DTH) services in India and instrumental in establishing<br />
<strong>Dish</strong> <strong>TV</strong> as a prominent brand with India's most modern<br />
and advanced technological infrastructure.<br />
Mr. Goel is the President of Indian Broadcasting Foundation<br />
which takes up various issues relating to Broadcasting<br />
industry at various forums. He is active member on the<br />
Board of various committees and task force set up by<br />
Ministry of Information & Broadcasting, Government of India<br />
which takes care of several critical matters relating to the<br />
industry. He is a prime architect in establishing India's<br />
most modern and advanced technological infrastructure<br />
for the implementation of Conditional Access System (CAS)<br />
and Direct To Home (DTH) services through "HITS" which<br />
would bring a revolution in the distribution of various<br />
entertainment and electronic media products in India in<br />
the ensuing months and would enormously benefit<br />
consumers (<strong>TV</strong> viewers).<br />
3. Mr. B. D. Narang : Mr. Narang is a Post Graduate in<br />
Agricultural Economics and brings with him 32 years of<br />
Banking experience. During this period, he also held the<br />
coveted position of the Chairman and Managing Director<br />
of Oriental Bank of Commerce.<br />
Mr. Narang has handled special assignments viz. alternate<br />
Chairman of the Committee on Banking procedures set up<br />
by Indian Banks Association for the year 1997-98, Chaired a<br />
Panel on serious financial frauds appointed by R.B.I., Chaired<br />
a Panel on financial construction industry appointed by Indian<br />
Banks Association, Appointed as Chairman of Governing<br />
Council of National Institute of Banking Studies & Corporate<br />
Management, Elected Member Management Committee of<br />
Indian Banks Association, Member of the Advisory Council<br />
of Bankers Training College (RBI) Mumbai, Chairman of IBA's<br />
Advisory Committee on NPA Management, CDR Mechanism,<br />
DRT, ARC etc. Elected as a Fellow and Member of Governing<br />
Council of the Indian Institute of Banking & Finance, Mumbai,<br />
Elected as Deputy Chairman of Indian Banks Association,<br />
Mumbai and recipient of Business Standard "Banker of the<br />
Year" Award for 2004. Presently he is Independent Director<br />
on the Board of National Investment Fund, M/s Shivam<br />
Autotech Ltd., M/s IST Steel & Power Ltd., M/s Jubilee Hills<br />
Landmark Projects Ltd., Member of Expert group formed for<br />
examining problem of distressed farmers - nominated by<br />
RBI, Member of the Committee to oversee the working of<br />
National Education & Investor Fund - Nominated by Ministry<br />
of Co. Affairs, Goverment of India, Member Supervisory Board<br />
of NABARD. Beside this he is advisor on the Board of KARMA<br />
FOUD and Consultant of M/s Revathi Equipment Ltd. for private<br />
equity business, DSP Merrillynch for India related business<br />
and M/s Dhir & Dhir Associate Law Firm.<br />
4. Mr. Arun Duggal : Mr. Duggal, a Mechanical Engineer from<br />
the prestigious Indian Institute of Technology, Delhi and<br />
holds an MBA from the Indian Institute of Management,<br />
Ahmedabad. He teaches Banking & Finance at the Indian<br />
Institute of Management, Ahmedabad as a visiting<br />
Professor.<br />
Mr. Duggal, is an experienced international Banker,<br />
advising Corporations on Financial Strategy, M&A and<br />
Capital Raising areas and an International Advisor to a<br />
number of Corporations, major Financial Institutions and<br />
Private Equity firms.<br />
Mr. Duggal is the Vice Chairman (non executive) of<br />
International Asset Reconstruction, a de novo Company<br />
engaged in managing Non Performing Loan portfolios. He<br />
is on the Board of Directors of Jubilant Energy Ltd. Canada,<br />
23
GROUP<br />
24<br />
Patni Computer Systems Ltd. (Chairman, Audit Committee),<br />
Fidelity Fund Management, Petronet LNG (Nominee<br />
Director of Asian Development Bank and Chairman, Audit<br />
Committee), Manipal AcuNova (Chairman - Investment and<br />
Finance Committee), Zuari Industries, Pragati Capfin Ltd.,<br />
Info Edge (India) Ltd. (Chairman - Audit Committee), The<br />
Economist Intelligence Unit (India), Shriram Transport<br />
Finance Company (Chairman), Shriram Properties Ltd.<br />
(Chairman), Shriram City Union Finance Limited (Chairman)<br />
and Mundra Port & Special Economic Zone Ltd. He was<br />
also on the Board of Governors of the National Institute of<br />
Bank Management and erstwhile Chairman of the American<br />
Chamber of Commerce, India.<br />
5. Mr. Ashok Kurien : Mr. Kurien, is a well known personality<br />
in the advertising world. He is the Chairman of Ambience<br />
Publicis, Publicis India and Solutions-Publicis India. He is<br />
also the promoter-Director of Zee Entertainment Enterprises<br />
Limited (ZEEL) which has in its fold flagship channel Zee<br />
<strong>TV</strong>, India's first private satellite channel.<br />
6. Dr. Pritam Singh : Dr. Singh is an M.Com (BHU), MBA (USA),<br />
Ph.D. (BHU), and author of seven academically reputed<br />
books and published over 50 research papers.<br />
Dr. Singh is one of the pioneers of management education in<br />
India and abroad. He initiated a number of social projects<br />
focusing on Healthcare, Education, Water Management and<br />
Road Building for the surrounding community to improve<br />
the quality of life. Owing to his contributions towards building<br />
intellectual capital at Administrative Staff College and<br />
refocusing of IIM, Bangalore as a truly integrated management<br />
school, he is branded as a Change Master par excellence<br />
and a Renaissance leader. Currently he is on the Board of<br />
Shipping Corporation of India, Hero Honda Motors Limited,<br />
Parsvnath Developers Limited and Local Board of Reserve<br />
Bank of India. Dr. Singh’s distinguished services were<br />
acknowledged by the country when the President of India<br />
conferred on him the prestigious ‘Padma Shri’ in year 2003.<br />
He has also been conferred with many other prestigious<br />
management awards. Notable among them are ESCORT<br />
Award (1979 and 2002), FORE Award (1984), Best Motivating<br />
Professor IIM Bangalore Award (1993), Best Director Award<br />
of Indian Management Schools (1998), Outstanding CEO<br />
(Chief Executive Officer) National HRD Award (2001) UP<br />
RATNA Award (2001), Wisitex Foundation Award – Eminent<br />
Personality of the Decade (2002) TIEUP California USA<br />
Outstanding Entrepreneur Award (2002), IMM Outstanding<br />
Management Educator Award (2002), Managerial GRID<br />
Leadership Excellence Award (2002).<br />
Code of Conduct<br />
The Board of Directors at its meeting held on January 6,<br />
20<strong>07</strong> have approved and adopted Code of Conduct for<br />
Members of the Board of Directors and Senior Management<br />
of the Company. The Code has been posted on Company's<br />
website viz. www.dishtv.in<br />
A declaration affirming compliance with the Code of Conduct<br />
by the members of the Board and Senior Management is<br />
annexed herewith and forms part of this report.<br />
Declaration<br />
All Directors and Senior Management of the Company<br />
have affirmed compliance with the Code of Conduct for<br />
the financial year ended March 31, 20<strong>07</strong>.<br />
Jawahar Lal Goel<br />
Managing Director<br />
Noida, June 28, 20<strong>07</strong><br />
BOARD COMMITTEES<br />
a) Audit Committee<br />
The Board has constituted the Audit Committee, all the Members<br />
of the Committee being Non-Executive Directors. The Chairman<br />
of the Committee, Mr. B. D. Narang, is an Independent Director.<br />
The role and the powers of the Audit Committee are as per the<br />
guidelines set out in the Listing Agreement with the Stock<br />
Exchanges and provisions of Section 292A of the Companies<br />
Act, 1956. The Committee meets periodically and reviews:<br />
Audited and unaudited financial results,<br />
Internal audit reports and report on internal control systems<br />
of the Company,<br />
Business plans, and various reports placed by the<br />
Management,<br />
Discusses the larger issues that could be of vital concern<br />
to the Company including adequacy of Internal Controls,<br />
reliability of financial statements/other management<br />
information, adequacy of provisions for liabilities and<br />
whether the audit tests are appropriate and scientifically<br />
carried out in accordance with Company's business and<br />
size of operations.<br />
The Audit Committee also reviews adequacy of disclosures and<br />
compliance with all relevant laws. In addition to the foregoing, in<br />
compliance with requirements of Clause 49 of the Listing<br />
Agreement, the Audit Committee reviews operations of subsidiary<br />
companies viz. its financial statement, significant related party<br />
transactions, statement of investments and minutes of meeting<br />
of the Board and Committees.<br />
During the period under review, Audit Committee met thrice i.e.<br />
on August 30, <strong>2006</strong>, February 22, 20<strong>07</strong> and June 28, 20<strong>07</strong>.<br />
Present composition of Audit Committee of the Board, in<br />
accordance with the applicable guidelines and rules, during the<br />
period under review is as follows:<br />
Name of Category Date of Date of<br />
Directors Appointment Cessation<br />
Mr. B. D. Non- January 6, NA<br />
Narang Executive- 20<strong>07</strong><br />
Independent<br />
Mr. Arun Non- January 6, NA<br />
Duggal Executive- 20<strong>07</strong><br />
Independent<br />
Mr. Ashok Non- January 6, April 27,<br />
Kurien Executive 20<strong>07</strong> 20<strong>07</strong><br />
Dr. Pritam Non- April 27, 20<strong>07</strong> NA<br />
Singh Executive-<br />
Independent
Statutory Auditors, Chief Executive Officer and Chief Financial<br />
Officer of the Company attend meetings of the Committee.<br />
The Company Secretary is the Secretary of the Audit<br />
Committee.<br />
b) Remuneration Committee and Policy<br />
The Remuneration Committee of the Company comprises of<br />
Mr. B. D. Narang, Non-Executive Independent Director as<br />
Chairman, Mr. Arun Duggal, Non-Executive Independent Director<br />
and Dr. Pritam Singh, Non-Executive Independent Director. The<br />
Company Secretary is the Secretary of the Committee.<br />
The terms of reference of the Remuneration Committee, inter alia,<br />
consist of reviewing the overall compensation policy, service<br />
agreements and other employment conditions of Executive<br />
Directors. The remuneration of Executive Directors is decided by<br />
the Board of Directors on the recommendation of the Remuneration<br />
Committee as per the remuneration policy of the Company within<br />
the overall ceiling approved by shareholders.<br />
During the period under review, Remuneration Committee met<br />
only once on January 6, 20<strong>07</strong>, which was attended by all<br />
members.<br />
Details of the remuneration paid to Managing Director till<br />
March 31, 20<strong>07</strong> :<br />
Name Position Remuneration (Rs.) Employer's<br />
Salary Contribution<br />
and to Provident<br />
Allowances Fund<br />
Mr. Jawahar Managing 1,225,613 68,129<br />
Lal Goel Director<br />
Remuneration payable to Non-Executive Director<br />
Within the limits specified under the Companies Act, 1956 and<br />
approved by the Board, all the Non-Executive Directors are entitled<br />
for sitting fees of Rs. 10,000/- per meeting for attending the<br />
Meetings of the Board, Audit and Remuneration Committee with<br />
effect from March, 20<strong>07</strong>.<br />
c) Share Transfer and Investor Grievance Committee<br />
The Share Transfer and Investors Grievance Committee of the<br />
Board comprises of Mr. Ashok Kurien, Non-Executive Director<br />
as Chairman and Mr. Jawahar Lal Goel, Managing Director as<br />
Member. The Company Secretary is the Secretary of the<br />
Committee.<br />
Main functions of the Share Transfer and Investor Grievance<br />
Committee is to supervise and ensure efficient transfer of shares<br />
and proper and timely attendance of investors' grievances.<br />
Mr. Jagdish Patra, Company Secretary is the Compliance Officer<br />
of the Company.<br />
During the period under review, Share Transfer and Investor<br />
Grievance Committee met once on May 30, 20<strong>07</strong>. The meeting<br />
was attended by all committee members.<br />
Details of number of requests/complaints received and resolved<br />
since listing till as on date:<br />
Nature of Received Replied/ Pending<br />
Correspondence<br />
Resolved<br />
Request for Transfer/ 9 9 –<br />
Transmission/Demat/Remat<br />
Non-receipt of Certificate 12 12 –<br />
Non-receipt of Warrant 4 4 –<br />
Miscellaneous Letters 37 37 –<br />
ANNUAL GENERAL MEETINGS<br />
The 19 th <strong>Annual</strong> General Meeting of the Company for the year 20<strong>07</strong><br />
will be held on Friday, the 3 rd day of August, 20<strong>07</strong> at Seven Seas, B-28,<br />
Ring Road, Lawrence Road, Industrial Area, Delhi-110 035 at 3 P. M.<br />
Details of <strong>Annual</strong> General Meetings held during last 3 years are as<br />
follows:<br />
Meeting Day, Date and Venue<br />
Time of the Meeting<br />
18th AGM Friday, September B-10, Lawrence<br />
29, <strong>2006</strong>, 1130 Hrs. Road, Industrial<br />
Area, Delhi - 110 035<br />
17th AGM Friday, September B-10, Lawrence<br />
30, 2005, 1130 Hrs. Road, Industrial<br />
Area, Delhi - 110 035<br />
16th AGM Thursday, September B-10, Lawrence<br />
30, 2004, 1130 Hrs. Road, Industrial<br />
Area, Delhi - 110 035<br />
No Special Resolution was passed during the last three <strong>Annual</strong> General<br />
Meetings of the Company.<br />
DISCLOSURES<br />
There are no materially significant related party transactions i.e.<br />
transaction material in nature, between the Company and its<br />
promoters, directors or management or their relatives etc. having<br />
any potential conflict with interests of the Company at large.<br />
Transactions with related parties are disclosed elsewhere in the <strong>Annual</strong><br />
<strong>Report</strong>.<br />
There has not been any non-compliance by the Company and no<br />
penalties or strictures imposed by SEBI or Exchanges or any statutory<br />
authority on any matter relating to capital markets, during the last<br />
three years.<br />
MEANS OF COMMUNICATION<br />
The Company has promptly reported all material information including<br />
declaration of financial results, press releases, etc. to all Stock<br />
Exchanges where the securities of the Company are listed. Such<br />
information is also simultaneously displayed immediately on the<br />
Company's website, www.dishtv.in. The financial results and other<br />
statutory information were communicated to the shareholders by way<br />
of an advertisement in a English daily and in a vernacular language<br />
newspaper as per requirements of the Stock Exchanges.<br />
Official news releases and presentations made to institutional<br />
investors or to the analysts are displayed on Company's<br />
website, www.dishtv.in.<br />
Management Discussions and Analysis <strong>Report</strong> forming part of <strong>Annual</strong><br />
<strong>Report</strong> is annexed separately.<br />
SHAREHOLDERS' INFORMATION<br />
The required information is provided in Shareholders' Information<br />
Section.<br />
25
GROUP<br />
AUDITORS’ CERTIFICATE<br />
To,<br />
The Members of<br />
<strong>Dish</strong> <strong>TV</strong> India Limited<br />
We have examined the compliance of conditions of Corporate Governance by <strong>Dish</strong> <strong>TV</strong> India Limited, for the period from April 1, <strong>2006</strong> to June<br />
28, 20<strong>07</strong> as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.<br />
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures<br />
and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither<br />
an audit nor an expression of opinion on the financial statements of the Company.<br />
In our opinion and to the best of our information and according to the explanations given to us and the representations made by the management,<br />
we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.<br />
We state that generally no investor grievances are pending for a period exceeding 30 days against the Company as per the records maintained<br />
by the Company.<br />
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with<br />
which the management has conducted the affairs of the Company.<br />
L. K. Shrishrimal<br />
Partner<br />
M. No. 72664<br />
For and on behalf<br />
MGB & Co.,<br />
Chartered Accountant<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
26
SHAREHOLDERS' INFORMATION<br />
1. Date, Time and Venue of Shareholders' Meeting Meeting : <strong>Annual</strong> General Meeting<br />
Day and Date : Friday, 3rd August, 20<strong>07</strong><br />
Time : 3 P. M.<br />
Venue : Seven Seas, B-28, Ring Road, Lawrence Road,<br />
Industrial Area, Delhi - 110 035<br />
2. Financial Year <strong>2006</strong>-20<strong>07</strong><br />
3. Date of Book Closure Monday, July 30, 20<strong>07</strong> to Friday, August 3, 20<strong>07</strong> (Both days inclusive)<br />
4. Registered Office B-10, Essel House, Lawrence Road, Industrial Area, Delhi -110 035<br />
Tel: +91 11 27101145, Fax: + 91 11 27186561, Website: www.dishtv.in<br />
5. Listing on Stock Exchanges The Bombay Stock Exchange Limited (BSE)<br />
The National Stock Exchange of India Limited (NSE)<br />
The Calcutta Stock Exchange Association Limited (CSE)<br />
6. Stock Code 532839 (Bombay Stock Exchange)<br />
DISH<strong>TV</strong> (National Stock Exchange)<br />
7. ISIN No. Equity - INE836F01026<br />
8. Registrar & Share Transfer Agent Sharepro Services (India) Pvt. Ltd.<br />
Unit: <strong>Dish</strong> <strong>TV</strong> India Ltd. Satam Estate, 3rd Floor, Above Bank of Baroda,<br />
Cardinal Gracious Road, Chakala, Andheri (E), Mumbai - 400 099<br />
Tel: +91 22 2821 5168/2832 9828 , Fax: +91 22 2839 2259/2837 5646<br />
Email: sharepro@vsnl.com<br />
9. Investor Relation Officer Mr. Ranjit Srivastava - Asst. Company Secretary<br />
<strong>Dish</strong> <strong>TV</strong> India Limited, FC-19, Sector 16 A, Noida - 201 301, U.P., India<br />
Tel: +91-120-2511064/78, Fax: +91-120-2488777, Email: cs@dishtv.in<br />
10. Change of Address<br />
Members holding equity shares in physical form are requested to notify the change of address, if any, to the Company's Registrar & Share<br />
Transfer Agent, at the address mentioned above.<br />
Members holding equity shares in dematerialised form are requested to notify the change of address if any, to their respective Depository<br />
Participant (DP).<br />
11. Share Transfer System<br />
Equity Shares sent for physical transfer or for dematerialisation are generally registered and returned within a period of 15 days from the<br />
date of receipt of completed and validly executed documents.<br />
12. Dematerialisation of Equity Shares & Liquidity<br />
As per extant guidelines Trading in equity shares of the Company is mandatory in dematerialised form. To facilitate trading in demat form,<br />
there are two depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).<br />
The Company has entered into agreements with both these depositories. Shareholders can open account with any of the Depository<br />
Participant registered with any of these two depositories. As on date 57.69% of the equity shares of the Company are in the dematerialised<br />
form.<br />
13. Shareholders' Correspondence<br />
We endeavour to reply all letters received from the shareholders within a period of 7 working days.<br />
All correspondence may be addressed to the Registrar & Share Transfer Agent at the address given above. In case any shareholder is not<br />
satisfied with the response or do not get any response within reasonable period, they may approach the Investor Relation Officer at the<br />
address given above.<br />
27
GROUP<br />
14. Stock Market Data Relating to Shares Listed in India<br />
a. Monthly high and low quotations and volume of shares traded on Bombay Stock Exchange and National Stock Exchange for the<br />
period April, May and June 20<strong>07</strong> (upto June 28, 20<strong>07</strong>) are:<br />
BSE<br />
NSE<br />
Month High Low High Low<br />
(Rs.) (Rs.) (Rs.) (Rs.)<br />
April 20<strong>07</strong> 120 97.25 117 96.5<br />
May 20<strong>07</strong> 142.8 1<strong>07</strong>.5 142.8 1<strong>07</strong>.5<br />
June 20<strong>07</strong> 136.2 100.7 135.85 101.00<br />
Distribution of Shareholding as on June 22, 20<strong>07</strong><br />
No. of Equity Shares<br />
Shareholders<br />
No. of Shares<br />
Number % of Holders Number % of Shares<br />
Up to 5000 117465 99.32 14759351 3.45<br />
5001-10000 319 0.27 2266195 0.53<br />
10001-20000 135 0.11 1941023 0.45<br />
20001-30000 70 0.06 1710425 0.40<br />
30001-40000 29 0.03 1026959 0.24<br />
40001-50000 25 0.02 1147852 0.27<br />
50001-100000 44 0.04 3136212 0.73<br />
100001 and Above 180 0.15 402234786 93.93<br />
TOTAL 118267 100.00 428222803 100.00<br />
Categories of Shareholders as on June 22, 20<strong>07</strong><br />
Category No. of Shares held % of Shareholding<br />
Promoters 248335772 57.99<br />
Individuals 15580873 3.64<br />
Domestic Companies 16532773 3.86<br />
FIs, Mutual Funds and Banks 38548738 9.00<br />
FIIs, OCBs & NRI 109224647 25.51<br />
TOTAL 428222803 100.00<br />
28
Top ten (10) Shareholders as on June 22, 20<strong>07</strong><br />
Sr. No. Name No. of Shares held % of Shareholding<br />
1. Veena Investments Pvt. Ltd. 76497825 17.86<br />
2. Afro-Asian Satellite Communications 35172125 8.21<br />
3. Jayneer Capital Pvt. Ltd. 34399354 8.03<br />
4. Charu Trading Co. Pvt. Ltd. 26858508 6.27<br />
5. Ganjam Trading Co. Pvt. Ltd. 16876987 3.94<br />
6. Premier Finance & Leasing Ltd. 12859855 3.00<br />
7. Prajatama Trading Co. Pvt. Ltd. 11998875 2.80<br />
8. Life Insurance Corporation of India 11719541 2.74<br />
9. Oppenheimer Funds Inc. A/c Oppenheimer 10934339 2.55<br />
10. Delgrada Limited 10420293 2.43<br />
TOTAL 247737702 57.85<br />
DISH <strong>TV</strong> SHARE PATTERN AS ON JUNE 22, 20<strong>07</strong><br />
25.51<br />
Promoters<br />
Individuals<br />
9.00<br />
3.86<br />
3.64<br />
57.99<br />
Domestic Companies<br />
Fls, Mutual Funds & Banks<br />
Flls, OCBs & NRI<br />
SHAREHOLDERS SERVICES<br />
Compliance Officer<br />
Jagdish Patra<br />
Company Secretary & Compliance Officer<br />
<strong>Dish</strong> <strong>TV</strong> India Ltd.<br />
FC-19, Sector 16 A, Noida - 201 301, U.P., India<br />
Tel. : +91-120-2511064<br />
Fax : +91-120-2488777.<br />
29
GROUP<br />
MANAGEMENT DISCUSSION AND ANALYSIS REPORT<br />
Your Directors are pleased to present the Management Discussion<br />
and Analysis <strong>Report</strong> for the year ended March 31, 20<strong>07</strong>.<br />
DISH <strong>TV</strong> - AN OVERVIEW<br />
The total number of <strong>TV</strong> owning households in India is estimated at 117<br />
million. This represents a 54% penetration of <strong>TV</strong> in Indian households.<br />
Out of this, Cable and Satellite households are 68 million. The DTH<br />
industry is currently pegged at 2.6 million subscribers. India is also<br />
one of the fastest growing and largest television markets in the world.<br />
Television households are estimated to grow to 165 million in 2011,<br />
resulting in an annual compounded growth rate of 6.5% p.a. The Indian<br />
Entertainment & Media Industry is estimated to be Rs. 450 billion and<br />
is on a growth overdrive, with a conservative projected compounded<br />
annual growth rate of 18% over the next 5 years. The DTH Industry<br />
revenue is expected to grow @ 80% compounded per annum over the<br />
next 5 years and will be in the range of Rs.100 billion in 2011.<br />
Due to the continued buoyancy in the Indian economy and an annual<br />
growth rate of over 9%, the country's Gross Domestic Product is<br />
touching US$ One trillion. This, coupled with increasing penetration<br />
of <strong>TV</strong>s, will give a boost to the demand for better quality products like<br />
DTH. In terms of sheer numbers, DTH subscribers are expected to<br />
touch 27 million in 2011 and 61 million in 2015.<br />
The industry will move towards adoption of best business practices<br />
due to enhanced consumer awareness about the quality of content,<br />
convergence, customisation, configuration, digitalisation, dynamic<br />
pricing, product innovation and contemporary global viewing<br />
experiences. Customers will increasingly demand content from<br />
content providers, that they can engage and relate with and which has<br />
relevance to their social and leisure lifestyle.<br />
Going forward, in the years to come, key drivers for the DTH industry<br />
will be Brand Strategy, Service Excellence, Content, Distribution reach<br />
across all corners of the country, Digitalisation of the industry, Strong<br />
high end television growth, Events like the Olympics and<br />
Commonwealth games, Robust international football and cricket<br />
calendar, improvement in the electricity generation situation and<br />
multiple service providers who between them are likely to spend<br />
anything between Rs.10-15 billion per annum on advertising and<br />
sales promotion. All these things, coupled with enormous consumer<br />
education, will result in the market opening up.<br />
Challenges to DTH providers will be largely in the form of higher<br />
subscriber acquisition costs, high content costs, long gestation and<br />
profit break even periods, stiff competition among various DTH<br />
platforms and from the cable industry, high tax regime, frequent<br />
regulatory changes and non availability of transponder capacity.<br />
SWOT ANALYSIS<br />
STRENGTHS<br />
<strong>Dish</strong> <strong>TV</strong> has the first mover advantage on account of being the first<br />
DTH service provider in India. Being a part of the Essel Group, there<br />
is strong promoter backing and committed investment. <strong>Dish</strong> <strong>TV</strong> is<br />
also India's only truly national DTH brand, with presence in over<br />
4,000 towns and with an equally strong representation in both Urban<br />
and Rural markets. Sales and Distribution infrastructure is one of the<br />
Company's key strengths. The Company has an extremely cost<br />
conscious culture that has resulted in multiple cost management<br />
initiatives making it one of the lowest cost service providers. Strong<br />
technology partnerships with organisations like Conax (Norway) and<br />
Open <strong>TV</strong> (USA) have helped/continue to help in providing cutting edge<br />
features and in maintaining technological leadership. Advance planning<br />
has resulted in adequate transponder capacity to meet the new channel<br />
launch requirements of the Company. This is an area where all other<br />
operators are likely to feel challenged over the next two years.<br />
OPPORTUNITIES<br />
GDP growth of almost 9% over the last four years has resulted in<br />
India's huge middle class flexing its muscles and an explosion in<br />
consumerism. With net disposable incomes on the rise, Indians are<br />
spending like never before on acquiring the latest products and<br />
products that are aspirational in nature. DTH, with its superior quality<br />
and wide ranging maneuverability and flexibility - Active services,<br />
Interactive services, multipoint channel viewing, gaming, Electronic<br />
Program Guide etc. - is increasingly being adopted by those who<br />
want great quality <strong>TV</strong> viewing experience. So far the Company has<br />
concentrated on household customers but a wide scope exists in<br />
areas relating to Multi Dwelling Units, Institutions, Guest Houses,<br />
Restaurants, Hotels and other Commercial establishments. Further,<br />
the emergence of large retail format stores across the country is<br />
creating a totally new opportunity. These will become more important<br />
as the retail industry in India goes through a consolidation phase,<br />
from its current highly fragmented disposition. As the Industry matures,<br />
value added services will give a boost to ARPU.<br />
WEAKNESSES<br />
The DTH Industry in India is an intrinsically low ARPU market, with<br />
one of the lowest rates in the world. This poses a challenge to the<br />
profitability of operators. This will continue till exclusive content<br />
becomes a reality, till people are willing to pay for more content and<br />
till value added services catch on with consumers. In all these areas,<br />
the Company has clearly defined strategies to increase ARPU.<br />
THREATS<br />
India will have between 4 to 5 operators in the DTH space. While this<br />
will help in expanding the market, as happened in mobile telephony, it<br />
will also result in higher subscriber acquisition costs by way of<br />
increase in promotional spends and higher subsidy on set top boxes.<br />
IP <strong>TV</strong> is also likely to come in, but is unlikely to be a major threat. With<br />
increasing competition management of churn and quality of subscriber<br />
acquisitions will also be a challenge.<br />
BUSINESS STRATEGY<br />
In the face of the opportunity that lies ahead, as well as the challenges<br />
with respect to the competitive environment, it would be paramount<br />
to sustain high paced growth and long-term viability of the business<br />
model. On a broader scale, the Media and Television industry is also<br />
going through a dynamic phase, therefore flexibility, adaptability and<br />
growth remain key concerns of the management. Going forward, we<br />
would build our business strengths, on the following strategies:<br />
(I) Brand Building: <strong>Dish</strong> <strong>TV</strong> is already considered a pioneer and<br />
30
(II)<br />
leader in the DTH segment. Efforts will be on, to make the brand<br />
a force to reckon with, that carves a niche for itself in the consumers'<br />
mind-space and life. Further, it will be the task of marketing<br />
to educate consumers, about the relevance of this technology<br />
to their entertainment needs, which will drive faster adoption.<br />
Value added services, will become more aspirational and<br />
find higher usage, as the product penetration expands. These<br />
services will drive not just brand stature but add to the revenue<br />
prospects as well.<br />
Subscriber and Revenue Growth: The Company has created a<br />
Zonal structure comprising of seven zones to create a wide<br />
spread distribution muscle across the length and breadth of<br />
the country. Apart from traditional retail outlets in the durable<br />
and telecom categories, the product will also find presence in<br />
multi brand national and regional modern trade chain stores.<br />
These stores that attract large volume traffic will add to our<br />
sales numbers in the present year, apart from giving us a<br />
commanding brand presence in the market. Moreover, large<br />
Corporates are being approached for bulk sales for their employees,<br />
vendor gifts, trade schemes and the like. Whilst acquiring<br />
new subscribers would remain one of the primary drivers<br />
for growth, retention of existing customers would also be a<br />
key focus area. Distinct emphasis is being laid to build capability<br />
in the team to develop subscriber relationship management<br />
and CRM calendars that will help in reducing churn and<br />
boosting revenues through timely collection and upgrade offers.<br />
(III) Service Capability: Recognising that service would be a key<br />
differentiator for this business, a commendable service team<br />
has been set up, over the last year, to take care of both the front<br />
end service management in the field and a back end support<br />
from the enhanced call centre capabilities. 93 <strong>Dish</strong> Care Centres<br />
(DCC) and service franchisees have been set up across major<br />
cities to provide on-site customer service, in the likelihood of<br />
such a service requirement. A large team of experienced<br />
professionals have been hired across regions, to build a service<br />
infrastructure that is commensurate with the growth in subscriber<br />
base and to steer the service function ongoingly. Call centre<br />
infrastructure has also been upgraded to cater to the demands of<br />
our growing base. Emphasis is placed on ease of access, instant<br />
customer responsiveness, quality of call centre interactions and<br />
fast resolution time. The objective being to build customer loyalty<br />
and an overall feeling pride of possession among the <strong>Dish</strong> <strong>TV</strong><br />
subscribers.<br />
(IV) Corporate Governance and Value Creation : We strongly believe<br />
that group corporate governance and management best practices<br />
are critical for long-term sustainable growth and for building<br />
resilience to competition. It will drive and ensure accountability,<br />
transparency, professionalism and risk containment. The<br />
recent restructure exercise will create more value and build a<br />
focused business approach that will go a long way in creating<br />
value for the stakeholders.<br />
CORPORATE STRUCTURE AFTER MERGER<br />
Integrated Subscriber<br />
Management Services<br />
Limited (wholly owned Subsidiary<br />
Company of SITI) (Now wholly owned<br />
subsidiary of <strong>Dish</strong> <strong>TV</strong>)<br />
New Era Entertainment<br />
Network Limited<br />
(NEEL) (Subsidiary of SITI)<br />
Zee Entertainment<br />
Enterprises Ltd. (ZEEL)<br />
SITI Cable Network<br />
Limited (SITI)<br />
(Subsidiary of ZEEL)<br />
Direct Consumer<br />
Services Business<br />
undertaking(DCS)<br />
<strong>Dish</strong> <strong>TV</strong> India Ltd.<br />
(Formerly ASC Enterprises<br />
Limited)<br />
● DCS business was merged with <strong>Dish</strong> <strong>TV</strong> and in lieu of such<br />
Merger, <strong>Dish</strong> <strong>TV</strong> issued 5.75 shares of Re. 1/- each for every 10<br />
shares held by ZEEL shareholders.<br />
Reorganisation of Share Capital:<br />
(Rs. in Crore)<br />
Equity Share Capital before 71.56<br />
reorganisation<br />
99.72 crores shares of Re.1/- each <strong>full</strong>y paid up equity<br />
was issued in the ratio of 23 shares for every 10 shares<br />
of ZEEL.<br />
Reduction of 99.72 crores shares by cancelling of 3<br />
shares for every 4 shares held and issue of 24.93<br />
crores shares to ZEEL shareholders.<br />
Therefore final equity of <strong>Dish</strong> <strong>TV</strong> India Ltd. is as under:<br />
1. Shares issued to ZEEL shareholders 24.93<br />
2. Reduction of existing equity of 71.56<br />
(In the ratio of 3 equity shares for every 4 17.89<br />
equity shares)<br />
Total share capital 42.82<br />
31
GROUP<br />
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY<br />
The Company believes in formulating adequate and effective internal<br />
control systems and implementing the same to ensure that the assets<br />
and interests of the Company are safeguarded and reliability of<br />
accounting data and its accuracy are ensured with proper checks and<br />
balances.<br />
The Company has a strong internal audit programme, which examines<br />
and evaluates the adequacy and effectiveness of Internal control<br />
systems. The internal audit ensures that the systems designed and<br />
implemented, provide adequate internal control, commensurate with<br />
the size and operations of the Company. Management Information<br />
System (MIS) forms an int egral part of the Company's control<br />
mechanism, where all operating parameters are monitored and<br />
controlled. An effective budgetary control on all capital expenditure<br />
ensures that the actual spends are in line with the capital budget.<br />
The Audit Committee of the Board, Statutory Auditors and the Top<br />
Management are regularly apprised of internal audit findings. The<br />
Audit Committee of the Company consisting of Non-Executive<br />
Independent Directors, periodically reviews and recommends the<br />
financial statements of the Company.<br />
HUMAN CAPITAL<br />
Since inception, we have endeavoured to establish ourselves as a<br />
progressive organisation, continuously monitoring and anticipating<br />
the changing market trends and evolving market dynamics. With this<br />
approach, we have been the change leader in the industry, setting<br />
what can be termed as “Industry Benchmark”.<br />
Human capital in the organisation has always remained the constant<br />
appreciating assets, which have propelled the organisation to its<br />
present status. The organisation aims to post a consistent and healthy<br />
growth in the DTH spectrum. The attraction, preservation and<br />
development of high caliber people is the source of competitive<br />
advantage for our business.<br />
Over the last 6 months, it was felt imperative to undertake an in-depth<br />
diagnostic and climate study with the purpose of aligning the<br />
aspirations, goals, structure, capabilities, processes and people with<br />
the organisation and most importantly bring about cultural change<br />
and uniformity across varied spectrums internally as well as with the<br />
industry. The entire exercise was to be followed by development of a<br />
Human Capital strategy and undertake various Human Capital<br />
initiatives for implementation across the organisation.<br />
The task to realign and transform the organisation along with the<br />
building process has been greatly challenging. However, it has<br />
provided clarity on what an individual/employee is expected to do,<br />
the interdependencies and interfaces in the organisation structure<br />
and the requisite capabilities and the behaviour required.<br />
Defining scope and responsibilities of the jobs and conducting job<br />
evaluation exercise for the whole organisation has been helpful to<br />
create clarity of structures, job roles and contributions resulting in<br />
effective implementation of organisation strategies and career and<br />
succession planning.<br />
Identification of key and critical positions and identifying individuals<br />
with leadership skills and nurturing them as future leaders, has been<br />
a continuous process.<br />
The organisation has also seen employee engagement initiatives like<br />
open houses, fun events, employee community building and<br />
recognition activities, which have build a sense of well being and<br />
excitement in the work environment. Training and development<br />
initiatives planned are focused towards increasing organisation's<br />
effectiveness and health through planned interventions in the<br />
processes, skills and competencies.<br />
There have also been a lot of efforts spent in pruning and streamlining<br />
the PMS, employee MIS and HR services systems and processes.<br />
The process is being advised by Hay Group. The objective of human<br />
resources is to build and develop a Human Capital geared up to face<br />
the challenges of the business.<br />
TALENT IDENTIFICATION<br />
The Company's talent Identification process is aimed at identifying<br />
employees who have the aptitude, capabilities and qualities necessary<br />
to undertake work, involving greater responsibility and skill levels,<br />
than their current one. Another aspect of talent identification is to<br />
create a talent pool by identifying individuals with leadership qualities<br />
and nurturing them as future leaders. A proactive and an effective<br />
succession management is in place, to nurture the talent pool.<br />
Individual development plans have been drawn detailing the career<br />
steps of the individual.<br />
CAUTIONARY STATEMENT<br />
Statements in this report describing the Company's objectives,<br />
expectations or predictions may be forward looking within the meaning<br />
of applicable laws and regulations. The actual results may differ<br />
materially from those expressed in this statement.<br />
32
AUDITORS' REPORT<br />
To,<br />
The Members,<br />
<strong>Dish</strong> <strong>TV</strong> India Limited<br />
1. We have audited the attached Balance Sheet of <strong>Dish</strong> <strong>TV</strong> India<br />
Limited (formerly ASC Enterprises Limited) as at March 31,<br />
20<strong>07</strong> and also the Profit and Loss Account and the Cash Flow<br />
Statement of the Company for the year ended on that date, annexed<br />
thereto. These financial statements are the responsibility of the<br />
Company's management. Our responsibility is to express an<br />
opinion on these financial statements based on our audit.<br />
2. We conducted our audit in accordance with the auditing standards<br />
generally accepted in India. Those standards require that we plan<br />
and perform the audit to obtain reasonable assurance about<br />
whether the financial statements are free of material misstatement.<br />
An audit includes examining, on a test basis, evidence supporting<br />
the amounts and disclosures in the financial statements. An audit<br />
also includes assessing the accounting principles used and<br />
significant estimates made by management, as well as evaluating<br />
the overall financial statement presentation. We believe that our<br />
audit provides a reasonable basis for our opinion.<br />
3. As required by the Companies (Auditor’s <strong>Report</strong>) Order, 2003<br />
(hereinafter referred to as "the Order") issued by the Central<br />
Government of India in terms of Section 227(4A) of the Companies<br />
Act, 1956 ("the Act"), on the basis of such checks as we<br />
considered appropriate and according to the information and<br />
explanations given to us during the course of our audit, we annex<br />
hereto a statement on the matters specified in paragraph 4 and<br />
5 of the said Order.<br />
4. We draw reference to<br />
a) Note 21 regarding the Scheme of Arrangement sanctioned<br />
by the High Court of Judicature at Bombay on 12th January,<br />
20<strong>07</strong> and High Court of Judicature at New Delhi on 18th<br />
December, <strong>2006</strong>, effect of which has been given in these<br />
financial statements, except allotment of equity shares and<br />
reorganisation of the share capital.<br />
b) Note 23 regarding preparation of these financial statements<br />
on going concern basis.<br />
5. Further to our comments in the annexure referred to in paragraph<br />
(3) above, we report that:<br />
a) We have obtained all the information and explanations,<br />
which to the best of our knowledge and belief were<br />
necessary for the purposes of our audit;<br />
b) In our opinion, proper books of accounts as required by<br />
law have been kept by the Company, so far as appears<br />
from our examination of those books;<br />
c) The Balance Sheet, Profit and Loss Account and Cash Flow<br />
Statement dealt with by this report are in agreement with<br />
the books of account;<br />
d) In our opinion, the Balance Sheet, Profit and Loss Account<br />
and Cash Flow Statement complies with the accounting<br />
standards referred to in sub-section (3C) of Section 211 of<br />
the Act;<br />
e) On the basis of written representations received from the<br />
directors, and taken on record by the Board of Directors,<br />
we report that none of the directors are disqualified as on<br />
March 31, 20<strong>07</strong> from being appointed as a director in terms<br />
of clause (g) of sub-section (1) of Section 274 of the<br />
Companies Act, 1956;<br />
f) In our opinion and to the best of our information and<br />
according to the explanations given to us, the said accounts<br />
read with the significant accounting policies and notes<br />
thereon subject to Note 30.10.2 regarding managerial<br />
remuneration amounting to Rs.1,293,742 paid to managing<br />
director pending approval of Central Government, give the<br />
information required by the Act in the manner so required<br />
and give a true and fair view in conformity with the<br />
accounting principles generally accepted in India:<br />
i) In the case of the Balance Sheet, of the state of affairs<br />
of the Company as at March 31, 20<strong>07</strong>;<br />
ii) In the case of the Profit and Loss Account, of the loss<br />
of the Company for the year ended on that date; and<br />
iii) In the case of Cash Flow Statement, of the cash flows<br />
for the year ended on that date.<br />
L.K. Shrishrimal<br />
M. No. 72664<br />
Partner<br />
For and on behalf of<br />
MGB & Co.<br />
Chartered Accountants<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS' REPORT<br />
TO THE MEMBERS OF DISH <strong>TV</strong> INDIA LIMITED ON THE ACCOUNTS<br />
FOR THE YEAR ENDED MARCH 31, 20<strong>07</strong>.<br />
(i) (a) The Company has maintained proper records showing <strong>full</strong><br />
particulars including quantitative details and situation of<br />
its fixed assets.<br />
(b) According to the information and explanations given to us,<br />
there is a phased program of physical verification of fixed<br />
assets except for consumer premises equipments installed<br />
at the customers premises,, which in our opinion is<br />
reasonable having regard to the size of the Company and<br />
nature of its assets. Pursuant to the program, the physical<br />
verification of certain assets was carried out during the<br />
year. The reconciliation of the fixed assets physically verified<br />
with the books is in progress and differences, if any, will<br />
be accounted on its determination.<br />
33
GROUP<br />
(c) In our opinion, the Company has not disposed of substantial<br />
part of the fixed assets during the year.<br />
(ii) (a) The inventory has been physically verified by the<br />
management at the end of the year. In our opinion, the<br />
frequency of such verification is reasonable.<br />
(b) The procedures of physical verification of inventories<br />
followed by the management are reasonable and adequate<br />
in relation to the size of the Company and the nature of its<br />
business.<br />
(c) The Company is maintaining proper records of the inventory<br />
and no discrepancy were noticed on physical verification<br />
as compared to book records.<br />
(iii) (a) According to the information and explanations given to us,<br />
the Company has granted unsecured loan to one company<br />
covered in the register maintained under Section 301 of<br />
the Act. The maximum amount involved during the year<br />
was aggregated to Rs. 1,239.82 Lacs and the year end<br />
balance of such loan amounted to Rs. 1,239.82 Lacs.<br />
(b) In our opinion and according to the information and<br />
explanations given to us, except for the rate of interest<br />
charged on the loans given, the other terms and conditions<br />
of loans given by the Company were prima facie not<br />
prejudicial to the interests of the Company.<br />
(c) As per the information made available to us, the party is<br />
regular in payment of principal and interest, wherever<br />
applicable, as per the terms of the loan.<br />
(d) In respect of the aforesaid loan, and considering the terms<br />
of the loan there is no overdue amount at the year end.<br />
(e) According to the information and explanations given to us,<br />
the Company has taken unsecured loans from two<br />
companies covered in the register maintained under Section<br />
301 of the Act. The maximum balance during the year was<br />
Rs. 1,025.74 Lacs and the year end balance of such loans<br />
is Rs. 533.36 Lacs.<br />
(f) The interest rate and other terms and conditions of such<br />
loans are prima facie not prejudicial to the interests of the<br />
Company.<br />
(g) As per the information made available to us, the aforesaid<br />
loans alongwith interest are repayable on demand.<br />
(iv) In our opinion and according to the information and explanations<br />
given to us, except in case where transactions entered are of<br />
special nature and for which alternative sources not available,<br />
there are adequate internal control procedures commensurate<br />
with the size of the Company and the nature of its business for<br />
the purchases of inventory, fixed assets and for the sale of goods<br />
and services. During the course of our audit, we have not<br />
observed any continuing failure to correct major weakness in<br />
these internal control systems.<br />
(v) (a) Based on the audit procedures applied by us and according<br />
to the information and explanations given to us, the<br />
transactions needed to be entered into the register<br />
maintained in pursuance of Section 301 of the Act have<br />
been duly entered.<br />
34<br />
(b) In our opinion and according to the information and<br />
explanations given to us, except in cases where transaction<br />
entered are of a special nature, the transaction made in<br />
pursuance of contract or arrangements entered into the<br />
register maintained under Section 301 of the Act and<br />
exceeding the value of Rupees five lacs in respect of each<br />
party during the year, have been made at prices which are<br />
reasonable having regard to the prevailing market prices.<br />
(vi) According to the information and explanations given to us, the<br />
Company has not accepted deposits from the public within the<br />
meaning of Section 58A and Section 58AA of the Act.<br />
(vii) The Company has an internal audit system commensurate with<br />
its size and nature of its business. However, the same needs to<br />
be strengthened as regard scope and periodicity.<br />
(viii) We are informed that the Central Government has not prescribed<br />
maintenance of cost records under Section 209 (1)(d) of the Act,<br />
for the activities of the Company.<br />
(ix) (a) According to the records of the Company, the Company is<br />
regular in depositing undisputed statutory dues including,<br />
investor education and protection fund, employees state<br />
insurance, income tax, sales tax, wealth tax, custom duty,<br />
excise duty, cess, and other statutory dues, wherever<br />
applicable, with appropriate authorities except delay in few<br />
cases.<br />
(b) According to the information and explanation given to us,<br />
no undisputed amounts payable in respect of income tax,<br />
wealth tax, sales tax, custom duty, excise duty and cess<br />
were outstanding as at March 31, 20<strong>07</strong> for a period of more<br />
than six months from the date they became payable.<br />
(c) According to the information and explanations given to us,<br />
there are no dues of sales tax, income tax, custom duty,<br />
wealth tax, excise duty and cess which have not been<br />
deposited on account of any dispute except the following:<br />
Name of Nature of Amount Period to Forum where<br />
statute dues (Rs. in which dispute<br />
lacs) pertain is pending<br />
Uttar Pradesh Entertainment 920.20 2003-04 to <strong>2006</strong>-<strong>07</strong> Allahabad High<br />
Entertainment & Tax<br />
Court<br />
Betting Tax Act,<br />
1979<br />
(x) The accumulated losses of the Company as at March 31, 20<strong>07</strong><br />
are more than fifty percent of its net worth. Further, the Company<br />
has incurred cash losses during the current financial year as<br />
well as in the immediately preceding financial year.<br />
(xi) On the basis of our examination and according to the information<br />
and explanations given to us, the Company has not defaulted in<br />
repayment of dues to banks/financial institutions.<br />
(xii) The Company has not granted any loans or advances on the<br />
basis of security by way of pledge of shares, debentures and<br />
other securities.<br />
(xiii) In our opinion, considering the nature of activities carried out by<br />
the Company during the year, the provision of any special statute<br />
applicable to chit fund, nidhi or mutual benefit fund/societies are<br />
not applicable to it.
(xiv) According to the information and explanations given to us the<br />
Company is not dealing or trading in shares, securities,<br />
debentures and other investments.<br />
(xv) In our opinion, the Company has not given any guarantees for<br />
loan taken by others from banks and financial institutions the<br />
terms and conditions whereof, are prima facie prejudicial to<br />
the interests of the Company.<br />
(xvi) According to the information and explanations given to us, the<br />
term loans raised during the year have been applied for the<br />
purposes for which the loans were obtained.<br />
(xvii) On the basis of utilisation of funds, which is based on an overall<br />
examination of Balance Sheet of the Company and related<br />
information as made available to us, we report that short-term<br />
fund amounting to Rs. 51,626.<strong>07</strong> have been used for long-term<br />
investments.<br />
(xviii) The Company has not made preferential allotment of shares to<br />
parties and companies covered in the register maintained<br />
under Section 301 of the Act.<br />
(xix) The Company has not issued any debentures during the year.<br />
(xx)<br />
(xxi)<br />
The Company has not raised any money by public issues during<br />
the year.<br />
During the course of examination of the books of account and<br />
records of the Company, carried out in accordance with the<br />
generally accepted auditing practices in India and according<br />
to the information and explanations given to us, we have not<br />
come across any fraud on or by the Company, noticed or<br />
reported during the year, nor have we been informed of such<br />
case by the management.<br />
L. K. Shrishrimal<br />
M. No. 72664<br />
Partner<br />
For and on behalf of<br />
MGB & Co.<br />
Chartered Accountants<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
35
GROUP<br />
BALANCE SHEET AS AT MARCH 31,<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
36<br />
(Currency: Indian Rupees)<br />
Notes 20<strong>07</strong> <strong>2006</strong><br />
SOURCES OF FUNDS<br />
Shareholders' Funds<br />
Share Capital 2 428,222,803 715,687,650<br />
Reserves and Surplus 3 1,695,856,798 3,728,245,250<br />
2,124,<strong>07</strong>9,601 4,443,932,900<br />
Advance against Share Application Money – 740,000,000<br />
LOAN FUNDS<br />
Secured Loans 4 1,444,696,311 78,085,333<br />
Unsecured Loans 5 306,314,726 5,678,150<br />
1,751,011,037 83,763,483<br />
TOTAL 3,875,090,638 5,267,696,383<br />
APPLICATION OF FUNDS<br />
Fixed Assets<br />
Gross Block 6 6,170,233,853 656,820,290<br />
Less : Depreciation/Amortisation upto date 673,702,453 50,910,568<br />
Net Block 5,496,531,400 605,909,722<br />
Capital Work-in-Progress 1,126,405,690 536,524,123<br />
6,622,937,090 1,142,433,845<br />
INVESTMENTS 7 944,510,040 1,068,715,480<br />
Current Assets, Loans and Advances<br />
Inventories 8 11,370,689 4,747,250<br />
Sundry Debtors 9 390,643,722 75,552,132<br />
Cash and Bank Balances 10 113,316,720 59,361,576<br />
Loans and Advances 11 1,869,406,314 1,468,002,403<br />
2,384,737,445 1,6<strong>07</strong>,663,361<br />
Less : Current Liabilities and Provisions 12<br />
Current Liabilities 8,576,968,604 1,818,347,<strong>07</strong>1<br />
Provisions 18,940,733 1,362,406<br />
8,595,909,337 1,819,709,477<br />
NET CURRENT ASSETS (6,211,171,892) (212,046,116)<br />
PROFIT AND LOSS ACCOUNT 2,518,815,400 3,268,593,174<br />
TOTAL 3,875,090,638 5,267,696,383<br />
The accompanying notes form an integral part of these financial statements<br />
As per our attached report of even date For and on behalf of the Board<br />
L. K. Shrishrimal<br />
Partner Jawahar Lal Goel B. D. Narang<br />
M. No.72664 Managing Director Director<br />
For and on behalf of<br />
MGB & Co. Rajeev K. Dalmia Jagdish Patra<br />
Chartered Accountants Chief Financial Officer Company Secretary
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
Notes 20<strong>07</strong> <strong>2006</strong><br />
INCOME<br />
Sales and Services 13 1,909,373,010 314,625,830<br />
Other Income 14 33,975,422 –<br />
1,943,348,432 314,625,830<br />
EXPENDITURE<br />
Cost of Goods Sold 15 5,4<strong>07</strong>,941 56,430,158<br />
Operating Costs 16 2,242,565,278 725,066,904<br />
Personnel Cost 17 148,720,588 21,486,610<br />
Administrative and Other Expenses 18 339,339,990 18,838,872<br />
Selling and Distribution Expenses 19 1,025,030,484 322,577,565<br />
Financial Charges (Net) 20 117,823,546 16,739,229<br />
Depreciation/Amortisation 6 575,283,677 28,345,299<br />
4,454,171,504 1,189,484,637<br />
PROFIT/(LOSS) BEFORE TAX & EXCEPTIONAL ITEMS (2,510,823,<strong>07</strong>2) (874,858,8<strong>07</strong>)<br />
Exceptional Items (Refer Note 30.2) – 1,203,430,395<br />
Profit/(Loss) Before Tax (2,510,823,<strong>07</strong>2) (2,<strong>07</strong>8,289,202)<br />
Provision for Taxation – Current Tax – –<br />
– Deferred Tax (Refer Note 27.2) – –<br />
– Fringe Benefit Tax 2,450,467 328,767<br />
– Wealth Tax 57,856 –<br />
Profit/(Loss) After Tax (2,513,331,395) (2,<strong>07</strong>8,617,969)<br />
Prior Period Adjustments (Net) - Income/(Loss) (Refer Note 30.5) (5,484,005) 292,152<br />
Profit/(Loss) for the Year (2,518,815,400) (2,<strong>07</strong>8,325,817)<br />
Balance Brought Forward (3,268,593,174) (1,190,267,357)<br />
Less : Transfer to Restructuring Account (Refer Note 24) 3,268,593,174 –<br />
Balance Carried to Balance Sheet (2,518,815,400) (3,268,593,174)<br />
CALCULATED ON THE FACE VALUE OF RS. 10<br />
Basic and diluted Earnings Per Share (Rs.) before exceptional items (58.82) (12.22)<br />
Basic and diluted Earnings Per Share (Rs.) after exceptional items (58.82) (29.04)<br />
CALCULATED ON THE FACE VALUE OF RE. 1<br />
Basic and diluted Earnings Per Share (Rs.) before exceptional items (5.88) (1.22)<br />
Basic and diluted Earnings Per Share (Rs.) after exceptional items (5.88) (2.90)<br />
The accompanying notes form an integral part of these financial statements<br />
As per our attached report of even date For and on behalf of the Board<br />
L. K. Shrishrimal<br />
Partner Jawahar Lal Goel B. D. Narang<br />
M. No.72664 Managing Director Director<br />
For and on behalf of<br />
MGB & Co. Rajeev K. Dalmia Jagdish Patra<br />
Chartered Accountants Chief Financial Officer Company Secretary<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
37
GROUP<br />
NOTES TO FINANCIAL STATEMENTS AS AT MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
2. SHARE CAPITAL (REFER NOTE 24.2)<br />
Authorised<br />
730,000,000 Equity Shares of Re.1 each 730,000,000 730,000,000<br />
(Previous Year 73,000,000 Equity Shares of Rs.10 each)<br />
Issued, Subscribed and Paid-up<br />
715,687,650 Equity Shares of Re. 1 each <strong>full</strong>y paid-up 715,687,650 715,687,650<br />
(Previous Year 71,568,765 Equity Shares of Rs.10 each <strong>full</strong>y paid-up)<br />
Share Capital Suspense (287,464,847) –<br />
TOTAL 428,222,803 715,687,650<br />
3. RESERVES AND SURPLUS<br />
Securities Premium : (Refer Note 24.3)<br />
As per last Balance Sheet 3,728,245,250 3,728,245,250<br />
Less : Transferred to Restructuring Account 3,728,245,250 –<br />
TOTAL – 3,728,245,250<br />
General Reserves (Refer Note No. 24.3.3):<br />
Transfer from Restructuring Account pursuant to the Scheme (Refer Note 24.3) 1,698,096,659 –<br />
Less : Adjustments pursuant to transitional Provisions as per AS-15 (Refer Note 30.12) 2,239,861 –<br />
TOTAL 1,695,856,798 –<br />
TOTAL 1,695,856,798 3,728,245,250<br />
4. SECURED LOANS<br />
(For security and other details Refer Note 26)<br />
Term Loan from Bank 750,000,000 –<br />
Bridge Loan from Bank 604,780,715 –<br />
Cash Credit from Bank 75,725,609 75,<strong>07</strong>0,472<br />
Vehicle Loan 7,183,137 3,014,861<br />
Interest accrued and due 7,006,850 –<br />
TOTAL 1,444,696,311 78,085,333<br />
5. UNSECURED LOANS<br />
From Banks (Refer Note 26.5) 250,000,000 –<br />
From Others 54,600,000 4,600,000<br />
Interest accrued and due 1,714,726 1,<strong>07</strong>8,150<br />
TOTAL 306,314,726 5,678,150<br />
38
NOTES TO FINANCIAL STATEMENTS AS AT MARCH 31,<br />
6. FIXED ASSETS (AT COST )<br />
(Currency: Indian Rupees)<br />
Particulars GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK<br />
Addition During The Year<br />
Depreciation During the Year<br />
As at Additions * Transfer Acquired Sale/ As at As at For The Year Transfer Acquired Sale/ As at As at As at<br />
31.03.<strong>2006</strong> Pursuant Under Adjustment 31.03.<strong>07</strong> 31.03.<strong>2006</strong> Pursuant to Under Adjustment 31.03.<strong>07</strong> 31.03.<strong>07</strong> 31.03.<strong>2006</strong><br />
Scheme* Slump Scheme* Slump<br />
Sale***<br />
Sale*<br />
Intangible Assets<br />
Goodwill – – – 451,177,637 – 451,177,637 – 22,558,882 – – – 22,558,882 428,618,755 –<br />
Licence fees 100,000,000 – – – – 100,000,000 25,000,000 10,000,000 – – – 35,000,000 65,000,000 75,000,000<br />
Software 27,540 139,690,936 34,429,719 – – 174,148,195 257 28,015,114 – – – 28,015,371 146,132,824 27,283<br />
Total (A) 100,027,540 139,690,936 34,429,719 451,177,637 – 725,325,832 25,000,257 60,573,996 – – – 85,574,253 639,751,579 75,027,283<br />
Tangible Assets<br />
Plant and<br />
Machinery 67,419,994 255,509,369 361,948,316 – – 684,877,679 12,203,250 64,458,059 47,567,308 – – 124,228,617 560,649,062 55,216,744<br />
Consumer<br />
Premises<br />
Equipments 476,646,480 2,722,775,388 – 1,503,497,136 – 4,702,919,004 9,980,853 444,125,843 – – – 454,106,696 4,248,812,308 466,665,627<br />
Computers 2,690,644 9,529,952 3,830,571 – – 16,051,167 738,329 1,955,627 – – – 2,693,956 13,357,211 1,952,315<br />
Office Equipments 853,<strong>07</strong>7 2,475,742 2,213,194 – – 5,542,013 134,459 339,575 – – – 474,034 5,067,979 718,618<br />
Furniture and<br />
Fixtures 1,009,898 1,999,034 3,022,267 – – 6,031,199 197,629 871,860 – – – 1,069,489 4,961,710 812,269<br />
Vehicles 5,650,062 2,825,706 17,239,423 – 1,724,462 23,990,729 553,629 2,361,981 – – 59,100 2,856,510 21,134,219 5,096,433<br />
Leasehold<br />
Improvements 2,522,595 2,973,635 – – – 5,496,230 2,102,162 596,736 – – – 2,698,898 2,797,332 420,433<br />
Total (B) 556,792,750 2,998,088,826 388,253,771 1,503,497,136 1,724,462 5,444,908,021 25,910,311 514,709,681 47,567,308 – 59,100 588,128,200 4,856,779,821 530,882,439<br />
Current Year<br />
(A+B) 656,820,290 3,137,779,762 422,683,490 1,954,674,773 1,724,462 6,170,233,853 50,910,568 575,283,677 47,567,308 – 59,100 673,702,453 5,496,531,400 605,909,722<br />
Previous Year 171,318,303 488,506,249 – – 3,004,262 656,820,290 23,105,978 28,345,299 – – 540,709 50,910,568 605,909,722<br />
Notes:<br />
(1) * Addition during the year includes additions of demerged operations.<br />
(2) ** Transfer of assets pursuant to the Scheme (Refer Note 24).<br />
(3) *** Acquired under Slump Sale (Refer Note 25).<br />
(4) Details of assets given on Operating Lease is given in Note 33.2.<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
7. INVESTMENTS (REFER NOTE 28)<br />
Long Term (At Cost) – Unquoted<br />
In Subsidiaries – Trade<br />
12,470,544 Equity Shares of Rs. 10 each <strong>full</strong>y paid up of Agrani 124,705,440 124,705,440<br />
Convergence Limited (Extent of holding 51%)<br />
50,000 Equity Shares of Rs.10 each <strong>full</strong>y paid up of Integrated Subscriber 500,000 –<br />
Management Services Ltd. (Wholly owned)<br />
94,401,004 Equity Shares of Rs. 10 each <strong>full</strong>y paid up of Agrani 944,010,040 944,010,040<br />
Satellite Services Limited (Wholly owned)<br />
1,069,215,480 1,068,715,480<br />
Less : Provision for Diminution in the Value of Investments 124,705,440 –<br />
TOTAL 944,510,040 1,068,715,480<br />
Aggregate Book Value of Unquoted Investments 944,510,040 1,068,715,480<br />
39
GROUP<br />
NOTES TO FINANCIAL STATEMENTS AS AT MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
8. INVENTORIES<br />
(as taken, valued and certified by the management)<br />
Stock in Trade 11,370,689 4,694,889<br />
Raw Tapes/Cassettes – 52,361<br />
TOTAL 11,370,689 4,747,250<br />
9. SUNDRY DEBTORS<br />
(unsecured, considered good unless otherwise stated)<br />
More than Six Months Old 18,146,573 8,126,528<br />
Others (includes doubtful Rs. 42,288,389 [Rs. Nil]) 414,785,538 67,425,604<br />
432,932,111 75,552,132<br />
Less : Provision for Doubtful Debts 42,288,389 –<br />
TOTAL 390,643,722 75,552,132<br />
10. CASH AND BANK BALANCES<br />
Cash in Hand 67,645 359,152<br />
Balance with Scheduled Banks :<br />
In Current Account 59,861,543 17,442,471<br />
In Fixed Deposit [pledged with Banks Rs. 53,387,532 (Rs. 41,559,953)] 53,387,532 41,559,953<br />
TOTAL 113,316,720 59,361,576<br />
11. LOANS AND ADVANCES (REFER NOTE 30.6)<br />
(unsecured, considered good unless otherwise stated)<br />
Loans 843,167,351 779,581,764<br />
Advance against Share Application Money 334,170,285 357,533,966<br />
Other Advances 1,901,467,193 1,533,578,715<br />
Deposits 16,644,794 5,738,353<br />
3,095,449,623 2,676,432,798<br />
Less : Provision for Doubtful Advances 1,226,043,309 1,208,430,395<br />
TOTAL 1,869,406,314 1,468,002,403<br />
40
NOTES TO FINANCIAL STATEMENTS AS AT MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
12. CURRENT LIABILITIES AND PROVISIONS<br />
Current Liabilities (Refer Note 30.7)<br />
Creditors for Goods 880,671,831 484,816,313<br />
Creditors for Expenses and Other Liabilities 3,<strong>07</strong>7,435,056 539,058,853<br />
Interest accrued but not due 4,019,923 –<br />
Advances/Deposits 4,614,841,794 794,471,905<br />
TOTAL 8,576,968,604 1,818,347,<strong>07</strong>1<br />
Provisions<br />
For Taxation 8,866,893 450,436<br />
For Retirement Benefits 10,<strong>07</strong>3,840 911,970<br />
TOTAL 18,940,733 1,362,406<br />
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
13. SALES AND SERVICES<br />
Income from DTH Subscribers :<br />
Subscription Income 1,219,008,658 195,304,505<br />
Lease Rentals 218,<strong>07</strong>0,913 2,398,831<br />
Other DTH Revenue 1,274,760 7,738,816<br />
Income from Content Providers :<br />
Placement and Active Services 359,214,740 –<br />
Royalty – 2,500,000<br />
Teleport Services 104,888,339 49,268,188<br />
Sales (Net of Returns) 6,915,600 57,415,490<br />
TOTAL 1,909,373,010 314,625,830<br />
14. OTHER INCOME<br />
Exchange Difference (Net) 25,162,512 –<br />
Other Income 8,812,910 –<br />
TOTAL 33,975,422 –<br />
15. COST OF GOODS SOLD<br />
Opening Stock 4,694,889 –<br />
Purchases (Net of Returns) 12,083,741 61,125,047<br />
16,778,630 61,125,047<br />
Less : Closing Stock 11,370,689 4,694,889<br />
TOTAL 5,4<strong>07</strong>,941 56,430,158<br />
41
GROUP<br />
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
16. OPERATING COSTS<br />
Transponder Lease 338,3<strong>07</strong>,289 330,555,853<br />
License Fees 156,121,933 36,265,718<br />
Uplink Charges 60,459,416 44,305,859<br />
Content Costs 1,556,275,576 229,325,911<br />
Subscriber Management Expenses 74,450,388 61,686,396<br />
Middleware Charges 45,1<strong>07</strong>,361 22,041,729<br />
Entertainment Tax 11,754,420 –<br />
Other Operating Charges 88,895 885,438<br />
TOTAL 2,242,565,278 725,066,904<br />
17. PERSONNEL COST<br />
Salary and Allowances 135,933,291 19,696,890<br />
Contribution to Provident and Other Funds 7,626,543 1,276,780<br />
Staff Welfare 5,160,754 512,941<br />
TOTAL 148,720,588 21,486,610<br />
18. ADMINISTRATIVE AND OTHER EXPENSES<br />
Rent 8,593,128 1,733,399<br />
Rates and Taxes 952 5,335<br />
Water and Electricity Charges 7,232,128 1,585,371<br />
Insurance 1,233,273 82,928<br />
Repairs and Maintenance – Plant and Machinery 1,051,928 2,567,329<br />
Repairs and Maintenance – Building 2,387,600 –<br />
Repairs and Maintenance – Others 5,419,450 423,728<br />
Vehicles Expenses 2,573,440 –<br />
Legal and Professional Expenses 15,721,445 1,873,679<br />
Director Sitting Fee 40,000 –<br />
Printing and Stationery 13,090,410 1,416,144<br />
Communication Expenses 12,959,287 755,603<br />
Travelling and Conveyance [Directors Rs. 206,612 (Rs. Nil)] 29,435,500 2,477,049<br />
Provision for Doubtful Debts & Advances 57,694,388 –<br />
Provision for Diminution in the Value of Investments 124,705,440 –<br />
Foreign Currency Fluctuations (Net) – 643,057<br />
Miscellaneous Expenses 17,630,737 920,870<br />
Service and Hire Charges 11,517,738 –<br />
Freight, Cartage and Demurrage 26,656,060 4,157,494<br />
Bad Debts 161,252 –<br />
Loss on Sale/Discard of Assets 1,235,835 196,886<br />
TOTAL 339,339,990 18,838,872<br />
42
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
19. SELLING AND DISTRIBUTION EXPENSES<br />
Advertisement Expenses 535,244,862 281,922,195<br />
Commission 328,846,145 14,690,759<br />
Business Promotion 5,764,044 3,133,544<br />
Customer Support Service (Call Centre) 155,175,433 22,831,067<br />
TOTAL 1,025,030,484 322,577,565<br />
20. FINANCIAL CHARGES (NET)<br />
Interest to Banks 71,311,992 5,177,753<br />
Interest to Others 71,743,715 950,589<br />
143,055,7<strong>07</strong> 6,128,342<br />
Less : Interest Received (Gross) 57,467,387 2,746,053<br />
(TDS Rs. 347,519, Previous Year Rs. 556,425)<br />
85,588,321 3,382,289<br />
Bank and Other Financial Charges 32,235,226 13,356,940<br />
TOTAL 117,823,547 16,739,229<br />
1. SIGNIFICANT ACCOUNTING POLICIES<br />
(a) Accounting Convention:<br />
i. The Company generally follows mercantile system of accounting and recognises income and expenditure on accrual basis<br />
except those with significant uncertainties.<br />
ii. The financial statements have been prepared on historical cost convention and in accordance with the accounting standards<br />
referred to in Section 211(3C) of the Companies Act, 1956.<br />
(b) Fixed Assets:<br />
i. Fixed assets are stated at cost. Cost includes capital cost, freight, installation cost, duties and taxes and other incidental<br />
expenses incurred during the construction/installation stage attributable to bringing the assets to working condition for its<br />
intended use.<br />
ii. All capital costs and incidental expenditure during the pre-operational period are shown as Capital work-in-progress.<br />
iii. Customer premises equipments is capitalised on activation.<br />
iv. License fee is considered as an intangible asset and is stated at amount paid.<br />
v. Software is capitalised as an intangible asset on meeting recognition criteria.<br />
(c) Depreciation/Amortisation:<br />
i. Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to<br />
the Companies Act, 1956, except customer premises equipments on which depreciation is provided @20% based on useful<br />
life estimated by the management.<br />
ii. Software is amortised over a period of five years or license period whichever is shorter.<br />
iii. Goodwill on acquisition is amortised over a period of five years.<br />
iv. Leasehold improvements are amortized over the period of lease.<br />
v. License fee is amortised over the period of license.<br />
43
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
(d)<br />
(e)<br />
(f)<br />
(g)<br />
(h)<br />
(i)<br />
(j)<br />
(k)<br />
(l)<br />
Revenue Recognition:<br />
i. Income from services is accounted on the completion of services. Period based services are accounted rateably over the<br />
period of service.<br />
ii. Sale of goods are recognised when risk and rewards of ownership are passed on to the customer, which is generally on<br />
dispatch of goods.<br />
Investments:<br />
Investments are considered as long-term and are stated at cost less provision for permanent diminution in the value of such<br />
investments.<br />
Inventories:<br />
Inventories are valued at lower of cost and net realisable value. Cost is identified on weighted average basis.<br />
Retirement Benefits:<br />
i) Contribution to Provident Fund and other recognised funds are charged to Profit and Loss Account.<br />
ii) Gratuity and Leave Encashment is provided on the basis of actuarial valuation at the Balance Sheet date.<br />
Foreign Currency Transactions:<br />
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and<br />
liabilities denominated in foreign currency are translated at the exchange rate prevailing at the Balance Sheet date and gains or<br />
losses on translation are recognised in Profit and Loss Account. Non monetary foreign currency items are carried at cost.<br />
Borrowing Costs:<br />
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as a part of such assets.<br />
All other borrowing costs are charged to revenue.<br />
Taxes on Income:<br />
Tax expense comprise of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount<br />
expected to be paid to the tax authorities in accordance with Indian Income Tax Act. Deferred Tax is recognised, subject to<br />
consideration of prudence, on timing difference, being the difference between taxable income that originate in one period and are<br />
capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. At the Balance Sheet date<br />
the company assesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realisation,<br />
as the case may be.<br />
Operating Lease:<br />
Lease of the assets where all the risk and rewards of ownership are effectively retained by the lessor are classified as operating<br />
lease. Lease payments/revenue under operating lease are recognised as an expense/income on accrual basis in accordance with<br />
respective lease agreement.<br />
Earning Per Share:<br />
Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the<br />
year. Diluted earnings per share is computed and disclosed using the weighted average number of common and dilutive common<br />
equivalent share outstanding during the year except where the result would be anti dilutive.<br />
21. BACKGROUND<br />
<strong>Dish</strong> <strong>TV</strong> India Limited is mainly in the business of providing Direct to Home (DTH) Satellite Television Service and Teleport Service<br />
including Placement and Active Service. The name of the Company has been changed during the year from ASC Enterprises Limited to<br />
<strong>Dish</strong> <strong>TV</strong> India Limited.<br />
22. USE OF ESTIMATES<br />
The preparation of the financial statements in accordance with the Generally Accepted Accounting Principles requires that the management<br />
to make estimates and assumption that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the<br />
date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those<br />
estimates. Any revision to estimates is recognised prospectively in the current and future periods.<br />
23. GOING CONCERN<br />
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management<br />
believes that it is appropriate to prepare these financial statements on a 'going concern' basis, for the following reasons:<br />
23.1 The Company hold DTH license from Government of India for a considerable long time.<br />
44
NOTES TO FINANCIAL STATEMENTS<br />
23.2 The Company is the first to launch DTH services in India. This business necessitates long gestation period to stand in its feet.<br />
Being first mover the Company incurred huge expenses on awareness of the product, brand building on a pan India basis. The<br />
benefit of these expenses will accrue in the future years.<br />
23.3 The Promoters are <strong>full</strong>y seized of the matter and are committed to arrange required resources.<br />
24. THE SCHEME OF ARRANGEMENT<br />
The Scheme of Arrangement (the Scheme) under Sections 391 to 394 read with Sections 78, 100 and other applicable provisions of the<br />
Companies Act, 1956 between Zee Telefilms Limited now known as Zee Entertainment Enterprises Ltd. (ZEEL), Siti Cable Network<br />
Limited (SITI) and New Era Entertainment Network Ltd. (NE) and ASC Enterprises Limited (now known as <strong>Dish</strong> <strong>TV</strong> India Limited (the<br />
Company)) and their respective shareholders have been sanctioned by the Hon'ble High Court of Judicature at Bombay and High Court<br />
of Judicature at New Delhi vide their respective order dated January 12, 20<strong>07</strong> and December 18, <strong>2006</strong> and a copy of these orders have<br />
been filed with the respective Registrar of Companies on January 17, 20<strong>07</strong> and January 19, 20<strong>07</strong> respectively. The Scheme has been<br />
given effect in these financial statements except actual allotment and reorganisation of Share Capital.<br />
24.1 Pursuant to the Scheme, Direct Consumer Services undertaken (DCS) of ZEEL including investment made by ZEEL in SITI and the<br />
entire business and whole of the undertaking of the transferor Companies i.e. SITI and NE have been transferred to and vested in the<br />
Company on appointed date i.e. April 1, <strong>2006</strong> on going concern basis. The assets and the liabilities of DCS undertaking of ZEEL at book<br />
value and of SITI and NE at fair value have been transferred to and vested in the Company as under: (Currency: Indian Rupees)<br />
Particulars DCS undertaking of ZTL SITI NE<br />
Gross Block of Fixed Assets 320,441,991 75,724,410 26,517,087<br />
Less : Depreciation 47,567,308 – –<br />
Net Block of Fixed Assets 272,874,683 75,724,410 26,517,087<br />
Capital Work-in-Progress – 329,347,821 –<br />
Investments 19,363,880 1,000,000 –<br />
Share Application Money 1,419,713,819 500,000,000 690,000,000<br />
Current Assets, Loans and Advances – 105,776,495 424,897,432<br />
Total Assets (A) 1,711,952,382 1,011,848,726 1,141,414,519<br />
Loan Funds 326,324,605 1,069,936 7,100,114<br />
Current Liabilities and Provisions 19,920 1,435,362,605 1,124,494,831<br />
Total Liabilities (B) 326,344,525 1,436,432,541 1,131,594,945<br />
Surplus/(Deficit) (A-B) 1,385,6<strong>07</strong>,857 (424,583,815) 9,819,574<br />
24.2 Reorganisation of Share Capital<br />
24.2.1 The paid up equity share capital of the Company had been sub-divided on September 25, <strong>2006</strong> by splitting 71,568,765 equity<br />
shares of Rs. 10 each into 715,687,650 equity shares of Re. 1 each.<br />
24.2.2 Pursuant to the Scheme following effect are given considering the shareholding pattern of ZEEL on record date i.e. February 20, 20<strong>07</strong>:-<br />
● 997,203,560 equity shares of Re. 1 each <strong>full</strong>y paid to be issued in the ratio of 23 equity shares Re. 1 each <strong>full</strong>y paid up of<br />
the Company for every 10 equity shares of Re. 1 each <strong>full</strong>y paid up of ZEEL.<br />
● Reduction of above equity share capital by way of cancellation of 3 equity shares of Re. 1 each <strong>full</strong>y paid up for every 4<br />
equity shares of Re. 1 each <strong>full</strong>y paid up resulting in final issues of 249,300,890 equity shares of Re. 1 each <strong>full</strong>y paid up.<br />
● Pending actual action, the difference on allotment, cancellation, reduction and issue of Share Capital as above has been<br />
taken to the "Share Capital Suspense" in Note 2 to these financial statements.<br />
24.2.3 The present Share Capital of the Company Rs. 715,687,650 divided into 715,687,650 equity shares of Re. 1 each <strong>full</strong>y paid up will<br />
be reduced by cancellation of 3 equity shares of Re. 1 each <strong>full</strong>y paid up for every 4 equity shares of Re. 1 each <strong>full</strong>y paid up. The<br />
resultant Share Capital will be Rs. 178,921,913. Pending actual reduction Rs. 536,765,737 has been taken to 'Share Capital<br />
Suspense' in Note 2.<br />
24.3 Pursuant to the Scheme, surplus Rs. 1,698,096,658 in the Restructuring Account after carrying out following adjustments as per<br />
the Scheme has been transferred to General Reserve Account.<br />
24.3.1 The value of net assets of DCS undertaking of ZEEL as reduced by the face value of equity shares to be issued amounting to Rs.<br />
1,136,306,967 has been credited to Restructuring Account as prescribed in the Scheme.<br />
45
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
24.3.2 The value of net assets/(liabilities) of SITI and NE amounting to (Rs. 443,947,695) and Rs. 9,319,574 respectively, as reduced<br />
by the cancellation of the investments amounting to Rs. 19,363,880 and Rs. 500,000 respectively has been (debited)/credited<br />
to Restructuring Account as prescribed in the Scheme.<br />
24.3.3 Balance in Share Premium Account and Profit and Loss Account (Debit Balance) amounting to Rs. 3,728,245,250 and<br />
Rs. 3,268,593,174 respectively has been transferred to Restructuring Account.<br />
24.3.4 Reduction in present Share Capital Rs. 536,765,737 has been transferred to Restructuring Account.<br />
24.4 Pursuant to demerger of DCS undertaking of ZEEL, SITI and NE became wholly owned subsidiaries of the Company and hence<br />
upon the merger of the Subsidiaries with the Company, entire equity share capital of these Companies stand automatically<br />
cancelled and hence there will not be any issue and allotment of shares of the Company.<br />
24.5 The transactions of New Era Entertainment Network Limited, Siti Cable Network Ltd. and DCS business of Zee Entertainment<br />
Enterprises Ltd. between the appointed date and the effective date are deemed to be made on behalf of the Company. Accordingly<br />
all Assets, Liabilities, Income & Expenditure of the demerged undertakings for the said period are taken over by the Company<br />
and given effect in these Financial Statements.<br />
24.6 The assets, license & agreements etc. transferred pursuant to the Scheme of Arrangement are in the process of registration/<br />
transfer in the name of the Company.<br />
25. The Company has acquired DTH Equipment Unit Business (DEU) of Essel Agro Private Limited on a going concern basis vide agreement<br />
to transfer DTH Equipment Unit (DEU) Business dated December 31, <strong>2006</strong>. Pursuant to the agreement following assets and liabilities have<br />
been acquired and are included in these financial statements. The goodwill arising on acquiring of DEU Business amounting to Rs.<br />
451,177,637 (including purchase consideration Rs. 500,000) has been treated as intangible asset. (Currency: Indian Rupees)<br />
46<br />
Particulars<br />
Fixed Assets 1,503,497,136<br />
Current Assets, Loans and Advances 21,403,084<br />
Total Assets 1,524,900,220<br />
Current Liabilities and Provisions 1,975,577,857<br />
Net Deficit 450,677,637<br />
26. SECURED/UNSECURED LOANS<br />
26.1 Cash Credit of Rs. 75,725,609 (Rs. 75,<strong>07</strong>0,472) is secured by first pari passu hypothecation charge on all present and future<br />
movable fixed assets relating to DTH project and pledge of shares by related parties.<br />
26.2 Bridge Loan of Rs. 604,780,715 (Rs. Nil) is secured by hypothecation of all movables including movable machinery, machinery<br />
spares, tools and accessories, book debts etc., present and future, and corporate guarantee of related party and pledge of<br />
certain shares held by the promoters in the Company. The bridge loan is against a term loan of Rs. 75 crores is repayable on<br />
October 1, 20<strong>07</strong>.<br />
26.3 Term Loan of Rs. 750,000,000 (Rs. Nil) is secured by hypothecation by way of first pari passu charge on all the current assets<br />
including goods, stocks and all other such articles and book debts, receivables, investments, present and future, corporate<br />
guarantee of related party. The loan is repayable within twelve months.<br />
26.4 Vehicle Loan is secured against hypothecation of vehicles (ROC charge not registered) (amount repayable within a year<br />
Rs. 3,514,731)<br />
26.5 Unsecured Loans from banks are backed by corporate guarantee provided by a related party and is short-term loan.<br />
27. TAXES ON INCOME<br />
27.1 In view of loss incurred by the Company no provision for current tax is made.<br />
27.2 In accordance with the Accounting Standards-22 on "Accounting for Taxes on Income" issued by The Institute of Chartered<br />
Accountants of India, deferred tax assets and liability should be recognised for all timing difference in accordance with the said<br />
standard. However, considering the present financial position and requirements of the accounting standard regarding certainty/<br />
virtual certainty, the same is not provided for. The same will be reassessed at a subsequent Balance Sheet date and will be<br />
accounted for in the year of certainty/virtual certainty in accordance with the aforesaid accounting standard.<br />
28. INVESTMENTS<br />
Investments in subsidiaries are carried at cost as the projects undertaken by such companies are under implementation and also<br />
keeping in view long-term involvement and relationship with these companies.
NOTES TO FINANCIAL STATEMENTS<br />
29. CAPITAL WORK IN PROGRESS<br />
29.1 Capital work in progress includes equipments valuing Rs. 763,289,475 (Rs. 287,187,769) which includes Customer Premises<br />
Equipments valuing Rs. 719,824,813 (Rs. 287,187,769) provided on lease to customers to provide services of the Company.<br />
29.2 Includes goods in transit of Rs. 361,460,373 (Rs. 249,336,354).<br />
29.3 Includes capital advances of Rs. 1,655,842 (Rs. Nil).<br />
30. OTHER DISCLOSURES<br />
30.1 Previous year figures have been regrouped, rearranged and recasted wherever considered necessary. Figures in brackets<br />
pertain to previous year. The current year figures are not comparable with previous years figures as current year figures<br />
includes transfer of undertakings pursuant to Scheme of Arrangement (Refer Note 24) and business acquired (Refer Note 25).<br />
30.2 Exceptional item during the previous year represents provision for doubtful advance Rs. 1,203,430,395 relating to multi mission<br />
satellite system project acquired during the year 2001. The approval of Reserve Bank of India is yet to be applied.<br />
30.3 Sharing of Expenses: The expenses under various heads are net of expenses shared with subsidiaries and other related parties<br />
as per arrangement.<br />
30.4 Small Scale Industry Undertakings:<br />
The total amount due to small-scale industry undertakings as at March 31, 20<strong>07</strong> is Rs. 89,920,401. The amount outstanding for<br />
more than 30 days as at March 31, 20<strong>07</strong> Rs. 55,955,240 is payable to Niyogi Offset Private Limited, Samrat Offset Private<br />
Limited, The Atlas Electric Industries Private Limited, Speedway Industries Private Limited, K.M. Tolling, Atul Engineers. The<br />
above information regarding small scale undertakings have been determined to the extent such parties have been identified on<br />
the basis of information available with the Company.<br />
30.5 Prior period adjustments (Net) comprises of :-<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
A. Income<br />
Teleport Services – 2,741,864<br />
Lease Rentals (222,033) –<br />
Total Income (222,033) 2,741,864<br />
B. Expenses<br />
Uplink Charges – 2,397,788<br />
Electricity Charges 2,731 –<br />
Communication Expenses 1,200,256 20,724<br />
Professional Fees 90,000 –<br />
Miscellaneous Expenses 49,175 –<br />
Sales Promotion 2,557,246 –<br />
Advertisement Expenses 89,456 –<br />
Commission 1,223,221 –<br />
License Fees 7,935 –<br />
Travelling and Conveyance 41,952 31,200<br />
Total Expenses 5,261,972 2,449,712<br />
Net Income/(Loss) (5,484,005) 292,152<br />
30.6 Loans and Advances<br />
Advances against share application money includes Rs. 334,170,285 (Rs. 327,533,966) given to wholly owned Subsidiary<br />
Company which is considered good as the project undertaken by the Subsidiary is under implementation and also in view of<br />
long-term involvement and relationship with the Subsidiary.<br />
30.7 Creditors for Expenses and Other Liabilities<br />
30.7.1 Includes Rs. 676,446,144 (Rs. Nil) due to Subsidiary Companies.<br />
47
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
30.7.2 Includes Rs. 350,999,096 due to Zee Entertainment Enterprises Ltd. on account of transaction between the appointed date and<br />
effective date pursuant to the Scheme of Arrangement (Refer Note 24).<br />
30.8 Loans and advances given include Rs. 899,656,036 (previous years Rs. Nil) recoverable from a private limited company in<br />
which director of the Company is a director or a member.<br />
30.9 As per the advice received and in term of DTH License agreement the Company has provided license fees on its gross revenue<br />
from DTH subscribers.<br />
30.10 Remuneration to the Directors<br />
30.10.1 No commission is paid/payable to any director and hence the computation of profits under Section 198/349 of the<br />
Companies Act, 1956 is not required.<br />
30.10.2 Remuneration paid or provided in accordance with Section 198 of the Companies Act, 1956 to the Managing Director<br />
included in personnel cost and relevant expenses head is as given below. Remuneration paid to the Managing Director<br />
exceeds the minimum remuneration payable in case of inadequacy of the Profits. Hence, the Company has applied to<br />
the Central Government for approval of the excess remuneration paid and approval is awaited.<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Managing Director<br />
Salary and Allowances 1,225,613 –<br />
Contribution to Provident Fund 68,129 –<br />
TOTAL 1,293,742<br />
Note: Salary and allowances includes basic salary, house rent allowance and leave travel allowance but excluding leave<br />
encashment and gratuity.<br />
30.11 Remuneration to Auditors:<br />
(Included in Legal & Professional Expenses)<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Statutory Audit Fees 800,000 270,000<br />
Tax Audit Fees 150,000 30,000<br />
Certification and Tax Representation 798,509 50,000<br />
30.12 Retirement Benefits to the Employees<br />
30.12.1 Effective April 1, <strong>2006</strong> the Company adopted the revised Accounting Standard on Employees Benefit. Pursuant to the<br />
adoption, the transitional obligation of the Company Rs. 2,239,861 has been recorded with the transfer of the<br />
obligation amount to balance of General Reserve Account as required by the Standard.<br />
The present value of defined benefit obligation and the related current service cost are measured using the projected<br />
unit credit method with actuarial valuation being carried at each Balance Sheet date. The defined benefit obligations<br />
are not funded.<br />
30.12.2 The reconciliation of opening and closing balances of the present value of the defined obligation as at March 31,<br />
20<strong>07</strong>: (Currency: Indian Rupees)<br />
Particulars Gratuity Benefits Leave Encashment Benefits<br />
Obligation at the year beginning 2,534,324 2,747,2<strong>07</strong><br />
Service Cost 1,881,<strong>07</strong>5 2,264,690<br />
Interest Cost 202,746 219,777<br />
Actuarial (Gain)/Loss 1,032,258 797,815<br />
Benefit Paid (33,228) (1,572,824)<br />
Obligation at the year end 5,617,175 4,456,665<br />
48
NOTES TO FINANCIAL STATEMENTS<br />
30.12.3 Cost for the year : (Currency: Indian Rupees)<br />
Particulars Gratuity Benefits Leave Encashment Benefits<br />
Service Cost 1,881,<strong>07</strong>5 2,264,690<br />
Interest Cost 202,746 219,777<br />
Net Actuarial (Gain)/Loss 1,032,258 797,815<br />
Net Cost 3,116,<strong>07</strong>9 3,282,282<br />
30.12.4 Assumptions used :<br />
Particulars Gratuity Benefits Leave Encashment Benefits<br />
Discount Rate 8% 8%<br />
Salary Escalation Rate 8% 8%<br />
30.12.5 The Company has provided gratuity liability on the basis of actuarial valuation at the end of the period and has<br />
decided to discontinue the payment of contribution to gratuity fund scheme namely Group Insurance Scheme of Life<br />
Insurance Corporation of India subscribed till March 31, <strong>2006</strong>.<br />
30.13 As at Balance Sheet date, the Company has foreign currency able USD 5,118,551, and receivable USD 375,000 which are not<br />
hedged by a derivative instrument or otherwise.<br />
30.14 Debit and Credit balances of parties including subscribers and dealers' balances are subject to confirmation/reconciliation and<br />
effect if any, will be considered on its determination.<br />
31. CAPITAL COMMITMENT<br />
Estimated amount of contract remaining to be executed on capital account and not provided for (Net of advance) is Rs. 3<strong>07</strong>,722,738<br />
(previous year Rs. 175,486,466).<br />
32. CONTINGENT LIABILITY NOT PROVIDED FOR<br />
32.1 (Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Claim against Company not acknowledged as Debts – –<br />
Guarantees given by Banks on our behalf 400,105,000 400,000,000<br />
Corporate Guarantees given on behalf of other Companies 24,000,000 4,000,000<br />
Corporate Guarantees provided by others on behalf of Company 2,224,030,715 400,000,000<br />
Legal Cases filed against the Company Unascertained Unascertained<br />
32.2 The Entertainment Tax Authorities, Noida has raised a demand of Rs. 40,459,628 for the period from November 3, to February 4. The<br />
Company has filed petition against the demand, which is pending. Further the authorities have intimated a total demand of<br />
Rs. 92,019,941 till March, 20<strong>07</strong>.<br />
33. OPERATING LEASE<br />
33.1 In respect of assets taken on operating lease:<br />
The Company's significant leasing arrangements are in respect of operating leases taken for offices, residential premises,<br />
transponder etc. These leases are cancellable operating lease agreements that are renewable on a periodic basis at the option of<br />
both the lessee and the lessor. The initial tenure of the lease generally is for 11 months to 120 months. The details of assets taken<br />
on operating lease during the period are as under:<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Lease Rental Charges for the period (net of shared cost) 403,424,137 368,806,561<br />
Future Lease Rental obligation payable (under non-cancellable lease)<br />
Not later than one year 141,119,343 352,676,466<br />
Later than one year but not later than five years 7,059,771 146,948,527<br />
More than five years – –<br />
49
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
33.2 In respect of assets given under operating lease:<br />
The Company has leased out assets by way of operating lease and as on March 31, 20<strong>07</strong>, the gross book value of such assets,<br />
its accumulated depreciation and depreciation for the year is as given below. The total lease income for the year is<br />
Rs. 273,155,252 (Previous year Rs. 3,509,874)<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Gross Value of the Assets 4,721,923,650 495,651,130<br />
Accumulated Depreciation 460,001,940 13,911,015<br />
Depreciation for the year 446,090,925 11,945,934<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Future Lease Rental Receivable (under non-cancellable lease)<br />
Not later than one year 45,560,0471 23,112,150<br />
Later than one year but not later than five years 1,447,565,341 438,254,470<br />
More than five years – –<br />
34. RELATED PARTY DISCLOSURES<br />
34.1 List of parties where control exists:<br />
● Agrani Satellite Services Limited. (Wholly Owned Subsidiary)<br />
● Agrani Convergence Limited. (Extent of holding reduced from 100 % to 51% on March 31, <strong>2006</strong>)<br />
● Agrani Wireless Services Limited. (Till March 31, <strong>2006</strong>)<br />
● Agrani Satellite Communication Enterprises (Gibraltar) Limited. (Till March 31, <strong>2006</strong>.)<br />
● Integrated Subscribers Management Services Ltd. (Wholly Owned Subsidiary from April 1, <strong>2006</strong>)<br />
34.2 Other Related with whom transactions have taken place during the year and balances outstanding as on last date of the year:-<br />
Smart Talk Private Limited, Essel Corporate Services Private Limited, Essel Agro Private Ltd., Cyquator Technologies Limited, Zee<br />
Telefilms Limited (now known as Zee Entertainment Enterprises Limited), Pan India Network Infravest Private Limited, Pan India<br />
Paryatan Limited, Ayepee Lamitubes Limited, Procall Private Limited, Suncity Projects Limited, Afro-Asian Satellite Communication<br />
(Gibraltar) Limited, Afro-Asian Satellite Communication (U.K.) Limited, ASC Telecommunication Limited, Asia Today Limited, Asia<br />
<strong>TV</strong> Limited, Zee News Limited, Brio Academic, Zee Foundation, Rupee Finance and Management Pvt. Ltd., Intrex India Limited,<br />
Wire and Wireless India Limited, Dakshin Media Gaming Solutions Private Limited, Rama Associates, Zee Turner Limited, Zee<br />
Interactive Learning Systems Limited, Kenlott Gaming Solutions Private Limited, Zee Akash News Private Limited, E City<br />
Entertainment Private Limited, Zee Sports Limited, Bhilwara Telenet Services Private Limited, Quick Call Private Limited,<br />
Mr. Jawahar Goel, ETC Networks Limited, Diligent Media Corporation Limited, Indian Cable Net Limited.<br />
Directors/Key Management Personnel<br />
Mr. Subhash Chandra,<br />
Mr. Jawahar Lal Goel, Mr. Ashok Kurien, Mr. B. D. Narang and Mr. Arun Duggal (appointed w.e.f. January 6, 20<strong>07</strong>),<br />
Mr. Laxmi Narain Goel, Mr. Punit Goenka, Mr. Rajagopalan Chandrashekhar and Mr. Ashok Goel (upto January 6, 20<strong>07</strong>).<br />
34.3 Transaction with related parties:<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Total Amount Amounts for Total Amount Amounts for<br />
(Rs.) Major Parties (Rs.) Major Parties<br />
(i)<br />
With Subsidiaries Companies<br />
Purchase of Goods & Services– 274,733,182 –<br />
Integrated Subscriber Management Services<br />
Limited 274,733,182 –<br />
Loan, Advance and Deposit Given<br />
(including Share Application Money) 6,636,319 132,540,130<br />
50
NOTES TO FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Total Amount Amounts for Total Amount Amounts for<br />
(Rs.) Major Parties (Rs.) Major Parties<br />
(ii)<br />
Agrani Satellite Services Limited 6,636,319 28,831,432<br />
Agrani Convergence Limited – 60,833,463<br />
Agrani Wireless Service Limited – 42,875,235<br />
Purchase of Fixed Assets – 2,382,013<br />
Agrani Convergence Limited – 2,382,013<br />
Refund Received against Loan, Advance and<br />
Deposit Given – 177,052,549<br />
Agrani Satellite Services Limited – 35,616,893<br />
Agrani Convergence Limited – 71,505,431<br />
Agrani Wireless Service Limited – 69,930,225<br />
Diminution in the value of Investment 124,705,440 –<br />
Agrani Convergence Limited 124,705,440 –<br />
With Other Related Parties:<br />
Sales, Services & Recoveries (Net of Taxes) 467,598,932 118,872,701<br />
Zee Entertainment Enterprises Limited 178,322,015 8,355,222<br />
Zee News Limited 71,144,836 4,645,020<br />
Asia Today Limited 34,896,965 17,752,9<strong>07</strong><br />
Asia <strong>TV</strong> Limited 24,804,575 17,225,482<br />
Zee Turner Limited 73,840,149 –<br />
Essel Agro Private Limited – 59,144,<strong>07</strong>0<br />
Others 84,590,392 11,750,000<br />
Purchase of Goods & Services 987,774,125 514,003,882<br />
Zee Turner Limited 802,522,247 93,723,409<br />
Zee Entertainment Enterprises Limited 67,452,464 36,080,254<br />
Intrex India Limited 25,566,444 3,228,896<br />
New Era Entertainment Network Limited – 371,486,868<br />
Essel Agro Private Limited 71,025,412 780,768<br />
Others 21,2<strong>07</strong>,558 8,703,687<br />
Rent Paid 4,899,943 864,000<br />
Zee Entertainment Enterprises Limited 3,662,364 864,000<br />
E City Entertainment (I) Private Limited 1,237,579 –<br />
Interest Paid 52,012,364 6,741,009<br />
Zee Entertainment Enterprises Limited 49,624,805 6,741,009<br />
Others 2,387,559 –<br />
Donation 2,500,000 –<br />
Zee Foundation 2,500,000 –<br />
Interest Received 52,818,343 381,098<br />
Essel Agro Private Limited 46,017,716 381,098<br />
ASC Telecommunication Limited 6,800,627 –<br />
Purchase of Fixed Assets 728,933,910 694,317,792<br />
Zee Entertainment Enterprises Limited 725,646,020 693,033,682<br />
Others 3,287,890 1,284,110<br />
51
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
52<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Total Amount Amounts for Total Amount Amounts for<br />
(Rs.) Major Parties (Rs.) Major Parties<br />
Sale of Investments – 202,216,663<br />
Essel Agro Private Limited – 202,216,663<br />
Loan, Advance and Deposit Taken 641,624,604 95,401,850<br />
Zee Entertainment Enterprises Limited 326,324,604 3,111,250<br />
Essel Agro Private Limited – 83,000,000<br />
Wire & Wireless India Limited 105,300,000 –<br />
Rupee Finance & Management Pvt. Ltd. 210,000,000 –<br />
Others – 9,290,600<br />
Repayment of Loan, Advance and<br />
Deposit Taken 290,300,000 2,100,000<br />
Essel Agro Private Limited 25,000,000 –<br />
Wire & Wireless India Limited 105,300,000 –<br />
Kenlott Gaming Solutions Private Limited – 2,100,000<br />
Rupee Finance & Management Pvt. Ltd. 160,000,000 –<br />
Share Application Money Received – 740,000,000<br />
New Era Entertainment Network Limited – 690,000,000<br />
Integrated Subscriber Management<br />
Services Limited – 50,000,000<br />
Loan, Advance and Deposit Given 417,337,314 961,206,276<br />
Essel Agro Private Limited 313,645,898 843,461,600<br />
ASC Telecommunication Limited 94,100,000 58,459,147<br />
Others 9,591,416 59,285,529<br />
Refund Received against Loan, Advance and<br />
Deposit Given 247,393,494 710,061,803<br />
ASC Telecommunication Limited 15,511,319 –<br />
Essel Agro Private Limited 231,282,175 –<br />
Jay Properties Private Limited – 5<strong>07</strong>,323,000<br />
Ganjam Trading Co. Private Limited – 98,241,988<br />
Others 600,000 104,496,815<br />
Corporate Guarantees Given 24,000,000 4,000,000<br />
Procall Private Limited 20,000,000 –<br />
Quick Call Private Limited 1,500,000 1,500,000<br />
Smart Talk Private Limited 1,500,000 1,500,000<br />
Bhilwara Telenet Services Limited 1,000,000 1,000,000<br />
Corporate Guarantees Received 2,224,030,715 400,000,000<br />
Zee Entertainment Enterprises Limited 2,224,030,715 400,000,000<br />
Provision for Doubtful Advances 8,030,768 1,208,430,395<br />
Afro-Asian Satellite Comm. (UK) Limited – 376,881,821<br />
Afro-Asian Satellite Comm. (Gib.) Limited – 827,708,050<br />
Agrani Satellite Comm. (Gib.) Limited – 3,840,524<br />
Brio Academic 7,950,000 –<br />
Others 80,768 –
NOTES TO FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Total Amount Amounts for Total Amount Amounts for<br />
(Rs.) Major Parties (Rs.) Major Parties<br />
Assets & Liabilities Received Pursuant to<br />
Scheme of Arrangement<br />
DCS undertaking of Zee Entertainment<br />
Enterprises Limited 1,385,6<strong>07</strong>,857 –<br />
Total Assets 1,711,952,382 –<br />
Total Liabilities 326,344,525 –<br />
Siti Cable Network Limited (424,583,815) –<br />
Total Assets 1,011,848,726 –<br />
Total Liabilities 1,436,432,541 –<br />
New Era Entertainment Network Limited 9,819,574 –<br />
Total Assets 1,141,414,519 –<br />
Total Liabilities 1,131,594,945 –<br />
Assets & Liabilities Received pursuant to<br />
Slump Sale<br />
Essel Agro Private Limited (451,177,637) –<br />
Total Assets 1,524,900,220 –<br />
Total Liabilities 1,975,577,857 –<br />
Purchase Consideration 500,000 –<br />
Key Management Personnel 1,014,833<br />
Jawahar Lal Goel 1,014,833<br />
Balance at the end of period:<br />
With Subsidiaries Companies:<br />
Investment 1,069,215,480 1,068,715,480<br />
Agrani Satellite Services Limited 944,010,040 944,010,040<br />
Agrani Convergence Limited 124,705,440 124,705,440<br />
Integrated Subscriber Management<br />
Services Limited 500,000 –<br />
Loan, Deposit and Advances Given 334,170,284 327,533,966<br />
Agrani Satellite Services Limited 334,170,284 327,533,966<br />
Creditors for Expenses and Other Liabilities 676,606,366 –<br />
Integrated Subscriber Management<br />
Services Limited 675,354,672 –<br />
Agrani Convergence Limited 1,251,694 –<br />
With Other Related Parties:<br />
Loan, Deposit and Advances Given 2,394,155,181 2,018,802,263<br />
Afro-Asian Satellite Comm. (UK) Limited 376,881,821 376,881,821<br />
Afro-Asian Satellite Comm. (Gib.) Limited 827,708,050 827,708,050<br />
Agrani Satellite Comm. (Gib.) Limited 3,840,524 3,840,524<br />
Intrex India Limited 133,128,344 –<br />
Essel Agro Private Limited 899,656,036 740,982,317<br />
ASC Telecommunication Limited 143,982,455 58,593,147<br />
Others 8,957,951 10,796,404<br />
53
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
(Currency: Indian Rupees)<br />
Total Amount Amounts for Total Amount Amounts for<br />
(Rs.) Major Parties (Rs.) Major Parties<br />
Loan, Deposit and Advances Taken 60,120,791 5,678,150<br />
Essel Agro Private Limited – –<br />
Suncity Project Limited 2,700,000 2,700,000<br />
Kenlott Gaming Solutions Private Limited 1,900,000 1,900,000<br />
Ayepee Lamitubes Limited 1,<strong>07</strong>8,150 1,<strong>07</strong>8,150<br />
Wire & Wireless India Limited 3,806,065 –<br />
Rupee Finance & Management Pvt. Ltd. 50,636,576 –<br />
Creditors 1,573,331,839 862,606,087<br />
Zee Entertainment Enterprises Limited 730,584,399 461,688,482<br />
Zee Turner Limited 800,633,181 –<br />
New Era Entertainment Network Limited – 267,053,242<br />
Integrated Subscriber Management<br />
Services Limited – 116,444,346<br />
Others 42,114,259 17,420,017<br />
Debtors 364,5<strong>07</strong>,920 52,965,529<br />
Asia Today Limited 23,772,474 17,857,613<br />
Asia <strong>TV</strong> Limited 16,473,374 17,225,482<br />
Essel Agro Private Limited – 9,149,304<br />
New Era Entertainment Network Limited – 8,553,650<br />
Zee News Limited 46,881,562 –<br />
Zee Entertainment Enterprises Limited 193,321,888 –<br />
Others 84,058,622 179,480<br />
Corporate Guarantees Given 24,000,000 4,000,000<br />
Procall Private Limited 20,000,000 –<br />
Quick Call Private Limited 1,500,000 1,500,000<br />
Smart Talk Private Limited 1,500,000 1,500,000<br />
Bhilwara Telenet Services Limited 1,000,000 1,000,000<br />
Corporate Guarantee Received 2,224,030,715 400,000,000<br />
Zee Entertainment Enterprises Limited 2,224,030,715 400,000,000<br />
NOTES<br />
1) Major parties notes who account for more than 10% or more of the aggregate for that category of transactions.<br />
2) Details of Managerial Remuneration is disclosed in Note 30.10.<br />
35. ADDITIONAL INFORMATION PURSUANT TO PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956:<br />
35.1 The Company is in the business of providing services, which is not subject to any license; hence licensed capacity is not given.<br />
Further, the nature of business is such that the installed capacity is not quantifiable.<br />
54
NOTES TO FINANCIAL STATEMENTS<br />
35.2 The details of Opening Stock, Purchases, Sales and Closing Stock of goods traded are as under:<br />
Quantitative Details 20<strong>07</strong> <strong>2006</strong><br />
(Currency: Indian Rupees)<br />
Particulars Unit Qty. Amount Qty. Amount<br />
Opening Stock – – – –<br />
Cable Metre 144 948 – –<br />
<strong>Dish</strong>/Connectors/Switches No. 168 30,845 – –<br />
DVR No. 485 4,659,166 – –<br />
LNB No. 6 3,930 – –<br />
Total 4,694,889<br />
Purchases<br />
Cable Metre 142,416 1,019,023 1,499,238 7,545,012<br />
<strong>Dish</strong>/Connectors/Switches No. 210 64,237 552 43,044<br />
DVR No. – – 500 4,812,693<br />
LNB No. 763 352,324 48,513 5,802,980<br />
Set Top Boxes No. 657 1,198,231 20,001 42,921,318<br />
Spare Parts – 9,449,926 – –<br />
Total 12,083,741 61,125,047<br />
Sales and Services<br />
Cable Metre 134,948 1,167,770 1,499,094 7,715,751<br />
<strong>Dish</strong>/Connectors/Switches* No. 265 69,753 384 15,232<br />
DVR No. 97 1,125,208 15 89,600<br />
LNB No. 656 477,827 48,5<strong>07</strong> 5,916,127<br />
Set Top Boxes No. 557 1,249,781 20,001 43,678,780<br />
Spare Parts 2,854,305 – –<br />
Total 6,944,644 57,415,490<br />
Closing Stock<br />
Cable Metre 7,612 61,452 144 948<br />
<strong>Dish</strong>/Connectors/Switches No. 113 48,924 168 30,845<br />
DVR No. 388 3,727,332 485 4,659,166<br />
LNB No. 113 38,513 6 3,930<br />
Set Top Boxes No. 100 178,254 – –<br />
Spare Parts – 7,316,214 – –<br />
Total 11,370,689 4,694,889<br />
*Includes transfer to Capital<br />
Work in Progress No. 162 29,044 – –<br />
35.3 Other Information :<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
A. CIF Value of Imports<br />
Capital Equipments 1,971,063,330 112,964,065<br />
Trading Goods 7,352,731 61,052,480<br />
B. Expenses in Foreign Currency<br />
Content Fees 20,510,319 8,634,445<br />
Transponder Teleport Charges 33,041,250 31,717,309<br />
55
GROUP<br />
NOTES TO FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Unlinking Charges 2,040,500 9,759,397<br />
Business Promotion 48,846 –<br />
Travelling Expenses 846,603 235,594<br />
C. Income in Foreign Exchange<br />
Teleport Services 45,543,340 37,720,253<br />
Down Linking Charges – 213,816<br />
36. EARNING PER SHARE (EPS) (Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong> <strong>2006</strong><br />
Profit/(Loss) After Tax but Before Exceptional Items (2,518,815,400) (874,895,422)<br />
Profit/(Loss) After Tax and Exceptional Items (2,518,815,400) (2,<strong>07</strong>8,325,817)<br />
Weighted average number of Equity Shares of Rs. 10 each (Nos.)* 42,822,280 71,568,765<br />
Basic and diluted earning per share before exceptional items (58.82) (12.22)<br />
Basic and diluted earning per share after exceptional items (58.82) (29.04)<br />
Weighted average number of Equity Shares of Re. 1 each (Nos.)* 428,222,803 715,687,650<br />
Basic and diluted earning per share before exceptional items (5.88) (1.22)<br />
Basic and diluted earning per share after exceptional items (5.88) (2.90)<br />
* Weighted average number of equity shares for the current year includes equity shares to be allotted on record date pursuant to the<br />
Scheme. (Refer Note No. 24)<br />
37. SEGMENT INFORMATION AS PER AS-17<br />
ASC follows AS-17 "Segmental <strong>Report</strong>ing" relating to the reporting of financial and descriptive information about their operating segments<br />
in financial statements.<br />
ASC's reportable operating segments have been determined in accordance with the internal management structure, which is organised<br />
based on the operating business segments as described below. The geographical segment is not relevant as exports are insignificant.<br />
Direct to Home Services (DTH) - Uplink of satellite television signals to be received by the customer directly in the home. This segment<br />
derives revenue by way of Subscription, Lease Rentals, Placement & Active Services and Other Incomes.<br />
Trading - Trading in electronics and other equipments.<br />
Teleport Services - Facility for uplink signals.<br />
(a) Business Segment (Year ended March 31, 20<strong>07</strong>)<br />
(Currency: Indian Rupees)<br />
Description DTH Trading Teleport Services Unallocated Total<br />
Segment Revenue<br />
External Sales 1,797,569,<strong>07</strong>1 6,915,600 104,888,339 – 1,909,373,010<br />
Inter-Segment Sales – – – – –<br />
Total Revenue 1,797,569,<strong>07</strong>1 6,915,600 104,888,339 – 1,909,373,010<br />
Segment Results (2,415,959,827) 1,5<strong>07</strong>,659 (10,782,583) – (2,425,234,751)<br />
Operating Profit/(Loss)<br />
Before Interest & Tax (2,415,959,827) 1,5<strong>07</strong>,659 (10,782,583) – (2,425,234,751)<br />
Interest Expenses – – – – 143,055,706<br />
Interest Income – – – – 57,467,387<br />
Profit/(Loss) Before Tax – – – – (2,510,823,<strong>07</strong>0)<br />
56
NOTES TO FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Description DTH Trading Teleport Services Unallocated Total<br />
Exceptional Items – – – – –<br />
Current Taxes - FBT/Wealth Tax – – – – 2,508,323<br />
Prior Period Adjustments<br />
(Net) - Income/(Loss) – – – – (5,484,005)<br />
Profit /(Loss) After Tax – – – – (2,518,815,400)<br />
(b) Other Segment Information<br />
Segment Assets 7,505,926,160 11,370,689 293,040,051 2,141,847,676 9,952,184,576<br />
Segment Liabilities 10,321,989,892 – 24,930,482 – 10,346,920,374<br />
Capital Expenditure* 5,892,956,755 – 212,062,837 – 6,105,019,592<br />
Depreciation/Amortisation 539,906,<strong>07</strong>4 – 35,377,603 – 575,283,677<br />
Non Cash Expenditure other<br />
than Depreciation/Amortisation 50,980,223 – – 132,655,440 183,635,663<br />
*Capital Expenditure includes assets received pursuant to the Scheme of Arrangement.<br />
(a) Business Segment (Year ended March 31, <strong>2006</strong>)<br />
(Currency: Indian Rupees)<br />
Description DTH Trading Teleport Services Unallocated Total<br />
Segment Revenue<br />
External Sales 2<strong>07</strong>,942,152 57,415,490 49,268,188 – 314,625,830<br />
Inter-Segment Sales – – – – –<br />
Total Revenue 2<strong>07</strong>,942,152 57,415,490 49,268,188 – 314,625,830<br />
Segment Results (869,039,788) 985,332 (2,837,758) – (871,476,518)<br />
Operating Profit/(Loss) before<br />
Interest and Tax (869,624,092) 985,332 (2,837,758) – (871,476,518)<br />
Interest Expenses – – – – (6,128,342)<br />
Interest Income – – – – 2,746,053<br />
Profit/(Loss) Before Tax – – – – (874,858,8<strong>07</strong>)<br />
Exceptional Items – – – – (1,203,430,395)<br />
Current Taxes –<br />
FBT/Wealth Tax – – – – 328,767<br />
Prior Period Adjustments<br />
(Net) - Income/(Loss) – – – – 292,152<br />
Profit/(Loss) After Tax – – – – (2,<strong>07</strong>8,325,817)<br />
(b) Other Segment Information<br />
(Currency: Indian Rupees)<br />
Segment Assets 2,088,176,260 4,694,889 95,293,196 1,630,648,341 3,818,812,686<br />
Segment Liabilities 1,899,478,578 – 3,994,381 – 1,903,472,959<br />
Capital Expenditure 1,025,030,372 – – – 1,025,030,372<br />
Depreciation/Amortisation 25,130,010 – 3,215,289 – 28,345,299<br />
Non Cash Expenditure other<br />
than Depreciation/Amortisation 196,886 – – 1,208,430,395 1,208,627,281<br />
As per our attached report of even date<br />
For and on behalf of the Board<br />
Jawahar Lal Goel B. D. Narang<br />
L. K. Shrishrimal Managing Director Director<br />
M. No. 72664<br />
Partner Rajeev K. Dalmia Jagdish Patra<br />
For and on behalf of Chief Financial Officer Company Secretary<br />
MGB & Co.<br />
Chartered Accountants<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
57
GROUP<br />
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE<br />
I. REGISTRATION DETAILS<br />
Registration No.<br />
Balance Sheet Date<br />
(Rs. in ’000)<br />
1 0 1 8 3 6 State Code<br />
5 5<br />
3 1 0 3 2 0 0 7<br />
II.<br />
CAPITAL RAISED DURING THE YEAR<br />
Public Issue<br />
Bonus Issue<br />
N I L Rights Issue<br />
N I L<br />
N I L Private Placement<br />
N I L<br />
III.<br />
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS<br />
Total Liabilities<br />
SOURCES OF FUNDS<br />
3 8 7 5 0 9 0<br />
Total Assets<br />
3 8 7 5 0 9 0<br />
Paid-up Capital<br />
4 2 8 2 2 2<br />
Reserves and Surplus<br />
1 6 9 5 8 5 6<br />
Secured Loans<br />
1 4 4 4 6 9 6<br />
Unsecured Loans<br />
3 0 6 3 1 4<br />
Deferred Tax Liability<br />
N I L<br />
APPLICATION OF FUNDS<br />
Net Fixed Assets<br />
6 6 2 2 9 3 7<br />
Investments<br />
9 4 4 5 1 0<br />
Net Current Assets (–)<br />
6 2 1 1 1 7 1<br />
Miscellaneous<br />
Expenditure<br />
N I L<br />
Accumulated Loss<br />
2 5 1 8 8 1 5<br />
IV.<br />
PERFORMANCE OF THE COMPANY<br />
Turnover<br />
1 9 4 3 3 4 8<br />
Total Expenditure<br />
4 4 5 4 1 7 1<br />
+/– Profit/(Loss) Before Tax (–) 2 5 1 0 8 2 3 +/– Profit/(Loss) After Tax (–)<br />
2 5 1 3 3 3 1<br />
Earnings Per Share (Rs.) - 5 . 8 8 Dividend Rate (%)<br />
N I L<br />
V. GENERIC NAMES OF PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY (as per monetary terms)<br />
Item Code No. (ITC Code)<br />
N A<br />
Product Description<br />
DTH Services, Trading & Transponder Teleport Activity<br />
For and on behalf of the Board<br />
Jawahar Lal Goel B. D. Narang<br />
Managing Director Director<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
58<br />
Rajeev K. Dalmia Jagdish Patra<br />
Chief Financial Officer Company Secretary
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
A. CASH FLOW FROM OPERATING ACTIVITIES<br />
Net Profit/(Loss) before taxation but after exceptional items (2,510,823,<strong>07</strong>1) (2,<strong>07</strong>8,289,202)<br />
Adjustments for :<br />
Depreciation /Amortisation 575,283,677 28,345,299<br />
Provision for Doubtful Debts & Advances 57,694,388 –<br />
Provision for Diminution in the value of Investment 124,705,440 –<br />
(Profit)/Loss on sale of fixed assets 1,235,835 196,886<br />
Exchange Adjustments ( Net) (3,208,281) –<br />
Exceptional Items – 1,203,430,395<br />
Interest expenses 143,055,7<strong>07</strong> 6,128,342<br />
Interest Income (57,467,387) (2,746,053)<br />
Prior Period Adjustment (Net) (5,484,005) 292,152<br />
Operating Profit/(Loss) before working capital changes (1,675,0<strong>07</strong>,696) (842,642,181)<br />
Adjustments for :<br />
(Increase)/Decrease in trade and other receivables (658,738,845) (355,161,538)<br />
Increase/(Decrease) in trade and other payables 4,165,910,428 954,476,532<br />
Cash Generated from Operations 1,832,163,887 (243,327,187)<br />
Direct Taxes Paid (Net) 7,169,519 398,400<br />
Net Cash Flow from Operating Activities 1,824,994,368 (243,725,587)<br />
B. CASH FLOW FROM INVESTING ACTIVITIES<br />
Purchases of Fixed Assets/CWIP (3,372,577,476) (1,025,030,372)<br />
Proceeds from sale of Fixed Assets 429,526 2,266,667<br />
Refund of Advances – 20,000,000<br />
Security Received against Capital goods 50,559,749 340,796,160<br />
Loan repaid by Subsidiaries – 52,131,225<br />
Loan repaid by others 190,832,756 699,561,357<br />
Loan to others (201,600,000) (779,581,764)<br />
Share Application Money Refund Received 100,000,000 120,330,222<br />
Advance against Share Application Money Paid (70,000,000) (30,000,000)<br />
Advance against Share Application Money Paid to Subsidiaries (6,636,319) –<br />
Sale of Investments – 182,350,663<br />
Interest received 4,649,044 2,746,053<br />
Net Cash Flow from Investing Activities (3,304,342,720) (414,429,789)<br />
59
GROUP<br />
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong> <strong>2006</strong><br />
C. CASH FLOW FROM FINANCING ACTIVITIES<br />
Interest Paid (131,392,358) (6,663,734)<br />
Net Proceeds from Long Term Borrowing (4,001,774) 2,180,513<br />
Proceeds from Short Term Borrowing 1,915,435,851 56,992,160<br />
Repayment of Short Term Borrowing (260,000,000) –<br />
Repayment of Term Loan – (120,000,000)<br />
Unsecured Loans repaid to Others – (1,000,000)<br />
Unsecured Loans from Others – 1,900,000<br />
Advance Against Share Application – 740,000,000<br />
Net Cash Flow from Financing Activities 1,520,041,718 673,408,939<br />
Net Cash Flow during the year (A+B+C) 40,693,367 15,253,563<br />
Cash and Cash Equivalents received pursuant to the Scheme 13,261,777 –<br />
Cash and Cash Equivalents at the beginning of the year 59,361,576 44,108,014<br />
Cash and Cash Equivalents at the end of the year 113,316,720 59,361,576<br />
Cash and Cash Equivalents at the end of the year comprises of :<br />
Cash in hand 67,645 359,152<br />
Balances with Scheduled Banks in Current Accounts 59,861,543 17,442,471<br />
Balances with Scheduled Banks in Deposit Accounts (Pledge with Banks) 53,387,532 41,559,953<br />
Notes :<br />
1) Previous year's figures have been regrouped, rearranged and recasted wherever considered necessary. The current year figures are not<br />
comparable with previous years figures as current year figures includes transfer of undertakings pursuant to Scheme of Arrangement<br />
(Refer Note 24) and business acquired (Refer Note 25).<br />
2) Assets and Liabilities received pursuant to the Scheme (Refer Note 24) and business acquired (Refer Note 25) are not considered in<br />
above Cash Flow Statement being non cash transactions.<br />
As per our attached report of even date For and on behalf of the Board<br />
L. K. Shrishrimal Jawahar Lal Goel B. D. Narang<br />
Partner Managing Director Director<br />
M. No.72664<br />
For and on behalf of<br />
MGB & Co. Rajeev K. Dalmia Jagdish Patra<br />
Chartered Accountants Chief Financial Officer Company Secretary<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
60
AUDITORS' REPORT<br />
To<br />
The Board of Directors of <strong>Dish</strong> <strong>TV</strong> India Limited<br />
1. We have audited the attached Consolidated Balance Sheet of<br />
<strong>Dish</strong> <strong>TV</strong> India Limited ("the Company") and its subsidiaries ("the<br />
Group") as at March 31, 20<strong>07</strong>, the Consolidated Profit and Loss<br />
Account for the year then ended on that date, annexed thereto.<br />
These financial statements are the responsibility of the<br />
Company's management. Our responsibility is to express an<br />
opinion on these financial statements based on our audit.<br />
2. We conducted our audit in accordance with the auditing<br />
standards generally accepted in India. Those standards require<br />
that we plan and perform the audit to obtain reasonable assurance<br />
about whether the financial statements are free of material<br />
misstatement. An audit includes examining on a test basis,<br />
evidence supporting the amounts and disclosures in the financial<br />
statements. An audit also includes assessing the accounting<br />
principles used and significant estimates made by the<br />
management, as well as evaluating the overall financial<br />
statement presentation. We believe that our audit provide a<br />
reasonable basis for our opinion.<br />
3. The financial statements of the subsidiary with total assets (net)<br />
of Rs. 42,997,9<strong>07</strong> as at March 31, 20<strong>07</strong> and total revenues (net)<br />
of Rs. 7,102,431 for the year ended on that date have not been<br />
audited by us. The financial statements of the subsidiary has<br />
been audited by other auditor whose report has been furnished<br />
to us and our opinion in so far as it relates to the amounts<br />
included in respect of the subsidiary, is based solely on the<br />
report of the other auditor.<br />
4. We draw reference to<br />
a) Note 25 regarding the Scheme of Arrangement sanctioned<br />
by the High Court of Judicature at Bombay on January 12,<br />
20<strong>07</strong> and High Court of Judicature at New Delhi on<br />
December 18, <strong>2006</strong>, effect of which has been given in<br />
these financial statements, except allotment of equity<br />
shares and reorganisation of the share capital.<br />
b) Note 23 regarding preparation of these financial statements<br />
on going concern basis.<br />
5. a) The Company could not prepare the consolidated cash flow<br />
statement as the consolidated financial statements for the<br />
previous year are not available, being the first year of<br />
consolidation.<br />
b) Note 30.6 regarding managerial remuneration amounting<br />
to Rs. 1,293,742 paid to managing director pending approval<br />
of Central Government.<br />
6. We report that the Consolidated Financial Statements have been<br />
prepared by the Company in accordance with the requirements<br />
of the Accounting Standard (AS) 21 "Consolidated Financial<br />
Statements" issued by the Institute of Chartered Accountants of<br />
India and on the basis of the separate audited financial<br />
statements of the Company and its subsidiaries<br />
7. Based on our audit and on consideration of the reports of other<br />
auditors on separate financial statements of subsidiaries, in our<br />
opinion and to the best of our information and according to the<br />
explanations given to us, the attached Consolidated Financial<br />
Statements, subject to matters stated in (5) above, give a true<br />
and fair view in conformity with the accounting principles<br />
generally accepted in India:<br />
(a)<br />
(b)<br />
In the case of the Consolidated Balance Sheet, of the<br />
consolidated state of affairs of the Group as at March 31,<br />
20<strong>07</strong>;<br />
In the case of the Consolidated Profit and Loss Account, of<br />
the consolidated results of operations of the Group for the<br />
year ended on that date.<br />
L. K. Shrishrimal<br />
Membership No. 72664<br />
Partner<br />
For and behalf of<br />
MGB & Co.<br />
Chartered Accountants<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
61
GROUP<br />
CONSOLIDATED BALANCE SHEET AS AT MARCH 31,<br />
(Currency: Indian Rupees)<br />
Notes 20<strong>07</strong><br />
SOURCES OF FUNDS<br />
Shareholders' Funds<br />
Share Capital 2 428,222,803<br />
Reserves and Surplus 3 1,695,856,798<br />
2,124,<strong>07</strong>9,601<br />
Deferred Tax Liability (Refer Note 28.3) 6,857,971<br />
Loan Funds<br />
Secured Loans 4 1,444,967,354<br />
Unsecured Loans 5 485,097,726<br />
1,930,065,080<br />
TOTAL 4,061,002,652<br />
APPLICATION OF FUNDS<br />
Fixed Assets<br />
Gross Block 6 6,580,023,774<br />
Less : Depreciation/Amortisation upto date 742,888,739<br />
Net Block 5,837,135,035<br />
Captial Work-in-Progress 2,468,184,983<br />
8,305,320,018<br />
Investments 7 25,500<br />
Current Assets, Loans and Advances<br />
Inventories 8 11,762,339<br />
Sundry Debtors 9 418,392,509<br />
Cash and Bank Balances 10 127,772,394<br />
Loans and Advances 11 1,547,498,727<br />
2,105,425,969<br />
Less : Current Liabilities and Provisions 12<br />
Current Liabilities 9,010,061,302<br />
Provisions 12,509,690<br />
9,022,570,992<br />
NET CURRENT ASSETS (6,917,145,023)<br />
PROFIT AND LOSS ACCOUNT 2,672,802,157<br />
TOTAL 4,061,002,652<br />
The accompanying notes form an integral part of these financial statements<br />
As per our attached report of even date For and on behalf of the Board<br />
L. K. Shrishrimal<br />
Partner Jawahar Lal Goel B. D. Narang<br />
M.No. 72664 Managing Director Director<br />
For and on behalf of<br />
MGB & Co. Rajeev K. Dalmia Jagdish Patra<br />
Chartered Accountants Chief Financial Officer Company Secretary<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
62
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR<br />
ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
Notes 20<strong>07</strong><br />
INCOME<br />
Sales and Services 13 1,916,475,433<br />
Other Income 14 45,630,442<br />
1,962,105,875<br />
EXPENDITURE<br />
Cost of Goods Sold 15 5,4<strong>07</strong>,941<br />
Operating Costs 16 2,202,<strong>07</strong>2,958<br />
Personnel Cost 17 220,133,221<br />
Administrative and Other Expenses 18 293,496,708<br />
Selling and Distribution Expenses 19 895,467,669<br />
Financial Charges (Net) 20 117,869,722<br />
Depreciation/Amortisation 623,625,999<br />
4,358,<strong>07</strong>4,218<br />
Profit/(Loss) Before Tax (2,395,968,343)<br />
Provision for Taxation - Current Tax/Wealth Tax 57,856<br />
- Deferred Tax (2,903,037)<br />
- Fringe Benefit Tax 2,660,784<br />
Profit/(Loss) After Tax (2,395,783,946)<br />
Prior Period Adjustments (Net) - Income/(Loss) (Refer Note 30.2) (4,924,454)<br />
Profit/(Loss) for the Year (2,400,708,400)<br />
Balance Brought Forward (3,540,686,931)<br />
Less : Transfer to Restructuring Account ( Refer Note 25.3) 3,268,593,174<br />
(272,093,757)<br />
Balance Carried to Balance Sheet (2,672,802,157)<br />
Basic and Diluted Earnings Per Share (Rs.) (Refer Note 35)<br />
Calculated on face value of Re. 1 each (5.61)<br />
Calculated on face value of Rs. 10 each (56.06)<br />
The accompanying notes form an integral part of these financial statements<br />
As per our attached report of even date For and on behalf of the Board<br />
L. K. Shrishrimal<br />
Partner Jawahar Lal Goel B. D. Narang<br />
M.No. 72664 Managing Director Director<br />
For and on behalf of<br />
MGB & Co. Rajeev K. Dalmia Jagdish Patra<br />
Chartered Accountants Chief Financial Officer Company Secretary<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong><br />
63
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT<br />
MARCH 31,<br />
(Currency: Indian Rupees)<br />
2. SHARE CAPITAL (REFER NOTE 25)<br />
Authorised<br />
730,000,000 Equity Shares of Re.1 each 730,000,000<br />
730,000,000<br />
Issued, Subscribed and Paid-up<br />
715,687,650 Equity Shares of Re. 1 each <strong>full</strong>y paid-up 715,687,650<br />
Share Capital Suspense (287,464,847)<br />
TOTAL 428,222,803<br />
20<strong>07</strong><br />
3. RESERVES AND SURPLUS<br />
Securities Premium (Refer Note 25.3.3)<br />
As per last Balance Sheet 3,728,245,250<br />
Less: Transferred to Restructuring Account 3,728,245,250<br />
TOTAL –<br />
General Reserves :<br />
Transfer from Restructuring Account pursuant to the Scheme (Refer Note 25.3) 1,698,096,658<br />
Less: Adjustment pursuant to the transitional provision as per AS-15 2,239,860<br />
TOTAL 1,695,856,798<br />
TOTAL 1,695,856,798<br />
4. SECURED LOANS<br />
(For security and other details Refer Note 27)<br />
Term Loan from Bank 750,000,000<br />
Bridge Loan from Bank 604,780,715<br />
Cash Credit from Bank 75,725,609<br />
Vehicle Loan 7,454,180<br />
Interest accrued and due 7,006,850<br />
TOTAL 1,444,967,354<br />
5. UNSECURED LOANS<br />
From Banks ( Refer Note 27.5) 250,000,000<br />
From Others 234,019,576<br />
Interest accrued and due 1,<strong>07</strong>8,150<br />
TOTAL 485,097,726<br />
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT<br />
MARCH 31,<br />
6. FIXED ASSETS<br />
(Currency: Indian Rupees)<br />
Particulars GROSS BLOCK DEPRECIATION/AMORTISATION NET BLOCK<br />
Addition During The Year<br />
Depreciation During the Year<br />
As at Additions * Transfer Acquired Sale/ As at As at For The Year Transfer Acquired Sale/ As at As at<br />
31.03.<strong>2006</strong> Pursuant to Under Adjustment 31.03.<strong>07</strong> 31.03.<strong>2006</strong> Pursuant to Under Adjustment 31.03.20<strong>07</strong> 31.03.20<strong>07</strong><br />
Scheme** Slump Sale*** Scheme* Slump Sale<br />
Intangible Assets<br />
Goodwill – – – 451,177,637 – 451,177,637 – 22,558,882 – – – 22,558,882 428,618,755<br />
Licence fees 100,000,000 – – – – 100,000,000 25,000,000 10,000,000 – – – 35,000,000 65,000,000<br />
Software 60,608 139,690,936 34,429,719 – – 174,181,263 15,516 28,021,728 – – – 28,037,244 146,144,019<br />
Tangible Assets<br />
Plant and Machinery 259,831,894 465,109,328 361,948,316 – – 1,086,889,538 31,288,406 110,227,610 47,567,308 – – 189,083,324 897,806,214<br />
Consumer Premises<br />
Equipments 476,646,480 2,722,775,388 – 1,503,497,136 – 4,702,919,004 9,980,853 444,125,843 – – – 454,106,696 4,248,812,308<br />
Computers 5,952,788 9,529,952 3,830,571 – – 19,313,311 2,991,655 2,483,515 – – – 5,475,170 13,838,141<br />
Office Equipments 4,120,186 2,747,174 2,213,194 – – 9,080,554 1,044,753 655,805 – – – 1,700,558 7,379,996<br />
Furniture and Fixtures 1,256,761 1,999,034 3,022,267 – – 6,278,062 281,400 885,477 – – – 1,166,877 5,111,185<br />
Other Electronic<br />
Equipment 21,034,190 – – – 21,034,190 – 6,088,039 2,182,833 – – 8,270,872 – –<br />
Vehicles 6,779,608 2,825,706 17,239,423 – 2,156,562 24,688,175 856,151 2,457,141 – – 252,202 3,061,090 21,627,085<br />
Leasehold<br />
Improvements 2,522,595 2,973,635 – – – 5,496,230 2,102,162 596,736 – – – 2,698,898 2,797,332<br />
Current Period 878,205,110 3,347,651,153 422,683,490 1,954,674,773 23,190,752 6,580,023,774 79,648,935 624,195,570 47,567,308 – 8,523,<strong>07</strong>4 742,888,739 5,837,135,035<br />
Notes:<br />
(1) * Addition during the year includes additions of demerged operations.<br />
(2) ** Transfer of assets pursuant to the Scheme.<br />
(3) *** Acquired under Slump Sale.<br />
(4) Details of operating lease is given in Note 33.2.<br />
(5) Current year depreciation includes Rs. 569,571 taken to pre-operating expenses (Refer Note 29.4).<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong><br />
7. INVESTMENTS<br />
Long Term (At Cost) - Unquoted<br />
NSC VIII issue 25,500<br />
(Pledge with Sales Tax Authorities)<br />
TOTAL 25,500<br />
Aggregate Book value of unquoted investments 25,500<br />
Aggregate Book value of quoted investments –<br />
8. INVENTORIES<br />
(as taken, valued and certified by the management)<br />
Stock in Trade 11,762,339<br />
TOTAL 11,762,339<br />
9. SUNDRY DEBTORS<br />
(unsecured, considered good unless otherwise stated)<br />
More than Six Months Old (include doubtful of Rs. 13,161,188) 56,397,146<br />
Others (include doubtful of Rs. 42,288,389) 417,444,940<br />
473,842,086<br />
Less: Provision for Doubtful Debts 55,449,577<br />
TOTAL 418,392,509<br />
65
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT<br />
MARCH 31,<br />
(Currency: Indian Rupees)<br />
20<strong>07</strong><br />
10. CASH AND BANK BALANCES<br />
Cash in Hand 183,<strong>07</strong>2<br />
Balance with Scheduled Banks :<br />
In Current Account 63,564,790<br />
In Fixed Deposit (Pledge with Bank/others Rs. 64,024,532 ) 64,024,532<br />
TOTAL 127,772,394<br />
11. LOANS AND ADVANCES<br />
(unsecured, considered good unless otherwise stated)<br />
Loans 849,767,351<br />
Other Advances (recoverable in cash or kind or for value to be considered) 1,9<strong>07</strong>,021,991<br />
Deposits 16,752,694<br />
2,773,542,036<br />
Less : Provision for Doubtful Advances 1,226,043,309<br />
TOTAL 1,547,498,727<br />
12. CURRENT LIABILITIES AND PROVISIONS<br />
Current Liabilities<br />
Creditors for Goods 886,017,159<br />
Creditors for Expenses and Other Liabilities 3,138,438,127<br />
Interest accrued but not due 4,019,923<br />
Advances/Deposits 4,981,586,093<br />
TOTAL 9,010,061,302<br />
Provisions<br />
For Taxation (net of taxes) 1,372,280<br />
For Retirement Benefits 11,137,410<br />
TOTAL 12,509,690<br />
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE<br />
YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
13. SALES AND SERVICES<br />
Income from DTH Subscribers :<br />
Subscription Income 1,219,008,658<br />
Lease Rentals 218,<strong>07</strong>0,913<br />
Other DTH Revenue 1,274,760<br />
Income from Content Providers:<br />
Placement and Active Services 359,214,740<br />
Royalty –<br />
Teleport Services 104,888,339<br />
Sales (Net of Returns) 6,915,600<br />
Call Center Charges 5,721,085<br />
Other Services 1,381,338<br />
TOTAL 1,916,475,433<br />
20<strong>07</strong><br />
14. OTHER INCOME<br />
Exchange Difference (Net) 25,162,512<br />
Other Income 20,467,930<br />
TOTAL 45,630,442<br />
15. COST OF GOODS SOLD (NET)<br />
Opening Stock 5,086,539<br />
Purchases (Net of Returns) 12,083,741<br />
17,170,280<br />
Less: Closing Stock 11,762,339<br />
TOTAL 5,4<strong>07</strong>,941<br />
16. OPERATING COSTS<br />
Transponder Lease 338,3<strong>07</strong>,289<br />
License Fees 200,614,938<br />
Uplink Charges 60,459,416<br />
Content Costs 1,556,275,576<br />
Entertainment Tax 11,754,420<br />
Middleware Charges 28,688,833<br />
Other Operating Charges 5,972,486<br />
TOTAL 2,202,<strong>07</strong>2,958<br />
17. PERSONNEL COST<br />
Salary and Allowances 202,255,273<br />
Contribution to Provident and Other Funds 12,400,052<br />
Staff Welfare 5,477,896<br />
TOTAL 220,133,221<br />
67
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE<br />
YEAR ENDED MARCH 31,<br />
(Currency: Indian Rupees)<br />
18. ADMINISTRATIVE AND OTHER EXPENSES<br />
Rent 9,310,128<br />
Rates and Taxes 36,441<br />
Water and Electricity Charges 8,841,886<br />
Insurance 1,254,732<br />
Repairs and Maintenance - Plant and Machinery 1,051,928<br />
Repairs and Maintenance - Building 2,387,600<br />
Repairs and Maintenance - Others 6,084,008<br />
Vehicles Expenses 2,608,178<br />
Legal and Professional Expenses 20,870,786<br />
Director Meeting Fee 40,000<br />
Printing and Stationery 13,211,752<br />
Communication Expenses 60,556,484<br />
Travelling and Conveyance 39,696,894<br />
Freight, Cartage and Demurrage 26,656,060<br />
Provision for Doubtful Debts and Advances 57,694,388<br />
Preliminary Expenses written off 16,415<br />
Miscellaneous Expenses 18,097,036<br />
Service and Hire Charges 11,517,738<br />
Bad Debts 161,252<br />
Loss on Sale/Discard of Assets 13,403,002<br />
TOTAL 293,496,708<br />
20<strong>07</strong><br />
19. SELLING AND DISTRIBUTION EXPENSES<br />
Advertisement Expenses 535,244,862<br />
Commission 328,846,145<br />
Business Promotion 5,805,396<br />
Customer Support Service (Call Centre) 25,571,266<br />
TOTAL 895,467,669<br />
20. FINANCIAL CHARGES (NET)<br />
Interest to Banks 71,803,899<br />
Interest to Others 72,056,215<br />
143,860,114<br />
Less : Interest Received (Gross) 58,225,618<br />
85,634,496<br />
Bank and Other Financial Charges 32,235,226<br />
TOTAL 117,869,722<br />
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
1. SIGNIFICANT ACCOUNTING POLICIES<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
(e)<br />
(f)<br />
(g)<br />
Accounting Convention:<br />
i. The Company generally follows mercantile system of accounting and recognises income and expenditure on accrual basis<br />
except those with significant uncertainties.<br />
ii.<br />
The Financial Statements have been prepared on historical cost convention and in accordance with the accounting standards<br />
referred to in Section 211 (3C) of the Companies Act,1956.<br />
Fixed Assets:<br />
i. Fixed assets are stated at Cost. Cost includes capital cost, freight, installation cost, duties & taxes and other incidental<br />
expenses incurred during the construction/installation stage attributable to bringing the assets to working condition for its<br />
intended use.<br />
ii.<br />
iii.<br />
iv.<br />
All capital costs and incidental expenditure during the pre-operational period are shown as Capital work-in-progress.<br />
License fee is considered intangible assets and is stated at amount paid.<br />
Customer premises equipments are being capitalised on its activation.<br />
v. Software is capitalised as an intangible asset on meeting recognition criteria.<br />
Depreciation/Amortisation:<br />
i. Depreciation on fixed assets is provided on tangible assets including leased assets, at the rates adopted in the accounts of<br />
respective subsidiaries as permissible under applicable law, on Straight Line Method from the time they are available for use,<br />
so as to write off their cost over estimated useful life of the assets.<br />
ii.<br />
iii.<br />
iv.<br />
Goodwill arising on acquisition is amortised over a period of five years.<br />
Leasehold improvements are amortised over the period of lease.<br />
License fee is amortised over the period of license.<br />
v. Assets costing below Rs. 5,000 (except customer premises equipments & VC Cards) are depreciated at 100%.<br />
vi.<br />
Depreciation on other intangible assets is amortised over the economic useful life of the assets as estimated by the management.<br />
Revenue Recognition:<br />
i. Incomes from service is accounted on the completion of services. Period based services are accounted rateably over the<br />
period of service.<br />
ii.<br />
iii.<br />
Sales of goods are recognised when risk and rewards of ownership are passed on to the customer, which is generally on<br />
dispatch of goods.<br />
Lease rentals are recognised as revenue as per the terms of the operating lease agreement.<br />
Investments:<br />
Long-term Investments are stated at cost. Diminution in value, other than temporary is provided.<br />
Inventories:<br />
Inventories including material lying with third parties are valued at the cost, which are being valued at weighted average basis or<br />
net releasable value whichever is lower except in case of one subsidiary, inventory is value on first in first out basis. The effect is<br />
unascertained.<br />
Retirement Benefits:<br />
i) Contribution to Provident Fund and other recognised funds are charged to Profit & Loss Account.<br />
ii)<br />
iii)<br />
Gratuity and Leave Encashment is provided on the basis of actuarial valuation at the Balance sheet date.<br />
In case of Two Indian Subsidiaries, the gratuity benefit is provided through annual contribution to a fund managed by the Life<br />
Insurance Corporation of India (LIC).<br />
69
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
(h)<br />
(i)<br />
(j)<br />
(k)<br />
(l)<br />
Foreign Currency Transactions:<br />
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and<br />
liabilities denominated in foreign currency are translated at the exchange rate prevailing at the Balance Sheet date and gains or<br />
losses on translation are recognised in Profit & Loss Account. Non monetary foreign currency items are carried at cost.<br />
Borrowing Costs:<br />
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as a part of such assets.<br />
All other borrowing costs are charged to revenue.<br />
Taxes on Income:<br />
Tax expense comprise of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount<br />
expected to be paid to the tax authorities in accordance with Indian Income Tax Act. Deferred Tax is recognised, subject to<br />
consideration of prudence, on timing difference, being the difference between taxable income that originate in one period and are<br />
capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. At the Balance Sheet date<br />
the Company assesses unrealised deferred tax assets to the extent they become reasonably certain or virtually certain of realization<br />
as the case may be.<br />
Operating Lease:<br />
Lease of the assets where all the risk and rewards of ownership are effectively retained by the lessor are classified as operating<br />
lease. Lease payments/revenue under operating lease are recognised as an expense/income on accrual basis in accordance with<br />
respective lease agreement.<br />
Earning Per Share:<br />
Basic earning per share is computed and disclosed using the weighted average number of common shares outstanding during the<br />
year. Diluted earning per share is computed and disclosed using the weighted average number of common and dilutive common<br />
equivalent share outstanding during the year except where the result would be anti dilutive.<br />
(m) Impairment:<br />
The carrying amounts of the Company's assets are reviewed at each Balance Sheet date if there is any indication of impairment<br />
based on internal/external factors. An impairment loss is recognized whenever the carrying amount of an asset exceeds its<br />
recoverable amount. Impairment losses are recognised in the income statement in the period in which the impairment is identified.<br />
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
21. BACKGROUND<br />
<strong>Dish</strong> <strong>TV</strong> India Limited (herein referred to as "the parent company", "the company" or "<strong>Dish</strong>") alongwith its subsidiaries (collectively<br />
known as "the Group") encompassing the Direct To Home (DTH) Satellite Television Service which includes teleport service, customer<br />
support, transponder space leasing etc.<br />
The Group's revenue are mainly from subscription from customers, lease rent on customer premises equipment, teleport services,<br />
placement and active services charges.<br />
22. USE OF ESTIMATES<br />
The preparation of the CFS in accordance with the Generally Accepted Accounting Principles requires the management to make<br />
estimates and assumption that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of<br />
the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from those estimates.<br />
Any revision to estimates is recognized prospectively in the current and future periods.<br />
23. GOING CONCERN<br />
The accompanying CFS have been prepared assuming that the Company will continue as a going concern. The management believes that<br />
it is appropriate to prepare these financial statements on a 'going concern' basis, for the following reasons:<br />
23.1 The Company hold DTH license from Government of India for a considerable long time.<br />
23.2 The Company is the first to launch DTH services in India. This business necessitates long gestation period to stand in its feet. Being<br />
first mover the Company incurred huge expenses on awareness of the product, brand building on a pan India basis. The benefit of<br />
these expenses will accrue in the future years.<br />
23.3 The Promoters are <strong>full</strong>y seized of the matter and are committed to arrange required resources.<br />
24. BASIS OF CONSOLIDATION<br />
24.1 The Consolidated Financial Statements (CFS) of the Group are prepared under the historical cost convention in accordance with<br />
Generally Accepted Accounting Principles in India and the Accounting Standard (AS) 21 on "Consolidated Financial Statements"<br />
issued by the Institute of Chartered Accountants of India (ICAI), to the extent possible in the same format as that adopted by the parent<br />
company for its separate financial statements by regrouping, recasting or rearranging figures wherever considered necessary. The<br />
significant inconsistencies in accounting policies are disclosed wherever applicable and no adjustment are made in CFS for such<br />
inconsistencies.<br />
The consolidation of the financial statements of the parent company and its subsidiaries is done to the extent possible on line to line<br />
basis by adding together like items of assets, liabilities, income and expenses. All significant intra group transactions , balances<br />
and unrealised inter company profits have been eliminated in the process of consolidation.<br />
24.2 The parent company and its subsidiaries prepare its financial statements under the historical cost convention, in accordance with<br />
Generally Accepted Accounting Principles (GAAP) prevalent in India.<br />
24.3 The CFS includes the Financial Statements of the parent company and the subsidiaries (all Indian companies) as listed in the table<br />
below. Subsidiaries are consolidated from the date on which effective control is acquired and are excluded from the date of transfer/<br />
disposal.<br />
Name of the Subsidiaries Extent of holding %<br />
Integrated Subscribers Management Services Limited 100.00<br />
Agrani Convergence Limited 51.00<br />
Agrani Satellite Services Limited 100.00<br />
24.4 Minority interest in subsidiary represents the minority shareholders proportionate share of the net assets and net income.<br />
25. THE SCHEME OF ARRANGEMENT<br />
The Scheme of Arrangement (the Scheme) under Sections 391 to 394 read with Sections 78, 100 and other applicable provisions of the<br />
Companies Act, 1956 between Zee Telefilms Limited now known as Zee Entertainment Enterprises Ltd. (ZEEL), Siti Cable Network<br />
71
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
Limited (SITI) and New Era Entertainment Network Ltd. (NE) and ASC Enterprises Limited (now known as <strong>Dish</strong> <strong>TV</strong> India Limited (the<br />
Company) and their respective shareholders have been sanctioned by the Hon'ble High Court of Judicature at Bombay and High Court of<br />
Judicature at New Delhi vide their respective order dated January 12, 20<strong>07</strong> and December 18, <strong>2006</strong> and a copy of these orders have been<br />
filed with the respective Registrar of Companies on January 17, 20<strong>07</strong> and January 19, 20<strong>07</strong> respectively. The Scheme has been given<br />
effect in these financial statements except actual allotment and reorganisation of Share Capital.<br />
25.1 Pursuant to the Scheme, Direct Consumer Services undertaking (DCS) of ZEEL including investment made by ZEEL in SITI and the<br />
entire business and whole of the undertaking of the transferor Companies i.e. SITI and NE have been transferred to and vested in the<br />
Company on appointed date i.e. April 1, <strong>2006</strong> on going concern basis. The assets and the liabilities of DCS undertaking of ZEEL at<br />
book value and of SITI and NE at fair value have been transferred to and vested in the Company as under.<br />
Particulars DCS undertaking of ZTL SITI NE<br />
Gross Block of Fixed Assets 320,441,991 75,724,410 26,517,087<br />
Less : Depreciation 47,567,308 – –<br />
Net Block of Fixed Assets 272,874,683 75,724,410 26,517,087<br />
Capital Work-in-Progress – 329,347,821 –<br />
Investments 19,363,880 1,000,000 –<br />
Share Application Money 1,419,713,819 500,000,000 690,000,000<br />
Current Assets, Loans and Advances – 105,776,495 424,897,432<br />
Total Assets (A) 1,711,952,382 1,011,848,726 1,141,414,519<br />
Loan Funds 326,324,605 1,069,936 7,100,114<br />
Current Liabilities and Provisions 19,920 1,435,362,605 1,124,494,831<br />
Total Liabilities (B) 326,344,525 1,436,432,541 1,131,594,945<br />
Surplus/(Deficit) (A-B) 1,385,6<strong>07</strong>,857 (424,583,815) 9,819,574<br />
25.2 Reorganisation of Share Capital<br />
25.2.1 The paid up equity share capital of the Company had been sub-divided on September 25, <strong>2006</strong> by splitting 71,568,765<br />
equity shares of Rs. 10 each into 715,687,650 equity shares of Re. 1 each.<br />
25.2.2 Pursuant to the Scheme following effect are given considering the shareholding pattern of ZEEL on record date i.e.<br />
February 20, 20<strong>07</strong>:-<br />
●<br />
●<br />
997,203,560 equity shares of Re. 1 each <strong>full</strong>y paid to be issued in the ratio of 23 equity shares of Re. 1 each <strong>full</strong>y<br />
paid up of the Company for every 10 equity shares of Re. 1 each <strong>full</strong>y paid up of ZEEL.<br />
Reduction of above equity share capital by way of cancellation of 3 equity shares of Re. 1 each <strong>full</strong>y paid up for<br />
every 4 equity shares of Re. 1 each <strong>full</strong>y paid up resulting in final issues of 249,300,890 equity shares of Re. 1<br />
each <strong>full</strong>y paid up.<br />
● Pending actual action, the difference on allotment, cancellation, reduction and issue of Share Capital as above<br />
has been taken to the "Share Capital Suspense" in Note 2 to these financial statements.<br />
25.2.3 The present Share Capital of the Company Rs. 715,687,650 divided into 715,687,650 equity shares of Re. 1 each <strong>full</strong>y<br />
paid up will be reduced by cancellation of 3 equity shares of Re. 1 each <strong>full</strong>y paid up for every 4 equity shares of<br />
Re. 1 each <strong>full</strong>y paid up. The resultant Share Capital will be Rs. 178,921,913. Pending actual reduction Rs. 536,765,737<br />
has been taken to 'Share Capital Suspense' in Note 2.<br />
25.3 Pursuant to the Scheme, surplus Rs. 1,698,096,658 in the Restructuring Account after carrying out following adjustments as per<br />
the Scheme has been transferred to General Reserve Account.<br />
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
25.3.1 The value of net assets of DCS undertaking of ZEEL as reduced by the face value of equity shares to be issued<br />
amounting to Rs. 1,136,306,967 has been credited to Restructuring Account as prescribed in the Scheme.<br />
25.3.2 The value of net assets/(liabilities) of SITI and NE amounting to (Rs. 424,583,815) and Rs. 9,819,574 respectively, as<br />
reduced by the cancellation of the investments amounting to Rs. 19,363,880 and Rs. 500,000 respectively has been<br />
(debited)/credited to Restructuring Account as prescribed in the Scheme.<br />
25.3.3 Balance in Share Premium Account and Profit and Loss Account (Debit Balance) amounting to Rs. 3,728,245,250 and<br />
Rs. 3,268,593,174 respectively has been transferred to Restructuring Account.<br />
25.3.4 Reduction in present Share Capital of Rs. 536,765,737 has been transferred to Restructuring Account.<br />
25.4 Pursuant to demerger of DCS undertaking of ZEEL, SITI and NE became wholly owned subsidiaries of the Company<br />
and hence upon the merger of the Subsidiaries with the Company, entire equity share capital of these Companies stand<br />
automatically cancelled and hence there will not be any issue and allotment of shares of the Company.<br />
25.5 The transactions of New Era Entertainment Network Limited, Siti Cable Network Ltd. and DCS business of Zee<br />
Entertainment Enterprises Ltd. between the appointed date and the effective date are deemed to be made on behalf of<br />
the Company. Accordingly all Assets, Liabilities, Income & Expenditure of the demerged undertakings for the said<br />
period are taken over by the Company and given effect in these Financial Statements.<br />
25.6 The assets, license & agreements etc. transferred pursuant to the Scheme of Arrangement are in the process of<br />
registration/transfer in the name of the Company.<br />
26. The Company has acquired DTH Equipment Unit Business (DEU) of Essel Agro Private Limited on a going concern basis vide agreement<br />
to transfer DTH Equipment Unit (DEU) Business dated December 31, <strong>2006</strong>. Pursuant to the agreement following assets and liabilities have<br />
been acquired and are included in these financial statements. The goodwill arising on acquiring of DEU Business amounting to<br />
Rs. 451,177,637 (including purchase consideration Rs. 500,000) has been treated as intangible asset. (Currency: Indian Rupees)<br />
Particulars<br />
Fixed Assets 1,503,497,136<br />
Current Assets, Loans and Advances 21,403,084<br />
Total Assets 1,524,900,220<br />
Current Liabilities and Provisions 1,975,577,857<br />
Net Deficit 450,677,637<br />
27. SECURED/UNSECURED LOANS<br />
27.1 Cash Credit of Rs. 75,725,609 is secured by first pari passu hypothecation charge on all present and future movable fixed assets<br />
relating to DTH project and pledge of shares by related parties.<br />
27.2 Bridge Loan of Rs. 604,780,715 is secured by hypothecation of all movables including movable machinery, machinery spares, tools<br />
and accessories, book debts etc., present and future, and corporate guarantee of related party and pledge of certain shares held by<br />
the promoters in the Company. The bridge loan is against a term loan of Rs. 75 crores and is repayable on October 1, 20<strong>07</strong>.<br />
27.3 Term Loan of Rs. 750,000,000 is secured by hypothecation by way of first pari passu charge on all the current assets including<br />
goods, stocks and all other such articles and book debts, receivables, investments, present and future, corporate guarantee of<br />
related party. The loan is repayable within twelve months.<br />
27.4 Vehicle Loan is secured against hypothecation of vehicles (ROC charge not registered) (amount repayable within a year Rs. 3,650,500)<br />
27.5 Unsecured Loans from banks are backed by corporate guarantee provided by a related party and is short term loan.<br />
28. TAXES ON INCOME<br />
28.1 In view of loss incurred by the Company and its subsidiaries, no provision for current tax is made.<br />
28.2 In accordance with the Accounting Standards-22 on "Accounting for Taxes on Income" issued by The Institute of Chartered Accountants<br />
of India, deferred tax assets and liability should be recognised for all timing difference in accordance with the said standard.<br />
However, considering the present financial position and requirements of the accounting standard regarding certainty/virtual certainty,<br />
the same is not provided for by the group except one subsidiary.<br />
73
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
28.3 The component of the deferred tax balance are as under:- (Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Deferred Tax Assets<br />
Unabsorbed Depreciation & Business Losses 63,232,296<br />
TOTAL 63,232,296<br />
Deferred Tax Liabilities<br />
Depreciation 70,090,267<br />
TOTAL 70,090,267<br />
Deferred Tax Balances (Net) 6,857,971<br />
29. CAPITAL WORK IN PROGRESS<br />
29.1 Capital work in progress includes equipments valuing Rs. 835,300,684 which includes Customer Premises Equipments valuing<br />
Rs. 719, 824,813 to be given on lease to customers to provide services of the Company.<br />
29.2 Includes goods in transit of Rs. 361,460,373.<br />
29.3 Includes capital advances of Rs. 1,655,842.<br />
29.4 Includes pre-operative expenses of Rs. 1,269,768,084 related to one of the subsidiaries which is implementing the satellite service<br />
project. All the expenses for implementing the satellite project are taken to pre-operative expenses. These are to be eventually<br />
allocated to fixed assets, on commencement of commercial operations.<br />
30. OTHER DISCLOSURES<br />
30.1 30.1.1 The CFS have been prepared for the first time hence as per AS-21 (Consolidated Financial Statements) the Company is<br />
not required to give previous year figures.<br />
30.1.2 Further being first year of consolidation, cash flow statement for the year has not been prepared.<br />
30.2 Prior period adjustments (Net) comprises of :- (Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
A. Income<br />
Exchange Fluctuation 560,051<br />
Lease Rentals (222,033)<br />
Total Income 338,018<br />
B. Expenses<br />
Electricity Charges 2,731<br />
Communication Expenses 1,200,256<br />
Professional Fees 90,000<br />
Miscellaneous Expenses 49,175<br />
Sales Promotion 2,557,246<br />
Advertisement Expenses 89,456<br />
Commission 1,223,221<br />
License Fees 7,935<br />
Travelling and Conveyance 42,452<br />
74<br />
Total Expenses 5,262,472<br />
Net-Income/(Loss) (4,924,454)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
30.3 Creditors for Expenses and Other Liabilities includes Rs. 350,999,096 due to Zee Entertainment Enterprises Ltd. on account of<br />
transaction between the appointed date and effective date pursuant to the Scheme of Arrangement (Refer Note 25).<br />
30.4 As per the advice received and in term of DTH License agreement the Company has provided license fees on its gross revenue from<br />
DTH subscribers.<br />
30.5 Debit and Credit balances of parties including subscribers and dealers' balances are subject to confirmation/reconciliation and<br />
effect if any, will be considered on its determination.<br />
30.6 Remuneration paid or provided in accordance with Section 198 of the Companies Act, 1956 to the Managing Director included in<br />
personnel cost and relevant expenses head is as given below. Remuneration paid to the Managing Director exceeds the minimum<br />
remuneration payable in case of inadequacy of the Profits. Hence, the Company has applied to the Central Government for approval<br />
of the excess remuneration paid and approval is awaited.<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Salary and Allowances 1,225,613<br />
Contribution to Provident Fund 68,129<br />
TOTAL 1,293,742<br />
31. CAPITAL COMMITMENT:<br />
Estimated amount of contract remaining to be executed on capital account and not provided for (Net of advance) is Rs. 452,3<strong>07</strong>,175.<br />
32. CONTINGENT LIABILITY NOT PROVIDED FOR<br />
32.1 (Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Claim against Company not acknowledged as Debts 99,144,271<br />
Guarantees given by Banks on our behalf 501,110,000<br />
Corporate Guarantees given on behalf of other Companies 24,000,000<br />
Corporate Guarantees provided by others on behalf of Company 2,224,030,715<br />
Legal Cases filed against the Company<br />
Unascertained<br />
32.2 The Entertainment Tax Authorities, Noida has raised a demand of Rs. 40,459,628 for the period from November 3, to February 4. The<br />
Company has filed petition against the demand, which is pending. Further the authorities have intimated a total demand of<br />
Rs. 92,019,941 till March, 20<strong>07</strong>.<br />
33. OPERATING LEASE<br />
33.1 In respect of assets taken on operating lease:<br />
The Group's significant leasing arrangements are in respect of operating leases taken for offices, residential premises, transponder<br />
etc. These leases are cancellable operating lease agreements that are renewable on a periodic basis at the option of both the lessee<br />
and the lessor. The initial tenure of the lease generally is for 11 months to 120 months. The details of assets taken on operating lease<br />
during the period are as under:<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Lease Rental Charges for the period (net of shared cost) 403,469,137<br />
Future Lease Rental obligation payable (under non-cancellable lease)<br />
Not later than one year 141,119,343<br />
Later than one year but not later than five years 7,059,771<br />
More than five years –<br />
33.2 In respect of assets given under operating lease:<br />
The Group has leased out assets by way of operating lease and as on March 31, 20<strong>07</strong>, the gross book value of such assets, its<br />
accumulated depreciation and depreciation for the year is as given below. The total lease income for the year is Rs. 273,155,252.<br />
75
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
Particulars 20<strong>07</strong><br />
Gross Value of the Assets 4,721,923,650<br />
Accumulated Depreciation 460,001,940<br />
Depreciation for the year 446,090,925<br />
Particulars 20<strong>07</strong><br />
Future Lease Rental Receivable (under non-cancellable lease)<br />
Not later than one year 455,600,471<br />
Later than one year but not later than five years 1,447,565,341<br />
More than five years –<br />
34. RELATED PARTY DISCLOSURES<br />
34.1 List of parties where control exists:<br />
● Agrani Satellite Services Limited. (Wholly Owned Subsidiary)<br />
(Currency: Indian Rupees)<br />
● Agrani Convergence Limited. (Extent of holding reduced from 100% to 51% on March 31, <strong>2006</strong>)<br />
● Agrani Wireless Services Limited. (Till March 31, <strong>2006</strong>.)<br />
● Agrani Satellite Communication Enterprises (Gibraltar) Limited. (Till March 31, <strong>2006</strong>.)<br />
● Integrated Subscribers Management Services Ltd. (Wholly Owned Subsidiary from April 1, <strong>2006</strong>)<br />
34.2 Other Related with whom transactions have taken place during the year and balances outstanding as on last date of the year:-<br />
Smart Talk Private Limited, Essel Corporate Services Private Limited, Essel Agro Private Ltd., Cyquator Technologies Limited, Zee<br />
Telefilms Limited (now known as Zee Entertainment Enterprises Limited), Pan India Network Infravest Private Limited, Pan India<br />
Paryatan Limited, Ayepee Lamitubes Limited, Procall Private Limited, Suncity Projects Limited, Afro-Asian Satellite Communication<br />
(Gibraltar) Limited, Afro-Asian Satellite Communication (U.K.) Limited, ASC Telecommunication Limited, Asia Today Limited, Asia<br />
<strong>TV</strong> Limited, Zee News Limited, Brio Academic, Zee Foundation, Ganjam Trading Co. Ltd., Rupee Finance & Management Pvt. Ltd.,<br />
Intrex India Limited, Wire and Wireless India Limited, Dakshin Media Gaming Solutions Private Limited, Rama Associates, Zee<br />
Turner Limited, Zee Interactive Learning Systems Limited, Kenlott Gaming Solutions Private Limited, Zee Akash News Private<br />
Limited, E City Entertainment Private Limited, Zee Sports Limited, Bhilwara Telenet Services Private Limited, Quick Call Private<br />
Limited, Mr. Jawahar Goel, ETC Networks Limited, Diligent Media Corporation Limited, Indian Cable Net Limited.<br />
Directors/Key Management Personnel<br />
Mr. Subhash Chandra<br />
Mr. Jawahar Lal Goel, Mr. Ashok Kurien, Mr. B. D. Narang and Mr. Arun Duggal (appointed w.e.f. January 6, 20<strong>07</strong>)<br />
Mr. Laxmi Narain Goel, Mr. Punit Goenka, Mr. Rajagopalan Chandrashekhar and Mr. Ashok Goel (upto January 6, 20<strong>07</strong>).<br />
34.3 Transaction with related parties (Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Amount Amounts for Major<br />
(Rs.)<br />
Parties<br />
With Other Related Parties:<br />
Sales, Services & Recoveries (Net of Taxes) 472,662,850<br />
Zee Entertainment Enterprises Limited 178,322,015<br />
Zee News Limited 71,144,836<br />
Asia Today Limited 34,896,965<br />
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Amount Amounts for Major<br />
(Rs.)<br />
Parties<br />
Asia <strong>TV</strong> Limited 24,804,575<br />
Zee Turner Limited 74,521,483<br />
Others 88,972,976<br />
Purchase of Goods & Services 987,774,125<br />
Zee Turner Limited 802,522,247<br />
Zee Entertainment Enterprises Limited 67,452,464<br />
Intrex India Limited 25,566,444<br />
Essel Agro Private Limited 71,025,412<br />
Others 21,2<strong>07</strong>,558<br />
Rent Paid 5,571,943<br />
Zee Entertainment Enterprises Limited 4,334,364<br />
E City Entertainment (I) Private Limited 1,237,579<br />
Interest Paid 52,012,364<br />
Zee Entertainment Enterprises Limited 49,624,805<br />
Others 2,387,559<br />
Donation 2,500,000<br />
Zee Foundation 2,500,000<br />
Interest Received 52,818,343<br />
Essel Agro Private Limited 46,017,716<br />
ASC Telecommunication Limited 6,800,627<br />
Purchase of Fixed Assets 728,933,910<br />
Zee Entertainment Enterprises Limited 725,646,020<br />
Others 3,287,890<br />
Sale of Fixed Assets 596,151<br />
Agrani Telecom Limited 596,151<br />
Loan, Advance and Deposit Taken 642,127,830<br />
Zee Entertainment Enterprises Limited 326,324,604<br />
Wire & Wireless India Limited 105,300,000<br />
Rupee Finance & Management Pvt. Ltd. 210,000,000<br />
Others 503,226<br />
Repayment of Loan, Advance and Deposit Taken 292,248,860<br />
Essel Agro Private Limited 25,000,000<br />
Wire & Wireless India Limited 105,300,000<br />
Rupee Finance & Management Pvt. Ltd. 160,000,000<br />
Others 1,948,860<br />
Loan, Advance and Deposit Given 423,640,989<br />
Essel Agro Private Limited 313,645,898<br />
ASC Telecommunication Limited 94,100,000<br />
Others 15,895,091<br />
Refund Received against Loan, Advance and Deposit Given 250,878,245<br />
ASC Telecommunication Limited 15,511,319<br />
77
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Amount Amounts for Major<br />
(Rs.)<br />
Parties<br />
78<br />
Essel Agro Private Limited 231,282,175<br />
Others 4,084,751<br />
Corporate Guarantees Given 24,000,000<br />
Procall Private Limited 20,000,000<br />
Quick Call Private Limited 1,500,000<br />
Smart Talk Private Limited 1,500,000<br />
Bhilwara Telenet Services Limited 1,000,000<br />
Corporate Guarantees Received 2,224,030,715<br />
Zee Entertainment Enterprises Limited 2,224,030,715<br />
Provision for Doubtful Advances 8,030,768<br />
Brio Academic 7,950,000<br />
Others 80,768<br />
Assets & Liabilities Received Pursuant to Scheme of Arrangement<br />
DCS undertaking of Zee Entertainment Enterprises Limited 1,385,6<strong>07</strong>,857<br />
Total Assets 1,711,952,382<br />
Total Liabilities 326,344,525<br />
Siti Cable Network Limited (424,583,815)<br />
Total Assets 1,011,848,726<br />
Total Liabilities 1,436,432,541<br />
New Era Entertainment Network Limited 9,819,574<br />
Total Assets 1,141,414,519<br />
Total Liabilities 1,131,594,945<br />
Assets & Liabilities Received pursuant to Slump Sale<br />
Essel Agro Private Limited (451,177,637)<br />
Total Assets 1,524,900,220<br />
Total Liabilities 1,975,577,857<br />
Purchase Consideration 500,000<br />
Key Management Personnel 1,014,333<br />
Jawahar Lal Goel 1,014,333<br />
Balance at the end of period:<br />
With Other Related Parties:<br />
Loan, Deposit and Advances Given 2,399,134,909<br />
Afro-Asian Satellite Comm. (UK) Limited 376,881,821<br />
Afro-Asian Satellite Comm. (Gib.) Limited 827,708,050<br />
Agrani Satellite Comm. (Gib.) Limited 3,840,524<br />
Intrex India Limited 133,128,344<br />
Essel Agro Private Limited 899,656,036<br />
ASC Telecommunication Limited 143,982,455<br />
Others 13,937,679<br />
Loan, Deposit and Advances Taken 245,408,006<br />
Suncity Project Limited 2,700,000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Amount Amounts for Major<br />
(Rs.)<br />
Parties<br />
Kenlott Gaming Solutions Private Limited 1,900,000<br />
Ayepee Lamitubes Limited 1,<strong>07</strong>8,150<br />
Wire & Wireless India Limited 3,806,065<br />
Zee Multimedia Worldwide Mauritius Ltd. 5,401,750<br />
Ganjam Trading Co. Private Limited 178,783,000<br />
Rupee Finance & Management Pvt. Ltd. 50,636,570<br />
Others 1,102,471<br />
Creditors 1,587,604,879<br />
Zee Entertainment Enterprises Limited 739,969,149<br />
Zee Turner Limited 800,633,181<br />
Others 47,002,549<br />
Debtors 375,699,888<br />
Asia Today Limited 23,772,474<br />
Asia <strong>TV</strong> Limited 16,473,374<br />
Zee News Limited 46,881,562<br />
Zee Entertainment Enterprises Limited 193,321,888<br />
Others 95,250,590<br />
Corporate Guarantees Given 24,000,000<br />
Procall Private Limited 20,000,000<br />
Quick Call Private Limited 1,500,000<br />
Smart Talk Private Limited 1,500,000<br />
Bhilwara Telenet Services Limited 1,000,000<br />
Corporate Guarantee Received 2,224,030,715<br />
Zee Entertainment Enterprises Limited 2,224,030,715<br />
Notes:<br />
1) Major parties denote who account for 10% or more of the aggregate for that category of transaction etc.<br />
2) Details of remuneration to managing director is disclosed in Note 30.6.<br />
35. EARNING PER SHARE (EPS)<br />
(Currency: Indian Rupees)<br />
Particulars 20<strong>07</strong><br />
Profit/(Loss) After Tax (2,400,708,400)<br />
Weighted average number of Equity Shares of Rs. 10 each (Nos.)* 42,822,280<br />
Basic and diluted earning per share (56.06)<br />
Weighted average number of Equity Shares of Re. 1 each (Nos.)* 428,222,803<br />
Basic and diluted earning per share (5.61)<br />
* Weighted average number of equity shares for the year includes equity shares to be allotted on record date pursuant to the Scheme.<br />
(Refer Note No. 25)<br />
36. SEGMENT INFORMATION AS PER AS-17<br />
The Group follows AS-17 "Segmental <strong>Report</strong>ing" relating to the reporting of financial and descriptive information about their operating<br />
segments in financial statements.<br />
79
GROUP<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br />
The Group's reportable operating segments have been determined in accordance with the internal management structure, which is<br />
organised based on the operating business segments as described below.<br />
Direct to Home Services (DTH) - Uplink of satellite television signals to be received by the customer directly in the home. This segment<br />
derives revenue by way of Subscription, Lease Rentals, Placement & Active Services and Other Incomes.<br />
Trading - Trading in electronics and other equipments.<br />
Teleport Services - Facility for uplink signals.<br />
Subscriber Management Services - Providing conditional access services, customer support services and related activities.<br />
Transponder Services - Acquisition of transponder per DTH Services and leasing to external parties.<br />
(a) Business Segment (Year ended March 31, 20<strong>07</strong>)<br />
(Currency: Indian Rupees)<br />
Description DTH Trading Teleport Subscriber Transponder Unallocated Elimination Total<br />
Services Management Services<br />
Services<br />
Segment Revenue<br />
External Sales 1,797,569,<strong>07</strong>1 6,915,600 104,888,339 7,102,423 – – – 1,916,475,433<br />
Inter Segment Sales – – – 274,733,198 – – (274,733,198) –<br />
Total Revenue 1,797,569,<strong>07</strong>1 6,915,600 104,888,339 281,835,621 – – (274,733,198) 1,916,475,433<br />
Segment Results (2,415,959,827) 3,156,292 (10,782,583) (5,140,584) – – 124,705,439 (2,310,333,847)<br />
Operating Profit/(Loss)<br />
Before Interest & Tax (2,415,959,827) 3,156,292 (10,782,583) (5,140,584) – – 124,705,439 (2,310,333,847)<br />
Interest Expenses – – – – – – – 143,860,114<br />
Interest Income – – – – – – – 58,225,618<br />
Profit/(Loss) Before Tax – – – – – – – (2,395,968,343)<br />
Exceptional Items – – – – – – – –<br />
Current Taxes - FBT/Wealth Tax – – – – – – – (2,718,640)<br />
Deferred Tax – – – – – – – 2,903,037<br />
Prior Period Adjustments<br />
(Net) - Income/(Loss) – – – – – – – (4,924,454)<br />
Profit/(Loss) After Tax – – – – – – – (2,400,708,400)<br />
(b)<br />
Other segment Information<br />
(Currency: Indian Rupees)<br />
Segment Assets 7,505,926,160 46,348,197 293,040,051 1,173,683,097 1,284,837,958 1,197,337,636 (1,027,169,316) 10,474,003,783<br />
Segment Liabilities 10,321,989,892 196,349,154 24,930,482 1,165,798,2<strong>07</strong> 6,657,634 – (692,999,030) 11,022,726,339<br />
Capital Expenditure* 5,892,956,755 – 212,062,837 236,928,431 9,891,854 – – 6,351,839,877<br />
Depreciation/Amortisation 539,906,<strong>07</strong>4 2,326,930 35,377,603 46,015,392 – – – 623,625,999<br />
Non Cash Expenditure other<br />
than Depreciation/Amortisation 50,980,223 12,167,167 – 16,415 – 7,950,000 – 71,113,805<br />
80<br />
*Capital Expenditure includes assets received pursuant to the Scheme of Arrangement.<br />
As per our attached report of even date For and on behalf of the Board<br />
L. K. Shrishrimal Jawahar Lal Goel B. D. Narang<br />
Partner Managing Director Director<br />
M.No. 72664<br />
For and on behalf of<br />
MGB & Co. Rajeev K. Dalmia Jagdish Patra<br />
Chartered Accountants Chief Financial Officer Company Secretary<br />
Place : Noida<br />
Date : June 28, 20<strong>07</strong>