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Notes to Accounts of Den Networks Ltd.

Mar 31, 2016

1. FINANCE LEASE AS LESSOR

The Company has entered into finance lease arrangements for certain equipment which provide the Company an option to sell the assets at the end of the lease period.

Future minimum lease payments and reconciliation of gross investment in the lease and present value of minimum lease payments.

2. DISCLOSURES AS PER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT, 2006

As per information available with the management, the balance due to enterprises covered under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006. This has been relied upon by the auditors.

3. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD 15 (REVISED 2005) ON ‘EMPLOYEE BENEFITS’

(I) Defined contribution plans

The Company makes provident fund contribution which is a defined contribution plan for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.

The Company recognized Rs. 41.75 million (Previous year Rs. 26.53 million) for provident fund contributions and Rs. 0.59 million (Previous year Rs. 0.83 million) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules to the scheme.

The contribution payable by the Company is at the rates specified in the rules to the plans.

(II) Defined benefit plan Gratuity plan

Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary (i.e. last drawn salary plus dearness allowance) for each completed year of service or part thereof in excess of 6 months, subject to a maximum of Rs. 1,000,000. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.

The following tables set out the unfunded status of the defined benefit scheme and amounts recognized in the Company financial statements as at 31 March, 2016:

Notes:

a. The discount rate is generally based upon the market yields available on Government bonds at the accounting date with a term that matches that of the liabilities.

b. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

c. The gratuity plan is unfunded.

4. EMPLOYEE STOCK OPTION PLAN 2010 (“ESOP 2010”)

a. The Company had established an Employee Stock Option Plan (ESOP 2010) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, which has been approved by the Board of Directors and the shareholders. A Nomination and Remuneration / Compensation Committee comprising majority of independent, non-executive members of the Board of Directors administers the ESOPs. All option under the ESOPs are exercisable for equity shares. The Company had taken approval of the Shareholders to grant and allot up-to 5,219,599 equity options under the said scheme. The total outstanding options under the scheme are 1,680,000 which were granted in last financial year.

b. There shall be a minimum period of one year between the grant of options and vesting of options. The vesting period may extend up to three years. The vesting shall happen in one or more tranches as may be decided by the Nomination and Remuneration / Compensation Committee. The exercise period of the options is a period of one year after the vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price (as determined by the Nomination and Remuneration / Compensation Committee) of share determined with respect to the date of grant. The Company has granted 4,756,195 options up to 31st March, 2016.

c. The movement in the scheme is set out as under:

5. The Company has investments of Rs. 6,126.75 million in subsidiary companies, joint venture and associate companies. Of these, the Company has investment of Rs. 825.60 million (net of provision for other than temporary diminution in the value of investments) and has balances of loans/advances of Rs. 28.20 million in various subsidiary companies whose net worth as at 31 March, 2016 has fully/substantially eroded. Of these, investments aggregating to Rs. 72.90 million in companies whose net worth is fully/substantially eroded have earned profits for the year ended 31 March, 2016. The management of the Company expects that these subsidiary companies will have positive cash flows to adequately sustain its operations in the foreseeable future. Having regard to the long term investment and strategic involvement no further provision is considered necessary for other than temporary diminution in the value of these investments.

6. Pursuant to TRAI notification, Digital Addressable System (DAS) was implemented in the metropolitan cities of the country in phase I, Phase 2 and Phase 3 cities effective 1 November, 2012, 1 April, 2013 and 1 January, 2016 respectively. The Company has not been able to finalize subscription rates / agreements with Distributors / Local Cable Operators (LCOs) in notified cities. Pending finalization of agreements, the Company has recognized subscription income on estimates based on market trends and negotiations with LCOs. Based on its review of such estimates on a regular basis management is of the view that any change arising in the subscription fee once finalized will not have significant impact on the revenue of the Company for the current period/year.

7. Exceptional items comprises the following:

a. Provision for doubtful trade receivables of Digital Addressable System customers of Rs. 637.43 million. Pursuant to TRAI notification, Digital Addressable System (DAS) was implemented in a phased manner in select cities / towns in F.Y 2012-13 and F.Y 2013-14. The Company had not been able to finalize the agreements with distributors/ Local Cable operators for DAS areas and hence revenues were accounted for on a best estimate basis. Based on current market trends of DAS rates and discussions/negotiations with trade partners, the Company has made an assessment of its trade receivables pertaining to DAS areas and has accordingly made a provision of doubtful trade receivables of Rs. 637.43 million.

b. Provision for other than temporary diminution in value of investments in subsidiary companies : Rs. 234.37 million.

c. During the current year, the Company has sold its entire 50% stake in Star Den Media Services Private Limited (‘Star Den) for a sales consideration of Rs. 403.50 million which has resulted in a net profit of Rs. 378.50 million and the same is disclosed as an exceptional item in the standalone financial statements.

d. Profit from disposal of investments has been netted off from the charge on account of provision for doubtful trade receivables and provision for other than temporary diminution in value of investments to arrive at a net exceptional item charge of Rs. 493.30 million.

8. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

Consequent to the change arising from the assessment of the useful lives of certain assets as above:

i. The Company had fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and had adjusted an amount of Rs. 12.03 million against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

ii. As a result the net depreciation charge was higher by Rs. 4.17 million.

9. Expenditure on Corporate Social Responsibility (CSR)

a. Gross amount required to be spent by the Company during the period ended 31 March, 2016 is Rs. Nil (Previous year Rs. 5.60 million)

Figures in bracket relates to previous year

c. Details of related party transactions:

- Contribution during the period ended 31 March, 2016 is Rs. Nil (Previous year Rs. Nil)

- Payable as at 31 March, 2016 is Rs. Nil (Previous year Rs. Nil)

10. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

11. Previous year’s figures have been regrouped/ reclassified wherever necessary to correspond with the current year’s classification/ disclosure.


Mar 31, 2015

1. BACKGROUND

DEN Networks Limited (hereinafter referred to as 'the Company' or 'DEN') was incorporated on 10 July 2007 and is engaged in distribution of television channels through analog and digital cable distribution network and provision of broadband services.

The Company changed its status from a Private Limited Company to a Public Limited Company on 15 April, 2008 thereby changing its name to DEN Digital Entertainment Networks Limited. Subsequently, the Company changed its name to DEN Networks Limited on 27 June, 2008.

During the financial year 2009-10, the Company issued and allotted 18,567,240 Equity Shares of face value of Rs. 10/- each, pursuant to the Initial Public Offer (IPO), which were admitted for listing and trading on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) with effect from November 24, 2009.

2.CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

a. Capital commitments

Estimated amount of contracts remaining to be executed on tangible capital account (net of advances) Rs. 459.00 million [Previous year Rs. 1,900.92 million].

b.Contingent liabilities

Claims against the Company not acknowledged as debts* As at As at 31st March,2015 31st March, (Rs. in million) 2014 (Rs. in million)

a) Bank guarantee issued 34.56 22.50

b) Corporate guarantee 250.00 250.00 issued by the Company

c) Outstanding letter of credits 216.72 19.25

d) Demand raised by UP Commercial 160.27 26.04 Tax Department for payment of VAT on transfer of STB's

e) Demand raised by Delhi 890.08 84.70 Entertainment Tax Department for payment of Entertainment Tax

f) Demand raised by UP 43.11 - Entertainment Tax Department for payment of Entertainment Tax

g) Demand raised by Madhya 3.65 3.65 Pradesh Entertainment Tax department for payment of Entertainment Tax

h) Demand raised by Rajasthan 25.30 25.30 Entry Tax department for payment of Entry Tax

i) Demand raised by Bihar 24.95 - Commercial Tax Department for payment of VAT on transfer of STB's

j) Demand raised by Karnataka 21.51 - Commercial Tax Department for payment of VAT on transfer of STB's

k) Demand raised by Kerala 22.88 - Commercial Tax Department for payment of VAT on transfer of STB's

* No provision is considered necessary since the company expects favourable decisions. The advance paid against the above is Rs. 164.87 million (previous year Rs. 55.50 million).

3. During the previous year, the Company had paid managerial remuneration to Chairman and Managing Director amounting to Rs. 24.93 million. Of this, remuneration amounting to Rs. 13.42 million was paid in excess of the provisions of Section 198 and 309 read with Schedule XIII of the Companies Act, 1956 for which the approval from the Central Government has been received in the current financial year.

3. RELATED PARTY DISCLOSURES

I. List of related parties

a. Related parties where control exists

i. Subsidiaries held directly

1. Den Mahendra Satellite Private Limited

2. Den Mod Max Cable Network Private Limited

3. Den Krishna Cable TV Network Private Limited

4. Den Pawan Cable Network Private Limited

5. DEN BCN Suncity Network Private Limited

6. Den Harsh Mann Cable Network Private Limited

7. Den Classic Cable TV Services Private Limited

8. DEN Bindra Network Private Limited

9. DEN Montooshah Network Private Limited

10. DEN Ashu Cable Private Limited

11. Shree Siddhivinayak Cable Network Private Limited

12. Drashti Cable Network Private Limited

13. DEN MCN Cable Network Private Limited

14. Mahadev Den Network Private Limited

15. Mahadev Den Cable Network Private Limited

16. Den Patel Entertainment Network Private Limited

17. DEN Digital Cable Network Private Limited

18. Den Malayalam Telenet Private Limited

19. DEN Bellary City Cable Private Limited

20. DEN-Manoranjan Satellite Private Limited

21. DEN Supreme Satellite Vision Private Limited

22. DEN Nashik City Cable Network Private Limited

23. Radiant Satellite (India) Private Limited

24. Den Radiant Satelite Cable Network Private Limited

25. Den MewarRajdev Cable Network Private Limited

26. DEN RIS Cable Network Private Limited

27. DEN Sky Media Network Private Limited

28. Den Prince Network Private Limited

29. Den Varun Cable Network Private Limited

30. Den Crystal Vision Network Private Limited

31. Meerut Cable Network Private Limited

32. DEN Jai Ambey Vision Cable Private Limited

33. DEN Fateh Marketing Private Limited

34. Den Enjoy Cable Networks Private Limited

35. Den MaaSharda Vision Cable Networks Private Limited

36. Den F K Cable TV Network Private Limited

37. Den Shiva Cable Network Private Limited

38. Den Pradeep Cable Network Private Limited

39. Den Satellite Cable TV Network Private Limited

40. Den Narmada Network Private Limited

41. Den Ambey Cable Networks Private Limited

42. Den Budaun Cable Network Private Limited

43. DEN Aman Entertainment Private Limited

44. Den Kashi Cable Network Private Limited

45. Den Futuristic Cable Networks Private Limited

46. Den Digital Entertainment Gujarat Private Limited

47. Aster Entertainment Private Limited

48. Den Entertainment Network Private Limited

49. Shine Cable Network Private Limited

50. Den Rajkot City Communication Private Limited

51. Den Elgee Cable Vision Private Limited

52. Den Malabar Cable Vision Private Limited

53. Amogh Broad Band Services Private Limited

54. Galaxy Den Media & Entertainment Private Limited

55. Den UCN Network India Private Limited

56. Bali Den Cable Network Private Limited

57. Mahavir Den Entertainment Private Limited

58. Den Citi Channel Private Limited

59. Den Satellite Network Private Limited

60. Fab Den Network Private Limited

61. Fortune (Baroda) Network Private Limited

62. Den Infoking Channel Entertainers Private Limited

63. United Cable Network (Digital) Private Limited

64. Shri Ram Den Network Private Limited

65. Den Krishna Vision Private Limited

66. CAB-I-NET Communications Private Limited

67. Den Sahyog Cable Network Private Limited

68. Den Sariga Communications Private Limited

69. Den Sports & Entertainment Private Limited (formerly known as IME Networks Private Limited)

70. Den Kattakada Telecasting and Cable Services Private Limited

71. Den A.F. Communication Private Limited

72. SreeGokulamStarnet Communication Private Limited

73. Big Den Entertainment Private Limited

74. Ambika Den Cable Network Private Limited

75. Den Steel City Cable Network Private Limited

76. Crystal Vision Media Private Limited

77. Victor Cable TV Network Private Limited

78. Sanmati Den Cable TV Network Private Limited

79. Multi Channel Cable Network Private Limited

80. Gemini Cable Network Private Limited

81. Multi Star Cable Network Private Limited

82. VM Magic Entertainment Private Limited

83. Matrix Cable Network Private Limited

84. Antique Communications Private Limited

85. Sanmati Entertainment Private Limited

86. Disk Cable Network Private Limited

87. Shaakumbari Den Media Private Limited

88. Silverline Television Network Private Limited

89. Ekta Entertainment Network Private Limited

90. Libra Cable Network Private Limited

91. DEN ADN Network Private Limited

92. CCN DEN Network Private Limited

93. Devine Cable Network Private Limited

94. Nectar Entertainment Private Limited

95. Pee Cee Cable Network Private Limited

96. Multitrack Cable Network Private Limited

97. Glimpse Communications Private Limited

98. Indradhanush Cable Network Private Limited

99. Adhunik Cable Network Private Limited

100. Blossom Entertainment Private Limited

101. Rose Entertainment Private Limited

102. Trident Entertainment Private Limited

103. Eminent Cable Network Private Limited

104. Mansion Cable Network Private Limited (w.e.f. 8-Apr-13)

105. DEN Discovery Digital Networks Private Limited (w.e.f. 29-Jun-13)

106. Jhankaar Cable Network Private Limited (w.e.f. 17-Jul-13)

107. Den Premium Multilink Cable Network Private Limited (w.e.f. 1-Jul-13)

108. Scorpio Cable Network Private Limited (w.e.f. 1-Nov-13)

109. Desire Cable Network Private Limited (w.e.f. 1-Feb-14)

110. Marble Cable Network Private Limited (w. e.f. 1-Feb-14)

111. Augment Cable Network Private Limited (w. e.f. 1-Feb-14)

ii. Subsidiaries held indirectly

1. Den Nanak Communication Private Limited

2. DEN Saya Channel Network Private Limited

3. Den Ambey Citi Cable Network Private Limited

4. Den Enjoy Navaratan Network Private Limited

5. Den Ambey Jhansi Cable Network Private Limited

6. Den Deva Cable Network Private Limited

7. DEN Faction Communication System Private Limited

8. Den AmbeyFarukabad Cable Network Private Limited

9. Star Channel Den Network Private Limited

10. Kishna Den Cable Networks Private Limited

11. Divya Drishti Den Cable Network Private Limited

12. DEN New Broad Communication Private Limited

13. Den Soccer Private Limited (formerly known as Astron Media Networks Private Limited)

14. Fun Cable Network Private Limited

15. Rajasthan Entertainment Private Limited

16. Kerela Entertainment Private Limited

17. Uttar Pradesh Digital Cable Network Private Limited

18. Saturn Digital Cable Private Limited

19. Den Enjoy SBNM Cable Network Private Limited

20. Capital Entertainment Private Limited

21. Bhadohi DEN Entertainment Private Limited

22. DEN STN Television Network Private Limited

23. Srishti Den Networks Private Limited (formerly known as Platinum Cable TV Network Private Limited)

24. Maitri Cable Network Private Limited

25. Melody Cable Network Private Limited

26. Mountain Cable Network Private Limited

27. Portrait Cable Network Private Limited

28. Den Prayag Cable Networks Private Limited

29. Skynet Cable Network Private Limited (w.e.f. 25-Apr-13)

30. DEN ABC Cable Network Ambarnath Private Limited (w.e.f. 1-Jul-13)

31. Konark IP Dossiers Private Limited (w.e.f. 1-Jul-13)

32. Angel Cable Network Private Limited (w.e.f. 1-Nov-13)

33. ABC Cable Network Private Limited (w.e.f. 1-Jan-14)

34. Den MTN Star Vision Networks Private Limited (w.e.f. 1-Jan-14)

iii. Jointly controlled entities

1. Star Den Media Services Private Limited

2. Media Pro Enterprise India Private Limited

3. Macro Commerce Private Limited (w.e.f. 15-Jan-15)

b. Entities under significant influence

1. Access Financial Services Limited

c. Key managerial personnel

1. Mr. Sameer Manchanda (Chairman and Managing Director)

4. OPERATING LEASE

The Company has taken office premises and accommodation for its employee under cancellable operating lease agreements. The lease rental expenses recognised in the Statement of Profit and Loss for the year is Rs. 141.26 million (Previous year Rs. 110.68 million).

5. FINANCE LEASE AS LESSEE

The Company has entered into finance lease arrangements for certain equipment which provide the Company an option to purchase the assets at the end of the lease period.

Future minimum lease payments and reconciliation of gross investment in the lease and present value of minimum lease payments

6. DISCLOSURES AS PER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT, 2006

As per information available with the management, the balance due to enterprises covered under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006. This has been relied upon by the auditors.

7. disclosure PuRSuANT To accounting standard 15 (revised 2005) on 'employee BENEFITS'

A. Defined contribution plans

The Company makes contribution toward the following defined contribution plans for qualifying employees:

a. Employees' Provident Fund (EPF)

B. Defined benefit plan Gratuity plan

Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary (i.e. last drawn salary plus dearness allowance) for each completed year of service or part thereof in excess of 6 months, subject to a maximum of Rs. 1,000,000. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.

The following tables set out the status of the gratuity plan (which is unfunded) and amounts recognised in the Company's financial statements as at 31st March, 2015.

8. EMPLOYEE STOCK OPTION PLAN 2010 ("ESOP 2010")

a. The Company had established an Employee Stock Option Plan (ESOP 2010) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, which have been approved by the Board of Directors and the shareholders. A Nomination and Remuneration / Compensation Committee comprising majority of independent, non-executive members of the Board of Directors administers the ESOPs. All option under the ESOPs are exercisable for equity shares. The Company had taken approval of the Shareholders to grant and allot up-to 5,219,599 equity options under the said scheme. During the year, the Company has granted 1,680,000 equity options to eligible employees of the Company and directors of the subsidiary companies.

b. There shall be a minimum period of one year between the grant of options and vesting of options. The vesting period may extend up to three years. The vesting shall happen in one or more tranches as may be decided by the Nomination and Remuneration / Compensation Committee. The exercise period of the options is a period of one year after the vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price (as determined by the Nomination and Remuneration / Compensation Committee) of share determined with respect to the date of grant. The Company has granted 4,756,195 options up to 31st March, 2015. During the year, 450,000 options were surrendered/forfeited.

Employee Stock Option Plan 2014 ("ESOP 2014")

a. In the extraordinary general meeting held on 05 January, 2015 the Shareholders through Postal Ballot approved the issue of 8,909,990 options (5% of issued capital) under the Scheme titled "DEN ESOP Plan A-2014 (ESOP A) and DEN ESOP Plan B- 2014" (ESOP B) in accordance with the Securities and Exchange Board of India (Share Bared Employee Benefits) Regulations 2014.

The ESOP A and B allows the issue of options to employees of the Company Each option comprises one underlying equity share.

As per the Scheme, the Nomination and Remuneration / Compensation Committee grants the options to the eligible employees. The exercise price of each option shall be such as may be decided by the Nomination and Remuneration / Compensation Committee. The options granted vest over a period of 4 years from the date of the grant in proportions as may be decided by the Nomination and Remuneration/ Compensation Committee. Options may be exercised within 1 year from the date of vesting.

b. The ESOP scheme titled "DEN ESOP Plan A -2014" (ESOP A) was approved by the shareholders through postal ballot on 05 January 2015. 4,454,995 options are covered under the Scheme for 4,454,995 shares.

During the current year, the Nomination and Remuneration / Compensation Committee has not granted options under the said scheme.

c. The ESOP scheme titled "DEN ESOP Plan B- 2014 was approved by the shareholders through postal ballot on 05January 2015. 4,454,995 options are covered under the Scheme for 4,454,995 equity shares.

The Nomination and Remuneration / Compensation Committee of the Company had granted 4,450,000 options under this Scheme to eligible employees. The shares covered by such options were 4,450,000 equity shares.

The vesting period of these options range over a period of 4 years. The options may be exercised within a period of 1 year from the date of vesting.

9. INTEREST IN JOINTLY CONTROLLED ENTITIES

The Company has 50% interest in the assets, liabilities, expense and income of Star Den Media Services Private Limited (Star Den), incorporated in India, which is involved in the business of distribution of television channels. Further, interest of Star Den in Media Pro Enterprise India Private Limited (Media Pro) is 50% resulting in 25% interest of the Company in Media Pro. The Company also has 50% interest in the assets, liabilities, expense and income of Macro Commerce Private Limited (Macro), incorporated in India, which is a TV Commerce Shop — A 24 Hour Home Shopping Channel.

The Company has total investments of Rs. 5,783.48 million in subsidiary companies and joint venture companies. Of these, the Company has investment of Rs. 660.29 million and has balances of loans/advances of Rs. 21.47 million in various subsidiary companies whose Net Worth as at 31st March, 2015 has fully/substantially eroded. Of these, companies with investments aggregating to Rs. 313.74 million and with balances of loans/advances of Rs. 5.26 million, whose net worth is fully/substantially eroded have earned profits for the year ended 31st March, 2015.The management of the Company expects that these subsidiary companies will have positive cash flows to adequately sustain its operations in the foreseeable future. Having regard to the long term investment and strategic involvement no provision for diminution of these investments has been considered necessary (Also see note 13).

10. Pursuant to TRAI notification, Digital Addressable System (DAS) was implemented in metropolitan cities of the country in phase I with effect from 1 November, 2012 and in 38 other cities in phase II with effect from 1 April, 2013. The Company is in the process of finalising the subscription fee to be billed to subscribers. Pending finalisation of such subscription fees, the Company has recognised subscription income on best estimates based on market trends and negotiations with distributors/ local cable operators. Based on its review of such estimates on a regular basis management is of the view that any change arising in the subscription fee once finalised will not have significant impact on the revenue of the Company for the current year and previous year.

11. Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure.


Mar 31, 2014

BACKGROUND

DEN Networks Limited (hereinafter referred to as ''the Company'' or ''DEN'') was incorporated on 10 July, 2007 and is engaged in distribution of television channels through analog and digital cable distribution network and provision of broadband services.

The Company changed its status from a Private Limited Company to a Public Limited Company on 15 April, 2008 thereby changing its name to DEN Digital Entertainment Networks Limited. Subsequently, the Company changed its name to DEN Networks Limited on 27 June, 2008.

During the financial year 2009-10, the Company issued and allotted 18,567,240 Equity Shares of face value of Rs. 10/- each, pursuant to the Initial Public Offer (IPO), which were admitted for listing and trading on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) with effect from November 24, 2009.

1. SEGMENT REPORTING

"The Company is engaged in the distribution and promotion of television channels and related services which is considered as the only reportable business segment. The Company''s operations are based in India. As the Company operates in a single business and geographical segment, the reporting requirements for primary and secondary segment disclosures prescribed by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting, are not required to be disclosed in these financial statements."

2. "During the year, the Company has paid managerial remuneration to Chairman and Managing Director amounting to Rs. 24.93 million. Of this, remuneration amounting to Rs. 13.42 million is paid in excess of the provisions of Section 198 & 309 read with Schedule XIII of the Companies Act, 1956 for which the approval from the Central Government is awaited."

3. Capital commitments and contingent liabilities

a. Capital commitments

Estimated amount of contracts remaining to be executed on tangible capital account (net of advances) Rs. 1,900.92 million [Previous year Rs. 3,116.61 million].

b. Contingent liabilities

Claims against the Company not acknowledged as debts

a. Bank guarantee issued 22.50 22.10

b. Corporate guarantee issued by the Company 250.00 250.00

c. Outstanding letter of credits 19.25 401.88

d. Demand raised by UP Commercial Tax 26.04 51.03 Department for payment of VAT on transfer of STB''s

e. Demand raised by Delhi Entertainment 84.70 - Tax Department for payment of Entertainment Tax

f. Demand raised by Madhya Pradesh 3.65 - Entertainment Tax department for payment of Entertainment Tax

g. Demand raised by Rajasthan Entry Tax 25.30 - department for payment of Entry Tax

4. OPERATING LEASE

The Company has taken office premises and accommodation for its employee under cancellable operating lease agreements. The lease rental expenses recognised in the Statement of Profit and Loss for the year is Rs. 105.28 million [Previous year Rs. 99.04 million].

6. FINANCE LEASE AS LESSEE

The Company has entered into finance lease arrangements for certain equipment which provide the Company an option to purchase the assets at the end of the lease period.

7. Disclosures as per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

As per information available with the management, the balance due to enterprises covered under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006. This has been relied upon by the auditors.

8. The Company has total investments of Rs. 4,961.60 million in subsidiary companies and a joint venture company. Of these, the Company has investment of Rs. 531.19 million and has balances of loans/advances of Rs. 32.81 million in various subsidiary companies whose Net Worth as at March 31, 2014 has fully/substantially eroded. Of these, companies with investments aggregating to Rs. 131.58 million and with balances of loans/advances of Rs. 14.51 million, whose net worth is fully/substantially eroded have earned profits for the year ended March 31, 2014. The management of the Company expects that these subsidiary companies will have positive cash flows to adequately sustain its operations in the foreseeable future. Having regard to the long term investment and strategic involvement no provision for diminution of these investments has been considered necessary.

9. Pursuant to TRAI notification, Digital Addressable System (DAS) was implemented in metropolitan cities of the country in phase I with effect from 1 November, 2012 and in 38 other cities in phase II with effect from 1 April, 2013. The Company is in the process of finalising the subscription fee to be billed to subscribers. Pending finalisation of such subscription fees, the Company has recognised subscription income on best estimates based on market trends and negotiations with distributors/ local cable operators. Based on its review of such estimates on a regular basis management is of the view that any change arising in the subscription fee once finalised will not have significant impact on the revenue of the Company for the current year.

10. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

1. Background

DEN Networks Limited (hereinafter referred to as ''the Company'' or ''DEN'') was incorporated on 10 July, 2007 and is engaged in distribution of television channels through analog and digital cable distribution network and provision of internet services.

The Company changed its status from a Private Limited Company to a Public Limited Company on 15 April, 2008 thereby changing its name to DEN Digital Entertainment Networks Limited. Subsequently, the Company changed its name to DEN Networks Limited on 27 June, 2008

During the financial year 2009-10, the Company issued and allotted 1,85,67,240 Equity Shares of face value of Rs.10/-each, pursuanttothe Initial Public Offer (IPO), which were admitted for listing and trading on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) with effect from November24,2009.

2. SEGMENT REPORTING

"The Company is engaged in the distribution & promotion of television channels and related services which is considered as the only reportable business segment. The Company''s operations are based in India. As the Company operates in a single business and geographical segment, the reporting requirements for primary and secondary segment disclosures prescribed by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting, are not required to be disclosed in these financial statements.

3. RELATED PARTY DISCLOSURES

I. List of related parties

a. Related parties where control exists

i. Subsidiaries held directl

1. Den Mahendra Satellite Private Limited (w.e.f. 27-Dec-07)

2. Den Mod Max Cable Network Private Limited (w.e.f. 27-Dec-07)

3. Den Krishna Cable TV Network Private Limited (w.e.f. 27-Dec-07)

4. Den Pawan Cable Network Private Limited (w.e.f. 27-Dec-07)

5. DEN BCN Suncity Network Private Limited (w.e.f. 27-Dec-07)

6. Den Harsh Mann Cable Network Private Limited (w.e.f. 1-Mar-08)

7. Den Classic Cable TV Services Private Limited (w.e.f. 1-May-08)

8. DEN Bindra Network Private Limited (w.e.f. 1-Jul-08)

9. DEN Montooshah Network Private Limited (w.e.f. 16-Jul-08)

10. DEN Ashu Cable Private Limited (w.e.f. 22-Aug-08)

11. Dew Shree Network Private Limited (w.e.f. 26-Sep-07)

12. Shree Siddhivinayak Cable Network Private Limited (w.e.f. 1-Dec-07)

13. Drashti Cable Network Private Limited (w.e.f. 1-Apr-08)

14. DEN MCN Cable Network Private Limited (w.e.f. 8-Apr-08)

15. Mahadev Den Network Private Limited (w.e.f. 1-Feb-08)

16. Mahadev Den Cable Network Private Limited (w.e.f. 1-Feb-08)

17. Den Patel Entertainment Network Private Limited (formerly known as Mahadev Den Cable Net Private Limited (w.e.f. 1-Feb-08)

18. DEN Digital Cable Network Private Limited (w.e.f. 1-May-08)

19. Den Malayalam Telenet Private Limited (w.e.f. 22-Aug-08)

20. DEN Bellary City Cable Private Limited (w.e.f. 1-Jan-09)

21. DEN-Manoranjan Satellite Private Limited (w.e.f. 1-Mar-08)

22. DEN Supreme Satellite Vision Private Limited (w.e.f. 30-May-08)

23. DEN Nashik City Cable Network Private Limited (w.e.f. 26-Jun-08)

24. Radiant Satellite (India) Private Limited (w.e.f. 2-Apr-08)

25. Den Radiant Satelite Cable Network Private Limited (w.e.f. 2-Apr-08)

26. Den Mewar Rajdev Cable Network Private Limited (w.e.f. 2-Apr-08)

27. DEN RIS Cable Network Private Limited (w.e.f. 1-Jun-08)

28. DEN Sky Media Network Private Limited (w.e.f. 31-May-08)

29. Den Prince Network Private Limited (w.e.f. 1-Feb-08)

30. Den Varun Cable Network Private Limited (w.e.f. 7-Jan-08)

31. Den Crystal Vision Network Private Limited (w.e.f. 27-Dec-07)

32. Meerut Cable Network Private Limited (w.e.f. 1-Dec-07)

33. DEN Jai Ambey Vision Cable Private Limited (w.e.f. 5-Apr-08)

34. DEN Fateh Marketing Private Limited (w.e.f. 9-Apr-08)

35. Den Prayag Cable Networks Private Limited (w.e.f. 1-Feb-08)

36. Den Enjoy Cable Networks Private Limited (w.e.f. 2-Apr-08)

37. Den Maa Sharda Vision Cable Networks Private Limited (w.e.f. 1-Apr-08)

38. Den F K Cable TV Network Private Limited (w.e.f. 1-May-08)

39. Den Shiva Cable Network Private Limited (w.e.f. 1-May-08)

40. Den Pradeep Cable Network Private Limited (w.e.f. 1-Feb-08)

41. Den Satellite Cable TV Network Private Limited (w.e.f. 1-Apr-08)

42. Den Narmada Network Private Limited (w.e.f. 1-Sep-08)

43. Den Ambey Cable Networks Private Limited (w.e.f. 11-Sep-07)

. Dsn Budaun Cable Network Private Limited (w.e.f. 1-0ct-08)

- DEN Aman Entertainment Private Limited (w.e.f. 1-0ct-08)

46. Den Kashi Cable Network Private Limited (w.e.f. 1-Mar-08)

47. Den Futuristic Cable Networks Private Limited (w.e.f. 9-Oct-07)

48. Den Digital Entertainment Gujarat Private Limited (w.e.f. 31-May-08)

49. Aster Entertainment Private Limited (w.e.f. 31-May-08)

50. Den Entertainment Network Private Limited (w.e.f. 1-Sep-07)

51. Shine Cable Network Private Limited (w.e.f. 1-Dec-08)

52. Den Rajkot City Communication Private Limited (formerly known as Rajkot City Communication Private Limited) (w.e.f. 10-Apr-09)

53. Den Elgee Cable Vision Private Limited (w.e.f. 3-Jun-09)

54. Den Malabar Cable Vision Private Limited (w.e.f. 30-Apr-09)

55. Amogh Broad Band Services Private Limited (w.e.f. 29-Jul-09)

56. Galaxy Den Media & Entertainment Private Limited (w.e.f. 15-Jul-09)

57. Den UCN Network India Private Limited (w.e.f. 25-Jul-09)

58. Bali Den Cable Network Private Limited (w.e.f. 1-Sep-09)

59. Mahavir Den Entertainment Private Limited (w.e.f. 1-Sep-09)

60. Den Citi Channel Private Limited (w.e.f. 16-Nov-09)

61. Den Satellite Network Private Limited (w.e.f. 15-Jan-10)

62. Fab Den Network Private Limited (w.e.f. 1-Jan-10)

63. Fortune (Baroda) Network Private Limited (w.e.f. 31-Jul-09)

64. Den Infoking Channel Entertainers Private Limited (w.e.f. 1-Aug-09)

65. United Cable Network (Digital) Private Limited (w.e.f. 1-Apr-10)

66. Shri Ram Den Network Private Limited (w.e.f. 1-Apr-10)

67. Den Krishna Vision Private Limited (w.e.f. 1-Apr-10)

68. CAB-I-NET Communications Private Limited (w.e.f. 1-May-10)

69. Den Sahyog Cable Network Private Limited (w.e.f. 1-Jul-10)

70. Den Sariga Communications Private Limited (w.e.f. 1-Aug-10)

71. IME Networks Private Limited (w.e.f. 27-Sep-10)

72. Den Kattakada Telecasting and Cable Services Private Limited (w.e.f. 1 -Oct-10)

73. Den A.F. Communication Private Limited (w.e.f. 1-Dec-10)

74. Sree Gokulam Starnet Communication Private Limited (w.e.f. 24-Jan-11)

75. Big Den Entertainment Private Limited (w.e.f. 1-Feb-11)

76. Ambika Den Cable Network Private Limited (w.e.f. 1-Jul-11)

77. Den Steel City Cable Network Private Limited (w.e.f. 1-Jul-11)

78. Crystal Vision Media Private Limited (w.e.f. 12-Jul-11)

79. Victor Cable TV Network Private Limited (w.e.f. 13-Jul-11)

80. Sanmati Den Cable TV Network Private Limited (w.e.f. 25-Aug-11)

81. Multi Channel Cable Network Private Limited (w.e.f. 1-Sep-11)

82. Gemini Cable Network Private Limited (w.e.f. 1-Oct-11)

83. Multi Star Cable Network Private Limited (w.e.f. 1-Oct-11)

84. VM Magic Entertainment Private Limited (w.e.f. 1-Oct-11)

85. Matrix Cable Network Private Limited (w.e.f. 1-Oct-11)

86. Antique Communications Private Limited (w.e.f. 5-Dec-11)

87. Sanmati Entertainment Private Limited (w.e.f. 26-Dec-11)

88. Disk Cable Network Private Limited (w.e.f. 6-Jan-12)

89. Shaakumbari Den Media Private Limited (w.e.f. 1-Feb-12)

90. Silverline Television Network Private Limited (w.e.f. 29-Mar-12)

91. Ekta Entertainment Network Private Limited (w.e.f. 15-Jun-12)

92. Libra Cable Network Private Limited (w.e.f. 1-Feb-13)

93. DEN ADN Network Private Limited (w.e.f. 27-Jul-12)

94. CCN DEN Network Private Limited (w.e.f. 27-Jul-12)

95. Devine Cable Network Private Limited (w.e.f. 1-Sep-12)

96. Nectar Entertainment Private Limited (w.e.f. 1-Sep-12)

97. Pee Cee Cable Network Private Limited (w.e.f. 11-Feb-13)

98. Multitrack Cable Network Private Limited (w.e.f. 1-Nov-12)

99. Glimpse Communications Private Limited (w.e.f. 16-Nov-12)

100. Indradhanush Cable Network Private Limited (w.e.f. 22-Dec-12)

101. Adhunik Cable Network Private Limited (w.e.f. 16-Nov-12)

102. Blossom Entertainment Private Limited (w.e.f. 31-Mar-12)

103. Rose Entertainment Private Limited (w.e.f. 31-Mar-12)

104. Trident Entertainment Private Limited (w.e.f. 31-Mar-12)

105. Eminent Cable Network Private Limited (w.e.f. 31-Mar-12)

ii. Subsidiaries held indirectly

1. Den Nanak Communication Private Limited (w.e.f. 1-Mar-08)

2. DEN Saya Channel Network Private Limited (w.e.f. 30-Jun-08)

3. Den Ambey Citi Cable Network Private Limited (w.e.f. 1-Feb-08)

4. Den Enjoy Navaratan Network Private Limited (w.e.f. 2-Apr-08)

5. Den Ambey Jhansi Cable Network Private Limited (w.e.f. 1-Mar-09)

6. Den Deva Cable Network Private Limited (w.e.f. 1-Apr-08)

7. DEN Faction Communication System Private Limited (w.e.f. 1-0ct-08)

8. Den Ambey Farukabad Cable Network Private Limited (w.e.f. 1-Mar-09)

9. Star Channel Den Network Private Limited (w.e.f. 1-Aug-09)

10. Kishna Den Cable Networks Private Limited (w.e.f. 1-Nov-09)

11. Divya Drishti Den Cable Network Private Limited (w.e.f. 1-Apr-10)

12. DEN New Broad Communication Private Limited (w.e.f. 1-Jul-10)

13. Astron Media Networks Private Limited (w.e.f. 27-Sep-10)

14. Fun Cable Network Private Limited (w.e.f. 15-Feb-11)

15. Rajasthan Entertainment Private Limited (w.e.f. 23-Feb-11)

16. Kerela Entertainment Private Limited (w.e.f. 9-Dec-10)

17. Uttar Pradesh Digital Cable Network Private Limited (w.e.f. 4-Apr-11)

18. Saturn Digital Cable Private Limited (w.e.f. 1-Jul-11)

19. Den Enjoy SBNM Cable Network Private Limited (w.e.f. 11-Apr-11)

20. Capital Entertainment Private Limited (w.e.f. 30-Dec-11)

21. Bhadohi DEN Entertainment Private Limited (w.e.f. 5-Dec-11)

22. DEN STN Television Network Private Limited (w.e.f. 1-Aug-12)

23. Platinum Cable TV Network Private Limited (w.e.f. 1 -Jan-13)

24. Maitri Cable Network Private Limited (w.e.f. 25-Mar-13)

25. Melody Cable Network Private Limited (w.e.f. 25-Mar-13)

26. Mountain Cable Network Private Limited (w.e.f. 25-Mar-13)

27. Portrait Cable Network Private Limited (w.e.f. 25-Mar-13)

b. Jointly controlled entities

1. Star Den Media Services Private Limited

2. Media Pro Enterprise India Private Limited

c. Entities under significant influence

1. Setpro 18 Distribution Limited

d. Key managerial personnel

1. Mr. SameerManchanda

4. Deferred tax

a. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing tax laws.

b. Break up of deferred tax assets/ liabilities and reconciliation of current year''s deferred tax charge is as follows:

5. Operating Lease

The Company has taken office premises and accommodation for its employee under cancellable operating lease agreements. The lease rental expenses recognised in the Statement of Profit and Loss for the year is Rs. 99.04 million [Previous year Rs. 90.55 million],

6. Finance lease as lessee

The Company has entered into finance lease arrangements for certain equipment which provide the Company an option to purchase the assets atthe end ofthe lease period.

Future minimum lease payments and reconciliation of gross investment in the lease and present value of minimum lease payments.

7. Finance lease as lessor

The Company has entered into finance lease arrangements for certain equipment which provide the Company an option to sell the assets at the end ofthe lease period.

Future minimum lease payments and reconciliation of gross investment in the lease and present value of minimum lease payments

8. Disclosures as perthe Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

As per information available with the management, the balance due to enterprises covered under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid oris payable underthe terms ofthe MSMED Act, 2006.

9. Disclosure pursuantto Accounting Standard 15 (Revised 2005) on ''Employee Benefits''

A. Defined contribution plans and state plans

The Company makes contribution toward the following defined contribution plans for qualifying employees:

a. Employees''Provident Fund (EPF)

b. Employees''State Insurance (ESI)

During the yearthe Company has recognised the following amounts in the Statement of Profit and Loss:

10. Employee Stock Option Plan 2010 ("ESOP 2010")

a. The Company had established an Employee Stock Option Plan (ESOP 2010) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A remuneration/compensation committee comprising majority of independent, non executive members ofthe Board of Directors administers the ESOPs. All option under the ESOPs are exercisable for equity shares. The Company has granted 5,000,000 equity options to eligible employees ofthe Company & directors ofthe subsidiary companies. During the year, Nil (Previous year 1,465,874) options have been surrendered by eligible employees and directors ofthe subsidiary companies

b. There shall be a minimum period of one year between the grant of options and vesting of options. The vesting period may extend up to three years. The vesting shall happen in one or more tranches as may be decided by the Compensation/Remuneration Committee. The exercise period ofthe options is a period of one year after the vesting ofthe options. Each option is exercisable for one equity share of'' 10 each fully paid up on payment of exercise price (as determined by the remuneration/ compensation committee) of share determined with respect to the date of grant. All ESOP options have been vested upto 31 st March 2013.

11. The Company has total investments of Rs. 43,674.70 lakhs in subsidiary companies and a joint venture company. Of these, the Company has investment of Rs. 4,176.58 lakhs and has balances of loans/advances of Rs. 604.75 lakhs in various subsidiary companies whose Net Worth as at March 31,2013 (as per management certified accounts) has fully/substantially eroded. Of these, companies with investments aggregating to Rs. 982.17 lakhs and with balances of loans/advances of Rs. 1.00 lakhs, whose net worth is fully/substantially eroded have (as per management certified accounts), earned profits forthe year ended March 31, 2013. The management ofthe Company expects that these subsidiary companies will have positive cash flows to adequately sustain its operations in the foreseeable future. Having regard to the long term investment and strategic involvement no provision for diminution ofthese investments has been considered necessary.

12. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2012

1. Background

DEN Networks Limited (hereinafter referred to as 'the Company' or 'DEN') was incorporated on 10 July, 2007 to engage in cable television distribution, broadband internet and other related business.

DEN is engaged in distribution of television channels through analog and digital cable distribution network and provision of internet services.

The Company changed its status from a Private Limited Company to a Public Limited Company on 15 April, 2008 thereby changing its name to DEN Digital Entertainment Networks Limited. Subsequently, the company changed its name to DEN Networks Limited on 27 June, 2008.

During the financial year 2009-10, the Company issued and allotted 1,85,67,240 Equity Shares of face value of Rs.10/- each, pursuant to the Initial Public Offer (IPO), which were admitted for listing and trading on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) with effect from November 24,2009.

2. Capital commitments and contingent liabilities

a. Capital commitments

Estimated amount of contracts remaining to be executed on tangible capital account (net of advances) X2 78.21 millions [Previous year Rs. 541.79 millions].

b. Contingent liabilities

i. Guarantees issued by bankers outstanding as at the end of the year amounting to Rs.44.90 millions [Previous year Rs.41.78 millions] on account of the following:

a. license for internet use issued by the Department of Teleco mmunications -X 1.00 millions [Previous year Rs.21.00 millions]

b. Tax Authorities for statutory registrations - Rs.3.33 millions [Previous year Rs.0.23 millions]

c. Bombay Stock Exchange as security - Rs.20.50 millions [Previous year Rs.20.50 millions]

d. Others - Rs.0.07 millions [Previous year Rs.0.05 millions]

ii. Outstanding letters of credit as at the end of the year Rs.370.83 millions [Previous year Rs.29451 millions].

iii. Guarantee given by the company for a term loan taken from bank by a subsidiary Company outstanding as at the end of the year amounting to Rs.2 50.00 millions [Previous year Rs.Nil].

3. Segment reporting

The company is engaged in the distribution & promotion of television channels and related services which is considered as the only reportable business segment. The Company's operations are based in India. As the Company operates in a single business and geographical segment, the reporting requirements for primary and secondary segment disclosures prescribed by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting, are not required to be disclosed in these financial statements.

4. Related Party Disclosures I. List of related parties a. Related parties where control exists i. Subsidiaries held directly

1. Den Mahendra Satellite Private Limited (w.e.f. 27-Dec-07)

2. Den Mod Max Cable Network Private Limited (w.e.f. 27-Dec-07)

3. Den Krishna Cable TV Network Private Limited (w.e.f. 27-Dec-07)

4. Den Pawan Cable Network Private Limited (w.e.f. 27-Dec-07)

5. DEN BCN Suncity Network Private Limited (w.e.f. 27-Dec-07)

6. Den Harsh Mann Cable Network Private Limited (w.e.f. l-Mar-08)

7. Den Classic Cable TV Services Private Limited (w.e.f. l-May-08)

8. DEN Bindra Network Private Limited (w.e.f. l-Jul-08)

9. DEN Montooshah Network Private Limited (w.e.f. 16-Jul-08)

10. DEN Ashu Cable Private Limited (w.e.f. 22- Aug-08)

11. Dew Shree Network Private Limited (w.e.f. 26- Sep-07)

12. Shree Siddhivinayak Cable Network Private Limited (w.e.f. l-Dec-07)

13. Drashti Cable Network Private Limited (w.e.f. l-Apr-08)

14. DEN MCN Cable Network Private Limited (w.e.f. 8-Apr-08)

15. Mahadev Den Network Private Limited (w.e.f. l-Feb-08)

16. Mahadev Den Cable Network Private Limited (w.e.f. l-Feb-08)

17. Mahadev Den Cable Net Private Limited (w.e.f. l-Feb-08)

18. DEN Digital Cable Network Private Limited (w.e.f. l-May-08)

19. Den Malayalam Telenet Private Limited (w.e.f. 22-Aug-08)

20. DEN Bellary City Cable Private Limited (w.e.f. l-Jan-09)

21. DEN-Manoranjan Satellite Private Limited (w.e.f. l-Mar-08)

22. DEN Supreme Satellite Vision Private Limited (w.e.f. 30-May-08)

23. DEN Nashik City Cable Network Private Limited (w.e.f. 26-Jun-08)

24. Radiant Satellite (India) Private Limited (w.e.f. 2-Apr-08)

25. Den Radiant Satelite Cable Network Private Limited (w.e.f. 2-Apr-08)

26. Den Mewar Rajdev Cable Network Private Limited (w.e.f. 2-Apr-08)

27. DEN RIS Cable Network Private Limited (w.e.f. l-Jun-08)

28. DEN Sky Media Network Private Limited (w.e.f. 3 l-May-08)

29. Den Prince Network Private Limited (w.e.f. l-Feb-08)

30. Den Varun Cable Network Private Limited (w.e.f. 7-Jan-08)

31. Den Crystal Vision Network Private Limited (w.e.f.27-Dec-07)

32. Meerut Cable Network Private Limited (w.e.f. l-Dec-07)

33. DEN Jai Ambey Vision Cable Private Limited (w.e.f. 5-Apr-08)

34. DEN Fateh Marketing Private Limited (w.e.f. 9-Apr-08)

35. Den Prayag Cable Networks Private Limited (w.e.f. l-Feb-08)

36. Den Enjoy Cable Networks Private Limited (w.e.f. 2-Apr-08)

37. Den Maa Sharda Vision Cable Networks Private Limited (w.e.f. l-Apr-08)

38. Den F K Cable TV Network Private Limited (w.e.f. l-May-08)

39. Den Shiva Cable Network Private Limited (w.e.f. l-May-08)

40. Den Pradeep Cable Network Private Limited (w.e.f. l-Feb-08)

41. Den Satellite Cable TV Network Private Limited (w.e.f. l-Apr-08)

42. Den Narmada Network Private Limited (w.e.f. l-Sep-08)

43. Den Ambey Cable Networks Private Limited (w.e.f. ll-Sep-07)

44. Den Budaun Cable Network Private Limited (w.e.f. l-Oct-08)

45. DEN Aman Entertainment Private Limited (w.e.f. l-Oct-08)

46. Den Kashi Cable Network Private Limited (w.e.f. l-Mar-08)

47. Den Futuristic Cable Networks Private Limited (w.e.f. 9-Oct-07)

48. Den Digital Entertainment Gujarat Private Limited (w.e.f. 3 l-May-08)

49. Aster Entertainment Private Limited (w.e.f. 3 l-May-08)

50. Den Entertainment Network Private Limited (w.e.f. l-Sep-07)

51. Shine Cable Network Private Limited (w.e.f. l-Dec-08)

52. Creative Cable Network (partnership firm) (w.e.f. 12-Oct-07) (dissolved during financial year 2011-12)

53. Rajkot City Communication Private Limited (w.e.f. 10-Apr-09)

54. Den Elgee Cable Vision Private Limited (w.e.f. 3-Jun-09)

55. Den Malabar Cable Vision Private Limited (w.e.f. 30-Apr-09)

56. Amogh Broad Band Services Private Limited (w.e.f. 29-Jul-09)

57. Galaxy Den Media & Entertainment Private Limited (w.e.f. 15-Jul-09)

58. Den UCN Network India Private Limited (w.e.f. 25-Jul-09)

59. Bali Den Cable Network Private Limited (w.e.f. l-Sep-09)

60. Mahavir Den Entertainment Private Limited (w.e.f. l-Sep-09)

61. Den Citi Channel Private Limited (w.e.f. 16- Nov-09)

62. Den Satellite Network Private Limited (w.e.f. 15-Jan-10)

63. Fab Den Network Private Limited (w.e.f. 1-Jan- 10)

64. Fortune (Baroda) Network Private Limited (w.e.f. 31-Jul-09)

65. Den Infoking Channel Entertainers Private Limited (w.e.f. l-Aug-09)

66. United Cable Network (Digital) Private Limited (w.e.f. l-Apr-10)

67. Shri Ram Den Network Private Limited (w.e.f. l-Apr-10)

68. Den Krishna Vision Private Limited (w.e.f. l-Apr-10)

69. Cab-I-Net Communications Private Limited (w.e.f. l-May-10)

70. Den Sahyog Cable Network Private Limited (w.e.f. l-Jul-10)

71. Den Sariga Communications Private Limited (w.e.f. l-Aug-10)

72. IME Networks Private Limited (w.e.f. 27-Sep- 10)

73. Den Kattakada Telecasting and Cable Services Private Limited (w.e.f. l-Oct-10)

74. Den A.F. Communication Private Limited (w.e.f. l-Dec-10)

75. Sree Gokulam Starnet Communication Private Limited (w.e.f. 24-Jan-ll)

76. Big Den Entertainment Private Limited (w.e.f. 1-Feb-ll)

77. Ambika Den Cable Network Private Limited (w.e.f. 1-Jul-ll)

78. Den Steel City Cable Network Private Limited (w.e.f. 1-Jul-ll)

79. Crystal Vision Media Private Limited (w.e.f. 12- Jul-11)

80. Victor Cable TV Network Private Limited (w.e.f. 13-Jul-ll)

81. Sanmati Den Cable TV Network Private Limited (w.e.f. 25-Aug-ll)

82. Multi Channel Cable Network Private Limited (w.e.f. 1-Sep-ll)

83. Gemini Cable Network Private Limited (w.e.f. 1-Oct-ll)

84. Multi Star Cable Network Private Limited (w.e.f. 1-Oct-ll)

85. VM Magic Entertainment Private Limited (w.e.f. 1-Oct-ll)

86. Matrix Cable Network Private Limited (w.e.f. 1-Oct-ll)

87. Antique Communications Private Limited (w.e.f. 5-Dec-ll)

88. Sanmati Entertainment Private Limited (w.e.f. 26-Dec-ll)

89. Disk Cable Network Private Limited (w.e.f. 6-Jan-12)

90. Shaakumbari Den Media Private Limited (w.e.f. l-Feb-12)

91. Silverline Television Network Private Limited (w.e.f. 29-Mar-12)

ii. Subsidiaries held indirectly

1. Den Nanak Communication Private Limited (w.e.f. l-Mar-08)

2. DEN Saya Channel Network Private Limited (w.e.f. 30-Jun-08)

3. Den Ambey Citi Cable Network Private Limited (w.e.f. l-Feb-08)

4. Den Enjoy Navaratan Network Private Limited (w.e.f. 2-Apr-08)

5. Den Ambey Jhansi Cable Network Private Limited (w.e.f. l-Mar-09)

6. Den Deva Cable Network Private Limited (w.e.f. l-Apr-08)

7. DEN Faction Communication System Private Limited (w.e.f. l-Oct-08)

8. Den Ambey Farukabad Cable Network Private Limited (w.e.f. l-Mar-09)

9. Star Channel Den Network Private Limited (w.e.f. l-Aug-09)

10. Kishna Den Cable Networks Private Limited (w.e.f. l-Nov-09)

11. Divya Drishti Den Cable Network Private Limited (w.e.f. l-Apr-10)

12. DEN New Broad Communication Private Limited (w.e.f. l-Jul-10)

13. Astron Media Networks Private Limited (w.e.f. 27-Sep-10)

14. Fun Cable Network Private Limited (w.e.f. 15- Feb-11)

15. Rajasthan Entertainment Private Limited (w.e.f. 23-Feb-ll)

16. Kerela Entertainment Private Limited (w.e.f. 9-Dec-10)

17. Uttar Pradesh Digital Cable Network Private Limited (w.e.f. 4-Apr-ll)

18. Saturn Digital Cable Private Limited (w.e.f. 1-Jul-ll)

19. Den Enjoy SBNM Cable Network Private Limited (w.e.f. 11-Apr-ll)

20. Capital Entertainment Private Limited (w.e.f. 30-Dec-ll)

21. Bhadohi DEN Entertainment Private Limited (w.e.f. 5-Dec-ll)

22. Blossom Entertainment Private Limited (w.e.f. 31-Mar-12)

23. Rose Entertainment Private Limited (w.e.f. 31- Mar-12)

24. Trident Entertainment Private Limited (w.e.f. 31-Mar-12)

25. Eminent Cable Network Private Limited (w.e.f. 31-Mar-12)

b. Jointly controlled entity

1. Star Den Media Services Private Limited

2. Media Pro Enterprise India Private Limited

c. Entities under significant influence 1. Setpro 18 Distribution Limited

d. Key managerial personnel 1. Mr. Sameer Manchanda

5. Deferred tax

a. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing tax laws.

6. Operating Lease

The company has taken office premises and accommodation for its employee under cancellable operating lease agreements. The lease rental expense recognised in the profit and loss account for the year is Rs. 90.55 millions [Previous year Rs. 83.29 millions].

7. Disclosures as per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

As per information available with the management, the balance due to enterprises covered under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006.

8. Disclosure pursuant to Accounting Standard 15 (Revised 2005) on 'Employee Benefits' A. Defined contribution plans and state plans

The Company makes contribution toward the following defined contribution for qualifying employees:

a. Employees'Provident Fund (EPF)

b. Employees' State Insurance (ESI)

c. Employees' Pension Scheme (EPS)

B. Defined benefit plan

Gratuity plan

The gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary (i.e. last drawn salary plus dearness allowance) for each completed year of service or part thereof in excess of 6 months, subject to a maximum ofRs. 1,000,000. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.

The following tables set out the status of the gratuity plan and amounts recognised in the Company's financial statements as at 31 March, 2012.

9. Employee Stock Option Plan 2010 ("ESOP 2010")

a. The Company had established an Employee Stock Option Plan (ESOP 2010) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A remuneration/ compensation committee comprising majority of independent, non executive members of the Board of Directors administers the ESOPs. All option under the ESOPs are exercisable for equity shares. The Company has granted 5,000,000 equity options to eligible employees of the Company & directors of the subsidiary Companies. During the financial year 2011-12,1,465,874 options have been surrendered by eligible employees & directors of the subsidiary companies.

b. There shall be a minimum period of one year between the grant of options and vesting of options. The vesting period may extend up to three years. The vesting shall happen in one or more tranches as may be decided by the Compensation/Remuneration Committee. The exercise period of the options is a period of one year after the vesting of the options. Each option is exercisable for one equity share ofRs. 10 each fully paid up on payment of exercise price (as determined by the remuneration/ compensation committee) of share determined with respect to the date of grant. There are 2,233,813 options which are vested upto 31st March, 2012.

10. Earnings per equity share (EPS)

Basic earnings per share have been computed by dividing net profit after tax and after dividend on cumulative convertible preference shares by the weighted average number of equity shares outstanding for the year. Convertible preference shares have been considered in Diluted Earnings per Share computation.

11. Interest in Jointly Controlled entity

The Company has 50% interest in the assets, liabilities, expense and income of Star Den Media Services Private Limited (Star DEN), incorporated in India, which is involved in the business of distribution of television channels.

12. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification/ disclosure.


Mar 31, 2011

1. Background

DEN Networks Limited (hereinafter referred to as 'the Company' or 'DEN') was incorporated on 10 July, 2007 to engage in cable television distribution, broadband internet and other related business.

DEN is engaged in distribution of television channels through analog and digital cable distribution network and provision of internet services.

The Company changed its status from a Private Limited Company to a Public Limited Company on 15 April, 2008 thereby changing its name to DEN Digital Entertainment Networks Limited. Subsequently, the company changed its name to DEN Networks Limited on 27 June, 2008.

During the financial year 2009-10, the Company issued and allotted 1,85,67,240 Equity Shares of face value of Rs. 10/- each, pursuant to the Initial Public Offer (IPO), which were admitted for listing and trading on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) with effect from November 24, 2009.

2. Secured Loans

a. Cash credit facilities of Rs. '(000) 285,966 [Previous year figures Rs. '(000) 230,345] are secured by:

i. First pari passu charge on current and future book debts of the Company.

ii. Second pari passu charge on all movable and immovable fixed assets of the Company.

b. Out of total term loan of Rs. '(000) 1,253,785 [Previous year figures Rs. '(000) 1,376,619] Rs. '(000) 1,123,742 [Previous year figure Rs. '(000) 1,376,619] from bank is secured by:

i. First pari passu charge on all movable and immovable properties of the Company both present and future;

c. Out of total term loan of Rs. '(000) 1,253,785 [Previous year figures Rs. '(000) 1,376,619] Rs. '(000) 130,044 [Previous year figure Rs. '(000) Nil] from bank is secured by:

i. First pari passu charge on all movable and immovable properties of the Company both present and future;

ii. Second pari passu charge on all current assets of the Company;

d. Other loans from banks amounting to Rs. '(000) 7,279 [Previous year figures Rs. '(000) 784] are secured by hypothecation of vehicles financed by them.

e. The entire amount under cash credit and term loan facilities of Rs. '(000) 527,400 [Previous year figure Rs. '(000) 1,606,964] is secured by personal guarantee of Mr. Sameer Manchanda.

3. Capital Commitments and Contingent Liabilities

a. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. '(000) 541,794 [Previous year Rs. '(000) 71,503].

b. Contingent Liabilities

I. Guarantees issued by bankers outstanding as at the end of the year end amounting to Rs. '(000) 41,775 [Previous year Rs. '(000) 41,725] on account of license for internet use issued by the Department of Telecommunications.

ii. Outstanding letters of credit as at the end of the year Rs. '(000) 294,510 [Previous year Rs. '(000) 140,887].

4. Segment Reporting

The company is engaged in the distribution & promotion of television channels and related services which is considered as the only reportable business segment. The Company's operations are based in India. As the Company operates in a single business and geographical segment, the reporting requirements for primary and secondary segment disclosures prescribed by paragraphs 39 to 51 of Accounting Standard 17 -Segment Reporting, are not required to be disclosed in these financial statements.

5. Related Party Disclosures i. List of related parties

a. Related parties where control exists

1 DEN Mahendra Satellite Private Limited (w.e.f. 27- Dec-07)

2 DEN Mod Max Cable Network Private Limited

(w.e.f. 27-Dec-07)

3 DEN Krishna Cable TV Network Private Limited (w.e.f. 27-Dec-07)

4 DEN Pawan Cable Network Private Limited (w.e.f. 27-Dec-07)

5 DEN BCN Suncity Network Private Limited (w.e.f. 27-Dec-07)

6 DEN Harsh Mann Cable Network Private Limited (w.e.f. 1-Mar-08)

7 DEN Classic Cable TV Services Private Limited (w.e.f. 1-May-08)

8 DEN Bindra Network Private Limited (w.e.f. 1-Jul-08)

9 DEN Montooshah Network Private Limited (w.e.f. 16-Jul-08)

10 DEN Ashu Cable Private Limited (w.e.f. 22-Aug-08)

11 DEN Shree Network Private Limited (w.e.f. 26-Sep-07)

12 Shree Siddhivinayak Cable Network Private Limited (w.e.f. 1-Dec-07)

13 Drashti Cable Network Private Limited (w.e.f. 1-Apr-08)

14 DEN MCN Cable Network Private Limited (w.e.f. 8-Apr-08)

15 Mahadev DEN Network Private Limited (w.e.f. 1-Feb-08)

16 Mahadev DEN Cable Network Private Limited (w.e.f. 1-Feb-08)

17 Mahadev DEN Cable Net Private Limited (w.e.f. 1-Feb-08)

18 DEN Digital Cable Network Private Limited (w.e.f. 1-May-08)

19 Malayalam Telenet Private Limited (w.e.f. 22-Aug-08)

20 DEN Bellary City Cable Private Limited (w.e.f. 1-Jan-09)

21 DEN-Manoranjan Satellite Private Limited (w.e.f. 1-Mar-08)

22 DEN Supreme Satellite Vision Private Limited (w.e.f. 30-May-08)

23 DEN Nashik City Cable Network Private Limited (w.e.f. 26-Jun-08)

24 Radiant Satellite (India) Private Limited (w.e.f. 2-Apr-08)

25 DEN Radiant Satelite Cable Network Private Limited (w.e.f. 2-Apr-08)

26 DEN Mewar Rajdev Cable Network Private Limited (w.e.f. 2-Apr-08)

27 DEN RIS Cable Network Private Limited (w.e.f. 1-Jun-08)

28 DEN Sky Media Network Private Limited (w.e.f. 31-May-08)

29 DEN Prince Network Private Limited (w.e.f. 1-Feb-08)

30 DEN Varun Cable Network Private Limited (w.e.f. 7-Jan-08)

31 DEN Crystal Vision Network Private Limited (w.e.f. 27-Dec-07)

32 Meerut Cable Network Private Limited (w.e.f. 1-Dec-07)

33 DEN Jai Ambey Vision Cable Private Limited (w.e.f. 5-Apr-08)

34 DEN Fateh Marketing Private Limited (w.e.f. 9-Apr-08)

35 DEN Prayag Cable Networks Private Limited (w.e.f. 1-Feb-08)

36 DEN Enjoy Cable Networks Private Limited (w.e.f. 2-Apr-08)

37 DEN Maa Sharda Vision Cable Networks Private Limited (w.e.f. 1-Apr-08)

38 DEN F K Cable TV Network Private Limited (w.e.f. 1-May-08)

39 DEN Shiva Cable Network Private Limited (w.e.f. 1-May-08)

40 DEN Pradeep Cable Network Private Limited (w.e.f. 1-Feb-08)

41 DEN Satellite Cable TV Network Private Limited (w.e.f. 1-Apr-08)

42 DEN Narmada Network Private Limited (w.e.f. 1-Sep-08)

43 DEN Ambey Cable Networks Private Limited (w.e.f. 11-Sep-07)

44 DEN Budaun Cable Network Private Limited (w.e.f. 1-Oct-08)

45 DEN Aman Entertainment Private Limited (w.e.f. 1-Oct-08)

46 DEN Kashi Cable Network Private Limited (w.e.f. 1-Mar-08)

47 DEN Futuristic Cable Networks Private Limited (w.e.f. 9-Oct-07)

48 DEN Digital Entertainment Gujarat Private Limited (w.e.f. 31-May-08)

49 Aster Entertainment Private Limited (w.e.f. 31-May-08)

50 DEN Entertainment Network Private Limited (w.e.f. 1-Sep-07)

51 Shine Cable Network Private Limited (w.e.f. 1-Dec-08)

52 Creative Cable Network (partnership firm) (w.e.f. 12-Oct-07)

53 Rajkot City Communication Private Limited (w.e.f. 10-Apr-09)

54 DEN Elgee Cable Vision Private Limited (w.e.f. 3-Jun-09)

55 DEN Malabar Cable Vision Private Limited (w.e.f. 30-Apr-09)

56 Amogh Broad Band Services Private Limited (w.e.f. 29-Jul-09)

57 Galaxy DEN Media & Entertainment Private Limited (w.e.f. 15-Jul-09)

58 DEN UCN Network India Private Limited (w.e.f. 25-Jul-09)

59 Bali DEN Cable Network Private Limited (w.e.f. 1-Sep-09)

60 Mahavir DEN Entertainment Private Limited (w.e.f. 1-Sep-09)

61 DEN Citi Channel Private Limited (w.e.f. 16-Nov-09)

62 DEN Satellite Network Private Limited (w.e.f. 15-Jan-10)

63 Fab DEN Network Private Limited (w.e.f. 1-Jan-10)

64 Fortune (Baroda) Network Private Limited (w.e.f. 31-Jul-09)

65 DEN Infoking Channel Entertainers Private Limited (w.e.f. 1-Aug-09)

66 United Cable Network (Digital) Private Limited (w.e.f. 1-Apr-10)

67 Shri Ram DEN Network Private Limited (w.e.f. 1-Apr-10)

68 DEN Krishna Vision Private Limited (w.e.f. 1-Apr-10)

69 CAB-I-NET Communications Private Limited (w.e.f. 1-May-10)

70 DEN Sahyog Cable Network Private Limited (w.e.f. 1-Jul-10)

71 DEN Sariga Communications Private Limited (w.e.f. 1-Aug-10)

72 IME Networks Private Limited (w.e.f. 27-Sep-10)

73 DEN Kattakada Telecasting and Cable Services Private Limited (w.e.f. 1-Oct-10)

74 DEN A.F. Communication Private Limited (w.e.f. 1-Dec-10)

75 Sree Gokulam Starnet Communication Private Limited (w.e.f. 24-Jan-11)

76 Big DEN Entertainment Private Limited (w.e.f. 1-Feb-11)

ii. Subsidiaries held indirectly

1 DEN Nanak Communication Private Limited (w.e.f. 1-Mar- 08)

2 DEN Saya Channel Network Private Limited (w.e.f. 30-Jun- 08)

3 DEN Ambey Citi Cable Network Private Limited (w.e.f. 1-Feb-08)

4 DEN Enjoy Navaratan Network Private Limited (w.e.f. 2-Apr-08)

5 DEN Ambey Jhansi Cable Network Private Limited (w.e.f. 1-Mar-09)

6 DEN Deva Cable Network Private Limited (w.e.f. 1-Apr- 08)

7 DEN Faction Communication System Private Limited (w.e.f. 1-Oct-08)

8 DEN Ambey Farukabad Cable Network Private Limited (w.e.f. 1-Mar-09)

9 Star Channel DEN Network Private Limited (w.e.f. 1-Aug-09)

10 Kishna DEN Cable Networks Private Limited (w.e.f. 1-Nov-09)

11 Divya Drishti DEN Cable Network Private Limited (w.e.f. 1- Apr-10)

12 DEN New Broad Communication Private Limited (we.f. 1-Jul-10)

13 Astron Media Networks Private Limited (we.f. 27-Sep-10)

14 Fun Cable Network Private Limited (w.e.f. 15-Feb-11)

15 Rajasthan Entertainment Private Limited (w.e.f. 23-Feb-11)

16 DEN BMC Cable Network Private Limited (w.e.f. 9-Dec-10)

b. Jointly Controlled Entity

1. Star Den Media Services Private Limited

c. Associates

1. Crystal Vision Media Private Limited

d. Entities under Significant Influence

1. Lucid Systems Private Limited

2. Setpro 18 Distribution Limited

3. Verve Engineering Private Limited

e. Key Managerial Personnel

1. Mr. Sameer Manchanda

6. Deferred Tax

a. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing tax laws.

7. Operating Lease

The company has taken office premises and accommodation for its employee under cancellable operating lease agreements. The lease rental expense recognised in the profit and loss account for the year is Rs. '(000) 83,287 [Previous year Rs. '(000) 86,578].

8. Investments

a. Subsidiary Companies

During the year, the company has acquired majority control in certain companies through share subscription and share purchase agreements for a total consideration of Rs. '(000) 1,323,358 [Previous year Rs. '(000) 912,136]. Of this, consideration payable on account of share purchase agreements to the erstwhile shareholder at the year-end amounting to Rs. '(000) 27,491 [Previous year Rs. '(000) 84,978] has been disclosed under sundry creditors. The Company has sold investments in a company during the year for total consideration of Rs. '(000) 9,142 [Previous year Rs. '(000) 12,631].

The company has also advanced Rs. '(000) 82,925 [Previous year Rs. '(000) 978,548] to acquire majority control in companies, the agreements for which have not been concluded prior to the year-end. Such balances have been disclosed under loans and advances. Balance commitments on account of such agreements concluded / to be concluded after the year end amount to Rs. '(000) 360,763 [Previous year Rs. '(000) 670,688].

The Company has also advanced Rs. '(000) 110,645 [Previous year Rs. '(000) Nil] for purchase of mutual fund units. These mutual fund units were allotted on April 4, 2011.

9. Dividend on cumulative preference shares

Dividend on 0.001% cumulative preference shares amounts to Rs. '(000) Nil (Previous year 1.49).

10. Disclosures as per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

As per information available with the management, the balance due to enterprises covered under the MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has been paid or is payable under the terms of the MSMED Act, 2006.

11. Disclosure pursuant to Accounting Standard 15 (Revised 2005) on 'Employee Benefits' A. Defined contribution plans and state plans

The Company makes contribution toward the following defined contribution for qualifying employees:

a. Employees' Provident Fund (EPF)

b. Employees' State Insurance (ESI)

c. Employees' Pension Scheme (EPS)

B. Defined Benefit Plan

Gratuity Plan

The gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary (i.e. last drawn salary plus dearness allowance) for each completed year of service or part thereof in excess of 6 months, subject to a maximum of Rs. 1,000,000. Vesting occurs upon completion of 5 years of service.

The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.

The following tables set out the status of the gratuity plan and amounts recognised in the Company's financial statements as at 31 March, 2011.

12. Employee Stock Option Plan 2010 ("ESOP 2010")

a. The Company had established an Employee Stock Option Plan (ESOP 2010) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A remuneration/ compensation committee comprising majority of independent, non executive members of the Board of Directors administers the ESOPs. All option under the ESOPs are exercisable for equity shares. The Company has granted 5,000,000 equity options to eligible employees of the Company & directors of the subsidiary Companies.

b. There shall be a minimum period of one year between the grant of options and vesting of options. The vesting period may extend up to three years. The vesting shall happen in one or more tranches as may be decided by the Compensation/Remuneration Committee. The exercise period of the options is a period of one year after the vesting of the options. Each option is exercisable for one equity share of Rs. 10 each fully paid up on payment of exercise price (as determined by the remuneration/ compensation committee) of share determined with respect to the date of grant. The Company has granted 5,000,000 options up to 31 March, 2011.

d. Pro forma Accounting for Stock Option Grants

The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using the fair value approach the Company's net income and basic and diluted earning per share as reported would have reduced to the pro forma amounts as indicated:

The Managing director was appointed vide a resolution passed by the board of directors on 12 November, 2010. The provision for payment of managerial remuneration for the year ended 31 March, 2011 as recommended by the board of directors exceeded the limits prescribed under section 198/309 read with schedule XIII of the Companies Act, 1956 and is subjected to the approval of Central Government. The Company has applied to the Central Government for waiver of excess remuneration paid to the managing director. However, permission is still awaited.

13. Earnings per Equity Share (EPS)

Basic earnings per share have been computed by dividing net profit after tax and after dividend on cumulative convertible preference shares by the weighted average number of equity shares outstanding for the year. Convertible preference shares have been considered in Diluted Earnings per Share computation.

14. Previous year's figures have been regrouped/ reclassified, wherever necessary to confirm to the current year's presentation.

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