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Directors Report of Hathway Cable & Datacom Ltd.

Mar 31, 2016

Dear Members,

The Directors have pleasure in presenting the 56th Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March, 2016.

1. FINANCIAL & OPERATION OVERVIEW:

a. Financial Highlights:

Your Company''s performance during the year ended 31st March, 2016 as compared to the previous financial year, is summarized as below:

(Rs. In Crores)

Consolidated Standalone

Particulars 2015-16 2014-15 Growth (%) 2015-16 2014-15 Growth (%)

Operating & Other Income 2,105.13 1,858.74 13.26 1,193.30 1,038.10 14.95

Earnings before interest, 412.19 287.07 43.59 210.95 153.95 37.03 depreciation, amortization & taxes

Finance Cost 137.49 153.50 (10.43) 90.76 105.76 (14.18)

Depreciation & Amortization 373.20 323.83 15.25 248.07 222.88 11.30

Impairment of Tangible / Intangible 6.42 4.10 56.59 6.42 4.09 56.97 Assets

Goodwill on consolidation written off - 3.77 (100.00) - - -

Prior Period Expenses (Net) 1.70 (0.92)(284.78) 0.69 0.27 155.56

Exceptional Items 3.75 (50.65)(107.40) 36.35 (3.84)(1046.61)

Amount transferred on change in stake 18.40 7.62 141.47 - - - in Subsidiaries/ Joint Ventures

Minority Interest (29.84) (13.94) 114.06 - - -

Profit/(Loss) Share of Associates 1.12 0.40 180.00 - - -

Excess/Short provision for taxation (1.99) 0.93 2.92 - - - in earlier years

Provision for Taxation - MAT 42.43 27.04 56.92 - - - Credit, Current Tax, Deferred Tax & (Excess)/Short provision for taxation in earlier years

Net Profit/(Loss) (163.13) (180.45) 9.60 (171.34) (175.22) 2.21

During the year under review, the total income of your Company was Rs. 1,193.30 Crores on a standalone basis and Rs. 2,105.13 Crores on a consolidated basis as compared to the previous financial year''s total income of Rs. 1,038.10 Crores on a standalone basis and Rs. 1,858.74 Crores on a consolidated basis. The net loss for the year under review, after taxation and exceptional items, stood at Rs. 171.34 Crores on a standalone basis and Rs. 163.13 Crores on a consolidated basis.

b. Operational Highlights:

Your Company has now reached over 10.6 million digital subscribers out of which 2.2 million subscribers digitized during current financial year. As a result, 87% of universe is digitalized and now the Company is one of the leading Multi System Operator (MSO) with highest digital subscribers in India.

Your Company offers cable television services across 200 cities and towns servicing through 23 digital headend. To promote advertisements aired on cable channels, your Company introduced 4 new cable channels namely DJAY, Lamhe, Home Theatre & Marathi Talkies. Your Company also has more than 20 local cable channels including Music channel, Hathway CCC, Hathway Shoppe, H-tube, Hathway Life, Hathway Movies and Hathway Entertainment etc.

Your Company holds a pan India Internet Service Provider (ISP) license and is the first cable television service provider to offer broadband internet services. It has its presence in 22 cities across India with around 3.3 million two-way broadband enabled homes passed and 0.627 million broadband customers as on 31st March, 2016. This makes your company India''s largest & leading cable broadband services provider.

Your Company has won several awards in the past year including "Most Outstanding National MSO for implementation of DAS" award by the BCS Ratna Awards 2016.

(i) CABLE TV BUSINESS: DAS III

The Company has digitized 2.2 million customers in DAS III area in current financial year and now your company has 4 million digital subscribers in DAS III markets. During the year, Company has expanded the foot print in Sikkim, West Bengal, Karnataka, Madhya Pradesh and Maharashtra.

ROBUST BACKEND, BILLING & IT SYSTEM

During the year, your Company has launched robust Billing & IT System, which enabled to launch prepaid payment method for Company''s direct subscribers. Your Company has also launched self-care portal on web, android and IOS platform. These initiatives have enhanced customer''s experience and have provided them liberty to manage their connection efficiently. This also yielded a significant improvement in efficiency including higher collections per subscriber and has enhanced manpower productivity, this freed up significant manpower to be re-deployed in revenue enhancement initiatives.

Your Company has recently implemented an online portal for the Local Cable Operator (LCOs); christened "Hathway Connect", which provide complete transparency to LCO about his customers and would facilitate managing its business efficiently and independently. This LCO portal is an extension of Hathway''s backend system which supports LCO to service customer in real time, comply with Quality of Service guidelines, generate bills, receipts and reports etc.

LCO portal support automated pre-defined messages to customer to remind for payments, offers, schemes, greetings and also support dunning. This LCO portal supports packed wise share to be paid. LCO portal has also enabled making online payment through net banking, credit cards, debit cards, cash card and mobile wallets.

NEW PACKAGING

Your Company has introduced simplified package structure whereby customer can customize pack by choosing from the 6 Genre Add ons and 7 Regional Language Add ons packs with base FTA pack. The packaging is a first of its kind initiative for Cable Customers. To simplify selection of package, there are only 2 pre-customized packs for the customers. New packaging will not only help consumers to opt channel of their choice, but it will also help company to enhance its revenues. Your company has also increased High Definition (HD) channels to approximately 50 Channels in the all major cities.

(ii) BROADBAND BUSINESS:

The broadband reach of your Company is about 3.3 million homes where it can offer our services. This makes us the largest MSO providing such services in the country. Your Company is a Category-A ISP and it covers both retail and corporate segments. Apart from continuous expansion in Delhi, Bangalore and Hyderabad, your company has also expanded footprint in Indore and Kolkata for offering high speed broadband services.

India has around 19.98 million wireline broadband subscribers as on 31st December, 2016 (As per revised definition i.e. a customer having minimum speed of 512 kbps). Cable provides big potential for growth of broadband penetration in the country considering the cable universe of 106 million CATV homes.

As of 31st March, 2016, your Company has over 0.63 million broadband subscribers with the ARPU of Rs. 670/-, which makes us the largest MSO in the country having highest number of broadband subscribers with an all India rank of being the 5th largest ISP Company in the country. With a high quality and high capacity HFC Network, your Company is well placed to garner a larger share of the growing broadband market. Your Company successfully implemented DOCSIS 3.0 high speed broadband service in many cities for broadband business and has received a good response to the same across Mumbai, Bangalore, Pune, Hyderabad and Delhi. At present, we are providing 50 Mbps speed to our DOCSIS 3.0 customers and we are further augmenting our network to provide 100 MBPS speed in future.

Your Company has also launched GPON Fibre to home services in Kolkata with ZTE as technology partner. Using this latest technology, your Company has built capability for providing up to 1 GBPS speed on mass scale. We will be gradually implementing this technology for premium consumers in other markets also.

Your company has also upgraded subscriber management system to QPS. This is latest and one of the best available global technology from CISCO. This also makes your Company''s business model more sustainable and gives all of you healthy return of income. Your company has also renewed association with international Lawn Tennis player Ms. Sania Mirza as brand ambassador to ensure that there is further improvement of customer perception about our services.

c) Consolidated Accounts:

The consolidated financial statements of your Company for the financial year 2015-2016 are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as prescribed by the Securities and Exchange Board of India (SEBI).

d) Report on performance of subsidiaries, associates and joint venture Companies:

A statement containing the performance and financial position of each of the subsidiaries, associates and joint venture companies for the year ended 31st March, 2016 is given pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 and 8 of the Companies (Accounts) Rules, 2014 in AOC-1 in Annexure-I to this report.

Details of Companies/entities which have become or ceased as subsidiary company, associates and joint ventures, during the year under review, are as under:

Name of the Company Relationship with the Company Details of changes Date of change

GTPL KCBPL Broad Band Subsidiary Company Became subsidiary of GTPL 14.03.2015 Pvt. Ltd. Hathway Private Limited

GTPL Junagadh Network Subsidiary Company Became subsidiary of GTPL 15.03.2016 Pvt Ltd Hathway Private Limited

GTPL Deesha Cable Net Subsidiary Company Became subsidiary of GTPL 17.09.2015 Pvt Ltd Hathway Private Limited

GTPL Kaizen Infonet Pvt. Wholly Owned Subsidiary Acquired 100% shares 01.04.2015 Ltd Company

GTPL Meghana Distributors Wholly Owned Subsidiary Acquired 100% shares 17.11.2015 Pvt. Ltd. Company

GTPL Abhilash Subsidiary Company Became subsidiary of GTPL 15.06.2015 Communication Pvt. Ltd. Hathway Private Limited

GTPL Chelikam Networks Subsidiary Company Became subsidiary of GTPL 23.05.2015 (India) Pvt. Ltd. Hathway Private Limited

Vizianagar Citi Subsidiary Company Became subsidiary of GTPL 01.11.2015 Communications P. Ltd. Hathway Private Limited

The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays up to the date of the Annual General Meeting as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company.

e) Management Discussion and Analysis:

The Management Discussion and Analysis forms an integral part of this Report and gives detail of the overall industry overview, business overview, performance review in Cable television business and broadband business, key growth drivers, Opportunities and threats, risks and concerns, internal control systems and its adequacy and Human Resource.

f) Dividend:

Considering the losses incurred during the year under review, your Directors have not recommended any dividend for the financial year under review.

g) Transfer to reserves:

In view of losses incurred during the year under review, your Directors have not recommended transfer of any amount to reserves during the financial year under review.

h) Revision of financial statement:

There was no revision of the financial statements for the year under review.

i) Deposits:

Your Company has not accepted any public deposits during the year under review within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

h) Disclosures under section 134(3)(l) of the Companies Act, 2013:

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company''s financial position have occurred between the end of the financial year of the Company and date of this report.

i) Disclosure of Internal Financial controls:

The Company''s internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. It uses a state-of-the-art enterprise resource planning (ERP) system to record data for accounting and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

In continuation of Company''s plan for implementation of internal financial control during Phase II, the management had appointed an external consultant and formed an Internal Team to document and evaluate the design, adequacy and operating effectiveness of the Internal Financial Controls of the Company. Entity Level Control framework document has been documented. The documentation of process maps and key controls has been completed for all material operating processes. Further, during financial year 2015- 16, management testing has been conducted on a sample basis for all key processes and remedial action has been taken or agreed upon with a finite closure date where control weaknesses were identified. The Management Audit Team (MAT) has also conducted a review of the Internal Financial Controls and remedial action has been taken or agreed upon with a finite closure date where in control weaknesses were identified.

There is no material financial controls related observations outstanding as at March 31, 2016.

Based on the above, the management believes that adequate Internal Financial Controls exist in relation to its Financial Statements.

j) Particulars of loans, guarantees, investments and securities:

The Company being engaged in the business of providing infrastructure facilities, the provisions of Section 186 of the Companies Act, 2013 are not applicable and accordingly, disclosure of details with respect to investment made, loan given, guarantee given and security made during the Financial Year 2015-16 in terms of Section 186(4) of the Act is not applicable.

2. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

a) BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Mr. Brahmal Vasudevan (DIN 00242016), Independent Director of the Company resigned from the Board w.e.f January 13, 2016.

In accordance with the provisions of the Companies Act, 2013, none of the Independent Directors is liable to retire by rotation.

As per the provisions of Section 152 of the Companies Act, 2013, Mr. Rajan Raheja (DIN: 00037480), shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend the same for your approval.

Mr. Ganapathy Subramaniam resigned from the Board as Chief Financial Officer w.e.f 12th February, 2016 and Mr. Vineet Garg succeeded him as Chief Financial Officer with immediate effect i.e. w.e.f 12th February, 2016.

b. DECLARATIONS BY INDEPENDENT DIRECTORS:

Your Company has received declarations from all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis- a-vis the Company.

3. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES

A. BOARD MEETINGS:

The Board of Directors met 6 times during the financial year ended 31st March, 2016 in accordance with the provisions of the Companies Act, 2013 and rules made thereunder.

The dates on which the Board of Directors met during the financial year under review are as under:

Sr. No. Date of the Board Meeting

1 29th May, 2015

2 11th August, 2015

3 15th October, 2015

4 6th November, 2015

5 26th November, 2015

6 12th February, 2016

b. DIRECTOR''S RESPONSIBILITY STATEMENT:

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2016, the Board of Directors hereby confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the loss of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

c. NOMINATION AND REMUNERATION COMMITTEE:

Consequent upon resignation of Mr. Brahmal Vasudevan from the Board w.e.f 13th January, 2016, the Nomination and Remuneration Committee was reconstituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Act.

The composition of the Reconstituted committee is as under:

Sr. No. Name of the Member Designation

1 Mr. Sasha Mirchandani Chairman

2 Mr. Viren Raheja Member 3 Mr. Akshay Raheja Member

4 Mr. Sridhar Gorthi Member

5 Mr. Devendra Shrotri Member

The Board of Directorshas in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining credentials, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees.

d. AUDIT COMMITTEE:

Consequent upon resignation of Mr. Brahmal Vasudevan from the Board w.e.f 13th January, 2016, the Audit Committee was reconstituted pursuant to the provisions of Section 177 of the Companies Act, 2013. The composition of the Audit Committee is in conformity with the provisions of the said section. The Reconstituted Audit Committee comprises of:

Sr. No. Name of the Member Designation

1 Mr. Sridhar Gorthi Chairman

2 Mr. Viren Raheja Member

3 Mr. Sasha Mirchandani Member

4 Mr. Devendra Shrotri Member

5 Ms. Ameeta Parpia Member

The scope and terms of reference of the Audit Committee are in accordance with section 177 of the Companies Act, 2013, Audit Charter adopted by the Board of Directors in their meeting held on 11th February, 2015 and the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee.

e. STAKEHOLDERS RELATIONSHIP COMMITTEE:

Pursuant to Section 178 of the Companies Act, 2013, the Board of Directors of the Company has reconstituted the Stakeholder''s Relationship Committee, comprising of:

Sr. No. Name of the Member Designation

1 Mr. Vinayak Aggarwal Chairman

2 Mr. Viren Raheja Member

3 Mr. Jagdishkumar G. Pillai Member

The Company Secretary acts as the Secretary of the Stakeholders'' Relationship Committee.

f. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

The Board of Directors of Company has pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.

The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.

Your Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

g. RISK MANAGEMENT POLICY:

The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company''s businesses and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews.

h. CORPORATE SOCIAL RESPONSIBILITY POLICY:

As per the provisions of Section 135 of the Companies Act, 2013read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and any amendment thereof, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee as under:

Sr. No. Name of the Member Designation

1 Mr. Devendra Shrotri Chairman

2 Mr. Jagdishkumar G. Pillai Member

3 Mr. Vinayak Aggarwal Member

The Board of Directors of the Company has approved CSR Policy based on the recommendation of the CSR Committee. Since the Company has no profits in preceding 3 financial years, no amount was required to be spent for corporate social responsibility activities.

The CSR Policy of the Company is available on the Company''s website and can be accessed in the link provided herein below:

http://www.hathway.com/assets/InvFile/HCDL_CSR_ Policy.pdf

i. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:

The performance of the Board of Directors and its Committees, individual Directors was evaluated in the meeting of the Board of Directors held on 12th February, 2016 and the same was recorded as satisfactory.

j. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014:

The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year under review and Statement containing the particulars of employees in accordance with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure - II.

4. AUDITORS AND REPORTS

The matters related to Auditors and their Reports are as under:

a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2016:

The observations made by the Statutory Auditors in their report for the financial year ended 31st March 2016 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31ST MARCH 2016:

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. M/s. Rathi and Associates, Company Secretaries had been appointed to issue Secretarial Audit Report for the financial year 2015-16.

Secretarial Audit Report issued by M/s. Rathi and Associates, Company Secretaries in Form MR-3 for the financial year 2015-16 forms part to this report and the same is attached as Annexure - III.

In Secretarial Audit Report, M/s. Rathi and Associates quoted the following observation:

Pursuant to Regulation 29 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has not given the prior intimation to the Stock Exchanges(s) for convening the Board Meeting on 12th February, 2016. However, the Company has filed a letter dated 2nd March, 2016 with the stock exchanges requesting for taking a lenient and sympathetic view of the said omission.

In this regard, the Board of Directors would like to state that said intimation was duly prepared and signed by the Company Secretary of the Company. However, the said intimation could not be sent to the exchange due to oversight on the part of the concerned staff. The said omission in sending of the intimation to the exchange was purely unintentional and occurred inadvertently.

c. RATIFICATION OF APPOINTMENT OF AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. G. M. Kapadia & Co, Chartered Accountants, the Statutory Auditors of the Company have been appointed for a term of 3 years. However, their appointment as Statutory Auditors of the Company shall be required to be ratified by the members at the ensuing Annual General Meeting. The Company has received a confirmation from the said Auditors that they are not disqualified to act as the Auditors and are eligible to hold the office as Auditors of the Company.

Necessary resolution for ratification of appointment of the said Auditors is included in the Notice of AGM for seeking approval of members.

d. COST AUDITORS:

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications/Circulars issued by the Ministry of Corporate Affairs from time to time and as per the recommendation of the Audit Committee, the Board of Directors at their meeting held on 26th May, 2016, appointed M/s. Ashok Agarwal & Co, Cost Accountants, as the Cost Auditors of the Company for the financial year 2016- 2017. The remuneration proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing Annual General Meeting would not be exceeding '' 5,75,000/- (Rupees Five Lakh Seventy Five Thousand only) plus reimbursement of out of pocket expenses, if any. The Cost Audit Report will be filed within the stipulated period of 180 days from the closure of the financial year.

5. OTHER DISCLOSURES

Other disclosures as per provisions of Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are furnished as under:

a. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, extract of the Annual Return for the financial year ended 31st March, 2016 made under the provisions of Section 92(3) of the Act is attached as Annexure - IV which forms part of this Report.

b. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as required under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure - V which forms part of this Report.

c. RELATED PARTY TRANSACTIONS:

During the financial year 2015-16, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014 and any amendment thereof, which were in the ordinary course of business and on arms'' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued thereunder and Regulation 34(3) and 53(f) and Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the financial year 2015-16, there were no transactions with related parties which qualify as material transactions under the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

d. CORPORATE GOVERNANCE: (Applicable to Companies giving remuneration as per Section II of Schedule V):

All elements of remuneration Rs. 227.45 Lacs package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors (Applicable only in case of Managing Director)

Details of fixed component and Rs. 202.45 Lacs performance linked incentives (Fixed) along with the performance criteria

Rs. 25 Lacs

(Variable)

Service contracts, notice period, - severance fees

Stock option details, if any, and - whether the same has been issued at a discount as well as the period over which accrued and over which exercisable

6. GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. I ssue of equity shares with differential rights as to dividend, voting or otherwise as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.

3. I ssue of sweat equity shares to employees of the Company as per provisions of Section 54(1 )(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014.

4. Issue of equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1 )(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.

5. Instances of exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014

6. Payment of remuneration or commission from any of its Holding or subsidiary Companies to the Managing Director or the Whole-time Directors of the Company.

7. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

8. Cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

9. There were no frauds reported by the Auditor of the Company pursuant to sub-section 12 of Section 143 of the Companies Act, 2013.

7. ACKNOWLEDGEMENTS AND APPRECIATION:

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.

For and on behalf of the Board

Jagdishkumar G. Pillai Vinayak Aggarwal

Managing Director & CEO Director

DIN 00036481 DIN 00007280

Date: 26/05/2016

Place: Mumbai

Registered Office

Rahejas, 4th Floor, Corner of Main Avenue & V. P. Road,

Santacruz West, Mumbai 400054



CIN: L64204MH1959PLC011421

Tel No. 022-26001306 Fax No. 022-26001307

Mail:info@hathway.net website: www.hathway.com


Mar 31, 2014

Dear Members,

We hereby present the Fifty Fourth Annual Report to the Members together with the Audited Statement of Accounts for the Financial Year ended March 31, 2014.

FINANCIAL HIGHLIGHTS

(Rs. In Crores) Consolidated Standalone

Particulars 2013-14 2012-13 2013-14 2012-13

Operating & Other Income 1,593.75 1,148.19 988.14 667.95

Earnings before interest, depreciation, amortisation & taxes 311.90 289.51 191.28 182.18

Interest 134.51 60.17 92.52 46.14

Depreciation & Amortisation 291.24 162.25 202.29 118.91

Impairment of Tangible / Intangible Assets 8.05 3.81 8.07 3.83

Exceptional Items - 7.93 10.60 9.34

Minority Interest (8.79) 24.94 - -

Prior period expenses/ (income) 2.57 (0.14) 3.05 0.76

(Profit)/Loss Share of Associates 0.01 (0.08) - -

Amount transferred on change in stake in Subsidiaries/Joint Ventures (20.81) (2.97) - -

Excess/Short provision for taxation in earlier years (0.02) 0.07 - -

Provision for Taxation - Current Tax & Deferred Tax 16.25 17.83 - -

Net Profit/(Loss) (111.11) 15.70 (125.25) 3.20

Operational Overview:

During the year under review, the total income of your Company was Rs. 988.14 Crores on a standalone basis and Rs. 1,593.75 Crores on a consolidated basis as compared to the previous financial year''s total income of Rs. 667.95 Crores on a standalone basis and Rs. 1,148.19 Crores on a consolidated basis. The net loss for the year under review, after taxation and exceptional items, stood atRs. 125.25 Crores on a standalone basis and Rs. 111.11 Crores on a consolidated basis.

(i) Cable TV Operations

As per Media Partners Asia (MPA) estimates, CATV Services reaches about 156 Million homes in India and is the primary means for television distribution.

Digitalisation which was mandated by the Cable Television Network Regulation (Amendment) Act, 2011, contemplated a phased roll out of Digital Addressable System (DAS) which commenced in November 2012 and shall be completed by December 2014. Cable TV continued to be the primary means for distributing television services in a predominantly urban landscape and selected DAS and Non-DAS cities.

During the year under review, your Company along with its subsidiaries and joint venture companies rolled out DAS in 38 Phase II cities with effect from April 01, 2013.

Your Company reaches a subscriber universe of nearly 11.5 Million homes as on March 31, 2014. We have a pan India footprint that covers key Hindi speaking markets in the West, North, East and Central India. During the year, your Company further expanded the scope of its operations in West Bengal and Uttar Pradesh.

Our DAS services are supported by 23 digital head-ends and more than 16,000 kilometers of HFC networks. We have also implemented state of the art Conditional Access System (CAS), Oracle Billing and Revenue Management System (OBRM) and partnered with a premier outsourced Customer Care Centre service provider.

The Company is now well positioned to monetise its subscriber base under mandatory digitisation.

(ii) Broadband Services

Our Broadband reach is about 1.8 Million homes where we can offer our services. This makes us the largest Multi System Operator providing such services in the Country. We are a Category -A Internet Service Provider (ISP) and we cover both retail and corporate segments.

India has around 55.20 Million broadband subscribers as on December 31, 2013 (As per revised definition i.e. a customer having minimum speed of 512 kbps). Cable provides big potential for growth of broadband penetration in the country considering the cable universe of 106 Million CATV homes.

As of March 31, 2014, Hathway has over 4 Lacs broadband subscribers, which make us the largest MSO in the country having highest number of Broadband Subscribers, with an all India rank of being the 5th largest ISP Company in the country. With a high quality and high capacity HFC Network, Hathway is well placed to garner a larger share of the growing broadband market. Your Company successfully implemented DOCSIS 3.0 service in many cities for Broadband business and has received a good response to the same especially in

South Mumbai. At present, we are providing 50 Mbps speed to our Docsis 3.0. customers and have the capacity to provide higher speed in future.

Utilisation of IPO Proceeds

During the financial year 2009-10, your Company had successfully completed the Initial Public Offer of shares to the tune of Rs. 666 Crores, including Rs. 186 Crores as Offer for Sale. As regards the utilisation of the IPO proceeds, the Company had obtained members approval vide resolution passed by way of Postal Ballot on June 21, 2011 to authorise the Board of Directors of the Company to decide, alter, vary, revise and finalise the utilisation of IPO proceeds apart from the objects mentioned in the Prospectus. The details of utilisation of issue proceeds to the extent of Rs. 480 Crores as on March 31, 2014 were placed before the members of Audit Committee at the meeting dated May 29, 2014 and the same was taken on record by Board of Directors of the Company.

Dividend

In view of the accumulated losses, your directors express their inability to declare any dividend for the year under review.

Fixed Deposits

The Company has not accepted any deposits during the year, within the meaning of Section 58A of the Companies Act, 1956 and the rules made thereunder.

Preferential Allotment

During the year under review there were two tranches of preferential allotments to promoters and foreign investors, pursuant to the provisions of Section 81(1 A) of the Companies Act, 1956 and other applicable legal provisions, including but not limited to Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended (ICDR Regulations).

Directors

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Rajan Raheja and Mr. Akshay Raheja, Directors would retire by rotation at the ensuing Annual General Meeting. Being eligible, Mr. Rajan Raheja and Mr. Akshay Raheja have offered themselves for reappointment.

Pursuant to provisions of Section 149, Section 150, and Section 152 read with Schedule IV and other applicable provisions of the Companies Act, 2013, Mr. Brahmal Vasudevan, Mr. Sridhar Gorthi, Mr. Sasha Mirchandani and Mr. Devendra Shrotri are proposed to be appointed as Independent Directors to hold office upto August 4, 2019 and their term of appointment will not be liable to retirement by rotation.

A brief profile of the aforesaid Directors seeking appointment/ reappointment at the ensuing Annual General Meeting forms part of this Directors'' Report.

Personnel

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the particulars are given in the statement which forms part of this report. In terms of provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the shareholders of the Company excluding the aforesaid statement. The statement is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

Employees Stock Option Plan

The disclosures required to be made under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are given in the Annexure to this report.

During the year under review, 29,700 options were exercised by the option holders. The net options outstanding under the Employees Stock Option Plan 2007 (Revised 2010) at the end of the year stood at 1,61,299 after lapse/forfeiture of 74,300 options.

Subsidiaries

The financial data of the subsidiaries has been furnished along with the statement pursuant to Section 212 of the Companies Act, 1956 forming part of the Annual Report. Further, pursuant to relevant accounting standards, the Company has presented the Consolidated Financial Statements which include the financial information relating to its subsidiaries and forms part of the Annual Report.

The Company shall provide the copy of the Annual report and other related information of its subsidiary companies as required under section 212 of the Companies Act, 1956 to the shareholders of the Company and the subsidiaries upon their written request. These documents will also be available for inspection at the Registered Office of the Company and Registered Offices of the respective Subsidiary Companies during the working hours up to the date of Annual General Meeting.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Considering the nature of operations of the Company, your Directors have nothing to state as regards the requirement of disclosures in terms of Section 217(1) (e) of the Companies Act, 1956, pertaining to the conservation of energy and technology absorption.

During the year under review, your Company has used foreign exchange amounting to Rs. 312.08 Crores as compared to the last year''s expenditure ofRs. 395.08 Crores.

Your Company has earned Foreign Exchange Income of Rs. 52.49 Crores during the year under review as compared to the last year''s Foreign Exchange Income of Rs. 6.44 Crores.

Directors'' Responsibilities Statement

Your Directors in compliance of Section 217 (2AA) of the Companies Act, 1956 confirm that in the preparation of the annual accounts for the year ended March 31, 2014:

a) the applicable accounting standards has been followed along with proper explanation relating to material departures, if any;

b) the Company has selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2014 and the loss of the Company for the year;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts of the Company has been prepared on a going concern basis.

Corporate Governance and Management Discussion and Analysis Report

A report on Corporate Governance along with a certificate from M/s. Rathi & Associates, Practicing Company Secretaries, regarding compliance of requirements of Corporate Governance pursuant to Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto and forms part of this report. The Management Discussion and Analysis Report on the operations of the Company as required under the Listing Agreement with the Stock Exchanges is also annexed hereto and forms part of this report.

Cost Auditors

Your Company has appointed Dr. Ashok Kumar Agarwal & Co., Cost Accountant as Cost Auditor under section 148 of the Companies Act, 2013 for Cost Audit for the financial year 2014-2015.

Statutory Auditors

M/s. G. M. KapadiaS Co, Chartered Accountants, the Statutory Auditors, shall retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The retiring Auditors have furnished certificate to the effect that their re-appointment, if made, would be in accordance with the limit prescribed under section 139 and section 141 of the Companies Act, 2013. Your Directors recommend their re-appointment.

Comments on Auditors'' Report

Your auditors have made certain observations in the annexure to their report pertaining to location wise particulars of Access Devices (para (i)(a)) and the need to strengthen frequency and procedure for verification of assets (para (i)(b)). During the year, the Company has put in a new billing system in place which is at an advanced level of implementation wherein the location wise CPE (Customer Premise Equipment) will be tracked. The frequency and procedure of verification of the Distribution equipment is being increased and improved in the current year by our Internal Audit department which will include assets under the control of the local cable operators. Discrepancies have been dealt with in the accounts. However, the same is not expected to have any material impact.

The auditors have also commented on internal controls pertaining to strengthening the internal controls over documentation in certain areas and revenue recognition (para(iv)). In view of the Phase I and II of the digitisation having been implemented within a short interval, the documentation with respect to the agreement with the local cable operators and also identification/registration of the ultimate subscriber is under progress and is expected to be completed in the current year.

Acknowledgements

Your Directors take this opportunity to thank all the shareholders and lenders for their continued support. Your Directors also wish to place on record, the sincere appreciation to all the employees, franchisees, distributors and the vendors for their excellent contribution towards the progress of the Company.

FOR AND ON BEHALF OF THE BOARD

Place: Mumbai

Date: May 29, 2014 CHAIRMAN


Mar 31, 2013

Dear Members,

The hereby present the Fifty Third Annual Report to the Members together with the Audited Statement of Accounts for the Financial Year ended March 31, 2013.

Financial Highlights

(Rs. In Lacs)

Consolidated Standalone Particulars 2012-13 2011-12 2012-13 2011-12

Operating & Other Income 1,14,820 1,02,862 66,795 52,870

Earnings before interest, 28,951 18,417 18,217 10,119 depreciation, amortization & taxes

Interest 6,018 5,199 4,614 4,085

Depreciation & Amortization 16,224 14,088 11,891 10,314

Impairment of Tangible/ 381 340 381 340 Intangible Assets

Exceptional Items 793 1,045 935 436

Minority Interest 2,493 1,021 - -

Prior period adjustments (14) 431 76 111

Profit/(Loss) share of Associates (8) (12) - -

Amount transferred on change (296) (311) - - in stake in Subsidiaries /Joint Ventures

Excess/Short provision for 7 57 - - taxation in earlier years

Provision for Taxation - Current 1,783 1,477 - - Tax & Deferred Tax

Net Profit/(Loss) 1,5701 (4,918) 3201 (5,167)

Operations

During the year under review, the total income of your Company was Rs. 66,795 Lacs on a standalone basis and Rs. 1,14,820 Lacs on a consolidated basis as compared to the previous financial year''s total income of Rs. 52,870 Lacs on a standalone basis and Rs. 1,02,862 Lacs on a consolidated basis. The net profit for the year under review, after taxation and exceptional items, stood at Rs. 320 Lacs on a standalone basis and Rs. 1,570 Lacs on a consolidated basis.

Utilization of IPO Proceeds

During the financial year 2009-10, your Company had successfully completed the Initial Public Offering of shares to the tune of Rs. 666 Crores, including Rs. 186 Crores as Offer for Sale. As regards the utilization of the IPO proceeds the Company had obtained members approval vide Resolution passed by way of Postal Ballot on 21st June, 2011 to authorize the Board of Directors of the Company to decide, alter, vary, revise and finalize the IPO proceeds apart from the objects mentioned in the Prospectus. The details of utilization of issue proceeds to the extent of Rs. 480 Crores as on 31st March, 2013 were placed before the members of Audit Committee at the meeting dated May 29, 2013 and the same also has been taken on record by Board of Directors of the Company.

Dividend

In view of the accumulated losses, your directors express their inability to declare any dividend for the year under review.

Fixed Deposits

The Company has not accepted any deposits during the year, within the meaning of Section 58A of the Companies Act 1956 and the rules made thereunder.

Cable Distribution

Media Partners Asia (MPA) estimates that CATV Services reaches about 8.8 million homes in India and is the primary means for television distribution (source MPA 2013). Currently as estimated Hathway reaches nearly 10.5 million as on March 2013. This Cable TV Paying Universe is expected to grow to over 106 million homes by 2020. Cable will also continue to be the primary means for distributing television services in a predominantly urban landscape. Digitalization that was mandated by the Cable Television Network Regulation (Amendment) Act, 2011, contemplates a phased roll out of Digital Addressable System (DAS) commencing November 2012 to December 2014. Your Company stands to gain as the economics of the Cable Television business is expected to transform consequent to this mandate.

Your Company along with its subsidiary and joint venture companies successfully rolled out DAS in the cities of Mumbai, Delhi and Kolkata. The Second phase was in 38 phase II cities where the implementation of DAS was with effect from 01st April, 2013. Your Company along with its subsidiary and joint venture companies and its subsidiary companies rolled out DAS in 26 cities forming part of its Phase II deadline.

Your Company is expected to reach a subscriber universe exceeding 10.5 million homes by the end of mandatory DAS. We have a pan India footprint that covers key Hindi speaking markets in the West, North, East and Central India. During the year your Company has increased its stake to 100% in Hathway Bhaskar Multinet Private Limited. With this acquisition its presence in Central India (Indore, Bhopal and Jaipur) is considerably strengthened. During the year as a part of Phase II your Company further expanded the scope of its operations in the South (Hyderabad, Bangalore and Mysore). Your Company also established the presence in key Northern cities such as Faridabad.

Our DAS services are supported by 20 digital head-ends and more than 16,000 kilometers of HFC networks. We have also implemented state of the art Conditional Access System (CAS), subscriber management and billing solution and partnered with a premier outsourced customer contact centre service provider. In the past year as required by Telecom Regulatory Authority of India (TRAI) the Company has also filed its tariff plan/packages, entered into contractual arrangements with most broadcasters and kept adequately stocked with STBs to meet the requirements of the market.

The Company is now well positioned to monetize its subscriber base under mandatory digitization.

Broadband Services

Our Broadband service reaches a universe of about 1.5 million homes. This makes us among the larger MSOs providing such services in the country. We are a Category-A Internet Service Provider (ISP) and we cover both retail and corporate segments.

India has around 14.98 million broadband subscribers as on 31st December 2012. Broadband has registered a quarterly growth of 2.02% and a year-on-year growth of 12.22% (Source - TRAI Report, May 2013). Cable modem subscribers'' accounts for only 5.24% that is only 9.6 million internet subscribers. Cable provides big potential for growth of broadband penetration in the country considering the cable universe of 106 million CATV homes.

As of 31st March 2013, Hathway had about 4,16,000 broadband subscribers, with an all India rank of being the 5th largest ISP Company in the country. With a high quality & high capacity network, Hathway is well placed to garner a larger share of the growing broadband market.

Directors

During the period following the date of last year''s report and the date of this report, Mr. Bharat Shah, Chairman and Mr. K. Jayaraman, Managing Director & CEO ceased to be directors of the Company. Your Directors place on record their appreciation on the valuable services rendered by Mr. Bharat Shah and Mr. K. Jayaraman and the guidance received from them.

Mr. Jagdishkumar G. Pillai was appointed as an additional director and also Managing Director & CEO of the Company with effect from 21st December, 2012. The Company has received the notice along with requisite deposit, from a member of the Company pursuant to Section 257 of the Companies Act, 1956 proposing the candidature of Mr. Jagdishkumar G. Pillai for the office of Director of the Company. He shall continue to assume the office of Managing Director & CEO once appointed as a director of the Company. His appointment and the remuneration payable to him were approved by the shareholders through postal ballot on 25th February 2013.

Pursuant to the provisions of Section 255 read with Section 256 of the Companies Act, 1956, Mr. Vinayak Aggarwal, Mr. Sridhar Gorthi and Mr. Devendra Shrotri, Directors would retire by rotation at the ensuing Annual General Meeting. Being eligible, Mr. Vinayak Aggarwal, Mr. Sridhar Gorthi and Mr. Devendra Shrotri have offered themselves for reappointments.

As required, the requisite details of Directors seeking re- appointment are included in this Annual Report.

Personnel

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the particulars are given in the statement which forms part of this report. In terms of provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to all the shareholders of the Company excluding the aforesaid statement. The statement is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

Employees Stock Option Plan

The disclosures required to be made under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are given in the Annexure to this report.

During the year under review 3,16,100 options were exercised by the option holders. The net options outstanding under the Employees Stock Option Plan 2007 (Revised 2010) at the end of the year stood at 2,65,299 after lapse/forfeiture of 38,800 options.

Subsidiaries

The financial data of the subsidiaries has been furnished along with the statement pursuant to Section 212 of the Companies Act, 1956 forming part of the Annual Report. Further, pursuant to relevant Accounting Standards, the Company has presented the Consolidated Financial Statements which include the financial information relating to its subsidiaries and forms part of the Annual Report.

The Company shall provide the copy of the Annual report and other related information of its subsidiary companies as required under section 212 of the Companies Act, 1956 to the shareholders of the Company and the subsidiaries upon their written request. These documents will also be available for inspection at the registered office of the Company and registered offices of the respective subsidiary Companies during the working hours up to the date of Annual General Meeting.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Considering the nature of operations of the Company, your Directors have nothing to state as regards the requirement of disclosures in terms of Section 217(1) (e) of the Companies Act, 1956, pertaining to the conservation of energy and technology absorption.

During the year under review, your Company has used foreign exchange amounting to Rs. 39,392 Lacs as compared to the last year''s Rs. 14,501 Lacs.

Your Company has earned Foreign Exchange Income of Rs. 644 Lacs during the year under review whereas there was no Foreign Exchange Income earned during last year.

Directors'' Responsibilities Statement

Your Directors in compliance of Section 217 (2AA) of the Companies Act, 1956 confirm that in the preparation of the annual accounts for the year ended March 31, 2013:

a) the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the Company has selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2013 and the profit of the Company for the year;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts of the Company has been prepared on a going concern basis.

Corporate Governance & Management Discussion and Analysis Report

A report on Corporate Governance along with a certificate from M/s. Rathi & Associates, Practicing Company Secretaries, regarding compliance of requirements of Corporate Governance pursuant to Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto and forms part of this report. The Management Discussion and Analysis Report on the operations of the Company as required under the Listing Agreement with the Stock Exchanges is also annexed hereto and forms part of this report.

Cost Auditors

Your Company has re-appointed Dr. Ashok Kumar Agarwal, Cost Accountant as Cost Auditor under section 233B of the Companies Act, 1956 for Cost Audit for the financial year 2013-2014.

Statutory Auditors

M/s. G. M. Kapadia & Co, Chartered Accountants, the Statutory Auditors, shall retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The retiring Auditors have furnished certificate to the effect that their re-appointment, if made, would be in accordance with the limit prescribed under section 224(1B) of the Companies Act, 1956.Your Directors recommend their re-appointment.

Comments on Auditors'' Report

Your auditors have made certain observations in the annexure to their report pertaining to location wise particulars of Access Devices (para (i) (a)) and the need to strengthen frequency and procedure for verification of assets (para (i) (b)). The Company had initiated a process for verification and identified discrepancies at an overall companywide level as location-wise reconciliation was not expected to have material impact. Discrepancies have been dealt with in the accounts. The auditors have also commented on internal controls pertaining to identification/ registration of ultimate subscribers (para (iv)). The Company is in the process of updating it''s subscriber database as mandated by the DAS regulations and expects to move to retail billing to end consumers in the course of the current financial year. This is as per the requirement and deadlines laid down by government from time to time.

Acknowledgements

Your Directors take this opportunity to thank all the shareholders and lenders for their continued support. Your Directors also wish to place on record, the sincere appreciation to all the employees, franchisees, distributors and the vendors for their excellent contribution towards the progress of the Company.

FOR AND ON BEHALF OF THE BOARD

CHAIRMAN

Place: Mumbai

Date: May 29, 2013


Mar 31, 2011

Dear Members,

We hereby present the Fifty First Annual Report to the Members together with the Audited Statement of Accounts for the Financial Year ended March 31, 2011.

Financial Highlights

(Rs. In Lacs)

Consolidated Standalone

Particulars 2010-11 2009-10 2010-11 2009-10

Operating & Other 90,667.94 73,998.18 49,496.08 40,676.20 Income

Gross Operating 17,384.57 13,224.62 11,104.73 7,421.62 Profit before interest, depreciation, amortization & taxes

Interest 4,498.231 5,562.021 3,863.771 5,090.971

Loss/(Gain) on (148.65) (59.72) (115.56) (51.96) Foreign Exchange Fluctuations

Depreciation & 12,488.40 11,112.36 9,463.74 8,861.53 Amortization

Impairment of 270.30 176.77 270.30 176.77 Tangible/Intangible Assets

Exceptional Items 1,434.80 1,488.61 1,438.89 1,632.70 (Provision for doubtful advances/ investments/ receivables from entities under control or significant influence/ impairment and write off of assets in respect of operations in Tamil Nadu/ depreciation written back)

Provision for Taxation 1,204.36 1,562.07 - - - Current Tax & Deferred Tax

Net Loss (2,362.88) (6,617.49) (3,816.42) (8,288.40)

Cumulative Loss (49,353.17) (46,226.48) (49,945.24) (45,914.02) carried to Balance Sheet after adjustments

Operations

During the year under review, the total income of your Company was Rs. 49,496.08 Lacs on standalone basis and Rs. 90,667.94 Lacs on consolidated basis as compared to the last year's total income of Rs. 40,676.20 Lacs on standalone basis and Rs. 73,998.18 Lacs on Consolidated basis respectively. The Net Loss after taxation and Exceptional Items has come down and stood at Rs. 3,816.42 Lacs on standalone basis and Rs. 2,362.88 Lacs on consolidated basis.

Variation in utilization of fund raised through Initial Public Offer Out of the total amount raised through the Initial Public Offer (IPO) of the Company, Rs. 28,760.48 Lacs have been utilized as of March 31, 2011 in accordance with the objects set out in the Objects of the Issue' section in the Prospectus for Initial Public Offer of the Company. During the Financial Year 2010-11 the Telecom Regulatory Authorities of India (TRAI) had recommended to the Ministry of Information & Broadcasting the digitalization plan that involves introduction of digital cable services across India. Considering the change in business environment, it was thought appropriate to pursue digitalization more aggressively than hitherto planned in our original Objects of the Issue and to reduce the debts by way of repayment of certain high cost debts.

In view of the above, the members of the Company had approved the variation in utilization of funds raised through Initial Public Offer through postal ballot in terms of provisions of Section 192A of the Companies Act, 1956, read with provisions of the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001 on 21st June, 2011.

Dividend

In view of loss incurred during the year under review and the accumulated losses, your directors express their inability to declare any dividend for the year under review. Several measures are being taken towards increasing the revenue, cost control and to improve the profitability.

Fixed Deposits

The Company has not accepted any deposits during the year, within the meaning of Section 58A of the Companies Act 1956 and the Rules made thereunder.

Cable Distribution

During the year under review the Telecom Regulatory Authorities of India (TRAI) recommended a digitalization plan to the Ministry of Information & Broadcasting that involves introduction of digital cable services across India. The digital plan is meant to improve consumer viewing experience in terms of number of Channels, providing digital quality to the consumers as against current analogue picture quality, to curb the revenue leakage at various level and ultimately to increase transparency in reporting numbers. The Company is planning to implement additional services like High Definition (HD), Video-on-Demand (VOD), Pay-per-View (PPV), Games-on-Demand, etc. to more effectively compete with Direct to Home (DTH) and Internet Protocol Television (IPTV).

As per the report of Media Partners Associates (MPA) 2011, out of 239 million homes in India, 147 million homes have TV set. with 61% CATV penetration. According to MPA estimates, digital cable is expected to reach 34 million homes by 2020. Digital cable share will reach about 33% which is about at 6% levels in 2011. Larger number of channels, better picture quality, choice of audio and other value added services are expected to be key drivers of digital cable in the country. Digital cable will face challenge from DTH players in coming years. MSO are better placed to counter DTH players, their key strengths like affordable pricing, prompt customer support, niche local content and local area offices for consumer interface will help them to grow faster on digital platform.

Hathway has a reach of approximately 8.4 million Cable TV homes for its analogue CATV services. We have over 15,000 kilometers of hybrid fiber optic cable which is spread over 140 Cities & Towns. Hathway has commenced a rapid digitalization process and at present we have deployed close to 1.5 million digital set top boxes in CAS & Non - CAS areas. Hathway is the only MSO with focus on digitization of non - metro markets. It has established 19 digital head-ends in the country.

Internet Market

India has around 11.89 million broadband subscribers as on 31st March 2011. Broadband has registered a quarterly growth of 8.17% and year-on-year growth of 35.49%. Cable modem subscribers' accounts for only 4% that is only 0.801 million internet subscribers. Cable provides big potential for growth of broadband penetration in the country considering the cable universe of 95 million CATV homes.

Hathway is the largest MSO offering broadband services in 21 cities. Hathway is Category "A" Internet Service Provider (ISP) providing broadband services to retail and corporate segments in various states. Hathway has 14,32,937 homes ready for catering for internet services. As of 31st March 2011, Hathway has 3,48,345 internet subscribers with all India rank of 5th largest ISP player in the country. Hathway has market leadership in terms of reach, revenues and subscribers. With high quality & high capacity network, Hathway is well placed to garner large share of growing broadband market. Amongst private sector, Hathway is India's 2nd largest wired broadband service provider. According to the latest TRAI report, Hathway Broadband wins the top spot in overall quality of service in Mumbai. Hathway is the first ISP to introduce the Simply Unlimited plans for retail customers. Your Company has started offering value added services like Web products (e.g. website builder, domain name registration etc), online tutorials with Topper learning to our customers and soon we will be adding more services like games on demand, movies on demand and security solutions (anti virus).

Directors

After the end of the financial year under review, Mr. Brahmal Vasudevan, Director, resigned from the Board of your Company. Your Directors place on record their appreciation on the valuable services rendered by Mr. Brahmal Vasudevan and the guidance received from him during his tenure as a Director. Mr. Brahmal Vasudevan was appointed as an additional independent director on the Board of Directors of your Company with effect from 9th May 2011. The Company has received the notice along with requisite deposit, from the member pursuant to Section 257 of the Companies Act, 1956 proposing his candidature for the office of Directors of the Company.

Pursuant to the provisions of Section 255 read with Section 256 of the Companies Act, 1956, Mr. Viren Raheja and Mr. Uday Shankar, Directors would retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Mr. Jagdish Kumar G., Director, who also retires by rotation at the ensuing Annual General Meeting, has not offered himself for reappointment.

As required, the requisite details of Directors seeking re- appointment are included in this Annual Report.

Personnel

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the particulars are given in the statement which forms part of this report. In the terms of provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors' Report is being sent to all the shareholders of the Company excluding the aforesaid statement. The statement is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

Employees Stock Option Plan

The disclosure required to be made under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to this Report.

The options outstanding under the Employees Stock Option Plan 2007 (Revised 2010) at the end of the year stood at 7,69,999 after lapse/forfeiture of 1,09,500 options.

Subsidiaries

The financial data of the subsidiaries has been furnished along with the statement pursuant to section 212 of the Companies Act, 1956 forming part of the Annual Report. Further, pursuant to Accounting Standards issued by the Institute of Chartered Accountants of India, the Company has presented the Consolidated Financial Statements which include the financial information relating to its subsidiaries and forms part of the Annual Report.

The Company shall provide the copy of the Annual report and other related information of its subsidiary companies as required under section 212 of the Companies Act, 1956 to the shareholders of the Company and the subsidiaries upon their written request. These documents will also be available for inspection at the registered office of the Company and registered offices of the respective subsidiary Companies during the working hours up to the date of Annual General Meeting.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The requirement of disclosures in terms of Section 217(1) (e) of the Companies Act, 1956, pertaining to the conservation of energy and technology absorption is not applicable to the Company.

During the year under review, your Company has incurred a total expenditure on foreign exchange amounting to Rs. 317.10 Lacs as compared to the last year's expenditure of Rs. 610.72 Lacs.

Like last year, your Company has not earned any Foreign Exchange Income during the year under review.

Audit Committee

A committee of the Board of Directors called 'Audit Committee' was reconstituted on 23rd October 2010 comprising of Mr. Bharat Shah, Mr. Viren Raheja, Mr. Sasha Mirchandani, Mr. Sridhar Gorthi and Mr. Devendra Shrotri, Directors of the Company. The Audit Committee reviews and lays down the basic Audit norms, rules and regulations and Audit Policies which are made applicable to the Company. The Audit Committee will function subject to the superintendence and direction of the Board of Directors and the recommendations made by the Audit Committee are mandatory in nature.

Directors' Responsibility Statement

Your Directors in compliance of Section 217 (2AA) of the Companies Act, 1956 confirm that in the preparation of the annual accounts for the year ended March 31, 2011:

a) the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the Company has selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2011 and the loss of the Company for the year;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts of the Company has been prepared on a going concern basis.

Corporate Governance & Management Discussion and Analysis Report

A report on Corporate Governance along with a certificate from M/s. Rathi & Associates, Practicing Company Secretaries, regarding compliance of requirements of Corporate Governance pursuant to Clause 49 of the Listing Agreement with Stock Exchanges along with the report of Corporate Governance is annexed hereto and forms part of this report. The Management Discussion and Analysis Report on the operations of the Company as required under the Listing Agreement with the Stock Exchanges is also annexed hereto and forms part of this report.

Auditors

M/s. G. M. Kapadia & Co, Chartered Accountants, the Statutory Auditors, shall retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Your Directors recommend their re-appointment.

Comments on Auditors' Report

Your Auditors have made some observations in the annexure (i) (b) to their report on verification of distribution equipments. Your Directors state that the Company has reconciled the book stock of Cable TV and Internet Access Devices with physical stock and there was no significant difference, which though not dealt with in the books of accounts does not have any material impact.

Acknowledgements

Your Directors take this opportunity to thank all the shareholders and lenders for their continued support. Your Directors also wish to place on record, the sincere appreciation to all the employees, franchisees, distributors and the vendors for their excellent contribution towards the progress of the Company.

FOR AND ON BEHALF OF THE BOARD

Place: Mumbai CHAIRMAN

Date: August 12, 2011







 
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