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Notes to Accounts of SITI Networks Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

SITI Cable Network Limited (hereinafter referred to as 'the Company' or 'SCNL') was incorporated in the state of Maharashtra, India. The Company is engaged in distribution of television channels through analogue and digital cable distribution network, primary internet and allied services.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared and presented under the historical cost convention on the accrual basis of accounting following generally accepted accounting principles in India and comply with the Accounting Standards as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and the provisions of the Act. The accounting policies have been consistently applied by the Company unless otherwise stated. All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Act.

In view of the present positive net worth, substantial subscription revenue growth and continued financial support from the promoters companies, these financial statements, have been prepared on a going concern basis.

3. SHARE CAPITAL

(a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of RS. 1 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Terms/ rights attached to preference shares

The Company has only one class of 7.25% Non- cumulative redeemable preference shares of RS. 1 each. The said preference shares were allotted to Zee Telefilms Limited (now Zee Entertainment Enterprises Limited) on December 29, 2006, pursuant to the scheme of arrangement for demerger of cable business undertaking of Zee Telefilms Limited approved by the Hon'ble Bombay High Court vide its order dated November 17, 2006. Initially, as per the terms of the issue and allotment, the said preference shares were due for redemption on December 29, 2008. However, with the written consent/approval of Zee Entertainment Enterprises Limited, the terms of the issue of said preference shares was varied by extending the period of redemption by another three years i.e. till December 29, 2011. Later on June 6, 2011 these shares were transferred to Churu Enterprises LLP by Zee Entertainment Enterprises Limited.Period for redemption of preference shares has been extended by another period of five years till December 29,2016 by Churu Enterprises LLP. The preference shares are redeemable at par. In the event of liquidation of the Company before redemption of preference shares, the holders of preference shares will have priority over equity shares in the payment of dividend and repayment of capital.

(c) Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 32.

(d) Terms of securities convertible into equity shares issued along with earliest date of conversion.

During the year ended March 31,2013, the Company issued 162,000,000 convertible warrants on preferential basis upon payment of a consideration of RS. 20 per warrant. Each convertible warrant was convertible into one equity share of RS. 1 each at a premium of RS. 19 per share. Holders of such warrants had the option to convert these warrants into equity shares upon payment of aforesaid consideration on or before eighteen months from the date of allotment of warrants, viz. March 19, 2013. During the year ended March 31, 2014 and March 31,2015, 68,500,000 and 93,500,000 equity shares respectively have been allotted pursuant to the exercise of option.

(e) No shares have been issued for consideration other than cash or as bonus shares in the current reporting year and in last five years immediately preceeding the current reporting year.

4. In view of the mandatory digital addressable system ('DAS') regulation announced by the Government of India, digitisation of cable network has been implemented in Phase 1 and Phase 2 cities effective November 1, 2012 and April 1,2013 respectively. Owing to the initial delays in implementation of DAS in phase 1 cities and challenges faced by all the Multi-System Operators (MSOs) during transition from analogue business to DAS, the Company is in the process of implementation of revenue sharing contracts entered into with the local cable operators (LCOs).Accordingly, the Company has invoiced and recognized subscription revenue on the basis of certain estimate under the new DAS regime amounting to RS. 529 millions (previous year RS. 1,997.12 millions) for year ended March 31,2015 based on certain estimates derived from market trends and ongoing discussion with the LCOs. Management is of the view that the execution/implementation of such contracts will not have a significant impact on the subscription revenue.

5. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS

Defined contribution plan

Contribution to defined contribution plan, recognised as expense for the year are as under :- Employer's contribution to provident fund and other funds RS. 18.32 million (Previous year RS. 15.25 million).

Defined benefit plan

The following table summarises the components of net benefit expenses recognised in the statement of profit and loss and amounts recognised in the balance sheet for the define benefit gratuity plan.

6. EMPLOYEE STOCK OPTION PLAN -ESOP-2007

The Company instituted the Employee Stock Option Plan - ESOP-2007 to grant equity based incentives to its eligible employees. The ESOP-2007 ("the Scheme") has been approved by the Board of Directors of the Company at their meeting held on June 27, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on September 18, 2007 to grant 4,344,355 options (not exceeding 2% of the issued, subscribed and paid up equity share capital of the Company as on March 31, 2007), representing one share for each option upon exercise by the employee of the Company at an exercise price determined by the Board / remuneration committee. The Scheme covers grant of options to the specified permanent employees of the Company and Directors of the Company, whether whole time directors or otherwise as may be decided by the Board.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the options will vest in the employee every year equally. The option grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the option grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

7. LEASES

Finance lease: Company as lessee

Vehicles obtained on finance lease are for 4 years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangements. There are no subleases.

8. RELATED PARTY DISCLOSURES

(i) Names of related parties where control exists

Subsidiaries companies

Indian Cable Net Company Limited

Central Bombay Cable Network Limited

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Limited

Master Channel Community Network Private Limited (Subsidiary of Central Bombay Cable Network Limited)

Siti Vision Digital Media Private Limited

Siti Jind Digital Media Communication Private Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Bhatia Network Entertainment Private Limited

Siti Jony Digital Cable Network Private Limited

Siti Krishna Digital Media Private Limited

Siti Faction Digital Private Limited

Siti Guntur Digital Network Private Limited

Siti Maurya Cable Net Private Limited (Subsidiary of Indian Cable Net Company Limited)

Siti Karnal Digital Media Network Private Limited w.e.f. February 02, 2015

Siti Global Private Limited w.e.f. June 20, 2014

Siri Digital Network Private Limited w.e.f. February 02, 2015

Siti Broadband Services Private Limited w.e.f. July 19, 2014

(ii) Name of related party where significant influence exists

Associate company

Siti Chhattisgarh Multimedia Private Limited (Associate of Siti Bhatia Network Entertainment Private Limited)

(iii) Key Management Personnel

Dr. Subhash Chandra, Director, Mr. V.D. Wadhwa, Executive Director and CEO

(iv) Enterprises owned or significantly influenced by key management personnel or their relatives

Dish TV India Limited

Zee Entertainment Enterprises Limited

Zee Media Corporation Limited (formerly known as Zee News Limited)

Zee Turner Limited

Essel International Limited

Essel Media Ventures Limited

9. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounting to RS. 108.25 million (Previous year RS. 1.28 million).

10. CONTINGENT LIABILITIES

i) Claims against the Company not acknowledged as debts RS. 15.02 million (Previous year RS. 49.2 million)

ii) Demands raised by the statutory authorities being contested by the Company RS. 417.92 million (Previous year Nil) ii) The Company has undertaken to provide continuing financial support to subsidiaries are given as below:

In March 31, 2015

Central Bombay Cable Network Limited

Siticable Broadband South Limited

In March 31, 2014

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Private Limited

Central Bombay Cable Network Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Faction Digital Private Limited

Siti Jony Digital Cable Network Private Limited

Siti Vision Digital Media Private Limited

Siti Bhatia Network Entertainment Private Limited

11. INFORMATION UNDER SECTION 186 (4) OF THE COMPANIES ACT, 2013

Investments made

There are no investments made by the Company other than those stated under Note 14 in the Financial Statements.

12. The Company operates in single business segment of cable distribution in India only. Hence there are no separate reportable business or geographical segments as per Accounting Standard (AS-17) on Segment Reporting.

13. Previous year amounts have been presented for the purpose of comparison and have been regrouped/ reclassified wherever necessary.


Mar 31, 2014

1. Gratuity and other post-employment benefit plans

Defined contribution plan

Contribution to defined contribution plan, recognised as expense for the year are as under :- Employer''s contribution to provident fund ` 15.03 million (Previous year ` 12.89 million).

Defined benefit plan

The following table summarises the components of net benefit expenses recognised in the statement of profit and loss and amounts recognised in the balance sheet for the define benefit gratuity plan.

2. Capital and other commitments

Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounting to ` 1.28 million (Previous year ` 104.43 million)

3. Contingent liabilities

i) Claims against the Company not acknowledged as debts ` 49.2 million (Previous year ` 50.34 million) ii) The Company has undertaken to provide continuing financial support to subsidiaries are given as below:

In March 31, 2014

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Private Limited

Central Bombay Cable Network Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Faction Digital Private Limited

Siti Jony Digital Cable Network Private Limited

Siti Vision Digital Media Private Limited

Siti Bhatia Network Entertainment Private Limited

In March 31, 2013

Central Bombay Cable Network Limited

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Private Limited

Siti Vision Digital Media Private Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Jind Digital Media Communications Private Limited

Siti Bhatia Network Entertainment Private Limited

4. The Company operates in single business segment of cable distribution in India only. Hence there are no separate reportable business or geographical segments as per Accounting Standard (AS-17) on Segment Reporting.

5. The Company has revised the useful life of set top boxes from five years to eight years during the financial year 2013-2014. This has resulted reduction in depreciation charges for the year by ` 174.80 (previous year Nil).

6. Previous year figures have been presented for the purpose of comparison and have been regrouped/ reclassified wherever necessary.


Mar 31, 2013

1. Corporate information

SITI Cable Network Limited [formerly known as Wire and Wireless [India) Limited] [hereinafter referred to as ''the Company'' or ''SCNL'') was incorporated in the state of Maharashtra, India. The Company is engaged in distribution of television channels through analogue and digital cable distribution network, primary internet and allied services.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies have been consistently applied by the Company unless otherwise stated. All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company as per the guidance as set out in the Revised Schedule VI to the Companies Act, 1956.

The Company''s accumulated losses aggregate to Rs. 6,049.81 millions as at March 31, 2013 (Previous year Rs. 5,431.40 millions) while the other components of shareholders'' funds aggregate to Rs. 5,467.77 millions (Previous year Rs. 4,657.77 millions). This has resulted in complete erosion of net worth of the Company.

In view of the warrant subscription, mandatory digitization, expansion in central India which will yield substantial subscription revenue, increase in efficiency and assurance to extend all support in foreseeable future from holder of majority of equity shares of the Company, these financial statement are prepared on going concern basis.

3. The Company has during the year acquired more than 50% stake in four subsidiaries by way of subscription of shares, the details are as below:

a) 5,100 shares of Rs.10 each in Siti Jony Digital Cable Network Private Limited (SJDCNPL) w.e.f. December 1, 2012 by paying a consideration of Rs. 0.05 million.

b) 5,100 shares of Rs.10 each in Siti Krishna Digital Media Private Limited (SKDMPL] w.e.f. July 2, 2012 by paying a consideration of Rs. 0.05 million.

c) 5,100 shares of Rs.10 each in Siti Faction Digital Private Limited ISFDPL) w.e.f. March 16, 2013 by paying a consideration of Rs. 0.05 million.

d) 7,400 shares of Rs.10 each in Siti Guntur Digital Network Private Limited (SGDNPL] w.e.f. March 16, 2013 by paying a consideration of Rs. 0.07 million.

The resulting goodwill has been shown as ''goodwill on consolidation''.

4. In view of the mandatory digital addressable system (''DAS'') regulation announced by the Ministry of Information and Broadcasting, Government of India, digitization of cable networks has been implemented in the cities notified for Phase 1 and Phase 2 effective November 1, 2012 and April 1, 2013 respectively. Owing to the initial delays in implementation of DAS in phase 1 cities and challenges faced by all the Multi-System Operators (MSOs) during transition from analog business to DAS, the Company is in the process of executing contracts with the subscribers and implementation of revenue sharing contracts entered into with the local cable operators (LCOs). Accordingly, the Company has invoiced and recognized subscription revenue net of sharing of revenue with the LCOs under the new DAS regime amounting to Rs. 212.48 millions.

5. Gratuity and other post-employment benefit plans

Defined contribution plan

Contribution to defined contribution plan, recognised as expense for the year are as under :- Employer''s contribution to provident fund Rs. 12.89 millions (Previous year Rs. 10.82 millions).

Defined benefit plan

The following table summarises the components of net benefit expenses recognised in the statement of profit and loss and amounts recognised in the balance sheet for the define benefit gratuity plan.

6. Employee Stock Option Plan -ESOP-2007

The Company instituted the Employee Stock Option Plan - ESOP-2007 to grant equity based incentives to its eligible employees. The ESOP-2007 ("the Scheme") has been approved by the Board of Directors of the Company at their meeting held on June 27, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on September 18, 2007 to grant 4,344,355 options (not exceeding 2% of the issued, subscribed and paid up equity share capital of the Company as on March 31, 2007), representing one share for each option upon exercise by the employee of the Company at an exercise price determined by the Board / remuneration committee. The Scheme covers grant of options to the specified permanent employees of the Company and Directors of the Company, whether whole time directors or otherwise as may be decided by the Board.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the options will vest in the employee every year equally. The option grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the option grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

7. Leases

Finance lease: Company as lessee

Vehicles obtained on finance Lease are for 4 years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangements. There are no subleases.

Operating Lease : Company as Lessee

The Company''s significant [easing arrangements are in respect of operating Leases taken for offices, residential premises, godowns, stores, etc. These leases are cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of the lease generally is for 11 to 120 months. Total future minimum lease payments under non cancellable operating lease is:-

8. Related party disclosures

li) Names of related parties where control exists

(a) Holding Company

Bioscope Cinemas Private Limited (till November 9, 2012)

(b) Subsidiaries Companies

Indian Cable Net Company Limited

Central Bombay Cable Network Limited

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Limited

Master Channel Community Network Private Limited

Siti Vision Digital Media Private Limited

Siti Jind Digital Media Communication Private Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Bhatia Network Entertainment Private Limited

Siti Jony Digital Cable Network Private Limited w.e.f. December 1, 2012

Siti Krishna Digital Media Private Limited w.e.f. July 2, 2012

Siti Faction Digital Private Limited w.e.f. March 16, 2013

Siti Guntur Digital Network Private Limited w.e.f. March 16, 2013

(c) Associate Company

Siti Chhattisgarh Multimedia Private Limited

(ii) Key Management Personnel

Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-Time Director, Mr. Sudhir Agarwal, CEO (till January 17,2012)

(iii) Enterprises owned or significantly influenced by key management personnel or their relatives

Dish TV India Limited

Zee Entertainment Enterprises Limited

Zee News Limited

Zee Sports Limited

Zee Turner Limited

Essel International Limited

Essel Media Ventures Limited

Related party transactions

The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:

38 Capital and other commitments

Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounting to Rs. 104.43 millions (Previous year Rs. 63.66 millions)

39. Contingant liabilities

i) Claims against the Company not acknowledged as debts Rs. 50.34 millions (Previous year Rs. 62.84 millions)

ii) The Company has undertaken to provide continuing financial support to subsidiaries are given as below:

In March 31, 2013

Central Bombay Cable Network Limited

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Limited

Siti Vision Digital Media Private Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Jind Digital Media Communication Private Limited

Siti Bhatia Network Entertainment Private Limited

In March 31, 2012

Central Bombay Cable Network Limited

Siticable Broadband South Limited

Wire and Wireless Tisai Satellite Limited

Siti Vision Digital Media Private Limited

Siti Jai Maa Durgee Communications Private Limited

Siti Bhatia Network Entertainment Private Limited

9. The Company operates in single business segment of cable distribution in India only. Hence there are no separate reportable business or geographical segments as per Accounting Standard (AS-17) on Segment Reporting.

10. Previous year figures have been presented for the purpose of comparison and have been regrouped/ reclassified wherever necessary.


Mar 31, 2012

1. a) Corporate Information

Wire and Wireless (India) Limited (hereinafter referred to as 'the Company' or 'WWIL') was incorporated in the state of Maharashtra, India. The Company is engaged in Distribution of Television Channels through analogue and digital cable distribution network, primary internet and allied services.

b) The Company's accumulated losses aggregate to Rs. 5,431.40 million as at March 31, 2012 (Rs. 4,610.03 million as at March 31, 2011) while the shareholders'funds are Rs. 4,657.77 million (Rs. 4,657.17 million as at March 31, 2011). This has resulted in complete erosion of net worth of the Company.

In view of new Digitisation policy announced by TRAI, which requires all Multi System Operators (MSOs) to convert the entire Analogue universe into digital by March 31, 2014 in a phased manner; starting from four metros, which are to be converted into digital by June 30, 2012; the Company expects to increase / expand the subscriber base of its analogue business; which will yield higher subscription income and improve operational efficiency. Further, the Company has been focusing on increasing its presence in Central India. The approved business plan of which is under implementation by the Company, the benefit of which will accrue in future years. Based on the new business plan, the Company expects to have positive c ash flows and earnings before interest, depreciation and tax (EBIDTA) from perations from year 2012-13.

Based on the above, management expects to earn higher revenues and improved profitability which will enable the Company to strengthen its financial position. Also the Parent Company (including the promoters and shareholders of parent company) has provided assurance that it intends to provide financial and operational support to the Company, to continue its operations for the foreseeable future. Based on above, the management is of the opinion that it is appropriate to prepare these financial statements on going concern basis.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year, except for the change in accounting policy explained below.

(a) Terms/ rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 1 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts.

The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Terms/ rights attached to Prefrence shares

The Company has only one class of 7.25% Non-Cumulative Redeemable Preference Shares of Rs. 1 /- each. The said Preference Shares were allotted to Zee Telefilms Limited (now Zee Entertainment Enterprise Limited) on December 29, 2006, pursuant to the Scheme of Arrangement for demerger of Cable Business Undertaking of Zee Telefilms Limited approved by the Hon'ble Bombay High Court vide its order dated 17th November, 2006. Initially, as per the terms ofthe issue and allotment the said Preference Shares were due for redemption on December 29, 2008. However, with the written c onsent/approval of Zee Entertainment Enterprises Limited, the terms ofthe issue of said Preference Shares was varied by extending the period of redemption by another 3 years i.e. till December29, 2011. Later on, on June 6, 2011 these shares were transferred to Churu Enterprises LLP. by Zee Entertainment Enterprises Limited. Period for redemption of preference shares has been extended till December 29, 2016 by another period of five years by Churu Enterprises LLP. In the event of liquidation of the company before redemption of preference shares, the holders of preference shares will have priority over equity shares in the payment of dividend and repayment of capital.

As per records of the company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents legal ownerships of shares.

(c) Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the company, refer note 28.

1. 9.95% p.a Secured Redeemable Non-Convertible Debenture

Non convertible debentures are secured by first ranking pari passu mortgage and/ or charge/assignment of all the Company's immovable properties, present and future and all the Company's movable, including movable plant and machinery, machinery spares, tools and accessories, furniture, fixture, vehicles and all other movable assets, present and future and the Company's cash flow, receivables, bank account (other than the reserve account) wherever mentioned, all monies lying in and to the credit of such account, book debts, revenue of whatsoever nature and where ever arising, present and future and insurance policies. An exclusive charge over the reserve account and all amount lying there in and the credit thereof, present and future. The debenture carries coupon rate of 9.95% pa payable on semi annual basis. The debentures are redeemable at par in four six monthly installments starting from December 2010,2 each of20% ofthe issue size and 2 each of30% ofthe issue size.

2. From Axis Bank-Term loans are secured by Pari-passu first charge on entire movable, both present and future, of the Company and on the receivables, cash flow and account of the company. Also secured by corporate guarantee of ZEEL for maintaining revolving Debt Service Reserve Account (DSRA) for 1 quarter of the interest and principal repayment to be funded 10 days before each due date, for the entire tenure of the loan.

1.The loan carries interest rate of base rate plus 2.25% pa payable on monthly basis. The loan are payable in 16 quarterly installmemt starting from the end of the 15 months from the date of first disbursement 8 each of 5% of the loan and 8 each of7.5% ofthe loan.

2. The loan carries interest rate of base rate plus 1.5% pa payable on monthly basis. The loan are payable in 8 half yearly installment starting from the end of the 15 months from the date of first disbursement "

3. From IDBI Bank-Term loans are secured by mortgage and charge in favour of lender in a form satisfactory to the lender of all the borrowers immovable properties, both present and future, and as well as movable properties and first charge by way of hypothecation and/ or pledge of the borrowers current assets. Also secured by corporate guarantee of ZEEL. Maintenance of Debt Service Rerserve Account(DSRA) for 2 quarters interest.The loan carries interest rate of the bank's prime lending rate payable on monthly basis. The loan are payable in 16 quarterly installemnt starting from the end of the one year from the date of first disbursement.

4. From ICICI Bank -Term loans are secured by first charge by way of hypothecation on the Compnay 's current assets which would include stocks & consumable stores and spares and such other movable including books debts, receivables both present and future, in a form and manner satisfactory to the bank, ranking pari passu with other banks/ lenders. First charge on all moveable fixed assets of the Company cash flow and account of the company ranking pari passu with other banks/ l enders. Also secured by c orporate guarantee of ZEEL for maintaining revolving Debt Service Reserve Account (DSRA) for 1 quarter of the interest and principal repayment to be funded 10 days before each due date, for the entire tenure of the loan. The loan carries interest rate of base rate plus 2.25% pa payable on monthly basis. The loan are payable in 16 quarterly installment starting from the end of the 15 months from the date offirst disbursement 8 each of 5% ofthe loan and 8 each of7.5% ofthe loan.

3. "The Company has during theyearacquired 51% stake in three subsidiaries byway ofsubscription ofshares,the details are as below:

a) 10,409 shares of Rs. 10 each in Siti Bhatia Network Entertainment Private Limited w.e.f. July 1, 2011 by paying a consideration of Rs. 0.1 million.

b) 102,000 shares of Rs. 10 each at a premium of Rs. 176 in Siti Jind Digital Media Communication Private Limited w.e.f. October 1, 2011 by paying a consideration of Rs. 18.97 million.

c) 5,100 shares of Rs. 10 each at a premium of Rs. 320 per share in Siti Jai Maa Durgee Communications Private Limited w.e.f. January 2, 2012 by paying a consideration of Rs. 16.83 million.

4 Capital-Work In Progress and Loans & Advances include amounts of Rs. 13.27 million (previous year Rs 18.64 million) and Rs. 40.80 million (previous year Rs 51.80 million) respectively as outstanding for more than 2 years. The management of the company is making all possible efforts to adjust/ recover these amounts and also initiated appropriate legal action against some of the parties, and therefore no provision there against has been considered necessary. The impact, if any, which in the opinion of the management would not be material, would be made in the year of adjustment/ settlement.

5 The Company had given advances under a guarantee of Holding Company to its subsidiaries and other Companies for meeting working capital requirements and for acquisition of MSOs/ direct points, technological upgradation etc. respectively to the extent of Rs.1182.70 million (including Rs. 450 million given subsequent to year end). The Company firmly believes that these interest free facilities/ advances of Rs. 1182.70 million given as such to be good of recovery and would further enhance its operations on standalone and consolidated basis over near future; therefore does not believe any provisions to be created on these amounts.

6 Gratuity and Other Post-employment benefit Plans Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under Employer's Contribution to Provident Fund Rs 10.82 million C 10.18 million as at March 31, 2011).

Defined Benefit Plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary of last drawn salary for each completed year of service. These benefits are unfunded.

The following table summarizes the components of net benefit expenses recognized in the profit and loss account and amounts recognized in the Balance Sheet for the respective plans.

7 Employee Stock Option Plan -ESOP-2007

The Company instituted the Employee Stock Option Plan - ESOP-2007 to grant equity based incentives to its eligible employees. The ESOP-2007 ("The Scheme") has been approved by the Board of Directors of the Company at their meeting held on June 27, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on September 18,2007 to grant aggregating 4,344,355 options (not exceeding 2% ofthe issued, subscribed and paid up equity share capital of the Company as on March 31, 2007, representing one share for each option upon exercise by the employee of the Company at an exercise price determined by the Board / Remuneration committee. The Scheme covers grant of options to the specified permanent employees of the Company and Directors of the Company, whether Whole time Directors or otherwise as may be decided by the Board. Pursuant to the Scheme, the Remuneration Committee has on July 16, 2009 granted 2,808,800 options (grant of 150,000 Options on June 16, 2008 ) to specified eligible employee of the Company at the market price determined as per the SEBI Guidelines.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms ofthe Scheme, 20% of the options will vest in the employee every year equally. The Option Grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

* The Shareholders of the Company in the Annual General Meeting held on August 17, 2009 approved to re-price the unexercised options already granted by the Company under the Employees Stock Option -2007. The Remuneration Committee decided to re-price outstanding stock options at a price of Rs. 20/- being the closing price of the equity shares of the Company on October 21, 2009 at the National Stock Exchange of India Limited.

8 Leases

Finance lease: Company as lessee

Vehicles obtained on Finance Lease are for 4 years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangements. There are no subleases.

Operating lease :company as lessee

The Company's significant leasing arrangements are in respect of operating leases taken for offices, residential premises, godowns, stores, etc. These leases are cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of the lease generally is for 11 to 120 months.

9 Related party disclosures

(i)Names of Related Parties where control exists

(a) Holding Company

Bioscope Cinemas Private Limited (effective December 28, 2011)

(b) Subsidiary Companies

Central Bombay Cable Network Ltd., Indian Cable Net Company Ltd., Siti Cable Broadband South Ltd., Wire and Wireless Tisai Satellite Ltd., Master Channel Community Network Pvt. Ltd. Siti Vision Digital Media Pvt. Ltd., Siti Bhatia Network Entertainment Pvt Ltd (w.e.f. July 1, 2011), SITI Jind Digital communications Pvt ltd (w.e.f. October 1, 2011) and SITI Jai Maa Durgee Communications Pvt Ltd (w.e.f. Jan 2, 2012)

(ii) Key Management Personnel

Mr. Subhash Chandra, Director, Mr. Brijendra Kumar Syngal, Director, Mr. Amit Goenka, Whole-Time Director, Mr. Sudhir Agarwal, Chief Executive Officer (Resigned wef Jan 17, 2012), Mr. Arun Kapoor, Director (Resigned wef July 12, 2011), Sureshkumar Aggarwal, Director, Vinod Kumar Bakshi, Director

(iii) Enterprises owned or significantly influenced by key management personnel or their relatives

Agrani Wireless Services Ltd., Dish TV India Ltd., Essel Propack Ltd., Media Pro Enterprise India Private Limited, Zee Entertainment Enterprises Limited (ZEEL), Zee News Limited, ZeeTurner Ltd., Zee Sports Limited

Related party transactions

The following table provides the total amount of transactions that have been entered into with related parties for 31 Capital and other commitments

Estimated amount of Contracts remaining to be executed and not provided for (Net of Advances) amounting to Rs. 63.66 million (Previous Year Rs. 63.16 million)

10 Contingent Liabilities

i) Claims against the Company not acknowledged as debts Rs. 62.84 million (Previous Year Rs. 62.84 million)

The Company had agreed to purchase the running business of Franchnet Cable Network for a total sum of Rs. 1.8 million, however Franchnet Cable Network alleged that siti cable has not supplied material /equipments etc to them to upgrade the network. The matter was referred to Arbitration Tribunal. Arbitration Tribunal has pronounced award against the Company. The Company has already filed an appeal before Mumbai High court. The appeal has been admitted and part hearing has been done. The case is now pending for further arguments. Franchnet had claimed Rs. 61.2 million as compensation /damages against the company.

Rs. 1.25 million on account of demand raised by Kanpur Nagar Nigam Ltd towards pole tax.

Rs. 0.39 million on account of claim raised by Om Commvision Network Pvt Ltd u/s 138 of the Negotiable Instruments Act.

Based on the discussions with the solicitor/expert, the management feels that the Company has a strong chance of success in above mentioned cases and hence no provision there against is considered necessary.

ii) The Company has undertaken to provide continuing financial support to subsidiaries (including in the previous year).

11 The breakup of year end tax assets and liabilities into major components of the respective balance is as under

As at the year end March 31, 2012, the company would have net deferred tax asset primarily comprising of unabsorbed losses and carry forward depreciation under tax laws. In the absence of virtual certainty of sufficient future taxable income, the Company has taken the conservative approach and created deferred tax assets to the extent of deferred tax liability.

12 Details of dues to micro and small enterprises as defined under MSMD act 2006

There is no amount due to Micro, Small and Medium Enterprises as per the Micro, Small and Medium Enterprises Development Act 2006. The above information regarding Micro, Small and Medium Enterprises have been determined to the extent to which parties have been identified on the basis of information available with the Company.

13 Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended March 31 , 201 2, the revised Schedule VI notified under the Companies Act 1956 , has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.


Mar 31, 2011

1. a) Background

Wire and Wireless (India) Limited (hereinafter referred to as 'the Company' or 'WWIL') was incorporated in the state of Maharashtra, India. The Company is engaged in Distribution of Television Channels through analogue and digital cable distribution network, primary internet and allied services.

b) The Company's accumulated losses aggregate to Rs 4,610.03 million as at March 31, 2011 (Rs. 4,042.93 million as at March 31, 2010) while the shareholders'funds are Rs 4,657.17 (Rs. 2,308.35 million as at March 31, 2010). This has resulted in complete erosion of net worth of the Company (after considering the impact of fictitious assets of Rs. 92.31 million lying in 'Miscellaneous Expenditure Account'). As per the revised business plan, the Company will increase/ expand the subscriber base of its analogue business & convert the existing universe of analog into digital customers which will yield higher subscription income and improve operational efficiency. Based on the business plan, the Company expects to have positive cash flows and earnings before interest, depreciation and tax (EBIDTA) from operations from year 2011-12. Further, the Company has been adopting and implementing significant cost rationalization measures including right sizing of its work force, the benefit of which will be more significant in future years.

Based on the above, management expects to earn higher revenues and improved profitability which will enable the Company to strengthen its financial position. Also one of the promoter companies has provided assurance that it intends to provide financial and operational support to the Company, to continue its operations for the foreseeable future.

Based on above, the management is of the opinion that it is appropriate to prepare these financial statements on going concern basis.

2. Segment Reporting Polices

The Company is a Multi System Operator providing Cable Television Network Services, Internet Services and allied services which is considered as the only reportable segment. The Company's operations are based in India.

3. Related Party Disclosure

(i) Names of Related Parties where control exists

(a) Individual having significant influence

Mr. Ashok Mathai Kurien, Mr. Laxmi Goel and Ms. Sushila Goel.

(b) Subsidiary Companies

Central Bombay Cable Network Ltd., Indian Cable Net Company Ltd., Siti Cable Broadband South Ltd., Wire and Wireless Tisai Satellite Ltd., Master Channel Community Network Pvt. Ltd. And Siti Vision Digital Media Pvt. Ltd.

(ii) Key Management Personnel

Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-Time Director, Mr. Sudhir Agarwal, Chief Executive Officer, Mr. Arun Kapoor, Director, Parminder Singh Sandhu, Director (Resigned w.e.f. Dec 21, 2010), Suresh Kumar Aggarwal, Director, Vinod Kumar Bakshi, Director ( w.e.f. Dec 21, 2010)

(iii) Other Related parties (in which directors are interested) with whom transactions have taken place during the year

Agrani Satellite Services Ltd., Dakshin Media Gaming Solutions Pvt. Ltd., Diligent Media Corporation Limited, Dish TV India Ltd., Essel Propack Ltd., Essel Corporate Resources Pvt Ltd., ETC Networks Limited, Integrated Subscriber Management Services Limited, Intrex India Ltd., Pan India Network Infravest Pvt. Ltd., Rama Associates Limited, Zee Entertainment Enterprises Limited (ZEEL), Zee Interactive Learning System, Zee News Limited, ZeeTurner Ltd., Churu Trading Co. Private Limited, Essel Minerals Pvt. Ltd., Jayneer Capital Pvt. Ltd.

4. Leases

In case of assets taken on lease

Finance Lease

Vehicles obtained on Finance Lease are for 4 years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangements. There are no subleases.

Operating Lease

The Company's significant leasing arrangements are in respect of operating leases taken for offices, residential premises, godowns, stores, etc. These leases are cancelable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of the lease generally is for 11 to 120 months.

In case of assets given on lease

Operating Lease

Set Top Boxes given under operating leases are capitalized at an amount equal to cost arrived on weighted average method and the rental income is recognized on equal monthly rental billed to subscriber.

5. Secured Loans

i. Non-Convertible Debentures

Non convertible debentures are secured by first ranking pari passu mortga'e and/or charge/assignment of all the Company's immovable properties, present and future and all the Companys movable, including movable plant and machinery, machinery spares, tools and accessories, furniture, fixture, vehicles and all other movable assets, present and future and the Company's cash flow, receivables, bank account (other than the reserve account) wherever mentioned, all monies lying in and to the credit of such account, book debts, revenue of whatsoever nature and whereever arising, present and future and insurance policies. An exclusive charge over the reserve account and all amount lying there in and the credit thereof, present and future. The debentures are redeemable at par in four six monthly installments starting from December 2010, 2 each of 20% of the issue size and 2 each of 30% of the issue size.

ii. Working Capital Finance From Banks

Secured by first pari passu charge on the fixed assets and current assets of the Company. All the loans are further secured by corporate guarantee of Zee Entertainment Enterprises Ltd. (ZEEL). iii. Term Loan From Banks/Financial Institution

From IDBI Bank - Term loans are secured by mortgage and charge in favour of lender in a form satisfactory to the lender of all the borrowers immovable properties, both present and future, and as well as movable properties and first charge by way of hypothecation and/ or pledge of the borrowers current assets. Also secured by corporate guarantee of ZEEL.

From Axis Bank - Term loans are secured by pari-passu first charge on entire movable, both present and future, of the Company and on the receivables, cash flow and account of the Company. Also secured by corporate guarantee of ZEEL for maintaining revolving Debt Service Reserve Account (DSRA) for 1 quarter of the interest and principal repayment to be funded 10 days before each due date, for the entire tenure of the loan.

iv. Finance lease and Hire Purchase

Secured by hypothecation of vehicles purchased thereunder.

6. Capital Commitments

Estimated amount of Contracts remaining to be executed on capital account and not provided for (Net of Advances) amounting to Rs 63.16 million (Previous Year Rs. 20.60 million).

7. Contingent Liabilities not provided for

i) Claims against the Company not acknowledged as debts Rs 62.84 million (Previous Year Rs. 93.45 million)

ii) Income Tax matters : The Assessing Officer had levied penalty under Section 271(1) (c) of the Act of Rs 24,990,210 in Assessment Year 2004-05 on account of additions confirmed by the CIT(A) in respect of the non-deduction of tax on bandwidth charges of Rs. 2,23,59,985 and advance to management companies written off of Rs. 5,09,64,244. The GT(A) had affirmed the penalty and the company has further filed an appeal before the Tribunal against the order of CIT(A). The Company contends that all the relevant facts material to the computation of the total income were disclosed in the assessment proceedings and hence feels that there would be no tax liability.

iii) The Company has undertaken to provide continuing financial support to subsidiaries (including in the previous year).

8. Employee Stock Option Plan -ESOP-2007

The Company instituted the Employee Stock Option Plan - ESOP-2007 to grant equity based incentives to its eligible employees. The ESOP-2007 ("The Scheme") has been approved by the Board of Directors of the Company at their meeting held on June 27, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on September 1 8, 2007 to grant aggregating 4,344,355 options (not exceeding 2% of the issued, subscribed and paid-up equity share capital of the Company as on March 31, 2007, representing one share for each option upon exercise by the employee of the Company at an exercise price determined by the Board/Remuneration committee. The Scheme covers grant of options to the specified permanent employees of the Company and Directors of the Company, whether Whole-time Directors or otherwise as may be decided by the Board. Pursuant to the Scheme, the Remuneration Committee has on July 16, 2009 granted 2,808,800 options (Previous year grant of 1 50,000 Options on June 16, 2008 ) to specified eligible employee of the Company at the market price determined as per the SEBI Guidelines.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the options will vest in the employee every year equally. The Option Grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the Option Grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

9. Employee Benefits

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under Employer's Contribution to Provident Fund Rs 10.18 million (Rs. 11.71 Million as at March 31, 2010).

Defined Benefit Plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. These benefits are unfunded.

The following table summarizes the components of net benefit expenses recognized in the profit and loss account and amounts recognized in the Balance Sheet for the respective plans.

10. There is no amount due to Micro, Small and Medium Enterprises as per the Micro, Small and Medium Enterprises Development Act 2006.

The above information regarding Micro, Small and Medium Enterprises have been determined to the extent to which parties have been identified on the basis of information available with the Company.

11. Capital-Work In Progress and Loans & Advances include amounts of Rs. 1 8.64 million and Rs. 51.80 million respectively as outstanding for more than 2 years. The management of the company is making all possible efforts to adjust/recover these amounts and also initiated appropriate legal action against some of the parties, and therefore no provision there against has been considered necessary. The impact, if any, which in the opinion of the management would not be material, would be made in the year of adjustment/settlement.

12. The Company had given advances under a guarantee of Promoter Group Company to its subsidiaries and other group Companies for meeting working capital requirements and for acquisition of MSOs/ direct points to the extent of Rs. 419.65 million as at year end (after receipt of Rs 1524.35 million at year end). The outstanding as on date of signing of financial statements is Rs. 1 806.30 million.

The Company firmly believes that these interest free facilities/ advances of Rs. 1 806.30 million given as such to be good of recovery and would further enhance its operations on standalone and consolidated basis over near future; therefore does not believe any provisions to be created on these amounts

13. The Company is in the process of reconciling the Service Tax Account. Necessary adjustments, if any, which in the opinion of the management will not be material, will be made as and when the accounts are finally reconciled.

14. During the year, the Company had acquired 50.65% stake in Siti Vision Digital Media Private Limited w.e.f. June 30, 2010 by way of subscription of 7,484,870 equity shares of Rs 10 each at a premium of Rs 100 per share in consideration of Rs. 82.33 million, which has been discharged by transfer of fixed assets of the Company. This transaction was accounted for by following the purchase method and resulted in goodwill amounting to Rs 1.32 million. The said goodwill has been shown as 'goodwill on consolidation'.

15. Previous year Comparatives:

Previous year's figures have been regrouped wherever necessary to confirm to this year's classification.

 
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