Mar 31, 2023
The discount rate is based on the prevailing market yields of Government of India bonds as at the Balance Sheet date for the estimated term of the obligations.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company''s policy for plan assets management.
viii The expected contributions for Defined Benefit Plan for the next financial year will be in line with financial year 2022-23.
xi These Plans typically expose the Company to actuarial risks such as: Investment Risk, Interest Risk, Longevity Risk and Salary Risk.
I investment Risk - The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds; if the return on plan asset is below this rate, it will create a plan deficit.
Interest Risk - A decrease in the discount rate will increase the plan liability.
Longevity Risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary Risk - The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
38 CAPITAL AND FINANCIAL RISK MANAGEMENT38.1 CAPITAL MANAGEMENT
The Company manages its capital to ensure that it will continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company monitors capital using a gearing ratio.
The Capital Structure of the Company consists of Debt, Cash and Cash equivalent and Equity.
38.2 FINANCIAL RISK MANAGEMENT
The Company''s activities exposes it mainly to credit risk, liquidity risk and market risk. The treasury team identifies and evaluates financial risk in close coordination with the Company''s business teams.
Credit risk is the risk that customers or counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities which is primarily trade receivables.
Customer credit risk is managed by each business team subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customers receivables are regularly monitored.
An impairment analysis is performed at each reporting date for major customers. Receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company evaluates the concentration of risk with respect to receivables as low.
Liquidity risk arises from the Company''s inability to meet its cash flow commitments on the due date. The Company maintains sufficient stock of cash, marketable securities and committed credit facilities. The Company accesses local financial markets to meet its liquidity requirements. It uses a range of products to ensure efficient funding from across well-diversified markets and investor pools. Treasury monitors rolling forecasts of the Company''s cash flow position and ensures that the Company is able to meet its financial obligation at all times including contingencies.
The Company''s liquidity is managed by forecasting the cash and liquidity requirements. Treasury arranges to either fund the net deficit or invest the net surplus in the market.
iii MARKET RISKa FOREIGN EXCHANGE EXPOSURE/ CURRENCY RISK
Foreign Currency Risk is the risk that the Fair Value or Future Cash Flow of an exposure will fluctuate because of changes in foreign currency rates. Exposure can arise on account of various assets and liabilities which are denominated in currencies other than functional currency.
1% appreciation/ depreciation of the respective foreign currencies with respect to the functional currency of the Company would result in decrease/ increase in the Company''s profit before tax by ?18 lakh for the year ended 31st March, 2023 and by ?16 lakh for the year ended 31st March, 2022.
The Company''s exposure to the risk of changes in market interest rate relates to floating rate debt obligations.
1% appreciation/ depreciation in the interest rate on floating rate borrowing included above would result in a decrease/ increase in the Company''s Profit Before Tax by ? 30 Lakh for the year ended 31st March, 2023 and by NIL lakh for the year ended 31st March, 2022.
39 IMPAIRMENT TESTING OF GOODWILL
Goodwill acquired through business combinations with indefinite useful lives has been allocated to cash generating unit (''CGU") "Media Operations" which is also an operating and reportable segment for impairment testing. The carrying amount of Goodwill as at 31st March, 2023 is ? 87,734 lakh (Previous year ? 87,734 lakh).
The Company performed its annual impairment test for year ended 31st March, 2023. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior
management covering a 5 years period, based on EBITDA multiples and independent valuer''s report. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 11% and cash flows beyond the 5 years period are extrapolated using a 5% terminal growth rate.
Key assumptions used for value in use calculations:-
a. Growth rate estimates:- Rates are based on published industry research and management assessments.
b. Discount rate:- The discount rate calculation representing the current market assessment is based on the specific circumstances of the CGU and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the CGU''s investors. The cost of debt is based on the interest-bearing borrowings the CGU is obliged to service. Industry-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.
The management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the CGU.
40.2 The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following three levels:
Level 1: Inputs are Quoted prices (unadjusted) in active markets or Net Assets Value (NAV) for identical assets or liabilities. Level 2: Inputs are other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
All financial instruments are initially recognised and subsequently re-measured at fair value as described below:
a. The fair value of investment in quoted Equity Shares and Mutual Funds is measured at quoted price or Net Asset Value (NAV), as applicable.
b. The fair value of the remaining financial instruments is determined based on adjusted quoted price of underlying assets, information about market participants, assumptions and other data that are available including using discounted cash flow analysis, as applicable.
Changes in the fair value of forward contracts that economically hedge monetary liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the Statement of Profit and Loss. The changes in fair value of the forward contracts, as well as the foreign exchange gains and losses relating to the monetary items, are recognised in the Statement of Profit and Loss.
ss Capital employed includes Equity, Borrowings, Deferred Tax Liabilities, Creditor for Capital Expenditure and reduced by Investments, Cash and Cash Equivalents, Deferred Tax Assets and Capital Work-in-Progress.
43 Details of Loan given, Investment made and Guarantee given covered u/s 186 (4) of the Companies Act, 2013
(a) Loan given by the Company to body corporate as at 31st March, 2023. (Refer Note 13)
(b) Investment made by the Company as at 31st March, 2023. (Refer Note 5)
(c) No Guarantee has been given by the Company as at 31st March, 2023 and 31st March, 2022.
44 The Company operates in a single reportable operating segment ''Media Operations''. Hence there are no separate reportable segments in accordance with Ind AS 108 ''Operating Segments''. Since the Company''s operations are primarily in India, it has determined single geographical segment. No customers represents more than 10% of the Company''s total revenue during the year as well as previous year.
45 There are no balance outstanding as on 31st March, 2023 and 31st March, 2022 on account of any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act,1956.
46 OTHER STATUTORY INFORMATION
(a) The Company does not have any Capital Work-In-Progress, whose completion is overdue or has exceeded its cost compared to its original plan.
(b) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(i) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(c) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(d) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
47 Previous year''s figures have been regrouped wherever necessary to make them comparable to current year''s figures.
48 The financial statements were approved for issue by the Board of Directors on 17th April, 2023.
Mar 31, 2022
CAPITAL AND FINANCIAL RISK MANAGEMENT
The Company manages its capital to ensure that it will continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company monitors capital using a gearing ratio.
The Capital Structure of the Company consists of Debt, Cash and Cash equivalent and Equity.
The Net Gearing Ratio at end of the reporting period was as follows:
(? in lakh) |
|||
As at |
As at |
||
31st March, 2022 |
31st March, 2021 |
||
Debt |
66,506 |
77,432 |
|
Less: Cash and Cash Equivalents |
4,778 |
12,390 |
|
Net Debt |
A |
61,728 |
65,042 |
Equity |
B |
3,04,353 |
2,86,846 |
Net Gearing Ratio |
A/B |
0.20 |
0.23 |
The Company''s activities exposes it mainly to credit risk, liquidity risk and market risk. The treasury team identifies and evaluates financial risk in close coordination with the Company''s business teams.
Credit risk is the risk that customers or counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities which is primarily trade receivables.
Customer credit risk is managed by each business team subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customers receivables are regularly monitored.
An impairment analysis is performed at each reporting date for major customers. Receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company evaluates the concentration of risk with respect to receivables as low.
Liquidity risk arises from the Company''s inability to meet its cash flow commitments on the due date. The Company maintains sufficient stock of cash, marketable securities and committed credit facilities. The Company accesses local financial markets to meet its liquidity requirements. It uses a range of products to ensure efficient funding from across
well-diversified markets and investor pools. Treasury monitors rolling forecasts of the Company''s cash flow position and ensures that the Company is able to meet its financial obligation at all times including contingencies.
The Company''s liquidity is managed by forecasting the cash and liquidity requirements. Treasury arranges to either fund the net deficit or invest the net surplus in the market.
Foreign Currency Risk is the risk that the Fair Value or Future Cash Flow of an exposure will fluctuate because of changes in foreign currency rates. Exposure can arise on account of various assets and liabilities which are denominated in currencies other than functional currency.
38 IMPAIRMENT TESTING OF GOODWILL
Goodwill acquired through business combinations with indefinite useful lives has been allocated to cash generating unit (''CGU'') "Media Operations" which is also an operating and reportable segment for impairment testing. The carrying amount of Goodwill as at 31st March, 2022 is ? 87,734 lakh (Previous year ? 87,734 lakh).
The Company performed its annual impairment test for year ended 31st March, 2022. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a 5-year period and based on EBITDA multiples. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 14% and cash flows beyond the 5-year period are extrapolated using a 5% growth rate.
Key assumptions used for value in use calculations:-
a. Growth rate estimates:- Rates are based on published industry research and management assessments.
b. Discount rate:- The discount rate calculation representing the current market assessment is based on the specific circumstances of the CGU and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the CGU''s investors. The cost of debt is based on the interest-bearing borrowings the CGU is obliged to service. Industry-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.
The management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the CGU.
1% appreciation/ depreciation of the respective foreign currencies with respect to the functional currency of the Company would result in decrease/ increase in the Company''s profit before tax by ? 16 lakh for the year ended 31st March, 2022 and by ? 6 lakh for the year ended 31st March, 2021.
The Company''s exposure to the risk of changes in market interest rate relates to floating rate debt obligations.
1% appreciation/ depreciation in the interest rate on floating rate borrowing included above would result in a decrease/ increase in the Company''s Profit Before Tax by Nil for the year ended 31st March, 2022 and by ? 152 lakh for the year ended 31st March, 2021.
Level 1: Inputs are Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs are other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
All financial instruments are initially recognised and subsequently re-measured at fair value as described below:
a. The fair value of investment in quoted Equity Shares and Mutual Funds is measured at quoted price or Net Asset Value (NAV), as applicable.
b. The fair value of the remaining financial instruments is determined based on adjusted quoted price of underlying assets, information about market participants, assumptions and other data that are available including using discounted cash flow analysis, as applicable.
Changes in the fair value of forward contracts that economically hedge monetary liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the Statement of Profit and Loss. The changes in fair value of the forward contracts, as well as the foreign exchange gains and losses relating to the monetary items, are recognised in the Statement of Profit and Loss.
42 DETAILS OF LOAN GIVEN, INVESTMENT MADE AND GUARANTEE GIVEN COVERED U/S 186 (4) OF THE COMPANIES ACT, 2013
(a) Loan given by the Company to body corporate as at 31st March, 2022. (Refer Note 12)
(b) Investment made by the Company as at 31st March, 2022. (Refer Note 5)
(c) No Guarantee has been given by the Company as at 31st March, 2022.
43 The Company operates in a single reportable operating segment ''Media Operations''. Hence there are no separate reportable segments in accordance with Ind AS 108 ''Operating Segments''. Since the Company''s operations are primarily in India, it has determined single geographical segment. No customers represents more than 10% of the Company''s total revenue during the year as well as previous year.
44 There are no balance outstanding as on 31st March, 2022 on account of any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act,1956.
45 OTHER STATUTORY INFORMATION
(a) The Company does not have any Capital Work-In-Progress, whose completion is overdue or has exceeded its cost compared to its original plan.
(b) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(i) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(c) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(d) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
46 Previous year''s figures have been regrouped wherever necessary to make them comparable to current year''s figures.
47 The financial statements were approved for issue by the Board of Directors on 3rd May, 2022.
Mar 31, 2021
37 CAPITAL AND FINANCIAL RISK MANAGEMENT37.1 CAPITAL MANAGEMENT
The Company manages its capital to ensure that it will continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company monitors capital using a gearing ratio.
The Capital Structure of the Company consists of Debt, Cash and Cash equivalent and Equity.
37.2 FINANCIAL RISK MANAGEMENT
The Company''s activities exposes it mainly to credit risk, liquidity risk and market risk. The treasury team identifies and evaluates financial risk in close coordination with the Company''s business teams.
Credit risk is the risk that customers or counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities which is primarily trade receivables.
Customer credit risk is managed by each business team subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customers receivables are regularly monitored.
An impairment analysis is performed at each reporting date for major customers. Receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company evaluates the concentration of risk with respect to receivables as low.
Liquidity risk arises from the Company''s inability to meet its cash flow commitments on the due date. The Company maintains sufficient stock of cash, marketable securities and committed credit facilities. The Company accesses local financial markets to meet its liquidity requirements. It uses a range of products to ensure efficient funding from across well-diversified markets and investor pools. Treasury monitors rolling forecasts of the Company''s cash flow position and ensures that the Company is able to meet its financial obligation at all times including contingencies.
The Company''s liquidity is managed by forecasting the cash and liquidity requirements. Treasury arranges to either fund the net deficit or invest the net surplus in the market.
iii) MARKET RISKa FOREIGN EXCHANGE EXPOSURE/ CURRENCY RISK
Foreign Currency Risk is the risk that the Fair Value or Future Cash Flow of an exposure will fluctuate because of changes in foreign currency rates. Exposure can arise on account of various assets and liabilities which are denominated in currencies other than functional currency.
38 IMPAIRMENT TESTING OF GOODWILL:
Goodwill acquired through business combinations with indefinite useful lives has been allocated to cash generating unit (''CGU'') "Media Operations" which is also an operating and reportable segment for impairment testing. The carrying amount of Goodwill as at 31st March, 2021 is ? 87,734 lakh (Previous year ? 87,734 lakh).
The Company performed its annual impairment test for year ended 31st March, 2021. The recoverable amount of the CGU has been determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a 5-year period and based on revenue multiples and EBITDA multiples. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 12% and cash flows beyond the 5-year period are extrapolated using a 5% growth rate.
Key assumptions used for value in use calculations:-
a. Growth rate estimates:- Rates are based on published industry research and management assessments.
b. Discount rate:- The discount rate calculation representing the current market assessment is based on the specific circumstances of the CGU and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the CGU''s investors. The cost of debt is based on the interest-bearing borrowings the CGU is obliged to service. Industry-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.
The management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the CGU.
39.2 The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following three levels:
Level 1: Inputs are Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs are other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
All financial instruments are initially recognised and subsequently re-measured at fair value as described below:
a. The fair value of investment in quoted Equity Shares and Mutual Funds is measured at quoted price or Net Asset Value (NAV).
b. The fair value of the remaining financial instruments is determined based on adjusted quoted price of underlying assets, information about market participants, assumptions and other data that are available including using discounted cash flow analysis, as applicable.
40 Details of Loan given, Investment made and Guarantee given covered u/s 186 (4) of the Companies Act, 2013
(a) Loan given by the Company to body corporate as at 31st March, 2021 (Refer Note 12)
(b) Investment made by the Company as at 31st March, 2021 (Refer Note 5)
(c) No Guarantee has been given by the Company as at 31st March, 2021.
41 The Company operates in a single reportable operating segment ''Media Operations''. Hence there are no separate reportable segments in accordance with Ind AS 108 ''Operating Segments''. Since the Company''s operations are primarily in India, it has determined single geographical segment. No customers represents more than 10% of the Company''s total revenue during the year as well as previous year.
42 Previous year''s figures have been regrouped wherever necessary to make them comparable to current year''s figures.
43 The standalone financial statements were approved for issue by the Board of Directors on 20th April, 2021.
Mar 31, 2018
A CORPORATE INFORMATION
TV18 Broadcast Limited (âthe Companyâ) is a listed Company incorporated in India.
The registered office of the Company is situated at First Floor, Empire Complex, 414 Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, Maharashtra.
The Company is engaged in the business of news broadcasting, digital content and allied businesses.
B SIGNIFICANT ACCOUNTING POLICIES
B.1 Basis of Preparation and Presentation
The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities, Defined benefit plans - plan assets and Equity settled share based payments which have been measured at fair value amount.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd ASâ), including the rules notified under the relevant provisions of the Companies Act, 2013.
These financial statements are the Companyâs Ind AS standalone financial statements.
The Companyâs financial statements are presented in Indian Rupees (Rs.), which is its functional currency and all values are rounded to the nearest lakh (Rs.00,000), except when otherwise indicated.
C CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY:
The preparation of the Companyâs financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Depreciation and useful lives of property, plant and Equipment and intangible assets:
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Intangible assets are amortised over its estimated useful lives. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/ amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation/ amortisation for future periods is adjusted if there are significant changes from previous estimates.
b) Recoverability of trade receivable:
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
c) Provisions:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
d) Impairment of non-financial assets:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or Cash Generating Units (âCGUâsâ) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
e) Impairment of financial assets:
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
f) Defined benefit plans:
The employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/ income include the discount rate, inflation and mortality assumptions. Any changes in these assumptions will impact upon the carrying amount of employment benefit obligations.
D STANDARDS ISSUED BUT NOT EFFECTIVE:
On March 28, 2018, the Ministry of Corporate Affairs (MCA) has notified Ind AS 115 - Revenue from Contract with Customers and certain amendment to existing Ind AS. These amendments shall be applicable to the Company from April 01, 2018.
i. Issue of Ind AS 115 - Revenue from Contracts with Customers:
Ind AS 115 will supersede the current revenue recognition guidance including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and the related interpretations. Ind AS 115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.
ii. Amendment to Existing issued Ind AS
The MCA has also carried out amendments following accounting standards. These are:
a I nd AS 21 - The Effects of Changes in Foreign Exchange Rates
b Ind AS 40 - Investment Property
c Ind AS 12 - Income Taxes
d I nd AS 28 - Investments in Associates and Joint Ventures and
e Ind AS 112 - Disclosure of Interests in Other Entities
Application of above standards are not expected to have any significant impact on the Companyâs financial statements.
1.1 The Company has only one class of equity share having par value of Rs.2 per share. Each holder of equity share is entitled to one vote per share held. All the equity shares rank pari passu in all respects including but not limited to entitlement for dividend, bonus issue and rights issue. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all liabilities, in proportion to their shareholding.
1.2 There are no bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date.
2.1 The above bank loans carry an interest rate referenced to the respective bankâs marginal cost of lending rate (âMCLRâ) and mutually agreed spread.
2.2 All commercial papers are repayable within a year.
Based on the information available with the Company, the balance due to Micro & Small Enterprises as defined under the Micro, Small and Medium enterprises Development (MSMED) Act, 2006 is Rs. 46 lakh (Previous year Rs. 4 lakh) under the terms of the MSMED Act, 2006. Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information provided by the parties.
3.1 Defined contribution plans
The Company makes Provident Fund and Employee State Insurance scheme contributions to the relevant authorities, which are defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
Defined benefit plans
The employeesâ gratuity fund scheme managed by a Trust is a defined benefit plan. The Company makes contributions to the trust which in turn makes contributions to the employees group gratuity cum life assurance scheme of the Life Insurance Corporation of India. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognised in the same manner as gratuity.
The discount rate is based on the prevailing market yields of Government of India Bonds as at the Balance Sheet date for the estimated terms of the obligations.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of Plan assets held, assessed risks, historical results of return on plan assets and the Companyâs policy for plan assets management.
vii) The expected contributions for Defined Benefit Plan for the next financial year will be in line with financial year 2017 -18.
viii) Sensitivity Analysis
Significant Actuarial assumptions for the determination of the defined benefit obligation discount rate, expected salary increase and employee turnover. The sensitivity analysis below, have been determined based on reasonable possible change of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The result of Sensitivity Analysis is given below:
These plans typically expose the Company to actuarial risks such as: investment risk, interest risk, longevity risk and salary risk.
(A) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds; if the return on plan asset is below this rate, it will create a plan deficit.
(B) Interest risk - A decrease in the discount rate will increase the plan liability.
(C) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
(D) Salary risk - The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Note 4 Corporate Social Responsibility (CSR)
(a) CSR amount required to be spent as per Section 135 of the Companies Act, 2013 read with Schedule VII thereto by the Company during the year is Rs.173 lakh (Previous Year Rs.132 lakh)
(b) Expenditure related to Corporate Social Responsibility is Rs.175 lakh (Previous Year Rs. 135 lakh).
Details of amount spent in cash/ cheque/ transfer towards CSR as follows:
(c) Out of note (b) above, Rs.175 lakh (Previous Year Rs.135 lakh) is spent through Reliance Foundation.
Note 5 Obligation on long term, non cancellable operating lease
The Company has taken various residential/ commercial premises under cancellable/ non-cancellable operating leases. There are no sub leases or restrictions imposed by lease arrangements. The cancellable lease agreements are normally renewed on expiry. Operating lease charges amounting to Rs. 2,559 lakh (Previous year Rs. 2,522 lakh) have been debited to the Statement of Profit and Loss during the year. The details of future minimum lease payments under non-cancellable leases are as under:
The operating leases mainly relates to office premises with lease terms of between 2 to 9 years. Most of the operating lease contract contains market review clauses for rate escalation.
Note 6 Foreign exchange exposure/ currency risk
The Company does not use foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments and forecasted transactions.
The Companyâs foreign currency exposure not hedged by a derivative instrument or otherwise as at year end is as follows:
6.1 Sensitivity analysis of 2% change in exchange rate at the end of the reporting period:
2% appreciation / depreciation of the respective foreign currencies with respect to the functional currency of the Company would result in a decrease/ increase in the Companyâs profit before tax by approximately Rs.26 lakh for the year ended 31st March 2018 and Rs.50 lakh for the year ended 31st March 2017 respectively.
Note 7 Capital and Financial Risk Management
7.1 Capital Management
The Company manages its capital to ensure that it will continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company monitors Capital using a gearing ratio.
The capital structure of the Company consists of debt, cash and cash equivalent and equity.
Gearing ratio
The gearing ratio at end of the year is as follows.
7.2 Financial Risk Management
The Companyâs activities exposes it mainly to credit risk and liquidity risk, The treasury team identifies and evaluates financial risk in close coordination with the Companyâs business teams.
(a) Credit risk
Credit risk is the risk that customers or counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities which is primarily trade receivables.
Customer credit risk is managed by each business team subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customers receivables are regularly monitored.
An impairment analysis is performed at each reporting date for major customers. Receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company evaluates the concentration of risk with respect to receivables as low.
(b) Liquidity Risk
The Company closely monitors its risk of shortage of funds. The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of commercial papers and cash credit/ overdrafts from banks. The Company assessed the concentration of risk with respect to its debt as low. As at reporting date, all financial liabilities of the Company are short term. Further, the Company believes that carrying value of all of its financial liabilities including debt approximates its fair value.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following three level.
Level 1: Inputs are Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs are other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
Note 8 Details of loan given, investment made and gaurantee given covered u/s 186 (4) of the Companies Act, 2013
(a) Loan given by the Company to body corporate as at 31st March 2018 (Refer Note 3 and 10)
(b) Investment made by the Company as at 31st March, 2018 (Refer Note 2)
(c) No Gaurantee has been given by the Company as at 31st March, 2018
Note 9 Segment Reporting
The Company is engaged in only one segment i.e. âMedia Operationsâ and hence there is no separate reportable segment as per Ind AS 108 âOperating Segmentsâ. Since the Companyâs operations are primarily in India, it has determined single geographical segment.
Note 10 In the previous year 2016-17, The Group received 90,96,333 Equity Shares of Rs. 10 each and 2,078 Optionally Convertible Non-Cumulative Redeemable Preference shares (0.001%) of Rs. 10 each of Viacom18 Media Private Limited (âViacom18â) (Joint venture of the Company), pursuant to the Scheme of Amalgamation and Arrangement for merger of Prism TV Private Limited (joint venture of Equator,a wholly owned subsidiary of the Company) and Viacom18, approved by the Honorable High Court of Judicature at Bombay on 12th August, 2016.
Note 11 The Scheme for Merger by Absorption (the âSchemeâ) for merger of Equator Trading Enterprises Private Limited, Panorama Television Private Limited, RVT Media Private Limited and ibn18 (Mauritius) Limited in to TV18 Broadcast Limited with appointed date as 1st April, 2016, has been filed with National Company Law Tribunal, Mumbai Bench, for approval. Upon receipt of approval, the scheme shall be given effect to in the financial statements of the Company.
Note 12 On 28th February 2018, the Company increased its equity interest in Viacom18 Media Private Limited (Viacom18) from 50% to 51% by acquiring in cash 1% of the equity shares for Rs.12,975 lakh and consequently obtained operational control overViacom18. Accordingly, the Company has accounted for Viacom18 as subsidiary from March 1, 2018. Consequent to this acquistion. IndiaCast Media Distribution Private Limited, which was hitherto a Joint Venture, was accounted as subsidiary with effect from 1st March, 2018.
Note 13 Previous yearâs figures have been regrouped wherever necessary to make them comparable to current yearâs figures.
Note 14 The financial statements were approved for issue by the Board of Directors on 24th April, 2018.
Mar 31, 2017
A CORPORATE INFORMATION
TV18 Broadcast Limited (âthe Companyâ) is a listed Company incorporated in India.
The address of its registered office situated at First Floor, Empire Complex, 414 Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, Maharashtra
B SIGNIFICANT ACCOUNTING POLICIES
B.1 Basis of Preparation and Presentation
The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities, Defined benefit plans - plan assets and Equity settled share based payments which have been measured at fair value amount.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd ASâ), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.
Upto the year ended 31st March, 2016, the Company has prepared its financial statements in accordance with the requirement of Indian GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006 and considered as âPrevious GAAPâ
These financial statements are the Companyâs first Ind AS standalone financial statements.
Companyâs financial statements are presented in Indian Rupees (Rs.), which is its functional currency.
B.2 Use of estimates
The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/ materialise.
C. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Companyâs financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Depreciation and useful lives of property, plant and Equipment and intangible assets:
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Intangible assets are amortised over its estimated useful lives. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/ amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation/ amortisation for future periods is adjusted if there are significant changes from previous estimates.
b) Recoverability of trade receivable:
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
c) Provisions:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
D FIRST TIME ADOPTION OF IND AS
The Company has adopted Ind AS with effect from 1st April 2016 with comparatives being restated. Accordingly the impact of transition has been provided in the opening Reserves as at 1st April 2015 and all the periods presented have been restated accordingly.
a) Exemptions from retrospective application:
i) Business combination exemption
The Company has applied the exemption as provided in Ind AS 101 on non-application of Ind AS 103, âBusiness Combinationsâ to business combinations consummated prior to April 1, 2015 (the âTransition Dateâ), pursuant to which goodwill/ capital reserve arising from a business combination has been stated at the carrying amount prior to the date of transition under Indian GAAP. The Company has also applied the exemption for past business combinations to acquisitions of investments in associates consummated prior to the Transition Date.
ii) Share-based payment transactions
Ind AS 101 encourages, but does not require, first time adopters to apply Ind AS 102 Share based Payment to equity instruments that were vested before the date of transition to Ind AS. The Company has elected not to apply Ind AS 102 to options that vested prior to April 1, 2015.
iii) Investments in subsidiaries, joint ventures and associates
The Company has elected to measure investment in subsidiaries, joint venture and associate at cost.
iv) Fair value measurement of financial assets or liabilities at initial recognition:
The Company has not applied the provision of Ind AS 109, Financial Instruments, upon the initial recognition of the financial instruments where there is no active market.
1.2 The vehicle loans carries interest @ 9.30% p.a. to 11.75% p.a.
Based on the information available with the Company, the balance due to Micro & Small Enterprises as defined under the Micro, Small and Medium enterprises Development (MSMED) Act, 2006 is Rs. 4.34 lakh (Previous year Rs. 15.28 lakh, As at 1st April, 2015, Rs. 8.05 lakh) under the terms of the MSMED Act, 2006. Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
Note:
Security and repayment details for term loans is as follows:
Term loan from others carries interest @ 13.50% p.a. and is repayable in 24 equal quarterly installments of Rs. 334 lakh. This is secured by first pari passu charge on movable fixed assets of the existing CNBC news channels and was collaterally secured by pledge of shares upto the previous year by the promoters/ group entities, personal guarantee of the Director of the Company and corporate guarantee of Network18 Media & Investments Limited. Term loan outstanding as at 1st April, 2015 aggregating to Rs. 986 lakh is repayable in 3 quarterly installments.
2.1 As per Indian Accounting Standard 19 âEmployee Benefitâ the disclosure as defined as given below:
2.2 Defined contribution plans
The Companyâs defined contribution plans are Provident fund, Employee State Insurance and Employee pension scheme. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs.
2.3 Defined benefit plans
The employeesâ gratuity fund scheme managed by a Trust, which maintains a gratuity fund with the Life Insurance Corporation of India, is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognised in the same manner as gratuity.
The discount rate is based on the prevailing market yields of Government of India Bonds as at the Balance Sheet date for the estimated term of the obligations.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The Expected Rate of Return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Companyâs policy for Plan Assets Management.
i) The expected contributions for Defined Benefit Plan for the next financial year will be in line with financial year 2016-17.
ii) Sensitivity Analysis of the defined benefit obligation :
Significant Actuarial Assumptions for the determination of the defined benefit obligation are discount trade and expected salary increase, employee turnover/ attrition. The sensitivity analysis below, have been determined based on reasonably possible changes of the assumptions occurring at end of the reporting period , while holding all other assumptions constant. The result of Sensitivity analysis is given below:
These plans typically expose the Company to actuarial risks such as: investment risk, interest risk, longevity risk and salary risk.
(A) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds; if the return on plan asset is below this rate, it will create a plan deficit.
(B) Interest risk - A decrease in the discount rate will increase the plan liability.
(C) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
(D) Salary risk - The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
3.1 Corporate Social Responsibility (CSR)
(a) CSR amount required to be spent as per section 135 of the Companies Act, 2013 read with schedule VII thereto by the company during the year is Rs. 132.06 lakh (Previous Year Rs. 58.10 lakh).
(b) Expenditure related to Corporate Social Responsibility is Rs. 135 lakh (Previous Year Rs. 125 lakh).
Details of amount spent in cash/ cheque/ transfer towards CSR as follows.
4. Obligation on long term, non cancellable operating lease
The Company has taken various residential/ commercial premises under cancellable/ non-cancellable operating leases. The cancellable lease agreements are normally renewed on expiry. Operating lease charges amounting to Rs. 2,521.81 lakh (Previous year Rs. 2,153.66 lakh) have been debited to the Statement of Profit and Loss during the year. The details of future minimum lease payments under non-cancellable leases are as under.
The operating leases mainly relates to office premises with lease terms of between 2 to 10 years. Most of the operating lease contract contains market review clauses for rate escalation.
5. Barter Transactions
During the year ended 31st March, 2017, the Company has entered into barter transactions, which were recorded at the contract price of consideration receivable or payable. The Statement of Profit and Loss for the year ended 31st March, 2017, reflects revenue from barter transactions of Rs. 993.49 lakh (Previous year Rs. 400.62 lakh) and expenditure of Rs. 834.07 lakh (Previous year Rs. 269.87 lakh) being the contract price of barter transactions provided and received.
6. Employees Stock Option Plan (âESOP 2007â)
a. The Company had established an Employee Stock Option Plan (ESOP 2007) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A Remuneration/ Compensation Committee comprising independent, non-executive members of the Board of Directors administer the ESOP 2007. All options under the ESOPs are exercisable for equity shares. The Company is authorised to grant upto 5,14,84,727 options to eligible employees and directors of the Company and its subsidiaries and holding company of the Company.
b. Options which have been granted under ESOP 2007 shall vest with the grantee over the vesting period of two years / five years equally from the date of grant. The exercise period of the options is a period of two years after the vesting of the options. Each option is exercisable for one equity share of Rs. 2 each fully paid up on payment of exercise price (as determined by the Remuneration/Compensation Committee) of share determined with respect to the date of grant. The Company has granted 1,47,31,849 options up to 31st March, 2017.
c. Proforma Accounting for Stock Option Grants
The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock based compensation plan. Had the compensation cost been determined using the fair value approach, the Companyâs net income and basic and diluted earnings per share as reported would have reduced to the proforma amounts as indicated:
7. Deferred Tax
The Company has not recognised the deferred tax assets (net) amounting to Rs. 4,586.74 lakh (Previous year Rs. 6,412.29 lakh, As at 1st April, 2015 Rs. 10,690.96 lakh) arising out of tangible and intangible assets, financials assets, unabsorbed depreciation, brought forward tax losses and other items due to non-existence of probability of taxable income against which the assets can be realised. The same shall be reassessed at subsequent balance sheet date.
8. Foreign exchange exposure
The Company does not use foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments and forecasted transactions.
8.1 There are no material adjustment to the Statement of cash flow as reported under Previous GAAP.
9. Capital and Financial Risk Management
9.1 Capital Management
The Company manages its capital to ensure that it will continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company monitors Capital using a gearing ratio.
The capital structure of the Company consists of debt, cash and cash equivalent and equity.
9.2 Financial Risk Management
The Companyâs activities exposes it mainly to credit risk and liquidity risk, The treasury team identifies and evaluates financial risk in close coordination with the Companyâs business teams. The Board provides guidance for overall risk-management, as well as policies covering specific areas such as credit risk, liquidity risk and investment of excess liquidity.
(a) Credit risk
Credit risk is the risk that customers or counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities and other financial instruments.
Customer credit risk is managed by each business team subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customers receivables are regularly monitored.
An impairment analysis is performed at each reporting date for major customers. Receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company evaluates the concentration of risk with respect to receivables as low.
(b) Liquidity Risk
The Company closely monitors its risk of shortage of funds. The Companyâs objective is to maintain a balance between continuity of funding and flexibility through the use of term loans, commercial papers and cash credit/ overdrafts from banks. The Company assessed the concentration of risk with respect to its debt as low. As at reporting date, except vehicle loan, the Company does not have any term loan and all other financial liabilities of the Company are short term. Further, the Company believes that carrying value of all of its financial liabilities including debt approximates its fair value.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following three level.
Level 1: Inputs are Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs are other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
10 . Details of loan given, investment made and guarantee given covered u/s 186 (4) of the Companies Act, 2013:
(a) Loan given by the Company to body corporate as at 31st March, 2017 (Refer Note 3 & 10)
(b) Investment made by the Company as at 31st March, 2017 (Refer Note 2)
(c) No Guarantee has been given by the Company as at 31st March, 2017.
11. Transfer Pricing
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions and specified domestic transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by 30th November, 2017 as required under law. The management is of the opinion that its international transactions and specified domestic transactions are at armâs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
12. The Company received 90,96,333 Equity Shares of Rs. 10 each and 2,078 Optionally Convertible Non- Cumulative Redeemable Preference shares (0.001%) of Rs. 10 each of Viacom18 Media Private Limited (âViacom18â) (Joint venture of the Company), pursuant to the Scheme of Amalgamation and Arrangement for merger of Prism TV Private Limited (joint venture of Equator, a wholly owned subsidiary of the Company) and Viacom18, approved by the Honorable High Court of Judicature at Mumbai on 12th August, 2016.
13. The Board of Directors at its Meeting held on 14th January, 2017, has approved amalgamation of wholly owned subsidiaries namely Equator Trading Enterprises Private Limited, Panorama Television Private Limited, RVT Media Private Limited and ibn18 (Mauritius) Limited into the Company, with appointed date as 1st April, 2016, subject to necessary approvals.
14. Segment Reporting
As per Ind AS 108 on âSegment Reportingâ, segment information has been provided under the Notes to Consolidated Financial Statement.
15. Approval of Financial Statements
The financial statements were approved for issue by the Board of Directors on 19th April, 2017.
Mar 31, 2016
1. Capital commitment, litigations and contingent liabilities
i. Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) Rs, 3,143.89 Lakhs (Previous year Rs, 127.79 Lakhs).
ii. Claims against the Company not acknowledged as debts include demands raised by Income Tax authorities aggregating Rs, 2,726.30 Lakhs (Previous year Rs, 2,726.30 Lakhs). Amount deposited by the Company against these claims is Rs, 824.06 Lakhs (Previous year Rs, 824.06 Lakhs) is included in Advance Income Tax in Note 11(d). No provision has been made in the accounts for these demands as the Company expects a favorable decision in appeal.
iii. The Company has extended corporate guarantee in favour of ICICI Home Finance Company Limited in consideration of loan facility extended by ICICI Home Finance Company Limited to:
a) The employees of the Company, for Rs, 100.00 Lakhs (Previous Year Rs, 357.00 Lakhs); as at the year end, Rs, 1.28 Lakhs (Previous year Rs, 135.26 Lakhs) was outstanding in respect of such loan.
b) Former employees of the Company, for Rs, 257.00 Lakhs (Previous Year Nil).
iv. Other money for which the Company is contingently liable:
a) The Company had purchased capital equipment under the ''Export Promotion Capital Goods Scheme'' with an export commitment of Rs, 8,740.14 Lakhs over a period of 8 years commencing from 10 August, 2005. The Company had made applications of Rs, 8,740.14 Lakhs to the Director General of Foreign Trade for issuance of the export obligation discharge certificate (EODC) towards fulfillment of its export obligation in the earlier years. Against such application, the Company is yet to receive EODC for Rs, 5,417.51 Lakhs as at the year end. The Company would be liable to resultant customs duty liability of Rs, 677.19 lakhs for such pending EODCs. Further, banks have given a guarantee amounting to Rs, 839.72 Lakhs (Previous year Rs, 1,049.47 Lakhs) on behalf of the Company to the customs authorities for the same.
b) Mr. Victor Fernandez and others ("plaintiffs") had filed a derivative action suit before the Bombay High Court against Raghav Bahl, TV18 and other TV18 group entities alleging that all business opportunities undertaken by the Network18 Group should be routed through e-Eighteen.com Limited. The plaintiffs have valued their claim in the suit at Rs, 3,11,406.00 Lakhs (Previous year Rs, 3,11,406.00Lakhs). The suit is currently pending.
Mr. Victor Fernandes has also filed an appeal before the Supreme Court against an order of Securities Appellate Tribunal regarding grant of listing approval by the National Stock Exchange for the rights issue.
Based on the legal advice by the legal counsel, management is of the view that the above claims made by the plaintiffs are unlikely to succeed and has accordingly made no provisions in the financial statements.
c) The Company has received legal notices of claims / lawsuits filed against it relating to infringement of copyrights, objectionable contents and defamation suits in relation to the programmes produced by it, the aggregate claim being Rs, 20,528.04 Lakhs (Previous year Rs, 40,528.04 Lakhs). In the opinion of the management and based on legal advice received, no material liability is likely to arise on account of such claims/law suits and thus no provision has been made against these in the financial statements.
d) The Company has received demand orders from the Collector of Stamps, Delhi aggregating to Rs, 3,914.80 Lakhs relating to scheme of amalgamation of the Company and Network 18 Media and Investments Limited and on issuance of shares by the Company. The Company has filed writ petition against such orders and the Delhi High Court has granted stay on such demand orders. No provision in the accounts has been made as the Company based on legal advice, is expecting a favorable decision based on merits of the case, as advised by its lawyers.
2. Earnings per equity shares
Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding at the year end. Diluted earnings per equity share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year. The details are:
3. Segment Reporting
As per Accounting Standard (AS) 17 on "Segment Reporting", segment information has been provided under the Notes to the Consolidated Financial Statements.
4. Deferred tax
The Company has considered the provisions of the Accounting Standard (AS) 22 on "Accounting for Taxes on Income", and in the absence of virtual certainty, deferred tax assets of Rs, 6,412.29 Lakhs (Previous year Rs, 10,690.96 Lakhs) have not been recognized. The same will be reassessed at subsequent balance sheet date.
5. Employee benefits
I. Defined contribution plans
The Company makes Provident Fund and Employee State Insurance scheme contributions to the relevant authorities, which are defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
II. Defined benefit plans
(a) Gratuity
The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The Company makes contributions to the trust which in turn makes contributions to the employees group gratuity cum life assurance scheme of the Life Insurance Corporation of India. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in the same manner as gratuity.
viii) The expected contributions for Defined Benefit Plan for the next financial year will be in line with financial year 2015-16.
6 Employees Stock Option Plan 2007 ("ESOP 2007")
a. The Company had established an Employee Stock Option Plan (ESOP 2007) in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which have been approved by the Board of Directors and the shareholders. A Remuneration/ Compensation Committee comprising independent, non-executive members of the Board of Directors administer the ESOP 2007. All options under the ESOPs are exercisable for equity shares. The Company is authorized to grant up to 5,14,84,727 options to eligible employees and directors of the Company and its subsidiaries and holding company of the Company.
b. Options which have been granted under ESOP 2007 shall vest with the grantee over the vesting period of two years / five years equally from the date of grant. The exercise period of the options is a period of two years after the vesting of the options. Each option is exercisable for one equity share of Rs, 2 each fully paid up on payment of exercise price (as determined by the Remuneration/Compensation Committee) of share determined with respect to the date of grant. The Company has granted 1,47,31,849 options up to 31 March, 2016.
c. Performa Accounting for Stock Option Grants
The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using the fair value approach, the Company''s net income and basic and diluted earnings per share as reported would have reduced to the proforma amounts as indicated:
7 Related party disclosures
As per Accounting Standard 18, the disclosures of transactions with the related parties are given below:
(a) List of related parties where control exists and related parties with whom transactions have taken place and relationships:
Sr
No Name of the Related Party Relationship
1 Independent Media Trust
2 Adventure Marketing Private Limited #
3 Watermark Infratech Private Limited #
4 Colorful Media Private Limited #
5 RB Media Holdings Private Limited # Enterprises Exercising control
6 RB Mediasoft Private Limited #
7 RRB Mediasoft Private Limited #
8 RB Holdings Private Limited #
9 Network18 Media & Investments Limited
10 Reliance Industries Limited (RIL)
Beneficiary/ Protector of
11 ReHance ^du^y memento and Holdings Independent Media Trust $ Limited
12 RVT Media Private Limited
13 Equator Trading Enterprises Private Limited
14 ibn18 (Mauritius) Limited
Subsidiary
15 AETN18 Media Private Limited
16 Panorama Television Private Limited
17 Prism TV Private Limited (by virtue of control of composition of Borad of Directors upto 31.07.2015)
Sr
No Name of the Related Party Relationship
18 Reliance Retail Limited *
19 Web18 Software Services Limited
20 e-Eighteen.com Limited
21 Greycells18 Media Limited
22 TV18 Home Shopping Network Limited
23 Digital18 Media Limited
24 Coliseum Media Private Limited
25 RRB Investments Private Limited
26 RVT Fin hold Private Limited
27 RRK Fin hold Private Limited
28 Info media Press Limited
29 Reed Info media Private Limited
30 Television Eighteen Media and Investments Limited
31 BK Holdings Limited, Mauritius (Amalgamated with Network18 Holdings Limited, w.e.f. June 3,
2014 ) Fellow Subsidiary
32 Capital 18 Limited, Mauritius (Amalgamated with Network18 Holdings Limited, w.e.f. June 3, 2014)
33 Television Eighteen Mauritius Limited
34 Network18 Holdings Limited
35 Setpro18 Distribution Limited
36 Money control Dot Com India Limited
37 E-18 Limited, Cyprus
38 Web18 Holdings Limited, Cayman Islands
39 NW18 HSN Holdings PLC
40 Bigtree Entertainment Private Limited
41 Fantain Sports Private Limited (w.e.f 17.02.2016)
42 Space Bound Weblabs Private Limited (w.e.f 23.04.2015)
43 Big Tree Entertainment Singapore PTE Limited (w.e.f 04.11.2015)
44 Stargaze Entertainment Private Limited (upto 23.04.2015)
45 Capital18 Fincap Private Limited
46 IBN Lokmat News Private Limited
47 Viacom 18 Media Private Limited
48 India Cast Media Distribution Private Limited
49 India Cast Distribution Private Limited Joint Ventures
50 India Cast UK Limited
51 India Cast US Limited
52 Prism TV Private Limited (w.e.f. 01.08.2015)
# Control by Independent Media Trust of which RIL is the sole beneficiary.
$ Entities exercising control
*Subsidiary of RIL, the sole beneficiary of Independent Media Trust
8 Barter Transactions
During the year ended 31 March, 2016, the Company has entered into barter transactions, which were recorded at the contract price of consideration receivable or payable. The Statement of Profit and Loss for the year ended 31 March, 2016, reflects revenue from barter transactions of Rs, 400.62 Lakhs (Previous year Rs, 1,710.36 Lakhs) and expenditure of Rs, 269.87 Lakhs (Previous year Rs, 1,094.14 Lakhs) being the contract price of barter transactions provided and received.
9 Transfer Pricing
The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions and specified domestic transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by 30 November, 2016 as required under law. The management is of the opinion that its international transactions and specified domestic transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
10. Foreign exchange exposure
The Company does not use foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to firm commitments and forecasted transactions.
11. Details of leasing arrangements Operating leases (As lessee)
The Company has taken various residential/ commercial premises under cancelable/non-cancelable operating leases. The cancelable lease agreements are normally renewed on expiry. Operating lease charges amounting to Rs, 2,032.87 Lakhs (Previous year Rs, 1,931.11Lakhs) have been debited to the Statement of Profit and Loss during the year. The details of future minimum lease payments under non-cancellable leases are as under:
12. Corporate Social Responsibility (CSR)
(a) CSR amount required to be spent as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof by the company during the year is Rs, 75 Lakhs (Previous Year Rs, 50 Lakhs ).
(b) Expenditure related to Corporate Social Responsibility is Rs, 125 Lakhs (Previous Year Rs, NIL ).
13 Details of loan given, investment made and guarantee given covered u/s 186(4) of the Companies Act, 2013:
a) Loans given by the company to body corporate as at 31st March, 2016 (Refer note no. 14);
b) Investments made by the company as at 31st March, 2016 (Refer note no. 10);
c) No guarantee given by the company as at 31st March, 2016.
14. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.
Mar 31, 2015
1. Capital commitment, litigations and contingent liabilities
i. Estimated amount of contracts remaining to be executed on capital
accounts and not provided for (net of advances) Rs. 127.79 Lakhs
(Previous year Rs. 342.27 Lakhs).
ii. The Company had purchased capital equipment under the 'Export
Promotion Capital Goods Scheme' with an export commitment of Rs.
8,740.14 Lakhs over a period of 8 years commencing from 10 August,
2005. The Company had made applications of Rs. 8,740.14 Lakhs to the
Director General of Foreign Trade for issuance of the export obligation
discharge certificate (EODC) towards fulfillment of its export
obligation in the previous year. Against such application, the Company
is yet to receive EODC for Rs. 5,417.51 Lakhs as at the year end. The
Company would be liable to resultant customs duty liability of Rs.
677.19 lakhs for such pending EODCs. Further, banks have given a
guarantee amounting to Rs. 1,049.47 Lakhs (Previous year Rs. 1,049.47
Lakhs) on behalf of the Company to the customs authorities for the
same.
iii. Claims against the Company not acknowledged as debts include
demands raised by Income Tax authorities aggregating to Rs. 2,726.30
Lakhs (Previous year Rs. 2,726.30 Lakhs). An amount deposited by the
Company against these claims is Rs. 824.06 Lakhs (Previous year Rs.
824.06 Lakhs) which are included in Advance Income Tax in Note 12(d).
No provision has been made in the accounts for these demands as the
Company expects a favourable decision in appeal.
iv. The Company has extended corporate guarantee of Rs. 357.00 Lakhs in
favour of ICICI Home Finance Company Limited in consideration of loan
facility extended by ICICI Home Finance Company Limited to the
employees of the Company. As at the year end, Rs. 135.26 Lakhs was
outstanding in respect of such loan.
v. Mr. Victor Fernandes and others ("plaintiffs") had filed a
derivative action suit before the Bombay High Court against Raghav
Bahl, TV18 and other TV18 group entities alleging that all business
opportunities undertaken by the Network18 Group should be routed
through e-Eighteen.com Limited. The plaintiffs have valued their claim
in the suit at Rs. 3,11,406.00 Lakhs (Previous year Rs.
3,11,406.00Lakhs). The suit is currently pending.
Further, Mr. Victor Fernandes ("plaintiff") has preferred an Appeal
before the Hon'ble Supreme Court of India against the order of the
Hon'ble Securities Appellate Tribunal (SAT) dated 8 February, 2013
which dismissed the appeal relating to grant of listing approval by the
National Stock Exchange (NSE) for the rights issue of the Company.
Based on the legal advice by the legal counsel, management is of the
view that the above claims made by the plaintiffs are unlikely to
succeed and has accordingly made no provisions in the financial
statements.
vi. The Company has received legal notices of claims / lawsuits filed
against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 40,528.04 Lakhs (Previous year Rs.
41,004.05 Lakhs). In the opinion of the management, no material
liability is likely to arise on account of such claims/law suits and
thus no provision has been made against these in the financial
statements.
2. Segment Reporting
As per Accounting Standard (AS) 17 on "Segment Reporting", segment
information has been provided under the Notes to the Consolidated
Financial Statements.
3. Deferred tax
The Company has considered the provisions of the Accounting Standard
(AS) 22 on "Accounting for Taxes on Income", and in the absence of
virtual certainty, no deferred tax assets (net) have been recognised.
The same will be reassessed at subsequent balance sheet date.
4. GBN Employees Stock Option Plan 2007 ("ESOP 2007")
(a) The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been approved by the Board of Directors and
the shareholders. A Remuneration/ Compensation Committee comprising
independent, non-executive members of the Board of Directors administer
the ESOP 2007. All options under the ESOPs are exercisable for equity
shares. The Company plans to grant upto 5,14,84,727 options to eligible
employees and directors of the Company and its subsidiaries and holding
company of the Company.
The Company had increased the maximum number of options that can be
granted under ESOP 2007 from 85,00,000 to 1,25,00,000 options at Annual
General Meeting held on 9 September, 2011 and which was further
increased to 5,14,84,727 options pursuant to the Rights Issue vide
Remuneration/Compensation Committee resolution dated 30 October, 2012.
(b) Options which have been granted under ESOP 2007 shall vest with the
grantee over the vesting period from the date of grant. The exercise
period of the options is a period of two years after the vesting of the
options. Each option is exercisable for one equity share of Rs. 2 each
fully paid up on payment of exercise price (as determined by the
Remuneration/Compensation Committee) of share determined with respect
to the date of grant.
5. Barter Transactions
During the year ended 31 March, 2015, the Company has entered into
barter transactions, which were recorded at the contract price of
consideration receivable or payable. The Statement of Profit and Loss
for the year ended 31 March, 2015, reflects revenue from barter
transactions of Rs. 1,710.36 Lakhs (Previous year Rs. 1,344.13 Lakhs)
and expenditure of Rs. 1,094.14 Lakhs (Previous year Rs. 773.92 Lakhs)
being the contract price of barter transactions provided and received.
6. Transfer Pricing
The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income-tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company is in the process of updating
the documentation for the international transactions and specified
domestic transactions entered into with the associated enterprises
during the financial year and expects such records to be in existence
latest by 30 November, 2015 as required under law. The management is of
the opinion that its international transactions and specified domestic
transactions are at arm's length so that the aforesaid legislation will
not have any impact on the financial statements, particularly on the
amount of tax expense and that of provision for taxation.
ii) Finance leases (As lessee)
The Company has entered into finance lease arrangements for certain
equipments which provide the Company an option to purchase the assets
at the end of the lease period. Finance lease payment amounting to Rs.
26.16 Lakhs (Previous year Rs. 37.35 Lakhs) has been paid during the
year. The total minimum lease payments and its present value discounted
at the interest rate implicit in the lease are:
7. Previous year's figures have been regrouped / reclassified
wherever necessary to correspond with the current year's classification
/ disclosure.
Mar 31, 2014
1. Corporate information
1.1 Background
TV18 Broadcast Limited ("The Company" or "TV18") (formerly ibn18
Broadcast Limited ("ibn18")) was incorporated on 6 June, 2005 as Global
Broadcast News Private Limited. The Company was converted into a public
limited company and a revised Certifcate of Incorporation was issued to
give effect to this change with effect from 12 December, 2005. The
commercial operations of the Company commenced on 17 December, 2005.
Subsequently, the name of the Company was changed to ibn18 Broadcast
Limited and a revised Certifcate of Incorporation was issued to give
effect to this change on 2 April, 2008. The name of the Company has
been changed from ibn18 Broadcast Limited to TV18 Broadcast Limited and
a fresh certifcate of incorporation has been issued to the Company to
give effect to this change with effect from 17 June, 2011. The Company
is in the business of broadcasting, telecasting, relaying and
transmitting Hindi and English general news, Hindi and English business
news programmes, and operates the news channels "CNN IBN, IBN7, CNBC
TV18, CNBC Awaaz". The Company has the licensing and content sharing
agreement with Turner Broadcasting System Asia Pacifc, Inc. and
Business News Asia, LLP.
After merger of ibn7 undertaking of ibn18 Media & Software Limited
(formerly Jagran TV Private Limited) during the financial year 2008-09,
ibn18 has been broadcasting, telecasting, relaying and transmitting
hindi general news programmes and operates the news channel "IBN7".
During the year the Company has launched a news channel in the name of
News18 India.
Network18 Media & Investments Limited is the holding company by virtue
of management control over the Company''s operations and is also holding
51.24% of shares of the Company as at 31 March, 2014 (previous year
51.24%).
1.2 Scheme of Arrangement (Scheme)
The Board of Directors of the Company in its meeting held on 7 July,
2010 considered and approved a Scheme of Arrangement ("the Scheme")
between the Company, Network18 Media & Investments Limited (''Network
18''), erstwhile Television Eighteen India Limited (''TEIL'') and other
group companies, under sections 391 to 394 read with section 78, 100 to
103 of the Companies Act, 1956. As per the Scheme, TEIL''s news business
inter-alia consisting of business news channels viz. CNBC TV18 and CNBC
Awaaz were demerged and consolidated with the Company. On the same
date, ibn18 Media & Software Limited (ibn18 Media) a subsidiary of the
Company and iNews.com Limited (iNews) a subsidiary of TEIL were merged
into the Company. Since these were the wholly owned subsidiary company
of TV18 and TEIL respectively, no consideration was paid to their
shareholders. As per the Scheme, the shareholders of TEIL had been
given 68 shares of TV18 in lieu of 100 shares held in TEIL.
Accordingly, the Company issued 123,943,303 equity shares of Rs. 2 each
amounting to Rs. 247,886,606 at a premium aggregating to Rs.
646,996,980.
The shareholders of the Company approved the Scheme on 21 December,
2010. The Scheme was heard and approved by the Hon''ble Delhi High Court
on 26 April, 2011. The certified copy of the order of the Hon''ble Delhi
High Court approving the scheme was fled with the Registrar of
Companies, N.C.T. of Delhi & Haryana on 10 June, 2011. On this date
the Scheme became effective from the Appointed Date of 1 April, 2010.
Subsequent to the merger of the news business of erstwhile TEIL, TV18
is now also broadcasting, telecasting, relaying and transmitting
English and Hindi business news channels namely CNBC TV18 and CNBC
Awaaz.
27. Capital commitment, litigations and contingent liabilities
i. Estimated amount of contracts remaining to be executed on capital
accounts and not provided for (net of advances) Rs. 34,227,398
(Previous year Rs. 68,841,733).
ii. The Company had purchased capital equipment under the ''Export
Promotion Capital Goods Scheme''. As per the terms of the licenses
granted under the scheme, the Company had undertaken to achieve an
export commitment of Rs. 874,014,347 (Previous year Rs. 874,014,347)
over a period of 8 years commencing from 10 August, 2005. In the event
the Company is unable to execute its export obligations, the Company
shall be liable to pay customs duty of Rs. 109,251,793 (Previous year
Rs. 109,251,793) and interest on the same at the rate of 15 per cent
compounded annually. The banks have given a guarantee amounting to Rs.
104,947,427 (Previous year Rs. 136,247,427) on behalf of the Company to
the customs authorities for the same. The Company has made applications
of Rs. 874,014,347 (Previous year Rs. 143,460,616) to the Director
General of Foreign Trade for issuance of the export obligation
discharge certifcate (EODC) towards fulfllment of its export obligation
and has received the EODC for Rs. 332,263,040 in respect thereof
during the year and EODC for balance of Rs. 541,751,307 is awaited as
at the year end.
iii. Claims against the Company not acknowledged as debts include
demands raised by Income Tax authorities aggregating to Rs. 272,629,554
(Previous year Rs. 424,978,295). An amount deposited by the Company
against these claims is Rs. 82,406,373 (Previous year Rs. 82,406,373)
which are included in Advance Income Tax in Note 14(d). No provision
has been made in the accounts for these demands as the Company expects
a favorable decision in appeal.
iv. The Company has given corporate guarantees of Rs. 249,000,000
(Previous year Rs. 249,000,000) towards credit facility given by banks
to IBN Lokmat News Private Limited. As at the year end Rs. 7,814,250
was outstanding in respect of such loans.
v. The Company has extended corporate guarantee of Rs. 50,900,000 in
favour of ICICI Home Finance Company Limited in consideration of loan
facility extended by ICICI Home Finance Company Limited to the
employees of the Company. As at the year end, Rs. 35,562,492 was
outstanding in respect of such loan.
vi. Mr. Victor Fernandes and other ("plaintiffs") had on 25 August,
2006 fled a suit as derivative action on behalf of e-Eighteen.com
Limited before the High Court of Bombay against Mr. Raghav Bahl,
erstwhile Television Eighteen India
Limited (TEIL), the Company and other TEIL Group entities. The
plaintiffs are minority shareholders of e-Eighteen. com Limited and
have alleged that Mr. Raghav Bahl, TEIL, ICICI Global Opportunities
Fund and e-Eighteen.com Limited had entered into a subscription cum
shareholders agreement dated 12 September, 2000 under which Mr. Raghav
Bahl and TEIL had inter alia undertaken that any opportunity offered to
them shall only be pursued or taken up through e-Eighteen.com Limited
or its wholly owned subsidiaries. The plaintiffs have alleged that Mr.
Raghav Bahl and TEIL have promoted and developed various businesses
through various entities which should have under the aforesaid
agreement rightfully been undertaken by e-Eighteen.com Limited or its
wholly owned subsidiaries.
The plaintiffs have alleged that by not doing so Mr. Raghav Bahl and
TEIL have caused monetary loss to e-Eighteen. com Limited as well as
to the plaintiffs. The plaintiffs have valued their claim in the suit
at Rs. 31,140,600,000 and have inter alia prayed that Mr. Raghav Bahl,
TEIL and other TEIL Group entities be ordered to transfer to
e-Eighteen. com Limited all their businesses, activities and ventures
along with all assets and intellectual property. The plaintiffs had
fled a notice of motion on 18 September, 2006 seeking an interim
relief. A reply had been fled with the Bombay High Court on 14
November, 2006. The said notice of motion was dismissed on 8 August,
2008 against which the plaintiffs have fled an appeal before the
division bench of the Bombay High Court. The said notice of motion for
in- terim relief was dismissed by the High Court on 21 September, 2011.
vii. Mr. Victor Fernandes ("plantiff") has preferred an Appeal before
the Hon''ble Supreme Court of India against the order of the Hon''ble
Securities Appellate Tribunal (SAT) dated 8 February, 2013 which
dismissed the appeal relating to grant of listing approval by the
National Stock Exchange (NSE) for the rights issue of the Company.
Based on the legal advice by the legal counsel, management is of the
view that the above claims made by the plain- tiffs are unlikely to
succeed and has accordingly made no provisions in the financial
statements.
viii. The Company has received legal notices of claims / lawsuits fled
against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 3,100,405,000 (Previous year Rs.
3,115,238,072). In the opinion of the management, no material liability
is likely to arise on account of such claims/law suits and thus no
provision has been made against these in the financial state- ments.
ix. The Company had received legal notice of claims/ lawsuits fled by
Rahmat Fatiama Ammanullah ("Plaintiff") against IBN7 Hindi News
channel, Mr Sukesh Ranjan, Mr. Ashutosh Gupta, Mr. Chandra Mohan Kumar,
Mr. Rajdeep Sard- esai and Mr. Raghav Bahl ("defendants") thereby
alleging that the news broadcasted by the defendants has damaged the
plaintiff''s reputation and standing before her family, friends, peers,
society and has caused extreme mental agony and trauma. The Plaintiff
has prayed for a claim of Rs. 1,000,000,000 against the defendants
along with the cost of litigation, the suit is currently pending. In
the opinion of the management, no material liability is likely to arise
on ac- count of such claims/law suits and thus no provision has been
made against these in the financial statements.
28. Investments
a) The Company has investment of Rs. 8,564,425,247 in equity shares of
Viacom18 Media Private Limited (Viacom18). As at 31 March 2014,
Viacom18 has accumulated losses and its net worth has been partially
eroded.
b) The Company has investments of Rs. 587,300,000 (comprising equity
and preference shares) in IBN Lokmat News Private Limited (IBN Lokmat).
As at 31 March, 2014 IBN Lokmat has significant accumulated losses and
its net worth has been substantially eroded.
c) The Company has investments of Rs. 346,560,000 in equity shares and
Rs. 315,400,000 in Zero Coupon Optionally Redeemable Convertible
Debentures of RVT Media Private Limited (RVT Media). As per
consolidated financial state- ments of RVT Media, there are accumulated
losses as at 31 March, 2014 and its net worth has been partially
eroded.
Having regard to the long term investment and strategic involvement
with the above mentioned Companies, no provision is considered
necessary for other than temporary diminution in the value of these
investments.
30. Segment Reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting,
have not been provided in these financial statements.
32. Deferred tax
The Company has carried out its tax computation in accordance with the
mandatory Accounting Standard (AS) 22 on "Accounting for Taxes on
Income", and in the absence of virtual certainty, no deferred tax
assets have been recognised on the amount of carried forward tax losses
and unabsorbed depreciation.
33. Employee benefits
I. Defined contribution plans
The Company makes Provident Fund and Employee State Insurance
contributions which are Defined contribution plans for qualifying
employees. Under the Schemes, the Company is required to contribute a
specified percentage of the payroll costs to fund the benefits. The
Company''s contribution to the Employees Provident Fund and Employee
State Insurance is deposited with Provident Fund Commissioner and
Employee State Insurance Commissioner which is recognised by the Income
Tax authorities.
The Company has recognised Rs. 72,339,469 (Previous year Rs.
69,874,595) for Provident Fund contributions and Rs. 423,900 (Previous
year Rs. 896,028) for Employee State Insurance in the Statement of
profit and Loss. The contributions payable to this plan by the Company
is at the rate specified in the rules of the schemes.
II. Defined benefit plans
(a) Gratuity
The gratuity liability arises on retirement, withdrawal, resignation or
death of an employee. The aforesaid liability is calculated on the
basis of ffteen days salary (i.e. last drawn salary plus dearness
allowance) for each completed year of service subject to completion of
five years of service.
For funded plan, the Company makes contributions to the trust from time
to time which in turn makes contributions to the Employee''s Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India.
The following table set out the funded / unfunded status of the
retirement benefits plans and the amount recognised in the financial
statements:
34. GBN Employees Stock Option Plan 2007 ("ESOP 2007")
a. The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been approved by the Board of Directors and
the shareholders. A Remuneration/ Compensation Commit- tee comprising
independent, non-executive members of the Board of Directors administer
the ESOP 2007. All options under the ESOPs are exercisable for equity
shares. The Company plans to grant upto 51,484,727 options to eligible
employees and directors of the Company and its subsidiaries and holding
company of the Company.
The Company had increased the maximum number of options that can be
granted under ESOP 2007 from 8,500,000 to 12,500,000 options at Annual
General Meeting held on 9 September, 2011 and which was further
increased to 51,484,727 options pursuant to the Rights Issue vide
Remuneration/Compensation Committee resolution dated 30 October, 2012.
b. Options which have been granted under ESOP 2007 shall vest with the
grantee over the vesting period from the date of grant. The exercise
period of the options is a period of two years after the vesting of the
options. Each option is exercisable for one equity share of Rs. 2 each
fully paid up on payment of exercise price (as determined by the
Remuneration/Compensation Committee) of share determined with respect
to the date of grant.
c. During the previous year, the Remuneration/Compensation Committee
of the Board of Directors had granted 7,500,000 options of the Company
under GBN Employee Stock Option Plan 2007 to the eligible employees.
e. Proforma Accounting for Stock Option Grants
The Company applies the intrinsic value-based method of accounting for
determining compensation cost for its stock- based compensation plan.
Had the compensation cost been determined using the fair value
approach, the Com- pany''s net income and basic and diluted earnings per
share as reported would have reduced to the proforma amounts as
indicated:
The volatility of the options is based on the historical volatility of
the share price since the Company''s equity shares are publicly traded,
which may be shorter than the term of the options.
Note:
The Company has formulated Employee Stock Option Schemes (ESOS) in
accordance with the Securities Exchange Board of India (SEBI) (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999. The Schemes provide for grant of options to employees of the
Company and its subsidiaries to acquire equity shares of the Company
that vest in a graded manner and that are to be exercised within a
specified period. In accordance with the SEBI Guidelines; the excess, if
any, of the closing market price on the day prior to the grant of the
options under ESOS over the exercise price is amortised on a
straight-line basis over the vesting period.
(b) Rights issue II (Year ended 31 March, 2013)
Pursuant to the approval from Stock Exchange Board of India (SEBI), the
subscription to the second Rights Issue of the Company opened on 25
September, 2012 and closed on 15 October, 2012. This Rights Issue was
for acquisition of ETV channels, repayment of certain loans and general
corporate purposes. The Rights Issue was subscribed to the extent of
130.08% (net of rejections) of the issue size in terms of number of
shares. On 23 October, 2012 the Capital Issues Committee of the Board
of Directors of the Company allotted 1,349,577,882 equity shares of Rs.
2 each amounting to Rs. 2,699,155,764 at a premium of Rs. 18 each
aggregating to Rs. 24,292,401,876. During the previous year, the
Company had received the entire proceeds from the rights issue
amounting to Rs. 26,991,557,640, the status of utilization of rights
issue proceeds till the previous year is set out below:
*As at 31 March, 2013, the Company paid Rs. 19,500,000,000 to Arimas
Trading Private Limited for acquisition of 100% stake of Equator
Trading Enterprises Private Limited (Promoters of ETV). The shares got
transferred in the name of the Company on 22 January, 2014 after legal
compliances and Equator Trading Enterprises Private Limited has become
a wholly owned subsidiary of the Company, since that date. (see note
37)
** Surplus of Rs 20,817,124 available after actual rights issue
expenses incurred (including provisions) on rights issue have been
utilized towards repayment of Public Deposits.
The rights issue proceeds had been fully utilised for the object of the
issue during the previous year.
37. Subsequent to receipt of all regulatory approvals, the Company has
successfully completed the acquisition of 100% equity securities of
Equator Trading Enterprises Private Limited (Promoters of ETV) w.e.f.
22 January, 2014. The Company has paid a sum of Rs. 3,050,000,000 for
equity shares and Rs. 17,480,000,000 for debentures to complete the
transaction as per Share Purchase Agreement. On 22 January, 2014 the
Company through acquisition of 100% interest in Equator Trading
Enterprises Private Limited has successfully completed the acquisition
of (i) 100% interest in Panorama Television Private Limited which is
engaged in the business of program production and broadcast of
satellite television channels in Hindi and Urdu languages predominantly
to India viewers namely ETV Uttar Pradesh, ETV Madya Pradesh, ETV
Rajasthan, ETV Bihar and ETV Urdu channel ("ETV News Channel") (ii) 50%
interest in Prism TV Private Limited which is engaged in the business
of program production and broadcast of satellite television in various
languages predominantly to India viewers namely ETV Marathi, ETV
Kannada, ETV Bangla, ETV Gujarati and ETV Oriya ("ETV non Telegu GEC
Channels") and (iii) 24.50% interest in Eenadu Television Private
Limited which is engaged in the business of program production and
broadcast of satellite television channels namely ETV Telugu and ETV
Telugu News ("ETV Telugu Channels"). The Company will have Board and
Management Control of ETV News Channels and ETV Non Telugu GEC
Channels.
38. Barter Transactions
During the year ended 31 March, 2014, the Company has entered into
barter transactions, which were recorded at the contract price of
consideration receivable or payable. The Statement of profit and Loss
for the year ended 31 March, 2014 refects revenue from barter
transactions of Rs. 134,413,348 (Previous year Rs. 102,400,259) and
expenditure of Rs. 77,392,205 (Previous year Rs. 94,539,276) being the
contract price of barter transactions provided and received.
39. Transfer Pricing
The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income-tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company is in the process of updating
the documentation for international transactions and specified domestic
transactions entered into with the associated enterprises during the
financial year and expects such records to be in existence latest by 30
November, 2014 as required under law. The management is of the opinion
that its international transactions and specified domestic transactions
are at arm''s length so that the aforesaid legislation will not have any
impact on the financial statements, particularly on the amount of tax
expense and that of provision for taxation.
40. Foreign exchange exposure
The Company does not use foreign currency forward contracts to hedge
its risks associated with foreign currency fuctuations relating to
certain firm commitments and forecasted transactions.
41. Details of leasing arrangements
i) Obligation towards operating leases (As lessee)
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classifed as operating
leases. Operating lease charges are recognised as an expense in the
Statement of profit and Loss. The Company has taken various residential/
commercial premises under cancelable/non-cancelable operating leases.
The cancelable lease agreements are normally renewed on expiry.
Operating lease charges amounting to Rs. 182,298,826 (Previous year
Rs. 165,634,172) has been debited to the Statement of profit and Loss
during the year. The details of future minimum lease payments under
non-cancellable leases are as under:
ii) Obligation towards finance leases (As lessee)
The Company has entered into finance lease arrangements for certain
equipments which provide the Company an option to purchase the assets
at the end of the lease period. Finance lease payment amounting to Rs.
3,734,517 (Previous year Rs. 3,869,805) has been paid during the year.
The total minimum lease payments and its present value discounted at
the interest rate implicit in the lease are:
43. Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosure.
Mar 31, 2013
1. Background and Scheme of Arrangement
1.1 Background
TV18 Broadcast Limited ("The Company" or "TV18") (formerly known as
ibn18 Broadcast Limited ("ibn18")) was incorporated on 6 June, 2005
as Global Broadcast News Private Limited. The Company was converted
into a public limited Company and a revised Certificate of
Incorporation was issued to give effect to this change with effect from
12 December, 2005. The commercial operations of the Company commenced
on 17 December, 2005. Subsequently, the name of the Company was
changed to ibn18 Broadcast Limited and a revised Certificate of
Incorporation was issued to give effect to this change on 02 April,
2008. The name of the Company has been changed from ibn18 Broadcast
Limited to TV18 Broadcast Limited and a fresh certificate of
incorporation has been issued to the Company to give effect to this
change. The Company is in the business of broadcasting; telecasting,
relaying and transmitting Hindi & English general news, Hindi & English
business news programmes, and operates the news channels "CNN IBN,
IBN7, CNBC TV18 and CNBC Awaaz". The Company has the licensing and
content sharing agreement with Turner Broadcasting System Asia Pacific,
Inc. and Business News Asia, LLP.
After merger of ibn7 undertaking of ibn18 Media & Software Limited
(formerly Jagran TV Private Limited) during the financial year 2008-09,
ibn18 has been broadcasting, telecasting, relaying and transmitting
hindi general news programmes and operates the news channel "IBN7".
Network 18 Media & Investments Limited is the holding company by virtue
of management control over the Company''s operations and is also holding
51.24% of Shares of the Company as at 31 March, 2013.
1.2 Scheme of Arrangement (Scheme)
The Board of Directors of the Company in its meeting held on 7 July,
2010 considered and approved a Scheme of Arrangement ("the Scheme")
between the Company, Network18 Media & Investments Limited (''Network
18''), erstwhile Television Eighteen India Limited (''TEIL'') and other
group companies, under sections 391 to 394 read with section 78, 100 to
103 of the Companies Act, 1956. As per the Scheme, TEIL''s news business
inter-alia consisting of business news channels viz. CNBC TV18 and CNBC
Awaaz were demerged and consolidated with the Company. On the same
date, ibn18 Media & Software Limited (ibn18 Media) a subsidiary of the
Company and iNews.com Limited (iNews) a subsidiary of TEIL were merged
into the Company. Since these were the wholly owned subsidiary company
of the TV18 and TEIL respectively, no consideration was paid to their
shareholders. As per the Scheme, the shareholders of TEIL had been
given 68 shares of TV18 in lieu of 100 shares held in TEIL.
The shareholders of the Company approved the Scheme on 21 December,
2010. The Scheme was heard and approved by the Hon''ble Delhi High Court
on 26 April, 2011. The certified copy of the order of the Hon''ble Delhi
High Court approving the scheme was filed with the Registrar of
Companies, N.C.T. of Delhi & Haryana on 10 June, 2011. On this date the
Scheme became effective from the Appointed Date of 1 April, 2010.
Subsequent to the merger of the news business of erstwhile TEIL, TV18
is now also broadcasting, telecasting, relaying and transmitting
English and Hindi business news programmes namely CNBC TV18 and CNBC
Awaaz.
2 Trade payables
Trade payables
According to the records available with the Company, there were no dues
payable to entities that are classified as Micro and Small Enterprises
under the Micro, Small and Medium Enterprises Development Act, 2006
during the year. Hence disclosures, if any, relating to amounts unpaid
as at the year end together with the interest paid / payable as
required under the said Act have not been given.
3. Capital commitment, litigations and contingent liabilities
i. Estimated amount of contracts remaining to be executed on capital
account (net of advances) Rs. 68,841,733 (Previous year Rs.
33,119,442).
ii. The Company has purchased capital equipment under the ''Export
Promotion Capital Goods Scheme''. As per the terms of the licenses
granted under the scheme, the Company has undertaken to achieve an
export commitment of Rs. 874,014,347 (Previous year Rs. 874,014,347)
over a period of 8 years commencing from 10 August, 2005. In the event
the Company is unable to execute its export obligations, the Company
shall be liable to pay customs duty of Rs. 109,251,793 (Previous year
Rs. 109,251,793) and interest on the same at the rate of 15 per cent
compounded annually. The banks have given a guarantee amounting to Rs.
136,247,427 (Previous year Rs. 115,272,086) on behalf of the Company to
the customs authorities for the same. During the year the Company has
made two applications of Rs. 143,460,616 to Director General of Foreign
Trade for issuance of the export obligation discharge certificate
(EODC) to fulfill its export obligation. The remaining export
commitment as at the year end being Rs. 730,553,731. Subsequent to the
year end the Company has made applications to Director General of
Foreign Trade for issuance of the EODC to fulfill its export obligation
of Rs. 730,553,731.
iii. Claims against the Company not acknowledged as debts include
demands raised by Income Tax authorities aggregating to Rs.
424,978,295. Amounts deposited by the Company against these claims -
Rs. 82,406,373 which are included in Advance Income Tax in Note 14. No
provision has been made in the accounts for these demands as the
Company expects a favorable decision in appeal. This liability is
related to TEIL operations transferred to the Company pursuant to the
Scheme.
iv. Guarantees given by banks on behalf of the Company outstanding for
the year ended Rs. 291,514,750 (Previous year Rs. 6,193,125).
v. The Company has given corporate guarantees of Rs. 249,000,000
(Previous year Rs. 249,000,000) towards credit facility given by banks
to IBN Lokmat News Private Limited. As at the year end Rs. 47,266,037
was outstanding in respect of such loans.
vi. The Company has extended corporate guarantee of Rs. 50,900,000 in
favour of ICICI Home Finance Company Limited in consideration of loan
facility extended by ICICI Home Finance Company Limited to the
employees of the Company. As at the year end, Rs. 47,460,025 was
outstanding in respect of such loan. This liability is related to TEIL
operations transferred to the Company pursuant to the Scheme.
vii. Mr. Victor Fernandes and other ("plaintiffs") had on 25 August,
2006 filed a suit as derivative action on behalf of e-Eighteen.com
Limited before the High Court of Bombay against Mr. Raghav Bahl,
erstwhile Television Eighteen India Limited (TEIL), the Company and
other TEIL Group entities. The plaintiffs are minority shareholders of
e-Eighteen.com Limited and have alleged that Mr. Raghav Bahl, TEIL,
ICICI Global Opportunities Fund and e-Eighteen.com Limited had entered
into a subscription cum shareholders agreement dated 12 September, 2000
under which Mr. Raghav Bahl and TEIL had inter alia undertaken that any
opportunity offered to them shall only be pursued or taken up through
e-Eighteen.com Limited or its wholly owned subsidiaries. The plaintiffs
have alleged that Mr. Raghav Bahl and TEIL have promoted and developed
various businesses through various entities which should have under the
aforesaid agreement rightfully been undertaken by e-Eighteen.com
Limited or its wholly owned subsidiaries.
The plaintiffs have alleged that by not doing so Mr. Raghav Bahl and
TEIL have caused monetary loss to e-Eighteen. com Limited as well as
to the plaintiffs. The plaintiffs have valued their claim in the suit
at Rs. 31,140,600,000 and have inter alia prayed that Mr. Raghav Bahl,
TEIL and other TEIL Group entities be ordered to transfer to
e-Eighteen.com Limited all their businesses, activities and ventures
along with all assets and intellectual property. The plaintiffs had
filed a notice of motion on 18 September, 2006 seeking an interim
relief. A reply had been filed with the Bombay High Court on 14
November, 2006. The said notice of motion was dismissed on 8 August,
2008 against which the plaintiffs have filed an appeal before the
division bench of the Bombay High Court. The said notice of motion for
interim relief was dismissed by the High Court on September 21, 2011.
Based on the legal advice by the legal counsel, management is of the
view that the above claim made by the plaintiffs is unlikely to succeed
and has accordingly made no provisions in the financial statements.
viii. The Company has received legal notices of claims / lawsuits
filed against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 3,115,238,072 (Previous year Rs.
3,123,653,000). In the opinion of the management, no material liability
is likely to arise on account of such claims/law suits and thus no
provision has been made against these in the financial statements.
ix. The Company has received legal notice of claims/ Lawsuits filed by
Rahmat Fatiama Ammanullah ("Plaintiff") against IBN7 Hindi News
channel, Mr Sukesh Ranjan, Mr. Ashutosh, Mr. Chandra Mohan Kumar, Mr.
Rajdeep Sardesai and Mr. Raghav Bahl ("Defendants") thereby alleging
that the news broadcasted by the defendants has damaged the plaintiff''s
reputation and standing before her family, friends, peers, society and
has caused extreme mental agony and trauma the Plaintiff. The Plaintiff
has prayed for a claim of Rs. 1,000,000,000 against the Defendants
along with the cost of litigation, the suit is currently pending. In
the opinion of the management, no material liability is likely to arise
on account of such claims/law suits and thus no provision has been made
against these in the financial statements.
x. Upto the previous year, the Company had disclosed a claim of Rs.
2,600,000,000 made by a former channel distributor. This claim has been
withdrawn during the year pursuant to a settlement with the Company and
is no longer contingent liability as at the end.
4. Investments
a) The Company has investment of Rs. 8,564,425,247 in equity share of
Viacom18 Media Private Limited (Viacom18). As at 31 March 2013,
Viacom18 has accumulated losses and its net worth has been partially
eroded.
b) The Company has investments of Rs. 519,500,000 (comprising equity
and preference shares) in IBN Lokmat News Private Limited (IBN Lokmat).
As at 31 March, 2013 IBN Lokmat has significant accumulated losses and
its net worth has been substantially eroded.
c) The Company has investment of Rs. 346,560,000 in equity shares and
Rs. 209,000,000 in Zero Coupon Optionally Redeemable Convertible
Debentures of RVT Media Private Limited (RVT Media). RVT Media''s
consolidated financial statements have accumulated losses and its net
worth has been partially eroded.
Having regard to the long term investment and strategic involvement
with the Company, no further provision is considered necessary for
diminution in the value of the investments in the above said Companies.
5. Earnings Per Equity Shares
Basic earnings per equity share have been computed by dividing net
profit after tax by the weighted average number of equity shares
outstanding at the year end. Diluted earnings per equity share have
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the year. The
details are:
6. Segment Reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting,
have not been provided in these financial statements.
7. Deferred tax
The Company has carried out its tax computation in accordance with the
mandatory standard on accounting, AS 22 - In view of accumulated
losses, the Company has not provided for deferred tax asset / liability
at the year end.
8. Employee benefits:
I. Defined contribution plans
The Company has recognised Rs. 70,770,623 (Previous Year Rs.
70,560,254) for provident fund contributions in the Statement of Profit
and Loss.
II. Defined benefit plans (a) Gratuity
The gratuity liability arises on retirement, withdrawal, resignation or
death of an employee. The aforesaid liability is calculated on the
basis of fifteen days salary (i.e. last drawn salary plus dearness
allowance) for each completed year of service subject to completion of
five years of service.
9. GBN Employees Stock Option Plan 2007 ("ESOP 2007")
a. The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been approved by the Board of Directors and
the shareholders. A Remuneration/ Compensation Committee comprising
independent, non-executive members of the Board of Directors administer
the ESOP 2007. All options under the ESOPs are exercisable for equity
shares. The Company plans to grant upto 51,484,727 options to eligible
employees and directors of the Company and its subsidiaries and holding
company of the Company.
The Company has increased maximum number of options that can be granted
under GBN ESOP 2007 from 8,500,000 to 12,500,000 options at Annual
General Meeting held on 09 September, 2011 and further increased to
51,484,727 pursuant to Rights Issue vide Remuneration/Compensation
Committee resolution dated 30 October 2012.
b. Options which have been granted under ESOP 2007 shall vest with the
grantee over the vesting period from the date of grant. The exercise
period of the options is a period of two years after the vesting of the
options. Each option is exercisable for one equity share of Rs. 2 each
fully paid up on payment of exercise price (as determined by the
Remuneration/Compensation Committee) of share determined with respect
to the date of grant.
c. During the year the Remuneration/Compensation Committee of the
Board of Directors has granted 7,500,000 options of the Company under
GBN Employee Stock Option Plan 2007 to the eligible employees.
10. Utilisation of Rights issue proceeds
(a) Rights issue I (Year ended 31 March 2011)
The Company had allotted 54,495,443 partly paid shares on rights basis
to its equity shareholders during the year ended 31 March, 2011. Out of
this 54,446,407 shares were converted into fully paid up shares till 31
March, 2013 upon receipt of full and final call money and balance
49,036 shares have been forfeited in the Board Meeting dated 19
January, 2012 for non-payment of full and final call money amounting to
Rs. 3,064,750. The status of utilization of rights issue proceeds is
set out below:
*Surplus available after actual right issue expenses incurred including
provisions on right issue has been utilized towards investment in
Viacom18 Media Private Limited.
** The difference between proposed and actual utilisation of Rs.
3,064,750 is on account of non payment of full and final call money on
49,036 shares.
The rights issue proceeds have been fully utilised for the objects of
the issue as at 31 March 2013.
(b) Rights issue II (Year ended 31 March 2013)
Pursuant to the approval from SEBI, the subscription to the current
Rights Issue of the Company opened on 25 September, 2012 and closed on
15 October, 2012. This Rights Issue was for acquisition of ETV
channels, repayment of certain loans and general corporate purposes.
The Rights Issue subscribed to the extent of 130.08% (net of
rejections) of the issue size in terms of number of shares. On 23
October, 2012 Capital Issues Committee of the Board of Directors of the
Company allotted 1,349,577,882 equity shares of Rs. 2 each at a premium
of Rs. 18 each aggregating to Rs. 26,991,557,640. The company has
received the proceeds from the rights issue amounting to Rs.
26,991,557,640, the status of utilization of rights issue proceeds is
set out below:
Trading Private Limited (Promoters of ETV). However, the shares are not
yet transferred due to pending legal compliances which are under
process.
** Surplus of Rs 20,817,124 available after actual rights issue
expenses incurred (including provisions) on rights issue have been
utilized towards repayment of Public Deposits.
The rights issue proceeds have been fully utilised for the object of
the issue.
11. Barter Transactions
During the year ended 31 March, 2013, the Company has entered into
barter transactions, which were recorded at the fair value of
consideration receivable or payable. The Statement of Profit and Loss
for the year 31 March, 2013 reflects revenue from barter transactions
of Rs. 102,400,259 (Previous year Rs. 103,313,556) and expenditure of
Rs. 94,539,276 (Previous year Rs. 108,868,690) being the fair value of
barter transactions provided and received.
12. Subscription revenue
With effect from 1 July, 2012 the Company has entered into an agreement
with IndiaCast for subscription revenue for net of income and placement
expenses thereby resulting in operating revenue and expenditure being
lower by a similar amount during the period.
13. Transfer Pricing
The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income-tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company is in the process of updating
the documentation for the international transactions and specified
domestic transactions entered into with the associated enterprises
during the financial year and expects such records to be in existence
latest by 30 November, 2013 as required under law. The management is of
the opinion that its international transactions and specified domestic
transactions are at arm''s length so that the aforesaid legislation will
not have any impact on the financial statements, particularly on the
amount of tax expense and that of provision for taxation.
14. Foreign exchange exposure
The Company does not use foreign currency forward contracts to hedge
its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions.
15. Details of leasing arrangements
i) Obligation towards operating leases (As lessee)
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the Statement of Profit and Loss. The Company has taken various
residential/ commercial premises under cancelable/non-cancelable
operating leases. The cancelable lease agreements are normally renewed
on expiry. Operating lease charges amounting to Rs. 165,634,172
(Previous year Rs. 155,306,465) has been debited to the Statement of
Profit and Loss during the year. The details of future minimum lease
payments under non-cancellable leases are as under:
ii) Obligation towards Finance leases (As lessee)
The company has entered into finance lease arrangements for certain
equipments which provide the Company an option to purchase the assets
at the end of the lease period. Finance Lease payment amounting to Rs.
3,869,805 (Previous year Rs. 824,973) has been paid during the year.
The total minimum lease payments and its present value and discounted
at the interest rate implicit in the lease are:
16. Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosure.
Mar 31, 2012
1. Background and Scheme of Arrangement
1.1 Background
TV18 Broadcast Limited ("The Company" or "TV18") (formerly known as
ibn18 Broadcast Limited ("ibn18")) was incorporated on 6 June, 2005 as
Global Broadcast News Private Limited. The Company was converted into a
public limited Company and a revised Certificate of Incorporation was
issued to give effect to this change with effect from 12 December,
2005. The commercial operations of the Company commenced on 17
December, 2005. Later, the name of the Company was changed to ibn 18
Broadcast Limited and a revised Certificate of Incorporation was issued
to give effect to this change on 02 April, 2008. In the current year,
the name of the Company has been changed from ibn18 Broadcast Limited
to TV18 Broadcast Limited. A fresh certificate of incorporation has
been issued to the Company to give effect to this change on 17 June,
2011. The Company is in the business of broadcasting; telecasting,
relaying and transmitting general news programmes and operates the news
channels "CNN IBN" (consequent to a licensing and content sharing
agreement with Turner Broadcasting System Asia Pacific, Inc.).
After merger of ibn7 undertaking of ibn18 Media & Software Limited
(formerly Jagran TV Private Limited) during the financial year 2008-09,
ibn18 has been broadcasting, telecasting, relaying and transmitting
hindi general news programmes and operates the news channel "IBN7"
Network 18 Media & Investments Limited is the holding company by virtue
of management control over the Company's operations and is also holding
51.24% of Shares of the Company as at 31 March, 2012.
1.2 Scheme of Arrangement (Scheme)
The Board of Directors of the Company in its meeting held on 7 July,
2010 considered and approved a Scheme of Arrangement ("the Scheme")
between the Company, Network18 Media & Investments Limited ('Network
18'), erstwhile Television Eighteen India Limited ('TEIL') and other
group companies, under sections 391 to 394 read with section 78, 100 to
103 of the Companies Act, 1956. As per the Scheme, TEIL's news business
inter-alia consisting of business news channels viz. CNBC TV18 and CNBC
Awaaz were demerged and consolidated with the Company. On the same
date, ibn 18 Media & Software Limited (ibn 18 Media) a subsidiary of
the Company and iNews.com Limited (iNews) a subsidiary of TEIL were
merged into the Company. Since these were the wholly owned subsidiary
company of the TV18 and TEIL respectively, no consideration was paid to
their shareholders. As per the Scheme, the shareholders of TEIL had
been given 68 shares of TV18 in lieu of 100 shares held in TEIL.
The shareholders of the Company approved the Scheme on 21 December,
2010. The Scheme was heard and approved by the Hon'ble Delhi High Court
on 26 April, 2011. The certified copy of the order of the Hon'ble Delhi
High Court approving the scheme was filed with the Registrar of
Companies, N.C.T. of Delhi & Haryana on 10 June, 2011. On this date the
Scheme became effective from the Appointed Date of 1 April, 2010.
Subsequent to the merger of the news business of erstwhile TEIL, TV18
is now also broadcasting, telecasting, relaying and transmitting
english and hindi business news programmes namely CNBC TV18 and CNBC
Awaaz.
* Fixed deposits is under lien with banks against Bank Guarantees to
the Custom authorities to meet export obligation and is restricted from
being exchanged or used to settle a liability for more than 12 months
from the balance sheet date. [also See note 26 (ii)]
2. Capital commitment, litigations and contingent liabilities
i. Estimated amount of contracts remaining to be executed on capital
account (net of advances) Rs. 33,119,442 (Previous year Rs. 2,900,000).
ii. The Company has purchased capital equipment under the 'Export
Promotion Capital Goods Scheme. As per the terms of the licenses
granted under the scheme, the Company has undertaken to achieve an
export commitment of Rs. 873,663,241 (Previous year Rs. 740,639,339)
over a period of 8 years commencing from 10 August, 2005. The
difference between the previous year and the current year amount
pertains to the obligation transferred from iNews.com Limited
(subsidiary of TEIL) pursuant to the Scheme over a period of 8 years
commencing from 21 October, 2004. In the event the Company is unable to
execute its export obligations, the Company shall be liable to pay
customs duty of Rs. 109,207,905 (Previous year Rs. 92,579,917) and
interest on the same at the rate of 15 per cent compounded annually.
The banks have given a guarantee amounting to Rs. 115,272,170 (Previous
year Rs. 115,272,170) on behalf of the Company to the customs
authorities for the same. The Company is hopeful of meeting the
required export obligation.
iii. Guarantees given by banks on behalf of the Company outstanding for
the year ended Rs. 6,193,125 (Previous year Rs. 25,000,000).
iv. The Company has given corporate guarantees of Rs. 249,000,000
(Previous year Rs. 249,000,000) towards credit facility given by banks
to IBN Lokmat News Private Limited. As at the year end Rs. 101,743,668
was outstanding in respect of such loans.
v. Claims against the Company not acknowledged as debts include
demands raised by Income Tax authorities aggregating to Rs.
239,330,980. Amounts deposited by the Company against these claims -
Rs. 82,406,374 which are included in Advance Income Tax in Note 14. No
provision has been made in the accounts for these demands as the
Company expects a favorable decision in appeal. This liability is
related to TEIL operations transferred to the Company pursuant to the
Scheme.
vi. The Company has extended corporate guarantee of Rs. 50,900,000 in
favour of ICICI Home Finance Company Limited in consideration of loan
facility extended by ICICI Home Finance Company Limited to the
employees of the Company. As at the year end, Rs. 47,441,177 was
outstanding in respect of such loan. This liability is related to TEIL
operations transferred to the Company pursuant to the Scheme.
vii. Mr. Victor Fernandes and other ("plaintiffs") had on 25 August,
2006 filed a suit as derivative action on behalf of e-Eighteen.com
Limited before the High Court of Bombay against Mr. Raghav Bahl,
erstwhile Television Eighteen India Limited (TEIL), the Company and
other TEIL Group entities. The plaintiffs are minority shareholders of
e-Eighteen.com Limited and have alleged that Mr. Raghav Bahl, TEIL,
ICICI Global Opportunities Fund and e-Eighteen.com Limited had entered
into a subscription cum shareholders agreement dated 12 September, 2000
under which Mr. Raghav Bahl and TEIL had inter alia undertaken that any
opportunity offered to them shall only be pursued or taken up through
e-Eighteen.com Limited or its wholly owned subsidiaries. The plaintiffs
have alleged that Mr. Raghav Bahl and TEIL have promoted and developed
various businesses through various entities which should have under the
aforesaid agreement rightfully been undertaken by e-Eighteen.com
Limited or its wholly owned subsidiaries.
The plaintiffs have alleged that by not doing so Mr. Raghav Bahl and
TEIL have caused monetary loss to e- Eighteen.com Limited as well as to
the plaintiffs. The plaintiffs have valued their claim in the suit at
Rs. 31,140,600,000 and have inter alia prayed that Mr. Raghav Bahl,
TEIL and other TEIL Group entities be ordered to transfer to
e-Eighteen.com Limited all their businesses, activities and ventures
along with all assets and intellectual property. The plaintiffs had
filed a notice of motion on 18 September, 2006 seeking an interim
relief. A reply had been filed with the Bombay High Court on 14
November, 2006. The said notice of motion was dismissed on 8 August,
2008 against which the plaintiffs have filed an appeal before the
division bench of the Bombay High Court. The said notice of motion for
interim relief was dismissed by the High Court on September 21, 2011.
Based on the legal advice by the legal counsel, management is of the
view that the above claim made by the plaintiffs is unlikely to succeed
and has accordingly made no provisions in the financial statements.
viii. The Company has received legal notices of claims / lawsuits
filed against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 3,123,653,000 (Previous year Rs.
3,124,110,000). In the opinion of the management, no material liability
is likely to arise on account of such claims/law suits and thus no
provision has been made against these in the financial statements.
ix. Damages/ claims of Rs. 2,600,000,000 have been filed against the
Company by the former channel distributor of the Company. A counter
claim has been filed for damages of Rs. 2,540,000,000 along with a
claim for recovery of dues of Rs. 214,000,000 against the distributor.
The matter is pending before the Hon'ble High court of Delhi. No
provision has been made in the accounts for these demands as the
Company expects a favorable decision.
3. Investments
a) Investments in Viacom18 Media Private Limited (Viacom18)
The Company had in earlier years subscribed to 12 million 'Investor
Warrants' of USD 3.33 per warrant aggregating to USD 39,960,000 in
Viacom18 as follows:
i. Series "A" 4,500,000 warrants
ii. Series "B" 4,500,000 warrants
iii. Series "C" 3,000,000 warrants
and had paid Rupee 1 each for these warrants aggregating to Rs. 12
million.
Each warrant was convertible into one fully paid up equity share of
Viacom18 on exercise of options and on payment of the balance of the
stipulated warrant consideration price. The option was exercisable
during a period of 12, 24 and 36 months from the date of allotment of
warrants of "A" "B" and "C" series respectively. During the year,
warrants allotted under Series "C" has been cancelled and shares were
allotted against share application money paid which was equal in
numbers as were allocated to joint venture partner in Viacom18.
The Company's total investment in the capital of Viacom18 is Rs.
8,564,425,247.
As at 31 March 2012, Viacom18 has accumulated losses and its net worth
has been partially eroded.
b) Investments in IBN Lokmat News Private Limited (IBN Lokmat)
The Company has investments of Rs. 519,500,000 (comprising equity and
preference shares) in IBN Lokmat. As at 31 March, 2012 IBN Lokmat has
significant accumulated losses and its net worth has been substantially
eroded.
c) Investment in RVT Media Private Limited (RVT Media)
The Company has an investment of Rs. 346,560,000 in equity shares of
RVT Media. RVT Media's consolidated financial statements have
accumulated losses and its net worth has been partially eroded.
d) Investment in ibn18 Mauritius Limited
The Company has investments of Rs. 5,081 in equity shares and Rs.
1,700,047,846 in debentures of ibn 18 (Mauritius) Limited as at 31
March, 2012.
ibn18 (Mauritius) Limited has significant accumulated losses of Rs.
444,087,314 and its net-worth has been completely eroded as at 31
March, 2012.
As at 31 March, 2012, ibn18 (Mauritius) Limited is having net assets
(net of liabilities other than debentures) of Rs. 1,255,136,360 against
which debentures outstanding is Rs. 1,699,223,675 resulting into short
fall of Rs. 444,087,314 as at the year end.
During the year ended 31 March, 2012, ibn18 (Mauritius) Limited has
made a profit of Rs. 74,291,696 mainly from interest on loan given to
related parties and has accumulated foreign exchange reserve of Rs.
140,205,454.
Accordingly, the company had made a provision of Rs. 658,937,927
towards diminution in the value of total investment.
In view of the above facts and having regard to the long term
investment and strategic involvement with the Company, no further
provision is considered necessary for diminution in the value of the
investments in these Companies.
4. Segment Reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 Segment Reporting,
have not been provided in these financial statements.
5. Deferred tax
In view of absence of virtually certainty of realisation of deferred
tax asset (DTA) on unabsorbed tax losses, deferred tax assets have been
recognised only to the extent of deferred tax liability (DTL). The
major components of DTA/DTL as recognised in the financial statements
are as follows:-
6. Employee Benefits:
I. Defined contribution plans
The Company has recognised Rs. 70,560,254 (Previous Year Rs.
36,675,939) for provident fund contributions in the Statement of Profit
and Loss.
II. Defined Benefit Plans (a) Gratuity
The gratuity liability arises on retirement, withdrawal, resignation or
death of an employee. The aforesaid liability is calculated on the
basis of fifteen days salary (i.e. last drawn salary plus dearness
allowance) for each completed year of service subject to completion of
five years of service.
2. The expected return is based on the expectation of the average long
term rate of return on investments of the fund during the estimated
term of the obligations.
3. The estimates of future salary increases considered takes into
account the inflation, seniority, promotion and other relevant factors.
4. Plan assets mainly comprise funds managed by the insurer i.e. ING
Vysya Life Insurance Company Limited and Life insurance Corporation of
India.
7. GBN Employees Stock Option Plan 2007 ("ESOP 2007")
a. The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been approved by the Board of Directors and
the shareholders. A Remuneration/ Compensation Committee comprising
independent, non-executive members of the Board of Directors
administers the ESOPs. All options under the ESOPs are exercisable for
equity shares. The Company had declared stock split of 1 equity share
of face value of Rs. 10 each in 5 equity share of Rs. 2 each through
postal ballot dated 19 December 2007, the results of which were
declared on 25 January, 2008. The Company plans to grant upto
12,500,000 options to eligible employees and directors of the Company
and its subsidiaries and holding company of the Company. The Company
has increased maximum number of options that can be granted under GBN
ESOP 2007 from 8,500,000 to 12,500,000 options at Annual General
Meeting held on 09 September, 2011.
b. Options which have been granted under ESOP 2007 shall vest with the
grantee over the vesting period from the date of grant. The exercise
period of the options is a period of two years after the vesting of the
options. Each option is exercisable for one equity share of Rs. 10
each (for one equity share of Rs. 2 each after split) fully paid up on
payment of exercise price (as determined by the
Remuneration/Compensation Committee) of share determined with respect
to the date of grant.
c. During the year the Remuneration/Compensation Committee of the
Board of Directors has granted 2,211,207 options of the Company under
GBN Employee Stock Option Plan 2007 to those employees of TEIL who have
become employees of the Company pursuant to the Scheme of Arrangement,
under a single plan existing in the Company.
* Remuneration/Compensation committee ("Committee") of the Company vide
resolution dated 4 November, 2011 has re-priced its existing 3,849,374
options at market price of Rs. 45.40 on the date of re-pricing.
Subsequently taking into consideration further decline in the share
prices of the Company, the Committee vide its resolution dated 30
December, 2011 has again re-priced its 3,731,765 options at market
price of Rs. 27.70 on the date of re-pricing, for the benefit of the
employees covered under the ESOPs scheme.
e. The Finance Act 2009 has abolished Fringe Benefit Tax (FBT) on
Employees' Stock Option Plan, hence there is no charge in these
financial statements.
8. Rights issue
The Company had allotted 54,495,443 partly paid shares on rights basis
to its equity shareholders during the year ended 31 March, 2011. Out of
this 54,446,407 shares were converted into fully paid up shares till 31
March, 2012 upon receipt of full and final call money and balance
49,036 shares have been forfeited in the Board Meeting dated 19
January, 2012 for non-payment of full and final call money amounting to
Rs. 3,064,750. The status of utilization of rights issue proceeds is
set out below:
* Surplus available after actual expenses incurred (including
provisions) on rights issue have been utilized towards investment in
Viacom18.
# The balance unutilised amount Rs. 46,457,536 are temporarily parked
with the banks in deposit accounts.
9. Barter Transactions
During the year ended 31 March,2012, the Company had entered into
barter transactions, which were recorded at the fair value of
consideration receivable or payable. The statement of profit and loss
for the year 31 March, 2012 reflect revenue from barter transactions of
Rs. 103,313,556 (Previous year Rs. 102,321,794) and expenditure of Rs.
108,868,690 (Previous year Rs. 93,925,912) being the fair value of
barter transactions provided and received.
10. Transfer Pricing
The Company has established a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income-tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company is in the process of updating
the documentation for the international transactions entered into with
the associated enterprises during the financial year and expects such
records to be in existence latest by 30 November, 2012 as required
under law. The management is of the opinion that its international
transactions are at arm's length so that the aforesaid legislation will
not have any impact on the financial statements, particularly on the
amount of tax expense and that of provision for taxation.
11. Foreign exchange exposure
The Company does not use foreign currency forward contracts to hedge
its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions.
12. Details of leasing arrangements
i) Obligation towards operating leases (As lessee)
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the statement of profit and loss. The Company has taken various
residential/ commercial premises under cancelable/non- cancelable
operating leases. The cancelable lease agreements are normally renewed
on expiry. Operating lease charges amounting to Rs. 155,306,465
(Previous year Rs. 64,049,572) has been debited to the statement of
profit and loss during the year. The details of future minimum lease
payments under non-cancellable leases are as under:
ii) Obligation towards Finance leases (As lessee)
The company has entered into finance lease arrangements for certain
equipments which provide the company an option to purchase the assets
at the end of the lease period. Finance Lease payment amounting to Rs.
824,973 (Previous year Rs. 163,447) has been paid during the year. The
total minimum lease payments and its present value and discounted at
the interest rate implicit in the lease are:
13. The Board of Directors in its meeting held on 3 January, 2012 have
considered and approved the issue of equity shares on rights basis for
an amount aggregating upto Rs. 2,700 crores for acquisition of ETV
channels, repayment of certain loans and general corporate purposes.
The Company has filed Draft Letter of Offer dated 1st March 2012 with
SEBI and necessary approval from SEBI is awaited.
14. The Revised Schedule VI has become effective from 1 April, 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year's figures have been regrouped / reclassified
wherever necessary to correspond with the current year's classification
/ disclosure.
Mar 31, 2011
1. Background
ibn18 Broadcast Limited ("The Company" or "ibn18") was incorporated on
6 June, 2005 as Global Broadcast News Private Limited. The Company was
converted into a public limited Company and a revised Certificate of
Incorporation was issued to give effect to this change w.e.f. 12
December, 2005. Later, the name of the Company was changed to ibn18
Broadcast Limited (hereinafter referred as "ibn18") and a revised
Certificate of Incorporation was issued to give effect to this change
on 02 April, 2008. The Company is in the business of broadcasting,
telecasting, relaying and transmitting general news programmes and
operates the news channels "CNN IBN" (consequent to a licensing and
content sharing agreement with Turner Broadcasting System Asia Pacific,
Inc.). The commercial operations of the Company commenced on 17
December, 2005. Further, after merger of ibn7 undertaking of ibn18
Media & software Limited (formerly Jagran TV Private limited), ibn18 is
broadcasting, telecasting, relaying and transmitting hindi general news
programmes and operates the news channel "IBN7". Of the total equity
share capital of the Company, 64,892,544 equity shares (Previous year
47,724,140 equity shares) of face value of Rs.2 each are held by
Network 18 Media & Investments Limited (Network18) of which, 47,384,140
shares were issued to Network18 for consideration received other than
cash pursuant to scheme of amalgamation between the company and SRH
Broadcast News Holdings Private Limited.
Network18 Media & Investments Limited is the holding company by virtue
of management control over the Company's operations.
The financial statements are prepared under the historical cost
convention on the accrual basis of accounting and in accordance with
the Generally Accepted Accounting Principles (GAAP) in India and comply
with the Accounting Standards prescribed by the Companies (Accounting
Standards) Rules, 2006 to the extent applicable and in accordance with
the provisions of the Companies Act, 1956 as adopted consistently by
the Company.
2 The Board of Directors of the Company in its meeting held on 7
July, 2010 considered and approved a Scheme of Arrangement ("the
Scheme") between the Company, Network18 Media & Investments Limited
('Network18'), Television Eighteen India Limited ('TV18') and other
group companies, under sections 391 to 394 read with section 78, 100 to
103 of the Companies Act, 1956. As per the Scheme, TV18's television
businesses inter-alia consisting of business news channels viz. CNBC
TV18 and CNBC Awaaz will be demerged and consolidated with the Company.
On the same date, ibn18 Media Software Limited (ibn18 Media) a
subsidiary of the Company and iNews.com Limited (iNews) will be merged
into the Company and since these are either the wholly owned subsidiary
or will become wholly owned subsidiary pursuant to scheme, no
consideration will be payable to their shareholders. As per the Scheme,
the shareholders of TV18 will be given 68 shares of the Company in lieu
of 100 shares held in TV18.
The shareholders of the Company approved the Scheme on 21 December,
2010. The Scheme has been sanctioned by the Hon'ble High Court of Delhi
on 26 April, 2011. The appointed date for the proposed restructuring is
1 April, 2010 and the Scheme shall be effective when the certified
copies of the High Court Orders are filed with the jurisdictional
Registrar of Companies, which is still pending. Accordingly no effect
of the proposed restructuring has been given in these financial
statements. Upon the Scheme becoming effective, the results of
operations, assets and liabilities relating to the television business
of TV18, shall be transferred to the Company. Further ibn18 Media and
iNews will be merged with the Company.
3 Capital commitment, contingent liabilities and litigations
a. Estimated amounts of contracts remaining to be executed on capital
account (net of advances) Rs.2.90 million (Previous year Rs. 0.86
million).
b. The Company has purchased capital equipment under the 'Export
Promotion Capital Goods Scheme'. As per the terms of the licenses
granted under the scheme, the Company has undertaken to achieve an
export commitment of Rs. 740.64 million (Previous year Rs. 740.64
million) over a period of 8 years commencing from 10 August, 2005. In
the event the Company is unable to execute its export obligations, the
Company shall be liable to pay customs duty of Rs. 92.58 million
(Previous year Rs. 92.58 million) and interest on the same at the rate
of 15 per cent compounded annually. The banks have given a guarantee
amounting to Rs. 115.30 million (Previous year Rs. 115.30 million) on
behalf of the Company to the custom authorities for the same. The
Company is hopeful of meeting the required export obligation.
c. The bank has given a guarantee amounting to Rs. 25.00 million
(Previous year Rs. 25.00 million) on behalf of the Company to The
Listing Department, Bombay Stock Exchange Limited.
d. The Company has given corporate guarantees of Rs. 249.00 million
(Previous year Rs. 272.5 million) towards credit facility given by
banks to IBN Lokmat. As at the year end Rs. 146.38 million was
outstanding in respect of such loans.
e. The Company has received legal notices of claims / lawsuits filed
against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 3,124.15 million (Previous year Rs.
3,124.11 million). In the opinion of the management, no material
liability is likely to arise on account of such claims/law suits and
thus no provision has been made against these in financial statements.
4 Share Capital
The shareholders of the Company at the Extra Ordinary General Meeting
held on 22 December, 2008 had approved the issue and allotment of
15,000,000 Convertible Warrants (Warrants) at a price of Rs.102/- each
in accordance with the provisions of Chapter XIII of the Securities and
Exchange Board of India (Disclosure and Investor Protection)
Guidelines, 2000 to RVT Investments Private Limited (RVT Investments),
a promoter group company. The Company had allotted the aforesaid
Warrants on 13 January, 2009 pursuant to which the Company received Rs.
153 Million being 10% of the total amount of Rs. 1,530 million in
respect thereof.
RVT Investments had in the year ending 31 March, 2009 applied for
conversion of 12,500,000 Warrants and paid Rs. 1,147.50 million towards
balance amount payable (Rs. 91.80 per share). The Company had allotted
12,500,000 equity shares of face value of Rs. 2/- each upon conversion
of Warrants at a premium of Rs 100/- per equity share as per the terms
of issue of Warrants.
As at 1 April, 2009, 2,500,000 fully paid up Warrants amounting to Rs.
25.50 Million were outstanding for conversion into equity shares. The
Company had received the share application money against these Warrants
for conversion into equity shares. During the year ending 31 March,
2010, the Company had allotted 2,500,000 equity shares of face value of
Rs. 2/- each upon conversion of remaining Warrants at a premium of Rs
100/- per equity share as per the terms of issue of Warrants.
5 Secured Loans
a. Cash credit from banks of Rs 674.72 million are secured as follows:
i. Cash credit facility of Rs 547.35 million are secured as follows:
- First pari passu charge on all the current assets of the company.
- Additionally secured by unconditional and irrevocable corporate
guarantee of Network18 Media & Investments Limited
- Cash credit facility of Rs. 159.98 million is additionally secured by
second charge on the Company's movable fixed assets.
ii. Cash credit facility of Rs. 127.37 million is secured by
hypothecation of book debts.
b. The term loan of Rs. 555.02 million taken from banks is secured as
follows:
i. Term loan of Rs. 40 million is secured by:
- First charge on the Company's movable assets, subject to the charges
on current assets created/to be created in favour of the Company's
bankers for securing borrowings for working capital requirements.
- Unconditional and irrevocable personal guarantee of a Director.
- Letter of comfort from Television Eighteen India Limited (TV18)
whereby TV18 undertakes to take all necessary steps to ensure that the
Company fulfils all necessary obligations under the agreement including
arrangement of funds for payment to the bank in accordance with the
terms and conditions of the loan agreement.
ii. Term loan of Rs. 74.03 million is secured by:
- First charge over entire fixed assets pool of IBN7 amounting to Rs
320.40 million as on 31 March 2009
- Unconditional and irrevocable corporate guarantee of Network18 Media
& Investments Limited
iii. Term loan of Rs. 20.15 million is secured by:
- First charge on all movable assets including plant and machinery and
equipment acquired / to be acquired out of the proceeds of the term
loan of IBN7
- Unconditional and irrevocable corporate guarantee of Network18 Media
& Investments Limited
iv. Term loan of Rs. 320.84 million is secured by:
- Subservient charge on all movable fixed assets (all present & future)
of the Company.
- Unconditional and irrevocable corporate guarantee of Network18 Media
& Investments Limited, to remain valid during currency of credit
facility.
v. Term loan of Rs. 100.00 million is secured by:
- Subservient charge on all movable fixed assets (all present & future)
of the Company.
- Unconditional and irrevocable corporate guarantee of Network18 Media
& Investments Limited, to remain valid during currency of credit
facility.
- Exclusive charge over the assets purchased.
c. Other secured loans are secured by hypothecation of vehicle and
plant and machinery.
6 Investments
1. Having regard to the long term investment and strategic involvement
with the Company, no provision is considered necessary for diminution
in the value of following investment and advance for share application
paid:
a. Investments in Viacom18 Media Private Limited (Viacom18)
The Company had in earlier years subscribed to 12 million 'Investor
Warrants' of USD 3.33 (Rs.148.68 approximately) per warrant aggregating
to USD 40 million (Rs.1,786.00 million approximately) in Viacom18 as
follows:
i. Series "A" - 4,500,000 warrants
ii. Series "B" - 4,500,000 warrants
iii. Series "C" - 3,000,000 warrants
and had paid Rs. 1 each for these warrants aggregating to Rs. 12
million.
Each warrant was convertible into one fully paid up equity share of
Viacom18 on exercise of options and on payment of the balance of the
stipulated warrant consideration price. The option was exercisable
during a period of 12, 24 and 36 months from the date of allotment of
warrants of "A", " B ", and "C" series respectively.
As at the year ended 31 March 2011, the Company has an amount of Rs 200
million outstanding towards share application money and Rs. 440.20
million outstanding towards the balance consideration payable for the
subscribed and allotted warrants of Series "C" which warrants are yet
to be converted by Viacom18. These amounts are disclosed under loans
and advances.
The Company's total investments in the capital of Viacom18 is Rs.
6,744.23 million as at the year ended 31 March 2011.
As at 31 March 2011, Viacom18 has accumulated losses and its net worth
has been partially eroded.
b. Investments in IBN Lokmat Private Limited (IBN Lokmat)
The Company had invested Rs 437.75 million in IBN Lokmat. As at 31
March 2011, IBN Lokmat has significant accumulated losses and its net
worth has been substantially eroded.
c. Investment in RVT Media Private Limited (RVT Media)
The Company had invested Rs. 26.20 million (including share application
money) in RVT Media. RVT Media has consolidated accumulated losses and
its networth has been partially eroded.
2. Provision is considered necessary for diminution in the value of
following investment:
a. Investment in ibn18 Mauritius Limited (ibn18 Mauritius)
The Company had invested Rs. 658.94 million (including amount paid for
Debentures) in ibn18 Mauritius. ibn18 mauritius has significant
accumulated losses and its networth has been completely eroded.
Accordingly, the Company had made a provision of Rs. 658.94 million
towards diminution in the value of total investment.
7 Earnings per share (EPS)
Basic earnings per equity share have been computed by dividing net
profit after tax by the weighted average number of equity shares
outstanding for the year ended 31 March, 2011. Diluted earnings per
equity share have been computed using the weighted average number of
equity shares and dilutive potential equity shares outstanding during
the year. The details are:
8 Deferred tax
The Company has carried out its tax computation in accordance with the
mandatory standard on accounting, AS 22 Ã 'Accounting for Taxes on
Income' referred in Companies (Accounting Standards) Rules, 2006. In
view of its significant accumulated losses, the Company has not
provided for deferred tax assets as there is no virtual certainty that
there will be sufficient future taxable income available to realise
such assets. In accordance with the same no deferred tax asset /
liability was required at the year end.
9 Segmental reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 Segment Reporting,
have not been provided in these financial statements.
10 Employee Benefits
a. Description of the Gratuity plan
The gratuity liability arises on retirement, withdrawal, resignation
and death of an employee. The aforesaid liability is calculated on the
basis of fifteen days salary (i.e. last drawn salary plus dearness
allowance) for each completed year of service subject to completion of
five years service.
11. GBN Employees Stock Option Plan 2007 ("ESOP 2007")
a. The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been approved by the Board of Directors and
the shareholders. A remuneration/ compensation committee comprising
independent, non executive members of the Board of Directors
administers the ESOPs. All options under the ESOPs are exercisable for
equity shares. The Company had declared stock split of 1 equity share
of face value of Rs. 10 each in 5 equity share of Rs. 2 each through
postal ballot dated 19 December 2007, the results of which were
declared on 25 January 2008. The Company plans to grant upto 1,700,000
(8,500,000 options pursuant to split of 1 share of face value of Rs.10
in 5 shares of face value of Rs.2 each) options to eligible employees
and directors of the Company and its subsidiaries and holding company
of the Company.
b. Options which have been granted under ESOP 2007 shall vest with the
grantee equally over a four year period from the date of grant. The
exercise period of the options is a period of two years after the
vesting of the options. Each option is exercisable for one equity share
of Rs. 10 each (for one equity share of Rs 2 each after split) fully
paid up on payment of exercise price (as determined by the
remuneration/compensation committee) of share determined with respect
to the date of grant. The Company has granted 5,020,642 options upto 31
March, 2011.
d. The Finance Act 2009 has abolished Fringe Benefit Tax (FBT) on
Employees' Stock Option Plan, hence there is no charge in these
financial statements.
12. Related Party disclosures
a. Related parties and their relationships Holding Company
i. Network18 Media & Investments Limited (Network18) (formerly
Network18 Fincap Limited)
Subsidiary Companies
i. RVT Media Private Limited (RVT Media)
ii. ibn18 Media and Software Limited (ibn18 Media) (Formerly Jagran TV
Private Limited (Jagran TV)
iii. ibn18 (Mauritius) Ltd w.e.f 1 April, 2009
iv AETN18 Media Private Limited (AETN18) w.e.f 22 November, 2010
Joint Venture
i. IBN Lokmat News Private Limited (IBN Lokmat)
ii. Viacom18 Media Private Limited (Viacom18) w.e.f 1 April, 2009
Fellow Subsidiaries
i. Television Eighteen India Limited (TV18)
ii. Network18 India Holdings Private Limited (N-18 Holding)
iii. Setpro18 Distribution Limited (Setpro18), formerly Setpro 18
Distribution Private Limited
iv. Television Eighteen Mauritius Limited, Mauritius (TEML)
[Subsidiary of TV18]
v. NewsWire18 Limited (Newswire), formerly News Wire18 India Private
Limited till 27 February, 2009 [Subsidiary of TV18]
vi. RVT Investments Private Limited (RVT) [Subsidiary of TV18]
vii. Infomedia 18 Limited (Infomedia) w.e.f 21 August, 2008
[Subsidiary of TV18]
viii. Web18 Holdings Limited, Cayman Islands (Web18 Holding)
[Subsidiary of TEML]
ix. BK Holdings Limited, Mauritius (BKH) [Subsidiary of TEML]
x. TV18 UK Limited (TV18 UK) [Subsidiary of TEML]
xi. E-18 Limited, Cyprus (E-18, Cyprus) [Subsidiary of Web18 Holding]
xii. e-Eighteen.com Limited (E-18) [Subsidiary of E-18, Cyprus]
xiii. Television Eighteen Commoditiescontrol.com Limited (TECCL)
[Subsidiary of E-18, Cyprus]
xiv. Web18 Software Services Limited (Web18) [Subsidiary of E-18,
Cyprus]
xv. Care Websites Private Limited (Care) w.e.f. 14 February, 2008
[Subsidiary of E-18, Cyprus]
xvi. Moneycontrol Dot Com India Limited (MCD) [subsidiary of E-18]
xvii. TV18 Home Shopping Network Limited (TV18 HSN)
xviii.Bigtree Entertainment Private Limited (Bigtree)
xix. Digital18 Media Limited (Digital18) w.e.f. 01 July, 2010
Individual exercising control
i. Raghav Bahl (RB)
Key management personnel and their relatives
i. Sameer Manchanda (SM) upto 22 October, 2010
ii. Rajdeep Sardesai (RS)
iii. Sagarika Ghose (SG)
Entity under significant influence
i. SGA News Limited (SGA News) upto 18 August, 2010
ii. Greycells 18 Media Limited (Greycells)
iii. Digital18 Media Limited (Digital18) upto 30 June, 2010
13. Barter Transactions
During the year ending 31 March, 2011, the Company had entered into
barter transactions, which were recorded at the fair value of
consideration receivable or payable. The Income from operations for the
year ended 31 March, 2011 has been net of, to reflect revenue from
barter transactions of Rs. 102.32 million and expenditure of Rs. 93.93
million being the fair value of barter transactions provided and
received.
14. Transfer Pricing
As per the Transfer Pricing Rules of the Income tax Act, 1961 every
company is required to get a transfer pricing study conducted to
determine whether the international transactions with associated
enterprises were undertaken at an arm's length basis for each financial
year end. Transfer pricing study for the transactions during the year
ended 31 March, 2011 is currently in progress and hence adjustments if
any which may arise there from have not been taken into account in
these financial statements for the year ended 31 March, 2011 and will
be effective in the financial statements for the year ended 31 March,
2012. However in the opinion of the Company's management, adjustments,
if any, are not expected to be material.
15. Disclosures as per Micro, Small and Medium Enterprises Development
Act, 2006 (MSMED)
Based on the information available with the Company, the balance due to
micro and small enterprises as defined under the MSMED Act, 2006 is Rs.
Nil (Previous year Rs. Nil) and no interest has been paid or is payable
under the terms of the MSMED Act, 2006.
16. Foreign exchange forward contracts
The Company does not use foreign currency forward contracts to hedge
its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions.
17. Previous year's amounts have been reclassified/ regrouped to
conform to the current year's presentation.
Mar 31, 2010
1. Background
ibn18 Broadcast Limited ("The Company") was incorporated on 6 June,
2005 as Global Broadcast News Private Limited. The Company was
converted into a public limited Company and a revised Certifcate of
Incorporation was issued to give effect to this change w.e.f. 12
December, 2005. Later, the name of the Company was changed to ibn18
Broadcast Limited (hereinafter referred as "ibn18") and a revised
Certifcate of Incorporation was issued to give effect to this change on
02 April, 2008. The Company is in the business of broad- casting,
telecasting, relaying and transmitting general news programmes and
operates the news channels "CNN IBN" (consequent to a licensing and
content sharing agreement with Turner Broadcasting System Asia Pacifc,
Inc.). The commercial operations of the Company commenced on 17
December, 2005. Further, after merger of ibn7 undertaking of ibn18
Media & software Limited (formerly Jagran TV Private limited), ibn18 is
broadcasting, telecasting, relaying and transmitting hindi general news
programmes and operates the news channel "IBN7".
Of the total equity share capital of the company, 47,724,140 equity
shares of face value of Rs. 2 each (Previous year 47,724,140 eq- uity
shares of face value of Rs. 2 each) are held by Network 18 Media &
Investments Limited (Formerly known as Network 18 Fincap Limited).
Network 18 Media & Investments Limited is also the holding company by
virtue of management control over the companys operations.
2. Scheme of arrangement between Jagran TV Private Limited, BK Fincap
Private Limited and ibn18 Broadcast Limited
The Companys Scheme of Arrangement had been approved by the Honorable
High Court of Delhi on 15 September, 2008 and fled with the Registrar
of Companies on 22 November, 2008. The scheme was to:
- merge IBN 7 News Undertaking of Jagran TV Private Limited (JTV) into
ibn18 with effect from 1 October, 2007 (Appointed date); and
- merge B K Fincap Private Limited (BK Fincap) with ibn18 with effect
from 2 October, 2007 (Appointed date).
Consequent upon these mergers, BK Fincap Private Limited stands
dissolved and Jagran TV Private Limited continue to exist to carry on
the other activities.
a. Merger of ibn7 News Undertaking of JTV into ibn18 (Scheme A)
i. News Business Undertaking of JTV comprising the business activities
of running the ÃIBN7 channel along with all related assets,
liabilities and employees was transferred on a going concern basis at
book value to the Company from the appointed date of 1 October 2007.
The Company without any further payment has issued 24.23 fully paid up
equity shares of face value of Rs. 10 each (121.15 fully paid up equity
shares of face value of Rs. 2 each) to shareholders of Jagran TV
Private Limited for every 100 Equity shares of face value of Rs. 10
each held in Jagran TV Private Limited.
iii. As per the scheme, during the intervening period, JTV shall be
deemed to have been carrying on all business and activities relating to
the merged undertaking on behalf of the ibn18 and all profts accruing
to the Transferor Company, or losses arising or incurred by them
relating to the merged undertaking shall be treated as the profts or
losses of the ibn18.
iv. Debit balance of proft and loss account of Rs. 93,094,889 of IBN 7
News Undertaking for the period 1 October, 2007 to 31 March, 2008 was
adjusted from the opening balance of the proft and loss account of the
year ended 31 March 2009.
v. Share application money pending allotment inter-se between the
Company and IBN 7 News Undertaking amounting to Rs. 20,000,000
appearing in the books of accounts of the Company and division stands
cancelled.
b. Merger of BK Fincap Limited
i. BK Fincap Private Limited which is a holding company of JTV, along
with all related assets, liabilities and employees has been merged on a
going concern basis at book value to the company from the appointed
date of 2 October, 2007. In consonance to the abovementioned scheme,
ibn18 has issued 1,662.76 fully paid up equity shares of face value of
Rs. 10 each (8,313.80 fully paid up equity shares of face value of Rs.
2 each) to shareholders of BK Fincap Private Limited for every 100
Equity shares of face value of Rs. 10 each held in BK Fincap Private
Limited.
iv. Pursuant to the Scheme of Arrangement, the amount representing the
difference between:
- Assets and liabilities transferred pursuant to the amalgamation of BK
Fincap and consequent cancellation of New Equity shares on Demerger
issued to BK Fincap, and
- Aggregate value of New Equity Shares on Amalgamation and cancellation
of investment by ibn18 in the equity shares of BK Fincap;
shall be debited to the Securities Premium Account of ibn18. v. Debit
balance of proft and loss account of Rs. 36,268 of BK Fincap for the
period 2 October, 2007 to 31 March, 2008 was adjusted from the opening
balance of the proft and loss account of the year ended 31 March 2009.
3. Capital commitment, contingent liabilities and litigations
a. Estimated amounts of contracts remaining to be executed on capital
account (net of advances) Rs. 0.86 million (Previous year Rs. 1.38
million).
b. The Company has purchased capital equipment under the ÃExport
Promotion Capital Goods Scheme. As per the terms of the licenses
granted under the scheme, the Company has undertaken to achieve an
export commitment of Rs. 740.64 million (Previous year Rs. 740.64
million) over a period of 8 years commencing from 10 August, 2005. In
the event the Company is unable to execute its export obligations, the
Company shall be liable to pay customs duty of Rs. 92.58 million
(Previous year Rs. 92.58 million) and interest on the same at the rate
of 15 per cent compounded annually. The banks have given a guarantee
amounting to Rs. 115.30 million (Previous year Rs. 115.30 million) on
behalf of the Company to the custom authorities for the same. The
Company is hopeful of meeting the required export obligation.
c. The bank has given a guarantee amounting to Rs. 25.00 million
(Previous year Rs. Nil) on behalf of the Company to The Listing
Department, Bombay Stock Exchange Limited.
d. The Company has given corporate guarantees of Rs. 272.5 million
(Previous year Rs. 272.5 million) towards credit facility given by
banks to IBN Lokmat. As at the year end Rs. 182.34 million was
outstanding in respect of such loans.
e. The Company has received legal notices of claims / lawsuits fled
against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 3,124.11 million (Previous year Rs.
8,841.22 million). In the opinion of the management, no material
liability is likely to arise on account of such claims/law suits.
4. Equity warrants
a. The Company, through postal ballot dated 7 September 2007, the
results of which were declared on 13 October 2007 approved the issue
and allotment of 3,000,000 convertible warrants (warrants) of Rs. 888
each in accordance with the provisions of Securities and Exchange Board
of India (Disclosures and Investor Protection) Guidelines, 2000 to
Network 18 India Holdings Private Limited (N-18 Holding), a fellow
subsidiary of the Company. The Company has allotted the warrants on 15
October, 2007 pursuant to which the Company received Rs. 266.4 million
being 10% of the total amount of Rs. 2,664 million in respect thereof.
Subsequent to the stock split of 1:5, held through postal ballot dated
19 December 2007, the results of which were declared on 25 January
2008, each warrant held by N-18 Holding was convertible into one fully
paid up equity shares of face value of Rs. 2 each at a premium of Rs.
175.60 per share on exercise of the option to convert the warrants into
equity shares. N-18 Holding had in the previous year applied for
conversion of 5,500,000 warrants. Pursuant to which the Company had
allotted 5,500,000 equity shares upon conversion of warrants at a
premium of Rs 175.60 per share as per the terms of warrants. During
the previous year, the Company had received a letter from N-18 Holdings
expressing its unwillingness to exercise the bal- ance 9,500,000
warrants due to adverse market conditions. Consequently Rs. 168.72
million representing 10% amount of issue price received pursuant to the
allotment of such warrants was forfeited and had been transferred to
Capital Reserve.
b. The shareholders of the Company at the Extra Ordinary General
Meeting held on 22 December, 2008 had approved the issue and allotment
of 15,000,000 Convertible Warrants (Warrants) at a price of Rs.102/-
each in accordance with the provisions of Chapter XIII of the
Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000 to RVT Investments Private Limited (RVT
Investments), a promoter group company. The Company had allotted the
aforesaid Warrants on 13 Janu- ary, 2009 pursuant to which the Company
received Rs. 153 Million being 10% of the total amount of Rs. 1,530
million in respect thereof.
RVT Investments had in the previous year applied for conversion of
12,500,000 Warrants and paid Rs. 1,147.50 million towards balance
amount payable (Rs. 91.80 per share). The Company had allotted
12,500,000 equity shares of face value of Rs. 2/- each upon conversion
of Warrants at a premium of Rs 100/- per equity share as per the terms
of issue of Warrants. As at the beginning of the year, 2,500,000 fully
paid up Warrants amounting to Rs. 25.50 Million were outstanding for
conversion into equity shares. The Company has received the share
application money against these Warrants for conversion into equity
shares.
During the year, the Company has allotted 2,500,000 equity shares of
face value of Rs. 2/- each upon conversion of remaining Warrants at a
premium of Rs 100/- per equity share as per the terms of issue of
Warrants. The amount received was used for the working capital
requirement of the Company.
5. Secured Loans
a. Cash credit from banks of Rs 568.48 million are secured as follows:
i. Cash credit from banks of Rs 434.34 million are secured as follows:
- First pari passu charge on all the current assets of the company.
- Additionally secured by unconditional and irrevocable corporate
guarantee of Network18 Media & Investments Limited
- Cash credit facility of Rs. 274.34 million is additionally secured by
second charge on the Companys movable fxed assets. ii. Cash credit
facility of Rs. 134.14 million is secured by hypothecation of book
debts.
b. The term loan of Rs. 1,651.66 million taken from banks is secured
as follows:
i. Term loan of Rs. 120 million is secured by:
- First charge on the Companys movable assets, subject to the charges
on current assets created/to be created in favour of the Companys
bankers for securing borrowings for working capital requirements.
- Unconditional and irrevocable personal guarantee of a Director.
- Letter of comfort from Television Eighteen India Limited (TV18)
whereby TV18 undertakes to take all necessary steps to ensure that the
Company fulfls all necessary obligations under the agreement including
arrangement of funds for payment to the bank in accordance with the
terms and conditions of the loan agreement.
ii. Term loan of Rs. 123.76 million is secured by:
- First charge over entire fxed assets pool of IBN7 amounting to Rs
320.40 million as on 31 March 2009
- U nconditional and irrevocable corporate guarantee of Network18 Media
& Investments Limited iii. Term loan of Rs. 32.90 million is secured
by:
- First charge on all movable assets including plant and machinery and
equipment acquired / to be acquired out of the proceeds of the term
loan of IBN7
- U nconditional and irrevocable corporate guarantee of Network18 Media
& Investments Limited iv. Term loan of Rs. 375 million is secured by:
- Subservient charge on Companys movable fxed assets
- Unconditional and irrevocable corporate guarantee of Network18 Media
& Investment Limited
- Letter of comfort from a Director
v. Term loan of Rs. 1,000.00 million is secured by:
- Second parri passu charge on all current assets and fxed assets of
the Company
- Unconditional and irrevocable corporate guarantee of Network18 Media
& Investment Limited
- Fixed Deposit of Network18 Media & Investment Limited worth Rs. 250
million is pledged with the bank, in lieu of pledge of listed /quoted
shares held by Network18 Media & Investment Limited.
6. Investments
a. Investments in Viacom18 Media Private Limited (Viacom18)
The Company has subscribed to 12 million ÃInvestor Warrants of USD
3.33 (Rs. 150.47 approximately) per warrant aggregating to
USD 40 million (Rs. 1,805.60 million approximately) in Viacom18 as
follows:
i. Series A - 4,500,000 warrants
ii. Series B - 4,500,000 warrants
iii. Series C - 3,000,000 warrants
and has paid Rs. 1 each for these warrants aggregating to Rs. 12
million.
Each warrant is convertible into one fully paid up equity share of
Viacom18 on exercise of options and on payment of the balance
of the stipulated warrant consideration price. The option is
exercisable during a period of 12, 24 and 36 months from the date of
allotment of warrants of ÃAÃ, ÃBÃ, and ÃCÃ series respectively.
As at the year end, the Company has a commitment towards the balance
consideration price (i.e. approximately Rs. 149.47 per warrant)
aggregating to approximate Rs. 1,793.60 million for the subscribed
and allotted warrants. The Company intends to fulfill its commitment
within the stipulated time period.
Further, during the year, the Company has made following investments in
equity shares of Viacom18.
As at 31 March 2010, Viacom18 has signifcant accumulated losses and its
net worth has been substantially eroded. Having regard to the long term
investment and strategic involvement with the Company, no provision is
considered necessary for diminution in the value of investment and
advance for share application paid.
b. Investments in IBN Lokmat Private Limited (IBN Lokmat)
The Company has invested Rs 340.25 million (including amount paid for
share application money) in IBN Lokmat. As at 31 March 2010, IBN Lokmat
has signifcant accumulated losses and its net worth has been
substantially eroded. Having regard to the long term investment and
strategic involvement with the Company, no provision is considered
necessary for diminution in the value of investment and advance for
share application paid.
c. Investment in ibn18 Mauritius Limited (ibn18 Mauritius)
The Company has invested Rs. 658.94 million (including amount paid for
Debentures) in ibn18 Mauritius. For the year ending 31 March,2010 ibn18
mauritius has signifcant accumulated losses and its networth has been
completely eroded. Accordingly, the Company has made a provision of Rs.
658.94 million towards diminution in the value of total investment.
7. Earnings per share (EPS)
Basic earnings per equity share have been computed by dividing net
proft after tax by the weighted average number of equity shares
outstanding for the year ended 31 March, 2010. Diluted earnings per
equity share have been computed using the weighted average number of
equity shares and dilutive potential equity shares outstanding during
the year. The details are:
8. Deferred tax
The Company has carried out its tax computation in accordance with the
mandatory standard on accounting, AS 22 Ã ÃAccounting for Taxes on
Income referred in Companies (Accounting Standards) Rules, 2006. In
view of its signifcant accumulated losses, the Company has not provided
for deferred tax assets as there is no virtual certainty that there
will be suffcient future taxable income available to realise such
assets. In accordance with the same no deferred tax asset / liability
was required at the year end.
9. Segmental reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting,
have not been provided in these fnancial statements.
10. Employee Benefts
a. Description of the Gratuity plan
The gratuity liability arises on retirement, withdrawal, resignation
and death of an employee. The aforesaid liability is calculated on the
basis of ffteen days salary (i.e. last drawn salary plus dearness
allowance) for each completed year of service subject to completion of
fve years service.
Notes:
1. The discount rate is based on the prevailing market yields of
Indian Government securities as at the balance sheet date for the
estimated term of obligations.
2. The estimates of future salary increases considered takes into
account the infation, seniority, promotion and other relevant factors.
*In accordance with the revised AS-15 issued by The Institute of
Chartered Accountants of India, retirement and short term employee
benefts as at 31 March, 2006 have been recomputed. The difference
between the amount so computed and the liability with respect to the
same as at 31 March 2006 had been accordingly adjusted in the opening
debit balance of proft and loss account. The Companys best estimate
of contributions expected to be paid during the annual year beginning
after the balance sheet date is Rs. 9,202,849.
11. GBN Employees Stock Option Plan 2007 (ÃESOP 2007Ã)
a. The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been ap- proved by the Board of Directors
and the shareholders. A remuneration/ compensation committee comprising
independent, non executive members of the Board of Directors
administers the ESOPs. All options under the ESOPs are exercisable for
equity shares. The Company had declared stock split of 1 equity share
of face value of Rs. 10 each in 5 equity share of Rs. 2 each through
postal ballot dated 19 December 2007, the results of which were
declared on 25 January 2008. The Company plans to grant upto 1,700,000
(8,500,000 options pursuant to split of 1 share of face value of Rs. 10
in 5 shares of face value of Rs. 2 each) options to eligible employees
and directors of the Company and its subsidiaries and holding company
of the Company.
b. Options which have been granted under ESOP 2007 shall vest with the
grantee equally over a four year period from the date of grant. The
exercise period of the options is a period of two years after the
vesting of the options. Each option is exercisable for one equity share
of Rs. 10 each (for one equity share of Rs 2 each after split) fully
paid up on payment of exercise price (as determined by the
remuneration/compensation committee) of share determined with respect
to the date of grant. The Company has granted 3,920,642 options upto 31
March, 2010.
d. The Finance Act 2009 has abolished Fringe Beneft Tax (FBT) on
Employees Stock Option Plan, hence there is no charge in these
fnancial results.
Notes:
1. includes entity under signifcant infuence of individuals having
direct/indirect signifcant infuence, their relative, KMP and their
relatives.
2. includes subsidiaries of fellow subsidiary
3. also see note 8(a)
12. Rights issue
During the year, the Company has made a rights issue of 54,495,443
equity shares of Rs. 2 each at a premium of Rs. 91.50 per share
aggregating to Rs. 5,095.32 million to the existing shareholders of the
Company. The rights issue opened on 10 March, 2010 and closed on 25
March, 2010.
The Company has received Rs. 1,740.77 million as against share
application money from its equity shareholders under the Rights issue
as on 31st March 2010. As at31st March 2010, the Company has not
utilized any amount out of the proceeds received of the above said
Rights issue and the amount is set aside in the bank account.
13. Barter Transactions
During the year ended 31 March 2010, the Company had entered into
barter transactions, which were recorded at the fair value of
consideration receivable or payable. The Income from operations for the
year ended 31 March, 2010 has been net of, to refect revenue from
barter transactions of Rs. 87.53 million and expenditure of Rs. 89.44
million being the fair value of barter transactions provided and
received.
14. Transfer Pricing
As per the Transfer Pricing Rules of the Income tax Act, 1961 every
company is required to get a transfer pricing study conducted to
determine whether the international transactions with associated
enterprises were undertaken at an arms length basis for each fnancial
year end. Transfer pricing study for the transactions during the year
ended 31 March, 2010 is currently in progress and hence adjustments if
any which may arise there from have not been taken into account in
these statements for the year ended
15 March, 2010 and will be effective in the financial statements for
the year ended 31 March, 2011. However in the opinion of the Companys
management, adjustments, if any, are not expected to be material.
16. Disclosures as per Micro, Small and Medium Enterprises Development
Act, 2006 (MSMED) Based on the information available with the Company,
the balance due to micro and small enterprises as defined under the
MSMED Act, 2006 is Rs. Nil (Previous year Rs. Nil) and no interest has
been paid or is payable under the terms of the MSMED Act, 2006.
17. Foreign exchange forward contracts
The Company does not use foreign currency forward contracts to hedge
its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions.
18. The financial statement for the year ended 31 March 2010 has not
been signed by the Joint Managing Director due to his urgent visit
outside India. Accordingly, two other directors have signed the
financial statements.
19. Previous years amounts have been reclassifed/ regrouped to
conform to the current years presentation.
Mar 31, 2009
1. Capital commitment, contingent liabilities and litigations
a. Estimated amounts of contracts remaining to be executed on capital
account (net of advances) Rs. 1.38 million (Previous year Rs. 21.04
million).
b. The Company has purchased capital equipment under the ÃExport
Promotion Capital Goods SchemeÃ. As per the terms of the licenses
granted under the scheme, the Company has undertaken to achieve an
export commitment of Rs. 740.64 million (Previous year Rs. 539 million)
over a period of 8 years commencing from 10 August, 2005. In the event
the Company is unable to execute its export obligations, the Company
shall be liable to pay customs duty of Rs. 92.58 million (Previous year
Rs. 67.42 million) and interest on the same at the rate of 15 per cent
compounded annually. The banks have given a guarantee amounting to Rs.
115.30 million (Previous year Rs. 84 million) on behalf of the Company
to the custom authorities for the same. The Company is hopeful of
meeting the required export obligation.
c. The Company has given corporate guarantees of Rs. 272.50 million
(Previous year Rs. 228 million) towards credit facility given by banks
to IBN Lokmat. As at the year end Rs. 230.74 million was outstanding in
respect of such loans.
d. The Company has received legal notices of claims / lawsuits filed
against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 8,841.22 million (Previous year Rs.
7,724 million). In the opinion of the management, no material liability
is likely to arise on account of such claims/lawsuits.
2. Equity warrants
a. The Company, through postal ballot dated 7 September 2007, the
results of which were declared on 13 October 2007 approved the issue
and allotment of 3,000,000 convertible warrants (warrants) of Rs. 888
each in accordance with the provisions of Securities and Exchange Board
of India (Disclosures and Investor Protection) Guidelines, 2000 to
Network 18 India Holdings Private Limited (N-18 Holding), a fellow
subsidiary of the Company. The Company has allotted the warrants on 15
October, 2007 pursuant to which the Company received Rs. 266.4 million
being 10% of the total amount of Rs. 2,664 million in respect thereof.
Subsequent to the stock split of 1:5, held through postal ballot dated
19 December 2007, the results of which were declared on 25 January
2008, each warrant held by N-18 Holding are convertible into one fully
paid up equity shares of face value of Rs. 2 each at a premium of Rs.
175.60 per share on exercise of the option to convert the warrants into
equity shares.
During the year, N-18 Holding has applied for conversion of 5,500,000
warrants. The Company has allotted 5,500,000 equity shares upon
conversion of warrants at a premium of Rs 175.60 per share as per the
terms of warrants.
As at the year ended, the Company has received a letter from N-18
Holdings expressing its unwillingness to exercise the balance 9,500,000
warrants due to adverse market conditions. Consequently Rs. 168.72
million representing 10% amount of issue price received pursuant to the
allotment of such warrants stands forfeited.
b. During the year, shareholders of the Company at the Extra Ordinary
General Meeting held on 22 December, 2008 have approved the issue and
allotment of 15,000,000 Convertible Warrants (Warrants) at a price of
Rs.102/-each in accordance with the provisions of Chapter XIII of the
Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000 to RVT Investments Private Limited (RVT
Investments), a promoter group company. The Company has allotted the
aforesaid Warrants on 13 January, 2009 pursuant to which the Company
received Rs.153 Million being 10% of the total amount of Rs.1,530
million in respect thereof.
During the year, RVT Investments has applied for conversion of
12,500,000 Warrants and paid Rs. 1,147.50 million towards balance
amount payable (Rs. 91.80 per share). The Company has allotted
12,500,000 equity shares of face value of Rs. 2/- each upon conversion
of Warrants at a premium of Rs 100/- per equity share as per the terms
of issue of Warrants. As at the year end, 2,500,000 fully paid up
Warrants amounting to Rs. 25.50 Million were outstanding for conversion
into equity shares. The Company has received the share application
money against these Warrants for conversion into equity shares.
3. Secured Loans
a. Cash credit from banks of Rs 412.48 million are secured as follows:
i. First pari passu charge on all the current assets of the company.
ii. Additionally secured by unconditional and irrevocable corporate
guarantee of Network18 Media & Investments Limited (Formerly Network 18
Fincap Limited).
iii. Cash credit facility of Rs 325.53 million is additionally secured
by second charge on the CompanyÃs movable fixed assets.
iv. Cash credit facility of Rs 57.08 million is secured by only
hypothecation of book debts.
b. The term loan of Rs. 419.14 million taken from banks is secured as
follows:
i. Term loan of Rs. 200.00 million is secured by:
- First charge on the CompanyÃs movable assets, subject to the charges
on current assets created/to be created in favour of the CompanyÃs
bankers for securing borrowings for working capital requirements.
- Unconditional and irrevocable personal guarantee of a Director.
- Letter of comfort from Television Eighteen India Limited (TV18)
whereby TV18 undertakes to take all necessary steps to ensure that the
Company fulfils all necessary obligations under the agreement including
arrangement of funds for payment to the bank in accordance with the
terms and conditions of the loan agreement.
ii. Term loan of Rs. 173.50 million is secured by:
- Hypothecation of entire assets of ibn7
- Personal guarantee of 10 members of Gupta family
- Corporate guarantee of Rainbow Packers Pvt Ltd
iii. Term loan of Rs. 45.65 million is secured by:
- First charge on all movable assets including plant and machinery and
equipment acquired/to be acquired out of the proceeds of the term loan
of ibn7
- Personal guarantee of 4 members of Gupta family
c. Other loans from banks are secured by hypothecation of vehicles.
8. Investments
b. Investments in IBN Lokmat News Private Limited (IBN Lokmat)
The Company has invested Rs 155.3 million (including amount paid for
share application money) in IBN Lokmat. As at 31 March 2009, IBN Lokmat
has significant accumulated losses and its net worth has been
substantially eroded. Having regard to the long term investment and
strategic involvement with the Company, no provision is considered
necessary for diminution in the value of investment and advance for
share application paid
4. Deferred tax
The Company has carried out its tax computation in accordance with the
mandatory standard on accounting, AS 22 Ã ÃAccounting for Taxes on
Incomeà referred in Companies (Accounting Standards) Rules, 2006. In
view of its significant accumulated losses, the Company has not
provided for deferred tax assets as there is no virtual certainty that
there will be sufficient future taxable income available to realise
such assets. In accordance with the same no deferred tax asset /
liability was required at the year end.
5. Segmental reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting,
have not been provided in these financial statements.
6. Employee Benefits
a. Description of the Gratuity plan
The gratuity liability arises on retirement, withdrawal, resignation
and death of an employee. The aforesaid liability is calculated on the
basis of fifteen days salary (i.e. last drawn salary plus dearness
allowance) for each completed year of service subject to completion of
five years service.
7. GBN Employees Stock Option Plan 2007 (ÃESOP 2007Ã)
a. The Company had established an Employee Stock Option Plan (ESOP
2007) in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 which have been approved by the Board of Directors and
the shareholders. A remuneration/ compensation committee comprising
independent, non executive members of the Board of Directors
administers the ESOPs. All options under the ESOPs are exercisable for
equity shares. The Company had declared stock split of 1 equity share
of face value of Rs. 10 each in 5 equity share of Rs. 2 each through
postal ballot dated 19 December 2007, the results of which were
declared on 25 January 2008. The Company plans to grant upto 1,700,000
(8,500,000 options pursuant to split of 1 share of face value of Rs. 10
in 5 shares of face value of Rs. 2 each) options to eligible employees
and directors of the Company and its subsidiaries and holding company
of the Company.
b. Options which have been granted under ESOP 2007 shall vest with the
grantee equally over a four year period from the date of grant. The
exercise period of the options is a period of two years after the
vesting of the options. Each option is exercisable for one equity share
of Rs. 10 each (for one equity share of Rs 2 each after split) fully
paid up on payment of exercise price (as determined by the
remuneration/compensation committee) of share determined with respect
to the date of grant. The Company has granted 3,920,642 options
(19,603,210 options after split) upto 31 March, 2009.
d. The Finance Act 2007 has included Fringe Benefit Tax (FBT) on
Employeesà Stock Option Plan. FBT liability crystallizes on the date of
exercise of stock options and the Company would recover the FBT from
the employees, hence there is no charge in these financial results.
8. Related Party disclosures
a. Related parties and their relationships
Holding Company
i. Network 18 Media & Investments Limited (Network18) (formerly
Network 18 Fincap Limited)
Subsidiary Companies
i. RVT Media Private Limited (RVT Media)
ii. Jagran TV Private Limited (Jagran TV), now known as IBN18 Media
and Software Limited
Joint Venture
i. IBN Lokmat News Private Limited (IBN Lokmat) (formerly RVT Finhold
Private Limited)
Associates
i.Viacom18 Media Private Limited (Viacom18) w.e.f. 4 March, 2009
ii.BK Fincap Private Limited (BK Fincap) till 1 October, 2007
Fellow Subsidiaries
i.Television Eighteen India Limited (TV18)
ii.Network 18 India Holdings Private Limited (N-18 Holding)
iii.Setpro18 Distribution Limited (Setpro18), formerly Setpro Holdings
Private Limited
iv.Television Eighteen Mauritius Limited, Mauritius (TEML) [Subsidiary
of TV 18]
v.NewsWire18 Limited (Newswire), formerly News Wire 18 India Private
Limited till 27 February, 2009 [Subsidiary of TV 18]
vi.RVT Investments Private Limited (RVT) [Subsidiary of TV 18]
vii.Infomedia 18 Limited (Infomedia) w.e.f 21 August, 2008 [Subsidiary
of TV 18]
viii.Web 18 Holdings Limited, Cayman Islands (Web 18 Holding)
[Subsidiary of TEML]
ix.BK Holdings Limited, Mauritius (BKH) [Subsidiary of TEML]
x.TV18 UK Limited (TV 18 UK) [Subsidiary of TEML]
xi.E-18 Limited, Cyprus (E 18, Cyprus) [Subsidiary of Web 18 Holding]
xii.e-Eighteen.com Limited (E-18) [Subsidiary of E 18, Cyprus]
xiii.Television Eighteen Commoditiescontrol.com Limited (TECCL)
[Subsidiary of E 18, Cyprus]
xiv.Web18 Software Services Limited (Web 18) [Subsidiary of E 18,
Cyprus]
xv.Care Websites Private Limited (Care) w.e.f. 14 February, 2008
[Subsidiary of E 18, Cyprus]
xvi.Moneycontrol Dot Com India Limited (MCD) [subsidiary of E-18]
xvii. TV18 Home Shopping Network Limited (TV18 HSN)
Individual exercising control
i. Raghav Bahl (RB)
Key management personnel
i.Sameer Manchanda (SM)
ii.Rajdeep Sardesai (RS)
iii.Sagarika Ghose (SG)
Entity under significant influence
i.SGA News Limited (SGA News)
ii.Greycells 18 Media Limited (Greycells)
iii.Digital18 Media Limited (Digital18)
iv.Jagran TV Private Limited (Jagran TV) till 30 September, 2007
9. Transactions with parties referred to in Section 297 of the
Companies Act
The Company has entered into an agreement with a Company in which
directors are interested, for distribution and strategic placement of
its channel CNN-IBN. The agreement is recorded in the register
maintained under section 301 of the Companies Act 1956. The Company has
paid Rs. 615.20 million (Previous year Rs 230 million), including
service tax, as distribution costs under this agreement. This
agreement has the approval of the Central Government for the period 22
October, 2006 to 31 March, 2009.
10. Barter Transactions
During the year ended 31 March 2009, the Company had entered into
barter transactions, which were recorded at the fair value of
consideration receivable or payable. The profit and loss account for
the year ended 31 March, 2009 has been grossed up to refect revenue
from barter transactions of Rs. 70.01 million and expenditure of Rs.
74.31 million being the fair value of barter transactions provided and
received.
11. Transfer Pricing
As per the Transfer Pricing Rules of the Income tax Act, 1961 every
company is required to get a transfer pricing study conducted to
determine whether the international transactions with associated
enterprises were undertaken at an armÃs length basis for each financial
year end. Transfer pricing study for the transactions during the year
ended 31 March, 2009 is currently in progress and hence adjustments if
any which may arise there from have not been taken into account in
these financial statements for the year ended 31 March, 2009 and will
be effective in the financial statements for the year ended 31 March,
2010. However in the opinion of the CompanyÃs management, adjustments,
if any, are not expected to be material.
12. Disclosures as per Micro, Medium and Small Enterprises Development
Act, 2006 (MSMED)
Pursuant to amendments to Schedule VI to the Companies Act, 1956 vide
Notification No. GSR 719 (E) dated 16 November, 2007, the amounts due
to micro and small enterprises only are to be disclosed as against the
earlier disclosure requirement of amounts due to small scale industrial
undertakings.
Based on the information available with the Company, the balance due to
micro and small enterprises as defined under the MSMED Act, 2006 is Rs.
Nil (Previous year Rs. Nil) and no interest has been paid or is payable
under the terms of the MSMED Act, 2006. Further, during the previous
year no amounts were payable to small scale undertakings which were
outstanding for more than 30 days.
Mar 31, 2008
1. Background
ibn18 Broadcast Limited (Formerly known as Global Broadcast News
Limited) was incorporated on 6 June, 2005 as Global Broadcast News
Private Limited. The Company was converted into a public limited
Company and a revised Certificate of Incorporation was issued to give
effect to this change w.e.f. 12 December, 2005. Later, the name of the
Company was changed to ibn18 Broadcast Limited (hereinafter referred as
"ibn18") and a revised Certificate of Incorporation was issued to give
effect to this change on 02 April, 2008. The Company is in the business
of broadcasting, telecasting, relaying and transmitting general news
programmes and operates the news channel "CNN IBN" (consequent to a
licensing and content sharing agreement with Turner Broadcasting System
Asia Pacific, Inc.). The commercial operations of the Company commenced
on 17 December, 2005.
2. Of the total equity share capital of the company, 52,055,140 equity
shares of facts value of Rs.2 each (Previous year 10,411,028 equity
shares of face value of Rs. 10 each) are held by Network 18 Media &
Investments Limited (Formerly known as Network 18 Fincap Limited).
Network 18 Media & Investments Limited is also the holding company by
virtue of management control over the companys operations.
3. Scheme of arrangement between Jagran TV Private Limited, BK Fincap
Private Limited and the Company
a. The Board of Directors have approved the Scheme of Arrangement
between BK Fincap Private Limited (BK Fincap), Jagran TV Private
Limited (JTV), and the Company for acquisition of "IBN 7" channel
business from JTV and merge BK Fincap into the Company with effect from
1st October, 2007.and 2nd October, 2007 respectively. The Company has
filed the scheme with the stock exchanges. Consequential to the scheme
becoming effective, if approved by the Honble Delhi High Court, the
aggregate net loss of Rs. 267.18 million of JTV and BK Fincap for the
year ended 31st March, 2008, will be merged with ibn18.
b. As per the scheme, during the intervening period, BK Fincap and JTV
shall be deemed to have been carrying on all business and activities
relating to the merged undertaking on behalf of ibn18 and all profits
accruing to the Transferor Company, or losses arising or incurred by
them relating to the merged undertaking shall be treated as the profits
or losses of ibn18.
c. News Business Undertaking of JTV comprising the business activities
of running the IBN7 channel along with all related assets,
liabilities and employees shall be transferred on a going concern basis
at book value to the company from the appointed date of 1 October 2007.
In consonance to the abovementioned restructuring scheme, ibnl 8 shall
issue 24.23 fully paid up equity shares of face value of Rs.10 each
(121.15 fully paid up equity shares of face value of Rs.2 each) to
shareholders of JTV for every 100 Equity shares of face value of Rs.10
each held in JTV.
d. BK Fincap which is a holding company of JTV, along with all related
assets, liabilities and employees shall be merged on a going concern
basis at book value to the company from the appointed date of 2 October
2007. In consonance to the abovementioned scheme, ibn18 shall issue
1,662.76 fully paid up equity shares of face value of Rs.10 each
(8,313.80 fully paid up equity shares of face value of Rs.2 each) to
shareholders of BK Fincap for every 100 Equity shares of face value of
Rs. 10 each held in BK Fincap. The accounting adjustments on account
of proposed scheme of arrangement would be made once the scheme is
approved and effective. The proposed scheme of arrangement will be
effective from the date on which the certified copy of the order of the
High Court is filed with the Registrar of Companies.
4. Capital commitment, contingent liabilities and litigation
a. Estimated amounts of contracts remaining to be executed on capital
account (net of advances) Rs. 21.04 million (Previous year Rs. 0.5
million).
b. The Company has given corporate guarantees of Rs. 473 million
(Previous year Rs. 410 million) towards credit facility given by banks
to Jagran TV Private Limited. At the year end Rs. 334 million (Previous
year Rs. 315 million) was outstanding in respect of such loans.
c. The Company has purchased capital equipment under the Export
Promotion Capital Goods Scheme. As per the terms of the licenses
granted under the scheme, the Company has undertaken to achieve an
export commitment of Rs.539 million over a period of 8 years commencing
from 10 August, 2005. In the event the Company is unable to execute its
export obligations, the Company shall be liable to pay customs duty of
Rs. 67.42 million and interest on the same at the rate of 15 per cent
compounded annually. The banks have given a guarantee amounting to Rs.
84.0 million (Previous year Rs. 81.7 million) on behalf of the Company
to the custom authorities for the same. The Company is hopeful of
meeting the required export obligation.
d. The Company has given corporate guarantees of Rs. 228 million
towards credit facility given by banks to IBN Lokmat. As at the year
end Rs. 116 million was outstanding in respect of such loans.
e. The Company has received legal notices of claims / lawsuits filed
against it relating to infringement of copyrights, objectionable
contents and defamation suits in relation to the programmes produced by
it, the aggregate claim being Rs. 7,724 million. In the opinion of the
management, no material liability is likely to arise on account of such
claims/law suits.
5. Equity warrants
The Company through postal ballot dated 7 September 2007, the results
of which were declared on 13 October 2007 approved the issue and
allotment of 3,000,000 convertible warrants (warrants) of Rs.888 each
in accordance with the provisions of Securities and Exchange Board of
India (Disclosures and Investor Protection) Guidelines, 2000 to Network
18 India Holdings Private Limited (N-18 Holding), a fellow subsidiary
of the Company. The Company allotted the warrants on 15 October, 2007
pursuant to which the Company received Rs.266.40 million being 10% of
the total amount of Rs.2s664 million in respect thereof.
As "per the terms of allotment each warrant is convertible into a fully
paid up equity share of face value of Rs.10 each at a premium of Rs.878
per share on exercise of the option to convert the warrant into equity
share and is to be further adjusted for corporate actions such as bonus
issue, right issue, stock split etc.
Subsequent to the stock split of 1:5, held through postal ballot dated
19 December, 2007, the results of which were declared on 25 January
2008, each warrant held by N-18 Holding are convertible into one fully
paid up equity shares of face value of Rs.2 each at a premium of Rs.
175.60 per share on exercise of the option to convert the warrants into
equity shares.
As at the year end, 15,000,000 warrants were outstanding for conversion
into equity shares. Equity warrants issued and subscribed amounting to
Rs.266.4 million as at the year end represent monies received pursuant
to the allotment of such warrants.
6. Secured Loans
a. Cash credit from banks of Rs. 428.51 million are secured by.
i. First pari passu charge on all the current assets of the company.
ii. Out of above, a cash credit facility amounting to Rs.80.88 million
is additionally secured by second charge on the Companys movable fixed
assets.
iii. Out of above, Cash credit facilities amounting to Rs.347.63
million are additionally secured by unconditional and irrevocable
corporate guarantee of Network18 Media & Investments Limited (Formerly
known as Network 18 Fincap Limited).
b. The term loan of Rs. 280 million from a bank is secured by:
i. First charge on the Companys movable assets, subject to the
charges on current assets created/to be created in favour of the
Companys bankers for securing borrowings for working capital
requirements.
ii. Unconditional and irrevocable personal guarantee of a Director.
iii. Letter of comfort from Television Eighteen India Limited (TV18)
whereby TV18 undertakes to take all necessary steps to ensure that the
Company fulfils all necessary obligations under the agreement including
arrangement of funds for payment to the bank in accordance with the
terms and conditions of the loan agreement.
c. Other loans from banks are secured by hypothecation of vehicles.
7. Deferred tax
The Company has carried out its tax computation in accordance with the
mandatory standard on accounting, AS 22 - Accounting for Taxes on
Income referred in Companies (Accounting Standards) Rules, 2006. In
view of significant accumulated losses the Company has not provided for
deferred tax assets as there is no virtual certainty that there will be
sufficient future taxable income available to realise such assets. In
accordance with the same no deferred tax asset / liability was required
at the year end.
8. Segmental reporting
The Company is engaged in the business of production and telecast of
news and current affairs programmes primarily in India. As the Company
operates in a single business and geographical segment, the reporting
requirements for primary and secondary segment disclosures prescribed
by paragraphs 39 to 51 of Accounting Standard 17 - Segment Reporting,
have not been provided in these financial statements.
9. Transactions with parties referred to in Section 297 of the
Companies Act
The Company has entered into an agreement with a Company in which
directors are interested, for distribution and strategic placement of
its channel CNN-IBN. The agreement is recorded in the register
maintained under section 301 of the Companies Act 1956. The Company has
paid Rs.230 million (Previous year Rs.224.4 million), including service
tax, as distribution costs under this agreement. This agreement has the
approval of the Central Government for the period 22 October, 2006 to
31 March, 2009.
10. Transfer Pricing
As per the Transfer Pricing Rules of the Income tax Act, 1961 every
company is required to get a transfer pricing study conducted to
determine whether the international transactions with associated
enterprises were undertaken at an arms length basis for each financial
year end. Transfer pricing study for the transactions during the year
ended 31 March, 2008 is currently in progress and hence adjustments if
any which may arise there from have not been taken into account in
these financial statements for the year ended 31 March, 2008 and will
be effective in the financial statements for the year ended 31 March,
2009. However in the opinion of the Companys management, adjustments,
if any, are not expected to be material.
11. Disclosures as per Micro, Medium and Small Enterprises Development
Act, 2006 (MSMED)
Pursuant to amendments to Schedule VI to the Companies Act, 1956 vide
Notification No. GSR 719 (E) dated 16 November, 2007, the amounts due
to micro and small enterprises only are to be disclosed as against the
earlier disclosure requirement of amounts due to small scale industrial
undertakings.
Based on the information available with the Company, the balance due to
micro and small enterprises as defined under the MSMED Act, 2006 is Rs.
Nil (Previous year Rs. Nil) and no interest has been paid or is payable
under the terms of the MSMED Act, 2006. Further, during the previous
year no amounts were payable to small scale undertakings which were
outstanding for more than 30 days.
12. Foreign exchange forward contracts
The Company does not use foreign currency forward contracts to hedge
its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions.
13. Previous years amounts have been reclassified/ regrouped to
conform to the current years presentation.