Home  »  Company  »  TV18 Broadcast  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of TV18 Broadcast Ltd.

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, 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.

 
Subscribe now to get personal finance updates in your inbox!