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Directors Report of Zee Learn Ltd.

Mar 31, 2015

The Members of Zee Learn Limited

The Directors take pleasure in presenting the Fifth Annual Report of the Company together with Audited Financial Statements for the year ended March 31,2015.

DIRECTORS'RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013 ('the Act'), in relation to the Audited Financial Statements for the Financial Year 2014 -2015, your Directors confirm that:

a) The Financial Statements of the Company - comprising of the Balance Sheet as at March 31, 2015 and the Statement of Profit & Loss for the year ended on that date, have been prepared on a going concern basis following applicable accounting standards and that no material departures have been made from the same;

b) Accounting policies selected were applied consistently and the judgments and estimates related to the financial statements have been made on a prudent and reasonable basis, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015, and, of the profit of the Company for the year ended on that date;

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

d) Requisite internal financial controls were laid down and that such financial controls are adequate and operating effectively; and

e) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

FINANCIAL PERFORMANCE

The financial performance of your Company for the year ended March 31,2015 is summarized below: (Rsln lacs)

Particulars For the year For the year ended March ended March 31,2015 31,2014

Revenue from Operations 12,158.25 11,917.54

Other Income 473.39 318.09

Total Income 12,631.64 12,235.63

Total Expenses 9,664.32 10,880.82

Operating Profit/Loss 2,967.32 1,354.81

Less: Finance Cost 1,324.84 823.30

Less: Depreciation 680.21 664.16

Profit/Loss before Tax 962.26 (132.65)

Provision for Taxation (Net) - -

Profit/Loss after Tax 962.26 (132.65)

Balance Carried to Balance Sheet 962.26 (132.65)

DIVIDEND

With a view to conserve the resources for future business requirements and expansion plans, your Directors are of view that the current year's profit be ploughed back into the operations and hence no dividend is recommended for the year under review.

BUSINESS OVERVIEW

Your Company is a leading education company, founded with the purpose of 'Improving Human Capital'. The company has contributed in the field of education across age groups, all the while maintaining its core values of integrity, ownership, leadership, trust and continuous learning. We believe that every child has a unique and infinite potential and we are committed to help children realize their capabilities. Linder its Portfolio, Zee Learn is currently operating over 1350 pre- schools & 87 K-12 schools, through its leading brands, "Kidzee" & "Mount Litera Zee School" respectively. By the current financial year end Kidzee has reached to over 4,10,000 students & MLZS has reached to about 30,500 students through its network of school chain.

In order to cater the need to develop skills of youth population, your company is looking to explore vocational courses outside the traditional curriculum. Zee Institute of Media Arts (ZIMA) provides diploma courses in TV and film making courses and Zee Institute of Creative Art (ZICA) provides diploma courses in 2D and 3D animation.

SHARE CAPITAL

During the year under review, your Company had allotted 6,69,453 Equity Shares ofRs. 1/- each upon exercise of Stock Options by the Option grantees under the Employee Stock Option Scheme. This has resulted an increase in the paid-up equity share capital of the Company from Rs. 31,93,31,644 to Rs. 32,00,01,097 comprising of 32,00,01,097 equity shares of Rs.1/-each.

NON-CONVERTIBLE DEBENTURES

During the year under review, 125 12% Secured Redeemable Non-Convertible Debentures ('SRNCD's) each ofRs. 10,00,000/- aggregating to Rs.12,50,00,000/-, listed on Wholesale Debt Market Segment of National Stock Exchange of India Ltd. (NSE), were redeemed as per the terms of issue and extinguished. As at March 31,2015, there is no outstanding SRNCD's.

Further, your Company had issued and allotted on April 8, 2015 650 (Six Hundred Fifty) Rated, Unlisted, Redeemable, Non-Convertible Debentures ("NCDs") of the Face Value of Rs.10,00,000/- (Rupees Ten Lakhs Only) Each, for cash, aggregating to Rs. 65,00,00,000/- (Rupees Sixty Five Crores Only) on Private Placement Basis, on which Credit Analysis & Research Limited (CARE) has affirmed the rating of 'CARE AA (SO)', which signifies the NCDs are construed to offer high safety for timely servicing of debt obligation and carries very low credit risk.

GLOBAL DEPOSITORY RECEIPTS

During the Financial year 2013-14, Global Depository Receipts (GDRs) offer of the Company for 56,17,977 GDRs opened for subscription at an issue price of US$ 3.56 per GDR representing 5,61,79,770 fully paid Equity Shares of Re. 1/- each of the Company(each GDR representing 10 Equity Shares). Upon subscription of the GDR, the Company issued and allotted 5,61,79,770 fully paid Equity Shares of Rs. 19.50 per share underlying Global Depository Receipts ("GDRs") on May 21, 2013. 56,17,977 Global Depository Receipts have been listed on the Luxembourg Stock Exchange since May 24, 2013. As at March 31,2015, total 41,17,977 GDRs have remained outstanding, the underlying shares of which forms part of the existing paid up share capital of the Company.

EMPLOYEES STOCK OPTION SCHEME

Your Company has implemented an Employee Stock Option Scheme called ZLL ESOP-2010, in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) forgrant of stock options to its eligible employees of the Company and its Subsidiary. The Nomination & Remuneration Committee of the Board administers and monitors the Scheme. The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2015 are annexed to this report.

During the year under review, 19,61,750 Stock Options were granted on September 29, 2014. Further, your Company had issued and allotted 6,69,453 Equity Shares of Rs. 1/- each upon exercise of equivalent number of vested Stock Options by the Option Grantees at Option price of Rs. 26.05 (80,100 Shares) , Rs. 14.50 (2,32,362 Shares) and Rs. 20.85 ( 3,56,991 Shares) per share.

The Company has received a Certificate from the Statutory Auditors, M/s. MGB & Co., LLP, Chartered Accountants, confirming that the Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The Certificate shall be placed at the ensuing Annual General Meeting and a copy of the same shall be available for inspection at the Registered Office of the Company on all working days (except Saturdays) between 2.00 p.m. to. 5.00 p.m., up to the date of ensuing Annual General Meeting.

SUBSIDIARY COMPANY

Your company has one wholly owned subsidiary, namely, Digital Ventures Private Limited.

No other Subsidiary / Joint-venture was formed or divested during the year under review. In compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operations of the aforesaid Subsidiary Company is annexed to this report.

In accordance with Accounting Standard AS 21 - Consolidated Financial Statements read with Accounting Standard AS 23 - Accounting for Investments in Associates, and Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

CORPORATE GOVERNANCE & POLICIES

Your Company is in compliance with the Corporate Governance requirements mentioned under Clause 49 of the Listing Agreement. A Report on Corporate Governance as stipulated under the Listing Agreement(s) with the Stock Exchanges as also a Management Discussion and Analysis Report forms part of the Annual Report. Certificate from the Statutory Auditors of the Company, M/s MGB & Co LLP, Chartered Accountants, confirming compliance with the provisions of Corporate Governance as stipulated in Clause 49, is annexed to the said Corporate Governance Report.

In compliance with the requirements of the Companies Act, 2013, the Nomination and Remuneration Committee of the Board had fixed criteria for nominating a person on the Board which, inter alia include desired size and composition of the Board, age limit, qualification/ experience, areas of expertise and independence of individual. Your Company has also adopted a Remuneration Policy, salient features whereof is annexed to this report.

Your Board had in accordance with the requirements of Companies Act, 2013 and Clause 49 of the Listing Agreement, adopted new policies including Related Party Transaction Policy, and amended existing Whistle Blower and Vigil Mechanism Policy in line with the amended requirements. These policies are available on the website of the Company www.zeelearn.com.

CORPORATE SOCIAL RESPONSIBILITY

As responsible citizen, your Company believes that a Business cannot succeed in a society that fails and therefore it is imperative for business houses, to invest in the future by taking part in CSR activities. As part of CSR activity, the Company has been providing School Management Services under Public Private Partnership to selected schools managed by Gujarat State Tribal Development Residential Educational and Institutional Society under the Eklavya Model Residential School project of Government of Gujarat. Additionally, the Company regularly organizes various Education awareness events / programs for the various strata of the Society.

During the year, your Company undertook many initiatives at Mount Litera Zee School to educate and connect with the local communities around the school and created various campaign to support various causes. Initiative such as 'Yoga Day" raised awareness towards 'Importance of daily exercise'. Besides these, the schools also conducted various events such as Tree plantation activities, Swatch BharatAbhiyan, World Population, distribution of Bins in the society, Human right programmes, etc. in their local communities.

In continuation to the I Care initiative-this year too OMEP India has led 'I Care' program across the country sensitizing on Anti Child Abuse and Neglect. This year the program extended to schools apart from preschools. The 'I care' campaign is part of a national movement to change the way we think about prevention of child abuse.

As part of its CSR activity, Zee Institute of Creative Arts (ZICA), Noida center run by the franchisee, has partnered with two NGO's namely Prerna Niketan Sangh & Deepalaya to provide free creative course scholarship for the underprivileged students. Through this initiative, ZICAin association with Prerna Niketan Sangh & Deepalaya will provide scholarship to eligible students to 100% of course fees. Prerna Niketan Sangh is registered with Delhi Government and is working for physically challenged children since 1998.

Further, as your Company has made net profit of Rs. 9.62 Cr in FY 2014-15, Section 135 of the Companies Act, 2013 and Listing agreement of the Stock Exchanges has become applicable which specifies constitution of a Corporate Social Responsibility Committee of the Board ("CSR Committee"). Accordingly, your Company will constitute ("CSR Committee") in F.Y. 2015-16.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Your Board comprises of 5 Directors including 3 Independent Directors. Independent Directors provide their declarations both at the time of appointment and annually confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement. During FY 2015 your Board met 6 (six) times details of which are available in Corporate Governance Report annexed to this report.

Mr. Subodh Kumar, Non-Executive Director is liable to retire by rotation at the ensuing Annual General Meeting and, being eligible he has offered himself for re-appointment. Your Board recommends his re-appointment.

In compliance with the requirements of Section 203 of the Companies Act, 2013, Mr. K V S Seshasai, Chief Executive Officer, Mr. Umesh Pradhan, Chief Financial Officer & Mr. Samir Raval, Compliance Officer & Company Secretary of the Company were nominated as Key Managerial personnel.

BOARD EVALUATION

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated. Based on such report of the meeting of Independent Directors and taking into account the views of executive directors and non- executive directors the Board had evaluated its performance on various parameters such as Board composition and structure, effectiveness of board processes, effectiveness of flow of information, contributions from each Directors, etc.

AUDITORS

STATUTORY AUDITOR

M/s. MGB & Co., LLP., Chartered Accountants, Mumbai having firm registration No. 101169W/W-100035 holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment.

Your Company has received confirmation from the Auditors to the effect that their appointment, if made, will be in accordance with the limits specified under the Companies Act, 2013 and the firm satisfies the criteria specified in Section 141 of the Companies Act, 2013 read with Rule 4 of Companies (Audit & Auditors) Rules 2014. Your Board is of the opinion that continuation of M/s. MGB & Co., LLP, as Statutory Auditors during FY 2015-16 will be in the best interests of the Company and therefore, Members are requested to consider their re-appointment as Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting till next Annual General Meeting at remuneration be decided by the Board.

COST AUDITOR

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, amended rules, 2014, the cost audit records maintained by the Company in respect of its education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business is required to be Audited.

Your Directors had, on the recommendation of the Audit Committee and on ratification of its Members appointed M/s. V. V. & Associates, Cost Auditor having Firm registration No. 000515 to audit the cost accounts of the Company forthe financial year 2015-16.

SECRETARIAL AUDITOR

During the year, Secretarial Audit was carried out by Mrs. Mita Sanghavi, Practising Company Secretary in compliance with Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

DISCLOSURES

i. Particulars of loans, guarantees and investments:

Particulars of loans, guarantees and investments made by the Company required under Section 186 (4) of the Companies Act, 2013 are contained in Note No. 29 to the Standalone Financial Statements.

ii. Transactions with Related Parties:

None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Information on material transactions with related parties pursuant to Section 134(3)(h) of the Act, read with Rule 8(2) of the

Companies (Accounts) Rules, 2014, in form AOC-2 is annexed to this report.

iii. Deposits:

Your Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits under Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposits) Rules, 2014, was outstanding as on the date of the Balance Sheet.

iv. Extract of Annual Return:

The extract of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with the Companies (Management & Administration) Rules, 2014 is annexed to this report.

v. Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the year under review one (1) complaint on sexual harassment was received and it has been resolved as perthe provisions of the Act.

vi. Regulatory Orders:

No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company is engaged in the business of delivering learning solutions and training to entire spectrum of the society from toddler to teens through its multiple products. Since these activities do not involve any manufacturing activity, most of the information required to be provided under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is not applicable.

However, the information as applicable are given hereunder:

Conservation of Energy:

(i) steps taken or impact on conservation of energy

(ii) steps taken by the company for utilizing alternate sources of energy

(iii) capital investment on energy conservation equipments

Your Company, being a service provider, requires minimal energy consumption and every endeavor has been made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible.

Technology Absorption:

(i) the efforts made towards technology absorption

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) -

(a) the details of technology imported

(b) the year of import

(c) whether the technology been fully absorbed

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof

(iv) the expenditure incurred on Research and Development

In its endeavor to deliver the best to its users and business partners, yoi Company has been constantly active in harnessing and tapping the late: and best technology in the industry.

FOREIGN EXCHANGE EARNING AND OUTGO:

During the year under review, there were no Foreign Exchange Earnings and the particulars of Foreign Exchange outgo is given in Note no. 34 of the Notes to Accounts forming part of the AnnualAccounts.

PARTICULARS OF EMPLOYEES

Requisite disclosures in terms of the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 along with statement showing names and other particulars of the employees drawing remuneration in excess of the limits prescribed underthe said rules is annexed to this report.

ACKNOWLEDGEMENTS

Your Board takes this opportunity to place on record their appreciation for the dedication and commitment of employees shown at all levels, Franchisees and Business Partners that have contributed to the success of your Company. Your Directors also express their gratitude for the valuable support and co-operation received from the Central and State Governments including Ministry of Human Resource Development and other stakeholders including Bankers, Financial Institutions, Investors, Service Providers as well as regulatory and government authorities.

For and on behalf of the Board Place: Mumbai Subodh Kumar Date : May 27, 2015 Chairman


Mar 31, 2013

To The Members of Zee Learn Limited

The Directors take pleasure in presenting the Third Annual Report of the Company together with Audited Financial Statements for the year ended March 31, 2013.

FINANCIAL PERFORMANCE

(Rs.in lacs)

For the year For the year Particulars ended March ended March 31,2013 31, 2012

Revenue from Operations 10,007.76 6,100.29

Other Income 62.32 90.95

Total Income 10,070.07 6,191.24

Total Expenses 10,853.84 8,275.54

Operating Proft/Loss (783.77) (2,084.30)

Less: Finance Cost 564.05 354.75

Less: Depreciation 642.00 302.05

Proft/Loss before Tax (1,989.81) (2,741.10)

Provision for Taxation (Net) 132.54 16.81

Proft/Loss after Tax (2,122.35) (2,757.90)

Balance Carried To Balance Sheet (2,122.35) (2,757.90)

DIVIDEND

In view of losses during the year, your Directors have not recommended any dividend on Equity Shares for the year under review.

BUSINESS OVERVIEW

Performance of your Company during Financial Year 2012-13 is on the back of over 73,000 enrolments in Kidzee, over 14,000 enrolments in Mount Litera Zee Schools, 1,960 enrolments in Zee Institute of Creative Arts (ZICA) and 450 enrolments in Zee Institute of Media Arts (ZIMA). Your Company also added 325 new Kidzee franchisees, 30 new Mount Litera Zee School franchisees, 4 new Company managed Mount Litera Zee Schools during the year under review. In school solution business, your Company changed the business model of BrainCafe Science to make the program more effective and proftable. During the year under review, 95 schools were signed under the new model of BrainCafé Science.

Your Company continues to be the largest chain of pre- schools and one of the fastest growing K-12 school chains in India.

SUBSIDIARY COMPANY

Statement pursuant to Section 212 of the Companies Act, 1956 in respect of the wholly owned subsidiary Digital Ventures Private Limited is attached herewith and forms part of this report.

In accordance with Accounting Standard AS 21 - Consolidated Financial Statements read with Accounting Standard AS 23 - Accounting for Investments in Associates and Accounting Standard AS 27 - Financial Reporting of Interests in Joint Ventures, the audited Consolidated Financial Statements forms part of this Annual Report.

Your Board has decided to avail the general exemption granted by Ministry of Corporate Affairs from complying with Section 212(8) of the Companies Act, 1956 and accordingly the fnancial statements of the wholly owned subsidiary Digital Ventures Private Limited for the fnancial year ended March 31, 2013 is not being attached with this Annual Report. Requisite fnancial highlight of the said subsidiary is annexed to this Report and the audited Annual Accounts and related information of the subsidiary will be made available upon request or for inspection at the registered offce, by any shareholder of the Company.

NON-CONVERTIBLE DEBENTURES & CREDIT RATING

During the year under review, second tranche of 12% Secured Redeemable Non-Convertible Debentures (''SRNCD''s) of Rs50 Crores, listed on Wholesale Debt Market Segment of National Stock Exchange of India Ltd. (NSE), was redeemed as per the terms of issue. As at March 31, 2013, SRNCD''s of Rs 25 Crores are outstanding and listed on Wholesale Debt Market segment of NSE.

Credit Analysis & Research Limited (CARE) has reaffrmed the rating of ''CARE AA (SO)'', assigned to the SRNCD''s issued by the Company and the said rating denotes high degree of safety for timely servicing of debt obligation and carries very low credit risk.

GLOBAL DEPOSITORY RECEIPTS

Pursuant to Members approval at the Extra-ordinary General Meeting held on October 19, 2011, your Company had, subsequent to March 31, 2013, issued 56,17,977 Global Depository Receipts (GDRs) to Overseas investors at an issue price of US$ 3.56 per GDR, representing 5,61,79,770 Equity

Shares of Rs 1 each of the Company (each GDR representing 10 Equity Shares). The allotment of the GDRs and underlying Equity Shares was made at an issue price of Rs 19.50 Per Equity Share, as per the pricing formula prescribed under Clause 5 (4) (D) of the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Mechanism) Scheme, 1993. The GDRs are listed at the Luxembourg Stock Exchange.

Consequent to said GDR issuance, the paid-up Share Capital of the Company stand increased to Rs 31,91,90,019 comprising of 31,91,90,019 Equity Shares ofRs 1 each.

EMPLOYEES STOCK OPTION SCHEME

Your Company has implemented an Employee Stock Option Scheme called ZLL ESOP-2010, in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) for grant of stock options to its eligible employees. The Remuneration Committee of the Board administers and monitors the Scheme. The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2013 are provided in the Annexure I to this report.

During the year under review, no Stock Options were granted. However, your Company had issued and allotted 2,71,650 Equity Shares upon exercise of equivalent number of Stock Options by the employees at Option price of Rs 26.05 (2,23,900 Shares) and Rs 14.50 ( 47,750 Shares) per share.

The Company has received a Certifcate from the Statutory Auditors, M/s. MGB & Co., Chartered Accountants, confrming that the Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The Certifcate shall be placed at the ensuing Annual General Meeting and a copy of the same shall be available for inspection at the Registered Offce of the Company on all working days (except Saturdays) between 2.00 p.m. to. 5.00 p.m., up to the date of ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out in the Listing Agreement with the Stock Exchanges. Report on Corporate Governance as stipulated under the Listing Agreements) with the Stock Exchanges as also the Management Discussions and Analysis Report forms part of the Annual Report.

Certifcate from the Statutory Auditors of the Company M/s MGB & Co., Chartered Accountants, Mumbai, confrming compliance with the provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreements), is annexed to the said Corporate Governance Report.

DIRECTORS

Mr. Sumeet Mehta, Whole-time Director and CEO of the Company resigned with effect from July 25, 2012. Your Board places on record its appreciation for the contributions made by Mr. Sumeet Mehta during his tenure as Whole-time Director of the Company.

Mr. Subodh Kumar, IAS (Retd.) was appointed as an Additional Director, with effect from May 29, 2013. Pursuant to the provisions of Section 260 of the Companies Act, 1956, Mr. Subodh Kumar holds offce up to the conclusion of the ensuing Annual General Meeting of the Company. The Company has received appropriate notice from a Member under Section 257 of the Companies Act, 1956, along with requisite deposit, proposing the candidature of Mr. Subodh Kumar for the offce of Director, liable to retire by rotation. Your Board recommends appointment of Mr. Subodh Kumar as Director of the Company.

As per the provisions of the Companies Act, 1956 read with Article 97 of the Articles of Association, Mr. Surjit Banga, Independent Director, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

Brief Profle of the Directors proposed to be appointed / re- appointed at the ensuing Annual General Meeting has been included in the Report on the Corporate Governance forming part of the Annual Report.

In compliance with Section 269 of the Companies Act, 1956, your Board had appointed Mr. Umesh Pradhan, Chief Financial Offcer of the Company as a Manager for a period of three years with effect from April 1, 2013. A proposal seeking Members approval for appointment and payment of remuneration to Mr. Umesh Pradhan as Manager of the Company forms part of the Notice of ensuing Annual General Meeting.

AUDITORS

M/s. MGB & Co., Chartered Accountants, the Statutory Auditors of the Company having frm registration No. 101169W hold offce until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their re-appointment, if made, would be in accordance with the limits prescribed under Section 224(1B) of the Companies Act, 1956 and that they are not disqualifed for reappointment within the meaning of Section 226 of the said Act.

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes that Corporate Social Responsibility (CSR) is about the integration of social, environmental and economic considerations into the decision-making structures and processes of business. It is about using innovation to fnd creative and value-added solutions to societal and environmental challenges. It is about engaging shareholders and other stakeholders and collaborating with them to more effectively manage potential risks and build credibility and trust in society. Ultimately, it is about delivering improved shareholder value, providing enhanced goods and services for customers, building trust and credibility in the society in which the business operates, and becoming more sustainable over the longer term.

As part of its CSR activity, Zee Institute of Creative Arts (ZICA), Zee Learn''s animation institutes, announced the addition of their new block in the Noida center. ZICA has partnered with two NGO''s namely: Prerna Niketan Sangh & Deepalaya to provide free creative course scholarship for the underprivileged students. The scholarship will serve as a gateway for underprivileged students keen to make a career in the exciting and unbounded world of animation.

Through this initiative, ZICA in association with Prerna Niketan Sangh & Deepalaya will provide scholarship up to 100%, applicable to ZICA center in Noida. Prerna Niketan Sangh is registered with Delhi Government and is working for physically challenged children since 1998. Deepalaya is an NGO working on issues affecting the urban and rural poor, with a special focus on children.

The scholarship would be based on frst come – frst serve basis. To be eligible for the creative course scholarship students need to register at the ZICA centre and take a test, called the "Creativity Test". Students will be awarded scholarship based on their performance in this test. Under this scholarship one can choose from an array of creative courses available at ZICA.

PUBLIC DEPOSITS

During the year under review, your Company has neither accepted nor renewed any deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

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

Your Company is engaged in the business of delivering learning solutions and training to entire spectrum of the society from toddler to teens through its multiple products. Since these activities do not involve any manufacturing activity, most of the information required to be provided under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is not applicable.

However the information as applicable are given hereunder:

I. Energy Conservation

Your Company being a service provider requires minimal energy consumption and every endeavor has been made to ensure optimal use of energy and avoid wastages and conserve energy as far as possible.

II. Technology Absorption

In its endeavor to deliver the best to its users and business partners, your Company has been constantly active in harnessing and tapping best technology in the industry.

III. Foreign Exchange Earning and Outgo

During the year under review, Foreign Exchange Earnings were Nil and the particulars of Foreign Exchange out go is given in Note number 34 of the Notes to Accounts forming part of the Annual Accounts.

PARTICULARS OF EMPLOYEES

During the year under review, no employee, other than Mr. Sumeet Mehta, Whole-time Director of the Company till July 24, 2012, drew remuneration in excess of limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended. Requisite details of remuneration paid to Mr. Sumeet Mehta is as detailed herein:

Name, Designation & Age Sumeet Mehta, Whole-time

Director, 37

Total Remuneration Rs 77,75,489

Qualifcation MBA (IIM, Ahmedabad)

Total Experience & Date of 14 Years, September 1, 2010 Joining

Previous Employment Zee Entertainment

Enterprises Ltd.

Total remuneration includes Salary, Bonus, Incentive, Allowances, Leave Travel Assistance, Medical Benefts, Gratuity, Company''s contribution to Provident Fund and other perquisites and benefts valued as per the Income Tax Act, 1961.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, in relation to the Annual Financial Statements for the Financial Year 2012-2013, your Directors confrm the following:

a) The Financial Statements comprising of the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss for the year ended on that date have been prepared in the revised format of Schedule VI of the Companies Act, 1956 on a going concern and on the accrual basis and in the preparation of these Financial Statements, applicable accounting standards have been followed and there are no material departures;

b) Accounting policies selected were applied consistently and the judgments and estimates related to the fnancial statements have been made on a prudent and reasonable basis, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the loss of the Company for the year ended on that date; and

c) Proper and suffcient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

ACKNOWLEDGEMENTS

Your Board takes this opportunity to place on record their appreciation for the dedication and commitment of employees shown at all levels, Franchisees and Business Partners that have contributed to the success of your Company. Your Directors also express their gratitude for the valuable support and co-operation received from the Central and State Governments including Ministry of Human Resource Development and other stakeholders including Bankers, Financial Institutions, Investors, Service Providers as well as regulatory and government authorities.

For and on behalf of the Board

Place : Mumbai Surjit Banga Himanshu Mody

Date : 29 May, 2013 (Director) (Director)


Mar 31, 2012

To,The Members of Zee Learn Limited

The Directors take pleasure in presenting the Second Annual Report of the Company together with Audited Statement of Accounts for the year ended March 31, 2012.

FINANCIAL PERFORMANCE

(Amount in Rs.)

Particulars For the year ended For the priod ended March 31, 2012 March 31, 2011

Revenue from Operations 610,029,164 427,477,750

Other Income 9,095,113 9,506,471

Total Income 619,124,277 436,984,221

Total Expenses 827,800,170 402,756,614

Operating Profit /(Loss) (208,675,892) 34,227,607

Less: Finance Cost 35,228,379 1,278,814

Less: Depreciation 30,205,273 7,527,363

Profit /(Loss) before Tax (274,109,545) 25,421,430

Provision for Taxation (Net) 1,680,847 6,900,745

Profit /(Loss) after Tax (275,790,392) 18,520,685

Balance Carried To Balance Sheet (257,269,707) 18,520,685

DIVIDEND

In view of losses during the year, your Directors have not recommended any dividend on Equity Shares for the year under review.

BUSINESS OVERVIEW

Performance of your Company during Financial Year 2011-12 is on the back of over 60,000 enrolments in KidZee, over 7,000 enrolments in Mount Litera Zee Schools, 1,100 enrolments in Zee Institute of Creative Arts (ZICA) and 351 enrolments in Zee Institute of Media Arts (ZIMA). Your Company also added 310 new KidZee centers, 28 new Mount Litera Zee Schools, 4 new ZICA centers into its franchise system during the year under review. Your Company entered the School Solutions segment with Zee Learn School Innovations (ZLSI), which offers Braincafe (earlier Gakken) to schools that want to improve the performance and understanding of their students in Science. During the year under review 370 schools signed up for Braincafe .

Your Company has planned to step into the digital sphere by being capable of catering to the modern and immediate need to serve willing parents and children on an immediate basis with applications for various mobile devices and computers too. On this note, your Company has been in talks with various leading industry player(s) for potential acquisitions and joint ventures.

Your Company's performance during the year makes it the largest chain of preschools in India and one of the fastest growing K-12 school chains for 2 years in a row.

SHARE CAPITAL ACY- VESTING OF UNDERTAKING PURSUANT TO THE SCHEME OF AMALGAMATION

During the year under review, the Authorised Share Capital of the Company was increased with your approval from Rs. 15,00,00,000/- (Rupees Fifteen Crores only) divided into 15,00,00,000 (Fifteen Crores) Equity Shares of Rs. 1/- (Rupee One only) each to Rs. 30,00,00,000/- (Rupees Thirty Crores only) divided into 30,00,00,000 (Thirty Crores) Equity Shares of Rs. 1/- (Rupee One only) each with a view to facilitate issuance of Equity Shares in accordance with the Scheme of Amalgamation for merger of Essel Entertainment Media Limited (EEML) with the Company.

The Scheme of Amalgamation for merger of EEML with the Company approved by the Members at the Meeting held on March 28, 2011, became effective on June 30, 2011, upon filing of Order dated June 17, 2011 issued by Hon'ble Bombay High Court approving the Scheme of Amalgamation. Consequently, the entire undertaking of EEML along with all its assets and liabilities including its investment in wholly owned subsidiary Digital Ventures Private Limited as on March 31, 2011 (Appointed Date) got vested on the Company and accordingly Digital Ventures Private Limited became wholly owned subsidiary of the Company. In accordance with the said Scheme of Amalgamation, your Company had on July 1, 2011 issued 14,00,00,000 (Fourteen Crores) Equity Shares of Rs. 1/- (Rupee One only) each of the Company for 70,00,00,000 (Seventy Crores) Equity Shares held by the shareholders of EEML i.e. in the ratio of 1 (One) Equity Share of Rs. 1/- (Rupee One only) each of the Company for every 5 (Five) Equity Shares of Rs. 1/- (Rupee One only) each held in EEML.

Further, as per Clause 10.3 of the said Scheme, the Authorised Share Capital of the Company increased from Rs. 30,00,00,000 /- (Rupees Thirty Crores only) divided into 30,00,00,000 (Thirty Crores) Equity Shares of Rs. 1/- (Rupee One only) each to Rs. 100,00,00,000/- (Rupees One Hundred Crores only) divided into 100,00,00,000 (One Hundred Crores) Equity Shares of Rs. 1/- (Rupee One only) each upon combination of Authorised Share Capital of EEML with Authorised Share Capital of the Company.

SUBSIDIARY COMPANY

Consequent upon effectiveness of the Scheme of Amalgamation for merger of Essel Entertainment Media Limited (EEML) with the Company, Digital Ventures Private Limited a wholly owned subsidiary of EEML became the wholly owned subsidiary of the Company with effect from June 30, 2011.

The Ministry of Corporate Affairs, Government of India vide its circular dated February 8, 2011 has granted general exemption to companies from complying with Section 212(8) of the Companies Act, 1956, provided such companies publish the audited consolidated financial statements in the Annual Report. Your Board in its meeting held on March 28, 2012 has decided to avail the said general exemption from applicability of provisions of Section 212 of the Companies Act, 1956 and accordingly, the annual accounts of the subsidiary of the Company for the financial year ended March 31, 2012 are not being attached with the Annual Report of the Company but certain financial highlights of the subsidiary are disclosed in the Annual Report, as part of the Consolidated Financial Statements. The audited Annual Accounts and related information of the subsidiary will be made available upon request or for inspection at the registered office, by any shareholder of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS 21 on Consolidated Financial Statements read with Accounting Standard AS 23 on Accounting for Investments in Associates and Accounting Standard AS 27 on Financial Reporting of Interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

NON-CONVERTIBLE DEBENTURES ACY- CREDIT RATING

Pursuant to the Composite Scheme of Amalgamation and Arrangement between ETC Networks Limited ('ETC'), Zee Entertainment Enterprises Limited ('ZEEL'), Zee Learn Limited ('ZLL or the Company') and their respective Shareholders and Creditors, 500 Nos. of 12 ACU- Secured Redeemable Non-Convertible Debentures (SRNCD's) each of Rs. 10 lacs aggregating to Rs. 50,00,00,000/- (Rupees Fifty Crores only) issued by the erstwhile ETC Networks Ltd, were transferred to and vested in the Company. The said SRNCD's are listed on Wholesale Debt Market Segment of the National Stock Exchange of India Ltd.

During the year, out of these SRNCD's, first tranche of Rs. 12.50 Crores i.e. 125 SRNCD's each of Rs. 10 lacs was redeemed by the Company in January, 2012.

Credit Analysis ACY- Research Limited (CARE) has reaffirmed the rating of 'CARE AA (SO)', assigned to the SRNCD's issued by the Company and the said rating denotes high degree of safety for timely servicing of debt obligation and carries very low credit risk.

EMPLOYEES STOCK OPTION SCHEME

Your Company has implemented an Employee Stock Option Scheme called ZLL ESOP-2010, in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) for grant of stock options to its eligible employees. The Remuneration Committee of the Board administers and monitors the Scheme.

During the year under review, the Remuneration Committee had granted 16,09,700 Stock Options (including 60,000 Stock Options granted to the Non-Executive Independent Directors) convertible into equivalent number of equity shares of Rs. 1/- each of the Company. Applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2012 are annexed herewith and forms part of this report.

As most of Educational Infrastructure Projects of the Company are executed by its Subsidiary, a proposal seeking Member's approval for extending benefits of the ESOP Scheme to the Employees and / or Directors of present and future Subsidiary / Holding Company (ies) of the Company forms part of Notice of ensuing Annual General Meeting of the Company.

The Company has received a Certificate from the Statutory Auditors, M/s. MGB ACY- Co., Chartered Accountants, confirming that the Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The Certificate shall be placed at the ensuing Annual General Meeting and a copy of the same shall be available for inspection at the Registered Office of the Company on all working days (except Saturdays) between 2.00 p.m. to. 5.00 p.m., up to the date of ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out in the Listing Agreement with the Stock Exchanges. Report on Corporate Governance as stipulated under the Listing Agreement(s) with the Stock Exchanges as also the Management Discussions and Analysis Report forms part of the Annual Report.

Certificate from the Statutory Auditors of the Company M/s MGB ACY- Co., Chartered Accountants, Mumbai, confirming compliance with the provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement(s), is annexed to the said Corporate Governance Report.

DIRECTORS

As per the provisions of the Companies Act, 1956 read with Article 97 of the Articles of Association, Mr. Himanshu Mody, one of the first Directors, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

Brief Profile of Director proposed to be re-appointed at the ensuing Annual General Meeting has been included in the Report on the Corporate Governance forming part of the Annual Report.

AUDITORS

M/s. MGB ACY- Co., Chartered Accountants, the Statutory Auditors of the Company having firm registration No. 101169W hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their re-appointment, if made, would be in accordance with the limits prescribed under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for re-appointment within the meaning of Section 226 of the said Act..

CORPORATE SOCIAL RESPONSIBILITY

As a responsible citizen, your Company believes that a Business cannot succeed in a society that fails and therefore it is imperative for business houses, to invest in the future by taking part in CSR activities. Being engaged in the education business, CSR activity forms part of every business decision of the Company. As part of CSR activity, the Company through Zee Learn Education Society has been providing School Management Services under Public Private Partnership to the

Schools managed by Gujarat State Tribal Development Residential Educational and Institutional Society under the Eklavya Model Residential School project of Government of Gujarat. Additionally the Company regularly organizes various Education awareness events / programs for the various strata of the Society.

The 'I Care' campaign is part of a national movement led by your Company with the message, 'Let us create a safe and nurturing environment for our children, and an abuse free world for today's children.' As part of this campaign, the employees and associates of the Company tied blue ribbons on individual's wrist and communicated the message on significance of an abuse free environment and held placards reading the messages against child abuse and distributed leaflets on preventive measures against child abuse.

PUBLIC DEPOSITS

During the year under review, your Company has neither accepted nor renewed any deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

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

Your Company is engaged in the business of delivering learning solutions and training to entire spectrum of the society from toddler to teens through its multiple products. Since these activities do not involve any manufacturing activity, most of the information required to be provided under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is not applicable.

However the information as applicable are given hereunder:

I. Energy Conservation

Your Company being a service provider, requires minimal energy consumption and every endeavor has been made to ensure optimal use of energy and avoid wastages and conserve energy as far as possible.

II. Technology Absorption:

In its endeavor to deliver the best to its users and business partners, your Company has been constantly active in harnessing and tapping and best technology in the industry.

III. Foreign Exchange Earning and Outgo:

During the year under review, Foreign Exchange Earnings were Nil and the particulars of Foreign Exchange outgo is given in Note Number 35 of the Notes to Accounts forming part of the Annual Accounts.

PARTICULARS OF EMPLOYEES

No Employee, other than Mr. Sumeet Mehta, Whole-time Director of the Company draw remuneration in excess of limits prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended. Requisite details of remuneration paid to Mr. Sumeet Mehta (from April 1, 2011 to March 31, 2012), pursuant to the said provisions, is as detailed herein:

Name, Designation ACY- Age Sumeet Mehta, Whole-time Director, 36

Total Remuneration Rs.1,07,64,065

Qualification MBA (IIM, Ahmedabad)

Total Experience ACY- Date of Joining 13 Years, September 1, 2010

Previous Employment Zee Entertainment Enterprises Ltd.

Total remuneration includes Salary, Bonus, Incentive, Allowances, Leave Travel Assistance, Medical Benefits, Gratuity, Company's contribution to Provident Fund and other perquisites and benefits valued as per the Income Tax Act, 1961.

DISCLOSURE PURSUANT TO CLAUSE 5A OF THE LISTING AGREEMENT

As per Clause 5A of the Listing Agreement inserted as per SEBI notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009, the details in respect of the shares, which were issued pursuant to the Composite Scheme of Amalgamation and Arrangement and lying in the suspense account till March 31, 2012 is as under:

Description Number of Number of hareholders Equity Shares

Aggregate number of shareholders and the outstanding shares in the suspense 231 44645 account post allotment and issuance on October 14, 2010.

Number of shareholders who approached the - - Company for transfer of shares from suspense account till March 31, 2012.

Number of shareholders to whom shares were - - transferred from the Suspense account till March 31, 2012.

Aggregate number of shareholders and the outstanding shares in the suspense account lying as on March 31, 2012. 231 44645

The voting rights on the shares outstanding in the suspense account as on March 31, 2012 shall remain frozen till the rightful owner of such shares claims the shares. In compliance with the said requirements, these shares will be transferred into one folio in the name of 'Unclaimed Suspense Account' in due course.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, and based on representations received from the operating management, the Directors hereby confirm that: -

a) in the preparation of the Annual Accounts for the year ended March 31, 2012, the applicable Accounting Standards have been followed and there are no material departures ADs-

b) they have selected such accounting policies in consultation with the statutory auditors and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended March 31, 2012 and the loss of the Company for that period ADs-

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

d) they have prepared the Annual Accounts on a going concern basis.

ACKNOWLEDGEMENTS

Your Board takes this opportunity to place on record their appreciation for the dedication and commitment of employees shown at all levels, Franchisees and Business Partners that have contributed to the success of your Company. Your Directors also express their gratitude for the valuable support and co-operation received from the Central and State Governments including Ministry of Human Resource Development and other stakeholders including Bankers, Financial Institutions, Investors, Service Providers as well as regulatory and government authorities.

For and on behalf of the Board

Place : Mumbai Sumeet Mehta Himanshu Mody

Date : May 16, 2012 Whole-time Director Chairman

 
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