Mar 31, 2018
The Directors have pleasure in presenting the 12th Annual Report of the Company, together with the Audited Financial Statements for the financial year ended March 31, 2018 prepared as per Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act, 2013 (Act).
FINANCIAL HIGHLIGHTS
The financial performance of your Company for the year ended March 31, 2018 is summarised below:
Rs. in million
Particulars |
Standalone |
Consolidated |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Revenue from operations |
8,378.08 |
7,736.79 |
14,104.01 |
11,949.16 |
Other Income |
107.8 |
162.79 |
159.73 |
258.85 |
Total Income |
8,485.88 |
7,899.58 |
14,263.74 |
12,208.01 |
Total Expenses |
7,391.24 |
6,989.23 |
11,018.54 |
9,921.07 |
EBIDTA |
1,094.64 |
910.35 |
3,245.20 |
2,286.95 |
Less: Finance costs |
1,273.46 |
1,210.12 |
1,395.49 |
1,274.47 |
Less : Depreciation |
1,830.15 |
1,345.24 |
3,261.70 |
2,411.82 |
Profit/(Loss) before share of profit/(loss) of associates and joint ventures, exceptional item and tax |
(2,008.97) |
(1,645.01) |
(1,411.99) |
(1,399.35) |
Share of profit/(loss) of associates and joint ventures |
0 |
0 |
(5.8) |
2.04 |
Profit /(Loss) before exceptional item and tax |
(2,008.97) |
(1,645.01) |
(1,417.79) |
(1,397.31) |
Exceptional items |
46.8 |
202.36 |
163.41 |
202.36 |
Profit/(Loss) before tax & exceptional items |
(2,055.77) |
(1,847.37) |
(1,581.20) |
(1,599.67) |
Provision for taxation (net) |
0 |
2.58 |
117.77 |
192.64 |
Profit/(Loss) after tax & exceptional items |
(2,055.77) |
(1,849.95) |
(1,698.97) |
(1,792.31) |
Remeasurement of defined benefit liability |
1.73 |
(1.31) |
3.91 |
2.25 |
Total comprehensive profit/(loss) for the period |
(2,054.04) |
(1,851.26) |
(1,695.06) |
(1,790.06) |
There have been no material changes and commitments that have occurred after close of the financial year till the date of this report, which affect the financial position of the Company. Based on the internal financial control framework and compliance systems established in the Company, the work performed by Statutory, Internal, Secretarial Auditors and reviews performed by the Management and/or Audit Committee of the Board, your Board is of the opinion that the Company''s internal financial controls were adequate and working effectively during financial year 2017-18.
BUSINESS OVERVIEW
Your Company started the year on a very strong note, adding 1.6 million digital cable customers in Q1 itself and made its intent clear on how aggressively it was going to approach the final round of digitisation. We ended up adding 2.5 million customers to the SITI family and maintained our preponderance as India''s Leading MSO. The other focus area was to improve monetisation levels and we managed that to a great extent, improving our realisation in phase 3 & 4 areas by 14% and 72%, respectively. This cumulated in a strong subscription revenue of Rs.7,997 million with a growth of 41% YoY. In Broadband, we ended up with 2.5 lakh customers and 16.8 lakh home passes as we grew in a more selective manner during the course of the year.
Simultaneously, your Company scrutinised various cost lines and instilled a frugal culture in the organisation coupled with a "war on waste" The Company rightsized a significant portion of the workforce and created joint teams for video and broadband, bringing in synergies and cost efficiencies. This allowed us to be leaner and respond in a more flexible manner to the changing industry and macro environment. We value our human resources immensely and initiated several inhouse training programs to keep them conversant with current trends and industry developments. In addition, we focused on seven core values that make us extraordinary together and comprise of the DNA of various Essel group entities. Our shared values allowed us to consistently execute in a disciplined manner and take the right calls in ambiguous situations. It is also expected to drive a competitive culture that gets the best out of our employees and delivers steady profitable growth.
Several office locations and IP points were consolidated to reduce general and administrative spends. The biggest difference, however, was made in content cost moderation as we took a strong stand against abnormal increases in the same in the best interests of our end consumers as well as business associates.
The combination of strong revenue growth coupled with moderation in expenses led to our operating EBITDA expanding 2.6x to Rs.151 crores and operating margins doubling to 12% YoY. This was accompanied by a singular focus on collection efficiencies, in fact, your Company exited the year with an overall collection efficiency of 95% in Q4FY18.
Our finance expenses grew in part due to the stress in the banking sector because of which some of our LOUs had to be converted to term loans. Depreciation and amortisation expense also saw an increase due to robust seeding of STBs in FY18.
On the regulatory front, in a significant victory for customers, the tariff order was notified by TRAI. With this, the broadcasters need to declare their a la carte channel rates and pay TV/ Free-to-air channels within 60 days; b) Distributors need to declare network fees and retail prices within 180 days; c) Signing of interconnect agreements between broadcasters and distributors will happen within 150 days; and d) Migration of end customers to this new system will happen within 180 days. In summary, the tariff order is due for implementation latest by the January 3, 2019.
As an organisation, we are well prepared to implement it within the specified time frames and in fact, have already done beta testing on our systems and processes. We have upgraded our subscriber management system, servers and call center to respond effectively to the significantly higher volumes expected. We have started sensitizing and educating our business associates, distributors and end consumers on how things are going to change and the immense potential of this new regulation to alter things for the better, provide more bespoke choice and realign the value chain towards the bottom of the pyramid.
We continue to work with the Industry Regulator, TRAI and the Ministry of Information and Broadcasting to ensure a holistic and balanced growth of the sector in the best interests of the end consumer.
This year, your Company will further grow its Video subscriber base in a selective manner as we look to extend our leadership in certain key markets. This will be accompanied by a significant uptick of our current HD subscriber base, in line with our strategy to move the end consumer up the value chain. We will also be focusing on improving our monetisation levels further and upsell better value packs to our valuable customers.
In Broadband, your Company is looking to deepen its penetration levels in its existing markets to better utilize existing capital expenditure incurred. Going forward, we are also looking to arrive at an ideal business model that will allow us to grow profitably and sustainably in this segment, especially considering the disruptive pricing environment prevalent in mobile internet currently and the entry on new entities in wired broadband.
Content deals with most major broadcasters have been tied up to ensure permanence of content. Cost rationalisation initiatives will continue this year as well with focus on general, administrative, human resources and bandwidth costs as we look at each region on a standalone basis. We are looking at driving more synergies across our existing setup and better utilize our inherent systemic operational leverage.
Capital expenditure is expected to continue as we expand further and ensure that we grow our business in scale. We expect to fund this primarily through internal accruals with minimal increases in debt levels.
Your Company is committed to further improve at the operating EBITDA level and by the end of this year, business would have matured into a steady state annuity model that will provide strong recurrent cash flows. We are committed to appreciate shareholder''s wealth and we will ensure that the growth story continues this year as well.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act, 2013, in relation to Annual Financial Statements for the financial year 2017-18, your Directors hereby confirm that:
i. the Financial Statements of the Company comprising of the Balance Sheet as at March 31, 2018 and the Statement of Profit & Loss for the year ended on that date, have been prepared on a going concern basis;
ii. in preparation of these Financial Statements, the applicable accounting standards have been followed and there are no material departures;
iii. 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, 2018 and of the profit/loss of the Company for the year ended on that date;
iv. 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;
v. requisite internal financial controls were laid down and that such financial controls are adequate and operating effectively; and
vi. proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Your Board currently comprises of five (5) Directors including four (4) Independent Directors and one (1) Executive Director. Independent Directors provide declarations both at the time of appointment and annually confirming that they meet the criteria of Independence as prescribed under the Act and SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). During the financial year 2017-18 your Board met eight (8) times details of which are available in the Corporate Governance Report annexed to this report.
During the year under review, your Board had, based on recommendations of Nomination & Remuneration Committee, appointed Mr. Sidharth Balakrishna as an Additional Director in the category of Whole-Time Director for a period of three (3) years with effect from July 14, 2017 and the same was approved by the Shareholders in 11th Annual General Meeting of the Company held on September 26, 2017.
At the 9th Annual General Meeting held on August 27, 2015, Ms.Kavita Kapahi was appointed as Independent Director to hold office up to March 31, 2018. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its meeting held on January 24, 2018 appointed Ms. Kavita Kapahi as Additional Director with effect from April 1, 2018 and decided to place the proposal for re-appointment of Ms. Kavita Kapahi as an Independent Director for second term of 3 years commencing April 1, 2018 till March 31, 2021, for approval of the members at the ensuing Annual General Meeting.
The Board of Directors of the Company had, based on recommendations of Nomination & Remuneration Committee, approved appointment of Prof. Sunil Kumar Maheshwari as Additional Director in the category of Independent Director with effect from November 3, 2017. In terms of Section 161 of the Companies Act, 2013, Prof. Sunil Kumar Maheshwari shall hold office up to the date of the ensuing Annual General Meeting of the Company.
The Company has received separate notices under Section 160 from members signifying their intention to propose appointment/re-appointment of Ms. Kavita Kapahi and Prof. Sunil Kumar Maheshwari as mentioned in the preceding paragraphs. Accordingly, necessary resolutions are being placed for approval of the members at the 12th Annual General Meeting of the Company.
Further, Mr. Sanjay Berry, who had resigned from the office of Chief Financial Officer effective from the close of business on April 28, 2017, has been appointed as Chief Financial Officer of the Company with effect from September 1, 2017.
During the year under review, Mr. V. D. Wadhwa had resigned from the Office of Executive Director and Chief Executive Officer of the Company with effect from June 5, 2017. Mr. Sureshkumar Agarwal and Mr. Sandeep Khurana have resigned from the Office of Director of the Company with effect from October 26, 2017 and November 3, 2017, respectively. Mr. Rajesh Sethi has been redesignated as Chief Business Transformation Officer with effect from July 14, 2017.
In compliance with the requirements of Section 203 of the Companies Act, 2013, Mr. Sidharth Balakrishna, Whole-Time Director, Mr. Sanjay Berry, Chief Financial Officer and Mr. Suresh Kumar, Company Secretary of the Company are Key Managerial Personnel of the Company.
Pursuant to the provisions under Section 134(3)(d) of the Companies Act, 2013, with respect to statement on declaration given by Independent Directors under Section 149(6) of the Act, the Board hereby confirms that all the Independent Directors of the Company have given a declaration and have confirmed that they meet the criteria of independence as provided in Section 149(6) read with Regulation 16 of Securities and Exchange Board of Indian (Listing Obligations and Disclosures Requirements) Regulations 2015 (SEBI Listing Regulations).
BOARD COMMITTEES
In compliance with the requirements of Companies Act, 2013 and SEBI Listing Regulations, your Board had constituted various Board Committees including Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. Details of the constitution of these Committees, which are in accordance with regulatory requirements, have been uploaded on the website of the Company viz. www.sitinetworks.com.
Details of scope, constitution, terms of reference, number of meetings held during the year under review along with attendance of Committee Members therein form part of the Corporate Governance Report annexed to this report.
BOARD EVALUATION
In a separate meeting of Independent Directors, performance of Non-Independent Directors and performance of the Board as a whole was evaluated and also assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The details of the evaluation process are set out in the Corporate Governance Report which forms part of this report.
AUDITORS
Statutory Auditors
Pursuant to Section 139 of the Companies Act, 2013 and the Rules made thereunder, the current Statutory Auditors of the Company, M/s Walker Chandiok & Co. LLP, Chartered Accountants, having Firm Registration No. 001076N/N500013, were appointed by the members at 9th Annual General Meeting of the Company to hold office until the conclusion of the 14th Annual General Meeting scheduled to be held in year 2020, subject to ratification at every Annual General Meeting. Pursuant to recent amendment to Section 139 of the Companies Act, 2013 effective May 7, 2018, ratification by the shareholders at every Annual General Meeting is no longer required and accordingly, the Notice of ensuing Annual General Meeting does not include the proposal for seeking shareholders'' approval for ratification of Statutory Auditors appointment. The Company has received certificate of eligibility from M/s Walker Chandiok & LLP in accordance with the provisions of the Companies Act, 2013 read with rules thereunder.
During the year the Statutory Auditors had not reported any matter under Section 143(12) of the Act, and as such no detail is required to be furnished under Section 134(3) (ca) of the Act.
Secretarial Auditors
M/s Amit Agrawal & Associates, Company Secretaries in Whole Time Practice, having Firm Registration No. I2001DE191600, were appointed as Secretarial Auditors of the Company for the financial year 2017-18 pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report submitted by them in the prescribed form MR-3 is annexed to this report as Annexure - I and forms part thereof.
The reports of Statutory Auditor and Secretarial Auditor forming part of this Annual Report do not contain any qualification, reservation or adverse remark(s).
Cost Auditor
In Compliance with the requirements of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, as amended, M/s Jitender, Navneet and Co., Cost Accountants, having Firm Registration No. 000119, was appointed to carry out Audit of the Cost Records of the Company during financial years 2017-18 & 2018-19. Requisite proposals seeking ratification of remuneration payable/paid to the Cost Auditor for financial years 2017-18 & 2018-19 by the Members as per Rule 14 of the Companies (Audit and Auditors) Rules, 2014, forms part of the Notice of ensuing Annual General Meeting.
SUBSIDIARIES
During the financial year under review, there is no change in subsidiary companies of the Company. Accordingly, your Company continues to have 25 subsidiary companies. In addition to these subsidiary companies, your Company has incorporated on May 7, 2018, a wholly owned Limited Liability Partnership namely SITI Networks India LLP.
Your Company has prepared the consolidated financial statements in accordance with Section 129(3) of the Companies Act, 2013 read with the accounting principles generally accepted in India, including the Indian Accounting Standards (''Ind AS'') as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Further, in compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operation of all the subsidiaries in Form AOC-I is annexed to this report as Annexure - II and forms part thereof.
In accordance with Section 136 of the Companies Act, 2013, the Audited Financial Statements including the Consolidated Financial Statements and related information of the Company and audited accounts of each of the subsidiaries are available on the website of the Company www.sitinetworks.com. These documents will also be available for inspection during business hours on all working days (except Saturday) at the Registered Office of the Company.
DEPOSITS
During the year under review, your Company has not accepted or invited any deposits as defined under Section 2(31) read with Chapter V of the Companies Act, 2013.
DIVIDEND
In view of the losses during the year under review, your Directors have not recommended any dividend either on Equity Shares or Preference Shares for the year under review.
EMPLOYEE STOCK OPTION SCHEME
In pursuance of Employees Stock Option Scheme of the Company (SITI ESOP 2015), your Company had granted 4,663,500 no. of options to eligible employees on September 3, 2015. During the year under review, neither any option was granted nor any grantee had exercised his vested option(s).
The applicable disclosures as stipulated under Regulation 14 of the Securities and Exchange of India (Share Based Employee Benefits) Regulations, 2014 with regard to SITI ESOP 2015 are available on website www.sitinetworks.com. The Statutory Auditors M/s Walker Chandiok & Co. LLP, Chartered Accountants have confirmed that the SITI ESOP 2015 has been implemented in accordance with SEBI Regulations and the resolution passed by the shareholders.
RECEIPT AND UTILISATION OF PREFERENTIAL ISSUE OF SECURITIES
During the year under review, the Company has utilised, in accordance with the object of the issue, the unutilised amount as on March 31, 2017 amounting to '' 4,77.16 million out of 75% consideration, amounting to '' 1,500 million received on February 27, 2017, towards 57,142,857 Warrants allotted on preferential basis to promoter entity namely Arrow Media & Broadband Private Limited.
SHARE CAPITAL
As on March 31, 2018, there is no change in Authorised Share Capital of the Company, which is Rs.1,300 million comprising of 1,290,000,000 no. of Equity Shares of Re. 1/- each and 10,000,000 no. of Preference Shares of Re. 1/- each and the Paid-Up Share Capital of the Company is Rs.872.69 million comprising 872,053,848 no. of Equity Shares of Re.1/- each and 23,436 no. of Preference Shares of Re. 1/- each and 1,227,123 forfeited Equity Shares of Re.1/- each, paid up Re.0.50/- per Equity Shares.
REGISTERED OFFICE
During the year under review, pursuant to approval granted by the Board of Directors, the Registered office of the Company has been shifted from ''4th Floor, Madhu Industrial Estate, P. B Marg, Worli, Mumbai - 400013'' to ''Unit No. 38, 1st Floor, A Wing, Madhu Industrial Estate, P. B Marg, Worli, Mumbai - 400013'' with effect from January 24, 2018.
CORPORATE GOVERNANCE & POLICIES
Your Company is in compliance with the Corporate Governance requirements mentioned under SEBI Listing Regulations and applicable provisions of the Companies Act, 2013. In terms of Schedule V of the Listing Regulations, a detailed report on Corporate Governance together with the Compliance Certificate issued by Secretarial Auditor of the Company is attached to this Annual Report. Management''s Discussion and Analysis Report as per Listing Regulations are presented as separate section forming part of the Annual Report.
In compliance with the requirements of Companies Act, 2013 and SEBI Listing Regulations, your Board has approved various Policies including Code of Conduct for Directors & Senior Management, Material Subsidiary Policy, Insider Trading Code, Document Preservation Policy, Material Event Determination and Disclosure Policy, Fair Disclosure Policy, Corporate Social Responsibility Policy, Whistle Blower and Vigil Mechanism Policy, Related Party Transaction Policy, Dividend Policy and Remuneration Policy. All these policies and codes have been uploaded on Company''s website www.sitinetworks.com. Additionally, Directors Familiarisation Programme and Terms and Conditions for appointment of Independent Directors can be viewed on Company''s website www.sitinetworks.com.
In compliance with the requirements of Section 178 of the Companies Act, 2013, the Nomination & Remuneration Committee of your Board had fixed various criteria for nominating a person on the Board which inter alia include desired size and composition of the Board, age limits, qualification / experience, areas of expertise and independence of individual. The Committee had also approved in-principle that the initial term of an Independent Director shall not exceed three (3) years.
CORPORATE SOCIAL RESPONSIBILITY
The provisions of Section 135(5) of the Companies Act, 2013, which provides for spending in every financial year at least two percent of the average net profits of the Company made during the three immediately preceding financial years, is not applicable to the Company as the Company had incurred losses during the three immediately preceding financial years.
DISCLOSURES
i. Loans, Guarantee or Investments Made by the Company:
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. 6 to the Standalone Financial Statements and are not reproduced for the sake of brevity.
ii. Related Parties Transactions: All contracts/arrangements/ transactions entered by the Company during the financial year with related parties were on arm''s length basis, in the ordinary course of business and in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations. During the financial year 2017-18, there are no materially significant Related Party Transactions by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, if any, which may have a potential conflict with the interest of the Company at large.
iii. Extract of Annual Return: The extract of annual return in MGT-9 as required under Section 92(3) of the Companies Act 2013, read with Companies (Management & Administration) Rules, 2014 is annexed to this report as Annexure -III and forms part thereof.
iv. Internal Financial Control systems and their adequacy: Your Company has approved internal financial controls and policies/ procedures for orderly and efficient conduct of the business including safeguarding of assets, prevention and detection of frauds and errors, ensuring accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically.
Your Company has adopted accounting policies which are in line with the Indian Accounting Standards (Ind-AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015. These are in accordance with Generally Accepted Accounting Principles in India.
v. Vigil Mechanisms/Whistle Blower Policy: The Company has established a vigil mechanism/framed a whistle blower policy. The policy enables the employees and other stakeholders to report to the management instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy.
vi. Sexual Harassment: The Company has zero tolerance for Sexual Harassment at work place and has adopted a Policy on prevention of Sexual Harassment in line with the provisions of Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder.
During the year under review, one (1) complaint was received by the Company and was investigated in accordance with the procedure and resolved/action taken.
vii. 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
The Company is a Multi System Operator (MSO) and is carrying on business of, inter alia, reception of signals of channels of various Broadcasters and distribution of same through cable networks. Since this does 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, are Nil / Not Applicable.
Conservation of Energy: |
||
i. |
The steps taken or impact or |
Your Company, being |
conservation of energy |
a service provider, |
|
ii. |
The steps taken by the Company |
has minimal energy |
for utilizing alternate sources of |
consumption though |
|
energy |
every endeavour is made |
|
iii. |
The capital investment on |
to ensure optimal use of |
energy conservation equipments |
energy, avoid wastages |
|
and conserve energy as |
||
far as possible. |
||
Technology Absorption: |
||
i. |
The efforts made towards |
Your Company uses |
technology absorption |
latest technology |
|
ii. |
The benefits derived like product |
and equipment for |
improvement, cost reduction, |
distribution of Cable |
|
product development or import |
TV signals. However, |
|
substitution |
since the Company |
|
iii. |
In case of imported technology |
is not engaged in |
(imported during the last |
any manufacturing |
|
three years reckoned from the |
activity, the information |
|
beginning of the financial year)- |
in connection with |
|
a. the details of technology |
technology absorption |
|
imported |
is Nil. |
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 |
Foreign Exchange Earnings and Outgo:
During the year under review, your Company had foreign exchange earnings of Rs.28.34 million and outgo of Rs.2473.64 million.
HUMAN RESOURCES
Human Resources at SITI Networks Limited (SITI) are business partners playing an integral role in achieving the organisational goals. We are enabling seamless and resourceful execution of organisation strategy, making sure to contribute in every possible manner to make SITI truly "Zindagi ka Network". At SITI, people have always been our strongest assets. We focus on selecting the right talent - who fit into our culture and bring on board the right skill and attitude in sync with our organisational vision. This year SITI imbibed in itself the seven core values that make the organisation extraordinary together, stressing onto the importance of having a string work culture. Cross pollination is ensured through engaging professionals from different verticals and industries. Campus connect ensures inclusion of fresh talent from some of the best B Schools and Engineering colleges. Learning & Development is of vital importance to the organisation for growing people through internal & external learning platforms. A strong performance management system allows for continuous feedback dialogue and a robust review mechanism. Human Resources continues to evolve & adapt best in people practices and processes to fully support business growth and ensure agility towards being a customer responsive business.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is attached as Annexure - IV which forms part of this report.
ACKNOWLEDGEMENTS
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, various Governmental Authorities including Ministry of Information and Broadcasting, Telecom and Regulatory Authority of India, Stock Exchanges, Depositories and other stakeholders including local cable operators, viewers, broadcasters, vendors. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Company''s employees at all level. The Directors look forward to their continued support.
For and on behalf of the Board
B.K. Syngal Vinod Kumar Bakshi
Independent Director Independent Director
Gurugram, May 17, 2018
Mar 31, 2017
To the Members,
The Directors have pleasure in presenting the 11th Annual Report of the Company, together with the Audited Financial Statements for the year ended March 31, 2017 prepared as per Indian Accounting Standards as prescribed under Section 133 of the Companies Act, 2013(Act).
FINANCIAL HIGHLIGHTS
The Financial Performance of your Company for the year ended March 31, 2017 is summarized below:
(Rs, millions)
Particulars |
Standalone |
Consolidated |
||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Revenue from operations |
7,736.79 |
8,558.06 |
11,949.16 |
11,460.40 |
Other Income |
162.79 |
207.81 |
258.85 |
231.16 |
Total Income |
7,899.58 |
8,765.87 |
12,208.01 |
11,691.56 |
Total Expenses |
6,989.23 |
6,966.11 |
9,921.07 |
9,000.99 |
EBIDTA |
910.35 |
1,799.76 |
2,286.95 |
2,690.57 |
Less: Finance costs |
1,210.12 |
1,375.79 |
1,274.47 |
1,399.29 |
Less : Depreciation |
1,345.24 |
943.53 |
2,411.82 |
1,654.54 |
Profit/(Loss) before share of profit/(loss) of associates and joint ventures, exceptional item and tax |
(1,645.01) |
(519.56) |
(1,399.35) |
(363.26) |
Share of profit/(loss) of associates and joint ventures |
0.00 |
0.00 |
2.04 |
(2.06) |
Profit/(Loss) before exceptional item and tax |
(1,645.01) |
(519.56) |
(1,397.31) |
(365.32) |
Exceptional item |
202.36 |
0.00 |
202.36 |
(1.58) |
Profit/(Loss) before tax & exceptional items |
(1,847.37) |
(519.56) |
(1,599.67) |
(363.74) |
Provision for Taxation (net) |
2.58 |
0.00 |
192.64 |
49.17 |
Profit/(Loss) after tax & exceptional items |
(1,849.95) |
(519.56) |
(1,792.31) |
(412.91) |
Remeasurement of defined benefit liability |
(1.31) |
0.30 |
2.25 |
0.07 |
Total comprehensive Profit/(Loss) for the period |
(1,851.26) |
(519.26) |
(1,790.06) |
(412.84) |
There have been no material changes and commitments that have occurred after close of the financial year till the date of this report, which affect the financial position of the Company. Based on the internal financial control framework and compliance systems established in the Company, the work performed by Statutory, Internal, Secretarial Auditors and reviews performed by the Management and/or Audit Committee of the Board, your Board is of the opinion that the Company''s internal financial controls were adequate and working effectively during Financial Year 2016-17.
BUSINESS OVERVIEW
Your Company began the year with a resolve to complete phase 3 & 4 areas and expand significantly in Broadband. The focus was on market expansion in certain areas and subscription revenue growth in Video and Broadband.
Your Company was reasonably effective in executing its strategy and added an industry leading 2.1 million subscriber relationships in Digital Cable in FY17 and now has more than 10 million digital customers to its credit. The Company now has a presence across 580 locations across the length and breadth of the country. In addition, the constant endeavor of streamlining our operations continued with prepaid migration done across 134 locations and ~1.2 million customers bought under its ambit as of August 2017. The Company also focused on up selling to our customers and we now have a base of 2.2 lakhs HD subscribers as of 30th June 2017. At the same time, we continued with our strategy of geographic expansion in contiguous territories and expanded our cable universe to 13.2 million .
Digitization was delayed again due to multiple petitions from various parties and extension of Phase 3 & 4 deadlines by the Central Government. This impacted the current year performance in terms of seeding and improvement of monetization levels; having said that, Phase 3 digitization is nearly over and we are looking to completely digitize our remaining analog subscriber base by the end of this fiscal year.
On the regulatory front, we have implemented GST across all our locations and we expect it to improve compliance and transparency in the industry, especially at the ground level. The subsuming of entertainment tax will ensure rationalization and make Cable more affordable as a medium of entertainment to the common man. The Tariff Order is expected to come into force later this fiscal and we expect it to offer the customer true choice, streamline the value chain and fuel growth for the Industry. SITI has aligned its systems and process to ensure seamless execution of the tariff order. This will also ensure that content cost growth is moderated for the industry and is a direct function of what is in demand with the end customer. You will be happy to know that SITI bolstered its content with multiple tie-ups and now has a portfolio of 130 local channels on a Pan India basis. This will ensure a rich and bespoke viewing experience for all customers
We are working closely with our business associates to support them to adjust to the changing regulation & technologies, offer more bespoke choices to the customer and improve ARPUs. We have signed deals with leading content providers to ensure the best of content for our subscribers.
With respect to the end consumer, the company is undertaking various initiatives such as consumer panels and other methods to precisely gauge the response on marketing initiatives, product plans, new product launch, marketing communications and collaterals to develop deeper understanding of usage, perceptual and preferences on our businesses. This will enable us to serve the customer better and fine tune our service offerings.
In broadband, your Company increased the customer base to 2,40,000 subscribers, primarily in Delhi, Greater Noida, Kolkata, Hissar, Karnal and Rohtak as of 30th June 2017. The focus was on improving customer experience and providing more value to the customer as we moved from a pure play DOCSIS network to a Hybrid network. In the near future, we plan to selectively deploy FTTH networks as well. You will be happy to know that the Company has managed to scale up steadily along with improved customer satisfaction levels. The Company is looking to expand selectively this year with multiple roll-outs.
Your Company continues to ensure compliance to the changing regulatory landscape, whether it is the matter of LCO agreements, Quality of Service Norms and others, we have always stressed on doing business in a systematic manner and ensure healthy development of the Industry. In this context, the All India Digital Cable Federation (AIDCF), of which SITI Networks is a founding member, continued to interact with the Ministry of Information & Broadcasting, TRAI and other Government authorities for redressal of the issues concerning the Industry. AIDCF is also working with other Industry bodies such as IBF, CII, FICCI, and ASSOCHAM to ensure close co-ordination and well considered policy recommendations.
Your Company continues to up skill the workforce in new processes as well as refresh the workforce by bringing in new talent from within the Group as well as other customer facing industries which is in line with our focus to make it a profitable entity. The Company sees this as significantly improving execution with the taking up of new approaches and redesigning the supply chain This would also make the organization more flexible. The Company refined its processes to allow effective decision making and execution, balancing this with adequate checks.
In financial terms, FY2016-17 was a year of tenacious execution under trying circumstances for your Company. Your Company''s consolidated revenue grew by 18% to '' 1,204 Crores; Subscription revenue grew strongly by 39% YoY, Carriage revenue grew by 17% YoY and broadband revenue grew by 100% YoY as Management continued the transition to a digital services provider and expanded presence in high growth services.
Consolidated EBITDA, including activation was at '' 2,287 million with margins at 19%. Delayin implementation of Phase 3 digitization due to litigation resulted in lower than planned seeding of boxes and monetization, wherever boxes were seeded in phase 3, whereas the costs pertaining to Phase 3 of digitization were incurred throughout the year. As a result, the operating profit declined during the current fiscal, which is likely to improve strongly as the digitization of Phase 3 is now complete. SITI has started the new fiscal on a strong note and seeded 1.6 million Boxes in Q1 FY2018, strengthening footprint across existing markets and contiguous territories.
The Company received fresh capital infusion of '' 150 Crores from Promoter Entities which strengthened the balance sheet and also restated the belief the promoters have in the performance of the company going forward. In FY18, Capital expenditure shall continue to be moderate, as we focus on expansion of Broadband and closure of digitization process in Cable. We expect operating synergies to play out this year leading to an improvement in recurring cash flows and consequently margins as well.
By the end of this year, your Company will be approaching our destination with respect to digitization and will have better presence in the broadband space. Our aim is to provide the consumer the best content in a platform neutral manner and eventually evolve into a responsive customer facing organization.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act, 2013, in relation to Annual Financial Statements for the financial year 2016-17, your Directors hereby confirm that:
i. the Financial Statements of the Company comprising of the Balance Sheet as at March 31, 2017 and the Statement of Profit & Loss for the year ended on that date, have been prepared on a going concern basis;
ii. during the financial year ended on March 31, 2017, the Company has for the first time adopted Indian Accounting Standards (Ind-AS) as per Section 133 of the Companies Act, 2013 and accordingly the Annual Financial Statements for the financial year ended on March 31, 2017 and comparative thereof for the financial year ended on March 31, 2016, have been prepared as per Ind-AS as against Indian Generally Accepted Accounting Principles (I-GAAP) followed in the earlier years and proper explanation(s) along with reconciliation have been provided in relation to material departures;
iii. 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, 2017 and of the profit/loss of the Company for the year ended on that date;
iv. 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;
v. requisite internal financial controls were laid down and that such financial controls are adequate and operating effectively; and as Board composition and structure, effectiveness of Board processes, effectiveness of flow of information, contributions from each Directors etc.
AUDITORS Statutory Auditors
Pursuant to Section 139 of the Companies Act, 2013 and the Rules made thereunder, the current Statutory Auditors of the Company, Walker Chandiok & Co. LLP, Chartered Accountants, having Firm Registration No. 001076N/ N500013, were appointed by the members at 9th Annual General Meeting of the Company to hold office until the conclusion of the 14th Annual General Meeting scheduled to be held in year 2020, subject to ratification at every Annual General Meeting.
The Members are requested to ratify the appointment of Walker Chandiok & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company and to fix their remuneration.
Secretarial Auditors
M/s Amit Agrawal & Associates, Company Secretaries in Whole Time Practice, having Firm Registration No. I2001DE191600, were appointed as Secretarial Auditors of the Company for the financial year 2016-17 pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report submitted by them in the prescribed form MR-3 is annexed to this report as Annexure - I and forms part thereof.
The reports of Statutory Auditor and Secretarial Auditor forming part of this Annual Report do not contain any qualification, reservation or adverse remark(s). During the year the Statutory Auditors had not reported any matter under Section 143(12) of the Act, and as such no detail is required to be furnished under Section 134(3) (ca) of the Act.
Cost Auditor
In Compliance with the requirements of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, as amended, M/s Jitender, Navneet and Co., Cost Accountants, having Firm
Registration No. 000119, were appointed to carry out Audit of the Cost Accounting Records of the Company during Financial Year 2016-17. Requisite proposal seeking confirmation of remuneration payable to the Cost Auditor for Financial Year 2016-17 by the Members as per Rule 14 of the Companies (Audit and Auditors) Rules, 2014, forms part of the Notice of ensuing Annual General Meeting.
SUBSIDIARIES
During the year under review, there is no change in subsidiary companies of the Company. Accordingly, your Company continues to have 25 subsidiary companies.
Your Company has prepared the Consolidated Financial Statements in accordance with the Section 129(3) of the Companies Act, 2013 read with AS21 (Consolidated Financial Statements), Accounting Standard AS23 (Accounting for Investments in Associates) and AS27 (Financial Reporting of Interests in Joint Ventures).
Further, in compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operation of all the subsidiaries in Form AOC-I is annexed to this report as Annexure - II and forms part thereof.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of each of the subsidiaries are available on the website of the Company www.sitinetworks.com. These documents will also be available for inspection during business hours at the Registered Office of the Company.
DEPOSITS
During the year under review, your Company has not accepted or invited any deposits as defined under Section 2(31) read with Chapter V of the Companies Act, 2013.
DIVIDEND
In view of the losses during the year under review, your Directors have not recommended any dividend either on Equity Shares on Preference Shares for the year under review.
EMPLOYEE STOCK OPTION SCHEME
Your Company had granted 4,663,500 no. of options to eligible persons on September 3, 2015 in terms of Employees Stock Option Scheme (SITI ESOP 2015) adopted pursuant to the approval of the members at the 9th Annual General Meeting of the Company held on August 27, 2015. During the period under review, 2,331,750 no. of options were vested with eligible persons as per SITI ESOP 2015 on September 3, 2016, out of which three (3) eligible persons have exercised 135,000 vested options.
Your Directors confirm that SITI ESOP 2015 is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.
The applicable disclosures as stipulated under Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 with regard to Employee Stock Option plan of the Company are available on website www.sitinetworks.com.
PREFERENTIAL ISSUE OF SECURITIES - RECEIPTS AND UTILISATION
Your Company had issued 142,857,142 Warrants and 51,428,571 Optionally Fully Convertible Debentures (OFCDs) {''Warrant(s)'' and ''OFCD(s)'' collectively referred to as "security(ies)"} to Promoters / Promoter entities on preferential basis on February 19, 2017, at a price of ''35/per security (including premium of Rs, 34/- per security). During the financial year 2015-16, as per the terms of the issue, on receipt of subscription money aggregating to Rs, 5,300.00 million and consequent upon conversion and cancellation of 85,714,285 Warrants and 30,800,000 OFCDs, the Company had allotted 116,514,285 Equity Shares of Rs, 1/- each at a premium of Rs, 34 per Equity Shares. During the financial year 2015-16, your Company had utilized an amount aggregating to Rs, 4,209.51 million in accordance with the objectives of the said issue. Further, during the financial year 2016-17, your Company has utilized the balance receipt of Rs, 1,090.49 million in accordance with the objectives of the said issue
During the period under review, on receipt of Rs, 1,500 million, being balance 75% of consideration @ Rs, 26.25 per Warrant in respect of 57,142,857 no. of Warrants allotted to Promoter/Promoter Group entity on preferential basis, the Company has allotted equal no. of Equity Shares as per the terms of the issue. Further during the year under review, your Company has utilized an amount of Rs, 1,022.84 million in accordance with the objectives of the said preferential issue.
In connection with the Special Resolution passed by the Shareholders at the Extra-ordinary General Meeting of the Company held on February 4, 2016, approving Preferential Issue of 142,857,143 Warrants and 51,428,571 OFCDs of the Company to Promoters/Promoter Group entities, the subscription money aggregating to Rs, 1,800.00 million received by the Company towards the OFCDs include capitalisation of Loan of Rs, 802.30 million received by the Company prior to the issuance from the OFCDs Subscriber.
SHARE CAPITAL
The paid-up Equity Share Capital of the Company as on March 31, 2016 has increased to Rs, 872.05 million comprising of 872,053,848 equity shares of Rs, 1/- each, due to allotment of:-
i. 135,000 no. of Equity Shares on February 14, 2017, to three eligible persons consequent upon exercise of options granted under SITI ESOP 2015;
ii. 77,771,428 no. of Equity Shares on February 27, 2017 to Promoter / Promoter Group entities, consequent upon conversion and cancellation of 57,142,857 no. of Warrants and 20,628,571 no. of OFCDs, allotted on preferential basis.
During the year under review, there is no change in Authorized Share Capital of the Company, which is Rs, 13,000.00 million comprising of 1,290,000,000 no. of Equity Shares of Rs, 1/- each and 10,000,000 no. of Preference Shares of Rs, 1/- each.
REGISTERED OFFICE
During the year under review, pursuant to approval granted by the Board of Directors, the Registered office of the Company has been shifted from Rs,135, Continental Building, Dr.Annie Besant Road, Worli, Mumbai - 400018'' to ''Madhu Industrial Estate, 4th Floor, P. B Marg, Worli, Mumbai - 400013'' with effect from May 25, 2016.
CHANGE OF NAME OF THE COMPANY
During the year under review, the name of the Company has changed from "Siti Cable Network Limited" to "Siti Networks Limited" pursuant to special resolution passed by the members of the Company under Section 13 of the Companies Act, 2013, which was approved by the Registrar of Companies Maharashtra, Mumbai by issuance of Certificate of Incorporation in changed name on August 5, 2016.
REGISTRAR & SHARE TRANSFER AGENT
During the year under review, the members of the Company at the 10th Annual General Meeting held on September 27, 2016, has approved a proposal for maintaining the Register and Index of Members, Register and Index of Debenture holders and other Security holders, etc. and copies of all Annual Returns prepared under Section 92 of the Act at the office of the Registrar
& Share Transfer Agent of the Company Link In time India Pvt Ltd (''RTA'') located at C-13, Pannalal Silk Mills Compound, LBS Road, Bhandup West, Mumbai 400 078 (Bhandup office), rather than at the Registered Office of the Company.
Since, RTA has shifted its Bhandup office, requisite proposal seeking members'' approval for maintaining Register & Index of members and other security holders and other Registers including Annual Return at the new office of the RTA situated at C 101, 247 Park, LBS Marg, Vikhroli (West), Mumbai 400 083, forms part of Notice of ensuing Annual General Meeting.
CORPORATE GOVERNANCE & POLICIES
Your Company is in compliance with the Corporate Governance requirements mentioned under SEBI Listing Regulations. In terms of Schedule V of the Listing Regulations, a detailed report on Corporate Governance together with the Compliance Certificate issued by Secretarial Auditor of the Company is attached to this Annual Report. Management''s Discussion and Analysis Report and Business Responsibility Report as per Listing Regulations are presented as separate section forming part of the Annual Report. The said Business Responsibility Report will also be available on the Company''s website www.sitinetworks.com as part of the Annual Report.
In compliance with the requirements of Companies Act, 2013 and SEBI Listing Regulations, your Board has approved various Policies including Code of Conduct for Directors & Senior Management, Material Subsidiary Policy, Insider Trading Code, Document Preservation Policy, Material Event Determination and Disclosure Policy, Fair Disclosure Policy, Corporate Social Responsibility Policy, Whistle Blower and Vigil Mechanism Policy, Related Party Transaction Policy and Remuneration Policy. All these policies and codes have been uploaded on Company''s website www.sitinetworks.com. Additionally, Directors Familiarization Programme and Terms and Conditions for appointment of Independent Directors can be viewed on Company''s website www.sitinetworks.com
In compliance with the requirements of Section 178 of the Companies Act, 2013, the Nomination & Remuneration Committee of your Board had fixed various criteria for nominating a person on the Board which inter alia include desired size and composition of the Board, age limits, qualification / experience, areas of expertise and independence of individual. The Committee had also approved in-principle that the initial term of an Independent Director shall not exceed three (3) years.
CORPORATE SOCIAL RESPONSIBILITY
The Company aims to remain essential to the society with its social responsibility, strongly connected with the principle of sustainability. It is responsibility of your Company to practice its corporate values through its commitment to grow in a socially and environmentally responsible way, while meeting the interest of Stakeholders.
The provisions of Section 135(5) of the Companies Act,
2013, which entails spending in every financial year at least two percent of the average net profits of the Company made during the three immediately preceding financial years, is not applicable to the Company as the Company had incurred losses during the three immediately preceding financial years.
DISCLOSURES
i. Loans, Guarantee or Investments Made by the Company: 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. 6 to the Standalone Financial Statements and are not reproduced for the sake of brevity.
ii. Related Parties Transactions: 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 as Annexure - III and forms part thereof.
iii. Extract of Annual Return: The extract of annual return in MGT -9 as required under Section 92(3) of the Act read with Companies (Management & Administration) Rules, 2014 is annexed to this report as Annexure -IV and forms part thereof.
iv. Internal Financial Control systems and their adequacy: Your Company has approved internal financial controls and policies/procedures for orderly and efficient conduct of the business including safeguarding of assets, prevention and detection of frauds and errors, ensuring accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically.
v. Vigil Mechanisms/ Whistle Blower Policy: The
Company has established a vigil mechanism/framed a whistle blower policy. The policy enables the employees and other stakeholders to report to the management instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy.
vi. Sexual Harassment: The Company has zero tolerance for Sexual Harassment at workplace and has adopted a Policy on prevention of Sexual Harassment in line with the provisions of Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under.
During the year under review, your Company has not received any complaint on sexual harassment.
vii. 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
The Company is a Multi System Operator (MSO) and is carrying on business of, inter alia, reception of signals of channels of various Broadcasters and distribution of same through cable networks. Since this does 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, are nil / not applicable.
Foreign Exchange Earnings and Outgo:
During the year under review, your Company had foreign exchange earnings of '' 26.94 million and outgo of '' 2,973.89 million.
HUMAN RESOURCES
Human Resources at SITI Networks is a business partner playing an integral role in achieving the organizational goals and enabling seamless and resourceful execution of organization strategy. At SITI Networks people have always been our strongest assets. We focus on selecting the right talent - who fit into our culture and bring on board the right skill and attitude in sync with our organizational vision. Cross pollination is ensured through engaging professionals from different verticals and industries. Campus connect ensures inclusion of fresh talent from some of the best B Schools and Engineering colleges. Training & Development is of vital importance to the organization for growing people through internal & external learning platforms. A strong performance management system allows for continuous feedback dialogue and a robust review mechanism. Our rewards & recognition programs encourage innovation & ideation giving an impetus to high performance.
Human Resources continues to evolve & adapt best in people practices and processes to fully support business growth and ensure agility towards being a customer responsive business.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is attached as Annexure - V which forms part of this report.
ACKNOWLEDGEMENTS
Your Directors place on record their sincere appreciation of the contribution made by the employees at all levels. Your Directors also express their heartfelt gratitude for valuable support and cooperation extended by various Governmental Authorities including Ministry of Information and Broadcasting, Ministry of Communication and Information Technology, Telecom and Regulatory Authority of India, Stock Exchanges, Depositories and other stakeholders including local cable operators, bankers, financial institutions, viewers, broadcasters, vendors. The Directors look forward to their continued support.
For and on behalf of the Board
Sidharth Balakrishna B. K. Syngal
Whole-Time Director Independent Director
DIN 07868948 DIN 00002395
Place : Noida
Date : July 14, 2017
Mar 31, 2016
The Financial Performance of your Company for the year ended March 31, 2016 is summarized below:
(Rs, million)
Consolidated |
||
Particulars |
2015-16 |
2014-15 |
Revenue from operations |
11,889 |
9,059 |
Other Income |
240 |
311 |
Total Income |
12,129 |
9,370 |
Total Expenses |
8,900 |
7,686 |
EBIDTA...................................................................................................................................................... Less: Finance costs Less : Depreciation Profit/(loss) before tax, Exceptional Items and Prior period Prior period . Profit/(loss) before tax & Exceptional Items Provision for Taxation (Net) |
3,229 |
1,684 |
1,378 |
1,209 |
|
1,632 |
1,328 |
|
219 |
(853) |
|
21 |
- |
|
198 |
(853) |
|
131 |
167 |
|
Profit/(loss) after tax & Exceptional Items |
67 |
(1,020) |
Amount transferred to General Reserve |
5,120 |
1,151 |
There have been no material changes and commitments that have occurred after close of the financial year till the date of this report, which affect the financial position of the Company.
Based on the internal financial control framework and compliance systems established in the Company, the work performed by Statutory, Internal, Secretarial Auditors and reviews performed by the management and/or relevant Audit and other Committees of the Board, your Board is of the opinion that the Company''s internal financial controls were adequate and working effectively during financial year 2015-16.
BUSINESS OVERVIEW
Your Company started the journey this year with a resolve to comprehensively digitize Phase 3 areas and expand strategically in select states, with the intent to utilize market leadership to drive price leadership, since we have always been focused on subscription driven revenue growth.
Your Company was successful to a large extent in executing its plans and added 2.7 mn subscriber relationships in Digital Cable in FY16 and now has 8.3 million digital customers. The pursuit of consolidation in an opportunistic and value accretive manner led to increased presence in select new markets and the expansion of the cable universe to 12.2 million as we finished the year. Your Company is confident of deriving considerable synergies and economies of scale from these acquisitions and expects the industry to further consolidate as it matures. The Company intends to digitize the remaining Phase 3 & contiguous Phase 4 areas, increase the HD subscriber base and provide more Value Added Services such as OTT and others.
In the broadband space, your Company intensified focus and increased the base to 1,67,000 subscribers in Delhi & Kolkata as of 30th June 2016. The focus was on stabilizing and consolidating the service offering as we moved from a pure play DOCSIS network to a Hybrid GPON enabled network which will ensure better customer service levels and ease of maintenance. You will be happy to know that the Company has managed to ensure a more robust service with improved customer satisfaction levels and steady network metrics. The Company is looking to expand significantly in Broadband this year with a roll-out in multiple states
Your Company continued to maintain focus on adherence to the changing regulatory landscape, since we have always stressed on doing business in an ethical manner and play a proactive role in the development of the Industry. In this context, the All India Digital Cable Federation (AIDCF), led by the CEO of your Company continued to interact with the Ministry of Information & Broadcasting, TRAI and other Government authorities for redressal of the issues concerning the Industry. In addition, AIDCF continues to closely work with other Industry bodies such as IBF, CII, FICCI, ASSOCHAM to ensure close co-ordination and more nuanced recommendations
The pace of digitization was hobbled due to multiple petitions from various parties. It is a concern area which is likely to impact the current year performance; however, we do not see it impacting the long term business prospects of the industry. We welcome the passage of the GST Constitution Amendment Bill which will ensure rationalization of taxes and make Cable more affordable to the public considering it is the most popular medium of entertainment for the common man. Your Company is working closely with the sector regulator on a variety of issues such as Interconnect Agreements, Content Pricing Models and others to ensure that the regulation developed is bespoke to the Indian environment and enhances the value chain to benefit the end consumer
Your Company continued to maintain Industry leading subscription revenue growth and expect operational synergies to be apparent this fiscal once monetization levels improve. We worked closely with our business associates to enable them to adjust to the changing regulations & technologies, offer better service to the customer and improve ARPUs. We signed Pan India Fixed Fee deals with leading content providers to ensure the best of content for our subscribers and get long term cost visibility plus ability to deploy rapidly.
Your Company continues to deskill/ retrain the workforce in new technologies and processes as well as refresh the workforce by bringing in new talent from customer facing industries in line with our renewed focus on the end consumer. The Company sees this as significantly improving its execution capabilities and making the organization more proactive and nimble. At the same time, the Company refined its systems and processes to allow quick decision making and execution, balancing this with adequate checks and balances.
In financial terms, FY2015-16 was a year of focused execution for your Company, as a result of which, there was a profitable turnaround of the Company for the first time in its history with Profit after Tax of Rs, 90 million and Profit before Tax at Rs, 221 million. Your Company''s consolidated revenue grew by 30% to Rs, 1,213 million from Rs, 9,370 million in 2015. Operating Revenue, excluding activation grew at 14% YoY to reach Rs, 9,995 million. Subscription revenue grew by 6% YoY, Carriage revenue grew by 3% YoY and broadband revenue grew by 83% YoY as Management continues the transition to a "dual play" organization and expands presence in high growth services.
EBITDA grew 92% to Rs, 3,230 million compared to Rs, 1,684 million last year. Operating EBITDA, excluding activation was at Rs, 1,095 million, due to delays in monetization of Phase 3.
The Company received fresh capital infusion of Rs, 530 crore from Promoter Entities which significantly strengthened the balance sheet and also goes to show the belief that they have in the future potential of the Company.
In FY17, Capital expenditure shall continue to be moderate to high, as we focus on steady expansion of Broadband and multi-city rollout and closure of digitization process in Cable. We expect operating synergies to play out this year leading to an improvement in recurring cash flows
By the end of this year, your Company will be closer to our destination in the journey of digitization and have better scale in the wire line broadband space. Our aim is to provide the consumer the best of the content in a platform neutral manner and ultimately evolve into a more customer responsive organization
CHANGE OF NAME OF THE COMPANY
Pursuant to Special Resolution passed by the Members of the Company on July 27, 2016 under Section 13 and other applicable provisions, if any, of the Companies Act, 2013, through Postal Ballot process, the Registrar of Companies, Maharashtra, Mumbai, has changed the name of the Company from "Siti Cable Network Limited" to "Siti Networks Limited" vide Certificate of Incorporation pursuant to change of name dated August 5, 2016.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act, 2013 and based on representations received from the operating management, the Directors hereby confirm that :-
i. in the preparation of the Annual Accounts, the applicable Accounting Standards has been followed and no material departures have been made from the same;
ii. they had selected such accounting policies 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 as at March 31, 2016 and of the loss of the Company for the financial year ended on that date;
iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they had prepared the Annual Accounts on a going concern basis;
v. they had laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and
vi. they had devised proper systems to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Your Board currently comprises of 6 Directors including 4 Independent Directors, 1 Non-Executive Director and an Executive Director.
In terms of Section 149 and 152 of the Companies Act, 2013 and SEBI Listing Regulations, the appointment of women Director Ms.Kavita Kapahi, in the category of Independent Director was confirmed in the 9th Annual General Meeting of the Company held on August 27, 2015. Ms. Kapahi holds office, not subject to retire by rotation, for a term of three (3) years w.e.f. March 31, 2015.
During the period under review, Dr. Subhash Chandra and Mr. Subodh Kumar resigned as Director of the Company w.e.f. April 4, 2015 and October 27, 2015 respectively.
Based on recommendations by the Nomination and Remuneration Committee, your Board had approved appointment of Mr.Sandeep Khurana as an Additional Director of the Company in the category of Non- Executive Non-Independent Director with effect from December 30, 2015. In terms of Section 161 of the Companies Act 2013, Mr. Sandeep Khurana shall hold office up to the date of the ensuing Annual General Meeting. Your Company has received a notice in writing along with requisite deposit pursuant to Section 160 of Companies Act,
2013, proposing appointment of Mr. Sandeep Khurana as Director of the Company and your Board recommends appointment of Mr. Sandeep Khurana as a Director of the Company, liable to retire by rotation.
Pursuant to the Members approval at the 8th Annual General Meeting of the Company held on August 12, 2014, Mr. B.K. Syngal, Mr. Vinod Kumar Bakshi and Mr. Sureshkumar Agarwal, were appointed as Independent Directors of the Company for a period of 3 years till March 31, 2017. Special Resolutions seeking Members'' approval for re-appointing them as Independent Director(s) for the second term of 3 years from expiry of their current terms form part of the Notice of the ensuing Annual General Meeting. Your Company has received notice(s) in writing along with requisite deposit pursuant to Section 160 of Companies Act, 2013, proposing their appointment for the second term and based on performance evaluation and contributions made by Mr. B. K. Syngal, Mr. Vinod Kumar Bakshi and Mr. Sureshkumar Agarwal, as Independent Directors of the Company, your Board recommends their appointment for the second term of 3 years upon expiry of their current term.
A brief resume of the Directors proposed to be reappointed, the nature of their expertise in specific functional areas, names of companies in which they have held directorships, committee memberships/ chairmanships, their shareholding etc., are furnished in the Corporate Governance Report.
In compliance with the requirements of Section 203 of the Companies Act, 2013, Mr.V.D.Wadhwa, Executive Director & CEO, Mr.Anil Jain, Head - Finance & Accounts and Mr. Suresh Kumar, Company Secretary of the Company continue as Key Managerial Personnel. Mr. Sanjay Goyal resigned as the Chief Finance Officer of the Company w.e.f June 8, 2015.
Pursuant to the provisions under Section 134(3)(d) of the Companies Act, 2013, with respect to statement on declaration given by Independent Directors under Section 149(6) of the Act, the Board hereby confirms that all the Independent Directors of the Company have given a declaration and have confirmed that they meet the criteria of independence as provided in the said Section 149(6) read with Regulation 16 of SEBI Listing Regulations.
BOARD AND COMMITTEE MEETINGS
The Board met six times during the financial year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report.
In compliance with the requirements of Companies Act, 2013 and Listing Agreements/ SEBI Listing Regulations, your Board had constituted various Board Committees including Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. Details of the constitution of these Committees, which are in accordance with regulatory requirements, have been uploaded on the website of the Company viz. www.sitinetworks.com.
Details of scope, constitution, terms of reference, number of meetings held during the year under review along with attendance of Committee Members therein form part of the Corporate Governance Report annexed to this report.
BOARD EVALUATION
In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole 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 Auditors
Pursuant to Section 139 of the Companies Act, 2013 and the Rules made there under, the current Statutory Auditors of the Company, Walker Chandiok & Co. LLP, Chartered Accountants, having Firm Registration No. 001076N/ N500013, were appointed by the Members at 9th Annual General Meeting of the Company to hold office until the conclusion of the Annual General Meeting to be held in year 2020, subject to ratification at every Annual General Meeting.
The Members are requested to ratify the appointment of Walker Chandiok & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company and to fix their remuneration.
Secretarial Auditors
M/s Amit Agrawal & Associates, Company Secretaries in Whole Time Practice, having Firm Registration No. I2001DE191600, were appointed as Secretarial Auditors of the Company for the financial year 2015-16 pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report submitted by them in the prescribed form MR- 3 is annexed to this report as Annexure - I and forms part of the same.
The reports of Statutory Auditor and Secretarial Auditor forming part of this Annual Report do not contain any qualification, reservation or adverse remarks. During the year the Statutory Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
SUBSIDIARIES
During the period under review, the Company has acquired 51% stake in Siti Prime Uttaranchal Communication Private Limited, Siti Sagar Digital Cable Network Private Limited (formerly known as ''Panchsheel Digital Communication Network Pvt. Ltd.''), Siti Saistar Digital Media Private Limited (formerly known as ''Saistar Digital Media Private Limited''), Siti Godaari Digital Services Pvt. Ltd. (formerly known as ''Bargachh Digital Communication Network Private Limited'') and 100% stake in Variety Entertainment Private Limited. Indian Cable Net Company Limited, subsidiary company of the Company has also acquired stake in two companies i.e. 100% stake in Indi net Service Private Limited and 50% stake in Axom Communications & Cable Private Limited, accordingly these companies also become step down subsidiary companies of the Company.
Accordingly, as on March 31, 2016, your Company had 25 no. of subsidiary companies as compared to 18 as on March 31, 2015.
Your Company has prepared the Consolidated Financial Statements in accordance with the Section 129(3) of the Companies Act, 2013 read with AS 21 (Consolidated Financial Statements), Accounting Standard AS 23 (Accounting for Investments in Associates) and AS 27 (Financial Reporting of Interests in Joint Ventures).
Further, in compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operation of all the subsidiaries in Form AOC-I is annexed to this report as Annexure - II and forms part of the same.
In accordance with Section 136 of the Companies Act,
2013, the audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of each of the subsidiaries are available on the website of the Company www.sitinetworks.com. These documents will also be available for inspection during business hours at the Registered Office of the Company.
DEPOSITS
During the year under review, your Company has not accepted or invited any deposits under Chapter V of the Companies Act, 2013.
DIVIDEND
In view of the losses during the year under review, your Directors have not recommended any dividend either on Equity Shares or Preference Shares for the year under review.
EMPLOYEE STOCK OPTION SCHEME
Pursuant to the approval of the Members at the 9th Annual General Meeting held on August 27, 2015, the Company adopted the "SITI ESOP 2015" Earlier ESOP Scheme
2007 ceases to be effective. During the year under review, 46,63,500 options were granted to eligible employees of the Company in terms of ''SITI ESOP 2015''. Further, it is confirmed that the ESOP Scheme of the Company is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.
The applicable disclosures as stipulated under Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 with regard to Employee Stock Option plan of the Company are available on website www.sitinetworks.com.
RIGHTS ISSUE OF SHARES - RECEIPTS AND UTILISATION
Against the offer of 2,36,767,351 Equity Shares of Rs, 1/- each issued at a price of Rs, 19/- per share (including premium of Rs, 18/- per share) aggregating to Rs, 4,498.58 million during the financial year 2009-10 on rights issue basis, your Company had received a sum of Rs, 4,488.27 million. During the year under review, the remaining unutilized portion of Rs, 75.87 million out of said proceeds of rights issue money had completely been utilized in accordance with the objectives of the issue.
During the financial year 2014-15 your Company had allotted 63,174,540 Equity Share of Rs, 1/- each issued at a price of Rs, 35/- per share (including premium of Rs,34/per share) aggregating to Rs, 2,211.11 million to Qualified Institutional Buyers under Chapter VIII of the SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009. During the year under review, the remaining unutilized portion of Rs, 2,194.01, out of the total proceeds of Rs, 2,211.11 million, had completely been utilized in accordance with the objectives of the issue.
Against the allotment of 1,42,857,142 Warrants and 51,428,571 Optionally Fully Convertible Debentures (OFCDs) {''Warrant(s)'' and ''OFCD(s)'' collectively referred to as "security(ies)"} to Promoters / Promoter entities on preferential basis, at a price of Rs, 35/- per security (including premium of Rs, 34/- per security), your Company had received a sum of Rs, 5,300.00 million. During the year under review, out of the total proceeds of Rs, 5,300.00 million, your Company has utilized an amount of Rs, 4,209.51 million in accordance with the objectives of the said issue.
SHARE CAPITAL
During the period under review, the authorized share capital of the Company has been increased from Rs, 1,000 million to Rs, 1,300 million, by creation of additional 300,000,000 (Three Hundred Million) Equity Shares of Rs, 1/- each vide resolution passed by the Members of the Company in their Extra-Ordinary General Meeting held on February 4, 2016.
The paid-up Equity Share Capital of the Company as on March 31, 2016 has increased to Rs, 794.14 million comprising of 794,147,420 equity shares of Rs, 1/- each, due to allotted of: 85,714,285 no. of Equity Shares on February 19, 2016 to Direct Media & Cable Private Limited, Promoter / Promoter Group entity upon conversion of equal number of Warrants allotted on preferential basis; and
30,800,000 no. of Equity Shares on March 28, 2016 to Digital Satellite Media & Broadband Private Limited, Promoter / Promoter Group entity upon conversion of equal number of Optionally Fully Convertible Debentures (OFCDs) allotted on preferential basis.
WARRANTS AND OFCDS
Your Company had allotted on February 19, 2016:142,857,142 no. of Warrants, convertible into equivalent number of Equity Shares of Rs, 1 each of the Company, to the Promoters / Promoters Group entities on preferential basis, at an issue price of Rs, 35/- (including premium of Rs, 34/-) per Warrant. Out of these Warrants, 85,714,285 no. of fully paid Warrants had been cancelled and converted into equal no. of Equity Shares of Rs, 1/- each; and 51,428,571 no. of Optionally Fully Convertible Debentures (OFCDs), convertible into equivalent number of Equity Shares of Rs, 1 each of the Company, to the Promoter/Promoter Group entity on preferential basis, at an issue price of Rs, 35/- (including premium of Rs, 34/-) per OFCD. Out of these OFCDs, 30,800,000 no. of fully paid OFCDs had been cancelled and converted into equal no. of Equity Shares of Rs,1/- each.
REGISTERED OFFICE
Due to some construction work at registered office of the Company causing the hindrance and disturbance to the general working of the Company, the Board of Directors of the Company had shifted the Registered office of the Company from "135, Continental Building, Dr. Annie Besant Road, Worli, Mumbai - 400018" to "Madhu Industrial Estate, 4th Floor, P. B Marg, Worli, Mumbai - 400013" with effect from May 25, 2016.
REGISTRAR & SHARE TRANSFER AGENT
During the first quarter of Calendar Year 2016, there were certain allegations of fraud and malpractices in the conduct and operations of Sharepro Services (India) Pvt Ltd (Rs,Sharepro''), who has been the Registrar and Share Transfer (R&T) Agent of the Company and upon preliminary investigations, SEBI had issued an order dated March 22, 2016 inter alia restraining Sharepro from involving in market related activities. The Assurance Audit of records and systems of Sharepro done at the behest of your Company by M/s MKB Associates, Company Secretaries did not reveal any irregularity or violations with respect to transfer / transmission in connection with Equity Shares of the Company, during the audit period from January 2007 - March 2016.
Subsequently, in pursuance of the advisory issued by SEBI vide Order dated March 22, 2016 and considering that key employees were leaving Sharepro which could affect R&T services at Sharepro in future, your Company has appointed M/s Link In time India Private Limited as the R&T Agent in place of Sharepro, with effect from July 1, 2016.
CORPORATE GOVERNANCE & POLICIES
Your Company has been constantly reassessing and benchmarking itself with well-established Corporate Governance practices besides strictly complying with the requirements of SEBI Listing Regulations and applicable provisions of Companies Act, 2013.
In terms of Schedule V of the Listing Regulations, a detailed report on Corporate Governance together with the Compliance Certificate issued by Secretarial Auditor of the Company is attached to this Annual Report. Management''s Discussion and Analysis Report and Business Responsibility Report as per Listing Regulations are presented as separate section forming part of the Annual Report. The said Business Responsibility Report will also be available on the Company website www.sitinetworks.com as part of the Annual Report.
In compliance with the requirements of Companies Act, 2013 and SEBI Listing Regulations, your Board has approved various Policies including Code of Conduct for Directors & Senior Management, Material Subsidiary Policy, Insider Trading Code, Document Preservation Policy, Material Event Determination and Disclosure Policy, Fair Disclosure Policy, Corporate Social Responsibility Policy, Whistle Blower and Vigil Mechanism Policy, Related Party Transaction Policy and Remuneration Policy. All these policies and codes have been uploaded on Company''s corporate website www.sitinetworks.com. Additionally, Directors Familiarization Programme and Terms and Conditions for appointment of Independent Directors can be viewed on Company''s website www.sitinetworks.com
In compliance with the requirements of Section 178 of the Companies Act, 2013, the Nomination & remuneration Committee of your Board had fixed various criteria for nominating a person on the Board which inter alia include desired size and composition of the Board, age limits, qualification / experience, areas of expertise and independence of individual. The Committee had also approved in-principle that the initial term of an Independent Director shall not exceed 3 years. Your Company has also adopted a Remuneration Policy, salient features whereof is annexed to this report as Annexure - IV and forms part of the same.
CORPORATE SOCIAL RESPONSIBILITY
The Company aims to remain essential to the society with its social responsibility, strongly connected with the principle of sustainability. It is responsibility of your Company to practice its corporate values through its commitment to grow in a socially and environmentally responsible way, while meeting the interest of Stakeholders.
Even though Section 135 of the Companies Act, 2013 is not applicable to the Company as it does not fall under any of the eligibility criteria prescribed therein, the Company has formulated the Corporate Social Responsibility Committee.
DISCLOSURES
i. Loans, Guarantee or Investments Made by the Company: 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. 14 to the Standalone Financial Statements.
ii. Related Parties Transactions: 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 as Annexure - III and forms part of the same.
iii. Extract of Annual Return: The extract of annual return in MGT -9 as required under Section 92(3) of the Act read with Companies (Management & Administration) Rules, 2014 is annexed to this report as Annexure - V and forms part of the same.
iv. Internal Financial Control systems and their adequacy: Your Company has approved internal financial controls and policies/procedures to be adopted by the Company for orderly and efficient conduct of the business including safeguarding of assets, prevention and detection of frauds and errors, ensuring accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically.
The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.
v. Risk Management: The Company is well aware of these risks and challenges and has put in place mechanisms to ensure that they are managed and mitigated with adequate timely actions. The Audit Committee of the Board of Directors is responsible for reviewing the risk management plan and ensures its effectiveness. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuous basis.
The details in respect of Risk Management are included in the Management Discussion & Analysis, which forms part of this report.
vi. Vigil Mechanisms/ Whistle Blower Policy: The
Company has established a vigil mechanism/framed a whistle blower policy. The policy enables the employees and other stakeholders to report to the management instances of unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. This policy is reviewed annually by the Audit Committee to check the effectiveness of the policy.
vii. Sexual Harassment: The Company has zero tolerance for Sexual Harassment at workplace and has adopted a Policy on prevention of Sexual Harassment in line with the provisions of Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under.
During the year under review, your Company has not received any complaint on sexual harassment.
viii. 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
The Company is a Multi System Operator (MSO) and is carrying on business of, inter alia, reception of signals of channels of various Broadcasters and distribution of same through cable networks. Since this does 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, are nil / not applicable.
However the information as applicable is given hereunder:-
Conservation of Energy: |
||
1 |
The steps taken or impact or conservation of energy |
Your Company, being a service provider, |
2 |
The steps taken by the company for utilising alternate sources of energy |
and every endeavour is made to ensure |
3 |
The capital investment on energy conservation equipments |
""optimal use of energy, avoid wastages and conserve energy as far as possible. |
Technology Absorption: |
||
1 |
The efforts made towards technology absorption |
Your Company uses latest technology |
2 |
The benefits derived like product improvement, cost reduction, product development or import substitution |
and equipment''s for distribution of Cable TV signals. However since the Company |
3 |
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 |
âis not engaged in any manufacturing, the information in connection with .....technology absorption is Nil. |
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 |
4. The expenditure incurred on Research and Development
Foreign Exchange Earnings and Outgo:
The details of Foreign Exchange Earnings and Outgo are mentioned in Note Nos. 39, 40 & 41 of the Notes forming part of the Standalone Financial Statements of the Company.
HUMAN RESOURCES
Your Company strongly believes that human capital will play an integral and important role in the efficient execution that SITI Networks is known for. Accordingly, we ensure that our employees are carefully nurtured, trained and empowered to take decisions. Talent has been recruited from various customer facing Industries, in line with our strategy of becoming a more customer responsive business. This ensure a pervasiveness of new ideas, approaches and energy which helps the organization respond to change nimbly and execute dynamically
The Company actively encourages outperformance and provides clear career paths to employees so that they can play an active role in the evolution of the Organization and become partners in the business. We strive for the emotional and professional connect that propels employees to take responsibility and leadership.
We clearly recognize that human resources will continue to play a differentiating role as the Industry evolves.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is attached as Annexure - VI which forms part of this report.
ACKNOWLEDGEMENT
Your Directors'' place on record their appreciation of the contribution made by the employees at all levels. Your Directors also express their gratitude for valuable support and cooperation extended by various Governmental Authorities mainly Ministry of Information and Broadcasting, Ministry of Communication and Information Technology, Telecom and Regulatory Authority of India and other stakeholders including local cable operators, bankers, financial institutions, viewers, broadcasters, vendors and other service providers, and also look forward to their continued support in future.
For and on behalf of the Board
B. K. Syngal V D Wadhwa
Independent Director Executive Director and CEO
DIN 00002395 DIN 00439684
Place : Noida
Date : August 26, 2016
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the 9th Annual Report on the
business and operations of the Company, together with the audited
financial statements for the year ended March 31,2015.
FINANCIAL HIGHLIGHTS
The Financial Performance of your Company for the year ended March
31,2015 is summarized below:
(RS. million)
Consolidated
Particulars 2014-15 2013-14
Sales 9,059 6,972
Other Income 311 131
Total Income 9,370 7,103
Total Expenses 7,686 5,844
EBIDTA 1,684 1,259
Less: Finance costs 1,209 1,191
Less : Depreciation 1,328 838
Profit / (loss) before tax & -852 -770
Exceptional Items
Provision for Taxation (Net) 167 64
Profit / (loss) after tax & -1,019 -834
Exceptional Items
Less : Exceptional Items 0 0
Minority Interest 72 107
Profit / (loss) after tax -1,091 -941
Amount transferred to General 1,151 -1,583
Reserve
There have been no material changes and commitments that have occurred
after close of the financial year till the date of this report, which
affect the financial position of the Company.
BUSINESS OVERVIEW
The year started with the promise of digitization in Phase 3 areas and
we were fully geared up to ensure that SITI Cable was well placed to
gain significant market share in the process. Although, the
digitization drive got slowed down due to the extension in the Phase 3
digitization deadline by the Government of India, we were able to
successfully seed 1.23 million STBs proactively in Phase-3 areas and
expand our reach from 60 cities to 130 cities across India.Overall Siti
Cable managed to close the year with over 5 Million digital subscribers
and expand our cable universe to 10.5 Million. We will continue to
digitize the remaining analogue subscriber base and also expand in
select strategic geographies to consolidate our presence.
The company made new forays into the broadband space and currently is
offering broadband at speeds upto 100 Mbps on state of the art DOCSIS
2/3 Technology in Delhi/ NCR. Your Company has chalked out plans to
expand broadband operations on all India basis and identified new
markets for expansion in the next twelve months to increase its current
subscriber base significantly.
You will be happy to know that SITI Cable continued to work closely
with the Sector Regulator and maintain a high-focus on adherence to
regulatory compliances, in order to minimize regulatory risk and
provide the end customer a quality service experience. The company has
also been at the forefront of bringing together leading MSOs for policy
advocacy and establishing the All India Digital Cable Federation
(AIDCF), which is the recognized industry body for the sector.
The industry continues to face an excessive tax burden in the form of
both service tax and entertainment tax incidence, which is unhealthy
considering it is the most popular and accessible medium of
entertainment for the common man. There is a need to bring down the
tax burden in line with other industries such as multiplexes and make
cable a more affordable medium Siti Cable continues to monetize the
business better and harness the inherent operational leverage that the
business possesses. We worked with our LCO business associates to train
and equip them with regards to the rapidly changing digital environment
and serve the customer more effectively. We built durable relationships
with leading content providers to ensure our subscribers get the best
of content and value added services.
SITI Cable, as part of the Essel Group is working in consonance with
other group companies to ensure economies of scale and derive synergies
in various aspects of the value chain such as STB procurement, content
cost and shared services.
We felt the need to bring in fresh talent from customer facing
industries in line with our renewed focus on the end consumer and
transition to a B2C business and have inducted the same at Senior
Management and Middle management levels for our foray into broadband
business on all India basis and also to drive execution capabilities.
At the same time, processes and systems were further refined and
streamlined to ensure the organization remains agile as it scales up.
In terms of overall perspective, FY2014-15 was a year of unique
differentiation for your Company. Your Company's consolidated revenue
grew by 32% to INR 9370 million from INR 7103 million in 2014. Core
Revenue, excluding other income and activation grew even faster at 37%
YoY to reach INR 8435 million.
The EBITDA also grew 34% to INR 1684 million compared to INR 1259
million last years. EBITDA, excluding other income and activation grew
by a significant 132% YoY to reach INR 749 million, testimony to the
inherent execution capabilities of your company. As an impact of
successful digitization in phase I and II as well as proactive seeding
in Phase 3, Subscription revenue grew by 57% over last fiscal. Carriage
revenue grew by 9.6% YoY and broadband revenue grew by 53% YoY due to
conscious decision by Management to use multiple growth levers and
diversify revenue streams. Capital expenditure shall continue to be
high this year as we strive for market expansion and establish our
digital footprint to transform our business to a sustainable perpetual
annuity with tremendous operating leverage which will generate a steady
cash flow.
We continue to pursue expansion of our digital cable and broadband
business in the current year, so that we are able to provide the
consumer the best of the content in a platform neutral manner. Our
eventual aim is to become a triple play service provider.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act, 2013 and based on
representations received from the operating management, the Directors
hereby confirm that :-
i. in the preparation of the annual accounts, the applicable standards
have been followed and there are no material departure;
ii. the Directors have selected such accounting policies 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 as at March 31, 2015 and of the loss of the Company for
the financial year ended on that date;
iii. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. the Directors had prepared the annual accounts on a going concern
basis;
v. the Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively; and
vi. the Directors had devised proper systems to ensure compliances
with the provisions of all applicable laws and that such systems were
adequate and operating effectively.
DIRECTORS & KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152(6) of the Companies
Act, 2013, Mr. Subodh Kumar, IAS (Retd.), is liable to retire by
rotation at the ensuing Annual General Meeting of the Company and being
eligible, offer himself for re-appointment. The Board recommends their
reappointment.
Mr. V.D.Wadhwa who has been holding the position of CEO of the Company
since April 29, 2013, was appointed as the Executive Director of the
Company for a period 3 years w.e.f. August 12, 2014, on the terms and
conditions as approved by the shareholders by passing special
resolution through postal ballot on October 14, 2014.
Pursuant to Section 149(1) of the Companies Act, 2013 the Board of
Directors of the Company had on March 31, 2015 appointed a Women
Director Ms. Kavita Kapahi as Additional Director in the category of
Independent Director. Ms. Kavita Kapahi shall hold office upto the date
of the ensuing AGM of the Company and, being eligible, offer herself
for re-appointment. The Company has also received a notice in writing
from a member proposing her candidature for the office of Director
along with a deposit of Rupees one lakh.
During the period under review, Dr. Subhash Chandra resigned as
Director of the Company w.e.f. April 4, 2015.
Further Brief Profile of Directors proposed to be appointed /
re-appointed are given in the Reports on the Corporate Governance
forming part of the Annual Report.
In compliance with the requirements of Section 203 of the Companies
Act, 2013, Mr. V.D.Wadhwa, Executive Director & CEO, Mr. Sanjay Goyal,
Chief Financial Officer and Mr. Suresh Kumar, Company Secretary of the
Company were nominated as Key Managerial Personnel.
Pursuant to the provisions under Section 134(3)(d) of the Companies
Act, 2013, with respect to statement on declaration given by
Independent Directors under Section 149(6) of the Act, the Board hereby
confirms that all the Independent Directors of the Company have given a
declaration and have confirmed that they meet the criteria of
independence as provided in the said Section 149(6).
BOARD AND COMMITTEE MEETINGS
The Board met five times during the financial year, the details of
which are given in the corporate governance report that forms part of
the Annual Report.
The Board has constituted an Audit Committee with Mr. B.K. Syngal as
the Chairman and Mr. Vinod Kumar Bakshi & Mr. Sureshkumar Agarwal as
the members of the Audit Committee.
Details of the composition of the Board and its Committees and of the
Meetings held and attendance of the Directors at such Meetings, are
provided in the Corporate Governance Report. The intervening gap
between any two meetings was within the period prescribed by the
Companies Act, 2013 and the Listing Agreement.
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 Auditors
M/s. Walker Chandiok & Co. LLP, Chartered Accountants, having Firm
Registration No. 001076N / N500013, Statutory Auditors of the Company,
will retire at the conclusion of the ensuing AGM and being eligible
have consented and offered themselves for re-appointment as Statutory
Auditors for the financial year 2015-16. Pursuant to Section 141 of the
Companies Act, 2013 and relevant Rules prescribed there under, the
Company has received certificate dated May 27, 2015 from the Auditors
to the effect, inter-alia, that their re-appointment, if made, would be
within the limits laid down by the Act, shall be as per the term
provided under the Act, that they are not disqualified for such
re-appointment under the provisions of applicable laws and also that
there is no proceeding against them or any of their partners pending
with respect to professional matter of conduct.
The Notes on Financial Statements referred to in the Auditors' Report
are self-explanatory and do not call for any further comments.
Secretarial Auditors
M/s Amit Agrawal & Associates, Company Secretaries in Whole Time
Practice, were appointed as Secretarial Auditors of the Company for the
financial year 2014-15 pursuant to Section 204 of the Companies Act,
2013. The Secretarial Audit Report submitted by them in the prescribed
form MR- 3 is annexed to this report as Annexure - I and forms part of
the same.
There are no qualifications or observations or other remarks of the
Secretarial Auditors in the Report issued by them for the financial
year 2014-15 which call for any explanation from the Board of
Directors.
SUBSIDIARIES
During the period under review, the Company has subscribed on rights
basis 45,000,000 equity shares of Indian Cable Net Company Limited,
which is one of the subsidiary company of the Company.
During the period under review, the Company has acquired 51% stake in
Siti Global Private Limited, Siti Karnal Digital Media Network Private
Limited, Siri Digital Network Private Limited and 100% stake in Siti
Broadband Services Private Limited. Accordingly, the total No. of
subsidiary companies of the Company has increased to 18 as compared to
14 during the financial year 2013-14.
Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting
Standard- 21 issued by the Institute of Chartered Accountants of India,
Consolidated Financial Statements presented by the Company include the
Financial Statements of its Subsidiaries. Further, a separate statement
containing the salient features of the financial statements of
subsidiaries of the Company in the prescribed form AOC-1 has been
disclosed herewith as Annexure - II in the Consolidated Financial
Statements.
LOANS, GUARANTEE OR INVESTMENTS MADE BY THE COMPANY
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. 44 to the Standalone Financial Statements.
RELATED PARTIES TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act, 2013,
particular of contracts or arrangements with related parties referred
to in sub-section (1) of section 188 in the prescribed Form No.AOC.2 is
annexed herewith as Annexure - III.
Further, your attention is drawn to the Related Party disclosures set
out in Note No. 34 of the Notes forming part of the Standalone
Financial Statements.
MATERIAL CHANGES
There are no material changes and commitments, affecting the financial
position of the Company which has occurred between the end of the
financial year of the Company to which the financial statements relate
and the date of the report other than those disclosed in the financial
statements.
DEPOSITS
During the year under review, your Company has not accepted or invited
any deposits under Chapter V of the Companies Act, 2013.
DIVIDEND
In view of losses during the year, your Directors have not recommended
any dividend either on Equity Shares or Preference Shares for the year
under review.
EMPLOYEE STOCK OPTION SCHEME
During the period under review, your Company has not granted any Stock
Options. Further, 245,680 options were exercised by the employees.
Accordingly, during the period under review, the Company has allotted
245,680 equity shares to eligible employees on such exercise. These
shares have been listed on the BSE Limited and National Stock Exchange
of India Limited.
Details of options granted till March 31, 2015 and other disclosures as
required under Clause 12 ("Disclosure in the Directors' Report") of the
SEBI (Employees Stock Option Scheme) Guidelines, 1999, as amended, are
given in Annexure - IV to this Report.
RIGHTS ISSUE OF SHARES - RECEIPTS AND UTILISATION
Against the allotment of 236,767,351 equity shares of RS. 1/- each
issued at a price of RS. 19/- per share (including premium of RS. 18/-
per share) aggregating to RS. 4498.50 million during the financial
year 2009-10 on rights issue basis, your Company had received a sum of
RS. 4488.27 million. The utilization of proceeds of the money received
through rights issue by the Company as on March 31,2015 are as under:-
(RS. million)
Right issue utilization
Object of the Issue
of the Total Receipt
Repayment of certain of our existing 2733.38 2733.38
unsecured loans
Funding our working capital requirements 275.97 265.90
Acquisition of MSOs and LCOs 186.70 141.80
Information technology infrastructure and ERP 0.30 0.30
General corporate purposes 1252.20 1231.27
Issue expenses 39.72 39.72
Total 4488.27 4412.37
Remaining unutilised
Object of the Issue
as on 31.03.2015
Repayment of certain of our existing 0.00
unsecured loans
Funding our working capital requirements 10.07
Acquisition of MSOs and LCOs 44.90
Information technology infrastructure and ERP 0.00
General corporate purposes 20.93
Issue expenses 0.00
Total 75.90
SHARE CAPITAL
During the period under review, the authorised share capital of the
Company has been increased from RS. 750 million to RS. 1000 million,
by creation of additional 250,000,000 (Two Hundred Fifty Million)
Equity Shares of RS. 1/- each vide resolution passed on October 14,
2014 through postal ballot.
The paid-up equity share capital of the Company as on March 31, 2015
was RS. 677.63 million comprising of 677,633,135 equity shares of RS.
1/- each. During the period under review, the Company has allotted:
* 93,500,000 equity shares on April 2, 2014 on preferential basis to
two foreign promoter entities upon conversion of equal number of
Warrants;
* 63,174,540 equity shares on March 9, 2015 on QIP (Qualified
Institutional Placement) basis; and
* 77,840 equity shares on February 4, 2015 and 167,840 equity shares on
March 26, 2015 against the options exercised by employees pursuant to
Employees Stock Option Scheme of the Company.
Accordingly, during the review, the paid up equity share capital of the
Company has been increased by Rs. 156.92 millions i.e. from RS. 520.71
million as on March 31,2014 to RS. 677.63 million as on March 31, 2015.
CORPORATE GOVERNANCE & POLICIES
Your Company has been constantly reassessing and benchmarking itself
with well-established Corporate Governance practices besides strictly
complying with the requirements of Clause 49 of the Listing Agreement
and applicable provisions of Companies Act, 2013.
A detailed report on Corporate Governance together with the Certificate
of Amit Agrawal & Associates, Practicing Company Secretaries, on
compliance is attached to this Annual Report. Management's Discussion
and Analysis Report for the year under review, as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges is
presented in separate section forming part of the Annual Report.
The Audit Committee of the Board has been vested with powers and
functions relating to Risk Management which inter alia includes (a)
review of risk management policies and business processes to ensure
that the business processes adopted and transactions entered into by
the Company are designed to identify and mitigate potential risk; (b)
laying down procedures relating to Risk assessment and minimization; and
(c) formulation, implementation and monitoring of the risk management
plan.
In compliance with the requirements of Section 178 of the Companies
Act, 2013, the Nomination & remuneration Committee of your Board had
fixed various criteria for nominating a person on the Board which inter
alia include desired size and composition of the Board, age limits,
qualification / experience, areas of expertise and independence of
individual. The Committee had also approved in-principle that the
initial term of an Independent Director shall not exceed 3 years. Your
Company has also adopted a Remuneration Policy, salient features
whereof is annexed to this report as Annexure - V.
Your Board has in accordance with the requirements of Companies Act,
2013 and Clause 49 of the Listing Agreement has adopted new policies
and amended existing policies such as policy on Related Party
Transaction, Code of Conduct for Directors and Senior Management,
Corporate Social Responsibility Policy and Whistle Blower and Vigil
Mechanism Policy. These policies are available on the website of the
Company and can be viewed on www.siticable.com
CORPORATE SOCIAL RESPONSIBILITY
The Company aims to remain essential to the society with its social
responsibility, strongly connected with the principle of
sustainability. It is responsibility of your Company to practice its
corporate values through its commitment to grow in a socially and
environmentally responsible way, while meeting the interest of
Stakeholders.
Even though Section 135 of the Companies Act, 2013 is not applicable to
the Company as it does not fall under any of the eligibility criteria
prescribed therein, the Company has formulated the Corporate Social
Responsibility Committee.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock
Exchanges, the attached Consolidated Financial Statements have been
prepared in accordance with the 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 and forms part of the Annual
Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT & CORPORATE GOVERNANCE
In terms of requirement of Clause 49 of the Listing Agreement with the
Stock Exchange(s) a separate section on Management Discussion and
Analysis Report- disclosing the operations, performance and outlook of
the business in which the Company operates forms an integral part of
this report.
Your Company is committed to maintain the highest standards of
Corporate Governance. Your Company observes high standards of corporate
governance in all areas of its functioning with strong emphasis on
transparency, integrity and accountability. Your Company has complied
with all the requirements as per Clause 49 of the listing agreement of
the Stock Exchanges, as amended from time to time. The Auditor's
certificate on compliance with Clause 49 is included in the section on
Corporate Governance in this Annual Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in Form
MGT -9 is annexed herewith as Annexure - VI.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is
attached as Annexure - VII which forms part of this report.
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said rules is attached as
Annexure - VII which forms part of this report.
INTERNAL FINANCIAL CONTROL
The Company has a well placed, proper and adequate internal control
system, which ensures that all assets are safeguarded and protected and
that the transactions are authorized, recorded and reported correctly.
As per Section 138 of the Companies Act, 2013 on the recommendation of
the Audit Committee, the Board of Directors has appointed M/s. Rajneesh
Gupta & Co., Chartered Accountants as the Internal Auditor of the
Company. The Internal Auditors independently evaluate the adequacy of
internal controls and concurrently audit the majority of the
transactions in value terms. Independence of the audit and compliance
is ensured by direct reporting of Internal Auditors to the Audit
Committee of the Board. During the year, the Company continued to
implement their suggestions and recommendations to improve the control
environment. Internal Auditors findings are discussed at quarterly
basis and suitable corrective actions taken as per the directions of
Audit Committee on an ongoing basis to improve efficiency in
operations.
Based on internal financial control framework and compliance systems
established in the Company, the work performed by statutory, internal
and secretarial auditors and reviews performed by the management and/or
relevant Audit and other Committees of the Board, your Board is of the
opinion that the Company's internal financial controls were adequate
and effective during the financial year 2014-15
VIGIL MECHANISMS/ WHISTLE BLOWER POLICY
The Company has established a vigil mechanism/framed a whistle blower
policy. The policy enables the employees and other stakeholders to
report to the management instances of unethical behaviour, actual or
suspected fraud or violation of the Company's code of conduct or ethics
policy.
This policy is reviewed annually by the Audit Committee to check the
effectiveness of the policy.
POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT
WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and
has adopted a policy on prevention, prohibition and redressal of sexual
harassment at the workplace. The Policy aims to provide protection to
employees at the workplace and prevent and redress complaints of sexual
harassment and for matters connected or incidental thereto, with the
objective of providing a safe working environment, where employees feel
secure. The Company has also constituted an Internal Complaints
Committee, known as the Prevention of Sexual Harassment (POSH)
Committee, to inquire into complaints of sexual harassment and
recommend appropriate action.
The Company has not received any complaint of sexual harassment during
the financial year 2014-15.
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
The Company is a Multi System Operator (MSO) and is carrying on
business of, inter alia, reception of signals of channels of various
Broadcasters and distribution of same through cable networks. Since
this does 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, are
nil / not applicable.
However the information as applicable is given hereunder:-
Conservation of Energy
1 The steps taken or impact or conservation Your Company,being a
of energy. service provider,
requires minimal energy
consumption and every
2 The steps taken by the company for endeavour is made to
utilizing alternate sources of ensure optimal use
energy of energy,avoid wastage
and conserve energy as
3 The capital investment on energy far as possible.
conservation equipments.
Technology Absorption
1 The efforts made towards technology Your Company uses
absorption. latest technology and
equipment's for
2 The benefits derived like product distribution of Cable
improvement, cost reduction, TV Signals. However
product development or import since the Company is
substitution. not engaged in any
manufacturing, the
3 In case of imported technology information in connect
(imported during the last three ion with technology
years reckoned from the beginning absorption is Nil.
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;
4. The expenditure incurred on Research
and Development.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of Foreign Exchange Earnings and Outgo are mentioned in
Note Nos. 40 to 41 of the Notes forming part of the Standalone
Financial Statements of the Company.
HUMAN RESOURCES
Your Company gives its human resources a special status and strongly
believes that quality of its employees can be improved by consistently
investing in them. The Company develops its human resources through
education, training and enhanced benefits that ultimately leads to a
quality service delivery. The Company has one of the most adept
management team that is strategically transforming its cable business
to broadband business.
Attracting, developing and retaining talent has been found to be a
fundamental solution for implementation of business plans. The Company
is extensively focusing on change management that can absorb new
businesses, ideas and people. Talent is being sought from across
industries with focus on on-boarding people with broadband experience.
Your Company embraces the notion of good human capital bringing in
competitive advantages and development of human resources becomes part
of its overall effort to achieve cost effective and firm performance.
ACKNOWLEDGEMENT
Your Directors' place on record their appreciation of the contribution
made by the employees at all levels. Your Directors also express their
gratitude for valuable support and cooperation extended by various
Governmental Authorities mainly Ministry of Information and
Broadcasting, Ministry of Communication and Information Technology,
Telecom and Regulatory Authority of India and other stakeholders
including local cable operators, bankers, financial institutions,
viewers, broadcasters, vendors and other service providers, and also
look forward to their continued support in future.
For and on behalf of the Board
Vinod Kumar Bakshi V.D.Wadhwa
Director Executive Director & CEO
Place : Delhi
Dated : May 28, 2015
Mar 31, 2013
To, The Members of SITI Cable Network Limited
The Directors take pleasure in presenting the Seventh Annual Report of
the Company together with Audited Statement of Accounts for the year
ended March 31, 2013.
FINANCIAL PERFORMANCE
The financial performance of consolidated operations of your Company
during the Financial Year 2012-13 is summarized in the following table:
(Rs. millions)
Particulars For The Year Ended
March 31,2013 March 31,2012
Sales & Services 4,696.4 3,428.2
Other Income 140.3 214.4
Total Income 4,836.7 3,642.6
Total Expenses 3,967.0 3,450.6
Operating Profit / (Loss) 869.7 192.0
Less: Finance Cost 863.7 566.4
Less: Depreciation 563.1 304.1
Profit/ (Loss) before Tax &
Exceptional Item (557.1) (678.5)
Provision for Taxation (Net) 46.3 29.9
Profit (Loss) after Tax before
Exceptional Item (603.4) (708.4)
Less: Exceptional Item 5.3 240.3
Minority Interest 3.0 (35.2)
Profit/(Loss) after Tax (640.7) (913.5)
BUSINESS OVERVIEW
Your Company is one of India''s largest Multi System Operator (MSO) with
56 analogue and 14 digital head ends and a network of more than 12000
Kms of optical fibre and coaxial cable. It provides its cable services
in India''s 60 key cities and the adjoining areas, having reach of over
10 millions viewers.
Your Company deploys State-of-the-art technology for delivering
multiple TV signals to enhance consumer viewing experience. Its product
range includes Digital Cable Television, Analogue Cable Television,
Broadband and Local Television Channels. Your Company has been
providing services in digital and analogue mode, armed with technical
capability to provide features like Broadband services, Video on
Demand, Movie on Demand, Pay per View, Electronic programming Guide
(EPG) and gaming through a Set Top Box (STB). All products are marketed
under "SITI" brand name.
During the year, your Company has successfully implemented the
digitization of TV signals in its 20 key markets which falls under
Phase-1 & 2 cities of mandated Digital Addressable System (DAS) besides
expanding Digital horizon in Cities falling in DAS phase 3 & 4. For
this transition, the Company has carried out Technology up gradation
and procurement of Set-top boxes (STB''s). Your Company also aligned the
interests of local cable operators, content aggregators, broadcaster
and consumer in a transparent manner while complying with stipulated
regulations which gave a big push to the digitization drive of the
Company.
Your Company expanded its business and ground presence by starting
operations in newer areas and it undertook strategic cost reduction
initiatives to enhance efficiencies and optimize resources.
From almost every perspective FY2012-13 was an impressive year for your
Company:
- The total revenues grew by 33% to Rs. 4,836.6 millions from Rs. 3,642.6
millions during the last fiscal.
- The Company posted a consolidated operating profit (EBITDA) of Rs.
869.6 millions, which was a significant achievement as compared to
operational profit of Rs. 192.0 millions during the last fiscal.
- The Company expands its business operations in new Strategic towns in
Central India Locations and Eastern part of the country.
- The Company has seamlessly installed 3 million Set-top-Boxes (STBs)
in its markets in Phase-I and Phase II.
- Your Company is the first and only company in the digital cable space
to provide "Own Your Customer (OYC)" web based subscriber management
system application to its business partners to serve the subscriber
better.
- Initiated Subscriber Wise billing in Digital Regime in adherence to
Regulatory compliances and built consumer connect.
Media & Entertainment Industry
According to FICCI-KPMG Indian Media & Entertainment Industry Report,
2012 was a challenging year for the industry as a whole, it was also a
year of significant changes; as value chains were re-arranged and
business models re-defined. These changes, while painful in the short
run, but will position the Indian M&E industry on a stronger footing
for the future.
The Indian M&E industry grew from INR 728 billion in 2011 to INR 821
billion in 2012, registering an overall growth of 12.6 percent. Given
the impetus introduced by digitization, continued growth of regional
media, upcoming elections, strength in the film sector and fast
increasing new media businesses, the industry is estimated to achieve a
growth rate of 11.8 percent in 2013 to touch INR 917 billion. The
sector is projected to grow at a healthy CAGR of 15.2 percent to reach
INR 1661 billion by 2017.
Television continues to be the dominant segment in the M&E sector;
however strong growth is visible in new media, animation, Films and
Music segment on the back of strong content and the benefits of
digitization. The benefits of digital addressable system (DAS) rollout
are expected to contribute significantly to strong continued growth in
the TV sector revenues and its ability to invest in and monetize
content. The sector is expected to grow at a CAGR of 18 percent.
Cable TV Industry
The total number of TV households grew from 146 millions in 2011 to 154
millions by the end of 2012, showing an increase of 5.4 percent. The
penetration of Cable & Satellite IC&S) households increased from 81
percent of total TV households in 2011 to 84 percent in 2012. The
overall number of C&S households increased by 11 millions during 2012
to reach 130 millions, registering a growth of 9 percent over last
year.
The year 2012 heralded the much awaited start to digitization of cable
industry. Despite some hiccups, Phase 1 and 2 cities saw significant
progress in implementation of mandatory digital addressable system
(DAS). Digitalization under phase-1 of DAS has been a success with
industry attaining 100% digitization in Delhi & Mumbai, followed with
some delay by Kolkata. Digital Cable TV has been a clear winner
garnering more than 70% share of digital Set-top-boxes in these cities.
At the end of March 2013, over 67% of the digitization target has been
achieved in Phase-2 cities of DAS as reviewed by MIB.
The Cable TV Industry now hopes to realize benefits over the medium
term - including enhanced ability to monetize content, greater
transparency, equitable revenue share across the value chain and hence
increased ability to invest in differentiated and sophisticated
content. The benefits will be visible in 2013-14 as MSO drive the
addressability and work with last mile local cable operator to ramp up
chosen content, billing and collection.
DIVIDEND
In view of losses during the year, your Directors have not recommended
any dividend either on Equity Shares or Preference Shares for the year
under review.
RIGHTS ISSUE OF SHARES - RECEIPTS AND UTILISATION
During the financial year 2009-10, your Company had come with Rights
Issue of 23,67,67,351 equity shares of Rs. 1/- each issued at a price of
Rs. 19/- per share (including premium of Rs. 18/- per share) aggregating to
X 4,498.5 millions. Your Company had received a sum of Rs. 4,488.27
millions towards the rights issue of equity shares. The utilization of
proceeds of the money received through rights issue by the Company as
on March 31, 2013 are as under:
(Rs. millions)
Object of Issue Right
Issue-
Utilization Remaining
Unutilized
of Total
Receipt as on
31.03.2013
Repayment of certain of
our existing unsecured loans 2733.38 2733.38 0.00
Funding our working
capital requirements 275.97 265.90 10.07
Acquisition of MSOs and LCOs 186.70 141.80 44.90
Information technology
infrastructure and ERP 0.30 0.30 0.00
General corporate purposes 1252.20 1231.27 20.93
Issue expenses 39.72 39.72 0.00
Total 4488.27 4412.37 75.90
EMPLOYEES STOCK OPTION SCHEME
Pursuant to approval from Members obtained at the First Annual General
Meeting of the Company held on September 18, 2007, your Company has
implemented Employee Stock Option Plan - ESOP-2007 to grant stock
options to its eligible employees. Applicable disclosures pursuant to
Clause 12 - "Disclosure in the Directors'' Report", of the SEBI
(Employees Stock Option Scheme) Guidelines, 1999, as amended, relating
to Employees Stock Options as at March 31, 2013, are given in Annexure
A to this Report.
A Certificate from the Statutory Auditors of the Company M/s. Walker
Chandiok & Co, Chartered Accountants, New Delhi, with respect to the
implementation of Company''s ESOP Scheme, will be placed before the
shareholders in the next 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 Saturday and Sunday) between 2.00
p.m. to. 5.00 p.m., up to the date of Annual General Meeting.
DIRECTORS
As per the provisions of the Companies Act, 1956 read with Article 97
of the Articles of Association, Mr.Subhash Chandra, Director is liable
to retires by rotation and being eligible, offers himself for
re-appointment at the ensuing Annual General Meeting.
Mr.Subodh Kumar was appointed as Additional Director with effect from
May 30,2013. Pursuant to the provisions of Section 260 of the Companies
Act, 1956, Mr.Subodh Kumar holds office only up to the date of the
ensuing Annual General Meeting of the Company. The Company has received
appropriate notice under Section 257 of the Companies Act, 1956 along
with requisite deposits, proposing the candidature of Mr.Subodh Kumar
for the office of Director, liable to retire by rotation.
Mr.V.D.Wadhwa has been appointed as Additional Director and Executive
Director of the Company with effect from June 1, 2013. Pursuant to the
provisions of Section 260 of the Companies Act, 1956, Mr.V.D.Wadhwa
holds office of Director only up to the date of the ensuing Annual
General Meeting of the Company. The Company has received appropriate
notices under Section 257 of the Companies Act, 1956 along with
requisite deposits, proposing the candidature of Mr.V.D.Wadhwa for the
office of Director.
Mr. Amit Goenka, Whole Time Director of the Company has given his
resignation from the office of Director of the Company effective from
close of May 31, 2013.
Brief Profile of Directors proposed to be appointed/re-appointed has
been included in the Reports on the Corporate Governance forming part
of the Annual Report.
CHANGE OF NAME OF THE COMPANY
The name of your Company has been changed from "Wire & Wireless (India)
Limited" to "Siti Cable Network Limited" vide fresh Certificate of
Incorporation dated September 5, 2012 issued by the Registrar of
Companies, Maharashtra, Mumbai.
CONVERTIBLE WARRANTS
During the year under review, the Company had issued 16,20,00,000
(Sixteen Crores Twenty Lacs) Warrants convertible into equivalent
number of Equity Shares of Rs. 1 each of the Company to the entities
forming part of Promoters / Promoter Group of Company viz. M/s. Essel
International Limited and Essel Media Ventures Limited, at a price of Rs.
20/- (Rupees Twenty
Only) per warrant, [being the price higher than the price determined in
accordance with the SEBI (ICDR) Regulations, 2009, aggregating to Rs.
324,00,00,000/- (Rupees Three Hundred and Twenty Four Crores only).
The company has so far received an amount equivalent to 25% of the
issue price i.e. Rs. 5/- (Rupees five only) per Warrant aggregating to Rs.
81,00,00,000/- (Rupees Eighty One Crore) form the allottees of the
Warrants. The holders of each Warrant will be entitled to apply for and
obtain allotment of one equity share of Rs. 1 each of the Company against
each Warrant at anytime on or before the expiry of 18 months from the
date of allotment thereof, in one or more tranches, upon payment of
balance subscription amount of Rs. 15 per warrant. In the event the
entitlement against the Warrants to apply for the Equity shares is not
exercised within the aforesaid period of 18 months from the date of
allotment thereof, the entitlement of the Warrant holders and/or the
transferees to apply for Equity Shares of the Company along with the
rights attached thereto shall expire and the upfront 25% amount paid on
the Warrants shall stand forfeited.
REDEMPTION OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the financial year 2009-10, your Company had issued on private
placement basis 1920 number of 9.95% Secured Redeemable Non-Convertible
Debentures (SRNCDs) aggregating to Rs. 1,920 millions. These SRNCDs were
listed on Wholesale Debt Market Segment of National Stock Exchange of
India Limited. Upto March 31,2012, the Company had repaid 70% of the
aggregate value of SRNCDs, constituting an amount of Rs. 1,344 millions.
During the year under review, as per the terms of issuance, the Company
had repaid balance 30% of the value of SRNCDs constituting an amount of
Rs. 576 millions.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of requirement of Clause 49 of the Listing Agreement with the
Stock Exchange(s) Management Discussion and Analysis Report, disclosing
the operations of the Company, in detail, is separately provided as a
part of Directors'' Report.
CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of
Corporate Governance. Your Directors adhere to the stipulations set out
in the Listing Agreement with the Stock Exchanges.
A separate section titled ''Corporate Governance'' together with the
certificate from Balika Sharma & Associates, Practicing Company
Secretary, confirming compliance with the requirements of Clause 49 of
the Listing Agreement(s) with the Stock Exchanges, as also the
Management Discussion and Analysis Statement, forms part of the Annual
Report.
SUBSIDIARIES COMPANIES
During the year under review, the Company has acquired 51% equity stake
in Siti Jony Digital Cable Network Private Limited, Siti Krishna
Digital Media Private Limited and Siti Faction Digital Private Limited
and 74% equity stake in Siti Guntur Digital Network Private Limited.
Accordingly, during the year under review the number of subsidiary
companies of the Company has increased to 13, as compared to 9 during
the financial year 2011-12.
Statement pursuant to Section 212 of the Companies Act, 1956, relating
to the subsidiaries is annexed to this report as Annexure - B''.
The Ministry of Corporate Affairs, Government of India vide General
Circular No.2/2011 dated February 8, 2011, has granted general
exemption from the provisions of Section 212, subject to compliance of
certain conditions as stipulated in the said General Circular, which
inter alia include disclosures of specified financial highlights in
consolidated balance sheet pertaining to each subsidiary. Your Board
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 all thirteen (13) subsidiary companies for the
financial year ended March 31, 2013 are not being attached with the
Annual Report of the Company. However, as per the requirement of para
(iv) of the Direction issued under Section 212(8) of the Companies Act,
1956, by the Ministry of Corporate Affairs vide General Circular
No.2/2011 dated 08/02/2011, the disclosures of specified financial
highlights in consolidated balance sheet pertaining to each subsidiary
have been made. The annual accounts of the subsidiary companies and
related detailed information shall be made available to the
shareholders seeking such information at any point of time. The annual
accounts of the subsidiary companies shall also be kept for inspection
by any shareholders at the Registered Office of the Company.
HOLDING COMPANY
During the year under consideration, due to inter se transfer of equity
shares amongst promoter entities, M/s Bioscope Cinemas Private Limited
ceased to be the holding company of Siti Cable Network Limited. As on
March 31, 2013, the Company has no Holding Company.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock
Exchanges, the attached Consolidated Financial Statements have been
prepared in accordance with the 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 and forms part of
the Annual Report.
AUDITORS
M/s. Walker Chandiok & Co., Chartered Accountants, New Delhi, the
Statutory Auditors of the Company, retire at the conclusion of the
ensuing Annual General Meeting and being eligible, offer themselves for
re-appointment. The Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the limits specified under Section 224(1 B) of the Companies Act, 1956.
The Notes on Financial Statements referred to in the Auditors'' Report
are self-explanatory and do not call for any further comments.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted or 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 a Multi System Operator (MSO) and is carrying on
business of, inter alia, reception of signals of channels of various
Broadcasters and distribution of same through cable networks. Since
this does 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, are not
applicable.
However the information as applicable is given hereunder:
Conservation of Energy:
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:
In its endeavor to deliver the best to its viewers and business
partners, your Company has been constantly active in harnessing and
tapping the latest and best technology in the industry.
Foreign Exchange Earnings and Outgo:
Particulars of foreign exchange earnings and outgo during the year are
given in Note No. 40 of the Standalone Notes to the Accounts forming
part of the Financials Statements of the Company.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 (Act'') read with the Companies [Particulars of Employees) Rules,
1975 is required to be set out in an annexure to this Directors''
Report. However, in terms of Section 219(1)(b) of the Act, the Report
and Accounts are being sent to the shareholders excluding the aforesaid
annexure. Any shareholder interested in obtaining copy of the same may
write to the Company Secretary at the Corporate Office. None of the
employees listed in the said annexure are related to any Director of
the Company.
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 financial statements for the year
ended March 31, 2013, the applicable Accounting Standards have been
followed and there are no material departures;
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, 2013 and the loss of the Company for that period;
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; and
d) they have prepared the Annual Accounts on a going concern basis.
ACKNOWLEDGEMENTS
Your Board wishes to convey its appreciation to all the Company''s
employees for their enormous personal efforts as well as their
collective contribution towards success of your Company. Your Directors
also express their gratitude for the valuable support and co-operation
extended by various Governmental Authorities, mainly Ministry of
Information and Broadcasting, Ministry of Communication and Information
Technology, Telecom and Regulatory Authority of India and other
stakeholders including Local Cable Operators, Bankers, Financial
Institutions, Viewers, Broadcasters, Vendors and Service Providers.
For and on behalf of the Board
Amit Goenka Sureshkumar Agarwal
Whole-time Director Director
Place : Mumbai Date: May 30, 2013
Mar 31, 2012
To, The Members of Wire and Wireless (India) Limited
The Directors take pleasure in presenting the Sixth Annual Report of
the Company together with Audited Statement of Accounts for the year
ended March 31 , 2012.
FINANCIAL PERFORMANCE
(Rs. In Millions)
Particulars For the year ended
March 31, 2012 March 31, 2011
Sales & Services 2,457.8 2,177.5
Other Income 206.7 94.88
Total Income 2,664.5 2,272.44
Total Expenses 2,440.0 2,093.76
Operating Profit/ (Loss) 224.5 178.7
Less: Finance Cost 565.2 566.4
Less: Depreciation 236.8 173.0
Profit/ (Loss) before Ta x & Exceptional Item (577.5) (560.7)
Provision for Taxation (Net) 12.4 6.4
Profit/ (Loss) after Tax before Exceptional
Item (589.9) (567.1)
Less: Exceptional Item 231.5 -
Profit / (Loss) after Tax (821.4) (567.1)
Add: Balance Brought Forward from Previous
Year (4,610.1) (4,043.0)
Balance Carried To Balance Sheet (5,431.4) (4,610.1)
BUSINESS OVERVIEW
Wire and Wireless (India) Limited is one of India's largest Multi
System Operator (MSO), with 54 analogue and 13 digital head ends and a
network of more than 12000 Kms of optical fiber and coaxial cable, it
provides its cable services in India's 58 key cities and the adjoining
areas, reaching out to over 10 million viewers.
Your Company deploys State-of-the-art technology for delivering
multiple TV signals to enhance consumer viewing experience through
multiple products ranging from Analogue Cable Television, Digital Cable
Television, Broadband and Local Television Channels. Your Company has
been providing services in analogue and digital mode, armed with
technical capability to provide features like Video on Demand, Pay per
View, Electronic Programming Guide (EPG) and gaming through a Set Top
Box (STB). All products are marketed under SITI brand name.
During the year, your Company has maintained strong momentum and
strengthened the operations. Majority of Company's Analog Business
units are operationally self-sustainable, resulting in operational
profits. While on one hand, your Company expanded its business and
ground presence by starting operations in newer areas, on the other
hand, it undertook strategic cost reduction initiatives to enhance
efficiencies and optimize resources.
Every opportunity has been exploited to streamline operations, realign
corporate and regional functions, reducing overhead costs, increase
focus and accountability of the Company's leadership team and improve
performance of our core service lines.
From almost every perspective FY 2011-12 was an impressive year for
your Company:
- The Consolidated operating revenues grew by 15% to Rs. 3,643 million
from Rs. 3,167 million during the last fiscal.
- The Company posted a consolidated operating profit (EBITDA) of Rs. 192
million, which was a significant achievement as compared to operational
profit of Rs. 164 million during the last fiscal.
- Indian Cable Net Company Limited, a subsidiary of WWIL, has been
honored Certificate of Excellence by Inc. India 500 for the second
consecutive year.
- WWILwas conferred with "Amity HR Excellence Award for Leadership
Development".
Media & Entertainment Industry
According to FICCI-KPMG Indian Media & Entertainment Industry Report,
2011 has been a dynamic year for the Indian Media & Entertainment
Industry - A year in which the transformation of the industry began to
take hold.
The Indian Media & Entertainment (M&E) industry has registered a growth
of 12 percent over 2010 to reach INR 728 billion. This double digit
growth was backed by strong media consumption in Tier 2 & Tier 3
cities, continued growth of regional media and fast increasing new
media businesses. As the industry braces for exciting times ahead, the
sector is projected to grow at a Compounded Annual Growth Rate (CAGR)
of 14.9 percent to touch INR 1,457 billion by 2016. The potential for
increase in media penetration, growing importance of regional markets,
increasing consumption in tier 2 and 3 cities, impact of regulatory
changes, more focused consumer research, innovation in content,
marketing and delivery platforms to serve different niches, increasing
device penetration like mobiles, tablets, PCs etc., all point towards a
very positive future for the industry.
Cable TV Industry
In sync with overall growth scenario cable television has also
registered an impressive escalation over last year. The total number of
TV households grew from 138 million in 2010 to 146 million by the end
of 2011, showing an increase of 5.8 percent. The penetration of Cable &
Satellite (C&S) households increased from 78 percent of total TV
households in 2010 to 81 percent in 2011. The overall number of C&S
households increased by 11 million during 2011 to reach 119 million,
registering a growth of 10 percent over last year.
The cable television industry in India is poised for one of its most
significant developments in the last decade - a transformation to the
Digital Addressable System (DAS) for television distribution.
The Cable Television Networks (Regulation) Amendment Act, 2011 has made
it mandatory for switch-over of the existing analogue Cable TV networks
to Digital Addressable System (DAS) by December 2014 in a phased
manner. As per the mandate four metros viz. Delhi, Mumbai, Kolkata and
Chennai have to shift to digital cable by October 2012. The next phase
will include cities with population greater than one million to make
the transition by March 2013. All urban areas are expected to shift
from analogue to digital cable by September 2014 and the rest of the
country by December 2014.
Digitization is being seen as the game changer for the entire Indian TV
industry, as it will reduce under reporting, brings in transparency and
boost in subscription revenue in the industry and it will be win-win
situation for all stakeholders. The Consumers will benefit the most
with more channels of their choice besides sharper pictures and better
sound quality. And further scope of receiving host of Value Added
Services (VAS) like MOD, Broadband etc.
DIVIDEND
In view of losses during the year, your Directors have not recommended
any dividend either on Equity Shares or Preference Shares for the year
under review.
CHANGE IN SUBSCRIBED & PAID UP EQUITY CAPITAL CONSEQUENT UPON
FORFEITURE
During the year under review, due to non-payment of first and final
call money, the Board had in accordance with the terms of Rights issue
and in accordance with Articles of Association of the Company,
forfeited 12,27,123 partly paid-up equity shares, resulting in
reduction of paid-up share capital of the Company from Rs. 452.83 million
comprising of 45,22,12,915 fully paid equity share of Rs. 1 each and
12,27,123 partly paid equity shares of Rs. 1 each ( paid up to Rs. 0.50 per
share ) to Rs. 452.21 million comprising of 45,22,12,915 equity shares of
Rs. 1 each.
RIGHTS ISSUE OF SHARES - RECEIPTS AND UTILISATION
During the financial year 2009-10, your Company had come with Rights
Issue of 23,67,67,351 equity shares of Rs. 1/- each issued at a price of
Rs. 19/- per share (including premium of Rs. 18/- per share) aggregating Rs.
4,498.5 million to the equity shareholders in the ratio of 109 equity
shares for every 100 equity shares held by them. The amount of Rs. 19/-
was payable in two installments i.e. Rs. 9/- per share on application
(including Rs. 0.50 towards capital) and the balance Rs. 10/- per share
(including Rs. 0.50 towards capital) was payable after six months at the
option of the Company but within twelve months from the date of
allotment.
Out of such 23,62,22,285 equity allotted on October 29, 2009, against
rights issue, the Company had received first and final call money in
respect of 23,49,95,162 equity shares. However, 12,27,123 equity
shareholders had failed to make payment of first and final call money
despite of sending first & final call money notice dated April 23,
2010; and various reminder notices including final reminder notice
dated April 28, 2011. Consequently these partly paid-up shares were
forfeited by the Board of Directors on October 19, 2011, resulting in
reduction of paid-up share capital of the Company from Rs. 452.83 million
comprising of 45,22,12,915 fully paid equity share of Rs. 1 each and
12,27,123 partly paid equity shares of Rs. 1 each (paid up to Rs. 0.50 per
share) to Rs. 452.21 million comprising of 45,22,12,915 equity shares of
Rs. 1 each.
Your Company has so far received a sum of Rs. 4,488.27 million towards
the rights issue of equity shares. The utilization of proceeds of the
money received through rights issue by the Company, as on March 31,
2012 are as under:
(Rs. In Millions)
Objects of the Rights Issue* Right Issue -
Utilization of
Total Receipts
Repayment of certain of our existing
unsecured loans 2,733.38 2,733.38
Funding our working capital
requirements 275.97 265.90
Acquisition of MSOs and LCOs 186.70 21.80
Information technology infrastructure
and ERP 0.30 0.30
General corporate purposes 1,252.20 781.27
Issue expenses 39.72 39.70
Total 4,488.27 3,842.35
(*)Pursuant to the approval of the Audit Committee and also of the
Board of Directors in their respective meetings both held on October
19, 2011, the proceeds of rights issue had been revised by utilizing
the additional amount of Rs. 733.80 million for repayment of unsecured
loan and Rs. 450 million for general corporate purposes, which were
envisaged for utilization towards working capital purposes (Rs. 1,023.38
million) and MSO Acquisition (Rs.160 million).
EMPLOYEES STOCK OPTION SCHEME
Pursuant to approval from Members obtained at the First Annual General
Meeting of the Company held on September 18, 2007, your Company has
implemented Employee Stock Option Plan - ESOP-2007 to grant stock
options to its eligible employees. Applicable disclosures pursuant to
Clause 12 - 'Disclosure in the Directors' Report' of the SEBI
(Employees Stock Option Scheme) Guidelines, 1999, as amended, relating
to Employees Stock Options as at March 31, 2012, are given in 'Annexure
A' to this Report.
A Certificate from the Statutory Auditors of the Company M/s. S. R.
Batliboi & Associates, Chartered Accountants, Gurgaon, with respect to
the implementation of Company's ESOP Scheme, will be placed before the
shareholders in the next 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 Saturday and Sunday) between 2.00
p.m. to 5.00 p.m., up to the date of Annual General Meeting. DIRECTORS
Mr. Arun Kumar Kapoor resigned as Director of the Company with effect
from the close of July 12, 2011. Your Board places on record its
appreciation for the contributions made by Mr. Arun Kumar Kapoor during
his tenure as Director of the Company.
As per the provisions of the Companies Act, 1956 read with Article 97
of the Articles of Association, Mr.Sureshkumar Agarwal retires by
rotation and being eligible, offers himself for re-appointment at the
ensuing Annual General Meeting.
Brief Profile of Mr. Sureshkumar Agarwal, Director proposed to be
re-appointed has been included in the Report on the Corporate
Governance forming part of the Annual Report.
REDEMPTION OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
During the financial year 2009-10, your Company had issued on private
placement basis 1920 number of 9.95% Secured Redeemable Non-Convertible
Debentures (SRNCDs) aggregating to Rs. 1,920 million. T hese SRNCDs were
listed on Wholesale Debt Market Segment of National Stock Exchange of
India Limited.
Upto March 31, 2011, the Company had repaid 20% of the aggregate value
of SRNCDs, constituting an amount ofRs. 384 million. During the year
under review and thereafter till this report, as per the terms of
issuance, the Company had repaid 80% of the value of SRNCDs
constituting an amount of Rs. 1,536 million in three installments
comprising of 20% of the aggregate value of the SRNCDs (i.e. Rs. 384
million) on or before 10th June, 2011; 30% of the aggregate value of
the SRNCDs (i.e. Rs. 576 million) on or before 10th December, 2011 and
balance 30% of the aggregate value of the SRNCDs (i.e. Rs. 576 million)
on or before 10th June, 2012.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of requirement of Clause 49 of the Listing Agreement with the
Stock Exchange(s) Management Discussion and Analysis Report, disclosing
the operations of the Company, in detail, is separately provided as a
part of Directors' Report.
CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of
Corporate Governance. Your Directors adhere to the stipulations set out
in the Listing Agreement with the Stock Exchanges.
A separate section titled 'Corporate Governance' together with the
certificate from Ms. Balika Sharma & Associates, Practicing Company
Secretary, confirming compliance with the requirements of Clause 49 of
the Listing Agreement(s) with the Stock Exchanges, as also the
Management Discussion and Analysis Statement, forms part of the Annual
Report.
SUBSIDIARIES COMPANIES
During the year under review the Company has acquired 51% equity stake
in Siti Bhatia Network Entertainment Private Limited, Siti Jind Digital
Media Communications Private Limited and Siti Jai Maa Durgee
Communications Private Limited. Accordingly, during the year under
review the number of subsidiary companies of the Company has increased
to 9, as compared to 6 during the financial year 2010-11.
Statement pursuant to Section 212 of the Companies Act, 1956, relating
to the subsidiaries is annexed to this Report as 'Annexure - B'
The Ministry of Corporate Affairs, Government of India vide General
Circular No.2/2011 dated February 8, 2011, has granted general
exemption from the provisions of Section 212, subject to compliance of
certain conditions as stipulated in the said General Circular, which
inter alia include disclosures of specified financial highlights in
consolidated balance sheet pertaining to each subsidiary. Your Board
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 all nine (9) Subsidiary of the Company for the
financial year ended March 31, 2012 are not being attached with the
Annual Report of the Company. However, as per the requirement of para
(iv) of the Direction issued under Section 212(8) of the Companies Act,
1956, by the Ministry of Corporate Affairs vide General Circular
No.2/2011 dated 08/02/2011, the disclosures of specified financial
highlights in consolidated balance sheet pertaining to each subsidiary
have been made. The annual accounts of the subsidiary companies and
related detailed information shall be made available to the
shareholders seeking such information at any point of time. The annual
accounts of the subsidiary companies shall also be kept for inspection
by any shareholders at the Registered Office of the Company.
HOLDING COMPANY
During the year under consideration, due to inter se transfer of equity
shares amongst group company of the Company, M/s. Bioscope Cinemas
Private Limited has become the holding company of Wire and Wireless
(India) Limited. M/s. Bioscope Cinemas Private Limited, a Company
incorporated in India and being a part of promoter group of the
Company, has acquired 26,20,40,427 fully paid up equity shares
constituting 57.95% of the paid up equity share capital of the Company
through inter se transfer of shares amongst promoters.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock
Exchanges, the attached Consolidated Financial Statements have been
prepared in accordance with the 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 and forms part of
the Annual Report.
AUDITORS AND AUDITORS' REPORT
The Statutory Auditors M/s. S. R. Batliboi & Associates, Chartered
Accountants, Gurgaon, hold office until the conclusion of the ensuing
Annual General Meeting. M/s. S. R. Batliboi & Associates, Gurgaon, has
expressed unwillingness to continue to hold the office of Statutory
Auditor after the conclusion of the ensuing Annual General Meeting. The
Directors place on record deep appreciation for the assistance and
guidance extended by M/s. S. R. Batliboi & Associates, Chartered
Accountants, Gurgaon, during their tenure as Statutory Auditors of the
Company. On recommendation of the Audit Committee, the Board at its
meeting held on July 26, 2012 proposed the name of M/s. Walker Chandiok
& Co., Chartered Accountants, New Delhi for appointment as the
Statutory Auditor of the Company at the ensuing Annual General Meeting.
The Company has received the confirmation from M/s. Walker Chandiok &
Co., Chartered Accountants, New Delhi to the effect that appointment,
if made, would be within the limits prescribed under Section 224(1 B)
of the Companies Act, 1956. You are requested to consider their
appointment.
The Notes on Financial Statements referred to in the Auditors' Report
are self -explanatory and do not call for any further comments.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted or 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 into the business of inter alia, reception of signals
of channels of various Broadcasters and distribution of same through
cable networks. Since this does 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, are
not applicable.
However the information as applicable is given hereunder:
1. Conservation of Energy:
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.
2. Technology Absorption:
In its endeavor to deliver the best to its viewers and business
partners, your Company has been constantly active in harnessing and
tapping the latest and best technology in the industry.
3. Foreign Exchange Earnings and Outgo:
Particulars of foreign exchange earnings and outgo during the year are
given in Note Nos. 38 & 39 of the Financial Statements of the Company.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 ('Act') read with the Companies (Particulars of Employees) Rules,
1975 is required to be set out in an annexure to this Directors'
Report. However, in terms of Section 219(1 )(b) of the Act, the Report
and Accounts are being sent to the shareholders excluding the aforesaid
annexure. Any shareholder interested in obtaining copy of the same may
write to the Company Secretary at the Corporate Office. None of the
employees listed in the said annexure are related to any Director of
the Company.
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 financial statements for the year
ended March 31, 2012, the applicable Accounting Standards have been
followed and there are no material departures;
b) they have selected such accounting policies in consultation with the
statutory auditors and applied them consistently and made judgements
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;
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; and
d) they have prepared the Annual Accounts on a going concern basis.
ACKNOWLEDGEMENTS
Your Board wishes to convey its appreciation to all the Company's
employees for their enormous personal efforts as well as their
collective contribution towards success of your Company. Your Directors
also express their gratitude for the valuable support and co-operation
extended by various Governmental Authorities, mainly Ministry of
Information and Broadcasting, Ministry of Communication and Information
Technology, Department of Telecommunication (Broadcasting & Cable
Services), Telecom and Regulatory Authority of India and other
stakeholders including Local Cable Operators, Bankers, Financial
Institutions, Viewers, Broadcasters, Vendors and Service Providers.
Place : Delhi For and on behalf of the Board
Date : 26.07.2012 Amit Goenka Sureshkumar Agarwal
Whole-time Director Director
Mar 31, 2011
The Members of
Wire and Wireless (India) Limited
The Directors take pleasure in presenting the Fifth Annual Report of
the Company together with Audited Statement of Accounts for the year
ended March 31, 2011.
FINANCIAL PERFORMANCE (Rs. in Millions)
Particulars For The Year Ended
March 31, March 31,
2011 2010
Sales & Services 2177.5 1938.7
Other Income 100.8 79.6
Total Income 2278.3 2018.3
Total Expenses 2099.6 2692.8
Operating Profit/(Loss) 178.7 (674.5)
Less: Finance Cost 566.4 673.3
Less: Depreciation 173.0 390.3
Profit/(Loss) before Tax & (560.7) (1738.1)
Exceptional Item
Provision for Taxation (Net) 6.4 -
Profit (Loss) after Tax before (567.1) (1738.1)
Exceptional Item
Less: Exceptional Item - -
Profit/(Loss) after Tax (567.1) (1738.1)
Less: Prior Period Adjustments (Net) - -
Add: Adjustment Pursuant to the - -
Scheme
Add: Balance Brought Forward (4043.0) (2304.9)
from Previous Year
Balance Carried to Balance (4610.1) (4043.0)
Sheet
BUSINESS OVERVIEW
Wire and Wireless (India) Limited (WWIL) is one of the India's largest
Multi System Operators (MSOs). With 50 analogue and 10 digital head
ends, it provides its analog & digital services in 54 cities of India.
WWIL is a part of the Essel Group, which is amongst India's most
prominent business houses with a diverse portfolio of assets in media,
packaging, entertainment, technology-enabled services, infrastructure
development and education.
WWIL product range includes Analogue TV signals, Digital TV signals,
Broadband and Local Television Channels. Wire and Wireless has been
providing services in analogue and digital mode, armed with technical
capability to provide features like Video on Demand, Pay per View,
Electronic programming Guide (EPG) and gaming through a Set Top Box
(STB). All products are marketed under SITI brand name.
For the year, WWIL has consolidated its existing businesses by making
them more stable and profitable with continued focus on building
processes, increased collections and strategic cost reduction
initiatives. During the year majority of its units have become
self-sustainable. WWIL has effectively managed expansions by putting up
Digital H/Es, spreading its foot prints in parts of Haryana, eastern
UP, eastern region towns, venturing into Broadband services in eastern
region of the country. Every opportunity has been exploited to
streamline operations, realign corporate and regional functions and
improve performance of our core service lines.
FY 11 was a good and satisfying year for WWIL in many ways.
- The standalone operating revenues grew by 1 2% to Rs. 2177.5 million
from Rs. 1938.7 million during last fiscal.
- The company posted a standalone operating profit (EBITDA) of Rs.
178.7 million, which was a significant achievement as compared to
operating loss of Rs. 674.5 million during the last fiscal.
- WWIL has been ranked among the best 400 mid ca' companies in India by
Dalal Street Investment Journals Annual Compendium - "Mid Cap 400".
- Indian Cable Net Company Limited, a subsidiary of WWIL, was ranked
among the top 500 of India's Best Performing Mid Sized Companies in the
Second Annual Inc. India 500 Awards.
- WWIL consolidates its Pan India presence through strategic expansions
in Uttar Pradesh and Hyderabad.
Media & Entertainment Industry
According to FICCI-KPMG Indian Media & Entertainment Industry Report,
2010 has been the year of resurgence for the industry. Overcoming the
gloom that had set in during the economic slowdown, the Indian Media &
Entertainment (M&E) industry bounced back in 2010 registering a growth
rate of 11 percent compared to a mere 1.4 percent in 2009. This growth
was primarily driven by the increased spends by advertisers across all
media platforms. As the industry braces for exciting times ahead, the
sector is projected to grow at a Compounded Annual Growth Rate (CAGR)
of 14 percent by 2015.
Cable TV Industry
Cable television has registered an impressive growth over last year.
The total number of TV households grew from 129 million in 2009 to 138
million by the end of 2010, showing an increase of 6.9 per cent. The
penetration of TV in the country grew from 58 per cent in 2009 to 61
per cent in 2010.The penetration for Cable & Satellite (C&S) households
increased from 74 per cent of total TV households in 2009 to 78 per
cent in 2010. The overall number of C&S households reached 108 million
registering a growth of 14 per cent over last year.
The Cable television industry in India is rapidly changing with visible
signs of progress towards the digital movement. In a positive
development for the Indian TV content distribution industry, the
Information and Broadcasting (l&B) Ministry has announced the final
schedule for mandatory digitization in the country. December 31, 2014
has been set as the deadline for digitization of the entire industry in
a phased manner subject to approval of Cabinet. Delhi, Mumbai, Kolkata
and Chennai are required to shift to digital addressability by March
31, 2012. The next phase will include cities with population greater
than one million to make the transition by March 31, 2013. All urban
areas are expected to convert by September 30, 2014 and the remaining
areas by December 31, 2014.
DIVIDEND
In view of losses during the year, your Directors have not recommended
any dividend either on Equity Shares or Preference Shares for the year
under review.
EMPLOYEES STOCK OPTION SCHEME
Pursuant to approval from Members obtained at the First Annual General
Meeting of the Company held on September 18, 2007, your Company has
implemented Employees Stock Option Plan - ESOP-2007 to grant stock
options to its eligible employees. Applicable disclosures pursuant to
Clause 12 - 'Disclosure in the Directors' Report', of the SEBI
(Employees Stock Option Scheme) Guidelines, 1999, as amended, relating
to employees Stock Options as at March 31, 2011, are given in Annexure
A to this Report.
A Certificate from the Statutory Auditors of the Company M/s. S. R.
Batliboi & Associates, Chartered Accountants, Gurgaon, with respect to
the implementation of Company's ESOP Scheme, will be placed before the
shareholders in the next 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 Saturday and Sunday) between 2.00
p.m. to. 5.00 p.m., upto the date of Annual General Meeting.
GROUP
As per the communications received by the Company from the Promoters,
the name of the Promoters and entities comprising 'group' for the
purpose of Clause 3(1)(e) of the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997, are enclosed in this Report as
Annexure B'.
RIGHTS ISSUE OF SHARES - RECEIPTS AND UTILISATION
During the financial year 2009-10, your Company had come with Rights
Issue of 23,67,67,351 equity shares of Re.1/- each issued at a price of
Rs.19/- per share (including premium of Rs.18/- per share) aggregating
Rs.4498.5 million to the equity shareholders in the ratio of 109 equity
shares for every 100 equity shares held by them. The amount of Rs.19/-
was payable in two installments i.e. Rs.9/- per share on application
(including Re.0.50 towards capital) and the balance Rs.10/- per share
(including Re.0.50 towards capital) was payable after six months at the
option of the Company but within twelve months from the date of
allotment.
Your Company had allotted 23,62,22,285 equity shares on October 29,
2009 against the said rights issue, thereby bringing the overall issue
size to Rs.4,488.2 million. During the financial year under review, the
Company had received First and Final Call amount of Rs.10/- per share
(including Re.0.50 towards capital) on 23,49,35,546 equity shares.
Consequent upon receipt of first & final call money on 23,49,35,546
equity shares, the paid up equity shares capital of your Company has
been increased from Rs.33,53,28,895.50 (as on 31.03.2010) to
Rs.45,27,96,668.50 (as on 31.03.2011).
Your Company had received a sum of Rs.212,60,00,565/ towards the share
application money from the aforesaid rights issue and
Rs.234,93,55,460/- (excluding interest on delayed payment) towards the
first & final call. The utilization of proceeds of the money received
through rights issue by the Company, as on March 31, 2011 are as under:
Objects of Issue* Rights Issue
- Utilization
of Total Receipts
figures in INR Million
Repayment of certain of our 2000.00 2000.00
existing unsecured loans
Funding our working capital 1299.40 417.00
requirements*
Acquisition of MSOs and 346.70 0.00
LCOs
Information technology 0.30 0.30
infrastructure and ERP*
General corporate purposes 802.20 789.40
Issue expenses 50.00 39.70
Total 4498.50 3246.40
(*) The Board had approved the revised utilization of Rs.119.35
Million, which were envisaged for utilization towards Information
Technology and ERP but were utilized towards the working capital
requirements of the Company. Accordingly, the utilisation of proceeds
of rights issue as had been revised by the Board, are as per details
mentioned in above stated table.
DIRECTORS
Mr. Parminder Singh Sandhu resigned as Director of the Company with
effect from October 21, 2010. The Board places on record its
appreciation for the contributions made by Mr. Parminder Singh Sandhu
during his tenure as Director of the Company.
Mr.Vinod Kumar Bakshi was appointed as an Additional Director, with
effect from October 27, 2010. Pursuant to the provisions of Section 260
of the Companies Act, 1956, Mr. Vinod Kumar Bakshi holds office only up
to the date of the ensuing Annual General Meeting of the Company. The
Company has received appropriate notice under Section 257 of the
Companies Act, 1956 along with requisite deposits, proposing the
candidature of Mr. Vinod Kumar Bakshi for the office of Director,
liable to retire by rotation.
As per the provisions of the Companies Act, 1956 read with Article 97
of the Articles of Association, Mr. B. K. Syngal retires by rotation
and being eligible, offers himself for re-appointment at the ensuing
Annual General Meeting.
Brief Profile of the Directors proposed to be appointed/re- appointed
has been included in the Report on the Corporate Governance forming
part of the Annual Report.
PARTIAL REDEMPTION OF SECURED REDEEMABLE NON- CONVERTIBLE DEBENTURES
During the financial year 2009-10, your Company had issued on private
placement basis 1920 number of 9.95% Secured Redeemable Non-Convertible
Debentures (SRNCDs) aggregating to Rs.192 crores. These SRNCDs are
listed on Wholesale Debt Market Segment of National Stock Exchange of
India Limited. As per the terms of the allotment, the Company had
repaid 20% of the aggregate value of the SRNCDs, constituting an amount
of Rs.38.40 crores, on December 10, 2010.
CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of
Corporate Governance. Your Directors adhere to the stipulations set out
in the Listing Agreement with the Stock Exchanges.
A separate section titled 'Corporate Governance' together with the
certificate from Mr. Satish K. Shah, Practicing Company Secretary,
confirming compliance with the requirements of Clause 49 of the Listing
Agreement(s) with the Stock Exchanges, as also the Management
Discussion and Analysis Statement, form part of the Annual Report.
SUBSIDIARIES
During the year under review your Company acquired 51% equity stake in
Siti Vision Digital Media Pvt. Ltd., effective July 21, 2010.
During the year, there were following subsidiaries of your Company with
shareholding of:
a) 100% equity stake in Central Bombay Cable Network Limited;
b) 100% equity stake in Siticable Broadband South Limited;
c) 67.69% equity stake in Indian Cable Net Company Limited;
d) 66% equity stake in Master Channel Community Network Private
Limited;
e) 51% equity stake in Wire and Wireless Tisai Satellite Limited; and
f) 51% equity stake in Siti Vision Digital Media Private Limited.
There have been no changes either in the business or operations of
these subsidiaries during the year under review. The statement pursuant
to Section 212 of the Companies Act, 1956, relating to the subsidiaries
is annexed to this Report as Annexure - C.
As per the requirement of para (iv) of the Direction under Section
212(8) of the Companies Act, 1956, issued by the Ministry of Corporate
Affairs vide General Circular No.2/2011 dated 08/02/2011, the requisite
disclosures in consolidated balance sheet pertaining to each subsidiary
have been made. The annual accounts of the subsidiary companies and
related detailed information shall be made available to the
shareholders seeking such information at any point of time. The annual
accounts of the subsidiary companies shall also be kept for inspection
by any shareholders at the Registered Office of the Company situated at
135, Continental Building, Dr.Annie Besant Road, Worli, Mumbai - 400
018 and of the subsidiary companies concerned which are as follows:-
Central Bombay Cable Network Limited
B-10, Lawrence Road, Industrial Area,
Delhi - 110035
Siticable Broadband South Limited
Regd. Office: United Mansion,
4th Floor, 39, M. G. Road,
Bangalore- 560001
Indian Cable Net Company Limited
J-1/15, Block-EP, 4th Floor,
Sector-V, Salt Lake,
Kolkata-700091
Master Channel Community Network Private Limited
T-4, Vijaya Apartments,
Mogulrajpuram, Vijayawada,
Andhra Pradesh
Wire and Wireless Tisai Satellite Limited
Madhu Industrial Estate,
4th Floor, P. B Marg,
Mumbai - 400 013, Maharashtra
Siti Vision Digital Media Pvt. Ltd.
B-10, Lawrence Road, Industrial Area,
Delhi - 110035
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock
Exchanges, the attached Consolidated Financial Statements have been
prepared in accordance with the 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 and forms part of
the Annual Report.
AUDITORS
M/s. S. R. Batliboi & Associates, Chartered Accountants, Gurgaon, the
Statutory Auditors of the Company, retire at the conclusion of the
ensuing Annual General Meeting and being eligible, offer themselves for
re-appointment. The Company has received a letter from them to the
effect that their re-appointment, if made, will be in accordance with
the limits specified under Section 224(1B) of the Companies Act, 1956.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted or renewed
any deposits within the meaning of Section 58A of the Companies Act,
1956 and rules made there under.
EXPLANATION TO QUALIFICATIONS IN AUDITORS REPORT
Explanations as regards the points raised by Auditors, in their report,
are as mentioned hereunder:
Item No. 6 of the Audit Report - The Company has given advances to its
subsidiaries & other group companies for meeting working capital
requirements and acquisition of MSOs/direct points during the year.
These advances would further enhance its operations in the near future.
Item No. (i)(a), of the annexure to the Auditors Report -Fixed Assets
Register with respect to Network Equipments taken over pursuant to the
Scheme of Arrangement are being updated.
Item No. (i)(b), of the annexure to the Auditors Report - It may be
noted that the Network Equipments are spread over wide geographical
areas and it is difficult to conduct the physical verification at
greater frequencies. The Company has been submitting the physical
verification report of major network equipments to the audit.
Item No. (iv) of the annexure to the Auditors Report - As per the
industry practice written agreements are not insisted from the
customers in the case of analogue business. However we initiated the
process and the company has executed agreements with most of the
customers of analogue business during the year.
Item No. (v)(b), of the annexure to the Auditors Report - Considering
the specific nature of business, the Company is making transaction at
prevailing market price at the relevant date.
Item No. (ix)(a) and (b) of the annexure to the Auditors Report - Due
to the wide geographical spread of Company's units, in few cases of
TDS, there were delays in collation of data resulting in delays in
deposit. The Company has taken necessary steps to address the issue.
Item No. (ix)(c) of the annexure to the Auditors Report - This case
relates to Siti Cable Network Ltd.. The Company has filed appeal before
ITAT.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
I. Energy Conservation and Technology Absorption:
During the year under review, the Company has not carried out any
activities involving conservation of energy and technology absorption
and therefore the particulars to be mentioned under this item is NIL.
II. Foreign Exchange Earning and Outgo:
Details of foreign exchange earnings and out go during the year under
review is given in Note No. 22.4 of the Notes to Accounts.
PARTICULARS OF EMPLOYEES
A statement showing the particulars of employees, pursuant to Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975, as amended vide Companies (Particulars of
Employees) Amended Rules, 2011, is annexed to this Report as Annexure -
D'.
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, 2011, the applicable Accounting Standards have been followed and
there are no material departures;
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, 2011 and the loss of the Company for that period;
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; and
d) they have prepared the Annual Accounts on a going concern basis.
ACKNOWLEDGEMENTS
Your Board wishes to convey its appreciation to all the Company's
employees for their enormous personal efforts as well as their
collective contribution towards success of your Company. Your Directors
also express their gratitude for the valuable support and co-operation
extended by various Governmental Authorities, mainly Ministry of
Information and Broadcasting, Ministry of Communication and Information
Technology, Department of Telecommunication (Broadcasting & Cable
Services), Telecom and Regulatory Authority of India and other
stakeholders including Local Cable Operators, Bankers, Financial
Institutions, Viewers, Broadcasters, Vendors and Service Providers.
For and on behalf of the Board
Place : Noida Amit Goenka Arun Kapoor
Date : May 19, 2011 Whole-time Director Director
Mar 31, 2010
The Directors take pleasure in presenting the Fourth Annual Report of
the Company together with Audited Statement of Accounts for the year
ended March 31, 2010.
FINANCIAL PERFORMANCE
(Rs. in Millions)
Particulars For the year Ended
March 31, March 31,
2010 2009
Sales & Services 1938.7 2284.3
Other Income 79.6 18.3
total Income 2018.3 2302.6
Total Expenses 2692.8 2408.4
Operating Profit/(Loss) (674.5) (105.8)
Less: Finance Cost 673.3 602.2
Less: Depreciation 390.3 297.7
Profit/(Loss) before tax & (1738.1) (1005.7)
Exceptional Item(s)
Provision for taxation (Net) - 3.8
Profit/(Loss) after tax before (1738.1) (1009.5)
Exceptional Item(s)
Less: Exceptional Item - -
Profit/(Loss) after Tax (1738.1) (1009.5)
Less: Prior Period Adjustments - -
(Net)
Add: Adjustment Pursuant to the - -
Scheme
Add: Balance Brought Forward (2304.9) (1295.4)
from Previous Year
balance Carried to balance Sheet (4043.0) (2304.9)
BUSINESS OVERVIEW
Wire and Wireless (India) Limited (WWIL) is one of the IndiaÃs largest
Multi System Operator (MSO). With 50 analogue and 7 digital headends,
it provides cable services in 60 cities of India. WWIL is a part of the
Essel Group, which is amongst IndiaÃs most prominent business houses
with a diverse portfolio of assets in media, packaging, entertainment,
technology-enabled services, infrastructure development and education.
WWIL product offers include, Analog Cable, Digital Cable Television,
Broadband and Local Television Channels. WWIL has been providing
services in analog and digital mode, having technical capability to
provide features like Video on Demand, Pay per View, Electronic
Programming Guide (EPG), gaming through a Set Top Box (STB) and IPTV.
All products are marketed under SITI brand Umbrella.
According to FICCI-KPMG Indian Media & Entertainment Industry Report,
like most sectors across the industry, Indian Media and Entertainment
(M&E) sector has also passed through a period of turmoil due to the
global economic slowdown which saw shrinking advertising budgets of the
corporate world. Advertisement spends grew at Compounded Annual Growth
Rate (CAGR) of 10 per cent in the past three years, with almost a flat
growth in 2009 and is expected to exhibit a robust CAGR of 14 percent
over the next five years. Thus, 2009 was a year marked with innovation
with a focus on cost efficiencies across sectors, borne out of sheer
necessity to combat the pressure on the bottom lines.
Cable Services Industry
The cable TV industry has experienced phenomenal growth and mindshare
over the last few years and still has tremendous potential to hit
higher curves on charts. The television content distribution market in
India is undergoing sweeping transformations. True convergence over
cable is round the corner, which will enable viewers to enjoy the
benefits of watching movies and TV shows, surfing the Internet and
making telephone calls without leaving the comfort of their sofas and
television screens.
The Telecom Regulatory Authority of India (TRAI) recently issued a set
of recommendations to the Ministry of Information & Broadcasting,
mandating every cable network operator to transmit digitized quality
video to every home by 2012, thus enabling the delivery of a host of
services, including Internet access and telephony via Cable TV.
Despite being an immensely profitable sector that generates annual
revenues in excess of Rs.10,000 crore (US$ 2 billion), the fragmented
and unorganized cable TV sector has attracted little investment in the
past. The primary reason for this has been the massive under-reporting
of subscriber numbers which adversely impacts the broadcastersÃ
revenues.
The total number of TV households grew from 123 million in 2008 to 129
million by the end of 2009, showing an increase of 5 percent. Currently
TV penetration in India is much lower as compared to some of the
developed markets which are almost fully penetrated. The total number
of Cable & Satellite (C&S) households grew at a faster rate of 10
percent from 86 million to 95 million. A large part of this growth came
from the digital homes being added.
Throughout the year, the focus at WWIL was on realizing efficiencies,
more focus on collections and Analogue Business Expansion in new
territories. We started business in some of new territories to name few
Bilaspur in Chhattisgarh State, Varanasi in Uttar Pradesh, Bhubaneswar
in Orissa State, Dhanbad in Jharkhand State, ( All these are TAM Towns
) and further the revival plan is also progressing well in Hyderabad,
Raniganj & Asansol in West Bangal and Lucknow in Uttar Pradesh. We
exploited every opportunity to streamline operations, realign corporate
and regional functions, thereby reducing over head costs, increasing
focus and accountability of the CompanyÃs leadership team and improving
performance of our core service lines. The total expenses during the
year under review include expenses on account of Headend-in-the Sky
(HITS) which were not there last year.
WWIL, hitherto was the only company in India distributing the HITS
satellite signals. While conceptually, the HITS platform was expected
to help quicken the pace of digitization in the country, but various
issues, which inter alia included the absence of a clear tariff and
content policy, led to a slower than expected roll out of the services.
Due to regulatory non-support and absence of conducive Government
policies, HITS has been suspended w.e.f. March 31, 2010.
DIVIDEND
In view of losses during the year, your Directors have not recommended
any dividend either on Equity Shares or Preference Shares for the year
under review.
EMPLOYEES STOCK OPTION SCHEME
Pursuant to Members approval at the First Annual General Meeting of the
Company held on September 18, 2007, your Company has implemented
Employee Stock Option Plan à ESOP-2007 to grant stock options to its
eligible employees.
Remuneration Committee of the Company, constitution whereof is in
accordance with The Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 (Ãthe SEBI GuidelinesÃ) administers and monitors the Scheme.
During the year under review, the Remuneration Committee had in
accordance with ESOP 2007 and SEBI Guidelines, granted 2,808,800 Stock
Options convertible into equivalent number of equity shares of Re. 1/-
each of the Company.
During the year, total 14,50,800 Stock Options lapsed out of which
6,91,400 were unvested and 7,59,400 were vested but not exercised, as
the employees to whom these options were granted left the organization.
The applicable disclosures as stipulated under the SEBI Guidelines as
at March 31, 2010 are annexed herewith and forms part of this report.
A Certificate from the Statutory Auditors of the Company M/s. S. R.
Batliboi & Associates, Chartered Accountants, Gurgaon, with respect to
the implementation of CompanyÃs ESOP Scheme, will be placed before the
shareholders in the next 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 Saturday and Sunday) between 2.00
p.m. to. 5.00 p.m., upto the date of Annual General Meeting.
RIGHTS ISSUE OF SHARES & ITS UTIILISATION
Your Company came with a Rights Issue of 23,67,67,351 equity shares of
Re. 1/- each issued at a price of Rs. 19/- per share (including premium
of Rs.18/- per share) aggregating Rs. 44,985 lacs to the equity
shareholders in the ratio of 109 equity shares for every 100 equity
shares held by them. The amount of Rs. 19/- was payable in two
installments i.e., Rs. 9/- per share on application (including Re. 0.50
towards capital) and the balance Rs. 10/- per share (including Re.
0.50 towards capital) was payable after six months at the option of the
Company but within twelve months from the date of allotment.
The Rights Issue opened on September 29, 2009 and closed on October 21,
2009. Your Company made the allotment of 23,62,22,285 equity shares on
October 29, 2009 against the said rights issue. Consequent to the said
Rights Issue, the paid up equity capital of your Company has been
increased from Rs. 21,72,17,753/- to Rs. 33,53,28,895.50 comprising of
21,72,17,753 equity shares of Re. 1/- each fully paid up and
23,62,22,285 equity shares of Re. 1/- each with a paid up value of Re.
0.50 per share. The equity shares issued on rights basis are listed at
The National Stock Exchange of India Limited (NSE) and Bombay Stock
Exchange Limited (BSE).
Your Company has received a sum of Rs. 2,12,60,00,565/- towards the
share application money from the aforesaid rights issue. The
utilization of proceeds of the money raised through rights issue by the
Company as on March 31, 2010 has been as under.
(Rs. in Millions)
Particulars Amount
Repayment of unsecured loans 1,888
Working Capital 204
Issue expenses 34
Total 2,126
DIRECTORS
Mr. Michael Block resigned as Director of the Company with effect from
March 25, 2010. The Board places on record its appreciation for the
contributions made by Mr. Michael Block during his tenure as Director
of the Company.
Mr. Parminder Singh Sandhu was appointed as an Additional Director,
with effect from March 25, 2010. Pursuant to the provisions of Section
260 of the Companies Act, 1956, Mr. Parminder Singh Sandhu holds
office only up to the date of the ensuing Annual General Meeting of the
Company. The Company has received appropriate notice under Section 257
of the Companies Act, 1956 along with requisite deposits, proposing the
candidature of Mr. Parminder Singh Sandhu for the office of Director,
liable to retire by rotation.
As per the provisions of the Companies Act, 1956 read with Article 97
of the Articles of Association, Mr. Subhash Chandra retires by rotation
and being eligible, offers himself for re-appointment at the ensuing
Annual General Meeting.
Brief Profile of the Directors proposed to be appointed/re- appointed
has been included in the Report on the Corporate Governance forming
part of the Annual Report.
CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of
Corporate Governance. Your Directors adhere to the stipulations set out
in the Listing Agreement with the Stock Exchanges.
A separate section titled ÃCorporate Governanceà together with the
certificate from Mr. Satish K. Shah, Practicing Company Secretary,
confirming compliance with the requirements of Clause 49 of the Listing
Agreement(s) with the Stock Exchanges, as also a Management Discussion
and Analysis Statement, forms part of the Annual Report.
SUBSIDIARIES
During the year, there were following subsidiaries of your Company with
shareholding of:
a) 100% equity stake in Central Bombay Cable Network Limited;
b) 100% equity stake in Siticable Broadband South Limited;
c) 67.69% equity stake in Indian Cable Net Company Limited;
d) 66% equity stake in Master Channel Community Network Private
Limited; and
e) 51% equity stake in Wire and Wireless Tisai Satellite Limited.
There have been no changes either in the business or operations of
these subsidiaries during the year under review. The statement pursuant
to Section 212 of the Companies Act, 1956, relating to the subsidiaries
is annexed to this Report. The Audited Financial Statements, DirectorsÃ
Report and Auditorsà Report of the subsidiaries are forming part of the
Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock
Exchanges, the attached Consolidated Financial Statements have been
prepared in accordance with the 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 forms part of the
Annual Report.
AUDITORS
M/s. S. R. Batliboi & Associates, Chartered Accountants, Gurgaon, the
Statutory Auditors of the Company, retire at the conclusion of the
ensuing Annual General Meeting and being eligible, offer themselves for
re-appointment. The Company has received a letter from them to the
effect that their re- appointment, if made, will be in accordance with
the limits specified under Section 224(1B) of the Companies Act, 1956.
PUBLIC DEPOSITS
During the year under review, your Company has not accepted or renewed
any deposits within the meaning of Section 58A of the Companies Act,
1956 and rules made there under.
EXPLANATION TO QUALIfICATIONS IN AUDITORS REPORT
Explanations as regards the points raised by Auditors, in their report,
are as mentioned hereunder:
Item No. (i)(a) of the annexure to the Auditors Report à The Company is
in the process of updating the Fixed Assets Register with respect to
Network Equipments taken over pursuant to the Scheme of Arrangement.
Item No. (i)(b) of the annexure to the Auditors Report à It may be
noted that the Network Equipments are spread over wide geographical
areas and it is difficult to conduct the physical verification at
greater frequencies. However, the Company has already completed the
physical verification of network equipments as per the phased plan,
reconciliation of the same will be completed during the year.
Item No. (iv) of the annexure to the Auditors Report à As per the
industry practice written agreements are not insisted from the
customers in the case of analogue business. However during the year,
the Company has executed and submitted agreements with many of the
customers of analogue business to the satisfaction of the Auditors.
Item No. (ix)(a) and (b) of the annexure to the Auditors Report à Due
to the wide geographical spread of CompanyÃs units, in few cases, there
were delays in collation of data resulting in delays in depositing of
statutory dues. The Company has taken necessary steps to address the
issue.
Item No. (ix)(c) of the annexure to the Auditors Report à All these
income tax cases are in name of SITI CABLE NETWORK LIMITED. The Company
has taken over these cases pursuant to the Scheme of Arrangement. The
ITAT and Commissioner (Appeals ) have given orders in favour of
Company, however the Department has filed appeal before High Court and
hearing for the same is yet to commence. However, this liability is
not provided as in the opinion of the Company, no liability is
anticipated.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO:
I. Energy Conservation and technology Absorption:
During the year under review, the Company has not carried out any
activities involving conservation of energy and technology absorption
and therefore the particulars to be mentioned under this item is NIL.
II. foreign Exchange Earnings and Outgo:
Details of foreign exchange earnings and out go during the year under
review is given in Note No. 18.4 of the Notes to Accounts.
PARTICULARS Of EMPLOYEES
A statement showing the particulars of employees, pursuant to Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975, is annexed to and forms part of this report.
DIRECTORSÃ 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, 2010, the applicable Accounting Standards have been followed and
there are no material departures;
(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, 2010 and the loss of the Company for that period;
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; 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
which have contributed to the success of your Company. Your Directors
also express their gratitude for the valuable support and co-operation
extended by various Governmental Authorities, mainly
Ministry of Information and Broadcasting, Ministry of Communication and
Information Technology, Department of Telecommunication (Broadcasting &
Cable Services), Telecom and Regulatory Authority of India and other
stakeholders including Local Cable Operators, Bankers, Financial
Institutions, Shareholders, Viewers, Broadcasters, Vendors and Service
Providers.
For and on behalf of the Board
Amit Goenka Arun Kapoor
Whole-time Director Director
Place: Delhi
Date: July 26, 2010
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