Mar 31, 2018
1. NATURE OF OPERATIONS
SITI Networks Limited (formerly SITI Cable Network Limited) (hereinafter referred to as the ''Company'' or ''SNL'') was incorporated in the state of Maharashtra, India. The Company is engaged in distribution of television channels through digital cable distribution network and allied services.
2. GENERAL INFORMATION
SNL, is a public company incorporated and domiciled in India. Its registered office is at Unit No.38, 1st Floor, A Wing, Madhu Industrial Estate, Pandurang Budhkar Marg, Worli Mumbai-400013. The Company''s shares are listed on the National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
Note a) Capital work-in-progress and intangible assets under development include set top boxes, viewing cards (softwares) and plant and equipment amounting to Rs.523.02 million, Rs.73.37 million and Rs.295.23 million respectively (previous year: Rs.1,849.21 million, Rs.180.91 million and Rs.184.70 million respectively) which are yet to be installed.
Note b) For details related to assets pledged as security, refer note 46.
Note c) Refer note 36 for Vehicle finance lease.
Note d) The Company has been capitalising the foreign exchange differences on gross block of Set top boxes amounting to Rs. 6.51 million (previous year: Rs. (64.36) million) and Capital work in progress amounting to Rs.Nil (previous year: Rs. (11.47) million).
For amounts due and terms and conditions relating to related party receivables see note 38.
No trade or other receivables are due from directors or other officers of the Company either severally or jointly with any other person. No trade or other receivables are due from firms or private companies respectively in which any director is a partner, a director or a member.
Preference shares
There is no movement in preference share capital.
(B) Terms/rights attached to :
Equity shares
The Company has only one class of equity shares having par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Preference shares
The Company has only one class of 7.25% Non-cumulative redeemable preference shares of '' 1 each. The said preference shares were allotted to Zee Telefilms Limited (now Zee Entertainment Enterprises Limited) on December 29, 2006, pursuant to the scheme of arrangement for demerger of cable business undertaking of Zee Telefilms Limited approved by the Hon''ble Bombay High Court vide its order dated November 17, 2006. Initially, as per the terms of the issue and allotment, the said preference shares were due for redemption on December 29, 2008. However, with the written consent/approval of Zee Entertainment Enterprises Limited, the terms of the issue of said preference shares was varied by extending the period of redemption by another three years i.e. till December 29, 2011. Later on June 6, 2011 these shares were transferred to Churu Enterprises LLP by Zee Entertainment Enterprises Limited.
Period for redemption of preference shares was extended by a period of five years till December 29, 2016 which has been further extended for period of five years till December 29, 2021 by Churu Enterprises LLP. The preference shares are redeemable at par.
(D) Shares reserved for issue under options
For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 35.
(E) Terms of securities convertible into equity shares issued along with earliest date of conversion.
The Company had originally issued 142,857,142 warrants on preferential basis upon payment of a consideration of Rs.35 per warrant. Each warrant was convertible into one equity share of Rs.1 each at a premium of Rs.34 per share. Holders of such warrants had an option to convert these warrants into equity shares upon payment of aforesaid consideration on or before eighteen months from the date of allotment of warrants viz February 19, 2016. During the year ended March 31, 2017, at request of holders of such warrants, the Company had converted 57,142,857 warrants into equity shares resulting in increase in equity share capital by Rs.57.14 million.
(F) No shares were issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issue or brought back during the current and last five years. During the year ended March 31, 2017, equity shares were issued on conversion of fully-paid up warrants and OFCDs.
The Company had originally issued 51,428,571 Optionally Fully Convertible Debenture (''OFCDs'') on preferential basis upon payment of a consideration of Rs.35 per OFCD. Each convertible OFCD was convertible into one equity share of Rs.1 each at a premium of '' 34 per share. Holders of such OFCDs had an option to convert these OFCDs into equity shares upon payment of aforesaid consideration on or before eighteen months from the date of allotment of OFCDs, viz. February 19, 2016. During the year ended March 31, 2017, the Company had converted 20,628,571 OFCDs into equity shares pursuant to the exercise of option resulting in increase in equity share capital by Rs.20.63 million. This instrument meets the definition of equity, in accordance with Ind AS 32, as there is no obligation to transfer cash or any other financial asset or issue a variable number of shares.
B Nature and purpose of reserves:
1 Securities premium reserve
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Act.
2 Retained earnings
Retained earnings represent the accumulated earnings net of losses if any made by the Company over the years.
3 General reserve
General Reserve is a free reserve which is created by transferring funds from retained earnings to meet future obligations or purposes.
4 Other comprehensive Income
Other comprehensive Income includes actuarial gain/(loss) recognise in respective financial year.
5 Foreign currency monetary item translation difference account (FCMITDA)
FCMITDA is created for recording exchange differences arising on restatement of long term foreign currency monetary items, other than for acquisition of fixed assets, and is being amortised over the maturity period of such monetary items.
6 Employee shares based reserve
The reserve is used to recognised the grant date fair value of the options issued to employees under Company''s employee stock option plan.
i) As at March 31, 2018 the cash credit facilities are secured by first pari passu charge on the future and current assets of the Company with minimum assets cover ratio 1:1. The Company is required to maintain DSRA for 2 quarter''s interest. The loans are further secured by corporate guarantee of an associate Company to maintain DSRA and carries an interest rate of BBR 250 BPS, IVBR and six months MCLR 1.70% respectively.
ii) As at March 31, 2017 the cash credit facilities were secured by first pari passu charge on the future and current assets of the Company with minimum assets cover ratio 1:1. The Company was required to maintain DSRA for 1 quarter''s interest. The loan was further secured by corporate guarantee of an associate Company to maintain DSRA and carries an interest rate of Base rate 1.95%.
3. The digitisation of cable networks has been implemented in Phase 1 and 2 cities starting from November 1, 2012 onwards and Phase 3 and 4 cities were to be digitised by January 31, 2017 and March 31, 2017 respectively, as per the extended timelines. Owing to the initial delays in implementation of DAS, all the Multi-System Operators (MSOs) are in transition from analogue regime to DAS and are in the process of implementation of revenue sharing contracts with the local cable operators (LCOs). Accordingly, the Company has invoiced certain LCO''s and recognised subscription revenue based on certain estimates (net basis) derived from market trends and ongoing discussion with the LCOs. Management is of the view that the execution/implementation of such contracts will not have a significant impact on the subscription revenue recognised.
4. EMPLOYEE BENEFIT OBLIGATIONS
Post-employment obligations - gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The expected contribution to the plan for next annual reporting period amounts to Rs.7.68 million.
The weighted average duration of the defined benefit obligation as at March 31, 2018 is 16 years (previous year 16 years).
The plan exposes the Company to actuarial risks such as interest rate risk and inflation risk.
Interest rate risk
The present value of the defined benefit liability is calculated using a discount rate determined by reference to market yields of risk free securities.
Inflation risk
A significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will increase the Company''s liability.
The following tables summarises the components of net benefit expense recognised in the standalone statement of profit and loss and the amount recognised in the standalone balance sheet for the respective plans.
Defined contribution plans
Contribution to defined contribution plan, recognised as expense for the year are as under :- Employer''s contribution to provident fund and other funds '' 33.21 million (previous year: '' 30.93 million)
5. SHARE-BASED EMPLOYEE REMUNERATION
Employee Stock Option Plan -ESOP-2015
The Company instituted the Employee Stock Option Scheme -2015 ("SITI ESOP 2015" or "New Plan") to grant equity based incentives to eligible employees. The SITI ESOP-2015 has been approved by the Board of Directors of the Company at their meeting held on May 28, 2015 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on August 27, 2015 to grant upto 33,881,656 options, representing one share for each option upon exercise by the eligible employee at an exercise price determined by the Board/remuneration committee.
The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 50%, 35% and 15% of the options will vest in the employee(s) after expiry of one year, two years and three years, respectively, from the date of grant of options. The option grantee must exercise all vested options within a period of four years from the date of vesting and the shares arising on exercise of such options shall not be subject to any lock-in period.
The underlying expected volatility was determined by reference to historical data of the Company''s shares over a period of time since its flotation on the Stock Exchange. No special features inherent to the options granted were incorporated into measurement of fair value.
The employee remuneration expense has decreased by Rs.16.47 million (previous year: increased by Rs.30.29 million), all of this relates to options lapsed/expired during the year due to resignation of eligible employees.
6. LEASES
Finance lease: Company as lessee
Vehicles obtained on finance lease are for 4 years after which the legal title is passed to the lessee. There is escalation clause in the lease agreement. There are restrictions imposed by the lease arrangements.
Finance lease liabilities (refer note 16 and 22) are secured by related assets held under finance leases.
Operating lease : Company as a lessee
The Company has taken various commercial premises under operating leases. These leases have varying terms, escalation clauses and renewal rights. On renewal the terms of the leases are renegotiated. Rent amounting to Rs.141.02 million (previous year: Rs.139.41 million) has been debited to standalone statement of profit and loss during the year.
B. Financial instruments measured at fair value
The following tables present financial assets and liabilities measured at fair value in the Balance sheet in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
Valuation technique to determine fair value Optionally fully convertible debentures (Level 3)
The valuation of optionally fully convertible debentures has been done using the discounted cash flow method by discounting the investee Companies free cash flows for the explicit forecast period and the perpetuity value thereafter. The free cash flows are discounted by weighted average cost of capital comprising of debt and equity. The risk free rate of 7.64% is considered on the 10 year zero coupon government bond.
There have been no transfer between level 1, level 2 and level 3 during the year ended March 31, 2018 and March 31, 2017.
D. Financial risk management objectives and policies Financial risk management
The Company is exposed to various risks in relation to financial instruments. The main types of risks are credit risk, liquidity risk and market risk.
The Company''s risk management is coordinated in close co-operation with the board of directors, and focuses on securing Company''s short to medium term cash flows.
This note explains the sources of risk which the Company is exposed to and how the Company manages the risk and the related impact in these standalone financial statements.
A. Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the Company causing financial loss. The Company''s exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
Credit risk management
Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
A: Low credit risk on financial reporting date
B: High credit risk
Concentration of trade receivables
The Company has widespread customers and there is no concentration of trade receivables.
Credit risk exposure
Provision for expected credit losses
The Company provides for 12 month expected credit losses for following financial assets.
For the purpose of computation of expected credit loss, the Company has analysed the trend of provisions for doubtful debts created in earlier years. The average rate of provision has been computed based on the adjusted sales (excluding those where the Company does not have any historical provision) and provision for doubtful debtors created against those sales. As per this methodology, the Company has determined the expected credit loss as 5% for customers of subscription and carriage and 15% for advertisement customers.
B. Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the Company''s business activities may not be available.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows. Short term liquidity requirements comprises mainly of trade payables and employee dues arising during normal course of business as on each balance sheet date. Long- term liquidity requirement is assessed by the management on periodical basis and is managed through internal accruals and through funding commitments from shareholders. As at each statement of financial position date, the Company''s liabilities having contractual maturities (including interest payments where applicable) are summarised as follows:
C. Market Risk
The Company has foreign currency borrowings in the form of buyers credit and is exposed to change in the exchange rates. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (''). The risk is measured through a forecast of highly probable foreign currency cash flows.
(i) Foreign currency risk
Foreign currency risk exposure:
(ii) Cash flow and fair value interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
(a) Interest rate risk exposure
The Company''s policy is to minimise interest rate cash flow risk exposures on long-term financing. The Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates.
q) Direct Media Solutions LLP (formerly known as Direct Media Solutions Private Limited), a stakeholder of the Company, has provided financial support as is necessary to enable the Company to fulfil all its obligations incurred in foreseeable future, atleast upto and including March 31, 2021, to enable it to continue as a going concern until such time period.
Further, the stakeholder has indemnified the Company against certain advances and receivables, if such are not adjusted/recovered in near future. The aforementioned indemnity shall also cover any amounts further advanced and receivable from such parties.
7. CAPITAL AND OTHER COMMITMENTS
Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounting to Rs.174.46 million (previous year: Rs.189.75 million).
8. Previous year''s amounts have been regrouped wherever deemed appropriate.
9. CONTINGENT LIABILITIES AND LITIGATIONS
i) Claims against the Company not acknowledged as debts Rs.108.74 million* (previous year: Rs.33.52 million).
ii) Demands raised by the statutory authorities being contested by the Company:
In the absence of probability of sufficient future taxable income, the Company has recognised deferred tax assets only to the extent of deferred tax liability.
During the financial year 2016-2017, the current tax amount of '' 2.58 million pertains to TDS recoverable written-off. Considering the Company is into continuous losses, no income tax provision has been created for the current year.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Company can use the benefits therefrom :
The tax losses expire in assessment year 2019-2024. The deductible temporary differences which includes unabsorbed depreciation and provision for doubtful debts do not expire under current tax legislation.
10. UTILISATION OF PROCEEDS FROM PREFERENTIAL ALLOTMENT
The Company had issued 142,857,142 warrants at Rs.35 per warrant during the year 2015-16. The Company had also issued Optionally Fully Convertible Debenture (OFCD) 51,428,571 each at Rs.35 per OFCD during the year 2015-16. Given below are the details of utilisation of proceeds raised through preferential issue.
11. CAPITAL MANAGEMENT
Risk Management
The Company''s objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth. The Company''s overall strategy remains unchanged from previous year. The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments The funding requirements are met through a mixture of equity, internal fund generation and other non-current borrowings. The Company''s policy is to use current and non-current borrowings to meet anticipated funding requirements. The Company monitors capital on the basis of the gearing ratio which is net debt divided by total capital (equity plus net debt) . The Company is not subject to any externally imposed capital requirements. Net debt are non-current and current borrowings as reduced by cash and cash equivalents, other bank balances and current investments. Equity comprises all components including other comprehensive income.
12. INFORMATION UNDER SECTION 186 (4) OF THE COMPANIES ACT, 2013
There are no investments or loan given or guarantee provided or security given by the Company other than the investments and loans stated under note 6 in these standalone financial statements, which have been made predominantly for the purpose of business.
13. The Company predominantly operates in a single business segment of cable distribution in India only. Hence there are no separately reportable business or geographical segments as per Indian Accounting Standard (''Ind AS'') 108 on Operating Segments. The aforesaid is in line with the way operating results are reviewed and viewed by the chief operating decision maker(s).
14. Exceptional item amounting to ''46.80 million represents amount incurred towards settlement as a one time cost towards restructuring of the operations to improve efficiencies.
The Company had recognised certain receivables in prior years pertaining to billings done on estimation (net) basis. The Company had reached further negotiations with the customers and had accordingly written off such old receivables amounting to Rs.202.36 million based on management''s best estimates, which were disclosed as exceptional items during the year ended March 31, 2017.
15. POST REPORTING DATE EVENTS
No adjusting or significant non-adjusting events have occurred between March 31, 2018 and the date of authorisation of these standalone financial statements.
16. Exceptional item for the year ended March 31, 2018 represents amount incurred towards settlement as a one time cost towards restructuring of the operations to improve efficiencies.
Further, the Group had recognised certain receivables in prior years pertaining to billings done on estimation (net) basis. The Company had reached further negotiations with the customers and had accordingly written off such old receivables based on management''s best estimates, which have been disclosed as exceptional items during the year ended March 31, 2018 and March 31, 2017 respectively.
17. POST REPORTING DATE EVENTS
No adjusting or significant non-adjusting events have ocured between March 31, 2018 and the date of authorisation of these Consolidated financial statements.
Mar 31, 2017
B: Nature and purpose of reserves
1 Securities premium reserve
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Act.
2 Retained earnings
Retained earnings represent the accumulated earnings net of losses if any made by the Group over the years.
3 General reserve
General Reserve is a free reserve which is created by transferring funds from retained earnings to meet future obligations or purposes.
4 Other comprehensive Income
Other comprehensive Income includes acturial gain/(loss) recognise in respective financial year.
5 Foreign currency monetary item translation difference account (FCMITDA)
Foreign currency translation reserve comprises of all exchange differences arising from translation of financial statements of foreign operations.
6 Employee shares based reserve
The reserve is used to recognized the grant date fair value of the options issued to employees under Company''s employee stock option plan.
Terms/ rights attached to preference shares
The Company has only one class of 7.25% Non-cumulative redeemable preference shares of '' 1 each. The said preference shares were allotted to Zee Telefilms Limited (now Zee Entertainment Enterprises Limited) on December 29, 2006, pursuant to the scheme of arrangement for demerger of cable business undertaking of Zee Telefilms Limited approved by the Hon''ble Bombay High Court vide its order dated November 17, 2006. Initially, as per the terms of the issue and allotment, the said preference shares were due for redemption on December 29, 2008. However, with the written consent/approval of Zee Entertainment Enterprises Limited, the terms of the issue of said preference shares was varied by extending the period of redemption by another three years i.e. till December 29, 2011. Later on June 6, 2011 these shares were transferred to Churu Enterprises LLP by Zee Entertainment Enterprises Limited.
Period for redemption of preference shares was extended by a period of five years till December 29, 2016 which has been further extended for period of five years till December 29, 2021 by Churu Enterprises LLP. The preference shares are redeemable at par.
In the event of liquidation of the Company before redemption of preference shares, the holders of preference shares will have priority over equity shares in the payment of dividend and repayment of capital. These instruments are accounted for as liability in accordance with the Ind AS.
i) As at April 01, 2015 the loans were secured by first pari passu charge on the fixed assets and current assets of the Company. The Company was required to maintain debt service reserve account (DSRA) for 2 quarters'' interest. All the loans were further secured by corporate guarantee of an associate Company to maintain DSRA and carried an interest rate of Base rate 3%.
ii) As at March 31, 2017 the loan was secured by first pari passu charge on the future and current assets of the Company with minimum assets cover ratio 1:1. The Company is required to maintain DSRA for 1 quarter''s interest. The loan is further secured by corporate guarantee of an associate Company to maintain DSRA and carries an interest rate of Base rate 1.95%.
The details of amounts outstanding to micro enterprises and small enterprises under the Micro, Small and Medium Enterprises Development Act (MSMED), 2006 are as per available information with the Company.
-Effect of potential equity shares being anti-dilutive has not been considered while calculating diluted weighted average equity shares and diluted earnings per share.
32 The digitization of cable networks has been implemented in Phase 1 and 2 cities starting from November 1, 2012 onwards and Phase 3 and 4 cities were to be digitized by January 31, 2017 and March 31, 2017 respectively, as per the extended timelines. Owing to the initial delays in implementation of DAS, all the Multi-System Operators (MSOs) are in transition from analogue regime to DAS and are in the process of implementation of revenue sharing contracts with the local cable operators (LCOs). Accordingly, the Company has invoiced certain LCO''s and recognized subscription revenue based on certain estimates (net basis) derived from market trends and ongoing discussion with the LCOs. Management is of the view that the execution/implementation of such contracts will not have a significant impact on the subscription revenue recognized.
7.EMPLOYEE BENEFIT OBLIGATIONS Post-employment obligations - gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The expected contribution to the plan for next annual reporting period amounts to '' 8.5 million.
The weighted average duration of the defined benefit obligation as at March 31, 2017 is 16 years (previous year 16 years).
The plan exposes the Company to actuarial risks such as interest rate risk and inflation risk.
Interest rate risk
The present value of the defined benefit liability is calculated using a discount rate determined by reference to market yields of risk free securities.
Inflation risk
A significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will increase the Company''s liability.
The following tables summarizes the components of net benefit expense recognized in the standalone statement of profit and loss and the amount recognized in the standalone balance sheet for the respective plans.
* Includes current portion Rs, 0. 63 million (March 31, 2016 and April 01, 2015: 0.79 million and 0.69 million respectively) The gratuity plan of the Company is unfunded.
These assumptions were developed by management with the assistance of independent actuaries. Discount factors are determined close to each year-end by reference to market yields of risk free securities that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension obligation. Other assumptions are based on current actuarial benchmarks and management''s historical experience.
The present value of the defined benefit obligation was measured using the projected unit credit method.
Defined contribution plans
Contribution to defined contribution plan, recognized as expense for the year are as under :-Employer''s contribution to provident fund and other funds Rs, 30.93 million (previous year Rs, 25.83 million)
8. SHARE-BASED EMPLOYEE REMUNERATION Employee Stock Option Plan -ESOP-2015
The Company instituted the Employee Stock Option Scheme -2015 ("SITI ESOP 2015" or "New Plan") to grant equity based incentives to eligible employees. The SITI ESOP-2015 has been approved by the Board of Directors of the Company at their meeting held on May 28, 2015 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on August 27, 2015 to grant up to 33,881,656 options, representing one share for each option upon exercise by the eligible employee at an exercise price determined by the Board / remuneration committee.
The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 50%, 35% and 15% of the options will vest in the employee(s) after expiry of one year, two years and three years, respectively, from the date of grant of options. The option grantee must exercise all vested options within a period of four years from the date of vesting and the shares arising on exercise of such options shall not be subject to any lock-in period.
The weighted average share price per share at the date of exercise was Rs, 39.05 per share (no options were exercised during the financial year 2015-2016 and April 01, 2015).
The fair values of options granted under new plan were determined using a variation of the binomial option pricing model that takes into account factors specific to the share incentive plans, such as the vesting period. The following principal assumptions were used in the valuation:
The underlying expected volatility was determined by reference to historical data of the Company''s shares over a period of time since its flotation on the Stock Exchange. No special features inherent to the options granted were incorporated into measurement of fair value.
In total Rs, 30.29 million (previous year Rs, 30.35 million ) of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit or loss.
9.LEASES
Finance lease: Company as lessee
Vehicles obtained on finance lease are for 4 years after which the legal title is passed to the lessee. There is escalation clause in the lease agreement. There are restrictions imposed by the lease arrangements. There are subleases.
Finance lease liabilities (refer note 16) are secured by related assets held under finance leases.
B. Financial instruments measured at fair value
The following tables present financial assets and liabilities measured at fair value in the Balance sheet in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
Valuation technique to determine fair value Optionally fully convertible debentures (Level 3)
The valuation of optionally fully convertible debentures has been done using the discounted cash flow method by discounting the investee Companies free cash flows for the explicit forecast period and the perpetuity value thereafter. The free cash flows are discounted by weighted average cost of capital comprising of debt and equity. The risk free rate of 7.14% is considered on the 10 year zero coupon government bond.
D. Financial risk management objectives and policies Financial risk management
The Company is exposed to various risks in relation to financial instruments.The main types of risks are credit risk, liquidity risk and market risk.
The Company''s risk management is coordinated in close co-operation with the board of directors, and focuses on securing Company''s short to medium term cash flows.
This note explains the sources of risk which the Company is exposed to and how the Company manages the risk and the related impact in these standalone financial statements.
A. Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the Company causing financial loss. The Company''s exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortized cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
Credit risk management
Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
A: Low credit risk on financial reporting date B: High credit risk
Concentration of trade receivables
The Company has widespread customers and there is no concentration of trade receivables.
Credit risk exposure
Provision for expected credit losses
The Company provides for 12 month expected credit losses for following financial assets.
For the purpose of computation of expected credit loss, the Company has analysed the trend of provisions for doubtful debts created in earlier years. The average rate of provision has been computed based on the adjusted sales (excluding those where the Company does not have any historical provision) and provision for doubtful debtors created against those sales. Further, the Company has analyzed expected credit loss separately for carriage revenue customer and other than carriage revenue customer primarily because the characteristics and historical losses trend was different in these two streams. As per this methodology, the Company has determined the expected credit loss as 15.5% for customers other than carriage and 5.5% for carriage customers. of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows. Short term liquidity requirements comprises mainly of trade payables and employee dues arising during normal course of business as on each balance sheet date. Long- term liquidity requirement is assessed by the management on periodical basis and is managed through internal accruals and through funding commitments from shareholders. As at each statement of financial position date, the Company''s liabilities having contractual maturities (including interest payments where applicable) are summarized as follows:
C. Market Risk
The Company has foreign currency borrowings in the form of buyers credit and is exposed to change in the exchange rates. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the company''s functional currency ( ''). The risk is measured through a forecast of highly probable foreign currency cash flows.
(i) Foreign currency risk
Foreign currency risk exposure:
The Company''s exposure to foreign currency risk at the end of the reporting period expressed in '', are as follows
(ii) Cash flow and fair value interest rate risk
The Company''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company''s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
10. RELATED PARTY TRANSACTIONS_
(i) Names of related parties where control exists_
Subsidiary companies_
Indian Cable Net Company Limited_
Central Bombay Cable Network Limited_
Siticable Broadband South Limited_
Master Channel Community Network Private Limited (Subsidiary of Central Bombay Cable Network Limited)_
Siti Vision Digital Media Private Limited_
Siti Jind Digital Media Communications Private Limited_
Siti Jai Maa Durgee Communications Private Limited_
Siti Bhatia Network Entertainment Private Limited_
Siti Jony Digital Cable Network Private Limited_
Siti Krishna Digital Media Private Limited_
Siti Faction Digital Private Limited_
Siti Guntur Digital Network Private Limited_
Siti Maurya Cable Net Private Limited (Subsidiary of Indian Cable Net Company Limited)_
Siti Karnal Digital Media Network Private Limited_
Siti Global Private Limited_
Siti Siri Digital Network Private Limited (formerly Siri Digital Network Private Limited)_
Siti Broadband Services Private Limited_
Siti Prime Uttaranchal Communication Private Limited (Formerly Capital Digital Multimedia Network Private Limited) w.e.f.
September 30, 2015_
Siti Sagar Digital Cable Network Private Limited (formerly Panchsheel Digital Communication Network Private Limited)
w.e.f. August 22, 2015_
Siti Saistar Digital Media Private Limited (formerly Saistar Digital Media Private Limited) w.e.f. February 12, 2016_
Siti Godaari Digital Services Private Limited (formerly Bargachh Digital Communication Network Private Limited) w.e.f.
January 11, 2016_
Variety Entertainment Private Limited w.e.f. January 29, 2016
Indinet Service Private Limited (Subsidiary of Indian Cable Net Company Limited) w.e.f. August 19, 2015_
Axom Communication & Cable Private Limited (Subsidiary of Indian Cable Net Company Limited) w.e.f. March 31, 2016
(ii) Associate companies_
Siti Chhattisgarh Multimedia Private Limited (Associate of Siti Bhatia Network Entertainment Private Limited)_
Voice Snap Services Private Limited w.e.f. September 19, 2016 (Associate of Variety Entertainment Private Limited)_
(iii) Joint ventures_
C&S Medianet Private Limited w.e.f. May 05, 2016_
Wire and Wireless Tissai Satellite Limited_
(iv) Key Management Personnel (KMP)_
Dr. Subhash Chandra, Director (till April 04, 2015) and Mr V.D. Wadhwa, Executive Director and CEO_
(v) Relatives of KMP**_
Mrs. Shiela Wadhwa_
Mrs.Renu Wadhwa_
(vi) Enterprises owned or significantly influenced by key management personnel or their relatives**_
Zee Entertainment Enterprises Limited_
Zee Media Corporation Limited (formerly known as Zee News Limited)_
Zee Turner Limited_
Essel International Limited_
Essel Media Ventures Limited_
Direct Media & Cable Private Limited_
Digital Satellite Media & Broadband Private Limited_
Arrow Media & Broadband Private Limited_
All India Digital Cable Federation_
** With whom the Company has transactions during the current year and previous year.
Related party transactions
The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:
11. CAPITAL AND OTHER COMMITMENTS
Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounting to Rs, 189.75 million (Previous year Rs, 124.40 million).
12. POST REPORTING DATE EVENTS
No adjusting or significant non-adjusting events have occurred between 31 March 2017 and the date of authorization of these standalone financial statements.
13. CONTINGENT LIABILITIES AND LITIGATIONS
i) Claims against the Company not acknowledged as debts Rs, 33.52 million* (Previous year Rs, 46.52 million).
ii) Demands raised by the statutory authorities being contested by the Company Rs, 273.97 million* (Previous year Rs, 580.43 million).
* excludes pending cases/litigations including ones with business associates/statutory authorities where the management believes that no material liability will devolve on the Company in respect of these litigations or where amount of liability is not ascertainable.
* Closing rate as at March 31, 2017 :1 USD = Rs, 64.84 (March 31, 2016 :1 USD = Rs, 66.33 and March 31, 2015: 1 USD = Rs, 62.59)
14. AUTHORISATION OF FINANCIAL STATEMENTS
These standalone financial statements for the year ended 31 March 2017 (including comparatives) were approved by the board of directors on 26 May 2017.
15. The breakup of year end deferred tax assets and liabilities into major components of the respective balance is as under
In the absence of probability of sufficient future taxable income, the Company has recognized deferred tax assets only to the extent of deferred tax liability.
During the current financial year 2016-2017, the current tax amount of Rs, 2.58 million pertains to TDS recoverable written-off. Considering the Company is into continuous losses, no income tax provision has been created for the current year.
Unrecognized deferred tax assets
Deferred tax assets have not been recognized in respect of the following items, because it is not probable that future taxable profit will be available against which the Company can use the benefits there from:
The tax losses expire in assessment year 2018-2024. The deductible temporary differences which includes unabsorbed depreciation and provision for doubtful debts do not expire under current tax legislation.
16. RIGHTS ISSUE UTILISATION
The Company had, during the year 2009-10, issued 236,222,285 equity shares of Rs, 1 each at a premium of Rs, 18 per share for cash to the existing equity shareholders of the Company. Given below are the details of utilization of proceeds raised through rights issue.
Unutilized amount was lying in deposit account with banks and since the money was fungible, utilization had been linked with the payment made from a common bank account post transfer of fund from the bank account separately maintained for the receipt of right issue proceeds.
17. UTILISATION OF PROCEEDS FROM PREFERENTIAL ALLOTMENT
The Company had issued 142,857,142 warrants at Rs, 35 per warrant during the year 2015-16. The Company had also issued Optionally Fully Convertible Debenture (OFCD) 51,428,571 each at Rs, 35 per OFCD during the year 2015-16. Given below are the details of utilization of proceeds raised through preferential issue.
Unutilized amount is lying bank accounts and since the money is fungible, utilization had been linked with the payment made from a common bank account post transfer of fund from the bank account separately maintained for the receipt of preferential allotment proceeds.
18. UTILISATION OF PROCEEDS FROM QUALIFIED INSTITUTIONAL PLACEMENT (QIP)
The Company had during the previous year 2014-15 issued 63,174,540 equity shares of Rs, 1 each at a premium of Rs, 34 per share. Given below are the details of utilization of proceeds raised through rights issue.
19. FIRST TIME ADOPTION OF IND AS Transition to Ind AS
These are the Companyâs first standalone financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS standalone balance sheet at April 01, 2015 (the date of transition). In preparing its opening Ind AS standalone balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
Use of deemed cost for investments in subsidiaries, jointly ventures and associates
The balance of the investment in subsidiaries and joint controlled entities at the date of transition to Ind AS, determined in accordance with the previous GAAP as the deemed cost of the investment at initial recognition.
Exchange differences on long-term foreign currency monetary items
Under previous GAAP, the company applied paragraph 46A of AS 11 whereby exchange differences arising from translation of long-term foreign currency monetary items were capitalized/ deferred. On transition to Ind AS first time adopter is permitted to continue policy adopted for accounting for such exchange differences recognized in the previous GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. The Company has opted for this exemption and continued its previous GAAP policy for accounting of exchange differences on long-term foreign currency monetary items recognized in the previous GAAP financial statements for the year ended March 31, 2016.
Under previous GAAP foreign exchange gain/ loss on long term foreign currency monetary items recognized upto March 31, 2016 has been deferred/ capitalized. Such exchange differences arising on translation/settlement of long-term foreign currency monetary items and pertaining to the acquisition of a depreciable asset are amortized over the remaining useful lives of the assets. From accounting periods commencing on or after April 01, 2016, exchange differences arising on translation/ settlement of long-term foreign currency monetary items, acquired post April 01, 2016, pertaining to the acquisition of a depreciable asset are charged to the statement of profit and loss.
B: Ind AS mandatory exceptions Estimates
An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 01, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:
Investment in equity instruments carried at FVTPL or FVTOCI.
Impairment of financial assets based on expected credit loss model.
Classification and measurement of financial assets and liabilities
The classification and measurement of financial assets will be made considering whether the conditions as per Ind AS 109 are met based on facts and circumstances existing at the date of transition.
Financial assets can be measured using effective interest method by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing at the date of transition and if it is impracticable to assess elements of modified time value of money i.e. the use of effective interest method, fair value of financial asset at the date of transition shall be the new carrying amount of that asset. The measurement exemption applies for financial liabilities as well.
Applying a requirement is impracticable when an entity cannot apply it after making every reasonable effort to do so. It is impracticable to apply the changes retrospectively if:
a) The effects of the retrospective application or retrospective restatement are not determinable;
b) The retrospective application or restatement requires assumptions about what management''s intent would have been in that period;
The retrospective application or retrospective restatement requires significant estimates of amounts and it is impossible to distinguish objectively information about those estimates that existed at that time.
C: Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity and total comprehensive income for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
Note 1: Interest free advances and security deposits
Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these security deposits and advances under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized according to the nature of the respective deposit or advance.
Note 2(a): Trade receivables
As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. IND-AS 109 requires entities to recognize loss allowances on at an amount equal to the lifetime expected credit loss or the 12 month expected credit loss based on the increase in the credit risk of the borrower. Lifetime expected credit losses are required to be estimated based on the present value of all expected cash shortfalls over the remaining life of the financial instrument. Lifetime expected credit losses are an expected present value measure of losses that arise if a borrower defaults on their obligation throughout the life of the financial instrument. They are the weighted average credit losses with the probability of default as the weight.
Note 2(b): Trade Receivables
In the financial year 2015-16, the Company has sold certain number of set-top boxes on deferred credit terms. The revenue is recognized on the basis of the fair value of the transaction entered.
Note 3: Fair valuation of investments
Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and reliability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value through profit and loss where fair value gains or losses are recognized in profit and loss.
Note 4: Borrowings and advances
Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Further, long term advances are initially recognized at fair value by applying the effective interest method. Under previous GAAP, these transaction cost on long term borrowings were amortized over the term of the borrowings.
Note 5: Deferred revenue
Under the previous GAAP, upfront amount charged as activation was being taken to revenue. Under Ind AS, Company has deferred the activation income over the average customer relationship period and carried the deferred portion on the transition date under deferred revenue.
Note 6: Convertible instruments
Under IND AS 109, a financial instrument should be classified by the issuer upon initial recognition as a financial liability or an equity instrument according to the substance of the contractual arrangement rather than its actual form and the definitions of financial liability and an equity instrument. Accordingly the company has classified optionally convertible debentures and redeemable preference shares from liability to equity.
Note 7: Deferred tax
Retained earnings has been adjusted consequent to the Ind AS transition adjustments with corresponding impact to deferred tax, wherever applicable.
Note 8: Remeasurements of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the loss for the year ended March 31, 2016 increased by '' 0.30 million. There is no impact on the total equity as at March 31, 2016.
Note 9: Retained earnings
Retained earnings as at April 01, 2015 has been adjusted consequent to the above Ind AS transition adjustments.
Note 10: Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans, effective portion of gains and losses on cash flow hedging instruments and fair value gains or (losses) on FVOCI equity instruments. Comprehensive income related recognition, measurement and disclosures did not exist under previous GAAP
Note 11: Capitalization of major repairs and capital spares
Under previous GAAP, spares were recognized as inventory and charged to profit or loss upon issuance and all expenditure on repairs were charged to profit or loss unless it increased the future benefits from the existing asset beyond its previously assessed standard of performance. Under Ind AS, spares have been capitalized if they were held by the Company for use in business and that is expected to be used for more than one year. Similarly cost of major spares and overhauls to continue to operate an item of property, plant and equipment has been capitalized as a cost of such property, plant and equipment.
Note 12: Prior period item
During the year ended 31 March 2016, there was a prior period expense of '' 21.76 million which relate to license fee pertaining to financial year 2014-2015. Under Ind AS 8, financial statements are restated retrospectively for correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occurred.
20. CAPITAL MANAGEMENT Risk Management
The Company''s objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth. The Company''s overall strategy remains unchanged from previous year. The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments The funding requirements are met through a mixture of equity, internal fund generation and other non-current borrowings. The Company''s policy is to use current and non-current borrowings to meet anticipated funding requirements. The Company monitors capital on the basis of the gearing ratio which is net debt divided by total capital (equity plus net debt) . The Company is not subject to any externally imposed capital requirements. Net debt are non-current and current borrowings as reduced by cash and cash equivalents, other bank balances and current investments. Equity comprises all components including other comprehensive income.
21. INFORMATION UNDER SECTION 186 (4) OF THE COMPANIES ACT, 2013
There are no investments or loan given or guarantee provided or security given by the Company other than the investments and loans stated under note 6 in these standalone financial statements, which have been made predominantly for the purpose of business.
22.The Company predominantly operates in a single business segment of cable distribution in India only. Hence there are no separately reportable business or geographical segments as per Indian Accounting Standard (''Ind AS'') 108 on Operating Segments. The aforesaid is in line with the way operating results are reviewed and viewed by the chief operating decision maker(s).
23. The Company had recognized certain receivables in prior years pertaining to billings done on estimation (net) basis. During the year, the Company has reached further negotiations with the customers and has accordingly written off such old receivables based on management''s best estimates, which have been disclosed as exceptional items during the year ended March 31, 2017.
24 Previous year''s amounts have been regrouped and rearranged, wherever necessary and in compliance with Ind AS.
Mar 31, 2016
1 In view of the mandatory digital addressable system (''DAS'') regulation announced by the Government of India, digitization of cable networks has been implemented in Phase 1, Phase 2 and Phase 3 cities effective November 1, 2012, April 1, 2013 and January 1, 2016 respectively. Owing to the initial delays in implementation of DAS in Phase 1, Phase 2 and Phase 3 cities and challenges faced by all the Multi-System Operators (MSOs) during transition from analogue business to DAS, the Company is in the process of implementation of revenue sharing contracts entered into with the local cable operators (LCOs). Accordingly, the Company has invoiced LCOs/subscribers and recognized subscription revenue under the new DAS regime amounting to Rs, 1,064.35 million (previous year Rs, 529 million) for year ended March 31, 2016, based on certain estimates (net basis) derived from market trends and ongoing discussion with the LCOs. Management is of the view that the execution /implementation of such contracts will not have a significant impact on the subscription revenue.
2 GRATUITY AND OTHER EMPLOYMENT BENEFIT PLANS Defined contribution plan
Contribution to defined contribution plan, recognized as expense for the year are as under :-Employer''s contribution to provident fund and other funds Rs, 25.83 million (Previous year Rs, 18.32 million).
Defined benefit plan
The following table summarizes the components of net benefit expenses recognized in the statement of profit and loss and amounts recognized in the balance sheet for the define benefit gratuity plan.
3 EMPLOYEE STOCK OPTION PLAN Employee Stock Option Plan -ESOP-2007
The Company instituted the Employee Stock Option Plan - ESOP-2007 to grant equity based incentives to its eligible employees. The ESOP-2007 ("the Scheme") has been approved by the Board of Directors of the Company at their meeting held on June 27, 2007 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on September 18, 2007 to grant 4,344,355 options (not exceeding 2% of the issued, subscribed and paid up equity share capital of the Company as on March 31, 2007), representing one share for each option upon exercise by the employee of the Company at an exercise price determined by the Board / remuneration committee. The Scheme covers grant of options to the specified permanent employees of the Company and Directors of the Company, whether whole time directors or otherwise as may be decided by the Board.
The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the options will vest in the employee every year equally. The option grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per the Scheme, they would be exercisable by the option
grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.
Employee Stock Option Plan -ESOP-2015
The Company instituted the Employee Stock Option Scheme -2015 ("SITI ESOP 2015" or "New Plan") to grant equity based incentives to eligible employees. The SITI ESOP-2015 has been approved by the Board of Directors of the Company at their meeting held on May 28, 2015 and by the shareholders of the Company by way of special resolution passed at their Annual General Meeting held on August 27, 2015 to grant up to 33,881,656 options, representing one share for each option upon exercise by the eligible employee at an exercise price determined by the Board / remuneration committee.
The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme 50%, 35% and 15% of the options will vest in the employee(s) after expiry of one year, two years and three years, respectively, from the date of grant of options. The option granted must exercise all vested options within a period of four years from the date of vesting and the shares arising on exercise of such options shall not be subject to any lock-in period.
4 LEASES
Finance lease: Company as lessee
Vehicles obtained on finance lease are for 4 years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangements. There are no subleases.
Rental expense for operating leases for the years ended March 31, 2016 and March 31, 2015 was Rs, 96.03 million and Rs, 75.78 million respectively.
5 RELATED PARTY DISCLOSURES
(i) Names of related parties where control exists Subsidiaries companies
Indian Cable Net Company Limited Central Bombay Cable Network Limited Satiable Broadband South Limited Wire and Wireless Tisai Satellite Limited
Master Channel Community Network Private Limited (Subsidiary of Central Bombay Cable Network Limited)
Siti Vision Digital Media Private Limited
Siti Jind Digital Media Communication Private Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Bhatia Network Entertainment Private Limited
Siti Jony Digital Cable Network Private Limited
Siti Krishna Digital Media Private Limited
Siti Faction Digital Private Limited
Siti Guntur Digital Network Private Limited
Siti Maurya Cable Net Private Limited (Subsidiary of Indian Cable Net Company Limited)
Siti Karnal Digital Media Network Private Limited w.e.f. February 02, 2015
Siti Global Private Limited w.e.f. June 20, 2014
Siti Siri Digital Network Private Limited w.e.f. February 02, 2015
Siti Broadband Services Private Limited w.e.f. July 19, 2014
Siti Prime Uttaranchal Communication Private Limited (Formerly Known As Capital Digital Multimedia Network Private Limited) w.e.f. September 30, 2015
Panchsheel Digital Communication Network Private Limited w.e.f. August 22, 2015 Saistar Digitalmedia Private Limited w.e.f. February 12, 2016 Bargachh Digital Communication Network Private Limited w.e.f. January 11, 2016 Variety Entertainment Private Limited w.e.f. January 29, 2016
Indinet Service Private Limited (Subsidiary of Indian Cable Net Company Limited) w.e.f. August 19, 2015 Axom Communications & Cable Private Limited (Subsidiary of Indian Cable Net Company Limited) w.e.f. March 31, 2016
(ii) Name of related party where significant influence exists Associate company
Siti Chhattisgarh Multimedia Private Limited (Associate of Siti Bhatia Network Entertainment Private Limited)
(iii) Key Management Personnel
- Mr. Subhash Chandra, Director (till April 04, 2015) and Mr .V.D. Wadhwa, Executive Director and CEO
(iv) Enterprises owned or significantly influenced by key management personnel or their relatives
Zee Entertainment Enterprises Limited
Zee Media Corporation Limited (formerly known as Zee News Limited)
Zee Turner Limited
Essel International Limited
Essel Media Ventures Limited
Direct Media & Cable Private Limited
Digital Satellite Media & Broadband Private Limited
Arrow Media & Broadband Private Limited
All India Digital Cable Federation
6 UTILISATION OF PROCEEDS FROM PREFERENTIAL ALLOTMENT
The Company has issued 142,857,142 warrants at Rs, 35 per warrant during the year 2015-16. The Company has also issued Optionally Fully Convertible Debenture (OFCDRs,s) 51,428,571 each at Rs, 35 per OFCDs during the year 2015-16. Given below are the details of utilization of proceeds raised through preferential issue.
Unutilized amount is lying bank accounts and since the money is fungible, utilization has been linked with the payment made from a common bank account post transfer of fund from the bank account separately maintained for the receipt of preferential allotment proceeds.
Details of utilization of proceeds of preferential allotment made during the year ended March 31, 2015:
7 UTILISATION OF PROCEEDS FROM QUALIFIED INSTITUTIONAL PLACEMENT (QIP)
The Company had during the previous year 2014-15 issued 63,174,540 equity shares of Rs, 1 each at a premium of Rs, 34 per share. Given below are the details of utilization of proceeds raised through rights issue.
Unutilized amount was lying in deposit account with banks as at end of the previous year and since the money is fungible, utilization has been linked with the payment made from a common bank account post transfer of fund from the bank account separately maintained for the receipt of QIP proceeds.
8 INFORMATION UNDER SECTION 186 (4) OF THE COMPANIES ACT, 2013
There are no investments or loan given or guarantee provided or security given by the Company other than the investments and loans stated under note 14 in these Financial Statements, which have been made predominantly for the purpose of business.
9 The Company operates in single business segment of cable distribution in India only. Hence there are no separate reportable business or geographical segments as per Accounting Standard (AS-17) on Segment Reporting.
10 Prior period item, for the year ended March 31, 2016, relates to license fee of Rs, 21.76 million pertaining to financial year 2014-2015, recorded in financial year 2015-2016.
11 As approved by the Shareholders, on the basis of recommendation of Nomination and Remuneration Committee, the remuneration paid to CEO and Executive Director of the Company exceeds the prescribed limits under the Companies Act, 2013 by Rs, 4.1 million, for which necessary representation for reconsidering the application has been submitted before Central Government and approval is awaited for the same.
12 Previous year amounts have been regrouped/ reclassified wherever necessary.
Mar 31, 2015
1. CORPORATE INFORMATION
SITI Cable Network Limited (hereinafter referred to as 'the Company' or
'SCNL') was incorporated in the state of Maharashtra, India. The
Company is engaged in distribution of television channels through
analogue and digital cable distribution network, primary internet and
allied services.
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared and
presented under the historical cost convention on the accrual basis of
accounting following generally accepted accounting principles in India
and comply with the Accounting Standards as prescribed under Section
133 of the Companies Act, 2013 ('Act') read with Rule 7 of the
Companies (Accounts) Rules, 2014 (as amended) and the provisions of the
Act. The accounting policies have been consistently applied by the
Company unless otherwise stated. All assets and liabilities have been
classified as current or non-current, wherever applicable as per the
operating cycle of the Company as per the guidance as set out in the
Schedule III to the Act.
In view of the present positive net worth, substantial subscription
revenue growth and continued financial support from the promoters
companies, these financial statements, have been prepared on a going
concern basis.
3. SHARE CAPITAL
(a) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of RS.
1 per share. Each holder of equity shares is entitled to one vote per
share.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
(b) Terms/ rights attached to preference shares
The Company has only one class of 7.25% Non- cumulative redeemable
preference shares of RS. 1 each. The said preference shares were
allotted to Zee Telefilms Limited (now Zee Entertainment Enterprises
Limited) on December 29, 2006, pursuant to the scheme of arrangement
for demerger of cable business undertaking of Zee Telefilms Limited
approved by the Hon'ble Bombay High Court vide its order dated November
17, 2006. Initially, as per the terms of the issue and allotment, the
said preference shares were due for redemption on December 29, 2008.
However, with the written consent/approval of Zee Entertainment
Enterprises Limited, the terms of the issue of said preference shares
was varied by extending the period of redemption by another three years
i.e. till December 29, 2011. Later on June 6, 2011 these shares were
transferred to Churu Enterprises LLP by Zee Entertainment Enterprises
Limited.Period for redemption of preference shares has been extended by
another period of five years till December 29,2016 by Churu Enterprises
LLP. The preference shares are redeemable at par. In the event of
liquidation of the Company before redemption of preference shares, the
holders of preference shares will have priority over equity shares in
the payment of dividend and repayment of capital.
(c) Shares reserved for issue under options
For details of shares reserved for issue under the employee stock
option plan (ESOP) of the Company, refer note 32.
(d) Terms of securities convertible into equity shares issued along
with earliest date of conversion.
During the year ended March 31,2013, the Company issued 162,000,000
convertible warrants on preferential basis upon payment of a
consideration of RS. 20 per warrant. Each convertible warrant was
convertible into one equity share of RS. 1 each at a premium of RS. 19
per share. Holders of such warrants had the option to convert these
warrants into equity shares upon payment of aforesaid consideration on
or before eighteen months from the date of allotment of warrants, viz.
March 19, 2013. During the year ended March 31, 2014 and March 31,2015,
68,500,000 and 93,500,000 equity shares respectively have been allotted
pursuant to the exercise of option.
(e) No shares have been issued for consideration other than cash or as
bonus shares in the current reporting year and in last five years
immediately preceeding the current reporting year.
4. In view of the mandatory digital addressable system ('DAS')
regulation announced by the Government of India, digitisation of cable
network has been implemented in Phase 1 and Phase 2 cities effective
November 1, 2012 and April 1,2013 respectively. Owing to the initial
delays in implementation of DAS in phase 1 cities and challenges faced
by all the Multi-System Operators (MSOs) during transition from
analogue business to DAS, the Company is in the process of
implementation of revenue sharing contracts entered into with the local
cable operators (LCOs).Accordingly, the Company has invoiced and
recognized subscription revenue on the basis of certain estimate under
the new DAS regime amounting to RS. 529 millions (previous year RS.
1,997.12 millions) for year ended March 31,2015 based on certain
estimates derived from market trends and ongoing discussion with the
LCOs. Management is of the view that the execution/implementation of
such contracts will not have a significant impact on the subscription
revenue.
5. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
Defined contribution plan
Contribution to defined contribution plan, recognised as expense for
the year are as under :- Employer's contribution to provident fund and
other funds RS. 18.32 million (Previous year RS. 15.25 million).
Defined benefit plan
The following table summarises the components of net benefit expenses
recognised in the statement of profit and loss and amounts recognised
in the balance sheet for the define benefit gratuity plan.
6. EMPLOYEE STOCK OPTION PLAN -ESOP-2007
The Company instituted the Employee Stock Option Plan - ESOP-2007 to
grant equity based incentives to its eligible employees. The ESOP-2007
("the Scheme") has been approved by the Board of Directors of the
Company at their meeting held on June 27, 2007 and by the shareholders
of the Company by way of special resolution passed at their Annual
General Meeting held on September 18, 2007 to grant 4,344,355 options
(not exceeding 2% of the issued, subscribed and paid up equity share
capital of the Company as on March 31, 2007), representing one share
for each option upon exercise by the employee of the Company at an
exercise price determined by the Board / remuneration committee. The
Scheme covers grant of options to the specified permanent employees of
the Company and Directors of the Company, whether whole time directors
or otherwise as may be decided by the Board.
The options granted under the Scheme shall vest not less than one year
and not more than five years from the date of grant of options. Under
the terms of the Scheme, 20% of the options will vest in the employee
every year equally. The option grantee must exercise all vested options
within a period of four years from the date of vesting. Once the
options vest as per the Scheme, they would be exercisable by the option
grantee at any time and the shares arising on exercise of such options
shall not be subject to any lock-in period.
7. LEASES
Finance lease: Company as lessee
Vehicles obtained on finance lease are for 4 years after which the
legal title is passed to the lessee. There is no escalation clause in
the lease agreement. There are no restrictions imposed by the lease
arrangements. There are no subleases.
8. RELATED PARTY DISCLOSURES
(i) Names of related parties where control exists
Subsidiaries companies
Indian Cable Net Company Limited
Central Bombay Cable Network Limited
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Limited
Master Channel Community Network Private Limited (Subsidiary of Central
Bombay Cable Network Limited)
Siti Vision Digital Media Private Limited
Siti Jind Digital Media Communication Private Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Bhatia Network Entertainment Private Limited
Siti Jony Digital Cable Network Private Limited
Siti Krishna Digital Media Private Limited
Siti Faction Digital Private Limited
Siti Guntur Digital Network Private Limited
Siti Maurya Cable Net Private Limited (Subsidiary of Indian Cable Net
Company Limited)
Siti Karnal Digital Media Network Private Limited w.e.f. February 02,
2015
Siti Global Private Limited w.e.f. June 20, 2014
Siri Digital Network Private Limited w.e.f. February 02, 2015
Siti Broadband Services Private Limited w.e.f. July 19, 2014
(ii) Name of related party where significant influence exists
Associate company
Siti Chhattisgarh Multimedia Private Limited (Associate of Siti Bhatia
Network Entertainment Private Limited)
(iii) Key Management Personnel
Dr. Subhash Chandra, Director, Mr. V.D. Wadhwa, Executive Director and
CEO
(iv) Enterprises owned or significantly influenced by key management
personnel or their relatives
Dish TV India Limited
Zee Entertainment Enterprises Limited
Zee Media Corporation Limited (formerly known as Zee News Limited)
Zee Turner Limited
Essel International Limited
Essel Media Ventures Limited
9. CAPITAL AND OTHER COMMITMENTS
Estimated amount of contracts remaining to be executed and not provided
for (net of advances) amounting to RS. 108.25 million (Previous year
RS. 1.28 million).
10. CONTINGENT LIABILITIES
i) Claims against the Company not acknowledged as debts RS. 15.02
million (Previous year RS. 49.2 million)
ii) Demands raised by the statutory authorities being contested by the
Company RS. 417.92 million (Previous year Nil) ii) The Company has
undertaken to provide continuing financial support to subsidiaries are
given as below:
In March 31, 2015
Central Bombay Cable Network Limited
Siticable Broadband South Limited
In March 31, 2014
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Private Limited
Central Bombay Cable Network Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Faction Digital Private Limited
Siti Jony Digital Cable Network Private Limited
Siti Vision Digital Media Private Limited
Siti Bhatia Network Entertainment Private Limited
11. INFORMATION UNDER SECTION 186 (4) OF THE COMPANIES ACT, 2013
Investments made
There are no investments made by the Company other than those stated
under Note 14 in the Financial Statements.
12. The Company operates in single business segment of cable
distribution in India only. Hence there are no separate reportable
business or geographical segments as per Accounting Standard (AS-17) on
Segment Reporting.
13. Previous year amounts have been presented for the purpose of
comparison and have been regrouped/ reclassified wherever necessary.
Mar 31, 2014
1. Gratuity and other post-employment benefit plans
Defined contribution plan
Contribution to defined contribution plan, recognised as expense for
the year are as under :- Employer''s contribution to provident fund `
15.03 million (Previous year ` 12.89 million).
Defined benefit plan
The following table summarises the components of net benefit expenses
recognised in the statement of profit and loss and amounts recognised
in the balance sheet for the define benefit gratuity plan.
2. Capital and other commitments
Estimated amount of contracts remaining to be executed and not provided
for (net of advances) amounting to ` 1.28 million (Previous year `
104.43 million)
3. Contingent liabilities
i) Claims against the Company not acknowledged as debts ` 49.2 million
(Previous year ` 50.34 million) ii) The Company has undertaken to
provide continuing financial support to subsidiaries are given as
below:
In March 31, 2014
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Private Limited
Central Bombay Cable Network Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Faction Digital Private Limited
Siti Jony Digital Cable Network Private Limited
Siti Vision Digital Media Private Limited
Siti Bhatia Network Entertainment Private Limited
In March 31, 2013
Central Bombay Cable Network Limited
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Private Limited
Siti Vision Digital Media Private Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Jind Digital Media Communications Private Limited
Siti Bhatia Network Entertainment Private Limited
4. The Company operates in single business segment of cable
distribution in India only. Hence there are no separate reportable
business or geographical segments as per Accounting Standard (AS-17) on
Segment Reporting.
5. The Company has revised the useful life of set top boxes from five
years to eight years during the financial year 2013-2014. This has
resulted reduction in depreciation charges for the year by ` 174.80
(previous year Nil).
6. Previous year figures have been presented for the purpose of
comparison and have been regrouped/ reclassified wherever necessary.
Mar 31, 2013
1. Corporate information
SITI Cable Network Limited [formerly known as Wire and Wireless [India)
Limited] [hereinafter referred to as ''the Company'' or ''SCNL'') was
incorporated in the state of Maharashtra, India. The Company is engaged
in distribution of television channels through analogue and digital
cable distribution network, primary internet and allied services.
2. Basis of preparation
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention. The accounting policies have been
consistently applied by the Company unless otherwise stated. All assets
and liabilities have been classified as current or non-current,
wherever applicable as per the operating cycle of the Company as per
the guidance as set out in the Revised Schedule VI to the Companies
Act, 1956.
The Company''s accumulated losses aggregate to Rs. 6,049.81 millions as at
March 31, 2013 (Previous year Rs. 5,431.40 millions) while the other
components of shareholders'' funds aggregate to Rs. 5,467.77 millions
(Previous year Rs. 4,657.77 millions). This has resulted in complete
erosion of net worth of the Company.
In view of the warrant subscription, mandatory digitization, expansion
in central India which will yield substantial subscription revenue,
increase in efficiency and assurance to extend all support in
foreseeable future from holder of majority of equity shares of the
Company, these financial statement are prepared on going concern basis.
3. The Company has during the year acquired more than 50% stake in
four subsidiaries by way of subscription of shares, the details are as
below:
a) 5,100 shares of Rs.10 each in Siti Jony Digital Cable Network Private
Limited (SJDCNPL) w.e.f. December 1, 2012 by paying a consideration of
Rs. 0.05 million.
b) 5,100 shares of Rs.10 each in Siti Krishna Digital Media Private
Limited (SKDMPL] w.e.f. July 2, 2012 by paying a consideration of Rs.
0.05 million.
c) 5,100 shares of Rs.10 each in Siti Faction Digital Private Limited
ISFDPL) w.e.f. March 16, 2013 by paying a consideration of Rs. 0.05
million.
d) 7,400 shares of Rs.10 each in Siti Guntur Digital Network Private
Limited (SGDNPL] w.e.f. March 16, 2013 by paying a consideration of Rs.
0.07 million.
The resulting goodwill has been shown as ''goodwill on consolidation''.
4. In view of the mandatory digital addressable system (''DAS'')
regulation announced by the Ministry of Information and Broadcasting,
Government of India, digitization of cable networks has been
implemented in the cities notified for Phase 1 and Phase 2 effective
November 1, 2012 and April 1, 2013 respectively. Owing to the initial
delays in implementation of DAS in phase 1 cities and challenges faced
by all the Multi-System Operators (MSOs) during transition from analog
business to DAS, the Company is in the process of executing contracts
with the subscribers and implementation of revenue sharing contracts
entered into with the local cable operators (LCOs). Accordingly, the
Company has invoiced and recognized subscription revenue net of sharing
of revenue with the LCOs under the new DAS regime amounting to Rs. 212.48
millions.
5. Gratuity and other post-employment benefit plans
Defined contribution plan
Contribution to defined contribution plan, recognised as expense for
the year are as under :- Employer''s contribution to provident fund Rs.
12.89 millions (Previous year Rs. 10.82 millions).
Defined benefit plan
The following table summarises the components of net benefit expenses
recognised in the statement of profit and loss and amounts recognised
in the balance sheet for the define benefit gratuity plan.
6. Employee Stock Option Plan -ESOP-2007
The Company instituted the Employee Stock Option Plan - ESOP-2007 to
grant equity based incentives to its eligible employees. The ESOP-2007
("the Scheme") has been approved by the Board of Directors of the
Company at their meeting held on June 27, 2007 and by the shareholders
of the Company by way of special resolution passed at their Annual
General Meeting held on September 18, 2007 to grant 4,344,355 options
(not exceeding 2% of the issued, subscribed and paid up equity share
capital of the Company as on March 31, 2007), representing one share
for each option upon exercise by the employee of the Company at an
exercise price determined by the Board / remuneration committee. The
Scheme covers grant of options to the specified permanent employees of
the Company and Directors of the Company, whether whole time directors
or otherwise as may be decided by the Board.
The options granted under the Scheme shall vest not less than one year
and not more than five years from the date of grant of options. Under
the terms of the Scheme, 20% of the options will vest in the employee
every year equally. The option grantee must exercise all vested options
within a period of four years from the date of vesting. Once the
options vest as per the Scheme, they would be exercisable by the option
grantee at any time and the shares arising on exercise of such options
shall not be subject to any lock-in period.
7. Leases
Finance lease: Company as lessee
Vehicles obtained on finance Lease are for 4 years after which the
legal title is passed to the lessee. There is no escalation clause in
the lease agreement. There are no restrictions imposed by the lease
arrangements. There are no subleases.
Operating Lease : Company as Lessee
The Company''s significant [easing arrangements are in respect of
operating Leases taken for offices, residential premises, godowns,
stores, etc. These leases are cancelable operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and the lessee. The initial tenure of the lease generally is for 11 to
120 months. Total future minimum lease payments under non cancellable
operating lease is:-
8. Related party disclosures
li) Names of related parties where control exists
(a) Holding Company
Bioscope Cinemas Private Limited (till November 9, 2012)
(b) Subsidiaries Companies
Indian Cable Net Company Limited
Central Bombay Cable Network Limited
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Limited
Master Channel Community Network Private Limited
Siti Vision Digital Media Private Limited
Siti Jind Digital Media Communication Private Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Bhatia Network Entertainment Private Limited
Siti Jony Digital Cable Network Private Limited w.e.f. December 1, 2012
Siti Krishna Digital Media Private Limited w.e.f. July 2, 2012
Siti Faction Digital Private Limited w.e.f. March 16, 2013
Siti Guntur Digital Network Private Limited w.e.f. March 16, 2013
(c) Associate Company
Siti Chhattisgarh Multimedia Private Limited
(ii) Key Management Personnel
Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-Time Director,
Mr. Sudhir Agarwal, CEO (till January 17,2012)
(iii) Enterprises owned or significantly influenced by key management
personnel or their relatives
Dish TV India Limited
Zee Entertainment Enterprises Limited
Zee News Limited
Zee Sports Limited
Zee Turner Limited
Essel International Limited
Essel Media Ventures Limited
Related party transactions
The following table provides the total amount of transactions that have
been entered into with related parties for the relevant financial year:
38 Capital and other commitments
Estimated amount of contracts remaining to be executed and not provided
for (net of advances) amounting to Rs. 104.43 millions (Previous year Rs.
63.66 millions)
39. Contingant liabilities
i) Claims against the Company not acknowledged as debts Rs. 50.34
millions (Previous year Rs. 62.84 millions)
ii) The Company has undertaken to provide continuing financial support
to subsidiaries are given as below:
In March 31, 2013
Central Bombay Cable Network Limited
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Limited
Siti Vision Digital Media Private Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Jind Digital Media Communication Private Limited
Siti Bhatia Network Entertainment Private Limited
In March 31, 2012
Central Bombay Cable Network Limited
Siticable Broadband South Limited
Wire and Wireless Tisai Satellite Limited
Siti Vision Digital Media Private Limited
Siti Jai Maa Durgee Communications Private Limited
Siti Bhatia Network Entertainment Private Limited
9. The Company operates in single business segment of cable
distribution in India only. Hence there are no separate reportable
business or geographical segments as per Accounting Standard (AS-17) on
Segment Reporting.
10. Previous year figures have been presented for the purpose of
comparison and have been regrouped/ reclassified wherever necessary.
Mar 31, 2012
1. a) Corporate Information
Wire and Wireless (India) Limited (hereinafter referred to as 'the
Company' or 'WWIL') was incorporated in the state of Maharashtra,
India. The Company is engaged in Distribution of Television Channels
through analogue and digital cable distribution network, primary
internet and allied services.
b) The Company's accumulated losses aggregate to Rs. 5,431.40 million as
at March 31, 2012 (Rs. 4,610.03 million as at March 31, 2011) while the
shareholders'funds are Rs. 4,657.77 million (Rs. 4,657.17 million as at
March 31, 2011). This has resulted in complete erosion of net worth of
the Company.
In view of new Digitisation policy announced by TRAI, which requires
all Multi System Operators (MSOs) to convert the entire Analogue
universe into digital by March 31, 2014 in a phased manner; starting
from four metros, which are to be converted into digital by June 30,
2012; the Company expects to increase / expand the subscriber base of
its analogue business; which will yield higher subscription income and
improve operational efficiency. Further, the Company has been focusing
on increasing its presence in Central India. The approved business plan
of which is under implementation by the Company, the benefit of which
will accrue in future years. Based on the new business plan, the
Company expects to have positive c ash flows and earnings before
interest, depreciation and tax (EBIDTA) from perations from year
2012-13.
Based on the above, management expects to earn higher revenues and
improved profitability which will enable the Company to strengthen its
financial position. Also the Parent Company (including the promoters
and shareholders of parent company) has provided assurance that it
intends to provide financial and operational support to the Company, to
continue its operations for the foreseeable future. Based on above,
the management is of the opinion that it is appropriate to prepare
these financial statements on going concern basis.
2. Basis of preparation
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year, except for the change in accounting
policy explained below.
(a) Terms/ rights attached to equity shares
The company has only one class of equity shares having par value of Rs. 1
per share. Each holder of equity shares is entitled to one vote per
share.
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts.
The distribution will be in proportion to the number of equity shares
held by the shareholders.
(b) Terms/ rights attached to Prefrence shares
The Company has only one class of 7.25% Non-Cumulative Redeemable
Preference Shares of Rs. 1 /- each. The said Preference Shares were
allotted to Zee Telefilms Limited (now Zee Entertainment Enterprise
Limited) on December 29, 2006, pursuant to the Scheme of Arrangement
for demerger of Cable Business Undertaking of Zee Telefilms Limited
approved by the Hon'ble Bombay High Court vide its order dated 17th
November, 2006. Initially, as per the terms ofthe issue and allotment
the said Preference Shares were due for redemption on December 29,
2008. However, with the written c onsent/approval of Zee Entertainment
Enterprises Limited, the terms ofthe issue of said Preference Shares
was varied by extending the period of redemption by another 3 years
i.e. till December29, 2011. Later on, on June 6, 2011 these shares were
transferred to Churu Enterprises LLP. by Zee Entertainment Enterprises
Limited. Period for redemption of preference shares has been extended
till December 29, 2016 by another period of five years by Churu
Enterprises LLP. In the event of liquidation of the company before
redemption of preference shares, the holders of preference shares will
have priority over equity shares in the payment of dividend and
repayment of capital.
As per records of the company, including its register of shareholders/
members and other declarations received from shareholders regarding
beneficial interest, the above shareholding represents legal ownerships
of shares.
(c) Shares reserved for issue under options
For details of shares reserved for issue under the employee stock
option (ESOP) plan of the company, refer note 28.
1. 9.95% p.a Secured Redeemable Non-Convertible Debenture
Non convertible debentures are secured by first ranking pari passu
mortgage and/ or charge/assignment of all the Company's immovable
properties, present and future and all the Company's movable, including
movable plant and machinery, machinery spares, tools and accessories,
furniture, fixture, vehicles and all other movable assets, present and
future and the Company's cash flow, receivables, bank account (other
than the reserve account) wherever mentioned, all monies lying in and
to the credit of such account, book debts, revenue of whatsoever nature
and where ever arising, present and future and insurance policies. An
exclusive charge over the reserve account and all amount lying there in
and the credit thereof, present and future. The debenture carries
coupon rate of 9.95% pa payable on semi annual basis. The debentures
are redeemable at par in four six monthly installments starting from
December 2010,2 each of20% ofthe issue size and 2 each of30% ofthe
issue size.
2. From Axis Bank-Term loans are secured by Pari-passu first charge on
entire movable, both present and future, of the Company and on the
receivables, cash flow and account of the company. Also secured by
corporate guarantee of ZEEL for maintaining revolving Debt Service
Reserve Account (DSRA) for 1 quarter of the interest and principal
repayment to be funded 10 days before each due date, for the entire
tenure of the loan.
1.The loan carries interest rate of base rate plus 2.25% pa payable on
monthly basis. The loan are payable in 16 quarterly installmemt
starting from the end of the 15 months from the date of first
disbursement 8 each of 5% of the loan and 8 each of7.5% ofthe loan.
2. The loan carries interest rate of base rate plus 1.5% pa payable on
monthly basis. The loan are payable in 8 half yearly installment
starting from the end of the 15 months from the date of first
disbursement "
3. From IDBI Bank-Term loans are secured by mortgage and charge in
favour of lender in a form satisfactory to the lender of all the
borrowers immovable properties, both present and future, and as well as
movable properties and first charge by way of hypothecation and/ or
pledge of the borrowers current assets. Also secured by corporate
guarantee of ZEEL. Maintenance of Debt Service Rerserve Account(DSRA)
for 2 quarters interest.The loan carries interest rate of the bank's
prime lending rate payable on monthly basis. The loan are payable in 16
quarterly installemnt starting from the end of the one year from the
date of first disbursement.
4. From ICICI Bank -Term loans are secured by first charge by way of
hypothecation on the Compnay 's current assets which would include
stocks & consumable stores and spares and such other movable including
books debts, receivables both present and future, in a form and manner
satisfactory to the bank, ranking pari passu with other banks/ lenders.
First charge on all moveable fixed assets of the Company cash flow and
account of the company ranking pari passu with other banks/ l enders.
Also secured by c orporate guarantee of ZEEL for maintaining revolving
Debt Service Reserve Account (DSRA) for 1 quarter of the interest and
principal repayment to be funded 10 days before each due date, for the
entire tenure of the loan. The loan carries interest rate of base rate
plus 2.25% pa payable on monthly basis. The loan are payable in 16
quarterly installment starting from the end of the 15 months from the
date offirst disbursement 8 each of 5% ofthe loan and 8 each of7.5%
ofthe loan.
3. "The Company has during theyearacquired 51% stake in three
subsidiaries byway ofsubscription ofshares,the details are as below:
a) 10,409 shares of Rs. 10 each in Siti Bhatia Network Entertainment
Private Limited w.e.f. July 1, 2011 by paying a consideration of Rs. 0.1
million.
b) 102,000 shares of Rs. 10 each at a premium of Rs. 176 in Siti Jind
Digital Media Communication Private Limited w.e.f. October 1, 2011 by
paying a consideration of Rs. 18.97 million.
c) 5,100 shares of Rs. 10 each at a premium of Rs. 320 per share in Siti
Jai Maa Durgee Communications Private Limited w.e.f. January 2, 2012
by paying a consideration of Rs. 16.83 million.
4 Capital-Work In Progress and Loans & Advances include amounts of Rs.
13.27 million (previous year Rs 18.64 million) and Rs. 40.80 million
(previous year Rs 51.80 million) respectively as outstanding for more
than 2 years. The management of the company is making all possible
efforts to adjust/ recover these amounts and also initiated appropriate
legal action against some of the parties, and therefore no provision
there against has been considered necessary. The impact, if any, which
in the opinion of the management would not be material, would be made
in the year of adjustment/ settlement.
5 The Company had given advances under a guarantee of Holding Company
to its subsidiaries and other Companies for meeting working capital
requirements and for acquisition of MSOs/ direct points, technological
upgradation etc. respectively to the extent of Rs.1182.70 million
(including Rs. 450 million given subsequent to year end). The Company
firmly believes that these interest free facilities/ advances of Rs.
1182.70 million given as such to be good of recovery and would further
enhance its operations on standalone and consolidated basis over near
future; therefore does not believe any provisions to be created on
these amounts.
6 Gratuity and Other Post-employment benefit Plans Defined
Contribution Plan
Contribution to Defined Contribution Plan, recognized as expense for
the year are as under Employer's Contribution to Provident Fund Rs
10.82 million C 10.18 million as at March 31, 2011).
Defined Benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary of last drawn salary for each completed year of service.
These benefits are unfunded.
The following table summarizes the components of net benefit expenses
recognized in the profit and loss account and amounts recognized in the
Balance Sheet for the respective plans.
7 Employee Stock Option Plan -ESOP-2007
The Company instituted the Employee Stock Option Plan - ESOP-2007 to
grant equity based incentives to its eligible employees. The ESOP-2007
("The Scheme") has been approved by the Board of Directors of the
Company at their meeting held on June 27, 2007 and by the shareholders
of the Company by way of special resolution passed at their Annual
General Meeting held on September 18,2007 to grant aggregating
4,344,355 options (not exceeding 2% ofthe issued, subscribed and paid
up equity share capital of the Company as on March 31, 2007,
representing one share for each option upon exercise by the employee of
the Company at an exercise price determined by the Board / Remuneration
committee. The Scheme covers grant of options to the specified
permanent employees of the Company and Directors of the Company,
whether Whole time Directors or otherwise as may be decided by the
Board. Pursuant to the Scheme, the Remuneration Committee has on July
16, 2009 granted 2,808,800 options (grant of 150,000 Options on June
16, 2008 ) to specified eligible employee of the Company at the market
price determined as per the SEBI Guidelines.
The options granted under the Scheme shall vest not less than one year
and not more than five years from the date of grant of options. Under
the terms ofthe Scheme, 20% of the options will vest in the employee
every year equally. The Option Grantee must exercise all vested options
within a period of four years from the date of vesting. Once the
options vest as per the Scheme, they would be exercisable by the Option
Grantee at any time and the shares arising on exercise of such options
shall not be subject to any lock-in period.
* The Shareholders of the Company in the Annual General Meeting held on
August 17, 2009 approved to re-price the unexercised options already
granted by the Company under the Employees Stock Option -2007. The
Remuneration Committee decided to re-price outstanding stock options at
a price of Rs. 20/- being the closing price of the equity shares of the
Company on October 21, 2009 at the National Stock Exchange of India
Limited.
8 Leases
Finance lease: Company as lessee
Vehicles obtained on Finance Lease are for 4 years after which the
legal title is passed to the lessee. There is no escalation clause in
the lease agreement. There are no restrictions imposed by the lease
arrangements. There are no subleases.
Operating lease :company as lessee
The Company's significant leasing arrangements are in respect of
operating leases taken for offices, residential premises, godowns,
stores, etc. These leases are cancelable operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and the lessee. The initial tenure of the lease generally is for 11 to
120 months.
9 Related party disclosures
(i)Names of Related Parties where control exists
(a) Holding Company
Bioscope Cinemas Private Limited (effective December 28, 2011)
(b) Subsidiary Companies
Central Bombay Cable Network Ltd., Indian Cable Net Company Ltd., Siti
Cable Broadband South Ltd., Wire and Wireless Tisai Satellite Ltd.,
Master Channel Community Network Pvt. Ltd. Siti Vision Digital Media
Pvt. Ltd., Siti Bhatia Network Entertainment Pvt Ltd (w.e.f. July 1,
2011), SITI Jind Digital communications Pvt ltd (w.e.f. October 1,
2011) and SITI Jai Maa Durgee Communications Pvt Ltd (w.e.f. Jan 2,
2012)
(ii) Key Management Personnel
Mr. Subhash Chandra, Director, Mr. Brijendra Kumar Syngal, Director,
Mr. Amit Goenka, Whole-Time Director, Mr. Sudhir Agarwal, Chief
Executive Officer (Resigned wef Jan 17, 2012), Mr. Arun Kapoor,
Director (Resigned wef July 12, 2011), Sureshkumar Aggarwal, Director,
Vinod Kumar Bakshi, Director
(iii) Enterprises owned or significantly influenced by key management
personnel or their relatives
Agrani Wireless Services Ltd., Dish TV India Ltd., Essel Propack Ltd.,
Media Pro Enterprise India Private Limited, Zee Entertainment
Enterprises Limited (ZEEL), Zee News Limited, ZeeTurner Ltd., Zee
Sports Limited
Related party transactions
The following table provides the total amount of transactions that have
been entered into with related parties for 31 Capital and other
commitments
Estimated amount of Contracts remaining to be executed and not provided
for (Net of Advances) amounting to Rs. 63.66 million (Previous Year Rs.
63.16 million)
10 Contingent Liabilities
i) Claims against the Company not acknowledged as debts Rs. 62.84 million
(Previous Year Rs. 62.84 million)
The Company had agreed to purchase the running business of Franchnet
Cable Network for a total sum of Rs. 1.8 million, however Franchnet Cable
Network alleged that siti cable has not supplied material /equipments
etc to them to upgrade the network. The matter was referred to
Arbitration Tribunal. Arbitration Tribunal has pronounced award against
the Company. The Company has already filed an appeal before Mumbai High
court. The appeal has been admitted and part hearing has been done. The
case is now pending for further arguments. Franchnet had claimed Rs. 61.2
million as compensation /damages against the company.
Rs. 1.25 million on account of demand raised by Kanpur Nagar Nigam Ltd
towards pole tax.
Rs. 0.39 million on account of claim raised by Om Commvision Network Pvt
Ltd u/s 138 of the Negotiable Instruments Act.
Based on the discussions with the solicitor/expert, the management
feels that the Company has a strong chance of success in above
mentioned cases and hence no provision there against is considered
necessary.
ii) The Company has undertaken to provide continuing financial support
to subsidiaries (including in the previous year).
11 The breakup of year end tax assets and liabilities into major
components of the respective balance is as under
As at the year end March 31, 2012, the company would have net deferred
tax asset primarily comprising of unabsorbed losses and carry forward
depreciation under tax laws. In the absence of virtual certainty of
sufficient future taxable income, the Company has taken the
conservative approach and created deferred tax assets to the extent of
deferred tax liability.
12 Details of dues to micro and small enterprises as defined under MSMD
act 2006
There is no amount due to Micro, Small and Medium Enterprises as per
the Micro, Small and Medium Enterprises Development Act 2006. The above
information regarding Micro, Small and Medium Enterprises have been
determined to the extent to which parties have been identified on the
basis of information available with the Company.
13 Till the year ended March 31, 2011, the company was using
pre-revised Schedule VI to the Companies Act 1956, for preparation and
presentation of its financial statements. During the year ended March
31 , 201 2, the revised Schedule VI notified under the Companies Act
1956 , has become applicable to the company. The company has
reclassified previous year figures to conform to this year's
classification. The adoption of revised Schedule VI does not impact
recognition and measurement principles followed for preparation of
financial statements. However, it significantly impacts presentation
and disclosures made in the financial statements, particularly
presentation of balance sheet.
Mar 31, 2011
1. a) Background
Wire and Wireless (India) Limited (hereinafter referred to as 'the
Company' or 'WWIL') was incorporated in the state of Maharashtra,
India. The Company is engaged in Distribution of Television Channels
through analogue and digital cable distribution network, primary
internet and allied services.
b) The Company's accumulated losses aggregate to Rs 4,610.03 million as
at March 31, 2011 (Rs. 4,042.93 million as at March 31, 2010) while the
shareholders'funds are Rs 4,657.17 (Rs. 2,308.35 million as at March
31, 2010). This has resulted in complete erosion of net worth of the
Company (after considering the impact of fictitious assets of Rs. 92.31
million lying in 'Miscellaneous Expenditure Account'). As per the
revised business plan, the Company will increase/ expand the subscriber
base of its analogue business & convert the existing universe of analog
into digital customers which will yield higher subscription income and
improve operational efficiency. Based on the business plan, the Company
expects to have positive cash flows and earnings before interest,
depreciation and tax (EBIDTA) from operations from year 2011-12.
Further, the Company has been adopting and implementing significant
cost rationalization measures including right sizing of its work force,
the benefit of which will be more significant in future years.
Based on the above, management expects to earn higher revenues and
improved profitability which will enable the Company to strengthen its
financial position. Also one of the promoter companies has provided
assurance that it intends to provide financial and operational support
to the Company, to continue its operations for the foreseeable future.
Based on above, the management is of the opinion that it is appropriate
to prepare these financial statements on going concern basis.
2. Segment Reporting Polices
The Company is a Multi System Operator providing Cable Television
Network Services, Internet Services and allied services which is
considered as the only reportable segment. The Company's operations are
based in India.
3. Related Party Disclosure
(i) Names of Related Parties where control exists
(a) Individual having significant influence
Mr. Ashok Mathai Kurien, Mr. Laxmi Goel and Ms. Sushila Goel.
(b) Subsidiary Companies
Central Bombay Cable Network Ltd., Indian Cable Net Company Ltd., Siti
Cable Broadband South Ltd., Wire and Wireless Tisai Satellite Ltd.,
Master Channel Community Network Pvt. Ltd. And Siti Vision Digital
Media Pvt. Ltd.
(ii) Key Management Personnel
Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-Time Director,
Mr. Sudhir Agarwal, Chief Executive Officer, Mr. Arun Kapoor, Director,
Parminder Singh Sandhu, Director (Resigned w.e.f. Dec 21, 2010), Suresh
Kumar Aggarwal, Director, Vinod Kumar Bakshi, Director ( w.e.f. Dec 21,
2010)
(iii) Other Related parties (in which directors are interested) with
whom transactions have taken place during the year
Agrani Satellite Services Ltd., Dakshin Media Gaming Solutions Pvt.
Ltd., Diligent Media Corporation Limited, Dish TV India Ltd., Essel
Propack Ltd., Essel Corporate Resources Pvt Ltd., ETC Networks Limited,
Integrated Subscriber Management Services Limited, Intrex India Ltd.,
Pan India Network Infravest Pvt. Ltd., Rama Associates Limited, Zee
Entertainment Enterprises Limited (ZEEL), Zee Interactive Learning
System, Zee News Limited, ZeeTurner Ltd., Churu Trading Co. Private
Limited, Essel Minerals Pvt. Ltd., Jayneer Capital Pvt. Ltd.
4. Leases
In case of assets taken on lease
Finance Lease
Vehicles obtained on Finance Lease are for 4 years after which the
legal title is passed to the lessee. There is no escalation clause in
the lease agreement. There are no restrictions imposed by the lease
arrangements. There are no subleases.
Operating Lease
The Company's significant leasing arrangements are in respect of
operating leases taken for offices, residential premises, godowns,
stores, etc. These leases are cancelable operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and the lessee. The initial tenure of the lease generally is for 11 to
120 months.
In case of assets given on lease
Operating Lease
Set Top Boxes given under operating leases are capitalized at an amount
equal to cost arrived on weighted average method and the rental income
is recognized on equal monthly rental billed to subscriber.
5. Secured Loans
i. Non-Convertible Debentures
Non convertible debentures are secured by first ranking pari passu
mortga'e and/or charge/assignment of all the Company's immovable
properties, present and future and all the Companys movable, including
movable plant and machinery, machinery spares, tools and accessories,
furniture, fixture, vehicles and all other movable assets, present and
future and the Company's cash flow, receivables, bank account (other
than the reserve account) wherever mentioned, all monies lying in and
to the credit of such account, book debts, revenue of whatsoever nature
and whereever arising, present and future and insurance policies. An
exclusive charge over the reserve account and all amount lying there in
and the credit thereof, present and future. The debentures are
redeemable at par in four six monthly installments starting from
December 2010, 2 each of 20% of the issue size and 2 each of 30% of the
issue size.
ii. Working Capital Finance From Banks
Secured by first pari passu charge on the fixed assets and current
assets of the Company. All the loans are further secured by corporate
guarantee of Zee Entertainment Enterprises Ltd. (ZEEL). iii. Term
Loan From Banks/Financial Institution
From IDBI Bank - Term loans are secured by mortgage and charge in
favour of lender in a form satisfactory to the lender of all the
borrowers immovable properties, both present and future, and as well as
movable properties and first charge by way of hypothecation and/ or
pledge of the borrowers current assets. Also secured by corporate
guarantee of ZEEL.
From Axis Bank - Term loans are secured by pari-passu first charge on
entire movable, both present and future, of the Company and on the
receivables, cash flow and account of the Company. Also secured by
corporate guarantee of ZEEL for maintaining revolving Debt Service
Reserve Account (DSRA) for 1 quarter of the interest and principal
repayment to be funded 10 days before each due date, for the entire
tenure of the loan.
iv. Finance lease and Hire Purchase
Secured by hypothecation of vehicles purchased thereunder.
6. Capital Commitments
Estimated amount of Contracts remaining to be executed on capital
account and not provided for (Net of Advances) amounting to Rs 63.16
million (Previous Year Rs. 20.60 million).
7. Contingent Liabilities not provided for
i) Claims against the Company not acknowledged as debts Rs 62.84
million (Previous Year Rs. 93.45 million)
ii) Income Tax matters : The Assessing Officer had levied penalty under
Section 271(1) (c) of the Act of Rs 24,990,210 in Assessment Year
2004-05 on account of additions confirmed by the CIT(A) in respect of
the non-deduction of tax on bandwidth charges of Rs. 2,23,59,985 and
advance to management companies written off of Rs. 5,09,64,244. The
GT(A) had affirmed the penalty and the company has further filed an
appeal before the Tribunal against the order of CIT(A). The Company
contends that all the relevant facts material to the computation of the
total income were disclosed in the assessment proceedings and hence
feels that there would be no tax liability.
iii) The Company has undertaken to provide continuing financial support
to subsidiaries (including in the previous year).
8. Employee Stock Option Plan -ESOP-2007
The Company instituted the Employee Stock Option Plan - ESOP-2007 to
grant equity based incentives to its eligible employees. The ESOP-2007
("The Scheme") has been approved by the Board of Directors of the
Company at their meeting held on June 27, 2007 and by the shareholders
of the Company by way of special resolution passed at their Annual
General Meeting held on September 1 8, 2007 to grant aggregating
4,344,355 options (not exceeding 2% of the issued, subscribed and
paid-up equity share capital of the Company as on March 31, 2007,
representing one share for each option upon exercise by the employee of
the Company at an exercise price determined by the Board/Remuneration
committee. The Scheme covers grant of options to the specified
permanent employees of the Company and Directors of the Company,
whether Whole-time Directors or otherwise as may be decided by the
Board. Pursuant to the Scheme, the Remuneration Committee has on July
16, 2009 granted 2,808,800 options (Previous year grant of 1 50,000
Options on June 16, 2008 ) to specified eligible employee of the
Company at the market price determined as per the SEBI Guidelines.
The options granted under the Scheme shall vest not less than one year
and not more than five years from the date of grant of options. Under
the terms of the Scheme, 20% of the options will vest in the employee
every year equally. The Option Grantee must exercise all vested options
within a period of four years from the date of vesting. Once the
options vest as per the Scheme, they would be exercisable by the Option
Grantee at any time and the shares arising on exercise of such options
shall not be subject to any lock-in period.
9. Employee Benefits
Defined Contribution Plan
Contribution to Defined Contribution Plan, recognized as expense for
the year are as under Employer's Contribution to Provident Fund Rs
10.18 million (Rs. 11.71 Million as at March 31, 2010).
Defined Benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
These benefits are unfunded.
The following table summarizes the components of net benefit expenses
recognized in the profit and loss account and amounts recognized in the
Balance Sheet for the respective plans.
10. There is no amount due to Micro, Small and Medium Enterprises as
per the Micro, Small and Medium Enterprises Development Act 2006.
The above information regarding Micro, Small and Medium Enterprises
have been determined to the extent to which parties have been
identified on the basis of information available with the Company.
11. Capital-Work In Progress and Loans & Advances include amounts of
Rs. 1 8.64 million and Rs. 51.80 million respectively as outstanding
for more than 2 years. The management of the company is making all
possible efforts to adjust/recover these amounts and also initiated
appropriate legal action against some of the parties, and therefore no
provision there against has been considered necessary. The impact, if
any, which in the opinion of the management would not be material,
would be made in the year of adjustment/settlement.
12. The Company had given advances under a guarantee of Promoter Group
Company to its subsidiaries and other group Companies for meeting
working capital requirements and for acquisition of MSOs/ direct points
to the extent of Rs. 419.65 million as at year end (after receipt of Rs
1524.35 million at year end). The outstanding as on date of signing of
financial statements is Rs. 1 806.30 million.
The Company firmly believes that these interest free facilities/
advances of Rs. 1 806.30 million given as such to be good of recovery
and would further enhance its operations on standalone and consolidated
basis over near future; therefore does not believe any provisions to be
created on these amounts
13. The Company is in the process of reconciling the Service Tax
Account. Necessary adjustments, if any, which in the opinion of the
management will not be material, will be made as and when the accounts
are finally reconciled.
14. During the year, the Company had acquired 50.65% stake in Siti
Vision Digital Media Private Limited w.e.f. June 30, 2010 by way of
subscription of 7,484,870 equity shares of Rs 10 each at a premium of
Rs 100 per share in consideration of Rs. 82.33 million, which has been
discharged by transfer of fixed assets of the Company. This transaction
was accounted for by following the purchase method and resulted in
goodwill amounting to Rs 1.32 million. The said goodwill has been shown
as 'goodwill on consolidation'.
15. Previous year Comparatives:
Previous year's figures have been regrouped wherever necessary to
confirm to this year's classification.
Mar 31, 2010
1. a) background
Wire and Wireless (India) Limited (hereinafter referred to as the
Company or WWIL) was incorporated in the state of Maharashtra,
India. The Company is engaged in Distribution of Television Channels
through analogue and digital cable distribution network, primary
internet and allied services. b) The Companys accumulated losses
aggregate to Rs 4,042.93 million as at March 31, 2010; while the
shareholder funds aggregate to Rs. 2,308.35 million at that date. As
per the revised business plan, the Company will increase/ expand the
subscriber base of its analogue business, which will result in improved
operational efficiency. Subsequent to the year end , the net worth of
Company has become positive after receipt of second call of right
issue. The Company has suspended its Headend in the Sky (HITS)
operations w.e.f. March 31, 2010. This will also result in reduced
operational losses as the Company incurred losses in HITS operations
due to Regulatory non support, Governmental Policies etc. Based on the
business plan, the Company expects to have positive cash flows and
earnings before interest, depreciation and tax (EBIDTA) from operations
from year 2010-11. Further, during the year, the Company has taken
significant cost rationalization measures including right sizing of its
work force, the benefit of which will be more significant in next year.
Based on the above, management expects to earn higher revenues and
improved profitability which will enable the Company to strengthen its
financial position. Also one of the promoter companies has provided
assurance that it intends to provide financial and operational support
to the Company, to continue its operations for the foreseeable future.
Based on above, the management is of the opinion that it is appropriate
to prepare these financial statements on going concern basis.
2. Segment Reporting Polices
The Company is a Multi System Operator providing Cable Television
Network Services, Internet Services and allied services which is
considered as the only reportable segment. The Companys operations are
based in India.
3. Related Party Disclosure
(i) Names of Related Parties where control exists
(a) Individual having significant influence
Mr. Ashok Mathai Kurien, Mr. Laxmi Goel and Ms. Sushila Goel.
(b) Subsidiary Companies
Central Bombay Cable Network Ltd., Indian Cable Net Company Ltd., Siti
Cable Broadband South Ltd., Wire and Wireless Tisai Satellite Ltd. and
Master Channel Community Network Pvt. Ltd.
(ii) Key Management Personnel
Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-Time Director,
Mr. Sudhir Agarwal, Chief Executive Officer, Mr. Arun Kapoor, Director
(w.e.f. April 22, 2009), Parminder Singh Sandhu (w.e.f. from March 25,
2010), Brijendra Kumar Syngal, Suresh Kumar Aggarwal (w.e.f. June 1,
2009), Michael Block (resigned w.e.f. March 25, 2010), Sanjay Jain
(resigned w.e.f. April 25, 2009)
(iii) Other Related parties with whom transactions have taken place
during the year
Agrani Satellite Services Ltd., Dakshin Media Gaming Solutions Pvt.
Ltd., Diligent Media Corporation Limited, Dish TV India Ltd., Essel
Propack Ltd., Essel Corporate Resources Pvt. Ltd., Integrated
Subscriber Management Services Limited, Intrex India Ltd., Pan India
Network Infravest Pvt. Ltd., Rama Associates Limited, Zee Entertainment
Enterprises Limited, Zee Interactive Learning System, Zee News Limited,
ZeeTurner Ltd., Churu Trading Co. Private Limited, Essel Minerals Pvt.
Ltd., Briggs Trading Company Pvt. Ltd., Ganjam Trading Company Pvt.
Ltd., Jayneer Capital Pvt. Ltd.
4. Leases
In case of assets taken on lease finance Lease
Vehicles obtained on Finance Lease are for 4 years after which the
legal title is passed to the lessee. There is no escalation clause in
the lease agreement. There are no restrictions imposed by the lease
arrangements. There are no subleases.
Operating Lease
The Companys significant leasing arrangements are in respect of
operating leases taken for offices, residential premises, godowns,
stores, etc. These leases are cancellable operating lease agreements
that are renewable on a periodic basis at the option of both the lessor
and the lessee. The initial tenure of the lease generally is for 11 to
120 months.
5. Secured Loans
i. Non-Convertible Debentures
Non-convertible debentures are secured by first ranking pari passu
mortgage and/ or charge/assignment of all the Companys immovable
properties, present and future and all the Companys movable, including
movable plant and machinery, machinery spares, tools and accessories,
furniture, fixture, vehicles and all other movable assets, present and
future and the Companys cash flow, receivables, bank account (other
than the reserve account) wherever mentioned, all monies lying in and
to the credit of such account, book debts, revenue of whatsoever nature
and where ever arising, present and future and insurance policies. An
exclusive charge over the reserve account and all amount lying there in
and the credit thereof, present and future.
ii. Working Capital finance from banks
Secured by first pari passu charge on the fixed assets and current
assets of the Company. All the loans are further secured by corporate
guarantee of Zee Entertainment Enterprises Ltd. (ZEEL).
iii. Term Loan from banks/financial Institution
Term loans are secured by mortgage and charge in favour of lender in a
form satisfactory to the lender of all the borrowers immovable
properties, both present and future, and as well as movable properties
and first charge by way of hypothecation and/or pledge of the borrowers
current assets. Also secured by corporate gurantee of Zee Entertainment
Enterprises Ltd.
iv. Finance lease and hire Purchase Facility
Secured by hypothecation of vehicles.
6. Capital Commitments
Estimated amount of Contracts remaining to be executed on capital
account and not provided for (Net of Advances) amounting to Rs. 20.60
million (Previous Year Rs. 3.29 million).
7. Contingent Liabilities not provided for
i) Claims against the Company not acknowledged as debts Rs 93.45
million (Previous Year Rs. 114.68 million)
ii) Income Tax matters : Rs. 24.99 million for the assessment year
2004-05. This dispute arose when AO levied a penalty of Rs 24.99
million in the assessment year 2004-05 based on the additions in the
income confirmed by the CIT(A). On an appeal filed by the Company
against the penalty levied by the AO, the CIT (A) has affirmed the
penalty and, the Company has filed an appeal before the Tribunal
against the order of CIT(A).
However, since the Company may contend that all the relevant facts
material to the computation of his total income were disclosed in the
assessment proceedings, there would be no tax liability.
iii) The Company has undertaken continuing financial support to
subsidiaries.
8. Employee Stock Option Plan à ESOP-2007
The Company instituted the Employee Stock Option Plan à ESOP-2007 to
grant equity based incentives to its eligible employees. The ESOP-2007
("The Scheme") has been approved by the Board of Directors of the
Company at their meeting held on June 27, 2007 and by the shareholders
of the Company by way of special resolution passed at their Annual
General Meeting held on September 18, 2007 to grant aggregating
4,344,355 options (not exceeding 2% of the issued, subscribed and
paid-up equity share capital of the Company as on March 31, 2007,
representing one share for each option upon exercise by the employee of
the Company at an exercise price determined by the Board/ Remuneration
committee. The Scheme covers grant of options to the specified
permanent employees of the Company and Directors of the Company,
whether Whole time Directors or otherwise as may be decided by the
Board. Pursuant to the Scheme, the Remuneration Committee has on July
16, 2009 granted 2,808,800 options (Previous year grant of 150,000
Options on June 16, 2008 ) to specified eligible employee of the
Company at the market price determined as per the SEBI Guidelines.
The options granted under the Scheme shall vest not less than one year
and not more than five years from the date of grant of options. Under
the terms of the Scheme, 20% of the options will vest in the employee
every year equally. The Option Grantee must exercise all vested
options within a period of four years from the date of vesting. Once
the options vest as per the Scheme, they would be exercisable by the
Option Grantee at any time and the shares arising on exercise of such
options shall not be subject to any lock-in period.
9. Employee benefits
Defined Contribution Plan
Contribution to Defined Contribution Plan, recognized as expense for
the year are as under: Employers Contribution to Provident Fund Rs.
11.71 million (Rs. 16.54 million as at March 31, 2009).
Defined benefit Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
These benefits are unfunded.
The following table summarizes the components of net benefit expenses
recognized in the profit and loss account and amounts recognized in the
Balance Sheet for the respective plans.
10. There is no amount due to Micro, Small and Medium Enterprises as
per the Micro, Small and Medium Enterprises Development Act, 2006.
The above information regarding Micro, Small and Medium Enterprises
have been determined to the extent to which parties have been
identified on the basis of information available with the Company.
10.1 Miscellaneous income includes foreign exchange gain/(loss) as on
March 31, 2010 amounts to Rs. 0.92 million; (Previous Year Rs. (6.12)
million).
11. Previous year Comparatives:
Previous years figures have been regrouped wherever necessary to
confirm to this years classification.