111
18
Notice is hereby given that the Twenty-Sixth Annual General Meeting of the Members of Zee Entertainment Enterprises Limited will be held at ‘Nehru Centre’, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018 on Wednesday, the 23rd day of July 2008, at 11.30 a.m., to transact the following businesses :
ORDINARY BUSINESS:
1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2008, the Profit & Loss Account of the Company for the financial year ended on that date and the Reports of the Auditors and Directors thereon.
2. To declare dividend on equity shares for the financial year ended March 31, 2008.
3. To appoint a Director in place of Mr. Ashok Kurien, who retires by rotation, and being eligible, offers himself for re-appointment.
4. To appoint a Director in place of Mr. Rajan Jetley, who retires by rotation, and being eligible, offers himself for re-appointment.
5. To appoint a Director in place of Sir Gulam Noon, who retires by rotation, and being eligible, offers himself for re-appointment.
6. To appoint M/s. MGB & Co., Chartered Accountants, Mumbai as Auditors of the Company to hold such office from the conclusion of this meeting until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Board of Directors of the Company.
SPECIAL BUSINESS:
7. To consider and if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution.
“Resolved that Prof. R. Vaidyanathan be and is hereby appointed a Director of the Company whose period of office shall be liable to determination by retirement of Directors by rotation.”
8. To consider and if thought fit, to pass, with or without modification, the following resolution as a Special Resolution.
“Resolved that pursuant to the provisions of Section 31 and other applicable provisions, if any, of the Companies Act, 1956 (including any amendment or re-enactment thereof), the Articles of Association of the Company be and is hereby altered by substituting existing Article 71 with the following:
Article 71. Until otherwise determined by a General Meeting the number of Directors shall not be less than three and not more than twelve.”
The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, July 19, 2008 to Wednesday, July 23, 2008 (both days inclusive). Share Transfers received in order at the Registered Office of the Company or at the office of the Registrars of the Company, by 5.30 p.m. on July 18, 2008, will be processed for payment of equity dividend, if declared, to the transferees or their mandatees.
Dividend, if approved by Members at the ensuing Annual General Meeting, will be paid to all those shareholders whose name appear in the Register of Members of the Company, after giving effect to all valid share transfers in physical form lodged with the Company or its Registrars on or before July 18, 2008 and in the list of beneficial owners furnished by National Securities Depository Limited (NSDL) and/or Central Depository Services (India) Limited, (CDSL) in respect of shares held in electronic form, as at the end of the business on July 18, 2008.
By order of the Board
Place : Mumbai M. LakshminarayananDate : June 16, 2008 Executive Vice President & Company Secretary
Registered Office:Continental Building,135, Dr. Annie Besant Road,Worli, Mumbai 400 018
NOTICE
19
NOTES:
1. A member entitled to attend and vote at the meeting may appoint a proxy to attend and vote on a poll on his behalf. A proxy need not be a member of the Company.
Proxies, in order to be effective, must be received at the Registered Office of the Company not less than 48 hours before the commencement of the Annual General Meeting.
2. Corporate Members are requested to send to the Registered Office of the Company, a duly certified copy of the Board Resolution, pursuant to Section 187 of the Companies Act, 1956, authorizing their representative to attend and vote at the Annual General Meeting.
3. Explanatory Statements pursuant to Section 173 (2) of the Companies Act, 1956, relating to the Special Businesses to be transacted at the Annual General Meeting are annexed.
4. Additional information, pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, on Directors recommended by the Board of Directors for appointment/re-appointment at the Annual General Meeting forms part of the Report on Corporate Governance in the Annual Report.
5. Members/Proxies should bring their Attendance Slips along with copy of the Annual Report to the meeting.
6. Members who are holding Company’s shares in dematerialised form are required to bring details of their Depository Account Number for identification.
7. Queries on accounts and operations of the Company, if any, may be sent to the Company Secretary seven days in advance of the meeting so as to enable the Management to keep the information ready at the meeting.
8. Members holding equity shares in physical form are requested to notify the change of address/dividend mandate, if any, to the Company’s Registrar and Share Transfer Agent, M/s. Sharepro Services (India) Pvt. Ltd., Satam Estate, 3rd Floor, Above Bank of Baroda, Cardinal Gracious Road, Chakala, Andheri (East), Mumbai-400 099, India.
9. Under Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of shares held by them in physical form. Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in duplicate (which will be made available on request) to M/s. Sharepro Services (India) Pvt. Ltd.
10. Dividend for the financial year ended March 31, 2001, which remains unpaid or unclaimed, will be due for transfer to the Investor Education and Protection Fund of the Central Government (‘IEPF’) in December, 2008.
Members who have not encashed their dividend warrant(s) for the financial year ended March 31, 2001, or any subsequent financial year(s), are requested to lodge their claims with the Company’s Registrar and Share Transfer Agent. Members are advised that in terms of provisions of Section 205C of the Companies Act, 1956, once unclaimed dividend is transferred to IEPF, no claim shall lie in respect thereof.
EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956
Item No. 7
Professor R. Vaidyanathan was appointed by the Board of Directors of the Company effective January 1, 2008, as an Additional Director of the Company in the category of Independent Non-Executive Directors, in terms of Section 260 of the Companies Act, 1956 (‘the Act’).
Pursuant to provisions of Section 260 of the Companies Act, 1956, and Article of Association of the Company, Prof. R. Vaidyanathan vacates his office at the conclusion of this Annual General Meeting. Due notice under Section 257 of the Act has been received from a Member proposing appointment of Prof. R. Vaidyanathan as a Director of the Company. Requisite consent has been filed by Prof. R. Vaidyanathan, pursuant to the provisions of Section 264(1) of the Act, to act as a Director, if appointed. Prof. R. Vaidyanathan does not hold any shares in the Company.
Brief profile and other details of Prof. R. Vaidyanathan, forms part of the Corporate Governance Report.
The Board recommends the resolution as set out in Item no. 7 for Member’s approval.
None of the Directors of the Company, except Prof. R. Vaidyanathan, is interested in this resolution.
20
Item No. 8
Existing Article 71 of the Articles of Association of the Company limits maximum number of Directors of the Company to Eleven (11). Section 259 of the Companies Act, 1956, permits a maximum of Twelve (12) Directors in a Public Company or a Private Company which is a subsidiary of a Public Company, without any further approval from the Central Government. To facilitate broad basing the Board of Directors of the Company, it is proposed to alter Article 71 of the Articles of Association, so as to enable appointment of not more than Twelve (12) Directors as and when required or deemed fit.
As per the provisions of Section 31 of the Companies Act, 1956, any alteration to Articles of Association shall be subject to approval of Members by means of Special Resolution.
The Board recommends the Special Resolution as set out in Item no. 8 for Member’s approval.
None of the Directors of the Company is in any way concerned or interested in this resolution.
By order of the Board
Place : Mumbai M. LakshminarayananDate : June 16, 2008 Executive Vice President & Company Secretary
Registered Office:Continental Building,135, Dr. Annie Besant Road,Worli, Mumbai 400 018
21
We, Punit Goenka, Whole-time Director and Hitesh Vakil, Director - Finance of Zee Entertainment Enterprises Limited (‘the Company‘), certify that:
(a) We have reviewed the financial statements and the cash flow statement of the Company for the year ended March 31, 2008 and that to the best of our knowledge and belief:
i) these statements do not contain any materially untrue statement or omit any material fact or contain statement that might be misleading;
ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.
(b) To the best of our knowledge and belief, no transactions entered into by the Company during the year ended March 31, 2008 are fraudulent, illegal or violative to the Company’s Code of Conduct.
(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee deficiencies in the design or operation of such internal controls, if any, of which we are aware and steps taken or proposed to be taken to rectify these deficiencies.
(d) During the year:
i) there has not been any significant change in internal control over financial reporting;
ii) there have not been any significant changes in accounting policies; and
iii) there have been no instances of significant fraud of which we are aware that involve management or other employees having significant role in the Company’s internal control system over financial reporting.
Hitesh Vakil Punit GoenkaDirector - Finance Whole-time Director
Mumbai, June 16, 2008
CERTIFICATION ON FINANCIAL STATEMENTS OF THE COMPANY
22
To the Members ofZee Entertainment Enterprises Ltd.,
Your Directors take pleasure in presenting the Twenty Sixth Annual Report together with the Audited Statement of Accounts of the Company for the year ended March 31, 2008.
RESPONSIBILITY STATEMENT
In terms of and pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors, in relation to the Annual Statement of Accounts for financial year 2007-08, state and confirm that:
a) the Accounts had been prepared on a ‘going concern’ basis and in such preparation the applicable accounting standards had been followed with proper explanation relating to material departures;
b) your Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that year; and
c) your Directors had taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, as amended, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
FINANCIAL RESULTS
The Financial performance of your Company for the year ended March 31, 2008 is summarized below:
(Rs. Thousands)Particulars Year ended
31.03.2008Year ended 31.03.2007
Sales & Services 10,419,923 8,676,786Other Income 1,019,293 614,553Total Income 11,439,216 9,291,339Total Expenses 6,869,997 6,830,203Profit before Tax & Exceptional Item 4,569,219 2,461,136Provision for Taxation (net) 1,592,203 799,050Profit after Tax before Exceptional Item 2,977,016 1,662,086Less: Exceptional Item (provision for diminution in value of Investment) 25,806 –Profit after Tax 2,951,210 1,662,086
DIRECTORS’ REPORT
(Rs. Thousands)Particulars Year ended
31.03.2008Year ended 31.03.2007
Add: Balance brought forward 5,571,728 4,969,018Amount available for appropriations 8,522,938 6,631,104Appropriations:Dividend 868,014 650,350Tax on Dividend 145,442 110,527General Reserve 300,000 300,000Excess provision for dividend including tax on dividend written back
– (1,501)
Balance carried forward 7,209,482 5,571,728
DIVIDEND
Your Directors are pleased to recommend a dividend of Rs. 2/- per equity share, i.e. 200% on par value of Re. 1/- each, for the financial year 2007-08. The total outflow for this purpose would be Rs. 1,013.46 Million, which includes a dividend of Rs. 868.01 Million and tax on dividend of Rs. 145.44 Million.
In the event, if all outstanding Foreign Currency Convertible Bonds aggregating US $ 3.79 Million get converted into equity shares by July 18, 2008, the outflow on account of dividend would be Rs. 1015.99 Million.
BUSINESS OVERVIEW
Your Company has further consolidated its position in the Media & Entertainment space. During the year Zee TV, which has 37% market share, is the only channel which has grown in viewership by 20% and has 5 out of top 10 programmes in the genre. The programmes Dulhan, Maayka, Ghar ki Lakshmi …Betiyaan, Saath Phere are ahead of competition in their respective slots. With the musical extravaganza Sa Re Ga Ma Pa being No. 1 programme across GEC, Zee TV has been able to establish and broaden the reportere of successful shows in this kitty. Your Company has maintained leadership position in the 9 PM to 10 PM slot and Zee TV has currently 24 out of the top 50 programmes. Zee Cinema continues to maintain its leadership position with 37% channel share in the segment with its premier properties ‘Shanivaar Ki Raat’, ‘Bhakti Ki Shakti’ and ‘Double Maaza’ performing consistently well. Zee Café’ has been successful in strengthening its position in the prime time and has launched eleven new programmes during the year and is continuously surpassing the competitors in its genre. Zee Café is the first channel in the country to
23
run popular sitcoms, simultaneously with their launch in US thereby realising its core purpose of providing widest and latest range of English entertainment in India. These in the aggregate, led to substantial growth in advertising revenues during the year on a like to like basis.
The Indian Film Industry has seen multifold expansion of exhibition with new multiplexes and digital cinemas which has given rise to development of ancillary markets like home entertainment, mobile music, international distribution, etc. To capitalize on this strong opportunity and synergies, your Company is launching a Film Division with two labels – Zee Motion Pictures and Zee Limelight for mainstream and niche films respectively. This division would focus on script development, talent and film acquisition, production, distribution and marketing of films in Hindi and five other regional languages viz. Tamil, Telugu, Kannada, Bengali and Marathi. Your Company’s management expects 2008-09 to be the first full year of these activities with range of releases across the six languages. With the expected enlarged coverage of Conditional Access System (CAS) your Company expects to garner higher subscription revenues.
SUBSIDIARIES
Asia Today Ltd., Mauritius, a wholly owned overseas subsidiary of your Company had acquired entire equity stake in APAC Media Ventures Ltd., a Company registered in Hongkong, effective October 30, 2007, for the purpose of its broadcasting foray in the Asia Pacific Region.
During the year, pursuant to a Scheme of Amalgamation, ETC Networks Limited, a listed subsidiary of your Company, merged with Zee Interactive Learning Systems Limited. The merged entity was subsequently renamed as ETC Networks Limited. Upon receipt of requisite approvals, ETC Networks Limited, as a merged entity got listed at the Stock Exchanges on and from March 28, 2008. Your Company currently holds 50.18% in this subsidiary post-merger.
Ministry of Corporate Affairs, Government of India has, vide its letter no. 47/232/2008-CL-III dated May 13, 2008, granted exemption to the Company from applicability of provisions of Section 212(1) of the Companies Act, 1956, relating to attachment of the accounts of its subsidiaries to its Annual Accounts for financial year ended March 31, 2008. Accordingly, annual accounts of the subsidiaries for current financial year are not being attached with the Annual Report of the Company. Financial highlights of the subsidiaries are disclosed in the Annual Report and the Annual Accounts of the subsidiary companies are available for inspection by any Member of the Company
who may be interested. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.
SHARE CAPITAL
During the financial year 2007-08, there has been no change in the issued capital of the Company.
The Conversion Price applicable on conversion of the Foreign Currency Convertible Bonds (FCCBs) consequent to the de-merger of business undertakings of the Company in 2006, was revised to Rs. 153.459 on and from April 18, 2008, on receipt of requisite approvals. Subsequently, till the date of this report, your Company has issued and allotted 440,346 Equity Shares of Re. 1 each, upon conversion of 154 FCCBs of US$ 10,000 each, resulting in an increase in the paid up share capital of the Company to 434,007,111 equity shares of Re. 1 each. As on date, out of FCCBs aggregating US$ 100 Million issued in the year 2004, only US$ 3.79 Million are outstanding.
PUBLIC DEPOSITS
Your Company has neither accepted nor renewed any Deposits. During the year, balance of matured deposits along with interest thereon, aggregating to Rs. 199,517/-, which were unclaimed for a period of seven (7) years from the date of maturity have been transferred to the Investor Education and Protection Fund.
CORPORATE GOVERNANCE
Your Company has been benchmarking itself with well-established Corporate Governance practices besides strictly complying with the requirements of Clause 49 of the Listing Agreement(s), including the recent amendments. Given the emerging pivotal role of Independent Directors in bringing about good governance, your Company continues its efforts in optimum utilization of their expertise and involving them in all critical decision making processes. A separate report on Corporate Governance together with the Statutory Auditors’ Certificate on compliance is attached to this Annual Report as also a Management Discussion and Analysis report.
DIRECTORS
Your Board had appointed Prof. R. Vaidyanathan as an Additional Director in the category of Independent Non-Executive Director on and from January 1, 2008. Prof. R. Vaidyanathan will vacate his office at the ensuing Annual General Meeting and has consented to act as Director of the Company, if appointed. Notice has been received from a Member of the Company under Section 257 of the Companies Act, 1956, proposing the appointment
24
of Prof. R. Vaidyanathan as Director of the Company. Appropriate resolution seeking your approval to his appointment forms part of the Notice convening 26th Annual General Meeting of the Company.
Mr. Ashok Kurien, Mr. Rajan Jetley and Sir Gulam Noon, Directors retire by rotation at the ensuing Annual General Meeting and, being eligible, have offered themselves for re-appointment. Your Board has recommended their re-appointment.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Accounting Standard AS 21 – Consolidated Financial Statements, read with Accounting Standard AS 23 – Accounting for Investments in Associates, and Accounting Standard AS 27 – Financial Reporting of Interests in Joint Ventures, the audited Consolidated Financial Statements forms part of this Annual Report.
AUDITORS
Statutory Auditors, M/s. MGB & Co., Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and, being eligible, have offered themselves for re-appointment.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Information required to be provided under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 in relation to Conservation of Energy and Technology Absorption are currently not applicable to the Company and therefore particulars in connection there with are as under:
a) Conservation of Energy – Nil
b) Technology Absorption – Nil
Particulars of foreign currency earnings and outgo during the year are given in Schedule 18B Note 14(e) to the Notes to the Accounts forming part of the Annual Report.
PARTICULARS OF EMPLOYEES
Information as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in an annexure forming part of this report.
ACKNOWLEDGEMENTS
Your Directors take this opportunity to place on record their appreciation of the dedication and commitment of employees at all levels that has contributed to the success of your Company and remain in the forefront of media and entertainment business. Your Directors thank and express their gratitude for the support and co-operation received from the Central and State Governments – mainly the Ministry of Information & Broadcasting and Ministry of Comminucations & Information Technology- Department of Telecommunication and other stakeholders including viewers, producers, vendors, financial institutions, banks, investors, service providers as well as regulatory and governmental authorities.
On behalf of the Board
Subhash Chandra Chairman
Place : Mumbai Date : June 16, 2008
25
Information as per Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2008
Sr. No.
Name Age Designation Total Remuneration
(Rs.)
Qualification Exp in
Yrs
Date of Commence-
ment of Employment
Previous Employment
1 Mr. Ajay Bhalwankar 37 Sr. Vice President - Programming
3,657,052 M.A 16 14.05.01 Tara Channel
2 Mr. Anil Anand 45 Sr. Vice President - Programming
2,555,558 B.Com., PGD in Marketing
24 20.11.00 Reliance Industries Ltd. (Infocom Division)
3 Mr. Ashish Sehgal 39 Sr. Vice President - Sales 4,184,815 B.Com., LLB 11 11.01.06 Star India Pvt. Ltd.
4 Mr. Bharat Ranga 39 Director - International Business
8,281,023 B.Com., M.B.A 18 04.03.98 Modi Korea Telecommunication
5 Mr. Gary Lovejoy 53 COO - Zee Sports 2,355,404 30 01.04.06 Zee Sports Ltd.
6 Mr. Gaurav Bahal 34 Vice President - Operations 3,256,533 + Dip in Broadcast Journalism
13 17.04.07 ESPN
7 Mr. Gaurav Seth 37 Vice President - Marketing 1,915,879 + B.A. 13 21.09.04 Alta Vista / Overture
8 Mr. Himanshu Mody 30 Director - Programming 6,215,184 M.Sc. - Finance University of Strathclyde, Glasgow
7 01.04.05 Essel Corporate Resources Pvt. Ltd.
9 Mr. Hitesh Vakil 48 Director - Finance & Operations 7,650,880 B.Com., ACA 23 01.04.96 Tips & Toes Cosmetics (I) Ltd.
10 Mr. Indranil Chakravarti
36 Executive Vice President - Zee Café
6,603,568 BBA, CPA 13 02.05.05 JP Morgan Plc.
11 Mr. Irshwin Balvani 55 Executive Vice President - Zee Music
4,610,276 B.A. DMM 31 01.07.05 Bennett & Coleman Co. Ltd.
12 Mr. Ishwar Jha 36 Sr. Vice President - Business Technology
3,369,332 B.Com., PGDCA 15 09.08.04 Sony Music Entertainment
13 Mr. Jitesh Rajdeo 35 Sr. Vice President - Sales 3,622,304 B.Com. 13 01.01.02 Econnect India Ltd.
14 Mr. Joy Chakraborthy 41 President - Sales & Revenue 16,359,458 B.Sc., MMM 16 09.03.05 Star India Pvt. Ltd.
15 Mr. M. Lakshminarayanan 46 Sr. Vice President & Company Secretary
3,401,624 B.Com., ACS 25 19.01.06 BPL Power Projects
16 Mr. Mohan Gopinath 36 Sr. Vice President - Programming
3,409,250 B.com., MMS. 11 19.12.96 NIL
17 Mr. Nitin Vaidya 47 Director - Regional Channels 7,168,366 B.Sc. 22 19.04.01 Broadcast Worldwide
18 Mr. Pankaj Suroliya 41 Vice President - Accounts 1,643,473 + B.Com. 22 01.09.94 Defiance Clothing Co.
19 Mr. Pawan Jailkhani 38 Sr. Vice President - Sales 3,789,561 B.Sc. 15 02.01.95 The Pioneer Ltd.
20 Mr. Pradeep Guha 56 CEO 53,310,698 B.A., AAMP (Asian Institute of Mgmt-Manila)
30 15.01.05 Bennett & Coleman Co. Ltd.
21 Mr. Punit Goenka 33 Whole-time Director 11,451,000 B.Com. 11 01.01.05 ASC Enterprise Limited
22 Mr. Rajib Chatterjee 36 Sr. Vice President - Zee Bangla 3,070,156 B.Com. 16 27.09.04 Eenadu Network
23 Mr. Rudolf D. 39 Sr. Vice President - Operations 3,078,079 B.A. 17 16.10.92 Lady London Pvt. Ltd.
24 Mr. Sanjay Agrawal 39 Sr. Vice President - Accounts & Finance
3,698,927 M.Com., CA 15 01.11.05 Asia TV Ltd., U.K
25 Mr. Sanjeev Lamba 47 Director - Marketing & Sales (Movies)
2,590,892 + BA/MBA 26 30.01.08 The Weinstien Company
26 Mr. Sanjoy Chatterjee 41 Sr. Vice President - Sales 3,803,504 B.Com. 17 25.04.05 Sony Entertainment Television
27 Mr. Santosh Gopal Shendye
43 Head - Inhouse Production 3,403,462 B.A. 17 20.11.92 Full Lights
ANNEXURE TO DIRECTORS’ REPORT
26
Sr. No.
Name Age Designation Total Remuneration
(Rs.)
Qualification Exp in
Yrs
Date of Commence-
ment of Employment
Previous Employment
28 Mr. Satish Menon 51 Director - Sponsorship & Business Development
4,796,575 B.A., Diploma in Marketing Management
18 01.04.06 Zee Sports Ltd.
29 Mr. Shariq Patel 36 Sr. Vice President - Operations 1,896,628 + B.Com., PGDBM 11 09.07.07 Radio Midday/Radio One
30 Mr. Sujay Kutty 39 Sr. Vice President - Sales 3,561,875 B.Com. 16 10.12.01 Sony T.V
31 Mr. Tarun Mehra 40 Executive Vice President 4,362,200 BE, MMS 14 07.01.05 Shaw Wallace
32 Mr. Umesh Pradhan 39 Vice President - Accounts 2,270,696 + B.Com., ICWA 17 01.09.94 J.K. Helene Curtis
33 Ms. Anjana Kshetry 42 Sr. Vice President - Sales 3,276,024 B.Com., Mass Comm.
19 07.04.00 Modi Entertainment
34 Ms. Ashwini Yardi 36 Sr. Vice President - Programming
5,830,353 + B.A. 13 01.06.94 Nil
35 Ms. Laxmi Shetty 40 Sr. Vice President - MIS 4,236,122 B.Sc., DMM 20 01.06.05 Bennett Coleman & Co. Ltd.
36 Ms. Priyanka Datta 36 Sr. Vice President - Sales 3,178,784 MA 14 01.05.02 SAB TV
37 Ms. Romila Sharma 43 Vice President - Collections 3,086,325 B.A., Dip. in Hotel Mgt.
14 20.03.06 Sony Entertainment Television
38 Ms. Sanghamitra Ghosh
52 Director - HR 6,332,376 B.Sc., PGD 22 01.04.03 Zee Interactive Learning Systems Ltd.
39 Ms. Sharda Sunder 41 Sr. Vice President - Commercial 3,669,633 B.Com., C.A. 18 11.05.05 Bennett & Coleman Co. Ltd.
40 Ms. Simran Hoon 37 Sr. Vice President - Sales 3,262,783 + B.A., PGDMM 11 28.03.05 Star India Pvt. Ltd.
41 Ms. Sita L. N. Swamy
42 Sr. Vice President - Network Marketing
2,895,886 + MBA 19 10.11.05 JWT
+ Indicates remuneration is for part of the year.
Notes: 1. All appointments are contractual and terminable by notice on either side.
2. None of the employees, except Mr. Punit Goenka is related to any of the Directors of the Company.
3. Remuneration includes Salary, Allowances and Company’s Contribution to Provident Fund, Medical Benefits, Leave Travel Allowance & Other Perquisites and benefits valued as per Income Tax Act,1961.
4. Except Mr. Punit Goenka, no other employees in this list are Members of the Board.
On behalf of the Board
Subhash Chandra Chairman
Place : Mumbai Date : June 16, 2008
27
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iddl
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aurit
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US$
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US$
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28
STAT
EMEN
T PU
RSU
AN
T TO
SEC
TION
212
OF
THE
COM
PAN
IES
ACT
, 195
6, R
ELAT
ING
TO S
UBS
IDIA
RY C
OMPA
NIE
S
Nam
e of
the
Subs
idia
ry C
ompa
ny
The
Fina
ncia
l Ye
ar o
f the
Su
bsid
iary
Co
mpa
ny
ende
d on
Hold
ing
Com
pany
Exte
nt o
f Ho
ldin
g Co
mpa
ny’s
In
tere
st
Face
val
ue
of e
quity
sh
ares
(p
er s
hare
)
Num
ber o
f eq
uity
sha
res
held
by
the
hold
ing
Com
pany
an
d/or
its
subs
idia
ries
Net
agg
rega
te a
mou
nt o
f pro
fits/
(lo
sses
) of t
he s
ubsi
diar
y so
far
as it
con
cern
s th
e m
embe
rs o
f the
ho
ldin
g co
mpa
ny a
nd is
dea
lt w
ith in
ac
coun
ts o
f hol
ding
com
pany
Net
agg
rega
te a
mou
nt o
f pro
fits/
(lo
sses
) of t
he s
ubsi
diar
y so
far
as it
con
cern
s th
e m
embe
rs o
f th
e ho
ldin
g co
mpa
ny a
nd is
not
de
alt w
ith in
acc
ount
s of
hol
ding
co
mpa
ny
For t
he fi
nanc
ial
year
end
ed o
n M
arch
31,
2008
For t
he p
revi
ous
finan
cial
yea
rs
of th
e su
bsid
ary
sinc
e it
beca
me
a su
bsid
iary
For t
he
finan
cial
yea
r en
ded
on
Mar
ch 3
1, 2
008
For
the
prev
ious
fin
anci
al
year
s of
the
subs
idar
y si
nce
it be
cam
e a
subs
idia
ry
(Am
t. in
‘000
)(A
mt.
in ‘0
00)
(Am
t. in
‘000
) (A
mt.
in ‘0
00)
( 1 )
( 2 )
( 3 )
( 4 )
( 5 )
( 6 )
( 7 )
( 8 )
( 9 )
( 10
)
Taj T
V M
aurit
ius
Lim
ited,
Mau
ritiu
s 31
/03/
2008
Zee
Spor
ts
Intl.
50%
US$
1000
3,1
00
US$
3,22
3US
$ 2,
941
Zee
Spor
ts A
mer
icas
Lim
ited,
Mau
ritiu
s 31
/03/
2008
Zee
Spor
ts
Intl.
100%
US$
1 1
,000
US
$ (2
)US
$ (2
)
Zee
Mul
timed
ia W
orld
wid
e (M
aurit
ius)
Li
mite
d ( Z
MW
L, M
aurit
ius
)31
/03/
2008
ZMW
L,BV
I10
0%US
$ 1
26,
520,
004
US$
67US
$ 64
9
Asia
T.V
. Lim
ited,
UK
31/0
3/20
08ZM
WL,
M
aurit
ius
100%
GBP
1 1
6,43
8,90
0 GB
P 8
GBP
(162
)
Zee
T.V.
USA
, Inc
.31
/03/
2008
ZMW
L,
Mau
ritiu
s10
0%US
$ .0
1 2
US
$ 16
9US
$ 27
4
Not
es:
^ E
TC N
etw
orks
Lim
ited
mer
ged
with
Zee
Inte
ract
ive
Lear
ning
Sys
tem
s Li
mite
d an
d th
e m
erge
d en
tity
was
rena
med
as
ETC
Net
wor
ks L
imite
d
** A
cqui
red
durin
g th
e ye
ar.
On b
ehal
f of t
he B
oard
Subh
ash
Chan
dra
Chai
rman
Plac
e : M
umba
i Da
te
: Jun
e 16
, 200
8
29
Company’s Governance Philosophy
Corporate Governance, which assumes great deal of importance at Zee Entertainment Enterprises Limited (ZEEL), is intended to ensure value creation for all its stakeholders. ZEEL believes that the governance process must ensure adherence and enforcement of the principles of sound Corporate Governance with the objectives of fairness, transparency, professionalism, trusteeship and accountability, while facilitating effective management of the businesses and efficiency in operations. The Company is committed to achieve and maintain highest standards of Corporate Governance and with this view, endeavours to improve in all aspects of Corporate Governance on an ongoing basis.
Board of Directors
a) Composition and Category of Directors
The Company is in strict compliance of Board composition requirements including SEBI Circular dated April 4, 2008. ZEEL has a balanced Board, with combination of Executive and Non-Executive Directors, to ensure independent functioning. Non-Executive Directors include independent professionals with experience in business, finance, taxation, technology and media. Independent Directors provide appropriate annual certifications to the Board confirming satisfaction of the conditions of their being independent as laid down in Clause 49.
Composition of the Board as on March 31, 2008
Category of Directors No. of Directors Percentage to total No. of Directors
Executive Directors 1 9%Non-Executive Independent Directors 7 64%Other Non-Executive Directors 3 27%Total 11 100%
Particulars of Directors, their attendance at the Annual General Meeting and Board Meetings held during the financial year 2007-08 and also their other directorships held in Public Companies (excluding Foreign Companies and Section 25 Companies) and membership of other Board committees (excluding Remuneration Committee) as at March 31, 2008 are as under:
Name of DirectorAttendance at
No. of Directorship
of other companies
No. of Memberships of Board Sub Committees
Category Board Meetings (Total 6
Meetings)
25th AGM held on 17.08.07
Ashok Kurien Promoter – Non-Executive 4 Yes 2 1B. K. Syngal Independent – Non-Executive 5 Yes 3 5D P Naganand Independent – Non-Executive 5 Yes 2 1Gulam Noon Independent – Non-Executive 2 No – –Laxmi N. Goel Promoter – Non-Executive 3 Yes 7 1M. Y. Khan Independent – Non-Executive 5 No 1 –N. C. Jain Independent – Non-Executive 6 Yes 2 –Rajan Jetley Independent – Non-Executive 2 No 1 1#R. Vaidyanathan Independent – Non-Executive 2 NA 3 1Subhash Chandra Promoter – Non-Executive 4 No 7 2Punit Goenka Promoter – Executive 5 Yes 11 1
#Appointed as an Additional Director w.e.f. January 1, 2008.
b) Board Meetings & Procedures
During the financial year under review, 6 meetings of the Board were held on April 21, 2007, June 27, 2007, July 17, 2007, October 23, 2007, January 29, 2008 and March 11, 2008. The intervening period between two
REPORT ON CORPORATE GOVERNANCE
30
Board Meetings was well within the maximum time gap of 4 months prescribed under Clause 49 of the Listing Agreement. The annual calendar of meetings is broadly determined at the beginning of each year.
Meetings of the Company are governed by a structured agenda. The Meetings are generally held at the registered and corporate office of the Company at Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai 400 018. The Company Secretary in consultation with Chairman/Whole-time Director/Chief Executive Officer finalises agenda of the Board meetings. All major agenda items, backed up by comprehensive background information, are sent well in advance of the date of the Board meetings to enable the Board to take informed decision. Any Board member may, in consultation with the Chairman, bring up any matter for consideration by the Board. Chief Executive Officer and Head of Department of Finance & Accounts are normally invited to the Board meetings to provide necessary insights into the working of the Company and for discussing corporate strategies.
The Board periodically reviews Compliance Reports in respect of laws and regulations applicable to the Company.
c) Brief profile of all Directors of the Company including those to be appointed/re-appointed at the Annual General Meeting
Ashok Kurien, 58, is a well known personality in the Advertising world. Mr. Kurien is the Managing Director of Ambience Publicis Advertising Private Limited, which is rated amongst the best Advertising Agencies of India. He is associated with the Company since its inception as its Promoter and Director.
Apart from the Company, Mr. Kurien holds directorships in Dish TV India Ltd., and Asian Skyshop Ltd.
Mr. Kurien holds 2,042,000 equity shares comprising of 0.47% of paid up capital in the Company.
B. K. Syngal, 68, is a Non-Executive Independent member of Board of the Company. He was the Vice-Chairman of BPL Communications Limited and Chairman of Internet, broadband and technology solutions businesses at the BPL Innovision Business Group at Bangalore. Mr. Syngal was also the Chairman and Managing Director (1991-98) of VSNL Ltd. Mr. Syngal is regarded as the father of Internet and data services in India, which propelled the growth of software exports from India. In the international telecom arena, he has held the positions of Chairman, Commonwealth Telecommunciations Organisation (CTO), London, Councilor for India INMARSAT Council, London, Vice Chairman and Director, ICO Boards, Chairman of Governance Committee ICO, Cayman Islands and Governor, INTELSAT Board, Washington DC. He has been recipient of many industry awards including Telecom Man of the Decade award by Wisitex Foundation, India, Partners in Progress award by Maharashtra State Government for his contributions in telecommunications both in India and abroad, and he was one of the fifty Stars of Asia, chosen by Business Week magazine for the year, 1998.
Apart from the Company, Mr. Syngal holds directorships in Sonata Software Ltd., Sonata Information Technology Ltd. and Wire and Wireless (India) Ltd.
Mr. Syngal does not hold any shares in the Company.
D P Naganand, 58, a B.Tech from I.I.T Kharagpur, M.B.A. from the University of Ontario and an AMP from Harvard University, was the Whole-time Director of the Company from October 20, 2000 to August 20, 2003. He joined Zee Group in February 2000 as Chief Executive Officer of Econnect India Limited (at that time, a wholly owned subsidiary of ZEEL) and was responsible for ZEEL’s convergence initiative. Mr. Naganand continues as a Non-Executive Independent Director on the Board. Mr. Naganand has more than 30 years experience working in various capacities in ITC, last being as Head of the Corporate Strategic Planning Department.
Apart from the Company, Mr. Naganand holds directorships in Zee Turner Ltd. (a subsidiary of the Company) and Wire and Wireless (India) Ltd.
Mr. Naganand does not hold any shares in the Company.
Sir Gulam Noon MBE, 72, a British National, is an accomplished entrepreneur, who founded Bombay Halwa Limited, a Company engaged in the business of manufacturing Indian confectionary, Indian savories and aviation catering. Currently he is Chairman & Managing Director of Bombay Halwa Limited and Chairman of Noon Group of Companies. In 1988, Sir Noon founded Noon Products Limited (now a member of Kerry Foods Limited), a
31
Company engaged in the business of frozen and chilled ethnic food specialists, supplying to supermarket chains under their own labels. The Noon Brand range of frozen ready meals is also supplied to outlets in the UK and worldwide.
Mr. Noon has been presented various prestigious awards, like Pravasi Bharatiya Samman Award – Gold Medal - presented by Mr. A. P. J. Abdul Kalam, Honour of Knighthood & Honour of MBE (Member of the Order of the British Empire), conferred by Her Majesty the Queen, for his services to industry. Mr. Noon holds five Honorary Degrees from various leading British universities and was named as Asian of The Year in 1994.
Mr. Noon neither holds directorship in any other Indian Public Limited Company nor holds any shares in the Company.
Laxmi N. Goel, 55, is a Non-Executive Director and one of the promoters of the Company. He is one of the key architects of the Essel Group of Companies. He started his career in 1969 trading agro commodities and established Rama Associates Limited along with his brothers. In 1980, he diversified the Group’s activities into handicraft exports and real estate development business. He has contributed enormously in the establishment and progress of Essel Propack Ltd. At present Mr. Goel holds the position of Vice Chairman of the Essel Group of Companies and is actively involved in the day-to-day developmental activities of the Group. Besides business, he is actively involved in social philanthropic work. He has been the trustee of the Agroha Vikas Trust for more than decade. He is also the trustee of the Delhi chapter of the Trust, which undertakes a number of noble social causes including the building and running of colleges, schools and temples. Mr. Goel was also head of affairs of the Sewak Sabha Hospital, Hissar, Haryana, for two years.
Apart from the Company, Mr. Goel holds directorship in seven (7) other Indian Public Limited Companies viz., Zee News Ltd., Rama Associates Ltd., Essel International Ltd., Rankey Investments & Trading Co. Ltd., ASC Telecommunication Ltd., East India Company (Trading) Ltd. and Siti Energy Ltd.
Mr. Goel holds 1,750,000 equity shares, comprising of 0.40% of paid up capital of the Company.
Dr. M. Y. Khan, 63, is a Science graduate from University of Kashmir and Doctorate of Philosophy in Business Management (PHD) from Burkes University in UK. Mr. Khan has been the Chairman of J&K Bank in the past, he was also a Director on the Board of Bharat Hotels, as well as Advisor for Berenson & Company, New York. Prior to joining J&K Bank, Dr. Khan spearheaded J&K Agro Industries Development Corporation as a Managing Director. He was also heading J&K Tourism Development Corporation for 5 years as Managing Director. Dr. Khan had been nominated Member of the Chattisgarh Economic Advisory Committee; Government of India, Member of the Banking and Financial Institutions Committee of FICCI and Member of the Managing Committee of Indian Banking Association, Mumbai, during his tenure with J&K Tourism Development Corporation. Dr. Khan is the recipient of several prestigious awards like “Udyog Rattan” award, “Pride of India & IMM” award, for excellence as top professional manager, “Excellence Award” by Institute of Economic Studies, “Star Achievers Award” among several others.
Apart from the Company, Mr. Khan, holds directorships in Steel Authority of India Ltd.
Mr. Khan does not hold any shares in the Company.
N. C. Jain, 69, a post graduate in Accounts and Law, has 38 years of experience in the Civil Service (as member of Indian Revenue Service). During his tenure in the civil services, he has held important positions like Chairman, Income Tax Settlement Commission, Secretary to Government of India, Ministry of Finance, Chief Commissioner of Income Tax at Kanpur and Mumbai, Joint Secretary to Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) in-charge of Tax Planning and Legislation division and Foreign Tax division. Mr. Jain was instrumental in negotiating various Double-Taxation Avoidance treaties on behalf of Government of India.
Apart from the Company, Mr. Jain, holds directorships in Superhouse Leather Ltd., and Ajanta Manufacturing Ltd.
Mr. Jain holds 20 equity shares, comprising of 0.00% of paid up capital of the Company.
Rajan Jetley, 58, is a Cambridge Graduate from Bishop School and MBA from Delhi University. He started his career with ITC Ltd., in 1972, rising to the position of Marketing Controller in its Hotels division. He has been associated with several prestigious organisations, to name some, Managing Director - Air India, Managing
32
Director - India Tourism Development Corporation, President - Britannia Industries, Director - International Airport Authority of India, Director - Indian Airlines, Board of Governors - National Institute of Tourism, Director- Pacific Asia Travel Association, Chairman - Centaur Group of Hotels, Member - Executive Committee IATA. At present, Mr. Jetley is a promoter and Chairman of Jacob Ballas Capital India Private Limited, an NBFC dealing primarily as advisors to the New York Life Insurance Companies private equity funds in India.
Apart from the Company Mr. Jetley holds directorship in Punj Lloyd Limited.
Mr. Jetley does not hold any shares in the Company.
R. Vaidyanathan, 56, a graduate from Loyola College, Madras, holds a Masters from the Indian Statistical Institute, Calcutta and also a Fellow Member in Management (Doctorate) from the Indian Institute of Management, Calcutta, is the Professor of Finance and Control at the Indian Institute of Management, Bangalore and UTI Chair Professor in the area of Capital Markets. He is known for his commendable contributions in the areas of Corporate Finance, Risk Management, Pensions, etc. He was a Member of the L.C. Gupta Committee appointed by SEBI for Derivative Trading and is currently a National Fellow of the Indian Council of Social Science Research, New Delhi. In past, Prof. Vaidyanathan, also held position of President of Asia Pacific Risk and Insurance Association headquartered in Singapore and he has published a number of articles in India and abroad on Corporate Finance and Capital Markets.
Apart from the Company, Prof Vaidyanathan holds directorship in Zee Turner Ltd., (a subsidiary of the Company), Vijaya Bank Ltd. and General Optics (Asia) Ltd.
Prof. Vaidyanathan does not hold any shares in the Company.
Subhash Chandra, 57, is the Non-Executive Chairman of the Board and promoter of Essel Group of Companies. His industry leading businesses include television networks and film entertainment, cable systems, satellite communications, theme parks, flexible packaging, family entertainment centers and online gaming. Mr. Chandra has been the recipient of numerous honorary degrees, industry awards and civic honors, including being named ‘Global Indian Entertainment Personality of the Year’ by FICCI for 2004, ‘Business Standard’s Businessman of the Year’ in 1999, ‘Entrepreneur of the Year’ by Ernst & Young in 1999 and ‘Enterprise CEO of the Year’ by International Brand Summit. The Confederation of Indian Industry (CII) chose Mr. Chandra as the Chairman of the CII Media Committee for two successive years.
Mr. Chandra has made his mark as an influential philanthropist in India. He set up TALEEM (Transnational Alternate Learning for Emancipation and Empowerment through Multimedia), an organisation which seeks to provide access to quality education and to promote research in various disciplines relating to health & family life, social & cultural anthropology, communication and media. He is also the trustee for the Global Vippassana Foundation, a trust set up for helping people in spiritual upliftment.
Apart from the Company Mr. Chandra holds directorship in seven (7) other Indian Public Limited Companies viz., Zee News Ltd., Dish TV India Ltd., Essel Propack Ltd., Wire and Wireless (India) Ltd., ETC Networks Ltd., Essel Infraprojects Ltd., and Agrani Satellite Services Ltd.
Mr. Chandra does not hold any shares in the Company.
Punit Goenka, 33, Whole-time Director of the Company, since 2005, is a young professional with an entrepreneurial background. A Bombay University Graduate (1995 Batch), he began his career with the Essel Group which has diversified business interest in the areas of media, entertainment, and telecommunications. Mr. Punit Goenka, son of Mr. Subhash Chandra, Chairman of Essel Group of Companies, has been contributing to several Essel Group projects at the corporate decision making level and he has also held senior positions in other Group Companies. From 1997-2004, Mr. Goenka was involved in Dish TV India Ltd., (erstwhile ASC Enterprises Ltd.), which is a diversified multi venture corporate with interests in the field of Satellite Infrastructure & Services (including Dish TV Direct to Home Television), Retailing (Agrani Switch) and Public Mobile Radio Trunking.
Mr. Goenka has participated in various intensive Management Education Programs viz. Young Managers Program at INSEAD, France and a program on “Birthing of Giants” hosted by Young Entrepreneurs’ Organization and MIT Enterprise Forum, Inc., Boston, USA.
33
Apart from the Company Mr. Punit Goenka holds directorship in eleven (11) other Indian Public Limited Companies viz., ETC Networks Ltd., Essel Infraprojects Ltd., Essel Ship Breaking Ltd., Essel Telecom Holdings Ltd., Rochan (India) Ltd., Zee Sports Ltd., Agrani Wireless Services Ltd., Agrani Convergence Ltd., Agrani Satellite Services Ltd., ASC Mobile Communication Ltd., and Diligent Media Corporation Ltd.
Mr. Punit Goenka does not hold any shares in the Company.
d) Code of Conduct
The Board of Directors has approved and adopted Code of Conduct for Members of the Board of Directors and Senior Management of the Company. The Code is circulated to all the members of the Board and Senior Management personnel and the compliance of the same is affirmed by them annually. The Code has also been posted on Company’s corporate website viz. www.zeetelevison.com.
A declaration affirming compliance with the Code of Conduct by the members of the Board and Senior Management is given below:
Declaration
I confirm that the Company has obtained from all Directors and Senior Management of the Company their affirmation of compliance with the ‘Code of Conduct for Members of the Board of Directors and Senior Management’ of the Company for the financial year ended March 31, 2008.
Punit GoenkaWhole-time Director
Mumbai, June 16, 2008
Board Committees
a) Audit Committee
The Board has constituted an Audit Committee, comprising of six (6) members, five (5) of whom are Independent Directors, with Mr. N. C. Jain, a Non-Executive Independent Director as its Chairman.
The Composition of the Audit Committee which complies with the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement(s) is as under:
Name of Directors Category
Mr. N. C. Jain Non-Executive – Independent
Mr. Ashok Kurien Promoter – Non Executive
Mr. B.K. Syngal Non-Executive – Independent
Mr. D.P. Naganand Non-Executive – Independent
Mr. Rajan Jetley Non-Executive – Independent
*Prof R. Vaidyanathan Non-Executive – Independent
*Appointed w.e.f. January 1, 2008
The role and the powers of the Audit Committee are as per guidelines set out in Clause 49 of the Listing Agreement and provisions of Section 292A of the Companies Act, 1956. The Committee meets periodically and reviews:
• Accounting and financial reporting process of the Company
• audited and un-audited financial results
• internal audit reports, risk management policies & report on internal control systems of the Company
• discusses the larger issues that are of vital concern to the Company including adequacy of internal controls, reliability of financial statements/other management information, adequacy of provisions for liabilities and whether the audit tests are appropriate and scientifically carried out in accordance with Company’s business and size of operations.
The Audit Committee also reviews adequacy of disclosures and compliance with all relevant laws. In addition to the foregoing, in compliance with requirements of Clause 49 of the Listing Agreement, the Audit Committee
34
reviews operations of Subsidiary Companies viz., its financial statements, significant related party transactions, statement of investments and Minutes of meeting of the Board and Committees.
During the year under review, five (5) Meetings of the Audit Committee were held viz.
Sr. No. Date of Meeting Attendance
No. of Independent Directors No. of Non-Independent Directors
1 21.04.2007 4 1
2 26.06.2007 3 –
3 17.07.2007 3 1
4 23.10.2007 3 1
5 28.01.2008 2 1
Statutory Auditor, Internal Auditor and Chief Financial Officer of the Company are invitees to all meetings of the Committee and the Company Secretary is the Secretary to the Audit Committee.
b) Remuneration Committee and Policy
The Remuneration Committee of the Company comprises of four (4) Non-Executive Directors, two of whom are Independent Directors. Mr. N. C. Jain, Non-Executive Independent Director is Chairman of the Committee and other members are Mr. B. K. Syngal, Non-Executive Independent Director, Mr. Ashok Kurien, Non-Executive Director and Mr. Laxmi N. Goel, Non-Executive Director. The Company Secretary is the Secretary to the Committee.
The terms of reference of the Remuneration Committee, inter alia, consist of reviewing the overall compensation policy, service agreements and other employment conditions of Executive Director(s). The recommendations of the Remuneration Committee are considered and approved by the Board of Directors, subject to the approval of the shareholders.
The Executive Director(s) is/are entitled to Performance Incentive for each financial year as may be determined by the Board on the recommendation of Remuneration Committee.
During the year under review, Remuneration Committee met on three occasions, viz: on April 21, 2007, July 17, 2007 and March 27, 2008.
Details of the remuneration paid to Mr. Punit Goenka, Whole-time Director of the Company during the year ended March 31, 2008 is as under:
Particulars Amount (Rs.)
Salary & Allowances 9,300,000
Perquisites 1,395,000
Employer’s Contribution to Provident Fund 756,000
Total 11,451,000
Remuneration payable to Non-Executive Directors
Non-Executive Directors are entitled to sitting fees of Rs. 10,000 per meeting, for attending the meetings of the Board and Committees thereof, the limits for which have been approved by the Shareholders.
Additionally, Non-Executive Directors are entitled to remuneration by way of Commission for each financial year up to an aggregate limit of 1% of net profits of the Company. The commission is determined by the Board based inter alia on the performance of, and regulatory provisions, applicable to the Company. As per current remuneration policy, the Company pays equal amount of Commission to Non-Executive Directors on pro rata basis with additional commission to Directors who are also on Board of unlisted subsidiary(ies) of the Company.
Details of the remuneration of the Non-Executive Directors of the Company for Financial year 2007-2008 are as under:
35
Sr. No. Name of Director Sitting Fees Commission Total
1 Subhash Chandra 40,000 1,250,000 1,290,0002 Laxmi N. Goel 60,000 1,250,000 1,310,0003 Ashok Kurien 90,000 1,250,000 1,340,000 4 D. P. Naganand 100,000 1,450,000 1,550,0005 N. C. Jain 140,000 1,250,000 1,390,0006 B. K. Syngal 120,000 1,250,000 1,370,0007 Rajan Jetley 30,000 1,250,000 1,280,0008 Gulam Noon 20,000 1,250,000 1,270,0009 M. Y. Khan 50,000 1,250,000 1,300,000
10 R. Vaidyanathan 20,000 362,500 382,500Total 670,000 11,812,500 12,482,500
Note: Disclosure with respect to Non-Executive Directors on other pecuniary relationship – None
c) Share Transfer and Investors Grievance Committee
The Share Transfer and Investors Grievance Committee of the Board comprises of Mr. Ashok Kurien, Non-Executive Director as Chairman and Mr. N. C. Jain, Non-Executive Independent Director as Member. The Company Secretary is the Secretary of the Committee.
Terms of reference of the Share Transfer and Investor Grievance Committee is to supervise and ensure efficient transfer of shares and proper and timely attendance of investors’ grievances. The Committee has delegated the power of approving transfers, transmission, rematerialisation, dematerialisation, etc. of shares of the Company to the officials of the Secretarial Department.
Mr. M. Lakshminarayanan, Executive Vice President & Company Secretary is the Compliance Officer of the Company.
During the year under review, Share Transfer and Investors Grievance Committee met five (5) times on April 2, 2007, June 4, 2007, July 9, 2007, October 8, 2007 and January 3, 2008. These meetings were attended by all committee members.
Details of number of requests/complaints received and resolved during the year ended March 31, 2008, are as under:
Nature of Correspondence Received Replied/Resolved
Pending
Non-receipt of Dividend Warrant(s) 161 161 –Non-receipt of Certificates (Sub-division) 12 12 –Non-receipt of Certificates (Demerger) 56 56Non-receipt of Shares after transfer 10 10 –Letter received from SEBI 13 13 –Letter received from BSE 12 12 –Non-receipt of Annual Report 37 37 –Total 301 301 –
d) Finance Sub-Committee
With a view to facilitate monitoring and expediting fund raising process, the Board of Directors of the Company constituted Finance Sub-Committee comprising of Mr. N. C. Jain, Non-Executive Independent Director as Chairman and Mr. Ashok Kurien, Non-Executive Director and Mr. Punit Goenka, Whole-time Director as its Members.
Main function of Finance Sub-Committee is to consider and approve financing facilities offered and/or sanctioned to the Company by various Banks and/or Indian Financial Institutions from time to time, in the form of Term Loans, Working Capital Facilities, Guarantee Facilities, etc., including the acceptance of terms and conditions of such facilities being offered.
36
During the year under review Finance Sub-Committee met thrice on August 22, 2007, January 18, 2008 and March 4, 2008, which was attended by all members.
In addition to the above, your Board has constituted a Corporate Management Committee comprising of Senior Executives of the Company. Main function of the Committee is to review, approve and/or grant authorities for managing day-to-day affairs of the Company within the limits delegated by the Board.
General Meetings
The 26th Annual General Meeting of the Company for the financial year 2007-08 will be held on Wednesday, July 23, 2008 at 11.30 a.m. at ‘Nehru Centre’, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018.
Details of Annual General Meetings held during last 3 years are as follows:
Meeting Day, Date and Time of the Meeting Venue25th AGM Friday, August 17, 2007 at 11.30 a.m. Auditorium, National Stock Exchange of India Limited,
Exchange Plaza, Plot No. C-1, G-Block, Bandra Kurla Complex,Bandra (E), Mumbai-400 051
24th AGM Thursday December 28, 2006 at 3.00 p.m.Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018. 23rd AGM Wednesday September 29, 2005
at 3.00 p.m.
During last three Annual General Meetings of the Company, the members had passed following Special Resolutions:
At 25th Annual General Meeting : None
At 24th Annual General Meeting : Delisting of Equity Shares of the Company from Calcutta Stock Exchange Association Limited.
Change of name of the Company from Zee Telefilms Limited to Zee Entertainment Enterprises Limited and consequent amendment to Memorandum and Articles of Association of the Company.
Payment of Commission to Non-Executive Directors of the Company.
Approval for appointment of Mr. Subhash Chandra, Non-Executive Chairman of the Company for holding an office or place of profit in Asia TV Limited UK, a wholly owned foreign subsidiary of the Company.
At 23rd Annual General Meeting : Alteration of Articles of Association of the Company.
All the above resolutions were passed with requisite majority.
No Ordinary or Special resolutions were passed through Postal Ballot during financial year 2007-08.
None of the resolutions proposed for the ensuing Annual General Meeting need to be passed by Postal Ballot.
Disclosures
There are no materially significant related party transactions, i.e. transaction material in nature, between the Company and its promoters, Directors or management or their relatives etc., having any potential conflict with interests of the Company at large. Transactions with related parties are disclosed elsewhere in the Annual Report.
There has not been any non-compliance by the Company and no penalties or strictures imposed by SEBI or Exchanges or any statutory authority on any matter relating to capital markets, during the last three years.
SEBI had issued Show Cause Notice to the Company in 2005 wherein the Company and its Promoters were charged for alleged involvement in market manipulation transactions of Ketan Parekh and his associates. In connection with this Show Cause Notice, Hon’ble Whole-time Member of SEBI has vide Order dated March 19, 2008, held that the charges of alleged involvement of the Company and its Promoters in market manipulation transactions, are not sustainable and that the Company and its promoter Companies are not directly involved in the market manipulation. Therefore any penal actions sought under the Show Cause Notice were dropped. However, since in the opinion of SEBI, the actions of the Company and its promoters gave an impression of such involvement, the SEBI order cautioned the Company and its promoters against any similar actions in future.
37
Compliance with Non-Mandatory requirements
The Company has complied with all mandatory requirements of Clause 49 of the Listing Agreement.
The status of compliance with non-mandatory requirements of Clause 49 of the listing Agreement are as detailed hereunder:
1. Remuneration Committee – The Company has setup Remuneration Committee to recommend/review overall compensation policy, service agreements and other employment conditions of Executive Directors.
2. Whistle Blower Policy – The Board of Directors of the Company approved the Whistle Blower Policy, pursuant to which employees can raise concern relating to the fraud, malpractice or any other untoward activity or event which is against the interest of the Company and/or its stakeholders.
3. Audit Qualification – Company is in the regime of unqualified financial statements.
4. Chairman’s Office – A Chairman’s office with requisite facilities is provided and maintained at the Company’s expenses for use by its Non-Executive Chairman. The Company also reimburses all travel and other expenses incurred in his furthering the Company’s business interests.
Means of Communication
The Company has promptly reported all material information including declaration of quarterly financial results, press releases, etc. to all Stock Exchanges where the securities of the Company are listed. Such information is also simultaneously displayed immediately on the Company’s corporate website, www.zeetelevision.com. The financial results quarterly, half yearly and annual results and other statutory information were communicated to the shareholders by way of an advertisement in a English daily viz. ‘Daily News & Analysis (DNA)’ and in a vernacular language newspaper viz. ‘Punya Nagari (Marathi)’ as per requirements of the Stock Exchange.
Official press releases and presentations made to institutional investors or to the analysts are displayed on Company’s corporate website, www.zeetelevision.com.
Information relating to financial results, shareholding pattern, report on corporate governance complianes etc. were posted on SEBI’s EDIFAR website till quarter ended September 2007. Subsequently these are filed electronically through Corporate Filing and Dissemination System (CFDS) portal. Hard copies of the said disclosures and correspondences are also filed with the Exchanges.
Management Discussions and Analysis Report forming part of annual report is annexed separately.
General Shareholder Information
The required information is provided in Shareholders’ Information Section.
38
AUDITORS’ CERTIFICATE
To The Members, Zee Entertainment Enterprises Limited
We have examined the compliance of conditions of Corporate Governance by Zee Entertainment Enterprises Limited (‘the Company’), for the year ended March 31, 2008 as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedures, and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has compiled with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.
We state that no investor grievances are pending for a period exceeding 30 days against the Company as per the records maintained by the Company.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
Mohan BhandariPartnerM. No.12912
For and on behalfMGB & Co.Chartered Accountant
Mumbai, June 16, 2008
39
1. Date, Time and Venue of Shareholder’s Meeting
Meeting : Annual General MeetingDay & Date : Wednesday, July 23, 2008Time : 11.30 a.m.Venue : Nehru Centre, Nehru Auditorium Dr. Annie Besant Road, Worli, Mumbai - 400 018
2. Financial Year 2007-2008
3. Period of Book Closure Saturday, July 19, 2008 to Wednesday, July 23, 2008(both days inclusive)
4. Dividend Payment Date On or after July 23, 2008
5. ROC Registration No./Company Identification No.
L92132MH1982PLC028767
6. Registered Office Continental Building, 135, Dr. Annie Besant Road,Worli, Mumbai - 400 018, IndiaTel: +91-22-6697 1234Fax: +91-22-2490 0302/0213Website : www.zeetelevision.com
7. Listing on Stock Exchanges Equity Shares:The Bombay Stock Exchange Limited (BSE)The National Stock Exchange of India Limited (NSE)The Kolkata Stock Exchange Association Ltd. (CSE) (delisted from CSE w.e.f. 28.05.2008)Foreign Currency Convertible Bonds :The Singapore Stock Exchange
8. Stock Code BSE - 505537NSE - ZEEL EQReuters - ZEE.BO (BSE) ZEE.NS (NSE)Bloomberg - Z IN (BSE) NZ IN (NSE)
9. ISIN No. Equity - INE256A01028FCCB - XS0191281137
10. Trustee for FCCB Issue Deutsche Trustee Company LimitedWinchester House, 1 Great Winchester Street,London EC2N 2DB,United Kingdom
11. Registrar & Share Transfer Agent M/s. Sharepro Services (India) Private LimitedSatam Estate, 3rd Floor, Above Bank of Baroda,Cardinal Gracious Road, Chakala, Andheri (East),Mumbai - 400 099, IndiaTel: +91-22-6772 0300Fax: +91-22-2837 5646E.Mail: [email protected]
SHAREHOLDERS’ INFORMATION
40
12. Investor Relation Officer Mr. Pushpal SanghaviZee Entertainment Enterprises LimitedContinental Building, 135, Dr. Annie Besant Road,Worli, Mumbai - 400 018, IndiaTel: +91-22-6697 1234,Fax: +91-22-2490 0302/0213E.Mail: [email protected]
13. Dividend
The Board of Directors has recommended payment of dividend @ Rs. 2/- per share on paid up value of Re. 1 per share i.e. 200% on the paid up capital of the Company.
Dividend, if approved by Members at the ensuing Annual General Meeting, will be paid to all those shareholders whose name appear in the Register of Members of the Company, after giving effect to all valid share transfers in physical form lodged with the Company or its Registrars on or before July 18, 2008 and in the list of beneficial owners furnished by National Securities Depository Limited (NSDL) and/or Central Depository Services (India) Limited, (CDSL) in respect of shares held in electronic form, as at the end of the business on July 18, 2008.
Dividend for the financial year ended March 31, 2001, which remains unpaid or unclaimed, will be due for transfer to the Investor Education and Protection Fund (IEPF) on completion of seven years. The same would be transferred on or before December, 2008. Members who have not encased their dividend warrant(s) for the financial year ended March 31, 2001, or any subsequent financial year(s), are requested to seek issue of duplicate warrant(s) by writing to the Registrar and Share Transfer Agent of the Company. Members will not be able to claim any unpaid dividend from the Investor Education and Protection Fund or the Company once it is transferred to the fund.
Information in respect of unclaimed dividend for financial year ended March 31, 2001 and subsequent financial years and date(s) when due for transfer to Investor Education and Protection Fund is given below:
Financial Year Ended Date of Declaration of Dividend
Last date for claiming Unpaid Dividend
Due date for transfer to IEPF
31.03.2001 29.09.2001 04.11.2008 03.12.2008
31.03.2002 25.10.2002 30.11.2009 29.12.2009
31.03.2003 26.09.2003 01.11.2010 30.11.2010
31.03.2004 28.09.2004 03.11.2011 02.12.2011
31.03.2005 28.09.2005 03.11.2012 02.12.2012
31.03.2006 28.12.2006 03.02.2014 02.03.2014
31.03.2007 17-08-2007 22.09.2014 21.10.2014
14. Change of Name of the Company
The name of the Company was changed from ‘Zee Telefilms Limited’ to ‘Zee Entertainment Enterprises Limited’ with effect from January 10, 2007. In compliance SEBI guidelines for Good and Bad Delivery, the Company confirms that old Share Certificates which have not been corrected with the new name of the Company shall also be good for delivery in the market.
The Registrar and Share Transfer Agent shall make necessary endorsement of change of name of the Company in physical share certificates as and when the same are received for transfer/transmission/remat/sub-division/split etc.
15. Share Transfer System
Equity Shares sent for physical transfer or for dematerialisation are generally registered and returned within a period of 15 days from the date of receipt of completed and validly executed documents.
41
16. Dematerialisation of Equity Shares & Liquidity
Trading in equity shares of the Company became mandatory in dematerialised form with effect from April 5, 1999. To facilitate trading in demat form the Company has made arrangements with both the depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Shareholders can open account with any of the Depository Participant registered with any of these two depositories. As on date 99.21% of the equity shares of the Company are in the dematerialised form.
17. Splitting of Shares
On October 25, 1999 Shareholders had approved splitting of face value of equity shares of the Company from Rs. 10 each to Re. 1 each. The resolution became effective from the start of no-delivery period w.e.f. December 6, 1999. From this day onwards trading in equity shares of Re.1 each commenced and consequently the equity shares of Rs. 10 each ceased to trade on the exchanges. For the shareholders, holding shares in physical form, the Company had sent them intimation to exchange the old certificates of face value of Rs. 10 each with new certificate of face value of Re. 1 each. For the shareholders holding shares in demat form, the depositories automatically gave the effect of splitting of face value of shares by way of a Corporate action dated December 23, 1999.
Shareholders who could not exchange their old certificates earlier for the new certificates and who are desirous of exchanging the same, may write to the Company’s Registrar & Share Transfer Agent.
18. Shareholders’ Correspondence
The Company has attended to all the investors’ grievances/queries/ information requests except for the cases where we are constrained because of some pending legal proceeding or court/statutory orders. We endeavour to reply to all letters received from the shareholders within a period of 5 working days.
All correspondence may please be addressed to the Registrar & Share Transfer Agent at the address given above. In case any shareholder is not satisfied with the response or do not get any response within reasonable period, they may approach the Investor Relation Officer at the address given above.
19. Outstanding Convertible Instruments, Conversion Date & Likely Impact on Equity
In April 2004, the Company has raised US$ 100 Million by issuing 10,000 0.5% Foreign Currency Convertible Bonds (FCCBs) of US$ 10,000 each, due for redemption on April 29, 2009. The bondholders have an option to convert these bonds into equity shares at an initial conversion price of Rs.197.235 per share, with a fixed rate of exchange on conversion of Rs. 43.88 (US$ 1). With effect from April 18, 2008, the Conversion price was revised from Rs. 197.235 to Rs. 153.459 per share, after obtaining appropriate approvals, consequent to Scheme of Arrangement for demerger of News, Cable and Direct Consumer Services Business Undertakings of the Company.
The Company can exercise the redemption option, subject to certain conditions up to April 22, 2009. The outstanding bonds will mature on April 29, 2009 at 116.24% of their principal amount. The FCCBs are listed at Singapore Stock Exchange and shares issued on conversion would be listed on stock exchanges in India.
As on date of this report on exercise of conversion options 9,621 FCCBs of US$ 10,000 each have been converted to 21,502,099 equity shares of Re. 1 each of the Company and 379 FCCBs are outstanding. If these outstanding bonds are converted at the revised conversion price, the share capital of the Company will increase by 1,083,711 equity shares of the Company.
20. Stock Market Data Relating to Shares Listed in India
a. The Equity Shares of the Company is a part of
i. ‘A’ group scrip at BSE
ii. CNX Nifty Index in NSE &
iii. Future and Options (F&O) Segment in NSE
42
b. Monthly high and low quotations and volume of shares traded on Bombay Stock Exchange and National Stock Exchanges for financial year 2007-2008 are:
BSE NSE
Month High (Rs.)
Low (Rs.)
Volume of Share Traded
High (Rs.)
Low (Rs.)
Volume of Shares Traded
April 2007 302.70 238.00 9,980,546 303.90 238.10 31,444,159
May 2007 323.00 272.00 8,082,460 325.00 270.05 28,564,797
June 2007 317.35 272.00 5,472,697 317.00 275.25 25,003,387
July 2007 360.90 290.70 22,265,704 361.85 290.55 55,675,437
August 2007 329.00 273.00 9,117,777 328.90 271.00 33,616,917
September 2007 344.00 296.50 9,052,308 345.00 296.10 29,033,380
October 2007 362.80 281.00 13,714,775 410.00 293.00 41,684,935
November 2007 340.00 279.90 5,711,698 339.00 278.00 22,806,885
December 2007 334.40 290.05 6,192,186 335.90 289.50 24,630,052
January 2008 338.30 169.00 6,790,568 333.85 217.85 32,349,635
February 2008 290.00 231.50 2,911,416 289.00 231.00 15,919,499
March 2008 272.70 227.80 4,269,310 272.80 226.15 24,259,134
21. Relative Performance of Zee Shares Vs. BSE Sensex & Nifty Index
Closing Price (Month End) Closing Sensex (Month End)
Month
Zee Entertainment Enterprises Limited(BSE - Closing Monthly Price Vs Closing Monthly Sensex)
Clo
sing
Pri
ce
Clo
sing
Sen
sex
200
220
240
260
280
300
320
340
360
Mar-08Feb-08Jan-08Dec-07Nov-07Oct-07Sep-07Aug-07Jul-07Jun-07May-07Apr-0713000
14000
15000
16000
17000
18000
19000
20000
21000
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22. Distribution of Shareholding as on March 31, 2008
No. of Equity Share Share Holders No. of SharesNumber % of Holders Number % of Shares
Up to 5000 90,215 99.29% 11,825,405 2.73% 5001 - 10000 179 0.20% 1,364,906 0.31% 10001 - 20000 77 0.08% 1,113,944 0.26% 20001 - 30000 36 0.04% 899,256 0.21% 30001 - 40000 40 0.04% 1,452,642 0.33% 40001 - 50000 15 0.02% 684,125 0.16% 50001 - 100000 48 0.05% 3,502,476 0.81% 100001 and Above 253 0.28% 412,724,011 95.19%Total 90,863 100.00% 433,566,765 100.00%
23. Categories of Shareholders as on March 31, 2008
Category March 31, 2008% of shareholding No. of shares held
Promoters 41.54% 180,102,368Individuals 2.72% 11,775,231Domestic Companies 5.36% 23,186,334FIs, Mutual funds and Banks 21.15% 91,765,714FIIs, OCBs & NRI 29.23% 126,737,118Total 100.00% 433,566,765
Closing Price (Month End) Closing Nifty (Month End)
Month
Zee Entertainment Enterprises Limited(NSE - Price Vs Nifty)
Clo
sing
Pri
ce
Clo
sing
Nift
y
200
220
240
260
280
300
320
340
360
Mar-08Feb-08Jan-08Dec-07Nov-07Oct-07Sep-07Aug-07Jul-07Jun-07May-07Apr-073500
3800
4100
4400
4700
5000
5300
5600
5900
6200
6500
44
24. Particulars of Shareholding a) Promoter Shareholding as on March 31, 2008
Sr. No. Name of Shareholder No. of Shares held % of shareholding1 Delgrada Limited 74,633,402 17.21%2 Jayneer Capital Pvt. Ltd. 52,346,704 12.07%3 Lazarus Investments Limited 11,500,000 2.65%4 Prajatma Trading Co. Pvt. Ltd. 7,574,500 1.75%5 Essel Infraprojects Ltd. (formerly Pan India Paryatan Ltd.) 6,400,000 1.48%6 Premier Finance and Trading Co. Ltd. 6,176,000 1.42%7 Ganjam Trading Co. Pvt. Ltd. 6,016,500 1.39%8 Briggs Trading Co. Pvt. Ltd. 4,451,262 1.03%9 Churu Trading Co Pvt. Ltd. 3,576,000 0.82%10 Ambience Advertising Pvt Ltd. 2,275,000 0.52%11 Ashok Kurien 2,042,000 0.47%12 Laxmi Goel 1,750,000 0.40%13 Sushila Goel 680,000 0.16%14 Veena Investment Pvt. Ltd. 431,000 0.10%15 Sushila Devi 250,000 0.06%
Total 180,102,368 41.54%
b) Top ten (10) Public Shareholding as on March 31, 2008
Sr. No. Name of Shareholder No. of Shares held % of shareholding
1 Life Insurance Corporation of India 32,455,099 7.49%2 HDFC Trustee Company Limited 14,020,802 3.23%3 Oppenheimer Funds Inc. A/c Oppenheimer Global fund 13,014,320 3.00%4 ICICI Prudential Life Insurance Company Ltd. 9,704,466 2.24%5 Reliance Capital Trustee Co. Ltd. A/c Reliance Media and
Entertainment Fund8,894,196 2.05%
6 J.P. Morgan Asset Management (Europe) S.A.R.L. A/C JP Morgan Funds - Emerging Markets Equity fund
6,785,250 1.56%
7 Lloyd George Investment Management (Bermuda) Limited A/c L.G. India Fund Limited
6,650,591 1.53%
8 Morgan Stanley Investment Management Inc. A/c Morgan Stanley Emerging Markets Fund, Inc.
5,803,966 1.34%
9 Templeton Mutual Fund A/c Franklin India Bluechip Fund 4,545,685 1.05%10 Government of Singapore 4,084,986 0.94%
Total 105,959,361 24.43%
Zee Entertainment Enterprises Limited Shareholding Pattern as on March 31, 2008
Promoters41.54%
Domestic Companies5.36%
FIs, Mutual Funds and Banks
21.15%
FIIs, OCBs & NRI29.23%
Individuals2.72%
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MANAGEMENT DISCUSSION AND ANALYSIS
The figures have been stated in Rs. Million in the MD&A for better readability instead of Rs. Thousands as stated in the financial statements.Investors are cautioned that this discussion contains forward looking statements that involve risks and uncertainties including, but not limited to, risks inherent in the Company’s growth strategy, acquisition plans, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors. The following discussion and analysis should be read in conjunction with the Company’s financial statements included herein and the notes thereto.
1) OVERVIEW Zee Entertainment Enterprises Limited (ZEEL)
(BSE: 505537 and NSE: ZEEL.EQ) is India’s largest vertically integrated media and entertainment company. The Company was formed in 1982.
ZEEL is a global content powerhouse. The Company broadcasts more than 15 television channels in India and abroad. It was the first Company to launch a satellite TV channel ‘Zee TV’ in India and is presently a most diversified content player in Indian market. The Company caters to global South Asia Diaspora reaching close to 500 million viewers across the globe.
ZEEL channels includes Zee TV (Hindi General Entertainment), Zee Cinema (Hindi Movies), Zee Music, ETC Music (Hindi Music), ETC Punjabi (Regional language), Zee Sports, Ten Sports (sports including Cricket), Zee Café (English Entertainment), Zee Studios (English Movies), Zee Trendz (Fashion & Life Style), Zee Classic (old Hindi movies), Zee Action (action-based Hindi movies), Zee Premier (new Hindi movies) & Zee Jagran (religion).
2) MEDIA & ENTERTAINMENT INDUSTRY The Indian media market is booming. It reflects
strong performance of the domestic economy. In the last three years, CAGR in advertising spend has been 18% and is outperforming developed economies like USA (3% CAGR) and beating World Average (4% CAGR).
Management believes that the sector will continue to grow rapidly during the next three years. Strong economic growth with GDP growth rate of 7-8%, rising disposable income levels and consumerism driving both media penetration and corporate advertising spend and with emergence of new class of advertisers such as telecom, insurance, broking/assets management, real estate, education and travel/holidays besides multinational FMCG companies are the key growth drivers.
Subscription Revenue growth in India is robust and is led by increasing penetration of digital distribution platform like Direct to Home (DTH), Digital Cable (CAS), HITS, IPTV, etc.
Presently, India has 125 Million TV HHs (52% of total homes) and is second largest TV market in the world. It is likely to grow more than 170 mn TV HHs (70% of total homes) in the next 5 years.
Pay TV HHs are likely to grow from the present 74 mn. HHs (60% of TV HHs) to 115 m. HHs (70% of TV HHs).
At present Indian broadcasters are not getting their fair share of subscription revenue from the analogue distribution system. Addressability is the key issue. Spread of DTH & Digital Cable in addressable environment will ensure fair share of subscription revenues to broadcasters.
Advertising and subscription revenues drive Sustained top-line growth
3) BUSINESS PROFILE Zee is an integrated media and entertainment
company engaged primarily in broadcasting and content development, production and its delivery via satellite. The Company has 15 channels that serves widest array of content choices in India and enjoys nearly 50% of viewership share in Hindi Speaking Markets (HSM).
ZEE TV The flagship channel Zee TV is close No. 2 and
firm challenge to the number one position in Hindi General Entertainment genre (GEC). Zee TV has strikingly improved its presence in the GEC segment with its 6 out of top 10 programmes, 28 out of top 50 programmes ranking in C&S HHs. Zee TV is averaging 26% channel share for the year. Its talent-based reality show ‘Sa Re Ga Ma Pa’ has broken all records in TV ratings and is longest running reality show in India produced InHouse by the Company.
Zee TV has averaged 271 GRP for Q4 FY08, during the period it has not only bridged the gap substantially with the genre leader but has also surpassed it in the Prime Time appointment.
0
100
200
300
400
500
600
2012F 2011F 2010F 2009F 2008F 2007E 2006 2005 2004
6
75 48 55 66 80 100 120 150 175 200 97 117 137
167 204 253
310 380
7 8
9 11
13
16
18
20 TV Advertising Revenues TV Subsription Revenues TV Content Revenues
46
• Zee TV is No.1 Asian channel in Europe, Americas, Africa, Apac and in Middle East.
• It offers 5 channels in the UK, 4 in the US, 1 in Middle East, Africa, Apac.
• Global subscribers of Zee Network:
Americas Europe Africa Asia Pac Total
Zee NetworkPaying Subs
575,000 155,000 150,000 4,430,000 5,310,000
Non Paying Subs
110,000 36,000 36,000 10,000,000 10,182,000
EducationZee Education began its activities in 1994 as a division of erstwhile Zee Telefilms Ltd. ‘Zee Interactive Learning System’ was formed in 1999 to create a learning network and deliver a variety of educational content and solutions for a range of careers and vocations through multiple delivery platforms. Apart from owned ground based centres, ZILS has been successful to establishing a pre-school learning centre franchise under the brand name “Kidzee”; it has more than 600 such operational centres in India and abroad.Recently ZILS has been accredited with ISO 9001: 2000 certification by British Standards Institution (BSI) for its remarkable quality practices to design and deploy educational content. Today ZILS is one of the most diversified companies in impartation of pre-school, career and vocational training in India, delivering learning solutions and training to various segments of society through its multiple divisions viz.: KIDZEELaunched in 2003, is currently a leader in childhood education with more than 425 Kidzee centres offering playground, nursery activity centre and kindergarten curriculum.KIDZEE - HIGH Launched in 2007, has 7 schools providing integrated learner-centric education through a quality school of international standards.ZIMAZee Institute of Media ArtsZICAClassical and Digital Animation training Academy
5) BUSINESS STRATEGY With the evolvement of Media Sector, Broadcasters
stand to gain on more than one front. The key elements of Zee’s strategy during the year
were (i) to strengthen its position as a leading media and entertainment company in India by continuously creating and aggregating high quality content for viewers in India and globally (ii) to enhance its channel bouquet offerings (iii) expand selectively in international market (iv) focus on shareholders
• Zee has emerged as a firm challenger to the number one position in viewership share.
• Zee is the only channel which has increased in viewership whereas competition has dropped. The gap between leader and us is 63 GRPs.
• Compared to last year, Zee is the only channel to have grown (22% growth): From 185 GRPs in January 2006 to 286 GRPs in March 2008.
• This phenomenal growth was due to strengthening of PT with series of launches.
• Currently all our PT programs are delivering with Dulhan being No.1 program in GEC genre.
Leadership across different GenreApart from its flagship channel Zee TV, the Company has a dominant presence across different segments in Indian Broadcasting space.• In Hindi Movie Genre, it has 4 channels viz. Zee
Cinema, Zee Premier, Zee Action and Zee Classic. Zee Cinema is a long undisputed leader in Hindi movie segment. It has now established itself as No. 3 channel across all genre with reach of more than 75% in C&S HHs and together with other 3 channels, enjoys a channel share of 46% in C&S HHs/HSM.
• Zee Café, Zee Studio and Zee Trendz channels are Company’s offering to the English speaking youth, it has widest variety of English entertainment with most current series of popular English programmes, sitcoms, dramas, soaps, reality, chat shows, fashion, travel, music, action, Hollywood and Bollywood news & snippets.
• The Company’s sports offering includes 2 channels viz. Zee Sports and Ten Sports (Company has 50% stake in Taj TV Group, which owns the Ten Sports channel). It plays a key role in developing Football (with telecast rights for AIFA, UEFA Cup, Euro 2008 Qualifier) and fuels passion for Cricket by telecasting domestic league cricket (India Cricket League). Ten Sports enjoys most loyal viewership in sports genre. Together both channels command 30% of the sports channel genre.
Global PresenceThe Company has access to more than 500 million viewership globally and broadcast to over 120 countries. Its global reach can be explained from the following chat.
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value enhancement (v) maintain consistently high standards of corporate governance.
(i) Strengthening of its position by continuously creating and aggregating high quality content:
Zee TV is now increasing number of original programming to cater to Afternoon and Weekend viewership and improve its channel share further from a present level of 26%.
(ii) Enhancement of its channel bouquet offerings:
While Zee TV is challenging No.1 position, it is simultaneously working towards expanding its channel bouquet. With the launch of Zee Next during the year, the Company aims to effectively challenge all new channels launched in Hindi GEC genre. Zee Next will enable the Company to broad based its content offerings with distinct youth appeal.
(iii) Selective expansion in international market: During the year, the Company expanded its
international presence. Zee TV has started its services in Malaysia (with 24 hrs. dubbed in Malay language), in Indonesia (with 24 hrs. dubbed in Bhasa language), in Russia (subtitled in Russia language), content syndication in China (subtitled in Mandarin language). The Company has recently started its Hindi movie channel with Arabic subtitling for mainstream viewers in Middle East.
(iv) Focus on shareholder value enhancement: Shareholder value has always been a prime
priority of Zee. The completed corporate restructuring in the form of Demerger of its News, Cable and DTH operations has already resulted in the unlocking of shareholder value. The restructuring also creates the opportunity for focused management and the commitment gains that shall result in growth in shareholder value at each of its demerged entities thereby providing higher returns to its shareholders.
(v) Corporate Governance: Zee firmly believes that good governance is
critical to sustaining corporate development, increasing productivity and competitiveness and creating shareholder wealth. The governance process should ensure that the available resources are utilized in a manner that meets the aspirations of all its stakeholders. Your Company’s essential charter is shaped by the objectives of fairness, transparency, professionalism, trusteeship and accountability. The Company continuously endeavours to improve on these aspects on an ongoing basis.
With the increasing emphasis on transparency and accountability, standards have been set by
various governing bodies on disclosure as well as judiciousness in conduct. Zee has always tried to go a step further in this direction.
6) OTHER COMPANY INFORMATION
ZEE ENTERTAINMENT ENTERPRISES LIMITED 1. Internal Control Systems The Company has in place adequate internal
control systems, commensurate with its size and nature of operations so as to ensure smoothness of operations and compliance with applicable legislation. The Company has a well-defined system of management reporting and periodic review of businesses to ensure timely decision-making. It has an internal audit team with professionally qualified financial personnel, which conducts periodic audits of all businesses to maintain a proper system of checks and control.
The management information system (MIS) forms an integral part of the Company’s control mechanism. All operating parameters are monitored and controlled. Any material change in the business outlook is reported to the Board. Material deviations from the annual planning and budgeting, if any, are reported to the Board on quarterly basis. An effective budgetary control on all capital expenditure ensures that actual spending is in line with the Capital Budget.
2. Human Resources The Company seeks, respects and values
the diverse qualities and backgrounds that its people bring to it and is committed to utilizing the richness of knowledge, ideas and experience that this diversity provides. The work environment is stimulating and development of core competencies through formal training, job rotation and hands on training is an ongoing activity.
7) RISK FACTORS Competition from other Players: The Company operates in highly competitive
environment that is subject to innovations, changes and varying levels of resources available to each player in each segment of business.
Ever changing trends in Media sector: For anyone to predict the choice of consumers
is not practical. People’s tastes vary quite rapidly along with the trends and environment they live in. This makes it virtually impossible to predict whether a particular show or serial would do well or not. With the kind of investments made in ventures, repeated failures would have an adverse impact on the bottom-line of the Company.
Effect of CAS on Subscription Revenue: With the implementation of CAS in metros, the
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TRAI has fixed MRP for channels. This MRP may prove to be adverse to Company’s revenues. Also, the mix might change with Regulations amended. It would be difficult to predict as to what stand the Government takes on the pricing policy for CAS going forward.
Cost of programming mix might affect its Bottom line:
The urge to compete and provide the best content to viewers, Zee would have to incur high expenditure to provide an impetus on its programming front from time to time.
The increase in costs might not necessarily perk up its Revenues in the same proportion.
Investments in new channels: The Company may from time to time launch new
channels. Content for these channels is obtained from its existing library as well as from programmes acquired in the normal course of its business. The success of any new channel depends on various factors, including the quality of programming, price, extent of marketing, competition etc. There can be no assurance that the Company will be as successful in launching new channels as it has been the case of its existing channels.
The Company is substantially dependent on advertising revenues and a decline in advertising expenditures could cause the Company’s revenues and operating results to decline significantly in any given period.
The seasonal nature of the Company’s business affects its revenue and low revenues in certain quarters could impact the Company’s results of operations:
The Company’s business reflects seasonal patterns of advertising expenditure, which is common in the television broadcast industry.
The Company depends substantially on its senior management and other skilled personnel, and may be adversely affected if it loses their services and fails to find equally skilled replacements:
The Company’s success to a large part depends on the abilities and continued services of its senior management, as well as other skilled personnel, including creative and programming personnel. The Company’s senior management is particularly important to its business because of their experience and knowledge of the media industry both in India and internationally. The loss or non-availability to the Company of any of its senior management including its Chairman could have significant adverse affect to the extent the Company will be required to replace any of its senior management or other skilled personnel, there can be no assurance that the Company will be able to locate or employ similarly qualified persons on acceptable terms or at all.
The Company may be exposed to foreign exchange rate fluctuations:
The Company receives a significant portion of its revenues and incurs a significant portion of its expenses in foreign currencies, particularly US dollars and UK pounds. Accordingly, the Company is exposed to fluctuations in the exchange rates between those currencies and the Rupee, the Company’s reporting currency, which may have a substantial impact on its revenues and expenses.
8) FINANCIAL RESULTS:CONSOLIDATED FINANCIALSA. RESULTS OF OPERATIONSWe have provided a comparison between ZEEL (Audited) figures for 2006-07 and ZEEL (Audited) figures for 2007-08. RevenueTotal revenue increased Rs. 3,585.7 million or 23% from Rs. 15,906.1 million in 2007 to Rs. 19,491.8 million in 2008 on account of higher sales & services and other income.Sales and ServicesRevenue from sales and services increased Rs. 3,194.8 million, or 21%, from Rs. 15,158.8 million in 2007 to Rs. 18,353.7 million in 2008. Advertisement Revenue has recorded a growth of 32 % from Rs. 7,034.7 million to Rs. 9,306.9 million due to improved position of Zee TV and other channels during the year. Subscription Revenue showed a growth of 12% from 6,648 million to 7,436.0 million while Other Sales & Services increased by 9%. Commission Income on Advertisement and Subscription Sales from other Broadcasters increased by Rs. 274.9 million or 319% from Rs. 86.0 million in 2007 to Rs. 361 million in 2008.Other IncomeOther income had risen by Rs. 390.9 million, or 52%, from Rs. 747.3 million in 2007 to Rs. 1,138.1 million in 2008 mainly due to interest of Rs. 204.2 million received from Income Tax Department on Tax Refunds.ExpendituresTotal expenditure increased Rs. 975.9 million, or 8%, from Rs. 11,954.8 million in 2007 to Rs. 12,930.7 million in 2008. Majority of the jump is in Personnel Cost and Administrative & other expenses.Operational Cost/Cost of GoodsOperational cost/Cost of goods decreased by Rs. 262.3 million, or 3%, from Rs. 8,080.0 million in 2007 to Rs. 7,817.7 million in 2008. Program/film rights cost has increased by Rs. 390.2 million from Rs. 4,782.5 million in 2007 to Rs. 5,172.7 million in 2008. Increased cost is mainly on account of launch of a new channel Zee Next and also due to new programmes on existing channels.Personnel CostPersonnel cost increased Rs. 421.3 million, or 41%,
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from Rs. 1,016.8 million in 2007 to Rs. 1,438.0 million in 2008. The main reason for this being recruitments and increments during the year. On a % of sales basis, the same has gone up to 8% in 2008 from 7% in 2007.Administrative and Other ExpensesAdministrative and other expenses have increased by Rs. 888.1 million, or 71%, from Rs. 1,244.1 million in 2007 to Rs. 2,132 million in 2008. This is mainly due to provision for Doubtful Debt of advances of Rs.335 mn to BCCI.Selling and Distribution ExpensesSelling and distribution expenses decreased Rs. 71.2 million, from Rs. 1,613.9 million in 2007 to Rs. 1,542.7 million in 2008. Due to greater focus on marketing, higher spend on carriage fees, resulted in a rise in selling and distribution expenses.. Operating ProfitOperating profit increased by Rs. 2,609.8 million, or 66%, from Rs. 3,951.3 million in 2007 to Rs. 6,561.1 million in 2008. The operating margin has improved from 25% in 2007 to 34% in 2008. This is primarily because of incremental Revenue being higher than incremental costs during the year. Financial ExpensesFinancial expenses increased Rs. 181.7 million, or 54%, from Rs. 334.3 million in 2007 to Rs. 515.9 million in 2008. This includes loss of Rs. 261.8 million on Foreign Currency Derivative Contracts besides increase on account of higher interest cost during the year.Depreciation and AmortisationDepreciation and amortisation increased Rs. 47.6 million, or 26%, from Rs. 184.7 million in 2007 to Rs. 232.3 million in 2008. Profit Before Tax and Exceptional ItemsProfit before tax and exceptional items increased Rs. 2,380.5 million or 69%, from Rs. 3,432.4 million in 2007 to Rs. 5,812.8 million in 2008. Exceptional ItemExceptional Item Rs. 25.8 million represent diminishing in value of investments in free hold land of 2700 sq. mtr. bought from Padmalaya Telefilms Ltd. Provision for TaxationProvision for taxation increased Rs. 627.6 million, or 63%, from Rs. 999.0 million in 2007 to Rs. 1,626.6 million in 2008. Effective Tax Rate works out to 29% in 2008 - same as in 2007.Profit After Tax and Before Minority Interest/Share of Profits (Losses) in AssociateProfit after tax and before minority interest/share of profits (losses) in associates increased Rs. 1,727 million from Rs. 2,433.3 million in 2007 to Rs. 4,160.4 million in 2008. Share of Results of AssociatesShare of result of associates decreased Rs. 4.7 million
from profit of Rs. 9.9 million in 2007 to profit of Rs. 5.1 million in 2008. Minority InterestMinority interest increased Rs. 265 million from Rs. 67.9 million in 2007 to Rs. 332.9 million in 2008. This includes share of minorities of ETC, Zee Turner, Taj TV Ltd., Asian Business Broadcasting Mauritius Ltd. Net Profit After TaxNet profit after tax increased by Rs. 1,457.3 million or 61%, from Rs. 2,375.3 million in 2007 to Rs. 3,832.7 million in 2008. The Net Profit margin in 2008 was 20% against 15% in 2007.
B. FINANCIAL POSITIONConsolidated Financial Position as on March 31, 2008 as compared to March 31, 2007.Sources of FundsShare Capital, Reserves & SurplusThere was no change in Share Capital of Rs. 4,33.57 mn in 2008.Loan FundsThe total Loan funds of the Company increased from Rs. 3,225.8 million as on March 31, 2007 to Rs. 3,865.6 million as on March 31, 2008. This increase is mainly on account of fixed term borrowing for Taj TV Ltd. at the time for bidding major sporting events telecasting rights.Application of FundsFixed AssetsDuring the year, the Company’s Gross Fixed Assets block increased by Rs. 522.95 million. This increase is mainly on account of new building premises, additional studio, production equipment and uplinking facility at NOIDA.The Net Block increased Rs. 364.5 million from Rs. 14,622 million as on March 31, 2007 to Rs. 14,986 million as on March 31, 2008. This increase is on account of increase of Gross Fixed Assets. Capital Work-in Progress of Rs.619 million represents building premise under construction at Dubai.InvestmentsThe Investments of the Company were valued at Rs. 2,515.4 million on March 31, 2008 as compared to Rs. 2,325.6.million on March 31, 2007, an increase of Rs.189.8 million over 2007. Additional investment is largely into Mutual Funds and other investments into liquid scheme.Deferred Tax AssetsDeferred Tax Assets (Net of Liabilities) is Rs. 243.1 million in 2008 as against Rs.75.4 million in 2007. Increase is largely on account of amalgamation of ETC and ZILS and effect of carried forward losses of ZILS.Net Current AssetsThe Net current assets has increased by Rs. 2,248.2 million during the year ended March 31, 2008 from
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Rs. 12,981.5 million on March 31, 2007 to Rs. 15,229.6 million on March 31, 2008. Current AssetsDuring the year the current assets increased by Rs. 3,420.4 million from 18,087.9 million as on March 31, 2007 to Rs. 21,508.3 as on March 31, 2008.Current LiabilitiesDuring the year the Current Liabilities and Provisions increased by Rs. 1172.3 million from Rs. 5,106.4 million as on March 31, 2007 to Rs. 6,278.7 million as on March 31, 2008.Program/Film RightsProgram/Film rights held by the Company increased from Rs. 2,015.6 million on March 31, 2007 to Rs. 2,441.8 million on March 31, 2008. This increase was mainly on account of acquisition of film rights during the year.InventoriesThe inventories of the Company as on March 31, 2008 were at Rs. 31.9 million an increase from Rs. 24.0 million as on March 31, 2007. These inventories mainly consist of raw tapes, cassettes & discs and other stores & spares.Sundry DebtorsAfter netting off provision for Doubtful Debts & Bad Debts written off, Net Debtors as on March 31, 2008 stood at Rs. 5,907.2 million. This was at Rs. 5,331.3 million as on March 31, 2007. This increase is commensurate to the increase in scale of operations. The age of Net Debtors is improved to 117 days of sales in 2008 as against 127 days of sales in 2007.Cash and Bank BalancesThe cash and bank balances lying with the Company as on March 31, 2008 was Rs. 1,652 million as against Rs. 954.8 million on March 31, 2007.Loans and AdvancesThere was an increase in loans given from Rs. 7,010.7 million on March 31, 2007 to Rs. 8,331.3 million on March 31, 2008. Trade Advances have increased by Rs. 372.3 million from Rs. 2,601.6 million on March 31, 2007 to Rs. 2,974 million on March 31, 2008. The deposits given have increased from Rs. 149.9 million to Rs. 170.1 million on March 31, 2008. Due to the above changes, the total of loans, advances and deposits has increased by Rs. 1,713.1 million from Rs. 9,762.2 million on March 31, 2007 to Rs. 11,475.3 million on March 31, 2008.Current Liabilities and ProvisionsCurrent Liabilities and Provisions have increased by Rs. 1172.3 million during the year. Current LiabilitiesCurrent liabilities on March 31, 2008 were at Rs. 4,151.8 million up from Rs. 3,908.9 million on March 31, 2007. ProvisionsProvisions made have increased from Rs. 1,197.5 million as on March 31, 2007 to Rs. 2,126.9 million as on March 31, 2008.
Miscellaneous Expenditure (to the extent not written off or adjusted)Miscellaneous Expenditure (to the extent not written off or adjusted) reduced by Rs. 1.7 million from Rs. 1.8 million on March 31, 2007 to Rs. 0.1 million on March 31, 2008.
STAND-ALONE FINANCIALS
A. RESULTS OF OPERATIONS
Non-Consolidated Financial Information for the Year Ended March 31, 2008 compared to the Year Ended March 31, 2007.
Total Revenue
Total revenue increased Rs. 2,147.9 million, or 23% from 9,291.3 million to Rs.11,439.2 million due to higher Broadcasting Revenue and other income.
Sales & Services
Revenue from Sales & Services increased Rs. 1,743.1 million, or 20% from Rs. 8,676.8 million to Rs. 10,419.9 million. Major contributor being broadcasting revenue on account of better performance of Zee TV and other channels. Subscription Revenue also has seen significant improvements.
Interest & Other Income
Interest & Other income increased by Rs. 404.7 million or 66% from Rs. 614.6 million to Rs. 1,019.3 million in 2008 primarily on account of Interest Income of Rs. 204.2 million received from Income Tax Department as Income Tax Refunds.
Total Expenditure
Total expenditure decreased by Rs. 221.7 million or 3% from Rs. 6,555.9 million to Rs. 6,334.2 million. The major contributor to this is Programming Cost and Personnel Cost.
Operational Cost/Cost of Goods
Operational cost/Cost of Goods decreased Rs. 1,174.1 million, or 25%, from Rs. 4,783.8 million in 2007 to Rs. 3,609.7 million in 2008, decreased is mainly due to lower purchases of Set Top Boxes (STB) & saving in Production cost.
Personnel Cost
Personnel cost increased Rs. 209.8 million, or 51%, from Rs. 411.2 million in 2007 to Rs. 621 million in 2008. The rise is mainly on account of increase in manpower and increments. As a % of sales, the same was 5.4% in 2008 as against 4.4% in 2007.
Administrative & Other expenses
Administrative and Other expenses increased from Rs. 275.6 million to Rs. 953.7 million, a increase of Rs. 678 million. This includes provision for Doubtful Advances for Rs. 335 million to BCCI and on other Debts Rs. 219 million.
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Selling & Distribution expenses Selling & Distribution expenses have increased by Rs. 64.6 million from Rs. 1,085.2 million in 2007 to Rs. 1,149.8 million in 2008. This is mainly due to high Carriage Fees paid by the company for effective carriage of its channels on cable networks. Also, due to increase of Rs. 195 million in Advertisement and Publicity expenses from 337.5 million in 2007 to 532.5 million in 2008.Operating Profit
Operating profit increased Rs. 2,369.6 million, or 87%, from Rs. 2,735.5 million in 2007 to Rs. 5,105.1 million in 2008. The operating margin has improved from 29% in 2007 to 45% in 2008. This is primarily due to higher revenue and decrease in operating cost.
Financial Expenses
Financial expenses increased by Rs. 240.6 million or 127%. and has gone up from Rs. 189.2 million to Rs. 429.8 million. This includes Rs.261 mn on account of losses on Foreign Exchange derivative contracts.
Depreciation and Amortisation
Depreciation increased by Rs. 20.9 million, or 24%, from Rs. 85.2 million to Rs. 106 million.
Profit Before Tax and Exceptional Items
Profit before tax and exceptional items increased Rs. 2,108 million or 86%, from Rs. 2,461.2 million in 2007 to Rs. 4,569.2 million in 2008.
Exceptional Item
Exceptional Item Rs. 25.8 million represent diminishing in value of investments in free hold land of 2700 sq. mtr. bought from Padmalaya Telefilms Ltd.
Provision for Taxation
Provision for taxation increased to Rs. 1,592.2 million from Rs. 799.1 million. Effective Tax Rate works out to 35%.
Profit After Tax for the Period
Profit after tax for the year increased by 78% to Rs. 2,951.21 million from Rs. 1,662.1 million resulting improved margin from 18% in 2007 to 26% in 2008.
B. FINANCIAL POSITION
Non-Consolidated Financial Position as on March 31, 2008 as compared to March 31, 2007.
Sources of Funds
Share Capital, Reserves & Surplus
Equity Share Capital remained stable at Rs. 433.6 in 2008 posts conversion of FCCB in to Equity in 2007.
Loan Funds
Total loan funds as on March 31, 2008 stood at Rs. 2,042.6 million down from Rs. 2,540.5 million mainly due to repayment of certain long term debt during the year.
Application of FundsFixed AssetsThe Net Block increased Rs. 289.1 million from Rs. 932.1 million as on March 31, 2007 to Rs. 1,221.3 million as on March 31, 2008. This is mainly due to New Building premises constructed at NOIDA.InvestmentsInvestments have increased from 13,458.9 million in 2007 to 13,494.7 million in 2008 an increase of 35.8 million towards additional investment in Equity of Asianet Communication Ltd.,Net Current AssetsThe Net current assets have increased from Rs. 7,391.1 million to Rs. 8,479.9 million largely due to increase in inventory and debtors.Current AssetsProgram/Film RightsProgram/Film rights held by the company increased from Rs. 1,874.3 million on March 31, 2007 to Rs. 2,357.9 million on March 31, 2008. This is mainly due to acquisition of Film Rights.Sundry DebtorsSundry Debtors have increased to Rs. 4,082.8 million from Rs. 2,839.2 million last year. The increase is commensurate to the rise in business for the year. Age of Debtors has gone up from 120 days in 2007 to 143 days in 2008.Cash and Bank BalancesThe cash and bank balances lying with the company, as on March 31, 2008 was Rs. 222.1 million as against Rs. 38.8 million on March 31, 2007. Loans and AdvancesThere was an increase in loans and trade advances given from Rs. 6,780.4 million on March 31, 2007 to Rs. 7,276.8 million on March 31, 2008. Current Liabilities and ProvisionsCurrent Liabilities and Provisions have increased by Rs. 1321.7 million during the year. Current LiabilitiesCurrent liabilities on March 31, 2008 are at Rs. 3,748.5 million up from Rs. 3,327.8 million on March 31, 2007. ProvisionsProvisions made increased from 816.4 million as on March 31, 2007 to Rs. 1,717.4 million as on March 31, 2008 towards provision for taxation and proposed dividend.Miscellaneous Expenditure (to the extent not written off or adjusted)Miscellaneous Expenditure (to the extent not written off or adjusted) reduced by Rs. 0.05 million from 0.15 million on March 31, 2007 to Rs. 0.10 million on March 31, 2008.
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ToThe Members,Zee Entertainment Enterprises Limited
1. We have audited the attached Balance Sheet of Zee Entertainment Enterprises Limited (“the Company”) as at March 31, 2008, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 (the ‘Order’) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956 (“the Act”), and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.
4. Further to our comments in the annexure referred to in paragraph (3) above, we report that:
(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company
AUDITORS’ REPORTso far as appears from our examination of those books;
(c) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Act;
(e) On the basis of written representations received from the Directors and taken on record by the Board, we report that none of the Directors is disqualified as at March 31, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together the significant accounting policies and notes to accounts as per Schedule 18, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;
ii) In the case of the Profit and Loss Account, of the Profit for the year ended on that date; and
iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date
Mohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Mumbai, June 16, 2008
Annexure referred to in Paragraph (3) of Auditors’ Report to the members of Zee Entertainment Enterprises Limited on the accounts for the year ended March 31, 2008
1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation, of its fixed assets.
(b) According to the information and explanations given to us, there is a regular program of physical verification which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, the physical verification of the assets, except the digital satellite receivers lying with third parties, was carried out during the year and discrepancies noticed on such verification, which were not material, have
been properly dealt with in the books of account.
(c) During the year, there was no disposal of substantial part of fixed assets.
2) (a) The inventory has been physically verified (copyrights of trading programs/film rights verified with reference to title documents/agreements) by the management at reasonable intervals during the year.
(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate
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in relation to the size of the Company and the nature of its business.
(c) In our opinion, the Company has maintained proper records of inventory and no discrepancies were noticed on physical verification as compared to the book records.
3) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act.
(b) The Company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act.
4) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and sale of goods and services. During the course of our audit, no major weaknesses were noticed in the internal control system in respect of these areas.
5) According to the information and explanations given to us, there are no contracts or arrangements the particulars of which are required to be entered into the register in pursuance of Section 301 of the Act.
6) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year.
7) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.
8) We are informed that the Central Government has not prescribed the maintenance of cost accounting records under Section 209 (1) (d) of the Act in respect of the Company’s activities.
9) According to the records of the Company examined by us and information and explanations given to us:
(a) The Company has been generally regular except delay in few cases in depositing its Statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and others as applicable. There are no undisputed amounts payable in respect of the aforesaid dues which have remained outstanding as at March 31, 2008 for a period of more than six months from the date they became payable.
(b) There are no disputed Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, which have not been deposited
except Wealth Tax of Rs./ Thousand 13 for A.Y. 1997-98 appeal pending with Income Tax Appellate Tribunal.
10) The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the current year and in the immediately preceding financial year.
11) The Company has not defaulted in repayment of dues to banks and financial institutions.
12) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.
13) The Company is not chit fund or a nidhi/ mutual benefit fund/society.
14) The Company is not dealing in or trading in shares, securities, debentures and other investments.
15) In our opinion, the terms and conditions of guarantees given by the Company for loans taken by subsidiaries and others are prima-facie not prejudicial to the interests of the Company.
16) According to the information and explanations given to us, the Company has not raised any term loan (exceeding three years) during the year. However, funds raised on issue of FCCB in earlier year have been applied for the purpose for which they were obtained, except Rs./Thousand 1,374 which as explained, pending utilization, is temporarily invested as referred in Note 4(d) of Schedule 18 to the financial statements.
17) On the basis of overall examination of the Balance Sheet of the Company and related information as to utilisation of funds, we report that funds raised on short term basis have not been used for long term investments.
18) The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Act.
19) The Company has not issued any secured debentures during the year.
20) The Company has not raised any money by public issue during the year.
21) Based upon the audit procedures performed and information & explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.
Mohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered AccountantsMumbai, June 16, 2008
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(Rs. in ‘000)
Schedule 2008 2007SOURCES OF FUNDSShareholders’ FundsShare Capital 1 433,567 433,567Reserves and Surplus 2 20,848,879 18,918,091
21,282,446 19,351,658Loan FundsSecured Loans 3 708,733 1,806,634Unsecured Loans 4 1,333,881 733,881
2,042,614 2,540,515
Deferred Tax Liabilities (Net) [Refer Note 10 (b)] – 11,682
TOTAL 23,325,060 21,903,855
APPLICATION OF FUNDSFixed Assets 5Gross Block 1,622,035 1,243,298Less: Depreciation up-to-date 400,781 311,182
Net Block 1,221,254 932,116Capital Work-in-progress 63,523 121,631
1,284,777 1,053,747
Investments 6 13,494,713 13,458,895
Deferred Tax Assets (Net) [Refer Note 10(b)] 65,605 –
Current Assets, Loans and Advances 7Programs/Film Rights 2,357,884 1,874,330Inventories 6,170 2,520Sundry Debtors 4,082,828 2,839,238Cash and Bank Balances 222,126 38,795Loans and Advances 7,276,774 6,780,397
13,945,782 11,535,280Less:Current Liabilities and ProvisionsCurrent Liabilities 8 3,748,516 3,327,790Provisions 9 1,717,401 816,426
5,465,917 4,144,216
Net Current Assets 8,479,865 7,391,064
Miscellaneous Expenditure 10 100 149(to the extent not written off or adjusted)
TOTAL 23,325,060 21,903,855
Significant Accounting Policies and Notes to Accounts 18
BALANCE SHEET AS AT MARCH 31,
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
55
(Rs. in ‘000)
Schedule 2008 2007INCOMESales and Services 11 10,419,923 8,676,786Other Income 12 1,019,293 614,553
TOTAL 11,439,216 9,291,339EXPENDITUREOperational Cost/Cost of Goods 13 3,609,736 4,783,788Personnel Cost 14 620,961 411,209Administrative and Other Expenses 15 953,678 275,647Selling and Distribution Expenses 16 1,149,788 1,085,224 TOTAL 6,334,163 6,555,868
Operating Profit 5,105,053 2,735,471Financial Expenses 17 429,815 189,177Depreciation/Amortization 106,019 85,158Profit Before Tax and Exceptional Item 4,569,219 2,461,136Less: Exceptional Item - Provision for Dimunition in Value of Investment (Refer Note 5 (b) ) 25,806 –Profit Before Tax 4,543,413 2,461,136Less: Provision for Taxation – Current Tax 1,652,550 768,154 – Deferred Tax (77,287) 19,396 – Fringe Benefit Tax 16,940 11,500Net Profit After Tax 2,951,210 1,662,086Add: - Transferred from Securities Premium [Refer Note 3(b)] – 1,385,608Less: - Adjusted pursuant to the Scheme of Arrangement [Refer Note 3(b)] – 1,385,608Add: - Balance brought forward 5,571,728 4,969,018Amount available for Appropriation 8,522,938 6,631,104AppropriationsProposed Dividend 868,014 650,350Tax on Dividend 145,442 110,527General Reserve 300,000 300,000Excess Provision for Dividend including Tax thereon written back – (1,501)Balance carried to Balance Sheet 7,209,482 5,571,728 TOTAL 8,522,938 6,631,104Earnings Per Share: (Rs.)Basic before Exceptional Item 6.87 3.92Basic after Exceptional Item 6.81 3.92Diluted before Exceptional Item 6.84 3.92Diluted after Exceptional Item 6.78 3.92(On distributable profits on shares outstanding)(Face Value Re.1)Significant Accounting Policies and Notes to Accounts 18
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
56
(Rs. in ‘000)
2008 2007
SCHEDULE 1
Share Capital
Authorised
500,000,000 Equity Shares of Re.1/- each 500,000 500,000
2,500,000 Cumulative Redeemable Preference Shares of Rs.100/- each 250,000 250,000
750,000 750,000
Issued, Subscribed and Paid up
433,566,765 Equity Shares of Re.1/- each fully paid up[Refer Note 4] 433,567 433,567
(Out of the above 210,316,212 Equity Shares of Re.1/-each fully paid up
were allotted for consideration other than cash against acquisition of
Investments)
TOTAL 433,567 433,567
SCHEDULE 2
Reserves and Surplus
Capital Redemption Reserve
As per last Balance Sheet 70,000 70,000
Securities Premium
As per last Balance Sheet 10,295,520 7,313,072
Add: Received during the year – 4,111,363
Less: Transfer to Profit and Loss Account for adjustment pursuant
to the Scheme of Arrangement [Refer Note 3(b)] – 1,385,608
(Less)/Add: Premium on redemption of FCCB [Refer Note 4 (c)] (6,966) 256,693
10,288,554 10,295,520
General Reserve
As per last Balance Sheet 2,980,843 2,684,827
Less: Adjustment pursuant to the transitional provisions as permitted under AS 15 (net of tax) – (3,984)
Add : Appropriated during the year 300,000 300,000
3,280,843 2,980,843
Profit and Loss Account 7,209,482 5,571,728
TOTAL 20,848,879 18,918,091
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,
57
(Rs. in ‘000)
2008 2007SCHEDULE 3
Secured Loans
Working Capital Finance from Banks 43,262 991,392
Secured by hypothecation of stocks (other than Program and Films Rights),book debts (other than advertisement commission and subscription receivables)and other current assets, all ranking pari passu with other financing banks.During the year security on immovable properties and plant and machineryat Noida has been duly released and charges are yet to be satisfied.
Term Loan from Banks 650,813 801,000
Secured by hypothecation by way of first charge on all domestic cable subscription receivables and program/film rights and further securedby exclusive charge on advertising receivables from sports channel.[Due within a year Rs./Thousand 200,250 (200,000)]
Vehicle Loans (Due within a year Rs./Thousand 6,451( 6,316)) 14,658 14,242Secured by hypothecation of specific assets
TOTAL 708,733 1,806,634
SCHEDULE 4
Unsecured Loans
Foreign Currency Convertible Bonds [Refer Note 4] 233,881 233,881
Short Term Loan
- From Banks 1,100,000 500,000
TOTAL 1,333,881 733,881
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,
SCHEDULE 5 Fixed Assets (at cost)
Description Gross Block Depreciation Net BlockAs at
01/04/07Additions Deductions As at
31/03/08Upto
31/03/07For the year
Deductions Upto 31/03/08
As at 31/03/08
As at 31/03/07
Leasehold Land 65,690 – – 65,690 3,423 813 – 4,236 61,454 62,267
Buildings 187,762 180,958 – 368,720 24,044 4,042 – 28,086 340,634 163,718
Plant and Machinery
673,362 140,123 499 812,986 140,927 71,274 204 211,997 600,989 532,435
Equipments 147,273 47,011 12,805 181,479 64,022 17,466 10,592 70,896 110,583 83,251
Furniture and Fixtures
51,372 26,264 302 77,334 16,162 3,848 237 19,773 57,561 35,210
Vehicles 50,191 16,444 18,457 48,178 10,246 4,487 5,387 9,346 38,832 39,945
Leasehold Improvements
67,648 – – 67,648 52,358 4,089 – 56,447 11,201 15,290
TOTAL 1,243,298 410,800 32,063 1,622,035 311,182 106,019 16,420 400,781 1,221,254 932,116
Previous Year 1,360,022 222,252 338,976 1,243,298 284,652 85,158 58,628 311,182 932,116 –
Note: 1) Building includes Rs./Thousand 114 the value of share in a Co-operative Society. 2) Part of Building has been given on Operating Lease.
58
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,
(Rs. in ‘000)
2008 2007SCHEDULE 6InvestmentsLong Term (at cost)Quoted - Non-Trade1,800,000 Equity Shares of Rs. 2/- each (Rs. 10/- each) of Essel Propack Limited 1,500 1,500
In Associate - Quoted1,321,200 Equity Shares of Rs. 10/- each of Aplab Limited 46,599 46,599
Unquoted -Trade1,692,328 [346,000] Equity shares of Rs. 10/- each of Asianet Communication Limited 259,342 217,718
23,000, 7.25% Redeemable Non-cumulative Preference Shares of Re.1/- each of Wire & Wireless (India) Limited 23 23
In Subsidiaries - Wholly owned - Unquoted
34 Ordinary Shares of USD 1/- each of Zee MultimediaWorldwide Limited ZMWL, BVI, (ZMWL) 10,840,000 10,840,000
501 Ordinary Shares of USD 1/- each of Asia Today Limited(Other 50% held through wholly owned subsidiary ZMWL) 1,480,000 1,480,000
50,000 Equity Shares of Rs. 10/- each of Zee Sports Limited 500 500In Subsidiaries - Others - Unquoted
74,000 Equity Shares of Rs. 10/- each of Zee Turner Limited 740 740(Extent of Holding 74%)
Nil (1,050,000) Equity Shares of Rs. 10/- each of Zee Interactive LearningSystems Limited (Refer Note 3 (a)) (extent of Holding 52.5%) – 10,500
5000 Equity Shares of Taj Television India Private Limited (Extent of Holding 50%) 20,558 20,558
In Subsidiaries- Others (Quoted)
Nil (7,679,176) Equity shares of Rs. 10/- each of ETC Networks Limited – 241,475(Refer Note 3 (a) (Extent of Holding 54.83%)
4,889,584 (Nil) Equity shares of Rs. 10/- each of ETC Networks Limited 271,975(Formerly Zee Interactive Learning Systems Limited [Refer Note 3(a)](Extent of Holding 50.18%)
Other
1,000 Equity Shares of Rs 10/- each of Ecool Gaming 10 10Solutions Private Limited
National Savings Certificates 10 10(Pledged with Sales Tax Department]
Immovable Properties
Freehold Land [Refer Note 5] 599,262 599,262Less: Provision for Diminution in Value 25,806 –
573,456 599,262All above securities are fully paid up
TOTAL 13,494,713 13,458,895
Aggregate Book Value of all Quoted Investments 320,074 289,573Market Value of all Quoted Investments 1,643,572 615,490Aggregate Book Value of all Unquoted Investments 13,174,640 13,169,322
59
(Rs. in ‘000)
2008 2007
SCHEDULE 7
Current Assets, Loans and Advances
A. Current Assets
Programs/Film rights [Refer Note 2] 2,357,884 1,874,330
Inventories (as taken, valued and certified by the Management)
Raw Stocks - Tapes 6,170 2,520
Sundry Debtors
(Unsecured and Considered Good, unless otherwise stated)
More than 6 months [Includes doubtful Rs./Thousand 386,172 (217,153)] 1,029,665 933,697
Others 3,439,335 2,122,694
4,469,000 3,056,391
Less: Provision for Doubtful Debts 386,172 217,153
[include Rs./Thousand 612,283 (350,955) due from Subsidiaries] 4,082,828 2,839,238
Cash and Bank Balances
Cash in hand 1,825 2,638
Balances with Scheduled Banks in Current Accounts 218,834 17,874
Balances with Scheduled Banks in Deposit Accounts 68 68
Balances with Non Scheduled Banks in Current Accounts [Refer Note 6 (d)] 1,374 941
Cheques in hand/transit 25 17,274
222,126 38,795
B. Loans and Advances
(Unsecured and considered good unless otherwise stated)
Loans 6,332,736 5,810,251
Advances (Recoverable in cash or in kind or for value to be received)
[Refer Note 6 (c)] 930,745 583,357
Less: Provision for Doubtful Advances 98,605 48,606
832,140 534,751
Deposits 111,898 435,395
7,276,774 6,780,397
TOTAL 13,945,782 11,535,280
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,
60
SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,
(Rs. in ‘000)
2008 2007
SCHEDULE 8
Current Liabilities*
Sundry Creditors: For Goods 803,619 904,576
For Expenses and Other Liabilities [Refer Note 6 (k)] 1,060,862 973,078
Trade Advances/Deposits received 40,997 16,483
Amounts pending remmittance to principals 1,833,085 1,422,328
Interest accrued but not due 2,352 3,328
Investor Education and Protection Fund:
Unclaimed dividend** 7,601 7,734
Unclaimed fixed deposits – 241
Unclaimed interest on fixed deposits – 22
[*include Rs./Thousand 1,990,109 (1,837,993) due to subsidiaries]
[**There are no amounts due and outstanding to be credited to Investor
Education and Protection Fund as at March 31, 2008].
TOTAL 3,748,516 3,327,790
SCHEDULE 9
Provisions
Provision For: Tax (Net of advances) [Refer Note 10(a)] 641,175 7,728
Retirement Benefits 62,770 47,821
Proposed Dividend (including tax) 1,013,456 760,877
TOTAL 1,717,401 816,426
SCHEDULE 10
Miscellaneous Expenditure
(to the extent not written off or adjusted)
Preliminary Expenses 100 149
TOTAL 100 149
61
SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR YEAR ENDED MARCH 31,
(Rs. in ‘000)
2008 2007
SCHEDULE 11
Sales and Services
Broadcasting Revenue 8,980,747 6,768,749
Sales 1,098,079 1,854,025
Commission - Space Selling 341,097 54,012
TOTAL 10,419,923 8,676,786
SCHEDULE 12
Other Income
Dividend - From Subsidiaries 7,679 7,679
- From Others 3,303 11,668
Interest (Gross) [T.D.S. Rs./Thousand 166,423 (93,761 )] 940,136 462,564
Miscellaneous Income 68,175 94,842
Provision no longer required written back – 37,800
TOTAL 1,019,293 614,553
SCHEDULE 13
Operational Cost/Cost of Goods
i. Operational Cost
Program/Film Rights
Opening [includes under production
Rs./Thousand 10,345 (8,332)] 1,874,330 1,575,962
Add: Production/Acquisition Cost 4,009,373 4,300,541
Less: Closing [includes under production
Rs./Thousand 4,604 (10,345)] 2,357,884 1,874,330
3,525,819 4,002,173
Transmission Cost 81,400 87,503
3,607,219 4,089,676
ii. Cost of Goods
Opening Stock – 90,073
Add: Purchases 2,517 604,039
Less: Closing Stock – –
2,517 694,112
TOTAL 3,609,736 4,783,788
62
SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR YEAR ENDED MARCH 31,
(Rs. in ‘000)
2008 2007SCHEDULE 14Personnel CostSalaries, Allowances and Bonus 570,280 366,360Contribution to Provident and other funds 25,103 21,054Staff Welfare Expenses 25,578 23,795
TOTAL 620,961 411,209
SCHEDULE 15
Administrative and Other ExpensesRent 22,921 12,008Rates and Taxes 8,428 12,366Repairs and Maintenance - Building 2,655 7,371 - Plant and Machinery 5,470 2,919 - Others 9,662 5,085Insurance 2,925 25,303Electricity and Water charges 29,962 15,308Communication expenses 41,124 32,135Printing and Stationery 12,081 9,300Miscellaneous Expenses (including Directors’ sitting fees Rs./Thousand 670 (550)] 55,419 28,963Service Charges/Expenses 57,071 29,136Vehicle expenses 13,207 11,642Travelling and Conveyance expenses [including Directors’ Rs./Thousands 9,335 (5,417)] 71,806 42,009Legal, Professional and Consultancy charges 57,984 34,008Bad debts and advances written off 337,430 159Provision for doubtful debts & advances 219,019 –Loss on sale/ discard/ shortage of fixed assets 6,465 1,839Preliminary Expenses written off 49 49Deferred Revenue Expenditure written off – 6,047
TOTAL 953,678 275,647
SCHEDULE 16Selling and Distribution ExpensesFreight and Forwarding 1,194 885Advertisement and Publicity expenses 532,477 337,503Commission on sales and services 199,895 155,329Business Promotion expenses 416,222 591,507
TOTAL 1,149,788 1,085,224
SCHEDULE 17Financial ExpensesInterest on - Fixed Loan 127,231 114,921 - Bonds 1,178 5,285 - Others 70,874 26,988Discounting and Financing expenses 1,252 41,983Loss on Foreign Exchange derivative contracts and exchange difference 229,280 –
TOTAL 429,815 189,177
63
SCHEDULE 18:
Significant Accounting Policies and Notes to Accounts
Background
Zee Entertainment Enterprises Limited (“ZEEL” or “the Company”) was incorporated in the State of Maharashtra, India. The Company has been mainly in the following businesses during the year:
a) Broadcasting of Satellite Television Channels uplinked from India;
b) Advertisement canvassing agent for other television channels;
c) Sale of programs and films including programming feeds provided for onward telecast in other territories.
d) Production and Distribution of Films;
e) Trading of Electronic Devices for distribution of channels.
A. Significant Accounting Policies
1. Basis of Accounting
The Financial Statements have been prepared under the Historical Cost Convention and on accrual basis in accordance with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.
2. Use of Estimates
The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. Any revision to estimates is recognized prospectively in current and future periods.
3. Fixed Assets
a) Fixed assets are stated at original cost of acquisition/installation net of accumulated depreciation, amortization and impairment losses. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.
b) Capital Work in Progress is stated at the amount expended upto the date of Balance Sheet including advances for capital expenditure.
c) Computer software is capitalized as an intangible asset in the year of put to use.
4. Borrowing Costs
Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. All other borrowing costs are charged to revenue.
5. Impairment of Assets
At each Balance Sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.
6. Depreciation/Amortization
a) Depreciation on fixed assets (including on fixed assets acquired under finance lease) is provided on Straight Line Method at the rate specified in Schedule XIV to the Companies Act, 1956.
b) Premium on Leasehold Land and Leasehold Improvements are amortized over the period of Lease.
c) Computer software is amortized on straight line basis over a period of 36 months from the date of its implementation based on the management estimate of useful life.
7. Investments
a) Investments intended to be held for more than one year, from the date of acquisition, are classified as long
64
term investments and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary.
b) Current Investments are carried at cost or fair value, whichever is lower.
8. Transaction in Foreign Currencies
a) Foreign currency transaction are recorded at the exchange rates prevailing on the date of such transaction.
b) Foreign currency monetary assets and liabilities at the Balance Sheet date are reported using the closing rate. Gain and losses arising, on account of difference, in foreign exchange rates on settlement/translation of monetary assets and liabilities are recognized in the Profit and Loss Account.
c) Non-monetary items denominated in foreign currency are reported using exchange rate prevailing on the date of the transaction.
d) In respect of forward exchange contracts assigned to the foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of the Balance Sheet is recognized in the Profit and Loss Account. Any profit or loss arising on settlement/cancellation of forward contract is recognized as income or as expense for the year in which they arise.
9. Revenue Recognition
a) Broadcasting Revenue - Advertisement revenue (net of agency commission) is recognized when the related advertisement or commercial appears before the public i.e. on telecast. Subscription revenue is recognized on providing the service.
b) Sale is recognized when the risk and rewards are passed onto the customers.
c) Commission on Advertisement canvassing i.e. space selling is recognized when the related advertisement or commercial appears before the public i.e. on telecast.
d) Dividend is recognized when the right to receive the dividend is unconditional.
10. Programs/Film Rights and Inventories
a) Programs/Film rights:
Programs/Film rights are stated at lower of net cost (cost minus accumulated amortization/impairment) or realizable value. Where the realizable value on the basis of its useful economic life is less than its carrying amount, the difference is expensed as impairment.
i. Cost of news/current affairs/chat shows/events including sports events etc. are fully expensed on telecast.
ii. Programs (other than (i) above) are amortized over three financial years from the year of telecast.
iii. Film rights are amortized on a straight-line basis over the license period or 60 months from the date of purchase whichever is shorter.
iv. Film rights for trade – Cost of respective right is fully expensed on sale.
b) Inventories of Raw Stock (Tapes) and Stock-in-Trade (electronic devices etc.) are valued at lower of cost or estimated net realisable value. Cost is taken on First in First Out (FIFO) basis.
11. Retirement Benefits
a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the related service is rendered.
b) Post employment and other long-term employee benefits are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss Account.
65
12. Taxes on Income
a) Current tax is determined as the amount of tax payable in respect of taxable income for the year as per the provisions of the Income Tax Act, 1961.
b) Deferred tax is recognized, subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates.
13. Leases
a) Finance Lease
Assets acquired under Finance Lease are capitalized and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an asset under the lease.
b) Operating Lease
Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments/revenue under operating leases are recognized as expense/income on accrual basis in accordance with the respective lease agreements.
14. Miscellaneous Expenditure a) Preliminary expenses are amortized over a period of 10 years. b) Deferred revenue expenditure other than (a) above are amortized over a period of 36 months15. Earnings Per Share
Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive.
16. Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes to accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.
B. Notes to Accounts
1. Prior Year Comparatives
Previous year’s figures are regrouped, rearranged, or recast wherever necessary to conform to this year’s classification. Figures in brackets pertain to previous year.
2. a) Program/film rights etc. for broadcasting are intangible assets as defined in AS – 26 but considered and shown under current assets as are used for broadcasting in the ordinary course of business.
b) In Schedule 13, Operational Cost includes Cost of Program/Film rights amortized/impaired, sold etc. The Company has impaired program/film rights of Rs./Thousand 8,400 (211,840) during the year.
3. Restructuring
a) The Scheme of Amalgamation, of erstwhile ETC Networks Limited (ETC) with Zee Interactive Learning Systems Limited (ZILS), both subsidiaries of the Company w.e.f. April 1, 2007, approved by the members of the respective companies has been sanctioned by the Hon’ble Court at Mumbai on January 11, 2008. Pursuant to the Scheme the name of Zee Interactive Learning Systems Limited has been changed to ETC Networks Limited and the Company as a shareholder has been allotted 3,839,584 Equity Shares of Rs. 10 each of ETC Networks Limited.
b) Pursuant to the Scheme of Arrangement between ZEEL, Siti Cable Network Limited, New Era Entertainment Network Limited and Dish TV India Limited (Dish TV) (Formerly ASC Enterprises Limited) sanctioned by the Hon’ble High Court at Delhi and Mumbai on December 18, 2006 and January 12, 2007 respectively. Pursuant to the said Scheme, the Direct Consumer Business Undertaking (DCS) of the Company has been transferred
66
to and vested in Dish TV with effect from April 1, 2006. This Scheme has been given effect to in the financial statements for the year ended March 31, 2007.
4. Foreign Currency Convertible Bonds (FCCB)
a) The Company had issued 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) (considered as a non-monetary liability) of US$ 10,000 each aggregating to US$ 100 million, redeemable on April 29, 2009 at 116.24% of their principal amount. The bond holders have an option to convert these bonds into equity shares from and including June 8, 2004 to and including April 22, 2009 at an initial conversion price of Rs.197.235 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$ 1). Consequent to the restructuring, the conversion price has been reset to Rs. 153.459 per share in terms of the Offering Circular, affective April 18, 2008.
b) Out of the total bonds, 9,467 bonds are already converted into equity shares in the earlier years and balance 533 bonds are outstanding as at the date of the Balance Sheet. If all the outstanding bonds are converted into equity shares, then the share capital of the company will increase by around 1,524,058 (1,185,795) Equity Shares of Re.1 each.
c) Further, the bonds may be redeemed in whole and not part at the option of the Company at any time on or after May 12, 2006 and up to April 22, 2009, subject to certain conditions. Premium payable on redemption of bonds Rs./Thousand 6,966 has been provided and adjusted against securities premium as per Section 78 of the Act.
d) Out of the net proceeds of Rs./Thousand 4,269,473 from the issue of the FCCB, Rs./Thousand 4,268,099 has been utilized for the object of the issue, which includes new projects, modernization and expansion of the existing production units and expansion of wholly owned subsidiary operations and balance pending utilization has been included in Cash and Bank balances.
5. Immovable Property
a) The Collector of Hyderabad, Andhra Pradesh, had resumed possession of the freehold land (included under Schedule 6 - “Investments”) admeasuring 17,639.64 sq meters, bought from Padmalaya Telefilms Limited (PTL), registered in the name of the Company and having book value of Rs./ Thousand 573,456. The action of the Collector has been set aside by the appellate authorities and the possession of the land is being restored.
b) Second piece of land admeasuring 2,700 sq meters having book value of Rs./Thousand 25,806 bought from PTL is not yet transferred in the name of the Company and accordingly diminution in value is provided.
6. Disclosures:
a) The Company has been deploying its surplus funds as short-term demand loans / inter corporate deposits, the parties are regular in repayment of principal and interest, hence are considered good.
b) Details of prior period expenses/income included in respective heads in the Profit and Loss Account is as under:
(Rs./Thousand)
Particulars 2008 2007
Managerial Remuneration – 2,100
Rent – written back – (16,653)
Prior Period Income (net) – (14,553)
c) Advances include Rs./Thousand 126,167 (165,026) due from subsidiaries.
d) Balances with Non Scheduled Bank:(Rs. /Thousand)
Name of the Bank Balance as on March 31,
Maximum Balance during the Year
2008 2007 2008 2007
Standard Chartered Bank (Mauritius) Limited – in Current Account
1,374 941 3,485 135,737
67
e) Managerial Remuneration:
i) The Computation of Net Profit in accordance with the provisions of Section 349 of the Companies Act, 1956
(Rs./Thousand)
Particulars 2008 2007
Net Profit before tax as per Profit and Loss Account 4,543,413 2,461,136
Add - Directors sitting fees - Managerial remuneration - Commission payable to Non-executive Directors - Depreciation u/s 350 of the Companies Act, 1956 - Loss on sale of fixed assets - Provision for doubtful debts - Provision for diminution in the value of Investments
Less - Depreciation u/s 350 of the Companies Act, 1956 - Commission payable for the year ended March 31, 2006
67011,45111,812
106,0196,465
219,01925,806
106,019–
55014,3745,517
85,1581,839
––
85,1582,100
Net Profit as per Section 198/349 of the Companies Act, 1956 4,818,447 2,481,316
Maximum permissible remuneration to Managing Director as per Section 198/309
240,932 248,131
Maximum permissible Commission to Non-Executive Directors under section 198/309
48,186 24,813
Remuneration as per service agreement and commission as per board approval.
23,934 18,882
ii) Remuneration paid or provided in accordance with Section 198 of the Companies Act, 1956 to the Directors included in personnel cost is as under:
(Rs./Thousand)
Particulars 2008 2007Whole-time Directors (By the Company)Salary and Allowances 9,300 12,460Provident Fund contribution 756 605Perquisites 1,395 1,309
Note: Salary and Allowances includes basic salary, house rent allowance, leave travel allowance and performance bonus but excluding leave encashment and gratuity provided on the basis of actuarial valuation.
iii) Remuneration (salaries and allowances) paid to a Non-Executive Director by a Foreign subsidiary company is Rs./Thousand 4,041 (4,300). However, no remuneration is paid to him by the Company.
iv) Approval of the Central Government in respect of excess Remuneration paid to the Whole-time Director for the year ended March 31, 2006 have been received during the year.
f) Auditors’ Remuneration included in Miscellaneous Expenses(Rs./Thousand)
Particulars 2008 2007
Audit fees 5,506 4,494
Tax Audit fees 562 562
Certifications and Tax Services 5,716 2,746
68
g) Foreign Exchange Difference
i) The foreign exchange gain (net) including on forward contracts and cross currency swap of Rs./Thousand 21,788 (21,041) on settlement or realignment of foreign exchange transactions has been adjusted in respective heads in the Profit and Loss Account.
ii) The Company has provided for mark to market losses of Rs./Thousand 261,793 on account of derivative transactions, and included in Schedule 17 “Financial Expenses”.
iii) Foreign currency exposures that are not hedged by derivative instruments as at March 31,
(Rs./ Thousand)
Particulars 2008 2007
Foreign Currency Payables 393,497 703,604
Receivables 690,745 388,516
iv) Derivative contracts entered into by the Company and outstanding as on March, 31:
Nominal amounts of derivative contracts entered into by the Company and outstanding as at March, 31 amount to Rs./Thousand 3,192,000 (3,475,336). Category wise breakup is given below:
(Rs./ Thousand)
Particulars 2008 2007
Interest Rate Swaps 3,192,000 3,475,336
h) Employee Stock Option Plan (ESOP)
As at March 31, 2008, the Zee Network Employees Welfare Trust holds 5,000 (5,000) Equity Shares of Re. 1/- each of the Company.
i) Micro, Small and Medium Enterprises:
Disclosure under the Micro, Small, Medium Enterprise Development Act, 2006.
(Rs./Thousand)
Particulars a) Principal amount due to suppliers under the Act 1,368b) Interest accrued and due to suppliers under the Act, on the above amount 19c) Payment made to suppliers (other than interest) beyond the appointed day during
the year–
d) Interest paid to suppliers under the Act, (Other than Section 16) –e) Interest paid to suppliers under the Act, (Section 16) –f) Interest due and payable to suppliers under the Act, for payments already made –g) Interest accrued and remaining unpaid at the end of the year to suppliers under
the Act19
Note: The information has been given in respect of such vendors to the extent they could be identified as “Micro and Small” Enterprises on the basis of information available with the Company.
j) Capital work in progress includes Capital Advances Rs./Thousand 22,437 (11,541).
k) Sundry Creditors for expenses and other liabilities under Current Liabilities include cheques overdrawn Rs./Thousand 82,847 (181,599).
l) Dividend Rs./Thousand 1,174 (724) unclaimed for the period more than seven years is transferred to Investor’s Education and Protection Fund during the year.
m) During the year the Company has shared expenses (included in relevant heads in the Profit and Loss account) of Rs./Thousand 76,980 with a related party pursuant to the memorandum of understanding.
7. Employee Benefits
A) Defined Benefit plans:
69
(Rs./Thousand)Particulars Gratuity (Non-Funded)
2008 2007I. Expenses recognized during the year ended March 31, 2008
1. Current Service Cost 3,865 2,9862. Interest Cost 1,443 1,0163. Actuarial Losses/(Gains) 2,374 3,000
Total Expenses 7,682 7,002II. Net Asset/(Liability) recognized in the Balance Sheet as at March
31, 20081. Present value of defined benefit obligation 19,680 17,8212. Net Asset/(Liability) (19,680) (17,821)
III. Reconciliation of Net Asset/(Liability) recognized in the Balance Sheet during the year ended March 31, 20081. Net Asset/(Liability) at the beginning of year (17,821) (13,481)2. Expense as per I above (7,682) (7,002)3. Employer contribution 5,823 2,662 4. Net Asset/(Liability) at the end of the year (19,680) (17,821)
IV. Actuarial Assumptions1. Discount rate 8.65% 8.25%2. Expected rate of salary increase 7.50% 7.50%3. Mortality LIC (1994-96) LIC (1994-96)
Notes:
(a) Amounts recognized as an expense and included in the Schedule 14 “Personnel Cost” are gratuity Rs./ Thousand 7,278 (4,986) and leave encashment Rs./ Thousand 16,964 (13,063)
(b) The estimates of future salary increases considered in the actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
B) Defined contribution plan:
“Contribution to provident and other funds” is recognized as an expense in Schedule 14 of the Profit and Loss Account
8. Capital Commitments
(Rs./Thousand)
Particulars 2008 2007
Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances)
72,662 75,308
9. Contingent Liabilities not provided for
(Rs./Thousand)
Particulars 2008 2007
a) Corporate Guarantees:- For subsidiaries to the extent of loans availed/outstanding Rs./Thousand 519,340 (568,418)- For other related parties, loans outstanding Rs./Thousand 4,654,185 (4,168,565)
1,204,500
5,362,700
1,315,500
4,604,250
b) Bank guarantees outstanding 3,028 2,637,200
c) Claims against the Company not acknowledged as debts 348,334 201,894
70
d) Disputed Direct Taxes 46,585 46,585
e) Letters of credit (net of liability provided) 7,969 94,069
f) Uncalled liability on shares partly paid - 20,000
g) Legal cases against the Company Unascertainable Uncertainable
10. Taxation
a) The Company’s claims for certain deductions under Chapter VIA of the Income Tax Act, 1961 for Assessment years 1993-1994 to 1999-2000 is allowed by second appellate authority and effect of those appeal orders resulted in excess provision of tax of Rs./ Thousand 573,794 which is not accounted for in these financials, as the Income Tax authorities have challenged these appeal orders in further appeals. The interest of Rs./Thousand 204,053 received on these income tax refunds has however been credited to the Profit and Loss Account
b) The components of deferred tax balances as at March 31,:
(Rs./Thousand)
Particulars 2008 2007
Deferred Tax Assets
Provision for retirement benefits 21,335 16,254
Expenses allowable on payment basis 14,273 14,273
Provision for doubtful debts 131,260 73,810
Total 166,868 104,337
Deferred Tax Liabilities
Depreciation 101,229 115,969
Others 34 51
Total 101,263 116,019
Deferred Tax Assets / (Liabilities) - Net 65,605 (11,682)
11. Leases:
(a) The Company leases office, residential facilities and plant and machinery (including equipments) etc. under cancellable/non-cancellable agreements that are renewable on a periodic basis at the option of both the lessee and the lessor. The initial tenure of the lease generally is for 11 months to 60 months.
(Rs. /Thousand)
Particulars 2008 2007
Lease rental charges for the year 154,541 123,275
Future lease rental obligation payable (under non-cancellable lease)
Not later than one year 32,432 5,680
Less than one year but not later than five years 53,429 17,986
(b) In respect of assets given under operating lease.
(i) The Company has given part of building under cancellable operating lease agreement. The initial term of the lease is for 36 months.
(ii) The rental revenue for the year is Rs./Thousand 19,459 (9,498) .
12. Related Party transactions
(i) List of Parties where control exists
Subsidiary Companies
a) Wholly Owned
Apac Media Ventures Limited (w.e.f October 30, 2007); Asia Today Limited; Asia TV Limited; Expand
71
Fast Holding (Singapore) Pte. Limited; Pan Asia Infrastructure Limited; Zee Multimedia (Maurice) Limited; Zee Multimedia Worldwide (Mauritius) Limited; Zee Multimedia Worldwide Limited; Zee Sports Americas Limited; Zee Sports International Limited; Zee Sports Limited; Zee Technologies (Guangzhou) Limited; Zee Telefilms Middle East FZLLC; Zee TV South Africa (Proprietary) Limited; Zee TV USA Inc.
b) Others – Direct
25 FPS Private Limited (ceased w.e.f. July 25, 2006); ETC Networks Limited (Refer Note 3(a)); Taj Television India Private Limited; Zee Turner Limited.
c) Others – Indirect
Taj TV Limited; Asia Business Broadcasting (Mauritius) Limited
(ii) Associates
Aplab Limited (extent of holding 26.42%)
Broadcast South Asia Limited (extent of holding 48.44%)
(iii) Other Related parties with whom transactions have taken place during the year and balance outstanding as on the last day of the year.
Asian Sky Shop Limited; Asia TV (USA) Limited; Asian Satellite Broadcasting Private Limited; Briggs Trading Company Private Limited; Buddha Films Limited; Churu Trading Company Private Limited; Credensys Software Technologies Limited; Dakshin Media Gaming Solutions Private Limited; Dish TV India Limited; Diligent Media Corporation Limited; Digital Media Convergance Limited; Essel Propack Limited; E-City Entertainment (India) Private Limited; E-City Retail Private Limited; E-Cool Gaming Solution Private Limited; Essel Agro Limited; Essel Corporate Resources Private Limited; Essel Infraprojects Private Limited; Essel International Limited; Essel Shyam Communication Private Limited; Essel Shyam Technologies Limited; Integrated Subscribers Management Limited; Ganjam Trading Company Private Limited; Intrex Trade Exchange Limited; Jay Properties Private Limited; Jayneer Capital Private Limited; New Media Broadcasting Private Limited; Pan India Network Infravest Private Limited; Prajatma Trading Company Private Limited; Rama Associates Limited; Real Media FZLLC, Taleem Research Foundation; Wire and Wireless (India) Limited; Zee News Limited.
Directors/Key Management Personnel
Mr. Ashok Kurien, Mr. B.K. Syngal, Mr. D. P. Naganand, Sir. Gulam Noon, Mr. Laxmi Narain Goel, Dr. M.Y. Khan, Mr. Nemi Chand Jain, Mr. Punit Goenka, Mr. R Vaidyanathan (w.e.f January 1, 2008), Mr. Rajan Jetley and Mr. Subhash Chandra.
(iv) Transactions during the year with related parties
(Rs./Thousand)Sr. No. Particulars 2008 2007
A) Assets Purchased during the year
Associates 497 592
B) Investments
Subsidiaries
Balance as at April 1, 12,593,773 12,573,685
Call Money Paid 20,000 –
Purchased/adjusted during the year – 20,558
Sold/Redemption during the year – 470
Balance as at March 31, 12,613,773 12,593,773
Other Related Parties
Balance as at April 1, 1,533 1,510
Purchased/adjusted during the year – 23
72
(Rs./Thousand)Sr. No. Particulars 2008 2007
Balance as at March 31, 1,533 1,533
Associates
Balance as at April 1, 46,599 46,599
Balance as at March 31, 46,599 46,599
C) Sundry Debtors as at March 31,
Subsidiaries 612,283 350,955
Other Related Parties 708,297 380,428
D) Loans, Advances and Deposits as at March 31,
Subsidiaries 126,167 165,026
Other Related Parties 1,699,578 824,865
E) Sundry Creditors as at March 31,
Pending remittance to Principals
Subsidiaries 1,833,085 1,422,328
Purchase of Programs and Services
Subsidiaries 157,024 415,665
Other Related Parties 142,777 272,075
Associates 260 613
F) Adjustment to Securities Premium pursuant to Scheme of Arrangement Diminution/Cancellation of Investment/ Share Application Money/Loans/Advances
Subsidiaries – 1,439,078
G) Sale & Services Turnover
Sale, Services and Recoveries (Net)
Subsidiaries 816,492 865,955
Other Related Parties 90,232 925,761
Subscription Income
Subsidiaries 126,610 138,221
Advertisement Income (Net)
Subsidiaries – 6,349
Other Related Parties 166,694 75,192
Agency Commission Received
Subsidiaries 69,418 54,012
Other Related Parties 271,679 –
H) Other Income
Dividend Received
Subsidiaries 7,679 7,679
Other Related Parties – 8,017
Associates 3,303 3,303
73
(Rs./Thousand)Sr. No. Particulars 2008 2007
Interest Received
Subsidiaries – 13,480
Other Related Parties 708,124 419,824
Miscellaneous Income
Subsidiaries 148 1,364
Other Related Parties 2,796 9,037
Commission Written Back
Subsidiaries – 27,813
I) Loans, Advances and Deposits Given
Subsidiaries 20,145 131,515
Other Related Parties 11,035,061 4,179,580
J) Purchase of Programs and Services
Subsidiaries 58,524 158,516
Other Related Parties 139,284 568,417
Associates – 42
Commission Paid
Subsidiaries 147,758 136,580
Other Related Parties – –
K) Loans and Advances repayment received
Subsidiaries – 367,325
Other Related Parties 10,178,522 3,816,550
L) Corporate Guarantees Given
Subsidiaries 519,340 568,418
Other Related Parties 4,654,185 4,168,565
Disclosure in Respect of Material Related Party who account for 10% or more of the transactions during the year:
1. Fixed asset purchased include from Aplab Limited Rs./Thousand 497 (592).
2. Pursuant to the Scheme, the name of Zee Interactive Learning Systems Limited has been changed to ETC Networks Limited and the company as a shareholder has been allotted 3,839,584 Equity Shares of Rs. 10 each of erstwhile ETC Networks Limited.
3. Loans & Advances given include to Zee Sports Limited Rs./Thousand 20,115 (Nil); Briggs Trading Co. Pvt. Ltd Rs./Thousand 1,410,000 (1,283,650); Churu Trading Co. Pvt. Limited Rs./Thousand 2,186,000 (1,190,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand 1,492,522 (76,200); Prajatma Trading Co. Pvt. Limited Rs./Thousand 1,605,000 (1,266,700); Dish TV India Limited Rs./Thousand 3,177,000 (326,325); Wire and Wireless (India) Limited Rs./Thousand 1,070,000 (378,570). Loans & Advances repaid includes Briggs Trading Co. Pvt. Ltd Rs./Thousand 1,410,000 (1,283,650); Churu Trading Co. Pvt. Limited Rs./Thousand 2,186,000 (1,190,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand 1,492,522 (76,200); Prajatma Trading Co. Pvt. Limited Rs./Thousand 1,605,000 (1,266,700); Dish TV India Limited
74
Rs./Thousand 2,900,000 (326,325). Balances outstanding at year end include Zee Sports Limited Rs./Thousand 31,704 (23,001); Zee Turner Limited Rs./Thousand 94,463 (139,481); Dish TV India Limited Rs./Thousand 781,315 (352,453); Wire & Wireless India Limited Rs./Thousand 820,817 (378,570).
4. Sundry Creditors balances includes pending remittances to Principals pending to Asia Today Limited Rs./Thousand 1,688,837 (1,362,505); Due for Purchase of Programs & Services to Asia Today Limited Rs./Thousand 88,157 (392,773); ETC Networks Limited Rs./Thousand 48,847 (19,745); Dish TV India Limited Rs./Thousand 98,929 ( Nil); Diligent Media Corporation Limited Rs./Thousand 15,118 ( 9,637); Zee News Limited Rs./Thousand Nil (198,825); Intrex Trade Exchange Limited Rs./Thousand Nil (35,438).
5. Sale & Services Turnover includes to Asia Today Limited Rs./Thousand 785,724 (579,085); Asia TV Limited Rs./Thousand Nil (286,815); Dish TV India Limited Rs./Thousand 9,957 (624,895); Zee News Limited Rs./Thousand 66,260 (295,398); Real Media FZ LLC. Rs./Thousand 9,461 (2,721); Subscription Income from Asia Today Limited Rs./Thousand 126,610 (138,221); Advertisement Income from ETC Networks Limited Rs./Thousand Nil (6,320); Dish TV India Limited Rs./Thousand 166,694 (68,142); Pan India Network Infravest Private Limited Rs./Thousand Nil ( 5,092); Agency Commission received from Asia Today Limited Rs./Thousand 29,144 (41,196); Zee TV USA Rs./Thousand 37,436 (Nil); Asia TV Limited Rs./Thousand Nil (12,816); Zee News Limited Rs./Thousand 271,679 ( Nil).
6. Other income includes Dividend received from ETC Network Limited Rs./Thousand 7,679 ( 7,679); Aplab Limited Rs./Thousand 3,303 (3,303); Essel Propack Limited Rs./Thousand Nil (8,017); Interest received from Asia Today Limited Rs./Thousand Nil (2,544); Asia TV Limited Rs./Thousand Nil (10,356); Briggs Trading Co. Pvt. Ltd Rs./Thousand 6,208 (106,287); Churu Trading Co. Pvt. Limited Rs./Thousand 120,272 (111,414); Ganjam Trading Co. Pvt. Limited Rs./Thousand 144,805 (723); Prajatma Trading Co. Pvt. Limited Rs./Thousand 136,071 (115,190); Dish TV India Limited Rs./Thousand 198,236 (Nil); Miscellaneous income from Zee Turner Limited Rs./Thousand 148 (Nil); Asia Today Limited Rs./Thousand Nil (932); ETC Network Limited (formerly known as Zee Interactive Learning Systems Limited) Rs./Thousand Nil (432);Asian Sky Shop Rs./Thousand 316 (1,350); Diligent Media Corporation Limited Rs./Thousand 462 (Nil); Pan India Network Infravest Private Limited Rs./Thousand 669 (842); Dish TV Limited Rs./Thousand Nil (3,456); Zee News Limited Rs./Thousand Nil (2,604); Digital Media Convergence Limited Rs./Thousand 1,349 (Nil); Real Media FZ LLC Rs./Thousand Nil (590).
7. Purchase of Programs and Services from Asia Today Limited Rs./Thousand 46,175 (49,825); Taj TV Limited - Mauritius Rs./Thousand 8,095 (Nil); 25 FPS Media Private Limited Rs./Thousand Nil (88,700); Dish TV India Limited Rs./Thousand 13,660 (177,204); Essel Corporate Resources Private Limited Rs./Thousand 44,315 (32,806); Essel Sports Private Limited Rs./Thousand 59,500 (Nil); Wire & Wireless (India) Limited Rs./Thousand Nil (2,81,724); Aplab Limited Rs./Thousand Nil (42).
8. Corporate guarantees include in respect Asia Today Limited Rs./Thousand 519,340 (568,418); Dish TV India Limited Rs./Thousand 1,501,395 (2,224,031); Wire & Wireless India Limited Rs./Thousand 2,697,120 (1,585,870).
“Material Parties” denote entities who account for 10% or more of the aggregate for that category of transaction.
i) Details of Remuneration to Directors are disclosed in Note 6(e). ii) Sharing of expenses has been disclosed in Note 6(m).
13. Disclosures as required by the amendment to Clause 32 of the listing agreement vide SEBI circular no.2/2003 of January 10, 2003:
a) Loans given to Subsidiaries and Others: Nil
75
b) Investments by Loanee in the shares of the Company as at March 31:
Loanee No. of fully paid up equity shares 2008
No. of fully paid up equity shares 2007
Churu Trading Company Private Limited 3,576,000 3,576,000
Briggs Trading Company Private Limited 4,451,262 4,451,262
Prajatma Trading Company Private Limited 7,574,500 7,574,500
Ganjam Trading Company Private Limited 6,016,500 6,016,500
14. Additional Information required to be given pursuant to Part II of Schedule VI to the Companies Act, 1956 is as follows:
The Company is in the business of producing television programs and is not subject to any license hence licensed capacity is not given. Further the nature of business of the Company is such that the installed capacity is not quantifiable.
a) Quantitative Information. The details of opening stock, acquisitions/productions, sales and closing stock are as under: (Refer Note 2)
Quantity in numbers and Amount in Rs./Thousand
Particulars 2008 2007
Qty. Amount Qty. Amount
Opening Stock
Program/ Film Rights – 1,863,985 – 1,567,630
Electronic Devices – – 53,680 90,073
Total 1,863,985 53,680 1,657,703
Acquisitions/Productions
Program/Film Rights – 4,009,373 – 4,300,540
Others – Electronic Devices 1 2,517 302,049 604,039
Total 4,011,890 302,049 4,904,579
Sales & Services
Broadcasting Revenue – 8,980,747 – 6,768,749
Program/Film Rights/Others – 1,095,512 – 1,146,220
Others– Electronic Devices 1 2,567 355,729 707,805
Commission - space selling – 341,097 – 54,012
Total 10,419,923 355,729 8,676,786
Closing Stock
Program/ Film Rights – 2,353,280 – 1,863,985
Electronic Devices – – – –
Total – 2,353,280 – 1,863,985
76
(b) Consumption of Raw Stock (included in Program/Film Rights above)
(Quantity in numbers, Amount in Rs./Thousand)
Particulars 2008 2007
Qty. Amount Qty. Amount
Tapes 57,986 34,715 44,273 31,514
Total 57,986 34,715 44,273 31,514
(c) Value of Imported and Indigenous Raw Stock consumed
(% denotes Percentage, Amount in Rs./Thousand)
Particulars 2008 2007
% Amount % Amount
Imported 2.16 752 0.71 223
Indigenous 97.84 33,963 99.29 31,291
Total 100.00 34,715 100.00 31,514
(e) Other Information (Rs./Thousand)
Particulars 2008 2007
Earning in Foreign ExchangeFOB Value of Exports 797,075 919,119Broadcasting Revenue 155,294 190,532Interest Income – 19,083Others 30,321 21,375Remittances in Foreign Currency Net Dividend remitted 348,256 239,715No. of Shareholders (Nos) 1,924 1,893No. of Equity Shares held (Nos) 232,170,943 239,714,963Expenditure in Foreign Currency (On Accrual Basis)Travelling expenses 6,874 5,209Transponder rent 63,614 70,456Programming Expenses 38,712 726,821Interest expense 1,832 6,252Others 40,104 46,605CIF Value of Imports Capital Equipment 104,032 70,746Electronic Devices 2,517 604,039Raw Stock 845 492
15. Earnings per share (EPS)-
Sr. No.
Particulars 2008 2007
a) Profit after Tax before Exceptional Item (Rs./Thousand) 2,977,016 1,662,086
b) Profit after Tax after Exceptional Item (Rs./Thousand) 2,951,210 1,662,086
Adjustment for the purpose of Diluted EPS:
77
Sr. No.
Particulars 2008 2007
Add: Interest on Foreign Currency Convertible Bonds 1,178 5,285
Less: Tax on above 400 1,779
c) Profit after Tax before Exceptional Item for Diluted EPS (Rs./Thousand)
2,977,794 1,665,592
d) Profit after Tax after Exceptional Item for Diluted EPS (Rs./Thousand)
2,951,988 1,665,592
e) Weighted Average number of equity shares for Basic EPS (Nos.) 433,566,765 423,617,434
Add: Weighted Average outstanding option deemed to be issued for no consideration (Nos.)
1,524,058 -
f) Weighted Average number of equity shares for Diluted EPS (Nos.) 435,090,823 423,617,434
Nominal value of equity shares (Re.) 1 1
g) Basic EPS before Exceptional Item (Rs.) 6.87 3.92
h) Basic EPS after Exceptional Item (Rs.) 6.81 3.92
i) Diluted EPS before Exceptional Item (Rs.) 6.84 3.92
j) Diluted EPS after Exceptional Item (Rs.) 6.78 3.92
16. Segmental Reporting
The Financial Statements of the company contain both the consolidated financial statements as well as the separate financial statements of the parent company. Hence, the company has presented the segmental information on the basis of the consolidated financial statements as permitted by Accounting Standard – 17.
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
78
I. REGISTRATION DETAILS REGISTRATION NO. STATE CODE
DATE MONTH YEAR
BALANCE SHEET DATE
II. CAPITAL RAISED DURING THE YEAR (AMOUNT RS. IN THOUSAND) PUBLIC ISSUE RIGHTS ISSUE
BONUS ISSUE PREFERENTIAL ALLOTMENT
III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT RS. IN THOUSAND) TOTAL LIABILITIES TOTAL ASSETS
SOURCES OF FUNDS PAID-UP CAPITAL RESERVES AND SURPLUS
SHARE APPLICATION MONEY SECURED LOANS
UNSECURED LOANS
APPLICATION OF FUNDS NET FIXED ASSETS INVESTMENTS
NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE
OTHER ASSETS DEFERRED TAX LIABILITIES
IV. PERFORMANCE OF COMPANY (AMOUNT RS. IN THOUSAND) TURNOVER* TOTAL EXPENDITURE
(*INCLUDES OTHER INCOME) + - PROFIT/(LOSS) BEFORE TAX BEFORE EXCEPTIONAL ITEMS + - PROFIT/(LOSS) AFTER TAX AND EXCEPTIONAL ITEM
+ EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS (WEIGHTED) (RS.) DIVIDEND RATE (%)
V. GENERIC NAMES OF PRINCIPAL PRODUCTS OF THE COMPANY (AS PER MONETARY TERMS) ITEM CODE NO. (ITC CODE)
PRODUCT DESCRIPTION
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
1 1
3 1 0 3 2 0 0 8
N I L
N I L
N I L
N I L
2 3 3 2 5 0 6 0 2 3 3 2 5 0 6 0
4 3 3 5 6 7 2 0 8 4 8 8 7 9
N I L 7 0 8 7 3 3
1 3 3 3 8 8 1
1 2 8 4 7 7 7 1 3 4 9 4 7 1 3
8 4 7 9 8 6 5 1 0 0
1 1 4 3 9 2 1 5
4 5 6 9 2 1 9 + 2 9 5 1 2 1 0
6 . 8 7 2 0 0
8 5 2 4 9 0 0 1
S E T T E SR E C O R D E D V I D E O C A S
N I L
Place : MumbaiDate : June 16, 2008
For and on behalf of the Board
Subhash Chandra ChairmanPunit Goenka Whole-time DirectorNemi Chand Jain Director
Hitesh Vakil Director - FinanceM. Lakshminarayanan Company Secretary
6 8 9 5 8 0 3
6 5 6 0 5
L 9 2 1 3 2 M H 1 9 8 2 P L C 0 2 8 7 6 7
79
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31,(Rs. in ‘000)
2008 2007
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before tax and exceptional item 4,569,219 2,461,136
Adjustments for:
Depreciation 106,019 85,158
Preliminary expenses written off 49 49
Deferred Revenue Expenditure written off – 6,047
Provision for doubtful debts and advances 219,019 (123,892)
Loss on sale of fixed assets 6,465 1,840
Profit on sale of fixed assets (189) –
Calls in arrears adjusted – 202
Interest expense 199,283 147,194
Dividend income (10,982) (19,346)
Interest income (940,136) (462,564)
Operating profit before working capital changes 4,148,748 2,095,824
Adjustments for:
(Increase) in trade and other receivables (1,358,164) (868,269)
(Increase) in Programs/Film Rights and Inventories (487,205) (209,029)
Increase / (Decrease) in trade and other payables 429,821 (187,700)
Cash Generated from Operations 2,733,200 830,826
Direct taxes paid (Net) (1,036,043) (787,264)
Net Cash flow from Operating Activities 1,697,157 43,562
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets/CWIP (352,692) (266,301)
Purchase of Investments (61,624) (310,905)
Loans to subsidiaries – (131,515)
Loans repaid by subsidiaries – 368,305
Loans to others (15,980,523) (8,633,149)
Loans repaid by others 15,513,716 6,508,217
Dividend received 10,982 19,347
Sale of fixed assets 9,366 5,634
Sale of Investments – 280,817
Interest received 806,119 419,351
Net Cash flow from Investing Activities (54,656) (1,740,199)
80
(Rs. in ‘000)
2008 2007
C. CASH FLOW FROM FINANCING ACTIVITIES
Dividend paid (including dividend tax) (761,010) (494,914)
Interest paid (200,258) (164,072)
Proceeds from short term borrowings 900,000 6,450,499
Proceeds from long term borrowings 7,948 848,792
Repayments of short term borrowings (1,248,130) (5,140,032)
Repayments of long term borrowings (150,188) –
Payment under finance leases (7,532) (2,304)
Net Cash flow from Financing Activities (1,459,170) 1,497,969
Net Cash Flow during the year (A+B+C) 183,331 (198,668)
Cash and Cash Equivalents at the beginning of the year 38,795 237,463
Cash and Cash Equivalents at the end of the year 222,126 38,795
Notes to the Cash Flow Statement for the year ended March 31, 2008
1. Previous year’s figures have been regrouped, recast wherever necessary.
2. Cash and Cash Equivalents at the end of the year:
Cash in hand 1,825 2,638
Balances with Scheduled Banks in Current Accounts 218,834 17,874
Balances with Scheduled Banks in Deposit Accounts 68 68
Balances with Non Scheduled Banks in Current Accounts 1,374 941
Cheques in hand/transit 25 17,274
Total 222,126 38,795
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
81
LAST FIVE YEARS FINANCIAL HIGHLIGHTS
(Rs. in million)
Consolidated Standalone
Year Ending March 31 2008 2007 2006 2005 2004 2008 2007 2006 2005 2004
Revenue Account
Income from Operations 18,354 15,159 16,543 13,252 12,789 10,420 8,677 8,314 6,473 5,053
Total Expenses 12,931 11,955 13,848 8,900 8,480 6,334 6,556 7,525 4,091 3,371
Operating Profit 5,423 3,204 2,695 4,352 4,309 4,086 2,121 789 2,382 1,682
% to Income from Operations 30% 21% 16% 33% 34% 39% 24% 9% 37% 33%
Other Income 1,138 747 640 521 776 1,019 614 510 458 662
PBIDT 6,561 3,951 3,335 4,873 5,085 5,105 2,735 1,299 2,840 2,344
Financial Expenses 516 334 188 206 583 430 189 140 165 370
Depreciation/Amortisation 232 185 360 329 319 106 85 148 139 100
Profit Before Tax & Exceptional Items 5,813 3,432 2,787 4,338 4,183 4,569 2,461 1,011 2,536 1,874
Exceptional Items 26 – (20) 141 – 26 – (19) 53
Taxation 1,627 999 547 1,023 1,049 1,592 799 339 860 720
Profit After Tax & before Exceptional Items 4,186 2,433 2,240 3,315 3,134 2,977 1,662 672 1,676 1,154
Profit After Tax & before minority interest/share of profits/(losses) in associates
4,160 2,433 2,260 3,174 3,134 2,951 1,662 691 1,623 1,154
Add: Share of Results of Associates 5 10 (46) 7 4 –
Less: Minority Interest 333 68 71 56 196 –
Profit After Tax for the year 3,832 2,375 2,143 3,125 2,942 2,951 1,662 691 1,623 1,154
% to Total Income 20% 15% 12% 23% 22% 26% 18% 8% 23% 20%
Dividend 868 650 435 413 413 868 650 435 413 413
Dividend Rate 200% 150% 100% 100% 100% 200% 150% 100% 100% 100%
Capital Account
Share Capital – Equity 434 434 413 412 412 434 434 413 412 412
Share Application Money – – – – – – – –
Share Capital – Preference – – – – – – – –
Reserves & Surplus 28,177 25,747 20,873 24,124 21,774 20,849 18,918 15,037 20,955 20,053
Deferred Tax Balances (243) (75) (148) (219) 11 (66) 11 (6) (55) 15
Minority Interest 1,117 818 458 397 1,251 – – – – –
Loan Funds 3,866 3,226 4,772 5,304 4,722 2,043 2,541 4,712 5,221 2,680
Capital Employed 33,351 30,150 26,368 30,018 28,170 23,259 21,904 20,156 26,533 23,160
Fixed Assets 15,605 14,841 12,948 15,373 15,463 1,285 1,054 1,153 1,792 1,482
Investments 2,516 2,326 3,024 3,744 328 13,495 13,459 13,448 15,475 15,171
Net Current Assets 15,230 12,981 10,384 10,851 12,304 8,480 7,391 5,549 9,252 6,454
Miscellanous Expenditure (to the extent not w/o) – 2 12 51 75 – – 6 14 53
Capital Deployed 33,351 30,150 26,368 30,018 28,170 23,259 21,904 20,156 26,533 23,160
Closing market price per share of Re.1 245 251 238 139 134 245 251 238 139 134
Market capitalisation 106,072 108,674 98,372 57,297 55,358 106,072 108,674 98,372 57,297 55,358
82
PERFORMANCE RATIOS - AN ANALYSIS
Consolidated Standalone
Year Ending March 31, 2008 2007 2006 2005 2004 2008 2007 2006 2005 2004
Financial Performance
Advertisement Income/Income from Operations (%) 50.7% 46.4% 39.7% 43.0% 42.6% 69.8% 58.9% 45.4% 50.2% 37.2%
Subscription Income/Income from Operations (%) 40.5% 43.9% 43.4% 50.6% 47.1% 16.4% 19.1% 21.2% 32.1% 17.7%
Operating Profit/Income from Operations (%) 29.5% 21.1% 16.3% 32.8% 33.7% 39.2% 24.4% 9.5% 36.8% 33.3%
Other Income/Total Income (%) 5.8% 4.7% 3.7% 3.8% 5.7% 8.9% 6.6% 5.8% 6.6% 11.6%
Programming Cost/Income from Operations (%) 28.2% 31.5% 25.7% 19.7% 19.7% 33.8% 46.1% 42.5% 29.9% 32.3%
Personnel Cost/Income from Operations (%) 7.8% 6.7% 6.6% 6.5% 5.7% 6.0% 4.7% 5.3% 6.0% 5.5%
Selling and Admin Expenses/Income from Operations (%) 20.0% 18.9% 20.7% 18.8% 18.5% 20.2% 15.7% 20.3% 19.7% 20.7%
Total Operating Cost/Income from Operations (%) 70.5% 78.9% 83.7% 67.2% 66.3% 60.8% 75.6% 90.5% 63.2% 66.7%
Financial Expenses/Income from Operations (%) 2.8% 2.2% 1.1% 1.6% 4.6% 4.1% 2.2% 1.7% 2.5% 7.3%
Tax/Income from Operations (%) 8.9% 6.6% 3.3% 7.7% 8.2% 15.3% 9.2% 4.1% 13.3% 14.2%
PAT for the year/Total Income (%) 19.7% 14.9% 12.5% 22.7% 21.7% 25.8% 17.9% 7.8% 23.4% 20.2%
Tax/PBT (%) 28.0% 29.1% 19.6% 23.6% 25.1% 34.8% 32.5% 33.6% 33.9% 38.4%
Dividend Payout/PAT for the year (%) 22.6% 27.4% 19.3% 13.2% 14.0% 29.4% 39.1% 59.7% 25.4% 35.8%
Dividend Payout/Effective Networth (%) 3.0% 2.5% 2.0% 1.7% 1.9% 4.1% 3.4% 3.2% 2.1% 2.2%
Balance Sheet
Debt-Equity ratio (Total loans/Eff. Networth) (%) 13.5% 12.3% 22.4% 21.7% 21.4% 9.6% 13.1% 34.7% 26.8% 14.4%
Current ratio (Current assets/Current liabilities) (x) 3.4 3.5 3.4 3.4 4.1 2.6 2.8 2.3 3.2 2.9
Capital Output Ratio (Inc. from Ops/Eff. Capital employed) (x) 0.6 0.5 0.6 0.4 0.5 0.4 0.4 0.5 0.3 0.2
Fixed assets Turnover (Inc from Ops/Fixed assets) (x) 6.9 8.0 7.5 3.1 3.1 8.1 8.2 7.2 3.6 3.4
Cash & cash equivalents/Total Eff. capital employed (%) 5.7% 3.2% 4.9% 5.2% 4.0% 1.0% 0.2% 1.3% 1.6% 1.3%
RONW (PAT for the year/Eff. Networth) (%) 13.4% 9.1% 10.1% 12.8% 13.3% 13.9% 8.6% 5.1% 8.3% 6.2%
ROCE (PBIT/Eff. Capital employed) (%) 19.0% 12.5% 11.3% 15.2% 17.0% 21.4% 12.1% 6.3% 10.9% 10.5%
Per Share Data #
Revenue per share (Rs.) 45.0 36.7 41.7 33.4 32.9 26.4 21.4 21.4 16.8 13.9
Dividend per share (Rs.) 2.00 1.50 1.00 1.00 1.00 2.00 1.50 1.00 1.00 1.00
Indebtedness per share (Rs.) 8.9 7.4 11.6 12.9 11.4 4.7 5.9 11.4 12.7 6.5
Book value per share (Rs.) 66.0 60.4 51.6 59.4 53.6 49.1 46.4 32.9 47.3 45.0
Earnings per share (after prior period adjustments) (Rs.) 8.8 5.5 5.2 7.6 7.2
PE Ratio - Price/EPS Ratio (Share Price as of March 31,) (x) 27.7 45.8 45.9 18.3 18.6
Note:~ Fixed Assets for the consolidated entity excludes Goodwill on consolidation of Rs. 12,959 million# AnnualisedFigures for the previous years have been regrouped wherever necessary.
83
To,
The Board of Directors
Zee Entertainment Enterprises Limited
1. We have audited the attached Consolidated Balance Sheet of Zee Entertainment Enterprises Limited (“the Company”) and its subsidiaries and associate Companies (“the Group”) as at March 31, 2008, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year then ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. (a) The financial statements of subsidiaries with total assets (net) of Rs./Thousand 12,607,157 (10,193,267) as at March 31, 2008 and total revenues (net) of Rs./Thousand 8,058,410 (5,897,452) for the year ended on that date have not been audited by us. These financial statements have been audited by other auditors whose report has been furnished to us and in our opinion, in so far it relates to the amounts included in respect of those subsidiaries, is based solely on the report of the other auditors.
(b) The financial statements of associates for the year ended March 31, 2008 has been audited by other auditors whose report has been furnished to us. The profit of such associates considered for consolidation is Rs./Thousand 5,141 (9,867). Our opinion, in so
far it relates to the amounts included in respect of those associates, is based solely on the report of the other auditors.
4. We draw reference to Note 25 regarding receivable of Rs./Thousand 239,400 claimed from a competing broadcaster, which is under litigation. In the opinion of the management, based on the legal opinion, the said claim is considered as good and recoverable.
5. We report that the Consolidated Financial Statements have been prepared by the Group in accordance with the requirements of the Accounting Standard (AS) 21 “Consolidated Financial Statements” and AS 23 “Accounting for Investments in Associates”, issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of the Company, its subsidiaries and associates.
6. Based on our audit and on consideration of reports of other auditors on separate Financial Statements and on the basis of information and explanations given to us, we are of the opinion that the attached Consolidated Financial Statements give a true and fair view in confirmity with the accounting principles generally accepted in India.
(a) In the case of the Consolidated Balance Sheet of the consolidated state of affairs of the Group as at March 31, 2008;
(b) In case of the Consolidated Profit and Loss Account of the consolidated result of operations of the Group for the year ended on that date; and
(c) In the case of the Consolidated Cash Flow Statement of the consolidated cash flows of the Group for the year ended on that date.
Mohan BhandariPartnerMembership No. 12912
For and on behalf ofMGB & CoChartered Accountants
Mumbai, June 16, 2008
AUDITORS’ REPORT
84
CONSOLIDATED BALANCE SHEET AS AT MARCH 31,
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
(Rs. in ’000) Schedule 2008 2007 SOURCES OF FUNDS
Shareholders’ Funds Share Capital 1 433,567 433,567 Reserves and Surplus 2 28,177,252 25,747,453 28,610,819 26,181,019
Minority Interest 1,117,148 818,595 Loan Funds
Secured Loans 3 2,531,740 2,451,871 Unsecured Loans 4 1,333,881 773,881 3,865,621 3,225,752 TOTAL 33,593,588 30,225,367
APPLICATION OF FUNDS
Fixed Assets 5 Gross Block 16,225,048 15,702,098 Less: Depreciation/Amortisation 1,238,984 1,080,533 Net Block 14,986,064 14,621,565 Capital work-in-progress 619,304 219,485 15,605,368 14,841,050 Investments 6 2,515,401 2,325,648
Deferred Tax Assets (Net) [Refer Note 22(c) ] 243,057 75,389 Current Assets, Loans and Advances 7 Program / Film rights 2,441,848 2,015,644 Inventories 31,931 24,003 Sundry Debtors 5,907,177 5,331,277 Cash and Bank Balances 1,652,024 954,752 Loans and Advances 11,475,349 9,762,210 21,508,329 18,087,886 Less: Current Liabilities and Provisions Current Liabilities 8 4,151,814 3,908,870 Provisions 9 2,126,865 1,197,519 6,278,679 5,106,389 Net Current Assets 15,229,650 12,981,497 Miscellaneous Expenditure 10 112 1,783 (to the extent not written off or adjusted) TOTAL 33,593,588 30,225,367 Significant Accounting Policies and Notes to Accounts 18
85
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,
(Rs. in ’000) Schedule 2008 2007 INCOME Sales and Services 11 18,353,653 15,158,817 Other Income 12 1,138,120 747,260 TOTAL 19,491,773 15,906,077 EXPENDITURE Operational Cost / Cost of Goods 13 7,817,687 8,079,963 Personnel Cost 14 1,438,049 1,016,767 Administrative and other Expenses 15 2,132,196 1,244,091 Selling and Distribution Expenses 16 1,542,734 1,613,937 TOTAL 12,930,666 11,954,758 Operating Profit 6,561,107 3,951,319 Financial Expenses 17 515,925 334,263 Depreciation/Amortisation 232,329 184,688 Profit Before Tax and Exceptional Items 5,812,853 3,432,368 Less : Exceptional Items - Provision for Dimunition in Value of Investment [Refer Note 17 (b)] 25,806 – Profit before Tax and After Exceptional Items 5,787,047 3,432,368 Less – Provision for Taxation – Current Tax – current year 1,741,313 909,779 – earlier years 31,252 (2,488) – Deferred (167,668) 75,987 – Fringe Benefit Tax 21,740 15,741 Profit after Tax and before Minority Interest/Share of Profits in Associates 4,160,410 2,433,349 Add – Share of results of associates 5,141 9,867 Less – Minority Interest 332,883 67,925 Net Profit after tax 3,832,668 2,375,291 Add – Transferred from Securities Premium [Refer Note 19 (b)] – 1,385,608 Less – Adjustments pursuant to Scheme of Arrangement [Refer Note 19(b)] – (1,385,608)Less – Adjustments pursuant to Scheme of Amalgamantion [Refer Note 19(a) (iii)] 593,201 366,114 Add – Balance brought forward 12,878,540 11,202,392 Amount available for Appropriation 16,118,007 13,943,797 APPROPRIATIONS Proposed Dividend 868,014 650,350 Tax on Dividend 149,562 112,907 General Reserve 325,000 302,000 Balance carried to Balance Sheet 14,775,431 12,878,540 TOTAL 16,118,007 13,943,797 Earnings Per Share: (Rs.) Basic before Exceptional Item 8.90 5.62 Basic after Exceptional Item 8.84 5.62 Diluted before Exceptional Item 8.87 5.62 Diluted after Exceptional Item 8.81 5.62 (On distributable profits on shares outstanding) (Face Value Re.1) Significant Accounting Policies and Notes to Accounts 18
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
86
SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31, (Rs. in ’000) 2008 2007 SCHEDULE - 1 Share Capital Authorised 500,000,000 Equity Shares of Re.1/- each 500,000 500,000 2,500,000 Cumulative Redeemable Preference Shares of Rs.100/- each. 250,000 250,000
750,000 750,000 Issued, Subscribed and Paid up 433,566,765 Equity Shares of Re.1/- each fully paid up 433,567 433,567 (Out of the above 210,316,212 Equity Shares of Re.1/- each fully paid up were allotted for consideration other than cash against acquistion of Investments.) TOTAL 433,567 433,567 SCHEDULE - 2 Reserves and Surplus Capital Reserve As per last Balance sheet 9,553 9,553
Less: Adjustment pursuant to Scheme of Amalgamation [Refer Note 19 (a) (iii)] (9,553) –
– 9,553 Capital Redemption Reserve As per last Balance Sheet 70,000 70,000 Add: Transfer from General Reserve 1,168 –
71,168 70,000 Securities Premium As per last Balance Sheet 10,295,520 7,313,072 Add: Received during the year – 4,111,363 Less: Adjustment pursuant to the Scheme of Arrangement [Refer Note 19(b)] – 1,385,608Add/(Less): Premium on Redemption of FCCB [Refer Note 16 (c)] (6,966) 256,693
10,288,554 10,295,520 General Reserve Balance as per last Balance Sheet 3,152,161 2,857,124 Less: Adjustment pursuant to the transistional provisions as permitted – (6,963) under AS 15 (net of tax) Less: Transfer to Capital Redemption Reserve 1,168 –Add: Transfer pursuant to the Scheme of Amalgamation [Refer Note 19(a) (iii)] 593,201 –Add: Appropriated during the year 325,000 302,000
4,069,194 3,152,161
Foreign Currency Translation Reserve (1,027,095) (658,321) Profit and Loss Account 14,775,431 12,878,540 TOTAL 28,177,252 25,747,453
87
(Rs. in ’000) 2008 2007 SCHEDULE - 3 Secured Loans [Refer Note 15] Term Loan from Financial Institution/Banks 1,754,883 801,000 Working Capital Finance from Banks 754,307 1,625,236 Vehicle Loans 22,550 25,635
TOTAL 2,531,740 2,451,871 SCHEDULE - 4 Unsecured Loans Foreign Currency Convertible Bonds [Refer Note 16] 233,881 233,881 Short Term Loans From Banks 1,100,000 500,000 4,00,000, 1% Unsecured Optionally Convertible Debentures of Rs.100/- - 40,000 each fully paid up (Redeemable on expiry of 3 years from allotment the date of at a premium of 10% on principal amount outstanding)
TOTAL 1,333,881 773,881
SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,
Description
Gross Block Depreciation Net Block
As at 01.04.07
Additions Deductions As at 31.03.08
Up to 01.04.07
For the year Deductions Up to 31.03.08
As at 31.03.08
As at 31.03.07
a) Intangibles
Goodwill - On consolidiation^ 12,955,567 4,262 – 12,959,829 – – – – 12,959,829 12,955,567
Software/Knowledge based Content
11,838 3,091 – 14,929 7,764 2,625 – 10,389 4,540 4,075
Trade Mark 33,037 – – 33,037 23,043 3,304 – 26,347 6,690 9,994
b) Tangibles
Leasehold Land 65,690 – – 65,690 3,422 813 – 4,235 61,455 62,268
Building 548,147 236,762 860 784,049 166,687 15,347 860 181,174 602,875 381,459
Plant and Machinery 1,596,115 234,672 47,385 1,783,402 644,054 147,564 47,334 744,284 1,039,118 952,061
Equipments 315,483 87,557 15,263 387,777 170,914 46,041 12,619 204,336 183,441 144,568
Furniture and fixtures 90,010 30,743 423 120,330 42,698 7,894 355 50,237 70,093 47,312
Vehicles 86,211 26,283 36,489 76,005 21,951 8,741 12,710 17,982 58,023 64,260
Total 15,702,098 623,370 100,420 16,225,048 1,080,533 232,329 73,878 1,238,984 14,986,064 14,621,564
Previous Year 13,278,722 3,168,016 744,640 15,702,098 990,860 184,688 95,015 1,080,533 14,621,564 –
SCHEDULE - 5 Fixed Assets (At cost) (Rs. in ‘000)
Notes:^ Arising on consolidation on ZEEL with its subsidiaries and its ultimate subsidiaries. (a) Part of Building has been given on Operating Lease.
88
(Rs. in ‘000) 2008 2007 SCHEDULE - 6Investments Long Term (at cost) Quoted - Non-Trade 1,800,000 Equity Shares of Rs. 2/- each of Essel Propack Limited 1,500 1,500 {Market Value Rs. Thousand / 66,420 (124,200)} Quoted - In Associates 1,321,200 Equity Shares of Rs.10/- each of Aplab Limited 46,599 46,599 (Extent of holding 26.42%) Add: Share of profit upto previous years 20,797 16,199 Add: Share of profit for the year 3,286 7,901 Less: Dividend received during the year 3,303 3,303
{Market Value Rs./Thousand 98,297 (115,010)} 67,379 67,396 Unquoted - Trade Associate 13,344 Equity Share of US$ each of Broadcast South Asia Limited [Extent of holding 48.44%] 1,384,663 1,384,663 Less: Share of loss upto previous year 67,063 69,029Add: Share of profit for the year 1,855 1,966
Others 1,319,455 1,317,600
346,000 (296,000) Equity Shares of Rs.10/- each of 259,342 217,718Asianet Communication Limited 23,000, 7.25% Redeemable Non-cumulative Preference shares of 23 23 Re. 1/- each of Wire and Wireless India Limited Others - Non-Trade 50 Equity Shares of Rs.10/- each of North Karnataka GSB Bank Limited 1 1 2,500 Equity Shares of Rs.10/- each of Samata Sahakari Bank Limited 63 63 1,000 Equity Share of Rs.10/- each of Ecool Gaming Solutions Private Limited 10 10 National Savings Certificates 25 25 Current Investments Unquoted Nil (2,000,000) Units of Rs.10/- each of Reliance Fixed Horizon Fund – 20,000 Institutional Dividend Plan Nil (10,014.55) Units of Rs.1000/- each of Reliance Liquid Plus Fund – 10,017 Daily Dividend Plan Nil (1,000,000) Units of Rs.10/- each of Birla Fixed Term Plan – 10,000 Quarterly Series 7 Nil (15,211) Units of Rs.10/- each of Standard Chartered Liquidity Manager – 15,216 Plus Weekly Dividend 2,044,565 (Nil) Units of Rs. 10/- each of LIC MF Liquid Plus Fund Daily Dividend 20,446 – 2,606,937(1,029,533.89) Units of Rs. 10/- each of Principal Floating Rate Fund 26,101 10,298 Fixed Maturity Plan Nil (1,076,740.73) Units of Rs. 10/- each of Birla Fixed Term Plan- – 10,767 Series F - Growth Nil (1,074,806.17) Units of Rs. 10/- each of HSBC Fixed Term – 10,748 Series-4 Dividend Nil (1,500,260.48) Units of Rs. 10/- each of LIC Fixed Maturity Plan – 15,003 Series-4 Growth Plan
SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,
89
Nil(2,000,000)Units of Rs. 10 each of ABN AMRO Fixed Term Series 1 – 20,000 957,595 (Nil) Units of Rs. 10 each of HDFC High Interest Fund-Short Term Plan 10,195 – 1,476,766 (Nil) Units of Rs. 10 each of HDFC Short Term Plan 15,264 – 1,559,667(Nil) Units of Rs. 10 each of JM Fixed Maturity Fund Series VII- 13 Month Plan 15,597 45,054 (Nil) Units of Rs. 1000 each of Reliance Liquid Plus Fund 45,106 – 2,000,000(Nil) Units of Rs. 10 each of JM Fixed Maturity Plan Series VII - 18 Month Plan 20,000 –5,093,614 (Nil) Units of Rs. 10 each of JM Money Manager Fund Super Plus Plan 50,957 – 2,011,698 (Nil) Units of Rs. 10 each of LIC Liquid Plus Fund - Daily Dividend 20,137 – 1,506,975 (Nil) Units of Rs. 10 each of Birla Sun Life Liquid Plus - Institutional Daily Dividend 15,080 –2,006,456 (Nil) Units of Rs. 10 each of SBI SHF Liquid Plus 20,130 – 1,908,645(Nil) Units of Rs. 10 each of Prudential ICICI - Flexible Income Plan 20,134 –1,500,000 (Nil) Units of Rs. 10 each of UTI Fixed Maturity Plan 15,000 –Immovable Property (Refer Note 17) Freehold Land 599,262 599,262 Less: Provision for diminution in value of investments 25,806 – 573,456 599,262 TOTAL 2,515,401 2,325,648 Note: All the above securities are fully paid up Mutual Fund Units bought and sold during the year:
Name of the Fund Face Value Quantity (Nos.) Cost (Rupees)
Standard Chartered Liquidity Manager - Plus Weekly Dividend 1000 19 19,151 Reliance Liquid Plus Fund - Retail Option Growth Plan 1000 29,621 30,000,000 HSBC Cash Fund - Institutional Daily Dividend 10 3,356,873 35,046,089 HSBC Liquid Plus Institutional Daily Dividend 10 3,619,728 36,242,524 Reliance Liquid Plus Fund - Institutional Option - Daily Dividend Plan 1000 17,453 17,476,851 Reliance Liquid Fund - Treasury Plan - Institutional Daily Dividend Option 10 982,198 15,014,763 DSP Merrill Lynch Strategic Bond Fund - Regular Weekly Dividend 1000 10,329 10,354,289 Principal Floating Rate Fund FMP - Institutional Option Dividend Reinvestment 10 5,126 51,263 Sundaram BNP Paribas Fixed Term Institutional Plan Series XXXIV - Dividend 10 2,032,562 20,325,620 JM Fixed Maturity Plan Series - VI - Quarterly Plan 4 Institutional Dividend Plan 10 2,035,548 20,355,476 Principal Cash Management Fund Liquid Option Institutional Plan - Daily Dividend 10 2,499,906 25,004,558 Reliance Monthly Interval Fund - Series II - Institutional Dividend Plan 10 1,011,717 10,119,796 Reliance Fixed Horizon Fund II - Quarterly Plan - Series V Institutional Plan 10 34,991 349,910 Reliance Floating Rate Fund - Weekly Dividend Reinvestment Plan 10 2,038,414 20,568,825 LIC FMP Series 26 - 3 Month - Dividend 10 1,018,221 10,182,211 LIC MF Liquid Fund - Dividend Plan 10 928,242 10,192,188 UTI Fixed Maturity Plan Quarterly Series Institutional Dividend Plan - Reinvestment 10 1,530,744 15,307,435 LIC MF Fixed Maturity Plan Series 30 - 3 Months 10 1,037,325 10,373,247 UTI Fixed Maturity Plan Quarterly Series Institutional Dividend Plan - Payout 10 1,500,000 15,000,000
SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000) 2008 2007 SCHEDULE - 6 (Contd.)
90
(Rs. in ’000) 2008 2007SCHEDULE - 7 Current Assets, Loans and AdvancesA. Current Assets (a) Programs/Film Rights [Refer Note 10(c)] 2,441,848 2,015,644 (b) Inventories (as taken,valued and certified by the Management) Raw-Stock - Tapes 6,566 2,887 Stock in Trade 25,365 21,116 31,931 24,003 (c) Sundry Debtors (Unsecured considered good unless otherwise stated) More than six months [includes doubtful Rs./Thousands 1,911,180 (1,348,912)] 2,648,214 2,514,243 Others 5,170,143 4,165,946 7,818,357 6,680,189 Less: Provision for Doubtful Debts 1,911,180 1,348,912 5,907,177 5,331,277 (d) Cash and Bank Balances Cash in hand 6,270 7,791 Balances with Scheduled Banks in Current Accounts 1,561,582 919,784 Balances with Scheduled Banks in Deposit Accounts 39,103 6,963 Cheques in hand / transit 45,069 20,214 1,652,024 954,752 (e) Loans and Advances Loans 8,331,306 7,010,663 Advances (Recoverable in cash or kind for value to be received) 3,077,133 2,654,040 Less: Provision for Doubtful Advances 103,171 52,386 2,973,962 2,601,654 Deposits 170,081 149,893 11,475,349 9,762,210 TOTAL 21,508,329 18,087,886
SCHEDULE - 8 Current Liabilities Sundry Creditors – For Goods 949,729 694,942 – For Expenses and Other Liabilities 2,262,920 2,543,061 Trade Advances/Deposits received 114,774 121,622 Amounts pending remittance to Principals 814,067 537,586 Unclaimed Dividend/Fixed Deposits 7,972 8,324 Interest accrued but not due 2,352 3,337
TOTAL 4,151,814 3,908,870
SCHEDULE - 9 Provisions Provision for – Tax ( Net of Advances) [Refer Note 22(d)] 984,640 340,994 – Retirement Benefits 124,629 93,267 Proposed Dividend (including tax) 1,017,596 763,257
TOTAL 2,126,865 1,197,519
SCHEDULE - 10 Miscellanous Expenditure (to the extent not written off or adjusted) Share Issue and Preliminary Expenses 112 163 Deferred Revenue Expenditure – 1,619 TOTAL 112 1,783
SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,
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SCHEDULES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, (Rs. in ’000) 2008 2007 SCHEDULE - 11 Sales and Services Services – Advertisement 9,306,869 7,034,684 – Subscription 7,436,098 6,647,954 – Commission – Broadcasters 360,962 86,071 – Course Fees and Materials 235,103 205,471 – Other Services 417,300 244,601 Sales – Products 597,321 940,035
TOTAL 18,353,653 15,158,817 SCHEDULE - 12 Other Income Dividend 10,543 13,879 Interest 995,990 494,768 Profit on Sale of Investment – in Associates – 37,104 – in Subsidiary – 22,889 – Others 5,511 821 Balances written back 47,515 35,049Miscellaneous Income 78,561 142,749
TOTAL 1,138,120 747,260 SCHEDULE - 13Operational Cost/Cost of Goods A. Program/Film Rights Opening 2,015,644 2,398,741 Add: Production/Acquisition cost 5,598,904 4,399,433 Less: Closing 2,441,848 2,015,644
5,172,700 4,782,530 B. Transmission Cost/Other Direct Expenses Subscription Management Services 1,952,540 1,967,278 Transmission Cost 604,539 563,608 Education Centre Operating Expenses 46,382 26,687
2,603,461 2,557,573 C. Stock in Trade Opening Stock 21,116 122,740 Add: Purchases 45,775 658,237 Less: Adjustment under Scheme of Arrangement [Refer Note No. 19 (b)] – 20,001 Less: Closing Stock 25,365 21,116
41,526 739,860
TOTAL 7,817,687 8,079,963
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(Rs. in ’000) 2008 2007SCHEDULE - 14 Personnel Cost Salaries, Allowances and Bonus 1,317,509 929,579 Contribution to Providend and other funds 54,607 45,742 Staff Welfare expenses 65,933 41,447
TOTAL 1,438,049 1,016,767 SCHEDULE - 15 Administrative and Other Expenses Rent 129,061 94,012 Lease Rentals 5,681 8,464 Rates and Taxes 28,799 27,806 Repaires and Maintenance – Building 3,369 8,257 – Plant and Machinery 27,546 5,229 – Others 30,097 35,189 Insurance 21,574 45,743 Electricity and Water charges 51,308 27,698 Communication expenses 103,697 86,842 Printing and Stationery 24,618 22,397 Miscellaneous Expenses 90,435 120,327 Conveyance and Travelling expenses 199,571 121,829 Vehicle expenses 24,658 25,400 Legal, Professional and Consultancy charges 284,876 207,574 Auditors’ Remuneration 25,727 19,841 Provision for doubtful debts and advances 727,208 276,289 Bad debts and advances written off 345,427 94,902 Loss on sale/discard/shortage of fixed assets 8,493 6,306 Share Issue and Preliminary Expenses written off 51 129 Deferred Revenue Expenditure written off - 9,858
TOTAL 2,132,196 1,244,091
SCHEDULE - 16 Selling and Distribution Expenses Advertisment and Publicity expenses 756,055 619,517 Commission/Discount on Sales and Services 163,081 216,402 Business Promotion expenses 623,598 778,019
TOTAL 1,542,734 1,613,937 SCHEDULE - 17 Financial Expenses Interest on – Fixed Loan 195,425 114,528 – Bonds 1,178 7,026 – Others 101,219 97,087 Discounting and Financing expenses 36,045 64,224 Loss on Foreign Exchange derivative contracts and exchange difference 182,058 51,398 TOTAL 515,925 334,263
SCHEDULES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,
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SCHEDULE - 18
Significant Accounting Policies and Notes to Accounts
1. Background:
Zee Entertainment Enterprises Limited (hereinafter referred to as ‘the parent company’, ‘the Company’ or ‘ZEEL’) together with its subsidiaries and associates (collectively known as “the Group”) derives revenue mainly from advertisements and subscription. The Group also generates revenue through sale of television programming softwares, film distribution, commision for space selling, trading in electronic devices and Educational services.
2. Basis of Consolidation
a) The Consolidated Financial Statements (CFS) of the Group are prepared under Historical Cost Convention in accordance with Generally Accepted Accounting Principles in India and the Accounting Standard - 21 on “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India (ICAI), to the extent possible in the same format as that adopted by the parent company for its separate financial statements by regrouping, recasting or rearranging figures, wherever considered necessary.
b) The CFS are prepared using uniform accounting policies for transactions and other events in similar transactions.
c) The consolidation of the financial statements of the parent company and its subsidiaries is done to the extent possible on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. All significant inter-group transactions, unrealised inter-company profits and balances have been eliminated in the process of consolidation. Minority interest in subsidiaries represents the minority shareholders proportionate share of the net assets and net income.
d) The CFS includes the Financial Statements of the parent company and the subsidiaries (as listed in the table below). Subsidiaries are consolidated from the date on which effective control is acquired and are excluded from the date of transfer/disposal.
Name of the Subsidiaries Extent of holding of Parent (%)
Country of Incorporation
Direct Subsidiaries
ETC Networks Limited (formerly Zee Interactive Learning System Limited)^
50.18 India
Taj Television India Private Limited 50.00 India
Zee Turner Limited 74.00 India
Zee Sports Limited 100.00 India
Zee Multimedia Worldwide Limited 100.00 British Virgin Islands
Indirect Subsidiaries
Apac Media Venture Limited* 100.00 Hongkong
Asia Today Limited # 100.00 Mauritius
Asia Business Broadcasting (Mauritius) Limited 60.00 Mauritius
Pan Asia Infrastructure Limited 100.00 Mauritius
Taj TV Limited 50.00 Mauritius
Zee Multimedia Worldwide (Mauritius) Limited 100.00 Mauritius
Zee Multimedia (Maurice) Limited 100.00 Mauritius
Zee Sports International Limited 100.00 Mauritius
Zee Sports Americas Limited 100.00 Mauritius
Asia TV Limited 100.00 United Kingdom
Expand Fast Holding (Singapore) Pte Limited 100.00 Singapore
Zee Technologies (Guangzhau) Limited 100.00 China
Zee Telefilms Middle East FZ LLC 100.00 U.A.E.
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Name of the Subsidiaries Extent of holding of Parent (%)
Country of Incorporation
Zee TV USA Inc. 100.00 United States of America
Zee TV South Africa (Proprietary) Limited 100.00 South Africa
^ Refer Note 19 (a)
* Acquired during the year (Refer Note 20)
# 50% held through wholly owned subsidiary.
e) Associates
The Group has adopted and accounted for Investments in Associate in these CFS, using the “Equity Method” as per AS – 23 issued by ICAI.
Name of the Associate Company Extent of Holdings Country of IncorporationAplab Limited 26.42% IndiaBroadcast South Asia Limited 48.44% British Virgin Islands
No adjustments are made for differences in accounting policy for inventories are valued on weighted average basis and depreciation provided on fixed assets on written down value method in case of Aplab Limited. The impact of this non-compliance on Company’s share of profit in the associate is not ascertained.
3. Use of Estimates
The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. Any revision to estimates is recognized prospectively in current and future periods.
4. Comparatives
(a) Previous years figures have been regrouped, rearranged or recasted wherever necessary to conform to this year’s classification. Figures in brackets pertain to previous year.
(b) The CFS are not comparable, in view of subsidiaries incorporated/acquired during the current and previous year.
5. Fixed Assets
(a) Goodwill on Consolidation
Goodwill represents the difference between the Group’s shares in the net worth of the subsidiary or an associate, and the cost of acquisition at the time of making the investment in the subsidiary or the associate. Capital reserve represents negative goodwill arising on consolidation.
(b) Intangible Assets
Intangible assets comprises Computer software, Trade Mark and Knowledge based content. These intangible assets are amortized on straight line basis based on the useful lives, which in management’s estimate represents the period during which economic benefits will be derived from their use.
(c) Tangible Fixed Assets
(i) Fixed assets are stated at original cost of acquisition/installation net of accumulated depreciation, amortization and impairment losses. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.
(ii) Capital Work in progress is stated at the amount expended upto the date of Balance Sheet including advances for capital expenditure.
(iii) Assets acquired under Finance Lease are capitalized and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease.
6. Impairment of assets
At each Balance Sheet date, the carrying amount of fixed assets is reviewed to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount
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of assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.
7. Borrowing Costs
Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. All other borrowing costs are charged to revenue.
8. Depreciation/Amortization
(a) Depreciation is provided on tangible fixed assets, including on fixed assets acquired under finance lease, on straight-line method at the rates specified in Schedule XIV or at such higher rates as permissible under applicable law, so as to write off their costs over the estimated useful life of the assets.
(b) Premium on leasehold land and leasehold improvements are amortized over the period of Lease.
(c) No part of goodwill arising on consolidation is amortized.
(d) Intangible assets are amortized over the economic useful life as estimated by the management as under:-
Assets Useful life (in years)Computer software/Knowledge based Content 3Trade Marks 10
9. Investments
(a) Investments (other than investment in associates) intended to be held for more than one year, from the date of acquisition, are classified as long term investments and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary.
(b) Current Investments are carried at cost or fair value whichever is lower.
10. Programs/Film Rights and Inventories
a) Programs/Film Rights -
Programs/Film rights are stated at the lower of net cost (cost minus accumulated amortization/impairment) or realisable value. Where the realisable value on the basis of its useful economic life is less than its carrying amount, the difference is expensed as impairment.
(i) Cost of news/current affairs/chat shows/events including sports events etc. are fully expensed on telecast.
(ii) Programs (other than (i) above) are amortized over three financial years from the year of telecast/purchase.
(iii) Film rights are amortized on a straight-line basis over the license period or 36/60 months from the date of purchase, whichever is shorter.
(iv) Film rights for trade – Cost of respective right is fully expensed on sale.
b) Inventories of Raw Stock–Tapes and Stock–in–trade (electronic devices, educational material/equipments) are valued at lower of cost or estimated net realisable value. Cost is taken on First in First Out (FIFO) basis/ Average Cost.
c) (i) Program/film rights etc. for broadcasting are intangible assets as defined in AS – 26 but considered and shown under current assets as are used for broadcasting in the ordinary course of business.
(ii) In Schedule 13, Operational Cost includes Cost of Program/Film rights amortised/impaired, sold etc. The Company has impaired program/film rights of Rs./Thousand 8,400 (211,840) during the year.
11. Revenue Recognition
(a) Advertisement revenue (net of agency commission) is recognized when the related advertisement or commercial appears before the public i.e. on telecast. Subscription revenue is recognized on providing the service.
(b) For services, including commission on subscription, advertising canvassing i.e. space selling, revenue is recognized when the service is completed.
(c) Sales are recognized when the risk and rewards are passed onto the customers.
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(d) In respect of educational services, revenue is recognized over the duration of course. Franchise fees are recognized as and when installments are due.
(e) Dividend is recognized when the right to receive the dividend is unconditional.
12. Foreign Currency
a) Accounting of Transactions
(i) The functional currency of each entity in the group is its respective currency. Monetary assets and liabilities in foreign currencies are converted into functional currency at the rates of exchange prevailing at the Balance Sheet date. Transactions in the foreign currencies are converted into functional currency at the rates of exchange prevailing at the date of the transaction.
(ii) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transaction.
(iii) Foreign currency monetary assets and liabilities at the Balance Sheet date are reported using the closing rate. Gain and losses arising on account of difference in foreign exchange rates on settlement/ translation of monetary assets and liabilities are recognised in the Profit and Loss Account.
(iv) Non-monetary items denominated in foreign currency are reported using exchange rate prevailing on the date of transaction.
(v) In respect of forward exchange contracts assigned to the foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of the Balance Sheet is recognised in the Profit and Loss Account. Any profit or loss arising on settlement/ cancellation of forward contract is recognised as income or as expense for the year in which they arise.
b) Translation and Exchange Rates
Financial Statements of overseas non-integral operations are translated as under:
(i) Assets and Liabilities at the rate prevailing at the end of the year. Depreciation is accounted at the same rate at which assets are converted.
(ii) Revenues and expenses at yearly average rates prevailing during the year (except for inventories, deferred tax and depreciation are converted at opening/closing rates as the case may be). Off Balance Sheet items are translated into Indian Rupees at year-end rates.
(iii) Exchange differences arising on translation of non-integral foreign operations are accumulated in the Foreign Currency Translation reserve until the disposal of such operations.
13. Retirement Benefits
Retirement benefit plans, pensions schemes and defined contribution plans, or funds are governed by the statutes of the countries in which the entities are located and contribution to the fund, future liability on actuarial valuation and liability on termination are charged to Profit and Loss Account. Accrued liabilities for leave encashment are made by the parent and its subsidiaries wherever applicable based on unavailed leave to the credit of employees in accordance with the rules of the respective companies. Incase of a subsidiary, the gratuity fund benefits are administered by a specific Trust formed and annual contributions are deposited under group policy scheme of Life Insurance Corporation of India (LIC).
14. Miscellaneous Expenditure
(a) Share issue and Preliminary expenses are amortized over a period of ten years.
(b) Deferred revenue expenditures (other than (a) above) are amortized based on the management’s estimates of its enduring future benefit over a period of 36 months.
15. Secured Loans
(a) In case of Parent Company:
Term Loan from Banks is secured by hypothecation by way of first charge on all domestic cable subscription receivables and Program and Film Rights and further secured by exclusive charge on advertising receivables from sports channel.
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Working Capital Finance from Banks is secured by hypothecation of stocks (other than Program and Film Rights), book debts (other than advertisement commission and subscription receivables) and other current assets, all ranking pari passu with other financing banks. During the year, the security on immovable properties and plant and machinery at Noida has been duly released and charges are yet to be satisfied.
(b) In case of subsidiaries, Term Loan and working capital finance from bank is secured by general charge on assets, assignment of revenue from advertisement, syndication, specific events, cable distribution proceeds and by personal/corporate guarantee of the promoters/principal shareholders. In case of a subsidiary, Term Loan is secured by way of mortgage of immovable property.
(c) Vehicle Loans:
Hire purchase and lease finance is secured by hypothecation of specific assets underlying the hire purchase/lease.
16. Foreign Currency Convertible Bonds (FCCB):
(a) The Company had issued 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) (considered as a non-monetary liability) of US$ 10,000 each aggregating to US$ 100 million, redeemable on April 29, 2009 at 116.24% of their principal amount. The bond holders have an option to convert these bonds into equity shares from and including June 8, 2004 to and including April 22, 2009 at an initial conversion price of Rs.197.235 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$ 1). Consequent to the restructuring, the conversion price has been reset to Rs. 153.459 per share in terms of the Offering Circular, affective April 18, 2008.
(b) Out of the total bonds, 9,467 bonds are already converted into equity shares in the earlier years and balance 533 bonds are outstanding as at the date of the Balance Sheet. If all the outstanding bonds are converted into equity shares, then the share capital of the Company will increase by around 1,524,058 (1,185,795) Equity Shares of Re.1 each.
(c) Further, the bonds may be redeemed in whole and not part at the option of the Company at any time on or after May 12, 2006 and up to April 22, 2009, subject to certain conditions. Premium payable on redemption of bonds Rs./Thousand 6,966 has been provided and adjusted against securities premium as per Section 78 of the Act.
(d) Out of the net proceeds of Rs./Thousand 4,269,473 from the issue of the FCCB, Rs./Thousand 4,268,099 has been utilized for the object of the issue, which includes new projects, modernization and expansion of the existing production units and expansion of wholly owned subsidiary operations and balance pending utilization has been included in Cash and Bank balances.
17. Immovable Property
(a) The Collector of Hyderabad, Andhra Pradesh, had resumed possession of the freehold land (included under Schedule 6- “Investments”) admeasuring 17,639.64 sq. mtr., bought from Padmalaya Telefilms Limited (PTL), registered in the name of the Company and having book value of Rs./Thousand 573,456. The action of the Collector has been set aside by the appellate authorities and the possession of the land is being restored.
(b) Second piece of land admeasuring 2,700 sq. mtrs. having book value of Rs./Thousand 25,806 bought from PTL is not yet transferred in the name of the Company and accordingly diminution in value is provided.
18. Debtors
Debtors are stated in the Balance Sheet at net realisable value. Net realisable value is the invoiced amount less provision for bad and doubtful debtors. Provisions are made specifically against debtors where there is evidence of a dispute or an inability to pay or irrecoverability.
19. Restructuring
(a) (i) The Scheme of Amalgamation, of erstwhile ETC Networks Limited (ETC) (Transferor Company) with Zee Interactive Learning Systems Limited (ZILS) (Transferee Company), both subsidiaries of the parent company w.e.f. April 1, 2007, approved by the members of the respective companies has been sanctioned by the Hon’ble High Court at Mumbai on January 11, 2008. Pursuant to the Scheme, the name of Zee Interactive Learning Systems Limited has been changed to ETC Networks Limited and the parent company as a share holder has been allotted 3,839,584 Equity Shares of Rs. 10 each of ETC Networks Limited. The group’s holding in the amalgamated entity is 50.18%.
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(ii) Pursuant to the Scheme, the surplus of assets over liabilities of erstwhile ETC, the debit balance in the Profit and Loss Account of the Company as on the appointed date and the consideration of buy-back of shares of transferor Company are transferred to Restructuring account. The net surplus in Restructuring account is credited to General Reserve, details are as under:-
Particulars Rs./ThousandAssets 847,069Less: Liabilities 174,731Net Asset Value of the Transferor Company 672,338Less: Debit Balance in Profit and Loss Account of the Transferee Company 3,616Buy-back of Equity Shares of Transferor Company 6,076Difference between the issued share capital of the Company and the Share Capital of Transferor Company 69,445Total 79,137Net Surplus in Restructuring Account 593,201Transferred to General Reserve 593,201
(iii) The balance in the Profit and Loss Account is adjusted to the General Reserve as referred above for Rs. Thousand 593,201.
(b) Pursuant to the Scheme of Arrangement between ZEEL, Siti Cable Network Limited, New Era Entertainment Network Limited and Dish TV India Limited (Dish TV) (Formerly ASC Enterprises Limited) sanctioned by the Hon’ble High Court at Delhi and Mumbai on December 18, 2006 and January 12, 2007 respectively. Pursuant to the said Scheme, the Direct Consumer Business Undertaking (DCS) of the Company has been transferred to and vested in Dish TV with effect from April 1, 2006. This Scheme has been given effect to in the financial statements for the year ended March 31, 2007.
20. Acquisitions
During the year, the Group has acquired 100% stake in Apac Media Venture Limited, Hongkong, for a consideration of Rs./Thousand 51. Goodwill arising on consoliation is Rs./Thousand 4,261.
21. Loans
The Group has been deploying its surplus funds as short-term demand loans/inter corporate deposits, the parties are regular in repayment of principal and interest, hence are considered good.
22. Taxation
(a) Current income tax is calculated on the results of individual companies in accordance with local tax regulations.
(b) Deferred tax is recognized, subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates.
(c) The components of the deferred tax balances as on March 31, are as under:
Rs./Thousand
Sr. No. Particulars 2008 2007(i) Deferred Tax Assets
Arising on account of timing differences in Retirement Benefit 21,335 28,625Provision for doubtful debts 194,008 117,492Allowable on payment basis 26,321 14,273
Unabsorbed fiscal allowances 114,614 602Deferred Revenue Expenditure 15,792 –Other Provisions 779 65,783TOTAL 372,849 226,775
(ii) Deferred Tax LiabilitiesDepreciation 129,758 151,335Other Provisions 34 51TOTAL 129,792 151,386Deferred Tax Assets (Net) 243,057 75,389
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(d) The Company’s claims for certain deductions under Chapter VIA of the Income Tax Act, 1961 for Assessment years 1993-1994 to 1999-2000 is allowed by second appellate authority and effect of those appeal orders resulted in excess provision of tax of Rs./ Thousand 573,794 which is not accounted for in these financials, as the Income Tax authorities have challenged these appeal orders in further appeals. The interest of Rs./Thousand 204,053 received on these income tax refunds has however been credited to the Profit and Loss Account.
23. Leases
(a) Finance Lease:
Long-term leases, which in economic terms constitute investments financed on a long-term basis (finance lease) are recognized as assets and recorded under tangible fixed assets at their cash purchase value. The minimum lease payments required under this finance lease that have initially or remaining non cancellable lease terms in excess of one year as at March 31, 2008 and its present value are as follows.
Reconciliation of minimum lease payments and present value:
Rs./Thousand
2008 2007i) In respect of assets taken on finance lease prior to April 1, 2001: (Assets not capitalized) Future Lease rental obligation – 965ii) In respect of assets taken on finance lease after April 1, 2001: (Assets capitalized) Reconciliation of minimum lease payments and its present value Minimum Lease Payments as at Not later than one year 263 1,175 Later than one year and not later than five year 842 1,937 Later than five years 173 433 Total 1,278 3,545 Less: Amount representing Interest 171 418 Present value of Minimum Lease payment 1,107 3,127 Less: Amount due not later than one year 209 1,016 Amount due later than one year and not later than five years 728 2,111 Amount due later than five years 170 –
(b) Operating Leases:
Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments/revenue under operating leases are recognized as expense/income on accrual basis in accordance with the respective lease agreements.
Leasing liabilities primarily relate to lease of certain offices, residential premises, and other facilities. The initial tenure of the lease generally is for 11 to 67 months. The minimum rental payables under other operating leases that have initially or remaining non-cancellable lease term in excess of one year as at March 31, 2008 are as follows:
Rs./Thousand
Particulars 2008 2007Lease rental charges for the year 454,470 394,310Future Lease rental obligation payable (Under non-cancellable lease)Not later than one year 112,490 142,934Later than one year but not later than five year 132,121 194,756
(c) In respect of assets given under operating lease.
(i) The Company has given part of building under cancellable operating lease agreement. The initial term of the lease is for 12 months.
(ii) The rental revenue for the year is Rs./Thousand 19,459 (9,498).
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24. (a) Contingent LiabilitiesRs./Thousand
Sr. No. Particulars 2008 2007
a) Corporate Guarantees for Subsidiaries to the extent of loans availed outstanding Rs./Thousand 519,340 (568,418)
1,204,500 1,315,500
b) Corporate Guarantees for other related parties availed/ outstanding Rs./Thousand 4,654,185 (4,168,565)
5,362,700 4,604,250
c) Bank/Counter guarantees outstanding 3,073 2,637,245d) Letter of Credit 144,155 242,343e) Claims not acknowledged as debts 357,237 212,674f) Legal cases against the Company Unascertainable Unascertainableg) Disputed Direct Taxes 203,021 125,571h) Uncalled Liability on shares partly paid – 20,000i) Disputed Service Tax demand – 1,266j) Customs Duty pending export obligation against
import of machinery5,501 5,501
(b) Estimated amount of contracts remaining to be executed on capital account 250,983 (Net of Advances) Rs./Thousand (573,813).
25. The Group has recognized a receivable of Rs./Thousand 239,400 (261,377) claimed from competing broadcaster for recovery of the telecast rights money relating to the sports event, which is under litigation. In the opinion of management and based on legal opinions, the receivable is considered as good.
26. During the year the Company has shared expenses (included in relevant heads in the Profit and Loss Account) of Rs./Thousand 76,980 with a related party pursuant to the memorandum of understanding.
27. Related Party Disclosure
(i) List of Parties where control exists
The list of subsidiaries is disclosed in Note 2 (c)
(ii) Associate Companies Extent of holding Aplab Limited 26.42% Broadcast South Asia Limited 48.44%
(iii) Other Related Parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year:
Agrani Convergence Limited; Agrani Wireless Service Limited; Ambience D’Ary Advertising Private Limited, Asian Satellite Broadcasting Private Limited; Asian Sky Shop Limited;; Briggs Trading Company Private Limited; Broadcast Pacenet (India) Private Limited; Buddha Films Limited; Churu Trading Company Private Limited; Credensys Software Technologies Private Limited; Dakshin Communication Private Limited; Dakshin Media Gaming Solutions Private Limited; Delgrada Limited; Digital Media Convergance Limited; Diligent Media Corporation Limited; Dish TV India Limited; Essel Propack Limited; Essel Agro Limited; E-City Entertainment (India) Private Limited; E-City Films Limited; E-City Retail Private Limited; E-Cool Gaming Solution Private Limited; Encore Electronics Limited; Essel Corporate Resources Private Limited; Essel Infraprojects Limited; Essel International Limited; Essel Shyam Communication Private Limited; Essel Shyam Technologies Limited; Ganjam Trading Company Private Limited; Intrex Trade Exchange Limited; Jay Properties Private Limited; Jayneer Capital Private Limited; Natural Wellness; New Media Broadcasting; Pan India Network Infravest Private Limited; Prajatma Trading Company Private Limited; Quickcalls Private Limited; Rama Associates Limited; Real Media FZLLC; Resource Software Limited; Scarpetta Investment Limited; Smartalk Private Limited; Taleem Research Foundation; Turner International India Limited; Wire and Wireless (India) Limited; Zee News Limited.
Directors / Key Management Personnel
Mr. Ashok Kurien, Mr. B.K. Syngal, Mr. D. P. Naganand, Sir. Gulam Noon, Mr. Laxmi Narain Goel, Dr. M.Y. Khan, Mr. Nemi Chand Jain, Mr. Punit Goenka, Mr. R Vaidyanathan (w.e.f January 1, 2008), Mr. Rajan Jetley and Mr. Subhash Chandra.
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(Rs./ Thousand)Sr. No.
Particulars 2008 2007
A) Fixed Assets / Capital work in progress
Other Related Parties – 2,710
Associates 497 592
B) Investments
Other Related Parties
Balance as at April 1, 1,533 1,510
Purchased/ adjusted during the year – 23
Balance as at March 31, 1,533 1,533
Associates
Balance as at April 1, 46,599 46,599
Balance as at March 31, 46,599 46,599
C) Sundry Debtors as at March 31,
Other Related Parties 760,045 391,256
D) Loans, Advances and Deposits Given as at March 31,
Other Related Parties 3,996,731 2,632,971
E) Sundry Creditors as at March 31,
Other Related Parties 717,419 566,897
Associates 260 –
F) Loans, Advances and Deposits Received as at March 31,
Other Related Parties 600 5,235
G) Share Capital
Share Application Money received
Other Related Parties 9,000 26,800
Refund/ adjustment of Share Application Money received
Other Related Parties 26,800 –
Debentures
Other Related Parties – 40,000
Conversion of 1% Debentures
Other Related Parties 40,000 –
H) Sale & Services Turnover
Sale, Services and Recoveries (Net)
Other Related Parties 148,201 965,994
Subscription Income
Other Related Parties – –
Advertisement Income (Net)
Other Related Parties 189,178 75,192
Commission Received
Other Related Parties 314,929 50,068
102
(Rs./ Thousand)Sr. No.
Particulars 2008 2007
I) Other Income
Dividend Received
Other Related Parties – 8,017
Associates 3,303 3,303
Interest Received
Other Related Parties 723,242 429,407
Miscellaneous Income
Other Related Parties 35,578 9,342
J) Loans, Advances and Deposits Given
Other Related Parties 11,527,323 4,691,650
K) Purchase of Programs, Goods and Services
Other Related Parties 1,123,662 1,915,119
L) Other Expenses
Commission Paid
Other Related Parties – 56,510
Interest Paid
Other Related Parties 133 526
Remuneration & Consultancy fees paid
Key mangement Personnel 15,492 19,765
Other
Other Related Parties – 14,158
M) Loans, Advances and Deposits Received
Other Related Parties – 32
N) Loans and Advances repayment received
Other Related Parties 10,179,054 3,935,582
O) Corporate Guarantees Given
Other Related Parties 4,654,185 4,168,565
Note:
a) Name of the related parties has been disclosed where they have 10% or more of the aggregate for that category of transaction.
b) Sharing of expenses has been disclosed in Note no 26.
Disclosure in Respect of Material Related Party who account for 10% or more of the transactions during the year:
1. Purchase of Assets during the year Aplab Limited Rs./Thousand 497(592); Broadband Placenet (India) Pvt. Ltd. Rs./Thousand Nil (2,710).
2. Loans & Advances given include to Briggs Trading Co. Pvt. Ltd Rs./Thousand 1,410,000 (1,283,650); Churu Trading Co. Pvt. Limited Rs./Thousand 2,186,000 (1,190,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand 1,492,522 (76,200); Prajatma Trading Co. Pvt. Limited Rs./Thousand 1,605,000 (1,266,700); Dish TV India Limited Rs./Thousand 3,177,000 (326,325). Loans & Advances repayment received includes Briggs Trading Co. Pvt. Ltd Rs./Thousand 1,410,000 (1,283,650); Churu Trading Co. Pvt. Limited
103
Rs./Thousand 2,186,000 (1,190,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand 1,492,522 (76,200); Prajatma Trading Co. Pvt. Limited Rs./Thousand 1,605,000 (1,266,700); Dish TV India Limited Rs./Thousand 2,900,000 (326,325). Balances outstanding at year end include Resource Software Limited Rs. Nil (390,975) Delgrada Limited Rs./Thousand 1,439,779 (1,111,482); Dish TV India Limited Rs./Thousand 794,085 (364,959); Wire & Wireless (India) Limited Rs./Thousand 938,251 (495,555).
3. Sundry Creditors balances include amounts due for Purchase of Programs Goods & Services to Turner International India Rs./Thousand 337,177 (214,000); Real Media F.Z.L.L.C. Rs./Thousand 91,970 (Nil); Dish TV India Limited Rs./Thousand 108,589 (Nil); Zee News Limited Rs./Thousand 53,635 (198,825).
4. Sale & Services Turnover include to Zee News Limited Rs./Thousand 113,729 (326,627); Dish TV India Limited Rs./Thousand 9,978 (624,895); Real Media F.Z.L.L.C. Rs./Thousand 19,392 (Nil); Advertisement Income from Dish TV India Limited Rs./Thousand 169,967 (68,142); Agency Commission received from Turner International India Rs./Thousand 43,250 (50,068); Zee News Limited Rs./Thousand 271,679 (Nil).
5. Other income include Dividend received from Essel Propack Limited Rs./Thousand Nil (8,017); Aplab Limited Rs./Thousand 3,303 (3,303); Interest received from Briggs Trading Co. Pvt. Ltd. Rs./Thousand 6,208 (106,287); Churu Trading Co. Pvt. Limited Rs./Thousand 120,272 (111,414); Ganjam Trading Co. Pvt. Limited Rs./Thousand 144,805 (723); Prajatma Trading Co. Pvt. Limited Rs./Thousand 136,071 (115,190); Dish TV India Limited Rs./Thousand 199,101 (Nil); Miscellaneous income from Dish TV India Limited Rs./Thousand 32,872 (1,872); Asian Sky Shop Rs./Thousand 316 (1,350); Zee News Limited Rs./Thousand Nil (2,604).
6. Purchase of Programs, Goods and Services from Turner International India Rs./Thousand 511,653 (579,601); Real Media F.Z.L.L.C. Rs./Thousand 346,855 (Nil); Dish TV India Limited Rs./Thousand 55,781 (225,753); Wire & Wireless (India) Limited Rs./Thousand Nil (282,019); Resource Software Limited Rs./Thousand Nil (678,123); Remuneration & Consultancy Fees paid to Key Management Personnel Rs./Thousand 15,492 (19,765).
7. Financial guarantees include in respect Dish TV India Limited Rs./Thousand 1,501,395 (2,224,031); Wire & Wireless (India) Limited Rs./Thousand 2,697,120 (1,585,870).
28. Segmental Information
The Group follows AS -17 “Segmental Reporting” relating to the reporting of financial and descriptive information about their operating segments in financial statements.
The Group’s reportable operating segments have been determined in accordance with the internal management structure, which is organized based on the operating business segments as described below.
Broadcasting and content, which principally consists of developing, producing and procuring television programming and film content and delivering via satellites, thereby earning revenues by way of advertisement and subscription revenues and syndication.
Education, which principally consists of distribution of software learning products, imparting education and training in IT.
104
(a) Business Segment (Financial Year 2007-2008)
(Rs./Thousand)
Description B & C Education Others Elimination Total
SEGMENT REVENUE
External Sales 18,098,721 252,365 2,567 – 18,353,653
Inter-segment Sales
Total Revenue 18,098,721 252,365 2,567 – 18,353,653
SEGMENT RESULT 5,008,626 54,398 50 – 5,063,074
Operating Profit Before Interest and Tax 5,063,074
Interest Expenses 297,822
Interest Income 995,990
Profit before Tax 5,761,242
Exceptional Items 25,806
Current Taxes - Current year (1,794,305)
Deferred Tax Benefit/(Expense) - Current year 167,668
Profit after Tax 4,160,410
Share in result of associates 5,141
Minority Interest 332,883
Net Profit 3,832,668
Business Segment (Financial Year 2006-2007)(Rs./Thousand)
Description B & C Education Others Elimination Total
SEGMENT REVENUE
External Sales 14,245,541 205,472 707,805 – 15,158,817
Inter-segment Sales 4,953 (4,953)
Total Revenue 14,250,494 205,472 707,805 (4953) 15,158,817
SEGMENT RESULT 3,071,013 11,542 13,693 – 3,096,248Operating Profit before interest and Tax 3,096,248Profit on Sale of Investments in As-sociates 37,104Loss on sale of Investments in Sub-sidiaries 22,889Interest Expense (218,641)
Interest income 494,768
Profit before Tax 3,432,368
Exceptional items
Current Taxes – Current year (923,032)Deferred Tax Benefit/(Expense) – Current Year
(75,987)
Profit after tax 2,433,349
105
Description B & C Education Others Elimination Total
Share in result of associates 9,867
Minority Interest (67,925)
Net Profit 2,375,291
(b) Other Segment Information (Financial Year 2007-2008) (Rs./Thousand)
Description B & C Education Unallocated Elimination Total
1. Segment Assets 41,758,513 172,770 11,246,520 (13,148,894) 40,028,909
2. Segment Liabilities 12,238,720 87,913 7,141,646 (8,050,189) 11,418,090
3. Capital Expenditures 942,509 8,680 951,159
4. Depreciation 223,648 8,681 232,329
5. Non Cash expenditures Other than Depreciation
754,074 7,483 761,558
Other Segment Information (Financial Year 2006-2007) (Rs./Thousand)
Description B & C Education Unallocated Elimination Total
1. Segment Assets 37,535,704 166,122 9,565,108 (11,783,793) 35,483,141
2. Segment Liabilities 10,584,799 149,738 5,299,984 (6,732,399) 9,302,121
3. Capital Expenditures 264,461 2,175 266,636
4. Depreciation 175,692 8,996 184,688
5. Non Cash expenditures Other than Depreciation 288,237 4,345 292,582
Revenue by Geographical Market
The geographical segments considered for disclosure are India and Rest of World.
(a) The revenues are attributable to countries based on location of customers
(Rs./Thousand)
2008 2007
India 11,073,390 8,686,172
Rest of World 7,280,263 6,472,645
(b) Segment assets and liabilities are disclosed based on the countries of incorporation of respective companies.
Rs. / Thousand
Net Assets Intangibles Capital Expenditures
2008 2007 2008 2007 2008 2007
India 7,110,058 11,226,016 36,263 33,173 224,677 206,353
Rest of World 7,574,844 1,720,963 12,938,495 12,934,232 726,482 60,283
106
29. Earning Per Share
In accordance with AS - 20 “Earnings Per Share” issued by ICAI, basic earnings per share are computed using the weighted average number of shares outstanding during the year.
Sr. Particulars 2008 2007
a) Profit after Tax before Exceptional Item (Rs./Thousand) 3,858,474 2,375,291
b) Profit after Tax after Exceptional Item (Rs./Thousand) 3,832,668 2,375,291
Adjustment for the purpose of Diluted EPS:
Add: Interest on Foreign Currency Convertible Bonds 1,178 5,285
Less: Tax on above 400 1,779
c) Profit after Tax before Exceptional Item for Diluted EPS (Rs./Thousand)
3,859,252 2,378,797
d) Profit after Tax after Exceptional Item for Diluted EPS (Rs./Thousand)
3,833,446 2,378,797
e) Weighted Average number of equity shares for Basic EPS (Nos.)
433,566,765 423,617,434
Add: Weighted Average outstanding option deemed to be issued for no consideration (Nos.)
1,524,058 –
f) Weighted Average number of equity shares for Diluted EPS (Nos.)
435,090,823 423,617,434
Nominal value of equity shares (Re.) 1 1
g) Basic EPS before Exceptional Item (Rs.) 8.90 5.62
h) Basic EPS after Exceptional Item (Rs.) 8.84 5.62
i) Diluted EPS before Exceptional Item (Rs.) 8.87 5.62
j) Diluted EPS after Exceptional Item (Rs.) 8.81 5.62
107
(Rs. in ‘000)2008 2007
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before taxation & exceptional items 5,812,853 3,432,367
Adjustments for :
Depreciation 232,329 184,688
Share Issue/Preliminary expenses written off 51 129
Deferred Revenue Expenditure written off – 9,858
Provision for doubtful debts/advances and investments 727,208 276,289
Loss on sale of Fixed Assets 8,493 6,306
Calls in Arrears Adjusted – 202
Exchange adjustments (net) (545,297) (79,885)
Interest expense 297,822 218,641
Loss on Foreign Exchange derivative contracts 261,792 –
Profit on Sale of Investments (5,511) (60,815)
Dividend income (10,543) (13,879)
Interest income (995,990) (494,768)
Operating profit before working capital changes 5,783,207 3,479,133
Adjustments for :
Increase in trade and other receivables (1,451,953) (2,862,943)
Increase in Programs/Film Rights and Inventories (434,132) 465,458
Increase/(Decrease) in Trade and Other Payables 264,427 1,911,480
Cash Generated from Operations 4,161,549 2,993,128
Direct taxes paid (Net) (1,150,659) (1,279,384)
Net Cash flow from Operating Activities 3,010,890 1,713,744
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets/CWIP (1,018,929) (460,146)
Acquistion of subsidiary (51) (2,571,906)
Purchase of Investments (627,458) (504,350)
Loans to others (15,980,522) (9,067,656)
Loans repaid by others 14,659,879 6,286,537
Dividend received 13,846 17,182
Sale of Fixed Assets 18,050 298,009
Sale of Investments - associate 633,005
Sale of Investments - subsidiary 23,359
Sale of Investments 419,247 614,275
Interest received 861,973 451,555
Net Cash flow from Investing Activities (1,653,965) (4,280,135)
CONSOLIDATED CASH FLOW STATEMENT AT AT MARCH 31,
108
(Rs. in ‘000)2008 2007
C. CASH FLOW FROM FINANCING ACTIVITIES
Dividend paid (including dividend tax) (763,609) (498,461)
Interest paid (298,806) (235,554)
Loss on Foreign Exchange derivative contracts (261,792)
Increase/(decrease) in Minority Interest (19,797) 292,522
Proceeds from short term borrowings 1,660,264 6,943,346
Proceeds from long term borrowings 624,841 848,792
Repayments of short term borrowings (1,488,128) (5,140,034)
Repayments of long term borrowings (156,258) –
Decrease in other vehicle loans (849) (1,377)
Payment under finance leases – (249)
Net Cash flow from Financing Activities (664,134) 2,208,985
Net Cash Flow during the year (A+B+C) 692,791 (357,407) Cash and Cash Equivalents at the beginning of the year 954,752 1,285,643
Cash and Cash Equivalents on acquistion of subsidiary 4,481 40,797
Cash and Cash Equivalents transferred as per Scheme of Arrangement – (14,281)
Cash and Cash Equivalents at the end of the year 1,652,024 954,752
Notes to the Cash Flow Statement for the year ended March 31, 2008.
1. Previous year’s figures have been regrouped, recast wherever necessary.
2. The Scheme of Arrangement and conversion of FCCB [Refer Note 3 and 5 (a) of Notes to Accounts respectively] and conversion of debentures of Rs./Thousand 40,000 have not been considered in the above cashflow statement being non-cash transactions.
3. Sale of Fixed assets includes Rs.Thousand Nil (400,107) being sale or transfer of facility relating to production gathering editing and uplinking of news and current affairs programming.
4. Cash and Cash Equivalents at the end of the year:
Cash in hand 6,270 7,791
Balances with Scheduled Banks in Current Accounts 1,561,582 919,784
Balances with Scheduled Banks in Deposit Accounts 39,103 6,022
Balances with Non Scheduled Banks in Deposit Accounts – –
Balances with Non Scheduled Banks in Current Accounts 941
Cheques in hand/transit 45,069 20,214
Total 1,652,024 954,752
As per our attached report of even dateMohan BhandariPartnerMembership No. 12912
For MGB & Co.Chartered Accountants
Place: MumbaiDate: June 16, 2008
For and on behalf of the Board
Subhash Chandra Chairman
Punit Goenka Whole-time Director
Nemi Chand Jain Director
Hitesh Vakil Director - Finance
M. Lakshminarayanan Company Secretary
109
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2,8
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Summ
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ATTENDANCE SLIP26th Annual General Meeting
ZEE ENTERTAINMENT ENTERPRISES LIMITEDRegistered Office: Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai – 400 018.
PROXY FORM26th Annual General Meeting
I/We ............................................................................................. of ............................................................................................
.......................................................................................................................................................... being member/members of
ZEE ENTERTAINMENT ENTERPRISES LIMITED hereby appoint ..............................................................................................
of ..................................................................................................................................................................................... or failing
him/her ........................................................................................ of ............................................................................................
......................................................................................................................................as my/our proxy to vote for me/us onmy/our behalf at the 26th Annual General Meeting of the Company to be held on Wednesday, July 23, 2008 at 11.30 a.m. at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai - 400 018. and at any adjournment(s) thereof.
Signed this...................... day of ................., 2008.
Signature of Shareholder ............................................... Folio No. ................................................
DP ID No. ...............................................
Client ID No. ..........................................
No. of Shares ........................................
NOTE: The Proxy completed in all respects must be deposited at the Registered Office of the Company not less than 48 hours before the commencement of the Annual General Meeting.
I hereby record my presence at the 26th Annual General Meeting of the Company at Nehru Centre, Nehru Auditorium Dr. Annie Besant Road, Worli, Mumbai - 400 018. on Wednesday, July 23, 2008 at 11.30 a.m.
................................................................................ ....................................................
Name of the Shareholder/Proxy (in BLOCK LETTERS) Signature of Shareholder/Proxy
Folio No. ................................................
DP ID No. ...............................................
Client ID No. ..........................................
No. of Shares ........................................
NOTE : Shareholder/Proxy holder wishing to attend the meeting must bring the Attendance Slip to the meeting and handover the same at the entrance, duly signed.
��
�
ZEE ENTERTAINMENT ENTERPRISES LIMITEDRegistered Office : Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai – 400 018.
Re. 1/-RevenueStamp
ETC Networks Ltd - Education Division: Valechha Chamber, Plot No. B-6, 3rd Floor, Off New Link Road, Andheri - West, Mumbai - 400 053Tel.: 022 2674 3900, Fax.: 022 2674 3422.
Zee Turner Ltd, 5th Floor, Radisson Plaza, NH-08, New Delhi 110 037. Tel. 011 - 6656 3333, Fax. 011 - 2672 9350 / 40.
Broadcasting Division: 1B, Shah Industrial Esatae, Off. Veera Desai Road, Andheri - West, Mumbai - 400 053 Tel.: 022 6781 3737, Fax.: 022 2673 2030.
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