DIRECTORS' REPORT DEAR MEMBERS, Your Directors are pleased to present the 20th Annual Report together with the Company's audited financial statement for the financial year ended March 31,2015. ACQUISITION OF CONTROLLING STAKE BY INDEPENDENT MEDIA TRUST Consequent to acquisition of control of the Company by Independent Media Trust (IMT), of which Reliance Industries Limited is the sole beneficiary, IMT had made open offer to the shareholders of the Company in terms of provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the same was completed during the year. RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS During the year under review, the Company recorded an operating turnover of Rs. 74.3 Crores (previous year Rs. 102.0 Crores). The consolidated revenue from operation of the Company and its subsidiaries/joint venture was Rs. 3,126.6 Crores as against Rs. 2,692.4 Crores in previous year and Profit Before Tax (before exceptional and prior period items) on a consolidated basis was Rs. 29.4 crore, turning positive from a loss of Rs. 68.5 crores in financial year 2013-14. DIVIDEND In view of the losses, the Board of Directors have not recommended any dividend for the year under review. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. DEPOSITS The Company has discontinued accepting fresh Fixed Deposits or renewing any deposits w.e.f. April 1, 2014. Further, the Company has repaid the entire Fixed Deposits during the year, maturing upto and after March 31,2015. The Company has been regular in payment of interest and repayment of Fixed Deposits. As on March 31, 2015, deposits aggregating to Rs. 5.44 crores remained unclaimed. The Company has sent fresh cheques to these deposit holders. EMPLOYEES STOCK OPTION SCHEME The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees' Stock Option Schemes of the Company in accordance with the applicable Regulation prescribed by the Securities and Exchange Board of India (SEBI). The Company has implemented the Employees' Stock Option Schemes in accordance with the applicable SEBI Regulations and the resolutions passed by the Members of the Company. The Certificate(s) of the Statutory Auditors confirming the same shall be placed before the Annual General Meeting for inspection by the Members. During the year, there is no change in the Employees' Stock Option Schemes of the Company. The issue of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable. Voting rights on the shares issued to employees under the Employees' Stock Option Schemes are either exercised by them directly or through their appointed proxy. The applicable disclosures with regard to the Employees' Stock Option Schemes as stipulated under the Companies Act 2013 as on March 31, 2015 are provided in Annexure I to this report and the disclosures under the Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014 are disclosed on the website of the Company at www.networkl8online.com and also provided in the notes forming part of the Financial Statements. SHARE CAPITAL The Company has not issued any equity shares with differential voting rights as to dividend, voting or otherwise. The Company has also not issued any shares (including sweat equity shares) to employees of the Company under any scheme, save and except Employees' Stock Option Schemes referred to in this Report. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The detailed Corporate Governance Report of the Company in pursuance of Clause 49 of the Listing Agreement forms part of the Annual Report of the Company. The requisite Certificate from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to the Corporate Governance Report. DIRECTORS Mr. Rajiv Krishan Luthra and Mr. Dhruv Subodh Kaji were appointed as Additional Directors (Independent) w.e.f. November 27, 2014. Further, Ms. Nirupama Rao was appointed as an Additional Director (Independent) w.e.f. March 25, 2015. The additional directors shall hold office upto the date of the ensuing Annual General Meeting. The Company has received requisite notices in writing from a member proposing the candidature of Mr. Rajiv Krishan Luthra, Mr. Dhruv Subodh Kaji and Ms. Nirupama Rao for appointment as Independent Directors. It is proposed to appoint Mr. Rajiv Krishan Luthra and Mr. Dhruv Subodh Kaji and Ms. Nirupama Rao as Independent Directors, not liable to retire by rotation, to hold the office for a term of five years upto November 26, 2019, November 26, 2019 and March 24, 2020 respectively. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. The Company organizes various programmes and presentations for the Board of Directors in order to familiarize them with their roles, rights, responsibilities in the Company, nature of the industry in which it operates, Business model of the Company and related matters. Details of such program is available on company's website www.network18online.com and may be accessed at the link: <http://www.network18online.com/reports/> policies/Familiarisation-Programmes-for-Independent-directors.pdf. The following policies of the Company are annexed herewith marked as Annexure DA and Annexure IIB: a) Policy for selection of Directors and determining Directors Independence; and b) Remuneration Policy for Directors, Key Managerial Personnel and other employees. The Company does not have any Managing Director or Whole Time Director. The Company has formulated a policy on performance evaluation of the Independent Directors, Board, and its Committees and other individual Directors which shall be based on inter alia criteria like attendance, effective participation, domain knowledge, access to management outside Board Meetings, Compliance with Code of Conduct, Vision and Strategy and Benchmark to global peers. On the basis of policy for performance evaluation of Independent Directors, Board, Committees and other individual directors, a process of evaluation was carried out. The Performance of the Board, individual directors and board committee were found to be satisfactory. KEY MANAGERIAL PERSONNEL The Board of Directors has appointed Mr. A.P. Parigi as Group ChiefExecutive Officer-Networkl8 w.e.f. January 29, 2015. The Board of Directors of the Company has appointed Mr. Hariharan Mahadevan as Chief Financial Officer of the Company w.e.f. November 27, 2014. Further, the Board of Directors of the Company has appointed Ms. Kshipra Jatana as Manager of the Company for a period of five years w.e.f. November 27, 2014. SUBSIDIARIES / JOINT VENTURES / ASSOCIATE COMPANIES The development in business operations/performance of the major subsidiaries/ Joint Ventures / Associate Companies, form part of the Management's Discussion and Analysis Report. During the year under review, B K Holding Limited, Mauritius and Capital18 Limited, Mauritius ceased to be Company's subsidiaries. Further, during the year under review, IBN Lokmat News Private Limited, Indiacast Media Distribution Private Limited, Indiacast UTV Media Distribution Private Limited, Indiacast UK Limited, Indiacast US Limited, Viacom18 Media Private Limited Roptional Limited, Viacom18 US Inc and Viacom18 Media (UK) Limited have become subsidiaries of the Company. The performance and financial information of the subsidiary companies / Joint Ventures / Associate Companies is disclosed in the Consolidated Financial Statement. CONSOLIDATED FINANCIAL STATEMENT In accordance with the provisions of the Companies Act, 2013, Clause 32 of the Listing Agreement and Accounting Standard AS-21 on Consolidated Financial Statement read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report. TRANSFER OFAMOUNTS TO INVESTORS EDUCATION AND PROTECTION FUND The amount of dividend, Interest on fixed deposits and amounts for debenture redemption, which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company, within the stipulated time, to the Investors Education and Protection Fund. Further, the Company has uploaded the details of such unpaid and unclaimed amounts on its website, and also on the website of the Ministry of Corporate Affairs. SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATORS OR COURT No significant and/or material orders were passed by any Regulators/ Courts/Tribunals which impact the going concern status of the Company or its future operations. NUMBER OF MEETINGS OF THE BOARD During the financial year ended on March 31, 2015, seven Board Meetings were held and the maximum time gap between any two Board meetings was less than 120 days. Further, details of the meetings of the Board and its Committee are given in Corporate Governance Report, forming part of the Annual Report. COMPOSITION OF AUDIT COMMITTEE The Audit Committee of the Company comprises Mr. Adil Zainulbhai (Chairman), Mr. Deepak Parekh, Mr. Dhruv Subodh Kaji, Independent Directors and Mr. Rohit Bansal, Non- Executive Director. All the recommendations made by the Audit Committee were accepted by the Board. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: i) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable Accounting Standards read with the requirements set out under Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same; ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit & loss of the Company for the year ended on that date; iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) the Directors have prepared the annual accounts of the Company for the financial year ended March 31, 2015 on a 'going concern' basis; v) the Directors have laid down internal financial control to be followed by the Company and that such internal financial control are adequate and were operating effectively; and vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. RISK ASSESSMENT/ MANAGEMENT The Company has formulated and adopted a Risk Management Policy. The Board of Directors of the Company is responsible for the direction and establishment of internal control to mitigate material business risks. The Policy is framed to identify the element of risk for achieving its business objective and to provide reasonable assurance that all the material risks, misstatements, frauds or violation of laws and regulations will be mitigated. The Company has constituted a Risk Management Committee. The Committee shall inter alia oversee, evaluate and implement the Risk Assessment Policy and Manual of the Company and suggest effective measures to counter or mitigate the risks. CORPORATE SOCIAL RESPONSIBILITY The Company has constituted a Corporate Social Responsibility (CSR) Committee in compliance with the provisions of the Companies Act, 2013. The CSR Committee comprises of the following directors: Mr. Adil Zainulbhai - Chairman Mr.Vinay Chand Chhajlani - Member Mr. Rohit Bansal - Member Mr. Rajiv Krishan Luthra - Member The Committee's prime responsibility is to assist the Board in discharging its social responsibilities by way of formulating and monitoring implementation of the objective of 'Corporate Social Responsibility Policy'. The CSR policy of the Company is available on its website at www.network18online.com and may be accessed at the link: <http://www.network18online.com/reports/policies/Network18->Policy-on-Corporate-Social-Responsibility.pdf. In terms of CSR Policy, the focus areas of engagement are as under: • Addressing identified needs of the unprivileged through improving livelihood, alleviating poverty, promoting education, empowerment through vocational skills and promoting health and well-being. • Preserve, protect and promote art, culture and heritage • Environmental sustainability, ecological balance and protection offlora and fauna. The Company would also undertake other need based initiatives in compliance with Schedule VII of the Companies Act, 2013. The Company has not yielded any profits during the previous three years and average net loss of the Company for last three financial years was Rs. 98.93 Crores. Hence, in terms of Section 135 of the Companies Act, 2013, the Company was not required to spend any amount on CSR. VIGIL MECHANISM The Company promotes ethical behavior in all its business activities. Towards this, the Company has adopted a policy on vigil mechanism and whistle blower. The Company has constituted an Ethics & Compliance Task Force to process and investigate a protected disclosure made under the policy. The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice or victimization. The Audit Committee oversees the Vigil Mechanism. The policy on vigil mechanism and whistle blower is available on Company's website at www.network18online.com and may be accessed at the link: <http://www.network18online.com/reports/policies/> Network18-Vigil-Mechanism-policy.pdf. RELATED PARTY TRANSACTIONS All the related party transactions were entered on arms' length basis and were in the ordinary course of business. Further, the transactions with related parties were in compliance with applicable provisions of the Companies Act, 2013 and the Listing Agreement. All Related Party Transactions are presented to the Audit Committee. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transaction is presented before the Audit Committee on a quarterly basis. During the year, the Company had not entered into any contract/ arrangement/ transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The policy on dealing with Related Party Transaction and Policy for determining materiality of related party transactions are posted on the company's website at www.network18online.com and may be accessed at the link: <http://www.network18online>. com/reports/policies/materiality_related_partytransactions_ policy_Network18.pdf and <http://www.network18online.com/> reports/policies/Network18-Policy-for-Determining-Material-Subsidiaries.pdf respectively. The details of the transactions with Related Parties are provided in Note No. 32 to the standalone financial statements. INTERNAL FINANCIAL CONTROL The Company has adequate system of internal financial control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the Company also checks and verifies the internal financial control systems and monitors them. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place Prevention of Sexual Harassment (POSH) Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year no complaint on Sexual Harassment was received. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED Details of Loans given, Investments made, Guarantees given and Securities provided given in the note No. 13, 14 & 16 to the standalone financial statements. AUDITOR & AUDITORS' REPORT Walker Chandiok & Co LLP, Chartered Accountants New Delhi (ICAI Firm Regn No. 001076N/N500013) were appointed as the Statutory Auditors of the Company for a period of two years at the 19th Annual General Meeting held on September 30, 2014 and the appointment was subject to ratification at each Annual General Meeting. The Company has received confirmation from them to the effect that their appointment is within the prescribed limits under the Companies Act, 2013 and that they are not disqualified for holding the office of the Auditors. Accordingly, the Board recommends ratification of their appointment as Statutory Auditors of the Company. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. COST AUDITOR AND COST AUDIT REPORT The Board had appointed Pramod Chauhan & Associates, Cost Accountants (Regd. No. 000436) as the Cost Auditors of the Company for the financial year 2014-15 for conducting the audit of the Cost Records of the Company. Further, the Cost Auditor of the Company is required to forward the Cost Audit Report to the Company by September 27, 2015. The Company is required to submit the same with Central Government within 30 days of receipt of Cost Audit Report from the Cost Auditor. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT The Board had appointed Chandrasekaran Associates, Company Secretaries, to conduct the Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015, in the prescribed format is attached herewith and marked as Annexure III. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. PARTICULARS OF EMPLOYEE AND MANAGERIAL REMUNERATION The information required in terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5 (1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed with this report and marked as Annexure IVA and Annexure IVB. EXTRACT OF ANNUAL RETURN Extract of the Annual Return in the prescribed format is attached with this report and marked as Annexure V. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the following information is provided: a) Conservation of Energy The Company is not an energy intensive unit, hence alternate source of energy may not be feasible. However, regular efforts are made to conserve the energy. The Company conducted an energy audit and suggested means to reduce energy consumption. Further, use of low energy consuming LED lightings are being encouraged. b) Technology Absorption The Company is conscious of implementation of latest technologies in key working areas. Technology is ever-changing and employees of the Company are made aware of the latest working techniques and technologies through workshops, group e-mails, and discussion sessions for optimum utilization of available resources and to improve operational efficiency. The Company is not engaged in manufacturing activities therefore, certain disclosures on technology absorption and conservation of energy etc. are not applicable ACKNOWLEDGMENT Your Directors wish to place on record their appreciation for the continuous support extended by all the employees, members, customers, Joint venture partners, investors, government authorities and bankers for their continued support and faith reposed in the Company. For and on behalf of the Board of Directors Adil Zainulbhai Rohit Bansal Chairman of the Board Director Place: Mumbai Date: July22, 2015 |