DIRECTORS' REPORT TO, THE MEMBERS OF ZEE LEARN LIMITED Your Directors take pleasure in presenting the Fifth Annual Report of the Company together with Audited Financial Statements for the year ended March 31,2015. DIRECTORS'RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Companies Act, 2013 ('the Act'), in relation to the Audited Financial Statements for the Financial Year 2014-2015, your Directors confirm that: a) The Financial Statements of the Company - comprising of the Balance Sheet as at March 31, 2015 and the Statement of Profit & Loss for the year ended on that date, have been prepared on a going concern basis following applicable accounting standards and that no material departures have been made from the same; b) Accounting policies selected were applied consistently and the judgments and estimates related to the financial statements have been made on a prudent and reasonable basis, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015, and, of the profit of the Company for the year ended on that date; c) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities; d) Requisite internal financial controls were laid down and that such financial controls are adequate and operating effectively; and e) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. DIVIDEND With a view to conserve the resources for future business requirements and expansion plans, your Directors are of view that the current year's profit be ploughed back into the operations and hence no dividend is recommended for the year under review. BUSINESS OVERVIEW Your Company is a leading education company, founded with the purpose of 'Improving Human Capital'. The company has contributed in the field of education across age groups, all the while maintaining its core values of integrity, ownership, leadership, trust and continuous learning. We believe that every child has a unique and infinite potential and we are committed to help children realize their capabilities. Under its Portfolio, Zee Learn is currently operating over 1350 preschools & 87 K-12 schools, through its leading brands, "Kidzee" & "Mount Litera Zee School" respectively. By the current financial year end Kidzee has reached to over 4,10,000 students & MLZS has reached to about 30,500 students through its network of school chain. In order to cater the need to develop skills of youth population, your company is looking to explore vocational courses outside the traditional curriculum. Zee Institute of Media Arts (ZIMA) provides diploma courses in TV and film making courses and Zee Institute of Creative Art (ZICA) provides diploma courses in 2D and 3D animation. SHARE CAPITAL During the year under review, your Company had allotted 6,69,453 Equity Shares ofRs. 1/- each upon exercise of Stock Options by the Option grantees under the Employee Stock Option Scheme. This has resulted an increase in the paid-up equity share capital of the Company from Rs. 31,93,31,644 to Rs. 32,00,01,097 comprising of 32,00,01,097 equity shares of Rs.1/-each. NON-CONVERTIBLE DEBENTURES During the year under review, 125 12% Secured Redeemable Non-Convertible Debentures ('SRNCD's) each o f Rs. 10,00,000/- aggregating to 2,50,00,000/-, listed on Wholesale Debt Market Segment of National Stock Exchange of India Ltd. (NSE), were redeemed as per the terms of issue and extinguished. As at March 31,2015, there is no outstanding SRNCD's. Further, your Company had issued and allotted on April 8, 2015 650 (Six Hundred Fifty) Rated, Unlisted, Redeemable, Non-Convertible Debentures ("NCDs") of the Face Value of 0,00,000/- (Rupees Ten Lakhs Only) Each, for cash, aggregating to Rs. 65,00,00,000/- (Rupees Sixty Five Crores Only) on Private Placement Basis, on which Credit Analysis & Research Limited (CARE) has affirmed the rating of 'CARE AA (SO)', which signifies the NCDs are construed to offer high safety for timely servicing of debt obligation and carries very low credit risk. GLOBAL DEPOSITORY RECEIPTS During the Financial year 2013-14, Global Depository Receipts (GDRs) offer of the Company for 56,17,977 GDRs opened for subscription at an issue price of US$ 3.56 per GDR representing 5,61,79,770 fully paid Equity Shares of Re. 1/- each of the Company(each GDR representing 10 Equity Shares). Upon subscription of the GDR, the Company issued and allotted 5,61,79,770 fully paid Equity Shares of Rs. 19.50 per share underlying Global Depository Receipts ("GDRs") on May 21, 2013. 56,17,977 Global Depository Receipts have been listed on the Luxembourg Stock Exchange since May 24, 2013. As at March 31, 2015, total 41,17,977 GDRs have remained outstanding, the underlying shares of which forms part of the existing paid up share capital of the Company. EMPLOYEES STOCK OPTION SCHEME Your Company has implemented an Employee Stock Option Scheme called ZLL ESOP-2010, in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI Guidelines) for grant of stock options to its eligible employees of the Company and its Subsidiary. The Nomination & Remuneration Committee of the Board administers and monitors the Scheme. The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2015 are annexed to this report. During the year under review, 19,61,750 Stock Options were granted on September 29, 2014. Further, your Company had issued and allotted 6,69,453 Equity Shares of Rs. 1/- each upon exercise of equivalent number of vested Stock Options by the Option Grantees at Option price of Rs. 26.05 (80,100 Shares) , Rs. 14.50 (2,32,362 Shares) and Rs. 20.85 ( 3,56,991 Shares) per share. The Company has received a Certificate from the Statutory Auditors, M/s. MGB & Co., LLP, Chartered Accountants, confirming that the Scheme has been implemented in accordance with SEBI Guidelines and the resolution passed by the shareholders. The Certificate shall be placed at the ensuing Annual General Meeting and a copy of the same shall be available for inspection at the Registered Office of the Company on all working days (except Saturdays) between 2.00 p.m. to. 5.00 p.m., up to the date of ensuing Annual General Meeting. SUBSIDIARY COMPANY Your company has one wholly owned subsidiary, namely, Digital Ventures Private Limited. No other Subsidiary / Joint-venture was formed or divested during the year under review. In compliance with Section 129 of the Act, a statement containing requisite details including financial highlights of the operations of the aforesaid Subsidiary Company is annexed to this report. In accordance with Accounting Standard AS 21 - Consolidated Financial Statements read with Accounting Standard AS 23 - Accounting for Investments in Associates, and Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report. CORPORATE GOVERNANCE & POLICIES Your Company is in compliance with the Corporate Governance requirements mentioned under Clause 49 of the Listing Agreement. A Report on Corporate Governance as stipulated under the Listing Agreement(s) with the Stock Exchanges as also a Management Discussion and Analysis Report forms part of the Annual Report. Certificate from the Statutory Auditors of the Company, M/s MGB & Co LLP, Chartered Accountants, confirming compliance with the provisions of Corporate Governance as stipulated in Clause 49, is annexed to the said Corporate Governance Report In compliance with the requirements of the Companies Act, 2013, the Nomination and Remuneration Committee of the Board had fixed criteria for nominating a person on the Board which, inter alia include desired size and composition of the Board, age limit, qualification/ experience, areas of expertise and independence of individual. Your Company has also adopted a Remuneration Policy, salient features whereof is annexed to this report. Your Board had in accordance with the requirements of Companies Act, 2013 and Clause 49 of the Listing Agreement, adopted new policies including Related Party Transaction Policy, and amended existing Whistle Blower and Vigil Mechanism Policy in line with the amended requirements. These policies are available on the website of the Company www.zeelearn.com. CORPORATE SOCIAL RESPONSIBILITY As responsible citizen, your Company believes that a Business cannot succeed in a society that fails and therefore it is imperative for business houses, to invest in the future by taking part in CSR activities. As part of CSR activity, the Company has been providing School Management Services under Public Private Partnership to selected schools managed by Gujarat State Tribal Development Residential Educational and Institutional Society under the Eklavya Model Residential School project of Government of Gujarat. Additionally, the Company regularly organizes various Education awareness events / programs for the various strata of the Society. During the year, your Company undertook many initiatives at Mount Litera Zee School to educate and connect with the local communities around the school and created various campaign to support various causes. Initiative such as 'Yoga Day" raised awareness towards 'Importance of daily exercise'. Besides these, the schools also conducted various events such as Tree plantation activities, Swatch BharatAbhiyan, World Population, distribution of Bins in the society, Human right programmes, etc. in their local communities. In continuation to the I Care initiative-this year too OMEP India has led 'I Care' program across the country sensitizing on Anti Child Abuse and Neglect. This year the program extended to schools apart from preschools. The 'I care' campaign is part of a national movement to change the way we think about prevention of child abuse. As part of its CSR activity, Zee Institute of Creative Arts (ZICA), Noida center run by the franchisee, has partnered with two NGO's namely Prerna Niketan Sangh & Deepalaya to provide free creative course scholarship for the underprivileged students. Through this initiative, ZICAin association with Prerna Niketan Sangh & Deepalaya will provide scholarship to eligible students to 100% of course fees. Prerna Niketan Sangh is registered with Delhi Government and is working for physically challenged children since 1998. Further, as your Company has made net profit of Rs. 9.62 Cr in FY 2014-15, Section 135 of the Companies Act, 2013 and Listing agreement of the Stock Exchanges has become applicable which specifies constitution of a Corporate Social Responsibility Committee of the Board ("CSR Committee"). Accordingly, your Company will constitute ("CSR Committee") in F.Y. 2015-16. DIRECTORS & KEY MANAGERIAL PERSONNEL Your Board comprises of 5 Directors including 3 Independent Directors. Independent Directors provide their declarations both at the time of appointment and annually confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement. During FY 2015 your Board met 6 (six) times details of which are available in Corporate Governance Report annexed to this report. Mr. Subodh Kumar, Non-Executive Director is liable to retire by rotation at the ensuing Annual General Meeting and, being eligible he has offered himself for re-appointment. Your Board recommends his re-appointment. In compliance with the requirements of Section 203 of the Companies Act, 2013, Mr. K V S Seshasai, Chief Executive Officer, Mr. Umesh Pradhan, Chief Financial Officer & Mr. Samir Raval, Compliance Officer & Company Secretary of the Company were nominated as Key Managerial personnel. BOARD EVALUATION In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated. Based on such report of the meeting of Independent Directors and taking into account the views of executive directors and nonexecutive directors the Board had evaluated its performance on various parameters such as Board composition and structure, effectiveness of board processes, effectiveness of flow of information, contributions from each Directors, etc. AUDITORS STATUTORY AUDITOR M/s. MGB & Co., LLP., Chartered Accountants, Mumbai having firm registration No. 101169W/W-100035 holds office until the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment. Your Company has received confirmation from the Auditors to the effect that their appointment, if made, will be in accordance with the limits specified under the Companies Act, 2013 and the firm satisfies the criteria specified in Section 141 of the Companies Act, 2013 read with Rule 4 of Companies (Audit & Auditors) Rules 2014. Your Board is of the opinion that continuation of M/s. MGB & Co., LLP, as Statutory Auditors during FY 2015-16 will be in the best interests of the Company and therefore, Members are requested to consider their re-appointment as Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting till next Annual General Meeting at remuneration be decided by the Board. COST AUDITOR Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, amended rules, 2014, the cost audit records maintained by the Company in respect of its education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business is required to be Audited. Your Directors had, on the recommendation of the Audit Committee and on ratification of its Members appointed M/s. V. V. & Associates, Cost Auditor having Firm registration No. 000515 to audit the cost accounts of the Company for the financial year 2015-16. SECRETARIAL AUDITOR During the year, Secretarial Audit was carried out by Mrs. Mita Sanghavi, Practising Company Secretary in compliance with Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. DISCLOSURES i. Particulars of loans, guarantees and investments: Particulars of loans, guarantees and investments made by the Company required under Section 186 (4) of the Companies Act, 2013 are contained in Note No. 29 to the Standalone Financial Statements. ii. Transactions with Related Parties: None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Information on material transactions with related parties pursuant to Section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014, in form AOC-2 is annexed to this report. iii. Deposits: Your Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits under Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposits) Rules, 2014, was outstanding as on the date of the Balance Sheet. iv. Extract of Annual Return: The extract of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with the Companies (Management & Administration) Rules, 2014 is annexed to this report. v. Sexual Harassment: The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. During the year under review one (1) complaint on sexual harassment was received and it has been resolved as per the provisions of the Act. vi. Regulatory Orders: No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Your Company is engaged in the business of delivering learning solutions and training to entire spectrum of the society from toddler to teens through its multiple products. Since these activities do not involve any manufacturing activity, most of the information required to be provided under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is not applicable. However, the information as applicable are given hereunder FOREIGN EXCHANGE EARNING AND OUTGO: ACKNOWLEDGEMENTS During the year under review, there were no Foreign Exchange Earnings and the particulars of Foreign Exchange outgo is given in Note no. 34 of the Notes to Accounts forming part of the Annual Accounts. PARTICULARS OF EMPLOYEES Requisite disclosures in terms of the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 along with statement showing names and other particulars of the employees drawing remuneration in excess of the limits prescribed under the said rules is annexed to this report. Your Board takes this opportunity to place on record their appreciation for the dedication and commitment of employees shown at all levels, Franchisees and Business Partners that have contributed to the success of your Company. Your Directors also express their gratitude for the valuable support and co-operation received from the Central and State Governments including Ministry of Human Resource Development and other stakeholders including Bankers, Financial Institutions, Investors, Service Providers as well as regulatory and government authorities For and on behalf of the Board Subodh Kumar Chairman Place: Mumbai Date: May 27, 2015 |