DIRECTORS' REPORT DEAR MEMBERS, Your Directors have pleasure in presenting the Twenty Eight Annual Report and audited financial statements of the Company for the financial year ended March 31, 2016 CONSOLIDATED FINANCIAL STATEMENTS In accordance with Accounting Standard - 21 on Consolidated Financial Statements read with Accounting Standard - 23 on Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard -27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statements are provided in the Annual Report. OPERATIONAL HIGHLIGHTS A detailed review of the Company's operations has been provided in the Management Discussion and Analysis Report in terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which forms part of this Report. DIVIDEND In view of the loss, no dividend has been recommended for the financial year 2015-16. DEPOSITS The Company has not accepted/renewed any deposits from the public during the year. CORPORATE SOCIAL RESPONSIBILITY In view of the loss incurred, provisions of Section 135 of the Companies Act, 2013 relating to incurring expenditure on Corporate Social Responsibility, are not applicable to the Company. However, as a responsible corporate, the Company has taken various initiatives for the benefit of the society and various other stakeholders, the details of which are provided in this Report as Annexure 1. CORPORATE GOVERNANCE The Company has complied with the corporate governance requirements, as stipulated under the various regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013. A report on Corporate Governance along with certificate on its compliance forms a part of the Annual Report. SUBSIDIARIES AND ASSOCIATE COMPANIES During the year under review, the Company along with its subsidiary, NDTV Convergence Limited, had set up various online ventures, including ventures in digital transactions in the auto, gadgets, food, wedding and arts space. Details of subsidiaries set up during the year have also been mentioned in MGT-9 which forms a part of this Report. A report on performance and financial position of each of the subsidiaries and associate company in prescribed format AOC-1 under Companies Act, 2013 is provided in the consolidated financial statement of the Company. MATERIAL SUBSIDIARIES The Company's policy on "material subsidiary" is placed on the Company's website and can be accessed at <http://www.ndtv.com/material-subsidiarv-policv> PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITY PROVIDED Details of loans, guarantees, investments and security provided pursuant to the provisions of Section 186 of the Companies Act, 2013, are provided in notes forming part of the standalone financial statements. DETAILS OF BOARD MEETINGS During the financial year under review, five meetings of the Board of Directors were held, details of which have been provided in the Corporate Governance Report. A calendar of meetings for every year is prepared and circulated in advance to the Directors. AUDIT COMMITTEE Composition of Audit Committee of the Board is provided in the Corporate Governance Report, which forms part of the Annual Report. All the recommendations made by the Audit Committee were accepted by the Board. DIRECTORS AND KEY MANAGERIAL PERSONNEL In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Dr. Prannoy Roy, Executive Co-Chairperson is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible offer himself for re-appointment. During the year under review, Mr. Kaushik Dutta and Mr. John Martin O'Loan have been appointed as Additional Directors to hold office as Independent Directors of the Company with effect from January 15, 2016 and February 15, 2016, respectively, after the receipt of approval from Ministry of Information & Broadcasting, subject to the approval of the members of the Company. Approval of the members is being sought for appointment of Mr. Kaushik Dutta and Mr. John Martin O'Loan as Independent Directors in the notice of the ensuing AGM. During the year under review, the shareholders through postal ballot also have approved the re-appointment of Mr. K.V.L. Narayan Rao as Executive Vice-Chairperson and Mr. Vikramaditya Chandra as Group CEO & Executive Director of the Company, respectively, with effect from April 01, 2016. Brief resume / details regarding Directors proposed to be appointed / re-appointed as above are furnished in the Notice of the AGM. INDEPENDENT DIRECTORS Mr. Amal Ganguli, Mr. Vijaya Bhaskar Menon, Ms. Indrani Roy, Mr. Kaushik Dutta and Mr. John Martin O'Loan are the Independent Directors of the Company. The Company has received declaration of independence in accordance with the provisions of Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of familiarisation program for Independent Directors are available on the website of the Company at: <http://www.ndtv.com/details-of-familiarisation-proqramme> DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements under Section 134(3) & (5) of the Companies Act, 2013, your Directors state that: a) in the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any; b) such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2015-16 and of the loss of the Company for that period; c) proper and sufficient care has been taken 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; d) the annual accounts for the financial year ended March 31, 2016 have been prepared on a going concern basis; e) internal financial controls were followed by the Company and they are adequate and are operating effectively; and f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY In terms of Section 134 of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Auditors report to the Audit Committee of the Board. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control system, its compliance with operating systems, accounting procedures and policies in the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby further strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee from time to time. The Company has in place adequate internal financial controls commensurate with the size and scale of the operations of the Company. During the period under review, such controls were tested and no reportable material weakness in the design or operations were observed. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a Vigil Mechanism/Whistle Blower Policy. The mechanism under the Policy has been communicated within the organisation. The objective of this mechanism is to eliminate and help to prevent malpractices, to investigate and resolve complaints, take appropriate action to safeguard the interests of the Company and to ensure that whistleblower is protected. The Company has appointed an Independent Ombudsman for the purpose of reporting, enforcing and monitoring the Whistle Blower Policy and procedures. The details of the Vigil Mechanism have been provided in the Corporate Governance Report and are also available on the website of the Company at: <http://www.ndtv.com/viqil-mechanism> BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of its committees. The performance of individual directors was evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders, time devoted etc. RELATED PARTY TRANSACTIONS All Transactions with related parties were in the ordinary course of business and on an arm's length pricing basis and were approved by the Audit Committee. Details of related party transactions have been disclosed in notes to the financial statements. There were no transactions which could be considered material in terms of the Company's Policy on materiality of related party transactions. Further, there were no transactions that were required to be reported in form AOC 2. The policy on related party transactions has been placed on the website of the Company at: <http://www.ndtv.com/related-partv-transaction-policv> RISK MANAGEMENT POLICY Pursuant to Regulation 17(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted a risk management policy and identified risks and is taking appropriate steps for their mitigation. The details of the Risk Management Policy of the Company are available on the website of the Company at: <http://www.ndtv.com/risk-management-policv> AUDITORS AND AUDITORS' REPORT Statutory Auditors The Auditors of the Company, M/s. B S R & Associates LLP, Chartered Accountants (FRN: 116231W/W-100024) hold office until the conclusion 32nd Annual General Meeting (AGM) of the Company subject to ratification of their appointment by the Members of the Company at every AGM. The Auditors have confirmed their eligibility to the effect that ratification of their appointment, if made, would be within the prescribed limit under the Companies Act, 2013 and that they are not disqualified for ratification of their appointment. The Board of Directors on recommendation of the Audit Committee propose the ratification of appointment of M/s. B S R & Associates LLP, Chartered Accountants as Statutory Auditors of the Company at the forthcoming AGM. The notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report to the Members for the year under review does not contain any qualification, reservation or adverse remark. Secretarial Auditors Pursuant to the provisions of the Companies Act, 2013, the Board has appointed M/s Hemant Singh & Associates, a firm of Company Secretaries in Practice, to conduct Secretarial Audit of the Company for the financial year 2015-16. The Secretarial Audit Report is attached as Annexure 2 to this Report. The Report does not contain any qualification, reservation or adverse remark. NOMINATION AND REMUNERATION POLICY The Company has adopted a Nomination & Remuneration Policy, attached as Annexure 3 to this Report. EXTRACT OF ANNUAL RETURN Pursuant to the provisions of Section 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, extract of annual return in Form MGT 9 is attached as Annexure 4 to this Report. DETAILS OF ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS 1. Tax Demand During the financial year 2013-14, the Company had received an assessment order for tax demand of Rs. 450 crores for the Assessment Year (AY) 2009-10, against which it had filed an appeal before the Income Tax Appellate Tribunal (ITAT). The ITAT had granted a stay on recovery of the tax demand for a period of one year. Since the ITAT didn't have powers to extend the stay beyond one year, the Company was constrained to file a Writ Petition before the Hon'ble High Court of Delhi (Court) on March 21, 2015 for extension of stay and the Hon'ble Court was pleased to continue the stay till the final disposal of the appeal by the ITAT. The ITAT from time to time has directed the Tax Department that no further adjournments will be granted in the matter. The matter is still pending before ITAT. The Department had also filed an application before the Hon'ble Court seeking modification of its earlier order of stay on recovery and seeking adjustment of refund of AY 2008-09 against the demand of AY 2009-10. The Hon'ble Court had dismissed the Department's application and directed it to process the Company's refund application within two weeks of the Company filing a representation. Despite the Court's directions, the Department, on September 14, 2015, passed an order for provisionally attaching the refund due to the Company, apart from its other non-current assets. The Hon'ble Court on a Writ Petition filed by the Company stayed the operation of this Order. The matter is pending for hearing. Fresh Tax Demand of Rs. 47.27 Crores pertaining to AY 2007-08 In April 2016, the Company received a fresh order raising a tax demand of Rs. 47.27 crores from the Income Tax Department, pertaining to AY 2007-08, calling an investment of US$ 20 Million by M/s Fuse+Media Holding LP (Fuse+Media), a wholly owned subsidiary of M/s. Velocity Interactive Group in NDTV Networks Plc. (NNLPC), erstwhile subsidiary of the Company, as a "sham transaction". This follows an earlier similar order for AY 2009-10, calling the investment by NBCU - a subsidiary of General Electric - also a "sham transaction". Fuse+ Media Group is a respected and leading Silicon Valley investment company and continues to be invested in NDTV Group till date. Based on the legal advice received from senior counsel, the Company strongly believes that the said order is untenable and misconceived. The Company has filed an appeal against the order alongwith the stay application. The matter is pending for hearing. 2. PROCEEDINGS BEFORE THE SECURITIES APPELLATE TRIBUNAL (SAT) During the previous year, the Company had received a show cause notice from SEBI for alleged violation of clause 36 of the listing agreement regarding non-disclosure of alleged tax demand of Rs. 450 Crores as detailed above. SEBI had then passed an Order under Section 23A and Section 23E of the Securities Contracts (Regulation) Act, 1956 levying a penalty of Rs. 2 crores on the Company. The Company has filed an appeal with SAT against the said Order. The SAT has granted ad interim relief in favour of the Company, directing that SEBI shall not take any coercive action till the final disposal of the appeal. The matter is pending before SAT. 3. MATTERS BEFORE COMPANY LAW BOARD The Company and its subsidiary had suo-moto made compounding applications before Hon'ble Company Law Board under the provisions of section 185 of the Companies Act, 2013. The matters were heard by the Hon'ble Board and minimum possible compounding cost was charged and paid. 4. CAPITAL REDUCTION PETITION FILED BY THE COMPANY IN 2013 The Company had filed a Petition before the Hon'ble High Court at Delhi (Court) on December 9, 2013 to allow reduction of reserves from its Securities Premium Account to offset certain losses incurred. The matter is pending before the Court. 5. SHOW CAUSE NOTICE ISSUED BY THE ENFORCEMENT DIRECTORATE During November, 2015 the Company, three of its executive Directors and NDTV Studios Ltd. (erstwhile subsidiary of the Company since merged with the Company) received a show cause notice ("SCN") from the Enforcement Directorate ("ED") as to why adjudication proceedings should not be held for alleged contraventions of provisions under Foreign Exchange Management Act, 1999 and regulations made thereunder. As per SCN, the contraventions are in respect of investments into Indian subsidiaries made by overseas subsidiaries of the Company during the previous period. The Company had filed its reply to the SCN with ED. In best interest of the shareholders of the Company; for saving time, cost and to quickly close the matter to avoid protracted litigation, the Company had filed an application with the Reserve Bank of India for compounding of the contraventions alleged in the SCN, which if at all, are technical or procedural in nature. EMPLOYEE STOCK PURCHASE SCHEME 2009 (ESPS - 2009) The Company had instituted the Employee Stock Purchase Scheme 2009 (the "Scheme") in accordance with the SEBI Guidelines for employees of the Company and its subsidiaries by allotting shares there under. The Scheme was approved by the shareholders of the Company, on March 10, 2009, through postal ballot. During the financial year ended March 31, 2016, there have been no issue, allotment and exercise of shares under the Scheme and no material changes have taken place in the Scheme. The Scheme is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 and the details are also placed on the website of the Company at <http://www.ndtv.com/aam2016> The Scheme provides for issue and allotment of not exceeding 21,46,540 Equity Shares to the eligible employees of the Company and its subsidiaries by the ESOP & ESPS Committee at an exercise price of Rs. 4/- each. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO In accordance with Section 134(3) (m) of the Companies Act, 2013 read with the Rule 8 of the Companies (Accounts) Rules, 2014, the following information is provided as under: A. Conservation of Energy Your Company is not an energy intensive unit, however regular efforts are made to conserve energy. Some of the steps taken by the Company towards energy conservation are as under: • Adoption of LED light technology in studios and office premises to reduce the power consumption; • Adoption of VRV technology for air-conditioning in office areas to reduce electricity consumption; and • Installation of motion sensors in all cabins to switch off lights and air-conditioners. B. Technology Absorption (Research and Development) The Company continuously makes efforts towards research and developmental activities whereby it can improve the quality and productivity of its programs. C. Foreign Exchange Earnings and Outgo During the year under review, the Company had foreign exchange earnings of Rs. 350.67 million (previous year Rs. 231.58 million). The foreign exchange outgo on subscription, uplinking and news service, travelling, consultancy and professional fees, repairs and maintenance, distribution and marketing fees and other expenses amounted to Rs. 154.66 million (previous year Rs. 178.25 million). Outgo on account of capital goods and others was Rs. 18.49 million (previous year Rs. 31.31 million). PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Company Act, 2013 (Act) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the prescribed format and annexed herewith marked as Annexure 5 to this Report. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2)&(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company, during office hours between 1.00 pm and 3.00 pm on all working days, excluding Saturdays, prior to the date of the Annual General Meeting. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. GENERAL There have been no material changes and commitments, which can affect the financial position of the Company between the end of the financial year and the date of this Report. Statutory Auditors of the Company have not reported incident related to fraud during the financial year 2015-16 to the Audit Committee or Board of Directors under section 143(12) of the Companies Act 2013. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 NDTV group has in place an Anti-Sexual Harassment Policy in compliance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the period under review, three complaints were received by the ICC and the same were resolved after due process within the prescribed time. Acknowledgements Your Directors acknowledge with thanks the support and co-operation extended by the Investors, Bankers, Business Associates and employees at all levels for their valuable patronage. For and on behalf of the Board Dr. Prannoy Roy Executive Co- Chairperson DIN : 00025576 Radhika Roy Executive Co- Chairperson DIN : 00025625 Place: New Delhi Date: May 9, 2016 |