Digicontent Ltd Directors Report.

Dear Members,

Your Directors are pleased to present their Third Report together with the Audited Financial Statements (Standalone & Consolidated) for the financial year ended on March 31, 2020.

FINANCIAL RESULTS (STANDALONE)

Your Companys performance during the financial year ended on March 31, 2020, along with previous years figures is summarized below: ((Rs. in Lacs))

Particulars 2019-20 2018-19*
Total Income 1,771 2,022
Earnings before interest, tax, depreciation and amortization (EBITDA) from continuing operations 85 447
Add: Exceptional Item - -
Less: Depreciation 20 30
Less: Finance cost 1,006 904
Profit/(Loss) before tax from continuing operations (941) (487)
Less: Tax Expense
• Current tax - -
• Deferred tax charge/(credit) 133 (127)
Total tax expense 133 (127)
Profit for the year from continuing operations (1,074) (360)
Profit/(Loss) for the period (1,074) (360)
Add: Other Comprehensive Income (net of tax)
a) Items that will not to be reclassified to profit or loss (3) (16)
b) Items that will be reclassified to profit or loss - -
Total Comprehensive Income for the year (net of tax) (1,077) (376)
Opening balance in Retained Earnings (594) (218)
Add: Profit/ (Loss) for the year (1,074) (360)
Less: Items of other Comprehensive Income recognized directly in Retained
Earnings
• Re-measurements of post-employment benefit obligation (net of tax) (3) (16)
Total Retained Earnings (1,671) (594)

* Comparative figures for FY-19 have been taken from the financial statements prepared after taking into effect the Scheme of Arrangement between HT Media Limited and the Company w.e.f. the Appointed Date i.e. March 31, 2018 (closing business hours).

DIVIDEND

Due to inadequacy of profits, no dividend is recommended by the Directors for the year ended March 31, 2020.

COMPANY PERFORMANCE AND FUTURE OUTLOOK

A detailed analysis and insight into the financial performance & operations of your Company for the year under review and future outlook is appearing in Management Discussion and Analysis Report, which forms part of the Annual Report.

RISK MANAGEMENT

Your Company has a robust risk management framework to identify, evaluate and mitigate business risks. A detailed statement indicating development and implementation of a risk management policy for the Company, including identification of various elements of risk, is appearing in the Management Discussion and Analysis Report.

SCHEME OF ARRANGEMENT

The Board of Directors approved a Scheme of Arrangement u/s 230 to 232 read with Section 66 and other applicable provisions of the Companies Act, 2013 (hereinafter referred to as "the Act") between the Company and HT Media Limited (HTML) and their respective shareholders and creditors (hereinafter referred to as "HTML-DCL Scheme") which, inter-alia, envisaged demerger of ‘Entertainment & Digital Innovation Business (Demerged Undertaking) of HTML, and transfer and vesting thereof to and in the Company, on a ‘going concern basis.

HTML-DCL Scheme was sanctioned by Honble National Company Law Tribunal (‘NCLT), New Delhi Bench, on March 7, 2019 (certified copy received on March 27, 2019). Consequent upon filing of the NCLT order with the Registrar of Companies on April 5, 2019, HTML-DCL Scheme became effective from the Appointed Date i.e. March 31, 2018 (close of business hours). Accordingly, in terms of the HTML-DCL Scheme, the eligible shareholders of HTML have been allotted equity shares of the Company in the ratio of 4:1 on April 12, 2019. The said equity shares have been admitted for trading on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) w.e.f. June 18, 2019.

Consequent upon allotment of shares to the eligible shareholders of HTML pursuant to HTML-DCL Scheme, The Hindustan Times Ltd., Go4i.com (Mauritius) Ltd., Mrs. Shobhana Bhartia, Mr. Priyavrat Bhartia and Mr. Shamit Bhartia have become promoters of the Company.

SUBSIDIARY COMPANY

Consequent upon effectiveness of HTML-DCL Scheme, HT Digital Streams Limited (HTDSL) became a material wholly-owned subsidiary of the Company. Your Company does not have any associate or joint venture company within the meaning of Section 2(6) of the Act, during the year under review.

In terms of the applicable provisions of Section 136 of the Act, Financial Statements of HTDSL, for the financial year ended on March 31, 2020 are available for inspection at Companys website viz. www.digicontent.co.in.

A report on the performance and financial position of HTDSL in the prescribed Form AOC-1, is annexed to the Consolidated Financial Statements of the Company and hence, not reproduced here. The ‘Policy for determining Material Subsidiary(ies) is available on the Companys website viz. www.digicontent.co.in.

The contribution of HTDSL to the overall performance of your Company is outlined in Note no. 34 of the Consolidated Financial Statements of the Company for the financial year ended March 31, 2020.

SHARE CAPITAL

Authorized share capital

During the year under review, in terms of HTML-DCL Scheme and upon effectiveness thereof, the Authorized share capital of your Company has been increased from H 1,00,000/- divided into 50,000 equity shares of H 2/- each to H 12,00,00,000/- divided into 6,00,00,000 equity shares of H 2/- each.

As on March 31, 2020, the Authorized share capital of the Company stood at H 12,00,00,000/- divided into 6,00,00,000 equity shares of H 2/- each.

Paid up equity share capital

During the year under review, the Board of Directors of the Company at its meeting held on April 12, 2019, issued and allotted 5,81,87,078 equity shares of face value of H 2/- each, aggregating to H 11,63,74,156/-, to the eligible equity shareholders of HTML, pursuant to HTML-DCL Scheme.

Further, in accordance with HTML-DCL Scheme, the entire pre-scheme paid-up equity share capital of the Company amounting to H 1,00,000/- divided into 50,000 equity shares of H 2/- each held by HTML & its nominees, was cancelled upon allotment of new equity shares to the eligible shareholders of HTML.

As on March 31, 2020, the paid-up equity share capital of your Company stood at H 11,63,74,156/- divided into 5,81,87,078 equity shares of face value of H 2/- each.

DEPOSITORY SYSTEM

The Companys equity shares are compulsorily tradeable in electronic form. As of March 31, 2020, 99.99% of the Companys total paid-up capital representing 5,81,86,129 equity shares is in dematerialized form. In view of the benefits offered by the depository system, members holding shares in physical mode are advised, in their own interest, to avail demat facility.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors

During the year under review, the members at the 2nd Annual General Meeting (AGM) of the Company held on April 04, 2019 approved appointment of Mr. Praveen Someshwar as Director. Further, the Board of Directors of your Company at its meeting held on April 18, 2019 accorded approval to the appointment of Mr. Ajay Relan, Mr. Vivek Mehra and Ms. Suchitra Rajendra as Additional Directors w.e.f. April 18, 2019 to hold office as such till the date of ensuing AGM and as Independent Directors, for a term of 5 (five) years until March 31, 2024, subject to approval of Members.

Mr. Sharad Saxena, Director of your Company since incorporation, passed away on January 27, 2020 after a brief illness. The Board places on record its deep appreciation of the valuable services rendered by Late Mr. Sharad Saxena during his tenure as Director of the Company. To fill the casual vacancy caused due to demise of Late Mr. Sharad Saxena, the Board of Directors, on the recommendation of Nomination

& Remuneration Committee, appointed Mr. Dinesh Mittal (DIN: 00105769) as Non-Executive Director w.e.f. March 12, 2020, subject to approval of Members.

Your Directors commend appointment of Mr. Ajay Relan, Mr. Vivek Mehra and Ms. Suchitra Rajendra as Independent Directors and Mr. Dinesh Mittal as Non-executive Director, for approval of members at the ensuing AGM.

In accordance with the applicable provisions of the Act, Mr. Praveen Someshwar retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. Your Directors commend re-appointment of Mr. Praveen Someshwar for approval of the Members at the ensuing AGM.

All the Independent Directors of the Company have confirmed that they meet the criteria of independence as prescribed under both, the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘‘SEBI Listing Regulations) along with declaration of compliance with Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, with respect to their registration on the data bank of Independent Directors maintained by Indian Institute of Corporate Affairs. The Independent Directors have also confirmed that they have complied with the ‘Code of Conduct of the Company.

Brief resume, nature of expertise, details of directorship held in other companies etc. of the Directors proposed to be appointed/re-appointed at the ensuing AGM, along with their shareholding in the Company, as stipulated under Secretarial Standard-2 and Regulation 36 of SEBI Listing Regulations, is provided in the Notice of the ensuing AGM.

Key Managerial Personnel

During the year under review, the Board of Directors approved the appointment of following Key Managerial Personnel (KMPs) :-

Name Designation Date of appointment
Mr. Abhesh Verma Chief Executive Officer July 31, 2019
Mr. Anup Sharma Chief Financial Officer April 12, 2019
Mr. Vikas Prakash Company Secretary April 12, 2019

PERFORMANCE EVALUATION

In line with the requirements under the Act and SEBI Listing Regulations, the Board of Directors undertook a formal annual evaluation of its own performance and that of its Committees, Chairperson & Directors.

Nomination & Remuneration Committee framed questionnaires for evaluation of performance of the Board as a whole, Board Committees (viz. Audit Committee, Stakeholders Relationship Committee and Nomination & Remuneration Committee) Directors and the Chairperson, on various criteria outlined in the ‘Guidance Note on Board Evaluation issued by SEBI on January 5, 2017.

The Directors were evaluated on parameters such as, value addition to discussions, level of preparedness, willingness to appreciate the views of fellow directors, commitment to processes which include risk management, compliance and control, commitment to all stakeholders (shareholders, employees, vendors, customers etc.), familiarization with relevant aspects of companys business / activities amongst other matters. Similarly, the Board as a whole was evaluated on parameters which included its composition, strategic direction, focus on governance, risk management and financial controls.

A summary report of the feedback of Directors on the questionnaire(s) was considered by the Nomination & Remuneration Committee and the Board of Directors. The Board would endeavour to use the outcome of the evaluation process constructively, to improve its own effectiveness and deliver superior performance.

AUDIT & AUDITORS

Statutory Auditor

During the year under review, the Shareholders of the Company at their Extra-ordinary General Meeting held on April 1, 2019 approved the appointment of M/s.MRKS and Associates, Chartered Accountants(MRKS)[Firm Registration No. 023711N] as Statutory Auditor, to fill the casual vacancy caused due to resignation of M/s. Price Waterhouse & Co. (PWC), Chartered Accountants LLP [Firm Registration No. 304026/E-300009] vide their letter dated March 29, 2019. Thereafter, MRKS was appointed as Statutory Auditor by the Members at their Second AGM held on April 4, 2019, to hold office for a term of 5 (five) consecutive years from the conclusion of Second AGM till the conclusion of Seventh AGM of the Company to be held in the calendar year 2024.

MRKS resigned as Statutory Auditor vide letter dated July 5, 2019. To fill the casual vacancy caused due to resignation of MRKS, the Board of Directors, on the recommendation of Audit Committee, on July 11, 2019 accorded approval to the appointment of B S R and Associates, Chartered Accountants ("BSR") [Firm Registration No. 128901W] as Statutory Auditor, to hold office as such upto the conclusion of the ensuing AGM. The appointment of BSR was approved by the Members of the Company on September 22, 2019 by way of passing resolution by postal ballot.

Since, the aforesaid appointment of BSR as Statutory Auditor of the Company is valid upto the date of the ensuing AGM, on the recommendation of Audit Committee, the Board of Directors recommends to the Members, appointment of BSR as Statutory Auditor of the Company, to hold office for a period of 5 (five) consecutive years from the conclusion of ensuing AGM till the conclusion of Eighth AGM of the Company, to be held in the calendar year 2025.

The report of BSR on Annual Financial Statements (Standalone and Consolidated) for the financial year ended on March 31, 2020, is an unmodified opinion i.e. does not contain any qualification, reservation or adverse remark.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act, and rules made thereunder, the Board of Directors appointed M/s. RMG & Associates, Company Secretaries ("RMG") (Firm Reg. No. P2001DE16100) as Secretarial Auditor, to conduct the Secretarial Audit for the financial year ended March 31, 2020 and their report is annexed herewith as "Annexure - A". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Further, the Secretarial Audit of material unlisted subsidiary viz. HT Digital Streams Limited, as required under Regulation 24A of SEBI LODR, has been conducted for the FY-20 and there were no qualification, reservation or adverse remark in the said report.

During the year under review, the Statutory Auditor and the Secretarial Auditor have not reported any instance of fraud to the Audit Committee, pursuant to Section 143(12) of the Act and rules made thereunder. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

RELATED PARTY TRANSACTIONS

All contracts/arrangements/transactions entered into by the Company with related parties during the year under review, were in ordinary course of business of the Company and on arms length terms. The related party transactions were placed before the Audit Committee for review and/or approval. During the year, the Company did not enter into any contract/ arrangement/transaction with related party which could be considered ‘material in accordance with the Companys ‘Policy on Materiality of and dealing with Related Party Transactions (available on Companys website viz. www.digicontent.co.in) and therefore, the disclosure of related party transactions in Form AOC-2 is not applicable.

Reference of Members is invited to Note nos. 30 and 30A of the Annual Financial Statements, which set out the related party disclosures as per Ind AS-24.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, your Directors state that:

(i) in the preparation of the annual accounts for the financial year ended on March 31, 2020, the applicable accounting standards have been followed and there are no material departures;

(ii) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2020 and of the loss of the Company for the year ended on March 31, 2020;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a ‘going concern basis;

(v) proper internal financial controls were in place and that such internal financial controls were adequate and operating effectively; and

(vi) systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DISCLOSURES UNDER THE COMPANIES ACT, 2013

Borrowings and Debt Servicing: During the year under review, your Company has met all its obligations towards repayment of principal and interest on loans availed, if any.

Particulars of loans given, investments made, guarantees / securities given: The details of investments made and loans/ guarantees/securities given, as applicable, are given in note no. 36 to the Standalone Financial Statements.

Board Meetings: A yearly calendar of board meetings is prepared and circulated in advance to the Directors. During the financial year ended March 31, 2020, the Board met eight times on April 04, 2019, April 12, 2019, April 16, 2019, April 18, 2019, July 31, 2019, October 24, 2019, January 21, 2020 and March 12, 2020. For further details of these meetings, Members may please refer the Report on Corporate Governance which forms part of the Annual Report.

Committees of the Board: At present, four standing committees of the Board of Directors are in place viz. Audit Committee, Nomination & Remuneration Committee, Banking & Finance Committee and Stakeholders Relationship Committee which have been constituted in accordance with the applicable provisions of the Act and SEBI Listing Regulations. During the year under review, recommendations of these committees were accepted by the Board of Directors.

Remuneration Policy: The Remuneration Policy of the Company on appointment and remuneration of Directors, Key Managerial Personnel & Senior Management, as prescribed under Section 178(3) of the Act and the SEBI Listing Regulations, is available on the Companys website viz. www.digicontent.co.in. The Remuneration Policy includes, inter-alia, the criteria for appointment of Directors, KMPs, Senior Management Personnel and other employees, their remuneration structure, recommendation to the Board, all remuneration in whatever form, payable to Senior Management and disclosures in relation thereto.

Vigil Mechanism: The Vigil Mechanism, as envisaged in the Act & rules made thereunder and the SEBI Listing Regulations, is addressed in the Companys "Whistle Blower Policy". In terms of the Policy, directors/employees/stakeholders of the Company may report concerns about unethical behaviour, actual or suspected fraud or any violation of the Companys Code of Conduct. The Policy provides for adequate safeguards against victimization of the Whistle Blower. The Policy is available on the Companys website viz. www.digicontent.co.in.

Particulars of employees and related disclosures: In accordance with the provisions of Section 197(12) of the Act, read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, details of employees remuneration are set out in the "Annexure - B" to this Report. In terms of the provisions of Section 136(1) of the Act, the Boards Report is being sent to the Members without this annexure. Member interested in obtaining such information, may write to the Company Secretary at the Registered Office of the Company.

Disclosures under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as "Annexure - C".

Extract of Annual Return: Extract of the Annual Return for the financial year ended on March 31, 2020 in Form MGT-9 is annexed herewith as "Annexure - D", and the same is also placed on the website of the Company viz. www.digicontent.co.in. The Annual Return will be hosted on Companys website after certification by Company Secretary in practice and filing thereof with Registrar of Companies.

Corporate Governance: The report on Corporate Governance in terms of SEBI Listing Regulations, forms part of this Annual Report. The certificate issued by Company Secretary-in-Practice is annexed herewith as "Annexure – E".

Conservation of energy & technology absorption: NIL

Foreign exchange earnings and outgo –

- Foreign Exchange earned in terms of actual inflows during the year: NIL

- Foreign Exchange outgo in terms of actual outflows during the year: H 11.58 Lac

INFORMATION ON MATERIAL CHANGES AND COMMITMENTS

No material changes/commitments have occurred after the end of financial year 2019-20 and till the date of this report, which affect the financial position of your Company.

SECRETARIAL STANDARDS

Your Directors state that the Secretarial Standards (i.e. SS-1 and SS-2), relating to ‘Meetings of the Board of Directors and ‘General Meetings, have been followed by the Company.

GENERAL

Your Directors state that during the year under review, no disclosure is required in respect of following matters, as there were no transactions/events in relation thereto:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme of the Company.

During the year under review, the provisions relating to Corporate Social Responsibility (CSR) enshrined under Section 135 of the Act were not applicable on the Company.

The Company does not have any Employee Stock Option Scheme.

The Company has not transferred any amount to the General Reserve during the year under review.

No significant or material order was passed by any Regulator, Court or Tribunal, which impact the ‘going concern status and Companys operations in future.

Your Company has in place, adequate internal financial controls with reference to the financial statements. The internal control system is supplemented by an extensive program of internal audits and their review by the management. The in-house internal audit function, supported by professional external audit firms, conduct comprehensive risk focused audits and evaluates the effectiveness of the internal control structure across locations and functions on a regular basis. In addition to internal audit activities, Company has also developed an internal financial control framework to periodically review the effectiveness of controls laid down across all critical processes. The Company has instituted an online compliance management tool with a centralized repository to cater to its statutory compliance requirements.

PREVENTION OF SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE

Your Company adheres to a strict policy to ensure safety of women employees at workplace. The Company is fully compliant with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has constituted an Internal Committee (IC) to redress complaints received regarding sexual harassment. The Companys policy in this regard, is available on the employees intranet. The Company conducts regular classroom training sessions for employees and members of IC and has also rolled-out an online module for employees to increase awareness. No instance or complaint was reported to IC during the year under review.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the co-operation extended by all stakeholders, including government authorities, shareholders, investors, customers, banks, vendors and suppliers. Your Directors also place on record their deep appreciation of the committed services of the executives and employees of the Company.