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Your Directors have pleasure in presenting the 59th Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March, 2019.
1. COMPANY SPECIFIC INFORMATION
a. Financial Highlights:
Your Companys performance during the year ended 31st March, 2019 as compared to the previous financial year, is summarized as below:
(र in Crores)
|Operating & Other Income||582.49||556.51||1619.20||1544.36|
|Earnings before interest, depreciation, amortization, exceptional item, share of profit of associates and JVs & taxes||245.97||236.98||369.69||345.37|
|Depreciation & Amortization||115.92||97.19||352.41||334.70|
|Share of profit/(loss) of associates and joint ventures||-||-||6.58||39.13|
|Provision for Taxation - MAT Credit, Current Tax, Deferred Tax & (Excess)/Short provision for taxation in earlier years**||(267.67)||(438.89)||(0.44)|
|Other Comprehensive Income/(Loss)||0.85||1.26||1.14||2.65|
|Total Comprehensive Income/(Loss)||211.45||78.92||(186.53)||(105.21)|
|Earning Per Share Basic and Diluted (in )||2.08||0.94||(1.90)||(130)|
Note: The above figures are extracted from the Audited Standalone and Consolidated Financial Statement as per Indian Accounting Standards (IND AS).
* In view of the New Regulatory Framework for Broadcasting and Cable services sector notified by the Telecom Regulatory Authority of India (TRAI), which has come into effect during the quarter resulting into changes in pricing mechanism and arrangements amongst the Company, LCOs and Broadcasters as well as equity infusion; the Management, based on a review, has provided for (a) impairment of trade receivables, advances & exposure to certain entities including JVs; (b) write down to the recoverable value of certain assets; (c) expenses relating to equity infusion. These adjustments, have one-time, non-routine material impact on financial statements, hence being disclosed as "Exceptional Item in Financial Results".
** The deferred tax assets recognised is mainly in respect of unabsorbed depreciation allowance available for set off for indefinite period in terms of applicable tax laws. Considering the revision in business plans and growth strategy of the Group, pursuant to fresh infusion of equity capital and implementation of New Tariff Order; the Management is reasonably certain of future taxable income and hence recovery of such deferred tax assets.
Income - Standalone and Consolidated
During the year under review, the total income of your Company was र 582.49 crores on a standalone basis and र 1619.20 crores on a consolidated basis as compared to the previous financial years total income of र 556.51 crores on a standalone basis and र 1544.36 crores on a consolidated basis.
Profits - Standalone and Consolidated
For the financial year under review, the Company has earned Net Profit of र 210.60 crores on a standalone basis reflecting a significant growth of 171% as against Net Profit of र 77.66 crores in the previous financial year. During the year under review, the Net Loss of the Company on a consolidated basis was र 187.67 crores compared to र 107.86 crores in previous financial year.
b. Transfer to reserves:
During the financial year under review, the Board of Directors of Company have not recommended transfer of any amount to reserves.
Your directors have not recommended any dividend for the financial year under review. The Companys Dividend Distribution Policy can be accessed through web link http://www.hathwav.com/About/Policies
d. General Review and State of Company Affairs:
The Company is one of Indias leading Cable Broadband service provider and also provides Cable Television Services through its subsidiaries particularly through its wholly owned subsidiary - Hathway Digital Private Limited.
The new upgraded technology DOCSIS 3.1, advent of GPON Fiber to the home, delighted customers with enhanced data limits and efficient customer services have helped your Company reach 4th position in the cable wireline broadband business. (Source TRAI- The Indian Telecom Services Performance Indicators - Jan 2019).
India has around 18.27 Mn wireline broadband subscribers as on 31st January, 2019 (As per revised definition i.e. a Broadband customer is a customer having minimum speed of 512 kbps). Comparing the trend on year on year basis, the wireline broadband number has added by 0.31 Mn subscribers (March 2018, 17.96 Mn) [Source-TRAI report January 2019]. Customers increasingly prefer wireline broadband as it allows online media consumption and seamless accessibility of data to multiple devices while at home.
During the year under review, the Broadband business revenue stood at र 527.63 crores and the subscribers stood at 0.81 Mn (Previous Years Broadband business revenue stood at र 544.54 crores and subscribers stood at 0.80 Mn).
With deployment of GPON FTTH and Parallel network in High Potential High Penetrated DOCSIS home passes, the Company saw opportunity to increase market share by offering 200 mbps - 500 mbps speed to premium consumers, which resulted in increase of minimum data limits across country to 200 GB/consumer/month.
Your Company continues to bring in new technology for superior consumer experience. One of the initiatives taken is Hathway Play Box based on android platform which will provide world class large screen OTT viewing experience to our privileged customers. Hathway Play box also allows consumers to experience Android gaming on big screen including multiple users having gaming fun on same screen. It also provides consumers a smarter way to watch all Google Play content on a big screen. These initiatives help to increase customer sticky-ness and to retain customers for longer duration.
The Company has appointed TCS as System Integrator to automate various process and improve the Quality of Services. IT and Other Initiatives have helped the Company in cost optimization and provide system driven services.
The average bandwidth consumption (Mbps) per subscriber is 0.77. The average data usage per costumer per month has now reached 113 GB which shows customers preference of watching online media and reflects the binge-watching culture of users.
Cable Television Business:
During the year, TRAI implemented the New Tariff Order (NTO) from 1st February, 2019. The NTO is set to dramatically change the distribution landscape in India. It will bring in far greater transparency and overall it will be good for all stakeholders, leading to fair share allocation of subscription revenues within the stakeholders.
Some of the key features for the NTO are as below:
Every broadcaster is required to declare the maximum retail price (MRP) of its pay channels on a-la-carte basis. However, such MRP shall be uniform for all types of addressable systems.
Every Broadcaster must declare a distribution fee at a minimum of 20% of the MRP of pay channel or bouquet of pay channels which can be upto 35%.
In addition to the distribution fee, Broadcasters may offer discounts to distributors which cannot exceed 15% of the MRP of pay channels or bouquet of pay channels. However, in no case, the sum of distribution fee declared by a broadcaster and discounts offered can exceed 35% of the MRP of pay channel or bouquet of pay channels, as the case may be.
Every broadcaster should publish, on its website, the Reference Interconnection Offer (RIO) containing the information such as MRP of its pay channels and bouquet of pay channels, distribution fee, discounts etc.
Every broadcaster is required to enter into written interconnection agreements on the basis of the RIO published by it for providing signals of pay channels to a distributor of television channels.
Similarly, every distributor of television channels is required to publish RIO on its website for carrying a channel on its distribution network. Such RIO must necessarily contain the information such as target market, rate of carriage fee, manner of calculation of carriage fee etc.
The rate of carriage fee has been capped at Re. 0.20 per Standard Definition channel and Re. 0.40 per High Definition Channel. The manner of carriage calculation is as prescribed in the regulations. The distributor can offer a discount on the carriage fee. However, such discount cannot be more than 35%.
Every distributor is required to enter into written agreement, on the basis of its published RIO, with the broadcaster for carrying television channels in respect of which the request has been received from such broadcasters.
Any other kind of fee for a channel such as marketing fee, placement fee etc. between two service providers should be made part of interconnection agreement and reported to the Authority.
It is mandatory for MSOs to enter into a written agreement with LCOs before providing the signals. Such interconnection agreement must comply with the standard provisions as per the Model Interconnection Agreement (MIA)/ Standard Interconnection Agreement(SIA) as prescribed by the Authority.
Hathways Cable Television business has seen significant growth in subscription revenue by 14%, led by increase in monetization of Phase III and IV.
Your Company has successfully implemented DPO packs for all regions. Packaging is based on the extensive consumer research and focused group interviews with the customers along with input from Local Cable Operators.
In view of the NTO, the relationship between the stakeholders has improved, which helped us to drive the NTO implementation across PAN India.
Your Company launched Indias first Cable Hybrid box "Hathway Ultra Smart HUB" on the android TV platform to create unique TV viewing experience for Indian consumers. The Ultra Smart TV Hub simplifies the user experience for our customers that increasingly combine their linear TV viewing with on- demand and streaming services. The user can select and download more than 2,000 apps from Google Play, including play services, games and music.
e. Material Changes and commitments, if any, affecting the financial position of the Company:
a. During the year, the Company made Preferential allotment of 30,800,000 Equity Shares at र 32.35 per share amounting to र 996,380,000 to Hathway Investments Private Limited - an entity belonging to Existing Promoter Group (i.e. Mr. Viren Raheja, Mr. Akshay Raheja, Hathway Investments Private Limited, Spur Cable and Datacom Private Limited).
b. During the year, Jio Content Distribution Holdings Private Limited, Jio Internet Distribution Holdings Private Limited and Jio Cable and Broadband Holdings Private Limited, (Acquirers) entered into a Share Subscription Agreement dated 17th October, 2018 ("SSA"), with the Company and Mr. Akshay Raheja, Mr. Viren Raheja, Hathway Investments Private Limited, Spur Cable and Datacom Private Limited (Existing Promoter Group) to subscribe to 51.34% of the post allotment share capital of the Company. Pursuant to the agreement, the Company made an allotment of 908,810,000 Equity Shares of the Company on 30th January, 2019 to the Acquirers, at a price of र 32.35/- (including premium of र 30.35/-per Equity Share aggregating to र 29,400,003,500/- on a preferential basis, as given below:
|Sr. No.||Particulars of Allotees||Shares|
|1||Jio Content Distribution Holdings Private Limited||534,698,609|
|2||Jio Internet Distribution Holdings Private Limited||214,296,755|
|3||Jio Cable and Broadband Holdings Private Limited||159,814,636|
Pursuant to the aforesaid preferential allotment, the Acquirers have acquired sole control of the Company and the Acquirers and the Persons Acting in Concert (PAC) namely Reliance Industries Limited, Digital Media Distribution Trust, Reliance Content Distribution Limited and Reliance Industrial Investments and Holdings Limited have become part of the Promoter and Promoter Group of the Company.
Further, on 26th February, 2019, the Acquirers acquired an aggregate of 364,891,215 equity shares representing 20.61% of the total paid-up equity share capital of the Company pursuant to an open offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Accordingly, as at 31st March, 2019, the aggregate holding of the Acquirers in the Company stood at 1,273,701,215 equity shares of the Company representing 71.96% of the total paid-up equity share capital of the Company.
Employee Stock Option Plan 2018
During the year under review, the Company obtained the approval for "Hathway Employee Stock Option Plan 2018" from the shareholders of the Company to introduce, offer, issue and allot employee stock options exercisable into not exceeding 11,000,000 equity shares of the Company, having face value of र 2/- (Rupees Two only) each at a price as may be determined in accordance with the terms and conditions envisaged under the "Hathway Employee Stock Option Plan 2018".
2. CAPITAL AND DEBT STRUCTURE
During the year under review, the Company raised the funds by creating, issuing, offering and allotting on preferential basis to the following allotees:
|Sr. No.||Date of Allotment||Name of the Allottee||Number of equity shares||Issue Price||Amount (in )|
|1.||29/08/2018||Hathway Investments Private Limited||30,800,000||32.35*||996,380,000|
|2.||30/01/2019||Jio Content Distribution Holdings Private Limited||534,698,609||32.35*||17,297,500,001|
|3.||30/01/2019||Jio Internet Distribution Holdings Private Limited||214,296,755||32.35*||6,932,500,024|
|4.||30/01/2019||Jio Cable and Broadband Holdings Private Limited||159,814,636||32.35*||5,170,003,475|
* Includes premium of र 30.35
During the year under review, the Company also increased its Authorised Share Capital from र 2,000.000,000/- (Rupees Two Hundred Crores Only) divided into 999,000,000 (Ninety-Nine Crores and Ninety Lakhs) Equity Shares of र 2/- (Rupees Two) each and 200,000 (Two Lakhs) Preference Shares of र 10/- (Rupees Ten) each to र 4,000,000,000/- (Rupees Four Hundred Crores Only) divided into 1,999,000,000 (One Hundred and Ninety-Nine Crores and Ninety Lakhs) Equity Shares of र 2/- (Rupees Two) each and 200,000 (Two Lakhs) Preference Shares of र 10/- (Rupees Ten) each.
3. CREDIT RATING OF SECURITIES
As per India Ratings & Research, the Companys credit rating is as under:
1) IND A- (Long term)/ RWP (Rating Watch Positive)
2) IND A2+ (Short term)/ RWP (Rating Watch Positive)
a. Board of Directors and Key Managerial Personnel:
Mr. Rajan Gupta was appointed as the Managing Director of the Company on 25th November, 2016 for a term of 2 (two) years which expired on 24th November, 2018. Considering the experience in the industry and growth of the Company under his leadership, the shareholders of the Company re-appointed him as Managing Director (Key Managerial Personnel) of the Company for a further period of 3 (three) years from 25th November, 2018 till 24th November, 2021 through postal ballot.
In accordance with the SSA dated 17th October, 2018 entered into between the Company, Jio Content Distribution Holdings Private Limited, Jio Internet Distribution Holdings Private Limited, Jio Cable and Broadband Holdings Private Limited and Existing Promoter Group, Mr. Rajan Raheja and Mr. Vinayak Aggarwal resigned as Directors from the Board of Directors of the Company on 30th January, 2019. The Board places on record its appreciation for the valuable services rendered by the said Directors during their respective tenure as Directors of the Company.
In accordance with Shareholders Agreement dated 17th October, 2018 entered into between the Company, Jio Content Distribution Holdings Private Limited, Jio Internet Distribution Holdings Private Limited, Jio Cable and Broadband Holdings Private Limited and Existing Promoter Group, Ms. Geeta Fulwadaya (DIN:03341926) was appointed as Additional Non-Executive Director of the Company on 30th January, 2019 and Mr. Saurabh Sancheti (DIN: 08349457) and Mr. Anuj Jain (DIN: 08351295) were appointed as Additional Non-Executive Directors of the Company on 29th March, 2019.
Mr. Sitendu Nagchaudhuri was appointed as Chief Financial Officer (Key Managerial Personnel) of the Company on 2nd July, 2018 as a successor to Mr. Vineet Garg who resigned on 15th May, 2018.
As per the provisions of Section 152 of the Companies Act, 2013 ("the Act"), Mr. Akshay Raheja (DIN: 00288397) shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors have recommended his re-appointment.
Ms. Geeta Fulwadaya (DIN:03341926), Mr. Saurabh Sancheti (DIN: 08349457) and Mr. Anuj Jain (DIN: 08351295) who were appointed as Additional Non-Executive Directors of the Company to hold office up to the date of the next Annual General Meeting of the Company, being eligible offered themselves for appointment as Non-Executive Directors of the Company. The Board of Directors has recommended their appointment.
In accordance with the provisions of the Act, none of the Independent Directors are liable to retire by rotation.
b. Declaration by independent directors:
Your Company has received declarations from all the Independent Directors under Section 149(6) of the Act confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.
c. Code of Conduct for Directors and Senior Management Personnel:
The Company has formulated and adopted the Code of Conduct for Directors, Key Managerial Personnel and Senior Management as per the provisions of the SEBI Listing Regulations and the Act. The Directors, Key Managerial Personnel and Senior Management have affirmed compliance with the Code of Conduct laid down by the Company.
d. Board Meetings:
The Board of Directors of the Company met 9 (nine) times during the year under review. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report which forms part of this Report.
Details of Audit Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee constituted by the Board of Directors of the Company under the Act and Listing Regulations are given in the Corporate Governance Report which forms part of this Report. The details of the Committee meetings and the attendance of the member of the Committees are provided in the Corporate Governance Report which forms part of this Report.
Details of other Committees constituted by the Board of Directors of the Company under the Act and Listing Regulations are given below:
Corporate Social Responsibility Committee:
As per the provisions of Section 135 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 of the Act, the Board of Directors have constituted Corporate Social Responsibility Committee. The composition of Corporate Social Responsibility Committee is as under:
|Mr. Devendra Shrotri||Chairman|
|Mr. Rajan Gupta||Member|
|Mr. Sridhar Gorthi*||Member|
*Owing to the resignation of Mr. Vinayak Aggarwal from the Board of Directors of the Company, Mr. Sridhar Gorthi was appointed as member of the Committee with effect from 30th January, 2019.
During the year, one meeting was held on 14th May, 2018.
Corporate Social Responsibility Policy:
During the year under review, the Company was not required to spend any amount for activities under Corporate Social Responsibility in terms of section 135 read with Schedule VII of the Act.
The Corporate Social Responsibility Policy of the Company is available on the Companys website and can be accessed in the link provided herein below:
http://www.hathwav.com/assets/InvFile/HCDL CSR Policy.pdf
Business Responsibility Committee:
The composition of Business Responsibility Committee is as under:
|Mr. Rajan Gupta*||Chairman|
|Mr. Viren Raheja||Member|
"Owing to the resignation of Mr. Vinayak Aggarwal from the Board of Directors of the Company, Mr. Rajan Gupta, a member of the CSR committee, was appointed as Chairman of the Committee with effect from 30th January, 2019.
During the year, one meeting of the Committee was held on 14th May, 2018.
Business Responsibility Report:
As stated under Regulation 34(2)(f) of SEBI (LODR), your Company has published the Business Responsibility Report on its website which can be accessed through web link http://www.hathwav.com/ About/AnnualReport
f. Companys Policy on Directors appointment and remuneration:
The Companys policy on Directors appointment and remuneration is given in the Corporate Governance Report which forms part of this Report.
g. Board Evaluation
The Company has devised a Policy for performance evaluation of the Board, Committees and other Individual Directors (including Independent Directors) which include criteria for performance evaluation of Non-Executive Directors and Executive Director. The evaluation process inter alia considers attendance of Directors at Board and Committee meetings, acquaintance with business, communication inter-se board members, effective participation, compliance with code of conduct, etc. which is in compliance with applicable laws, regulations and guidelines.
Pursuant to the provisions of the Act and Listing Regulations, the Directors have carried out an annual performance evaluation of Board, Independent Directors, Non-Executive Directors, Executive Director, Committees and Chairman of the Board.
This exercise was carried out through structured evaluation process covering various aspects of the Board such as composition of the Board/Committees, experience, competencies, performance of specific duties etc. Separate exercise was carried out to evaluate the performance of individual directors including the Chairman in accordance with Nomination and Remuneration Policy and was found to be satisfactory.
h. Particulars of employees and related disclosures:
In terms of the provisions of Section 197 (12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided as Annexure - I.
Disclosures relating to remuneration and other details as required under section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 are provided in the said annexure.
i. Directors responsibility statement:
In terms of Section 134(5) of the Act, in relation to the audited financial statements of the Company for the year ended 31st March, 2019, the Board of Directors of the Company hereby state that:
a. In the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards read with requirements set out under Schedule III to the Act have been followed and there are no material departures;
b. They 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 end of the financial year and the profit and loss of the Company for that period;
c. They have taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. They have prepared the Annual Accounts of the Company on a going concern basis;
e. They have laid down internal financial controls, which are adequate and are operating effectively; and
f. They have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
j. Disclosure of Internal Financial Controls:
The Companys internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance of corporate policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. It uses a state-of-the-art enterprise resource planning (ERP) system to record data for accounting and management information purposes and connects to different locations for efficient exchange of information. Entity Level Control framework document has been documented. The documentation of process maps and key controls has been completed during the previous financial year for all material operating processes. It has continued its efforts to align all its processes and controls with global best practices.
The Management Audit Team had conducted a review and evaluated the design, adequacy and operating effectiveness of the Internal Financial Controls of the Company. Management testing has been conducted on a sample basis for Revenue, Expenses and Payables, Fixed Assets, Inventory, Compliance, Related Party, Borrowings, Consolidation, Contingent Liability, Loans and Advances, Cash Management, Current Investment, Forex Exposure and Hedging, Finalization, Retirement Benefits and remedial action has been taken or agreed upon with a finite closure date where control weaknesses were identified.
Based on the above, the Management believes that adequate Internal Financial Controls exist in relation to its Financial Statements.
5. DISCLOSURES RELATING TO SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
a. Report on performance of subsidiary companies, associate companies and joint ventures:
A statement containing the performance and financial position of each of the subsidiaries, associates and joint ventures for the financial year ended 31st March, 2019 is given pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014 (including any subsequent amendment thereof) in AOC-1 in Annexure - II to this Report.
During the year, there has been no change in any of its subsidiary companies, associates or joint ventures.
Hathway Digital Private Limited is a material subsidiary of the Company as per the Listing Regulations.
The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during the business hours on all days except Saturdays, Sundays and public holidays up to the date of the Annual General Meeting as required under Section 136 of the Act. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company.
6. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
As per Section 186 (11)(a) read with Schedule VI of the Act, the Company qualifies to be the Company providing infrastructural facilities and is exempted from the applicability of Section 186 except for sub-section (1) of section 186 of the Act. Accordingly, disclosure of details with respect to investment made, loan given, guarantee given and security made during the financial year 2018-19 in terms of Section 186(4) of the Act is not applicable.
7. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions entered into during the financial year were on an arms length basis and in the ordinary course of business. During the year the Company had not entered into any transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions and in terms of Section 188 of the Act and Listing Regulations.
The policy on Related Party Transactions as approved by the Board may be accessed on the Companys website at http://www.hathwav.com/About/Policies
8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as required under the provisions of Section 134(3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure - III which forms part of this Report.
9. RISK MANAGEMENT
The Board of Directors of the Company have designed Risk Management Policy and guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Companys businesses and define a structured approach to manage uncertainty and to make use of these in their decision-making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews.
10. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Board of Directors of the Company have pursuant to the provisions of Section 178(9) read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 of the Act, framed "Vigil Mechanism Policy" for directors and employees of the Company. The said policy provides a mechanism which ensures adequate safeguard to employees and directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc. This Policy is available on the Companys website at www.hathway.com
The employees of the Company have the right/option to report their concern/ grievance to the Chairman of the Audit Committee.
Your Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.
11. MATERIAL ORDERS OF JUDICIAL BODIES/ REGULATORS
There were no significant or material orders passed by the Regulators/Courts/Tribunals/Statutory and quasijudicial body which impact the going concern status and Companys operations in future.
12. AUDITORS AND REPORTS
The matters related to Auditors and their Reports are as under:
a. Observations of Statutory Auditors on Accounts for the year ended 31st March, 2019:
The report of Statutory Auditors on accounts for the year ended 31st March, 2019 forms part of the financial statement. The observations made by the Statutory Auditors in their report for the financial year ended 31st March, 2019 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board of Directors under Section 134(3) of the Act.
b. Secretarial audit report for the year ended 31st March, 2019:
M/s. Rathi and Associates, Company Secretaries had been appointed to conduct the Secretarial Audit and to issue Secretarial Audit Report for the financial year 2018-19.
Secretarial Audit Report issued for the financial year 2018-19 forms part of this Report and the same is attached as Annexure - IV. The said Report does not contain any qualification, reservation, adverse remark or disclaimer.
c. Cost Auditors:
On the recommendation of the Audit Committee, the Board of Directors have appointed M/s. Ashok Agarwal & Co, Cost Accountants, as the Cost Auditors of the Company for the financial year 201920. The Cost Audit Report will be filed within the stipulated period of 180 days from the closure of the financial year.
13. COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS
The Board of Directors of the Company have complied with Secretarial Standards 1 and 2 relating to Meetings of the Board of Directors and General Meetings, respectively and has voluntarily adopted Secretarial Standard 4 relating to Boards Report to a reasonable extent possible.
14. ANNUAL RETURN
As required under the 134(3)(a) of the Act, the Annual Return placed on the website of the Company may be accessed on the Companys website at http://www. hathwav.com/About/AnnualReport.
15. OTHER DISCLOSURES
OTHER DISCLOSURES AS PER PROVISIONS OF SECTION 134 OF THE ACT READ WITH COMPANIES (ACCOUNTS) RULES, 2014 ARE FURNISHED AS UNDER
Corporate Governance: (Applicable to Companies giving remuneration as per Section II of Schedule V):
|All elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc. of all the directors (Applicable only in case of Managing Director)||26,840,521*|
|Details of fixed component and performance linked incentives along with the performance criteria||Fixed: र 22,374,521 * Variable: र 4,466,000|
|Service contracts, notice period, severance fees||-|
|Stock option details, if any and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable||Mr. Rajan Gupta will be granted 5,360,000 ESOPs at a price of र 19 per option under the Employee Stock Option Plan 2018, upon exercise of which he will be entitled to 5,360,000 equity shares in the Company. The ESOPs granted to the MD shall vest upon completion of his 3-year term (Vesting Date). He would be entitled to exercise the ESOPs within a period of 135 days of the Vesting Date.|
includes provident fund of र 760,320/-
16. MANAGEMENT DISCUSSION AND ANALYSIS
In terms of provisions of Regulation 34 of SEBI (LODR), the Management Discussion and Analysis is set out in the Annual Report of the Company.
17. DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
There were no cases/complaints filed during the year, under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Further, the Company has constituted an internal Complaints Committee as required under the said Act.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
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 as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.
3. issue of sweat equity shares to employees of the Company as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014.
4. issue of equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1 )(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.
5. Instances of exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.
6. Issue of debentures/bonds/warrants/any other convertible securities.
7. instances of transferring the funds to the investor Education and Protection Fund.
8. Payment of remuneration or commission from any of its holding or subsidiary companies to the Managing Director of the Company.
9. Details of any application filed for corporate insolvency under Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.
10. There were no frauds reported by the auditor of the Company pursuant to sub-section 12 of section 143 of the Act.
11. Statement of deviation or variation in connection with preferential issue.
19. ACKNOWLEDGEMENTS AND APPRECIATION:
Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/ associates, financial institutions, Regulatory bodies and Central and State Governments for their consistent support and encouragement to the Company.
For and on behalf of the Board
|Rajan Gupta||Viren Raheja|
|DIN 07603128||DIN 00037592|
|Date: 15th April, 2019|
|Rahejas, 4th Floor, Corner of Main Avenue & V. P Road,|
|Santacruz West, Mumbai 400054|
|Tel No. 022-26001306 Fax No. 022-26001307|
DISCLOSURE FOR RATIO OF REMUNERATION OF EACH DIRECTOR TO THE MEDIAN REMUNERATION OF THE EMPLOYEES OF THE COMPANY AND OTHER DETAILS AS PER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) AMENDMENT RULES, 2016
Median Remuneration: र 839,700/-
Except Managing Director, no other director has been paid any remuneration. Remuneration paid to Mr. Rajan Gupta, Managing Director of the Company for the year ended 31st March, 2019 is र 26,840,521/-
The percentage increase in the median remuneration of employees in the financial year: 17.44
The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year:
|Sr. No.||Name of the Director*/KMP & their Designation||Remuneration of Director/ KMP for financial year 2018-19 (Amount in )||% increase in Remuneration in the Financial Year 2018-19||Ratio of remuneration of each Director to median remuneration of employees|
|1.||Mr. Rajan Gupta||26,840,521||22.47%||27.44|
|2.||Mr. Sitendu Nagchaudhuri||11,797,954||-||--|
|Chief Financial Officer|
|3.||Mr. Ajay Singh||7,964,993||14.73%||--|
|Head Corporate Legal, Company Secretary and Chief Compliance Officer|
Note: *Remuneration is paid only to Managing Director and not to other directors of the Company.
There were 387 permanent employees on the rolls of the Company.
The remuneration paid to Managing Director is as per the Nomination and Remuneration Policy of the Company and the remuneration paid to the employees of the Company is as per the Companys Human Resource Policy.
Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year is 83.
The percentile increase in managerial remuneration in the last financial year is also 50.
STATEMENT PURSUANT TO RULE 5(2) OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) AMENDMENT RULES, 2016:
A. List of top 10 employees of the Company in terms of remuneration drawn and employees who drew remuneration during the financial year not less than र 1.02 Crores per annum:
|Sr. No.||Name||Designation||Date of Joining||Remuneration (in )||Age (years)||Experience (Years)||Qualification||Last employment and designation held|
|1.||Mr. Rajan Gupta||Managing Director||01-07-2014*||26,840,521||45||19||MBA, BE (Civil)||Tata Teleservices Limited- Chief Operating Officer|
|2.||Mr. Sitendu Nagchaudhuri||Chief Financial Officer||02-07-2018||11,797,954||50||28||Chartered Accountant||Navin Fluorine International Limited-Chief Financial Officer|
|3.||Mr. Dulal Banerjee||Financial Controller & Chief Commercial Officer||01-11-1999||10,794,330||48||23||B.Com (Hons.), M.Com, ICWA (Inter)||IndusInd Media & Communications Limited- Senior Executive|
*He joined as President-ISP on 1st July, 2014 and was re-appointed as Managing Director of the Company on 25th November, 2018.
1. The contractual terms of Mr. Rajan Gupta are governed by the resolution passed by the shareholders through postal ballot on 4th October, 2018.
2. The employee mentioned above is not related to any of the Directors of the Company within the meaning of Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules,2016.
3. None of the employees of the Company, who were employed throughout the financial year 2018-19, were in receipt of remuneration in excess of that drawn by the managing director and hold by themselves or along with their spouse and dependent children, not less than two percent of the equity shares of the Company.
4. Except Mr. Rajan Gupta, none of the employees employment is contractual in nature.
5. Remuneration of managerial personnel as per Schedule V of the Companies Act, 2013 includes salary, bonus, performance linked incentive, commission, various allowance, contribution to provident fund and superannuation fund and taxable value of perquisites but excluding provision for gratuity and leave encashment.
B. Employees employed for the part of the year and drew remuneration during the financial year 2018-19 at a rate which in aggregate was not less than र 8.50 Lakhs per month: N.A.
|Sr. No.||Designation||Date of Joining||Remuneration||Age (years)||Experience (Years)||Qualification||Last employment and designation held|
C. Names of top ten employees of the Company in terms of remuneration drawn:
|Sr. No.||Name||Remuneration Drawn (in )|
|1||Mr. Rajan Gupta||26,840,521|
|2||Mr. Sitendu Nagchaudhauri||11,797,954|
|3||Mr. Dulal Banerjee||10,794,330|
|4||Mr. Ruzbeh Jaorewalla||9,290,558|
|5||Mr. Nagakishore Sure||9,164,605|
|6||Mr. Vivekanand Tripathi||8,896,674|
|7||Mr. Ajay Singh||7,964,993|
|8||Mr. Sarathy Kovil Kandadai||7,473,715|
|9||Mr. Rajesh Bhaskaran||6,524,000|
|10||Mr. Santanu Banerjee*||6,379,820|
* Resigned during the year.
For and on behalf of the Board
|Rajan Gupta||Viren Raheja|
|DIN 07603128||DIN 00037592|
|Date: 15th April, 2019|
|Rahejas, 4th Floor, Corner of Main Avenue & V. P Road,|
|Santacruz West, Mumbai 400054|
|Tel No. 022-26001306 Fax No. 022-26001307|
ANNEXURE - II AOC -1
STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENTS OF SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES, PURSUANT TO SECTION 129 (3) OF THE COMPANIES ACT, 2013 READ WITH RULE 5 OF THE COMPANIES (ACCOUNTS) RULES, 2014
Reporting period : 01/04/2018 to 31/03/2019 & Reporting Currency in INR
|Sr. No.||Name of the Subsidiary||Note||Date of Acquisition||Share Capital||Reserves and Surplus||Total Assets||Total Liabilities||Investments||Turnover||Profit before taxation||Provision for taxation||Profit after taxation||Proposed Dividend||%of Shareholding|
|1||Channels India Network Private Limited||20/04/1995||0.09||(1.41)||0.02||1.34||-||0.00||-||-||-||N.A||95.63|
|2||Vision India Network Private Limited||07/04/1998||0.09||(2.15)||0.01||2.07||-||0.00||-||-||-||N.A||100.00|
|3||Liberty Media Vision Private Limited||07/04/1998||0.01||(2.28)||0.07||2.34||-||0.01||0.00||-||0.00||N.A||100.00|
|4||Ideal Cables Private Limited||07/04/1998||0.08||(0.86)||0.00||0.78||-||0.00||(0.00)||-||(0.00)||N.A||100.00|
|5||Hathway Channel 5 Cable & Datacom Private Limited||07/04/1998||0.49||(0.15)||4.16||3.83||-||0.00||(0.02)||-||(0.02)||N.A||51.00|
|6||Bee Network & Communication Private Limited||07/04/1998||0.10||(1.44)||-||1.34||-||0.00||-||-||-||N.A||100.00|
|7||Elite Cable Network Private Limited||07/04/1998||0.06||(0.08)||-||0.02||-||0.00||-||-||-||N.A||80.00|
|8||Binary Technology Transfers Private Limited||07/04/1998||0.01||(1.65)||0.00||1.64||-||-||-||0.00||(0.00)||N.A||100.00|
|9||Hathway Media Vision Private Limited||13/08/1998||0.07||(0.14)||5.10||5.18||1.85||-||(0.00)||-||(0.00)||N.A||100.00|
|10||UTN Cable Communication Private Limited||31/05/1999||0.76||(22.85)||6.34||28.43||-||7.77||(6.92)||-||(6.92)||N.A||100.00|
|11||ITV Interactive Media Private Limited||09/09/1999||0.08||(0.50)||0.03||0.45||-||0.00||-||-||-||N.A||100.00|
|12||Chennai Cable Vision Network Private Limited||30/09/1999||0.18||(2.18)||0.00||2.00||-||0.00||-||-||-||N.A||75.99|
|13||Win Cable and Datacom Private Limited||15/03/2000||0.20||(19.90)||0.52||20.22||-||0.00||(0.00)||-||(0.00)||N.A||100.00|
|14||Hathway Space Vision Cabletel Private Limited||15/03/2000||0.01||(1.05)||0.00||1.04||-||0.00||-||-||-||N.A||100.00|
|15||Hathway Software Developers Private Limited||21/03/2000||0.76||(13.36)||10.49||23.09||0.00||4.92||(5.63)||-||(5.63)||N.A||100.00|
|16||Hathway Nashik Cable Network Private Limited||17/06/2000||0.05||(10.45)||0.00||10.40||-||0.00||(0.03)||-||(0.03)||N.A||90.06|
|17||Hathway Cnet Private Limited||27/07/2000||0.10||(0.53)||0.02||0.45||-||0.00||0.00||-||0.00||N.A||100.00|
|18||Hathway United Cables Private Limited||01/12/2000||0.01||(0.17)||0.02||0.18||0.00||0.00||(0.00)||-||(0.00)||N.A||100.00|
|19||Hathway Internet Satellite Private Limited||01/01/2001||0.01||(1.64)||0.00||1.63||-||-||(0.00)||0.00||(0.00)||N.A||100.00|
|20||Hathway Krishna Cable Private Limited||22/07/2002||7.81||(21.69)||7.37||21.25||0.00||10.01||(6.89)||-||(6.89)||N.A||100.00|
|21||Hathway Mysore Cable Network Private Limited||29/11/2003||1.04||(20.42)||4.16||23.53||0.00||4.56||(5.61)||-||(5.61)||N.A||100.00|
|22||Hathway Prime Cable & Datacom Private Limited||03/02/2006||0.45||(0.52)||0.23||0.31||-||0.00||(0.00)||-||(0.00)||N.A||51.00|
|23||Hathway Gwalior Cable & Datacom Private Limited||01/05/2007||0.01||(0.59)||0.05||0.63||-||-||(0.00)||-||(0.00)||N.A||100.00|
|24||Hathway Digital Saharanpur Cable & Datacom Private Limited||01/03/2008||0.02||(4.26)||0.53||4.77||-||0.03||(0.07)||-||(0.07)||N.A||51.00|
|25||Hathway Enjoy Cable Network Private Limited||07/06/2007||0.01||(0.00)||0.01||0.01||-||0.00||-||-||-||N.A||100.00|
|26||Hathway JMD Farukhabad Cable Network Private Limited||01/05/2007||0.01||(0.01)||0.01||0.00||-||0.00||-||-||-||N.A||100.00|
|27||Hathway Kokan Crystal Cable Network Private Limited||01/11/2011||0.15||(1.34)||5.26||6.45||-||2.58||(3.24)||(0.70)||(2.54)||N.A||96.36|
|28||Hathway Latur MCN Cable & Datacom Private Limited||15/01/2008||0.10||0.08||2.24||2.07||-||4.42||0.05||0.18||(0.13)||N.A||51.00|
|29||Hathway MCN Private Limited||01/06/2007||1.89||3.43||13.77||8.45||0.41||17.67||(0.94)||0.65||(1.60)||N.A||51.00|
|30||Hathway Sonali OM Crystal Cable Private Limited||01/06/2008||0.10||(13.10)||3.03||16.03||-||2.11||1.67||-||1.67||N.A||68.00|
|31||Hathway ICE Television Private Limited||15/10/2007||0.20||(0.81)||1.04||1.65||-||-||(0.00)||-||(0.00)||N.A||51.00|
|32||Hathway Digital Private Limited||31/12/2007||355.73||(565.33)||1,363.24||1,572.85||13.96||1,037.30||(545.83)||(170.57)||(375.26)||N.A||100.00|
|33||Net 9 Online Hathway Private Limited||4||01/03/2008||0.01||2.08||3.74||1.65||-||7.32||0.14||0.03||0.11||N.A||50.00|
|34||Hathway New Concept Cable & Datacom Private Limited||01/09/2008||0.15||(0.99)||11.07||11.91||-||4.88||(0.73)||-||(0.73)||N.A||100.00|
|35||Hathway Sai Star Cable & Datacom Private Limited||01/09/2008||0.14||33.72||42.93||9.07||-||20.15||(3.61)||-||(3.61)||N.A||51.00|
|36||Hathway Cable MCN Nanded Private Limited||3||17/06/2008||3.36||(2.95)||3.21||2.80||-||5.56||0.64||0.67||(0.03)||N.A||45.05|
|37||Hathway Palampur Cable Network Private Limited||01/04/2008||0.03||0.31||1.36||1.01||-||0.00||(0.12)||-||(0.12)||N.A||51.00|
|38||Hathway Mantra Cable & Datacom Private Limited||30/08/2008||0.01||(18.72)||9.31||28.02||-||15.62||(5.95)||-||(5.95)||N.A||100.00|
|39||Hathway Dattatray Cable Network Private Limited||13/05/2009||0.04||(6.31)||4.46||10.73||-||11.03||(0.14)||-||(0.14)||N.A||51.00|
|40||Hathway CBN Multinet Private Limited||1||01/07/2008||0.05||0.21||5.16||4.90||-||4.47||0.21||(0.01)||0.21||N.A||51.00|
|41||Hathway CCN Multinet Private Limited||1||01/07/2008||0.48||2.28||8.63||5.87||-||7.04||(1.14)||(0.53)||(0.61)||N.A||51.00|
|42||Hathway CCN Entertainment (India) Private Limited||1||01/07/2008||0.50||0.54||5.30||4.27||-||6.00||(2.09)||(0.01)||(2.09)||N.A||51.00|
|43||Hathway Bhaskar CCN Multi Entertainment Private Limited||1||29/09/2011||0.01||0.01||0.88||0.86||-||0.05||(0.28)||0.03||(0.31)||N.A||70.00|
|44||Hathway Bhawani Cabletel & Datacom Limited||2||31/08/2009||8.10||(11.95)||3.38||7.23||0.41||4.90||0.06||-||0.06||N.A||51.60|
|45||Hathway Bhawani NDS Network Private Limited||5||13/10/2010||1.55||(0.94)||0.76||0.15||0.01||1.15||(0.10)||(0.03)||(0.07)||N.A||26.32|
|46||Hathway Broadband Private Limited||15/10/2014||2.50||0.69||3.20||0.01||-||0.25||0.24||0.06||0.18||N.A||100.00|
1 Held through subsidiary Hathway Digital Private Limited (Formerly known as Hathway Datacom Central Private Limited)
2 Partly held directly by Hathway Cable and Datacom Limited and partly through its subsidiary Hathway Media Vision Private Limited
3 Held through its subsidiary Hathway MCN Private Limited and has control over the Board of Directors.
4 Subsidiary based on our Companys right to appoint majority of directors on the board of the Subsidiary Company.
5 Held through subsidiary Hathway Bhawani Cabletel & Datacom Limited
6 Definition of Subsidiary, Associate and JV has been considered as per Companies Act,2013. However some subsidiaries have been considered as Joint Venture as per definition given under Indian Accounting Standards.
PART - B:
Statement pursuant to section 129(3) of the Companies Act, 2013 relating to Associate Companies and Joint Ventures
(? In Crores unless otherwise stated)
|Sr. No.||Name of Associates/Joint Ventures||GTPL Hathway Limited (f.k.a GTPL Hathway Private Limited)||Pan Cable Services Private Limited||Hathway VCN Cablenet Private Limited||Hathway SS Cable & Datacom LLP|
|1||Latest Audited Balance Sheet||31 March 2019||31 March 2019||31 March 2019||31 March 2019|
|2||Date of Acquisition||12 October 2007||10 May 1995||18 March 2009||30 September 2012|
|3||Shares of Associate/Joint Ventures held by the Company on the year end|
|Amount of Investment in Associates/Joint Venture||168.75||0.00||0.10||0.00|
|Extent of Holding %||37.32||33.33||25.03||51.00|
|4||Description of how there is significant influence||By virtue of holding more than 20% of the total share capital of the Company.||The Holding Company by virtue of the Share Holding Agreement signed with JV Partners, has power to participate in the Operations and Financial activities of the Company||The Holding Company by virtue of the Share Holding Agreement signed with JV Partners, has power to participate in the Operations and Financial activities of the Company||By virtue of joint arrangement whereby the Company has joint control and has the rights to the net assets of the arrangement.|
|5||Reason why the Associate/Joint Venture is not Consolidated||NA||NA||NA||NA|
|6||Networth attributable to Shareholding as per latest audited Balance sheet||247.68||(0.21)||(2.02)||(1.14)|
|7||Profit/Loss for the year|
|(i) Considered in Consolidation||7.15||0.00||0.00||(0.20)|
|(ii) Not Considered in Consolidation||NA||NA||NA||NA|
Note: During the financial year 2017-18, the investment (49%) in equity shares of Hathway Patiala Cable Private Limited (formerly known as Hathway Sukhamrit Cable & Datacom Private Limited) was classified as investment in Joint Venture. However, the management no longer intends to exercise its influence in operations of Hathway Patiala Cable Private Limited. Accordingly, such interest in Hathway Patiala Cable Private Limited has been reclassified and measured as financial assets in terms of Ind AS 109.
DISCLOSURE PURSUANT TO SECTION 134(3)(m) OF THE COMPANIES ACT 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS), RULES 2014
(A) Conservation of energy:
|Steps taken or impact on conservation of energy|
|Steps taken by the Company for utilizing alternate sources of energy||Not Applicable|
|Capital investment on energy conservation equipment|
|(B) Technology absorption:|
|Efforts made towards technology absorption|
|Benefits derived like product improvement, cost reduction, product development or import substitution||Not Applicable|
In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):
| Details of technology imported|
| Year of import|
| Whether the technology has been fully absorbed||
| If not fully absorbed, areas where absorption has not taken place, and the reasons thereof|
|Expenditure incurred on Research and Development|
(C) Foreign exchange earnings and Outgo:
|1st April, 2018 to 31st March, 2019 [Current F.Y.]||1st April, 2017 to 31st March, 2018 [Previous F.Y.]|
|Actual Foreign Exchange earnings||1.95||0.00|
|Actual Foreign Exchange outgo||54.99||128.99|