Siti Networks Ltd Management Discussions.

Indian Economic Review

The Indian economy has been witnessing a deceleration in quarterly growth since the beginning of FY 2018-19. This downward trend in growth has been driven by a decline in private final consumption expenditure in Q2, on account of weak rural demand, coupled with deceleration in rural wages and a downturn in labour-intensive exports.

(Source: Monetary Policy Statement for 2019-20 - April 2020)

Source: tradingeconomics.com : Ministry of Statistics and Programme Implementation (MOSPI)

The last quarter of FY 2019-20 was overcast with concerns regarding the spread of the COVID-19 pandemic. With protecting health as the primary focus, a prolonged nationwide lockdown was mandated from March, 2020 which brought most economic activities to a standstill. The impact of this mandate was marginally visible in the last quarter of FY 2018-19, as the Indian economys growth slowed to 3.1%. This took the full year GDP growth to 4.2%, after the growth figures for previous quarters were revised downwards.

The Q4 figure was higher than most economists estimates, buoyed by the performance of the agriculture and mining sectors, which delivered good growth during the year. Government spending also contributed to keeping the growth rate from falling further as private consumption, gross fixed capital formation and net exports continued to be sluggish.

The government (MOSPI) issued a caveat with respect to the figures released as the data flow from various economic entities have been impacted by the nationwide lockdown since March 2020. Accordingly, the estimates released were based on the available data, although some data collection and mining units were yet to resume operations. Additionally, as the statutory timelines for submitting the requisite financial returns have been extended by the Government, the quarterly and annual estimates could undergo revision as and when the data flow resumes and more reliable estimates are available.

To combat the economic impact of the lockdown, the Government and the RBI have announced a series of stimulus measures targeted at various sections of the economy. Some of these have been aimed at offering respite from procedural mandates, such as extending the deadlines for filing of returns, while others have been in the form of availability of credit or moratoriums from repayment, grants and amendments to policies to facilitate MSMEs and agriculture segment. Most pertinently, the PM unveiled a vision for the nation – Atmanirbhar Bharat Abhiyan – which advocates self-reliance by bringing the focus back to local-level enterprises and facilitation of those at the bottom of the pyramid.

Outlook

Predicting the path of recovery is a challenge on two counts – it is an unprecedented situation and simultaneously, the event is still playing out and therefore, could take a turn for the better or worse before a return to normalcy (or a new normal) emerges.

Nevertheless, estimates suggest that due to the unparalleled losses that resulted from the lockdown in the first quarter of FY 2020-21 (Apr-June), the Indian economys GDP will contract substantially during this period. While a report by State Bank of India puts this figure at over 40% in Q1 FY 2020-21, ratings agency CRISIL expects a contraction of 25%.

Source: https://www.business-standard.com/article/economy-policy/fitch-ratings-crisil-sbi-research-see-india-economy-shrinking-in-fy21-120052700029_1.html

Estimates for growth during the rest of the financial year are more sanguine, based on expectations of pent-up demand that could unfold immediately after the lockdown. However, some economists point out that lower incomes and job losses could act as a drag on consumption. Further, the deep-seeded fear instilled in the minds of consumers may result in a change in consumption patterns and intensity, with a preference towards saving for future crises.

INDUSTRY REVIEW

Media & Entertainment Industry

The Media & Entertainment industry has grown by 9% in 2019 to reach 1.82 trillion (USD25.7 billion). This growth has largely been fuelled by online gaming, digital media & animation and VFX, which reporting growth rates of 39.8%, 30.9% and 20.3%, respectively, in 2019.1

Advertising revenue grew by 5.3%, showing a lower-grade growth due to the economic slowdown in 2019, whereas the subscription revenue grew by 9.3% in 2019, majorly driven by the jump in OTT video consumption.2

While Television and Print still dominated, the Digital media overtook Filmed entertainment to claim third largest spot in 2019. Sensing this, Digital advertising and Digital subscription accounted for a large share of marketers incremental and performance-driven advertising spends. While digital ads grew 24% in 2019, accounting for a share of 24% of total advertising revenues, up from 20% in 2018, Digital subscription more than doubled in 2019.

2018 2019 2020E 2022E CAGR
2019-22
Television 740 787 790 882 4%
Print 305 296 301 309 1%
Digital media 169 221 279 414 23%
Filmed entertainment 175 191 207 244 8%
Animation and 79 95 122 156 18%
VFX
Live events 75 83 94 122 14%
Online gaming 46 65 91 187 43%
Radio 34 31 33 36 5%
Music 14 15 17 20 10%
Total 1,674 1,822 1,965 2,416 10%

All figures are gross of taxes ( in billion) for calendar years : EY estimates

Certain segments of the video consumption space have witnessed a significant jump in their customer base, with Digital only3 and Tactical digital4 service consumers being the frontrunners, recording a growth of 220% and 183% respectively5.

Television (TV) Industry

The television industry witnessed a growth of 6.4%, from _ 740 billion in 2018 to 788 billion in 2019. Advertising contributed 320 billion or approximately 41%, of the overall segments revenue, whereas subscription comprised the majority of revenues standing at, 468 billion or 59% of the total revenues, as of 2019. In the television segment, while the advertising revenues grew by 5%, the subscription revenues recorded a growth of 7.5%, due to the increase in end-customer pricing in compliance with the NTO.

According to EY FICCI report 2020 figures, the number of MSO distribution platforms grew by a robust 11%, from 1,471 to 1,623, which can be attributed to the implementation of the NTO.

2018 2019 2020E 2022E
Advertising 305 320 341 388
Distribution 435 468 449 495
Total 740 788 790 883

INR billion (gross of taxes : EY estimates

The dip in AD revenue happened in CY 2020 and FY 2021. This was followed by a subdued growth in the second half due to the fear of an economic slowdown.

TAM AdEx data suggests that while overall ad insertions reduced by 2%, the insertions in the top 10 sectors grew by 0.4%. The lead contributor to ad spends on television remained the FMCG industry, which was also the primary growth driver, contributing 40% towards growth of the value of ad spends. The number of advertisers using television stood at 11,525. While national channel ad volumes dropped 6%, the regional channel ad volumes increased by 4%, the growth of which is a result of the positive impact of the NTO.

The coronavirus had a two-fold impact on the TV industry as a whole, on the one hand the viewership increased during the lockdown due to outdoor entertainment activities being curbed. On the other hand, there was a lack of fresh content due to prohibition of outdoor activities, including filming. At the same time, advertisement monetisation revenues were setback due to advertisers holding back on ad spending with the fear of economic uncertainties brought about by the coronavirus crisis.

1 EY FICCI ‘The era of A.R.T report 2020

2 The advertising and subscription revenue figures refer to the entire M&E industrys revenue, except live events, online gaming and Animation and VFX revenues. (FICCI EY M&E industry report 2020)

3 Definition: "consume content only on digital platforms, do not access television", EY FICCI ‘The era of A.R.T report 2020

4 Definition: "consume pay TV and at least one paid OTT service", EY FICCI ‘The era of A.R.T report 2020

5 EY FICCI ‘The era of A.R.T report 2020

Cable and Satellite

Alongside the trend of penetration of TV households rising year after year, Cable (Digital + Analog) controls 54% of Indias TV market.

Within that universe, the NTO brought about a significant change in active paid TV subscriptions. An emerging trend in 2019 was the shift from paid TV subscriptions to the free TV subscriptions due to a change in pricing models.

The number of paid TV subscriptions, including cable, DTH and HITS services fell from 161 million in 2018 to 133 million in 2019, whereas free TV subscriptions increased from 36 million to over 38 million subscribers.

2018 2019
Pay TV (Cable+DTH*+HITS) 161 133
Free TV 36 38+
Total unidirectional TV 197 171+
Connected TV <2 4.5
Total 199 175+

Television subscriptions in million : Industry discussions, billing reports, EY estimates for 2019; BARCs Broadcast India Survey for 2018

There was a sharp increase of over 56% in the viewership HD channels, due to the implementation of the NTO6. Moreover, broadcaster share of revenues grew by approximately 10-15% with a higher number of paid channels and higher ARPUs. Additionally, a prominent trend in the industry was an increase in news viewership as a percentage of total viewership from 7% in 2018 to 9% in 2019 due to an extra-normal number of major national events transpiring in 2019.

New Tariff Order – January 2020

Modifications to the NTO – 2019 brought welcome changes, giving more power to DPOs. Some of the key highlights:

Twin Condition

MRP of channels in a bouquet cant be more than 1.5x of Broadcaster bouquet price i.e. max 33% discount Channels in a bouquet cant be more than 3x the average channel price of that bouquet

Capping on Channel pricing

Capping of _12 for Pay Channels to be part of Broadcaster Bouquet Currently this capping is at _19

Simplified NCF Structure

Implementation of 2 slabs: Up to 200 channels – _130 + tax More than 200 channels – _160 + tax

Multi-TV Homes Addressed

NCF on Multi-TV is capped at 40% of the NCF

Definition of Multi-TV: Any HH having more than one STB in the name of same person

With the modifications, the number of broadcaster bouquets will be reduced, leading to an ease in selection and less load on DPO systems. It is estimated that tail-end Pay channels will turn FTA, leading to Placement/Carriage opportunity. With price capping, DPO packs with la carte will become attractive proposition for DPOs. There is a potential revenue upside from LCNs as they have been freed from carriage / penetration commitments.

Broadband

According to the EY FICCI report, internet subscriptions grew 20% between December 2018 and December 2019, with 91% of internet users relying on broadband connections. Broadband subscriptions grew 26% during the same period, eating into the share of narrow band, which fell 23%, in terms of subscriptions. With more than 660 million broadband subscribers, India has the second largest broadband subscriber base in the world.

Number of Internet Subscribers by Category (million)

Dec 20173 Dec 20184 Dec 20195
Total internet subscribers 446 604 723
Narrow band subscribers 83 79 61
Broadband subscribers 363 525 661
Urban internet subscribers 314 391 463
Rural internet subscribers 132 213 261

3. Yearly Performance indicators of the Indian Telecom Sector (second edition) 2017 released on May 4, 2018

4. The Indian Telecom Services Performance Indicators October – December 2018 released on April 4, 2019

5. Telecom Subscription Data as on November 30, 2019, Press release 09/2020, EY analysis

Another trend that gained momentum was the increase in wired broadband subscribers, which supports the growing preference for high speed internet and purchase of smart television sets.

Dec 20177 Dec 20188 Dec 20199
Wired broadband 18 18 20
Wireless broadband 345 507 641
Total broadband 363 525 661

Policy initiatives

National Broadband Mission

In December 2018, the Union Minister for Communication and Information Technology, Government launched the National Broadband Mission towards fast tracking growth of digital communications infrastructure, bridging the digital divide and providing affordable and universal access of broadband for all.

The Mission aims to provide broadband access to all villages by 2022. The Government envisages that this will entail laying down around 30 lac kilometres of Optical Fibre Cables, increasing tower density from 0.42 tower per thousand of population to 1.0 tower per thousand of population by 2024 and significantly improving the quality of services for mobile and internet users. Over the course of the mission, this will involve an investment of around _7 lac crore.

It will also entail developing innovative implementation models for Right of Way (RoW), Developing a Broadband Readiness Index (BRI) for measuring, Creating a digital fibre map, etc.

Industry Outlook

Overall, customer experience and choice have taken centre-stage with the implementation of NTO. The coming years will be focussed on providing more value on the wire, be it broadband, add-on services or hybrid set-top boxes.

The EY FICCI report estimates that the M&E industry as a whole can expect a growth of 7.8% in 2020 and an estimated CAGR of 10% in the period of FY 2019-22. However, it clarified that "The coronavirus impact on various segments of M&E could include postponement / cancellation of events, impact on theatrical revenues due to loss of weekends, stoppage of print production / circulation in impacted areas, newsprint import blockage, stoppage / delay of content production and post production, etc. Positives could include increased time spent with media in the home."

The unprecedented economic trends that are unfolding in the wake of the coronavirus pandemic and the lockdowns that followed appear to be having had a dual impact on the industry. While television viewership, OTT content consumption and online gaming saw a considerable growth due the lockdown, the monetisation models of almost all mediums have been severely impacted for various reasons.

In the wake of the COVID-19 pandemic, and the economic uncertainty that ensued, the flow of advertising revenue towards the M&E industry has begun to dry up. Availability of fresh content has also become a challenge on account of the lockdowns and need for social distancing. This has resulted in leveraging of existing content through reruns.

Notwithstanding, the Government has declared the C&S segment as an essential service. It has acknowledged the importance of this service in enabling social distancing by facilitating work from home. This is a clear endorsement of the segments relevance in the economic ecosystem.

Company Overview

SITI Networks Limited (the Company), a part of one of the leading business houses in the country – Essel Group, operates Indias leading digital TV network. The Essel Group has a diverse portfolio of assets in media, packaging, entertainment, technology-enabled services, infrastructure development and education sectors. The Company is one of Indias largest Multi System Operator (MSO) with 10 digital head ends, a network of over 33,000 kms of optical fibre and coaxial cables and over 24,000 LCO partner families. The Company has a footprint in ~800 locations, across 249 districts in 20+ states and UT in India. It serves a massive customer base of north of 45 million active customers.

The Company deploys state-of-the-art technology for delivering multiple TV signals to enhance consumer-viewing experience. Its product range includes High Speed Broadband, Digital Television, Broadband and Local Television Channels and Electronic Programming. The Company also provides a wide gamut of services ranging from OTT and High-speed gaming ready services to IoT Ready Network with security camera and surveillance services to even business solutions in the ILP & ILL domains.

The Company also runs an expansive partner platform, accessible through both online mediums in the form of an Android application and a website as well as a strong offline medium operated through a call centre.

Even during the pandemic and unprecedented lockdowns, our operations were not disrupted as they continued through cloud-based Call Centre services.

Operational Review

During FY 2019-20, due to continued focus on operational efficiencies and strict control over expenses, the Companys Operating EBITDA increased 1.18x YoY to _3,538 million as compared to _3,001 million in FY 2018-19. Operating EBITDA Margins have seen a consolidation in Q4FY20 and have remained largely stable, increasing to 21.6% from 21.2% in FY 2018-19.

The Companys continued focus on working closely with its distribution partners for increased utilisation of ground assets delivered results. Total revenues, excluding activation, increased to _ 16,354 million in FY 2019-20, registering 15.3% growth while subscription revenues surged 21.3% to _11,567 million during the same period. During the financial year, the subscription ARPU leaped to 1.74x YoY to _128.

Through the introduction of allied value-added services for its customers, as a result of the SITI Broadbands partnership with Zee 5, both entities have the opportunity to scale up their business and create value for their stakeholders with a strategic and focussed approach.

Operational Performance

During FY 2019-20, SITI Broadband expanded its presence through a mix of smart customer management and innovative offerings. A new SITI Broadband web and mobile interface has been introduced to enhance customer experience. SITIs continuous efforts to improve operational efficiencies through improvement of its systems, processes and personnel has been yielding results. This has resulted in a better and more intimate ground connect with its 24,000+ strong distribution network and increased focus on being fully compliant to the Tariff regime.

The success of the various initiatives undertaken by the Company has been well reflected in its performance. It has significantly increased its collection efficiency by shifting to the prepaid module.

Moving ahead, this is expected to improve further as the Company leverages the advantages of being a formal sector player in the NTO regime.

Customer Focus

During FY 2019-20, with the implementation of NTO, customer experience and choice has taken centre stage. The customer-centric multi-tier packaging has begun to address both consumption behaviour and ARPU. At the same time, access to the customers has improved via the self-service portal for payment, package change, invoices, etc. This has enhanced connect which was formerly limited only to call centre interaction.

Accordingly, the Company has initiated a mix of smart customer management and innovative offerings to engaged customers. To ensure transparency in pricing policies, the Company ensures uniform commercial policies and for better Subscriber Management, OYC Subscriber Management Systems, ConaxCAS and SAP-based systems are in place.

With superior technology offerings, including the latest MPEG4 STBs and broadband through Hybrid (DOCSIS 2/3 & GPON) Network, the Company ensured that its customers enjoyed superior viewing experiences through better visual quality as well as absence of lags and buffering.

ARPU and Monetisation

As the NTO (March 2019) played out, consumer ARPUs began to rise. In the pre-NTO era, there existed a single ARPU for the entire region with Fixed content cost baked in it, ranging from ~_50 to 75 for the industry. Now, with the implementation, gross ARPU ranges around _120 to _130 (excl. Tax) per Subscription.

The Company registered a 21.3% YoY increase in Subscription Revenue to _11,567 million. The Subscription ARPU increased 1.74x YoY to _ 128. With the new tariff regulatory regime being reinforced and a range of curated offerings, the Company is well-positioned to benefit and grow its ARPUs further.

Content Cost

From content costs being fixed in nature, it is now based on the customers choice, with the advent of the NTO. This gave MSOs more negotiating power over broadcasters with respect to discounts and incentives.

This has also eliminated the content risk for the Company, as the content cost are now collected directly from the subscribers and passed through to the broadcaster. The closer control over content costs has worked in favour of the Company.

Marketing and Packaging

With greater online connect with consumers, the Company has been communicating its packaging more effectively. During the year, it has focussed offering content for the entire family and widened the choices for subscribers. With multiple My SITI Value packs, it has been able to reach out to subscribers with varying tastes in content consumption as well as varying budgets.

The upgraded Website and enhanced Contact Centres capabilities were together able to cater to the increased subscriber base as they were equipped to meet the increased volume of customer connect which had various levels of tech comfort.

During FY 2019-20, the page views on SITIs website increased by 57.32% while the number of sessions grew by 40.6%.

The Company continued to make available subscriber education and support in multiple languages at Toll Free Support Numbers and on the Subscriber Information Channel through videos and tutorials.

All-in-all, with more customer-centric multi-tier packaging, the consumption behaviour of customers has become more demand-driven, which has reduced the push-factor that was earlier required.

Established Promoter Group

SITI Networks is a part of the prominent Essel Group, which was established almost a century ago. As one of Indias leading business houses, with a dominant vertically integrated presence in Media and Entertainment, it is a foremost producer, aggregator and distributor of Indian programming across the world.

The Group has over 250,000 hours of original content, a bouquet of 75 channels, a reach of over 1.3 billion viewers spread across 171 countries. This deep reach facilitates SITI Networks strong business connect and enables the Company to capitalise on various business opportunities while adhering to the Groups high compliance standards and prompt migration to new applicable statutes.

The Group also has a presence in infrastructure, education, precious metal refineries, health, lifestyle and wellness, etc.

Experienced Management Team

The leadership and management teams are constantly finding ways to improve operations and enhance consumer experiences. While striving for business sustainability, disciplined execution, operating efficiencies and cost optimisation, it also dedicatedly upholds SITIs core value system which includes keeping customers first, setting audacious goals, being frugal, showing respect, humility and integrity, targeting speed and agility, being accountable for results and promptly solving problems. Most importantly, it fosters a work environment which supports best business practices and high work ethos. Most importantly, it fosters a work environment which supports best business practices and high work ethos, by hiring professionals with the desired skill sets to ensure.

Compliance, Integrity, and Work Ethics

SITI Networks basis all its business operations on a firm foundation of best-in-class industry standards of professionalism and compliance. It has always ensured high levelsofcomplianceandensuresthatitsday-to-dayoperations are bound by ethics and a high level of transparency, across processes and in dealings with all stakeholders. As a case in point, the Company was one of the first MSOs to implement NTO-related compliance.

Financial Review

The Company has successfully incorporated the Ind AS form of book keeping for recording accounts in accordance with guidelines issued by the Ministry of Corporate Affairs.

The main highlight of FY 2019-20 has been the sterling expansion of operating EBITDA, through strict control on expenses and operational efficiencies across all metrics.

The total consolidated revenue from operations stood at _ 16,185.85 million in FY 2019-20 as compared to _ 14,421.34 million in FY 2018-19, registering a growth of 12.23%. On a standalone basis, revenue from operations fell from _8,212.75 million in FY 2018-19 to _8,189.39 million in FY 2019-20.

Total Expenditure

Total consolidated expenditure excluding depreciation, expenditure and finance costs stood at _17,813.31 million in FY 2019-20 compared to 16,542.07 million in FY 2018-19, up 7.68%. This included Cost of Materials consumed, Purchases of stock-in-trade, Pay channel, carriage sharing and related costs, Employee benefits, finance costs, depreciation and amortisation expenses and other expenses.

On a standalone basis, costs decreased from _ 10,209.72 million in FY 2018-19 to _ 9,820.48 million in FY 2019-20. This was due to a decline in purchase of stock-in-trade and a reduction in finance and employee costs, amongst other_things.

EBITDA

Operating EBITDA of the Company stood at _3,538 million in FY 2019-20 rising 1.18x over the previous year.

Finance Cost

Finance cost stood at _ 1,318.22 million in FY 2019-20 as compared to _1,537.33 million in FY 2018-19 on a standalone basis, marking a decline of 14.25%.

Balance Sheet Metrics Fixed Assets

On a standalone basis, Total assets declined from _ 18.99 billion in FY 2018-19 to _15.40 billion in FY 2019-20. Total Non-current assets also declined from _ 13.17 billion to _11.26 billion during the same period.

Current Assets

Current Assets declined from _5.82 billion in FY 2018-19 to _4.14 billion during the year under review.

Current Liabilities

Current Liabilities rose from _13.37 billion in FY 2018-19 to _14.5 billion in FY 2019-20, marking a growth of 8.45%.

Outlook

While deepening its presence in existing markets, over the years, SITI Networks has integrated forward and backward and moved into strategically associated segments as well. It has evolved into an integrated platform, which provides a host of services including High Speed Broadband, Digital TV and OTT & High-Speed Gaming Ready. Beyond Media and Entertainment facilitators, it also offers IoT Ready Network with Security Camera & Surveillance Business Solutions (ILP, ILL). Effectively, the current future-ready network architecture, comprising video and broadband network infrastructure, offers a complete Smart Network.

These services are offered on Customer-Friendly Platform that entails an intuitive mobile app, a responsive website and call centre support, with options to choose unique services or the entire FTTH Network for broadband and video.

While following a hybrid approach to delivering both the medium as well as content, it has upgraded the Cable Operator to an Integrated Service Provider who offers customers TVs, internet and IoT equipment.

With this opportunity to scale-up business ambitions, the Company looks forward to strengthening its Integrated Services Play in the future.

Risk Management and Mitigation

The Company has established systems and reporting structures in place as a part of an all-inclusive risk management framework. This framework is aimed at timely identification, evaluation and pre-emption of potential risks. Appropriate risk mitigation measures are established to overcome adverse situations which may arise on account of foreseeable risks.

Preference Risk: Within the ever-changing and evolving M&E industry, with more power being given to consumers to express their preferences, businesses in the industry must keep up with shifting preferences to pre-empt loss of consumer interest.

Mitigation: The Company proactively innovates, upgrades and renews its offerings. It constantly seeks to enhance the quality of infotainment content which it presents its consumers. Its focus on HD and OTT enables it to provide enriched subscriber experiences. Being an integrated player also facilitates the Company as it can offer the superlative broadband speed and striking data plans to the consumers to complement viewing experiences.

Awareness Risk: There is a constant need for the Company to conduct training of the Business Partners who are the main growth drivers of the business.

Mitigation: In addition to regularly collaborating with Business Partners to provide real-time training and branding know-how, the Company has provided its Business Partners with subscriber management software to help them efficiently manage their subscribers and to incentivise and motivate them, the carriage fees are shared with them. To ensure high brand recall, the Company undertakes an outreach programme for its broadband services and spreads awareness among subscribers about its offerings.

Further, its services are offered on a Customer-Friendly Platform that entails an intuitive mobile app, a responsive website and call centre support, with options to choose unique services or the entire FTTH Network for broadband and video.

Content Risk: The ability to provide content from broadcasters that is mapped to customer demand is crucial for companies in the segment. This forms the basis of their ability to successfully attract and retain subscribers and maintain competitiveness and brand equity.

Mitigation: SITI Broadband has recently partnered with Zee 5, Indias fastest growing OTT platform, to promote premium content to SITIs high speed broadband customers. At a broader level, as a part of the Essel Group, it enjoys access to the parent companys diverse portfolio of assets in media, packaging, entertainment, technology-enabled services, infrastructure development and education segments. The Company has also entered into top agreements with all major broadcasters, which in turn will enable it to offer consumers a wide range of offerings.

Talent and Technology Risk: In the industry, attracting and retaining skilled professionals is imperative for the Company to execute and expand its business frontiers. At the same time, in an ever-changing environment, it becomes crucial for the Company to ensure that it utilizes the latest technologies.

Mitigation: The Companys cable and broadband businesses employs highly skilled professionals at the top rung from multiple consumer-facing industries. Similarly, the sales team also has rich experience. To encourage its employees to be decisive and responsible, the Company has in place a performance-linked culture.

Where technology is concerned, the Company is fast moving towards becoming an integrated provider of the entire range of devices that comprise a Smart Network with its Future-Ready Network Architecture.

Product Risk: With constant upgrades in available technology, there is a substantial risk arising from migration of subscribers from traditional cable to content which is available in a non-linear fashion.

Mitigation: Keeping up with the times, the Company has been shifting its focus to OTT and Broadband Services, which enables it to meet the evolving subscriber needs. Further, its strong subscriber relationships and committed substantial investments on broadband services puts the Company in a strong place to mitigate product-related risks.

Policy and Economic Risk: The outbreak of coronavirus and policy measures that had to be implemented to stem the contagion had an immense impact on the economy, in general. Such events could completely disrupt the functioning of corporates.

Mitigation: The Company has a robust Business Continuity Plan in place that not only covers its own survival but that of its downstream business partners as well.

Human Resource Development

At SITI, our valued mantra for propelling the growth has been our focus on 3 Ps – People, Processes and Performance. Towards this end, we have developed a competency model to ensure that expectations and delivery are well articulated right at the beginning of every employees journey. We also communicate these essentials to existing employees through the AOP.

People are the heart of our organisation. This makes it imperative for each one of us to speak a common language and become mirror images for one another. While we have disciplined the DNA of our organisation through a competency framework, we have also ensured that every new entrant falls comfortably into the discipline, right from the beginning. This way, our ubiquitous language gets internalised by everyone in the organisation.

While we realise that it is imperative for the organisation to grow vertically, we believe that it is crucial for every individual, at a granular level, to grow horizontally and take leaps vertically. Accordingly, we promote the learning and development of all our people with technology-fuelled initiatives. LEARNING for ALL, launched ‘Project Learn, which has made training accessible to all, through a multi-pronged approach.

The base of the pyramid which works as the foundation for our organisation has been trained and certified by the SKILL INDIA initiative, free of cost. This has been very beneficial for our Techno-Commercial Layer. It has also helped solidify the initiative of collapsing and merging the technical and sales roles into one. This has resulted in everyone in market-facing roles being able to service customers better, be it B2B or B2C.

We have created training modules in collaboration with HODs and SMEs and made them accessible to all by recording the live training sessions. Our Sitizens can access them at their convenience from their desktop and laptops.

Processes for other avenues and modes of online training are being carved out and learning will remain the focus area. The processes will evolve continually, giving individuals and the organisation more visibility, which in turn will give progress greater predictability too.

While broadband expansion will be our thrust area in the times to come and equally so for the video business, we will be constantly making innovative endeavours to upskill our talent pool.

There have been several new initiatives aimed at rewarding superior performances. These have been felicitated across the organisation.

Information Technology

Being in a highly digital and technology-based industry, the Company ensures that its IT infrastructure is state-of-the-art and constantly reviewed for scalability. At another level, since it communicates through business partners and directly with customers, it ensures that all its interfaces are intuitive and adaptive by tying up with consultancies, like Accenture and Conax, to create seamless experience on CRM, Web and Mobile.

Keeping an eye on business continuity in the face of critical subscriber facing needs, 100% capacity built-in Disaster Recovery setup was created in Chennai. To reduce the activation cycle time further, action processing has been streamlined.

Internal Control Systems

The Company has robust internal control systems to safeguard its assets and ensure efficient productivity commensurate with the size and industry in which it operates. The internal control mechanism ensures strict adherence to requisite laws and regulations and robust financial reporting and transaction reporting. Operational, financial and other areas covered by the Internal Audit are periodically monitored and reviewed by the Audit Committee of the Board. Any deviations from standards are corrected promptly and measures are taken to strengthen the internal control framework further.

Cautionary Statement

In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements - written and oral - that we periodically make contain forward-looking statements that set out anticipated results based on the managements plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipate, ‘estimate, ‘expects, ‘projects, ‘intends, ‘plans, ‘believes, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are subject to risks, uncertainties, and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.