Siti Networks Ltd Directors Report.

To the Members,

Your Directors have pleasure in presenting the 13th Annual Report of your Company, together with the Audited Financial Statements for the financial year ended March 31, 2019 prepared as per Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act, 2013 (Act).

Financial Highlights

The financial performance of your Company for the year ended March 31, 2019 is summarised below:

(र in million)
Particular Standalone Consolidated
2018-19 2017-18 2018-19 2017-18
Revenue from operations 8,212.75 8,378.08 14,421.34 14,104.01
Other Income 213.58 107.80 322.38 159.73
Total Income 8,426.33 8,485.88 14,743.72 14,263.74
Total Expenses 6,579.36 7,391.24 11,185.24 11,018.54
EBIDTA 1,846.97 1,094.64 3,558.48 3,245.20
Less : Finance cost 1,537.33 1,273.46 1,707.16 1,395.49
Less : Depreciation 2,093.03 1,830.15 3,649.67 3,261.70
Profit/(Loss) before share of profit/(loss) of associates and joint ventures, exceptional item and tax (1,783.39) (2,008.97) (1,798.35) (1,411.99)
Share of profit/(loss) of associates and joint ventures 0.00 0.00 (1.42) (5.80)
Profit/(Loss) before exceptional item and tax (1,783.39) (2,008.97) (1,799.77) (1,417.79)
Exceptional items 1,940.88 46.80 742.66 163.41
Profit /(Loss) before tax & exceptional items (3,724.27) (2,055.77) (2,542.43) (1,581.20)
Provision for taxation (net) 0.00 0.00 100.40 117.77
Profit/(Loss) after tax & exceptional items (3,724.27) (2,055.77) (2,642.83) (1,698.97)
Remeasurement of defined benefit liability (1.51) 1.73 (2.18) 3.91
Total comprehensive profit/ (loss) for the period (3,725.78) (2,054.04) (2,645.01) (1,695.06)

There have been no material changes and commitments that have occurred after close of the financial year till the date of this report, which affect the financial position of the Company. Based on the internal financial control framework and compliance systems established in the Company, the work performed by Statutory, Internal, Secretarial Auditors and reviews performed by the Management and/or Audit Committee of the Board, your Board is of the opinion that the Companys internal financial controls were adequate and working effectively during financial year 2018-19.

Business Overview

Your Company (SITI) ended the year with subscription revenue of र 9,537 million for FY 2018-19, which is a 19% increase YoY. Collection efficiency improved from pre-Tariff Order era and near 100% prepaid was achieved by the end of Q4 FY 19. This shift to prepaid collection model has enabled SITI to manage working capital more efficiently and will do away with the issues of short collection ailing the industry. This is especially important in the Phase 3 and Phase 4 markets, where SITIs significant base lies, where efficiency, realization & ARPU will increase significantly. In Broadband, SITI maintained focus on making home pass more effective and increase ARPU & penetration level in existing markets.

With the implementation of NTO, next few quarters will bring an industry wide change in a positive direction. Your Company has successfully upgraded its IT and subscriber management systems and this upgrade along with other system improvement has helped us implement NTO in the most efficient and effective manner.

Post implementation of NTO, we expect an improvement in ARPU and streamlining of processes, where there is a defined share for all the stakeholders. NTO also makes the content and channel pull as the driver for its demand in long term, thus the market demand will now decide the relevance and price of channels and DPOs will act as service provider for which they will get paid.

Simultaneously, your Company worked on strengthening the organization by working on many fronts with focus on the ideologies of "Right people on Right Job" & "More from less", thus emphasizing on efficiency in the organization. In line with the above strategy the organization structure was also revamped.

SITI conducted a thorough review of our infrastructure across geographies and accordingly have internally restructured the operations to make it more efficient and agile.

The expenses for the Company grew due to increased stress in financial sector and conversion of a few LOU in term loans. Depreciation and amortization expenses saw an increase due to a full year of depreciation incurred in the books.

In Broadband, your Company is working on a bottom up strategy to increase penetration level in the existing market and working on business models which can provide a profitable long term growth in the ever-changing market scenario prevailing in the market.

Content deals have been tied up with all content providers under new NTO regime and your company is working along with all the broadcasters to provide best in the market entertainment to all its customers.

Your Company is committed to improve EBITDA levels and increase ARPU in next financial year by providing rich & entertaining content at pricing which provide our customers the highest value. Your Company is committed to appreciate shareholders wealth and bring steady growth to all stakeholders.

Directors Responsibility Statement

Pursuant to Section 134 of the Companies Act, 2013, in relation to Annual Financial Statements for the financial year 2018-19, your Directors hereby confirm that:

i. the Financial Statements of the Company comprising of the Balance Sheet as at March 31, 2019 and the Statement of Profit & Loss for the year ended on that date, have been prepared on a going concern basis;

ii. in preparation of these Financial Statements, the applicable accounting standards have been followed and there are no material departures;

iii. accounting policies selected were applied consistently and the judgments and estimates related to the financial statements have been made on a prudent and reasonable basis, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit/loss of the Company for the year ended on that date;

iv. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

v. requisite internal financial controls, to be followed by the Company, were laid down and that such financial controls are adequate and operating effectively; and

vi. proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

Directors & Key Managerial Personnel

Your Board currently comprises of five (5) Directors including four (4) Independent Directors and one (1) Executive Director. Independent Directors provide declarations both at the time of appointment and annually confirming that they meet the criteria of Independence as prescribed under the Act and SEBI (Listing Regulations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). During the financial year 2018-19, your Board met five (5) times, details of which are available in the Corporate Governance Report annexed to this report.

During the year under review, your Board had, based on recommendations of Nomination & Remuneration Committee, approved the appointment of Mr. Suresh Arora as an Additional Director in the category of Non-Executive Non-Independent Director with effect from March 29, 2019 and subsequently, as a Whole Time Director of the Company for a period of 3 years with effect from June 14, 2019. In terms of Section 161 of the Companies Act, 2013, Mr.Suresh Arora, shall hold office up to the date of the ensuing Annual General Meeting of the Company. The Company has received a notice under Section 160 from a member proposing appointment of Mr.Suresh Arora. Accordingly, necessary resolution is being placed for approval of the Members at the 13th Annual General Meeting of the Company.

Your Board had, based on recommendations of Nomination & Remuneration Committee, approved the appointment of Mr.Deepak Mittal and Mr.Bhanu Pratap Singh as Additional Directors in the category of Independent Directors with effect from April 1, 2019. In terms of Section 161 of the Companies Act, 2013, Mr.Deepak Mittal and Mr.Bhanu Pratap Singh shall hold office up to the date of the ensuing Annual General Meeting of the Company. The Company has received separate notices under Section 160 from members signifying their intention to propose appointment of Mr.Deepak Mittal and Mr.Bhanu Pratap Singh. Accordingly, necessary resolutions are being placed for approval of the Members at the 13th Annual General Meeting of the Company.

Further, during the year under review, in compliance with Regulation 17(1A) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as SEBI Listing Regulations), as amended, Mr.Brijendra K. Syngal and Mr.Vinod Kumar Bakshi, Independent Directors, whose age exceeded 75 years, had voluntarily stepped down from the Board of the Company with effect from the close of business on March 31, 2019.

Mr.Sidharth Balakrishna, who was Whole Time Director of the Company, had resigned from the Board and Committees of the Company with effect from close of business hours of April 15, 2019, on account of other professional obligations and commitments.

In compliance with the requirements of Section 203 of the Companies Act, 2013, Mr. Suresh Arora, Whole-Time Director, Mr. Sanjay Berry, Chief Financial Officer and Mr. Suresh Kumar, Company Secretary of the Company are Key Managerial Personnel of the Company. Pursuant to the provisions under Section 134(3)(d) of the Companies Act, 2013, with respect to statement on declaration given by Independent Directors under Section 149(6) of the Act, the Board hereby confirms that all the Independent Directors of the Company have given a declaration and have confirmed that they meet the criteria of independence as provided in Section 149(6) read with Regulation 16 of Securities and Exchange Board of Indian (Listing Obligations and Disclosures Requirements) Regulations 2015 (SEBI Listing Regulations).

Board Committees

In compliance with the requirements of Companies Act, 2013 and SEBI Listing Regulations, your Board had constituted various Board Committees including Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. Details of the constitution of these Committees, which are in accordance with regulatory requirements, have been uploaded on the website of the Company viz. www.sitinetworks.com.

Details of scope, constitution, terms of reference, number of meetings held during the year under review along with attendance of Committee Members therein form part of the Corporate Governance Report annexed to this report.

Board Evaluation

At a separate meeting of Independent Directors held without presence of other Directors and management, the Independent Directors had, based on various criteria, evaluated performance of the Executive Directors and performance of the Board as a whole and various Board Committees. A report on such evaluation done by Independent Directors was taken on record by the Board and further, the Board had in compliance with the requirements of Companies Act, 2013 evaluated performance of all Independent Directors based on various parameters including attendance, contribution etc. The details of the evaluation process are set out in the Corporate Governance Report which forms part of this Report.

Auditors

Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013 and the Rules made thereunder, the current Statutory Auditors of the Company, M/s Walker Chandiok & Co. LLP, Chartered Accountants, having Firm Registration No. 001076N/ N500013, were appointed by the Members at 9th Annual General Meeting of the Company to hold office until the conclusion of the 14th Annual General Meeting scheduled to be held in year 2020, subject to ratification of their appointment by Members at every Annual General Meeting (AGM). The requirement to place the matter relating to appointment of Auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of Statutory Auditors at the ensuing AGM and note in respect of the same has been included in the Notice of AGM.

The Company has received certificate of eligibility from M/s Walker Chandiok & LLP in accordance with the provisions of the Companies Act, 2013 read with rules thereunder and a confirmation that they continue to hold Peer Review Certificate as required under SEBI Listing Regulations.

During the year the Statutory Auditors had not reported any matter under Section 143(12) of the Act and as such no detail is required to be furnished under Section 134(3)(ca) of the Act.

Secretarial Auditors

M/sAmit Agrawal & Associates, Company Secretaries in Whole Time Practice, having Firm Registration No. I2001DE191600, were appointed as Secretarial Auditors of the Company for the financial year 2018-19 pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report submitted by them in the prescribed form MR-3 is annexed to this report as Annexure – I and forms part thereof.

The reports of Statutory Auditors and Secretarial Auditor forming part of this Annual Report do not contain any qualification, reservation or adverse remark(s).

Additionally, in line with SEBI Circular No. CIR/CFD/ CMD/1/27/2019 dated February 8, 2019, an Annual Secretarial Compliance Report confirming compliance of all applicable SEBI Regulations, Circulars and Guidelines by the Company was issued by the Secretarial Auditor and filed with Stock Exchanges.

Cost Auditors

In compliance with the requirement of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, as amended, M/s A.K. Gupta & Co., Cost Accountant, having Firm Registration No. 100770, has been appointed to carry out Audit of the Cost Records of the Company during financial year 2019-20. Requisite proposal seeking ratification/approval of remuneration payable to the Cost Auditor for financial year 2019-20 by the Members as per Rule 14 of the Companies (Audit and Auditors) Rules, 2014, forms part of Notice of ensuing Annual General Meeting.

Subsidiaries & Joint Ventures

During the financial year under review:

Siti Bhatia Network Entertainment Private Limited ("SBNEPL") ceased to be subsidiary company, as the Company had sold 10409 equity shares (being the entire stake of the Company constituting 51%) of SBNEPL on June 14, 2018; In consequence of SBNEPL ceased to be subsidiary company of the Company, Siti Chhattisgarh Multimedia Private Limited, wherein SBNEPL was holding 41% equity shares, ceased to be associate company of the Company.

Axom Communications & Cable Private Limited ("Axom"), which was subsidiary company of Indian Cable Net Company Limited ("ICNCL"), ceased to be subsidiary company of ICNCL as it ceased to effectively control the composition of the Board of Directors of Axom.

Accordingly, as on March 31, 2019, your Company had 23 no. of subsidiary companies as compared to 25 no. of subsidiary companies as on March 31, 2018.

Variety Entertainment Private Limited ("VEPL"), which is wholly owned subsidiary company of the Company: had acquired/purchased 49% Equity stake in Siti Godaari Digital Services Private Limited ("SGDSPL") on May 29, 2019. After such acquisition/purchase, SGDSPL (wherein the Company already holds 51% Equity stake) becomes wholly owned subsidiary company of the Company; had acquired further 4.75% Equity stake in Voice Snap Services Private Limited ("VSSPL") on July 21, 2019. Accordingly, Equity stake of VEPL in VSSPL has increased to 40% and the same continues to be associate company of the Company. your Company had incorporated a wholly owned Limited Liability Partnership namely Siti Networks India LLP on May 7, 2018.

Apart from the above, there was no change in number of Subsidiary/Associate/Joint Venture of the Company either by way of acquisition or divestment or otherwise during the year under review.

In line with amendments of threshold for determining Material Subsidiary as stated in Regulation 16(1)(c) of SEBI Listing Regulations, effective April 1, 2019, Indian Cable Net Company Limited, one of the subsidiary company of the Company continues to be Material Subsidiary of your Company.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing the salient features of financial statements of the Companys subsidiaries and associate company(ies) in Form AOC-1 is annexed to this report as Annexure – II and forms part thereof.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company www.sitinetworks. com. These documents will also be available for inspection during business hours on all working days (except Saturday) at the Registered Office of the Company.

Deposits

During the year under review, your Company has not accepted or invited any deposits as defined under Section 2(31) read with Chapter V of the Companies Act, 2013 and Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014.

Dividend

With a view to conserve the resources for future business requirements and expansion plans and in view of losses during the year, your Board has not recommended dividend for the year under review.

Employee Stock Option Scheme

In pursuance of Employees Stock Option Scheme of the Company (SITI ESOP 2015), your Company had granted 4,663,500 options to eligible employees on September 3, 2015. During the year under review, neither any option was granted nor any grantee had exercised vested option(s).

The applicable disclosures as stipulated under Regulation 14 of the Securities and Exchange of India (Share Based Employee Benefits) Regulations, 2014 with regard to SITI ESOP 2015 are annexed to this report as Annexure - III. The said disclosures on SITI ESOP 2015 will also be available on Companys website www.sitinetworks.com. A Certificate of Statutory Auditors M/s Walker Chandiok & Co. LLP, Chartered Accountants confirming that the SITI ESOP 2015 has been implemented in accordance with SEBI Regulations and the resolution passed by the shareholders, will be placed at the 13th Annual General Meeting.

Share Capital

During the period under review, there is no change in Authorised Share Capital of the Company. As on March 31, 2019, the Authorised Capital of the Company is र 1,300 million comprising of 1,290,000,000 Equity Shares of र 1/- each and 10,000,000 Preference Shares of र 1/- each and the Paid-up Share Capital of the Company is र 872.69 million comprising 872,053,848 Equity Shares of र 1/- each and 23,436 Preference Shares of र 1/- each and 1,227,123 forfeited Equity Shares of र 1/- each, paid up र 0.50/- per Equity Shares.

Registered Office

During the year under review, the Registered office of the Company is continued to be situated at ‘Unit No. 38, 1st Floor, A wing, Madhu Industrial Estate, P. B Marg, Worli, Mumbai – 400013.

Corporate Governance & Policies

Your Company is in compliance with the Corporate Governance requirements mentioned under SEBI Listing Regulations and applicable provisions of the Companies Act, 2013. In terms of Schedule V of the Listing Regulations, a detailed report on Corporate Governance together with the

Compliance Certificate issued by Secretarial Auditor of the Company is attached to and forms an integral part of this report. Management Discussion and Analysis Report as per Listing Regulations are presented as separate section forming part of the Annual Report.

In compliance with the requirements of Companies Act, 2013 and SEBI Listing Regulations, your Board has approved various Policies including Code of Conduct for Directors

& Senior Management, Material Subsidiary Policy, Insider Trading Code, Document Preservation Policy, Material Event Determination and Disclosure Policy, Fair Disclosure Policy, Corporate Social Responsibility Policy, Whistle Blower and Vigil Mechanism Policy, Related Party Transaction Policy, Dividend Policy and Remuneration Policy. All these policies and codes have been uploaded on Companys website www.sitinetworks.com. Additionally, Directors Familiarisation Programme and Terms and Conditions for appointment of Independent Directors can be viewed on Companys website www.sitinetworks.com.

In compliance with the requirements of Section 178 of the Companies Act, 2013, the Nomination & Remuneration Committee of your Board had fixed various criteria for nominating a person on the Board which inter alia include desired size and composition of the Board, age limits, qualification/experience, are as of expertise and independence of individual. The Committee had also approved in-principle that the initial term of an Independent Director shall not exceed three (3) years.

Corporate Social Responsibility

The provisions of Section 135(5) of the Companies Act, 2013, which provides for spending in every financial year at least two percent of the average net profits of the Company made during the three immediately preceding financial years, is not applicable to the Company as the Company had incurred losses during the three immediately preceding financial years.

Disclosures i. Particulars of Loans, Guarantee or Investments:

Particulars of loans, guarantees and investments made by the Company required under Section 186(4) of the Companies Act, 2013 are contained in Note No. 46 of the Standalone Financial Statements and are not reproduced for the sake of brevity.

ii. Related Parties Transactions: All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were on arms length basis, in the ordinary course of business and in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations.

During the financial year 2017-18, there are no materially significant related party transactions by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, if any, which may have a potential conflict with the interest of the Company at large. Details of related party transactions will be available on Companys website www.sitinetworks.com.

All related party transactions, specifying the nature, value and terms and conditions of the transactions including the arms-length justification, are placed before the Audit Committee for its approval and statement of all related party transactions carried out is placed before the Audit Committee for its review on a quarterly basis. During the year under review, there have been no materially significant related party transactions by the Company as defined under Section 188 of the Act and Regulation 23 of the Listing Regulations and accordingly, no transactions are required to be reported in Form AOC-2 as per Section 188 of the Companies Act, 2013.

iii. Extract of Annual Return: The extract of annual return in MGT-9 as required under Section 92(3) of the Companies Act 2013, read with Companies (Management & Administration) Rules, 2014 will be available on the website of the Company www.sitinetworks.com.

iv. Internal Financial Control systems and their adequacy:

Your Company has approved internal financial controls and policies/ procedures for orderly and efficient conduct of the business including safeguarding of assets, prevention and detection of frauds and errors, ensuring accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically. Your Company has adopted accounting policies which are in line with the Indian Accounting Standards (Ind-AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules,

2015. These are in accordance with Generally Accepted Accounting Principles in India.

v. Vigil Mechanisms/Whistle Blower Policy: The Company has established a vigil mechanism/framed a whistle blower policy. The policy enables the employees and other stakeholders to report to the management instances of unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics policy.

vi. Sexual Harassment: The Company has zero tolerance for Sexual Harassment at work place and has adopted a Policy on prevention of Sexual Harassment in line with the provisions of Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder.

During the year under review, your Company has not received any complaint on sexual harassment.

vii. Regulatory Orders: No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and Companys operations in future.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The Company is a Multi System Operator (MSO) and is carrying on business of, inter alia, reception of signals of channels of various Broadcasters and distribution of same through cable networks. Since this does not involve any manufacturing activity, most of the Information required to be provided under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, are nil / not applicable. The information, as applicable are given hereunder:

Conservation of Energy:
i. The steps taken or impact or conservation of energy Your Company, being a service provider, has minimal energy consumption. Though, every endeavour is made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible.
ii. The steps taken by the Company for utilizing alternate sources of energy
iii. The capital investment on energy conservation equipments
Technology Absorption:
i. The efforts made towards technology absorption Your Company uses latest technology and equipment for distribution of Cable TV signals.
ii. The benefits derived like product improvement, cost reduction, product development or import substitution
However, since the Company is not engaged in any manufacturing, the information in connection with technology absorption is Nil.
iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-
a. the details of technology imported
b. the year of import;
c. whether the technology been fully absorbed
d. if not fully absorbed, areas where absorption has not taken place, and the reasons thereof
iv. The expenditure incurred on Research and Development

Foreign Exchange Earnings and Outgo: During the year under review, your Company had foreign exchange earnings of र 29.81 million and outgo of र 941.36 million.

Human Resources & Particulars of Employees

The differentiator in todays world between any two organization is the Human Capital, while technology and capital are accessible equally to business organization, challenge lies in attracting and hiring the talent.

SITI has always strived to attract and retain best of the talent, constantly grooming its work force.

Human Resource (HR) function and leadership team ensures that talent management and performance management run as a symbiotic & complimenting process across the organization and permeates at all levels. While the performance of the organization is propelled by the challenging business dynamics and superior performance and are equipped to handle the volumes and scales.

We have identified the High Potential performers in 2018-19 annual appraisals. These High Pots will be put on track which differentiates them for propelling the organization further by furthering the business and there by developing the second line of leadership.

The home-grown talent will be nurtured through a very well thought mentoring program which would ensure their retention and carve a growth path, giving them visibility cross functionally and vertical movement through the lattices.

For capacity development and out of the box thinking, synergies are created between the people with experience from the industry and hand-picked talent from cross industry experience. This blend has brought a lot of value add to SITI and has led to path breaking synergies.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is attached as Annexure – IV which forms part of this report.

Acknowledgements

The Board of Directors wish to pace on record their sincere appreciation for the contribution made by the employees at all levels, but for whose hard work and support your Companys achievements would not have been possible. The Board of Directors also wish to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, various Governmental Authorities including Ministry of Information and Broadcasting, Telecom and Regulatory Authority of India, Stock Exchanges, Depositories and other stakeholders including local cable operators, viewers, broadcasters, vendors.

For and on behalf of the Board
Suresh Arora Kavita Kapahi
Whole Time Director Independent Director
DIN 00299232 DIN 02330706
Noida, August 12, 2019