Television Eighteen India Ltd Merged Share Price directors Report
TELEVISION EIGHTEEN INDIA LIMITED
ANNUAL REPORT 2009-2010
DIRECTORS REPORT
Dear Members,
Your Directors have pleasure in presenting you the 17th Annual Report
together with the Audited Accounts of Television Eighteen India Limited
(hereinafter referred to as Company or TV 18) for the Financial Year
ended March 31, 2010.
FINANCIAL PERFORMANCE:
The summarized financial figures on a standalone basis of your Company for
the year ended March 31, 2010 are as follows:
(Rs. In Crores)
Particulars Financial Financial
Year ended Year ended
March 31, 2010 March 31, 2009
Profit before interest & depreciation 98.95 132.44
Interest 109.18 108.66
Depreciation 17.19 18.96
Net operating profit before tax (27.41) 4.82
Provision for taxes/deferred tax 5.06 (15.00)
Net Profit/(loss) after tax (32.48) 19.82
OPERATIONS:
During the year under review, the Company achieved a turnover of Rs. 276.91
(Previous Year Rs. 287.71 crores) and EBDIT of Rs. 98.95 (Previous Year
Rs.132.44 crores).
Your Company is a full-fledged Indian broadcaster with properties like
CNBC-TV18 and CNBC-Awaaz alongwith two regular revenue streams -
commercial advertising and cable subscriptions. The operations of the
Company are discussed in detail in Management Discussion and Analysis
Report forming part of the Annual Report in accordance with Clause 49 of
the Listing Agreement.
The audited consolidated financial statements for the financial year ended
March 31, 2010 form part of the Annual Report.
DEPOSITS:
Your Companys Fixed Deposits Scheme launched in terms of Section 58A of
the Companies Act, 1956 is performing incredibly well since its inception
and as on March 31, 2010 the Fixed Deposits of the Company stood at
Rs.1,770,733,557/-
Your Company has sent reminders to 569 deposit holders, who have not
claimed repayment of their fixed deposits which became due as on March 31,
2010, amounting to Rs. 19,792,000/-.
There was no failure in repayment of Fixed Deposits on the maturity and the
interest due thereon by the Company.
CHANGE OF REGISTERED OFFICE:
As approved by the Board of Directors of the Company, the registered office
of the Company was shifted from 601, 6 1h Floor, Commercial Tower, Hotel
Le- Meridien, Raisina Road, New Delhi 110 001 to 503, 504 & 507, 51h Floor,
Mercantile House, 15, Kasturba Gandhi Marg, New Delhi 110 001 w.e.f. May
10, 2010.
INCREASE IN AUTHORISED AND PAID-UP SHARE CAPITAL OF THE COMPANY:
During the year under review the Authorised and Paid up share capital of
the Company has been increased in the following manner:
Increase in the Authorised Share capital:
The Company had given a postal ballot notice dated 13 May, 2009 to its
shareholders pursuant to Section 192A of the Companies Act, 1956 for
reclassification of the authorised share capital of the Company comprising
of 20,00,00,000 equity shares of Rs. 5 per share and 5,00,000 preference
shares of Rs 100 each aggregrating to Rs. 1,050,000,000, to 210,000,000
equity shares of Rs. 5 each aggregating to Rs. 1,050,000,000 and for
increasing the authorised share capital of the Company from Rs1,050,000,000
(comprising 210,000,000 equity shares of Rs 5 each) to Rs 2,050,000,000
(comprising 410,000,000 equity shares of Rs 5 each). The result of the
postal ballot was announced on 22 June, 2009 whereby the aforesaid
resolutions were duly approved by the shareholders of the Company.
Increase in the Paid up Share Capital:
- During the current year the Company has made a rights issue of 60,007,121
equity shares of Rs. 5 each at a premium of Rs. 79 per share aggregating to
Rs. 50,405.98 lakhs to the existing shareholders of the Company. The rights
issue opened on 29 September, 2009 and closed on 14 October, 2009. Pursuant
to the approval dated 26 October, 2009 of the Right Issue Committee, the
Company has allotted 60,007,121 partly paid equity shares of Rs. 5 each at
the premium of Rs. 79 per share. The Company had called Rs. 21.00 per share
on application and Rs. 29.40 per share and Rs. 33.60 per share were called
on first call and final call, respectively on the allotted shares. The
rights issue resulted in an increase in the equity share capital by
Rs.2,940.16 lakhs and securities premium by Rs. 46,454.50 lakhs. As on 31
March, 2010, there are partly paid 1979148 shares in respect of which calls
are in arrears.
- During the year ended 31 March, 2010, the Company has allotted 1,351,876
equity shares of Rs. 5 each on account of exercise of ESOPs by the
employees of the Company under various ESOP schemes.
DIRECTORS:
With profound grief and sorrow we inform you that Mr. G.K. Arora, who was
the Chairman and Non- Executive Independent Director of the Company expired
on November 5, 2009. We sincerely place on record his contribution to the
growth of the Company during his tenure.
Ms. Subhash Bahl, Director of the Company retires by rotation at the
ensuing Annual General Meeting and being eligible, offers herself for being
re-appointed as Director of the Company. The relevant details of the
Directors proposed to be re-appointed are provided in the Corporate
Governance Report forming part of the Annual Report.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the provision of Section 217 (2AA) of the Companies Act, 1956
as amended, your Directors confirm:
i) that in the preparation of the annual accounts for the financial year
ended March 31, 2010, the applicable Accounting Standards have been
followed;
ii) that the Directors 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 at the end of the financial year and of profit or loss of the
Company for the year under review;
iii) that the Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
iv) that the Directors have prepared the accounts for the financial year
ended March 31, 2010 on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS
Managements Discussion and Analysis Report in terms of Clause 49 of the
Listing Agreement is attached as Annexure - I to this report and forms the
part of the Annual Report.
PARTICULARS OF SUBSIDIARIES REQUIRED UNDER SECTION 212 OF THE COMPANIES
ACT, 1956:
A statement of your Companys interest in its Subsidiary Companies is
attached as Annexure - II to the Directors Report in terms of the
provisions of Section 212 of the Companies Act, 1956.
Ministry of Corporate Affairs, Government of India vide order no. 47/ 401/
2010- CL--III dated May 14, 2010 has granted exemption under section 212(8)
of the Companies Act, 1956 from attaching the Directors Report, Balance
Sheet, Profit & Loss Account and the Report of Auditors of the Subsidiary
Companies with the Balance Sheet of the Company. Financial information of
the Subsidiary Companies, as required under the said order, is disclosed in
this Annual Report. The Annual Accounts of the subsidiary companies will
also be kept for inspection by any shareholder at its Registered Office.
The Company shall also furnish a hard copy of details of accounts of
subsidiaries to any shareholder on demand.
AUDITORS & AUDITORS REPORT:
The term of M/s. Deloitte Haskins & Sells, Chartered Accountants the
Statutory Auditors of your Company expires at the ensuing Annual General
Meeting. The Company has received a certificate from them pursuant to the
effect that their appointment, if made, would be within the prescribed
limit as mentioned under Section 224 (113) of the Companies Act, 1956. They
are also not otherwise disqualified within the meaning of Section 226(3) of
the Companies Act, 1956.
Your Board has duly examined the Report by the Statutory Auditors of the
Company for the financial year ended March 31, 2010. The Notes on Accounts
as presented in this Annual Report are self explanatory in this regard and
hence do not call for any further clarification.
CORPORATE GOVERNANCE REPORT:
A detailed report on the Corporate Governance system and practices of the
Company is given in a separate section in the annual report along with a
Certificate from the Practicing Company Secretary confirming the compliance
of conditions on Corporate Governance is stipulated in Clause 49 of the
Listing Agreement.
GROUP AS DEFINED UNDER MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT,
1956:
Pursuant to intimation received from Promoter(s) the names of Corporate(s)
entities consisting the (Group as defined under the Monopolies and
Restrictive Trade Practices Act, 1969 for the purpose of the SEBI
(Substantial Acquisition of Shares and Takeover) Regulations, 1997 is
disclosed in a separate section in the Annual Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE AND
EARNINGS AND OUTGO:
Pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the
Companies (Disclosures of particulars in the report of the Board of
Directors) Rules, 1988, the following information is provided:
A. Conservation of Energy:
Your Company is not an energy intensive unit, however regular efforts are
made to conserve energy your Companys editing facilities, studios, offices
etc.
B. Research and Development:
The Company continuously makes efforts towards research and developmental
activities whereby it can improve the quality and productivity of its
programmes.
C. Foreign Exchange Earnings and Outgo:
Disclosure of foreign exchange earnings and outgo as required under Rule
2(C) is given in Schedule No. 16 Notes on Accounts forming part of the
Audited Annual Accounts.
EMPLOYEE STOCK OPTION AND STOCK PURCHASE PLAN:
Your Company has always believed in rewarding its employees for their
continuous hard work, dedication and support. To this end the Company has
instituted various ESOP Schemes for rewarding the hard work and dedication
put in by its employees and also, to attract new talent. The details of
ESOPs in compliance with SEBI (Employees Stock Option and Employees Stock
Purchase Scheme) Guidelines, 1999 are given in annexure III of this report.
PARTICULARS OF EMPLOYEES:
The names and other particulars of employees as required under Section
217(2A) of the Companies Act, 1956, read with the Companies (Particulars of
Employees) Rules, 1975 are set out as annexure IV to the Directors Report.
In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act,
1956, the Annual Report excluding the aforesaid annexure is being sent out
to the members and others entitled to receive the Annual Report of the
Company. However any member who is interested in obtaining such information
may send a written request for the same, addressed to the Company Secretary
of the Company at the Registered Office of the Company.
Listing of Shares:
The names and addresses of the Stock Exchanges where the Companys shares
are listed are given below:
a) Bombay Stock Exchange Limited, Mumbai, 1st Floor, Phiroze Jeejeebhoy
Towers, Dalai Street, Mumbai - 400 001.
b) National Stock Exchange of India Limited, Exchange Plaza, 5th Floor,
Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.
ACKNOWLEDGEMENT:
Your Directors take this opportunity to place on record their sincere
appreciation for the unstinted support and efforts made by will the
employees of the Company, bankers, various Government departments and last
but not the least, the shareholders of the Company, towards conducting of
efficient operations of your Company.
For and on behalf of the Board
Sd/-
Place : Noida (Manoj Mohanka)
Date : May 28, 2010 Chairman.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
INDUSTRY STRUCTURE AND DEVELOPMENTS:
The Indian media & entertainment industry, as a whole, has been estimated
to be approximately INR 587 billion as in 2009. According to industry
reviews and reports this sector has shown a CAGR of 10% during 2006-2009
and is forecast to grow at a CAGR of 13% over the next 5 years. The growth
in media & entertainment has primarily been aided by Indias rapid economic
growth amongst other factors. Indias Gross Domestic Product (GDP) grew by
almost % in fiscal 2009 (Source: Economic Survey 2008-2009, RBI).
M&E Industry 2009 2014P CAGR CAGR
(INR Billion) (2006 (2009
-09) -14)
Television 257 521 12% 15%
Print 175 269 8% 9%
Films 89 137 5% 9%
Animation 20 47 18% 19%
Outdoor 14 24 5% 12%
Music 8 17 2% 16%
Radio 8 16 9% 16%
Gaming 8 32 38% 32%
Internet 8 29 56% 30%
Total Size 587 1091 10% 13%
(Source: FICCI-KPMG Report 2010)
Television, Print and Films are by far the largest segments of the media &
entertainment industry today and as per industry reports will continue to
remain dominant over the next 5 years. Internet segment has exhibited the
fastest growth during the period 2006-09 and is projected to be the second
fastest growing segment going forward. Television and Print segments derive
revenues from both Advertising and Subscription whereas Outdoor and Radio
only have an Advertising revenue stream. Films have a diversified revenue
mix including theatrical ticket sales, home video, cable, satellite & DTH
rights sales and other ancillary revenues. Animation & Gaming industries in
India rely on outsourcing and domestic sales, whereas Music generates
revenues from sale of songs across digital & physical media and broadcast &
public performance licensing rights.
Internet as an industry is evolving and companies are experimenting with
different revenue models - advertising, subscription, transaction (revenues
in the table above however include only advertising revenues for Internet)
OPPORTUNITIES AND GROWTH DRIVERS:
Media and Entertainment Industry:
The Media and Entertainment Industry has shown structural shift due to
digitization leading to convergence with consumers increasingly taking
control of their media consumption. Knowledge of evolving consumption
trends is a critical success factor in this scenario. The more one
understands the habits of customers, the greater opportunities will be
there to meet their information and entertainment requirements and generate
revenues. The impact of digitization has been wide-spread and deep-rooted
across all segments of the Media and Entertainment industry both globally
and in India. The companies that have embraced this change as opportunity
and adapted and evolved as a result have shown tremendous growth whereas
those resisting the change have perished. This section highlights the
dynamics in which the industry operates
Digitization and Convergence - Digitization has been a huge trend in the
global media industry deeply impacting TV, print, music and films. From an
enhanced consuming experience for the end-user to greater address ability &
monetization potential for the content provider, digitization has proved to
be a great value creator across the value chain. Many digital platforms,
ranging from digital cable, DTH, IPTV to digitization of films, print and
online sales of music have come into existence. DTH is leading the
digitization wave in India, with approximately 30 million subscribers
projected by the end of 2010. With the increase in DTH, mobile & broadband
penetration and the expected 3G roll out, the market for other digital
distribution platforms such as VoD, Pay Per View, Online streaming and
downloads is likely to improve considerably. Convergence of content across
screens - TV, computer and mobile is a direct result of the digitization
revolution. Consumers as well as content providers have ensured that the
same content is increasingly deployed across platforms available to
consumers at the time and place of their convenience. Whether its e-papers
or online streaming of shows or mobile based applications, all content is
now available at a click across devices. My time is the new primetime.
Growth of the Indian Consumption Story - Significant increase in private
domestic consumption accompanied with a shift of the share of wallet from
essentials, such as food, clothing and shelter to discretionary items such
as recreation, education, healthcare etc. has been the key macro-economic
theme in India over the last few years. This is largely a result of 2
factors - (a) the favorable demographic composition of the nation, commonly
termed as the Demographic Dividend, which essentially means that a large
proportion of the countrys populace is young and in the working age group,
thus allowing for greater consumption upside and (b) rapid economic growth
which has corresponded with the influx of foreign capital and brands as
well as stronger integration with the global socio-economic environment.
The above factors have led to the emergence of an ever increasing large
consuming class, with rising disposable incomes, which is globally aware
and acquisitive in nature. This consuming class is highly brand aware and
willing to spend money on goods and services of value. Subscription led
revenue models - Traditionally, advertising revenues have had a strong hold
in the M&E industry, but increasingly, subscription revenues are becoming
important with consumers paying for media services. The media business
models in India are undergoing a change with audiences becoming more
willing to pay for content and value added services. Technology has brought
about convenience and offered superior quality to consumers who have
responded positively. The growth in ticket prices of movies at multiplexes,
increasing number of Pay-TV subscribers, increasing penetration of DTH with
its user-friendly interface and technology, and introduction of Value Added
Services (VAS) by telecom players are some examples of pay markets gaining
importance.
Increasing importance of regional markets - No longer can media owners
apply the single content for all audience strategy. From providing
regional versions or feeds of national media brands to launching local
content driven titles and channels, regionalization and localization have
been growing rapidly across media. The regional film, music and print
industries have always been a large part of the media milieu and their
importance has only grown in the last few years, extending now to
television and slowly to the web. This has been caused by the percolation
of media consumption in cities apart from the large metros and the gradual
increase in income & awareness levels in Tier 2 & Tier 3 cities. From the
launch of regional newspapers to city & region/language based channels to
special shows, this trend is spurring growth in multiple ways.
Consolidation -Another key trend with respect to how the industry has been
organized is the rise of the media conglomerate in India. Due to
traditional benefits of size & scale from the diversification of capital
risk to cross-leveraging of audiences & promotional opportunities to
managing volatility in consumption patterns, media owners are realizing the
importance of presence across the value chain and moving towards large
conglomerate forms. This is completely opposite to stand alone operations
which may not be able to withstand environmental exigencies or intense
competitive pressures. The M&E industry is growing rapidly due to entry of
newer players and newer customers and regions getting added. These trends
are giving rise to increasing competition and are expected to give way to
consolidation of operations. Some of this has already started happening,
with last year being a tough year seeing some of the smaller players
finding it difficult to survive.
The players which were able to weather the downturn are likely to look at
enhancing their market shares. This could help in the emergence and growth
of players with superior product, marketing, distribution, technological
and innovation capabilities. In turn, this is likely to aid the growth in
the overall market size and reach for the industry.
360 Degree Connect with Consumers - Players are looking beyond just the
traditional mediums by reaching the consumers across multiple platforms in
order to establish a stronger connect. They are taking the help of multiple
touch points simultaneously to communicate to the consumer across platforms
like TV, Print, Radio, OOH, Films, Internet, Mobile and Retail.
Regulatory enablers -important factors such as gradual de regulation in
industry policies, easier availability of institutional capital for funding
growth and the opening up of global markets for Indian media content have
facilitated the growth of the industry.
Television industry:
The television industry, which is by far the largest component of the
Indian Media and Entertainment industry, is expected to grow from strength
to strength, doubling its revenues over the next 5-6 years. It recorded
a growth of rate of around 12% on an average during the last 3 years and as
per estimates accounted for almost 44% of revenues of the M&E industry. The
industry growth has been nothing short of phenomenal given that private
television industry commenced its operations only in 1992, when the
Government authorized privately owned cable and satellite televisions.
Starting with 2 privately owned television channels in 1992, there are
currently over 450 television channels with TV1 8 being one of the nations
leading broadcasters. TV18 operates the two leading business news channels
viz. CNBC TV18 and CNBC AWAAZ. Through the CNBC Channels, your Company
operates Indias premier news services in business news & information. With
over a decade and a half of unparalleled leadership between CNBC-TV18 &
CNBC AWAAZ, we inform and enable Indias core news viewers across a
spectrum of areas.
Key Growth Drivers for Television News Industry:
The Companys channel offerings address business news and current affairs.
Apart from the secular macro-economic growth factors and media industry
trends, the television news industry is impacted by the following specific
factors:
News relevance: News viewership is directly related to the occurrence of
expected as well sudden news events that impact political, social, economic
environment and are relevant to viewers. India is today closely integrated
with the rest of the worlds economy and any change there has an almost
direct impact in India. Additionally, there is significant quantum of
domestic news flow given the rapid growth strides being taken by the
economy. This is resulting in a significant flow of news that appeals to a
wide and diverse base of Indian viewers.
Immediate availability of news: An important parameter that differentiates
television news industry is its ability to break news as it happens rather
than report it at the end of the day. This has increasingly become the
critical success factor in the industry given the audiences interest in
being the first to know. Viewers have come to expect television news to
help them stay upto date about their environment - local, national and
international across all areas of interest.
Quality of news content: News broadcasters have focused on delivering news
as fast as possible to viewers and presenting news in an interesting
manner. Several factors such as extensive news gathering networks, use of
advanced news gathering technology, effective editing and production
systems are facilitating the rapid and interesting dissemination of news
content to viewers.
Extensive reach: High absolute reach of news channels offers an attractive
platform for advertisers to build reach.
SEC profile of viewership: News channels, especially in the English
language, have a higher proportion of viewership among SEC A and SEC B
households. These households typically have higher purchasing power and are
attractive targets for advertisers. Increasingly, your Company and other
industry players in this genre are targeting other revenue streams through
(a) enhancing domestic subscription revenues through new distribution
platforms which reach out to consumers directly such as DTH and IPTV;
(b) exploiting potential to syndicate their content to domestic and
international broadcasters or other parties interested in news content;
(c) delivering news over mediums such as Internet and SMS and
(d) international subscription revenues from the Indian diaspora in regions
such as the US, UK, Middle East and South Africa.
The Indian print and local search market:
Your Company forayed into print media and local search business through
acquisition of Infomedia18 Limited in 2007. Infomedia18 is Indias leading
special interest publishing major with a well diversified fortfolio of
titles across the 132C & 13213 space and significant competencies in the
local search business.
The print media industry primarily comprises magazines and newspaper
publishing. The Indian print media industry has shown impressive growth
over the last few years, far in excess of the growth witnessed in most
other countries around the world. In fact all the developed economies are
reporting shrinkage of their print sector every year as increasingly
viewers and content moves online. Advertisers too have followed suit and
substantially reduced print media spends. On the contrary, print continues
to dominate the advertising market in India, comprising 47% of the total
advertising pie in 2009. Even subscription revenues have been on the
upswing with several almost all key newspapers and magazines reporting
healthy increases in their circulation. As per industry estimates, the
Indian print media industry is expected to grow further in the range of 9-
10% during the next few years - while advertising revenues are expected to
grow at 11.6%, the subscription revenues growth is pegged in the range of
5% during the next few years. The newspaper segment has historically
dominated the print segment in India. However, the sector has witnessed
significant developments in the last few years with the increase in the
number of special interest publications (including B2B and 132C magazines),
launch of niche newspaper supplements as well as aggressive portfolio and
geographic expansion by print companies both in the national and regional
space. These developments have benefited consumers due to increased
availability of choices and better product quality as well as the
advertisers, providing them with the media to reach a broader target
audience and also much more accurately.
In addition to the special interest publications, the print media industry
in India also includes publishing of directories (including yellow pages,
exporters guides and home/office/city guides), custom publishing and
providing printing solutions.
Local search business comprises providing consumers and businesses local
information on the media of their choice - internet, mobile, on the phone
and in physical yellow pages. Globally, it is a very large segment and the
market in India has also witnessed significant growth and expansion in the
last few years. The industry as expected to boom substantially in the near
future as local searches constitute 25-30% of the total web searches. This
is being driven by the increasing interest of people searching for local
information using mobile phones and Internet. The growth will also be
driven by small businesses getting better organized and being able to
directly co relate spending on local search media and increase in revenues.
Key growth drivers for the Indian print media industry:
Rising literacy levels and readership: Literacy has been on the rise for
the last several years across India and the growth has been faster in the
semi-urban and rural areas helping increase penetration of print products.
Additionally, there are significant numbers of literate people in the
country who do not read any publication, which further provides an
opportunity for improvement in the penetration levels. The reach of print
media in urban India is 85% and is less than 50%in rural areas. The rural
areas are constrained primarily by the low literacy and readership levels.
Though the reach of print media is currently lower than television, due to
improving literacy levels and readership in India, it is witnessing a
faster growth in reach than television. Reach is an important parameter as
advertisers use that as one of the key metrics to take decisions on
advertising budget allocation.
Aggressive marketing: Penetration of print media is also improving due to
growing income levels as well as aggressive marketing by print media
companies in India. Through aggressive marketing, penetration levels have
significantly improved especially in the English and Hindi markets. Further
discounted cover prices and aggressive marketing of subscription schemes
has accelerated penetration and has also helped push multiple dailies into
homes.
Evolving tastes and need for niche information: Changing lifestyles and
diverse interests of people has led to a spurt in demand for special
interest publications, newspaper supplements and directories which focus on
specific needs of particular segments of the population. Increasing
sophistication in the way businesses are conducted has led to the growth of
B2B magazines and directories targeting specific audiences.
Advertising by non-traditional segments: Increased spending by new emerging
sectors in India such as organized retail, education, telecom, insurance
etc has provided a lot of revenue impetus to the print industry.
Indian internet industry:
Internet usage in India has been on the rise over the last few years with a
greater number of users being able to access the Internet. Increasing focus
on literacy, PC education and vernacular content on the web is expected to
generate an increase in online penetration in the country. What is likely
to be unique about internet growth in India is that a significant majority
of the new internet users will experience the web on mobile and hand-held
devices rather than on the fixed line PC. The recent auction of 3G spectrum
and broadband wireless access (BWA) is likely to go a long way in helping
further the growth of mobile internet in India.
Internet audiences in India are approximately 47 million users (Source:
Juxt Consult India Online 2009). As broadband penetration & mobile based
consumption grows (3G), Internet audiences will grow especially from
smaller towns, who are discovering how the Internet can be used to surmount
barriers of distance and time. While Email and Information Search remain
the top activities on the Internet, online banking, ecommerce transactions,
gaming, Video/ Music downloads have been on the rise. (I-Cube 2008 - IAMAI
and IMRB). Another key factor in spurring heightened interest in the online
medium has been the relative affluence and empowered nature of internet
users. This was corroborated by a recent survey of cyber cafe audiences by
Nielsen and also Juxt Consults Online Report 2009, which showed that more
than 50% of the audience was from the aspiring class and large proportion
from SEC A&B. This makes the online audience significant from an advertiser
point of view. As per industry estimates the internet advertisement
revenues are expected to grow at a much faster rate as compared to most
other segments in the media industry over the next few years. Also, the
large number of mobile Internet users in India which as per a recent Google
report is the second highest in the world after US, is a positive indicator
of potential Internet audience growth through mobile based solutions. A
Nielsen Report as of April 2009 also states that online video consumption
is growing complementary to Television rather than as a substitute for the
same and Web18 as one of the largest servers of video content in India is
well placed to drive this revolution.
As detailed above, India already has some of the worlds largest user bases
- 51h largest Internet user base and 2nl largest Mobile user base (as per
Internet World Stats and ITU respectively) in terms of absolute numbers,
which is projected to increase even further. However the market has
witnessed a lag in terms of monetization of the large user base metrics.
This has been due to low yields, inadequate importance to the medium,
piracy and under monetization of existing opportunities. There is now cause
to believe that with the internet user base reaching critical mass and
becoming comparable to the reach of TV and print, value catch up will
happen sooner rather than later.
Source: Nielsen Mobile. Mobile Internet penetration amongst mobile
subscribers. Latest estimates (US, February 2009; EU, Q1 2009; Canada Q4
2008; BRIC Q1 2008. Juxt Consult India Online 2009)
Key growth drivers for Indian Internet industry:
Rapid growth in mobile internet users: This segment has seen a rapid
increase with the number of internet users increasing by five times in the
last five years. This segment will get an enormous fillip with operators
likely to launch 30 services within the next 8-10 months Increase in
computer literacy: The Government of India has in recent years taken
several initiatives to promote the penetration and literacy of personal
computing. For example, the Government of India has established the
Universal Service Obligation Fund which seeks to finance the provision of
basic telecommunications services throughout India, statewide area networks
and common service centers, to promote the use of the Internet for
business, educational and home use across the country.
Growth of online advertising: Indias online advertising market is
relatively under-penetrated compared to other high growth countries.
Internet advertising is projected to grow by 32% over the next five years
and reach an estimated Rs. 2,900 cr in 2014 from the present Rs. 800 cr in
2009. The share of the online advertising too is projected to grow from
2.3% in 2008 to 5.5% in 2013 of the overall advertising pie.
Expanding online content: Internet content targeted for the Indian market
has expanded significantly with new websites now offering national,
regional and local information and news, online shopping, gaming, travel
services and other interactive features and services. Additionally,
increase in the Hindi and regional language content and services has
brought many non English speakers into the internet fold G & Wireless
Broadband: Another major impetus to online industry could be the platform
advantages offered by the introduction of 3G & Wireless broadband services
in India. The Union Govt.s recent auction of spectrum will help telecom
operators launch these services within FY 2011 and this is expected to
increase internet usage. A ecosystem of stakeholders including operators,
application developers, content owners and service providers is expected to
develop new specialized services to drive this growth.
BUSINESS OVERVIEW - SEGMENT WISE PERFORMANCE:
Television Eighteen India Ltd (TV18) [BSE: 532299, NSE: TV18] operates
Indias leading business news television channels, CNBC TV18 and CNBC
Awaaz. It also runs one of Indias largest Internet players - Web18, as
well as one of Indias leading real time financial information and news
terminals - Newswire18. TV18 entered publishing & local search market with
the acquisition of Infornedia, rechristened as Infomedia18. Infomedia18 is
Indias leading special interest publishing and local search player.
1. BUSINESS TELEVISION:
- CNBC-TV18-Indias No.1 business medium.
- CNBC AWAAZ-Indias leading consumer focused business channel
2. PUBLISHING & LOCAL SEARCH:
- INFOMEDIA18 - Indias leading special interest & 13213 publisher.
Publishers of Yellow Pages, Overdrive, Chip magazine amongst others.
3. CONSUMER INTERNET:
- WEB18 - Portals across the content, transaction, subscription & mobile
spectrum
- CONTENT - In.com, Moneycontrol.com, Ibnlive.com, Cricketnext. com,
Tech2.com, Compareindia.com, 52622 Mobile
- TRANSACTION - Yatra.com, Bookmyshow.com, Easymf.com
- SUBSCRIPTION - Poweryourtrade.com, Commoditiescontrol.
com, Indiaearnings.com
4. REAL TIME DATA & INFORMATION:
- NEWSWIRE18 - Indias leading provider of real-time market data and news
for participants in the financial markets.
BUSINESS TELEVISION:
CNBC-TV18-INDIAS NO.1 TV BRAND & INDIAS NO.1 BUSINESS MEDIUM:
The undisputed leader in business news and information in India, CNBC-TV18,
is trusted by business leaders for its analysis, insight and real-time
market coverage. Since 1999, CNBC-TV18 has been the platform for thought
leaders across India, giving Indias decision makers unparalleled news,
analysis and perspective facilitated by one of the largest and most
comprehensive television content libraries in India. Not only has the
channel revolutionized business programming in India, helping viewers to
understand and profit from the markets and from their businesses, it has
also built loyal communities, by interacting with people of all ages
through non markets programming, special on-ground events and a series of
awards that have set the standards for industry benchmarks.
VIEWERSHIP PERFORMANCE:
For the year ended March 31, 2010, CNBC-TV18 led the news genre and emerged
as the nations most preferred news source amongst the core audiences. Its
leadership in the business news space was undisputed
PROGRAMMING:
Content & Programming Strategy: CNBC TV18s programming strategy is aimed
at delivering the latest and highest quality business content to its
audiences yet also broad-base the universe of such audiences with programs
of wider appeal. CNBC TV18s benchmark coverage extends from corporate
news, financial markets coverage, expert perspectives on investing and
management to industry verticals and beyond. CNBC-TV18 has been constantly
innovating with new genres of content that help make business more relevant
to different constituencies across India. CNBC TV 18s expansive and
engaging programming along with various innovative formats introduced such
as industry events, investor camps, vertical focused series and so on
provides a diversified offering to viewers and adds tremendous value
addition to all stakeholders.
News leadership - Throughout the year, CNBC-TV18 continued to be the medium
of choice for all major business and policy news, whether national or
global. From coverage of key policy moves of the govt., especially fiscal
decisions intended to manage the impact of the slowdown and those of major
regulators like RBI and SEBI to major corporate news ranging from corporate
actions to mergers & acquisitions, from markets news to sectorial news,
CNBC-TV18 continued to be at the forefront. Moreover, when it came to major
global news such as the Dubai & Greek economic arises, CNBC-TV18 partnered
with the CNBC Global Network to get Indian audiences real time coverage.
From breaking news to insightful analysis, CNBC-TV18 programming was
aligned to evolving needs of the viewers and the business environment.
Content Differentiation - During the period, CNBC-TV18 continued to
strengthen its position as Indias No.1 business medium, by conceptualizing
& delivering a wide portfolio of special programming & marketing
initiatives. From topical specials to exclusive with top news makers, from
interactive properties to landmark events, CNBC-TV1 8 further enriched its
content portfolio. Especially noteworthy were the channels initiatives
around its 10 Year anniversary in Dec 2009, its launch of new primetime
shows like Tycoons with Vir Sanghvi, India Inc Gen Next and as always,
the channels benchmark coverage of the 2 union budgets in the fiscal (July
2009 Interim Budget & February 2010 Union Budget). The channel further
strengthened its offerings with interactive initiatives such as the CNBC-
TV18 Linkedin Polls, an exclusive marketing alliance with the Worlds No.1
Professional Networking brand and a series of other indices & polls that
gauge emerging business trends and consumer confidence levels in the
economy.
Innovation & Value Creation in Programming - At CNBC TV18, Focus is the
customized innovation solutions division within the network that has grown
from strength to strength. The fundamental ideal behind the genesis of
Focus was to deliver sustainable value to partners & audiences rather
than restricting the channel to traditional content delivery model of media
brands driven by regular advertising and shows. Focus aligns itself with
the strategic objectives of partners and after mapping that with viewer
needs, develops a comprehensive mix of programming and promotions to
achieve value addition for viewers as well as the partners. With the use of
new distinctive formats, both on air and on ground, Focus engages
stakeholders of the partners & viewers of the channel at multiple touch
points. In the last year, CNBC TV18 Focus has continued to grow with
benchmark events such as the Emerging Awards, India Business Leader Awards,
Investor camps, Art camps and so on. Formats include awards, camps, on pair
special series etc.
- Special Properties - CNBC-TV18 continued to engage with key stakeholders,
viewers & investors as well as the industry through its multiple benchmark
properties such as the India Business Leader Awards (IBLA), Auto Awards,
CFO awards etc, special formats such as Investor Camps, media partnerships
and other special properties. On its 10th anniversary the channel launched
an investor empowerment initiative called Informed Investor in
association with the National Stock Exchange, the initiative focuses on
strengthening financial literacy & providing a platform for comprehensive
investor education in the country.
- Platform diversification & Affiliate Growth - Brand CNBC-TV18 continued
to expand its platform footprint through high impact promotional
initiatives in the online and mobile domains besides retail level
engagements - its BESTSELLERS DVD & books title range is available in
Indias leading retail stores. This emerges from the channel philosophy
that it must be communicate to its stakeholders across platforms and be
true to the fast emerging Convergence reality amongst Indias business
audiences
BRAND PERFORMANCE:
CNBC-TV18 continued to strengthen its decade old leadership as Indias No.1
business medium and a pioneer of business news during the period. Despite
intense competitive activity in the business news genre, the channel
sustained its leadership through its innovative programming, marketing &
distribution efforts. The performance of the channel was further evident
through its undisputed market leadership amongst core news audiences and
through several industry accolades.
CNBC-TV18: INDIAS NO.1 TV BRAND:
CNBC-TV18 added another feather to its cap, by being VOTED INDIAS NO.1 TV
BRAND by the nations media & marketing decision makers in a survey
conducted by Pitch magazine from the exchange4media group. Ahead of all
channels, across genres and competition,CNBC-TV18 achieved this accolade on
account of its exemplary performance across key decision making criterion
including media delivery, innovation, professionalism, servicing ability
etc. This is a significant affirmation of the trust & faith thatour key
advertising partners have reposed in the channel over the years.
CNBC-TV18: INDIAS NO.1 BUSINESS NEWS CHANNEL:
CNBC-TV18 has been widely recognized as the NO.1 BUSINESS NEWS CHANNEL in
the country over the years. As in the earlier years, for 2009-2010 as well,
CNBC-TV18 has been awarded the Best Business Channel at the nations
leading television awards such as the Indian Television Academy awards &
the Indian Telly Awards. This is apart from the numerous other accolades
received by the anchors, programming & production teams for shows, promos
and special properties.
CNBC AWAAZ-INDIAS NO.1 HINDI BUSINESS NEWS CHANNEL:
We launched CNBC Awaaz in 2005 as a news channel targeting the Hindi
speaking consumers, retail investors and businessmen to provide information
on areas such as stock markets, commodities, consumer products and
financial planning. It caters to the new progressive Hindi speaking Indian
who is globally aware, enjoys a high propensity to consume and seeks value
in life. Its focus on consumers, retail investors and small businessmen has
helped us expand the business genre remarkably over the last few years
PROGRAMMING:
Content & Programming Strategy - CNBC AWAAZs content strategy is dedicated
to the consuming, investing and financial planning needs of the new
emerging middle India. A large cross section of business audiences in the
Hindi speaking regions of the country and Hindi speakers across the nation,
tune into CNBC AWAAZ as the trusted channel of choice. CNBC AWAAZ
programming ranges from various investing verticals such as perquities &
commodities to shopping trends, new launches, financial planning, personal
taxation and so on. With a mix of industry relevant analysis & macro
coverage as well as news that you can use type of content, CNBC AWAAZ
seeks to be the answer to all financial & business information needs of the
progressive middle class India.
Benchmark Programming - CNBC AWAAZ launched a spate of new shows which
answered the evolving needs of the Hindi speaking business consumer &
investor. Shows & properties such as Responsibility aur Rupaiya,
Financial inclusion summit, Super 20 advised viewers on investing
choices and financial planning
Audience expansion & engagement - CNBC AWAAZ added to its line up of
benchmark initiatives which engage with audiences and stakeholders. A key
highlight was UTTAR UDAY, a pioneering initiative that provided a
platform to the youth, the SMEs & other industries from across northern
Indian states to voice their issues and concerns that are hindering growth.
CNBC AWAAZ also launched Chotta Business Bade Sapne, a unique corporate
reality show saluting the entrepreneurial spirit of Indian Small and Medium
Enterprises (SMEs).
Special Properties - CNBC AWAAZ continued to deliver on its leading brand
properties such a Pehla Kadam, Indias foremost investor education
initiative, CNBC AWAAZ Consumer Awards, real Estate Awards & Travel Awards.
BRAND PERFORMANCE:
CNBC AWAAZ has emerged as business viewing choice of millions in middle
India claiming the largest reach within the business genre. In the past
couple of years, CNBC AWAAZ has won numerous accolades for its various
shows and properties including Best Hindi News Anchor, Best Hindi
Business Show at leading industry platforms.
Out of Home: Do note that the existing TV viewership measurement mechanisms
though essential do not project the actual delivery for a media platform
like CNBC TV18 & CNBC AWAAZ. The CNBC TV18 & CNBC AWAAZ services attract a
great amount of viewership out of home (OOH) especially in corporate
offices, institutions, business areas, markets etc. This viewership is not
captured in the commonly used TV measurement mechanisms and thus CNBC TV18
audience reach is actually much higher.
The Network 18 group has a news-gathering network comprising of 23 news
bureaus (including in London and New York), providing latest corporate and
financial news from Indian and global markets.
STRATEGIC OBJECTIVES:
To consolidate our position further as the most preferred choice of all
business viewers in the nation through best in class content, innovation in
programming and an uncompromised focus on the highest quality of editorial
coverage.
To ensure that the channel viewers are engaged with actively and
consistently, through a variety of platforms ranging from on-ground events
to online & mobile initiatives.
To strengthen our relationships in the market and build long-term value
creating partnerships with advertisers, distributors and other alliance
partners.
To develop reasonable traction for value added content from CNBC channels
through new delivery mechanisms such as DVDs, content syndication etc.
To diversify our revenue streams and increase contribution from
subscription revenues overtime
WEB18:
INDIAS LEADING WEB NETWORK:
Web18, Indias leading Internet player continued to build on its leadership
in the online space through strong traffic sustenance on its web portals,
growth in its WAP services portfolio and continued innovation in its
features & offerings
In.com:
In.com further strengthened its leadership position during the year and
cemented its No.2 position among Indian horizontal portals. In.com unveiled
a new avatar in December 2009. The new intuitive interface facilitates user
interactivity on the site. This includes significant additions to the
content and features available on the various sections of the portal. From
a new music player in its Listen section to a careers sub-section within
Read, from a beefed up Find page to more options within the Download
section, the enhancements have further augmented the user experience on the
site.
In.com launched an anti-Piracy Campaign on 5th January, 2010 which
supported the movement against destruction of music IPR and this has been
well appreciated by the music industry
Moneycontrol.com:
Moneycontrol celebrated its 10th year anniversary in November, 2010, marked
by a host of celebratory online initiatives. Business leaders such as Anand
Mahindra, Kumaramangalarn Birla, Steve Forbes shared their vision on the
site. Moneycontrol.com also formally announced the partnership with Intuit
Inc. on its site, to bring to its users the Intuit@ Money Manager, an
innovative personal finance tool that offers consumers a smarter way to
plan, track and grow their money for the future.
Furthermore, Moneycontrol launched its news offering - Newscentre, which
is a repository of the latest news from Moneycontrol partners (Forbes
India, magazines from the Infomedia18 stable such as Entrepreneur,
Overdrive, Chip etc, and Newswire18), providing comprehensive business
news, including softer aspects of business like leadership, management,
corporate lifestyle etc.
Moneycontrol.com launched MoneyControl MYTV in February 2010. This is an
innovative service that allows the user access to TV on Demand.
Moneycontrol MYTV provides for custornizable stock tickers, on-demand
business news from CNBC-TV18, Live TV and real-time market updates.
Industry experts & Moneycontrol.com teamed up, yet again, for Budget 2010,
unleashing a host of exciting activities and features including exclusive
interactions with Ramesh Damani, Riddham Desai, etc..,.
IBNLive.com:
In Dec. 2009, IBNLive provided a new social networking platform to CNN-IBN
& IBN7 anchors, thereby improving the interactivity between viewers & IBN
news channels. This initiative is infact a part of a larger long term focus
on social networking for the site.
In March 2010, IBNLive developed dedicated sections within the portal that
aggregate and deliver the latest news & web content focused on key areas of
mass interest through ibn politics, ibn sports, ibn movies & ibn trends.
It was recently named the News Website of the Year at the Digital Media
Awards, 2010.
Cricketnext.com:
Cricketnext.com launched the Fastest Online Scorecard in March, 2010. This
exciting product allows the user instant access to ball by-ball updates,
with the scorecard page refreshing almost every few seconds, to update
scores of the ongoing match
Bookmyshow.com:
Bookmyshow.com continues to be the leading remote movie ticketing service
(online, IVR, mobile, telecalling) in India Bookmyshow.com was the Official
ticketing Partner for Mumbai Indians, Delhi Daredeviis and Kings XI Punjab
for the recently concluded IPL Season 3
Investment in Yatra.com:
We hold 16% stake in Yatra Online Inc. (Yatra). www.yatra.com is one of
Indias leading travel websites providing travel related information
pricing, availability and reservations for airlines, hotels railways, buses
and car rentals across many cities and rural areas throughout India
STRATEGIC OBJECTIVES:
Our objective is to become the destination of choice and the gateway for
the web for Internet users in India and for the global Indian community. We
intend to pursue the following strategies to achieve this objective:
Continue the breadth of our content, applications and services. Strengthen
our relationships with the rapidly growing base of online advertisers in
India.
As we continue to expand our network, we focus on delivering content and
applications that appeal to a broad spectrum of Indian Internet users. With
special reference to key brands at Web18, following are the imperatives:
In.com: We will continue to add innovative features, applications and also
social networking feature on in.com to make it the leading horizontal
portal in Indian internet.
Moneycontrol.com: We will continue to hold on to the leadership position on
moneycontrol.com amongst the financial sites in spite of burgeoning
competition. We will add more applications in personal finance and
investments to attract new users and retain existing users.
Ibnlive: We will make it the most authoritative news website in India and
continue to champion all Indian newsworthy events cross the globe for
million of users.
Bookmyshow.com: We shall to continue to retain the leadership position in
movie ticketing and expand its offering by leveraging the recent success of
IPL ticketing service Mobile: We will make all our applications and
services available on Mobile and also develop new applications and services
in the local search and information space.
INFOMEDIA18:
Infomedia18 was acquired in 2007 as part of our strategy of being an
integrated player in the media and publishing space. The two key pivots of
Infomedia 18s growth are the local search business and the special
interest publishing business. The company is the market leader in the local
search business providing consumers and businesses local information on the
media of their choice - internet, mobile, on the phone and in physical
yellow pages. Infomedia18 is also Indias largest publisher of special
interest publications, which target both mass and niche audiences.
Infomedia18 also provides various printing solutions to its customers. We
have been successful in leveraging our strengths in the television and
internet businesses to establish synergies and further expand the local
search and publishing segments. Here are the key developments for the year
under review at Infomedia18
BUSINESS EXPANSION:
INFOMEDIA18 YELLOW PAGES:
The new look print directory Infornedia Yellow Pages (IYP) has been well
received by the users:
- KNOW YOUR CITY: During the Year Know Your City product was launched in
Mumbai, Delhi, Hyderabad, Jaipur, Bangalore and Goa.
- Infornedia Yellow Pages has launched new customer loyalty programs.
ALIBABA PARTNERSHIP:
Our partnership with Alibaba.com, to sell memberships to SMEs in India has
gone from strength to strength. During the year, the partnership has
delivered new contracts with 3,800 SMEs.
ASK ME: The acquisition of Askme.com was completed during the Year.
Askme.in beta site was successfully launched during the year.
EVENTS: The Engineering Expo promoting the 13213 print segment were held in
4 cities including Pune, Ahmedabad, Chermai and Indore.
OVERDRIVE MAGAZINE India leading auto magazine, from the Infomedia18 B2C
stable, went through a re-vamp with a new refreshed look to enhance reader
experience.
LAUNCH OF ENTREPRENEUR MAGAZINE:
During the year, Infomedia18 launched Entrepreneur, one of the worlds
leading magazines for small businesses & business owners, for the Indian
market. The local edition focuses on Indias small businesses, start-ups,
venture funds and financial institutions. The magazine offers an in-depth
understanding of what an entrepreneur wants and needs: information, tools
and resources to conquer their daily business challenges
PLATFORM DIVERSITIFICATION:
Better Photography magazine introduced the acclaimed Wedding
Photographer of the Year awards
BRAND PERFORMANCE:
Infornedia Yellow Pages was conferred the Superbrand status during the
year Overdrive magazines TV offshoot, the Overdrive TV shows on CNBC
TV18 won many accolades and was adjudged the Best Automotive show at the
News Television Awards 2010.
STRATEGIC OBJECTIVES:
Rapidly build scale in the local search business:
- Grow the online and voice platform leveraging Ask me and burrp
acquisitions.
- Strengthen the print directory business with the launch of the Ask me
voice services.
- Strengthen partnership with alibaba.corn as we enter the third year of
operations.
Expand the special interest publishing business by launching large titles
and leveraging the Groups expertise in the events business and in
electronic media
NEWSWIRE18:
Newswire18 is Indias leading real-time news and data terminal services
provider and the only domestic player with an integrated platform. The
Newswire 18 News & Data platform is a state-of-the art market data platform
providing custornizable views and several analytical tools structured to
meet unique Indian customer needs. The platform has news on India, Indian
exchange data, Indian OTC data, Global Newsfrorn several sources including
DowJones, Global exchange data, and Global OTC data, along with news,
financials of companies and data histories.
Newswire18 has operated in an extremely challenging macro economic
environment for the last two years given that its core customer base, the
financial services industry has been the most adversely impacted by the
financial and economic downturn. In spite of the banks, financial
institutions and the other key clients canceling / deferring purchases,
Newswire18 has recorded robust revenue growth for FY2009-10 and has also
been able to turn in a positive EBITDA for the year.
BUSINESS EXPANSION:
Market expansion: Newswire18 has been able to successfully expand the real
time information and data terminals market during the year and made sales
in several non traditional customer segments. This was accompanied with
geographic expansion to new cities and towns.
Product development: Newswire18 restructured its product portfolio and
launched an aggressive program to target sales from trials that had earlier
not converted to sales. The product restructuring is also expected to save
costs. A host of new products and service value-adds launched have already
started boosting sales.
Segment leader: Newswire18 has emerged as the largest vendor in the fixed
income segment besides having the largest number of terminals in most of
the PSU banks.
INVESTMENT IN DEN NETWORKS LIMITED:
TV18 indirectly holds 7.55% stake in DEN Networks Limited which went IPO in
December 2009. The value of the stake is about Rs 193 crat the closing
price ofthe stock as on March 31, 2010 (against an investment of Rs.20 cr)
INDUSTRY OUTLOOK:
Globally, media businesses do not operate in standalone segments of the
media industry or with a single property. As players expand their portfolio
ofservices and revenue streams, their presence across the value chain
further strengthens their competencies. The most attractive aspect of media
businesses is their ability to leverage. Players either leverage their core
competencies in a particular content (filmed, news, music, gaming, etc) and
extend presence across distribution formats or leverage presence in a
particular value chain - film, television, print, etc. In India as well,
integrated models have emerged in a much larger way. TV1 8 has consciously
built its portfolio of businesses with convergence & across the value
chain presence as a key goal. Today, it is perhaps amongst the few media
houses in India with such an integrated value chain, engaging with
consumers at multiple touch points & delivering value to all stakeholders.
TV18, with its current strong presence in television news, publishing and
the internet and new ventures in other media, is well positioned for
further growth and expansion.
Competition in News:
The competition in the television business news broadcasting industry is
intense. We believe that competitive advantage is based principally on
connectivity and the ability to attract and retain viewers and advertisers.
Our ability to compete successfully depends, in part, on our ability to
anticipate and respond to competitive factors affecting the Indian news
broadcasting industry, and more specifically, the Indian television
business news broadcasting industry.
Strengthen our market leadership - Innovation & Leadership in Television
programming.
We intend to continue to produce and broadcast television programming that
enables us to maintain our market leadership in the television markets we
serve. We seek to continue to be a market innovator in content
differentiation, programming formats and scheduling by continuously
enhancing the news gathering, programming and presentation of our
television channels.
Building strong strategic partnerships:
Partnerships, alliances and joint ventures are great value drivers with
significant synergy upsides through collaboration and sharing of strengths.
Our Company has established partnerships and alliances with other leading
media establishments and has been instrumental in initiating and creating
several strategic partnerships and alliances entered into by the Network18
group. We believe that we have a reputation in the media industry as a
reliable partner which has enabled us and the Network18 group to build and
maintain relationships with other leading global and Indian media entities,
including NBC Universal, CNN (Time Warner), Viacom. We believe that we
derive substantial benefits from the brand name and extensive network of
our partners and that our partners recognize the value we bring to the
ventures, which is demonstrated by the willingness of our partners to
collaborate with us for extended periods. We believe that our partners and
alliances provide us with greater market visibility, significant synergy
upsides through sharing of strengths, reputational benefits and will assist
us in continuing to build our market share in India and internationally.
Establishing & growing new businesses:
Our Company has in the past successfully conceptualized and established new
businesses in niche spaces. We entered the internet space in 2000 and have
since then successfully established, through both organic and inorganic
growth, several leading internet websites in India. Websites such as
vvww.moneycontrol.com and vvww.ibnlive.com attract and engage a large and
growing user base. We also acquired and re-launched Crisils market wire
service, as Newswire 18 - a real time financial information and news
terminal operation. Moreover, we believe our ability to successfully
establish new businesses further strengthens our ability to attract and
retain leading industry talent and leverage existing skills and synergies
from the Network 18 group to grow our business.
Positioned to capitalize on online & mobile growth:
With the advent of 3G services, wireless broadband & WIMAX, value added
content, secure payment gateways and enhanced backend logistics, the
internet & mobile are slowly growing to be a preferred media for consumers
in India with substantial revenue potential. We seek to expand our internet
& mobile portfolio through organic and inorganic growth and leverage our
existing customer relationships to expand penetration and geographic
coverage. For example, we believe that the recent launch ofvv,(vw.in.com
will provide relevant and personalized content from across the internet and
enable us to take advantage of the opportunities created by the
proliferation of user generated content to provide innovative web
publishing and social networking tools. Additionally, the Network18
groups strategy to house investment opportunities in internet properties
in our company further enables us to leverage the broadcasting viewership
of our company through a wide content offering of internet websites. As
consumer media consumption continues to change, leaning towards more
internet and mobile usage and interactive environments, we believe that the
internet will become even more relevant as a branding medium and that
interactive media companies, like our Company, should benefit from these
trends.
Regional focus:
Given Indias linguistic diversity, we believe that regional language news
channels will continue to be important players in the industry. Our Company
believes that strategic investments, both through organic and inorganic
routes, in other regional language news channels and other local channels,
may act as an enabler to grow our business. As part of the strategy, we
intend to launch new regional business news channels in India depending
upon prevailing market conditions.
Looking forward:
We believe that advertising spending in India will increase substantially
with the general growth of the Indian economy and the increased purchasing
power of consumers in the country. If we continue to maintain our strong
brand recognition and market share for our television channels, internet
websites and other properties, we believe we will be well positioned to
benefit from such economic factors, thus enabling us to generate greater
revenue from advertisers. In addition, we believe that the expansion of
digital cable and satellite television will help address the currently
prevalent under-reporting of subscribers, which would have a positive
effect on our subscription revenues from viewers. We also intend to be
present on emerging distribution platforms with a potential to deliver
additional subscription revenue. Further, our channels are a part of the
Star-DEN distribution bouquet of channels, which includes leading channels
from the Star group such as Star Plus, Star One and Star Gold. We
believe that as a result of being a part of a strong distribution bouquet
our subscription revenue will increase in a market with increasing
addressability of the cable and satellite market. We intend to leverage on
our strength in the television broadcasting and internet businesses in
India to consolidate our presence in the publishing and print sector.
Thiswould allow us to offer a wider advertising footprint to our customers
and extend our reach.
We have an internal evaluation system for all acquisition or investment
opportunities based on identified parameters of financial performance,
operating parameters and infrastructure. Each opportunity will be evaluated
by a cross functional team of senior management, before being referred to
our Board for further evaluation and approval.
BUSINESS STRATEGY & FUTURE PLANS:
Television Eighteen (TV18) has a leading presence in the financial news,
information and transactional space in India through its television, online
& new media and data terminal businesses.
Moreover, TV18 is strongly placed to capitalize on the new opportunities in
the publishing and local search space through Infornedia18. Going forward,
TV18 will continue to consolidate its existing offerings and create &
launch new initiatives that cater to the evolving finance, investing and
consuming needs of audiences in the country. Strategically, the following
are key for TV1 8:
Deliver across the financial information & specialty need spectrum -
Considering the return of strong economic momentum post the global
slowdown, rising consumerism, growth in the financial needs of Indian
consumers and deepening of retail finance markets, increasing global
assimilation of India Inc. and the overall importance of the Indian
economy, our presence across a the spectrum of business & financial
information as well as the specialty B2C & B2B space is critical. Through
our channels, online services and other offerings, TV18 delivers content
ranging from markets to personal finance & investing choices, from policy
to management intelligence, from corporate news & information to financial
education, from benchmark initiatives to industry verticals, from special
interest to niche infotainment. TV18 shall continue to add to its content
and service repertoire to meet all evolving information & transactional
needs of the financial and business audiences in the country.
Exploit content & platform synergies- TV 18 will also focus on leveraging
cross platform synergies both in terms of content, media as well as
audiences. The focus will be on ensuring content availability as is
required, with a high degree of ease of use and also as much custornization
as possible. Moreover, TV18 shall focus on providing sustainable value to
advertisers and partners by delivering audiences at multiple touch points
across platforms. Addressability - With the growing addressability emerging
on the Indian media landscape, TV18 will endeavor to develop competent
offerings on addressable platforms satisfying relevant content needs of
Indias business audiences.
Consolidation & Diversification - Web 18, a key part of TV18 stable, shall
continue to focus on emerging as a leader in the online content,
transaction & communication spaces and thus strengthen TV1 8s existing
presence in new media. With the rapid proliferation of online media in
India due to better IT infrastructure, broadband & 3G penetration and
secure payment gateways, internet user base in India is expected to grow
exponentially and growth in online advertising is forecast to be robust at
a 30% expected CAGR over the 2009-2014 period. Clearly, Web 18 with its
wide variety of offerings will be best positioned to monetise these
megatrends both from a user as well as advertising standpoint. Infomedia18
will continue to build on its presence as a specialty publishing major and
one of Indias leading local search players. TV18 will continue to
establish & exploit synergies with the publishing business of
Infornedia18, including the B2B & B2C titles and at the same time attempt
to strengthen its services portfolio.
RISKS AND CONCERNS:
The following are the areas of concern Lack of transparency in sharing of
revenues by distribution
- The lack of transparency in case of analog cable systems has
traditionally been a challenge for the broadcasters. Local cable operators
(LCOs) still garner almost 75% of the subscription revenues due to under
declaration of the subscription numbers, broadcaster gets around 15-20% and
MSO gets around 5%. There is a possibility for this scenario to change to a
more equitable sharing norm, with higher penetration of digital platforms.
Carriage Fee - As per industry estimates, carriage fee in 2009 was around
INR 1000 to 1200 Crores. The fee depends on the pull factor of broadcasters
in terms of the kind of content produced, overall popularity of the channel
and the bouquet that the broadcasters provide. The bargaining power of
broadcasters is limited due to the shortage of bandwidth. However, it is
expected that the onset of digitization will make more bandwidth available.
Advertising Environment Risks - Due to the global economic crisis, the
macro advertising environment has been adversely impacted for the last two
years, though recovery momentum has begun. This risk of sudden macro-
economic changes, leading to cuts in ad spending, can be substantial for
broadcasters. Content costs for channels - As a result of the clutter and
competitive pressures in the market, there has been a high degree of
volatility in content costs which is a cause for concern. Regulatory
concerns - The Indian broadcasting, especially the news and current affairs
genre, is subject to significant Government regulations. License to uplink
channels from India provides broad discretion to the Government to
influence the conduct of business by channels by giving right to modify, at
any time, the terms and conditions of licenses granted. Any adverse change
in regulatory environment can negatively impact the business of channels.
The Telecom Regulatory Authority of India (TRAI) has also implemented a
series of additional regulatory measures, including a standardized template
that fixes the commercial terms between broadcasters and cable operators.
Emergence of large number of channels in the market has lead to
fragmentation of audiences. Also, advertisements in India are regulated by
applicable guidelines issued by the Government of India, with the
discretion to determine the display or broadcast of any particular
advertisement on the basis of public policy, general interest of society
and such other factors. Increasing regulation(s) and government
intervention in the news broadcasting space could impact news broadcasters.
The broadcasting industry is subject to rapid changes in technology. The
Company strives to keep in line with the latest international technological
standards. The cost of implementing new technology significantly influences
the financial condition of the Company. Slow growth of broadband internet
users - The rate of growth of broadband internet users has been slow in the
recent past in spite of policy announcements by the government.
INTERNAL CONTROL SYSTEMS:
Your Company has put in place a proper system of internal controls that
ensures the effectiveness and efficiency in all its operations and
compliance with applicable laws and regulations. As a part of its internal
control measures an independent Internal Auditor scrutinizes the financials
and other operations of the Company. Even the slightest diversions from set
standards are reported to the Board through the Audit Committee and
appropriate remedial measures are taken. The Internal Control Systems are
periodically reviewed and strengthened to meet the requirements.
HUMAN RESOURCES AND DEVELOPMENT:
Your Company recognizes that a significant part of its success depends on
the quality of its human resources. This intellectual capital is reflected
in the quality of our programming and broadcasting, our business strategy,
our excellent customer relations and our financial health. Your company is
focused on attracting, developing and managing talent. Robust Human
Resource systems & processes have been implemented to provide an enriching
work experience to employees. A culture of incentives and pay-for-
performance has been inculcated to ensure excellence in deliverables.
Network 18s Human Resource team continues to make a concerted effort to
cultivate Companys image as an employer of choice at leading campuses
across the country. Network18 Group has been judged by the Great Place to
Work Institute and the Economic Times as the Best Workplace in the Media
Industry two years in a row - 2008 and 2009. This, coupled with the
Network 18 Groups strong brand equity, continues to attract the best
talent in the industry. The comprehensive Performance Management System
continues to help employees recognize their strengths and areas of
improvement. Your Company has created a dedicated Organization Development
team which aims to create a Learning Organization in the coming years. In
our efforts towards building a High Performance Work Culture, a set of 5
Values have been deployed along with the Mission statement. The Reward &
Recognition Program continues to identify and reward the outstanding
performers for their contribution and excellence. Embedded HR teams are
working closely with different businesses so that there is rigor in the
Reward & Recognition Program. As on March 31, 2010 814 employees were on
the payroll of the Company.
DISCLAIMER:
Statements in the Management Discussion and Analysis describing the
Companys objectives, projections, estimate, expectations may be forward-
looking statements within the meaning of applicable securities laws and
regulations. Actual results could differ materially from those expressed or
implied. Important factors that could influence the Companys operations
include economic developments within the country, demand and supply
conditions in the industry, input prices, changes in government
regulations, tax laws and other factor such as litigation and industrial
relations.
Information regarding the Employees Stock Option Schemes/ Employees Stock
Purchase Plan as on March 31, 2010 in terms of Regulation 12 and 19 of SEBI
(Employees Stock Option and Employees Stock Purchase Scheme) Guidelines,
1999.
Employee Stock Option Plan:
(a) options granted during 2009-10 Nil
(b) the pricing formula No options were
granted during
2009-10
(c) options vested 2,550,514
(d) options exercised 1,351,867
(e) the total number of shares
arising as a result of exercise
of option 1,351,867
(f) options lapsed 156,210
(g) variation of terms of options No variation was done
on the outstanding
options during 2009-10
(h) money realised by exercise
of options (Rs. Lacs) 148.03
(i) total number of options in force 4,628,384
employee wise details of options granted
to during 2009-10:
(i) senior managerial personnel Nil
(ii) any other employee who receives a
grant in any one year of option amounting
to 5% or more of option granted during that year. Nil
(iii) identified employees who were granted
option, during any one year, equal to or
exceeding 1% of the issued capital (excluding
outstanding warrants and conversions) of the
company at the time of grant None
(k) diluted Earnings Per Share (EPS) pursuant
to issue of shares on exercise of option
calculated in accordance with Accounting
Standard (AS) 20 Earnings Per Share 2.45
(1) Where the company has calculated the
employee compensation cost using the intrinsic
value of the stock options, the difference
between the employee compensation cost so
computed and the employee compensation cost
that shall have been recognized if it had
used the fair value of the options, shall be
disclosed. The impact of this difference on
profits and on EPS of the company shall also
be disclosed.
(i) method of calculation of employee
compensation cost Intrinsic value
(ii) the difference between the employee
compensation cost so computed at (i) above
and the employee compensation cost to P&L
account if the company had used the fair
value of the options (Rs. Lacs) 538.29
(iii) The impact of the difference at (ii)
above on profits and on EPS of the company
Profit/Loss after tax (Rs. Lacs) -3,247.55
Less: Additional employee compensation cost
based on fair value (Rs. Lacs) 538.29
Adjusted Proft/Loss after tax (Rs. Lacs) -3,785.84
Adjusted Basic EPS -2.86
Adjusted Diluted EPS -2.86
(m) Weighted-average exercise prices/
weighted-average fair values of options NA
(n) A description of the method and significant
assumptions used during the year to estimate the
fair values of options, including the following
weighted-average information:
(i) risk-free interest rate 5.51%
(ii) expected life of the options from the
date of grant (in years) 4.23
(iii) expected volatility 71.80%
(iv) expected dividends, and 2.99%
(v) the price of the underlying share in market
at the time of option grant. Nil as no option
granted during the
year
Persons constituting Group coming within the definition of group as
defined in the Monopolies and Restrictive Trade Practice Act, 1969 include
the following:
Name of the Companies
Network18 Media & Investments Limited
ibn18 Broadcast Limited
setpro18 Distribution Ltd
RVT Investments Private Limited
iNews.com Limited
NewsWire18 Limited
Moneycontrol Dot Com India Limited
Television Eighteen Commoditiescontrol.com Ltd
e-Eighteen.com Ltd
SGA News Limited
TV18 Home Shopping Network Ltd
Web18 Software Services Limited
Care Websites Pvt Limited
Big Tree Entertainment Pvt Limited
Network18 India Holdings Private Limited
RVT Media Private Limited
MobileNXT Online Private Limited
Colosceum Media Private Limited
Stargaze Entertainment Private Limited
Webchutney Studio Pvt. Limited
Juxt Consult Research and Consulting Private Limited
Goosefish Media Ventures Private Limited
Blue Slate Media Private Limited
digitaI18 Media Limited
RVT Holdings Pvt Limited
RRK Holdings Pvt Limited
RB Software Private Limited
RB Investments Private Limited
VT Investments Private Limited
RVT Softech Private Limited
RRB Holdings Pvt Ltd
greycells 18 Media Limited
RB Softech Pvt. Ltd.
VT Holdings Private Limited
BK Media Pvt Limited
Tangerine Digital Entertainment Pvt. Ltd.
Keyman Financial Services Pvt. Ltd.
RVT Fincap Pvt Limited
VT Softech Private Limited
Network 18 Publications Limited
RB Finhold Private Limited
RRK Finhold Private Limited
RRB Investments Private Limited
RRB Fincap Private Limted
RRK Media Private Limited
RVT Finhold Private Limited
Wespro Digital Private Limited
India International Film Advisors Private Limited
VT Media Private Limited
RRB Media Private Limited
RRK Finvest Private Limited
BK Finhold Private Limited
RB Holdings Private Limited
Infornedia 18 Limited
Glyph International Limited
Cepha Imaging Private Limited
Glyph International UK Limited
Glyph International US LLC
BRR Securities Private Limited
IBN 18 Media & Software Limited
Capital 18 Media Advisors Private Limited
BK Media Mauritius Limited, Mauritius
BK Holdings Limited, Mauritius
Television Eighteen Media and Investments Limited, Mauritius
BK Communications Limited, Mauritius
BK Ventures Limited, Mauritius
BK Capital Limited, Mauritius
BK Network Limited, Mauritius
Television Eighteen Mauritius Ltd, Mauritius
CapitaI18 Limited, Mauritius
Capital 18 Advisors Limited, Mauritius
International Media Advisors Private Limited
ibn 18 Mauritius Limited
TV18 UK Limited, UK
Web18 Holdings Limited, Cayman Islands
E-18 Limited, Cyprus
TV18 HSN Holdings Limited, Cyprus
Network 18 Holdings Limited, Cayman Islands
Namono Investments Limited, Cyprus
Capita 18 Limited, Cayman Islands
Capital 18 Acquisition Corp, Cayman Islands
The Indian Film Company Limited, Guernsey
The Indian Film Company (Cyprus) Limited
TV18 Employees Welfare Trust
IBN18 Trust
Global Broadcast Employees Welfare Trust
Network 18 Employees Welfare Trust
Network 18 Group Senior Welfare Professional Trust
15. Employee Benefits:
a. Description of the Gratuity Plan:
The gratuity liability arises on retirement, withdrawal, resignation or
death of an employee. The aforesaid liability is calculated on the basis of
fifteen days salary (i.e. last drawn salary plus dearness allowance) for
each completed year of service subject to completion of five years of
service.
b. Defined Benefit Plans / Compensated absences:
The present value of defined benefit obligations/ compensated absences and
the related current service cost are measured using the projected unit
credit method with actuarial valuation being carried at each balance sheet
date. The details are set out as under:
(Amounts in Rupees)
Particulars 31.03.2010 31.03.2009
Gratuity Compensated Gratuity Compensated
Benefits Absences Benefits Absences
Change in benefit
obligations:
Present value of 37702960 37222927 20277481 18337902
obligation at the
beginning of the
year
Current service 5843237 4280262 8421708 10470846
cost
Interest cost 3016237 2977834 1419424 1283653
Actuarial (10894451) (5133884) 9164419 11507021
(gain) / loss
Benefits paid (3038025) (21655613) (1680072) (4376495)
Present value of 32629958 17691526 37702960 37222927
obligation at the
year end
Change in plan
assets:
Fair value of 12123970 - 12445507 -
plan assets at
the beginning
of the year
Expected return 1030537 - 995641 -
on plan assets
Employers 1229874 - 934683 -
contributions
Benefits paid (1881559) - (1564572) -
Actuarial gain / 873925 - (687289) -
(loss)
Fair value of 13376747 - 12123970 -
plan assets at
the year ends
compensated
absences not
funded
Net liability:
Present value of 32629958 17691526 37702960 37222927
obligation at the
year end
Fair value of 13376747 - 12123970 -
plan assets at
the year end
Net liability 19253211 17691526 25578990 37222927
Particulars year ended year ended
31.03.2010 31.03.2009
Gratuity Compensated Gratuity Compensated
Benefits Absences Benefits Absences
(Rs.) (Rs.) (Rs.) (Rs.)
Expenses recognised
in the profit and
loss account:
Current service 5843237 4280262 8421708 10470846
cost
Interest cost 3016237 2977834 1419424 1283653
Net actuarial (11768376) (5133884) 9951708 11507021
(gain) / loss
Expetted return (1030537) - (995641) -
on plan assets
Net cost (3939439) 2124212 18797199 23261520
Particulars 31.03.2010 31.03.2009
Gratuity Compensated Gratuity Compensated
Benefits Absences Benefits Absences
Actuarial assumptions
used:
Discount rate 8% 8% 7% 7%
Expetted salary 6% 6% 6% 6%
escalation rate
Expected rate of 8.5% - 8% -
return
Particulars 31.03.2010
Gratuity Compensated
Benefits Absences
Mortality table LIC(1994-96) LIC(1994-96)
Duly modified duly modified
Retirement age 60 Yrs 60 Yrs
Withdrawal rates Age Percentage
Upto 30 years 3
Upto 44 years 1
Above 44 years 1
Particulars 31.03.2009
Gratuity Compensated
Benefits Absences
Mortality table LIC(1994-96) LIC(1994-96)
Duly modified duly modified
Retirement age 60 Yrs 60 Yrs
Withdrawal rates Age Percentage
Upto 30 years 3
Upto 44 years 1
Above 44 years 1
Notes:
1. The discount rate is based on the prevailing market yield of Indian
Government Securities as at the balance sheet date for the estimated term
of obligations-
2. The expected return is based on the expectation of the average long term
rate of return on investments of the fund during the estimated term of the
obligations.
3. The estimates of future salary increases considered takes into account
the inflation, seniority, promotion and other relevant factors.
4. Plan assets mainly comprise funds managed by the insurer i.e. ING Vysya
Life Insurance Company Limited. 20% of the plan assets are invested in the
Liquid Fund while 80% are invested in the Secure Fund. The portfolio
composition of these funds is as follows:
Liquid Secure Liquid Secure
fund fund fund fund
% % % %
31.03.10 31.03.10 31.03.09 31.03.09
Corporate debt 99.98% - 99.64%
Mutual fund / cash 0.02% - 0.36%
Government securities - 13.40% 23.54%
Corporate bonds - 62.99% 53.21%
Equity - 16.56% 15.75%
Money market - 7.05% 7.50%
Total 100% 100% 100% 100%
16. Earnings Per Share:
Basic earnings / (loss) per equity share has been computed by dividing net
profit / (loss) after tax by the weighted average number of equity shares
outstanding during the year. Diluted earnings / (loss) per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the year. The
reconciliation between basic and diluted earnings per equity Share is as
follows:
Particulars Units Year ended year ended
31.03.2010 31.03.2009
a. Net profit / (loss) Rs. (324,755,400) 198,223,022
after tax
b. Weighted average number No. of 132,399,190 119,777,128
of equity shares used in shares
computing basic earnings per
share
c. Basic earnings / (loss) per Rs. (2.45) 1.65
share (a/b)
d. Weighted average of the No. of - 5,132,757
number of shares under shares
options
e. Adjustment for weighted No. of 1,213,690 (1,774,664)
average number of shares shares
that would have been issued
at fair value
f. Weighted average number of No. of 133,612,880 123,135,221
equity shares used in shares (see note below)
computing diluted earnings
per share (b+d+e)
g. Diluted earnings per share Rs. (2.45) 1.61
(see note below)
h. Effect of potential equity Rs. - 0.04
shares (c-g) (see note below)
Note:
Potential equity shares have not been considered for the purpose of
computing diluted earnings per share as the result is anti-dilutive.
17. Employee Stock Option and Stock Purchase Plan:
a. Television Eighteen India Limited Employee Stock Option Plans:
The Company has established several employee stock option plans (ESOPs) In
accordance with the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which
have been approved by the Board of Directors and the shareholders. The
details are as given below:
- Television Eighteen India Limited Stock Option Plan 2002 (ESOP 2002)
- Television Eighteen India Limited Employees Stock Option Plan 2003 (ESOP
- 2003)
- Television Eighteen India Limited Employee Stock Option Plan 2004 (ESOP
2004)
- Television Eighteen India Limited Senior Employee Stock Option Plan 2004
(Senior ESOP 2004)
- Television Eighteen India Limited Long Term Retention Employee Stock
Option Plan 2005 (Long Term Retention ESOP 2005)
- Television Eighteen India Limited Employee Stock Option Plan 2005 (ESOP
2005)
- Television Eighteen India Limited Strategic Employees Stock Option Plan
2005 (Strategic Acquisition ESOP 2005)
- Television Eighteen India Limited Employees Stock Option Plan 2006 (ESOP
2006)
- Television Eighteen India Limited Employees Stock Option Plan A 2007
(ESOP (A)2007)
- Television Eighteen India Limited Employees Stock Option Plan B 2007
(ESOP (8)2007)
- Television Eighteen India Limited Employees Stock Option Plan 2007 (ESOP
2007)
A compensation committee comprising independent members of the Board of
Directors administers the ESOPs. All options under the ESOPs are
exercisable for equity shares. The Company had declared a bonus issue of
1:1 in the AGM of the Company on 7 September, 2007 with record date of 18
October, 2007. Prior to the bonus issue, each option was exercisable for
one Rs. 5 fully paid up equity share of the Company on payment of the
exercise price. Subsequent to the bonus issue each option is exercisable
for two Rs. 5 fully paid up equity shares of the Company on payment of the
exercise price.
The Company had given a postal ballot notice dated 19 December, 2008 to its
shareholders pursuant to Section 192A of the Companies Act, 1956 for the
approval of modifications relating to exercise price and vesting of options
under the ESOP (A) 2007, ESOP 2005, ESOP 2004 and Senior ESOP 2004 plans.
Further the number of options authorised to be granted under the ESOP 2007
were proposed to be increased from 2,542,438 to 10,000,000 options. The
result of the postal ballot was announced on 2 February, 2009 whereby the
aforesaid modifications were duly approved by the shareholders of the
Company.
Consequent to the modifications that occurred after the vesting date of
certain optrons the deferred employee compensation amount increased by Rs.
35,41 million which is being amortised over the additional vesting period.
This incremental intrinsic value granted had been determined based on the
intrinsic value of the modified stock options and that of the original
stock options both estimated as on the date of the modifications.
The impact of the modifications as on the date of modification is
summarlsed below:
Plans As per As per
original plan modified plan
ESOP 2004:
Weighted average price of 51.94 27.58
options outstanding
Weighted average remaining 1.38 3.55
contractual life
Senior ESOP 2004:
Weighted average price of 55.23 49.24
options outstanding
Weighted average remaining 2.24 3.62
contractual life
ESOP 2005:
Weighted average price of 214.31 20.00
options outstanding
Weighted average remaining 1.89 2.85
contractual life
ESOP (A) 2007:
Weighted average price of 221.31 5.00
options outstanding
Weighted average remaining 2.51 3.85
contractual life
b. Senior Employee Stock Awards (Stock Appreciation Right) Plan 2005:
During 2005-2006 the Company had established the Stock Appreciation Right
Plan 2005 (Senior Employee Stock Award Plan) (SAR) for compensation to
the employees whereby the Company in its extraordinary general meeting held
on 25 July, 2005 had approved a grant of upto 300,000 awards to eligible
employees. During the earlier years, the Company had granted 299,995 awards
representmg 140,998 options which had vested as on 31 March, 2007. Pursuant
to the scheme, the employees have a right to receive such numbers of fully
paid up equity shares of Rs. 5 of the Company whose market value matches
with the amount of increase due to appreciation in share price during the
date of grant and date of exercise of the awards. Upto 31 March, 2008, of
the 140,998 options the Company issued 91,650 shares to employees on the
exercising of the options. During the year ended 31 March, 2009 the Company
had issued 36,808 shares under this scheme, and the balance 12,540 options
had lapsed during the previous year.
The salient terms of ESOPs schemes/ revised ESOPs schemes and SAR of the
Company are set out hereunder:
Particulars ESOP 2002 ESOP 2003
Year in which 2002-03 2003-04
scheme was
established
Number of options 700,000 700.000
authorised to be 700,000 700,000
granted
Exercise price* Rs. 5 per option. 95% of market
(See note 1) value on grant date.
Vesting date* After one year from After one year from
(See note 1) the date of grant of the date of grant of
options. options.
Vesting One years service One years service
requirements from the date of from the date of
grant of option. grant of option. date of grant of
option
Exercise period During two years During one year
after vesting date. after vesting date after vesting date.
Un-granted - -
options cancelled - -
during the year
Particulars ESOP 2004
Year in which 2004-05
scheme was
established
Number of options 700,000
authorised to be 700,000
granted
Exercise price* The exercise price is
(See note 1) to be decided by the
compensation
committee, such
that the exercise
price is not less than
the per value of the
shares of the
Company and not
more than the price
presenbed under
Chapter XIII of SEBI
(Disclosure and
Investor Protection)
Guidelines. 2000.
The relevant date
will be the date of
Vesting date* Option to vest after
(See note 1) one year from the
date of grant within
such period not
exceeding ten years
as may be
determined by the
compensation
committee.
Vesting Three years of
requirements service from the
grant of option.
Exercise period During two years
after vesting date.
Un-granted -
options cancelled -
during the year
Particulars Senior ESOP 2004
Year in which 2004-05
scheme was
established
Number of options 840,000
authorised to be 840,000
granted
Exercise price* The exercise price is
(See note 1) to be decided by
the compensation
committee, and is
not to be less than
the per value of the
shares of the
Company and not
more than the price
prescribed under
Chapter XIII of SEBI
(Disclosure and
Investor Protection)
Guidelines, 2000.
The relevant date
will be the date of
grant grant
Vesting date* Option to vest after
(See note 1) one year from the
date of grant within
such period not
exceeding ten years
as may be
determined by the
compensation
committee.
Vesting Two to four years of
requirements service from the
date of grant of
option
Exercise period During a period of
two / three years
from the vesting date
Un-granted -
options cancelled -
during the year
Note 1:
The details of exercise price and vesting period prior to modifications are
given below:
Particulars ESOP 2002 ESOP 2003
Exercise price N.A. N.A.
before
modification
2. Remaining 50%
Vesting date N.A. N.A.
before
modification
Particulars ESOP 2004
Exercise price 1. 50% of options
before granted at 90%
modification of market value
on grant date;
2. Remaining 50%
of the options
granted at a
discount of Rs.
125 on market
value on grant
date.
Vesting date After three years of
before service from the
modification date of grant of
options
Particulars Senior ESOP 2004
Exercise price 1. 50% of options
before granted at 90%
modification of market value
on grant date;
2. Remaining 50%
of the options
granted at a
discount of Rs.
100 on markets
value on grant
date.
Vesting date 1. One third of
before options granted
modification will vest after
two years from
the date of
grant of option
2. Remaining two
third of options
granted will vest
after four years
from the date of
grant of options.
Particulars Long Term
Retention
2005
Year in which 2005-06
scheme was
established
Number of options 350,000
authorised to be 350,000
granted
Exercise price* Market value on
(See note 2) grant date.
Vesting date* After four years
(See note 2) from the date of
grant of options.
Vesting Four years of service
requirements from the date of
grant of option
Exercise period During two years
after vesting date.
Un-granted options -
cancelled during -
the year
Particulars ESOP 2005
Year in which 2005-06
scheme was
established
Number of options 1,260,000
authorised to be 1,260,000
granted
Exercise price* The exercise price is
(See note 2) to be decided by the
compensation
committee, such
that the exerise
price is not less than
the per value of the
shares of the
Company and not
more than the price
precribed under
Chapter XIII of SEBI
(Disclosure and
Investor Protection)
Guidelines, 2000
The relevant date
will be the date of
grant.
Vesting date* Option to vest after
(See note 2) one year from
date of grant within
such period not
exceeding ten years
as may be
determined by the
compensation
committee.
Vesting Three years of
requirements service from the
date of grant of
option.
Exercise period During one year
after vesting date.
Un-granted options -
cancelled during -
the year
Particulars Strategic
Acquisition ESOP
2005
Year in which 2005-06
scheme was
established
Number of options 840000
authorised to be 840000
granted
Exercise price* Rs.100 per option.
(See note 2)
Vesting date* After one year from
(See note 2) the date of grant of
options.
Vesting One years service
requirements from the date of
grant of option.
Exercise period During one year
after vesting date.
Un-granted options -
cancelled during -
the year
Particulars ESOP 2006
Year in which 2006-07
scheme was
established
Number of options 1,000
authorised to be 1000000
granted
Exercise price* Rs.5 per option.
(See note 2)
Vesting date* After two years from
(See note 2) the date of grant of
options.
Vesting Two years of service
requirements from the date of
grant of option.
Exercise period During one year
after vesting date.
Un-granted options -
cancelled during -
the year
Note 2:
The details of exercise price and vesting period prior to modifications are
given below:
Particulars Long Term
Retention ESOP
2005
Exercise price N.A.
before
modification
Vesting date N.A.
before
modification
Particulars ESOP 2005
Exercise price 90% of market
before value on grant date.
modification
Vesting date 1. One third of
before options granted
modification will vest after
one year from
the date of grant
of options;
2. One third
options granted
will vest after
two years from
the date of grant
of options, and
3. One third options
granted will vest
after three years
from the date of
grant of options.
Particulars strategic
Acquisition ESOP
2005
Exercise price N.A.
before
modification
Vesting date N.A
before
modification
Particulars ESOP 2006
Exercise price N.A
before
modification
Vesting date N.A.
before
modification
Particulars ESOP (A) 2007
Year in which 2006-07
scheme was
established
Number of 1,000,000
options/awards 1,000,000
authorised to
be granted
Exercise price* The exercise price is
(see note 3) to be decided by the
compensation
committee, such
that the exercise
price is not less than
the par value of the
shares of the
Company and not
more than the price
prescribed under
Chapter XIII of SEBJ
(Disclosure and
Investor Protection)
Guidelines, 2000.
The relevant date will
be the date of grant.
Vesting date Option to vest after
(See note 3) one year from the
date of grant within
such period not
exceeding ten years
as may be
determined by the
compensation
committee.
Vesting One to four years of
requirements service from the
date of grant of
option.
Exercise period During four years
after vesting date.
Un-granted options -
cancelled during -
the year
Un-granted -
options -
Exercise price 75% of market
before value on grant date.
modification
Vesting date 1. One fourth
before options granted
modification will vest after
one year from
the date of grant
of options;
2. One fourth options
granted will vest after
two years from the date
of grant of options;
3. One fourth options
granted will vest after
three years from the date
of grant of options; and
4. One fourth options granted
will vest after four years
from the date of grant of
options.
Particulars ESOP (B) 2007
Year in which 2006-07
scheme was
established
Number of 1,000,000
options/awards 1,000,000
authorised to
be granted
Exercise price* Rs.5 per option.
(see note 3)
Vesting date 1. One sixth
(See note 3) options granted
will vest after
one year from
the date of
grant of
options,
2. One sixth
options granted
will vest after
two years from
the date of
grant of
options;
3. One sixth options
granted will vest after
three years from the
date of grant of options;
4. One sixth options granted
will vest after four years
from the date of grant of
options;
5. One sixth options granted
will vest after five years
from the date of grant of
options; and
6. One sixth options
granted will vest after six
years from the date of grant
of options
Vesting One to six years of
requirements service from the
date of grant of
option.
Exercise period During four years
after vesting date.
Un-granted options -
cancelled during -
the year
Un-granted -
options -
Exercise price N.A.
before
modification
Vesting date N.A.
before
modification
Particulars ESOP 2007
Year in which 2007-08
scheme was
established
Number of 10,000,000
options/awards 10000000
authorised to
be granted
Exercise price* The exercise price
(see note 3) will be decided by
the compensation
committee such that
the exercise price is
not less than the par
value of the equity
shares of the
Company and not
more than the price
prescribed under
Chapter XIII of SEBI
(Disclosure and
Investor Protection)
Guidelines, 2000.
Vesting date After a minimum
(See note 3) period of one year
from the date of
Grant. The vesting
shall happen in one
or more tranches as
may be decided by
the ESOP
Compensation
Committee.
Vesting Option to vest over
requirements such period, in such
manner and subject
to conditions as may
be decided by the compensation
committee provided the employee
continues m service.
Exercise period Exercise period will
commence from the
vesting date and extend
upto the expiry period
of the option as may be
decided by the compensation
committee
Un-granted options -
cancelled during -
the year
Un-granted -
options 8,330,000
Exercise price N,A.
before
modification
Vesting date N.A
before
modification
Particulars SAR
Year in which 2005-06
scheme was
established
Number of 300,000
options/awards 300,000
authorised to
be granted
Exercise price* Rs.5
(see note 3)
Vesting date Cliff vesting period
(See note 3) of three years
Vesting One to four years of
requirements service from the
date of grant of SAR
Exercise period One year after
vesting date
Un-granted options -
cancelled during -
the year
Un-granted -
options -
Exercise price N.A.
before
modification
Vesting date N.A.
before
modification
Note 3:
The details of exercise price and vesting period prior to modifications are
given below:
c. Television Eighteen India Limited Employee Stock Purchase Plans (ESPP)
i. Television Eighteen India Limited Stock Purchase Plan 2003 (ESPP 2003)
During 2003-2004 the Company had established an Employee stock purchase
plan (ESPP 2003) for compensation to employees whereby the Companys plan
was to issue upto 700,000 shares to eligible employees. The offer price per
share was 95% of the market value of the shares as at the date of the
offer. The Company had issued 667,016 shares under ESPP 2003 upto 31 March,
2007 During the year ended 31 March, 2008, pursuant to the approval of the
shareholders it was decided to cancel the issue of the remaining balance of
the proposed 32,984 equity shares.
ii. Television Eighteen Employee Stock Purchase Plan 2007 (ESPP 2007):
During 2007-2008 the Company established an Employee stock purchase plan
(ESPP 2007) for compensation to employees whereby the Companys plan was to
issue upto 532,984 shares to eligible employees. The offer price shall be
decided by the compensation committee provided that the offer price shall
not be less than the par value of the equity shares of the Company and
shall not be more than the price prescribed under Chapter XIII of SEBI
(Disclosure and Investor Protection) Guidelines, 2000.
d. Details of option numbers and weighted average exercise prices:
The details of options and weighted average prices are as given below:
Particulars A B C D
a. outstanding at the 53690 2.50 562800 27.58
beginning of the year 53690 2.50 749000 48.89
b. granted during the
year
c. exercised during the - - 206500 20.00
year 72800 25.65
d. forfeited during the
year - - 8400 20.00
113400 48.66
e. expired during the
year
f. additions pursuant to - - - -
bonus issue - - - -
g. outstanding at the
end of 53690 2.50 347900 32.26
the year 53690 2.50 562800 27.58
h. exercisable at the
end of 53690 2.50 113400 57.61
the year 53690 2.50 21000 99.88
i. number of equity
shares of Rs.5 each See note 1 N.A. 347900 N.A.
fully paid up to be See note 1 N.A. 562800 N.A.
issued on exercise
of option
j. weighted average - N.A. 206500 76.81
share price at the - N.A. 72800 244.80
date of exercise
k. weighted average - N.A. 2.36 N.A.
remaining contractual - N.A. 3.55 N.A.
life (years)
A = ESOP 2002 - Options (Nos.)
B = ESOP 2002 - Weighted Average Price (Rs.)
C = ESOP 2004 - Options (Nos.)
D = ESOP 2004 - Weighted Average Price (Rs.)
Particulars A B C D
a. outstanding at the 998226 49.24 700000 75.61
beginning of year 1091498 52.96 700000 75.61
b. granted during the
year - - - -
62 52.96 - -
c. exercised during the 163325 16.76 - -
year
93330 33.24 - -
d. forfeited during the - - - -
year
e. expired during the - - - -
year
f. additions pursuant - - - -
to bonus Issue
g. outstanding at the 834901 55.60 700000 75.61
end of the Year 998230 49.24 700000 75.61
h. exercisable at the 391329 50.81 - -
end of the year - - - -
i. number of equity 834901 N.A. 700000 N.A.
shares of Rs. 5 each
fully paid up to be 998230 N.A. 700000 N.A.
issued on exercise of
option
j. weighted average 163325 76.81 - N.A.
share price at the date
of exercise 93330 243.70 - N.A.
k. weighted average 2.51 N.A. 1.56 N.A.
remaining contractual
life 3.62 N.A. 2.56 N.A.
(years)
A = Senior ESOP 2004 - Options (Nos.)
B = Senior ESOP 2004 - Weighted Average Price (Rs.)
C = Long Term Retention Esop 2005 - Options (Nos.)
D = Long Term Retention Esop 2005 - Weighted Average Price (Rs.)
Particulars A B C D
a. outstanding at the 492864 20.00 10000 22.15
beginning of the year 533064 208.84 55000 22.15
b. granted during the - - - -
year
c. exercised during the 201667 20.00 - -
year - - 45000 22.15
d. forfeited during the 23800 20.00
year 40200 141.72
e. expired during the - - - -
year
f. additions pursuant - - - -
to bonus Issue
g. outstanding at the 267397 20.00 10000 22.15
end of the year 492864 20.00 10000 22.15
h. exercisable at the 267397 20.00 10000 22.15
end of the year - N.A. 10000 22.15
i. number of equity 267397 N.A. 10000 N.A.
shares of Rs. 5 each
fully paid up to be 492864 N.A. 10000 N.A.
issued on exercise of
option
j. weighted average 201667 76.81 - N.A.
share price
at the date of N.A. N.A. 45000 244.80
exercise
k. weighted average 1.85 N.A. - N.A.
remaining
contractual life 2.85 N.A. 0.01 N.A.
(years)
A = ESOP 2005 - Options (Nos.)
B = ESOP 2005 - Weighted Average Price (Rs.)
C = Strategic Acquisition ESOP 2005 - Options (Nos.)
D = Strategic Acquisition ESOP 2005 - Weighted Average Price (Rs.)
Particulars A B C D
a. outstanding at the 361480 2.50 1287400 5.00
beginning of the year 509280 2.50 1490500 221.31
b. granted during the - - - -
year
c. exercised during the - - 780375 5.00
year 100000 2.50 - -
d. forfeited during the 58460 2.50 65550 5.00
year 47800 2.50 203100 221.31
e. expired during the - - - -
year
f. additions pursuant - - - -
to bonus issue
g. outstanding at the 303020 2.50 441475 5.00
end of the year 361480 2.50 1287400 5.00
h. exercisable at the 303020 2.50 136012 5.00
end of the year 312080 2.50 - -
i. number of equity 303020 N.A. 441475 N.A.
shares of Rs.5 each
fully paid up to be 361480 N.A. 1287400 N.A.
issued on exercise
of option
j. weighted average - N.A. 780375 76.81
share price at the
date of exercise 100.000 58.60 - N.A.
k. weighted average 0.00 N.A. 2.85 N.A.
remaining
contractual life 0.79 N.A. 3.85 N.A.
(years)
A = ESOP 2006 - Options (Nos.)
B = ESOP 2006 - Weighted Average Price (Rs.)
C = ESOP (A) 2007 - Options (Nos.)
D = ESOP (A) 2007 - Weighted Average Price (Rs.)
Particulars A B C D
a. outstanding at the 1670000 42.45
beginning
of the year - - 49348 5
b.granted during the year - - - -
1670000 42.45 - -
c. exercised during the - - - -
year - - 36808 5
d. forfeited during the - - - -
year - - 12540 5
e. expired during the - - - -
year
f. additions pursuant to - - - -
bonus issue
g. outstanding at the 1670000 42.45 - -
end of the year 1670000 42.45 - -
h. exercisable at the - - - -
end of the year
i. number of equity 1670000 42.45 - N.A.
shares of Rs. 5 each
fully paid up to be 1670000 42.45 - N.A.
issued on exercise
of option
j. weighted average - N.A. - N.A.
share price
at the date of - N.A. 36808 56.10
exercise
k. weighted average 5.63 N.A. - -
remaining
contractual life 6.63 N.A. - -
(years)
A = ESOP 2007 - Options (Nos.)
B = ESOP 2007 - Weighted Average Price (Rs.)
C = SAR - Options (Nos.)
D = SAR - Weighted Average Price (Rs.)
There were no reportable details in respect of ESOP 2003, ESOP (B) 2007 and
ESPP 2007.
Previous year figures are in italics.
Note:
The equity shares pursuant to options granted under this scheme were
allotted in the past and were administered through the TV18 Employee
Welfare Trust. Accordingly, there has been no further allotment of equity
shares pursuant to the exercise of these options.
e. Proforma Accounting for Stock Option Grants:
The Company applies the intrinsic value-based method of accounting for
determining compensation cost for its stock-based compensation plans. Had
the compensation cost been determined using the fair value approach, the
Companys net profit and basic and diluted earnings per share as reported
would have reduced to the proforma amounts as indicated:
(Amounts in Rs. Million)
Particulars Year ended Year ended
31.03.2010 31.03.2009
a. Net Profit / (Loss)
after tax as reported (324.75) 198.22
i. Add: Stock based employee 23.90 64.00
compensation expense debited
to Profit and Loss account
ii. Less: Stock based employee 77.73 176.51
compensation expense based on
fair value
b. Difference between (i) and (ii) (53.83) 112.51
c. Adjusted proforma profit (378.58) 85.71
d. Difference between (a) and (c) 53.83 112.51
e. Basic earnings per share as reported (2.45) 1.65
f. Perform a basic earnings per share (2.86) 0.71
g. Diluted earnings per share as reported (2.45) 1.61
h. Proforma diluted earnings per share (2.86) 0.69
i. The fair value of the options, calculated by an external valuer, was
estimated on the date of grant using the Black-Scholes model with the
following significant assumptions:
Particulars Year ended Year ended
31.03.2010 31.03.2009
a. Risk free interest
rates (in %) 5.51 7.34
b. Expected life (in years) 4.23 9.00
c. Volatility (in %) 71.80 67.44
d. Dividend yield (in %) 2.99 3.07
The volatility of the options is based on the historical volatility of the
share price since the Companys equity shares are publicly traded and has
been calculated on the basis of the share price and trading volume data.
ii. Details of weighted average exercise price and fair value of the stock
options granted during the year at price below market price:
Particulars Year ended Year ended
31.03.2010 31.03.2009
a. Total options granted (in Nos) - 535000
b. Weighted average exercise
price (in Rs.) - 5.00
c. Weighted average fair value
(in Rs.) - 47.30
ii. Details of weighted average exercise price and fair value of the stock
options granted during the year at market price:
Particulars Year ended Year ended
31.03.2010 31.03.2009
a. Total options granted (in Nos) - 1135000
b. Weighted average exercise
price (in Rs.) - 60.10
c. Weighted average fair
value (in Rs.) - 29.43