Dish TV India Limited (‘Dish TV’ or ‘the Company’) was incorporated on 10 August 1988. The Company is engaged in the business of providing Direct to Home (‘DTH’) and Teleport services.
2. a) During the previous year ended 31 March 2016, pursuant to resolution approved by shareholder through postal ballot on 3 February 2015 the Company had entered into Business Transfer Agreement (dated 25 February 2015) with Dish Infra Services Private Limited (Dish Infra), for transfer of its Non-core business on ‘Slump Sale’ basis w.e.f.1 April 2015. As per the terms of the agreement Dish Infra undertook following activities of the Company providing support services for satellite based communication services, broadcasting content services, management of hard assets like CPEs and their installation, value added services, etc.
b) As per the Valuation Report obtained from Independent valuers, the Enterprise value of Non-core Business was valued at Rs.165,961 Lacs and the Company had received cash consideration amounting to Rs.507 lacs from Dish Infra Services Private Limited, which is arrived after adjusting Closing Net Debt and difference between Closing Working Capital and Base Working Capital on the Transfer Date. The surplus arising on slump sale of Non-core Business was Rs.358 lacs as included in the financial statements under note 20.
Following assets and liabilities were transferred from Dish TV India Limited to Dish Infra Services Private Limited w.e.f. 1 April 2016.
c) In reference to term loan and buyers credit related to non-core business, the Company had entered into novation agreement with banks to transfer its debt to its subsidiary company Dish Infra Services Private Limited w.e.f 1 April 2015.
3. The Board of Directors at their meeting held on 23 May 2016 had approved adjustment of entire securities premium account against the accumulated losses, through Capital reduction under section 100 to 104 of the Companies Act, 1956 read with section 52 of the Companies Act, 2013. The Company has received observation letter(s) from NSE (National Stock Exchange of India Limited) and BSE (BSE Limited) dated 14 July 2016 and 15July 2016 respectively, confirming their No Objection. The Shareholders of the Company have also accorded their approval vide special resolution dated 19 September 2016. The Company had filed an application with the Hon’ble National Company Law Tribunal, Mumbai Bench (NCLT) on 13January 2017. The proposed adjustment of entire securities premium account against the accumulated losses is subject to final approval of NCLT and accordingly has not been accounted for in these financial statements.
4. During the year ended 31 March 2017, the Company has incorporated a new joint venture with Siticable Network Limited, namely C&S Medianet Private Limited. The Company holds 48% of the equity share capital.
5. With effect from 09 November 2016, the Registered Office of the Company has shifted from Delhi to the State of Maharashtra at Mumbai, by passing special resolution to alter the provisions of its Memorandum of Association with respect to the place of the Registered Office and such alteration having been confirmed vide an order dated 28 October 2016 of the Regional Director, Northern Region.
6. The Board of Directors at their meeting held on 11 November 2016 approved a Scheme of Arrangement (Scheme) under section 391 to 394 of Companies Act 1956 and/or applicable sections of Companies Act 2013, among Dish TV India Limited (DTIL) and Videocon DTH Limited (VD2H) and their respective Shareholders and Creditors inter alia for amalgamation of the VD2H into and with the DTIL, pursuant to the relevant provision of the Companies Act and relevant provisions of the scheme, and various other matters consequential or otherwise integrally connected therewith.
The Company has received observation letter(s) dated 1 March 2017 and 2 March 2017 from NSE (National Stock Exchange of India Limited) and BSE (BSE Limited) respectively, confirming their No Objection to the said Scheme. Further, the Competition Commission of India (CCI), in its meeting held on 4 May 2017, has accorded its approval for the said combination. The Company has filed an application with Hon’ble National Company Law Tribunal, Mumbai Bench (NCLT) on 10 March 2017 and vide its order dated 22 March 2017 the Company had convened a Meeting of Shareholders who have accorded their approval to the said Scheme vide resolution dated 12 May 2017 pursuant to the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 / 1956. Post the said approval, the Company has filed a Petition with NCLT on 19 May 2017 for final direction. The said scheme of arrangement is subject to requisite approval of NCLT and other approvals (regulatory or otherwise) and accordingly no impact has been given in these financial statements.
7. With effect from 01 April 2016, the Company has changed its business policy and started recovering entertainment tax from its subscribers and then paying it to the relevant authorities, therefore, entertainment tax has been netted off from subscription revenue.
8. Employee stock option plan (ESOP) 2007
At the Annual General Meeting held on 3 August 2007, the shareholders of the Company had approved Employee Stock Option Plan, i.e., ESOP 2007 (“the Scheme”). The Scheme provided for issuance of 4,282,228 stock options (underlying fully paid equity share of Rs.1 each) to the employees of the Company as well as that of its subsidiaries of the Company at the exercise price which shall be equivalent to the market price determined as per the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 [‘SEBI (ESOP) Guidelines, 1999’].
The options granted under the Scheme shall vest between one year to six years from the date of grant of options, with 20% vesting each year. Once the options vest as per the Scheme, they would be exercisable by the grantee at any time within a period of four years from the date of vesting and the shares arising on exercise of such options shall not be subject to any lock-in period.
The shareholders in their meeting held on 28 August 2008 approved the re-pricing of outstanding options which were granted till that date and consequently the outstanding options were re-priced at Rs.37.55 per option, determined as per SEBI (ESOP) Guidelines, 1999.
However, in respect of options granted subsequent to 28 August 2008, the exercise price of the options has been maintained as equivalent to the market price determined as per the SEBI (ESOP) Guidelines, 1999.
As stated above, the options are granted to the employees at an exercise price, being the latest market price as per SEBI (ESOP) Guidelines, 1999. Further, since the Company follows intrinsic value method for accounting of the above options, there is no charge in the Statement of Profit and Loss.
The activity relating to the options granted and movements therein are set out below:
As permitted by the Guidance Note on accounting for Employee Share - based Payment, issued by the Institute of Chartered Accountants of India, the Company has elected to account for stock options based on their intrinsic value (i.e., the excess of fair market value of the underlying share over the exercise price) at the grant date rather than their fair value at that date. Had the compensation cost for employee stock options been determined on the basis of the fair value method as described in the said Guidance Note, the impact on the Company’s net profit after tax and basic/diluted earnings per share would have been as stated below.
* Additional compensation cost had the Company recorded employee stock option expenses based on the fair value of option (using black scholes method)
For purposes of the above proforma disclosures, the fair values are measured based on the Black-Scholes-Merton formula. Expected volatility, an input in this formula, is estimated by considering historic average share price volatility. The inputs used in the measurement of grant-date fair values are as follows:
9. Disclosure pursuant to Accounting Standard 15 on “Employee Benefits”
Defined contribution plans
An amount of Rs.275 lacs (previous year Rs.240 lacs) and Rs.2 lac (previous year Rs.1 lacs) for the year, have been recognized as expenses in respect of the Company’s contributions to Provident Fund and Employee’s State Insurance Fund respectively, deposited with the government authorities and have been included under “Employee benefits expenses”.
Defined benefit plans
Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company’s Scheme, whichever is more beneficial.
The following table sets forth the status of the gratuity plan of the Company and the amounts recognised in the Balance Sheet and Statement of Profit and Loss:
Discount rate: The discount rate is estimated based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligation.
Salary escalation rate: The estimates of salary increases, considered in actuarial valuation, take account of inflation, promotion and other relevant factors.
The best estimate of expected contributions for Defined Benefit Plan for the next financial year will be Rs.244 lacs.
10. Segmental information
The Company is in the business of providing Direct to Home (‘DTH’) and teleport services primarily in India. As the Company’s business activity primarily falls within a single business and geographical segment, disclosures in terms of Accounting Standard 17 on “Segment Reporting” are not applicable.
11. Related party disclosures
a) Related parties where control exists: Subsidiary companies:
Dish T V Lanka (Private) Limited.
Dish Infra Services Private Limited (formerly known as Xingmedia Distribution Private Limited)
C&S Medianet Private Limited
b) Other related parties with whom the Company had transactions:
c) Transactions during the year with related parties:
Obligation on operating lease:-
The Company’s significant leasing arrangements are in respect of operating leases taken for offices, residential premises, transponder, etc. These leases are cancellable operating lease agreements that are renewable on a periodic basis at the option of both the lessee and the lessor.The initial tenure of the lease generally is for 11 months to 69 months.The details of assets taken on operating leases during the year are as under:
13. a) The Company has been making payment of license fee to the Ministry of Information and Broadcasting considering the present legal understanding. However, in view of the ongoing dispute (refer note (b) below), the Company has made provision on a conservative basis considering the terms and conditions of the License given by the Regulatory Authority.-
The outflow of economic benefits with regard to the disputed portion would be dependent on the final decision by the Regulatory Authority. Presently, it has been considered under the ‘Short-term provisions’.
b) The Company has filed Petition (205(C) of 2014) before the Hon’ble Telecom Disputes Settlement & Appellate Tribunal (TDSAT) against union of India challenging the propriety and legality of the demand of Rs.62,420 lacs including interest of Rs.15,967 lacs raised by the Ministry of Information and Broadcasting (MIB) by way of a demand letter dated 19 March 2014 towards alleged short payment of license fee for the period 2003-2004 to 2012-2013. The matter is pending before the TDSAT.
14. Rights issue
The Company during the financial year ended 31 March 2009 issued 518,149,592 equity shares of Rs.1 each at a premium of Rs.21 per share for cash to the existing equity shareholders on the record date. The terms of payment were as under:
Upto the financial year ended 31 March 2017, the Company has received Rs.31,089 lacs (previous year Rs.31,089 lacs) towards the application money on 518,149,592 (previous year 518,149,592) equity shares issued on Rights basis; Rs.41,450 lacs (previous year Rs.41,450 lacs) towards the first call money on 518,130,477 (previous year 518,130,477) equity shares; and Rs.41,450 lacs (previous years Rs.41,450 lacs) towards the second and final call money on 518,115,215 (previous year 518,115,094) equity shares.
The Company has also received Rs.0.42 Lacs (previous year Rs.0.42 lacs) towards first call and/ or second and final call. Pending completion of corporate action, the amount has been recorded as Share call money pending adjustments under ‘Other long term liabilities.
The utilisation of Rights Issue proceeds have been in accordance with the revised manner of usage of Rights Issue proceeds, as approved by the Board of Directors of the Company, in their meeting held on 28 May 2009. The utilization of the Rights Issue proceeds as per the revised usage aggregating to Rs.113,989 lacs (previous year Rs.113,989 lacs) is as under. The monitoring agency, IDBI Bank Limited, has issued its report dated 25th January 2016 on utilization of the Rights Issue proceeds upto 31 December 2016.
The details of utilisationof Rights Issue proceeds by the Company, on an overall basis, are as below:
15. Issue of Global Depository Receipts (GDR Issuer-
Pursuant to the approvals obtained by the Company and in accordance with the applicable laws including the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993, as amended, the Global Depository Receipt (GDR) Offer of the Company for 117,035 GDRs opened for subscription on 23 November 2009 at a price of US $ 854.50 per GDR, each GDR representing 1000 fully paid equity shares. The pricing of the GDR, as per the pricing formula prescribed under Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Mechanism) Scheme, 1993, as amended, was Rs.39.80 per fully paid equity share and the relevant date for this purpose was 23 November 2009.
Upon opening, the GDR issue for USD 1,000lacs (approx.) was fully subscribed and the Company received USD1,000lacs (approx.), towards the subscription money. Upon receipt of the subscription money, the Issue Committee of the Board at its meeting held on 30 November 2009, issued and allotted 117,035,000 fully paid equity shares @ Rs.39.80 per fully paid equity share to M/s Deutsche Bank Trust Company Americas (being the depository) in lieu of the Global Depository Receipts issued. The GDR’s were listed at the Luxembourg Stock Exchange.
During the year ended 31 March 2016, 85,035 GDRs were sold into the domestic market and converted into 85,035,000 equity shares of Re 1 each by the holder and accordingly GDR outstanding thereafter are nil.
16. Foreign currency transactions
Foreign currency transactions outstanding as on the balance sheet date that are not hedged by derivative instruments or otherwise are as under.
17. Contingent liabilities, litigations and commitments
a) Claims against the Company (including unasserted claims) not acknowledged as debt:
Other than above, the Company has certain litigations involving customers and based on the legal advise of in-house legal team, the management believe that no material liability will devolve on the Company in respect of these litigations.
In earlier years, the Company had received demand notices for TDS and interest thereon amounting to Rs.760 lacs (excluding penalty levied amounting Rs.16 lacs) relating to matters pertaining to alleged short deduction of tax at source on certain payments for the Assessment Year’s 2009-10 to 2013-14. In respect of the demand received the Company had made payment under protest of Rs.726 lacs out of which Rs.141 lacs had been paid in the FY 2015-16 and Rs.39 lacs has been paid in the year ended 31 March 2017 and remaining was paid in the previous years. Further, the amount paid under protest, as a matter of abandoned caution, based on management estimate has been provided for in the books. Accordingly, the remaining amount Rs.34 lacs has been included under the head contingent liabilities above. However, the Company has disputed all these matters and filed appeal against the above said demands with the tax authorities.
Further, for the assessment year 2004-05, in case of Siti Cable Network Limited (now merged with the Company), demand under section 271(1)(c) amounting Rs.263 lacs on account of additions of loans and advances and bandwidth charges has been raised by assessing officer vide order dated 29 March 2016. The Company has preferred an appeal before higher appellate authorities on 29 April 2016 and same is pending for disposal.
Sales tax, value added tax, entry tax, service tax, entertainment tax and other claims
The Company has received notices / assessment orders in relation to applicability of above-mentioned taxes. The Company has contested these notices at various Appellate Forums / Courts and the matter is subjudice. Based on the advice from independent tax experts, and development on the appeals, the Company is confident that the additional tax so demanded will not be sustained on the completion of appellate proceedings and accordingly, pending the decisions by the appellate authorities, no provision has been made in these financial statements.
i) During the year, the Delhi High Court (HC) passed an order retraining the Company from operation in MENA (Middle East and North Africa) region, on a plea brought by the UAE-based company Gulf DTH FZ, about copyright infringement by Dish TV in the region. An application for interim stay filed by Gulf DTH FZ lLC has been allowed by the Single Judge Bench of High Court vide its order dated 30 August 2016 which is further confirmed by Division Bench of High Court. The Company has filed appeals against the said order and same is pending for disposal. Based on management’s assessment and independent expert’s advice, the Company believes no significant claim will devolve upon the Company and no provision has been recognised.
ii) The Company’s DTH license was valid upto 30 September 2013. Ministry of Information and Broadcasting (MIB) has been extending the validity of the DTH License on yearly basis and as per the letter dated 31 March 2017of the MIB, the DTH License is valid upto 31 December 2017.
iii) Management believes that it is appropriate to prepare these financial statements on a going concern basis considering available resources, current level of operations of the Company, and those projected for foreseeable future.
18. Particulars of loans, guarantee or investment under section 186 of the Companies Act 2013.
The Company has provided following loans, guarantee or investment pursuant to section 186 of Companies Act, 2013.
All the loans are provided for business purposes of respective entities.
Security or guarantee against loan
During the current year Company has given guarantees on behalf of Dish Infra Services Private Limited to various banks amounting to Rs.278,710 lacs (Previous year Rs.234,083 lacs) for loan facility obtained by Dish Infra Services Private Limited.
There are no investments by the Company other than those stated under Note 13 in the Financial Statements.
19. Disclosure pursuant to schedule V of Securities and Exchange Board of India (Listing Obligation and Disclosure requirements) regulations, 2015.
20. In accordance with the provisions of Section 135 of the Companies Act, 2013, the Board of Directors of the Company had constituted a Corporate Social Responsibility (‘CSR’) Committee. In terms with the provisions of the said Act, the Company was to spend a sum of approx Rs.189 lacs during the year ended 31 March 2017 (previous year Nil) towards CSR activities. The details of amount actually paid by the Company are:
21. The Company has advanced loans, classified under long term loans and advances, to Dish T V Lanka Private Limited (“Dish Lanka”), its subsidiary company, which has incurred losses and its net worth has been eroded. The management is in the process of implementing certain changes to its business strategy in Sri Lankan market and based on future business plans and projections, believes that the subsidiary would turn around in future and accordingly, the loan given to this subsidiary has been considered good for recovery.
22. Figures of the previous year have been regrouped / rearranged, wherever considered necessary to conform to the current year’s presentation.