siti cable network limited - bseindia.com · preliminary placement document not for circulation...

Preliminary Placement Document

Not for Circulation

Serial Number: [●]

Strictly Confidential

SITI CABLE NETWORK LIMITED

Our Company was incorporated as Wire and Wireless (India) Limited on March 24, 2006 under the Companies Act, 1956 as a public liability

company. Subsequently our Company changed its name to Siti Cable Network Limited with effect from September 5, 2012. The CIN of our Company

is L64200MH2006PLC160733.

Siti Cable Network Limited (“SCNL”, “Issuer” or the “Company”) is issuing up to [●] equity shares of face value of ₹ 1 each (the “Equity

Shares”) at a price of ₹ [●] per Equity Share (the “Issue Price”), including a premium of ₹ [●] per Equity Share aggregating up to ₹ [●] (the “Issue”).

ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “SEBI REGULATIONS”) AND SECTIONS 42 AND 62 OF

THE COMPANIES ACT, 2013, AS AMENDED AND THE RULES MADE THEREUNDER

THE ISSUE AND DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED

INSTITUTIONAL BUYERS (“QIBs”) AS DEFINED UNDER THE SEBI REGULATIONS IN RELIANCE UPON CHAPTER VIII OF THE SEBI

REGULATIONS AND SECTION 42 OF THE COMPANIES ACT, 2013, AS AMENDED AND THE RULES MADE THEREUNDER. THIS

PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN

OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS

WITHIN OR OUTSIDE INDIA, OTHER THAN QIBs. THE ISSUE IS MEANT ONLY FOR QIBS ON A PRIVATE PLACEMENT BASIS AND IS

NOT AN OFFER TO THE PUBLIC OR TO ANY OTHER CLASS OF INVESTORS.

YOU ARE NOT AUTHORIZED TO AND MAY NOT (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER

PERSON; OR (2) REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3) RELEASE

ANY PUBLIC ADVERTISEMENTS OR UTILISE ANY MEDIA, MARKETING OR DISTRIBUTION CHANNELS OR AGENTS TO INFORM

THE PUBLIC AT LARGE ABOUT THE ISSUE. ANY DISTRIBUTION OR REPRODUCTION OF THIS PRELIMINARY PLACEMENT

DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A

VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THIS

ISSUE UNLESS THEY ARE PREPARED TO TAKE THE RISK OF LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE

INVESTORS ARE ADVISED TO CAREFULLY READ “RISK FACTORS” BEFORE MAKING AN INVESTMENT DECISION RELATING TO

THIS ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR

CONSEQUENCES OF AN INVESTMENT IN THE EQUITY SHARES BEING ISSUED PURSUANT TO THIS PRELIMINARY PLACEMENT

DOCUMENT.

The Equity Shares are listed on the National Stock Exchange of India Limited (the “NSE”) and the BSE Limited (the “BSE”, together with NSE,

the “Stock Exchanges”). In-principle approvals under Clause 24(a) of the Equity Listing Agreements (as defined hereinafter) for listing of the

Equity Shares have been received from the NSE and the BSE on February 27, 2015. Applications shall be made for obtaining the listing and trading

approvals for the Equity Shares to be issued pursuant to the Issue on the Stock Exchanges. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock

Exchanges should not be taken as an indication of the merits of the business of our Company or the Equity Shares.

A copy of this Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter)) has been delivered to the Stock Exchanges. A copy of the Placement Document (which will also include disclosures prescribed under Form PAS-4) will also

be delivered to the Stock Exchanges. Our Company shall also make the requisite filings with the Registrar of Companies, Maharashtra at Mumbai

(the “RoC”) and the Securities and Exchange Board of India (“SEBI”) within the stipulated period as required under the Companies Act, 2013 and

the Companies (Prospectus and Allotment of Securities) Rules, 2014. This Preliminary Placement Document has not been reviewed by SEBI, the

Reserve Bank of India (the “RBI”), the Stock Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by the

QIBs. This Preliminary Placement Document has not been and will not be registered as a prospectus with the RoC, will not be circulated or

distributed to the public in India or any other jurisdiction, and will not constitute a public offer in India or any other jurisdiction. This Preliminary Placement Document has been prepared by our Company solely for providing information in connection with the Issue.

Invitations, offers and sales of the Equity Shares shall only be made pursuant to this Preliminary Placement Document together with the respective

Bid Cum Application Form (defined hereinafter) and the Placement Document and the Confirmation of Allocation Note (defined hereinafter). See section “Issue Procedure” on page 139 for further details. The distribution of this Preliminary Placement Document or the disclosure of its contents

without the prior consent of our Company to any person, other than QIBs and persons retained by QIBs to advise them with respect to their purchase

of the Equity Shares is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document,

agrees to observe the foregoing restrictions and make no copies of this Preliminary Placement Document or any documents referred to in this

Preliminary Placement Document.

The information on the website of our Company or any website directly or indirectly linked to the website of our Company does not form part of

this Preliminary Placement Document and prospective investors should not rely on such information contained in, or available through, any such

website.

Except as disclosed in “Capital Structure” on page 77, all of our Company’s outstanding Equity Shares are listed on each of the Stock Exchanges.

The closing price of the outstanding Equity Shares on the BSE and the NSE on February 26, 2015, was ₹ 36.70 and ₹ 36.55 per Equity Share, respectively.

The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act”), or

any state securities laws in the United States and may not be offered, sold or delivered within the United States, unless pursuant to an exemption

from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with any applicable state securities laws

of the United States. Accordingly, the Equity Shares are being offered and sold only outside the United States in off-shore transactions in reliance on

Regulation S under the Securities Act (‘‘Regulation S’’) and the applicable laws of each jurisdiction where such offers and sales occur. For further

details, see sections “Selling Restrictions” and “Transfer Restrictions” on pages 152 and 158, respectively.

BOOK RUNNING LEAD MANAGERS

Motilal Oswal Investment Advisors Private Limited

Ambit Corporate Finance Private Limited

This Preliminary Placement Document is dated February 27, 2015.

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TABLE OF CONTENTS

NOTICE TO INVESTORS ..................................................................................................................................................... 3

REPRESENTATIONS BY INVESTORS .............................................................................................................................. 5

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES .............................................................................................. 11

PRESENTATION OF FINANCIAL AND OTHER INFORMATION ............................................................................. 12

INDUSTRY AND MARKET DATA .................................................................................................................................... 13

FORWARD-LOOKING STATEMENTS............................................................................................................................ 14

ENFORCEMENT OF CIVIL LIABILITIES ...................................................................................................................... 15

EXCHANGE RATES ............................................................................................................................................................ 16

DEFINITIONS AND ABBREVIATIONS ........................................................................................................................... 17

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES ACT, 2013

AND THE RULES MADE THEREUNDER ....................................................................................................................... 23

SUMMARY OF BUSINESS ................................................................................................................................................. 25

SUMMARY OF THE ISSUE ................................................................................................................................................ 30

SELECTED FINANCIAL INFORMATION ...................................................................................................................... 32

RISK FACTORS ................................................................................................................................................................... 50

MARKET PRICE INFORMATION.................................................................................................................................... 73

USE OF PROCEEDS ............................................................................................................................................................ 75

CAPITALISATION STATEMENT ..................................................................................................................................... 76

CAPITAL STRUCTURE ...................................................................................................................................................... 77

DIVIDENDS ........................................................................................................................................................................... 79

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS ....................................................................................................................................................................... 80

INDUSTRY OVERVIEW ..................................................................................................................................................... 99

BUSINESS ............................................................................................................................................................................ 112

BOARD OF DIRECTORS AND SENIOR MANAGEMENT ......................................................................................... 127

PRINCIPAL SHAREHOLDERS ....................................................................................................................................... 135

ISSUE PROCEDURE.......................................................................................................................................................... 139

PLACEMENT ...................................................................................................................................................................... 150

SELLING RESTRICTIONS ............................................................................................................................................... 152

TRANSFER RESTRICTIONS ........................................................................................................................................... 158

THE SECURITIES MARKET OF INDIA ........................................................................................................................ 159

DESCRIPTION OF EQUITY SHARES ............................................................................................................................ 162

REGULATIONS AND POLICIES IN INDIA .................................................................................................................. 166

STATEMENT OF TAX BENEFITS .................................................................................................................................. 170

LEGAL PROCEEDINGS ................................................................................................................................................... 186

STATUTORY AUDITORS................................................................................................................................................. 214

GENERAL INFORMATION ............................................................................................................................................. 215

FINANCIAL INFORMATION .......................................................................................................................................... 217

DECLARATION ................................................................................................................................................................. 218

3

NOTICE TO INVESTORS

Our Company has furnished and accepts full responsibility for all the information contained in this Preliminary

Placement Document and to the best of its knowledge and belief, after having made all reasonable enquiries,

confirms that this Preliminary Placement Document contains all information with respect to our Company and

our Subsidiaries (together, the “Group”) and the Equity Shares which are material in the context of this Issue.

The statements contained in this Preliminary Placement Document relating to our Company, the Group and the

Equity Shares are, in all material respects, true and accurate and not misleading; the opinions and intentions

expressed in this Preliminary Placement Document with regard to our Company, the Group and the Equity

Shares are honestly held, have been reached after considering all relevant circumstances, are based on

information presently available to our Company and are based on reasonable assumptions. There are no other

facts in relation to our Company, the Group and the Equity Shares, the omission of which would, in the context

of the Issue, make any statement in this Preliminary Placement Document misleading in any material respect.

Further, all reasonable enquiries have been made by our Company to ascertain such facts and to verify the

accuracy of all such information and statements.

The BRLMs or any of their shareholders, employees, counsel, officers, directors, representatives, agents or

affiliates do not make any express or implied representation, warranty or undertaking, and no responsibility or

liability is accepted by the BRLMs as to the accuracy or completeness of the information contained in this

Preliminary Placement Document or any other information supplied in connection with the Equity Shares. Each

person receiving this Preliminary Placement Document acknowledges that such person has not relied on either

the BRLMs or on any of their shareholders, employees, counsel, officers, directors, representatives, agents or

affiliates in connection with such person’s investigation of the accuracy of such information or such person’s

investment decision, and each such person must rely on its own examination of the Group and the merits and

risks involved in investing in the Equity Shares issued pursuant to this Issue.

No person is authorised to give any information or to make any representation not contained in this Preliminary

Placement Document and any information or representation not so contained must not be relied upon as having

been authorised by or on behalf of the Company or by or on behalf of the BRLMs. The delivery of this

Preliminary Placement Document at any time does not imply that the information contained in it is correct as of

any time subsequent to its date.

The Equity Shares have not been approved, disapproved or recommended by the U.S. Securities and Exchange

Commission, any other federal or state authorities in the United States or the securities authorities of any non-

United States jurisdiction or any other United States or non-United States regulatory authority. No authority has

passed on or endorsed the merits of this Issue or the accuracy or adequacy of this Preliminary Placement

Document. Any representation to the contrary is a criminal offence in the United States and may be a criminal

offence in other jurisdictions.

The Equity Shares have not been recommended by any foreign federal or state securities commission or

regulatory authority. The distribution of this Preliminary Placement Document and the issue of the Equity Shares

may be restricted in certain jurisdictions by law. As such, this Preliminary Placement Document does not

constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in

which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or

solicitation. In particular, no action has been taken by the Company and the BRLMs which would permit an

offering of the Equity Shares or distribution of this Preliminary Placement Document in any jurisdiction, other

than India, where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold,

directly or indirectly, and neither this Preliminary Placement Document nor any offering material in connection

with the Equity Shares may be distributed or published in or from any country or jurisdiction, except under

circumstances that will result in compliance with any applicable rules and regulations of any such country or

jurisdiction.

The Equity Shares have not been and will not be registered under the Securities Act, and unless so registered,

may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not

subject to the registration requirements of the Securities Act and applicable U.S. state securities laws.

Accordingly, the Equity Shares are being offered and sold only outside the United States in offshore transactions

in reliance on Regulation S and the applicable laws of the jurisdictions where those offers and sales occur. The

Equity Shares are transferable only in accordance with the restrictions described in the section “Transfer

Restrictions” on page 158. Subscriber of the Equity Shares will be deemed to make the representations set forth

4

in the sections “Representations by Investors” and “Transfer Restrictions” on page 5 and 158, respectively.

The distribution of this Preliminary Placement Document or the disclosure of its contents without the prior

consent of the Company to any person, other than QIBs specified by the BRLMs or their representatives, and

those retained by QIBs to advise them with respect to their purchase of the Equity Shares is unauthorised and

prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to

observe the foregoing restrictions and to make no copies of this Preliminary Placement Document or any

documents referred to in this Preliminary Placement Document.

The distribution of this Preliminary Placement Document and the Issue may be restricted by law in certain

countries or jurisdictions. As such, this Preliminary Placement Document does not constitute, and may not be

used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or

solicitation is not authorised, or to any person to whom it is unlawful to make such offer or solicitation. In

particular, no action has been taken by our Company and the Book Running Lead Managers which would permit

an offering of the Equity Shares or distribution of this Preliminary Placement Document in any country or

jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not

be offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any offering

materials in connection with the Equity Shares may be distributed or published in or from any country or

jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations

of any such country or jurisdiction.

Any reproduction or distribution of this Preliminary Placement Document in the United States, in whole or in

part, and any disclosure of its contents to any other person is prohibited. In making an investment decision,

prospective investors must rely on their own examination of our Group and the terms of the Issue, including the

merits and risks involved. Investors should not construe the contents of this Preliminary Placement Document as

legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to

business, legal, tax, accounting and related matters concerning the Issue. In addition, neither our Company nor

the Book Running Lead Managers are making any representation to any offeree or subscriber of the Equity

Shares regarding the legality of an investment in the Equity Shares by such offeree or subscriber under

applicable legal, investment or similar laws or regulations. Each purchaser of the Equity Shares in the Issue

is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our

Company under Indian law, including Chapter VIII of the SEBI Regulations and pursuant to Section 42

of the Companies Act, 2013, and that it is not prohibited by SEBI or any other statutory authority from

buying, selling or dealing in the securities or otherwise accessing the capital markets in India including

the Equity Shares. Each purchaser of the Equity Shares in the Issue also acknowledges that it has been

afforded an opportunity to request from our Company and review information relating to our Company

and the Equity Shares. This Preliminary Placement Document contains summaries of certain terms of

certain documents, which are qualified in their entirety by the terms and conditions of such documents.

All references herein to “you” or “your” is to the prospective investors of the Issue.

The information on our Company’s website (www.siticable.com), any website directly and indirectly linked to

the website of our Company, Group or the websites of the Book Running Lead Managers or their affiliates, does

not constitute nor form part of this Preliminary Placement Document. Prospective investors should not rely on

the information contained in, or available through such websites.

NOTICE TO INVESTORS IN CERTAIN JURISDICTIONS

In addition to the above, for information to investors in certain other jurisdictions, see the sections “Selling

Restrictions” and “Transfer Restrictions” on pages 152 and 158, respectively.

5

REPRESENTATIONS BY INVESTORS

References herein to “you” or “your” are to the prospective investors in the Issue.

By Bidding for and/or subscribing to any Equity Shares in the Issue, you are deemed to have represented,

warranted, acknowledged and agreed to our Company and the Book Running Lead Managers, as follows:

You (i) are a QIB as defined under Regulation 2(1)(zd) of the SEBI Regulations and not excluded as an

eligible investor in the Issue pursuant to Regulation 86(1)(b) of the SEBI Regulations, (ii) have a valid

and existing registration under applicable laws and regulations of India, (iii) undertake to acquire, hold,

manage or dispose of any Equity Shares that are Allotted to you in accordance with Chapter VIII of the

SEBI Regulations, and (iv) undertake to comply with the SEBI Regulations, the Companies Act and all

other applicable laws, including in respect of reporting requirements, if any;

If you are not a resident of India, but a QIB, you are an Eligible FPI including an FII (including a sub-

account other than a sub-account which is a foreign corporate or a foreign individual) having a valid and

existing certificate of registration with or on behalf of SEBI under the applicable laws in India or a

multilateral or bilateral development financial institution or an FVCI, and have a valid and existing

registration with SEBI under the applicable laws in India and are eligible to invest in India under

applicable law, including the FEMA Transfer Regulations, and any notifications, circulars or

clarifications issued thereunder, and have not been prohibited by SEBI or any other regulatory authority,

from buying, selling or dealing in securities;

You will make all necessary filings with appropriate regulatory authorities, including RBI, as required

pursuant to applicable laws;

If you are Allotted Equity Shares, you shall not, for a period of one year from the date of Allotment, sell

the Equity Shares so acquired except on the floor of the Stock Exchanges (additional requirements apply

if you are in jurisdictions other than India, see section “Transfer Restrictions” on page 158);

You have made, or been deemed to have made, as applicable, the representations set forth under sections

titled “Selling Restrictions” and “Transfer Restrictions” beginning on pages 152 and 158, respectively;

You are aware that the Equity Shares have not been and will not be registered through a prospectus under

the Companies Act, the SEBI Regulations or under any other law in force in India. This Preliminary

Placement Document has not been reviewed or affirmed by the RBI, SEBI, the Stock Exchanges, the

RoC or any other regulatory or listing authority and is intended only for use by QIBs;

You are entitled to subscribe for and acquire the Equity Shares under the laws of all relevant jurisdictions

that apply to you and that you have fully observed such laws and you have the necessary capacity, have

obtained all necessary consents, governmental or otherwise, and authorizations and complied with all

necessary formalities, to enable you to commit to participation in the Issue and to perform your

obligations in relation thereto (including, without limitation, in the case of any person on whose behalf

you are acting, all necessary consents and authorizations to agree to the terms set out or referred to in this

Preliminary Placement Document), and will honour such obligations;

Neither our Company nor any of the Book Running Lead Managers or any of their respective

shareholders, directors, officers, employees, counsel, representatives, agents or affiliates are making any

recommendations to you or advising you regarding the suitability of any transactions it may enter into in

connection with the Issue and your participation in the Issue is on the basis that you are not, and will not,

up to the Allotment of the Equity Shares, be a client of any of the Book Running Lead Managers. Neither

the Book Running Lead Managers nor any of its respective shareholders, directors, officers, employees,

counsel, representatives, agents or affiliates have any duties or responsibilities to you for providing the

protection afforded to their clients or customers or for providing advice in relation to the Issue and are not

in any way acting in any fiduciary capacity;

You confirm that, either: (i) you have not participated in or attended any investor meetings or

presentations by our Company or its agents (the “Company Presentations”) with regard to our Company

or the Issue; or (ii) if you have participated in or attended any Company Presentations: (a) you understand

and acknowledge that the Book Running Lead Managers may not have knowledge of the statements that

6

our Company or its agents may have made at such Company Presentations and are therefore unable to

determine whether the information provided to you at such Company Presentations may have included

any material misstatements or omissions, and, accordingly you acknowledge that the Book Running Lead

Managers have advised you not to rely in any way on any information that was provided to you at such

Company Presentations, and (b) confirm that, to the best of your knowledge, you have not been provided

any material information relating to our Company and the Issue that was not publicly available;

All statements other than statements of historical fact included in this Preliminary Placement Document,

including, without limitation, those regarding our Group’s financial position, business strategy, plans and

objectives of management for future operations (including development plans and objectives relating to

our Group’s business), are forward-looking statements. Such forward-looking statements involve known

and unknown risks, uncertainties and other important factors that could cause actual results to be

materially different from future results, performance or achievements expressed or implied by such

forward-looking statements. Such forward-looking statements are based on numerous assumptions

regarding our Group’s present and future business strategies and environment in which our Group will

operate in the future. You should not place undue reliance on forward-looking statements, which speak

only as at the date of this Preliminary Placement Document. Our Company assumes no responsibility to

update any of the forward-looking statements contained in this Preliminary Placement Document;

You are aware and understand that the Equity Shares are being offered only to QIBs and are not being

offered to the general public, and the Allotment of the same shall be on a discretionary basis;

You are aware that if you are Allotted more than 5.00% of the Equity Shares in the Issue, our Company

shall be required to disclose your name and the number of the Equity Shares Allotted to you to the Stock

Exchanges and the Stock Exchanges will make the same available on their websites and you consent to

such disclosures;

You have been provided a serially numbered copy of this Preliminary Placement Document and have

read it in its entirety, including in particular, the section “Risk Factors” beginning on page 50;

In making your investment decision, (i) you have relied on your own examination of our Group and the

terms of the Issue, including the merits and risks involved, (ii) you have made and will continue to make

your own assessment of our Group, the Equity Shares and the terms of the Issue, based solely on the

information contained in this Preliminary Placement Document and no other disclosure or representation

by our Group, its Directors, Promoters and affiliates or any other party, (iii) you have relied upon your

own investigations and resources in deciding to invest in the Issue, (iv) you have consulted your own

independent advisors (including tax advisors) or otherwise have satisfied yourself concerning, without

limitation, the effects of local laws and taxation matters, (v) you have relied solely on the information

contained in this Preliminary Placement Document and no other disclosure or representation by our

Company or any other party and (vi) you have received all information that you believe is necessary or

appropriate in order to make an investment decision in respect of our Company and the Equity Shares;

Neither the Book Running Lead Managers nor any of their respective shareholders, directors, officers,

employees, counsel, representatives, agents or affiliates, have provided you with any tax advice or

otherwise made any representations regarding the tax consequences of purchase, ownership and disposal

of the Equity Shares (including but not limited to the Issue and the use of proceeds from the Equity

Shares). You will obtain your own independent tax advice from a reputable service provider and will not

rely on any of the Book Running Lead Managers nor on any of their respective shareholders, directors,

officers, employees, counsel, representatives, agents or affiliates when evaluating the tax consequences in

relation to the Equity Shares (including but not limited to the Issue and the use of proceeds from the

Equity Shares). You waive, and agree not to assert any claim against our Company or any of the Book

Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel,

representatives, agents or affiliates with respect to the tax aspects of the Equity Shares or as a result of

any tax audits by tax authorities, wherever situated;

You are a sophisticated investor and have such knowledge and experience in financial, business and

investment matters as to be capable of evaluating the merits and risks of an investment in the Equity

Shares. You are experienced in investing in private placement transactions of securities of companies in a

similar nature of business, similar stage of development and in similar jurisdictions. You and any

accounts for which you are subscribing to the Equity Shares (i) are each able to bear the economic risk of

7

your investment in the Equity Shares, (ii) will not look to our Company and/or any of the Book Running

Lead Managers or any of their respective shareholders, directors, officers, employees, counsel,

representatives, agents or affiliates for all or part of any such loss or losses that may be suffered in

connection with the Issue, including losses arising out of non-performance by our Company of any of its

respective obligations or any breach of any representations and warranties by our Company, whether to

you or otherwise, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have

no need for liquidity with respect to the investment in the Equity Shares, and (v) have no reason to

anticipate any change in your or their circumstances, financial or otherwise, which may cause or require

any sale or distribution by you or them of all or any part of the Equity Shares. You acknowledge that an

investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a

speculative investment. You are seeking to subscribe to the Equity Shares in the Issue for your own

investment and not with a view to resell or distribute;

You agree that in terms of Section 42(7) of the Companies Act, 2013, we shall file the list of QIBs (to

whom the Preliminary Placement Document has been circulated) along with other particulars with the

RoC and SEBI within 30 days of circulation of the Preliminary Placement Document and other filings

required under the Companies Act, 2013;

If you are acquiring the Equity Shares to be issued pursuant to the Issue, for one or more managed

accounts, you represent and warrant that you are authorised in writing, by each such managed account to

acquire such Equity Shares for each managed account and to make (and you hereby make) the

representations, warranties, acknowledgements and agreements herein for and on behalf of each such

account, reading the reference to ‘you’ to include such accounts;

You are not a “Promoter” (as defined under the SEBI Regulations) of our Company or any of its affiliates

and are not a person related to the Promoters, either directly or indirectly, and your Bid does not directly

or indirectly represent the “Promoter”, or “Promoter Group”, (as defined under the SEBI Regulations) of

our Company or persons relating to the Promoter;

You have no rights under a shareholders’ agreement or voting agreement with the Promoters or persons

related to the Promoters, no veto rights or right to appoint any nominee director on the Board of

Directors, other than the rights acquired, if any, in the capacity of a lender not holding any Equity Shares,

which shall not be deemed to be a person related to the Promoter;

You will have no right to withdraw your Bid after the Bid/Issue Closing Date;

You are eligible to apply and hold the Equity Shares Allotted to you together with any Equity Shares held

by you prior to the Issue. Further, you confirm that your aggregate holding after the Allotment of the

Equity Shares shall not exceed the level permissible as per any applicable regulation;

The Bid made by you would not result in triggering a tender offer under the Securities and Exchange

Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the

“Takeover Regulations”);

Aggregate allotment to you in the Issue, together with other QIBs in the Issue that belong to the same

group or are under common control as you, shall not exceed 50.00% of the Issue. For the purposes of this

representation:

(a) The expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies

under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956;

and

(b) ‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover

Regulations;

You are aware that the pre and post issue shareholding pattern of our Company in the format prescribed

in clause 35 of the Listing Agreements will be filed by our Company with the Stock Exchanges, and that

if you are Allotted more than 5% of the Equity Shares in this Issue, we shall be required to disclose your

name and the number of Equity Shares Allotted to you to the Stock Exchanges and the Stock Exchanges

will make the same available on their website and you consent to such disclosure being made by us;

8

You are aware that our Company shall make necessary filings with the RoC pursuant to the Allotment

(which shall include certain details of the allottees) and if the Allotment of Equity Shares in the Issue

results in you being one of the top ten shareholders of our Company, we shall also be required to disclose

your name and shareholding details to the RoC within 15 days of Allotment, and you consent to such

disclosure being made by us;

You shall not undertake any trade in the Equity Shares credited to your beneficiary account until such

time that the final listing and trading approvals for such Equity Shares are issued by the Stock Exchanges,

as applicable;

You are aware that (i) applications for in-principle approval, in terms of Clause 24(a) of the Equity

Listing Agreements, for listing and admission of the Equity Shares and for trading on the Stock

Exchanges, were made and approval has been received from each of the Stock Exchanges, and (ii) the

application for the final listing and trading approvals will be made only after Allotment. There can be no

assurance that the final approvals for listing and trading in the Equity Shares will be obtained in time or at

all. Our Company shall not be responsible for any delay or non-receipt of such final approvals or any loss

arising from such delay or non-receipt;

You are aware and understand that the Book Running Lead Managers have entered into a placement

agreement with our Company, whereby the Book Running Lead Managers have, subject to the

satisfaction of certain conditions set out therein, severally and not jointly, agreed to manage the Issue and

use reasonable efforts to procure subscriptions for the Equity Shares on the terms and conditions set forth

therein;

You understand that the contents of this Preliminary Placement Document are exclusively the

responsibility of our Company, and neither the Book Running Lead Managers nor any person acting on

their behalf has or shall have any liability for any information, representation or statement contained in

this Preliminary Placement Document or any information previously published by or on behalf of our

Company and will not be liable for your decision to participate in the Issue based on any information,

representation or statement contained in this Preliminary Placement Document or otherwise. By

accepting a participation in the Issue, you agree to the same and confirm that the only information you are

entitled to rely on, and on which you have relied in committing yourself to acquire the Equity Shares is

contained in this Preliminary Placement Document, such information being all that you deem necessary

to make an investment decision in respect of the Equity Shares, you have neither received nor relied on

any other information, representation, warranty or statement made by or on behalf of the Book Running

Lead Managers or our Company or any of their respective affiliates or any other person, and neither the

Book Running Lead Managers nor our Company nor any other person will be liable for your decision to

participate in the Issue based on any other information, representation, warranty or statement that you

may have obtained or received;

The only information you are entitled to rely on, and on which you have relied in committing yourself to

acquire the Equity Shares is contained in this Preliminary Placement Document, such information being

all that you deem necessary to make an investment decision in respect of the Equity Shares and that you

have neither received nor relied on any other information given or representations, warranties or

statements made by the BRLMs (including any view, statement, opinion or representation expressed in

any research published or distributed by the BRLMs or their affiliates or any view, statement, opinion or

representation expressed by any staff (including research staff) of the BRLMs or their respective

affiliates) or our Company or any of their respective shareholders, directors, officers, employees,

counsels, advisors, representatives, agents or affiliates and neither the BRLMs nor our Company or any

of their respective shareholders, directors, officers, employees, counsels, advisors, representatives, agents

or affiliates will be liable for your decision to accept an invitation to participate in the Issue based on any

other information, representation, warranty, statement or opinion

You understand that none of the Book Running Lead Managers have any obligation to purchase or

acquire all or any part of the Equity Shares purchased by you in the Issue;

You are eligible to invest in India under applicable law, including the FEMA Transfer Regulations, and

any notifications, circulars or clarifications issued thereunder, and have not been prohibited by SEBI or

any other regulatory authority, from buying, selling or dealing in securities;

9

You understand that the Equity Shares have not been and will not be registered under the Securities Act

or registered, listed or otherwise qualified in any other jurisdiction outside India and accordingly, may not

be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not

subject to, the registration requirements of the Securities Act and applicable US state securities laws.

Accordingly, the Equity Shares are being offered and sold outside the United States in offshore

transactions in reliance on Regulation S and the applicable laws of the jurisdictions where those offers

and sales occur;

You are, at the time the Equity Shares are purchased, located outside the United States (within the

meaning of Regulation S), and you are not an affiliate of our Company or a person acting on behalf of the

Company or such an affiliate;

You are purchasing the Equity Shares in an offshore transactions meeting the requirements of Rule 903 or

904 of Regulation S and you shall not offer, sell, pledge or otherwise transfer such Equity Shares except

in an offshore transaction complying with Regulation S or pursuant to any other available exemption

from registration under the Securities Act and in accordance with all applicable securities laws of the

states of the United States and any other jurisdiction, including India;

You agree that any dispute arising in connection with the Issue will be governed by and construed in

accordance with the laws of India, and the courts in Mumbai, India shall have exclusive jurisdiction to

settle any disputes which may arise out of or in connection with this Preliminary Placement Document

and the Placement Document;

Each of the representations, warranties, acknowledgements and agreements set out above shall continue

to be true and accurate at all times up to and including the Allotment, listing and trading of the Equity

Shares in the Issue;

You agree to indemnify and hold our Company and the Book Running Lead Managers harmless from any

and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in

connection with any breach of the foregoing representations, warranties, acknowledgements and

undertakings made by you in this Preliminary Placement Document. You agree that the indemnity set

forth in this paragraph shall survive the resale of the Equity Shares by, or on behalf of, the managed

accounts; and

Our Company, the Book Running Lead Managers, their respective affiliates and others will rely on the

truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings,

which are given to the Book Running Lead Managers on their own behalf and on behalf of our Company,

and are irrevocable.

OFF-SHORE DERIVATIVE INSTRUMENTS (P-NOTES)

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of

Regulation 22 of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, as

amended (“SEBI FPI Regulations”), FPIs (other than Category III foreign portfolio investors and unregulated

broad based funds, which are classified as Category II FPI by virtue of their investment manager being

appropriately regulated) may issue, subscribe or otherwise deal in offshore derivative instruments (as defined

under the SEBI FPI Regulations as any instrument, by whatever name called, which is issued overseas by a FPI

against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as

its underlying, and all such offshore derivative instruments are referred to herein as “P-Notes”), for which they

may receive compensation from the purchasers of such instruments. P-Notes may be issued only in favour of

those entities which are regulated by any appropriate foreign regulatory authorities subject to compliance with

‘know your client’ requirements. An FPI shall also ensure no further issue or transfer is made of any offshore

derivative instruments issued by or on behalf of it to any person other than a person regulated by an appropriate

foreign regulatory authority. P-Notes have not been and are not being offered or sold pursuant to this

Preliminary Placement Document. This Preliminary Placement Document does not contain any information

concerning P-Notes, including, without limitation, any information regarding any risk factors relating thereto.

In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which

means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to be

10

10% or above of our post-Issue Equity Share capital. As per the circular issued by SEBI on November 24, 2014,

these investment restrictions shall also apply to subscribers of offshore derivative instruments. Two or more

subscribers of offshore derivative instruments having a common beneficial owner shall be considered together as

a single subscriber of the offshore derivative instruments. In the event an investor has investments as a FPI and

as a subscriber of offshore derivative instruments, these investment restrictions shall apply on the aggregate of

the FPI and offshore derivative instruments investments held in the underlying company.

Any P-Notes that may be issued are not securities of our Company and do not constitute any obligation of,

claims on or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the

establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-

Notes that may be offered are issued by, and are the sole obligations of, third parties that are unrelated to us. Our

Company does not make any recommendation as to any investment in P-Notes and does not accept any

responsibility whatsoever in connection with the P-Notes. Any P-Notes that may be issued are not securities of

the BRLMs and do not constitute any obligations or claims on the BRLMs. FPI affiliates (other than Category

III FPI and unregulated broad based funds which are classified as FPI by virtue of their investment manager

being appropriately regulated) of the BRLMs may purchase, to the extent permissible under law, Equity Shares

in this Issue, and may issue P-Notes in respect thereof. Affiliates of the BRLMs which are Eligible FPIs may

purchase, to the extent permissible under law, the Equity Shares in the Issue, and may issue P-Notes in respect

thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate

disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes. Neither

SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related

thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax

advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in

compliance with applicable laws and regulations.

11

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, a copy of this Preliminary Placement Document has been submitted to each of the Stock

Exchanges. The Stock Exchanges do not in any manner:

(i) warrant, certify or endorse the correctness or completeness of the contents of this Preliminary

Placement Document;

(ii) warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or

(iii) take any responsibility for the financial or other soundness of our Company, its Promoters, its

management or any scheme or project of our Company;

and it should not for any reason be deemed or construed to mean that this Preliminary Placement Document has

been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire

any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have

any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person

consequent to or in connection with, such subscription/acquisition, whether by reason of anything stated or

omitted to be stated herein, or for any other reason whatsoever.

12

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Preliminary Placement Document, unless otherwise specified or the context otherwise indicates or

implies, references to ‘you’, ‘your’, ‘offeree’, ‘purchaser’, ‘subscriber’, ‘recipient’, ‘investors’, ‘prospective

investors’ and ‘potential investor’ are to the prospective investors in the Issue, references to ‘SCNL’ or the

‘Company’, ‘our Company’, or the ‘Issuer’ are to Siti Cable Network Limited and references to ‘we’, ‘us’, ‘our’

or ‘our Group’ are to, where applicable, our Company and its consolidated Subsidiaries including entities

controlled through contractual arrangements, except as the context otherwise requires.

In this Preliminary Placement Document, all references to “Indian Rupees”, “Rs.” and “₹” are to the legal

currency of India, all references to “India” are to the Republic of India and its territories and possessions.

References to the singular also refers to the plural and one gender also refers to any other gender, wherever

applicable, and the words “Lakh” or “Lac” mean “100 thousand”, the word “million” means “10 lakh”, the word

“crore” means “10 million” or “100 lakhs” and the word “billion” means “1,000 million” or “100 crores”. All

references herein to the ‘Government’ or ‘GoI’ or the ‘Central Government’ or the ‘State Government’ are to the

Government of India, central or state, as applicable.

Our Company publishes its financial statements in Indian Rupees. The Reformatted Financial Statements of our

Company included herein have been prepared in accordance with accounting principles generally accepted in

India, or Indian GAAP and the Companies Act. The financial statements of our Company as of and for the

Financial Years ended March 31, 2012 have been audited by S.R. Batliboi & Co. LLP and for the Financial

Years ended March 31, 2013 and March 31, 2014 by our Auditors in accordance with the applicable generally

accepted auditing standards in India prescribed by the ICAI. The Consolidated Condensed Financial Statements

has been prepared in accordance with the requirements of Accounting Standards (AS) 25 notified under

Companies Act, 1956 read with general circular 8/2014 dated April 4, 2014 issued by Ministry of Corporate

Affairs, have been reviewed by our Auditors in accordance with the Standard on Review Engagement (SRE)

2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by

the ICAI.

Our Company does not attempt to quantify the impact of U.S. GAAP or IFRS on the financial data included in

this Preliminary Placement Document, nor does our Company provide a reconciliation of its financial statements

to International Financial Reporting Standards (“IFRS”) or U.S. GAAP. Each of IFRS and U.S. GAAP differ in

certain significant respects from Indian GAAP. Accordingly, the degree to which the Reformatted Financial

Statements prepared in accordance with Indian GAAP included in the Preliminary Placement Document will

provide meaningful information is entirely dependent on the reader’s familiarity with the respective accounting

practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures

presented in this Preliminary Placement Document should accordingly be limited. See section “Risk Factors” on

page 50.

For the sake of presentation in this Preliminary Placement Document the numericals and other financial

information has been presented in Rupees million. All numerical and financial information as set out and

presented in this Preliminary Placement Document for the sake of consistency and convenience have been

rounded off to two decimal places. Accordingly, figures shown as totals in certain tables may not be an

arithmetic aggregation of the figures which precede them.

13

INDUSTRY AND MARKET DATA

Information regarding market position, growth rates and other industry data and certain industry forecasts

pertaining to the businesses of our Group contained in this Preliminary Placement Document consists of

estimates based on data reports compiled by government bodies, recognized industry sources, professional

organisations and analysts, data from other external sources and knowledge of the markets in which we compete.

Unless stated otherwise, the statistical information included in this Preliminary Placement Document relating to

the industry in which we operate has been reproduced from various trade, industry and government publications

and websites. We confirm that such information and data has been accurately reproduced, and that as far as we

are aware and are able to ascertain from information published by third parties, no facts have been omitted that

would render the reproduced information inaccurate or misleading.

This data is subject to change and cannot be verified with certainty due to limits on the availability and

reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many

cases, there is no readily available external information (whether from industry associations, government bodies

or other organisations) to validate market-related analysis and estimates, so we have relied on internally

developed estimates. Industry publications generally state that the information they generally contain has been

obtained from sources believed to be reliable but that the accuracy and completeness of the information is not

guaranteed.

Neither we nor the Book Running Lead Managers have independently verified this data and do not make any

representation regarding the accuracy or completeness of such data. Our Company takes responsibility for

accurately reproducing such information but accepts no further responsibility in respect of such information and

data.

Similarly, while we believe our internal estimates to be reasonable, such estimates have not been verified by any

independent source and we cannot assure potential investors as to their accuracy. Internal estimates and surveys,

industry forecasts and market research, while believed to be reliable, have not been independently verified and

neither we nor the BRLMs make any representation as to the accuracy and completeness of information based

on trade, industry and government publications and websites, data reports compiled by government bodies,

professional organisations and analysts, or from other external sources.

Certain information in the section “Industry Overview” has been derived from various Indian government

publications / industry reports and reports prepared by the TRAI and the FICCI KPMG Report and has not been

prepared or independently verified by us, the Book Running Lead Managers or any of our or their respective

affiliates or advisors.

14

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Preliminary Placement Document that are not statements of law or historical

facts constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by

terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’,

‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or phrases of

similar import. Similarly, statements that describe the strategies, objectives, plans or goals of our Company are

also forward-looking statements. However, these are not the exclusive means of identifying forward-looking

statements.

All statements regarding our Group’s expected financial conditions, results of operations; business plans and

prospects are forward-looking statements. These forward-looking statements include statements as to our

business strategy, revenue and profitability (including, without limitation, any financial or operating projections

or forecasts), new business and other matters discussed in this Preliminary Placement Document that are not

historical facts. The forward-looking statements contained in this Preliminary Placement Document (whether

made by us or any third party), are predictions and involve known and unknown risks, uncertainties,

assumptions and other factors that may cause the actual results, performance or achievements of our Group to be

materially different from any future results, performance or achievements expressed or implied by such forward-

looking statements or other projections. All forward-looking statements are subject to risks, uncertainties and

assumptions about us that could cause actual results to differ materially from those contemplated by the relevant

forward-looking statement. Important factors that could cause the actual results, performances and achievements

of our Group to be materially different from any of the forward-looking statements include, among others:

Failure to convert our existing analog cable television subscribers, to digital cable services;

Inability to manage our growth effectively;

Uncertainties associated with our acquisition strategy;

Inability to manage our relationship with our LCOs or any liability arising out of LCOs’ activities

not under our control;

Inability to compete effectively;

Increased regulation or changes in existing regulations governing our industry; and

General economic and business conditions in India.

By their nature, certain of the market risk disclosures are only estimates and could be materially different from

what actually occurs in the future. As a result, actual future gains, losses or impact on revenue or income could

materially differ from those that have been estimated, expressed or implied by such forward-looking statements

or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about us

that could cause actual results to differ materially from those contemplated by the relevant forward-looking

statement. Additional factors that could cause actual results, performance or achievements of our Group to differ

materially include, but are not limited to, those discussed under the sections entitled “Risk Factors”, “Industry

Overview”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” beginning on pages 50, 99, 112 and 80, respectively.

The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of

the management, as well as the assumptions made by, and information currently available to, the management of

our Group. Although we believe that the expectations reflected in such forward-looking statements are

reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these

uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. In any

event, these statements speak only as of the date of this Preliminary Placement Document or the respective dates

indicated in this Preliminary Placement Document and our Company undertakes no obligation to update or

revise any of them, whether as a result of new information, future events, changes in assumptions or changes in

factors affecting these forward looking statements or otherwise. If any of these risks and uncertainties

materialise, or if any of our underlying assumptions prove to be incorrect, the actual results of operations or

financial condition of our Company could differ materially from that described herein as anticipated, believed,

estimated or expected. All subsequent forward-looking statements attributable to our Group are expressly

qualified in their entirety by reference to these cautionary statements.

15

ENFORCEMENT OF CIVIL LIABILITIES

Our Company is a public limited company incorporated under the laws of India. A majority of our Directors and

all the key managerial personnel of our Company named herein are residents of India. All the assets of our

Company are located in India. As a result, it may be difficult or may not be possible for investors outside India

to effect service of process upon our Company or such persons in India, or to enforce judgments obtained

against such parties outside India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.

Recognition and enforcement of foreign judgments and execution of a foreign judgment is provided for under

Sections 13 and 44A respectively, of the Code of Civil Procedure, 1908 (the “Civil Procedure Code”) on a

statutory basis.

Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any

matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of

competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it

appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or

a refusal to recognize the law of India in cases in which such law is applicable; (iv) where the proceedings in

which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by

fraud, or (vi) where the judgment sustains a claim founded on a breach of any law in force in India.

Under Section 14 of the Civil Procedure Code, a court in India shall, upon the production of any document

purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of

competent jurisdiction, unless the contrary appears on record; but such presumption may be displaced by

proving want of jurisdiction.

A foreign judgment which is conclusive under Section 13 of the Civil Procedure Code can be enforced in India

(i) by instituting execution proceedings; or (ii) by instituting a suit on such judgment.

Foreign judgments may be enforced by proceedings in execution in certain cases. Section 44A of the Civil

Procedure Code provides that where a foreign judgment has been rendered by a superior court within the

meaning of that section in any country or territory outside India which the Government has by notification

declared to be in a reciprocating territory, it may be enforced in India by proceedings in execution as if the

judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Procedure Code is

applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other

charges of a like nature or in respect of a fine or other penalties and does not include arbitration awards.

Furthermore, the execution of the foreign decree under Section 44A of the Civil Procedure Code is also subject

to the exceptions under Section 13 of the Civil Procedure Code, as mentioned above.

Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government of India to be a

reciprocating territory for the purposes of Section 44A of the Civil Procedure Code but the United States has not

been so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced

only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be filed in India

within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil

liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if

an action is brought in India.

Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of

damages awarded as excessive or inconsistent with public policy. Further, any judgment or award denominated

in a foreign currency would be converted into Rupees on the date of such judgment or award and not on the date

of payment. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI

to repatriate outside India any amount recovered pursuant to the execution of such a judgement.

16

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency

equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect

the conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.

The following table sets forth information with respect to the exchange rates between the Rupee and the U.S.

dollar (in ₹ per US$1.00), for the periods indicated. The exchange rates are based on the reference rates released

by RBI, which are available on the website of RBI. No representation is made that any Rupee amounts could

have been, or could be, converted into U.S. dollars at any particular rate, the rates stated below, or at all.

On February 26, 2015 the exchange rate (RBI reference rate) was ₹ 61.94 to US$ 1.00. (Source: www.rbi.org.in)

Period end Average(1) High(2) Low(3)

Financial Year Ended: (₹ Per US$)

March 31, 2012 51.16 47.95 54.24 43.95

March 31, 2013 54.39 54.45 57.22 50.56

March 31, 2014 60.10 60.50 68.36 53.74

Quarter ended:

March 31, 2014 60.10 61.79 62.99 60.1

June 30, 2014 60.09 59.77 61.12 58.43

September 30, 2014 61.61 60.59 61.61 59.72

December 31, 2014 63.33 62.00 63.75 61.04

Month ended:

January 31, 2015 61.76 62.23 63.45 61.41 (1) Average of the official rate for each working day of the relevant period. (2) Maximum of the official rate for each working day of the relevant period. (3) Minimum of the official rate for each working day of the relevant period.

(Source: www.rbi.org.in)

http://www.rbi.org.in/

http://www.rbi.org.in/

17

DEFINITIONS AND ABBREVIATIONS

This Preliminary Placement Document uses the definitions and abbreviations set forth below, which you should

consider when reading the information contained herein. References to any legislation, act or regulation shall be

to such term as amended from time to time.

The following list of certain capitalized terms used in this Preliminary Placement Document is intended for the

convenience of the reader/prospective investor only and is not exhaustive.

Company Related Terms

Term Description

Articles / Articles of Association Articles of association of our Company, as amended from time to time.

Audit Committee The audit committee of the Board of Directors described in the section titled

“Board of Directors and Senior Management” beginning on page 133.

Auditors The statutory auditors of our Company, Walker Chandiok & Co. LLP,

Chartered Accountants.

Board of Directors / Board The board of directors of our Company or any duly constituted committee

thereof.

Condensed Consolidated Financial

Statements

Condensed consolidated balance sheet as at December 31, 2014, condensed

consolidated statement of profit and loss and condensed consolidated statement

of cash flows of our Group, for the nine months period then ended and select

explanatory notes to condensed consolidated financial statements for the nine

months ended December 31, 2014, condensed consolidated statement of profit

and loss and condensed consolidated statement of cash flows of our Group, for

the nine months ended December 31, 2013, including the select explanatory

notes (collectively or individually, as the case may be).

Directors The directors of our Company.

Equity Shares The equity shares of our Company of a face value of ₹ 1 each, fully paid-up

unless otherwise specified in the context thereof.

ESOP 2007 The employee stock option scheme of our Company, more particularly

described in “Capital Structure-Our stock option plan” on page 78.

ICNCL India Cable Net Company Limited, our subsidiary, a public limited company

incorporated under the Companies Act, 1956, having its registered office at J-

1/15, Block EP, 4th Floor, Sector-V, Salt Lake, Kolkata 700 091, West Bengal,

India.

Memorandum or Memorandum of

Association or MOA

Memorandum of association of our Company, as amended from time to time.

Our Company / the Company / the

Issuer / SCNL

Siti Cable Network Limited, a public limited company incorporated under the

Companies Act, 1956 and having its registered office at 135, Continental

Building, Dr. Annie Besant Road, Worli, Mumbai 400 018, Maharashtra, India.

Preference Shares Non-cumulative redeemable preference shares of the Company having a face

value of ` 1 each.

Promoters Promoters of our Company, being Ashok Mathai Kurien, Sushila Goel,

Ambience Business Services Private Limited, Sprit Textiles Private Limited,

Essel Infraprojects Limited, Ganjam Trading Company Private Limited, Jayneer

Capital Private Limited, Veena Investment Private Limited, Direct Media

Solutions Private Limited, Digital Satellite Holdings Private Limited, Bioscope

Cinemas Private Limited, Essel Media Ventures Limited and Essel International

Limited. Promoter Group Promoter group of our Company as per the definition provided in Regulation

2(1)(zb) of the SEBI Regulations.

Reformatted Financial Statements Reformatted consolidated financial statements of our Group, for Financial Years

ended March 31, 2012, .March 31, 2013 and March 31, 2014 (collectively or for

a particular Financial Year, as the case may be).

Registered Office The registered office of our Company, located at 135, Continental Building, Dr.

Annie Besant Road, Worli, Mumbai 400 018, Maharashtra, India.

Registrar of Companies/RoC The Registrar of Companies, Maharashtra, Mumbai.

Scheme of Arrangement The scheme of arrangement by which Zee Entertainment Enterprises Limited

(formerly Zee Telefilms Limited) and Siti Cable Network Limited have

transferred their news and cable business undertaking to Zee News Limited and

18

Term Description

the Company, respectively, as approved by the order of the High Court of

Judicature at Bombay, dated November 17, 2006.

Subsidiaries Subsidiaries of our Company as on December 31, 2014, namely,

(i) Indian Cable Net Company Limited;

(ii) Central Bombay Cable Network Limited;

(iii) Siticable Broadband South Limited;

(iv) Master Channel Community Network Private Limited;

(v) SITI Vision Digital Media Private Limited;

(vi) SITI Jind Digital Media Communications Private Limited;

(vii) SITI Jai Maa Durgee Communications Private Limited;

(viii) SITI Bhatia Network Entertainment Private Limited; (ix) SITI Krishna Digital Media Private Limited; (x) SITI Guntur Digital Network Private Limited; (xi) SITI Jony Digital Cable Network Private Limited; (xii) SITI Faction Digital Private Limited; (xiii) Wire and Wireless Tisai Satellite Limited; (xiv) SITI Maurya Cable Net Private Limited; (xv) SITI Broadband Services Private Limited; and (xvi) Siti Global Private Limited.

we / us / our / our Group

Our Company, its Subsidiaries and the associate, except as the context otherwise

requires.

ZEEL Zee Entertainment Enterprise Limited, a company incorporated under the

Companies Act, 1956, having its registered office at 135, Continental Building,

Dr. Annie Besant Road, Worli, Mumbai 400 018, Maharashtra, India.

Issue Related Terms

Term Description

Allocated / Allocation The allocation of Equity Shares following the determination of the Issue Price

to QIBs on the basis of the Bid Cum Application Form submitted by them, by

our Company in consultation with the Book Running Lead Managers and in

compliance with Chapter VIII of the SEBI Regulations

Allot / Allotment / Allotted Unless the context otherwise requires, the issue and allotment of Equity Shares

to be issued pursuant to the Issue

Allottees QIBs to whom Equity Shares are issued and Allotted pursuant to the Issue

Bid(s) Indication of interest of a Bidders, including all revisions and modifications

thereto, as provided in the Bid Cum Application Form, to subscribe for the

Equity Shares

Bid Cum Application Form The form (including any revisions thereof) pursuant to which a QIB shall

submit a Bid for the Equity Shares in the Issue

Bid/Issue Closing Date [●], 2015, which is the last date up to which the Bid Cum Application Forms

shall be accepted

Bid/Issue Opening Date [●], 2015

Bid/Issue Period Period between the Bid/Issue Opening Date and the Bid/Issue Closing Date,

inclusive of both days, during which prospective Bidders can submit their Bids

Bidder Any prospective investor, being a QIB, who makes a Bid pursuant to the terms

of this Preliminary Placement Document and the Bid Cum Application Form

Book Running Lead Managers Motilal Oswal Investment Advisors Private Limited and Ambit Corporate

Finance Private Limited

CAN or Confirmation of Allocation

Note

Note or advice or intimation to QIBs confirming Allocation of Equity Shares to

such QIBs after determination of the Issue Price and requesting payment for the

entire applicable Issue Price for all Equity Shares Allocated to such QIBs

Closing Date The date on which Allotment of Equity Shares pursuant to the Issue shall be

made, i.e. on or about [●], 2015

Cut-off Price The Issue Price of the Equity Shares to be issued pursuant to the Issue which

shall be finalised by our Company in consultation with the Book Running Lead

Managers

Designated Date The date of credit of Equity Shares to the QIB’s dematerialised account, as

applicable to the respective QIB

Equity Listing Agreement(s) The agreement entered into by our Company with each of the Stock Exchanges

in relation to listing of the Equity Shares, on each of the Stock Exchanges

Escrow Agreement Agreement dated February 27, 2015, entered into amongst our Company, the

Escrow Banks and the Book Running Lead Managers for collection of the Bid

Amounts and for remitting refunds, if any, of the amounts collected, to the

19

Term Description

Bidders.

Escrow Bank(s) Axis Bank Limited, a company incorporated under the laws of India, having its

registered office at 3rd Floor, Trishul, Opposite Samrtheswar Temple, Law

Garden, Ellis Bridge, Ahmedabad 380 006, Gujarat, India and ING Vysya

Bank Limited, a company incorporated under the laws of India, having its

registered officer at CMS Hub, 20, Vithal Malya Road, 100 – Eden Park,

Bengaluru 560 001, Karnataka, India.

Escrow Bank Account(s) The accounts entitled “SCNL Axis– QIP Escrow Account” and “SCNL ING–

QIP Escrow Account” with regard to any money received towards the

subscription of the Equity Shares, opened with the Escrow Bank(s), subject to

the terms of the Escrow Agreement(s)

Floor Price The floor price of ₹ 36.41 which has been calculated in accordance with

Chapter VIII of the SEBI Regulations. In terms of the SEBI Regulations, the

Issue Price cannot be lower than the Floor Price. Our Company may offer a

discount of not more than 5% on the Floor Price in terms of Regulation 85 of

the SEBI Regulations.

Issue The offer, issue and Allotment of [●] Equity Shares to QIBs pursuant to

Chapter VIII of the SEBI Regulations and the provisions of the Companies Act,

2013

Issue Price ₹ [●] per Equity Share

Issue Size The issue of up to [●] Equity Shares aggregating up to ₹ [●] Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board

of India (Mutual Funds) Regulations, 1996, as amended

Mutual Fund Portion 10.00% of the Equity Shares proposed to be Allotted in the Issue, which is

available for Allocation to Mutual Funds

Pay-in Date The last date specified in the CAN for payment of application monies by the

successful Bidders

Placement Agreement Placement agreement dated February 27, 2015, entered into by our Company

and the Book Running Lead Managers

Placement Document The placement document to be issued by our Company in accordance with

Chapter VIII of the SEBI Regulations and Section 42 of the Companies Act,

2013

Preliminary Placement Document This preliminary placement document dated February 27, 2015 issued in

accordance with Chapter VIII of the SEBI Regulations and Section 42 of the

Companies Act, 2013

QIBs or Qualified Institutional

Buyers

Qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI

Regulations or such other persons as maybe permitted by applicable laws to

acquire the Equity Shares to be issued pursuant to the Issue

QIP Qualified institutions placement under Chapter VIII of the SEBI Regulations

Regulation S Regulation S under the Securities Act

Relevant Date [●], which is the date of the meeting of the Board, or any committee duly

authorised by the Board, deciding to open the Issue

Securities Act The United States Securities Act of 1933, as amended and the related rules and

regulations promulgated thereunder

Industry Related Terms

Term Description

ADSL Asymmetric Digital Subscriber Line

AIDFC All India Digital Cable Federation

ARPU Average Rate Per User

BIS Bureau of Indian Standards

C&S Cable and Satellite

CAF Customer Application Forms

CAS Conditional Access System

CMSP Cellular Mobile Service Providers

CMTS Cable Modem Termination System

DAS Digital Addressable System

DOCSIS Data Over Cable Service Interface Specification

DTH Direct to Home

DVD Digital Video Disc

ECS Electronic Clearing System

EOC Ethernet Over Coax

EPG Electronic Programme Guide

20

Term Description

FICCI KPMG Report 2014 “Indian Media and Entertainment Industry”, FICCI KPMG Report 2014

HD High Definition

HFC Hybrid Fibre Co-Axial

HITS Head end in the Sky

IPTV Internet Protocol Television

IRD Integrated Receiver Descrambler

ISP Internet Service Provider

LCN Logical Channel Numbering

LCO Local Cable Operator

LNB Low Noise Block down converter

Mbps Megabyte per second

MHz Mega Hertz

MIB Ministry of Information and Broadcasting, Government of India

MSO Multi Systems Operator

Non-C&S Non-Cable and Satellite

OLT Optical Line Terminal

ONU Optical Network Unit

OYC Own Your Customer

P/E Ratio Price Earnings Ratio

PIO Persons of Indian Origin

PVR Personal Video Recorder

QAM Quadrature Amplitude Moderation

RF Radio Frequency

SD Standard Definition

STBs Set Top Boxes

TDSAT Telecom Disputes Settlement and Appellate Tribunal

TRAI Telecom Regulatory Authority of India

TRAI Act The Telecom and Regulatory Authority of India Act, 1997, as amended

TBCSIDACTS Regulations Telecommunication (Broadcasting and Cable Services Interconnecting Digital

Addressable Cable Television System) Regulations, 2012

UASL Unified Access Service Licencees

UIN Unique Identification Number

VoIP Voice over Internet Protocol

Conventional and general terms

Term Description

₹ / INR / Rupees/ Rs. Indian Rupees

AGM Annual general meeting

AIF(s) Alternative investment funds, as defined and registered with SEBI under the

Securities and Exchange Board of India (Alternative Investment Funds) Regulations,

2012, as amended

AO Assessing Officer

AS Accounting Standards issued by ICAI

BSE BSE Limited

BSNL Bharat Sanchar Nigam Limited

CAGR Compound annual growth rate

Calendar Year Year ending on December 31

Category III Foreign Portfolio

Investor

An FPI registered as a category III foreign portfolio investor under the SEBI FPI

Regulations

CARO Companies Auditors Report Order, 2003

CDSL Central Depository Services (India) Limited

CIN Corporate Identity Number

Civil Procedure Code The Code of Civil Procedure, 1908

CLB Company Law Board

Companies Act Companies Act, 1956 and/or the Companies Act, 2013, as applicable

Companies Act, 1956 Companies Act, 1956, as amended (without reference to the provisions thereof that

have ceased to have effect upon the notification of the Notified Sections) and the

rules made thereunder

Companies Act, 2013 Companies Act, 2013, to the extent in force pursuant to the notification of the

Notified Sections, and the rules made thereunder

Competition Act The Competition Act, 2002, as amended

21

Term Description

Consolidated FDI Policy Circular 1 of 2014 issued by the Department of Industrial Policy and Promotion,

Ministry of Commerce and Industry, Government, effective from April 17, 2014 as

amended from time to time

Cr.P.C The Code of Criminal Procedure, 1973

Crore 100 lakhs

Debt to equity ratio Debt to equity ratio is calculated as total borrowings/net worth

Depositories NSDL and CDSL

Depositories Act The Depositories Act, 1996

Depository Participant or DP A depository participant as defined under the Depositories Act

DP ID Depository participant identity

EBITDA Earnings before interest, tax, depreciation and amortization

ECB External Commercial Borrowing

ECS Electronic clearing service

EGM Extraordinary general meeting

Eligible FPIs FPIs that are eligible to participate in this Issue and do not include qualified foreign

investors and Category III Foreign Portfolio Investors who are not allowed to

participate in the Issue

EOM Emphasis of Matters as per Standard on Auditing (SA) 706 (Emphasis of Matters

paragraphs and other matter paragraphs in the Independent Auditors Report)

EPS Earnings per share, i.e., profit after tax for a Financial Year divided by the weighted

average number of equity shares during the Financial Year

EU European Union

FDI Foreign direct investment

FEMA The Foreign Exchange Management Act, 1999, together with rules and regulations

thereunder

FEMA Transfer Regulations Foreign Exchange Management (Transfer or Issue of Security by a Person Resident

Outside India) Regulations, 2000, as amended

FICCI Federation of Indian Chambers of Commerce and Industry

FII Regulations The Securities and Exchange Board of India (Foreign Institutional Investors)

Regulations, 1995

FIIs Foreign Institutional Investors as defined under the SEBI FPI Regulations

Financial Year/ FY/ Fiscal/

fiscal

Refers to the 12 month period beginning from April 1 of a particular year and ending

on March 31 of the next year.

FIPB Foreign Investment Promotion Board

FIR First Information Report

FMCG Fast Moving Consumer Goods

Form PAS-4 Form PAS-4 prescribed under the Companies (Prospectus and Allotment of

Securities) Rules, 2014

FPI Foreign portfolio investors as defined under the SEBI FPI Regulations and includes

person who has been registered under the SEBI FPI Regulations. Any foreign

institutional investor or qualified foreign investor who holds a valid certificate of

registration is deemed to be a foreign portfolio investor till the expiry of the block of

three years for which fees have been paid as per the Securities and Exchange Board

of India (Foreign Institutional Investors) Regulations, 1995

FVCI Foreign Venture Capital Investors (as defined under the SEBI (Foreign Venture

Capital Investors) Regulations, 2000) registered with the SEBI

GAAP Generally Accepted Accounting Principles

GDP Gross Domestic Product

General Meeting AGM or EGM

GoI or Government Government of India

I.T. Act The Income Tax Act, 1961

ICAI Institute of Chartered Accountants of India

IFRS International Financial Reporting Standards

IND-AS Indian accounting standards converged with IFRS, which has been proposed for

implementation by the ICAI

Indian GAAP Generally accepted accounting principles in India

Insurance Act The Insurance Act, 1938

IPC The Indian Penal Code,1860

JV Joint Venture

Lakh 100 thousand

MCA Ministry of Corporate Affairs, GoI

MoF Ministry of Finance

MoU Memorandum of Understanding

MTNL Mahanagar Telephone Nigam Limited

22

Term Description

Net Worth Net worth comprises share capital and reserves and surplus and is adjusted for

miscellaneous expenditure to the extent not written off

Non-Resident or NR A person resident outside India, as defined under the FEMA and includes a Non-

Resident Indian

Notified Sections Sections of the Companies Act, 2013 that have been notified by the Government of

India

NRI A person resident outside India, who is a citizen of India or a person of Indian origin

and shall have the same meaning as ascribed to such term in the Foreign Exchange

Management (Deposit) Regulations, 2000, as amended

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

OCB or Overseas Corporate

Body

A company, partnership, society or other corporate body owned directly or indirectly

to the extent of at least 60% by NRIs including overseas trusts in which not less than

60% of the beneficial interest is irrevocably held by NRIs directly or indirectly and

which was in existence on October 3, 2003 and immediately before such date was

eligible to undertake transactions pursuant to the general permission granted to

OCBs under the FEMA. OCBs are not allowed to invest in the Issue

Official Gazette The official gazette of India or a State

P.A. Per annum

PAN Permanent Account Number allotted under the I.T. Act

RBI Reserve Bank of India

RONW Return on Net Worth

RTGS Real Time Gross Settlement

SCRA The Securities Contracts (Regulation) Act, 1956 as amended

SCRR The Securities Contracts (Regulation) Rules, 1957 as amended

SEBI The Securities and Exchange Board of India established under the SEBI Act

SEBI Act The Securities and Exchange Board of India Act, 1992 as amended

SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors)

Regulations, 2014, as amended

SEBI Insider Trading

Regulations, 1992

The Securities and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 1992, as amended

SEBI Insider Trading

Regulations, 2015

The Securities and Exchange Board of India (Prohibition of Insider Trading)

Regulations, 2015

SEBI Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as

amended

SEBI Takeover Code 1997 The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 1997, as amended

SEBI Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011, as amended

SEC The U.S. Securities Exchange Commission

Securities Act The United States Securities Act of 1933, as amended

STL Short term liability

Stock Exchanges The BSE and the NSE

STT Securities Transaction Tax

Supreme Court The Supreme Court of India

UK United Kingdom

U.S.A/ U.S./ United States United States of America

U.S. GAAP Generally accepted accounting principles in the United States of America

VCF A Venture Capital Fund as defined and registered with SEBI under the Securities and

Exchange Board of India (Alternative Investment Funds) Regulations, 2012 or the

erstwhile Securities and Exchange Board of India (Venture Capital Funds)

Regulations, 1996, as the case may be

w.e.f With effect from

23

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES

ACT, 2013 AND THE RULES MADE THEREUNDER

The table below sets out the disclosure requirements as provided in PAS-4 and the relevant pages in this

Preliminary Placement Document where these disclosures, to the extent applicable, have been provided.

S.

No.

Disclosure Requirements Relevant Page of this

Preliminary Placement

Document

1. GENERAL INFORMATION

a. Name, address, website and other contact details of the Company indicating both

Registered Office and Corporate Office

220

b. Date of incorporation of the Company Cover page, 215

c. Business carried on by the Company and its subsidiaries with the details of

branches or units, if any

112-126

d. Brief particulars of the management of the Company 127-130

e. Names, addresses, DIN and occupations of the directors 129-130

f. Management’s perception of risk factors 50-72

g. Details of default, if any, including therein the amount involved, duration of

default and present status, in repayment of –

i) statutory dues 191

ii) debentures and interest thereon 191

iii) deposits and interest thereon 191

iv) loan from any bank or financial institution and interest thereon 191

h. Names, designation, address and phone number, email ID of the nodal/

compliance officer of the Company, if any, for the private placement offer process

220

2. PARTICULARS OF THE OFFER

a. Date of passing of board resolution 30 and 215

b. Date of passing of resolution in the general meeting, authorizing the offer of

securities

30 and 215

c. Kinds of securities offered (i.e. whether share or debenture) and class of security Cover page and 30

d. price at which the security is being offered including the premium, if any, along

with justification of the price

Cover page and 30

e. name and address of the valuer who performed valuation of the security offered Not Applicable

f. Amount which the Company intends to raise by way of securities Cover Page and 75

g. Terms of raising of securities:

Duration, if applicable Not Applicable

Rate of dividend Not Applicable

Rate of interest Not Applicable

Mode of payment Not Applicable

Repayment Not Applicable

h. Proposed time schedule for which the offer letter is valid 18

i. Purposes and objects of the offer 75

j. contribution being made by the promoters or directors either as part of the offer or

separately in furtherance of such objects

75

k. Principle terms of assets charged as security, if applicable Not Applicable

3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,

LITIGATION ETC.

a. Any financial or other material interest of the directors, promoters or key

managerial personnel in the offer and the effect of such interest in so far as it is

different from the interests of other persons

134

b. Details of any litigation or legal action pending or taken by any Ministry or

Department of the Government or a statutory authority against any promoter of the

offeree company during the last three years immediately preceding the year of the

circulation of the offer letter and any direction issued by such Ministry or

Department or statutory authority upon conclusion of such litigation or legal

action shall be disclosed

194-213

c. remuneration of directors (during the current year and last three Financial Years) 130-131

d. Related party transactions entered during the last three Financial Years

immediately preceding the year of circulation of offer letter including with regard

to loans made or, guarantees given or securities provided

F-16 to F-18

e. Summary of reservations or qualifications or adverse remarks of auditors in the

last five Financial Years immediately preceding the year of circulation of offer

letter and of their impact on the financial statements and financial position of the

40-49

24

S.

No.

Disclosure Requirements Relevant Page of this

Preliminary Placement

Document

company and the corrective steps taken and proposed to be taken by the Company

for each of the said reservations or qualifications or adverse remark

f. Details of any inquiry, inspections or investigations initiated or conducted under

the Companies Act, 2013 or any previous company law in the last three years

immediately preceding the year of circulation of offer letter in the case of the

Company and all of its subsidiaries. Also if there were any prosecutions filed

(whether pending or not) fines imposed, compounding of offences in the last three

years immediately preceding the year of the offer letter and if so, section-wise

details thereof for the Company and all of its subsidiaries

190

g. Details of acts of material frauds committed against the Company in the last three

years, if any, and if so, the action taken by the Company

191

4. FINANCIAL POSITION OF THE COMPANY

a. the capital structure of the Company in the following manner in a tabular form-

(i)(a) the authorised, issued, subscribed and paid up capital (number of securities,

description and aggregate nominal value)

77

(b) size of the present offer 77

(c) paid up capital 77

(A) after the offer 77

(B) after conversion of convertible instruments (if applicable) Not Applicable

(d) share premium account (before and after the offer) 77

(ii) the details of the existing share capital of the issuer company in a tabular form,

indicating therein with regard to each allotment, the date of allotment, the number

of shares allotted, the face value of the shares allotted, the price and the form of

consideration

77-78

Provided that the issuer company shall also disclose the number and price at which

each of the allotments were made in the last one year preceding the date of the

offer letter separately indicating the allotments made for considerations other than

cash and the details of the consideration in each case

77-78

b. Profits of the Company, before and after making provision for tax, for the three

Financial Years immediately preceding the date of circulation of offer letter

38

c. Dividends declared by the Company in respect of the said three financial years;

interest coverage ratio for last three years (Cash profit after tax plus interest

paid/interest paid)

79

d. A summary of the financial position of the Company as in the three audited

balance sheets immediately preceding the date of circulation of offer letter

36-40

e. Audited cash flow statement for the three years immediately preceding the date of

circulation of offer letter

38-40

f. Any change in accounting policies during the last three years and their effect on

the profits and the reserves of the Company

49

5. A DECLARATION BY THE DIRECTORS THAT - 218-219

a. the Company has complied with the provisions of the Act and the rules made

thereunder

b. the compliance with the Act and the rules does not imply that payment of dividend

or interest or repayment of debentures, if applicable, is guaranteed by the Central

Government

c. the monies received under the offer shall be used only for the purposes and objects

indicated in the Offer letter

25

SUMMARY OF BUSINESS

Overview

We are one of the leading cable television distribution companies in India. As of December 31, 2014, we offer

analog and/or digital cable television services across 130 cities across 17 states in India, including the National

Capital Region of Delhi, Kerala, Uttar Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Punjab, Haryana,

Bihar, Jharkhand, Rajasthan, West Bengal, Andhra Pradesh, Telangana, Chhattisgarh, Uttarakhand and Assam.

We also provide cable broadband services in the cities of Kolkata, Greater Noida and Delhi. We own and

operate cable networks that reach a cable universe of approximately 10.5 million (based on our estimates) across

India, supported by multiple analog and 15 digital head ends and approximately 15,400 kilometers of HFC

network owned and leased by us. As of December 31, 2014, we had a total of approximately 4.85 million digital

subscribers.

Since the de-merger of the cable business undertaking of ZEEL and our independent existence in November

2006, we have focused on acquiring, aggregating and expanding the businesses of existing multi-system

operators (“MSOs”) to achieve economies of scale, deliver a standardised service and provide broadcasters a

single-point pan India distribution platform to connect with millions of subscribers. As of December 31, 2014,

we have acquired the assets and/or majority interest in the businesses of 14 MSOs and have entered into

arrangements with running cable television businesses of several local cable operators (“LCOs”) while

simultaneously expanding our own infrastructure.

We have grown both organically and inorganically through sale of our services directly to the cable television

subscribers and through consolidation of network equipment, infrastructure and subscribers of other MSOs and

LCOs. In certain instances, we convert the cable television subscribers of our LCOs to our primary subscribers

(direct points). Direct points allow us direct access to our cable television subscribers and improved

monetization prospects.

We believe that our extensive presence and industry expertise has provided us with an opportunity to take

advantage of the four-phased policy on digitization announced by the Ministry of Information & Broadcasting,

Government of India (“MIB”), under which the cable television industry in India is being transitioned for

distribution of channel signals through a Digital Addressability System (“DAS”) by December 31, 2016

requiring cable operators to transmit digital signals through addressable set top boxes (“STBs”) only.

We currently offer up to 430 satellite channels through our digital cable television services and up to 100

channels through our analog cable television service. Besides providing the ability to telecast a greater number

of channels and high quality picture and sound for the channels broadcasted, our digital cable television services

includes value added services to our subscribers, such as video on demand, movie on demand, HD content and

local channels. We also intend to provide our digital cable subscribers the option of availing additional value-

added services such as gaming etc.

We own as well as distribute certain local brand television channels from some of our head-ends, which are

telecast from our cable distribution networks for certain regions. These channels primarily telecast films, music,

devotional programmes or local news and events etc. We derive advertising revenue from these channels

through scroll advertising, commercials, stills, movie promos and telemarketing.

Our Company and our Subsidiaries, ICNCL and Siti Vision Digital Media Private Limited have received DAS

licenses. While our Company and ICNCL have received the DAS license for all the four phases of digitization,

Siti Vision Digital Media Private Limited has received the DAS license for digitization under Phase II only. The

DAS licenses received by our Company and Siti Vision Digital Media Private Limited are provisional as of now

and are pending for issue of permanent licenses by Ministry of Information and Broadcasting Government of

India. Please refer to “Risk Factors” beginning on page 50.

Further, our Company and our Subsidiary, Siti Broadband Services Private Limited have All-India Unified

License to provide Internet Service Provider (“ISP”) services under category ‘A’ on PAN India basis and we

are providing broadband internet services in the cities of Kolkata, Greater Noida and Delhi. We believe that our

strategy of cross-selling broadband services to our existing cable television subscribers and new customers will

provide us with an opportunity to increase ARPUs, increase retention rates, ensure higher sustainable EBITDA

margins and leverage upon our existing pan India presence.

26

On a consolidated basis, our total revenue for the Financial Year 2013-14 and the nine month period ending

December 31, 2014 is ₹ 7,103.41 million and ₹ 6,582.82 million, respectively of which ₹ 3,395.13 million and

₹ 4,075.38 million accounted for subscription income for Financial Year 2013-14 and the nine month period

ending December 31, 2014 respectively and ₹ 2,271.11 million and ₹ 1,765.78 million accounted for carriage

income for Financial Year 2013-14 and the nine month period ending December 31, 2014 respectively. EBITDA

margins for the Financial Year 2013-14 and the nine month period ending December 31, 2014 is 17.73% and

20.71%, respectively.

Our Strengths

Our business is characterised by the following key strengths:

Part of India’s leading media conglomerate

We are one of the group companies of the Essel Group. Launched in 1976, Essel Group is one of India’s largest

business houses, with a dominant presence in media industry having a market capitalization of approximately

USD 8 billion (as of February 15, 2015). Essel Group is one of India’s largest vertically integrated media and

entertainment group and also one of the leading producers, content aggregators and distributors of programming

globally. Zee Entertainment Enterprise Limited (“ZEEL”), the flagship company of the Essel Group owns and

operates the ‘Zee’ bouquet of channels, which is one of India’s largest network of general entertainment

channels with 34 domestic and 36 international channels in its bouquet. The Essel Group is one of the largest

producers and aggregators of programming in India having presence in 169 countries. Zee Media Corporation

Limited, one of our group companies owns and operates 10 news and current affairs channels. One of the Essel

Group company, Dish TV India Limited, is the first company in India to start the distribution of content via the

DTH platform. The Essel Group also has interests in English print media.

The Company believes that its association with Essel Group lends strength to the trust reposed in our Company

and enables it to attract and retain fresh talent. We are also able to utilise various synergies which aid in our

business and operations for instance, it is able to leverage its relationship with group entities and have entered

into arrangements with regards technology and content.

Attractive user base

We are one of the leading distribution companies in India, in terms of subscriber universe. As per our estimates,

we reach approximately 10.5 million cable homes across India, supported by multiple analog and 15 digital head

ends and approximately 15,400 kilometers of hybrid fiber co-axial (“HFC”) network on an owned and leased

basis. As of December 31, 2014 we had approximately 54,000 broadband subscribers across different markets

and one lakh home passes in Delhi.

We have successfully identified, acquired and integrated various regional MSOs since our incorporation. We

believe that our understanding of the cable television distribution industry has enabled us to identify and acquire

appropriate acquisition targets, which in turn, has enabled us to become the leading national cable television

distribution company in India.

Owing to our existing presence and our investments in STBs and digital technology, we believe that we are well-

positioned to benefit from the Phase III and Phase IV of the mandatory conversion to digital platform required to

be completed by December 31, 2015 and December 31, 2016 respectively. As of December 31, 2014, we had a

total of approximately 4.85 million digital subscribers, comprising approximately, 2.20 million subscribers in

Phase I cities and approximately 1.70 million subscribers in Phase II cities. We provide our analog and/or digital

cable television services to subscribers in several cities in the states of Delhi, Uttar Pradesh, Maharashtra,

Andhra Pradesh, Haryana, Madhya Pradesh, Kerala and West Bengal, which we believe are key growth markets.

We believe that operating in these states provides us with the opportunity to expand our business significantly.

We believe that our existing nationwide reach and our delivery network provides us with a key growth

opportunity to convert our existing analog cable television subscribers, as well as attract new subscribers for our

digital cable services.

Established Relationship with leading Suppliers

27

We source our equipment for our digital service offerings from reputed vendors of digital components. We

procure STBs primarily from Arion Technology Inc, Woojeon and Handan and Chang Hong (Hong Kong)

Trading Limited, which we believe are industry leaders in STBs design and technology and other equipment

such as head-ends and servers from leading suppliers such as Cisco, HCL and Harmonic Inc. A portion of our

intercity and intra-city network is set up on the network leased from third parties such as leading telecom service

providers like Airtel, Idea, Tata Teleservices and Tata Communications.

We believe that we are able to monitor and improve our network infrastructure to keep pace with the constantly

evolving subscriber preferences and technology landscape through our partnerships with these leading products

and service providers.

We have agreements with leading content providers and we believe that our content agreements cover a wide

range of popular channels which cater to varied tastes and preferences of subscribers in the markets where we

are present.

Strong Adherence to Regulatory Compliances

Mandatory digital access system gained traction with roll out in Phase I and Phase II cities. With the launch of

digitization, TRAI has recommended several standardized industry practices with respect to the cable

distribution business. We continue to place immense importance to regulatory compliances and have put in place

systems and processes for the adherence of the same. For instance:

.

Majority of Customer Application Forms (“CAF”)/ Subscriber Application Forms (“SAF”) have been

collected for Phase I and Phase II cities;

We are undertaking gross billing for Delhi, Mumbai and Kolkata as mandated by TRAI and are in the

process of moving towards gross billing for Phase II cities;

We have implemented the ‘Own Your Customer’ (“OYC”) Subscriber Management System for real time

access of subscriber billings, payments, account statements, activation, de-activation, up-gradation, down

gradation, packaging and monthly collections. Through the OYC system, we are able to generate

customised invoices and provide the same to our subscribers via box mail, e-mail as well physical delivery

through LCOs;.

We are working pro-actively with AIDCF (All India Digital Cable Federation) and various broadcasting

federations to educate the subscriber about their rights and options in relation to fostering the B2C model in

line with regulatory requirements;

We have set up two call centres in Noida and Kolkata for efficient customer service and have provided toll

free access for our customers. We have implemented various key performance indicators internally in order

to provide effective customer services and turn around time; and

We have defined interconnect agreements with most of our LCO partners clearly delineating revenue share

as well as other operational covenants. We treat LCOs as partners and undertake pro-active revenue share.

Industry-Experienced Management Team

The promoter of the Essel Group, Subash Chandra, has extensive experience in the television industry. He has

played an instrumental role in the launch of cable television in India and was an integral part of the senior

management team of the Essel Group, an Indian media conglomerate that has interests in television, print, film

and allied businesses. Chandra has been the recipient of numerous honorary degrees, industry awards and civic

honors, including International Emmy Directorate Award in 2011 for his contribution to India’s television

industry.

Our management team includes professionals with extensive experience in FMCG, telecom, broadcasting,

entertainment and content distribution sectors.

Our senior management team comprises of the following personnel:

Mr. V.D. Wadhwa, Chief Executive Officer and executive Director;

Mr. Vinay Chandok, Chief Operating Officer and head of sales and operations; Mr. Sanjay Goyal, Chief Financial Officer;

Mr. Anil Malhotra, Chief Operating Officer for strategy and compliance; and

28

Mr. Bibhash Jha, Head of carriage and content

We are making a conscious effort to source senior management personnel from customer facing sectors to

ensure innovative thinking and professional best practices with an emphasis on providing customer satisfaction.

Our Strategy

Our aim is to become India’s leading integrated provider of cable television distribution, broadband internet

services and other value added services. In order to achieve our aim, we intend to follow the key business

strategies described below:

Focus on Digitization

The cable television distribution industry in India is transitioning to DAS and all cable operators are required to

transmit digital signals through addressable STBs by December 31, 2016. We are aggressively pursuing the

digitization of our services to adhere to the digitization schedule set out by the MIB.

We are aggressively undertaking proactive seeding on Phase III and Phase IV areas. We are looking to

completely digitize our cable subscriber universe by the digitization dead-line as well as scale up our presence

from 130 cities to 200 cities. We have in the past successfully expanded our operations and increased our

subscriber base. Our strategy is to continue to invest in the expansion of our existing network and tapping new

geographies. We have expanded our presence from around 60 cities as of March 31, 2013 to 130 cities and

certain adjacent semi urban and rural areas as of December 31, 2014.

In addition to increased subscription fees, digitization also provides other commercial advantages. A digital

platform enables us to offer greater number of channels, content with high quality picture and sound and revenue

enhancing services, such as HD (high definition) and value added services such as video on demand, movie on

demand, HD and content, which cannot be offered through an analog platform. The use of digital STBs enables

us to obtain accurate data about the number of subscribers using our services and eliminates the practice of

under-reporting of subscribers by LCOs. Further, digitization enables our signal to be encrypted, thereby

reducing revenues lost due to unauthorized access. We believe that our digital service offerings reduce the

likelihood of our subscribers switching to another digital platform such as DTH satellite television, thereby

strengthening our relationships with the subscribers and enabling us to compete effectively.

With the preference for digital and HD quality telecast, there has been a drastic change in the consumer

preference over the years. With cable television industry moving towards this drift positively, we see a huge

opportunity ahead of us given our existing market positioning. Due to healthy competition in the cable television

industry, the subscriber is becoming more demanding and expects more entertainment, varied channels and high

quality signals. We seek to continue to cater to such demands of our subscriber through differentiated packaging,

competitive prices and advanced technological infrastructure.

Deeper penetration in our existing geographies and entry into new geographies

We intend to continue increasing our customer penetration and income from sales of cable and broadband

services in the areas in which our cable network is laid. We intend to improve our cable penetration ratio (cable

television subscriber base as a percentage of estimated homes passed) in locations with lower than average

penetration thereby improving the overall connection efficiency across our network. We intend to expand our

cable television subscriber base through a combination of competitive pricing, multiple service offerings,

extensive marketing, acquiring majority interests in established MSOs/ LCOs and acquiring network equipment,

infrastructure and subscribers from the MSOs/LCOs in such areas, as the case may be.

Increase our broadband subscriber base

ISPs, unified access service licensees (UASLs) and cellular mobile service providers (CMSPs) are permitted to

provide broadband access under the existing licensing framework. As of March 2014, 121 broadband operators

have reported 60.87 million broadband subscribers. Top ten broadband service providers account for about 97%

of subscriber base and the top 5 broadband service providers alone hold 83% market share. State owned

companies viz. BSNL and MTNL together have about 74.9% market share for wireline broadband and 30.5%

for overall broadband subscriptions. (Source: TRAI, Consultation paper on broadband, September 2014)

29

The aforesaid data suggests that we have ample opportunity to continue increasing our customer penetration and

income from sales broadband services in the areas in which our cable network is laid. As per our estimates, we

have access to approximately 10.5 million cable universe in 130 cities in India, which we can tap for our

broadband services offerings.

We are currently providing broadband services with EOC in Kolkata and have recently launched DOCSIS 2.0

and DOCSIS 3.0 technology in Delhi and Greater Noida. For our broadband services we are offering up to 100

Mbps speed and our packages starts from ` 599 going up to about ` 3699. As of December 31, 2014 we had

approximately 54,000 broadband subscribers across different markets and one lakh home passes in Delhi.

We intend to launch our broadband internet offerings in approximately 21 cities using primarily DOCSIS 2.0

and DOCSIS 3.0 technology. We intend to provide speeds up to 40 Mbps on DOCSIS 2.0 and up to 100 Mbps

on DOCSIS 3.0. We are currently putting in place a parallel network to provide broadband and have entered into

long term agreements with certain LCOs to provide service support and maintenance of this network. We

believe that our strategy of cross-selling broadband services to our existing subscribers will lead to lower

customer churn improve ARPUs and higher sustainable EBITDA margins. Our ability to offer double play

bundled services will enable us to reduce our payback period and increase the return on our investment.

Bundling of broadband and cable services would also lead to increased retention rates, lower churn and better

negotiating power with LCOs.

We believe that improving penetration levels of the broadband universe will substantially reduce the cost of

subscriber acquisition.

Increase our primary subscriber base

We have direct points in Delhi and we continue to acquire LCOs in attractive localities to increase direct

subscription revenue. Increasing our primary subscriber numbers is important because we benefit from higher

realization per subscriber and can gradually move the subscriber to higher value offerings in addition to

providing improved customer service. Consolidation in the distribution space through direct points will give us

more pricing power with respect to our subscribers and better negotiation ability with respect to broadcasters and

LCOs.

Focus on Improved Monetisation of Subscriber Base

The television industry in India is estimated at ` 417 billion in 2013, and is expected to grow at a CAGR of 16%

over 2013-18, to reach ` 885 billion in 2018. Aided by digitization and the consequent increase in ARPU, the

share of subscription revenue to the total industry revenue is expected to increase from 67% in 2013 to 71% in

2018. (Source: FICCI-KPMG Report, 2014)

We are looking to improve realization of revenue in the following manner:

Increase subscriber ARPUs by bundling selective packaging of content to provide a bespoke

entertainment experience to the subscriber;

Providing value added services such as video on demand, movie on demand and own and local

channels; and

Negotiating improved commercial terms with LCOs over a period of time

The Ministry of Information and Broadcasting (MIB) introduced several initiatives with a view to harness the

power of technology and create a framework to drive growth in the existing broadcasting landscape in India.

With Phase I and Phase II nearly complete, we are now committed to complete Phase III and Phase IV of

digitization of television signals’ transmission. Along with digitization the cable television industry is shifting

from B2B to B2C business model. B2C business model will lead to increased awareness about our product and

services amongst our subscribers, facilitate better interaction between us and our subscribers, it will also enable

us to company can provide better services and targeted / refined messaging can be done by the company leading

increased ARPU’s

We expect that after rolling out tiered channel packages and launching double play bundled services leading to

increase in subscriber ARPU, we would be able to negotiate a more equitable revenue share arrangement with

LCOs as that would lead to higher absolute amount being received by the LCOs.

30

SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with,

and is qualified in its entirety by, the more detailed information appearing elsewhere in this Preliminary

Placement Document, including the sections entitled “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue

Procedure” and “Description of the Equity Shares” beginning on pages 50, 75, 150, 139 and 162, respectively.

Issuer Siti Cable Network Limited

Face Value ₹ 1 per equity share

Issue Size Issue of up to [●] Equity Shares, aggregating to ₹ [●]

A minimum of 10.00% of the Issue Size i.e. up to [●] Equity

Shares shall be available for Allocation to Mutual Funds only, and

up to [●] Equity Shares shall be available for Allocation to all

QIBs, including Mutual Funds.

If no Mutual Fund is agreeable to take up the minimum portion

mentioned above, such minimum portion or part thereof may be

Allotted to other eligible QIBs.

Dividend

Indian Taxation

Date of Board Resolution

See “Description of Equity Shares”, “Dividends” and “Statement of

Tax Benefits” beginning on pages 162, 79 and 170.

See “Statement of Tax Benefits” beginning on page 170.

July 17, 2014 and February 4, 2015

Date of Shareholders’ Resolution

October 14, 2014

Floor Price ₹ 36.41 per Equity Share. In terms of the SEBI Regulations, the

Issue Price cannot be lower than the Floor Price. Our Company

may offer a discount of not more than 5.00% on the Floor Price in

terms of Regulation 85 of the SEBI Regulations.

Issue Price

₹ [●] per Equity Share

Eligible Investors QIBs as defined in regulation 2(1)(zd) of the SEBI Regulations

and not excluded pursuant to Regulation 86 of the SEBI

Regulations, who are outside of the United States acquiring Equity

Shares in an offshore transaction in reliance on Regulation S. See

the sections entitled “Issue Procedure” and “Transfer

Restrictions” beginning on pages 139 and 158.

Equity Shares paid-up and outstanding

immediately prior to the Issue1

614,290,755 Equity Shares

Equity Shares paid-up and outstanding

immediately after the Issue [●] Equity Shares

Listing

Our Company has obtained in-principle approvals, dated February

27, 2015 from the BSE and the NSE, in terms of Clause 24(a) of

the Equity Listing Agreements, for listing of the Equity Shares

issued pursuant to the Issue. Our Company will make applications

to each of the Stock Exchanges to obtain final listing and trading

approvals for the Equity Shares after Allotment and after the credit

of Equity Shares to the beneficiary account with the Depository

1 Additionally, up to 216,320 Equity Shares may be issued by the Company on exercise of stock options granted under the ESOP Scheme 2007.

31

Participant, respectively.

Lock-up See “Placement” on page 150.

Promoter Lock-up

Transferability Restrictions

See “Placement” on page 150.

The Equity Shares being Allotted pursuant to this Issue shall not be

sold for a period of one year from the date of Allotment, except on

the floor of the Stock Exchanges. For further restrictions, see the

section “Transfer Restrictions” beginning on page 158.

Use of Proceeds The gross proceeds from the Issue will be approximately ₹ [●]

million. See the section “Use of Proceeds” on page 75 for further

details.

Risk Factors See the section “Risk Factors” beginning on page 50 for a

discussion of risks you should consider before deciding whether to

subscribe for the Equity Shares.

Pay-In Date Last date specified in the CAN sent to the QIBs for payment of

application money.

Closing The Allotment of the Equity Shares offered pursuant to the Issue is

expected to be made on or about [●], 2015 (the “Closing Date”).

Ranking The Equity Shares being issued pursuant to the Issue shall be

subject to the provisions of the Memorandum of Association and

Articles of Association and shall rank pari passu in all respects

with the existing Equity Shares, including rights in respect of

dividends.

The shareholders of our Company will be entitled to participate in

dividends and other corporate benefits, if any, declared by our

Company after the Closing Date, in compliance with the

Companies Act, the Equity Listing Agreements and other

applicable laws and regulations. Shareholders of our Company

may attend and vote in shareholders’ meetings on the basis of one

vote for every Equity Share held. See the section “Description of

the Equity Shares” beginning on page 162 for further details.

Security Codes for the Equity Shares ISIN INE965H01011

BSE Code 532795

NSE Code SITICABLE-EQ

32

SELECTED FINANCIAL INFORMATION

The following selected financial information is derived from and should be read in conjunction with, the

Condensed Consolidated Financial Statements and Reformatted Financial Statements prepared in accordance

with Indian GAAP, each included elsewhere in this Preliminary Placement Document. You should refer to

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page

80, for further discussion and analysis of the Reformatted Financial Statements and Condensed Consolidated

Financial Statements.

The financial information included in this Preliminary Placement Document does not reflect our Company’s

results of operations, financial position and cash flows for the future and its past operating results are no

guarantee of its future operating performance.

SUMMARY OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated condensed statement of Assets and Liabilities as at December 31, 2014 and March 31, 2014

December 31, 2014

(In ` million)

March 31, 2014

(In ` million)

EQUITY AND LIABILITIES

Shareholders’ funds

Share capital 614.85 521.35

Share suspense 314.63 314.63

Reserves and surplus (674.68) (1,582.98)

Money received against warrants - 1,870.00

254.80 1,123.00

Share application money pending allotment 10.41 10.41

Minority interest 444.77 260.75

Non-current liabilities

Long-term borrowings 8,421.22 10,483.89

Deferred tax liability (net) 12.92 23.39

Other non-current liabilities 42.93 373.27

Long -term provisions 34.83 31.88

8,511.90 10,912.43

Current liabilities

Short term borrowings 504.53 473.87

Trade payables 2,935.95 2,448.54

Other current liabilities 6,069.64 2,936.05

Short-term provisions 85.25 64.97

9,595.37 5,923.43

Total 18,817.25 18,230.02

ASSETS

33

December 31, 2014

(In ` million)

March 31, 2014

(In ` million)

Non-current assets

Fixed assets

Tangible assets 5,800.99 5,241.63

Intangible assets 2,188.13 2,345.63

Capital work-in-progress 1,361.27 1,702.29

Goodwill on consolidation 93.01 91.79

Non-current investments 8.42 8.42

Deferred tax assets (net) 44.26 -

Long-term loans and advances 291.58 632.32

Other non-current assets 666.84 479.25

10,454.50 10,501.33

Current assets

Current investments 8.04 8.04

Inventories 165.00 96.98

Trade receivables 2,863.26 1,953.56

Cash and bank balances 2,247.19 3,528.72

Short-term loans and advances 2,472.57 1,925.57

Other current assets 606.69 215.82

8,362.75 7,728.69

Total 18,817.25 18,230.02

Condensed consolidated statement of Profit and Loss for the nine months ended December 31, 2014 and

December 31, 2013

December 31, 2014

(In ` million)

December 31, 2013

(In ` million)

Revenue

Revenue from operations

6,499.23 4,638.97

Other income 83.59 66.04

Total revenue 6,582.82 4,705.01

Expenses

Carriage sharing, pay channel and related costs

3,538.42 2,097.69

Cost of goods sold 2.82 71.51

Employee benefit expenses 361.19 283.24

Finance costs 898.31 878.77

Depreciation and amortisation expenses 988.96 746.85

Other expenses 1,317.20 1,272.64

Total expenses 7,106.90 5,350.70

Loss before exceptional item and tax (524.08) (645.69)

34

December 31, 2014

(In ` million)

December 31, 2013

(In ` million)

Exceptional items 0.03 -

Loss before tax (524.11) (645.69)

Tax expenses

Current tax 96.63 93.23

Deferred tax (54.96) (12.94)

Loss for the year after tax before minority interest (565.78) (725.98)

Adjustment for minority interest 183.96 117.01

Loss for the year (749.74) (842.99)

Loss per share after tax

Basic (1.22) (1.86)

Diluted (1.22) (1.86)

Condensed consolidated cash flow statement for the nine months ended December 31, 2014 and December

31, 2013

December 31, 2014

(In ` million)

December 31, 2013

(In ` million)

Cash flow from operating activities

Loss before tax (524.11) (645.69)


Bad debts written off 0.02 34.83

Excess provision written back (22.87) 26.89

Amortisation of ancillary borrowing costs 21.40 19.02

Provision for doubtful debts 65.07 41.20

Provision for doubtful advances 0.55 14.84

Unrealised foreign exchange loss (64.04) (89.97)

Interest expense 898.31 859.75

Interest income (47.12) (36.51)

Operating profit before working capital changes 1,316.17 971.21

Movements in working capital :

Increase in trade payables 510.27 814.71

Increase in long-term provisions 2.94 2.58

Increase in short-term provisions 20.28 2.17

Decrease in other non-current liabilities (330.33) (778.90)

Increase in other current liabilities 357.70 844.76

Increase in trade receivables (974.76) (1,331.21)

Increase in inventories (68.01) (13.75)

35

December 31, 2014

(In ` million)

December 31, 2013

(In ` million)

Increase in short-term loans and advances (588.42) (2,789.69)

Decrease in long-term loans and advances 289.58 2,428.85

Increase in other current assets (359.47) (27.97)

Increased/(decrease) in other non-current assets (185.63) 31.72

Cash generated/(used in) from operations (9.68) 154.48

Direct taxes paid (net of refunds) (3.24) (136.58)

Net cash flow (used in)/from operating activities (A) (12.92) 17.90

Cash flows from investing activities

Purchase of fixed assets including capital advance (1,106.62) (2,262.18)

Redemption/(Investments in) of bank deposits having original

maturity of more than three months and margin money deposits 0.12 (9.33)

Interest received 20.24 28.67

Net cash used in investing activities (B) (1,086.26) (2,242.84)

Cash flows from financing activities


Proceeds from issuance of equity share capital - 1.22

Share application money pending allotment - 10.41

Proceeds from long-term borrowings 1,996.18 4,374.80

Repayment of long-term borrowings (1,279.86) (759.77)

Proceeds/(Repayment) from short-term borrowings (net) 30.67 (21.01)

Interest and finance expenses paid (929.27) (896.94)

Net cash flow (used in)/from financing activities (C) (182.23) 2,729.86

Net (decrease)/increase in cash and cash equivalents (A + B +

C) (1,281.41) 504.92

Cash and cash equivalents at the beginning of the period 3,516.46 1,264.09

Cash and cash equivalents at the end of the period 2,235.05 1,769.01

Components of cash and cash equivalents

Cash on hand 45.41 23.09

Cheques on hand 64.95 1,158.04

Deposits 9.67 6.12

With banks- on current account 2,115.02 581.76

Total cash and cash equivalents 2,235.05 1,769.01

36

SELECTED FINANCIAL INFORMATION FROM THE REFORMATTED FINANCIAL

STATEMENTS FOR THE YEAR ENDING MARCH 31, 2012, MARCH 31, 2013 AND MARCH 31, 2014

Statement of Assets and Liabilities as at March 31, 2014, March 31, 2013 and March 31, 2012

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)



Share capital 521.35 452.85 452.85

Share suspense (refer note 19 of annexure 5) 314.63 - -

Reserves and surplus (1,582.98) (1,922.82) (1,282.09)

Money received against warrants 1,870.00 810.00 -

1,123.00 (659.97) (829.24)

Share application money pending allotment 10.41

-

2.46

Minority interest 260.75 132.32 100.17


Long-term borrowings 10,483.89 7,786.00 3,031.48

Deferred tax liability (net) 23.39 29.04 2.39

Other non-current liabilites 373.27 832.03 8.75

Long -term provisions 31.88 28.66 19.47

10,912.43 8,675.73 3,062.09

Current liabilities

Short term borrowings 473.87 244.85 503.71

Trade payables 2,448.54 1,984.07 1,384.38

Other current liabilities 2,936.05 1,575.28 1,415.02

Short-term provisions 64.97 4.60 0.69

5,923.43 3,808.80 3,303.80

Total 18,230.02 11,956.88 5,639.28

ASSETS

Non-current assets

Fixed assets

Tangible assets 5,241.63 4,046.72 1,610.13

Intangible assets 2,345.63 372.61 232.51

Capital work-in-progress 1,702.29 691.38 123.15

Goodwill on consolidation 91.79 93.01 -

Non-current investments 8.42 8.42 8.42

37

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)

Long-term loans and advances 632.32 3,001.21 541.22

Other non-current assets 479.25 594.99 292.70

10,501.33 8,808.34 2,808.13

Current assets

Current investments 8.04 8.04 10.04

Inventories 96.98 79.01 161.17

Trade receivables 1,953.56 967.94 777.59

Cash and bank balances 3,528.72 1,293.56 1,482.83

Short-term loans and advances 1,925.57 760.75 364.34

Other current assets 215.82 39.24 35.18

7,728.69 3,148.54 2,831.15

Total 18,230.02 11,956.88 5,639.28

Statement of Profit and Loss for the Financial Year ended March 31, 2014, March 31, 2013 and March 31,

2012

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)

Revenue


6,972.37 4,696.36 3,428.17

Other income 131.04 140.29 214.43

Total revenue 7,103.41 4,836.65 3,642.60

Expenses

Carriage sharing, pay channel and related costs

3,339.53 2,343.45 2,163.34

Cost of goods sold 96.24 40.50 11.68

Employee benefit expenses 381.94 319.37 271.07

Finance costs 1,191.13 863.67 566.41

Depreciation and amortisation expenses 837.90 563.08 304.06

Other expenses 2,026.35 1,263.71 1,004.51

Total expenses 7,873.09 5,393.78 4,321.07

Loss before exceptional item and tax (769.68) (557.13) (678.47)

Exceptional items (0.33) 5.35 240.27

Loss before tax (769.35) (562.48) (918.74)

Tax expenses

Current tax 79.94 19.63 23.91

Minimum alternate tax (MAT) credit entitlement (10.54) - -

Prior period tax adjustments 0.33 - -

38

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)

Deferred tax (5.65) 26.65 6.00

Loss for the year after tax before minority

interest (833.43) (608.76) (948.65)

Adjustment for minority interest 107.18 31.97 (35.25)

Loss for the year (940.61) (640.73) (913.40)


Basic (2.07) (1.42) (2.02)

Diluted (2.07) (1.42) (2.02)

Cash flow statement for the Financial Year ended March 31, 2014, March 31, 2013 and March 31, 2012

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)


Loss before tax (769.35) (562.48) (918.74)

Depreciation and amortisation expenses 837.90 563.08 304.06

Loss on sale of assets (net) 12.77 0.33 4.35

Bad debts written off 33.78 16.61 58.46

Excess provision written back (40.22) (61.02) (172.82)

Preliminary expenses written off - 0.06 0.02

Amortisation of ancillary borrowing costs 26.53 30.36 71.71

Provision for doubtful debts 69.46 106.70 137.66

Provision for doubtful advances 35.68 32.27 34.97

Net gain on sale of current investment - - (0.20)

Dividend income on current investment - - (0.21)

VAT input credit written off - 5.35 -

Unrealised foreign exchange loss 34.59 -

Interest expense 976.02 712.58 491.32

Interest income (49.27) (41.87) (23.72)

Operating profit before working capital changes 1,167.89 801.97 (13.14)


Increase in trade payables 504.68 688.22 272.57

Increase in long-term provisions 3.48 8.56 4.16

(Decrease)/increase in short-term provisions 0.94 0.26 (3.81)

(Decrease)/increase in other non-current liabilities (458.76) 823.28 3.17

Increase in other current liabilities 534.88 1.84 (147.36)

Increase in trade receivables (1,088.86) (313.65) (14.76)

(Increase)/decrease in inventories (17.98) 82.16 63.33

Increase in short-term loans and advances (1,038.76) (401.17) 337.41

Decrease/(increase) in long-term loans and advances 2,431.23 (2,453.97) (23.97)

(Increase)/decrease in other current assets (172.21) 2.65 3.54

39

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)

Decrease in other non-current assets 0.23 0.29 (0.15)

Cash generated/(used in) from operations 1,866.76 (759.56) 480.99

Direct taxes paid (net of refunds) (225.50) (70.56) (79.57)

Net cash flow from/(used in) operating activities (A) 1,641.26 (830.12) 401.42


Purchase of fixed assets including capital advance (4,853.28) (3,797.22) (363.86)

Proceeds from sale of fixed assets 53.07 12.19 1.53

Consideration paid on acquisition of subsidiaries (net of

assets acquired)

1.22 (0.23) (35.56)

Purchase of non-current investments - - (8.42)

Purchase of current investments - - (10.00)

Sale of current investments - 2.00 7.70

Dividend income on current investment - - 0.21

Redemption/(Investments in) of bank deposits having

original maturity of more than three months and margin

money deposits

134.88 (327.08) 37.84

Interest received 46.73 32.75 17.44

Net cash used in investing activities (B) (4,617.38) (4,077.59) (353.12)


Minority interest 21.25 0.17 -

Proceeds from issuance of equity share capital 1,370.00 - 0.60

Share application money pending allotment 10.41 (2.46) 2.46

Amount received against share suspense 314.63 - -

Proceeds from issuance of warrants 1,060.00 810.00 -

Proceeds from long-term borrowings 4,644.02 5,768.76 2,844.85

Repayment of long-term borrowings (1,400.26) (895.56) (2,180.59)

Proceeds/(Repayment) from short-term borrowings (net) 229.02 (258.85) 324.78

Interest and finance expenses paid (1,020.58) (726.98) (553.66)

Net cash flow from financing activities (C) 5,228.49 4,695.08 438.44

Net increase/ (decrease) in cash and cash equivalents

(A + B + C)

2,252.37 (212.63) 486.74

Cash and cash equivalents at the beginning of the year 1,264.09 1,476.49 995.73

Cash and cash equivalents of entities acquired during the

year

- 0.23 0.34

Cash and cash equivalents at the end of the year 3,516.46 1,264.09 1,482.82


Cash on hand 43.09 35.33 7.06

Cheques on hand 367.18 83.44 58.96

Deposits 1,359.67 55.11 79.42

With banks- on current account 1,746.52 1,090.21 1,337.38

40

March 31, 2014

(In ` million)

March 31, 2013

(In ` million)

March 31, 2012

(In ` million)

Total cash and cash equivalents 3,516.46 1,264.09 1,482.82

Summary of reservations or qualifications or adverse remarks or EOMs or CARO observations in the

auditors’ report in the last five Financial Years immediately preceding the year of filing the Preliminary

Placement Document

Financial Year 2009-2010

Adverse remark (Sl. No. 5)

Without qualifying their opinion, attention has been drawn to Note 1 (b) of Schedule 22 to the consolidated

financial statements. In view of the matters stated therein relating to the net worth position of the Company and

the mitigating factors stated in that note, the financial statements have been prepared under the going concern

assumption.

Management’s response

Our Company suspended its HITS operations with effect from March 31, 2010. This also resulted in reduced

operational losses as our Company incurred losses in HITS operations due to regulatory issues. Further, during

the year, our Company took significant cost rationalization measures including right sizing of its work force, the

benefit of which would have shown in next year.

Based on the above, our management expected to earn higher revenues and improved profitability enabling

strengthened financial position. Based on above, our management was of the opinion that it is appropriate to

prepare these financial statements on going concern basis.

EOM (Sl. No. 6)

Reference is drawn to Note 11 of Schedule 22 to the consolidated financial statements wherein Indian Cable Net

Company Limited (one of the subsidiaries) has not provided for the entertainment tax liability amounting to `

24.35 million. Had the provision for amusement tax been recorded, the consolidated loss for the year, the

provisions and the debit balance in the profit and loss account as at March 31, 2010 would have been higher by `

24.35 million. This had caused us to qualify our audit opinion on the financial statements relating to preceding

year.


In case of our Subsidiary, ICNCL, pursuant to an order passed by the Supreme Court, the Entertainment Tax

Department, West Bengal, imposed entertainment/amusement tax, inter alia, on MSOs as a percentage of gross

receipts from Cable TV service from April, 1998 and accordingly made assessments up to March 31, 2006 and

raised a demand of ` 72.61 million towards amusement tax payable. Out of the said ` 72.61 million, no

provision was made for ` 72.16 million. Against the said un-provided liability of ` 72.16 million, we paid ` 2

million during the year ended March 31, 2008, ` 23.32 million during the year ended March 31, 2009, and 22.49

million during the year ended March 31, 2010 and the same was debited to profit and loss account for respective

years and balance of ` 24.35 million was paid by March 31, 2012.

CARO Observation (Sl. No. i (a))

The Company has maintained proper records showing full particulars, including quantitative details and situation

of fixed assets, except for some of the network equipments taken over in the Scheme of Arrangements where the

records are maintained for group of similar assets and not for each individual asset. The fixed assets register

does not contain item-wise depreciation and accumulated depreciation.


While the Physical verification of all the assets is being done on periodical basis regularly, the depreciation is

being provided on all the assets including the assets acquired in the process of merger, in line with depreciation

policy of our Company. All the assets acquired in amalgamation has already been fully amortised /depreciated in

41

FY 2010.

CARO Observation (Sl. No. i (b))

All fixed assets have not been physically verified by the management during the year but there is a regular

programme of verification. As informed, no material discrepancies were noticed on such verification. In our

opinion, the frequency of the physical verification of the network equipment needs to be improved further having

regard to the size of the Company and the nature of its assets.


Our Company has a regular physical verification of its fixed assets. It is being done on regular intervals by

internal team.

CARO Observation (Sl. No. (iv))

In our opinion and according to the information and explanations given to us, there is an adequate internal

control system commensurate with the size of the Company and the nature of its business, for the purchase of

inventory and fixed assets and for the sale of goods, advertising and carriage services. During the course of our

audit, no major weakness has been noticed in the internal control system in respect of these areas. However, the

internal control system for the sale of services for analogue subscription is inadequate since the Company does

not have written agreements with customers in some cases, which is an industry issue as per management.

Having regard to management explanation that this is an industry wide issue, consequent to which it may not be

possible to have written agreements in all cases, there is no continuing failure to correct a major weakness in the

internal controls system of the company.




internal controls system of our Company. However, the industry is now moving to digitization and upon

completion of Phase IV of digitization, we will have contractual arrangements with all our customers.

CARO Observation (Sl. No. ix (a))

Undisputed statutory dues including provident fund, investor education and protection fund, or employees’ state

insurance, income-tax, sales tax, wealth-tax, service tax customs duty, excise duty, have not generally been

regularly deposited with the appropriate authorities in cases of tax deducted at source, though the delays in

deposit have not been serious. The provisions of excise duty are not applicable to the Company.

Management’s Response

Due to the wide geographical spread of our Company’s unit, in few cases there were delays in collection of data

resulting in delays in depositing of statutory dues. Our Company has taken necessary steps to address delays in

depositing the statutory dues.

CARO Observation (Sl. No. ix (b))

According to the information and explanations given to us, undisputed dues in respect of provident fund,

investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-

tax, customs duty, cess and other material statutory dues which were outstanding, at the year end for a period of

more than six months from the date they became payable are as follows:

Name of the statute Nature of the dues Amount

(In ` million)

Period to which

the amount

relates

Due Date Date of

Payment

42

Name of the statute Nature of the dues Amount

(In ` million)

Period to which

the amount

relates

Due Date Date of

Payment

Andhra Pradesh State Entertainment

Tax, 1939

Entertainment Tax 3.32 For the months

from November

2006 to August 2009

25th of each

month

subsequent to the

month of

collection

Not yet paid

Income Tax Act, 1961 Tax Deducted at source u/s 194 H

3.95 For the months of July and August,

2009

7th of the subsequent

month.

` 1.22 million paid on April

13, 2010.


This liability no longer exists in view of the fact that Entertainment tax liability in Andhra Pradesh

Entertainment Tax Act is on collection basis which has been deposited and discharged in compliance of the

statute. The aforesaid value represents the entertainment tax value calculated on the non collectable value.


resulting in delays in depositing of statutory dues. Our Company has taken necessary steps to address the delays.

CARO Observation (Sl. No. ix (c))

According to the records of the Company, the dues outstanding of income tax account of any dispute are as

follows:

Name of the statute Nature of dues Amount (` million) Period to which

the amount relates

Forum where

dispute is pending

The Income Tax Act, 1961 Income Tax Penalty 24.99 Assessment Year

2004-05

Income Tax

Appellate Tribunal


The demand of ` 24.99 million was adjusted against FY 2002-03 refund of ` 13.91 million. The balance amount

has been waived by an order of ITAT dated December 28, 2011.


Adverse remark (Sl. No. 5)

Without qualifying their opinion and without considering the consequential effect of the matter stated in

paragraph 7 & 8 of their report for the Financial Year 2010-2011, attention has been drawn to Note 1 (b) of

schedule 22 of the consolidated financial statements which indicate the existence of a material uncertainty on

Company’s ability to continue as a going concern. In view of the mitigating factors, which have been more fully

discussed in Note 1 (b) of schedule 22 of the financial statements for the Financial Year 2010-2011 have

prepared under the going concern assumption.


The same advances are given to entities through our Subsidiaries for the acquisition of MSO/primary points and

also for developing our assets in Kolkata. Part advances have already been converted into investments due to

acquisition of MSO/Interest. The Building construction in Kolkata is on full swing and likely to be completed by

FY 2016 post which the advances are likely to refunded back or converted into investments.

43

Adverse Remark (Sl. No. 6)

Without qualifying their opinion, attention has been drawn to non compliance of certain terms and conditions of

the Listing agreement with the Securities and Exchange Board of India, which the management is in the process

of regularizing. Pending the final outcome of this matter, no adjustments have been made to the financial

statements in this regard.

Management’s Response It is clarified in the Paragraph 5 read with Paragraph 4 of the Limited review audit report for the quarter ended

June 30, 2011 that impact of the matters discussed in Paragraph 4 is not presently ascertainable, we are under no

obligation to present the same through Note in the published and submitted financial results since Para (a) of Sub

Clause IV of Clause 41 of Listing agreement states that only reasons for the variations having financial impacts,

are required to be submitted to Stock Exchange which in our case does not exists since financial impact of

qualification stated in Para 6 of Audit report is not ascertainable.

Qualification (Sl. No. 7)

Attention is drawn to note no. 27 of schedule 22 of the consolidated financial statements in respect of advances

of ` 1806.30 million (including ` 1,386.65 million being advanced subsequent to year end) given to various

companies (including ` 1510.00 million to subsidiaries) for meeting working capital requirements and

acquisition of MSOs / direct points etc. In view of the reasons stated in the said note, management of the

Company is of the view that no provision is required there against. Having regard to the nature and size of

operations of the recipients of said advances and in the absence of concrete plans for acquisition of MSO/ direct

points, we are unable to comment on their ability to repay/ adjustments of these advances, and consequent

adjustments, if any, that may be required to the carrying values of such advances.

Management’s response:






Attention is drawn to note no. 12 of schedule 22 of the accompanying financial statements regarding non

provision of amusement tax liability of ` 1.86 million.


In case of our Subsidiary, ICNCL, pursuant to an order passed by the Supreme Court, the Entertainment Tax

Department, West Bengal, imposed entertainment/amusement tax, inter alia, on Multi System Operators (MSOs)

as a percentage of gross receipts from Cable TV service from April, 1998 and accordingly made assessments up

to March 31, 2006 and raised a demand of ` 72.61 million towards amusement tax payable. Out of the said ` 72.61 million, no provision was made for ` 1.86 million in the FY 2011 but the same was paid by March 31,

2013.







While the physical verification of all the assets is being done on periodical basis regularly, all assets are being

verified within a period of three years from term to term, the depreciation is being provided on all the assets

including the assets acquired in the process of merger, in line with depreciation policy of our Company. All the

44

assets acquired in amalgamation has already been fully amortised /depreciated in FY 2010.










FY 2010

CARO Observation (Sl. No. iv)




audit, no major weakness has been notices in the internal control system in respect of these areas. However, the

internal control system for the sale of services for analog subscription is inadequate since the Company does

have written agreements with the customers in some cases which is an industry issue as per management. In our

opinion, this is a continuing failure to correct major weakness in the internal control system.






CARO Observation (Sl. No. viii(b))

According to the information and explanations given to us, undisputed dues in respect of provident fund,

investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-

tax, customs duty, cess and other material statutory dues which were outstanding, at the year end for a period of

more than six months from the date they became payable are as follows:

Name of the statute Nature of the

dues

Amount (`

million)

Period to

which the

amount

relates

Due Date Date of

Payment

Andhra Pradesh State Entertainment Tax, 1939 Entertainment

Tax 3.32

For the

months

from November

2006 to

September 2009

25th of

each

month subsequent

to the

month of collection

Not yet paid



resulting in delays in depositing of statutory dues. Our Company has taken necessary steps to address this issue.

CARO Observation (Sl. No. viii(c))

According to the records of the Company, the dues outstanding of income tax, sales tax, wealth tax, service tax,

customs duty and cess on account of any dispute are as follows:

45

Name of the statute Nature of

dues

Amount (`

million)

Period to

which the

amount

relates

Forum where

dispute is

pending

The Income Tax Act, 1961 Income Tax Penalty

24.99 Assessment Year 2004-05

Income Tax Appellate

Tribunal


The demand of ` 24.99 million was adjusted against FY 2003-04 refund of ` 13.91 million. The balance amount

has been waived by an order of ITAT dated December 28, 2011.

CARO Observation (Sl. No. x)

The Company’s accumulated losses at the end of the financial year are more than fifty percent of its net worth.

The Company has incurred cash losses during the year and in the immediately preceding financial year.


Our Company continued to incur cash losses during the year but in view of the present positive net worth,

substantial subscription revenue growth and continued financial support from the promoters companies, the

financial results continue to be prepared on a going concern basis.


Adverse Remark (Sl. No. 4)

Without qualifying their opinion and without considering the consequential effect of the matter stated in

paragraph 5 and 6 in their report, the auditor has drawn attention to Note 1 (b) of the consolidated financial

statements related to the conditions which indicate the existence of a material uncertainty on Company’s ability

to continue as a going concern. In view of the mitigating factors, which have been more fully discussed in Note

1 (b) of accompanying financial statements, these financial statements have been prepared under the going

concern assumption.







Attention is drawn to note no. 26 of the consolidated financial statements in respect of advances of ` 471.80

million (including ` 450 million given subsequent to the yearend) given to two companies for technological up

gradation and acquisition of MSOs / direct points etc. In view of the reasons stated in the said note, management

of the Company is of the view that no provision is required there against. Having regard to the nature and size of

operations of the recipients of said advances and in the absence of concrete plans for recovery / adjustments of

these amounts / acquisition of MSO/ direct points, technological up gradation etc., we are unable to comment on

their ability to repay / adjustments of these advances, and consequent adjustments, if any, that may be required

to the carrying values of such advances. This had caused us to qualify our audit opinion on the financial

statements relating to previous year also.






46


The Company has, during the year, given interest free advances/deposit of ` 746.00 million to various

Companies for technological upgradation and acquisition of MSOs / direct points etc. These advances/deposits

have been received back by the Company during the year (except for an amount of ` 21.80 million, which is still

outstanding as at the yearend). Having regard to the nature and size of operations of the recipients of said

advances/deposits and in view of the fact that these advances/deposits have been received back without receipt

of any services by the Company and considering that the Company is incurring external borrowing costs at the

same time, we are not in a position to comment on the nature of these advances/deposits.















FY 2010.










FY 2010.

CARO Observations (Sl. No. ii (c))

The Company has been maintaining inventory records; however the same needs to be strengthened to make it

commensurate with the size of the Company and nature of its business. No material discrepancies were noticed

on physical verification.


Physical verification of the inventory is being done on periodical basis regularly. While the inventory

verification on locations by designated persons is being done regularly/monthly for reporting purposes, third

party inventory verification is being carried out on quarterly basis

CARO Observation (Sl. No. (iv))


47



audit, no major weakness has been noticed in the internal control system in respect of these areas. However, the

internal control system for the sale of services for analogue subscription is inadequate since the company does

not have written agreements with customers in some cases. In our opinion this is a continuing failure to correct

major weakness in the internal control system.






CARO Observation (Sl. No. ix(a))

Undisputed statutory dues including provident fund, investor education and protection fund, employees’ state

insurance, sales-tax, wealth-tax, income tax, service tax, customs duty, cess and other material statutory dues

have generally been regularly deposited with the appropriate authorities though there has been slight delay in a

few cases of tax deducted at source, provident fund. Excise duty is not applicable to the Company.


The management agrees that there have been delays in the past, however, proper systems have been put in

place to ensure that no delays happen in the future.


The Company’s accumulated losses at the end of the financial year are more than fifty percent of its net worth.

The Company has incurred cash losses during the year and in the immediately preceding financial year.






There were no reservations or qualifications or adverse remarks or EOMs in the Auditor’s report for the

Financial Year 2012-2013.







While the physical verification of all the assets is being done on periodical basis regularly, the depreciation is



FY 2010.


The Company has a regular program of physical verification of its fixed assets (other than set top boxes,

installed at customer premises and those in transit or lying with the distributors/cable operators and distribution

48

equipment comprising overhead and underground cables physical verification of which is infeasible owing to the

nature and location of these assets), under which fixed assets, except for some of the network equipment

acquired in a scheme of arrangement in an earlier year, are verified in a phased manner over a period of three

years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

No material discrepancies were noticed on such verification except in case of some of the network equipment

acquired in a scheme of arrangement in an earlier year which have not been physically verified by the

management during the year and we are therefore unable to comment on the discrepancies, if any, which could

have arisen on verification thereof.





FY 2010


In our opinion, the Company’s accumulated losses at the end of the financial year are more than fifty percent of

its net worth. The Company has incurred cash losses in the current and the immediately preceding financial year.






There were no reservations or qualifications or adverse remarks in the Auditor’s report for the Financial Year

2013-14.










FY 2010.


The Company has a regular program of physical verification of its fixed assets (other than set top boxes,

installed at customer premises and those in transit or lying with the distributors/cable operators and distribution

equipment comprising overhead and underground cables physical verification of which is infeasible owing to the

nature and location of these assets), under which fixed assets, except for some of the network equipment

acquired in a scheme of arrangement in an earlier year, are verified in a phased manner over a period of three

years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

No material discrepancies were noticed on such verification except in case of some of the network equipment

acquired in a scheme of arrangement in an earlier year which have not been physically verified by the

management during the year and we are therefore unable to comment on the discrepancies, if any, which could

have arisen on verification thereof. According to the information and explanations given to us, the existence of

set top boxes installed at customer premises is considered on the basis of the ‘active user’ status of the set top

box.

49





FY 2010.


In our opinion, the Company’s accumulated losses at the end of the financial year are more than fifty percent of

its net worth. The Company has incurred cash losses in the current and the immediately preceding financial year.





Review Report for the Condensed Consolidated Financial Statements for the nine months ending

December 31, 2014.

There were no reservations or qualifications or adverse remarks in the Auditor’s review report for the nine

months ended December 31, 2014.

Changes in the accounting policies

There have been no changes in our accounting policies during the last three years.

50

RISK FACTORS

Prospective investors should carefully consider the risk factors described below together with all other

information contained in this Preliminary Placement Document before making any investment decision relating

to the Equity Shares. These risks and uncertainties are not the only issues that we face. These risks and

uncertainties and additional risks and uncertainties not presently known to us or that we currently believe to be

immaterial may have an adverse effect on our business, results of operations, cash-flows, financial condition or

prospects and might affect and cause the market price of the Equity Shares to fall significantly and you to lose

all or part of your investment in the Equity Shares. Prospective investors should pay particular attention to the

fact that our Company is incorporated under the laws of India and that we are subject to a legal and regulatory

environment that may differ in certain respects from other countries.

This Preliminary Placement Document also contains forward-looking statements that involve risks and

uncertainties. The Company’s results could differ materially from such forward-looking statements as a result of

certain factors including the considerations described below and elsewhere in this Preliminary Placement

Document.

To obtain a complete understanding of our business, you should read this section in conjunction with the section

titled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” beginning on pages 112 and 80, respectively.

Risks Related to our Business

1. Our inability to convert our existing analog cable television subscribers, to digital cable services will

adversely affect our business, results of operations and financial condition.

We expect that our future growth will be primarily dependent on the conversion of our analog cable subscribers

to digital cable subscribers. Digital cable television service gives us the ability to earn higher revenues and curbs

the current industry-wide problem of LCOs under-reporting the number of subscribers. Under the four-phased

digitization policy announced by the MIB, the cable television distribution industry in India will be transitioned

to DAS by December 31, 2016 requiring cable operators to transmit digital signals through addressable STBs

only. We are pursuing the digitization of our services to adhere to the schedule set out by the MIB. Phase I and

Phase II was completed by March 31, 2013. Phase III, which is applicable to all other urban areas across India, is

scheduled to be completed by December 31, 2015 and Phase IV, which affects the rest of India, is scheduled to

be completed by December 31, 2016. There can be no assurance that digitization will adhere to the revised

schedule or the completion date will not be extended further or that we will be able to convert our existing

analog cable television subscribers, as well as attract new subscribers, for our digital cable services. Subscribers

may not be willing to pay higher costs for digital television services, or may find the services offered by our

competitors, including by DTH service providers, to be more cost effective or attractive. Such conversion will

also require increased capital expenditure for STBs and improvement of our cable network. We also cannot

assure you that the revenues that we generate from new digital cable television subscribers will be sufficient to

meet this expenditure. Our inability to convert our existing analog cable television subscribers, in a cost-

effective manner, or at all, or to attract new subscribers, for our digital cable services will adversely affect our

business, results of operations and financial condition.

2. We have incurred losses in the past and have a negative networth.

We have incurred losses during the nine months period ended December 31, 2014, fiscal 2014, 2013, 2012

amounting to ` 749.74 million, ` 940.61 million, ` 640.73 million and ` 913.40 million, respectively as per our

Condensed Consolidated Financial Statements as of and for the nine months period ended December 31, 2014

and Reformatted Financial Statements. Our networth as of the nine months period ended on December 31, 2014

and fiscal, 2014 was ` 254.80 million and ` 1,123.00 million as per our as per our Condensed Consolidated

Financial Statements as of and for the nine months period ended December 31, 2014 and Reformatted Financial

Statements for fiscal 2014, respectively. Additionally, we have recorded negative earnings per share (EPS) ratio

for fiscal 2012, fiscal 2013 and fiscal 2014, where our loss per share was ` 2.02, ` 1.42 and ` 2.07 respectively.

In the event we continue to incur such losses in the future, it would adversely affect our results of operations.

51

3. We are heavily dependent on LCOs to reach most of our cable television subscribers, to collect

subscription fees, to increase our subscriber base and to maintain our service quality standards. We

may be exposed to liability arising from activities by LCOs that are beyond our control or on losses

caused due to the termination of LCO agreements or otherwise.

We deliver programming on our cable network through LCOs as a “last mile” link that connects our cable lines

to the homes of our subscribers. We typically enter into interconnect agreements with LCOs, pursuant to which

the LCOs receive our signal feed and agree to offer our cable services rather than the services of a competitor.

The interconnect agreements typically do not contain any long-term obligations for the LCOs to remain

affiliated with us and are typically valid for a period of one year to any period unless terminated earlier.

However, under some the affiliation agreements entered into by us, an LCO may terminate the agreement on 30

days’ notice provided that all the accounts are fully settled between us and the LCO. Therefore, no LCO is under

any long-term obligation to remain affiliated with us. We compete with other MSOs for the LCOs to offer our

cable services. Although we believe that we have established, close relationships with our principal LCOs, our

success will depend upon our ability to retain our relationships with LCOs. Failure to retain our relationships

with LCOs could result in a loss of our subscribers, which would adversely affect our business and results of

operations.

We provide training and support to LCOs to ensure that they deliver quality customer service to our subscribers.

However, the quality of a LCO’s operations may be lowered by a number of factors beyond our control. LCOs,

which typically have direct contact with subscribers in respect of sales, billing, technical support and general

customer services, may not successfully deliver our services in a manner consistent with our standards and

requirements or may not hire and train qualified personnel in accordance with our standards. Any negative

publicity regarding our brand or services resulting from such circumstances could adversely affect our business

and results of operations.

Further, our subscription revenue is dependent on the LCOs' ability to generate and maintain subscription

revenue. Therefore, any failure by LCOs to collect adequate subscription fees from end subscribers may

adversely affect our business. Certain illegal activities by LCOs could also potentially expose us to liability. For

example, LCOs may offer content on their network which is not legally permitted to transmit. Such actions are

outside our control and may result in us being exposed to adverse publicity, loss of brand value or legal

proceedings in which we are named as parties. Any failure of the LCOs to provide adequate services could

adversely affect our reputation and may expose us to legal and regulatory proceedings.

4. We rely on the cooperation of the minority shareholders of our Subsidiaries in which we have acquired

a majority interest to conduct our operations. If our relationships with these minority shareholders

deteriorate, it could have an adverse effect on our business and results of operations.

Acquisition of majority interests in MSOs is one of our expansion strategies. We expect such minority

shareholders to continue to support the operations and grow the business. However, if these minority

shareholders do not assist us in successfully operating and growing these Subsidiaries, we could lose

subscribers, revenues and market share.

Further, under the terms of the shareholders agreements pursuant to which we acquire our majority interests in

MSOs, we agree to certain affirmative voting matters in favour of the minority shareholders. In the event if any

of these minority shareholders decide to exercise the affirmative voting matters in a manner which is not in the

best interest of our Subsidiary or if they get into a dispute with us, it may have an adverse effect on our business,

financial condition and results of operations of the Company.

5. The television distribution industry is highly competitive, which affects our ability to attract and retain

subscribers.

The television distribution is highly competitive and is often subject to rapid and significant changes in the

marketplace, technology and regulatory and legislative environments. We believe that we compete on pricing,

programming offerings, services, subscriber satisfaction, network quality, content delivery and value-added

services. We primarily compete with other cable television service providers in the markets in which we operate,

as well as with DTH service providers, IPTV service providers and their respective local affiliates. We believe

our strongest cable competitors include Hathway, Den, and InCable. All three of these competitors have a

presence in several cities across India. DTH companies that compete with us include TataSky, DishTV, Airtel

Digital TV, Videocon D2H, Sun Direct TV and BIG TV. Factors such as the development of new technologies

52

and services within the industry may force us to compete with new types of services offered by other providers.

We cannot accurately predict how emerging and future technological changes will affect our operations or the

competitiveness of our services. The success of these ongoing and future developments could have an adverse

impact on our business. Additionally, existing and new competitors, and in particular competitors with

substantially more resources than us, could begin to operate in the markets that we operate in or identify and

acquiring targets being pursued by us. Moreover, the cable television business is largely unorganised and

fragmented and based on local preferences. We may not be able to adjust the programs and bouquets we offer to

cater to the local preferences of our end subscribers as well as competitors.

Increasing competition may require us to expend significant resources on more advanced equipment, enhanced

programming offerings and more sophisticated marketing initiatives, which may increase subscriber acquisition

and retention expenses. Alternatively, we may be required to accept lower subscriber acquisitions and higher

turnover of subscribers in the form of subscriber service cancellations, or churn. We cannot assure you that we

will be able to compete successfully, which could adversely affect our business and results of operations.

6. We operate in a highly capital intensive sector and import a major part of the business equipment like

cable and set top boxes.

We operate in a highly capital intensive industry. The cost of set top boxes, updating the network and laying of

new cable lines is capital intensive. The returns on our ventures would only start at a later date. Our return on

capital investment depends upon, among other things, competition, demand, government policies, rate of interest

and general economic conditions. We are dependent on external vendors for a regular supply of business

equipment and majority of such equipment are imported from foreign suppliers. We have imported set top boxes

and viewing cards worth ` 1,107.05 million during the fiscal 2014.

We have not entered into any firm/long term arrangements for supply of such equipment with the vendors. We

may not guarantee a regular supply of such equipment at competitive prices. Further, any change in government

policy on imports of such goods, including import duties, may affect our procurement of such equipment at a

reasonable cost, which may adversely affect our business and results of operations.

7. We have been non-compliant with the provisions of Companies Act in the past.

We have been non-compliant with the provisions of the Companies Act which provides for registration of charge

with the RoC. We have made a delay of over 15 months in filing of Form 8 for registration of charge in favour

of IDBI Bank Limited, with the RoC. The delay was condoned by the authorities subject to payment of ` 25,000.

For further details, see the section “Legal Proceedings” on page 190.

We cannot assure you if we will be able to satisfy all or any provisions of the Companies Act in the future and

other applicable rules/regulations, non-compliance of which may have a materially adverse impact on our

operations.

8. Our Promoters and certain of our Directors are also the promoters and directors in one of our group

companies, engaged in business activities which compete with our business.

Some of our Promoters and one of our Directors are also the promoters and directors respectively in Dish TV

India Limited which is involved in similar line of business as our Company, engaged in business of providing

DTH services, and the target customers may be the same for our Company and Dish TV India Limited. We

cannot assure you that such Promoters and Directors will not act in a manner that is adverse to our interests, in

the event of a conflict of interest between our Company and Dish TV India Limited. Further, we may lose some

of our target Subscribers to Dish TV India Limited which would affect our Subscriber base. In the past, we have

lost our Subscribers to Dish TV India Limited and we cannot assure you that this will not occur in future and any

such occurrence may adversely affect our financial conditions and prospects.

9. We have disputes with the broadcasters who provide us with signal input for the provision of their

programming

In order to successfully operate our business, we depend on third-party broadcasters for the input of their signals

to provide us with programming. We are involved in a dispute with Star India Private Limited (“Star”), on the

ground that Star has issued disconnection notices to us demanding an amount ₹ 260 million from our Company

towards subscription fees and the non-submission of SMS reports. We have filed a petition bearing no. 15(C) of

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2015 before the TDSAT on January 22, 2015 against Star under section 14 read with section 14A of the TRAI

Act challenging the disconnection notices issued by Star and restraining Star from deactivating or disturbing the

signals of its channels to the networks of our Company and directing Star to sign agreements for an interim

period on the basis of the erstwhile agreements.

An order dated January 27, 2015 has been issued by the TDSAT staying the notices for disconnection subject to

the payment of ₹ 100 million by our Company and directing us to send the SMS reports to Star. Our Company

has issued a cheque of ₹ 100 million to Star. We have sent the SMS reports to Star for further action on their

end. TDSAT has issued an order dated February 19, 2015 directing Star to raise its invoices within a week from

the date of the order. The next date of hearing is March 24, 2015. For further details please refer to the section

titled “Legal Proceedings” on page 189. In case the dispute is decided against us, we will be required to put all Star bouquet channels on RIO pricing in a

la carte mode, i.e. channel to be provided on specific consumer request which may harm our ability to

successfully market our full service offerings including loss in our related carriage income, which we derive

from placement of Star bouquet channels on preferred frequency and LCN. We may also not be able to collect

carriage fees. If we are unable to continue to provide content from popular broadcasters our credibility and

market acceptance of our full service offerings could be adversely affected along with our business and results of

operations.

10. All of our movie agreements have expired.

We enter into agreements with the production houses for licensing the non-exclusive right to telecast and re-

telecast their movies on our own channels typically for a period of 1 year and for a fixed fee. In the past we have

executed such agreements with Shemaroo Entertainment Limited, Ultra Distributors Private Limited and Eros

International Media Limited. As of this date none of our movie agreements are subsisting as all of them have

expired and we are in the process of negotiating the commercial terms with the production houses. We continue

to broadcast the movies on our own channels despite there not being a valid contract between us and the

production house. Although this is a general industry practice as we usually renew the agreements with the same

production houses, however, there can be no assurance that these production houses will not initiate a legal

action against us for telecasting movies for which we have no contractual right to telecast. In case the production

houses initiate any legal action against us, we may be restrained from showing the movies on our channels,

which may lead to a lack of consumer confidence and harm our ability to successfully market our service

offerings. Such deficiencies in services adversely affect our reputation. In addition, we may need to incur

substantial litigation costs. If we are unable to show movies on our own channels, our credibility and market

acceptance of our service offerings could be adversely affected.

11. Our Company may not have been in compliance with certain terms and conditions of the Listing

Agreements with the Stock Exchanges.

In the past, may not have complied with Clause 41 of the Listing Agreement relating presentation of a matter by

way of notes in the financial statements as the same was not ascertainable. In the financial statements for fiscal

2011, the auditor have without qualifying their opinion, have drawn attention to non-compliance of certain terms

and conditions of the Listing agreement. Our management is of the view that there has been no non-compliance

of the Listing Agreement.

Under the standard terms of Listing Agreement, the governing body of Stock Exchanges is empowered to

suspend trading of or dealing in a listed security for breach by a listed company, of its obligations under such

agreement. Further, every listed company has to also comply with certain other rules and regulations like the

SEBI Takeover Regulations and the SEBI Insider Trading Regulations in addition to the Listing Agreement,

which involve periodical and event based filings by any listed company including us.

We cannot assure you if we will be able to satisfy all or any terms of the Listing Agreement and other applicable

rules/regulations, non-compliance of which may have an adverse impact on the continued listing and trading of

our Equity Shares.

12. Success of our business is substantially dependent on our management and technical team, our

inability to retain them could adversely affect our business.

Our ability to sustain our growth depends, in large part, on our ability to attract, train, motivate and retain skilled

54

personnel. Our ability to hire and retain additional qualified personnel will impact our ability to continue to

expand our business. We believe that there is a significant demand for personnel who possess the skills needed

in our business areas. An increase in the rate of attrition of our experienced employees, would adversely affect

our business. We cannot assure you that we will be successful in recruiting and retaining a sufficient number of

personnel with the requisite skills to replace those personnel who leave. This may adversely affect our business

and results of operations. Further we cannot assure you that we will be able to re-deploy and re-train our

personnel to keep pace with continuing changes in our business. For further details, see the para on ‘Human

Resources” under section titled “Business” on page 126.

13. Our business is subject to extensive governmental regulation, which could have an adverse effect on

our business by increasing our expenses or limiting our operational flexibility.

Our business is subject to extensive regulation by TRAI, the MIB, DoT and other government bodies. Increased

regulation or changes in existing regulation may require us to change our business policies and practices and

may increase the costs of providing services to customers, which could have an adverse effect on our financial

condition and results of operations.

Some of the key regulatory challenges faced by us include:

TRAI in its recommendation on issues related to new DTH licenses dated July 23, 2014 (“Recommendations”)

has recommended that there should be uniformity in the policy on cross-holding/control between broadcasters

and Distribution Platform operators (DPOs) like MSOs, DTH, HITS, and amongst DPOs, in the broadcasting

and distribution sectors. In view of the above, TRAI inter-alia has recommended:

i. The entity that controls a broadcaster or the broadcaster itself, shall be permitted to “control” only one

DPO (of any category i.e. either an MSO/HITS operator or DTH operator) in a relevant market and

vice-versa;

ii. The entity that controls a vertically integrated DPO or the vertically integrated DPO itself, shall not be

allowed to “control” any other DPO of other category;

iii. If a vertically integrated DPO, while growing organically or inorganically, acquires a market share of

more than 33% in a relevant market, then the vertically integrated entities will have to restructure in

such a manner that the DPO and the broadcaster no longer remain vertically integrated.

Accordingly, TRAI recommended that any entity controlling a DPO or the DPO itself should not “control”

any DPO of other category. However, MSOs and HITS operators can have cross-holding/“control” amongst

them, subject to market share restrictions, as specified from time to time. Pursuant to the Recommendations,

TRAI has also recommended the following definition of “control”:

“An entity (E1) is said to “Control” another entity (E2) and the business decisions thereby taken, if E1,

directly or indirectly through associate companies, subsidiaries and/or relatives: (a) owns at least twenty

per cent of total share capital of E2. In case of indirect shareholding by E1 in E2, the extent of ownership

would be calculated using the multiplicative rule. For example, an entity who owns, say, 30% equity in

Company A, which in turn owns 20% equity in Company B, then the entity’s indirect holding in Company

B is calculated as 30% * 20%, which is 6%; or (b) exercises de jure control by means of: (i) having not

less than fifty per cent of voting rights in E2; or (ii) appointing more than fifty per cent of the members of

the board of directors in E2; or (iii) controlling the management or affairs through decision-making in

strategic affairs of E2 and appointment of key managerial personnel; or (c) exercises de facto control by

means of being a party to agreements, contracts and/or understandings, overtly or covertly drafted,

whether legally binding or not, that enable the entity to control the business decisions taken in E2, in

ways as mentioned in (b) (i) (ii) and (iii) above. For this purpose: (i) The definitions of “associate

company”, “subsidiary” and “relative” are as given in the Companies Act 2013. (ii) An “entity” means

individuals, group of individuals, companies, firms, trusts, societies and undertakings.”

While our Company and Dish TV India Limited are part of the Essel Group, the management of our

Company is of the opinion that the Recommendations would not apply on our Company as the equity

holding of the Essel Group is such that cross holdings and control of our Company and Dish TV India

Limited would not squarely fall under the ambit of the definition of control.

55

MIB has notified a four-phase digitization process for cable television in India which was required to be

completed by December 31, 2014. There have been substantial delays and the revised date for completion of

digitization process has now been fixed on December 31, 2016. If there are further delays in the completion

of the digitization process, our business may be adversely affected;

MSOs are required to re-transmit signals of television channels received from a broadcaster, on a non-

discriminatory basis to LCOs; MSOs are not allowed to engage in any practice or activity or enter into any

understanding or arrangement, including exclusive contracts with any broadcaster or distributor of TV

channels, that prevents any LCO from obtaining such TV channels;

With respect to area where we do not offer digital services, we are required to maintain quality standards

prescribed by the Standards of Quality of Service (Broadcasting and Cable Services) (Cable Television –

Non CAS Areas) Regulation, 2009 and other laws and regulations; any amendment in such standards may

require us to incur costs in order to comply with such laws and regulations; and

The foreign capital that we may raise is restricted under the provisions of India’s current Consolidated FDI

Policy, effective from April 17, 2014 issued by the Department of Industrial Policy and Promotion, Ministry

of Commerce and Industry, Government of India. Foreign investment in our Company is permitted up to

49.00% of our paid-up Equity Share capital under the automatic route, and up to 74.00%, with prior

approval of the Government of India, subject to, among others, the following conditions:

(i) a majority of our directors and our key executives, including any chief executive officer,

chief officer in charge of technical network operations and chief security officer must be

citizens of India;

(ii) each of our Company, directors, key executive such as any managing director, chief

executive, chief financial officer, chief operating officer, chief technical officer, chief

security officer, any shareholder of our Company who holds 10.0% or more of our paid-up

Equity Share capital, and any other category of persons as may be specified by MIB from

time to time, are required to obtain security clearance from the MIB;

(iii) prior permission of MIB must be obtained for effecting any changes in our Board of

Directors, appointment of Directors and any key executives as mentioned above, and any

other executives as may be specified by the MIB from time to time; and

(iv) security clearance must also be obtained for each foreign personnel likely to be deployed for

more than 60 days in a year by way of appointment, contract, consultancy or any other

capacity for providing any services to our Company. Such security clearance is required to

be renewed every two years.

Some of the key regulatory risks faced by us with respect to our broadband cable internet business may

include:

(i) under the ISP license granted to us, we are required to ensure that objectionable, obscene,

unauthorised or any other content, messages or communications infringing copyright, intellectual

property rights and international and domestic cyber laws, in any form or inconsistent with the laws of

India, are not carried in our network; any violation of these requirements can result in penalties and

punishment under Information Technology Act, 2000; and

(ii) FDI in ISP activities is restricted to 49.00% under the automatic route and 74.00% with prior approval

of the FIPB, respectively, which restricts the amount of foreign capital that we may raise.

Although we believe that we are generally in compliance with such laws and regulations or that the same are not

applicable on us, the government authorities may allege non-compliance, and we cannot assure you that we will

not be subjected to any adverse regulatory action in the future. Additionally, we rely on LCOs to provide the last

mile connection to our subscribers. In the event the LCOs we transact with are subject to any adverse regulatory

action, we may have an adverse effect on our business and results of operations. Further, the laws and

regulations under which we operate, and our obligation to comply with them, may result in delays in the

development and production of our services, cause us to incur increased costs by reason of the need to comply

with such regulations and prohibit or severely restrict certain activities that we may seek to carry out in the

56

course of our business. Moreover, the laws and regulations under which we operate are subject to change and

any change to these laws and regulations could adversely affect our business and results of operations.

14. We are dependent on third parties to provide us with programming content and any increase in content

costs or applicable laws may adversely affect our business, financial condition and results of

operations.

We depend on third parties to provide us with programming content. We procure content through channel

distributors or owners. Under Indian interconnection regulations, all broadcasters and distributors are required to

offer their content to all platforms and operators. We enter into content agreements with channel distributors and

owners to license channels for viewing by our subscribers and we pay them content and programming cost as

stipulated under the agreements. Our content agreements generally have fixed terms and contain various renewal

and termination provisions. We may be unable to renew these agreements on favourable terms, in a timely

manner, or at all, or these agreements may be terminated prior to the expiration of their original terms. If we are

unable to renew any of these agreements or if a counterparty terminates any of these agreements, we may be

unable to obtain appropriate substitute programming at comparable cost, in a timely manner, or at all.

When offering new programming, or upon expiration of existing contracts, programming suppliers often increase

the rates they charge us for programming, which increases our programming costs. Increases in programming

costs may cause us to increase the rates that we charge our subscribers, which may, in turn, increase subscriber

churn and cause potential subscribers to refrain from subscribing to our services. In addition, we may be unable

to pass programming cost increases on to our subscribers. If our programming costs increase, our business,

financial condition and results of operations may be adversely affected.

Content procurement by cable operators in India, including us, generally takes place through channel distributors

or owners. Under Indian interconnection regulations, all broadcasters and distributors are required to offer their

content to all platforms and operators. We enter into agreements with channel distributors and owners to license

channels for viewing by our subscribers. The major channel distributors and owners, from whom we license

channels or to whom we pay content and programming costs, provide us with access to approximately 430

channels and services. Any change in Indian interconnection regulations that would permit broadcasters and

distributors to refuse to provide such programming to us or to impose discriminatory terms or conditions may

adversely affect our ability to acquire programming on a cost-effective basis, or at all, which would adversely

affect our business, financial condition and results of operations.

15. Our Promoters have in the past been penalized by SEBI for non-compliance of the SEBI Takeover

Code, 1997.

We had issued a letter of offer of our rights issue on September 22, 2009, pursuant to some of our then existing

Shareholders subscribed Equity Shares of our Company. Pursuant to Regulation 3(4) of the SEBI Takeover

Code, 1997, our Promoters were required to submit a report along with supporting documents to SEBI giving all

details in respect of acquisition made under Regulation 3(1)(b) which would entitled the Promoters to exercise

15% or more of the voting rights in our Company within 21 days from the date of allotment of acquisition, which

our Promoters failed to do.

SEBI by way of its order dated December 29, 2014 imposed a penalty of ` 2 million on all our then existing

Promoters under Section 15A(b) of the SEBI Act for the violation of Regulation 3(4) of the SEBI Takeover

Code, 1997. We cannot assure you if we or our Promoters will be able to satisfy all or any provisions of the

applicable laws in the future and other applicable rules/regulations, non-compliance of which may have a

materially adverse impact on our operations.

16. We do not have a track record for payment of dividend on Equity Shares

We do not have a track record of dividend distribution on the Equity Shares. The future payment of dividends, if

any, would be based on then available distributable profits and the recommendations of our Board of Directors.

The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition,

cash flows, working capital requirements, capital expenditures and other factors. There can be no assurance that

we will be able to pay dividends in future.

17. A portion of our revenue consists of carriage income, which is dependent upon the continued demand

of channels to be placed in certain preferred frequencies.

57

We derive a portion of our revenue from operations from carriage income. These fees are paid to us by

broadcasters and content aggregators for carrying their channels and placing their channels on their preferred

channel number or position in the LCN and the package in case of digital services or preferred signal and

frequency band in case of analog services. For gaining better viewership, broadcasters also negotiate and offer

carriage fee to run their services in the desired frequency/band. Depending on our capacity to carry the channels

and keeping in mind the subscribers’ demands, we negotiate such fee with some of the broadcasters and place

their channels on the agreed frequency/ band. We generally enter into placement contracts for a period of one

year, which is of a renewable nature. We generally agree to a fixed fee for the term of the agreement, payable in

equal monthly or quarterly instalments. Typically the broadcaster require their lesser known or new channels to

be placed on the suitable channel number or position or LCN, in order to ensure wider visibility of such

channels. We derive maximum carriage fee from the placement of local channels.

Further, revenues from carriage fees depend upon the availability of the position on the LCN or the frequencies.

If the position on the LCN and the package or the frequencies requested by a broadcaster has already been

provided to another, we may not be able to provide such broadcaster with the same position on the LCN and the

package or the frequency, thereby adversely affecting our business and results of operations. If we are unable to

provide the position on the LCN and the package or the frequency requested by the broadcaster, our revenue

from carriage fees may be adversely affected.

18. Problems with the service quality or performance of our digital platform could result in a decrease in

the number of our subscribers and revenues.

Actual problems (such as systems failures caused by fire, earthquakes, severe storms, other natural disasters,

power loss, tele-communications failures, network software flaws, industrial actions, civil disturbances, acts of

terrorism and other catastrophic events) or perceived problems with the quality of our services may lead to a lack

of consumer confidence and harm our ability to successfully market our service offerings. Most commonly, we

face problems of cable wire disconnection which leads to temporary stoppage of our services in such areas. Such

deficiencies in services adversely affect our reputation and could lead to litigation. Further, in areas where such

disruptions take place on a frequent basis, we may not be able to collect subscription fees or may be required to

refund fees for the period of disconnection. In addition, we may need to incur substantial costs in order to

address any quality issues. If we are unable to provide high quality digital cable and broadband services, our

credibility and market acceptance of our service offerings could be adversely affected.

19. We may require consent of certain third parties with whom we have entered into business agreements.

We have entered into several business related agreements with our suppliers, broadcasters, LCOs and service

providers. Under the terms of such agreements we may be required to obtain a prior consent of such counter

parties for naming them in this Preliminary Placement Document.

While we believe that we have approached the parties from whom we require consent, we cannot assure the

investors that we will receive such consents in a timely manner or at all. Any failure to receive the consents from

our counterparties will equip our counterparties to initiate legal proceedings against us on account of breach of

contract. In case the counter parties initiate any legal proceedings against us, it will affect our credibility and

market acceptance. In addition, we may need to incur substantial litigation costs which will cause an adverse

effect on the financial position of our Company.

20. We cannot guarantee the accuracy of statistical and other information with respect to our business,

India, the Indian economy or the industry in which we operate contained in this Preliminary

Placement Document.

Some data relating to our business have been assessed and quantified internally by our Company as no other

credible third party sources are available for verifying or ascertaining such data. The assessment of the data is

based on our understanding, experience and internal estimates of our business. Although we believe that the data

can be considered to be reliable, but due the nature of the industry we operate in, which is driven by volumes and

where under-reporting is rampant, we cannot assure the investors regarding the accuracy, completeness and

underlying assumptions for such data.

Statistical and other information in this Preliminary Placement Document relating to India, the Indian economy

or the industry in which we operate have been derived from third party sources including various government

publications and obtained in communications with various Indian government agencies that we believe to be

58

reliable. However, we cannot guarantee the quality or reliability of such source of materials as this information

have not been prepared or independently verified by us. While our directors have taken reasonable care in the

reproduction of the information, the information has not been independently verified by us, each of the BRLMs

or any of our or their respective affiliates or advisors and, therefore, we make no representation as to the

accuracy of such facts and statistics, which may not be consistent with other information compiled within or

outside India. These facts and other statistics include the facts and statistics included in the section titled

“Industry Overview” beginning on page 99. Due to possibly flawed or ineffective collection methods or

discrepancies between published information and market practice and other problems, the statistics herein may

be inaccurate or may not be comparable to statistics produced for other economies and should not be unduly

relied upon. Further, there is no assurance that they are stated or compiled on the same basis or with the same

degree of accuracy as may be the case elsewhere. In all cases, investors should give consideration as to how

much weight or importance they should attach to, or place on, such facts or statistics.

21. If we are unable to compete effectively for the leisure and entertainment time of subscribers, our

business and financial condition would be adversely affected.

Our business is subject to risks relating to increasing competition for the leisure and entertainment time of

subscribers, which have become more intense due to advances in technology. Our business competes with all

other sources of entertainment and information delivery, including broadcast television, films, live events, radio

broadcasts, home video products, console games, print media and the internet. Technological advancements,

such as new video formats and internet streaming and downloading, have increased the number of entertainment

and information delivery choices available to consumers and intensified the challenges posed by audience

fragmentation. The increasing number of choices available to audiences could negatively impact demand for our

services. If we do not respond appropriately to further increases in the leisure and entertainment choices

available to consumers, our competitive position could deteriorate and our financial results could suffer.

22. We have limited experience in providing cable broadband internet services and may not be able to

compete effectively.

We have an all-India ISP license and intend to expand our broadband internet services to our digital cable

subscribers. Our broadband cable internet services will compete with fixed telephony carriers and other

broadband internet access providers, as well as providers of dial-up internet access and with emerging

technologies for the provision of broadband internet services. We believe that our competitors in this market will

be MTNL, BSNL, Tata Indicom, Bharti Airtel, Sify, DEN, Hathway and Reliance Communications. There can

be no assurance that we will be able to successfully compete against the established players in the market.

23. The success of our broadband may be slowed or halted by high costs and other obstacles in India.

Bandwidth, the measurement of the volume of data capable of being transported in a communications system in

a given amount of time, remains expensive in India. Although prices for bandwidth in India have substantially

declined recently, they are relatively high compared to western countries due to, among other reasons, capacity

constraints and lack of competition. As increase in international bandwidth costs would increase our operating

costs and may adversely affect our profitability.

Further, the market penetration rates of personal computers and online access in India is low. Alternate methods

of obtaining access to the Internet, such as through STBs for televisions, are currently not popular in India. There

can be no assurance that the number or penetration rate of personal computers in India will increase rapidly, or at

all, or that alternate means of accessing the Internet, which we can service through our existing broadband

technology, will develop and become widely available in India. Customers will have to bear significant costs for

obtaining the hardware and software necessary to connect to the internet in India. If such costs do not become

affordable, our broadband services subscriber base will be curtailed, which may adversely affect our business

and results of operations.

24. If the broadcasters who provide us with signal input for the provision of their programming encounter

any technical failures, our business and results of operations may be adversely affected.

In order to successfully operate our business, we depend on third-party broadcasters for the input of their signals

to provide us with programming. If such broadcasters encounter technical failures in the provision of their input,

we may be unable to provide uninterrupted programming offerings to our subscribers or the audio-visual quality

of such programming may be reduced. If we are unable to provide our programming as a result of such technical

59

failures, our business and results of operations may be adversely affected.

25. Our insurance coverage may not adequately protect us against certain operational risks or claims and

we may be subject to losses that might not be covered in whole or in part by existing insurance

coverage

We maintain insurance for a variety of risks, including, among others, for risks relating to fire, burglary and

certain other losses and damages. There could be other risks and/or losses for which we are not insured, such as

loss of business, environmental liabilities and natural disasters. Moreover equipment installed at the Subscribers

premises are not covered by any insurance. Any such losses could adversely affect our financial conditions and

prospects.

26. Our expansion strategy may result in additional risks and uncertainties in our business.

We have achieved growth through acquiring majority stake in MSOs / LCO and by acquiring the entire cable

business of MSOs/LCOs and we intend to continue to explore such opportunities to grow our business. While we

do not have any existing agreement for strategic investments or acquisitions, we continue to face numerous risks

and uncertainties, more particularly, the following:

- in connection with the integration of an acquired MSO/LCO, a large number of systems must be

assimilated into our established business, including management information, purchasing, accounting

and finance, billing, payroll and benefits and regulatory compliance;

- our ongoing business may be disrupted and our management’s attention may be diverted by acquisition,

transition or integration activities;

- we may have higher than anticipated costs in continuing support and development of acquired cable

networks or face difficulties in realising projected efficiencies, synergies and cost savings;

- we may have problems coordinating the sales and marketing functions of an acquired business with our

existing businesses; and

- we may face cultural challenges associated with integrating or retaining employees from acquired

businesses;

These difficulties could disrupt our ongoing business, distract our management and employees and adversely

affect our results of operations.

27. The growth of our business may require us to obtain additional financing, which we may not be able to

obtain on reasonable terms or at all.

We expect to incur substantial expenditure for the purposes of purchasing equipment and upgrading our

equipment for digitization, rolling out our broadband services and expanding our reach in the future. There can

be no assurance that we will have sufficient capital to accomplish the planned purchases and upgrades of our

broadband services and expansion. Further, because future business expansion will be dependent in part on the

future demand for our services, it is difficult for us to predict with certainty our future capital expenditure

requirements. In the event that we have underestimated our future capital requirement needs or overestimated

future cash flows, we may require additional financing in order to meet our projected capital and other

expenditure requirements. In such an event, no assurance can be given that financing will be available.

Further, to the extent that we are able to obtain financing when needed, the agreements governing debt financing

may contain certain restrictive covenants that will limit our ability to enter into certain business transactions and

restrict our management’s ability to conduct our business. Any financing obtained by the issuance of additional

equity securities would also dilute the ownership interest of holders of our Equity Shares.

28. Our substantial indebtedness could adversely affect our business, financial condition and results of

operations.

As of December 31, 2014, we had long-term borrowings of ` 8,421.22 million, current maturities of long-term

borrowings of ` 4,444.46 million and short-term borrowings of ` 504.53 million. Our financing agreements

60

contain, among others, requirements to maintain certain security margins and financial ratios and also contain

restrictive covenants, such as requiring lender consent for, among others things, issuance of new shares, making

any material changes to constitutional documents, incurring further indebtedness, creating further encumbrances

on or disposing of assets, undertaking guarantee obligations, declaring dividends or incurring capital

expenditures beyond certain limits. In addition, some of these agreements have required us to obtain personal

undertakings from our Promoters. There can be no assurance that we will be able to comply with these financial

or other covenants or that we will be able to obtain the consents necessary to take the actions we believe are

necessary to operate and grow our business. Our level of existing debt and any new debt that we incur in the

future has important consequences. For example, such debt could:

- increase our vulnerability to general adverse economic and industry conditions;

- limit our ability to fund future working capital, capital expenditures and other general corporate

requirements;

- require us to dedicate a substantial portion of our cash flow from operations to service our debt;

- limit our flexibility to react to changes in our business and in the industry in which we operate;

- limit, along with other restrictive covenants, among other things, our ability to borrow additional funds;

and

- lead to circumstances that result in an event of default, if not waived or cured. A default under one debt

instrument may also trigger cross-defaults under other debt instruments.

Any of these developments could adversely affect our business, financial condition and results of operations.

We cannot provide any assurance that our business will generate cash in an amount sufficient to enable us to

service our debt or to fund our other liquidity needs as they come due. If we are unable to repay our outstanding

indebtedness, or if we are unable to obtain additional financing on terms acceptable to us, our business, financial

condition and results of operations may be adversely affected.

29. We have in the past not been, and continue not to be, compliant with certain financial and other

covenants, in relation to our loan agreements, which have resulted and potentially could result in an

event of default under the respective loan agreements thereby accelerating our obligations under our

debt facilities.

We enter into loan agreements, with various lenders for undertaking our business, which require us to comply

with certain financial as well as non-financial covenants and to provide certain guarantees, during the currency

of the respective loans. Typically, in case of an event of default, the lenders have the right to, inter alia, declare

all amounts outstanding with respect to that loan immediately due and payable (subject to the expiry of any

applicable cure periods), exercise their rights pursuant to cross-default and cross-acceleration provisions under

such loan agreements, guarantees or instruments and enforce their security created in their favour.

Any acceleration, cross acceleration, enforcement of security and/or guarantee, trigger of a cross-default or

declaration of a cross-default under the financing agreements entered into by our Company or any of our

Subsidiaries may not only have a material adverse effect on our business, prospects and financial condition but

also lead to the cessation of our business as a going concern.

As of December 31, 2014 our long term borrowings were ` 8,421.22 million.

There is no assurance that we shall not be in breach of any covenants in the future under our current or future

financing agreements and that such breach will not cause a material adverse effect on our business, prospects and

financial condition or cause the cessation of our business as a going concern. While the lenders may not have

declared an event of default under any of our financing agreements where there have been defaults (irrespective

of their knowledge of such defaults) and though we continue to service our debts on their respective due dates,

we cannot assure you that the lenders will not seek to enforce their rights in respect of any past, present or future

breaches or that we will be able to obtain any waivers from any or all lenders. In the absence of waivers for any

non-compliance of the covenants, irrespective of payments of any penalties by us, we may continue to be in

default of the covenants and our lenders have the right to accelerate payment of all amounts outstanding under

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the relevant loan agreements and declare such amounts immediately due and payable together with accrued and

unpaid interest. Any such action by our lenders to declare us in default may trigger cross-default and cross-

acceleration clauses under other loan agreements, including loan agreements of our Company, and would have a

material adverse effect on our business, prospects, financial condition and results of operations.

30. We require certain approvals or licenses in the ordinary course of business, and the failure to obtain

them in a timely manner, or at all, could adversely affect our business, results of operations and

financial condition.

We require certain approvals, licenses, registrations and permissions for operating our business, some of which

may expire in the future for which we may be required to obtain renewals. These include the DAS licenses,

registrations with the postal department of the respective cities in which we operate as well as the ISP license

issued by the Department of Telecommunications, Government of India with respect to our broadband cable

internet business. For instance, all the DAS licenses obtained by us other the one for Kolkata region are

provisional licenses as the security clearance from the Ministry of Home Affairs is presently pending. There is

no assurance that these provisional licenses will be converted into final licenses failing which the operations of

our MSO shall be shut down immediately and there can be no claim against the Government pursuant to the

investments made on the basis of provisional license. Further, we may be required to comply with certain

conditions set out in the licenses and approvals granted to us. If we fail to obtain any of these approvals, licenses

or renewals in a timely manner, or at all, or fail to comply with the conditions set forth in such approvals, our

business, results of operations and financial condition could be adversely affected.

31. We are involved in certain legal proceedings that, if determined against us, may have an adverse

impact on our financial condition.

There are certain outstanding legal proceedings against our Company pending at various levels of adjudication

before various courts, tribunals, authorities and appellate bodies in India. Should any new development arise,

such as, change in applicable laws or rulings against us by the appellate courts or tribunals, we may need to

make additional provisions in our financial statements, which may increase our expenses and current liabilities.

In addition our Company in present and in the future may be subject to risks of litigation. We may in the future

be, implicated in lawsuits in the ordinary course of our business, including lawsuits and arbitrations involving

compensation for loss due to various reasons including tax matters, civil disputes, labour and service matters,

statutory notices, regulatory petitions, consumer cases and other matters. Litigation or arbitration could result in

substantial costs and a diversion of effort by, us and/or subject us to significant liabilities to third parties.

We cannot give you any assurance that these legal proceedings will be decided in our favour. Any adverse

decision may have a significant effect on our business including the financial condition of our Company and

results of operations. There can be no assurance that the results of such legal proceedings will not materially

harm our business, reputation or standing in the marketplace or that we will be able to recover any losses

incurred from third parties, regardless of whether we are at fault. There can be no assurance that losses relating

to litigation or arbitration will be covered by insurance, that any such losses would not have a material adverse

effect on the results of our operations or financial condition, or that provisions made for litigation and arbitration

related losses will be sufficient to cover our ultimate loss or expenditure. For further details refer to “Legal

Proceedings” beginning on page 186.

32. We import a significant portion of the equipment used in our business and as a result we are subject to

foreign currency fluctuations in respect of purchases made in various foreign currencies.

We import a significant portion of the equipment, such as digital STBs and digital head-ends used in our

business, and as a result, we are subject to foreign currency fluctuations in respect of such purchases made in

various foreign currencies. Further, any political or economic disturbances in the countries from where we

import could interrupt the timely supply of these equipment. The exchange rate between the Rupee and other

currencies, including the US Dollar, the British Pound Sterling, the Euro, the Chinese Yuan and the Japanese

Yen, has changed substantially in recent years and may fluctuate substantially in the future. We also do not have

any outstanding forward contracts to hedge the risk of fluctuations in foreign exchange rates. Therefore, such

fluctuations may have an adverse effect on our results of operations.

33. We may be unsuccessful in implementing new value-added services for our digital cable service

subscribers.

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We believe that ability to provide unique and compelling value-added services will be an important differentiator

among television operators. We have limited prior experience in delivering such services and we may not be able

to successfully provide these services due to unpredictable technical, operational or regulatory challenges.

Further, there can be no assurance that these services will generate significant revenue.

We may rely on third-party service providers, including technology platform and content providers, to offer

value-added services. We may not have control over such third parties and we will continue to be exposed to the

risk that they do not perform their obligations in accordance with the agreed service standards in a timely manner

or at all, in which event our revenues from value added services may be adversely affected. We may be

unsuccessful in implementing new value-added services for our digital cable service subscribers, which may

have an adverse effect on business and results of operations.

34. We may not be able to successfully maintain the brand image of our existing offerings or effectively

build the brand image of our new offerings, bundled offerings and brand extensions, which may affect

our performance.

Our success, especially in relation to our proposed expansion of broadband internet services as well as digital

cable services, depends significantly on our ability to maintain the “SitiCable” brand and effectively build the

brand image of our new offerings, bundled offerings and brand extensions. To increase our brand recognition,

we believe we must continue to devote significant time and resources to advertising and promotions. These

expenses may not result in an increase in favourable recognition of our brands or a sufficient increase in

revenues to cover such advertising and promotional expenses.

35. Broadcasters may prohibit or curtail us in certain respects from offering their channels as part of

packages we market to attract and retain cable television subscribers, which may adversely affect our

results of operations.

Our marketing strategy to attract subscribers includes channel bouquets, which is the aggregation of certain

channels into packages at a price less than the sum of the prices of such channels on an a la carte basis. Such

packages may include channels of different genres and do not take into account the preferences of broadcasters.

If broadcasters prohibit or restrict such packages by insisting that their channels are included only in packages of

their choice or with channels of certain other broadcasters, we may not be able to offer attractive packages to our

subscribers, which may reduce our ability to attract and retain subscribers, which may in turn affect our results of

operations.

36. Programming signals may be stolen, which could result in lost revenues and cause us to incur

operating costs that do not result in increase in number of subscribers.

Theft of cable content is widespread in India. Specifically, delivery of analog subscription content is more

susceptible to theft than digital subscription content because signals transmitted via an analog platform are not

protected by encryption technology. A significant proportion of our subscribers still use our analog platform and

will continue to do so till DAS is fully implemented in their respective areas. Till such time, our ability to protect

analog signals from theft or monitor possible theft may be very limited.

We have undertaken various initiatives with respect to our DAS implementation in compliance with the

requirements of the MIB to further enhance the security of our signals. To help combat signal theft, we provide

our customers with advanced encryption technology that we believe significantly enhance the security of our

signal. However, we cannot guarantee that our encryption technology is or will be effective enough to prevent

the theft of our programming signals. Further, there can be no assurance that we will succeed in developing or

implementing the technology we need to effectively restrict or eliminate signal theft. If we cannot promptly

correct a compromise of programming signals, our revenue and our ability to contract for video and audio

services provided by programmers could be adversely affected. Where subscription content is stolen, we would

not receive revenues from those stealing our signals and this would adversely affect our total income. Further,

we may also face additional liabilities under our content sourcing agreement where we typically indemnify the

content providers for any losses caused by unauthorized access. Certain of our content sourcing agreements have

expired in the ordinary course of our business and we are in the process of renewing these agreements. In

addition, our operating costs could increase if we attempt to implement additional measures to combat signal

theft, which could adversely affect our business and results of operations.

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37. We may be unable to keep pace with changes in technology and existing and future technological

developments may allow new competitors to emerge.

The entertainment, media industry and ISP industry are characterised by rapid changes in technology and the

introduction of new products and services. Technological developments within the cable distribution services

include changes that may result in improved utilization of capacity, more robust content recording features and

new interactive content. Consumers may also choose to consume digital media through other platforms, such as

computers, mobile phones, tablet computers and other devices capable of being used to view media content.

Such changes could adversely affect our ability to maintain, expand or upgrade our systems and respond to

competitive pressures. We cannot assure you that we will be able to fund the capital expenditures necessary to

keep pace with future technological developments. We also cannot assure you that we will successfully

anticipate the demand for products and services requiring new technology. If we are unable to keep pace with

changes in technology and provide advanced services in a timely manner, or to anticipate the demands of the

market place, our business and results of operations could be adversely affected.

While we are aware of the existing and still evolving types of technology that we are competing against, such as

DTH satellite services and IPTV services in the entertainment and media industry, we may not be able to foresee

how these technologies will evolve. In addition, we may not be able to foresee the emergence of new

technologies that would also compete with our cable television distribution services or broadband services in the

future.

Future technological advances may require us to expend financial resources in the development or

implementation of new competitive technologies. We may not have sufficient financial resources to fund new

technology or access new resources. Our failure to introduce new technology and services as rapidly as those of

our competitors could adversely affect our business and results of operations.

38. We depend on computer technologies and network infrastructure, and disruptions in such systems

could harm our reputation and results of operations.

Our success depends, in part, on the continued and uninterrupted performance of our information technology and

network systems. Our systems are vulnerable to damage from a variety of sources, including telecommunications

failures, power loss, malicious human acts and natural disasters. Moreover, despite security measures, our

servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive

problems. Despite the precautions we have taken, unanticipated problems affecting our systems could cause

failures in our information technology systems or disruption in the transmission of signals. Sustained or repeated

system failures that interrupt our ability to provide service to our customers or otherwise meet our business

obligations in a timely manner would adversely affect subscriber satisfaction.

If our information technology systems are subject to a natural disaster, terrorism, a computer virus, a power loss,

other catastrophe or unauthorized access, our operations and customer relations could be adversely affected. Any

failure in the operation of our information technology systems could result in business interruption, which may

adversely affect our reputation, weaken our competitive position and have an adverse effect on our business and


39. Our business relies on intellectual property, some of which is owned by third parties, and we may

inadvertently infringe patents and proprietary rights of others.

Many entities, including some of our competitors, have or may in the future obtain patents and other intellectual

property rights that cover or affect products or services related that we currently offer or may offer in the future

or equipments or technologies that we use in our operations. In general, if it is determined that one or more of

our services, products, technologies or equipment used to transmit or receive our services infringes intellectual

property owned by others, we and the relevant manufacturers or vendors may be required to cease developing or

marketing those services and products, to obtain licenses from the owners of the intellectual property or to

redesign those services and products in such a way as to avoid infringing the intellectual property rights. If a

third party holds an intellectual property right, it may charge us or the relevant manufacturers to use its

intellectual property at an increased cost, which could adversely affect our competitive position.

We cannot estimate the extent to which we may be required in the future to obtain intellectual property licenses

or the availability and cost of any such licenses. We may also be held liable to pay damages in patent

infringement cases. There can be no assurance that the courts will conclude that our services or the products used

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to transmit or receive our services do not infringe on the rights of third parties, that we or the manufacturers

would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to

obtain such licenses, that we or the manufacturers would be able to redesign our services or the products used to

transmit or receive our services to avoid infringement.

40. We are dependent on a number of key personnel and the loss of such persons, or our inability to attract

and retain key personnel in the future, could adversely affect us.

Our success depends on the continued services and performance of the members of our management team and

our other key employees. Competition for senior management personnel in the cable industry is intense, and we

may not be able to retain our existing senior management personnel, attract senior management personnel of

similar capabilities or employ new senior management personnel in the future.

The success of our business will depend on our ability to identify, attract, hire, train, retain and motivate skilled

professionals to build and maintain our network. Demand for qualified professional personnel is high and such

personnel are in limited supply. Our professionals are sought after by our competitors as well as other Indian

companies, particularly as India’s economy continues to grow and mature. We cannot assure you that we will be

successful in recruiting and retaining a sufficient number or personnel with the requisite skills to replace those

personnel who leave. Further, we cannot assure you that we will be able to re-deploy and re-train our personnel

to keep pace with continuing changes in our business.

The loss of the services of our senior management team or other key personnel could adversely affect our

business and our results of operations.

41. Wage increases in India may reduce our profit margins.

One of our significant costs is payment of salaries and related benefits to our operations staff and other

employees. Because of rapid economic growth, increased demand for services and increased competition for

skilled employees in India, wages for skilled employees are increasing at a faster rate in India than in the United

States and Europe. We may need to increase the levels of employee compensation more rapidly than in the past

to remain competitive in attracting and retaining the quality and number of skilled employees that our businesses

require. Wage increases in the long-term may reduce our competitiveness and our profitability.

42. We have entered into, and will continue to enter into, related party transactions.

We have in the course of our business entered into transactions with related parties such as the Subsidiaries and

entities owned or significantly controlled by our key managerial personnel and their relatives. While we believe

that all such transactions have been conducted on an arm’s length basis, there can be no assurance that we could

not have achieved more favourable terms had such transactions not been entered into with related parties.

Furthermore, it is likely that we may enter into related party transactions in the future. There can be no assurance

that such transactions, individually or in the aggregate, will not have an adverse effect on our business and

results of operations. For further details, refer to “Financial Statements- Related Party Transactions” on page F-

16.

43. We have a number of contingent liabilities and our profitability could be adversely affected if any of

these contingent liabilities materialise.

The contingent liabilities (as per ‘Accounting Standards 29 – Provisions, Contingent Liabilities and Contingent

Assets’) disclosed in the Reformatted Financial Statements for the Financial Year ended March 31, 2014 was ₹

52.00 million. If any of these contingent liabilities (as per ‘Accounting Standards 29 – Provisions, Contingent

Liabilities and Contingent Assets’) materialise, our profitability may be adversely affected. For a more detailed

description of our contingent liabilities (as per ‘Accounting Standards 29 – Provisions, Contingent Liabilities and

Contingent Assets’), see the section “Financial Information- Contingent Liabilities”on page F-18.

44. Our Promoters and Promoter Group will continue to hold a significant portion of our equity share

capital after this Placement and can therefore influence the outcome of any shareholder vote.

Presently, the Promoters and Promoter Group own 72.82% of the Company’s outstanding Equity Shares and

even after the completion of the Issue our Promoter and Promoter Group will continue to hold majority stake in

our Company. So long as the Promoters and Promoter Group own a significant portion of the Company’s Equity

65

Shares, they will be able to significantly influence the election of members in the Board of Directors and control

most matters affecting the Company, including the appointment and removal of the Company’s officers, the

Company’s business strategies and policies, any decisions with respect to mergers, business combinations and

acquisitions or dispositions of assets, the Company’s dividend policies and the Company’s capital structure and

financings. Further, to the extent that they hold a significant portion of the Company’s Equity Shares, they could

delay or prevent a change of management or control of the Company, even if such a transaction may be

beneficial to the other shareholders of the Company. The interests of the Promoters and Promoter Group, as the

controlling shareholders of the Company, could also conflict with the Company’s interests or the interests of the

Company’s other shareholders. As a result, the Promoters may take actions with respect to the Company’s

business that may conflict with the Company’s interests or the interests of the other shareholders of the

Company.

45. Grant of stock options under our ESOP Scheme will result in a charge to our profit and loss account

and will to that extent reduce our profits.

We have adopted the ESOP 2007, under which eligible employees of our Company and our Subsidiaries are able

to participate, subject to such approvals as may be necessary. The total number of Equity Shares arising as a

result of full exercise of options already granted and vested, as on date, would amount to 216,320 Equity Shares.

For further details on the exercise price of the option see “Capital Structure-Our stock option plan” on page 78.

The grant of these stock options may result in a charge to our profit and loss account based on the difference

between the fair market value determined on the date of the grant of the stock options and the exercise price.

This expense will be amortised over the vesting period of the stock options. As per applicable laws, stock

options are subject to fringe benefit tax. The fringe benefit tax is payable on the fair market value of the specified

security on the date which the option vests with the employees as reduced by the amount actually paid by, or

recovered from, the employee in respect of such securities. The implementation of fringe benefit tax may

increase our tax costs.

46. Our Corporate Office is not owned by us.

We do not own the premises on which our Corporate Office is located. We operate from rented and leased

premises. The Corporate Office is leased for an initial period of 3 years pursuant to a lease agreement entered

into with ZEEL. If ZEEL does not renew the agreement/arrangement under which we occupy the premises or

renew such agreements on terms and conditions that are unfavorable to us, we may suffer a disruption in our

operations which could have a material adverse effect on our business, financial condition and results of

operations.

47. We do not have any definitive arrangement for occupancy of our Registered Office.

We currently do not have any arrangement for the occupancy of our Registered Office. Pursuant to the Scheme

of Arrangement, whereby the entire cable business undertaking of ZEEL and Siti Cable Network Limited,

including assets, liabilities, staff, employees, legal proceedings etc., were transferred to our Company, we have

continued to occupy and operate out of the same premises in the interest of continuity and convenience. While

we do not have any contractual arrangement with ZEEL or the actual owners of the property, we continue to use

the premises as our Registered Office. In the event we do not enter into any definitive arrangement with either

ZEEL or the owners of the property, we may not be able to continue to use the premises as our Registered

Office, as a result of which we may suffer a disruption in our operations which could have a material adverse

effect on our business, financial condition and results of operations.

48. Our corporate logo has not been registered.

We have made an applications to the Registrar of Trademark, New Delhi dated September 29, 2011 for

registration of our corporate logo under classes 9, 16, 35, 38, 41 and 42, which are currently pending approval of

the necessary authorities. Not being the license holder for such logo, we do not enjoy the statutory protection

accorded to registered logos and trademarks and may be subject to infringement of our intellectual property by

third parties.

49. We face various risks related to the outsourcing of certain of our business operations.

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Our call centers are located at Noida and Kolkata and are managed by us. We may be unable to exercise the

sufficient level of control over the call center operator. The call center operator may fail to meet its obligations

or perform its services in a way that we determine to be satisfactory, which may adversely affect our reputation

and ability to serve our customers effectively. Any failure by call center operator to adequately conduct its

customer support functions may adversely affect our reputation, business, financial condition and results of

operations

Risks related to investment in Indian companies

50. Financial instability in other countries may cause increased volatility in Indian financial markets.

The Indian market and the Indian economy are influenced by economic and market conditions in other countries,

particularly emerging market countries in Asia. Financial turmoil in Asia, Russia and elsewhere in the world in

recent years has affected the Indian economy. Although economic conditions are different in each country,

investors’ reactions to developments in one country can have adverse effects on the securities of companies in

other countries, including India. A loss of investor confidence in the financial systems of other emerging markets

may cause increased volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any

worldwide financial instability could also have a negative impact on the Indian economy. Financial disruptions

may occur again and could harm the Bank’s business, its future financial performance and the prices of the

equity shares.

The global credit and equity markets have experienced substantial dislocations, liquidity disruptions and market

corrections in recent years. In particular, sub-prime mortgage loans in the United States have experienced

increased rates of delinquency, foreclosure and loss. Since September 2008, liquidity and credit concerns and

volatility in the global credit and financial markets increased significantly with the bankruptcy or acquisition of,

and government assistance extended to, several major U.S. financial institutions. The United States continues to

face adverse economic conditions and should a further downgrade of the sovereign credit ratings of the U.S.

government occur, it is foreseeable that the ratings and perceived creditworthiness of instruments issued, insured

or guaranteed by institutions, agencies or instrumentalities directly linked to the U.S. government could also be

correspondingly affected by any such downgrade, which may have an adverse effect on the economic outlook

across the world.

Recent developments in the Eurozone have exacerbated the ongoing global economic crisis. Large budget

deficits and rising public debts in Europe have triggered sovereign debt finance crises that resulted in the bailouts

of European economies and elevated the risk of government debt defaults, forcing governments to undertake

aggressive budget cuts and austerity measures, in turn underscoring the risk of global economic and financial

market volatility. Moreover, in 2012, the sovereign rating of various European Union countries was downgraded.

Financial markets and the supply of credit could continue to be negatively impacted by ongoing concerns

surrounding the sovereign debts and/or fiscal deficits of several countries in Europe, the possibility of further

downgrades of, or defaults on, sovereign debt, concerns about a slowdown in growth in certain economies and

uncertainties regarding the stability and overall standing of the European Monetary Union. These and other

related events have had a significant impact on the global credit and financial markets as a whole, including

reduced liquidity, greater volatility, widening of credit spreads and a lack of price transparency in the United

States, Europe and global credit and financial markets.

In response to such developments, legislators and financial regulators in the United States, Europe and other

jurisdictions, including India, have implemented several policy measures designed to add stability to the

financial markets. However, the overall impact of these and other legislative and regulatory efforts on the global

financial markets is uncertain, and they may not have the intended stabilizing effects. In the event that the

current adverse conditions in the global credit markets continue or if there are any significant financial

disruption, this could have an adverse effect on the Bank’s business, future financial performance and the trading

price of the equity shares.

51. The Companies Act, 2013 has effected significant changes to the existing Indian company law

framework, which may subject us to higher compliance requirements and increase our compliance

costs.

A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and have

come into effect from the date of their respective notification, resulting in the corresponding provisions of the

Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect significant

67

changes to the Indian company law framework, such as in the provisions related to issue of capital (including

provisions in relation to issue of securities on a private placement basis), disclosures in offer document,

corporate governance norms, accounting policies and audit matters, related party transactions, introduction of a

provision allowing the initiation of class action suits in India against companies by shareholders or depositors, a

restriction on investment by an Indian company through more than two layers of subsidiary investment

companies (subject to certain permitted exceptions), prohibitions on loans to directors and insider trading and

restrictions on directors and key managerial personnel from engaging in forward dealing. We are also required to

spend, in each Financial Year, at least 2% of our average net profits during three immediately preceding

Financial Years towards corporate social responsibility activities. Further, the Companies Act, 2013 imposes

greater monetary and other liability on our Company and Directors for any non-compliance. To ensure

compliance with the requirements of the Companies Act, 2013, we may need to allocate additional resources,

which may increase our regulatory compliance costs and divert management attention.

The Companies Act, 2013 introduced certain additional requirements that do not have corresponding equivalents

under the Companies Act, 1956. Accordingly, we may face challenges in interpreting and complying with such

provisions due to limited jurisprudence on them. In the event, our interpretation of such provisions of the

Companies Act, 2013 differs from, or contradicts with, any judicial pronouncements or clarifications issued by

the Government in the future, we may face regulatory actions or we may be required to undertake remedial steps.

Additionally, some of the provisions of the Companies Act, 2013 overlap with other existing laws and

regulations (such as the corporate governance norms and insider trading regulations issued by SEBI). Recently,

SEBI issued revised corporate governance guidelines. Pursuant to the revised guidelines, we will be required to,

amongst other things ensure that there is at least one woman director on our Board at all times, establish a

vigilance mechanism for directors and employees and reconstitute certain committees in accordance with the

revised guidelines. We may face difficulties in complying with any such overlapping requirements. Further, we

cannot currently determine the impact of provisions of the Companies Act, 2013 and the revised SEBI corporate

governance guidelines, which are yet to come in force. Any increase in our compliance requirements or in our

compliance costs may have an adverse effect on our business and results of operations.

52. Political instability or changes in the government in India could delay the liberalization of the Indian

economy and adversely affect economic conditions in India generally, which would impact our

financial results and prospects.

Since 1991, successive Indian governments have pursued policies of economic liberalization, including

significantly relaxing restrictions on the private sector. Nevertheless, the roles of the Indian central and state

governments in the Indian economy as producers, consumers and regulators remain significant as independent

factors in the Indian economy. Most recently, the election of Prime Minister Narendra Modi and a pro-business

majority in May 2014 has marked a distinct increase in expectations for policy and economic reforms among

certain aspects of the Indian economy. There is no guarantee Prime Minister Modi and the new government will

be able to enact an optimal set of reforms or that any such reforms would continue or succeed if there were a

change in the current majority leadership in the government in the future or if Prime Minister Modi ceases to act

as Prime Minister. There is also no guarantee that the government will announce an optimal set of reforms or

policies in the future. The rate of economic liberalization is subject to change and specific laws and policies

affecting banking and finance companies, foreign investment, currency exchange and other matters affecting

investment in our securities are continuously evolving as well. Other major reforms that have been proposed are

the goods and services tax, the direct tax code and the general anti-avoidance rules (GAAR). Any significant

change in India’s economic liberalization, deregulation policies or other major economic reforms could

adversely affect business and economic conditions in India generally and our business in particular.

53. Significant differences exist between the requirements of Indian GAAP and other accounting

principles, such as U.S. GAAP and IFRS, which may be material to investors’ assessments of our

financial condition. The effects of the planned adoption of “Indian Accounting standards converged

with IFRS” (“IND-AS”) are uncertain.

We have not attempted to quantify the impact of U.S. GAAS or International Financial Reporting Standards

(“IFRS”) on the financial data included in this Preliminary Placement Document, nor do we provide a

reconciliation of our financial statements to those of U.S. GAAS or IFRS. Each of U.S. GAAS and IFRS differs

in significant respects from the requirements of Indian GAAS. Accordingly, the degree to which the financial

statements included in this Preliminary Placement Document will provide meaningful information is entirely

dependent on the reader’s level of familiarity with Indian accounting practices. Any reliance by persons not

familiar with Indian accounting practices on the financial disclosures presented in this Preliminary Placement

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Document should accordingly be limited. On January 2, 2015, the MCA released the revised road map for

companies other than banking companies, insurance companies and non- banking finance companies for

implementation IND-AS converged with the IFRS.

IND-AS shall be applicable on a voluntary basis for financial statements for accounting periods beginning on or

after April 1, 2015, with the comparatives for the periods ending 31st March, 2015 or thereafter. The IND-AS

shall be applicable on a mandatory basis for the accounting periods beginning on or after April 1, 2016, with

comparatives for the periods ending 31st March, 2016, or thereafter, for the companies (a) whose equity and/or

debt securities are listed or are in the process of listing on any stock exchange in India or outside India and

having net worth of ` 5,000 million or more; (b) Companies other than those covered in (a) above, having net

worth of ` 5,000 million or more; and (c) holding, subsidiary, joint venture or associate companies of companies

covered under (a) and (b). The IND-AS shall be applicable on a mandatory basis for the accounting periods

beginning on or after April 1, 2017, with comparatives for the periods ending 31st March, 2017, or thereafter, for

the companies (x) Companies whose equity and/or debt securities are listed or are in the process of being listed

on any stock exchange in India or outside India and having net worth of less than rupees 500 Crore; (y)

Companies other than those covered in (a), (b) and (c) and (x) above that is unlisted companies having net worth

of ` 2,500 million or more but less than ` 5,000 million; and (z) holding, subsidiary, joint venture or associate

companies of companies covered under paragraph (x) and (y) above.

Recently, MCA vide its notification dated February 16, 2015, has issued Companies (Indian Accounting

Standards) Rules, 2015, notifying the above roadmap and the accounting standards applicable. Additionally,

IND AS has fundamental differences compared with IFRS and therefore financial statements prepared under

IND AS may be substantially different from financial statements prepared under IFRS.

There can be no assurance that our financial condition, results of operations, cash flows or changes in

shareholders’ equity will not appear materially worse under IND - AS than under current Indian GAAS. In our

transition to IND - AS reporting, we may encounter difficulties in the on-going process of implementing and

enhancing its management information systems. Moreover, our transition may be hampered by increasing

competition and increased costs for the relatively small number of IND - AS experienced accounting personnel

available as more Indian Companies begin to prepare financial statements.

54. A downgrade of our Company or of our Subsidiaries’ or India’s sovereign debt rating may adversely

affect our ability to raise additional debt financing.

Any adverse revisions to our or our Subsidiaries’ or India’s sovereign credit ratings for domestic and

international debt by rating agencies may adversely affect our ability to raise additional financing and the interest

rates and other commercial terms at which such additional financing is available. This could have an adverse

effect on our business and future financial performance and our ability to obtain financing to fund our growth, as

well as on the trading price of the Equity Shares.

55. Our ability to raise foreign capital may be constrained by Indian law.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such

regulatory restrictions limit our financing sources for our operations and could constrain our ability to obtain

financing on favourable terms and refinance existing indebtedness. In addition, we cannot assure you that

required approvals will be granted to us without onerous conditions, or at all. Limitations on foreign debt may

have an adverse effect on our business, financial condition and results of operations.

56. The Competition Act, 2002, regulates our business and activities and any adverse application or

interpretation of the Competition Act could materially and adversely affect our business, financial

condition and results of operations.

The Competition Act, 2002, of India, as amended (“Competition Act”) regulates practices having an

appreciable adverse effect on competition (“AAEC”) in the relevant market in India. Under the Competition Act,

any formal or informal arrangement, understanding or action in concert, which causes or is likely to cause an

AAEC is considered void and results in the imposition of substantial penalties. Further, any agreement among

competitors which directly or indirectly involves the determination of purchase or sale prices, limits or controls

production, shares the market by way of geographical area or number of guests in the relevant market or directly

or indirectly results in bid- rigging or collusive bidding is presumed to have an AAEC in the relevant market in

69

India and is considered void. The Competition Act also prohibits abuse of a dominant position by any enterprise.

On March 4, 2011, the Government issued and brought into force the combination regulation (merger control)

provisions under the Competition Act with effect from June 1, 2011. These provisions require acquisitions of

shares, voting rights, assets or control or mergers or amalgamations that cross the prescribed asset and turnover

based thresholds to be mandatorily notified to and pre-approved by the Competition Commission of India (the

“CCI”). Additionally, on May 11, 2011, the CCI issued Competition Commission of India (Procedure for

Transaction of Business Relating to Combinations) Regulations, 2011, as amended, which sets out the

mechanism for implementation of the merger control regime in India.

The Competition Act aims to, among others, prohibit all agreements and transactions that may have an AAEC in

India. Consequently, all agreements entered into by us could be within the purview of the Competition Act.

Further, the CCI has extra-territorial powers and can investigate any agreements, abusive conduct or

combination occurring outside India if such agreement, conduct or combination has an AAEC in India.

However, the impact of the provisions of the Competition Act on the agreements entered into by us cannot be

predicted with certainty at this stage. We are not currently party to any outstanding proceedings, nor have we

received notice in relation to non-compliance with the Competition Act or the agreements entered into by us.

However, if we are affected, directly or indirectly, by the application or interpretation of any provision of the

Competition Act, or any enforcement proceedings initiated by the CCI, or any adverse publicity that may be

generated due to scrutiny or prosecution by the CCI or if any prohibition or substantial penalties are levied under

the Competition Act, it would adversely affect our business, results of operations and prospects.

57. Natural disasters, terrorist attacks, civil unrest, war or conflicts, especially those involving India, could

adversely affect the financial markets and adversely affect our business.

India has in the past experienced natural disasters, such as tsunamis, floods, cyclones and earthquakes. If any of

our offices or work sites were to be damaged by a natural disaster, our business operations could be interrupted

or delayed, which could adversely affect our business, financial condition and results of operations.

India has also from time to time experienced instances of social, religious and civil unrest and terrorist attacks.

Military activity or terrorist attacks in the future could influence the Indian economy by disrupting

communications and making travel more difficult and such political tensions could create a greater perception

that investments in Indian companies involve higher degrees of risk. Events of this nature in the future, as well as

social and civil unrest within other countries in Asia, could influence the Indian economy and our business,

future financial performance, cash flows and market price of the Equity Shares.

58. Investors may not be able to enforce a judgment of a foreign court against our Company.

Our Company is a limited liability company incorporated under the laws of India. All of our Company’s

Directors are residents of India and the assets of our Company are located in India. The senior management

employed by our Subsidiaries are residents of India. As a result, it may not be possible for investors to effect

service of process upon our Company or such persons in jurisdictions outside India, or to enforce against them

judgments obtained in courts outside India.

In addition, India is not a party to any international treaty in relation to the recognition or enforcement of foreign

judgments. Recognition and enforcement of foreign judgments is provided for under section 13 and section 44A

of the Indian Civil Procedure Code (Code). Section 44A of the Code provides that where a foreign judgment has

been rendered by a superior court in any country or territory outside India which the Government has by

notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if

the judgment had been rendered by the relevant court in India. However, section 44A of the Code is applicable

only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a

like nature or in respect of a fine or other penalty and is not applicable to arbitration awards.

The United States has not been declared by the Government to be a reciprocating territory for the purposes of

section 44A of the Code. However, the United Kingdom has been declared by the Government to be a

reciprocating territory and the High Courts in England as the relevant superior courts. Accordingly, a judgment

of a court in the United States may be enforced only by a fresh suit upon the judgment and not by proceedings in

execution. A judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced only by

a new suit upon the judgment and not by proceedings in execution. Section 13 of the Code provides that a

foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon except: (i) where it has

70

not been pronounced by a court of competent jurisdiction; (ii) where it has not been given on the merits of the

case; (iii) where it appears on the face of the proceedings to be founded on an incorrect view of international law

or a refusal to recognize the law of India in cases where such law is applicable; (iv) where the proceedings in

which the judgment was obtained were opposed to natural justice; (v) where it has been obtained by fraud; or

(vi) where it sustains a claim founded on a breach of any law in force in India. The suit must be brought in India

within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil

liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if

an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if

it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to

enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any

amount recovered pursuant to execution. Any judgment in a foreign currency would be converted into Indian

rupees on the date of the judgment and not on the date of the payment. The Company cannot predict whether a

suit brought in an Indian court will be disposed of in a timely manner or be subject to considerable delays.

59. Your ability to acquire and sell Equity Shares is restricted by the distribution and transfer restrictions

set forth in this Preliminary Placement Document and may be subject to delays if any other

Government agency’s approval is required.

No actions have been taken to permit a public offering of the Equity Shares in any jurisdiction including India.

The Equity Shares are subject to restrictions on transferability and resale. You are required to inform yourself

about and observe these restrictions, which are set forth in this Preliminary Placement Document under the

section “Transfer Restrictions” beginning on page 158. The information contained in this Preliminary Placement

Document has been provided for the benefit of investors. However, the information below does not purport to

be a complete analysis of the restrictions under Indian laws for the acquisition and/or transfer of securities in an

Indian company by a person resident outside India. The Company, the Book Running Lead Manager and its

respective officers, directors, representatives, agents, affiliates and associates accept no responsibility or liability

for advising any investor on whether such investor is eligible to acquire Equity Shares of the Company. We, our

representatives and our agents will not be obligated to recognise any acquisition, transfer or resale of the Equity

Shares made other than in compliance with the restrictions set forth herein.

60. You may be restricted in your ability to exercise pre-emptive rights under Indian law and thereby may

suffer future dilution of your ownership position.

Under the Companies Act, and the Listing Agreements, a public limited company incorporated in India must

offer its holders of equity shares pre-emptive rights to subscribe and pay for a proportionate number of shares to

maintain their existing ownership percentages before the issuance of any new equity shares, unless the pre-

emptive rights have been waived by adoption of a special resolution by the holders of three-fourths of the shares

that are voted on the resolution, or if no such resolution is adopted, the resolution is adopted by a simple majority

of the shareholders that voted on the resolution and the Central Government is satisfied on an application made

by the board of directors that such approval is beneficial to the company. However, if the law of the jurisdiction

you are in does not permit you to exercise your pre-emptive rights without us filing an offering document or

registration statement with the applicable authority in the jurisdiction that you are in or otherwise taking steps to

comply with local securities or other laws, you will be unable to exercise your pre-emptive rights unless we

make such a filing or take such other steps. If we elect not to make such a filing, the new securities may be

issued to a custodian, who may sell the securities for your benefit. The value, if any, such custodian would

receive upon the sale of such securities and the related transaction costs cannot be predicted. In addition, to the

extent that you do not or are unable to exercise pre-emptive rights granted in respect of the Equity Shares held by

you, your proportional interest in the Company would be reduced.

Risks related to the Equity Shares and the trading market

61. The trading price of the Equity Shares may be subject to volatility and you may not be able to sell the

Equity Shares at or above the Issue Price.

The trading price of the Equity Shares may fluctuate after this Issue due to a variety of factors, including our

results of operations and the performance of our business, competitive conditions, general economic, political

and social factors, the performance of the Indian and global economy and significant developments in India’s

fiscal regime, volatility in the Indian and global securities market, performance of our competitors and the

perception in the market about investments in the infrastructure sector, changes in the estimates of our

performance or recommendations by financial analysts and announcements by us or others regarding contracts,

71

acquisitions, strategic partnerships, joint ventures, or capital commitments. In addition, if the stock markets in

general experience a loss of investor confidence, the trading price of the Equity Shares could decline for reasons

unrelated to our business, financial condition or operating results. The trading price of the Equity Shares might

also decline in reaction to events that affect other companies in our industry even if these events do not directly

affect us. Each of these factors, among others, could adversely affect the price of the Equity Shares.

62. After this Issue, the price of the equity shares may be volatile.

The Issue Price will be determined by us in consultation with the Lead Manager, based on the Bids received in

compliance with Chapter VIII of the SEBI Regulations, and it may not necessarily be indicative of the market

price of the equity shares after this Issue is complete. The price of the equity shares on the NSE and the BSE

may fluctuate after this Issue as a result of several factors, including:

volatility in the Indian and the global securities market or in the rupee’s value relative to the U.S. dollar, the

Euro and other foreign currencies;

our profitability and performance;

perceptions about our future performance or the performance of Indian companies in general;

performance of our competitors and the perception in the market about investments in the banking and

finance sector; adverse media reports about us or the Indian banking and finance sector;

a comparatively less active or illiquid market for equity shares;

changes in the estimates of our performance or recommendations by financial analysts;

significant developments in India’s economic liberalisation and deregulation policies;

significant developments in India’s fiscal and environmental regulations; and

any other political or economic factors.

There can be no assurance that an active trading market for the equity shares will be sustained after this Issue, or

that the price at which the equity shares have historically traded will correspond to the price at which the equity

shares are offered in this Issue or the price at which the equity shares will trade in the market subsequent to this

Issue.

63. There is no guarantee that the Equity Shares will be listed on the Stock Exchanges in a timely manner

or at all, and any trading closures at the Stock Exchanges may adversely affect the trading price of our

Equity Shares.

In accordance with Indian law and practice, permission for listing and trading of the Equity Shares issued

pursuant to the Issue will not be granted until after the Equity Shares have been issued and allotted. Approval for

listing and trading will require all relevant documents authorising the issuing of Equity Shares to be submitted.

There could be a failure or delay in listing the Equity Shares on the Stock Exchanges. Any failure or delay in

obtaining the approval would restrict your ability to dispose of your Equity Shares.

64. Our ability to pay dividends in the future will depend upon our future earnings, financial condition,

cash flows, working capital requirements, capital expenditures and other factors.

The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition,

cash flows, working capital requirements, capital expenditures and other factors. There can be no assurance that

we will have distributable funds in future periods.

65. There are restrictions on daily movements in the trading price of the Equity Shares, which may

adversely affect a shareholder’s ability to sell the Equity Shares or the price at which Equity Shares

can be sold at a particular point in time.

The Equity Shares are subject to a daily circuit breaker imposed on listed companies by all stock exchanges in

India, which does not allow transactions beyond certain volatility in the trading price of the Equity Shares. This

circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by

SEBI on the Stock Exchanges. The percentage limit on the Equity Shares’ circuit breaker will be set by the stock

exchanges based on historical volatility in the price and trading volume of the Equity Shares. The stock

exchanges are not required to inform us of the percentage limit of the circuit breaker, and they may change the

limit without our knowledge. This circuit breaker would effectively limit the upward and downward movements

in the trading price of the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding

the ability of shareholders to sell the Equity Shares or the price at which shareholders may be able to sell their

Equity Shares.

72

66. Foreign investors are subject to foreign investment restrictions under Indian law that limit our ability

to attract foreign investors, which may adversely affect the trading price of the Equity Shares.

Under the foreign exchange regulations currently in force in India, transfers of shares between non-residents and

residents are freely permitted (subject to certain exceptions) if they comply with the requirements specified by

the RBI. If the transfer of shares is not in compliance with such requirements or falls under any of the specified

exceptions, then prior approval of the RBI or the FIPB will be required. In addition, shareholders who seek to

convert the Rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign

currency from India will require a no-objection or tax clearance certificate from the income tax authority.

Additionally, the Indian government may impose foreign exchange restrictions in certain emergency situations,

including situations where there are sudden fluctuations in interest rates or exchange rates, where the Indian

government experiences extreme difficulty in stabilizing the balance of payments or where there are substantial

disturbances in the financial and capital markets in India. These restrictions may require foreign investors to

obtain the Indian government’s approval before acquiring Indian securities or repatriating the interest or

dividends from those securities or the proceeds from the sale of those securities. There can be no assurance that

any approval required from the RBI or any other government agency can be obtained on any particular terms or

at all.

67. An investor will not be able to sell any of the Equity Shares purchased in the Issue other than on a

recognized Indian stock exchange for a period of 12 months from the date of issue of such Equity

Shares.

Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of the Equity Shares in

the Issue, investors purchasing the Equity Shares in the Issue may only sell their Equity Shares on the NSE or the

BSE and may not enter into any off-market trading in respect of their Equity Shares. We cannot be certain that

these restrictions will not have an impact on the price of the Equity Shares.

68. You may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Under current Indian tax laws and regulations, capital gains arising from the sale of equity shares in an Indian

company are generally taxable in India. Any gain realized on the sale of shares on a stock exchange held for

more than 12 months will not be subject to capital gains tax in India if the securities transaction tax (“STT”) has

been paid on the transaction. The STT will be levied on and collected by an Indian stock exchange on which

equity shares are sold. Any gain realised on the sale of shares held for more than 12 months to an Indian resident,

which are sold other than on a recognised stock exchange and as a result of which no STT has been paid, will be

subject to long term capital gains tax in India. Further, any gain realized on the sale of shares held for a period of

12 months or less will be subject to capital gains tax in India. Further, any gain realised on the sale of listed

equity shares held for a period of 12 months or less which are sold other than on a recognised stock exchange

and on which no STT has been paid, will be subject to short term capital gains tax at a relatively higher rate as

compared to the transaction where STT has been paid in India. See the section “Statement of Tax Benefits” on

page 170. Capital gains arising from the sale of shares will be exempt from taxation in India in cases where an

exemption is provided under a treaty between India and the country of which the seller is a resident. Generally,

Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of other

countries may be liable for tax in India as well as in their own jurisdictions on gains arising from a sale of the

shares.

69. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

In the past, Indian stock exchanges have experienced substantial fluctuations in the prices of listed securities.

These exchanges have also experienced problems that have affected the market price and liquidity of the

securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and

strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time

restricted securities from trading, limited price movements and restricted margin requirements. Further, disputes

have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies

that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the

market price and liquidity of our Equity Shares could be adversely affected.

73

MARKET PRICE INFORMATION

As at the date of this Preliminary Placement Document, 614,290,755 Equity Shares are paid-up and outstanding.

The Equity Shares have been listed and traded on the BSE and the NSE since January 10, 2007.

On February 26, 2015, the closing price of the Equity Shares on the BSE and the NSE was ₹ 36.70 and ₹ 36.55

per Equity Share, respectively. Since the Equity Shares are actively traded on the Stock Exchanges, the market

price and other information for each of the BSE and the NSE has been given separately.

(i) The following tables set forth the reported high, low and average market prices and the trading volumes

of the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were

recorded for calendar years ended 2014, 2013 and 2012:

BSE

Calendar

Year

High

(₹)

Date of high Number of

Equity Shares

traded on the

date of high

Total

turno

ver

on

date

of

high

(₹

millio

n)

Low

(₹)

Date of low Number of

Equity Shares

traded on the

date of low

Total

turnove

r on

date of

low (₹

million)

Avera

ge of

Closin

g

Prices

durin

g the

Period

(₹)

Total

number of

Equity

Shares

traded in

the period

Total

Equity

Shares

traded

in the

period

In number In ` million

2014 35.35 December 31, 2014

154,777 5.41 17.00 January 1, 2014 and January 3,

2014

434,290 and 167,522

7.80 & 2.90

24.24 70,662,643 1,734.59

2013 30.30 January 11, 2013

1,650,490 48.07 13.05 August 20, 2013 113,484 1.54 21.13 68,480,872 1,534.75

2012 26.30 November

19, 2012

1,410,200 34.16 5.70 January 2, 2012 258,326 1.50 14.70 144,636,746 2,374.7

1

NSE

Calendar

Year

High

(₹)


Equity

Shares

traded on

the date of

high

Total

turnove

r on

date of

high (₹

million)

Low

(₹)

Date of low Number

of Equity

Shares

traded on

the date of

low

Total

turnove

r on

date of

low (₹

million)

Avera

ge of

Closin

g

Prices

durin

g the

Period

(₹)

Total

number of

Equity

Shares

traded in

the period

Total

Equity

Shares

traded

in the

period

In number In ` million

2014 35.35 December

31, 2014

486,985 16.78 16.95 January 1, 2014 933,027 16.78 24.26 190,133,870 4,679.87

2013 30.35 January 11, 2013

3,069,736 89.78 13.00 August 20, 2013 404,966 5.48 21.15 137,675,837 3,090.45

2012 26.20 November

19, 2012

1,672,755 40.83 5.65 January 2, 2012 645,384 3.72 14.72 290,715,279 4,655.63

(Source: www.bseindia.com and www.nseindia.com)

Notes:

1) High, low and average prices are based on the daily closing prices.

2) In case of two days with the same closing price, the date with the higher volume has been chosen.

(ii) The following tables set forth the reported high, low and average market prices and the trading volumes

of the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were

recorded during each of the last six months:

http://www.bseindia.com/

http://www.nseindia.com/

74

BSE

Month year High

(₹)

Date of high Number

of Equity

Shares

traded on

date of

high

Total

turnov

er on

date of

high (₹

million

)

Low

(₹)

Date of low Number of

Equity Shares

traded on date

of low

Total

turnov

er on

date of

low (₹

million

)

Avera

ge of

Closin

g

Prices

for the

Period

(₹)

Total Equity Shares

traded in the period

(In

figures)

(In ₹ in

million)

January 2015 36.50 January 27, 2015 150,613 5.41 31.85 January 6, 2015 134,722 4.37 34.44 2,720,993

94.09

December

2014

35.35 December 31, 2014 154,777 5.41 27.60 December 2, 2014 281,368 8.14 31.81 6,441,5

83

204.49

November 2014

29.25 November, 18 2014 655,816 18.50 24.85 November 11, 2014

57,346 1.45 26.83 3,864,416

104.69

October 2014 26.30 October 30, 2014 43,799 1.14 24.70 October 7, 2014

and October 8, 2014

54,025 & 68,660 1.35 &

1.72

25.41 1,531,5

56

38.82

September

2014

28.80 September 16, 2014 1,063,582 29.61 24.70 September 26,

2014

155,874 3.94 26.06 3,836,7

63

101.83

August 2014 29.60 August 7, 2014 701,434 20.48 25.40 August 28, 2014 117,398 3.02 28.05 5,872,8

10

164.98

NSE

Month

year

High

(₹)


Equity

Shares

traded on

date of

high

Total

turnov

er on

date of

high (₹

million

)

Low

(₹)

Date of low Number

of Equity

Shares

traded on

date of

low

Total

turnover

on date

of low (₹

million)

Average

of

Closing

Prices

for the

Period

(₹)

Total Equity Shares

traded in the period

In figures (In ₹ in

million)

January

2015

37.00 January 27, 2015 271,936 9.79 31.75 January 6,

2015

390,308 12.69 34.48 8,785,941 304.58

December 2014

35.35 December 31, 2014 486,985 17.04 27.30 December 1, 2014

261,856 7.32 31.84 18,093,010

574.96

November

2014

29.30 November, 18 2014 1,744,217 49.18 24.80 November 11,

2014

496,881 12.53 26.86 11,949,64

5

321.98

October 2014

26.45 October 30, 2014 345,043 8.98 24.20 October 8, 2014

261,307 6.55 25.48 5,275,610 134.36

September

2014

28.80 September 16, 2014 2,235,862 62.16 24.70 September 26,

2014

926,815 23.34 26.09 11,749,54

5

309.47

August

2014

29.60 August 7, 2014 1,610,553 46.57 25.30 August 28,

2014

409,036 10.55 28.07 10,044,47

8

281.34


Notes:

1) High, low and average prices are based on the daily closing prices.

2) In case of two days with the same closing price, the date with the higher volume has been chosen.

(iii) The following table sets forth the market price on the Stock Exchanges on July 18, 2014 the first

working day following the approval of the Board of Directors for the Issue:

BSE

Open High Low Close Number of Equity

Shares traded

Turnover (₹

million)

27.95 28.75 27.25 28.30 152,583 4.25

NSE

Open High Low Close Number of Equity

Shares traded

Turnover (₹

million)

27.75 28.65 27.35 28.30 350,894 9.88






75

USE OF PROCEEDS

The gross proceeds from the Issue will be approximately ₹ [●] million.

The net proceeds from the Issue, after deducting fees, commissions and expenses of the Issue, will be

approximately ₹ [●] million (the “Net Proceeds”).

Subject to compliance with applicable laws and regulations, we intend to use the Net Proceeds for meeting

expenditure in connection with implementation of DAS in Phase III and IV and business expansion, ongoing

acquisition of MSOs/LCOs and primary points; business diversification which inter alia include value added

services, high definition services, broadband, technological upgradation, working capital requirements,

redemption of Preference Shares and other general corporate purposes of our Company, as approved by the

Board.

In accordance with the policies approved by the Board and as permissible under applicable laws and government

policies, our management will have flexibility in deploying the Net Proceeds. Pending utilisation for the

purposes described above, we intend to temporarily invest funds in creditworthy instruments, including money

market Mutual Funds and deposits with banks and corporates. Such investments would be in accordance with the

investment policies as approved by the Board from time to time and all applicable laws and regulations.

Neither our Promoters nor our Directors are making any contribution either as part of the Issue or separately in

furtherance of the objects of the Issue.

76

CAPITALISATION STATEMENT

The following tables set forth our consolidated capitalization as of and for the nine months period ended

December 31, 2014 and as adjusted for the Issue. These tables should be read in conjunction with section

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page

80 and other financial information contained in section “Financial Information” on beginning on page 217.

(In ` million)

Particulars As at December 31,

2014

As adjusted for the

Issue*

Short-term borrowings 504.53 [●]

Long-term borrowings 8,421.22 [●]

Current maturities of long-term debt 4,444.46 [●]

Total debt (A) 13,370.21 [●]

Shareholders’ funds:

Share capital 614.85 [●]

Share suspense 314.63 [●]

Securities premium 7,278.06 [●]

Reserves and surplus (7,952.74) [●]

Total shareholder’s funds (B) 254.80 [●]

Total capitalisation (A) + (B) 13,625.01 [●]

* Will be inserted following closure of the Issue.

Notes

1. Short-term borrowings are considered as borrowing due within 12 months from the balance sheet date.

2. Long-term borrowings are considered as borrowing other than short term borrowing, as defined above

and also includes the current maturities of long term borrowings.

3. Reserves and surplus include deficit in the statement of profit and loss, foreign currency monetary item

translation difference account and employee stock options outstanding.

77

CAPITAL STRUCTURE

The Equity Share capital and the Preference Share capital of our Company as at the date of this Preliminary

Placement Document is set forth below:

(In `, except share data)

Aggregate value at face value

1. AUTHORIZED SHARE CAPITAL

990,000,000 Equity Shares 990,000,000

10,000,000 Preference Shares 10,000,000

TOTAL 1,000,000,000

2. ISSUED, SUBSCRIBED AND PAID UP CAPITAL BEFORE THE

ISSUE

614,290,755 Equity Shares* 614,290,755

23,436 Preference Shares 23,436

TOTAL 614,314,191

3. PRESENT ISSUE IN TERMS OF THIS PRELIMINARY

PLACEMENT DOCUMENT

Up to [●] Equity Shares aggregating to ` [●] million [●]

4. PAID-UP CAPITAL AFTER THE ISSUE

[●] Equity Shares [●]

23,436 Preference Shares 23,436

TOTAL [●]

5. SECURITIES PREMIUM ACCOUNT

Before the Issue 7,279,342,633

After the Issue [●]

*Additionally, up to 216,320 Equity Shares may be issued by the Company on exercise of stock options granted under the ESOP Scheme

2007.

Terms/ rights attached to equity shares

Our Company has only one class of Equity Shares having a face value of ₹ 1 per equity share. Each holder

of equity shares is entitled to one vote per Equity Share.

Share Capital History of our Company

A. The history of the Equity Share capital of our Company is provided in the following table:

Date of Allotment No. of Equity

Shares Allotted

Face Value (`) Issue price per

Equity Share (`)

Consideration

March 25, 2006 50,000 10 10 Cash - Subscription to

MOA

July 25, 2006 500,000(1) 1 - -

December 29, 2006 216,717,753 1 - Other than cash(2)

October 29, 2009 236,222,285 1 19 Cash(3)

March 25, 2014 68,500,000 1 20 Cash(4)

April 2, 2014 93,500,000 1 20 Cash(5)

February 4, 2015 77,840 1 17.45 Cash(6) (1) The Equity Shares of the Company were split from a face value of ` 10 per equity share to ` 1 per equity share pursuant to the

Scheme of Arrangement and as per the resolution of our shareholders dated July 25, 2006. (2) Allotted to shareholders of Zee Entertainment Enterprises Limited pursuant to the Scheme of Arrangement. (3) Issuance pursuant to the rights issue of our Company. Only ` 9 per Equity Share, excluding allotment money of ` 0.5 and

premium of ` 8.5 per Equity Share, paid at the time of allotment. Due to failure of corporate action by the depositories of these

shareholders, 3,338 Equity Shares could not be converted into fully paid up shares and have not been listed on the Stock Exchanges. On October 19, 2011, the Company forfeited 1,227,123 Equity Shares due to non-receipt of the call money.

However, corporate action for cancellation of 189,564 partly paid up Equity Shares could not be executed due to issues at the

depositories of these shareholders. (4) Issuance of 42,283,951 Equity Shares to Essel Media Ventures Limited and 26,216,049 Equity Shares to Essel International

Limited pursuant to exercise of 68,500,000 equity warrants. (5) Issuance of 57,716,049 Equity Shares to Essel Media Ventures Limited and 35,783,951 Equity Shares to Essel International

Limited pursuant to exercise of 93,500,000 equity warrants.

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(6) Issuance pursuant to exercise of options issued under the ESOP 2007.

B. The history of the Preference Share capital of our Company is provided in the following table:

Date of Allotment No. of Preference

Shares Allotted


Preference Share (`)

Consideration

December 29, 2006 23,436 1 1 Other than cash* *Allotted to Zee Entertainment Enterprises Limited pursuant to the Scheme of Arrangement.

Details of allotments made in the last one year

Other than the following, our Company has not allotted any Equity Shares in the last one year:

Date of Allotment No. of Equity Shares

Allotted


Equity Share (`) Consideration

March 25, 2014 68,500,000 1 20 Cash(1)

April 2, 2014 93,500,000 1 20 Cash(2)

February 4, 2015 77,840 1 17.45 Cash(3) (1) Issuance of 42,283,951 Equity Shares to Essel Media Ventures Limited and 26,216,049 Equity Shares to Essel International Limited

pursuant to exercise of 68,500,000 equity warrants. (2) Issuance of 57,716,049 Equity Shares to Essel Media Ventures Limited and 35,783,951 Equity Shares to Essel International Limited

pursuant to exercise of 93,500,000 equity warrants. (3) Issuance pursuant to exercise of options issued under the ESOP 2007.

Our stock option plan

Our Company has instituted an employee stock option scheme, “ESOP 2007”, approved by the Shareholders

vide their resolution dated September 18, 2007. ESOP 2007 was constituted under the Employees Stock Option

Scheme and Employees Stock Purchase Scheme Guidelines in 1999 issued by SEBI which was applicable to

stock option schemes implemented on or after June 19, 1999. Pursuant to ESOP 2007, each option entitled an

employee to subscribe to 1 equity share of ₹ 1 each of the Company at an exercise price approved by the

Shareholders, which shall be equal to the closing market price, i.e. the latest available closing price, on the day

previous to the date that the options have been granted. The options may be exercised within a period of four

years from the date of vesting of the respective employee stock option. The total number of options under the

ESOP 2007 were 4,344,355.

The latest details are provided below:

Date Lapsed/ Forfeited Issued and outstanding

April 1, 2013 to March 31, 2014 69,040 582,860

April 1, 2014 to February 15, 2015 253,900 216,320

See, “Board of Directors and Senior Management” beginning on page 127.

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DIVIDENDS

The declaration and payment of dividends will be recommended by our Board of Directors, at their discretion,

subject to the provisions of the Articles of Association and applicable law, including the Companies Act and will

depend on a number of factors, including but not limited to the future expansion plans and capital requirements,

profit earned during the financial year, liquidity, applicable legal restrictions and taxes including dividend

distribution tax payable by our Company. In addition, our ability to pay dividends may be impacted by a number

of factors, including restrictive covenants under the loan or financing arrangements our Company is currently

availing of or may enter into to finance our fund requirements for our business activities.

Our Company has not declared any dividend on the Equity shares or the Preference Shares for the year ended

March 31, 2012, March 31, 2013, March 31, 2014 and the nine months period ended December 31, 2014.

For a summary of certain Indian consequences of dividend distributions to shareholders, see the section titled

“Statement of Tax Benefits” on page 170.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

You should read the following discussion of our financial condition and results of operations together with our

Condensed Consolidated Financial Statements and our Reformatted Financial Statements as of and for the fiscal

ended March 31, 2012, 2013 and 2014, including the notes thereto and reports thereon, each included in this

Preliminary Placement Document. You should also read the sections titled “Risk Factors” and “Forward

Looking Statements” included in this Preliminary Placement Document which discuss a number of factors and

contingencies that could affect our financial condition and results of operations.

Our Reformatted Financial Statements and Condensed Consolidated Financial Statements included in this

Preliminary Placement Document are prepared in accordance with Indian GAAP, which differs in certain

material respects from IFRS and U.S. GAAP. Our fiscal ends on March 31 of each year. Accordingly, all

references to a particular fiscal are to the 12 months ended March 31 of that year.

Overview





We also provide cable broadband services in the cities of Kolkata, Greater Noida and Delhi. We own and operate

cable networks that reach a cable universe of approximately 10.5 million (based on our estimates) across India,

supported by multiple analog and 15 digital head ends and approximately 15,400 kilometers of HFC network

owned and leased by us. As of December 31, 2014, we had a total of approximately 4.85 million digital

subscribers.
















distribution of channel signals through a Digital Addressability s System (“DAS”) by December 31, 2016



channels through our analog cable television service. Besides providing the ability to telecast a greater number

of channels and high quality picture and sound for the channels broadcasted, our digital cable television services






devotional programmes or local news and events etc. We derive advertising revenue from these channels

through scroll advertising, commercials, stills, movie promos and telemarketing.


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income for Financial Year 2013-14 and the nine month period ending December 31, 2014 respectively. EBITDA

margins for the Financial Year 2013-14 and the nine month period ending December 31, 2014 is 17.73% and

20.71%, respectively.

Factors Affecting Our Results of Operations, Cash Flows and Financial Condition

Digitisation

We expect that our future growth in the near-term will primarily be dependent on the conversion of our analog

cable subscribers to digital cable subscribers. Conversion of our analog cable subscriber to digital cable

television services will result in higher revenues from our subscribers and would curb the current industry-wide

problem of LCOs under reporting the number of subscribers and also by increase in APRU. Under the four-

phased digitization policy announced by the MIB, the cable television distribution industry in India will be

transitioned to DAS by December 31, 2016 requiring cable operators to transmit digital signals through

addressable STBs only. We are pursuing the digitisation of our services to adhere to the schedule set out by the

MIB besides pursuing for Voluntary Digitisation in select areas. Phase I and Phase II was completed by October

31, 2012 and March 31, 2013 respectively. Phase III, which is applicable to all other urban areas across India, is

scheduled to be completed by December 31, 2015 and Phase IV, which covers the rest of India, is scheduled to

be completed by December 31, 2016. However, our ability to convert our existing analog subscribers under

Phase III and Phase IV depends on several factors, including:

Our ability to incur increased capital expenditure for STBs and improvement of our cable network;

Subscriber preference for services offered by our competitors, including by DTH service

providers;

Availability of STBs at acceptable prices and in a timely manner; and

Regulatory directives with respect to schedule of implementation.

Number of Cable Television Subscribers

We deliver television channels on our cable distribution network through LCOs, who provide the “last mile”

cable link to the homes of our subscribers. Our revenues from cable television are based on the number of

subscribers connected to our LCOs. The number of subscribers, we have, is affected by several factors,

including:

our MSO / LCO acquisition strategy and our resultant geographic reach;

our relationship with the minority shareholders of the MSOs acquired by us;

our relationships with LCOs; and

competition with other MSOs, DTH and other distribution technology..

For our digital services, the LCOs are required to collect the subscription fee from the subscribers and remit the

collected amount to us based on the number of STBs issued to them by us after deducting their agreed revenue

share However, in respect of our analog subscribers, who currently constitute majority of our subscribers (though

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we but our billed subscribers are more in digital), we do not have the ability to independently determine the

number of subscribers that any given LCO has and must instead rely on the information provided by the LCOs.

Carriage Income

We receive carriage fee from television broadcasters and content aggregators for carrying their channels and

placing their channels on their preferred channel number or position in the logical channel numbering (“LCN”)

and the package in case of digital services or preferred signal and frequency band in case of analog services. This

is of particular relevance because where the channel is placed on the LCN or on the frequency band can impact

the viewership of the channel. Some positions in the LCN or the frequencies therefore command a premium in

the market and broadcasters are willing to pay us for placing their channels on these positions or frequencies.

Such fees are generally negotiated and paid by broadcasters that are generally for a term of 12 months. We

generally agree to a fixed fee for the term of the agreement, payable in equal monthly or quarterly instalments.

The amount we receive for carriage is dependent on the availability of preferred position on the LCN and the

package or the frequency bandwidth, the geographic regions we operate in and competition among television

broadcasters.

Content Cost

We source programming content from third parties. Our ability to compete successfully depends on our ability to

continue to obtain competitive programming at competitive prices. Significant agreements that we have entered

into with content providers for the provision of programming include those entered into with India Cast, MSM

Discovery Private Limited, Taj Television (India) Private Limited and ZEEL. Our programming agreements are

generally entered for specific territories, have fixed fee provisions and terms ranging from one year to such

period unless terminated earlier with customary renewal and termination provisions. When offering new

programming, or upon expiration of existing contracts, programming suppliers generally increase the rates they

charge us for programming, which increases our programming costs. Our results of operation are dependent on

our ability to pass programming cost increases on to our subscribers.

Our Ability to Integrate the Operations of the MSOs and LCOs Acquired by us

The focus of our growth strategy has been to acquire majority interests in established MSOs to expand our

geographic reach. We acquire, aggregate and expand the businesses of existing MSOs and LCOs to achieve

economies of scale, deliver a standardized service and provide broadcasters a single point of connect with

millions of subscribers. As of December 31, 2014, we have acquired the assets and/or majority interest in the

businesses of 14 MSOs and have entered into arrangements with running cable television business of

approximately multiple local cable operators (“LCOs”) while simultaneously expanding our own infrastructure.

We intend to consolidate our position and further expand our geographic reach by acquiring majority interests or

the entire business of MSOs and LCOs. Our growth will continue to depend on our ability to successfully

integrate the operations of the newly acquired businesses. In connection with the integration of an acquired MSO

/ LCO, our management’s attention is diverted by the acquisition, transition or integration activities and

employees and a large number of systems must be assimilated into our established business, including

management information, purchasing, accounting and finance, billing, payroll and benefits and regulatory

compliance.

Other Factors

For a discussion of other factors that affect or could affect our results of operations and financial condition, such

as changes in government laws or regulations, see section titled “Risk Factors” on page 50 of this Preliminary

Placement Document.

Note Regarding Presentation

Basis of Preparation

Pursuant to Notification S.O. 447(E) dated February 28, 2011, the Old Schedule VI was replaced with the

Revised Schedule VI which significantly changes the presentation of, and disclosure made in, the financial

statements of Indian companies. Accordingly, we modified the manner in which we presented our financial

83

statements as of March 31, 2012 and future periods so that the presentation of our financial statements is

consistent with the Revised Schedule VI, which became applicable to us during the fiscal 2012.

This financial information have been prepared in accordance with Indian GAAP and the Companies Act and as

described in the report of our auditors dated May 28, 2014, which is included under the section titled "Financial

Information" on page 217 of this Preliminary Placement Document.

Our Reformatted Financial Statements for the fiscal 2012, 2013 and 2014 are prepared in accordance with the

applicable generally accepted auditing standards in India prescribed by the ICAI. The Condensed Consolidated

Financial Statements has been prepared in accordance with the requirements of Accounting Standards (AS) 25

notified under Companies Act, 1956 read with general circular 8/2014 dated April 4, 2014 issued by Ministry of

Corporate Affairs, have been reviewed by our Auditors in accordance with the Standard on Review Engagement

(SRE) 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’

issued by the ICAI.

As of March 31, for the fiscal 2012, 2013 and 2014, we have consolidated the financial statements of our

Subsidiaries based on the financial statements audited by the statutory auditors of such Subsidiaries. Our share of

total assets, total income and profit/(loss) after tax of the top five subsidiaries as of and for the fiscal ended

March 31, 2012, 2013 and 2014 and for the limited reviewed financial results for the nine month period ended

December 31, 2014 are set out below:

(` In million)

Fiscal 2012 Fiscal 2013 Fiscal 14 9 month period ended

December 31, 2014

Indian Cable Net Company Limited (Consolidated)

Total Asset 1080.39 2145.51 5252.14 5457.14

Total Income 885.39 1216.76 2014.91 1927.02

Profit/(loss) after tax 16.92 91.48 161.6 281.25

Siti Vision Digital Media Private Limited

Total Asset 171.41 318.12 691.67 716.08

Total Income 110.60 215.75 351.06 199.47

Profit/(loss) after tax (134.39) (28.15) 73.89 (15.78)

Master Channel Community Network Private Limited

Total Asset 42.51 54.17 216.89 473.62

Total Income 77.19 92.69 129.90 221.28

Profit/(loss) after tax 3.33 6.39 19.80 141.94

Siti Guntur Digital Network Private Limited

Total Asset NA 26.96 54.12 66.25

Total Income NA 49.95 97.33 89.88

Profit/(loss) after tax NA 0.58 5.16 21.37

Siti Faction Digital Private Limited

Total Asset NA 112.75 137.59 154.28

Total Income NA 32.05 55.84 63.34

Profit/(loss) after tax NA 0.42 (8.59) 20.59

Comparability

The discussion below in this section compares:

(i) the financial condition, results of operations and cash flows for the year ended March 31, 2013, based on

our Reformatted Financial Statements as of and for the year ended March 31, 2013, with that as of and for

the year ended March 31, 2012, each presented in accordance with the format prescribed by the Revised

Schedule VI;

(ii) the financial condition, results of operations and cash flows for the year ended March 31, 2014, based on

our Reformatted Financial Statements as of and for the year ended March 31, 2014, with that as of and for

84

the year ended March 31, 2013, each presented in accordance with the format prescribed by the Revised

Schedule VI; and

(iii) the financial condition, results of operations and cash flows as of and for the nine month period ended

December 31, 2014, based on our Condensed Consolidated Financial Statements for the nine months

period ended December 31, 2014, with the Condensed Consolidated Financial Statements for the nine

months period ended December 31, 2014, based on our Condensed Consolidated Financial Statements

each presented in accordance with the format prescribed by the Revised Schedule VI.

Critical Accounting Policies

The financial statements of our Company have been prepared in accordance with the Generally Accepted

Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the

Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act,

1956 read with the General Circular 15/2013 dated September 13, 2014 of the Ministry of Corporate Affairs in

respect of section 133 of the Companies Act, 2013. The financial statements have been prepared on an accrual

basis and under the historical cost convention. The accounting policies have been consistently applied by our

Company unless otherwise stated. All assets and liabilities have been classified as current or non-current,

wherever applicable as per the operating cycle of our Company as per the guidance as set out in the Revised

Schedule VI to the Companies Act.

Our management has evaluated the accounting policies used in the preparation of our financial statements and

related notes and believes those policies to be reasonable and appropriate. In applying accounting principles in

accordance with Indian GAAP, we are required to make estimates and assumptions about future events that

affect the amounts reported in our financial statements and the accompanying notes. Future events and their

effects cannot be determined with absolute certainty. Therefore, our management must make estimates which

require the exercise of judgment. Examples of such estimates include estimates of income taxes, future

obligations under employment retirement benefit plans, provision for doubtful debts and advances and estimated

useful life of tangible and intangible assets. Actual results could differ from these estimates, and any such

differences may be material to the financial statements. Any revision to accounting estimates is recognised

prospectively in the current and future periods.

We consider an accounting estimate to be critical if: (a) the accounting estimate requires us to make assumptions

about matters that were highly uncertain at the time the accounting estimate was made, and (b) changes in the

estimate that are reasonably likely to occur from period to period, or use of different estimates that we

reasonably could have used in the current period, would have a material impact on our financial condition or


There are other items in our financial statements that require estimation, but are not deemed critical as defined

above. Changes in estimates used in these and other items could have a material impact on our financial

statements.

We believe the following are our critical accounting policies:

Tangible fixed assets

(i) Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

The cost comprises of the purchase price (net of Cenvat credit availed), borrowing costs if capitalisation

criteria are met and any directly attributable cost of bringing the asset to its working condition for the

intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

(ii) Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an

increase in the future benefits from such asset beyond its previously assessed standard of performance.

(iii) Gains or losses arising from de-recognition of fixed assets are measured as the difference between the net

disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and

loss when the asset is derecognised.

85

(iv) Set top boxes are treated as part of capital work in progress till at the end of the month of activation

thereof. Also, set top boxes intended to be sold are treated as part of inventory.

Depreciation on tangible fixed assets

(i) Depreciation on tangible fixed assets is calculated on a straight-line basis using the rates arrived at based

on useful lives estimated by the management, or those prescribed under the Schedule XIV to the

Companies act, 1956 whichever is higher. Our Company has used the following rates to provide

depreciation on its fixed assets:

Building - 1.63%

Plant and equipment - 12.50%

Furniture and fixtures - 10.00%

Studio equipment - 7.70%

Computers - 33.33%

Vehicles - 12.50%

Office equipment - 20.00%

Air conditioners - 20.00%

Set-top boxes - 12.50%

Integrated receiver and decoder (IRD) boxes - 12.50%

Since the date of our last audited financial statements dated March 31, 2014, the rates of depreciation

have changed in accordance with Schedule II of the Companies Act, 2013 and the same shall be reflected

in our next audited financial statements.

(ii) Leasehold improvements are amortised over the lease term or estimated useful life; whichever is less.

(iii) Plant and equipment taken over under scheme of arrangement in the earlier years are depreciated over the

management’s estimate of remaining useful life, a period of 5 years.

(iv) Assets costing less than ` 5,000 are fully depreciated in the year of purchase.

Intangible assets

Intangible Assets acquired separately are measured on initial recognition at cost. Following initial recognition,

intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

Amortisation of intangible assets

(i) Goodwill on acquisition is amortised using the straight-line method over a period of five years.

(ii) Computer software are amortised over a period of six years on straight-line basis.

(iii) Cost of news/ current affairs/ chat shows/ events including sports events etc. are fully expensed on first

telecast.

(iv) Program/ film/ cable rights are amortised on a straight-line basis over the license period or 60 months

from the date of purchase, whichever is shorter.

(v) Distribution network rights are amortized using the straight line method over a period of ten years.

Leases

Where our Company is the lessee:

Finance leases, which effectively transfer to our Company substantially all the risks and benefits incidental to

ownership of the leased item, are capitalised at the lower of the fair value and present value of minimum lease

payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned

between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance

86

charges are charged directly against income.

Lease management fees, legal charges and other initial direct costs are capitalised. A leased asset is depreciated

on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule XIV to the

Companies Act, 1956, whichever is lower. However, if there is no reasonable certainty that our Company will

obtain the ownership by the end of the lease term, the capitalised asset is depreciated on a straight-line basis over

the shorter of the estimated useful life of the asset, the lease term or the useful life envisaged in Schedule XIV to

the Companies Act, 1956.

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased

item, are classified as operating leases. Operating lease payments are recognised as an expense in the statement

of profit and loss on a straight-line basis over the lease term.

Where our Company is the lessor:

Leases in which our Company does not transfer substantially all the risks and benefits of ownership of the asset

are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income in

an operating lease is recognised in the statement of profit and loss on a straight-line basis over the lease term.

Costs, including depreciation, are recognised as an expense in the statement of profit and loss. Initial direct costs

such as legal costs, brokerage costs, etc. are recognised immediately in the statement of profit and loss.

Borrowing cost

Borrowing cost includes interest, amortisation of ancillary costs incurred in connection with the arrangement of

borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as

an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or

production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale

are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period

they occur.

Impairment of tangible and intangible assets

Our Company assesses at each balance sheet date whether there is any indication that an asset may be impaired.

If any such indication exists, our Company estimates the recoverable amount of the asset. If such recoverable

amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than

its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an

impairment loss and the same is recognised in the statement of profit and loss. If at the balance sheet date there is

an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed

and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the

same is accordingly reversed in the statement of profit and loss.

Investments

Investments which are readily realisable and intended to be held for not more than one year from the date on

which such investments are made, are classified as current investments. All other investments are classified as

long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase

price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are

carried in the financial statements at lower of cost and fair value determined on an individual investment basis.

Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a

decline other than temporary in the value of the investments. On disposal of an investment, the difference

between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

Inventories

Stores and spares are valued at cost on weighted average basis or at net realisable value whichever is lower. Net

realisable value is the estimated selling price in the ordinary course of business, less estimated costs of

completion and estimated costs necessary to make the sale.

87

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to our Company and

the revenue can be reliably measured.

(i) Sale of goods

Revenue from sale of goods is recognised when the significant risks and rewards in respect of

ownership of the goods are transferred to the buyer, usually on delivery of the goods. Our Company

collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are

not economic benefits flowing to our Company. Hence, they are excluded from revenue. Revenue from

high sea sales are being recognised on transfer of title of goods to the customer.

(ii) Income from services

Subscription income is recognised on completion of services. Lease rentals charges and carriage income

are recognised on accrual basis over the terms of related agreements. Carriage revenue recognition is

deferred till formal agreement is executed with broadcasters. Advertisement income is recognised when

the related advertisement appears before the public. Other advertisement revenue for slot sale is

recognised on period basis. Activation fees on STBs is recognised as revenue on activation of the

related boxes. Our Company collects service tax on behalf of the Government and, therefore, it is not an

economic benefit flowing to our Company. Hence, it is excluded from revenue. Income from rendering

technical services and broadband services are recognised on accrual basis.

(iii) Interest

Interest income is recognised on a time proportion basis taking into account the amount outstanding and

the applicable interest rate. Interest income is included under the head “other income” in the statement

of profit and loss.

Segment reporting

Our Company is a MSO providing cable television network services, internet services and allied services which

is considered as the only reportable segment. Our Company’s operations are based in India.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by

the occurrence or non-occurrence of one or more uncertain future events beyond the control of our Company or a

present obligation that is not recognised because it is not probable that an outflow of resources will be required

to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that

cannot be recognised because it cannot be measured reliably.

Results of Operations

Revenue

Our total income comprises our revenue from operations and other income.

Revenue from Operations

Our revenue from operations comprises our sale of services and other income.


Our revenue from operations comprises the following:

Subscription income: We earn revenues from the delivery of cable television services. In case of analog services,

we agree a set monthly fee payable by the LCO but the agreed fee is subject to renegotiation during the term of

88

the agreement. For our digital services, the LCOs are required to collect the subscription fee from the subscribers

and remit the collected amount to us based on the number of STBs issued to them by us after deducting their

revenue share. We recognize this revenue at the end of each month.

Advertisement income: Our advertising income relates to our own brand/local television channels that are

telecast exclusively on our cable distribution network. We earn revenues from our own brand/local cable

television channels by selling advertising spots/scrolls that are interspersed in our channels’ as regular

programmes, by selling sponsorship rights to certain content and from stills, banner advertisements and screen

crawlers that are displayed on the bottom of the television screen while regular content is broadcast. We

recognize revenue from advertising when the advertisement is broadcast.

Carriage income: We receive carriage income from certain television broadcasters and content aggregators for

the purpose of distribution reach and to ensure that we will place their channels on their preferred signal and

frequency band, as per agreed understanding and terms. We generally enter into placement contracts for a period

of one year. We generally agree to a fixed fee for the term of the agreement, payable equal monthly or quarterly

instalments.

Activation income: We receive revenue from the activation of STBs, which is recognized at the end of the month

in which the STB is activated.

Other Operating Revenue

Our other operating revenue comprises the following:

Sale of traded goods: Our income from sale of traded goods comprises the sale of STBs and viewing card and

stores and spare.

Lease rental charges: Lease rental charges represents the revenue earned from leasing of fiber owned by the

company

Management Charges and other networking income: Management Charges and other networking income

primarily comprises income from the following: (i) Subscription Income – Internet (ii) Digital Feed charges ,(iii)

Management Charges & others

Scrap sales: revenue derived from the sale of scrap.

Other Income

Our other income primarily comprises income from the following: (i) interest income on bank deposits; (ii)

others; (iii) excess provision written back; (iv) profit on sale of fixed assets; and (v) other non operating income

etc.

Expenses

Our expenditure comprises of cost of materials consumed, purchases of traded goods, changes in inventories of

traded goods, carriage sharing, pay channel and related costs, employee benefit expenses, finance costs,

depreciation and amortisation expenses and other expenses

Cost of materials consumed: cost for purchase of materials for stores and spares

Purchases of traded goods: cost for purchase of STBs and viewing cards. Changes in inventories of traded goods.

Carriage sharing, pay channel and related costs: Represents the pay channel /subscription cost payable to the

television broadcasters for purchase of their content programming and revenue sharing expenses for business

partners including Distributor and LCO.

89

Employee benefit expenses: expenditure on salaries, allowances and bonus, contributions to provident and other

funds, employee benefits expenses and staff welfare expenses.

Finance costs: expenditure on interest, bank charges and amortisation of ancillary borrowing costs.

Depreciation and amortisation expenses: comprises of expenses from depreciation of tangible assets and

amortisation of intangible assets.

Other expenses: comprises of expenses on rent, rates and taxes, communication expenses, repairs and

maintenance of network, building and others, electricity and water charges, legal, professional and consultancy

charges, printing and stationery, service charges, travelling and conveyance expenses, payment to auditors,

vehicle expenses, insurance expenses, provision for doubtful debts, provision for doubtful advances,

advertisement and publicity expenses, commission charges and incentives; additional LCO commission, rebate

and discount, program production expenses, other operational cost; business and sales promotion, forex loss and

miscellaneous expenses.

Results of Operation

The following table sets forth, for the periods indicated, certain items from our Reformatted Financial

Statements, in each case also stated as a percentage of our total revenue:

90

(In ` million, unless stated otherwise)

Particulars

31-Mar-12 31-Mar-13 31-Mar-14 9 month period ended

December 31, 2014

9 month period ended

December 31, 2013

Amount % Amount % Amount % Amount % Amount %

Audited Limited Reviewed

Revenue

Revenue from operations: 3,428.17 94.11% 4,696.36 97.10% 6,972.37 98.16% 6,499.23 98.73% 4,638.97 98.60%

Other income 214.43 5.89% 140.29 2.90% 131.04 1.84% 83.59 1.27% 66.04 1.40%

Total Revenue 3,642.60 100.00% 4,836.65 100.00% 7,103.41 100.00% 6,582.82 100% 4,705.01 100%

Expenses

Carriage sharing, pay channel and related

costs 2,163.34 59.39% 2,343.45 48.45% 3,339.53 47.01% 3,538.42 53.75% 2,097.69 44.58%

Cost of goods sold 11.68 0.32% 40.5 0.84% 96.24 1.35% 2.82 0.04% 71.51 1.52%

Employee benefits expenses 271.07 7.44% 319.37 6.60% 381.94 5.38% 361.19 5.49% 283.24 6.02%

Finance costs 566.41 15.55% 863.67 17.86% 1,191.13 16.77% 898.31 13.65% 878.77 18.68%

Depreciation and amortisation expenses 304.06 8.35% 563.08 11.64% 837.9 11.80% 988.96 15.02% 746.85 15.87%

Other expenses 1,004.51 27.58% 1,263.71 26.13% 2,026.35 28.53% 1,317.20 20.01% 1,272.64 27.05%

Total expenses 4,321.07 118.63% 5,393.78 111.52% 7,873.09 110.84% 7,106.90 108% 5,350.70 113.72%

Loss before exceptional items and tax (678.47) (18.63%) (557.13) (11.52%) (769.68) (10.84%) (524.08) (7.96%) (645.69) (13.72%)

Exceptional items 240.27 6.60% 5.35 0.11% (0.33) 0.00% 0.03 0.00%

0.00%

Loss before tax (918.73) (25.22%) (562.48) (11.63%) (769.35) (10.83%) (524.11) (7.96%) (645.69) (13.72%)

Tax expenses

Current tax 23.91 0.66% 19.63 0.41% 79.94 1.13% 96.63 1.47% 93.23 1.98%

MAT credit entitlement - - (10.54) - -

Prior period tax adjustments - - 0.33 - -

Deferred tax 6 26.65 (5.65) (54.96) (0.83%) (12.94) (0.28%)

Loss for the year after tax before

minority interest (948.64) (26%) (608.76) (13%) (833.43) (11.73%) (565.78) (9%) (725.98) (15.43%)

Adjustment for minority interest (35.25) 31.97 107.18 183.96 117.01

91

Particulars

31-Mar-12 31-Mar-13 31-Mar-14 9 month period ended

December 31, 2014

9 month period ended

December 31, 2013

Amount % Amount % Amount % Amount % Amount %

Audited Limited Reviewed

Loss for the year (913.4) (25.08%) (640.73) (13.25%) (940.61) (13.24%) (749.74) (11.39%) (842.99) (11.39%)


Basic (2.02) (1.42) (2.07) (1.22) (1.86)

Diluted (2.02) (1.42) (2.07) (1.22) (1.86)

(1) Percentage to total income for respective years / period.

92

Nine month period ending December 31, 2014 compared to December 31, 2013

Total Revenue. Total revenue increased by 40% to ` 6,582.82 million for the nine month period ending

December 31, 2014 from ` 4,705.01 million for the December 31, 2013, primarily due to increase in digital

subscription revenue pursuant to mandatory digitisation.

Revenue from operations. Revenue from operations increased by increased by 40% to ` 6,499.23 million for the

nine month period ending December 31, 2014 from ` 4,638.97 million for the December 31, 2013, primarily

due to increase in digital subscription revenue pursuant to mandatory digitisation.

Other Income. Other income increased by 27% to ` 83.59 million for the nine month period ending December

31, 2014 from ` 66.04 million for the December 31, 2013, primarily due to excess provision written back.

Total Expenses. Total expenses increased by 40% to ` 5,219.62 million for the nine month period ending

December 31, 2014 from ` 3,725.08 million for the December 31 2013, primarily due to increased distribution

cost pursuant to digitisation and negligible impact on account of pay channel cost increased.

Carriage Sharing, Pay Channel and Related Costs. Carriage sharing, pay channel and related costs increased by

69% to ` 3,538.42 million for the nine month period ending December 31, 2014 from ` 2,097.69 million for the

December 31, 2013, primarily due to increase in distribution cost pursuant to digitisation and negligible impact

on account of pay channel cost increased.

Cost of Goods Sold. Cost of goods sold decreased by 96% to ` 2.82 million for the nine month period ending

December 31, 2014 from ` 71.51 million for the December 31, 2013, primarily due to decrease in the STB and

VC sold to associates and consumers.

Employee Benefit Expenses. Employee benefit expenses increased by 28% to ` 361.19 million for the nine

month period ending December 31, 2014 from ` 283.24 million for the December 31, 2013, primarily due to

annual increment and manpower count increase for expansion and faster digitisation.

Finance Costs. Finance costs increased by 2% to ` 898.31 million for the nine month period ending December

31, 2014 from ` 878.77 million for the December 31, 2013, primarily due to miscellaneous bank charges.

Depreciation and Amortisation Expenses. Depreciation and amortisation expenses increased by 32% to ` 988.96

million for the nine month period ending December 31, 2014 from ` 746.85 million for the nine month period

ending December 31, 2013, primarily due to additional STB deployed and change in the depreciation rates as

per Companies Act, 2013.

Other Expenses. Other expenses increased by 4% to `1,317.20 million for the nine month period ending

December 31, 2014 from ` 1,272.64 million for the December 31, 2013, primarily due to increase in service

charges on account of annual increment and normal growth in other operational and administrative expenses.

Tax Expense. Tax expense decreased by 48% to ` 41.66 million for the nine month period ending December 31,

2014 from ` 80.29 million for the December 31, 2013, primarily due to better tax planning.

Loss for the year after tax before minority interest. Loss for the year after tax before minority interest decreased

by 22% to ` 565.78 million for the nine month period ending December 31, 2014 from ` 725.98 million for the

December 31, 2013, primarily due to better EBITDA margin by operating efficiency despite increase in

depreciation.

Fiscal 2014 compared to Fiscal 2013

Total Revenue. Total revenue increased by 46.87% to ` 7,103.41 million for fiscal 2014 from ` 4,836.64

million for the fiscal 2013, primarily due to increase in subscription income by 181% overall to reach ` 3,395

million from ` 1,207 million in FY13. Digital subscription revenue grew by 630% over last fiscal. Overall sales

93

of set-top boxes also scaled revenue of ` 106 million compared to ` 39 million last year, highlighting the impact

of digitization.

Revenue from operations. Revenue from operations increased by 48.46% to ` 6,972.37 million for fiscal 2014

from ` 4,696.36 million for the fiscal 2013. This increase was primarily due to increase in digital subscription

revenue grew by 630% over last fiscal. Overall sale of set-top boxes also scaled revenue of ` 106 million

compared to ` 39 million last year, highlighting the impact of Digitisation

Other Income. Other income decreased by 6.59% to ` 131.04 million for fiscal 2014 from ` 140.29 million for

the fiscal 2013, primarily due to decrease in write back of excess provision as compared to fiscal 2013.

Total Expenses. Total expenses increased by 45.97% to ` 7,873.09 million for fiscal 2014 from ` 5,393.78

million for the fiscal 2013, primarily due to increase in carriage sharing, pay channel and related costs gone up

with expansion in digital mode, digitization in Phase II, commencement of Package based billing and

recognition of related expenses and infrastructure for new and renewed connections with digitisation. Finance

costs, depreciation and amortisation expenses also increased due to investment into seeding of set-up boxes in

digitisation phase.

Carriage Sharing, Pay Channel and Related Costs. Carriage sharing, pay channel and related costs 42.50% to `

3,339.53 million for fiscal 2014 from ` 2,343.45 million for the fiscal 2013, primarily due to increase carriage

sharing, pay channel and related costs expansion in digital mode and resultant content cost therein, digitization

in Phase II, commencement of package based billing and recognition of related expenses and infrastructure for

new and renewed connections with digitisation. Cost of Goods Sold. Cost of goods sold increased by 137.63% to ` 96.24 million for fiscal 2014 from ` 40.50

million for the fiscal 2013, primarily due to sale of more STB and VC for their seeding in various cities due to

mandatory digitisation phase.

Employee Benefit Expenses. Employee benefit expenses increased by 19.59% to ` 381.94 million for fiscal 2014

from ` 319.37 million for the fiscal 2013, primarily due to the expansion of business and digitisation coupled

with manpower rationalization.

Finance Costs. Finance costs increased by 37.92% to ` 1,191.13 million for fiscal 2014 from ` 863.67 million

for the fiscal 2013, primarily due to interest and increase in bank charges for procurement of STB and

infrastructure preparedness for digitisation.

Depreciation and Amortisation Expenses. Depreciation and amortisation expenses increased by 48.81% to `

837.90 million for fiscal 2014 from ` 563.08 million for the fiscal 2013, primarily due to addition in set boxes

and other fixed assets. During the same period, our gross block increased to ` 11,180.80 million from `

7,160.26 million increase in the number of STB and related amortisation besides additional digital

infrastructure.

Other Expenses. Other expenses increased by 60.35% to ` 2,026.35 million for fiscal 2014 from ` 1,263.71

million for the fiscal 2013, primarily due to increase in commission charges and incentives, additional LCO

commission, forex loss and other operating costs.

Tax Expense. Tax expense increased to ` 64.08 million for fiscal 2014 from ` 46.28 million for the fiscal 2013,

primarily due to higher provision for current tax offset by other tax related adjustments.

Loss for the year after tax before minority interest. Loss for the year after tax before minority interest increased

by 36.90% to ` 833.43million for fiscal 2014 from ` 608.76 million for the fiscal 2013, primarily due to higher

operating costs and higher provision for depreciation and amortization expenses. During the same period, loss

for the year after tax before minority interest as a percentage of total revenue decreased to 11.73% from 12.59%.

94

Fiscal 2013 compared to Fiscal 2012

Total Revenue. Total revenue increased by 32.78% to ` 4,836.65 million for fiscal 2013 from ` 3,642.60

million for the fiscal 2012, primarily due to revenue earned from introduction of digital cable service, STB

activation etc.

Revenue from operations. Revenue from operations increased by increased by 36.99% to ` 4,696.36 million for

fiscal 2013 from ` 3,428.17 million for the fiscal 2012, primarily due to revenue earned from introduction of

digital cable service.

Other Income. Other income decreased by 34.58% to ` 140.29 million for fiscal 2013 from ` 214.43 million for

the fiscal 2012, primarily due to decrease in write back of excess provision as compared to fiscal 2013 offset by

increase in interest on bank deposits.

Total Expenses. Total expenses (excluding exceptional items) increased by 24.83% to ` 5,393.78 million for

fiscal 2013 from ` 4,321.07 million for the fiscal 2012, primarily due to increase in carriage sharing, pay

channel and related costs, finance costs, depreciation and amortisation expenses and other expenses. During the

same period, total expenses as a percentage of total revenue decreased to 111.52% from 118.63%.

Carriage Sharing, Pay Channel and Related Costs. Carriage sharing, pay channel and related costs increased by

8.33% to ` 2,343.45 million for fiscal 2013 from ` 2,163.34 million for the fiscal 2012, primarily due to

increase in cost incurred for additional pay channel cost at renewal of contracts and also additional revenue

share in digital services. During the same period, carriage sharing, pay channel and related costs as a percentage

of total revenue decreased to 48.45% from 59.39%.

Cost of Goods Sold. Cost of goods sold increased by 246.70% to ` 40.50 million for fiscal 2013 from ` 11.68

million for the fiscal 2012, primarily due to sales of STB and VC for seeding in Digital markets.

Employee Benefit Expenses. Employee benefit expenses increased by 17.82% to ` 319.37 million for fiscal 2013

from ` 271.07 million for the fiscal 2012, primarily due to increase in salary on account of annual growth and

allowances. During the same period the number of our employees also increased. During the same period,

employee benefit expenses as a percentage of total revenue decreased to 6.60% from 7.44%.

Finance Costs. Finance costs increased by 52.48% to ` 863.67 million for fiscal 2013 from ` 566.41 million for

the fiscal 2012, primarily due to increase in term loan facilities utilized during the year for ` 4565 million.

Depreciation and Amortisation Expenses. Depreciation and amortisation expenses increased by 85.19% to `

563.08 million for fiscal 2013 from ` 304.06 million for the fiscal 2012, primarily due to addition in STBs and

other fixed assets. During the same period, our gross block increased to ` 7,160.26 million from ` 3,932.09

million.

Other Expenses. Other expenses increased by 25.80% to ` 1,263.71 million for fiscal 2013 from ` 1,004.51

million for the fiscal 2012, primarily due to increase in commission charges and incentives and other operating

costs. During the same period, other expenses as a percentage of total revenue increased to 26.13% from

27.58%.

Tax Expense. Tax expense increased to ` 46.28 million for fiscal 2013 from ` 29.91million for the fiscal 2012,

primarily due to higher provision made for deferred tax offset by reduction in provision for current tax.

Loss for the year after tax before minority interest. Loss for the year after tax before minority interest decreased

by 35.83% to ` 608.76million for fiscal 2013 from ` 948.65 million for the fiscal 2012.

Liquidity and Capital Resources

We have funded our capital requirements, including our working capital requirements from our cash flow from

operations and loans from banks.

95

We raise our invoices for all of our services on a monthly or quarterly basis depending on the terms of the

agreement. Our payment terms range from 30 -60 days.

Cash Flows

Set forth below is a table of selected items from our consolidated cash flow statement for the periods indicated:

(`in million)

Particulars March 31,

2012

March 31,

2013

March 31,

2014 9 month

period

ended

Decembe

r 31, 2014

Amount Amount Amount Amount

Audited Limited

Reviewed

Cash flow from operating activities:

Net cash flow (used in) / from operating activities 401.42 (830.12) 1,641.26 (12.92)

Net cash from / (used in) investing activities (353.12) (4,077.59) (4,617.38) (1,086.26)

Net cash from / (used in) financing activities 438.44 4,695.08 5,228.49 (182.23)

Net increase in cash and cash equivalents 486.74 (212.63) 2,252.37 (1,281.41)

Cash and cash equivalents at the end of the

period

1,482.82 1,264.09 3,516.46 2,235.05

Cash flow from Operating Activities

Cash from operating activities for the nine months ended December 31, 2014 was ` (12.92) million and our

operating profit before working capital changes for that period was ` 1,316 million. The adjustments to

operating profit before working capital changes were primarily attributable to net increase in current assets.

Cash from operating activities for the fiscal 2014 was ` 1,641.26 million and our operating profit before

working capital changes for that period was ` 1,167.89 million. The adjustments to operating profit before

working capital changes were primarily attributable to depreciation and amortization expenses of ` 837.90

million, loss on sale of assets (net) of ` 12.77 million, bad debts written off of ` 33.78 million, amortization of

ancillary borrowing costs of ` 26.53 million, provision of doubtful debts of ` 69.46 million, provision for

doubtful advances of ` 35.68 million, unrealized foreign exchange loss of ` 34.59 million, interest expense of `

976.02 million, offset by excess provision written back of ` 40.22 million and interest income of ` 49.27 million

and other items. Working capital adjustments included increase in trade payables of ` 504.68 million, decrease

in other non-current liabilities of ` 534.88 million, decrease in non-current liabilities of ` 1,088.86 million,

increase in short term loans and advances of ` 1,038.76 million, decrease in long term loans and advances of `

2,431.23 million, direct tax paid (net) of ` 225.50 million and other adjustments.

Cash used in operating activities for the fiscal 2013 was ` 830.12 million and our operating profit before

working capital changes for that period was ` 801.97 million. The adjustments to operating profit before

working capital changes were primarily attributable to depreciation and amortization expenses of ` 563.08

million, bad debts written off of ` 16.61 million, amortization of ancillary borrowing costs of ` 30.36 million,

provision of doubtful debts of ` 106.70 million, provision for doubtful advances of ` 32.27 million, interest

expense of ` 712.58 million, offset by excess provision written back of ` 61.02 million and interest income of `

41.87 million and other items. Working capital adjustments included increase in trade payables of ` 688.22

million, increase in other non-current liabilities of ` 823.28 million, decrease in trade receivables of ` 313.65

million, decrease in short term loans and advances of ` 401.17 million, increase in long term loans and advances

of ` 2,453.97 million, direct tax paid (net) of ` 70.56 million and other adjustments.

Cash from operating activities for the fiscal 2012 was ` 401.42 million and our operating profit before working

capital changes for that period was ` 13.14 million. The adjustments to operating profit before working capital

changes were primarily attributable to depreciation and amortization expenses of ` 304.06 million, bad debts

written off of ` 58.46 million, amortization of ancillary borrowing costs of ` 71.71 million, provision of

96

doubtful debts of ` 137.66 million, provision for doubtful advances of ` 34.97 million, HITS security deposit

written off, interest expense of ` 491.32 million, offset by excess provision written back of ` 172.82 million and

interest income of ` 23.72 million and other items. Working capital adjustments included increase in trade

payables of ` 272.57 million, decrease in other current liabilities of ` 147.36 million, decrease in trade

receivables of ` 14.76 million, decrease in inventories of ` 63.33 million, increase in short term loans and

advances of ` 337.41 million, increase in long term loans and advances of ` 23.97 million, direct tax paid (net)

of ` 79.57 million and other adjustments.

Net Cash from Investing Activities

Net cash used in investing activities for the nine months ended December 31, 2014 was ` (1,086.26) million.

This primarily comprised of ` 1,106.62 million from purchase of fixed assets including capital advance, ` Nil of

proceeds from sale of fixed assets, ` Nil from purchase of non current investments, ` Nil from sale of current

investments, ` 20.24 million from interest received from investment in bank deposits and ` 0.12 million from

advance to subsidiary companies.

Net cash used in investing activities for fiscal 2014 was ` 4,617.38 million. This primarily comprised of `

4,853.28 million from purchase of fixed assets including capital advance, ` 53.07 million of proceeds from sale

of fixed assets, ` 134.88 million from redemption of bank deposits and ` 46.73 million from interest received. Net cash used in investing activities for fiscal 2013 was ` 4,077.59 million. This primarily comprised of `

3,797.22 million from purchase of fixed assets including capital advance, ` 12.19 million of proceeds from sale

of fixed assets, ` 2.00 million from sale of current investments, ` 32.75 million from interest received and `

327.08 million used for investment in bank deposits.

Net cash used in investing activities for fiscal 2012 was ` 353.12 million. This primarily comprised of ` 363.86

million from purchase of fixed assets including capital advance, ` 1.53 million of proceeds from sale of fixed

assets, ` 35.56 million consideration paid on acquisition of subsidiaries, ` 8.42 million from purchase of non-

current investments, ` 7.7 million from sale of current investments, ` 17.44 million from interest received and `

37.84 million of redemption of bank deposits.

Net Cash from Financing Activities

For the nine months ended December 31, 2014, our net cash from financing activities was ` (182.23) million.

This primarily comprised, ` Nil received from proceeds from issuance of equity share capital, ` Nil form

proceeds of issuance of warrants, ` 1,996.18 million from long-term borrowings, which were partially offset by

repayment of ` 1,279.86 million long-term borrowings, ` 30.67 million net of proceeds and repayment of short

term borrowings (net) and ` 929.27 million from interest and finance expense paid.

For fiscal 2014, our net cash from financing activities was ` 5,228.49 million. This primarily comprised, ` 1,370

million received from proceeds from issuance of equity shares, ` 314.63 million received against share

suspense, ` 1,060 million from proceeds of issuance of warrants, ` 4,644.02 million from long-term borrowings,

which were partially offset by repayment of ` 1,400.26 million long-term borrowings, ` 229.02 million net of

proceeds from short term borrowings (net) and ` 1,020.58 million from interest and finance expense paid.

For fiscal 2013, our net cash from financing activities was ` 4,695.08 million. This primarily comprised, ` 810

million form proceeds of issuance of warrants, ` 5,768.76 million from long-term borrowings, which were

partially offset by repayment of ` 895.56 million long-term borrowings, ` 258.05 million repayment of short

term borrowings (net) and ` 726.98 million from interest and finance expense paid.

For fiscal 2012, our net cash from financing activities was ` 438.44 million. This primarily comprised, ` 0.60

million received from proceeds from issuance of equity share capital, ` 2,844.85 million from long-term

borrowings, which were partially offset by repayment of ` 2,180.59 million long-term borrowings, ` 324.78

million from short term borrowings (net) and ` 553.66 million from interest and finance expense paid.

97

Indebtedness

As of nine months period ended December 31, 2014, we had long-term borrowings (excluding current

maturities) of ` 8,421.22 million as compared to ` 10,483.89 million as of March 31, 2014, current maturities of

long-term borrowings of ` 4,444.46 million as compared to ` 1,665.49 million as of March 31, 2014 and short

term borrowings of ` 504.53 million as compared to ` 473.87 million as of March 31, 2014. The increases in

term related to ` 771.36 million.

As of nine months period ended December 31, 2014, we had secured loans of ` 8,313.34 million, primarily

comprising term-loans of ` 6185.02 million and buyer’s credit of ` 2,127.35 million. The entire amount under

term-loan facilities is secured by first pari passu charge on entire movable fixed assets, both present and future,

of the Company and on the receivables, cash flow and bank account of the Company and also secured by

corporate guarantee of an associate .

As per our management’s assessment of our indebtedness as of December 31, 2014, the repayment obligations

for the next three years of our long term indebtedness are as follows:

(` in million)

Particular Year 1 Year 2 Year 3

Term loan 1,625.75 1,960.25 1,708.50

Buyer's credit 2,761.76 1,814.21 274.19

Total 4,387.51 3,774.46 1,982.69

Related Party Transactions

We have engaged in the past, and may engage in the future, in transactions with related parties, including our

affiliates, on an arm’s length basis. This primarily consists of sale of goods and services for the F.Y. 2013-14,

2012-13 and 2011-12 amounting to ` 220.30 million ` 285.79 million and ` 260.36 million respectively and

purchase of traded goods for the F.Y. 2013-14, 2012-13 and 2011-12 amounting to ` 10.76 million ` 11.96

million and ` 351.61 million respectively. For details in relation to the related party transactions entered by our

Company during the last three fiscals, as per the requirements under ‘Accounting Standard 18 – Related Party

Transaction’ issued by the Institute of Chartered Accountants of India, see the section titled “Financial

Information” on pages F-16 to F-18.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk

As at December 31, 2014, we had ` 8,421.22 million of long term debt outstanding, some of which are fixed and

some are at floating rate of interest, which exposed us to market risk as a result of changes in interest rates. We

undertake debt obligations primarily to support our working capital needs, capital expenditure and acquisitions.

Upward fluctuations in interest rates increase the cost of debt and interest cost of outstanding variable rate

borrowings. We do not currently use any derivative instruments to hedge the nature of our debt so as to manage

our interest rate risk.

Inflation Risk

India has experienced high inflation for the last 12 to 24 months, which has contributed to an increase in interest

rates leading to a rise in our cost of borrowing. See “Risk Factors— A slowdown in economic growth in India

and other countries in which we operate could cause our business to suffer.”

98

Material Developments after December 31, 2014 that may affect our future results of operations

There has been no material development in our Company after December 31, 2014 except the following:

Our Company has obtained a unified license (for ISP Category A) in the name of its wholly owned subsidiary,

Siti Broadband Services Private Limited, on January 28, 2015 to undertake the broadband services business.

99

INDUSTRY OVERVIEW

Unless noted otherwise, the information in this section is derived from industry sources and government

publications. None of the Company, the BRLMs and any other person connected with the Issue has

independently verified this information. Industry sources and publications generally state that the information

contained therein has been obtained from sources believed to be reliable, but their accuracy, completeness and

underlying assumptions are not guaranteed and their reliability cannot be assured. Industry sources and

publications are also prepared based on information as of specific dates and may no longer be current or reflect

current trends. Industry sources and publications may also base their information on estimates, projections,

forecasts and assumptions that may prove to be incorrect. Accordingly, investors should not place undue

reliance on this information.

Overview of the Indian Economy

The total GDP of India was ` 99.2 trillion at constant (2011-12 prices) and ` 113.45 trillion at current prices, in

fiscal 2014. (Source: Press Note, MOSPI, 9-Feb-2015). On purchasing power parity (“PPP”) basis, India is the

fourth largest economy in the world after the United States, European Union and China, with a GDP of US$4.99

trillion in the year 2013. (Source: CIA Factbook Website)

India has been one of the fastest growing economies in the past decade. In the first decade of the 21st century,

India set a robust pace of GDP growth (along with China), and emerged as a bulwark of the global economy.

India’s growth averaged over 9% from 2004-05 to 2007-08 (although China’s growth was higher). India and

China were joined later by other major developing economies such as Brazil, Russia, Indonesia and South

Africa (BRICS), whose growth averaged over 5.6% during this period; by contrast, growth in the US and

Europe averaged only 2.4% and Japan around 1.3%. Together, the share of developing economies of world GDP

exceeded that of the developed economies for the first time ever, as did their cumulative share in global trade.

(Source: International Monetary Fund)

The growth in GDP during 2014-15 is estimated at 7.4% (based on constant (2011-12 prices)) as compared to

the growth rate of 6.9 per cent in 2013-14 (Source: Press Note, MOSPI, 9-Feb-2015). With a fall in inflation

over the last few quarters, consumer discretionary spending is expected to increase. The increase in spending is

aided by an estimatedgrowth in per capita income of 6.1% in fiscal 2015. Per capita income at current prices

during 2014-15 is estimated to be ` 99,872 compared with ` 90,688 during 2013-14, a rise of 10.1% per cent.

(Source: Press Note, MOSPI, 9-Feb-2015)

The total population in India has increased from 1.15 billion in 2008-09 to 1.23 billion in 2013-14. (Source: RBI

Macro Economic Aggregates). As per the Report of the Technical Group on Population Projections constituted

by the National Commission on Population (“NCP”), the total population of India is likely to increase to 1.4

billion by 2026. Further, the urban population is projected to increase from 0.34 billion (29.6% of total

population) in 2009 to 0.53 billion (38.8% of total population) in 2026. (Source: NCP). Over the last two

decades, India's urban population increased from 217 million to 377 million and this is expected to reach 600

million, or 40 percent of the population by 2031 (Source: United Nations Report).

Media and Entertainment Industry

The Indian Media and Entertainment (“M&E”) industry, which comprises television, film, radio, print, music,

the internet, animation, gaming, outdoor media and digital advertising, has been one of the fastest growing

industries in India over the last few years. The Indian M&E industry grew from ` 821 billion in 2012 to ` 918

billion in 2012, registering an overall growth of 11.8 per cent. While low GDP growth and a weaker rupee

ensured that growth in this industry remained muted in 2013 increased digitization of media products and

growth in regional media ensured some resilience in the M&E industry. The industry is estimated to achieve a

growth of 13.18 per cent in 2014 to touch ` 1,039 billion. Going forward, the sector is projected to grow at a

healthy CAGR of 14.2 per cent to reach ` 1,786 billion by 2018. (Source: FICCI KPMG Report 2014)

100

Today, India’s media and entertainment industry reaches millions of people. 161 million TV households, 94,067

newspapers (12,511 dailies), close to 2,000 multiplexes, 214 million internet users out of which 130 million are

mobile internet users – all these are platforms that could drive change and be transformational catalysts.

Although total households are expected to grow at a CAGR of 0.8% only between CY14 & CY17, the number

of C&S Households are expected to grow at a robust CAGR of 5.7% in the same period. C&S penetration of TV

households is expected to reach ~91% in CY2017 (Source: FICCI-KPMG Report, 2014)

The following table sets forth the historic and projected revenue of India’s entertainment and media industry as

a whole and for the various segments of this industry for the period 2008 through 2018:

The TV industry CAGR growth at 16.2% is expected to exceed that and would account for more than half of the

incremental revenue addition that would take place in the TV industry.

Increasing digitization across various sub-sectors of the M&E industry, rate increases in television, channel

packaging by MSOs, innovative strategies for monetizing digital content, the rapid growth of new media

powered by the increased penetration of smart phones and campaign spending during the general elections are

likely to expand horizons for the M&E business. (Source: FICCI KPMG Report 2014)

India’s Pay Television Industry

Television is the largest medium for media delivery in India in terms of revenue, representing around 45 per

cent of the total media industry. The Indian television industry is slated on the path of continued growth, with

increased digitization and the rollout of the mandatory DAS almost complete in in Phase I (four metropolitan

370 417 479 567 672 772 885 224 243 264

287 313

343 374

112 125

138 158

181 200

220

114 133

158 188

223

265

307

2012 2013 2014p 2015p 2016p 2017p 2018p

TV Print Films Others

101

cities) and Phase II cities (38 cities in India with a population of over one million). (Source: FICCI KPMG

Report 2014)

The number of households in India with television increased to 161 million in 2013. The number of C&S

subscribers increased by 9 million in 2013, to reach 139 million. Excluding Doordarshan direct, the number of

paid C&S subscribers in India is estimated to be 130 million. This C&S subscriber base is expected to grow to

181 million by 2018, representing 95 per cent of households with television. (Source: FICCI KPMG Report

2014)

Television Industry Value Chain

The Indian television industry comprises of:

content producers/aggregators (who bundle and create packages of television channels and sell these

packages to distributors of television channels)

broadcasters of television channels

distributors of television channels

Content Production

The content production industry is highly fragmented, given that it has sizeable barriers to entry and its

extreme creative nature.

Content production costs have been increasing, linked not only to inflation, but also to improvement in

production quality.

Digitization of cable is expected to create significant opportunities for growth in the content production

industry, including in improvement in content quality, localized content and niche channels.

The need to maintain intellectual property law protection for content has grown in the content production

industry. Robustly protected intellectual property rights are also significant entry barriers.

Broadcasting

The total number of private satellite television channels has gone up to 793 as of March 2014, and 187 pay

channels for which rates have been taken on record (Source: TRAI Information Note on “Indian Telecom

Services Performance Indicator Report for the Quarter ending March 2014” available at

http://www.trai.gov.in). The genres and niches have expanded significantly, with launch of new channels

catering to specific customer preferences (e.g. news, kids, infotainment and lifestyle). The industry also saw

significant growth in the number of regional channels.

The real benefits from digitization in the broadcasting industry are expected to be seen over 2015. Growth

is expected to be driven by increase in net subscription revenues, which in turn will be driven by better

ARPU shares and increasing digitized subscriber base.

2013 was a weaker year from broadcasters, with advertising revenues achieving lower-than-expected

growth levels, driven by a weak operating environment, and TRAI regulations on the 12 minute

advertisement cap. Hindi and regional general entertainment channels performed better in terms of

advertising revenues in 2013, given that advertising in mainstream channels was considered safer in a lower

growth industry.

The long-term outlook for advertising remains positive and advertising revenues are expected to grow at a

CAGR of 13 per cent from 2013 till 2018.

102

Subscription revenues increased in 2013, partly due to higher subscription revenues from Phase I and Phase

II cities (in terms of digitization) and partly due to better negotiation through consolidated channel

aggregators.

Distribution

India continues to be the third largest television market in the world (after USA and China), with 168.51

million television households in 2014.

Digitization of cable, driven by the recent Cable Television Networks (Regulation) Amendment Bill 2011

passed by the GoI, is expected to be a game changer, affecting the entire value chain.

Broadcasters, MSOs and DTH operators are expected to be key beneficiaries of the government mandate,

while the LCO’s bargaining power is expected to decline substantially

Mandatory digitalization will result in consolidation of the last-mile cable industry. Larger operators will be

keen to acquire the last mile as operators successfully develop skill sets and necessary infrastructure as they

transition to a B2C model.

2013 will probably be best remembered for the rollout and traction in the mandatory DAS.

(Source: FICCI KPMG Report 2014)

Growth Drivers

1. Increase in television Penetration in India: India was estimated to have around 168.51 million

television households in 2014.

It may be noted that while India has added 12-16 million television sets every year since 2005,

television penetration every year has increased by around 6-8 million. Thus, approximately 40 per cent

of television sales in the year appear to reflect in increased television penetration. The balance of

television sales includes replacement of old television sets or multiple television sets entering a

household. While a single analog cable connection may be used to cater to all the television sets in a

house, these would need multiple connections (multiple set-top boxes) in a digitized environment.

3. Increase in C&S Penetration: The number of C&S subscribers increased by ~9 million during 2013

to reach 139 million. Excluding Doordarshan Direct, the number of paid C&S subscribers is estimated

to be 130 million in 2013. As television homes increase going forward, consumer demand for content

beyond free to air channels, combined with the relatively low ARPUs are expected to drive the demand

for C&S in India. This C&S subscriber base is expected to grow to 181 million by 2018, representing

95 per cent of TV households.

4. Increase in television Viewing Time: Average television viewing time in India continues to be low

vis-a-vis developed economies. Thus, there is potential for growth not only in terms of penetration /

reach, but also in terms of viewing time.

103

Television Distribution: Industry Structure in India

Cable Television

The number of TV households in India increased to 161 million in 2013. The number of Cable & Satellite

(C&S) subscribers increased by 9 million in 2013, to reach 139 million. Excluding DD Direct, the number of

paid C&S subscribers is estimated to be 130 million. This C&S subscriber base is expected to grow to 181

million by 2018, representing 95 per cent of TV households. (Source: FICCI KPMG Report 2014)

Operation of Cable Television

Cable television broadcasting operates by uplinking a broadcaster’s channel to a satellite which then provides a

downlink signal to a particular region. The downlink signal is received by MSOs at their network operating

center through dish antennas and other equipment such as modulators, decoders, encoders and amplifiers. This

signal is then distributed to end-user/subscribers, generally by LCOs who provide the ‘last mile’ cable link to a

subscriber’s home. Cable television signals can be transmitted in either analog or digital form. Most of the cable

television distribution networks currently deliver television channels in analog mode to subscribers. In India

while the MSOs largely operate the backbone networks/network operating centers, the LCOs operate and

control the ‘last mile’. MSOs and LCOs typically operate in small demarcated areas/cities. Generally, LCOs do

not own head-ends but receive signal from MSOs and provide the ‘last mile’ connection to the end-user. Each

LCO typically manages around 1,000 to 2,000 subscribers. (Source: FICCI KPMG Report 2014)

Market Structure

The dominant business model in the cable industry in India involves MSOs providing signal to the LCOs. MSOs

typically enter into an agreement with the LCOs with the latter serving as its “franchisees”. This is referred to as

secondary model or franchise model. Most MSOs are dependent on the secondary point strategy. Cable MSOs

are the corporate links of the cable distribution chain, with backbone networks and head-ends that aggregate

satellite channels and pass the signals on to LCOs for a fee. The biggest risks in this strategy are dependence on

LCOs for delivering service to the customers, revenue leakage due to under-reporting by LCOs, zero access to

customers thereby eliminating possibility of offering additional services like broadband etc and over-

dependence on placement fees.

The alternate model called the primary model, involves the MSO owning the network end-to-end and providing

‘last mile’ connection or signals directly to the end-users. However this model is adopted by very few MSOs in

India. The benefits of the primary point model or direct access to customers are significant however, as the

MSO retains 100 per cent of subscription revenues. The primary point acquisition also means that the MSO can

upgrade the ‘last mile’ network and up-sell multiple services including digital pay- television and broadband

internet access, to maximize long-term value, reduce the payback period in building the network and prevent

churn to DTH.

Distribution

104

2013 will probably be best remembered by the industry as the year in which mandatory Digital Access System

(DAS) gained traction with roll out in Phase II cities. As per FICCI-KPMG Report, 2013, most stakeholders had

indicated a time gap of 6-12 months for complete rollout of STBs across the 38 Phase II cities. The experience

has largely been in line with industry expectations. While there have been implementation challenges in some

Phase II cities such as Hyderabad and Coimbatore, DAS roll-out is estimated to be almost complete in Phase II

cities. At an overall level, all industry participants agree that digitization has been a step in the right direction,

and that they remain committed to the digitization effort.

Most industry participants are in agreement that the digitization deadline is not the end of a journey but the start

of one. most industry participants are of the opinion that its financial benefits will happen over the next 2-3

years from 2014 through 2016. The industry also believes that it is critical for the regulatory pressure to

continue for digitization to be completed.

Even as MSOs work to verify and consolidate billing for their subscriber base in Phase I and II cities, the

deadline for Phases III & IV is close. The status of the digitization process as announced by The Ministry of

Information & Broadcasting (MIB) recently is set out below:

Phase Area Analog

Subscriber Base

(~150 mn)

Implementation

Date

Status

Phase I 4 metros – Mumbai,

Delhi, Kolkata, Chennai

~6 31st Oct 2012

(Delhi and

Mumbai)

15th

Feb 2013

(Kolkata)

Mumbai , Delhi , Kolkata –

Complete

Chennai - still underway,

given legal issues

Phase II 38 cities with population

> 1m

~14 31st Mar 2013 Complete except Hyderabad

city

Phase III All other urban areas

across India with a

municipality

~90 31st Dec. 2015

Voluntary digitization taking

place

Phase IV Rest of India 31st Dec. 2016

Digitization Mandate by the Government

The government has passed the Cable Television Networks (Regulation) Amendment Bill 2011 that makes it

mandatory to digitalise analog cable network throughout the country in four phases by December 31, 2014 (now

revised to December 31, 2016). The digitization of cable networks will hugely benefit the government,

broadcasters, MSOs and the consumer in the following ways:

Lead to higher tax receipts for the government;

An improved experience for consumers with more bespoke choice and services;

Higher subscription fees for MSOs;

Scalable business models for MSOs and LCOs with multiple services across the last mile including digital

cable and high speed broadband; and

Rationalize the distribution of Cable television subscription revenues between the broadcasters, MSOs and

LCOs.

While there are over 800 channels available, an analog cable network can carry only a little over 100 channels

currently. Once digitised, any cable network will be able to carry at least 500 channels with ease and still free up

bandwidth to offer additional services like broadband internet, HD television (high definition) and several value-

added services like telephony, gaming, shopping etc. Once implemented, this bill prohibits the transmission of

television signal in analog format by any MSO/LCO in the designated cities by making them legally bound to

transmit only digital signals. Subscribed channels will be received at the customer’s premises only through a

105

STB equipped with a smart card. Each user in the network would be uniquely identifiable to the service provider

through an SMS deployed by each MSO and this is expected to shift the control over the subscriber from the

LCOs to the MSOs.

Subsequent to the DAS mandate, new regulations and policies have been set out by the TRAI. Chief amongst

these was a tariff order that offers more control and scalability to MSOs. In order to accelerate capital flows into

the cable industry, the tariff order offers multiple monetization points for MSOs. In addition to gaining a 67 per

cent share of pay channel subscription fees (to be shared with broadcasters), MSOs are also entitled to a share of

FTA channel subscription fees.

Furthermore, retail rates under DAS are now free from price regulation, providing ample room for ARPU

growth. Significantly, TRAI has made MSOs responsible for billing the consumer and paying the LCOs and

broadcasters, making the MSO the primary point for billing and revenue sharing in the new DTV regime. TRAI

has also legitimized carriage fees, which will help MSOs offset their investment in rolling out digital

infrastructure.

As per industry estimates the total capital requirement for upgradation to digital cable network could be to the

tune of ` 20,000-25,000 crores. To support the process of mandatory digitization, the government raised the

limit of foreign investment in broadcast services from 49 per cent to 74 per cent. This move is likely to help the

MSOs in attracting new funding to supplement the funding requirements for digitization apart from enabling

partnerships with foreign strategic players that will help bring in better technological know-how, particularly on

rolling out of broadband internet and other value added services as relevant to the cable industry.

(Source: Ministry of Information and Broadcasting)

Impact of Digitization

Despite implementation and policy bottlenecks, digitization of cable television distribution made significant

progress in Phase I cities as well as in Phase II cities. Industry estimates state that the phased progress in

digitization has been the stepping stone for the M&E industry growth and success, thereby bringing about a

paradigm shift in key indicators, particularly within the domains of TV and film sectors. The MIB introduced

several initiatives with a view to harness the power of technology and create a framework to drive growth in the

existing broadcasting landscape in India. With phases one (top four cities in the country) and two (the next 38

cities) nearly complete, the industry is now committed to complete phase three (all remaining urban areas) of

digitization of TV signals’ transmission. Successful completion of the digitization process will result in the

complete closure of analogue transmission and could act as an enabler to add value and to increase profits at

each level in the value chain. (Source: FICCI KPMG Report 2014)

In the absence of digital addressability, the industry estimates that a cable operator declares only 15 to 20 per

cent of his actual subscriber base to the MSO. Subscriber declaration levels are expected to increase to 100 per

cent post digitization. However, revenue share between various stakeholders may continue to be negotiation

driven during initial period even though the government has announced a revenue sharing structure between the

MSOs and LCOs. The revenue share is expected to evolve as digitization progresses. MSOs are expected to see

a significant increase in their bargaining power over LCOs. The LCOs share, while smaller than the pre-

digitization period, may differ depending on the area.

With proactive STB seeding by MSOs and with the ongoing mandatory DAS rollout, the share of analog cable

is expected to reduce drastically going forward with digital cable accounting for much of the churn.

106

Source: FICCI KPMG Report 2014

Benefits of Digitization

In 2013, large networks appear to have witnessed 15-20 per cent growth in their subscription revenue,

Subscription-led revenue share deals between broadcasters and MSOs are still the exception in the industry.

Given that the MSOs are still in the process of verifying subscribers on the ground and establishing SMS,

broadcaster-MSO agreements continue to be based on fixed fee arrangements for the most part.

DAS Phase I and II markets account for 75 per cent of the carriage fee payment in the near term, so there is a

risk that decline in carriage fees in digitised regions may be offset by an increase in carriage fee paid for less

than Tier I markets since TAM has extended its reach to include the less than Tier I markets and broadcasters

may want to ensure visibility in these markets.

The supply-demand situation to carry channels will improve significantly post digitization. However, there is

also a realisation that carriage fees will not disappear completely in the medium term. (Source: FICCI KPMG

Report 2014)

Digital television is expected to provide the consumer access to a higher number of television channels,

customized tariffs, availability of broadband and other value-added-services, and enhanced user experience

through better viewing quality and consumer service. It also releases bandwidth which can be used to broadcast

more channels in the same space. This can enable more niche content being available in the future using the

same network. Some of the advantages of digital cable television over analog cable television are:

Better quality picture and sound: Digital cable television, with its high picture quality and sound, provides

a significantly better quality viewing experience compared with analog cable television.

Significantly more channels: Digital cable networks have a significantly higher capacity to carry channels

than the current capacity available in an analog cable network.

Value-added services: Digital cable allows operators to provide subscribers with value-added services, such

as an electronic programme guide, video-on-demand, pay-per view and interactive- television services,

which provide multiple monetization opportunities for the distributor.

68 74 69 68 55

31 5 5 5

5 6 19 25

40

60

81 87 91

28 31

34 37

44 56 70 72

75

5 8

9 9

9 9

9 9

10

106

119

131 139

148 156

165 173

181

2010 2011 2012 2013 2014P 2015P 2016P 2017P 2018P

Number of Cable & Satellite Subscribers

Analog Cable Digital Cable DTH Other Digital

107

Prevents non-subscribers from viewing content and the under reporting of subscribers by LCOs:

Digitization involves encryption of content, which helps prevent unauthorised viewing of the content

Accurate subscriber data: Digitization provides accurate data on subscriber base of each operator.

Revenue

ARPUs will be driven by channel packs, premium content channels, VoD and other value added services.

Package wise billing will lead to increased negotiation ability for the MSOs.

ARPU Trends (`)– on a monthly basis


Aided by digitization and the consequent increase in ARPU, the share of subscription revenue is expected to

increase from 66% in 2013 to 71% in 2018.

TV Industry size (in INR billion)


175

196

225

248

273

301

200

220

242

266

292

322

2013 2014P 2015P 2016P 2017P 2018P

Digital Cable DTH

245 281 327 395

477 551

632 125 136

152 172

195

221

253

2012 2013 2014p 2015p 2016p 2017p 2018p

Subscription revenue Advertisement revenue

108

Although total households are expected to grow at a CAGR of 0.8% only between CY14 & CY17, the number

of C&S Households are expected to grow at a CAGR of 5.7% in the same period.

DTH Satellite Television

DTH satellite television, which was introduced in India in 2003, utilizes a small dish antenna and a STB that is

installed at the viewer’s premises and is capable of directly receiving and unscrambling television signals from

the satellite. The advantages of DTH as a platform include a user-friendly interface and a large number of

channels compared to the analog platform. The DTH industry is currently looking very competitive with six

players already in the market, excluding state-owned Doordarshan’s Apna DTH, which is a free platform. Total

number of registered subscribers and active subscribers being served by these six private DTH operators, as

reported to TRAI, are 67.57 million and 38.24 million respectively, as on June 30, 2014.

Despite the strong growth of DTH in last few years, digital cable is expected to remain dominant in the future as

cable television, particularly digital cable, has the certain inherent advantages over DTH which include:

The biggest advantage that digital cable has is the reverse path that does not exist in the satellite based DTH

which enables bundling of services such as analog/digital cable with data and voice;

Digital cable television network can carry more number of channels than DTH and the incremental

expenses for adding more channels is lower in cable television networks;

The set-up, operating costs and service fee is lower for digital cable;

Adverse weather conditions may affect the quality of DTH services, whereas digital cable television

services remain largely unaffected by adverse weather; and

Ability to offer more channels also translates into availability of local content which is not possible in

DTH

Digital Cable, owing to its two way communication capability, localized nature of service and immunity to

weather conditions is best placed to serve Indian households.

Other emerging Pay-TV technologies

Apart from cable and DTH satellite television networks, a number of other emerging digital pay-television

technologies may become more available to Indian subscribers, including IPTV and HITS.

HITS is similar to DTH; in both these platforms of digital cable, channels are distributed at one go through a

satellite. But unlike DTH, where the end-user is the consumer, the HITS end-user is a cable operator, who then

delivers the signals to the end consumers. However, HITS is likely to lose its appeal as the Government is

planning to complete the roll-out of a nation-wide fibre optic network (National Broadband Plan) by December

2013 which will make the availability of a bandwidth over a fibre optic network abundant and cost of transport

much cheaper than currently as also lower than the cost of setting-up and running a HITS network.

IPTV delivers television channels to subscribers using high speed internet protocol over copper cable networks.

IPTV is capable of providing voice, video and data transmission (referred to in the industry as triple-play

services) and can support video on demand, live video and gaming. IPTV was introduced in India in 2007. IPTV

in India is currently being offered by MTNL, BSNL and Bharti Airtel. IPTV remains nascent because of limited

fixed broadband penetration, and is likely to appeal to a premium consumer segment, unless prices fall. As a

service, it is widely accepted in just two countries across the world i.e. Hong Kong and Singapore with Cable

television being the dominant service in most other countries.

Internet Broadband Industry

Pursuant to recommendations of TRAI, the GoI formulated Broadband Policy of 2004. In this policy, broadband

was defined as an “always on” connection with downloads speeds of 256 kbps or more which has thereafter

109

been changed to 512 kpbs or more. As on March 2014, the total number of broadband subscribers were 60.87

million. Non broadband internet connections were 190.71 million, which comprises dial up connections working

upto 56.6 kbps and other connections with speeds less than 512 kbps.(Source: TRAI, Indian Telecom Services

Performance Indicators (January – March 2014).

While broadband has been deployed using Cable Modems, xDSL technologies, fibre and wireless, in India

xDSL has been predominantly used. As per TRAI data as on March 2014, 12.95 million wired internet

subscribers utilized DSL.

NTP-2012 has the vision Broadband on Demand and envisages leveraging telecom infrastructure to enable all

citizens and businesses, both in rural and urban areas, to participate in the Internet and web economy thereby

ensuring equitable and inclusive development across the nation. It provides the enabling framework for

enhancing India’s competitiveness in all spheres of the economy.

Internet Service Providers (ISPs), Unified Access Service Licensees (UASLs) and Cellular Mobile Service

Providers (CMSPs) are permitted to provide broadband access under the existing licensing framework. 60.87

million subscribers for March 2014 have been reported by 121 operators. However, the top ten service providers

account for about 97% of subscriber base and the top 5 service providers alone hold 83% market share. State

owned companies viz. BSNL and MTNL together have about 74.9% market share for wireline broadband and

30.5% for overall broadband subscriptions. This suggests that despite having a license for providing broadband

services, the majority of the service providers are either unwilling or unable to penetrate into the market and the

market is still dominated by a few players only. (Source: TRAI, Consultation paper on broadband, September

2014)

Broadband Tariff Trends

Although broadband penetration is low in India, the entry level tariff for broadband services has come down

drastically from ` 1500 per month in 2004 to around ` 500 a month in 2014. Most service providers charge a

monthly rental between ` 200 to ` 1600 for a broadband connection and providing various packages for data

transfer. Most service providers provide unlimited download packages. Unlimited broadband plans are on offer

for ` 549 per month. (Source: TRAI, Consultation paper on broadband, September 2014)

Broadband Supply Chain

The broadband supply chain as depicted below has four main components:

110

(Source: TRAI, Consultation paper on broadband, September 2014)

(i) Local access networks: provide the wireline and wireless infrastructure that end users utilize to

connect to the broadband network.

(ii) Metropolitan or backhaul links: provide the connections between local areas and the national

backbone network, usually via fibre optic cable (OFC) and microwave and, to a lesser extent, satellite.

In a wireless network, these links are used to bring traffic from cell sites back to a switching centre

(this is known as backhaul).

(iii) National backbone network: provides pathways for transmitting Internet data across a country,

typically via microwave, satellite, and OFC links. This also includes traffic management, exchange,

and routing as well as equipment related to enhancing efficiency and quality over IP networks such as

Internet exchanges, metropolitan rings, and next-generation networks (NGNs).

(iv) Internet Link and International connectivity: ISPs also need to arrange for exchanging and routing

their traffic to other networks around the world. Such arrangements ensure that Internet traffic can be

delivered anywhere in the world, eliminating the need to have physical connections to every country.

An ISP typically arranges to hand off its traffic at the points where its contracted physical connectivity

terminates. International connectivity provides links to networks in other countries usually via satellite

and OFC

(Source: TRAI, Consultation paper on broadband, September 2014)

International Experience

The development of key cable markets globally provides important insight for India especially with respect to

last mile consolidation, digitalization and the growth of broadband.

Globally, the development of the cable business has focused on ownership of the last mile with cable MSOs

operating as B2C businesses. Successful B2C last mile MSOs around the world include: (1) Comcast, Time

Warner Cable and Cablevision in the US; (2) Liberty Global and Virgin Media in Europe; (3) J:COM in Japan;

(4) CJ Hello Vision and C&M in Korea; (5) First Media in Indonesia; and (6) Taiwan Broadband

Communications, KBRO and CNS in Taiwan.

Globally, the cable industry typically consolidates under the last mile B2C model with a handful of players

emerging with a majority share of the market. In the experience of the US, UK, Korea, Japan and Taiwan, each

of these cable markets has undergone three distinct phases: (1) Over fragmented, un-regulated, chaotic market;

111

(2) Over regulation, still fragmented market but with a large base of subscribers across an analog network

without broadband or digital television; (3) Deregulated, digitized market with cable also providing broadband

services and driving last mile consolidation.

The key advantage for cable operators in global markets stems from return path or two way technological

infrastructure. This allows cable operators to offer high-speed broadband services, bundled with digital

television and various value added services such as VOD and DVR. Product innovation, attractive tiering of

content and the bundling of broadband services are key drivers of the cable television business proposition,

creating a significant pull for consumers. Once the cable network is upgraded and digitalized, the ability to offer

new services such as high-speed internet and telephony makes for a compelling proposition.

Cable MSOs have rolled out DOCSIS 3.0 in more competitive, urban markets where telecommunications

companies have deployed fiber; while in less-urban areas, cable has been competing with legacy DSL networks

with average speeds of lesser than 4 mbps. The growth of broadband has also driven significant changes in

revenue composition with more than 30 per cent of Comcast Cable’s revenues derived from broadband and

telephony. The same trend is evident in markets such as Japan, Taiwan and Korea as well as emerging markets

such as Indonesia.

Subscription Details

The table below shows the subscriber and other details as at June 30, 2014:

(Source: TRAI, “Indian Telecom Services Performance Indicator Report” for the Quarter ending June, 2014)

112

BUSINESS

Overview





We also provide cable broadband services in the cities of Kolkata, Greater Noida and Delhi. We own and

operate cable networks that reach a cable universe of approximately 10.5 million (based on our estimates) across

India, supported by multiple analog and 15 digital head ends and approximately 15,400 kilometers of HFC

network owned and leased by us. As of December 31, 2014, we had a total of approximately 4.85 million digital

subscribers.
















distribution of channel signals through a Digital Addressability s System (“DAS”) by December 31, 2016



channels through our analog cable television service. Besides providing the ability to telecast a greater number of

channels and high quality picture and sound for the channels broadcasted, our digital cable television services






devotional programmes or local news and events etc. We derive advertising revenue from these channels through

scroll advertising, commercials, stills, movie promos and telemarketing.













113





income for Financial Year 2013-14 and the nine month period ending December 31, 2014 respectively.

EBITDA margins for the Financial Year 2013-14 and the nine month period ending December 31, 2014 is

17.73% and 20.71%, respectively.

Our Strengths

Our business is characterised by the following key strengths:

Part of India’s leading media conglomerate

We are one of the group companies of the Essel Group. Launched in 1976, Essel Group is one of India’s largest

business houses, with a dominant presence in media industry having a market capitalization of approximately

USD 8 billion (as of February 15, 2015). Essel Group is one of India’s largest vertically integrated media and

entertainment group and also one of the leading producers, content aggregators and distributors of programming

globally. Zee Entertainment Enterprise Limited (“ZEEL”), the flagship company of the Essel Group owns and

operates the ‘Zee’ bouquet of channels, which is one of India’s largest network of general entertainment

channels with 34 domestic and 36 international channels in its bouquet. The Essel Group is one of the largest

producers and aggregators of programming in India having presence in 169 countries. Zee Media Corporation

Limited, one of our group companies owns and operates 10 news and current affairs channels. One of the Essel

Group company, Dish TV India Limited, is the first company in India to start the distribution of content via the

DTH platform. The Essel Group also has interests in English print media.

The Company believes that its association with Essel Group lends strength to the trust reposed in our Company

and enables it to attract and retain fresh talent. We are also able to utilise various synergies which aid in our

business and operations for instance, it is able to leverage its relationship with group entities and have entered

into arrangements with regards technology and content.

Attractive user base

We are one of the leading distribution companies in India, in terms of subscriber universe. As per our estimates,

we reach an estimated 10.5 million cable homes across India, supported by multiple analog and 15 digital head

ends and approximately 15,400 kilometers of hybrid fiber co-axial (“HFC”) network on an owned and leased

basis. As of December 31, 2014 we had approximately 54,000 broadband subscribers across different markets

and one lakh home passes in Delhi.

We have successfully identified, acquired and integrated various regional MSOs since our incorporation. We

believe that our understanding of the cable television distribution industry has enabled us to identify and acquire

appropriate acquisition targets, which in turn, has enabled us to become the leading national cable television

distribution company in India.

Owing to our existing presence and our investments in STBs and digital technology, we believe that we are

well-positioned to benefit from the Phase III and Phase IV of the mandatory conversion to digital platform

required to be completed by December 31, 2015 and December 31, 2016 respectively. As of December 31,

2014, we had a total of approximately 4.85 million digital subscribers, comprising approximately, 2.2 million

subscribers in Phase I cities and approximately 1.70 million subscribers in Phase II cities. We provide our

analog and/or digital cable television services to subscribers in several cities in the states of Delhi, Uttar

Pradesh, Maharashtra, Andhra Pradesh, Haryana, Madhya Pradesh, Kerala and West Bengal, which we believe

are key growth markets. We believe that operating in these states provides us with the opportunity to expand our

business significantly.

We believe that our existing nationwide reach and our delivery network provides us with a key growth

opportunity to convert our existing analog cable television subscribers, as well as attract new subscribers for our

digital cable services.

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Established Relationship with leading Suppliers

We source our equipment for our digital service offerings from reputed vendors of digital components. We

procure STBs primarily from Arion Technology Inc, Woojeon and Handan and Chang Hong (Hong Kong)

Trading Limited, which we believe are industry leaders in STBs design and technology and other equipment

such as head-ends and servers from leading suppliers such as Cisco, HCL and Harmonic Inc. A portion of our

intercity and intra-city network is set up on the network leased from third parties such as leading telecom service

providers like Airtel, Idea, Tata Teleservices and Tata Communications.

We believe that we are able to monitor and improve our network infrastructure to keep pace with the constantly

evolving subscriber preferences through and technology landscape our partnerships with these leading products

and service providers.

We have agreements with leading content providers and we believe that our content agreements cover a wide

range of popular channels which cater to varied tastes and preferences of subscribers in the markets where we

are present.

Strong Adherence to Regulatory Compliances

Mandatory digital access system gained traction with roll out in Phase I and Phase II cities. With the launch of

digitization, TRAI has recommended several standardized industry practices with respect to the cable

distribution business. We continue to place immense importance to regulatory compliances and have put in

place systems and processes for the adherence of the same. For instance:

.

Majority of Customer Application Forms (“CAF”)/ Subscriber Application Forms (“SAF”) have been

collected for Phase I and Phase II citiess;

We are undertaking gross billing for Delhi, Mumbai and Kolkata as mandated by TRAI and are in the

process of moving towards gross billing for Phase II cities;

We have implemented the ‘own your customer’ (“OYC”) subscriber management system for real time

access of subscriber billings, payments, account statements, activation, de-activation, up-gradation, down

gradation, packaging and monthly collections. Through the OYC system, we are able to generate

customised invoices and provide the same to our subscribers via box mail, e-mail as well physical delivery

through LCOs;.

We are working pro-actively with AIDCF (All India Digital Cable Federation) and various broadcasting

federations to educate the subscriber about their rights and options in relation to fostering the B2C model in

line with regulatory requirements;

We have set up two call centres in Noida and Kolkata for efficient customer service and have provided toll

free access for our customers. We have implemented various key performance indicators internally in order

to provide effective customer services and turn around time; and

We have defined interconnect agreements with most of our LCO partners clearly delineating revenue share

as well as other operational covenants. We treat LCOs as partners and undertake pro-active revenue share.

Industry-Experienced Management Team

The promoter of the Essel Group, Mr. Subash Chandra, has extensive experience in the television industry. He

has played an instrumental role in the launch of cable television in India and was an integral part of the senior

management team of the Essel Group, an Indian media conglomerate that has interests in television, print, film

and allied businesses. Mr. Chandra has been the recipient of numerous honorary degrees, industry awards and

civic honors, including International Emmy Directorate award in 2011 for his contribution to India’s television

industry, he was named the ‘Global Indian Entertainment Personality of the Year’ by FICCI for 2004, ‘Business

Standard’s Businessman of the Year’ in 1999.

Our management team includes professionals with extensive experience in FMCG, telecom, broadcasting,

entertainment and content distribution sectors.

Our senior management team comprises of the following personnel:

Mr. V.D. Wadhwa, Chief Executive Officer and executive Director;

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Mr. Vinay Chandok, Chief Operating Officer and head of sales and operations; Mr. Sanjay Goyal, Chief Financial Officer;

Mr. Anil Malhotra, Chief Operating Officer for strategy and compliance; and

Mr. Bibhash Jha, Head of carriage and content

We are making a conscious effort to source senior management personnel from customer facing sectors to

ensure innovative thinking and professional best practices with an emphasis on providing customer satisfaction.

Our Strategy

Our aim is to become India’s leading integrated provider of cable television distribution, broadband internet

services and other value added services. In order to achieve our aim, we intend to follow the key business

strategies described below:

Focus on Digitization

The cable television distribution industry in India is transitioning to DAS and all cable operators are required to

transmit digital signals through addressable STBs by December 31, 2016. We are aggressively pursuing the

digitization of our services to adhere to the digitization schedule set out by the MIB.

We are aggressively undertaking proactive seeding on Phase III and Phase IV areas. We are looking to

completely digitize our cable subscriber universe by the digitization dead-line as well as scale up our presence

from 130 cities to 200 cities. We have in the past successfully expanded our operations and increased our

subscriber base. Our strategy is to continue to invest in the expansion of our existing network and tapping new

geographies. We have expanded our presence from around 60 cities as of March 31, 2013 to 130 cities and

certain adjacent semi urban and rural areas as of December 31, 2014.

In addition to increased subscription fees, digitization also provides other commercial advantages. A digital

platform enables us to offer greater number of channels, content with high quality picture and sound and

revenue enhancing services, such as HD (high definition) and value added services such as video on demand,

movie on demand, HD and content, which cannot be offered through an analog platform. The use of digital

STBs enables us to obtain accurate data about the number of subscribers using our services and eliminates the

practice of under-reporting of subscribers by LCOs. Further, digitization enables our signal to be encrypted,

thereby reducing revenues lost due to unauthorized access. We believe that our digital service offerings reduce

the likelihood of our subscribers switching to another digital platform such as DTH satellite television, thereby

strengthening our relationships with the subscribers and enabling us to compete effectively.

With the preference for digital and HD quality telecast, there has been a drastic change in the consumer

preference over the years. With cable television industry moving towards this drift positively, we see a huge

opportunity ahead of us given our existing market positioning. Due to healthy competition in the cable television

industry, the subscriber is becoming more demanding and expects more entertainment, varied channels and high

quality signals. We seek to continue to cater to such demands of our subscriber through differentiated

packaging, competitive prices and advanced technological infrastructure.

Deeper penetration in our existing geographies and entry into new geographies

We intend to continue increasing our customer penetration and income from sales of cable and broadband

services in the areas in which our cable network is laid. We intend to improve our cable penetration ratio (cable

television subscriber base as a percentage of estimated homes passed) in locations with lower than average

penetration thereby improving the overall connection efficiency across our network. We intend to expand our

cable television subscriber base through a combination of competitive pricing, multiple service offerings,

extensive marketing, acquiring majority interests in established MSOs/ LCOs and acquiring network equipment,

infrastructure and subscribers from the MSOs/LCOs in such areas, as the case may be. For instance, we are

exploring options of expanding our cable services base in Andhra Pradesh.

Increase our broadband subscriber base

ISPs, unified access service licensees (UASLs) and cellular mobile service providers (CMSPs) are permitted to

provide broadband access under the existing licensing framework. As of March 2014, 121 broadband operators

have reported 60.87 million broadband subscribers. Top ten broadband service providers account for about 97%

of subscriber base and the top 5 broadband service providers alone hold 83% market share. State owned

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companies viz. BSNL and MTNL together have about 74.9% market share for wireline broadband and 30.5%

for overall broadband subscriptions. (Source: TRAI, Consultation paper on broadband, September 2014)

The aforesaid data suggests that we have ample opportunity to continue increasing our customer penetration and

income from sales broadband services in the areas in which our cable network is laid. As per our estimates, we

have access to approximately 10.5 million cable universe in 130 cities in India, which we can tap for our

broadband services offerings.

We are currently providing broadband services with EOC in Kolkata and have recently launched DOCSIS 2.0

and DOCSIS 3.0 technology in Delhi and Greater Noida. For our broadband services we are offering up to 100

Mbps speed and our packages starts from ` 599 going up to about ` 3,699. As of December 31, 2014 we had

approximately 54,000 broadband subscribers across different markets and one lakh home passes in Delhi.

We intend to launch our broadband internet offerings in approximately 21 cities using primarily DOCSIS 2.0

and DOCSIS 3.0 technology. We intend to provide speeds up to 40 Mbps on DOCSIS 2.0 and up to 100 Mbps

on DOCSIS 3.0. We are currently putting in place a parallel network to provide broadband and have entered into

long term agreements with certain LCOs to provide service support and maintenance of this network. We

believe that our strategy of cross-selling broadband services to our existing subscribers will lead to lower

customer churn improve ARPUs and higher sustainable EBITDA margins. Our ability to offer double play

bundled services will enable us to reduce our payback period and increase the return on our investment.

Bundling of broadband and cable services would also lead to increased retention rates, lower churn and better

negotiating power with LCOs.

We believe that improving penetration levels of the broadband universe will substantially reduce the cost of

subscriber acquisition.

Increase our primary subscriber base

We have direct points in Delhi and we continue to acquire LCOs in attractive localities to increase direct

subscription revenue. Increasing our primary subscriber numbers is important because we benefit from higher

realization per subscriber and can gradually move the subscriber to higher value offerings in addition to

providing improved customer service. Consolidation in the distribution space through direct points will give us

more pricing power with respect to our subscribers and better negotiation ability with respect to broadcasters

and LCOs.

Focus on Improved Monetisation of Subscriber Base

The television industry in India is estimated at ` 417 billion in 2013, and is expected to grow at a CAGR of 16%

over 2013-18, to reach ` 885 billion in 2018. Aided by digitization and the consequent increase in ARPU, the

share of subscription revenue to the total industry revenue is expected to increase from 67% in 2013 to 71% in

2018. (Source: FICCI-KPMG Report, 2014)

We are looking to improve realization of revenue in the following manner:

Increase subscriber ARPUs by bundling selective packaging of content to provide a bespoke entertainment

experience to the subscriber;

Providing value added services such as video on demand, movie on demand and own and local channels;

and

Negotiating improved commercial terms with LCOs over a period of time

The Ministry of Information and Broadcasting (MIB) introduced several initiatives with a view to harness the

power of technology and create a framework to drive growth in the existing broadcasting landscape in India.

With Phase I and Phase II nearly complete, we are now committed to complete Phase III and Phase IV of

digitization of television signals’ transmission. Along with digitization the cable television industry is shifting

from B2B to B2C business model. B2C business model will lead to increased awareness about our product and

services amongst our subscribers, facilitate better interaction between us and our subscribers, it will also enable

us to company can provide better services and targeted / refined messaging can be done by the company leading

increased ARPU’s

We expect that after rolling out tiered channel packages and launching double play bundled services leading to

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increase in subscriber ARPU, we would be able to negotiate a more equitable revenue share arrangement with

LCOs as that would lead to higher absolute amount being received by the LCOs.

Our Service Offerings

Our business is broadly divided into (i) cable television services (including analog cable services and digital

cable services); and (ii) broadband services. Below is a map of India showing the key cities in which we provide

analog and/or digital cable distribution services:

Map not to scale

The services being offered are provided by our Company, our direct and indirect Subsidiaries and the LCOs

with whom we have entered into contractual arrangements.

Analog Cable Television Distribution

Our analog cable services involve the distribution of video programming from analog linear transmission

channels through our HFC network. A majority of our subscribers currently receive analog cable services. Our

analog infrastructure comprises multiple analog head-ends. The analog transmission is distributed to subscribers

utilizing an LCO through a feed processed at an analog head-end through our control room. Our analog services

presently offer up to 100 channels.

Our analog cable services are provided by down linking signals containing content from various broadcasters

using multiple parabolic satellite dish antennas located at the various analog head-ends. Considering the number

of channels to be received, 6 to 9 dish antennas are required for each analog head-end location. At the parabolic

focus of the dish antenna, low noise block down-converter (“LNB”) is placed to receive the signal being

beamed on the focus. The signals received by the antennas for a particular channel are then fed into an

integrated receiver descrambler (“IRD”), which is used to decrypt the scrambled channel. The IRD typically

converts the signal to a baseband audio and video signal which is then inserted into a modulator. The modulator

is a device which takes the baseband input signal and converts it into a radio frequency (“RF”) modulated

signal. A modulator allows one service to be transmitted per radio frequency carrier. After the modulation

process is completed, all RF signals are combined so that they can be transmitted via a single cable through our

HFC network. The HFC network then distributes the signals from the head-end to LCOs in various service

areas. Finally the signals are delivered to subscribers.

The assigned bandwidth for cable television transmission on the HFC network is 0 to 860 MHz, where 0 to 85

MHz is reserved for transmission from the subscriber to head-end as upstream, 100 to 860 MHz is reserved for

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transmission from head-end to the subscriber as downstream. A maximum of 106 channels can be transmitted

in analog format.

To have un-interrupted transmission from the head-end, 100% power backup arrangement is available at the

head-ends and field.

Digital Cable Television Distribution

We launched our digital cable television services in November, 2012. We currently offer up to 400 standard

definition (SD) and 30 high definition (HD) video channels, with multiple audio-feeds, where available, through

our digital cable television services. We currently have 15 operational digital head-ends located in the National

Capital Region of Delhi, Kolkata, Mumbai and other cities.

Driven by the regulatory requirement in relation to compulsory digitization, we have rapidly scaled up our

digital subscriber base. As of December 31, 2014, we had a total of approximately 4.85 million digital

subscribers, comprising approximately, 2.2 million subscribers in Phase I cities and approximately 1.7 million

subscribers in Phase II cities.

The points below sets forth the step-by-step process of delivering digital cable television services to a

subscriber:

We receive signals from the broadcaster via an array of dish antennas.

The received signals are then demodulated and decrypted by an IRD.

Un-encrypted signals are processed in the compression system using encoders, multiplexers and routers

among other equipment, and then encrypted with our DAS to prevent un-authorised reception of the

signal.

The encrypted signals are modulated and combined together on various frequencies for delivery to our

HFC network.

From the HFC network, LCOs take the feed for the last mile connectivity to our subscribers.

STBs installed at subscribers’ premises are activated using the subscriber management system and the

signals are decoded for viewing.

In digital transmission, the signal is converted into a combination of zeros and ones (bits), are compressed,

coded and then delivered and therefore can carry up to 2,000 channels.

In order to receive digital cable television, subscribers require STBs that we purchase from a number of leading

international vendors. Under our agreement with the LCOs, we charge new subscribers an activation fee for

activating their consumer premises equipment, primarily a STB and related equipment. The STB continues to be

owned by us, is capitalized on activation and depreciated over a period of eight years. The STBs are identified

by their unique serial numbers assigned by their respective vendors. The STBs are identified in our subscriber

management system by these serial numbers, and are assigned to subscribers in the process of activating their

digital cable television services. The STB decodes and decrypts the signals, which results in the conversion of

the signals into the content that is displayed on the subscriber’s television screen.

Digital transmission of cable television has significant advantages over the conventional analog transmission

such as more number of channels can be made available in the same bandwidth space, customised packages can

be availed by the subscribers, content is of superior quality and it offers scope for several value added services

such as:

video on demand – a feature that allows the subscribers to select and watch tele-films, soaps, reality

television and other entertainment programme during the allotted time slots upon payment of certain

amount.

movie on demand – a feature that allows the subscribers to select and watch movies from our own library

and the movie library of ZEEL (for which we have made arrangements) during the allotted time slots

upon payment of certain amount.

own brand and local channels – our own brand and local channels primarily telecast films and also offer

music, devotional programme or local events and news and are available for free to our subscribers.

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From the MSO perspective digitization plugs revenue leakage and under declaration, enhances subscriber

management and brings in discipline and structure to commercial deals, the revenue are secured and under

declaration of subscriber is eliminated.

Broadband Services

We provide both broadband services in Kolkata, Greater Noida and Delhi . Our network is capable of delivering

data speed of up to 100 Mbps. As at December 31, 2014, we have approximately 54,000 subscribers of our

broadband services and 1,00,000 home passes in Delhi.

We provide our broadband services through our HFC network. Our subscribers are currently able to access the

broadband services by using EOC, DOCSIS 2.0 and DOCSIS 3.0. Our fibre backbone and the ‘last mile’

network enable our customers to access internet services. For the Delhi and Greater Noida we are operating our

broadband services over DOCSIS 2.0 and DOCSIS 3.0 platforms to provide enhanced user experience to the

customers. We have also installed state-of-the-art NOC (network operation center) and broadband network

distribution from leading players like Cisco. The table below sets out the broadband activities undertaken /

proposed to be undertaken by our Company as on December 31, 2014:

Timeline Activity Location Current State / Target

March 2012 Launched broadband with EOC

technology

Kolkata Presently around 54,000 subscribers

September 2014 Launched broadband with DOCSIS

2.0 and 3.0 technology

Delhi Presently around 100 subscribers

December 2014 Expansion in Delhi; 2 way HFC

upgrade. Analog to digital migration

Delhi Presently around 1,00,000 home passes

FY 17 E Accelerated digitization; DOCSIS 2.0

and 3.0 expansion

~20 cities Feasibility study completed; Network

upgradation began in October 2014.

DOCSIS is an open standard with inter-operable equipment from various vendors across the world. In DOCSIS,

customers can be offered plan up to 300 Mbps. In DOCSIS, CPE (customer premises equipment, called cable

modem) are available in two variants – DOCSIS 2.0 and DOCSIS 3.0 cable modem. In DOCSIS 2.0, speeds up

to 40 Mbps can be offered and in DOCSIS 3.0, speeds up to 100 Mbps can be offered. We use cable modem

termination system (“CMTS”), or router, a device located in the cable head-end to offer high-speed internet

access to home computers.

We currently offer various packages to our subscribers ranging from ` 599 going up to about ` 3699. We also

offer home wireless options to our broadband subscribers. The details of the packages offered by us as on

January 31, 2015 are set out below:

Plan Name Download Speed Fair Usage Policy (FUP) Limit Post FUP

Download speed 15 GB 25 GB 40 GB 60 GB 100 GB

Basic 5 Mbps ` 599 ` 799 ` 999 ` 1,199 ` 1,399 512 Kbps

Standard 10 Mbps ` 699 ` 899 ` 1,099 ` 1,299 ` 1,499 512 Kbps

Turbo 20 Mbps ` 1,199 ` 1,399 ` 1,599 ` 1,799 ` 1,999 512 Kbps

Extreme 50 Mbps ` 1,899 ` 2,099 ` 2,299 ` 2,499 ` 2,699 512 Kbps

Ultimate 100 Mbps ` 2,899 ` 3,099 ` 3,299 ` 3,499 ` 3,699 512 Kbps

Programming

We currently offer up to 100 channels of programming on our analog cable television platform and up to 430

video channels, where available, on our digital cable television platform. The number of channels offered is

dependent on the location and subscriber demographics in the target market. To meet the diverse needs of the

large, culturally diverse and multi-lingual Indian market, we offer a broad range of content.

Our digital subscribers pay and view channels according to their specific tastes by choosing specific packages

that we have put together, and which consists of various channels across numerous different genres. They also

have the option of selecting channels on an ‘a-la-carte’ basis.

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Our content offering, in each of the analog and digital platforms is structured with an objective to maximize the

preferred channels in each genre and we ensure to cover all genre including general entertainment, news, sports,

movies, music, infotainment, regional, religious, kids, lifestyle and other bouquets. The offering of these

channels may vary from locations to locations across India.

As on January 31, 2015 we are offering the following monthly subscription packages in the DAS Phase I and

Phase II cities:

Region Channel Count Janta Popular Grand Premium

Delhi New Channel Count 119 193 235 243

Price (`) 100 185 235 285

Mumbai New Channel Count 108 195 225 232

Price (`) 100 185 235 285

Bangalore New Channel Count 128 195 221 235

Price (`) 100 185 235 285

Indore New Channel Count 120 194 227 235

Price (`) 100 185 235 285

UP New Channel Count 107 179 214 219

Price (`) 100 185 235 285

Faridabad New Channel Count 119 194 235 244

Price (`) 100 185 235 285

Jaipur New Channel Count 122 194 227 235

Price (`) 100 185 235 285

Kolkata New Channel Count 114 184 273 332

Price (`) 100 205 265 325

Content and Carriage

Availability of the right mix of channels at any given point of time is critical for subscriber satisfaction and

retention. Since there are a large number of channels available we have to provide channels in different markets

depending on the subscriber’s expectations and competitor’s offers. Once the desired channel list is decided, we

negotiate the commercial aspects with the respective broadcasters in respect of pay channels and an agreement

is executed with the broadcasters.

On a general basis we follow different commercial models for negotiating our content agreements with the

broadcasters. Typically, the content owners charge an agreed price per subscriber for the content provided or an

agreed fixed fee and on an ala-a-carte basis. The popularity of the content being offered by the broadcaster is the

single most critical driver to decide the commercial model which we will follow under our content agreements.

Similarly, for gaining better viewership, broadcasters also negotiate and offer carriage fee to run their services in

the desired frequency/band and entail improved distribution. Depending on our capacity to carry the channels

and keeping in mind the subscribers’ demands, we negotiate such fee with some of the broadcasters and place

their channels on the agreed frequency/ band. We generally enter into placement contracts for a period of one

year, which is of a renewable nature. We generally agree to a fixed fee for the term of the agreement, payable in

equal monthly or quarterly instalments. Typically the broadcaster require their lesser known or new channels to

be placed on the suitable channel number or position or LCN, in order to ensure wider visibility of such

channels. We derive maximum carriage fee from the placement of local channels.

Carriage fees, marketing support and placement fees are paid to us by broadcasters and content aggregators for

carrying their channels and placing their channels on their preferred channel number or position in the logical

channel numbering (“LCN”) and the package in case of digital services or preferred signal and frequency band

in case of analog services.

Programming Suppliers

We procure content through channel distributors or owners. Under Indian interconnection regulations, all

broadcasters and distributors are required to offer their content to all platforms and operators. We enter into

content agreements with channel distributors and owners to license channels for viewing by our subscribers and

we pay them content and programming cost as stipulated under the agreements. Some of the content providers,

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from whom we license channels are indicated below:

IndiaCast Media Distribution Private Limited

MSM Discovery Private Limited

Taj Television (India) Private Limited

ZEEL

Various regional / local content providers

Typically, content owners charge an agreed price per subscriber for the content provided or an agreed upon

fixed fee and on an ala-a-carte basis. In addition to paid content, a number of channel distributors or owners,

such as the free-to-air channels, provide their content at no cost, and in certain instances, we charge channel

owners placement fees for including certain channels in our subscription packages.

Own Brand Television Channels

We own and operate several local brand television channels from our digital head-ends, which are telecast

exclusively on our cable distribution network. These channels primarily telecast films and also offer music,

devotional programme or local events and news.

We currently have distribution rights for over several films to be telecasted through our own brand channels.

The agreements that we have entered into with broadcasters and content aggregators typically have a term of 1

year(s) which we renew from time to time. We seek to continuously acquire the distribution rights of additional

films, music and other content to cater to the tastes and preferences of a diverse and varied group of subscribers

and to differentiate ourselves from our competitors. As of February 15, 2015 all the movie agreements we have

entered into have expired. For more details please refer to section titled ‘Risk Factors’ on page 50 of this


We earn revenues from our own brand television channels by selling advertising spots that are interspersed in

our channels’ regular programme, by selling sponsorship rights to certain content and from stills, banner

advertisements and screen crawlers that are displayed on the bottom of the television screen while regular

content is broadcast. Each of our centers typically has a small team responsible for generating advertisement

revenues, who are assisted by a central sales team.

Contractual arrangements with LCOs

We provide cable television signals in both analog and digital mode of re-transmission to our subscribers either

directly or through our affiliated LCOs. Our sources of revenues are subscription revenue, channel

placement/carriage revenues and advertisement revenues generated in both analog and digital areas across India.

We enter into the following agreements with LCOs to undertake our business:

Interconnect Agreement - We execute the interconnect agreements with the LCOs (for both analog and digital

cable television) for providing cable television services to our subscribers. The main responsibility of the LCO

is to provide the uninterrupted cable television services by seeding and activate STBs at subscriber’s premises

for receipt of analog and digital signals of various channels, fill up CAF from all the subscribers and collect

monthly subscription charges from subscribers and deposit the same with us. These agreements are executed for

a perpetual term unless terminated by either party. With regard to the revenue sharing, the LCO is provided with

2 options i.e one which has been mandatorily provided under TRAI Regulations or the other option given by us.

Distributor Agreement - To carry and run cable television operations smoothly and to control and manage LCOs

affiliated with us in the entire operational areas, we appoint distributors and execute distributor agreements in

specific regions only. Generally the term of these distributor agreements vary between one year to three years

and monthly consideration/commission is as approved by the management. A distributor is an overall in-charge

of operations in a particular area of the region to ensure that each LCO installs the STB’s supplied for

installation at subscribers premises and provide duly filled/signed CAF by each subscriber for activation of

channel signals, timely collection of subscription charges and depositing the same with us and also look after the

business interests of our Company.

Direct Point Agreements - Direct point agreements are executed by us for the provision of cable television

services directly to all the subscribers by acquiring all the rights over direct cable points of each LCO in DAS

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notified areas wherein, we acquire the entire running cable television business of each LCO on a per STB

basis. After negotiations, a rate is fixed for the acquisition of rights over each subscriber i.e. on per STB basis

from the affiliated LCO. These LCOs are generally affiliated to us. The LCOs declare their available direct point

respective operational areas, followed by an extensive due diligence exercise to verify the claimed customer

base. The transaction is consummated over a specified time period during which a continuous monitoring and

evaluation of revenue collection is undertaken as well as gradual handing over of on ground operations to our

team is done by the LCO.

Shareholders Agreement – We also enter into shareholders agreement with MSOs, whom we acquire by

purchasing the majority shareholding in such MSO and making them our subsidiaries. The agreement primarily

sets out the covenants and understanding in relation to the operational, commercial and legal aspects of the joint

venture and the understanding in relation to the day to day management of the affairs of our Subsidiary and all

the rights and obligations of the shareholders in our Company and vis-à-vis each other.

Marketing, Sales and Pricing

Our marketing efforts are focused on converting our analog subscribers to digital subscribers. Our brand

campaign is focused on building the digital viewing category and encouraging subscribers to upgrade their

television viewing to digital cable. We distribute leaflets and other promotional materials, post advertisements

on kiosks and use banners. We have also appointed direct sales agents to create greater consumer awareness

about our digital cable services and undertake sales and marketing activities. We also rely on the vast network of

LCOs that distribute our cable service to promote our digital services. LCOs conduct on the ground marketing

activities to demonstrate digital cable service to potential subscribers.

In order to develop our brands’ recognition, we distribute promotional materials and advertise across various

media, including, print campaigns, advertise at our own local channels and prominent outdoor campaigns. We

also undertake consumer engagement and digitization awareness activities such as direct marketing of STBs,

partnering with resident welfare associations, staging street plays and placing of a branded canopies / canter

with an on-board TV and SITI STB at strategic locations to build brand awareness and subscriber loyalty. We

also undertake door to door promotional activities to educate the subscribers about the various packages and

schemes on offer by us.

Analog Cable Television Pricing

There are two aspects of our product pricing- one-time connection fee and monthly subscription. In both

categories, the pricing varies with each location. The connection fee which is charged at the time of installation

is driven by the competition in that specific market. Monthly subscription within a location usually follows

different pricing strategies to cater to the different income groups. The subscription is usually reviewed by us

and if required revised periodically based on market conditions and guidelines issued by TRAI. With a direct

sales team in place, different sales schemes are introduced in different markets.

Digital Cable Television Pricing

Our pricing is set keeping in mind the services provided by other cable service providers as well as the DTH

operators. We have adopted a strategy of differential activation fee to suit the requirement of different market

segments. We attempt to price our monthly subscription plans competitively. We also offer localized regional

content and various choices in terms of add-on packages at competitive prices. Our decentralized operation

gives us the advantage of choosing channels based on the requirement of locations. Digital sales are driven by

conversions of DTH subscribers and our analog cable television subscribers to digital cable television

subscribers.

Prospective customers are identified through various activities including tele-calling, road shows and door-to-

door visits.

Broadband services

The ability to offer ‘Triple Play’ services helps us to sell our broadband services along with our cable television

services. While acquiring cable television subscribers, the data pertaining to computer ownership and other

details including requirement of broadband is identified. The prospective list is also generated through customer

referral programs and tele-calling. Customer acquisition is made by us directly as well as through direct selling

123

agents. The product mix has packages at different monthly subscription prices, speed, download limits and

complimentary offerings, aimed at different market segments.

Customer service and call centers

We believe that good customer service helps to build subscriber loyalty. The current structure of the Indian

cable television distribution industry results in the LCOs having direct contact with our subscribers in respect of

sales, billing, technical support and general assistance. However, since it is important to us that our subscribers

receive superior customer service, our training teams undertake capacity building of LCOs with respect to

customer services, technical knowledge, OYC system and infrastructure maintenance. The LCOs’ personnel are

given extensive training to maintain high standards of professionalism and courtesy. We believe that with

increased digitization, we will have a greater role in servicing our customer.

We have set up two call centres in Noida and Kolkata for efficient customer service mechanism and have toll

free access for our customers. We have implemented various key performance indicators internally in order to

provide effective customer services to our subscribers. Our call centers in Noida and Kolkata is well equipped

with high quality and capacity servers with trained customer service agents. We also have a grievance redressal

system in place. Network complaints pertaining to our broadband services are referred to our highly skilled

engineering team, who resolve the complaints.

Network and Infrastructure

We purchase our equipment from reputed manufacturers, including STBs which we procure primarily from

Arion Technology, Woojeon and Handan and Chang Hong (Hong Kong) Trading Limited, which we believe are

industry leaders in STBs design and technology and other equipment such as head-ends and servers from

leading suppliers such as Cisco and Harmonic Inc. We enter into annual maintenance agreements with these

vendors. In the event that our current suppliers are unable to fulfil our requirements, we believe that there are

various alternative suppliers available to us who can fulfil our requirements.

We deliver our services through the HFC network, which is a combination of optic fiber cable network and

coaxial cable network. Fiber optic cable is used as a network backbone which is a communication medium that

uses hair-thin glass fibers to transmit signals over long distances with less signal loss and zero distortion as

compared to coaxial cable. Tri-shield coaxial cable is used in the downstream for broadband data and cable

systems and has high-quality broadband frequency characteristics, noise immunity and physical durability. Out

of our approximately 15,400 kilometers of HFC network, we own approximately 13,240 kilometers and lease

approximately 2,230 kilometers. In this respect, we have entered into agreements with third parties such as

telecom service providers.

We enter into annual maintenance agreements with various authorised maintenance services providers for our

equipment including our head ends, servers, diesel generators, air-conditioners and UPS systems. Our in-house

maintenance teams undertake the maintenance of our HFC network owned by us.

Competition

Our cable television distribution business faces competition from other local, regional and national cable

television distributors and providers of television services through different transmission platforms, such as

DTH satellite television and IPTV, as well as from India’s traditional terrestrial broadcasting service,

Doordarshan. We believe that our strongest competitors providing cable television services include Hathway,

InCable and Den. All three of these competitors have a presence in multiple cities across India. Our competitors

providing DTH satellite television services include TataSky, DishTV, Videocon D2H, Sun Direct, BIG TV and

Airtel Digital TV. We also compete with providers of IPTV, including BSNL, MTNL, Bharti Airtel and

Reliance Communications.

Competition is not necessarily limited only to traditional forms of television services such as competition based

on programme offerings, customer satisfaction, network quality and price, but may also include competition in

respect of value-added services that competitors can offer. Competition may increase in the future due to

changes in laws and regulations governing the television industry.

Television competes with other forms of entertainment for the attention of the consumer. The introduction of

new technologies and cultural shifts may all affect consumer interest in watching television.

124

Our broadband cable internet services competes with fixed telephony carriers and other broadband internet

access providers, wireless service providers, as well as providers of dial-up internet access and with emerging

technologies for the provision of broadband internet services. We believe that competition in the provision of

broadband internet service is based on speed of access, the ability to handle large volumes of data, price,

technical support and the quality of data transmissions. We believe that our main competitors in this market are

MTNL, BSNL, Tata Indicom, Bharti Airtel, Hathway and Reliance Communications.

Branding and Intellectual Property

All our products and services are consolidated under the SITI brand.

Analog cable television is branded as SITI Network;

Digital cable television is branded as SITI Digital;

Local channels are branded as SITI Channel;

Broadband services are branded as SITI Broadband;

The following copyrights for broadcasting and distribution of video, communication and data signals, including

signals for television, radio programme, video programme and cable television services have been registered by

our Company:

The Deputy Registrar of Copyrights, by its letter dated June 10, 2004 bearing reference number Dy. No.

1055/2003-COA, registered “GALAXZEE digital cable entertainment” as copyright under the class of

‘artistic work’ in favour of our Company. The registration number issued is A-67339/2004;

The Deputy Registrar of Copyrights, by its letter dated May 24, 2005 bearing reference number Dy. No.

739/04-COA, has registered “Jagran” as copyright under the class of ‘artistic work’ in favour of our

Company vide registration no.70590/2005 dated April 27, 2005;

The Deputy Registrar of Copyrights, by its letter dated October 6, 2005 bearing reference number Dy. No.

1656/05-COA, has registered “SITI HULCHAL” as copyright under the class of ‘artistic work’ in favour of

our Company. The registration number issued is A-74448/2005;

The Deputy Registrar of Copyrights, by its letter dated July 4, 2006 bearing reference number Dy. No.

951/06-COA, has registered “CHANNEL SITI” as copyright under the class of ‘artistic work’ in favour of

our Company. The registration number issued is A-76822/2006; and

The Deputy Registrar of Copyrights, by its letter dated September 13, 2006 bearing reference number Dy.

No. 952/06-COA, has registered “CHANNEL SITI INTERESTING” as copyright under the class of

‘artistic work’ in favour of our Company. The registration number issued is A-77332/2006.

We have registered the following trademarks being used by our Company. These trademarks have been

registered under various classes including 9, 16, 35, 38 and 41 for the provision our business related services

including broadcasting and distribution of video, communication and data signals, including signals for

television, radio programme, video programme and cable television services.

125

In addition to the above registered trademarks, our Company has also applied for the registration of the

following marks being used by our Company.

We have the telecast rights for more than several films for the purposes of delivering them through our network.

We typically purchase the right to transmit a film in India through a cable platform for an unlimited number of

times for a term of one year.

Awards and Recognition

We have won industry awards and recognitions including:

Period Award

January, 2010 ICNCL ranked in Inc. India 500 Awards – India’s Best performing enterprises

January, 2011 ICNCL ranked in Inc. India 500 Awards – India’s Best performing enterprises (second

consecutive year

September, 2011 HR excellence Award for Leadership Development – by Amity

126

Period Award

January, 2014 Honored for Fostering Local Cable Operator Partnership – by Indiantelevision.com

February, 2014 Bagged 3 Awards under MSO Category at “BCS Ratna Awards” organized by Aavishkar Media

Best Customer Care

Best Digital Head-end

Most Emerging Digital Approach

Insurance

We are covered by commercial general liability insurance policies for loss caused to our property or assets by

earthquakes, accident, burglary, fire, flood, riot, strike or malicious damage. We also maintain group medical

insurance for expenses related to hospitalization due to illness, disease or injury for all our employees. Further,

we provide and maintain directors and officers liability insurance for all our Directors and certain employees.

Notwithstanding our insurance coverage, damage to our facilities, equipment and properties could nevertheless

have a material adverse effect on our business and our financial condition and results of operations to the extent

such occurrences disrupt normal operations of our business or to the extent our insurance policies do not cover

our economic loss resulting from such damage.

Human Resources

We believe that our ability to maintain growth depends to a large extent on our strength in attracting, training,

motivating and retaining employees. As of January 31, 2015, we had 465 employees.

We do not employ any part-time employees. None of our employees are covered by collective bargaining

agreements. We consider our relations with our employees to be good.

Our employees currently receive salaries and benefits which, we believe, are competitive in the industry. In

addition to recruiting employees who already have experience in their areas of focus, we also recruit university

students through on-campus interviews. We ensure that our employees are up-to-date with current trends in our

industry and accomplishes this by providing professional training to employees at all levels.

Properties and Facilities

The corporate office of our Company is located at Plot No. 9 and 18, Sector 16 A, Noida, Uttar Pradesh. We

have executed a leave and license agreement for our corporate office with ZEEL for an area of approximately

11,195 square feet and the agreement is valid till March 14, 2015. We presently do not have any contractual

arrangement for the occupancy of our registered office. Pursuant to the Scheme of Arrangement whereby the

entire cable business undertaking of ZEEL was transferred to our Company, we have continued to occupy and

operate out of the same premises in the interest of continuity and convenience. While we do not have any

contractual arrangement with ZEEL or the actual owners of the property, we continue to use the premises as our

registered office. For more details please see Risk Factor titled “We do not have any definitive arrangement for

occupancy of our Registered Office” on page 65.

In addition to the above mentioned properties, we have leased several other commercial and official properties

for the purposes of undertaking our business across the various states from which we operate. Our digital and

analog head-ends are also located on property that we either own or lease.

127

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Directors

The composition of the Board of Directors is governed by the provisions of the Companies Act, 2013 and the

listing agreements with the Indian Stock Exchanges where the shares of our Company are listed. The Articles of

Association provide that the number of directors shall not be less than three or more than twelve unless

otherwise approved in a general meeting. At present, our Company has six Directors including one executive

Director and five non-executive Directors. Our Company has a total of three independent Directors.

As per the provisions of the Companies Act, 2013, at least two-thirds of the total number of Directors

(excluding independent Directors) are liable to retire by rotation, with one-third of such number of Directors

retiring at each annual general meeting. A retiring Director is eligible for re-election. Further, the independent

Directors may be appointed for a term of up to five consecutive years and shall be appointed for a maximum of

two consecutive terms, after which such independent Directors shall be eligible for appointment only after the

expiration of three years of ceasing to become an independent Director. Any re-appointment of independent

Directors shall, inter alia, be on the basis of the performance evaluation report and approved by the Shareholders

by way of special resolution.

The following table provides information about the Directors as of the date of this Preliminary Placement

Document:

S.

No.

Name, Address, DIN, Term and Nationality Age Designation

1. Subhash Chandra

Address: Flat No. 4, 1 Hyde Park Street, London, W2 2JW, United

Kingdom

DIN: 00031458

Term: Appointed on December 5, 2006 (Liable to retire by rotation)

Nationality: Indian

Occupation: Business

64 Non-executive Chairman

and Director

2. Vassdev Wadhwa

Address: Plot No. 122, 3rd Floor, Jasola 1, New Delhi 110 025, Delhi,

India

DIN: 00439684

Term: August 12, 2014 to August 11, 2017

Nationality: Indian

Occupation: Service

50

Whole time/ executive

Director

3. Brijendra K. Syngal

Address: LCG 601 B – The Laburnum, Sector 28, Gurgaon 122 002,

Haryana, India

DIN: 00002395

Term: August 12, 2014 to March 31, 2017

Nationality: Indian

Occupation: Service

74 Non-executive independent

Director

4. Subodh Kumar

Address: Flat No. 6, Bay View, Khan Abdul Gaffar Khan Road, Worli Sea

Face, Mumbai 400 030, Maharashtra, India

DIN: 02151793

Term: May 30, 2013 (Liable to retire by rotation)

Nationality: Indian

Occupation: Service

63

Non-executive Director

128

S.

No.

Name, Address, DIN, Term and Nationality Age Designation

5. Sureshkumar Agarwal

Address: 3rd Floor, Lilou Ville, West Avenue, Santacruz (West), Mumbai

400 054, Maharashtra, India

DIN: 00773957


Nationality: Indian

Occupation: Business

58

Non-executive independent

Director

6. Vinod Kumar Bakshi

Address: 01-02 A Court Greens, The Laburnum, Sushant Lok 1, Sector 28,

Gurgaon 122 001, Haryana, India

DIN: 00771934


Nationality: Indian

Occupation: Service

75

Non-executive independent

Director

Biographies of the Directors

Subhash Chandra, aged 64 years, is the non-executive Chairman and Director of our Company and promoter

of Essel Group of Companies. He was appointed a Director of our Company on December 5, 2006. He launched

one of the first satellite television channel 'Zee TV' in the year 1992 and a private news channel, 'Zee News' in

the year 1995. His business interests also include a newspaper chain (DNA), cable systems (Siti Cable), direct-

to-home (Dish TV), theme parks (EsselWorld and Water Kingdom), online gaming (Playwin), education (Zee

Learn), infrastructure development (Essel Infraprojects), precious metals (Shirpur Gold Refinery) and health,

lifestyle & wellness (Zee Living). Dr. Chandra has been the recipient of numerous industry awards and civic

honours. He is also a philanthropist and has set up TALEEM (Transitional Alternate Learning for Emancipation

and Empowerment through Multimedia) to provide access to quality education through distance and open

learning. He was also associated with Ekal Vidyalaya Foundation of India – A Movement to eradicate illiteracy

from rural and tribal India which provides free education. He is also associated with the Global Vipassana

Foundation a trust set up to help people raise their spiritual quotient.

Vassdev Wadhwa, aged 50 years, is the executive/ whole time Director and the chief executive officer of our

Company. He was appointed as a chief executive officer of our Company with effect from April 29, 2013 and a

Director on August 12, 2014. He is an alumni of Harvard Business School, a fellow member of the Institute of

Company Secretaries of India and also holds a bachelor’s degree in law. He has served on various committees of

FICCI and ASSOCHAM and was President of the Horological Federation of India. He has 29 years of general

management experience in consumer life style and retail industry. Prior to joining our Company, Vassdev

Wadhwa was managing director and chief executive officer of Timex Group India Limited, for its business

operations in India and SAARC Countries. He is also the president of All India Digital Cable Federation

(AIDCF), which is a non-profitable company incorporated by major MSOs of India to organise the digital cable

industry for the overall benefit of all stakeholders and to facilitate and further create momentum for digitization

for phase III and IV. He has been awarded with “Movers of Times Award” and “The Man of the Year Award”

by the Trade Post Journal of India at the opening ceremony of Indian International Watch Clock Fair ‘Samay

Bharti 2012’.

Brijendra K. Syngal, aged 74 years, is a non-executive independent Director of our Company. He was

appointed a Director of our Company on December 5, 2006. He is an alumni of Indian Institute of Technology,

Kharagpur. Syngal has been the chairman and managing director of Videsh Sanchar Nigam Limited (now Tata

Telecommunications Limited), chairman of Reliance Telecom, vice chairman of BPL Communications Limited

and vice chairman of INMARSAT-P. He has received Star of ASIA Award, 1998 by Business Week, “Life

Fellow of IIT Kharagpur” and Sir John Ambrose Fleming Medal for achievements in communications by The

Institution of Engineering and Technology. He has also held directorships at Zee Entertainment Enterprises

Limited, Oxigen Services (India) Private Limited, Eklavya Creations Private Limited, and Power Max

Communications Private Limited. He is currently a director of Sonata Software Limited, Sonata Information

Technology Limited and India Security Council for IT and Telecom and a senior principal at Dua Consulting.

129

Subodh Kumar, aged 63 years, is a non-executive Director of our Company. He was appointed as a Director of

our Company on May 30, 2013. He holds a master’s degree in science from Meerut University and management

certificates from Indian Institute of Management Ahmedabad, Bengaluru and Kolkata, Harvard Business

School, IDS Sussex and IMF. He is a 1977 batch IAS officer and was municipal commissioner of Greater

Mumbai Municipal Corporation. He has also served as the principal secretary, Department of Finance,

Government of Maharashtra, director – Small Scale Industries & Ministry of Urban Development, vice

chairman – MHADA, as well as in the Department of Telecommunication, Ministry of Industry and Ministry of

Textile in the Government of India. He has also been managing director of Maharashtra State Seeds

Corporation.

Sureshkumar Agarwal, aged 58 years, is a non-executive, independent Director of our Company. He was

appointed as a Director of our Company on June 1, 2009. He is the managing director of Super Dynic Clothing

Private Limited, a company engaged in the business of home textile. He is also a member of the charitable

institute, Lions Club of Millennium. Apart from the aforementioned, he is also a director in Deoralia Finance

Private Limited, Indian Cable Net Company Limited and Swals Steel Private Limited. He has experience of

over 15 years in the areas of marketing, clothing and other trading businesses.

Vinod Kumar Bakshi, aged 75 years, is a non-executive, independent Director of our Company. He was

appointed as a Director of our Company on October 27, 2010. He holds a master’s degree in arts in public

administration from Punjab University. Mr. Bakshi is an experienced professional with a career spanning over

four decades in domestic and overseas marketing, public relations, administration and image building. He has

been associated with organizations like Care India, Gabriel India Limited, Escorts Limited, Williamson and

Magor Group, Exide Industries and BBC.

Relationship with other Directors

As of the date of this Preliminary Placement Document, none of our Directors are related to each other.

Borrowing powers of the Board of Directors

As per the resolution passed at the AGM held on August 12, 2014, the Board was given powers to borrow such

amounts as it deems appropriate, notwithstanding that the moneys to be borrowed, together with the moneys

already borrowed by our Company, if any, may exceed the aggregate paid-up capital of the Company and its

free reserves, provided that the total amount of money so borrowed by the Board, other than the temporary loan

obtained/ to be obtained from the Company’s bankers in the ordinary course of business, and outstanding at any

point of time shall not exceed a sum of ` 15,000 million.

Interest of the Directors

All of the Directors, may be deemed to be interested to the extent of fees payable to them for attending meetings

of the Board or a committee thereof as well as to the extent of reimbursement of expenses payable to them. The

executive Director, Vassdev Wadhwa, may be deemed interested to the extent of remuneration paid to him for

services rendered as the officer of our Company.

Other than as disclosed in this Preliminary Placement Document, there were no outstanding transactions other

than in the ordinary course of business undertaken by our Company, in which the Directors were interested

parties.

All Directors may also be regarded as interested in the Equity Shares held by, or subscribed by and allotted to,

the companies, firms and trusts, in which they are interested as directors, members, partners or trustees.

Except as otherwise stated in this Preliminary Placement Document in this regard, our Company has not entered

into any contract, agreement or arrangement during the preceding two years from the date of this Preliminary

Placement Document in which any of the Directors are interested, directly or indirectly, and no payments have

been made to them in respect of any such contracts, agreements, arrangements which are proposed to be made

with them. Furthermore, the Directors have not taken any loans from our Company.

130

Shareholding of Directors

As on the date of this Preliminary Placement Document, none of our Directors hold any Equity Shares or

Preference Shares in our Company.

Terms and Compensation of the Directors

Vassdev Wadhwa joined our Board as an executive director on August 12, 2014. The shareholders of our Company

have approved his appointment, by passing a special resolution on October 14, 2014 through postal ballot, as a whole

time/ executive Director for a period of three years with effect August 12, 2014.

The remuneration payable to Vassdev Wadhwa as approved in the AGM dated August 12, 2014 and meeting of

Nomination and Remuneration Committee held on August 12, 2014 is set out below:

During the first year of appointment, total salary shall be ` 20,413,952 p.a. (comprising of basic salary of `

8,800,428 p.a.), subject to increase during the second year and third year of appointment within the limit of total

salary of ` 40,000,000 p.a. (comprising of basic salary of ` 16,000,000 p.a.). The total salary of ` 20,413,952

p.a. in the first year, in addition to basic salary of ` 8,800,428 p.a., which comprises of:

Variable pay Up to ` 4,520,000*

House Rent Allowance ` 366,540 p.m.

Leave Travel Allowance ` 73,337 p.m.

Medical allowances ` 1,250 p.m.

Entertainment reimbursement ` 20,000 p.m.

Car lease ` 70,000 p.m.

Fuel reimbursement ` 25,000 p.m.

Driver’s salary ` 20,000 p.m.

Vehicle Maintenance ` 15,000 p.m. *Contingent upon achieving of business targets

In addition to the above, Vassdev Wadhwa is entitled to contribution to provident fund, earned/ privilege leave,

and coverage under group medical and personal accident insurance as per the policy/ rules of our Company.

The following tables set forth all compensation (including sitting fees, salaries, commission and perquisites)

paid by our Company to the Directors during the current Financial Year 2015 (to the extent applicable):

Financial Year 2015 (to the extent applicable)

Name of the Directors Salary &

Commission

(`)

Perquisites

(`)

Sitting Fees

(`) Total

(`)

Subhash Chandra Nil Nil Nil Nil

Vassdev Wadhwa* 7,333,690 4,282,234 Nil 11,615,924**

Brijendra K. Syngal Nil Nil 160,000 160,000

Sureshkumar Agarwal Nil Nil 260,000 260,000

Subodh Kumar Nil Nil Nil Nil

Vinod Kumar Bakshi Nil Nil 260,000 260,000 *Appointed as Director w.e.f August 12, 2014. Remuneration has been paid to him in his capacity as the chief executive officer and the whole time/Director of our Company.

**Statutory contribution towards provident fund is separately being made by our Company

The following tables set forth all compensation paid by our Company to the Directors for the Financial Years

2014, 2013 and 2012:

Financial Year 2014


Commission

(`)

Perquisites

(`)

Sitting Fees

(`)

Total

(`)

Subhash Chandra Nil Nil 60,000 60,000

Vassdev Wadhwa* 6,627,945 10067113 Nil 16,695,058**


131


Commission

(`)

Perquisites

(`)

Sitting Fees

(`) Total

(`)

Vinod Kumar Bakshi Nil Nil 220,000 220,000


Subodh Kumar Nil Nil Nil Nil

Amit Goenka Nil Nil Nil Nil *He was Director from June 1, 2013 to September 24, 2013. Remuneration has been paid to him in his capacity as the chief executive officer and the whole time/Director of

our Company.

** Statutory contribution towards provident fund is separately being made by our Company

Financial Year 2013


Commission

(`)

Perquisites

(`)

Sitting Fees

(`)

Total

(`)





Amit Goenka Nil Nil Nil Nil

Financial Year 2012


Commission

(`)

Perquisites

(`)

Sitting Fees

(`)

Total

(`)




Amit Goenka Nil Nil Nil Nil


Arun Kapoor Nil Nil Nil Nil

Organisational Chart of our Company

Key Managerial Personnel

Our operations are overseen by a professional management team. Our key management personnel along with

the senior management team has the requisite experience and the qualification for their respective

responsibilities. Our Company’s key managerial personnel are as follows:

132

Vassdev Wadhwa*

Whole time Director and Chief Executive Officer

Please refer to his biography on page 128.

Sanjay Goyal*

Chief Financial Officer

Sanjay Goyal, aged 41 years, is the chief financial officer (CFO) of our Company. He joined our Company on

May 21, 2009. He holds a bachelor’s degree in law from Government College, Ajmer and is a/an associate of

the ICAI, ICSI and is also a cost accountant. He has an experience of over 16 years in the field of corporate

finance, business strategy and development, risk management, corporate laws and mergers and acquisition. Prior

to joining our Company, he was associated with Vishal Retail Limited. He is responsible for financial planning

and analysis, accounting, treasury operations, revenue and cost management, statutory compliances and audits.

He received a remuneration of ` 5,116,213 in FY 2014.

Vinay Chandhok

Chief Operations Officer - Operations

Vinay Chandhok, aged 48 years, is the chief operations officer - operations of our Company. He joined our

Company on October 1, 2014. He holds a master’s degree in commerce from Garhwal University and a post

graduate diploma in business administration from Dr. Virendra Swarup Memorial Institute of Management. He

has an experience of over 24 years and has led teams in mass distribution, retail operations and

enterprise/institutional sales. Prior to joining our Company, he was associated with Reliance Communication as

hub chief executive officer, RPG Group, SIFY Limited and Aircel Limited. He is responsible for subscription

and ad sales of our revenue/costs.

Anil Kumar Malhotra

Chief Operations Officer – Strategy and Compliances

Anil Kumar Malhotra, aged 51 years, is the chief operations officer – strategy and compliances, of our

Company. He joined our Company on September 7, 2011. He holds a master’s degree in science from

University of Garhwal. He has an experience of around 30 years in the field of distribution, technology and

operations. Prior to joining our Company, he was associated with Broadband Pacenet India Private Limited and

was responsible for cable, broadband and DTH business for North India, Indusind Media and Communications

Limited as President (North India) and Shyam Communications. He is responsible for role organisational

strategic intent, regulatory framework and to provide support to line functions through customer services and

processes department, logistics and supply chain management, IT, legal, regularity and also leading and direct

points business. He received a remuneration of ` 8,102,957 in FY 2014.

Suresh Kumar*

Company Secretary and Compliance Officer

Suresh Kumar is the company secretary and compliance officer of our Company. He joined our Company on

August 1, 2002 and was appointed as the company secretary with effect from September 28, 2010. He holds a

bachelor’s degree in commerce from University of Delhi, a master’s degree in financial management from

Kurukshetra University and is an associate member of the ICSI. He has an experience of 14 years in the field of

companies law and secretarial matters. Prior to joining our Company, he was associated with Essel International

Limited. He is responsible for ensuring compliances under the Companies Act, Listing Agreements and the

SEBI Regulations. He received a remuneration of ` 1,950,975 in FY 2014.

*Vassdev Wadhwa, Sanjay Goyal and Suresh Kumar are also the key managerial personnel of our Company as

per the Companies Act, 2013.

Shareholding of key managerial personnel

The following table sets forth details regarding the shareholding of the key managerial personnel in our

Company as at the date of this Preliminary Placement Document:

133

Name Number of Equity

Shares

Percentage of

total number of

outstanding Equity

Shares (%)

Stock options held as

per ESOP 2007

Vassdev Wadhwa Nil Nil Nil

Sanjay Goyal 77,840 Negligible Nil

Vinay Chandhok Nil Nil Nil

Anil Kumar Malhotra Nil Nil Nil

Suresh Kumar Nil Nil Nil

Interest of key managerial personnel

The key managerial personnel of our Company do not have any interest in our Company other than to the extent

of (i) the remuneration or benefits to which they are entitled to as per their terms of appointment; and (ii) the

Equity Shares held by them or their dependants in our Company, if any.

Other than as disclosed in this Preliminary Placement Document, there were no outstanding transactions other

than in the ordinary course of business undertaken by our Company in which the key managerial personnel were

interested parties.

None of the Directors are related to any of the key managerial personnel of our Company.

Corporate governance

Except as disclosed in the Preliminary Placement Document, our Company has been complying with the

requirements of all applicable corporate governance norms, including the Equity Listing Agreements, the RBI

regulations and the SEBI Regulations, in respect of corporate governance including constitution of the Board

and committees thereof.

The Board of Directors presently consists of six Directors. In compliance with the requirements of the Listing

Agreement, the Board of Directors consists of three independent Directors.

Committees of the Board

In terms of Clause 49 of the Equity Listing Agreement, RBI guidelines on corporate governance and Companies

Act, 2013, our Company has constituted the following committees of Directors namely:

(i) Audit Committee;

(ii) Nomination and Remuneration Committee;

(iii) Stakeholders’ Relationship Committee;

(iv) Corporate Social Responsibility Committee;

(v) Corporate Management Committee;

(vi) Allotment Committee;

(vii) Whistle Blower Committee;

(viii) Finance Committee; and

(ix) QIP Committee

The following table sets forth the details of the members of the aforesaid committees as of the date of this

Preliminary Placement Document:

Committee Members

Audit Committee (a) Brijendra K. Syngal (Chairman);

(b) Vinod Kumar Bakshi (Member);

(c) Sureshkumar Agarwal (Member)

Nomination and Remuneration

Committee

(a) Brijendra K. Syngal;

(b) Subodh Kumar;

(c) Vinod Kumar Bakshi;

(d) Sureshkumar Agarwal

Stakeholders’ Relationship (a) Brijendra K. Syngal;

134

Committee Members

Committee (b) Subodh Kumar;

(c) Vinod Kumar Bakshi

Corporate Social Responsibility

Committee

(a) Subodh Kumar;

(b) Vinod Kumar Bakshi; and

(c) Sureshkumar Agarwal

Corporate Management Committee (a) Vassdev Wadhwa; and

(b) Sanjay Goyal (Non- Board member)

Allotment Committee (a) VassdevWadhwa;

(b) Vinod Kumar Bakshi; and

(c) Sureshkumar Agarwal

Whistle Blower Committee (a) Vassdev Wadhwa;

(b) Sanjay Goyal; and

(c) Pankaj Dhingra (Non- Board member)

Finance Committee (a) Vassdev Wadhwa; and

(b) Sureshkumar Agarwal

QIP Committee (a) Subodh Kumar,

(b) VassdevWadhwa;

(c) Sureshkumar Agarwal; and

(d) Vinod Kumar Bakshi

Policy on disclosures and internal procedure for prevention of insider trading

Regulation 12(1) of the Insider Trading Regulations applies to our Company and its employees and requires our

Company to implement a code of internal procedures and conduct for the prevention of insider trading. Our

Company has implemented a code of conduct for prevention of insider trading in accordance with the Insider

Trading Regulations. As per the code of internal procedures and conduct for the prevention of insider trading

adopted by our Company, the Company Secretary of our Company, shall be the compliance officer of our

Company for the purposes of this code.

Other confirmations

None of the Directors, Promoters or key managerial personnel of our Company have any financial or other

material interest in the Issue.

Related Party Transactions

For details in relation to the related party transactions entered by our Company during the last three Fiscals, as

per the requirements under Accounting Standard 18 issued by the Institute of Chartered Accountants in India,

see the section “Financial Statements” beginning on page 217.

135

PRINCIPAL SHAREHOLDERS

The following table sets forth the details regarding the shareholding pattern of our Company, as on December

31, 2014:

Categ

ory

Code

Category of

Shareholder

Number

of

Sharehol

ders

Total Number

of Shares

No of Shares

held on

Dematerialise

d form

Total Shareholding

as percentage of

total number of

shares

Shares pledged or

otherwise encumbered

As %

of

(A+B)

As % of

(A+B+C

)

No of

Shares

As % of

Shareholdi

ng

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) =

VIII/IV*10

0

A Shareholding of Promoter and Promoter Group

1 Indian

a Individuals / HUF 1 1,021,000 1,021,000 0.17% 0.17% 0 0.00%

b Central / State Government 0 0 0 0.00% 0.00% 0 0.00%

c Bodies corporate 5 262,040,427 262,040,427 42.66% 42.66% 199,490,000 76.13%

d Financial institutions / banks 0 0 0 0.00% 0.00% 0 0.00%

e Any other (specify) 0 0 0 0.00% 0.00% 0 0.00%

Sub-total (A)(1) 6 263,061,427 263,061,427 42.83% 42.83% 199,490,000 75.83%

2 Foreign

a

Individuals (non-

resident/ foreign) 0 - 0 0.00% 0.00% 0 0.00%

b

Bodies corporate

(OCB) 2 184,181,000 184,181,000 29.99% 29.99% 0 0.00%

c

Institutions - foreign

bodies 0 0 0 0.00% 0.00% 0 0.00%

d

Qualified Foreign

Investor 0 0 0 0.00% 0.00% 0 0.00%

e Any other (Specify) 0 0 0 0.00% 0.00% 0 0.00%

Sub-total (A)(2) 2 184,181,000 184,181,000 29.99% 29.99% 0 0.00%

Total Shareholding

of Promoter and

Promoter Group

(A) =(A)(1)+(A)(2) 8 447,242,427 447,242,427 72.82% 72.82% 19,94,90,000 44.60%

B

1 Institutions

a

Mutual Funds and

UTI 4 13,725,487 13,724,987 2.23% 2.23%

b Financial institutions/banks 13 21,559 21,559 0.00% 0.00%

c

Central / State

Government 0 0 0 0.00% 0.00%

d Venture Capital Funds 0 0 0 0.00% 0.00%

e Insurance companies 2 4,001 4,001 0.00% 0.00%

f Foreign Institutional Investors 19 55,869,353 55,863,853 9.10% 9.10%

g

Foreign Venture

Capital Investors 0 0 0 0.00% 0.00%

h Qualified Foreign Investor 0 0 0 0.00% 0.00%

-

136

Categ

ory

Code

Category of

Shareholder

Number

of

Sharehol

ders

Total Number

of Shares

No of Shares

held on

Dematerialise

d form

Total Shareholding

as percentage of

total number of

shares

Shares pledged or

otherwise encumbered

As %

of

(A+B)

As % of

(A+B+C

)

No of

Shares

As % of

Shareholdi

ng

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) =

VIII/IV*10

0

i Any other (Specify) 0 0 0 0.00% 0.00%

Sub-total (B)(1) 38 69,620,400 69,614,400 11.33% 11.33%

2 Non-Institutions

a Bodies corporate 1,617 26,486,878 26,481,906 4.31% 4.31%

b -i

Individuals holding

shares up to ` 0.1

million in nominal

value 116,570 49,338,713 49,132,908 8.03% 8.03%

b-ii

Individuals holding

shares in excess of `

0.1 million in

nominal value 38 13,903,617 13,903,617 2.26% 2.26%

c

Qualified Foreign

Investor 0 0 0 0.00% 0.00%

d Any other

i

Overseas Corporate

Body 1 75 75 0.00% 0.00%

ii Foreign national 1 500 500 0.00% 0.00%

iii Foreign bodies 1 1 1 0.00% 0.00%

iii Non Resident Indian 1071 7,616,302 7,414,600 1.24% 1.24%

iv Trust 4 4,002 4,002 0.00% 0.00%

Sub-total (B)(2) 119,303 97,350,088 96,937,609 15.85% 15.85%

Total Public

Shareholding (B)=

(B)(1)+(B)(2) 119,341 166,970,488 166,552,009 27.18% 27.18%

TOTAL (A)+(B) 1,19,349 614,212,915 613,794,436 100.00% 100.00% 199,490,000 32.48%

C

Share held by

custodians and

against which depository receipts

have been issued

-

-

-

1 Promoter and Promoter Group 0 0 0 0.00%

2 Public 0 0 0 0.00%

GRAND TOTAL

(A+B+C) 119,349 614,212,915 613,794,436 100.00% 100.00% 19,9490,000 32.48%

The following table sets forth the details of securities (including shares, warrants, convertible securities) of

persons belonging to the category Promoter and Promoter Group:

137

Sr.N

o.

Name of

the

sharehol

der

Details of Shares held Encumbered shares(*) Details of

warrants

Details of

convertible

securities

Total

share

s

(inclu

ding

under

lying

share

s

assu

ming

full

conve

rsion

of

warr

ants

and

conve

rtible

securi

ties )

as a

% of

dilute

d

share

capit

al

No of Shares

held

As a

% of

grand

total

(A)+(B

)+(C)

Number of

shares

As a

Percenta

ge

As a

% of

grand

total

A+B+

C of

sub-

clause

(1)(a)l

No

of

warr

ants

held

As a

% of

total

numbe

r of

warra

nts of

the

same

class

Numb

er of

conver

tible

securit

ies

held

As a

% of

total

numbe

r of

conver

tible

securit

ies of

the

same

class

( I ) ( II ) ( III ) ( IV ) ( V )

( VI ) =

(V)/(III)

*100 (VII)

(VII

I) (IX) (X) (XI) (XII)

1 Direct Media

Solution

s Private Limited

14,00,00,000 22.79 11,72,80,000 83.77 19.09 - - - - 22.79

2 Digital

Satellite

Holdings Private.

Limited

5,15,69,898 8.40 5,00,00,000 96.96 8.14 - - - - 8.40

3 Bioscope Cinemas

Private

Limited

3,31,60,000 5.40 - 0.00 0.00 - - - - 5.40

4 Digital Satelite

Holdings

Private Limited

1,98,00,000 3.22 1,47,10,000 74.29 2.39 - - - - 3.22

5 Bioscope

Cinemas Private

Limited

1,75,10,529 2.85 1,75,00,000 99.94 2.85 - - - - 2.85

6 Essel Media

Ventures

Limited

11,64,31,000 18.96 - 0.00 0.00 - - - - 18.96

7 Essel Internati

onal

Limited

6,77,50,000 11.03 - 0.00 0.00 - - - - 11.03

8 Ashok

Mathai

Kurien

10,21,000 0.17 - 0.00 0.00 - - - - 0.17

TOTAL 44,72,42,427 72.82 19,94,90,000 44.60 32.48 0 - - - 72.82

(*) The term "encumbrance" has the same meaning as assigned to it in regulation 28(3) of the SEBI Takeover Regulations.

138

The following table sets forth the details regarding the shareholding of the “Public” category and holding more

than 1% of the total number of Equity Shares as of December 31, 2014 is detailed in the table below:

S. No. Name of the

shareholder

Number

of shares

held

Shares as a

percentage

of total

number of

shares {i.e.,

Grand Total

(A)+(B)+(C)

indicated in

Statement at

para (I)(a)

above}

Details of warrants

Details of convertible

securities

Total shares

(including

underlying

shares

assuming

full

conversion

of warrants

and

convertible

securities)

as a % of

diluted

share

capital

Number

of

warrants

held

As a %

total

number of

warrants

of the

same class

Number of

convertible

securities

held

% w.r.t

total

number of

convertible

securities

of the

same class

1. Copthall Mauritius Investment Limited 17,070,090 2.78 0 0 0 0 2.78

2. DSP Blackrock Micro Cap Fund 12,954,671 2.11 2.11

3. Kotak Mahindra

Investments Limited 8,702,307 1.42 0 0 0 0 1.42

4. Swiss Finance

Corporation (Mauritius) Limited

7,372,417 1.20 0 0 0 0 1.20

5. Goldman Sachs India

Fund Limited 7,231,702 1.18 0 0 0 0 1.18

TOTAL 53,331,187 8.68 0 0 0 0 8.68

139

ISSUE PROCEDURE

The following is a summary intended to present a general outline of the procedure relating to the application,

payment, Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure

followed in the Issue may differ from the one mentioned below, and investors are presumed to have apprised

themselves of the same from our Company or the Book Running Lead Managers. Prospective investors are

advised to inform themselves of any restrictions or limitations that may be applicable to them. Investors that

apply in the Issue will be required to confirm and will be deemed to have represented to our Company, the

BRLMs and their respective directors, officers, agents, affiliates and representatives that they are eligible under

all applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. Our Company

and the BRLMs and their respective directors, officers, agents, affiliates and representatives accept no

responsibility or liability for advising any investor on whether such investor is eligible to acquire the Equity

Shares. See sections entitled “Selling Restrictions” and “Transfer Restrictions” beginning on pages 152 and

158, respectively.

Qualified Institutions Placement

This Issue is being made to QIBs in reliance upon Chapter VIII of the SEBI Regulations and Section 42 of the

Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules,

2014, through the mechanism of a QIP. Under Chapter VIII of the SEBI Regulations and Section 42 of the

Companies Act, 2013, a company may issue equity shares to QIBs provided that certain conditions are met by

the company. Certain of these conditions are set out below:

the shareholders of the issuer have passed a special resolution approving such QIP. Such special

resolution must specify that the allotment of securities is proposed to be made pursuant to the QIP;

equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, or

pursuant to conversion or exchange of eligible securities, are listed on a recognised stock exchange in

India having nation-wide trading terminals for a period of at least one year prior to the date of issuance

of notice to its shareholders for convening the meeting to pass the above-mentioned special resolution;

the payment to be made for subscription to the securities shall be made from the bank account of the

person subscribing to such securities and in case of securities to be held by joint holders, the payment

for subscription to the securities shall be paid from the bank account of the person whose name appears

first in the application

the aggregate of the proposed issue and all previous qualified institutions placements made by the

issuer in the same financial year does not exceed five times the net worth (as defined in the SEBI

Regulations) of the issuer as per the audited balance sheet of the previous financial year;

the issuer shall be in compliance with the minimum public shareholding requirements set out in the

SCRR;

the issuer shall have completed allotments with respect to any offer or invitation made by the issuer or

shall have withdrawn or abandoned that offer or invitation made by the issuer;

the issuer shall offer to each Allottee at least such number of the securities in the issue which would

aggregate to ₹ 20,000 calculated at the face value of the securities

At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion

or any part thereof to be allotted to Mutual Funds remains unsubscribed, it may be allotted to other QIBs.

Prospective purchasers will be deemed to have represented to us and the Book Running Lead Managers in order

to participate in the Issue that they are outside the United States and purchasing the Equity Shares in an offshore

transaction in accordance with Regulation S and the applicable laws of the jurisdictions where those offers and

sales occur. For further details, please refer to the chapters titled “Selling Restrictions” and “Transfer

Restrictions” beginning on page 152 and 158, respectively, of this Preliminary Placement Document.

Bidders are not allowed to withdraw their Bids after the Bid/Issue Closing Date.

140

Additionally, there is a minimum pricing requirement for pricing equity shares, offered in a QIP under the SEBI

Regulations. The Issue Price should not be above the Floor Price. The Floor Price shall not be less than the

average of the weekly high and low of the closing prices of the Equity Shares quoted on the stock exchange

during the two weeks preceding the Relevant Date. However, a discount of up to 5% of the Floor Price is

permitted in accordance with the provisions of the SEBI Regulations.

The “Relevant Date” referred to above, will be the date of the meeting in which the Board or the committee of

Directors duly authorised by the Board decides to open the Issue and “stock exchange” means any of the

recognised stock exchanges in India on which the Equity Shares of the issuer of the same class are listed and on

which the highest trading volume in such Equity Shares has been recorded during the two weeks immediately

preceding the Relevant Date.

Our Company has applied for and received the in-principle approval of the Stock Exchanges under Clause 24 (a)

of the Equity Listing Agreements for the listing of the Equity Shares on the Stock Exchanges. Our Company has

also delivered a copy of this Preliminary Placement Document to the Stock Exchanges.

Our Company shall also make the requisite filings with the RoC and SEBI within the stipulated period as

required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules,

2014.

The Issue has been authorized by (i) the Board pursuant to resolutions passed on July 17, 2014 and February 4,

2015, and (ii) the shareholders, pursuant to a resolution passed under section 42 and 62 of the Companies Act,

2013 on October 14, 2014.

The Equity Shares will be Allotted within 12 months from the date of the shareholders’ resolution approving the

QIP and within 60 days from the date of receipt of subscription money from the successful Bidders. For details

of refund of application money, see the section “Issue Procedure – Pricing and Allocation – Designated Date

and Allotment of Equity Shares”.

The Equity Shares issued pursuant to the QIP must be issued on the basis of this Preliminary Placement

Document and the Placement Document shall contain all material information including the information

specified in Schedule XVIII of the SEBI Regulations and the requirements prescribed under Form PAS-4. The

Preliminary Placement Document and the Placement Document are private documents provided to only select

investors through serially numbered copies and are required to be placed on the website of the concerned Stock

Exchanges and of our Company with a disclaimer to the effect that it is in connection with an issue to QIBs and

no offer is being made to the public or to any other category of investors.

The minimum number of allottees for each QIP shall not be less than:

two, where the issue size is less than or equal to ₹ 2,50,00,00,000 ; and

five, where the issue size is greater than ₹ 2,50,00,00,000 .

No single allottee shall be allotted more than 50.00% of the issue size or less than ₹ 20,000 of face value of

Equity Shares..

The Issuer is required to furnish a copy of the placement document to each stock exchange on which its equity

shares are listed. Accordingly, our Company shall file a copy of this Preliminary Placement Document, and

subsequently file a copy of the Placement Document with the Stock Exchanges.

QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee.

For details of what constitutes “same group” or “common control”, see “Issue Procedure—Application

Process—Bid Cum Application Form” on page 144.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of

allotment except on the floor of a recognised stock exchange in India. Allotments made to FVCIs, VCFs and

AIFs in the Issue are subject to the rules and regulations that are applicable to them, including in relation to

lock-in requirements.

The Equity Shares offered hereby have not been and will not be registered under the Securities Act or

registered, listed or otherwise qualified in any other jurisdiction outside India, and unless so registered,

141

may not be offered or sold within the United States except pursuant to an exemption from, or in a

transaction not subject to, the registration requirements of the Securities Act and applicable state

securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States in

offshore transactions in reliance on Regulation S and the applicable laws of the jurisdictions where those

offers and sales occur. For a description of certain restrictions on transfer of the Equity Shares, please see

the section “Transfer Restrictions” on page 158.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other

jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any

such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

Issue Procedure

1. Our Company and the Book Running Lead Managers shall circulate serially numbered copies of this

Preliminary Placement Document and the serially numbered Bid Cum Application Form, either in

electronic or physical form, to the eligible QIBs and the Bid Cum Application Form will be specifically

addressed to such QIBs. In terms of Section 42(7) of the Companies Act, 2013, our Company shall

maintain complete records of the QIBs to whom the Preliminary Placement Document and the serially

numbered Bid Cum Application Form have been dispatched. Our Company will make the requisite

filings with the RoC and SEBI within the stipulated time period as required under the Companies Act,

2013 and rules made thereunder.

2. The list of QIBs to whom the Bid Cum Application Form is delivered shall be determined by the

BRLMs at their sole discretion. Unless a serially numbered Preliminary Placement Document along

with the serially numbered Bid Cum Application Form is addressed to a particular QIB, no invitation to

subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come

into the possession of any person other than the intended recipient, no offer or invitation to offer shall

be deemed to have been made to such person and any application that does not comply with this

requirement shall be treated as invalid.

3. QIBs may submit a Bid Cum Application Form, including any revisions thereof, during the Bidding

Period to the Book Running Lead Managers.

4. QIBs will be, inter alia, required to indicate the following in the Bid Cum Application Form:

name of the QIB to whom Equity Shares are to be Allotted;

number of Equity Shares Bid for;

price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may

also indicate that they are agreeable to submit a Bid at “Cut-off Price”; which shall be any

price as may be determined by our Company in consultation with the Book Running Lead

Managers at or above the Floor Price or the Floor Price net of such discount as approved in

accordance with SEBI Regulations;

details of the depository account to which the Equity Shares should be credited; and

a representation that it is outside the United States at the time it places its buy order for the

Equity Shares, it is acquiring the Equity Shares in an offshore transaction in reliance on

Regulation S and it has agreed to certain other representations set forth in the section

“Representations by Investors” and “Transfer Restrictions” beginning on pages 5 and 158,

respectively, of this Preliminary Placement Document and certain other representations made

in the Bid Cum Application Form.

Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign

individual will be considered as an individual QIB and separate Bid Cum Application Forms would be

required from each such sub-account for submitting Bids.

5. Once a duly completed Bid Cum Application Form is submitted by a QIB, such Bid Cum Application

Form constitutes an irrevocable offer and cannot be withdrawn after the Bid/Issue Closing Date. The

142

Bid/Issue Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have

been given notice of such date after receipt of the Bid Cum Application Form.

6. The Bids made by asset management companies or custodians of Mutual Funds shall specifically state

the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate

Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI.

7. Upon receipt of the Bid Cum Application Form, after the Bid/Issue Closing Date, our Company shall

determine the final terms, including the Issue Price of the Equity Shares to be issued pursuant to the

Issue in consultation with the Book Running Lead Managers. Upon determination of the final terms of

the Equity Shares, the Book Running Lead Managers will send the serially numbered CAN along with

the Placement Document to the QIBs who have been Allocated the Equity Shares. The dispatch of a

CAN shall be deemed a valid, binding and irrevocable contract for the QIB to pay the entire Issue Price

for all the Equity Shares Allocated to such QIB. The CAN shall contain details such as the number of

Equity Shares Allocated to the QIB and payment instructions including the details of the amounts

payable by the QIB for Allotment of the Equity Shares in its name and the Pay-In Date as applicable to

the respective QIB. Please note that the Allocation will be at the absolute discretion of our Company

and will be based in consultation with the Book Running Lead Managers.

8. Pursuant to receiving a CAN, each QIB shall be required to make the payment of the entire application

monies for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer

to our Company’s designated bank account by the Pay-In Date as specified in the CAN sent to the

respective QIBs. No payment shall be made by QIBs in cash. Please note that any payment of

application money for the Equity Shares shall be made from the bank accounts of the relevant QIBs

applying for the Equity Shares. Monies payable on Equity Shares to be held by joint holders shall be

paid from the bank account of the person whose name appears first in the application. Pending

Allotment, all monies received for subscription of the Equity Shares shall be kept by our Company in a

separate bank account with a scheduled bank and shall be utilised only for the purposes mentioned in

the Preliminary Placement Document.

9. Upon receipt of the application monies from the QIBs, our Company shall Allot Equity Shares as per

the details in the CANs sent to the QIBs.

10. The QIB confirms that it is purchasing the Equity Shares in an offshore transaction meeting the

requirements of Rule 903 or 904 of Regulation S and it shall not offer, sell, pledge or otherwise transfer

such Equity Shares except in an offshore transaction complying with Regulation S or pursuant to any

other available exemption from registration under the Securities Act and in accordance with all

applicable securities laws of the states of the United States and any other jurisdiction, including India.

It also confirms all other applicable representations and warranties included under “Representations by

Investors”, “Notice to Investors”, “Selling Restrictions” and “Transfer Restrictions” beginning on

pages 5, 3, 152 and 158 respectively.

11. After receipt of the listing approvals of the Stock Exchanges, our Company shall credit the Equity

Shares Allotted pursuant to this Issue into the Depository Participant accounts of the respective

Allottees.

12. Our Company will then apply for the final listing and trading approvals from the Stock Exchanges.

13. The Equity Shares that would have been credited to the beneficiary account with the Depository

Participant of the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of

final trading and listing approvals from the Stock Exchanges.

14. Upon receipt of intimation of final listing and trading approval from the Stock Exchanges, our

Company shall inform the Allottees of the receipt of such approval. Our Company and the Book

Running Lead Managers shall not be responsible for any delay or non-receipt of the communication of

the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay

or non-receipt. Final listing and trading approvals granted by the Stock Exchanges are also placed on

their respective websites. QIBs are advised to apprise themselves of the status of the receipt of the

permissions from the Stock Exchanges or our Company.

143

Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations and not otherwise excluded pursuant to

Regulation 86(1)(b) of the SEBI Regulations are eligible to invest. Currently, under Regulation 2(1)(zd) of the

SEBI Regulations, a QIB means:

alternate investment funds registered with SEBI

Eligible FPIs;

foreign venture capital investors registered with SEBI;

insurance companies registered with Insurance Regulatory and Development Authority;

insurance funds set up and managed by army, navy or air force of the Union of India;

insurance funds set up and managed by the Department of Posts, India;

multilateral and bilateral development financial institutions;

Mutual Fund registered with SEBI;

pension funds with minimum corpus of ₹25,00,00,000;

provident funds with minimum corpus of ₹25,00,00,000;

public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the

Companies Act, 2013);

scheduled commercial banks;

state industrial development corporations;

the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005

of the Government published in the Gazette of India; and

venture capital funds registered with SEBI.

In terms of the SEBI FPI Regulations, an FII who holds a valid certificate of registration from SEBI shall be

deemed to be a registered FPI until the expiry of the block of three years for which fees have been paid as per

the SEBI FII Regulations. An FII shall not be eligible to invest as an FII after registering as an FPI under the

SEBI FPI Regulations.

In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which

means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to

exceed 10 % of our post-Issue Equity Share capital. Further, in terms of the FEMA Regulations, the total

holding by each FPI shall be below 10% of the total paid-up Equity Share capital of our Company and the total

holdings of all FPIs put together shall not exceed 24% of the paid-up Equity Share capital of our Company. The

aggregate limit of 24% may be increased up to the sectoral cap by way of a resolution passed by the Board of

Directors followed by a special resolution passed by the Shareholders of our Company and subject to prior

intimation to RBI. In terms of the FEMA Regulations, for calculating the aggregate holding of FPIs in a

company, holding of all registered FPIs as well as holding of FIIs (being deemed FPIs) shall be included. The

existing individual and aggregate investment limits an FII or sub account in our Company is 10% and 24% of

the total paid-up Equity Share capital of our Company, respectively.

FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which may

be specified by the Government from time to time.

Eligible non-resident QIBs can participate in the Issue under Schedule 1 of the FEMA Transfer

Regulations.

144

FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs are

permitted to participate through the portfolio investment scheme under Schedule 2 and Schedule 2A of

FEMA Transfer Regulations respectively, in this Issue. FIIs and Eligible FPIs are permitted to

participate in the Issue subject to compliance with all applicable laws and such that the shareholding of

the FPIs do not exceed specified limits as prescribed under applicable laws in this regard.

Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions

which may be specified by the Government from time to time.

An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of

the block of three years for which fees have been paid as per the SEBI FII Regulations. An FII or sub-account

(other than a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until

the expiry of its registration as a FII or sub-account, or until it obtains a certificate of registration as FPI,

whichever is earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or

sub-account may, subject to payment of conversion fees under the SEBI FPI Regulations, participate in the

Issue. An FII or sub-account shall not be eligible to invest as an FII after registering as an FPI under the SEBI

FPI Regulations.

In terms of the FEMA Transfer Regulations, for calculating the aggregate holding of FPIs in a company, holding

of all registered FPIs as well as holding of FIIs (being deemed FPIs) shall be included.

Restriction on Allotment

Under Regulation 86(1)(b) of the SEBI Regulations, no Allotment shall be made pursuant to the Issue, either

directly or indirectly, to any QIB being, or any person related to, the Promoters. QIBs which have all or any of

the following rights shall be deemed to be persons related to the Promoters:

rights under a shareholders’ agreement or voting agreement entered into with the Promoters or persons

related to the Promoters;

veto rights; or

a right to appoint any nominee director on the Board.

Provided, however, that a QIB which does not hold any shares in our Company and which has acquired the

aforesaid rights in the capacity of a lender shall not be deemed to be related to the Promoters.

Our Company and the Book Running Lead Managers are not liable for any amendment or modification or

change to applicable laws or regulations, which may occur after the date of this Preliminary Placement

Document. QIBs are advised to make their independent investigations and satisfy themselves that they are

eligible to apply. QIBs are advised to ensure that any single application from them does not exceed the

investment limits or maximum number of Equity Shares that can be held by them under applicable law or

regulation or as specified in this Preliminary Placement Document. Further, QIBs are required to satisfy

themselves that their Bids would not eventually result in triggering a tender offer under the Takeover

Regulations.

Note: Affiliates or associates of the Book Running Lead Managers who are QIBs may participate in the Issue in

compliance with applicable laws.

Application Process

Bid Cum Application Form

QIBs shall only use the serially numbered Bid Cum Application Forms (which are addressed to them) supplied

by our Company and/or the Book Running Lead Managers in either electronic form or by physical delivery for

the purpose of making a Bid (including revision of a Bid) in terms of this Preliminary Placement Document.

By making a Bid (including the revision thereof) for Equity Shares through Bid Cum Application Forms and

pursuant to the terms of this Preliminary Placement Document, the QIB will be deemed to have made the

following representations and warranties and the representations, warranties and agreements made under the

sections entitled “Notice to Investors”, “Representations by Investors”, “Selling Restrictions” and “Transfer

145

Restrictions” beginning on pages 3, 5, 152, and 158, respectively:

1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI Regulations and is not

excluded under Regulation 86 of the SEBI Regulations, has a valid and existing registration under the

applicable laws in India (as applicable) and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or

indirectly and its Bid Cum Application Form does not directly or indirectly represent the Promoter or

Promoter Group or persons related to the Promoter;

3. The QIB confirms that it has no rights under a shareholders’ agreement or voting agreement with the

Promoter or persons related to the Promoter, no veto rights or right to appoint any nominee director on

the Board other than those acquired in the capacity of a lender which shall not be deemed to be a

person related to the Promoter;

4. The QIB acknowledges that it has no right to withdraw its Bid after the closure of the Bid/Issue;

5. The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one

year from Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;

6. The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further

confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any

applicable regulations applicable to the QIB;

7. The QIB confirms that its Bids would not eventually result in triggering a tender offer under the

Takeover Regulations;

8. The QIB confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to

it pursuant to the Issue, together with other Allottees that belong to the same group or are under

common control, shall not exceed 50.00% of the Issue. For the purposes of this representation:

a. The expression “belongs to the same group” shall derive meaning from the concept of

“companies under the same group” as provided in sub-section (11) of Section 372 of the

Companies Act, 1956; and

b. “Control” shall have the same meaning as is assigned to it by Regulation 2(1)(c) of the

Takeover Regulations;

9. The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account

maintained with the Depository Participant until such time that the final listing and trading approvals

for the Equity Shares are issued by the Stock Exchanges.

10. The QIB represents that it is outside the United States and is acquiring the Equity Shares in an offshore

transaction in reliance on Regulation S under the Securities Act and it has agreed to certain other

representations set forth in the Bid Cum Application Form. It also confirms all other applicable

representations and warranties included under “Representations by Investors”, “Notice to Investors”,

“Selling Restrictions” and “Transfer Restrictions” beginning on pages 5, 3, 152 and 158 respectively.

QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PAN, THEIR DEPOSITORY

PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND

BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT

THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN

WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB

ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB.

IF SO REQUIRED BY THE BRLM’s, THE QIB SUBMITTING A BID, ALONG WITH THE

APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO BRLM’s

TO EVIDENCE THEIR STATUS AS A “QIB” AS DEFINED HEREINABOVE.

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Demographic details such as address and bank account will be obtained from the Depositories as per the

Depository Participant account details given above.

The submission of an Bid Cum Application Form by a QIB shall be deemed a valid, binding and irrevocable

offer for the QIB to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a

binding contract on the QIB upon issuance of the CAN by our Company in favour of the QIB.

Submission of Bid Cum Application Form

All Bid Cum Application Forms must be duly completed with information including the number of Equity

Shares applied for. All Bid Cum Application Forms duly completed along with payment and a copy of the PAN

card or PAN allotment letter shall be submitted to the Book Running Lead Managers either through electronic

form or through physical delivery at the following address:

Name of the

Book Running

Lead Manager

Address Contact

person

Email Phone (telephone and fax)

Motilal Oswal

Investment

Advisors

Private

Limited

Motilal Oswal

Tower,

Rahimtullah

Sayani Road,

Opposite Parel ST

Depot, Prabhadevi,

Mumbai 400 025,

Maharashtra, India

Rupesh Khant [email protected] Tel: +91 22 3980 4380

Fax: +91 22 3980 4315

Ambit

Corporate

Finance

Private

Limited

Ambit House, 449,

Senapati Bapat

Marg,

Lower Parel,

Mumbai 400 013

Maharashtra, India

Sandeep

Sharma

[email protected] Tel: +91 22 3982 1819

Fax: +91 22 3982 3020

The Book Running Lead Managers shall not be required to provide any written acknowledgement of the same.

Permanent Account Number or PAN

Each QIB should mention its PAN allotted under the IT Act in the Bid Cum Application Form. Applications

without this information will be considered incomplete and are liable to be rejected. QIBs should not submit the

GIR number instead of the PAN as the Bid Cum Application Form is liable to be rejected on this ground. The

copy of the PAN card or PAN allotment letter is required to be submitted with the Bid Cum Application Form.

Pricing and Allocation

Build up of the Book

The QIBs shall submit their Bids (including the revision of bids) through the Bid Cum Application Form within

the Bidding Period to the Book Running Lead Managers. Such Bids cannot be withdrawn after the Bid/Issue

Closing Date. The book shall be maintained by the Book Running Lead Managers.

Price discovery and Allocation

Our Company, in consultation with the Book Running Lead Managers, shall determine the Issue Price, which

shall be at or above the Floor Price. Our Company may offer a discount of not more than 5.00% on the Floor

Price in terms of Regulation 85 of the SEBI Regulations.

After finalisation of the Issue Price, our Company shall update this Preliminary Placement Document with the

Issue details and file the same with the Stock Exchanges as the Placement Document.

Method of Allocation

Our Company shall determine the Allocation in consultation with the Book Running Lead Managers on a

discretionary basis and in compliance with Chapter VIII of the SEBI Regulations.

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Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand.

The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a

minimum of 10.00% of the Issue Size shall be undertaken subject to valid Bids being received at or above the

Issue Price.

THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD

MANAGERS IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS.

QIBS MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE

DISCRETION OF OUR COMPANY AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF

THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE.

NEITHER OUR COMPANY NOR THE BOOK RUNNING LEAD MANAGERS IS OBLIGED TO

ASSIGN ANY REASON FOR ANY NON-ALLOCATION.

CAN

Based on the Bid Cum Application Forms received, our Company, in consultation with the Book Running Lead

Managers, in their sole and absolute discretion, decide the QIBs to whom the serially numbered CAN shall be

sent, pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable

for Allotment of such Equity Shares in their respective names shall be notified to such QIBs. Additionally, a

CAN will include details of the relevant Escrow Bank Account(s) into which such payments would need to be

made, address where the application money needs to be sent, Pay-In Date as well as the probable designated

date, being the date of credit of the Equity Shares to the respective QIB’s account.

The eligible QIBs would also be sent a serially numbered Placement Document either in electronic form or by

physical delivery along with the serially numbered CAN.

The dispatch of the serially numbered Placement Document and the serially numbered CAN to the QIBs shall be

deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the

Book Running Lead Managers and to pay the entire Issue Price for all the Equity Shares Allocated to such QIB.

QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be

Allotted to them pursuant to the Issue.

Bank Account for Payment of Application Money

Our Company has opened the “SCNL Axis- QIP Escrow Account” with Axis Bank Limited and “SCNL ING-

QIP Escrow Account” with ING Vysya Bank Limited in terms of the Escrow Agreement. The QIB will be

required to deposit the entire amount payable for the Equity Shares Allocated to it by the Pay-In Date as

mentioned in the respective CAN.

If the payment is not made favouring either the “SCNL Axis- QIP Escrow Account” or “SCNL ING- QIP Escrow

Account” within the time stipulated in the CAN, the Bid Cum Application Form and the CAN of the QIB are

liable to be cancelled.

Our Company undertakes to utilise the amount deposited in “SCNL Axis- QIP Escrow Account” and “SCNL ING-

QIP Escrow Account” only for the purposes of (i) adjustment against Allotment of Equity Shares in the Issue; or

(ii) repayment of application money if our Company has not been able to Allot Equity Shares in the Issue.

In case of cancellations or default by the QIBs, our Company and the Book Running Lead Managers have the

right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute

discretion.

Payment Instructions

The payment of application money shall be made by the QIBs in the name of either “SCNL Axis- QIP Escrow

Account” or “SCNL ING- QIP Escrow Account” as per the payment instructions provided in the CAN.

Payments are to be made only through electronic fund transfer.

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Note: Payments through cheques are liable to be rejected

Designated Date and Allotment of Equity Shares

The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the “SCNL Axis- QIP Escrow

Account” or “SCNL ING- QIP Escrow Account” as stated above.

Subject to the satisfaction of the terms and conditions of the Placement Agreement, our Company will ensure

that the Allotment of the Equity Shares is completed by the Designated Date provided in the CAN for the QIBs

who have paid the aggregate subscription amounts as stipulated in the CAN.

In accordance with the SEBI Regulations, Equity Shares will be issued and Allotment shall be made only in

dematerialised form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they so

desire, as per the provisions of the Companies Act and the Depositories Act.

Our Company, at its sole discretion, reserve the right to cancel the Issue at any time up to Allotment without

assigning any reason whatsoever.

Post receipt of the listing approvals of the Stock Exchange, the Issuer shall credit the Equity Shares into the

Depository Participant account of the QIBs.

Following the Allotment and credit of Equity Shares into the QIBs’ Depository Participant accounts, our

Company will apply for final trading and listing approvals from the Stock Exchanges.

The Escrow Bank(s) shall release the monies lying to the credit of the Escrow Bank Account(s) to our Company

after allotment of Equity Shares to the QIBs.

In case of QIBs who have been Allotted more than 5.00% of the Equity Shares in the Issue, our Company shall

disclose the name and the number of the Equity Shares Allotted to such QIB to the Stock Exchanges and the

Stock Exchanges will make the same available on their website.

The Escrow Bank(s) shall release the monies lying to the credit of the Escrow Bank Account(s) to our Company

post receipt of final listing and trading approvals from the Stock Exchanges.

In the event that our Company is unable to issue and Allot the Equity Shares offered in the Issue or on

cancellation of the Issue within 60 days from the date of receipt of application money, our Company shall repay

the application money within 15 days from expiry of 60 days, failing which our Company shall repay that

money with interest at the rate of 12% per annum from expiry of the sixtieth day. The application money to be

refunded by our Company shall be refunded to the same bank account from which application money was

remitted by the QIBs.

Other Instructions

Right to Reject Applications

Our Company, in consultation with the Book Running Lead Managers, may reject Bids, in part or in full,

without assigning any reason whatsoever. The decision of our Company and the Book Running Lead Managers

in relation to the rejection of Bids shall be final and binding.

Equity Shares in Dematerialised form with NSDL or CDSL

The Allotment of the Equity Shares in this Issue shall be only in dematerialised form (i.e., not in physical

certificates but be fungible and be represented by the statement issued through the electronic mode).

A QIB applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary account

with a Depository Participant of either NSDL or CDSL prior to making the Bid. Allotment to a successful QIB

will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the

QIB.

Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with

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NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and CDSL.

The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised form only for all

QIBs in the demat segment of the respective Stock Exchanges.

Our Company will not be responsible or liable for the delay in the credit of Equity Shares to be issued pursuant

to the Issue due to errors in the Bid Cum Application Form or otherwise on part of the QIBs.

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PLACEMENT

Placement Agreement

The Book Running Lead Managers have entered into a Placement Agreement with our Company, pursuant to

which the Book Running Lead Managers have agreed to manage the Issue and to act as placement agents in

connection with the proposed Issue and procure subscription for Equity Shares to be placed with the QIBs,

pursuant to Chapter VIII of the SEBI Regulations.

The Placement Agreement contains customary representations and warranties, as well as indemnities from our

Company and is subject to termination in accordance with the terms contained therein.

Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on

the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for

such Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which

holders of the Equity Shares will be able to sell their Equity Shares.

This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the RoC

and, no Equity Shares issued pursuant to the Issue will be offered in India or overseas to the public or any

members of the public in India or any other class of investors, other than QIBs.

In connection with the Issue, the Book Running Lead Managers (or their affiliates) may, for their own accounts,

subscribe to the Equity Shares or enter into asset swaps, credit derivatives or other derivative transactions

relating to the Equity Shares to be issued pursuant to the Issue at the same time as the offer and sale of the

Equity Shares, or in secondary market transactions. As a result of such transactions, the Book Running Lead

Managers may hold long or short positions in such Equity Shares. These transactions may comprise a

substantial portion of the Issue and no specific disclosure will be made of such positions.

Affiliates of the Book Running Lead Managers may purchase the Equity Shares and be Allotted Equity Shares

for proprietary purposes and not with a view to distribute or in connection with the issuance of P-Notes. See

section “Representations by Investors – Off-shore Derivative Instruments” on page 9.

From time to time, the Book Running Lead Managers and their affiliates may engage in transactions with and

perform services of our Company in the ordinary course of business and have engaged, or may in the future

engage, in commercial banking and investment banking transactions with our Company or its affiliates, for

which they have received compensation and may in the future receive compensation.

Lock-up

Our Company has undertaken that it will not for a period of 90 days from the date of this Preliminary Placement

Document without the prior written consent of the BRLMs, directly or indirectly, (a) offer, issue, contract to

issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant any option,

right or warrant to purchase, or otherwise transfer or dispose of, any Equity Shares or any securities convertible

into or exercisable for Equity Shares (including, without limitation, securities convertible into or exercisable or

exchangeable for Equity Shares), or file any registration statement under the United States Securities Act of

1933, as amended, with respect to any of the foregoing or (b) enter into any swap or other agreement or any

transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences

associated with the ownership of any of the Equity Shares or any securities convertible into or exercisable or

exchangeable for Equity Shares (regardless of whether any of the transactions described in clause (a) or (b) is to

be settled by the delivery of Equity Shares or such other securities, in cash or otherwise), or (c) deposit Equity

Shares with any other depositary in connection with a depositary receipt facility or (d) publicly announce any

intention to enter into any transaction falling within (a) to (c) above or enter into any transaction (including a

transaction involving derivatives) having an economic effect similar to that of a sale, issue or offer or deposit of

Equity Shares in any depositary receipt facility or publicly announce any intention to enter into any transaction

falling within (a) to (c) above.

To provide comfort to the investors that may participate in the Offering, the undersigned, during the period

commencing on the date hereof and ending 90 days after the date of allotment of the Equity Shares under the

Offering (the “Lock-up Period”), agrees not to, without the prior written permission of the BRLM, do the

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following:

(a) directly or indirectly, offer, lend, sell, contract to sell, sell any option or contract to purchase, purchase

any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or

dispose of, any Promoter Share (as defined herein below) or any securities convertible into or exercisable

for any Promoter Share or file any registration statement under the U.S. Securities Act of 1933, as

amended, with respect to any of the foregoing (regardless of whether any of the transactions described in

this clause (a) is to be settled by the delivery of the Promoter Shares or such other securities, in cash or

otherwise); or

(b) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or

indirectly, any of the economic consequences associated with the ownership of any of the Promoter

Shares or any securities convertible into or exercisable or exchangeable for any of the Promoter Shares

(regardless of whether any of the transactions described in this clause (b) is to be settled by the delivery

of the Promoter Shares or such other securities, in cash or otherwise); or

(c) deposit any of the Promoter Shares with any depositary in connection with a depositary receipt facility;

or

(d) publicly announce any intention to enter into any transaction falling within (a) to (c) above or enter into

any transaction (including a transaction involving derivatives) having an economic effect similar to that

of a sale or deposit of the Promoter Shares in any depositary receipt facility or publicly announce any

intention to enter into any transaction falling within (a) to (c) above,

provided, however, that the foregoing restrictions shall not apply to any sale, transfer or disposition of any of the

Promoter Shares by the undersigned with prior notice to the BRLM to the extent such sale, transfer or

disposition is required by Indian law

The term “Promoters’ Shares” shall mean the 44,72,42,427 Equity Shares constituting 72.82% of the total

Equity Share Capital owned by Promoters during the Lock-up Period.

Notwithstanding anything provided above, the foregoing restrictions on transfer of Promoters’ Shares by the

Promoters shall not apply to (i) any pledge to be created on the Promoter Shares by the Promoters in favour of

any banks or financial institutions for raising capital; and (ii) any inter group transfer made to any entities

forming a part of the Promoter Group, subject to compliance with applicable laws and subject to observance by

the transferee Promoter Group of the foregoing restrictions on transfer of Promoters’ Shares until the expiry of

the Lock-up Period.

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SELLING RESTRICTIONS

The distribution of this Preliminary Placement Document or any offering material and the offering, sale or

delivery of the Equity Shares in this Issue is restricted by law in certain jurisdictions. Therefore, persons who

may come into possession of this Preliminary Placement Document or any offering material are advised to take

legal advice with regard to any restrictions that may be applicable to them and to observe such restrictions.

This Preliminary Placement Document may not be used for the purpose of an offer or sale in any circumstances

in which such offer or sale is not authorized or permitted.

General

No action has been or will be taken in any jurisdiction by our Company or the BRLMs that would permit a

public offering of the Equity Shares to occur in any jurisdiction or the possession, circulation or distribution of

this Preliminary Placement Document or any other material relating to our Company or the Equity Shares in the

Issue in any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares in the Issue

may not be offered or sold, directly or indirectly and neither this Preliminary Placement Document nor any other

offering material or advertisements in connection with the offering of the Equity Shares issued pursuant to the

Issue may be distributed or published, in or from any country or jurisdiction except under circumstances that

will result in compliance with any applicable rules and regulations of any such country or jurisdiction and will

not impose any obligations on our Company or the BRLMs. The Issue will be made in compliance with the

SEBI Regulations. Each subscriber of the Equity Shares in the Issue will be required to make, or will be deemed

to have made, as applicable, the acknowledgments and agreements as described under the sections “Selling

Restrictions” and “Transfer Restrictions” beginning on page 152 and 158, respectively.

India

This Preliminary Placement Document may not be distributed directly or indirectly in India or to residents of

India and any Equity Shares may not be offered or sold directly or indirectly in India to, or for the account or

benefit of, any resident of India except as permitted by applicable Indian laws and regulations, under which an

offer is strictly on a private and confidential basis and is limited to eligible QIBs and is not an offer to the

public. The Issue is a “private placement” within the meaning of Section 42 of the Companies Act, 2013 since

the invitation or offer is to be made only to QIBs. This Preliminary Placement Document/ Placement Document

is neither a public issue nor a prospectus under the Companies Act, 2013, or an advertisement and should not be

circulated to any person other than to whom the offer is made. This Preliminary Placement Document has not

been and will not be registered as a prospectus with the Registrar of Companies in India.

Australia

This Preliminary Placement Document is not a disclosure document under Chapter 6D of the Corporations Act

2001 (the “Australian Corporations Act”), and has not been lodged with the Australian Securities &

Investments Commission and does not purport to include the information required of a disclosure document

under the Australian Corporations Act. (i) The offer of the Equity Shares under this Preliminary Placement

Document is only made to persons to whom it is lawful to offer the Equity Shares without disclosure to

investors under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in Section

708 of the Australian Corporations Act; (ii) this Preliminary Placement Document is made available in Australia

to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree

is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia any

Equity Share sold to the offeree within 12 months after their issue or transfer to the offeree under this


Cayman Islands

No offer or invitation to purchase Equity Shares may be made to the public in the Cayman Islands.

Dubai International Financial Centre

The Preliminary Placement Document relates to an exempt offer (an “Exempt Offer”) in accordance with the

Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”). The Preliminary Placement

Document is intended for distribution only to persons of a type specified in those rules. It must not be delivered

153

to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents

in connection with an Exempt Offer. The DFSA has not approved the Preliminary Placement Document nor

taken steps to verify the information set out in it, and has no responsibility for it. The Equity Shares to which the

Preliminary Placement Document relates may be illiquid and/or subject to restrictions on their resale.

Prospective purchasers of the Equity Shares offered should conduct their own due diligence on the Equity

Shares. If you do not understand the contents of the Preliminary Placement Document, you should consult an

authorized financial adviser.

European Economic Area (including Liechtenstein, Iceland and Norway)

In relation to each Member State of the European Economic Area which has implemented the Prospectus

Directive (each a “Relevant Member State”), an offer may not be made to the public in that Relevant Member

State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the

competent authority in that Relevant Member State or, where appropriate, approved in another Relevant

Member State and notified to the competent authority in that Relevant Member State, all in accordance with the

Prospectus Directive, except that it may, with effect from and including the date on which the Prospectus

Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), make an offer

of Equity Shares to the public in that Relevant Member State at any time:

to legal entities which are authorized or regulated to operate in the financial markets or, if not so

authorized or regulated, whose corporate purpose is solely to invest in securities;

to any legal entity which has two or more of (i) an average of at least 250 employees during the last

Financial Year, (ii) a total balance sheet of more than €50,000,000, as show in its last annual

consolidated accounts;

to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus

Directive) subject to obtaining the prior consent of the BRLM for any such offer; or

in any other circumstances which do not require the publication of a prospectus pursuant to Article 3(2)

of the Prospectus Directive.

provided that no such offer of Equity Shares shall result in a requirement for the publication by our Company or

the BRLMs of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision,

the expression an “offer of Equity Shares to the public” in relation to any of the Equity Shares in any Relevant

Member States means the communication in any form and by any means, of sufficient information on the terms

of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for

the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus

Directive in that Member State.

Hong Kong

No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong by

means of any document, other than to persons whose ordinary business is to buy or sell shares or debentures,

whether as principal agent; or to “professional investors” as defined in the Securities and Futures Ordinance

(Cap. 571) of Hong Kong and any rules made under that Ordinance; or in other circumstances which do not

result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or

which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of

Hong Kong. No document, invitation or advertisement relating to the Equity Shares has been issued or may be

issued, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong

Kong (except if permitted under the securities laws of Hong Kong) other than with respect to the Equity Shares

which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as

defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that

Ordinance.

Japan

The offering of the Equity Shares has not been and will not be registered under the Financial Instruments and

Exchange Law of Japan, as amended (the “Financial Instruments and Exchange Law”). No Equity Shares

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have been offered or sold, and will not be offered or sold, directly or in directly, in Japan or to, or for the benefit

of, any resident of Japan (which term as used herein means any person resident in Japan, including any

corporation or other entity organized under the laws of Japan) or to others for reoffering or re-sale, directly or

indirectly in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the

registration requirements of the Financial Instruments and Exchange Law and otherwise in compliance with the

Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial ordinances

of Japan.

Korea

The Equity Shares have not been registered under the Korean Securities and Exchange Law, and the Equity

Shares acquired in connection with the distribution contemplated hereby may not be offered or sold, directly or

indirectly, in Korea or to or for the account of any resident thereof, except as otherwise permitted by applicable

Korean laws and regulations, including, without limitation, the Korean Securities and Exchange Law and the

Foreign Exchange Transaction Laws.

Kuwait

The Equity Shares have not been authorized or licensed for offering, marketing or sale in the State of Kuwait.

The distribution of this Preliminary Placement Document and the offering and sale of the Equity Shares in the

State of Kuwait is restricted by law unless a license is obtained from the Kuwaiti Ministry of Commerce and

Industry in accordance with Law 31 of 1990.

Malaysia

No approval of the Securities Commission of Malaysia has been or will be obtained in connection with the offer

and sale of the Equity Shares in Malaysia nor will any prospectus or other offering material or document in

connection with the offer and sale of the Equity Shares be registered with the Securities Commission of

Malaysia. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, nor may any

document or other material in connection therewith be distributed in Malaysia.

Mauritius

Our shares may not be offered, distributed or sold, directly or indirectly, in Mauritius or to any resident of

Mauritius, except as permitted by applicable Mauritius securities law. No offer or distribution of securities will

be made to the public in Mauritius.

New Zealand

This Preliminary Placement Document is not a prospectus. It has not been prepared or registered in accordance

with the Securities Act 1978 of New Zealand (the “New Zealand Securities Act”). This Preliminary Placement

Document is being distributed in New Zealand only to persons whose principal business is the investment of

money or who, in the course of and for the purposes of their business, habitually invest money, within the

meaning of section 3(2)(a)(ii) of the New Zealand Securities Act (“Habitual Investors”). By accepting this

Preliminary Placement Document, each investor represents and warrants that if they receive this Preliminary

Placement Document in New Zealand they are a Habitual Investor and they will not disclose this Preliminary

Placement Document to any person who is not also a Habitual Investor.

Oman

By receiving the Preliminary Placement Document, the person or entity to whom it has been issued understands,

acknowledges and agrees that the Preliminary Placement Document has not been approved by the Capital

Market Authority of Oman (the “CMA”) or any other regulatory body or authority in the Sultanate of Oman

(“Oman”), nor has the Book Running Lead Manager or any placement agent acting on its behalf received

authorisation, licensing or approval from the CMA or any other regulatory authority in Oman, to market, offer,

sell, or distribute interests in the Equity Shares within Oman.

No marketing, offering, selling or distribution of any interests in the Equity Shares has been or will be made

from within Oman and no subscription for any interests in the Equity Shares may or will be consummated

within Oman. Neither the Book Running Lead Managers nor any placement agent acting on its behalf is a

155

company licensed by the CMA to provide investment advisory, brokerage, or portfolio management services in

Oman, nor a bank licensed by the Central Bank of Oman to provide investment banking services in Oman.

Neither the Book Running Lead Manager nor any placement agent acting on its behalf advise persons or entities

resident or based in Oman as to the appropriateness of investing in or purchasing or selling securities or other

financial products.

Nothing contained in the Preliminary Placement Document is intended to constitute Omani investment, legal,

tax, accounting or other professional advice. The Preliminary Placement Document is for your information only,

and nothing herein is intended to endorse or recommend a particular course of action. You should consult with

an appropriate professional for specific advice on the basis of your situation.

People’s Republic of China

This Preliminary Placement Document, may not be circulated or distributed in the People‘s Republic of China

and the Equity Shares may not be offered or sold directly or indirectly to any resident of the People‘s Republic

of China, or offered or sold to any person for reoffering or resale directly or indirectly to any resident of the

People‘s Republic of China except pursuant to applicable laws and regulations of the People‘s Republic of

China. The BRLM has represented and agreed that neither it nor any of its affiliates has offered or sold or will

offer or sell any of the Equity Shares in the People‘s Republic of China (excluding Hong Kong, Macau and

Taiwan) as part of the Issue. We do not represent that this Preliminary Placement Document may be lawfully

distributed, or that any Equity Shares may be lawfully offered, in compliance with any applicable registration or

other requirements in the People‘s Republic of China, or pursuant to an exemption available thereunder, or

assume any responsibility for facilitating any such distribution or offering. In particular, no action has been

taken by us which would permit a public offering of any Equity Shares or distribution of this document in the

People‘s Republic of China. Accordingly, the Equity Shares are not being offered or sold within the People‘s

Republic of China by means of this Preliminary Placement Document or any other document. Neither this

Preliminary Placement Document nor any advertisement or other offering material may be distributed or

published in the People‘s Republic of China, except under circumstances that will result in compliance with any

applicable laws and regulations.

Qatar

The Equity Shares have not been offered, sold or delivered, and will not be offered, sold or delivered at any

time, directly or indirectly, in the state of Qatar in a manner that would constitute a public offering. This

Preliminary Placement Document has not been reviewed or registered with Qatari Government Authorities,

whether under Law No. 25 (2002) concerning investment funds, Central Bank resolution No. 15 (1997), as

amended, or any associated regulations. Therefore, this Preliminary Placement Document is strictly private and

confidential, and is being issued to a limited number of sophisticated investors, and may not be reproduced or

used for any other purposes, nor provided to any person other than recipient thereof.

Singapore

The BRLM has acknowledged that this Preliminary Placement Document has not been registered as a

prospectus with the Monetary Authority of Singapore. Accordingly, the BRLM has represented and agreed that

it has not offered or sold any Equity Shares issued pursuant to the Issue or caused such Equity Shares to be

made the subject of an invitation for subscription or purchase and will not offer or sell such Equity Shares issued

pursuant to the Issue or cause such Equity Shares to be made the subject of an invitation for subscription or

purchase, and have not circulated or distributed, nor will they circulate or distribute, this Preliminary Placement

Document or any other document or material in connection with the offer or sale, or invitation for subscription

or purchase, of such Equity Shares issued pursuant to the Issue, whether directly or indirectly, to persons in

Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter

289 of Singapore (“SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to

Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise

pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

a corporation (which is not an accredited investor) (as defined in Section 4A of the SFA) the sole

business of which is to hold investments and the entire share capital of which is owned by one or more

individuals, each of whom is an accredited investor; or

156

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and

each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation to the beneficiaries’ rights and interest

(howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust

has acquired the Equity Shares pursuant to an offer made under Section 275 except:

to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section 275(2)

of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B)

of the SFA;

where no consideration is or will be given for the transfer;

where the transfer is by operation of law; or

as specified in Section 276(7) of the SFA.

Switzerland

This Preliminary Placement Document does not constitute an issue prospectus pursuant to Art. 652a of the

Swiss Code of Obligations. The Equity Shares will not be listed on the SWX Swiss Exchange, and therefore,

this Preliminary Placement Document does not comply with the disclosure standards of the Listing Rules of the

SWX Swiss Exchange. Accordingly, the Equity Shares may not be offered to the public in or from Switzerland,

but only to a selected and limited group of investors, which do not subscribe the Shares with a view to

distribution to the public. The investors will be individually approached by the BRLM. This Preliminary

Placement Document is personal to each offeree and does not constitute an offer to any other person. This

Preliminary Placement Document may only be used by those persons to whom it has been handed out in

connection with the offer described herein and may neither directly nor indirectly be distributed or made

available to other persons without the express consent of our Company. It may not be used in connection with

any other offer and shall in particular not be copied and/or distributed to the public in or from Switzerland.

United Arab Emirates

This Preliminary Placement Document is not intended to constitute an offer, sale or delivery of shares or other

securities under the laws of the United Arab Emirates (the “UAE”). The Equity Shares have not been and will

not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities

Authority and the Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai

Financial Market, the Abu Dhabi Securities market or with any other UAE exchange. the Issue, the Equity

Shares and interests therein do not constitute a public offer of securities in the UAE in accordance with the

Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise. This Preliminary

Placement Document is strictly private and confidential and is being distributed to a limited number of investors

and must not be provided to any person other than the original recipient, and may not be reproduced or used for

any other purpose. The interests in the Equity Shares may not be offered or sold directly or indirectly to the

public in the UAE.

By receiving this Preliminary Placement Document, the person or entity to whom this Preliminary Placement

Document has been issued understands, acknowledges and agrees that the Equity Shares have not been and will

not be offered, sold or publicly promoted or advertised in the Dubai International Financial Centre other than in

compliance with laws applicable in the Dubai International Financial Centre, governing the issue, offering or

sale of securities. The Dubai Financial Services Authority has not approved this Preliminary Placement

Document nor taken steps to verify the information set out in it, and has no responsibility for it.

United Kingdom

Each Book Running Lead Manager has represented and agreed that it:

i. is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services

and Markets Act 2000 (the "FSMA"), being an investor whose ordinary activities involve it in

acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its

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business;

ii. has not offered or sold and will not offer or sell the Equity Shares other than to persons who are

qualified investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will

acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their

businesses where the issue of the Equity Shares would otherwise constitute a contravention of Section

19 of the FSMA by us;

iii. has only communicated or caused to be communicated and will only communicate or cause to be

communicated an invitation or inducement to engage in investment activity (within the meaning of

Section 21 of the FSMA) received by it in connection with the issue or sale of the Equity Shares in

circumstances in which Section 21(1) of the FSMA does not apply to it; and

iv. has complied and will comply with all applicable provisions of the FSMA with respect to anything

done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom.

United States of America

The Equity Shares have not been and will not be registered under the Securities Act, and may not be

offered or sold within the United States except pursuant to an exemption from, or in a transaction not

subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are being

offered and sold outside the United States in offshore transactions in reliance on Regulation S. Each

purchaser of the Equity Shares will be deemed to have made the representations, agreements and

acknowledgements as described under section “Transfer Restrictions” beginning on page 158.

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TRANSFER RESTRICTIONS

Resale of Equity Shares, except on the floor of the Stock Exchanges, is not permitted for a period of one year

from the date of Allotment, pursuant to Chapter VIII of the SEBI Regulations. Since the following

additional restrictions will apply, investors are advised to consult legal counsel prior to making any offer,

resale, pledge or transfer of the Equity Shares.

Allotments made to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are

applicable to them, including in relation to lock-in requirements. Subject to the foregoing, by accepting this

Preliminary Placement Document and purchasing any Equity Shares under this Issue, you are deemed to have

represented, warranted, acknowledged and agreed with the Company and the BRLMs as follows:

you have received a copy of the Preliminary Placement Document and such other information as you deem

necessary to make an informed decision and that you are not relying on any other information or the

representation concerning the Company or the Equity Shares and neither the Company nor any other

person responsible for this document or any part of it or the BRLMs will have any liability for any such

other information or representation;

you are purchasing the Equity Shares in an offshore transaction meeting the requirements of Rule 903 or

904 of Regulation S and you agree that you will not offer, sell, pledge or otherwise transfer such Equity

Shares except in offshore transactions complying with Regulation S or pursuant to any other available

exemption from registration under the Securities Act and in accordance with all applicable securities laws

of the states of the United States and any other jurisdiction, including India;

you are authorised to consummate the purchase of the Equity Shares in compliance with all applicable

laws and regulations;

you acknowledge (or if you are a broker-dealer acting on behalf of a customer, your customer has

confirmed to you that such customer acknowledges) that such Equity Shares have not been and will not be

registered under the Securities Act;

you certify that either (A) you are, or at the time the Equity Shares are purchased will be, the beneficial

owner of the Equity Shares and are located outside the United States (within the meaning of Regulation S)

or (B) you are a broker-dealer acting on behalf of your customer and your customer has confirmed to you

that (i) such customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the

Equity Shares, and (ii) such customer is located outside the United States (within the meaning of

Regulation S); and

the Company, the BRLMs, their respective affiliates and others will rely upon the truth and accuracy of

your representations, warranties, acknowledgements and undertakings set out in this document, each of

which is given to (a) the BRLMs on their own behalf and on behalf of the Company, and (b) to the

Company, and each of which is irrevocable and, if any of such representations, warranties,

acknowledgements or undertakings deemed to have been made by virtue of your purchase of the Equity

Shares are no longer accurate, you will promptly notify the Company.

Any resale or other transfer or attempted resale or other transfer, made other than in compliance with the above

stated restrictions will not be recognised by the Company.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the website of SEBI and the

Stock Exchanges and has not been prepared or independently verified by our Company or the Book Running

Lead Managers or any of their respective affiliates or advisors.

India has a long history of organized securities trading. In 1875, the first stock exchange was established in

Mumbai. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the

number of listed companies, market capitalization and trading activity.

Indian Stock Exchanges

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the

Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the

“SCRA”) and the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”). On June 20, 2012, SEBI, in

exercise of its powers under the SCRA and the Securities and Exchange Board of India Act, 1992, as amended

from time to time (the “SEBI Act”), notified the Securities Contracts (Regulation) (Stock Exchanges and

Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate inter alia the

recognition, ownership and internal governance of stock exchanges and clearing corporations in India together

with providing for minimum capitalisation requirements for stock exchanges. The SCRA, the SCRR and the

SCR (SECC) Rules along with various rules, bye-laws and regulations of the respective stock exchanges,

regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner, in which

contracts are entered into, settled and enforced between members of the stock exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and

intermediaries in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent

and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public

companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies,

buy-backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, Mutual

Funds, FIIs, FPIs, credit rating agencies and other capital market participants have been notified by the relevant

regulatory authority.

Listing

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws

including the Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued

by SEBI and the listing agreements of the respective stock exchanges. The SCRA empowers the governing body

of each recognised stock exchange to suspend trading of or withdraw admission to dealings in a listed security

for breach of or non compliance with any conditions or breach of company’s obligations under such listing

agreement or for any reason, subject to the issuer receiving prior written notice of the intent of the exchange and

upon granting of a hearing in the matter. SEBI also has the power to amend such equity listing agreements and

bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw

recognition of a recognized stock exchange.

Delisting

SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in

relation to the voluntary and compulsory delisting of equity shares from the stock exchanges. In addition, certain

amendments to the SCRR have also been notified in relation to delisting.

Minimum Level of Public Shareholding

Pursuant to an amendment of the SCRR in June 2010, all listed companies (except public sector undertakings)

are required to ensure a minimum public shareholding at 25%. Listed companies which had public shareholding

below 25% prior to the amendment in June, 2010, were required to increase the public shareholding to the level

of at least 25% within a period of three years from the date of commencement of the amendment. Further, where

the public shareholding in a listed company falls below 25% at any time, such company is required to bring the

public shareholding to 25% within a maximum period of 12 months from the date of such fall. Consequently, a

listed company may be delisted from the stock exchanges for not complying with the above-mentioned

requirement. Our Company is in compliance with this minimum public shareholding requirement.

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Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to

apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index-

based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index

movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading

halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by

movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached

earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise

price bands of 20% movements either up or down. However, no price bands are applicable on scrips on which

derivative products are available or scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.

Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

Established in 1875, it is the oldest stock exchange in India. In 1956, it became the first stock exchange in India

to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its

present status as one of the premier stock exchanges of India.

NSE

The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked,

screen-based trading facilities with market-makers and electronic clearing and settlement for securities including

government securities, debentures, public sector bonds and units. It has evolved over the years into its present

status as one of the premier stock exchanges of India. The NSE was recognised as a stock exchange under the

SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital

market (equities) segment commenced operations in November 1994 and operations in the derivatives segment

commenced in June 2000. NSE launched the NSE 50 Index, now known as S&P CNX NIFTY, on April 22,

1996 and the Mid-cap Index on January 1, 1996. The securities in the NSE 50 Index are highly liquid.

Internet-based Securities Trading and Services

Internet trading takes place through order routing systems, which route client orders to exchange trading

systems for execution. Stockbrokers interested in providing this service are required to apply for permission to

the relevant stock exchange and also have to comply with certain minimum conditions stipulated under

applicable law. The NSE became the first exchange to grant approval to its members for providing internet-

based trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments

of the NSE.

Trading Hours

Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST

(excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on

public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash

and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.;

and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the

trading hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (or

“BOLT”) facility in 1995. This totally automated screen based trading in securities was put into practice nation-

wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement

cycles and improving efficiency in back-office work.

161

NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or

“NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided

depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the

spreads.

Takeover Regulations

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011,

as amended (the “Takeover Regulations”), which provides specific regulations in relation to substantial

acquisition of shares and takeover. Once the equity shares of a company are listed on a stock exchange in India,

the provisions of the Takeover Regulations will apply to any acquisition of the company’s shares/voting

rights/control. The Takeover Regulations prescribes certain thresholds or trigger points in the shareholding a

person or entity has in the listed Indian company, which give rise to certain obligations on part of the acquirer.

Acquisitions up to a certain threshold prescribed under the Takeover Regulations mandate specific disclosure

requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an

open offer of the shares of the target company. The Takeover Regulations also provides for the possibility of

indirect acquisitions, imposing specific obligations on the acquirer in case of such indirect acquisition.

Insider Trading Regulations

The SEBI Insider Trading Regulations, 1992 have been notified by SEBI to prohibit and penalize insider trading

in India. An insider is, among other things, prohibited from dealing either on his own behalf or on behalf of any

other person, in the securities of a listed company when in possession of unpublished price sensitive

information.

The SEBI Insider Trading Regulations, 1992 also provide disclosure obligations for shareholders holding more

than a pre-defined percentage, and directors and officers, with respect to their shareholding in the company, and

the changes therein. The definition of “insider” includes any person who has received or has had access to

unpublished price sensitive information in relation to securities of a company or any person reasonably expected

to have access to unpublished price sensitive information in relation to securities of a company and who is or

was connected with the company or is deemed to have been connected with the company. The SEBI Insider

Trading Regulations, 2015 have been notified by SEBI on January 15, 2015 and shall come into force on the one

hundred and twentieth day from their notification in the official gazette.

Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership

details and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, among other

things, the formation and registration of such depositories, the registration of participants as well as the rights

and obligations of the depositories, participants, companies and beneficial owners. The depository system has

significantly improved the operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in

February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA.

Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a

separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock

exchange functions as a self-regulatory organisation under the supervision of the SEBI.

162

DESCRIPTION OF EQUITY SHARES

The following is information relating to the Equity Shares including a brief summary of the Memorandum and

Articles of Association and the Companies Act. Prospective investors are urged to read the Memorandum and

Articles of Association carefully, and consult with their advisers, as the Memorandum and Articles of

Association and applicable Indian law, and not this summary, govern the rights attached to the Equity Shares.

General

The authorized share capital of our Company is ₹ 1,000,000,000 divided into 990,000,000 equity shares of ₹ 1

each and 10,000,000 non-cumulative redeemable preference shares of ₹ 1 each. The issued, subscribed and

paid-up capital is ₹ 614,314,191 consisting of 614,290,755 fully paid up equity shares of ₹ 1 each and 23,436

non-cumulative redeemable preference shares of ₹ 1 each.

Dividends

Under Indian law, a company pays dividends upon a recommendation by its board of directors and approval by

a majority of the shareholders at the AGM held each financial year. Under the Companies Act unless the board

of directors of a company recommends the payment of a dividend, the shareholders at a general meeting have no

power to declare any dividend. Subject to certain conditions specified under Section 123 of the Companies Act,

2013 and the rules made there under no dividend can be declared or paid by a company for any financial year

except (a) out of the profits of the company for that year, calculated in accordance with the provisions of the

Companies Act; or (b) out of the profits of the company for any previous financial year(s) arrived at in

accordance with the Companies Act and remaining undistributed; or (c) out of both; or (d) out of money

provided by the Central Government or a state Government for payment of dividend by the Company in

pursuance of a guarantee given by that Government.

The Articles of Association provide that our shareholders in their general meeting may declare a dividend to be

paid to the members according to their rights and interest in the profits and may, subject to the provisions of the

Companies Act. The dividend shall not exceed the amount recommended by our Board, though a smaller

dividend may be declared at the General Meeting by our Company. No dividend shall be payable except out of

the profits of our Company for that year or any other undistributed profits and no dividend shall carry interest as

against our Company. Further, our Board may from time to time pay the members such interim dividend as in

their judgment the position of our Company justifies. The Directors may retain dividends on which the

Company has a lien and may apply the same in or towards the satisfaction of the debts, liabilities or

engagements in respect of which that lien exists, subject to the provisions of the Companies Act. A transfer of

shares shall not pass on the rights to any dividend declared thereon before the registration of the transfer.

Capitalisation of Reserves and Issue of Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, the

Companies Act permits the board of directors, if so approved by the shareholders in a general meeting, to

capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares, which are similar to stock

dividend. The Companies Act permits the issue of fully paid up bonus shares from its free reserves, securities

premium account or capital redemption reserve account, provided that bonus shares shall not be issued by

capitalising reserves created by revaluation of assets. These bonus Equity Shares must be distributed to

shareholders in proportion to the number of Equity Shares owned by them as recommended by the board of

directors.

Any issue of bonus shares by a listed company would be subject to the SEBI Regulations. The relevant SEBI

Regulations prescribe that no company shall make a bonus issue of equity shares if it has outstanding fully or

partly convertible debt instruments at the time of making the bonus issue, unless it has made reservation of the

equity shares in the same class in favour of the holders of the outstanding convertible debt instruments in

proportion to the convertible part thereof and the equity shares reserved for the holders of fully or partly

convertible debt instruments shall be issued at the time of conversion of such convertible debt instruments on

the same terms or same proportion on which the bonds were issued. Further, for issuance of such bonus shares, a

company should not have defaulted in the payment of interest or principal in respect of fixed deposits and

interest on existing debentures or principal on redemption of such debentures. The declaration of bonus shares in

lieu of a dividend cannot be made. The bonus issuance shall be made out of free reserves built out of genuine

profits or share premium collected in cash only. The reserves created by revaluation of fixed assets cannot be

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capitalised. Further, a company should have sufficient reason to believe that it has not defaulted in respect of the

payment of statutory dues of the employees, such as contributions to provident funds, gratuities and/or bonuses.

The Articles of Association provide that any general meeting may resolve that the whole or any part of the

undivided profits of our Company including any premium received on the issue of shares and any profits or

other sums which have been set aside as a reserve or reserves or have been carried forward without being

divided, shall be capitalized and distributed among such members as would be entitled to the footing that they

become entitled thereto as capital and that all or any part of such capitalized amount be applied on behalf of

such members in paying up in full any unissued shares of our Company which shall be distributed accordingly

or in or towards payment of the uncalled liability on any issued shares, and that such distribution or payment

shall be accepted by such members in full satisfaction of their interest in the said capitalized amount. However,

any sum standing to the credit of a share premium account or a capital redemption reserve account may only be

applied in paying up of unissued shares to be issued to members of our Company as fully paid bonus shares.

Alteration of Share Capital

Subject to the provisions of the Companies Act our Company may increase its share capital by issuing new

shares on such terms and with such rights as it, by action of its shareholders in a General Meeting may

determine. According to Section 62 of the Companies Act, 2013 such new shares shall be offered to existing

shareholders in proportion to the paid up share capital on those shares at that date. The offer shall be made by

notice specifying the number of shares offered and the date (being not less than 15 days and not exceeding 30

days from the date of the offer) within which the offer, if not accepted, will be deemed to have been declined.

After such date or on receipt of earlier intimation from the persons to whom such notice is given that they

decline to accept the shares offered, the Board may dispose of the shares offered in respect of which no

acceptance has been received in a manner which shall not be disadvantageous to the shareholders of our

Company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares

offered to him in favour of any other person subject to the provisions of FEMA Transfer Regulations, if

applicable.

Under the provisions of Section 62(1)(c) of the Companies Act, 2013 and the Companies (Share Capital and

Debentures) Rules, 2014, new shares may be offered to any persons whether or not those persons include

existing shareholders or employees to whom shares are allotted under a scheme of employees stock options,

either for cash or for consideration other than cash, if a special resolution to that effect is passed by our

Company’s shareholders in a general meeting. Our Company may, by an ordinary resolution, from time to time,

increase the share capital by such amount to be divided into shares of such amount as may be specified in the

resolution. Such increase in the share capital shall be subject to compliance with the provisions of the

Companies Act and of any other laws that may be in force.

The Articles of Association authorises the Company to issue and allot shares at par or at a premium subject to

and in accordance with provisions of the Companies Act.

Our Company may by Ordinary Resolution:

(a) Consolidate and divide its existing Shares or any of them into Shares of larger amount than its existing

Shares;

(b) Subdivide its existing Shares or any of them into Shares of smaller amount than is fixed originally by

the Memorandum of Association, such that in the subdivision, the proportion between the amount paid

and the amount unpaid on each reduced Share be the same as it was in the case of the Share from which

the reduced Share is derived; and

(c) Cancel any Shares which at the date of the passing of the ordinary resolution, have not been taken or

agreed to be taken by any person and also may diminish the amount of its Share capital by the amount

of the Shares so cancelled.

Further, subject to the provisions of the Companies Act, our Company may, by a special resolution, reduce in

any manner and subject to any incident authorized and consent required by law, its share capital, any capital

redemption reserve account or any share premium account.

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General Meetings of Shareholders

Our Directors may, whenever it thinks fit, call an extraordinary general meeting and shall, on the requisition of a

number of members who constitute not less than one-tenth of the paid-up capital of our Company, proceed to

call an extraordinary general meeting. Not less than 21 days' clear notice in writing of the general meeting is to

be given, but shorter notice may be given if consent in writing is accorded by all the members entitled to vote

and in case of any other meetings, with the consent of members holding not less than 95 per cent of such part of

the paid-up Share capital of our Company which gives a right to vote at the meeting. An explanatory statement

shall be annexed to every notice of a general meeting. The quorum requirements for a general meeting are as

prescribed under Section 103 of the Companies Act, 2013, and no business is to be transacted at the general

meeting unless the requisite quorum is present at the commencement of the same. If the quorum is not present

within half an hour of the time appointed for a meeting, the meeting, if convened upon such requisition as

aforesaid, shall be dissolved; but in any other case it shall stand adjourned to the same day in the next week at

the same time and place. The Articles of Association further provide that no business shall be transacted at any

adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

The chairman of our Board shall be entitled to take the chair at every general meeting or, if there is no such

chairman, or if at any general meeting he is not present within fifteen minutes after the time appointed for

holding such general meeting or is unwilling to act as chairman, the Directors present shall elect one of them to

be the chairman of the meeting. If no Director is present or if all the Directors present decline to take the chair,

then the members present shall choose one amongst themselves to be chairman of the general meeting. At any

general meeting, unless a poll is demanded in conformity with Section 109 of the Companies Act 2013, a

declaration by the chairman that a resolution has, on a show of hands been carried, or carried unanimously or by

a particular majority or lost and an entry to that effect in the minute book, should be conclusive evidence of the

fact without proof of number or proportion of votes recorded in favour of or against the resolution.

Voting Rights

Every member present in person shall have one vote on a show of hands, and on poll, the member present in

person or by proxy shall have one vote for each Share of our Company held by him, subject to any rights or

restrictions for the time being attached to any class or classes of Shares. The Articles of Association provide that

votes may be given by proxies in a manner as authorised under the Articles of Association.

The instrument appointing a proxy is required to be lodged at the registered office at least 48 hours before the

time of the meeting. A vote given in accordance with the terms of an instrument appointing a proxy shall be

valid notwithstanding the previous death or insanity of the principal or revocation of the instrument or transfer

of the Share in respect of which the vote is given provided no intimation in writing of the death or insanity,

revocation or transfer shall have been received at the office of our Company before the general meeting.

Provided never the less that the chairman of any general meeting shall be entitled to require such evidence as he

may in his discretion think fit of the due execution of an instrument of proxy and that the same has not been

revoked.

No member is entitled to exercise any voting rights either personally or by proxy at any meeting of our

Company in respect of any shares registered in his name on which any calls or other sums presently payable by

him have not been paid or in regard to which our Company has and has exercised any right or lien.

Transfer of Shares

An application for registration of a transfer of the Shares in our Company may be made either by the transferor

or the transferee. Where the application is made by the transferor and relates to partly paid Shares, the transfer

shall not be registered unless our Company gives notice of the application to the transferee and the transferee

makes no objection to the transfer within two weeks from the receipt of the notice. A notice to the transferee

shall be deemed to have been duly given if it is dispatched by prepaid registered post to the transferee at the

address given in the instrument of transfer and shall be deemed to have been duly delivered in the ordinary

course of post.

Our Company is required to comply with the rules, regulations and requirements of the stock exchange or the

rules made under the Companies Act, or the rules made under the Securities Contracts (Regulation) Act, 1956,

as amended (“SCRA”), or any other law or rules applicable, relating to the transfer or transmission of Shares or

debentures.

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Buy-back

Our Company may buy back its own shares or other specified securities subject to the provisions of the

Companies Act and any related guidelines issued in connection therewith.

Liquidation Rights

In the event that our Company is wound up, and the assets available for distribution among the members as such

are insufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may

be the losses shall be borne by the members in proportion to the capital paid up or which ought to have been

paid up at the commencement of the winding up on the shares held by them respectively and if in a winding up

the assets available for distribution among the members is more than sufficient to repay the whole of the paid up

capital at the commencement of the winding up the excess shall be distributed amongst the shareholders but this

shall be without prejudice to the rights of shareholder registered in respect of shares issued upon special terms

and conditions.

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REGULATIONS AND POLICIES IN INDIA

The following is an overview of the important laws and regulations which are relevant to our business in India.

The description of laws and regulations set out below is not exhaustive, and is only intended to provide general

information to QIBs, and is neither designed nor intended to be a substitute for professional legal advice. The

statements below are based on the current provisions of Indian law, which are subject to change or modification

by subsequent legislative, regulatory, administrative or judicial decisions.

Our Company is engaged in the business of providing cable television and broadband internet services.

Central Laws

Cable Television

The following acts, rules and regulations govern our cable television business:

The Cable Television Networks (Regulation) Act, 1995 (“Cable Television Act”)

The Cable Television Act regulates the operation of cable television networks in India. The Cable Television

Act requires any cable operator who is desirous of operating a cable television network to be registered with the

head post master of the area concerned. Where the Central Government is satisfied that it is necessary in public

interest to do so may make it obligatory for every cable operator to transmit or re-transmit programmes of any

channel in an encrypted form through a DAS.

The Ministry of Information and Broadcasting issued a notification dated November 11, 2011 (“DAS

Notification”) under the Cable Television Act, making it mandatory for every cable operator to transmit or

retransmit programmes of any channel in an encrypted form through a digital addressable system in four phases

in such cities and with effect from such dates as specified in the DAS Notification. Phase I included the cities of

Mumbai, Delhi, Kolkata and Chennai where digitization had to be completed by June 30, 2012. The said

deadline of June 30, 2012 was extended until October 31, 2012. Phase II which included 38 cities, was required

to be completed by March 31, 2013. Further, phases III and IV are required to be completed by December, 2015

and December, 2016 respectively.

The Cable Television Network Rules, 1994 (“Cable Television Rules”)

The Cable Television Rules stipulate that registration as a cable operator needs to be renewed every 12 months.

The Cable Television Rules further stipulate that a MSO shall apply for registration in order to provide DAS

services.

The Indian Telegraph Act, 1885 (“Telegraph Act”)

The Telegraph Act governs all forms of the usage of ‘telegraph’ which expression has been defined to mean any

appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs,

signals, writing, images, and sounds or intelligence of any nature, by wire, visual or other electro-magnetic

emissions, radio waves or hertzian waves, galvanic, electric or magnetic means. Using appliance or apparatus

for the purposes of dissemination of television signals and video transmissions therefore comes within the

definition of a ‘telegraph’.

The Indian Wireless Telegraphy Act, 1933 (“Wireless Telegraphy Act”)

In addition to a telegraph license under section 4 of the Telegraph Act, land–based wireless providers and users

also require an additional license under the Wireless Telegraphy Act. Section 3 of the Wireless Telegraphy Act

forbids any person from possessing a wireless telegraphy apparatus without a license. Under section 5 of the

Wireless Telegraphy Act, the license to possess the wireless and radio equipment and to use it for wireless

services is issued by the telegraph authority designated under the Telegraph Act, that is, the Director-General of

Posts and Telegraphs.

The Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 (“Mandatory Signal

Sharing Act”)

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The Mandatory Signal Sharing Act provides for access to the largest number of listeners and viewers, on a free

to air basis, of sporting events of national importance through mandatory sharing of sports broadcasting signals

with Prasar Bharati. Under this enactment, no content rights owner or holder and no television or radio

broadcasting service provider can carry a live television broadcast on any cable or DTH network or radio

commentary broadcast in India of “sporting events of national importance”, unless it simultaneously shares the

live broadcasting signal, without advertisements, with Prasar Bharati, to enable Prasar Bharati to re-transmit the

signal on its terrestrial networks and DTH networks.

The Telecom Regulatory Authority of India Act, 1997 (“TRAI Act”)

The Telecom Regulatory Authority of India (“TRAI”) was established in 1997 by the TRAI Act, as amended, to

regulate telecommunication services in India, including broadcasting and cable services. The TRAI is vested

with major recommendatory, regulatory and tariff setting functions, including (a) making recommendations on

the need and timing for introduction of new service providers, (b) on the terms and conditions of license to a

service provider, (c) ensuring compliance of terms and conditions of license, (d) effective management of

telecom, (e) laying down the standards for quality of service, (f) conducting a periodical survey of such service

provided by the service providers so as to protect interest of consumers, and (g) notifying the rates at which

telecommunication services within India and outside India shall be provided under the TRAI Act. In addition,

the TRAI Act contains penalty provisions for offences committed by a company under the TRAI Act.

The following regulations have been notified by TRAI:

A. Regulations applicable to DAS Notified areas:

The Standards of Quality of Service (Digital Addressable Cable TV Systems) Regulations, 2012 (“DAS

Regulations”)

The DAS Regulations require every MSO or its linked Local Cable Operator (“LCO”), offering digital

addressable cable TV services in entire DAS Notified areas to devise formats of application for seeking

connection, disconnection, reconnection and for obtaining and returning of set top boxes. Any person seeking

connection, disconnection or reconnection or shifting of cable service connection or intending to obtain or return

set top box at a place located within the area of operation of a MSO or its linked LCO is required to make an

application to such MSO/ LCO, as the case may be. Every MSO/ LCO shall provide the cable services to every

person making request for the same. No MSO/ LCO shall disconnect the cable services to the subscriber or take

any channel off the air without giving prior notice of at least 15 days to such subscriber indicating the reasons

for such disconnection and no charge for the services other than the rent for set top box shall be levied on the

subscriber for the period during which the services were discontinued. In the event of a complaint received from

a subscriber, the MSO/ LCO shall respond to the complaint within eight hours and at least 90% of all ‘no signal’

complaints received shall be redressed and signal restored within twenty four hours of receipt of such complaint.

Further, the quality of the set top box should conform to the Indian standard set by the Bureau of Indian

Standards.

The Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable

Television Systems) Regulations, 2012 (“Interconnection DAS Regulations”)

The Interconnection DAS Regulations provide that no broadcaster of television channels shall engage in any

practice or activity or enter into any understanding or arrangement, including exclusive contract with any MSO

for distribution of its channel which may prevent any other MSO from obtaining such TV channels for

distribution. Further, every broadcaster shall provide signals of its television channels on non-discriminatory

basis to every MSO having the prescribed channel capacity and registered. Every broadcaster shall provide the

signals of television channels to a MSO, in accordance with its Reference Interconnect Offer (RIO) or as may be

mutually agreed, within 60 days from the date of receipt of the request. Every MSO while seeking

interconnection with the broadcaster, shall ensure that its DAS installed for the distribution of television

channels meets the DAS requirements specified in these regulations. A MSO operating in the Municipal

boundary of Greater Mumbai, National Capital Territory of Delhi, Kolkata and Chennai shall have a capacity to

carry a minimum of 500 channels as on January 1, 2013 and provided that all MSOs operating in the above

areas and having subscriber base of less than 25,000 shall have the capacity to carry a minimum of 500 channels

by April 1, 2013. In the event of a complaint received from a subscriber, the MSO/ LCO shall respond to the

complaint within eight hours and at least 90% of all ‘no signal’ complaints received shall be redressed and

signal restored within twenty four hours of receipt of such complaint.

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The Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010

(“Tariff Order”)

TRAI has imposed a ceiling on tariffs of channels and bouquets of channels payable by (i) broadcasters to

distributors, (ii) LCOs to MSOs, and (iii) subscribers to MSOs/LCOs. The Tariff Order provides that every

MSO shall offer all channels to its subscribers on an a-la-carte basis and shall specify the maximum retail price

for each channel, as payable by the subscribers. The a-la-carte rates for free to air channels shall be uniform.

Further, in the event a MSO is offering channels as part of a bouquet, the sum of the a-la-carte rates of the

channels forming part of such a bouquet shall in no case exceed one and half times of the rate of that bouquet of

which such channels are a part. Additionally, the a-la-carte rate of each channel forming part of such a bouquet

shall in no case exceed three times the average rate of channel of that bouquet of which such channel is a part.

Every MSO shall report to TRAI, the a-la-carte rates for its pay channels and the bouquet rates.

B. Regulations applicable to Non-DAS areas:

The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, as amended

(“Interconnection Regulations”)

The Interconnection Regulations apply to all arrangements among service providers, including MSOs, for

interconnection and revenue sharing for all telecommunication services, including cable services in India. The

Interconnection Regulations provides that broadcasters are required to provide signals on non-discriminatory

terms to all distributors of television channels. Similarly, Head End In The Sky (“HITS”) operators and MSOs

are required to re-transmit signals received from a broadcaster on a non-discriminatory basis to LCOs. MSOs

are not allowed to engage in any practice or activity or enter into any understanding or arrangement, including

exclusive contracts with any distributor of TV channels that prevents any other distributor from obtaining such

TV channels. Further, No Broadcaster/ MSO/ HITS operator shall disconnect the TV channel signals to a

distributor of TV channels without giving three weeks prior written notice indicating the brief reasons for the

proposed action.

Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order, 2004, as amended

TRAI has imposed a ceiling on tariffs on channels and bouquets of channels, payable by (i) MSOs to

broadcasters, (ii) LCOs to MSOs, and (iii) subscribers to MSOs/LCOs. The charges, excluding taxes shall not

exceed 4% of the charges prevailing as on December 1, 2007 with respect to free to air, pay channels, bouquet

of channels and standalone channels not part of a bouquet, offered by MSOs to LCOs and by MSOs/ LCOs to

subscribers. Further, every MSO/LCO is required to give to every subscriber a bill for the charges payables by

that subscriber.

The Standards of Quality of Service (Broadcasting and Cable Services) (Cable Television – Non CAS Areas)

Regulation, 2009

The regulations provide for provisions relating to connection/disconnection or shifting of cable services as well

as provisions for the billing procedure and billing related complaints. Further, the regulations details the

mechanism for the handling of complaints and the provisions regarding additional standards of quality of service

relating to digital decoders and set top boxes for digital cable service in non-CAS areas.

The Policy Guidelines for Uplinking of Television Channels from India, 2011 (“Uplinking Guidelines”)

The Uplinking Guidelines came into effect in December 5, 2011 and regulate the gathering, uplinking and

broadcasting of television-based content in India. The Uplinking Guidelines provide for, inter alia, permission

for: (i) setting up of uplinking hub/teleports; (ii) uplinking of non-news and current affairs television channels

(that is, channels which do not include elements of news and current affairs in their programme content); (iii)

uplinking of news and current affairs television channels; and (iv) uplinking by Indian news agency; (v) use of

SNG/DSNG equipment in C Band and Ku Band; and (vi) temporary uplinking. Setting up uplinking

hub/teleports, uplinking of a non-news and current affairs television channels, or uplinking news and current

affairs television channels requires a specific permission from the MIB, and the permission granted by the MIB

is valid for a period of ten years.

Internet Service Provider

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Guidelines and General Information for Grant of License for Operating Internet Services, 2007 (“ISP License

Guidelines”)

The DoT issued ISP License Guidelines or grant of license of internet services on non-exclusive basis. The

licensee company is required to provide service within 24 months from the date of signing the license

agreement. The license is valid for a period of 15 years and access to internet through an authorized cable

operator is permitted to ISPs without additional licensing subject to the provisions of Cable Television Act. In

addition, the license is governed by the provisions of the Telegraph Act and the TRAI Act.

License Agreement for Internet Services

A service provider is required to obtain a license and enter into a standard agreement (“ISP License

Agreement”) with the DoT before starting operations as an ISP. In addition to the conditions required to be

followed by a licensee company under the ISP License Guidelines, the ISP License Agreement provides for

further requirements to be adhered to by the licensee company.

The Telecommunication Tariff Order, 1999 (“Tariff Order 1999”)

The Tariff Order issued by TRAI, provides the terms and conditions at which telecommunication services

within India and outside India may be provided, including rates and related conditions at which messages shall

be transmitted to any country outside India, deposits, installation fees, rentals, free calls, usage charges and any

other related fees or service charge.

Foreign Direct Investment

FDI investment, in activities pertaining to cable network undertaking upgradation of networks towards

digitalization) and HITS broadcasting service is permitted up to 74% of the paid up equity capital, of which 49%

is permitted under the automatic route and may be increased to 74% with the prior approval of the FIPB.

Further, FDI in activities relating to cable network (MSOs not undertaking upgradation of networks towards

digitalization and LCO) is restricted to 49% under the automatic route. Each of our Company, directors, key

executives such as any managing director, chief executive/ financial officer, chief operating/ technical/ security

officer, any shareholder of our Company who holds 10.00% or more of our paid-up Equity Share capital, and

any other category of persons as may be specified by MIB from time to time, are required to obtain security

clearance from the MIB.

State Laws

Entertainment Tax Laws

In majority of the states, the payment of entertainment tax is a liability of the cable operators. Cable operators

have to register themselves under respective state entertainment laws and they are required to deposit the

entertainment tax to the concerned department on monthly basis. The cable operators also require filing of

returns from time to time. However, in the states of West Bengal, Karnataka and Andhra Pradesh, the

entertainment tax is collected directly from the MSOs.

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STATEMENT OF TAX BENEFITS

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS

SHAREHOLDERS

To

The Board of Directors

Siti Cable Network Limited

135, Continental Building,

Dr. Annie Besent Road, Worli

Mumbai – 400018, Maharashtra

Dear Sirs

Subject: Statement of Possible Tax Benefits

We hereby certify that the enclosed annexure states the possible tax benefits available to Siti Cable Network

Limited (“the Company”) and to the shareholders of the Company under the provisions of the Income-tax Act,

1961 and Wealth-tax Act, 1957 (collectively referred to as “Tax Laws”), presently in force in India for the

Financial Year (“FY”) 2014-15 – Assessment year (AY) 2015-16. Several of these benefits are dependent on the

Company or its shareholders fulfilling the conditions prescribed under the relevant Tax Laws. Hence, the ability

of the Company or its shareholders to derive tax benefits is dependent upon fulfilling such conditions, which

based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The enclosed statement discusses key tax benefits including potential benefits. This statement is only intended

to provide general information to the investors and is neither designed nor intended to be a substitute for a

professional tax advice. A shareholder is advised to consult his/ her/ their own tax consultant with respect to the

tax implications arising out of their participation in the proposed public issue of equity shares of the Company

particularly in view of ever changing Tax Laws in India. We do not express any opinion or provide any assurance as to whether:

The Company or its shareholders will continue to obtain these benefits in future; or

The conditions prescribed for availing the benefits have been / would be met. The contents of this annexure are based on information, explanations and representations obtained from the

Company and on the basis of our understanding of the business activities and operations of the Company and

the provisions of the Tax Laws. The same shall be subject to notes to this annexure. This report is intended solely for your information and for the inclusion in the Offer Document in connection

with the proposed pubic issue of the Company and is not to be used, referred to or distributed for any other

purpose without our prior written consent.

For Walker Chandiok & Co LLP

(formerly Walker, Chandiok & Co)

Chartered Accountants

Firm Registration No: 001076N/N500013

per Atul Seksaria

Partner

Membership No.: 086370

Place: Noida

Date: 26 February 2015

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TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a summary

manner only and is not a complete analysis or listing of all potential tax consequences of purchase, ownership

and disposal of equity shares, under the Tax Laws presently in force in India. It is not exhaustive or

comprehensive analysis and is not intended to be a substitute for professional advice.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX

IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY

SHARES IN YOUR PARTICULAR SITUATION.

The following is based on the provisions of the Income-tax Act, 1961 (“the Act”) as of the date hereof. The Act

is amended every fiscal year.

1. Levy of Income Tax

Tax implications under the Act are dependent on the residential status of the tax payer. We summarize

herein below the provisions relevant for determination of residential status of a tax payer.

1.1. Residential status of an Individual

As per the provisions of the Act, an individual is considered to be a resident in India during any FY if

he or she is present in India for:

a) a period or periods aggregating to 182 days or more in that FY; or

b) a period or periods aggregating to 60 days or more in that FY and for a period or periods

aggregating to 365 days or more within the four preceding years; or

In the case of a citizen of India or a person of Indian origin living outside India who comes on a visit to

India in any previous year, the limit of 60 days under point (b) above, shall be read as 182 days.

In the case of a citizen of India who leaves India as member of the crew of an Indian ship or for the

purposes of employment outside India in any previous year, the limit of 60 days under point (b) above,

shall be read as 182 days.

Subject to complying with certain prescribed conditions, individuals may be regarded as ‘Resident but

not ordinarily resident’.

1.2. Residential status of a company

A company is resident in India if it is formed and incorporated under the Companies Act, 1956 or the

control and management of its affairs is situated wholly in India.

1.3. Residential status of a Hindu undivided family (‘HUF’) firm or AOP

A HUF, firm or other association of persons or every other person is resident in India except when the

control and management of its affairs is situated wholly outside India.

A person who is not a resident in India would be regarded as ‘Non-Resident’.

1.4. Residential status of every other person

Every other person is resident in India in a FY in every case except when the control and management

of his affairs is situated wholly outside India.

1.5. Scope of taxation

In general, a person who is "resident'' in India in a FY is subject to tax in India on its global income. In

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the case of a person who is "non-resident'' in India, only the income that is received or deemed to be

received or that accrues or is deemed to accrue or arise to such person in India is subject to tax in India.

In the instant case, the income from the equity shares of the Company would be considered to accrue or

arise in India, and would be taxable in the hands of all categories of tax payers irrespective of their

residential status unless specifically exempt (e.g. Dividend). However, a relief may be available under

applicable Double Taxation Avoidance Agreement (‘DTAA’) to certain non-residents/ investors.

Tax Considerations

As per the taxation laws in force, the tax benefits / consequences as applicable, to the Company and the

perspective shareholders are stated as under. Several of these benefits are dependent on the Company

or its shareholders fulfilling the conditions prescribed under the relevant Tax Laws. Hence, the ability

of the Company or its shareholders to derive the tax benefits is dependent upon the fulfilling such

conditions:

2. Benefits available to the Company - Under the Act

2.1 Special Tax Benefits

There are certain special tax holiday benefits available under the provisions of the Act. At present,

there are no special tax holiday benefits available to the Company, since it does not satisfy the

conditions prescribed therein.

2.2 General Tax Benefits

2.2.1. As per section 10(15) of the Act, any interest received by the Company from any public sector

company in respect of bonds or debentures is exempt from tax. The exemption is subject to such

conditions including the condition that the holder of such bonds or debentures registers his name and

the holding with that company, as the Central Government may specify in this behalf by notification in

the Official Gazette.

2.2.2. As per Section 10(34) of the Act, any income received by the Company by way of dividends on which

Dividend Distribution Tax (‘DDT’) has been paid shall not form part of the total income of the

Company and accordingly would be exempt from tax in its hands.

Under Section 14A of the Act, no deduction is permitted in respect of expenditure incurred in relation

to earning of income which is not chargeable to tax including dividends exempt under Section 10(34)

of the Act. The expenditure relatable to ‘exempt income’ needs to be determined in accordance with

the provisions specified in Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962

(‘the Rules’).

However, the Company would be liable to pay DDT at 15% (plus applicable surcharge and education

cess and secondary & higher education cess) on the grossed up amount declared, distributed or paid as

dividends. The grossing up may be explained by way of the following example:

Where the amount of dividend paid or distributed by a company is Rs. 85, then DDT under the

amended provision would be calculated as follows:

Dividend amount distributed = Rs. 85

Increase by Rs. 15 [i.e. (85*0.15)/(1-0.15)]

Increased amount = Rs. 100

DDT @ 15% of Rs. 100 = Rs. 15

Tax payable u/s 115-O is Rs. 15

Dividend distributed to shareholders = Rs. 85

In calculating the amount of dividend on which DDT is payable, dividends (if any, received by the

Company during the tax year and subject to fulfillment of the conditions), shall be reduced by:

dividends received by the domestic company from a subsidiary of the Company (A company shall

be a subsidiary of another company, if such other company, holds more than half in nominal value

of the equity share capital of the company); and

173

where such subsidiary is a domestic company, it has paid tax payable under section 115-O (DDT)

or where such subsidiary is a foreign company, the tax is payable under section 115BBD by the

domestic company.

As per the proviso to this section, the same amount of dividend would not be taken into account for

reduction more than once 2.2.3. As per Section 10(35) of the Act, the following income shall be exempt in the hands of the Company:

i) Income received in respect of the units of a Mutual Fund specified under clause (23D) of Section

10; or

ii) Income received in respect of the units from the Administrator of the Specified undertaking; or

iii) Income received in respect of units from the specified company. However, as per the proviso to section 10(35), the above provisions are not applicable to any income

arising from transfer of units of the Administrator of the specified undertaking or of the specified

company or of a mutual fund 2.3 Deductions under “Income from House Property”

2.3.1. Under Section 24(a) of the Act, the Company is eligible for a standard deduction of 30% of the annual

value of the property (i.e. actual rent received or receivable on the property or any part of the property

which is let out), where the Company has income chargeable to tax under the head ‘Income from House

Property’. 2.3.2. Further, under Section 24(b) of the Act, where the house property has been acquired, constructed,

repaired, renewed or reconstructed with borrowed capital, the amount of interest payable on such

borrowed capital shall be allowed as a deduction in computing the income, if any, from such house

property.

In respect of property acquired or constructed with borrowed capital, the amount of interest payable for

the period prior to the year in which the property has been acquired or constructed shall be allowed as

deduction in computing the income from house property in five equal installments beginning with the

year of acquisition or construction.

2.4 Computation of capital gains

2.4.1 Capital assets may be categorized into short-term capital assets and long-term capital assets based on

the period for which they are held by a tax payer.

A security (other than a unit) listed in a recognized stock exchange in India or units of Unit Trust of

India or units of an equity oriented fund or zero coupon bonds are considered as long-term capital

assets if they are held for a period more than 12 months immediately preceding date of their transfer.

Consequently, capital gains arising on sale of these assets are considered as ‘long-term capital gains’. Capital gains arising on sale of these assets held for a period of 12 months or less are considered as

‘short-term capital gains’.

2.4.2 As per Section 10(38) of the Act, capital gains arising from transfer of a long-term capital asset being

an equity share in the Company or a unit of an equity oriented fund, where the transaction of sale is

chargeable to Securities Transaction Tax (‘STT’), shall be exempt from tax in the hands of the

Company.

For this purpose ‘Equity oriented fund’ means a fund –

i) Where the investible funds are invested by way of equity shares in the domestic companies to the

extent of more than 65% of the total proceeds of such funds; and

ii) Which has been set up under a scheme of a Mutual fund specified under Section 10(23D).

However, the long-term capital gains arising on sale of share or units referred above shall not be

174

reduced while calculating the book profit under the provisions of Section 115JB of the Act. In other

words, such book profit shall include the long-term capital gain as referred to in Section 10(38) of the

Act and the Company will be required to pay MAT @ 18.5% (plus applicable surcharge, education

cess and secondary & higher education cess) on such book profit.

2.4.3 Section 48 of the Act, (which prescribes the mode of computation of capital gains) provides for

deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of

a capital asset from the sale consideration to arrive at the amount of capital gains.

However, in respect of long-term capital gains (as defined in para 2.4.1 above), a deduction of indexed

cost of acquisition/improvement is available.

Indexed cost of acquisition means the means an amount which bears to the cost of acquisition the same

proportion as Cost Inflation Index (CII) for the year in which the asset is transferred bears to the CII for

the first year in which the asset was held by the taxpayer or for the year beginning on April 1, 1981,

whichever is later. In other words indexed cost of acquisition is computed as under:

Cost of acquisition X CII of the FY in which the asset is transferred/ CII of the FY in which the asset

was first held by the tax payer or for the year beginning on April 1, 1981 whichever is later.

2.4.4 As per the provisions of Section 112 of the Act, long-term capital gains (as defined in para 2.4.1 above)

to the extent not exempt under Section 10(38) of the Act would be subject to tax in the hands of the

Company at the rate of 20% (plus applicable surcharge, education cess and secondary & higher

education cess).

However, as per the proviso to Section 112(1) of the Act, if the tax on long-term capital gains resulting

from transfer of listed securities or units [to the extent not exempt under Section 10(38) of the Act],

calculated at the rate of 20% (with indexation benefit) exceeds the tax on long-term gains computed at

the rate of 10% (without indexation benefit), then such gains are chargeable to tax at the concessional

rate of 10% (without indexation benefit) (plus applicable surcharge, education cess and secondary &

higher education cess ).

2.4.5 As per the provisions of Section 111A of the Act, short-term capital gains (as defined in para 2.4.1

above) on sale of equity shares or units of an equity oriented fund where the transaction of sale is

chargeable to STT shall be subject to tax at a rate of 15% (plus applicable surcharge, education cess

and secondary & higher education cess). Short-term capital gains arising from transfer of shares, other

than those covered by Section 111A of the Act, would be subject to tax at the rate as applicable to the

Company i.e 30% (plus applicable surcharge, education cess and secondary & higher education cess).

2.4.6 Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains

arising to the Company would be exempt from tax if such capital gains are invested within 6 months

after the date of such transfer in long term specified assets, being bonds issued by:

a) National Highway Authority of India constituted under Section 3 of The National Highway

Authority of India Act, 1988; or

b) Rural Electrification Corporation Limited, the Company formed and registered under the

Companies Act, 1956.

The investment made in such bonds during the FY in which asset is transferred and in subsequent FY

cannot exceed Rs.5,000,000.

If only a part of the capital gains is invested, the exemption available shall be in the same proportion as

the cost of long term specified assets bears to the whole of the capital gain. However, in case the long

term specified assets are transferred or converted into money within 3 years from the date of its

acquisition, the amount of capital gains so exempt shall be chargeable to tax during the year of such

transfer or conversion.

As long term capital gains covered under Section 10(38) of the Act are exempt from tax, there is no

requirement to invest under Section 54EC of the Act in such cases.

Set off and carry forward of capital loss

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2.4.7 Under section 70(2) of the Act, the Company can set off short term capital loss against other short term

capital gain or long term capital gain. Under section 70(3) of the Act, the Company can set off long

term capital loss against other long term capital gain.

2.4.8 Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off

against capital gains (whether short term or long term) of subsequent years (upto 8 years). Unabsorbed

long term capital loss can be carried forward and set off only against long term capital gains in

subsequent years (upto 8 years). However, as per Section 80 of the Act, the unabsorbed capital loss can

be carried forward only when the return of income has been filed within the time prescribed under

section 139(1) of the Act.

Computation of business income

2.5 Depreciation allowance 2.5.1. Under Section 32(1) of the Act, the Company can claim depreciation allowance at the prescribed rates

in respect of the following assets:

Tangible assets being building, machinery, plant or furniture;

Intangible assets being know-how, patents, copyrights, trademarks, licences, franchises or any

other business or commercial rights of similar nature acquired on or after April 1, 1998

2.6 Carry forward of unabsorbed depreciation, unabsorbed business losses

2.6.1. Under Section 32(2) of the Act, the Company can carry forward and set off unabsorbed depreciation of

one FY and adjusted against income of subsequent years.

2.6.2. Under Section 72 of the Act, unabsorbed business loss, if any can be carried forward and set off against

business profits of subsequent years (upto 8 years) subject to prescribed conditions. However, as per

Section 80 of the Act, the unabsorbed business loss can be carried forward only when the return of

income has been filed within the time prescribed under section 139(1) of the Act.

Potential tax benefits

2.7 Deduction of expenditure on scientific research

2.7.1 Under Section 35(1)(i) and Section 35(1)(iv) of the Act, the Company is eligible for deduction in

respect of any revenue or capital expenditure (other than expenditure on the acquisition of any land)

incurred on scientific research related to its business.

2.7.2 Under Section 35(1)(ii) of the Act, the Company can claim weighted deduction of one and three fourth

times (175%) of any sum paid to an approved research association (which has as its object, the

undertaking of scientific research) or to a university, college or other institution to be used for scientific

research.

2.7.3 Under Section 35(1)(iia) of the Act any sum paid to a company registered in India (which has as its

main object the conduct of scientific research and development) and is approved by the prescribed

authority can be claimed as deduction to the extent of one and one fourth times(125%) of the amount

so paid.

2.7.4 Under section 35(1)(iii) the Company is eligible for a deduction of one and one fourth times (125%) of

the sum paid to a research association, university, college or other institution to be used for research in

social science or statistical research. This weighted deduction is available to amounts paid to approved

research association, university, college or institution.

2.7.5 The company is eligible for weighted deduction of 200% under Section 35(2AA) in respect of

payments to a National Laboratory, university or Indian Institute of Technology in respect of approved

programs of scientific research. The weighted deduction is available provided the sum is paid with

specific direction that it is used for approved programs of scientific research.

176

2.8 Deduction of expenditure on eligible projects or scheme

As per the provisions of section 35AC of the Act, the Company is eligible for deduction of any

expenditure incurred towards payment of any sum to a public sector company or local authority or an

association or institution approved by the National Committee for carrying out any eligible project or

scheme, subject to prescribed conditions.

2.9 Amortisation of certain expenditure

2.9.1 Under Section 35D of the Act, a company is eligible for deduction in respect of specified preliminary

expenditure incurred by it in connection with extension of its undertaking or in connection with setting

up new unit for an amount equal to 1/5th of such expenditure over 5 successive AYs subject to

conditions and limits specified in that Section.

2.9.2 Specified expenditure includes expenditure in connection with the issue, for public subscription, of

shares in or debentures of the company, being underwriting commission, brokerage and charges for

drafting, typing, printing and advertisement of the prospectus.

2.9.3 Under Section 35DDA of the Act, the company is eligible for deduction in respect of payments made

to its employees in connection with his voluntary retirement for an amount equal to 1/5th of such

expenses over 5 successive AYs subject to conditions specified in that Section.

2.10 Expenditure on skill development project

As per section 35CCD, the Company would be entitled to a deduction of one and a half times of an

amount of expenditure (not being expenditure in the nature of cost of any land or building) incurred on

any skill development project notified by the Central Board of Direct Taxes (‘CBDT’) in accordance

with the guidelines as may be prescribed.

2.11 MAT credit

Under Section 115JAA of the Act, tax credit is allowed in respect of MAT paid under Section 115JB of

the Act for any AY commencing on April 1, 2006 and any subsequent AY.

The credit eligible for carry forward is the difference between MAT paid and the amount of tax payable

computed as per the normal provisions of the Act.

The credit is available for set off only when tax becomes payable under the normal provisions of the

Act. The brought forward tax credit can be utilized to the extent of difference between the tax payable

under the normal provisions of the Act and tax payable under MAT for that year. Credit in respect of

MAT paid is available for set-off up to 10 AYs immediately succeeding the AY for which the MAT

credit initially arose.

2.12 Deduction for donations

The Company is entitled to a deduction under Section 80G of the Act in respect of amounts contributed

as donations to various charitable institutions and funds covered under that Section, subject to the

fulfillment of conditions prescribed therein. Please note that no deduction shall be allowed under

Section 80G of the Act for any sum exceeding Rs. 10,000 unless such sum is paid by any mode other

than cash.

2.13 Benefit of double taxation avoidance agreement (DTAA)

Under the provisions of section 90 of the Act, the Company shall be eligible for claiming credit of

taxes paid by it on incomes in the foreign countries with which the Government of India has entered

into DTAA. The tax credit shall be available as per the provisions of relevant DTAA.

Section 91 of the Act provides for unilateral relief in respect of taxes paid on incomes in the foreign

countries with which no DTAA exists. Under the provisions of said section, the Company shall be

entitled to deduction from the income tax of sum calculated on such doubly taxed income at the Indian

177

rate of tax or rate of tax in the foreign country whichever is lower.

3. Benefits available to resident shareholders under the Act

3.1. Dividend income

Under Section 10(34) of the Act, any income earned by way of dividends from the Company would be

exempt from tax in the hands of the shareholders, if such dividends are subject to DDT under Section

115-O of the Act.

However, as per the provisions of section 94(7) of the Act, losses arising from transfer/sale of shares,

where such shares are purchased within three months prior to the ‘record date’ and sold within three

months from the record date will be disallowed to the extent such loss does not exceed the amount of

dividend claimed exempt. ‘Record date’ means such date as may be fixed by the company for the

purposes of entitlement of the holder of securities to receive dividend

As per the provisions of section 14A of the Act, no deduction would be allowed in respect of

expenditure incurred in relation to earning of dividend income which is exempt from tax.

3.2. Computation of capital gains

3.2.1. As per the provisions of section 2(42A) of the Act, securities (other than units) listed on a recognized

stock exchange in India will be considered as short term capital asset if they are held for a period of 12

months of less immediately preceding date of their transfer. If the period of holding of shares is more

than 12 months immediately preceding date of transfer, they will be treated as long term capital asset.

The capital gain/loss on sale of short term capital assets is regarded as short term capital loss. The

capital gain/loss on sale of long term capital assets is regarded as long term capital loss.

3.2.2. According to Section 10(38) of the Act, long-term capital gains on sale of equity shares, where the

transaction of sale is chargeable to STT, shall be exempt from tax.

However, in case of a shareholder being a company, gains arising from transfer of above referred long-

term capital asset shall be taken into account for computing the book profit for the purposes of

computation of MAT under Section 115JB of the Act.

3.2.3. Section 48 of the Act, (which prescribes the mode of computation of capital gains) provides for

deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of

a capital asset from the sale consideration to arrive at the amount of capital gains. However, in respect of long-term capital gains, a deduction of indexed cost of acquisition/improvement

is available. Indexed cost of acquisition means the means an amount which bears to the cost of acquisition the same

proportion as Cost Inflation Index (CII) for the year in which the asset is transferred bears to the CII for

the first year in which the asset was held by the taxpayer. In other words indexed cost of acquisition is

computed as under: Cost of acquisition X CII of the FY in which the asset is transferred/ CII of the FY in which the asset

was first held by the tax payer. 3.2.4. As per the provisions of Section 112 of the Act, long-term capital gains (to the extent not exempt under

Section 10(38) of the Act) would be subject to tax in the hands of the shareholders at the rate of 20%

(plus applicable surcharge, education cess and secondary & higher education cess). As per the proviso to Section 112(1) of the Act, if the tax on long-term capital gains resulting from

transfer of listed securities [to the extent not exempt under Section 10(38) of the Act], calculated at the

rate of 20% (with indexation benefit) exceeds the tax on long-term gains computed at the rate of 10%

(without indexation benefit), then such gains are chargeable to tax at the concessional rate of 10%

(without indexation benefit) (plus applicable surcharge, education cess and secondary & higher

education cess ).

178

3.2.5. As per the provisions of Section 111A of the Act, short-term capital gains on sale of equity shares

where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus

applicable surcharge, education cess and secondary & higher education cess). Short-term capital gains arising from transfer of shares of the Company, other than those covered by

Section 111A of the Act, would be subject to tax as calculated under the normal provisions of the Act.

3.2.6. Under Section 54EC of the Act and subject to the conditions specified therein, long-term capital gains

arising on the transfer of equity shares of the Company (other than those covered by section 10(38) of

the Act) would be exempt from tax if such capital gains are invested within 6 months after the date of

such transfer in specified assets, being bonds issued by:


Authority of India Act, 1988;









transfer or conversion. 3.2.7. As per the provisions of Section 54F of the Act, long term capital gains [which are not covered under

Section 10(38)] arising from the transfer of any capital asset (not being residential house property) held

by an Individual or Hindu Undivided Family (‘HUF’) will be exempt from tax, if net consideration is

utilised, within a period of one year before or two year after the date of transfer, for purchase of a

residential house, or for construction of a residential house within three years. The exemption is

available subject to fulfillment of prescribed conditions.

3.2.8. Under section 70(2) of the Act, the short term capital loss can be set off against other short term capital

gain or long term capital gain. Under section 70(3) of the Act, the long term capital loss can be set off

against other long term capital gain. 3.2.9. Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off


long term capital loss can be carried forward and set off against long term capital gains only in of

subsequent years (upto 8 years). However, the unabsorbed capital loss can be carried forward only

when the return of income has been filed within the time prescribed under section 139(1) of the Act.

3.3. Deduction of STT while computing business income

As per Section 36(1)(xv) of the Act, the STT paid by the tax payer in respect of the taxable securities

transactions entered into in the course of business during the FY will be allowable as deduction, if the

income arising from such taxable securities transactions is included in the income computed under the

head ‘Profits and gains of business or profession’. 3.4. Income from other sources

As per the provisions of section 56(2)(vii) of the Act, where any property, other than immovable

property (including shares) is received by an individual/ HUF: -

i) without consideration and the aggregate fair market value of such property exceeds Rs. 50,000,

whole of the aggregate fair market value, or

ii) for a consideration which is less than the aggregate fair market value of such property by at least

Rs.50,000, then the difference between fair market value and consideration paid

will be taxable as income from other sources.

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This provision is applicable only if shares are held by the shareholders as a capital asset.

This provision is not applicable where shares are received in any of the following modes, namely – 1) From any relative;

2) On the occasion of marriage of the individual;

3) Under a will or by way of inheritance;

4) In contemplation of death of the payer or donor;

5) From any local authority as defined in Explanation to Section 10(20);

6) From any fund or foundation or university or other educational institution or hospital or other

medical institution or any trust or institution referred to in Section 10(23C); or

7) From any trust or institution registered under Section 12AA.

4. Benefits available to Non-resident shareholders (Other than Foreign Institutional Investors)

under the Act 4.1. Dividends exempt under Section 10(34) of the Act



115-O of the Act. However, as per the provisions of section 94(7) of the Act, losses arising from transfer/sale of shares,

where such shares are purchased within three months prior to the record date and sold within three



purposes of entitlement of the holder of securities to receive dividend. As per the provisions of section 14A of the Act, no deduction would be allowed in respect of


4.2. Computation of capital gains 4.2.1. As per the provisions of section 2(42A) of the Act, securities (other than units) listed on a recognized

stock exchange in India will be considered as short term capital asset if they are held for a period of 12

months of less immediately preceding date of their transfer. If the period of holding of shares is more

than 12 months immediately preceding date of transfer, they will be treated as long term capital asset. The capital gain/loss on sale of short term capital assets is regarded as short term capital loss. The

capital gain/loss on sale of long term capital assets is regarded as long term capital loss.


transaction of sale is chargeable to STT, shall be exempt from tax. However, in case of shareholder being a company and liable to MAT in India, gains arising on transfer

of above referred long term capital asset shall not be reduced in computing the “book profit” for the

purposes of computation of MAT under Section 115 JB of the Act.

4.2.3. First proviso to section 48 of the Act contains special provisions relating to computation of capital

gains, in the hands of non-residents arising from transfer of shares of an Indian company which were

purchased in foreign currency. In such a case, the capital gains are computed by converting the cost of acquisition, expenditure

incurred wholly and exclusively in connection with transfer and the full value of consideration into the

same foreign currency that was initially used to purchase of such shares. The capital gain so computed

in the original foreign currency is reconverted into Indian Rupees at the prescribed exchange rate. The

said manner of computing capital gains is used in respect of capital gains accruing or arising from

every reinvestment thereafter in and sale of shares of an Indian company. The non-resident shareholders are not entitled to indexation benefit (for a detailed discussion on

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indexation, refer para 2.4.3 above). 4.2.4. As per the provisions of Section 112 of the Act, long-term capital gains (to the extent not exempt under

Section 10(38) of the Act) would be subject to tax in the hands of the shareholders at the rate of 20%

(plus applicable surcharge, education cess and secondary & higher education cess). As per the proviso to Section 112(1) of the Act, if the tax on long-term capital gains resulting from

transfer of listed securities [to the extent not exempt under Section 10(38) of the Act], calculated at the

rate of 20% (with indexation benefit) exceeds the tax on long-term gains computed at the rate of 10%

(without indexation benefit), then such gains are chargeable to tax at the concessional rate of 10%

(without indexation benefit) (plus applicable surcharge, education cess and secondary & higher

education cess).

4.2.5. As per the provisions of Section 111A of the Act, short-term capital gains on sale of equity shares

where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus

applicable surcharge, education cess and secondary & higher education cess). Short-term capital gains arising from transfer of shares of the Company, other than those covered by

Section 111A of the Act, would be subject to tax as calculated under the normal provisions of the Act.


arising on the transfer of equity shares of the Company (other than those covered by section 10(38) of

the Act) would be exempt from tax if such capital gains are invested within 6 months after the date of

such transfer in specified assets, being bonds issued by:

c) National Highway Authority of India constituted under Section 3 of The National Highway


d) Rural Electrification Corporation Limited, the Company formed and registered under the








transfer or conversion. 4.2.7. As per the provisions of Section 54F of the Act, long term capital gains [which are not covered under

Section 10(38)] arising from the transfer of any capital asset (not being residential house property) held

by an Individual or Hindu Undivided Family (‘HUF’) will be exempt from tax, if net consideration is

utilised, within a period of one year before or two year after the date of transfer, for purchase of a

residential house, or for construction of a residential house within three years. The exemption is

available subject to fulfillment of prescribed conditions.

4.2.8. Under section 70(2) of the Act, the short term capital loss can be set off against other short term capital


against other long term capital gain.

4.2.9. Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off




when the return of income has been filed within the time prescribed under section 139(1) of the Act.

4.3. Deduction of STT while computing business income




head ‘Profits and gains of business or profession’.

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4.4. Special benefit available to Non-resident Indian shareholders

4.4.1. In addition to some of the general benefits available to non-resident shareholders, where ‘specified

assets’ (as defined in Section 115C (f) of the Act, which includes equity shares in the Company) have

been subscribed or acquired or purchased by Non-Resident Indians, they have the option of being

governed by the provisions of Chapter XII-A of the Act, which inter alia entitles them to the benefits

mentioned below. As per section 115C (e) of the Act, a ‘non resident Indian’(NRI) has been defined to mean an

individual being citizen of India or person of Indian origin who is not a resident.

4.4.2. As per the provisions of section 115E of the Act, investment income (income derived from specified

assets other than dividends referred to in section 115O) or income from long- term capital gains on

transfer of assets other than specified asset shall be taxable at the rate of 20% in the hands of a NRI.

Income by way of long term capital gains in respect of a specified asset, shall be chargeable to income

tax at the rate of 10%. The rates would be increased by the applicable rate of surcharge education cess

and secondary & higher education cess.

4.4.3. Under provisions of Section 115F of the Act, any long term capital gains arising from the transfer of

shares of the Company acquired in convertible foreign exchange shall be exempt from tax if the whole

or any part of the net consideration (consideration less expenditure incurred wholly and exclusively on

transfer) is reinvested within six months of the date of the transfer in any ‘specified assets’ or savings

certificates referred to in clause (4B) of section 10. If only a part of the net consideration is reinvested, the exemption shall be proportionately reduced.

The amount so exempted shall be chargeable to tax as “capital gains” subsequently, if the specified

assets or savings certificate are transferred or converted into money within three years from the date of

their acquisition. The taxability shall arise in the year in which the transfer or conversion, as the case

may be, takes place.

4.4.4. As per the provisions of section 115D, no deduction is allowed for any expenditure or allowance under

any provision of the Act in computing the investment income of the NRI. Further no deduction is

allowed to NRI under chapter VIA against investment income or income by way of long term capital

gains. The benefit of indexation is also not available.

4.4.5. As per the provisions of Section 115G of the Act, NRIs are not required to furnish a return of income

under Section 139(1) of the Act, if:

Their income chargeable under the Act consists of only investment income or long term capital

gains arising from the transfer of specified asset or both and;

Tax deductible at source has been deducted as per the provisions of Chapter XVII-B of the Act

from the income.

4.4.6. As per the provision of Section 115H of the Act, where a person who is NRI in any FY, becomes

assessable as resident in India in respect of total income of any subsequent year, the provisions of

Chapter XII-A shall continue to apply to him in relation to the investment income derived from any

foreign exchange asset being an assets specified in sub clause (ii), (iii), (iv) or (v) of Section 115(C)(f)

for that AY and for every subsequent AY until there is transfer or conversion into money of such asset.

For this provision to apply, NRI is required to file a declaration along with his return of income for the

AY in which he becomes assessable as resident in India.

4.4.7. In accordance with Section 115I of the Act, where a NRI opts not to be governed by the provisions of

Chapter XII-A for any AY, his total income for that AY (including income arising from investment in

the company) will be computed and tax will be charged according to the other provisions of the Act.

4.5. Taxability as per DTAA 4.5.1. The tax rates and consequent taxation mentioned above will be further subject to any benefits available

under the DTAA, if any, between India and the country or any specified territory in which the non-

resident has fiscal domicile. As per the provisions of Section 90(2) of the Act, the provision of the DTAA would prevail over the

provisions of the Act to the extent they are more beneficial to the non-resident.

182

4.5.2. As per provisions of section 90(4) of the Act, a non-resident, shall not be entitled to claim any relief

under DTAA, unless a certificate of his being a resident in any country outside India or specified

territory outside India, as the case may be has been obtained by him from the government of that

country or specified territory. In other words, the non-resident tax payers shall be entitled to be

governed by the provisions of the DTAA only when they obtain a tax residency certificate from the

government of their country of residence. In addition, as per the provisions of section 90(5) of the Act, a non-resident shall also provide

prescribed documents.

5. Benefits available to Foreign Institutional Investors (‘FIIs’) under the Act 5.1. Dividends exempt under Section 10(34) of the Act



115-O of the Act. However, as per the provisions of section 94(7) of the Act, losses arising from transfer/sale of shares,

where such shares are purchased within three months prior to the record date and sold within three



purposes of entitlement of the holder of securities to receive dividend. As per the provisions of section 14A of the Act, no deduction would be allowed in respect of


5.2. Taxability of capital gains

5.2.1. As per the provisions of Section 115AD of the Act, FIIs will be taxed on the capital gains that are not

exempt under Section 10(38) of the Act at the rates as follows:

Nature of income Rate of tax (%)

Long term capital gain (other than the short term capital gain

covered by the provisions of section 10(38))

10

Short term capital gain (other than the short term capital gain

covered by the provisions of section 111A)

30

The above tax rates would be increased by the applicable rate of surcharge education cess and

secondary & higher education cess.

The benefits of indexation and foreign currency fluctuation protection are not available to an FII.

The above mentioned capital gains are not subject to tax deduction at source as per the provisions of

section 196D(2) of the Act.

5.2.2. According to Section 111A of the Act, short-term capital gains on sale of equity shares where the

transaction of sale is chargeable to STT shall be subject to tax at a rate of 15% (plus applicable

surcharge, education cess and secondary & higher education cess) in addition to the other requirements,

as specified in the Section.

5.3. Capital gains - not subject to Income- tax


transaction of sale is chargeable to STT, shall be exempt from tax.

However, in case of shareholder being a company and liable to MAT in India, gains arising on transfer

of above referred long term capital asset shall not be reduced in computing the “book profit” for the

purposes of computation of MAT under Section 115 JB of the Act.


arising on the transfer of equity shares of the Company (other than the long term capital gain covered

183

by the provisions of section 10(38)) would be exempt from tax if such capital gains is invested within 6

months after the date of such transfer in specified assets, being bonds issued by:







If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion

as the cost of long term specified assets bears to the whole of the capital gain. However, in case the

specified asset is transferred or converted into money within 3 years from the date of its acquisition, the

amount so exempted shall be chargeable to tax during the year of such transfer or conversion. 5.3.3. Under section 70(2) of the Act, the short term capital loss can be set off against other short term capital


against other long term capital gain.

5.3.4. Under section 74 of the Act, the unabsorbed short term capital loss can be carried forward and set off




when the return of income has been filed within the time prescribed under section 139(1) of the Act. 5.4. Income from Business Profits




head ‘Profits and gains of business or profession’. 5.5. Taxability as per DTAA 5.5.1. The tax rates and consequent taxation mentioned above will be further subject to any benefits available

under the DTAA, if any, between India and the country or any specified territory in which the non-

resident has fiscal domicile. As per the provisions of Section 90(2) of the Act, the provision of the DTAA would prevail over the

provisions of the Act to the extent they are more beneficial to the non-resident.

5.5.2. As per provisions of section 90(4) of the Act, a non-resident, shall not be entitled to claim any relief

under DTAA, unless a certificate of his being a resident in any country outside India or specified

territory outside India, as the case may be has been obtained by him from the government of that

country or specified territory. In other words, the non-resident tax payers shall be entitled to be

governed by the provisions of the DTAA only when they obtain a tax residency certificate from the

government of their country of residence. In addition, as per the provisions of section 90(5) of the Act, a non-resident shall also provide

prescribed documents. 5.6. Benefits available to Mutual Funds under the Act

As per the provisions of Section 10(23D) of the Act, any income of:

A mutual fund registered under the Securities and Exchange Board of India Act, 1992 or

regulations made there under;

Mutual Funds set up by public sector banks or public financial institutions or authorised by the

Reserve Bank of India would be exempt from income-tax, subject to the conditions as the Central Government may by

notification in the Official Gazette specify in this behalf.

184

However, the Mutual Funds would be required to pay tax on distributed income to unit holders as per

the provisions of Section 115R of the Act. 6. Benefits available to Venture Capital Companies/Funds

6.1. Under Section 10(23FB) of the Act, any income of Venture Capital Companies or Venture Capital

Funds registered with the Securities and Exchange Board of India, from investment in a venture capital

undertaking would be exempt from income tax, subject to conditions specified therein. ‘Venture capital

undertaking’ means:

A venture capital undertaking as defined in clause (n) of the regulation 2 of Securities and

Exchange Board of India (Venture Capital Funds) Regulations, 1996 or

A venture capital undertaking as defined in clause (aa) of sub regulation (1) of regulation 2 of

Alternate Investment Fund Regulations.

6.2. According to Section 115U of the Act, any income accruing or arising to or received by a person from

his investment in venture capital companies/ funds would be taxable in his hands in the same manner as

if it were the income accruing/ arising/ received by such person had the investments been made directly

in the venture capital undertaking.

6.3. Further, as per Section 115U(5) of the Act, the income accruing or arising to or received by the

Venture Capital Company/ Funds from investments made in a Venture Capital Undertaking if not paid

or credited to a person (who has made investments in a Venture Capital Company/ Fund) shall be

deemed to have been credited to the account of the said person on the last day of the previous year in

the same proportion in which such person would have been entitled to receive the income had it been

paid in the previous year.

7. Benefits available under the Wealth-tax Act, 1957

Asset as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies

and hence, shares are not liable to wealth tax.

8. Benefits available under the Gift-tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. However as per the

provisions of Section 56(2)(vii) of the Act, value of any property including shares and securities

received without consideration or for inadequate consideration will be included in the total income of

the recipient and be subject to tax, unless exempt(for detailed discussion, refer para 3.4 above).

9. Loss under the head ‘Capital Gains’

In general terms, loss arising from transfer of a capital asset in India can only be set off against capital

gains. Long term capital loss arising on sale of equity shares not subjected to STT during a year is

allowed to be set-off only against long term capital gains. A short term capital loss can be set off

against capital gains whether short term or long term. To the extent that the loss is not absorbed in the

year of transfer, it may be carried forward for a period of 8 years immediately succeeding the year for

which the loss was first determined and may be set off against the capital gains assessable for such

subsequent years. In order to set off a capital loss as above, the investor (resident/ non- resident) is

required to file appropriate and timely income-tax returns in India.

Notes: 1) The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary

manner only and is not a complete analysis or listing of all potential tax consequences of the purchase,

ownership and disposal of equity shares;

2) The above Statement of Possible Direct Tax Benefits sets out the possible tax benefits available to the

Company and its shareholders under the current Tax Laws presently in force in India. Several of these

benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under

the relevant Tax Laws;

185

3) This Statement is only intended to provide general information to the investors and is neither designed

nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax

consequences, the changing Tax Laws, each investor is advised to consult his or her own tax consultant

with respect to the specific tax implications arising out of their participation in the issue;

4) In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further

subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between

India and the country/specified territory (outside India) in which the non-resident has fiscal domicile;

and

5) The stated benefits will be available only to the sole/first named holder in case the shares are held by

joint shareholders.

6) The tax rates (including rates for tax deduction at source) mentioned in this Statement are applicable

for FY 2014-15 (AY 2015-16) and are exclusive of surcharge, education cess and higher education

cess.

Surcharge @ 10% of income tax is applicable in case of individuals where total income under the Act

exceeds Rs 1 crore.

Surcharge @ 5% is applicable in case of domestic companies where total income under the Act

exceeds Rs 1 crore and is up to Rs. 10 crore. If the total income of the resident companies exceeds Rs.

10 crore, surcharge would be leviable @ 10%.

In case of foreign companies, surcharge @ 2% is applicable in case of where total income under the

Act exceeds Rs 1 crore and is upto Rs. 10 crore. If the total income exceeds Rs. 10 crore, surcharge

would be leviable @ 5%.

7) We have not considered the provisions of Direct Tax Code Bill 2010 for the purpose of this Statement.





per Atul Seksaria

Partner


Place: Noida


186

LEGAL PROCEEDINGS

Our Company and its Subsidiaries from time to time are involved in various legal proceedings, most of which

arise from the ordinary course of business that we and our Subsidiaries are engaged in. As of the date of this

Preliminary Placement Document, disclosed hereunder are governmental, legal or arbitration proceedings or

litigation that we are involved and believe are material. In addition to the matters as disclosed in this section,

we are also involved in certain other governmental, legal or arbitration proceedings or litigation, pending

before the relevant courts and authorities at various levels with respect to our cable distribution and broadband

businesses. All terms defined in a particular litigation are for that particular litigation only.

Material Litigation Involving our Company

Litigation filed against our Company

Writ Petition

1. Malwa Cable Operator Sangh (“Petitioner”) has filed a writ petition (2367 of 2014) before the Madhya

Pradesh High Court, Indore (“High Court”) on March 14, 2014 against Union of India represented by

MIB, TRAI, our Company and others against the arbitrary implementation of DAS regulations in Indore,

vide tariff order 3 of 2012, regulation 9 of 2012 and regulation 12 of 2012. Thus, the Petitioner has

prayed that regulations 9 of 2012, 12 of 2012 and tariff order 3 of 2012 may be set aside and that The

Standards of Quality of Service (Broadcasting and Cable services) (Cable Television - CAS Areas)

Regulation, 2006 be implemented. The final arguments are pending.

2. Jabalpur Cable Operator Welfare Association (“Petitioner”) has filed a writ petition (19619/2014) before

the High Court of Madhya Pradesh (“High Court”) in December 2014 against Union of India

represented by MIB, TRAI, our Company and others (“Respondents”) alleging that the MSOs operating

in Jabalpur are non-compliant with the provisions issued by TRAI and the Telecommunication

(Broadcasting and Cable Services Interconnecting Digital Addressable Cable Television System)

Regulations, 2012. The Petitioner has prayed before the High Court to summon the records from the

possession of the Respondents for perusal, issue directions to the Respondents to comply with the

mandatory provisions of law issued by TRAI and the TBCSIDACTS Regulations and award cost of the

litigation to the Petitioner and an interim writ be issued to the Respondents directing them to comply

with the mandatory provisions of chapter 5 of the notification issued by TRAI. The next date of hearing

is March 16, 2015.

Civil matters

1. Positive Television Private Limited (“Petitioner”) has filed a petition bearing no. 5 (C) of 2015

(“Petition”) before the TDSAT against our Company. The Petition has been filed on the grounds that our

Company has allegedly violated certain provisions of the Telecommunication (Broadcasting and Cable

Services) Interconnection Regulation, 2004 by denying the Petitioners access to its networks with a mala

fide intent. An interim order dated February 23, 2015 has been passed by the Tribunal wherein it has

observed that in the future if our Company decides to increase its capacity in case of the genre of “news”

or decides to add channels in any other genre, it will give preference to the Petitioner’s request to carry

their channels in terms of the affidavit filed by our Company. Further, the Tribunal has granted a time of

two weeks to our Company to file a detailed reply and a time of two weeks has been granted to the

Petitioner to file its rejoinder. The matter has been adjourned to April 6, 2015 for the framing of issues.

2. Certain petitions have been filed before the TDSAT against our Company by (i) Satellite Linkers (442(C)

of 2014), (ii) Nagpal Satellite Division (443(C) of 2014), (iii) Moon Cable Network (444(C) of 2014),

(iv) Digital World (445(C) of 2014), (v) Praveen Cable Network (446(C) of 2014), Sachin Cable

Network (447(C) of 2014), Sun Cable Network (448(C) of 2014), World Sky Linker (449(C) of 2014)

(collectively, the “Petitions”). The aforementioned petitions have been filed against our Company for

actions that are allegedly contrary to the DAS Interconnection Regulations. The Petitions have been

referred to the mediation centre as per the order of the TDSAT dated February 10, 2015 and are now

listed on February 27, 2015 before the mediator for reconciliation of accounts between the parties and

further proceedings.

3. Power Grid Corporation of India Limited (“Petitioner”) filed a petition (189 (C) of 2014) against our

187

Company before the TDSAT for the recovery of money for the services of STM-4 link received by our

Company in various cities. The petitioner has further stated that our Company issued several purchase

orders between December 2011 and September 2012 and failed to make payments in that respect. The

Petitioner has prayed for the recovery of an amount of ₹ 4.13 million along with an interest at 12% for

the services received by our Company. Our Company filed a reply cum counter claim stating that the

petitioner has failed to provide the services under the purchase orders and therefore cannot seek the

recovery of dues. In turn, we have claimed for damages amounting to ₹ 646.59 million towards

investments, loss of carriage and advertisement charges, payments made to broadcasters and other

expenses and losses incurred. The Petitioner further filed a rejoinder to the counter claim praying for its

dismissal. The matter is pending before the TDSAT and the next date of hearing is scheduled for

February 27, 2015 for framing of issues.

Arbitration matters

1. Magna Quest Technologies Limited (“Magna Quest”) filed a statement of claim, dated January 5,

2013 in AD No. 6 of 2012 before the Arbitral Tribunal, Hyderabad claiming an amount of ₹ 8.72

million in outstanding dues along with an interest of ₹ 5.09 million payable on unpaid invoices by our

Company. Magna Quest has alleged that our Company has pending payments amounting to ₹ 8.72

million for product licenses and services rendered, also that an interest of 8% is payable under the

terms of the software end user license to use agreement dated November 28, 2006 (“Agreement”)

entered into between Magna Quest and our Company which amounts to ₹ 5.09 million. Magna Quest

has further claimed for damages amounting to ₹ 5.00 million on account of fundamental breach of the

Agreement due to the non-payment of outstanding invoices and causing increased costs in business and

other loss to them. Our Company filed a counter claim dated March 30, 2013 against Magna Quest

claiming an amount of ₹ 39.53 million along with an interest of 18% per annum, towards loss suffered

by our Company on account of failure of Magna Quest to provide software products and services for

generation of bills leading to delay in raising bills on the subscribers and non-payment of subscription

dues amounting to ₹ 39.53 million for the period of January 1, 2007 to June 30, 2007. Our Company

has also claimed an amount of ₹ 0.83 million towards further loss due to delay in deactivation of

expired packages along with an interest of 18% due to the delay in raising of bills by Magna Quest.

Our Company has further claimed an amount of ₹ 10.00 million as damages for loss to our Company’s

reputation on account of the abovementioned failure by Magna Quest. Magna Quest has filed a

rejoinder dated April 19, 2013.

Tax proceedings

1. An assessment order dated December 23, 2010 (“Order”) has been issued by the Assistant

Commissioner for Income Tax-11(1), Mumbai and a demand of tax amounting to ₹ 2,965.91 million in

the assessment year 2008-09 has been imposed on our Company. We have filed an appeal against the

Order before the Commissioner of Income Tax (Appeals)-3, Mumbai (“Appellate Authority”) and the

Appellate Authority has, through its order dated February 28, 2011 allowed our appeal. The matter is

currently pending.

2. The Office of the Commissioner of Service Tax-1, Mumbai (“CSTM”) has issued a show cause notice

dated October 19, 2012 (“SCN”) to our Company alleging that our Company has availed in-admissible

CENVAT credit of ₹ 16.53 million during the F.Y. 2007-08 to F.Y. 2009-10 in contravention of the

provisions of Service Tax Rules, 1994 read with the CENVAT Credit Rules, 2004. The CSTM has

alleged that our Company has not been able to show proper records for availing such credit during an

audit undertaken by the Office of the CSTM. Our Company has filed a reply to the SCN on June 2, 2014

stating that the CENVAT credit availed by our Company is recorded in our books of accounts and

properly documented with regular books of accounts and documents maintained by our Company. Our

Company has further averred that the demand sought by the CSTM is barred by limitation. The matter is

pending before the CSTM.

3. The Office of the Commissioner of Service Tax-1, Mumbai (“CSTM”) has issued a show cause notice

dated October 16, 2012 (“SCN”) to our Company alleging that our Company has wrongly availed credit

of countervailing duty paid on import of capital goods to the extent of ₹ 18.32 million during the period

of April 2007 to March 2009, which has resulted in short payment of service tax and is liable to be

recovered under the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with proviso to

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section 73(1) of Chapter V of the Finance Act, 1994, as amended. The CSTM has alleged that our

Company has not been able to show proper records for availing such credit during an audit undertaken by

the Office of the CSTM. Our Company has filed a reply to the SCN on June 28, 2013 stating that the

CENVAT credit availed by our Company is recorded in our books of accounts and properly documented

with regular books of accounts and documents maintained by our Company. Our Company has further

averred that the demand sought by the CSTM is barred by limitation. The matter is pending before the

CSTM.

4. The Office of the Commissioner of Customs, Central Excise and Service Tax, Hyderabad II

Commissionerate (“CC”) issued a show cause notice O.R. No. 231/20100Adjn. (ST) (Commr.)/ C. No.

IV/16/114/2010-S. Tax Gr. IV dated October 22, 2010 in relation to irregular availment of CENVAT

credit of ₹ 32.85 million during the FY 2005-06 to 2008-09 in contravention of CENVAT Credit Rules,

2004 and Finance Act, 1994 read with the Service Tax Rules, 1994. Our Company filed a reply dated

December 12, 2011 stating that the aforementioned demand was barred by limitation. The CC has vide

its order dated October 30, 2012 (“Order”) directed our Company to pay ₹ 32.85 million towards

irregular utilization of CENVAT credit and ₹ 32.86 million towards penalty for such irregular utilization.

Our Company filed an appeal on February 11, 2013 challenging the Order before the Customs, Excise

and Service Tax Appellate Tribunal, Bangalore (“CESTAT”). The CESTAT has issued an order bearing

no. 20992/2014 directing our Company to deposit an amount of ₹ 15.00 million and the CC to complete

the adjudication after observing the principles of natural justice. Our Company has deposited ₹ 15.00

million on August 7, 2014. The matter is pending before the CC.

5. The Additional Director General, Directorate General of Central Excise Intelligence, Kolkata Zonal Unit,

Ministry of Finance, Department of Revenue (“DGCEI”), issued a show cause notice bearing no.

DGCEI F. No. 21/KZU/KOL/Gr-A/12/Pt-XXXIV/6840 dated October 21, 2013 (“SCN”) in relation to

an investigation conducted by the DGCEI pursuant to which it was found that our Company had not

obtained registrations under the Finance Act, 1994, as amended, for providing services of ‘intellectual

property rights’, management or business consultants service’ or ‘internet telecommunication service’

within the stipulated and had failed to pay service tax of ₹ 11.08 million for the FY 2008-09 to FY 2012-

13 and file returns in this regard. Our Company has deposited ₹ 9.87 million towards service tax and ₹ 1.74 million towards interest on such tax. The DGCEI had requested our Company to appear for a

personal hearing in relation to the SCN. The matter is currently pending.

6. The Office of the Commissioner of Service Tax, New Delhi, has issued a show cause notice no.

12/Audit/2013-14 dated October 22, 2013 to our Company in relation to the non-payment of service tax

on the gross value of its advertisement income amounting to ₹ 1.57 million and the recovery of

CENVAT credit amounting to ₹ 28.36 million.

7. An order has been issued by the Commissioner of Service Tax (Adjudication), New Delhi (“Authority”)

bearing no. 19/ST/SRB/2013-14 wherein a demand of service tax of ₹ 11.49 million including interest

has been made against our Company. Also, a penalty of ₹ 0.01 million for failing to assess and discharge

service tax correctly and a penalty of ₹ 11.49 million for the non-payment of service tax with an

intention to evade service tax including educational cess and secondary and higher education cess, have

been imposed on our Company. Our Company has filed an appeal before the Customs, Excise and

Service Tax Appellate Tribunal, New Delhi (“CESTAT”) on the grounds that the Authority has

committed an error while calculating the demand and has not analyzed the documents submitted to it.

The matter is currently pending.

8. A notice of assessment, received on March 20, 2013 (“Notice”) has been issued by the Assistant

Commissioner of Sales Tax (D-205), Mumbai directing our Company to pay an amount of ₹ 21.21

million towards sales tax including interest and penalty, for the period from 2008-2009. An appeal has

been filed against the Notice by our Company before the Deputy Commissioner of Sales Tax (Appeals-

II), Mumbai on August 28, 2014. The matter is currently pending.

9. An order of assessment dated July 28, 2014 has been issued by the Deputy Commissioner of Sales Tax,

Mumbai to our Company under which sales tax amounting to ₹ 20.07 million including interest and

penalty for the assessment year 2010-2011, has been imposed on our Company. We have filed an

application for rectification dated September 11, 2014 before the Deputy Commissioner of Sales Tax,

Mumbai.

189

10. An order of assessment dated December 29, 2014 (“Order”) has been issued by the Deputy

Commissioner of Sales Tax, Mumbai (“Authority”) to our Company under which sales tax amounting to

₹ 46.38 million including interest and a penalty for the assessment year 2011-2012, has been imposed on

our Company. Our Company has filed an application for rectification dated February 2, 2015 before the

Authority against the Order.

11. A show cause notice dated November 27, 2014 has been issued to our Company by the Entertainment

Tax Officer, Hyderabad (“Officer”) in relation to the suppression of the entertainment tax amounting to

₹ 218.57 million. Our Company has sent a reply dated November 28, 2014 to the Officer, denying the

suppression of entertainment tax and requesting the vigilance reports in order to further give a detailed

reply to the show cause notice.

Litigation filed by our Company

Writ Petition

Our Company filed a writ petition (WP (C) No. 427/2014) (“Petition”) before the Delhi High Court against

Government of NCT of Delhi and others (“Respondents”) in relation to a notice dated January 8, 2014 issued to

our Company proposing to prohibit the transmission of television signals in the NCT of Delhi without resorting

to assessment, despite payment of the entire tax amount by our Company. The Respondents have replied to the

Petition, denying the claims of our Company. Our Company has further filed a rejoinder. The matter is currently

pending for final arguments.

Civil matters

Our Company has filed a petition bearing no. 15(C) of 2015 before the TDSAT on January 22, 2015 against Star

India Private Limited (“Star”) under section 14 read with section 14A of the TRAI Act challenging the

disconnection notices issued by Star which demanded ₹ 260 million from our Company towards subscription

fees and the non-submission of SMS reports from July 2014 to January 2015 and praying for setting aside and

quashing these notices, restraining Star from deactivating or disturbing the signals of its channels to the

networks of our Company, directing Star to sign agreements for an interim period on the basis of the erstwhile

agreements. An order dated January 27, 2015 has been issued by the TDSAT staying the notices for

disconnection subject to the payment of ₹ 100 million by our Company and directing us to send the SMS reports

to Star. Our Company has issued a cheque of ₹ 100 million to Star. We have sent the SMS reports to Star for

further action on their end. TDSAT has issued an order dated February 19, 2015 directing Star to raise its

invoices within a week from the date of the order. The next date of hearing is March 24, 2015.

Arbitration matters

1. Our Company has initiated arbitration proceedings against Shreenathji Distributions Private Limited

(“Respondent”) for issues including failure to deposit right to use charges, retention of subscription

charges and other assets and revenue belonging to our Company including failure to pay for the material

supplied by our Company. The claim filed by us amounts to ₹ 125.98 million along with an interest at

20% per annum. In relation to the claim, the Respondent filed a suit bearing no. 782 of 2008 (“Suit”)

before the District Court, Varanasi against our Company, challenging the validity of the agreement dated

November 11, 2005 entered into between our Company and the Respondents and thus challenging the

validity of the arbitration. Further, the Respondent filed an application dated July 10, 2008 with the

arbitration tribunal stating that the arbitrator may not arbitrate in the matter. The arbitration proceedings

have been adjourned till the settlement of the Suit. The matter is currently pending.

2. Our Company has initiated arbitration proceedings before the sole arbitrator Mr. A. Mariaputham

(“Arbitrator”) against Anil Gupta, proprietor of Visionaries Media Network, Jammu (“Respondent”) in

relation to breach of agreements dated January 1, 2001 and July 1, 2003 (“Agreements”) entered into

between the Respondent and our Company. Our Company has, in the claim demanded from the

Respondent, an amount of ₹ 3.12 million towards right to use charges in terms of the Agreements along

with damages and value of assets supplied to the Respondent by our Company, amounting to ₹ 6.96

million. The Respondent has filed a counter claim of 12.30 million before the Arbitrator along with

interest for damages suffered on the installation of optic fiber network, outstanding subscriptions and

advertisements. The proceedings have concluded and the award has been reserved by the sole arbitrator.

190

3. Our Company has initiated separate arbitration proceedings against (i) Anirudh Jadeja (64 of 2007), (ii)

Karan Jadeja (67 of 2007), (iii) Kanak Rana (66 of 2007) and (iv) Ashwini Gambhir (65 of 2007) for the

non-payment of right to use charges and deposits, the non-delivery of network assets to our Company as

agreed and damages to the business of our Company. The amount claimed by our Company amounts to ₹

152.30 million with an interest at 24% per annum, ₹ 105.40 million, ₹ 45.30 million and ₹ 42.20 million

respectively. The proceedings of arbitration and settlement between the parties are at the trial stage. The

next date of hearing is fixed on March 13, 2015 for report on settlement and further proceedings.

4. Our Company has filed a petition (246(C) of 2012) (“Petition”) before the TDSAT against Mahuaa

Media Private Limited (“Respondent”) for the non-payment of outstanding channel placement charges

amounting to ₹ 43.09 million. The Respondent replied to the Petition, denying the claims of our

Company and filed a counter claim for the recovery of excess payments amounting to ₹ 0.14 million

along with an interest at 24% from our Company. The matter is currently pending before the TDSAT for

appearance of the Respondent.

Tax proceedings

Our Company has filed an appeal (21 of 2014) dated January 16, 2014 before the Financial Commissioner, NCT

of Delhi (“Authority”) against the order dated January 6, 2014 (“Order”) passed by the Deputy Commissioner

(Taxes) in relation to the assessment period of April, 2013 and May, 2013 upholding the order of Entertainment

Tax Officer (“Respondent”) dated July 5, 2013. The Respondent filed a reply denying the claims made by our

Company in the appeal. The Authority passed an order dated February 18, 2014 staying the operation of the

Order. The next date of the hearing is scheduled for April 23, 2015.

Potential litigation

Our Company has issued a notice invoking arbitration clause and the appointment of an arbitrator dated October

10, 2014, to Ravi Singh, in his capacity as the managing partner of Satellite Cable TV Network and as the

director of DEN Satellite Cable TV Networks Private Limited. We have alleged that Ravi Singh has violated the

terms of the agreement dated January 1, 2013 (“Agreement”) entered into between him and our Company.

Thus, our Company has invoked the arbitration clause of the Agreement and accordingly nominated Justice J. D.

Kapoor as the sole arbitrator seeking to recover amounts due to them under the Agreement. Justice J. D. Kapoor

has sent a notice dated November 10, 2014 accepting his appointment as the sole arbitrator in the matter and

called upon the parties to appear on December 3, 2014 for a preliminary hearing. Ravi Singh has replied to the

notice dated October 10, 2014 and objected to the appointment of the sole arbitrator and the arbitration

proceedings and stated that he shall object to the proceedings in accordance with law.

In addition to the above matters, we are also involved in 15 disputes relating to section 138 of the Negotiable

Instruments Act, 1881, some disputes relating to direct, indirect tax liabilities, eight disputes pending for

adjudication before the TDSAT and a dispute under the Copy Rights Act, 1957 collectively aggregating to an

amount of ₹ 135.12 million. We cannot predict the initiation of any future litigation and/ or the outcome of any

pending or future litigation, examination or investigation, based on the amounts sought in pending actions

against us and our history of resolving litigation matters in the past, as well as the advice of legal counsel.

Inquiries, inspections or investigations under the Companies Act against our Company in the last three years

Other than the following, there are no inquiries, inspections or investigations initiated or conducted against our

Company and our Subsidiaries under the Companies Act, 2013 or any previous company law in the last three

years. Further, other than the following, there are no prosecutions filed (whether pending or not), fines imposed,

compounding of offences in the last three years involving our Company:

An order dated November 6, 2012 was issued by the Regional Director, Western Region, Mumbai, (the

“Regional Director”) in relation to a petition dated October 22, 2012 under section 141 of the Companies Act,

1956 read with Companies Central Government General Rules, 2012 made by our Company for condonation of

delay and extension of time for filing the particulars of charge modification, modified on March 23, 2011 for ₹

600 million in favour of IDBI Bank Limited, which ought to have been filed with the RoC on or before April

21, 2011 but was actually filed on August 7, 2012. The Regional Director condoned the delay and extended the

time for filing of the aforementioned modification up to August 7, 2012 subject to payment of ₹ 25,000 as cost

under Section 141(2) of the Companies act, 1956.

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Acts of material frauds committed against our Company in the last three years, if any, and if so, the action

taken by our Company

No acts of material fraud have been committed against our Company in the last three years.

Defaults in respect of dues payable

Except as disclosed in the section titled “Selected Financial Information” beginning on page 32, our Company

has not in the past defaulted in relation to statutory dues payable, dues payable to holders of any debentures

(including interest thereon) or dues in respect of deposits (including interest thereon) or any defaults in

repayment of loans from any bank or financial institution (including interest thereon).

Our Company does not have any outstanding defaults in relation to payment of statutory dues, dues payable to

holders of any debentures (including interest thereon) or dues in respect of deposits (including interest thereon)

or any defaults in repayment of loans from any bank or financial institution (including interest thereon).

Material litigation involving our Subsidiaries

Material litigation involving Indian Cable Net Company Limited (“ICNCL”)

Other than the following there are no other material litigation involving ICNCL:

Litigation filed by ICNCL

Criminal matters

ICNCL filed a complaint dated January 1, 2010 with the inspector in charge, Bidhan Nagar Police Station,

Kolkata for registering a criminal case against Amit Nag for allegedly passing on certain confidential/ critical

business related information of ICNCL on to its competitors. Thus, ICNCL has alleged that Amit Nag had

violated provisions of the Indian Copyright Act, 1957 and was liable to be punished under the Indian Penal

Code, 1860. Subsequently the Bidhan Nagar Police Station filed a first information report dated January 1, 2010

based on the complaint given by ICNCL. The matter is pending for hearing before the Judicial Magistrate,

Bidhan Nagar.

Writ petition

ICNCL and another (“Petitioners”) have filed a writ petition before the Calcutta High Court against the State of

West Bengal and another (“Respondents”) challenging the validity of Section 4 of the West Bengal Tax on

Entry of Goods into the Local Areas Act, 2012 (“Act”) being ultra vires of Section 301 read with Article 304(a)

of the Constitution of India. The High Court has stayed the aforementioned provision after hearing the

submissions from the Petitioners and has asked the Respondents to submit its reply. The matter is pending for

adjudication as a regular matter.

Civil matters

1. ICNCL has filed petitions before the TDSAT against Star India Private Limited (“Respondent”) for

the issue of notices dated January 12, 2015 and public notices dated January 14, 2015 (collectively, the

“Notices”) for disconnection of channels signals in DAS operational areas of Kolkata and Patna on the

alleged grounds of non-payment of subscription fee, non-provision of subscriber reports and non-

signing agreement for interim period from July, 2014 to October, 2014. The respondent company

denied allegations of Star and further stated that the Notices were filed with a mala fide intent to coerce

ICNCL. The TDSAT has stayed the notices issued against company for the operational areas of

Kolkata and Patna. The hearings are currently pending.

2. ICNCL has filed a petition (247(C) of 2012) (“Petition”) before the TDSAT against Mahuaa Media

Private Limited (“Respondent”) for the non-payment of outstanding channel placement charges

amounting to ₹ 52.65 million. The Respondent replied to the Petition, dismissing the claims of ICNCL

and has in turn filed a counter claim seeking to recover an outstanding amount of ₹ 0.31 million along

with an interest at 24% per annum towards excess payments made to ICNCL. The matter is pending

before the TDSAT.

192

3. ICNCL has filed a criminal complaint dated January 1, 2010 before the inspector in charge,

Bidhannagar East police station, Kolkata against Amit Nag for the offences of theft, criminal breach of

trust and breach of provisions of the Indian Copyright Act, 1957. Further, a first information report has

been issued by the Bidhannagar East Police Station dated January 1, 2010. The matter is currently

pending for appearance of Amit Nag and for further proceedings.

Litigation filed against ICNCL

Civil matters

Krishna Chanda Paul (“Petitioner”) filed a petition (CC No. 693 of 2012) against ICNCL and another

(collectively, the “Respondents”) before the District Consumer Disputes Redressal Forum, Barasat

(“Consumer Court”) alleging that the Respondents raised false bills and in relation to the same disconnected

the Petitioner’s broadband connection. The Petitioner has thus prayed that the broadband connection be restored

and that a sum of ₹ 0.05 million be paid to the Petitioner by way of compensation. The matter is currently

pending and has currently been posted for March 13, 2015 for further proceedings.

Tax proceedings

1. A notice for demand of tax has been issued to ICNCL by the Senior Joint Commissioner, Sales Tax,

West Bengal and the same has been received on January 27, 2014. Through the notice for demand, an

amount of ₹ 41.70 million has been imposed on ICNCL for the assessment period of 2011-2012.

2. An order dated May 3, 2013 has been passed by the Sales Tax Officer, Saltlake Charge imposing an

amount of ₹ 3,697 payable by ICNCL for the year ending March 31, 2011. A petition for appeal dated

November 8, 2013 has been filed by ICNCL before the Senior Joint Commissioner, 24 Parganas Circle

(“Joint Commissioner”) claiming that disallowance of input tax credit should be allowed, the

imposition of purchase tax on printing stationery which is not used in the business directly is arbitrary

and that imposition of an interest of ₹ 0.88 million should be deleted and further asking for the

assessing order to be modified. The appeal has been admitted and the matter is currently pending

before the Joint Commissioner.

Material litigation involving Wire and Wireless Tisai Satellite Limited (“WWTSL”)

Other than the following there are no other material litigation involving WWTSL:

Litigation filed against WWTSL

Tax proceedings

1. An assessment order dated March 18, 2013 has been issued by the Deputy Commissioner of Income

Tax-7(3), Mumbai wherein a taxable income of ₹ 25.75 million has been calculated for WWTSL in the

assessment year 2010-11. Further, the Office of the Tax Recovery Officer-7(3), Mumbai sent a notice

of demand, received by WWTSL on September 25, 2014, bearing no. TRO 7(3)/Recovery/2014-

15/AAACW 7197D for an outstanding demand of ₹ 9.89 million for the assessment year 2010-11

along with an interest as applicable, to be paid by WWTSL. WWTSL has filed an appeal before the

Commissioner for Income Tax (Appeals)-14 and the same has been admitted as appeal no. 211/13-14.

The matter is currently pending.

2. The Deputy Commissioner of Income Tax, 8(3)(2), Mumbai has sent a notice no. DCIT-8(3)(2)/Curr

Recovery/5/14/15 dated February 4, 2015 to WWTSL demanding the payment of an outstanding

amount of ₹ 17.99 million payable by WWTSL towards assessment year 2011-12.

Material litigation involving Master Channel Community Network Private Limited (“MCCNPL”)

Other than the following there are no other material litigation involving MCCNPL:

193

Litigation filed against MCCNPL

Tax proceedings

An assessment order dated October 31, 2015 has been issued to MCCNPL by the Assistant Commissioner (CT)

(LTU), Vijayawada imposing an amount of ₹ 14.57 million towards value added tax payable by MCCNPL for

the period of Dec 2013 to June 2014. An appeal has been filed by MCCNPL and subsequently an order dated

January 30, 2015 has been issued by the Appellate Deputy Commissioner (CT) (FAC), Vijayawada through

which the appeal has been rejected. MCCNPL has filed and appeal against the order before the Additional

Commissioner (CT) Legal, Hyderabad.

Material litigation involving Central Bombay Cable Network Limited

Nil

Material litigation involving Siticable Broadband South Limited

Nil

Material litigation involving SITI Vision Digital Media Private Limited

Nil

Material litigation involving SITI Jind Digital Media Communications Private Limited

Nil

Material litigation involving SITI Jai Maa Durgee Communications Private Limited

Nil

Material litigation involving SITI Bhatia Network Entertainment Private Limited

Nil

Material litigation involving SITI Krishna Digital Media Private Limited

Nil

Material litigation involving SITI Guntur Digital Network Private Limited

Nil

Material litigation involving SITI Jony Digital Cable Network Private Limited

Nil

Material litigation involving SITI Faction Digital Private Limited

Nil

Material litigation involving SITI Maurya Cable Net Private Limited

Nil

Material litigation involving SITI Broadband Services Private Limited

Nil

194

Material litigation involving SITI Global Private Limited

Nil

In addition to the above matters, our Subsidiaries are also involved in certian disputes relating to direct, indirect

tax liabilities, disputes pending for adjudication before the TDSAT, certain disputes in relation to payment of

charges/ dues and a writ petition, collectively aggregating to an amount of ₹ 56.27 million. We cannot predict

the initiation of any future litigation and/ or the outcome of any pending or future litigation, examination or

investigation, based on the amounts sought in pending actions against our Subsidiaries and their history of

resolving litigation matters in the past, as well as the advice of legal counsel.

Inquiries, inspections or investigations under the Companies Act against our Subsidiaries in the last three

years

No inquiries, inspections or investigations initiated or conducted against our Subsidiaries under the Companies

Act, 2013 or any previous company law in the last three years.

Litigation or legal action against Promoters taken by any Ministry, Department of Government or any

statutory authority in the last three years (including any direction issued by such Ministry or Department or

statutory authority upon conclusion of such litigation or legal action)

I. Ashok Mathai Kurien

1. An appeal (346 of 2014) (“Appeal”) has been filed by the Commissioner of Income Tax-6, Mumbai

(“Appellant”) against the order of the Income Tax Appellate Tribunal, Mumbai (“ITAT”) dated

September 4, 2013 (“Order”) in the income tax appeal no. 398/Mum/2011 filed by Ashok Mathai

Kurien (“Respondent”) against the assessment order issued by the Appellant for the assessment year

2006-07 before the High Court of Bombay. In the Appeal, the Appellant has claimed that the ITAT has

exceeded its powers in admitting fresh claims by the Respondent. The matter is currently pending before

the High Court.

2. Show cause notices (“SCN”) were issued by SEBI to Ashok Mathai Kurien and other Promoters of our

Company (“Noticees”) to show cause as to why an inquiry should not be initiated against them and

penalty may not be imposed under section 15A(b) of the SEBI Act, 1992 for the alleged violation of

regulations 3(4) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

(“SAST Regulations”). It was alleged in the SCN that the Noticees had failed to submit a report along

with supporting documents to SEBI in respect of the acquisition of equity shares of our Company by the

Noticees, under regulation 3(4) of SAST Regulations. In pursuance of the inquiry, SEBI has, through an

adjudication order no. JJ/AO/AK/160-173/2014 dated December 29, 2014 imposed a penalty of ₹ 2.00

million on the Noticees for violating regulation 3(4) of SAST Regulations. The penalty has been duly

paid by the Noticees through a pay order no. 016991 dated February 9, 2015.

II. Sushila Goel

Show cause notices (“SCN”) were issued by SEBI to Sushila Goel and other Promoters of our Company

(“Noticees”) to show cause as to why an inquiry should not be initiated against them and penalty may not

be imposed under section 15A(b) of the SEBI Act, 1992 for the alleged violation of regulations 3(4) of

the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“SAST Regulations”). It

was alleged in the SCN that the Noticees had failed to submit a report along with supporting documents

to SEBI in respect of the acquisition of equity shares of our Company by the Noticees, under regulation

3(4) of SAST Regulations. In pursuance of the inquiry, SEBI has, through an adjudication order no.

JJ/AO/AK/160-173/2014 dated December 29, 2014 imposed a penalty of ₹ 2.00 million on the Noticees

for violating regulation 3(4) of SAST Regulations. The penalty has been duly paid by the Noticees

through a pay order no. 016991 dated February 9, 2015.

III. Ambience Business Services Private Limited (“Ambience”)

Tax Proceedings

1. The Commissioner of Income Tax (Appeals) has issued an order dated April 28, 2011 (“Order”) in an

195

appeal filed by Ambience against an order dated October 29, 2010 issued by the Assistant Commissioner

of Income Tax, Circle 16 (1), Mumbai (“Assessing Officer”) wherein a demand of ₹ 0.07 has been

imposed on Ambience in the assessment year 2005-06. Through the Order, the appeal has been partly

allowed. The Assessing Officer has further filed an appeal dated July 7, 2011 against the Order before the

Income Tax Appellate Tribunal (“ITAT”). The matter is currently pending.

2. The Commissioner of Income Tax (Appeals) has issued an order dated September 27, 2013 (“Order”) in

an appeal filed by Ambience against an order dated May 14, 2012 issued by the Assistant Commissioner

of Income Tax, Circle 16 (1), Mumbai (“Assessing Officer”) wherein a demand of ₹ 3.29 million in the

assessment year 2005-06 has been imposed on Ambience. Through the Order, business expenses have

been allowed but in proportion to the income of ₹ 0.31 million earned by Ambience. Ambience has

further filed an appeal dated October 29, 2013 against the Order before the Income Tax Appellate

Tribunal (“ITAT”) stating that the income from business and from other sources are those specifically

identified as expenses allowable under section 30 to 43D and under section 57 of the Income Tax Act,

1961. The matter is currently pending.

3. The Commissioner of Income Tax (Appeals) has issued an order dated April 28, 2011 (“Order”) in an

appeal filed by Ambience against an order dated August 29, 2008 issued by the Assistant Commissioner

of Income Tax, Circle 16 (1), Mumbai (“Assessing Officer”) wherein a demand of ₹ 1.75 million in the

assessment year 2006-07 has been imposed on Ambience. Through the Order, brought forward losses

and other expenses have been allowed. The Assessing Officer has further filed an appeal dated July 7,

2011 against the Order before the Income Tax Appellate Tribunal (“ITAT”) claiming that the expenses

allowed through the Order were not relevant to the incomes earned by Ambience. The matter is currently

pending.


an appeal filed by Ambience against an order dated August 29, 2008 issued by the Assistant

Commissioner of Income Tax, Circle 16 (1), Mumbai (“Assessing Officer”) wherein a demand of ₹ 1.36

million in the assessment year 2007-08 has been imposed on Ambience. Through the Order, the

assessment done by the Assessing Officer has been dismissed and the appeal has been partly allowed.

The Assessing Officer has further filed an appeal dated December 22, 2010 against the Order before the

Income Tax Appellate Tribunal (“ITAT”) claiming that the Order has resulted in double deduction to

Ambience. The matter is currently pending.


an appeal filed by Ambience against an order dated December 30, 2011 issued by the Assistant

Commissioner of Income Tax, Circle 16 (1), Mumbai (“Assessing Officer”) wherein a demand of ₹ 1.65

million in the assessment year 2009-10 has been imposed on Ambience. Through the Order, the appeal

has been partly allowed and expenses towards travelling, entertainment and other losses have been

disallowed. Ambience has further filed an appeal dated October 29, 2013 against the Order before the

Income Tax Appellate Tribunal (“ITAT”). The matter is currently pending.

Action initiated by SEBI

Show cause notices (“SCN”) were issued by SEBI to Ambience and other Promoters of our Company










196

IV. Sprit Textiles Private Limited (“STPL”)


1. Show cause notices (“SCN”) were issued by SEBI to STPL and other Promoters of our Company










2. SEBI had issued a show cause notice dated February 4, 2008 (“SCN”) against Churu Trading Company

Private Limited, now merged with STPL ("Churu Trading") in relation to an alleged violation of

Regulation 13(3) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 for having failed to

make requisite disclosures as to change in their shareholding of more than 2% of the total shareholding in

the scrip of Cranes Software International Limited. Pending the Adjudication Proceedings, Churu

Trading opted for consent terms and upon payment of a sum of ₹ 0.15 million a consent order dated

November 11, 2008 was passed by SEBI disposing the aforementioned adjudication proceedings pending

against Churu Trading.

3. In an enquiry relating to SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to

Securities Market) Regulations, 1995 the Securities and Exchange Board of India (SEBI) has passed an

order dated March 19, 2008 under Section 11 and 11B of the SEBI Act, 1992 cautioning Zee

Entertainment Enterprises Limited (formerly known as Zee Telefilms Limited) and its promoter entities

which include Prajatma Trading Company Private Limited and Churu Trading Company Private Limited

(Both these companies are now merged with STPL) against any instances of violations or non-compliance

of the provisions of Securities and Exchange Board of India Act and the Rules and Regulations framed

there under.

Defaults under the Companies Act

1. Churu Trading Company Private Limited (“CTCPL”) (now merged with STPL) has been involved in the

following disputes under the Companies Act:

(i) Show cause notices bearing no. ROC/STA(K)/28133/11781 to 11796 dated March 26, 2008 have

been issued by the Registrar of Companies, Maharashtra wherein it has been alleged that CTCPL

has violated provisions of section 211 of the Companies Act as due to non-availability of balance

confirmations for some of the loans and advances appearing in the books of CTCPL and the non-

availability of physical share certificates, the annual accounts of CTCPL for the year ended March

31 2004, March 31, 2005 and March 31, 2006 did not give true and fair view of the state of affairs

of CTCPL. CTCPL filed a compounding application no.466/621A/CLB/MB/2011 before the

Company Law Board (“CLB”). The offences committed have been compounded by the CLB

against the Director on payment of ₹ 1,000.

(ii) Show cause notices bearing no. ROC/STA(K)/28133/54 to 56 dated April 2, 2008, have been

issued by the office of the Registrar of Companies, Maharashtra to CTCPL, wherein it has been

alleged that the provisions of section 383(1A) of the Companies Act have been violated by not

appointing a qualified company secretary. CTCPL filed a compounding application no.

462/621A/CLB/MB/2011 before the Company Law Board (“CLB”). The offence committed has

been compounded by the CLB against the Directors and CTCPL on payment of ₹ 7,500 each and

the same has been paid.

(iii) Show cause notices bearing no. ROC/STA(K)/28133/11798 to 11799 dated March 26, 2008, have

been issued by the office of the Registrar of Companies, Maharashtra to CTCPL, wherein it has

been alleged that the provisions of section 303(1) of the Companies Act have been violated by not

including details of company secretary, Mr. Ramratan Jhunjhunwala, in the statutory register

197

maintained under the section and also not mentioning his name in the annual accounts of the

CTCPL for the financial year ended March 31, 2004, March 31, 2005 and March 31, 2006.

CTCPL filed a compounding application no. 463/621A/CLB/MB/2011 before the Company Law

Board (“CLB”). The offence committed has been compounded by the CLB against the Directors

and CTCPL on payment of ₹ 7,500 each and the same has been paid.

(iv) Show cause notices bearing no. ROC/STA(K)/28133/11779 to 11780 dated March 26, 2008, have



providing requisite explanation to auditors comments/ remarks, in the Directors’ report for the

financial year ended March 31, 2004, March 31, 2005 and March 31, 2006. CTCPL filed a

compounding application no. 464/621A/CLB/MB/2011 before the Company Law Board (“CLB”).

The offence committed has been compounded by the CLB against the Director on payment of ₹ 1,000 and the same has been paid.

(v) Show cause notices bearing no. ROC/STA(K)/28133/11777 to 11778 dated March 26, 2008, have



attaching balance sheet of Zee News Limited, one of the subsidiary companies, to the annual

report of CTCPL for the financial year ended March 31, 2004 and March 31, 2005. CTCPL filed a


The offence committed has been compounded by the CLB against the Director on payment of ₹ 1,000 and the same has been paid.

(vi) Show cause notices bearing no. ROC/STA(K)/28133/11794 to 11796 dated March 26, 2008, have


been alleged that the provisions of section 217(3) of the Companies Act have been violated as

during inspection, the name plate along with the address of the registered office was not found

during inspection at the registered office of CTCPL. CTCPL filed a compounding application no.


been compounded by the CLB against the Director and CTCPL on payment of ₹ 7,500 by each

and the same has been paid.

(vii) Show cause notices bearing no. ROC/STA(K)/28133/33 to 35 dated March 26, 2008, have been

issued by the office of the Registrar of Companies, Maharashtra to CTCPL, wherein it has been

alleged that the provisions of section 17 of the Companies Act have been violated as CTCPL is

carrying on the business of trading in shares, investments, lending and borrowing which are not

mentioned in the main object clause of the memorandum of association of CTCPL. CTCPL filed a

compounding application no. 467A/621A/CLB/MB/2011 before the Company Law Board

(“CLB”). The offence committed has been compounded by the CLB against the Director and

CTCPL on payment of ₹ 7,500 by each and the same has been paid.

2. Prajatma Trading Company Private Limited (“PTCPL”) (now merged with STPL) has been involved in

the following disputes under the Companies Act:

(i) Show cause notices bearing no. ROC/STA(K)/Insp/209A/28132/95 to 96 dated April 3, 2008, have

been issued by the office of the Registrar of Companies, Maharashtra to PTCPL, wherein it has

been alleged that the provisions of section 217(3) of the Companies Act have been violated as the

Directors’ report of PTCPL for the financial year ended March 31, 2004, March 31, 2005 and

March 31, 2006 didn’t give appropriate information/ explanation to the comments/ remarks stated

in the auditors’ report for the said financial years. PTCPL filed a compounding application no.


been compounded by the CLB against the Director on payment of ₹ 4,000 and the same has been

paid.

(ii) Show cause notice bearing no. ROC/STA(K)/Insp/209A/28132/89 to 90 dated April 3, 2008, have

been issued by the office of the Registrar of Companies, Maharashtra wherein it has been alleged

that the provisions of Section 211 read with Schedule VI of the Companies Act have been violated

due to the non-availability of balance confirmation for some of the loans and advances appearing

in the books of PTCPL, the annual account of PTCPL for the year ended March 31, 2004, March

198

31. 2005 and March 31, 2006 didn’t give true and fair view of the state of affairs of PTCPL. The

Company filed compounding application no.482/621A/CLB/MB/2011 before CLB. The offence

committed has been compounded by the CLB against the Company and Director on payment of ` 2,000/- by each

(iii) Show cause notices bearing no. ROC/STA(K)/Insp/209A/28132/92 to 93 dated April 3, 2008, have


been alleged that the provisions of section 211 of the Companies Act have been violated as due to

non-availability of physical share certificates or demat statements relating to some of the

investments of PTCPL, for verification by the auditors, the annual account of PTCPL for the year

ended March 31, 2004, March 31, 2005 and March 31, 2006 didn’t give true and fair view of the

state of affairs of the Company. PTCPL filed a compounding application nos.



paid.

(iv) Show cause notices bearing no. ROC/STA(K)/Insp/209A/28132/86 to 87 dated April 3, 2008, have


been alleged that the provisions of section 209(1) of the Companies Act have been violated as

PTCPL did not have internal audit system and could not produce internal audit report during the

financial year ended March 31, 2004, March 31, 2005 and March 31, 2006, inspite of having paid

up capital and reserves exceeding ₹ 5.00 million. PTCPL filed a compounding application no.



paid.

(v) Show cause notices bearing no. ROC/STA(K)/Insp/209A/28132/78 to 80 dated April 3, 2008, have


been alleged that the provisions of section 224(8) of the Companies Act have been violated as the

remuneration of auditors for year ended March 31, 2004 to March 31, 2006 were not determined

by the Board resolution as authorized by the members in respective annual general meetings.

PTCPL filed a compounding application no. 484/621A/CLB/MB/2011 before the Company Law

Board (“CLB”). The offence committed has been compounded by the CLB against the Director

and PTCPL on payment of ₹ 7,500 by each and the same has been paid.

(vi) Show cause notices bearing no. ROC/STA(K)/Insp/209A/28132/82 to 84 dated April 3, 2008, have


been alleged that the provisions of section 147 of the Companies Act have been violated as during

inspection no name board of PTCPL at is registered office was found. PTCPL filed a compounding

application no. 485/621A/CLB/MB/2011 before the Company Law Board (“CLB”). The offence

committed has been compounded by the CLB against the Director and PTCPL on payment of ₹ 7,500 by each and the same has been paid.

3. Premier Finance and Trading Company Limited (“PFTCL”) (now merged with STPL) has been involved

in the following disputes under the Companies Act:

(i) Show cause notices bearing no. ROC/STA(K)/19636/Insp/209A/720 to 739, all dated April 17,

2008, have been issued by the office of the Registrar of Companies, Maharashtra to PFTCL,

wherein it is alleged that the provisions of Section 49 of the Companies Act have been violated by

PFTCL due to non-availability of proof of ownership being physical share certificates of certain

investments of PFTCL at the time of the audit and therefore the applicants have rendered

themselves liable to be punished. PFTCL filed a compounding application bearing no. 106/621-

A/STA(A)/06/11/3273 before the Regional Director, Western Region (“RD”). The offence

committed has been compounded by the RD on the payment of compounding fee of ₹ 0.80 million

on PFTCL and ₹ 0.80 million each on the other Directors/ officers in default.

(ii) Show cause notices bearing no. ROC/STA(K)/19636/Insp/209A/708 to 711, all dated April 17,


wherein it has been alleged that the provisions of Section 295 of the Companies Act, 1956 have

been violated, in view of loan of ₹ 1.15 million given by the Company to Briggs Trading

199

Company Private Limited during financial year ended March 31, 2005 without obtaining an

approval from the Central Government and therefore the applicants have rendered themselves

liable to be punished under the provisions of Section 295(4) of the Companies Act. PFTCL filed a


The offence committed has been compounded by the CLB against the Directors on payment of ₹ 5,000 each.

(iii) Show cause notices bearing no. ROC/STA(K)/19636/Insp/209A/712 to 715, all dated April 17,


wherein it has been alleged that the provisions of Section 295 of the Companies Act has been

violated, in view of loan of ₹ 94.54 million given by PFTCL to Prajatma Trading Company Private

Limited during the financial year ended March 31, 2005 without obtaining approval from the

Central Government and therefore the applicants have rendered themselves liable to be punished.

PFTCL filed a compounding application no.476/621A/CLB/MB/2011 before the Company Law

Board (“CLB”). The offence committed has been compounded by the CLB against the Directors

on payment of ₹ 5,000 each.

(iv) Show cause notices bearing no. ROC/STA(K)/19636/Insp/209A/716 to 719, all dated April 17,


wherein it has been alleged that the provisions of Section 295 of the Companies Act have been

violated in view of loans aggregating to ₹ 156.49 million given by PFTCL to three companies

during financial year ended March 31, 2006 without obtaining approval from the Central

Government and therefore PFTCL have rendered themselves liable to be punished. PFTCL filed a


The offence committed have been compounded by the CLB against the Directors on payment of ₹ 5,000 each.

200

Taxation proceedings

1. Details of taxation proceedings involving Churu Trading Company Private Limited (now merged with STPCL)

Sr.

No AY

Assessm

ent

Proceedi

ng U/s Income/(Loss) as per ITR

Total

Disallowan

ce Made

by AO Income/ (Loss) After Disallowance

First

Appeal

filed

against

disallowan

ce Status Relief Demand Status

Business

Income/(loss)

Speculation

loss Capital Gain

Business

Income/(lo

ss)

Speculati

on loss

Capital

Gain

1

200

1-

02

Sec 143

(3) of IT

Act (331,308,898) - -

36,417,801

(294,891,0

97)

-

- YES

Heard

On

23/12/2

004 no nil

GOT

ITAT

favorab

le order

dated

31/01/2

012

2

200

2-

03

Sec 143

(3) of IT

Act (75,742,777) - -

128,417,03

0

52,674,253

-

- YES

Heard

On

12/12/2

004

Partly

relief nil

GOT

ITAT

favorab

le order

dated

31/01/2

012

3

200

3-

04

Sec 143

(3) of IT

Act (312,450,342) - -

210,824,42

9

101,625,91

3

2,147,657

15,570,

700 YES

Heard

on

30.03.2

007

Partly

allowe

d nil

GOT

ITAT

favorab

le order

dated

31/01/2

012

4

200

4-

05

Sec 143

(3) of IT

Act (13,817,678) - -

155,230,72

8

110,446,13

3

-

- YES

-

-

7,774,021

GOT

ITAT

favorab

le order

dated

31/01/2

012

201

Sr.

No AY

Assessm

ent

Proceedi


Total

Disallowan

ce Made


First

Appeal

filed

against

disallowan


Business

Income/(loss)

Speculation

loss Capital Gain

Business

Income/(lo

ss)

Speculati

on loss

Capital

Gain

5

200

5-

06

Sec 143

(3) of IT

Act (102,103,314) - -

133,481,29

3

46,258,589

-

- YES

Heard

on

31/05/2

012

Partly

allowe

d

18,134

Pending

for

hearing

6

200

6-

07

Sec 143

(3) of IT

Act 2,519,772 - -

65,092,184

-

-

- YES

Heard

on

23.02.2

011

Partly

allowe

d

1,982,740

Pending

for

hearing

7

200

7-

08

Sec 143

(3) of IT

Act (250,097,023) - -

97,067,724

(153,029,2

99)

-

- YES no

870,364

Pending

for

hearing

8

200

8-

09

Sec 143

(3) of IT

Act

(1,029,465,859

)

-

-

1,058,500,4

97

29,034,638

-

- YES

Heard

on

30.04.2

012

Partly

allowe

d 11016610

Pending

for

hearing

Sec 148

of IT Act

-

-

-

1,074,117,2

27

51,430,252

-

- YES

Pending

for

hearing NA

203,062,5

78 NA

9

200

9-

10

Sec 143

(3) of IT

Act (132,011,783) - -

-

-

-

- YES

Pending

for

hearing NA

21,150 NA

10

201

0-

11

Sec 143

(3) of IT

Act (318,095,090)

(29,315,352)

500,676,08

7

109,671,89

9

-

- YES

Pending

for

hearing NA

50,258,77

0 NA

11

201

1-

12

(537,254,270)

(29,445,899)

(40,000) NA NA NA NA NA NA NA NA NA

12

201

2-

13

Sec 143

(3) of IT

Act

(598,899,849)

(1,925,127)

235,521,828

NA NA NA NA NA NA NA NA NA

202

2. Details of taxation proceedings involving Prajatma Trading Company Private Limited (now merged with STPCL)

Sr.

No AY

Assessm

ent

Proceedi


Total

Disallowan

ce Made


First

Appeal

filed

against

disallowan


Business

Income/(loss)

Speculation

loss Capital Gain

Business

Income/(lo

ss)

Speculati

on loss

Capital

Gain

1

200

1-

02

- - - -

-

-

-

-

-

-

-

-

-

2

200

2-

03

- - - -

-

-

-

-

-

-

-

-

-

3

200

3-

04

Sec 143

(3) of IT

Act

(202,005,310)

(14,810,801) -

46,916,622

(136,780,3

39)

(37,772,0

10)

- Yes

Heard

On

15/07/2

010

Dismi

ssed NIL

Pending

Before

ITAT

Before

"C"

Bench

4

200

4-

05

Sec 143

(3) of IT

Act

(207,269,514)

(8,428,847) -

24,481,105

(151,237,1

20)

(23,861,3

45)

- NO NO NO NO NO

5

200

5-

06

Sec 143

(3) of IT

Act - - -

-

-

-

-

-

-

-

-

Pending

Before

ITAT

Before

"C"

Bench

6

200

6-

07

Sec 143

(3) of IT

Act

(125,730,146) - -

38,263,570

(87,466,57

6)

-

- Yes

Heard

on

9/6/201

0

Dismi

ssed NIL

Pending

Before

ITAT

Before

"C"

Bench

203

Sr.

No AY

Assessm

ent

Proceedi


Total

Disallowan

ce Made


First

Appeal

filed

against

disallowan


Business

Income/(loss)

Speculation

loss Capital Gain

Business

Income/(lo

ss)

Speculati

on loss

Capital

Gain

Sec 263

of IT Act - - -

-

-

-

- Yes

Dismi

ssed

7,457,440

Pending

Before

ITAT

Before

"C"

Bench

7

200

7-

08

Sec 143

(3) of IT

Act

(236,012,399) - -

107,309,16

5

(120,782,3

25)

-

- Yes

Heard

on

19/02/2

012

Part

relief

Rs

22,43,

611/- NIL

Pending

Before

ITAT

Before

"C"

Bench

8

200

8-

09 N.A

(991,746,854)

(14,220,958)

(981,945) N.A

9

200

9-

10

Sec 143

(3) of IT

Act

(247,567,071) - -

237,950,78

4

(10,697,79

7)

(51,025,7

89)

- Yes

Pending

before

CIT A NA NIL NA

10

201

0-

11

Sec 143

(3) of IT

Act

(201,334,395) - -

206,298,93

6

4,970,096

-

- Yes

Pending

before

CIT A NA

20,773,85

0 NA

11

201

1-

12

Sec 143

(3) of IT

Act

(207,930,110) - -

207,178,15

1

(751,958)

-

- -

Pending

before

CIT A NA

30,929,13

0 NA

12

201

2-

13

Sec 143

(3) of IT

Act

(873,439,492)

not available

204

3. Details of taxation proceedings involving Premier Finance and Trading Company Limited (now merged with STPCL)

Sr.

No

Assessme

nt Year

Income

as per

ROI

Demand /

(Refund)

Income as

per Sec.

143(3)

Tax

Payable

143(3)

Income

As per

CIT(A)

Effect

Demand after

CIT (A)

Income

as per

ITAT

Deman

d as

per

ITAT

Remark Rectification /

Appeal Pending

1

1998-99 1,482,2

99

(317,270) 10,041,458 3,599,164 1,702,475 (1,756,019) - - a) Additions in Order u/s

143(3): Profit on Sale of

Investments of ` 37,80,000/-

Loss on conversion of

investment in stock in trade

` 33,20,000/- Interest

attributable to investment in

shares ` 14,32,283/- and

depreciation 26,876/-

a) Rectification for

short grant of refund

and set off MAT

Credit

u/s 115JB 2,463,5

82

- 2,893,267 Nil 2,463,582 - - - a) Letter filed dated

20.02.2012, 24.07.2013 for

short grant of refund of `

1,93,652/- and set off of

MAT Credit of AY 1998-99

2 1999-00 638,585 (117,000) 34,104,120 17,924,992 1,104,650 (1,906,231) - - a) Additions in Order u/s

143(3): Depreciation

disallowed ` 25,532/-

undervaluation of shares `

2,85,85,165/- Interest on

dividend income `

48,54,838/-

Nothing

3

2000-01 86,348,

625

(182,619) 91,401,266 5,051,801 86,760,64

8

3,006,573 87,061,95

0

190,657 a) Additions in Order u/s

143(3): Sales Tax Penalty `

49,858/- Disallowance of

Interest ` 50,02,783/- b)

Letter filed dated

18.06.2010, 24.07.13 for

excess charge of interest u/s

220(2) ` 84,406/- and

demand is already adjusted

against refund of AY 2008-

09

a) Rectification for

excess charge of

interest of ` 84,406/-

and demand is already

adjusted against refund

of AY 2008-09

205

Sr.

No

Assessme

nt Year

Income

as per

ROI

Demand /

(Refund)

Income as

per Sec.

143(3)

Tax

Payable

143(3)

Income

As per

CIT(A)

Effect

Demand after

CIT (A)

Income

as per

ITAT

Deman

d as

per

ITAT


Appeal Pending

4

2001-02 (480,42

4,116)

(1,587,858) (99,451,984) Nil - - - - a) Additions in Order u/s

143(3): Penalty ` 7,500/-

Interest u/s 14A `

93,36,065/- Interst on

Borrowing ` 98,24,664/-

Interest ` 35,24,103/-

Valuation Loss `

35,82,79,800/- b) Hon'ble

ITAT directed the AO to re-

calculate disallowance u/s

14A by following SB

decision of Daga Capital c)

Letter filed dated

18.06.2010, 24.07.2013 for

ITAT effect

a) ITAT Appeal Effect

5

2002-03 (137,82

3,950)


143(3): Interest free loan `

2,85,12,330/- on Share

application amount `

92,60,000/- u/s 14A `

1,47,28,503/- on late

payment of TDS. 30,65,261/-

legal and professional fees `

5000/- Other Interest

1,20,10,954/- b) Letter filed

dated 10.10.2012,

24.07.2013 for giving effect

to CIT(A) Order c) Appeal

filed by dept in ITAT dated

27.08.2012

a) Letter for CIT(A)

Effect and appeal of

department in ITAT

206

Sr.

No

Assessme

nt Year

Income

as per

ROI

Demand /

(Refund)

Income as

per Sec.

143(3)

Tax

Payable

143(3)

Income

As per

CIT(A)

Effect

Demand after

CIT (A)

Income

as per

ITAT

Deman

d as

per

ITAT


Appeal Pending

6

2003-04

(45,560

,696)


143(3): Interest on loan `

2,06,91,000/- Other interest

` 7,78,264/- on Share

application ` 39,21,885/-

Interest on late payment of

TDS ` 26,64,905/- legal fees

` 50,000/- b) Letter filed

dated 10.10.2012,

24.07.2013 for giving effect

to CIT(A) Order c) Appeal

filed by dept in ITAT dated

27.08.2012



department in ITAT

7

2004-05 (56,666

,716)

(447,168) Nil (after loss

set off)

Nil - - - - a) Addition in Order u/s

143(3): Interest on borrowed

funds (Net) ` 6,00,16,704/-

b) Letter filed dated

10.10.2012, 24.07.2013 for

giving effect to CIT(A)

Order c) Appeal filed by

dept in ITAT dated

27.08.2012



department in ITAT

8

2005-06 (52,213

,677)

(1,071,191) Nil (after loss

set off)

(1,242,582) - - - - a) Addition in Order u/s

143(3): Interest on borrowed

funds (Net) ` 5,24,98,606/-

b) Letter filed dated

10.10.2012, 24.07.2013 for

giving effect to CIT(A)

Order c) Appeal filed by

dept in ITAT dated

27.08.2012



department in ITAT

9

2006-07 (34,790

,157)

Nil No Assessment a) Return of income was

filed 29.11.2006

Nothing

10

2007-08 (130,21

0,375)

Nil No Assessment a) Return of income was

filed 31.10.2007

Nothing

207

Sr.

No

Assessme

nt Year

Income

as per

ROI

Demand /

(Refund)

Income as

per Sec.

143(3)

Tax

Payable

143(3)

Income

As per

CIT(A)

Effect

Demand after

CIT (A)

Income

as per

ITAT

Deman

d as

per

ITAT


Appeal Pending

11

2008-09

(58,894

,130)

(5,114,363)

(7,390)

(5,958,232)

-

-

-

-

a) Addition in Order u/s

143(3): u/s 36(1)(iii) `

50,00,000/- u/s 14A `

2,33,36,058/- u/s 37(1) `

3,05,50,685/- b) CIT(A)

Effect letter filed on

24.07.2013 c) Appeal filed

by assessee in ITAT dated

17.12.2012



assessee in ITAT

12

2009-10

(121,11

6,396)

(1,387,628)

(43,639,929)

Nil

-

-

-

-

a) Addition in Order u/s

143(3): Loss due to

diminution in value of

closing stock ` 4,12,62,104/-

u/s 36(1)(iii) ` 7,74,76,467/-

b) CIT(A) Effect letter filed

on 16.05.2014 c) Appeal

filed by assessee in ITAT

dated 11.04.2014



assessee in ITAT

13

2010-11

15,685,

127

(23,447)

155,164,475

65,935,340

-

-

-

- a) Addition u/s 36(1)(iii) `

13,22,54,824/- b) CIT(A)

filed on 30.04.2013 c)

Refund of ` 4,34,22,725/- of

AY 2012-13 is adjusted

against the above demand,

letter filed dated 20.09.2014

a) CIT(A) b) Credit

for refund of

adjustment

14

2011-12

(153,97

9,411)

(551,885)

254,093,26

0

Appeal against DCIT

pending

15

2012-13 (52,726

,078)

(39,720,050) N.A

208

V. Essel Media Venture Limited

Show cause notices (“SCN”) were issued by SEBI to Essel Media Ventures Limited and other Promoters

of our Company (“Noticees”) to show cause as to why an inquiry should not be initiated against them

and penalty may not be imposed under section 15A(b) of the SEBI Act, 1992 for the alleged violation of








VI. Essel Infraprojects Limited (“EIL”)


Show cause notices (“SCN”) were issued by SEBI to EIL and other Promoters of our Company










Writ petition

Writ petitions have been filed by Aatika Saify (306/2012), Archana Jaiswal (21892/2011), Huzefa Raj

and Mahmooda Parveen (21904/2011), Mohammad Saleem Soudagar (1507/2012) and Muhammad

Shafi (220/2012) (collectively, the “Petitions”) against the State of Madhya Pradesh, EIL and others

(“Respondents”) in the Madhya Pradesh High Court at Jabalpur. The Petitions are in relation to certain

notifications published by the State of Madhya Pradesh under section 4 and 6 of the Land Acquisition

Act in 2011 and the Petitioners have collectively prayed for quashing of these notifications. The Petitions

are currently pending.

Civil matters

1. EIL has filed an arbitration appeal (5 of 2014) in the Madhya Pradesh High Court at Jabalpur (“High

Court”) against the State of Madhya Pradesh and another (“Respondents”). The arbitration appeal has

been filed by EIL to restrain the Respondents from invoking a performance bank guarantee of ₹ 200.00

million. The High Court by its order dated January 27, 2014 restrained the Respondents from encashing

the bank guarantee. The matter is pending for final hearing.

2. EIL has filed an arbitration petition (27 of 2013) (“Petition”) against the State of Madhya Pradesh

(“Respondent”) before the Madhya Pradesh High Court at Jabalpur. The Petition has been filed for the

non-appointment of an arbitrator by the Respondent under the arbitration clause of the concession

agreement entered into between EIL and the Respondent, inspite of EIL drawing references to the

relevant clause and urging the Respondent to do the same. The matter is currently pending.

Taxation proceedings

1. An order dated June 13, 2005 has been issued by the relevant income tax authority (“Authority”)

wherein a demand of ₹ 0.51 million towards income tax in the assessment year 2002-03 has been

imposed on EIL. A rectification against the order has been filed on August 16, 2005. An appeal before

the Income Tax Appellate Tribunal (“ITAT”) has been filed by EIL on April 12, 2011and through its

order dated August 28, 2013 the ITAT has directed the Authority to reassess the tax imposed and the

disallowance allowed to EIL.

209

2. Intimation dated December 20, 2013 has been received by EIL showing a demand of ₹ 0.44 million

towards income tax payable for the assessment year 2003-04. Further, a demand of ₹ 0.38 million has

been raised through an order dated July 15, 2008 by the relevant income tax officer. A rectification letter

dated March 21, 2006 has been filed against the order. The Commissioner of Income Tax (Appeals) has

through its order given partial relief to EIL. An appeal has been filed by EIL before the Income Tax

Appellate Tribunal (“ITAT”) on April 12, 2011 and ITAT has issued an order dated February 29, 2012

giving partial relief to EIL.

3. EIL has filed a rectification letter on January 24, 2007 for short credit for TDS of ` 0.19 million for the

assessment year 2004-05 before the Commissioner for Income Tax (Appeals) (“CITA”). CITA has

issued an order dated May 17, 2010, giving partial relief to EIL. An appeal has been filed before the

Income Tax Appellate Tribunal (“ITAT”) on April 12, 2011 by EIL and ITAT has issued an order dated

February 29, 2012 giving partial relief to EIL.

4. Through an assessment order, the relevant income tax officer has calculated ₹ 0.12 million for provision

for bad and doubtful debts, ₹ 0.14 million towards gratuity provision, ₹ 0.19 million towards leave

encashments and a demand of income tax amounting to ₹ 54,561 has been adjusted against refund of

assessment year 1997-98. An appeal has been filed before the Commissioner for Income Tax (Appeal)

(“CITA”) on January 29, 2008 by EIL and CITA has through an order dated May 17, 2010 given partial

relief to EIL. Further, an appeal has been filed before Income Tax Appellate Tribunal (“ITAT”) on April

12, 2011 by EIL and the ITAT has through its order dated February 20, 2012 accepted the order passed

by CITA.

5. A demand of ₹ 37.32 million has been made by the relevant income tax officer against EIL for the

assessment year 2006-07. An appeal has been filed before the Commissioner for Income Tax (Appeal)

(“CITA”) on January 22, 2009. The appeal was remanded to the Deputy Commissioner of Income Tax

(“Deputy Commissioner”) and a remand report dated July 26, 2010 has been received by EIL. Through

its rectification order the total income has been revised and a fresh demand has been raised for ₹ 17.14

million. EIL has paid a demand of ₹ 9.00 million and balance demand of ₹ 8.14 million is adjusted

against the refund of assessment year 2009-2010. Penalty Proceedings are pending against EIL for

disallowances made in the assessment order.

6. An appeal before the Commissioner for Income Tax (Appeal) (“CITA”) has been filed on January 28,

2011 by EIL against an order for the assessment year 2008-09. An order dated August 5, 2011 has been

issued, showing a demand of ₹ 0.17 million and an additional disallowance of ` 1.80 million. A

rectification letter dated October 31, 2011 has been filed order issued by EIL for the short credit of TDS

amounting to ₹ 0.25 million plus interest.

7. An appeal before the Commissioner for Income Tax (Appeal) (“CITA”) has filed by EIL on April 15,

2013 against the order issued by the Deputy Commissioner of Income Tax dated March 14, 2013

demanding a sum of ₹ 22.44 million.

8. Through an assessment order dated March 18, 2014 in the assessment year 2011-12 issued by the Deputy

Commissioner of Income Tax a demand of ₹ 52.11 million has been adjusted against the TDS credit. An

appeal has been filed against the said order before the Commissioner for Income Tax (Appeal) (“CITA”)

by EIL on April 16, 2014.

VII. Ganjam Trading Company Private Limited (“GTCPL”)


Show cause notices (“SCN”) were issued by SEBI to GTCPL and other Promoters of our Company







210





1. Seven orders have been issued by the Company Law Board, Mumbai Bench (the “Board”) against

GTCPL for defaults committed under the Companies Act, the details of which have been provided below:

a. Show cause notices ROC/STA(K)/28131/11496 to 11497 and 11503 to 11505 dated March 18,

2008 were issued by the Registrar of Companies, Maharashtra to GTCPL wherein it was alleged

that GTCPL has not obtained confirmation of creditors, debtors and loans and advances and had

shown the auditors remuneration as audit fees, tax audit fees and others and not disclosed

particulars of others for the financial years 2003-04, 2004-05 and 2005-06 and thus, the respective

annual accounts of GTCPL did not give a true and fair view of the state of affairs of GTCPL. In

relation to the same a compounding application has been filed with the Board and the Board has

issued an order dated February 28, 2012 wherein the offence committed have been compounded

towards the defaulting Directors of GTCPL and a payment of ₹ 2,000 has been imposed which has

been duly paid.

b. Show cause notices ROC/STA(K)/28131/11493 to 11495 dated March 18, 2008 were issued by the

Registrar of Companies, Maharashtra to GTCPL wherein it was alleged that due to the non-

availability of balance confirmations in respect of certain loans and/ or advances given during the

financial year 2005-06, the annual accounts of GTCPL for the year ended March 31, 2006 did not

give a true and fair view of the state of affairs of GTCPL. In relation to the same a compounding

application has been filed with the Board and the Board has issued an order dated February 28,

2012 wherein the offence committed have been compounded towards the defaulting Director of

GTCPL and a payment of ₹ 1,000 has been imposed which has been duly paid.

c. Show cause notices ROC/STA(K)/28131/11500 to 11502 dated March 18, 2008 were issued by the

Registrar of Companies, Maharashtra to GTCPL wherein it was alleged that GTPL had violated

section 217 of the Companies Act and therefore the Directors of GTCPL have rendered themselves

liable to be punished as the Directors’ report for the financial year ended March 31, 2004, March

31, 2005 and March 31, 2006 did not contain explanation to certain comments/ remarks stated in

the annual reports for the abovementioned financial years. In relation to the same a compounding




d. Show cause notices ROC/STA(K)/28131/11498 to 11499 dated March 18, 2008 were issued by the

Registrar of Companies, Maharashtra to GTCPL wherein it was alleged that due to the non-

availability of balance confirmations in respect of certain loans and/ or advances given during the

financial year 2005-06, the annual accounts of GTCPL for the year ended March 31, 2006 did not

give a true and fair view of the state of affairs of GTCPL. In relation to the same a compounding




e. Show cause notices ROC/STA(K)/28131/11509 to 11511 dated March 18, 2008 were issued by the

Registrar of Companies, Maharashtra to GTCPL wherein it was alleged that GTCPL had violated

section 147 of the Companies Act by not showing the name plate of GTCPL with the address of

their registered office. In relation to the same a compounding application has been filed with the

Board and the Board has issued an order dated February 28, 2012 wherein the offence committed

have been compounded towards the defaulting Director of GTCPL and GTCPL and a payment of

₹ 5,000 each has been imposed which has been duly paid.

f. Show cause notices ROC/STA(K)/28131/27 to 29 dated April 1, 2008 were issued to by the

Registrar of Companies, Maharashtra to GTCPL wherein it was alleged that no depreciation was

provided by GTCPL during the financial year 2005-06 on newly acquired office premises vide

agreement dated December 15, 2004, and therefore GTCPL has violated provisions of section 350

211

of the Companies Act. In relation to the same a compounding application has been filed with the

Board and the Board has issued an order dated February 28, 2012 wherein the offence committed

have been compounded towards the defaulting Director of GTCPL and GTCPL and a payment of

₹ 5,000 each has been imposed which has been duly paid.

Further, in relation to the abovementioned orders, GTCPL has sent a letter dated March 9, 2012 to the

Registrar of Companies, Maharashtra (“ROC”) giving the details of the payments made by them in

relation to the respective orders issued by the Board and thereby requesting the ROC to withdraw the

prosecutions.

2. The Regional Director, Western Region, Mumbai has issued an order dated November 3, 2011

(“Order”) against GTCPL in relation to a letter no. ROC/STA/621-A/123. Through the Order it has been

decided that GTCPL has committed an offence under section 297 of the Companies Act and the same has

been compounded though the Order on payment of an aggregate amount of ₹ 0.01 million on GTCPL

and the Director in default. The fee has been paid by GTCPL and the Director through challan nos.

B23772981 and B23772544.

3. The Regional Director, Western Region, Mumbai has issued an order dated November 3, 2011

(“Order”) against GTCPL in relation to a letter no. ROC/STA/621-A/123 dated June 24, 2011 forwarded

by the Registrar of Companies, Maharashtra. Through the Order it has been decided that GTCPL has

committed an offence under section 49 of the Companies Act and the same has been compounded though

the Order on payment of an aggregate amount of ₹ 0.04 million on GTCPL and the Director in default.

The fee has been paid by GTCPL and the Director through challan nos. B23771454 and B23772072.

Tax Proceedings

1. An assessment order dated December 29, 2008 and a rectification order dated March 14, 2013 has been

issued by the Income Tax department wherein a disallowance of ₹ 30.50 million has been made and the

loss has been assessed as ₹ 0.14 million in the assessment year 2006-07 for GTCPL. GTCPL have filed

an appeal against the Order before the Income Tax Appellate Tribunal (“Appellate Authority”) and the

Appellate Authority has, through its order dated April 26, 2013 allowed our appeal and the appeal effect

is pending.

2. An assessment order dated December 21, 2009 has been issued by the Income Tax Department and a

demand of tax amounting to ₹ 8.23 million in the assessment year 2007-08 has been imposed on GTCPL.

GTCPL have filed an appeal against the assessment order before the Income Tax Appellate Tribunal

(“Appellate Authority”) and the Appellate Authority has, through its order dated April 26, 2013 allowed

our appeal and the appeal effect is pending.

3. An assessment order dated December 31, 2010 has been issued by the Income Tax Department and

wherein a disallowance for ₹ 712.28 million has been made and the loss has been assessed as ₹ 551.77

million in the assessment year 2008-09 on GTCPL. GTCPL have filed an appeal against the Order before

the Commissioner of Income Tax (Appeals) (“CITA”) and the matter is still pending with CITA.

4. An assessment order dated December 30, 2011 has been issued by the Income Tax Department (“ITD”)

wherein a disallowance for ₹ 125.91 million has been made and a loss has been assessed is ₹ 178.35

million in the assessment year 2009-10 on GTCPL. We have filed an appeal against the assessment order

before the Commissioner of Income Tax-6, Mumbai (“CIT”) and an order dated February 26, 2014 has

been passed by CIT wherein the assessment order has been set aside and the ITD has been directed to

pass a fresh assessment order. GTCPL has filed another appeal before the Income Tax Appellate Tribunal

(“ITAT”) and the matter is pending for filing with the ITAT.

5. An assessment order U/s. 143 (3) dated – March 15, 2013 has been issued by the Income Tax

Department and a demand of tax amounting to ₹ 17.90 million in the assessment year 2010-11 has been

imposed on GTCPL. GTCPL have filed an appeal against the assessment order before the Income Tax

Appellate Tribunal (“Appellate Authority”) on October 13, 2014 and the matter is currently pending.

6. An assessment order dated February 20, 2014 has been issued by the Income Tax Department wherein a

disallowance for ₹ 83.70 million has been made and loss has been assessed as ₹ 199.33 million in the

212

assessment year 2011-12 on GTCPL. GTCPL have filed an appeal against the Order before the

Commissioner of Income Tax (Appeals) (“CITA”) and the matter is still pending with CITA.

VIII. Jayneer Capital Private Limited (“JCPL”)


Show cause notices (“SCN”) were issued by SEBI to JCPL and other Promoters of our Company










Tax proceedings

1. An assessment order dated January 13, 2014 (“Order”) has been issued by the Assistant Commissioner

for Income Tax-6(1), Mumbai and a demand of tax amounting to ₹ 6.41 million in the assessment year

2007-08 has been imposed on JCPL. We have filed an appeal against the Order before the Commissioner

of Income Tax (Appeals)-14, Mumbai (“Appellate Authority”) and the Appellate Authority has, through

its order dated September 15, 2014 allowed our appeal.


Commissioner for Income Tax-6(1), Mumbai with a disallowance of ₹ 72.43 million expenses in the

assessment year 2008-09. JCPL has filed an appeal against the Order before the Commissioner of Income

Tax (Appeals)-14, Mumbai (“Appellate Authority”) and the Appellate Authority has, through its order

dated November 26, 2013 partly allowed our appeal. JCPL has further filed an appeal against the order of

CIT (A) before Income Tax Appellate Tribunal dated January 28, 2014 and the case is pending for

hearing.


Commissioner for Income Tax-6(1), Mumbai with a disallowance of ₹ 183.65 million expenses in the

assessment year 2009-10. JCPL has filed an appeal against the Order before the Commissioner of Income

Tax (Appeals)-14, Mumbai (“Appellate Authority”) and the Appellate Authority has, through its order

dated November 8, 2013 party allowed the appeal. JCPL has further filed an appeal against the order of

the Appellate Authority before Income Tax Appellate Tribunal dated January 28, 2014 and the case is

pending for hearing.


1. A show cause notice dated June 14, 2011 has been issued to JCPL by the ROC, Maharashtra (“ROC”) in

relation to defaults committed by JCPL under sections 166, 210 and 220 of the Companies Act in relation

to holding of an annual general meeting and certain other compliances. JCPL has, through a letter dated

July 18, 2011 replied to the ROC stating that the rectifications of the non-compliances have been duly

made by them.

2. A show cause notice bearing no. 11-039204/Arun B/DN/185 has been issued to JCPL by the ROC,

Maharashtra (“ROC”) in relation to defaults committed by JCPL under sections 159, 166, 210 and 220

of the Companies Act in relation to holding of an annual general meeting, filing of annual returns and

certain other compliances. JCPL has, through a letter dated March 15, 2012 replied to the ROC stating

that the rectifications of the non-compliances have been duly made by them.

IX. Essel International Limited

Show cause notices (“SCN”) were issued by SEBI to Essel International Limited and other Promoters of

our Company (“Noticees”) to show cause as to why an inquiry should not be initiated against them and

213

penalty may not be imposed under section 15A(b) of the SEBI Act, 1992 for the alleged violation of








X. Veena Investment Private Limited (“VIPL”)


Show cause notices (“SCN”) were issued by SEBI to VIPL and other Promoters of our Company










Tax proceedings

1. An assessment order dated December 28, 2011 (“Order”) has been issued to VIPL by the Assistant

Commissioner for Income Tax-7(3), Mumbai wherein interest and expenses amounting to ₹ 52.24 million

have been disallowed as deductions in the assessment year 2009-10. VIPL has filed an appeal against the

Order before the Commissioner of Income Tax (Appeals)-13, Mumbai (“Appellate Authority”) and the

Appellate Authority has, through its order dated November 19, 2012 partly allowed the appeal. VIPL has

further filed an appeal before Income Tax Appellate Tribunal (“ITAT”) against the order of Appellate

Authority and the case is pending for hearing.

2. An assessment order dated March 15, 2013 (“Order”) has been issued by the Assistant Commissioner for

Income Tax-7(3), Mumbai wherein expenses amounting to ₹ 4.46 million have been disallowed as

deductions in the assessment year 2010-11. We have filed an appeal against the Order before the

Commissioner of Income Tax (Appeals)-13, Mumbai (“Appellate Authority”) and the case is pending

for hearing.

3. An assessment order dated March 27, 2014 (“Order”) has been issued by the Assistant Commissioner for

Income Tax-7(3), Mumbai wherein expenses amounting to ₹ 247.89 million have been disallowed as

deductions in the assessment year 2011-12. We had filed an appeal against the Order before the

Commissioner of Income Tax (Appeals)-13, Mumbai (“Appellate Authority”) and the Appellate

Authority and the case is pending for hearing.

XI. Direct Media Solutions Private Limited

Nil

XII. Digital Satellite Holdings Private Limited

Nil

XIII. Bioscope Cinemas Private Limited

Nil

214

STATUTORY AUDITORS

Walker Chandiok & Co. LLP, Chartered Accountants, are our current statutory auditors as required by the

Companies Act and in accordance with the guidelines issued by the ICAI. Further, Walker Chandiok & Co. LLP

have audited our financial statements as of and for the years ended March 31, 2013 and March 31, 2014 and

S.R. Batliboi & Co. LLP have audited our financial statements as of and for the year ended March 31, 2012.

Our Company has received consent from the Auditors to include their name as an expert under Section

26(1)(a)(v) of the Companies Act, 2013 in this Preliminary Placement Document in relation to the report of the

Auditor dated February 26, 2015 and statement of tax benefits dated February 26, 2015 included in this

Preliminary Placement Document. However, the term “expert” shall not be construed to mean an “expert” as

defined under the Securities Act.

215

GENERAL INFORMATION

1. Our Company was incorporated on March 24, 2006 under the Companies Act, 1956 as Wire and

Wireless (India) Limited. Our Company received a certificate of commencement of business on March

27, 2006. Our Company is registered with the Registrar of Companies, Maharashtra, Mumbai under

CIN L64200MH2006PLC160733. The Registered Office of our Company is situated at Continental

Building, 135, Dr. Annie Besant Road, Worli, Mumbai 400 018, Maharashtra, India and the corporate

office of our Company is situated at Building No: FC 9, Gate No -3, Sector 16 A, First Floor, Film

City, Noida 201301, Uttar Pradesh, India.

2. The High Court of Bombay, by its order dated November 17, 2006 approved the Scheme Of

Arrangement of the demerger i.e. the Scheme of Arrangement of the news and cable business

undertaking of Zee Entertainment Enterprises Limited and Siti Cable Network Limited, which became

effective from November 22, 2006. As per the Scheme of Arrangement, Zee Entertainment Enterprises

Limited re-organized and segregated, by way of demerger, its business and undertakings engaged in

news business comprising of news and regional channels; and cable business comprising of cable

distribution business within Zee Entertainment Enterprises Limited and Siti Cable Network Limited.

Pursuant to the Scheme of Arrangement and in accordance with the provisions of Sections 391 to 394

and other relevant provisions of the Companies Act, the entire cable business undertaking of Zee

Entertainment Enterprises Limited and Siti Cable Network Limited, which comprised of all of their

assets, liabilities, approvals and intellectual property rights, in connection with or pertaining to or

relatable to their cable business undertaking, were transferred to our Company as a going concern, from

March 31, 2006. As consideration for such transfer, on December 29, 2006, our Company had issued

and allotted Equity Shares to the shareholders of Zee Entertainment Enterprises Limited and Preference

Shares to Zee Entertainment Enterprises Limited. For further details the section titled “Capital

Structure” beginning on page 77.

3. Our Company’s name was changed to Siti Cable Network Limited pursuant to a special resolution of

our shareholders, dated August 30, 2012. A fresh certificate of incorporation consequent upon the name

change was granted to our Company on September 5, 2012.

4. The Issue was authorised and approved by the Board of Directors on July 17, 2014 and February 4,

2015 and approved by the shareholders vide postal ballot proceedings held on October 14, 2014.

5. Our Company has received in-principle approvals to list the Equity Shares to be issued pursuant to the

Issue, on the BSE and the NSE on February 27, 2015.

6. Copies of Memorandum and Articles of Association will be available for inspection between 11:00 am

to 5:00 pm on all working days at the Registered Office.

7. Except as disclosed in this Preliminary Placement Document, our Company has obtained necessary

consents, approvals and authorisations required in connection with the Issue.

8. There has been no material change in the financial or trading position of our Company since December

31, 2014, the date of the latest limited reviewed financial results prepared in accordance with Indian

GAAP included in this Preliminary Placement Document, except as disclosed herein.

9. Except as disclosed in this Preliminary Placement Document, there are no legal or arbitration

proceedings against or affecting our Company or its assets or revenues, nor is our Company aware of

any pending or threatened legal or arbitration proceedings, which are, or might be, material in the

context of the Issue.

10. Our Company’s Auditors, Walker Chandiok & Co. LLP, Chartered Accountants have (i) audited our

financial statements for the Fiscal 2013 and 2014; and (ii) reviewed and reformatted the financial

statements which have been included in this Preliminary Placement Document. Our previous statutory

auditors, S.R. Batliboi & Co. LLP have audited our financial statements for the Fiscal 2012.

11. Our Company confirms that it is in compliance with the minimum public shareholding requirements as

required under the terms of the Listing Agreements.

12. The Floor Price for the Equity Shares under the Issue is ` 36.41 per Equity Share which has been

calculated in accordance with Chapter VIII of the SEBI Regulations.

216

13. Our Company may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85

of the SEBI Regulations.

217

FINANCIAL INFORMATION

S. No. Particulars Page Number

1. Independent Auditors’ Report on Reformatted Financial Statements F-1 to F-3

2. Reformatted Financial Statements F-4 to F-29

3. Review Report of the Auditors on the Condensed Consolidated Financial

Statements

F-30

4. Condensed Consolidated Financial Statements F-31 to F-36

F - 1

Independent Auditors’ Report on Reformatted Consolidated Financial Statements

To,

The Board of Directors

SITI Cable Network Limited

FC 9, Gate no. 3, Sector 16 A

Film City, Noida- 201 301

1. The accompanying Summary Reformatted Consolidated Balance Sheet of SITI Cable

Network Limited (the “Parent Company” or the “Issuer”), its subsidiaries and associate

(hereinafter collectively referred to as the “Group”) as at 31 March 2014, 31 March 2013 and 31

March 2012, related Summary Reformatted Consolidated Statement of Profit and Loss and

Summary Reformatted Consolidated Statement of Cash Flows for the years ended 31 March

2014, 31 March 2013 and 31 March 2012 and the related Statement of Notes to Reformatted

Consolidated Financial Statements of the Group and Annexures (collectively, the

“Reformatted Consolidated Financial Statements”), are derived by the management of the

Parent Company from the Group’s Audited Consolidated Financial Statements as of and for

the years ended 31 March 2014, 31 March 2013 and 31 March 2012 (the “Audited

Consolidated Financial Statements”) respectively. These Audited Consolidated Financial

Statements for respective years were adopted by Company’s Board of Directors in the

meetings held on 28 May 2014, 30 May 2013 and 17 May 2012 respectively.

2. We expressed unmodified opinions on the Audited Consolidated Financial Statements of the

Group for the years ended 31 March 2014 and 31 March 2013 vide our reports dated 28 May

2014 and 30 May 2013 respectively.

3. Consolidated Financial Statements of the Group for the year ended 31 March 2012 were

audited by M/s S.R. Batliboi & Associates’ (“SRBA”). SRBA expressed a qualified audit

opinion on these financial statements in their report dated May 17, 2012 (see 9 below)

4. The Reformatted Consolidated Financial Statements do not contain all the accompanying notes to

Audited Consolidated Financial Statements and other disclosures required by the accounting

standards, as notified under the Companies (Accounting Standards) Rules, 2006 read with Rule 7

of the Companies (Accounts) Rules, 2014 in respect of Section 133 of the Companies Act, 2013

applied in the preparation of the Audited Consolidated Financial Statements. Reading the

Reformatted Consolidated Financial Statements, therefore, is not a substitute for reading the

Audited Consolidated Financial Statements.

5. The Reformatted Consolidated Financial Statements have been prepared by the management

of the Parent Company for the purposes of inclusion in the Preliminary Placement Document

and the Placement Document (together with any supplements or amendments thereto, the

"Placement Documents"), prepared by the Issuer in connection with the proposed Qualified

institutional placement of equity shares of Re 1 each (the “proposed QIP”) outside the United

States of America as per Regulation S under the Securities Act (the “Issue”). The Issue will

involve the preparation by the Issuer, and for which the Issuer will be solely responsible, of

the Placement Documents for filling with the Securities Exchange Board of India (“SEBI”),

National Stock Exchange of India Limited and the BSE Limited in accordance with the

Securities Exchange Board of India (Issue of Capital and Disclosure requirements)

Regulations, 2009, as amended.

Management’s Responsibility for the Reformatted Consolidated Financial Statements 6. The management of the Parent Company is responsible for the preparation of the Reformatted

Consolidated Financial Statements from the Audited Consolidated Financial Statements for

F - 2

the respective periods on the basis described in Note 2(b) of Annexure 4 to the Reformatted

Consolidated Financial Statements.

Auditors’ Responsibility

7. Our responsibility is to express an opinion on these Reformatted Consolidated Financial

Statements based on our procedures, which were conducted in accordance with Standard on

Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the

Institute of Chartered Accountants of India.

Opinion 8. In our opinion and to the best of our information and according to the explanations given to

us, the Reformatted Consolidated Financial Statements, which have been derived by the

management of the Parent Company from the Audited Consolidated Financial Statements of

the Group for the years ended 31 March 2014, 31 March 2013 and 31 March 2012 proposed

to be included in the Placement Documents, as prepared by the management and approved by

the QIP Committee constituted by the Board of Directors of the Parent Company, are a fair

summary of those Audited Consolidated Financial Statements on the basis described in Note

2(b) of Annexure 4 to the Reformatted Consolidated Financial Statements. However, the

Reformatted Consolidated Financial Statements are misstated to the equivalent extent as the

Audited Consolidated Financial Statements as of and for the year ended 31 March 2012.

9. M/s S.R. Batliboi & Associates’ (“SRBA”) audit opinion on the Audited Consolidated

Financial Statements as of and for the year ended 31 March 2012 vide their report dated 17

May 2012 contained an emphasis of matter paragraph and two qualifications as reproduced

below (refer note 2(a) and 2(b) to annexure 5 of Reformatted Consolidated Financial

Statements for Note 1 (b) referred in a. below and note no. 26 referred in b. below).

a. “Without qualifying our opinion and without considering the consequential effect of the

matter stated in paragraph 5 and 6 below, we draw attention to Note 1 (b) of

accompanying financial statements related to the conditions which indicate the existence

of a material uncertainty on Company's ability to continue as a going concern. In view of

the mitigating factors, which have been more fully discussed in Note 1 (b) of

accompanying financial statements, these financial statements have been prepared under

the going concern assumption.”

b. “Attention is drawn to note no. 26 of accompanying financial statements in respect of

advances of Rs.471.80 million (including Rs. 450 million given subsequent to the yearend)

given to two companies for technological up gradation and acquisition of MSOs / direct

points etc. In view of the reasons stated in the said note, management of the Company is of

the view that no provision is required there against. Having regard to the nature and size of

operations of the recipients of said advances and in the absence of concrete plans for

recovery / adjustments of these amounts / acquisition of MSO/ direct points, technological up

gradation etc., we are unable to comment on their ability to repay / adjustments of these

advances, and consequent adjustments, if any, that may be required to the carrying values of

such advances. This had caused us to qualify our audit opinion on the financial statements

relating to previous year also.”

c. “The Company has, during the year, given interest free advances/deposit of Rs. 746.00

million to various Companies for technological upgradation and acquisition of MSOs / direct

points etc. These advances/deposits have been received back by the Company during the year

(except for an amount of Rs. 21.80 million, which is still outstanding as at the yearend).

Having regard to the nature and size of operations of the recipients of said advances/deposits

and in view of the fact that these advances/deposits have been received back without receipt

of any services by the Company and considering that the Company is incurring external

borrowing costs at the same time, we are not in a position to comment on the nature of these

advances/deposits.”

F - 3

Other Matters

10. We did not audit the financial statements of certain subsidiaries and associate included in the

Audited Consolidated Financial Statements, whose financial statements reflect total assets (after

eliminating intra-group transactions) of Rs. 7,419.82 millions and Rs. 5,329.63 millions as at 31

March 2014 and 31 March 2013 respectively, total revenues (after eliminating intra-group

transactions) of Rs. 2,781.69 millions and Rs. 1,732.16 millions for the years ended 31 March

2014 and 31 March 2013 respectively and net cash flows aggregating to Rs. 71.31 millions, Rs.

635.46 millions for the years ended 31 March 2014 and 31 March 2013 respectively. These

financial statements were audited by other auditors whose audit reports were furnished to us by

the Parent Company’s management, and our audit opinion on the Audited Consolidated Financial

Statements of the Group for the years ended 31 March 2014 and 31 March 2013 to the extent they

relate to the financial statements not audited by us as stated in this paragraph is solely based on

the audit reports of the other auditors. Our opinion is not qualified in respect of this matter.

11. SRBA’s report on the Audited Consolidated Financial Statements for the year ended 31

March 2012 contains the following paragraph:

“We did not audit the financial statements of certain subsidiaries, whose financial statements

reflect total assets of Rs. 2,232.89 millions as at 31 March 2012, total revenues of Rs. 1,127.95

millions and cash flows amounting to Rs. 720.80 millions for the year then ended. These financial

statements and other financial information were audited by other auditors whose reports have

been furnished to us, and our opinion was based solely on the reports of other auditors.”

12. This report should be in any way construed as a re-issuance or re-dating of any of the

previous audit reports issued by us or SRBA now should it be construed as a new opinion on

of the financial statements referred therein.

13. We have no responsibility to update our report for events and circumstances occurring after

the date of the report

14. Our report is intended only for the use of Parent Company’s management and for inclusion in

the Placement Documents in connection with the Issue. Our report should not be used for any

other purpose except with our consent in writing.





per Atul Seksaria

Partner


Place: Noida


March 31, 2014 March 31, 2013 March 31, 2012

₹ millions ₹ millions ₹ millions



Share capital 6 521.35 452.85 452.85

Share suspense (refer note 19 of annexure 5) 314.63 - -

Reserves and surplus 7 (1,582.98) (1,922.82) (1,282.09)

Money received against warrants 8 1,870.00 810.00 -

1,123.00 (659.97) (829.24)

Share application money pending allotment (refer note 22 of annexure 5) 10.41 - 2.46

Minority interest 260.75 132.32 100.17


Long-term borrowings 9 10,483.89 7,786.00 3,031.48

Deferred tax liability (net) 10 23.39 29.04 2.39

Other non-current liabilites 11 373.27 832.03 8.75

Long -term provisions 12 31.88 28.66 19.47

10,912.43 8,675.73 3,062.09

Current liabilities

Short term borrowings 13 473.87 244.85 503.71

Trade payables 14 2,448.54 1,984.07 1,384.38

Other current liabilities 15 2,936.05 1,575.28 1,415.02

Short-term provisions 12 64.97 4.60 0.69

5,923.43 3,808.80 3,303.80

Total 18,230.02 11,956.88 5,639.28

ASSETS

Non-current assets

Fixed assets

Tangible assets 16 5,241.63 4,046.72 1,610.13

Intangible assets 17 2,345.63 372.61 232.51

Capital work-in-progress 1,702.29 691.38 123.15

Goodwill on consolidation 91.79 93.01 -

Non-current investments 18 8.42 8.42 8.42

Long-term loans and advances 19 632.32 3,001.21 541.22

Other non-current assets 20 479.25 594.99 292.70

10,501.33 8,808.34 2,808.13

Current assets

Current investments 21 8.04 8.04 10.04

Inventories 22 96.98 79.01 161.17

Trade receivables 23 1,953.56 967.94 777.59

Cash and bank balances 24 3,528.72 1,293.56 1,482.83

Short-term loans and advances 19 1,925.57 760.75 364.34

Other current assets 20 215.82 39.24 35.18

7,728.69 3,148.54 2,831.15

Total 18,230.02 11,956.88 5,639.28

Summary of significant accounting policies (refer note 3 of annexure 4)

The accompanying annexures are an integral part of the reformatted consolidated financial statements.

This is the reformatted consolidated balance sheet referred to in our report of even date

For Walker Chandiok & Co. LLP



Per Atul Seksaria

Partner

Place : Noida

Date : February 26, 2015

Suresh Kumar

Company Secretary

V D Wadhwa

Executive Director & CEO

Vinod Kumar Bakshi

Director

Sanjay Goyal

Chief Finance Officer

For and on behalf of the Board constituted QIP committee

Annexure

Annexure 1 - Reformatted consolidated balance sheet



F - 4



Revenue

Revenue from operations 25 6,972.37 4,696.36 3,428.17

Other income 26 131.04 140.29 214.43

Total revenue 7,103.41 4,836.65 3,642.60

Expenses

Carriage sharing, pay channel and related costs 3,339.53 2,343.45 2,163.34

Cost of goods sold 96.24 40.50 11.68

Employee benefit expenses 27 381.94 319.37 271.07

Finance costs 28 1,191.13 863.67 566.41

Depreciation and amortisation expenses 29 837.90 563.08 304.06

Other expenses 30 2,026.35 1,263.71 1,004.51

Total expenses 7,873.09 5,393.78 4,321.07

Loss before exceptional item and tax (769.68) (557.13) (678.47)

Exceptional items 31 (0.33) 5.35 240.27 Loss before tax (769.35) (562.48) (918.74)

Tax expenses

Current tax 79.94 19.63 23.91

Minimum alternate tax (MAT) credit entitlement (10.54) - -

Prior period tax adjustments 0.33 - -

Deferred tax (5.65) 26.65 6.00

Loss for the year after tax before minority interest (833.43) (608.76) (948.65)

Adjustment for minority interest 107.18 31.97 (35.25) Loss for the year (940.61) (640.73) (913.40)

Loss per share after tax (refer note 26 of annexure 5)

Basic (2.07) (1.42) (2.02)

Diluted (2.07) (1.42) (2.02)


The accompanying annexure are an integral part of the reformatted consolidated financial statements.

This is the reformatted consolidated statement of profit and loss referred to in our report of even date


(formerly Walker, Chandiok & Co)Chartered Accountants

Per Atul Seksaria

Partner

Place : Noida



V D Wadhwa


Suresh Kumar

Company Secretary

Vinod Kumar Bakshi

Director

Sanjay Goyal


Annexure

Annexure 2 - Reformatted consolidated statement of profit and loss



F - 5


Annexure 3 Reformatted consolidated cash flow statement



(769.35) (562.48) (918.74)

837.90 563.08 304.06

12.77 0.33 4.35

33.78 16.61 58.46

(40.22) (61.02) (172.82)

- 0.06 0.02

26.53 30.36 71.71

69.46 106.70 137.66

35.68 32.27 34.97

- - (0.20)

- - (0.21)

- 5.35 -

34.59 -

976.02 712.58 491.32

(49.27) (41.87) (23.72)

1,167.89 801.97 (13.14)

504.68 688.22 272.57

3.48 8.56 4.16

0.94 0.26 (3.81)

(458.76) 823.28 3.17

534.88 1.84 (147.36)

(1,088.86) (313.65) (14.76)

(17.98) 82.16 63.33

(1,038.76) (401.17) 337.41

2,431.23 (2,453.97) (23.97)

(172.21) 2.65 3.54

0.23 0.29 (0.15)

1,866.76 (759.56) 480.99

(225.50) (70.56) (79.57)

1,641.26 (830.12) 401.42

(4,853.28) (3,797.22) (363.86)

53.07 12.19 1.53

1.22 (0.23) (35.56)

- - (8.42)

- - (10.00)

- 2.00 7.70

- - 0.21

134.88 (327.08) 37.84

46.73 32.75 17.44

(4,617.38) (4,077.59) (353.12)

21.25 0.17 -

1,370.00 - 0.60

10.41 (2.46) 2.46

314.63 - -

1,060.00 810.00 -

4,644.02 5,768.76 2,844.85

(1,400.26) (895.56) (2,180.59)

229.02 (258.85) 324.78

(1,020.58) (726.98) (553.66)

5,228.49 4,695.08 438.44

2,252.37 (212.63) 486.74

1,264.09 1,476.49 995.73

- 0.23 0.34

3,516.46 1,264.09 1,482.82

VAT input credit written off

Unrealised foreign exchange loss

Direct taxes paid (net of refunds)

(Decrease)/increase in short-term provisions

(Decrease)/increase in other non-current liabilites


Loss before tax

Depreciation and amortisation expenses

Loss on sale of assets (net)

Bad debts written off

Excess provision written back

Amortisation of ancillary borrowing costs

Provision for doubtful debts

Provision for doubtful advances

Preliminary expenses written off

Net gain on sale of current investment

Dividend income on current investment

Decrease in other non-current assets

Cash generated/(used in) from operations

Increase in other current liabilities

Interest income

Operating profit before working capital changes


Increase in trade payables

Increase in trade receivables

(Increase)/decrease in inventories

Increase in short-term loans and advances

Decrease/(increase) in long-term loans and advances

(Increase)/decrease in other current assets

Increase in long-term provisions

Interest expense

Proceeds from issuance of equity share capital

Share application money pending allotment

Proceeds from long-term borrowings

Interest and finance expenses paid

Net cash used in investing activities (B)


Minority interest

Amount received against share suspense

Proceeds/(Repayment) from short-term borrowings (net)

Proceeds from issuance of warrants

Repayment of long-term borrowings

Interest received

Net cash flow from/(used in) operating activities (A)


Purchase of fixed assets including capital advance

Proceeds from sale of fixed assets

Redemption/(Investments in) of bank deposits having original maturity of more than

three months and margin money deposits

Sale of current investments

Consideration paid on acquisition of subsidiaries (net of assets acquired)

Purchase of non-current investments

Purchase of current investments

Dividend income on current investment

Net cash flow from financing activities (C)

Net increase/ (decrease) in cash and cash equivalents (A + B + C)

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents of entities acquired during the year

Cash and cash equivalents at the end of the year

F - 6


Annexure 3 Reformatted consolidated cash flow statement



43.09 35.33 7.06

367.18 83.44 58.96

1,359.67 55.11 79.42

1,746.52 1,090.21 1,337.38

3,516.46 1,264.09 1,482.82

Annexure:

1. Figures in bracket indicate cash outflow.

This is the reformatted consolidated cash flow statement referred to in our report of even date.




V D Wadhwa


Per Atul Seksaria

Partner

Suresh Kumar

Company Secretary

Place : Noida





Cash on hand

Cheques on hand

Deposits

With banks- on current account

Total cash and cash equivalents (refer annexure 24)

Vinod Kumar Bakshi

Director

Sanjay Goyal



F - 7


Annexure 4

Reformatted consolidated financial statements of significant accounting policies

1 a) Corporate information

2 a) Principles of consolidation

b) Basis of preparation

3 Summary of significant accounting policies

a) Use of estimates

b) Tangible fixed assets

SITI Cable Network Limited (formerly known as Wire and Wireless (India) Limited) (hereinafter referred to as ‘the Company’ or ‘SCNL’ or ' the

Holding Company' or 'the Parent Company') was incorporated in the state of Maharashtra, India. The Company and its subsidiaries and associate

(collectively known as 'the Group' ) are engaged in distribution of television channels through analogue and digital cable distribution network,

primary internet and allied services.

The consolidated financial statements include the financial statements of the Holding Company, its subsidiaries and associate (collectively referred

to as “Group”).

In preparing the consolidated financial statements, financial statements of the Holding Company, its subsidiaries and associate have been combined

on a line by line basis by adding the book values of the like items of assets, liabilities, income and expenses after eliminating intra-group balances/

transactions and unrealised profits in full. The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the balance

sheet of the Parent Company and its share in the post-acquisition increase in the relevant reserves of the consolidated entities except that in case of

one of the subsidiaries, Central Bombay Cable Network Limited, fixed assets are depreciated using written down value method instead of straight

line method till March 31,2012. The total amount of net block of these items of fixed assets represents 1.83% of the total consolidated fixed assets

of the group for the financial year March 31, 2012.

The results of operation of the associate have been reflected in the consolidated financial statements by following the equity method of accounting.

The excess/deficit of cost to the Parent Company of its investment over its portion of net worth in the consolidated entities at the respective dates

on which the investment in such entities was made is recognised in the consolidated financial statements as goodwill/ capital reserve. Goodwill

arising on consolidation is tested for impairment when the relevant indicators of impairment are applicable. The Parent Company’s portion of net

worth in such entities is determined on the basis of book value of assets and liabilities as per the financial statements of the entities as on the date of

investment and if not available, the financial statements for the immediately preceding period adjusted for the effects of significant changes.

Minority interest in subsidiary represents the minority shareholders’ proportionate share of the net assets and net income.

Minorities’ interest in net profit of consolidated subsidiaries for the year has been identified and adjusted against the income in order to arrive at the

net income attributable to the shareholders of the Company. Their share of net assets has been identified and presented in the consolidated balance

sheet separately. Where accumulated losses attributable to the minorities are in excess of their equity, in the absence of the contractual obligation on

the minorities, the same have been attributed to the shareholder of the Holding Company.

The "Reformatted Consolidated Balance Sheet" of the Group as at March 31, 2014, March 31, 2013 and March 31, 2012 , the "Reformatted

Consolidated Statement of Profit and Loss" and the "Reformatted Consolidated Statement of Cash Flows" for the years ended March 31, 2014,

March 31, 2013 and March 31, 2012 (collectively referred to as "Reformatted Consolidated Financial Statements") have been prepared specifically

for the purpose of inclusion in the preliminary placement document to be filed by the Company with the Securities and Exchange Board of India

("SEBI") in connection with the proposed Qualified Institutional Placement (hereinafter referred to as "QIP").

The reformatted consolidated financial statements of the Group have been extracted from the audited consolidated financial statements of the

Group as at and for the year ended March 31, 2014, March 31, 2013 and March 31, 2012.

The audited consolidated financial statements have been prepared to comply with the Accounting Standards referred to in the Companies

(Accounting Standards) Rules, 2006 issued by the Central Government in exercise of the power conferred under sub-section (1) (a) of section 642

and the relevant provisions of the Companies Act, 1956 (the "Act") read with the General Circular 15/2013 dated September 13, 2013 of the

Ministry of Corporate Affairs in respect of section 133 of the Companies Act 2013. The audited consolidated financial statements have been

prepared on a going concern basis under the historical cost convention on accrual basis. The accounting policies have been consistently applied by

the Group unless otherwise stated.

The Group's accumulated losses aggregate to ₹ 7,068.35 million as at March 31, 2014 , ₹ 6,127.74 million as at March 31, 2013 and ₹ 5,487.01

million as at March 31, 2012.

In view of the warrant subscription, mandatory digitization, expansion in central India which will yield substantial subscription revenue, increase in

efficiency and assurance to extend all support in foreseeable future from holder of majority of equity shares of the Company, these financial

statement are prepared on going concern basis.

In preparing the Group’s reformatted consolidated financial statements in conformity with accounting principles generally accepted in India, the

management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of

contingent liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual

results could differ from those estimates. Any revision to accounting estimates is recognised in the period the same is determined.

F - 8


Annexure 4


(i)

(ii)

(iii)

(iv)

c) Depreciation on tangible fixed assets

(i)

2014 2013 2012

Building 1.63% 1.63% 1.63%

Plant and equipment 10% to 20% 10% to 20% 10% to 20%

Ground distribution network 7.07% 7.07% 7.07%

Furniture and fixtures 6.33% 6.33% 6.33%

Studio equipment 7.07% 7.07% 7.07%

Computers 16.21% 16.21% 16.21%

Vehicles 9.50% 9.50% 9.50%

Office equipment 4.75% 4.75% 4.75%

Air conditioner 4.75% 4.75% 4.75%

Set top boxes 12.5% 20.0% 20.0%

Integrated receiver and decoder (IRD) boxes 10% 10% 10%

(ii)

(iii) Leasehold land is amortized over the effective period of lease.

(iv)

(v)

(vi)

d) Intangible assets

e)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

f) Leases

Where the Group is the lessee

In case of Indian Cable Net Company Limited, computer software are amortized over lower of useful life or period of six years on

straight line basis.

Leasehold improvements are amortized over the lease term or 10 years; which ever is less.

Plant and machinery taken over under scheme of arrangement in the earlier years are depreciated over the management’s estimate

of remaining useful life, a period of 5 years.Assets costing less than ₹ 5,000 are fully depreciated in the year of purchase.

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are

carried at cost less accumulated amortisation and accumulated impairment losses, if any.

Computer software are amortized over a period of six years on straight line basis.

Cost of news/ current affairs/ chat shows/ events including sports events etc. are fully expensed on first telecast.

Program/ film/ cable rights are amortized on a straight-line basis over the license period or 60 months from the date of purchase,

whichever is shorter.

Amortization of intangible assets

Goodwill arising in a scheme of arrangement and purchase of business is amortized using the straight-line method over a period of

five years.

Set top boxes are treated as part of capital work in progress till at the end of the month of activation thereof. Also, set top boxes intended to be

sold are treated as part of inventory.

Goodwill arising on consolidation is not amortized but tested for impairment.

Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any. The cost comprises of the purchase price

(net of Cenvat credit availed), borrowing costs if capitalisation criteria are met and any directly attributable cost of bringing the asset to its working

condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset

beyond its previously assessed standard of performance.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount

of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

Depreciation on tangible fixed assets is calculated on a straight-line basis using the rates arrived at based on useful lives estimated by the

management, or those prescribed under the Schedule XIV to the Companies act, 1956 whichever is higher. The Group has used the following rates

to provide depreciation on its fixed assets:

In case of Indian Cable Net Company Limited, distribution network rights are amortized using the straight-line method over a

period of ten years.

In case of Siti Vision Digital Media Private Limited, studio equipment are depreciated at the rate of 4.75%.

Rates(SLM)

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases.

Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

A leased asset is depreciated on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule XIV to the Companies

Act, 1956, whichever is lower. However, if there is no reasonable certainty that the Group will obtain the ownership by the end of the lease term,

the capitalized asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life

envisaged in Schedule XIV to the Companies Act, 1956.

Assets acquired on finance lease, which effectively transfers to the Group substantially all the risks and benefits incidental to ownership of the leased

item, are capitalized at the lower of the fair value and present value of minimum lease payments at the inception of the lease term. Lease payments

are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Lease management fees, legal

charges and other initial direct costs are capitalized.

F - 9


Annexure 4


Where the Group is the lessor

g) Borrowing costs

h) Impairment of tangible and intangible assets

i) Investments

j) Inventories

k) Revenue recognition

(i) Sale of goods

(ii) Income from services

Stores and spares are valued at cost on weighted average or at net realizable value whichever is lower.

Subscription income is recognized on completion of services.

Revenue from high sea sales are being recognized on transfer of title of goods to the customer.

Lease rentals charges and carriage income are recognised on accrual basis over the terms of related agreements. Carriage revenue recognition is

deferred till formal agreement is executed with broadcasters.

Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of the goods are transferred to the buyer,

usually on delivery of the goods. The Group collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are

not economic benefits flowing to the Group. Hence, they are excluded from revenue.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary

to make the sale.

Activation fees on Set top boxes (STB) is recognised as revenue on activation of the related boxes.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to

get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period

they occur.

Advertisement income is recognised when the related advertisement appears before the public. Other advertisement revenue for slot sale is

recognised on period basis.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit

and loss.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term

investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the

investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as

brokerage, fees and duties.

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are

classified as current investments. All other investments are classified as long-term investments.

The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group

estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to

which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an

impairment loss and the same is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously

assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a

maximum of depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange

differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets

subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the statement of profit and loss on a

straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct

costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.

F - 10


Annexure 4


Interest

l) Foreign currency transaction

(i) Initial recognition

(ii) Conversion

(iii) Exchange differences

m) Retirement and other employee benefits

n) Income tax

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are

recognised for all taxable timing differences. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient

future taxable income will be available against which such deferred tax assets can be realised. In situations where the Group has unabsorbed

depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that

they can be realised against future taxable profits.

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in

accordance with the Income Tax Act, 1961 enacted in India.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income for the year and reversal of timing

differences of earlier years.

In respect of ICNCL, gratuity which is in the nature of non contributory defined benefit plan, is administered by the Trustees. Trustees of the scheme have

entrusted the administration of the related fund to the Life Insurance Corporation of India (LIC). ICNCL provides gratuity benefit through annual

contributions to a fund managed by LIC. Under this plan settlement obligation remains with it, although LIC administers the plan and determines the

contribution premium required to be paid by ICNCL. The contribution to the fund with LIC is debited to the provision for gratuity which is created by the

difference between the balance in the fund with LIC and the amount of fund required at the end of a relevant period as determined by external actuarial

valuation.

Actuarial gains / losses are immediately recognised to the statement of profit and loss and are not deferred.

The Group collects service tax on behalf of the government and, therefore, it is not an economic benefit flowing to the Group.

Hence, it is excluded from revenue.

Exchange differences arising on the settlement of monetary items or on reporting such monetary items of the Group at rates different from those at

which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year

in which they arise.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. Short term compensated

absences are provided for based on estimates.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement

purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-

end.

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the

end of each financial year or in case of plans administredbu insurers, based on contribution determined by the insurer.

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the

statement of profit and loss for the year when the contributions are due. The Group has no other obligation, other than the contribution payable to

the provident fund.

Exchange difference arising on other long-term foreign currency monetary items are accumulated in the " Foreign Currency Monetary Items

Translation Difference Account" and amortised over the remaining life of concerned monetary items.

From financial year 2013-14, exchange difference arising on long-term foreign currency monetary items related to acquisition of a fixed assets are

capitalised and depreciated over the remaining useful life of assets.

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated

in a foreign currency are reported using the exchange rate at the date of the transaction; and the non-monetary items which are carried at fair value

or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the

reporting currency and the foreign currency at the date of the transaction.

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

Income from dark fiber leasing is recognized on accrual basis as per terms of the respective contracts.

Income from rendering technical services and broadband services are recognized on accrual basis.

F - 11


Annexure 4


o) Employees stock compensation cost

p) Segment reporting

q) Earning per share

(i)

(ii)

r) Provisions

s) Contingent liabilities

t) Cash and cash equivalents

u) Amortisation of borrowing cost

(This space has been left blank intentionally)

At each balance sheet date the Group re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that

it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such

deferred tax assets can be realised.

Costs incurred in raising funds are amortized equally over the period for which the funds are raised. Preliminary expenditure are amortized in the

year when they are incurred except in case of Siti Broadband South Limited where these are amortized over a period of 10 years.

Cash and Cash equivalents in the Cash Flow Statement comprise cash at bank and in hand, cheques in hand and short term investments with an

original maturity of three months or less.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of

one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that

an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that

cannot be recognised because it cannot be measured reliably.

A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be

required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are

determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and

adjusted to reflect the current best estimates.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted

average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference

dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are

treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the

reporting period.

The Group is a multi system operator providing cable television network services, internet services and allied services which is considered as the

only reportable segment. The Group's operations are based in India.

Measurement and disclosure of the stock option granted the Group's employee share-based payment plans is done in accordance with SEBI

(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee

Share-based Payments, issued by the Institute of Chartered Accountants of India. The Group measures compensation cost relating to employee

stock options using the fair value method. Compensation expense is amortised over the vesting period of the option on a straight line basis.

Minimum Alternate Tax (‘MAT’) credit is recognised as an asset only when and to the extent there is convincing evidence that the Group will pay

normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset in accordance with the

recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is recognised by way of a

credit to the statement of profit and loss and presented as MAT credit entitlement. The Group reviews the same at each balance sheet date and

writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Group will

pay normal income tax during the specified period.

F - 12


Annexure 5

Statement of Notes to Reformatted Consolidated Financial Statements

1

Name of the subsidiariesCountry of

incorporation 2014 2013 2012India 67.99% 67.99% 67.99%

India 100.00% 100.00% 100%

India 100.00% 100.00% 100%

India 51.00% 51.00% 51%

India 66.00% 66.00% 66%

India 51.00% 50.65% 51%

India 51.00% 51.00% 51%

India 51.00% 51.00% 51%

India 51.00% 51.00% 51%

India 51.00% 51.00% -

India 51.00% 51.00% -

India 51.00% 51.00% -

India 74.00% 74.00% -

India 50.10% - -

** Subsidiary of CBCNL.

*** Subsidiary of ICNCL

Name of the associate Country of

incorporation 2014 2013 2012

23.50% 23.50% -**** Associate of SBNEPL

2 a

b

3

4

5

In compliance with Accounting Standard – 21 “Consolidated Financial Statements” and Accounting Standard – 23 “Accounting for Investments in Associates in Consolidated FinancialStatements” referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of the power conferred under sub-section(1)(a) of Section 642and the relevant provisions of the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 ofthe Companies Act, 2013, the Parent Company has prepared the accompanying consolidated financial statements, which include the financial statements of the Parent Company, itssubsidiaries and the results of operations of its associate listed below:

Percentage of ownership

Contribution to defined contribution plan, recognized as expense for the year are as under :-Employer’s contribution to provident fund ₹19.85 million , ₹ 17.09 million and 14.21 million for the years ended March 31, 2014 , March 31, 2013 and March 31, 2012 respectively.

Percentage of ownership

Gratuity and other post-employment benefit plans

Indian Cable Net Company Limited ( hereinafter referred as “ICNCL”)*

Central Bombay Cable Network Limited ( hereinafter referred as “CBCNL”)

Siticable Broadband South Limited ( hereinafter referred as “SBSL”)

Wire and Wireless Tisai Satellite Limited ( hereinafter referred as “WWTSL”)

Master Channel Community Network Private Limited (hereinafter referred as “MCCNPL”)**

Siti Vision Digital Media Private Limited (hereinafter referred as “SVDMPL”)

Siti Jind Digital Media Communications Private Limited (hereinafter referred as “SJDMCPL”)w.e.f. October 1, 2011

Siti Jai Maa Durgee Communications Private Limited (hereinafter referred as “SJMDCPL”)w.e.f. January 2, 2012

Siti Bhatia Network Entertainment Private Limited (hereinafter referred as “SBNEPL”) w.e.f. July 1, 2011

Siti Jony Digital Cable Network Private Limited (SJDCNPL) w.e.f. December 1, 2012

Siti Krishna Digital Media Private Limited (SKDMPL) w.e.f. July 2, 2012

Siti Guntur Digital Network Private Limited (SGDNPL) w.e.f. March 16, 2013

Siti Faction Digital Private Limited (SFDPL) w.e.f. March 16, 2013

Siti Maurya Cable Net Private Limited (SMCNPL) w.e.f. April 1, 2013 ***

Siti Chhattisgarh Multimedia Private Limited (SCMPL)**** India

*Include 0.30% held through CBNCL

The Company had given advances under a guarantee of Holding Company to its subsidiaries and other Companies for meeting working capital requirements and for acquisition of MSOs/direct points, technological upgradation etc. respectively to the extent of ₹ 471.80 million (including ₹ 450 million given subsequent to year end).The Company firmly believes that these interest free facilities/ advances of ₹ 471.80 million given as such to be good of recovery and would further enhance its operations on standaloneand consolidated basis over near future; therefore does not believe any provisions to be created on these amounts.

Capital-Work In Progress and Loans and Advances include amounts of ₹ 13.27 million for the financial year 2011-12 and Rs. 40.80 million for the financial year 2011-12 respectively asoutstanding for more than 2 years. The management of the company is making all possible efforts to adjust/ recover these amounts and also initiated appropriate legal action against someof the parties, and therefore no provision there against has been considered necessary. The impact, if any, which in the opinion of the management would not be material, would be made inthe year of adjustment/ settlement.

In view of the mandatory digital addressable system ('DAS') regulation announced by the Ministry of Information and Broadcasting, Government of India, digitization of cable networks hasbeen implemented in the cities notified for phase 1 and phase 2 effective November 1, 2012 and April 1, 2013 respectively. Owing to the initial delays in implementation of DAS in phase 1and phase 2 cities and challenges faced by all the Multi-System Operators (MSOs) during transition from analog business to DAS, the Group is in the process of executing contracts with thesubscribers and implementation of revenue sharing contracts entered into with the local cable operators (LCOs). Accordingly, the Group has invoiced and recognized subscription revenuenet of sharing of revenue with the LCOs under the new DAS regime.

The group's accumulated losses aggregate to ₹ 5,487.01 million as at March 31, 2012 (₹ 4,573.61 million as at March 31, 2011) while the shareholders’ funds are ₹ 4,657.77 million (Rs.4,657.17 million as at March 31, 2011). This has resulted in complete erosion of net worth of the Group. In case of the Company, the accumulated losses aggregate to ₹ 5,431.40 million as at March 31, 2012 (₹ 4,610.03 million as at March 31, 2011) while the shareholders’ funds are ₹ 4,657.77million (₹ 4,657.17 million as at March 31, 2011). In view of new Digitisation policy announced by TRAI, which requires all Multi System Operators (MSOs) to convert the entire Analogueuniverse into digital by March 31, 2014 in a phased manner; starting from four metros, which are to be converted into digital by June 30, 2012; the Company expects to increase / expandthe subscriber base of its analogue business; which will yield higher subscription income and improve operational efficiency. Further, the Company has been focusing on increasing itspresence in Central India. The approved business plan of which is under implementation by the Company, the benefit of which will accrue in future years. Based on the new business plan,the Company expects to have positive cash flows and earnings before interest, depreciation and tax (EBIDTA) from operations from year 2012-13.

Based on the above, management expects to earn higher revenues and improved profitability which will enable the Company to strengthen its financial position. Also the Parent Company(including the promoters and shareholders of parent company) has provided assurance that it intends to provide financial and operational support to the Company, to continue its operationsfor the foreseeable future.

Based on above, the management is of the opinion that it is appropriate to prepare these financial statements on going concern basis.

Defined contribution plan

F - 13


Annexure 5


Defined benefit plan



Current service cost 4.47 4.17 3.02

1.83 1.16 1.13

Actuarial gain on plan assets (0.23) (0.20) (0.17)

Net actuarial (gain)/loss recognized in the year (2.17) 1.26 (1.38)

Expenses recognised in statement of profit and loss 3.90 6.39 2.60

Actual return on plan assets (0.26) 0.20 0.17

Benefit asset/ liability March 31, 2014 March 31, 2013 March 31, 2012


Present value of defined benefit obligation (23.45) (20.38) (14.21)

Fair value of plan assets 3.46 2.80 2.17

Plan liability (19.99) (17.58) (12.04)

Changes in fair value of assets



At the beginning of the year 2.80 2.18 2.27

Actuarial gain on plan assets 0.26 0.20 0.17

Contribution by employer 0.40 0.42 1.32

Benefits paid - - (1.59)

At the closing of the year 3.46 2.80 2.17

Expected employer contribution next year# 0.90 0.90 0.90

# pertains to Indian Cable Net Company Limited only (subsidiary company of SITI Cable Network Ltd.).

Changes in the present value of the defined benefit obligation are as follows:



Present value of defined benefit obligation at the beginning of the year 20.38 14.21 13.43

Current service cost 4.47 4.17 3.02

Interest cost 1.83 1.17 1.13

Benefits paid (1.06) (0.43) (1.99)

Actuarial (gains)/ loss recognised during the year (2.17) 1.26 (1.38)

Present value of defined benefit obligation at the end of the year * 23.45 20.38 14.21

March 31, 2014 March 31, 2013 March 31, 2012 March 31, 2014 March 31, 2013 March 31, 2012

Discount rate (per annum) 9.00% 8.25% - 8.75% 8.35% - 8.75% 9.00% 8.25% - 8.75% 8.35% - 8.75%

Rate of escalation in salary (per annum) 5.00% - 8.00% 5.00% - 8.00% 5.00% - 8.00% 5.00% - 8.00% 5.00% - 8.00% 5.00% - 8.00%

Rate of return of plan assets 8.75% 8% 8% 8.75% 8% 8%

Withdrawal rate (per annum) 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

Mortality rate IALM 2006-08 Ultimate

LIC 94-96 Ultimate LIC 94-96 UltimateIALM 2006-08 Ultimate

LIC 94-96 UltimateLIC 94-96 Ultimate

Amounts for the current and previous two periods are as follows:

Gratuity March 31, 2014 March 31, 2013 March 31, 2012


Defined benefit obligation 23.45 20.38 14.21

Plan assets* 3.46 2.80 2.17

Net deficit (19.99) (17.58) (12.04)

Experience adjustments on plan liabilities 0.02 1.07 1.70

6 Employee Stock Option Plan –ESOP-2007

The Holding Company instituted the Employee Stock Option Plan – ESOP-2007 to grant equity based incentives to its eligible employees. The ESOP-2007 (“the Scheme”) has beenapproved by the Board of Directors of the Holding Company at their meeting held on June 27, 2007 and by the shareholders of the Holding Company by way of special resolution passed at

The Group has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary of last drawn salary for eachcompleted year of service. These benefits are unfunded except in case of ICNCL where the same are funded.

Gratuity

The following table summarizes the components of net benefit expenses recognized in the statement of profit and loss and amounts recognized in the balance sheet forthe respective plans.

Expense recognised in reformatted consolidated statement of profit and loss

Compensated absence

* pertains to Indian Cable Net Company Limited only (subsidiary company of SITI Cable Network Ltd.).

The principal assumptions used in determining present value of defined benefit obligation given below:

Gratuity

Gratuity

Gratuity

Interest cost on benefit obligation

Gratuity

F - 14


Annexure 5


The movement in the options granted to the employee during the year is set out below :

Plan 3 Plan 2 Plan 1

Date of grant July 16, 2009 June 16, 2008 October 22, 2007

Date of Board approval July 16, 2009 June 17, 2008 October 22, 2007

Date of shareholders' approval October 22, 2009 August 17, 2009 September 18, 2007

Number of options granted 2,808,800 150,000 2,987,300

Method of settlement (cash/equity) Equity Equity Equity

Vesting period Five years Five years Five years

Exercise period Four years Four years Four years

Number of options

Weighted average exercise price

Number of options


Number of options

Weighted average exercise

price

Outstanding at the beginning of the year 172,600 20.00 172,600 20.00 313,300 20.00

Expired/lapsed during the year - - - - 140,700 20.00

Outstanding at the end of the year 172,600 20.00 172,600 20.00 172,600 20.00

Exercisable at the end of the year 172,600 20.00 172,600 20.00 138,080 20.00

The details of activity under Plan 3 have been summarised below:

Number of options


Number of options


Number of options

Weighted average exercise

priceOutstanding at the beginning of the year 623,000 17.45 686,600 17.45 1,677,600 17.45 Expired/Lapsed during the year 143,700 17.45 63,600 17.45 991,000 17.45

Outstanding at the end of the year 479,300 17.45 623,000 17.45 686,600 17.45

Exercisable at the end of the year 383,440 17.45 373,800 17.45 274,640 17.45

Plan 1 Plan 3

Number of options outstanding 172,600 479,300

1 year 2 years

Weighted average exercise price (₹) 20 17.45

Plan 1 Plan 3


2 year 3 years


Plan 1 Plan 3


2 years 4 years


7 Leases

Finance lease: Group as lessee

Minimum lease payments (MLP)

Present value of MLP

MLP


MLP


₹ millions ₹ millions ₹ millions ₹ millions ₹ millions ₹ millions

Within one year 1.50 1.24 1.24 0.99 0.78 0.55

After one year but not more than five years 2.05 1.81 2.09 1.86 1.98 1.68

More than five years - - - - - -

Vehicles obtained on finance lease are for 4 years after which the legal title is passed to the lessee. There is no escalation clause in the lease agreement. There are no restrictions imposed bythe lease arrangements. There are no subleases.

approved by the Board of Directors of the Holding Company at their meeting held on June 27, 2007 and by the shareholders of the Holding Company by way of special resolution passed attheir Annual General Meeting held on September 18, 2007 to grant 4,344,355 options (not exceeding 2% of the issued, subscribed and paid up equity share capital of the Holding Companyas on March 31, 2007), representing one share for each option upon exercise by the employee of the Holding Company at an exercise price determined by the Board / remunerationcommittee. The Scheme covers grant of options to the specified permanent employees of the Holding Company and Directors of the Holding Company, whether whole time directors orotherwise as may be decided by the Board.

The options granted under the Scheme shall vest not less than one year and not more than five years from the date of grant of options. Under the terms of the Scheme, 20% of the optionswill vest in the employee every year equally. The option grantee must exercise all vested options within a period of four years from the date of vesting. Once the options vest as per theScheme, they would be exercisable by the option grantee at any time and the shares arising on exercise of such options shall not be subject to any lock-in period.

Weighted average remaining contractual life of options (in years)


March 31, 2014

March 31, 2013 March 31, 2012

The details of activity under Plan 1 have been summarised below:

The details of exercise price for stock options outstanding as at March 31, 2013 :

March 31, 2014

There is no activity under plan 2.




March 31, 2013 March 31, 2012


F - 15


Annexure 5


Total minimum lease payments 3.55 3.05 3.33 2.85 2.76 2.23

Less: amounts representing finance charges 0.50 - 0.48 - 0.53 -

Present value of minimum lease payments 3.05 3.05 2.85 2.85 2.23 2.23

Operating lease : Group as lessee



Within one year - 15.16 1.86

After one year but not more than five years - 43.44 2.11

More than five years - - -

- 58.60 3.97

In case of assets given on lease

Operating Lease

Particulars As at March 31, 2014 As at March 31, 2013 As at March 31, 2012

Gross block 142.30 55.55 -

Accumulated depreciation 19.96 3.53 -

Depreciation charged during the year 16.42 3.53 -



Lease payment for the year 29.18 3.18 3.08 Minimum lease payment not later than 1 year 30.00 13.32 0.19 Minimum lease payment later than 1 year but 72.64 43.44 0.17

Minimum lease payment later than 5 years - - -

8 Related party disclosures

(i) Names of related parties where control exists

Associate Company

(ii) Holding Company

Bioscope Cinemas Private Limited (effective from December 28, 2011 till November 09, 2012)

(iii) Key management personnel

(iv)

For the Financial year 2011-12, Mr. Subhash Chandra, Director; Mr. Amit Goenka, Whole-Time Director; Mr. Brijendra Kumar Syngal, Director, Mr. Sudhir Agarwal, Chief ExecutiveOfficer, (Resigned wef Jan 17, 2012); Mr. Arun Kapoor, Director, (Resigned wef July 12, 2011); Suresh Kumar Aggarwal, Director; Vinod Kumar Bakshi, Director, Mr. Avnindra Mohan,Director, Director, Mr. Suresh Kumar, Director, Mr. Suresh Kumar Sethia, Director, Mr. Sudhir J. Agarwal, Director, Mr. Raj Kumar Agarwal, Mr. Surendra Kumar Agarwala, Mr. MahipalSingh Rawat, Director; Mr. Somen Roy Choudhary, Manager, Mr. R.K. Singh, Director, Mr. Sandeep Kumar Jain, Director, Mr. V.Kumar, Director, Mr. Anil Jain, Mr. Mukesh Mittal,Director, Mr. S.K.Gupta, Director, Mrs. Sulbha Gaekwad, Director, Mr. P. Sai Babu, Smt. P. Kiranmayee, Mr. Shio Kumar Gupta, Mr.V.K.Gupta, Mr. Jain Kumar, Mr. Sandeep Kumar Jain,Mr. K. Sivaramakrishna, Mr. B. Satish Kumar, Mr. J. Gopalarao, Mr. I.S. Ramakrishna.For the Financial year 2012-13, Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-TimeDirector, Mr. Sudhir Agarwal, CEO (till January 17, 2012). For the Financial year 2013-14, Mr. Subhash Chandra, Director, Mr. Amit Goenka, Whole-Time Director (till May 31, 2013),V.D. Wadhwa, CEO, (from April 29, 2013)

The Group’s significant leasing arrangements are in respect of operating leases taken for offices, residential premises, godowns, stores, etc. These leases are cancelable operating leaseagreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of the lease generally is for 11 to 120 months. Total future minimum leasepayments due under non cancellable operating lease is:-

Enterprises owned or significantly influenced by key management personnel or their relatives

Rental expense for operating leases for the years ended March 31, 2014, March 31, 2013 and March 31, 2012 was ₹ 93.25. millions, ₹ 87.94 millions and 65.63 million respectively.

Siti Chhattisgarh Multimedia Private Limited

The total future minimum lease payment receivable under non cancellable operating lease is:

Set top boxes given under operating leases are capitalised at an amount equal to cost arrived and the rental income is recognised on equal monthly rental.

The Group has leased assets to its business associates and other parties by way of operating lease. The detail of gross book value of such assets, accumulateddepreciation and depreciation for the year is as under.

F - 16


Annexure 5


Related party transactions

a. Sale/ purchase of goods and services (Amount in ₹ millions)

Year endedSale of goods and

servicesPurchase of traded

goodsBalance owed by related parties

Balance owed to related parties

Associate

March 31, 2014 18.02 - 3.88 5.32

March 31, 2013 17.03 - 2.71 4.70

March 31, 2012 - - - -

March 31, 2014 - 0.03 - -

March 31, 2013 0.53 0.15 - 14.17

March 31, 2012 - 5.24 - 19.70

March 31, 2014 151.31 7.99 11.86 4.91

March 31, 2013 208.10 9.06 22.79 11.74

March 31, 2012 177.79 3.55 5.46 3.25

March 31, 2014 - - 0.21 281.65

March 31, 2013 - - 0.21 281.65

March 31, 2012 - 46.16 0.21 294.98

March 31, 2014 50.96 2.75 20.05 13.53

March 31, 2013 60.13 2.75 13.86 10.78

March 31, 2012 48.63 - 9.18 10.92

March 31, 2014 - - - -

March 31, 2013 - - - -

March 31, 2012 - 296.66 - 41.48

March 31, 2014 - - - -

March 31, 2013 - - - -

March 31, 2012 1.21 - 1.26 -

March 31, 2014 - - - -

March 31, 2013 - - - -

March 31, 2012 - - 1.60 -

March 31, 2014 - - - -

March 31, 2013 - - - -

March 31, 2012 32.73 - 2.80 -

March 31, 2014 - - - -

March 31, 2013 - - - -

March 31, 2012 - - - 34.36

March 31, 2014 - - - -

March 31, 2013 - - - -

March 31, 2012 - 21.46 - 40.46

b. Advance given and repayment thereof

Year ended Advance given RepaymentBalance owed by related parties

March 31, 2014 - - -

March 31, 2013 - - -

March 31, 2012 - 231.50 -

March 31, 2014 - - -

March 31, 2013 - - -

March 31, 2012 - 40.15 -

March 31, 2014 - - -

March 31, 2013 - - -

March 31, 2012 - 0.04 -

March 31, 2014 - - 13.15

March 31, 2013 - 0.29 13.15

March 31, 2012 - - 13.44

c. Advances taken and repayment thereof (Amount in ₹ million)

Year ended Loans taken RepaymentBalance owed to the

related parties

March 31, 2014 - - -

March 31, 2013 - 24.10 -

March 31, 2012 723.35 701.45 24.10

d. Expenditure paid by the Company on behalf of others and expenditure paid by others on behalf of the Company:

For the Financial year 2011-12, Agrani Wireless Services Ltd., Dish TV India Ltd., Essel Propack Ltd., Zee Entertainment Enterprises Limited (ZEEL), Zee News Limited, Zee TurnerLtd., Essel Minerals Pvt. Ltd., Briggs Trading Company Pvt. Ltd., Ganjam Trading Company Pvt. Ltd., Jayneer Capital Pvt. Ltd., Shree Jarimari Satellite Services, Shree Tisai SatelliteServices, Siti Dharshan Cable Net Co. Private Limited , Mr. P. Kasi Viswanadha rao, M/s R. K. Master, Mrs. P. Damyanthi Rao, Megha Satellite Service, Mr. Jayant P., Mrs. Bharti P, SitiRoyal Heritage Network Cable Pvt. Ltd, Siti Singbhum Cable Net Company Pvt ltd, .Sri Satya O & M Services, Silpi Tech, Mr. B. Parvathi, Mr. J. Parvathi, Mrs. M. Sujatha.For the Financialyear 2012-13, Dish TV India Limited, Zee Entertainment Enterprises Limited (ZEEL), Zee News Limited, Zee Sports Limited, Zee Turner Limited, Essel International Limited, EsselMedia Ventures Limited. Financial year 2013-14, Dish TV India Limited, Zee Entertainment Enterprises Limited (ZEEL), Zee News Limited, Zee Sports Limited, Zee Turner Limited,Essel International Limited, Essel Media Ventures Limited

Zee Entertainment Enterprises Limited


The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:

Dish TV India Limited

Siti Chhattisgarh Multimedia Private Limited

Zee News Limited

Zee Entertainment Enterprises Limited

Dish TV India Limited

Zee Media Corporation Limited (formerly known as Zee News Limited)

Zee Turner Limited


Zee Turner Limited



MediaPro Enterprises Pvt.Ltd.,

Other Related Parties

Siti Royal Heritage Cable Net (P) Ltd.

Shri Jarimari Satellite Services

Shree Tisai Satellite Service

Siti Darshan Cable Net Co. (P) Ltd.

F - 17


Annexure 5



₹ millions ₹ millions ₹ millions ₹ millions ₹ millions

Zee Entertainment Enterprises Limited 4.51 14.10 7.90 12.64 14.38 1.07


- 0.01 0.27 - - -

Zee Turner Limited 0.81 1.35 0.79 - - -

Dish TV India Limited - 0.02 0.03 0.05 - -



930.00 310.00 -

1,500.00 500.00 -

f. Remuneration to key managerial personnel



7.41 - -

- - 15.07

- - -

- - 3.05

- - 1.54

g. Interest paid to



- - 46.34

9 Capital and other commitments

10 Contingent liabilities

i)ii)iii)

In case of Company

In case of ICNCL

e. Money received on allotment of warrants

Essel International Limited

Estimated amount of contracts remaining to be executed and not provided for (net of advances) amounting to ₹ 333.14 million as at March 31, 2014, ₹ 134.08 million as at March 31, 2013and ₹ 76.28 million as at March 31, 2012.

Mrs. Sulbha Gaikwad

Essel Media Ventures Limited

Expenditure paid by the Company on behalf of the others Expenditure paid by others on behalf of the Company

Rs 0.39 mn for the financial year 2011-12 on account of claim raised by Om Commvision Network Pvt Ltd u/s 138 of the Negotiable Instruments Act.

ICNCL has entered into a memorandum of understanding (MOU) dated September 25, 2009 (subsequently amended vide Addendum MOU dated December 30, 2009) with anothercompany M/S Jay Properties Private Limited for purchase of office space in Mumbai, at the terms and conditions set forth in the said MOU. ICNCL had given a sum of ₹ 300 million as anadvance for the purchase / acquisition of the said office space and the amount is included in capital advance.

₹ 2.30 million for the financial year 2011-12 for difference in Invoice raised and content cost booked, which in the opinion of management of company, is not payable.

Sudhir Agarwal (till Jan 17, 2012)

Mr. Somen Roy Choudhary

Other related parties

Zee news limited

₹ 0.99 million For the financial year 2011-12 for income tax demand against the company for the AY 2005-06, against which an appeal by the company is lying pending for disposal.

V.D. Wadhwa (from April 29,2013)

₹ 1.03 million for the financial year 2011-12 towards interest in deferred payment of old amusement tax liabilities. The company has filed an appeal against the same on ground of error in calculation

before the Hon'ble Court of Certificate officer, Certificate Organisation, Kolkata & 24 Pargana.

₹ 0.50 million for the financial year 2011-12 in respect of a suit filed by Super Cassettes Industries Ltd for alleged infringement of copyright of the film. The suit is pending for disposal.

₹ 8.47 million for the financial year 2011-12 towards Service Tax demand against which the company has replied to show cause notice by the appropriate authorities. For ₹ 4.00 million showcause notice

has been received in respect of rental income earned by the company on which company has duly paid VAT. This showcause is based on the CERA auditors observations sent to Service Tax department.

In the opinion of the company, Service Tax department has erroneously raised this demand and therefore shall get relief at the appellate level. For ₹ 4.47 million showcause notice has been served by the

Service Tax department on query filed by CERA auditors to Service Tax Department. The Company has found the CERA auditor findings erroneous and accordingly has filed reply.

₹ 6.13 million for the financial year 2011-12 towards amusement tax demand against the company. For ₹.2.73 million, the demand has been raised during the financial year, against which the company has

decided to file appeal before the appropriate authority. For balance of demand of ₹ 3.4 million, the company has already filed appeal with Assistant Commissioner of Agricultural Income Tax, West

Bengal. These demands are raised for the difference in amount which is 5% on amount billed by the company on cable operator towards monthly subscription during a financial year and amount of

collection received in respect of the same during the said period.

₹ 5.00 million for the financial year 2011-12 in respect of a suit filed against the company by M/s Time Warner and others for alleged infringement of copyright of the film. The suit is pending for final

disposal.

During the financial year 2012-13, ICNCL has entered into a joint development agreement (JDA) with M/s Choate Developers Private Limited (CDPL) for construction of multistoriedbuilding on its leasehold land on the terms and condition as set out in the said agreement. The relevant financial implication shall be determined on completion of the construction and shallbe accounted for on the said completion. However, during the financial year 2013-14 the JDA was superseded by a development agreement as per which the CDPL will perform as workcontractor only against the consideration agreed without any right in the developed space of buildling.

The Company had agreed to purchase the running business of Franchnet Cable Network for a total sum of ₹ 1.8 million, however Franchnet Cable Network alleged that siti cable has not supplied material

/equipments etc to them to upgrade the network. The matter was referred to Arbitration Tribunal. Arbitration Tribunal has pronounced award against the Company. The Company has already filed an

appeal before Mumbai High court. The appeal has been admitted and part hearing has been done. The case is now pending for further arguments. Franchnet had claimed ₹ 61.2 million as compensation

/damages against the company.

Rs 1.25 mn for the financial year 2011-12 on account of demand raised by Kanpur Nagar Nigam Ltd towards pole tax.

Claims against the Group not acknowledged as debts as at March 31, 2014 ,₹ 52.00 million, March 31, 2013 ₹ 53.14 million and March 31, 2012 ₹ 65.64 million.Demands raised by the statutory authories being contested by the Group as at March 31, 2104 ₹29.81 million, March 31, 2013 ₹ 37.90 million and March 31, 2012 ₹ 16.63 million

In case of ICNCL, counter bank guarantees in respect of outstanding bank guarantees and fixed deposit pledged as at March 31, 2104 ₹ 0.73 million, March 31, 2013 ₹ 0.86 million and March 31, 2012 ₹ 1.00 million.

F - 18


Annexure 5


11

12

13 In case of SVDMPL for the Financial Year 2011-12 :

a) The company has not provided for the liability on account of Bonus.

b) The Entertainment Tax liability of ₹ 1.03 million has not been paid/provided by the Company.

14

15

16

17 Reformatted consolidated statement of unhedged foreign currency exposure

Particulars of unhedged foreign currency exposure as at reporting date:

USD millions ₹ millions USD millions ₹ millions USD millions ₹ millionsTrade receivables for carriage income 0.06 3.38 0.16 8.68 0.38 19.30

Trade payables 1.63 97.00 0.56 30.43 - -

Payable for fixed assets 8.56 510.61 9.64 523.55 - -

Buyers' credit (Secured loan) 73.81 4,402.26 37.53 2,039.06 - -

Advances for access equipment - - 0.01 0.54 - -

18 Reformatted consolidated statement of rights issue utilization



Unutilised amount at the beginning of the year 75.87 645.87 1,242.57

Less: amount utilised during the year

Working capital - 120.00 -

General corporate purposes - 450.00 596.70

Unutilised amount at the end of the year 75.87 75.87 645.87

19 Reformatted consolidated statement of shares suspenseMarch 31, 2014 March 31, 2013 March 31, 2012


Equity share suspense 313.10 - -

Preference share suspense 1.53 - -

314.63 - -

The Holding Company had during the year 2009-10 issued 236,222,285 equity shares of ₹ 1 each at a premium of ₹ 18 per share for cash to the existing equityshareholders of the Holding Company. Given below are the details of utilisation of proceeds raised through rights issue.

* Closing rate as at March 31, 2014 (1 USD = ₹ 59.65 (March 31, 2013: 1 USD = ₹ 54.33 and March 31, 2012: 1 USD = ₹ 51.16))

Based on the discussions with the solicitor/expert, the management feels that the group has a strong chance of success in above mentioned cases and hence no provision there against is considered

necessary.

15,270 6% Non-cumulative redeemable preference shares of ₹100 each to be allotted to thepreference shareholders of Pearltree Tradelink Private Limited pursuant to the scheme ofamalgamation

31,310,000 equity shares of ₹ 10 each to be allotted to the equity shareholders of Pearltree

March 31, 2014 March 31, 2013 31-Mar-12

In case of ICNCL, SJMDCPL, SBNEPL, SVDMPL & MCCNL, balances of loans and advances, trade receivables, trade payables & other liabilities are subject to confirmation for the financial year 2011-

12.

In case of SJDMCPL & SVDMPL, where the necessary documentary evidence does not support the payment made/ expenses incurred, the same are accounted for on the basis of certification of the

Management for the financial year 2011-12

In case of ICNCL , SVDMPL, SBNEPL & MCCNL, in the opinion of the Board of Directors the current assets, loans and advances shown in the Balance Sheet as on March 31, 2012 are considered

good and fully recoverable, except otherwise stated and provision for all known liabilities has been made in the accounts.

The Commercial Tax authorities, Government of West Bengal, by an order dated June 9, 2003, sought to impose sales tax, with retrospective effect from April 2, 1997, on ICNCL’s income from cable

TV services. ICNCL has filed an application before the Hon’ble West Bengal Taxation Tribunal on July 15, 2003, seeking, inter alia, that the aforesaid order be set aside. The Hon’ble West Bengal

Taxation Tribunal by its order dated August 1, 2003 has directed that pending disposal of the application, assessment proceedings may continue but that no demand notice will be issued. The matter had

come for hearing on several occasions but has been adjourned, pending State’s submissions. In view of the fact that neither assessment proceedings have been completed nor demand notice has been

issued, the alleged liability for Sales tax cannot be ascertained. Consequently no liability on account of sales tax has been recognized by the Company in the books of accounts.

In case of ICNCL, pursuant to an Order passed by the Hon’ble Supreme Court, The Entertainment Tax Department, West Bengal, has imposed entertainment/amusement tax, inter alia, on Multi System

Operators (MSOs) as a percentage of gross receipts from Cable TV service from April, 1998 and has accordingly made Assessments up to March 31, 2006 and raised a demand of ₹72.61 million towards

Amusement Tax payable. Out of the said ₹72.61 million, no provision has been made for ₹ 72.16 million. Against the said unprovided liability of ₹72.16 million, the company has paid ₹ 2 million during

the year ended 31. 03.2008, ₹ 23.32 million during the year ended March 31, 2009, ₹ 22.49 million during the year ended March 31, 2010, ₹ 22.49 million during the year ended March 31, 2011 and ₹

1.86 million during the year ended March 31, 2012 and the same has been debited to profit and loss account for respective years. Further, during the financial year, Tax Recovery department of West

Bengal raised interest demand of ₹ 8.08 million for deferred payment of the afforsaid amount of ₹72.61 million against which ₹7.05 million has been paid by the company, and for balance of ₹1.03 million,

the Company has filed an appeal in the Hon'ble Court of Certificate Officer of Certificate Organisation, Kolkata & 24 Pargana, on the ground that this amount is not payable for the error in the calculation

of the said interest.

F - 19


Annexure 5


20

21

22

23 Details of dues to micro and small enterprises as defined under MSMD act 2006

24

(Amount in ₹ million)

Sr.

No.

Balance as on March 31,

2012

Maximum outstanding

during the year

Balance as on March

31, 2011

Maximum outstanding

during the year

1 - 231.50 217.82 226.41

2 - 0.04 0.04 0.16

3 13.44 13.44 13.44 14.01

4 - 40.15 40.15 46.89

25 Reformatted Consolidated Statement of Earnings per share March 31, 2014 March 31, 2013 March 31, 2012


Loss attributable to equity shareholders (940.61) (640.73) (913.40)

Number of weighted average equity shares

Basic 453,526,614 452,242,724 452,242,724 Diluted 453,526,614 452,242,724 452,242,724

Nominal value of equity share (₹ 1) 1 1 1 Loss per share after exceptional item and after

Basic (2.07) (1.42) (2.02) Diluted (2.07) (1.42) (2.02)

Effect of potential equity shares being anti-

26 Previous years figures have been presented for the purpose of comparison and have been regrouped/ reclassified wherever necessary

Zee Turner Ltd.

Zee Entertainment Enterprise Limited

Pursuant to the approval of the shareholders and subsequent sanction of the High Court of the Judicature at Kolkata (‘High Court’) on May 8, 2014 to the Scheme of Amalgamation (‘theScheme’) of Pearltree Tradelink Private Limited (‘PTPL’) with ICNCL. PTPL has been amalgamated with ICNCL with effect from the appointed date i.e March 31, 2014. Consequently theassets and liabilities of PTPL have been transferred to, and vested in ICNCL with effect from March 31, 2014.The certified copy of the order of the High Court in this regard is awaited for consequent filing with Registrar of Companies. Based on a legal opinion obtained by ICNCL, the Scheme hasbeen given effect to by ICNCL in its accounts for the year ended March 31, 2014 and consequently effect of the same has been given in the consolidated financial statements of the Groupfor the year ended March 31, 2014.Pursuant to the implementation of the Scheme, equity shares of ICNCL will be issued in the ratio of thirty one shares of ICNCL to the equity shareholders of PTPL for every one shareheld by them in PTPL and equal number of 6% non cumulative redeemable preference shares of ICNCL will be issued to the preferential shareholders of PTPL. Pending allotment, thesame have been shown in the share suspense account.As per the Scheme, ICNCL has accounted for amalgamation in its books and all assets (including intangible assets) and liabilities of PTPL as at the appointed date have been recorded byICNCL at fair value The difference between the face value of equity shares to be issued and the net assets acquired being ₹ 421.33 million has been accounted for as Goodwill.

There is no amount due to Micro, Small and Medium Enterprises as per the Micro, Small and Medium Enterprises Development Act 2006. The above information regarding Micro,

Small and Medium Enterprises have been determined to the extent to which parties have been identified on the basis of information available with the Company.

Supplementary statutory information required to be given pursuant to clause 32 of the listing agreement:

Loans and Advances to Companies in which Directors are interested/ subsidiaries

Name of the Enterprise

Associates / Parties in which directors are interested

Dish TV India Ltd.

Zee News Ltd.

Equity Shares of ₹10 each fully paid shall be allotted at the premium of ₹ 100 each by SVDMPL for the financial year 2013-14.

The Group operates in single business segment of cable distribution in India only. Hence there are no separate reportable business or geographical segments as per Accounting Standard (AS-17) on Segment Reporting.

F - 20

The Company has revised the useful life of set top boxes from five years to eight years during the financial year 2013-2014. This has resulted reduction in depreciation charges for the March 31, 2014 ₹ 281.94 (March 31, 2013 Nil and March 31, 2012 Nil).

Annexure 6 Reformatted consolidated statement of share capital Amount in ₹ Million

No. of shares Amount No. of shares Amount No. of shares Amount

Authorised share capital

Equity shares of ₹ 1 each 740,000,000 740.00 740,000,000 740.00 740,000,000 740.00

Preference shares of ₹ 1 each 10,000,000 10.00 10,000,000 10.00 10,000,000 10.00

Total authorised capital 750.00 750.00 750.00

Issued share capital

Equity shares of ₹ 1 each 521,940,038 521.94 453,440,038 453.44 453,440,038 453.44

Less:- Forfeited shares - Equity shares of ₹ 1 each 1,227,122 (1.23) 1,227,122 (1.23) 1,227,122 1.23

7.25% Non cumulative redeemable preference shares of ₹ 1 each 23,436 0.02 23,436 0.02 23,436 0.02

Total issued capital 520.73 452.23 452.23

Subscribed and fully paid up capital

Equity shares of ₹ 1 each fully paid up 520,712,915 520.71 452,212,915 452.21 452,212,915 452.21

7.25% Non cumulative redeemable preference shares of ₹ 1 fully paid up 23,436 0.02 23,436 0.02 23,436 0.02

Total paid up capital 520.73 452.23 452.23

Forfeited shares 0.62 0.62 0.62

521.35 452.85 452.85

(a) Reconciliation of the shares outstanding at the beginning and at the end of each of the reporting year

Equity shares Amount in ₹ Million


Outstanding at the beginning of the year 452,212,915 452.21 452,212,915 452.21 453,410,229 452.80

Add: Receipt of call money - - - - 29,808 0.03

Less : 1,227,122 equity shares of ₹.1 each (₹ 0.50 paid up) forfeited during the

financial year 2011-12

- - - - 1,227,122 (0.62)

Add: Issued on conversion of warrants 68,500,000 68.50 - - - -

Outstanding at the end of the year 520,712,915 520.71 452,212,915 452.21 452,212,915 452.21

Preference shares

(b) Terms/ rights attached to equity shares

(c) Terms/ rights attached to preference shares

(d) Shares held by holding company


Equity Shares

Bioscope Cinemas Private Limited, the immediate holding company,

effective from December 28, 2011 to November 9, 2012, Equity shares of ₹ 1

each fully paid up

- - - - 262,040,427 262.04

Preference shares No. of Shares % of Holding No. of Shares % of Holding No. of Shares % of Holding

Churu Enterprises LLP 23,436 100% 23,436 100% 23,436 100%

Equity shares No. of Shares % of Holding No. of Shares % of Holding No. of Shares % of Holding

Bioscope Cinemas Private Limited, the immediate holding company, effective

from December 28, 2011 to November 9, 2012.50,670,529 9.73% 122,040,427 26.99% 262,040,427 57.95%

Direct Media Solutions Private Limited 140,000,000 26.89% 140,000,000 30.96% - -

Essel International Limited 31,966,049 6.14% - - - -

Essel Media Ventures Limited 58,714,951 11.28% - - - -

Digital Satellite Holdings Private Limited (formerly know as Agamesh Builders

Private Limited)71,369,898 13.70% - - - -

(f) Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 6 of annexure 5.

(g) Terms of securities convertible into equity shares issued along with earliest date of conversion

During the year ended March 31, 2013, the Company issued 162,000,000 convertible warrants on preferential basis upon payment of a consideration of ₹ 20 per warrant. Each convertible warrant is convertible into one

equity share of ₹1 each at a premium of ₹19 per share. Holders of such warrants have the option to convert these warrants into equity shares upon payment of aforesaid consideration on or before eighteen months

from the date of allotment of warrants, viz. March 19, 2013. During the year ended March 31, 2014, 68,500,000 equity shares have been allotted pursuant to the exercise of option. Amount outstanding as at the year

end and disclosed as money received against convertible warrants constitutes ₹ 20 in the year ended March 31, 2014 (Previous year ₹ 5 in the year ended March 31, 2013) per warrant received from the holders of

93,500,000 (Previous year 162,000,000) warrants which have been converted into equity shares on April 02, 2014.


March 31, 2014

March 31, 2014

ParticularMarch 31, 2014

(e) Details of shareholders holding more than 5% shares in the Company.

March 31, 2014

March 31, 2014

The Company has only one class of 7.25% Non-cumulative redeemable preference shares of ₹1 each. The said preference shares were allotted to Zee Telefilms Limited (now Zee Entertainment Enterprises Limited)

on December 29, 2006, pursuant to the scheme of arrangement for demerger of cable business undertaking of Zee Telefilms Limited approved by the Hon'ble Bombay High Court vide its order dated November 17,

2006. Initially, as per the terms of the issue and allotment, the said preference shares were due for redemption on December 29, 2008. However, with the written consent/approval of Zee Entertainment Enterprises

Limited, the terms of the issue of said preference shares was varied by extending the period of redemption by another three years i.e. till December 29, 2011. Later on June 6, 2011 these shares were transferred to

Churu Enterprises LLP by Zee Entertainment Enterprises Limited.

Period for redemption of preference shares has been extended by another period of five years till December 29, 2016 by Churu Enterprises LLP. The preference shares are redeemable at par.

In the event of liquidation of the Company before redemption of preference shares, the holders of preference shares will have priority over equity shares in the payment of dividend and repayment of capital.

March 31, 2013 March 31, 2012

March 31, 2012

March 31, 2012

There is no movement in preference share capital during the years ended March 31, 2014, March 31, 2013 and March 31, 2012.

The Company has only one class of equity shares having par value of ₹1 per share. Each holder of equity shares is entitled to one vote per share.

Out of equity and preference shares issued by the Company, shares held by its holding company are as below:

March 31, 2013

March 31, 2013 March 31, 2012

March 31, 2013

March 31, 2013 March 31, 2012

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion

to the number of equity shares held by the shareholders.

F - 21


Annexure 7 Reformatted consolidated statement of reserves and surplus March 31, 2014 March 31, 2013 March 31, 2012


Foreign currency monetary item translation difference account

Balance at beginning of the year - - -

Add: Recognised during the year (55.64) - -

Less: Amortised during the year (34.59) - -

Balance at the end of the year (21.05) - -

Securities premium account

Balance at the beginning of the year 4,200.07 4,200.07 4,199.50

Add: Premium received on issue of shares 1,301.50 - 0.57

Balance at the end of the year 5,501.57 4,200.07 4,200.07

Employee stock options outstanding

Employee stock options outstanding 4.85 5.25 5.61

Less: Deferred employee compensation - 0.40 0.76

4.85 4.85 4.85

Deficit in the statement of profit and loss

Balance at the beginning of the year (6,127.74) (5,487.01) (4,573.61)

Loss for the year (940.61) (640.73) (913.40)

Balance at the end of the year (7,068.35) (6,127.74) (5,487.01)

(1,582.98) (1,922.82) (1,282.09)

Annexure 8 Reformatted consolidated statement of money received against warrants 1,870.00 810.00 -



Balance unutilised at the end of the previous year 72.74 - -

Add: Proceeds received during the year 2,430.00 810.00 -

Utilised for working capital requirements 194.40 270.00 -

Utilised for capital expenditure and capital advances 465.54 467.26 -

Balance unutilised at the end of the current year* 1,842.80 72.74 -

* Balance unutilised amount is lying in fixed deposit and current accounts with banks.

Annexure 9 Reformatted consolidated statement of long-term borrowings

Non-current Current Non-current Current Non-current Current



(a) Debentures (Secured)

Debentures - - - - - 576.00

(b) Term loans from banks (Secured)

Term Loan 6,057.69 1,554.13 5,647.76 1,063.51 2,981.25 368.75

Buyer’s credits 4,292.13 110.12 2,039.06 - - -

Finance lease obligations 1.81 1.24 2.37 0.48 1.90 0.56

(c) Other borrowings (Unsecured) 132.26 - 96.81 - 48.33 -

10,483.89 1,665.49 7,786.00 1,063.99 3,031.48 945.31

The above amount includes

Secured borrowings 10,351.63 1,665.49 7,689.19 1,063.99 2,983.15 945.31

Unsecured borrowings 132.26 - 96.81 - 48.33 -

Amount disclosed under the head "other current liabilities" (refer annexure 15)

- (1,665.49) - (1,063.99) - (945.31)

Net amount 10,483.89 - 7,786.00 - 3,031.48 -

Annexure 10 Reformatted consolidated statement of deferred tax liability (net)

March 31, 2014 March 31, 2013

₹ millions ₹ millions

48.39 23.58 19.57

58.84 45.63 13.00

107.23 69.21 32.57

17.71 1.74 1.24

66.13 38.43 28.94

83.84 40.17 30.18

23.39 29.04 2.39

Annexure 11 Reformatted consolidated statement of other non-current liabilites



Advance from customers 2.84 3.02 3.20

Interest free deposit from customers 46.09 113.33 1.10

Payable for fixed assets 324.34 715.68 4.45

373.27 832.03 8.75

Deferred tax liabilities

Provision for doubtful debts and advances

Gross deferred tax assets

Unamortised expenditure for ancillary cost of arranging the borrowings

Timing difference in depreciation and amortisation of tangible and intangible assets

Gross deferred tax liabilities

Details of utilisation of proceeds raised through warrants issued on preferential basis

Expenditure debited to Reformatteed Consolidated Statement of Profit and Loss account in the current year but allowed for

tax purposes in following years


March 31, 2012

₹ millions

Deferred tax assets

Net deferred tax liability


Long-term Short-term Long-term Short-term Long-term Short-term



Provision for employee benefits (refer note 5 of annexure 5)

Provision for gratuity 19.02 0.97 17.22 0.36 11.78 0.26

Provision for compensated abesences 12.49 0.90 10.81 0.58 7.69 0.43

31.51 1.87 28.03 0.94 19.47 0.69

Provision for taxation

Provision for Income Tax 0.37 63.10 0.63 3.66 - -

31.88 64.97 28.66 4.60 19.47 0.69

Annexure 13 Reformatted consolidated statement of short-term borrowings March 31, 2014 March 31, 2013 March 31, 2012


Secured

Loans repayable on demand 473.87 244.85 503.71

473.87 244.85 503.71

Annexure 14 Reformatted consolidated statement of trade payables March 31, 2014 March 31, 2013 March 31, 2012


Dues to MSMED (refer note 23 of annexure 5) - - -

Dues to others 2,448.54 1,984.07 1,384.38

2,448.54 1,984.07 1,384.38

Annexure 15 Reformatted consolidated statement of other current liabilities March 31, 2014 March 31, 2013 March 31, 2012


Current maturities of long-term borrowings (refer annexure 9) 1,664.25 1,063.51 944.75

Current maturities of finance lease obligations (refer annexure 9) 1.24 0.48 0.56

Interest accrued but not due on borrowings 48.32 62.03 49.83

Interest accrued and due on borrowings 1.24 1.56 1.56

Share application money refundable - 17.60 17.53

Book overdraft 104.70 127.11 81.17

Advance from customers 34.62 59.51 65.15

Payable for fixed assets 238.43 - -

Payable to employees 2.85 10.18 -

Income received in advance 88.05 39.29 19.81

Others

Interest free deposits from customers 61.46 - 93.06

Statutory liabilities payable 406.79 94.63 34.62

Contractual liabilities payable 284.10 99.38 106.98

2,936.05 1,575.28 1,415.02


F - 23

F - 22Annexure 12 Reformatted consolidated statement of provisions


Annexure 16

(₹ millions)

Reformatted consolidated statement of Tangible assets

Gross block Building Leasehold landPlant and

equipmentComputers

Office

equipment

Furniture and

fixturesAir conditioners Studio equipment Vehicles

Ground

distribution

network

Leasehold

improvementsSet top boxes IRD boxes Total

Balance as at April 1, 2011 27.58 6.78 2,069.57 88.42 28.36 34.65 12.37 36.93 14.67 252.54 37.26 630.53 1.26 3,240.92

Addition on acquisition of subsidiaries - - 0.36 0.06 - - - - - 4.65 - - - 5.07

Additions - 2.14 151.11 3.51 2.39 2.15 1.33 0.51 4.00 32.38 3.82 238.26 - 441.60

Deductions - - 0.05 - 0.04 0.55 - - 1.62 3.29 - 21.45 - 27.00

Balance as at March 31, 2012 27.58 8.92 2,220.99 91.99 30.71 36.25 13.70 37.44 17.05 286.28 41.08 847.34 1.26 3,660.59

Addition on acquisition of subsidiaries - - 15.39 0.05 0.05 0.47 0.03 - - - - - - 15.99

Additions - - 256.42 10.16 4.16 1.18 1.64 4.94 1.81 41.06 7.18 2,623.16 2,951.71

Deductions - - 6.85 - - - - - 0.36 6.26 - 3.65 - 17.12

Balance as at March 31, 2013 27.58 8.92 2,485.95 102.20 34.92 37.90 15.37 42.38 18.50 321.08 48.26 3,466.85 1.26 6,611.17

Addition on acquisition of subsidiaries - - 41.78 0.62 0.11 3.06 - - - 14.33 - 77.98 - 137.88

Addition on amalgamation (refer note 19 of annexure 5) - - 12.05 1.70 1.26 6.44 - - 4.14 - - - - 25.59

Additions - - 89.37 9.55 4.04 1.08 0.32 0.59 1.38 29.48 7.35 1,689.04 - 1,832.20

Deductions - - 3.44 - 0.05 - - - 0.23 6.52 - 28.34 - 38.58


Balance as at April 1, 2011 6.63 0.64 1,297.68 61.41 9.17 14.42 4.38 26.98 5.86 80.30 18.90 264.60 0.53 1,791.50

Addition on acquisition of subsidiaries - - 0.01 0.00 - - - - - 0.31 - - - 0.32

Charge for the year 0.47 0.10 117.55 9.99 1.68 1.44 0.62 0.91 1.27 12.47 3.75 129.38 0.13 279.76

Reversal on disposal of assets - - 0.02 - 0.01 0.09 - - 0.41 0.21 - 20.38 - 21.12


Charge for the year 0.47 0.09 146.40 9.98 1.97 2.24 0.67 0.98 1.42 13.34 5.97 335.07 - 518.60

Reversal on disposal of assets - - 0.32 - - - - - 0.34 0.48 3.47 4.61


Addition on acquisition of subsidiaries - - 0.13 0.01 0.00 0.02 - - - 0.08 - - - 0.24

Addition on amalgamation (refer note 19 of annexure 5) - - 3.15 1.40 0.67 1.87 - - 0.63 - - - - 7.72

Charge for the year 0.47 0.06 151.24 6.81 2.11 1.89 0.77 1.29 1.58 15.86 7.32 571.03 - 760.43

Reversal on disposal of assets - - 1.57 - - - - - 0.13 0.95 - 3.56 - 6.21


20.48 8.18 805.78 20.59 19.87 20.48 8.70 9.55 10.33 193.41 18.43 473.74 0.60 1,610.13

Balance as at March 31, 2013 20.01 8.09 924.65 20.82 22.11 19.89 9.70 13.51 10.70 215.35 19.64 2,761.65 0.60 4,046.72

Balance as at March 31, 2014 19.54 8.03 911.46 24.47 24.69 26.69 9.25 12.81 13.91 237.65 19.67 3,932.86 0.60 5,241.63

Annexure:-

Accumulated depreciation

The Company has exercised the option available under paragraph 46A of Accounting Standard-11 "The Effects of Changes in Foreign Exchange Rates" accordingly foreign exchange loss of ₹ 136.44 millions for the year ended March 31, 2014 and Nil for the year(s) ended March 31, 2013 and March 31, 2012 has been added to the gross block of

set top boxes and ₹ 15.79 millions for the year ended March 31, 2014 and Nil for the year(s) ended March 31, 2013 and March 31, 2012 has been added to capital work in progress.

F - 24

Net blockBalance as at March 31, 2012


Annexure 17

Reformatted consolidated statement of intangible assets ( ₹ millions)

Gross block GoodwillProgram/ film/

cable rights

Distribution

Network RightsComputer softwares Total

Balance as at April 1, 2011 44.79 50.33 - 89.54 184.66

-

Additions 30.75 - - 56.09 86.84

Balance as at March 31, 2012 75.54 50.33 - 145.63 271.50

Additions - - - 277.59 277.59


Addition on acquisition of subsidiaries - - - 10.23 10.23

Addition on amalgamation (refer note 19 of annexure 5) 421.33 - 1,550.00 0.05 1,971.38

Additions - - - 115.32 115.32

Deductions 33.48 - - - 33.48

Balance as at March 31, 2014 463.39 50.33 1,550.00 548.82 2,612.54

Balance as at April 1, 2011 7.09 47.18 53.43 107.70

Charge for the year 5.74 - 18.56 24.30


Charge for the year 7.65 - - 36.83 44.48


Addition on acquisition of subsidiaries - - - - -

Addition on amalgamation (refer note 19 of annexure 5) - - 12.92 0.04 12.96

Charge for the year 6.15 - - 71.32 77.47

Balance as at March 31, 2014 26.63 47.18 12.92 180.18 266.91

Net block



Balance as at March 31, 2014 436.76 3.15 1,537.08 368.64 2,345.63

Accumulated amortisation


F - 25


Annexure 18Amount ₹ millions

Number Amount Number Amount Number Amount Investment in equity instruments-associate

Equity share of ₹ 10 each fully paid up of Siti Chhattisgarh Multimedia Private Limited

70,500 8.42 70,500 8.42 70,500 8.42

Investment in equity instruments-others

Equity shares of ₹ 100 each fully paid up of Master Ads Private Limited 480 0.05 480 0.05 480 0.05

Equity shares of ₹10 each fully paid up of Dakshin Communication Private Limited

9,500 1.77 9,500 1.77 9,500 1.77

Equity shares of ₹10 each fully paid up of Centre Channel Private Limited 3,000 0.23 3,000 0.23 3,000 0.23

10.47 10.47 10.47

Less : Provision for diminution in the value of investments 2.05 2.05 2.05

8.42 8.42 8.42

Investment in preference shares

6% Non-cumulative redeemable preference shares of ₹ 100 each

fully paid up of Haryana Communication Network Private Limited 14080 7.04 14080 7.04 14080 7.04

Less : Provision for diminution in the value of investments 7.04 7.04 7.04 -

Total - - -

Aggregate amount of unquoted investments 8.42 8.42 8.42

Annexure 19 Reformatted consolidated statement of loans and advances Long-term Short-term Long-term Short-term Long-term Short-term

March 31, 2014 March 31, 2014 March 31, 2013 March 31, 2013 March 31, 2012 March 31, 2012₹ millions ₹ millions ₹ millions ₹ millions ₹ millions ₹ millions

Capital advances

Unsecured, considered good 339.63 - 330.49 - 346.79 - -

Unsecured considered doubtful - - 4.50 - - - -

339.63 - 334.99 - 346.79

Less: Provision for doubtful capital advances - - 4.50 - - - -

339.63 - 330.49 - 346.79 - -

Security deposits

Unsecured, considered good 104.61 15.10 129.48 1.49 100.89 0.60

Doubtful 2.83 - 2.81 - 2.81 - -

107.44 15.10 132.29 1.49 103.70 0.60 -

Less: Provision for doubtful security deposits 2.83 - 2.81 - 2.81 - -

104.61 15.10 129.48 1.49 100.89 0.60 -

Advances to related parties

Unsecured, considered good - - - - - 0.53 -

Advances recoverable in cash or kind

Unsecured, considered good

Other advances 86.77 1,196.26 2,502.80 172.33 72.11 73.14

Doubtful

Advances to distribution companies - 750.75 - 837.83 928.79 -

86.77 1,947.01 2,502.80 1,010.16 72.11 1,001.93 -

Less:

Provision for doubtful advances - 750.75 - 837.83 - 928.79 -

86.77 1,196.26 2,502.80 172.33 72.11 73.14 -

Other loans and advances

Unsecured, considered good

Advance tax 91.65 355.88 38.44 194.13 16.12 161.23

Balances with statutory authorities 9.66 347.11 - 388.65 5.31 124.79

Prepaid expenses - 11.22 - 4.15 - 4.05

101.31 714.21 38.44 586.93 21.43 290.07

632.32 1,925.57 3,001.21 760.75 541.22 364.34

Annexure 20 Reformatted consolidated statement of other assets Non-current Current Non-current Current Non-current Current


Considered good unless stated otherwise

Non-current bank balances ( refer annexure 24) 424.34 - 542.01 - 238.07 -

424.34 - 542.01 - 238.07 -

Unamortised expenditure

Ancillary cost of arranging the borrowings 54.91 25.38 52.75 23.55 54.11 25.95

54.91 25.38 52.75 23.55 54.11 25.95

Others

Interest accrued on fixed deposits - 18.23 - 15.69 - 6.58 Unbilled revenue - 172.21 0.23 - 0.52 2.65

- 190.44 0.23 15.69 0.52 9.23

479.25 215.82 594.99 39.24 292.70 35.18

Annexure 21 Reformatted consolidated statement of current investments (non trade, unquoted)

(Valued at lower of cost or fair value)


Number of units Amount Number of units Amount Number of units Amount

Investments in mutual funds

Units of face value of ₹ 10 each of ICICI Prudential Flexible Income Premium Growth

250,404 2.54 250,404 2.54 250,404 2.54

Units of face value of ₹ 10 each of UTI Fixed Income Interval Fund - - - - 199,952 2.00

Units of face value of ₹100 each of Taurus Short Term Income Fund - Growth Plan

3,176 5.50 3,176 5.50 3,176 5.50

8.04 8.04 10.04 -

Aggregate amount of unquoted investment 8.04 8.04 10.04 -

Annexure 22 Reformatted consolidated statement of inventories (valued at lower of cost or net realizable value) March 31, 2014 March 31, 2013 March 31, 2012


Traded goods - - 42.10

Stores and spares 96.98 79.01 119.07

96.98 79.01 161.17

In addition to the above, the Company holds certain 6% Non-cumulative redeemable preference shares of ₹ 100 each fully paid up in a few companies which have been completely written offagainst provision for diminution in value of investments..


Reformatted consolidated statement of Non-current investments (Trade, unquoted)

(Valued at cost unless stated otherwise)

F - 26


Unsecured, considered good 622.39 145.98 265.32

Unsecured, considered doubtful 1,360.43 1,573.88 1,614.22

1,982.82 1,719.86 1,879.54

Less: Provision for doubtful debts 1,360.43 1,573.88 1,614.22

622.39 145.98 265.32

Other receivables

Unsecured, considered good 1,331.17 821.96 512.27

Unsecured, considered doubtful 1.90 0.01 2.33

1,333.07 821.97 514.60

Less: Provision for doubtful debts 1.90 0.01 2.33

1,331.17 821.96 512.27

1,953.56 967.94 777.59

Annexure 24 Reformatted consolidated statement of cash and bank balances

Non-current Current Non-current Current Non-current Current


Cash and cash equivalents

Cash on hand - 43.09 - 35.33 - 7.06

Cheques on hand - 367.18 - 83.44 - 58.96

Balances with banks:

On current accounts - 1,746.52 - 1,090.21 - 1,337.38

Deposits with original maturity of less than three months - 1,359.67 - 55.11 - 20.80

Unpaid matured deposits - - - - - 52.29

- 3,516.46 - 1,264.09 - 1,476.49

Other bank balances

Deposits with original maturity of more than 3 months but less than 12 months and residual maturity of less than 12 months

- 12.26 - 28.49 - 5.00

Margin money deposits* 424.34 - 542.01 0.98 238.07 1.34

424.34 12.26 542.01 29.47 238.07 6.34

Amount disclosed under non-current assets (refer annexure 20) 424.34 - 542.01 - 238.07 -

- 3,528.72 - 1,293.56 - 1,482.83

Outstanding for a period exceeding six months from the date they are due for payment

*Margin money deposits are subject to first charge to secure the company's term loans and cash credit loans.


F - 27

Annexure 23 Reformatted consolidated statement of trade receivables March 31, 2014 March 31, 2013 March 31, 2012 ₹ millions ₹ millions ₹ millions


Annexure 25 Reformatted consolidated statement of revenue from operations March 31, 2014 March 31, 2013 March 31, 2012


Sale of services

Subscription income 3,395.13 1,206.89 909.70

Advertisement income 179.90 151.10 156.41

Carriage income 2,271.11 2,035.47 2,238.04

Activation income 805.52 1,231.49 -

Other operating revenue

Sale of traded goods* 106.07 39.26 19.44 Lease rental charges 21.73 24.72 2.83

Management charges and other networking income 192.70 7.04 98.85

Scrap sales 0.21 0.39 2.90 6,972.37 4,696.36 3,428.17

* Details of sale of traded goods

Set top box and viewing cards 102.65 37.81 18.46 Spares parts 3.42 1.45 0.98

106.07 39.26 19.44

Annexure 26 Reformatted consolidated statement of other income March 31, 2014 March 31, 2013 March 31, 2012


Interest income on

Bank deposits 49.27 41.87 23.72

Others 4.65 0.13 1.16

Dividend income on current investment - - 0.21

Net gain on sale of current investment - - 0.20

Excess provision written back 40.22 61.02 172.82

Other non-operating income 36.90 37.27 16.32

131.04 140.29 214.43

Annexure 27 Reformatted consolidated statement of employee benefit expenses March 31, 2014 March 31, 2013 March 31, 2012


Salaries, allowances and bonus 332.37 275.30 241.88

Contributions to provident and other funds 20.62 17.90 15.45

Employee benefits expenses 7.55 11.08 2.60

Staff welfare expenses 21.40 15.09 11.14

381.94 319.37 271.07

Annexure 28 Reformatted consolidated statement of finance costs March 31, 2014 March 31, 2013 March 31, 2012


Interest 976.02 712.58 491.32

Bank charges 188.58 120.73 3.38

Amortisation of ancillary borrowing costs 26.53 30.36 71.71

1,191.13 863.67 566.41

F - 28


Depreciation of tangible assets (refer annexure 16) 760.43 518.60 279.76

Amortisation of intangible assets (refer annexure 17) 77.47 44.48 24.30

837.90 563.08 304.06

Annexure 30 Reformatted consolidated statement of other expenses March 31, 2014 March 31, 2013 March 31, 2012


Rent 93.25 87.94 65.63

Rates and taxes 20.21 15.29 2.44

Communication expenses 17.68 16.64 12.74

Repairs and maintenance

- Plant and equipment 60.55 57.47 37.78

- Building 0.37 0.76 0.19

- Others 22.19 30.06 15.00

Electricity and water charges 46.21 39.89 25.49

Legal, professional and consultancy charges 79.31 78.33 62.37

Printing and stationery 4.90 8.63 7.75

Service charges 125.36 90.51 55.36

Travelling and conveyance expenses 39.70 32.61 24.24

Payment to auditors 4.82 4.84 3.69

Vehicle expenses 23.53 21.21 18.38

Insurance expenses 3.20 4.29 6.47

Provision for doubtful debts* 69.46 106.70 137.66

Bad debts written off 33.78 16.61 58.46

Provision for doubtful advances 35.68 32.27 34.97

Loss on sale of assets (net) 12.77 0.33 4.35

Preliminary expenses written off - 0.06 0.02

Advertisement and publicity expenses 53.32 73.27 70.25

Commission charges and incentives 175.58 84.67 47.92

Additional Local Cable Operator commission 158.11 - -

Rebate and discount 187.74 54.12 70.34

Program production expenses 25.43 16.98 19.55

Other operational cost 544.17 311.86 158.32

Business and sales promotion 24.54 21.20 32.79

Foreign Exchange loss 115.74 -

Miscellaneous expenses 48.75 57.17 32.35

2,026.35 1,263.71 1,004.51

Annexure 31 Reformatted consolidated statement of exceptional items March 31, 2014 March 31, 2013 March 31, 2012


Amusement tax payment - - 8.77

Headend In The Sky (HITS) security deposit written off - - 231.50

VAT input credit written off - 5.35 -

Other (0.33) - -

(0.33) 5.35 240.27

* Provision for doubtful debts is net of liabilities written back ₹ 41.53 million for the year ended March 31, 2014, ₹ 87.09 million for the year

ended March 31, 2013 and ₹ 14.14 million for the year ended March 31, 2012.


Annexure 29 Reformatted consolidated statement of depreciation and amortisation expenses March 31, 2014 March 31, 2013 March 31, 2012


F - 29

1. We have reviewed the accompanying condensed consolidated financial statements of SITI Cable

Network Limited (the “Company”) and its subsidiaries, and associate (hereinafter collectively

referred to as the “Group”), which comprise the condensed consolidated balance sheet as at

31 December 2014, condensed consolidated statement of profit and loss and condensed

consolidated statement of cash flows for the nine months period then ended and select explanatory

notes to condensed consolidated financial statements for the nine months ended 31 December 2014

(collectively, the “Condensed Consolidated Financial Statements”). These Condensed Consolidated

Financial Statements are the responsibility of the Company’s management. Our responsibility is to

express a conclusion on these Condensed Consolidated Financial Statements based on our review.

2. We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410,

“Review of Interim Financial Information Performed by the Independent Auditor of the Entity”,

issued by the Institute of Chartered Accountants of India. A review of interim financial information

consists of making inquiries, primarily of persons responsible for financial and accounting matters,

and applying analytical and other review procedures. A review is substantially less in scope than an

audit conducted in accordance with Standards on Auditing and consequently does not enable us to

obtain assurance that we would become aware of all significant matters that might be identified in

an audit. Accordingly, we do not express an audit opinion.

3. Based on our review conducted as above, nothing has come to our attention that causes us to believe

that the accompanying Condensed Consolidated Financial Statements are not prepared, in all

material respects, in accordance with Accounting Standard 25, “Interim Financial Reporting”, as

notified under the Companies (Accounting Standard) Rules, 2006, read with Rule 7 of the

Companies (Accounts) Rules, 2014 in respect of section 133 of the Companies Act, 2013.

4. We did not review the financial statements of certain subsidiaries and associate included in the

consolidated financial statements, whose financial statements reflect total assets (after eliminating

intra-group transactions) of ₹ 7,704.96 million as at 31 December 2014; total revenues (after

eliminating intra-group transactions) of ₹ 2,620.82 million and net cash flows aggregating to ₹

138.22 million the nine months period then ended. These financial statements have been reviewed

by other auditors whose review reports have been furnished to us by the management, and our

review opinion on the Condensed Consolidated Financial Statements of the Group for the nine

months period then ended to the extent they relate to the financial statements not reviewed by us as

stated in this paragraph is based solely on the review reports of the other auditors. Our opinion is

not qualified in respect of this matter.





per Atul Seksaria

Partner


Place: Noida


F - 30

Review Report

To the Board of Directors of SITI Cable Network Limited


Condensed consolidated balance sheet as at December 31, 2014

December 31, 2014 March 31, 2014




Share capital 614.85 521.35

Share suspense 314.63 314.63

Reserves and surplus (674.68) (1,582.98)

Money received against warrants - 1,870.00

254.80 1,123.00

Share application money pending allotment 10.41 10.41



Long-term borrowings 8,421.22 10,483.89

Deferred tax liability (net) 12.92 23.39

Other non-current liabilities 42.93 373.27

Long -term provisions 34.83 31.88

8,511.90 10,912.43

Current liabilities

Short term borrowings 504.53 473.87

Trade payables 2,935.95 2,448.54

Other current liabilities 6,069.64 2,936.05

Short-term provisions 85.25 64.97

9,595.37 5,923.43

Total 18,817.25 18,230.02

ASSETS

Non-current assets

Fixed assets

Tangible assets 5,800.99 5,241.63

Intangible assets 2,188.13 2,345.63

Capital work-in-progress 1,361.27 1,702.29

Goodwill on consolidation 93.01 91.79

Non-current investments 8.42 8.42

Deferred tax assets (net) 44.26 -

Long-term loans and advances 291.58 632.32

Other non-current assets 666.84 479.25

10,454.50 10,501.33

Current assets

Current investments 8.04 8.04

Inventories 165.00 96.98

Trade receivables 2,863.26 1,953.56

Cash and bank balances 2,247.19 3,528.72

Short-term loans and advances 2,472.57 1,925.57

Other current assets 606.69 215.82

8,362.75 7,728.69

Total 18,817.25 18,230.02

The accompanying notes are an integral part of the condensed consolidated financial statements.

This is the condensed consolidated balance sheet referred to in our report of even date




Vinod Kumar Bakshi

Director

Per Atul Seksaria

Partner Sanjay Goyal


Place : Noida


Company Secretary



V D Wadhwa


Suresh Kumar

F - 31

December 31, 2014 December 31, 2013


Revenue

Revenue from operations 6,499.23 4,638.97

Other income 83.59 66.04

Total revenue 6,582.82 4,705.01

Expenses

Carriage sharing, pay channel and related costs 3,538.42 2,097.69

Cost of goods sold 2.82 71.51

Employee benefit expenses 361.19 283.24

Finance costs 898.31 878.77


Other expenses 1,317.20 1,272.64

Total expenses 7,106.90 5,350.70

Loss before exceptional item and tax (524.08) (645.69)

Exceptional items 0.03 -

Loss before tax (524.11) (645.69)

Tax expenses

Current tax 96.63 93.23

Deferred tax (54.96) (12.94)

Loss for the year after tax before minority interest (565.78) (725.98)

Adjustment for minority interest 183.96 117.01

Loss for the year (749.74) (842.99)


Basic (1.22) (1.86)

Diluted (1.22) (1.86)

The accompanying notes are an integral part of the condensed consolidated financial statements.

This is the condensed consolidated statement of profit and loss referred to in our report of even date




Vinod Kumar Bakshi

Director

Per Atul Seksaria

Partner Sanjay Goyal


Place : Noida


Company Secretary


Suresh Kumar

Condensed consolidated statement of profit and loss for the nine months period ended December 31, 2014




V D Wadhwa

F - 32


Condensed consolidated cash flow statement for the nine months period ended December 31, 2014



(524.11) (645.69)

988.96 746.85

0.02 34.83

(22.87) 26.89

21.40 19.02

65.07 41.20

0.55 14.84

(64.04) (89.97)

898.31 859.75

(47.12) (36.51)

1,316.17 971.21

510.27 814.71

2.94 2.58

20.28 2.17

(330.33) (778.90)

357.70 844.76

(974.76) (1,331.21)

(68.01) (13.75)

(588.42) (2,789.69)

289.58 2,428.85

(359.47) (27.97)

(185.63) 31.72

(9.68) 154.48

(3.24) (136.58)

(12.92) 17.90

(1,106.62) (2,262.18)

0.12 (9.33)

20.24 28.67

(1,086.26) (2,242.84)

0.05 21.15

- 1.22

- 10.41

1,996.18 4,374.80

(1,279.86) (759.77)

30.67 (21.01)

(929.27) (896.94)

(182.23) 2,729.86

(1,281.41) 504.92

3,516.46 1,264.09

2,235.05 1,769.01

Increase in short-term loans and advances

Interest expense

Interest income

Operating profit before working capital changes


Increase in trade payables

Increase in long-term provisions

Increase in short-term provisions

Decrease in other non-current liabilites

Increase in other current liabilities


Loss before tax

Depreciation and amortisation expenses

Bad debts written off

Excess provision written back


Purchase of fixed assets including capital advance

Decreasein long-term loans and advances

Increase in other current assets

Increased/(decrease) in other non-current assets

Cash generated/(used in) from operations

Direct taxes paid (net of refunds)

Net cash flow (used in)/from operating activities (A)

Amortisation of ancillary borrowing costs

Provision for doubtful debts

Provision for doubtful advances

Unrealised foreign exchange loss

Increase in inventories

Increase in trade receivables

Proceeds from issuance of equity share capital

Share application money pending allotment

Proceeds from long-term borrowings

Redemption/(Investments in) of bank deposits having original maturity of

more than three months and margin money deposits

Interest received

Net cash used in investing activities (B)


Minority interest

Repayment of long-term borrowings

Proceeds/(Repayment) from short-term borrowings (net)

Interest and finance expenses paid

Net cash flow (used in)/from financing activities (C)

Net (decrease)/increase in cash and cash equivalents (A + B + C)

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

F - 33



45.41 23.09

64.95 1,158.04

9.67 6.12

2,115.02 581.76

2,235.05 1,769.01




V D Wadhwa Vinod Kumar Bakshi

Executive Director & CEO Director

Per Atul Seksaria

Partner

Suresh Kumar Sanjay Goyal

Company Secretary Chief Finance Officer

Place : Noida




Deposits

With banks- on current account

Total cash and cash equivalents

Cheques on hand


Cash on hand

F - 34

SITI Cable Network Limited Notes forming part of the condensed consolidated financial statements for the nine months period ended December 31, 2014

1. Basis of accounting

The same accounting policies are followed in the condensed consolidated financial statements

for the nine months period ended December 31, 2014 as those followed in the annual

financial statements for the year ended March 31, 2014.

2. Segment reporting

SITI Cable Network Limited (the "Company”), its subsidiaries and associate (collectively

hereinafter referred to as the “Group”) is a multi system operater providing cable television

network services, internet services and allied services which is considered as the only

reportable business segment. The Group’s operations are based in India only. Hence there is

no separate reportable business or geographical segments as per Accounting Standard on

Segment Reporting (AS-17).

3. With effect from April 1, 2014, the Group has revised the useful lives of its fixed assets to

comply with the requirements as mentioned under Schedule II of the Companies Act, 2013.

Accordingly, the depreciation expense for the nine months ended December 31, 2014 is

higher by ₹ 134.50 million. Similarly, in case of fixed assets whose life has been completed as

on March 31, 2014, the carrying value (net of residual value) of those assets accounting to ₹

55.60 million has been adjusted with the opening balances of retained earnings i.e. deficit in

statement of profit and loss.

4. During the nine months period ended December 31, 2014, the Company has issued

57,716,049 equity shares to Essel Media Ventures Limited and 35,783,951 equity shares to

Essel International Limited pursuant to exercise of option for conversions of warrants.

5. The Company has during the nine months period ended December 31, 2014, acquired

controlling stake in two subsidiaries by way of subscription of equity shares:

a) 10,000 shares of ₹10 each in Siti Broadband Services Private Limited on July 19, 2014

and

b) 5,100 shares of ₹10 each in Siti Global Private Limited on June 20, 2014

6. In view of the mandatory digital addressable system (DAS) regulation announced by the

Government of India, digitization of cable networks has been implemented in phase 1 and

phase 2 cities effective November 1, 2012 and April 1, 2013 respectively. Owing to the initial

delays in implementation of DAS in phase 1 and phase 2 cities and challenges faced by all the

Multi-System Operators (MSOs) during transition from analogue business to DAS, the Group

is in the process of implementation of revenue sharing contracts entered into with the local

cable operators (LCOs). Accordingly, the Company has invoiced and recognized subscription

after sharing of revenue with the LCOs under the new DAS regime amounting to ₹ 401.40 mn

for the nine months ended December 31, 2014, based on certain estimates derived from

market trends and ongoing discussion with the LCOs. Management is of the view that the

execution/implementation of such contracts will not have a significant impact on subscription

revenue.

7. The Company continued to incur cash losses on standalone basis, during the nine months

ended December 31, 2014 but in view of the present positive consolidated net worth,

substantial subscription revenue growth and continued financial support from the promoters

companies, the financial statements continue to be prepared on a going concern basis.

F - 35

SITI Cable Network Limited Notes forming part of the condensed consolidated financial statements for the nine months period ended December 31, 2014

8. As approved by the Shareholders, on the basis of recommendation of Nomination and

Remuneration Committee duly approved by the Board, the remuneration paid to CEO of the

Company is the same after his appointment as Executive Director for which necessary

application has been submitted to Central Government for approval.

9. Previous period figures have been regrouped and reclassified, wherever necessary, to make

them comparable with those of the current period.

For Walker Chandiok & Co. LLP For and on behalf of the Board constituted QIP

committee

(formerly Walker, Chandiok & Co) SITI Cable Network Limited


V D Wadhwa Vinod Kumar Bakshi

Executive Director & CEO Director

Per Atul Seksaria

Partner

Suresh Kumar Sanjay Goyal

Company Secretary Chief Finance Officer

Place : Noida Date : February 26, 2015

F - 36

218

DECLARATION

Our Company certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the SEBI

Regulations have been complied with and no statement made in this Preliminary Placement Document is

contrary to the same. Our Company further certifies that all the statements in this Preliminary Placement

Document are true and correct.

Signed by:

Vassdev Wadhwa

Whole Time Director & Chief Executive Officer

Date: February 27, 2015

Place: Noida

219

DECLARATION

We, the Directors of the Company certify that:

(i) the Company has complied with the provisions of the Companies Act and the rules made thereunder;

(ii) the compliance with the Companies Act and the rules does not imply that payment of dividend or

interest or repayment of debentures, if applicable, is guaranteed by the Central Government;

(iii) the monies received under the offer shall be used only for the purposes and objects indicated in the


Signed by:

Vassdev Wadhwa

Whole Time Director & Chief Executive Officer

I am authorized by the QIP Committee vide resolution dated February 27, 2015 to sign this form and declare

that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter

of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the

attachments thereto is true, correct and complete and no information material to the subject matter of this form

has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to

the Memorandum of Association and the Articles of Association.

It is further declared and verified that all the required attachments have been completely, correctly and legibly

attached to this form.

Signed by

Vassdev Wadhwa

Whole Time/ Executive Director & Chief Executive Officer

Date: February 27, 2015

Place: Noida

220

SITI CABLE NETWORK LIMITED

Registered Office

135, Continental Building,

Dr. Annie Besant Road,

Worli, Mumbai 400 018

Maharashtra, India

Tel: +91 22 24831234 Fax: +91 22 24955974

Website: www.siticable.com

CIN: L64200MH2006PLC160733

Corporate Office

Building No: FC 9, Gate No -3

Sector 16 A, First Floor, Film City

Noida - 201301, Uttar Pradesh

Tel: +91 120 4526757 Fax: +91 120 4526777

Contact Person: Suresh Kumar

Address of Compliance Officer:

Suresh Kumar

Company Secretary & Compliance Officer

Siti Cable Network Limited

Building No: FC 9, Gate No -3

Sector 16 A, First Floor, Film City

Noida – 201301, Uttar Pradesh

Tel: +91 120 4526707; Fax: +91 120 4526777

Email: [email protected]

BOOK RUNNING LEAD MANAGERS

Motilal Oswal Investment Advisors Private Limited

Motilal Oswal Tower, Rahimtullah Sayani Road

Opposite Parel ST Depot,

Prabhadevi, Mumbai 400 025,

Maharashtra, India

Tel: +91 22 3980 4380

Fax: +91 22 3980 4315

Ambit Corporate Finance Private Limited

Ambit House, 449, Senapati Bapat Marg,

Lower Parel, Mumbai 400 013

Maharashtra, India

Tel: +91 22 3982 1819

Fax: +91 22 3982 3020

AUDITORS TO OUR COMPANY

Walker Chandiok & Co. LLP


L 41, Connaught Circus,

New Delhi 110 001

India

LEGAL COUNSEL TO THE ISSUE

Link Legal India Law Services

Thapar House, Central Wing

First Floor, 124 Janpath

New Delhi 110 001

India

INTERNATIONAL LEGAL COUNSEL TO THE BOOK RUNNING LEAD MANAGERS WITH

RESPECT TO INTERNATIONAL SELLING AND TRANSFER RESTRICTIONS

Squire Patton Boggs Singapore LLP

10 Collyer Quay

#03-01/02 Ocean Financial Centre

Singapore 049 315

Republic of Singapore