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Network 18 Media & Investments
BSE: 532798|NSE: NETWORK18|ISIN: INE870H01013|SECTOR: Finance - General
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Notes to Accounts Year End : Mar '13
1 Background and Scheme of arrangement
 
 1.1 Background
 
 Network18 Media & Investments Limited (the Company) was
 incorporated as SGA Finance and Management Services Private Limited in
 1996. The name was changed to Network 18 Fincap Private Limited in
 April 2006. The Company was converted into a public company on 20
 October 2006. The name was further changed to its current name on 1
 December 2007.
 
 1.2 Scheme of arrangement
 
 (i) The Board of Directors of the Company, on 7 July 2010 approved a
 Scheme of Arrangement (the Scheme) with an overall objective of
 simplifying the corporate structure of the Company and its
 subsidiaries, associates and joint ventures (together referred to as
 the Network18 Group). The Scheme was approved by Hon''ble High Court
 of Delhi and made effective on 10 June 2011 with an appointed date of 1
 April 2010. As a consequence of the Scheme, Business News
 Operations comprising of ''CNBC TV18'' and ''CNBC Awaaz'' channels and
 teleport business of Television Eighteen India Limited (TV18), a
 subsidiary of the Company, has been transferred to another subsidiary -
 ibn18 Broadcast Limited (now known as TV18 Broadcast Limited). The
 remaining TV18 (post demerger of Business News Operations of TV18)
 along with its investments stands merged with the Company. Further, in
 consideration of the merger of the residual TV18 with the Company, on
 23 June 2011, the Company had issued 23,695,044 equity shares to the
 shareholders of TV18 (in the ratio of 13 equity shares of Rs. 5 for
 every 100 equity shares in TV18 of Rs. 5).In addition, in accordance
 with the Scheme, ''the Web Undertakings'' of Web18 Software Services
 Limited and Television Eighteen Commoditiescontrol.com Limited, Care
 Websites Private Limited, RVT Investments Private Limited and Network18
 India Holdings Private Limited have been merged into the Company. The
 remaining TV18, RVT Investments Private Limited and Network 18 India
 Holdings Private Limited primarily held investments in other companies.
 The ''web undertaking'' of Web18 Software Service Limited operates
 certain websites. Television Eighteen Commodities control.com Limited
 and Care Websites Private Limited did not carry out any significant
 business operations.
 
 (ii) The Board of Directors of the Company, on 7 July 2010, announced
 and approved another Scheme of Arrangement (''the Infomedia Scheme'')
 between Infomedia Press Limited (formerly Infomedia 18 Limited
 (Infomedia 18)) and the Company and their respective shareholders
 and creditors. As per the Infomedia Scheme, the Business Directories
 business, the New Media business and the Publishing business of
 Infomedia18 have demerged into the Company while the Printing Press
 business of Infomedia 18 continued to remain with Infomedia18. The
 Infomedia Scheme was approved by the Hon''ble High Court of Delhi on 22
 May 2012 and made effective on 1 June 2012 with an appointed date of 1
 April 2010.
 
 Further, in consideration of the demerger of the Business Directories
 business, the New Media business and the Publishing business of
 Infomedia18 into the Company, on 19 June 2012, the Company had issued
 3,679,356 equity shares to the shareholders of Infomedia18 (in the
 ratio of 14 equity shares of Rs. 5 for every 100 equity shares in
 Infomedia 18 of Rs. 10), The demerged undertaking of Infomedia 18 was
 engaged in publication of Yellow Pages (Business Directories), special
 interest magazines and operating certain websites.
 
 The above referred schemes of arrangement have been accounted for under
 the pooling of interests method as modified for the provisions of
 respective schemes of arrangement. The financial impact of these is as
 follows:
 
 Note: The Company also issued 11,586,782 equity shares to Network 18
 Media Trust in respect of shares held by the Company in Television
 Eighteen India Limited (refer note 14)
 
 2.  Basis of preparation
 
 The financial statements are prepared under the historical cost
 convention, on the accrual basis of accounting and in accordance with
 the generally accepted accounting principles (GAAP) in India and comply
 with the Accounting Standards prescribed by the Companies (Accounting
 Standards) Rules, 2006 to the extent applicable and in accordance with
 the provisions of the Companies Act, 1956, (the Act) as adopted
 consistently by the Company.
 
 3. Related party disclosures 
 
 a. List of related parties
 
 i.  Direct subsidiaries
 
 - Television Eighteen Mauritius Limited
 
 - Capital18 Fincap Private Limited
 
 - Television Eighteen Media and Investments Limited
 
 - Network 18 Holdings Limited, Mauritius (domicile changed from
 Cayman Islands to Mauritius with effect from 19 April 2012 vide
 certificate of registration dated 7 August 2012)
 
 - Digital 18 Media Limited
 
 - RRB Investments Private Limited
 
 - Newswire18 Limited (upto 27 December 2012)
 
 - Setpro18 Distribution Limited
 
 - TV18 Broadcast Limited
 
 - Infomedia Press Limited
 
 - Television Eighteen India Limited (upto 10 June 2011)
 
 - Network18 India Holdings Private Limited (upto 10 June 2011)
 
 ii.  Subsidiary companies of subsidiaries
 
 - BK Holdings Limited, Mauritius
 
 - Namono Investments Limited, Cyprus
 
 - TV 18 UK Limited
 
 - Capital 18 Limited, Mauritius
 
 - Webchutney Studio Private Limited
 
 - RRK Finhold Private Limited
 
 - RVT Finhold Private Limited
 
 - Greycells 18 Media Limited
 
 - Colosceum Media Private Limited
 
 - Stargaze Entertainment Private Limited
 
 - Web 18 Holdings Limited, Cyprus (de-registered from Cayman Islands
 and get registered in Cypus w.e.f 25 April 2013)
 
 - E-18 Limited, Cyprus
 
 - Web 18 Software Services Limited
 
 - e - Eighteen.com Limited
 
 - Moneycontrol Dot Com India Limited
 
 - ibn18 (Mauritius) Limited
 
 - AETN18 Media Private Limited
 
 - RVT Media Private Limited
 
 - TV18 HSN Holdings Limited, Cyprus
 
 - TV18 Home Shopping Network Limited
 
 - Blue Slate Media Private Limited
 
 - IndiaCast Media Distribution Private Limited (formerly Sun18 Media
 Services North Private Limited)
 
 - IC Media Distribution Services Private Limited
 
 - Capital18 Acquisition Corporation, Cayman Islands (upto 28
 September 2012)
 
 - Juxt Consult Research and Consulting Private Limited (upto 31
 October 2012)
 
 - Big Tree Entertainment Private Limited
 
 - IndiaCast UK Limited
 
 - IndiaCast US Limited
 
 - RVT Investments Private Limited (upto 10 June 2011)
 
 - Television Eighteen Commoditiescontrol.com Limited (upto 10 June
 2011)
 
 iii. Associates and joint ventures of the subsidiaries
 
 - Viacom18 Media Private Limited
 
 - IBN Lokmat News Private Limited
 
 - Ubona Technologies Private Limited
 
 - Reed Infomedia India Private Limited
 
 - 24 X 7 Learning Private Limited
 
 - Viacom 18 US Inc.
 
 - Roptonal Limited, Cyprus
 
 - Viacom 18 Media (UK) Limited
 
 - The Indian Film Company Limited, Guernsey
 
 - The Indian Film Company (Cyprus) Limited
 
 - Wespro Digital Private Limited
 
 - IFC Distribution Private Limited
 
 iv.  Key Management Personnel
 
 - Raghav Bahl (Also exercises control by virtue of having a
 substantial interest in the voting power of the Company)
 
 v.  Relatives of Key Management Personnel (with whom transactions have
 been undertaken during the year)
 
 - Vandana Malik
 
 vi.  Entities over which persons listed above are able to exercise
 significant influence/control
 
 (with whom transactions have been undertaken during the period/balance
 at the end of the year)
 
 - Network 18 Publications Limited
 
 - VT Softech Private Limited
 
 - Adventure Marketing Private Limited
 
 - Watermark Infratech Private Limited
 
 - Colorful Media Private limited
 
 - RB Media Holdings Private Limited
 
 - RB Holdings Private Limited
 
 - Web18 Securities Private Limited
 
 - BK Media Mauritius Private Limited
 
 - Network18 Group Senior Professional Welfare Trust
 
 - Network18 Employees Welfare Trust
 
 - B K Media Private Limited
 
 Estimates of future salary increases considered in actuarial valuation,
 take account of inflation, seniority, promotion and other relevant
 factors, such as supply and demand in the employment market.
 
 Defined contribution plan
 
 The Company has contributed Rs. 40,204,741 (previous year Rs.
 38,654,877) to Contribution to provident fund and employees'' state
 insurance.
 
 Other long term employee benefits
 
 The Company, along with its subsidiary company, TV18 Broadcast Limited,
 has jointly established an Employee Welfare Plan dated 2 February 2009
 for the benefit of their existing and future employees and to
 administer the same, a Trust named Network18 Group Senior Professional
 Welfare Trust has been constituted under the Indian Trusts Act, 1881
 vide Trust Deed dated 19 February 2009.
 
 The Employee Welfare Plan provides that any accretion to the corpus of
 the Trust (like dividends, profit on sale of investments, interest
 income, etc.) will be utilized for the benefit of beneficiaries upon
 occurrence of certain specific events. It further provides that the
 amount of benefit to be provided out of such accretion will be at the
 discretion of the trustees.
 
 During the year ended 31 March 2013 and 31 March 2012, there were no
 net accretions to the corpus of the aforementioned Trust and
 accordingly no liability or plan assets have been provided/recognized
 in these financial statements.
 
 4. Obligation on long term, non-cancellable operating leases
 
 The Company has taken various office premises under operating lease
 agreements. The lease term of these leases ranges between 1 to 5 years
 and they are renewable by mutual consent. There are no sub leases or
 restrictions imposed by lease arrangements. There are certain lease
 agreements with escalation clauses during the initial lease term. Lease
 payments during the period recognized in the statement of profit and
 loss amount to - Rs 195,336,226 (Rs.  194,415,789)
 
 5.  Managerial remuneration paid, up to 31 March 2013, by the Company
 amounting to Rs. 26,388,400 (31 March 2012- Rs 20,100,400) is in excess
 of the limits prescribed under the Companies Act, 1956 (the Act).
 The Company is in the process of obtaining the necessary approvals as
 per the Act.
 
 6.  Employee Stock Option Plans
 
 a. The Company''s Employee Stock Option Plans (ESOPs) framed in
 accordance with the Securities and Exchange Board of India (Employee
 Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
 1999 (SEBI Guidelines) which have been approved by the Board of
 Directors and the Shareholders are listed below. Schemes listed at
 serial (i) to (vii) were established as mirror schemes of the then
 existing ESOP schemes in Television Eighteen India Limited, in terms of
 the Scheme of Arrangement.
 
 i) The Network 18 Employees Stock Option Plan 2002 (ESOP 2002)
 
 ii) The Network 18 Employees Stock Option Plan 2004 (ESOP 2004)
 
 iii) The Network 18 Senior Employees Stock Option Plan 2004 (Senior
 ESOP 2004)
 
 iv) The Network 18 Employees Stock Option Plan 2005 (ESOP 2005)
 
 v) The Network 18 Long Term Retention Employees Stock Option Plan 2005
 (Long Term Retention ESOP 2005)
 
 vi) The Network 18 Employees Stock Option Plan C 2007 (ESOP C 2007)
 
 vii) The Network 18 Employees Stock Option Plan 2007 (ESOP 2007)
 
 7. Due to Micro and Small Enterprises
 
 The management has identified enterprises which have provided goods and
 services to the Company and which qualify under the definition of micro
 and small enterprises, as defined under Micro, Small and Medium
 Enterprises Development Act, 2006 (MSMEDA). Accordingly, the disclosure
 in respect of the amounts payable to such enterprises as at 31 March
 2013 has been made in the financial statements based on information
 received and available with the Company. Further in the view of the
 management, the impact of interest, if any, that may be payable in
 accordance with the provisions of the MSMEDA is not expected to be
 material.
 
 8.  Barter transactions
 
 The Company enters into barter transactions, which are recorded at the
 fair value of consideration receivable or payable. The statement of
 profit and loss for the year 31 March 2013 reflects revenue from barter
 transactions of Rs 73,968,497 (for the year ended 31 March 2012 Rs
 78,930,412) and expenditure of Rs 79,441,768 (for the year ended 31
 March 2012 Rs 78,294,251) being the fair value of barter transactions
 provided and received.
 
 9.  Pursuant to the business transfer agreement dated 27 February 2013
 the Yellow Pages and AskMe business undertakings, forming part of the
 ''Publishing'' segment of the Company, have been disposed off to Getit
 Infoservices Private Limited. As at 31 March 2013, the carrying amount
 of such assets and liabilities of discontinuing operations which were
 not disposed off was Rs 7,597,686 (previous year Rs 138,190,345) and Rs
 96,959,325 (previous year Rs 366,643,490) respectively. The following
 statement shows the revenue and expenses of continuing and
 discontinuing operations:
 
 10.  The Board of Directors, at their meeting held on 3 January 2012
 decided to raise Rs. 27,000,000,000 by issuing shares on rights basis
 for, inter alia (a) Investment in subsidiary, TV18 Broadcast Limited
 (b) Repayment/prepayment of certain loans, redemption of Secured
 Optionally Fully Convertible Debentures, redemption of Preference
 shares and repayment of public deposits and (c) General corporate
 purposes. Pursuant to the approval by the Securities and Exchange Board
 of India (SEBI) for the Rights Issue, the Issue was opened on 18
 September 2012 and closed on 04 October 2012. The Issue was fully
 subscribed. The Company has allotted 899,873,930 equity shares on 12
 October 2012 at a price of Rs.  30 per share (face value of Rs. 5 and
 securities premium of Rs. 25) and the new shares started trading from
 16 October 2012 in the Bombay Stock Exchange (BSE) and National Stock
 Exchange (NSE). The status for the utilisation of total proceeds of Rs.
 26,996,217,900 from the Rights Issue of the Company is set out below:
 
 11.  The Company is in the process of addressing the matters specified
 in circular no. CIR/CFD/DIL/3/2013 dated 17 January 2013 issued by the
 Securities and Exchange Board of India (''SEBI'') in respect of certain
 shares held by Network18 Group Senior Professional Welfare Trust.
 
 12.  Previous year figures have been regrouped, wherever necessary, to
 confirm to current year presentation.
Source : Dion Global Solutions Limited
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