Television Eighteen

1.  Secured Loans
 
 a.  Cash credit with banks are secured by:
 
 i. First charge on all current assets of the Company on pari passu
 basis with participating banks.
 
 ii. Second charge on all fixed assets of the Company on pari passu
 basis with participating banks.
 
 iii.  Personal guarantee of the Managing Director.
 
 b.  Term loans from banks as on 31 March, 2008 amounted to Rs.
 377,637,284:
 
 i.  Out of the above Rs. 207,589,286 is secured by:
 
 a.  First charge on pari passu basis on the Companys immovable and
 movable properties (except for the land exclusively mortgaged to the
 trustees of the ZCSPCDs), both present and future, save and except
 charges created/to be created in favour of the companys bankers on
 current assets for securing borrowings for working capital
 requirements.
 
 b.  First charge on the moveable and immovable properties both present
 and future of all the subsidiary companies except Television Eighteen
 Mauritius Limited, save and except book debts subject to charges
 created/to be created in favour of the companys bankers on current
 assets for securing borrowings for working capital requirements.
 
 c.  Unconditional and irrevocable personal guarantees of the Managing
 Director.
 
 d.  Further term loans amounting to Rs. 123,214,286 are additionally
 secured by an exclusive charge of Rs. 15,401,786 on the liquid
 securities of the Company.
 
 ii.  Out of the above, Bs. 150,000,000 is secured by:
 
 a.  Pari passu charge on all the fixed assets of the Company.
 
 b.  Pari passu charge on the current assets of the Company.
 
 c.  Corporate guarantee of the Holding Company, Network18 Media &
 Investments Limited (formerly Network 18 Fincap Limited).
 
 iii.  Out of the above Rs. 20,047,998 is secured by first charge on the
 buildings.
 
 c.  The working capital demand loan from a bank amounting to Rs.
 135,840,631 is secured by first pari passu charge on current assets.
 
 d.  Other loans from banks amounting to Rs. 9,614,592 are secured by
 hypothecation of vehicles.
 
 e.  Term Loans from others amounting to Rs. 408,333,335 are secured by:
 
 i.  Pari passu charge over all the fixed assets and current assets of
 the Company.
 
 ii.  Corporate guarantee of Holding Company, Network18 Media &
 Investments Limited (formerly Network 18 Fincap Limited).
 
 2.  Investments in subsidiaries and affiliates
 
 a.  The Company has an investment of Rs. 59,490,000 (Previous year Rs.
 59,490,000) in iNews.com Limited (iNews) as at 31 March 2008. iNews had
 accumulated losses (including miscellaneous expenditure) aggregating to
 Rs 20,455,987 (Previous year Rs. 14,542,306) as at 31 March, 2008
 resulting in an erosion in its net worth.
 
 b.  The Company has an investment of Rs. 133,543,900 (Previous year Rs.
 55,100,200) in News Wire 18 India Private Limited (Newswire) as at 31
 March 2008. Newswire had accumulated losses aggregating to Rs.
 211,418,368 (Previous year Rs. 71,497,597) as at 31 March, 2008
 resulting in a complete erosion of its net worth.
 
 c.  The Company has an investment of Rs. 151,190,000 (Previous year Rs.
 Nil) in equity shares of Mobilenxt Teleservices Private Limited
 (Mobilenxt Tele). Mobilenxt Tele had accumulated losses aggregating to
 Rs. 70,529,944 as at 31 March 2008, resulting in an erosion in its net
 worth.
 
 However, having regard to the continued long term strategic involvement
 with these companies, no provision is considered necessary for
 diminution in the value of investments.
 
 3.  Investment in Infomedia India Limited
 
 The Company, l-Ven Interactive Limited (l-Ven), Infomedia India Limited
 (Target Company) and India Advantage Fund II (DlAF ll), a trust
 constituted under the provisions of the Indian Trust Act, 1882, have
 entered into a Share Purchase, Share Subscription and Warrant
 Subscription Agreement dated 11 December, 2007 (agreement). As at the
 date of the agreement, the Target Company was a subsidiary of l-Ven and
 is listed on the Bombay Stock Exchange Limited (BSE) and the National
 Stock Exchange of India Limited (NSE). Further, as at the date of the
 agreement, l-Ven held 12,396,999 equity shares of the Target Company
 representing 62.73% of the outstanding equity shares of the Target
 Company. As per terms of the agreement, subject to statutory and
 regulatory clearances:
 
 The Company agreed to purchase from IAF II such number of fully paid up
 equity shares of l-Ven (sale shares) which would transfer to the
 Company an economic interest of 40% of the issued and paid up equity
 shares of the Target Company. In addition, the Company agreed to
 subscribe to and l-Ven agreed to issue and allot a stipulated number of
 fully paid up equity shares (subscription shares) of l-Ven. As at the
 year end, the Company had not purchased/subscribed to the above
 mentioned shares and had a commitment of Rs. 1,779 million as at the
 year end in respect of the above. Pursuant to the agreement, the said
 consideration was to be placed in an escrow account pending which the
 Company has provided for interest, at the rate of 14 % per annum
 compounded monthly, amounting to Rs. 57.22 million on the above
 mentioned amount.
 
 It was envisaged that the purchase of sale shares and subscription
 shares by the Company would result in the Company indirectly acquiring
 control over 62.73% of the fully diluted issued and paid up capital of
 the Target Company, prior to the exercise of options to convert
 warrants into fully paid up equity shares .
 
 ii It was envisaged that the Company would make an offer (offer) as per
 the Securities and Exchange Board of India (Substantial Acquisition of
 Shares and Takeovers) Regulations 1997 to the shareholders of the
 Target Company for acquiring up to 20% of the voting capital of the
 Target Company. In the event, the Company is not able to acquire an
 economic interest of 53% of the issued and paid up equity shares of the
 Target Company after the offer and purchase of sale shares, IAF II has
 agreed to sell additional equity shares (subsequent sale shares) of
 l-Ven to the Company to ensure that the Company acquires an economic
 interest of 53% in the issued and paid up equity capital of the Target
 Company.
 
 The offer closed on 28 April, 2008 and the Company acquired 720,931
 equity shares (face value Rs. 10 each) representing 3.65% of the voting
 capital of the Target Company pursuant to such offer.
 
 iii Further, the Target Company agreed to issue 5,000,000 warrants
 (warrants) to the Company, in accordance with Securities and Exchange
 Board of India (Disclosure and Investor Protection) Guidelines, 2000 D
 Guidelines for Preferential Issues. The warrant consideration price was
 fixed at Rs. 237 per warrant. Each warrant is convertible into one
 fully paid up equity share of Rs. 10 each of the Target Company on
 exercise of options and on payment of the stipulated warrant exercise
 price. The option is exercisable during a period of 18 months from the
 date of allotment of warrants.
 
 During the year, the Company paid 10% of the consideration price (i.e.
 Rs.23.70 per warrant) aggregating to Rs. 118,500,000 to the Target
 Company and 5,000,000 warrants were allotted to the Company. As at the
 year end, the Company has a commitment towards the balance 90% of the
 consideration price (i.e. Rs.213.30 per warrant) aggregating to Rs.
 1,066,500,000 for the subscribed and allotted warrants. The Company
 intends to fulfill its commitment within the stipulated time period.
 
 4.  Television Eighteen Mauritius Limited
 
 Pursuant to the issuance of revised guidelines for uplinking of news
 and current affairs channels from India issued by the Ministry of
 Information and Broadcasting, the Company had resolved, by means of a
 special resolution of its shareholders passed in the general meeting on
 17 October, 2003 to utilise the securities premium account upto Rs.
 550,000,000 towards adjustment for diminution in value of investments
 made by the Company in TEML and loans granted by the Company to TEML.
 
 The Company had filed a petition for the above resolution with the
 Honorable High Court of Delhi on 6 January, 2004. The Honorable High
 Court of Delhi vide its order dated 23 March, 2004 had approved the
 above scheme. Consequently, during the year ended 31 March, 2004 the
 Companys investments in the equity of TEML had been written down by
 Rs.407,500,000 to Rs. 160,631,581 which was determined by the Company
 on the basis of an independent valuation. Further, the loan due from
 TEML had been written down by Rs. 136,830,000 to Nil value. The total
 write down on this account of Rs. 544,330,000 had been adjusted against
 the securities premium account.  The Company had also written off
 amounts receivable from TEML on account of exports aggregating to Rs.
 135,406,876 in the year ended 31 March, 2004. The approval for the same
 from Reserve Bank of India is pending as at 31 March, 2008.
 
 5.  Current Liabilities
 
 Current liabilities include amounts aggregating to Rs.49,882,379
 (Previous year Rs.89,254,316) due to Television Eighteen Mauritius
 Limited, the repatriation of which is subject to clearance from an
 authorised dealer.
 
 6.  Employee Stock Option and Stock Purchase Plan
 
 a.  Television Eighteen India Limited Employee Stock Option Plans
 
 The Company has established several employee stock option plans (ESOPs)
 in accordance with the Securities and Exchange Board of India (Employee
 Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
 1999 which have been approved by the Board of Directors and the
 shareholders. The details are as given below:
 
 - Television Eighteen India Limited Stock Option Plan 2002 (ESOP 2002)
 
 - Television Eighteen India Limited Employees Stock Option Plan 2003
 (ESOP 2003)
 
 - Television Eighteen India Limited Employee Stock Option Plan 2004
 (ESOP 2004)
 
 - Television Eighteen India Limited Senior Employee Stock Option Plan
 2004 (Senior ESOP 2004)
 
 - Television Eighteen India Limited Long Term Retention Employee Stock
 Option Plan 2005 (Long Term Retention ESOP 2005)
 
 - Television Eighteen India Limited Employee Stock Option Plan 2005
 (ESOP 2005)
 
 - Television Eighteen India Strategic Employees Stock Option Plan 2005
 (Strategic Acquisition ESOP 2005)
 
 - Television Eighteen India Limited Employees Stock Option Plan 2006
 (ESOP 2006)
 
 - Television Eighteen India Limited 18 Employees Stock Option Plan A
 2007 (ESOP (A) 2007)
 
 - Television Eighteen India Limited Employees Stock Option Plan B 2007
 (ESOP (B) 2007)
 
 - Television Eighteen India Limited Employee Stock Option Plan 2007
 (ESOP 2007)
 
 -Television Eighteen India Limited Employee Stock Purchase Plan 2007
 (ESPP 2007)
 
 A compensation committee comprising independent members of the Board of
 Directors administers the ESOPs. All options under the ESOPs are
 exercisable for equity shares. The Company had declared a bonus issue
 of 1:1 in the AGM of the Company on 7 September, 2007 with record date
 of 18 October, 2007. Prior to the bonus issue, each option was
 exercisable for one Rs. 5 fully paid up equity share of the Company on
 payment of the exercise price. Subsequent to the bonus issue each
 option is exercisable for two Rs. 5 fully paid up equity shares of the
 Company on payment of the exercise price.
 
 The salient terms of ESOPs schemes of the Company are set out
 hereunder:
 
 7.  Transfer Pricing
 
 As per the Transfer Pricing Rules of the Income tax Act, 1961 every
 company is required to get a transfer pricing study conducted to
 determine whether the international transactions with associated
 enterprises were undertaken at an armos length basis for each financial
 year end. Transfer pricing study for the transactions during the year
 ended 31 March, 2008 is currently in progress and hence adjustments, if
 any, which may arise there from have not been taken into account in
 these financial statements for the year ended 31 March, 2008 and will
 be effective in the financial statements for the year ended 31 March,
 2009. However, in the opinion of the Companys management, adjustments,
 if any, are not expected to be material.