UTV Software Communications

The Directors take pleasure in presenting the 18th Annual Report on
 the operations of your Company for the financial year ended March 31,
 2008.
 
 1.  FINANCIAL HIGHLIGHTS
 
 Company Standalone                                   (Rs. in million)
 Particulars                             Year ended        Year ended
                                            2007-08           2006-07
 
 Sales and Services                        2,862.91          1,524.50
 
 Other Income                                 20.78            285.40
 
 Profit on Sale of Post Production Division    8.90               -
 
 Total Income                              2,892.59           1809.90
 
 Direct cost                               2,335.33          1,225.60
 
 Staff cost                                  157.46            141.36
 
 Other Expenses                              172.00            198.81
 
 Total Expenses                            2,664.79          1,565.77
 
 PROFIT BEFORE INTEREST, 
 DEPRECIATION AND TAX                        227.80            244.13
 
 Less: Interest (net)                        115.54             16.10
 
 PROFIT BEFORE DEPRECIATION AND TAX          112.26            228.03
 
 Less: Depreciation                           33.54             30.66
 
 PROFIT BEFORE TAX                            78.72            197.37
 
 Less: Provision for Taxation
 
 - Current                                     8.99             22.25
 
 - Mat Credit Entitlement                     (8.47)           (21.82)
 
 - Fringe Benefit Tax                          3.94              4.08
 
 - Deferred Tax                               29.50           (173.07)
 
 Total of Taxes                               33.96           (168.56)
 
 PROFIT AFTER TAX                             44.76            365.93
 
 Balance Profit brought forward              741.16            477.08
 
 NET PROFIT AVAILABLE FOR APPROPRIATION      785.92            843.01
 
 Transfer to General Reserve                    -               36.59
 
 Dividend on Equity shares                    34.20             57.23
 
 Distribution Tax Thereon                      5.81              8.03
 
 BALANCE CARRIED TO BALANCE SHEET            745.91            741.16
 
 
 Consolidated                    (Rs. in million)
 Particulars          Year ended      Year ended
                         2007-08         2006-07
 
 Sales and Services     4,341.80        1,749.07
 
 Other Income             107.05          283.23
 
 Profit on Sale of Post 
 Production Division        8.90             -
 
 Total of Income        4,457.45        2,032.30 
 
 EXPENDITURE
 
 Direct Cost            3,047.16        1,299.13
 
 Staff Cost               258.36          160.59
 
 Other Expenses           388.79          218.10
 
 Total of Expenses      3,694.31        1,677.82
 
 PROFIT BEFORE INTEREST, 
 DEPRECIATION AND TAX     763.14          354.48
 
 Less : Interest (net)     59.86           16.10
 
 PROFIT BEFORE 
 DEPRECIATION AND TAX     703.28          338.38
 
 Less : Depreciation       38.91           31.36
 
 Add : Exceptional Item
 
 PROFIT BEFORE TAX        664.37          307.02
 
 Less : Provision for Taxation
 
 - Current                 20.86           27.44
 
 - Mat Credit Entitlement  (8.47)         (21.82)
 
 - Fringe Benefit Tax       4.18            4.08
 
 - Deferred Tax          (129.10)        (173.07)
 
 Total of Taxes          (112.53)        (163.37)
 
 PROFIT BEFORE 
 MINORITY INTEREST        776.90          470.39
 
 Less : Minority Interest 200.32            7.12
 
 PROFIT AFTER 
 MINORITY INTEREST        576.59          463.27
 
 Balance Profit 
 brought forward          880.26          518.85
 
 NET PROFIT AVAILABLE
 FOR APPROPRIATION      1,456.84          982.12
 
 Transfer to 
 General Reserve            -              36.59
 
 Dividend on 
 Equity Shares             34.20           57.24
 
 Distribution Tax Thereon   5.81            8.03
 
 BALANCE CARRIED TO 
 BALANCE SHEET          1,416.83          880.26
 
 2.  DIVIDEND
 
 Your Directors are pleased to recommend a dividend of Re. 1/- per
 Equity Share on 34,195,468 fully paid Equity Share of Rs.10/- each for
 the financial year ended March 31, 2008.
 
 3.  SUBSIDIARIES & JOINT VENTURE COMPANIES
 
 As at March 31, 2008, the Company has the following subsidiaries viz.
 
 1) UMP Plc 2) UTV Motion Pictures (Mauritius) Limited
 
 3) IG Interactive Entertainment Limited 
 
 4) UTV Communications (USA) LLC
 
 5) Ignition Entertainment Limited- UK and its subsidiaries i.e.
 Ignition Entertainment Limited (USA) and Digi-Guys Limited 
 
 6) Indiagames Limited 
 
 7) UTV TV Content Limited As at March 31,2008, IG Interactive
 Entertainment Limited., UTV Communications (USA) LLC & UTV TV Content
 Limited are wholly owned subsidiaries of the Company.
 
 UMP Plc is 76.82% subsidiary of the Company.
 
 Ignition Entertainment Limited (UK) is a 70% subsidiary and Indiagames
 Limited is 54.86% subsidiary of IG Interactive Entertainment Limited.
 
 Ignition Entertainment Limited (USA) and Digi-Guys Limited are 100%
 subsidiaries of Ignition Entertainment Limited (UK).
 
 UTV Motion Pictures (Mauritius) Ltd. is 99.75% subsidiary of UMP Plc.
 
 The statement pursuant to Section 212(1)(8) of the Companies Act, 1956
 in respect of subsidiaries is attached. The Consolidated Accounts of
 your Company and its subsidiaries are presented as part of this Annual
 Report in accordance with Accounting Standard 21 issued by the
 Institute of Chartered Accountants of India.
 
 Your Company has been exempted by the Ministry of Company Affairs, vide
 their letter No. 47/294/2008-CL-III dated May 7, 2008 from attaching
 the Audited Financial Statements along with the reports of the Board of
 Directors and the Auditor’s Report pertaining to its subsidiary
 companies viz., 
 
 1) UMP Plc 
 
 2) UTV Motion Pictures (Mauritius) Limited
 
 3) IG Interactive Entertainment Limited
 
 4) UTV Communications (USA) LLC 5) Ignition Entertainment Limited (UK)
 and its subsidiaries i.e. Ignition Entertainment Limited (USA) and
 Digi-Guys Limited 6) Indiagames Limited 7) UTV TV Content Limited. As
 per the terms of the exemption letter, a statement containing brief
 financial details of the Company’s subsidiaries for the year/ period
 ended March 31, 2008 is included in the Annual Report.  Accordingly,
 the audited accounts of the above mentioned subsidiary companies are
 not attached.
 
 The audited accounts of the subsidiary Companies are also kept for
 inspection by any member at the Company’s Registered office and copies
 will be made available on request to the members when requested.
 
 Subsidiaries
 
 a) UMP Plc
 
 The Company was incorporated on March 27, 2007 as UTV Motion Pictures
 Plc at Isle of Man. The name of the Company was changed to UMP Plc on
 January 31, 2008.
 
 During the year UMP Plc was listed on the Alternative Investment Market
 of (“AIM”) of the London Stock Exchange and the shares started trading
 with effect from July 2, 2007. UMP Plc allotted 24,137,931 equity
 shares of USD 0.05 each comprising of 23.18% of the post allotment
 equity at USD 2.90 per share aggregating to USD 70 million. The balance
 shares are held by the Company.
 
 During the year under review, UMP Plc has acquired 99.75% controlling
 stake in UTV Motion Pictures (Mauritius) Limited. Accordingly, the
 Company along with UMP Plc holds 100% stake in UTV Motion Pictures
 (Mauritius) Limited as on March 31, 2008.  Thus, UTV Motion Pictures
 (Mauritius) Limited has become a downstream subsidiary of your Company.
 
 b) IG Interactive Entertainment Limited
 
 The Company was incorporated on September 6, 2004 as UTV Communications
 (UK) Limited with an intention to carry out Film Acquisition,
 Syndication and Distribution business in the United Kingdom.  The name
 of the Company was changed to IG Interactive Entertainment Limited on
 February 15, 2008. As at March 31, 2008 it posted a sales of GBP
 1,116,364 (Previous Year GBP 1,262,049) and a net loss of GBP 139,415
 as against the net profit of GBP 144,219 in the previous year.
 
 On December 14, 2007, IG Interactive Entertainment Limited acquired
 54.86 % equity stake in Indiagames Limited which is into the business
 of mobile and online gaming for a consideration of USD 9 million.
 Simultaneously, the Company has also acquired a 12.11% equity stake in
 Indiagames Limited by subscribing to additional shares issued by
 Indiagames Limited for Rs. 0.85 million and holds these for the benefit
 of the management and shareholders of Indiagames. Accordingly, the
 Company along with IG Interactive Entertainment Limited holds 66.97%
 stake in Indiagames Limited as on March 31, 2008.  Thus, Indiagames
 Limited has become a stepdown subsidiary of your Company.
 
 During the year under review, the holding of IG Interactive
 Entertainment Limited in its subsidiary Ignition Entertainment Limited
 (UK) has been reduced from 71.09% to 70% due to the issue of additional
 shares by Ignition Entertainment Limited to its minority shareholders.
 Ignition Entertainment Limited (USA), Digi-Guys Limited continue to be
 100% downstream subsidiaries of Ignition Entertainment Limited (UK).
 
 c) UTV Communications (USA) LLC (UTV US)
 
 UTV US was incorporated on April 26, 2004 with an intention to carry
 out film acquisition, syndication and distribution business in the
 United States of America (North America) and other surrounding
 territories. As at March 31, 2008 it posted a sales of USD 16,638,754
 (Previous year USD 2,124,161) and a net profit of USD 13,917 (Previous
 Year USD 10,285).
 
 d) UTV TV Content Limited (UTV TV)
 
 The Company was incorporated on July 9, 2007 as UTV Movies Limited. On
 January 24, 2008, your Company acquired 100% equity stake in UTV TV
 Content Limited for a consideration of Rs. 0.50 million, making it a
 wholly owned subsidiary of the Company. The name of the Company was
 changed to UTV TV Content Limited on June 03, 2008. UTV TV incorporated
 a Company on May 06, 2008 called RB Entertainment Limited (“RBEL”),
 which is a 60:40 joint Venture between UTV TV and Mr. Rajesh Beri.
 
 e) UTV Broadcasting Limited (UTVBL)
 
 On January 24, 2008, your Company has sold off its 98.75 % equity stake
 in UTVBL, a dormant company at a consideration of Rs.19.75
 million.Subsequent to such sale UTVBL ceased to be a subsidiary of the
 Company.
 
 f) UTV New Media Limited (UNML)
 
 On April 30, 2008, your Company acquired 100% equity stake in UNML thus
 making it a wholly owned subsidiary of the Company. UNML was
 incorporated on September 20, 2007 under the name of “United New Media
 Ventures Limited” and consequent to the acquisition by the Company, the
 name of the Company was changed to UTV New Media Limited w.e.f. May 06,
 2008. The Company carries on the business of developing and maintaining
 websites and acquisition and exploitation of digital rights on mobile
 and digital platforms.
 
 On May 08, 2008 UNML completed the acquisition of ITNation Media
 Private Limited ( ITNation).
 
 ITNation has technology based consumer and trade focussed business
 model positioned as an “Online Technology Infomediary” in India. This
 business model focuses on the target age group of 15-35 and the Company
 finds this highly synergistic to its business. The acquisition by UNML
 of ITNation was through a combination of acquisition of equity shares
 from the existing promoters of ITNation and subscription to fresh
 equity shares of ITNation. Post completion of acquisition process UNML
 will hold 80% stake in ITNation.
 
 Joint Ventures
 
 i) Windmill Entertainment Limited (WEL)
 
 Windmill Entertainment Limited is a 50:50 Joint Venture between the
 Company and Mr. Shekhar Suman.
 
 During the year under review, the Company has invested Rs. 0.50 million
 in Windmill Entertainment Limited, a Company incorporated on August 17,
 2007 to house the joint venture with Mr. Shekhar Suman for television
 content production. On November 5, 2007, Mr. Shekhar Suman has invested
 Rs 0.25 million in Windmill Entertainment Limited by acquiring 50% of
 the equity capital from the Company, thereby making it a 50:50 Joint
 Venture. Being in its first year of operation and as at March 31, 2008,
 WEL posted a net loss of Rs. 4.12 million.
 
 ii) Smriti Irani Television Limited (SITL)
 
 Smriti Irani Television Limited is a 50:50 Joint Venture between the
 Company and Mrs. Smriti Irani.
 
 During the year under review, the Company has invested Rs. 0.25 million
 in STIL, a Company incorporated on December 6, 2007 to house the joint
 venture with Mrs. Smriti Irani for television content production. Being
 the first year of its operation and as at March 31, 2008, STIL posted a
 net loss of Rs. 0.75 million.
 
 4.  ISSUE OF SHARES ON PREFERENTIAL BASIS
 
 (A) Pursuant to the approval granted by the members at the Annual
 General Meeting held on August 24, 2006, the Company had allotted
 1,949,360 warrants on a preferential basis with the option of
 converting each warrant into one equity share @ Rs.192.50 (including
 premium of Rs.182.50 per share) per share within a period of 18 months
 from the date of allotment. The Company has, upon receipt of the
 balance consideration allotted 519,500 equity shares on February 20,
 2008 and 1,429,860 equity shares on March 4, 2008 at an issue price of
 Rs. 192.50 per share upon conversion of the aforesaid warrants.
 
 (B) On February 16, 2008, the Board approved the execution and delivery
 of a Share Subscription Agreement between The Walt Disney Company
 (Southeast Asia) Pte Limited (‘Disney’) and Unilazer (Hong Kong)
 Limited, Mr. Rohinton Screwvala and Unilazer Exports and Management
 Consultants Limited (“Promoter Group”) and the execution and delivery
 of a Shareholders Agreement between Disney, the Company and the
 Promoter Group. In compliance with the Share Subscription Agreement and
 on receipt of the approval of the Foreign Investment Promotion Board
 and pursuant to the approval granted by the members at the Extra
 Ordinary General Meeting held on March 17, 2008, the Company has:
 
 i) on May 06, 2008 allotted 4,532,000 warrants to Unilazer Exports and
 Management Consultants Limited (“Unilazer”), a Promoter Group company
 on a preferential basis which will entitle Unilazer to 4,532,000 equity
 shares of the Company of nominal value of Rs. 10/- each at a price of
 Rs. 860.79 (including a premium of Rs. 850.79 per share) within a
 period of 18 months from the date of issue. The Company has received
 10% of the total amount of the warrants on allotment. The total
 investment by Unilazer in the Company would be around Rs. 3,901
 million.
 
 ii) on May 09, 2008, allotted 9,352,500 equity shares of Rs. 10/- each
 at an issue price of Rs. 860.79 to Disney on preferential basis. The
 total investment by Disney in the Company was Rs. 8,050 million.
 
 After the aforesaid issue and allotment, the issued, subscribed and
 paid up share capital of the Company consequently has increased and
 stood at 34,195,468 equity shares of the face value of Rs.10/-each.
 
 Pursuant to issue of shares/ warrants aforesaid, Disney
 
 and Promoter Group, as persons acting in concert, have made an open
 offer to the Public shareholders of the Company under the Securities
 and Exchange Board of India (Substantial Acquisition of Shares &
 Takeovers) Regulation 1997.
 
 5.  INVESTMENT IN UTV GLOBAL BROADCASTING LIMITED
 
 On February 16, 2008, the Board of the Company approved the conversion
 of debt funding in UTV Global Broadcasting Limited (“UGBL”) together
 with further investment for a 75 % stake for an aggregate consideration
 of Rs. 2,400 million. Disney will also be investing in UGBL for a 15%
 equity shareholding and 720,000 warrants for an aggregate consideration
 of Rs. 1,189.8 million. In certain circumstances, the Warrants issued
 by UGBL to Disney may convert into additional equity shares such that
 Disney has an aggregate holding of 37.5% of the share capital of UGBL.
 Mr. Rohinton Screwvala will be holding 10% of the shares of UGBL. UGBL
 is the parent company for its two wholly owned subsidiaries, Genx
 Entertainment Limited (Genx) and UTV Entertainment Television Limited.
 Genx has already launched successfully two youth channels through the
 Bindass brand whilst UTV Television Entertainment Limited has launched
 the “World Movies Channel” and “UTV Movies”. The aforesaid is subject
 to all regulatory approvals.
 
 6.  EMPLOYEES STOCK OPTION SCHEME
 
 Pursuant to the approval granted by the members at the last year Annual
 General Meeting held on September 25, 2007, the Company had introduced
 Employee Stock Option Scheme (“ESOP Scheme”) for permanent employees
 and directors of the Company & of its subsidiaries.
 
 The ESOP Scheme provides for grant of 1,000,000 options. Each option,
 on exercise, is convertible into one equity share of the Company having
 face value of Rs.10/.  Pursuant to a resolution passed by the
 Remuneration & Compensation Committee at its meeting held on January
 11, 2008, all 1,000,000 options have been granted to the eligible
 employees at exercise price of Rs. 800/- per option.
 
 Disclosure pursuant to Clause 12 of the Securities and Exchange Board
 of India (Employees Stock Option Scheme and Employees Stock Purchase
 Scheme) Guidelines is given in the Annexure to this Report.
 
 7.  CORPORATE GOVERNANCE REPORT AND MANAGEMENT’S DISCUSSION AND
 ANALYSIS STATEMENT:
 
 Your Company adheres to high standards of Corporate Governance. Your
 Company has complied with the Corporate Governance code as stipulated
 under the listing agreement with the stock exchanges. A separate
 section on Management’s Discussion and Analysis and the Corporate
 Governance report along with a certificate from Company Secretary in
 practice confirming the level of compliance is annexed and forms a part
 of the Directors Report.
 
 8.  DIRECTORS
 
 During the year Mr. Ronald D’Mello resigned as Executive Director from
 the Company. Mr. Sanjaya Kulkarni and Mrs. Zarina Mehta retire by
 rotation and being eligible, offer themselves for re-appointment.  Your
 Directors recommend their re-appointment.
 
 9.  FIXED DEPOSIT
 
 Your Company has neither accepted nor renewed any fixed deposit in
 respect of the year under review.
 
 10.  AUDITORS
 
 M/s Price Waterhouse & Co., Chartered Accountants, the present
 statutory auditors of the Company holds office until the conclusion of
 the ensuing Annual General Meeting. It is proposed to re appoint them
 as the statutory auditors of the Company until the conclusion of the
 next Annual General Meeting. M/s Price Waterhouse & Co., have under
 Section 224(1) of the Companies Act, 1956 furnished the certificate of
 their eligibility for reappointment.
 
 11.  AUDITORS REPORT
 
 The Auditor’s Report to the shareholders does not contain any
 qualification.
 
 12.  CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
 ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The particulars as prescribed under sub-section of Section 217 of the
 companies Act, 1956, read with the Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules, 1988 are set out in the
 annexure, which forms part of this report.
 
 13.  PARTICULARS OF EMPLOYEES
 
 Information as per Section 217 (2A) of the Companies Act, 1956 read
 with rules framed there under is required to be a part of this report.
 However, pursuant the provisions of Section 219(b)(iv) of the Companies
 Act, 1956 the report and accounts are being sent to the shareholders of
 the Company excluding the statement of particulars under Section
 217(2A) of the Act. Any shareholder interested in obtaining a copy of
 the said statement may write to the Company secretary at the registered
 office of the Company.
 
 14.  DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements of Section 217(2AA) of the Companies Act,
 1956 the Board of Directors hereby state:
 
 (a) That in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures
 
 (b) That the Directors have selected appropriate accounting policies
 and applied consistently and made judgments and estimates made are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as on March 31, 2008 and of the profit of the
 Company for the year ended March 31, 2008.
 
 (c) That the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities
 
 (d) That the Directors have prepared the annual accounts on a going
 concern basis.
 
 15.  ACKNOWLEDGEMENTS
 
 Your Directors would take this opportunity to thank all the
 stakeholders for their support and co-operation rendered to the Company
 during the year under review.
 
                                    By order of the Board of Directors
                               for UTV Software Communications Limited
 
                                                    Rohinton Screwvala
                                         CMD & Chief Executive Officer
 
 Place : Mumbai
 Date  : June 16, 2008