Zee Entertainment Enterprises

The Directors take pleasure in presenting the Twenty Sixth Annual
 Report together with the Audited Statement of Accounts of the Company
 for the year ended March 31, 2008.
 
 RESPONSIBILITY STATEMENT
 
 In terms of and pursuant to Section 217 (2AA) of the Companies Act,
 1956, your Directors, in relation to the Annual Statement of Accounts
 for financial year 2007-08, state and confirm that:
 
 a) the Accounts had been prepared on a ‘going concern’ basis and in
 such preparation the applicable accounting standards had been followed
 with proper explanation relating to material departures;
 
 b) your Directors had selected such accounting policies and applied
 them consistently and made judgements and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at the end of the financial year and of the profit of
 the Company for that year; and
 
 c) your Directors had taken proper and sufficient care for maintenance
 of adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, as amended, for safeguarding the assets of the
 Company and for preventing and detecting fraud and other
 irregularities.
 
 FINANCIAL RESULTS
 
 The Financial performance of your Company for the year ended March 31,
 2008 is summarized below:
 
                                                (Rs. Thousands)
 Particulars                              Year ended    Year ended
                                         31.03.2008     31.03.2007
 
 Sales & Services                        10,419,923       8,676,786
 Other Income                             1,019,293         614,553
 Total Income                            11,439,216       9,291,339
 Total Expenses_6,869,997                 6,830,203
 Profit before Tax &
 Exceptional Item                         4,569,219       2,461,136
 Provision for Taxation
 (net)                                    1,592,203         799,050
 Profit after Tax before
 Exceptional Item                         2,977,016       1,662,086
 Less: Exceptional Item
 (provision for diminution
 in value of Investment)                     25,806
 Profit after Tax                         2,951,210       1,662,086
 (Rs. Thousands)
 
 Particulars                               Year ended    Year ended
                                          31.03.2008     31.03.2007
 Add: Balance brought
 forward                                  5,571,728       4,969,018
 Amount available for
 appropriations8,                           522,938       6,631,104
 Appropriations:
 Dividend                                   868,014         650,350
 Tax on Dividend                            145,442         110,527
 General Reserve                            300,000         300,000
 Excess provision for
 dividend including tax on                      -            (1,501)
 dividend written back
 Balance carried forward                  7,209,482        5,571,728
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of Rs. 2/- per
 equity share, i.e. 200% on par value of Re. 1/- each, for the financial
 year 2007-08. The total outflow for this purpose would be Rs. 1,013.46
 Million, which includes a dividend of Rs. 868.01 Million and tax on
 dividend of Rs. 145.44 Million.
 
 In the event, if all outstanding Foreign Currency Convertible Bonds
 aggregating US $ 3.79 Million get converted into equity shares by July
 18, 2008, the outflow on account of dividend would be Rs. 1015.99
 Million.
 
 BUSINESS OVERVIEW
 
 Your Company has further consolidated its position in the Media &
 Entertainment space. During the year Zee TV, which has 37% market
 share, is the only channel which has grown in viewership by 20% and has
 5 out of top 10 programmes in the genre. The programmes Dulhan, Maayka,
 Ghar ki Lakshmi …Betiyaan, Saath Phere are ahead of competition in
 their respective slots.  With the musical extravaganza Sa Re Ga Ma Pa
 being No. 1 programme across GEC, Zee TV has been able to establish and
 broaden the reportere of successful shows in this kitty. Your Company
 has maintained leadership position in the 9 PM to 10 PM slot and Zee TV
 has currently 24 out of the top 50 programmes. Zee Cinema continues to
 maintain its leadership position with 37% channel share in the segment
 with its premier properties ‘Shanivaar Ki Raat, Bhakti Ki Shakti’ and
 ‘Double Maaza’ performing consistently well. Zee Caf has been
 successful in strengthening its position in the prime time and has
 launched eleven new programmes during the year and is continuously
 surpassing the competitors in its genre. Zee Café is the first channel
 in the country to run popular sitcoms, simultaneously with their launch
 in US thereby realising its core purpose of providing widest and latest
 range of English entertainment in India. These in the aggregate, led to
 substantial growth in advertising revenues during the year on a like to
 like basis.
 
 The Indian Film Industry has seen multifold expansion of exhibition
 with new multiplexes and digital cinemas which has given rise to
 development of ancillary markets like home entertainment, mobile music,
 international distribution, etc. To capitalize on this strong
 opportunity and synergies, your Company is launching a Film Division
 with two labels - Zee Motion Pictures and Zee Limelight for mainstream
 and niche films respectively.  This division would focus on script
 development, talent and film acquisition, production, distribution and
 marketing of films in Hindi and five other regional languages viz.
 Tamil, Telugu, Kannada, Bengali and Marathi. Your Company’s management
 expects 2008- 09 to be the first full year of these activities with
 range of releases across the six languages. With the expected enlarged
 coverage of Conditional Access System (CAS) your Company expects to
 garner higher subscription revenues.
 
 SUBSIDIARIES
 
 Asia Today Ltd., Mauritius, a wholly owned overseas subsidiary of your
 Company had acquired entire equity stake in APAC Media Ventures Ltd., a
 Company registered in Hongkong, effective October 30, 2007, for the
 purpose of its broadcasting foray in the Asia Pacific Region.
 
 During the year, pursuant to a Scheme of Amalgamation, ETC Networks
 Limited, a listed subsidiary of your Company, merged with Zee
 Interactive Learning Systems Limited. The merged entity was
 subsequently renamed as ETC Networks Limited. Upon receipt of requisite
 approvals, ETC Networks Limited, as a merged entity got listed at the
 Stock Exchanges on and from March 28, 2008. Your Company currently
 holds 50.18% in this subsidiary post-merger.
 
 Ministry of Corporate Affairs, Government of India has, vide its letter
 no. 47/232/2008-CL-III dated May 13, 2008, granted exemption to the
 Company from applicability of provisions of Section 212(1) of the
 Companies Act, 1956, relating to attachment of the accounts of its
 subsidiaries to its Annual Accounts for financial year ended March 31,
 2008. Accordingly, annual accounts of the subsidiaries for current
 financial year are not being attached with the Annual Report of the
 Company. Financial highlights of the subsidiaries are disclosed in the
 Annual Report and the Annual Accounts of the subsidiary companies are
 available for inspection by any Member of the Company who may be
 interested. The Consolidated Financial Statements presented by the
 Company include financial results of its subsidiary companies.
 
 SHARE CAPITAL
 
 During the financial year 2007-08, there has been no change in the
 issued capital of the Company.
 
 The Conversion Price applicable on conversion of the Foreign Currency
 Convertible Bonds (FCCBs) consequent to the de-merger of business
 undertakings of the Company in 2006, was revised to Rs. 153.459 on and
 from April 18, 2008, on receipt of requisite approvals.  Subsequently,
 till the date of this report, your Company has issued and allotted
 440,346 Equity Shares of Re.  1 each, upon conversion of 154 FCCBs of
 US$ 10,000 each, resulting in an increase in the paid up share capital
 of the Company to 434,007,111 equity shares of Re. 1 each. As on date,
 out of FCCBs aggregating US$ 100 Million issued in the year 2004, only
 US$ 3.79 Million are outstanding.
 
 PUBLIC DEPOSITS
 
 Your Company has neither accepted nor renewed any Deposits. During the
 year, balance of matured deposits along with interest thereon,
 aggregating to Rs. 199,517/-, which were unclaimed for a period of
 seven (7) years from the date of maturity have been transferred to the
 Investor Education and Protection Fund.
 
 CORPORATE GOVERNANCE
 
 Your Company has been benchmarking itself with well-established
 Corporate Governance practices besides strictly complying with the
 requirements of Clause 49 of the Listing Agreement(s), including the
 recent amendments. Given the emerging pivotal role of Independent
 Directors in bringing about good governance, your Company continues its
 efforts in optimum utilization of their expertise and involving them in
 all critical decision making processes. A separate report on Corporate
 Governance together with the Statutory Auditors’ Certificate on
 compliance is attached to this Annual Report as also a Management
 Discussion and Analysis report.
 
 DIRECTORS
 
 Your Board had appointed Prof. R. Vaidyanathan as an Additional
 Director in the category of Independent Non- Executive Director on and
 from January 1, 2008. Prof. R.  Vaidyanathan will vacate his office at
 the ensuing Annual General Meeting and has consented to act as Director
 of the Company, if appointed. Notice has been received from a Member of
 the Company under Section 257 of the Companies Act, 1956, proposing the
 appointment of Prof. R. Vaidyanathan as Director of the Company.
 Appropriate resolution seeking your approval to his appointment forms
 part of the Notice convening 26th Annual General Meeting of the
 Company.
 
 Mr. Ashok Kurien, Mr. Rajan Jetley and Sir Gulam Noon, Directors retire
 by rotation at the ensuing Annual General Meeting and, being eligible,
 have offered themselves for re-appointment. Your Board has recommended
 their re- appointment.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In accordance with Accounting Standard AS 21 - Consolidated Financial
 Statements, read with Accounting Standard AS 23 - Accounting for
 Investments in Associates, and Accounting Standard AS 27 - Financial
 Reporting of Interests in Joint Ventures, the audited Consolidated
 Financial Statements forms part of this Annual Report.
 
 AUDITORS
 
 Statutory Auditors, M/s. MGB & Co., Chartered Accountants, Mumbai,
 retire at the ensuing Annual General Meeting and, being eligible, have
 offered themselves for re-appointment.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING
 AND OUTGO
 
 Information required to be provided under Section 217(1)(e) of the
 Companies Act, 1956 read with the Companies (Disclosure of Particulars
 in the Report of the Board of Directors) Rules, 1988 in relation to
 Conservation of Energy and Technology Absorption are currently not
 applicable to the Company and therefore particulars in connection there
 with are as under:
 
 a) Conservation of Energy - Nil
 
 b) Technology Absorption - Nil
 
 Particulars of foreign currency earnings and outgo during the year are
 given in Schedule 18B Note 14(e) to the Notes to the Accounts forming
 part of the Annual Report.
 
 PARTICULARS OF EMPLOYEES
 
 Information as required under Section 217(2A) of the Companies Act,
 1956 read with the Companies (Particulars of Employees) Rules, 1975, as
 amended, is given in an annexure forming part of this report.
 
 ACKNOWLEDGEMENTS
 
 Your Directors take this opportunity to place on record their
 appreciation of the dedication and commitment of employees at all
 levels that has contributed to the success of your Company and remain
 in the forefront of media and entertainment business. Your Directors
 thank and express their gratitude for the support and co-operation
 received from the Central and State Governments - mainly the Ministry
 of Information & Broadcasting and Ministry of Comminucations &
 Information Technology- Department of Telecommunication and other
 stakeholders including viewers, producers, vendors, financial
 institutions, banks, investors, service providers as well as regulatory
 and governmental authorities.
 
                                                 On behalf of the Board
                                                        Subhash Chandra
                                                               Chairman
 Place : Mumbai
 Date   : June 16, 2008