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NOTES TO ACCOUNTS

Zee Entertainment Enterprises Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 26086.68 Cr. P/BV 2.92 Book Value (₹) 92.91
52 Week High/Low (₹) 507/267 FV/ML 1/1 P/E(X) 16.65
Bookclosure 16/07/2019 EPS (₹) 16.32 Div Yield (%) 1.29
Year End :2019-03 

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

Trade receivable consists of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of the accounts receivable.

Loans given aggregating Rs. 1,784 Millions (including interest) is outstanding and overdue as at 31 March 2019 from related parties. The Company does not consider any credit risk on such loan given. As a promoter company has provided a letter of comfort for repayment of such outstanding loans.

Further, as explained in note 47 to the financial statment, unsecured interest free deposit aggregating Rs. 6,930 Millions are outstanding as at 31 March 2019.

Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by credit-rating agencies. The credit risk on mutual funds, commercial paper, non-convertible debentures, certificates of deposit and other debt instruments is limited because the couterparties are generally banks and financial institutions with high credit ratings assigned by credit rating agencies.

iii Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The Company's principal source of liquidity are cash and cash equivalents and the cash flow generated from operations. The Company consistently generated strong cash flows from operations which together with the available cash and cash equivalents and current investment provides adequate liquidity in short term as well as in the long term. Trade and other payables are non-interest bearing and the average credit term is 45 days

The table below provides details regarding the contractual maturities of financial liabilities including estimated interest payments as at 31 March 2019:

(Rs. Millions)

Due in 1st year 2

Due in to 5th year

Due after 5 years

Total

Carrying value

Financial liabilities

Trade payables and other financial liabilities

20,715

-

20,715

20,715

Borrowings

4,045

8,085

12,130

11,141

Total

24,760

8,085

32,845

31,857

The table below provides details regarding the contractual maturities of financial liabilities including estimated interest payments as at 31 March 2018:

(Rs. Millions)

Due in 1st year 2

Due in to 5th year

Due after 5 years

Total

Carrying value

Financial liabilities

Trade payables and other financial liabilities

11,897

-

11,897

11,897

Borrowings

4,041

12,151

16,192

15,262

Total

15,938

12,151

28,089

27,159

The amount of financial guarantees included in contingent liabilities are the maximum amounts the Company could be forced to settle under the arrangement for the full guaranteed amount if the amount is claimed by the counterparty to the guarantee.

46. EMPLOYEE BENEFITS

The disclosures as per Ind AS 19 - Employee Benefits are as follows:

a) Defined contribution plans

Contribution to provident and other funds' is recognised as an expense in Note 25 'Employee benefits expense' of the statement of profit and loss.

b) Defined benefit plans

The present value of gratuity obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave benefits (non funded) is also recognised using the Projected Unit Credit Method.

(Rs. Millions)

Mar-19

Mar-18

Gratuity (Non Funded)

i)

Expenses recognised during the year

1

Current service cost

67

65

2

Interest cost

34

27

3

Past service cost

230

50

Total Expenses

331

142

ii)

Amount recognised in other comprehensive income (OCI)

1

Opening amount recognised in OCI

(27)

24

2

Remeasurement during the period due to

- Changes in financial assumptions

16

(29)

- Changes in experience charges

88

(22)

Closing amount recognised in OCI

77

(27)

iii)

Net liability recognised in the Balance Sheet as at 31 March

1

Present value of Defined Benefit Obligation (DBO)

796

404

2

Net liability

796

404

iv)

Reconciliation of net liability recognised in the Balance Sheet

1

Net liability at the beginning of year

404

341

2

Transferred during the year

-

8

3

Expense as per (i) above

331

142

4

Other comprehensive income as per (ii) above

104

(51)

5

Liabilities transferred on divestiture

(8)

(3)

6

Benefits paid

(35)

(33)

Net liability at the end of the year

796

404

v)

The following payments are expected to defined benefit plan in future years :

1

Expected benefits for year 1

22

16

2

Expected benefits for year 2 to year 5

128

90

3

Expected benefits beyond year 5

2,889

1,112

Mar-19

Mar-18

vi)

Actuarial assumptions

1

Discount rate

7.71%

7.85%

2

Expected rate of salary increase

9.50%

9.50%

3

Mortality

IAL (2012-14)

IAL (2006-08)

vii) The defined benefit plans expose the Company to actuarial risks such as interest rate risk, longevity risk and salary risk:

Interest risk: A decrease in the bond interest rate will increase the plan liability.

Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.

Salary risk: The present value of defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of plan participants will increase the plan's liability.

viii) Sensitivity analysis

The key actuarial assumptions to which the benefit obligation results are particularly sensitive to discount rate and future salary escalation rate. The following table summarizes the impact in percentage terms on the reported defined benefit obligation at the end of the reporting period arising on account of an increase or decrease in the reported assumption by 50 basis points:

(Rs. Millions)

Mar-19

Mar-18

1

Impact of increase in 50 bps on DBO -

discount rate

744

377

2

Impact of decrease in 50 bps on DBO

- discount rate

852

432

3

Impact of increase in 50 bps on DBO -

salary escalation rate

838

423

4

Impact of decrease in 50 bps on DBO

- salary escalation rate

757

384

Notes:

a) The current service cost recognised as an expense is included in Note 25 'Employee benefits expense' as gratuity. The remeasurement of the net defined benefit liability is included in other comprehensive income.

b) The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the Actuary.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

C Other long term benefits

The obligation for leave benefits (non funded) is also recognised using the Projected Unit Credit Method and accordingly the long term paid absences have been valued. The leave encashment expense is included in Note 25 'Employee benefits expense'.

47. Considering the increasing competition and content cost inflation, the Company adopted an aggressive differentiated movie library expansion strategy and entered into strategic content partnerships with major production houses, movie studios and creative partners for movies monetization on Zee5, domestic and international broadcast businesses.

Accordingly, the Company had entered into various agreements with content aggregators and their agencies (sub-agents) for movie library acquisition and provided, from time to time, advances aggregating Rs. 22,790 millions to the agencies. In those cases where agencies could not fulfill their obligations in terms of the arrangement within the agreed timelines, the Company has terminated those Memorandum of Understandings (MOU) and advances aggregating Rs. 17,340 millions were received back. Interest aggregating Rs. 175 Millions recovered in terms of the MOU, where applicable, is accounted under the head 'Other income'. Advances aggregating Rs. 2,450 Millions (net of inventories acquired of Rs. 3,000 Millions) are outstanding as on 31 March 2019. Such advances are accounted under the sub-head 'Other advances (unsecured) - Considered good' under the head 'Other assets'.

Further, during the year, considering the cost inflation and to mitigate the possibility of non-availability of films, to ensure a robust content pipeline for future, the Company has entered into certain output deals and given unsecured interest-free deposits aggregating Rs. 6,930 millions for a period of eleven months to the aggregators, which are outstanding as at 31 March 2019. Such deposits are accounted under sub-head 'Deposits - unsecured and considered good - to others' under the hear 'Other financial assets'.

With regard to the aforesaid advances, with reference to standard operating procedures, the Company as a part of its enterprise risk assessment and internal control evaluation, with a view of enhancing the related effectiveness of control, is modifying its systems and processes with technology enablement for film acquisition.

48. RELATED PARTY DISCLOSURES

a) List of parties where control exists Subsidiary companies

i) Wholly owned (direct and indirect subsidiaries)

Asia Multimedia Distribution Inc.; Asia Today Limited; Asia Today Singapore Pte Limited; Asia TV Gmbh; Asia TV USA Limited; Asia TV Limited; ATL Media FZ-LLC; ATL Media Ltd.; Eevee Multimedia Inc.; Essel Vision Productions Limited; Expand Fast Holdings (Singapore) Pte. Limited; Fly by Wire International Private Limited (extent of holding 100% w.e.f. 14 July 2017); Idea Shop Web and Media Private Limited (held through India Webportal Private Limited); India Webportal Private Limited (extent of holding 100% w.e.f. 22 July 2017); OOO Zee CIS Holding LLC; OOO Zee CIS LLC; Pantheon Productions Limited; Taj TV Limited; Zee Digital Convergence Limited; Zee Entertainment Middle East FZ-LLC; Zee Multimedia Worldwide (Mauritius) Limited; Zee Radio Network Middle East FZ-LLC (De-registered on 24 December 2017); Zee Technologies (Guangzhou) Limited; Zee TV South Africa (Proprietary) Limited; Zee Unimedia Limited; Z5X Global FZ-LLC; Zee Studios International Limited; Zee TV USA Inc.

ii) Other subsidiaries

Zee Network Distribution Limited (formerly known as Zee Turner Limited extent of holding 74%); Margo Networks Private Limited (extent of holding 80% w.e.f. 17 April 2017)

b) Associates

Aplab Limited (extent of holding 26.42% upto 15 January 2019); Asia Today Thailand Limited (extent of holding 25% through Asia Today Singapore Pte Limited); Fly By Wire International Private Limited* (extent of holding 49% upto 13 July 2017)

* Became subsidiary during previous year

c) Joint venture

India Webportal Private Limited* (extent of holding 51% upto 21 July 2017); Idea Shop Web and Media Private Limited (extent of holding 51.04% through India Webportal Private Limited)*; Media Pro Enterprise India Private Limited (extent of holding 50% through Zee Network Distribution Limited formerly known as Zee Turner Limited extent of holding 74%).

* Became subsidiary during previous year

d) Other related parties consist of Companies controlled by key management personnel and its relatives with whom transactions have taken place during the year and balance outstanding as on the last day of the year:

Asian Satellite Broadcast Private Limited; Axom Communication and Cable Private Limited; Broadcast Audience Research Council; Cyquator Media Services Private Limited; Creantum Security Solutions Private Limited; Digital Subscriber Management and Consultancy Services Private Limited; Diligent Media Corporation Limited; Dish Infra Services Private Limited; Dish TV India Limited; Edisons Infrapower & Multiventures Private Limited; Essel Business Excellence Services Limited; Essel Finance VKC Forex Limited; Essel Corporate LLP; Essel Corporate Resources Private Limited; Essel Finance Business Loans Limited; Essel Finance Management LLP; Essel Infra Projects Limited; Essel Finance Wealth Zone Private Limited; Essel Realty Private Limited; Essel Solar Energy Private Limited; EZ Buy Private Limited; EZ Mall Online Limited; Indian Cable Net Company Limited; Konti Infrapower & Multiventures Private Limited; Living Entertainment Enterprises Private Limited; Master Channel Community Network Private Limited; Pan India Network Infravest Private Limited; Pan India Network Limited; Procall Infra & Utilities Private Limited; Real Media FZ-LLC; Shirpur Gold Refinery Limited; Siti Networks Limited; Siti Maurya Cable Net Private Limited; Siti Prime Uttranchal Communications Private Limited; Siti Siri Digital Network Private Limited; Siti Vision Digital Media Private Limited; Smart Wireless Private Limited; Subhash Chandra Foundation; Today Merchandise Private Limited; Veria International Limited; Widescreen Holdings Private Limited; Zee Akaash News Private Limited; Zee Learn Limited; Zee Media Corporation Limited.

Directors / Key Management Personnel

Dr. Subhash Chandra (Non-Executive Director); Punit Goenka (Managing Director & CEO); Ashok Kurien (Non-Executive Director); Subodh Kumar (Non-Executive Director); Prof. Sunil Sharma (Independent Director); Prof. Neharika Vohra (Independent Director); Manish Chokhani (Independent Director); Adesh Kumar Gupta (Independent Director)

e)

Disclosure in respect of related party transactions and balances as at and during the year

(Rs. Millions)

SI. No.

Particulars

Mar-19

Mar 18

Transactions during the year

A)

Fixed assets

I)

Assets purchased

Subsidiaries

-

56

B)

Non-Current investments

I)

Investments purchased / subscribed

Subsidiaries

1,239

5,253

II)

Investments sold

Associate

2

-

Subsidiaries

120

7,411

C)

Revenue from operations

I)

Advertisement income

Subsidiaries

3

19

Other related parties

126

105

II)

Subscription income

Other related parties

6,227

3,481

III)

Share of subscription income payable

Subsidiaries

1,148

998

Other related parties

683

713

IV)

Commission - Space selling

Subsidiaries

162

153

Other related parties

389

392

V)

Transmission income

Subsidiaries

327

315

Other related parties

112

76

VI)

Sales - Media content

Subsidiaries

1,120

1,314

Joint venture

-

58

Other related parties

-

2

VII)

Other operating income

Subsidiaries

1

-

Other related parties (2018 : Rs 14,000/-)

-

0

D)

Other income

I)

Dividend income

Subsidiaries

-

7,816

II)

Rent / miscellaneous income

Subsidiaries (2019 : Rs 300,000/-)

0

1

Other related parties

345

272

III)

Interest income

Other related parties

172

-

IV)

Liabilities / excess provision written back

Other related parties

68

-

E)

Purchase - Media content

Subsidiaries

3,250

3,058

Other related parties

-

43

F)

Purchase of services

Subsidiaries

333

228

Associate

88

Other related parties

2,936

2,286

G)

Recoveries / (reimbursement) (net)

Subsidiaries

302

342

Other related parties

306

322

H)

Loans, advances and deposits repayment received

Other related parties

24

44

I)

Loans, advances and deposits repayment given

Other related parties #

1,752

-

J)

Corporate Social Responsibility

Other related parties

222

71

K)

Remuneration to Managing Director & CEO

Short term employee benefits*

83

104

L)

Commission and sitting fees

Non-executive directors

23

22

M)

Dividend paid

Director (2019: Rs. 1,140/-; 2018: Rs. 870/-)

0

0

(Rs. Millions)

SI. No.

Particulars

Mar-19

Mar 18

Balance as at 31 March

A)

Investment

Subsidiaries

12,302

10,953

Associates

-

47

B)

Provision for diminuition in value of investments

Associate

-

20

C)

Trade receivables

Subsidiaries

1,686

859

Joint venture

-

1

Other related parties

5,259

1,090

D)

Loans, advances and deposits given

Subsidiaries

175

175

Other related parties

2,233

427

E)

Other receivables

Subsidiaries

750

393

Joint venture (2018: Rs 213,400/-)

-

0

Other related parties

773

721

F)

Trade advances and deposits received

Subsidiaries

-

1

Joint venture

2

-

Other related parties

81

24

G)

Trade / other payables

Subsidiaries

1,287

786

Joint venture

-

1

Other related parties

762

535

H)

Due to principals

Subsidiaries

520

768

I)

Corporate guarantees given

Other related parties

1,137

1,037

# Includes assignment of loan given worth Rs. 1,706 Millions.

* Does not include provision made for gratuity and leave encashment as they are determined on actuarial basis for all the employees together.

f) Disclosure in respect of material related parties which account for 10% or more of the transactions and balances as at and during the year

(Rs Millions)

SI. No.

Particulars

Mar 19

Mar 18

Transactions during the year

A)

Fixed assets

I)

Assets purchased

Expand Fast Holdings (Singapore) Pte. Limited

-

56

B)

Non-current investments

I)

Investments purchased / subscribed

Debenture - Essel Vision Productions Limited

1,239

2,163

Equity Shares of Margo Networks Private Limited

-

750

Equity Shares of India Webportal Private Limited

-

2,001

Others

-

339

II)

Investments sold

Redemption of preference share of ATL Media Limited

-

7,411

Redemption of debenture - Fly By Wire International Private Limited

120

-

Others

2

-

C)

Revenue from operations

I)

Advertisement income

Essel Vision Productions Limited

3

14

Dish TV India Limited

108

92

Zee Media Corporation Limited

13

10

Others

5

8

II)

Subscription income

Dish TV India Limited

4,839

2,442

Siti Networks Limited

1,012

746

Others

376

293

III)

Share of subscription income payable

ATL Media Limited

1,148

998

Living Entertainment Enterprises Private Limited

210

238

Zee Media Corporation Limited

473

475

IV)

Commission - Space selling

ATL Media Limited

119

123

Diligent Media Corporation Limited

-

70

Zee Akaash News Private Limited

23

65

Zee Media Corporation Limited

345

241

Others

64

46

V)

Transmission income

Asia Today Limited

264

246

ATL Media Limited

63

69

Zee Media Corporation Limited

79

56

Others

33

20

VI)

Sales - Media content

Asia Today Limited

1,120

1,314

Others

-

60

VII)

Other operating income

Essel Vision Productions Limited

1

-

Essel Corporate Resources Private Limited (2018 : Rs. 14,000/-)

-

0

D)

Other income

I)

Dividend income

ATL Media Limited

-

7816

II)

Rent/ miscellaneous income

Siti Networks Limited

29

36

Zee Media Corporation Limited

133

106

Essel Business Excellence Services Limited

44

30

Essel Infra Projects Limited

49

27

Others

90

74

III)

Interest income

Widescreen Holdings Private Limited

47

-

Konti Infrapower & Multiventures Private Limited

57

-

Edisons Infrapower & Multiventures Private Limited

57

-

Asian Satellite Broadcast Private Limited

11

-

IV)

Liabilities / excess provision written back

Dish TV India Limited

68

-

E)

Purchase - Media content

Essel Vision Productions Limited

3,082

2968

Others

168

133

F)

Purchase of services

Fly By Wire International Private Limited

309

309

Broadcast Audience Research Council

383

287

Digital Subscriber Management and Consultancy Services Private Limited

581

563

Essel Business Excellence Services Limited

743

302

Siti Networks Limited

229

270

Essel Corporate LLP

212

-

Essel Corporate Resources Private Limited

-

366

Others

812

505

G)

Recoveries / (reimbursement) (net)

ATL Media Limited

302

330

Zee Media Corporation Limited

152

154

Others

154

180

H)

Loans, advances and deposits repayment received

Essel Corporate LLP

12

-

Essel Corporate Resources Private Limited

-

35

Cyquator Media Services Private Limited

3

-

Broadcast Audience Research Council

9

9

I)

Loans, advances and deposits repayment given #

Widescreen Holdings Private Limited

460

-

Konti Infrapower & Multiventures Private Limited

560

-

Edisons Infrapower & Multiventures Private Limited

570

-

Others

162

-

J)

Corporate Social Responsibility

Subhash Chandra Foundation

222

71

K)

Remuneration to Managing Director & CEO

Short term employee benefits*

83

104

L)

Commission and sitting fees

Non-executive directors

23

22

M)

Dividend paid

Director (2019: Rs. 1,140/-; 2018: Rs 870/-)

0

0

(Rs. Millions)

MAr-19

Mar 18

Balance as at 31 March

A)

Investment

Equity Shares of Zee Multimedia Worldwide Limited, BVI

2,584

2,584

Equity Shares of ATL Media Limited

2,515

2,515

Debentures - Essel Vision Productions Limited

5,904

4,409

Others

1,299

1,492

B)

Provision for diminution in value of investments

Aplab Limited

-

20

C)

Trade receivables

Asia Today Limited

1,481

769

Dish TV India Limited

3,272

259

Siti Networks Limited

1,691

639

Others

501

282

D)

Loans, advances and deposits given

Fly By Wire International Private Limited

175

175

Widescreen Holdings Private Limited

481

-

Konti Infrapower & Multiventures Private Limited

586

-

Edisons Infrapower & Multiventures Private Limited

595

-

Digital Subscriber Management and Consultancy Services Private Limited

340

340

Others

231

87

E)

Other receivables

ATL Media Limited

696

324

Zee Media Corporation Limited

106

268

Living Entertainment Enterprises Private Limited

147

139

Others

574

383

F)

Trade advances and deposits received

Essel Corporate LLP

10

-

Essel Corporate Resources Private Limited

-

10

Zee Media Corporation Limited

46

-

Essel Infra Projects Limited

12

12

Others

15

3

G)

Trade / other payables

ATL Media Limited

247

162

Essel Vision Productions Limited

922

521

Indian Cable Net Company Limited

80

229

Others

800

410

H)

Due to principals

Asia Today Limited

47

82

ATL Media Limited

473

686

I)

Corporate guarantees given

Broadcast Audience Research Council

170

170

Siti Networks Limited

967

867

# Includes assignment of loan given worth Rs. 1,706 millions.

* Does not include provision made for gratuity and leave encashment as they are determined on actuarial basis for all the employees together.

For Deloitte Haskins & Sells LLP

For and on behalf of the Board

Chartered Accountants

Punit Goenka

Adesh Kumar Gupta

A. B. Jani

Managing Director and CEO

Director

Partner

Place! Mumbai

Rohit Kumar Gupta

M Lakshminarayanan

Chief Financial Officer

Company Secretary

Date: 27 May 2019

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