DIRECTORS' REPORT 

TO

THE MEMBERS

Your Directors take pleasure in presenting the 17th Annual Report of your Company together with Audited Financial Statements for the year ended March 31, 2016.

There have been no material changes and commitments that have occurred after close of the financial year till the date of this report which affect the financial position of the Company. Based on internal financial control framework and compliance systems established in the Company and verified by the statutory and internal auditors and reviews performed by the management and/or the Audit Committee of the Board, your Board is of the opinion that Company's internal financial controls were adequate and effective during the financial year2015-16.

DIVIDEND

After a gap of over 5 years, your Directors are pleased to recommend Equity Dividend of Rs. 0.15 per equity share of face value of Rs. 1/- each for the Financial Year 2015-16. The total outflow on account of Dividend payment would be Rs. 85 Million which includes dividend of Rs. 70.62 Million and tax on dividend of Rs. 14.38 Million.

OPERATIONS & STRATEGY

FY16 proved to be the year of reckoning for India with the economy emerging as the clear growth leader in the world and the improvement in economic fundamentals accelerated with the combined impact of strong government reforms and central bank's inflation focus supported by benign global commodity prices. Projected GDP growth of 7.5-8% in FY17 on the back of expected favourable monsoon, increased consumerism and improved investor confidence is expected to fuel growth across industries and sectors.

The television media industry grew by 14.2% making it a Rs. 542 billion industry in 2015 from Rs. 475 billion in 2014. Broadcast advertisement revenues grew by 17% to Rs. 181 billion in 2015 from Rs. 155 billion in 2014, while the broadcast subscription revenues registered 15% growth to Rs. 86 billion in 2015 from Rs. 75 billion in 2014. Preceded by a year of general elections, 2015 witnessed single digit growth in news channels. 

The Indian television industry continued to witness upheaval in the operating environment. The implementation of alternative rating system by Broadcast Audience Research Council (BARC), with wider geographic coverage including rural markets, led to major changes in pecking order and forced all players to alter their strategies. Growth in content consumption over digital platforms provided an experimental field to broadcasters for additional revenue and a complementary medium to advertisers to reinforce their brand communication.

Your Company continues to be one of the largest news networks touching more than 258 million viewers through its 10 News Channels in 5 different languages and reaching more than 280 million users through digital channels.

Zee News, the flagship channel of your Company and a pioneer in news broadcasting, reached over 115.5 million viewers across India in Q4 FY16. While Zee Business, India's 1st 24-hour Hindi business channel, reached more than 25.5 million viewers across India. India 24x7, your Company's national news channel launched on October 24, 2015, reached more than 97 million viewers.

Zee 24 Taas outperformed its competitors to emerge as No. 1 Marathi News channel in reach with more than 39.1 million viewers across India. Zee Punjab Haryana Himachal dominated the region's news market and reached more than 22.6 million viewers across India. Zee Madhya Pradesh and Chhattisgarh, launched on March 31, 2013 for viewers of Madhya Pradesh and Chhattisgarh, has established its dominance and No. 1 position with a reach of more than 27.9 million viewers across India.

Zee Rajasthan News (erstwhile Zee Marudhara), which was launched on July 31, 2013 for Rajasthan market, emerged as No. 1 Rajasthani News channel and reached over 20.5 million viewers across India. Zee Kalinga News (erstwhile Zee Kalinga), Company's offering for Odisha market launched on January 26, 2014, reached more than 10.6 million viewers across India.

24 Ghanta, your Company's Bengali news offering through the 60% subsidiary, Zee Akaash News Pvt Ltd, is No. 1 in reach in West Bengal with more than 30.2 million viewers across India. While Zee Purvaiya (erstwhile Maurya TV), the regional channel housed under a wholly owned subsidiary, Maurya TV Pvt Ltd, targeting Bihar and Jharkhand region, reached more than 13.7 million viewers across India.

Zeenews.com registered a year on year increase of 37.3% in visits, 37.9% in unique visitors, and 24% in page views. The website attracted over 160 million unique visitors, 395 million visits with 753 million page views in FY16 compared to 116 million unique visitors, 287 million visits with 607 million page views in the previous year. The regional arms of the website put up a phenomenal performance with visitors on Hindi, Bengali and Marathi websites growing by 98%, 95% and 26% respectively.

Dnaindia.com registered a year on year increase of 50.1% in visits, 49.3% in unique visitors, and 62.6% in page views. The website attracted over 102 million unique visitors, 173 million visits with 258 million page views in FY16 compared to 68 million unique visitors and 115 million visits with 159 million page views in the previous year.

Your company launched 5 news apps (Zee News - Hindi, Zee News - English, 24 Taas, 24 Ghanta, DNA) since December 2015 on Android and iOS platforms and the total installs crossed 1 million mark within six months.

During the year, keeping in view the muted growth in news genre, your company focused on consolidating the revenues. Simultaneously, your company strived to increase profitability by establishing operational efficiencies and using cutting-edge technology to optimize expenditure. As a result, while the revenues remained flat at Rs. 5,429.1 million, operating profit grew by 100.3% to Rs. 953.5 million in FY16 from Rs. 476.1 millionin FY15.

RIGHTS ISSUE

During the year under review, in terms of the Letter of Offer dated March 16, 2015, your Company successfully raised Rs. 1,955.59 Million from the market by issuance of 108,643,732 Equity Shares of Rs. 1 each at the price of Rs. 18/- per Equity Shares, on Rights basis in the ratio of 3 (Three) Right Shares for every 10 (Ten) Equity Shares held as on Record date of March 17, 2015. The said Rights Issue which opened on March 25, 2015 and closed on April 8, 2015, was subscribed by 1.03 times. Consequent to allotment of Rights Shares, the Paid-up Share Capital of your Company increased to Rs. 470,789,505 comprising of 470,789,505 Equity Shares of Rs. 1 each.

REGISTRAR & SHARE TRANSFER AGENT

During the year under view, consequent to certain allegations of fraud and malpractices in the conduct and operations of Sharepro Services (India) Pvt Ltd ('Sharepro'), who has been Registrar & Share Transfer Agent ('R&T Agent') of the Company, SEBI had issued an interim order dated March 22, 2016 inter alia restraining Sharepro from involving in Stock Market related activities. As per the said order of SEBI, your Company had engaged M/s. MKB & Associates, Company Secretaries to carry out an Assurance Audit of Sharepro in connection with records of the Company and the said Audit did not reveal irregularity or violations with respect to transfer of securities or payment of dividend of the Company during the Audit period from January 2007 till March 2016.

Subsequently, in pursuance of the advisory issued by SEBI vide the said order dated March 22, 2016 and also considering that key employees were leaving Sharepro which could affect their services, your Company has appointed M/s. Link Intime India Pvt Ltd as the R&T agent in place of Sharepro. The said changeover of R&T Agent shall take effect from July 1, 2016.

EMPLOYEES STOCK OPTION SCHEME

The Employee Stock Option Scheme approved by the Members at the Annual General Meeting held on August 18, 2009 has not been implemented till date and no Stock Options were under granted under the said ESOP Scheme. In view of this, particulars as required under Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are not provided and the Company has not obtained any certificate from the Statutory Auditors confirming implementation of the Employees Stock Option Scheme in accordance with SEBI Regulations and the resolution passed by the shareholders.

SUBSIDIARIES & ASSOCIATES

During FY16 there have not been any acquisition / divestment of subsidiaries/associates by the Company. Your Company continues to have 5 (five) subsidiaries as at March 31, 2016. These include 2 (two) subsidiaries engaged in News Broadcasting business viz. Zee Akaash News Pvt Ltd, a 60% subsidiary engaged in broadcasting of a Bengali News Channel - 24 Ghanta and Maurya TV Pvt Ltd, a wholly owned subsidiary, engaged in broadcasting of Zee Purvaiya, a regional news channel targeting Bihar and Jharkhand region.

The Newspaper business of your Company continues to be housed under 3 (three) direct and indirect subsidiaries viz. Pri-Media Services Pvt Ltd, a wholly owned subsidiary of the Company engaged in the business of printing; and Mediavest India Private Limited, a wholly owned subsidiary, which holds 99.99% equity stake in Diligent Media Corporation Limited, an entity engaged in publication and distribution of 'dna' a English daily.

During the year under review, your Board had approved a proposal for expansion into E-commerce and TV Shopping space, by acquiring upto 80% equity stake in Today Merchandise Pvt Ltd and Today Retail Network Pvt Ltd. These entities currently operate an E-commerce website www.bagittoday.com and have created infrastructure for launch of a TV Shopping Channel. The proposed acquisition would be in a staggered manner, whereby your Company shall initially acquire 49% equity stake by subscribing to Equity shares of these entities at par value and shall thereafter fund their business requirements, from time to time, by subscribing to Compulsory Convertible Debentures, which upon conversion into Equity Shares at par value, will enable the Company to hold 80% equity stake in these entities. As on date of this report, your Company has executed requisite Investment agreements, but has not acquired any stake in these entities.

In compliance with Section 129 of the Companies Act, 2013, a statement containing requisite details including financial highlights of the operations of all subsidiaries is annexed to this report. Further as per Section 136 of the Companies Act, 2013, the audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of each of the subsidiaries are available on the website of the Company www.zeenews.india.com. These documents will also be available for inspection during business hours at the Registered Office of the Company.

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 are provided in and forms part of this Annual Report.

CORPORATE GOVERNANCE & POLICIES

Your Company is in compliance with the Corporate Governance requirements mentioned under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'). A Report on Corporate Governance as stipulated under the Listing Regulations as also a Management Discussion and Analysis Report forms part of the Annual Report. Certificate from the Statutory Auditors of the Company, M/s MGB & Co LLP, Chartered Accountants, confirming compliance with the provisions of Corporate Governance as stipulated under Listing Agreement / Listing Regulations, is annexed to the said Corporate Governance Report.

In compliance with the requirements of the Companies Act, 2013 and Listing Regulations, your Board has approved various Codes and Policies including Code of Conduct for Directors & Senior Management, Policy for determining Material Events, Policy for Preservation of Documents and Archival of Records, Policy for Determination of Material Subsidiary, Related Party Transaction Policy, Whistle Blower and Vigil Mechanism Policy, Corporate Social Responsibility Policy and Remuneration Policy. Further in accordance with SEBI regulations, your Board has approved Insider Trading Code and Fair Disclosure Policy. All these Codes and Policies along with the Terms and conditions of appointment of Independent Director and brief  on Directors Familiarization Programs have been uploaded on Company's website www.zeenews.india.com

In compliance with regulatory requirements, the Nomination and Remuneration Committee of your Board has fixed criteria for nominating a person on the Board which inter alia include desired size and composition of the Board, age limit, qualification/ experience, areas of expertise and independence of individual. The Committee had also approved in-principle that the initial term of an Independent Director shall not exceed 3 years.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Your Board currently comprises of five (5) Directors including four (4) Independent Directors and one (1) Executive Director. Independent Directors provide declarations both at the time of appointment and annually, confirming that they meet the criteria of independence as prescribed under Companies Act, 2013 and Listing Regulations. During FY16 your Board met 7 (seven) times details of which are available in the Corporate Governance Report annexed to this report.

During the year under review, your Board had, based on recommendations of Nomination & Remuneration Committee, appointed Dr (Mrs.) Rashmi Aggarwal and Mrs. Kanta Devi Allria as Additional Directors in the category of Independent Director with effect from August 10, 2015 and in terms of Section 161 of the Companies Act, 2013, these Directors hold office upto the ensuing Annual General Meeting. The Company has received notice from Members along with requisite deposits proposing appointment of these Directors. Requisite proposals seeking your approval for their appointment as Independent Director not liable to retire by rotation for a period of 3 years with effect from August 10, 2015 forms part of the Notice of ensuing Annual General Meeting.

Additionally, your Board had based on recommendations of Nomination & Remuneration Committee, appointed Mr. Rajendra Kumar Arora, as an Additional Director designated as Executive Director & CEO of the Company for a period of 3 years with effect from May 24, 2016. As per Section 161 of the Companies Act, 2013, Mr. Arora holds office of Director till ensuing Annual General Meeting. The Company has received a notice from a Member proposing appointment of Mr. Arora as a Director and requisite proposals seeking your approval for his appointment as a Director and also his appointment and payment of remuneration as Executive Director & CEO of the Company for a period of 3 years with effect from May 24, 2016, forms part of Notice of ensuing Annual General Meeting.

Additionally, the Notice of ensuing Annual General Meeting includes a proposal for appointment of Mr. Surjit Banga for second term as an Independent Director not liable to retire by rotation for a period of 3 years from expiry of his current term on March 31, 2017, by passing a Special Resolution. Members of the Company, at the Annual General Meeting held on August 7, 2014, had appointed Mr. Banga as an Independent Director for a period of 3 years till March 31, 2017 and since his current term would expire before the Annual General Meeting to be held in 2017, your Board has, based on performance evaluation and contributions made by Mr. Banga and in compliance with the requirements of Section 149 of the Companies Act, 2013, recommended re-appointment of Mr. Banga as Independent Director for the second term of 3 years upon expiry of his current term.

During the year under review Mr. Vinod Kumar Bakshi, Independent Director and Mr. Ashish Kirpal Pandit, Executive Director & CEO resigned as Directors with effect from September 9, 2015 and October 12, 2015, respectively. Dr. Subhash Chandra, Director & Non-Executive Chairman of the Board since 2007, resigned with effect from May 24, 2016. Your Board places on record their appreciation for contributions of Dr. Subhash Chandra and Mr. Vinod Kumar Bakshi towards growth of the Company. Consequent to resignation of Dr. Subhash Chandra, Mr. Surjit Banga, the senior most Director, was appointed as Non-Executive Chairman of the Board.

Currently, Mr. Rajendra Kumar Arora, Executive Director & CEO, Mr. Dinesh Garg, Chief Financial Officer and Mr. Pushpal Sanghavi, Company Secretary are nominated as Key Managerial Personnel in compliance with the requirements of Section 203 of the Companies Act, 2013. During the year under review, upon resignation of Mr. Ashish Kirpal Pandit as Executive Director & CEO, Mr. Bhaskar Das, Group CEO-News Cluster was nominated as Key Managerial Personnel with effect from October 20, 2015. Thereafter consequent to resignation of Mr. Bhaskar Das, Mr. R K Arora, Chief Executive Officer was nominated as Key Managerial Personnel with effect from April 29, 2016.

BOARD EVALUATION

In a separate meeting of Independent Directors held without presence of other Directors and management, the Independent Directors had, based on various criteria, evaluated performance of the Chairman and also performance of the Board as a whole and various Board Committes. A report on such evaluation done by Independent Directors was taken on record by the Board and further, the Board had in compliance with the requirements of Companies Act, 2013 evaluated performance of all Independent Directors based on various parameters including attendance, contribution etc.

BOARD COMMITTEES

In compliance with the requirements of Companies Act, 2013 and Listing Agreement / Listing Regulations, your Board had constituted various Board Committees including Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. Details of constitution of these Committees, which are in accordance with regulatory requirements, have been uploaded on the website of the Company. Further the details of scope, constitution, number of meetings of the Committee held during FY16 along with particulars of attendance of Committee Members therein form part of the Corporate Governance Report annexed to this report. 

An Annual Report on CSR activities initiated by the Company during FY15-16, in compliance with the requirements of Companies Act, 2013 is annexed to this report.

AUDITORS

Statutory Audit: The Statutory Auditors M/s MGB & Co. LLP, Chartered Accountants, Mumbai, having Firm Registration No 101169W/W-100035, holds office until the conclusion of the ensuing Annual General Meeting and is eligible for reappointment. Your Company has received confirmation from the said Auditors to the effect that their appointment, if made, will be in accordance with the limits specified under the Companies Act, 2013 and that the firm satisfies the criteria specified in Section 141 of the Companies Act, 2013 read with Rule 4 of Companies (Audit & Auditors) Rules, 2014.

Your Board is of the opinion that continuation of M/s MGB & Co LLP as Statutory Auditors during FY17 will be in the best interests of the Company and therefore, Members are requested to consider their re-appointment as Statutory Auditors of the Company for signing financial statements and issuing reports for the period ending March 31, 2017. The re-appointment proposed is within the transition period prescribed under the third proviso of sub-section (2) of Section 139 of the Companies Act, 2013.

Secretarial Audit: In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit for FY15-16 was carried out by Mr. Satish K Shah, Practicing Company Secretary (holding Certificate of Practice No. 3142)

The reports of Statutory Auditor and/or Secretarial Auditor forming part of this Annual report do not contain any qualification, reservation or adverse remarks. During the year the Statutory Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and therefore no disclosures are required pursuant to Section 134(3) (ca) of the Companies Act, 2013.

DISCLOSURES

i. Particulars of loans, guarantees and investments: Particulars of loans, guarantees and investments made by the Company as required under Section 186(4) of the Companies Act, 2013 are given in Note 38 to the Standalone Financial Statements.

ii. Transactions with Related Parties: None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Further there are no material transaction with related parties, as defined under Section 2(76) of the Companies Act, 2013. Accordingly the information as prescribed under Section 134(3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is Nil and therefore form AOC-2 is not annexed to this report.

During the year under review, your Company had entered into material related party transaction with Taj Television (India) Pvt Ltd, (Taj) a subsidiary of Zee Entertainment Enterprises Ltd and related party of the Company as per Accounting Standard 18. As per the terms of said material related party transaction, which was approved by unrelated shareholders vide resolution passed on November 3, 2015, Taj provided Channel Distribution Services to the Company on principal-to-principal and revenue sharing basis wherein Taj retained 14% of Subscription revenues of the Company as a consideration for said services.

Consequent to re-organisation of Distribution business, Taj discontinued its Channel Distribution business and therefore with effect from May 1, 2016, your Company has entered into Channel Distribution Service arrangement with Zee Entertainment Enterprises Limited (ZEEL), a related party as per Accounting Standard 18. Under the said arrangement, ZEEL shall provide Channel Distribution Services to the Company on principal-to-principal basis and retain 7% of Subscription revenues of the television channels of the Company. A Postal Ballot Notice dated May 18, 2016, seeking approval of Unrelated Shareholders for the said material related party transaction has been issued by the Company and voting results on such proposal will be announced on June 30, 2016.

iii. Deposits: Your Company has not accepted any public deposit under Chapter V of the Companies Act, 2013.

iv. Extract of Annual Return: The extract of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with Companies (Management & Administration) Rules, 2014 is annexed to this report.

v. Sexual Harassment: Your Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. There was no complaint on sexual harassment during the year under review.

vi. Regulatory Orders: No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future.

vii. Internal Financial Controls and their adequacy: Your Company has approved internal financial controls and policies / procedures to be adopted by the Company for orderly and efficient conduct of the business including safeguarding of assets, prevention and detection of frauds and errors, ensuring accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically. 

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company is into the business of Broadcasting of News & Current Affairs Television Channels in Hindi and various regional languages. Since this does not involve any manufacturing activity, most of the Information required to be provided under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is not applicable.

Foreign Exchange Earnings and Outgo:

Particulars of foreign exchange earnings and outgo during the year are given in Note 40 to 42 to the Standalone Financial Statements of the Company

PARTICULARS OF EMPLOYEES

Your Company had 1450 employees as at March 31, 2016. The information required under the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel)  Rules, 2014 along with statement showing names and other particulars of the employees drawing remuneration in excess of the limits prescribed under the said rules is annexed to this report

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act, 2013, in relation to the Annual Financial Statements for the Financial Year 2015-2016, your Directors confirm that:

a) The Financial Statements of the Company comprising of the Balance Sheet as at March 31, 2016 and the Statement of Profit & Loss for the year ended on that date, have been prepared on a going concern basis following applicable accounting standards and that no material departures have been made from the same;

b) Accounting policies selected were applied consistently and the judgments and estimates related to the financial statements have been made on a prudent and reasonable basis, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016, and, of the profit of the Company for the year ended on that date;

c) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act, to safeguard the assets of the Company and for preventing and detecting fraud and other irregularities;

d) Requisite Internal financial controls were laid down and that such financial controls are adequate and operating effectively; and

e) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

ACKNOWLEDGEMENTS

Your Board takes this opportunity to place on record its appreciation for the dedication and commitment of employees shown at all levels which have contributed to the success of your Company. Your Directors also express their gratitude for the valuable support and co-operation extended by various Governmental authorities, including Ministry of Information and Broadcasting, Department of Telecommunication, Ministry of Corporate Affairs, Securities and Exchange Board of India, Stock Exchanges, Depositories and other stakeholders including banks, financial Institutions, viewers, vendors and service providers. 

For and on behalf of the Board

Surjit Banga

Non-Executive Chairman

Rajendra Kumar Arora

Executive Director & CEO 

Place: Mumbai

Date : May 24, 2016