MIRA INFORM REPORT

Report Date :

21.04.2011

Note : ETC NETWORKS LIMITED has been amalgamated with ZEE ENTERTAINMENT ENTERPRISES LIMITED

IDENTIFICATION DETAILS

Name :	ZEE ENTERTAINMENT ENTERPRISES LIMITED (w.e.f. 10.01.2007) ETC NETWORKS LIMITED (AMALGAMATED WITH ZEE ENTERTAINMENT ENTERPRISES LIMITED)
Formerly Known As :	ZEE TELEFILMS LIMITED
Registered Office :	135, Dr. Annie Besant Road, Worli, Mumbai - 400018, Maharashtra
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	25.11.1982
Com. Reg. No.:	11-28767
CIN No.: [Company Identification No.]	L92132MH1982PLC028767
TAN No.: [Tax Deduction & Collection Account No.]	MUMZ00074E
PAN No.: [Permanent Account No.]	AAACZ0243R
Legal Form :	Public limited liability company. The company's shares are listed on the Stock Exchanges.
Line of Business :	Subject is a television, media and entertainment company. Producers and aggregators of hindi program.

RATING & COMMENTS

MIRA’s Rating :

A (65)

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 110000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and a reputed company having fine track. Financial Position of the company appears to be sound. Fundamentals are strong and healthy. Directors are reported to be experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – April 1, 2010

Country Name	Previous Rating (31.12.2009)	Current Rating (01.04.2010)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

INFORMATION DECLINED BY

Name :	Mr. Mehul Shah
Designation :	Vice President - Accounts Department
Contact No.:	91-22-66971234
Date :	19.04.2011

LOCATIONS

Registered Office :	135, Dr. Annie Besant Road, Worli, Mumbai - 400018, Maharashtra, India
Tel. No.:	91-22-66971234
Fax No.:	91-22-24900302/24900213
E-Mail :	sanghavip@zeenetwork.com
Website:	http://www.zeetelevision.com
Regional Office :	Located At: New Delhi Kolkata Pune Hyderabad Chennai Bangalore Noida
International Office :	Located At: USA United Kingdom Singapore South Africa Mauritius China Malaysia Dubai Russia (Moscow)
Other Office:	Located At: Mumbai Noida

DIRECTORS

As on 31.03.2010

Name :	Mr. Subhash Chandra
Designation :	Chairman
Name :	Mr. Laxmi Narain Goel
Designation :	Director
Name :	Mr. Ashok Kurien
Designation :	Director
Name :	Mr. Brijendra K Syngal
Designation :	Independent Director
Name :	Mr. Nemichand S Jain
Designation :	Independent Director
Name :	Mr. Rajan Jetley
Designation :	Independent Director
Name :	Mr. Sir Gulam K Noon
Designation :	Independent Director
Name :	Dr. Mohammed Y Khan
Designation :	Independent Director
Name :	Prof. R Vaidyanathan
Designation :	Independent Director
Name :	Mr. Punit Goenka
Designation :	Managing Director

KEY EXECUTIVES

Name :	Mr. Amitabh Kumar
Designation :	Technology
Name :	Mr. Atul Das
Designation :	Corporate Strategy & Business Development
Name :	Mr. Atul Pande
Designation :	Sports
Name :	Mr. Bharat Ranga
Designation :	International Operations
Name :	Dr. Rajesh Save
Designation :	Human Resources
Name :	Mr. Hitesh Vakil
Designation :	Finance
Name :	Mr. Joy Chakraborty
Designation :	Domestic Revenue & Niche Channels
Name :	Mr. Nitin Vaidya
Designation :	Content - National & Regional HSM
Name :	Mr. Roland Landers
Designation :	Corporate Brand Development
Name :	Mr. M Lakshminarayanan
Designation :	Company Secretary
Name :	Mr. Punit Goenka
Designation :	Chief Executive Officer

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2011

Names of Shareholders	Total No. of Shares	Total Shareholding as a % of total No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	9,676,468	0.99
Bodies Corporate	236,529,168	24.18
Sub Total	246,205,636	25.17
(2) Foreign
Bodies Corporate	172,266,804	17.61
Sub Total	172,266,804	17.61
Total shareholding of Promoter and Promoter Group (A)	418,472,440	42.79
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	58,145,446	5.94
Financial Institutions / Banks	277,552	0.03
Insurance Companies	68,090,075	6.96
Foreign Institutional Investors	350,714,092	35.86
Sub Total	477,227,165	48.79
(2) Non-Institutions
Bodies Corporate	50,485,583	5.16
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	23,031,215	2.35
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	5,745,299	0.59
Any Others (Specify)	3,114,428	0.32
Foreign Corporate Bodies	93,952	0.01
Overseas Corporate Bodies	33,182	-
Foreign Nationals	3,408	-
Non Resident Indians	2,916,554	0.30
Trusts	67,332	0.01
Sub Total	82,376,525	8.42
Total Public shareholding (B)	559,603,690	57.21
Total (A)+(B)	978,076,130	100.00

BUSINESS DETAILS

Line of Business :

Subject is a television, media and entertainment company. Producers and aggregators of hindi program.

Products :

Product Description	Items Code
Recorded Video Cassettes	85249001

GENERAL INFORMATION

No. of Employees :

Information denied by the management

Bankers :

• Axis Bank Limited
• BNP Paribas
• Yes Bank Limited
• ING Vysya Bank Limited
• Standard Chartered Bank

Facilities :

Secured Loan	As on 31.03.2010 (Rs. in Millions)	As on 31.03.2009 (Rs. in Millions)
Debentures	500.000	0.000
Term Loan From Banks	60.000	1000.000
Working Capital Finance From Banks	12.135	200.000
Vehicle Loans	12.228	13.964
Interest accrued and due	0.675	0.000
Total	585.038	1213.964
Unsecured Loan
Term Loan from Banks	600.000	0.000
Foreign Currency Convertible Bonds	0.000	195.450
Short Term Loan From Bank	0.000	300.000
Inter Corporate Deposits	3.515	0.000
Interest accrued and due	0.477	0.000
Total	603.992	495.450

Banking Relations :	--
Auditors :
Name :	MGB and Company Chartered Accountant
Associates:	Aplab Limited (Extent of holding 26.42%)
Subsidiaries :	Wholly Owned Apac Media Ventures Limited Asia Business Broadcasting Mauritius Limited Asia Today Limited Asia TV Limited Expand Fast Holding (Singapore) Pte. Limited Zee CIS Holding LLC Zee Multimedia (Maurice) Limited Zee Multimedia Worldwide Limited Mauritius Zee Multimedia Worldwide Limited (BVI) Zee Sports Americas Limited Zee Sports International Limited Zee Sports Limited Zee Technologies (Guangzhou) Limited Zee Telefilms Middle East FZLLC Zee TV South Africa (Proprietary) Limited Zee TV USA Inc. ZES Holding Limited Zee Entertainment Studios BVI ZES Mauritius Limited ZES International Limited Zee Motion Pictures Private Limited. Others – Direct ETC Networks Limited (merged as on March 31, 2010)* Taj Television India Private Limited; Zee Turner Limited *Cornershop Entertainment Company Private Limited Cornershop Animation Company Private Limited Digital Media Convergence Limited Remed Services Private Limited (merged with erstwhile ETC Networks Limited w.e.f. January 1, 2010) Other – Indirect Taj TV Limited, Mauritius

CAPITAL STRUCTURE

As on 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
1399200000	Equity Shares	Rs.1/- each	Rs.1399.200 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
434007111	Equity Shares	Rs.1/- each	Rs.434.007 Millions
	Share Capital Suspense Account		Rs.55.031 Millions
			Rs. 489.038 Millions

Note: Out of the above 210,316,212 Equity Shares of Re.1/-each fully paid up were allotted for consideration other than cash against acquisition of investments

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		489.038	434.007	433.567
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		27764.251	22996.025	20848.879
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		28253.289	23430.032	21282.446
LOAN FUNDS
1] Secured Loans		585.038	1213.964	708.733
2] Unsecured Loans		603.992	495.450	1333.881
TOTAL BORROWING		1189.030	1709.414	2042.614
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		29442.319	25139.446	23325.060
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1583.742	1399.267	1221.254
Capital work-in-progress		1110.966	183.250	183.523
INVESTMENT		15319.290	13496.163	13494.713
DEFERREX TAX ASSETS		49.354	39.986	65.605
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	4531.303	3194.763	6.170
	Sundry Debtors	4633.845	3516.805	4082.828
	Cash & Bank Balances	3002.910	1104.344	222.126
	Other Current Assets	1.973	0.000	0.000
	Loans & Advances	5422.413	6448.945	7156.774
Total Current Assets		17592.444	14264.857	11467.898
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	2952.591	1942.011	1864.481
	Other Current Liabilities	881.254	899.956	1884.035
	Provisions	2379.634	1402.161	1717.401
Total Current Liabilities		6213.479	4244.128	5465.917
Net Current Assets		11378.965	10020.729	8359.865
MISCELLANEOUS EXPENSES		0.002	0.051	0.100
TOTAL		29442.319	25139.446	23325.060

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	12787.436	12102.425	10419.923
		Other Income	1061.815	1050.920	1019.293
		TOTAL (A)	13849.251	13153.345	11439.216
Less	EXPENSES
		Operational Cost	4256.652	5030.689	3609.736
		Personnel Cost	814.558	924.181	620.961
		Administrative and Other Expenses	771.601	595.827	953.678
		Selling and Distribution Expenses	1633.490	1942.767	1149.788
		Exceptional Item	0.000	(25.806)	25.806
		TOTAL (B)	7476.301	8467.658	6359.969
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		6372.950	4685.687	5079.247
Less	FINANCIAL EXPENSES (D)		175.254	778.737	429.815
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		6197.696	3906.950	4649.432
Less/ Add	DEPRECIATION/ AMORTISATION (F)		114.272	119.240	106.019
	PROFIT BEFORE TAX (E-F) (G)		6083.424	3787.710	4543.413
Less	TAX (H)		495.021	690.264	1592.203
	PROFIT AFTER TAX (G-H) (I)		5588.403	3097.446	2951.210
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		8893.473	7209.482	5571.728
Less	APPROPRIATIONS
		Interim dividends on equity shares	968.967	0.000	0.000
		Proposed Final Dividend on equity share	977.795	868.014	868.014
		Tax on Dividend	323.332	145.441	145.442
		General Reserve	1100.000	400.000	300.000
	BALANCE CARRIED TO THE B/S		11111.782	8893.473	7209.482
	Earnings Per Share (Rs.) Basic		12.51	7.08	6.87
	Earnings Per Share (Rs.) Basic		12.51	7.14	6.81
	Earnings Per Share (Rs.) Diluted		12.51	7.07	6.84
	Earnings Per Share (Rs.) Diluted		12.51	7.13	6.78

QUARTERLY RESULTS

PARTICULARS	30.06.2010	30.09.2010	31.12.2010
Type	1^st Quarter	2^nd Quarter	3^rd Quarter
Net Sales	4526.700	5009.800	5950.400
Total Expenditure	2537.700	2744.400	3675.600
PBIDT (Excl OI)	1989.000	2265.400	2274.800
Other Income	141.200	158.100	180.200
Operating Profit	2130.200	2423.500	2455.0000
Interest	4.300	32.700	4.900
Exceptional Items	290.600	0.000	0.0000
PBDT	2416.500	2390.800	2450.100
Depreciation	28.200	43.100	49.600
Profit Before Tax	2388.300	2347.700	2400.500
Tax	712.000	772.100	717.400
Profit After Tax	1676.300	1575.600	1683.100
Net Profit	1676.300	1575.600	1683.100

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	40.35	23.55	25.80
Net Profit Margin (PBT/Sales)	(%)	47.57	31.30	43.60
Return on Total Assets (PBT/Total Assets}	(%)	31.72	24.18	35.80
Return on Investment (ROI) (PBT/Networth)		0.22	0.16	0.21
Debt Equity Ratio (Total Liability/Networth)		0.26	0.25	0.35
Current Ratio (Current Asset/Current Liability)		2.83	3.36	2.10

LOCAL AGENCY FURTHER INFORMATION

Amalgamation of ETC Networks Limited with the Company and Demerger of Education Business Undertaking from the Company:

The Composite Scheme of Amalgamation and Arrangement (“the composite scheme”) between erstwhile ETC Networks Limited (“ETC”) the Company Zee Learn Limited (“ZLL”) and the Company and their respective shareholders and creditors was approved by the Hon’ble High Court of Mumbai on July 16, 2010 and the said order filed with the Registrar of Companies on August 30, 2010. Pursuant to the Scheme the erstwhile ETC has merged and vested in the Company at fair values on the Appointed date i.e. March 31, 2010. And upon such merger, the Education Business Undertaking from the Company was demerged and vested with Zee Learn Limited on the Appointed Date April 1, 2010.

DETAILS OF SUNDRY CREDITORS:

Particulars	31.03.2010 (Rs. in millions)	31.03.2009 (Rs. in millions)	31.03.2008 (Rs. in millions)
Sundry Creditors
For Goods	990.044	1054.223	803.619
For Expenses and Other Liabilities	1962.547	887.788	1060.862
Total	2952.591	1942.011	1864.481

BUSINESS OVERVIEW

The year saw the Company successfully implement a range of initiatives to overcome the unique challenges of recession and unabated growth in number of new entrants. In addition the Company’s ability to capitalize on such upcoming opportunities as digital platform growth, by leveraging the strength of the Company’s portfolio of offerings, to cater to multiple viewer groups and their evolving preferences has put the Company ahead and at the forefront of a highly competitive market.

Zee TV maintained leadership in the crucial Prime Time band on weekdays and gave the viewers the No 1 fiction show, Pavitra Rishta in Hindi general entertainment genre. The leadership in Non-fiction genre continued with launch of Dance India Dance 2 staying much ahead of the competition week after week and the year also marked

completion of 1000 episodes of Saregamapa - one of Zee TV’s biggest and oldest brands. The celebration of Zee TV’s endearing relationship with viewers was marked by the record ratings that Zee Rishtey Awards clocked, becoming the highest rated event in the year, far ahead of the other events of the year. Jhansi Ki Rani was also launched, successfully upstaging the slot leader & adding a new flavor of historical drama to the channel and the genre.

In the Hindi movie genre, Zee Cinema retained its leadership, resonating with properties and movies that were loved by the viewers. Showcasing the biggest films of the year to interviews with the biggest stars, the channel had it all. Shanivaar Ki Raat, Amitabh Ke Saath came back with a bang during the year with the biggest films of Amitabh Bachchan. In a first for Hindi movie channels, the star himself featured on the channel for the entire season, in specially created break content, to speak about his experiences on 15 of these films. Several other initiatives including the re-branding of the Sunday 8 PM slot as ‘Lage Raho’, where viewers get to see their favourite films with few breaks have been a huge hit with viewers. This became the highest rated property for Zee Cinema, and was often the leading slot across the genre. Zee Cinema also launched ‘Buzz of the Week’ featuring the biggest stars of Bollywood promoting their upcoming releases.

Zee regional channels have been leaders and trendsetters in their respective regional markets and continued to do so through the year, registering strong growth in viewership, despite the high clutter and fragmentation due to scores of new channels. Zee Marathi continued to be the dominant leader in Marathi genre. Trend-setting shows like Hafta Bandh, Maharashtracha Superstar, Yala Jeevan Aise Naav and Kunku have created a strong channel identity and association in the minds of the audience. In addition, a slew of blockbuster movies and events made Zee Marathi the preferred choice for discerning as well as mass viewers. Zee Telugu registered the best growth in Telugu and touched its highest ever viewership since launch. The channel also had among the best shows including Aata, a dance show, which was the No. 1 non-fiction show in Telugu. The channel also maintained leadership in morning band and differentiated content in afternoon for women. In the Bengali genre, Zee Bangla continued to delight the Bengali viewers and challenge for leadership with new content such as Mirakkel Akkel Challenger 5 which was the No.1 performing reality show across West Bengal. Zee Kannada covered new ground by building and dominating new viewership bands in morning and late night by offering differentiated content including a morning religious band and late prime comedy content.

Zee Café and Zee Studio have been successful in attracting discerning niche Indian audiences by offering some of the best English content including Hollywood movies, the best of American television series and sitcoms.

Zee further expanded its business presence internationally increasing its reach within the non penetrated markets and growing its share within the South Asian subscription and advertising revenue pie. Zee International channels were among the top rated in markets across US, UK, Middle East, South Africa and APAC thus consistently generating viewer interest in both South Asian and mainstream audiences resulting in new advertisers and subscribers coming on board The constant efforts, some of which have been listed above, of various channels of the Company to “delight” viewers by setting new trends, has greatly strengthened the Company’s long standing relationship with viewers.

This has helped it to successfully ride the recession by garnering large share of existing advertising spending and

attracting new advertising. The Company has also made huge strides in the fast growing digital delivery space with a range of compelling and exciting offerings for viewers subscribing to DTH and Digital Cable platforms. The positive effect is being reflected in the growth in subscription revenues.

SUBSIDIARIES AND JOINT VENTURES

Domestic Subsidiaries

During the year, ETC Networks Ltd (ETC), the listed subsidiary of the Company acquired the entire shareholding in Cornershop Entertainment Company Private Ltd which in turn held 100% stake in Cornershop Animation Private Limited, Digital Media Convergence Limited and Re-Med Services Private Limited. Subsequently, these subsidiaries amalgamated with ETC from the Appointed Date January 1, 2010 in pursuance of a Scheme of Amalgamation which became effective on April 29, 2010.

Overseas Subsidiaries

Asia TV Limited, United Kingdom, one of the overseas subsidiary along with its subsidiary OOO Zee CIS Holding Limited, Russia jointly acquired 100% stake in OOO Zee CIS Limited, a broadcasting operating Company in Russia. The Board of Directors had in-principle approved acquisition of additional stakes of (i) 45% in Taj TV Ltd., Mauritius by Zee Sports International Limited, Mauritius (ZSIL) a step-down subsidiary to make the aggregate holding to 95% and (ii) 50% in Taj Television India Private Ltd by the Company to make it a wholly-owned subsidiary of the Company.

During the year, the Board had approved two joint ventures - one with Geodesic Limited in digital distribution and monetization of contents through the internet purely on subscription based revenue model and another to host and promote an India branded Entertainment Portal in a Joint Venture with Mail.com Media Corporation, USA, both with majority shareholding by the Company.

The Company has been granted exemption by the Ministry of Corporate Affairs, Government of India, vide its letter No. 47/518/2010-CL-III dated June 23, 2010, from the requirement of attaching Annual Reports of the Subsidiary Companies to the Annual Report of the Company for the financial year ended March 31, 2010. Accordingly, as required under the said approval, the annual accounts of the subsidiaries of the Company for year ended March 31, 2010 are not being attached with the Annual Report of the Company and certain financial highlights of these subsidiaries are disclosed in the Annual Report. Statement pursuant to Section 212 of the Companies Act 1956 relating to the subsidiaries of the Company is attached to this report. The annual accounts of the subsidiary companies and related detailed information will be available for inspection by any Member of the Company or that of the subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

In accordance with Accounting Standard AS 21 - Consolidated Financial Statements read with Accounting Standard AS 23 - Accounting for Investments in Associates, and Accounting Standard 27 - Financial Reporting of

Interests in Joint Ventures

Management Discussion and Analysis

OVERVIEW

Zee Entertainment Enterprises Limited (ZEEL) (BSE Code: 505537, NSE Code: ZEEL.EQ) is India’s largest vertically integrated media and entertainment Company. The Company was formed in 1982. Zee Entertainment was the first Company to launch a satellite channel in India and from being a single channel for a single geography today operates multiple channels across multiple geographies in different languages and genres. The

Company’s programming reaching out to over 500 million viewers across 167 countries. Zee Entertainment channels include Zee TV (Hindi General Entertainment), Zee Cinema (Hindi Movies), Zee Sports, Ten Sports (sports including Cricket), Zee Café (English Entertainment), Zee Studio (English Movies), Zee Trendz (Fashion and Life Style), Zing (Music and Lifestyle), ETC Music (Hindi Music), ETC Punjabi (Regional language), Zee Classic (Old Hindi movies), Zee Action (Action-based Hindi movies), Zee Premier (New Hindi movies), Zee Jagran (Alternative Lifestyle), Zee Smile (Niche Hindi General Entertainment) and recently merged Regional Channels like Zee Marathi, Zee Bangla, Zee Kannada, Zee Telugu, Zee Talkies and 9X.

MEDIA AND ENTERTAINMENT INDUSTRY

A buoyant economy led to the Indian media and entertainment industry growing at a quick pace over the last few years. Advertising revenues continued to outperform the world growth average and digitization ensured that corrections were brought into the subscription revenues model. However, year gone by was a unique one for the world economy at large and growth plans across businesses were brought under check while rationalizing spends to grapple with unprecedented slowdown.

An ever increasing ad spend to GDP ratio, rapid adoption of DTH and digital pay television services, favourable trends from television heavy advertisers lead the revival of the sector from this pressure situation in the second half of the fiscal 2010 which is likely to rally in the coming years The new era of digitization has seen DTH adoption going up to 20 million pay DTH households as of March 2010, an 80% growth over the last year. With more number of players foraying into the DTH market and heavier investments into consumer education, the DTH industry is estimated to grow by another 9-10 million households this year alone. Established broadcasters with emphasis on subscription revenues are likely to be the biggest beneficiaries from this expansion going forward. India has been relatively lesser impacted by the upheaval in the world economic situation, yet the widespread uncertainty has led to a slowdown in advertising spends.

BUSINESS PROFILE

Zee is an integrated media and entertainment Company engaged primarily in broadcasting and content development, production and its delivery via satellite. The Company has 23 channels that serves widest array of content choices in India and is the leading broadcaster across the country as also the pioneer in the international markets for Indian content.

Zee TV

The flagship channels Zee TV operates in the Hindi General Entertainment genre. Over the last year, easy liquidity in capital markets and growth prospects of Indian media had lead to the launch of various new channels, especially in the Hindi General Entertainment space. New players were attracted to the genre owing to its popularity among viewers and the resultant advertising spends it attracts through giving little emphasis on their breakeven horizons and profitability. Nevertheless, with the launch of new players, a lot more choice was available to the viewers, the quantity of GEC content being produced went up. This in turn also resulted in increased cost of marketing and distribution within the GEC genre. Since cable distribution in India is predominantly in analogue mode, getting carriage on cable networks was a challenge for most. As a result, the channels had to pay sizable amounts as carriage fees. The cost structure of new channels was thus very different as compared to established players. While new channels spent excessively across all cost heads, creating unviable operating plans, the liquidity scenario also changed for the worse and but a brake in the plans of some new players.

The fragmentation in viewership brought with it some pressure on advertising for the genre. New broadcasters offered entry pricing on new inventory, which resulted in lower realization and yields. Subscription revenues were also under pressure, with all new entrants offering long free-view windows.

While the initial flurry of spends did bring with it short-term viewership spikes, most of the channels started to plateau out on ratings. Monetize-able ratings eluded new players, even as established incumbents continued to garner a larger pie of the relevant viewership and advertising revenues hence. The graph below is indicative of the competitive Hindi GEC space and primetime ratings of each of the channels over the last four years, showing the growing strength of Zee TV versus other established players in the genre.

Zee TV continued to maintain its dominance in the genre even as other channels lost market share and delivered

an average channel share of 17% across the year. The encouraging part for the channel was that while other existing players lost channel share to new competitors, the channel was the least effected by the upheaval that surrounded it. During the year, the channel launched various new successful shows including ‘Choti Bahu’, Agle Janam Mohe Bitiya Hi Kijo’, ‘Dance India Dance’, ‘Do Sahelia’, ‘Jhansi Ki Rani’, etc. These shows met with instant success and broke into the top 50 shows slot.

Leadership across different Genre

Apart from its flagship channel Zee TV, the Company has a dominant presence across different segments in Indian broadcasting space.

In Hindi Movie Genre, it has 4 channels viz. Zee Cinema, Zee Premier, Zee Action and Zee Classic. Zee Cinema has been a leader in its genre from the time of its inception and commanded 33% weekly average channel share during the year. The channel has the largest film library in the country and is a strong favourite with the viewers as also the advertisers.

The Company’s sports offering includes 2 channels viz. Zee Sports and Ten Sports. With telecast rights to 5 cricket boards, which ensure coverage of cricket of all test playing countries, and over hundred days of cricket per year along with rights to exciting properties such as UEFA cup football, WWE wrestling, US Open Tennis, etc. tied up, the sports business has emerged as a strong segment of the Company’s revenues, contributing to over 14% of the Company’s top line this year.

Zee Music, the music channel offering of the Company was rebranded to Zing during the course of the year. The content on Zing will revolve around the world of music, movies and celebrities.

Zee Marathi, Zee Talkies, Zee Bangla, Zee Telugu, Zee Kannada are regional language offerings and are carrying significant market share in their respective markets.

Education

For India to achieve its target of GDP growth, it needs to harness all its Resources – the biggest one being manpower. Sadly, our manpower today is not equipped to take on the challenge of leading India to its destiny. 36% of them are illiterate and the ones, who are certified literate, are barely employable. Therefore, organized private initiatives are gaining momentum in India’s lucrative education market.

BUSINESS STRATEGY

The year gone by can be classified as two distinct parts: the first half from April to September and the second half

from October to March. While the first half saw the fallout impact on advertising revenue due to economic slowdown witnessed during 2008-2009, second half saw a resurgent economy and higher ad spend. The key elements of Zee’s strategy during the year were (i) to take appropriate steps to safeguard its leadership position in a fiercely competitive environment (ii) to concentrate on additional revenues from digital pay platforms (iii) rationalize on costs across different heads, especially towards the latter half of the year (iv) fortify its expansion in the international markets (v) maintain consistently high standards of corporate governance.

Appropriate steps to safeguard its leadership position in a fiercely competitive environment

Over the years, Zee Network has been the only network to gain viewership share in the top 3 television networks of the country. The launch of new shows across network channels along with the tie up of cricket rights and current series rights of programmes has helped ensure that in a highly fragmented environment, the network maintained and grew its dominance.

Concentrate on additional revenues from digital pay platforms

India is a fast digitizing market and the consumer shift towards digital services is exhibited through the rampant expansion from 6 million pay DTH households at the beginning of the fiscal to 12 million pay DTH households at the end of it. The Company gained substantially through this growth and revenues realized by the Company for these consumers grew 93% over the last year.

Rationalize on costs across different heads towards the latter half of the year

The belief at the Company has always been that higher spends will not necessarily result in sustained incremental viewership. Even in the wake of competition, the network maintained its cost structures though with increased competition our costs also moved up. The costs were however brought under check towards the fourth quarter of the year and are expected to further be brought under check going forward. The Company cut back on expansion plans such as Zee Next and Zee Entertainment Studios. Better negotiations with suppliers, efforts on manpower rationalization and stricter control on distribution spends will help in further keeping costs under check.

Fortify its expansion in the international markets

While the network launched local language channels across various new territories in the previous fiscal, this fiscal saw the consolidation on this front, with the success of Zee Aflam for the Middle East region and Zee Music in the UK. The success of these channels has given the management confidence that low cost experiments such as these are an innovative way of expanding network strengths.

CONTINGENT LIABILITIES NOT PROVIDED FOR

Particulars	31.03.2010 (Rs. in millions)	31.03.2009 (Rs. in millions)
Corporate Guarantees For subsidiaries to the extent of loans availed/ outstanding	5008.850	1565.100
For other related parties, loans outstanding	4077.030	4526.760
Bank guarantees	0.075	1.810
Claims against the Company not acknowledged as debts	640.278	132.743
Disputed Direct Taxes	131.504	133.517
Disputed Indirect Tax	474.538	0.000
Letters of credit (net of liability provided)	40.817	0.000
Total	10373.092	6359.93

Fixed Assets:

• Freehold Land
• Leasehold Land
• Buildings
• Leasehold Improvements
• Plant and Machinery
• Equipments
• Furniture and Fixtures
• Vehicles

UNAUDITED FINANCIAL RESULTS

Rs. in Millions

Particular	Quarter Ended December 31, 2010	9 Months Ended December 31, 2010
	Unaudited	Unaudited
Net Sales / Income from operations	5950.400	15486.900
Total Income	5950.400	15486.900
Expenditure
Cost of Goods and Operation	2556.300	5485.000
Staff Cost	410.100	1100.800
Deprecation	49.600	120.900
Admin and Others Expenses	201.800	755.200
Selling and Dist. Expenses	507.400	1616.900
Total	3725.200	9078.800
Profit from operations before other income, interest and exceptional Items	2225.200	6408.100
Other income / Interest	180.200	479.500
Profit before finance cost	2405.400	6887.600
Finance cost	4.900	42.000
Profit after finance cost but before exceptional items	2400.500	6845.600
Exceptional Items	--	290.600
Profit before tax	2400.500	7136.200
Provision for tax	717.400	2201.500
Net Profit after tax	1683.100	4934.700
Paid up equity share capital (Face value of Rs.1/- per share)	978.100	978.100
Reserves excluding revaluation reserves as per balance sheet of previous accounting year
Earning per share (EPS)
(a) Basic and diluted EPS before Extraordinary items for the period, for the year to date and for the previous year (not to be annualised)	1.72	4.75
(a) Basic and diluted EPS before Extraordinary items for the period, for the year to date and for the previous year (not to be annualised)	1.72	4.75
Public shareholding
Number of shares	559.600	559.600
Percentage of shareholding	57.22	57.22
Promoters and Promoters group Shareholding-
a) Pledged /Encumbered
Number of shares	74.800	74.800
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	17.88	17.88
Percentage of shares (as a % of total share capital of the company)	7.65	7.65
b) Non Encumbered
Number of shares	343.700	343.700
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	82.12	82.12
Percentage of shares (as a % of total share capital of the company)	35.13	35.13

Note:

1. During the quarter, upon receipt of approval of the Members at the Annual General Meeting held on October 29, 2010, the Company had capitalized an amount of Its. 489.000 Millions and allotted Bonus Equity Shares of Re. 1 each in ratio of one (I) Bonus Equity Share for one (I) Equity Share. Consequently the Paid Up Share Capital of the Company has increased to Rs.978.076 Millions.

2. The Board of Directors of the Company at the meeting held today has approved amalgamation of two (2) wholly owned overseas Subsidiaries of the Company viz. ZES Holdings Limited, Mauritius and Zee Multimedia Worldwide Limited, BVI with the Company through a Scheme of Amalgamation which will be subject to requisite statutory arid regulatory approvals.

3. During the quarter, company has received Rs.700.000 Millions as one time fees for pre matured termination of sporting events rights, included in Income from operations.

4. The above results include fanatical of newly launched channel TEN CRICKET.

5. No investor grievance was pending anon October 1, 2010. The Company received 23 letters during the quarter, all of which were resolved and none were lying unresolved as on December 31, 2010.

6. The Statutory Auditors have carried out a ‘Limited Review’ of the stand-alone financial results for the quarter ended December 31, 2010.

7. Previous year figures have been reclassified I regrouped wherever necessary.

8. Current quarter/Nine months results Includes financials of merged RGEC, ETC and 9X undertakings, hence stand-alone results of current quarter/Nine months is not comparable with that of corresponding periods

9. The Company operates only in one Segment namely ‘Content and Broadcasting’ and hence segment details are not required.

10. The above results were reviewed by the audit committee and approved by the board of directors in their meeting held on 14^th January, 2011.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.38
UK Pound	1	Rs.72.55
Euro	1	Rs.63.92

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--MARGINS	-5~5	---
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		65

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.