MIRA
INFORM REPORT
|
Report Date : |
19.03.2011 |
IDENTIFICATION DETAILS
|
Name : |
HATHWAY CABLE AND DATACOM LIMITED (w.e.f. 07.09.2009) |
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Formerly Known
As : |
CHICS DISPLAY SERVICES PRIVATE LIMITED HATHWAY CABLE AND DATACOM PRIVATE LIMITED (w.e.f. 16.02.1999) |
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Registered
Office : |
Rahejas, 4th Floor, Corner of |
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Country : |
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Financials (as on)
: |
31.03.2010 |
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Date of
Incorporation : |
07.08.1959 |
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Com. Reg. No.: |
11-011421 |
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CIN No.: [Company Identification
No.] |
L64204MH1959PLC011421 |
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TAN No.: [Tax Deduction &
Collection Account No.] |
MUMH07346D |
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PAN No.: [Permanent Account No.] |
AAACC6814B |
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Legal Form : |
A public limited
liability company. The company's
shares are listed on the Stock Exchanges |
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Line of Business
: |
Providing of Cable Transmission and Internet Services. |
RATING & COMMENTS
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MIRA’s Rating : |
B (32) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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Maximum Credit Limit : |
USD 35427000 |
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Status : |
Moderate |
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Payment Behaviour : |
Slow |
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Litigation : |
Clear |
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Comments : |
Subject is an established company having moderate track. Profitability
of the company appears to be under pressure. There appears huge accumulated
losses recorded by the company. However, trade relations are reported as
fair. Business is active. Payments are reported to be slow. The company can be considered for business dealings with some
cautions. |
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) |
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A1 |
A1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
INFORMATION PARTED BY (General Details)
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Name : |
Mr. Ritesh Vakharia |
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Designation : |
Accountant |
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Contact No.: |
91-22-67627000 |
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Date : |
17.03.2011 |
LOCATIONS
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Registered Office : |
Rahejas, 4th Floor, Corner of |
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Tel. No.: |
91-22-26001306 / 26055041 / 67627000 |
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Fax No.: |
91-22-26001307 |
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E-Mail : |
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Website : |
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Area : |
4000 sq ft |
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Location : |
Rented |
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Corporate Office : |
Located at:
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DIRECTORS
As on 31.03.2010
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Name : |
Mr. Bharat Shah |
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Designation : |
Chairman |
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Name : |
Mr. Rajan Raheja |
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Designation : |
Director |
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Address : |
Rahejas, 87/1, G. B. Marg, Juhu, Mumbai-400049, |
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Date of Birth/Age : |
17.06.1954 |
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Date of Appointment : |
07.09.2000 |
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Name : |
Mr. Akshay Raheja |
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Designation : |
Director |
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Name : |
Mr. Viren Raheja |
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Designation : |
Director |
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Name : |
Mr. K. Jayaraman |
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Designation : |
Managing Director and Chief Executive
Officer |
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Address : |
909, Brindaban,
II-B, Poonam Nagar, Andheri (East), Mumbai-400093, |
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Date of Birth/Age : |
16.05.1961 |
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Date of Appointment : |
08.02.2004 |
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Name : |
Mr. Vinayak Aggarwal |
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Designation : |
Director |
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Address : |
502, Gladioli,
Off |
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Date of Birth/Age : |
12.04.1969 |
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Date of Appointment : |
04.06.1996 |
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Name : |
Mr. Jagdishkumar G. |
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Designation : |
Director |
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Name : |
Mr. Uday Shankar |
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Designation : |
Director |
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Address : |
301/ 302, Vastu
CHS Limited, De. L.D. Thadani Marg, Worli Seaface, Mumbai – 400 030, |
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Date of Birth/Age : |
16.09.1961 |
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Date of Appointment : |
24.10.2007 |
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Name : |
Mr. Brahmal Vasudevan |
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Designation : |
Director |
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Name : |
Mr. Sasha Mirchandani |
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Designation : |
Director |
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Name : |
Mr. Sridhar Gorthi |
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Designation : |
Director |
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Name : |
Mr. Devendra Shrotri |
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Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. Milind Karnik |
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Designation : |
President - Finance and Company Secretary |
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Address : |
E/30, Sai Krupa, |
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Date of Birth/Age : |
02.12.1960 |
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Date of Appointment : |
01.01.1999 |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 31.12.2010
|
Category of Shareholders |
No. of Shares |
Percentage of
holding |
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(A) Shareholding
of Promoter and Promoter Group |
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48,193,200 |
33.74 |
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22,150,800 |
15.51 |
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70,344,000 |
49.24 |
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24,715,500 |
17.30 |
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24,715,500 |
17.30 |
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Total
shareholding of Promoter and Promoter Group (A) |
95,059,500 |
66.54 |
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(B) Public
Shareholding |
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18,719,638 |
13.10 |
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1,959,933 |
1.37 |
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6,710,576 |
4.70 |
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27,390,147 |
19.17 |
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4,262,733 |
2.98 |
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1,453,632 |
1.02 |
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1,427,129 |
1.00 |
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13,263,959 |
9.28 |
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51,622 |
0.04 |
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1 |
- |
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2,250,072 |
1.58 |
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10,961,788 |
7.67 |
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|
476 |
- |
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20,407,453 |
14.29 |
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Total Public
shareholding (B) |
47,797,600 |
33.46 |
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Total (A)+(B) |
142,857,100 |
100.00 |
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(C) Shares held by
Custodians and against which Depository Receipts have been issued |
- |
- |
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- |
- |
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- |
- |
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- |
- |
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Total
(A)+(B)+(C) |
142,857,100 |
- |
(1) Indian
Individuals / Hindu Undivided Family
Individual shareholders holding nominal
share capital up to Rs.0.100 millionBUSINESS DETAILS
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Line of Business : |
Providing of Cable Transmission and Internet Services. |
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Products/ Services : |
Cable Transmission, Internet Service Provider |
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Terms : |
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Selling : |
Cash and Credit |
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Purchasing : |
Cash and Credit |
GENERAL INFORMATION
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Customers : |
Individual Corporate |
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No. of Employees : |
1000 (Approximately) |
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Bankers : |
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Facilities : |
NOTE: (i) Rs. NIL
(P.Y. Rs. NIL) (Sanction amount Rs.500.000 millions (P.Y. Rs.500.000
millions)) is secured by hypothecation of Current Assets of the Company both
present and future and extension of pari passu hypothecation of movable Fixed
Assets of the Company both present and future (ii) Rs.2.090
millions (P.Y. Rs. NIL) (Sanction amount Rs.50.000 millions (P.Y. Rs.50.000
millions)) is secured by hypothecation of inventory and Book debts of the
Company both present and future and personal guarantee of one of the
directors (iii) Secured by Hypothecation of Vehicles. (iv) Out of the
above, Rs.4.167 millions (P.Y. Rs.20.833 millions) secured by item no. (a)
and (b) given below and Rs.243.750 millions (P.Y. Rs.300.000 millions)
secured by item no. (a), (b) and (c) and Rs.855.000 millions (P.Y. Rs.500.000
millions) secured by item no. (a) and (b) and Rs.240.000 millions (P.Y.
Rs.300.000 millions) secured by item no. (a) and (c) (a) pari passu
hypothecation of present and future movable and immovable Fixed Assets of the
Company. (b) pari passu
hypothecation of present and future Current Assets of the Company. (c) Personal
Guarantees given by one of the directors of the Company. (v) Secured by
pari passu hypothecation of present and future movable Fixed Assets of the
Company. (vi) Out of the
above, Rs.265.486 millions (P.Y. Rs. 267.924 millions) secured by item no.
(a) and (b) and Rs.108.186 millions (P.Y. Rs.122.231 millions) secured by
item no. (a) and (c) and Rs.404.683 millions (P.Y. Rs.466.716 millions) is
secured by (a) and (d). (a)
Hypothecation of Assets acquired under LC facility. (b) Secured by
hypothecation of Current Assets of the Company both present and future and
extension of pari passu hypothecation of movable Fixed Assets of the Company
both present and future. (c) Cash Margin
of 33% by Fixed deposit with Bank. (d) Personal
Guarantee given by one of the directors of the Company. (vii) Out of the
above, Rs. NIL (P.Y. Rs.60.000 millions) secured by item no. (a) to (g) given
below, Rs.293.750 millions (P.Y. Rs.300.000 millions) secured by item no.
(a), (b) and (k), Rs.481.250 millions (P.Y. Rs.500.000 millions) secured by
item no. (a), (b), (e), (h), (i), (l) and (m), Rs.500.000 millions (P.Y. Rs.
NIL) secured by item no. (a), (b), (h) and (i) and Rs.506.548 millions (P.Y.
Rs.499.405 millions) secured by item no. (a), (f) and (j) (a) pari passu
hypothecation of the present and future movable and immovable Fixed Assets of
the Company. (b) pari passu
hypothecation of the present and future Current Assets of the Company. (c) pledge of
NIL (P. Y. 1,920,000) Equity shares in Hathway Bhawani Cabletel and Datacom
Limited (d) third party
pledge of NIL (P.Y. 2,160,000) Equity shares in Hathway Bhawani Cabletel and
Datacom Limited (e) Personal
Guarantees given by one of the directors of the Company. (f) undertaking
given by certain shareholders of the Company for non- disposal of their
shareholding in the Company so long as Term Loan is outstanding to the tune
of Rs.327.976 millions (P.Y. Rs.499.405 millions). (g) undertaking
for sub-ordination of loan by certain Shareholders to the tune of Rs. NIL
(P.Y. Rs. 150.000 millions) to Financial Institution (h) pari passu
first charge on present and future book debts, operating cash flows,
receivables, commissions, revenues of whatsoever nature. (i) First charge
on the uncalled capital of the company. (j) Personal
Guarantees given by one of the directors of the Company to the tune of
Rs.350.000 millions (P.Y. Rs.350.000 millions). (k) Pledge of
202,000 (P.Y. 202,000) fully paid equity shares of Gujarat Telelink Private
Limited. (l) Lien on
3,500,000 (P.Y. NIL) units of ICICI Prudential FMP Series 51- 13 Months Plan
C (m) Lien on NIL (P.Y. 2,964,695) units of ING Treasury Advantage Fund-
Institutional Growth |
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Banking
Relations : |
-- |
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Financial
Institution : |
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Auditors : |
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Name : |
G. M. Kapadia and Company Chartered Accountants |
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Advocates and Solicitors
: |
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Related Parties (Controlled by) : |
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Wholly Owned
Subsidiaries : |
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Other –
Subsidiaries : |
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Other
Enterprises : |
Hathway Cable Entertainment Private Limited |
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Associate
Company and Joint Ventures : |
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Companies /
Firms under the Significant Influence of Directors / Shareholders****
: |
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* Hathway Bhawani
Cabletel and Datacom Limited was a joint venture upto 31st August 2009.
**Hathway VCN Cabletel
Private Limited was a subsidiary upto 16th March 2009
***Hathway Sukhamrit
Cable and Datacom Private Limited was a subsidiary upto 1st September 2009
****The
above Companies were under the Significant influence of Directors/Shareholders
upto 19th February 2010.
CAPITAL STRUCTURE
As on 31.03.2010
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
199800000 |
Equity Shares |
Rs.10/- each |
Rs.1998.000 millions |
|
200000 |
Non- Cumulative Redeemable Preference Shares |
Rs.10/- each |
Rs.2.000 millions |
|
|
|
|
Rs.2000.000
millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
142857100 |
Equity Shares - Of the above
74,236,874 shares are allotted as fully paid-up bonus shares out of Securities
Premium Account - Of the above 1
share has been allotted as fully paid-up under the Employee Stock Option Plan - During the
year 11,501,788 Equity Shares of Rs.10 Each were issued on conversion of
Fully and Compulsorily Convertible Debentures (FCCD) - During the
year 20,000,000 Equity Shares of Rs. 10 Each were issued as fully paid- up
shares through Initial Public Offer |
Rs.10/- each |
Rs.1428.571
millions |
|
48000 |
0% Non-cumulative Redeemable Preference Shares (Up issued for consideration other than cash pursuant to scheme of
demerger) (These
Preference shares are redeemable on or before 12th December 2012
at the option of the Board of Directors) |
Rs.10/- each |
Rs.0.480
million |
|
|
Total |
|
Rs.1429.051 millions |
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 |
1429.051 |
1114.033 |
1114.033 |
|
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2] Employee Stock Options Outstanding |
19.354 |
11.884 |
3.285 |
|
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3] Reserves & Surplus |
11999.692 |
5304.635 |
5353.698 |
|
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4] (Accumulated Losses) |
(4591.402) |
(3756.370) |
(2694.304) |
|
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NETWORTH |
8856.695 |
2674.182 |
3776.712 |
|
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LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
3995.256 |
3472.953 |
1899.575 |
|
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2] Unsecured Loans |
0.000 |
2472.400 |
250.000 |
|
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TOTAL BORROWING |
3995.256 |
5945.353 |
2149.575 |
|
|
DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
|
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|
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|
|
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TOTAL |
12851.951 |
8619.535 |
5926.287 |
|
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
5274.842 |
5468.868 |
3677.082 |
|
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Capital work-in-progress |
240.365 |
452.086 |
676.864 |
|
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|
|
|
|
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INVESTMENT |
6662.620 |
2449.721 |
1787.559 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
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|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
24.961
|
43.755
|
48.606
|
|
|
Sundry Debtors |
1189.568
|
1206.512
|
963.310
|
|
|
Cash & Bank Balances |
745.308
|
303.066
|
173.006
|
|
|
Other Current Assets |
0.000
|
0.000
|
0.000
|
|
|
Loans & Advances |
1064.080
|
1223.907
|
1066.922
|
|
Total
Current Assets |
3023.917
|
2777.240
|
2251.844 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
1346.818 |
|
2438.616
|
|
|
Other Current Liabilities |
963.900
|
902.308
|
|
|
|
Provisions |
39.075
|
42.291
|
28.446
|
|
Total
Current Liabilities |
2349.793
|
2528.380
|
2467.062
|
|
|
Net Current Assets |
674.124
|
248.860
|
(215.218)
|
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
12851.951 |
8619.535 |
5926.287 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
|
|
SALES |
|
|
|
|
|
|
|
Income from Operations |
4017.992 |
3956.623 |
2971.050 |
|
|
|
Other Income |
47.377 |
87.210 |
221.930 |
|
|
|
TOTAL (A) |
4065.369 |
4043.833 |
3192.980 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Operational Expenses |
1763.581 |
1815.208 |
|
|
|
|
Staff Cost |
327.863 |
378.390 |
|
|
|
|
Administration & General Expenses |
968.757 |
946.342 |
|
|
|
|
Provision for Bad and Doubtful debts |
258.904 |
140.994 |
|
|
|
|
Loss / (Gain) on Foreign Exchange Fluctuation (Net) |
(5.196) |
66.897 |
|
|
|
|
Loss on sale of Set Top Boxes |
3.992 |
25.337 |
|
|
|
|
Amortisation |
170.442 |
188.194 |
|
|
|
|
Impairment of Tangible / Intangible Assets |
17.677 |
0.000 |
|
|
|
|
Provision for
Doubtful Advances / Investments / Receivables from Entities Under Control /
Significant Influence |
65.344 |
224.282 |
|
|
|
|
Provision for Bad and Doubtful Debts for Previous years |
0.000 |
235.297 |
|
|
|
|
Impairment of Intangible Assets of Chennai |
5.942 |
0.000 |
|
|
|
|
Loss on Shortages of Tangible Assets of Chennai |
116.074 |
0.000 |
|
|
|
|
Provision for Bad and Doubtful Debts for Chennai |
40.308 |
0.000 |
|
|
|
|
Depreciation Write-back for Previous Year |
(64.398) |
0.000 |
|
|
|
|
TOTAL (B) |
3669.291 |
4020.941 |
2959.570 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
396.079 |
22.892 |
233.410 |
|
|
|
|
|
|
|
|
|
Less |
INTEREST &
FINANCIAL EXPENSES (D) |
509.097 |
418.618 |
217.050 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
(113.018) |
(395.726) |
16.360 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
715.711 |
628.413 |
542.910 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
(828.729) |
(1024.139) |
(526.550) |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
0.110 |
10.592 |
10.620 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
(828.839) |
(1034.731) |
(537.170) |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
(3756.370) |
(2694.304) |
NA |
|
|
|
|
|
|
|
|
|
|
Prior Period Adjustments |
(6.193) |
(24.167) |
NA |
|
|
|
Gain on Foreign Exchange Fluctuation |
-- |
(3.167) |
NA |
|
|
|
|
|
|
|
|
|
|
BALANCE CARRIED
TO THE B/S |
(4591.402) |
(3756.370) |
NA |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Export Earnings |
Nil |
1.495 |
NA |
|
|
TOTAL EARNINGS |
Nil
|
1.495 |
NA |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Capital Goods |
180.129 |
944.753 |
NA |
|
|
|
Stores, Spares and Others |
14.883 |
5.194 |
NA |
|
|
TOTAL IMPORTS |
195.012 |
949.947 |
NA |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
(6.98) |
(8.64) |
(0.48) |
|
KEY RATIOS
|
PARTICULARS |
|
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
PAT / Total Income |
(%) |
(20.39)
|
(25.59)
|
(16.82)
|
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
(20.63)
|
(25.88)
|
(17.72)
|
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
(9.99)
|
(12.42)
|
(8.88)
|
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
(0.09)
|
(0.38)
|
(0.14) |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
0.72
|
3.17 |
1.22 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.29
|
1.10 |
0.91 |
LOCAL AGENCY FURTHER INFORMATION
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 Capital Goods |
679.170 |
876.554 |
NA |
|
Sundry Creditors for Expenses and Trade Liabilities |
667.648 |
707.227 |
NA |
|
|
1346.818 |
1583.781 |
NA |
HISTORY:
The Company was incorporated on August 7, 1959 in Mumbai as Chics Display Services Private Limited. Subsequently, the name was changed to Hathway Cable and Datacom Private Limited due to a change in the ownership of the Company, pursuant to the provisions of the Companies Act by a certificate of incorporation dated February 16, 1999. The Company became a public limited company and the word private was deleted from its name pursuant to a special resolution of our shareholders at an extra ordinary general meeting held on August 26, 2009 and a fresh certificate of incorporation was issued to the Company on September 7, 2009. The Company entered into the business of providing broadband internet services from March 2000.
Operations
During the year,
the total income of the Company was Rs.4065.300 millions on standalone basis
and Rs.7396.100 millions on consolidated basis as compared to the last year’s
total income of Rs.4043.800 millions on standalone basis and Rs.6728.600
millions on Consolidated basis respectively. The Net Loss after taxation and
Exceptional Items has come down and stood at Rs.828.800 millions on standalone
basis and Rs.661.700 millions on consolidated basis.
Initial Public
Offering
The Company with a
view to raise funds for customer acquisitions, investment in the development of
broadband and digital capital expenditure, deployment of set top boxes,
repayment of loans and for general corporate purposes, made an Initial Public
Offer (IPO) of 27.75 million equity shares of Rs. 10/- each (20 million equity
shares by way of fresh issue and 7.75 million by way of Offer for Sale) at a
price of Rs. 240/- per equity share including a premium of Rs. 230/- per equity
share aggregating Rs. 6,660 million. The IPO opened on 9th February, 2010 and
closed on 11th February, 2010. The Issue was subscribed 1.34 times. The allotment
of shares was made on 19th February, 2010. The equity shares are listed at the
National Stock Exchange of India Limited (“NSE”) and the Bombay Stock Exchange
Limited (“BSE”) and the trading commenced from 25th February, 2010.
Axis Bank Limited
was appointed as the Monitoring Agency for the purpose of monitoring the
utilisation of the proceeds of the fresh issue.
Cable Distribution
As per the report
of Media Partners Associates (MPA) 2010, out of 220 million homes in
Hathway has a
reach of approximately 8.2 million Cable TV homes for its analogue CATV
services. They have over 15,000 kms. Of hybrid fiber optic cable which is
spread over 125 Cities. Hathway has commenced a rapid digitalization process
and at present they have deployed 10,33,399 digital set top boxes in CAS and in
Non – CAS areas. Hathway is the only MSO with focus on digitization of non-
metro markets. It has established 19 digital headends in the country.
Internet Market
Hathway is the
largest MSO offering broadband services in 18 cities. Hathway is Category “A”
Internet Service Provider (ISP), providing broadband services to retail and
corporate segments in various states. Hathway has 10,34,883 homes ready for
catering for internet services. As of 31st March 2010, Hathway has 3,14,000
internet subscribers with all
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY OVERVIEW
The
Internet services in
BUSINESS OVERVIEW
They are the
leading cable television services provider in
BUSINESS STRATEGY
PRIMARY, SECONDARY AND BROADBAND SUBSCRIBER
They have a track
record of growth through the acquisition of smaller Multi system Operator
(MSO’s), Independent Cable Operator (ICO’s) and Local Cable Operator (LCO’s).
This consolidation has provided them with a strong presence in the cable
television market and a large analog subscriber base. On such acquisition, when
they convert secondary analog subscribers to primary subscribers, they improve
the quality of the connection by upgrading the “last mile connection” and often
are able to convert their analog subscribers into digital subscribers. As a
result, they are able to charge higher subscription fee.
They also focus on
primary subscribers for cross-selling their broadband service, which provides
them with an opportunity to increase revenues from their broadband services
with a comparatively low capital expenditure. Their broadband subscribers primarily
comprise domestic households. They also provide services to corporate
subscribers.
ACQUISITIONS
Their growth
strategy has been driven by the acquisition of majority interests in
established MSOs, ICOs and LCOs to expand their geographic reach. These
acquisitions have been funded through a combination of equity financing, debt
financing and internal accruals. Their strategy is to continue to acquire the
“last mile” connections from LCOs and selected MSOs and ICOs. These
acquisitions will be funded by the IPO proceeds received during the year.
DIGITALISATION
As a part of their
strategy, they intend to focus on rolling out digital services to their
customers. Digital cable television requires a set top box to be provided to
the subscriber. The set top box is provided with an encryption technology which
is required to decode the encrypted signals transmitted by us. They purchase
the set top boxes and encryption technology from third party suppliers. In
addition to the set top boxes they also require smart cards and other digital
compression equipments and infrastructure such as fibre coaxial cable.
Typically, they provide the set top box to the end customers and seek to
recover a portion of the cost of such set top box from the end customers.
BROADBAND BUSINESS
REGULATION
Their business is
subject to regulation by the Telecom Regulatory Authority of India (“TRAI”),
the Ministry of Information and Broadcasting (“MIB”), and Department of
Telecommunication (“DoT”).
As per the TRAI’s
recommendations dated August 5, 2010, it is proposed to implement digital
addressable Cable TV systems in
The said
implementation is proposed to be completed by December 31, 2013 starting with
the subscribers residing in metros.
FINANCIAL REVIEW
The Authorised
Share Capital of the Company has increased from Rs.1500.000 millions to
Rs.2000.000 millions. During the year 11,501,788 Equity Shares of Rs. 10 each
were issued on conversion of Fully and Compulsorily Convertible Debentures
(FCCD) as per the terms of the underlying agreements, at an aggregate
securities premium of Rs.2357.382 millions. Further the Company also came up
with Initial Public Offer (IPO) of 20,000,000 Equity Shares of Rs. 10/- each at
a price of Rs. 240 including premium of Rs.230 per share. The Shares of the
Company are listed on Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited.
UNAUDITED STAND ALONE FINANCIALS RESULTS FOR THE QUARTER ENDED 31ST
DECEMBER, 2010
(Rs.
in millions)
|
Particulars |
Quarter ended |
Nine Months
ended |
|
31st
December 2010 Unaudited |
31st
December 2010 Unaudited |
|
|
1. Income |
|
|
|
a. Net
Sales/Income from Operations |
1124.440 |
3208.691 |
|
b. Other
Operating Income |
75.049 |
288.376 |
|
c. Total |
1199.489 |
3497.067 |
|
2. Expenditure |
|
|
|
a. Employees
cost |
111.019 |
310.139 |
|
b. Pay Channel
Cost |
294.925 |
854.403 |
|
c. Operational
expenditure |
268.461 |
745.317 |
|
d.
Administrative expenditure |
237.106 |
669.803 |
|
e. Provision for
Bad and Doubtful debts |
74.031 |
206.291 |
|
f. Total |
985.542 |
2785.953 |
|
3. Profit /
(Loss) from Operations before Other Income, Interest , Depreciation and
Exceptional Items (1-2) |
213.947 |
711.114 |
|
4. Depreciation
/ Amortisation / Impairment |
247.717 |
714.101 |
|
5. Profit / (Loss)
from Operations before Other Income, Interest and Exceptional Items (3-4) |
(33.770) |
(2.987) |
|
6. Other Income |
|
|
|
a. Other Income |
42.005 |
130.660 |
|
b. Exchange
Fluctuation - (Loss)/Gain |
2.635 |
7.620 |
|
7. Profit / (Loss)
before Interest and Exceptional Items (5+6) |
10.870 |
135.293 |
|
8. Interest |
99.076 |
291.726 |
|
9. Profit /
(Loss) after Interest but before Exceptional Items (7-8) |
(88.206) |
(156.433) |
|
10. Exceptional
Items |
|
|
|
a. Exceptional
Items |
28.327 |
56.940 |
|
b. Prior Period
Adjustment |
7.509 |
9.558 |
|
11. Profit /
(Loss) from Ordinary Activities before tax (9-10) |
(124.042) |
(222.931) |
|
12. Tax expense |
-- |
-- |
|
13. Net Profit /
(Loss) from Ordinary Activities after tax (11-12) |
(124.042) |
(222.931) |
|
14.
Extraordinary Item (net of tax expense Rs. Nil) |
-- |
-- |
|
15. Net Profit /
(Loss) for the period (13-14) |
(124.042) |
(222.931) |
|
16. Paid-up equity
share capital (Face Value Rs.10/-) |
1428.571 |
1428.571 |
|
17. Reserve
excluding Revaluation Reserves as per balance sheet of previous accounting
year |
7408.290 |
7408.290 |
|
18. Earnings Per
Share (EPS) |
|
|
|
(a) Basic and diluted
EPS before Extraordinary items for the period, for the year to date and for
the previous year |
(0.87) |
(1.56) |
|
(b) Basic and
diluted EPS after Extraordinary items for the period, for the year to date
and for the previous year |
(0.87) |
(1.56) |
|
19. Public
shareholding |
|
|
|
- Number of
shares |
47797600 |
47797600 |
|
- Percentage of
shareholding |
33.46 |
33.46 |
|
20. Promoters
and Promoter Group Shareholding |
|
|
|
a) Pledged /
Encumbered |
|
|
|
- Number of
shares |
-- |
-- |
|
- Percentage of
shares (as a % of the total shareholding of promoter and promoter group) |
-- |
-- |
|
- Percentage of
shares (as a % of the total share capital of the company) |
-- |
-- |
|
b) Non -
encumbered |
|
|
|
- Number of
shares |
95059500 |
95059500 |
|
- Percentage of
shares (as a % of the total shareholding of the Promoter and Promoter group) |
100.00 |
100.00 |
|
- Percentage of shares (as a % of the total share capital of the
company) |
66.54 |
66.54 |
Notes to
Standalone Accounts
1 The above
results were reviewed by the Audit Committee on 11th February, 2011
and approved by the Board of Directors in its meeting held on 11th
February, 2011. The statutory auditors have carried out limited review of the
financial results of the Company for the quarter ended 31st
December, 2010.
2 The Company is a
Multi System Operator providing Cable Television Network Services, Internet
Services and allied services which is considered as the only reportable segment.
The Company’s operations are based in
3 The figures for
the corresponding periods have been regrouped, wherever necessary, to make them
comparable.
4 The Company has
made an application to the Central Government for approval of the payment of remuneration
to the Managing Director and CEO in excess of limits prescribed under Section
198 and 309 read with part II to Schedule XIII of the Companies, Act, 1956.
5 Exceptional
Items for the quarter ended 31st December 2010 represent Provision
for Doubtful Advances / Investments / Receivables from entities under control
or significant influence
6 Due to certain
unforseen conditions, in the city of
7 The Initial Public Offer (IPO) proceeds have been utilised, as under,
as per objects stated in the prospectus dated February 17, 2010
(Rs. in millions)
|
Particulars |
|
|
|
|
|
|
|
Amount received from IPO |
|
4800.000 |
|
Utilisation of funds |
Amount Proposed |
Amount utilised upto 31st December 2010 |
|
Acquisition of Customers |
2436.000 |
109.927 |
|
Investment in the development of their digital capital expenditure,
services and set top boxes |
1564.000 |
617.627 |
|
Investment in the development of their broadband infrastructure,
capital expenditure and services |
830.000 |
424.672 |
|
Repayment of
loans (includes temporary repayment of WCDL Rs.250.000 millions as interim
use) |
967.000 |
967.000 |
|
Interim use of fund (paying down short term credit limit) |
|
266.647 |
|
Total |
5797.000 |
2385.873 |
|
Less: To be funded by Borrowings |
997.000 |
130.000 |
|
Total |
4800.000 |
2255.873 |
|
|
|
|
|
Balance Unutilised |
|
2544.127 |
Unutilised Balance has been invested as stated below:
|
|
Rs. in millions |
|
Mutual funds |
1514.535 |
|
Certificate of Deposits of Banks |
968.690 |
|
Margin Money in Banks |
60.902 |
|
Total |
2544.127 |
8 There was no complaint
pending at the beginning of the quarter. During the quarter, 1 complaint was
received and 1 was resolved. No complaint was outstanding as on 31st
December 2010. No complaints were pending for more than 30 days during the
quarter.
9 This being the first year of listing corresponding figures for quarter
and nine months ended 31st December 2009 are not stated.
10 Addtional
Information
Consolidated Summarised Results, as per Management Review for Quarter
ended 31st December 2010: (Unaudited and not subjected to limited review by the
Statutory Auditors)
|
|
Quarter ended 31st
December 2010 |
Quarter ended 30th
September 2010 |
Quarter ended 30th
June 2010 |
|
Turnover |
Rs.2270.991 millions |
Rs.2265.163 millions |
Rs.1959.779 millions |
|
EBITDA |
Rs.414.635 millions |
Rs.502.292 millions |
Rs.374.067 millions |
|
Profit Before Tax |
Rs.(1.440 millions) |
Rs.117.641 millions |
Rs.16.002 millions |
|
|
|
|
|
CONTINGENT
LIABILITIES (As son 31.03.2010)
a) The Company has
given a counter indemnity favouring the bankers to the extent of Rs.59.788
millions for issue of Bank Guarantees.
b) The Company has
given Corporate Guarantee of Rs.438.250 millions to a Bank towards various credit
facilities given by the Bank to its Subsidiary Companies.
c) Outstanding
Letter of Credit Rs.182.485 millions secured against assets acquired under LC
facility, hypothecation of present and future current assets of the Company and
extension of pari passu hypothecation of present and future movable fixed
assets of the Company. This includes Rs.39.237 millions utilised for one of the
subsidiary, Gujarat Telelink Private Limited.
d) Pending
finalization of negotiations with one of the broadcasters, the Company has
accounted pay channel cost net of discounts expected from such broadcaster. The
Company as well as the broadcaster has claims and counter claims against each
other, which are yet to be finalized and settled. The contingent liability in
respect of such claims could not be ascertained.
e) The relevant
Authority under the Karnataka Sales Tax / VAT had initiated proceeding to
reassess the Company’s liability for the financial years 2001-02 to 2008-09 on
the argument that light energy created while using OFC network for the purposes
of transmission is goods and hence liable to tax under relevant state
legislation.
On writ petition,
the Karnataka High Court has held against the Company. On further appeal, the
Honourable Supreme Court remanded the matter to the Tribunal. However, Sales
Tax Tribunal did not entertain the appeal of the Company as no assessment was
made.
The Assessing
Officer, acting on Nil returns filed by the Company, has proposed to complete
best judgement re-assessment to tax light energy as goods. This may result in
approximate demand of Rs.54.406 millions. The Company has filed detailed reply
and the matter is pending.
f) Pursuant to
various amendments under Karnataka Entertainment Tax Act, 1958 to levy
entertainment tax on LCO’s and MSO’s, the Government of Karnataka has issued
various notices for various periods. The Company has challenged the notices and
validity of amendments with the Hon’ble High Court of Karnataka. The Hon’ble
High Court of Karnataka has issued stay order against such notices.
The Company has
filed a petition before the Honourable Court of Andhra Pradesh challenging the
virus of the amendment to the Andhra Pradesh Entertainment Tax Act, 1939 which
has resulted in the levying of the Entertainment Tax on MSOs. The petition has
been admitted and the levy and the action pursuant thereto have been ordered to
be stayed.
The above matters
are pending and based on the outcome of the respective petitions, liability may
extend to period beyond notice period. The contingent liability in respect of
claims is considered as part of Claims against Company not acknowledged as
debts below.
g) Two wholly
owned subsidiaries of the Company viz. Binary Technologies Transfers Private
Limited and Hathway Internet Satellite Private Limited are majority partners in
a partnership firm namely M/s. Hathway Space Vision. The aforesaid majority
partners of the firm had initiated legal action against the minority partners
viz. Space Vision Cabletel Private Limited with reference to some management
and operational issues. The majority partners and the Company had lodged
certain claims against the minority partners. Pursuant to Order passed by High
Court dated 22nd March 2005, the matter was referred for the arbitration before
Justice S. P. Bharucha (Retd.) An award has been passed by Justice S. P.
Bharucha (Retd.), on 14th September, 2009 dismissing all claims as
well as counter claims. Pursuant to dismissal of claim under arbitration, on 7th
October, 2009 the majority partners have filed a petition before Bombay High
Court under section 9 of Arbitration and Conciliation Act seeking extension of
restraining Interim Orders dated 12th May, 2004 and 22nd March, 2005 passed by
the Hon’ble High Court against the minority partners. The Hon’ble High Court
has been pleased to extend the said restraining Interim Order. On 5th November
2009 the majority partners have filed an Appeal before the Bombay High Court
under section 34 of Arbitration and Conciliation Act, challenging the award
dated 14th September 2009. The same is pending for hearing. Pending the
Arbitration, on 2nd March 2009, the majority partners have also filed a
Petition before the Bombay High Court seeking the interim relief for
appointment of court receiver in order to carry out the activity of collection
of subscription from the customers / operators. The same is also pending for
hearing.
The Company based
on legal advice has not made any provision towards claims raised by the
minority partner of the firm and are considered as claims against the Company
not acknowledged as debt below.
h) Other Claims against the Company not acknowledged as debts Rs.227.246
millions.
FIXED ASSETS:
Intangible Assets
·
Goodwill
·
Cable Television Franchisee
·
Movie and Serial Rights
·
Softwares
·
Bandwidth Rights
Tangible Assets
·
Plant and Machinery
·
Air Conditioners
·
Structural Fittings
·
Furniture and Fixtures
·
·
Computers
·
Office Equipments
·
Electrical Fittings
·
Motor Vehicles
·
Movie Master Tapes
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
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.45.09 |
|
|
1 |
Rs.72.59 |
|
Euro |
1 |
Rs.62.95 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
5 |
|
PAID-UP CAPITAL |
1~10 |
4 |
|
OPERATING SCALE |
1~10 |
3 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
3 |
|
--PROFITABILIRY |
1~10 |
3 |
|
--LIQUIDITY |
1~10 |
3 |
|
--LEVERAGE |
1~10 |
3 |
|
--RESERVES |
1~10 |
5 |
|
--CREDIT LINES |
1~10 |
3 |
|
--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 |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
32 |
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 |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.