Annual Report 2007-08 UTV SOFTWARE COMMUNICATIONS LTD

AAt work. In the theatre. At home. On a plane. While travelling. the mobile. Through Films and Television. And Games. In India. In other countries. In Hindi. In English. In Tamil. In French. For you adults worldwide. Big budgets. Small budgets. Through stream video. On IPTV. On DTH. Via Digital download. Your channel. channels. At work. In the theatre. At home. At work. In the theat At home.ANYWHERE On a plane. While travelling. On the mobile.. Throu Films and Television. And Games. In India. At work. In the theat At home. On a plane. While travelling. On the mobile. Throu Films and Television.ANYTIME And Games. In India. In 26 ot.her countries Hindi. In English. In Tamil. In French. For young adults worldwi Big budgets. Small budgets. Through stream ing. video. On IPTV. DTH. Via Digital download. Your channel. Our channels. At work the theatre. At home. At work. In the theatre. At home. On a pla While travelling. On the mobile. Through Films and Televisi And Games. In India. At work. In the theatre. At home. On a pla While travelling. On the mobile. Through Films and Television. A Games. In India. In 26 other countries. In Hindi. In English. Tamil. In French. Digital downloads. Big budgets. Small budge Through streaming video. On IPTV. On DTH. Via Digital downlo Your channel. Our channels. At work. In the theatre. At home work. In the theatre. At home. On a plane. While travelling. On mobile. Through Films and Television. And Games. In India. At wo In the theatre. At home. On a plane. While travelling. On the mob Through Films and Television. And Games. In India. In 26 ot countries. In Hindi. In English. In Tamil. In French. For young adu worldwide. Big budgets. Small budgets. Through streaming vid On IPTV. On DTH. Via Digital download. Your channel. Our chann Annual Report 2007-08 UTV SOFTWARE COMMUNICATIONS LTD. FORWARD LOOKING STATEMENT

In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance.

We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTENTS

> 02 > 04 > 06 > 08 > 10 Identity Business Portfolio Presence and Corporate Financial Relationships Highlights Highlights

> 12 > 14 > 26 > 28 > 38 Chairman’s Business Profile of Directors’ Report on Message Segments Board of Directors Report Corporate Governance

> 52 > 69 > 101 > 134 Management’s Consolidated Standalone Corporate Discussion and Financial Financial Information Analysis Statements Statements Your channel.Ourchannels... video. OnIPTV. OnDTH. OnDigitaldownload. budgets. SmallThroughstreaming In French. Foryoungadultsworldwide.Big other countries.InHindi.English.Tamil. and Television. AndGames.InIndia.26 While travelling. Onthemobile.ThroughFilms At work.Inthetheatre.home.Onaplane. TELEVISION MOTION PICTURES UTV = BROADCASTING INTERACTIVE NEW MEDIA

Annual Report 2007-08 1 SOFTWARE COMMUNICATIONS LIMITED

IDENTITY

UTV Software Communications Ltd. (UTV India) is one of India’s leading integrated global media and entertainment conglomerate with over eighteen years of experience in the entertainment industry. UTV, its subsidiaries and joint ventures (UTV / UTV Group) CREATE, AGGREGATE and DISSEMINATE content of various genres across varied distribution platforms. The Group employs 827 going to 1500 people across various business segments. In a world where media and entertainment consumption is characterised by increasing diversity in preferred genres and access platforms; UTV straddles the entire value chain linking content to the consumption platform and the consumer. UTV has remained focused on the media and entertainment business while broadening its capabilities and global reach through its subsidiaries around the world.

DISNEY CO-INVESTS AND MOBILE ONLINE GAMING PRESENCEACCROSS CONSOLE, MOVER INTO HOLLYWOOD ONLY COMPANY FROMINDIA TO HAVE STRONG FORAY INTO BROADCASTING WITH4CHANNELS. WALT COMPANY OUTOFSOUTHASIAIN2008-09.FIRST MOVES TO BEINGTHENO. 1 MOTION PICTURE IN INDIA ONE OFTHEMOSTEXPERIENCEDTVCONTENTHOUSES WEB ANDMOBILE ENTERED INTO THENEWMEDIA SPACE WHICH INCLUDES

Annual Report 2007-08 3 SOFTWARE COMMUNICATIONS LIMITED

UTV BUSINESS PORTFOLIO

A mature understanding of the markets has enabled UTV to broad base its business. This has resulted in transforming a predominantly B2B model into one that is B2C leading to a more focussed approach towards consumers. UTV today has a highly scalable business model, with an ability to create intellectual property at the top end of the entertainment value chain and the capability to disseminate this content through a variety of media across geographies.

MOTIONM PICTURES

TELEVISION TELEVISION MOTION PICTURES Television Content Upcoming slate of over 40 films in - Hindi, Air Time Sales Regional language, Dubbing Hollywood, Animation. Syndication Worldwide Distribution and Marketing

BROADCASTING INTERACTIVE Youth and Movie Console verticals Mobile Web, Mobile - Online Publishers integral part and IP Creators Own Distribution Network

NEW MEDIA Internet Portals Mobile 5 Segment – Music – Entertainment – Business – Technology Annual Report 2007-08 Annual Report

INTERACTIVEIN BROADCASTING NEW MEDIA SOFTWARE COMMUNICATIONS LIMITED

UTV PRESENCE

UTV is an Indian Group with truly global operations. It is headquartered in Mumbai, India with ofﬁces in UK, USA and Japan. The Company operates across cultures and geographies through subsidiaries and strategic investments in all major global markets. In addition to its domestic Indian operations UTV has also made foray into producing mainstream Hollywood ﬁlms. UTV’s gaming subsidiaries Ignition and Indiagames, have operations across North America, UK, Japan and parts of Europe as its major markets. Of the 67 countries Indiagames serves, the US and Europe are the largest geographical segments after India. UTV is publicly listed on the stock exchanges in India (The Stock Exchange, Mumbai and the National Stock Exchange). In addition, the Motion Picture Subsidiary of UTV, UMP PLC is listed on the Alternative Investment Market (AIM) of London Stock Exchange. UTV RELATIONSHIPS

UTV has several business and strategic talent associations in India, the UK and the USA. These associations are formal relationships with leading players in the Indian and international media industry. They also help UTV enhance its visibility in the international media industry. Some of the Group’s notable relationships are given below:

The Walt Disney Company (South East Asia) Pte. Ltd. ‘Disney’ – Strategic Investor in UTV India

20th Century Fox and Fox Searchlight – Movie co-production for ‘THE NAMESAKE’, ‘I THINK I LOVE MY WIFE’ and ‘THE HAPPENING’

Talent Relations – Mira Nair, M. Night Shyamalan, Rakeysh Omprakash Mehra, Ashutosh Gowarikar, Iranian ﬁlm director Majid Majdi 7

Partnership – With Virgin Comics to create original superhero franchises across media Annual Report 2007-08 Annual Report Publisher Status with Nintendo, Microsoft and Sony Computer Entertainment Inc. – In console gaming business

Verizon, Vodafone and Airtel and over 80 telecom companies worldwide – Mobile game publishing, new media and online gaming

Star India, Zee TV, National Geographic Channel, Sun TV – Long standing relationships for television content SOFTWARE COMMUNICATIONS LIMITED – Corporate Highlights 2007-08

Entered Gaming: Strategic acquisition of Ignition and Indiagames

Moved out of Outsourcing Services to focus on B2C business

Co-produced first cross over film ‘The Namesake’ Broadcasting Foray into Web and Digital Focus onNewMedia, * stake byWalt Disney Increase instrategic * TheBand’sVisit -BleibergEntertainment

Annual Report 2007-08 9 SOFTWARE COMMUNICATIONS LIMITED FINANCIAL HIGHLIGHTS

148% GROWTH IN CONSOLIDATED REVENUES* (From Rs. 1,749 million to Rs. 4,342 million)

65% GROWTH IN PROFIT AFTER TAX* BEFORE MINORITY INTEREST (From Rs. 470 million to Rs. 777 million)

236% GROWTH IN MOVIES SEGMENT REVENUES* (From Rs. 721 million to Rs. 2,424 million)

31% GROWTH IN TELEVISION SEGMENT REVENUES* (From Rs. 767 million to Rs. 1,006 million)

249% GROWTH IN INTERACTIVE SEGMENT REVENUES* (From Rs. 274 million to Rs. 956 million)

* 2007-08 compared with 2006-07 25.01 2008 2008 777 Per ShareEarnings 21.63 before MinorityInterest 0720 052004 2005 2006 2007 0720 052004 2005 2006 2007 470 (Rs. InMillions) Profits 7.29 142 (Rs.) 10.70 163 3.20 47 4,342 4,572 2008 2008 1,813 1,749 0720 052004 2005 2006 2007 2004 2005 2006 2007 Net Worth Revenues (Rs. InMillions) (Rs. InMillions) 1,338 2,084 1,369 1,768 1,125 677 11 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED CHAIRMAN’S MESSAGE

Shareholders and Colleagues, Multiple Year Head Start I believe we have built the foundations of a near non It’s been a whirlwind 2007-08 for India, for the Media replicable model, with a combination of 5 unique and Entertainment Industry and for your Company. And Verticals that are scalable as they are very synergistic that while there is a fair amount of gloom and doom at the is rooted in ‘Content’ and in creating large and valuable time of penning this report with the much expected if Intellectual Properties (IP’s) which is the strongest wealth not overdue correction of the markets and the genuine creation value driver for you the Shareholder – that has concerns on Oil and Inflation... I think overall for a truly Global footprint, especially in Motion Pictures, business in general and for UTV – the profile and canvas Gaming and New Media and is at the top end of the has grown exponentially, at home and overseas – taking value chain and in Leadership positions. everyone to a much higher plain of operation and scale. Our Business Verticals In Television: We believe there will be consolidation Anytime Anywhere UTV as the scale increases and we aim to be at the If you read the lines carefully, on the cover of this forefront of such a move Annual Report and inside, you will see that we have In Motion Pictures: We will build on our No. 1 been working on this for the past year – creating one position – in Content, Scale and Brand as our of the most diversified yet focused media models to challenge as a Leader remains how to grow the come out of Asia – and built our brand and taken overall market the products directly to the consumer – in Movies, In Broadcasting: As we foray into this, we feel our TV, Home Video, Channels, Web, Mobile, Gaming, model of specific genres and specialty channels will Consoles and others. create larger value – as we see no clear winners in Content is our Core the GEC space While many of the diversified media groups in Asia In Interactive: Between Console, Mobile and Online have their origin and base in Distribution, Pipeline or and with a world market we are fully poised for a Channels – UTV’s core focus and origin has always pioneer and a leader emerging out of India for the been ‘CONTENT’ and understanding the consumer very borderless market of Games and that I believe gives us a very strong base and In New Media: We consolidate all our Content inflection points for each of our verticals. Our core Assets to grow them on the web and in the Digital business stems from being a creator and aggregator Media of content with a strong focus of owning IPR – and its distribution through various pipelines to keep us at the The Whole is Bigger than the Sum of Parts top of the value chain. While most in the Industry are de-merging or unlocking value in some form, we are consolidating our businesses Disney Connect to align all our shareholders’ interests into a single The Walt Disney Company increased their stake in your entity and we believe this will stand us in good stead Company going from approximately 14 per cent to over the next few years as each of our business mature 32 per cent in one of the largest media investments, to the next level. where with the Promoter Group a total of approximately USD 330 million flows into UTV to fuel its further We are going to be a family of 1,500 of my colleagues growth. This is a significant investment even for Disney and around 18,000 shareholders, and to you all I and they are committed to drive growth, synergies say – when you are pioneering or being a first mover, and significant value addition to all our 5 Business there will be challenges but all in all ‘The Best is Yet to Verticals. To match Disney’s fresh investment, I as the Come’. Promoter Group have committed to invest Rs. 4 billion into the Company at the same price as Disney and the Open Offer, which communicates a strong belief and commitment by both of us going forward. Ronnie Screwvala June 16, 2008 the topofvaluechain and itsdistributionthroughvariouspipelinestokeepusat aggregator ofcontentwithastrongfocusowningIPR– Our corebusinessstemsfrombeingacreatorand 13 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED TELEVISION

SMALL SCREEN, BIG AMBITIONS UTV ENTERED INTO THE TELEVISION BUSINESS AS A CONTENT PROVIDER IN THE YEAR 1991. UTV AIMS TO EMERGE AS ONE AMONGST THE TOP TWO CONTENT PROVIDERS FROM INDIA. IT ALSO AIMS TO BE THE FIRST TO REACH OUT TO A GLOBAL AUDIENCE. IT HAS A PROVEN TRACK RECORD FOR FICTION SHOWS. NOW ALSO MAKING FORAY IN NON-FICTION INCLUDING THE REALITY GENRE. UTV HAS AIRED MULTIPLE PROGRAMMES ACROSS 26 CHANNELS, IN 19 COUNTRIES, IN 7 LANGUAGES AND HAS A LIBRARY OF OVER 5000 HOURS OF PROGRAMMING.

TELEVISION dubbing studiosstrategicallylocatedinMumbai,Delhiand technologyanddedicated The Companyhasstate-of-the-art channels. hours ofairtimesalesacrossdiversegenresonvarious Surya TV, ETVandGeminiTV. UTVhasclockedover10,000 business inSouthIndiaforchannelssuchasSunTV, UdayaTV, UTV isadominantplayerintheAirtimeacquisitionandsales French and otherEuropean/AsianlanguagestoHindi. international languagessuchasJapanese,Chinese,German, Hindi. TheCompanyhasestablishedcapabilitiestodubfrom Tamil, Telugu andMalayalambesidesdubbingfromEnglishto undertakes dubbinginHindi,Bengali,Gujarati,Marathi exact flavourofregionallanguagesanddialects.TheCompany Chennai. ThishelpstheCompanyofferingdubbingwith 15 Annual Report 2007-08 MOTION PICTURES UTV PIONEEREDTHESTUDIOMODELOFFILMMAKING ININDIAWITHTHEESTABLISHMENT MOVIE STUDIO GLOBAL ASIAN ON ANDOFFSCREENTALENT. FILMS WITHSTRONGAND POWERFULSTORYLINES INASSOCIATION WITHTHEVERY BEST DISTRIBUTION OFHINDIMOVIES, REGIONAL MOVIES, ANIMATION FILMS, INTERNATIONAL OF OPERATIONS BUSINESS INCLUDED PRODUCTION, IN1995.UTV’S MARKETINGAND PRODUCTIONS AND CO-PRODUCTIONS. THECORPORATEPRODUCTIONS ANDCO-PRODUCTIONS. VIEWEMPHASISEDPRODUCING RANG DEBASANTI timeline. UTV’s pastfilmsincludeIndia’stimeline. UTV’s official OSCAR(S) emphasises theformaldelegation ofresponsibilityworkingtoapresetplan,budget and UTV toleadthewayforcollaborationsbetweenIndia and Hollywood.Thestudiomodel Association withFox, Disney, SonyPictures andwith Will Smith’s Overbrookhavehelped , whichcreatednewbenchmarks theworldover. ® , entryandBAFTA nominee 17 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

UTV is the first Indian group to have co-produced and released mainstream Hollywood films. The first of the Hollywood releases handled by UTV was the box office hit and critically acclaimed masterpiece by Mira Nair THE NAMESAKE. This was followed by I THINK I LOVE MY WIFE featuring Chris Rock as actor and director. UTV co-produced M. Night Shyamalan’s THE HAPPENING with Fox which has already grossed more than USD 150 million worldwide since its release on Friday, June 13, 2008. Highlights 2007-08 THE HAPPENING (released in June 2008), the first mainstream Hollywood film by an Indian studio has been accepted well by global audiences UTV’s tent-pole production JODHAA AKBAR, the first blockbuster of 2008, released in 1500 screens worldwide. The film has been dubbed in Tamil, Telugu, Dutch and Arabic. Besides being a blockbuster, it is also the all time 7th highest grosser in India. The film also has the distinction of earning the 2nd highest opening ever in USA and Australia. Following the success of JODHAA AKBAR was RACE, UTV’s second release of 2008 and also the 2nd blockbuster of 2008 RACE had the highest number of shows in India at 3600 per day in multiplexes, was released in 1300 screens in India. The film got the second highest opening weekend of all times in India Launch of UTV Spotboy, UTV’s second motion picture brand. The first film from the Spotboy stable, AAMIR was released in June 2008 and has been critically acclaimed. It brings to audiences a first time actor, director, director of photography, music director and lyricist UTV forayed into the Telugu film industry, India’s second largest film market after Hindi films. UTV acquired distribution rights for Telugu Superstar Mahesh Babu’s 2008 blockbuster ATIDTHI and 19 signed him for another 2 movies. UTV also ventured into the Tamil film industry with its first co-production KENNAMOOCHI YENNADA UTV successfully released three of its movies; DHAN DHANA DHAN GOAL, TAARE ZAMEEN PAR and RACE in the attractive Pakistan market which has been highly insulated from Indian movie releases. DHAN DHANA DHAN GOAL was the first Indian film to 2007-08 Annual Report have a day and date release in Pakistan, followed by RACE THE BLUE UMBRELLA and RANG DE BASANTI won the National Awards for ‘Best Childern’s Film’ and ‘Best Popular Film’ respectively

MOTION PICTURES SOFTWARE COMMUNICATIONS LIMITED

BROADCASTING BROADCASTING **

THE UTV NETWORK FOR THE SELECT MANY BROADCASTING REPRESENTS AN IMPORTANT ELEMENT OF UTV’S INTEGRATED MEDIA PLAY BRIDGING THE DISTANCE BETWEEN CONTENT CREATION AND CONSUMPTION. AS SUCH, UTV IS PROPOSING RE-ENTRY INTO THE SPACE THROUGH AN INVESTMENT IN UTV GLOBAL BROADCASTING LIMITED (UGBL).

UTV’s proposed investment in broadcasting entity UGBL has four television channels launched in 7 months which address specific age groups and genres. The focus and orientation of these channels were planned after an extensive market research commissioned to discover changing audience expectations and existing gaps.

With established strengths in content creation, dubbing and a growing library of programming and films, the broadcasting venture is a natural extension that will both capitalise on existing strengths as well as provide added synergy.

* Kangaroo Jack - Warner Brothers - TM and © 2003 WBEI ** The Beach - © 2000 Twentieth Century Fox Film Corporation has built a whole new viewing habit amongst Indian youth. has builtawholenewviewinghabitamongstIndianyouth. into Indianlanguages at Indian youth. Blockbuster Hollywood Movies, uniquely dubbed at Indianyouth.BlockbusterHollywoodMovies,uniquelydubbed This channelbringsanotherinnovativeofferingsharplytargeted Bindass Movies already reached64percentofIndianyouth. reality andgameshowsamongothers.To dateBindasshas genres thatattracttheyouth–actionthrillers,comedy, magic, Offering auniqueblendofprogramminginwellresearched Bindass Youth EntertainmentChannel(YEC) Launched inSeptember2007,Bindassis Brand Bindass Bouquet ofchannels of building platformtobringIndianYouth togetherusingthepower of beingfun,frank,fearlessandIndianhascreatedacommunity Entertainment BrandforIndianYouth TV, Web, Mobile,GroundandCampusActivities ‘bindass style’ ‘bindass . Indeed, Bindaas Movies . Indeed,BindaasMovies . Bindass’ brand values . Bindass’brandvalues the ﬁrst360 . o

blockbusters – movie viewingexperience.Thechannelhasalibraryofbiggest and others. for Hindifilmsandaddsexcitementfreshnesstothe out thebiggesthitsof2008,itdrawsonuniversalpassion movie studiosinIndia.TheonlyHindichanneltoplay experience ofUTVMotionPictures –oneofthelargestHindi 24-hour premiumHindimoviechannelthathasalineageand Launched inFebruary 2008,UTVMoviesistheonly UTV Movies such as from over35countries.Thelibraryincludesawardwinningtitles successful movies.Thechannelhasalibraryofover650titles airs thebestofcontemporary, awardwinningandcommercially channel dedicatedtomoviesfromaroundtheglobe.The Launched inFebruary 2008,World Moviesistheonly24hour World Movies and (Won OscarforBestForeign Language Film oftheYear 2008) SONG OFTHESPARROWS THE LIVESOFOTHERS JODHAA AKBAR (directedbyMajidMajidi). , RACE , THE COUNTERFEITERS , AAMIR , JANNAT

21 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED INTERACTIVE INTERACTIVE

SERIOUS INITIATIVES IN GAMING

UTV APPLIES THE PROVEN 360o APPROACH THAT HAS MADE IT SUCCESSFUL IN THE MOVIE BUSINESS TO ITS INITIATIVES IN THE INTERACTIVE DOMAIN OF GAMING. IT HAS ALREADY ACQUIRED MAJORITY STAKES IN TWO GAMING COMPANIES - IGNITION AND INDIAGAMES MAKING UTV A STRONG PLAYER IN THE GAMING ARENA. online through broadband ISPs like BSNL, MTNL, Airtel andTataonline throughbroadbandISPs MTNL, likeBSNL, VSNL latestventureisintoPCgameswhicharedistributed The Company’s and onlinegaminginIndia. Indiagames Ltd.isIndia’s largestgamingCompanythatpioneeredmobile Indiagames Ignition like PS2,PS3,Nintendo,XBox360,NDS, etc. development, publishinganddistributionacrosstheglobeforallplatforms The UKbasedIgnitionEntertainmentLtd.isinvolvedinconsolegame gaming market. UTV iscomprehensivelypositionedtoservetheneedsofconsole and webportals. platforms suchasgamingconsoles,computers,telecomserviceproviders and India.GamecontentdevelopedbyUTVisdistributedthroughvarious US, Japan interactiveverticalhascreativetalentacrosstheUK, UTV’s amongst others. Reich being developedinLondon Game andaCGIMovieopportunity Wardevil areunderdevelopment: Original IP’s utpafr aebig Xbox360andPC Angelic developed inFlorida Multiplatform gamebeing utpafr aebig Xbox360andPC developed inJapan Multiplatform gamebeing

Its supplierbaseisglobal Its customer base spans the UK, Europe,JapanandNorthAmerica Its customerbasespanstheUK, Its isthelargestdeveloperandpublisherofwirelessgamesinIndia Ocean’sXXX, 12,StarWars, KamaSutra, Playboy, ScorpionKing The CompanyhasdevelopedgamessuchasHarryPotter, Godzilla, THQ, Ubisoft,etc. withallmajor gamepublishersintheWorldIt hastie-ups suchasEA, Verizon, HutchandAirtel operators across67countriesaroundtheworldsuchasVodafone, The Companyhasestablishedrelationshipswithmorethan80telecom Pioneer inGamesonDemandofferingthroughbroadband GameforthePS3, GameforthePS3, GameexclusivelyforSonyPS3

23 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED NEW MEDIA

NEW HORIZONS IN MEDIA AND CONTENT

UTV NEW MEDIA LTD., THE DIGITAL ARM OF UTV, WHICH CAME INTO OUR FOLD SINCE MAY 2008, ADDRESSES DIGITAL SPACE IN DOMAINS SUCH AS BUSINESS, FINANCE, ENTERTAINMENT (TV, FILMS, MUSIC) GADGETS AND TECHNOLOGY. THE COMPANY HAS PUT TOGETHER CAPABILITIES TO DELIVER CONTENT FOR USER SPECIFIC DEVICE. THE YOUTH HAVE ALWAYS BEEN THE PRIMARY TARGET GROUP OF THE COMPANY AND THIS FOCUS IN REITERATED BY THE COMPANY’S FOCUS ON TWO DEVICES THAT COMMAND MOST ATTENTION OF THE YOUTH - THE COMPUTER AND THE HANDSET SPANNING THE FOLLOWING ACTIVITIES. Company haswithmobileoperatorsworldwide. be deliveredtoconsumersthroughstrongrelationshipsthe ring tonesandvideosforthesecatalogues.Thiscontentwill intention ofcreatingdigitalassetssuchasimages,music, The Companyistargetingthedigitalmusicspacewith and upcomingAkshayKumar starrer film andRegional musictitlesincluding UTV hasacquireddigitalrightsforover20,000Hindi frommusicbasedcontent The spin-offs the contentlibrarythatUTVowns. related news,entertainmentdeliveryandanaccessibilityof of businessnewsdissemination,news,technology portals forastarttargetingspecificneedgapsintheareas The Companyplanstocreateabouquetofnearly10 Portals thatcatertospecificneeds site is also showcased on the news channel UTVi. site isalsoshowcasedonthenewschannelUTVi. can interactwiththeeditor. Selectedcontent developed forthe blogswherebloggers invitationonly’ interactivity through‘by world andreflectsthetargetgroup’s concerns.Thesiteoffers on lifestyle.Thebusinesstargetsyouthengagedinthecorporate offering thatgoesbeyondthestockmarketnewsandfocuses UTV hasventuredintotheonlinebusinessdomainwithaunique The OnlineBusinessinitiative and usersbyorganisingnationwidetechnologyevents. platforms tovendors provides effectiveinformation-exchange technology resellersandgeneralconsumers.ITNationalso Company servesthetechnologymarketscoveringenterprises, with closetoadecadeofexperienceintechnology. The Pvt. Ltd.ITNationisaleadingonlinetechnologycompany acquiring acontrollingstakein(ITNation)ITNationsMedia UTV hasventuredintoonlinetechnologydomainby initiative technology The synergieswithUTV’s w.xtdycmwww.enterpriser.in www.channeltimes.com www.utvatplay.com www.cxotoday.com www.indiagames.com www.techtree.com www.digi-guys.com www.ignitionent.com www.utvnet.com www.utvmotionpictures.com SINGH ISKINNG JODHAA AKBAR .

25 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

PROFILE OF BOARD OF DIRECTORS

1 2 3 4

5 6 7 8 1234

Ronnie (Rohinton) Zarina Mehta Mr. Andy Bird Deven Khote Screwvala (CMD & CEO) (Non Executive Director) (Non Independent and (Executive Director) Founder CEO of the UTV A founder director of Non Executive Director) Deven Khote, founder Group is the driving force UTV, Zarina is at the Andy Bird, President, Walt member of UTV, has played behind the Company’s helm of UTV’s youth Disney International is a a key role in establishing evolution into India’s broadcasting agenda. As talented executive with the credentials of the first truly global Media COO of Hungama TV strong media, entertainment Company’s leading ad films Company. Blending she successfully steered and business experience. production companies. creativity with commerce the Channel to surpass He has built businesses in He has worked with major he pioneered a number of its international rivals Europe, Latin America and advertising agencies and initiatives, which include and emerge the No. 1 Asia. Over the past three has made films for major introducing cable TV in a kids channel in a record years he has overseen the national and international single state broadcaster 18 months. Zarina has remarkable growth and clients covering numerous environment and diversifying introduced genres like game expansion of Disney’s brands and market into TV content production. shows, soaps and thrillers businesses in overseas segments. These include Under his stewardship, to the Indian television markets. Prior to Disney, Britannia, Coca-Cola, UTV ventured into post audiences besides working Andy was with Time Warner Colgate, Fiat, Godrej, Hero production and movies on award-winning corporate where he worked in cable Honda, HLL, J&J, Lakme, when satellite TV debuted documentaries. television, broadcasting and LG, Liberty, Maruti, P&G, in Asia. He helped the the wireless arena. Pepsi, Raymonds, Tata Tea Indian animation industry and Videocon. He has achieve global standards also made several Public and renown. Ronnie Service films including the is also the President of award-winning Doodh Piyo The Film and Television Glassful for NDDB. Producers Guild of India. He is actively involved in welfare projects and he runs SHARE, an integrated rural development programme. 5678

Kishore Biyani Darius C Shroff Sanjaya Kulkarni Suketu Shah 27 (Independent and (Independent and (Independent and (Independent and Non Executive Director) Non Executive Director) Non Executive Director) Non Executive Director) Kishore Biyani is the CEO of Darius Shroff is an Attorney A banker formerly Suketu Shah is the Joint Future Group, a diversified at Law and Senior Partner associated with Citibank, Managing Director organisation with retail as in Crawford Bayley & Co., 20th Century Finance of Mukand Limited, a its core and catering to a Solicitors and Advocates. Corporation Limited, and special steel and alloys large part of the consumer He has been on the Board Centurion Bank, etc., producer. He has worked requirements across India. of the Company since May Sanjaya is an MBA from IIM in leading global and

He led the Group’s flagship 2007-08 Annual Report 2000. Darius is also on Ahmedabad. He has varied Indian organisations like enterprise, Pantaloon Retail the Board of various other experience in consumer Bajaj Auto, International into being one of the first Companies, Associations, finance, treasury, merchant Finance Corporation, organised retail chains Chambers of Commerce, banking, etc. and has American Express Bank, in India in 1997 with the Bar Councils, etc. been on our Board since etc. He is also associated Pantaloons Fresh Fashion December 2002. with various Indian and chain. Some of his path- breaking initiatives include International trade bodies Big Bazaar and Food such as Confederation of Bazaar - hypermarket chains Indian Industry (CII), Alloys and Central malls located Steel Producers Association, in major Indian cities and Harvard Business School more. Kishore was awarded Association of India, etc. the International Retailer of the Year 2007 by the National Retail Federation. He also received the Ernst & Young Entrepreneur of the Year – Services award in 2006. SOFTWARE COMMUNICATIONS LIMITED

DIRECTORS’ REPORT

Dear Members, Your Directors take pleasure in presenting the 18th Annual Report on the operations of your Company for the financial year ended March 31, 2008.

1. FINANCIAL HIGHLIGHTS Company Standalone (Rs. in million) Particulars Year ended Year ended 2007-08 2006-07 Sales and Services 2,862.91 1,524.50 Other Income 20.78 285.40 Profit on Sale of Post Production Division 8.90 - Total Income 2,892.59 1809.90 Direct cost 2,335.33 1,225.60 Staff cost 157.46 141.36 Other Expenses 172.00 198.81 Total Expenses 2,664.79 1,565.77 PROFIT BEFORE INTEREST, DEPRECIATION AND TAX 227.80 244.13 Less: Interest (net) 115.54 16.10 PROFIT BEFORE DEPRECIATION AND TAX 112.26 228.03 Less: Depreciation 33.54 30.66 PROFIT BEFORE TAX 78.72 197.37 Less: Provision for Taxation – Current 8.99 22.25 – Mat Credit Entitlement (8.47) (21.82) – Fringe Benefit Tax 3.94 4.08 – Deferred Tax 29.50 (173.07) Total of Taxes 33.96 (168.56) PROFIT AFTER TAX 44.76 365.93 Balance Profit brought forward 741.16 477.08 NET PROFIT AVAILABLE FOR APPROPRIATION 785.92 843.01 Transfer to General Reserve - 36.59 Dividend on Equity shares 34.20 57.23 Distribution Tax Thereon 5.81 8.03 BALANCE CARRIED TO BALANCE SHEET 745.91 741.16 es:Mnrt neet 0.2 7.12 (163.37) (173.07) 4.08 200.32 (112.53) 470.39 (129.10) (21.82) 4.18 307.02 31.36 776.90 (8.47) 16.10 664.37 38.91 1,677.82 59.86 338.38 3,694.31 218.10 2,032.30 703.28 388.79 4,457.45 354.48 Less :MinorityInterest - PROFITBEFOREMINORITYINTEREST Total ofTaxes Year ended –DeferredTax 763.14 –Fringe BenefitTax Year ended –MatCreditEntitlement 1,749.07 283.23 8.90 –Current 1,299.13 107.05 Less :Provision forTaxation PROFITBEFORETAX 4,341.80 Add:ExceptionalItem 3,047.16 Less :Depreciation PROFITBEFOREDEPRECIATION ANDTAX Less :Interest(net) PROFITBEFOREINTEREST, DEPRECIATION ANDTAX Total ofExpenses Other DirectCost Staff Expenses Cost Total ofIncome EXPENDITURE Profit onSaleofPost Production Division OtherIncome SalesandServices Particulars Consolidated rnfrt eea eev 36.59 - 518.85 463.27 880.26 982.12 576.59 1,456.84 Transfer toGeneralReserve NETPROFITAVAILABLE FORAPPROPRIATION BalanceProfit broughtforward PROFITAFTERMINORITYINTEREST itiuinTxTeen 58 8.03 57.24 5.81 880.26 34.20 1,416.83 BALANCECARRIEDTO BALANCESHEET DistributionTax Thereon DividendonEquityShares 2007-08 2006-07 258.36 160.59 20.86 27.44

(Rs. inmillion) 29 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

DIRECTORS’ REPORT

2. DIVIDEND the year/ period ended March 31, 2008 is included in the Your Directors are pleased to recommend a dividend of Annual Report. Accordingly, the audited accounts of the Re. 1/- per Equity Share on 34,195,468 fully paid Equity above mentioned subsidiary companies are not attached. Share of Rs.10/- each for the financial year ended March The audited accounts of the subsidiary Companies are 31, 2008. also kept for inspection by any member at the Company’s Registered office and copies will be made available on 3. SUBSIDIARIES & JOINT VENTURE COMPANIES request to the members when requested. As at March 31, 2008, the Company has the following Subsidiaries subsidiaries viz. a) UMP Plc 1) UMP Plc 2) UTV Motion Pictures (Mauritius) Limited The Company was incorporated on March 27, 2007 3) IG Interactive Entertainment Limited 4) UTV as UTV Motion Pictures Plc at Isle of Man. The name Communications (USA) LLC 5) Ignition Entertainment of the Company was changed to UMP Plc on January Limited- UK and its subsidiaries i.e. Ignition Entertainment 31, 2008. Limited (USA) and Digi-Guys Limited 6) Indiagames During the year UMP Plc was listed on the Alternative Limited 7) UTV TV Content Limited Investment Market of (“AIM”) of the London Stock As at March 31,2008, IG Interactive Entertainment Limited., Exchange and the shares started trading with effect UTV Communications (USA) LLC & UTV TV Content Limited from July 2, 2007. UMP Plc allotted 24,137,931 are wholly owned subsidiaries of the Company. equity shares of USD 0.05 each comprising of UMP Plc is 76.82% subsidiary of the Company. 23.18% of the post allotment equity at USD 2.90 per Ignition Entertainment Limited (UK) is a 70% subsidiary and share aggregating to USD 70 million. The balance Indiagames Limited is 54.86% subsidiary of IG Interactive shares are held by the Company. Entertainment Limited. During the year under review, UMP Plc has acquired Ignition Entertainment Limited (USA) and Digi-Guys Limited 99.75% controlling stake in UTV Motion Pictures are 100% subsidiaries of Ignition Entertainment Limited (UK). (Mauritius) Limited. Accordingly, the Company along with UMP Plc holds 100% stake in UTV Motion UTV Motion Pictures (Mauritius) Ltd. is 99.75% subsidiary Pictures (Mauritius) Limited as on March 31, 2008. of UMP Plc. Thus, UTV Motion Pictures (Mauritius) Limited has The statement pursuant to Section 212(1)(8) of the become a downstream subsidiary of your Company. Companies Act, 1956 in respect of subsidiaries is b) IG Interactive Entertainment Limited attached. The Consolidated Accounts of your Company The Company was incorporated on September 6, and its subsidiaries are presented as part of this Annual 2004 as UTV Communications (UK) Limited with an Report in accordance with Accounting Standard 21 issued intention to carry out Film Acquisition, Syndication by the Institute of Chartered Accountants of India. and Distribution business in the United Kingdom. Your Company has been exempted by the Ministry of The name of the Company was changed to IG Company Affairs, vide their letter No. 47/294/2008-CL-III Interactive Entertainment Limited on February 15, dated May 7, 2008 from attaching the Audited Financial 2008. As at March 31, 2008 it posted a sales of Statements along with the reports of the Board of Directors GBP 1,116,364 (Previous Year GBP 1,262,049) and and the Auditor’s Report pertaining to its subsidiary a net loss of GBP 139,415 as against the net profit companies viz., 1) UMP Plc 2) UTV Motion Pictures of GBP 144,219 in the previous year. (Mauritius) Limited 3) IG Interactive Entertainment Limited On December 14, 2007, IG Interactive Entertainment 4) UTV Communications (USA) LLC 5) Ignition Limited acquired 54.86 % equity stake in Indiagames Entertainment Limited (UK) and its subsidiaries i.e. Ignition Limited which is into the business of mobile and Entertainment Limited (USA) and Digi-Guys Limited online gaming for a consideration of USD 9 million. 6) Indiagames Limited 7) UTV TV Content Limited. As per Simultaneously, the Company has also acquired the terms of the exemption letter, a statement containing a 12.11% equity stake in Indiagames Limited by brief financial details of the Company’s subsidiaries for subscribing to additional shares issued by Indiagames ) UTVCommunications(USA)LLC(“UTVUS”) c) Duringtheyearunderreview, theholdingofIG ) UTVTVContentLimited(“UTVTV”) d) UTVUSwasincorporatedonApril26,2004with ) UTVBroadcasting Limited(“UTVBL”) e) TheCompanywasincorporatedonJuly9,2007as ) UTVNewMediaLimited (“UNML”) f) OnJanuary24,2008,yourCompanyhassoldoffits On April 30, 2008, your Company acquired 100% OnApril30,2008,yourCompanyacquired 100% subsidiaries ofIgnitionEntertainmentLimited(UK). Limitedcontinuetobe100%downstream Digi-Guys shareholders. IgnitionEntertainmentLimited(USA), shares byIgnitionEntertainmentLimitedtoitsminority from 71.09%to70%duetheissueofadditional Ignition EntertainmentLimited(UK)hasbeenreduced Interactive EntertainmentLimitedinitssubsidiary subsidiary ofyourCompany. Thus, IndiagamesLimitedhasbecomeastepdown stake inIndiagamesLimitedasonMarch31,2008. IG InteractiveEntertainmentLimitedholds66.97% Indiagames. Accordingly, theCompanyalongwith benefit ofthemanagementandshareholders Limited forRs.0.85millionandholdsthesethe 10,285). and anetprofitofUSD13,917(Previous Year USD of USD16,638,754(Previous yearUSD 2,124,161) territories. AsatMarch31,2008itpostedasales America (NorthAmerica)andothersurrounding and distributionbusinessintheUnitedStatesof an intentiontocarryoutfilmacquisition,syndication Beri. 60:40 jointVenture betweenUTVTVandMr. Rajesh called RBEntertainmentLimited(“RBEL”), whichisa TV incorporated a Company on May 06, 2008 TV incorporatedaCompanyonMay06,2008 to UTVTVContentLimitedonJune03,2008. Company. ThenameoftheCompanywaschanged million, makingitawhollyownedsubsidiaryofthe Content LimitedforaconsiderationofRs.0.50 Company acquired100%equitystakeinUTVTV UTV MoviesLimited.OnJanuary24,2008,your Company. such saleUTVBLceasedtobeasubsidiaryofthe at aconsiderationofRs.19.75million.Subsequentto adormantcompany 98.75 %equitystakeinUTVBL, New MediaVentures Limited” andconsequentto on September20,2007under the nameof“United subsidiary oftheCompany. UNMLwasincorporated equity stakeinUNMLthusmaking itawhollyowned

Joint Ventures ITNationhastechnologybasedconsumerandtrade OnMay08,2008UNMLcompletedtheacquisition Duringtheyearunderreview, theCompanyhas Windmill EntertainmentLimitedisa50:50Joint Duringtheyearunderreview, theCompany has SmritiIraniTelevision Limitedisa50:50JointVenture i) i SmritiIraniTelevision Limited(“SITL”) ii)

80% stakeinITNation. completion ofacquisitionprocessUNMLwillhold subscription tofreshequitysharesofITNation.Post shares fromtheexistingpromotersofITNationand was throughacombinationofacquisitionequity its business.TheacquisitionbyUNMLofITNation and theCompanyfindsthishighlysynergisticto model focusesonthetargetagegroupof15-35 Technology inIndia.Thisbusiness Infomediary” focussed businessmodelpositionedasan“Online of ITNationMediaPrivate Limited(“ITNation”). mobile anddigitalplatforms. and acquisitionexploitationofdigitalrightson business ofdevelopingandmaintainingwebsites w.e.f. May06,2008.TheCompanycarriesonthe Company waschangedtoUTVNewMediaLimited the acquisitionbyCompany, thenameof million. March 31,2008,WELpostedanetlossofRs.4.12 Venture. Beinginitsfirstyearofoperationandasat the Company, therebymakingita50:50Joint Limited byacquiring50%oftheequitycapitalfrom invested Rs0.25millioninWindmill Entertainment November 5,2007,Mr. ShekharSumanhas Suman fortelevisioncontentproduction.On 2007 tohousethejointventurewithMr. Shekhar Limited, aCompanyincorporatedonAugust17, invested Rs.0.50millioninWindmill Entertainment Suman. Venture betweentheCompanyandMr. Shekhar Windmill EntertainmentLimited(“WEL”) Rs. 0.75million. as atMarch31,2008,STILposted anetlossof production. Beingthefirstyear of itsoperationand venture withMrs.SmritiIranifor televisioncontent incorporated onDecember6,2007tohousethejoint aCompany invested Rs.0.25millioninSTIL, between theCompanyandMrs.SmritiIrani.

31 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

DIRECTORS’ REPORT

4. ISSUE OF SHARES ON PREFERENTIAL BASIS and Promoter Group, as persons acting in concert, (A) Pursuant to the approval granted by the members at the have made an open offer to the Public shareholders Annual General Meeting held on August 24, 2006, the of the Company under the Securities and Exchange Company had allotted 1,949,360 warrants on a preferential Board of India (Substantial Acquisition of Shares & basis with the option of converting each warrant into one Takeovers) Regulation 1997. equity share @ Rs.192.50 (including premium of Rs.182.50 5. INVESTMENT IN UTV GLOBAL BROADCASTING per share) per share within a period of 18 months from LIMITED the date of allotment. The Company has, upon receipt of the balance consideration allotted 519,500 equity shares On February 16, 2008, the Board of the Company on February 20, 2008 and 1,429,860 equity shares on approved the conversion of debt funding in UTV Global March 4, 2008 at an issue price of Rs. 192.50 per share Broadcasting Limited (“UGBL”) together with further upon conversion of the aforesaid warrants. investment for a 75 % stake for an aggregate consideration (B) On February 16, 2008, the Board approved the execution of Rs. 2,400 million. Disney will also be investing in UGBL and delivery of a Share Subscription Agreement between for a 15% equity shareholding and 720,000 warrants for The Walt Disney Company (Southeast Asia) Pte Limited an aggregate consideration of Rs. 1,189.8 million. In (‘Disney’) and Unilazer (Hong Kong) Limited, Mr. Rohinton certain circumstances, the Warrants issued by UGBL to Screwvala and Unilazer Exports and Management Disney may convert into additional equity shares such that Consultants Limited (“Promoter Group”) and the execution Disney has an aggregate holding of 37.5% of the share and delivery of a Shareholders Agreement between Disney, capital of UGBL. Mr. Rohinton Screwvala will be holding the Company and the Promoter Group. In compliance 10% of the shares of UGBL. UGBL is the parent company with the Share Subscription Agreement and on receipt of for its two wholly owned subsidiaries, Genx Entertainment the approval of the Foreign Investment Promotion Board Limited (Genx) and UTV Entertainment Television Limited. and pursuant to the approval granted by the members at Genx has already launched successfully two youth the Extra Ordinary General Meeting held on March 17, channels through the Bindass brand whilst UTV Television 2008, the Company has: Entertainment Limited has launched the “World Movies i) on May 06, 2008 allotted 4,532,000 warrants Channel” and “UTV Movies”. The aforesaid is subject to to Unilazer Exports and Management Consultants all regulatory approvals. Limited (“Unilazer”), a Promoter Group company 6. EMPLOYEES STOCK OPTION SCHEME on a preferential basis which will entitle Unilazer to 4,532,000 equity shares of the Company of nominal Pursuant to the approval granted by the members at the value of Rs. 10/- each at a price of Rs. 860.79 last year Annual General Meeting held on September 25, (including a premium of Rs. 850.79 per share) within 2007, the Company had introduced Employee Stock Option a period of 18 months from the date of issue. The Scheme (“ESOP Scheme”) for permanent employees and Company has received 10% of the total amount of directors of the Company & of its subsidiaries. the warrants on allotment. The total investment by The ESOP Scheme provides for grant of 1,000,000 Unilazer in the Company would be around Rs. 3,901 options. Each option, on exercise, is convertible into one million. equity share of the Company having face value of Rs.10/. ii) on May 09, 2008, allotted 9,352,500 equity shares Pursuant to a resolution passed by the Remuneration & of Rs. 10/- each at an issue price of Rs. 860.79 to Compensation Committee at its meeting held on January Disney on preferential basis. The total investment by 11, 2008, all 1,000,000 options have been granted to Disney in the Company was Rs. 8,050 million. the eligible employees at exercise price of Rs. 800/- per After the aforesaid issue and allotment, the issued, option. subscribed and paid up share capital of the Company Disclosure pursuant to Clause 12 of the Securities and consequently has increased and stood at 34,195,468 Exchange Board of India (Employees Stock Option Scheme equity shares of the face value of Rs.10/-each. and Employees Stock Purchase Scheme) Guidelines is Pursuant to issue of shares/ warrants aforesaid, Disney given in the Annexure to this Report. Your Companyadheresto high standardsofCorporate CORPORATE GOVERNANCE REPORTAND 7. Information as per Section 217 (2A) of the Companies Informationasper Section 217(2A)ofthe Companies PARTICULARS OFEMPLOYEES 13. ofSection Theparticularsasprescribedundersub-section CONSERVATION12. OFENERGY, RESEARCHAND Report totheshareholdersdoesnotcontain TheAuditor’s AUDITOR’S11. REPORT M/sPrice Waterhouse &Co.,CharteredAccountants,the AUDITORS10. Your Companyhasneitheracceptednorrenewedany FIXEDDEPOSIT 9. Your Directorsrecommendtheirre-appointment. DuringtheyearMr. Ronald D’Mello resignedasExecutive DIRECTORS 8. annexed and forms a part of the Director’s Report. annexed andformsapartoftheDirector’s Secretary inpracticeconfirmingthelevelofcomplianceis Governance reportalongwithacertificatefromCompany DiscussionandAnalysistheCorporate Management’s agreement withthestockexchanges.Aseparatesectionon Corporate Governancecodeasstipulatedunderthelisting Governance. Your Companyhascompliedwiththe STATEMENT: MANAGEMENT’S DISCUSSIONANDANALYSIS of thisreport. Rules, 1988aresetoutintheannexure,whichforms part (Disclosure ofParticulars intheReport ofBoardDirectors) 217 ofthecompaniesAct,1956,readwithCompanies OUTGO FOREIGN EXCHANGE EARNINGSAND DEVELOPMENT, TECHNOLOGY ABSORPTION any qualification. certificate oftheireligibilityforreappointment. Section 224(1)oftheCompaniesAct,1956furnished General Meeting. M/sPrice Waterhouse &Co.,haveunder of theCompanyuntilconclusionnextAnnual is proposedtoreappointthemasthestatutoryauditors the conclusionofensuingAnnualGeneralMeeting. It present statutoryauditorsoftheCompanyholdsofficeuntil fixed depositinrespectoftheyearunderreview. offer themselvesforre-appointment. Mrs. ZarinaMehtaretirebyrotationandbeingeligible, Director fromtheCompany. Mr. SanjayaKulkarni and a Thatinthepreparationofannualaccounts, (a) Pursuant totherequirementsofSection217(2AA) 14. (b) That the Directors have selected appropriate ThattheDirectorshaveselectedappropriate (b) (c) That the Directors have taken proper and sufficient ThattheDirectorshavetakenproperandsufficient (c) (d) That the Directors have prepared the annual accounts ThattheDirectorshavepreparedannualaccounts (d) Date :June16, 2008 Place :Mumbai CMD &ChiefExecutiveOfficer Rohinton Screwvala for By orderoftheBoardDirectors Your Directorswouldtake thisopportunitytothankallthe 15. ACKNOWLEDGEMENTS UTV Software Communications Limited UTV SoftwareCommunicationsLimited Company. the Companysecretaryatregisteredofficeof in obtainingacopyofthesaidstatementmaywriteto Section 217(2A)oftheAct.Anyshareholderinterested the Companyexcludingstatementofparticularsunder report andaccountsarebeingsenttotheshareholdersof of Section219(b)(iv)theCompaniesAct,1956 be apartofthisreport.However, pursuanttheprovisions Act, 1956readwithrulesframedthereunderisrequiredto state: Companies Act,1956theBoardofDirectorshereby DIRECTORS’ RESPONSIBILITYSTATEMENT to theCompanyduringyearunderreview. rendered stakeholders fortheirsupportandco-operation departures along withproperexplanationrelatingtomaterial applicableaccountingstandardshavebeenfollowed ended March 31, 2008. ended March31,2008. 2008 andoftheprofitCompanyforyear the stateofaffairsCompanyasonMarch31, and prudentsoastogiveatruefairviewof made judgmentsandestimatesarereasonable accounting policiesandappliedconsistently and otherirregularities the Companyandforpreventingdetectingfraud Companies Act,1956forsafeguardingtheassetsof records inaccordancewiththeprovisionsof care forthemaintenanceofadequateaccounting on agoingconcernbasis. 33 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

ANNEXURE TO DIRECTORS’ REPORT

DISCLOSURES REGARDING STOCK OPTIONS Pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“the SEBI Guidelines”), following disclosures are made in connection with the “UTV Employees Stock Option Scheme 2007”

Sr. No. Details Disclosures

(a) Options Granted The Company granted 1,000,000 options on January 11, 2008. Each option on exercise, is convertible into one equity share of the Company having face value of Rs.10/-.

(b) Pricing Formula The Closing market price on January 10, 2008 at the National Stock Exchange of India Limited (“NSE”) which recorded the highest trading volume in the Company’s Share i.e. prior to the date of meeting of Remuneration and Compensation committee in which options were granted.

(c) Options Vested N.A., As the Board has provided for a minimum vesting period of 2 years to 3 years from the date of grant.

(d) Options Exercised N.A.

(e) Total No. of shares N.A. Since none of the options have been exercised, no shares have been issued by the arising as a result of Company pursuant to exercise of options. exercise of options

(f) Options Lapsed 470,000 Options lapsed as at March 31, 2008 due to eligible employees not meeting the short term target or due to resignation of employees.

(g) Variations of terms N.A. of options

(h) Money realised by N.A. exercise of options

(i) Total No. of Options 530,000 in force srpre i s) 1.94 1.61 1.94 1.61 Adjustedproforma (inRs.) (Rs.inmillion) Asreported(inRs.) 37.10 EarningPer Share: Diluted Adjustedproforma(inRs.) 44.76 7.66 Asreported(in Rs.) - Earningspershare:Basic Adjustedproformanetincome Less: Fair valuecompensationcost Add:IntrinsicValue compensationcost NetIncomeasreported Proforma AdjustedNetIncomeandEPS withAS20‘EarningPer Share’ sharesonexerciseofoptioncalculatedinaccordance N.A. L DilutedEarningPer Share(EPS)pursuanttoissueof Companyatthetimeofgrant. Nil. K exceeding1%ofthe options,duringanyoneyear, equaltoor AlpanaMishra,G.Chandrashekhar, outstanding –Identifiedemployeeswhoweregranted Disclosures grantedduringthatyear. moreofoptions5%or warrants oneyearofoptionsamountingto5% or –Employeeswho –SeniorManagerial ofoptionsgrantedto personnel Employeewisedetails (j) Details Sr. No. receives agrantinany issued capital (excluding issued capital(excluding and conversions) of the and conversions)ofthe Amit Banka,AjitThakur, JyotirmoySaha Siddharth Roy Kapur, VikasBhal,Ram Mirchandani, Options havebeengrantedtoSeniorManagerialpersonnel. 35 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

ANNEXURE TO DIRECTORS’ REPORT

Sr. No. Details Disclosures

M Weighted average exercise price of options granted during the year whose

(a) Exercise price equals market price N.A.

(b) Exercise price is greater than market price Rs. 800

Weighted average fair value of options granted during the year whose

(a) Exercise price equals market price N.A

(b) Exercise price is greater than market price Rs. 351.29

N Description of method and significant assumptions The Fair Value of Options has been calculated using the used during the year to estimate the fair value of Black-Scholes Option pricing formula. The assumptions used options. in the estimation of the same has been detailed as follows:

Variables

Risk free interest rates 7.34%

Expected life (in years) 3.00

Expected volatility 55.35%

Dividend yield 1.13%

Stock price Rs. 796.75

PARTICULARS PURSUANT TO COMPANIES Entertainment Industry and carries out research and innovation (DISCLOSURE OF PARTICULARS IN THE REPORT OF in creating content in various segments of entertainment as part BOARD OF DIRECTORS) RULES, 1988. of its regular on going business. Conservation of Energy Technology Absorption, Adaptation and The operations of the Company are not energy intensive. Innovation However, the Company has taken adequate measures to reduce The Company keeps innovating, takes all measures necessary the energy consumption by using energy efficient hardware to absorb and adapt latest technology. and other equipment. Air conditioners are used only when Foreign Exchange Earning and Outgo in Rs. required. Further the Company has spread awareness among million the employees on the need to conserve energy which is well Earnings in foreign exchange Rs. 848.35 (Previous Year adopted by the employees. Rs. 492.74) Research and Development Expenditure in foreign exchange was Rs.12.42 (Previous Year The Company is an integrated player in the Media and Rs. 130.48) Financial Information of Subsidiaries Pursuant to Approval of Ministry of Company Affairs u/s 212(8) of the Companies Act, 1956 for the Financial Year Ended March 31, 2008 (Rs. in Million) Sr. Particulars Reporting Closing Average Rate Capital Reserves Other Total Fixed Assets Details of Total Assets Turnover Profit/ Provision Profit Proposed No. Currency Rate Liabilities Liabilities & Investments (Loss) Before for After Dividend Current (except in case Taxation Taxation Taxation Assets of investment in subsidiaries) 1 UTV Movies Limited Rupees N.A. N.A. 0.50 (0.38) 0.03 0.15 0.15 - 0.15 - (0.38) - (0.38) - 2 UTV Communications (USA) LLC Dollar 39.97 40.13 2.00 7.25 477.31 486.56 486.56 - 486.56 659.87 1.64 1.08 0.56 - 3 IG Interactive Entertainment Limited (Standalone) GBP 79.53 80.70 557.51 1.91 736.24 1,295.66 1,295.66 - 1,295.66 90.09 (15.03) (3.78) (11.25) - 4 UMP PLC Dollar 39.97 40.13 208.12 2,504.68 2.39 2,715.18 2,715.18 2,715.18 - (19.31) - (19.31) - 5 Ignition Entertainment Limited (Standalone) GBP 79.53 80.70 795.30 (183.35) 500.40 1,112.35 1,112.35 - 1,112.35 367.80 93.01 (77.96) 170.97 - 6 Ignition Entertainment Limited (USA) Dollar 39.97 40.13 0.08 (6.67) 333.89 327.30 327.30 - 327.30 255.18 25.40 0.60 24.79 - 7 Digi-Guys Limited GBP 79.53 80.70 0.40 (60.73) 440.76 380.43 380.43 - 380.43 - 8.66 (80.33) 89.00 - 8 Indiagames Limited Rupees N.A. N.A. 10.00 116.54 95.32 221.86 221.86 221.86 91.45 (1.57) (2.43) 0.86 - 9 UTV Motion Pictures (Mauritius) Limited Dollar 39.97 40.13 160.28 640.47 3,537.93 4,338.68 4,338.68 - 4,338.68 1,597.44 543.64 16.31 527.33 - 37 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE (PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENT ENTERED INTO WITH THE STOCK EXCHANGES AND FORMS A PART OF THE DIRECTOR’S REPORT).

1. COMPANY’S PHILOSOPHY ON CODE OF and the numbers of Independent Directors is 50% of GOVERNANCE the total number of Directors. The Company continues to focus and is committed to good b. None of the Directors on the Board is a Member Corporate Governance as it helps enhancement of long- of more than 10 Committees or Chairman of more term shareholder value and interest of other stakeholders. than 5 committees as specified in Clause 49, across The Company is committed to its objective of accountability, all the companies in which he/ she is a Director. The transparency, independence and professionalism in all Directors have made necessary disclosures regarding spheres of activities. Committee positions in other public companies as at Corporate Governance is an integral part of the March 31, 2008. management and the Company follows procedures c. The names and categories of the Directors on the and practices in conformity with the Code of Corporate Board, their attendance at Board meetings held Governance as stipulated by SEBI. during the year and the number of Directorship and Committee Chairmanship/ Membership held 2. BOARD OF DIRECTORS by them in other companies is given below. Other The Company’s Board comprises of two executive directors directorship do not include alternate directorship, (including the Chairman cum Managing Director) and directorship of private limited companies and six other non-executive directors, having rich corporate, of companies incorporated outside India. business and professional expertise. Chairmanship/ Membership of Board Committees a. The Board of Directors of the Company have an includes only Audit and Shareholders/ Investors optimum combination of executive and nonexecutive Grievance Committee. directors with more than 50% of the Board of d. On July 27, 2007, Mr. Ronald D’ Mello, who was Directors comprising of non-executive directors. The an executive director, relinquished his position as a Company has an Executive Chairman (“Promoter”) member of the Board.

Composition and Category of the Board Sr. Name of the Director Category No. of Number of Number of No. Directorship in other Board other Board other Public Committee Committee as Companies as Chairman Member 1 Mr. Rohinton Screwvala Promoter Executive (Chairman) 10 Nil Nil 2 Mrs. Zarina Mehta* Promoter Non-Executive 11 Nil Nil 3 Mr. Deven Khote Executive Director 08 Nil Nil 4. Mr. Ronald D’Mello** Non-Promoter Executive 04 Nil Nil 5 Mr. Sanjaya Kulkarni Independent Non Executive 05 01 03 6 Mr. Suketu Shah Independent Non Executive 10 03 Nil 7 Mr. Darius Shroff Independent Non Executive 07 03 04 8 Mr. Kishore Biyani Independent Non Executive 14 Nil 04 9 Mr. Andy Bird Non-Independent Non Executive Nil Nil Nil

* Ceased to be an Executive Director with effect from April 01, 2007. However, she continues to be on Board as Non-Executive Director. ** Mr. Ronald D’ Mello ceased to be Executive Director as well as member of various committees of the Board of Directors of the Company with effect from July 27, 2007, on account of resignation. r nyBr 7 4 No No No Yes No Yes Yes Yes 4 2 Yes 5 5 6 7 7 thelastAGM 6 7 7 7 7 meetingattended 7 7 7 7 meetingheld 7 Mr. Ronald D’Mello** Mr. AndyBird 7 Mr. KishoreBiyani Mr. DariusShroff Mr. SuketuShah Mr. SanjayaKulkarni Mr. DevenKhote Mrs. ZarinaMehta Mr. Rohinton Screwvala Director No. of Board No. of Board Attendance at Attendanceat No.ofBoard No.ofBoard Director The AnnualGeneralMeetingforthefinancialyear2006-07washeldonSeptember25,2007. April 11,2007,27,JulyAugust14,October25,January31,2008andFebruary 16,2008 The datesonwhichtheBoardMeetingswereheldareasfollows: During thefinancialyear2007-08,SevenBoardmeetingswereheldandgapbetweentwodidnotexceedfourmonths. Attendance oftheDirectorsandotherDirectorship/Committeemembership i thestatutory auditfirmortheinternalthatisassociatedwithCompany, and (i) isnotoranexecutivewaspartnerduringtheprecedingthreeyears,ofanyfollowing: d. hasnotbeenanexecutiveoftheCompanyinimmediate precedingthreefinancialyears c. isnotrelatedtopromotersorpersonsoccupyingmanagementpositionsattheboardlevelonebelow b. remuneration,does not haveanymaterialpecuniaryrelationshipsortransactionswiththe apartfromreceivingdirector’s a. shall meanaNonExecutiveDirectoroftheCompanywho: ‘IndependentDirector’ 1. Note: ** Mr. Ronald D’ MelloceasedtobeanExecutiveDirectorwitheffectfromJuly27,2007. i) thelegalfirms(s)andconsultingthathave a materialassociationwiththeCompany. (ii) . Noneofthedirectors arerelatedtoeachotherexcept,Mrs.ZarinaMehta,nonexecutive director, whoisthewifeofMr. 3. NoneoftheNonExecutive Directorshaveanymaterialpecuniaryrelationship ortransactionswiththeCompany. Necessary isnotlessthan21yearsofage 2. g. isnotasubstantialshareholderoftheCompanyi.e.owingtwopercent ormoreoftheblockvotingshares. f. isnotamaterialsupplier, serviceprovidesorcustomeralessor orlesseeoftheCompany, whichmayaffect e. Rohinton of theCompany. Screwvala,CMD&CEO (“Promoter”) the Boardfortheirconsideration. information totheextentrequired, asmentionedinAnnexure1AofClause49theListingAgreement hasbeenplacedbefore may affectindependenceofthedirectors Company, itspromoters,directors,seniormanagementorholdingcompany, itssubsidiariesandassociatewhich independence of the director; and independence ofthedirector;and 39 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE

Code of Conduct Significant adjustments arising out of audit The Board has laid down a code of conduct for all the The going concern assumption Board Members and Senior Management of the Company. Compliance with Accounting Standards The Code of Conduct is posted on the Company’s website www.utvnet.com. Senior Management includes team Compliance with Stock Exchange and legal comprising of members of the category of Associate Vice requirements concerning financial statements President and above, including all functional heads. Any related party transactions i.e. transactions of The declaration by the Managing Director affirming the the Company of material nature, with promoters of compliance of Code of Conduct by all the Board Members the management, their subsidiaries or relatives etc. and Senior Management personnel is annexed separately that may have potential conflict with the interests of in the Annual Report. Company at large

3. AUDIT COMMITTEE B. In relation to Audit The Audit Committee of the Company was constituted on (i) Relevant to Internal and Statutory Audit May 20, 2000, in line with the provisions of Clause 49 of Reviewing with the management, performance of the Listing Agreement with the Stock Exchanges read with statutory and internal auditors, adequacy of internal Section 292A of the Companies Act, 1956. control systems Till July 27, 2007, the Committee comprised of Mr. Reviewing financial and risk management policies Sanjaya Kulkarni and Mr. Suketu Shah, both Independent Directors and Mr. Ronald D’Mello, Executive Director as Reviewing with the management the quarterly financial the members of the committee. Upon the resignation of statements before submission to the Board for Mr. Ronald D’Mello, the Committee was reconstituted on approval July 27, 2007 and Mr. Rohinton Screwvala , was appointed (ii) Relevant to Statutory Audit as member of the Committee. Recommending appointment and removal of external The terms of reference of the Audit Committee are broadly auditors, fixing of audit fees and approval for payment as under: of fees for any other services A. In relation to Financial Reporting: Discussion with external auditors before the audit Oversight of the Company’s financial reporting commences, the nature, scope and approach of audit process and the disclosure of its financial statements as well as post audit discussion to ascertain areas of is correct, sufficient and credible, specifically reviewing concern with management the half yearly/ annual financial (iii) Relevant to Internal Audit statements before submission to the board, focusing primarily on: Reasons for substantial defaults in payments to Any changes in accounting policies and practices and depositors, debenture holders, shareholders (in case reasons for the same of non payment of declared dividend) and creditors Matters required to be included in the Director’s Reviewing the scope and adequacy of the internal Responsibility Statement to be included in the Board’s audit function report in terms of Clause 2(AA) of Section 217 of the Review of reports of internal auditors primarily the Companies Act, 1956 significant findings and follow up thereon including Major accounting entries based on exercise of findings relating to investigations regarding frauds, judgement by management irregularities and material failures of internal control Qualification in Draft Audit Report system i. The appointment, removal and terms of remuneration of Theappointment,removalandtermsofremuneration of i. Internalauditreportsrelatingtointernalcontrolweaknessesand h. Managementletters/ofinternalcontrolweaknesses g. f. Statement of significant related party transactions (as defined Statementofsignificantrelatedpartytransactions(asdefined f. Managementdiscussionandanalysisoffinancialcondition e. The AuditCommitteeshallreviewthefollowinginformation: Secureattendanceofoutsiderswithrelevantexpertise,ifit d. Obtainoutsidelegalorotherprofessionaladvice c. Seekinformationfromanyemployee b. Investigateanyactivitywithinitsscopeofrole a. The AuditCommitteeisempoweredto The functioning and terms of reference of the Committee Thefunctioning andtermsofreferencetheCommittee Terms ofReference TheBoardofDirectorsattheirmeetingheldonJuly24, REMUNERATION COMMITTEE 4. r oitnSrwaa Mme NnIdpnet xctv 5 2 5 5 5 Non-Independent,Executive Member Independent,NonExecutive Chairman Mr. Rohinton Screwvala# Mr. SanjayaKulkarni held during meetings meetings Attended theyear2007-08 heldduring 5 1 5 5 No. of No.ofmeetings Independent,NonExecutive Non-Independent,Executive Category Member Member # Mr. CommitteewitheffectfromJuly27,2007. Rohinton ScrewvalawasappointedasMemberofAudit ** Mr. Ronald CommitteewitheffectfromJuly27,2007. D’ MelloceasedtobeaDirectorandMemberofAudit Chairman/Member Mr. Ronald D’ Mello** Mr. SuketuShah Name The CompositionoftheAuditCommitteeandparticularsmeetingsattendedbymembersaregivenbel Audit Committee the ChiefInternalAuditorshallbesubjecttoreviewby issued bythestatutoryauditors by theauditcommittee),submittedmanagement and resultsofoperations considers necessary Exchanges with particular reference on all elements of Exchanges with particular referenceonallelements of prescribed undertheListingAgreement withtheStock have beenfinalisedinlinewith therecommendationsas employees oftheCompany. Compensation committeeforgrantofESOPtotheeligible the membersofcommittee.TheCommitteealsoacts Biyani andMr. DariusShroff, IndependentDirectorsas Committee comprisesofMr. SanjayaKulkarni, Mr. Kishore 2006 hasconstitutedaRemuneration Committee.The at allthemeetings. 2007 andJanuary31,2008requiredquorumwaspresent on April26,2007,June22,July27,October25, During thefinancialyear2007-08,committeemetfivetimes Chairman oftheAuditCommittee. September 25,2007wasattendedbyMr. SanjayaKulkarni, the The previousAnnualGeneralMeetingoftheCompanyheldon taxation. do possesssoundknowledgeofaccounts,finance,auditand All themembersofAuditCommitteearefinanceliterateand Committee. meeting. TheCompanySecretaryactsasoftheAudit Officer andtheStatutoryAuditorsarespecialinviteesto also thequarterlyresultsofCompany. TheChiefFinancial covering operational,financialandotherbusinessareas In itsmeetings,theAuditCommitteeconsideredauditreports The appointment of CMD & Chief Executive Officer TheappointmentofCMD&ChiefExecutiveOfficer Remuneration toCMD &ChiefExecutive NoneoftheNonExecutiveDirectorshaveanymaterial Remuneration ofDirectors Company, intermsoftheCompaniesAct,1956. passed bytheBoardofDirectors andShareholdersofthe and otherExecutiveDirectorsis governedbyresolutions Ofﬁcer andotherExecutive Directors. pecuniary relationshiportransactionswiththeCompany. etc., stockoptionsdetails,ifany. performance criteria,servicecontracts,severancefees remuneration packagesofalltheDirectorsalongwith ow: ow: 41 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE

Details of remuneration to the Executive Directors for the year ended March 31, 2008. (Rs. in million ) Name of the Director Salary Perquisites Commission Rohinton Screwvala 6.54 0.96 Nil Deven Khote 3.00 0.12 Nil Ronald D’ Mello # 1.53 0.35 Nil Service Contract For a period of five years w.e.f. August 01, 2006 For a period of three years w.e.f. April 27, 2007

# Ceased to be Director with effect from July 27 ,2007.

Remuneration to Non Executive Directors of the subsidiary companies. The details of ESOP are provided The Non Executive Directors of the Company do not draw in Director’ Report. any remuneration from the Company other than sitting fees of 6. SHAREHOLDERS/ INVESTORS GRIEVANCE Rs.10,000/- per meeting for attending each Board meeting or COMMITTEE a meeting of the Committee thereof. At present no commission The Company has constituted a ‘Share Allotment/ Share is payable to the Non-Executive Directors out of the net profits Transfer/ Shareholders Grievance Redressal Committee’ of the Company. on May 20, 2000, which was subsequently re-designated The shareholding of Non–Executive Directors at March 31, as ‘Shareholders / Investors Grievance Committee’ on July 2008 are as under: 30, 2005, to specifically look into the redressal of investors Name of the Director No. of Shares held grievances. Further the said committee was reconstituted Sanjaya Kulkarni 1,000 on January 25, 2007. The committee has the following Darius Shroff 2,000 powers i.e. to receive, consider and effect a. Share Transfers Zarina Mehta 800 b. Deletion of the name of the shareholders Employees Stock Option Scheme – 2007 (“ESOP c. Transmission of shares Scheme”) d. Splitting of shares In terms of resolution passed by the members on 25th e. Consolidation of shares September, 2007 the Company has implemented ESOP scheme f. Issue of new shares in lieu of old certificates for its present and future permanent employees, directors of the g. Address grievances of shareholders and provide Company and also for the permanent employees and directors solutions, refer the matter to Board, in case necessary

The Composition and other particulars of ‘Shareholders / Investors Grievance Committee’ are as follows: Name Chairman/ Member Category No. of meetings held No. of during the year 2007-08 meetings Attended Mr. Sanjaya Kulkarni Chairman Independent, Non Executive 3 3 Mr. Deven Khote Member Non Independent, Executive 3 3 The Company Secretary acts as Compliance officer of the committee. During the year the committee met three times on October 25, 2007, February 20, 2008 and March 04, 2008 and necessary quorum was present for the meetings. Name, designation and address of Compliance Officer: Mohd. Sajid Ali, Company Secretary UTV Software Communications Limited 1181-1182, 8th Floor, Solitaire Corporate Park Guru Hargovindji Marg, Chakala, Andheri(E), Mumbai 400 093 Email: [email protected], Website : www.utvnet.com I 6 6 NIL 16 16 There werenotransferspendingasatMarch31,2008. ClosingBalance requirements, etc.directlyorthroughSEBI,andstockexchanges. attending togrievancesoftheshareholdersandinvestorsintimatedCompany, complianceswith thisstatutoryandregulat The CompanySecretaryisentrustedthetaskofoverseeingsharetransferworkdonebyRegistrar andShareTransfer Agen Resolved duringtheyear NIL 500081 Received duringtheyear Agents vizKarvy ComputersharePrivate Limited,PlotNo.17to24,NearImageHospital,VittalraoNagar, Madhapur, Hyderabad Registrars andShareTransferAll sharetransfersandcorrespondencethereonwiththeshareholdersarehandledbyCompany’s OpeningBalance Details ofComplaintsreceivedandredressed: Meetings for the 2004-05 2005-06 2005-06 (EGM) 2006-07 (EGM) 2006-07 (EGM) 10.30a.m. Equity 2005-06(EGM) Shareholders) (CourtconvenedMeeting 2006-07 September25,2007 11.30a.m. 2005-06 2004-05 Financialyear Meetingsforthe August24,2006 DetailsofExtraOrdinaryGeneralMeetingheldduring: 2005-06 11.30a.m. TheHallofCulture, September06,2005 TheHallofCulture,Discovery TheHallofCulture,Discovery Venue forallthethree 2004-05 Time Date Financialyear Meetingsforthe Detailsof location andtime,wherelastthreeAnnualGeneralMeetingsheld i. 7. GENERAL BODY MEETINGS ae A coe 6 06 coe 6 06 March17,2008 October16,2006 October16,2006 NA Date DiscoveryofIndia ofIndiaBuilding, NehruCenter, ofIndiaBuilding, NehruCenter, financialyears Worli, Mumbai400018 10.30a.m. 12.00p.m.(noon) 11.00a.m. Dr. AnnieBesantRoad, NA Mumbai400018. Building, NehruCenter, Time Dr. AnnieBesantRoad, Worli, Mumbai400018. Dr. AnnieBesantRoad, Worli, eu o l h A h alo utr, TheHallofCulture, TheHallofCulture, NA Venue forallthe he iaca er Dsoeyo ni ulig DiscoveryofIndia DiscoveryofIndiaBuilding, threefinancial years er etr r ni Building, NehruCenter, NehruCenter, Dr. Annie eatRa,Wri r ni eatRa, R Dr. AnnieBesantRoad, BesantRoad, Worli, Mma 008 W Mumbai 400018. of Arrangements of of Arrangements of capital from Rs. 36 capitalfromRs.36 ofArrangements ofArrangements For For approving ascheme NIL SpecialResolutions M/sUnitedEntertainment ouin iie ihte SltosLmtd ih 2.For altering Articles SolutionsLimited,with SolutionsLimitedwiththe Company. the Company. of Association. ofAssociation. theCompany. Company. 3.For altering Memorandum of Association. Association. 4. Preferential Issue underSection81(1A) M/s UnitedEntertainment ri ubi401. Mumbai400059 orli, Mumbai400018. approving a scheme 1. 1. For approving ascheme Hotel Kohinoor Hotel Kohinoor Continental, Emerald I Continental, EmeraldI and II, Andheri-Kurla and II,Andheri-Kurla crores to Rs. 45 crores. crores toRs.45crores. oad, Andheri (E), oad, Andheri(E), increasing share increasing share ory ory ts, ts,

43 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE

The Special Resolution passed at the last three Annual General vi) Appointment/ Re-appointment of Mr. Deven Khote Meetings are as under, as Executive Director for a period of 3 years from a) At the Annual General Meeting held on September 06, April 27, 2007 2005 Resolution pertaining to Amendments to the Articles During the year under review, Company obtained the following of Association were passed. approvals of the members through postal ballot: b) At the Annual General Meeting held on August 24, 2006 (1) On October 3, 2007 by Special Resolution under following special resolutions were passed: Section 372A of the Companies Act, 1956, authorising i) Amendment to Capital Clause of Memorandum of the Board to make investments, give loans or guarantee Association, on account of increase in Authorised upto Rs. 325 crores Share Capital (2) On November 30, 2007 by Ordinary Resolution ii) Amendment to Articles 4 of Article of Association, under Section 293(1)(a) of the Companies Act, 1956, on account of increase in Authorised Share Capital authorising the Board to sell Company’s business of iii) Authorisation to the Board to create, issue and allot library management and operations of post-production 1,949,360 convertible warrants on Preferential studio basis to Mr. Rohinton Screwvala. (3) On November 30, 2007 by Special Resolution under iv) Authorisation to the Board to issue and allot Section 372A of the Companies Act, 1956 authorising 3,400,000 equity shares to The Walt Disney the Board to issue/ provide corporate guarantee not Company (Southeast Asia) Pte. Limited. exceeding Rs. 150 crores v) Approval of the remuneration paid and waiver (4) On March 24, 2008 by Special Resolution under Section of recovery of excess remuneration paid to Mr. 372A of the Companies Act, 1956 authorising the Rohinton Screwvala, for the financial year 2005- Board to make inter-corporate investments, give loans or 06. guarantee upto Rs. 400 crores vi) Appointment of Mr. Rohinton Screwvala as CMD Based on the report of Mr. Sanjay Parab, a Practicing & CEO for period of 5 years commencing from Company Secretary and Scrutiniser for conducting the August 01, 2006. aforementioned Postal Ballot, the Chairman declared vii) Approval of the remuneration paid and waiver of that the aforesaid Ordinary/ Special resolutions were recovery of excess remuneration paid to Mr. Ronald passed with an overwhelming majority of 99.99%. D’Mello, for the financial year 2005-06. Resolution pursuant to Section 372A of the Companies viii) Appointment of Mr. Ronold D’Mello as Executive Act 1956 is proposed to be adopted through postal ballot Director & COO for period of 3 years commencing as stated in the Notice of the Annual General Meeting. from August 21, 2006. 8. DISCLOSURES: c) At the Annual General Meeting held on September 25, Related Party Transactions 2007 following special resolutions were passed: i) Amendment to Capital Clause of Memorandum of There are no materially significant related party transactions Association, on account of increase in Authorised of the Company with key managerial personnel, which Share Capital have potential conflict with the interest of the Company ii) Amendment to Articles 4 of Article of Association, at large. However, the related party Disclosures, as on account of increase in Authorised Share Capital required to be mentioned in accordance with Accounting Standards (AS) 18, have been provided on note 14 of iii) Issue of equity shares, convertible debentures, Schedule 20 to the Accounts contained in this report. FCCBs, GDR, ADR, etc not exceeding USD 100,000,000 to Qualified Institutional Buyers Disclosure of accounting treatment in prepara- pursuant to Section 81(1A) tion of ﬁnancial statements iv) Issue of equity shares under UTV Employees Stock Your company has followed the guidelines of accounting Option Scheme 2007 (ESOP) to the present and standards laid by the Institute of Chartered Accountants of future employees, directors of the Company India (ICAI) in preparation of its financial statements. pursuant to Section 81(1A) Compliances v) To extend the benefit of UTV Employees Stock The Company had materially complied with the requirement Option Scheme, 2007 to permanent employees of the Stock Exchange, SEBI and other statutory authorities and directors of subsidiary companies on all matters relating to capital market during the last . DateofBookclosure c. March, 2009 . Dividendpayment date OnorbeforeendofJune,2009 d. AuditedResults fortheyearending 31stDecember31,2008 CertificatefromMr. Rohinton Screwvala,CMD&CEO CEO&CFOCertiﬁcation TheCompanyhaslaiddownprocedurestoinformthe Risk Management Meeting. Ifapproved,thedividendwillbepaidonorafterAugust 12,2008. March31,2008,forapprovaloftheshareholdersatAnnual General thedividendofRe. 1/-perequityshareforthefinancialyear ended ListingonStock Exchanges e. OnorbeforetheendofJanuary, 2009 OnorbeforetheendofOctober, 2008 For thethirdQuarterending yearendingSeptember30,2008 For secondQuarterandthehalf June30,2008 . AnnualGeneralMeeting a. GENERALSHAREHOLDERINFORMATION 10. TheBombayStockExchangeLimited:532619 TheBombayStockExchangeLimited(BSE) StockCode f. For thefirstQuarterending Dr. AnnieBesantRoad, Worli, Mumbai400018 TheHallofCulture,DiscoveryIndiaBuilding, Nehru Center, 10.30a.m. Tuesday, August12,2008 Venue Financial Time b. Calendar Date forNSDLand CDSL eredn March31 Year ending 16, 2008. of DirectorstheCompanyinitsmeetingheldonJune into withStockExchanges,wasplacedbeforetheBoard terms ofClause49(v)theListingAgreemententered and Mr. G. Chandrasekhar, ChiefFinancial Officer, in risk throughmeansofproperlydefinedframework. reviewed toensurethatExecutiveManagementcontrols sation procedures.Theseproceduresareperiodically Board Membersabouttheriskassessmentandminimi- authorities. on theCompanybyanyofabove-mentioned three years.Nopecuniarystrictureshavebeenimposed g. Demat ISIN Number DematISINNumber g. Financial Reporting TheNationalStockExchangeof IndiaLimited:UTVSOF, EQ 2008-09(Tentative andsubjecttochange) OnorbeforetheendofJuly, 2008 INE 507B01022 Monday, August4,2008toTuesday, August12,2008(bothdaysinclusive) The Board of Directors at their meeting held on June 16, 2008 recommended TheBoardofDirectorsattheirmeetingheldon June16,2008recommended The National Stock Exchange of India Limited (NSE) TheNationalStock ExchangeofIndiaLimited(NSE) The ‘Management Discussion and Analysis Report’ forms The‘ManagementDiscussionandAnalysis Report’ Inlinewithgoodcorporategovernancepractices,the MEANSOFCOMMUNICATIONS 9. part oftheDirectorsReport. sent totheshareholdersindividually. which isalsomadeavailableonthewebsite.Thesearenot after declarationofquarterlyfinancialresults,thetext hosts conferencecallswithanalystsandfundmanagers the corporatewebsitewww.utvnet.com. TheCompanyalso National InformaticsCentre(NIC).Theupdateispostedon Retrieval System)maintainedbySEBIinassociationwiththe website EDIFAR (ElectronicDataInformationFiling and (vernacular languagenewspapers)andpostedonthe in Navshakti,Tarun BharatandTheMaharashtraTimes Business Standard(Englishlanguagenewspapers)and are normallypublishedinTheEconomicTimes, The quarterlyun-audited/auditedfinancialresults Company’s

45 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE

g. Table below respectively gives the monthly high and low prices and number of shares traded at the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited, Mumbai (BSE) for the year ended on March 31, 2008. The National Stock Exchange of India Limited Month High (Rs.) Low (Rs.) Total No. of Shares Traded

April, 2007 341.90 275.00 3,972,009 May, 2007 552.95 301.00 20,425,919 June, 2007 585.20 465.00 5,846,328 July, 2007 585.00 439.10 2,352,920 August, 2007 516.90 428.50 1,320,044 September, 2007 652.50 465.00 3,848,100 October, 2007 753.60 605.00 2,492,576 November, 2007 900.00 662.00 3,146,210 Decemeber, 2007 1,088.40 778.00 4,935,159 January, 2008 980.10 638.75 3,608,345 February, 2008 926.00 705.00 1,620,577 March, 2008 825.00 735.50 981,674 The Bombay Stock Exchange Limited (BSE) Month High (Rs.) Low (Rs.) Total No. of Shares Traded April, 2007 343.00 274.15 3,168,777 May, 2007 557.70 302.05 11,742,591 June, 2007 585.70 466.50 3,186,182 July, 2007 558.00 400.00 1,263,307 August, 2007 517.50 430.00 1,511,603 September, 2007 655.00 467.00 2,281,376 October, 2007 755.70 602.20 1,330,904 November, 2007 885.00 661.30 1,976,355 December, 2007 1132.00 785.00 3,412,187 January, 2008 984.75 644.35 2,433,503 February, 2008 948.75 705.05 1,136,192 March, 2008 852.50 714.80 404,353 UTV Price UTV Price 1,000 1,000 200 300 500 600 700 800 900 200 300 500 600 700 800 900 100 100 400 400 - -

Apr-07 Apr-07

May-07 May-07

Jun-07 Jun-07

Jul-07 Jul-07 UTV PRICEVSS&PCNXNIFTY UTV PRICEVSBSESENSEX UTV Price

Aug-07 Aug-07 UTV

Month Sep-07 Month Sep-07

Oct-07 Oct-07

BSE Sensex Nov-07 NIFTY Nov-07

Dec-07 Dec-07

Jan-08 Jan-08

Feb-08 Feb-08

Mar-08 Mar-08 3,000 4,000 5,000 6,000 7,000 - 5,000 10,000 15,000 20,000 25,000 - 1,000 2,000

BSE Sensex S&P CNX Nifty Price 47 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE

h. Registrar and Transfer Agent Name and address : Karvy Computershare Private Limited Plot No.17 to 24, Near Image Hospital Vittalrao Nagar, Madhapur, Hyderabad 500081 Tel No. : 040 23420815-820 Fax No. : 040 23420814 Email : [email protected] Contact Person : Mr. P.A. Varghese Name and address : Karvy Computer Share Private Limited 16/22, Bake House, Maharashtra Chambers of Commerce Lane Opp. MSC Bank, Kalaghoda, Fort, Mumbai 400 023 Tel No. : 022 56382666 Fax No. : 022 5633 1135 Email : [email protected] Contact Person : Francis J Fernandes i. Share Transfer System : The shares of the Company are traded in the compulsory demat mode by all the investors. The share transfer committee meets regularly to approve transfer of shares in physical form. The transfer are approved in 10 to 15 days time from the date of receipt, if the transfer documents are in order.

j. Distribution of shareholding as on March 31, 2008 Range No. of % of No. of % to No. of Equity Shares Shareholders Shareholders Shares No. of Shares Upto 500 17,190 95.51 1,001,709 4.04 501 – 1000 375 2.08 305,442 1.23 1001 – 2000 166 0.92 245,041 0.99 2001 – 3000 59 0.33 155,131 0.62 3001 – 4000 27 0.15 98,269 0.39 4001 – 5000 27 0.15 128,413 0.52 50001 – 10000 53 0.29 383,503 1.54 10001 and above 102 0.57 22,525,460 90.67 TOTAL 17,999 100.00 % 24,842,968 100 GADTTL 48298 100.00 0.21 24,842,968 1.04 51,300 0.66 13.69 0.23 260,340 3,400,000 163,074 58,156 GRANDTOTAL Directors v) Foreign CorporateBodies iv) Foreign Companies iii) ClearingMembers ii) Trust i) AnyOther(pleasespecify) d. c. NRIs 311,788 1.26 1.26 311,788 NRIs c. b. Indian Public 2,547,777 10.26 10.26 2,547,777 8.87 2,203,544 IndianPublic b. Private CorporateBodies a. b BanksFinancial Institutions, InsuranceCompanies b. tes 20.32 10.23 31.25 7,762,489 5,048,321 0.69 2,542,493 Others 171,675 Foreign InstitutionalInvestors(FIIs) c. (Central/StateGovt.Institutions/ NonGovt.Inst.) 3 Sub MutualFunds andUTI a. Total InstitutionalInvestors 2 NnPooesHlig Non-Promoters Holding B Unilazer Hongkong Limited 2,565,593 10.33 10.33 2,565,593 UnilazerHongkongLimited FrinPooes: 0.00 20 Foreign Promoters : UnitedTeleshopping &MarketingCo.Limited Zrn et 80 0.00 800 ZarinaMehta Unilazer Exports & Management Consultants Limited 3,231,740 13.01 13.01 3,231,740 UnilazerExports&ManagementConsultantsLimited Ida rmtr 9.20 2,286,347 Rohinton Screwvala IndianPromoters Promoters : 1 Pooe’ odn Holding Promoter’s A ShareholdingasatMarch31,2008 k. Ctgr N.o hrsHl %ofholding No.ofSharesHeld Category Sub Total 8,995,979 36.21 36.21 8,995,979 Sub Total SbT tl 8,084,500 32.54 Sub Total

49 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

REPORT ON CORPORATE GOVERNANCE

l. Dematerialisation of shares and liquidity : The Company’s shares are compulsorily to be traded in dematerialised form, 19,822,748 equity shares of Rs. 10/- each representing 79.79% of the equity capital of the Company have been dematerialised as at March 31, 2008. The Company’s shares are regularly traded on The National Stock Exchange of India Limited(NSE) and the Bombay Stock Exchange Limited(BSE). m. Their were no outstanding warrants convertible into equity shares as at March 31, 2008. n. Plant Locations: The Company is into media and entertainment software industry and operates from its Registered office at 1181-1182, 8th Floor, Solitaire Corporate Park, Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai 400 093. o. Address for Correspondence: UTV Software Communications Limited 1181-1182, 8th Floor, Solitaire Corporate Park, Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai 400 093. Tel No. 022 - s4098 1400 Fax No. 022- 4098 1510 / 40981650 Email: [email protected] Website : www.utvnet.com

For and on behalf of the Board Rohinton Screwvala CMD and Chief Executive Officer

Place : Mumbai Date : June 16, 2008 CODE OFCONDUCT AND SENIORMANGEMENTPERSONNELWITHCOMPANY’S Date :June16,2008 Place :Mumbai Cop No.7093 Membership No.16718 Company Secretaries For Company. nor theefficiencyoreffectivenesswithwhichmanagementhasconductedaffairsof We furtherstatethatsuchcomplianceisneitheranassuranceastothefutureviabilityofCompany ListingAgreement. in Clause49oftheabove-mentioned certify thethatCompanyhascompliedwithconditionsofCorporateGovernanceasstipulated In ouropinionandtothebestofinformationaccordingexplanationgivenus,we audit noranexpressionofopiniononthefinancialstatementsCompany. Company forensuringcompliancewithconditionsoftheCorporateGovernances.Itisneitheran examination waslimitedtoareviewoftheproceduresandimplementationthereof, adoptedbythe The ComplianceofconditionsCorporateGovernanceisresponsibilitythemanagement.Our into bythesaidcompanywithStockexchange(s). Limited forthefinancialyear2007-08,asstipulatedinClause49ofListingAgreemententered We haveexamined thecomplianceofCorporateGovernancebyUTVSoftwareCommunications To theMEMBERSOFUTVSOFTWARE COMMUNICATIONS LIMITED CERTIFICATE OF COMPLIANCEOFCORPORATE GOVERNANCE Date :June16,2008 Place :Mumbai CMD andChiefExecutiveOfficer Rohinton Screwvala of membersthecategoryAssociateVicePresident andabove,includingallfunctionalheads. For thepurposeofthisdeclaration,seniormembersmeaningSeniorManagementteamcomprising Code ofConductasapplicabletothem. from theseniormanagersofCompanyandmembers theBoardofcompliancewith I confirmthattheCompanyhasinrespectoffinancialyear ended onMarch31,2008received Managers oftheCompany. website. TheCode ofConductisavailableontheCompany’s This istoconfirmthattheCompanyhasadoptedCodeofConduct foritseachDirectorandSenior DECLARATION REGARDINGCOMPLIANCEBYBOARD MEMBERS STOCK EXCHANGE) AS REQUIREDUNDERTHELISTINGAGREEMENT WITHTHE SANJAY PARAB 51 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION such films across various platforms, such as theatres, television, cable and home We began as a television content entertainment as well as new emerging production company in 1990 and have since developed into an integrated media platforms. Our interactive media business and entertainment group. Our business is focused on capitalising on demand for can be divided into four segments: console and mobile gaming through our in-house game development and 1 Television Content Production, publishing business where we have taken Dubbing and Airtime sales; the inorganic route to growth by acquiring 2 Movie Production and Distribution; Ignition, a UK based console game developer & publisher and Indiagames, 3 Interactive Media, including a Mumbai based online & mobile game console and mobile game development, developer and publisher. UGBL and its publishing and distribution and subsidiaries which is the broadcasting 4 New Media including Web and group that we are proposing to invest Mobile which is a very recent addition. in, has already launched four channels On April 30, 2008, we made a foray targeted at the different segments of into the new media segment by acquiring audiences whereas UNML will provide 100% of UTV New Media Limited the digital content delivery platform (“UNML”). catering to the Web and Mobile initiatives We are a We are planning to make a re-entry of the Group. UNML recently acquired IT media and into the broadcasting space as a new Nation Media Pvt. Limited, a new media entertainment line of business by subscribing to 75% company having an IT-focused business of the equity share capital of UTV model that currently comprises four Company Global Broadcasting Limited (“UGBL”). portals. Techtree.com (a B2C portal), based in India, Simultaneous to our investment in UGBL, Channeltimes.com (B2B portal for the IT The Walt Disney Company (South East supply chain), CXOToday.com (B2B for with growing Asia) Pte. Limited (“Disney”) will also IT enterprise buyers) and CXOLinux.com international invest in 15% of UGBL’s share capital. (B2B for IT enterprises). operations. Our television business is focused on producing television programs for our INDUSTRY OVERVIEW clients on a commissioned basis and The Entertainment and Media industry selling commercial air time to advertisers (E&M) has been growing at a steady rate on broadcaster networks in South India. for the past few years and this trend is Our movie business is focused on the expected to continue for a few years. production of Indian, Hollywood and This year we have seen many Indian animated films and the distribution of Companies push the envelope and Annual GrowthRate (CAGR) of19% 2006 andhasrecordedaCompounded 513 billion,upfromRs.438billionin of theE&MindustryisestimatedatRs. forecasted lastyear. Currentlythesize exceeding theexpected15%thatwas growth of17%overthepreviousyear, In 2007,theE&Mindustryrecordeda industry. leading toincreasedrevenuesthe and distributionplatformsareemerging segments, newdigitaldeliveryplatforms from theprivateequitysector. Manynew merger activityandheightenedinterest in additiontotheincreaseddomestic of India’s burgeoningmediaindustry world atlargeseemstobetakingnotice call ‘Indianmediaconglomerates’.The cult ofmediacompanies,whatwecould result ofwhichistheemergenceanew move beyondnationalboundaries,the (Rs. Billion) 07 08 09 00 01 2012E 2011E 2010E 2009E 2008E 2007E 513 and Entertainment Industry and Entertainment Projected Growth in Media in Media Growth Projected 608 715 855 like DTH, IPTVandMobileTV. emerging technologiesandplatforms of thisindustryareeverchangingwith number ofTVchannels.Thedynamics due totheexponentialincreasein healthy growthinthecontentindustry homes andsubscriptionrevenues, industry fuelledbyincreaseinPayTV primarily duetogrowthinTVDistribution FICCI-PwC Report 2008).Thisgrowthis recording aCAGR of22%(Source: 226 billiontoRs.600by2012 to growfromthecurrentsizeofRs. The Indiantelevisionindustryisexpected (Source: FICCI-PwCReport 2008) CAGR of18%overafiveyearperiod. Rs. 1,158billionby2012recordinga industry isestimatedtoreachasizeof from 2004to2007.Goingforward,the 1003 1158 * TheMask –Warner TMand ©1994WBEI Brothers- * 53 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

The Indian film industry has grown phe- which are also on the rise, being higher the new generation of consoles like the nomenally over the past four years and in multiplexes than single screens, we Wii, Xbox360 and PlayStation3 launched is expected to continue growing at a can expect a substantial increase in total recently. The introduction of consoles CAGR of 13% reaching to Rs. 176 bil- box office revenues (Source: FICCI-PwC with internet capabilities and the growing lion in 2012 from the current size of Rs. Report 2008). penetration of broadband will fuel the 96 billion in 2007 (Source: FICCI-PwC The gaming industry in India consisting growth in the online gaming sector. Report 2008). We will see domestic box of mobile, console, online and PC gam- Looking at the constant changes in tech- office ruling the pie; however, the rela- ing, all of which are still at nascent stages nology and emerging streams of revenue tive shares are expected to shift margin- of development, has a potential for phe- due to increased penetration of mobiles, ally from traditional revenues to emerg- nomenal growth in the coming years. Internet and other handheld devices, it ing streams of revenue like Home video, But in the gaming industry, the world is is no surprise that this industry has out- Television, Music, Internet, etc. The mul- the market which is expected to grow at grown the Indian economy and shall tiplexes are also exploding in the country a CAGR of 9.1% from the current USD continue to do so in the coming years. with an expected 5,000 screens to be 37 billion to USD 49 billion in 2011 up and running by 2012 from the cur- (Source: FICCI-PwC Report 2008). Prin- rent 1,350 screens and with ticket prices, cipal drivers of growth in this industry are

Business Overview

Television

TV CONTENT have two shows on air, one on Gemini DUBBING Our TV Content segment represents TV and another on KTV. The Dubbing division today, has the shows produced by us on a AIR TIME SALES a talent bank of over 500 voices commissioned basis. During the year, This business has shown steady across genres and languages. During we provided television content for growth during the fiscal. During the the year, we provided our dubbing Hindi channels like Star Plus (Bhabhi), year, we managed a monthly average services for television content to large Hungama TV (Hero), Bindass (Sun of approximately 85 hours of content international players like Disney, Yaar Chill Maar and Shakira) and across all leading South Indian National Geographic Channel, The Doordarshan (Soni Mahiwal). We Channels such as Sun TV, Gemini History Channel and various other are also looking at inorganic growth TV, Udaya TV and KTV. During the channels including Bindass and in the television content business. To year, among many other shows, we Bindass Movies. that end, we have entered into two added Ramayanam, the first ever Joint Ventures, one each with Smriti dubbed show going on air on Sun TV. Irani and Shekhar Suman. While we Currently, the Top 2 slots on Sun TV would provide these ventures with the are managed by us, which includes financial and infrastructural muscle, Kolangal on the top position followed the talent would front the respective by Arasi. Besides Sun TV, we also have JVs and lend creative and relevant shows running on Gemini TV, KTV business acumen. During the year we and Udaya TV wherein some of our also forayed into television production shows feature in the Top 5 list of these for South Indian market, where we channels. different brands. them withinthesamestudiothrough audiences andatthesametimebring range ofgenres,budgetsandtarget us withrangeandflexibilityacrossa second motionpicturebrandproviding film. National AwardforBestChildren’s 550 millionteenageaudiences. animation andgaming, targetingIndia’s superhero franchisesforpublishing, Branson’s Virgin,tocreateoriginal entertainment divisionofSirRichard collaboration withVirginComics,an business thisfiscal: key highlightsofthemovies The followingweresomeofthe released thefollowingfilms: during fiscal2008.Duringthegroup Our moviesbusinesswentfromstrengthto UTV Mauritiusenterednto RACE JODHAA TAARE ZAMEENPAR (InternationalDistribution) AKBAR KENNAMOOCHI YENNADA ATIDHI DHANDHANAGOAL THEBLUE UMBRELLA Foray intotheTelugu filmindustry, Launch ofUTVSpotboy, our THE BLUE UMBRELLA LIFE INAMETRO Motion Pictures got the gotthe released duringtheyearwasoneof acclaimed. as muchboxofficehitscritically from theMiramaxlibrarywhichare Hollywood andWorld Cinematitles India, launchedsomeofthebest with astrongdistributionchainacross AKBAR. latest tent-pole production UTV Music,whichdistributedour KENNAMOOCHI YENNADA. industry withitsfirstco-production Hindi films. India’s secondlargestfilmmarketafter movies. ATIDHI Mahesh Babu’s 2008blockbuster distribution rightsforTelugu Superstar OurHomeEntertainmentDivision Launched ourownmusiclabel, Foray intothelucrativeTamil film WELCOME andsignedhimforanother2 UTV Mauritius , oneofthemovies JODHAA acquired GOAL three movies; AKBAR ever inUSAandAustralia. of alltimewiththe2ndhighestopening is alsothe7thhighestgrosserinIndia Arabic. Besidesbeingablockbuster, it dubbed inTamil, Telugu, Dutchand was releasedandhasalsobeen AKBAR from Indianmoviereleases. which hassofarbeenhighlyinsulated RACE year 2007. the highestgrossingfilmsofcalendar of alltime. highest openingweekendcollections of 2008. of 2008andalsothe2ndblockbuster We alsosuccessfullyreleased Following thesuccessof Our tentpole production intheattractivePakistan market , was , thefirstblockbusterof2008, TAARE ZAMEENPAR RACE RACE DHAN DHANA hasrecordedthe2nd , oursecondrelease JODHAA JODHAA and 55 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

Interactive

This business segment comprises outsourcing and use our animation character George of the Jungle™ and Gaming Business through recent facilities for captive movie production. Crayola®. It closed publishing deals with acquisitions of Ignition and Indiagames, Post Production and VFX business was Playlogic and Marvellous Entertainment Animation, Post-Production and VFX sold during this fiscal so as to move out to bring key properties like Obscure: activities. It is important to note that of service oriented business model. The Aftermath, Bubble Bobble and New the Animation, Post-Production and This year has been an eventful one Zealand Story to North America. The VFX businesses will not form part of this for Ignition where it launched Mercury following is a list of titles published by segment in the following year. This is Meltdown Revolution for the Wii™ home Ignition during the fiscal: primarily because, we have strategically video game system. It also published decided to move out of animation games based on children’s beloved

NAME FORMAT TERRITORY During the year, our Art of Fighting PS2 Europe subsidiary in UK completed Bubble Bobble Double Shot NDS USA Crayola Treasure Adventures NDS USA our acquisition of majority Flipper Critters NDS USA stake in Indiagames George of the Jungle PS2 / Wii / NDS Europe King of Fighters XI PS2 Europe Limited, thereby giving Mercury Meltdown WII Europe / USA us strong visibility in the Metal Slug Anthology PS2 Europe Neves NDS Europe ﬂedgling but high growth New Zealand Story Revolution NDS USA mobile and online gaming Obscure: The Aftermath Wii / PS2 / PC USA Rainbow Island Evolution PSP USA industry in India and SNK Vs CAPCOM NDS Europe around the globe. Teenage Zombies NDS Europe / USA

BUSINESS STRATEGY

The key elements of our We believe in creating quality business strategy are as content across multiple platforms for follows: a global audience, but which also caters to local and regional tastes Innovate and and sensitivities. We recognise the Grow Through Our need to target a relatively younger Integrated Platform audience, particularly in a country of Media Businesses like India, the demographics of Our goal is to become one of which are heavily skewed towards the largest and most respected the youth. Our diversified business integrated media group by model, apart from providing scale, continuing to diversify across various also spreads the risk profile of our entertainment platforms. We believe overall business. that each of our business verticals is a highly scalable business model. that we produce. The key elements of our that weproduce.Thekeyelements ofour property rightsinrelationtothe movies creation andcapitalisationofintellectual us toexercisegreatercontrol over the distribution arrangementsandwill allow us toexploitfavorablemarketingand believe the“studioapproach” enables aimed atvarioustypesofaudiences.We ofmovies develop andreleasealine-up various successfuldirectorsandartiststo entering intomultiplemoviecontractswith production atalltimesandisachievedby having astrongportfolioofmoviesunder and distributionbusiness.Thisinvolves approach” toourmovieproduction We continuetobelieveina“studio Distribution Production and Approach” toMovie Strengthen the“Studio Television Motion Pictures

Productions Innovative Movie Concepts Innovative MovieConcepts and diversifyourbusinessrisks. the businesspotentialofthesesegments portfolio willallowustocapitaliseon We believethatmaintainingadiverse for theIndianandinternationalmarket. languages, aswellanimatedmovies in Hindi,EnglishandregionalIndian movies productions, includinglive-action maintaining adiverseportfolioofmovie We believeakeytooursuccessis a. of themovieindustry. We plantofocus diverse genreswilldrivethefuture growth We believethatinnovativeconceptsin b. include: “studio approach” tomovieproduction

Maintain DiversePortfolio of Continue to Green light Continue toGreenlight margins ratherthanvolumebuilding. sales marketing, ourfocusisonimproving content acrossmultiplechannels.Inairtime to deliverdiversemulti-genreandmultilingual preferences ofourviewers.We continuetoplan and mitigateagainstsuddenchangesinthe our abilitytocaterawidearrayofviewers diverse mixoftelevisionprogramsiscriticalto We believe thatcontinuingtoproducea Television Content Market Arrayof aWide Continue toProduceand original movieconcepts. well positionedtodeliverthesenewand movie production,webelieveare strong backgroundandexperiencein and innovativeconcepts.With our with theopportunitytointroducenew that smallbudgetfilmswillprovideus films acrossvariousgenres.We believe on large,mediumandsmallbudget both inIndiaandHollywood. will enableustoincreaseouroperations leading Indianandinternationaltalent international productionhousesand relationships withglobalstudios, We believethatbuildingandenhancing Arrangements withTalent c. Establish Multiple Movie EstablishMultipleMovie ntent

57 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

d. Leverage Distribution movies is evidence of this as we have been Retain all distribution Capabilities through Vertical associated with well regarded media rights over content Integration companies in the United States, such as Our strategy is to continue to focus on 20th Century Fox and Fox Searchlight. In order to leverage our movie the production, or co-production, and These relationships have facilitated our distribution capabilities, we will continue distribution of our own movies. We access to enhanced marketing platforms to fully integrate our marketing and believe that movie production entails and larger financial commitments while global distribution business with our fewer risks than having a distribution- reducing the overall risk associated with movie production business. We believe only model due to the wide array of exploring international markets. we can fully capitalise on the movies we distribution platforms that are available produce by successfully distributing such The movie industry in South India, to us when we produce our own movies. movies across a wide array of distribution including movies made in languages Producing our own movies allows us to platforms, such as theaters, home such as Tamil, Telugu, Kannada and utilise our intellectual property rights over entertainment products, merchandising, Malayalam, is the second largest movie such movies and capitalise on multiple and content on mobile phones. industry in India, collectively delivering distribution channels such as music, approximately 587 movies a year. In home video, television rights, new media Diversify Into Producing addition, many movies from South India and merchandising rights. Alternatively, International and are dubbed into other languages, such we are not averse of acquiring movies Indian Regional Movies as Hindi, which enables them to reach provided they are available to us for We believe in continuing to expand into an even wider audience. Due to the exploitation across multiple platforms the international marketplace rather than popularity of South Indian movies, we and for long period of time. being restricted in producing only Indian intend to ensure that we obtain a firm movies. Our co-production of Hollywood foothold in this industry.

Broadcasting

Develop Unique movie channels UTV Movies and World and High Quality Movies. By focusing on niche subsets of Broadcasting Content entertainment, we believe we can keep Through our proposed investment into broadcasting costs down and capitalise UGBL, we intend to focus on developing on the high demand in India for higher broadcasting entertainment that caters quality broadcasting content. We also to various target segments of India’s plan to adopt a research-oriented population. UGBL has launched two approach to developing broadcasting youth-oriented broadcasting channels, content which we believe will lead to Bindass and Bindass Movies which attracting and retaining viewers and allow target 15 to 34 year olds, India’s fastest us to constantly adapt to such viewers’ growing demographic segment, and two evolving tastes in television content. interactive gamingindustrygenerally. for growthwithinourbusinessandinthe also continuetoevaluatenewopportunities interactive mediabusinesssegment.We will and Indiagameswilldriveourgrowthinthe We believe thatouracquisitionofIgnition Indiagames Limitedduringthecurrentfiscal. process ofacquiringacontrollinginterestin distribution ofgames.We alsocompletedthe development forconsolesaswellworldwide stake inIgnitionthatundertakesin-housegame During fiscal2007,weacquiredacontrolling Mobile GamingIndustry Growth intheConsoleand Evaluate Opportunitiesfor devices. Besides servicing our entire devices. Besidesservicingour entire deployed overthewebandhandheld entertainment andleisurewhich canbe It isalsolookingatothersectors of content availablewithinthe Group. only restrictingitselftothein-house their content.However, UNMLisnot portals showcasingandmonetising Movies channelstosetupentertainment the Bindass,UTVMoviesandWorld has plansofworkingintandemwith Besides thewebsiteUTVi.com,UNML intellectual propertyrightsoverthe stream butdoesnotallowustoretain which providesuswithastablerevenue on developinganimationforclients, We haveinthepastbeenfocused Content wedevelop Rights overtheGaming Intellectual Property Focus onCreating handheld platforms through Web and and acquiredcontent Monetise in-house Interactive New Media distribution platforms. production capabilitieswithourvarious produce andintegratingouranimation rights overtheanimationcontentwe us toretaincertainintellectualproperty with certainadvantages,suchasallowing animation projectswhichwillprovideus can beginourownin-houselarge-scale animationstudio, we believe the-art animation wedevelop.With ourstate-of- in theWeb domain. management withextensiveexperience the existingUNMLbusinessesalong with excellent ITsupportandinfrastructure to businesses. ITNationalsobrings along own operationsandtheGroup’s various explore theinherentsynergiesbetweenits with anentertainmentfocuswhereitshall an interestingverticalliketechnologybut With ITNation,UNML hasgotaccessto South Indianandotherregionalspaces. contracting variouscataloguesfromthe portals. Onthemobilefront,itisalso commerce tieupswithotherestablished is alsosimultaneouslyforgingcontent/e- network onWeb andmobiledomain,it developing andpublishingsequels. platforms butalsoallowsustheoptionof exploitation worldwidethroughmultiple gaming notonlygivesustheflexibilityof for variousplatforms.OriginalIPin Properties of developingthreeoriginalIntellectual present, forexample,weareintheprocess rather thanjustpublishing. InIgnitionat In gamingtoo,thefocusisondevelopment Wardevil , Reich and Angelic , 59 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

OPPORTUNITIES AND THREATS

the rapid growth of multiplexes and their markets rather than being restricted digitisation of movie halls is presenting to any particular region. Gaming in India us with the opportunity of reaching wider is growing at phenomenal rates and audiences in the first weekend itself. This Indiagames is well positioned to capture is changing the economics of the film a good chunk of that growth. Online distribution business. Changes such as gaming is another huge opportunity, these help film makers work with greater particularly in Asian economies and that creative freedom given the ability to work is definitely something we will closely with larger budgets. The flipside to this is monitor in the near future. that costs of production in general and While new and addressable technologies star prices in particular are on the rise like Conditional Access System (CAS), and this calls for some degree of caution Direct-to-Home (DTH) and Internet on the part of film makers. We also Protocol Television (IPTV) provide believe the revolution in home video is opportunities for broadcasters, due to still in the making and lots will change the regulatory environment surrounding in the areas of new media exploitation these areas, any delay or change in We currently operate in a highly as well. the implementation of these can prove competitive and dynamic industry. In The television space is highly fragmented detrimental to our broadcasting plans. India, the media and entertainment and we expect some consolidation to take The single biggest threat in this segment industry is growing much faster than the place on that front. The mushrooming of would come from the large number of growth of the economy. One needs to broadcasting channels in India gives us players, both existing and new, with fairly be quick at spotting opportunities and a great opportunity to make the most of. deep pockets, which are capable of converting them into success stories. Further, fragmentation of audiences and changing the dynamics of the business, We believe that with the breadth of the growth of two TV households will increase at least in the short term. businesses that we have developed over the demand for innovative, specialised the last few years, we are well positioned programming. Audience preferences, to ride the growth story in the media fickle as they are, are the biggest threat space not just in India but also globally. to this business. It is essential to be ahead We look at the World as a marketplace of time in this business rather than being a and tapping that marketplace is a huge follower. Innovation cannot be sporadic; opportunity for us. We are taking strides it has to be continuous. in that direction through our foray into Gaming is a multi billion dollar industry Hollywood and through our entry into the worldwide and we are at present, barely a Considering the integrated business gaming business. drop in this large ocean. Both Ignition and model that we have put together in the In the Movies distribution business, Indiagames are looking at the world as recent past, the biggest opportunity for us is to cross leverage the power of these businesses with each other. While each of these businesses in themselves are capable of substantial scale up, achieving optimal synergies between these businesses can take us to a different scale altogether. The business of media and entertainment is all about creativity, people being at the centre of that. With the amount of money that is being offered, manpower retention is one the biggest challenges for any manpower intensive business.

* The Adventures of Pluto Nash - Warner Brothers - TM and © 2002 WBEI dimensional businesses. dimensional businesses. functional managerstotakecareofmulti We havebuilt aresourcebaseofcross- hands ontrainingisanongoingactivity. through formaltraining, jobrotationand and developmentofcorecompetencies The workenvironmentisstimulating and experiencethatthisdiversityprovides. utilising theirrichnessofknowledge,ideas bring tothetableandarecommitted qualities andbackgroundthatourpeople We seek, respect andvaluethediverse HUMAN RESOURCES of activityhasincreasedsubstantially studio modelapproachandthe level realise thebenefitsofourIPfocus and year. OurMovies businesshasstartedto the numberofmoviereleasesduring the this year, mainlyduetotheincreasein in thepreviousyeartoRs.2,424million increase inrevenuesfromRs.721million The Moviessegmentreportedan business. in thelevelofactivitytelevision This wasprimarilyduetothegrowth the currentyear, anincreaseof31%. previous yeartoRs.1,006millionin increased fromRs.767millioninthe Revenues intheTelevision segment Interactive. our business–Television, Moviesand the scaleofallthreesegments the previousyear, duetoincreasein from Rs.1,749millionreportedin Rs. 2,593millionto4,342 consolidated operatingrevenuesof The Companyreportedagrowthin Revenues CONSOLIDATED RESULTS OFOPERATIONS FINANCIAL OVERVIEW

on saleoftheentireshareholding in (which includedRs.263million asprofit 116 millionasagainstRs.283 million Other Incomefortheyear was Rs. Other Income Ignition andIndiagames. primarily duetotheconsolidationof in thepreviousyeartoRs.956million, revenues of249%fromRs.274million segment reportedanincreasein year. Duringtheyear, theinteractive Limited, duringthethirdquarterof VFX businesswassoldtoPrime Focus part oftheyear. ThePost productionand Post productionandVFXbusinessfora segment alsoincludestheresultsfor 14, 2007toMarch31,2008.This Indiagames fortheperiodDecember for thefullyearandfinancialsof consolidated financialsofIgnition the Interactivesegmentincluded During theyear, theresultsof Exchange underAIM. following theIPOinLondon Stock along side. classification ofwhichisgiveninthetable animation talent,thebusinesswise long-term professionalassociatesand subsidiaries, had827fulltimeemployees, As atMarch31,2008,we,alongwithour us tothenextlevelofgrowth. and newbusinessinitiativesfortaking from aroundtheindustryforourexisting We havebeen abletoattractthebesttalent the moviebusinessoverseas. Indiagames andalsoduetogrowth in due totheconsolidationofIgnitionand during thecurrentyear. Thisisprimarily in thepreviousyeartoRs.258million increased by60%fromRs.161million The staffcostoftheCompanyhas Staff Costs compared to74%inthepreviousyear. of operatingrevenueswasat70% Company. Directcostasapercentage of increaseinthelevelactivity an increaseof135%,whichisaresult Rs. 1,299millioninthepreviousyear, fiscal areRs.3,047millionasagainst Direct costsincurredduringthecurrent Direct Costs Pte Limited)inthepreviousyear. Walt DisneyCompany(SouthEastAsia) Entertainment Limited(“UHEL”), toThe the associatecompany, UnitedHome TOTAL 827 Corporate 86 Interactive 631 Television 46 64 Motion Pictures 61 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

Other Expenses and resulted in interest costs being high in the previous year to Rs. 664 million in at Rs. 183 million compared to Rs. 73 the current year. This increase in profit is Other Expenses comprises administrative million during the previous year. The due to both the increase in the turnover overheads, provisions for doubtful debts/ advances, advertisement and Company received Rs. 123 million by and the increase in operating margins. way of interest income and the net interest business promotion expenses, general Provision for Taxation expenses and others. During the year, cost for the year was at Rs. 60 million. In other expenses were at Rs. 389 million the previous year, the Company earned During the year the total Provision for compared to Rs. 218 million in the interest income of Rs. 57 million against tax was Rs. (113) million as against Rs. previous year showing an increase an interest outgo of Rs. 73 million which (163) million during the previous year. of 78%. This was mainly due to the resulted in a net interest expense in the The provision for tax during the current consolidation of Ignition and Indiagames previous year of Rs. 16 million. year is negative primarily due to deferred tax assets being created on account of into the consolidated results of the Depreciation Company and the increase in the scale past consolidated losses in Ignition and of operations of the other businesses The depreciation charge for the current year its subsidiaries. more so movies business overseas. was Rs. 39 million as compared to Rs. 31 million in the previous year. This increase Proﬁt after Tax and Interest Cost was primarily due to the consolidation of Minority Interest During the year, the Company’s Ignition and Indiagames. The Profit after Tax and Minority Interest borrowings increased by Rs. 1,060 for the year was higher at Rs. 577 million million compared to previous year. The Proﬁt before Tax against Rs. 463 million in the previous year. increased borrowings was used to fund The Profit before Tax for the year This was primarily due to increase in the the expansion activities of the Company increased by 116% from Rs. 307 million revenues and better operating margins.

CONSOLIDATED FINANCIAL POSITION

SOURCES OF FUNDS the Promoters into equity shares. The by Rs. 1,060 million, up from Rs. consolidated Reserves and Surplus 1,637 million in the previous year to Rs. Share Capital, Revenues and increased from Rs. 1,547 million to Rs. 2,697 million in the current year. These Surplus 4,324 million, an increase of Rs. 2,777 increased borrowings were being used to The Equity Share Capital of the Company million. fuel the growth of the Company. increased from Rs. 229 million to Rs. Loan Funds 248 million due to the conversion of 1.9 million warrants earlier issued to The Company’s borrowings increased

UTILISATION OF FUNDS

Fixed Assets Goodwill on Consolidation Investments Gross Fixed Assets as on March 31, During the year the Company acquired The Company had investments of Rs. 171 2008 were at Rs. 485 million (excluding Indiagames Limited. The consolidation million at the start of the year. Investments Goodwill on consolidation) as against of this Company primarily resulted in an as on March 31, 2008 were negligible at Rs. 525 million on March 31, 2007. This increase in the Goodwill on Consolidation Rs. 1 million showing a decrease of Rs. reduction is gross fixed assets is primarily from Rs. 451 million in the previous year 170 million. The liquid investments that due to the sale of the post production to Rs. 708 million in the current year. were held by the Company at the start of and VFX business during the year. the financial year were liquidated during the course of the year and the proceeds were used to fund the expansion needs of the Company. businesses. Loans andadvanceshave of activityintheMoviesandInteractive was primarilyduetoincreaseinlevel 1,637 millioninthepreviousyear. This doubled toRs.4,056millionfrom the year, inventorieshavemorethan representing 97daysofsale.During Rs. 465millionasonMarch31,2007 representing 129daysofsaleasagainst 31, 2008wereatRs.1,538million Debtors (netofprovisions)asonMarch the previousyeartoRs.9,309million. the year, upfromRs.3,285millionin increased byRs.6,024millionduring Total currentassets,loansandadvances and Advances Current Assets,Loans during the year and due to an increase during theyearandduetoan increase an increaseinthenumberof releases 2,424 millionthisyear, mainlydueto 721 millioninthepreviousyear toRs. increase inrevenuesof236% from Rs. The Moviessegmentreportedan Motion Pictures the previousyear. million ascomparedtoRs.50in segment reportedaprofitofRs.183 to 18.2%duringthecurrentyear. The from about6.5%inthepreviousyear a substantialimprovementinmargins increase inrevenues,therewasalso the televisionbusiness.Alongwithan growth inthescaleofoperations during theyearprimarilydueto in thepreviousyeartoRs.1,006million increased by31%fromRs.767million Revenues fromthetelevisionsegment Television segments: categorised intothefollowingthree business oftheCompanywasbroadly During thefiscalyear2007-08, SEGMENTAL PERFORMANCE

the levelofactivity. liabilities resultingfromanincreasein to anincreaseinCreditorsandother of Rs.1,441million.Thisisprimarilydue Current Liabilitieshasshownanincrease Provisions Current Liabilitiesand on March31,2008. March 31,2007toRs.714millionas marginally fromRs.685millionason and Bankbalanceshaveincreased of activitytheotherbusinesses.Cash business andduetotheincreaseinlevel loans madetowardsthebroadcasting the year, primarilyduetoanincreasein increased byRs.2,501millionduring Rs. 114millionduringthecurrent fiscal. Rs. 91millionduringtheprevious yearto the interactivesegmentincreased from Ignition andIndiagames.Theprofit from primarily duetotheconsolidation of in thepreviousyeartoRs.956million, in revenuesof249%fromRs.274million interactive segmentreportedanincrease quarter ofthefiscal.Duringyear, the to Prime Focus Limited,duringthethird production andVFxbusinesswassold business forapartoftheyear. ThePost results forthePost productionandVFx 2008. Thissegmentalsoincludesthe December 14,2007toMarch31, financials ofIndiagamesfortheperiod financials ofIgnitionforthefullyearand Interactive segmentincludedconsolidated During theyear, theresultsof Interactive the previousyear. Rs. 37million[marginsof5.1%]during 19.8%] duringtheyearagainstaprofitof a profitofRs.480million[margins rights. TheMoviesbusinessreported in revenuesearnedfromsyndicationof

in Ignitionanditssubsidiary. being createdonaccountofpastlosses primarily duetothedeferredtaxassets higher deferredtaxprovisionhasaccrued 135 millioninthepreviousyear. The was atRs.260millioncomparedto Net deferredtaxassetsattheyearend Liability Net DeferredTax Asset/ previous year. scale ofoperationsascomparedtothe year primarilyduetoincreaseinthe by Rs.4,584millionovertheprevious Overall, netcurrentassetshaveincreased Motion Pictures Motion Pictures Contribution Contribution 55% Revenue 61% Profit Profit Interactive Interactive 15% Television 22% Television 23% 24% 63 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

CORPORATE DEVELOPMENTS DURING THE FISCAL AND DEVELOPMENTS POST BALANCE SHEET DATE

1. Acquisition of 3. Increase in Strategic 30 million) for 15% stake in UTV Global Indiagames, a Mumbai stake by Disney Broadcasting Limited, at an enterprise value of Rs. 7,930 million (USD 200 million) based mobile & online On February 16, 2008, we announced gaming company the increase in Disney’s stake from the e. Total Fund Infusion of approximately On December 14, 2007, we completed current 13.7% to 32.1% of the fully Rs. 13,140 million (~USD 331 million) our acquisition of Indiagames which diluted equity. The key terms of the This is by far, the largest strategic deal develops & publishes their games in transaction are given below: ever by a foreign investor in the Indian over 67 countries around the world a. Preferential allotment to Disney Media and Entertainment Industry. with more than 150 relationships with through subscription of 9,352,500 We have received necessary statutory wireless operators and channel partners. shares for investment of approximately approvals for Disney’s investment into the This acquisition has gives us a strong Rs. 8,050 million (~USD 203 million) Company and that leg of the transaction foothold in the rapidly growing mobile was consummated on May 09, 2008. b. The Promoter Group consolidated games industry, which in India, is growing The UGBL leg of the transaction is still its shareholding – investment through exponentially. awaiting regulatory approvals. subscription of 4,532,000 equity shares through 4,532,000 warrants for around 2. Sale of Post 4. Proposed foray into Production Business Rs. 3,900 million (~USD 98 million). This maintains Promoter shareholding Broadcasting In the third quarter of the fiscal, we sold equal to Disney at 32.1% on a fully After the success with HungamaTV, we are our interest in the Post Production and VFX diluted basis planning a foray into the broadcasting business to Prime Focus Limited With an space once again, this time by investing c. The transaction including the objective of focusing on businesses which into UGBL, which has already launched preferential allotment and the subsequent cater to the end consumer and allows us a bouquet of four channels i.e. Bindass, Open Offer will consummate at Rs. to be on the top end of the value chain, Bindass Movies, World Movies and UTV 860.79 per share we decided to exit this service oriented Movies. Simultaneous to our investment business. d. Additionally, Disney invests into UGBL, Disney will also invest in approximately Rs. 1,190 million (~USD UGBL for a 15% stake. English. UTV Movies features the best of English. UTVMoviesfeaturesthebestof films invariouslanguages,subtitled contemporary, commerciallysuccessful Hollywood fare.Thefocusison horror, Asianaction,besidesofcourse, award-winning familymovies,Japanese genres like,drama,suspense,thrillers, films, thechanneloffersarangeof with agreatlibraryofinternational within 5weeksoflaunch.Equipped the Top3 inEnglishentertainmentspace best ofinternationalmovies,brokeinto The World Movieschannel,featuringthe inHindi]. (‘bindassified’) [including thebestofHollywooddubbed moviesfromacrosstheglobe ‘bindass’ Movies isauniqueconceptwhichfeatures - comedy, actionandthrillers,Bindass is amixentertainmentacrossgenres at theagegroup15-34.WhileBindass Bindass andMoviesaretargeted Entertainment BrandforyoungIndia. Brand BindassisIndia’s first360 o UTVi.com, an internet portal is currently UTVi.com, aninternetportaliscurrently handheld platforms. News andCurrentAffairsfordigital/ Group’s synergiesinEntertainment, since endofApril‘08willleveragethe our100% subsidiary in India.UNML, are stillatnascentstagesofdevelopment businesses likeMobileandWeb which We haverecently forayedintohorizon Mobile) Media (Web and ForayintoNew 5. channels sincelaunch. connectivity andreachtoallofthese ground upbyprovidingplacement, distribution platformforallitschannels UGBL hasalsosuccessfullybuiltitsown much more. the scenefootage,deletedscenesand blockbusters, exclusiveaccesstobehind Hindi moviefare,completewiththelatest

2008, platform wasourtentpoleproductionof mobile space.Thefirstventureonthis is aggressivelyacquiringcontentforthe arrangements withtelcosinIndia,UNML Having thebestrevenuesharedistribution CXOLinux.com: B2Bforenterprises d. buyers CXOToday.com: B2Bforenterprise c. chain Channeltimes.com:B2Bforsupply b. Techtree.com: B2CPortal a. four portals: focused businessmodelconsistingof inIndiawhichhasanIT-info-mediary recently acquiredITNation,atechnology Electronics, Travel, etc.whereithas businesses likeGadgets,Consumer exploring othersegmentsbeyondGroup a teamstrengthof26,itisindependently With operated andmanagedbyUNML. JODHHA AKBAR . 65 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

RISK FACTORS

1. We operate in a highly competitive Certain factors could adversely affect space. We believe that there are risk environment that is subject to our business including, but not limited factors inherent to such a new venture, innovations, changes and varying levels to escalating costs of the movies we such as competitive risk and the risk of of resources available to each player in produce and delays in movie production unpredictability in viewer reactions. each segment of business. schedules. 8. The success of our proposed 2. Certain parts of our business 5. Most of the activity undertaken broadcasting and airtime sales like production of television content by us is creativity driven and our long- businesses depends on the amount and dubbing are highly fragmented term profitability is dependent on our of income we earn from advertising, with competition ranging from other ability to attract and retain creative and which could decline due to a variety organised large players to smaller technical talent. of factors including, but not limited to, unorganised ones. 6. Our business is significantly the popularity and commercial success of our programs, the state of our 3. Our business depends upon us regulated and segments of media and competitors or even general economic creating a successful product line. entertainment changes in regulations conditions. Acceptance of our films, television could adversely affect our operations. programming and games by the public 7. We are proposing to enter into the 9. The broadcasting business is is difficult to predict, which could Broadcasting space where we will be subject to extensive regulation by the lead to fluctuations in revenues and competing not only with established government of India and our failure profitability. players having deep pockets but also to comply with such regulations could have an adverse effect on our business. 4. Our business of film production and recent entrants and a whole host of distribution involves high level of risks. new players planning a foray into the 67 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

FINANCIAL SECTION

68 Annual Report 2007-08 Annual Report . We didnotauditthefinancialstatementsofsubsidiariesandjoint 3. We conductedourauditinaccordancewiththeauditing 2. We haveaudited(referpara3)theattachedconsolidated 1. Limited anditsSubsidiaries the ConsolidatedFinancialStatementofUTVSoftwareCommunications To theBoardofDirectorsUTVSoftwareCommunicationsLimitedon AUDITORS’ REPORT reports ofotherauditors. of thesesubsidiariesandjointventuresisbasedsolelyonthe opinion, insofarasitrelatestotheamountsincludedrespect auditors whosereportshavebeenfurnishedtous,andour the subsidiariesandjointventureshavebeenauditedbyother statements. Thesefinancialstatementsandotherinformationof ended onthatdateasconsideredintheconsolidatedfinancial and netcashinflowamountingtoRs.45.6millionfortheyear and theGroup’s shareoftotalrevenuesRs.2,948.2million of totalassetsRs.9,979.1millionasatMarch31,2008 ventures, whosefinancialstatementsreflecttheGroup’s share reasonable basisforouropinion. statement presentation.We believethatourauditprovidesa by management,aswellevaluatingtheoverallfinancial the accountingprinciplesusedandsignificantestimatesmade in thefinancialstatements.Anauditalsoincludesassessing test basis,evidencesupportingtheamountsanddisclosures material misstatements.Anauditincludesexamining, ona assurance aboutwhetherthefinancialstatementsarefreeof that weplanandperformtheaudittoobtainreasonable standards generallyacceptedinIndia.Thoserequire audit. express onopinionthesefinancialstatementsbasedour information regardingcomponents.Ourresponsibilityisto the basisofseparatefinancialstatementsandother management andhavebeenpreparedbytheon are theresponsibilityofUTVSoftwareCommunicationsLimited’s reference tothisreport.Theseconsolidatedfinancialstatements on thatdateannexedthereto,whichwehavesignedunder and theconsolidatedCashFlowStatementforyearended 31, 2008,andalsotheconsolidatedProfit andLoss Account its subsidiariesandjointventures(theGroup),asatMarch Balance SheetofUTVSoftwareCommunicationsLimitedand Price Waterhouse &Co. For andonbehalfof MembershipNo.F-55913 Mumbai, June16,2008. c InthecaseofconsolidatedCashFlowStatement, (c) b InthecaseofconsolidatedProfit andLoss Account, (b) a InthecaseofconsolidatedBalanceSheet,state (a) Based onourauditandconsiderationofthereportsother 5. We reportthattheconsolidatedfinancialstatementshave 4. generally acceptedinIndia: a trueandfairviewinconformitywiththeaccountingprinciples given tous,theattachedconsolidatedfinancialstatementsgive the bestofourinformationandaccordingtoexplanation financial informationofthecomponents,inouropinionandto auditors onseparatefinancialstatementsandtheother of India. Joint Ventures” issuedbytheInstituteofCharteredAccountants and AccountingStandard27,“Financial Reporting ofInterestsin Accounting Standard21,“ConsolidatedFinancial Statements” Limited’s managementinaccordancewiththerequirementsof been preparedbytheUTVSoftwareCommunications Group fortheyearendedonthatdate. the cashflowsofUTVSoftwareCommunicationsLimited Group fortheyearendedonthatdate;and of theprofitUTVSoftwareCommunicationsLimited as atMarch31,2008; of affairsUTVSoftwareCommunicationsLimitedGroup Chartered Accountants Partner Partha Ghosh

69 Annual Report 2007- 08 SOFTWARE COMMUNICATIONS LIMITED

CONSOLIDATED BALANCE SHEET as at March 31, 2008

Rs. in Million

Schedule As at As at No. March 31, 2008 March 31, 2007

SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 248.43 228.94 Advance Against Warrants 2 - 37.53 Reserves and Surplus 3 4,323.77 4,572.20 1,546.74 1,813.21 Minority Interest 997.49 74.08 Loan Funds Secured Loans 4 2,479.41 1,637.20 Unsecured Loans 5 218.04 - TOTAL 8,267.14 3,524.49 APPLICATION OF FUNDS Fixed Assets 6 Gross Block 1,192.91 976.27 Less : Accumulated Depreciation 129.40 114.80 Net Block 1,063.51 861.47 Capital Work In Progress 17.95 1,081.46 16.02 877.49 Investments 7 1.36 171.48 Deferred Tax Assets (Net) 259.64 134.63 [Refer Note C 6 (a) of Sch.21] Current Assets, Loans and Advances Inventories 8 4,056.12 1,637.00 70 Sundry Debtors 9 1538.39 464.95 Cash and Bank Balances 10 714.15 684.84 Other Current Assets 11 1.74 0.75 Loans and Advances 12 2,999.05 497.58 9,309.45 3,285.13 Less : Current Liabilities and Provisions Current Liabilities 13 2,336.47 938.61 Annual Report 2007-08 Annual Report Provisions 14 48.30 5.63 2,384.77 944.24 Net Current Assets 6,924.68 2,340.89 TOTAL 8,267.14 3,524.49 NOTES TO THE FINANCIAL STATEMENTS 21 Schedules referred to above and notes attached thereto form an integral part of the Consolidated Balance Sheet.

This is the Consolidated Balance Sheet referred to in our report of even date. Partha Ghosh G. Chandrashekar Rohinton Screwvala Partner Chief Financial Officer CMD & Chief Executive Officer Membership No. F-55913 For and on behalf of Price Waterhouse & Co. Mohd. Sajid Ali Sanjaya Kulkarni Chartered Accountants Company Secretary Director Place : Mumbai Place : Mumbai Date : June 16, 2008 Date : June 16, 2008 lc ubi Place: Mumbai Date:June16,2008 Date :June16,2008 Place : Mumbai hree conat CmaySceay Director CMD&ChiefExecutiveOfficer Rohinton Screwvala ChiefFinancial Officer CompanySecretary G. Chandrashekar Chartered Accountants Price Waterhouse &Co. For andonbehalfof Membership No.F-55913 Partner Partha Ghosh This istheConsolidatedProfit andLoss Accountreferredtoinourreportofevendate.

urn 2.6 2.4 27.44 292.15 14.87 (21.82) 31.36 1,677.82 16.10 2,032.30 20.86 672.04 (8.47) (7.67) 38.91 3,694.31 59.86 160.59 218.10 1,299.13 4,457.45 283.23 -MatCreditEntitlement - 258.36 20 388.79 Previous Year Rs.0.43Mio) -Current 3,047.16 (Includes Wealth Tax Rs.0.52Mio, 1,749.07 ContinuingOperations Less :Provision 18 forTaxation DiscontinuedOperations 19 17 107.05 Consists of: PROFIT BEFORETAX Less :Depreciation PROFIT BEFOREDEPRECIATION &TAX Less :Interest(net) 16 4,341.50 DEPRECIATION ANDTAX PROFIT BEFOREINTEREST, 15 OtherExpenses StaffCost DirectCost EXPENDITURE Profit onSaleofPost Production Division OtherIncome SalesandServices(net) INCOME CONSOLIDATED PROFIT&LOSS ACCOUNT 1468 982.12 8.03 36.59 57.24 7.12 518.85 1,456.84 455.67 14.72 5.81 - 34.20 (163.37) 200.32 880.26 784.57 (7.67) (173.07) 4.08 (112.53) Schedules referredtoaboveandnotesattachedtheretoformanintegral partoftheConsolidatedProfit andLoss Account NOTES TO THEFINANCIALSTATEMENTS (129.10) Diluted Basic (Refer note C9ofSch.21) Earnings Per ShareofRs.10/-each BALANCE CARRIEDTO BALANCESHEET Distribution Tax thereon 4.18 Proposed DividendonEquityShares Transfer toGeneralReserve Balance Profit broughtforward PROFIT AFTERMINORITYINTEREST Less :MinorityInterest Continuing Operations Discontinued Operations Consists of: -DeferredTax PROFIT BEFOREMINORITYINTEREST Rs.Nil,Previous Year Rs1.13Mio) ended March31,2008 (Refer NoteC11ofSch.21) 25.01 21.63 Fringe BenefitTax (includingforPrior Years 25.01 21.63

od ai l SanjayaKulkarni Mohd.SajidAli 643 307.02 664.37

89 - 8.90 565 463.27 576.58 769 470.39 776.90 2 21 732 338.38 703.28 1468 880.26 1,416.83

Schedule No. 731 354.48 763.14

March 31,2008 Year Ended

March 31,2007 for theyear Year Ended .

Rs. inMillion

71 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

CONSOLIDATED CASH FLOW Statement for the year ended March 31, 2008 Rs. in Million Particulars March 31, 2008 March 31, 2007 A CASH FLOW FROM OPERATING ACTIVITIES: Net Profit Before Tax 664.37 307.02 Adjustments for: Depreciation 38.91 31.36 Profit on Sale of Fixed Assets / Investments ( Net ) (85.32) (265.08) Interest Expenses 183.27 72.80 Interest Income (123.41) (56.70) Bad Debts Written off 1.52 0.68 Amortisation of Movie Copyrights 261.51 10.73 Provision for Doubtful Debts 16.60 0.05 Provision for Doubtful Advances - 77.81 Provision No Longer Required Written Back (5.58) (11.13) Unrealised Foreign Exchange (Gain)/Loss (1.62) (1.93) Provision for Employee Retirement Benefits 7.59 0.19 Dividend Income (1.62) (2.89) Operating Proﬁt Before Working Capital Changes 956.22 162.91 Adjustments for changes in Working Capital - (Increase)/ Decrease in Sundry Debtors (998.17) 125.50 - (Increase)/ Decrease in Other Receivables (806.12) 261.19 - (Increase)/Decrease in Inventories (2,664.11) (1,124.74) - Increase in Trade and Other Payables 1,331.09 6.05 72 Cash Used in Operations (2,181.09) (569.09) - Taxes Paid (including Tax Deducted at Source) (125.48) (54.14) Net Cash Generated Used in Operating Activities (A) (2,306.57) (623.23) Consists of: Cash generated used in Continuing operations (2,229.54) (612.70) Cash generated by/(used) in Discontinued operations (77.03) (10.53)

Annual Report 2007-08 Annual Report B CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (86.66) (245.19) Proceeds from Sale of Fixed Assets 144.99 - Proceeds from Sale of Investments ( Net ) 517.67 1,115.08 (Purchase)/ Sale of Investments (271.14) (819.75) Advances to Related Companies (1,550.10) - Interest Received (Revenue) 122.42 56.04 Investment Made in Subsidiary company (343.87) (614.89) Dividend Received 2.85 1.67 Net Cash Used In Investing Activities (B) (1,463.84) (507.04) Consists of: Cash used in Continuing operations (1,593.64) (487.93) Cash generated by/(used) in Discontinued operations 129.80 (19.11) lc ubi Place: Mumbai Date:June16,2008 Date :June16,2008 Place : Mumbai hree conat CmaySceay Director CMD&ChiefExecutiveOfficer Rohinton Screwvala ChiefFinancial Officer CompanySecretary G. Chandrashekar Chartered Accountants Price Waterhouse &Co. For andonbehalfof Membership No.F-55913 Partner Partha Ghosh This istheConsolidatedCashFlowStatementreferredtoinourreport ofevendate. Previous yearsfigureshavebeenregroupedwherevernecessary. CashandcashequivalentsincludesRs.0.06Mio(PY0.32Mio) (Refer Sch.13)whicharenotavailableforusebytheComp 4 Figures inbracketsindicatecashoutgo. 3 2 TheaboveCashFlowStatementhasbeenpreparedundertheIndirectMethodsetoutinAccounting Standard-3issuedbytheIns 1 Notes: CONSOLIDATED CASHFLOW March 31,2008 Particulars

neetpi aiaie (65) (14.73) 1,124.01 (16.52) 3,749.01 NetCashGeneratedFrom FinancingActivities(C) DistributionTax Paid Minority Interest Dividend Interestpaid-Capitalised Interest Paid Paid

-Payment -Receipts oeg urnyTasainRsre 5.7 (30.75) (50.97) 211.80 896.08 (Previous Year Rs.1.55Mio)onreinstatementofForeign CurrencyLoan] Payments -Receipts [ExcludesExchangeFluctuationofRs.NIL Foreign CurrencyTranslation Reserve dac arn oe eevdicuigPeim 37.53 - AdvancewarrantmoneyreceivedincludingPremium su fEut hrs 2224 654.50 2,272.41 IssueofEquityShares ShareIssueExpenses

aac ihShdldBns 0.1 616.81 709.41 684.84 68.03 714.15 625.10 4.74 50.71 Balance with ScheduledBanks Cash,Cheques&Drafts(inhand)andRemittances inTransit Cashandcashequivalentscomprise ClosingCashandEquivalents ofSubsidiary(Refer NoteC1(a)and(b)ofSch.21) CashandEquivalentsreceivedpursuanttoPurchase CASHFLOW FROMFINANCINGACTIVITIES: C EQUIVALENTS (A+BC) NETINCREASE/(DECREASE)INCASHAND D Chartered AccountantsofIndia. Cash usedinDiscontinuedoperations Proceeds fromCashCredit Consists of: Cash generatedfromContinuingoperations Proceeds fromShorttermBorrowings Proceeds fromLongTerm Borrowings Opening CashandEquivalents

od ai l SanjayaKulkarni Mohd.SajidAli (Contd.) (Net) (408.42) 671.72 (14) (6.26) (21.40) (57.35) (29.16)

8.4 66.00 684.84 ,0.6 1,153.17 3,806.36

Statement fortheyearended March 31,2008 For andonbehalfoftheBoardDirectors (8.8 (77.44) (180.48)

1.5 684.84 714.15 691.10 735.55 6.3 0.25 666.13 7.4 - 571.04 (.6 (57.06) (0.26) (8.03) - - (115.00) (146.42) - (2.36) -

March 31,2007 Rs. inMillion any. titute of

73 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULES forming part of the Consolidated Financial Statements

Rs. in Million

As at As at March 31, 2008 March 31, 2007

1 SHARE CAPITAL AUTHORISED 45,000,000 Equity Shares of Rs.10/- each 450.00 260.00 (Previous Year 26,000,000 Equity Shares of Rs.10/- each) (Refer Note C 4 (a) Sch. 21) ISSUED AND SUBSCRIBED 24,842,968 Equity Shares of Rs. 10/- each fully paid 248.43 228.94 (Previous Year 22,893,608 Equity Shares of Rs.10/- each fully paid) (Refer Note C 4 (b) Sch. 21) TOTAL 248.43 228.94 Notes: 1) 6,705,882 Equity Shares of Rs.10/- each were issued without consideration in cash as Bonus Shares by capitalisation of Share Premium in the F.Y. 1995-96 to the then existing Shareholders of the Company. 2) 4,664,824 Equity Shares of Rs.5/- each (2,332,412 Equity Shares of Rs.10/- each) were issued without consideration in cash to various shareholders under a share swap arrangement in the F.Y. 2000-01 as part of consolidation exercise carried out in the said year. 3) 182,932 Equity Shares of Rs.5/- each (91,466 Equity Shares of Rs.10/- each) were issued to shareholders of Western Outdoor Media Technologies Limited as per the Scheme of Arrangement for demerger of its studio division to the Company in F.Y. 2003-04.

2 ADVANCE AGAINST WARRANTS As per Last Balance Sheet 37.53 - Advance warrant money received including Premium - 37.53 Less: Transfer to Share Capital Account (1.95) - Less: Transfer to Securities Premium Account (35.58) - (Refer Note C 4 (b) of Sch. 21) 74 TOTAL - 37.53

3 RESERVES AND SURPLUS SECURITIES PREMIUM ACCOUNT As per last Balance Sheet 652.88 616.45 Add : Premium on shares issued on a preferential basis - 620.50 Add: Arising on account of conversion of warrants [Refer Note C 4 (b) of Sch. 21] 355.76 - 1,008.64 1,236.95 Annual Report 2007-08 Annual Report Less: Share Issue Expenses - 2.36 1,008.64 1,234.59 Less: Write Down as per Scheme of arrangement - 581.71 1,008.64 652.88 CAPITAL RESERVE Reserve arising due to change in shareholding of subsidiaries 1,934.69 -

GENERAL RESERVE As per last Balance Sheet 44.23 7.64 Add: Credit on account of transitional provision of AS-15 (Refer Note 13 of Sch. 21) 3.27 - Add : Transferred from Profit and Loss Account - 36.59 47.50 44.23 Foreign Currency Translation Reserve (83.89) (30.63)

PROFIT & LOSS ACCOUNT As per annexed Profit and Loss Account 1,416.83 880.26 TOTAL 4,323.77 1,546.74

(Contd.)

hr emLas-Ohrta ak 1.4 - 218.04 ShortTerm Loans -OtherthanBanks SECUREDLOANS 4 SCHEDULES UNSECUREDLOANS 5 tes 04 68.60 3.72 90.46 298.32 1,637.20 1,221.56 2,479.41 2.28 2 45.00 1,175.53 813.14 2 1 398.00 1 1 Others TOTAL Vehicle Loans From Banks Term Loans From Banks Working CapitalDemandLoans From Banks CashCreditFrom Banks eil on:R .1Mo -Others:Rs29.30Mio -Vehicle Loans: Rs1.31Mio -Term Loans: Rs1,116.21Mio -Working CapitalDemandLoans: Rs398Mio. Oftheabove,amountrepayablewithinoneyearareasfollows: 3. Securedagainstthehypothecationofunderlyingfixedassets. 2 Cashcredit,Working CapitalandTerm Loans frombanksaresecuredbyhypothecationoffixedassets,inventories,bookdebt 1. Notes : OA 1.4 - 218.04 TOTAL

pledge ofsharesheldbyapromoter/promotercompany, whichhavebeenrepaidfullysubsequenttotheBalanceSheetdate. personal guaranteeofadirectortheCompany. Outofthetermloansabove,amountingtoRs.600Mioarefurthersecure Notes formingpartoftheConsolidatedFinancialStatements

March 31,2008 As at March 31,2007 Rs. inMillion s andthe As at d by

75 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULES forming part of the Consolidated Financial Statements (Contd.) .45 2007 29.23 March 31, 31, March As at As 1 861.47 (B) (A-B) (B) (A-B) 2008 As at As at March 31, March 31,

revious Year - Rs. 3.72 Mio]. - Rs. 3.72 Mio]. revious Year Limited (Refer Note C 1 (a) of Sch. 21). Limited (Refer As at Adjustments on Assets Year Year Assets on Adjustments at As April 1, over Taken (Refer Opening Consolidation Depreciation For the Deduction the Depreciation For Consolidation Opening 2007 (Refer Note Note Note Note (Refer 2007

76 (A) 2008 As at March 31, Annual Report 2007-08 Annual Report 529.41 (0.01) 52.56 758.79 364.48 976.27 246.36 (0.01) 41.31 31.36 204.22 114.80 861.47 (Refer Note B (2), (11), (12) of Schedule 21) (Refer Rs. in Million 450.83 (27.62) - 284.66 - 707.87 ------707.87 450.83

COST / AMORTISATION DEPRECIATION NET BLOCK b) Building is hypothecated to Standard Chartered Bank for the term loan taken acquisition of said building. c) assets and accumulated depreciation represents net fixed of Rs 19.22 Mio acquired on acquisition Indiagames Fixed d) Game Development Costs includes game costing Rs 7.37 Mio which are under development phase. e) Depreciation capitalised during the year amounts to Rs. 13.1 Mio. f) Goodwill on Consolidation is tested for impairment at each year end. Particulars Opening Consolidation Additions Additions Deductions Additions Additions Consolidation ASSETS 6 FIXED Opening Particulars Goodwill on Consolidation Notes: a) includes value of vehicles acquired under loan from banks amounting to Rs 2.28 Mio [ P The Net Book value of Motor Vehicles April 1, 2007 Acquisition Computer Software 23.67 - - 9.90 0.89 32.68 8.08 - - 4.43 0.31 12.20 20.48 15.59 20.48 12.20 0.31 4.43 8.08 - 32.68 0.89 9.90 Software 23.67 - Intangible Assets Computer Note: d below) (Refer As at Adjustments on on Adjustments at As Note (Refer Game Development Cost - - 10.85 2.79 c below) - 13.64 - - 1.64 2.09 - c below) 3.73 e below) 9.91 - (Refer Note: f below) (Refer Tangible Assets Tangible Leasehold Improvements Leasehold 27.14 (0.88) 3.01 20.56 16.92 32.91 9.69 (0.88) 2.88 3.31 10.67 4.33 28.58 17 Building Note: b below) (Refer 122.17 - - 1.17 - 123.34 0.02 - - 2.01 - 2.03 121.31 122.15 Plant & Machinery 185.67 - - 4.30 132.24 57.73 38.23 - - 9.22 17.33 30.12 27.61 147.44 Motor Vehicles Motor Vehicles 14.92 (0.09) - 0.86 2.00 13.69 4.99 (0.09) - 1.20 0.69 5.41 8.28 9.93 Furniture & Fixtures & Fixtures Furniture 68.01 (3.06) 4.43 53.28 32.12 90.54 38.78 (2.05) 2.71 14.22 20.74 32.92 57.62 Computers Office Equipments Note: a below) (Refer 11.03 72.83 (0.03) - 11.09 7.16 17.98 5.28 1.96 2.87 99.91 20.60 13.82 1.19 (0.02) - 7.28 14.41 2.81 1.12 0.76 34.73 1.19 65.18 3.93 59.01 16.67 9.84 Capital Work in Progress, in Progress, Capital Work at cost (including Capital Advances) 17.95 16.02 Grand Total Grand Total 976.27 (31.68) 36.54 400.78 189.00 1,192.91 114.80 (3.04) 17.32 52.01 51.69 129.40 1,063.5 Total 1,081.46 877.49 1,081.46 Total Year Previous OA .6 171.48 1.36 * AmountlessthanRs10,000 soldduringtheyear-15,283,733) TOTAL accumulatedduringtheyear-161,722,Units (Unitspurchasedduringtheyear-Nil,Units b B MOFPSre urel lnD 1,2,1 s 0 - 151.22 - Rs.10 15,122,011 - ABNAMROFTPSeries4QuarterlyPlanD (b) Sbiir opne Uqoe) - 0.50 0.85 0.50 Rs.10 Rs.2 0.01 - 62,500 0.01 121,145 62,500 [Refer NoteC1(a)ofSch.21andno.(b)below] 0.001USD Indiagames Limited SubsidiaryCompanies(Unquoted) 125,000 EquitySharesofCompanies a) 125,000 Radaan MediaworksIndiaLimited Current Investment,NonTrade (fullypaid) Quoted: Equity SharesofCompanies HomlandNetworkCorporation Long Term, Trade (fullypaid) Unquoted Preference SharesofCompanies oln ewr oprto 5,0 3200 001UD - -* -* 0.001USD 352,000 352,000 HomlandNetworkCorporation ) Ohr Uqoe) - - Rs.10 600,000 600,000 CompanyLimited UnitedTeleshopping andMarketing Others(Unquoted) b) ) Sbiir opn Uqoe) 19.75 - Rs.10 1,975,100 - (Refer Note-A(ii)ofSch.21) GenxEntertainmentLimited SubsidiaryCompany(Unquoted) a) Equity SharesofCompanies Long Term, Non-Trade andOthers INVESTMENTS

(Contd.) 7 INVESTMENTS SCHEDULES

(ee oeB3o ceue2) Rs.inMillion (Refer NoteB3ofSchedule21)

formingpartoftheConsolidatedFinancialStatements

Nos. asat March 31, 2008

March 31, Nos. asat 2007

Face Value

March 31, As at 2008

March 31, 2007 As at

77 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULES forming part of the Consolidated Financial Statements (Contd.)

7 INVESTMENTS (Refer Note B 3 of Schedule 21)(Contd.) Rs. in Million

Cost Market value Cost Market value March 31, March 31, March 31, March 31, 2008 2008 2007 2007 Aggregate Value of Quoted Investments 0.50 0.38 0.50 0.28 Aggregate Value of Unquoted Investments 0.86 - 170.98 - Total 1.36 171.48

Details of Current Investments bought and sold during the year Name of the Fund 2007-08 2007-08 2006-07 2006-07 Purchase of Units Redemption of Units Purchase of Units Redemption of Units No. of Rs. in No. of Rs. in No. of Rs. in No. of Rs. in units Million units Million units Million units Million Tata Liquidity Management Fund - Daily Dividend* - - - - 49,887 50.00 50,008 50.12 UTI Liquid Cash Plan Institutional Daily Income Option Reinvestment* - - - - 49,046 50.00 49,172 50.13 HDFC Cash Management - Saving plan Daily Dividend Reinvestment* - - - - 4,700,839 50.00 4,712,519 50.12 Prud ICICI FMP Series 32 - One month Plan D - Retail Dividend* - - - - 25,000,000 250.00 25,129,250 251.29 DBS Chola FMP Series 6 (Qtrly Plan - 2 ) - Dividend - - - - 25,000,000 250.00 25,000,000 251.63 Emerging M. Global - UBS 5,000 199.85 5,000 270.29 - - - - Total 5,000 199.85 5,000 270.29 54,799,772 650.00 54,940,949 653.29 78 * including dividend reinvestments Notes: (a) The Company has partly pledged its investment in UTV Motion Pictures PLC to Standard Chartered Bank - Mauritius (13.60 Mio shares) and Axis Bank, Hongkong (9.08 Mio shares). Same has been released in May 2008. (b) The Company acquired 85,429 equity shares of Rs 10 each of Indiagames Limited on December 14, 2007. During the year, Indiagames Limited issued 35,716 bonus equity shares to the Company. Accordingly, the Company holds 121,145 equity shares of Indiagames Limited as on the Balance Sheet date. The Company is holding the shares of Indiagames Limited for the benefit of the Management Shareholders.

Annual Report 2007-08 Annual Report Rs. in Million As at As at March 31, 2008 March 31, 2007

8 INVENTORIES (Refer Note B 4 of Schedule 21) (As certified by the Management, at lower of cost or net realisable value) Raw Stock- Tapes and Films 4.92 4.68 Unamortised cost of Completed - Animation Programmes 114.90 100.46 - Movie Copyrights 1,262.49 246.38 Gaming Programmes 67.26 11.53 Unutilised Free Commercial Time 61.91 67.34 Projects in Progress 417.89 102.28 Films Under Production 2,126.75 1,104.33 TOTAL 4,056.12 1,637.00 OA 1.5 684.84 714.15 TOTAL -Ohr 01 0.11 0.11 -Others OA 1583 464.95 287.44 1,538.39 28.85 1,374.23 48.28 TOTAL Unbilled urn con 1.2 601.72 14.98 516.32 192.98 -Fixed DepositAccount -CurrentAccount ild 1359 258.59 181.04 1,325.95 184.29 177.51 3.53 164.16 20.13 Billed ii.OtherDebts-consideredgood Less :Provision fordoubtfuldebts i Blnewt ak BalancewithBanks Previous Year Rs.67.00Mio] ii. [IncludeschequesonhandRs.3.57Mio, OA .4 0.75 1.74 TOTAL ild 1.63 3.53 175.88 - 20.13 164.16 -Unbilledconsideredgood -considereddoubtful -consideredgood Billed i.OverSixmonths (Unsecured&consideredgoodunlessotherwisestated) (Contd.) . ahadceuso ad 47 68.03 4.74 Cashandchequesonhand i. neetRcial nFxdDpst n tes 17 0.75 1.74 InterestReceivable onFixed DepositsandOthers 11 OTHER CURRENTASSETS 11 CASH ANDBANKBALANCES 10 SUNDRYDEBTORS 9 SCHEDULES

formingpartoftheConsolidatedFinancialStatements

March 31,2008 As at

March 31,2007 As at Rs. inMillion 79 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULES forming part of the Consolidated Financial Statements (Contd.)

Rs. in Million As at As at March 31, 2008 March 31, 2007 12 LOANS AND ADVANCES

(Unsecured and considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received

- Advance to UTV Employees Welfare Trust 16.07 14.97

- Advance to Suppliers

- considered good 801.37 205.40

- considered doubtful 84.53 84.53

885.90 289.93

Less : Provision for Doubtful Advances 84.53 801.37 84.53 205.40

- Others 347.41 138.64

(Includes Rs. 0.81 Mio [Previous Year Rs. 1.27 Mio] due from the directors of the Company, Maximum amount outstanding during the year Rs. 2.27 Mio [Previous Year Rs. 2.06 Mio] )

Mat Credit Entitlement 34.57 26.09

Advances

- To Subsidiary Companies (Refer Note C 5 of Sch. 21) - 3.97

- To Others 1,560.35 0.14

Advance Income Tax Less Provision 168.81 68.23

80 [Provision for Income Tax Current Year Rs. 20.86 Mio, Previous Year Rs. 65.24 Mio]

Other Deposits 70.47 40.14

TOTAL 2,999.05 497.58

13 CURRENT LIABILITIES

Annual Report 2007-08 Annual Report Sundry Creditors for Capital Goods, Materials and Expenses

- Micro and Small Enterprises - -

- Others 1,046.23 481.68

Advance from Customers 384.67 125.23

Advance Billings 0.75 5.95

Unpaid Dividend * 0.06 0.32

Interest Accrued But Not Due on Loans 1.11 3.90

Other Liabilities and Accruals 903.65 321.53

TOTAL 2,336.47 938.61

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

OA 4.0 5.63 48.30 5.20 0.43 7.72 0.57 TOTAL Provision forEmployeesRetirement Benefits Provision forWealth Tax (netofadvances) 3844 1,591.52 3,824.42 58.75 20.34 12.62 10.73 55.98 188.03 53.00 410.28 8.82 261.51 269.49 237.48 21.28 689.34 49.36 327.45 66.45 337.47 1,883.39 121.15 55.22 277.80 MiscellaneousExpenses AmortisationofMovieCopyrights Costof Games Sold Advertisement&Publicity Travelling Expenses Post Production Charges Consumption ofRawstock ofVideoTapes andFilms Footage Expenses/OtherAcquisitionCost Equipment Hire,Sets,CostumesandVenue Hire CastandTechnicians’ Fees andCommission Telecast Fees OA ,4.6 1,299.13 292.39 3,047.16 777.26 TOTAL Movierights Towards Free CommercialTime andUnexploited (Contd.) 17 DIRECT COST 17 OTHER INCOME 16 SALES ANDSERVICES(NET) 15 PROVISIONS 14 SCHEDULES

OA ,4.0 1,749.07 4,341.50 1,749.07 4,341.50 TOTAL SalesandServiceRevenues (Net) OA 0.5 283.23 107.05 3.43 265.08 0.70 12.82 77.64 11.13 2.89 9.39 5.58 1.62 TOTAL GainonForeign ExchangeFluctuation(Net) Profit onSaleofInvestments MiscellaneousIncome DividendfromCurrentandNonTrade Investments Provision NoLonger Required Written Back rvso o a nPooe iied 58 - - 5.81 34.20 Provision fortaxonProposed Dividend Proposed DividendonEquityShares

(Refer NoteB8ofSchedule21) Less: Amountsinventorised

formingpartoftheConsolidatedFinancialStatements

March 31,2008 March 31,2008 Year ended As at

March 31,2007 March 31,2007 Year ended As at Rs. inMillion Rs. inMillion 81 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULES forming part of the Consolidated Financial Statements (Contd.)

Rs. in Million Year ended Year ended 18 STAFF COST March 31, 2008 March 31, 2007 Salaries, Wages and Bonus 223.80 150.41 Contribution to Gratuity, Provident & other Funds 17.91 4.29 Staff Welfare 16.65 5.89 TOTAL 258.36 160.59

19 OTHER EXPENSES Rent - Premises 53.37 34.53 Repairs and Maintenance - Plant and Machinery 0.33 2.00 Others 28.43 28.76 9.72 11.72 Rates & Taxes 7.19 8.67 Insurance 6.68 4.97 Electricity Charges 8.20 7.24 Travelling & Conveyance Expenses 35.29 11.64 Communication & Postage Expenses 18.73 7.47 Provision for Doubtful Debts 16.60 0.05 Bad Debts Written Off 1.52 0.68 Advertisement & Business Promotion Expenses 28.08 6.42 Loss on Sale on Fixed Assets (Net) 1.22 0.01 Provision for Doubtful Advances - 77.81 82 Directors’ Sitting Fees 3.67 0.23 Miscellaneous Expenses 179.48 46.66 TOTAL 388.79 218.10

20 INTEREST (NET) Interest on Loans from Banks Annual Report 2007-08 Annual Report -Fixed Loans 38.93 21.81 -Others 138.54 47.08 Interest on Others 5.80 183.27 3.91 72.80 Less : Interest Income : On Fixed Deposits and Others 123.41 56.70 [Tax Deducted at Source Rs. 13.14 Mio Previous year - Rs 12.09 Mio] TOTAL 59.86 16.10 Accountants Chartered 2007 (JointVenture withMs.SmritiIrani) Accountants Chartered Nisar&Kumar, - 50% India December 6, 2007 SmritiIraniTelevision Limited (JointVenture withMr. SekharSuman) aur 4 08 20 Chartered Accountants Nisar&Kumar, - 50% India 2007 August 17, Windmill EntertainmentLimited January 24, 2008) racsigLmtdo ue2,20) Accountants Chartered Nisar&Kumar, - 100% India July9, 2007 UTVMoviesLimited(subsidiary w.e.f Broadcasting LimitedonJune29,2007) (ceasedtobeasubsidiary ofUTV (Mauritius), Chartered Accountants Accountants Morison Nisar&Kumar, Public 98.75% Nisar&Kumar, - 98.75% - India India February 19, December22, 2006 2004 GenxEntertainment Limited (ceased to beasubsidiaryonJanuary 24, UTVBroadcastingLimited 2008) (subsidiaryofUMPPLC) Accountants& Co.,Chartered KPMGAudit Accountants - LLC Waterhouse & Auditors Registered 76.82% KPMG/ IsleofMan 100% Price March27, - 76.87% Mauritius 66.97% October4, India 2007 UTVMotionPictures (Mauritius) Limited (formerlyknownasUTVMotionPictures PLC) 2000 UMPPLC February 1, December14,2007) InteractiveEntertainmentLimitedw.e.f IndiagamesLimited(subsidiaryofIG giinEtranetLmtd K 20 Kndm Chartered Taylors, 71.09% 70% Kingdom United 2001 July19, IgnitionEntertainmentLimited,UK) DigiGuysLimited(100%subsidiaryof Limited, UK) netimn iie] Accountants& Auditors Registered Aggarwal, CPA Rajeev 71.09% 70% ofAmerica UnitedStates May22, 2006 (100%subsidiaryofIgnitionEntertainment IgnitionEntertainmentLimited,USA EntertainmentLimited] sbiir fI neatv 01 igo Chartered Auditors Registered Accountants Chartered & Limited, Taylors, 71.09% Kingdom 70% 2001 United September26, [subsidiaryofIGInteractive IgnitionEntertainmentLimited,UK (UK) Limited) frel nw sUVCmuiain 04 igo Associates Kingdom 2004 (formerlyknownasUTVCommunications fAeia Aggarwal,CPA ofAmerica NagleJames 100% 100% United September6, IGInteractiveEntertainmentLimited,UK asonMarch31, Rajeev 100% Incorporation Incorporation 100% UnitedStates April26,2004 UTVCommunications(USA)LLC ) h opn a h olwn usdaisjitvnue: TheCompany hasthefollowingsubsidiaries/jointventures: i) UTVSoftwareCommunicationsLimitedwasincorporatedunderthelawsofIndia onJune22,1990. A Background FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED usdayJitVnue Dt f Paeo Pooto fOnrhp Auditors Proportion ofOwnership Placeof Dateof Subsidiary/Joint Ventures

2008 2007 83 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ii) During the year, UTV Broadcasting Limited has sold its investment in Genx Entertainment Limited and UTV Entertainment Television Limited to UTV Global Broadcasting Limited for a consideration of Rs. 26.66 mio and Rs. 0.13 mio respectively. The investment in UTV Entertainment Television Limited has been sold at cost and the profit on sale of investment in Genx Entertainment Limited of Rs. 6.91 mio has been disclosed in Schedule 16 - ‘Other Income’ under the head ‘Profit on Sale of Investments’. On January 24, 2008, the Company has disposed off its investment in UTV Broadcasting Limited to Unilazer Exports & Management Consultants Limited for a consideration of Rs 19.75 mio. Consequent to such sale, UTV Broadcasting Limited has ceased to be a subsidiary of the Company effective such date. The said divestment has resulted in a profit of Rs. 0.12 mio which has been credited to the profit and loss account. Accordingly, in the accompanying statement of profit and loss, the results of operation of the subsidiary has been consolidated only for the period upto January 24, 2008.

iii) During the year, the Company has invested USD 4.00 mio [80,000,000 shares of USD 0.05 each] in UMP PLC (subsidiary incorporated in Isle of Man on March 27, 2007). UMP PLC has in turn invested USD 4.00 mio [80,000,000 shares of USD 0.05 each] in UTV Motion Pictures ( Mauritius ) Limited, thereby acquiring 99.75% stake in UTV Motion Pictures (Mauritius) Limited. In July 2007, UMP PLC listed its shares on London Stock Exchange’s Alternative Investment Market (AIM) with the issue of additional 24,137,931 Equity shares of the face value of USD 0.05 each (constituting 23.18% of the expanded share capital) at an issue price of USD 2.90 per share to public investors. Consequently, UMP PLC and its subsidiary UTV Motion Pictures (Mauritius) Limited ceased to be a wholly owned subsidiary of the Company w.e.f. July 2007. The Company and its subsidiary UTV Communications (USA) LLC has transferred all their rights in produced films and films under production to UTV Motion Pictures ( Mauritius ) Limited.

iv) During the year, the Company has invested Rs. 0.50 mio in Windmill Entertainment Limited, a Company incorporated to house the Joint Venture with Mr. Sekhar Suman for television content production. On October 29, 2007, Mr. Sekhar Suman has invested Rs 0.25 mio in Windmill Entertainment Limited by acquiring 50% of the equity capital from the Company, thereby making it a 50:50 Joint Venture. The Company has also acquired 50 % interest in the Joint Venture Company - Smriti Irani Television Limited incorporated to house the Joint Venture with Ms. Smriti Irani by investing Rs 0.25 mio.

v) On December 14, 2007, IG Interactive Entertainment Limited acquired 54.86 % equity stake in Indiagames Limited which is into the business of mobile and online gaming for a consideration (including expenses) of Rs. 343.37 mio. Simultaneously, the Company has also acquired a 12.11 % equity stake in Indiagames Limited by subscribing to additional shares issued by Indiagames Limited for Rs 0.85 mio. Accordingly, the Company along with IG Interactive Entertainment Limited holds 66.97% stake (of expanded capital base) in Indiagames Limited as on the Balance Sheet date. The Company is holding 12.11% stake for the benefit of the Management Shareholders and the same is not considered for the purpose of consolidation as per Accounting Standard -21 on ‘Consolidated Financial Statements’. 84 vi) During the year, Ignition Entertainment Limited, UK has issued additional shares to its minority shareholders. Consequent to this, the proportion of ownership of the Company in Ignition Entertainment Limited has reduced from 71.09% to 70% as on the Balance Sheet date.

vii) The Company has acquired UTV Movies Limited, a promoter group company at cost for Rs. 0.50 mio on January 24, 2008, making it a fully owned subsidiary.

viii) Subsequent to the Balance Sheet date, the Company has acquired UTV New Media Limited, a promoter group company, at cost for Rs 0.50 mio, making it a fully owned subsidiary.

Annual Report 2007-08 Annual Report B Signiﬁcant Accounting Policies

1 Basis of preparation of Consolidated Financial Statements

The consolidated financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable. The Consolidated Financial statements relate to UTV Software Communications Limited, its Subsidiary Companies and Joint Venture Companies and have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible in the same manner as the Company’s separate financial statements. The Consolidated Financial Statements have been prepared on the following basis:

a In respect of Subsidiary Companies, the financial statements have been consolidated on a line-by-line basis by adding together the book values of like item of assets, liabilities, incomes and expenses, after fully eliminating intra-group balances and unrealised profits/losses on intra-group transactions as per Accounting Standard - AS 21 “Consolidated Financial Statements”. In accordance with Accounting Standard 21, the losses applicable to the Minority, to the extent, if it exceeds, the Minority’s Interest in the Equity of the subsidiary, has been adjusted against the Majority Interest. fTtlCnoiae rs lc fFxdAst 2.1 0.15% 24.11% %ofTotal ConsolidatedGross BlockofFixed Assets rs au fFxdAst R.i ilo)-Mrh3,20 136 0.70 113.66 GrossValue ofFixed Assets (Rs.inmillion)-March31,2008 Motors Office Vehicles Equipment Computers untr itrs 0 3 20.00% 20%-33% Furniture &Fixtures

GItrcieEtranet UTVCommunications IGInteractiveEntertainment Asset Head (ii)Depreciationisprovidedbasedonmanagementestimateofusefullivesthefixedassets,straightlinemethodpr (i)Fixed assetsarestatedatcostofacquisitionlessaccumulateddepreciation.TheCompanycapitalisesallcosts relating t FixedAssetsandDepreciation: 2 TheNotesandSignificantAccountingPolicies totheConsolidatedFinancial Statementsareintendedtoserve asaguideforb Theresultanttranslationexchangegain/(loss)hasbeendisclosedasForeign CurrencyTranslation Reserve underReservesf andS -incomeandexpenseshavebeentranslatedatanaverageofmonthlyexchange rates. -assetsandliabilitieshavebeentranslatedatclosingexchangeratestheyear end;and ThetranslationsoffinancialstatementsintoIndianRupees relatingtonon-integralforeignoperationshavebeencarriedout e Theresultsofoperationsa subsidiaryareincludedintheConsolidatedFinancial Statementsfromthedate onwhichthepa d c The excess of cost to the Company of its investment in the Subsidiary Company over the Company’s shareofnetassetsthes TheexcessofcosttotheCompanyitsinvestmentinSubsidiaryoverCompany’s c InrespectofJointVenture Companies,thefinancialstatementshavebeenconsolidatedasperAccountingStandard-AS27 b FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED i) Currentinvestmentsare statedatcostorfairvalue,whicheverislower. (ii) Long terminvestmentsare statedatcost,exceptwherethereisadiminutioninvalueotherthantemporary, inwhichcase (i) 3 Investments : Costs involvedintheproductionofagamewhichrequiresperiodmorethanonemontharecapitalisedasGa (v) Leasehold ImprovementsareamortisedovertheperiodofleaseinIndiaand onastraightlinebasisoverperiodof5ye (iv) (iii) Fixed Assetsindividuallycostinglessthan Rs.5,000orlessarefullydepreciatedintheyearofacquisition. However, itwasnotpracticabletouseuniformaccountingpoliciesfordepreciationinthecaseoffollowingsubsidiaries: the usefullifeofPlant&Machinerytobe12years(lowerthanthatprescribedbyScheduleXIVCompaniesAc period ofuseorattheratesprescribedinScheduleXIVCompaniesAct,1956,whicheverishigher. Themanagement hases and installationoffixedassets. disclosure. understanding oftheGroup’s position.Inthisrespect,theGrouphasdisclosedsuchnotesandpolicies,whichrepresentre following procedures: as profitorlossondisposalofinvestmentinthesubsidiary. from thedisposalofinvestmentinasubsidiaryandcarryingamountitsassetslessliabilitiesasondatedispos included intheconsolidatedstatementofprofitandlossuntildatecessationrelationship.Thedifferencebetwe relationship comesintoexistence.Theresultsofoperationasubsidiarywithwhichtheparent-subsidiary relationshipcease shareofnetassetsthesubsidiarycompanyovercostacquisitionistreatedasCapitalReserve. Company’s company isrecognisedinthefinancialstatementsasGoodwill,whichtestedforimpairmentateachbalancesheetdate.Thee Reporting ofInterestsinJointVentures”. game accruingrevenue.Gamescompletedareamortisedoveraperiod of6to9months. Development Cost.GameCostisamortised,oncethe game iscompleted,dependingontheanticipatedtermof subsidiaryoftheCompany. astep-down Ignition EntertainmentLimited,UK, provision ismadetowritedownthe carryingvaluetorecognisesuchdecline.

iie ru (USA)LLC Limited -Group 3.3 20.00% 33.33% 25.00% - - 25.00% 20.00% Depreciation Rates al arerecognised o theacquisition en theproceeds rent-subsidiary ars incaseof s toexistare orata tothe urplus. usingthe “Financial t, 1956). ubsidiary requisite xcess of timated quisite etter me 85 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4 Inventories :

(i) The Company amortises 60% (75% amortised for films released till March 31, 2007) of the cost of movie rights acquired or produced by it, on first theatrical release of the movie. The said amortisation pertaining to Domestic Theatrical Rights, International Theatrical Rights, Television Rights, Music Rights, Video Rights and others is made proportionately based on management estimate of revenues from each of these rights. In case the aforesaid rights are not exploited along with or prior to the first theatrical release, proportionate cost of the said right is carried forward to be written off as and when such right is commercially exploited or at the end of one year from the date of first theatrical release, whichever occurs earlier. Balance 40% (25% for films released upto March 31, 2007) is amortised over the balance license period or based on management estimate of future revenue potential, as the case may be.

(ii) Acquired rights pertaining to movies, animation and other content, are amortised on the exploitation of such rights based on the management estimates of revenue potential.

(iii) Projects in progress are stated at cost. Cost comprises the cost of materials, labour, other expenses and advances paid.

(iv) Pilot episodes are stated at cost. Pilots are written off at the end of 3 years from the year of production of respective pilot, in case the same is not developed into a serial.

(v) Raw Stock, Digital Video Discs/Compact Discs stock, Unutilised Free Commercial Time (FCT) and finished stock of games are stated at lower of cost or net realisable value. Costs attributable to the development and production of computer games software are carried forward as work in progress and released to the profit and loss account when the project realises anticipated revenues.

(vi) The borrowing cost directly attributable to a movie/game is capitalised as part of the cost. In case of general borrowings, borrowing cost eligible for capitalisation is determined by applying a weighted average capitalisation rate to the expenditure on a particular movie/ game.

(vii) The Company evaluates the realisable value and/or revenue potential of inventory on an annual basis and appropriate write down is made in cases where accelerated write down is warranted.

5 Current Taxation :

Provision for Current tax (including Wealth Tax) and Fringe benefit tax has been made in accordance with the Income tax and Wealth tax laws prevailing for the relevant Assessment Years in the countries in which the companies of the group are domiciled.

6 Deferred Taxation :

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income 86 and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

7 Foreign Currency Transactions :

The transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities as at the Balance sheet date are translated at the rate of exchange prevailing at the date of the Balance sheet. Non-monetary foreign currency items are carried at cost. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit and Loss account. Annual Report 2007-08 Annual Report 8 Revenue Recognition :

(i) Revenues on commissioned television programmes, animation programmes and dubbing are recognised on delivery. The amount recognised is the predetermined price, the collection of which is reasonably assured.

(ii) Revenues from sale of airtime are recognised in the period during which the spots are aired.

(iii) Revenues from licensing and distribution of television programmes, games and movies are recognised in accordance with the licensing and distribution agreement or on physical delivery of the programmes/movies/games, whichever is later. Home Video sales are recognised as per underlying agreement based on delivery.

(iv) Revenue arising from mobile games downloads/online games is recognised on receipt of the download reports or revenue receipts reports in accordance with the agreements entered.

(v) Revenues on utilisation of post production, studio facilities and technical services are recognised when the services are rendered.

(vi) Dividend is recognised when the right to receive the dividend is unconditionally established at the Balance Sheet date.

9 Retirement Beneﬁts :

(i) Long Term Employee Benefits:

In case of Defined Contribution plans, the Company’s contributions to these plans are charged to the Profit and Loss Account as incurred. Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresestimatesandass UseofEstimates: 15 TheCompanyrecognises a provisionwhenthereispresentobligationasresultofpasteventthatprobablyrequiresanou FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED 4 Provisions andContingentLiabilities: 14 TheCompanyaccountsforcompensationexpenseundertheEmployeeStockOptionSchemesusingintrinsicvaluemethodasperm EmployeeStock OptionSchemes(ESOP): 13 TheCompany assessesateachbalancesheetdatewhetherthereisanyindicationthatanassetmaybeimpaired.Ifsuchind Impairmentof Assets : 12 Lease paymentsforoperatingleasesarerecognisedasexpenseonastraight-line basisovertheleaseterm.Initial directcos Operating Leases AssetsacquiredunderfinanceleasearerecognisedasassetswithcorrespondingliabilitiesintheBalanceSheetatincept Finance 11 Lease Leases : Borrowingcoststhatareattributabletothe acquisition/ constructionofaqualifyingassetarecapitalisedaspartthe BorrowingCosts: 10 ii)Actuarialgainsandlossescompriseexperienceadjustmentstheeffectsofchangesinactuarialassumptionsare recognised intheperiodswhichresultsareknown/materialise. and thereportedamountsofrevenuesexpensesduringreporting period.Differencesbetweenactualresultsandestimates made thataffectthereportedamountsofassetsandliabilitiesdisclosure ofcontingentliabilitiesonthedatefin obligation orapresentthatthelikelihoodofoutflowresources isremote,noprovisionordisclosuremade. is apossibleobligationorpresentthatmay, butprobablywillnot,requireanoutflowofresources. Wherethere resources andareliableestimatecanbemadeoftheamountobligation. Adisclosureforacontingentliabilityismade Liability forDefinedBenefitplansisprovidedonthebasisofvaluations,asatBalanceSheetdate,carriedoutbyanind the vestingperiod. difference betweenthemarketpriceandexerciseasatdateofgrantistreatedcompensationexpensec by theGuidanceNoteon“Accounting Payments” forEmployeeShare-based issuedbytheInstituteofCharteredAccountantsIndi at therecoverableamount. an indicationthatifapreviouslyassessedimpairmentlossnolongerexists,therecoverableamountisreassessedandasse amount. ThereductionistreatedasanimpairmentlossandrecognisedintheProfit &Loss Account.IfattheBalanceSheet of thecashgeneratingunittowhichassetbelongsislessthanitscarryingamount,amountreduced exists, theCompanyestimatesrecoverableamountofasset.Ifsuchassetora immediately asanexpense. so astoproduceaconstantperiodicrateofinterestontheremainingbalanceliabilityforeachperiod. policyondepreciationoffixed assets.Theinterestisallocatedtoperiodsduring are depreciatedinlinewiththeCompany’s at amountsequaltolowerofthefairvalueleasedassetorpresentminimumleasepayments.Thesele Other borrowingcostsarerecognisedasanexpenseintheyearwhichtheyincurred. recognised intheProfit andLoss Accountintheyearwhichtheyarise. compensated absencesisprovidedonthebasisofvaluation,asatBalanceSheetdate,carriedoutbyanindependentactuary. on Governmentsecurities.PlanassetsaremeasuredatfairvalueastheBalanceSheetdate.Theliabilityforleaveencashm account inflation,seniority, promotion and otherrelevantfactors.Theexpectedrateofreturnplanassetsistakenatthe as attheBalanceSheetdateforestimatedtermofobligations.Theestimatefuturesalaryincreasesconsideredtak the presentvalueofestimatedfuturecashflowsdiscountedatratesreflectingprevailingmarketyieldsIndianGovernmen The actuarialvaluationmethodusedformeasuringtheliabilityisProjected UnitCreditmethod.Theobligationsaremeasu

ependent actuary. ancial statements ts arerecognised cost oftheasset. ion ofthelease umptions tobe the leaseterm rateofreturn date, thereis is apossible harged over t isreflected recoverable ased assets when there t securities ent and tflow of es into ication red as mount a. The itted are

87 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

C NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 Goodwill Movement during the year Rs in Million March 31, March 31, 2008 2007 Balance at the beginning of the year 450.83 - Other Adjustments (17.45) - Arising on account of acquisition of Ignition Entertainment Limited - 450.83 Arising on acquisition of Indiagames Limited 274.15 - [as per note below (a)] Arising on acquisition of UTV Movies Limited 0.34 - [as per note below (b)] Balance at the close of the year 707.87 450.83 a) On December 14, 2007, IG Interactive Entertainment Limited acquired 54.86 % equity stake in Indiagames Limited. [Refer Note A (v) of Sch. 21]. The following assets and liabilities of Indiagames Limited were taken over on December 14, 2007: Particulars Fixed Assets (net) 19.22 Sundry Debtors 90.35 Cash and Bank balance 50.29 Loans and Advances 36.32 Current Liabilities & Provisions (70.00) Net Assets taken over 126.18 Minority Interest (45.14%) 56.96 Company’s share in net assets (54.86%) 69.22 Cost of Acquisition 343.37 88 Goodwill on Consolidation 274.15 b) During the year, the Company acquired 100% stake of UTV Movies Limited [Refer Note A (vii) of Sch.21]. The following assets and liabilities of UTV Movies Limited were taken over on January 24, 2008: Particulars Cash and Bank balance 0.42 Current Liabilities & Provisions (0.26) Net Assets taken over 0.16

Annual Report 2007-08 Annual Report Company’s share in net assets (100%) 0.16 Cost of Acquisition 0.50 Goodwill on Consolidation 0.34

2 Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 2.47 2.25 3 Contingent liabilities not provided for: Nature Description (a) Claims against the Company not Notice for Interest claim by a broadcaster 34.40 34.40 acknowledged as debts during 2000-2001 towards delayed payment made by the company in earlier years. The interest claim by the broadcaster is disputed by the company. (b) Appeals filed in respect of disputed Income Tax appeal before Commissioner/ 15.78 11.05 demands Deputy Commissioner of Income Tax for the Assessment Years 2000-01/ 2004-05/ 2005-06 / 2007-08. pin xrie uigteya - (470,000) 1,000,000 - OptionsOutstandingattheyearend OptionsLapsed duringthe year Options Exercisedduringtheyear Options Grantedduringtheyear OptionOutstandingatthe beginningoftheyear Stockoptions activityundertheschemeisasfollows: Thescheme providesthatthetotalnumberofoptionsgrantedthereunderwillbe1,000,000.Eachoption,onexercise,isconve Pursuant totheresolutionpassedbyBoardofdirectorsonJuly27,2007andmembersCompanyatAnnualGeneral EmployeeStockOptionScheme-2007: c) ,2,6 March4,2008 February 20,2008 1,429,860 519,500 DateofAllotment Pursuant totheaboveconversions,paidupsharecapitalofCompanynowconsists24,842,968equitysharesRs10 NoofSharesAllotted Duringthepreviousyear, theCompanyhadissued1,949,360warrants onapreferentialbasiswiththeoptionof b) TheAuthorisedShareCapitaloftheCompanywasincreasedfromRs260mioto360asperresolutionpassedat a) Rs.inMillion 16.17 15.86 34.05 14.47 Asst.CommissionerofCustoms 35.96 2.50 1.39 4 Pertains tolitigation/disputeswithparties. 976.48 Mahanagarpalika,Mumbai infavourofcompanies. Legal casesandclaimsfiled TheBrihanmumbai (e) variousGovernmentAuthorities Guarantees/CorporateGuaranteeissued Bankguaranteeissuedinfavourofa broadcasterforaccreditation/Counter BankGuaranteesissued favoring givencounterguarantees (d) CreditforwhichtheCompanyhas Guarantees/OutstandingLetter of Bankguarantees/Corporate (c) FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED thepartiesandnooutflowisforeseen. TheCompanyhasfiledlegalcasesagainst Note:Future cashoutflowinrespectof(b)and(e)abovearedeterminableonlyonreceiptjudgments/decisionspendingatv againsttheCompany

Particulars stock options. higher thanthemarketpriceasondateofgrant.Accordingly, theCompanyhasnotrecognisedanyexpense onaccountof Committee atitsmeetingheldonJanuary11,2008,all1,000,000optionshavebeengrantedanexercisepriceofRs.800,whi into oneequityshareofthecompanyhavingfacevalueRs.10.Pursuant toaresolutionpassedbytheRemuneration &Compens directors oftheCompanyanditssubsidiaries,asmaybedecidedbyCompensationCommittee/Board. held onSeptember25,2007,theCompanyhadintroducedEmployeeStockOptionScheme(“thescheme”)forpermanentemployeesand grgtn oR 4.3mo aggregating toRs248.43mio. 19930 Total 1,949,360 of theaforesaidwarrants: During thecurrentyear, theCompanyhas,uponreceiptofbalanceconsideration,allottedfollowingequity sharesupon within aperiodof18monthsfromthedateallotmentandreceived10%amountonwarrants. converting [email protected](includingpremiumofRs182.50pershare) resolution passedbythemembersatExtraordinaryGeneralMeetingheldonMarch17,2008. General MeetingheldonSeptember25,2007.TheAuthorisedSharecapitalwasfurtherraisedfromRs360mioto450vide Share Capital forum/authorities.

: March 31, 2008 March31,2008 Year Ended

March 31, 2007 arious 530,000 conversion grantof Meeting Annual each ation rtible ch is

89 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

d) On June 26, 2007 Andrew James Carnegie and Charles Peter Arthur Vanderpump, non-executive directors of UMP PLC have been conditionally granted options to subscribe for 208,276 and 52,069 ordinary shares, respectively, at an exercise price of USD 2.90 per ordinary share [being the issue price at the time of listing its shares on London Stock Exchange’s Alternative Investment Market (AIM)]. The options will vest over a period of three years and expire after a period of 6 years from the date of the grant, if not exercised.

e) Subsequent to the Balance sheet date, the Company has:

i) allotted 4,532,000 warrants each convertible into equivalent number of equity shares to Unilazer Exports and Management Consultants Limited (‘Unilazer’), a promoter group company on a preferential basis, with an option to convert into equity shares of the Company of nominal value of Rs 10 each at a price of Rs. 860.79 (including a premium of Rs 850.79 per share) within a period of 18 months from the date of issue. Upon allotment of the warrants, the Company has received 10% of the total amount of the warrants. Balance 90% is receivable on the date of exercise of the options.

ii) allotted 9,352,500 equity shares of Rs 10 each at an issue price of Rs 860.79 to the Walt Disney Company (Southeast Asia) Pte Limited (‘Disney’) after obtaining the necessary approval of the shareholders in the Extraordinary General Meeting held on March 17, 2008.

f) The Board of Directors, vide meeting held on February 16, 2008, approved the execution of a Share Subscription Agreement between Disney, the Company, Unilazer, Mr. Rohinton Screwvala and UTV Global Broadcasting Ltd (“UGBL”) and the execution of a Shareholders Agreement between UGBL, Disney, the Company and Mr. Rohinton Screwvala (“UGBL Agreements”). Pursuant to the UGBL Agreements, the Company will be converting its funding in UGBL together with further investment for a 75% stake for an aggregate consideration of Rs 2,400 mio, making UGBL a subsidiary of the Company. The shares would be issued upon receipt of all requisite regulatory approvals. The shareholders have approved the investment by resolution passed through postal ballot on March 24, 2008.

g) The Company has received Rs 337.72 mio (Previous year Rs 692.02 mio) pursuant to the allotment on a preferential basis of equity shares and warrants (Refer Schedule 1 and 2), which has been utilised for expansion of business activities, financing additional working capital requirements and general corporate purposes as per the objects of the issue. 5 Advances to Subsidiary is as follows : Rs. In Million Subsidiary As at March 31, As at March 31, 2008 2007 Genx Entertainment Limited (ceased to be a subsidiary w.e.f June 29, 2007) - 3.97 90 Total - 3.97 6 (a) Components of Deferred Tax Assets and Liabilities arising are: Rs. in Million Particulars As at March 31, As at March 31, 2008 2007 Deferred Tax Assets - Provision for Doubtful Debts 5.57 0.62

Annual Report 2007-08 Annual Report - Provision for Doubtful Advances 28.74 28.74 - Business Losses & Unabsorbed Depreciation 178.07 99.31 - Provision for Gratuity - 0.06 - Provision for Leave encashment 1.96 1.70 - Timing Difference between books and tax depreciation 4.88 18.93 - Expense/Interest Allowable only on Payment/Receipt 49.56 - - Others 0.54 0.72 Total 269.32 150.08 Deferred Tax Liability - Provision for Gratuity 0.88 - - Inventories 8.80 15.45 Total 9.68 15.45 Net Deferred Tax Asset 259.64 134.63 7 (a) Consideringlongtermcorporatestrategies,futureprofitabilityandvirtualcertainty, DeferredTax Asset(net)ofRs259 c) Provision forcurrenttaxationincludedRs.8.47mio(Previous Year -Rs.21.82mio)representingMinimumAlternateTax pu b) FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED oadDmlo(eindwefAgs 8 07 Ronald D’mello (Resigned w.e.f.August 28, 2007) DevenKhote(appointed on August28,2007) Hitesh Rohinton Screwvala Chandrana ZarinaMehta (ExecutiveDirectoruptoApril1,2007) Kishore Biyani(Appointedw.e.f. January25,2007) Sanjaya Kulkarni Suketu Darius Shah Ronald D’mello (Resigned w.e.f. July27,2007) Shroff Deven Rohinton Khote Screwvala UTVNewMediaLimited UTVBroadcastingLimited UTVEntertainmentTelevision Limited UTVNewsLimited GenxEntertainmentLimited(ceasedtobeasubsidiaryw.e.f June29,2007) UTVGlobalBroadcastingLimited VijayBroadcastingPrivate Limited Television NewsandEntertainment(I)Limited UnitedHomeEntertainmentLimited(Ceasedw.e.f December12,2006) Unilazer(HongKong) Limited UnitedTele-Shopping &MarketingCompanyLimited UnilazerExports&ManagementConsultantsLimited i ShareholderinUTVSoftwareCommunicationsLimited(parentcompany) (i) (iii) Key Management Personnel : (iii) Related partieswherecommoncontrolexists: (ii) Related Party DisclosuresasrequiredbyAccountingStandardAS18“Related Party Disclosures”issuedbytheInstituteofChar ul bobd Accountants ofIndiaaregivenbelow: fully absorbed. recognised asontheBalanceSheetdateandmanagementisofopinionthatinlongrun,carryforwardlosseswou included asMAT CreditEntitlementinSchedule12-Loans andAdvances. liability, otherthanMAT infutureyears.Accordingly, anamountofRs.8.47mio(Previous Year -Rs.21.82mio)forthecurr the provisionsofSection115JBIncomeTax Act,1961ofIndia.MAT Creditrecognisedisexpectedtobeset-off againstt nyBr Apitdwef aur 5 07 Non-Executive Director IG InteractiveEntertainmentLimited UTV Communications(USA)LLC Andy Bird(Appointedw.e.f. January25,2007) Non-Executive Directors Executive Directors UTV SoftwareCommunicationsLimited (ceased tobeasubsidiaryw.e.f January24,2008)

.64 miohasbeen ent yearis rsuant to he tax tered ld be 91 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

UMP PLC Non-Executive Directors Rohinton Screwvala (appointed w.e.f May 16, 2007) Siddharth Roy Kapur (appointed w.e.f May 16, 2007) Andrew James Carnegie (appointed w.e.f May 16, 2007) Charles Peter Arthur Vanderpump (appointed w.e.f May 29, 2007) Chief Operating Officer Babulal Gautam (appointed w.e.f October 20, 2007) UTV Movies Limited Non-Executive Directors Rohinton Screwvala (appointed w.e.f July 9, 2007) Zarina Mehta (appointed w.e.f July 9, 2007) Ronald D’mello (appointed on July 9, 2007 and resigned w.e.f. Aug 16, 2007) Deven Khote (appointed on August 16, 2007) Windmill Entertainment Limited Non-Executive Directors Rohinton Screwvala (appointed w.e.f July 9, 2007) Zarina Mehta (appointed w.e.f July 9, 2007) Deven Khote (appointed w.e.f August 16, 2007) Ajit Thakur (appointed w.e.f December 20, 2007) Smriti Irani Television Limited Non-Executive Directors Smriti Irani (appointed w.e.f December 6, 2007) Zarina Mehta (appointed w.e.f December 6, 2007) Zubin Irani (appointed w.e.f December 6, 2007) 92 Ajit Thakur (appointed w.e.f December 20, 2007) Annual Report 2007-08 Annual Report FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED exEtranetLmtd 7.0 - 175.00 - - 160.52 -Unilazer(Hong Kong) Limited -GenxEntertainment Limited T e ei iie 03 - - 0.35 2.03 - 13.40 0.14 - - -UTVNewMedia Limited -UnitedHomeEntertainment Limited ConsultantsLimited -UnilazerExports &Management -UnitedHomeEntertainmentLimited T racsigLmtd .4 - 0.04 -UTVBroadcasting Limited T e ei iie 04 - - 0.47 -UTVNewMediaLimited exEtranetLmtd 54 - 11.27 - - - - - 0.64 25.44 23.98 - 16.93 - 750.00 200.00 -UTVEntertainment Television Limited -GenxEntertainment Limited -UTVGlobalBroadcastingLimited -UTVNewsLimited -UTVEntertainmentTelevision Limited -GenxEntertainmentLimited CorporateGuaranteegivenonbehalfof: T esLmtd .1 - 0.11 - 0.41 -UTVNewsLimited -UTVBroadcastingLimited exEtranetLmtd .4 - - 0.14 53.09 -GenxEntertainmentLimited -UTVGlobalBroadcastingLimited

T esLmtd 00 - - 10.04 - 19.60 0.03 - - - 37.24 35.49 - 20.22 - - - 251.83 392.10 -UTVNewsLimited 20.25 -GenxEntertainmentLimited -UnitedHomeEntertainmentLimited -UnitedHomeEntertainmentLimited -UTVNewMediaLimited -UTVEntertainmentTelevision Limited -UTVNewsLimited -GenxEntertainmentLimited -UTVGlobalBroadcastingLimited T esLmtd .8 - 4.08 39.51 - - 19.75 -UTVNewsLimited -UnitedHomeEntertainmentLimited ConsultantsLimited -UnilazerExports&Management hrhles omnCnrlEtte Subsidiaries CommonControlEntities Shareholders Rs. Disclosure inrespectoftransactionswithpartiesreferredtoitem(a)(i)and(ii)above: (b) (i) In Million Advance fromCustomers Expenses Reimbursed to Expenses Paid onbehalfof Guarantees andCollaterals Sale ofFixedAssets Purchase ofFixedAssets/Inventory Sales andServices Interest Chargedto Sale ofInvestmentinUTVBroadcastingLimited

Year ended March 31, 2008 2007 March 31, Year ended Year ended March 31, 2008 March31, 2007 Year ended Year ended March 31, 2008 March31, 2007 Year ended 93 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(b) (i) Disclosure in respect of transactions with parties referred to in item (a) (i) and (ii) above (Contd.): Rs. In Million Shareholders Common Control Entities Subsidiaries Year ended Year ended Year ended Year ended Year ended Year ended March 31, March 31, March 31, March 31, March 31, March 31, 2008 2007 2008 2007 2008 2007

Advances Given - UTV News Limited 202.30 - - United Home Entertainment Limited - 100.25 - UTV Broadcasting Limited 54.02 0.50 - Genx Entertainment Limited 14.50 - - UTV Global Broadcasting Limited 1,711.40 - - UTV Entertainment Television Limited 1.20 - Unsecured Loan taken - Unilazer (Hong Kong) Limited 40.79 - Advances Repaid - UTV Broadcasting Limited 54.56 - - Genx Entertainment Limited 4.50 - - UTV Global Broadcasting Limited 323.30 - - UTV News Limited 113.00 - - UTV Entertainment Television Limited 1.20 - - Unilazer Exports & Management Consultants Limited 0.14 - Bad debts written off - United Home Entertainment Limited - 0.75 Outstanding Balance 94 - Payable - Genx Entertainment Limited (advance) 175.00 - - Unilazer (Hong Kong) Limited 200.67 - - Receivable - Genx Entertainment Limited 52.66 - - 3.97 - UTV Global Broadcasting Limited 1,466.83 - - UTV New Media Limited 35.13 -

Annual Report 2007-08 Annual Report - UTV News Limited 113.57 - - UTV Entertainment Television Limited 381.33 - - Unilazer Exports & Management Consultants Limited - 0.14 FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED iue 2.1 21.63 21.63 25.01 25.01 21,421,827 463.27 21,421,827 45.91 23,055,865 23,055,865 576.58 97.03 55.17 Diluted 190.19 Basic -EquityShares ofRs.10eachfullypaidup Weighted averagenumberofsharesfordiluted earningspershare(nos.) -EquitySharesofRs.10eachfullypaidup Weighted averagenumberofsharesforbasic earningspershare(nos.) Profit AfterTax &MinorityInterest(Rs.inMillion) earningspersharecomprisethenetprofitaftertaxandminority intere Theearning consideredinascertainingtheCompany’s CalculationofEarningsPer Share Later thanoneyearbutnotlaterfiveyears NotLater thanoneyear 9 16.61 49.57 17.65 60.23 27.84 51.54 29.30 60.03 Theseleasingarrangementsareforaperiodnotexceeding 5 yearsandareinmostcasesrenewablebymutualconsent,onmutua significantleasingarrangementsaremainly inrespectofofficepremises.Theaggregateleaserentalspayable TheCompany’s Within Onetofiveyears Within Oneyear Within Onetofiveyears Within Oneyear idat o au 09 - - - - 0.99 0.99 208,276 - - 52,069 Number Rs10 - of Rs.182.50 Options 1,199,360 1.74 2.97 1.55 Balanceoutstandingasatyearend -SiddharthRoy Kapur 8 Leases: Unsecured-Interestfreeloangranted(Rs.inMillion) -CharlesPeter ArthurVanderpump 4 -AndrewJamesCarnegie Following stockoptionsweregrantedduringtheyearbyUMPPLC: EquityStockOptionsgranted: Premium paidpershare 3 Face Value pershare NoofSharesallotted conversionofwarrantsduringtheyear: AllotmentofSharestoMr. Rohinton Screwvala upon 2 -CharlesPeter ArthurVanderpump -AndrewJamesCarnegie -SiddharthRoy Kapur -Zrn et - 2.40 3.71 - 1.89 -Ronald D’mello -ZarinaMehta ee ht 31 2.40 3.12 -DevenKhote oitnSrwaa .0 3.60 Rs. 7.50 in Million -Rohinton Screwvala 1 Remuneration: b (ii) Particulars b) Operating Lease: ) FinanceLease:DisclosureonLeasesasrequiredbyAccountingStandard-19isfollows: a) Earning Per share (Rs) Description all dilutivepotentialequityshares. basic earningpershare,andalsotheweightedaveragenumberofshares, ifany, whichwouldhavebeenissued ontheconversion The numberofsharesusedincomputingdilutedearningspersharecomprises theweightedaveragesharesconsideredforderiving number ofsharesusedincomputingbasicearningspershareistheweighted averagenumberofsharesoutstandingduringtheyea hs esn ragmnsaecagda etudr“te xess nShdl 9 Particulars leasing arrangements.Future leaserentalspayableareasfollows: agreeable terms.TheCompanyhasplacedarefundabledepositofRs.51.67mio[Previous yearRs.38.96mio]inrespectofthes these leasingarrangementsarechargedasrentunder“Other Expenses”inSchedule19. Present Value ofLeasepayments Minimum LeasePayments Payable Particulars Disclosure inrespectoftransactionswithpersonsreferredtoitem(a)(iii)above:

March 31,2008 March 31,2008 March 31,2008 2007-08 Year ended Year ended Year ended 2006-07 March31,2007 March31,2007 March31,2007 Year ended Year ended Year ended st. The on lly of e

r. r.

95 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS March 31, 2007

March 31, 2008 March 31, 2007 March 31, 2008 ‘Television’, ‘Movies’, and ‘Interactive’. Erstwhile Allied Services ‘Television’, s of Animation (included in Television segment last year) have been s of Animation (included in Television evision” segment. evision” visions. Segment revenue, results, assets and liabilities have been easonable basis to the business segment. The Company accounts for March 31, 2007 March 31, 2008

96 March 31, 2007 March 31, 2008 Annual Report 2007-08 Annual Report

March 31, 2007 March 31, 2008

------38.91 31.36 206.05 228.46 1,207.46 321.41 238.61 435.28 - - 6,089.39 2,670.97

548.22 653.19 5,375.58 1,878.37 1,628.81 1,363.05 - - 10,661.59 4,484.18

segment has now been renamed as ‘Interactive’ and now includes animation, gaming, post production and SFX. Previous year figure post production and SFX.segment has now been renamed as ‘Interactive’ and includes animation, gaming, Previous regrouped into ‘Interactive’ segment. The above business segments have been identified considering the different nature of activities carried on by these di accounted for on the basis of their relationship to related business activities segment and amounts allocated a r content, airtime sales and dubbing into ”Tel intersegment sales and transfers at cost. The Company has consolidated Television 10. The Company considers Business segment as the Primary segment. The Company is organised into three business segments namely 10. The Company considers Business segment as the Primary Particulars Particulars TELEVISION MOVIES * INTERACTIVE Inter Segment Adjustment Total

Unallocable Other Income ------131.22 283.23 Unallocable Other Expenditure Add : ------(184.31) (138.53) Rs. in Million in Rs. REVENUE External Revenue 1,006.42 766.84 2,423.53 720.72 955.77 273.90 (44.22) (12.39) 4,341.50 1,749.07 Profit Before Taxation Before Taxation Profit ------664.37 307.02 Segment Result Segment Result 183.09 50.36 479.77 37.28 114.46 90.78 - - 777.32 178.42 RESULT Unallocable Depreciation Depreciation Total ------38.91 31.36 Segment Assets Unallocable Assets 548.22 - 653.19 5,375.58 - 1,878.37 - 1,628.81 1,363.05 - - - - - 7,552.61 3,894.61 - - 3,108.98 589.57 OTHER INFORMATION OTHER Less : Interest ------(59.86) (16.10) Segment Depreciation ------Total Assets Total Unallocable Liabilities Liabilities Total Depreciation ------4,437.27 1,685.82 Segment Liabilities 206.05 228.46 1,207.46 321.41 238.61 435.28 - - 1,652.12 985.15 FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED Note 10 to Schedule 21 (Contd.) Rs. in Million Particulars TELEVISION MOVIES INTERACTIVE * Inter Segment Adjustment Total

March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007

Non Cash Expenses other than Depreciation Segment Non Cash Expenditure 2.54 0.05 270.18 10.73 6.87 - - - 279.59 10.78 Unallocable Non Cash Expenditure ------

Total Non Cash Expenses other than Depreciation 2.54 0.05 270.18 10.73 6.87 - - - 279.59 10.78 GEOGRAPHICAL SEGMENT Revenue India 985.55 759.80 947.60 320.29 160.51 92.77 (44.22) (12.39) 2,049.44 1,160.47 Outside India 20.87 7.04 1,475.93 400.43 795.26 181.13 - - 2,292.06 588.60 Assets India Segment Assets 548.22 653.19 1,196.04 918.74 646.14 187.92 - - 2,390.40 1,759.85 Unallocable Assets - in India ------3,108.98 589.57 Outside India - - 4,179.54 959.63 982.67 1,175.13 - - 5,162.21 2,134.76 * The Company has, during the year, discontinued the Post Production and SFX business included in the Interactive Segment. Refer Note 11 of Sch 21. 97 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11 Discontinued Operations The Board of Directors in their meeting dated October 25, 2007 approved the plan to discontinue the Post Production and SFX business division of the Company, which falls under the Interactive segment as per AS-17. The sale was approved by the shareholders on November 30, 2007. Accordingly, the Company entered into a Business Transfer Agreement with Prime Focus Limited on November 19, 2007 wherein the Company has sold the machinery/equipments with the division for a consideration of Rs 120 mio and the business has been discontinued effective December 31, 2007. The Company has, as on the Balance Sheet date, received Rs 60 mio out of the total consideration of Rs 120 mio. Balance Rs. 60 mio is receivable in two installments falling due on 180th and 360th day from the date of the agreement. The following statement shows the revenue and expenses of the discontinued operation included in the Profit and Loss account for the year ended March 31, 2008: Rs. in Million Particulars For the period ended For the year ended December 31, 2007 March 31, 2007 Income 60.36 93.66 Expenditure 56.28 65.72 Profit Before Interest, Depreciation & Tax 4.08 27.94 Interest Expense 4.25 3.21 Profit/(Loss) before Depreciation & Tax (0.17) 24.73 Depreciation 7.50 9.86 Profit/(Loss) before tax (7.67) 14.87 Taxation - 0.15 Profit/(Loss) after Tax (7.67) 14.72 The Assets and Liabilities in books pertaining to the discontinued operation are as follows: Rs. in Million As at As at March 31, 2008 March 31, 2007 Total Assets 114.27 193.53 Total Liabilities (220.34) (291.93) 98 12 In accordance with the Company’s accounting policy, Rs. 16.52 mio [Previous Year Rs. 14.73 mio] is interest capitalised on movie projects during the year. 13 Employee Beneﬁts The Company has, with effect from April 1, 2007, adopted Accounting Standard 15, Employee Benefits (Revised 2005), issued by the Institute of Chartered Accountants of India. Consequently, the difference between the transitional liability as per this Standard and the liability that would have been recognised at the same date as per the pre-revised AS 15, amounting to Rs. 3.27 mio [net of deferred tax of Rs 1.80 mio], has been adjusted against General Reserve balance as at April 1, 2007.

Annual Report 2007-08 Annual Report The disclosures as required as per the revised AS 15 are as under: 1 Brief description of the Plans The Company provides long-term benefits in the nature of Provident fund & Gratuity to its employees. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through appropriate authorities/insurers. The Company’s defined contribution plans are provident fund, employee state insurance and employees’ pension scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company’s defined benefit plans include gratuity benefit to its employees which is funded through the Life Insurance Corporation of India. The employees of the Company are also entitled to leave encashment and compensated absences as per the Company’s policy. 2 The Company has recognised the following amounts in the Profit and Loss Account for the year: Rs in Million Year ended March 31, 2008 Employers’ Contribution to Provident Fund/Social Security 28.68* Employer’s Contribution to Employees State Insurance 0.08 (* includes amounts inventorised in respect of Digi Guys Limited) 28.76 Included in Contribution to Gratuity, Provident and Other Funds (Refer Schedule 18) c Ata euno lnAst 0.85 (0.05) 0.90 ActualReturn onPlanAssets (c) Actuarialloss onPlanAssets (b) ExpectedReturn onPlanAssets (a) March Rs 31, in 2008 Million FINANCIAL STATEMENTS SCHEDULE 21-NOTES TO THECONSOLIDATED e AtailLs 1.57 0.90 3.62 12.58 8.48 (1.99) ClosingDefinedBenefitObligation (f) ActuarialLoss (e) CurrentServiceCost (c) InterestCost (b) (d) OpeningDefinedBenefitObligation (a) Benefits Paid d NtatailLs 1.62 3.62 (0.90) 5.24 0.90 2.35 10.23 12.58 2.35 10.23 11.69 12.58 Total ExpensesrecognisedintheProfit andLoss Account 0.90 3.02 NetactuarialLoss (0.05) (d) 9.81 ExpectedReturn onPlanAssets (1.99) (c) CurrentServiceCost (a) (b) NetAssetrecognisedasonMarch31,2008 (c) Interest Fair Value ofPlanAssetsasatyearend (b) Cost Present Value ofObligationasatyearend (a) (IncludedinProvisions -Schedule14) Funded (Asset)/LiabilityrecognisedintheBalance Sheet (c) Fair Value ofPlanAssetsasatyearend (b) Present Value ofFunded Obligationasatyearend (a) ObligationandtheFair Value ofAssets ClosingFair Value ofPlanAssets (f) Contribution during theyearbyemployer (c) (e) ExpectedReturn onPlanAssets (b) Actuarial (d) OpeningFair Value ofPlanAssets (a) Benefits Loss Paid c Rt fRtr nPa ses 7.5%-8% 7.65%-8% 5%-9% 26years DisclosuresfordefinedbenefitplanbasedonactuarialreportsasMarch31, 2008: ExpectedAverageremainingworkinglivesofemployeesinnumberyears (d) Rate ofReturn onPlanAssets (c) Rate ofincreaseinCompensationLevels (b) DiscountRate (perannum) (a) InaccordancewiththeAccountingStandard(AS15)(Revised 2005),actuarialvaluationwasperformedinrespectoftheafores F A B E D C culrtr nPa ses ActualreturnonPlanAssets xessrcgie ntePoi n osAcut ExpensesrecognisedintheProfit andLoss Account hne nteFi au fPa ses ChangesintheFair valueofPlanAssets hne nDfndBnftOlgto ChangesinDefinedBenefitObligation Reconciliation ofthePresent Value ofDefinedBenefit mutrcgie nteBlneSet Amountrecognised intheBalanceSheet eie eei ln ae ntefloigasmtos defined benefitplansbasedonthefollowingassumptions: (Included inContributiontoGratuity, Provident andotherFunds -Schedule18)

Gratuity (Funded plan) Year Ended aid

99 Annual Report 2007-08 SOFTWARE COMMUNICATIONS LIMITED

SCHEDULE 21- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 13 to Schedule 21 (Contd.):

Rs. in Million Year Ended March 31, 2008 Gratuity (Funded plan) G Percentage of each Category of Plan Assets to total Fair Value of Plan Assets as at March 31, 2008 Insurer Managed Funds 100% H Expected Employers contribution for the next year NIL I The liability for leave encashment and compensated absences as at year end is Rs. 6.86 mio. Disclosure for defined benefit plans as above include numbers of Indiagames Limited for the full year. This being the first year of implementation of revised AS-15, previous year figures are not available. 14 The previous year’s figures have been re-grouped, wherever considered necessary and are not comparable with the current year amounts as the current year’s figures are inclusive of new subsidiaries - Indiagames Limited and UTV Movies Limited and Joint Ventures - Smriti Irani Television Limited and Windmill Entertainment Limited.

Signatures to Schedules 1 to 21 which form an integral part of the Consolidated Financial Statements.

Partha Ghosh G. Chandrashekar Rohinton Screwvala Partner Chief Financial Officer CMD & Chief Executive Officer Membership No. F-55913 For and on behalf of Price Waterhouse & Co. Mohd. Sajid Ali Sanjaya Kulkarni 100 Chartered Accountants Company Secretary Director Place : Mumbai Place : Mumbai Date : June 16, 2008 Date : June 16, 2008 Annual Report 2007-08 Annual Report b Inouropinion,properbooksofaccountasrequiredby (b) a We haveobtainedallthe informationandexplanations, (a) Further toourcommentsintheAnnexurereferredparagraph 4. Report) Order, AsrequiredbytheCompanies(Auditor’s 2003, 3. We conductedourauditinaccordancewiththeauditing 2. We haveauditedtheattachedBalanceSheetofUTVSoftware 1. To TheMembersOfUTVSoftwareCommunicationsLimited AUDITORS’ REPORT 3, wereportthat: the mattersspecifiedinparagraphs4and5ofsaidorder. explanations giventous,wegiveintheAnnexureastatementon considered appropriateandaccordingtotheinformation of suchchecksthebooksandrecordsCompanyaswe CompaniesAct,1956’ofIndia(the‘Act’)of ‘The andonthebasis (4A)ofSection227 Government ofIndiaintermssub-section Order, issuedbytheCentral 2004,(togetherthe“Order”) Report) (Amendment) as amendedbytheCompanies(Auditor’s reasonable basisforouropinion. statement presentation.We believethatourauditprovidesa by management,aswellevaluatingtheoverallfinancial accounting principlesusedandsignificantestimatesmade the financialstatements.Anauditalsoincludesassessing basis, evidencesupportingtheamountsanddisclosuresin material misstatement.Anauditincludesexamining, onatest assurance aboutwhetherthefinancialstatementsarefreeof that weplanandperformtheaudittoobtainreasonable standards generallyacceptedinIndia.ThoseStandardsrequire our audit. is toexpressanopiniononthesefinancialstatementsbased management.Ourresponsibility responsibility oftheCompany’s under referencetothisreport.Thesefinancialstatementsarethe ended onthatdateannexedthereto,whichwehavesigned Profit andLoss AccountandCashFlowStatementfortheyear Communications Limited,asatMarch31,2008andtherelated from ourexaminationofthosebooks; law havebeenkeptbytheCompanysofarasappears necessary forthepurposesofouraudit; which tothebestofourknowledgeandbeliefwere Price Waterhouse &Co. For andonbehalfof MembershipNo.F-55913 Mumbai,June16,2008. inthecaseofCashFlowStatement,cash (iii) inthecaseofProfit andLoss Account,ofthe (ii) inthecaseofBalanceSheet,state (i) f Inouropinionandtothebestofinformation (f) e Onthebasisofwritten representationsreceivedfromthe (e) d Inouropinion,theBalanceSheet,Profit andLoss Account (d) c TheBalancesheet,Profit andLoss AccountandCashFlow (c) accepted inIndia: view inconformitywiththeaccountingprinciplesgenerally information requiredbytheActandgiveatruefair and attachedtheretogiveintheprescribedmanner, the financial statementstogetherwiththenotesthereon according totheexplanationsgivenus,said clause (g) of sub-section (1)ofSection274theAct; clause (g)ofsub-section 2008 frombeingappointedasadirectorintermsof none ofthedirectorsaredisqualifiedasonMarch31, taken onrecordbytheBoardofDirectorsCompany, directors oftheCompanyasonMarch31st2008,and (3C) ofSection211theAct; with theaccountingstandardsreferredtoinsub-section and CashFlowStatementdealtwithbythisreportcomply the booksofaccount; Statement dealtwithbythisreportareinagreement flows fortheyearendedonthatdate. profit fortheyearendedondate;and affairs oftheCompanyasatMarch31,2008; Chartered Accountants Partner Partha Ghosh

101 Annual Report 2007-08 102 Annual Report 2007-08 d Inrespectoftheaforesaidloansgranted,thereisno (d) c Inrespectoftheaforesaid loans,thepartiesarerepaying (c) b Inouropinion,therateofinterestandotherterms (b) () TheCompanyhasgrantedunsecuredloans,tosix (a) 3 c Onthebasisofourexaminationinventoryrecords, (c) b Inouropinion,theproceduresofphysicalverification (b) () Theinventoryoftapesandfilmshasbeenphysicallyverified (a) 2 c Inouropinion,theCompanyhasdisposedofasubstantial (c) b Thefixedassetsofthecompanyhavebeenphysically (b) () TheCompanyismaintaining properrecordsshowingfull (a) 1 statements fortheyearendedMarch31,2008) members ofUTVSoftwareCommunicationsLimitedontheﬁnancial (Referred toinparagraph3ofthe Auditors’Report ofevendatetothe ANNEXURE TO AUDITORS’ REPORT SOFTWARE COMMUNICATIONS LIMITED overdue amountmorethanRupees OneLakh. payment ofinterest,whereapplicable. the principalamountsasstipulatedandarealsoregularin the interestofCompany. conditions ofsuchloansarenotprimafacieprejudicialto million respectively. aggregates toRs.1,597.66millionand1,553.01 during theyearandendbalanceofsuchloans Section 301oftheAct.Themaximumamountinvolved Companies coveredintheregistermaintainedunder records. physical verificationofinventoryascomparedtobook of inventory. Nomaterialdiscrepancieswerenoticedon in ouropinion,theCompanyismaintainingproperrecords Company andthenatureofitsbusiness. are reasonableandadequateinrelationtothesizeof inventory oftapesandfilmsfollowedbythemanagement frequency ofverificationisreasonable. by themanagementduringyear. Inouropinion,the Company. assets hasnotaffectedthegoingconcernstatusof to us,inouropinion,thedisposalofsaidpartfixed and accordingtotheinformationexplanationsgiven examination ofthebooksandrecordsCompany, part offixedassetsduringtheyear. Onthebasisofour frequency ofverificationisreasonable. physical inventoryhavebeennoticed.Inouropinion,the material discrepanciesbetweenthebookrecordsand verified bythemanagementduringyearandno fixed assets. particulars includingquantitativedetailsandsituationof . TheCentralGovernmentof Indiahasnotprescribedthe 8. Inouropinion,theCompanyhasaninternalauditsystem 7. TheCompanyhasnotacceptedanydepositsfromthepublic 6. b Inouropinionandaccordingtotheinformation (b) () Inouropinionandaccordingtotheinformation (a) 5 In ouropinionandaccordingtotheinformationexplanations 4. e TheCompanyhasnottakenloans,securedorunsecured, (e) Company. (1) ofSection209theActforanyproducts maintenance ofcostrecordsunderClause(d)Sub-Section commensurate withitssizeandnatureofbusiness. rules framedthereunder. within themeaningofSections58Aand58AAAct weaknesses intheaforesaidinternalcontrolsystem. have beeninformedofanycontinuingfailuretocorrectmajor and explanationsgiventous,wehaveneithercomeacrossnor and recordsoftheCompany, andaccording totheinformation services. Further, onthebasisofourexamination ofthebooks purchase ofinventory, fixedassetsand forthesaleofgoodsand with thesizeofCompanyandnatureitsbusinessfor there isanadequateinternalcontrolsystemcommensurate sources donotexistforobtainingcomparativequotations, purchased areofspecialnatureforwhichsuitablealternative given tous,havingregardtheexplanationthatcertainitems at therelevanttime. reasonable havingregardtotheprevailingmarketprices party duringtheyearhavebeenmadeatpriceswhichare exceeding thevalueofRupees Five Lakhs inrespectofany pursuance ofsuchcontractsorarrangementsand explanations giventous,thetransactionsmadein under thatsection. been enteredintheregisterrequiredtobemaintained arrangements referredtoinSection301oftheActhave explanations giventous,theparticularsofcontractsor the orderarenotapplicabletoCompany. Accordingly, Clauses(iii)(f)and(iii)(g)of paragraph4of the registermaintainedunderSection301ofAct. from companies,firmsorotherpartiescoveredin M hrsta SlsT x 47 20-6 2005-06 2005-06 34.72 Maharashtra Sales Tax

noe Icm a .5 .Y 070 Commissionerof A.Y. 2007-08 0.45 Income–tax Income asatMarch31,2008,whichhavenotbeendepositedonaccountofadispute,are TheparticularsofduesIncome-tax 7 Onthebasisofanoverall examinationofthebalancesheet of 17. Inouropinion,and according totheinformationandexplanations 16. Inouropinionandaccordingtotheinformationexplanations 15. Inouropinion,theCompanyisnot adealerortraderinshares, 14. Theprovisionsofanyspecialstatueapplicabletochitfund/nidhi/ 13. TheCompany hasnotgrantedanyloansandadvancesonthe 12. AccordingtotherecordsofCompanyexaminedbyusand 11. TheCompanyhasnoaccumulatedlossesatMarch31,2008and 10. Accordingtotheinformationandexplanationsgivenusrecords of theCompanyexaminedbyus,therearenodues (b) AccordingtotheinformationandexplanationsgivenusrecordsofCompanyexaminedbyus,inouropinion, (a) 9 *Netofamountdepositedunderprotest. ANNEXURE TO AUDITORS’ REPORT(Contd.) applied forthepurposeswhichthey wereobtained. given tous,onanoverallbasis, the termloanshavebeen during theyear, arenotprejudicialtotheinterestofCompany. Company, forloanstakenbyothersfrombanksorfinancialinstitutions given tous,thetermsandconditionsofguaranteesby securities, debenturesandotherinvestments. mutual benefitfund/societiesarenotapplicabletotheCompany. other securities. basis ofsecuritybywaypledgeshares,debenturesand bank asatthebalancesheetdate. not defaultedinrepaymentofduestoanyfinancialinstitutionor the informationandexplanationgiventous,Companyhas that dateorintheimmediatelyprecedingfinancialyear. it hasnotincurredanycashlossesinthefinancialyearendedon au de ad20-8 n 070 – and2007-08 and2007-08 Tax Act,2002 Value Added h ttt R.I ilo) whichthe (Rs.InMillion) theStatute amount relates n eat, andpenalty, Tax areasfollows:- dues outstandingasatMarch31,2008,foraperiodofmorethansixmonthsfromthedatetheybecamepayable,inrespectSa statutory duesasapplicable,withtheappropriateauthoritiesexceptinrespectofSalesTax. Theextentofthearrearso Fund, Wealth Employees’StateInsurance,Income-tax, Tax, SalesTax, ServiceTax, CustomsDuty, ExciseDuty, Cessandothermat Company isgenerallyregularindepositingundisputedstatutoryduesincludingProvident Fund, InvestorEducationandProtectio Wealth Tax, SalesTax, ServiceTax, CustomsDuty, ExciseDutyandCesswhichhavenot been depositedonaccountofanydispute. a c,16 icuigitrs IncomeTax Appeals thedispute whichthe (Rs.InMillion)* as includinginterest Tax Act,1961 applicable theStatute follows: amount relates is pending aeo aueo us mut Pro o u ae DateofPayment Duedate Period to Amount Natureofdues Name of aeo aueo us mut Pro o Forumwhere Period to Amount Natureofdues Name of Price Waterhouse &Co. For andonbehalfof MembershipNo.F-55913 Mumbai, June16,2008. Duringthecourseofourexaminationbooks andrecords 21. TheCompanyhasnotraisedanymoneybypublicissueduring 20. TheCompanyhasnot issuedanydebentures. 19. TheCompanyhasnotmadeanypreferentialallotment ofshares 18. of suchcasebythemanagement. noticed orreportedduringtheyear, norhave webeeninformed across anyinstanceofmaterialfraudonorbytheCompany, information andexplanationsgiventous,wehaveneithercome accepted auditingpracticesinIndia,andaccordingtothe of theCompany, carriedoutinaccordancewiththegenerally the year. under Section301oftheActduringyear. to partiesandcompaniescoveredintheregistermaintained term basiswhichhavebeenusedforlong-term investment. and explanationsgiventous,therearenofundsraisedonashort the Company, inouropinionandaccordingtotheinformation Chartered Accountants Partner Partha Ghosh

f statutory erial the of les

n 103 Annual Report 2007-08 104 Annual Report 2007-08 ,3.6 7.7 Place: Mumbai Date:June16,2008 479.47 5.63 2,425.80 473.84 1,433.56 Date :June16,2008 Place : Mumbai 43.74 1,050.06 4,733.17 1,389.82 13 12 3,439.28 Schedules referredtoaboveandnotesattachedtheretoformanintegral partoftheBalanceSheet. NOTES TO THEFINANCIALSTATEMENTS 11 NetCurrentAssets TOTAL Provisions CurrentLiabilities Less :CurrentLiabilitiesandProvisions Loans andAdvances No. Schedule hree conat CmaySceay Director CMD&ChiefExecutiveOfficer Rohinton Screwvala ChiefFinancial Officer CompanySecretary G. Chandrashekar 0.75 Chartered Accountants 831.79 Price Waterhouse &Co. 90.34 452.86 For andonbehalfof Membership No.F-55913 Partner Partha Ghosh This istheBalanceSheetreferredtoinourreportofevendate. 0.88 267.94 392.33 405.35 1,001.74 23.33 464.98 1,591.39 10 13.02 7 8 9 (72.65) 290.66 272.71 17.95 351.60 OtherCurrentAssets 2,447.94 CashandBankBalances SundryDebtors 228.94 37.53 1,680.18 Inventories (78.89) Current Assets,LoansandAdvances 1,413.71 [Refer Note8(a)ofSch.20] Deferred Tax Assets(Net) 2,026.19 Investments 4 CapitalWork InProgress 248.43 1,777.76 - Less :AccumulatedDepreciation NetBlock GrossBlock 3 1 2 APPLICATION OFFUNDS SecuredLoans TOTAL Loan Funds Reserves andSurplus AdvanceAgainstWarrants ShareCapital Shareholders’ Funds SOURCES OFFUNDS BALANCE SHEET Fixed Assets

SOFTWARE COMMUNICATIONS LIMITED

8.3 785.26 780.53 6 5

od ai l SanjayaKulkarni Mohd.SajidAli 3296 1,946.33 3,299.61 133 134.63 103.33

asatMarch31,2008 0 20 March 31,2008 As at As at ,7.3 3,271.57 4,474.13 ,7.3 3,271.57 4,474.13 March31,2007 Rs. inMillion

lc ubi Place: Mumbai Date:June16,2008 Date :June16,2008 Place : Mumbai otnigOeain 8.9 182.50 14.87 30.66 (21.82) 4.08 1,565.77 Schedules referredtoaboveandnotesattachedtheretoformanintegral partoftheProfit and Loss Account. 16.10 NOTES TO THEFINANCIALSTATEMENTS Diluted 22.25 1,809.90 86.39 (7.67) (8.47) 33.54 3.94 2,664.79 141.36 115.54 198.81 1,225.60 8.99 2,892.59 -DeferredTax Rs.Nil,Previous Year Rs1.13Mio) -Fringe BenefitTax (includingforPrior Years 157.46 -MatCreditEntitlement 172.00 Mio,Previous Year 19 Rs.0.43Mio) 2,335.33 (IncludesWealth -Current Tax Rs.0.52 17 ContinuingOperations 18 Less :Provision forTaxation DiscontinuedOperations 16 Consists of: PROFIT BEFORETAX Less :Depreciation PROFIT BEFOREDEPRECIATION &TAX Less :Interest(net) DEPRECIATION &TAX PROFIT BEFOREINTEREST, OtherExpenses StaffCost DirectCost EXPENDITURE itiuinTxteen .1 8.03 36.59 57.23 351.21 14.72 477.08 5.81 - 34.20 52.43 741.16 (7.67) Basic (Refer Note 18ofSch.20) Earnings Per ShareofRs.10each BALANCE CARRIEDTO BALANCESHEET Distribution Tax thereon Proposed DividendonEquityShares Transfer toGeneralReserve APPROPRIATION NET PROFITAVAILABLE FOR ContinuingOperations Balance Profit broughtforward DiscontinuedOperations Consists of: PROFIT AFTERTAX hree conat CmaySceay Director CMD&ChiefExecutiveOfficer Rohinton Screwvala ChiefFinancial Officer CompanySecretary G. Chandrashekar Chartered Accountants Price Waterhouse &Co. For andonbehalfof Membership No.F-55913 Partner Partha Ghosh This istheProfit andLoss Accountreferredtoinourreportofevendate. No. Schedule te noe 5 2.8 285.40 1,524.50 20.78 2,862.91 15 14 (Refer Note23ofSch.20) Profit onSaleofPost Production Division OtherIncome Sales andServices(net) INCOME PROFIT &LOSS ACCOUNT

[Refer Note1(f)&8(a)ofSch.20] 1.94 17.08 1.94 17.08

759 843.01 785.92

od ai l SanjayaKulkarni Mohd.SajidAli 87 197.37 78.72

89 - 8.90 95 3.6 (7.7 (168.56) (173.07) 33.96 29.50 2 20 122 228.03 112.26 759 741.16 745.91

for theyearendedMarch31,2008 March 31,2008 Year Ended Year Ended March31,2007 2.0 244.13 227.80 47 365.93 44.76 Rs. inMillion

105 Annual Report 2007-08 106 Annual Report 2007-08 Particulars CASH FLOW ae ad(nldn a eutda ore (69) (55.55) (480.87) (510.51) (566.06) (84.74) (35.48) 41.06 (46.96) 560.36 1,019.14 972.18 0.38 915.94 (154.82) (1.46) (568.11) 49.52 (11.13) 3.30 9.68 265.77 (1.06) NetCashGeneratedby/(Used)inOperatingActivities(A) Taxes Paid (includingTax Deductedat Source) CashGeneratedby/(Used)InOperations (Decrease)/IncreaseinTrade andOtherPayables (Increase)/DecreaseinInventories (Increase)/DecreaseinOtherReceivables (Increase)/DecreaseinSundryDebtors OperatingProﬁt BeforeWorking CapitalChanges Provision forEmployeeRetirement Benefits Dividend UnrealisedForeign Exchange (Gain)/Loss Income Provision NoLonger Required Written Back CASHFLOW FROMINVESTINGACTIVITIES: B CASHFLOW FROMOPERATING ACTIVITIES: A rvso o obflAvne 77.81 0.05 7.03 - 14.56 20.00 (265.08) (7.92) Provision forDoubtfulAdvances Provision forDoubtfulDebts AmortisationofMovieCopyrights BadDebtsWritten off Profit onSaleofFixed Assets/Investment(Net) Interest Interest Income Depreciation Expenses Proﬁt BeforeTax

dacst eae opne (,5.1 - (492.81) (1,429.94) - - (234.96) 1,115.08 (2,022.19) (166.26) (1,550.11) (641.63) 169.75 (42.15) 130.87 NetCashusedinInvestingActivities(B) Dividend Advances toRelated Companies Interest Received ShareApplication MoneyTo Subsidiaries Received Purchase ofInvestments Proceeds fromSaleofInvestments Proceeds fromSaleofFixed Assets Purchase ofFixed Assets Cash usedinDiscontinuedoperations Cash generatedby/(used)inContinuingoperations Consists of: Adjustments forChangesinWorking Capital: Adjustments for: Cash generatedby/(used)inDiscontinued operations Cash usedinContinuingoperations Consists of:

SOFTWARE COMMUNICATIONS LIMITED

Statement fortheyearendedMarch31,2008 (2,151.99) (473.70) (77.03) (10.53)

,4.1 (555.53) 1,049.21 2.0 (19.11) 129.80

March 31,2008 (46) (56.01) (74.62) 9.6 72.11 190.16 87 197.37 78.72 35 30.66 33.54 44 55.34 74.49 (1.62) (2.89) 28 1.67 2.85 .3 0.68 1.03

March 31,2007 Rs. inMillion CASH FLOW lc ubi Place: Mumbai Date:June16,2008 Date :June16,2008 Place : Mumbai Notes: hree conat CmaySceay Director CMD&ChiefExecutiveOfficer Rohinton Screwvala ChiefFinancial Officer CompanySecretary G. Chandrashekar Chartered Accountants Price Waterhouse &Co. For andonbehalfof Membership No.F-55913 Partner Partha Ghosh This istheCashflowstatementreferredtoinourreportofevendate. Previous yearsfigureshavebeenregroupedwherevernecessary. 4 CashandcashequivalentsincludeunclaimeddividendRs.0.06Mio(PY0.32 Mio)(Refer Sch.12)whicharenot availablef 3 Figures inbracketsindicatecashoutgo. 2 TheaboveCashFlowStatementhasbeenpreparedundertheIndirectMethodsetoutinAccounting Standard-3issuedbytheIns 1 Particulars

rcesfo ahCei Nt (6.0 644.03 1,127.53 (362.60) 983.00 NetCashGeneratedFrom FinancingActivities(C) DistributionTax Paid Dividend Interest Paid Proceeds fromCashCredit(Net) Interest Paid Capitalised -Payment -Receipts Peiu erR.15 i)o enttmn fFrinCrec on 6.1 211.80 864.61 (Previous Year Rs.1.55Mio)onreinstatementofForeign CurrencyLoan] -Payments -Receipts [ExcludesExchangeFluctuationofRs.NIL

aac ihShdldBns 90 22.49 19.03 67.85 4.30 BalancewithScheduledBanks Cash,Cheques&Drafts(inhand)andRemittances inTransit su fEut hrs 377 654.50 37.53 337.72 - AdvancewarrantmoneyreceivedincludingPremium ShareIssueExpenses IssueofEquityShares Cashequivalents(A+BC) NetIncrease/(Decrease)inCashand D CASHFLOW FROMFINANCINGACTIVITIES: C pnn ahadCs qiaet 03 9.43 90.34 atthetimeofmerger Add:CashTaken OverFrom UnitedEntertainmentSolutionsLimited OpeningCashandEquivalents hree conat fIda the Company. Chartered AccountantsofIndia. Cash usedinDiscontinuedoperations Cash generatedfromContinuingoperations Consists of: Proceeds fromShorttermBorrowings Proceeds fromLongTerm Borrowings Cash andEquivalentsComprise Closing CashandEquivalents

od ai l SanjayaKulkarni Mohd.SajidAli

Statement fortheyearendedMarch31,2008 (73) (29.16) (57.35) 33 90.34 23.33

,4.5 1,156.69 1,040.35 (67.01) 68.66

March 31,2008 For andonbehalfoftheBoardDirectors (192.95) (76.73) (65) (14.73) (16.52) 5.0 - 353.00 33 90.34 23.33 03 21.68 90.34 (0.26) (57.06) - (115.00) - - (146.42) - - (2.36) - (8.03) - 12.25 -

(Contd.) March 31,2007 Rs. inMillion or useby titute of 107 Annual Report 2007-08 108 Annual Report 2007-08 Asperlast BalanceSheet GENERAL ShareIssueExpenses Less: RESERVE TOTAL spranxdPoi n osAcut 759 741.16 745.91 AsperannexedProfit andLoss Account TOTAL es WieDw sprShm farneet - 606.27 - - (35.58) Write DownasperSchemeofarrangement Less: Less: Transfer toSecuritiesPremium Account

es rnfrt hr aia con 19) - (1.95) Arisingonaccountofconversionwarrants Add: Less: Transfer toShareCapitalAccount 48298Eut hrso s 0-ec ul ad 284 228.94 260.00 248.43 450.00 182,932EquitySharesofRs.5/-each(91,466 EquitySharesofRs.10/-each)wereissuedtoshareholdersWestern Outdoor 3) 4,664,824EquitySharesofRs.5/-each(2,332,412Rs.10/-each)wereissued withoutconsiderationincash 2) 6,705,882EquitySharesofRs.10/-eachwereissuedwithoutconsiderationincashasBonusbycapitalisationShar 1) Notes: TOTAL (Previous Year 22,893,608EquitySharesofRs.10/-eachfullypaid) 24,842,968EquitySharesofRs.10/-eachfullypaid ISSUED, SUBSCRIBED&PAID UP (Previous Year 26,000,000EquitySharesofRs.10/-each) 45,000,000EquitySharesofRs.10/-each d rnfre rmPoi n osAcut - 36.59 - Add: Transferred fromProfit andLoss Account

sprls aac he 2.2 616.45 628.32 620.50 - 37.53 - Add: Premium onsharesissuedapreferentialbasis AsperlastBalanceSheet RESERVESANDSURPLUS 3 AdvancewarrantmoneyreceivedincludingPremium ADVANCE AGAINST WARRANTS 2 AUTHORISED SHARECAPITAL 1 SCHEDULES (Refer Note4(ii)ofSch.20) PROFIT &LOSS ACCOUNT (Refer Note4(ii)ofSch.20) (Refer Note4(i)ofSch.20) sprLs aac he 75 - 37.53 SECURITIES PREMIUMACCOUNT As perLast BalanceSheet Add : Credit onaccountoftransitionalprovisionAS-15 in theF.Y. 1995-96tothethenexistingShareholdersofCompany. Technologies LimitedaspertheSchemeofArrangementfordemergeritsstudiodivisiontoCompanyinF.Y. 2003-04. shareholders underashareswaparrangementintheF.Y. 2000-01aspartofconsolidationexercisecarriedoutinthesaidyear. SOFTWARE COMMUNICATIONS LIMITED (Refer Note 4(ii)ofSch.20) (Refer

formingpartoftheFinancialStatements

357 - 355.76

(Refer Note21ofSch.20) .4 - 3.54 March 31,2008 ,7.6 1,413.71 1,777.76 940 628.32 984.08 940 1,236.95 984.08

4.3 228.94 248.43 4.7 44.23 47.77 4.3 7.64 44.23 As at - 37.53 - - 2.36 -

March 31,2007 Rs. inMillion e Premium to various Media As at

-Others:Rs19.09Mio. -Vehicle Loans: Rs1.31Mio. -Term Loans: Rs1,116.21Mio. -Working CapitalDemandLoans: Rs398Mio. Oftheabove,amountrepayablewithinoneyearareasfollows: 3. Securedagainstthehypothecationofunderlyingfixedassets. 2. Cash credit,Working CapitalandTerm 1. Loans frombanksaresecuredbyhypothecationoffixedassets,inventories, Notes :

SECUREDLOANS 4 SCHEDULES eil on rmBns 22 3.72 68.60 298.32 58.99 1,175.75 2.28 45.00 1,175.53 2 813.14 2 398.00 1 1 1 Vehicle Loans From Banks Others Term Loans From Banks Working CapitalDemandLoans From Banks CashCreditFrom Banks TOTAL 2,447.94 1,591.39 to theBalanceSheetdate. Rs. 600mioarefurthersecuredbypledgeofsharesheldapromoter/promotercompany, whichhavebeenrepaidfullysubsequen book debtsandthepersonalguaranteeofadirectorCompany. Outofthetermloansabove,amountingto Notes formingpartoftheFinancialStatements March 31,2008 As at (Contd.) March 31,2007 Rs. inMillion As at t 109 Annual Report 2007-08 110 Annual Report 2007-08

5 FIXED ASSETS (Refer Note 1(b), 1(j), 1(k), 1(l)) of Schedule 20) Rs. in Million SCHEDULES COST DEPRECIATION / AMORTISATION NET BLOCK Particulars Opening Additions Deductions As at Opening For the Deductions As at As at As at SOFTWARE COMMUNICATIONS LIMITED As at (Refer March 31, As at Year March 31, March 31, March 31, April 1, Note c below) 2008 April 1, 2008 2008 2007 2007 (A) 2007 (B) (A-B) Intangible Assets

Computer Software 23.67 9.77 0.89 32.55 8.08 4.40 0.32 12.16 20.39 15.59 formingpartoftheFinancialStatements Tangible Assets Leasehold Improvements 14.03 8.97 11.79 11.21 5.16 1.45 5.53 1.08 10.13 8.87 Building 122.17 1.17 - 123.34 0.02 2.01 - 2.03 121.31 122.15 (Refer Note: a below) Plant & Machinery 185.67 4.30 132.22 57.75 38.23 9.22 17.32 30.13 27.62 147.44 Furniture & Fixtures 22.74 4.16 13.95 12.95 2.81 1.07 2.59 1.29 11.66 19.93 Computers 72.20 17.54 1.41 88.33 13.60 13.57 0.32 26.85 61.48 58.60 Office Equipments 11.01 3.79 1.68 13.12 1.18 0.61 0.52 1.27 11.85 9.83 Motor Vehicles 13.49 0.86 2.00 12.35 3.57 1.21 0.70 4.08 8.27 9.92 (Refer Note: b below) Grand Total 464.98 50.56 163.94 351.60 72.65 33.54 27.30 78.89 272.71 392.33 Capital Work in Progress, at cost (including Capital Advances) 17.95 13.02 Total 290.66 405.35 Previous Year 245.18 584.28 364.48 464.98 160.14 30.66 118.15 72.65 392.33 Notes:

a) Building is hypothecated to Standard Chartered Bank for the term loan taken for the acquisition of the said building. (Contd.) b) The Net Book value of Motor Vehicles includes value of vehicles acquired under loan from banks amounting to Rs 2.28 Mio [Previous Year - Rs. 3.72 Mio]. c) Deductions during the year include disposal of fixed assets pursuant to sale of the post production assets (Refer Note 23 of Sch. 20). OA 8.3 785.26 780.53 * AmountlessthanRs10,000 TOTAL Units soldduringtheyear-15,283,733) Units accumulatedduringtheyear -161,722, (Units purchasedduringtheyear-Nil, ) B MOFPSre urel lnD 1,2,1 s 0 - 151.23 - Rs.10 15,122,011 - 0.01 0.01 ABNAMROFTPSeries4QuarterlyPlanD b) 0.001USD 125,000 125,000 Homland NetworkCorporation Others(Unquoted) b) RfrNt i)o c.2) 1115 s 0 08 - 0.85 Rs.10 0.50 - 0.50 121,145 Rs2 - 62,500 62,500 - (Refer Note5(ii)ofSch.20) Indiagames Limited# -* 610.19 Subsidiary Companies(Unquoted) EquitySharesofCompanies a) Rs.10 610.19 Radaan MediaworksIndiaLimited Current Investment,NonTrade (fullypaid) -* 1GBP 600,000 Quoted : Equity SharesofCompanies 0.001USD 600,000 7,000,000 Long Term, 352,000 Trade (fullypaid) 7,000,000 352,000 (formerlyUTVCommunications(UK)Limited) IGInteractiveEntertainmentLimited SubsidiaryCompanies (Unquoted) a) HomlandNetworkCorporation (ii) Preference SharesofCompanies CompanyLimited UnitedTeleshopping andMarketing (i) Others(Unquoted) d) i) miiIaiTlvso iie 500 s 0 02 - 0.25 Rs.10 - 25,000 Smriti IraniTelevision Limited (ii) i Wnml netimn iie 500 s 0 02 - 0.25 Rs.10 - 25,000 Windmill EntertainmentLimited (i) JointVenture Companies(Unquoted) c) ) Sbiir opne Qoe) - 164.40 0.05USD - 2.27 80,000,000 0.85 2.27 0.85 (Refer Note5(i)ofSch.20) 10USD UMPPLC** 1GBP SubsidiaryCompanies(Quoted) 5,000 b) 10,000 5,000 10,000 (formerlyUTVCommunications(UK)Limited) IGInteractiveEntertainmentLimited (ii) UTVCommunications(USA)LLC (i) SubsidiaryCompanies(Unquoted) a) Equity SharesofCompanies Long Term, NonTrade (fullypaid) INVESTMENTS

(ee oe5()o c.2) 5,0 - R.1 .0 - 0.50 Rs.10 - 0.46 50,000 0.46 0.05USD 200,000 (v) UTV MoviesLimited(Refer Note5(v)ofSch.20) 200,000 (iii) UTV MotionPictures (Mauritius)Limited

(ee oe5(v fSh 0 19510 R.1 19.75 - Rs.10 1,975,100 - (Refer Note5(iv)ofSch.20) (iv) UTV BroadcastingLimited 6 INVESTMENTS SCHEDULES

(Refer Note1(c)and5ofSchedule20)

formingpartoftheFinancialStatements

Nos. asat March 31, 2008

Rs.inMillion March 31, Nos. asat 2007

Face Value

(Contd.) March 31, As at 2008

March 31, 2007 As at

111 Annual Report 2007-08 112 Annual Report 2007-08 grgt au fQoe netet 149 6018 05 0.28 0.50 6,011.86 164.90 Aggregate Value ofQuotedInvestments oa 705 785.26 - 780.53 784.76 - 615.63 Total Aggregate Value ofUnquotedInvestments

im ne rdcin 3.1 552.40 67.34 100.46 35.31 0.73 61.91 114.90 0.73 Films UnderProduction TOTAL Projects inProgress UnutilisedFree CommercialTime -MovieCopyrights -AnimationProgrammes UnamortisedcostofCompleted Raw Stock- Tapes andFilms (AscertifiedbytheManagement, atlowerofcostornetrealisablevalue)

nldn iiedrivsmns 50.12 50,008 the BalanceSheetdate.TheCompanyisholdingsharesofIndiagamesLimitedforbenefitManagementShareholders. 50.12 50.00 Limited issued35,716bonusequitysharestotheCompany. Accordingly, theCompanyholds121,145equitysharesofIndiagamesLi 50.13 4,712,519 49,887 # TheCompanyacquired85,429equitysharesofRs10eachatparIndiagamesLimitedonDecember14,2007.Duringtheyear, I 49,172 50.00 4,700,839 - (9.08 Mioshares).SamehasbeenreleasedinMay2008. - 50.00 ** TheCompanyhaspledgeditsinvestmentinUMPPLCtoStandardCharteredBank-Mauritius(13.60Mioshares)andAxisBank,H 49,046 - Note: - - * includingdividendreinvestments ------plan DailyDividendReinvestment* HDFC CashManagement-Saving Daily IncomeOptionReinvestment* UTI LiquidCashPlanInstitutional - DailyDividend* Tata LiquidityManagementFund Name oftheFund Details ofCurrentInvestmentsboughtandsoldduringtheyear 6 INVESTMENTS SCHEDULES INVENTORIES 7 n ot lnD-Rti iied - - 2,0,0 200 2,2,5 251.29 25,129,250 250.00 25,000,000 - - - - One monthPlanD-Retail Dividend* Prud ICICIFMPSeries32- QryPa iied - - 50000 5.0 50000 251.63 25,000,000 250.00 25,000,000 - - - - (Qtrly Plan-2)Dividend DBS CholaFMPSeries6 OA - - 5,9,7 600 5,4,4 653.29 54,940,949 650.00 - 54,799,772 - - - TOTAL

SOFTWARE COMMUNICATIONS LIMITED

(Refer Note 1(d)ofSchedule20) (Refer Note1(c)and5ofSchedule20) formingpartoftheFinancialStatements ucaeo nt Redemption ofUnits Purchase ofUnits o f R.i N.o Rs.in No.of Rs.in No. of nt ilo units Million units Million 2007-08

ac 1 March31, March 31,

(Contd.) 2008 ot Market value Cost Rs.inMillion

March 31,2008 ucaeo nt Redemption ofUnits Purchase ofUnits o f R.i o f Rs.in No.of Rs.in No. of 2006-07 units Million units Million units units Million 2007 2007 2007

267.94 831.79 29.19 34.87 25.90 75.99 As at (Contd.) ac 1 March31, March 31, ot Marketvalue Cost

March 31,2007 Rs. inMillion

mited ason ndiagames ong Kong

As at

OA 33 90.34 23.33 TOTAL -Ohr 01 0.11 0.11 -Others urn con 08 7.40 14.98 10.89 8.03 -Fixed DepositAccount -CurrentAccount i Blnewt ak BalancewithBanks Previous Year Rs.67.00Mio] ii. [IncludeschequesonhandRs.3.57Mio, OA 1017 452.86 403.88 401.99 1.89 1,001.74 50.80 947.74 2.21 945.53 48.98 70.38 1.63 1.82 47.35 1.82 54.00 - 16.38 16.38 54.00 TOTAL Unbilled Billed OtherDebts-consideredgood ii. Less :Provision fordoubtful debts Unbilled-consideredgood -considereddoubtful -consideredgood OverSixmonths i. Billed (Unsecuredandconsideredgood,unlessotherwisestated) . ahadceuso ad 43 67.85 4.30 Cashandchequesonhand i. OA .8 0.75 0.88 0.75 0.88 TOTAL InterestReceivable onFixed DepositsandOthers 10 OTHER CURRENTASSETS 10 CASHANDBANKBALANCES 9 SUNDRYDEBTORS 8 SCHEDULES

(Refer Note6ofSchedule20) formingpartoftheFinancialStatements

March 31,2008 As at

(Contd.) March 31,2007 As at Rs. inMillion

113 Annual Report 2007-08 114 Annual Report 2007-08 te eois 20 40.14 52.03 1,050.06 3,439.28 OtherDeposits TOTAL (Previous Year Rs.21.82Mio)] oOhr 1576 1699 01 606.72 75.08 - 0.14 26.09 1,649.97 1,567.67 109.26 641.63 34.57 [Provision forTax CurrentYear Rs.8.47Mio AdvanceIncomeTax (netofprovision) -To Others -To SubsidiaryCompanies ShareApplicationMoney Advances MAT Credit Entitlements duringtheyearRs.2.27Mio[Previous Year Rs.2.06Mio]) fromthedirectorsofCompany, Maximumamountoutstanding udyCeiosfrCptlGos aeil n xess -Microand SmallEnterprises SundryCreditorsforCapitalGoods,MaterialsandExpenses CURRENT LIABILITIES 12 LOANS ANDADVANCES 11 OA 1398 473.84 0.32 5.95 151.13 1,389.82 204.20 3.90 108.34 0.06 - 0.75 504.52 347.14 1.11 365.67 170.57 *Therearenoamountsdueandoutstanding tobecreditedtheInvestorEducationandProtection Fund. TOTAL OtherLiabilitiesandAccruals InterestAccruedButNotDueonLoans Unpaid Dividend * AdvanceBillings Advance fromCustomers -Others -Amount Payable tosubsidiary tes 5.2 81.66 289.93 158.62 84.53 861.66 205.40 205.40 14.97 84.53 84.53 777.13 777.13 84.53 16.07 (IncludesRs.0.81Mio[Previous Year Rs.1.27Mio]due -Others Less :Provision forDoubtfulAdvances -considereddoubtful -consideredgood -AdvancestoSuppliers -AdvancetoUTVEmployeesWelfare Trust tobereceived Advancesrecoverableincashorkindforvalue (Unsecuredandconsideredgood,unlessotherwisestated) SCHEDULES

(Refer Note7ofSch.20) (Refer Note 16ofSch.20) SOFTWARE COMMUNICATIONS LIMITED formingpartoftheFinancialStatements 23 606.58 82.30 - -

March 31,2008 As at

(Contd.) March 31,2007 As at Rs. inMillion

rvso o elhTx(e favne) .7 0.43 0.57 Provision forEmployeesRetirement Benefits Provision forWealth Tax (netofadvances) OA 4.4 5.63 43.74 TOTAL MselnosEpne 22 39.57 12.62 11.05 7.03 36.78 52.25 22.92 8.82 33.00 216.61 20.00 237.48 21.29 517.11 36.51 327.45 66.45 337.47 1,334.21 52.42 55.22 275.97 MiscellaneousExpenses Amortisation ofMovieCopyrights AdvertisementandPublicity Travelling Expenses Professional Fees Post Production Charges ConsumptionofRawstock ofVideoTapes andFilms Footage Expenses/OtherAcquisitionCost EquipmentHire,Sets,CostumesandVenue Hire CastandTechnicians’ Fees andCommission Telecast Fees OA ,3.3 1,225.60 99.39 2,335.33 61.91 TOTAL Movierights Towards Free CommercialTime andUnexploited 16 DIRECT COST 16 OTHER INCOME 15 PROVISIONS 13 SCHEDULES OA 07 285.40 20.78 3.18 265.08 3.12 - 2.47 11.13 15.63 2.89 1.06 1.62 TOTAL GainonForeign ExchangeFluctuation(Net) Profit onSaleofInvestments MiscellaneousIncome Provision NoLonger Required Written Back DividendfromCurrentandNonTrade Investments rvso o a nPooe iied .1 - - 5.81 34.20 Provision forTax onProposed Dividend Proposed DividendonEquityShares 14 SALES ANDSERVICES(NET) 14 OA ,6.1 1,524.50 2,862.91 1,524.50 2,862.91 TOTAL SalesandServiceRevenues (Net)

(Refer Note21ofSch.20) Less: Amountsinventorised (Refer Note1(h)ofSchedule20)

formingpartoftheFinancialStatements .6 5.20 3.16

March 31,2008 March 31,2008 Year ended 2372 1,324.99 2,397.24 As at

(Contd.) March 31,2007 Year ended March 31,2007 Rs. inMillion Rs. inMillion As at

115 Annual Report 2007-08 116 Annual Report 2007-08 OA 5.6 141.36 5.24 157.46 9.77 131.83 4.29 140.76 6.93 TOTAL StaffWelfare ContributiontoGratuity, Provident &otherFunds Salaries,Wages andBonus 17 STAFF COST 17

SCHEDULES

OA 7.0 198.81 172.00 TOTAL OA 1.4 16.10 115.54 56.01 72.11 47.08 3.22 74.62 190.16 146.83 4.40 TOTAL Previous Year -Rs12.09Mio] [Tax DeductedatSourceRs. 13.14Mio OnFixed DepositsandOthers Less :InterestIncome InterestonOthers -Others ietr’StigFe 03 0.23 0.01 0.68 77.81 0.37 4.87 0.05 7.24 5.11 9.82 6.98 0.98 9.61 1.03 - 11.67 4.39 14.56 31.30 8.88 9.67 10.76 4.86 9.28 2.00 20.53 13.25 20.20 32.96 Directors’SittingFees Miscellaneous 0.33 Loss onSaleofFixed Assets(Net) Expenses AdvertisementandBusinessPromotion Expenses Provision forDoubtfulAdvances BadDebtsWritten Off Provision forDoubtfulDebts Communication&Postage Expenses Travelling &ConveyanceExpenses ElectricityCharges Insurance Rates &Taxes Others PlantandMachinery Repairs andMaintenance Rent -Premises 19 INTEREST (NET) 19 OTHER EXPENSES 18 ie on 3.3 21.81 38.93 -Fixed Loans Intereston Loans fromBanks SOFTWARE COMMUNICATIONS LIMITED

(Refer Note13ofSch.20) formingpartoftheFinancialStatements

01 33.43 50.15 March 31,2008 Year ended

March 31,2007 Year ended Rs. inMillion STATEMENTS SCHEDULE -20NOTES TO THEFINANCIAL Thetransactionsinforeignexchangeareaccounted attheexchangerateprevailingondateoftransaction.Monetaryasset ForeignCurrencyTransactions : g Deferred taxisrecognised,subjecttotheconsiderationofprudence,ontimingdifferences,beingdifferencebetween Provision forCurrenttax(includingWealth Tax) andFringe benefittaxhasbeenmadeinaccordancewiththeIncomeandW CurrentTaxation : e (vii)TheCompany evaluatestherealisablevalueand/orrevenuepotentialofinventoryonanannualbasisandappropriate wri (vi)Theborrowingcostdirectlyattributabletoamovieiscapitalisedaspartofthemovie.Incasegeneral borr (v)Raw Stock,DigitalVideoDiscs/CompactDiscsstockandUnutilisedFree CommercialTime (FCT)arestated at lowerofcos (iv)Pilot episodesarestatedatcost.Pilots arewrittenoffattheendof3yearsfromyearproductionrespecti (iii)Projects inprogressarestatedatcost.Costconsistsofmaterials,labour, otherexpensesandadvancespaid. (ii)Acquiredrightspertainingtomovies,animation&othercontent,areamortisedontheexploitationofsuchbased (i)TheCompanyamortises60%(75%amortisedforfilmsreleasedtillMarch31,2007)ofthecostmovierightsacquiredor (ii)Currentinvestmentsarestatedatcostorfairvalue,whicheverislower. d (i)Long terminvestments (includingjointventures)arestatedatcost,exceptwherethereisadiminutioninvalueotherth Inventories : (iv)Leasehold Improvementsareamortisedovertheperiodoflease. (iii)Fixed AssetsindividuallycostingRs.5,000orlessarefullydepreciatedintheyearofacquisition. (ii)Depreciationisprovidedbasedonmanagement estimateofusefullivesthefixedassets,onstraightlinemethod (i)Fixed assetsarestatedatcostofacquisitionlessaccumulateddepreciation.TheCompanycapitalisesallcostsrelating ThefinancialstatementsarepreparedtocomplyinallmaterialaspectswiththeapplicableaccountingprinciplesIndi Basis of Accounting: a SigniﬁcantAccountingPolicies : 1 DeferredTaxation : f c Investments : FixedAssetsandDepreciation: b future taxableincomewillbeavailableagainstwhichsuchdeferredtax assetscanberealised. tax assetsarenotrecognisedonunabsorbeddepreciationandcarry forward oflossesunlessthereisvirtualcertaintythatsuf income andaccountingthatoriginateinoneperiodarecapable ofreversalinoneormoresubsequentperiods.Deferr management estimatesofrevenuepotential. of monetaryassetsandliabilitiesdenominated inforeigncurrenciesarerecognisedtheProfit andLoss account. foreign currencyitemsarecarriedat cost.Gainsandlossesresultingfromthesettlementofsuchtransactions andfromthetr liabilities asattheBalancesheetdate aretranslatedattherateofexchangeprevailingdateBalance sheet.No tax lawsprevailingfortherelevantAssessmentYears. is madeincaseswhereacceleratedwritedownwarranted. expenditure onthatmovie. borrowing costeligibleforcapitalisationmovieprojectsisdeterminedbyapplyingaweightedaveragerate realisable value. the sameisnotdevelopedintoaserial. in whichcaserequisiteprovisionismadetowritedownthecarryingvaluerecognisesuchdecline. 1956. applicable accountingstandardsnotifiedu/s211(3C)oftheCompaniesAct,1956andrelevantprovisionsAc is amortisedoverthebalancelicenseperiodorbasedonmanagementestimateoffuturerevenue potential, asthecasemaybe. one yearfromthedateoffirsttheatricalrelease,whicheveroccursearlier. Balance40%(25%forfilmsreleasedupto March31 proportionate costofthesaidrightiscarriedforwardtobewrittenoffasandwhensuchcommerciallyexploitedora of revenuesfromeachtheserights.Incasetheaforesaidrightsarenotexploitedalongwithorpriortofirsttheatric Theatrical Rights,Television Rights,MusicVideoRightsandothersismadeproportionatelybasedonmanagementestimat produced byit,onfirsttheatricalreleaseofthemovie.ThesaidamortisationpertainingtoDomesticTheatricalRights,Inter XIV oftheCompaniesAct,1956). The managementhasestimatedtheusefullifeofPlant&Machinerytobe12years(lowerthanthatprescribedbySch prorata totheperiodofuseoratratesprescribedinScheduleXIVCompaniesAct,1956,whicheverishigher. acquisition andinstallationoffixedassets.

ve pilot,incase an temporary, n-monetary t theendof al release, anslation national te down owings, , 2007) t ornet on the to the a, the ficient to the s and edule ealth able ed t, e

117 Annual Report 2007-08 118 Annual Report 2007-08 Borrowingcoststhatareattributabletotheacquisitionandconstructionofaqualifyingassetcapitalisedaspart TheCompanyrecognisesaprovisionwhen thereisapresentobligationasresultofpasteventthatprobablyrequiresano TheCompanyaccountsfor compensationexpenseundertheEmployeeStockOptionSchemesusingintrinsicvaluemethodas TheCompanyassesses ateachbalancesheetdatewhetherthereisanyindicationthatanassetmaybeimpaired.Ifsuch in ImpairmentofAssets: l Lease paymentsforoperatingleasesarerecognisedasexpenseonastraight-line basisovertheleaseterm.Initialdirectco AssetsacquiredunderfinanceleasearerecognisedasassetswithcorrespondingliabilitiesintheBalanceSheetatincep contributionstotheseplansarechargedtheProfit andLoss Account IncaseofDefinedContributionplans,theCompany’s (i)Long Term EmployeeBenefits: (v)DividendisrecognisedwhentherighttoreceivedividendunconditionallyestablishedatBalanceSheetdate. (iv)Revenue onutilisationofpostproduction,studiofacilitiesandtechnicalservicesare recognisedontherenderingofs (iii)Revenues from licensinganddistributionoftelevisionprogrammesmoviesarerecognisedinaccordancewiththelice (ii)Revenues fromsaleofairtimearerecognisedintheperiodduringwhichspots aired. (i)Revenues oncommissionedtelevisionprogrammes,animationprogrammesanddubbingarerecogniseddelivery. Theamount Revenue Recognition : h NOTES TO THE FINANCIAL STATEMENTS Provisions andContingentLiabilities: n EmployeeStockOptionSchemes(ESOP): m k Lease : BorrowingCosts: j Retirement Beneﬁts: i is reflectedattherecoverableamount. there isanindicationthatifapreviouslyassessedimpairmentlossnolonger exists,therecoverableamountisreassessedand amount. Thereductionistreatedasanimpairmentlossandrecognised intheProfit &Loss Account.IfattheBalanceSheet of thecashgeneratingunittowhichassetbelongsislessthanitscarryingamount,amountreduced exists, theCompanyestimatesrecoverableamountofasset.Ifsuchassetora asset. Otherborrowingcostsarerecognisedasanexpenseintheyearwhichtheyincurred. possible obligationorapresent thatthelikelihoodofoutflowresourcesisremote,noprovision ordisclosurei there isapossibleobligationorpresent obligationthatmay, butprobably willnot,requireanoutflowofresources.Where of resourcesandareliableestimate canbemadeoftheamountobligation.Adisclosureforacontingent liabilityisma and chargedoverthevestingperiod. of India.Thedifferencebetweenthemarketpriceandexercise asatthedateofgrantistreatedcompensation permitted bytheGuidanceNoteon“Accounting Payments” forEmployeeShare-based issued bytheInstituteofCharteredAccountan recognised immediatelyasanexpense. Operating Leases during theleasetermsoastoproduceaconstantperiodicrateofinterestonremainingbalanceliabilityforeach policyondepreciation offixedassets.Theinterestisallocatedtop leased assetsaredepreciatedinlinewiththeCompany’s lease atamountsequaltolowerofthefairvalueleasedassetorpresentminimumpayments.Th Finance Leases in theProfit andLoss Accountintheyearwhichtheyarise. ii) Actuarialgainsandlossescompriseexperienceadjustmentstheeffectsofchangesinactuarialassumptionsarereco and compensatedabsencesisprovidedonthebasisofvaluation,asatBalanceSheetdate,carriedoutbyanindependentactuary return onGovernmentsecurities.PlanassetsaremeasuredatfairvalueastheBalanceSheetdate.Theliabilityforleave into accountinflation,seniority, promotion andotherrelevantfactors.Theexpectedrateofreturnplanassetsistakena securities asattheBalanceSheetdateforestimatedtermofobligations.Theestimatefuturesalaryincreasescon as thepresentvalueofestimatedfuturecashflowsdiscountedatratesreflectingprevailingmarketyieldsIndianGovern actuary. Theactuarialvaluationmethodused formeasuringtheliabilityisProjected UnitCreditmethod.Theobligations Liability forDefinedBenefitplansisprovidedonthebasisofvaluations,asatBalanceSheetdate,carriedoutbyanind underlying agreementsbasedondelivery. distribution agreementoronphysicaldeliveryoftheprogrammes/movies,whicheverislater. HomeVideosalesarerecognisedas recognised isthepredeterminedprice,collectionofwhichreasonablyassured. SOFTWARE COMMUNICATIONS LIMITED

the costof aremeasured uch services. sidered takes encashment recoverable as incurred. t therateof s made. tion ofthe nsing and period. ependent theasset there isa expense de when dication sts are gnised mount eriods utflow date, ment per ese ts .

con n o rvddfr Nto dacs - 2.25 34.40 - 34.40 NoticeforInterest claimbyabroadcaster ClaimsagainsttheCompanynot (a) Contingentliabilitiesnotprovidedfor 3 account andnotprovidedfor(Netofadvances) Estimatedamountofcontractsremainingtobeexecutedoncapital 2 Thepreparation of financialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresestimatesandas NOTES TO THE FINANCIAL STATEMENTS iptdb h opn. 11.05 11.55 disputedbythecompany. Theinterestclaimbythebroadcasteris madebythecompanyinearlieryears. IncomeTax appealbefore during2000-01towardsdelayedpayment Appealsfiledinrespectofdisputed (b) acknowledgedasdebts Pursuant totheaboveconversions,paid upsharecapital oftheCompanynowconsists24,842,968equity sharesofRs10 h ate n ootlwi oeen 3.6 34.05 35.96 16.17 15.86 thepartiesandnooutflowisforeseen. 1.39 14.47 Asst.CommissionerofCustoms. Mahanagarpalika,Mumbai. TheCompanyhasfiledlegalcasesagainst 2.50 Pertains tolitigation/disputeswithparties. againsttheCompany 2000-01/2005-06/2007-08. 2,315.48 IncomeTax TheBrihanmumbai fortheAssessmentYears Legal casesandclaimsfiled (e) favourofsubsidiaries/othercompanies. variousGovernmentAuthorities Guarantees/Corporate Guaranteeissuedin BankGuaranteesissuedfavoring Bankguaranteeissuedinfavourofa broadcasterforaccreditation/Counter (d) givencounterguarantees Commissioner/DeputyCommissionerof CreditforwhichtheCompanyhas Guarantees/OutstandingLetter of Bankguarantees/Corporate (c) incometaxdemands o fSae lotd DateofAllotment No.ofSharesAllotted Duringthepreviousyear, theCompanyhadissued1,949,360warrantsonapreferentialbasiswithoption of ii) TheAuthorisedShareCapitaloftheCompany wasincreasedfromRs260mioto360aspertheresolutionpassedat i) ShareCapital: 4 authorities. Note: Future cashoutflowinrespectof(b)&(e) above aredeterminableonlyonreceiptofjudgments/decisionspendingatvari Nature Description UseofEstimates: o aggregating toRs 248.43mio. 1,949,360 Total ,2,6 March4,2008 February 20,2008 1,429,860 519,500 of theaforesaidwarrants: During thecurrentyear, theCompanyhas,upon receiptofthebalanceconsideration,allottedfollowingequitysharesupon within aperiodof18monthsfromthedateallotmentand received10%oftheamountonallotmentwarrants. converting [email protected] (includingpremiumofRs.182.50pershare)share resolution passedbythemembersatExtraordinaryGeneralMeeting heldonMarch17,2008. General MeetingheldonSeptember25,2007.TheAuthorisedShare capitalwasfurtherraisedfromRs360mioto450vide estimates arerecognisedintheperiodswhichresultsknown/materialise. statements andthereportedamountsofrevenuesexpensesduringreportingperiod.Differencesbetweenactualresultsan to bemadethataffectthereportedamountsofassetsandliabilitiesdisclosurecontingentondatet : :

March 31,2008 As at March 31,2007 ous forum/ Rs. inMillion he financial conversion sumptions each As at Annual d 119 Annual Report 2007-08 120 Annual Report 2007-08 i SubsequenttotheBalanceSheetdate,Companyhasacquired UTVNewMediaLimited,apromotergroupcompany, atcostfor vi) TheCompanyhasacquiredUTVMoviesLimited,apromoter groupcompanyatcostforRs.0.50mioonJanuary24, 2008,makingi v) OnJanuary24,2008,theCompanyhassolditsinvestment inUTVBroadcastingLimited,anonoperatingcompanytoUnilazerE iv) Duringtheyear, theCompanyhasinvestedRs.0.50mioinWindmill EntertainmentLimited,aCompanyincorporatedtohouse iii) OnDecember14,2007,theCompanyhasacquired12.11 %equitystakeinIndiagamesLimitedbysubscribingtoadditionalshar ii) Duringtheyear, theCompanyhasinvestedUSD4mio[80,000,000sharesof0.05each]inUMPPLC(formerlyknownasUTV i) 5 Investments : TheCompanyhasreceivedRs337.72mio(Previous yearRs692.02mio)pursuanttotheallotmentonapreferentialbasisofe vi) TheBoardofDirectors,videmeetingheldonFebruary 16,2008,approvedtheexecutionofaShareSubscriptionAgreementbet v) b)allotted 9,352,500equitysharesofRs10eachatanissueprice860.79totheWalt DisneyCompany(SoutheastAsia)P a)allotted4,532,000warrants eachconvertibleintoequivalentnumberofequitysharestoUnilazerExportsandManagementCo SubsequenttotheBalancesheetdate,Companyhas: iv) OptionsOutstandingattheyearend OptionsLapsed duringtheyear OptionsExercisedduringtheyear OptionsGrantedduringtheyear OptionOutstandingatthebeginningofyear Particulars Stockoptionsactivityundertheschemeisasfollows: Theschemeprovidesthatthetotalnumberofoptionsgrantedthereunderwillbe1,000,000.Eachoption,onexercise,isconve Pursuant totheresolutionpassedbyBoardofdirectorsonJuly27,2007andmembersCompanyatAnnualGeneral EmployeeStockOptionScheme-2007: iii) NOTES TO THE FINANCIAL STATEMENTS (‘Disney’) afterobtainingthenecessaryapprovalofshareholdersin ExtraordinaryGeneralMeetingheldonMarch17,20 (‘Disney’) fully ownedsubsidiary. Management ConsultantsLimitedatcost. Venture withMs.SmritiIranibyinvestingRs0.25mio. The Companyhasalsoacquired50%interestintheJointVenture Company-SmritiIraniTelevision Limitedincorporatedtohou in Windmill EntertainmentLimitedbyacquiring50%oftheequitycapitalfromCompany, therebymakingita50:50JointVent Venture withMr. SekharSumanfortelevisioncontentproduction.OnOctober29,2007,Mr. SekharSumanhasinvestedRs0.25mi by IndiagamesLimitedforRs0.85mio.Thesesharesareheldthebenefit ofthemanagementshareholders. (constituting 23.18%oftheexpandedsharecapital)atanissueprice USD2.90persharetopublicinvestors. Exchange’s AlternativeInvestmentMarket(AIM)withtheissueofadditional 24,137,931EquitysharesofthefacevalueUSD0 Motion Pictures PLC)(subsidiaryincorporatedinIsleofManonMarch27,2007).InJuly2007,UMPPLClisteditssharesLon requirements andgeneralcorporatepurposesaspertheobjectsofissue. and warrants(Refer Schedule1&2),whichhasbeenutilisedforexpansionofbusinessactivities,financingadditionalworking shareholders haveapprovedtheinvestmentbyresolutionpassedthroughpostalballotonMarch24,2008. 2,400 mio,makingUGBLasubsidiaryoftheCompany. Theshareswouldbeissueduponreceiptofallrequisiteregulatoryapprova the CompanywillbeconvertingitsfundinginUGBLtogetherwithfurtherinvestmentfora75%stakeanaggregateconsiderat Disney,Agreement betweenUGBL, theCompanyandMr. Rohinton Screwvala(“UGBLAgreements”).Pursuant totheUGBLAgreements, Disney, theCompany, Unilazer, Mr. Rohinton ScrewvalaandUTVGlobalBroadcastingLtd(“UGBL”) andtheexecutionofaSharehold receivable onthedateofexerciseoption. the dateofissue.Uponallotmentwarrants,Companyhasreceived10%totalamountwarrants.Balance90 nominal valueofRs10eachataprice860.79(includingpremium850.79pershare)withinperiod18monthsf apromotergroupcompanyon preferential basis,withanoptiontoconvertitintoequitysharesofthe Limited (‘Unilazer’), mio, makingitafullyownedsubsidiary. stock options. higher thanthemarketpriceasondateofgrant.Accordingly, theCompanyhasnotrecognisedanyexpenseonaccountof Committee atitsmeetingheldonJanuary11,2008,all1,000,000optionshavebeengrantedanexercisepriceofRs.800,whic into oneequityshareofthecompanyhavingfacevalueRs.10.Pursuant toaresolutionpassedbytheRemuneration &Compens directors oftheCompanyanditssubsidiaries,asmaybedecidedbyCompensationCommittee/Board. held onSeptember25,2007,theCompanyhadintroducedEmployeeStockOptionScheme(“thescheme”)forpermanentemployeesand SOFTWARE COMMUNICATIONS LIMITED

March 31,2008 Year Ended 1,000,000 (470,000) Company of quity shares 530,000 se theJoint don Stock te Limited 08. .05 each es issued ion ofRs nsultants the Joint grantof Rs0.50 xports & Meeting capital ls. The ween ation rtible % is rom ure. h is - - ers t a o

NOTES TO THE FINANCIAL STATEMENTS rvso o rtiy - .6 0.06 - 79.74 0.06 (4.95) 99.31 28.74 March - 31,2008 0.62 19.57 28.74 5.57 3.97 0.50 -Provision forGratuity UnabsorbedDepreciation -BusinessLosses & - -Provision forDoubtful - -Provision forDoubtfulDebts Advances 19.91 0.50 Particulars (ceasedtobeasubsidiaryw.e.f June29,2007) GenxEntertainmentLimited (ceasedtobeasubsidiaryw.e.f January24,2008) UTVBroadcastingLimited dpino S1 rvsd Nt 1o c.2) (1.80) 29.50 ChargetotheProﬁt &Lossaccountduringtheyear (revised)(Note-21ofSch.20) adoptionofAS-15 DeferredTax Liabilityrecognisedonaccountof nPyetRcit 4.6 (49.56) 11.86 - (0.26) 18.93 49.56 1.70 7.07 1.96 - onPayment/Receipt -Expense/Interest Allowableonly andtax depreciation 0.14 -Timing Differencebetweenbooks -Provision forLeave encashment 152.30 19.27 36.56 11.34 546.28 127.96 65.83 - duringtheyear 16.33 3.37 128.94 546.69 8 MaximumOutstanding 101.05 * Theamountsadvancedtothesubsidiariesarerepayableondemandalongwithinterest. - UMPPLC IGInteractiveEntertainmentLimited* UTVMotionPictures (Mauritius)Limited* 3.37 UTVCommunications(USA)LLC* Subsidiaries Advances/OtherReceivables fromSubsidiariesisasfollows: 7 Total (ceasedtobeasubsidiaryw.e.f January24,2008) UTVBroadcastingLimited netre .0 54 (6.65) 0.88 15.45 - 8.80 0.88 -Inventories -Provision forGratuity 130 100 37.07 0.18 150.08 0.72 113.01 0.54 -Others 148.93 duringtheyear 127.96 1,012.33 MaximumOutstanding UTVMotionPictures (Mauritius)Limited DuefromSubsidiaries: Debtorsincludeamounts: 6 (a) ComponentsofDeferredTax AssetsandLiabilitiesarisingare: Deferred Tax Assets Net DeferredTax Asset Deferred Tax Liability

As atMarch31, Rs.inMillion 0.3 3.3 31.30 134.63 103.33 2008 96 1.5 (5.77) 15.45 9.68

As atMarch31, As atMarch31, As atMarch31, 23 606.58 82.30 2008 2008 2007 Expense/(Income) for

As atMarch31, As atMarch31, the Year Ended Deferred Tax Rs. inMillion Rs. inMillion 2007 2007

121 Annual Report 2007-08 122 Annual Report 2007-08 The CompanyhasobtainedtherequisiteapprovalfromCentralGovernmentforexcessremunerationpaid/payableye

rfto aeo ie ses 79 265.08 7.92 2.25 9.82 At10%ofNetProﬁt -Restricted toRs.9.82mio[Previous Year Rs.2.25mio] Profit onsaleoffixedassets oso aeo ie ses nt - 0.01 77.81 - - Loss onsaleoffixedassets(net) Provision fordoubtfuladvances rvso o obfldbs 1.6 0.05 14.56 Provision fordoubtfuldebts aaeilrmnrto 25 12.11 12.51 SittingFees Director’s Managerialremuneration i) aclto fntpoi ne eto 9/4 fteCmaisAt 96 Profit beforetax Calculation ofnetprofitunderSection198/349theCompaniesAct,1956: (ii) () xot acltdo O ai 4.5 490.95 848.35 ExportscalculatedonFOBbasis (a) (b) Library Earninginforeignexchangeonaccountof : 12 Sales (d) Others Total (c) Travelling Professional (a) (b) Footage Fees Expenditureinforeigncurrencyonacc 11 Costs 2.24 1.44 (b)Perquisites &Allowances

) Consideringlongtermcorporatestrategies,futureprofitabilityandvirtualcertainty, theCompanyhasrecognisedDeferred c) ) Provision forcurrenttaxationtheCompanyofRs.8.47mio(Previous Year -Rs.21.82mio)representsMinimumAlternate b) NOTES TO THE FINANCIAL STATEMENTS CapitalGoods Value of importscalculatedonCIFbasis: 10 (a)Salaries ManagerialRemuneration : (i) Remuneration toDirectors: 9 Less: Remuneration Payable Director: toManagingDirector/Whole-time Net Proﬁt underSection198/349oftheCompaniesAct,1956 Add : be fullyabsorbed. of Rs103.33mioasontheBalanceSheetdateandmanagementisopinionthatinlongruncarryforwardlosse included asMAT CreditEntitlementinSchedule11-Loans andAdvances. set-off againstthetaxliability, otherthanMAT infutureyears.Accordingly, anamountofRs.8.47mio(Previous Year -Rs. to theprovisionsofSection115JBIncomeTax Act,1961ofIndia.TheCompanyhasrecognisedMAT Creditwhichisexpecte

SOFTWARE COMMUNICATIONS LIMITED

uto ount of:

March 31,2008 March 31,2008 Year ended Year ended 7.2 197.37 78.72 82 22.50 98.24 25 12.11 12.51 11.07 9.87 34 18.29 3.48 .7 0.23 0.37 .8 19.72 0.98 .9 3.32 89.15 5.09 2.87 .2 3.89 6.02 - 1.79 -

March 31,2007 March 31,2007 Tax Asset(net) 21.82mio)is Year ended Year ended Tax pursuant Rs. inMillion Rs. inMillion ar. s would d tobe

T oinPcue Muiis iie UTVNewMediaLimited (ceasedtobeasubsidiaryw.e.f January24,2008) UTVBroadcasting Limited UTVEntertainment Television Limited UTVNews Limited GenxEntertainmentLimited(ceasedtobeasubsidiaryw.e.f June29,2007) UTVGlobalBroadcastingLimited VijayBroadcastingPrivate Limited Television NewsandEntertainment(I)Limited UnitedHomeEntertainmentLimited(Ceasedw.e.f December12,2006) Windmill EntertainmentLimited SmritiIraniTelevision 0.01 Limited IgnitionEntertainmentLimited,USA DigiGuysLimited,UK IgnitionEntertainmentLimited,UK IndiagamesLimited(w.e.f. December14,2007) 0.01 UTVMotionPictures (Mauritius)Limited UMPPLC(formerlyUTVMotionPictures PLC) UTVMoviesLimited(w.e.f January24,2008) (formerlyUTVCommunications(UK)Limited) IGInteractiveEntertainmentLimited UTVCommunications(USA)LLC UnitedTele-Shopping &MarketingCompanyLimited Unilazer(HongKong) Limited UnilazerExports&ManagementConsultantsLimited Otherservices (c) Reimbursement ofOutPocket Expenses 14 (b) Auditors’remunerationinrespectof: (a) Audit MiscellaneousExpensesinclude: 13 Fees Ronald D’mello (resignedw.e.f July27,2007) Deven Rohinton Khote Screwvala ihr iai(pone ...Jnay2,20) ZarinaMehta(ExecutiveDirector uptoApril 1,2007) KishoreBiyani(Appointed w.e.f. January25, 2007) SanjayaKulkarni AndyBird(Appointedw.e.f. January25,2007) Suketu Darius Shah Shroff NOTES TO THE FINANCIAL STATEMENTS a Related Party DisclosuresasrequiredbyAccountingStandard-18”Related Party Disclosures”issuedbytheInstituteofC (a) v Key ManagementPersonnel : (v) Otherrelatedpartieswherecommoncontrolexists: (iv) Joint Ventures oftheCompany: (iii) SubsidiariesoftheCompany: (ii) ShareholdersintheCompany: (i) conat fIdaaegvnblw: Accountants ofIndiaaregivenbelow: Non-Executive Directors Executive Directors

March 31,2008 Year ended 01 0.14 0.18 .0 3.20 3.50

March 31,2007 Year ended hartered Rs. inMillion 123 Annual Report 2007-08 124 Annual Report 2007-08 (b) (i) NOTES TO THE FINANCIAL STATEMENTS hrhles usdayCmais omnCnrlEtte JointVenture Companies CommonControlEntities SubsidiaryCompanies Shareholders Rs. in Million

T omnctos(S)LC - 83 18.36 - - UTVCommunications(USA)LLC Sales andServices -I neatv netimn t 1.3 19.03 - -IGInteractiveEntertainmentLtd -UVMto itrs(artu)Lmtd 601 207 200.78 650.14 -UTVMotionPictures (Mauritius)Limited exEtranetLmtd 218 - - - - 251.83 20.25 3.37 3.37 - - GenxEntertainmentLimited - UTVGlobalBroadcastingLimited -UTVBroadcastingLimited -UVNw iie 02 - - - 20.22 383.74 - UTVEntertainmentTelevision Limited -UTVNewsLimited -Eut hrsi T racsigLd - 97 19.75 37.24 - - - 265.42 -EquitySharesinUTVBroadcastingLtd - UTVMotionPictures (Mauritius)Limited Producers’ SharePayable/Paid -UnitedHomeEntertainmentLimited Lmtd 02 - 0.25 39.51 - - - 0.03 - - - - 164.40 0.50 0.85 19.75 375.32 - UnitedHomeEntertainmentLimited Interest Chargedto Consultants Limited - UnilazerExports&Management 0.25 Limited Sale ofInvestmentinUTVBroadcasting Limited - EquitySharesinWindmill Entertainment Limited - EquitySharesinSmritiIraniTelevision - EquitySharesinUTVMoviesLimited - EquitySharesinIndiagamesLimited - EquitySharesinUMPPlc UTV Communications(USA)LLC - Preference SharesApplicationMoneyin - -UnitedHomeEntertainmentLimited Purchase ofFixedAssets/Inventory UVBodatn iie .1 - - - - 0.41 4.08 0.14 53.09 - - 10.04 19.60 - 610.19 60.12 206.19 - UTVBroadcastingLimited - GenxEntertainmentLimited -UTVGlobalBroadcastingLimited - UTVNewsLimited UTV MotionPictures (Mauritius)Ltd -Preference SharesApplicationMoneyin IG InteractiveEntertainmentLtd - Preference SharesApplicationMoneyin in kind) Finance (Equitycontributionsincashor -UTVNewsLimited - GenxEntertainmentLimited Sale ofFixedAssets icouei epc ftascin ihprisrfre oi tm()() i) ii n i)aoe Disclosure inrespectoftransactionswithpartiesreferredtoitem(a)(i),(ii),(iii)and(iv)above:

SOFTWARE COMMUNICATIONS LIMITED

March 31,2008 Year ended March31,2007 Year ended March 31,2008 Year ended Year ended March31,2007 March 31,2008 Year ended Year ended March31,2007 March 31,2008 Year ended Year ended March31,2007 NOTES TO THE FINANCIAL STATEMENTS oprt urne ie nbhl f Corporate Guaranteegivenonbehalfof: Guarantees andCollaterals (b) (i) exEtranetLmtd 700 - - 750.00 JointVenture Companies CommonControlEntities SubsidiaryCompanies Shareholders Rs. - GenxEntertainmentLimited in Million T netimn eeiinLmtd 200 - - 200.00 - UTVEntertainmentTelevision Limited

T esLmtd 2.8 - 23.98 - 1,339.00 - UTVMotionPictures (Mauritius)Limited - UTVNewsLimited ntdHm netimn iie 1.0 13.40 - - UnitedHomeEntertainmentLimited Expenses Paid onbehalfof T omnctos(S)LC 1.0 82 28.24 13.40 - UTVCommunications(USA)LLC GItrcieEtranetLmtd 1.8 11 31.18 18.98 - IGInteractiveEntertainmentLimited T oinPcue Muiis iie 47 1.9 17.79 24.74 - UTVMotionPictures (Mauritius)Limited oslat iie 01 - - - 0.11 0.13 - - - 0.12 16.93 25.44 - 0.04 11.27 0.27 11.50 - 0.14 - - Consultants Limited - UnilazerExports&Management - UTVNewMediaLimited - UTVEntertainmentTelevision Limited - UTVNewsLimited - GenxEntertainmentLimited - UTVGlobalBroadcastingLimited - UTVBroadcastingLimited - UMPPlc miiIaiTlvso iie .8 - 0.08 1.08 - - UTVCommunications(USA)LLC Expenses Reimbursed to - SmritiIraniTelevision Limited GItrcieEtranetLmtd 07 39 3.95 0.71 - IGInteractiveEntertainmentLimited ntdHm netimn iie 20 2.03 - - UnitedHomeEntertainmentLimited -Gn netimn iie 7.0 - 175.00 -GenxEntertainmentLimited Advances fromCustomers T omnctos(S)LC - 9.1 491.11 - - UTVCommunications(USA)LLC Advances Given -UVNw iie 0.0 - 202.30 - - 40.19 64.83 -UTVNewsLimited - IGInteractiveEntertainmentLimited - UTVMotionPictures (Mauritius)Limited ntdHm netimn iie 102 100.25 - - UnitedHomeEntertainmentLimited -UVBodatn iie 40 05 0.50 54.02 -UTVBroadcastingLimited -Gn netimn iie 45 - - - 14.50 1,711.40 - UTVGlobalBroadcastingLimited -GenxEntertainmentLimited -Srt rn eeiinLmtd 1.1 - - 15.11 4.20 - 1.20 - 20.00 -SmritiIraniTelevision Limited - Windmill EntertainmentLimited - IndiagamesLimited - UTVEntertainmentTelevision Limited -UVCmuiain UA L 6.8 - 469.78 -UTVCommunications(USA)LLC Advances Repaid icouei epc ftascin ihprisrfre oi tm()() i) ii n i)aoe Cnd) Disclosure inrespectoftransactionswithpartiesreferredtoitem(a)(i),(ii),(iii)and(iv)above:(Contd.)

March 31,2008 Year ended March31,2007 Year ended March 31,2008 Year ended Year ended March31,2007 March 31,2008 Year ended Year ended March31,2007 125 Annual Report 2007-08 March 31,2008 Year ended Year ended March31,2007 126 Annual Report 2007-08 NOTES TO THE FINANCIAL STATEMENTS -Gn netimn iie 45 - - - - 4.50 54.56 323.30 - - 11.91 12.02 -UTVGlobalBroadcastingLimited -GenxEntertainmentLimited -UTVBroadcastingLimited - UTVMotionPictures (Mauritius)Limited - IGInteractiveEntertainmentLimited (b) (i) T esLmtd 1.0 - 113.00 JointVenture Companies CommonControlEntities SubsidiaryCompanies Shareholders - UTVNewsLimited Rs. in Million oslat iie .4 - - 1.20 20.00 0.14 - Consultants Limited - UnilazerExports&Management - IndiagamesLimited -UTVEntertainmentTelevision Limited

miiIaiTlvso iie .3 - 4.73 0.75 - - UnitedHomeEntertainmentLimited Bad DebtsWritten Off - SmritiIraniTelevision Limited T oinPcue Muiis iie 26 - - 175.00 - 42.62 - GenxEntertainmentLimited(advance) - UTVMotionPictures (Mauritius)Limited - Payable Outstanding Balance T omnctos(S)LC 1.3 4.7 546.27 16.33 - UTVCommunications(USA)LLC - Receivable GItrcieEtranetLmtd 6.3 92 19.27 65.83 - IGInteractiveEntertainmentLimited T oinPcue Muiis iie 154 185.49 - - UTVMotionPictures (Mauritius)Limited T racsigLmtd - .7 3.87 - - UTVBroadcastingLimited T lblBodatn iie ,6.3 - - 1,466.83 52.66 3.97 - - UTVGlobalBroadcastingLimited - GenxEntertainmentLimited M l .4 - 113.57 - 0.14 - UTVNewsLimited - UMPPlc T netimn eeiinLmtd 324 - - 372.48 - UTVEntertainmentTelevision Limited miiIaiTlvso iie 04 - - 10.46 4.20 - 0.13 - SmritiIraniTelevision Limited - Windmill EntertainmentLimited - UTVNewMediaLimited CnutnsLmtd 01 0.14 - ConsultantsLimited -UnilazerExports&Management rmu adprsae Rs.182.50 Premium paidpershare Face Value pershare oo hrsalte 1,199,360 NoofSharesallotted ofwarrantsduringtheyear: AllotmentofSharestoMr. Rohinton Screwvala uponconversion 2 -Ronald D’mello -ZarinaMehta -Deven Khote oitnSrwaa .0 3.60 7.50 -Rohinton Screwvala 1 Remuneration: Disclosureinrespectoftransactionswith personsreferredtoinitem(a)(v)above: (ii) (b) icouei epc ftascin ihprisrfre oi tm()() i) ii n i)aoe Cnd) Disclosure inrespectoftransactionswithpartiesreferredtoitem(a)(i),(ii),(iii)and(iv)above:(Contd.)

SOFTWARE COMMUNICATIONS LIMITED

March 31,2008 Year ended March31,2007 Year ended March 31,2008 Year ended Rs.inMillion 2007-08 Rs 10 Year ended March31,2007 .9 3.71 1.89 .2 2.40 3.12 2.40 -

2006-07 March 31,2008 Year ended Year ended March31,2007 March 31,2008 Year ended Year ended March31,2007 Particulars ae hnoeya u o ae hnfv er 5.5 97.03 55.05 18 Later thanoneyearbutnotlaterfiveyears Not Later thanoneyear Particulars Particulars ihnOet ieyas 97 49.57 60.23 39.71 47.25 Within Onetofiveyears b) Operating Within Oneyear Lease: Within Onetofiveyears Within Oneyear ) Finance Lease:DisclosureonFinanceLeasesasrequiredbyAccountingStandard-19isfollows: a) 17 Leases: 16 15 Diluted Basic Earning Per share(Rs) -Eut hrso s 0-ec ul adu 2,5,6 21,421,827 23,055,865 -EquitySharesofRs.10/-eachfullypaidup Weighted averagenumberofsharesfordilutedearningspershare(nos.) -Eut hrso s 0-ec ul adu 2,5,6 21,421,827 23,055,865 -EquitySharesofRs.10/-eachfullypaidup Weighted averagenumberofsharesforbasicearningspershare(nos.) Profit aftertax(Rs.inMillion) NOTES TO THE FINANCIAL STATEMENTS Theabovebusinesssegmentshavebeenidentifiedconsidering thedifferentnatureofactivitiescarriedonbythese businessd 19 The earning considered in ascertaining the Company’s earnings persharecomprisethenetprofitaftertax.Thenumberof TheearningconsideredinascertainingtheCompany’s TheCompanyhasnotreceivedanyinformationfromthe“suppliers” regardingtheirstatusundertheMicroSmallandMediumEnt TheCompanyisengagedintheproduction/makingofmediasoftware,whichrequiresvarioustypes,qualitiesandquantitiesr TheCompanyconsidersBusinesssegmentasthePrimary segment. The Companyisorganisedintothreebusinesssegmentsnamely weighted averagenumberofshares,ifany, whichwouldhavebeenissuedontheconversionofalldilutivepotentialequityshar computing dilutedearningspersharecomprisestheweightedaveragesharesconsideredforderivingbasicearningshare,and computing basicearningspershareistheweightedaveragenumberofsharesoutstandingduringyear. Thenumber ofsharesu esn ragmnsaecagda etudr“te xess nShdl 8 arrangements. Future leaserentalspayableareasfollows: agreeable terms.TheCompanyhasplacedarefundabledepositofRs.51mio[Previous Year Rs.38.96mio]inrespectofthesel These leasingarrangementsareforaperiodnotexceeding5yearsandinmostcasesrenewablebymutualconsent,onmutuall leasing arrangementsarechargedasrentunder“Other Expenses”inSchedule18. significantleasingarrangementsaremainlyinrespectofoffice premises.Theaggregateleaserentalspayableo The Company’s Present Value ofLeasePayments Minimum LeasePayments Payable required underthesaidActhavenotbeengiven. Development Act,2006andhencedisclosures,ifany, relatingtotheamountsasatyearendtogetherwithinterestpaid/payab by thecompanyasispracticegenerallyfollowedcompaniesinIndustry. Physicalstockistakenattheendofye continuous stockregister, astheprocessofmakingprogramsoftwareisnotamenabletoit.Hencequantitativedetailsare and inputsindifferentdenominations.Duetothemultiplicitycomplexityofitems,itisnotpracticablemaintainq transfers atcost.TheCompanyhas consolidatedTelevision content,airtimesalesanddubbing into“Television” segment. of thesegmentandamountsallocated onareasonablebasistothebusinesssegment.TheCompanyaccounts forintersegmentsales Segment revenue,results,assetsand liabilitieshavebeenaccountedforonthebasisoftheirrelationship totherelatedbusi segment. Previouspost productionandSFX. yearfiguresofAnimation(includedinTelevision segment lastyear)havebeenregroupedinto ‘Television’, ‘Movies’,and‘Interactive’.ErstwhileAllied Servicessegmenthasnowbeenrenamedas‘Interactive’and incl

March 31,2008 March 31,2008 March 31,2008 Year ended Year ended Year ended 13 45.91 31.36 79 16.61 17.65 17.94 19.09 47 365.93 44.76 19 17.08 1.94 .4 17.08 1.94

Rs.inMillion Rs.inMillion

March 31,2007 March 31,2007 March 31,2007 uantitative record/ udes animation, Year ended Year ended Year ended ar. ness activities aw materials ‘Interactive’ maintained es. s usedin alsothe erprises ivisions. n these easing sed in le as and

127 Annual Report 2007-08 128 Annual Report 2007-08

Rs. in Million NOTES TO THE FINANCIAL STATEMENTS

Particulars TELEVISION MOVIES INTERACTIVE * Inter Segment Adjustment Total March March March March March March March March March March 31, 2008 31, 2007 31, 2008 31, 2007 31, 2008 31, 2007 31, 2008 31, 2007 31, 2008 31, 2007

REVENUE SOFTWARE COMMUNICATIONS LIMITED External Revenue 1,009.22 769.83 1,597.25 557.17 264.89 209.89 (8.45) (12.39) 2,862.91 1,524.50 RESULT Segment Result 191.72 50.91 122.05 (49.69) 22.18 64.70 - - 335.95 65.92 Less : Interest (115.54) (16.10) Unallocable Other Expenditure (171.37) (137.85) Add : Unallocable Other Income 29.68 285.40 Profit Before Taxation 78.72 197.37

OTHER INFORMATION Segment Assets 541.87 425.61 1,278.32 918.74 425.13 414.91 - - 2,245.32 1,759.26 Unallocable Assets 3,672.05 2,007.23 Total Assets 541.87 425.61 1,278.32 918.74 425.13 414.91 - - 5,917.37 3,766.49

Segment Liabilities 205.02 151.89 469.45 244.69 26.44 85.40 - - 700.91 481.98 Unallocable Liabilities 3,190.27 1,604.33 Total Liabilities 205.02 151.89 469.45 244.69 26.44 85.40 - - 3,891.18 2,086.31

Depreciation Segment Depreciation ------Unallocable Depreciation ------33.54 30.66 Total Depreciation ------33.54 30.66

Non Cash Expenses other than Depreciation Segment Non Cash Expenditure 2.54 0.05 27.75 7.03 5.30 - - - 35.59 7.08 Unallocable Non Cash Expenditure ------3.30 - Total Non Cash Expenses other than Depreciation 2.54 0.05 27.75 7.03 5.30 - - - 38.89 7.08

GEOGRAPHICAL SEGMENT Revenue India 988.35 759.80 947.60 320.29 87.07 92.77 (8.45) (12.39) 2,014.57 1,160.47 Outside India 20.87 10.03 649.65 236.88 177.82 117.12 - - 848.34 364.03 Assets India Segment Assets 541.87 425.61 1,278.32 918.74 425.13 414.91 - - 2,245.32 1,759.26 Unallocable Assets - in India ------3,672.05 2,007.23 Outside India ------* The Company has, during the year, discontinued the Post Production and SFX business included in the Interactive Segment. Refer Note 23 of Sch 20. a Dson ae(e nu) 8.00% 5.00% 8.00% 3.76 26years 0.08 DisclosuresfordefinedbenefitplanbasedonactuarialreportsasMarch31,2008: ExpectedAverageremainingworkinglivesofemployeesinnumberyears (d) Expected Rate ofReturn onPlanAssets(perannum) (c) Rate ofincreaseinCompensationLevels (b) DiscountRate (perannum) (a) InaccordancewiththeAccountingStandard(AS15)(Revised 2005),actuarialvaluationwasperformedinrespectofthe afore IncludedincontributiontoGratuity, Provident andOther Funds (Refer Schedule17) 3 EmployersContributiontoEmployeesStateInsurance EmployersContributiontoProvident Fund NOTES TO THE FINANCIAL STATEMENTS f CoigDfndBnftOlgto 8.36 5.60 Closing DefinedBenefitObligation (f) (e) CurrentServiceCost Actuarial (c) (d) Benefits Loss OpeningDefinedBenefitObligation Paid (a) (b) Interest Cost b Epce euno lnAst 0.86 1.94 9.35 Contributionduringthe yearbyemployer (c) Expected Return onPlan Assets (b) OpeningFair Value of PlanAssets (a) Bifdsrpino h ln: TheCompanyhasrecognisedthefollowingamountsinProfit andLoss Accountfortheyear: 2 TheCompanyprovideslong-term benefitsinthenatureofProvident fund&Gratuitytoitsemployees.Incaseoffundedschem BriefdescriptionofthePlans: ThedisclosuresasrequiredpertherevisedAS15areunder: 1 TheCompanyhas,witheffectfromApril1,2007,adoptedAccountingStandard15,EmployeeBenefits(Revised 2005),issued by A B 21 Employee Beneﬁts 20 hne nteFi au fPa ses ChangesintheFair valueofPlanAssets hne nDfndBnftOlgto ChangesinDefinedBenefitObligation

eie eei ln ae ntefloigasmtos defined benefitplansbasedonthefollowingassumptions: Total sprteCmaysplc. policy.as pertheCompany’s Insurance CorporationofIndia.TheemployeestheCompanyarealsoentitledtoleaveencashmentandcompensatedabsences definedbenefitplansincludegratuitytoitsemployeeswhichisfundedthroughtheL the contributions.TheCompany’s Employees’ Provident Funds andMiscellaneousProvisions Act,1952)sincetheCompanyhasnofurtherobligationbeyondmaking defined contributionplansareprovidentfund,employeestateinsuranceandemployees’pensionscheme(undertheprovisionsof the fundsarerecognisedbyIncometaxauthoritiesandadministeredthroughappropriateauthorities/insurers.TheCompany’ rjcsdrn h er deferred taxofRs1.80mio],hasbeenadjustedagainstGeneralReserve balanceasatApril1,2007. amountingtoRs.3.54mio[net AS-15, the liabilitythatwouldhavebeenrecognisedasatApril1,2007,perpre-revised the InstituteofCharteredAccountantsIndia.Consequently, thedifferencebetweentransitionalliabilityasperthisSt projects duringtheyear. accountingpolicy,In accordancewiththeCompany’s Rs.16.52mio[Previous Year Rs.14.73mio]isinterestcapitalisedonmovi

3.84 March31,2008 Rs.inMillion March31,2008 Rs.inMillion 0.95 (1.18) 2.40 0.59

Gratuity (Funded plan) Year ended Year ended andard and said the es, of ife

e s 129 Annual Report 2007-08 130 Annual Report 2007-08 asatMarch31,2008 SekharSuman SmritiIrani 50% 50% India India interestintheJointVenture TheCompany’s isreportedaslong-term investment(schedule6)andstatedatcost.The Company’s Windmill EntertainmentLimited(WEL) SmritiIrani Television Limited(SITL) NOTES TO THE FINANCIAL STATEMENTS h opn’ neet,a etrr njitycnrle niisae interests,asventurer, TheCompany’s injointlycontrolledentitiesare: Name 10.96 (2.60) 8.36 InterestInJointVentures: 22 10.96 10.96 8.36 NetAssetrecognisedasonMarch31,2008 (c) Fair Value ofPlanAssetsasatyearend (b) Present Value ofObligationasatyearend (a) Funded (Asset)/LiabilityrecognisedintheBalanceSheet (c) Fair Value ofPlanAssetsasatyearend (b) Present Value ofFunded Obligationasatyearend (a) ClosingFair Value ofPlanAssets (f) (e) Actuarial (d) Benefits Loss Paid c Epce euno lnAst (0.86) 3.09 (IncludedinContributiontoGratuity, Provident and otherFunds -Schedule17) Total ExpensesrecognisedintheProfit andLoss Account NetactuarialLoss (d) ExpectedReturn onPlanAssets (c) CurrentServiceCost (a) (b) Interest Cost nue aae ud 100% 0.85 (0.01) 0.86 previousyearfiguresarenotavailable. Thisbeing thefirstyearofimplementationrevisedAS-15, InsurerManagedFunds ActualReturn onPlanAssets (c) ActuariallossonPlanAssets (b) ExpectedReturn onPlanAssets (a) follows: venture) relatedtoitsinterestsinthejointventures,basedonfinancial informationascertifiedbytheauditorsofJoi each oftheassets,liabilities,incomeandexpense,etc(withoutelimination oftheeffecttransactionsbetweenCompany E D C F I H G h iblt o ev nahetadcmestdasne sa eredi s57 i. TheliabilityforleaveencashmentandcompensatedabsencesasatyearendisRs5.75mio. culrtr nPa ses ActualreturnonPlanAssets xessrcgie ntePoi n osAcut ExpensesrecognisedintheProfit andLoss Account eoclaino h rsn au fDfndBnftOlgto n h arVleo ses Reconciliation ofthePresent Value ofDefinedBenefitObligation and theFair Value ofAssets mutrcgie nteBlneSet AmountrecognisedintheBalanceSheet xetdEpoescnrbto o h etya NIL ExpectedEmployerscontributionforthenextyear ecnaeo ahCtgr fPa sest oa arVleo lnAst sa ac 1 08 Percentage ofeachCategoryPlanAssetstototalFair Value ofPlanAssetsasatMarch31,2008 SOFTWARE COMMUNICATIONS LIMITED noprtdi Pretg fOnrhp Jointventureparty Percentage ofOwnership Incorporatedin Icue nPoiin ceue1) (2.60) (Included inProvisions -Schedule13)

(0.01) March31,2008 Rs.inMillion (1.18) 0.96 2.40 0.59

nt venturesareas Year ended andthejoint shareof

NOTES TO THE FINANCIAL STATEMENTS Profit/(Loss) beforetax rft(os eoeDpeito a 01) 24.73 (0.17) Profit/(Loss) afterTax Taxation Depreciation Profit/(Loss) beforeDepreciation&Tax rftBfr neet ercain&Tx .8 27.94 4.08 Interest Expense Profit BeforeInterest,Depreciation&Tax Expenditure Income Loans andAdvances b. Current a. Unsecured Liabilities Loan Cash&Bank . diitaieEpne 06 2.05 0.67 AdministrativeExpenses a. b. Depreciation

TheBoard ofDirectorsintheirmeetingdatedOctober25,2007approvedtheplantodiscontinuePost Production andSFXbu 23 Discontinued Operations . urn ses on n dacs CurrentAssets,Loans andAdvances c. Inventories

March31,2008 Fortheyearended March 31,2008 As at Deferredtax c. Other Income DeferredTax Asset b. a. Fixed Assets Particulars

II. Liabilities VI. Capital Commitment 31, 2008: statement showstherevenueandexpensesofdiscontinuedoperation includedintheProfit andLoss accountfortheyearend mio. BalanceRs.60mioisreceivableintwoinstallmentsfallingdueon 180thand360thdayfromthedateofagreement.Th effective December31,2007.TheCompanyhas,asontheBalanceSheet date,receivedRs60miooutofthetotalconsiderationo the Companyhassoldmachinery/equipmentswithdivisionfora considerationofRs120mioandthebusinesshasbeendis 30, 2007.Accordingly, theCompanyenteredintoaBusinessTransfer AgreementwithPrime Focus LimitedonNovember19,2007whe division oftheCompany, ThesalewasapprovedbytheshareholdersonN whichfallsundertheInteractivesegmentasperAS-17. IV. Expenses IL WEL SITL V. Contingent Liability III. Income I. Assets IL WEL SITL

For theperiodended December 31,2007 62 65.72 93.66 56.28 60.36 (7.67) 14.87 (7.67) 14.72 .0 9.86 7.50 .5 3.21 4.25 (0.20) - .4 0.02 0.64 .2 0.25 2.12 .2 0.08 2.10 0.92 5.23 .5 - 3.05 .0 - 0.10 - 0.10 0.20 0.03 0.15 - I NIL NIL I NIL NIL Rs.inMillion 0.01 -

For theyearended March 31,2007 Rs. inMillion Rs. inMillion e following continued ed March ovember f Rs120 siness rein

131 Annual Report 2007-08 132 Annual Report 2007-08 lc ubi Place: Mumbai Date:June16,2008 16.05 - Date :June16,2008 Place : Mumbai AmountofDividendPaid (Rs inMillion)

Total Liabilities Total Assets The AssetsandLiabilitiesinbookspertainingtothediscontinuedoperationareasfollows: NOTES TO THE FINANCIAL STATEMENTS hree conat CmaySceay Director CMD&ChiefExecutiveOfficer 2006-07 Rohinton Screwvala 6,421,191 9 ChiefFinancial Officer CompanySecretary - - G. Chandrashekar - Chartered Accountants Price Waterhouse &Co. For andonbehalfof Membership No.F-55913 Partner Partha Ghosh Signatures toSchedules120whichformanintegralpartoftheFinancialStatements. Year towhichDividendRelates 26 NumberofEquitySharesHeld NumberofNon-Resident Shareholders Particulars DetailsofDividendRemittance inForeignCurrency: 25 24 ac 1 08 March31,2008 March31,2008 The previous year’s figures have been re-grouped/rearranged, whereverconsiderednecessary. figures havebeenre-grouped/rearranged, Thepreviousyear’s TheCompanyhasundertakennecessarystepstocomplywiththeTransfer Pricing regulations.TheManagementisoftheopiniont the Companywillcarryoutatransferpricingstudytocomplywithsaidregulations. international transactionsareatarm’s lengthandatpresentdoesnotenvisageanyfurthertaxliability. For theyearendedM SOFTWARE COMMUNICATIONS LIMITED od ai l SanjayaKulkarni Mohd. SajidAli For theYear Ended

(220.34) (291.93) 1.7 193.53 114.27 sa As at For theYear Ended March 31,2007 March 31,2007 arch 31,2008, Rs. inMillion Rs. inMillion As at hat the diinlIfrainrqie ne atI fShdl It h opne c,15 BALANCESHEETABSTRACT &COMPANY’S GENERALBUSINESSPROFILE AdditionalInformationrequiredunderPart IVofScheduleVItotheCompaniesAct,1956 a. Registration Details . GenericNamesofThree PrincipalProducts/ServicesoftheCompany e. Turnover(TotalIncome) PerformanceofCompany d. TotalLiabilitiesincludingShareholderFunds PositionofMobilisationandDeploymentFunds c. . CapitalRaisedduringtheyear b. Registration No. Unsecured Loans Misc Expenditure Deferred TaxAssets(NetofLiabilities) Net FixedAsstes Application ofFunds Reserved andSurplus Paid upCapital Source ofFunds Products Description Item CodeNo.(ITCCode) Dividend Rate% Bonus Issue Preferential offerofShares Basic EarningsPerShareinRs. Profit /(Loss)beforeTax 1 % 0 1 4 9 . 1 2 7 . 8 7 5 9 . 2 2 89 L I N 3 . 1 03 6 . 2 90 L I N 7 6 . 7 1 7 4 3 . 2 48 1 3 . 4 4 7 9 4 . 9 1 L I N L I N Public Issue Balance SheetDate 8 7 5 69 3 1 3 aeMnhYear Month Date N A N A N 0 3 0 2 0 8 0 0 2 State Code Secured Loans Advance AgainstWarrants Private Placement Diluted EarningsPerShareinRs. Accumulated Losses Net CurrentAssets Profit/(Loss)after Tax Total Assets 1 3 . 4 4 7 L I N L I N 1 9 4 9 . 1 6 7 . 4 4 8 7 . 3 2 81 L I N 6 1 . 9 3 29 5 3 . 7 80 9 4 . 7 2 4 L I N Total Expenditure Right Issue Investments 1 1 1 Rs. inMillion 133 Annual Report 2007-08 134 Annual Report 2007-08 Independent Non-ExecutiveDirector Mr. DariusShroff Independent Non-ExecutiveDirector Mr. SuketuShah Independent Non-ExecutiveDirector Mr. SanjayaKulkarni Independent Non-ExecutiveDirector Mr. KishoreBiyani Non-Independent Non-ExecutiveDirector Mr. AndyBird Non-Executive Director Mrs. ZarinaMehta Executive Director Mr. DevenKhote CMD &ChiefExecutiveOfficer Mr. Rohinton Screwvala CharteredAccountants CharteredAccountants& CharteredAccountants& CertifiedPublic Accountants KPMGAuditLLC IsleofMan Taylors ChateredAccountants& March27,2007 CertifiedPublic Public Accountant Accountants UnitedKingdom Rajeev Price Aggarwal Waterhouse &Co. Nisar&Kumar UnitedStatesofAmerica July19,2001 UMP PLC Taylors May22,2006 KPMG Limited Digi-Guys India India Limited (USA) UnitedKingdom Registered Ignition Entertainment February 01,2000 September26,2001 July09,2007 Ignition EntertainmentLimited Mauritius Registered Indiagames Limited October04,2004 Auditors UTV MoviesLimited PlaceofIncorporation Chartered (Mauritius) Limited Rajeev Aggarwal DateofIncorporation UTV MotionPictures Auditors Chartered UnitedStatesofAmerica IG InteractiveEntertainmentLimited April26,2004 Registered UTV Communications(USA)LLC Auditors Subsidiary SUBSIDIARIES INFORMATION Accountants Mohd. SajidAli COMPANY SECRETARY Accountants Auditors BOARD OFDIRECTORS June 22,1990 DATE OFINCORPORATION 11-56987 REGISTRATION NO. OFTHECOMPANY UTV SoftwareCommunicationsLimited NAME OFTHECOMPANY CORPORATE SOFTWARE COMMUNICATIONS LIMITED

etme 6 04 ntdKndm NagleJamesAssociatesLimited UnitedKingdom September 06,2004

INFORMATION Fax No.0402340814/23420857 Tel No.0402420815-28 Hyderabad 500081 Vittalrao Nagar, Madhapur, Plot No.17to24,NearImageHospital Karvy ComputersharePrivate Limited REGISTRAR ANDSHARETRANSFERAGENT Indian OverseasBank ABN AmroBank Central BankofIndia Oriental BankofCommerce DBS Bank State BankofIndia HDFC BankLimited Standard CharteredBank BANKERS Chartered Accountants Price Waterhouse &Co. AUDITORS IM1 1EA Douglas, IsleofMan Upper ChurchStreet Chapter House UMP Plc. ISLE OFMAN Tel No.:+44(0)2082618001 United Kingdom HA1 2TY Harrow, Middlesex, 51 -53StationRoad, IG InteractiveEntertainmentLtd. UNITED KINGDOM INTERNATIONAL Fax No.:+913340017550 Tel No.:+913340017551-7553 15 Park Street,Kolkata 700016,India Apeejay House,BlockA,8thFloor, Wing C- UTV Kolkata Bangalore 560038,India # 25C.M.H. Road, IndiraNagar, 3rd Floor, Ram PlazaI, UTV Bangalore Fax. No.:+911146030150 Tel. No.:+911146030100 Panchsheel, NewDelhi110017,India No. 5,Panchsheel CommunityCenter, UTV Delhi Fax No.022-40981650 Tel No.022-40981400 Mumbai 400093. Guru HargovindjiMarg, Chakala,Andheri (E), 1181-1182, 8thFloor, SolitaireCorporatePark, UTV SoftwareCommunicationsLtd. REGISTERED &CORPORATE OFFICE INDIA Fax No.:310-634-0400 Tel No.:310-496-5767 Marina DelRey, CA90292 4640 AdmiraltyWay, 5thFloor West CoastOffice UTV Communications(USA)LLC UNITED STATES OFAMERICA United Kingdom W5 5EP Ealing Green,London Ealing Studios Ltd. Digi-Guys Fax. No.:+2302129833 Tel. No.:+2302129800 Port Louis, Mauritius Les Cascades,EdithCavellStreet, UTV MotionPictures(Mauritius)Ltd. MAURITIUS CIDCO, Vashi, Navi-Mumbai400705.India Plot No.34,35&38,Sector30A, Above Raghuleela Mall.11thFloor, Vishwaroop ITPark, Vashi InternationalInfo-Tech Park, Indiagames Ltd. INDIAGAMES Chennai 600018,India,Tel. No.:914424363769 Northwing, GroundFloor, EldamsRoad Archway Apartment,OldNo.151,NewNo.a44 UTV Chennai Fax No.:+911204695323 Tel No.:+911204695353 Noida 201301U.P, India A-18 &A-19 Sector-16, UTV Noida Fax No.:+81(3)5326 3177 Tel No.:+81(3)53263347 Tokyo, 163-1030-Japan 3-7-1, Nishi,Shinjuku,Shinjuku-Ku N30, Shinjuku,Park Tower Ignition EntertainmentLtd. JAPAN

Fax No.:+44(0)1992703971 Tel No.:+44(0)1992703970 Waltham Abbey, Essex,EN91JH 168 -172BrookerRoad Ignition EntertainmentLtd. 135 Annual Report 2007-08 NOTES TELEVISION MOTION PICTURES www.utvnet.com www.utvnet.com www.utvmotionpictures.com

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