CONTENTS

Chairman’s Message ...... 3 Board of Directors 6XEKDVK&KDQGUD Chairman Channels ...... 6 /D[PL1DUDLQ*RHO Director $VKRN.XULHQ Director Viewership ...... 24 %ULMHQGUD.6\QJDO Independent Director 1HPLFKDQG6-DLQ Independent Director Network ...... 26 5DMDQ-HWOH\ Independent Director 6LU*XODP.1RRQ Independent Director People ...... 28 'U0RKDPPHG<.KDQ Independent Director The Way Forward ...... 30 3URI59DLG\DQDWKDQ Independent Director 3XQLW*RHQND :KROHWLPH'LUHFWRU &(2 Notice of Annual General Meeting ...... 33 Auditors : 060*% &R Certification on Financial Statements ...... 41 of the Company Company Secretary : M Lakshminarayanan

Directors’ Report ...... 42 Senior Management 3XQLW*RHQND&KLHI([HFXWLYH2IILFHU Statement Pursuant to Section 212 ...... 47 $PLWDEK.XPDU7HFKQRORJ\ $WXO'DV&RUSRUDWH6WUDWHJ\ %XVLQHVV'HYHORSPHQW Corporate Governance Report ...... 49 %KDUDW5DQJD,QWHUQDWLRQDO2SHUDWLRQV 'LQHVK-DLQ6XEVFULSWLRQ6DOHV Shareholders Information ...... 57 +LPDQVKX0RG\6SRUWV Management Discussion and Analysis ...... 63 +LWHVK9DNLO)LQDQFH -R\&KDNUDERUW\'RPHVWLF5HYHQXH Auditors’ Report ...... 72 0/DNVKPLQDUD\DQDQ/HJDO 6HFUHWHULDO 1LWLQ9DLG\D1DWLRQDO&KDQQHOV Standalone Financial Statements...... 74 'U5DMHVK6DYH+XPDQ5HVRXUFHV 5RODQG/DQGHUV&RUSRUDWH&RPPXQLFDWLRQV Balance Sheet Abstract and Company’s 6DQMHHY/DPED)LOP3URGXFWLRQ 'LVWULEXWLRQ general business profile ...... 96 6XPHHW0HKWD(GXFDWLRQ

Cash Flow Statement ...... 97 Bankers Axis Bank Ltd. Last Five Years Financial Highlights ...... 99 BNP Paribas ICICI Bank Ltd. 3HUIRUPDQFH5DWLRV$Q$QDO\VLV ...... 100 IDBI Bank Ltd. ING Vyasa Bank Ltd. Consolidated Financial Statements ...... 102 Standard Chartered Bank Ltd. Financial Highlights of Subsidiary Companies ...... 126 Registered Office: 135, Continental Building, Dr. Annie Besant Road, :RUOL0XPEDL0DKDUDVKWUD,QGLD CHAIRMAN’S MESSAGE

“The entertainment industry is In today’s business environment, it is seldom possible witnessing a big transformation for large corporations to be insulated off pressures faced by global macro economy. The comforting part led by technological advancements, for us is that India is relatively unaffected and trends new delivery platforms and growing indicate that the country’s GDP growth will outperform diversity of content.” that of many other emerging economies.

Dear Shareholders, Indian media was impacted, though to a relatively lesser extent It has been a significant year for the television media industry in India. More than six million households While India remained largely unaffected during the converted to digital pay TV and total households first half of the fiscal, we did see the impact of global on digital pay TV are estimated at 14 million. It gives economic meltdown during the second half. Coming me great satisfaction to present the fact that India after several years of continued growth, the year is the third largest television market in the world brought its own set of challenges. Spends from and despite the size, is one of the fastest growing sectors like real estate and banking and financial markets. TV penetration in India is currently only services were severely affected and advertising 5%, and cable and satellite TV penetration is a revenue growth of most media companies saw a mere 35%. Going forward consumption growth dramatic slowdown. While the calendar year 2008 fuelled by a steady growth in Indian economy witnessed an 18% growth in television advertising would ensure a much greater number of spends, the opinion is divided on the expected television households. growth during calendar 2009.

Your company is one of the foremost players Media and entertainment sector : in the television media and entertainment space Entertainment Unlimited in the country. Zee’s strong strategic and financial position gives us great confidence in our ability The Indian media and entertainment industry to benefit from this growth opportunity. continued to grow in scale and size during the year. Within the media and entertainment sector, A year of turmoil for the global economy television, given its wider spread and ever increasing reach, showed higher growth as compared to other In the financial year 2009, the world economy went media vehicles. An important trend in the broadcasting through difficult times. The International Monetary industry was the growing preference for digital services. Fund (IMF) has stated that the global economy faces its worst crisis since World War II and will shrink by 1.3 per cent in 2009.

3 =((/$QQXDO5HSRUW CHAIRMAN’S MESSAGE

“We believe that having the right people in the right positions doing the right things is critical for success of any enterprise.”

India now has over 120 million television homes and From a 30% plus growth in advertising revenues in over 80 million of these homes have cable and satellite the first half, we saw the growth fade away during the connections. Digital pay TV homes have also grown to second half of fiscal 2009. Increased competition also significant numbers with an estimated 12 million homes impacted industry margins during the second half of on DTH alone as of March 2009. There were several new fiscal 2009. channels launched during the year both in Hindi and regional languages and the appetite for entertainment During the year the overall revenues of the company continued to grow. The Hindi GEC genre attracted grew by 19% over the last year. Of the two primary new players owing to its popularity among viewers sources of revenues, advertising revenues grew by and advertisers. 14% over the previous year while the subscription revenues grew by 22%. It was encouraging to note The entertainment industry is witnessing that our subscription revenues earned from various a big transformation led by the technological DTH operators increased by 93% over last year. advancements, new delivery platforms and growing diversity of content. Consumer expectations are also changing rapidly. While consumers are spending more on media and entertainment, they also want more control, choice and pricing flexibility. While these changes are posing new challenges for media companies, they also open up new opportunities.

Zee performance, year of consolidation

Fiscal year 2009 saw improvements across a number of key operating metrics. We continued to deliver strong operating results, with most of our businesses performing as per expectations. The year also saw emergence of new competition in the Hindi entertainment space. While Hindi entertainment genre recorded higher viewership, television penetration increased and there was greater adoption of digital television, advertising revenue growth was impacted due to the overall economic slowdown. Zee focused on consolidating its market share across International subscription contributed 21% to genres and continued to build on its lead in international our revenues. The overall operating profits of the markets across the globe. company were flat as compared to the previous year and the profit after tax increased by 34% on a yearly It has been a very unique year for us and for the basis. We took a series of steps to streamline our industry. On the one hand we witnessed a considerable operations. Towards the end of the year, we were slowdown in the advertising revenue growth trajectory, able to reduce our selling, general and administrative particularly during the second half of the fiscal, while expenses. We have also consciously focused on on the other we continued to record robust growth improving efficiencies in content acquisition, one of in subscription revenues. the biggest cost elements. With the steps we have taken last year, Zee is now a leaner and more tightly focused company. ZEEL Annual Report 2008-2009 4 Focus on people and human capital Looking ahead - Committed to sustained growth

We believe that having the right people in the right Over the past 17 years, we have built a history of positions doing the right things is critical for success delivering growth. Our content businesses are leading of any enterprise. We need a creative and technology players in each of their genres and our strong strategic savvy leadership team to tap the opportunities. Every position gives us great confidence in our ability to executive needs to balance creativity with technology succeed in the medium term, despite a weak economic and yet be mindful of the costs. Those who can climate. Given the growing television penetration in balance these skill sets would create value in the India and the rapid digitization of distribution through long term. We continue to work towards enhancing DTH and digital cable, your company would continue the capabilities of our global workforce. to focus on aligning its strategy to take a significant share of emerging subscription revenues. Your company has taken a series of initiatives to consolidate the talent management initiatives. Zee’s objective is to create long term sustainable The Board has recommended issuing of Employee shareholder value. During the year, we have taken Stock Options Plan (ESOPs) to deserving employees important steps to move out of areas which were to create a greater degree of ownership. We have also not yielding results and move into areas of greater initiated creation of a talent map for all positions which long term potential. We continue to make judicial will be synchronized with talent map of employees investments in our core assets. We plan to build on holding these positions. These efforts have already the success of our businesses by continuing to produce started showing positive results in the Company. the most compelling content for our consumers. While

“Zee’s objective is to create long term sustainable shareholder value. During the year, we have taken important steps to move out of areas which were not yielding results and move into areas of greater long term potential.”

Corporate Governance the times are difficult, we are hopeful of an early recovery. Collaboration, consolidation and digitization Sound principles of corporate governance are vital in are the key words for the industry in the coming year. the long term success of any Company. Our endeavour continues to maintain transparency and secure trust I want to end on a note of thanks to all of our of our investors, employees, customers and public shareholders, employees, customers and partners at large. Your company is in full compliance of the for the continued support in our journey. Corporate Governance Code laid down by SEBI and stock exchanges. Sincerely, Subhash Chandra

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A:LWKLWVVKRZ&KRWL%DKX=HHEURNHWKHEDUULHUVRISULPHWLPHYLHZLQJB: Zee TV’s Dance India Dance is another example of reality shows creating stars out of ordinary people CHANNELS : GENERAL ENTERTAINMENT CONSISTENTLY DELIVERING RELEVANT AND COMPELLING CONTENT

Zee TV, the flagship channel of ZEEL was launched in October 1992 as the first Hindi General Entertainment Channel. Through its strong presence worldwide, Zee entertains over 500 million viewers across 167 ountries. It has moved into a leadership position with strong brand equity. This makes it the largest media franchise servicing the South Asian diaspora. With a consistent rating performance, its market share stands at 19% and it is one of the foremost channels across varying time bands.

Showcasing abundant understanding of Indian culture, Zee TV’s success is reflected in its popularity with its YLHZHUVDFURVVWKHVXEFRQWLQHQW$OVRNHHSLQJLQV\QF with the changing preferences of the channels audiences Zee TV launched its portal www.zeetv.com

With a large gamut of segments and a variety of programming, Zee TV has created a range that gives viewers of all demographics and age groups a large choice. Zee’s creatively innovative programming, has EHHQDSDWKEUHDNLQJVXFFHVV6KRZVVXFKDVSa Re Ga Ma Pa, Betiyaan, Dance India Dance have been hugely successful. Recent launches like Choti Bahu, Aap Ki Antara, Pavitra Rishta, Agle Janam Mohe Bitiya Hi Kijo, have became the rave among its diverse audience.

To live up to its innovativeness, Zee launched its fresh programming strategy with the tag line ‘Har Pal Banaye Ek Naya Rishta’ this year. With this leap, the channel highlighted women in her various moods and nuances. The packaging is an amalgamation of the five elements, commemorates the quintessential Zee TV woman and also caters to family values. This is the channel’s step towards consolidating and binding its programmes and bringing to its viewers a palatable mix of drama, thrillers, music and mythology.

In a highly competitive environment, Zee TV continues to hold on its position while other channels in the genre have lost share. Zee TV dominates the General Entertainment Channel space and remains a leader.

9 =((/$QQXDO5HSRUW CHANNELS : BOLLYWOOD SUSTAINING LEADERSHIP

Zee Cinema was launched in 1995. It is India’s first 24 hours Hindi Movies channel. It also has the distinction of being India’s first pay channel, with a powerful distribution network spread widely all over India. The channel boasts of one of the largest libraries having an eclectic mix of programmes, blockbusters and hits. Since it’s launch, Zee Cinema has been a leader in its channel genre with over 30% market share. In the year gone by, the properties that have captivated audiences are Dopahar Zee Cinema Par and Shanivaar Ki Raat Sitaron Ke Saath. Innovative offerings such as Rok Sako Toh Rok Lo and Double Mazaa, which show EDFNWREDFNPRYLHVKDYHEHHQLPPHQVHO\ appreciated and viewed brands for over five years. Zee Cinema’s sprucing up premiers & specials with an innovative break content has been widely appreciated.

Zee Premier has been specifically designed to address viewers of of a specific demographic. Now movie buffs, addicts and cinema lovers can feast of our library, which boast of over a collection of exclusive entertainment and art value. Zee Premier range includes blockbusters from modern Indian cinema, an industry which has been in a continuous state of evolution with every passing year. The collection contains the world premiers of many award winning movies such as Taare Zameen Par, Dhool, Dhammal, Jodha Akbar and Race.

Exclusively focused on the action genre, Zee Action has a collection of hundreds of movies from the last three decades. Action lovers have had a blast with blockbusters such as Ghayal, Ghatak, Tahalka, Elane Jung, Phool aur Kaante, Apradh and Qurbani. Zee Action has brought thrill home to millions of viewers. Thematics like Teen Ka Tashan have brought the action into the living rooms of these action seekers, a special experience crafted only on Zee Action.

Zee Classic, boasts of an outstanding library of Indian cinematic classics. It’s the most popular after Zee Cinema. Zee Classic was created to air only classics and blockbusters of the yester years, to revive nostalgic moments and memories.

=((/$QQXDO5HSRUW 10 A

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A: A still from Jodha Akbar an award winning Hindi film telecast on Zee Cinema, B: Shanivaar Ki Raat Sitaron Ke Saath is an innovative property launched by Zee Cinema A B

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A, B & C : Images showcasing the successful telecast of India – Sri Lanka series, the telecast of channels prime properties WWE and UEFA Champions League CHANNELS : SPORTS DRIVING STRENGTH TO BOUQUET CONSTRUCT

Ten Sports and Zee Sports combine, have given the viewers a lot of action in the past years and have become a force to reckon with in the sports entertainment business. Popular events like WWE, UEFA Champions and League Football have made inroads into the Indian market. Tennis fans enjoy the grand slams with a series of ATP 500 and a multitude of other events. For the indoor sports fan, the channel has showcased the World Poker Tour and Darting events. Cricket being nothing less than a religion in India, Ten Sports has acquired the rights to five of the ten cricket boards, giving it over 100 days of cricket a year. This is the maximum number of days of cricket across sports channels. The rights to these 5 boards; Sri Lanka, Pakistan, South Africa, West Indies and Zimbabwe are with Ten Sports for the next 4 years.

March 2005 saw the launch of Zee Sports, India’s first privately owned sports channel, which has put the ‘coup de grace’ on Zee network’s bouquet.

Four years on the go since it’s inception, Zee Sports has left a blazing trail and has evolved into one of the biggest forces on the sports entertainment front for the Indian audience.

In the last few years Zee Sports has focused not only on bringing the international sports action to the Indian viewers, but has taken much of the Indian sports action into the international arena. Some of the biggest criket events from the biggest territorial teams – Pakistan, Srilanka and Zimbabwe have been showcased on this channel. Events such as WWE have made wrestlers like Khalli a super hero in India and a superstar abroad. Indian football that required a much needed boost, is now on the verge of a gigantic leap forward. Besides this, sports fans have a range of adrenalin pumping adventure sports programming as well.

13 =((/$QQXDO5HSRUW CHANNELS : ENGLISH CONTENT BRINGING THE BEST OF INTERNATIONAL CONTENT TO INDIAN AUDIENCES

7KH(QJOLVK*(&ZDVODXQFKHGLQ0DUFK%HLQJ the most widely viewed English Channel in India, it has garnered a large market share among the English speaking and viewing audience. Zee has focused on sourcing the best international content which appeals to the young and urban Indian palate. Some of the most popular shows on this channel are The Best of F. R.I.E.N.D.S., Gossip Girl, Sex and the City, The Tonight Show, The Big Bang Theory and many alike. The only ,QGLDQVKRZWRFDSWXUHDOOWKHH[LWLQJ ZRUWKZKLOHSDUW\DFWLRQ LV$IWHU+UV%URDGFDVWLQJWKHPRVWKDSSHQLQJLQWHUQDWLRQDO events like the World Music Awards, Emmy’s and leading fashion shows is one of the channels strategic prerogatives. In recent times, Zee Café acquired exclusive live telecast rights to the most prestigious beauty pageant – Miss World 2008.

Zee Trendz is the leading fashion and lifestyle property in India. Following Indian as well as global trends, this channel brings to you the latest in style, fashion, music and people. Some of the remarkably successful shows that were acquired are: Ultimate Gadgets is a program on audio, video, interactive and communication, bringing the audience the latest on trends and products, especially designed for the viewers. Music Retro is an introspective retrospect of various styles of PXVLF²IURPURFNSRSUDSDQGKLSKRSWR5 %)RUPXVLF lovers, Music Retro is flowing with reviews and video clips. Power Players profiles the most influential men and women from fields where power, talent and moral example have touched and transformed lives, around the world.

Zee Studio has brought quality cinema to the discerning Indian audience. Catering primarily to movie buffs among the 6(&$ %LQWKHDJHUDQJHRI\HDUVWKHFROOHFWLRQ of programmes includes a potent mix of Hollyood’s hottest block busters, animation flicks, golden classics, musicals, comedies and the finest of world cinema. Classics like WKH0HUFKDQW,YRU\ILOPVDQG%%&79DGDSWDWLRQVZHUHDOVR VKRZFDVHG,Q)HEUXDU\=HH6WXGLRDFTXLUHGWKHH[FOXVLYH telecast rights to the prestigious awards ceremories such as, The Screen Actors Guild Awards ‘09 and Live From The Red Carpet Academy Awards ‘09.

=((/$QQXDO5HSRUW 14 A

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A: Much to the delight of its ever growing audience Zee Studio telecasted the movie Ocean’s Twelve B: Grey's Anatomy a new addition to Zee Café's impressive library CHANNELS : MUSIC, LIFESTYLE & ENTERTAINMENT STRENGTHENING THE BOUQUET

The three major properties of ZEEL in the music genre are ETC, etc Channel Punjabi and Zee Muzic.

ETC has etched its unique identity as India’s only Bollywood trade channel. Some of the prime time shows on the channel are: ETC Bollywood Business : Taran Adarsh interviews directors, producers, corporate heads, actors and everyday celebrities Bada Parda : Reviews the hottest films of the fortnight Star Giraftar : Showcases stars and their upcoming films, an indepth look at the films and their characters ETC Xtras : Catch all the superhits on this program ETC Nautanki : Bollywood’s biggest Suresh Menon gag show ETC Karaoke : A unique program with lyrics displayed on screen

ETC Channel Punjabi is specially designed with Punjabi music and religious content at heart. A market leader for almost a decade, it has excelled both in numbers and programming. It received an overwhelming response from the viewers for a two hour entertainment extravaganza Garma Garam Dus Hazar and for a weekly campus fun frenzy – Masti da Funda.

Year 2009 saw an exciting development in the field of music for Zee. Now called Zing, the channel presents movies, music and madness to an audience of fifteen years and above. Some of the channel’s key properties are Eye Candy, Face to Face, Chillax Morning, Flix @ 2, After 8 and Bollywood Chakkar.

Alternate Lifestyle

Zee Jagran forays into the spiritual and religious entertainment genre, aimed at awakening people to realize the spiritual aspects in their life and hence enriching lives. This lifestyle channel attempts to provide holistic entertainment to the audience through alternate lifestyle programs, LQWHUDFWLYHDVWURVROXWLRQVVSLULWXDOFRQWHQWDQGP\WKRORJLFDODQGVRFLDOO\ relevant movies and serials. $KRXUVRFLRVSLULWXDORIIHULQJ the channel offers content creation standards that puts it above any other channel in this genre.

General Entertainment

Another offering by the company in the entertainment genre Zee Smile, brings to its viewers original content and some which is shown on Zee TV. 7KHFKDQQHOLVDFFHVVLEOHWRYLHZHUVRQDIUHHWRDLUEDVLV this in turn provides it a vast viewership.

=((/$QQXDO5HSRUW 16 A

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A: A show from Zee Jagran highlighting the preachings of the spiritual guru Osho B: A still from etc’s show Star Giraftar B

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A: De Dhakka, a superhit film produced by the production house, B: Gulaal, produced by Zee Motion Pictures was a much critically acclaimed film FILM PRODUCTION & DISTRIBUTION INDIAN FILMED ENTERTAINMENT

Zee ventured into the movie production, acquisition and distribution business this year. Zee Motion Pictures is an independently running division of ZEEL and operates with two labels. Zee Motion Pictures (for mainstream films) and Zee Limelight (for modestly budgeted films targeted at niche audiences).

The films division manages and exploit’s multiple revenue streams associated with its films including theatrical distribution, syndication rights on television platforms (cable, satellite, terrestrial and VOD), home entertainment rights, music and audio rights – both domestically and internationally.

The division has established production teams for each of the languages in the regional centres including Mumbai, Chennai, Kolkata and Hyderabad with a national team in Mumbai.

The company’s focus is on the development, production, distribution and marketing of films in Hindi and regional languages like Marathi, Telugu, Tamil, Kannada and Bengali.

In the first full year of operations, the company released 15 films. Some of the films are Oh My God, Gulaal, Dhudgus, De Dhakka, Olot Palot, Tomar Janya and Masth.

19 =((/$QQXDO5HSRUW INTERNATIONAL BUSINESS DELIGHTING INDIANS ACROSS THE WORLD

In 1996, Zee became the first Indian broadcaster to step into international markets by launching in UK. The network today spans over 167 countries, entertaining a diverse audience of 500 Million viewers. The major regions are USA, Europe, Middle East (MENAP), Asia Pacific and Africa.

Each market has a dedicated business team keeping a tap on the pulse of the region. A customized beam delivers specifically crafted content catering to the current tastes, likes and needs of the market.

Being a pioneer in the South Asian market, Zee enjoys the first mover advantage. The niché channel offering and WKHVWURQJWLHXSVZLWKOHDGLQJGLVWULEXWLRQSODWIRUPV gives the network a formidable stance. Some of the recent offerings include local language launches in Malaysia, Indonesia, Russia and Middle East among other countries. The existing library content is being dubbed or subtitled for these markets and has met with significant success.

International subscription is a key contributor to the company’s revenues contributing over 21% of the FRPSDQ\·VWRSOLQHLQWKHILQDQFLDO\HDU

=((/$QQXDO5HSRUW 20 Regions highlighting Zee’s global reach A

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A: .LG]HHLV$VLD·V1RFKDLQRISUHVFKRROVB:ZZZ]HHWYFRPLVDSRUWDOIRUWKHIODJVKLSFKDQQHO=HH79 C:WKHILUVWRILWVNLQGVHUYLFHLQWHJUDWLQJ79 606 EDUCATION & TECHNOLOGY SHAPING A BETTER TOMORROW

Zee Schools

ZEE LEARN – the Education division of ETC is an Zee Schools clocked impressive growth in expanding integrated education entity specializing in design its footprint across India. $VRQVW0DUFKWKHUH of pedagogical content, running, franchising ZHUHVFKRROVZKRKDGVLJQHGXSWREH=HH6FKRROV DQGFRQVXOWLQJEULFN PRUWDUSUHVFKRROVFKRROV DQGRXWRIWKHVHVFKRROVDUHDOUHDG\RSHUDWLRQDO and vocational institutes. It has its presence in Leading the much needed innovation in the school 3 business verticals: segment, the company developed and rolled out a XQLTXHPHWKRGRORJ\/LWHUD2FWDYHTM. Litera KIDZEE OctaveTM ensures a child’s best understanding of a concept through his/her own unique learning style. .LG]HHLV$VLD·V1RFKDLQRISUHVFKRROV$VRQ It is a holistic approach to achieving real understanding 0DUFKWKHUHZHUH.LG]HHSUHVFKRROV YLVDYLVWKHFXUUHQWVWDWHRIURWHOHDUQLQJ'XULQJWKH\HDU in more than 300 cities. Out of these 480, were the education division has entered into an arrangement already operational. for rendering infrastructure, content and other services for a school in Mumbai. Consistent with our strategy to lead innovation in the category, Kidzee introduced a new child Youth Vocational Institutes centric methodology iLLUMETM in October, 2008 under Project Dolphin. Project Dolphin is a game The company caters to the Youth Segment through its FKDQJLQJLQQRYDWLRQLQWKHSUHVFKRROVHJPHQW vocational training institutes Zee Institute of Creative ZLWKDQHZEXVLQHVVPRGHOWKDWLVDZLQZLQIRUWKH Arts (ZICA) and=HH,QVWLWXWHRI0HGLD$UWV =,0$  franchisee and the franchisor and the new iLLUMETM The company has successfully developed and methodology. iLLUMETM is unique to Kidzee & gives implemented the franchisee model of its ZICA us a competitive advantage as the only TM pedagogy institute at Bhuvneshwar and plans to add LQWKHSUHVFKRROVHJPHQW more such institutes in India.

Technology

Mobile VAS Services, 57575 was the first service to LQWHJUDWH79606DWHFKQRORJ\VROXWLRQWKDWSURYLGHV live interaction capabilities to play and interact while watching the show.

Through 57575, Zee aims to integrate and extend high quality and engaging content, applications and services to its customers. Being the first to realize, adapt and integrate innovative ideas and solutions that lead the mobile world, 57575 is a platform that has a penetration RIQDWLRQDOO\

23 =((/$QQXDO5HSRUW VIEWERSHIP

Being a network on the cutting edge of the home entertainment business, Zee has made sure that the customer is the starting point in every decision that is taken. In the process, the network has created content with a large number of options. Naturally, this means moving with the times.

Boundaries have been pushed. Dedicated channels have been set up for specific cultures. Zee has developed a bouquet of region specific channels to bring into the fold, masses of people. Bridging thereby the fractured lines of geographical divides.

As a network, Zee has focused on reaching out to various target groups across different markets and the network’s strategy to offer different genres has helped 20 6WDU Sun the conglomerate in growing into India’s leading  16.6 15.1 viewership based broadcaster. 15 16 15.1 Zee 14.4 14.5 14.7 Star 12.2 Sun The mechanics of programming have evolved from Zee 12.2 10 just being a mere concept. Today, it is a strategic Sony 7.2 7.6 7.6 TV 18 model of high value. Zee has created new content, 7.1 Sony channel diversity and viewer loyalty resulting in a large 5 subscriber base. This has had a fallout of lasting impact. TV 18   Viewers of every age group can now indulge in total 0 entertainment. Now everyone, everywhere holds the 2005 2006 2007 2008  key to entertainment unlimited. Source: TAM Media Research, All Universe, All Markets of India, Today, Zee’s strategic focus is on becoming India’s Total Network Cumulative Average Weekly leading broadcaster on viewership. Channel Shares; CY 2009 : Q1 nos.

=((/$QQXDO5HSRUW 24 We’ve grown by becoming a bigger and more important part of our viewers' lives. Zee continues to create content, that stands out in a crowd.

THE WAY FORWARD

“At Zee, we are putting in place a strategic framework for sustained profitable growth through a strong portfolio of brands across the entertainment spectrum.”

Punit Goenka Chief Executive Officer

U Leading broadcaster in India and overseas for South East Asian content U First mover advantage across genres U Widest offering of channels by a single broadcaster in the country U Across genres, our channels are either leaders or U Inspire creativity strong contenders for the leadership position U Continue to run our business as best in class, with U Diversified revenue streams : advertising and viewer satisfaction as the ultimate goal. subscription U Enhance our leadership position in the genres U Diversified customer base : across 167 countries we compete. U Operating the largest pay TV distribution platform in U Continuous innovation to stay ahead of the curve the country, Zee Turner and seize growth opportunities U Large network gives tremendous leverage U Invest in the business in a focused, disciplined with advertisers way and achieve superior financial performance. U Cost conscious approach towards business U To use the strong cash flows of our business to U Affiliate companies have leading presence across the improve returns to shareholders media value chain cable and distribution, U Reaffirm our commitment to highest level of  GLUHFWWRKRPHVDWHOOLWHVHUYLFHVGLJLWDOPHGLD integrity and professionalism throughout our amongst others business.

=((/$QQXDO5HSRUW 30 
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EQUAL EMPHASIS ON ADVERTISING AND SUBSCRIPTION Syndication & Movies

Subscription DTH Advertising Domestic Cable 5% 15% International 21%

Other Sales 10% Advertising 49%

YoY Growth Particulars (Figures in Rs. Million) FY2008 1Q FY09 2Q FY09 3Q FY09 4Q FY09 FY2009 FY2009 vs FY2008 Operating Revenues 18,354 5,420 5,717 5,456 5,181 21,773  Operating Costs    4,256 3,831  26% Operating Profits (EBITDA) 5,423 1,442 1,488 1,200 1,350 5,480 1% Profit Before Tax 5,813 1,450  1,132 1,341 5,403  Profit After Tax & before 4,186 1,607 1,782 815  5,170 23% Exceptional Items Profit After Tax for the year 3,832 1,601 1,783 825  5,122 34%

Full Year Audited Numbers: Consolidated; Quarterly Numbers Unaudited

14% SEGMENT WISE GROWTH IN FY 2009 10 All Figures in Rs Billion

9.3 10.6 8

6 14% 20% 4 3.9 4.5 33% 2.8 3.4 2 93%

0.6 1.2 1.6 2.1

Advertising Domestic DTH International Other Sales Cable

FY 2008 FY 2009 YoY Growth % Zee Entertainment Enterprises Ltd. 135, Continental Building, Dr. Annie Besant Road , Worli, Mumbai-400 018, Maharashtra, India. Tel: 91-22 66971234

Regional Offices New Delhi Noida China B-10, Essel House, Zee Studio, Rm 1906 East Tower, Lawrence Road, Industrial Area, Filmcity 19, Fortune Plaza New Delhi-110035 Sector 16-A, 116 Tiyu East Road, Tel: 011 27101145 / 54 Noida 201301 Guangzhou, China - 510620 Fax: 011 27192172 Tel: +86-20 38931510

Kolkata International Offices Malaysia 5A/1 & 5A/2,5th Floor, USA Level 16, 1 Sentral Jalan Park Plaza, 71, Park Street, Suite no - 200, Stesen Sentral 5 Kolkata-700016 701 Highlander Blvd, Arlington, KL Sentral 50470 Tel: 033 2227 5458 / 5459 TX 76015, USA Kuala Lumpur. Malaysia Fax: 033 22275463 Tele: +81 78044600 Tel: +603 2092 9297 Fax: +81 78044696 Fax: +603 20929201 Hyderabad 6-2-929 DB Enclave, United Kingdom Raj Bhavan Road, Unit 7;Belvue Business Centre. Khairtabad, Hyderbad-500 004 Other Offices Belvue Road, Northoit. Tel: 040 23320139 / 23320770 Middlesex, UB5 5QQ Broadcasting Division Fax: 040 23320164 London, United Kingdom. 1B, Shah Industrial Estate, Tele Fax: +44 020 8841 9550 Off. Veera Desai Road, Pune Andheri-West, Mumbai - 400 053 Swastik Apartment, Tel: 022 67813737 South Africa Gulmohar Lane Fax: 022 26732030 st Of Law College, 1 Floor 109 Atrium Terraces, 272 Oak Avenue., Ferndale, opp. Nirmiti Showroom, ETC Networks Ltd Erandawane, Pune-411 004 Randburg, South Africa Education Division: Valechha Tel: 020 25455338 Tel : +27 117813352 Chamber, Plot No. B-6, 3rd Floor, Fax: 020 25422049 Fax No +27 117813347 Off New Link Road, Andheri-West, Mumbai - 400 004 Chennai Mauritius Tel: 022 2674 3900 Alpha Centre, Essel House, 2nd floor, Ebene House, 33, Fax.: 022 2674 3422 6th Floor, No.150 & 151, Cybercity Ebene, Mauritius North Usman Road, Tel: +230 464 2222 / 6666 T- Nagar, Chennai-600 017 Fax No: +230 464 4040 Tel: 044 2814464 Tel Fax: 044 28144963 Singapore (Singapore Pte. Ltd.) Bangalore 500, Rifle Range Road, # 01-09 Bukit Timah Satellite, 204, 2nd Floor, H.M. Earth Station, Singapore-588 397 Geneva House, 14, Tel: +65 64669331 Cunningham Road, Fax: +65 6468837 Bangalore-560 052 Tel: 088 22373183/84/85/86 Fax: 088 22373180 NOTICE Notice is hereby given that the Twenty-Seventh Annual General Meeting of the Members of Zee Entertainment Enterprises Limited will be held at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018 on Tuesday, the 18th day of August, 2009, at 11.00 a.m., to transact the following businesses: ORDINARY BUSINESS: 1. To receive, consider and adopt the Audited Balance Sheet as at March 31, 2009, the Profit & Loss Account of the Company for the financial year ended on that date and the Reports of the Auditors and Directors thereon. 2. To declare dividend on equity shares for the financial year ended March 31, 2009. 3. To appoint a Director in place of Mr. Subhash Chandra, who retires by rotation, and being eligible, offers himself for re-appointment. 4. To appoint a Director in place of Mr. B. K. Syngal, who retires by rotation, and being eligible, offers himself for re-appointment. 5. To appoint a Director in place of Dr. M. Y. Khan, who retires by rotation, and being eligible, offers himself for re-appointment. 6. To appoint M/s. MGB & Co., Chartered Accountants, Mumbai as Auditors of the Company to hold such office from the conclusion of this meeting until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Board of Directors of the Company. SPECIAL BUSINESS: 7. To consider and if thought fit, to pass, with or without modification, the following resolution as a Special Resolution. “Resolved that pursuant to Section 163 and other applicable provisions, if any, of the Companies Act, 1956 (the Act), approval and consent of the Company is hereby accorded for maintaining the Register & Index of Members, Register & Index of Debenture holders, if any, Share and/or Debenture Transfer Register, and copies of all Annual Returns prepared under Section 159 of the Act, together with copies of certificates and documents required to be annexed thereto under Section 161 of the Act, or any one or more of them, at the offices of the Company’s Registrar and Share Transfer agents M/s. Sharepro Services (India) Private Limited, at 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072 and/or at 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021, instead of the Registered office of the Company.” 8. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution. “Resolved that in accordance with the provisions of Section 81(1A), and other applicable provisions, if any, of the Companies Act, 1956 (“the Act”), the provisions contained in the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the “SEBI Guidelines”) or any statutory modification(s) or re-enactment of the Act or the SEBI Guidelines, the Articles of Association of the Company and the Listing Agreements entered into by the Company with the Stock Exchanges where the securities of the Company are listed and subject to such other approval(s), permission(s) and sanction(s) as may be necessary, consent of the Company be and is hereby accorded to the Board of Directors (hereinafter referred to as “the Board” which term shall include any ‘Remuneration Committee’ or ‘Employee Stock Option Committee’ of the Board), to introduce and implement an Employee Stock Option Scheme (‘ZEEL-ESOP 2009’ or ‘the Scheme’), and to grant, offer, issue and allot in one or more tranches at any time to or to the benefit of such employees of the Company and Directors of the Company, whether Whole-time Directors or otherwise, as may be decided by the Board, Options under ZEEL ESOP-2009 exercisable & convertible into equity shares (hereinafter referred to as ‘the securities’) of the Company not exceeding in the aggregate 5% of the issued, subscribed and paid-up capital of the Company as on March 31, 2009 i.e. up to 21,700,355 equity Shares of Re. 1/- each of the Company (or such other adjusted number of shares for any bonus, consolidation or other re-organisation of the capital structure of the Company as may be applicable from time to time), at such price, in such manner, during such period and on such terms and conditions as may be determined by the Board in accordance with the SEBI Guidelines or any other applicable provisions as may be prevailing at that time. Resolved further that, a) the Board be and is hereby authorised to formulate, evolve, decide upon and bring into effect the scheme on such terms and conditions as contained in the Explanatory Statement to this Notice and to make any modification(s), change(s), variation(s), alteration(s), or revision(s) in the terms and conditions of the Scheme from time to time including but not limited to amendments with respect to vesting period/ schedule, exercise price/period, eligibility criteria or to suspend, withdraw, terminate or revise the Scheme; 33 ZEEL Annual Report 2008-2009 b) the Non-Executive Directors of the Company including Independent Directors, be granted up to a maximum of 200,000 Options per annum and up to a maximum of 1,000,000 Options in the aggregate under the scheme; c) the securities may be allotted in accordance with the scheme either directly or through a trust which may be set up in any permissible manner and that the scheme may also envisage for providing any financial assistance to the trust to enable to acquire, purchase or subscribe to the securities of the Company; d) any new equity shares to be issued and allotted upon exercise of options from time to time under ZEEL ESOP- 2009 shall rank pari passu inter se in all respects with the then existing Equity Shares of the Company; e) the Board be and is hereby authorised to take requisite steps for listing of the securities allotted under ZEEL ESOP-2009 on the Stock Exchanges where the securities of the Company are listed; and f) for the purpose of giving effect to this resolution, the Board be and is hereby authorised on behalf of the Company to do all such acts, deeds, matters and things, as may be necessary or expedient and to settle any questions, difficulties or doubts that may arise in this regard at any stage including at the time of listing of securities without requiring the Board to secure any further consent or approval of the Members of the Company to the end and intent that they shall be deemed to have given their approval thereto expressly by the authority of this resolution.” 9. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution. “Resolved that the benefits of Employees Stock Option Scheme, “ZEEL ESOP 2009” proposed under Resolution No. 8 contained in this Notice be extended to the employee and/or Director of any present and future subsidiary/ holding companies of the Companies, on such terms and conditions as may be decided by the Board Directors of the Company.” 10. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution. “Resolved that pursuant to provisions of Section 31 and other applicable provisions, if any, of the Companies Act, 1956 (including any amendment or re-enactment thereof), the Articles of Association of the Company be and are hereby altered with immediate effect as follows: Substitution of existing Article 95 with the following: Article 95 - Every deed or other instrument, to which the Seal of the Company is required to be affixed, shall be executed either by a Director or Company Secretary or any person authorised by the Board or Board Committee. Insertion of a new Article 7A after Article 7 Article 7A - Subject to the provisions of Sections 80, 81, 85 to 90 and other applicable provisions of Companies Act, 1956, including applicable rules, any new shares shall be issued upon such terms and conditions and with such rights and privileges as the Board shall determine, in particular any such shares may be issued with a preferential or qualified or differential right to voting and/or dividends and/or in the distribution of assets of the Company and subject to the provisions of the said sections of the Act, with special or differential voting rights. Insertion of a new Article 7B after Article 7A Article 7B - Notwithstanding anything contained in this Articles of Association, the Board of Directors may, when and if thought fit, buy back such of the Company’s own shares or securities as it may think necessary, subject to such limits, upon such terms and conditions, and subject to such approvals, as may be permitted by law.” 11. To consider and if thought fit, to pass, with or without modification, following resolution as an Ordinary Resolution. “Resolved that in accordance with the provisions of Sections 16, 94 and other applicable provisions, if any, of the Companies Act, 1956, the Authorised Capital of the Company be and is hereby re-organised/altered by converting the existing un-issued Cumulative Redeemable Preference Shares into Equity Shares, resulting in the alteration of Capital clause from Rs. 75,00,00,000 (Rupees Seventy Five Crores Only) divided into 50,00,00,000 (Fifty Crores) Equity Shares of Re 1/- (Rupee One) each and 25,00,000 (Twenty Five Lakhs) Cumulative Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred) each to Rs. 75,00,00,000/- (Rupees Seventy Five Crores only) divided into 75,00,00,000 (Seventy Five Crores) Equity Shares of Re 1/- (Rupee One) each and in consequence thereof the existing Clause V of the Memorandum of Association of the Company relating to share capital be substituted by the following clause : V. The Authorised Share Capital of the Company is Rs. 75,00,00,000/- (Rupees Seventy Five Crores only) consisting of 75,00,00,000 (Seventy Five Crores) Equity Shares of Re 1/- (Rupees One) each.”

ZEEL Annual Report 2008-2009 34 12. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution. “Resolved that pursuant to Section 31 and other applicable provisions, if any, of the Companies Act, 1956, consequent to re-organisation/alteration of capital clause of Memorandum of Association of the Company by converting existing un-issued Cumulative Redeemable Preference Shares into Equity Shares, the existing Article 3 (a) of the Articles of Association of the Company be substituted by the following Article: Article 3(a) - The Authorised Share Capital of the Company is Rs 75,00,00,000/- (Rupees Seventy Five Crores only) consisting of 75,00,00,000 (Seventy Five Crores) Equity Shares of Re 1/- (Rupee One) each.” 13. To consider and if thought fit, to pass, with or without modification, following resolution as an Ordinary Resolution. “Resolved that pursuant to the provisions of Sections 198, 269, 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, and in partial modification of the Members resolution dated 28th September, 2005, consequent to the appointment as the Chief Executive Officer (CEO) of the Company, the remuneration and perquisites payable to Mr. Punit Goenka as Whole-time Director & CEO be and is hereby increased, as detailed in the explanatory statement, effective from August 1, 2008 for the remaining term of his appointment. Resolved further that, a) the aggregate of salary, perquisites and allowances of Mr. Punit Goenka, Whole-time Director & CEO in any one financial year shall not exceed the limits prescribed under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act as amended from time to time; b) in the event of loss or inadequacy of profit in any financial year during the currency of tenure of services of the Mr. Punit Goenka, Whole time Director & CEO, the payment of salary, perquisites and other allowances shall be governed by the limits prescribed under Section II of Part II of Schedule XIII of the Companies Act, 1956; c) the Board or any committee thereof be and is hereby authorized, in its absolute discretion and from time to time, to fix, within the revised range stated in explanatory statement, the salary and the performance bonus or other entitlements of Mr. Punit Goenka.” 14. To consider and if thought fit, to pass, with or without modification, following resolution as a Special Resolution. “Resolved that pursuant to the provisions of Section 314 and other applicable provisions, if any, of the Companies Act, 1956, consent of the Members of the Company be and is hereby accorded for the re-appointment of, and consequent holding of office or place of profit by Mr. Subhash Chandra, Chairman and Non-Executive Director of the Company, as Chief Executive Officer of Asia TV Limited, UK, a wholly owned foreign subsidiary of the Company for a period of 3 years with effect from April 1, 2009, on such remuneration and other terms, (including any increase or modification in remuneration during the period of appointment as may be approved by Asia TV Limited, UK, from time to time) as detailed in the Explanatory Statement. Resolved further that the Board of Directors of the Company be and is hereby authorised to agree to, accept and approve any subsequent changes to the terms and conditions of the said appointment of Mr. Subhash Chandra as Chief Executive Officer of Asia TV Limited, UK.” The Register of Members and Share Transfer Books of the Company will remain closed from Monday, August 10, 2009 to Tuesday, August 18, 2009 (both days inclusive). Share Transfers received in order at the Registered Office of the Company or at the office of the Registrar of the Company, by 5.30 p.m. on August 8, 2009, will be processed for payment of equity dividend, if declared, to the transferees or their mandatees. Dividend, if approved by Members at the ensuing Annual General Meeting, will be paid to all those shareholders whose name appear in the Register of Members of the Company, after giving effect to all valid share transfers in physical form lodged with the Company or its Registrar on or before August 8, 2009 and in the list of beneficial owners furnished by National Securities Depository Limited and/or Central Depository Services (India) Limited, in respect of shares held in electronic form, as at the end of the business on August 8, 2009. By order of the Board Place : Mumbai M. Lakshminarayanan Date : June 26, 2009 Executive Vice President & Company Secretary Registered Office: Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai 400 018 35 ZEEL Annual Report 2008-2009 NOTES: 1. A member entitled to attend and vote at the meeting may appoint a proxy to attend and vote on a poll on his behalf. A proxy need not be a member of the Company. Proxies, in order to be effective, must be received at the Registered Office of the Company not less than 48 hours before the commencement of the Annual General Meeting. 2. Corporate Members are requested to send to the Registered Office of the Company, a duly certified copy of the Board Resolution, pursuant to Section 187 of the Companies Act, 1956, authorizing their representative to attend and vote at the Annual General Meeting. 3. Explanatory Statements pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special Businesses to be transacted at the Annual General Meeting, are annexed. 4. Additional information, pursuant to Clause 49 of the Listing Agreement(s) with Stock Exchanges, on Directors recommended by the Board for appointment/re-appointment at the Annual General Meeting forms part of the Report on Corporate Governance in the Annual Report. 5. Members/Proxies should bring their Attendance Slips along with copy of the Annual Report to the Meeting. 6. Members who are holding Company’s shares in dematerialised form are required to bring details of their Depository Account Number for identification. 7. Queries on accounts and operations of the Company, if any, may be sent to the Company Secretary seven days in advance of the meeting so as to enable the management to keep the information ready at the Meeting. 8. Members holding Equity Shares in physical form are requested to notify the change of address/dividend mandate, if any, to the Company’s Registrar and Share Transfer Agent, M/s. Sharepro Services (India) Pvt. Ltd., at 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072 and/or at 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021. 9. Under Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of shares held by them in physical form. Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in duplicate (which will be made available on request) to M/s. Sharepro Services (India) Pvt. Ltd. 10. Dividend for the financial year ended March 31, 2002, which remains unpaid or unclaimed, will be due for transfer to the Investor Education and Protection Fund of the Central Government (‘IEPF’) in December 2009. Members who have not encashed their dividend warrant(s) for the financial year ended March 31, 2002, or any subsequent financial year(s), are requested to lodge their claims with the Company’s Registrar and Share Transfer Agent. Members are advised that in terms of provisions of Section 205C of the Companies Act, 1956, once unclaimed dividend is transferred to IEPF, no claim shall lie in respect thereof. EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956 Item No. 7 Your Company has appointed M/s. Sharepro Services (India) Private Limited as its Registrar & Share Transfer Agents (‘R&T agent’). As the R&T agent have been charged with the duty inter alia of maintaining and updating the Register & Index of Members and Shares/Debentures Transfer Register, it will be convenient for them to maintain if these are located at their office(s) at 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri Kurla Road, Sakinaka, Andheri (East), Mumbai - 400 072 and/or at 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021, rather than at the Registered Office of the Company. Section 163 of the Companies Act, 1956, permits the Company to maintain its Statutory Registers at any other place within the city, town or village where registered office of the Company is situated, subject to Members approval by way of Special Resolution. The Board recommends the Special resolution as set out in Item no. 7 for Member’s approval. None of the Directors of the Company are in any way concerned or interested in this resolution. Item No. 8 & 9 Employee Stock Options have long been recognised as an effective instrument, to align the interests of the employees with those of the Company and its shareholders, providing an opportunity to the employees to share the growth of the Company and to create long-term wealth in the hands of the employees.

ZEEL Annual Report 2008-2009 36 Though your Company has been recognizing the performance and incentivising its employees from time to time, including by way of an ESOP scheme which was launched in 1998 in line with the applicable regulations at that point in time, with a view to reward employees for their contribution; encourage value creation and value sharing with employees, attract and retain best talents, your Board has, at its meeting held on June 26, 2009, subject to your approval approved implementation of an Employees Stock Option Scheme called “ZEEL ESOP 2009,” for the benefit of present and future employees including Executive/Non-Executive Directors of the Company and such other persons including employees/Directors of Holding/Subsidiary companies, now or in future, in accordance with the provisions of prevailing regulations. To promote the culture of employee ownership, approval of the shareholders is being sought for issue of stock options to the employees of the Company. The following are the salient features of the Scheme, and various disclosures as required by Clause 6 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the “SEBI Guidelines”): 1. Total number of options to be granted: A number of options to be granted under the Scheme would equal to and shall not exceed 5% of the issued, subscribed and paid-up equity shares of the Company as on March 31, 2009, i.e. up to 21,700,355 Equity Shares of Re. 1/- each of the Company. It is also proposed to reserve maximum of 1,000,000 options for grant to the Directors (other than Promoter Directors) of the Company from time to time. In the event of any corporate action(s) viz. bonus, consolidation or other re-organisation of the capital structure of the Company, number of options/shares to be issued shall undergo fair, reasonable and appropriate adjustments pursuant to the SEBI Guidelines. Each option when exercised would be converted into one Equity Share of Re. 1/- each fully paid- up. Any vested option(s) that lapse due to non-exercise or unvested option(s) that get cancelled due to resignation of the employees or otherwise, would be available for being re-granted at a future date. 2. Identification of classes of employees entitled to participate in the Employee Stock Option Scheme: All employees of the Company, including Executive & Non-Executive Directors, but excluding the Promoters of the Company, as may be decided by the Remuneration Committee from time to time, would be entitled to be granted stock options under the ESOP Scheme. 3. Transferability of employee stock options: The stock options granted to an employee will not be transferable to any other person and shall not be pledged, hypotheticated, mortgaged or otherwise alienated in any manner. However, in the event of the death of an employee/option holder while in employment, the right to exercise all the vested options granted to him/her till such date shall be transferred to his/her legal heirs or nominees. 4. Requirements of vesting, period of vesting and maximum period of vesting: The Options granted shall vest, not earlier than one year and not later than five years from the date of grant of options, so long as the employee continues to be in the employment of the Company, as the case may be. Vesting shall happen in one or more tranches, subject to such terms and conditions of vesting as may be decided by the Board/Remuneration Committee including but not limited to certain performance metrics (on the achievement of which the granted options would vest) and the proportion in which options granted would vest. 5. Exercise Price or Pricing Formula: The Options would be granted at an exercise price equal to the ‘market price’ within the meaning as defined in the SEBI Guidelines i.e. the latest available closing market price (on that stock exchange where there is highest trading volume) on the date prior to the date on which the options are granted to the employees. 6. Exercise Period and the process of Exercise: The Exercise period would commence from the date of vesting and will expire on completion of four years from the date of vesting of such options. The options will lapse if not exercised within the specified exercise period or such other period as may be decided by the Board. The options will be exercisable by the Employees by a written application addressed to the designated officer of the Company intimating his intention to exercise the options in such manner, and on execution of such documents, as may be prescribed by the Board/Remuneration Committe from time to time.

37 ZEEL Annual Report 2008-2009 7. Appraisal Process for determining the eligibility of the employees to ESOP: The Company has a formal performance appraisal system established in line with emerging standards, wherein the performance of employees is assessed each year on the basis of various functional and managerial parameters. Stock Options would be granted based on performance linked parameters, value creation, leadership, role/ designation of the employee, length of service with the Company, past performance record, future potential of the employee and/or such other criteria that may be determined by the Board/ Remuneration Committee at its sole discretion. The Board/Remuneration Committee may at its sole discretion extend the benefits to a new entrant on such basis as it may deem fit. 8. Maximum number of options to be issued per employee and in aggregate: The number of options that may be granted to any specific employee under the Scheme will depend upon the rank/designation of the employee and shall be in the aggregate less than 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant of options. 9. Disclosure and Accounting Policies: The Company shall comply with the disclosure and the accounting policies prescribed under SEBI Guidelines and/or the Accounting Standards. 10. Method of option valuation: To calculate the employee compensation cost, the Company shall use the Fair Value Method for valuation of the options granted. In case the Company calculates the employee compensation cost using the Intrinsic Value of the stock options, the difference between the employee compensation cost so computed and the cost that shall have been recognised if it had used the Fair Value of the options, shall be disclosed in the Directors’ Report and also the impact of this difference on profits and on EPS of the Company shall also be disclosed in the Directors’ Report. As the employee stock option scheme provides for issue of shares to be offered to persons other than existing shareholders of the Company, consent of the Members is being sought pursuant to Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956 and as per Clause 6(1) of the SEBI Guidelines. As per Clause 6(3) of the SEBI Guidelines, a separate special resolution is required to be passed if the benefits of the Scheme are to be extended to employees/Directors of subsidiary or holding company, existing now or formed or acquired in future. The Board recommends the Special resolutions as set out in Item Nos. 8 & 9 for the Member’s approval. None of the Directors of the Company are in any way concerned or interested in this resolution, except to the extent of any option that may be offered or securities that may be issued to them under the Scheme. Item No. 10 As per the existing Article 95 of the Articles of Association of the Company, every deed or agreement on which the Common Seal of the Company needs to be affixed shall be executed by a duly constituted attorney or by a Director of the Company. This creates administrative inconvenience. For operational convenience, it is therefore proposed to alter Article 95 of the Articles of Association, whereby the Common Seal of the Company can be affixed on any deed or agreement executed by any Director or Company Secretary or any officer authorised by the Board or any Board Committee. Further with a view to take any future benefit of recent amendments to Companies Act, 1956, permitting buy-back of shares by insertion of Section 77A and also issuance of shares with Differential Voting Rights pursuant to amendment to the Companies Act, 1956, it is proposed to include appropriate enabling provisions in the Articles of Association by inserting Article 7A & 7B after existing Article 7 to the Articles of Association of the Company. As per provisions of Section 31 of the Companies Act, 1956, any alteration(s) to the Articles of Association of the Company would require approval of Members through a Special Resolution. The Board recommends the Special resolution as set out in Item No. 10 for the Member’s approval. None of the Directors of the Company are in any way concerned or interested in this resolution. Item No. 11 & 12 The Authorised Share Capital of the Company currently is Rs. 75 crores consisting of 50 crores Equity Shares of Re. 1 each and 25 lakhs Cumulative Redemable Preference Shares of Rs. 100/- each. The paid up capital of the ZEEL Annual Report 2008-2009 38 Company as on date is Rs. 43.40 crores comprising of 434,007,111 Equity Shares of Re. 1 each. To facilitate any capital infusion by way of issuance of further shares any time in future, including issue of shares to employees upon conversion of the Stock Options from time to time, it is considered appropriate to alter the existing capital clause by converting the Preference Shares into Equity Shares. Therefore, Clause V of the Memorandum of Association and Article 3(a) of the Articles of Association of the Company are proposed to be altered such that the Authorised Share Capital of the Company after alteration shall be Rs. 75,00,00,000 (Rupees Seventy Five Crores only) consisting of 75,00,00,000 (Seventy Five Crores) Equity Shares of Re. 1 each. Pursuant to the provisions of Section 94 and other applicable provisions of the Companies Act, 1956, any alteration to the authorized share capital would require approval of the shareholders and the proposed amendments to the Memorandum & Articles of Association of the Company are consequential in nature. The Board recommends the resolutions as set out in Item Nos. 11 and 12 for the Member’s approval as Ordinary and Special resolution respectively. None of the Directors of the Company are in any way concerned or interested in this resolution. Item No. 13 Mr. Punit Goenka, was appointed as Whole-time Director of the Company for a period of 5 years with effect from January 1, 2005, which was approved by the Members’ resolution passed at 23rd Annual General Meeting held on September 28, 2005. The said appointment was made at the remuneration and perquisite as detailed in the explanatory statement to aforesaid resolution. Thereafter consequent to resignation of Mr. Pradeep Guha as Chief Executive Officer of the Company, the Board of Directors at its meeting held on July 23, 2008 appointed Mr. Punit Goenka as Whole-time Director & Chief Executive officer of the Company with effect from August 1, 2008 and consequent to such additional responsibility assigned, the remuneration payable to Mr. Punit Goenka was revised as per details mentioned herein: a) Basic Salary: The Basic Salary of Mr. Punit Goenka shall be Rs. 16,75,000 per month, with the authority to the Board of Directors to determine any increase from time to time within in the scale of Rs. 16,75,000 to Rs. 25,00,000 per month. The annual increment will be merit based. b) Perquisites & Allowances: In addition to the basic salary payable, Mr. Goenka shall be entitled to perquisites and allowances like: i. Company maintained accommodation or House Rent Allowance in lieu thereof subject to a maximum of 50% of Basic Salary as per rules of the Company. ii. Personnel allowance of Rs. 2,25,000/- per month with annual increase as may be determined by the Board, subject to a ceiling of 25% of Basic Salary. iii. Medical reimbursements, leave travel allowance (subject to a maximum of one month basic salary in a year), club fees, personel accident & medical insurance, use of chauffeur driven Company car, telecommunication facilities at residence and such other perquisites and allowances in accordance with rules of the Company. iv. Company’s contribution to provident fund, gratuity and leave encashment as per the rules of the Company; and v. Annual performance bonus/incentive, if any, based on the performance criteria as laid down by or approved by the Board. Perquisites shall be evaluated as per Income Tax Rules, wherever applicable. In the absence of any such rules, perquisites shall be evaluated at actual cost. c) Overall Remuneration: The aggregate of salary, perquisites and allowances in any one financial year shall not exceed the limits prescribed under Sections 198, 309 and other applicable provisions of the Companies Act, 1956, read with Schedule XIII to the said Act for the time being in force. d) In the event of loss or inadequacy of profit in any financial year during the currency of tenure of services of the Whole-time Director & CEO, the payment of salary, perquisites and other allowances shall be governed by the limits prescribed under Section II of Part II of Schedule XIII of the Companies Act, 1956.

39 ZEEL Annual Report 2008-2009 The revised remuneration as detailed hereinabove shall be effective from August 1, 2008 and shall be valid till the expiry of current tenure of appointment of Mr. Punit Goenka as Whole-time Director i.e. upto December 31, 2009. Members may note that after the aforesaid revision, in view of the recent economic downturn affecting the economy, in line with the cost rationalization efforts and salary cuts effected in the Company, the remuneration payable to Mr. Punit Goenka was also reduced effective April 1, 2009 to which Mr. Goenka has agreed to. Consequently, the remuneration payable to Mr. Punit Goenka stands reduced to Rs. 18.05 Lakhs per month. Your Board, however, seeks to reserve the right of increasing the same appropriately within the overall ceiling approved by the Members. The Board recommends Resolution No. 13, for the approval of the Members. None of the Directors of the Company, except Mr. Punit Goenka, his father Mr. Subhash Chandra and relative Mr. Laxmi N. Goel, are concerned or interested in this resolution. Item No. 14 Members of the Company, at the 24th Annual General Meeting held on December 28, 2006, had approved appointment of Mr. Subhash Chandra, Chairman of your Company, as Chief Executive Officer of Asia T.V. Limited, UK, a wholly owned foreign subsidiary of your Company engaged in the business of broadcasting television channels in United Kingdom, Europe, Russia and other overseas countries, for a period of three (3) years with effect from April 1, 2006 at an annual remuneration of £. 50,000 (Fifty Thousand Sterling Pounds). The said appointment expired on March 31, 2009. Since Mr. Subhash Chandra has been re-appointed as Chief Executive Officer of Asia TV Limited, UK, effective April 1, 2009 the Board at its meeting held on June 26, 2009, took note of aforesaid appointment at same remuneration of £. 50,000 (Fifty Thousand Sterling Pounds), excluding performance bonus and perquisites, as per the corporate policy of Asia TV Limited, UK, for a further period of 3 years with effect from April 1, 2009, subject to the Members approval. Pursuant to the provisions of Section 314 of the Companies Act, 1956, this appointment of Mr. Subhash Chandra in Asia TV Limited, UK, shall be construed as an office or place of profit and is required to be approved by the Members of the Company by way of a Special Resolution. Your Board is of opinion that Mr. Chandra’s experience and entrepreneurial skill will benefit overseas broadcasting operations, managed by Asia TV Limited, UK and its stakeholders and hence your Board recommends the Special resolution no. 14 for the approval of the Members. None of the Directors, other than Mr. Subhash Chandra himself, Mr. Laxmi Narain Goel being brother and Mr. Punit Goenka being son of Mr. Subhash Chandra, are in any way concerned or interested in this resolution.

By order of the Board

Place : Mumbai M. Lakshminarayanan Date : June 26, 2009 Executive Vice President & Company Secretary Registered Office: Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai 400 018

ZEEL Annual Report 2008-2009 40 CERTIFICATION ON FINANCIAL STATEMENTS OF THE COMPANY

We, Punit Goenka, Whole-time Director & CEO, Hitesh Vakil, Director-Finance of Zee Entertainment Enterprises Limited (‘the Company‘), certify that: (a) We have reviewed the financial statements and the cash flow statement of the Company for the year ended March 31, 2009 and that to the best of our knowledge and belief: i) these statements do not contain any materially untrue statement or omit any material fact or contain statement that might be misleading; ii) these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. (b) To the best of our knowledge and belief, no transactions entered into by the Company during the year ended March 31, 2009 are fraudulent, illegal or violative of the Company’s Code of Conduct. (c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee deficiencies in the design or operation of such internal controls, if any, of which we are aware and steps taken or proposed to be taken to rectify these deficiencies. (d) During the year: i) there has not been any significant change in internal control over financial reporting; ii) there have not been any significant changes in accounting policies; and iii) there have been no instances of significant fraud of which we are aware that involve management or other employees having significant role in the Company’s internal control system over financial reporting.

Hitesh Vakil Punit Goenka Director- Finance Whole-time Director & CEO

Date : June 26, 2009 Place : Mumbai

41 ZEEL Annual Report 2008-2009 DIRECTORS’ REPORT To the Members of DIVIDEND Zee Entertainment Enterprises Ltd., Your Directors are pleased to recommend a dividend of Your Directors take pleasure in presenting the Twenty Rs. 2 per equity share of Re. 1/- each, for the financial Seventh Annual Report together with the Audited year 2008-09. The total outflow for this purpose would Statement of Accounts of the Company for the year be Rs. 1013.45 million, which includes a dividend of ended March 31, 2009. Rs. 868.01 million and tax on dividend of Rs. 145.44 RESPONSIBILITY STATEMENT million. In terms of and pursuant to Section 217 (2AA) of the BUSINESS OVERVIEW Companies Act, 1956, your Directors, in relation to In a year which saw huge inflow of new entrants into the the Annual Statement of Accounts for financial year Media & Entertainment space, your Company continued 2008-2009, state and confirm that: to be the benchmark for existing and new players with a) the Accounts had been prepared on a going its offerings and consequently affinity developed with concern basis and in such preparation the applicable viewers and advertisers alike. accounting standards had been followed with Zee TV ended the year with a strong push towards proper explanation relating to material departures; leadership in the Hindi general entertainment genre on b) your Directors had selected such accounting the back of a slew of successful new launches including policies and applied them consistently and made ‘Choti Bahu’, ‘Dance India Dance’ and ‘Shree’. ‘Choti judgements and estimates that are reasonable and Bahu’ helped extend primetime by developing the slot prudent so as to give a true and fair view of the and is the leader in the evening 7:30 p.m. slot. ‘Dance state of affairs of the Company at the end of the India Dance’ saw unprecedented participation and financial year, and of the profit of the Company for viewer response from even smaller markets across the that year; and country. Premier programmes as ‘Sa Re Ga Ma Pa’ - the c) your Directors had taken proper and sufficient care No.1 talent reality show on TV, family serials including for maintenance of adequate accounting records in ‘Shree’, ‘Maayka’, ‘Ghar Ki Lakshmi…Betiyaan’, ‘Dulhan’ accordance with the provisions of the Companies continued their success amongst viewers. Act, 1956 as amended, for safeguarding the assets of the Company and for preventing and detecting As a market leader in the Hindi movie genre, Zee Cinema fraud and other irregularities. continued to excite viewers consistently with its line-up of movies. This year, the most successful franchisee FINANCIAL RESULTS of ‘Shanivaar Ki Raat, Amitabh Ke Saath’ transformed The Financial Performance of your Company for the into ‘Shanivaar Ki Raat, Sitaaron Ke Saath’. The promise year ended March 31, 2009 is summarized below: of showing the biggest movies and premieres in Hindi (Rs. Thousands) cinema, on Saturday nights drew a strong viewer Particulars Year ended Year ended interest. During the summer break, Zee Cinema launched 31.03.2009 31.03.2008 ‘Dopahar Zee Cinema Par’, a film festival for kids with Sales & Services 12,102,425 10,419,923 Darsheel Safary as the brand ambassador, growing the Other Income 1,050,920 1,019,293 brand significantly. Total Income 13,153,345 11,439,216 Zee café maintained its success by bringing the best Total Expenses 9,391,441 6,869,997 of the English series & sitcoms into India including the Profit before Tax & 3,761,904 4,569,219 ‘Old School Omnibus’ which has been a huge hit with Exceptional Items the India viewers. Zee café also created original content Less: Exceptional Item on the channel to further strengthen its offering to the Provision for diminution in discerning Indian audience. Zee studio’s first mover value of Investment (25,806) 25,806 initiatives including subtitling of movies in English Provision for Taxation (net) 690,264 1,592,203 helped it to generate strong viewer preference. Profit after Tax 3,097,446 2,951,210 Despite the effects of recession on the advertising Add: Balance brought 7,209,482 5,571,728 industry at large, your Company’s market presence forward and affinity with viewers built through initiatives as Amount available for 10,306,928 8,522,938 summarized above has helped it to garner and grow appropriations advertising revenues at the expense of competition. Appropriations: In addition to a strong presence in cable households, Dividend 868,014 868,014 exciting offerings across multiple channels has helped Tax on Dividend 145,441 145,442 your Company to expand its presence in households General Reserve 400,000 300,000 serviced by digital platforms. This is expected to Balance carried forward 8,893,473 7,209,482 positively impact subscription revenues.

ZEEL Annual Report 2008-2009 42 SUBSIDIARIES AND NEW VENTURES PUBLIC DEPOSITS Overseas Subsidiaries During the year, your Company has neither accepted nor During the year, Asia Today Ltd., Mauritius, a wholly renewed any Deposits under Section 58A and Section owned overseas subsidiary of your Company, acquired 58AA of the Companies Act, 1956, read with Companies the balance 40% equity stake in Asia Business (Acceptance of Deposits) Rules, 1975. Broadcasting (Mauritius) Limited, a Company registered CORPORATE GOVERNANCE in Mauritius and divested its entire 100% holding in Pan Your Company has been benchmarking itself with well- Asia Infrastructure Limited, Mauritius. established Corporate Governance practices besides Additionally with a view to comply with the regulatory strictly complying with the requirements of Clause 49 of requirements for Russian Broadcasting Operations, Asia the Listing Agreement including the recent amendments. TV Ltd., UK, an overseas subsidiary of your Company During the year, your Company has put in place a created/acquired an indirect subsidiary called ‘OOO Zee formalized system of Corporate Governance by initiating CIS Holdings Limited’ in Russia during the year. implementation of a Corporate Governance Manual New Venture which sets out the structure, processes and practices of governance within the Company and its subsidiaries. To capitalize on the opportunities and synergies, Given the emerging pivotal role of Independent your Company ventured into the film production Directors in bringing about good governance, your and distribution business, with launch of two labels – Company continues its efforts in optimum utilization of Zee Motion Pictures and Zee Limelight for mainstream their expertise and involving them in all critical decision and niche films, respectively and for the purpose, making processes. A separate report on Corporate created/acquired the following direct/in-direct subsidiaries Governance together with the Statutory Auditors’ during the year: Certificate on compliance is attached to this Annual – ZES Holdings Limited, Mauritius Report and also a Management Discussion and Analysis – Zee Entertainment Studios Limited, British Virgin Statement. Islands CORPORATE SOCIAL RESPONSIBILITY – ZES Mauritius Limited, Mauritius Corporate Social Responsibility (CSR) of all Essel Group – ZES International Limited, United Kingdom Companies, including your Company, has been unified and centralized at the group level. The CSR policy – Zee Motion Pictures Private Ltd., India at Essel Group is based on the belief that a business Ministry of Corporate Affairs, Government of India has, cannot succeed in a society that fails and therefore it is vide its letter Nos. 47/301/2009-CL-III dated April 28, 2009 imperative for business houses, to invest in the future and June 6, 2009, granted exemption to the Company by taking part in social-building activities. from applicability of provisions of Section 212(1) of CSR is a very broad concept and includes an obligation the Companies Act, 1956 relating to attachment of the by every corporate to consider the interests of the society accounts of its subsidiaries to its Annual Accounts for by taking responsibility for the impact of its activities financial year ended March 31, 2009. Accordingly, the on customers, suppliers, employees, shareholders, annual accounts of the subsidiaries for current financial communities and other stakeholders. year are not being attached with the Annual Report of During the year under review, a number of social the Company. Financial highlights of the subsidiaries activities have been undertaken both by the individual are disclosed in the Annual Report and the Accounts of companies and the Group as a whole including: the subsidiary companies are available for inspection by any Member of the Company who may be interested. • Adoption of school(s)/village(s) in tribal areas The Consolidated Financial Statements presented by through Ekal Vidyalaya Foundation, an NGO that the Company include financial results of its subsidiary works to bring about basic literacy and health companies. awareness amongst the tribal and rural population of India. Zeel has also sought to increase awareness SHARE CAPITAL of the work being done by Ekal through its television During the financial year 2008-09, your Company had channels and help it achieve its goal of eradicating issued, allotted and listed 440,346 Equity Shares of illiteracy from tribal India by 2011. Re. 1/- each upon conversion of 154 Foreign Currency • The Essel Group is a strong supporter of the Global Convertible Bonds (FCCBs) of US $ 10,000 each issued Vipassana Foundation. Vipassana is a 2,500 year in 2004, resulting in the increase in Paid up share capital old non-sectarian, rational process of mental of the Company to 434,007,111 equity shares of Re. 1 purification through self-observation which has each. Subsequently, in April 2009, as per the terms of been propagated by the Group to bring about issuance of FCCBs, your Company has redeemed and spiritual well being and peace within the individual repaid 379 FCCBs aggregating US $ 3.79 million which and the society as a whole. The Group is also were outstanding on the date of redemption. actively involved in the ‘Global Vipassana Pagoda’, 43 ZEEL Annual Report 2008-2009 an architectural marvel which has the potential to CONSERVATION OF ENERGY, TECHNOLOGY be called the 8th wonder of the world. The land ABSORPTION AND FOREIGN EXCHANGE EARNINGS for the site was donated by the Group and a large AND OUTGO amount of contribution both financially and in Your Company is into the business of Broadcasting of terms of time and expertise has been made over General Entertainment Television Channels. Since these the years. The website www.globalpagoda.org is activities does not involve any manufacturing activity, also designed and hosted by the Group. most of the Information required to be provided under • The Essel Group also supports the Global Section 217(1)(e) of the Companies Act, 1956 read with Foundation for Civilizational Harmony, a body the Companies (Disclosure of Particulars in the Report dedicated to bringing together all the religions of the Board of Directors) Rules, 1988, is not applicable. and cultures of the world on a common platform, However the information as applicable are given resolve existing disputes amongst them and help hereunder: create a peaceful and harmonius society. A large Conservation of Energy amount of contribution in terms of time and effort has been made to this cause by the Essel Your Company, being a service provider, requires Group. The website www.gfchindia.com has been minimal energy consumption and every endeavour designed and hosted by the Group. has been made to ensure optimal use of energy, avoid wastages and conserve energy as far as possible. EMPLOYEES STOCK OPTION SCHEME Technology Absorption With a view to reward employees for their contribution; encourage value creation and value sharing with In its endeavour to deliver the best to its viewers and employees; & attract and retain best talents, your Board business partners, your Company has been constantly has proposed, subject to your approval, introduction active in harnessing and tapping the latest and best and implementation of an Employee Stock Option technology in the industry. Scheme, for allotment of stock options equivalent to Foreign Exchange Earnings and Outgo 5% of paid up equity share capital to the employees/ Particulars of foreign currency earnings and outgo Directors of the Company and/or its present and future during the year are given in Schedule 18B Note 13(d) holding/subsidiary companies. Detailed proposal, to the Notes to the Accounts forming part of the Annual seeking Members approval, in this regard, forms part of Report. notice of ensuing Annual General Meeting. PARTICULARS OF EMPLOYEES DIRECTORS Information as required under Section 217(2A) of Due to reason of ill-health, Mr. D. P. Naganand resigned the Companies Act, 1956 read with the Companies and ceased to be a Non- Executive Independent Director (Particulars of Employees) Rules, 1975, as amended, is of your Company effective March 16, 2009. Your given in an annexure forming part of this report. Directors would like to record their appreciation of the services rendered by Mr. Naganand. ACKNOWLEDGEMENTS Messrs Subhash Chandra, B. K. Syngal and M. Y. Khan, Your Directors take this opportunity to place on record Directors, retire by rotation at the ensuing Annual their appreciation of the dedication and commitment of General Meeting and, being eligible, offer themselves employees at all levels that has contributed to the success for re-appointment. Your Board has recommended their of your Company and remain in the forefront of media re-appointment. and entertainment business. Your Directors thank and express their gratitude for the support and co-operation CONSOLIDATED FINANCIAL STATEMENTS received from the Central and State Governments In accordance with Accounting Standard AS 21 – – mainly the Ministry of Information & Broadcasting Consolidated Financial Statements, read with Accounting and the Department of Telecommunication – and other Standard AS 23 – Accounting for Investments in stakeholders including viewers, producers, vendors, Associates, and Accounting Standard 27 – Financial financial institutions, banks, investors, service providers Reporting of Interests in Joint Ventures, the audited as well as regulatory and governmental authorities. Consolidated Financial Statements are provided in the Annual Report. On behalf of the Board AUDITORS Statutory Auditors M/s. MGB & Co., Chartered Subhash Chandra Accountants, Mumbai, retire at the ensuing Annual Chairman General Meeting and, being eligible, offer themselves Place: Mumbai for re-appointment. Date: June 26, 2009

ZEEL Annual Report 2008-2009 44 ANNEXURE TO DIRECTORS’ REPORT

Information as per Section 217(2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2009

Sr. Name Age Designation Total Qualification Exp. Date of Previous Employment No. Remuneration in Commence- (Rs.) Yrs. ment of Employment 1 Ajay Bhalwankar 38 Sr. Vice President - 7,142,190 M.A. 17 14-May-01 Tara Channel Programming 2 Anil Anand 46 Sr. Vice President - 3,777,259 B.Com., PGD in Marketing 25 20-Nov-00 Reliance Industries Ltd. Programming (Infocom Division) 3 Ashish Sehgal 40 Sr. Vice President - Sales 6,065,181 B.Com, LLB 12 11-Jan-06 Star India Pvt. Ltd. 4 Bharat Ranga 40 Chief Operating Officer 15,199,658 B.Com, MBA 19 4-Mar-98 Modi Korea - International Operations Telecommunication 5 Gaurav Bahal 35 Vice President - Operations 4,842,375 Dip. in Broadcast Journalism 14 17-Apr-07 ESPN 6 Himanshu Mody 31 Director - Programming 9,584,376 Msc - Finance University 7 1-Apr-05 Essel Corporate Strath Clyde Glasgow Resources Pvt. Ltd. 7 Hitesh Vakil 49 Director - Finance & Operations 11,151,905 B.Com, ACA. 24 1-Oct-95 Tips & Toes Cosmetics 8 Indranil Chakravarti 37 Head - Strategy & Business 8,400,847 BBA, CPA 13 2-May-05 JP Morgan Plc. Development 9 Ishwar Jha 36 CEO - DMCL 8,689,981 B.Com, PGDCA 16 9-Aug-04 Sony Music Entertainment 10 Jitesh Rajdeo 36 Sr. Vice President - Sales 5,860,304 B.Com, MMM 14 1-Jan-02 Econnect India Ltd. 11 Joy Chakraborthy 42 Chief Revenue Officer 36,479,503 B.Sc, MMM 17 9-Mar-05 Star India Pvt. Ltd. 12 M. Lakshminarayanan 46 Executive Vice President & 6,495,432 B.Com, ACS 26 19-Jan-06 BPL Power Projects Company Secretary 13 Mohan Gopinath 37 Sr. Vice President - 5,933,773 B.Com., MMS 12 19-Dec-96 Nil Programming 14 Nitin Vaidya 48 Chief Operating Officer 12,033,960 B.Sc 23 19-Apr-01 Broadcast Worldwide - National Channels 15 Punit Goenka 34 Whole-time Director & CEO 26,267,096 B.Com 12 1-Jan-05 ASC Enterprise Limited 16 Rajib Chatterjee 37 Sr. Vice President - Zee Bangla 7,751,839 B.Com 17 27-Sep-04 Eenadu Network 17 Rudolf D’sa 40 Sr. Vice President - Operations 5,071,976 B.A. 18 16-Oct-92 Lady London Pvt. Ltd. 18 Sanjoy Chatterjee 42 Sr. Vice President - Sales 4,860,686 B.Com 18 25-Apr-05 Sony Entertainment Television 19 Santosh Shendye 44 Head - Inhouse Production 3,522,997 B.A. 18 20-Nov-92 Full Lights 20 Sujay Kutty 40 Sr. Vice President - 5,304,659 B.Com 17 10-Dec-01 Sony T.V. Programming 21 Tarun Mehra 41 Executive Vice President 7,892,817 BE, MMS 15 7-Jan-05 Shaw Wallace 22 Anjana Kshetry 43 Sr. Vice President - Sales 4,584,372 B.Com., Mass. Comm. 20 7-Apr-00 Modi Entertainment 23 Laxmi Shetty 41 Sr. Vice President - MIS 5,836,152 B.Sc, DMM 21 1-Jun-05 Bennett Coleman & Co. 24 Priyanka Datta 37 Sr. Vice President - Sales 5,688,574 MA 15 1-May-02 SAB T.V. 25 Shekhar Kadav 46 Sr. Vice President - I.T. 3,581,552 B.Com 21 1-Apr-04 Freelancer 26 Anurag Bedi 32 Vice President - Sales 4,010,178 HSC, Degree in Nautical Sci 8 5-Feb-07 Star India Pvt. Ltd. 27 Vijay Anand 33 Executive Assistant 4,180,857 B.Sc, PGD in Adv. & Comm. 11 2-Jan-06 Star India Pvt. Ltd. Kondapaneni 28 Mehul Shah 38 Vice President - Accounts 3,565,212 M.Com, C.A., MFM 13 11-Mar-02 Biopas India Corp Ltd. 29 Sushruta Samanta 38 Vice President - Strategy & 2,697,548 B.E, PGDMM 12 25-Mar-08 Starcom Business Development (International Markets) 30 Mukund Cairae 38 Executive Vice President 4,518,553 MBA 9 1-Jul-04 Nil - International Business 31 Vijay Sanil 31 Dy. Vice President - Sales 3,355,377 B.Sc., PGDBM 9 10-Jun-04 Nil 32 Siju Prabhakaran 35 Dy. Vice President - Sales 3,345,177 B.TECH., M.B.A. 11 27-Sep-04 Hangama T.V. 33 Akash Chawla 32 Vice President - Marketing 3,592,814 B.COM, MMS 8 23-May-05 S-group Tam 34 Sanjeev Lamba 48 Director - Marketing & Sales 12,985,440 BA / MBA 27 30-Jan-08 The Weinstien Company (Movies) 35 Utpal Das 43 Sr. Vice President - Commercial 3,069,005 BE Mech & Master in Intl Bizz 20 11-Jun-08 Bennette Coleman Ltd.

45 ZEEL Annual Report 2008-2009 Sr. Name Age Designation Total Qualification Exp. Date of Previous Employment No. Remuneration in Commence- (Rs.) Yrs. ment of Employment 36 Shaswati Saradar 37 Vice President - Marketing 3,352,854 * BA, PGD in Adv & PR 14 18-Aug-08 Maruti Suzuki India Ltd. 37 Priya Mishra 37 Creative Head 2,081,934 * BA, MA 7 1-Sep-08 Freelancer 38 Sunita Uchil 40 Vice President - Sales 2,008,406 * BA PGD Advt. & PR 15 5-Sep-08 Shamal Media Services Sharjha UAE 39 J. Shekar 46 Vice President - Sales 1,680,590 * B.E., 24 1-May-08 BPL LTD. 40 Rahul Kumar Shaw 36 Head of Sales - Sports Business 441,937 * B.Com 9 5-Mar-09 Inx News Pvt. Ltd. 41 Dilip Roy 50 President - Human Resources 7,653,616 * B.A., PGDHR in Ind. 27 9-Apr-08 Jubliant Organosys Ltd. Relations (Xlri) 42 Pawan Jailkhani 39 Sr. Vice President - Sales 5,276,456 B.Sc. 15 2-Jan-95 The Pioneer Ltd. 43 Pradeep Guha 57 CEO 34,306,567 * B.A., Aamp (Asian Institute 31 15-Jan-05 Bennett Coleman & Co. of Mgmt-Manila) 44 Irshwin Balvani 56 Executive Vice President - Zee 12,149,991 * B.A. DMM 32 1-Jul-05 Bennett Coleman & Co. Music 45 Sanghamitra Ghosh 53 Director - Hr 9,292,654 * B.Sc, PGD 23 1-Apr-03 Zee Interactive Learning Systems Ltd. 46 Sharada Sunder 42 Sr. Vice President - Commercial 2,911,757 * B.Com, C.A. 18 11-May-05 Bennett Coleman & Co. 47 Romila Sharma 44 Sr. Vice President - 2,198,459 * B.A., Dip. in Hot Mgt. 15 20-Mar-06 Sony Entertainment Programming Television 48 Sheetal Mehra 37 Vice President - Sales 1,809,543 * B.A, PGD, DMM 14 2-Jan-06 Radio Mirchi 49 Vaishali Kasturia 39 Vice President - Programming 2,674,303 M.Sc, MMS , Dip. JOUR. 16 20-Mar-97 Shogun Network 50 Simran Hoon 38 Sr. Vice President - Sales 624,047 * B.A., PGDMM 15 28-Mar-05 Star India Pvt. Ltd. 51 Deepender Sehajpal 37 Vice President - Marketing 3,003,190 B.Sc, MBA 11 9-Mar-07 Self Employed 52 Rajan Dange 44 Sr. Editor 2,635,462 HSC 21 2-Feb-93 Bombino Video 53 Sachin Rumde 33 Dy. Vice President - Operations 2,595,201 BE, MMS 9 1-Jun-00 Nil 54 Samir Kadam 37 Dy. Vice President - Sales 1,972,020 * Bcom 14 1-Dec-05 Etc Networks Ltd. 55 Santosh R. Pillai 36 Dy. Vice President - Marketing 2,801,808 PGD in Advt & Comm Mgt. 12 1-Mar-07 Madison Creative 56 Shanti Miranda 38 Dy. Vice President - Finance 2,533,585 B.Com, MFM 17 11-Oct-93 Elbee Services Ltd. 57 Roy Tauro 37 Dy. Vice President - IT 2,417,582 B.Sc 13 24-Jul-98 Activa 58 Gunjarav Nayak 33 Dy. Vice President - Sales 3,165,665 B.Com, PGDBM 10 1-Sep-01 Sai Service Station 59 Ashish P. Golvalkar 33 Dy. Vice President - Non-Fiction 2,565,096 B.Sc 11 9-Apr-01 Broadcast World Content Wide Ltd. 60 Archana Agarwal 43 Dy. Vice President - Sales 2,743,061 M.Com 20 2-Dec-02 Media Consultant 61 Rajneesh Gupta 35 Dy. Vice President - Sales 2,445,050 B.Com., MBA. 10 1-Aug-98 Nil 62 Samrat Ghosh 32 Dy. Vice President - Sales 2,969,425 B.Sc., PGDBA 8 26-Dec-00 Nil 63 Monali Ghosh 36 Dy. Vice President - Sales 3,210,109 M.A., MMM 13 15-Apr-05 Bennett Coleman & Co. 64 Deepti Verma 27 Dy. Vice President - Channel 2,811,510 B.Com, MBA 6 2-Nov-05 Raj Homes Pvt. Ltd. Placement 65 Jay Sampat 34 Dy. Vice President - Marketing 2,575,505 B.E., MS, CFA 10 15-Feb-06 Sony Entertainment Television * Indicates remuneration is for part of the year. Notes : 1. All appointments are contractual and terminable by notice on either side. 2. None of the Employees, except Mr. Punit Goenka are related to any of the Directors. 3. Remuneration includes Salary, Allowances, Company’s Contribution to Provident Fund, Medical Benefits, Leave Travel Allowance & Other Perquisites and benefits valued on the basis of the provisions of Income Tax Act,1961.

ZEEL Annual Report 2008-2009 46 For the previous financial years of the subsidary since it became a subsidiary Net aggregate amount of profits/(losses) the subsidiary so far as it concerns the members of holding company and is not dealt with in accounts of holding company For the financial year ended on March 31, 2009 For the previous financial years of the subsidary since it became a subsidiary (Amt. In '000) (Amt. In '000) (Amt. In '000) (Amt. In '000) For the financial year ended on March 31, 2009 Net aggregate amount of profits/ (losses) of the subsidiary so far as it concerns the members of holding company and is dealt with in accounts of holding company Number of equity shares held by the holding Company and/or its subsidiaries Face value Face of equity shares (per share) 100% Rs. 10/-100% 10,000 US$ 1100% US$ 1 1,002 1,000 Rs. (8) USD 38,154 NA US$ - 9,937 US$ (5) NA 100% US$ 1100% GBP 1 1 1 US$ (2) GBP (2) NA NA Extent of Holding Company's Interest Ltd. Ltd. ZEEL Studios BVI Studios BVI Entertainment Entertainment Holding Company 31/03/2009 ZEEL 100% US$ 1 34 US$ -13 US$ - 13 31/03/2009 ATL 100% US$ 10 6,000 US$ 7,842 US$ 3,259 31/03/2009 ATL 100% US$ 1 100,000 US$ 141 US$ 87 financial of the Year Subsidiary Company ended on (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Name of the Subsidiary Company The Zee Multimedia Worldwide Limited, BVI Zee Multimedia Worldwide (ZMWL,BVI) Limited, Mauritius (ATL)Asia Today Asia Infrasturcture Ltd.**Pan 31/03/2009ZES Entertainment Studios Limited - BVI # ZMWL, BVI & 31/03/2009 ZES Holding 31/03/2009 ATL 100% US$ 1 2 NA US$ (955) ETC Networks Limited ETC Limited India Private Television Taj LimitedZee Turner Zee Sports Limited 31/03/2009ZES Holdings Limited, Mauritius # Limited # Private Zee Motion Pictures ZEEL 31/03/2009 31/03/2009 31/03/2009 ZEEL ZES Mauritius 31/03/2009 ZEEL 50% 31/03/2009 Rs. 100/- 50.18% ZEEL Rs. 10/- ZEEL 100% 5,000 4,889,526 US$ 1 74% 100% Rs. 10/- Rs. 10/- 25,000 74,000 50,000 Rs. 5,869 Rs. 43,227 Rs. 117,229 Rs. (7,779) US$ (7) Rs. (115,020) Rs. (4,345) Rs. (20,789) NA Rs. 695 ZES Mauritius Limited #ZES International Limited, UK # 31/03/2009 31/03/2009 ZES ZES Asia Business Broadcasting (Mauritius) Limited Limited, HongkongApac Media Ventures Holdings (Singapore) Pte. Expand Fast 31/03/2009Limited ATL 100% HK$ 1 10,000 HKD (1,415) HKD (738) STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES TO 1956 RELATING ACT, SECTION 212 OF THE COMPANIES PURSUANT TO STATEMENT 47 ZEEL Annual Report 2008-2009 (633) Chairman Mauritus Rs. For the previous financial years of the subsidary since it became a subsidiary Subhash Chandra (630) For and on behalf of the Board Net aggregate amount of profits/(losses) the subsidiary so far as it concerns the members of holding company and is not dealt with in accounts of holding company For the financial year ended on March 31, 2009 For the previous financial years of the subsidary since it became a subsidiary (Amt. In '000) (Amt. In '000) (Amt. In '000) (Amt. In '000) Net aggregate amount of profits/ (losses) of the subsidiary so far as it concerns the members of holding company and is dealt with in accounts of holding company For the financial year ended on March 31, 2009 1,000 Mauritus Rs. Number of equity shares held by the holding Company and/or its subsidiaries Re. 1 Re. Face value Face of equity shares (per share) 100% GBP 1100% US$ .01 16,438,900 2 GBP (1,039) GBP 8 US$ 272 US$ 169 Extent of Holding Company's Interest Mauritius Mauritius Holding Company 31/03/2009 ATL 100% Mauritus 31/03/2009 ATL31/03/2009 100% ZMWL, BVI YUAN 1 100% 1,000,000 US$ 1 26,520,004 (2,173) Yuan (6,640) Yuan US$ (1,836) US$ (67) financial of the Year Subsidiary Company ended on (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Name of the Subsidiary Company The Zee Multimedia (Maurice) Limited, Mauritius Zee TV South Africa (Proprietary) LimitedZee TV South Africa (Proprietary) Middle East FZLLC, U.A.E.Zee Telefilms 31/03/2009 (Ghuangzhou) Limited, Zee Technologies 31/03/2009China ATLZee Sports International Limited, Mauritius ATL 31/03/2009 TV Limited, MauritiusTaj Zee Sports Americas Limited, Mauritius 100% ATL (Mauritius) Zee Multimedia Worldwide 31/03/2009 100%Limited (ZMWL, Mauritius) 1 Rand Zee Sports Intl. AED 1000 Limited, UKAsia T.V. 100% 31/03/2009 100% Zee Sports Intl. 1,000 US$ 1 2,500 US$ 1 50% US$ 1000 1,000 1,000 31/03/2009 ZMWL, 3,100 (5,540) Rand AED (1,957) (3,104) Rand AED (166) US$ 3,827 US$ (2) US$ (15) US$ 991 US$ (2) US$ (3,223) Zee T.V. USA, Inc.Zee T.V. 31/03/2009 ZMWL, Notes: ** Sold during the year # Incorporated during the year Place : Mumbai Date : June 26, 2009 STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES TO 1956 RELATING ACT, SECTION 212 OF THE COMPANIES PURSUANT TO STATEMENT

ZEEL Annual Report 2008-2009 48 REPORT ON CORPORATE GOVERNANCE

Company’s Governance Philosophy Corporate Governance, which assumes great deal of importance at Zee Entertainment Enterprises Limited (ZEEL), is intended to ensure value creation for all its stakeholders. ZEEL believes that the governance process must ensure adherence and enforcement of the principles of sound Corporate Governance with the objectives of fairness, transparency, professionalism, trusteeship and accountability, while facilitating effective management of the businesses and efficiency in operations. The Company is committed to achieve and maintain highest standards of Corporate Governance on an ongoing basis. In its endeavour to improve in all aspects of Corporate Governance, ZEEL’s Board has approved and implemented a comprehensive Corporate Governance Manual during the year which contains guidelines covering decision making authority levels, the policies and processes which provide an effective and flexible governance framework in the Company realizing the need to ensure an effective mechanism of checks and balances with transparency and accountability as the hallmark. Board of Directors a) Composition and Category of Directors ZEEL has a balanced Board with combination of Executive and Non-Executive Directors, to ensure independent functioning. Non-Executive Directors include independent professionals with experience in business, finance, taxation, technology and media. Independent Directors of the Company provide appropriate annual certifications to the Board confirming satisfaction of the conditions of their being independent as laid down in Clause 49. Composition of the Board as on March 31, 2009 Category of Directors No. of Directors Percentage to total No. of Directors Executive Directors 1 10% Non-Executive Independent Directors 6 60% Other Non-Executive Directors 3 30% Total 10 100% Particulars of Directors, their attendance at the Annual General Meeting and Board Meetings held during the financial year 2008-09 and also their other directorships held in Public Companies (excluding Foreign Companies and Section 25 Companies) and membership of other Board Committees (excluding Remuneration Committee) as at March 31, 2009 are as under: Name of Director Category Attendance at Board Meetings 26th AGM No. of No. of (Total 7 held on Directorship memberships Meetings) 23.07.08 of other of Board Sub- companies Committees Ashok Kurien Promoter – Non-Executive 6 Yes 2 1 B. K. Syngal Independent – Non-Executive 4 No 3 4 #D. P. Naganand Independent – Non-Executive 6 Yes NA NA Gulam Noon Independent – Non-Executive 2 Yes – – Laxmi N. Goel Promoter – Non-Executive 4 Yes 7 1 M. Y. Khan Independent – Non-Executive 6 Yes 1 – N. C. Jain Independent – Non-Executive 6 Yes 2 – Rajan Jetley Independent – Non-Executive 2 No 1 1 R. Vaidyanathan Independent – Non-Executive 7 Yes 2 – Subhash Chandra Promoter – Non-Executive 7 Yes 6 1 Punit Goenka Promoter – Executive 7 Yes 14 1 #Resigned as Director w.e.f March 16, 2009 b) Board Meetings & Procedures During the financial year under review, 7 meetings of the Board were held on April 15, 2008, June 16, 2008, July 23, 2008, July 30, 2008, October 21, 2008, December 5, 2008 and January 21, 2009. The intervening period between

49 ZEEL Annual Report 2008-2009 any two Board Meetings were well within the maximum time gap of 4 months prescribed under Clause 49 of the Listing Agreement. The annual calendar of meetings is broadly determined at the beginning of each year. Meetings of the Company are governed by a structured agenda. The Meetings are generally held at the Registered and Corporate Office of the Company at Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai 400 018. The Company Secretary in consultation with Chairman/Whole-time Director & Chief Executive Officer finalises agenda of the Board meetings. All major agenda items, backed up by comprehensive background information, are sent well in advance of the date of the Board meetings to enable the Board to take informed decision. Any Board member may, in consultation with the Chairman, bring up any matter for consideration by the Board. Head of Department of Finance & Accounts is normally invited to the Board meetings to provide necessary insights into the working of the Company and for discussing corporate strategies. The Board periodically reviews Compliance Reports in respect of various laws and regulations applicable to the Company. c) Brief profile of the Directors of the Company to be appointed/re-appointed at the Annual General Meeting B. K. Syngal, 69, is a Non-Executive Independent member of Board of the Company. He was the Vice-Chairman of BPL Communications Limited and Chairman of Internet, broadband and technology solutions businesses at the BPL Innovision Business Group at Bangalore. Mr. Syngal was also the Chairman and Managing Director (1991-98) of VSNL Ltd. Mr. Syngal is regarded as the father of Internet and data services in India, which propelled the growth of software exports from India. In the international telecom arena, he has held the positions of Chairman, Commonwealth Telecommunications Organisation (CTO) London, Councillor for India INMARSAT Council, London, Vice Chairman and Director, ICO Boards, Chairman of Governance Committee ICO, Cayman Islands and Governor, INTELSAT Board, Washington DC. He has been recipient of many industry awards including Telecom Man of the Decade award by Wisitex Foundation, India, Partners in Progress award by Maharashtra State Government for his contributions in telecommunications both in India and abroad, and he was one of the fifty Stars of Asia, chosen by Business Week magazine for the year, 1998. Apart from the Company, Mr. Syngal holds directorships in Sonata Software Ltd., Sonata Information Technology Ltd. and Wire and Wireless (India) Ltd. Mr. Syngal does not hold any shares in the Company. Dr. M. Y. Khan, 65 is a Science graduate from University of Kashmir and Doctorate of Philosophy in Business Management (PHD) from Burkes University in UK. Mr. Khan has been the Chairman of J & K Bank in the past, he was also a Director on the Board of Bharat Hotels, as well as Advisor for Berenson & Company, New York. Prior to joining J & K Bank, Dr. Khan spearheaded J & K Agro Industries Development Corporation as a Managing Director. He was also heading J&K Tourism Development Corporation for 5 years as Managing Director. Dr. Khan had been nominated Member of the Chattisgarh Economic Advisory Committee; Government of India, Member of the Banking and Financial Institutions Committee of FICCI and Member of the Managing Committee of Indian Banking Association, Mumbai, during his tenure with J & K Tourism Development Corporation. Dr. Khan is the recipient of several prestigious awards like “Udyog Rattan” award, “Pride of India & IMM” award, for excellence as top professional manager, “Excellence Award” by Institute of Economic Studies, “Star Achievers Award” among several others. Apart from the Company, Mr. Khan, holds directorships in Steel Authority of India Ltd. Mr. Khan does not hold any shares in the Company. Subhash Chandra, 58, is the Non-Executive Chairman of the Board and promoter of Essel Group of Companies. His industry leading businesses include television networks and film entertainment, cable systems, satellite communications, theme parks, flexible packaging, family entertainment centers and online gaming. Mr. Chandra has been the recipient of numerous honorary degrees, industry awards and civic honours, including being named ‘Global Indian Entertainment Personality of the Year’ by FICCI for 2004, ‘Business Standard’s Businessman of the Year’ in 1999, ‘Entrepreneur of the Year’ by Ernst & Young in 1999 and ‘Enterprise CEO of the Year’ by International Brand Summit. The Confederation of Indian Industry (CII) chose Mr. Chandra as the Chairman of the CII Media Committee for two successive years. Mr. Chandra has made his mark as an influential philanthropist in India. He set up TALEEM (Transnational Alternate Learning for Emancipation and Empowerment through Multimedia), an organisation which seeks to provide access to quality education and to promote research in various disciplines relating to health & family life, social & cultural anthropology, communication and media. He is also the trustee for the Global Vippassana Foundation a trust set up for helping people in spiritual upliftment.

ZEEL Annual Report 2008-2009 50 Apart from the Company Mr. Chandra holds directorship in six (6) other Indian Public Limited Companies viz. Agrani Satellite Services Ltd., Dish TV India Ltd., Essel Infraprojects Ltd., Essel Propack Ltd., Wire and Wireless (India) Ltd. and Zee News Ltd. Mr. Chandra does not hold any shares in the Company in his personal capacity. d) Code of Conduct The Board of Directors has approved and adopted a Code of Conduct for Members of the Board and Senior Management of the Company. The Code is circulated to all the members of the Board and Senior Management personnel and the compliance of the same is affirmed by them annually. The Code has also been posted on Company’s corporate website viz. www.zeetelevison.com A declaration affirming compliance with the Code of Conduct by the members of the Board and Senior Management is given below:

Declaration I confirm that the Company has obtained from all Directors and Senior Management of the Company their affirmation of compliance with the ‘Code of Conduct for Members of the Board and Senior Management’ of the Company for the financial year ended March 31, 2009.

Punit Goenka Whole-time Director & CEO Mumbai, June 26, 2009

Board Committees a) Audit Committee The Board has constituted an Audit Committee, comprising of five (5) members as on March 31, 2009, four (4) of whom are Independent Directors, with Mr. N. C. Jain, a Non-Executive Independent Director as its Chairman. During the year under review, Mr. D. P. Naganand resigned as Audit Committee Member with effect from March 16, 2009. The Composition of the Audit Committee as on March 31, 2009, which complies with the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement(s) is as under:

Name of Directors Category Mr. N. C. Jain Non-Executive – Independent Mr. Ashok Kurien Promoter – Non-Executive Mr. B.K. Syngal Non-Executive – Independent Mr. Rajan Jetley Non-Executive – Independent Prof. R. Vaidyanathan Non-Executive – Independent The role and the powers of the Audit Committee are as per guidelines set out in Clause 49 of the Listing Agreement and provisions of Section 292A of the Companies Act, 1956. The Committee meets periodically and reviews:

z accounting and financial reporting process of the Company

z audited and un-audited financial results

z internal audit reports, risk management policies and report on internal control systems of the Company

z discusses the larger issues that are of vital concern to the Company including adequacy of internal controls, reliability of financial statements/other management information, adequacy of provisions for liabilities and whether the audit tests are appropriate and scientifically carried out in accordance with Company’s business and size of operations. The Audit Committee also reviews adequacy of disclosures and compliance with all relevant laws. In addition to these, in compliance with requirements of Clause 49 of the Listing Agreement, the Audit Committee reviews 51 ZEEL Annual Report 2008-2009 operations of Subsidiary Companies viz. its financial statements, significant related party transactions, statement of investments and minutes of meetings of its Board and Committees. During the year under review, five (5) Meetings of the Audit Committee were held viz.

Sr. No. Date of Meeting Attendance No. of Independent Directors No. of Non-Independent Directors 1 14.04.08 3 1 2 16.06.08 3 – 3 23.07.08 3 1 4 20.10.08 5 1 5 21.01.09 4 1 Statutory Auditor, Internal Auditor and Chief Financial Officer of the Company are invitees to all meetings of the Committee and the Company Secretary is the Secretary to the Audit Committee. b) Remuneration Committee and Policy The Remuneration Committee of the Company comprises of five (5) Non-Executive Directors, three of whom are Independent Directors. Mr. N. C. Jain, Non-Executive Independent Director is Chairman of the Committee and other members are Mr. B. K. Syngal, Non-Executive Independent Director, Mr. Rajan Jetley, Non Executive Independent Director, Mr. Ashok Kurien, Non-Executive Director and Mr. Laxmi N. Goel, Non-Executive Director. The Company Secretary is the Secretary to the Committee. The terms of reference of the Remuneration Committee, inter alia, consists of reviewing the overall compensation policy, service agreements and other employment conditions of Executive Director(s). The recommendations of the Remuneration Committee are considered and approved by the Board of Directors, subject to the approval of the shareholders. The Executive Director(s) is/are entitled to Performance Incentive for each financial year as may be determined by the Board on the recommendation of Remuneration Committee. During the year under review, Remuneration Committee met on three occasions, viz. on June 16, 2008, July 30, 2008 and October 20, 2008. Details of the remuneration paid to Mr. Punit Goenka, Whole-time Director & CEO of the Company during the year ended March 31, 2009 is as under: Particulars Amount (Rs.) Salary & Allowances 21,181,847 Perquisites 3,177,279 Employer’s Contribution to Provident Fund 1,908,000 Total 26,267,126 Remuneration payable to Non-Executive Directors Non-Executive Directors are entitled to sitting fees of Rs. 10,000/- per meeting, for attending the meetings of the Board and Committees thereof other than Share Transfer and Investors Grievance Committee, the limits for which have been approved by the Shareholders. Additionally, as approved by the Members and the Central Government, the Non-Executive Directors are entitled to remuneration by way of Commission for each financial year up to an aggregate limit of 1% of net profits of the Company. The commission payable is determined by the Board based inter alia on the performance of and regulatory provisions, applicable to the Company. As per the current remuneration policy, the Company pays equal amount of commission to Non-Executive Directors on pro rata basis. Details of the remuneration of the Non-Executive Directors of the Company for Financial year 2008-2009 are as under:

ZEEL Annual Report 2008-2009 52 Sr. No. Name of Director Sitting Fees Commission Total 1 Subhash Chandra 70,000 1,180,000 1,250,000 2 Laxmi N. Goel 60,000 1,180,000 1,240,000 3 Ashok Kurien 120,000 1,180,000 1,300,000 4 D. P. Naganand 100,000 1,131,000 1,231,000 5 N. C. Jain 130,000 1,180,000 1,310,000 6 B. K. Syngal 90,000 1,180,000 1,270,000 7Rajan Jetley 50,000 1,180,000 1,230,000 8 Gulam Noon 20,000 1,180,000 1,200,000 9 M. Y. Khan 60,000 1,180,000 1,240,000 10 R. Vaidyanathan 120,000 1,180,000 1,300,000 Total 820,000 11,751,000 12,571,000 Disclosure with respect to Non-Executive Directors on other pecuniary relationship – None c) Share Transfer and Investors Grievance Committee The Share Transfer and Investors Grievance Committee of the Board comprises of Mr. Ashok Kurien, Non-Executive Director as Chairman and Mr. N. C. Jain, Non-Executive Independent Director as Member. The Company Secretary is the Secretary of the Committee. Terms of reference of the Share Transfer and Investor Grievance Committee is to supervise and ensure efficient transfer of shares and proper and timely attendance of investors’ grievances. The Committee has delegated the power of approving transfer, transmission, rematerialisation, dematerialization etc. of shares of the Company to the officials of the Secretarial Department. Mr. M. Lakshminarayanan, Executive Vice President & Company Secretary is the Compliance Officer of the Company. During the year under review, Share Transfer and Investors Grievance Committee met four (4) times on April 3, 2008, July 3, 2008, October 6, 2008 and January 5, 2009. These meetings were attended by all Committee members. Details of number of requests/complaints received and resolved during the year ended March 31, 2009, are as under: Nature of Correspondence Received Replied/ Pending Resolved Non-receipt of Dividend Warrant(s) 61 61 – Non-receipt of Certificates (Sub-division) 66– Non-receipt of Certificates (Demerger) 10 10 – Non-receipt of Shares after transfer 1 1 – Letter received from SEBI 5 5 – Non-receipt of Annual Report 26 26 – Total 109 109 – d) Finance Sub-Committee With a view to facilitate monitoring and expediting fund raising process, the Board of Directors of the Company had constituted a Finance Sub-Committee of the Board comprising of Mr. N. C. Jain, Non-Executive Independent Director as Chairman and Mr. Ashok Kurien, Non-Executive Director and Mr. Punit Goenka, Whole-time Director & CEO as its Members. Main function of the Finance Sub-Committee is to consider and approve financing facilities offered and/or sanctioned to the Company by various Banks and/or Indian Financial Institutions from time to time, in the form of Term Loans, Working Capital facilities, Guarantee Facilities, etc., including the acceptance of terms and conditions of such facilities being offered. 53 ZEEL Annual Report 2008-2009 During the year under review Finance Sub-Committee met seven times on July 15, 2008, July 25, 2008, September 13, 2008, September 17, 2008, September 23, 2008, December 19, 2008 and January 6, 2009 which were attended by all members. In addition to the above, your Board has constituted a Corporate Management Committee comprising of Senior Executives including Whole-time Director and CEO of the Company. Main functions of the Committee is to review, approve and/or grant authorities for managing day-to-day affairs of the Company within the limits delegated by the Board. General Meetings The 27th Annual General Meeting of the Company for the financial year 2008-09 will be held on Tuesday, August 18, 2009 at 11.30 a.m. at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018. Details of Annual General Meetings held during last 3 years are as follows:

Meeting Day, Date and Time of the Meeting Venue 26th AGM Wednesday, July 23, 2008 at 11.30 a.m. Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018. 25th AGM Friday, August 17, 2007 at 11.30 a.m. Auditorium, ‘A’ Wing, Ground Floor, National Stock Exchange of India Limited, Exchange Plaza, Plot No. C-1, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051. 24th AGM Thursday, December 28, 2006 at 3.00 p.m. Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai 400 018. During last three Annual General Meetings of the Company, the members had passed following Special Resolutions: At 26th Annual General Meeting : Alteration of Articles of Association

At 25th Annual General Meeting : None

At 24th Annual General Meeting : Delisting of Equity Shares of the Company from Calcutta Stock Exchange Association Limited Change of name of the Company from Zee Telefilms Limited to Zee Entertainment Enterprises Limited and consequent amendment to Memorandum and Articles of Association of the Company Payment of Commission to Non-Executive Directors of the Company Approval for appointment of Mr. Subhash Chandra, Non-Executive Chairman of the Company for holding an office or place of profit in Asia TV Limited UK, a wholly owned foreign subsidiary of the Company All the above resolutions were passed with requisite majority. No Ordinary or Special resolutions were passed through Postal Ballot during financial year 2008-09. None of the resolutions proposed at the ensuing Annual General Meeting need to be passed by Postal Ballot. Disclosures There are no materially significant related party transactions, i.e. transaction material in nature, between the Company and its promoters, directors or management or their relatives etc., having any potential conflict with interests of the Company at large. Transactions with related parties are disclosed elsewhere in the Annual Report. There has not been any non-compliance by the Company and no penalties or strictures imposed by SEBI or Exchanges or any statutory authority on any matter relating to capital markets, during the last three years. SEBI had issued a Show Cause Notice to the Company in 2005 wherein the Company and its Promoters were charged for alleged involvement in market manipulation transactions of Ketan Parekh and his associates. In connection with this Show Cause Notice, Hon’ble Whole-time Member of SEBI has vide Order dated March 19, 2008, held that the charges of alleged involvement of the Company and its Promoters in market manipulation transactions, are not sustainable and that the Company and its Promoter Companies are not directly involved in the market manipulation.

ZEEL Annual Report 2008-2009 54 Therefore any penal actions sought under the Show Cause Notice were dropped. However, since in the opinion of SEBI, the actions of the Company and its Promoters gave an impression of such involvement, the SEBI order cautioned the Company and its promoters against any similar actions in future. Compliance with Non-Mandatory requirements The Company has complied with all mandatory requirements of Clause 49 of Listing Agreement(s). The status of compliance with non-mandatory requirements of Clause 49 of the Listing Agreement are as detailed hereunder: 1. Remuneration Committee – The Company has setup Remuneration Committee to recommend/review overall compensation policy, service agreements and other employment conditions of Executive Directors. 2. Whistle Blower Policy – The Board of Directors of the Company approved the Whistle Blower Policy, pursuant to which employees can raise concern relating to the fraud, malpractice or any other untoward activity or event which is against the interest of the Company and/or its stakeholders. 3. Audit Qualification – Company is in the regime of unqualified financial statements. 4. Chairman’s Office – A Chairman’s office with requisite facilities is provided and maintained at the Company’s expenses for use by its Non-Executive Chairman. The Company also reimburses all travel and other expenses incurred in his furthering the Company’s business interests. Means of Communication The Company has promptly reported all material information including declaration of quarterly financial results, press releases, etc. to all Stock Exchanges where the securities of the Company are listed. Such information is also simultaneously displayed immediately on the Company’s corporate website, www.zeetelevision.com. The financial results quarterly, half yearly and annual results and other statutory information were communicated to the shareholders by way of an advertisement in a English newspaper viz. ‘Daily News & Analysis (DNA)’ and in a vernacular language newspaper viz. ‘Punya Nagari (Marathi)’ as per requirements of the Stock Exchange. Official press releases and presentations made to institutional investors or to the analysts are displayed on Company’s corporate website, www.zeetelevision.com. Hard copies of the said disclosures and correspondences are also filed with the exchanges. Management Discussions and Analysis Report forming part of annual report is annexed separately. General Shareholder Information The required information is provided in Shareholders’ Information Section.

55 ZEEL Annual Report 2008-2009 AUDITORS’ CERTIFICATE

To The Members, Zee Entertainment Enterprises Limited We have examined the compliance of conditions of Corporate Governance by Zee Entertainment Enterprises Limited (‘the Company’), for the year ended March 31, 2009 as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges. The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has compiled with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. We state that no investor grievances are pending for a period exceeding 30 days against the Company as per the records maintained by the Company. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Mohan Bhandari Partner M. No.12912

For and on behalf MGB & Co. Chartered Accountant

Mumbai, June 26, 2009

ZEEL Annual Report 2008-2009 56 SHAREHOLDERS’ INFORMATION

1. Date, Time and Venue of Meeting : Annual General Meeting Shareholder’s Meeting Day & Date : Tuesday, August 18, 2009 Time : 11.00 a.m. Venue : Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai – 400 018

2 Financial Year 2008-2009

3. Period of Book Closure Monday, August 10, 2009 to Tuesday, August 18, 2009 (both days inclusive)

4. Dividend Payment Date 1st Week of September 2009

5 Company Identification No L92132MH1982PLC028767

6. Registered office Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai - 400 018, India Tel: +91-22-6697 1234 Fax: +91-22-2490 0302/0213 Website : www.zeetelevision.com

7. Listing on Stock Exchanges Equity Shares: The Bombay Stock Exchange Limited (BSE) The National Stock Exchange of India Limited (NSE) Foreign Currency Convertible Bonds : The Singapore Stock Exchange (Redeemed in April 2009)

8. Stock Code BSE - 505537 NSE - ZEEL EQ Reuters - ZEE.BO (BSE) & ZEE.NS (NSE) Bloomberg - Z IN (BSE) & NZ IN (NSE)

9. ISIN No. Equity - INE256A01028 FCCB - XS0191281137

10. Trustee for FCCB Issue Deutsche Trustee Company Limited Winchester House, 1 Great Winchester Street, London EC2N 2DB, United Kingdom

11. Registrar & Share Transfer Agent Sharepro Services (India) Private Limited 13AB, Samhita Warehousing Complex, Second Floor, Sakinaka Telephone Exchange Lane, Off Andheri-Kurla Road, Sakinaka, Andheri (East) Mumbai - 400 072, India Tel: +91-22-6772 0400, Fax: +91-22- 2859 1568 E-mail: [email protected]

57 ZEEL Annual Report 2008-2009 12. Investor Relations Officer Mr. Pushpal Sanghavi, Investors Relations Officer Zee Entertainment Enterprises Limited Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai - 400 018, India Tel: +91-22-6697 1234, Fax: +91-22-2490 0302/0213/2495 5974 E-mail: [email protected]

13. Dividend The Board of Directors have recommended payment of dividend of Rs. 2/- per share on paid-up value of Re. 1 per share. Dividend, if approved by Members at the ensuing Annual General Meeting, will be paid to all those shareholders whose name appear in the Register of Members of the Company, after giving effect to all valid share transfers in physical form lodged with the Company or its Registrar on or before August 8, 2009 and in the list of beneficial owners furnished by National Securities Depository Limited and/or Central Depository Services (India) Limited, in respect of shares held in electronic form, as at the end of the business on August 8, 2009. Dividend for the financial year ended March 31, 2002, which remains unpaid or unclaimed, will be due for transfer to the Investor Education and Protection Fund on completion of seven years. The same would be transferred on or before December 2009. Members who have not encashed their dividend warrant(s) for the financial year ended March 31, 2002, or any subsequent financial year(s), are requested to seek issue of duplicate warrant(s) by writing to the Registrar and Share Transfer Agent of the Company. Members will not be able to claim any unpaid dividend from the Investor Education and Protection Fund or the Company once it is transferred to the fund. Information in respect of unclaimed dividend for the subsequent financial years and date(s) when due for transfer to Investor Education and Protection Fund is given below:

Financial Year Ended Date of Declaration Last date for Claiming Due date for transfer to of Dividend unpaid Dividend IEP fund

31.03.2002 25.10.2002 30.11.2009 29.12.2009

31.03.2003 26.09.2003 01.11.2010 30.11.2010

31.03.2004 28.09.2004 03.11.2011 02.12.2011

31.03.2005 28.09.2005 03.11.2012 02.12.2012

31.03.2006 28.12.2006 03.02.2014 02.03.2014

31.03.2007 17.08.2007 22.09.2014 21.10.2014

31.03.2008 23.07.2008 28.08.2015 27.09.2015

14. Change of Name of the Company The name of the Company was changed from ‘Zee Telefilms Limited’ to ‘Zee Entertainment Enterprises Limited’ with effect from January 10, 2007. In compliance with SEBI guidelines for Good and Bad Delivery, the Company confirms that old Share Certificates which have not been corrected with the new name of the Company shall also be good for delivery in the market. The Registrar and Share transfer Agent shall make necessary endorsement of change of name of the Company in physical share certificates as and when the same are received for transfer / transmission / remat / sub- division/split etc.

ZEEL Annual Report 2008-2009 58 15. Share Transfer System

Equity Shares sent for physical transfer or for dematerialization are generally registered and returned within a period of 15 days from the date of receipt of completed and validly executed documents.

16. Dematerialisation of Equity Shares and Liquidity

Trading in equity shares of the Company became mandatory in dematerialized form with effect from April 5, 1999. To facilitate trading in demat form the Company has made arrangements with both the depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Shareholders can open account with any of the Depository Participant registered with any of these two depositories. As on date 99.69% of the equity shares of the Company are in the dematerialized form.

17. Splitting of Shares

On October 25, 1999 Shareholders had approved splitting of face value of equity shares of the Company from Rs. 10 each to Re. 1 each. The resolution became effective from the start of no-delivery period w.e.f. December 6, 1999. From this day onwards trading in equity shares of Re.1 each commenced and consequently the equity shares of Rs. 10 each ceased to trade on the exchanges.

For the shareholders, holding shares in physical form, the Company had sent them intimation to exchange the old certificates of face value of Rs. 10 each with new certificate of face value of Re. 1 each. For the shareholders holding shares in demat form, the depositories automatically gave the effect of splitting of face value of shares by way of a Corporate action dated December 23, 1999.

Shareholders who could not exchange their old certificates earlier for the new certificates and who are desirous of exchanging the same may send appropriate request along with old share certificate in original to the Company’s Registrar & Share Transfer Agent.

18. Shareholders’ Correspondence

The Company has attended to all the investors’ grievances/ queries/ information requests except for the cases where we are constrained because of some pending legal proceeding or court/statutory orders. We endeavour to reply all correspondence received from the shareholders within a period of 5 working days.

All correspondence may be addressed to the Registrar & Share Transfer Agent at the address given above. In case any shareholder is not satisfied with the response or do not get any response within reasonable period, they may approach the Investors Relations Officer at the address given above.

19. Outstanding Convertible Instruments, Conversion Date and Likely Impact on Equity

In April 2004, the Company has raised US$ 100 million by issuing 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) of US$ 10,000 each, which were due for redemption on April 29, 2009. The bondholders had an option to convert these bonds into equity shares at an initial conversion price of Rs.197.235 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$1), from and including June 8, 2004 to and including April 22, 2009. The initial conversion price was revised to Rs. 153.459, with effect from April 18, 2008, consequent to Scheme of Arrangement for demerger of News, Cable and Direct Consumer Services Business Undertakings of the Company.

As on March 31, 2009, on exercise of conversion option 9,621 FCCBs of US$ 10,000 each were converted to 21,502,099 Equity Shares of Re. 1 each of the Company. Balance of outstanding FCCBs viz. 379 Bonds of US$ 10,000 each, aggregating to US$ 3.79 million were redeemed at 116.24% of principal amount, as per the terms of Issue on April 29, 2009.

59 ZEEL Annual Report 2008-2009 20. Stock Market Data Relating to Shares Listed in India

Monthly high and low quotations and volume of shares traded on Bombay Stock Exchange and National Stock Exchanges for financial year 2008-2009 are as detailed herein

BSE NSE Month High (Rs.) Low (Rs.) Volume of High (Rs.) Low (Rs.) Volume of Share Traded Shares Traded April 2008 257.00 206.00 9,012,230 254.90 205.00 31,750,202 May 2008 244.85 211.40 4,835,837 244.90 213.10 20,931,430 June 2008 251.80 193.30 6,362,463 252.00 192.20 24,991,189 July 2008 232.90 180.10 6,246,789 232.00 180.00 22,936,936 August 2008 224.70 188.00 5,496,275 224.50 188.00 19,158,232 September 2008 239.00 187.00 5,554,054 254.80 187.55 22,579,482 October 2008 209.00 93.00 9,532,477 210.00 91.10 34,752,592 November 2008 163.00 99.05 6,554,364 163.00 100.00 30,915,775 December 2008 146.40 102.00 4,854,282 146.20 102.20 27,247,802 January 2009 155.80 90.40 11,919,172 156.80 90.00 48,227,315 February 2009 132.40 95.90 8,725,107 132.80 95.25 37,825,454 March 2009 110.10 88.10 9,242,448 110.25 88.00 41,826,813

21. Relative Performance of Zee Shares Vs. BSE Sensex & Nifty Index

Zee Entertainment Enterprises Limited Closing Price Vs Closing Sensex 250 20000 18000 200 16000 14000 150 12000 10000 100 8000

Closing Price 6000 Closing Sensex 50 4000 2000 0 0 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09

Month

Closing Rs. (Month End) Sensex (Month End)

ZEEL Annual Report 2008-2009 60 Zee Entertainment Enterprises Limited Closing Price Vs Closing Nifty 250 6000

5000 200

4000 150 3000 100

2000 Closing Nifty Closing Price

50 1000

0 0 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Month

Closing Price Closing Nifty

22. Distribution of Shareholding as on March 31, 2009

No. of Equity Share Share Holders No. of Shares Number % of Holders Number % of Shares Up to 5000 95,329 99.34% 12,261,934 2.83% 5001 – 10000 177 0.18% 1,338,720 0.31% 10001 – 20000 100 0.10% 1,459,625 0.34% 20001 – 30000 38 0.04% 955,456 0.22% 30001 – 40000 28 0.03% 975,796 0.22% 40001 – 50000 13 0.01% 575,689 0.13% 50001 – 100000 45 0.06% 3,339,001 0.77% 100001 and Above 233 0.24% 413,100,890 95.18% Total 95,963 100.00% 434,007,111 100.00%

23. Categories of Shareholders as on March 31, 2009

Category March 31, 2009 % of shareholding No. of shares held Promoters 41.50% 180,102,368 Individuals 3.03% 13,180,700 Domestic Companies 4.70% 20,404,507 FIIs, Mutual funds and Banks 20.77% 90,134,184 FIIs, OCBs & NRI 30.00% 130,185,352 Total 100.00% 434,007,111

61 ZEEL Annual Report 2008-2009 Zee Entertainment Enterprises Limited Shareholding Pattern as on March 31, 2009

Indian Companies Promoters 4.70% 41.50%

FIIs / NRIS / OCBS 30.00%

Individuals FIS / MF / Bank 3.03% 20.77%

24. Particulars of Shareholding a) Promoter Shareholding as on March 31, 2009

Sr. Name of Shareholder No of Shares held % of shareholding 1 Delgrada Limited 74,633,402 17.20% 2 Jayneer Capital Pvt. Ltd. 52,346,704 12.06% 3 Lazarus Investments Limited 11,500,000 2.65% 4 Prajatma Trading Co. Pvt. Ltd. 7,574,500 1.75% 5 Essel Infraprojects Ltd. (formerly Pan India Paryatan Ltd.) 6,400,000 1.47% 6 Premier Finance and Trading Co. Ltd. 6,176,000 1.42% 7 Ganjam Trading Co. Pvt. Ltd. 6,016,500 1.39% 8 Briggs Trading Co. Pvt. Ltd. 4,451,262 1.03% 9 Churu Trading Co Pvt. Ltd. 3,576,000 0.82% 10 Ambience Advertising Pvt. Ltd. 2,275,000 0.52% 11 Ashok Kurien 2,042,000 0.47% 12 Laxmi Goel 1,750,000 0.40% 13 Sushila Goel 680,000 0.16% 14 Veena Investment Pvt. Ltd. 681,000 0.16% Total 180,102,368 41.50%

b) Top ten (10) Public Shareholding as on March 31, 2009

Sr. Name of Shareholder No of Shares held % of shareholding 1 Life Insurance Corporation of India 45,784,735 10.55% 2 Oppenheimer Funds Inc- Oppenheimer Developing Markets Fund 19,470,773 4.49% 3 HDFC Trustee Company Ltd - HDFC Cap 18,236,495 4.20% 4 HDFC Standard Life Insurance Co. Ltd. 13,650,401 3.15% 5 Oppenheimer Funds Inc. A/c Oppenheimer Global Fund 12,047,984 2.78% 6 Reliance Capital Trustee Co. Ltd. Reliance Media & Ent. Fund 10,373,294 2.39% 7 Government of Singapore 4,905,298 1.13% 8 FID Funds (Mauritius) Ltd. 4,370,684 1.01% 9 Emerging Markets Portfolio A Series of the Pacific Select Fund 4,303,068 0.99% 10 J.P. Morgan Asset Management (Europe) S.A.R.L.A/C 3,770,380 0.87% J.P. Morgan Funds – Emerging Markets Equity Fund Total 136,913,112 31.56%

ZEEL Annual Report 2008-2009 62 MANAGEMENT DISCUSSION AND ANALYSIS

The figures have been stated in Rs. X million in the will revive from this pressure situation in the MD & A for better readability instead of Rs. XX thousands second half of the fiscal 2010 and will again rally in as stated in the financial statements. the coming years. Investors are cautioned that this discussion contains The new era of digitization has seen DTH adoption forward looking statements that involve risks and going up to 12 million pay DTH households as of uncertainties including, but not limited to, risks inherent March 2009, a 100% growth over the last year. in the Company’s growth strategy, acquisition plans, With more number of players foraying into the DTH dependence on certain businesses, dependence on market and heavier investments into consumer availability of qualified and trained manpower and other education, the DTH industry is estimated to grow factors. The following discussion and analysis should by another 9-10 million households this year be read in conjunction with the Company’s financial alone. Established broadcasters with emphasis on statements included herein and the notes thereto. subscription revenues are likely to be the biggest beneficiaries from this expansion going forward. 1. OVERVIEW India has been relatively lesser impacted by the Zee Entertainment Enterprises Limited (ZEEL) (BSE upheaval in the world economic situation, yet the Code: 505537, NSE Code: ZEEL.EQ) is India’s largest widespread uncertainty has led to a slowdown in vertically integrated media and entertainment advertising spends. company. The Company was formed in 1982. ZEEL was the first company to launch a satellite 3. BUSINESS PROFILE channel in India and from being a single channel Zee is an integrated media and entertainment for a single geography today operators multiple company engaged primarily in broadcasting and channels across multiple geographies in content development, production and its delivery different languages and genres. The Company’s via satellite. The Company has 15 channels that programming reaching out to over 500 million serves widest array of content choices in India viewers across 167 countries. and is the leading broadcaster across the country ZEEL channels include Zee TV (Hindi General as also the pioneer in the international markets for Entertainment), Zee Cinema (Hindi Movies), Zee Indian content. Sports, Ten Sports (sports including Cricket), Zee Zee TV Café (English Entertainment), Zee Studio (English The flagship channel Zee TV operates in the Movies), Zee Trendz (Fashion & Life Style), Zing Hindi General Entertainment genre. Over the last (Music and Lifestyle), ETC Music (Hindi Music), ETC year, easy liquidity in capital markets and growth Punjabi (Regional language), Zee Classic (Old Hindi prospects of Indian media had lead to the launch movies), Zee Action (Action-based Hindi movies), of various new channels, especially in the Hindi Zee Premier (New Hindi movies), Zee Jagran General Entertainment space. New players were (Alternative Lifestyle) and Zee Smile (Niche Hindi attracted to the genre owing to its popularity among General Entertainment). viewers and the resultant advertising spends it 2. MEDIA AND ENTERTAINMENT INDUSTRY attracts through giving little emphasis on their breakeven horizons and profitability. A buoyant economy led to the Indian media and entertainment industry growing at a quick pace over Nevertheless, with the launch of new players, a the last few years. Advertising revenues continued lot more choice was available to the viewers, the to outperform the world growth average and quantity of GEC content being produced went digitization ensured that corrections were brought up. This in turn also resulted in increased cost of into the subscription revenues model. However, marketing and distribution within the GEC genre. last year was a unique one for the world economy Since cable distribution in India is predominantly in at large and growth plans across businesses were analogue mode, getting carriage on cable networks brought under check while rationalizing spends to was a challenge for most. As a result, the channels grapple with the unprecedented slowdown. had to pay sizable amounts as carriage fees. An ever increasing ad spend to GDP ratio, rapid The cost structure of new channels was thus very adoption of DTH and digital pay television services, different as compared to established players. favourable trends from television heavy advertisers While new channels spent excessively across all gives management the confidence that the sector cost heads, creating unviable operating plans, the

63 ZEEL Annual Report 2008-2009 liquidity scenario also changed for the worse and share to new competitors, the channel was the put a brake in the plans of some new players. least affected by the upheaval that surrounded The fragmentation in viewership brought with it. During the year, the channel launched various it some pressure on advertising for the genre. new successful shows including ‘Choti Bahu’, ‘Agle New broadcasters offered entry pricing on new Janam Mohe Bitiya Hi Kijo’, ‘Dance India Dance’ inventory, which resulted in lower realizations and etc. These shows met with instant success and yields. Subscription revenues were also under broke into the top 50 shows slot. pressure, with all new entrants offering long free- Leadership across different Genres view windows. Apart from its flagship channel Zee TV, the Company On the viewership front, the launch of each of the has a dominant presence across different segments in channels led to an expansion in the overall GEC Indian broadcasting space. viewership pie. The chart demonstrates the growth • In Hindi Movie Genre, it has 4 channels viz. Zee in GRPs (Viewership) of the Hindi GEC space: Cinema, Zee Premier, Zee Action and Zee Classic. 1250 NEW CHANNELS EXPANDING MAINLINE VIEWERSHIP Zee Cinema has been a leader in its genre from July-Aug GRPs the time of its inception and commanded 34% 2008 weekly average channel share during the year. The 1150 1145 channel has the largest film library in the country May and is a strong favourite with the viewers as also 1050 Jan 2008 2008 the advertisers. Nov 2007 1012 950 Sept-Oct 1000 • The Company’s sports offering includes 2 channels 2007 925 viz. Zee Sports and Ten Sports (company has 50% 889 stake in Taj TV Group, which owns the Ten Sports 850 Pre 9X 9X NDTV IPL Colors channel). With telecast rights to 5 cricket boards, Launch Imagine Launch Launch which ensure coverage of cricket of all test playing

Source: TAM Media Research, All Universe, Hindi Speaking Markets of India GEC Channels Cumulative Average Weekly GRPs countries, and over hundred days of cricket per year along with rights to exciting properties such While the initial flurry of spends did bring with it as UEFA cup football, WWE wrestling, US Open short-term viewership spikes, most of the channels tennis etc tied up, the sports business has emerged started to plateau out on ratings. Monetize-able as a strong segment of the Company’s revenues, ratings eluded new players, even as established contributing to over 18% of the Company’s top line incumbents continued to garner a larger pie of this year. the relevant viewership and advertising revenues hence. The graph below is indicative of the • Zee Café, Zee Studio and Zee Trendz channels competitive Hindi GEC space and primetime ratings are company’s offering to the English speaking of each of the channels over the last four years, audiences in the country. Zee Café has the rights to showing the growing strength of Zee TV versus the latest current series programming of super-hit other established players in the genre. shows while Zee Studio has tied up with leading studios from across the globe. The channels 5 TRPs PRIMETIME VIEWERSHIP TRENDS- ZEE TV CONSISTENT Average primetime viewership trends of Hindi GEC continue to drive in strength to network subscription 4 bouquet. • Zee Music, the music channel offering of the 3 company was rebranded to Zing during the course of the year. The content on Zing will revolve around 2 the world of music, movies and celebrities.

1 Global Presence The Company has access to more than 500 million 0 Star Plus Zee TV Colors Sony Star One NDTV Sahara 9X SAB Star viewers globally and broadcasts to over 167 countries Imagine One Utsav 2005 2006 2007 2008 worldwide. Internationally, subscription is a key driver Source: TAM Media Research, All Universe, Hindi Speaking Markets of India, Prime Time Ratings 1800 hrs- 2400 hrs of revenues for any broadcaster and international Zee TV continued to maintain its dominance in the subscription revenues contributed to over 21% of Zee genre even as other channels lost market share and Entertainment’s total revenues in this financial year. delivered an average channel share of 19% across The Company also forayed into new markets with the the year. The encouraging part for the channel launch of local language channels in Russia, Indonesia, was that while other existing players lost channel Malaysia, Saudi Arabia. The offering is of the existing

ZEEL Annual Report 2008-2009 64 library either subtitled or dubbed into the local language The key elements of Zee’s strategy during the year to cater to the non South Asian audiences as well. were (i) to take appropriate steps to safeguard Films Business its leadership position in a fiercely competitive environment (ii) to concentrate on additional During the course of the year, the Company reentered revenues from digital pay platforms (iii) rationalize the movie production and distribution business in India. on costs across different heads, especially towards Plans include producing and distributing movies in six the latter half of the year (iv) fortify its expansion in local Indian languages to help strengthen the movie the international markets (v) maintain consistently library of the company as also benefit from the fast high standards of corporate governance. evolving transparency in the movie distribution business. Fifteen movies were released under two banners: Zee (i) Appropriate steps to safeguard its Motion Pictures and Zee Limelight. leadership position in a fiercely competitive environment: Education Over the years, Zee Network has been the only For India to achieve its target of GDP growth, it needs network to gain viewership share in the top 3 to harness all its Resources – the biggest one being television networks of the country. The launch manpower. Sadly, our manpower today is not equipped of new shows across network channels along to take on the challenge of leading India to its destiny. with the tie up of cricket rights and current 36% of them are illiterate and the ones, who are certified series rights of programs has helped ensure literate, are barely employable. Therefore, organized that in a highly fragmented environment, the private initiatives are gaining momentum in India’s network maintained and grew its dominance. lucrative education market. (ii) Concentrate on additional revenues from Zee Interactive Learning Systems (ZILS) is the digital pay platforms: education division of ETC Networks Ltd. ZILS’s purpose is to improve Human Capital via quality education and India is a fast digitizing market and the consumer development as also helps individuals (children and shift towards digital services is exhibited youth) realize their unique potential through our chain through the rampant expansion from 6 million of Pre-schools, Schools, Youth Institutes and Online pay DTH households at the beginning of the ventures. ZILS plans to make substantial investments in fiscal to 12 million pay DTH households at the developing new education centres for the children and end of it. The company gained substantially youth through organic and inorganic routes. through this growth and revenues realized by the company for these consumers grew 93% ZILS runs India’s No. 1 chain of pre-schools, Kidzee with over the last year. more than 415 operational pre-schools in more than 275 cities. Kidzee is a pioneer in organized and standardized (iii) Rationalize on costs across different heads pre-schooling in the country. ZILS has also ventured towards the latter half of the year: into K12 schools with Kidzee High, India’s only chain of The belief at the Company has always been Higher Secondary schools with an integrated approach that higher spends will not necessarily result to Learner Centric Education. For youth, ZILS runs 2 in sustained incremental viewership. Even vocational institutes in Mumbai in addition to more than in the wake of competition, the network 50 ZedCA centres across the country. ZedCA centres maintained its cost structures though with impart IT training. Zee Institute of Media Arts (ZIMA) is a increased competition our costs also moved TV and Film training institute in Lokhandwala, Mumbai up. The costs were however brought under that offers diploma courses in Direction, Acting, Sound, check towards the fourth quarter of the year Editing, Production and Cinematography. Zee Institute and are expected to further be brought under of Creative Animation (ZICA) is a premier animation check going forward. The Company cut back institute at Esselworld, Mumbai that trains youth in on expansion plans such as Zee Next and Zee classical 2D and modern 3D animation. Entertainment Studios. Better negotiations with suppliers, efforts on manpower rationalization 4. BUSINESS STRATEGY and stricter control on distribution spends will The year gone by can be classified as two distinct help in further keeping costs under check. parts: the first half from April to September and (iv) Fortify its expansion in the international the second half from October to March. While the markets: first half was fueled by growth and an enhanced competitive environment, the second half saw a While the network launched local language slowdown in advertising revenues. channels across various new territories in the

65 ZEEL Annual Report 2008-2009 previous fiscal, this fiscal saw the consolidation 2. Human Resources on this front, with the success of Zee Aflam for The Company seeks, respects and values the Middle East region and Zee Music in the the diverse qualities and backgrounds that UK. The success of these channels has given its people bring to it and is committed to the management confidence that low cost utilizing the richness of knowledge, ideas experiments such as these are an innovative and experience that this diversity provides. way of expanding network strengths. The work environment is stimulating and (v) Corporate Governance: development of core competencies through Zee firmly believes that good governance is formal training, job rotation and hands on critical to sustaining corporate development, training is an ongoing activity. increasing productivity and competitiveness 6. RISK FACTORS and creating shareholder wealth. The Competition from other players: governance process should ensure that the available resources are utilized in a manner that The Company operates in highly competitive meets the aspirations of all its stakeholders. environment that is subject to innovations, changes Your Company’s essential charter is shaped by and varying levels of resources available to each the objectives of transparency, professionalism player in each segment of business. and accountability. The Company continuously Ever changing trends in Media sector: endeavours to improve on these aspects on an ongoing basis. It may not be possible to consistently predict changing audience tastes. People’s tastes vary quite With the increasing emphasis on transparency rapidly along with the trends and environment they and accountability, standards have been set by live in. This makes it virtually impossible to predict various governing bodies on disclosure as well whether a particular show or serial would do well or as judiciousness in conduct. Zee has always not. With the kind of investments made in ventures, tried to go a step further in this direction. repeated failures would have an adverse impact on 5. OTHER COMPANY INFORMATION the bottom-line of the Company. ZEE ENTERTAINMENT ENTERPRISES LIMITED Cost of programming mix might affect its Bottom line: 1. Internal Control Systems The urge to compete and provide the best content to The Company has in place adequate internal viewers, Zee would have to incur high expenditure control systems, commensurate with its size to provide an impetus on its programming front and nature of operations so as to ensure from time to time. smoothness of operations and compliance with applicable legislation. The Company has a The increase in costs might not necessarily perk up well-defined system of management reporting its revenues in the same proportion. and periodic review of businesses to ensure Investments in new channels: timely decision-making. It has an internal audit The Company may from time to time launch new team with professionally qualified financial channels. Content for these channels is obtained personnel, which conducts periodic audits of from its existing library as well as from programmes all businesses to maintain a proper system of acquired in the normal course of its business. The checks and control. success of any new channel depends on various The management information system (MIS) factors, including the quality of programming, forms an integral part of the Company’s price, extent of marketing, competition etc. There control mechanism. All operating parameters can be no assurance that the Company will be as are monitored and controlled. Any material successful in launching new channels as it has change in the business outlook is reported to been the case of its existing channels. the Board. Material deviations from the annual Weakened Macro Economic Environment takes planning and budgeting, if any, are reported longer than expected to recover: to the Board on quarterly basis. An effective budgetary control on all capital expenditure The Company estimates that the economic ensures that actual spending is in line with the slowdown will be overcome by the second half of Capital Budget. the fiscal 2010 and that an upward trend will follow with regard to spends by the advertisers. However,

ZEEL Annual Report 2008-2009 66 a longer recovery period may lead to delayed still under-reported, this expansion of digital DTH uptake on advertising spends and an impact on the services may lead to cannibalization of analogue company’s strategy going forward. cable revenues in the near term. Delay in DTH/CAS rollouts resulting in slower Increase in cost of acquisition for some of the key ramp up in pay revenues: sports properties: The uptake of pay digital services by subscribers has While a significant amount of rights have been been a very encouraging sign for all broadcasters. signed on by the Company for leading sports Internationally most broadcasters derive a greater properties, any future contracts may be at higher share of their revenues from the subscription costs, which may put pressure on margins of the revenues where as in India the under-declaration in company. the analogue cable system has led to broadcasters The Company may be exposed to foreign exchange being more dependant on advertising revenues, rate fluctuations: which tend to cyclical in nature and more affected by the macro economic factors. The industry The Company receives a significant portion of its expects pay digital services to grow at over 50% revenues and incurs a significant portion of its CAGR in the next three years and Zee is likely to expenses in foreign currencies, particularly US benefit heavily from this rapid growth. A slowdown dollars and UK pounds. Accordingly, the Company in growth of digital services may lead to incremental is exposed to fluctuations in the exchange rates profit margins being impacted. between those currencies and the Rupee, the Company’s reporting currency, which may have a Increased competitive environment in the Hindi substantial impact on its revenues and expenses. General Entertainment Space: 7. FINANCIAL RESULTS: The Hindi GEC genre is amongst the key genres for all advertisers and with the increased competition CONSOLIDATED FINANCIALS in the space, the Company’s revenues may be at A. RESULTS OF OPERATIONS risk. Though Zee TV has been maintaining its share We have provided a comparison between ZEEL of viewership and off late growing it with new (Audited) figures for 2007-08 and ZEEL (Audited) launches, the channel may be the risk of losing figures for 2008-09 revenues. Revenue Sluggish consumer uptake in the international markets: Total revenue increased Rs. 3,853.6 million or 20% from Rs. 19,491.7 million in 2008 to Rs. 23,345.3 Zee has been a pioneer in the international markets million in 2009 on account of higher Advertisement, and has the highest market share amongst all Subscription, Other Sales and Services and other South East Asian broadcasters across Europe income. and USA. Indian content in these markets serves the preference of a niche audience and Zee has Sales and Services strong relations with distribution platforms in Revenue from sales and services increased these markets giving management the confidence Rs. 3,419.4 million, or 19%, from Rs. 18,353.7 that the Company will retain market share in key million in 2008 to Rs. 21,773.1 million in 2009. geographies. In the given slowdown, consumers Advertisement Revenue has recorded a growth may find it difficult to upgrade their packages and of 14 % from Rs. 9,306.9 million to Rs. 10,592.6 the value growth from these markets may get million. Subscription Revenue showed a growth of affected. 22% from Rs.7436.0 million to Rs.9037.6 million. Cannibalization of analogue cable revenues due to Other Sales and Services increased Rs.532.2 or increased digital pay revenues 33% from Rs. 1,610.7 million to Rs.2142.9 million due to higher income from Film Production and The television distribution system in India is distribution income in addition to Commission primarily analogue in nature and continues to be Income on Advertisement and Subscription Sales impacted by the rampant under-declaration and for other Broadcasters, Syndication Sales of piracy by the last mile cable operators. With the Programmes, Films and Sports Events. advent of digital pay TV services such as DTH and digital cable, a clear shift in consumer preference Other Income has emerged with all of the expansion in the cable Other income had risen by Rs. 434.2 million, or and satellite adoption coming on the back of 38%, from Rs. 1,138.1 million in 2008 to Rs. 1,572.3 these digital services. Though analogue cable is million in 2009. It includes Interest income, Rental 67 ZEEL Annual Report 2008-2009 income and Profit on Sales of Investment in a Financial Expenses Subsidiary company namely Pan Asia Infrastructure Financial expenses increased Rs. 823.1 million, or Ltd besides dividend and other miscellaneous 159%, from Rs. 515.9 million in 2008 to Rs. 1,339 Income. million in 2009. This includes Rs.443.52 million Expenditures on Foreign Currency Derivative Contracts and Rs. Total expenditure increased Rs. 3,362 million, 445.2 million due to Exchange fluctuation loss or 26%, from Rs. 12,930.7 million in 2008 to besides increase on account of higher interest cost Rs. 16,292.7 million in 2009. Majority of the jump during the year. is in Personnel Cost and Administrative & other Depreciation and Amortisation expenses. Depreciation and amortisation increased Rs. 78 Operational Cost/Cost of Goods million, or 34%, from Rs. 232.3 million in 2008 to Operational cost/Cost of goods increased by Rs. Rs. 310.3 million in 2009. 1,991.9 million, or 25%, from Rs. 7,817.7 million Profit Before Tax and Exceptional Items in 2008 to Rs. 9,809.6 million in 2009. Increase Profit before tax and exceptional items decreased in operating cost is mainly due to increase in Rs. 409.6 million or 7%, from Rs. 5,812.8 million in programming cost by Rs.1,820.1 million or 35% 2008 to Rs. 5,403.2 million in 2009. from Rs. 5,172.7 million in 2008 to Rs. 6,992.8 million in 2009. Increase in Programming costs is Exceptional Item mainly due to newly launched Channel Zee Next, Exceptional Item Rs. 25.8 million represent Film Production Costs, High Cost Sports events reversal of provision against diminishing in value besides increase in higher programming and Film of investments in free hold land of 2700 sq. mtr. content on existing Channels. bought from Padmalaya Telefilms Ltd. as the same Personnel Cost was written off during the year. Personnel cost increased Rs. 593.1 million, or 41%, Provision for Taxation from Rs. 1438.0 million in 2008 to Rs. 2,031.1 million Provision for taxation decreased Rs. 1,418.7 in 2009. The main reason for this being incentives, million, or 87%, from Rs. 1626.6 million in 2008 to increments and increase in manpower during the Rs. 207.9 million in 2009. During the year Company year. On a % of sales basis, the same has gone up has received a refund taxes paid in earlier year to 9% in 2009 from 8% in 2008. Rs. 1,425.2 upon winning its claim for Tax Administrative and Other Expenses Incentives. For current year Tax Provision has been Rs. 1,633.1 million at Effective Tax Rate of 28% in Administrative and other expenses have decreased 2009 as against 29% in 2008. by Rs. 271.9 million, or 13%, from Rs. 2,132.1 million in 2008 to Rs.1,860.2 million in 2009. This is Profit After Tax and Before Minority Interest/Share manly due to lesser provision required to be made of Profits (Losses) in Associate for Doubtful Debts and advances of Rs.235 million Profit after tax and before minority interest/share in 2009 as against Rs 727.2 million in 2008. of profits (losses) in associates increased Rs. Selling and Distribution Expenses 1,060.7 million from Rs. 4,160.4 million in 2008 to Rs. 5,221.1 million in 2009. Selling and distribution expenses increased Rs. 1048.9 million, from Rs. 1,542.7 million in 2008 Share of Results of Associates to Rs. 2,591.6 million in 2009. This is mainly due Share of losses in associates decreased Rs. 3.7 to higher marketing costs for new channels, higher million from profit of Rs. 5.1 million in 2008 to profit carriage fees and increase in Advertisement and of Rs. 1.4 million in 2009. Publicity and other promotional activities. Minority Interest Operating Profit Minority interest decreased Rs. 234 million from Operating profit increased by Rs. 491.5 million, or 8%, Rs. 332.9 million in 2008 to Rs. 98.9 million in 2009. from Rs. 6,561.1 million in 2008 to Rs. 7,052.6 million Net Profit After Tax in 2009. The operating margin has gone down from 34% in 2008 to 30% in 2009. This is primarily because Net profit after tax increased by Rs. 1,290.9 of higher costs incurred during the year on New million or 34%, from Rs. 3,832.7 million in 2008 to Channel Zee Next, Film Production and Distribution Rs. 5,123.6 million in 2009. The Net Profit margin in Business and Sports event Telecast rights. 2009 was 22% against 20% in 2008.

ZEEL Annual Report 2008-2009 68 B. FINANCIAL POSITION Net Current Assets Consolidated Financial Position as on March 31, The Net current assets has increased by Rs. 5,993.4 2009 as compared to March 31, 2008. million during the year ended March 31, 2009 from Sources of Funds Rs. 15,229.6 million on March 31, 2008 to Rs. 21,223 million on March 31, 2009. Share Capital, Reserves and Surplus Current Assets During the year, Upon conversion of FCCB, Share capital has changed from Rs. 433.6 million in 2008 During the year the current assets increased by to Rs. 434 million in 2009. Rs. 5,518 million from 21,508.3 million as on 31.03.2008 to Rs. 27,026.3 as on 31.03.2009. Loan Funds Current Liabilities The total Loan funds of the Company increased from Rs. 3,865.6 million as on March 31, 2008 to During the year the current Liabilities and Provisions Rs. 5,756.9 million as on March 31, 2009. This decreased by Rs. 475.4 million from Rs. 6,278.7 increase is mainly on account of fixed term Million as on 31.03.2008 to Rs. 5,803.3 Million as on borrowing for Taj TV Ltd. at the time for bidding 31.03.2009. major sporting events telecasting rights and by Program/Film Rights Asia Today Ltd. for acquiring Media assets. Program/Film rights held by the Company increased Application of Funds from Rs. 2,441.8 million on March 31, 2008 to Fixed Assets Rs. 4,532.4 million on March 31, 2009. This increase During the year, the Company’s Gross Fixed was mainly on account of acquisition of film rights, Assets block increased by Rs. 2,706.5 million. This Higher Programming and Sports events rights increase is mainly on account of Goodwill arising acquired during the year. out of acquisition of balance 40% shareholding Inventories in Asia Business Broadcasting Limited. There has been addition to New Building premises, additional The inventories of the Company as on March 31, studio, production equipment and uplinking facility 2009 were at Rs. 43.9 million a growth from Rs. 31.9 at NOIDA and at TAJ TV Dubai.. million as on March 31, 2008. These inventories mainly consist of raw tapes, cassettes & discs and The Net Block increased Rs. 2,437 million from other stores & spares. Rs. 14,986.1 million as on March 31, 2008 to Rs. 17,423.1 million as on March 31, 2009. This Sundry Debtors increase is on account of increase of Gross Fixed After netting off provision for Doubtful Debts and Assets. Bad Debts written off, Net Debtors as on March Capital Work-in Progress of Rs. 669.4 million includes 31, 2009 stood at Rs. 6,436.5 million. This was Rs. 450 million towards rights for managing School at Rs. 5,907.2 million as on March 31, 2008. This for an Education Business and Rs. 150 million for increase is commensurate to the increase in scale Building under constructions. of operations. The age of Net Debtors is improved Investments to 107 days of sales in 2009 as against 117 days of sales in 2008. The Investments of the Company were valued at Rs. 1,271.1 million on March 31, 2009 as compared to Cash and Bank Balances Rs. 2,515.4.million on March 31, 2008, a decrease of Rs. The cash and bank balances lying with the Company 1,244.3 million over 2008. During the year, Company’s as on March 31, 2009 was Rs. 1,926.3 million as Subsidiary Asia Today Limited had divested its against Rs. 1,652 million on March 31, 2008. 100% holding in Pan Asia Infrastructure Limited and 48.44% holding in Broadcast South Asia Loans and Advances Limited. There was an increase in loans given from Deferred Tax Assets Rs. 8,331.3 million on March 31, 2008 to Rs. 8,862 Deferred Tax Assets (Net of Liabilities) is Rs.112.8 million on March 31, 2009. Trade Advances have million in 2009 as against Rs. 243.1 million in 2008. increased by Rs. 2,082.4 million from Rs. 2,974 Decrease is largely on account of reduced Provision million on March 31, 2008 to Rs. 5,056.4 million on for Doubtful Debts, and lower unabsorbed fiscal March 31, 2009. Trade Advances are given mainly allowances. for Content Acquisitions and film rights.

69 ZEEL Annual Report 2008-2009 The deposits given have increased from Rs. 168.2 Operational Cost/Cost of Goods million to Rs. 168.8 million on March 31, 2009. Due Operational cost/Cost of Goods increased to the above changes, the total of loans, advances Rs. 1,421 million, or 39%, from Rs. 3,609.7 million and deposits has increased by Rs. 2,611.8 million in 2008 to Rs. 5,030.7 million in 2009, increased is from Rs. 11,475.3 million on March 31, 2008 to mainly attributable to Film Production/Distribution Rs. 14,087.1 million on March 31, 2009. expenses, cost of sports AIFF, ICL etc. and overall Current Liabilities and Provisions increase in programming cost. Current Liabilities and Provisions have decreased Personnel Cost by Rs. 475.4 million during the year. Personnel cost increased Rs. 303.2 million, or 49%, Current Liabilities from Rs. 621.0 million in 2008 to Rs. 924.2 million Current liabilities on March 31, 2009 were at in 2009. The rise is mainly on account of Incentive Rs. 4,317.5 million up from Rs. 4,151.8 million on and increments. As a % of sales, the same was 7% March 31, 2008. in 2009 as against Rs. 5% in 2008. Provisions Administrative and Other expenses Provisions made have decreased from Rs. 2,126.9 Administrative and Other expenses decrease from million as on March 31, 2008 to Rs. 1,485.8 million Rs. 953.7 million to Rs. 596 million, a decrease of as on March 31, 2009. Rs. 357.7 million. This is mainly due to additional provision for doubtful debts last year on account Miscellaneous Expenditure (to the extent not BCCI Rs.335 mn . written off or adjusted) Selling and Distribution expenses Miscellaneous Expenditure (to the extent not written off or adjusted) reduced by Rs. 0.05 million Selling and Distribution expenses have increased from Rs. 0.1 million on March 31, 2008 to Rs. 0.05 by Rs. 792.9 million or 69% from Rs. 1,149.8 million million as on March 31, 2009. in 2008 to Rs.1,942.7 million in 2009. This is mainly due to high Carriage Fees paid by the Company STAND-ALONE FINANCIALS for effective carriage of its channels on cable A. RESULTS OF OPERATIONS networks. Non-Consolidated Financial Information for the Operating Profit Year Ended March 31, 2009 compared to the Year Operating profit decrease Rs. 445.1 million, or 9%, Ended March 31, 2008. from Rs. 5,105.1 million in 2008 to Rs.4,660 million Total Revenue in 2009. The operating margin has reduced mainly due to increase in operating cost. Total revenue increased Rs. 1,714.1 million, or 15% from Rs. 11,439.2 million to Rs.13,153.3 million due Financial Expenses to higher Broadcasting Revenue and other income. Financial expenses increased by Rs. 348.9 million Sales and Services or 81% and has gone up from Rs. 429.8 million to Rs. 778.7 million. This includes Rs.443.5 million on Revenue from Sales and Services increased account of losses on Foreign Exchange derivative Rs. 1,682.5 million, or 16% from Rs. 10,419.9 contracts. million to Rs. 12,102.4 million. Major contributor being broadcasting revenue on account of better Depreciation and Amortisation advertisement revenue on its channel. Subscription Depreciation increased by Rs. 13.2 million or 12%, Revenue also has seen significant improvements. from Rs. 106 million to Rs. 119.2 million. Interest and Other Income Profit Before Tax and Exceptional Items Interest and Other income increased by Rs. 31.7 Profit before tax and exceptional items decrease million or 3% from Rs. 1,019.3 million to Rs. 1,051 Rs. 807.3 million or 18%, from Rs. 4,569.2 million in million in 2009 2008 to Rs. 3,761.9 million in 2009. Total Expenditure Exceptional Item Total expenditure increased by Rs. 2159.4 million or Exceptional Item Rs. 25.8 million represent 34% from Rs. 6,334.1 million to Rs. 8,493.5 million. reversal of provision against diminishing in value The major contributor to this is Programming Cost, of investments in free hold land of 2700 sq. mtr. Selling & Marketing Cost and Personnel Cost.

ZEEL Annual Report 2008-2009 70 bought from Padmalaya Telefilms Limited as the Net Current Assets same was written off during the year. The Net current assets have increased from Provision for Taxation Rs. 8,359.8 million to Rs. 10,020.7 million largely due to increase in inventory and reduction in Creditors. Provision for taxation increased to Rs. 1,324.4 million from Rs. 1,592.2 million. Effective Tax Rate Current Assets works out to 34%. Current year includes Rs.634.1 Program/Film Rights million towards excess provision for tax for earlier Program/Film rights held by the company increased years written back. from Rs. 2,357.9 million on March 31, 2008 to Profit After Tax for the Period Rs. 3,177.5 million on March 31, 2009. This is mainly due to acquisition of Film Rights and Film Profit after tax for the year increased by 5% to under Production. Rs. 3,097.4 million from Rs. 2,951.2 million. Sundry Debtors B. FINANCIAL POSITION Sundry Debtors have reduced to Rs. 3,516.8 million Non-Consolidated Financial Position as on March from Rs. 4,082.8 million last year. The reduction 31, 2009 as compared to March 31, 2008. is mainly due to effective realization of debtors Sources of Funds outstanding for more than 180 days. Age of Debtors has down from 120 days in 2008 to 107 days Share Capital, Reserves and Surplus in 2009. During the year, Upon conversion of FCCB, Share Cash and Bank Balances capital has changed from Rs. 433.6 million in 2008 The cash and bank balances lying with the to Rs. 434 million in 2009 Company, as on March 31, 2009 was Rs. 1,104.3 Loan Funds million as against Rs. 222.1 million on March 31, 2008. Total loan funds as on March 31, 2009 stood at Rs. 1,709.4 million down from Rs. 2,042.6 million Loans and Advances mainly due to repayment of certain long-term debt There was an reduction in loans and trade advances during the year. given from Rs. 7,156,7 million on March 31, 2008 to Application of Funds Rs. 6,448.9 million on March 31, 2009. Current Liabilities and Provisions Fixed Assets Current Liabilities and Provisions have decreased The Net Block increased Rs. 178.1 million from by Rs. 1,221.8 million during the year. Rs. 1,221,2 million as on March 31, 2008 to Rs. 1,399.3 million as on March 31, 2009. This is Current Liabilities mainly due to purchase of new Plant and Machinery Current liabilities on March 31, 2009 are at at Mumbai and New Building premises constructed Rs. 2,841.9 million up from Rs. 3,748.5 million on at NOIDA. March 31, 2008. Investments Miscellaneous Expenditure (to the extent not written off or adjusted) Investments have increased from Rs. 13,494.7 million in 2008 to Rs. 13,496.1 million in 2009 an Miscellaneous Expenditure (to the extent not increase of Rs.1.4 million towards subscription of written off or adjusted) reduced by Rs. 0.05 million equity share in ZES Holdings Ltd. and investment from Rs. 0.10 million on March 31, 2008 to Rs. 0.05 in Equity of Last Minute Media Private Limited. million on March 31, 2009.

71 ZEEL Annual Report 2008-2009 AUDITORS’ REPORT To, (c) The Balance Sheet, Profit and Loss account The Members, and Cash Flow statement dealt with by this Zee Entertainment Enterprises Limited report are in agreement with the books of 1. We have audited the attached Balance Sheet of Zee account; Entertainment Enterprises Limited (“the Company”) (d) In our opinion, the Balance Sheet, Profit and as at March 31, 2009, and also the Profit and Loss Loss Account and Cash Flow Statement dealt account and the Cash Flow Statement for the year with by this report comply with the accounting ended on that date, annexed thereto. These financial standards referred to in Section 211 (3C) of statements are the responsibility of the Company’s the Act; management. Our responsibility is to express an (e) On the basis of written representations received opinion on these financial statements based on our from the directors and taken on record by the audit. Board, we report that none of the Director is 2. We conducted our audit in accordance with the disqualified as at March 31, 2009 from being auditing standards generally accepted in India. appointed as a director in terms of Clause (g) Those standards require that we plan and perform of sub-section (1) of Section 274 of the Act; the audit to obtain reasonable assurance about (f) In our opinion and to the best of our information whether the financial statements are free of material and according to the explanations given to us, misstatement. An audit includes examining, on a the said accounts read together the significant test basis, evidence supporting the amounts and accounting policies and notes to accounts as disclosures in the financial statements. An audit also per Schedule 18, give the information required includes assessing the accounting principles used by the Act, in the manner so required and give and significant estimates made by management, a true and fair view in conformity with the as well as evaluating the overall financial statement accounting principles generally accepted in presentation. We believe that our audit provides a India: reasonable basis for our opinion. i) In the case of the Balance Sheet, of the 3. As required by the Companies (Auditors’ Report) state of affairs of the Company as at Order, 2003 (the ‘Order’) issued by the Central March 31, 2009; Government of India in terms of Section 227(4A) of the Companies Act, 1956 (“the Act”), and on the basis ii) In the case of the Profit and Loss Account, of such checks as we considered appropriate and of the Profit for the year ended on that according to the information and explanations given date; and to us, we annex hereto a statement on the matters iii) In the case of the Cash Flow Statement, of specified in paragraph 4 and 5 of the said order. the cash flows for the year ended on that 4. Further to our comments in the annexure referred date to in paragraph (3) above, we report that: (a) We have obtained all the information and explanations, which to the best of our Mohan Bhandari knowledge and belief were necessary for the Partner purpose of our audit; Membership No. 12912 (b) In our opinion, proper books of account as For MGB & Co. required by law have been kept by the Company Chartered Accountants so far as appears from our examination of Mumbai, June 26, 2009 those books; Annexure referred to in Paragraph (3) of Auditors’ Report to the members of Zee Entertainment Enterprises Limited on the accounts for the year ended March 31, 2009 1. a) The Company has maintained proper records to the program, the physical verification was showing full particulars, including quantitative carried out during the year and discrepancies details and situation of its fixed assets. noticed on such verification, which were not b) According to the information and explanations material, have been properly dealt with in the given to us, there is a regular program of books of accounts. physical verification of fixed assets except c) During the year, there was no disposal of lying with third parties which in our opinion substantial part of fixed assets. is reasonable having regard to the size of the 2. a) The inventory has been physically verified Company and the nature of its assets. Pursuant (copyrights of programs/film rights verified

ZEEL Annual Report 2008-2009 72 with reference to title documents/agreements) b) There are no disputed amounts on account by the management at reasonable intervals of Income Tax, Sales Tax, VAT, Service during the year. Tax, Customs Duty, Excise Duty and Cess, b) In our opinion, the procedures of physical which have not been deposited except verification of inventory followed by the Wealth tax of Rs./ Thousand 13 for A.Y. management are reasonable and adequate 1997-98 appeal pending with Income Tax in relation to the size of the Company and the Appellate Tribunal. nature of its business. 10. The Company does not have accumulated losses at the end of the financial year and has not incurred c) In our opinion, the Company has maintained cash losses during the current financial year or in proper records of inventory and no the immediately preceding financial year. discrepancies were noticed on physical verification as compared to the book records. 11. On the basis of our examination of records and according to the information and explanations given 3. a) The Company has not granted any loan, to us, the Company has not defaulted in repayment secured or unsecured to companies, firms or of dues to banks and financial institutions. other parties covered in the register maintained under Section 301 of the Act. 12. According to the information and explanations given to us, the Company has not granted any loans or b) The Company has not taken any loan, secured advances on the basis of security by way of pledge or unsecured from companies, firms or other of shares, debentures and other securities. parties covered in the register maintained under Section 301 of the Act. 13. The Company is not chit fund or a nidhi/ mutual benefit fund/ society. 4. In our opinion and according to the information and explanations given to us, there is adequate 14. The Company is not dealing in or trading in shares, internal control system commensurate with the securities, debentures and other investments. size of the Company and the nature of its business 15. In our opinion and according to the information and with regard to purchases of inventory, fixed assets explanations given to us, the terms and conditions and sale of goods and services. During the course of guarantees given by the Company for loans of our audit, we have not observed any continuing taken by subsidiaries and others are prima facie not failure to correct major weaknesses in the internal prejudicial to the interests of the Company. control system in respect of the aforesaid areas. 16. According to the information and explanations 5. According to the information and explanations given given to us, the term loan raised during the year to us, there are no contracts or arrangements the have been applied for the purposes for which they particulars of which are required to be entered into were raised. the register in pursuance of Section 301 of the Act. 17. On the basis of overall examination of the Balance 6. The Company has not accepted any deposits from Sheet and cash flows of the Company and related the public during the year. information as made available to us, we report that no short-term funds have been used for long-term 7. The Company has an internal audit system investments. commensurate with the size and nature of its business. 18. The Company has not made preferential allotment of shares to companies and parties covered in the 8. We are informed that the Central Government has register maintained under Section 301 of the Act not prescribed the maintenance of cost records during the year. under Section 209 (1) (d) of the Act in respect of the Company’s activities. 19. The Company has not issued any secured debentures during the year. 9. According to the records of the Company examined 20. The Company has not raised any money by public by us and information and explanations given to us: issue during the year. a) The Company has been generally regular 21. Based on audit procedures and according to the except delay in few cases in depositing its information and explanations given to us, no fraud Statutory dues including Provident Fund, on or by the Company has been noticed or reported Investor Education and Protection Fund, during the year. Employees State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax, Service Tax, Mohan Bhandari Customs Duty, Excise Duty, Cess and others as Partner applicable. There are no undisputed amounts Membership No. 12912 payable in respect of the aforesaid dues which have remained outstanding as at March 31, For MGB & Co. 2009 for a period of more than six months Chartered Accountants from the date they became payable. Mumbai, June 26, 2009 73 ZEEL Annual Report 2008-2009 BALANCE SHEET AS AT MARCH 31,

(Rs. in ‘000) Schedule 2009 2008 SOURCES OF FUNDS Shareholders' Funds Share Capital 1 434,007 433,567 Reserves and Surplus 2 22,996,025 20,848,879 23,430,032 21,282,446 Loan Funds Secured Loans 3 1,213,964 708,733 Unsecured Loans 4 495,450 1,333,881 1,709,414 2,042,614 TOTAL 25,139,446 23,325,060 APPLICATION OF FUNDS Fixed Assets 5 Gross Block 1,898,167 1,622,035 Less: Depreciation/Amortization 498,900 400,781 Net Block 1,399,267 1,221,254 Capital Work-in-progress 183,250 183,523 1,582,517 1,404,777 Investments 6 13,496,163 13,494,713 Deferred Tax Assets (Net) [Refer Note 8 (b)] 39,986 65,605 Current Assets, Loans and Advances 7 Program/Film Rights 3,177,504 2,357,884 Inventories 17,259 6,170 Sundry Debtors 3,516,805 4,082,828 Cash and Bank Balances 1,104,344 222,126 Loans and Advances 6,448,945 7,156,774 14,264,857 13,825,782 Less: Current Liabilities and Provisions Current Liabilities 8 2,841,967 3,748,516 Provisions 9 1,402,161 1,717,401 4,244,128 5,465,917 Net Current Assets 10,020,729 8,359,865 Miscellaneous Expenditure 10 51 100 (to the extent not written off or adjusted) TOTAL 25,139,446 23,325,060 Significant Accounting Policies and Notes to Accounts 18

As per our attached report of even date For and on behalf of the Board

Mohan Bhandari Subhash Chandra Chairman Partner Punit Goenka Whole-time Director For MGB & Co. Nemi Chand Jain Director Chartered Accountants Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary ZEEL Annual Report 2008-2009 74 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, (Rs. in ‘000) Schedule 2009 2008 INCOME Sales and Services 11 12,102,425 10,419,923 Other Income 12 1,050,920 1,019,293 TOTAL 13,153,345 11,439,216 EXPENDITURE Operational Cost/Cost of Goods 13 5,030,689 3,609,736 Personnel Cost 14 924,181 620,961 Administrative and Other Expenses 15 595,827 953,678 Selling and Distribution Expenses 16 1,942,767 1,149,788 TOTAL 8,493,464 6,334,163 Operating Profit 4,659,881 5,105,053 Financial Expenses 17 778,737 429,815 Depreciation/Amortization 119,240 106,019 Profit before Tax and Exceptional Item 3,761,904 4,569,219 Less/(Add): Exceptional Item Provision for Dimunition in Value of Investment (Refer Note 4 (b) ) (25,806) 25,806 Profit before Tax 3,787,710 4,543,413 Less/(Add): Provision for Taxation - Current Tax 1,277,143 1,652,550 - Earlier Years (634,116) - - Deferred Tax 25,619 (77,287) - Fringe Benefit Tax 21,618 16,940 Net Profit after Tax 3,097,446 2,951,210 Add : Balance brought forward 7,209,482 5,571,728 Amount available for Appropriation 10,306,928 8,522,938 Appropriations Proposed Dividend 868,014 868,014 Tax on Dividend 145,441 145,442 General Reserve 400,000 300,000 Balance carried to Balance Sheet 8,893,473 7,209,482 TOTAL 10,306,928 8,522,938 Earnings Per Share: (Rs.) Basic before Exceptional Item 7.08 6.87 Basic after Exceptional Item 7.14 6.81 Diluted before Exceptional Item 7.07 6.84 Diluted after Exceptional Item 7.13 6.78 (On distributable profits on shares outstanding)(Face Value Re.1) Significant Accounting Policies and Notes to Accounts 18

As per our attached report of even date For and on behalf of the Board

Mohan Bhandari Subhash Chandra Chairman Partner Punit Goenka Whole-time Director For MGB & Co. Nemi Chand Jain Director Chartered Accountants Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary 75 ZEEL Annual Report 2008-2009 SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000) 2009 2008 SCHEDULE - 1 Share Capital Authorised 500,000,000 Equity Shares of Re.1/- each 500,000 500,000 2,500,000 Cumulative Redeemable Preference Shares of Rs.100/- each 250,000 250,000 750,000 750,000 Issued, Subscribed and Paid up 434,007,111 [433,566,765] Equity Shares of Re.1/- each fully paid up [Refer Note 3] 434,007 433,567 (Out of the above 210,316,212 Equity Shares of Re.1/- each fully paid up were allotted for consideration other than cash against acquisition of Investments) TOTAL 434,007 433,567

SCHEDULE - 2 Reserves and Surplus Capital Redemption Reserve As per last Balance Sheet 70,000 70,000

Securities Premium As per last Balance Sheet 10,288,554 10,295,520 Add: Received during the year 67,136 – Less: Premium on redemption of FCCB [Refer Note 3 (c)] 3,981 6,966 10,351,709 10,288,554 General Reserve As per last Balance Sheet 3,280,843 2,980,843 Add: Appropriated during the year 400,000 300,000 3,680,843 3,280,843 Profit and Loss Account 8,893,473 7,209,482 TOTAL 22,996,025 20,848,879

ZEEL Annual Report 2008-2009 76 SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000) 2009 2008 SCHEDULE - 3 Secured Loans Working Capital Finance from Banks 200,000 43,262 Secured by hypothecation of stocks (other than Program and Films Rights), and advertisement receivables (other than advertisement receivables from Sports Channel) all ranking pari passu with other financing banks. Term Loan From Banks Secured by hypothecation by way of first charge on all domestic cable subscription receivables and program/film rights and further secured – 650,813 by exclusive charge on advertising receivables from sports channel. (Due within a year Rs./Thousand Nil (200,250)) Secured by hypothecation by way of first pari passu charge on immovable 1,000,000 – properties at Noida and subscription receivables. The Charge is to be created within the stipulated period. (Due within a year Rs./Thousand 62,500 (Nil)) Vehicle Loans Secured by hypothecation of specific assets 13,964 14,658 (Due within a year Rs./Thousand 5,855 (6,451)) TOTAL 1,213,964 708,733

SCHEDULE - 4 Unsecured Loans Foreign Currency Convertible Bonds [Refer Note 3] 195,450 233,881 Short Term Loan - From Bank 300,000 1,100,000 TOTAL 495,450 1,333,881

SCHEDULE - 5 Fixed Assets ( at cost )

GROSS BLOCK DEPRECIATION/AMORTIZATION NET BLOCK Description As at Additions Deductions As at Up to For the Deductions Up to As at As at 01/04/08 31/03/09 31/03/08 year 31/03/09 31/03/09 31/03/08 (a) Intangibles Software 24,412 3,793 – 28,205 18,965 488 – 19,453 8,752 5,447 (b) Tangibles Leasehold Land 65,690 – – 65,690 4,236 813 – 5,049 60,641 61,454 Buildings 368,720 50,849 350 419,219 28,086 6,425 83 34,428 384,791 340,634 Plant and Machinery 812,986 183,932 1,400 995,518 211,997 78,343 1,400 288,940 706,578 600,989 Equipments 157,067 35,887 16,010 176,944 51,931 18,224 14,469 55,686 121,258 105,136 Furniture and Fixtures 77,334 1,489 3,201 75,622 19,773 4,700 3,201 21,272 54,350 57,561 Vehicles 48,178 19,487 6,705 60,960 9,346 4,993 1,968 12,371 48,589 38,832 Leasehold Improvements 67,648 8,361 – 76,009 56,447 5,254 – 61,701 14,308 11,201 TOTAL 1,622,035 303,798 27,666 1,898,167 400,781 119,240 21,121 498,900 1,399,267 1,221,254 Previous Year 1,243,298 410,800 32,063 1,622,035 311,182 106,019 16,420 400,781 1,221,254 – Note :- 1) Building includes Rs. 114, the value of shares in a Co-operative Society. 2) Part of Building has been given on Operating Lease

77 ZEEL Annual Report 2008-2009 SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000) 2009 2008 SCHEDULE - 6 Investments Long Term (at cost) Quoted - Non-Trade 1,800,000 Equity Shares of Rs.2/- each of Essel Propack Limited 1,500 1,500 In Associate - Quoted 1,321,200 Equity Shares of Rs.10/- each of Aplab Limited 46,599 46,599 Unquoted - Trade 778,471 [1,692,328] Equity Shares of Rs. 10/- each of Asianet Communication Limited* 119,296 259,342 67,693 [Nil] Equity Shares of Rs. 10/- each of Asianet Infrastructure Limited* 10,374 – 423,082 [Nil] Equity Shares of Rs. 10/- each of Asianet Radio Private Limited* 64,836 – 423,082 [Nil] Equity Shares of Rs. 10/- each of Asianet News Private Limited* 64,836 – 23,436, 7.25% Redeemable Non-Cumulative Preference Shares of Re.1/- each 23 23 of Wire & Wireless (India) Limited In Subsidiaries - Wholly owned - Unquoted 34 Ordinary Shares of USD 1/- each Zee Multimedia Worldwide Limited ZMWL,BVI , (ZMWL) 10,840,000 10,840,000 501 Ordinary Shares of USD 1/- each of Asia Today Limited (50% held through wholly owned subsidiary ZMWL) 1,480,000 1,480,000 25,000 [Nil] Ordinary Shares of USD 1/- each of ZES Holdings Limited 1,150 – 50,000 Equity Shares of Rs. 10/- each of Zee Sports Limited 500 500 In Subsidiaries - Others (Unquoted) 74,000 Equity Shares of Rs.10/- each of Zee Turner Limited 740 740 (Extent of Holding 74 %) 5,000 Equity Shares of Taj Television India Limited (Extent of Holding 50%) 20,558 20,558 In Subsidiaries - Others (Quoted) 4,889,584 Equity Shares of Rs 10/- each of ETC Networks Limited 271,975 271,975 (Extent of Holding 50.18%)** Others 1,000 Equity Shares of Rs 10/- each of Ecool Gaming Solution Private Limited + 5 10 1,000 (Nil) Equity Shares of Rs.10/- each of Pan India Network Private Limited + 5 – 3,000 (Nil) Equity Shares of Rs. 10/- each of Last Minute Media Private Limited 300 – National Savings Certificates 10 10 (Pledged with VAT Authorities) Immoveable Properties Freehold Land [Refer Note 4] 573,456 599,262 Less: Provision for diminution in value – 25,806 All the above securities are fully paid up 573,456 573,456 TOTAL 13,496,163 13,494,713 Aggregate Book Value of all Quoted Investments 320,074 320,074 Market Value of all Quoted Investments 350,008 1,643,572 Aggregate Book Value of all Unquoted Investments 13,176,089 13,174,639

* Consequent to the Scheme of Arrangement for demerger of Asianet Communication Limited, the Company has been alloted shares in the demerged entities. ** The Company has given non disposal undertaking against debentures issued by ETC Networks Limited. + Pursuant to the Scheme of Arrangement for demerger of Pan India Infravest Network Private Limited and Ecool Gaming Solutions Private Limited the Company has been allotted Equity Shares in Pan India Network Private Limited.

ZEEL Annual Report 2008-2009 78 SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31, (Rs. in ‘000) 2009 2008 SCHEDULE – 7 Current Assets, Loans and Advances A. Current Assets Program/Film Rights [Refer Note 2] 3,177,504 2,357,884 Inventories (as taken,valued and certified by the Management) Raw Stock - Tapes 17,259 6,170 Sundry Debtors (Unsecured and considered good, unless otherwise stated) More than six months [includes doubtful Rs./Thousand 466,512 (386,172) 895,634 1,029,665 Others 3,087,683 3,439,335 3,983,317 4,469,000 Less: Provision for doubtful debts 466,512 386,172 [includes Rs./ Thousand 412,849 (612,283) due from Subsidiaries] 3,516,805 4,082,828 Cash and Bank Balances Cash in hand 1,764 1,825 Balances with Scheduled Banks in Current Accounts 1,102,160 218,834 Balances with Scheduled Banks in Deposit Accounts 68 68 Balances with Non-Scheduled Bank in Current Account [Refer Note 5 (d)] 352 1,374 Cheques in hand/transit – 25 1,104,344 222,126 B. Loans and Advances (Unsecured and considered good unless otherwise stated) Loans 5,930,817 6,332,736 Advances (recoverable in cash or in kind or for value to be received) 481,800 810,745 [Refer Note 5 (c)] Less: Provision for doubtful advances 81,514 98,605 400,286 712,140 Deposits 117,842 111,898 6,448,945 7,156,774 TOTAL 14,264,857 13,825,782

79 ZEEL Annual Report 2008-2009 SCHEDULES TO THE BALANCE SHEET AS AT MARCH 31,

(Rs. in ‘000) 2009 2008 SCHEDULE - 8 Current Liabilities* Sundry Creditors: For Goods 1,054,223 803,619 For Expenses and Other Liabilities [Refer note 5 (l)] 887,788 1,060,862 Trade Advances/Deposits received 21,736 40,997 Pending remmittances to Principals 871,073 1,833,085 Unclaimed dividend 7,097 7,601 Interest accrued but not due 50 2,352 [There are no amounts due and outstanding to be credited to Investor Education and Protecton Fund as at March 31, 2009]. [*include Rs./Thousand 924,608 (1,990,109) due to subsidiaries] TOTAL 2,841,967 3,748,516

SCHEDULE - 9 Provisions Provision: for Tax (net of advances) (Refer Note 8 (a)) 303,939 641,175 for Retirement benefits 84,767 62,770 Proposed Dividend (including tax) 1,013,455 1,013,456 TOTAL 1,402,161 1,717,401

SCHEDULE - 10 Miscellaneous Expenditure (to the extent not written off or adjusted) Share Issue and Preliminary Expenses 51 100 TOTAL 51 100

ZEEL Annual Report 2008-2009 80 SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,

(Rs. in ‘000) 2009 2008 SCHEDULE - 11 Sales and Services Broadcasting Revenue 10,098,103 8,980,747 Sales 1,670,595 1,098,079 Commission - Space Selling 333,727 341,097 TOTAL 12,102,425 10,419,923

SCHEDULE - 12 Other Income Dividend - From Subsidiaries (Gross) 12,224 7,679 - From Others (Gross) 5,489 3,303 Interest (Gross) [T.D.S. Rs./Thousand 204,952 (166,423)] 883,061 940,136 Rent Income [T.D.S. Rs./Thousand 7,067 (9,459)] 64,119 19,458 Miscellaneous Income (Includes Balances written back 86,027 48,717 Rs./Thousand 80,057 (43,223) TOTAL 1,050,920 1,019,293

SCHEDULE - 13 Operational Cost/Cost of Goods i. Operational Cost Program/Film Rights Opening [ includes under production Rs./Thousand 4,604 (10,345)] 2,357,884 1,874,330 Add: Production / Acquisition Cost 5,733,914 4,009,373 Less: Closing [includes under production Rs./Thousand 363,760 (4,604)] 3,177,504 2,357,884 4,914,294 3,525,819 Transmission Cost 116,395 81,400 5,030,689 3,607,219 ii. Cost of Goods Purchase - Trade – 2,517 TOTAL 5,030,689 3,609,736

81 ZEEL Annual Report 2008-2009 SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, (Rs. in ‘000) 2009 2008 SCHEDULE - 14 Personnel Cost Salaries, Allowances and Bonus 842,874 570,280 Contribution to Provident and other funds 40,741 25,103 Staff Welfare expenses 40,566 25,578 TOTAL 924,181 620,961

SCHEDULE - 15 Administrative and Other Expenses Rent 67,607 22,921 Rates and Taxes 8,446 8,428 Repairs and Maintenance - Building 6,831 2,655 - Plant and Machinery 17,401 5,470 - Others 9,361 9,662 Insurance 4,136 2,925 Electricity and Water charges 35,986 29,962 Communication expenses 42,681 41,124 Printing and Stationary 11,630 12,081 Miscellaneous expenses (including Directors' sitting fees Rs./Thousand 820 (670)] 20,796 55,419 Service charges/expenses 89,990 57,071 Travelling, Conveyance and vehicle expenses 88,501 85,013 Legal, Professional and Consultancy charges 52,920 57,984 Bad debts and advances written off 72,467 337,430 Provision for doubtful debts and advances 63,249 219,019 Loss on sale/ discard/ shortage of fixed assets 3,776 6,465 Share Issue and Preliminary expenses written off 49 49 TOTAL 595,827 953,678

SCHEDULE - 16 Selling and Distribution Expenses Freight and Forwarding 3,416 1,194 Advertisement and Publicity expenses 584,699 532,477 Commission on sales and services 251,001 199,895 Business Promotion expenses 1,103,651 416,222 TOTAL 1,942,767 1,149,788

SCHEDULE - 17 Financial Expenses Interest on - Fixed Loan 148,848 127,231 - Bonds 1,075 1,178 - Others 122,505 70,874 Discounting and Financing expenses 2,625 1,252 Loss on Foreign exchange derivative contracts/exchange difference 503,684 229,280 TOTAL 778,737 429,815

ZEEL Annual Report 2008-2009 82 SCHEDULE 18: Significant Accounting Policies and Notes to Accounts Background Zee Entertainment Enterprises Limited (“ZEEL” or “the Company”) is incorporated in the State of Maharashtra, India. The Company has been mainly in the following businesses during the year: a) Broadcasting of Satellite Television Channels uplinked from India; b) Advertisement canvassing agent for other television channels; c) Sale of programs including films and program feeds mainly to its subsidiaries for broadcasting on their satellite television channels all over the world; d) Production and Distribution of Films. A. Significant Accounting Policies 1. Basis of Accounting The Financial statements have been prepared under the Historical Cost Convention and on accrual basis in accordance with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956. 2. Use of Estimates The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. Any revision to estimates is recognized prospectively in current and future periods. 3. Fixed Assets a) Fixed assets are stated at original cost of acquisition/ installation net of accumulated depreciation, amortization and impairment losses. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. b) Capital Work in progress is stated at the amount expended upto the date of Balance sheet including advances for capital expenditure. c) Software is capitalized as an intangible asset in the year in which the related software is implemented. 4. Borrowing Costs Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. All other borrowing costs are charged to revenue. 5. Impairment of Assets At each Balance Sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value. 6. Depreciation/Amortization a) Depreciation on fixed assets is provided on Straight Line Method at the rate specified in Schedule XIV to the Companies Act, 1956. b) Premium on Leasehold Land and Leasehold Improvements are amortized over the period of Lease. c) Software is amortized on straight line basis over a period of 36 months from the date of its implementation based on the management estimate of useful life. 7. Investments Investments intended to be held for more than one year, from the date of acquisition, are classified as long-term and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary. Current Investments are carried at cost or fair value, whichever is lower.

83 ZEEL Annual Report 2008-2009 8. Transaction in Foreign Currencies a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. b) Foreign currency monetary assets and liabilities at the Balance Sheet date are reported using the closing rate. Gain and losses arising on account of difference in foreign exchange rates on settlement/translation of monetary assets and liabilities are recognized in the Profit and Loss Account. c) Non-monetary items denominated in foreign currency are carried at the exchange rate prevailing on the date of the transaction. d) In respect of forward exchange contracts assigned to the foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of the Balance Sheet is recognized in the Profit and Loss Account. Any profit or loss arising on settlement/cancellation of forward contract is recognized as income or as expense for the year in which they arise. 9. Revenue Recognition a) Broadcasting Revenue – Advertisement revenue (net of agency commission) is recognized when the related advertisement or commercial appears before the public i.e. on telecast. Subscription revenue is recognized on completion of service. b) Sales are recognized when the risk and rewards of ownership are passed onto the customers, which is generally on dispatch of goods. c) Commission – Space Selling i.e. on Advertisement canvassing is recognized when the related advertisement or commercial appears before the public i.e. on telecast. d) Dividend is recognized when the right to receive the dividend is unconditional. 10. Programs/Film Rights and Inventories a) Programs/Film Rights: Programs/Film rights are stated at lower of net cost (cost minus accumulated amortization/impairment) or realizable value. Where the realizable value on the basis of its useful economic life is less than its carrying amount, the difference is expensed. i. Cost of news/ current affairs/ chat shows/ events including sports events etc. are fully expensed on telecast. ii. Programs (other than (i) above) are amortized over three financial years from the year of telecast. iii. Film telecast rights are amortized on a straight-line basis over the duration of license period or 60 months from the date of purchase, whichever is shorter. iv. Film rights for trade – Cost of respective right is fully expensed on sale. b) Film produced and acquired for distribution: The cost is amortized for Theatrical, Satellite, Music rights, Home Video rights etc. is as under: i. Theatrical rights: - 70% cost is amortized over three months of theatrical release of movie and balance 30% in subsequent three quarters. ii. Satellite rights, Music rights , Home Video rights etc. are expensed on sale. iii. In case of Negative rights 10% is allocated to IPR to be amortized over subsequent nine years. c) Inventory of Raw Stock – Tapes is valued at lower of cost or estimated net realizable value. Cost is taken on First In First Out (FIFO) basis. 11. Retirement Benefits a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered. b) Post employment and other long-term employee benefits are recognized as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the profit and loss account.

ZEEL Annual Report 2008-2009 84 12. Accounting for Taxes on Income a) Current Tax is determined as the amount of tax payable in respect of taxable income for the year as per the provisions of the Income Tax Act, 1961. b) Deferred tax is recognized, subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. 13. Leases a) Finance Lease Assets acquired under Finance Lease are capitalized and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognized as an asset under the lease. b) Operating Lease Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments/revenue under operating leases are recognized as expense/ income on accrual basis in accordance with the respective lease agreements. 14. Miscellaneous Expenditure Share Issue and Preliminary expenses are amortized over a period of 10 years. 15. Earnings Per Share Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive. 16. Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes to accounts. Contingent Assets are neither recognized nor disclosed in the financial statements. B. Notes to Accounts 1. Prior Year Comparatives Previous year’s figures are regrouped, rearranged, or recast wherever necessary to confirm to this year’s classification. Figures in brackets pertain to previous year. 2. a) Program/film rights for broadcasting are intangible assets as defined in AS–26 but considered and shown under current assets as are used for broadcasting in the ordinary course of business. b) In Schedule 13, Operational Cost includes Cost of Program/ Film rights amortized/ impaired, sold etc. The Company has impaired program/ film rights of Rs./Thousand Nil (8,400) during the year. 3. Foreign Currency Convertible Bonds (FCCB) a) The Company had issued 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) of US$10,000 each aggregating to US$100 million, redeemable on April 29, 2009 at 116.24% of their principal amount. The bond holders have an option to convert these bonds into equity shares from and including June 8, 2004 to and including April 22, 2009 at an initial conversion price of Rs.197.24 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$1). Consequent to the restructuring, the conversion price has been reset to Rs. 153.46 per share in terms of the Offering Circular, effective April 18, 2008. b) 9,621 bonds (including 154 bonds during the year) have been converted and balance 379 bonds outstanding as at the date of the balance sheet are redeemed on due date i.e. April 29, 2009. c) Premium payable on redemption of 379 bonds Rs./Thousand 3,981 has been provided and adjusted against Securities Premium as per Section 78 of the Companies Act, 1956. 85 ZEEL Annual Report 2008-2009 d) Out of the Net proceeds of Rs./Thousand 4,269,473 from the issue of the FCCB, Rs./Thousand 4,269,122 has been utilized for the object of the issue, including new projects, modernization and expansion of the existing production units and expansion of wholly owned subsidiary operations and balance pending utilization is included in Cash and Bank balances. 4. Immovable Property a) The Collector of Hyderabad, Andhra Pradesh, had resumed possession of the freehold land (included under Schedule 6 - “Investments”) admeasuring 17,639.64 sq. meters, bought from Padmalaya Telefilms Limited (PTL), registered in the name of the Company and having book value of Rs./Thousand 573,456. The action of the Collector has been set aside by the appellate authorities and the possession of the land is restored to the Company during the year. b) In terms of final settlement agreement entered with PTL during the year, the company has given up its claim on the second piece of land admeasuring 2700 sq. meters having book value of Rs./Thousand 25,806, accordingly value of investments has been written off and liability provided is written back as an exceptional item. 5. Disclosures: a) The Company has been deploying its surplus funds as short-term demand loans/inter corporate deposits mainly to related parties. The parties are regular in repayment of principal and interest, hence are considered good. b) Details of prior period expenses/income included in respective heads in the Profit and Loss Account is as under (Rs./Thousand) Particulars 2009 2008 Excess Interest on Tax Refund accounted, now reversed 23,400 – Business Promotion expenses 7,605 – Subscription Revenue (1,562) – Prior Period Expenses (net) 29,443 – c) Advances include Rs./Thousand 29,249 (126,167) due from subsidiaries. d) Balances with Non Scheduled Bank as at March 31, 2009 with Standard Chartered Bank (Mauritius) is Rs./Thousand 352 (1,374). Maximum Balance during the year is Rs./Thousand 1,374 (3,485). e) Managerial Remuneration: i) The Computation of Net Profit in accordance with the provisions of Section 349 of the Companies Act, 1956 (Rs./Thousand) Particulars 2009 2008 Net Profit before tax as per Profit and Loss Account 3,787,710 4,543,413 Add/(Less): Directors sitting fees 820 670 - Managerial remuneration 26,267 11,451 - Commission paid to Non-Executive Directors 11,751 11,812 - Depreciation 119,240 106,019 - Loss on sale of fixed assets 3,352 6,276 - Provision for doubtful debts 63,249 219,019 - Provision for diminution in the value of Investments (25,806) 25,806 Less: - Depreciation u/s 350 119,240 106,019 Net Profit as per Section 198/349 of the Companies Act, 1956 3,867,343 4,818,448 Maximum permissible remuneration to Whole Time as per Section 193,367 240,922 198/309 Maximum permissible Commission to Non-Executive Directors under 38,673 48,184 Section 198/309 Remuneration and commission restricted as per service agreement 38,018 23,263

ZEEL Annual Report 2008-2009 86 ii) Remuneration paid or provided in accordance with Section 198 of the Companies Act, 1956 to Whole-time Director included in Schedule 14 - Personnel Cost is as under:- (Rs./Thousand) Particulars 2009 2008 Salary and Allowances 21,182 9,300 Contribution to Provident fund 1,908 756 Perquisites 3,177 1,395 Note: Salary and Allowances includes basic salary, leave travel allowance and performance bonus but excludes leave encashment and gratuity provided on the basis of actuarial valuation. iii) Remuneration (salaries and allowances) of Rs./Thousand 3,708 (4,041) is paid to a non-executive director by a Foreign subsidiary company. However, no remuneration is paid to him by the Company. f) Auditors Remuneration included in Miscellaneous Expenses is as under:- (Rs./Thousand) Particulars 2009 2008 Audit fees 5,900 4,900 Tax Audit fees 500 500 Certifications and Tax Services 1,948 5,716 g) Foreign Exchange Difference i) The foreign exchange loss (net) including on forward contracts and cross currency swap of Rs./Thousand 435,392 (240,005) on settlement or realignment of foreign exchange transactions has been adjusted in respective heads in the Profit and Loss account. ii) Foreign currency exposures that are not hedged by derivative instruments as at March 31, (Rs./Thousand) Particulars 2009 2008 Foreign Currency Payables 241,903 393,497 Receivables 454,190 690,745 iii) Derivative contracts entered into by the Company and outstanding: Nominal amounts of derivative contracts (Interest Rate Swaps) entered into by the Company and outstanding as at March 31, 2009 is Rs./Thousand 4,125,600 (3,192,000). h) Employee Stock Option Plan (ESOP) Zee Network Employees Welfare Trust holds 5,000 (5,000) Equity Shares of Re. 1/- each of the Company. i) Micro, Small and Medium Enterprises: The Company has no dues to Micro and Small enterprises during the year ended March 31, 2009, on the basis of information provided by the parties and available on record. j) Capital work in progress includes Capital Advances Rs./Thousand 183,250 (142,427). k) Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) is Rs./Thousand 266,181 (312,662). l) Sundry Creditors for expenses and other liabilities under Current Liabilities include cheques overdrawn Rs./Thousand 11,844 (82,847). m) Dividend Rs./Thousand 1,315 (1,174) unclaimed for the period of more than seven years is transferred to Investor’s Education and Protection Fund. n) During the year, expenses of Rs./Thousand 63,160 (76,980), shared by other related party, are netted off in relevant heads of expenses in Profit and Loss account.

87 ZEEL Annual Report 2008-2009 6. Employee Benefits A) Defined Benefit plans: (Rs./Thousand) Particulars Gratuity (Non Funded) 2009 2008 I. Expenses recognized during the year ended March 31, 2009 1. Current Service Cost 4,393 3,865 2. Interest Cost 2,056 1,443 3. Actuarial Losses/(Gains) 3,374 2,374 Total Expenses 9,823 7,682 II. Net Asset/(Liability) recognized in the Balance Sheet as at March 31, 2009 1. Present value of defined benefit obligation 25,885 19,680 2. Net Asset/(Liability) (25,885) (19,680) III. Reconciliation of Net Asset/(Liability) recognized in the Balance Sheet as at March 31, 2009 1. Net Asset/(Liability) at the beginning of year (19,680) (17,821) 2. Expense as per I above (9,823) (7,682) 3. Employer contribution 3,618 5,823 4. Net Asset/(Liability) at the end of the year 25,885 (19,680) IV. Actuarial Assumptions: 1. Discount rate 7.95% 8.65% 2. Expected rate of salary increase 7.50% 7.50% 3. Mortality LIC (1994-96) LIC (1994-96) Notes: (a) Amounts recognized as an expense and included in the Schedule 14 “Personnel Cost” are gratuity Rs./Thousand 9,823 (7,278) and leave encashment Rs./Thousand 22,137 (16,964). (b) The estimates of future salary increases considered in the actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. B) Defined contribution plan: “Contribution to Provident and other funds” is recognized as an expense in Schedule 14 “Personnel Cost” of the Profit and Loss Account 7. Contingent Liabilities not provided for (Rs./ Thousand) Particulars 2009 2008 a) Corporate Guarantees - For Subsidaries to the extent of loans availed/outstanding 1,565,100 1,204,500 Rs./Thousand 1,001,338 (519,340) - For other related parties, loans outstanding Rs./Thousand 4,526,760 5,362,700 3,949,415 (4,654,185) b) Bank guarantees outstanding 1,810 3,028 c) Claims against the company not acknowledged as debts 132,743 348,334 d) Disputed Direct Taxes 133,517 46,585 e) Letters of credit (net of liability provided) – 7,969 f) Legal cases against the Company Unascertainable Unascertainable

ZEEL Annual Report 2008-2009 88 8. Taxation a) The Company’s claims for certain deductions under Chapter VIA of the Income Tax Act, 1961 for Assessment years 1993-1994 to 1999-2000 is allowed by second appellate authority and effect of those appeal orders resulted in excess provision for tax of Rs./ Thousand 573,794 which is accounted for during the year. Interest of Rs./Thousand 204,053 received on these refunds was however credited to the Profit and Loss account in previous financial year. Further, during the year, the Company has received income tax refund of Rs./Thousand 524,934 relating to Assessment year 2006-2007, pending final tax assessment, interest income of Rs./Thousand 47,904 and excess tax provision are not accounted, and refund received is adjusted against provision for tax. b) The components of deferred tax balances as at March 31: (Rs./Thousand) Particulars 2009 2008 Deferred Tax Assets Provision for retirement benefits 28,813 21,335 Expenses allowable on payment basis – 14,273 Provision for doubtful debts 158,567 131,260 Total 187,380 166,868 Deferred Tax Liabilities Depreciation 118,881 101,229 Others 28,513 34 Total 147,394 101,263 Deferred Tax Assets - Net 39,986 65,605 9. Leases: (a) The Company leases office, residential facilities and plant and machinery (including equipments) etc. under cancellable/non-cancellable agreements that are renewable on a periodic basis at the option of both the lessee and the lessor. The initial tenure of the lease generally is for 11 months to 60 months. (Rs./Thousand)

Particulars 2009 2008 Lease rental charges for the year 154,759 154,541 Future lease rental obligation payable (under non-cancelable lease) Not later than one year 140,683 32,432 Later than one year but not later than five years 187,153 53,429 (b) In respect of assets given under operating lease. (i) The Company has given part of building under cancelable operating lease agreement. The initial term of the lease is for 36 months. (ii) The rental revenue for the year is Rs./Thousand 64,119 (19,458). 10. Related Party Transactions (i) List of Parties where control exists Subsidiary Companies a) Wholly Owned Apac Media Ventures Limited; Asia Business Broadcasting Mauritius Limited; Asia Today Limited; Asia TV Limited; Expand Fast Holding (Singapore) Pte. Limited; Zee CIS Holding LLC; Pan Asia Infrastructure Limited (ceased w.e.f. January 19, 2009); Zee Multimedia (Maurice) Limited; Zee Multimedia Worldwide Limited, Mauritius; Zee Multimedia Worldwide Limited (BVI); Zee Sports Americas Limited; Zee Sports International Limited; Zee Sports Limited; Zee Technologies (Guangzhou) Limited; Zee Telefilms 89 ZEEL Annual Report 2008-2009 Middle East FZLLC; Zee TV South Africa (Proprietary) Limited; Zee TV USA Inc.; ZES Holding Limited*; Zee Entertainment Studios BVI*; ZES Mauritius Limited*; ZES International Limited*; Zee Motion Pictures Private Limited*. * incorporated during the year. b) Others – Direct ETC Networks Limited; Taj Television India Private Limited; Zee Turner Limited. c) Other - Indirect Taj Television Limited, Mauritius (ii) Associates Aplab Limited (extent of holding 26.42%) Broadcast South Asia Limited (extent of holding 48.44%) (Ceased to be w.e.f. May 8, 2008) (iii) Other Related parties with whom transactions have taken place during the year and balance outstanding as on the last day of the year. 25 FPS Media Private Limited; Asian Sky Shop Limited; Asian Satellite Broadcasting Private Limited; Briggs Trading Company Private Limited; Buddha Films Limited; Churu Trading Company Private Limited; Credensys Software Technologies Limited; Digital Media Convergence Limited; Dakshin Media Gaming Solutions Private Limited; Dish TV India Limited; Diligent Media Corporation Limited; Essel Propack Limited; E-City Entertainment (India) Private Limited; E-City Retail Private Limited; E-Cool Gaming Solution Private Limited; Essel Agro Limited; Essel Corporate Services Private Limited; Essel Sports Private Limited; Essel Infraprojects Limited; Essel International Limited; Essel Shyam Communication Private Limited; Essel Shyam Technologies Limited; Integrated Subscribers Management Limited; Ganjam Trading Company Private Limited; Intrex Trade Exchange Limited; Jay Properties Private Limited; Jayneer Capital Private Limited; New Media Broadcasting Private Limited; Pan India Network Infravest Private Limited; Pan India Network Private Limited; Prajatma Trading Company Private Limited; Premier Finance and Trading Co. Limited; Rama Associates Limited; Real Media FZLLC, Taleem Research Foundation; Wire and Wireless (India) Limited; Zee News Limited. Directors/Key Management Personnel Mr. Punit Goenka (iv) Transactions with Related Parties (Rs./Thousands)

Sr. Particulars 2008–2009 2007–2008 A) Fixed Assets / Capital work in progress Assets Purchased during the year Associates – 497 B) Investments Subsidiaries Balance as at April 1, 12,613,773 12,593,773 Call Money Paid – 20,000 Purchased/adjusted during the year 1,150 – Balance as at March 31, 12,614,923 12,613,773 Other Related Parties Balance as at April 1, 1,533 1,533 Balance as at March 31, 1,533 1,533 Associates Balance as at April 1, 46,599 46,599 Balance as at March 31, 46,599 46,599

ZEEL Annual Report 2008-2009 90 Sr. Particulars 2008–2009 2007–2008 C) Sundry Debtors as at March 31, Subsidiaries 412,849 612,283 Other Related Parties 854,682 708,297 D) Loans, Advances and Deposits as at March 31, Subsidiaries 29,249 126,167 Other Related Parties 4,811,662 1,699,578 E) Sundry Creditors as at March 31, Pending Remittance to Principals Subsidiaries 871,073 1,833,085 Purchase of Programs/Goods and Services Subsidiaries 53,535 157,024 Other Related 175,508 142,777 Associates – 260 F) Sales and Services Turnover Sales, Services and Recoveries (Net) Subsidiaries 955,474 816,492 Other Related Parties 275,251 90,232 Subscription Revenue Subsidiaries – 126,610 Advertisement Revenue (Net) Subsidiaries 6,186 – Other Related Parties 99,479 166,694 Commission Space Selling Subsidiaries 65,360 69,418 Other Related Parties 268,367 271,679 G) Other Income Dividend Income Subsidiaries 12,224 7,679 Other Related Parties 2,186 – Associates 3,303 3,303 Interest Income Other Related Parties 885,087 708,124 Miscellaneous Rent Income Subsidiaries 56,242 148 Other Related Parties 48,989 2,796 H) Loans, Advances and Deposits Given Subsidiaries – 20,145 Other Related Parties 11,525,500 11,035,061 I) Purchase of Programs, Goods and Services Subsidiaries 65,332 58,524 Other Related Parties 688,282 139,284 Commission Paid Subsidiaries 145,993 147,758 J) Balances written off Other Related Parties 13,665 – K) Loans and Advances repayment received Other Related Parties 7,620,400 10,178,522 L) Guarantees Corporate Guarantees Given Subsidiaries 1,565,100 1,204,500 Other Related Parties 4,526,760 5,362,700

91 ZEEL Annual Report 2008-2009 Disclosure in respect of material other Related Parties which account for 10% or more of the transactions during the year: a) Fixed asset purchased include from Aplab Limited Rs./Thousand Nil (497). b) Loans, Advances and Deposits given include to Zee Sports Limited Rs./Thousand Nil (20,115); Briggs Trading Co. Private Limited Rs./Thousand Nil (1,410,000); Churu Trading Co. Private Limited Rs./Thousand 3,770,500 (2,186,000); Ganjam Trading Co. Private Limited Rs./Thousand Nil (1,492,522); Prajatma Trading Co. Private Limited Rs./Thousand 2,170,000 (1,605,000); Dish TV India Limited Rs./Thousand 2,430,000 (3,177,000); Wire and Wireless (India) Limited Rs./Thousand 1,550,000 (1,070,000); Premier Finance and Trading Co. Limited Rs./Thousand 1,605,000 (Nil). c) Loans, Advances and Deposits repayment received includes Briggs Trading Co. Private Limited Rs./Thousand Nil (1,410,000); Churu Trading Co. Private Limited Rs./Thousand 3,770,500 (2,186,000); Ganjam Trading Co. Private Limited Rs./Thousand Nil (1,492,522); Prajatma Trading Co. Private Limited Rs./Thousand 2,170,000 (1,605,000); Dish TV India Limited Rs./Thousand Nil (2,900,000); Wire and Wireless India Limited Rs./Thousand 70,000 (Nil); Premier Finance and Trading Co. Limited Rs./Thousand 1,605,000 (Nil). d) Loans, Advances and Deposits balances outstanding at year end include Zee Sports Limited Rs./Thousand 29,249 (31,704); Zee Turner Limited Rs./Thousand Nil (94,463); Dish TV India Limited Rs./Thousand 2,430,000 (7,81,315); Wire and Wireless (India) Limited Rs./Thousand 23,00,817 (820,817). e) Sundry Creditors balances include Pending Remittances to Principals pending to Asia Today Limited Rs./Thousand 869,628 (1,688,837); Amounts due for Purchase of Programs, Goods and Services to Asia Today Limited Rs./Thousand 12,448 (88,157); ETC Networks Limited Rs./Thousand 41,085 (48,847); Dish TV India Limited Rs./Thousand Nil (98,929); Diligent Media Corporation Limited Rs./Thousand Nil (15,118); Wire and Wireless (India) Limited Rs./Thousand 92,984 (Nil); Essel Sports Private Limited Rs./Thousand 70,044 (Nil). f) Sales, Services and Recoveries (Net) include to Asia Today Limited Rs./Thousand 929,083 (785,724); Dish TV India Limited Rs./Thousand 4,475 (9,957); Zee News Limited Rs./Thousand 245,694 (66,260); Real Media FZ LLC. Rs./Thousand 5,958 (9,461); Subscription Revenue from Asia Today Limited Rs./Thousand Nil (126,610); Advertisement Revenue from Asia Sky Shop Rs./Thousand 12,085 (Nil); Dish TV India Limited Rs./Thousand 83,427 (166,694); ETC Networks Limited Rs./Thousand 6,186 (Nil); Commission - Space Selling from Asia Today Limited Rs./Thousand 65,360 (29,144); Zee TV USA Inc. Rs./Thousand Nil (37,436); Zee News Limited Rs./ Thousand 268,367 (271,679). g) Other income include Dividend Income from ETC Networks Limited Rs./Thousand 12,224 (7,679); Aplab Limited Rs./Thousand 3,303 (3,303); Essel Propack Limited Rs./Thousand 2,186 (Nil); Interest income from Briggs Trading Co. Private Limited Rs./Thousand Nil (6,208); Churu Trading Co. Private Limited Rs./Thousand 258,147 (120,272); Ganjam Trading Co. Private Limited Rs./Thousand Nil (144,805); Prajatma Trading Co. Private Limited Rs./Thousand 256,625 (136,071); Dish TV India Limited Rs./Thousand 68,917 (198,237); Premier Finance & Trading Co. Private Limited. Rs./Thousand 173,521 (Nil); Wire and Wireless (India) Limited Rs./Thousand 127,877 (Nil); Miscellaneous/Rent income from Zee Turner Limited Rs./Thousand 14,330 (148); Asia Today Limited Rs./Thousand 39,829 (Nil); ETC Networks Limited Rs./Thousand 2,083( Nil); Asian Sky Shop Limited Rs./Thousand Nil (316); Diligent Media Corporation Limited Rs./Thousand 2,081 (462); Pan India Network Infravest Private Limited Rs./Thousand Nil (669); Dish TV India Limited Rs./Thousand 25,132 (Nil); Zee News Limited Rs./Thousand 20,441 (Nil); Digital Media Convergence Limited Rs./Thousand Nil (1,349); Wire and Wireless (India) Limited Rs./Thousand 1,335 (Nil) h) Purchase of Programs, Goods and Services from Asia Today Limited Rs./Thousand 59,212 (46,175); Taj TV Limited – Mauritius Rs./Thousand 3,529 (8,095); Dish TV India Limited Rs./Thousand 20,886 (13,660); Essel Corporate Services Private Limited Rs./Thousand 134,872 (44,315); Essel Sports Private Limited Rs./Thousand 262,603 (59,500); Wire and Wireless (India) Limited Rs./Thousand 250,321 (Nil).; Commission paid to Zee Turner Limited Rs./Thousand 145,992 (120,342); Balances written off 25 FPS Media Private Limited Rs./Thousand 13,665 (Nil). i) Corporate guarantees include in respect Asia Today Limited Rs./Thousand 1,565,100 (1,204,500); Dish TV India Limited Rs./Thousand 3,305,760 (1,877,700); Wire and Wireless India Limited Rs./Thousand 921,000 (2,835,000). Notes: i) Details of Remuneration to Whole-time Director is disclosed in Note 5 (e). ii) Sharing of expenses has been disclosed in Note 5 (n).

ZEEL Annual Report 2008-2009 92 12. Disclosures as required by the amendment to Clause 32 of the listing agreement vide SEBI Circular No. 2/2003 of January 10, 2003: a) Loans given to Subsidiaries and Others: Nil b) Investments by Loanee in the shares of the Company as at March 31:

Loanee No. of fully paid up No. of fully paid up equity shares equity shares 2009 2008 Churu Trading Co. Private Limited 3,576,000 3,576,000 Briggs Trading Co. Private Limited 4,451,262 4,451,262 Prajatma Trading Co. Private Limited 7,574,500 7,574,500 Ganjam Trading Co. Private Limited 6,016,500 6,016,500 Premier Finance & Trading Co. Limited 6,176,000 Not Loanee 13. Additional Information required to be given pursuant to Part II of Schedule VI to the Companies Act, 1956 is as follows: The Company is in the business of producing television programs and is not subject to any license hence licensed capacity is not given. Further the nature of business of the Company is such that the installed capacity is not quantifiable. a) Quantitative Information. The details of opening stock, acquisitions/productions, sales and closing stock are as under: (Refer Note 2) Quantity in numbers and Amount in Rs./Thousand

Particulars 2009 2008 Qty. Amount Qty. Amount Opening Stock Program/Film Rights – 2,353,280 – 1,863,985 Total – 2,353,280 – 1,863,985 Acquisitions/Productions Program/Film Rights – 5,733,915 – 4,009,373 Others – Electronic Devices –-1 2,517 Total – 5,733,915 4,011,890 Sales & Services Broadcasting Revenue – 10,098,103 – 8,980,747 Program/ Film Rights/ Others – 1,670,595 – 1,095,512 Commission – 333,727 – 341,097 Others – Electronic Devices - 1 2,567 Total – 12,102,425 – 10,419,923 Closing Stock Program/Film Rights – 2,813,744 – 2,353,280 Total – 2,813,744 – 2,353,280 (b) Consumption of Raw Stock (included in Program/Film Rights above) (Quantity in numbers, Amount in Rs./Thousand)

Particulars 2009 2008 Qty. Amount Qty. Amount Raw Tapes/Discs 53,041 48,562 57,986 34,715

93 ZEEL Annual Report 2008-2009 (c) Value of Imported and Indigenous Raw Stock consumed (% denotes Percentage, Amount in Rs./Thousand)

Particulars 2009 2008 % Amount % Amount Imported 9.80 4,761 2.16 752 Indigenous 90.20 43,801 97.84 33,963 Total 100.00 48,562 100.00 34,715 (d) Other Information (Rs./Thousand)

Particulars 2009 2008 Earning in Foreign Exchange FOB Value of Exports 893,415 797,075 Broadcasting Revenue 34,632 155,294 Others 21,605 30,321 Remittances in Foreign Currency Net Dividend remitted 172,803 348,256 No. of Shareholders (Nos.) 133 1,924 No. of Equity Shares held (Nos.) 86,401,552 232,170,943 Expenditure in Foreign Currency (On Accrual Basis) Travelling expenses 4,970 6,874 Transponder rent 64,485 63,614 Programming Expenses 31,175 38,712 Repairs and Maintenance 1,661 75 Interest expense 1,168 1,832 Others 20,082 40,029 CIF Value of Imports Capital Equipment 169,774 104,032 Electronic Devices - 2,517 Raw Tapes 4,907 845 14. Earnings per share (EPS) -

Sr. Particulars 2009 2008 a. Profit after Tax before Exceptional Item (Rs./Thousand) 3,071,640 2,977,016 b. Profit after Tax after Exceptional Item (Rs./Thousand) 3,097,446 2,951,210 Adjustment for the purpose of Diluted EPS: Add: Interest on Foreign Currency Convertible Bonds 1,075 1,178 Less: Tax on above 365 400 c. Profit after Tax before Exceptional Item for Diluted EPS (Rs./Thousand) 3,072,350 2,977,792 d. Profit after Tax after Exceptional Item for Diluted EPS (Rs./Thousand) 3,098,156 2,951,985 e. Weighted Average number of equity shares for Basic EPS (Nos.) 433,930,729 433,566,765 Add: Weighted Average outstanding option deemed to be issued for no 1,083,712 1,524,058 consideration (Nos.)

ZEEL Annual Report 2008-2009 94 Sr. Particulars 2009 2008

f. Weighted Average number of equity shares for Diluted EPS (Nos.) 434,726,859 435,090,823

Nominal value of equity shares (Re.) 1 1

g. Basic EPS before Exceptional Item (Rs.) 7.08 6.87

h. Basic EPS after Exceptional Item (Rs.) 7.14 6.81

i. Diluted EPS before Exceptional Item (Rs.) 7.07 6.84

j. Diluted EPS after Exceptional Item (Rs.) 7.13 6.78

16. Segmental Reporting The Financial Statements of the Company contain both the consolidated financial statements as well as the separate financial statements of the parent company. Hence, the Company has presented the segmental information on the basis of the consolidated financial statements as permitted by Accounting Standard – 17.

As per our attached report of even date For and on behalf of the Board Mohan Bhandari Partner Subhash Chandra Chairman Punit Goenka Whole-time Director For MGB & Co. Nemi Chand Jain Director Chartered Accountants Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary

95 ZEEL Annual Report 2008-2009 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I. REGISTRATION DETAILS REGISTRATION NO. 28767 STATE CODE 11 DATE MONTH YEAR BALANCE SHEET DATE 31 03 2009 II. CAPITAL RAISED DURING THE YEAR (AMOUNT RS. IN THOUSAND) PUBLIC ISSUE RIGHTS ISSUE NIL NIL BONUS ISSUE PREFERENTIAL ALLOTMENT NIL NIL III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT RS. IN THOUSAND) TOTAL LIABILITIES TOTAL ASSETS 25139446 25139446 SOURCES OF FUNDS PAID-UP CAPITAL RESERVES AND SURPLUS 434007 22996025 SHARE APPLICATION MONEY SECURED LOANS NIL 1213 964 UNSECURED LOANS 495450 APPLICATION OF FUNDS NET FIXED ASSETS INVESTMENTS 1582 517 13496163 NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE 10020729 51 OTHER ASSETS DEFERRED TAX LIABILITIES NIL 3998 6 IV. PERFORMANCE OF COMPANY (AMOUNT RS. IN THOUSAND) TURNOVER*TOTAL EXPENDITURE 13153345 9365 635

(*INCLUDES OTHER INCOME) + - PROFIT/(LOSS) BEFORE TAX BEFORE EXCEPTIONAL ITEMS + - PROFIT/(LOSS) AFTER TAX AND EXCEPTIONAL ITEM + 37 61 90 4 + 30 97 44 6 EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS (WEIGHTED) (RS.) DIVIDEND RATE (%) 7.08 200 V. GENERIC NAMES OF PRINCIPAL PRODUCTS OF THE COMPANY (AS PER MONETARY TERMS) ITEM CODE NO. (ITC CODE) 85249001

PRODUCT DESCRIPTION RECORDED V I D E O C A S SE TTES For and on behalf of the Board

Subhash Chandra Chairman Punit Goenka Whole-time Director Nemi Chand Jain Director

Place : Mumbai Hitesh Vakil Director - Finance Date : June 26, 2009 M. Lakshminarayanan Company Secretary

ZEEL Annual Report 2008-2009 96 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31,

(Rs. in ‘000) Particulars 2009 2,008 A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before taxation and exceptional items 3,761,904 4,569,219 Adjustments for : Depreciation/Amortization 119,240 106,019 Share issue and preliminary expenses written off 49 49 Provision for doubtful debts/advances 63,249 219,019 Exchange adjustments 29,143 – Loss on Foreign exchange derivative contracts 443,519 261,172 Loss on sale/ discard/ shortage of fixed assets (net) 3,352 6,276 Interest expense 272,428 199,283 Dividend income (17,713) (10,982) Interest income (883,061) (940,136) Operating profit before working capital changes 3,792,110 4,409,919 Adjustments for : (Increase)/Decrease in trade and other receivables 740,918 (1,358,164) (Increase) in Programs/Film Rights and Inventories (830,709) (487,204) Increase/(Decrease) in trade and other payables (885,726) 429,821 Cash Generated from Operations 2,816,593 2,994,372 Direct taxes paid - For current year (1,001,881) (1,036,044) Net Cash flow from Operating Activities 1,814,712 1,958,328 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets/Capital Work-in-Progress (303,523) (352,692) Purchase of Investments (1,450) (61,624) Loans to others (12,761,580) (15,860,522) Loans repaid by others 13,163,499 15,393,716 Dividend received 17,713 10,982 Sale of fixed assets 3,192 9,366 Interest received 976,632 806,119 Net Cash Flow from Investing Activities 1,094,483 (54,655) C. CASH FLOW FROM FINANCING ACTIVITIES Dividend paid (including dividend tax) (1,013,959) (761,010) Interest paid (274,730) (200,258) Loss on Foreign exchange derivative contracts (443,519) (261,172)

97 ZEEL Annual Report 2008-2009 (Rs. in ‘000) Particulars 2009 2,008 Proceeds from short term borrowings 500,000 1,400,000 Proceeds from long term borrowings 1,004,855 7,948 Repayments of short term borrowings (1,143,262) (1,748,130) Repayments of long term borrowings (650,813) (150,188) Payment under finance leases (5,549) (7,532) Net Cash flow from Financing Activities (2,026,977) (1,720,342) Net Cash Flow during the year (A+B+C) 882,218 183,331 Cash and Cash Equivalents at the beginning of the year 222,126 38,795 Cash and Cash Equivalents at the end of the year 1,104,344 222,126 Notes to the Cash Flow Statement for the year ended March 31, 2009 1. Previous year's figures have been regrouped, recast wherever necessary. 2. Conversion of FCCB (Refer Note 3 of Notes to Accounts) is not considered in the above cash flow statement being a non cash transaction 3. Cash and Cash Equivalents at the end of the year: Cash in hand 1,764 1,825 Balances with Scheduled Banks in Current Accounts 1,102,160 218,834 Balances with Scheduled Banks in Deposit Accounts 68 68 Balances with Non-Scheduled Banks in Current Accounts 352 1,374 Cheques in hand/transit 25 Total 1,104,344 222,126

As per our attached report of even date For and on behalf of the Board Mohan Bhandari Partner Subhash Chandra Chairman Punit Goenka Whole-time Director For MGB & Co. Nemi Chand Jain Director Chartered Accountants Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary

ZEEL Annual Report 2008-2009 98 LAST FIVE YEARS FINANCIAL HIGHLIGHTS

Consolidated Standalone Year Ending March 31 2009 2008 2007 2006 2005 2009 2008 2007 2006 2005 Revenue Account Income from Operations 21,773 18,354 15,159 16,543 13,252 12,102 10,420 8,677 8,314 6,473 Total Expenses 16,293 12,931 11,955 13,848 8,900 8,493 6,334 6,556 7,525 4,091 Operating Profit 5,480 5,423 3,204 2,695 4,352 3,609 4,086 2,121 789 2,382 % to Income from Operations 25% 30% 21% 16% 33% 30% 39% 24% 9% 37% Other Income 1,572 1,138 747 640 521 1,051 1,019 614 510 458 PBIDT 7,053 6,561 3,951 3,335 4,873 4,660 5,105 2,735 1,299 2,840 Financial Expenses 1,339 516 334 188 206 779 430 189 140 165 Depreciation / Amortisation 310 232 185 360 329 119 106 85 148 139 Profit Before Tax & Exceptional Items 5,403 5,813 3,432 2,787 4,338 3,762 4,569 2,461 1,011 2,536 Exceptional Items (26) 26 – (20) 141 (26) 26 – (19) 53 Taxation 208 1,627 999 547 1,023 690 1,592 799 339 860 Profit After Tax & before exceptional items 5,195 4,186 2,433 2,240 3,315 3,072 2,977 1,662 672 1,676 Profit After Tax & before minority interest / share of 5,221 4,160 2,433 2,260 3,174 3,097 2,951 1,662 691 1,623 profits/(losses) in associates Add: Share of Results of Associates 1 5 10 (46) 7 Less: Minority Interest 99 333 68 71 56 Profit After Tax for the year 5,124 3,832 2,375 2,143 3,125 3,097 2,951 1,662 691 1,623 % to Total Income 22% 20% 15% 12% 23% 24% 26% 18% 8% 23% Dividend 868 868 650 435 413 868 868 650 435 413 Dividend Rate 200% 200% 150% 100% 100% 200% 200% 150% 100% 100% Capital Account Share Capital - Equity 434 434 434 413 412 434 434 434 413 412 Share Application Money – – – Share Capital - Preference – – – Reserves & Surplus 33,561 28,177 25,747 20,873 24,124 22,996 20,849 18,918 15,037 20,955 Deferred Tax Balances (113) (243) (75) (148) (219) (40) (66) 12 (6) (55) Minority Interest 948 1,117 818 458 397 – Loan Funds 5,757 3,866 3,226 4,772 5,304 1,709 2,043 2,541 4,712 5,221 Capital Employed 40,587 33,351 30,150 26,368 30,018 25,099 23,259 21,904 20,156 26,533 Fixed Assets 18,093 15,605 14,841 12,948 15,373 1,583 1,285 1,054 1,153 1,792 Investments 1,271 2,516 2,326 3,024 3,744 13,496 13,495 13,459 13,448 15,475 Net Current Assets 21,223 15,230 12,981 10,384 10,851 10,021 8,480 7,391 5,549 9,252 Miscellaneous Expenditure (to the extent not w/o) – – 2 12 51 – – – 6 14 Capital Deployed 40,587 33,351 30,150 26,368 30,018 25,099 23,259 21,904 20,156 26,533 Closing market price per share of Re.1 106 245 251 238 139 106 245 251 238 139 Market capitalisation 46,157 106,072 108,674 98,372 57,297 46,157 106,072 108,674 98,372 57,297

99 ZEEL Annual Report 2008-2009 PERFORMANCE RATIOS - AN ANALYSIS

Consolidated Standalone Year Ending March 31 2009 2008 2007 2006 2005 2009 2008 2007 2006 2005 Financial Performance Advertisement Income / Income from Operations (%) 48.6% 50.7% 46.4% 39.7% 43.0% 64.9% 69.8% 58.9% 45.4% 50.2% Subscription Income / Income from Operations (%) 41.5% 40.5% 43.9% 43.4% 50.6% 18.5% 16.4% 19.1% 21.2% 32.1% Operating Profit / Income from Operations (%) 25.2% 29.5% 21.1% 16.3% 32.8% 29.8% 39.2% 24.4% 9.5% 36.8% Other Income / Total Income (%) 6.7% 5.8% 4.7% 3.7% 3.8% 8.0% 8.9% 6.6% 5.8% 6.6% Programming Cost / Income from Operations (%) 32.6% 28.2% 31.5% 25.7% 19.7% 40.6% 33.8% 46.1% 42.5% 29.9% Personnel Cost / Income from Operations (%) 9.3% 7.8% 6.7% 6.6% 6.5% 7.6% 6.0% 4.7% 5.3% 6.0% Selling and Admin Expenses / Income from 20.4% 20.0% 18.9% 20.7% 18.8% 21.0% 20.2% 15.7% 20.3% 19.7% Operations (%) Total Operating Cost / Income from Operations (%) 74.8% 70.5% 78.9% 83.7% 67.2% 70.2% 60.8% 75.6% 90.5% 63.2% Financial Expenses / Income from Operations (%) 6.2% 2.8% 2.2% 1.1% 1.6% 6.4% 4.1% 2.2% 1.7% 2.5% Tax / Income from Operations (%) 1.0% 8.9% 6.6% 3.3% 7.7% 5.7% 15.3% 9.2% 4.1% 13.3% PAT for the year / Total Income (%) 21.9% 19.7% 14.9% 12.5% 22.7% 23.5% 25.8% 17.9% 7.8% 23.4% Tax / PBT (%) 3.8% 28.0% 29.1% 19.6% 23.6% 18.3% 34.8% 32.5% 33.6% 33.9% Dividend Payout / PAT for the year (%) 16.9% 22.6% 27.4% 19.3% 13.2% 28.0% 29.4% 39.1% 59.7% 25.4% Dividend Payout / Effective Networth (%) 2.6% 3.0% 2.5% 2.0% 1.7% 3.7% 4.1% 3.4% 3.2% 2.1% Balance Sheet Debt-Equity ratio (Total loans / Eff. Networth) (%) 16.9% 13.5% 12.3% 22.4% 21.7% 7.3% 9.6% 13.1% 34.7% 26.8% Current ratio (Current assets / Current liabilities) (x) 4.7 3.4 3.5 3.4 3.4 3.4 2.6 2.8 2.3 3.2 Capital Output Ratio (Inc from Ops / Eff. Capital 0.5 0.6 0.5 0.6 0.4 0.5 0.4 0.4 0.5 0.3 employed) (x) Fixed assets Turnover (Inc from Ops / Fixed 7.5 6.9 8.0 7.5 3.1 7.6 8.1 8.2 7.2 3.6 assets) (x) Cash & cash equivalents / Total Eff. Capital 4.7% 5.7% 3.2% 4.9% 5.2% 4.4% 1.0% 0.2% 1.3% 1.6% employed (%) RONW (PAT for the year / Eff. Networth) (%) 15.1% 13.4% 9.1% 10.1% 12.8% 13.2% 13.9% 8.6% 5.1% 8.3% ROCE (PBIT / Eff. Capital employed) (%) 16.6% 19.0% 12.5% 11.3% 15.2% 18.1% 21.4% 12.1% 6.3% 10.9% Per Share Data # Revenue per share (Rs.) 53.8 45.0 36.7 41.7 33.4 30.3 26.4 21.4 21.4 16.8 Dividend per share (Rs.) 2.00 2.00 1.50 1.00 1.00 2.00 2.00 1.50 1.00 1.00 Indebtedness per share (Rs.) 13.3 8.9 7.4 11.6 12.9 3.9 4.7 5.9 11.4 12.7 Book value per share (Rs.) 78.3 66.0 60.4 51.6 59.4 54.0 49.1 44.6 32.9 47.3 Earnings per share (after prior period 11.8 8.8 5.5 5.2 7.6 adjustments) (Rs.) PE Ratio - Price / EPS Ratio 9.0 27.7 45.8 45.9 18.3 (Share Price as of March 31,) (x)

ZEEL Annual Report 2008-2009 100 AUDITORS’ REPORT

To, included in respect of those associates, is based The Board of Directors solely on the report of the other auditors. Zee Entertainment Enterprises Limited 4. We draw reference to Note 18(b) regarding receivable of Rs./Thousand 313,046 claimed from a competing 1. We have audited the attached Consolidated Balance broadcaster, which is under litigation. In the opinion Sheet of Zee Entertainment Enterprises Limited of the management, based on the legal opinion, the (“the Company”) and its subsidiaries and associate said claim is considered as good and recoverable. Companies (“the Group”) as at March 31, 2009, 5. We report that the Consolidated Financial Statements the Consolidated Profit and Loss Account and the have been prepared by the Company in accordance Consolidated Cash Flow Statement for the year then with the requirements of the Accounting Standard ended on that date, annexed thereto. These financial (AS) 21 “Consolidated Financial Statements” and statements are the responsibility of the Company’s AS 23 “Accounting for Investments in Associates”, management. Our responsibility is to express an issued by the Institute of Chartered Accountants opinion on these financial statements based on our of India and on the basis of the separate audited audit. financial statements of the Company, its subsidiaries 2. We conducted our audit in accordance with the and associates. auditing standards generally accepted in India. 6. On the basis of information and explanations given Those standards require that we plan and perform to us and on consideration of the separate audit the audit to obtain reasonable assurance about reports on individual audited financial statements whether the financial statements are free of material of the Company, its subsidiaries and associates misstatements. An audit includes examining on a and subject to Para (3) above, we are of the opinion test basis, evidence supporting the amounts and that disclosures in the financial statements. An audit also includes assessing the accounting principles used (a) The Consolidated Balance Sheet gives a true and significant estimates made by the management, and fair view of the consolidated state of affairs as well as evaluating the overall financial statement of the Group as at March 31, 2009; presentation. We believe that our audit provide a (b) The Consolidated Profit and Loss Account gives reasonable basis for our opinion. a true and fair view of the consolidated result of 3. (a) The financial statements of subsidiaries with operations of the Group for the year ended on total assets (net) of Rs. /Thousand 17,818,445 that date; and as at March 31, 2009 and total revenues (net) (c) The Consolidated Cash Flow Statement gives a of Rs./Thousand 9,980,182 for the year ended true and fair view of the consolidated cash flows on that date have not been audited by us. of the Group for the year ended on that date. These financial statements have been audited by other auditors whose report has been furnished to us and in our opinion, in so far it relates to the amounts included in respect of Mohan Bhandari those subsidiaries, is based solely on the report Partner of the other auditors. Membership No. 12912 (b) The financial statements of associates for the year ended March 31, 2009 has been audited by For and on behalf of other auditors whose report has been furnished MGB & Co. to us. The profit of such associates considered Chartered Accountants for consolidation is Rs./Thousand 1,357. Our opinion, in so far it relates to the amounts Mumbai, June 26, 2009

101 ZEEL Annual Report 2008-2009 CONSOLIDATED BALANCE SHEET AS AT MARCH 31,

(Rs. in '000) Schedule 2009 2008 SOURCES OF FUNDS Shareholders' Funds Share Capital 1 434,007 433,567 Reserves and Surplus 2 33,560,988 28,177,252 33,994,995 28,610,819 Minority Interest 947,659 1,117,148 Loan Funds Secured Loans 3 5,261,451 2,531,740 Unsecured Loans 4 495,450 1,333,881 5,756,901 3,865,621 TOTAL 40,699,555 33,593,588 APPLICATION OF FUNDS Fixed Assets 5 Gross Block 18,931,540 16,225,048 Less: Depreciation/Amortisation 1,508,466 1,238,984 Net Block 17,423,074 14,986,064 Capital work-in-progress 669,444 619,304 18,092,518 15,605,368 Investments 6 1,271,146 2,515,401 Deferred Tax Assets (Net) [Refer Note 23(c)] 112,828 243,057 Current Assets, Loans and Advances 7 Program/Film rights 4,532,418 2,441,848 Inventories 43,931 31,931 Sundry Debtors 6,436,508 5,907,177 Cash and Bank Balances 1,926,334 1,652,024 Loans and Advances 14,087,139 11,475,349 27,026,330 21,508,329 Less: Current Liabilities and Provisions Current Liabilities 8 4,317,532 4,151,814 Provisions 9 1,485,786 2,126,865 5,803,318 6,278,679 Net Current Assets 21,223,012 15,229,650 Miscellaneous Expenditure 10 51 112 (to the extent not written off or adjusted) TOTAL 40,699,555 33,593,588 Significant Accounting Policies and Notes to Accounts 18

As per our attached report of even date For and on behalf of the Board Mohan Bhandari Partner Subhash Chandra Chairman Punit Goenka Whole-time Director For MGB & Co. Nemi Chand Jain Director Chartered Accountants Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary

ZEEL Annual Report 2008-2009 102 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,

(Rs. in '000) Schedule 2009 2008 INCOME Sales and Services 11 21,773,097 18,353,653 Other Income 12 1,572,205 1,138,120 TOTAL 23,345,302 19,491,773 EXPENDITURE Operational Cost/Cost of Goods 13 9,809,652 7,817,687 Personnel Cost 14 2,031,154 1,438,049 Administrative and other Expenses 15 1,860,230 2,132,196 Selling and Distribution Expenses 16 2,591,618 1,542,734 TOTAL 16,292,654 12,930,666 Operating Profit 7,052,648 6,561,107 Financial Expenses 17 1,339,098 515,925 Depreciation/Amortization 310,333 232,329 Profit Before Tax and Exceptional Items 5,403,217 5,812,853 (Add)/Less: Exceptional Items (25,806) 25,806 Provision for Dimunition in Value of Investment [Refer Note 17 (b)] Profit before Tax and After Exceptional Items 5,429,023 5,787,047 (Add)/Less: Provision for Taxation - Current Tax - current year 1,501,077 1,741,313 - earlier period (1,425,204) 31,252 - Deferred Tax 107,877 (167,668) - Fringe Benefit Tax 24,134 21,740 Profit after tax and before minority interest/share of profits in associates 5,221,139 4,160,410 Add: Share of results of associates 1,357 5,141 Less: Minority Interest 98,870 332,883 Net Profit after tax 5,123,626 3,832,668 Less: Adjustments pursuant to scheme of Amalgamation – 593,201 Add: Balance brought forward 14,775,431 12,878,540 Amount available for appropriation 19,899,057 16,118,007 Appropriations Proposed Dividend 868,014 868,014 Tax on Dividend 145,441 149,562 General Reserve 410,000 325,000 Capital Redemptional Reserve 29,700 – Balance carried to Balance Sheet 18,445,902 14,775,431 TOTAL 19,899,057 16,118,007 Earnings Per Share: (Rs.) Basic before Exceptional Item 11.75 8.90 Basic after Exceptional Item 11.81 8.84 Diluted before Exceptional Item 11.73 8.87 Diluted after Exceptional Item 11.79 8.81 (On distributable profits on shares outstanding)(Face Value Re.1) Significant Accounting Policies and Notes to Accounts 18 As per our attached report of even date For and on behalf of the Board Mohan Bhandari Partner Subhash Chandra Chairman Punit Goenka Whole-time Director For MGB & Co. Nemi Chand Jain Director Chartered Accountants Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary 103 ZEEL Annual Report 2008-2009 SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,

(Rs. in ’000) 2009 2008 SCHEDULE - 1 Share Capital Authorised 500,000,000 Equity Shares of Re.1/- each 500,000 500,000 2,500,000 Cumulative Redeemable Preference Shares of Rs.100/- each. 250,000 250,000 750,000 750,000 Issued, Subscribed and Paid-up 434,007,111 Equity Shares of Re.1/- each fully paid-up 434,007 433,567 (Out of the above 210,316,212 Equity shares of Re.1/- each fully paid-up were allotted for consideration other than cash against acquisition of Investments.)

TOTAL 434,007 433,567

SCHEDULE - 2 Reserves and Surplus Debenture Redemption Reserve As per last Balance Sheet – – Add: Appropriated During the year 29,700 – 29,700 – Capital Redemption Reserve As per last Balance Sheet 71,168 70,000 Add: Transfer from General Reserve – 1,168 71,168 71,168 Securities Premium As per last Balance Sheet 10,288,554 10,295,520 Add: Received during the year 67,135 – Less: Premium on Redemption of FCCB [Refer Note 16(c)] 3,981 6,966 10,351,708 10,288,554 General Reserve Balance as per last Balance Sheet 4,069,194 3,152,161 Less: Transfer to Capital Redemption Reserve – 1,168 Add: Transfer pursuant to the Scheme of Amalgamation – 593,201 Add: Appropriated during the year 410,000 325,000 4,479,194 4,069,194 Foreign Currency Translation Reserve 183,316 (1,027,095) Profit and Loss Account 18,445,902 14,775,431 TOTAL 33,560,988 28,177,252

ZEEL Annual Report 2008-2009 104 SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,

(Rs. in ’000) 2009 2008

SCHEDULE - 3 Secured Loans [Refer Note 15] 500 (Nil) Secured Redeemable Non-Convertible Debenture of Rs.1,000,000 each fully paid-up 500,000 – Term Loan from Financial Institution/Bank 2,824,977 1,754,883 Working Capital Finance from Banks 1,911,260 754,307 Vehicle/Other Loans 25,214 22,550 TOTAL 5,261,451 2,531,740

SCHEDULE - 4 Unsecured Loans Foreign Currency Convertible Bonds [Refer Note 16 ] 195,450 233,881 Short Term Loan From Bank 300,000 1,100,000 TOTAL 495,450 1,333,881

SCHEDULE - 5 Fixed Assets (at cost) (Rs. in ’000) GROSS BLOCK DEPRECIATION/AMORTIZATION NET BLOCK Description As at Additions Deductions As at As at For the Deductions As at As at As at 1.4.2008 31.03.2009 1.4.2008 year 31.03.2009 31.03.2009 31.03.2008 a) Intangibles Goodwill - On Consolidation ^ 12,959,829 2,225,796 2,880 15,182,745 –– –– 15,182,745 12,959,829 Software/Knowledge based 14,929 8,799 43 23,685 10,389 4,021 26 14,384 9,301 4,540 Content Trade Mark 33,037 –– 33,037 26,347 3,304 – 29,651 3,386 6,690 b) Tangibles Leasehold Land 65,690 –– 65,690 4,235 813 – 5,048 60,642 61,455 Building 784,049 67,935 7,762 844,222 181,174 29,860 6,701 204,333 639,889 602,875 Plant and Machinery 1,783,402 238,283 3,756 2,017,929 744,284 125,544 1,312 868,516 1,149,413 1,039,118 Equipments 387,777 156,920 29,758 514,939 204,336 124,421 24,191 304,566 210,373 183,441 Furniture and Fixtures 120,330 13,959 7,375 126,914 50,237 12,398 4,905 57,730 69,184 70,093 Vehicles 76,005 58,372 11,998 122,379 17,982 9,973 3,717 24,238 98,141 58,023 Total 16,225,048 2,770,064 63,574 18,931,540 1,238,984 310,334 40,852 1,508,466 17,423,074 14,986,064 Previous Year 15,702,098 623,370 100,420 16,225,048 1,080,533 232,329 73,878 1,238,984 14,986,064 – Notes : (a) ^ Arising on consolidation on ZEEL with its subsidiaries and its ultimate subsidiaries. (b) Building includes Rs. 114, the value of shares in a Co-operative Society. (c) Part of Building has been given on Operating Lease.

105 ZEEL Annual Report 2008-2009 SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,

(Rs. in ‘000) SCHEDULE - 6 2009 2008 Investments Long Term (at cost) Quoted - Non-Trade 1,800,000 Equity Shares of Rs. 2/- each of Essel Propack Limited 1,500 1,500

{Market Value Rs. Thousand / 66,420 (124,200)} Quoted - Trade - In Associates 1,321,200 Equity shares of Rs.10/- each of Aplab Limited 46,599 46,599 (Extent of holding 26.42%)

Add: Share of profit for previous years 20,780 20,797 Add: Share of profit for current year 1,357 3,286 Less: Dividend received during the year (3,303) (3,303) {Market Value Rs. Thousand / 98,297 (115,010)} 65,433 67,379 Unquoted - Trade 50 Equity shares of Rs.10/- each of North Karnataka GSB Bank Limited 1 1 2,500 Equity shares of Rs.10/- each of Samata Sahakari Bank Limited 63 63 346,000 (296,000) Equity Shares of Rs.10/- each of Asianet Communication Limited# 119,297 259,342 67,693 [Nil] Equity shares of Rs. 10/- each of Asianet Infrastructure Limited# 10,373 – 423,082 [Nil] Equity shares of Rs. 10/- each of Asianet Radio Private Limited# 64,836 – 423,082 [Nil] Equity shares of Rs. 10/- each of Asianet News Private Limited# 64,836 – 3,000 Equity Shares of Rs. 10/- each of Last Minute Media Private Limited 300 – 23,000 7.25% Redeemable Non-Cumulative Preference shares of 23 23 Re. 1/- each of Wire & Wireless India Limited 28 (Nil) 14% Unsecured Reedemable Optionaly Convertible Debentures (OCD's) of Cornershop Entertainment Company Private Limited of Rs.10,000,000 fully paid-up (Refer Note 19)* 280,000 – Unquoted - Trade 13,344 Equity Share of US$ each of Broadcast South Asia Limited [extent of holding 48.44%] 1,319,455 1,384,663 (Less): Share of Loss in previous year (65,208) (67,063) Add: Share of Profit in current year – 1,855 Less: Sale of Investments during the year 1,254,247 – – 1,319,455 Others 1,000 Equity share of Rs.10/- each of Ecool Gaming Solutions Private Limited 5 10 1,000 Equity share of Rs.10/- each of Pan India Network Private Limited+ 5 –

National Savings Certificates 15 25 (Pledged with VAT/Sales Tax authorities)

ZEEL Annual Report 2008-2009 106 SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31,

(Rs. in ‘000) SCHEDULE - 6 (Contd.) 2009 2008 Investments Current Investments Unquoted 506,305 (Nil) units of Rs. 10/- each of Principal Cash Management Fund Liquid Option - Daily Dividend * 5,064 – 2,042,115 (Nil) units of Rs. 10/- each of JM Money Manager Fund Super Plus Plan - Daily Dividend * 20,430 – 601,214 (Nil) units of Rs. 10/- each of Reliance Medium Term Fund - Daily Dividend Plan * 10,278 – 3,523,103 (Nil) units of Rs. 10/- each of LIC MF Income Plus - Daily Dividend Plan * 35,231 – 2,000,000 (2,000,000) units of Rs. 10/- each of JM Fixed Maturity Plan Series VII - 18 Month Plan * 20,000 20,000 Nil (2,044,565) units of Rs.10/- each of LIC MF Liquid Plus Fund Daily Dividend – 20,446 Nil (2,606,937) units of Rs. 10/- each of Principal Floating Rate Fund (FMP) – 26,101 Nil (957,595) units of Rs. 10/- each of HDFC High Interest Fund - Short Term Plan Dividend Option – 10,195 Nil (1,476,766) units of Rs. 10/- each of HDFC Short Term Plan - Dividend Option – 15,264 Nil (1,559,667) units of Rs. 10/- each of JM Fixed Maturity Fund Series VII - 13 Month Plan – 15,597 Nil (45,054) units of Rs. 1,000/- each of Reliance Liquid Plus Fund - Institutional Option - Daily Dividend Plan – 45,106 Nil (5,093,614) units of Rs. 10/- each of JM Money Manager Fund Super Plus Plan – 50,957 Nil (2,011,698) units of Rs. 10/- each of LIC Liquid Plus Fund - Daily Dividend – 20,137 Nil (1,506,975) units of Rs. 10/- each of Birla Sun Life Liquid Plus - Institutional Daily Dividend – 15,080 Nil (2,006,456) units of Rs. 10/- each of SBI SHF Liquid Plus- Institutional Plan Weekly Dividend – 20,130 Nil (1,908,645) units of Rs. 10/- each of Prudential ICICI - Flexible Income Plan – 20,134 Nil (1,500,000) units of Rs. 10/- each of UTI Fixed Maturity Plan Institutional Dividend Plan - Re-investment – 15,000 (*These investments have been charged against Secured Redeemable Non-Convertible Debentures issued.) – – Immovable Property (Refer Note 17) Freehold Land 573,456 599,262 Less: Provision for diminution in value of investments – 25,806 573,456 573,456 TOTAL 1,271,146 2,515,401 Note: All the above securities are fully paid up. # Consequent to the Scheme of Arrangement for demerger of Asianet Communication Limited, the Company has been alloted shares in the demerged entities. + Pursuant to the Scheme of Arrangement for demerger of Pan India Infravest Network Private Limited and Ecool Gaming Solutions Private Limited the Company has been allotted Equity Shares in Pan India Network Private Limited.

107 ZEEL Annual Report 2008-2009 SCHEDULES TO CONSOLIDATED BALANCE SHEET AS AT MARCH 31, (Rs. in ’000) SCHEDULE - 7 2009 2008 Current Assets, Loans and Advances A. Current Assets (a) Programs/Film Rights [Refer Note 10] 4,532,418 2,441,848 (b) Inventories (as taken, valued and certified by the Management) Raw Stock - Tapes 17,871 6,566 Educational Materials/Equipments 26,060 25,365 43,931 31,931 (c) Sundry Debtors (Unsecured and considered good unless otherwise stated) More than six months 3,146,063 2,648,214 Others 5,768,001 5,170,143 8,914,064 7,818,357 Less: Provision for doubtful debts 2,477,556 1,911,180 6,436,508 5,907,177 (d) Cash and Bank Balances Cash in hand 16,263 6,270 Balances with Banks in Current Accounts 1,792,747 1,561,582 Balances with Banks in Deposit Accounts 112,791 39,103 Cheques in hand/transit 4,533 45,069 1,926,334 1,652,024 (Fixed deposit Pledged Rs./Thousand 55 (53) with Sales Tax authorities, Rs./Thousand 6,592 (6,363) against guarantee given by bank and Rs./Thousand 47,461 (Nil) as security for Secured Redeemable Optionally Non-Convertible Debentures) (e) Loans and Advances Loans (Unsecured and considered good unless otherwise stated) 8,861,962 8,331,306 Advances (recoverable in cash or kind or for value to be received) 5,145,081 3,078,957 Less: Provision for doubtful advances 88,663 103,171 5,056,418 2,973,962 Deposits 168,759 168,257 14,087,139 11,475,349 TOTAL 27,026,330 21,508,329 SCHEDULE - 8 Current Liabilities Sundry Creditors - For Goods 1,281,661 949,729 - For Expenses and other liabilities 1,968,720 2,262,920 Trade Advances/Deposits received 327,039 114,774 Pending remittance to Principals 732,533 814,067 Unclaimed dividend/Fixed deposits 7,529 7,972 Interest accrued but not due 50 2,352 TOTAL 4,317,532 4,151,814 SCHEDULE - 9 Provisions Provision for - Tax (net of advances) 327,502 984,640 - Retirement benefits 142,766 124,629 Proposed Dividend (including tax) 1,015,518 1,017,596

TOTAL 1,485,786 2,126,865 SCHEDULE - 10 Miscellaneous Expenditure (to the extent not written off or adjusted) Share Issue and Preliminary Expenses 51 112 TOTAL 51 112

ZEEL Annual Report 2008-2009 108 SCHEDULES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, (Rs. in ’000) SCHEDULE - 11 2009 2008 Sales and Services Services - Advertisement 10,592,585 9,306,869 - Subscription 9,037,579 7,436,098 - Commission - Broadcasters 388,159 360,962 - Educational Services 164,800 151,233 - Other Services 461,413 271,120 Sales 1,128,561 827,371 TOTAL 21,773,097 18,353,653

SCHEDULE - 12 Other Income Dividend (Gross) 13,387 10,543 Interest 1,255,697 995,990 Profit on sale of investment - in subsidiary 191,923 – - in associates 4,590 – - others – 5,511 Rent Income 52,776 20,915 Miscellaneous Income 53,382 57,646 Balances written back (net) 450 47,515 TOTAL 1,572,205 1,138,120

SCHEDULE - 13 Operational Cost/Cost of Goods A. Program/Film Rights Opening 2,441,848 2,015,644 Add: Production/Acquisition cost 9,083,407 5,598,904 Less: Closing 4,532,418 2,441,848 6,992,837 5,172,700 B. Transmission Cost/OtherDirect Expenses Subscription Management Services 2,017,308 1,952,540 Transmission Cost 692,785 604,539 Other operational expenses 54,441 46,382 2,764,534 2,603,461 C. Stock-in-Trade Opening Stock 25,365 21,116 Add: Purchases 52,976 45,775 Less: Closing Stock 26,060 25,365 52,281 41,526 TOTAL 9,809,652 7,817,687

SCHEDULE - 14 Personnel Cost Salaries, Allowances and Bonus 1,871,882 1,317,509 Contribution to Provident and other funds 78,073 54,607 Staff Welfare Expenses 81,199 65,933 TOTAL 2,031,154 1,438,049

109 ZEEL Annual Report 2008-2009 SCHEDULES TO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,

(Rs. in ’000) 2009 2008 SCHEDULE - 15 Administrative and Other Expenses Rent 200,644 133,341 Lease Rentals 1,077 1,401 Rates and Taxes 50,188 28,799 Repairs and maintenance - Building 9,249 3,369 - Plant and Machinery 37,297 27,546 - Others 34,603 30,097 Insurance 14,412 21,574 Electricity and Water charges 69,752 51,308 Communication expenses 110,662 103,697 Printing and Stationary 32,324 24,618 Miscellaneous Expenses 58,044 90,435 Conveyance, Travelling and Vehicle expenses 268,089 224,229 Service charges/expenses 100,212 71,133 Legal, Professional and Consultancy charges 287,049 213,743 Auditors Remuneration 23,950 25,727 Provision for doubtful debts and advances 235,577 727,208 Bad debts and advances written off 315,572 345,427 Loss on sale/discard/shortage of fixed assets (net) 11,467 8,493 Share issue and preliminary expenses written off 62 51 TOTAL 1,860,230 2,132,196

SCHEDULE - 16 Selling and Distribution Expenses Advertisement and Publicity expenses 1,016,734 756,055 Commission on sales and services 270,012 163,081 Business Promotion expenses 1,304,872 623,598

TOTAL 2,591,618 1,542,734

SCHEDULE - 17 Financial Expenses Interest on - Fixed Loan 210,575 195,425 - Bonds and Debentures 1,075 1,178 - Working Capital Loan 191,048 97,644 - Others 3,200 3,575 Discounting and Financing expenses 44,467 36,045 Loss on Foreign exchange derivative contracts and exchange difference 888,733 182,058 TOTAL 1,339,098 515,925

ZEEL Annual Report 2008-2009 110 SCHEDULE 18 Significant Accounting Policies and Notes to Accounts 1. Background: Zee Entertainment Enterprises Limited (hereinafter referred to as `the parent company’, `the Company’ or ‘ZEEL’) together with its subsidiaries and associates (collectively known as “the Group”) derives revenue mainly from advertisements and subscription. The Group also generates revenue through sale of television softwares, film distribution and Educational services. 2. Basis of Consolidation a) The Consolidated Financial Statements (CFS) of the Group are prepared under Historical Cost Convention under going concern basis in accordance with Generally Accepted Accounting Principles in India and the Accounting Standard-21 on “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India (ICAI), to the extent possible in the same format as that adopted by the parent company for its separate financial statements by regrouping, recasting or rearranging figures, wherever considered necessary. b) The CFS is prepared using uniform accounting policies for transactions and other events in similar transactions. c) The consolidation of the financial statements of the parent company and its subsidiaries is done to the extent possible on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. All significant inter-group transactions, unrealized inter-company profits and balances have been eliminated in the process of consolidation. Minority interest in subsidiaries represents the minority shareholders proportionate share of the net assets and net income. d) The CFS includes the Financial Statements of the parent company and the subsidiaries (as listed in the table below). Subsidiaries are consolidated from the date on which effective control is acquired and are excluded from the date of transfer/disposal.

Name of the Subsidiaries Extent of holding Country of Incorporation of Parent (%) Direct Subsidiaries ETC Networks Limited 50.18 India Taj Television India Private Limited 50.00 India Zee Turner Limited 74.00 India Zee Sports Limited 100.00 India Zee Multimedia Worldwide Limited 100.00 British Virgin Islands ZES Holdings Limited ^ 100.00 Mauritius Indirect Subsidiaries Apac Media Venture Limited 100.00 Hongkong Asia Today Limited # 100.00 Mauritius Asia Business Broadcasting (Mauritius) Limited * 100.00 Mauritius Pan Asia Infrastructure Limited + 100.00 Mauritius Taj TV Mauritius Limited 50.00 Mauritius Zee Multimedia Worldwide (Mauritius) Limited 100.00 Mauritius Zee Multimedia (Maurice) Limited 100.00 Mauritius Zee Sports International Limited 100.00 Mauritius Zee Sports Americas Limited 100.00 Mauritius Asia TV Limited 100.00 United Kingdom Expand Fast Holding (Singapore) Pte Limited 100.00 Singapore Zee Technologies (Guangzhau) Limited 100.00 China Zee Telefilms Middle East FZ LLC 100.00 U.A.E.

111 ZEEL Annual Report 2008-2009 Name of the Subsidiaries Extent of holding Country of Incorporation of Parent (%) Zee TV USA Inc. 100.00 United States of America Zee TV South Africa (Proprietary) Limited 100.00 South Africa ZES Entertainment Studios Limited ^ 100.00 British Virgin Islands ZES Mauritius Limited ^ 100.00 Mauritius ZES International Limited ^ 100.00 United Kingdom Zee Motion Pictures Private Limited ^ 100.00 India CIS Holding LLC ^ 100.00 Russia * 40% Shareholding acquired during the year ^ Incorporated during the year # 50% held through wholly owned subsidiary. + Ceased to be subsidiary w.e.f. January 19, 2009 e) Associates The Group has adopted and accounted for Investments in Associate in these CFS, using the “Equity Method” as per AS -23 issued by ICAI.

Name of the Associate Company Extent of Holdings Country of Incorporation Aplab Limited 26.42% India Broadcast South Asia Limited * 48.44% British Virgin Islands * ceased to be an associate w.e.f. May 8, 2008. No adjustments are made for differences in accounting policy for inventories are valued on weighted average basis and depreciation provided on fixed assets on written down value method in case of Aplab Limited. The impact of this non-compliance on company’s share of profit in the associate is not ascertained. 3. Use of Estimates The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. Any revision to estimates is recognized prospectively in current and future periods. 4. Comparatives (a) Previous years figures have been regrouped, rearranged or recasted wherever necessary to confirm to this year’s classification. Figures in brackets pertain to previous year. (b) The CFS is not comparable, in view of subsidiaries incorporated/ acquired during the current and previous year. 5. Fixed Assets (a) Goodwill on Consolidation Goodwill represents the difference between the group’s shares in the net worth of the subsidiary or an associate, and the cost of acquisition at the time of making the investment in subsidiary or associate. Capital reserve represents negative goodwill arising on consolidation. (b) Intangible Assets Intangible assets comprises Software, Knowledge based content and Trade Mark. These intangible assets are amortized on straight line basis based on the useful lives, which in management’s estimate represents the period during which economic benefits will be derived from their use. (c) Tangible Fixed Assets (i) Fixed assets are stated at original cost of acquisition/installation net of accumulated depreciation, amortization and impairment losses. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. (ii) Capital Work in progress is stated at the amount expended upto the date of Balance sheet including advances for capital expenditure.

ZEEL Annual Report 2008-2009 112 (iii) Assets acquired under Finance Lease are capitalized and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. 6. Impairment of assets At each Balance Sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value. 7. Borrowing Costs Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as a part of the cost of such assets. All other borrowing costs are charged to revenue. 8. Depreciation/Amortization a) Depreciation is provided on tangible fixed assets, including on fixed assets acquired under finance lease, on straight-line method at the rates specified in Schedule XIV or at such higher rates as permissible under applicable law, so as to write off their costs over the estimated useful life of the assets. b) Premium on Leasehold land and leasehold improvements are amortized over the period of Lease. c) No part of goodwill arising on consolidation is amortized. d) Intangible assets are amortized over the economic useful life as estimated by the management as under:- Assets Useful life ( in years) Software/ Knowledge based Content 3 Trade Marks 10 9. Investments a) Investments (other than investment in associates) intended to be held for more than one year, from the date of acquisition, are classified as long term investments and are carried at cost. Provision for diminution in value of these investments is made to recognize a decline other than temporary. b) Current Investments are carried at cost or fair value whichever is lower. 10. Programs/Film Rights and Inventories a) Programs/Film rights: Programs/Film rights are stated at lower of net cost (cost minus accumulated amortization/impairment) or realizable value. Where the realizable value on the basis of its useful economic life is less than its carrying amount, the difference is expensed. i. Cost of news/ current affairs/ chat shows/ events including sports events etc. are fully expensed on telecast. ii. Programs (other than (i) above) are amortized over three financial years from the year of telecast. iii. Film telecast rights are amortized on a straight-line basis over the duration of license or 60 months from the date of purchase, whichever is shorter. iv. Film rights for trade – Cost of respective right is fully expensed on sale. b) Film produced and acquired for distribution: The cost is amortized for Theatrical, Satellite, Music rights etc. as under: i. Theatrical Rights: - 70% cost is amortized over three months of theatrical release of movie and balance 30% in subsequent three quarters. ii. Satellite Rights, Music Rights, Home Video Rights etc. are expensed on sale. iii. In case of Negative rights 10% is allocated to IPR to be amortized over subsequent nine years. c) Inventory of Raw Stock - Tapes is valued at lower of cost or estimated net realizable value. Cost is taken on First In First Out (FIFO) basis. d) Educational Materials/Equipments are valued at lower of cost or estimated net realizable value. Cost means average cost.

113 ZEEL Annual Report 2008-2009 11. Revenue Recognition a) Broadcasting services - Advertisement revenue (net of agency commission) is recognized when the related advertisement or commercial appears before the public i.e. on telecast. Subscription revenue is recognized on completion of service. b) Commission - Broadcaster includes commission on subscription, advertising canvassing i.e. space selling, revenue recognized when the service is completed. c) Sales are recognized when the risk and rewards of ownership are passed onto the customers, which is generally on dispatch of goods. d) In respect of education services, revenue is recognized over the duration of course. Franchise fees are recognized as and when instalments are due. e) Dividend is recognized when the right to receive the dividend is unconditional. 12. Foreign Currency a) Accounting of Transactions (i) The functional currency of each entity in the group is its respective currency. Monetary assets and liabilities in foreign currencies are converted into functional currency at the rates of exchange prevailing at the Balance Sheet date. Transactions in the foreign currencies are converted into functional currency at the rates of exchange prevailing at the date of the transaction. (ii) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such transactions. (iii) Foreign currency monetary assets and liabilities at the Balance Sheet date are reported using the closing rate. Gain and losses arising on account of difference in foreign exchange rates on settlement/ translation of monetary assets and liabilities are recognized in the Profit and Loss Account. (iv) Non-monetary items denominated in foreign currency are reported using exchange rate prevailing on the date of transaction. (v) In respect of forward exchange contracts assigned to the foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of the Balance Sheet is recognized in the Profit and Loss Account. Any profit or loss arising on settlement/ cancellation of forward contract is recognized as income or as expense for the year in which they arise. b) Translation and ExchangeRates Financial Statements of overseas non-integral operations are translated as under: (i) Assets and Liabilities at the exchange rate prevailing at the end of the year. Depreciation is accounted at the same rate at which assets are converted. (ii) Revenues and expenses at yearly average rates (except for inventories and depreciation are converted at opening/closing rates as the case may be). Off Balance Sheet items are translated into Indian Rupees at year-end rates. (iii) Exchange differences arising on translation of non-integral foreign operations are accumulated in the Foreign Currency Translation reserve until the disposal of such operations. 13. Retirement Benefits Retirement benefit plans, pensions schemes and defined contribution plans, or funds are governed by the statutes of the countries in which subsidiaries are located and contribution to the fund, future liability on actuarial valuation or liability on termination are charged to Profit and Loss Account. Accrued liabilities for leave encashment are made by the parent and its subsidiaries wherever applicable based on unavailed leave to the credit of employees in accordance with the rules of the respective companies. Incase of a subsidiary, the gratuity fund benefits are administered by a specific Trust formed and annual contributions are deposited under group policy scheme of Life Insurance Corporation of India (LIC). 14. Miscellaneous Expenditure Share issue and Preliminary expenses are amortized over a period of ten years. 15. Secured Loans a) In case of Parent Company : Term Loan from Banks is secured by hypothecation by way of first pari passu charge on immovable property at noida and subscription receivables. The charge to be created within stipulated period. Certain

ZEEL Annual Report 2008-2009 114 loans were repaid during the year were hypothecated by way of first charge on all domestic cable subscription receivables and Program and Film Rights and further secured by exclusive charge on advertising receivables from sports channel. Working Capital Finance from Banks is secured by hypothecation of stocks (other than Program and Film Rights), and book debts (other than advertisement commission and subscription receivables) and other current assets, all ranking pari passu with other financing banks. b) In case of subsidiaries, Debentures are secured by way of first charge on all fixed assets including immovable property, current assets including certain fixed deposits with banks, investments in units of mutual funds, charge on Escrow account through which all the receivables of the Company will be routed and negative lien/non-disposal undertaking in respect of equity shares of the Company held by ZEEL (parent company) and other promoter companies - Charge in respect of pledge of investments in debentures of Cornershop Entertainment Company Private Limited and assignment of lease right under agreement with Taleem Research Foundation is yet to be created. - Redeemable at par in four equal installments with the earliest redemption being on January 6, 2012 and last being on January 6, 2015. c) Vehicle/other Loans: Hire purchase and lease finance is secured by hypothecation of specific assets underlying the hire purchase/ lease. 16. Foreign Currency Convertible Bonds (FCCB): a) The Company had issued 10,000 0.5% Foreign Currency Convertible Bonds (FCCB) of US$ 10,000 each aggregating to US$ 100 million, redeemable on April 29, 2009 at 116.24% of their principal amount. The bond holders have an option to convert these bonds into equity shares from and including June 8, 2004 to and including April 22, 2009 at an initial conversion price of Rs.197.24 per share, with a fixed rate of exchange on conversion of Rs.43.88 (US$ 1). Consequent to the restructuring, the conversion price has been reset to Rs. 153.46 per share in terms of the Offering Circular, effective April 18, 2008. b) 9,621 bonds (including 154 bonds during the year) have been converted and balance 379 bonds outstanding as at the date of the balance sheet are redeemed on due date i.e. April 29, 2009. c) Premium payable on redemption of 379 bonds Rs./Thousand 3,981 has been provided and adjusted against securities premium as per Section 78 of the Act. d) Out of the Net proceeds of Rs./Thousand 4,269,473 from the issue of the FCCB, Rs./Thousand 4,269,122 has been utilized for the object of the issue, which includes new projects, modernization and expansion of the existing production units and expansion of wholly owned subsidiary operations and balance pending utilization has been included in Cash and Bank balances. 17. Immovable Property a) The Collector of Hyderabad, Andhra Pradesh, had resumed possession of the freehold land (included under Schedule 6 - “Investments”) admeasuring 17,639.64 sq. meters, bought from Padmalaya Telefilms Limited (PTL), registered in the name of the Company and having book value of Rs./Thousand 573,456. The action of the Collector has been set aside by the appellate authorities and the possession of the land is restored. b) In terms of final settlement agreement entered during the year with PTL, company has given up his claim on the Second piece of land admeasuring 2,700 sq. meters having book value of Rs./Thousand 25,806, accordingly value of investment has been reduced to that extent in the books. 18. Debtors a) Debtors are stated in the Balance Sheet at net realizable value. Net realizable value is the invoiced amount less provision for bad and doubtful debtors. Provisions are made specifically against debtors where there is evidence of a dispute or an inability to pay or recoverability. b) The Group has recognized a receivable of Rs./Thousand 313,046 (239,400) claimed from competing broadcaster for recovery of the telecast rights money relating to the sports event, which is under litigation. In the opinion of management and based on legal opinions, the receivable is considered as good. 19. Investment During the year, the Company has invested in Rs. 28 Crores in 14% Unsecured Redeemable Optionally Convertible Debentures (OCD’s) of Cornershop Entertainment Company Private Limited (Cornershop) engaged 115 ZEEL Annual Report 2008-2009 in the business of Animation. These debentures are convertible at the option of the Company within a period of 18 months from the date of allotment i.e. March 31, 2009 into 50,000 equity shares of Rs. 10/- each at a premium of Rs. 5,589.10 per share. Upon exercise of the conversion option Cornershop would become a subsidiary of the Company, extent of holding being 83%. Unless converted earlier, these debentures shall be redeemed at par on expiry of 18 months from the date of allotment. 20. During the year, the Company has entered into an arrangement with a Charitable Trust/ Society established under the Bombay Public Trust Act, 1950 to acquire exclusive rights for providing educational infrastructure, content, advisory and other related services to its school for a period of 30 years for Rs. 75 Crores and advance of Rs. 45.25 crores paid for acquiring the rights is included in capital work in progress, eventually to be capitalized as an intangible asset on commencement of operations by the school, to be amortised over the period of the right. Pursuant to the agreement Rs. 4.41 Crores, incurred for arranging finance, interest on loan and other related expenditure, recoverable from the Trust is included in other advances. 21. Acquisitions/Disinvestment a) During the year Asia Today Limited a subsidiary of the Company has disinvested its entire 100% shareholding in Pan Asia Infrastructure Limited (PAIL), which resulted in aggregate profit of Rs./Thousand 191,923. b) During the year Asia Today Limited a subsidiary of the Company has (i) divested its 48.44% holding in Broadcast South Asia Limited (BSA) under a buyback arrangement for USD 30.9 million. And (ii) has increased its 60% shareholding in its subsidiary Asia Business Broadcasting Limited to 100% by an additional investment of USD 56 million. Goodwill arising on consolidation is Rs./Thousand 2,225,795. 22. Loans The Group has been deploying its surplus funds as short-term demand loans/inter corporate deposits, the parties are regular in repayment of principal and interest, hence are considered good. 23. Taxation a) Current income tax is calculated on the results of individual companies in accordance with local tax regulations. b) Deferred tax is recognized, subject to consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. c) The components of the deferred tax balances as on March 31, are as under: (Rs./Thousand) Sr. No. Particulars 2009 2008 (i) Deferred Tax Assets Arising on account of timing differences in Retirement Benefit 33,080 21,335 Provision for doubtful debts 238,962 194,008 Allowable on payment basis 4,562 26,321 Unabsorbed fiscal allowances 4,631 114,614 Other Provisions 6,679 6,571 Total 287,914 372,849 (ii) Deferred Tax Liabilities Depreciation 146,574 129,758 Other Provisions 28,512 34 Total 175,086 129,792 Deferred Tax Assets (Net) 112,828 243,057 d) The Company’s claims for certain deductions under Chapter VIA of the Income Tax Act, 1961 for Assessment years 1993-1994 to 1999-2000 is allowed by second appellate authority and effect of those appeal orders resulted in excess provision for tax of Rs./ Thousand 573,794 which is accounted for during the year. The interest of Rs./Thousand 204,053 received on these income tax refunds have however been credited to the Profit and Loss account in previous financial year. Further, during the year, the Company has received income tax refund of Rs./Thousand 524,934 relating to Assessment year 2006-07, pending final tax assessment, interest income of Rs./Thousand 47,904 and excess tax provision are not accounted and refund received is adjusted against provision for tax. Subsidiary’s certain claim for exemption based on status for Assessment years 2001-02 , 2002-03 & 2004-05 is allowed by appellate authority and effect of those appeal orders resulted in excess provision for tax of Rs./Thousand 793,287 which is accounted for in these financials.

ZEEL Annual Report 2008-2009 116 24. Leases (a) Finance Lease: Long-term leases, which in economic terms constitute investments financed on a long-term basis (finance lease) are recognized as assets and recorded under tangible fixed assets at their cash purchase value. The minimum lease payments required under this finance lease that have initially or remaining non cancellable lease terms in excess of one year as at March 31, 2009 and its present value are as follows. Reconciliation of minimum lease payments and present value: (Rs./Thousand) 2009 2008 Minimum Lease Payments as at Not Later than one year 1,557 263 Later than one year and not later than five year 4,815 842 Later than five years – 173 Total 6,372 1,278 Less: Amount representing Interest 1,087 171 Present value of Minimum Lease payment 5,285 1,107 Less: Amount due not later than one year 1,107 209 Amount due later than one year and not later than five years 4,178 728 Amount due later than five years – 170 (b) Operating Leases: Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments/revenue under operating leases are recognized as expense/ income on accrual basis in accordance with the respective lease agreements. Leasing liabilities primarily relate to lease of certain offices, residential premises, and other facilities. The initial tenure of the lease generally is for 11 to 72 months. The minimum rental payables under other operating leases that have initially or remaining non-cancellable lease term in excess of one year as at March 31, 2009 are as follows: (Rs./Thousand) Particulars 2009 2008 Lease rental charges for the year 355,964 454,470 Future Lease rental obligation payable (Under non-cancellable lease) Not later than one year 222,975 112,490 Later than one year but not later than five year 347,451 132,121 Later than five years 246,191 – (c) In respect of assets given under operating lease. (i) The Company has given part of building under cancellable operating lease agreement. The initial term of the lease is for twelve months. (ii) The rental revenue for the year is Rs./Thousand 64,119 (19,458). 25. (a) Contingent Liabilities (Rs./Thousand) Sr. No. Particulars 2009 2008 a) Corporate guarantees for other related parties availed/ 4,526,760 5,362,700 outstanding Rs./Thousand 3,949,415 (4,654,185) b) Bank/Counter guarantees outstanding 3,630 3,073 c) Letter of Credit 406,327 144,155 d) Claims not acknowledged as debts 141,364 357,237 e) Legal cases against the Company Unascertainable Unascertainable f) Disputed Direct Taxes 354,946 203,021 g) Customs Duty pending export obligation against import of – 5,501 machinery (b) Estimated amount of contracts remaining to be executed on capital account (net of advances) 726,856 Rs./Thousand (250,983).

117 ZEEL Annual Report 2008-2009 26. During the year, expenses of Rs./Thousand 63,160 (76,980), shared by other related party, are netted off in relevant heads of Profit and Loss Account. 27. Capital work in progress includes Capital Advances Rs./Thousand 512,373. 28. Details of prior period expenses/income included in respective heads in the Profit and Loss Account is as under (Rs./Thousand) Particulars 2009 2008 Excess Interest on Tax refund accounted, now reversed 23,400 – Business Promotion expenses 7,605 – Subscription Revenue (1,562) – Prior Period Expense (net) 29,443 – 29. Related Party Disclosure (i) List of Parties where control exists The list of subsidiaries is disclosed in Note 2 (d) (ii) Associate Companies Name of the Associate Company Extent of Holdings Country of Incorporation Aplab Limited 26.42% India Broadcast South Asia Limited * 48.44% British Virgin Islands * ceased to be an associate w.e.f. May 8, 2008. (iii) Other Related Parties with whom transactions have taken place during the year and balances outstanding as on the last day of the year: Agrani Convergence Limited; Agrani Wireless Service Limited; Asian Satellite Broadcasting Private Limited; Asian Sky Shop Limited; Borth Company Limited; Briggs Trading Company Private Limited;, Buddha Films Limited; Churu Trading Company Private Limited; Credensys Software Technologies Private Limited, Dakshin Media Gaming Solutions Private Limited; Delgrada Limited; Digital Media Convergence Limited; Diligent Media Corporation Limited; Dish TV India Limited; Essel Propack Limited; Essel Agro Limited; E-City Entertainment (India) Private Limited; E-City Films Limited; E-City Retail Private Limited; E-Cool Gaming Solution Private Limited; Essel Corporate Resources Private Limited; Essel Infraprojects Private Limited; Essel International Limited; Essel Shyam Communication Private Limited; Essel Shyam Technologies Limited; Ganjam Trading Company Private Limited; Intrex Trade Exchange Limited; Jay Properties Private Limited; Jayneer Capital Private Limited; Natural Wellness; New Media Broadcasting; Pan India Infrastructure Limited; Pan India Network Infravest Private Limited; Prajatma Trading Company Private Limited; Quickcalls Private Limited; Rama Associates Limited; Real Media FZLLC; Resource Software Limited; Scarpetta Investment Limited; Taleem Research Foundation; Turner International India Limited; Wire and Wireless (India) Limited; Zee News Limited; 25 FPS Media Private Limited. Directors/Key Management Personnel Mr. Puneet Goenka Transactions during the year with related parties (Rs./Thousand) Sr. Particulars 2008-2009 2007-2008 No. A) Fixed Assets/Capital work-in-progress/Capital Advances Other Related Parties 452,570 – Associates – 497 B) Investments Other Related Parties Balance as at March 31, 281,533 1,533 Associates Balance as at March 31, 65,433 1,386,834 C) Sundry Debtors as at March 31, Other Related Parties 890,887 760,045 D) Loans, Advances and Deposits Given as at March 31, Other Related Parties 10,479,529 5,297,073

ZEEL Annual Report 2008-2009 118 (Rs./Thousand) Sr. Particulars 2008-2009 2007-2008 No. E) Sundry Creditors as at March 31, Other Related Parties 450,433 717,419 Associates – 260 F) Loans, Advances and Deposits Received as at March 31, Other Related Parties – 600 G) Share Capital Share Application Money Received Other Related Parties – 9,000 Refund/adjustment of Share Application Money received Other Related Parties – 26,800 Debentures Other Related Parties 280,000 – Conversion of 1% Debentures Other Related Parties – 40,000 H) Sale and Services Turnover Sale, Services and Recoveries (Net) Other Related Parties 655,664 406,041 Advertisement Income (Net) Other Related Parties 99,479 189,178 Commission Received Other Related Parties 268,368 314,929 I) Other Income Dividend Received Other Related Parties 2,186 – Associates 3,303 3,303 Interest Received Other Related Parties 1,059,694 723,242 Miscellaneous Income Other Related Parties 48,989 35,578 J) Share of Profit in Associates 1,357 5,141 K) Sale of Investments in Associates 1,319,455 – L) Acquisition of Minority Interest in Subsidiary Other Related Party 2,399,566 – M) Loans, Advances and Deposits Given Other Related Parties 12,413,758 11,527,323 N) Purchase of Fixed Assets/ CWIP/ Capital Advances Other Related Parties 452,570 – O) Purchase of Investments Other Related Parties 280,000 – P) Purchase of Programs, Goods and Services Other Related Parties 1,748,679 1,141,005 Q) Other Expenses Interest Paid Other Related Parties – 133 Remuneration and Consultancy fees paid Key Management Personnel 3,925 15,492 R) Loans, Advances and Deposits Received Other Related Parties 569,459 – S) Loans and Advances repayment received Other Related Parties 7,900,400 10,179,054 T) Corporate Guarantees Given Other Related Parties 4,526,760 5,362,700

119 ZEEL Annual Report 2008-2009 Note: a) Name of the related parties has been disclosed where they have 10% or more of the aggregate for that category of transaction. Disclosure in Respect of Material Related Party who account for 10% or more of the transactions during the year: 1. Purchase of Asset during the year Aplab Limited Rs./Thousand Nil (497); Capital Advances given to Taleem Research Foundation Rs./Thousand 452,570 (Nil). 2. Share of Profit in associates includes from Aplab Limited Rs./Thousand 1,357 (3,286), and from Broadcast South Asia Limited Rs./Thousand Nil (1,855). 3. Sale of shares in associate include of Broadcast South Asia Limited Rs./Thousand 1,319,455 (Nil). 4. Acquisition of Minority Interest in subsidiary is acquired from Resource Software Limited Rs./Thousand 2,399,566 (Nil). 5. Purchase of Investments includes investment in Debentures of Cornershop Entertainment Private Limited Rs./Thousand 280,000 (Nil). 6. Loans and Advances given include to Briggs Trading Co. Pvt. Ltd. Rs./Thousand Nil (14,10,000); Churu Trading Co. Pvt. Limited Rs./Thousand 37,70,500 (21,86,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand Nil (14,92,522); Prajatma Trading Co. Pvt. Limited Rs./Thousand 21,70,000 (16,05,000); Dish TV India Limited Rs./Thousand 24,30,000 (31,77,000); Wire and Wireless (India) Limited Rs./Thousand 15,50,000 (10,70,000); Premier Finance and Trading Co. Limited Rs./Thousand 18,85,000 (Nil). 7. Loans and Advances repayment received includes Briggs Trading Co. Pvt. Ltd. Rs./Thousand Nil (14,10,000); Churu Trading Co. Pvt. Limited Rs./Thousand 37,70,500 (21,86,000); Ganjam Trading Co. Pvt. Limited Rs./Thousand Nil (14,92,522); Prajatma Trading Co. Pvt. Limited Rs./Thousand 21,70,000 (16,05,000); Dish TV India Limited Rs./Thousand Nil (29,00,000); Premier Finance and Trading Co. Limited Rs./Thousand 18,85,000 (Nil) . 8. Balances outstanding at year end include Zee Sports Limited Rs./Thousand Nil (31,704); Zee Turner Limited Rs./Thousand Nil (94,463); Dish TV India Limited Rs./Thousand 2,491,176 (7,81,315); Wire & Wireless India Limited Rs./Thousand 24,20,906 (8,20,817), Borth Company Limited Rs./Thousand 19,09,059 (14,59,942), Delgrada Limited Rs./Thousand 18,59,701 (14,39,779). 9. Sundry Creditors balances include amounts due for Purchase of Programs Goods & Services to Turner International India Limited Rs./Thousand Nil (3,37,177); Real Media F.Z.L.L.C. Rs./Thousand 132,168 (91,970); Dish TV India Limited Rs./Thousand 82,070 (1,08,589); Zee News Limited Rs./Thousand 47,318 (53,635), Essel Sports Private Limited Rs./Thousand 70,045 (Nil) , Wire and Wireless (India) Limited Rs./Thousand 92,984 (569). 10. Sale and Services Turnover include to Zee News Limited Rs./Thousand 384,483 (1,13,729); Turner Internationals India Private Limited Rs./Thousand 256,391 (191,697), Advertisement Income from Dish TV India Limited Rs./Thousand 83,427 (1,69,967), Asian Sky Shop Limited Rs./Thousand 12,086 (Nil); Agency Commission received from; Zee News Limited Rs./Thousand 2,68,368 (2,71,679). 11. Other income include Dividend received from Essel Propack Limited Rs./Thousand 2,186 (Nil); Aplab Limited Rs./Thousand 3,303 (3,303); Churu Trading Co. Pvt. Limited Rs./Thousand 2,58,147 (1,20,272); Prajatma Trading Co. Pvt. Limited Rs./Thousand 2,56,625 (1,36,071); Wire and Wireless (India) Limited Rs./Thousand 1,41,902 (Nil); Premier Finance & Trading Co. Pvt. Ltd. Rs./Thousand 1,92,548 (Nil); Delgrada Limited Rs./Thousand 139,265 (Nil); Miscellaneous income from Dish TV India Limited Rs./Thousand 25,132 (32,872); Zee News Limited Rs./Thousand 20,441 (Nil). 12. Purchase of Programs, Goods and Services from Turner International India Limited Rs./Thousand 4,54,750 (5,11,653); Real Media F.Z.L.L.C. Rs./Thousand 4,29,923 (3,46,855); Wire and Wireless (India) Limited Rs./Thousand 266,093 (16,926); Essel Sports Private Limited Rs./Thousand 262,603 (59,500); Remuneration and Consultancy Fees paid to Key Management personnel Rs./Thousand 3,925 ( 15,492); Balance written off 25 FPS Media Private Limited Rs./Thousand 13,665 (Nil). 13. Corporate guarantees include in respect Dish TV India Limited Rs./Thousand 3,305,760 (1,877,700); Wire and Wireless (India) Limited Rs./Thousand 921,000 (2,835,000).

ZEEL Annual Report 2008-2009 120 30. Segment Information The Group follows AS -17 “Segment Reporting” relating to the reporting of financial and descriptive information about their operating segments in financial statements. The Group’s reportable operating segments have been determined in accordance with the internal management structure, which is organized based on the operating business segments as described below. Broadcasting and content (B & C), which principally consists of developing, producing and procuring television programming and film content and delivering via satellites, thereby earning revenues by way of advertisement and subscription revenues and syndication. Education, which principally consists of delivering learning solutions and traning to various segments of the society. Film Production which principally consists of Production and distribution of films. (a) Business Segment (Financial Year 2008-2009) (Rs./Thousand) Film Description B & C Education Production Elimination Total SEGMENT REVENUE External Sales 21,190,985 251,295 330,816 – 21,773,097 Inter-segment Sales Total Revenue 21,190,985 251,295 330,816 – 21,773,097 SEGMENT RESULT 4,487,481 (16,481) (114,094) – 4,356,906 Operating Profit before interest and Tax 4,356,906 Profit on Sale of Investments in associates 4,590 Profit on Sale of Investments in Subsidiaries 191,923 Interest Expenses 405,899 Interest Income 1,255,697 Profit before Tax and Exceptional Item 5,403,217 Exceptional Items (25,806) Profit before Tax and After Exceptional Item 5,429,023 Current Taxes – Current year 1,525,211 Earlier Period (1,425,204) Deferred Tax Benefit/(Expense) – Current year 107,877 Profit after tax 5,221,139 Share in result of associates 1,357 Minority Interest 98,870 Net Profit 5,123,626 Business Segment (Financial Year 2007-2008) (Rs./Thousand) Description B & C Education Others Elimination Total SEGMENT REVENUE External Sales 18,098721 252,365 2,567 – 18,353,653 Inter-segment Sales Total Revenue 18,098721 252,365 2,567 – 18,353,653

121 ZEEL Annual Report 2008-2009 (Rs./Thousand) Description B & C Education Others Elimination Total SEGMENT RESULT 5,008,626 54,398 50 5,063,074 Operating Profit before interest and Tax 5,063,074 Interest Expense 297,822 Interest income 995,990 Profit before Tax and exceptional Item 5,761,242 Exceptional items 25,806 Profit before Tax and after exceptional Item 5,735,436 Current Taxes – Current year (1,794,305) Deferred Tax Benefit/(Expense) – Current Year 167,668 Profit after tax 4,160,411 Share in result of associates 5,141 Minority Interest 332,883 Net Profit 3,832,669

(b) Other Segment Information (Financial Year 2008-2009) (Rs./Thousand) Film Description B & C Education Unallocated Elimination Total Production 1. Segment Assets 35,612,629 726,646 823,314 10,254,987 (905,709) 46,502,867 2. Segment Liabilities 4,283,079 128,827 954,097 8,047,509 (905,709) 12,507,873 3. Capital Expenditures 2,336,478 466,274 14,203 2,816,955 4. Depreciation/ 300,357 8,243 1,733 310,333 Amortisation 5. Other Non Cash 208,306 6,817 – 215,123 expenditures

Other Segment Information (Financial Year 2007-2008) (Rs./Thousand) Description B & C Education Unallocated Elimination Total 1. Segment Assets 28,593,761 162,819 11,115,681 – 39,872,261 2. Segment Liabilities 4,186,256 90,188 6,985,004 – 11,261,448 3. Capital Expenditures 942,509 8,680 – – 951,189 4. Depreciation/ Amortization 223,648 8,681 – – 232,329 5. Other Non-Cash expenditures 754,074 7,483 – – 761,557 Revenue by Geographical Market The geographical segments considered for disclosure are India and Rest of World. (a) The revenues are attributable to countries based on location of customers (Rs./Thousand) 2009 2008 India 13,111,777 11,073,390 Rest of World 8,661,320 7,280,263

ZEEL Annual Report 2008-2009 122 (b) Segment assets and liabilities are disclosed based on the countries of incorporation of respective companies. (Rs./Thousand) Segment Assets Capital Expenditures 2009 2008 2009 2008 India 29,682,765 28,378,488 949,159 381,700 Rest of World 16,820,102 11,493,774 1,867,796 641,472

31. Earning Per Share In accordance with AS-20 “Earnings Per Share” issued by ICAI, basic earnings per share are computed using the weighted average number of shares outstanding during the year.

Sr. Particulars 2009 2008 No. a. Profit after Tax before Exceptional Item (Rs./Thousand) 5,097,820 3,858,475 b. Profit after Tax after Exceptional Item (Rs./Thousand) 5,123,626 3,832,669 Adjustment for the purpose of Diluted EPS: Add: Interest on Foreign Currency Convertible Bonds 1,075 1,178 Less: Tax on above 365 400 c. Profit after Tax before Exceptional Item for Diluted EPS (Rs./Thousand) 5,098,530 3,859,253 d. Profit after Tax after Exceptional Item for Diluted EPS (Rs./Thousand) 5,124,336 3,833,447 e. Weighted Average number of equity shares for Basic EPS (Nos.) 433,930,729 433,566,765 Add: Weighted Average outstanding option deemed to be issued for no consideration (Nos.) 1,083,712 1,524,058 f. Weighted Average number of equity shares for Diluted EPS (Nos.) 434,726,859 435,090,823 Nominal value of equity shares (Re.) 1 1 g. Basic EPS before Exceptional Item (Rs.) 11.75 8.90 h. Basic EPS after Exceptional Item (Rs.) 11.81 8.84 i. Diluted EPS before Exceptional Item (Rs.) 11.73 8.87 j. Diluted EPS after Exceptional Item (Rs.) 11.79 8.81

As per our attached report of even date For and on behalf of the Board Mohan Bhandari Partner Subhash Chandra Chairman Punit Goenka Whole-time Director For MGB & Co. Chartered Accountants Nemi Chand Jain Director

Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary

123 ZEEL Annual Report 2008-2009 CONSOLIDATED CASH FLOW STATEMENT AT AT MARCH 31,

(Rs. in ’000) 2009 2008 A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before taxation and exceptional items 5,403,217 5,812,853 Adjustments for : Depreciation 310,333 232,329 Share issue/Preliminary expenses written off 62 51 Provision for doubtful debts/advances and investments 235,577 727,208 Loss on sale of fixed assets 11,467 8,493 Exchange adjustments (net) 1,251,208 (545,297) Interest expense 405,899 297,822 Loss on Foreign Exchange derivative contracts 443,519 261,792 Profit on Sale of Investments - In Subsidiary (191,923) (5,511) Profit on Sale of Investments - in Associate (4,590) – Dividend income (13,387) (10,543) Interest income (1,255,697) (995,990) Operating profit before working capital changes 6,595,686 5,783,207 Adjustments for : Increase in trade and other receivables (2,916,865) (1,451,953) Increase in Programs/Film Rights and Inventories (2,102,571) (434,132) Increase/(Decrease) in trade and other payables 182,615 264,427 Cash Generated from Operations 1,758,864 4,161,549 Direct taxes paid (net) (757,146) (1,150,659) Net Cash flow from Operating Activities 1,001,718 3,010,890

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets/Capital Work-in-Progress (594,408) (1,018,929) Acquistion of Minority Interest in subsidiary (2,399,566) (51) Purchase of Investments - Long Term (280,300) (627,458) Purchase of Investments- Short Term (71,003) – Loans to others (13,691,098) (15,980,522) Loans repaid by others 13,163,499 14,659,879 Dividend received 16,690 13,846 Sale of fixed assets 11,254 18,050 Sale of subsidiary 103,979 – Sale of investment in Associate 1,319,455 – Sale of Investments - Long Term 10 – Sale of Investments - Short Term 274,148 – Sale of Investments – 419,247 Interest received 1,349,268 861,973 Net Cash flow from Investing Activities (798,073) (1,653,965)

ZEEL Annual Report 2008-2009 124 (Rs. in ’000) 2009 2008 C. CASH FLOW FROM FINANCING ACTIVITIES Dividend paid (including dividend tax) (1,015,976) (763,609) Interest paid (408,201) (298,806) Loss on Foreign Exchange derivative contracts (443,519) (261,792) Proceeds of Share Premium received Increse/(decrease) in Minority Interest (20,493) (19,797) Proceeds from short term borrowings 499,958 1,660,264 Proceeds from long term borrowings 2,947,505 624,841 Repayments of short term borrowings (1,143,262) (1,448,128) Repayments of long term borrowings (345,345) (156,258) Decrease in other vehicle loans (849) Net Cash flow from Financing Activities 70,665 (664,134) Net Cash Flow during the year (A+B+C) 274,311 692,791 Cash and Cash Equivalents at the beginning of the year 1,652,024 954,752 Cash and Cash Equivalents on acquistion of subsidiary – 4,481 Cash and Cash Equivalents at the end of the year 1,926,334 1,652,024 Cash and Cash Equivalents at the end of the year 1,926,334 1,652,024 Notes to the Cash Flow Statement for the year ended March 31, 2009 1. Previous year's figures have been regrouped, recast wherever necessary. 2. Conversion of FCCB (Refer Note 16 of Notes to Accounts) is not considered in the above cashflow statement being non cash transaction 3. Cash and Cash Equivalents at the end of the year: Cash in hand 16,263 6,270 Balances with Current Accounts 1,792,747 1,561,582 Balances with Deposit Accounts 112,791 39,103 Cheques in hand/transit 4,533 45,069 TOTAL 1,926,334 1,652,024

As per our attached report of even date For and on behalf of the Board Mohan Bhandari Partner Subhash Chandra Chairman Punit Goenka Whole-time Director For MGB & Co. Chartered Accountants Nemi Chand Jain Director

Hitesh Vakil Director - Finance Place: Mumbai Date: June 26, 2009 M. Lakshminarayanan Company Secretary

125 ZEEL Annual Report 2008-2009 APAC 1,025 Media Limited Ventures (Rs. ‘000) Zee 010 6.7317 468 5.9749 East FZLLC Middle (26,192) 8,456 Telefilms ) (26,192) 8,456 – – Zee TV Limited South Africa (Proprietary) Pte. Fast Expand Limited Holdings (Singapore) Asia Limited Business (Mauritius) Broadcasting Limited Pan Asia Infrastructure Zee TV USA Inc. UK Asia TV Limited, Zee Limited (Guangzhou) Technologies Zee Sports Limited Americas Limited (Rs. ‘000) (I) Private (I) Private Limited Zee Sports Taj Television International Ltd. ZES International Pvt. Ltd Pictures Pictures Zee Motion Ltd. ZES Mauritius ZES Limited Studios BVI Zee Sports Entertainment Ltd. ZES Holdings Limited Taj TV Zee Turner Mauritius Rs. USD USD USD USD GBP USD USD YUAN GBP USD USD USD USD RANDS AED HKD Zee Limited (Maurice) Limited Mauritius Multimedia Networks Zee 294 – 19,639 – – 44,275 40,248 – 63,733 669 – – – Limited 781,337 (12,913) 194,717 (377) (288) (104) (128) 114,026 (347) (80,183) (672,036) 95,404 – 972,020 47,783 (165,938) (211,656) (1,035) 2,196,913 444 2,481,654 1,031 735 109,618 – 3,166,086 49 7,351 890,349 735,686 – 1,125,097 57,698 4,661 273,367 57 1,383,663 2 884,354 1,304 52 – – 52 52 86,124 1,218,653 52,226 – 5,217 3,261 – 35,502 67 Worldwide (Mauritius) Multimedia Limited Asia Today – 360,129 BVI Zee 1956 RELATING TO SUBSIDIARY TO 1956 RELATING COMPANIES FOR THE YEAR ENDED MARCH 31, 2009 Limited, 52.174346.4683 52.1743 46.4683 52.1743 46.4683 1.5181 52.1743 1.5110 52.1743 46.4683 46.4683 52.1743 52.1743 46.4683 46.4683 74.1323 78.4938 52.1743 52.1743 46.4683 46.4683 7.6216 74.1323 6.7536 52.1743 78.4938 46.4683 52.1743 46.4683 52.1743 46.4683 52.1743 46.4683 5.3675 14.2 5.2377 12.6 Worldwide Multimedia STATEMENT EXEMPTION RECEIVED PURSUANT TO UNDER SECTION 212 (8) OF THE ACT, COMPANIES Balance Sheet Profit & Loss Investments (excluding subsidiaries) & Loss Account Summary Profit 371,071 Total Liabilities 827,842 1,361,294 57,637 – 144,758 Profit Before TaxProvision for TaxProfit after TaxProposed Dividend 134,315 48,172 (151,491) 28,501 86,144 (4,345) 3,940 (155,432) (4,345) (8) – (8) 19,117 – 11,738 7,379 Summary Balance Sheet Share CapitalReserve & SurplusTotal Assets 927,116 97,445 (524,848) 1,852,402 (27,871) 1,000 837,446 30,267 500 (8) 42,503 92 100 188,261 1,000 PARTICULARS ETC Turnover 762,452 1,978,854 1,602 – 146,322 Investments (excluding Proposed Dividend Provision for Tax – (710,728) Profit Before Tax (604) 1,004,562 (85,071) (952) 207,964 (336) (256) (93) (135) 199,957 (94) (14,686) (34,468) 15,830 73,824 431,367 5,447 (29,021) Summary Profit & Summary Profit Loss Account Functional Functional CurrencyConversion Rates USD USD USD subsidiaries) Turnover – 4,285,715 26 – 3,153,646 180,065 – 13,663 1,260,745 2,828,425 103,875 661,398 116,898 13,517 530,858 34,299 Profit after Tax (604) 1,715,290 (85,365) (952) 188,325 (336) (256) (93) (135) 199,957 (94) (14,686) (78,743) (24,418) 73,824 367,634 4,778 (29,021 Total Liabilities 165,194 6,917,383 31,914 13,355 1,402,582 104 970 109,722 128 3,052,008 344 1,410 343,732 588,055 – 147,860 6,654 170,598 449,521 Total Assets 8,130,005 17,027,933 Summary Balance Sheet Share Capital 2 52 Reserve & Surplus 7,964,809 10,110,498 INDIAN SUBSIDIARIES OVERSEAS OPERATIONS

ZEEL Annual Report 2008-2009 126  ZEE ENTERTAINMENT ENTERPRISES LIMITED Registered Office : Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai – 400 018. ATTENDANCE SLIP 27th Annual General Meeting

I hereby record my presence at the 27th Annual General Meeting of the Company at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai - 400 018. on Tuesday, August 18, 2009 at 11.00 a.m.

...... Name of the Shareholder/Proxy (in BLOCK LETTERS) Signature of Shareholder/Proxy

Folio No......

DP ID No......

Client ID No......

No. of Shares ......

NOTE : Shareholder/Proxy holder wishing to attend the meeting must bring the Attendance Slip to the meeting and handover the same at the entrance, duly signed. 

ZEE ENTERTAINMENT ENTERPRISES LIMITED Registered Office: Continental Building, 135, Dr. Annie Besant Road, Worli, Mumbai – 400 018. PROXY FORM 27th Annual General Meeting

I/We...... of ...... being member/members of ZEE ENTERTAINMENT ENTERPRISES LIMITED hereby appoint ...... of ...... or failing him/her ...... of ...... as my/our proxy to vote for me/us on my/our behalf at the 27th Annual General Meeting of the Company to be held on Tuesday, August 18, 2009 at 11.00 a.m. at Nehru Centre, Nehru Auditorium, Dr. Annie Besant Road, Worli, Mumbai - 400 018, and at any adjournment(s) thereof, if any. Signed this ______day of August, 2009.

Signature of Shareholder ...... Re. 1/- Revenue Folio No...... Stamp DP ID No...... Client ID No...... No. of Shares ......

NOTE: The Proxy completed in all respect must be deposited at the Registered Office of the Company not less than 48  hours before the commencement of the Annual General Meeting.