Zee Entertainment Enterprises Limited Annual Report 2010-11 Inspired Leadership Forward-looking statement In this Annual Report, we have disclosed forward looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements - written and oral, that we periodically make contain forward looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise. Contents Corporate 01 Overview ZEE at a Glance Operational Review 02 ZEE – A 5-Minute Read 24 MD & CEO’s Review 44 04 The New ZEE 26 The ZEE Calendar 06 Channel Portfolio 28 Accolades FY 2011 10 FY 2011 in Retrospect 30 Distribution Inspired Leadership 32 Broadcasting 33 Technology 14 Chairman’s Letter to the Shareholders 34 Profitability 16 Industry Transformation 36 Sustainability 18 Regional Roots 38 Human Resource 20 Consolidation 39 Corporate Information 22 Innovation Board of Directors Team ZEE Board and Management Report 45 45 Notice 48 Directors’ Report 54 Annexure to the Directors’ Report 89 60 Report on Corporate Governance 78 Management Discussion and Analysis Financials Standalone Consolidated 91 Auditors’ Report 131 Auditors’ Report 90 94 Balance Sheet 132 Balance Sheet 95 Profit & Loss Account 133 Profit & Loss Account 96 Schedules & Notes 134 Schedules & Notes 163 125 Balance Sheet Abstract 161 Cash Flow Statement 126 Cash Flow Statement 163 Financial Highlights of 128 Last Five Years Financial Subsidiaries Highlights 129 Performance Ratios – An Analysis Note 1) The acronym ZEE stands for Zee Entertainment Enterprises Limited throughout the entire report 2) As per the notification of the Government of India the Indian Rupee is denoted by ` throughout the entire report “Inspired leadership is all about leading from the front, creating benchmarks of excellence for others and self and forever dwelling outside the comfort zone. I am proud to say that today ZEE has not only created new benchmarks for itself, but also set examples for others to follow.” Mr. Subhash Chandra Chairman, ZEE Zee Entertainment Enterprises Limited Annual Report 2010-11 /1 INSPIRED LEADERSHIP ZEE A 5-Minute Read Who How are we we are performing? We are one of India’s leading Media & We are pioneers of the Indian private television entertainment industry. From Entertainment companies, and one of launching the first entertainment channel, Zee TV in 1992, to launching India’s the largest producers and aggregators first food channel, Zee Khana Khazana last year, we have been at the forefront of of Hindi programming globally. We innovation since inception. We were also the first to spot opportunities in the regional operate 25 TV channels in India and markets and launched dedicated regional channels, thereby widening our audience 17 beams in international markets. Our base and brand appeal. We were also the first to go international by launching our offerings span across various genres: services in UK in 1995, and today with our presence in 167 countries, we are the most Hindi Entertainment, Hindi Movies, preferred Hindi entertainment destination of the South Asian Diaspora globally. English Entertainment & Movies, Regional Language Entertainment, Our focus in the coming years is on sports and digital and we have taken significant Sports, Alternate Lifestyle, Music and steps in that direction. With the acquisition of Taj Television, the launch of Ten Cricket Special Interest Channels. and Ten Action+, we hope to bring world-class sports content to our viewers. Our foray in digital with our partner, Mail.com Media Corporation (MMC) will focus on With our successful marketing launching content centric digital properties. initiatives, constant evolution to align with the changing audience preferences and continuous investments in new technology platforms, we have positioned ourselves as one of the Financial Summary most popular entertainment networks. Today, ZEE enjoys a robust pan-India Figures in ` million FY2010 FY2011 Change (%) market share of 13%, and a healthy 16.1% in the Hindi speaking markets. Revenues 21,998 30,136 37.0 We are also the frontrunner in content EBITDA 6,135 8,266 34.7 distribution through both the traditional EBITDA Margin 27.9% 27.4% (analogue) and new (digital) platforms. PBT (after exceptional Item) 6,738 8,922 32.4 We are also the largest entertainment Basic EPS (after exceptional item and 6.78 6.51 -4.0 network catering to the South Asian discontinuing operation) community across the world. Gross Debt 1,195 17 -98.6 Networth* 38,300 30,947 -19.2 Fixed Assets* 19,587 8,464 -56.8 Net Current Assets 16,550 15,225 -8.0 * Pursuant to Corporate Restructuring ZEE at a Glance Inspired Leadership Operational Review ZEE Board of Directors Team ZEE A 5-Minute Read 25 17 167 500mn+ 100,000+ channels international countries viewers hours of television beams content Our What What is recognitions we think? changing? Our endless efforts to entertain The digital drive led by the Collaborations and partnerships are viewers have been consistently exponential growth of DTH has been on the radar as we strive harder to recognized by the industry. a significant feature over the last few explore new frontiers. Our first major ZEE’s innovative content and years making it possible for C&S to step in this direction is a partnership execution excellence have been reach 80% TV households in India. with STAR to form a distribution praised and rewarded nationally With the focus shifting towards alliance. This landmark event will and internationally. After being addressable infrastructure, there will incentivise digitization, address piracy awarded ‘The Hall of Fame for be speeding up of digitization in India issues and enable a content revolution Continuing Contribution to Industry – going forward. in India. Entrepreneur’ in 2010, our Chairman, Mr. Subhash Chandra will receive the Increase in internet penetration levels Our passion to create unparalleled 2011 International Emmy Directorate and growth of m-commerce in India entertainment content constantly Award as well. Our MD & CEO, Mr. are trends that will take shape in the drives us to think out of the box. We Punit Goenka was presented the future. The launch of 3G technology in acknowledge that society is evolving, Rotary Vocational Excellence Award the country along with multiple smart and so is the viewer’s preference for 2010. phone applications will considerably entertainment. To stay relevant and expand the market for digital media. contemporary in a world of constant Be it the ITA, Telly Awards, change, we have introduced a new International Drama Awards or Another trend is the rapid change brand logo, with a more engaging FICCI-FRAMES, our serial “Pavitra in consumer preferences as they tagline and a new positioning. Rishta” has won over 7 awards and search for content of their choice many accolades this year. Zee Talkies and relevance. Likewise with the production “Natarang” has added increase in purchasing power across many feathers to our hat by winning tier I and II cities, regional and niche awards at the Munich International programming will gain prominence. Film Festival 2010, the National Award and the Pune Press Guild. Why we exist? “To become the world’s leading global media company from the emerging markets. As a Corporation, we will be driven by innovation & creativity and would focus on growth while delivering exceptional value to our customers, our viewers and all our stakeholders”. Zee Entertainment Enterprises Limited Annual Report 2010-11 2/3 INSPIRED LEADERSHIP October 1992 to June 2000 June 2000 to March 2005 March 2005 to June 2011 The New ZEE Why the change? The new identity ZEE’s content has evolved Designed in-house, the brand identity is marked by vibrancy, effortless style, new-age sensibilities. We identify most though, phenomenally. With our growing with its characteristics of breaking away from clichés and norms. popularity, we revamp our image We are young, we are enthusiastic. too, periodically. As part of our latest We carried out extensive research among our viewers to arrive rebranding initiative, we decided to at a new logo and programming content. It stands also for ZEE’s optimism – a mirror of the aspirations of millions of Indians. To give our brand a fresh outlook, just like us, it is full of rigor, and life and the ultimate energy. So this our programming. rebranding isn’t just on the surface: the approach is thorough, derived from viewer endorsement. Our new brand identity, positioning and vision was unveiled on June 19, 2011. With these echoes, ZEE steps into a new phase of its growth trajectory. The new identity magnifies our relatable content, our adaptability to societal changes and our capability to creatively innovate. We showcase the credibility we have built over the past two decades, to tell our viewers we have come back stronger, not only than our competitors, but also than our earlier self. ZEE at a Glance Inspired Leadership Operational Review Board of Directors Team ZEE The New ZEE June 2011 onwards Umeed Se Saje Zindagi Umeed ke bandh lifaafe mein, Ek timtimata sapna hai. Baadal ki pichkaari lekar, Chaand sitaare rangna hai.