India Equity Research December 22, 2020
ANNUAL REPORT ANALYSIS Zee Entertainment Enterprises
MARKET DATA Zee Entertainment Enterprises’ (Zee) FY20 Annual Report comes 52-week range (INR) NIL with an auditor’s qualified opinion w.r.t. Letter of Comfort (LOC) on Share in issue (mn) 960.5 Put Option Agreement between ATL Media (subsidiary) and Living Market cap (INR bn/USD mn) 217/2,951 Avg. Daily Vo. BSE/NSE (‘000) 26,323 Entertainment (related party) (pg 4). Profitability was hit by several provisions/write-downs such as fair valuation loss on offshore investments, goodwill impairment (online media), accelerated Shareholding Pattern (%) amortisation (inventory) and doubtful debts provisions. Promoters * 4.0 MFs, FIs & Banks 11.3 Other points: (i) Another key audit matter-Though recovered later, FIIs 66.2 during FY20, banks had prematurely adjusted INR2bn of Zee’s FD Others 18.5 against repayments due from related parties. (ii) ICD of INR1.7bn *Promoters pledged shares 0.24 (% of share in issue) written off. (iii) In standalone, Zee devalued investments in Essel Vision Production (EVP) up to 74% (INR4.4bn). (iv) OCF (post interest) at INR1.3bn versus INR(79)mn in FY19. Auditors Deloitte Haskins & Sells LLP Auditor’s qualified opinion w.r.t. Letter of Comfort
The auditor has issued a qualified opinion with regard to non-recognising contingent liability against LOC given by Zee to banks and liability against Put Option Agreement of INR8bn in FY16 (renewed to INR4bn during FY20) entered between ATL Media (Zee’s 100% subsidiary) and LEL (promoter-owned company), which got rescinded post FY20, quoting misrepresentation by LEL (refer to page 4 for details). Explore: The auditor stated that, “this could potentially result in adjustment in the books of account or disclosure in the consolidated financial statements.” Post FY20, credit rating further deteriorated to “AA-“ (from AA) primarily due to uncertainties of above matters along with ongoing inspection by MCA. Financial model Podcast Related party transaction lower; other FD-related key audit matter Subscription income (related party) plunged 69% YoY primarily due to Dish TV being classified as non-related party from FY20 (FY19:INR4.8bn). Trade receivables and loans/ advances cumulatively declined sharply and stood at INR1.6bn led by high
Corporate access Video allowance booked at year-end. Certain related parties (promoter companies) defaulted against which the bank pre-matured Zee’s fixed deposit of ~INR2bn. From these related parties the company later received this full amount during the year, along with interest. The auditor has mentioned this as a key audit matter.
Investments devalued; 45% online media’s goodwill impaired Zee booked INR3.8bn (64% of total investment) fair value loss on Poseidon Opportunities & Actinium Investments, and was expected to receive the balance Analysis Beyond Consensus (ABC) is our post Q2FY21. Further, ICDs of INR1.7bn earlier assigned to certain related parties initiative to provide a differentiated were written-off during FY20 due to non-recoverability. In standalone, investments perspective to our clients on various non- routine and intricate issues. This unit of (OCD) in Essel Vision Production (EVP) were devalued by 74% and a loss of INR4.4bn research works independent of the was booked. EVP, on the other hand, booked gain of 25% (INR1.5bn) only on its sector/ stock research team and views borrowings (OCD). Goodwill pertaining to online media business impairment expressed in this report may vary with continued this year, also under exceptional item, for INR1.1bn (FY19-INR218mn). that of respective sector/ stock analyst. As a % of total allocated goodwill, 45% was impaired during FY20 versus 8% in FY19.
Alok Deshpande Bhavin Rupani Rahul Ahuja +91 (22) 6620 3163 +91 (22) 4063 5544 +91 (22) 6620 3006 [email protected] [email protected] m [email protected]
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ANNUAL REPORT ANALYSIS
Tax cut supported OCF; cash profit to OCF conversion remains weak OCF doubled YoY to INR2.5bn primarily led by a sharp INR6bn decline in cash tax paid due to lower corporate tax in FY20. Adjusted for finance cost and dividend on preference share, OCF stood at INR1.3bn versus INR(79)mn in FY19. While ATL Media’s OCF deteriorated to INR(2.7)bn from INR(830)mn in FY19 primarily led by adverse working capital movement of INR1.6bn YoY, Essel Vision’s FCF improved from INR(1.3)bn to INR(49)mn due to favourable working capital swing of INR0.9bn YoY. EBITDA to OCF (pre-tax) conversion ratio remain flat YoY at 41%; cumulatively, for past five years, it stood at 59%. Working capital up 41% YoY on high inventory and unbilled revenue Working capital jumped 41% YoY and as % to sales it rose to 73% from 53% in FY19. Despite accelerated amortisation, inventory during the year catapulted 39% YoY due to movie rights received against advances given in FY19. Unbilled revenue jumped 3x YoY to INR2.6bn. Cash conversion cycle rose by 75 days to 380, mainly due to rise in inventory days by 54 days to 438 days. Capital allocation and ROCE: ROCE halved to 13.8% During FY16-20, Zee generated major funds from operation (71%) and deployed them majorly towards working capital requirements (48%), followed by dividend distributed (21%), redemption of preference share (13%) and capex (12%). Asia Today and Asia TV USA dragged 30% of standalone EBIT in FY20 predominantly due to one-off provisions and loss on fair value. Consolidated ROCE plunged to 13.8% (FY19: 27%) on lower profitability margin. One-offs hit profitability Despite 2.5% YoY revenue growth, reported EBITDA margin plunged to 20% (FY19- 32%) due to higher provision for doubtful debts and one-off accelerated amortisation. Further, profitability worsened due to loss on fair valuation of offshore investment (INR3.8bn) along with exceptional loss due to ICDs written-off (INR1.7bn) and goodwill impairment (INR1.1bn) of the online media business. Fair valuation gain spurred EVP’s performance Asia Today (holding company of Asia TV (UK) took impairment of INR1.0bn (USD13.7mn) and ATL Media (holding company to Taj TV) took impairment of INR165mn (USD2.2mn) during FY20. The auditor of Z5X Global has raised significant doubts on the company’s ability to continue as a going concern. Essel Vision Production: Despite revenue dipping 10% YoY, PAT jumped from INR79mn in FY19 to INR1.6bn in FY20 led by fair valuation gain of INR1.5bn on 0% OCD issued to parent company. Other Networth accretion: During FY16-20, networth moved from INR55.5bn to INR93.4bn mainly led by profits from operation (136%), which adjusted for reclassification of redeemable preference share as debt (-36%). Trade receivables: Allowance for doubtful debts jumped almost 3x during FY20 on account of one-off provisioning of INR3.4bn at year-end. Despite unbilled revenue also jumping 3x, receivables as % to sale rose to 31% from 25% in FY19. Inventory: Inventory amortised rose 37% YoY to INR31bn due to accelerated charge due to covid-19 and slow-down in economic activity. Other expenses: Total other expenses surged 20% YoY to INR18.9bn led by huge allowances for doubtful debtors and advances; as % to sales it rose to 7% in FY20 from 1.1% FY19.
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ANNUAL REPORT ANALYSIS
Table of contents
Auditor’s qualification………………………………………………………………………….…………4
Related party transaction analysis……………………………………………………………….….6
Investments analysis, Intangibles & goodwill, exceptional item………………………8
Cash flow analysis………………………………………………………………………………………...10
Working capital analysis, trade receivables/ inventory analysis…………………....12
Capital allocation……………………………………………………………………………………..……14
Profitability………………………………………………………………………………………………..….17
Governance…………………………………………………………………………………………..………20
Group structure……………………………………………………………………………………….……22
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ANNUAL REPORT ANALYSIS
Auditor’s Qualified Opinion
What was the matter?
Zee Yes/ Axis Bank 3. In order to secure a borrowing, 2. May'16:Zee issued a Letter of Comfort (LOC) to the Banks 100% LEL assigned all its right, title, subsi. confirming its intention, among other matters, to support ATL benefit and interest under the said by infusing equity/debt for meeting all its working capital Put Option Agreement in favour of requirements, debt requirements, business expansion plans, Banks. honouring the put option, take or pay agreements and 5. LEL extended the renewed guarantees. assignment of the Put Option. ATL Media LEL, Mauritius (Related Party) 1. Mar'16: ATL entered into a Put Option Agreement with LEL to acquire 64% of VIL held by LEL for USD105mn (INR8bn), whose expiry date was Jul'19.
4. Jul'19: Agreement renewed on and extended till Dec'26 based VIL, Bermunda (Related Party) on certain representations made by LEL and the exercise price was set at USD52.5mn (INR4bn) for the same number of shares.
LEL defaulted; suit filed by bank against LOC On default by LEL on repayment of loan, the bank enforced the Put Option pursuant Since the matter is sub-judice and based to the assignment and demanded ATL to pay the exercise price. Zee is of the view on legal advice obtained by the that the LOC provides neither any guarantee, commitment nor assurance to company, the LOC has not been pay/repay any obligation of LEL. considered as a guarantee by management and it does not create any In June 2020, the bank filed primary a suit and a plaint seeking ad-interim relief in transaction that requires recognition of a the Hon'ble High Court of Bombay (court) on the ground that the company’s LOC is liability in the books of account of the a guarantee. The High Court of Bombay has refused the ad-interim relief sought by company. the bank. The primary suit is yet to be heard by the court. Misrepresentation by LEL; ATL rescinded the Put Option Agreement Post FY20, ATL rescinded the agreement from the date it was extended, citing reason of misrepresentation by LEL at the time of renewal and filed a suit against LEL and
the bank for inter-alia declaration that the amended agreement has been properly rescinded and no longer binding and enforceable. The management has determined that based on valuation reports provided by LEL annually for subsequent periods (from March 2016 to March 2019), the value of the underlying shares in VIL was higher than the exercise price and hence no amount was required to be recognised as a liability on account of the put option in respect of those financial year ends. Auditor highlighted material weakness in internal financial control Basis for qualified opinion extract: “The Parents financial reporting process did not have controls to identify the issuance of such LOC and controls surrounding the consideration of the valuation of the Put Option entered by the subsidiary company when preparing the consolidated financial statements. This could potentially result in adjustment in the books of account or disclosure in the consolidated financial statements.”
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ANNUAL REPORT ANALYSIS
Credit ratings downgraded further after FY20 In August 2020, the company’s credit rating was further downgraded to AA- (credit watch with negative implication) due to decline in FY20 profitability and margin, auditor’s qualification with respect to non-recognizing the liability against put option agreement entered by ATL Media, contingent liability due to LOC issued by the company and uncertainties associated with the outcome of ongoing inspection by MCA.
Exhibit 1: Credit ratings trend Facilities/Instruments Rating Agency FY16 FY17 FY18 FY19 FY20 Aug-20 Bonus Preference Shares Brickwork Ratings AA+ AAA AAA AAA AA AA- Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Related party transactions analysis
Purchase of service remains flat and was mainly from Broadcast Audience Research Council, Zee Media Corp., Digital Subscriber Management & Consultancy Services, Siti Networks and Evenness Business Excellence Services.
Trade receivables and loans/advances given plunged by INR6bn to INR1.6bn largely due to allowances and provision provided for in FY20. Provision in respect of SNL (INR1.1bn) was highest, followed by Edison Infrapower and Konti Infrapower (INR0.6bn), Widescreen Holdings (INR0.5bn) and Living Entertainment Enterprises (INR0.4bn).
Exhibit 2: Related party transaction trend (INR mn) Particulars FY17 FY18 FY19 FY20 Subscription income plunged ~69% YoY Subscription income 3,228 3,481 6,227 1,955 primarily due to classification of Dish TV as a non-related party from FY20, which As % of subscription income 14.3 17.2 27.0 6.8 stood INR4.8bn in FY19. Purchase of services 2,328 2,530 3,034 3,065
Trade receivables 1,080 1,159 5,335 1,222 As % of Sales 1.7 1.7 6.7 1.5
Loans, advances and deposits given 646 427 2,233 408 As % of Networth 1.0 0.6 2.5 0.4 Source: Company annual report, Edelweiss research:
Zee’s INR2bn fixed deposit (FD) with a bank was supposed to mature in September Auditor has considered FD adjustment 2020. In July 2019, the bank unilaterally pre-matured and adjusted the FD against against dues of certain related parties as dues of below mentioned non-group related parties (promoter group entities). key audit matter However, the amount along with interest (INR25mn) received from such related parties.
Separately, Dr. Subhash Chandra in his individual capacity had given Personal Letters of Comfort (LOC) to a bank. Based on the legal opinion obtained, the Group is of the view that the LOC was given in his personal capacity and hence will have no financial implications on the Group.
Exhibit 3: Related parties that have defaulted Related parties INR mn % Pan India Infraprojects Pvt. Ltd. 523 26 Pan India Network Infravest Ltd. 499 25 Evenness Business Excellence Services Ltd. 233 12 Essel Corporate Resources Pvt. Ltd. 226 11 Essel Utilities Distribution Company Ltd. 194 10 Living Entertainment Enterprises Pvt. Ltd. 176 9 Essel Green Mobility Ltd. 173 9 Total 2,024 100 Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Exhibit 4: Contingent liabilities & commitments analysis (INR bn) Corporate guarantees for other related Particulars FY16 FY17 FY18 FY19 FY20 parties and loans outstanding catapulted Corporate Guarantees 44% YoY to INR1.6bn in FY20 -For subsidiaries, loans outstanding 21.4 4.0 - - - Capital commitments towards media -For other related parties, loans outstanding 0.8 1.0 1.0 1.1 1.6 content and licence fees doubled during -For other parties, loans outstanding - - - - 0.3 the year Indirect taxes 0.5 0.5 0.5 0.6 0.6 Direct Taxes 6.0 5.4 4.7 3.4 0.6 Claims against the company not acknowledged as debts 0.9 0.6 0.7 0.4 0.3 Total 30 12 7 6 4
As % of net worth 62 17 9 6 4 Capital commitments Towards media content and license fees 35.2 6.7 3.1 8.6 16.7 Estimated amount of contracts remaining to be executed 0.2 0.4 0.4 0.6 0.6 Uncalled liability on investments 0.2 0.9 0.1 0.1 0.0 Total 36 8 4 9 17 As % of net worth 74 12 5 10 19 Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Investment analysis
Exhibit 5: Analysis of investments and loans & advances (INR mn) Zee booked INR3.8bn (64% of total Particulars FY16 FY17 FY18 FY19 FY20 investment) fair value loss on Poseidon Investments Opportunities and Actinium Investments Poseidon Opportunities Fund Ltd. 4,192 4,250 3,418 3,794 1,370 during FY20. The company expected to Actinium Investments Funds - - 1,976 2,196 875 receive balance amount post Q2FY21 17% unrated subordinate NCDs of 1,469 1,543 1,725 - - Also, ICD of INR1.7bn written-off under SGGD Projects Development exceptional item Morpheus Media Fund 859 446 323 165 58 CCPS of Tagos Design Innovations - - 184 102 98 The company received inventory worth INR2bn against other advances, which led Total (A) 6,520 6,239 7,626 6,257 2,401 it declined to INR10.6bn Loan and advances: Inter-corporate deposits (ICD's) 1,750 1,542 2,428 2,135 - Furthermore, deposits to non-related parties fell by INR7.8bn to INR0.7bn Other advances 5,566 8,574 9,320 12,532 10,604 during FY20 as the company received Deposits and other receivables: rights aggregating INR2.2bn and has Related parties 816 853 1,059 1,163 813 received refund of INR525mn; balance Non-related parties 841 2,393 986 8,513 716 amount has been renewed as advance Total (B) 8,973 13,362 13,793 24,343 12,133 Total (A+B) 15,493 19,601 21,419 30,600 14,534 As % of net worth 32 29 25 34 16 Other investments/ loans: Mutual fund 400 3,075 4,577 67 - CP/ CD's 3,000 3,000 2,000 2,519 525 Others 1,430 2,096 2,445 2,253 922 Total (C) 4,830 8,171 9,022 4,839 1,447 Total (A+B+C) 20,323 27,772 30,441 35,439 15,981 As % of net worth 42 42 40 40 17 Source: Company annual report, Edelweiss research
Exhibit 6: Investment position in Essel Vision Production (INR mn) Investment Essel Vision (Standalone) FY16 FY17 FY18 FY19 FY20 On standalone basis, Zee devalued its investment in Essel Vision Production Equity 330 330 330 330 330 (optionally convertible debentures) by 0% Optionally convertible debentures 1,424 2,246 4,409 5,904 1,555 ~74% and booked loss of INR4.4bn during Total 1,754 2,576 4,739 6,234 1,885 the year As % of standalone networth 4.9 5.9 8.1 8.7 2.5 On the other hand, Essel Vision devalued Essel Vision Production (Equity & Liabilities) its borrowing from the company by 25% Equity 330 330 330 330 330 and booked gain of INR1.5bn 0% Optionally convertible debentures 1,218 1,900 3,985 5,904 4,395 Total 1,548 2,230 4,315 6,234 4,725 Difference (Standalone - Essel) 206 346 424 0 (2,840)
Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Exhibit 7: Exceptional item analysis (INR mn) Particulars FY16 FY17 FY18 FY19 FY20 Exceptional loss jumped during FY20 led by goodwill impairment of INR1.1bn on Provision for investment write off (331) - - - - online media business (FY19: INR218mn) Profit on sale of sport business - 12,234 1,346 - - and INR1.7bn on account of impairment Impairment loss on goodwill - - - (218) (1,137) of ICDs to related parties. Impairment of loan - - - - (1,706) Total (331) 12,234 1,346 (218) (2,843) As % to PBT(Before Exceptional Item) (2.0) 72.9 6.2 (0.9) (22.9)
As % to Networth (0.7) 18.3 1.8 (0.2) (3.0) Source: Company annual report, Edelweiss research
Zee impaired online media business goodwill worth INR1.1bn in FY20 (FY19: INR218mn).
Goodwill of INR4.1bn at FY20-end largely pertains to the online media business (INR1.3bn), international business (INR2.0bn) and regional channels in India (INR0.6bn). Exhibit 8: Intangibles and goodwill analysis (INR mn) Goodwill had jumped from INR2.7bn in Particulars FY16 FY17 FY18 FY19 FY20 FY17 to INR5.5bn in FY18 owing to the Goodwill on consolidation 8,843 2,676 5,467 5,252 4,070 acquisition of the balance 49% stake of Computers & Software 126 109 725 846 1,286 India Web Portal (IWPL) for INR2bn. Intangibles channels 93 135 61 35 66 Consequent to the acquisition, Zee’s Trademark 272 214 117 31 21 earlier stake of 51% was revalued, which Customer list and websites - - 831 471 111 led to rise in goodwill Intangible assets under development - 287 139 478 497 Total 9,334 3,421 7,340 7,113 6,051
Net worth 48,039 66,904 75,617 89,239 93,439
As % of Net worth 19.4 5.1 9.7 8.0 6.5 Source: Company annual report, Edelweiss research
Exhibit 9: Yield on investments and other income (INR mn) Yield on cash/investments doubled to Particulars FY16 FY17 FY18 FY19 FY20 9.6% mainly due to income tax refund of INR971mn in FY20 (FY19: INR7mn) Income from investments 1,272 1,291 1,806 1,327 1,617 Total cash and cash equivalents 19,832 20,229 31,050 23,226 10,332
Also, offshore investment revalued down Average yield on investments (%) 6.5 6.4 5.2 4.9 9.6 by INR3.8bn at FY20-end. Adjusted for it, average yield stood at 8.6% Total other income 1,951 2,240 4,403 2,515 2,836 Other income as % of PBT (before 13.9 13.4 20.2 10.3 22.8 Other income accounted for 23% of PBT exceptional) Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Cash flow analysis
Despite weak performance in FY20, OCF almost doubled to INR2.5bn from INR1.4bn in FY19 mainly led by lower tax paid and working capital release. Working capital was higher at INR(16.8)bn, on account of decline in receivables and other payables due to interest free callable deposit of INR5bn received during FY19 got settled.
Adjusted for interest and dividend on preference shares, OCF stood at INR1.3bn from INR(79)mn in FY19. Capex during the year halved to INR1.4bn, but pushed FCF in to negative territory.
ATL Media’s OCF deteriorated to INR(2.7)bn from INR(830)mn in FY19 primarily led by adverse working capital movement to INR(2.1)bn from INR509mn in FY19. However, Essel Vision’s OCF improved led by working capital release of INR1bn during FY20.
Exhibit 10: Standalone and consolidated cash flow analysis (INR mn) Particulars Standalone Subsidary/ JV (derived) Consolidated FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Profit before tax 11,299 16,151 27,311 25,956 12,029 2,741 12,858 (4,124) (1,611) (2,466) 14,040 29,009 23,187 24,345 9,563 Non operating expenses 236 (2,021) (7,889) 601 2,148 340 (10,051) 6,261 (530) (2,715) 576 (12,072) (1,628) 71 (567) Non cash adjustments 502 3,427 1,935 1,558 8,078 515 (112) (1,104) 1,828 5,297 1,017 3,315 831 3,386 13,375 Direct taxes paid (5,095) (5,834) (8,130) (8,297) (2,553) (732) (976) (165) (1,002) (561) (5,827) (6,810) (8,295) (9,299) (3,114) Cash profit after tax 6,942 11,723 13,227 19,818 19,702 2,864 1,719 868 (1,315) (445) 9,806 13,442 14,095 18,503 19,257 (Increase)/Decrease in trade/ other receivables (1,492) (3,472) (2,691) (15,478) (2,257) (2,053) 1,047 181 1,223 1,968 (3,545) (2,425) (2,510) (14,255) (289) (Increase)/Decrease in inventories (1,294) (2,398) (5,857) (10,764) (11,537) 19 (1,278) (3,502) (778) (3,293) (1,275) (3,676) (9,359) (11,542) (14,830) Increase/ (Decrease) trade/ other payables 1,342 2,385 2,652 9,057 (2,822) 981 (2,320) 666 (411) 1,183 2,323 65 3,318 8,646 (1,639) (Increase)/ Decrease in working capital (1,444) (3,485) (5,896) (17,185) (16,616) (1,053) (2,551) (2,655) 34 (142) (2,497) (6,036) (8,551) (17,151) (16,758) OCF 5,498 8,238 7,331 2,633 3,086 1,811 (832) (1,787) (1,281) (587) 7,309 7,406 5,544 1,352 2,499 Interest expenses paid (27) (10) (94) (48) (28) (1) (63) (7) (6) (64) (28) (73) (101) (54) (92) Preference share dividend (1,458) (1,458) (1,435) (1,377) (1,146) - - - - - (1,458) (1,458) (1,435) (1,377) (1,146) Net OCF post int. 4,013 6,770 5,802 1,208 1,912 1,810 (895) (1,794) (1,287) (651) 5,823 5,875 4,008 (79) 1,261 Capex (897) (1,759) (1,350) (1,059) (1,011) (1,819) (945) (1,195) (1,755) (440) (2,716) (2,704) (2,545) (2,814) (1,451) Free Cash Flow 3,116 5,011 4,452 149 901 (9) (1,840) (2,989) (3,042) (1,091) 3,107 3,171 1,463 (2,893) (190) Investment/ acquisition in Subsi/JV/Associate (968) (213) (2,765) - - (12) 100 750 - - (980) (113) (2,015) - - Adjusted Free Cash Flow 2,148 4,798 1,687 149 901 (21) (1,740) (2,239) (3,042) (1,091) 2,127 3,058 (552) (2,893) (190) Source: Company annual report, Edelweiss research
Exhibit 11: Adj. FCF bridge FY19 and FY20 (INR mn)
901 835 426 550 149 69 156
(49) (49) (325) (190) (830) (929) (1,335)
(2,651) (2,893) Zee (S) Essel ATL MediaAsia Today Asia TV Zee Ent. Others Zee (C) Vision USA ME
FY19 FY20
Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Earnings to cash conversion ratio improved during FY20 to 12% from (1)% in FY19, though cumulative for FY16-20 it remains subdued at 30%. OCF (pre-tax) to EBITDA ratio has remained weak at 59% for the past five years.
Zee’s accounting policy of amortising inventory over 60 months creates a mismatch between its profitability and cash flow, leading to a lower earnings-to-cash conversion ratio.
Exhibit 12: Earnings-to-cash conversion analysis (INR mn) 5yr Particulars FY16 FY17 FY18 FY19 FY20 FY16-20 CAGR (%) Operating cash flow, post interest and pref. dividend (A) 5,823 5,875 4,008 (79) 1,261 16,888 -ve Profit after tax and pref. dividend (adjusted for exceptional items) 8,568 9,967 13,432 15,890 8,089 55,946 -ve Depreciation & FVTPL notional loss 1,450 3,357 1,889 2,311 5,303 14,310 51.1 Other income 1,951 2,240 4,403 2,515 2,836 13,945 4.5 PAT + Depreciation - Other income (B) 8,067 11,084 10,918 15,686 10,556 56,311 9.5 Earnings to cash conversion ratio (A/B*100) 72 53 37 (1) 12 30 OCF (pre-tax) to EBITDA ratio (%) 91 83 67 41 41 59
Inventory movement YoY (mainly movie rights) 1,302 3,782 9,316 12,227 14,970 41,597 153.9 Source: Company annual report, Edelweiss research
Exhibit 13: Earnings to cash conversion versus inventory movement 100.0 18.0
75.0 14.4
50.0 10.8
(%) 25.0 7.2 (INR bn) (INR
0.0 3.6
(25.0) 0.0 FY16 FY17 FY18 FY19 FY20
Inventory change YoY (RHS) Earnings to cash conversion ratio (%) OCF (pre tax) to EBITDA ratio (%) Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Working capital analysis
Exhibit 14: Working capital analysis (INR mn) While inventory rose 39% YoY, unbilled Particulars FY16 FY17 FY18 FY19 FY20 revenue rose 3x YoY during FY20. This led to Trade receivables 13,482 12,418 15,365 18,274 20,847 significant rise in working capital (41%) Inventories 13,180 16,962 26,278 38,505 53,475 Working capital as % to sales rose 20ppt YoY Trade Payables 4,768 8,343 11,497 14,897 16,803 to 73% (all time high) Advance from customers 1,287 671 931 575 730 Increase in inventory led by acquisition of Unbilled revenue 1,220 123 444 830 2,581 movie rights from content aggregators who Unearned revenue 479 - - - - were paid advances during FY19 Trade working capital 21,348 20,489 29,659 42,137 59,370 Unbilled revenue rose 3x to INR2.6bn from Trade working capital to sales (%) 37 32 44 53 73 INR830mn in FY19. As % to sales it stood at Inventory receivable as % to sales 23 26 39 49 66 3.2% (FY19: 1.1%) Inventory days 176 198 312 384 438 Cash conversion cycle jumped to 380 days Trade Receivable days 76 73 76 77 88 (FY19: 305) primarily due to increase in Trade Payable days (63) (86) (143) (157) (151) inventory days by 54 to 438 days in FY20 Unbilled revenue days 7 4 2 3 8 Advance from customers days (7) (6) (4) (3) (3) Unearned revenue days (2) - - - - Cash conversion cycle 188 184 242 305 380 Source: Company annual report, Edelweiss research . Exhibit 15: Receivables’ analysis (INR mn) Allowance for doubtful debts jumped Particulars FY16 FY17 FY18 FY19 FY20 almost 3x during FY20 on account of one-off Considered good 13,482 12,418 15,365 18,274 20,847 provisioning of INR3.4bn at year end Considered doubtful 1,581 1,319 1,759 1,720 4,707 Receivables as % to sale rose to 31% from Less: Allowance for doubtful debts (1,581) (1,319) (1,759) (1,720) (4,707) 25% in FY19 on account of poor collection Total 13,482 12,418 15,365 18,274 20,847 due to covid-19 at year end
Doubtful as % to gross receivable 10 10 10 9 18 Gross receivables % of sales 26 21 26 25 31 Source: Company annual report, Edelweiss research
Inventory amortised surged 37% YoY to Exhibit 16: Inventory amortisation analysis (INR bn) INR31bn due to accelerated charge of Particulars FY16 FY17 FY18 FY19 FY20 INR2.6bn due to covid-19 and slow down in Amortisation of Inventory n.a. 19 20 23 31 economic activity in Q4FY20 As % to Gross Media Content Exp n.a. 41 44 44 46 As % to sale, it jumped 500bps YoY to 39% As % to Sales n.a. 29 32 34 39 (FY19: 34%) Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Exhibit 17: Inventory amortisation accounting policy - peers benchmarking Zee amortises film rights over 60 months Company Status Inventory Accounting Policy (SLM basis). Peers (domestic and global) Film rights are amortised on a straight-line basis over the licensed amortise inventory based on estimated period or 60 months from the commencement of rights, whichever is shorter. economic benefit/ usage/ number of Films produced and/or acquired for distribution/sale of rights : episodes telecast over the period. Film rights are amortised as under : Zee Domestic a) Satellite rights - Allocated cost of right is expensed immediately on sale. b) Theatrical rights - 80% of allocated cost is amortised immediately on theatrical release and balance allocated cost is amortised equally in following six months. Cost related to film is fully expensed on the date of first telecast of the Sun TV Domestic film and the cost related to program broadcasting rights / multi episodes series are amortized based on the telecasted episodes. Programmes purchased and the cost of programmes produced in- house is expensed off based on number of episodes telecast during the period. Cost of news/ current affairs/ onetime events are fully TV 18 Domestic expensed off on first telecast. Cost of shows, events and films are expensed off based on the expected pattern of realisation of economic benefits. Amortize the license fee to “Cost of sales” on a straight-line basis or on Amazon Global an accelerated basis, based on estimated usage patterns, which typically ranges from one to five years. Television series and feature film programming costs are amortized Viacom over the period in which an economic benefit is expected to be Global (CBS Corp.) derived based on the timing of the Company’s usage of and benefit from such programming. The amortization is on an accelerated basis, as the Company typically expects more upfront viewing, for instance due to additional Netflix Global merchandising and marketing efforts, and film amortization is more accelerated than TV series amortization. Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Capital allocation
During FY16-20, Zee generated funds largely from its operations (71%) and utilised the surplus cash equivalent (22%). The company utilised its major funds in working capital (48%), followed by dividends paid (21%), redemption of preference shares (13%) and capital expenditure (12%). Exhibit 18: Sources & application Sources of Funds(FY16-20) Application of Funds(FY16-20) Others Net Borrowings Investment in Investment 2% 3% Subsidiary income 3% 5% Capex 12% Net cash/ investments 22% Redemption of Preference Working Shares capital 13% 48%
CPAT (Post Dividends int.) paid 71% 21%
Source: Company annual report, Edelweiss research
Exhibit 19: Sources and application of funds (FY16-20) (INR mn) Sources of Funds FY16-20 % Application of Funds FY16-20 % CPAT (Post int.) 74,755 71 Working capital 50,993 48 Net cash/ investments 22,544 21 Dividends paid 21,911 21 Investment income 5,655 5 Redemption of Preference Shares 13,785 13 Others 2,458 2 Capex 12,230 12 Net Borrowings 3,385 3 Investment in Subsidiary 3,108 3 Total 1,05,412 100 1,05,412 100 Source: Company annual report, Edelweiss research Exhibit 20: Capital allocation (INR bn) Particulars FY16 FY17 FY18 FY19 FY20
The company’s ROE/ROCE more than halved Sales 58.1 64.3 66.9 79.3 81.3 YoY to 8.9%/13.8% during FY20 from EBITDA 14.5 17.1 20.7 25.7 13.7 19.3%/27.0% in FY19 EBITDA margin (%) 24.9 26.5 31.0 32.4 16.9 Excluding the one-off accelerated inventory Depreciation 0.8 1.2 1.8 2.3 2.7 amortisation (INR2.6bn) and provision for Net Profit 8.2 22.2 14.8 15.7 5.2 doubtful debts (INR3.4bn), EBITDA margin ROE (%) 15.9 17.3 18.8 19.3 8.9 stood at 27.5% ROCE (%) 25.9 23.6 25.9 27.0 13.8 Asset turnover (ex-CWIP and intangibles 4.4 7.0 4.5 5.6 6.2 under development) Capital employed 65.2 88.9 90.9 100.4 100.3 Equity shareholders' funds (A) 48.0 66.9 75.6 89.2 93.4
Loan funds (B) 17.2 22.0 15.3 11.1 6.8 Source: Company annual report, Edelweiss research
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Exhibit 21: EBITDA, ROCE and ROE trend (INR bn) 125 35
100 28
75 21
50 14
25 7
0 0 FY16 FY17 FY18 FY19 FY20
Equity (LHS) Loan (LHS) ROCE (%) ROE (%) EBITDA margin (%)
Source: Company annual report, Edelweiss research
Exhibit 22: ROCE - key subsidiaries (INR mn) EBIT RoCE % Particulars FY19 FY20 FY19 FY20 ROCE % across the business deteriorated as EBIT halved during Standalaone 25,564 13,984 35 20 FY20 Essel Vision Productions (120) 40 (2) 27 ATL Media Ltd (900) (404) 1 (26) Asia Today and Asia TV USA dragged Asia Today Ltd (462) (1,614) (89) -ve 30% of standalone EBIT mainly due to Asia TV USA Ltd 77 (1,598) 45 -ve one-off provisions and loss on fair Zee Entertainment ME 453 154 22 8 value Asia TV Ltd (UK) 94 110 8 9 Others (1,378) 371 Consol 23,328 11,043 27 14 Source: Company annual report, Edelweiss research
Exhibit 23: Networth accretion FY16-20 (INR bn) Networth increased from INR55.5bn in
FY15 to INR93.4bn in FY20 mainly led by profits from operation (136%), which 93.4 adjusted for reclassification of 51.7 14.3 redeemable preference share as debt (- 1.9 1.4 36%) Others mainly consist of INR(1.6)bn on DDT and reversal of DTL on redemption 55.5 of preference share issued by way of bonus during FY14
Networth Profit(Post IND AS FCTR Others Networth (FY15) Dividend) Adjustments (FY20)
Source: Company annual report, Edelweiss research
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Exhibit 24: Networth movement FY16-20 (INR mn) Particulars FY16 FY17 FY18 FY19 FY20 FY16-20 Op. Networth 55,498 62,315 66,564 75,617 89,239 55,498 Profit (Post Dividend) 6,215 19,605 12,390 12,313 1,194 51,717 Surplus on Acquisition - - 340 - - 340 IND AS Adjustments - (14,276) - - - (14,276) FCTR 624.0 (1,073) (364) 1,449 1,254 1,890 Others (22) 2 (3,245) (52) 1,751 (1,566) Other OCI Items - (9) (68) (88) 1 (164) Closing Networth 62,315 66,564 75,617 89,239 93,439 93,439 Profit as a % to Networth change 91 106 137 90 28 Source: Company annual report, Edelweiss research
Exhibit 25: Debt & borrowing cost analysis (INR mn)
Particulars FY16 FY17 FY18 FY19 FY20 Gross debt dipped ~40% YoY to INR6.8bn Gross Debt 17,159 22,031 15,262 11,145 6,827 due to redemption of preference shares Cash & investments 17,223 38,001 29,813 20,794 10,115 Borrowing cost % jumped to 16% from 10% Net Debt (64) (15,970) (14,551) (9,649) (3,288) in FY19 due to other interest cost of Finance cost 1,598 1,372 1,448 1,304 1,449 INR482mn (FY19: INR137mn) Average borrowing cost (%) 18.6 7.0 7.8 9.9 16.1 Net D/E (0.0) (0.2) (0.2) (0.1) (0.0)
Net Debt/EBITDA (0.0) (0.8) (0.7) (0.4) (0.2) Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Profitability analysis
Zee’s consolidated revenue grew merely 2.5% YoY during FY20 due to macroeconomic slow down during the second half along with covid-19, which further aggravated by the rejigging of ZEEL’s FTA portfolio in March 2019. However, reported EBITDA margin plunged to 20% from 32% in FY19 primarily driven by increase in media content cost by 26% YoY to INR36bn. Adjusted for one-off accelerated inventory amortisation (INR2.6bn) and provision for doubtful debts (INR3.4bn), EBITDA margin stood at 27.5%.
During Q4FY20, due to covid-19 and slowdown in economic activity, Zee took accelerated amortisation of inventory of INR2.6bn led by value of content procured against advance and deposits value halved to INR4.2bn compared to INR9.4bn at FY19 end.
Other expenses also surged 20% majorly due to one-time higher provision for doubtful debts and advances of INR3.4bn. Further, profitability worsened due to loss on fair valuation of offshore investment (INR3.8bn) along with exceptional loss due to ICDs written-off (INR1.7bn) and goodwill impairment (INR1.1bn) of online media business.
Exhibit 26: Profitability analysis (INR bn) Standalone Subsidiary/ JV (derived) Consolidated Particulars FY18 % FY19 % FY20 % FY18 % FY19 % FY20 % FY18 % FY19 % FY20 % Sales 58.0 100 68.6 100 72.2 100 8.9 100 10.8 100 9.1 100 66.9 100 79.3 100 81.3 100 Operating cost 21.9 37.8 24.0 35.0 33.1 45.9 3.3 37.6 6.8 62.8 5.1 56.5 25.3 37.8 30.8 38.8 38.3 47.1 Personnel cost 4.8 8.2 5.4 7.9 6.2 8.5 1.9 21.1 1.8 17.0 1.6 18.0 6.7 10.0 7.2 9.1 7.8 9.6 Other expenses 10.8 18.6 12.1 17.6 13.8 19.1 3.4 38.3 3.6 33.7 5.1 55.5 14.2 21.2 15.7 19.8 18.9 23.2 EBITDA 20.5 35.4 27.1 39.5 19.1 26.4 0.3 3.0 (1.4) (13.4) (2.7) (29.9) 20.8 31.1 25.6 32.3 16.3 20.1 Depreciation 1.4 2.4 1.6 2.3 1.8 2.5 0.4 4.8 0.8 7.0 0.9 10.2 1.8 2.7 2.3 3.0 2.7 3.3 Fair value loss on financial 0.2 0.3 (0.1) (0.1) 3.3 4.6 (0.1) (1.3) 0.0 0.3 (0.7) (7.9) 0.1 0.1 (0.0) (0.0) 2.6 3.2 instruments at FVTPL* EBIT 18.9 32.6 25.6 37.3 14.0 19.4 (0.0) (0.5) (2.2) (20.8) (2.9) (32.3) 18.9 28.2 23.3 29.4 11.0 13.6 Financial charges 1.4 2.5 1.3 1.9 1.4 1.9 0.0 0.2 0.0 0.2 0.1 0.6 1.4 2.2 1.3 1.6 1.4 1.8 Other income# 9.8 16.9 1.9 2.8 2.3 3.2 2.4 26.8 0.6 5.8 0.6 7.1 4.4 6.6 2.5 3.2 2.8 3.5 PBT 27.3 47.1 26.2 38.2 14.9 20.6 2.3 26.0 (1.6) (15.2) (2.4) (25.8) 21.8 32.6 24.5 30.9 12.4 15.3 Exceptional Item - - (0.2) (0.3) (2.8) (3.9) 1.3 15.1 - - - - 1.3 2.0 (0.2) (0.3) (2.8) (3.5) Tax 8.2 14.1 9.4 13.7 4.5 6.3 0.2 2.4 (0.7) (6.8) (0.2) (2.5) 8.4 12.6 8.7 10.9 4.3 5.3 Associate/ minority share ------0.0 0.1 0.0 0.2 (0.0) (0.3) 0.0 0.0 0.0 0.0 (0.0) (0.0) PAT 19.1 33.0 16.6 24.1 7.5 10.4 3.5 38.8 (0.9) (8.2) (2.1) (23.5) 14.8 22.1 15.7 19.8 5.2 6.5 OCI 0.0 0.1 (0.1) (0.1) 0.1 0.2 (0.4) (4.9) 1.4 12.9 1.2 13.1 (0.4) (0.6) 1.3 1.6 1.3 1.6 Total comprehensive income 19.2 33.1 16.5 24.0 7.6 10.6 3.0 33.9 0.5 4.7 (1.0) (10.5) 14.4 21.5 17.0 21.4 6.6 8.1 Source: Company annual report, Edelweiss research *FVTPL: Fair value through profit & loss account #Other income in subsidiaries adjusted for dividend from inter-company
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ANNUAL REPORT ANALYSIS
ATL Media: The company reported robust revenue growth of 36% YoY, but posted loss at PAT level mainly due to fair value loss on offshore investment of INR3.8bn during FY20.
Essel Vision Production: Despite revenue falling 10% YoY, PAT jumped from INR79mn in FY19 to INR1.6bn in FY20 led by fair valuation gain of INR1.5bn on 0% optionally convertible debenture issued to parent company.
Asia TV USA: The company reported loss of INR1.3bn in FY20 (FY19 PAT: INR68mn) due to significant provisioning for doubtful debt of INR1.8bn during FY20 (FY19: Nil).
Impairments and Going Concern: Asia Today (holding company of Asia TV (UK)) took impairment of INR1,028mn (USD13.7mn) and ATL Media (holding company of Taj TV) took impairment of INR165mn (USD2.2mn) during FY20. Auditor of Z5X Global has raised significant doubts on the company’s ability to continue as a going concern.
Exhibit 27: Subsidiaries’ performance analysis (INR mn) Particulars % shareholding FY19 FY20 FY20 Networth Turnover PAT PAT % Networth Turnover PAT PAT % ATL Media Ltd (Formerly known as Asia Today) 100 15,160 2,735 751 27 11,998 3,722 (4,103) -ve Asia Today Limited (Formerly known as Zee 100 345 2,657 (568) (21) (989) 2,725 (1,289) (47) Multimedia (Maurice)Ltd.) Taj Television (I) Private Limited 100 1,787 - (550) n.a. 1,400 - 34 n.a. Zee Entertainment Middle East FZ-LLC 100 2,402 1,839 430 23 2,307 1,425 160 11 Essel Vision Productions 100 (49) 5,130 79 2 1,502 4,673 1,553 33 Zee TV South Africa (Proprietary) Ltd. 100 (209) 277 14 5 (142) 299 46 15 Zee Multimedia Worldwide (Mauritius) 100 5,730 - 139 n.a. 6,302 - 124 n.a. Asia TV Limited, UK 100 1,115 1,451 68 5 1,226 1,694 84 5 Margo Networks Private Limited 80 690 - 13 n.a. 613 5 (77) n.a. Z5X Global FZ - LLC 100 (1,083) 31 (753) -ve (2,224) 226 (939) -ve Asia TV USA Limited 100 208 2,139 68 3 (1,128) 1,734 (1,280) (74) Others 51-100 106 1,878 132 7 240 2,054 251 12 Total 26,202 18,137 (177) (1) 21,105 18,557 (5,436) (29) Source: Company annual report, company filings Edelweiss research
Total other expenses zoomed 20% YoY to INR18.9bn led by huge allowances for doubtful debtors and advances as % to sales it rose to 7% in FY20 (FY19:1.1%). Exhibit 28: Expenditure analysis (INR mn) % to Sales Particulars FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Operating Expenses Media Content 24,658 26,227 23,571 28,651 36,068 42.4 40.8 35.3 36.1 44.4 Telecast Cost 1,326 1,530 1,704 2,107 2,217 2.3 2.4 2.5 2.7 2.7 Other Expenses Rent 807 813 959 889 598 1.4 1.3 1.4 1.1 0.7 Repair and Maintenance 180 242 312 413 528 0.3 0.4 0.5 0.5 0.6 Travelling and Conveyance Exp 498 597 843 870 877 0.9 0.9 1.3 1.1 1.1 Legal and Professional Charges 681 617 803 801 652 1.2 1.0 1.2 1.0 0.8 Hire and Service Charges 536 707 677 1,024 934 0.9 1.1 1.0 1.3 1.1 Advertisement and Publicity 4,592 4,472 5,773 6,993 6,956 7.9 7.0 8.6 8.8 8.6 Marketing, Distribution and Promotion Exp 3,006 1,989 2,822 2,259 1,422 5.2 3.1 4.2 2.8 1.7 Allowances for Doubtful Debt and advances (289) 197 547 834 5,656 -0.5 0.3 0.8 1.1 7.0 Misc. 2,010 1,639 1,428 1,610 1,240 3.5 2.5 2.1 2.0 1.5 Total other expenses 12,021 11,273 14,164 15,693 18,863 20.7 17.5 21.2 19.8 23.2 Source: Company annual report, Edelweiss research
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ANNUAL REPORT ANALYSIS
Exhibit 29: Tax rate analysis (INR mn) Cash tax rate declined to 21% due to Particulars FY16 FY17 FY18 FY19 FY20 corporate tax rate cut during the year; PL tax rate was still higher at 29%, though PBT* 14,713 18,980 21,909 24,527 15,003 lower than FY19 (35%) Cash tax 5,827 6,810 8,296 9,299 3,114 PL tax 5,491 6,808 8,409 8,673 4,317 During FY20, higher allowances on receivables led to higher DTA creation of Cash tax % 40 36 38 38 21 INR1.5bn, which was INR(28)mn in FY19 PL tax % 37 36 38 35 29 and INR100mn in FY18 Source: Company annual report, Edelweiss research Note: *excluding fair value loss and exceptional item
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Governance
Exhibit 30: Board structure remains above regulatory norms Particulars FY16 FY17 FY18 FY19 FY20 Total directors 8 8 8 8 8 No. of Independent directors 4 4 4 4 5 Ratio 0.50 0.50 0.50 0.50 0.63 Regulatory norms 0.33 0.33 0.33 0.33 0.33 Source: Company annual report, Edelweiss research
Exhibit 31: KMP and directors’ remuneration jumped in FY20 (INR mn) Name Designation FY18 FY19 FY20 YoY % Total KMP remuneration up 35% YoY to Punit Goenka MD and CEO 103 83 90 9 INR204mn in FY20. As % to PBT, it was M Lakshminarayanan CS (till Nov-19) 18 19 47 145 up to 1.6% from 0.6% in FY19 Rohit Kumar Gupta CFO - 18 26 41 Ashish Agarwal CS (from Nov-19) - - 4 n.a. Bharat Kedia CFO (till Apr-18) 11 9 - n.a. Mihir Modi CFO (till July-17) 12 - - n.a.
Total 144 130 167 29 As % of PBT 0.7 0.5 1.3 Non-Executive Directors 22 21 37 76 Total 166 151 204 35 As % of PBT 0.8 0.6 1.6 Source: Annual Reports, Company filings, Edelweiss research
Exhibit 32: Auditor remuneration up 6% YoY (INR mn) FY16 FY17 FY18 FY19 FY20 YoY % Payment to Auditors 41 50 39 35 37 6 Source: Company annual report, Edelweiss research
Exhibit 33: Auditor history Year Auditor FY20 Deloitte Haskins & Sells LLP FY19 Deloitte Haskins & Sells LLP FY18 Deloitte Haskins & Sells LLP FY17 M/S MGB & CO. LLP FY16 M/S MGB & CO. LLP Source: Company annual report, Edelweiss research
Exhibit 34: Promoter pledge declined to 6% during Q2FY20 Pledge Promoter's Shareholding (Sep-20) % holding % of pledged shares Year ratio Shareholding % (%) Promoters 4.02 6.09 FY20 4.77 16.38 Non-promoters 95.98 FY19 38.20 66.18 Total 100.00 FY18 41.62 52.55 FY17 43.07 39.32 FY16 43.07 42.35 Source: BSE, Edelweiss research
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ANNUAL REPORT ANALYSIS
Exhibit 35: Summary Financials (INR mn) Particulars FY16 FY17 FY18 FY19 FY20 Sales 58,125 64,342 66,857 79,339 81,299 Total income 60,076 66,582 71,260 81,854 84,135 EBITDA 14,461 17,064 20,693 25,675 16,346 EBITDA margin (%) 25 27 31 32 20 RoE (%) 16 17 19 19 9 RoCE (%) 26 24 26 27 14 Depreciation 777 1,152 1,821 2,347 2,706 Financial costs 1,598 1,372 1,448 1,304 1,449 Net profit 8,237 22,201 14,778 15,672 5,246 Equity shareholders' funds 48,039 66,904 75,617 89,239 93,439 Loan funds 17,159 22,031 15,262 11,145 6,827 Net Debt/ (Cash) (64) (15,970) (14,551) (9,649) (3,288) Net fixed assets 13,325 9,443 14,900 14,623 13,148 CWIP 1,104 1,270 780 1,083 831 Current assets loans and advances 37,010 43,272 56,087 82,545 90,858 Current liabilities and provisions 13,601 12,862 17,388 26,191 22,297 Net current assets (Ex-cash) 23,409 30,410 38,699 56,354 68,561 Cash and cash equivalent 17,223 38,001 29,813 20,794 10,115 Cash flow from operating activities 7,309 7,406 5,544 1,352 2,499 Cash flow from investing activities 169 13,969 (10,497) 8,663 3,888 Cash flow from financing activities (4,046) (4,138) (10,902) (9,664) (10,620) Net cash flows 3,432 17,237 (15,855) 351 (4,233) CAPEX (2,716) (2,704) (3,146) (2,814) (1,451) Working capital investments (2,497) (6,036) (8,551) (17,151) (16,758) Source: Company annual report, Edelweiss research
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Exhibit 36: Zee--Group structure ZEEL
Indian Overseas 100% 100% 100% 100% 100% 100% 80% 100% 100% Zee Essel Vision Zee Digital India Zee Fly-By-Wire Zee Network Margo ATL Media Multimedia Productions Convergence Webportal Unimedia Internation Distribution Ltd Networks Ltd Worldwide Ltd Ltd Pvt Ltd Ltd al Pvt Ltd (Zee Turner Ltd) Pvt Ltd (Mauritius) Ltd
51% 50% JV 100% Idea Shop Media Pro Web and Enterprise India Zee TV USA. Inc. Media Pvt Pvt Ltd Ltd
100% 100% 100% 100% 100% Expand Fast Zee Studios Pantheon Holdings Asia Today Ltd TAJ TV Ltd International Productions (Singapore) Ltd Ltd Pte. Ltd
100% 100% 100% 100% 100% 100% 25% JV Zee Zee Asia Today Asia Today Entertainme ATL Media Technologies Asia TV Ltd Singapore Z5X Global FZ LLC (Thailand) Co. nt Middle FZ-LLC (Guangzhou) Pte Ltd. Ltd East FZ-LLC Ltd
100% 100% 100% 100% 100% 100% 100% Asia Zee TV South Zee Asia TV USA Zee CIS Multimedia Africa Technologies Zee CIS LLC Ltd. Asia TV GmbH Holding LLC Distribution (Proprietary) (Guangzhou) Wyoming Inc Ltd Ltd
Source: Company’s filings, Edelweiss Research
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ANNUAL REPORT ANALYSIS
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Aditya Narain Head of Research [email protected]
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